As filed with the Securities and Exchange Commission on December 4, 1997
Registration No. 333-39483
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1
to
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
FDX CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 4513 pending
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
2005 Corporate Avenue
Memphis, Tennessee 38132
(901) 369-3600
---------------
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
Kenneth R. Masterson
Executive Vice President, General
Counsel and Secretary
FDX Corporation
2005 Corporate Avenue
Memphis, Tennessee 38132
(901) 369-3600
---------------
Name, address, including zip code, and telephone number,
(including area code, of agent for service)
Copies to:
</TABLE>
<TABLE>
<S> <C> <C> <C>
Dennis S. Hersch John E. Lynch, Jr. Robert A. Profusek Robert A. Kindler
Davis Polk & Wardwell Caliber System, Inc. Jones, Day, Reavis & Pogue Cravath, Swaine & Moore
450 Lexington Avenue 3925 Embassy Parkway 599 Lexington Avenue Worldwide Plaza
New York, New York 10017 Akron, Ohio 44333 New York, New York 10022 825 Eighth Avenue
(212) 450-4000 (330) 665-5646 (212) 326-3800 New York, New York 10019
(212) 474-1000
</TABLE>
Approximate date of commencement of proposed sale to the
public: As soon as practicable after the effectiveness of this Registration
Statement and the effective time ("Merger Date") of the merger (the "Merger")
of Caliber System, Inc. ("Caliber") into a wholly-owned subsidiary of the
Registrant, as described in the Agreement and Plan of Merger dated as of
October 5, 1997.
If the securities being registered on this Form are being
offered in connection with the formation of a holding company and there is
compliance with General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act of 1933, as amended
(the "1933 Act"), check the following box and list the 1933 Act registration
statement number of the earlier effective registration statement for the same
offering. [ ]
If this form is a post-effective amendment filed pursuant to
Rule 462(d) under the 1933 Act, check the following box and list the 1933 Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
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<S> <C> <C> <C> <C>
CALCULATION OF REGISTRATION FEE
===============================================================================================================================
Proposed
Maximum Proposed Maximum
Title of Each Class of Amount to be Offering Price Aggregate Offering Amount of Registration
Securities to be Registered(1) Registered(1) Per Unit Price(2) Fee(3)
- -------------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.10 per share... 31,611,848 $60.35 $1,907,775,027 $578,114
===============================================================================================================================
</TABLE>
(1) Represents the number of shares of common stock, par value $.10 per share,
of the Registrant ("FDX Common Stock") to be issued in connection with
the Merger in exchange for shares of common stock, without par value,
of Caliber ("Caliber Common Stock"), determined by multiplying the
exchange ratio applicable in the Merger (0.8 shares of FDX Common Stock
for each share of Caliber Common Stock) by the sum of the number of
outstanding shares of Caliber Common Stock on November 4, 1997
(39,206,414) plus the number of shares of Caliber Common Stock (i)
subject to options exercisable prior to the expected Merger Date and
(ii) issuable under certain Caliber benefit plans (281,396).
(2) Estimated solely for the purpose of computing the amount of the
registration fee pursuant to Rule 457(f)(1) and Rule 457(c) of the 1933
Act, based on the average of the high and low prices of Caliber Common
Stock on October 28, 1997 on the New York Stock Exchange, which was
$48.28.
(3) The registration fee of $578,114 for the securities registered hereby was
paid in connection with the filing of the Registration Statement on
November 4, 1997. This fee was calculated pursuant to Rule 457(f)
under the 1933 Act, as one thirty-third of one percent of
$1,907,775,027.
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 1933 Act or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
==============================================================================
- -------------------- -------------------
FEDERAL EXPRESS LOGO CALIBER SYSTEM LOGO
- -------------------- -------------------
MERGER PROPOSED
YOUR VOTE IS VERY IMPORTANT
The Board of Directors of Federal Express Corporation and the Directors of
Caliber System, Inc. have approved a transaction that would result in FedEx
and Caliber becoming wholly-owned subsidiaries of a newly formed holding
company, FDX Corporation. The combined company will be a $15 billion
powerhouse in global transportation and logistics.
If the transaction is completed, Caliber shareholders will receive 0.8 shares
of FDX common stock for each share of Caliber common stock. The FedEx common
stock held by FedEx stockholders will be automatically converted into an equal
number of shares of FDX common stock.
We estimate that Caliber shareholders will own approximately 21% of the FDX
common stock after the transaction and FedEx stockholders will own
approximately 79% of the FDX shares after the transaction.
Stockholders of FedEx are being asked, at FedEx's special meeting of
stockholders, to approve the issuance of FDX shares in connection with the
transaction and the adoption of the FDX 1997 Stock Incentive Plan. The 1997
Stock Incentive Plan is very similar to the stock incentive plan approved by
FedEx stockholders at the Annual Meeting of FedEx stockholders held on
September 29, 1997. That plan, while approved, was discontinued by the Board
of Directors of FedEx because of the pending transaction. The Board of
Directors of FedEx has determined that the transaction is fair to you and in
your best interests. The Board of Directors of FedEx therefore recommends
that you vote in favor of the issuance of FDX shares in connection with the
transaction and in favor of the adoption of the 1997 Stock Incentive Plan.
Shareholders of Caliber are being asked, at Caliber's special meeting of
shareholders, to approve the transaction. The Caliber Directors have
determined that the transaction is fair to you and is in your best interests.
The Caliber Directors therefore recommend that you vote to approve the
transaction and the related merger agreement.
YOUR VOTE IS VERY IMPORTANT.
Whether or not you plan to attend a meeting, please take the time to vote on
the proposal(s) submitted to stockholders at your meeting by completing and
mailing the enclosed proxy card to us. If you sign, date and mail your proxy
card without indicating how you wish to vote, your proxy will be counted as a
vote in favor of the proposal(s) submitted at your meeting. If you fail to
return your Caliber proxy card, the effect will be a vote against the
transaction.
The dates, times and places of the meetings are:
For FedEx stockholders:
January 12, 1998 -- 10 a.m.
Memphis Marriott
2625 Thousand Oaks Boulevard
Memphis, Tennessee
For Caliber shareholders:
January 9, 1998 -- 9 a.m.
Law Offices of Jones, Day, Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, Ohio
This Joint Proxy Statement/Prospectus provides you with detailed information
about the proposed transaction, the issuance of the FDX common stock and the
1997 Stock Incentive Plan. In addition, you may obtain information about our
companies from documents that we have filed with the Securities and Exchange
Commission. We encourage you to read this entire document carefully.
- -----------------------------------------------
Frederick W. Smith
Chairman, President and Chief Executive Officer
Federal Express Corporation
- -----------------------------------------------
Daniel J. Sullivan
Chairman, President and Chief Executive Officer
Caliber System, Inc.
- -------------------------------------------------------------------------
Neither the SEC nor any state securities regulators have approved the FDX
common stock to be issued under this Joint Proxy Statement/Prospectus or
determined if this Joint Proxy Statement/Prospectus is accurate or
adequate. Any representation to the contrary is a criminal offense.
- -------------------------------------------------------------------------
Joint Proxy Statement/Prospectus dated December 5, 1997, and first mailed
to stockholders on December 8, 1997.
TABLE OF CONTENTS
QUESTIONS AND ANSWERS ABOUT THE TRANSACTION................................ 1
SUMMARY.................................................................... 2
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA........................... 6
UNAUDITED COMPARATIVE PER SHARE DATA....................................... 10
COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION................ 11
THE PROPOSALS.............................................................. 12
THE MERGERS................................................................ 13
Background of the Mergers............................................... 13
FedEx's Reasons for the Mergers; Recommendation of the FedEx Board of
Directors............................................................ 14
Caliber's Reasons for the Caliber Merger; Recommendation of the Caliber
Directors............................................................ 15
Opinion of Caliber's Financial Advisor.................................. 16
Interests of Certain Persons in the Mergers--Caliber.................... 20
Interests of Certain Persons in the Mergers--FedEx...................... 23
Accounting Treatment.................................................... 23
Certain U.S. Federal Income Tax Consequences............................ 24
Regulatory Matters...................................................... 25
Dissenters' Rights...................................................... 25
Federal Securities Laws Consequences; Resale Restrictions............... 28
MANAGEMENT FOLLOWING THE MERGERS........................................... 29
FedEx................................................................... 29
Caliber................................................................. 29
FDX..................................................................... 29
More Information........................................................ 29
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS................ 30
THE MERGER AGREEMENT....................................................... 38
General................................................................. 38
Merger Consideration.................................................... 38
FDX, FedEx and Caliber Following the Mergers............................ 40
Stock Options........................................................... 40
Certain Covenants....................................................... 41
Certain Representations and Warranties.................................. 44
Conditions to the Mergers............................................... 44
Termination of the Merger Agreement..................................... 45
Other Expenses.......................................................... 46
Amendments; Waivers..................................................... 46
CERTAIN STOCKHOLDER ARRANGEMENTS........................................... 46
THE MEETINGS............................................................... 47
Times and Places; Purposes.............................................. 47
Voting Rights; Votes Required for Approval.............................. 47
Proxies................................................................. 48
Other Business; Adjournments............................................ 49
COMPARISON OF STOCKHOLDER RIGHTS........................................... 51
General................................................................. 51
Comparison of Stockholder Rights........................................ 51
DESCRIPTION OF FDX CAPITAL STOCK........................................... 55
Authorized Capital Stock................................................ 55
FDX Common Stock........................................................ 55
FDX Preferred Stock..................................................... 55
Anti-Takeover Effect of Certain Provisions of the FDX Charter and the FDX
Bylaws............................................................... 55
Transfer Agent and Registrar............................................ 55
Stock Exchange Listing; Delisting and Deregistration of Caliber Common
Stock................................................................ 56
THE FDX 1997 STOCK INCENTIVE PLAN.......................................... 56
CERTAIN INFORMATION RELATING TO FEDERAL EXPRESS COMPENSATION............... 58
LEGAL MATTERS.............................................................. 66
EXPERTS.................................................................... 67
FUTURE SHAREHOLDER PROPOSALS............................................... 67
WHERE YOU CAN FIND MORE INFORMATION........................................ 68
Index To FDX Financial Statement...........................................F-1
LIST OF ANNEXES
Annex A -- Merger Agreement
Annex B -- Opinion of Goldman, Sachs & Co.
Annex C -- Voting Agreement
Annex D -- Section 1701.85 of the General Corporation Law of Ohio
Annex E -- FDX 1997 Stock Incentive Plan
QUESTIONS AND ANSWERS ABOUT THE TRANSACTION
Q: Why are the two companies proposing the transaction?
A: FedEx and Caliber believe that the combination of the two companies will
permit their customers to take advantage of a broader portfolio of services
and choices at a level of excellence unmatched by any competitor. FDX was
formed as the new parent company for both FedEx and Caliber because, in the
judgment of management of FedEx, it would be the most efficient way to
strategically manage the operations of the two companies while continuing to
operate the distinct business units separately. Stockholders of both
companies will become stockholders of a $15 billion powerhouse in global
transportation and logistics.
Q: What do I need to do now?
A: Just mail your signed proxy card in the enclosed return envelope as soon
as possible, so that your shares may be represented at the appropriate
stockholder meeting.
Q: What do I do if I want to change my vote?
A: Just send in a later-dated, signed proxy card to your company's Secretary
or transfer agent before your meeting or attend your meeting in person and
vote.
Q: If my shares are held in "street name" by my broker, will my broker vote
my shares for me?
A: Your broker will vote your shares only if you provide instructions on how
to vote. Please tell your broker how you would like him or her to vote your
shares. If you do not tell your broker how to vote, your shares will not be
voted by your broker, which, in the case of Caliber shareholders, will have
the effect of a vote against the transaction.
Q: Should I send in my stock certificates now?
A: No. After the transaction is completed, the exchange agent for the
transaction will send Caliber shareholders written instructions for exchanging
their share certificates. FedEx stockholders will keep their existing
certificates.
Q: Please explain what I will receive in the transaction.
A: If the transaction is completed, Caliber shareholders will receive 0.8
shares of common stock of FDX for each share of Caliber common stock.
We will not issue fractional shares of FDX common stock. Instead, Caliber
shareholders will receive cash in the amount of the net proceeds from the sale
of those fractional shares in the open market.
If you currently own shares of FedEx common stock, your shares of FedEx common
stock will be automatically converted into the same number of shares of FDX
common stock.
Q: What happens to my future dividends?
A: FedEx does not pay dividends because it believes that it is more
advantageous to stockholders for the company to reinvest its earnings than
to pay a cash dividend. FDX intends to continue this policy.
Q: When do you expect the transaction to be completed?
A: We are working toward completing the transaction as quickly as
possible. In addition to stockholder approvals, we must also obtain
regulatory approvals. We hope to complete the transaction by the end of
January 1998.
Q: What are the tax consequences to stockholders of the transaction?
A: The transaction will be tax-free to Caliber shareholders for U.S.
federal income tax purposes, except for taxes on cash received for a
fractional share or pursuant to the exercise and perfection of dissenters'
rights. The transaction will be tax-free to FedEx stockholders for U.S.
federal income tax purposes.
Q: Whom should I call with questions?
A: If you are a FedEx stockholder, call the Investor Relations Department
at FedEx, at (901) 395-3478. If you are a Caliber shareholder, call
Investor Relations at Caliber, at (330) 665-8896.
- ----------------------------------------------------------------------------
The Board of Directors of FedEx recommends voting in favor of the proposed
issuance of FDX shares in connection with the transaction and the adoption
of the 1997 Stock Incentive Plan. The Caliber Directors recommend voting
in favor of the approval of the merger agreement and the transaction.
- ----------------------------------------------------------------------------
SUMMARY
This summary highlights selected information from this Joint
Proxy Statement/Prospectus and may not contain all of the information that is
important to you. To understand the transaction fully and for a more complete
description of the legal terms of the transaction, you should read carefully
this entire document and the documents we have referred you to. See "Where You
Can Find More Information".
The Companies
Federal Express Corporation
2005 Corporate Avenue
Memphis, Tennessee 38132
(901) 369-3600
FedEx, the world's largest all-cargo airline, provides express
services for the time-definite transportation of documents, packages and
freight. FedEx offers its services throughout the world using an extensive
fleet of aircraft and vehicles and leading-edge information technologies.
Caliber System, Inc.
3925 Embassy Parkway
Akron, Ohio 44333
(330) 665-5646
Caliber, through its subsidiaries, is engaged in a number of
businesses that provide transportation, logistics management and operations,
and related information services. Caliber is one of the leading diversified
transportation and logistics companies in the United States.
FDX Corporation
2005 Corporate Avenue
Memphis, Tennessee 38132
(901) 369-3600
FDX is a new subsidiary of FedEx, formed for the purpose of
this transaction. Following the transaction, FDX will become the new parent
company for both FedEx and Caliber. FDX will derive all of its revenues from
the operations of FedEx and Caliber and their respective subsidiaries. Shares
of FDX will be listed on the New York Stock Exchange. It is expected that
following the transaction, with certain exceptions, FedEx and Caliber and its
subsidiaries will continue to be operated as separate business units.
The Special Meetings
A special meeting of FedEx's stockholders will be held at 10
a.m. on January 12, 1998 at the Memphis Marriott, 2625 Thousand Oaks
Boulevard, Memphis, TN. At the FedEx special meeting, FedEx stockholders will
be asked to approve the issuance of FDX common stock in connection with the
transaction and the adoption of the 1997 Stock Incentive Plan. If
stockholders of FedEx approve the adoption of the 1997 Stock Incentive Plan,
that plan will be adopted regardless of whether the transaction is approved.
A special meeting of Caliber's shareholders will be held at 9
a.m. on January 9, 1998 at the law offices of Jones, Day, Reavis & Pogue, North
Point, 901 Lakeside Avenue, Cleveland, OH. At the Caliber special meeting,
Caliber shareholders will be asked to approve the transaction and the merger
agreement.
Voting Rights; Votes Required for Approval
If you are a FedEx stockholder, you are entitled to vote at the
FedEx special meeting if you owned shares at the close of business on the
record date, which is November 28, 1997. On the FedEx record date, there were
115,174,659 shares of FedEx common stock entitled to vote at the FedEx special
meeting. FedEx stockholders will have one vote at the FedEx special meeting
for each share of FedEx common stock they own on the FedEx record date.
The affirmative vote of a majority of the shares of FedEx
common stock present or represented at the FedEx special meeting is required
to approve the FedEx proposals.
If you are a Caliber shareholder, you are entitled to vote at
the Caliber special meeting if you owned shares as of the close of business on
the record date, which is November 28, 1997. On the Caliber record date,
there were 39,206,181 shares of Caliber common stock entitled to vote at the
Caliber special meeting. Caliber shareholders will have one vote at the
Caliber special meeting for each share of Caliber common stock they own on the
Caliber record date.
The affirmative vote of a majority of the shares of Caliber
common stock outstanding on the Caliber record date is required to approve the
Caliber proposal.
Share Ownership of Management and Certain Stockholders
On the FedEx record date, FedEx directors and executive
officers owned 10,418,122 shares of FedEx common stock (approximately 9%).
These directors and executive officers have indicated that they intend to vote
their FedEx common stock in favor of both FedEx proposals.
On the Caliber record date, Caliber directors (other than Mr.
Roush) and executive officers owned 73,654 shares of Caliber common stock
(approximately 0.2%). These directors and officers have indicated that they
intend to vote their Caliber common stock in favor of the Caliber proposal.
In addition, certain Caliber shareholders (including Mr. Roush) who own
approximately 13.6% of the Caliber shares have agreed to vote in favor of the
Caliber proposal.
Our Reasons for the Merger
Both FedEx and Caliber believe that the transaction will
benefit the stockholders of both companies by creating a new, leading provider
of express and non-express delivery services, offering a broader array of
services and choices than either company is able to offer separately today.
Recommendations to Stockholders
To FedEx Stockholders:
The FedEx Board believes that the transaction is in your best
interest and recommends that you vote FOR both FedEx proposals.
To Caliber Shareholders:
The Caliber Directors believe that the transaction is in your
best interest and recommend that you vote FOR the Caliber proposal.
The Transaction
The merger agreement is attached as Annex A to this Joint Proxy
Statement/Prospectus. We encourage you to read the merger agreement as it is
the legal document that governs the transaction.
What Caliber Shareholders Will Receive in the Transaction
If the transaction is approved, Caliber shareholders will have
the right to receive 0.8 shares of FDX common stock for each share of Caliber
common stock they own. FDX will not issue any fractional shares. Instead,
Caliber shareholders otherwise entitled to receive fractional shares will
receive cash in the amount of the net proceeds from the sale of those
fractional shares in the open market.
Caliber shareholders should not send in their stock
certificates for exchange until instructed to do so after we complete the
transaction.
What FedEx Stockholders Will Receive in the Transaction
Each share of FedEx common stock will be automatically
converted into one share of FDX common stock. FedEx stockholders should not
send in their stock certificates in connection with the transaction. After
the transaction, each certificate representing FedEx common stock, without any
action on the part of FedEx stockholders, will be deemed to represent an
equivalent number of shares of FDX common stock.
Ownership of FDX, FedEx and Caliber After the Transaction
FDX will own 100% of the stock of FedEx and Caliber. The
former stockholders of FedEx will own approximately 79% of FDX. The former
shareholders of Caliber will own approximately 21% of FDX.
Board of Directors and Management of FedEx, FDX and Caliber after the
Transaction
Following the transaction, the Board of Directors of FDX will
consist of the present Board of Directors of FedEx.
It is expected that the management of FedEx and Caliber
following the completion of the transaction will be substantially the same as
it is now.
Interests of Officers and Directors in the Transaction
A number of directors and executive officers of Caliber and
FedEx have interests in the transaction as employees and/or directors that are
different from, or in addition to, your interests as stockholders. If we
complete the transaction, the directors and executive officers of Caliber will
receive certain benefits and other compensation under their existing
compensation arrangements. In addition, certain indemnification and insurance
arrangements for existing directors and officers of Caliber and FedEx will be
continued.
Conditions to the Transaction
The transaction will be completed if a number of conditions are
met, including the following:
(1) the approvals of the stockholders of FedEx and Caliber are
obtained;
(2) no law, injunction or order prohibits the transaction;
(3) the relevant waiting period imposed by the Federal Trade
Commission and the Department of Justice has expired; and
(4) any significant governmental approvals are obtained.
These conditions can be waived, but only if FedEx and Caliber
agree to waive them. In addition, the transaction can only be completed if
FedEx receives an opinion from its counsel that the transaction will be
tax-free; this is a condition FedEx can waive. Caliber must also receive an
opinion from its counsel that the transaction will be tax-free; this is a
condition Caliber can waive.
Termination of the Merger Agreement and Payment of Fees
FedEx and Caliber may agree to terminate the merger agreement
at any time. In addition, either party may terminate the merger agreement if:
(1) we do not complete the transaction by June 30, 1998;
however, neither FedEx nor Caliber may terminate the
agreement if its breach is the reason the transaction
has not been completed;
(2) a law or regulation makes the transaction illegal or any
order or injunction permanently prohibits the
transaction; or
(3) the other party breaches its representations, warranties
or obligations under the merger agreement and the breach
has a material effect on the other party.
In certain other circumstances, if the merger agreement is
terminated, a fee may be payable. FedEx must pay Caliber $50 million if
Caliber terminates the merger agreement because the FedEx stockholders do not
approve the transaction.
Caliber must pay FedEx a fee of $50 million if FedEx terminates
the agreement because:
o Caliber's shareholders do not approve the transaction; or
o the Caliber Directors do not call or hold the Caliber
special meeting; or
o the Caliber Directors change, in a manner adverse to
FedEx, their recommendation that Caliber's shareholders
vote in favor of the transaction.
If Caliber must pay FedEx $50 million for any of the reasons
discussed above, Caliber must pay FedEx an additional $50 million if at the
time FedEx terminates the merger agreement:
o another proposal to acquire Caliber is pending; and
o Caliber agrees to be or is acquired within 12 months after
the termination.
Caliber can terminate the merger agreement if Caliber wishes to
enter into an agreement for another transaction with a third party which is a
better transaction than the transaction with FedEx so long as Caliber pays
FedEx $100 million.
Regulatory Approvals
Caliber and FedEx are both required to make filings with or
obtain approvals from certain domestic and international regulatory
authorities in connection with the transaction including, among others, United
States and certain European antitrust authorities.
Accounting Treatment
We expect the transaction will be accounted for as a "pooling
of interests", which means that we will treat our companies as if they had
always been combined for accounting and financial reporting purposes. FedEx
will receive a letter from its independent accounting firm just prior to the
closing of the transaction stating that it agrees with the assessment of FedEx
that the transaction should be accounted for as a pooling of interests.
Caliber will receive a letter from its independent accounting firm just prior
to the closing of the transaction stating that it agrees with the assessment
of Caliber that, from the Caliber perspective, the transaction should be
accounted for as a pooling of interests. The receipt of those letters is a
condition to the closing of the transaction.
Opinion of Financial Advisor
In deciding to approve the transaction, the Caliber Directors,
among the numerous factors discussed below in "The Mergers--Caliber's Reasons
for the Caliber Merger; Recommendation of the Caliber Directors", considered
the October 5, 1997 opinion of Caliber's financial advisor, Goldman, Sachs &
Co., that as of such date, the exchange ratio of 0.8 shares of FDX common
stock for each share of Caliber common stock was fair from a financial point
of view to the Caliber shareholders. That opinion is attached as Annex B to
this Joint Proxy Statement/ Prospectus. We encourage you to read this opinion.
The Board of Directors of FedEx did not seek an opinion of a
financial advisor as to the fairness of the transaction from a financial point
of view to the stockholders of FedEx.
Material Federal Income Tax Consequences
We have structured the transaction so that none of FedEx,
Caliber or any of their respective stockholders will recognize any gain or
loss for U.S. federal income tax purposes in the transaction (except for tax
payable on cash received by Caliber shareholders for fractional shares or
pursuant to the exercise and perfection of dissenters' rights).
Dissenters' Rights
Under Delaware law, FedEx stockholders have no right to an
appraisal of the value of their shares in connection with the transaction.
Under Ohio law, Caliber shareholders who properly exercise and
perfect dissenters' rights may be entitled to receive payment of the fair
value of their shares in connection with the transaction.
Comparative Per Share Market Price Information
FedEx and Caliber common stock are both listed on the New York
Stock Exchange. On October 3, 1997, the last full trading day prior to the
public announcement of the proposed transaction, FedEx common stock closed at
$78 3/4 and Caliber common stock closed at $55(5)/(16). On December 1, 1997,
FedEx common stock closed at $69(11)/(16) and Caliber common stock closed at
$54(15)/(16).
Listing of FDX Common Stock
FedEx will cause FDX to list the FDX common stock (including
the shares to be issued in the transaction) on the New York Stock Exchange.
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
The following tables present (1) selected pro forma condensed
combined financial data of FDX (which reflects the proposed transaction and
assumes the pooling of interests method of accounting), (2) selected
historical financial data of FedEx and (3) selected historical financial data
of Caliber.
The selected financial data has been derived from the
historical consolidated financial statements and notes thereto of FedEx and
Caliber, included in their Reports on Form 10-K for the year ended May 31,
1997 and December 31, 1996 and their Reports on Form 10-Q for the periods
ended thereafter. These reports are incorporated by reference into this Joint
Proxy Statement/Prospectus but can be obtained from Caliber and FedEx. See
"Where You Can Find More Information." The selected financial data has also
been derived from the unaudited pro forma condensed combined financial
statements included elsewhere in this Joint Proxy Statement/Prospectus. To
understand the selected financial data fully, we encourage you to read all the
sources from which they were derived.
FDX CORPORATION
Selected Pro Forma Condensed Combined Financial Data
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Year Ended
--------------------------------- -------------------------------------------------------------------------
August 31, 1997 August 31, 1996 May 31, 1997 May 31, 1996 May 31, 1995 May 31, 1994 May 31, 1993
--------------- --------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Results:
Revenues............ $3,889,706 $3,319,538 $14,255,789 $12,721,791 $11,719,596 $10,301,946 $9,199,941
Operating income.... 322,627 130,142 440,893(a) 779,552 756,247 681,815 515,504
Income from
continuing
operations........ $ 175,706 $ 59,980 $ 150,624(a) $ 400,186 $ 396,125 $ 295,975 $ 196,304
Per Share Data:
Income from
continuing
operations........ $ 1.18 $ 0.41 $ 1.02(a) $ 2.74 $ 2.74 $ 2.06 $ 1.39
Cash dividends...... $ -- $ -- $ -- $ -- $ -- $ -- $ --
Financial Position:
Property and
equipment, net.... $5,458,194 $ 5,441,363 $ 4,973,948 $ 4,421,312 $ 4,042,035 $3,899,845
Total assets........ 9,277,690 8,949,513 8,088,241 7,943,218 7,459,007 7,143,136
Long-term debt, less
current portion... 1,638,233 1,597,954 1,325,277 1,324,711 1,632,202 1,882,279
Common
stockholders'
investment........ $3,546,063 $ 3,453,378 $ 3,312,440 $ 3,260,963 $ 2,971,856 $2,692,741
Average shares
outstanding....... 148,709 147,122 145,843 144,501 143,641 141,054
- ------------
(a) Caliber announced a financial restructuring of its Viking operations
on March 27, 1997. Nonrecurring charges relating to the restructuring
included in pro forma operating expenses for the year ended May 31,
1997 are $310 million.
</TABLE>
FEDERAL EXPRESS CORPORATION
Selected Historical Financial Data
(in thousands, except per share data)
(audited, other than quarterly data)
<TABLE>
<CAPTION>
Three Months Ended Year Ended
--------------------------------- -------------------------------------------------------------------------
August 31, 1997 August 31, 1996 May 31, 1997 May 31, 1996 May 31, 1995 May 31, 1994 May 31, 1993
--------------- --------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Results:
Revenues................ $3,297,218 $2,692,312 $11,519,750 $10,273,619 $9,392,073 $8,479,456 $7,808,043
Operating income........ 264,205 129,918 699,042 623,824 591,144 530,632 377,173
Income from continuing
operations............ $ 143,257 $ 61,950 $ 361,227 $ 307,777 $ 297,588 $ 204,370 $ 109,809
Per Share Data:
Income from continuing
operations............ $ 1.22 $ 0.54 $ 3.12 $ 2.69 $ 2.63 $ 1.82 $ 1.00
Cash dividends.......... $ -- $ -- $ -- $ -- $ -- $ -- $ --
Financial Position:
Property and equipment,
net................... $4,711,932 $ 4,622,080 $ 4,116,601 $3,715,244 $3,449,093 $3,476,268
Total assets............ 8,019,356 7,625,486 6,698,971 6,433,372 5,992,498 5,793,064
Long-term debt, less
current portion....... 1,438,233 1,397,954 1,325,277 1,324,711 1,632,202 1,882,279
Common stockholders'
investment............ $3,103,338 $ 2,962,514 $ 2,576,139 $2,245,569 $1,924,705 $1,671,381
Average shares
outstanding........... 117,343 115,641 114,276 112,987 112,024 109,437
</TABLE>
CALIBER SYSTEM, INC.
Selected Historical Financial Data
(in thousands, except per share data)
(audited, other than quarterly data)
Caliber uses a 13 four-week period calendar with 12 weeks in
each of the first three quarters and 16 weeks in the fourth quarter.
<TABLE>
<CAPTION>
9 Four-Week Accounting Year Ended
Periods Ended ------------------------------------------------------------------------
September 13, September 7, December 31, December 31, December 31, December 31, December 31,
1997 1996 1996 1995 1994 1993 1992
------------- ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Results:
Revenues............ $1,808,360 $1,825,201 $2,718,142 $2,448,172 $2,327,523 $1,822,490 $1,391,898
Operating income
(loss)............ 11,908 (a) 19,819 (192,040)(a) 155,728 165,103 151,183 138,331
Income (loss) from
continuing
operations........ $ (3,190)(a) $ 7,871 $ (165,123)(a) $ 92,409 $ 98,537(b) $ 91,605 $ 86,495
Per Share Data:
Income (loss) from
continuing
operations........ $ (0.08)(a) $ 0.20 $ (4.18)(a) $ 2.34 $ 2.50(b) $ 2.32 $ 2.19
Cash dividends...... $ 0.38 $ 0.54 $ 0.72 $ 1.40 $ 1.40 $ 1.37 $ 1.27
Financial Position:
Property and
equipment, net.... $ 746,262 $ 848,319 $ 857,347 $ 706,068 $ 592,942 $ 423,577
Total assets........ 1,258,334 1,432,167 1,389,270 1,509,846 1,466,509 1,350,072
Long-term debt...... 200,000 200,000 -- -- -- --
Total shareholders'
equity............ $ 519,487 $ 538,647 $736,301 $1,015,394 $1,047,151 $1,021,360
Average shares
outstanding....... 39,221 39,484 39,459 39,392 39,521 39,521
- ------------
(a) Caliber announced a financial restructuring of its Viking operations
on March 27, 1997. In connection with the restructuring, Caliber
recorded a non-cash asset impairment charge of $225 million in 1996
operating expenses ($175 million net of tax or $4.43 per share) and an
$85 million ($56.4 million net of tax or $1.43 per share) restructuring
charge in the first quarter of 1997.
(b) Reflects the net after tax effect of $13.7 million (or $0.35 per
share) related to an employment tax settlement with the IRS in 1994.
</TABLE>
UNAUDITED COMPARATIVE PER SHARE DATA
The following table sets forth, for each of the periods
indicated, income per share from continuing operations, cash dividends per
share and book value per share for (1) FedEx on a historical basis, (2) Caliber
on a historical basis, (3) FDX on a pro forma basis (which reflects the
proposed transaction and assumes the pooling of interests method of
accounting), and (4) Caliber on an equivalent pro forma basis.
<TABLE>
<CAPTION>
Income per share
from Continuing
Operations Cash Dividends Book Value
---------------- -------------- ----------
<S> <C> <C> <C>
As of and for the Three Months Ended August 31, 1997
FedEx Historical (three months ended August 31, 1997)........ $1.22 $ -- $26.98
Caliber Historical (3 four-week accounting periods ended
September 13, 1997)...................... 0.83 0.10 13.25
FDX Pro Forma Combined....................................... 1.18 -- 24.18
Caliber Equivalent Pro Forma................................. 0.95 -- 19.35
As of and for the Year Ended May 31, 1997
FedEx Historical (year ended May 31, 1997)................... $3.12 $ -- $25.78
Caliber Historical (13 four-week accounting periods ended
June 21, 1997)............................................. (5.35) 0.64 12.52
FDX Pro Forma Combined....................................... 1.02 -- 23.57
Caliber Equivalent Pro Forma................................. 0.82 -- 18.86
As of and for the Year Ended May 31, 1996
FedEx Historical (year ended May 31, 1996)................... $2.69 $ --
Caliber Historical (year ended December 31, 1995)............ 2.34 1.40
FDX Pro Forma Combined....................................... 2.74 --
Caliber Equivalent Pro Forma................................. 2.20 --
As of and for the Year Ended May 31, 1995
FedEx Historical (year ended May 31, 1995)................... $2.63 $ --
Caliber Historical (year ended December 31, 1994)............ 2.50 1.40
FDX Pro Forma Combined....................................... 2.74 --
Caliber Equivalent Pro Forma................................. 2.20 --
</TABLE>
COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION
FedEx common stock and Caliber common stock are listed on the
New York Stock Exchange. The FedEx ticker symbol on the NYSE is FDX. The
Caliber ticker symbol on the NYSE is CBB.
The tables below set forth, for the calendar quarters
indicated, the reported high and low sale prices of FedEx common stock and
Caliber common stock as reported on the NYSE Composite Transaction Tape and
the dividends declared on such stock. The Caliber market prices have been
adjusted to reflect the spin-off of Roadway Express, Inc. on January 2, 1996.
FedEx effected a 2-for-1 stock split on November 5, 1996; the FedEx market
prices have been adjusted to reflect that split.
<TABLE>
<CAPTION>
FedEx Common Stock Caliber Common Stock
--------------------------------------- ----------------------------------------
Market Price Cash Market Price Cash
------------------------ Dividends ------------------------ Dividends
High Low Declared High Low Declared
---------- ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
1994
First Quarter....................... $38(15)/(16) $32(3)/(4) -- $74(1)/(4) $59(1)/(2) $0.35
Second Quarter...................... 40(3)/(8) 31(9)/(16) -- 72 62(1)/(2) 0.35
Third Quarter....................... 38(1)/(4) 29(3)/(4) -- 64(1)/(2) 53(3)/(4) 0.35
Fourth Quarter...................... 32(15)/(16) 26(3)/(4) -- 58 46 0.35
1995
First Quarter....................... $34(15)/(16) $29(15)/(16) -- $56(3)/(4) $47(3)/(4) $0.35
Second Quarter...................... 34(31)/(32) 29(1)/(4) -- 49(1)/(2) 42 0.35
Third Quarter....................... 42 30(1)/(8) -- 56(1)/(2) 45(1)/(2) 0.35
Fourth Quarter...................... 43 34(1)/(4) -- 53(1)/(2) 42(11)/(16) 0.35
1996
First Quarter....................... $39(3)/(16) $33(7)/(16) -- $50(1)/(4) $35(7)/(16) $0.18
Second Quarter...................... 41(1)/(4) 35(1)/(8) -- 43(7)/(8) 33(3)/(4) 0.18
Third Quarter....................... 41(7)/(8) 36(1)/(4) -- 34(1)/(4) 15(5)/(8) 0.18
Fourth Quarter...................... 45 38(13)/(16) -- 21(1)/(8) 15(7)/(8) 0.18
1997
First Quarter....................... $57(7)/(8) $42 -- $27 $19(1)/(4) $0.18
Second Quarter...................... 59(5)/(8) 49(1)/(2) -- 37(7)/(8) 24(3)/(8) 0.10
Third Quarter....................... 84(1)/(2) 56(3)/(8) -- 54(11)/(16) 35(3)/(4) 0.10
Fourth Quarter (through December 3). 81(1)/(4) 60(1)/(4) -- 61(15)/(16) 45(3)/(8) --
</TABLE>
Stockholders are urged to obtain current market quotations
prior to making any decision with respect to the proposals.
FedEx does not pay dividends. FDX does not intend to pay
dividends on FDX common stock after the transaction. FedEx and FDX believe
that it is more advantageous to stockholders for the company to reinvest its
earnings than to pay a cash dividend. FedEx is a "growth" company, and the
express industry is very capital intensive, requiring sizable investments in
aircraft, sort facilities and technology. Diverting cash to pay a dividend
might require FedEx to borrow additional funding or reduce its growth rate.
THE PROPOSALS
The discussion in this Joint Proxy Statement/Prospectus of
the Mergers and the principal terms of the Merger Agreement is subject to,
and qualified in its entirety by reference to, the Merger Agreement, a copy
of which is attached to this Joint Proxy Statement/Prospectus as Annex A,
and is incorporated herein by reference.
We are furnishing this Joint Proxy Statement/Prospectus to
holders of common stock, par value $0.10 per share ("FedEx Common Stock"), of
Federal Express Corporation, a Delaware corporation ("FedEx"), and holders of
common stock without par value ("Caliber Common Stock"), of Caliber System,
Inc., an Ohio corporation ("Caliber"), in connection with the solicitation of
proxies by the Board of Directors of FedEx for a special meeting of FedEx's
stockholders (the "FedEx Meeting") and by the Directors of Caliber (the
"Caliber Directors") for a special meeting of Caliber's shareholders (the
"Caliber Meeting"), and at any adjournments or postponements thereof (the
"FedEx Meeting" and the "Caliber Meeting" being referred to together as the
"Meetings").
At the FedEx Meeting, holders of FedEx Common Stock will be
asked to vote upon proposals (the "FedEx Proposals") to approve (i) the
issuance of shares of FDX Common Stock to Caliber shareholders in the Caliber
Merger (as such terms are defined below) and (ii) the adoption of the FDX 1997
Stock Incentive Plan (the "1997 Stock Incentive Plan"). At the Caliber
Meeting, holders of Caliber Common Stock will be asked to vote upon a proposal
(the "Caliber Merger Proposal") to adopt an Agreement and Plan of Merger dated
as of October 5, 1997 (the "Merger Agreement"), among FedEx, Caliber, FDX
Corporation, a Delaware corporation and a direct wholly-owned subsidiary of
FedEx ("FDX"), Fast Merger Sub Inc., a Delaware corporation and a direct
wholly-owned subsidiary of FDX ("Fast Merger Sub") and Tires Merger Sub Inc., a
Delaware corporation and a direct wholly-owned subsidiary of FDX ("Tires
Merger Sub"), and the transactions contemplated thereby.
The Merger Agreement provides for, among other things, the
merger of Tires Merger Sub with and into Caliber (the "Caliber Merger"), with
the result that Caliber will become a wholly-owned subsidiary of FDX. Upon
consummation of the Caliber Merger, each outstanding share of Caliber Common
Stock (other than shares for which dissenting shareholders' rights have been
properly exercised and perfected) will be converted into the right to receive
0.8 shares of common stock, par value $0.10 per share, of FDX ("FDX Common
Stock"). The Merger Agreement also provides that, immediately prior to the
Caliber Merger, FedEx will be reorganized by means of the merger of Fast
Merger Sub with and into FedEx (the "FedEx Reorganization Merger" and,
together with the Caliber Merger, the "Mergers"). The result of this
reorganization will be that FedEx will become a subsidiary of FDX. In the
FedEx Reorganization Merger, each outstanding share of FedEx Common Stock will
be converted into one share of FDX Common Stock. The FedEx Reorganization
Merger does not require the approval of the stockholders of FedEx, but is
conditioned upon, among other things, FedEx stockholder approval of the
issuance of shares of FDX Common Stock to the Caliber shareholders. FedEx
stockholders will not be entitled to exercise any dissenters' rights in
connection with the FedEx Reorganization Merger or other transactions
contemplated by the Merger Agreement.
The Mergers will become effective (the "Merger Date") at the
time of filing of a certificate of merger with the Ohio Secretary of State and
the filing of the Merger Agreement with the Delaware Secretary of State (or at
such other time as specified in the certificate of merger or in the Merger
Agreement), which is expected to occur as soon as practicable after the last
of the conditions precedent to the Mergers set forth in the Merger Agreement
has been satisfied or waived. However, at least ten days must elapse between
the Caliber Meeting and the Merger Date, and the Merger Date will not, in any
event, occur prior to January 2, 1998.
After the Merger Date, all shares of FedEx Common Stock will be
canceled and each certificate theretofore representing any such shares,
without any action on the part of the holder thereof, will be deemed to
represent an equivalent number of shares of FDX Common Stock. Shareholders of
Caliber Common Stock will receive transmittal forms from the exchange agent
accompanied by instructions specifying details of the exchange of their share
certificates. CALIBER SHAREHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES
UNTIL THEY RECEIVE A TRANSMITTAL FORM. Upon surrender of the certificates
representing shares of Caliber Common Stock, together with a properly
completed and executed transmittal form, to the exchange agent, each Caliber
shareholder will receive in exchange therefor certificates representing a
whole number of shares of FDX Common Stock and a check for any cash payable in
lieu of fractional shares, as applicable. See "The Merger Agreement--
Merger Consideration--Exchange of Shares."
THE MERGERS
Background of the Mergers
In January of 1997, Frederick W. Smith, Chairman of the Board,
President and Chief Executive Officer of FedEx, telephoned Daniel J. Sullivan,
Chairman, President and Chief Executive Officer of Caliber, to inquire as to
whether Caliber would be willing to consider the possible acquisition by FedEx
of Caliber's ground parcel subsidiary, RPS, Inc. ("RPS"), and Caliber's
surface expedited carrier subsidiary, Roberts Express, Inc. ("Roberts"), or,
alternatively, the possible acquisition by FedEx of all of Caliber. Mr.
Sullivan informed Mr. Smith that neither of those subsidiaries nor Caliber as
a whole was for sale, but said that he would review the matter with the
Caliber Directors.
Following a regular meeting of the Caliber Directors on
February 11 and 12 and consultation with Caliber's legal and financial
advisors, Mr. Sullivan informed Mr. Smith that none of Caliber, RPS or Roberts
was for sale and that Caliber's principal priority at the present time was the
pursuit of a financial restructuring of Caliber's superregional freight
carrier subsidiary, Viking Freight, Inc. ("Viking"). Mr. Sullivan suggested,
however, that Caliber might consider exchanging information with FedEx subject
to a customary confidentiality agreement. Following discussions among their
respective legal and financial advisors, on March 6, 1997, FedEx and Caliber
entered into a confidentiality agreement (the "Confidentiality Agreement"),
and throughout March and early April of 1997 Caliber and its advisors
exchanged information with FedEx and its advisors. On March 27, 1997, Caliber
announced that it would restructure Viking.
On April 4, 1997, Messrs. Smith, Sullivan and other senior
executives of FedEx and Caliber met to exchange information and to discuss a
possible FedEx proposal with respect to Caliber. On April 10, 1997,
representatives of FedEx proposed the acquisition by FedEx of all of the
outstanding shares of Caliber at a price of $32 per share in cash. This
proposal was subsequently confirmed in writing by Mr. Smith. Mr. Smith also
confirmed FedEx's willingness to make a portion of the consideration available
in FedEx Common Stock in order to provide for a partially tax-free transaction
to Caliber shareholders. Following discussions with the Caliber Directors and
Caliber's financial and legal advisors, Mr. Sullivan informed Mr. Smith on
April 11, 1997 that Caliber was not prepared to accept FedEx's proposal and
was not interested in continuing discussions with FedEx regarding a potential
business combination. Mr. Sullivan also requested that FedEx return all
materials concerning Caliber that had previously been provided to FedEx. The
materials were returned on April 11 and the discussions between FedEx and
Caliber terminated.
On August 8, 1997, representatives of FedEx's financial
advisor, Merrill Lynch & Co. ("Merrill Lynch"), contacted representatives of
Caliber's financial advisor, Goldman, Sachs & Co. ("Goldman Sachs"), and
indicated that FedEx might be willing to consider a merger with Caliber in
which holders of Caliber Common Stock would receive $50 per share in FedEx
Common Stock. Merrill Lynch suggested that the offer could be structured as a
stock-for-stock, tax-free, pooling of interests transaction. Following
discussions between representatives of Goldman Sachs and Merrill Lynch, Mr.
Sullivan and a representative of Goldman Sachs met in Washington, D.C. on
August 21, 1997, with Mr. Smith, representatives of Merrill Lynch, and other
senior executives of FedEx and Caliber to discuss FedEx's proposal and to
exchange information concerning Caliber and FedEx, respectively. Throughout
this time period, Mr. Sullivan kept the Caliber Directors apprised of the
course of the discussions.
On September 4, 1997, representatives of Merrill Lynch
contacted representatives of Goldman Sachs to inform Goldman Sachs that FedEx
would consider a merger with Caliber at an exchange ratio of 0.8 shares of
FedEx Common Stock for each outstanding share of Caliber Common Stock.
Following a preliminary due diligence review and several
discussions among Caliber's and FedEx's respective financial and legal
advisors during the period from September 4 to September 19, 1997, Messrs.
Smith, Sullivan and other senior executives of FedEx and Caliber met on
September 22, 1997. In that meeting, Mr. Sullivan asked FedEx to increase the
proposed 0.8 exchange ratio. However, the representatives of FedEx informed
Mr. Sullivan and the other representatives of Caliber that the 0.8 exchange
ratio represented FedEx's best and final offer.
A special meeting of the Caliber Directors was held on
September 23, 1997. At that meeting, Caliber's management and its financial
and legal advisors reviewed the circumstances with the Caliber Directors.
While no decision was made to accept the transaction proposed by FedEx, it was
the consensus of the Caliber Directors that it would be appropriate for
Caliber's management and legal and financial advisors to continue their due
diligence reviews and pursue negotiation of definitive documentation to
determine whether an acceptable transaction could be negotiated for subsequent
consideration by the Caliber Directors. Mr. Sullivan so informed Mr. Smith on
September 23, 1997.
From September 25 through October 4, 1997, representatives of
FedEx, Caliber and their respective advisors exchanged information and
conducted due diligence and negotiations regarding definitive documentation
for the Mergers. FedEx also requested that Caliber and its legal advisors
contact certain significant shareholders of Caliber, including Mr. G. James
Roush (who is also a Caliber Director), to request those shareholders to enter
into an agreement to vote in favor of the Caliber Merger Proposal and the
approval and adoption of the Merger Agreement. The terms of the Voting
Agreement (as hereinafter defined) were thereafter negotiated among the
parties thereto.
On October 5, 1997, meetings of the Caliber Directors and of
the Board of Directors of FedEx were held, and the Caliber Directors
unanimously approved, and the FedEx Board of Directors by unanimous vote of all
directors present (four directors being absent) approved, the Merger
Agreement, the Voting Agreement and the transactions contemplated thereby.
FedEx's Reasons for the Mergers; Recommendation of the FedEx Board of Directors
The Board of Directors and the management of FedEx believe that
the Mergers are fair to and in the best interests of the stockholders of
FedEx. FedEx believes that FDX will be able, following the Mergers, to offer
to its customers a broader portfolio of services and choices at a level of
excellence unmatched by any competitor. Caliber offers its customers
cost-competitive, reliable service in the non-express delivery segment, as
well as leading-edge information systems, which will complement the services
currently offered by FedEx. FDX, following the Mergers, will be able to offer
its customers (a) fast, reliable and time-definite express delivery, (b)
expedited surface delivery of critical freight-shipments, (c)
business-to-business non-express delivery of packages, (d) regional
"less-than-truckload" freight service and (e) integrated information and
logistics solutions.
The management of FedEx believes that this is a transaction in
which the whole is much greater than the sum of the parts. The service
offerings and core markets of the two companies are complementary and will
permit FDX to provide a comprehensive, worldwide service offering which covers
not only the whole distribution chain but includes logistics planning services
for integrated delivery and transportation strategies. Following the Mergers,
the sales forces of the two companies will be able to sell the complete line
of products and services of all of the subsidiaries of FDX to customers in a
broad spectrum of industries, utilizing industry expertise of the two
companies' sales forces.
The Caliber Merger is an important strategic move for FedEx,
intended to strengthen its competitive position. By acquiring Caliber, FDX
will obtain an extensive ground-service infrastructure that might have taken
years for FedEx to develop on its own and substantially greater capability to
serve ground markets than it had, or would have had, without expenditure of
capital and internal growth, on its own. Revenues are expected to be enhanced
by operating the two companies under one new holding company; bringing the two
companies together is expected to permit the realization of certain synergies
and to create the potential for greater growth than either Caliber or FedEx
have experienced in the past. FedEx expects to offer certain of Caliber's
services (in particular those of RPS, the Caliber subsidiary which specializes
in package delivery) through FedEx's automated service system quickly and
inexpensively. This will permit customers to select a broader range of
services from a single desk top computer or other customer automation
alternative and FDX to match more closely its customers' needs with the most
appropriate services. It is expected that FDX will be able to deliver more
packages in both the express and non-express sectors than would have been the
case had the two companies continued to operate separately. Management expects
that the volumes and traffic levels of both FedEx and Caliber (and, in
particular, of RPS, the Caliber subsidiary which specializes in package
delivery) will increase as a result of coordinated sales efforts, permitting
customers "one-stop" shopping for integrated distribution services in
different segments.
FedEx proposed the structure of the transaction because it
believes it is the most sensible manner in which to accomplish the acquisition
of Caliber in order to achieve the benefits described above, minimizing, among
other things, any adverse tax consequences to the stockholders of FedEx and
Caliber and other potential costs of an acquisition. In addition, the
labor-jurisdictional status of the two companies will remain unchanged since
FedEx and Caliber will be operated separately. The stockholders of both
Caliber and FedEx will have an opportunity, since they will receive shares of
the new parent company, FDX, to participate in any future growth of the
combined business.
The Board of Directors of FedEx has approved, by a unanimous
vote of those directors present, the FedEx Reorganization Merger, the Caliber
Merger, the Merger Agreement, and the issuance of the FDX Common Stock in
connection with the Mergers. The Board of Directors of FedEx recommends that
the stockholders of FedEx vote in favor of the FedEx Proposals.
This document (including documents that have been incorporated
herein by reference) includes various forward-looking statements with respect
to the Mergers about Caliber, FedEx and FDX that are subject to risks and
uncertainties. Forward-looking statements include the information concerning
expectations of future results of operations and synergies of FDX after the
Merger Date, set forth in this section and under "Questions and Answers About
the Transaction", "Summary", "--Background of the Mergers", "--Caliber's
Reasons for the Caliber Merger; Recommendation of the Caliber Directors" and
those preceded by, followed by or that otherwise include the words "believes,"
"expects," "anticipates," "intends," "estimates," or similar expressions. For
those statements, Caliber, FedEx and FDX claim the protection of the safe
harbor for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995.
Caliber's Reasons for the Caliber Merger; Recommendation of the Caliber
Directors
Reasons for the Caliber Merger. At its October 5, 1997
meeting, the Caliber Directors determined that the Caliber Merger was fair to
and in the best interests of Caliber and its shareholders and approved the
Merger Agreement. Such determination and action were based upon various
factors, including the Caliber Directors' consideration of the following at
their October 5, 1997 and prior meetings:
(i) The strategic alternatives available to Caliber on a
stand-alone basis, including a perceived long-term need for Caliber to
offer a broader array of transportation and related services and to obtain
air delivery capacity and the substantial capital and other costs required
therefor;
(ii) The strategic fit between FedEx and Caliber, including
the opportunity for significant revenue synergies;
(iii) The belief, based in part on informal targeted
inquiries made at the request of Caliber by Goldman Sachs, that it was not
likely that any other entity would propose a transaction that would be
superior to the Caliber Merger;
(iv) The terms of the Merger Agreement, which would,
subject to certain restrictions, permit Caliber to terminate the Merger
Agreement upon payment of a $100 million termination fee if a superior
proposal with respect to Caliber were made (see "The Merger Agreement--
Termination of the Merger Agreement");
(v) The course of the discussions with representatives of
FedEx relating to the Caliber Merger, including the price indication given
by FedEx in April 1997 (see "--Background of the Mergers") and the
discussions on September 22, 1997 at which representatives of FedEx
informed representatives of Caliber that the 0.8 exchange ratio represented
FedEx's best and final offer;
(vi) Historical and forecasted financial information relating
to Caliber and FedEx (see "--Opinion of Caliber's Financial Advisor"), the
results of Caliber's due diligence examination of FedEx and other exchanges
of information with FedEx;
(vii) The terms of the exchange ratio, including the fact
that the Exchange Ratio was fixed, and historical market prices for Caliber
and FedEx Common Stock, including the increases therein during 1997 as
compared to other stock market standards;
(viii) The opinion of Goldman Sachs dated as of October 5,
1997 to the effect that, as of such date, the Caliber Merger Consideration
(as defined below) was fair from a financial point of view to the holders
of Caliber Common Stock (see "--Opinion of Caliber's Financial Advisor");
(ix) The expectation that the transaction would be accomplished
on a tax-free basis for federal income tax purposes (except for tax payable on
cash received by Caliber shareholders for fractional shares or pursuant to the
exercise and perfection of dissenters's rights) and accounted for as a "pooling
of interests" transaction; and
(x) The other material terms of the Caliber Merger and the
Merger Agreement, including the matters described under "--Interests of
Certain Persons in the Merger--Caliber."
The Caliber Directors also considered certain risks arising in
connection with the Caliber Merger, including the potential disruption of
Caliber's business that might result from the announcement of the Caliber
Merger, the possibility that the Caliber Merger might not be consummated and
the fact that the exchange ratio was fixed and would therefore not change as a
result of fluctuations in the market price for FedEx Common Stock or Caliber
Common Stock or otherwise. In the view of the Caliber Directors, these
considerations were not sufficient, either individually or in the aggregate,
to outweigh the advantages of the Caliber Merger.
The foregoing discussion of the information and factors
considered by the Caliber Directors is not intended to be exhaustive but is
believed to include all material factors considered by the Caliber Directors.
In view of the wide variety of factors, both positive and negative, considered
by the Caliber Directors, the Caliber Directors did not find it practical to,
and did not, quantify or otherwise seek to assign relative weights to the
specific factors considered. After taking into consideration all of the
factors set forth above as of the date of this Joint Proxy Statement/
Prospectus, the Caliber Directors continue to believe that the Caliber Merger
is in the best interests of Caliber and its shareholders and continue to
recommend approval and adoption of the Merger Agreement and approval of the
Caliber Merger.
Caliber Board Recommendation. The Caliber Directors have
determined that the Caliber Merger is fair to, and in the best interests of,
the shareholders of Caliber, have unanimously approved the Merger Agreement and
the Caliber Merger, and recommended that the shareholders of Caliber vote to
adopt the Merger Agreement.
Opinion of Caliber's Financial Advisor
On October 5, 1997, Goldman Sachs delivered its oral opinion
(which it subsequently confirmed in writing as of such date) to the Caliber
Directors, that as of such date, the Caliber Merger Consideration (as defined
below) pursuant to the Merger Agreement was fair from a financial point of
view to the holders of Caliber Common Stock.
The full text of the written opinion of Goldman Sachs dated
October 5, 1997, which sets forth assumptions made, matters considered and
limitations on the review undertaken in connection with the opinion, is
attached as Annex B to this Joint Proxy Statement/Prospectus and is
incorporated herein by reference. Holders of Caliber Common Stock are urged
to, and should, read such opinion in its entirety.
In connection with its opinion, Goldman Sachs reviewed, among
other things, (i) the Merger Agreement; (ii) Annual Reports to Stockholders
and Annual Reports on Form 10-K of Caliber for the five years ended December
31, 1996 and of FedEx for the five fiscal years ended May 31, 1997; (iii)
certain interim reports to stockholders and Quarterly Reports on Form 10-Q of
Caliber and FedEx; (iv) certain other communications from Caliber and FedEx to
their respective stockholders; and (v) certain internal financial analyses and
forecasts for Caliber prepared by its management. Goldman Sachs also held
discussions with members of the senior managements of Caliber and FedEx
regarding the past and current business operations, financial condition and
future prospects of their respective companies. In addition, Goldman Sachs
reviewed the reported price and trading activity for the Caliber Common Stock
and the FedEx Common Stock, compared certain financial and stock market
information for Caliber and FedEx with similar information for certain other
companies the securities of which are publicly traded, reviewed the financial
terms of certain recent business combinations in the freight transportation
industry specifically and in other industries generally and performed such
other studies and analyses as it considered appropriate.
Goldman Sachs relied upon the accuracy and completeness of all
of the financial and other information reviewed by it and assumed such
accuracy and completeness for purposes of rendering its opinion. Goldman
Sachs was informed by FedEx that forecasts reflecting recent developments for
FedEx beyond fiscal year 1998 were not available. Accordingly, Goldman Sachs'
review of such information for purposes of rendering its opinion was limited
to discussions with the management of FedEx regarding analysts' estimates for
fiscal year 1999. In addition, Goldman Sachs did not make an independent
evaluation or appraisal of the assets and liabilities of Caliber or FedEx or
any of their subsidiaries and was not furnished with any such evaluation or
appraisal, except for an evaluation or appraisal of Caliber's
less-than-truckload carrier division (formerly the Viking Division) prepared
by an outside advisor to Caliber. Goldman Sachs assumed, with Caliber's
consent, that the transaction contemplated by the Merger Agreement will be
accounted for as a pooling of interests under generally accepted accounting
principles ("GAAP"). Goldman Sachs' advisory services and the opinion
expressed herein were provided for the information and assistance of the
Caliber Directors in connection with their consideration of the transaction
contemplated by the Merger Agreement and such opinion does not constitute a
recommendation as to how any Caliber shareholder should vote with respect to
such transaction.
The following is a summary of certain of the financial analyses
used by Goldman Sachs in connection with providing its opinion to the Caliber
Directors on October 5, 1997 which it reviewed with the Caliber Directors in
connection with that meeting.
(i) Public Market Analysis. Goldman Sachs reviewed and
compared certain financial information relating to Caliber to corresponding
financial information, ratios and public market multiples for 17 publicly
traded corporations (the "Comparable Companies") and grouped these
corporations into the following comparable groups: (a) the long-haul less-
than-truckload group comprised of CNF Transportation Inc. ("CNF") and
Yellow Corporation ("Yellow"); (b) the regional less-than-truckload group
comprised of American Freightways Corporation ("American Freightways"),
Arnold Industries Inc. ("Arnold"), Old Dominion Freight Line, Inc. ("Old
Dominion") and US Freightways Corporation ("US Freightways"); (c) the
parcel delivery group comprised of FedEx and Airborne Freight Corporation
("Airborne"); (d) the transportation leasing/integrated logistics group
comprised of GATX Corporation, Rollins Truck Leasing Corp., Ryder System,
Inc. and NFC PLC; and (e) the freight forwarding/logistics group comprised
of Air Express International Corporation, Eagle USA Airfreight, Inc.,
Expeditors International of Washington Inc., Fritz Companies, Inc. and
Circle International Group Inc.
The Comparable Companies were chosen because they are
publicly-traded companies with operations that for purposes of analysis may be
considered similar to certain operations of Caliber. Within the Comparable
Companies, Goldman Sachs performed additional analyses for the following eight
corporations: CNF, Yellow, American Freightways, Arnold, Old Dominion, US
Freightways, FedEx and Airborne (the "Selected Companies").
On the same basis, Goldman Sachs also calculated and compared
various financial multiples and ratios for Caliber using a price of $54.25 per
share of Caliber Common Stock, the closing price of the Caliber Common Stock
on the NYSE on October 1, 1997. The multiples and ratios for Caliber were
based on publicly available information and information provided by Caliber's
management and the multiples for each of the Selected Companies were based on
the most recent publicly available information.
With respect to the Comparable Companies, Goldman Sachs
considered levered market capitalization (i.e., market value of common equity
plus estimated market value of debt less cash) as a multiple of latest 12
months ("LTM") sales, as a multiple of LTM earnings before interest, taxes,
depreciation and amortization ("EBITDA") and, with respect only to the
Selected Companies, as a multiple of LTM earnings before interest and taxes
("EBIT"). Goldman Sachs' analyses of the Comparable Companies indicated
levered multiples of LTM sales, which ranged from 0.3x to 5.0x; LTM EBITDA,
which ranged from 4.5x to 24.7x; and, with respect only to the Selected
Companies, LTM EBIT, which ranged from 11.2x to 22.0x, compared to levered
multiples of 1.0x, 6.8x and 10.5x respectively, for Caliber. Goldman Sachs
also considered 1997 estimated price/earnings ("P/E") ratios for the
Comparable Companies based on calendarized earnings estimates provided by
Institutional Brokers Estimate System ("IBES"), which ranged from 10.8x to
39.7x compared to 22.1x for Caliber based on estimates provided by Caliber's
management and estimated 1998 P/E ratios for the Comparable Companies based on
calendarized earnings estimates provided by IBES, which ranged from 8.9x to
29.9x compared to 17.8x for Caliber based on estimates provided by Caliber's
management; a five-year earnings per share ("EPS") growth rate (provided by
IBES) ranging from 8.0% to 25.0% for the Comparable Companies compared to
10.0% for Caliber; and dividend yields ranging from 0.0% to 2.7% for the
Comparable Companies compared to 0.7% for Caliber.
(ii) Private Market Analysis. Goldman Sachs analyzed
certain information relating to selected transactions in the freight
transportation industry since 1986 (the "Selected Transactions"). Such
analysis indicated that for the Selected Transactions (i) levered aggregate
consideration as a multiple of LTM sales ranged from 0.1x to 3.0x, compared
to 1.14x for the levered aggregate consideration to be paid pursuant to the
Caliber Merger; (ii) levered aggregate consideration as a multiple of LTM
EBITDA ranged from 1.1x to 14.7x, compared to 8.0x for the levered
aggregate consideration to be paid pursuant to the Caliber Merger; and
(iii) levered aggregate consideration as a multiple of LTM EBIT ranged from
5.3x to 19.2x, compared to 12.3x for the levered aggregate consideration to
be paid pursuant to the Caliber Merger.
(iii) Discounted Cash Flow Analysis. Goldman Sachs
performed a discounted cash flow analysis for Caliber using Caliber's
management's estimates for Caliber for the years 1998 through 2002.
Goldman Sachs calculated a net present value of free cash flows for the
years 1998 through 2002 applying various discount rates to the free cash
flows to be generated by the segments of Caliber's business and calculating
the net present values of such cash flows on a segment by segment basis.
In calculating the net present value of the free cash flows, Goldman Sachs
also applied a sensitivity analysis to each of the business segments.
Based on this analysis the implied per share values of the Caliber Common
Stock ranged from $49.62 to $65.63.
(iv) LBO Analysis. Goldman Sachs performed a summary
leveraged buyout ("LBO") analysis based on Caliber's management's estimates
and discussions for the years 1998 through 2002. The analysis was based on
a range of purchase prices, from $50.00 per share to $75.00 per share, to
calculate the implied equity returns based on a terminal EBITDA multiple in
the year 2002. At $50.00 per share, between a range of terminal EBITDA
multiples of 5.0x to 10.0x, the implied equity returns were 17% to 39%. At
$75.00 per share, between a range of terminal EBITDA multiples of 5.0x to
10.0x, the implied equity returns were 2% to 22%.
(v) Caliber Discounted Future Stock Price Analysis.
Goldman Sachs performed a discounted future stock price analysis for the
Caliber Common Stock by analyzing the sensitivity of the year 2002 stock
price as a function of EPS growth rate and P/E multiples. Goldman Sachs
calculated a net present value of the end of year 2002 stock price for the
Caliber Common Stock using a discount rate of 12% and Caliber's
management's EPS estimate for Caliber for 1998. Goldman Sachs calculated a
range of present values of stock prices by applying five year EPS growth
rates ranging from 5.0% to 15.0% and P/E multiples ranging from 15.0x to
21.0x. Based on this analysis, the present value per share of the Caliber
Common Stock year 2002 per share price ranged from $38.45 to $84.84.
(vi) FedEx Discounted Future Stock Price Analysis. Goldman
Sachs performed a discounted future stock price analysis for the FedEx
Common Stock by analyzing the sensitivity of the year 2002 stock price as a
function of EPS growth rate and P/E multiples. Goldman Sachs calculated a
net present value of the end of year 2002 stock price for the FedEx Common
Stock using a discount rate of 12% and EPS estimates provided by IBES for
1998. Goldman Sachs calculated a range of present values of stock prices
by applying five year EPS growth rates ranging from 10.0% to 20.0% and P/E
multiples ranging from 15.0x to 21.0x. Based on this analysis, the present
value per share of FedEx Common Stock year 2002 per share price ranged from
$54.83 to $118.60.
(vii) Contribution Analysis. Goldman Sachs reviewed
certain historical and estimated future operating and financial information
including, among other things, revenues, EBITDA, EBIT, net income, book
value, levered market capitalization and equity market capitalization for
Caliber, FedEx and the pro forma combined entity resulting from the Mergers
based on Caliber's and FedEx's managements' financial forecasts for Caliber
and FedEx, respectively. This analysis indicated that in 1998 Caliber
would contribute 15.9% to combined revenues, 16.5% to combined EBITDA,
19.7% to combined EBIT, 20.5% to combined net income, 14.9% to combined
book value, 18.0% to combined levered market capitalization and 18.8% to
combined equity market capitalization. This analysis further indicated
that in 1999 Caliber would contribute 22.9% to combined net income.
(viii) Relative Exchange Ratio Analysis. Goldman Sachs
reviewed the pre-announcement historical trading prices and volumes for the
Caliber Common Stock and the FedEx Common Stock for each of the following
dates or periods: the closing price per share on October 1, 1997; the
weighted average share prices for the prior 30 days, 90 days, six months
and one year; and since Caliber's spin-off of Roadway Express, Inc. For
each of these periods, Goldman Sachs compared the closing price per share
or the weighted average trading price of the Caliber Common Stock to the
closing price per share or weighted average trading price of the FedEx
Common Stock and derived for each such period the following implied
exchange ratios: 0.68 based on the October 1, 1997 closing price per share;
0.63 based on the prior 30 day weighted average share price; 0.61 based on
the prior 90 day weighted average share price; 0.57 based on the prior six
month weighted average share price; 0.56 based on the prior one year
weighted average share price; and 0.62 since Caliber's spin-off of Roadway
Express, Inc.
(ix) Summary Merger Analysis. Goldman Sachs reviewed
Caliber's management's estimates of EPS (adjusted to a May fiscal year
end). Goldman Sachs also reviewed FedEx's management's estimates of EPS
for FedEx for fiscal year 1998 and analysts' estimates of EPS for FedEx for
fiscal year 1999. Goldman Sachs then reviewed the pro forma EPS effect on
the FDX Common Stock based on the exchange ratio and assuming the
achievement of synergies ranging from zero to $150 million. This analysis
indicated that, for the fiscal year ending May 1998, the transaction would
be slightly dilutive to EPS if no synergies were achieved, would be
accretive to EPS if $50 million in synergies were achieved and would be
accretive to EPS at all levels of achievement of synergies above $50
million, and that, for the fiscal year ending May 1999, the transaction
would be accretive to EPS at all levels of synergies.
The preparation of a fairness opinion is a complex process and
is not necessarily susceptible to partial analysis or summary description.
Selecting portions of the analyses or of the summary set forth above, without
considering the analyses as a whole, could create an incomplete view of the
processes underlying Goldman Sachs' opinion. In arriving at its fairness
determination, Goldman Sachs considered the results of all such analyses. No
single company or transaction used in the above analyses as a comparison is
directly comparable to Caliber or FedEx or the contemplated transaction. The
analyses were prepared solely for purposes of Goldman Sachs providing its
opinion to the Caliber Directors as to the fairness from a financial point of
view of the Caliber Merger Consideration to the holders of Caliber Common
Stock and do not purport to be appraisals or necessarily reflect the prices at
which businesses or securities actually may be sold. Analyses based upon
forecasts of future results are not necessarily indicative of actual future
results, which may be significantly more or less favorable than suggested by
such analyses. Because such analyses are inherently subject to uncertainty,
being based upon numerous factors or events beyond the control of the parties
or their respective advisors, none of Caliber, FedEx, Goldman Sachs or any
other person assumes responsibility if future results are materially different
from those forecast. As described above, Goldman Sachs' opinion to the
Caliber Directors was one of many factors taken into consideration by the
Caliber Directors in making their determination to approve the Merger
Agreement. The foregoing summary does not purport to be a complete
description of the analysis performed by Goldman Sachs and is qualified by
reference to the written opinion of Goldman Sachs set forth in Annex B hereto.
Goldman Sachs, as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings,
competitive biddings, secondary distributions of listed and unlisted
securities, private placements, and valuations for estate, corporate and other
purposes. Caliber selected Goldman Sachs as its financial advisor because it
is a nationally recognized investment banking firm that has substantial
experience in transactions similar to this one.
Goldman Sachs is familiar with Caliber, having acted as its
financial advisor with respect to the spin-off of Roadway Express, Inc. to
shareholders in 1996 and divestiture of Caliber's Central Freight Lines Inc.
unit in 1997, having acted as its lead manager in connection with the issuance
of $200 million principal amount of Caliber's 7.80% senior notes due July 15,
2006, and having acted as its financial advisor in connection with the Caliber
Merger.
Goldman Sachs has also provided certain investment banking
services to FedEx and its subsidiaries from time to time, including having
participated as a lead co-manager in numerous issuances of lease debt pass
through certificates and other debt securities. Goldman Sachs may provide
investment banking services to FedEx and its subsidiaries in the future.
Goldman Sachs provides a full range of financial, advisory and brokerage
services and in the course of its normal trading activities, may from time to
time effect transactions and hold securities, including derivative securities,
of Caliber or FedEx for its own account and for the accounts of its customers.
Pursuant to a letter agreement dated January 28, 1997 (the
"Engagement Letter"), Caliber engaged Goldman Sachs to act as its exclusive
financial advisor in connection with the acquisition of Caliber by FedEx.
Pursuant to the terms of the Engagement Letter, Caliber has agreed to pay
Goldman Sachs a fee of $500,000 and a fee of 0.65% of the aggregate
consideration to be paid by FedEx (as described in the Engagement Letter) less
any fees already then paid. Caliber has agreed to reimburse Goldman Sachs for
its reasonable out-of-pocket expenses, including attorney's fees, and to
indemnify Goldman Sachs against certain liabilities, including certain
liabilities under the federal securities laws.
Interests of Certain Persons in the Mergers-- Caliber
Certain Caliber Directors and members of Caliber management may
be deemed to have interests in the Caliber Merger that are different from, or
in addition to, the interests of Caliber shareholders generally. The Caliber
Directors were aware of these interests and considered them, among other
matters, in approving the Merger Agreement and in recommending that Caliber
shareholders vote in favor of the Caliber Merger and the adoption of the
Merger Agreement. See "--Caliber's Reasons for the Caliber Merger;
Recommendation of the Caliber Directors." These interests are described below.
Management Retention Agreements. Caliber has in place existing
Management Retention Agreements (the "MRAs") which contain "change of control"
provisions with 20 officers and key employees of Caliber and its subsidiaries
(the "Covered Employees"). There are four "tiers" of MRAs, which are
substantially the same except for the differences noted below.
In the event a Covered Employee's employment is terminated in a
"Qualifying Termination" within 24 months of a "change in control", Caliber
will, within five days of the termination, make a lump sum cash payment equal
to the sum of (i) the Covered Employee's earned but unpaid base salary through
the date of termination, (ii) a pro rata portion (based on the number of days
worked during the year) of the greater of the Covered Employee's target bonus
opportunity or actual bonus payable for the year of termination, (iii) any
compensation previously deferred or earned and all accrued unpaid vacation,
(iv) a lump sum payment equal to two times (three times for Mr. Sullivan) the
sum of the Covered Employee's base salary and target bonus opportunity for the
year of termination, (v) the actuarial present value as of the date of
termination of the Covered Employee's accrued benefits under Caliber's
non-qualified pension programs and (vi) the actuarial present value as of the
date of termination of an additional 24 months (36 months for Mr. Sullivan) of
contributions or accruals under Caliber's retirement and savings programs.
With respect to Caliber's pension programs, Mr. Sullivan receives credit for
additional age and service to enable him to qualify for certain early
retirement subsidies. In addition, Caliber would provide (i) continued
coverage under certain welfare benefits for 24 months (36 months for Mr.
Sullivan) following the date of termination and (ii) outplacement services for
12 months following the date of termination. The consummation of the Caliber
Merger will constitute a "change in control" under the MRAs.
Under the MRAs, a "Qualifying Termination" is any termination
of a Covered Employee without cause by Caliber or its successor or any
termination by a Covered Employee with "Good Reason". "Good Reason" is
defined to mean any of the following events occurring after a change in
control: (i) a reduction in a Covered Employee's base salary, target bonus
opportunity or participation in incentive compensation plans as in effect
before the change in control, (ii) a material diminution in the Covered
Employee's duties or the assignment of duties materially inconsistent with his
or her duties in effect immediately before the change in control, (iii) the
loss of any of the Covered Employee's titles or positions held before the
change in control, (iv) a required relocation of the Covered Employee of more
than 50 miles from his or her primary office at the time of the change in
control, or (v) the failure of any successor of Caliber to assume the MRAs.
In addition, a voluntary termination within the 30 day period following the
first anniversary of a change in control will be considered a "Qualifying
Termination" for 13 of the Covered Employees.
Five officers of Caliber and one officer of a subsidiary of
Caliber have MRAs that further provide that if any payment to a Covered
Employee will be subject to any excise tax under Section 4999 of the Internal
Revenue Code of 1986, as amended (the "Code"), a gross-up payment will be made
to place the Covered Employee in the same net after-tax position as would have
been the case if no excise tax had been payable. Such gross-up payment, if
required, will also compensate such Covered Employees for any tax under
Section 4999 with respect to the acceleration of certain options to purchase
shares of Caliber Common Stock ("Caliber Stock Options") and stock awards
described under "Equity Arrangements" below. The remaining 14 MRAs provide
that if any payment to a Covered Employee will be subject to any excise tax
under Section 4999 of the Code, the payments to the Covered Employee will be
reduced to the maximum amount that would not be subject to an excise tax, but
only if such cut back yields a better after-tax result for the Covered
Employee.
With respect to the seven Covered Employees who are officers of
Caliber, the Caliber Merger will result in payments being required to be made
as of the Merger Date under the pre-existing terms of their MRAs. The
following table sets forth the names and positions of each Caliber officer and
the expected net cash amount each such officer will receive under the MRAs on
an after-tax basis assuming a January 2, 1998 Merger Date.
<TABLE>
<CAPTION>
Cash Amount
Name Position Payable
- ------------------ ----------------------------------------------------------- -----------
<S> <C> <C>
D. J. Sullivan Chairman, President and Chief Executive Officer $2,871,137
D. C. Brown Vice President - Human Resources $ 455,780
K. W. Dindo Vice President and Controller $ 445,960
D. B. Edmonds Vice President - Corporate Marketing and Sales $ 285,176
J. E. Lynch, Jr. Vice President, General Counsel and Secretary $ 591,744
R. J. Quinn Vice President - Corporate Planning $ 394,766
L. J. Valerio Senior Vice President - Finance and Chief Financial Officer $ 739,589
</TABLE>
Equity Arrangements. Pursuant to the Merger Agreement, all
outstanding Caliber Stock Options will be converted into options to purchase
FDX Common Stock. See "The Merger Agreement--Stock Options". Under the
1996 Equity Incentive Compensation Plan previously approved by Caliber
shareholders (the "1996 EICP"), the vesting of all Caliber Stock Options
outstanding under the 1996 EICP will be accelerated on the Merger Date in
accordance with its pre-existing terms. On the date of this Joint Proxy
Statement/ Prospectus, the following Caliber officers held the following
unvested Caliber Stock Options under the EICP:
Exercise Price Per
Name Unvested Options Share
- ------------------ ------------------------ ------------------
D. J. Sullivan 94,643 $38.500
D. C. Brown 11,455 $38.500
K. W. Dindo 10,110 $38.500
D. B. Edmonds 8,883 $38.500
J. E. Lynch, Jr. 32,539 $20.875
R. J. Quinn 8,883 $38.500
L. J. Valerio 75,000 $16.750
Under the 1996 EICP, the vesting of all grants of restricted
Caliber Common Stock will be accelerated in accordance with its pre-existing
terms. On the date of this Joint Proxy Statement/Prospectus, the following
Caliber officers held the following numbers of shares of restricted Caliber
Common Stock under the 1996 EICP: D. J. Sullivan, 15,143 shares; L. J.
Valerio, 25,000 shares; J. E. Lynch, Jr., 7,008 shares; D. C. Brown, 3,055
shares; D. B. Edmonds, 2,369 shares; K. W. Dindo, 2,696 shares; and R. J.
Quinn, 2,369 shares.
Under the Long-Term Stock Award Incentive Plan adopted in 1991
(the "Stock Award Plan"), the distribution of all stock credits credited to
participant accounts will be accelerated on the Merger Date in accordance
with its pre-existing terms. On the date of this Joint Proxy Statement/
Prospectus, the following Caliber officers were credited with the following
numbers of shares of stock credits under the Stock Award Plan: D.J.
Sullivan, 10,218 shares; L.J. Valerio, 0 shares; J.E. Lynch, Jr., 255
shares; D.C. Brown, 1,802 shares; D.B. Edmonds, 253 shares; K.W.
Dindo, 1,104 shares; and R.J. Quinn, 64 shares.
Change in Control Severance Plan. Caliber has in place an
existing Change in Control Severance Pay Plan (the "Plan") to provide
severance benefits to individuals employed by Caliber or Services Development
Corporation in Akron, Ohio or Arlington, Virginia who are terminated without
cause within 12 months of a "change in control". The Plan does not cover any
employee subject to a MRA described above. The amount of benefits provided
under the Plan depends upon an eligible employee's length of service, but
eligible employees will receive severance benefits equal to between 12 and 52
weeks of salary and "target" bonus. The Plan also provides for continued
medical coverage for a specified period after termination. The Caliber Merger
will constitute a "change in control" under the Plan.
Non-Employee Directors' Arrangements. Under the pre-existing
terms of the Directors' Charitable Award Program (the "Program"), all
non-employee directors of Caliber (the "Directors") who are not fully vested
under the Program (there are currently two such directors) will be vested in
the maximum charitable contribution available under the Program upon a "change
in control". The Caliber Merger will constitute a "change in control" under
the Program.
For a specified time after the Mergers, FedEx will appoint each
of the Directors to serve on the board of directors of a subsidiary of FDX
that will be considered a successor to Caliber for purposes of certain of
Caliber's non-employee directors' benefit plans.
Indemnification Agreements. The Merger Agreement provides that
certain indemnification and insurance arrangements in favor of existing
officers and directors of Caliber, subject to certain limitations, will be
continued following the Merger Date. See "The Merger Agreement--Certain
Covenants."
Employment with FedEx. Under the Merger Agreement, FedEx has
stated that it intends to offer employment after the Merger Date to each
employee of Caliber at its Akron, Ohio location who is willing to relocate his
or her place of employment to Memphis, Tennessee or such other location
designated by FedEx.
It is currently expected that FDX and Mr. Sullivan will enter
into an employment and non-competition agreement and that as of the Merger
Date Mr. Sullivan will become President and Chief Executive Officer of RPS
pursuant to that agreement. If FDX and Mr. Sullivan do not enter into a
definitive employment agreement. Mr. Sullivan's employment with Caliber
will terminate on the Merger Date and he will be paid $4,100,000 in
consideration for the execution of an agreement on customary terms
prohibiting Mr. Sullivan from competing with the business of RPS for the
four year period beginning on the Merger Date.
Interests of Certain Persons in the Mergers--FedEx
Certain members of the management and the directors of FedEx
may be deemed to have interests in the Mergers that are different from, or in
addition to, the interests of FedEx stockholders generally. The Board of
Directors of FedEx was aware of these interests and considered them, among
other matters, in approving the Merger Agreement and in recommending that
FedEx stockholders vote in favor of the issuance of the FDX Common Stock in
connection with the Caliber Merger.
The Merger Agreement provides that certain indemnification and
insurance arrangements in favor of the existing officers and directors of
FedEx will be continued, subject to certain limitations, following the Merger
Date. See "The Merger Agreement--Certain Covenants." In addition, the
directors of FedEx prior to the Merger Date will become the directors of
FDX following the Merger Date. Frederick W. Smith, chairman, president
and chief executive officer of FedEx, will become chairman, president and
chief executive officer of FDX following the Merger Date. Alan B. Graf,
Jr. and Kenneth R. Masterson, executive vice presidents of FedEx, and T.
Michael Glenn and Dennis H. Jones, senior vice presidents of FedEx, will
all become executive vice presidents of FDX.
Accounting Treatment
Both Mergers are intended to qualify as a pooling of interests
for accounting and financial reporting purposes under GAAP. Under this method
of accounting, the recorded assets and liabilities and the operating results
of both FedEx and Caliber will be carried forward to the operations of FDX at
their recorded amounts. Results of operations will include the results of
both FedEx and Caliber for the entire fiscal year of FDX in which the Mergers
occur.
Consummation of the Mergers is conditioned upon (i) receipt by
FedEx from Arthur Andersen LLP, their independent accountants, of a written
letter in form and substance reasonably satisfactory to FedEx, confirming
management's assessment that the Mergers will qualify for pooling of interests
accounting treatment under GAAP and (ii) receipt by Caliber from Ernst & Young
LLP, their independent accountants, of a written letter in form and substance
reasonably satisfactory to Caliber confirming management's assessment that no
conditions exist relating to Caliber which would preclude FedEx from
accounting for the Mergers as a pooling of interests. See "The Merger
Agreement--Conditions to the Mergers." Such opinions will be based on
certain facts, assumptions and representations of officers of FedEx and
Caliber. Certain events, including certain transactions with respect to
FedEx Common Stock or Caliber Common Stock by affiliates of FedEx or
Caliber, respectively, may prevent the Mergers from qualifying as a pooling
of interests for accounting and financial reporting purposes. For
information concerning certain restrictions to be imposed on the
transferability of FDX Common Stock to be received by affiliates in order,
among other things, to ensure the availability of pooling of interests
accounting treatment, see "--Federal Securities Laws Consequences; Resale
Restrictions."
Certain U.S. Federal Income Tax Consequences
The following is a summary of the material U.S. federal income
tax consequences of the Mergers to FedEx, Caliber and the FedEx stockholders
and the Caliber shareholders. The summary is based upon the Code,
administrative pronouncements, judicial decisions and Treasury regulations,
changes to any of which after the date of this Joint Proxy
Statement/Prospectus may affect the tax consequences described herein. This
summary does not purport to be a comprehensive description of all of the tax
consequences applicable to a particular taxpayer. In particular, this summary
does not address the tax treatment to holders subject to special tax rules,
such as banks, insurance companies, dealers in securities or stockholders who
acquired their stock pursuant to the exercise of employee stock options or
otherwise as compensation. In addition, this summary only applies to a holder
who (a) is a U.S. citizen or resident, a U.S. corporation or other entity
taxable as a corporation created or organized under the laws of the United
States, or an estate or trust the income of which is subject to U.S. federal
income taxation regardless of its source and (b) holds shares of FedEx Common
Stock or Caliber Common Stock as capital assets. Stockholders are urged to
consult their tax advisors as to the particular U.S. federal income tax
consequences to them of the Mergers and an investment in FDX Common Stock and
as to the foreign, state, local and other tax consequences thereof.
Except with respect to any cash received in lieu of fractional
shares and any cash received by the Caliber shareholders who exercise and
perfect dissenters' rights, the Mergers have been structured to qualify as
tax-free transactions under the Code. The obligations of FedEx and Caliber to
consummate the Mergers are conditioned on the receipt by FedEx of an opinion
from Davis Polk & Wardwell, counsel to FedEx, and by Caliber of an opinion
from Cravath, Swaine & Moore, counsel to Caliber, that the Mergers will so
qualify. See "The Merger Agreement--Conditions to the Mergers." Such
opinions will be based upon certain facts, assumptions and representations
contained in certificates of officers of FedEx, Caliber and their
respective subsidiaries, and certain stockholders dated as of the date of
the consummation of the Mergers. Opinions of counsel are not binding on
the Internal Revenue Service (the "IRS") or the courts, and the parties do
not intend to request a ruling from the IRS with respect to the Mergers.
Accordingly, there can be no assurance that the IRS will not challenge such
opinions or that a court will not sustain such challenge.
Tax Consequences to FedEx Stockholders. FedEx stockholders
will not recognize gain or loss upon the conversion of their shares of FedEx
Common Stock into shares of FDX Common Stock. The tax basis of the shares of
FDX Common Stock will be the same as the tax basis of the shares of FedEx
Common Stock which are converted. The holding period of the shares of FDX
Common Stock will include the holding period of the shares of FedEx Common
Stock which are converted.
Tax Consequences to Caliber Shareholders. Caliber shareholders
will not recognize gain or loss upon the receipt of FDX Common Stock in
exchange for their shares of Caliber Common Stock (other than shareholders who
receive cash in lieu of fractional shares or as a result of their exercise and
perfection of dissenter's rights, to the extent of any cash received). The
tax basis of the shares of FDX received by Caliber shareholders will be the
same as the tax basis of the shares of Caliber Common Stock exchanged
therefor. The holding period of the shares of FDX Common Stock received by
Caliber shareholders will include the holding period of the shares of Caliber
Common Stock surrendered therefor.
Caliber shareholders who receive cash with respect to
fractional shares will be treated as having received such fractional shares
pursuant to the Caliber Merger and then having sold those fractional shares in
the market for cash. Such Caliber shareholders will recognize gain or loss
with respect to such fractional shares in an amount equal to the difference
between the tax basis allocated to such fractional shares and the cash
received in respect thereof.
A holder of Caliber Common Stock who exercises and perfects
dissenter's rights will generally recognize gain or loss equal to the
difference between the amount of cash received (other than in respect of
interest, if any, awarded by a court) and such shareholder's tax basis in his
or her shares of stock.
Backup Withholding. Noncorporate holders may be subject to
backup withholding at a rate of 31% on payments of cash received with respect
to fractional shares or exercise of dissenter's rights. Backup withholding
will not apply, however, to a shareholder who furnishes a correct taxpayer
identification number or certificate of foreign status and makes any other
required certification or who otherwise is exempt from backup withholding.
Reporting Requirements. Each FedEx stockholder and each
Caliber shareholder (other than shareholders who exercise and perfect
dissenter's rights) will be required to retain records and file with such
holder's U.S. federal income tax return a statement setting forth certain
facts relating to the Mergers. Caliber shareholders will be required to
indicate in the letter of transmittal their tax basis in the shares
surrendered by them pursuant to the Mergers.
Tax Consequences to FedEx and Caliber. No gain or loss will be
recognized by FedEx or Caliber pursuant to the Mergers.
Regulatory Matters
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), and the rules promulgated thereunder, filings must
be made with the Federal Trade Commission (the "FTC") and the Antitrust
Division of the United States Department of Justice (the "Antitrust Division")
and the Caliber Merger may not be consummated until after the specified
waiting period has expired. FedEx and Caliber made the required filings under
the HSR Act and the applicable waiting period commenced on November 5, 1997.
The applicable waiting period ended on December [5], 1997. The FTC and the
Antitrust Division have the authority to challenge the Caliber Merger on
antitrust grounds before or after the Caliber Merger is completed. Each state
in which FedEx or Caliber has operations may also review the Caliber Merger
under state antitrust law.
Caliber and FedEx must also comply with applicable regulatory
requirements under German law. Under the German Law Against Restraints of
Competition of 1957, as amended, the Caliber Merger may not be consummated
until notification has been given and certain information has been furnished
to the German Federal Cartel Office (the "Bundeskartellamt") and the
applicable waiting period has expired. The Bundeskartellamt is required to
decide within one month whether to forego objection to the transaction or to
initiate a more detailed investigation. In case of a detailed investigation,
the Bundeskartellamt is required to reach a final decision within four months
following the initial notification, unless FedEx and Caliber have agreed to an
extension of the four-month period. The applicable waiting period will end as
soon as the Bundeskartellamt has notified the parties of its non-objection to
the transaction. The Bundeskartellamt has the authority to prohibit the
Caliber Merger on antitrust grounds.
Regulatory approvals, notices or filings may be required in one
or more additional jurisdictions. In addition, the Mergers must comply with
any applicable requirements of the United States Department of Transportation.
FedEx and Caliber believe that they will obtain all required
regulatory clearances and approvals prior to the Meetings. However, it is not
possible to predict whether all such approvals will be forthcoming, the time
frame for the receipt of such clearances and approvals or whether any
governmental authorities will impose conditions for granting the required
clearances or approvals that are unfavorable.
Dissenters' Rights
FedEx
Section 262 of the General Corporation Law of the State of
Delaware (the "Delaware Law") provides appraisal rights (also referred to as
"dissenters' rights") to stockholders of a Delaware corporation in certain
situations. However, Section 262 appraisal rights are not available for
shares of stock of a corporation in a merger effected pursuant to Section
251(g) of the Delaware Law. Since the FedEx Reorganization Merger is being
effected pursuant to Section 251(g) of the Delaware Law, appraisal rights will
not be available to FedEx stockholders in connection with the FedEx
Reorganization Merger.
Caliber
Holders of Caliber Common Stock have the right to dissent from
the Caliber Merger and to receive payment of the fair value of their shares
upon full compliance with Section 1701.85 of the General Corporation Law of
Ohio (the "Ohio Law"). Caliber shareholders seeking to exercise dissenters'
rights are referred to herein as "Dissenting Shareholders".
The following is a summary of the principal steps a Caliber
shareholder must take to perfect dissenters' rights under Section 1701.85 of
the Ohio Law. This summary does not purport to be complete and is qualified
in its entirety by reference to Section 1701.85, a copy of which is attached
hereto as Annex D and incorporated herein by reference. Any Caliber
shareholder contemplating the exercise of dissenters' rights is urged to review
carefully such provisions and to consult an attorney, since dissenters' rights
will be lost if the procedural requirements under Section 1701.85 are not
fully and precisely satisfied.
To perfect dissenters' rights with respect to any shares of
Caliber Common Stock so that they become dissenting shares as described in
this Joint Proxy Statement/Prospectus, a Dissenting Shareholder must satisfy
each of the following conditions:
No Vote in Favor of Adoption of the Merger Agreement. Caliber
Common Stock held by the Dissenting Shareholder must not be voted at the
Caliber Meeting in favor of adoption of the Merger Agreement. This
requirement will be satisfied if a proxy is signed and returned with
instructions to vote against the Caliber Merger or to abstain from such vote,
if no proxy is returned and no vote is cast at the Caliber Meeting in favor of
adoption of the Merger Agreement, or if the Dissenting Shareholder revokes a
proxy and thereafter abstains from voting with respect to adoption of the
Merger Agreement or votes against adoption of the Merger Agreement at the
Caliber Meeting. A vote in favor of adoption of the Merger Agreement at the
Caliber Meeting constitutes a waiver of dissenters' rights. A proxy that is
returned signed but on which no voting preference is indicated will be voted
in favor of adoption of the Merger Agreement and will constitute a waiver of
dissenters' rights. A Dissenting Shareholder may revoke his or her proxy at
any time prior to its exercise by complying with the procedures set forth
herein under "The Meetings--Proxies."
Filing Written Demand. Not later than ten days after the
taking of the vote on the proposal to adopt the Merger Agreement, a Dissenting
Shareholder must deliver to Caliber a written demand (the "Demand") for
payment of the fair cash value of the shares of Caliber Common Stock with
respect to which the Dissenting Shareholder seeks payment. Each Demand should
be delivered to Caliber at 3925 Embassy Parkway, Akron, Ohio, 44333,
Attention: Secretary. It is recommended, although not required, that such
Demand be sent by registered or certified mail, return receipt requested.
Voting against adoption of the Merger Agreement will not itself constitute a
Demand. Caliber will not send any further notice to Caliber shareholders as
to the date on which such ten-day period expires.
A Demand must identify the name and address of the holder of
record of the shares of Caliber Common Stock with respect to which payment is
sought, the number and class of such shares and the amount claimed by such
holder as the fair cash value thereof. A beneficial owner of shares must, in
all cases, have the record holder of such shares submit the Demand in respect
thereof. A Demand must be signed by the shareholder of record (or by the duly
authorized representative of such shareholder) exactly as the shareholder's
name appears on the shareholder records of Caliber. A Demand with respect to
shares owned jointly by more than one person must identify and be signed by
all of the holders of record. Any person signing a Demand on behalf of a
partnership or corporation or in any other representative capacity (such as an
attorney-in-fact, executor, administrator, trustee or guardian) must indicate
the nature of the representative capacity and, if requested, must furnish
written proof of his or her capacity and his or her authority to sign such
Demand.
Because only holders of record of Caliber Common Stock at the
close of business on the Caliber Record Date (as hereinafter defined) may
exercise dissenters' rights, any person who beneficially owns shares that are
held of record by a broker, fiduciary, nominee, or other holder and who wishes
to exercise dissenters' rights must instruct the record holder of the shares
to satisfy the conditions outlined above. If a record holder does not
satisfy, in a timely manner, all of the conditions outlined in this section,
the dissenters' rights for all of the shares held by such record holder will
be lost.
From the time the Demand is given until either the termination
of the rights and obligations arising from such Demand or the purchase of the
related shares of Caliber Common Stock by Caliber, all rights accruing to the
holder thereof, including voting and dividend or distribution rights, will be
suspended. If any dividend or distribution is paid in money on Caliber Common
Stock or FDX Common Stock during the suspension, an amount equal to the
dividend or distribution which would have been payable on such shares, but for
such suspension, will be paid to the holder of record thereof as a credit upon
the fair cash value of such shares. If the right to receive the fair cash
value is terminated other than by the purchase of such shares of Caliber, all
rights will be restored to the Dissenting Shareholder and any distribution
that would have been made to the holder of record of such shares, but for the
suspension, will be made to the holder of record at the time of the
termination.
If Caliber sends to a Dissenting Shareholder, at the address
specified in the Demand, a request for the certificates representing the
related shares of Caliber Common Stock, the Dissenting Shareholder, within
fifteen days from the date of sending such request, is required to deliver to
Caliber the certificates requested. Caliber will then endorse the
certificates with a legend to the effect that a demand for the fair cash value
of such shares has been made, and promptly return such endorsed certificates
to the Dissenting Shareholder. Failure on the part of the Dissenting
Shareholder to deliver such certificates upon such request will terminate his
or her rights as a Dissenting Shareholder, at the option of Caliber, exercised
by written notice to the Dissenting Shareholder within twenty days after the
lapse of the fifteen-day period, unless a court, for good cause shown,
otherwise directs.
Petitions to be Filed in Court. Within three months after the
service of the Demand, if Caliber and the Dissenting Shareholder do not reach
an agreement on the fair cash value of the shares of the Caliber Common Stock
subject to the Demand, the Dissenting Shareholder or Caliber may file a
complaint in the Court of Common Pleas in Summit County, Ohio (the "Common
Pleas Court"), or join or be joined in an action similarly brought by another
Dissenting Shareholder, for a judicial determination of the fair cash value of
the shares of Caliber Common Stock held by such Dissenting Shareholder(s).
Upon the motion of the complainant, the Common Pleas Court will
hold a hearing to determine whether the Dissenting Shareholder is entitled to
be paid the fair cash value of his or her shares of Caliber Common Stock. If
the Common Pleas Court finds that the Dissenting Shareholder is so entitled,
it may appoint one or more appraisers to receive evidence and to recommend a
decision on the amount of such fair cash value. The Common Pleas Court is
thereafter required to make a finding as to the fair cash value of such shares
and to render a judgment against Caliber for the payment thereof, with
interest at such rate and from such date as the Common Pleas Court considers
equitable. Costs of the proceeding, including reasonable compensation to the
appraiser or appraisers, to be fixed by the Common Pleas Court, are to be
apportioned or assessed as the Common Pleas Court considers equitable.
Payment of the fair cash value of such shares is required to be made within 30
days after the date of final determination of such value or the Merger Date,
whichever is later, only upon surrender to Caliber of the certificates
representing the shares of Caliber Common Stock for which payment is made.
Fair cash value is the amount which a willing seller and
willing buyer with neither any compulsion to sell or buy would accept or pay,
but in no event may the fair cash value exceed the amount specified in the
Demand. Because the Caliber Merger requires the approval of the Caliber
shareholders, the fair cash value is to be determined as of the day prior to
the day of the Caliber Meeting. In computing this value, any appreciation or
depreciation in the market value of the shares of Caliber Common Stock held by
the Dissenting Shareholder resulting from the Caliber Merger is excluded.
The fair cash value determined by the Common Pleas Court may be
higher or lower than the value of the shares of FDX Common Stock a Dissenting
Shareholder would have otherwise received in the Caliber Merger.
The dissenters' rights of any Dissenting Shareholder will
terminate if, among other things, (i) he or she has not complied with Section
1701.85 of the Ohio Law (unless the Caliber Directors waive compliance), (ii)
the Caliber Merger is abandoned or otherwise not carried out or such
Dissenting Shareholder withdraws his or her Demand with the consent of the
Caliber Directors or (iii) no agreement has been reached between Caliber and
the Dissenting Shareholder as to the fair value for the shares and neither the
Dissenting Shareholder nor Caliber shall have timely filed or joined in a
complaint in the Common Pleas Court. For a discussion of the tax consequences
to the shareholder exercising dissenters' rights; see "--Certain U.S. Federal
Income Tax Consequences."
If holders of more than 5% of the outstanding shares of Caliber
Common Stock properly demand dissenters' rights, FedEx has the right to
decline to consummate the Merger. See "The Merger Agreement--Conditions to the
Mergers."
BECAUSE A PROXY CARD WHICH DOES NOT CONTAIN VOTING INSTRUCTIONS
WILL, UNLESS REVOKED, BE VOTED IN FAVOR OF ADOPTION OF THE MERGER AGREEMENT, A
CALIBER SHAREHOLDER WHO WISHES TO EXERCISE DISSENTERS' RIGHTS MUST EITHER NOT
SIGN AND RETURN A PROXY CARD OR, IF HE OR SHE SIGNS AND RETURNS A PROXY CARD,
VOTE AGAINST OR ABSTAIN FROM VOTING ON THE PROPOSAL TO ADOPT THE MERGER
AGREEMENT.
Federal Securities Laws Consequences; Resale Restrictions
This Joint Proxy Statement/Prospectus does not cover any
resales of the FDX Common Stock to be received by the stockholders of FedEx or
Caliber upon consummation of the Mergers, and no person is authorized to make
any use of this Joint Proxy Statement/Prospectus in connection with any such
resale.
All shares of FDX Common Stock received by FedEx stockholders
and Caliber shareholders in the Mergers will be freely transferable, except
that shares of FDX Common Stock received by persons who are deemed to be
"affiliates" of Caliber under the Securities Act of 1933, as amended (the
"1933 Act"), at the time of the Caliber Meeting may be resold by them only in
transactions permitted by Rule 145 or as otherwise permitted under the 1933
Act. Persons who may be deemed to be affiliates of Caliber for such purposes
generally include individuals or entities that control, are controlled by, or
are under common control with, Caliber and may include certain officers,
directors and principal stockholders of Caliber. The Merger Agreement
requires Caliber to use its reasonable best efforts to cause each of such
affiliates to execute a written agreement to the effect that such persons will
not offer or sell or otherwise dispose of any of the shares of FDX Common
Stock issued to such persons in the Caliber Merger in violation of the 1933
Act or the rules and regulations promulgated by the Securities and Exchange
Commission ("SEC") thereunder.
SEC guidelines regarding qualifying for the pooling of
interests method of accounting would also limit sales by affiliates of both
FedEx and Caliber. SEC guidelines indicate further that the pooling of
interests method of accounting generally would not be challenged on the basis
of sales by affiliates of FedEx or Caliber if they do not dispose of any of
the shares they own or shares they receive in connection with the Mergers
during the period beginning 30 days before the Merger Date and ending at such
time as financial results covering at least 30 days of combined operations of
FedEx and Caliber have been publicly filed by FDX after the Merger Date. The
Merger Agreement requires FedEx and Caliber to use reasonable best efforts to
cause each of its affiliates to execute a written agreement prohibiting such
affiliates from selling, transferring or otherwise disposing of, or acquiring
or selling any options or other securities relating to securities of FedEx or
Caliber that would be intended to reduce such affiliate's risk relative to any
shares of FedEx Common Stock or Caliber Common Stock beneficially owned by
such affiliate during such period.
MANAGEMENT FOLLOWING THE MERGERS
FedEx
The current directors of FedEx will continue to be the
directors of FedEx following the FedEx Reorganization Merger. It is expected
that certain of the current executive officers of FedEx will become executive
officers of FDX at the Merger Date, while the remainder of such executive
officers will continue to be executive officers of FedEx.
Caliber
The directors of Fast Merger Sub will be the directors of
Caliber following the Caliber Merger. It is expected that most of the current
executive officers of Caliber will continue to be the executive officers of
Caliber following the Caliber Merger.
FDX
The directors of FedEx will be the directors of FDX following
the Mergers (as well as continuing to be directors of FedEx following the
FedEx Reorganization Merger). The executive officers of FDX will include
Frederick W. Smith, chairman, president and chief executive officer of FedEx,
who will be the chairman, president and chief executive officer of FDX, and
Alan B. Graf, Jr. and Kenneth R. Masterson, executive vice presidents of
FedEx, and T. Michael Glenn and Dennis H. Jones, senior vice presidents of
FedEx, all of whom will be executive vice presidents of FDX.
More Information
For additional information regarding the directors and
executive officers of FedEx, please consult the Proxy Statement of FedEx
mailed to holders of FedEx Common Stock in August of 1997. See also "Certain
Information Relating to Federal Express Compensation." For additional
information regarding the directors and executive officers of Caliber, please
consult the Proxy Statement of Caliber mailed to holders of Caliber Common
Stock in April of 1997.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The Board of Directors of FedEx and the Caliber Directors have
approved a Merger Agreement that would result in FedEx and Caliber becoming
wholly-owned subsidiaries of a newly-formed holding company, FDX. If the
Mergers are completed, Caliber shareholders will receive 0.8 shares of FDX
Common Stock for each share of Caliber Common Stock, and FedEx stockholders
will receive one share of FDX Common Stock for each share of FedEx Common
Stock. The following unaudited pro forma condensed combined financial
statements (the "Pro Forma Financial Statements") have been prepared to
reflect the proposed Mergers assuming the pooling of interests method of
accounting pursuant to Accounting Principles Board Opinion No. 16 is applied
to the business combination.
The Pro Forma Financial Statements are based on the respective
historical financial statements of FedEx and Caliber, certain of which are
incorporated by reference into this Joint Proxy Statement/Prospectus. FedEx
has a May 31 fiscal year-end; Caliber has a December 31 fiscal year-end
comprised of 13 four-week accounting periods. Accordingly, the Pro Forma
Financial Statements have been prepared using the following periods of each
company: The unaudited pro forma condensed combined statement of
operations for the year ended May 31, 1997 combines FedEx's historical
condensed consolidated statement of income for the year ended May 31, 1997
with Caliber's historical condensed consolidated statement of operations
for the 13 four-week accounting periods ended June 21, 1997 (the end of
Caliber's fiscal 1997 second quarter); the unaudited pro forma condensed
combined statements of operations for the years ended May 31, 1996 and 1995
combine FedEx's historical condensed consolidated statements of income for
the years ended May 31, 1996 and 1995, respectively, with Caliber's
historical condensed consolidated statements of operations for the years
ended December 31, 1995 and 1994, respectively; the unaudited pro forma
condensed combined statements of operations for the three months ended
August 31, 1997 and 1996 combine FedEx's historical condensed consolidated
statements of income for the three months ended August 31, 1997 and 1996,
respectively, with Caliber's historical condensed consolidated statements
of operations for the 3 four-week accounting periods ended September 13,
1997 and September 7, 1996, respectively (the end of Caliber's third
quarter); the unaudited pro forma condensed combined balance sheet as of
August 31, 1997 combines FedEx's historical condensed consolidated balance
sheet as of August 31, 1997 with Caliber's historical condensed
consolidated balance sheet as of the accounting period ended September 13,
1997.
The above-referenced periods used in preparing the unaudited
pro forma condensed combined statements of operations exclude Caliber's
results of operations for the period from January 1, 1996 through June 15,
1996 (Caliber's first and second quarters of fiscal 1996); Caliber's revenues
and income from continuing operations for this period were $1.2 billion and
$9.8 million, respectively.
The unaudited pro forma information is presented for
illustrative purposes only and is not necessarily indicative of the operating
results or financial position that would have occurred if the Mergers had been
consummated as of these dates, nor is it necessarily indicative of future
operating results of FDX. The Pro Forma Financial Statements should be read
in conjunction with the historical consolidated financial statements and notes
thereto of FedEx and Caliber, included in their Reports on Form 10-K for the
year ended May 31, 1997 and December 31, 1996, and their Reports on Form 10-Q
for the periods ended thereafter, respectively, incorporated by reference into
this Joint Proxy Statement/Prospectus.
FDX CORPORATION
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Year Ended May 31, 1997
(in thousands, except per share data)
<TABLE>
<CAPTION>
FedEx Caliber
------------ -----------------
13 Four-Week
Accounting Periods
Year Ended Ended June 21, Pro Forma
May 31, 1997 1997 Adjustments FDX Pro Forma
------------ ----------------- ----------- -------------
<S> <C> <C> <C> <C>
Revenues.................................. $11,519,750 $2,736,039 $14,255,789
---------- --------- ----------
Operating expenses:
Salaries and employee benefits........... 5,095,462 1,035,878 6,131,340
Rentals and landing fees................. 1,070,658 56,977 1,127,635
Purchased transportation................. 460,748 819,493 1,280,241
Depreciation and amortization............ 777,374 139,940 917,314
Fuel..................................... 690,412 43,388 733,800
Maintenance and repairs.................. 724,416 77,970 802,386
Impairment charge........................ -- 225,036 225,036
Restructuring charge..................... -- 85,000 85,000
Other.................................... 2,001,638 510,506 2,512,144
---------- --------- ----------
10,820,708 2,994,188 13,814,896
---------- --------- ----------
Operating income (loss)................... 699,042 (258,149) 440,893
---------- --------- ----------
Other income (expense):
Interest, net............................ (90,634) (20,000) (110,634)
Other, net............................... 19,813 9,758 29,571
---------- --------- ----------
(70,821) (10,242) (81,063)
---------- --------- ----------
Income (loss) from continuing operations
before income taxes...................... 628,221 (268,391) 359,830
Provision (benefit) for income taxes...... 266,994 (57,788) 209,206
---------- --------- ----------
Income (loss) from continuing operations.. $ 361,227 $ (210,603) $ 150,624
========== ========== ==========
Income (loss) from continuing operations
per share................................ $ 3.12 $ (5.35) $ 1.02
========== ========== ==========
Average shares outstanding................ 115,641 39,351 (7,870)(A) 147,122
========== ========== ===== ==========
See accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Statements.
</TABLE>
FDX CORPORATION
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Year Ended May 31, 1996
(in thousands, except per share data)
<TABLE>
<CAPTION>
FedEx Caliber
------------ -----------------
Year Ended
Year Ended December 31 Pro Forma
May 31, 1997 1995 Adjustments FDX Pro Forma
------------ ----------------- ----------- -------------
<S> <C> <C> <C> <C>
Revenues.................................. $10,273,619 $2,448,172 $12,721,791
----------- ---------- -----------
Operating expenses:
Salaries and employee benefits........... 4,619,990 937,972 5,557,962
Rentals and landing fees................. 959,055 45,969 1,005,024
Purchased transportation................. 370,650 694,275 1,064,925
Depreciation and amortization............ 719,609 132,383 851,992
Fuel..................................... 578,614 33,629 612,243
Maintenance and repairs.................. 617,657 76,829 694,486
Other.................................... 1,784,220 371,387 2,155,607
----------- ---------- -----------
9,649,795 2,292,444 11,942,239
----------- ---------- -----------
Operating income.......................... 623,824 155,728 779,552
----------- ---------- -----------
Other income (expense):
Interest, net............................ (95,599) 5,409 (90,190)
Other, net............................... 11,734 998 12,732
----------- ---------- -----------
(83,865) 6,407 (77,458)
----------- ---------- -----------
Income from continuing operations before
income taxes............................. 539,959 162,135 702,094
Provision for income taxes................ 232,182 69,726 301,908
----------- ---------- -----------
Income from continuing operations......... $307,777 $ 92,409 $400,186
=========== ========== ===========
Income from continuing operations $ 2.69 $ 2.34 $ 2.74
=========== ========== ===========
per share................................
Average shares outstanding................ 114,276 39,459 (7,892)(A) 145,843
See accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Statements.
</TABLE>
FDX CORPORATION
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Year Ended May 31, 1995
(in thousands, except per share data)
<TABLE>
<CAPTION>
FedEx Caliber
------------ -----------------
Year Ended
Year Ended December 31 Pro Forma
May 31, 1997 1995 Adjustments FDX Pro Forma
------------ ----------------- ----------- -------------
<S> <C> <C> <C> <C>
Revenues.................................. $9,392,073 $2,327,523 $11,719,596
----------- ---------- -----------
Operating expenses:
Salaries and employee benefits........... 4,425,202 876,694 5,301,896
Rentals and landing fees................. 818,599 36,435 855,034
Purchased transportation................. 331,581 700,016 1,031,597
Depreciation and amortization............ 652,287 120,029 772,316
Fuel..................................... 502,417 30,773 533,190
Maintenance and repairs.................. 544,170 74,999 619,169
Other.................................... 1,526,673 323,474 1,850,147
----------- ---------- -----------
8,800,929 2,162,420 10,963,349
----------- ---------- -----------
Operating income.......................... 591,144 165,103 756,247
----------- ---------- -----------
Other income (expense):
Interest, net............................ (114,687) 6,256 (108,431)
Other, net............................... 45,627 121 45,748
(69,060) 6,377 (62,683)
Income from continuing operations before
income taxes............................. 522,084 171,480 693,564
Provision for income taxes................ 224,496 72,943 297,439
----------- ---------- -----------
Income from continuing operations......... $297,588 $ 98,537 $396,125
=========== ========== ===========
Income from continuing operations per 2.63 $ 2.50 $ 2.74
=========== ========== ===========
share.....................................
Average shares outstanding................ 112,987 39,392 (7,878)(A) 144,501
=========== ========== ======== ===========
See accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Statements.
</TABLE>
FDX CORPORATION
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Three Months Ended August 31, 1997
(in thousands, except per share data)
<TABLE>
<CAPTION>
FedEx Caliber
---------------- ------------------
3 Four-Week
Three Months Accounting Periods
Ended August 31, Ended September Pro Forma
1997 13, 1997 Adjustments FDX Pro Forma
---------------- ------------------ ----------- -------------
<S> <C> <C> <C> <C>
Revenues................................. $3,297,218 $592,488 $3,889,706
----------- ---------- -----------
Operating expenses:
Salaries and employee benefits.......... 1,450,487 181,922 1,632,409
Rentals and landing fees................ 274,468 12,287 286,755
Purchased transportation................ 136,685 203,512 340,197
Depreciation and amortization........... 202,421 27,870 230,291
Fuel.................................... 173,780 4,300 178,080
Maintenance and repairs................. 208,460 14,529 222,989
Other................................... 586,712 89,646 676,358
----------- ---------- -----------
3,033,013 534,066 3,567,079
----------- ---------- -----------
Operating income......................... 264,205 58,422 322,627
----------- ---------- -----------
Other income (expense):
Interest, net........................... (25,828) (3,700) (29,528)
Other, net.............................. 8,618 661 9,279
----------- ---------- -----------
(17,210) (3,039) (20,249)
----------- ---------- -----------
Income from continuing operations before
income taxes............................ 246,995 55,383 302,378
Provision for income taxes............... 103,738 22,934 126,672
----------- ---------- -----------
Income from continuing operations........ $ 143,257 $32,449 $ 175,706
=========== ========== ===========
Income from continuing operations per
share.................................... $ 1.22 0.83 $ 1.18
=========== ========== ===========
Average shares outstanding............... 117,343 39,207 (7,841)(A) 148,709
=========== ========== ===========
See accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Statements.
</TABLE>
FDX CORPORATION
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Three Months Ended August 31, 1996
(in thousands, except per share data)
<TABLE>
<CAPTION>
FedEx Caliber
---------------- ------------------
3 Four-Week
Three Months Accounting Periods
Ended August 31, Ended September Pro Forma
1996 7, 1996 Adjustments FDX Pro Forma
---------------- ------------------- ----------- -------------
<S> <C> <C> <C> <C>
Revenues.................................. $2,692,312 $627,226 $3,319,538
------------ ---------- -----------
Operating expenses:
Salaries and employee benefits........... 1,231,423 247,157 1,478,580
Rentals and landing fees................. 253,368 18,329 271,697
Purchased transportation................. 96,758 182,775 279,533
Depreciation and amortization............ 190,209 34,194 224,403
Fuel..................................... 153,547 14,414 167,961
Maintenance and repairs.................. 181,419 26,061 207,480
Other.................................... 455,670 104,072 559,742
----------- ---------- -----------
2,562,394 627,002 3,189,396
----------- ---------- -----------
Operating income.......................... 129,918 224 130,142
----------- ---------- -----------
Other income (expense):
Interest, net............................ (21,759) (3,100) (24,859)
Other, net............................... (420) 135 (285)
----------- ---------- -----------
(22,179) (2,965) (25,144)
----------- ---------- -----------
Income (loss) from continuing operations
before income taxes...................... 107,739 (2,741) 104,998
Provision (benefit) for income taxes...... 45,789 (771) 45,018
----------- ---------- -----------
Income (loss) from continuing operations.. $ 61,950 $(1,970) $59,980
=========== ========== ===========
Income (loss) from continuing operations
per share................................ $ 0.54 $ (0.05) $ 0.41
=========== ========== ===========
Average shares outstanding................ 114,934 39,505 (7,901)(A) 146,538
=========== ========== ======== ===========
See accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Statements.
</TABLE>
FDX CORPORATION
Unaudited Pro Forma Condensed Combined Balance Sheet
As of August 31, 1997
(in thousands)
<TABLE>
<CAPTION>
FedEx Caliber
---------------- ------------------
As of August 31, As of September 13, Pro Forma
1997 1997 Adjustments FDX Pro Forma
---------------- ------------------- ----------- -------------
<S> <C> <C> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents............ $209,782 $20,307 $230,089
Receivables, net..................... 1,771,116 320,427 2,091,543
Deferred income taxes................ 157,629 58,585 216,214
Other current assets................. 375,978 59,443 435,421
----------- ---------- -----------
Total current assets................ 2,514,505 458,762 2,973,267
----------- ---------- -----------
Property and Equipment, at Cost...... 10,083,465 1,499,613 11,583,078
Less accumulated depreciation and 5,371,533 753,351 6,124,884
----------- ---------- -----------
amortization.........................
Net property and equipment.......... 4,711,932 746,262 5,458,194
----------- ---------- -----------
Other Assets:
Goodwill............................. 361,603 4,891 366,494
Equipment deposits and other assets.. 431,316 48,419 479,735
----------- ---------- -----------
Total other assets.................. 792,919 53,310 846,229
----------- ---------- -----------
$8,019,356 $1,258,334 $9,277,690
=========== ========== ===========
LIABILITIES AND STOCKHOLDERS'
INVESTMENT
Current Liabilities:
Current portion of long-term debt.... $148,449 $148,449
Short-term debt...................... -- $13,000 13,000
Accounts payable..................... 841,775 339,201 1,180,976
Accrued expenses..................... 1,150,212 113,320 $85,000 (B)
(8,238)(C) 1,340,294
----------- ---------- ------- -----------
Total current liabilities........... 2,140,436 465,521 76,762 2,682,719
----------- ---------- ------- -----------
Long-Term Debt, less current portion. 1,438,233 200,000 1,638,233
----------- ---------- -----------
Deferred Income Taxes................ 170,229 41,096 211,325
----------- ---------- -----------
Other Liabilities.................... 1,167,120 32,230 1,199,350
----------- ---------- -----------
Common Stockholders' Investment:
Common Stock......................... 11,504 39,898 (36,740) 14,662
Other................................ 3,091,834 479,589 (85,000)
44,978 3,531,401
----------- ---------- ------- -----------
Total common stockholders' 3,103,338 519,487 (76,762) 3,546,063
----------- ---------- ------- -----------
investment...........................
$8,019,356 $1,258,334 $ $9,277,690
=========== ========== ======= ==========
See accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Statements.
</TABLE>
NOTES TO
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
Note (A): To adjust the historical average of the number of shares of Caliber
Common Stock outstanding to reflect the conversion of Caliber Common
Stock into FDX Common Stock based on the exchange ratio of 0.8 shares
of FDX Common Stock for each share of Caliber Common Stock.
Note (B): To reflect the balance sheet effect of estimated costs expected to
be incurred by FedEx and Caliber which are directly attributable to
the Mergers, consisting primarily of (a) fees and expenses of
investment bankers, attorneys and other advisors, and (b) costs
relating to payments due under certain MRAs of Caliber and the
vesting of Caliber performance share awards. The total costs to be
incurred by FedEx and Caliber directly attributable to the Mergers
are estimated to be approximately $85 million (after tax), and will
be charged against income in the period in which the Mergers are
consummated.
Note (C): To reflect the balance sheet effect of the conversion of shares of
FedEx Common Stock into shares of FDX Common Stock and the exchange
of shares of Caliber Common Stock for shares of FDX Common Stock.
THE MERGER AGREEMENT
The following summary of the Merger Agreement is qualified in
its entirety by reference to the complete text of the Merger Agreement, which
is incorporated by reference herein and attached hereto as Annex A.
General
The Merger Agreement provides for the merger of Fast Merger Sub
with and into FedEx and the merger of Tires Merger Sub with and into Caliber.
As a result of the Mergers, each of FedEx and Caliber will become a
wholly-owned subsidiary of FDX. In the Mergers, stockholders of Caliber and
FedEx will receive the consideration described below. The Mergers will become
effective at the time of filing of a certificate of merger with the Ohio
Secretary of State and the filing of the Merger Agreement with the Delaware
Secretary of State (or at such other time as specified in the certificate of
merger or in the Merger Agreement), which is expected to occur as soon as
practicable after the last of the conditions precedent to the Mergers set
forth in the Merger Agreement has been satisfied or waived. At least 10 days
must elapse between the date of the Caliber Meeting and the Merger Date; in no
event will the Merger Date occur earlier than January 2, 1998.
Merger Consideration
Caliber Merger. Upon consummation of the Caliber Merger, each
share of Caliber Common Stock outstanding immediately prior to the Merger Date
(except for treasury stock and shares for which dissenters' rights have been
properly exercised and perfected) will be converted into the right to receive
0.8 shares of FDX Common Stock (the "Caliber Merger Consideration"), provided
that holders of Caliber Common Stock otherwise entitled to fractional shares
of FDX Common Stock will be entitled to receive, from First Chicago Trust
Company of New York, which will serve as the "Exchange Agent" in accordance
with the Merger Agreement, a cash payment in lieu of such fractional shares,
representing such holder's proportionate interest, if any, in the net proceeds
from the sale by the Exchange Agent in one or more transactions (which sale
transactions will be made at such times, in such manner, and on such terms as
the Exchange Agent determines in its reasonable discretion) on behalf of all
such holders of the aggregate of the fractional shares of FDX Common Stock
which would otherwise have been issued.
Each share of Caliber Common Stock held by Caliber as treasury
stock immediately prior to the Merger Date will be canceled, and no payment
will be made with respect thereto.
FedEx Reorganization Merger. Upon consummation of the FedEx
Reorganization Merger, pursuant to the Merger Agreement, each share of FedEx
Common Stock outstanding immediately prior to the Merger Date (except for
treasury stock) will be automatically converted into one share of FDX Common
Stock (the "FedEx Merger Consideration" and together with the Caliber Merger
Consideration, the "Merger Consideration").
Each share of FedEx Common Stock held by FedEx as treasury
stock immediately prior to the Merger Date will be canceled, and no payment
will be made with respect thereto.
If at any time during the period between the date of the Merger
Agreement and the Merger Date, any change in the outstanding shares of Caliber
Common Stock or FedEx Common Stock occurs, including by reason of any
reclassification, recapitalization, stock split or combination, exchange or
readjustment of shares, or any stock dividend thereon with a record date
during such period, the Merger Consideration will be appropriately adjusted.
For a description of the treatment of the Caliber stock
options, see "--Stock Options."
Dissenters' Shares. Pursuant to the Merger Agreement, shares
of Caliber Common Stock outstanding immediately prior to the Merger Date and
held by a holder who has not voted in favor of the Caliber Merger and who has
exercised dissenters' rights in respect of such shares of Caliber Common Stock
in accordance with the Ohio Law will not be converted into a right to receive
the Caliber Merger Consideration unless such holder fails to perfect or
withdraws or otherwise loses his dissenters' or objecting shareholders'
rights. Shares of Caliber Common Stock in respect of which dissenters' rights
have been exercised will be treated in accordance with Section 1701.85 of the
Ohio Law. If after the Merger Date such holder fails to perfect or withdraws
or otherwise loses his right to demand the payment of fair cash value for
shares of Caliber Common Stock under the Ohio Law, such shares of Caliber
Common Stock will be treated as if they had been converted as of the Merger
Date into the right to receive the Caliber Merger Consideration. See "The
Mergers--Dissenters' Rights."
Exchange of Shares. After the Merger Date, all shares of FedEx
Common Stock being converted into the FedEx Merger Consideration will be
canceled and each certificate theretofore representing any such shares,
without any action on the part of the holder thereof, will be deemed to
represent an equivalent number of shares of FDX Common Stock.
Promptly after the Merger Date, transmittal forms will be
mailed to each holder of record of Caliber Common Stock to be used in
forwarding certificates formerly evidencing such shares for surrender and
exchange for certificates evidencing the shares of FDX Common Stock and cash
to which such holder has become entitled. After receipt of such transmittal
form, each holder of certificates formerly representing Caliber Common Stock
should surrender such certificates, together with a properly completed and duly
executed transmittal form, to the Exchange Agent, and each holder will receive
in exchange therefor certificates evidencing the whole number of shares of FDX
Common Stock and a check for any cash payable in lieu of fractional shares, as
applicable. Such transmittal forms will be accompanied by instructions
specifying other details of the exchange.
CALIBER SHAREHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES
UNTIL THEY RECEIVE A TRANSMITTAL FORM.
Each holder of shares of Caliber Common Stock or FedEx Common
Stock that has been converted into a right to receive the Caliber Merger
Consideration or the FedEx Merger Consideration, as applicable, in the case of
Caliber Common Stock upon surrender to the Exchange Agent of a certificate or
certificates representing such shares of Caliber Common Stock together with a
properly completed and duly executed letter of transmittal covering such
shares of Caliber Common Stock, and in the case of FedEx Common Stock without
any action on the part of the holder thereof, will be entitled to receive the
Caliber Merger Consideration or the FedEx Merger Consideration, as applicable,
and the other amounts, if any, specified in the Merger Agreement.
Until a holder of Caliber Common Stock so surrenders its
certificates representing Caliber Common Stock, such certificates will, after
the Merger Date, represent for all purposes only the right to receive the
Caliber Merger Consideration and the other amounts, if any, specified in the
Merger Agreement. No dividends or other distributions with respect to the FDX
Common Stock, constituting all or a portion of the Caliber Merger
Consideration will be paid to the holder of any unsurrendered certificate
representing Caliber Common Stock until such certificate is surrendered in
accordance with the Merger Agreement. Subject to the effect of applicable
laws, following such surrender, there will be paid, without interest, to the
record holder of the certificates representing the FDX Common Stock, (i) at
the time of such surrender, the amount of dividends or other distributions
with a record date after the Merger Date payable prior to or on the date of
such surrender with respect to such whole shares of FDX Common Stock, and not
paid, and the amount of cash payable in lieu of any fractional shares, less
the amount of any taxes thereon which may be required to be withheld, under
any provision of federal, state, local or foreign tax law, and (ii) at the
appropriate payment date, the amount of dividends or other distributions with
a record date after the Merger Date but prior to the date of surrender and a
payment date subsequent to the date of surrender payable with respect to such
whole shares of FDX Common Stock, less the amount of any taxes thereon which
may be required to be withheld under any provision of federal, state, local or
foreign tax law.
From and after the Merger Date, all shares of Caliber Common
Stock converted into the Caliber Merger Consideration and all shares of FedEx
Common Stock converted into the FedEx Merger Consideration will no longer be
outstanding and will automatically be canceled and retired and cease to exist,
and each holder of such shares will cease to have any rights with respect
thereto, except the right to receive the Caliber Merger Consideration or FedEx
Merger Consideration, as applicable, the right (in respect of shares of Caliber
Common Stock) to exercise dissenters' rights in accordance with and subject to
the provisions of the Ohio Law and any other rights specified in the Merger
Agreement.
At the Merger Date, each share of common stock, par value $0.10
per share, of Fast Merger Sub ("Fast Merger Sub Common Stock") and each share
of common stock, par value $0.10 per share, of Tires Merger Sub ("Tires Merger
Sub Common Stock") outstanding immediately prior to the Merger Date will be
converted into an equal number of shares of common stock, par value $0.10 per
share, of FedEx, the surviving corporation in the FedEx Reorganization Merger,
and common stock, par value $0.10 per share, of Caliber, the surviving
corporation in the Caliber Merger, respectively. From and after the Merger
Date, all certificates representing Fast Merger Sub Common Stock and Tires
Merger Sub Common Stock will be deemed for all purposes to represent the
number of shares of FedEx Common Stock and Caliber Common Stock into which
they were converted.
All outstanding shares of the capital stock of FDX immediately
prior to the Merger Date will be canceled immediately upon consummation of the
FedEx Reorganization Merger.
FDX, FedEx and Caliber Following the Mergers
The Second Amended Articles of Incorporation of Caliber (the
"Caliber Charter") and the Restated Amended Code of Regulations of Caliber
(the "Caliber Bylaws") in effect at the Merger Date will remain the articles
of incorporation and code of regulations of Caliber, respectively, after the
Merger Date, until amended in accordance with applicable law.
The certificate of incorporation and bylaws of FedEx (the
"FedEx Charter" and the "FedEx Bylaws", respectively) in effect at the Merger
Date will remain the certificate of incorporation and bylaws of FedEx,
respectively, after the Merger Date, until amended in accordance with
applicable law. The certificate of incorporation and bylaws of FDX (the "FDX
Charter" and the "FDX Bylaws", respectively) are identical to the FedEx
Charter and FedEx Bylaws, respectively, in all material respects.
After the Merger Date, until successors are duly elected or
appointed and qualified in accordance with applicable law, (i) the directors
of Fast Merger Sub immediately prior to the Merger Date will be the directors
of Caliber, (ii) the directors of FedEx immediately prior to the Merger Date
will also remain the directors of FedEx, (iii) the directors of FedEx
immediately prior to the Merger Date will be the directors of FDX, (iv) the
officers of Caliber immediately prior to the Merger Date will remain the
officers of Caliber and (v) substantially all of the officers of FedEx
immediately prior to the Merger Date will remain the officers of FedEx.
Stock Options
At the Merger Date, each outstanding option to purchase shares
of FedEx Common Stock (the "FedEx Stock Options") granted under any plan or
arrangement providing for the grant of options to purchase shares of FedEx
Common Stock to current or former officers, directors, employees or
consultants of FedEx (the "FedEx Stock Plans"), whether vested or unvested,
will be amended and converted into an option to acquire an equal number of
shares of FDX Common Stock at the same per share exercise price and on the
same terms and conditions as were applicable under the corresponding FedEx
Stock Option (each, an "Adjusted FedEx Option").
Similarly, at the Merger Date, each Caliber Stock Option
granted under any plan or arrangement providing for the grant of options to
purchase shares of Caliber Common Stock to current or former officers,
directors, employees or consultants of Caliber, whether vested or unvested,
will be amended and converted into an option to acquire, on the same terms and
conditions as were applicable under the Caliber Stock Option, the number of
shares of FDX Common Stock (rounded down to the nearest whole share)
determined by multiplying the number of shares of Caliber Common Stock subject
to such Caliber Stock Option by 0.8, at a price per share of FDX Common Stock
equal to (A) the aggregate exercise price for the shares of Caliber Common
Stock otherwise purchasable pursuant to such Caliber Stock Option divided by
(B) the aggregate number of shares of FDX Common Stock deemed purchasable
pursuant to such Caliber Stock Option (each, as so adjusted, an "Adjusted
Caliber Option"), provided that such exercise price shall be rounded up to the
nearest whole cent.
Prior to the Merger Date, FDX will adopt an option plan which
shall provide for the issuance of the Adjusted FedEx Options and the Adjusted
Caliber Options (together with the FDX Adjusted Options, the "Adjusted
Options") at the Merger Date and by virtue of the Mergers and without the need
of any further corporate action, and, accordingly, FDX will assume all
obligations with respect to those options.
No later than the Merger Date, FDX will prepare and file with
the SEC a registration statement on Form S-8 (or another appropriate form)
registering a number of shares of FDX Common Stock equal to the number of
shares subject to the Adjusted Options. Such registration statement will be
kept effective (and the current status of the initial offering prospectus or
prospectuses required thereby will be maintained) at least for so long as any
Adjusted Options may remain outstanding.
Certain Covenants
Interim Operation of Caliber. From October 5, 1997 (the date
of execution of the Merger Agreement) until the Merger Date, Caliber and its
subsidiaries are required to conduct their business in all material respects
in the ordinary course consistent with past practice and use their
commercially reasonable efforts to preserve intact their business
organizations and relationships with third parties and to keep available the
services of their present officers and employees. Without limiting the
generality of the foregoing, during this period, each of Caliber and its
subsidiaries is subject to restrictions on (subject to certain limited
exceptions) among other things: amending its organizational documents;
entering into any merger or consolidation; acquiring (other than as provided
in Caliber's capital expenditure budget) or selling or otherwise disposing of
material assets or property (other than pursuant to existing contracts or
commitments and in the ordinary course consistent with past practice);
declaring dividends (other than the payment of its regular quarterly dividend
on Caliber Common Stock in an amount not exceeding $0.10 per share) or making
any other distribution with respect to any shares of its capital stock;
creating or assuming any lien on any material asset (other than in the ordinary
course consistent with past practice); issuing or selling any of its equity
securities convertible into or exchangeable for, or any rights, warrants or
options to acquire, any of its equity securities (other than pursuant to the
exercise of a Caliber Stock Option); splitting, combining or reclassifying any
of its capital stock, or repurchasing or redeeming its capital stock;
incurring, assuming or guaranteeing any indebtedness from any third party
(other than in the ordinary course of business consistent with past practice);
making any material loans, advances or capital contributions (other than to
its subsidiaries, its employees in the ordinary course of business consistent
with past practice or investments in securities consistent with past
practice); entering into severance, termination pay, employment, deferred
compensation or similar agreements with directors, officers or employees and
increasing employee compensation, severance or other benefits (other than in
the ordinary course of business); proposing or adopting a plan of liquidation
or dissolution, or planning a division or share exchange, in each case with
respect to Caliber or a material subsidiary; making any changes in its
accounting policies (other than by reason of a change in GAAP or Regulation
S-X under the Securities and Exchange Act of 1934, as amended (the "1934
Act")); taking certain actions with respect to tax matters; and agreeing to do
any of the foregoing.
Interim Operations of FedEx. From October 5, 1997 until the
Merger Date, FedEx and its subsidiaries are required to conduct their business
in all material respects in the ordinary course consistent with past practice
and use their commercially reasonable efforts to preserve intact their
business organizations and relationships with third parties and to keep
available the services of their present officers and employees. In
particular, FedEx may not, during this period, declare, set aside or pay any
dividend or make any other distribution with respect to any shares of its
capital stock.
Caliber Directors' Covenant to Recommend. The Caliber Directors
have agreed to recommend adoption of the Merger Agreement to Caliber
shareholders. Furthermore, Caliber has agreed that until the termination of
the Merger Agreement, neither it nor its subsidiaries, directors, officers,
employees, financial advisors and other agents or representatives will,
directly or indirectly, take any action to solicit, initiate or encourage any
Acquisition Proposal (as defined below) with respect to Caliber or engage in
negotiations with, or disclose any non-public information relating to Caliber
or its subsidiaries or afford access to the properties, books or records of
Caliber or its subsidiaries to, any Person (as defined in the Merger
Agreement) that has informed Caliber that it is considering making, or has
made, an Acquisition Proposal with respect to Caliber. Notwithstanding the
foregoing, Caliber may, in response to an unsolicited bona fide written
proposal regarding an Acquisition Proposal by any Person, disclose such
non-public information to, or engage in negotiations with, such Person, if the
Caliber Directors determine in good faith that such Acquisition Proposal is
reasonably likely to be a Superior Proposal (as defined below), provided, that
prior to furnishing non-public information to, or entering into discussions or
negotiations with, such Person, Caliber receives from such Person an executed
confidentiality agreement with terms no less favorable to Caliber than those
contained in the Confidentiality Agreement.
Caliber will promptly (and in no event later than 24 hours
after receipt of the relevant Acquisition Proposal with respect to Caliber),
notify (which notice shall be provided orally and in writing and shall identify
the Person making the relevant Acquisition Proposal with respect to Caliber
and set forth the material terms thereof) FedEx after receipt of any
Acquisition Proposal or any indication from any Person that such Person is
considering making an Acquisition Proposal with respect to Caliber or any
request for nonpublic information relating to Caliber or its subsidiaries or
for access to any properties, books or records of Caliber or its subsidiaries
by any Person that may be considering making, or has made, an Acquisition
Proposal with respect to Caliber and will keep FedEx fully informed of the
status and details of any such Acquisition Proposal with respect to Caliber.
Caliber will give FedEx at least one business day's advance notice of any
information to be supplied to, and at least two days' advance notice of any
agreement to be entered into with, any Person making such Acquisition Proposal
with respect to Caliber.
"Acquisition Proposal" means any offer or proposal for, or any
indication of interest in, (i) a merger or other business combination
involving Caliber or any of its subsidiaries or (ii) the acquisition in any
manner of an equity interest in an amount equal to or greater than 20% of the
class of such equity security then outstanding, or a substantial portion of
the assets of Caliber or any of its subsidiaries, in each case other than the
transactions contemplated by the Merger Agreement. "Superior Proposal" means
an Acquisition Proposal with respect to Caliber which the Caliber Directors
determine in good faith (based on the advice of an investment banking firm of
national reputation taking into account all of the terms and conditions of the
Acquisition Proposal, including any conditions to consummation) to be more
favorable and provide greater value to Caliber's shareholders than the Caliber
Merger.
FedEx Board's Covenant to Recommend. The Board of Directors of
FedEx has agreed to recommend approval of the issuance of FDX Common Stock in
connection with the Merger Agreement to FedEx's stockholders.
Reasonable Best Efforts. Each party has agreed to use
reasonable best efforts to take, or cause to be taken, all actions and to do,
or cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate the Mergers and the other transactions
contemplated by the Merger Agreement.
Certain Employee Benefits Matters. After the Merger Date,
FedEx and FDX will offer employment to each employee at Caliber's Akron, Ohio
headquarters who is willing to relocate his or her place of employment to
Memphis, Tennessee or any other location designated by FedEx and FDX. As of
the Merger Date, FDX will assume the obligations of Caliber to perform certain
management retention agreements. Prior to the Merger Date it is contemplated
that Caliber will take certain actions with respect to certain compensation
and benefit arrangements covering certain Caliber employees and directors.
Indemnification and Insurance of Caliber Directors and
Officers. The Merger Agreement contains certain covenants relating to
indemnification and insurance. After the Merger Date, FDX will cause Caliber
to indemnify, defend and hold harmless any person who was, as of October 5,
1997, or had been at any time prior thereto, or who becomes prior to the
Merger Date, an officer, director, or employee or agent (an "Indemnified
Party") of Caliber or any of its subsidiaries against all losses, claims,
damages, liabilities, costs and expenses (including attorney's fees and
expenses), judgments, fines, losses, and amounts paid in settlement in
connection with any actual or threatened action, suit, claim, proceeding or
investigation (each a "Claim") to the extent that any such Claim is based on,
or arises out of, (i) the fact that such person is or was a director, officer,
employee or agent of Caliber or any of its subsidiaries at any time prior to
the Merger Date or is or was serving at the request of Caliber or any of its
subsidiaries as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise at any time prior to the
Merger Date, or (ii) the Merger Agreement or any of the transactions
contemplated thereby in each case to the extent that any such Claim pertains
to any matter or fact arising, existing, or occurring prior to or at the
Merger Date, regardless of whether such Claim is asserted or claimed prior to,
at or after the Merger Date (the matters described in clauses (i) and (ii) the
"Pre-Merger Matters"), to the fullest extent indemnified under the Caliber
Charter and the Caliber Bylaws in effect as of October 5, 1997 or
indemnification agreements in effect at the date thereof, including provisions
relating to advancement of expenses incurred in the defense of any action or
suit; provided that such indemnification will be subject to any limitation
imposed from time to time under applicable laws. FDX and Caliber will also
honor the indemnification agreements between Caliber or any of its
subsidiaries, as the case may be, and any officer or director of Caliber or
any such subsidiary, as the case may be, existing on October 5, 1997.
FDX and Caliber have agreed that all rights to indemnification
and all limitations or exculpation of liabilities existing in favor of the
Indemnified Party as provided in the Caliber Charter and Caliber Bylaws as in
effect as of October 5, 1997 will continue in full force and effect with
respect to Pre-Merger Matters, without any amendment thereto, for a period of
six years from the Merger Date to the extent such rights are consistent with
Ohio Law; provided that, in the event any Claim or Claims with respect to any
such Pre-Merger Matters are asserted or made within such six year period, all
rights to indemnification in respect of any such Claim or Claims will continue
until disposition of any and all such Claims; provided however, that any
determination required to be made with respect to whether an Indemnified
Party's conduct complies with the standards set forth under Ohio Law, the
Caliber Charter or Caliber Bylaws or such agreements, as the case may be, will
be made by independent legal counsel selected by the Indemnified Party and
reasonably acceptable to FDX, retained at FDX's expense.
FDX or Caliber will maintain Caliber's officers' and directors'
liability insurance policy as of the Merger Date ("D&O Insurance") with
respect to Pre-Merger Matters for a period of not less than six years after the
Merger Date, provided, that FDX or Caliber may substitute therefor policies of
substantially similar coverage and amounts containing terms no less
advantageous to such former directors or officers; provided further that in
satisfying these obligations, FDX will not be obligated to pay premiums in
excess of 150% of the premium for D&O Insurance paid by Caliber per annum in
its last full fiscal year, but provided further that FDX will nevertheless be
obligated to provide such coverage as may be obtained for such amount.
Certain Other Covenants. The Merger Agreement contains certain
mutual covenants of the parties, including covenants relating to actions to be
taken so as not to jeopardize the intended tax or accounting treatment of the
Mergers; public announcements; notification of certain matters; access to
information; identification of affiliates; further assurances; cooperation in
connection with certain governmental filings and in obtaining consents and
approvals; and confidential treatment of non-public information.
The Merger Agreement also contains certain covenants of FedEx,
including covenants requiring FedEx to: use its reasonable best efforts to
list the FDX Common Stock to be issued in connection with the Mergers on the
NYSE; promptly prepare and file a registration statement (of which this Joint
Proxy Statement/Prospectus is a part) and use reasonable best efforts to have
such registration statement declared effective; and cause FDX to establish an
FDX stock option plan as contemplated by the Merger Agreement and to vote the
shares of FDX owned by it in favor of such stock option plan.
Certain Representations and Warranties
The Merger Agreement contains certain reciprocal customary
representations and warranties made by Caliber and FedEx as to, among other
things: due organization and good standing; corporate authorization to enter
into the contemplated transactions; governmental approvals required in
connection with the contemplated transactions; absence of any breach of
organizational documents and certain material agreements as a result of the
contemplated transactions; capitalization; filings with the SEC; financial
statements; information included in this Joint Proxy Statement/Prospectus;
absence of certain material changes since a specified balance sheet date;
absence of undisclosed material liabilities; litigation; compliance with laws;
pooling and tax treatment of the Mergers; and finders' fees.
In addition, Caliber has made certain representations and
warranties to FedEx as to ownership of material subsidiaries; tax matters;
employee matters; intellectual property rights; environmental matters; receipt
of opinions of financial advisors; anti-takeover or similar statutes or
regulations; and its "poison pill".
The representations and warranties in the Merger Agreement do
not survive the Merger Date.
Conditions to the Mergers
Conditions to Each Party's Obligations to Effect the Mergers.
The obligations of Caliber to consummate the Caliber Merger and FedEx to
consummate the FedEx Reorganization Merger are subject to the satisfaction of
the following conditions: (i) the receipt of the approval of Caliber
shareholders of the Caliber Merger and the Merger Agreement; (ii) the receipt
of the approval of FedEx stockholders of the issuance of FDX Common Stock in
connection with the Merger Agreement; (iii) the expiration of the applicable
waiting period under the HSR Act; (iv) the absence of any applicable law or
regulation, judgment, injunction, order or decree prohibiting the consummation
of the Mergers; (v) the registration statement of which this Joint Proxy
Statement/Prospectus is a part having become effective under the 1933 Act and
not being subject to any stop order or related proceedings by the SEC; (vi)
the shares of FDX Common Stock to be issued in the Mergers having been
approved for listing on the NYSE, subject to official notice of issuance;
(vii) the receipt of all approvals from any governmental body, agency,
official or authority which are required to permit consummation of the Mergers
(other than those the failure of which to obtain would not be reasonably
likely to have a material adverse effect on FedEx or Caliber); and (viii)
FedEx shall have received a letter from its independent accounting firm
confirming management's assessment that the Mergers will qualify for pooling of
interests accounting treatment under GAAP, and Caliber shall have received a
letter from its independent accounting firm confirming management's assessment
that no conditions exist related to Caliber which would preclude FedEx from
accounting for the Mergers as a pooling of interests.
Conditions to the Obligations of FedEx. The obligations of
FedEx to consummate the FedEx Reorganization Merger are further subject to the
satisfaction of the following conditions: (i) the performance in all material
respects by Caliber of its obligations under the Merger Agreement at or prior
to the Merger Date; (ii) the representations and warranties of Caliber
contained in the Merger Agreement being true and correct at and as of the
Merger Date, as if made at and as of the Merger Date (except to the extent
expressly made as of an earlier date, in which case as of such date), except
where the failure of such representations and warranties to be so true and
correct (without giving effect to any limitation as to "materiality" or
"material adverse effect" set forth therein) is not reasonably likely to have,
individually or in the aggregate, a material adverse effect on Caliber; (iii)
holders of not more than 5% of the outstanding shares of Caliber Common Stock
having perfected dissenters' rights in respect of such Caliber Common Stock
pursuant to Section 1701.85 of the Ohio Law; and (iv) FedEx having received
the legal opinion of Davis Polk & Wardwell to the effect that the Mergers will
constitute transactions described in Section 351 and/or Section 368(a) of the
Code and that neither FedEx nor its stockholders will recognize gain or loss
for U.S. Federal income tax purposes as a result of the Mergers.
Conditions to the Obligations of Caliber. The obligations of
Caliber to consummate the Caliber Merger are further subject to the
satisfaction of the following conditions: (i) the performance in all material
respects by FedEx of its obligations under the Merger Agreement at or prior to
the Merger Date; (ii) the representations and warranties of FedEx contained in
the Merger Agreement being true and correct at and as of the Merger Date, as
if made at and as of the Merger Date (except to the extent expressly made as
of an earlier date, in which case as of such date), except where the failure
of such representations and warranties to be so true and correct (without
giving effect to any limitation as to "materiality" or "material adverse
effect" set forth therein) is not reasonably likely to have, individually or
in the aggregate, a material adverse effect on FedEx; and (iii) Caliber having
received the legal opinion of Cravath, Swaine & Moore to the effect that the
Mergers will constitute transactions described in Section 351 and/or Section
368(a) of the Code and that neither Caliber nor its shareholders shall
recognize gain or loss for U.S. Federal income tax purposes as a result of the
Mergers (other than with respect to cash paid in lieu of fractional shares to
dissenting shareholders).
Termination of the Merger Agreement
Right to Terminate. The Merger Agreement may be terminated at
any time prior to the Merger Date:
(i) by mutual written consent of Caliber and FedEx;
(ii) by either Caliber or FedEx, if the Mergers have not been consummated by
June 30, 1998 (but neither Caliber nor FedEx may terminate if its willful
failure to perform any of its obligations under the Merger Agreement is the
reason that the Mergers have not been consummated);
(iii) by either Caliber or FedEx, if any law or regulation makes
consummation of either of the Mergers illegal or otherwise prohibited or if
any judgment, injunction, order or decree is entered which enjoins Caliber
or FedEx from consummating the Mergers and such judgment, injunction, order
or decree becomes final and non-appealable (provided that any judgment,
injunction, order or decree other than a temporary restraining order shall
be deemed to have become final and non-appealable thirty days following the
entry thereof);
(iv) (A) by Caliber, if the approval of the FedEx stockholders has not been
obtained by reason of the failure to obtain the required vote at a duly
held meeting of stockholders or (B) by FedEx, if the Caliber Directors do
not call or hold the Caliber Meeting or if the approval of the Caliber
shareholders has not been obtained by reason of the failure to obtain the
required vote at a duly held meeting of shareholders;
(v) by FedEx, if prior to the Caliber Meeting, the Caliber Directors
withdraw, modify or change in a manner adverse to FedEx their approval or
recommendation of the Merger Agreement;
(vi) by FedEx, upon a breach of any representation, warranty, covenant or
agreement of Caliber, or if any representation or warranty of Caliber becomes
untrue, the effect of which is a material adverse effect on Caliber, in either
case such that certain conditions would be incapable of being satisfied by
June 30, 1998 (or as otherwise extended);
(vii) by Caliber, upon a breach of any representation, warranty, covenant
or agreement of FedEx, or if any representation or warranty of FedEx becomes
untrue, the effect of which is a material adverse effect on FedEx, in either
case such that certain conditions would be incapable of being satisfied by
June 30, 1998 (or as otherwise extended); and
(viii) by Caliber, if prior to the Caliber Meeting, the Caliber Directors
withdraw or modify in a manner adverse to FedEx their approval or
recommendation of the Merger Agreement or the Caliber Merger in order to
permit Caliber to execute a definitive agreement in connection with a
Superior Proposal.
If the Merger Agreement is terminated, no provision thereof
will survive (except for provisions relating to confidentiality, non-survival
of representations and warranties, expenses, governing law and jurisdiction),
and such termination will be without any liability on the part of any party,
unless such party is in willful breach thereof.
Termination Fees and Expenses Payable by Caliber. Caliber has
agreed to pay to FedEx $50,000,000 (A) if FedEx terminates the Merger
Agreement pursuant to paragraph (iv)(B) under "-- Right to Terminate" above
or (B) if FedEx terminates the Merger Agreement pursuant to paragraph (v)
under "-- Right to Terminate" above (except that, in each case, Caliber will
not be obligated to pay such amount if FedEx has not performed its obligations
or is in breach of its representations and warranties under the Merger
Agreement). In the event of any such termination of the Merger Agreement when
an Acquisition Proposal is pending, Caliber will pay to FedEx an additional
$50,000,000 if, within 12 months of such termination, Caliber enters into an
agreement providing for, or there shall be consummated, a transaction which
would constitute an Acquisition Proposal.
Caliber has also agreed to pay to FedEx an aggregate of
$100,000,000 if Caliber terminates the Merger Agreement pursuant to paragraph
(viii) under "--Right to Terminate" above.
Termination Fees and Expenses Payable by FedEx. FedEx has
agreed to pay to Caliber $50,000,000 if Caliber terminates the Merger
Agreement pursuant to paragraph (iv)(A) under "--Right to Terminate" above
(except that FedEx shall not be obligated to pay such amount if Caliber has
not performed its obligations or is in breach of its representations and
warranties under the Merger Agreement).
Other Expenses
Except as described above, all costs and expenses incurred in
connection with the Merger Agreement and the transactions contemplated thereby
will be paid by the party incurring such costs or expenses.
Amendments; Waivers
Any provision of the Merger Agreement may be amended or waived
prior to the Merger Date if the amendment or waiver is in writing and signed,
in the case of an amendment, by Caliber, FedEx and FDX or, in the case of a
waiver, by the party against whom the waiver is to be effective; provided that
after the approval of the issuance of FDX Common Stock in connection with the
Mergers by the stockholders of FedEx and the approval of the Merger Agreement
by the shareholders of Caliber, no amendment or waiver will, without the
further approval of such stockholders, change or alter (i) the amount or kind
of consideration to be received in exchange for such stockholders' shares of
FedEx or Caliber or (ii) the terms or conditions of the Merger Agreement so as
to adversely affect such stockholders.
CERTAIN STOCKHOLDER ARRANGEMENTS
Voting Agreement. The following summary of the Voting
Agreement is qualified in its entirety by reference to the complete text of
the Voting Agreement, which is incorporated by reference herein and attached
hereto as Annex C. In connection with the Merger Agreement, (i) G. James
Roush and Sarah Roush Werner (each a "Shareholder" with respect to the Free
Shares, and a "Beneficiary" with respect to the Trust Shares (as such terms
are defined in the Voting Agreement)) and (ii) G. James Roush and Richard A.
Chenoweth (each a "Trustee") entered into a Voting Agreement with FedEx dated
as of October 5, 1997 (the "Voting Agreement"). The Beneficiaries and the
Trustees, among others, are parties to an Amended and Restated Voting Trust
Agreement effective as of November 1, 1993 (the "Trust Agreement"). Pursuant
to the Voting Agreement, each Beneficiary has agreed to instruct the Trustees,
in accordance with the Trust Agreement, and each Trustee has agreed, to the
extent so instructed in accordance with the Trust Agreement, to vote any shares
of Caliber Common Stock subject to the Trust Agreement, and each Shareholder
has agreed; to vote any shares of Caliber Common Stock held by them in favor
of the Merger Agreement, the Caliber Merger and the other transactions
contemplated by the Merger Agreement. Approximately 13.6% (or 5,332,942
shares) of the outstanding shares of Caliber Common Stock are subject to the
Voting Agreement and will be voted in favor of the Caliber Merger Proposal
subject to the terms of the Voting Agreement.
The Voting Agreement will terminate upon the termination of the
Merger Agreement in accordance with its terms.
THE MEETINGS
This Joint Proxy Statement/Prospectus is furnished in
connection with the solicitation of proxies (i) from the holders of FedEx
Common Stock by the Board of Directors of FedEx for use at the FedEx Meeting
and (ii) from the holders of Caliber Common Stock by the Caliber Directors for
use at the Caliber Meeting. This Joint Proxy Statement/Prospectus and
accompanying form of proxy are first being mailed to the respective stockholders
of FedEx and Caliber on or about December 8, 1997.
Times and Places; Purposes
The FedEx Meeting will be held at the Memphis Marriott, 2625
Thousand Oaks Boulevard, Memphis, Tennessee, on January 12, 1998, starting at
10:00 a.m. local time. At the FedEx Meeting, the stockholders of FedEx will
be asked to consider and vote upon (i) the FedEx Proposals and (ii) such other
matters as may properly come before the FedEx Meeting.
FedEx stockholders must approve the issuance of the FDX Common
Stock in connection with the Mergers in order to comply with requirements of
the NYSE, on which the FDX Common Stock will be listed. Stockholder approval
is required if a company whose common stock is listed on the NYSE issues common
stock in a transaction such as the Mergers in an amount equal to or greater
than 20% of the number of shares of common stock outstanding prior to such
issuance.
Pursuant to the FedEx Proposals, FedEx stockholders are also
being asked to approve the adoption of the 1997 Stock Incentive Plan. The
1997 Stock Incentive Plan is substantially similar to the stock incentive plan
approved by FedEx stockholders at the Annual Meeting of FedEx stockholders
held on September 29, 1997. That plan, while approved, was discontinued by
the FedEx Board because of the pending Mergers.
Approval and consummation of the Mergers is not conditioned on
approval of the adoption of the 1997 Stock Incentive Plan, and approval of the
1997 Stock Incentive Plan is not conditioned on the approval and consummation
of the Mergers. If the 1997 Stock Incentive Plan is approved but the Mergers
are not, the 1997 Stock Incentive Plan will be a stock incentive plan of FedEx
instead of FDX. See "The FDX 1997 Stock Incentive Plan."
The Caliber Meeting will be held at the Law Offices of Jones,
Day, Reavis & Pogue, North Point, 901 Lakeside Avenue, Cleveland, OH, on
January 9, 1998, starting at 9:00 a.m., local time. At the Caliber
Meeting, the shareholders of Caliber will be asked to consider and vote
upon (i) the Caliber Merger Proposal and (ii) such other matters as may
properly come before the Caliber Meeting.
Voting Rights; Votes Required for Approval
FedEx. The FedEx Board has fixed the close of business on
November 28, 1997 as the record date (the "FedEx Record Date") for FedEx
stockholders entitled to notice of and to vote at the FedEx Meeting.
The only outstanding voting securities of FedEx are the shares
of FedEx Common Stock. Only holders of record of the shares of FedEx Common
Stock on the FedEx Record Date are entitled to notice of and to vote at the
FedEx Meeting. Under the Delaware Law and the FedEx Charter, each share of
FedEx Common Stock is entitled to one vote on all matters submitted to FedEx
stockholders.
On the FedEx Record Date, there were 115,174,659 shares of
FedEx Common Stock outstanding and entitled to vote at the FedEx Meeting, held
by approximately 9,528 stockholders of record.
A majority of the outstanding shares of FedEx Common Stock
entitled to vote at the FedEx meeting will constitute a quorum. The
affirmative vote of a majority of the votes represented by the shares of FedEx
Common Stock present at the FedEx Meeting, in person or by proxy, and entitled
to vote (so long as such shares represent a quorum), is required to approve
the FedEx Proposals.
On the FedEx Record Date, FedEx directors and executive
officers owned 10,418,122 shares of FedEx Common Stock (approximately 9%).
These directors and executive officers have indicated that they intend to vote
in favor of the FedEx Proposals.
Caliber. The Caliber Directors have fixed the close of
business on November 28, 1997 (the "Caliber Record Date") as the record date
for Caliber shareholders entitled to notice of and to vote at the Caliber
Meeting.
The only class of Caliber capital stock entitled to notice of
and to vote at the Caliber Meeting is the Caliber Common Stock. Only holders
of record of shares of Caliber Common Stock on the Caliber Record Date are
entitled to notice of and to vote at the Caliber Meeting. Each holder of
record, as of the Caliber Record Date, of Caliber Common Stock is entitled to
cast one vote per share.
On the Caliber Record Date, there were approximately 39,206,181
million shares of Caliber Common Stock outstanding and entitled to vote at the
Caliber Meeting, held by approximately 11,923 shareholders of record.
The presence, in person or by proxy, of the holders of a
majority of the outstanding shares of Caliber Common Stock entitled to vote is
necessary to constitute a quorum at the Caliber Meeting. The affirmative
vote, in person or by proxy, of the holders of a majority of the shares of
Caliber Common Stock outstanding on the Caliber Record Date is required to
approve and adopt the Caliber Merger Proposal.
On the Caliber Record Date, Caliber directors (other than Mr.
Roush) and executive officers owned 73,654 shares of Caliber Common Stock
(approximately 0.2%). These directors and officers have indicated that they
intend to vote in favor of the Caliber Merger Proposal. In addition, certain
Caliber shareholders (including Mr. Roush), who own in the aggregate 13.6% of
Caliber shares, have agreed to vote in favor of the Caliber Merger Proposal.
See "Certain Stockholder Arrangements."
Proxies
All shares of FedEx Common Stock and of Caliber Common Stock
represented by properly executed proxies received prior to or at the
respective FedEx Meeting or Caliber Meeting, as the case may be, and not
revoked, will be voted in accordance with the instructions indicated in such
proxies. If no instructions are indicated on a properly executed returned
proxy, such proxies will be voted FOR the approval of the FedEx Proposals or
the Caliber Merger Proposal, as the case may be.
Abstentions may be specified on all proposals. A properly
executed proxy marked "ABSTAIN" with respect to any proposal will be counted
as present for purposes of determining whether there is a quorum and for
purposes of determining the aggregate voting power and number of shares
represented and entitled to vote at the applicable Meeting with respect to the
indicated proposal. Accordingly, since the affirmative votes described above
are required for approval of the Caliber Merger Proposal and the FedEx
Proposals, a proxy marked "ABSTAIN" with respect to any such proposal will
have the effect of a vote against such proposal. In addition, the failure of
a Caliber stockholder to return a proxy will have the effect of a vote against
the Caliber Merger Proposal.
Under NYSE rules, brokers who hold shares in street name for
customers have the authority to vote on certain "routine" proposals, when
they have not received instructions from beneficial owners. Under NYSE rules,
such brokers are precluded from exercising their voting discretion with
respect to the approval and adoption of non-routine matters such as the
Mergers and the issuance of shares of FDX Common Stock in the Mergers and
thus, absent specific instructions from the beneficial owner of such shares,
brokers are not empowered to vote such shares with respect to the approval and
adoption of the FedEx Proposals or the Caliber Merger Proposal. Since the
affirmative vote described above is required for approval of the Caliber
Merger Proposal, a "broker non-vote" with respect to such proposal will have
the effect of a vote against such proposal. Broker non-votes will be treated
as not voted and will therefore have no effect on the outcome of the FedEx
Proposals.
A stockholder may revoke his or her proxy at any time prior to
its use by delivering to the Secretary of FedEx or Caliber (or to the
respective transfer agent in the case of confidential voting), as the case may
be, a signed notice of revocation or a later-dated signed proxy or by
attending the applicable Meeting and voting in person. Attendance at the
FedEx Meeting or the Caliber Meeting will not in itself constitute the
revocation of a proxy.
It is the policy of FedEx and Caliber to keep confidential
proxy cards, ballots and voting tabulations that identify individual
stockholders, except where disclosure is mandated by law and in other limited
circumstances. There is a place on the enclosed proxy card for Caliber
shareholders to make an election with respect to confidential treatment of
their proxy votes. If a Caliber shareholder so requests confidential
treatment, an independent vote tabulator and the independent inspectors of
election will keep the shareholder's vote permanently confidential and not
disclose the vote to anyone, subject to applicable law as described above.
The cost of solicitation of proxies will be paid by FedEx for
FedEx proxies and by Caliber for Caliber proxies. In addition to solicitation
by mail, arrangements will be made with brokerage houses and other custodians,
nominees and fiduciaries to send the proxy materials to beneficial owners; and
FedEx or Caliber, as the case may be, will, upon request, reimburse such
brokerage houses and custodians for their reasonable expenses in so doing.
FedEx has retained Morrow & Co. and Caliber has retained MacKenzie Partners,
Inc. to aid in the solicitation of proxies and to verify certain records
related to the solicitations. Each such firm will receive customary fees, and
expense reimbursement, for such services. To the extent necessary in order to
ensure sufficient representation at its Meeting, FedEx or Caliber may request
by telephone or facsimile the return of proxy cards. The extent to which this
will be necessary depends entirely upon how promptly proxy cards are returned.
Stockholders are urged to send in their proxies without delay.
Stockholders should not send in any stock certificates with
their proxy cards. A transmittal form with instructions for the surrender of
stock certificates for Caliber Common Stock will be mailed by the Exchange
Agent to former Caliber shareholders as soon as practicable after the
consummation of the Mergers.
Other Business; Adjournments
The Board of Directors of FedEx and the Caliber Directors are
not currently aware of any business to be acted upon at their respective
Meetings other than as described herein. If, however, other matters are
properly brought before either Meeting, or any adjournments or postponements
thereof, the persons appointed as proxies will have discretion to vote or act
thereon according to their best judgment. Adjournments may be made for the
purpose of, among other things, soliciting additional proxies. Any
adjournment may be made from time to time by approval of the holders of a
majority of the shares present in person or by proxy at the Meeting (whether
or not a quorum exists) without further notice other than by an announcement
made at the Meeting. Neither FedEx nor Caliber currently intends to seek an
adjournment of its respective Meeting.
COMPARISON OF STOCKHOLDER RIGHTS
General
The rights of FedEx stockholders are currently governed by the
Delaware Law and the FedEx Charter and the FedEx Bylaws. The rights of
Caliber shareholders are currently governed by the Ohio Law and the Caliber
Charter and the Caliber Bylaws. The rights of FDX stockholders are currently
governed by the Delaware Law and the FDX Charter and the FDX Bylaws. The FDX
Charter and the FDX Bylaws are identical to the FedEx Charter and the FedEx
Bylaws, respectively, in all material respects. Accordingly, upon
consummation of the Mergers, the rights of FedEx stockholders and of Caliber
shareholders who become FDX stockholders in the Mergers will be governed by
the Delaware Law, the FDX Charter and the FDX Bylaws. The following is a
summary of the principal differences between the current rights of Caliber
shareholders and those of FDX stockholders following the Mergers.
The following discussions are not intended to be complete and
are qualified by reference to the Delaware Law, the Ohio Law, the FedEx
Charter, the FedEx Bylaws, the Caliber Charter, the Caliber Bylaws, the FDX
Charter and the FDX Bylaws. Copies of all of these documents are incorporated
by reference herein and will be sent to holders of shares of FedEx Common
Stock and Caliber Common Stock upon request. See "Where You Can Find More
Information."
Comparison of Stockholder Rights
Neither the FDX Charter nor the FDX Bylaws are being amended in
connection with the Mergers.
Authorized Capital Stock. The authorized capital stock of
Caliber consists of 200,000,000 shares of Caliber Common Stock and 40,000,000
shares of serial preferred stock without par value (the "Caliber Preferred
Stock"). The authorized capital stock of FDX is set forth under "Description
of FDX Capital Stock--Authorized Capital Stock." Both the Delaware Law and
the Ohio Law permit a corporation's certificate of incorporation or articles
of incorporation, respectively, to allow the directors to issue, without
stockholder approval, a series of preferred or preference stock and to
designate their rights, preferences, privileges and restrictions. The Ohio
Law, however, does not permit the directors to fix the voting rights of any
such series of preferred or preference stock.
Board of Directors. Under the Ohio Law, the number of
directors may be fixed or changed by the shareholders or by the directors if
so authorized by the articles of incorporation or code of regulations. The
Caliber Charter provides that the number of directors will be ten, except that
either the shareholders or the directors by resolution may change that number
at any time. The number of directors may not be reduced to less than three.
Caliber currently has eight directors. Under the Ohio Law, cumulative voting
(unless eliminated by an amendment of the articles of incorporation) is
required to be available for the election of directors if notice to such
effect is given by a shareholder prior to a shareholders' meeting and an
announcement to such effect is made at the meeting. The Caliber Charter does
not provide for cumulative voting for the election of directors.
The Caliber Bylaws provide for nomination for the election of
directors by (i) the directors or a committee appointed by the directors or
(ii) any shareholder entitled to vote in the election of directors generally
and according to the procedures described in the Caliber Bylaws. Under the
Caliber Bylaws, vacancies on the Board, however caused, will be filled by the
vote of a majority of the remaining directors (even if less than a majority of
the whole authorized number of directors) for the remainder of the unexpired
term.
The Caliber Bylaws do not contain provisions regarding the
removal of directors, and accordingly the matter is governed by the Ohio Law.
The Ohio Law provides that directors may be removed by (i) the directors if
(A) by order of court a director has been found to be of unsound mind, or if
he is adjudicated a bankrupt, or (B) within sixty days from the date of
election, the director does not qualify by accepting in writing his election
or by acting at a meeting of directors, or (ii) the shareholders, without
assigning any cause, by the vote of the holders of a majority of the voting
power entitling them to elect directors.
The Caliber Charter authorizes the Directors of Caliber to
designate any series of Caliber Preferred Stock and the relative rights and
preferences of each series.
Under the Delaware Law, unless the certificate of incorporation
specifies the number of directors, a board of directors may change the
authorized number of directors by an amendment to the bylaws if fixed therein,
or in such manner as may be provided therein. If the certificate of
incorporation specifies the number of directors, then that number can be
changed only by amending the certificate of incorporation. The FDX Bylaws
provide that the number of directors shall be not less than nine or more than
fifteen persons, with the exact number to be determined by the FDX Board.
Pursuant to the FDX Bylaws, the FDX Board is divided into three classes, with
directors of each class serving until the third annual meeting of stockholders
after the annual meeting at which that class was elected. FDX will, as of the
Merger Date, have thirteen directors. Under the Delaware Law, stockholders of
a corporation cannot elect directors by cumulative voting unless its
certificate of incorporation so provides. The FDX Charter does not provide
for cumulative voting for the election of directors.
The FDX Bylaws provide that vacancies and newly-created
directorships resulting from an increase in the authorized number of directors
shall be filled by a majority of the directors then in office (even if less
than a quorum) and such new directors shall hold office until the next
election of the class for which they have been chosen. Neither the FDX
Charter nor the FDX Bylaws contain provisions regarding the removal of
directors, and accordingly this matter is governed by the Delaware Law. The
Delaware Law provides that directors of a corporation with a classified board
may be removed only for cause by a vote of the holders of a majority of shares
entitled to vote at an election of directors.
Special Meetings of Stockholders. Under the Ohio Law, a
special meeting of shareholders may be called by the chairman, the president,
the directors by action at a meeting, a majority of the directors voting
without a meeting, persons owning 25% of the outstanding shares entitled to
vote at such meeting (or a less or greater proportion as specified in the
articles or regulations but not greater than 50%) or the person(s) authorized
to do so by the articles of incorporation or the code of regulations. The
Caliber Bylaws provide that special meetings of shareholders may be called by
(i) the chairman of the board, (ii) the board acting at a meeting, or (iii)
the persons who hold fifty percent of the voting power of the outstanding
shares. Under the Delaware Law, special stockholder meetings may be called by
the board of directors and by any person(s) authorized by the certificate of
incorporation or the bylaws. The FDX Charter provides that special meetings
of stockholders may be called only by the board of directors pursuant to a
resolution approved by a majority of the entire board of directors.
Stockholder Action by Written Consent. Under the Ohio Law,
unless prohibited by the articles of incorporation or the code of regulations,
any action by shareholders generally must be taken at a meeting, unless a
consent in writing setting forth the action so taken is signed by all the
shareholders who would be entitled to notice of the meeting held to consider
the subject matter thereof. The Caliber Bylaws permit its shareholders to act
by written consent if authorized by a writing signed by all of the
shareholders who would be entitled to a notice of a meeting for such purposes.
Under the Delaware Law, unless the certificate of incorporation provides
otherwise, any action by stockholders must be taken at a meeting of
stockholders, unless a consent in writing setting forth the action so taken is
signed by stockholders having not less than the minimum number of votes
necessary to take such action at a meeting at which all shares entitled to
vote were present and voted. The FDX Charter and the FDX Bylaws do not permit
its stockholders to act by written consent.
Amendment of Corporate Charter and Bylaws. The Ohio Law
permits the adoption of amendments to the articles of incorporation if such
amendments are approved at a meeting held for such purpose by the holders of
shares entitling them to exercise two-thirds of the voting power of the
corporation, or such lesser, but not less than a majority, or greater vote as
specified in the articles of incorporation. Amendment of the Caliber Charter
requires the affirmative vote or consent of the holders of shares entitling
them to exercise a majority of the voting power of the corporation or by the
affirmative vote of the majority of the holders of shares of every class
entitled by law or the Caliber Charter to vote on such amendment.
Notwithstanding the foregoing, the approval of the holders of more than
two-thirds of the voting power then outstanding is required if the amendment
of the Caliber Charter is of certain provisions relating to mergers or
consolidations of Caliber, unless the directors approve the transaction by an
87.5% majority, in which case the majority of the voting power is required.
In addition, the Caliber Charter provides that the directors may amend it in
circumstances permitted under the Ohio Law.
The Caliber Bylaws may be amended by the affirmative vote of
the holders of shares entitling them to exercise a majority of the voting
power of the corporation. Certain provisions of the Caliber Bylaws (relating
to special meetings of shareholders, indemnification and insurance, nomination
of directors, bringing business before meetings and amendments to the Caliber
Bylaws) may only be amended with the affirmative vote of the holders of shares
entitling them to exercise not less than two-thirds of the voting power.
Under the Ohio Law, a code of regulations may be adopted,
amended or repealed only by approval of the shareholders either at a meeting
of shareholders by the affirmative vote of the holders of shares entitling them
to exercise a majority of the voting power on such proposal or by written
consent signed by holders of shares entitling them to exercise two-thirds of
the voting power on such proposal. The articles of incorporation or code of
regulations may provide for amendment by a greater or lesser proportion of the
voting power, but not less than a majority.
The Delaware Law provides that a charter amendment requires
that (i) the board of directors adopt a resolution setting forth the proposed
amendment and (ii) a majority of the voting power of the then outstanding
capital stock of the company approves the amendment. Certain provisions of
the FDX Charter relating to business combinations may only be amended with the
affirmative vote of at least eighty percent of the voting power of all shares
entitled to vote generally in the election of directors. The FDX Charter does
not provide for its amendment relating to other provisions. Accordingly,
amendment of any other provision of the FDX Charter is governed by the
Delaware Law.
The Delaware Law provides that amendment of a company's bylaws
may be made by holders of a majority of the voting power of the then
outstanding capital stock of the company. The FDX Bylaws may be amended by
the directors or the stockholders. The FDX Bylaws generally do not specify
the stockholder vote required for amendment. Certain provisions of the FDX
Bylaws (relating to special meetings of stockholders, action by written
consent by stockholders, number and vacancies of directors, and amendment of
the bylaws) may only be amended with the affirmative vote of at least eighty
percent of the voting power of all shares entitled to vote generally in the
election of directors.
Voting Rights. The Caliber Common Stock is the only class of
Caliber capital stock entitled to vote generally on all matters submitted to
Caliber shareholders, including the approval of the Caliber Merger and the
Merger Agreement. Each share of Caliber Common Stock is entitled to one vote
on all matters submitted to Caliber shareholders.
The outstanding voting securities of FDX are the shares of FDX
Common Stock. Under the Delaware Law and the FDX Charter, each share of FDX
Common Stock is entitled to one vote on all matters submitted to FDX
stockholders.
Certain Business Combinations. Under the Ohio Law, unless
otherwise provided in the articles of incorporation, any merger, consolidation
or sale of substantially all of the assets of the corporation require the
approval of the holders of shares entitling them to exercise at least
two-thirds of the voting power. The articles of incorporation may provide for
a greater or lesser vote, so long as the vote required is not less than a
majority of the voting power. Article XI of the Caliber Charter requires the
vote of the holders of voting stock outstanding representing not less than
two-thirds of the votes entitled to vote for any: (i) proposal or proceeding
for a merger or consolidation, (ii) combination or majority share acquisition,
or (iii) sale, lease or exchange of substantially all of the assets.
Notwithstanding the foregoing, the affirmative vote of not less than a
majority of the shares of the entire voting power will be required to approve
any such proposal if: (i) 87.5% of the directors recommend approval to the
shareholders, or (ii) 100% of the directors consent thereto in writing in
accordance with the Ohio Law. The Ohio Law permits mergers without approval
by stockholders of the surviving corporation if, among other things, no
charter amendment is involved and no more than a specified maximum increase in
outstanding voting stock will result. Under the Ohio Law, the maximum
permitted increase is any amount less than one-sixth of a corporation's
resulting shares possessing voting power in the election of directors.
The Delaware Law generally requires approval of any merger,
consolidation or sale of substantially all the assets of a corporation by vote
of the holders of a majority of all outstanding shares entitled to vote
thereon, although the certificate of incorporation may provide for a greater
vote. Article Fifth of the FDX Charter provides that any Business Combination
(defined below) with or upon a proposal by a Related Person (defined below)
requires, in addition to any vote required by law, the affirmative vote of the
holders of at least eighty percent of the voting power of the then outstanding
shares of capital stock entitled to vote generally in the election of
directors (the "Voting Stock"), unless, among other things, (i) the Business
Combination has been approved by a majority of the Continuing Directors
(defined below) or (ii) certain fair price criteria and disclosure obligations
are satisfied.
The term "Related Person" is defined to mean any person (other
than FDX, a subsidiary or any profit sharing, employee stock ownership or
other employee benefit plan or any trustee of or fiduciary with respect to any
such plan acting in such capacity) which (i) is the beneficial owner, directly
or indirectly, of more than 10% of the voting power of the outstanding Voting
Stock, (ii) is an Affiliate (as such term is defined in Rule 12b-2 promulgated
under the 1934 Act) of FDX and at anytime within the two-year period
immediately prior to the date in question was the beneficial owner, directly
or indirectly, of 10% or more of the voting power of the then outstanding
Voting Stock, or (iii) is an assignee of or has otherwise succeeded to any
shares of Voting Stock which were at any time within the two-year period
immediately prior to the date in question beneficially owned by any Related
Person, if such assignment or succession shall have occurred in the course of a
transaction or series of transactions not involving a public offering within
the meaning of the 1933 Act.
The term "Business Combination" is defined to mean any of the
following transactions, when entered into by FDX or a subsidiary of FDX with,
or upon a proposal by, a Related Person or any other corporation (whether or
not itself a Related Person which is, or after such transaction would be, an
Affiliate of a Related Person: (i) the merger or consolidation of FDX or any
subsidiary of FDX, (ii) the sale, lease, exchange, mortgage, pledge, transfer
or other disposition of any assets of FDX or any subsidiary of FDX having an
aggregate Fair Market Value (as defined in the FDX Charter) of $5 million or
more, (iii) the issuance or transfer by FDX or any of its subsidiaries of
securities of FDX or that subsidiary having an aggregate Fair Market Value of
$5 million or more, (iv) the adoption of a plan or proposal for the
liquidation or dissolution of FDX, (v) the reclassification of securities
(including a reverse stock split), recapitalization, consolidation or any
other transaction (whether or not involving a Related Person) which has the
direct or indirect effect of increasing the voting power, whether or not then
exercisable, of a Related Person in any class or series of capital stock of
FDX or any subsidiary of FDX, or (vi) any agreement, contact or other
arrangement providing directly or indirectly for the foregoing.
The term "Continuing Director" is defined to mean a director of
FDX who is not affiliated with a Related Person and who was a member of the
FDX Board immediately prior to the time that the Related Person became a
Related Person, and any successor to a Continuing Director who is not
affiliated with the Related Person and is recommended to succeed a Continuing
Director by a majority of Continuing Directors who are then members of the
Board of Directors.
DESCRIPTION OF FDX CAPITAL STOCK
The summary of the terms of the capital stock of FDX set forth
below does not purport to be complete and is qualified by reference to the FDX
Charter and the FDX Bylaws. Copies of the FDX Charter and the FDX Bylaws are
incorporated by reference herein and will be sent to holders of shares of
FedEx Common Stock and Caliber Common Stock upon request. See "Where You Can
Find More Information."
Authorized Capital Stock
Under the FDX Charter, FDX's authorized capital stock consists
of 400,000,000 shares of FDX Common Stock and 4,000,000 shares of series
preferred stock without par value (the "FDX Preferred Stock").
FDX Common Stock
The holders of FDX Common Stock are entitled to one vote for
each share held and have the sole right to vote for the election of directors
of FDX or on any other matter (unless required by the Delaware Law, the FDX
Charter or a resolution of the FDX Board authorizing a series of the FDX
Preferred Stock). Subject to preferences that may be applicable to
outstanding FDX Preferred Stock, holders of FDX Common Stock are entitled to
share equally, share for share, when and as dividends are declared upon the
FDX Common Stock, whether payable in cash, in property or in shares of stock
of FDX. In the event of the distribution of assets on liquidation,
dissolution or winding up, the FDX Preferred Stock shall rank prior to the FDX
Common Stock.
FDX Preferred Stock
The FDX Board is authorized to designate any series of FDX
Preferred Stock and the relative rights and preferences of each series. As of
the date of this Joint Proxy Statement/Prospectus, no shares of the FDX
Preferred Stock were issued or outstanding.
Anti-Takeover Effect of Certain Provisions of the FDX Charter and the FDX
Bylaws
Certain provisions of the FDX Charter and the FDX Bylaws
described above may have the effect of impeding the acquisition of control of
FDX. These provisions are designed to reduce, or have the effect of reducing,
the vulnerability of FDX to unsolicited takeover attempts which are unfair to
FDX stockholders. The FDX Board could create and issue a series of preferred
stock with rights, privileges or restrictions, and adopt a stockholder rights
plan, having the effect of discriminating against an existing or prospective
holder of such securities as a result of such security holder beneficially
owning or commencing a tender offer for a substantial amount of FDX Common
Stock. One of the effects of authorized but unissued and unreserved shares of
capital stock may be to render more difficult or discourage an attempt by a
potential acquiror to obtain control of FDX by means of a merger, tender
offer, proxy contest or otherwise, and thereby protect the continuity of FDX's
management. The issuance of such shares of capital stock may have the effect
of delaying, deferring or preventing a change in control of FDX without any
further action by the stockholders of FDX. FDX has no present intention to
adopt a shareholder rights plan, but could do so without shareholder approval
at any future time. In addition, the existence of a classified board would
make it more difficult for a hostile third party to effect a business
combination with FDX by removing the existing board in a proxy contest.
Transfer Agent and Registrar
First Chicago Trust Company of New York is the transfer agent
and registrar for the FDX Common Stock.
Stock Exchange Listing; Delisting and Deregistration of Caliber Common Stock
It is a condition to the Mergers that the shares of FDX Common
Stock issuable in the Mergers be approved for listing on the NYSE prior to the
Merger Date, subject to official notice of issuance. If the Mergers are
consummated, Caliber Common Stock will cease to be listed on the NYSE.
THE FDX 1997 STOCK INCENTIVE PLAN
The use of stock incentives to secure and retain key employees
of outstanding ability, to further identify the interests of employees with
the interests of the stockholders, to encourage greater stock ownership by, and
to provide added incentive to, those individuals who carry a major part of the
responsibility for the success of the business that has been and remains
important in American industry. In furtherance of these objectives, the Board
of Directors of FedEx has adopted the 1997 Stock Incentive Plan, subject to
approval thereof by the vote of the holders of a majority of the FedEx Common
Stock represented and voting at the FedEx Meeting. A copy of the 1997 Stock
Incentive Plan is attached hereto as Annex E and the statements made in this
Joint Proxy Statement/Prospectus with respect to the 1997 Stock Incentive Plan
are qualified in their entirety by and subject to the more complete
information set forth therein.
The 1997 Stock Incentive Plan is very similar to the stock
incentive plan that holders of FedEx Common Stock approved at the Annual
Meeting of FedEx stockholders held in September of 1997. That stock incentive
plan, while approved by the FedEx stockholders, was discontinued by the Board
of Directors of FedEx because of the pending Mergers. FedEx is therefore
requesting that its stockholders approve the 1997 Stock Incentive Plan
described below. Consummation of the Mergers is not conditioned on approval
of the 1997 Stock Incentive Plan; adoption of the 1997 Stock Incentive Plan is
not conditioned on consummation of the Mergers.
The 1997 Stock Incentive Plan provides for the granting of
options to purchase for cash an aggregate of not more than 3,000,000 shares of
FDX Common Stock (subject to adjustments in the event of a consolidation or
other corporate reorganization in which FDX is the surviving corporation)
which will represent approximately 2% of the outstanding shares of FDX Common
Stock expected to be outstanding after the Mergers. In the event the Mergers
are not consummated, the 1997 Stock Incentive Plan will provide for the
granting of options to purchase 3,000,000 shares of FedEx Common Stock, or
approximately 2.6% of the outstanding shares of FedEx Common Stock outstanding
as of November 28, 1997. All other provisions of the 1997 Stock Incentive
Plan will be identical regardless of whether the Mergers are consummated,
except that if the Mergers are not consummated, references to FDX contained in
the 1997 Stock Incentive Plan and in the description set forth herein will be
deemed to be references to FedEx. During the term of the 1997 Stock Incentive
Plan, no person may be granted options for more than 400,000 shares during any
fiscal year.
Options may be granted to key employees, including officers of
FDX and its subsidiaries, designated by the members, not less than two, of the
Compensation Committee of the Board of Directors (the "Committee"), each of
whom will be an "outside director" within the meaning of Section 162(m) of the
Code and a "non-employee director" as defined in Rule 16b-3 of the General
Rules and Regulations under the 1934 Act. The Committee will select persons
to receive options from among the eligible employees, determine the types of
options and the number of shares to be awarded to optionees, and set the
terms, conditions and provisions of the options consistent with the terms of
the 1997 Stock Incentive Plan. The Committee will also establish rules for
the administration of the 1997 Stock Incentive Plan.
Under the terms of the 1997 Stock Incentive Plan, the Committee
may grant options to purchase FDX Common Stock at a price which may not be
less than the fair market value of the shares, as determined by the mean
between the high and low prices of the stock on the NYSE on the date the
option is granted. The 1997 Stock Incentive Plan does not permit the
repricing of options or the grant of discounted options.
Unless otherwise determined by the Committee, options may not
be exercised later than ten years after the date of grant. Subject to the
limitations imposed by the provisions of the Code, certain of the options
granted under the 1997 Stock Incentive Plan to key employees may be designated
"incentive stock options". FDX may make interest-free demand loans to holders
of options not designated as incentive stock options for the purpose of
exercising such options and paying any tax liability associated with such
exercise.
Unless otherwise determined by the Committee, no option may be
exercised until the optionee has completed a year of service after the option
is granted, except in the case of termination of an employee's employment or a
Director's directorship because of death or disability, nor may an option be
exercised after termination of an employee's employment or a Director's
directorship for any reason other than death, disability or retirement.
Unless otherwise determined by the Committee, options may be exercised within
twenty-four months (i) after the optionee retires or (ii) after termination of
an employee's employment or a Director's directorship on account of permanent
disability (except that no option may be exercised less than six months from
the date of grant), and may be exercised within twelve months after death when
in the service of FDX or any of its subsidiaries. In the event of death
within the twenty-four month period following termination of an employee's
employment or a Director's directorship for retirement or permanent disability,
options may be exercised by the optionee's legal representative within twelve
months following the date of death, unless otherwise determined by the
Committee.
Since the contemplated options are to be granted as incentives,
no cash consideration will be received for the granting of the options.
Payment in full of the option price must be made upon exercise of any option.
The options are not transferable by the optionee except by will or by the laws
of descent and distribution, unless otherwise determined by the Committee.
The 1997 Stock Incentive Plan provides for the use of
authorized but unissued shares or treasury shares. In the event of approval
of the 1997 Stock Incentive Plan, and to the extent that treasury shares are
not acquired for the purpose of the 1997 Stock Incentive Plan, authorized but
unissued FDX Common Stock will be issued upon exercise of options granted
under the 1997 Stock Incentive Plan.
Unless otherwise determined by the Committee, no options or
awards may be granted under the 1997 Stock Incentive Plan after October 5,
2007, but options or awards granted prior to such date may extend beyond that
date. The 1997 Stock Incentive Plan may be discontinued by the Board of
Directors of FDX, but no termination may impair options or awards granted
prior thereto.
Upon the occurrence of a change in control of FDX each holder
of an unexpired option under the 1997 Stock Incentive Plan will have the right
to exercise the option in whole or in part without regard to the date that
such option would be first exercisable, and such right will continue, with
respect to any such holder whose employment with FDX or a subsidiary or whose
directorship terminates following a change in control, for a period ending on
the earlier of the date of expiration of such option or the date which is
twelve months after such termination of employment or directorship.
The Committee may alter or amend the 1997 Stock Incentive Plan
at any time. No amendment by the Committee, however, may (i) increase the
total number of shares reserved for purposes of the 1997 Stock Incentive Plan,
(ii) reduce the option price to an amount less than the fair market value at
the time the option was granted, or (iii) increase the maximum number of
options which may be granted to an optionee under the 1997 Stock Incentive
Plan, unless such amendment is approved by the stockholders. No amendment or
alteration may impair the rights of optionees with respect to options
theretofore granted, except the Committee may revoke and cancel any
outstanding options which, in the aggregate, would create a significant adverse
effect on FDX's financial statements in the event that the Financial
Accounting Standards Board issues a statement requiring an accounting
treatment which causes such adverse effect with respect to options then
outstanding. The Committee has the power to interpret the 1997 Stock
Incentive Plan to make all other determinations necessary or advisable for its
administration.
Under the current federal tax law, non-incentive stock options
granted under the 1997 Stock Incentive Plan will not result in any taxable
income to the optionee at the time of grant or any tax deduction to FDX. Upon
the exercise of such option, the excess of the market value of the shares
acquired over their cost is taxable to the optionee as compensation income and
is generally deductible by FDX. The optionee's tax basis for the share is the
market value thereof at the time of exercise.
Neither the grant nor the exercise of an option designated as
an incentive stock option results in any federal tax consequences to either
the optionee or FDX. At the time the optionee sells shares acquired pursuant
to the exercise of an incentive stock option, the excess of the sale price
over the exercise price will qualify as a capital gain, provided the
applicable holding period is satisfied. If the optionee disposes of such
shares within two years of the date of grant or within one year of the date of
exercise, an amount equal to the lesser of (i) the difference between the fair
market value of the shares on the date of exercise and the exercise price, or
(ii) the difference between the exercise price and the sale price will be
taxed as ordinary income and FDX will be entitled to a deduction in the same
amount. The excess, if any, of the sale price over the sum of the exercise
price and the amount taxed as ordinary income will qualify as capital gain if
the applicable holding period is satisfied. If the optionee exercises an
incentive stock option more than three months after his or her termination of
employment due to retirement, he or she is deemed to have exercised a
non-incentive stock option.
FDX believes that compensation received by optionees on the
exercise of non-incentive stock options or the disposition of shares acquired
upon exercise of any incentive stock options will be considered
performance-based compensation and not subject to the $1,000,000 deductibility
limit of Section 162(m) of the Code.
The amounts that may be received by the participants under the 1997 Stock
Incentive Plan are not currently determinable.
The affirmative vote of the holders of a majority of the FedEx
Common Stock represented in person or by proxy at the FedEx Meeting is
required for approval of the 1997 Stock Incentive Plan.
THE BOARD OF DIRECTORS OF FEDEX RECOMMENDS THAT STOCKHOLDERS
VOTE "FOR" THIS PROPOSAL.
CERTAIN INFORMATION RELATING TO FEDERAL EXPRESS COMPENSATION
Summary Compensation Table
The following table sets forth the compensation awarded to,
earned by or paid to FedEx's chief executive officer and its four other most
highly-compensated executive officers for services rendered in all capacities
during the fiscal years ended May 31, 1997, 1996 and 1995.
<TABLE>
<CAPTION>
Long Term Compensation
---------------------------------------
Annual Compensation Awards Payouts
------------------------------------ ---------------------------- ---------- Securities
Other Annual Restricted Underlying LTIP All Other
NAME AND PRINCIPAL Salary Bonus Compensation Stock Award(s) Options/SARs Payouts Compensation
POSITION Year ($) ($) ($) ($)(1) (#) ($) ($) (2)
- ------------------------ ---- ------- ---------- ------------- -------------- ------------ --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Frederick W. Smith 1997 805,000 213,000 221,359(3) -- -- 1,125,000 19,655
Chairman, President and 1996 745,833 -- 131,742(3) -- -- 1,200,000 24,174
Chief Executive 1995 700,000 515,500 96,541(3) -- 50,000 -- 22,232
Officer
Theodore L. Weise 1997 569,896 147,705(4) 614,545(5) 838,000 30,000 329,531 14,024
Executive Vice President, 1996 449,604 37,500(4) 974,734(5) 1,333,500 11,500 352,388 12,947
Worldwide Operations 1995 417,994 188,480(4) 58,016(6) -- 27,500 -- 12,021
Kenneth R. Masterson 1997 476,344 148,084(4)(7) 614,545(5) 838,000 25,000 342,000 11,487
Executive Vice President, 1996 396,688 37,500(4) 764,729(5) 1,044,500 11,500 364,875 10,743
General Counsel and 1995 378,478 138,880(4) -- -- 22,500 -- 10,617
Secretary
Alan B. Graf, Jr. 1997 451,526 102,970(4) 614,545(5) 838,000 45,000 334,269 10,304
Executive Vice President 1996 375,421 25,000(4) 843,160(5) 1,152,875 11,500 362,250 10,312
and Chief Financial 1995 347,477 137,640(4) -- -- 25,000 -- 9,578
Officer
Dennis H. Jones 1997 421,998 101,580(4)(7) 614,545(5) 838,000 40,000 273,094 10,083
Senior Vice President 1996 367,419 -- 658,956(5) 900,000 11,500 364,988 9,673
and Chief Information 1995 343,651 137,330(4) -- -- 29,000 -- 9,980
Officer
</TABLE>
(1) The amounts in the table represent the closing market value of the shares
awarded at the date of grant. At May 30, 1997, the number and value of the
aggregate restricted stock holdings of the named individuals were as follows:
<TABLE>
<CAPTION>
Number of Shares
Name Held Value
- ------------------------- ---------------- -----------
<S> <C> <C>
F.W. Smith............... -- --
T.L. Weise............... 43,600 $2,283,550
K.R. Masterson........... 36,000 1,885,500
A.B. Graf, Jr............ 39,600 2,074,050
D.H. Jones............... 34,000 1,780,750
</TABLE>
The restrictions on the shares awarded to Mr. Weise lapse ratably over five
years after the date of award with respect to 18,000 shares granted in October
1995 and 9,600 shares granted in April 1996 and over four years with respect
to 16,000 shares granted in February 1997. The restrictions on the shares
awarded to Mr. Masterson lapse ratably over five years after the date of award
with respect to 18,000 shares granted in December 1995, and over two years
after the date of award with respect to 2,000 shares granted in April 1996 and
over four years with respect to 16,000 shares granted in February 1997. The
restrictions on the shares awarded to Mr. Graf lapse ratably over five years
after the date of award with respect to 18,000 shares granted in October 1995
and 5,600 shares granted in April 1996 and over four years with respect to
16,000 shares granted in February 1997. The restriction on the shares awarded
to Mr. Jones lapse ratably over five years after the date of award with
respect to 18,000 shares granted in October 1995 and over four years with
respect to 16,000 shares granted in February 1997. Holders of restricted
shares are entitled to receive any dividends declared on such shares. FedEx
has never declared a dividend on its shares because its policy has been to
reinvest earnings in the business of the corporation.
(2) These amounts represent profit sharing payments to the named executive
officers and contributions under FedEx's Profit Sharing Plan.
(3) Of the amounts shown for 1997, 1996 and 1995, $152,528, $95,174 and
$69,437, respectively, represent personal use of corporate aircraft treated as
taxable income to Mr. Smith. Of the amount shown for 1997, $62,497 is for
financial counseling.
(4) The amounts shown for 1997 represent annual performance bonuses received
by each officer under FedEx's annual performance bonus plan; bonuses received
by Messrs. Weise, Masterson and Graf for promotion to Executive Vice President;
and, in the case of Mr. Masterson, an additional special recognition award.
The amounts shown for 1996 represent bonuses received by each officer upon
promotion to Executive Vice President and, in the case of Mr. Masterson, an
additional special recognition award. No amounts are included for annual
performance bonuses because no such bonuses were awarded for fiscal 1996. The
amounts shown for 1995 represent annual performance bonuses received by each
officer under FedEx's annual performance bonus plan.
(5) The amounts shown for Messrs. Weise, Masterson, Graf and Jones in 1997 and
1996 represent tax reimbursements related to restricted stock awards.
(6) Of the amount shown for 1995, $55,018 is for financial counseling.
(7) This amount includes $25,000 from a Five Star Award, FedEx's highest
special achievement award, received by Mr. Masterson and Mr. Jones,
respectively.
Option/SAR Grants in Last Fiscal Year
The following table sets forth information regarding grants of
stock options during the fiscal year ended May 31, 1997 made to the named
executive officers under FedEx's Stock Incentive Plans (the "Stock Incentive
Plans"). The amounts shown for each of the named executive officers as
potential realizable values are based on arbitrarily assumed annualized rates
of stock price appreciation of five percent and ten percent over the full
ten-year term of the options, which would result in stock prices of
approximately $63.02 and $100.35, respectively, for the options with an
exercise price of $38.6875. No gain to the optionees is possible without an
increase in stock price which will benefit all stockholders proportionately.
These potential realizable values are based solely on arbitrarily assumed
rates of appreciation required by applicable SEC regulations. Actual gains,
if any, on option exercise and common stock holdings are dependent on the
future performance of FedEx Common Stock and overall stock market conditions.
There can be no assurance that the potential realizable values shown in this
table will be achieved.
<TABLE>
<CAPTION>
Potential Realizable Value At
Assumed Annual Rates of
Stock Price Appreciation for
Individual Grants Option Term
------------------------------------------------------------- -----------------------------
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise or
Options/SARs Employees in Base Price Expiration
Name Granted (#) Fiscal Year ($/Sh) (*) Date 5% ($) 10% ($)
- --------------- ------------ ------------ ----------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
F.W. Smith..... -- -- -- -- -- --
T.L. Weise..... 30,000 2.58 38.6875 7/12/06 729,975 1,849,875
K.R. Masterson. 25,000 2.15 38.6875 7/12/06 608,313 1,541,563
A.B. Graf, Jr.. 45,000 3.87 38.6875 7/12/06 1,094,963 2,774,813
D.H. Jones..... 40,000 3.44 38.6875 7/12/06 973,300 2,466,500
</TABLE>
(*) The option exercise price of the options granted to the individuals shown
above was the fair market value of FedEx Common Stock at the date of grant
of the option. The options granted to Mr. Weise and Mr. Masterson are
subject to a vesting schedule as follows: 25% after one year from the date
of grant; 50% after two years; 75% after three years; and 100% after four
years. The options granted to Mr. Graf and Mr. Jones are subject to a
vesting schedule as follows: 25% after four years from the date of grant;
50% after five years; 75% after six years; and 100% after seven years. The
options may not be transferred in any manner other than by will or the laws
of descent and distribution and may be exercised during the lifetime of the
optionee only by the optionee. During the fiscal year ended May 31, 1997,
options for a total of 1,162,000 shares were granted to various employees
of FedEx.
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR
Values
The following table summarizes for each of the named executive
officers certain information relating to stock options exercised by them
during the fiscal year ended May 31, 1997. Value realized upon exercise is the
difference between the fair market value of the underlying stock on the
exercise date and the exercise or base price of the option. The value of an
unexercised, in-the-money option at fiscal year-end is the difference between
its exercise or base price and the fair market value of the underlying stock
on May 30, 1997, which was $52.3125 per share. These values, unlike the
amounts set forth in the column "Value Realized," have not been, and may never
be, realized. Such options have not been, and may not be, exercised; and
actual gains, if any, on exercise will depend on the value of FedEx Common
Stock on the date of exercise. There can be no assurance that these values
will be realized. Unexercisable options are those which have not yet vested.
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised In-The-
Unexercised Options/SARs at Money Options/SARs at FY-End
FY-End (#) ($)
Shares Acquired Value Realized ------------------------------- ----------------------------
Name on Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- --------------- --------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
F.W. Smith..... -- -- 565,000 140,000 16,175,469 2,530,000
T.L. Weise..... 63,728 1,967,359 60,902 119,400 1,332,228 2,070,963
K.R. Masterson. 57,400 1,604,725 34,600 102,000 637,819 1,754,613
A.B. Graf, Jr.. 24,200 674,956 76,000 142,600 1,608,525 2,468,025
D.H. Jones..... 19,000 510,469 109,800 139,200 2,574,781 2,401,750
</TABLE>
Long-Term Incentive Plans -- Awards in Last Fiscal Year
The following table sets forth estimates of the possible future
payouts to each of the named executive officers under FedEx's long-term
performance bonus plans.
<TABLE>
<CAPTION>
Estimated Future Payouts Under
Performance or Non-Stock Price-Based Plans
Number of Other Period Until --------------------------------------
Shares, Units or Maturation or Threshold Target Maximum
Name Other Rights (#) Payout ($ or #) ($ or #) ($ or #)
- ------------------ ----------------- ------------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
F.W. Smith........ N/A 5/31/98 $500,000 $1,000,000 $1,500,000
N/A 5/31/99 500,000 1,000,000 1,500,000
N/A 5/31/00 500,000 1,000,000 1,500,000
T.L. Weise........ N/A 5/31/98 191,667 383,333 575,000
N/A 5/31/99 225,000 450,000 675,000
N/A 5/31/00 225,000 450,000 675,000
K.R. Masterson.... N/A 5/31/98 191,667 383,333 575,000
N/A 5/31/99 225,000 450,000 675,000
N/A 5/31/00 225,000 450,000 675,000
A.B. Graf, Jr..... N/A 5/31/98 191,667 383,333 575,000
N/A 5/31/99 225,000 450,000 675,000
N/A 5/31/00 225,000 450,000 675,000
D.H. Jones........ N/A 5/31/98 125,000 250,000 375,000
N/A 5/31/99 125,000 250,000 375,000
N/A 5/31/00 125,000 250,000 375,000
</TABLE>
In 1996, the Committee established a long-term performance
bonus plan to provide a long-term cash bonus opportunity to members of upper
management, including executive officers, at the conclusion of fiscal year
1998 if FedEx achieves certain earnings per share targets established by the
Committee with respect to the three-fiscal year period 1996 through 1998.
However, no amounts can be earned until fiscal 1998 because it is only after
the conclusion of that year that the Committee can determine the extent of
achievement of the three-year earnings per share objectives. The Committee has
established similar plans for the three-fiscal year periods 1997 through 1999
and 1998 through 2000 providing bonus opportunities for 1999 and 2000,
respectively, if certain earnings per share targets are achieved with respect
to those periods. No amounts can be earned for the 1997 through 1999 and 1998
through 2000 plans until 1999 and 2000, respectively, since achievement of the
earnings per share objectives can only be determined following the conclusion
of the applicable three-fiscal year period. Each successive plan has earnings
per share targets which are higher than the previous plans.
Under each plan, the average percentage of an individual's
achievement of individual objectives under FedEx's annual performance bonus
plan for the three-fiscal year period of each of the long-term performance
bonus plans will be used as an individual performance measure when calculating
individual bonuses, except for Mr. Smith whose payout will be determined by
the Committee. The estimated individual future payouts set forth in the table
above are set dollar amounts ranging from threshold amounts if the objectives
are minimally achieved, up to maximum amounts if the plan targets are
substantially exceeded. Individual bonuses may be adjusted downward from these
amounts if the individual's average individual achievement percentage is less
than 100% for the three-fiscal year period of each of the plans. There can be
no assurance that the estimated future payouts shown in this table will be
achieved.
Pension Plan Table
The following table shows the estimated annual pension benefits
payable to participants upon retirement on a single life annuity basis in
specified remuneration classes and years of credited service under the Federal
Express Corporation Employees' Pension Plan and the Federal Express
Corporation Retirement Parity Pension Plan which provides 100 percent of the
benefit that would otherwise be denied certain participants by reason of
Internal Revenue Code limitations on qualified plan benefits. The benefits
listed in the table are not subject to any reduction for Social Security or
other offset amounts.
<TABLE>
<CAPTION>
Years of Service
-------------------------------------------------------
Remuneration 10 15 20 25 30
- -------------- ------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$400,000...... $80,000 $120,000 $160,000 $200,000 $200,000
500,000...... 100,000 150,000 200,000 250,000 250,000
600,000...... 120,000 180,000 240,000 300,000 300,000
700,000...... 140,000 210,000 280,000 350,000 350,000
800,000...... 160,000 240,000 320,000 400,000 400,000
900,000...... 180,000 270,000 360,000 450,000 450,000
1,000,00...... 200,000 300,000 400,000 500,000 500,000
1,100,00...... 220,000 330,000 440,000 550,000 550,000
</TABLE>
The remuneration specified in the Pension Plan Table includes
"Salary" and "Bonus" as reported in the Summary Compensation Table. Since the
covered compensation is the average over the five-year period preceding
retirement, the amount differs from that set forth in the Summary Compensation
Table and is stated below together with the credited years of service achieved.
<TABLE>
<CAPTION>
Covered
Name Compensation Years of Service
- ------------------------ ------------- ----------------
<S> <C> <C>
F.W. Smith.............. $868,569 25
T.L. Weise.............. 518,044 25
K.R. Masterson.......... 459,230 17
A.B. Graf, Jr........... 408,283 17
D.H. Jones.............. 395,821 22
</TABLE>
Report on Executive Compensation of the Compensation Committee of the Board of
Directors
The compensation of FedEx's executives comprises three basic
components: base salary, annual and long-term performance bonus plans, and
long-term equity incentives. The Committee determines the compensation of the
executive officers of FedEx, approves the objectives for the annual and
long-term performance bonus plans, establishes the funding of the plans,
determines the awards of long-term equity incentives and the individuals to
whom such awards are made, and recommends to the Board of Directors of FedEx
the compensation of the chief executive officer of FedEx.
Base Salary. The establishment of competitive base compensation
for FedEx's executives is the primary objective in setting base salaries. The
starting point for this process is to determine the relative importance of an
executive officer's position, the extent of accountability of the position and
the skills required to perform the duties of the position. In addition, FedEx
utilizes compensation surveys published by three major consulting firms of
companies in general industry with $6 billion or more in annual sales. The
Committee believes that general industry is an appropriate comparison category
in determining competitive compensation because FedEx's executives can be
recruited from, and by, businesses outside FedEx's industry peer group. In
addition, in its 1997 executive compensation review, the Committee considered
compensation information on the five highest paid executive officers of other
companies available from the proxy statements of a group of 15 transportation
companies and a group of 31 companies in general industry with annual sales of
$8-$12 billion. The transportation companies comprise most of the companies in
the Standard & Poor's Transportation Index and the Dow Jones Transportation
Average, but also include several other companies not in these indices. Base
salaries are generally targeted at the median (or 50th percentile) of base
salaries for comparable positions in the comparison surveys mentioned above.
None of the factors mentioned above is given any particular
weight in determining base compensation. Other factors may also influence such
determination, such as the relative extent of an individual's experience or
a desire to retain a valuable executive. The Committee's target for Mr. Smith
is the 50th percentile as is the case with the other executive officers. Mr.
Smith's base salary was increased in 1997; however, his base salary remains at
about the 40th percentile of base salaries of chief executive officers in the
comparison surveys.
Performance Bonus Plans. Under FedEx's annual performance bonus
plan, a bonus opportunity is established at the beginning of each fiscal year
for management and certain professional employees based on the degree of
attainment of both corporate and individual goals for the year. Each position
eligible for such bonus, including all executive officers but excluding Mr.
Smith, is assigned a number of points based on salary grade. Individual
objectives for each position are established and points are allocated to the
objectives by each participant and his or her immediate superior. A
participant earns points by achieving his or her individual objectives. The
amount of a participant's bonus is determined by the number of points earned,
multiplied by the dollar value, if any, assigned to each point by the
Committee according to the extent of achievement of plan objectives.
If both the individual and plan objectives are achieved, the
plan is designed to produce a bonus ranging, on a sliding scale, from a
threshold amount if the plan objectives are minimally achieved up to a maximum
amount if such objectives are substantially exceeded. For 1997, the threshold
bonus target was established at an amount which, when added to base salary,
would be less than the 50th percentile of total salary and bonus for
comparable positions in the comparison surveys discussed above under "Base
Salary". Thus, total salary and bonus for executive officers (assuming
achievement of all individual objectives) is designed to range from less than
the 50th up to the 75th percentile of total salary and bonus for comparable
positions in the comparison surveys according to the degree to which plan
objectives are met or exceeded.
The plan objectives established for 1997 were (i) a pretax
income goal and (ii) an internal measure reflecting a targeted level of
service quality. Bonuses were awarded for 1997 because plan targets for pretax
income were achieved.
Mr. Smith's bonus is not determined by a number of points
specifically assigned to his position as is the case with other management
personnel, but by whether corporate business plan objectives are met or
exceeded. If such objectives are met, the Committee determines and recommends
to the Board of Directors of FedEx a bonus which, when combined with base
salary, may be up to the 75th percentile of total salary and bonus for chief
executive officers in the comparison surveys discussed above under "Base
Salary". In addition to the comparison surveys, the Committee also considered
publicly available proxy statement information on the compensation of chief
executive officers of two groups of other public companies, as described above
under "Base Salary", in determining Mr. Smith's total salary and bonus. Mr.
Smith received an annual bonus of $213,000 for 1997.
In 1995, the Committee established a long-term performance
bonus plan to provide a long-term cash bonus opportunity to members of upper
management, including executive officers, at the conclusion of fiscal year
1997 if FedEx achieves certain earnings per share targets established by the
Committee with respect to the three-fiscal year period 1995 through 1997.
Bonuses were awarded under the long-term plan in 1997 to upper management,
including the named executive officers, based on achievement of maximum plan
targets for the three-fiscal year period. The Committee has established
similar plans for the three-fiscal year periods 1996 through 1998, 1997
through 1999 and 1998 through 2000 providing bonus opportunities for 1998,
1999 and 2000, respectively, if certain earnings per share targets are
achieved with respect to those periods. The Long-Term Incentive Plans Table on
page 61 of this Joint Proxy Statement/Prospectus sets forth the estimated
future payouts for the named individuals under these plans if the three-year
earnings per share objectives are achieved.
Long-Term Equity Incentives. Stock options were granted as
long-term incentives in 1997 to certain key employees of FedEx, including
executive officers, under certain of FedEx's Stock Incentive Plans. Under the
terms of the plans, FedEx may grant options to key employees (determined by
the Committee) to purchase such number of shares of FedEx Common Stock as is
determined by the Committee.
The number of shares for which options are granted to executive
officers is generally determined by the Committee based on the respective
officer's senior officer status. However, no set criteria are used and other
factors may influence the Committee's determination with respect to the number
of shares granted, such as the promotion of an individual to a higher
position, a desire to retain a valued executive or the number of shares then
available for grant under one or more of the plans. The stock option holdings
of an individual at the time of a grant are generally not considered in
determining the size of a grant to that individual.
Under the terms of FedEx's 1995 and 1997 Restricted Stock Plans
(the 1997 plan was approved by the Board of Directors of FedEx in July 1997),
FedEx may award restricted stock to key employees as determined by the
Committee. No set criteria are used to determine the amount of restricted
stock awarded; however, the Committee's determination may be influenced with
respect to the number of shares awarded by factors such as the respective
officer's senior officer status, the promotion of an individual to a higher
position, a desire to retain a valued executive, a desire to recognize a
particular officer's contribution to FedEx or the number of shares then
available for award. In 1997, 201,900 shares of restricted stock were awarded.
During 1997, Mr. Manatt abstained from voting on awards, approved by the
Committee, to FedEx's executive officers under FedEx's Stock Incentive and
Restricted Stock Plans.
Section 162(m) of the Code limits deductibility of certain
compensation for the chief executive officer and the four other highest paid
executive officers to $1,000, 000 per year, unless certain requirements are
met. The policy of FedEx is generally to design its compensation plans and
programs to ensure full deductibility. The Committee attempts to balance this
policy with compensation programs designed to motivate management to maximize
stockholder wealth. There are times when it is determined that the interests
of the stockholders are best served by the implementation of compensation
policies that do not restrict the Committee's ability to exercise its
discretion in crafting compensation packages even though such policies may
result in certain non-deductible compensation expenses.
FedEx's Stock Incentive Plans comply with Section 162(m);
therefore, compensation recognized by the five highest paid executive officers
under these plans will qualify for appropriate tax deductions. FedEx's annual
and long-term performance bonus plans and its Restricted Stock Plans do not
meet all of the conditions for qualification under Section 162(m). Therefore,
compensation received under these plans will be subject to the $1,000,000
deductibility limit.
Compensation Committee Members
Jackson W. Smart, Jr., Chairman
Robert H. Allen
Ralph D. DeNunzio
J.R. Hyde, III
Charles T. Manatt
Paul S. Walsh
May 31, 1997
Transactions with Management and Others
Pursuant to the provisions of FedEx's Stock Incentive Plans, FedEx has made
interest-free demand loans to certain officers, fully secured by FedEx Common
Stock, to assist them in exercising non-incentive stock options and paying any
tax liability associated with such exercise. Such loans are repayable on
demand or upon termination of employment for any reason. The following table
shows the highest balance of such loans outstanding during the period June 1,
1996 through August 4, 1997 and the balance of such loans outstanding at
August 4, 1997, for those executive officers with loan balances which exceeded
$60,000.
<TABLE>
<CAPTION>
Highest Balance Balance at
Executive Officer During Period August 4, 1997
- --------------------------------------------------------------- --------------- --------------
<S> <C> <C>
Theodore L. Weise, Executive Vice President Worldwide
Operations..................................................... $355,373 $355,373
</TABLE>
The law firm of Baker, Donelson, Bearman & Caldwell represented
FedEx during fiscal year 1997. Mr. Baker, a now retired Director, is a named
partner in that firm. Mr. Baker also represented FedEx pursuant to a retainer
arrangement during fiscal 1997 for a fee of $200,000. The law firm of Waring
Cox represented FedEx during fiscal year 1997. Mr. Cox, a Director, is a named
partner in that firm. FedEx expects to utilize the services of these firms
during fiscal year 1998. Mr. Mitchell, a Director, represented FedEx pursuant
to a retainer arrangement during fiscal 1997 for a fee of $100,000. Mr.
Manatt, a Director, represented FedEx pursuant to a retainer arrangement
during fiscal 1997 for a fee of $100,000, and FedEx has utilized the services
of Manatt, Phelps & Phillips from time to time. FedEx expects to utilize the
services of Messrs. Baker, Manatt and Mitchell during fiscal 1998. FedEx is
considering purchases of software from Precept Software, Inc. valued at
approximately $265,000 during fiscal 1998. Ms. Estrin, a Director, is the
President and Chief Executive Officer of Precept Software, Inc.
Stock Performance Graph
The Stock Performance Graph below shall not be deemed
incorporated by reference by any general statement incorporating by reference
this Joint Proxy Statement/Prospectus into any filing under the 1933 Act or
under the 1934 Act, except to the extent FedEx specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
The following graph shows changes over the past five fiscal
years in the value of $100 invested on May 31, 1992 in: (1) FedEx's Common
Stock; (2) the Standard & Poor's 500 Composite Index; and (3) the Standard &
Poor's Transportation Index.
Comparison of 5 Year Cumulative Total Return (Federal Express, S&P 500
Composite Index and S&P Transportation Index)
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Federal Express Corporation 100 120 188 147 188 257
S&P 500 Composite Index.... 100 112 116 140 180 232
S&P Transportation Index... 100 111 115 122 159 191
</TABLE>
The total return assumes that all dividends were reinvested.
No dividends were paid on FedEx Common Stock during the period.
Change in Control Arrangement
FedEx's Stock Incentive Plans provide that in the event of a
change in control each holder of an unexpired option under any of the plans
has the right to exercise such option without regard to the date such option
would first be exercisable, except that no option may be exercised less than
six months from the date of grant. This right continues, with respect to
holders whose employment with FedEx terminates following a change in control,
for a period of twelve months after such termination or until the option's
expiration date, whichever is sooner. The instruments pursuant to which
restricted stock is granted under FedEx's Restricted Stock Plans provide that
the restricted shares will be canceled and FedEx will make a cash payment, in
an amount determined under the plan, to each holder in the event of a change
in control.
LEGAL MATTERS
The validity of the FDX Common Stock to be issued to Caliber
shareholders pursuant to the Mergers will be passed upon by Davis Polk &
Wardwell, special counsel to FedEx and FDX. It is a condition to the
consummation of the Mergers that Caliber and FedEx receive opinions from
Cravath, Swaine & Moore and Davis Polk & Wardwell, respectively, with
respect to the tax treatment of the Mergers. See "The Merger Agreement--
Conditions to the Mergers" and "The Mergers--Certain U.S. Federal Income
Tax Consequences."
EXPERTS
The consolidated financial statements incorporated in this
Joint Proxy Statement/Prospectus by reference to the Annual Report on Form
10-K for FedEx for the fiscal year ended May 31, 1997 have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in giving said reports.
The consolidated financial statements and schedule of Caliber
incorporated in this Joint Proxy Statement/Prospectus by reference to the
Annual Report on Form 10-K for Caliber for the year ended December 31, 1996
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon included therein and incorporated herein by reference.
Such consolidated financial statements and schedule are incorporated herein by
reference in reliance upon such report given on the authority of such firm as
experts in accounting and auditing.
FUTURE SHAREHOLDER PROPOSALS
If the Caliber Merger is not consummated, Caliber will hold a
1998 Annual Meeting of Shareholders. If such meeting is held, shareholder
proposals intended to be presented at such meeting must be received by Caliber
on or before December 15, 1998 and must otherwise comply with the requirements
of Rule 14a-8 of the 1934 Act to be considered for inclusion in Caliber's
proxy materials for such meeting.
WHERE YOU CAN FIND MORE INFORMATION
FedEx and Caliber file annual, quarterly and special reports,
proxy statements and other information with the SEC. You may read and copy
any reports, statements or other information we file at the SEC's public
reference rooms in Washington, D.C., New York, New York and Chicago, Illinois.
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. Our SEC filings are also available to the public from
commercial document retrieval services and at the web site maintained by the
SEC at "http://www.sec.gov".
FDX filed a Registration Statement on Form S-4 to register with
the SEC the FDX Common Stock to be issued to FedEx stockholders and Caliber
shareholders in the Mergers. This Joint Proxy Statement/Prospectus is a part
of that Registration Statement and constitutes a prospectus of FDX in
addition to being a proxy statement of FedEx and Caliber for the Meetings.
As allowed by SEC rules, this Joint Proxy Statement/Prospectus does not
contain all the information you can find in the Registration Statement or
the exhibits to the Registration Statement.
The SEC allows us to "incorporate by reference" information
into this Joint Proxy Statement/Prospectus, which means that we can
disclose important information to you by referring you to another document
filed separately with the SEC. The information incorporated by reference
is deemed to be part of this Joint Proxy Statement/Prospectus, except for
any information superseded by information in this Joint Proxy
Statement/Prospectus. This Joint Proxy Statement/ Prospectus incorporates
by reference the documents set forth below that we have previously filed
with the SEC. These documents contain important information about our
companies and their finances.
<TABLE>
FedEx SEC Filings (File No. 1-7806) Period
- ----------------------------------- ------
<S> <C>
Annual Report on Form 10-K Fiscal Year ended May 31, 1997
Quarterly Reports on Form 10-Q Quarter ended August 31, 1997
Current Reports on Form 8-K Filed on June 2, June 19, July 7, July 9, August 14
and October 8, 1997
The description of FedEx Common Stock set forth in Filed on December 15, 1978
the Registration Statement on Form 8-A
Caliber SEC Filings (File No. 0-10716) Period
- -------------------------------------- ------
Annual Report on Form 10-K Year ended December 31, 1996
Quarterly Reports on Form 10-Q Quarters ended March 29, 1997, June 21, 1997 and
September 13, 1997
Current Reports on Form 8-K Filed on January 24, February 14, March 27, April 21,
June 5, June 25, July 11, July 15, August 15,
October 8, October 9 and October 16, 1997
</TABLE>
We are also incorporating by reference additional documents
that we file with the SEC between the date of this Joint Proxy
Statement/Prospectus and the dates of the Meetings of our stockholders.
FedEx and FDX have supplied all information contained or
incorporated by reference in this Joint Proxy Statement/Prospectus relating to
FedEx and FDX, and Caliber has supplied all such information relating to
Caliber.
If you are a stockholder, we may have sent you some of the
documents incorporated by reference, but you can obtain any of them through us
or the SEC. Documents incorporated by reference are available from us without
charge, excluding all exhibits unless we have specifically incorporated by
reference an exhibit in this Joint Proxy Statement/Prospectus. Stockholders
may obtain documents incorporated by reference in this Joint Proxy
Statement/Prospectus by requesting them in writing from the appropriate party
at the following address:
Federal Express Corporation Caliber System, Inc.
2005 Corporate Avenue 3925 Embassy Parkway
Memphis, TN 38132 Akron, OH 44334
Attention: Investor Relations Attention: Investor Relations
Department
Tel: (901) 395-3478 Tel: (330) 665-8896
If you would like to request documents from us, please do so by
December 30, 1997 to receive them before the Meetings.
You should rely only on the information contained or
incorporated by reference in this Joint Proxy Statement/Prospectus to vote
on the FedEx Proposals and the Caliber Merger Proposal. We have not
authorized anyone to provide you with information that is different from
what is contained in this Joint Proxy Statement/Prospectus. This Joint
Proxy Statement/Prospectus is dated December 5, 1997. You should not
assume that the information contained in the Joint Proxy
Statement/Prospectus is accurate as of any date other than such date, and
neither the mailing of this Joint Proxy Statement/Prospectus to
stockholders nor the issuance of FDX Common Stock in the Merger shall
create any implication to the contrary.
LIST OF DEFINED TERMS
Defined Term Page No.
- ------------ --------
1933 Act......................................28
1934 Act......................................42
1996 EICP.....................................22
1997 Stock Incentive Plan.....................12
Acquisition Proposal..........................42
Adjusted Caliber Option.......................41
Adjusted FedEx Option.........................41
Adjusted Options..............................41
Affiliate.....................................54
Airborne......................................17
American Freightways..........................17
Antitrust Division............................25
Arnold........................................17
Beneficiary...................................46
broker non-vote...............................49
Business Combination..........................54
Caliber Bylaws................................40
Caliber Charter...............................40
Caliber Common Stock..........................12
Caliber Directors.............................12
Caliber Meeting...............................12
Caliber Merger Consideration..................38
Caliber Merger Proposal.......................12
Caliber Merger................................12
Caliber Preferred Stock.......................51
Caliber Record Date...........................48
Caliber Stock Options.........................21
Caliber.......................................12
change in control.............................21
Claim.........................................43
CNF...........................................17
Code..........................................21
Committee.....................................56
Common Pleas Court............................27
Comparable Companies..........................17
Confidentiality Agreement.....................13
Continuing Director...........................54
Covered Employees.............................20
D&O Insurance.................................43
Delaware Law..................................25
Demand........................................26
Directors.....................................22
dissenters' rights............................25
Dissenting Shareholders.......................26
EBITDA........................................18
EBIT..........................................18
Engagement Letter.............................20
EPS...........................................18
Exchange Agent................................38
Fair Market Value.............................54
Fast Merger Sub Common
Stock........................................40
Fast Merger Sub...............................12
FDX Bylaws....................................40
FDX Charter...................................40
FDX Common Stock..............................12
FDX Preferred Stock...........................55
FDX...........................................12
FedEx Bylaws..................................40
FedEx Charter.................................40
FedEx Common Stock............................12
FedEx Meeting.................................12
FedEx Merger Consideration....................38
FedEx Proposals...............................12
FedEx Record Date.............................47
FedEx Reorganization
Merger.....................................12
FedEx Stock Options...........................40
FedEx Stock Plans.............................40
FedEx.........................................12
FTC...........................................25
GAAP..........................................17
Goldman Sachs.................................13
Good Reason...................................21
HSR Act.......................................25
IBES..........................................18
incentive stock options.......................57
Indemnified Party.............................43
IRS...........................................24
LBO...........................................18
LTM...........................................18
Meetings......................................12
Merger Agreement..............................12
Merger Consideration..........................38
Merger Date...................................12
Mergers.......................................12
Merrill Lynch.................................13
MRAs..........................................20
non-employee director.........................56
Ohio Law......................................26
Old Dominion..................................17
outside director..............................56
P/E...........................................18
Person........................................42
Plan..........................................22
Pre-Merger Matters............................43
Pro Forma Financial
Statements.................................30
Program.......................................22
Qualifying
Termination................................21
Related Person................................54
Roberts.......................................13
RPS...........................................13
SEC...........................................28
Selected Companies............................18
Selected
Transactions...............................18
Shareholder...................................46
Stock Award Plan..............................22
Stock Incentive
Plans......................................60
Superior Proposal.............................42
Tires Merger Sub
Common Stock...............................40
Tires Merger Sub..............................12
Trust Agreement...............................46
Trustee.......................................46
US Freightways................................17
Viking........................................13
Voting Agreement..............................46
Voting Stock..................................54
Yellow........................................17
----------- --------------
FED EX LOGO CALIBER SYSTEM
----------- --------------
Index To FDX Financial Statement
Report of Independent Public Accountants...................................F-2
Balance Sheet as of October 3, 1997........................................F-3
Note to Financial Statement................................................F-4
Report of Independent Public Accountants
We have audited the accompanying balance sheet of FDX
Corporation (a Delaware corporation) as of October 3, 1997. This financial
statement is the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial statement based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the balance sheet is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the balance sheet. 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 audit provides a reasonable basis for our
opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of FDX Corporation as of October 3,
1997, in conformity with generally accepted accounting principles.
Arthur Andersen LLP
Memphis, Tennessee
October 28, 1997
FDX Corporation
Balance Sheet
As of October 3, 1997
<TABLE>
<S> <C>
ASSETS:
Cash................................................................................... $100
----
Total Assets........................................................................ $100
====
COMMON STOCKHOLDER'S INVESTMENT:
Common Stock, $.10 par value; 1,000 shares authorized, issued and outstanding.......... $100
----
Total Common Stockholder's Investment............................................... $100
====
</TABLE>
The accompanying note to financial statement is an integral part of this
balance sheet.
FDX Corporation
Note to Financial Statement
As of October 3, 1997
1. Organization and Purpose:
FDX Corporation (FDX), formerly Fast Holding Inc., was incorporated
in the State of Delaware on October 2, 1997, as a wholly-owned
subsidiary of Federal Express Corporation ("FedEx"). Pursuant to an
Agreement and Plan of Merger (the "Merger Agreement") dated October
5, 1997 among FedEx, Caliber System, Inc. ("Caliber"), FDX, Fast
Merger Sub Inc. and Tires Merger Sub Inc., FedEx and Caliber will
become wholly-owned subsidiaries of FDX upon consummation of the
transactions (the "Mergers") contemplated in the Merger Agreement.
The Mergers are expected to be accounted for as a pooling of
interests in accordance with Accounting Principles Board Opinion No.
16. FDX will derive all of its revenues from the operations of FedEx
and Caliber and their respective subsidiaries.
==============================================================================
ANNEX A
AGREEMENT AND PLAN OF MERGER
dated as of
October 5, 1997
among
FEDERAL EXPRESS CORPORATION,
CALIBER SYSTEM, INC.,
FAST HOLDING INC.,
FAST MERGER SUB INC.,
AND
TIRES MERGER SUB INC.
TABLE OF CONTENTS
Page
----
ARTICLE 1
The Mergers
Section 1.01. Tires Sub Merger........................................ A-1
Section 1.02. Buyer Sub Merger........................................ A-1
Section 1.03. Surrender and Payment................................... A-2
Section 1.04. Cancellation of Parent Stock............................ A-3
Section 1.05. The Merger Date......................................... A-3
Section 1.06. Dissenting Shares....................................... A-4
Section 1.07. Stock Options of the Company............................ A-4
Section 1.08. Adjustments............................................. A-5
Section 1.09. Fractional Shares....................................... A-5
ARTICLE 2
The Surviving Corporations
Section 2.01. Articles and Certificate of Incorporation; Bylaws....... A-5
Section 2.02. Directors and Officers.................................. A-5
ARTICLE 3
Representations and warranties of the Company
Section 3.01. Corporate Existence and Power........................... A-6
Section 3.02. Corporate Authorization................................. A-6
Section 3.03. Governmental Authorization.............................. A-6
Section 3.04. Non-Contravention....................................... A-7
Section 3.05. Capitalization.......................................... A-7
Section 3.06. Material Subsidiaries................................... A-7
Section 3.07. SEC Filings............................................. A-7
Section 3.08. Financial Statements.................................... A-8
Section 3.09. Disclosure Documents.................................... A-8
Section 3.10. Information Supplied.................................... A-8
Section 3.11. Absence of Certain Changes.............................. A-8
Section 3.12. No Undisclosed Material Liabilities..................... A-9
Section 3.13. Litigation; Investigations.............................. A-10
Section 3.14. Taxes................................................... A-10
Section 3.15. ERISA and Labor Matters................................. A-11
Section 3.16. Compliance with Laws.................................... A-12
Section 3.17. Intellectual Property Rights............................ A-12
Section 3.18. Environmental Matters................................... A-13
Section 3.19. Pooling; Tax Treatment.................................. A-14
Section 3.20. Opinion of Financial Advisor............................ A-14
Section 3.21. Antitakeover Statutes................................... A-14
Section 3.22. Rights Agreement........................................ A-14
Section 3.23. Finders' Fees........................................... A-14
ARTICLE 4
Representations and Warranties of Buyer
Section 4.01. Corporate Existence and Power........................... A-14
Section 4.02. Corporate Authorization................................. A-15
Section 4.03. Governmental Authorization.............................. A-15
Section 4.04. Non-Contravention....................................... A-15
Section 4.05. Capitalization.......................................... A-15
Section 4.06. SEC Filings............................................. A-16
Section 4.07. Financial Statements.................................... A-16
Section 4.08. Disclosure Documents.................................... A-16
Section 4.09. Information Supplied.................................... A-16
Section 4.10. Absence of Certain Changes.............................. A-16
Section 4.11. No Undisclosed Material Liabilities..................... A-17
Section 4.12. Litigation; Investigations.............................. A-17
Section 4.13. Compliance with Laws.................................... A-17
Section 4.14. Pooling; Tax Treatment.................................. A-17
Section 4.15. Finders' Fees........................................... A-17
ARTICLE 5
Covenants of the Company
Section 5.01. Conduct of the Company.................................. A-18
Section 5.02. Shareholder Meeting; Proxy Material..................... A-19
Section 5.03. Other Offers............................................ A-20
ARTICLE 6
Covenants of Buyer
Section 6.01. Conduct of Buyer........................................ A-20
Section 6.02. Shareholder Meeting; Proxy Material..................... A-20
ARTICLE 7
Covenants of Buyer, the Company and Parent
Section 7.01. Reasonable Best Efforts................................. A-21
Section 7.02. Cooperation............................................. A-21
Section 7.03. Public Announcements.................................... A-21
Section 7.04. Access to Information................................... A-21
Section 7.05. Further Assurances...................................... A-22
Section 7.06. Notices of Certain Events............................... A-22
Section 7.07. Tax-free Reorganization; Pooling........................ A-22
Section 7.08. Affiliates.............................................. A-22
Section 7.09. Director and Officer Liability.......................... A-22
Section 7.10. Registration Statement; Form S-8........................ A-23
Section 7.11. Governmental Authorization.............................. A-23
Section 7.12. Listing of Stock........................................ A-23
Section 7.13. Certain Corporate Matters with Respect to Parent........ A-23
Section 7.14. Employment.............................................. A-24
Section 7.15. Certain Additional Benefits Matters..................... A-24
ARTICLE 8
Conditions to the Mergers
Section 8.01. Conditions to the Obligations of Each Party............. A-24
Section 8.02. Conditions to the Obligations of Buyer.................. A-24
Section 8.03. Conditions to the Obligations of the Company............ A-25
ARTICLE 9
Termination
Section 9.01. Termination............................................. A-25
Section 9.02. Effect of Termination................................... A-26
ARTICLE 10
Miscellaneous
Section 10.01. Notices................................................ A-26
Section 10.02. Entire Agreement; Non-Survival of Representations and
Warranties............................................. A-27
Section 10.03. Amendments; No Waivers................................. A-27
Section 10.04. Expenses............................................... A-28
Section 10.05. Successors and Assigns................................. A-28
Section 10.06. Governing Law.......................................... A-28
Section 10.07. Jurisdiction........................................... A-28
Section 10.08. Counterparts; Effectiveness............................ A-28
Exhibit A Forms of Affiliate's Pooling Letters
TABLE OF DEFINITIONS
<TABLE>
<CAPTION>
Term Section
- ------------------------------------------------- -------------
<S> <C>
1933 Act......................................... 3.03(d)
1934 Act......................................... 3.03(c)
368 Reorganization............................... 3.19(b)
Acquisition Proposal............................. 5.03
Adjusted Option.................................. 1.07(a)(i)
Benefit Arrangements............................. 3.15(d)
Buyer............................................ preamble
Buyer 10-K....................................... 4.06
Buyer Balance Sheet.............................. 4.07
Buyer Balance Sheet Date......................... 4.07
Buyer Disclosure Documents....................... 4.08(a)
Buyer Disclosure Schedule........................ Article 4
Buyer Merger Consideration....................... 1.02(b)
Buyer Merger Sub................................. preamble
Buyer Merger Sub Common Stock.................... 1.02(b)
Buyer Party...................................... 4.02
Buyer Preferred Stock............................ 4.05(a)
Buyer Proxy Statement............................ 4.08(b)
Buyer SEC Documents.............................. 4.06
Buyer Shareholder Meeting........................ 6.02(a)
Buyer Stock...................................... 1.02(b)
Buyer Sub Merger................................. 1.02(a)
Buyer Surviving Corporation...................... 1.02(a)
Buyer Surviving Corporation Common Stock......... 1.02(b)
Claim............................................ 7.09(a)
Code............................................. 1.07(b)
Company.......................................... preamble
Company 10-K..................................... 3.06(a)
Company 10-Qs.................................... 3.06(a)
Company Balance Sheet............................ 3.08
Company Balance Sheet Date....................... 3.08
Company Benefit Arrangements..................... 3.15(d)
Company Certificate of Merger.................... 1.05(a)
Company Disclosure Documents..................... 3.09(a)
Company Disclosure Schedule...................... Article 3
Company Merger Consideration..................... 1.01(b)
Company Merger Sub............................... preamble
Company Merger Sub Common Stock.................. 1.01(b)
Company Proxy Statement.......................... 3.09(a)
Company Returns.................................. 3.14(a)(i)
Company SEC Documents............................ 3.07
Company Securities............................... 3.05
Company Shareholder Meeting...................... 5.02(a)
Company Software................................. 3.17(b)
Company Sub Merger............................... 1.01(a)
Company Subsidiary Securities.................... 3.06(b)
Company Surviving Corporation.................... 1.01(a)
Company Surviving Corporation Common Stock....... 1.01(b)
Company Stock.................................... 1.01(b)
Company Stock Options............................ 1.07(a)(i)
Company Stock Plans.............................. 1.07(a)(i)
D&O Insurance.................................... 7.09(c)
Delaware Law..................................... 1.05
Employee Benefit Plan............................ 3.15(a)
Employee Plan.................................... 3.15(a)
Employee Plans................................... 3.15(a)
Environmental Laws............................... 3.18(e)(i)
Environmental Permits............................ 3.18(e)(ii)
ERISA............................................ 3.15(a)
ERISA Affiliate.................................. 3.15(a)
Excess Shares.................................... 1.09
Exchange Agent................................... 1.03(a)
Form S-4......................................... 4.08
GAAP............................................. 3.08
HSR Act.......................................... 3.03(b)
Indemnified Party................................ 7.09(a)
Lien............................................. 3.04(d)
Material Adverse Effect.......................... 3.01
Material Subsidiary.............................. 3.06(a)
Merger Consideration............................. 1.02(b)
Merger Date...................................... 1.05(c)
Mergers.......................................... 1.04
Multiemployer Plan............................... 3.15(b)
Names............................................ 3.17
NYSE............................................. 1.09
Ohio Law......................................... 1.01(b)
Parent........................................... preamble
Parent Common Stock.............................. 1.01(b)
Pension Plans.................................... 3.15(a)
Person........................................... 1.03(c)
Pre-Merger Matters............................... 7.09(a)
Providing Party.................................. 7.04
Receiving Party.................................. 7.04
Regulation S-X................................... 3.11(i)
Retirement Plans................................. 3.15(b)
Rights Agreement................................. 3.22(a)
SEC.............................................. 3.07
Subsequent Buyer SEC Documents................... 4.06
Subsequent Company SEC Documents................. 3.07
Subsidiary....................................... 1.01(b)
Superior Proposal................................ 5.03
Tax Return....................................... 3.14(b)
Taxes............................................ 3.14(b)
Taxing Authorities............................... 3.14(b)
Valuation Report................................. 3.15(a)
</TABLE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of October 5, 1997 among
Federal Express Corporation, a Delaware corporation ("Buyer"), Caliber System,
Inc., an Ohio corporation (the "Company"), Fast Holding Inc., a Delaware
corporation and a wholly-owned subsidiary of Buyer ("Parent"), Fast Merger Sub
Inc., a Delaware corporation and a wholly-owned subsidiary of Parent ("Buyer
Merger Sub"), and Tires Merger Sub Inc., a Delaware corporation and a
wholly-owned subsidiary of Parent ("Tires Merger Sub").
The parties hereto agree as follows:
ARTICLE 1
The Mergers
Section 1.1. Tires Sub Merger. (a) Upon the terms and subject
to the conditions set forth herein, on the Merger Date, Tires Merger Sub shall
merge into the Company (the "Tires Sub Merger") and the separate existence of
Tires Merger Sub shall cease. The Company shall be the surviving corporation
in the Tires Sub Merger (hereinafter sometimes referred to as the "Tires
Surviving Corporation") and its separate corporate existence, with all its
purposes, objects, rights, privileges, powers and franchises, shall continue
unaffected and unimpaired by the Tires Sub Merger.
(b) Pursuant to the Tires Sub Merger:
(i) Each share of common stock without par value of the Company
(the "Company Stock") held by the Company as treasury stock
immediately prior to the Merger Date shall be canceled and no payment
shall be made with respect thereto;
(ii) Each share of Company Stock outstanding immediately prior
to the Merger Date shall, except as otherwise provided in Section
1.1(b)(i) or as provided in Section 1.6 with respect to shares of
Company Stock as to which dissenters' rights have been exercised
(which shares shall be treated in accordance with Section 1701.85 of
the General Corporation Law of Ohio (the "Ohio Law")), be converted
into the right to receive 0.8 shares (the "Tires Merger
Consideration") of common stock, par value $0.10 per share, of Parent
("Parent Common Stock"); and
(iii) At the Merger Date, each share of common stock, par value
$0.01 per share, of Tires Merger Sub ("Tires Merger Sub Common Stock")
outstanding immediately prior to the Merger Date shall be converted
into an equal number of shares of common stock, par value $0.01 per
share, of the Tires Surviving Corporation ("Tires Surviving
Corporation Common Stock").
From and after the Merger Date, all shares of Company Stock converted in
accordance with Section 1.1(b)(ii) shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each
holder of such shares shall cease to have any rights with respect thereto,
except the right to receive the Tires Merger Consideration, the right to
exercise dissenters' rights in accordance with and subject to the
provisions of the Ohio Law and the other rights specified in this
Agreement. From and after the Merger Date, all certificates representing
Tires Merger Sub Common Stock shall be deemed for all purposes to represent
the number of shares of Tires Surviving Corporation Common Stock into which
they were converted in accordance with Section 1.1(b)(iii). For the
purposes of this Agreement, "Subsidiary", when used with respect to any
Person means any other Person, whether incorporated or unincorporated, of
which securities or other ownership interests having ordinary power to
elect a majority of the board of directors or other persons performing
similar functions are directly or indirectly owned or controlled by such
Person or by any one or more of its Subsidiaries. For purposes of this
Agreement, "Person" means an individual, a corporation, a limited liability
company, a partnership, an association, a trust or any other entity or
organization, including, without limitation, a government or political
subdivision or any agency or instrumentality thereof.
Section 1.2. Buyer Sub Merger. (a) Upon the terms and subject
to the conditions set forth herein, on the Merger Date, Buyer Merger Sub shall
merge into Buyer (the "Buyer Sub Merger") and the separate existence of Buyer
Merger Sub shall cease. Buyer shall be the surviving corporation in the Buyer
Sub Merger (hereinafter sometimes referred to as the "Buyer Surviving
Corporation") and its separate corporate existence, with all its purposes,
objects, rights, privileges, powers and franchises, shall continue unaffected
and unimpaired by the Buyer Sub Merger.
(b) Pursuant to the Buyer Sub Merger:
(i) Each share of common stock, par value $0.10 per share, of
Buyer (the "Buyer Stock") held by Buyer as treasury stock immediately
prior to the Merger Date shall be canceled and no payment shall be
made with respect thereto;
(ii) Each share of Buyer Stock outstanding immediately prior to
the Merger Date shall, except as otherwise provided in Section
1.2(b)(i), be converted into the right to receive one share of Parent
Common Stock (the "Buyer Merger Consideration" and, together with the
Tires Merger Consideration, the "Merger Consideration"); and
(iii) At the Merger Date, each share of common stock, par value
$0.01 per share, of Buyer Merger Sub ("Buyer Merger Sub Common
Stock"), outstanding immediately prior to the Merger Date shall be
converted into an equal number of shares of common stock, par value
$0.01 per share, of the Buyer Surviving Corporation ("Buyer Surviving
Corporation Common Stock").
From and after the Merger Date, all shares of Buyer Stock converted in
accordance with Section 1.2(b)(ii) shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each
holder of such shares shall cease to have any rights with respect thereto,
except the right to receive the Buyer Merger Consideration and the other
rights specified in this Agreement. From and after the Merger Date, all
certificates representing Buyer Sub Common Stock shall be deemed for all
purposes to represent the number of shares of the Buyer Surviving
Corporation Common Stock into which they were converted in accordance with
Section 1.2(b)(iii).
Section 1.3. Surrender and Payment. (a) Prior to the Merger
Date, Buyer shall cause Parent to appoint an agent reasonably satisfactory to
the Company (the "Exchange Agent") for the purpose of exchanging certificates
representing shares of Company Stock for the Tires Merger Consideration.
Parent will make available to the Exchange Agent, as needed, certificates
representing the Parent Common Stock in respect of the Tires Merger
Consideration to be paid in respect of shares of Company Stock, in accordance
with the terms of Section 1.1(b). Promptly after the Merger Date, Parent
shall send, or shall cause the Exchange Agent to send, to each holder of
shares of Company Stock at the Merger Date a letter of transmittal for use in
such exchange (which shall specify that delivery of the Tires Merger
Consideration shall be effected, and risk of loss and title shall pass, only
upon proper delivery of the certificates representing shares of Company Stock,
to the Exchange Agent). Upon the conversion of Buyer Stock into Parent Common
Stock in accordance with Section 1.2(b), all shares of Buyer Stock so converted
shall be canceled and cease to exist, and each certificate theretofore
representing any such shares shall, without any action on the part of the
holder thereof, be deemed to represent an equivalent number of shares of
Parent Common Stock.
(b) Each holder of shares of Company Stock that have been
converted into a right to receive the Tires Merger Consideration, upon
surrender to the Exchange Agent of a certificate or certificates
representing such shares of Company Stock, together with a properly
completed letter of transmittal covering such shares of Company Stock, will
be entitled to receive the Tires Merger Consideration payable in respect of
such shares of Company Stock, cash in lieu of any fractional shares and
certain dividends or other distributions in accordance with Section 1.3(g).
Until so surrendered, each such certificate shall, after the Merger Date,
represent for all purposes only the right to receive the Tires Merger
Consideration, cash in lieu of any fractional shares and certain dividends
or other distributions in accordance with Section 1.3(g).
(c) If any portion of the Tires Merger Consideration is to
be paid to a Person other than the registered holder of the shares of
Company Stock represented by the certificate or certificates surrendered in
exchange therefor, it shall be a condition to such payment that the
certificate or certificates so surrendered shall be properly endorsed or
otherwise be in proper form for transfer and that the Person requesting
such payment shall pay to the Exchange Agent any transfer or other taxes
required as a result of such payment to a Person other than the registered
holder of such shares of Company Stock or establish to the satisfaction of
the Exchange Agent that such tax has been paid or is not payable.
(d) After the Merger Date, there shall be no further
registration of transfers of shares of Company Stock. If, after the Merger
Date, certificates representing shares of Company Stock or Buyer Stock are
presented to the respective surviving corporations in the Mergers, they
shall be canceled and exchanged for the consideration provided for, and in
accordance with the procedures set forth, in this Article 1.
(e) Any portion of the Tires Merger Consideration made
available to the Exchange Agent pursuant to Section 1.3(a) that remains
unclaimed by the holders of shares of Company Stock twelve months after the
Merger Date shall be returned to Parent, upon demand, and any such holder
who has not exchanged his shares of Company Stock for the Tires Merger
Consideration in accordance with this Section 1.3 prior to that time shall
thereafter look only to Parent for his claim for Tires Merger
Consideration, any cash in lieu of any fractional shares and certain
dividends or other distributions in accordance with Section 1.3(g).
Notwithstanding the foregoing, Parent shall not be liable to any holder of
shares of Company Stock for any amount paid to a public official pursuant
to applicable abandoned property laws. Any amounts remaining unclaimed by
holders of shares of Company Stock two years after the Merger Date (or such
earlier date immediately prior to such time as such amounts would otherwise
escheat to or become property of any governmental entity) shall, to the
extent permitted by applicable law, become the property of Parent free and
clear of any claim or interest of any Person previously entitled thereto.
(f) Any portion of the Tires Merger Consideration made
available to the Exchange Agent pursuant to Section 1.3(a) to pay for
shares of Company Stock in respect of which dissenters rights have been
perfected shall be returned to Parent, upon demand.
(g) No dividends or other distributions with respect to the
Parent Common Stock constituting all or a portion of the Tires Merger
Consideration shall be paid to the holder of any unsurrendered certificate
representing Company Stock until such certificates are surrendered as
provided in this Section 1.3. Subject to the effect of applicable laws,
following such surrender, there shall be paid, without interest, to the
record holder of the certificates representing the Parent Common Stock (i)
at the time of such surrender, the amount of dividends or other
distributions with a record date after the Merger Date payable prior to or
on the date of such surrender with respect to such whole shares of Parent
Common Stock, and not paid, and the amount of cash payable in lieu of any
fractional shares, less the amount of any withholding taxes which may be
required thereon under any provision of federal, state, local or foreign
tax law, and (ii) at the appropriate payment date, the amount of dividends
or other distributions with a record date after the Merger Date but prior
to the date of surrender and a payment date subsequent to the date of
surrender payable with respect to such whole shares of Parent Common Stock,
less the amount of any withholding taxes which may be required thereon
under any provision of federal, state, local or foreign tax law. Parent
shall make available to the Exchange Agent cash for these purposes.
(h) If any certificate representing Company Stock shall
have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the Person claiming such certificate to be lost, stolen or
destroyed and, if required by Parent, the posting by such Person of a bond
in such reasonable amount as Parent may direct as indemnity against any
claim that may be made against it with respect to such certificate, the
Exchange Agent shall issue in exchange for such lost, stolen or destroyed
certificate the Tires Merger Consideration and, if applicable, any unpaid
dividends and distributions on shares of Parent Common Stock deliverable in
respect thereof and any cash in lieu of fractional shares, in each case
pursuant to this Agreement.
Section 1.4. Cancellation of Parent Stock. All outstanding
shares of the capital stock of Parent immediately prior to the Merger Date
shall be canceled immediately upon consummation of the Buyer Sub Merger. The
Tires Sub Merger and the Buyer Sub Merger are sometimes together referred to
as the "Mergers".
Section 1.5. The Merger Date. As soon as practicable (but in
no event more than two business days) after the satisfaction or, to the extent
permitted hereunder or under applicable law, waiver of all conditions to each
of the Mergers, (a) the Company shall file the certificate of merger required
to effect the Tires Sub Merger (the "Company Certificate of Merger") with the
Ohio Secretary of State and make all other filings or recordings required by
the Ohio Law in connection with the Tires Sub Merger, (b) Buyer shall file a
copy of this Agreement with the Delaware Secretary of State and make all other
filings or recordings required by the Delaware Law in connection with the
Buyer Sub Merger, and (c) the Mergers shall become effective, it being
understood that the Buyer Sub Merger shall become effective immediately prior
to the Tires Sub Merger in accordance with the terms of such Company
Certificate of Merger and this Agreement (such time and date are referred to
as the "Merger Date"). Notwithstanding the first sentence of this Section
1.5, the Merger Date shall occur no earlier than ten days after the date on
which the shareholders of the Company shall have approved the Tires Sub Merger
and, in any event, no earlier than January 2, 1998.
Section 1.6. Dissenting Shares. Notwithstanding Section 1.1
or Section 1.2, as applicable, shares of Company Stock outstanding immediately
prior to the Merger Date and held by a holder who has not voted in favor of
the Tires Sub Merger and who has exercised dissenters' rights in respect of
such shares of Company Stock in accordance with the Ohio Law shall not be
converted into a right to receive the Tires Merger Consideration unless such
holder fails to perfect or withdraws or otherwise loses his dissenters' or
objecting shareholders' rights. Shares of Company Stock in respect of which
dissenters rights have been exercised shall be treated in accordance with
Section 1701.85 of the Ohio Law. If after the Merger Date such holder fails to
perfect or withdraws or otherwise loses his right to demand the payment of
fair value for shares of Company Stock under Ohio Law, such shares of Company
Stock shall be treated as if they had been converted as of the Merger Date
into a right to receive the Tires Merger Consideration, cash in lieu of any
fractional shares and certain dividends or other distributions in accordance
with Section 1.3(g). The Company shall give Buyer prompt notice of any demands
received by the Company for the exercise of dissenters rights with respect to
shares of Company Stock and Buyer shall have the right to participate in all
negotiations and proceedings with respect to such demands. The Company shall
not, except with the prior written consent of Buyer, make any payment with
respect to, or settle or offer to settle, any such demands. In the event any
amounts shall become due and payable in respect of any such demands, such
amounts shall be paid by the Company.
Section 1.7. Stock Options of the Company. (a) As soon as
practicable following the date of this Agreement, the Directors of the Company
(or, if appropriate, any committee administering the Company Stock Plans, as
defined below) shall adopt such resolutions or take such other actions as may
be required to effect the following:
(i) adjust the terms of all outstanding options to purchase
shares of Company Stock (the "Company Stock Options") granted under any
plan or arrangement providing for the grant of options to purchase shares
of Company Stock to current or former officers, directors, employees or
consultants of the Company (the "Company Stock Plans"), whether vested or
unvested, as necessary to provide that, at the Merger Date, each Company
Stock Option outstanding immediately prior to the Merger Date shall be
amended and converted into an option to acquire, on the same terms and
conditions as were applicable under the Company Stock Option, the
number of shares of Parent Common Stock (rounded down to the nearest
whole share) determined by multiplying the number of shares of Company
Stock subject to such Company Stock Option by 0.8, at a price per
share of Parent Common Stock equal to (A) the aggregate exercise price
for the shares of Company Stock otherwise purchasable pursuant to such
Company Stock Option divided by (B) the aggregate number of shares of
Parent Common Stock deemed purchasable pursuant to such Company Stock
Option (each, as so adjusted, an "Adjusted Option"); provided that
such exercise price shall be rounded up to the nearest whole cent; and
(ii) make such other changes to the Company Stock Plans as
Parent and the Company may agree are appropriate to give effect to the
Merger.
(b) The adjustments provided herein with respect to any
Company Stock Options that are "incentive stock options" as defined in
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code")
shall be and are intended to be effected in a manner which is consistent
with Section 424(a) of the Code.
(c) Prior to the Merger Date, Parent shall adopt an option
plan which shall provide for the issuance of the Adjusted Options at the
Merger Date and by virtue of the Merger and without the need of any further
corporate action, Parent shall assume all obligations of the Company under
the Company Stock Plans, including with respect to the Company Stock
Options outstanding at the Merger Date.
(d) No later than the Merger Date, Parent shall prepare and
file with the SEC a registration statement on Form S-8 (or another
appropriate form) registering a number of shares of Parent Common Stock
equal to the number of shares subject to the Adjusted Options. Such
registration statement shall be kept effective (and the current status of
the initial offering prospectus or prospectuses required thereby shall be
maintained) at least for so long as any Adjusted Options may remain
outstanding.
(e) As soon as practicable after the Merger Date, Parent
shall deliver to the holders of Company Stock Options appropriate notices
setting forth such holders' rights pursuant to the respective Company Stock
Plans and the agreements evidencing the grants of such Company Stock
Options and that such Company Stock Options and agreements shall be assumed
by Parent and shall continue in effect on the same terms and conditions
(subject to the adjustments required by this Section 1.7 after giving
effect to the Merger).
(f) A holder of an Adjusted Option may exercise such
Adjusted Option in whole or in part in accordance with its terms by
delivering a properly executed notice of exercise to Parent, together with
the consideration therefor and any required United States Federal
withholding tax information and payment.
(g) Except as otherwise contemplated by this Section 1.7
and except to the extent required under the respective terms of the Company
Stock Options or other applicable agreements, all restrictions or
limitations on transfer and vesting with respect to Company Stock Options
awarded under the Company Stock Plans or any other plan, program or
arrangement of the Company, to the extent that such restrictions or
limitations shall not have already lapsed, shall remain in full force and
effect with respect to such options after giving effect to the Merger and
the assumption by Parent as set forth above.
Section 1.8. Adjustments. If at any time during the period
between the date of this Agreement and the Merger Date, any change in the
outstanding shares of Buyer Stock or Company Stock shall occur, including by
reason of any reclassification, recapitalization, stock split or combination,
exchange or readjustment of shares, or any stock dividend thereon with a
record date during such period, the Merger Consideration shall be
appropriately adjusted.
Section 1.9. Fractional Shares. No fractional shares of
Parent Common Stock shall be issued in the Tires Sub Merger, but in lieu
thereof each holder of Company Stock otherwise entitled to a fractional share
of Parent Common Stock will be entitled to receive, from the Exchange Agent in
accordance with the provisions of this Section 1.9, a cash payment in lieu of
such fractional shares of Parent Common Stock representing such holder's
proportionate interest, if any, in the net proceeds from the sale by the
Exchange Agent in one or more transactions (which sale transactions shall be
made at such times, in such manner and on such terms as the Exchange Agent
shall determine in its reasonable discretion) on behalf of all such holders of
the aggregate of the fractional shares of Parent Common Stock which would
otherwise have been issued (the "Excess Shares"). The sale of the Excess
Shares by the Exchange Agent shall be executed on the New York Stock Exchange,
Inc. (the "NYSE") through one or more member firms of the NYSE and shall be
executed in round lots to the extent practicable. Until the net proceeds of
such sale or sales have been distributed to the holders of shares of Company
Stock, the Exchange Agent will hold such proceeds in trust for the holders of
Company Stock. Parent shall pay all commissions, transfer taxes and other
out-of-pocket transaction costs, including, without limitation, the expenses
and compensation of the Exchange Agent, incurred in connection with such sale
of the Excess Shares. As soon as practicable after the determination of the
amount of cash, if any, to be paid to holders of Company Stock in lieu of any
fractional shares of Parent Common Stock the Exchange Agent shall make
available such amounts to such holders of shares of Company Stock without
interest.
ARTICLE 2
The Surviving Corporations
Section 2.1. Articles and Certificate of Incorporation;
Bylaws. (a) The articles of incorporation and bylaws of the Company in effect
at the Merger Date shall be the articles of incorporation and bylaws,
respectively, of the Tires Surviving Corporation until amended in accordance
with applicable law. The Tires Surviving Corporation shall succeed to all of
the rights, privileges, powers and franchises, of a public as well as of a
private nature, of the Company and Tires Merger Sub, all of the properties and
assets and all of the debts of the Company and Tires Merger Sub, choses in
action and other interests due or belonging to the Company and Tires Merger
Sub and shall be subject to, and responsible for, all of the debts,
liabilities and duties of the Company and Tires Merger Sub with the effect set
forth in the Ohio Law.
(b) The certificate of incorporation and bylaws of Buyer in
effect at the Merger Date shall be the certificate of incorporation and
bylaws, respectively, of the Buyer Surviving Corporation until amended in
accordance with applicable law. The Buyer Surviving Corporation shall
succeed to all of the rights, privileges, powers and franchises, of a
public as well as of a private nature, of Buyer and Buyer Merger Sub, all
of the properties and assets of and all of the debts of Buyer and Buyer
Merger Sub, choses in action and other interests due or belonging to Buyer
and Buyer Merger Sub and shall be subject to, and responsible for, all of
the debts, liabilities and duties of Buyer and Buyer Merger Sub with the
effect set forth in the Delaware Law.
Section 2.2. Directors and Officers. From and after the
Merger Date, until successors are duly elected or appointed and qualified in
accordance with applicable law, and subject to Section 7.15 of the Company
Disclosure Schedule, (a) the directors of Buyer Merger Sub immediately prior
to the Merger Date shall be the directors of the Tires Surviving Corporation,
(b) the directors of Buyer immediately prior to the Merger Date shall be the
directors of the Buyer Surviving Corporation, (c) the directors of Buyer
immediately prior to the Merger Date shall be the directors of Parent, (d) the
officers of the Company immediately prior to the Merger Date shall be the
officers of the Tires Surviving Corporation and (e) the officers of Buyer
immediately prior to the Merger Date shall be the officers of the Buyer
Surviving Corporation.
ARTICLE 3
Representations and warranties of the Company
Except as set forth in the disclosure schedule (each section
of which qualifies the correspondingly numbered representation and warranty
only, except where the information in any such section is disclosed in such
a way to make its relevance to any other representation or warranty readily
apparent, in which case, such section shall be deemed to also qualify such
other representation and warranty) of the Company attached hereto (the
"Company Disclosure Schedule") or as otherwise provided herein, the Company
represents and warrants to Buyer that:
Section 3.1. Corporate Existence and Power. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Ohio, and has all corporate powers and all governmental
licenses, authorizations, permits, consents and approvals required to carry on
its business as now conducted and is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its
activities makes such qualification necessary, except (i) where the failure to
have such licenses, authorizations, permits, consents or approvals and (ii)
for those jurisdictions where the failure to be so qualified or in good
standing, is not, individually or in the aggregate, reasonably likely to have
a Material Adverse Effect on the Company. For purposes of this Agreement, a
"Material Adverse Effect" means, with respect to any Person, a material
adverse effect on the financial condition, business, assets or results of
operations of such Person and its Subsidiaries taken as a whole or on the
ability of such Person to perform its obligations hereunder in all material
respects. The Company has heretofore delivered to Buyer true and complete
copies of the Company's articles of incorporation and bylaws as currently in
effect.
Section 3.2. Corporate Authorization. (a) The execution,
delivery and performance by the Company of this Agreement and the consummation
by the Company of the transactions contemplated hereby are within the
Company's corporate powers and, except for the required approval of the
shareholders of the Company in connection with the consummation of the Tires
Sub Merger, have been duly authorized by all necessary corporate action. The
affirmative vote of a majority of the shares of the entire voting power is the
only vote of any class or series of the Company's capital stock necessary to
approve and adopt this Agreement and the transactions contemplated by this
Agreement. This Agreement has been duly executed and delivered by the Company
and constitutes a valid and binding agreement of the Company enforceable
against the Company in accordance with its terms.
(b) The Directors of the Company, at a meeting duly called
and held, have (i) determined that this Agreement and the transactions
contemplated hereby (including the Tires Sub Merger) are fair to and in the
best interests of the shareholders of the Company, (ii) approved and
adopted this Agreement and the transactions contemplated hereby (including
the Tires Sub Merger), and (iii) resolved to recommend approval and
adoption of this Agreement by the shareholders of the Company, subject to
the terms hereof.
Section 3.3. Governmental Authorization. The execution,
delivery and performance by the Company of this Agreement and the consummation
by the Company of the transactions contemplated by this Agreement require no
action, by or in respect of, or filing with, any governmental body, agency,
official or authority other than (a) the filing of the Company Certificate of
Merger in accordance with the Ohio Law; (b) compliance with any applicable
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"); (c) compliance with any applicable requirements of
the Securities and Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder (the "1934 Act"); (d) compliance with any
applicable requirements of the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder (the "1933 Act"); (e) compliance
with any applicable foreign or state securities or Blue Sky laws; (f)
compliance with any applicable pre-merger notification or similar statutes and
rules of the European Community (or certain of its member states), Canada and
Mexico; (g) any applicable requirements of the Department of Transportation;
(h) filings and notices not required to be made or given until after the
Merger Date and (i) immaterial actions or filings relating to ordinary
operational matters.
Section 3.4. Non-Contravention. The execution, delivery and
performance by the Company of this Agreement and the consummation by the
Company of the transactions contemplated by this Agreement do not and will not
(a) contravene or conflict with the articles of incorporation or bylaws of the
Company, (b) assuming compliance with the matters referred to in Section 3.3,
contravene or conflict with or constitute a violation of any provision of any
law, regulation, judgment, injunction, order or decree binding upon or
applicable to the Company or any Subsidiary of the Company, (c) constitute a
default (or an event which with notice, the lapse of time or both would become
a default) under or give rise to a right of termination, cancellation or
acceleration of any right or obligation of the Company or any Subsidiary of
the Company or to a loss of any benefit to which the Company or any Subsidiary
of the Company is entitled under any provision of any agreement, contract or
other instrument binding upon the Company or any Subsidiary of the Company or
any license, franchise, permit or other similar authorization held by the
Company or any Subsidiary of the Company, or (d) result in the creation or
imposition of any Lien on any asset of the Company or any Subsidiary of the
Company, other than, in the case of the events specified in clauses (b), (c)
and (d), any such event which, individually or in the aggregate, has not had,
and is not reasonably likely to have, a Material Adverse Effect on the
Company. For purposes of this Agreement, "Lien" means, with respect to any
asset, any mortgage, lien, pledge, charge, security interest or encumbrance of
any kind in respect of such asset.
Section 3.5. Capitalization. As of September 15, 1997, the
authorized capital stock of the Company consists of 200,000,000 shares of
Company Stock and 40,000,000 shares of serial preferred stock. As of
September 13, 1997, there were (i) 39,206,414 shares of Company Stock
outstanding and (ii) no shares of serial preferred stock outstanding. As of
September 18, 1997, there were employee and director stock options to purchase
an aggregate of 663,681 shares of Company Stock outstanding (none of which
options were exercisable, other than options in respect of 22,460 shares of
Company Stock). All outstanding shares of capital stock of Company have been
duly authorized and validly issued and are fully paid and nonassessable.
Except as set forth in this Section 3.5, and for changes since September 15,
1997 resulting from the exercise of stock options outstanding on such date,
there are outstanding (a) no shares of capital stock or other voting
securities of the Company, (b) no securities of the Company convertible into
or exchangeable for shares of capital stock or voting securities of the
Company, and (c) no options or other rights to acquire from the Company, and
no obligation of the Company to issue, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or voting
securities of the Company (the items in clauses (a), (b) and (c) being
referred to collectively as the "Company Securities"). There are no
outstanding obligations of the Company or any Subsidiary of the Company to
repurchase, redeem or otherwise acquire any Company Securities.
Section 3.6. Material Subsidiaries. (a) Each Material
Subsidiary of the Company is duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation, has all
corporate powers and all governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted and is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction where the character of the property owned or leased by it
or the nature of its activities makes such qualification necessary, except (i)
where the failure to have such licenses, authorizations, consents or approvals
and (ii) for those jurisdictions where failure to be so qualified or licensed
is not, individually or in the aggregate, reasonably likely to have a Material
Adverse Effect on the Company. All Material Subsidiaries and their respective
jurisdictions of incorporation are identified in the Company's annual report
on Form 10-K for the fiscal year ended December 31, 1996 (the "Company 10-K").
For the purposes of this Agreement, "Material Subsidiary" means those
Subsidiaries of the Company required to be identified as significant
subsidiaries of the Company in the Company 10-K pursuant to Regulation S-X
1.02(w).
(b) All of the outstanding capital stock of, or other
ownership interests in, each Material Subsidiary of the Company, is owned
by the Company, directly or indirectly, free and clear of any Lien and free
of any other limitation or restriction (including, without limitation, any
restriction on the right to vote, sell or otherwise dispose of such capital
stock or other ownership interests). There are no outstanding (i)
securities of the Company or any Subsidiary of the Company convertible into
or exchangeable for shares of capital stock or other voting securities or
ownership interests in any Subsidiary of the Company, and (ii) options or
other rights to acquire from the Company or any Subsidiary of the Company,
and no other obligation of the Company or any Subsidiary of the Company to
issue, any capital stock, voting securities or other ownership interests
in, or any securities convertible into or exchangeable for, any capital
stock, voting securities or ownership interests in, any Subsidiary of the
Company (the items in clauses (i) and (ii) being referred to collectively
as the "Company Subsidiary Securities"). There are no outstanding
obligations of the Company or any Subsidiary of the Company to repurchase,
redeem or otherwise acquire any outstanding Company Subsidiary Securities.
Section 3.7. SEC Filings. The Company has delivered to Buyer
(i) the Company's annual reports on Form 10-K for its fiscal years ended
December 31, 1996, 1995 and 1994, (ii) its quarterly reports on Form 10-Q for
its fiscal quarters ended after December 31, 1996 (the "Company 10-Qs"), (iii)
its proxy or information statements relating to meetings of, or actions taken
without a meeting by, the shareholders of the Company held since December 31,
1996, and (iv) all of its other reports, statements, schedules and
registration statements filed with the Securities and Exchange Commission (the
"SEC") since January 1, 1996 and through the date of this Agreement. The
Company has filed all required reports, schedules, forms, statements and other
documents with the SEC since January 1, 1995 (collectively, the "Company SEC
Documents"). As of their respective dates, or if amended, as of the date of
the last such amendment, the Company SEC Documents complied, and all documents
required to be filed by the Company with the SEC after the date hereof and
prior to the Merger Date (the "Subsequent Company SEC Documents") will comply,
in all material respects with the requirements of the 1933 Act or the 1934
Act, as the case may be, and the applicable rules and regulations promulgated
thereunder, and none of the Company SEC Documents contained, and the
Subsequent Company SEC Documents will not contain, any untrue statement of a
material fact or omit to state any material fact necessary in order to make
the statements made therein, in the light of the circumstances under which
they were made, not misleading.
Section 3.8. Financial Statements. The audited consolidated
financial statements and unaudited consolidated interim financial statements
of the Company included in its annual reports on Form 10-K and the quarterly
reports on Form 10-Q referred to in Section 3.7 fairly present, in all
material respects, in conformity with United States generally accepted
accounting principles ("GAAP") applied on a consistent basis (except as may be
indicated in the notes thereto), the consolidated financial position of the
Company and its consolidated Subsidiaries as of the dates thereof and their
consolidated results of operations and cash flows for the periods then ended
(subject to normal year-ended adjustments in the case of any unaudited interim
financial statements). For purposes of this Agreement, "Company Balance
Sheet" means the consolidated balance sheet of the Company as of December 31,
1996 set forth in the Company 10-K and "Company Balance Sheet Date" means
December 31, 1996.
Section 3.9. Disclosure Documents. (a) Each document required
to be filed by the Company with the SEC in connection with the transactions
contemplated by this Agreement (the "Company Disclosure Documents"),
including, without limitation, the proxy or information statement of the
Company (the "Company Proxy Statement"), if any, to be filed with the SEC in
connection with the adoption of this Agreement by the holders of Company
Stock, and any amendments or supplements thereto, will, when filed, comply as
to form in all material respects with the applicable requirements of the 1934
Act.
(b) At the time the Company Proxy Statement or any
amendment or supplement thereto is first mailed to shareholders of the
Company, and at the time such shareholders vote on the adoption of this
Agreement, the Company Proxy Statement, as supplemented or amended, if
applicable, will not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they were made,
not misleading. At the time of the filing of any Company Disclosure
Document other than the Company Proxy Statement and at the time of any
distribution thereof, such Company Disclosure Document will not contain any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. The
representations and warranties contained in this Section 3.9(b) will not
apply to statements included in or omissions from the Company Disclosure
Documents based upon information furnished to the Company in writing by
Buyer or Parent specifically for use therein.
Section 3.10. Information Supplied. The information supplied
or to be supplied by the Company for inclusion or incorporation by reference
in (i) the Buyer Proxy Statement (as defined hereinafter) or any amendment or
supplement thereto will not, at the time the Buyer Proxy Statement is first
mailed to stockholders of Buyer and at the time such stockholders vote on the
issuance of Parent Common Stock in connection with this Agreement, contain any
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading, (ii) the Form S-4 or
any amendment or supplement thereto will not, at the time the Form S-4 or any
amendment or supplement thereto becomes effective under the 1933 Act and on
the Merger Date, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading and (iii) any Buyer Disclosure Document
(other than the Buyer Proxy Statement, the Form S-4 and any amendments or
supplements to either) will not, at the time of effectiveness of such Buyer
Disclosure Document and at the time of any distribution thereof, contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
Section 3.11. Absence of Certain Changes. Since the Company
Balance Sheet Date and except as set forth in the Company SEC Documents, the
Company and its Subsidiaries have conducted their business in the ordinary
course consistent with past practice and there has not been:
(a) any event, occurrence or development of a state of
circumstances or facts which has had or is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on the Company
other than any of the foregoing (i) relating to the economy or securities
markets in general, (ii) relating to the Company's industry in general or
(iii) arising from the announcement or pendency of this Agreement or the
transactions contemplated hereby;
(b) any declaration, setting aside or payment of any
dividend or other distribution with respect to any shares of capital stock
of the Company (other than payment of the Company's regular quarterly
dividend on Company Common Stock in an amount not exceeding $0.10 per share
and having customary record and payment dates), or any repurchase,
redemption or other acquisition by the Company or any Subsidiary of the
Company of any amount of outstanding shares of capital stock or other
securities of, or other ownership interests in, the Company or any of its
Subsidiaries;
(c) (except for amendments to the Company's Rights
Agreement contemplated by Section 3.22) any amendment of any material term
of any outstanding security of the Company or any Subsidiary of the
Company;
(d) any incurrence, assumption or guarantee by the Company
or any Subsidiary of the Company of any indebtedness from any third party
for borrowed money other than in the ordinary course of business and in
amounts and on terms consistent with past practices;
(e) any creation or assumption by the Company or any
Subsidiary of the Company of any Lien on any material asset other than in
the ordinary course of business consistent with past practices;
(f) any making of any loan, advance or capital contribution
to or investment in any Person other than loans, advances or capital
contributions to or investments in wholly-owned Subsidiaries of the Company
or to employees of the Company made in the ordinary course of business
consistent with past practices;
(g) any damage, destruction or other casualty loss (whether
or not covered by insurance) affecting the business or assets of the
Company or any Subsidiary of the Company which, individually or in the
aggregate, has had or is reasonably likely to have a Material Adverse
Effect on the Company;
(h) any transaction or commitment made, or any contract or
agreement entered into, by the Company or any Subsidiary of the Company
relating to its assets or business (including, without limitation, the
acquisition or disposition of any assets) (other than transactions and
commitments contemplated by this Agreement) inconsistent with the Company's
budget and/or spending plans disclosed to Buyer prior to the date of this
Agreement or any relinquishment by the Company or any Subsidiary of the
Company of any material contract, license or right;
(i) any change in any method of accounting or accounting
principle or practice by the Company or any Subsidiary of the Company,
except for any such change required by GAAP or Regulation S-X promulgated
under the 1934 Act ("Regulation S-X");
(j) any (i) grant by the Company or any of its Subsidiaries
of any severance or termination pay to, or entry into any employment,
termination or severance arrangement with, any director, officer or
employee of the Company or any Subsidiary of the Company other than any
such grant or arrangement to or with any employee of any Subsidiary of the
Company in the ordinary course in an amount not exceeding an amount equal
to the annual compensation plus expenses relating to "COBRA" and out-
placement benefits of such employee; (ii) entering into of any employment,
deferred compensation or other similar agreement (or any amendment to any
such existing agreement) with any director, officer or employee of the
Company or any Subsidiary, (iii) increase in benefits payable under any
existing severance or termination pay policies or employment agreements or
(iv) increase in compensation, bonus or other benefits payable to
directors, officers or employees of the Company or any Subsidiary, other
than in the ordinary course of business.
Section 3.12. No Undisclosed Material Liabilities. There are
no liabilities, commitments or obligations (whether pursuant to contracts or
otherwise) of the Company or any Subsidiary of the Company of any kind
whatsoever which, individually or in the aggregate, have had or are reasonably
likely to have a Material Adverse Effect on the Company, whether accrued,
contingent, absolute, determined, determinable or otherwise, and there is no
existing condition, situation or set of circumstances which is reasonably
likely to result in such a liability, commitment or obligation, including,
without limitation, any fines, disciplinary actions or other adverse actions
that may be taken or reported concerning the conduct of the Company or any of
its Subsidiaries, other than:
(a) liabilities, commitments or obligations disclosed or
provided for in the Company Balance Sheet (including the notes thereto) or
in the Company 10-K;
(b) liabilities, commitments or obligations incurred in the
ordinary course of business consistent with past practice since the Company
Balance Sheet Date; and
(c) liabilities, commitments or obligations under this
Agreement.
Section 3.13. Litigation; Investigations. Except as set forth
in the Company SEC Documents, there is no action, claim, suit, investigation,
proceeding or examination pending against or affecting, or to the knowledge of
the Company, threatened or reasonably likely to be brought against or
affecting, the Company or any Subsidiary of the Company or any of their
respective properties before any court or arbitrator or any governmental body,
agency, authority or official which, individually or in the aggregate, has had
or is reasonably likely to have a Material Adverse Effect on the Company. The
foregoing representation and warranty does not include or relate to any
action, claim, suit, investigation, proceeding or examination, pending or
threatened, challenging or seeking to prevent, enjoin, alter or delay the
Mergers or any of the transactions contemplated hereby.
Section 3.14. Taxes. (a) Except as set forth in the Company
Balance Sheet (including the notes thereto) or on Schedule 3.14, (i) all tax
returns, statements, reports and forms (collectively, the "Company Returns")
required to be filed with any taxing authority by, or with respect to, the
Company and its Subsidiaries have been filed in accordance with all applicable
laws; (ii) the Company and its Subsidiaries have timely paid all taxes shown
as due and payable on the Company Returns that have been so filed, and, as of
the time of filing, the Company Returns and any other information required to
be shown thereon were correct and complete in all respects (other than taxes
which are being contested in good faith and which are adequately provided for,
under GAAP, on the Company Balance Sheet); (iii) the Company and its
Subsidiaries have made provision for all Taxes payable by the Company and its
Subsidiaries for which no Company Return has yet been filed; (iv) there is no
action, suit, proceeding, audit or claim now proposed or pending against or
with respect to the Company or any of its Subsidiaries in respect of any Tax
where there is a reasonable possibility of an adverse determination; (v)
neither the Company nor any of its Subsidiaries has been a United States real
property holding corporation within the meaning of Section 897(c)(2) of the
Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the
Code; (vi) neither the Company nor any of its Subsidiaries has been a member
of an affiliated, consolidated, combined or unitary group other than one of
which the Company was the common parent; (vii) all Returns filed with respect
to tax years of the Company and its Subsidiaries through the tax year ended
December 31, 1989, have been examined and closed or are returns with respect
to which the applicable period for assessment under applicable law, after
giving effect to extensions or waivers, has expired; (viii) neither the
Company nor any Subsidiary (or any member of any affiliated, consolidated,
combined or unitary group of the Company or any Subsidiary is or has been a
member) has been granted any extension or waiver of the statute of limitations
period applicable to any return, which period (after giving effect to such
extension or waiver) has not yet expired; (ix) at no time during the two years
preceding the date hereof has there been pending any request for a ruling or
determination between the Company or any Subsidiary and any Taxing Authority
in respect of any Tax, net operating loss, net capital loss, investment tax
credit, foreign tax credit, charitable deduction, depreciation or amortization
deduction or other tax deduction or credit; (x) none of the property owned or
used by the Company or any subsidiary is subject to a tax benefit transfer
lease executed in accordance with Section 168(f)(8) of the Code; (xi) none of
the property owned or used by the Company or any Subsidiary is subject to a
lease, other than a "true" lease for federal income tax purposes; (xii) none
of the property owned by the Company or any Subsidiary is "tax-exempt use
property" within the meaning of Section 168(h) of the Code; (xiii) a
protective carryover election has been filed in connection with each
transaction consummated by the Company or any Subsidiary prior to January 20,
1994 that constituted a "qualified stock purchase" within the meaning of
Section 338 of the Code; (xiv) neither the Company nor any of its Subsidiaries
has any contractual obligations under any tax sharing agreement or similar
agreement or tax indemnity agreement with any corporation or person which is
not a member of the affiliated group of corporations of which the Company is
the common parent; and (xv) neither the Company nor any of its Subsidiaries
owns any interest in real property in the State of New York. For purposes of
the representations contained in this Section 3.14, none of these
representations shall be deemed to have been breached unless such breach would
have, individually or in the aggregate, a Material Adverse Effect on the
Company.
(b) For purposes of this Agreement, "Taxes" means all
United States Federal, state, local and foreign taxes, levies and other
assessments, including, without limitation, all income, sales, use, goods
and services, value added, capital, capital gains, net worth, transfer,
profits, withholding, payroll, employer health, unemployment insurance
payments, excise, real property and personal property taxes, and any other
taxes, assessments or similar charges in the nature of a tax, including,
without limitation, interest, additions to tax, fines and penalties,
imposed by a governmental or public body, agency, official or authority
(the "Taxing Authorities"). "Tax Return" means any return, report,
information return or other document (including any related or supporting
information) required to be filed with any Taxing Authority in connection
with the determination, assessment, collection, administration or
imposition of any Taxes.
Section 3.15. ERISA and Labor Matters. (a) Section 3.15(a) of
the Company Disclosure Schedule contains a list identifying each "employee
benefit plan", as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974 ("ERISA"), which is subject to any provision of ERISA and
is maintained, administered or contributed to by the Company or any Affiliate
of the Company and covers any employee or former employee of the Company or
any Subsidiary of the Company or under which the Company or any Subsidiary of
the Company has any liability. Copies of such plans (and, if applicable,
related trust agreements) and all amendments thereto and written
interpretations thereof have been furnished to Buyer together with the three
most recent annual reports (Form 5500 including, if applicable, Schedule B
thereto) prepared in connection with any such plan and the most recent
actuarial valuation report prepared in connection with any such plan. Such
plans are referred to collectively herein as the "Employee Plans". For
purposes of this Section, "ERISA Affiliate" of the Company means any other
Person which, together with the Company, would be treated as a single employer
under Section 414 of the Code. The only Employee Plans which individually or
collectively would constitute an "employee pension benefit plan" as defined in
Section 3(2) of ERISA (the "Pension Plans") are identified as such in the list
referred to above.
(b) No Employee Plan constitutes a "multiemployer plan", as
defined in Section 3(37) of ERISA (a "Multiemployer Plan"). No
"accumulated funding deficiency", as defined in Section 412 of the Code,
has been incurred with respect to any Employee Plan subject to Title IV of
ERISA, whether or not waived. The Company knows of no "reportable event",
within the meaning of Section 4043 of ERISA, and no event described in
Section 4041, 4042, 4062 or 4063 of ERISA has occurred in connection with
any Employee Plan, other than a reportable event that is not reasonably
likely to have a Material Adverse Effect on the Company. No condition
exists and no event has occurred that could constitute grounds for
termination of any Employee Plan other than any such terminations that
would not individually or in the aggregate be reasonably likely to have a
Material Adverse Effect. Neither the Company nor any of its ERISA
Affiliates has any material unsatisfied liability under Title IV of ERISA
in connection with the termination of, or complete or partial withdrawal
from, any plan covered or previously covered by Title IV of ERISA. Nothing
done or omitted to be done and no transaction or holding of any asset under
or in connection with any Employee Plan has or will make the Company or any
Subsidiary, any officer or director of the Company or any Subsidiary
subject to any liability under Title I of ERISA or liable for any tax
pursuant to Section 4975 of the Code that is reasonably likely to have a
Material Adverse Effect on the Company.
(c) Each Employee Plan which is intended to be qualified
under Section 401(a) of the Code is so qualified and has been so qualified
during the period from its adoption to date, and each trust forming a part
thereof is exempt from tax pursuant to Section 501(a) of the Code. The
Company has furnished to Buyer copies of the most recent IRS determination
letters with respect to each such Employee Plan. Each Employee Plan has
been maintained in compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations,
including but not limited to ERISA and the Code, which are applicable to
the Employee Plan, excluding any instances of non-compliance that would not
individually or in the aggregate be reasonably likely to have a Material
Adverse Effect on the Company.
(d) Section 3.15(d) of the Company Disclosure Schedule
contains a list of each material employment, severance or other similar
contract, arrangement or policy and each plan or arrangement (written or
oral) providing for insurance coverage (including any self-insured
arrangements), workers' compensation, disability benefits, supplemental
unemployment benefits, vacation benefits, retirement benefits or for
deferred compensation, profit-sharing, bonuses, stock options, stock
appreciation or other forms of incentive compensation or post-retirement
insurance, compensation or benefits which is not an Employee Plan, is
entered into, maintained or contributed to, as the case may be, by the
Company or any of its Affiliates and covers any employee or former employee
of the Company or any of its Subsidiaries. Such contracts, plans and
arrangements as are described above, copies or descriptions of all of which
have been furnished previously to Buyer are referred to collectively herein
as the "Benefit Arrangements". Each Benefit Arrangement has been
maintained in substantial compliance with its terms and with the
requirements prescribed by any and all statutes, orders, rules and
regulations that are applicable to such Benefit Arrangement, excluding any
instances of non-compliance that would not individually or in the aggregate
be reasonably likely to have a Material Adverse Effect on the Company.
(e) Except as would not be reasonably likely to have a
Material Adverse Effect on the Company, no Employee Plan, Benefit
Arrangement or related document contains any provision that would prevent
the Company or any Subsidiary from amending or terminating any post-
retirement health, medical or life insurance benefits and no agent or
representative of the Company or any of its Affiliates has made any
statements that would limit the ability of the Company or any of its
Subsidiaries to amend or terminate any such benefits.
(f) There has been no amendment to, written interpretation
or announcement (whether or not written) by the Company or any of its
Affiliates relating to, or change in employee participation or coverage
under, any Employee Plan or Benefit Arrangement which would increase
materially the expense of maintaining such Employee Plan or Benefit
Arrangement above the level of the expense incurred in respect thereof for
the fiscal year ended on the Company Balance Sheet Date.
(g) The execution of, and performance of the transactions
contemplated in, this Agreement will not (either alone or upon the
occurrence of any additional or subsequent events) constitute an event
under any Employee Plan, Benefit Arrangement, trust or loan that will or
may result in any payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution, increase
in benefits or obligation to fund benefits with respect to any employee or
former employee of the Company or any of its Subsidiaries, or result in the
triggering or imposition of any restrictions or limitations on the right of
Parent, the Company or any Subsidiary of the Company to amend or terminate
any Employee Plan and receive the full amount of any excess assets
remaining or resulting from such amendment or termination, subject to
applicable taxes. Except as otherwise identified in Section 3.15(d) of the
Company Disclosure Schedule, there is no contract, agreement, plan or
arrangement covering any employee or former employee of the Company or any
Subsidiary that, individually or collectively, could give rise to the
payment of any amount that would not be deductible pursuant to the terms of
Sections 162(a)(1), 162(i)(2) or 280G of the Code.
(h) Neither the Company nor any of its Subsidiaries is a
party to any collective bargaining agreement. There are no labor unions
voluntarily recognized or certified to represent any bargaining unit of
employees at the Company or any of its Subsidiaries. No work stoppage,
labor strike or slowdown against the Company or any of its Subsidiaries is
pending or threatened. Neither the Company nor any of its Subsidiaries is
involved in or threatened with any labor dispute or grievance which
individually or in the aggregate has had or is reasonably likely to have a
Material Adverse Effect on the Company. To the knowledge of the Company
there is no organizing effort or representation question at issue with
respect to any employee of the Company or any of its Subsidiaries. No
collective bargaining agreement to which the Company or any of its
Subsidiaries is or may be a party is currently under negotiation or
renegotiation and no existing collective bargaining agreement is due for
expiration, renewal or renegotiation within the one year period after the
date hereof.
Section 3.16. Compliance with Laws. Except for any matter
that is not reasonably likely to have a Material Adverse Effect on the
Company, since January 1, 1996, neither the Company nor any of its
Subsidiaries is in violation of, or has violated, any applicable provisions of
any laws, statutes, ordinances or regulations.
Section 3.17. Intellectual Property Rights. (a) The Company
and its Subsidiaries own or have rights to use, free and clear of all Liens,
and have not assigned, hypothecated or otherwise encumbered, the names
"Caliber System," "RPS" and "Roberts Express" (the "Names") and any of the
Company's related material trademarks, trade names, service marks or logos
except for such trademarks, trade names, service marks or logos the failure of
which to own or have rights to use individually or in the aggregate is not
reasonably likely to have a Material Adverse Effect on the Company. The
Company has no knowledge of any current pending or threatened infringement or
challenge by any Person with respect to the Names and the related logos.
(b) Each of the Company and its Subsidiaries owns outright
or holds valid and enforceable licenses to all copies of the operating and
applications computer software programs and databases material to the
conduct by the Company and its Subsidiaries of their respective businesses
(other than programs and databases that are generally commercially
available) as of the date hereof (collectively, the "Company Software")
except for such Company Software the failure of which to own or validly
license individually or in the aggregate is not reasonably likely to have a
Material Adverse Effect on the Company. To the Company's knowledge, none
of the Company Software used by the Company and its Subsidiaries, and no
use thereof, infringes upon or violates any patent, copyright, trade secret
or other proprietary right of any other Person and, to the Company's
knowledge, no claim with respect to any such infringement or violation is
pending or threatened, except for any such infringement or violation which,
individually or in the aggregate, has not had and is not reasonably likely
to have a Material Adverse Effect on the Company. Upon consummation of the
transactions contemplated by this Agreement, except for Company Software
sold or otherwise disposed of in the ordinary course of business after the
date hereof, each of the Company and its Subsidiaries (i) will continue to
own all the Company Software owned by it, free and clear of all claims,
Liens, encumbrances, obligations and liabilities and (ii) with respect to
all agreements for the lease or license of Company Software which require
consents or other actions as a result of the consummation of the
transactions contemplated by this Agreement in order for the Company and
its Subsidiaries to continue to use and operate such Company Software after
the consummation of the transactions contemplated by this Agreement, shall
have obtained such consents or taken such other actions so required prior
to the Merger Date, except for such consents or actions that if not
obtained or taken, individually or in the aggregate, would not be
reasonably likely to have a Material Adverse Effect on the Company.
Section 3.18. Environmental Matters. (a) (i) Except as set
forth in the Company 10-K or the Company 10-Qs, no notice, notification,
demand, request for information, citation, summons or order has been received,
no complaint has been filed, no penalty has been assessed, no investigation,
action, claim, suit, proceeding or review is pending, or, to the knowledge of
the Company or any Subsidiary, threatened by any governmental entity or other
Person with respect to any matters relating to the Company or any Subsidiary
and arising out of any Environmental Law which, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect on the
Company; and
(ii) the Company and each Subsidiary are in compliance with all
Environmental Laws and have, and are in compliance with, all
Environmental Permits, except where any noncompliance or failure to
receive Environmental Permits is not, individually or in the
aggregate, reasonably likely to have a Material Adverse Effect on the
Company; and
(iii) there are no liabilities of, or relating to, the Company or
any Subsidiary of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise, arising under or
relating to any Environmental Law which, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect on
the Company.
(b) There are no liabilities disclosed in any environmental
assessment, investigation, study, audit, test, review or other analysis
conducted of which the Company has knowledge in relation to the current or
prior business of the Company or any Subsidiary or any property or facility
now or previously owned, leased or operated by the Company or any
Subsidiary which individually or in the aggregate are reasonably likely to
exceed $10,000,000 which have not been disclosed to Buyer in writing as of
the date hereof.
(c) Neither the Company nor any Subsidiary owns, leases or
operates or has owned, leased or operated any real property, or conducts or
has conducted any operations, in New Jersey or Connecticut to which either
the Connecticut Transfer Act or the New Jersey Industrial Site Recovery Act
is applicable.
(d) Neither the Company nor any Subsidiary owns or operates
or has owned or operated any underground storage tank which has been closed
in place, other than in compliance with Environmental Laws, as in effect on
the date hereof or abandoned and, each underground storage tank owned,
leased or operated by the Company or any Subsidiary of the Company is in
compliance with Environmental Laws and, as of the date hereof, meets the
standards, including new system performance standards and upgrading
requirements contained in Subtitle I of the Resource Conservation and
Recovery Act, 42 U.S.C. 6991, et seq., as amended, and any rules or
regulations promulgated thereunder, including 40 C.F.R. Section 280.20, et
seq., except to the extent that any compliance, assessment or remediation
costs arising from or relating to underground storage tanks would not,
individually or in the aggregate, be reasonably likely to result in
liabilities in excess of $10,000,000.
(e) For purposes of this Section, the following terms shall
have the meanings set forth below:
(i) "Environmental Laws" means any federal, state, local and
foreign law (including, without limitation, common law), treaty,
judicial decision, regulation, rule, judgment, order, decree,
injunction, permit, license or governmental restriction or any
agreement or contract with any governmental authority or other third
party, whether now or hereafter in effect, relating to human health
and safety, the environment or to pollutants, contaminants, wastes or
chemicals or toxic, radioactive, ignitable, corrosive, reactive or
otherwise hazardous substances, wastes or materials;
(ii) "Environmental Permits" means all permits, licenses,
franchises, certificates, approvals and other similar authorizations
of governmental authorities relating to or required by Environmental
Laws and affecting, or relating in any way to the business of the
Company or any Subsidiary as currently conducted; and
(iii) "Company" and Subsidiary" shall include any entity which is,
in whole or in part, a predecessor of the Company or any Subsidiary.
Section 3.19. Pooling; Tax Treatment. (a) The Company intends
that the Mergers be accounted for under the "pooling of interests" method
under the requirements of Opinion No. 16 (Business Combinations) of the
Accounting Principles Board of the American Institute of Certified Public
Accountants (APB No. 16), as amended by Statements of the Financial Accounting
Standards Board, and the related interpretations of the American Institute of
Certified Public Accountants, the Financial Accounting Standards Board, and
the rules and regulations of the SEC.
(b) Neither the Company nor any of its Affiliates has taken
or agreed to take any action that would prevent the Mergers from qualifying
(i) for "pooling of interests" accounting treatment as described in (a)
above or (ii) as a reorganization within the meaning of Section 368 of the
Code (a "368 Reorganization") or a transfer governed by Section 351 of the
Code.
Section 3.20. Opinion of Financial Advisor. The Directors of
the Company have received the opinion of Goldman, Sachs & Co., financial
advisor to the Company, to the effect that, as of the date of this Agreement,
the Tires Merger Consideration is fair to the shareholders of the Company from
a financial point of view, and such opinion has not been withdrawn.
Section 3.21. Antitakeover Statutes. The Directors of the
Company have taken or will take all appropriate and necessary actions such
that Section 1704 of the Ohio Law will not have any effect on the Mergers or
the other transactions contemplated by this Agreement. No other "fair price,"
"moratorium," "control share acquisition," or other similar antitakeover
statute or regulation is applicable to the Tires Sub Merger or the other
transactions contemplated by this Agreement.
Section 3.22. Rights Agreement. (a) The Company has adopted
an amendment to the Rights Agreement dated August 22, 1996 between the Company
and First Chicago Trust Company of New York (as successor to Keybank National
Association) (the "Rights Agreement") with the effect that neither Buyer,
Parent nor Buyer Merger Sub shall be deemed to be either an Acquiring Person
(as defined in the Rights Agreement), the Distribution Date (as defined in the
Rights Agreement) shall not be deemed to occur and that the Rights will not
separate from the Company Stock, as a result of entering into this Agreement or
consummating the Tires Sub Merger and/or the other transactions contemplated
hereby.
(b) The Company has taken all necessary action with respect
to all of the outstanding Rights (as defined in the Rights Agreement) so
that, as of immediately prior to the Merger Date, as a result of entering
into this Agreement or consummating the Tires Sub Merger and/or the other
transactions contemplated by this Agreement, (A) neither the Company nor
Buyer will have any obligations under the rights or the Rights Agreement as
a result of the Mergers and (B) the holders of the rights will have no
rights under the Rights or the Rights Agreement as a result of the Mergers.
Section 3.23. Finders' Fees. Except for Goldman, Sachs & Co.,
a copy of whose engagement agreement has been provided to Buyer, there is no
investment banker, broker, finder or other intermediary which has been
retained by or is authorized to act on behalf of the Company or any of its
Subsidiaries who might be entitled to any fee or commission in connection with
the transactions contemplated by this Agreement.
ARTICLE 4
Representations and Warranties of Buyer
Except as set forth in the disclosure schedule (each section
of which qualifies the correspondingly numbered representation and warrant
only, except where the information in any such section is disclosed in such
a way to make its relevance to any other representation or warranty readily
apparent, in which case, such section shall be deemed to also qualify such
other representation and warranty) of Buyer attached hereto (the "Buyer
Disclosure Schedule"), Buyer represents and warrants to the Company that:
Section 4.1. Corporate Existence and Power. (a) Buyer is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, and has all corporate powers and all
governmental licenses, authorizations, permits, consents and approvals
required to carry on its business as now conducted and is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
where the character of the property owned or leased by it or the nature of its
activities makes such qualification necessary, except (i) where the failure to
have such licenses, authorizations, permits, consents or approvals and (ii)
for those jurisdictions where the failure to be so qualified or in good
standing is not, individually or in the aggregate, reasonably likely to have a
Material Adverse Effect on Buyer. Buyer has heretofore delivered to the
Company true and complete copies of Buyer's certificate of incorporation and
bylaws as currently in effect.
(b) Each of Parent, Buyer Merger Sub and Tires Merger Sub
is a corporation duly incorporated, validly existing and in good standing
under the laws of its jurisdiction of incorporation, and has all corporate
powers and all governmental licenses, authorizations, permits, consents and
approvals required to carry on its business as now conducted. Since their
respective dates of incorporation, none of Parent, Buyer Merger Sub and
Tires Merger Sub has engaged in any activities other than in connection
with the transactions contemplated hereby.
Section 4.2. Corporate Authorization. The execution, delivery
and performance by each of Buyer, Parent, Buyer Merger Sub and Tires Merger
Sub (each, a "Buyer Party") of this Agreement and the consummation by each
Buyer Party of the transactions contemplated hereby are within the corporate
powers of such Buyer Party and, except for the required approval of the
stockholders of Buyer of the issuance of Parent Common Stock in connection
with this Agreement pursuant to the rules of the NYSE, have been duly
authorized by all necessary corporate action. This Agreement has been duly
executed and delivered by each Buyer Party which is a party thereto and
constitutes a valid and binding agreement of such Buyer Party enforceable
against such Buyer Party in accordance with its terms.
Section 4.3. Governmental Authorization. The execution,
delivery and performance by each Buyer Party of this Agreement and the
consummation by such Buyer Party of the transactions contemplated by this
Agreement require no action, by or in respect of, or filing with, any
governmental body, agency, official or authority other than (a) the filing of
this Agreement in accordance with the Delaware Law; (b) compliance with any
applicable requirements of the HSR Act; (c) compliance with any applicable
requirements of the 1934 Act; (d) compliance with any applicable requirements
of the 1933 Act; (e) compliance with any applicable foreign or state
securities or Blue Sky laws; (f) compliance with any applicable pre-merger
notification or similar statutes and rules of the European Community (or
certain of its member states), Canada and Mexico; (g) any applicable
requirements of the Department of Transportation; (h) filings and notices not
required to be made or given until after the Merger Date and (i) immaterial
actions or filings relating to ordinary operational matters.
Section 4.4. Non-Contravention. The execution, delivery and
performance by each Buyer Party of this Agreement and the consummation by such
Buyer Party of the transactions contemplated by this Agreement do not and will
not (a) contravene or conflict with the certificate of incorporation or bylaws
of such Buyer Party, (b) assuming compliance with the matters referred to in
Section 4.3, contravene or conflict with or constitute a violation of any
provision of any law, regulation, judgment, injunction, order or decree
binding upon or applicable to Buyer or any Subsidiary of Buyer, (c)
constitute a default (or an event which with notice, the lapse of time or both
would become a default) under or give rise to a right of termination,
cancellation or acceleration of any right or obligation of Buyer or any
Subsidiary of Buyer or to a loss of any benefit to which Buyer or any
Subsidiary of Buyer is entitled under any provision of any agreement, contract
or other instrument binding upon Buyer or any Subsidiary of Buyer or any
license, franchise, permit or other similar authorization held by Buyer or any
Subsidiary of Buyer, or (d) result in the creation or imposition of any Lien
on any asset of Buyer or any Subsidiary of Buyer, other than, in the case of
the events specified in clauses (b), (c) and (d), any such event which,
individually or in the aggregate, has not had, and is not reasonably likely to
have, a Material Adverse Effect on Buyer.
Section 4.5. Capitalization. As of August 4, 1997, the
authorized capital stock of (a) Buyer consisted of 200,000,000 shares of Buyer
Stock and 4,000,000 shares of series preferred stock without par value ("Buyer
Preferred Stock"), (b) Parent consisted of 200,000,000 shares of Parent Common
Stock, (c) Buyer Merger Sub consisted of 1,000 shares of Buyer Merger Sub
Stock, and (d) Tires Merger Sub consisted of 1,000 shares of Tires Merger Sub
Common Stock. As of August 4, 1997, there were 115,011,018 shares of Buyer
Stock outstanding and no shares of Buyer Preferred Stock outstanding. As of
August 4, 1997, an aggregate of 7,580,010 shares of Buyer Stock were reserved
for issuance or issuable under employee benefit or other compensation plans or
programs or dividend reinvestment plans of Buyer. All outstanding shares of
capital stock of each Buyer Party have been duly authorized and validly issued
and are fully paid and nonassessable. All shares of Parent Common Stock, when
issued in the Mergers, will be duly authorized and validly issued and will be
fully paid and non-assessable.
Section 4.6. SEC Filings. Buyer has furnished to the Company
(i) Buyer's annual reports on Form 10-K for its fiscal years ended May 31,
1997 (the "Buyer 10-K"), 1996 and 1995, (ii) its quarterly reports on Form
10-Q for its fiscal quarters ended after May 31, 1997, (iii) its proxy or
information statements relating to meetings of, or actions taken without a
meeting by, Buyer's shareholders held since May 31, 1997, and (iv) all of its
other reports, statements, schedules and registration statements filed with
the SEC since May 31, 1997 and through the date of this Agreement. Buyer has
filed all required reports, schedules, forms, statements and other documents
with the SEC since January 1, 1995 (collectively, the "Buyer SEC Documents").
As of their respective dates, or if amended, as of the date of the last such
amendment, the Buyer SEC Documents complied, and all documents required to be
filed by Buyer with the SEC after the date hereof and prior to the Merger Date
(the "Subsequent Buyer SEC Documents") will comply, in all material respects
with the requirements of the 1933 Act or the 1934 Act, as the case may be, and
the applicable rules and regulations promulgated thereunder, and none of the
Buyer SEC Documents contained, and the Subsequent Buyer SEC Documents will not
contain, any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in the light of
the circumstances under which they were made, not misleading.
Section 4.7. Financial Statements. The audited consolidated
financial statements and unaudited consolidated interim financial statements
of Buyer included in its annual reports on Form 10-K and the quarterly
reports on Form 10-Q referred to in Section 4.6 fairly present, in all
material respects, in conformity with GAAP applied on a consistent basis
(except as may be indicated in the notes thereto), the consolidated financial
position of Buyer and its consolidated Subsidiaries as of the dates thereof
and their consolidated results of operations and cash flows for the periods
then ended (subject to normal year-ended adjustments in the case of any
unaudited interim financial statements). For purposes of this Agreement,
"Buyer Balance Sheet" means the consolidated balance sheet of Buyer as of May
31, 1997 set forth in the Buyer 10-K and "Buyer Balance Sheet Date" means May
31, 1997.
Section 4.8. Disclosure Documents. (a) Each document required
to be filed by Buyer and Parent with the SEC in connection with the
transactions contemplated by this Agreement (the "Buyer Disclosure
Documents"), including, without limitation, the proxy or information statement
and registration statement of Buyer and Parent (the "Form S-4"), to be filed
with the SEC in connection with the issuance of Parent Common Stock pursuant
to this Agreement and any amendments or supplements thereto, will, when filed,
comply as to form in all material respects with the applicable requirements of
the 1933 Act and the 1934 Act.
(b) At the time the proxy statement which forms a part of
the Form S-4 (the "Buyer Proxy Statement") or any amendment or supplement
thereto is first mailed to shareholders of Buyer, at the time such
shareholders vote on the issuance of Parent Common Stock in connection with
this Agreement, the Buyer Proxy Statement, as supplemented or amended, if
applicable, will not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading. At the time of the filing of any Buyer Disclosure Document
other than the Buyer Proxy Statement and at the time of any distribution
thereof, such Buyer Disclosure Document will not contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. The
representations and warranties contained in this Section 4.8 will not apply
to statements included in or omissions from the Buyer Disclosure Documents
based upon information furnished to Buyer or Parent in writing by the
Company specifically for use therein.
Section 4.9. Information Supplied. The information supplied
or to be supplied by Buyer or Parent for inclusion or incorporation by
reference in (i) the Company Proxy Statement or any amendment or supplement
thereto will not, at the time the Company Proxy Statement is first mailed to
shareholders of the Company and at the time such shareholders vote on the
approval and adoption of this Agreement, contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make
the statements made therein, in light of the circumstances under which they
were made, not misleading, and (ii) any Company Disclosure Document (other
than the Company Proxy Statement, and any amendments or supplements to either)
will not, at the time of effectiveness of such Company Disclosure Document and
at the time of any distribution thereof, contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
Section 4.10. Absence of Certain Changes. Since the Buyer
Balance Sheet Date and except as set forth in the Buyer SEC Documents, Buyer
and its Subsidiaries have conducted their business in the ordinary course
consistent with past practice and there has not been:
(a) any event, occurrence or development of a state of
circumstances or facts which has had or is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Buyer other
than any of the foregoing (i) relating to the economy or securities markets
in general, (ii) relating to Buyer's industry in general or (iii) arising
from the announcement or pendency of this Agreement or the transactions
contemplated hereby;
(b) any declaration, setting aside or payment of any
dividend or other distribution with respect to any shares of capital stock
of Buyer, or any repurchase, redemption or other acquisition by Buyer or
any Subsidiary of Buyer of any amount of outstanding shares of capital
stock or other securities of, or other ownership interests in, Buyer or any
of its Subsidiaries;
(c) any amendment of any material term of any outstanding
security of Buyer or any Subsidiary of Buyer; or
(d) any damage, destruction or other casualty loss (whether
or not covered by insurance) affecting the business or assets of Buyer or
any Subsidiary of Buyer which, individually or in the aggregate, has had or
is reasonably likely to have a Material Adverse Effect on Buyer.
Section 4.11. No Undisclosed Material Liabilities. There are
no liabilities, commitments or obligations (whether pursuant to contracts or
otherwise) of Buyer or any Subsidiary of Buyer of any kind whatsoever which,
individually or in the aggregate, have had or are reasonably likely to have a
Material Adverse Effect on Buyer, whether accrued, contingent, absolute,
determined, determinable or otherwise, and there is no existing condition,
situation or set of circumstances which is reasonably likely to result in such
a liability, commitment or obligation, including, without limitation, any
fines, disciplinary actions or other adverse actions that may be taken or
reported concerning the conduct of Buyer or any of its Subsidiaries, other
than:
(a) liabilities, commitments or obligations disclosed or
provided for in the Buyer Balance Sheet (including the notes thereto) or in
the Buyer 10-K;
(b) liabilities, commitments or obligations incurred in the
ordinary course of business consistent with past practice since the Buyer
Balance Sheet Date; and
(c) liabilities, commitments or obligations under this
Agreement.
Section 4.12. Litigation; Investigations. Except as set forth
in the Buyer SEC Documents, there is no action, claim, suit, investigation,
proceeding or examination pending against or affecting, or to the knowledge of
Buyer, threatened or reasonably likely to be brought against or affecting,
Buyer or any Subsidiary of Buyer or any of their respective properties before
any court or arbitrator or any governmental body, agency, authority or
official which, individually or in the aggregate, has had or is reasonably
likely to have a Material Adverse Effect on Buyer. The foregoing
representation and warranty does not include or relate to any action, claim,
suit, investigation, proceeding or examination, pending or threatened,
challenging or seeking to prevent, enjoin, alter or delay the Mergers or any
of the transactions contemplated hereby.
Section 4.13. Compliance with Laws. Except for any matter
that is not reasonably likely to have a Material Adverse Effect on Buyer,
since January 1, 1996, neither Buyer nor any of its Subsidiaries is in
violation of, or has violated, any applicable provisions of any laws,
statutes, ordinances or regulations.
Section 4.14. Pooling; Tax Treatment. (a) Buyer intends that
the Mergers be accounted for under the "pooling of interests" method under the
requirements of Opinion No. 16 (Business Combinations) of the Accounting
Principles Board of the American Institute of Certified Public Accountants
(APB No. 16), as amended by Statements of the Financial Accounting Standards
Board, and the related interpretations of the American Institute of Certified
Public Accountants, the Financial Accounting Standards Board, and the rules
and regulations of the SEC.
(b) Neither Buyer nor any of its Affiliates has taken or
agreed to take any action that would prevent the Mergers from qualifying
(i) for "pooling of interests" accounting treatment as described in (a)
above or (ii) as a reorganization within the meaning of Section 368, or a
transfer governed by Section 351, of the Code.
Section 4.15. Finders' Fees. Except for Merrill Lynch & Co.,
Inc., a copy of whose engagement agreement has been provided to the Company,
there is no investment banker, broker, finder or other intermediary which has
been retained by or is authorized to act on behalf of the Buyer or any of its
Subsidiaries who might be entitled to any fee or commission in connection with
the transactions contemplated by this Agreement.
ARTICLE 5
Covenants of the Company
The Company agrees that:
Section 5.1. Conduct of the Company. From the date hereof
until the Merger Date, except as provided in the Company Disclosure Schedule
or as otherwise consented to by Buyer (which consent shall not be unreasonably
withheld or delayed), the Company shall, and shall cause its Subsidiaries to,
conduct their business in all material respects in the ordinary course
consistent with past practice and use their commercially reasonable efforts to
preserve intact their business organizations and relationships with third
parties and to keep available the services of their present officers and
employees. Without limiting the generality of the foregoing, except as
expressly permitted in this Agreement, from the date hereof until the Merger
Date:
(a) The Company will not adopt or propose any change in its
articles of incorporation or bylaws;
(b) The Company will not, and will not permit any
Subsidiary of the Company to, merge or consolidate with any other Person
or, other than as provided in the Company's capital expenditure budget
(included as Section 5.01(b) of the Company Disclosure Schedule) in the
ordinary course of business, acquire a material amount of assets of any
other Person;
(c) The Company will not, and will not permit any
Subsidiary of the Company to, sell, lease, license or otherwise dispose of
any material assets or property except (i) pursuant to existing contracts
or commitments and (ii) in the ordinary course consistent with past
practice;
(d) The Company will not, and will not permit any
Subsidiary of the Company to, declare, set aside or pay any dividend (other
than the payment of the Company's regular quarterly dividend on Company
Stock in an amount not exceeding $0.10 per share) or make any other
distribution with respect to any shares of the Company's capital stock;
(e) The Company will not, and will not permit any
Subsidiary of the Company to, create or assume any Lien on any material
asset other than in the ordinary course consistent with past practices;
(f) The Company will not, and will not permit any
Subsidiary of the Company to, issue, deliver or sell, or authorize or
propose the issuance, delivery or sale of, any Company Securities, any
Company Subsidiary Securities or any securities convertible into or
exchangeable for, or any rights, warrants or options to acquire, any
Company Securities or Company Subsidiary Securities other than pursuant to
the exercise of a Company Stock Option;
(g) The Company (i) will not split, combine or reclassify,
or take any other similar action with respect to, any capital stock of the
Company, and (ii) the Company will not, and will not permit any Subsidiary
of the Company to, repurchase, redeem or otherwise acquire an amount of
shares of capital stock of, or other ownership interests in, the Company or
any Subsidiary of the Company, which repurchase, redemption or other
acquisition, individually or in the aggregate, is material to the Company
and its Subsidiaries, taken as a whole;
(h) Except for borrowings or guarantees in the ordinary
course of business consistent with past practice, the Company will not, and
will not permit any Subsidiary of the Company to, incur or assume any
indebtedness from any third party for borrowed money or guarantee any such
indebtedness;
(i) Except for (i) loans, advances or capital contributions
to or investments in Subsidiaries of the Company, (ii) loans or advances to
employees in the ordinary course of business consistent with past practice
or (iii) investments in securities consistent with past practices, the
Company will not, and will not permit any Subsidiary of the Company to,
make any material loans, advances or capital contributions to, or
investments in, any other Person;
(j) The Company will not, and will not permit any of its
subsidiaries to, (i) grant any severance or termination pay to, or enter
into any employment, termination or severance arrangement with, any
director, officer or employee of the Company or any Subsidiary of the
Company, (ii) enter into any employment, deferred compensation or other
similar agreement (or any amendment to any such existing agreement) with
any director, officer or employee of the Company or any Subsidiary, (iii)
increase benefits payable under any existing severance or termination pay
policies or employment agreements or (iv) increase compensation, bonus or
other benefits payable to directors, officers or employees of the Company
or any Subsidiary, other than in the ordinary course of business;
(k) The Company will not, and will not permit any of its
Subsidiaries to, authorize, recommend, propose or announce an intention to
adopt a plan of complete or partial liquidation or dissolution of the
Company or any Material Subsidiary of the Company, or any plan of division
or share exchange involving the Company or any of its Material
Subsidiaries;
(l) The Company will not, and will not permit any
Subsidiary of the Company to, change any material method of accounting or
any material accounting principle or practice used by the Company or any
Subsidiary of the Company, except for any such change required by reason of
a change in GAAP or Regulation S-X;
(m) Neither the Company nor any Subsidiary shall, to the
extent it may affect or relate to the Company or any Subsidiary, make or
change any tax election, change any annual tax accounting period, adopt or
change any method of tax accounting, file any amended Return, enter into
any closing agreement, settle any Tax claim or assessment, surrender any
right to claim a Tax refund, consent to any extension or waiver of the
limitations period applicable to any Tax claim or assessment or take or
omit to take any other action, if any such action or omission would have
the effect of, in the aggregate, materially increasing the Tax liability,
or in the aggregate, materially reducing any Tax asset of the Company or
any Subsidiary of the Company except to the extent (i) consistent with past
practice or in the ordinary course of business, provided, however, that
such action or omission will not have a Material Adverse Effect on the
Company or (ii) such increase or reduction is adequately provided for,
under GAAP, on the Company Balance Sheet. Furthermore, this Section 5.1(m)
shall not preclude good faith efforts to comply with the Tax Matters
Agreement by and between the Company and Sub-10 entered into in connection
with the spin-off of Sub-10 on January 2, 1996.
(n) All Returns not required to be filed on or before the
date hereof (i) shall be filed when due in accordance with all applicable
laws and (ii) as of the time of filing, shall correctly reflect the facts
regarding the income, business, assets, operations activities and status of
the Company, its Subsidiaries and any other information required to be
shown therein;
(o) Neither the Company nor any Subsidiary shall reserve
any amount for or make any payment of Taxes to any person or any Taxing
Authority, except for such Taxes as are due or payable or have been
properly estimated in accordance with applicable law as applied in a manner
consistent with past practice of the Company or any such Subsidiary, as the
case may be; and
(p) The Company will not, and will not permit any
Subsidiary of the Company to, agree to do any of the foregoing.
Section 5.2. Shareholder Meeting; Proxy Material. (a) Subject
to Section 5.3, the Company shall cause a meeting of its shareholders (the
"Company Shareholder Meeting") to be duly called and held as soon as
reasonably practicable for the purpose of voting on the approval and adoption
of this Agreement and, to the extent submitted to the Company's shareholders
for approval, the transactions contemplated by this Agreement, and the
Directors of the Company shall recommend adoption of this Agreement by the
Company's shareholders; provided that such meeting need not be called and held
and, prior to the Company Shareholder Meeting, such recommendation may be
withdrawn, modified or amended to the extent that, as a result of the
commencement or receipt of an Acquisition Proposal with respect to the
Company, the Directors of the Company determine in good faith that such
Acquisition Proposal constitutes a Superior Proposal.
(b) Subject to Section 5.3, in connection with the Company
Shareholder Meeting, the Company will (i) promptly prepare and file with
the SEC, will use commercially reasonable efforts to have cleared by the
SEC and will thereafter mail to its shareholders as promptly as practicable
the Company Proxy Statement and all other proxy materials for such meeting,
(ii) use commercially reasonable efforts to obtain the necessary approvals
by its shareholders of this Agreement and the transactions contemplated
hereby, and (iii) otherwise comply with all legal requirements applicable
to such meeting.
Section 5.3. Other Offers. From the date hereof until the
termination of this Agreement, the Company will not, and will cause its
Subsidiaries and the directors, officers, employees, financial advisors and
other agents or representatives of the Company or any of its Subsidiaries not
to, directly or indirectly, take any action to solicit, initiate or encourage
any Acquisition Proposal with respect to the Company or engage in negotiations
with, or disclose any non-public information relating to the Company or any
Subsidiary of the Company or afford access to the properties, books or records
of the Company or any Subsidiary of the Company to, any Person that has
informed the Company that it is considering making, or has made, an
Acquisition Proposal with respect to the Company, provided however, that the
Company may, in response to an unsolicited bona fide written proposal
regarding an Acquisition Proposal by any Person, disclose such non-public
information to or engage in negotiations with such Person, if the Board of
Directors of the Company determines in good faith that such Acquisition
Proposal is reasonably likely to be a Superior Proposal, and, provided
further, that prior to furnishing non-public information to, or entering into
discussions or negotiations with, such Person, the Company receives from such
Person an executed confidentiality agreement with terms no less favorable to
the Company than those contained in the Letter Agreement dated as of March 5,
1997 between Buyer and the Company ("Confidentiality Agreement") (provided
that such confidentiality agreement need not include the same standstill
provisions as those in the Confidentiality Agreement, it being understood that
if there are no standstill provisions in such confidentiality agreement or if
such provisions are more favorable to the other party than those in the
Confidentiality Agreement, the Confidentiality Agreement shall be deemed
amended to exclude the existing standstill provision or include such more
favorable provisions, as the case may be). The Company will promptly (and in
no event later than 24 hours after receipt of the relevant Acquisition
Proposal with respect to the Company), notify (which notice shall be provided
orally and in writing and shall identify the Person making the relevant
Acquisition Proposal with respect to the Company and set forth the material
terms thereof) Buyer after receipt of any Acquisition Proposal or any
indication from any Person that such Person is considering making an
Acquisition Proposal with respect to the Company or any request for nonpublic
information relating to the Company or any Subsidiary of the Company or for
access to any properties, books or records of the Company or any Subsidiary of
the Company by any Person that may be considering making, or has made, an
Acquisition Proposal with respect to the Company and will keep Buyer fully
informed of the status and details of any such Acquisition Proposal with
respect to the Company. The Company shall give Buyer at least one business
day's advance notice of any information to be supplied to, and at least two
days' advance notice of any agreement to be entered into with, any Person
making such Acquisition Proposal with respect to the Company. The Company
shall, and shall cause its Subsidiaries and the directors, officers, employees,
financial advisors and other agents or representatives of the Company or any
of its Subsidiaries to, cease immediately and cause to be terminated all
activities, discussions or negotiations, if any, with any Persons conducted
heretofore with respect to any Acquisition Proposal with respect to the
Company. For purposes of this Agreement, "Acquisition Proposal" means any
offer or proposal for, or any indication of interest in, (i) a merger or other
business combination involving the Company or any Subsidiary of the Company or
(ii) the acquisition in any manner of an equity interest in an amount equal to
or greater than 20% of the class of such equity security then outstanding, or
a substantial portion of the assets of, the Company or any Subsidiary of the
Company, in each case other than the transactions contemplated by this
Agreement. For purposes of this Agreement, "Superior Proposal" means an
Acquisition Proposal with respect to the Company which the Directors of the
Company determine in good faith (based on the advice of an investment banking
firm of national reputation taking into account all of the terms and
conditions of the Acquisition Proposal, including any conditions to
consummation) to be more favorable and provide greater value to the Company's
shareholders than the Tires Sub Merger.
ARTICLE 6
Covenants of Buyer
Buyer agrees that:
Section 6.1. Conduct of Buyer. From the date hereof until the
Merger Date, Buyer shall, and shall cause its Subsidiaries to, conduct their
business in all material respects in the ordinary course consistent with past
practice and use their commercially reasonable efforts to preserve intact
their business organizations and relationships with third parties and to keep
available the services of their present officers and employees. Without
limiting the generality of the foregoing, except as expressly permitted in
this Agreement, from the date hereof until the Merger Date Buyer will not
declare, set aside or pay any dividend or make any other distribution with
respect to any shares of Buyer's capital stock.
Section 6.2. Shareholder Meeting; Proxy Material. (a) Buyer
shall cause a meeting of its shareholders (the "Buyer Shareholder Meeting") to
be duly called and held as soon as reasonably practicable for the purpose of
voting on the issuance of Parent Common Stock in connection with this
Agreement. The Board of Directors of Buyer shall recommend approval of the
issuance of Parent Common Stock in connection with this Agreement by Buyer's
shareholders.
(b) In connection with the Buyer Shareholder Meeting, Buyer
(i) will promptly prepare and file with the SEC, will use its reasonable
best efforts to have cleared by the SEC and will thereafter mail to its
shareholders as promptly as practicable the Buyer Proxy Statement and all
other proxy materials for such meeting, (ii) will use its reasonable best
efforts to obtain the necessary approvals by its shareholders of this
Agreement and the transactions contemplated hereby and (iii) will otherwise
comply with all legal requirements applicable to such meeting.
ARTICLE 7
Covenants of Buyer, the Company and Parent
Section 7.1. Reasonable Best Efforts. (a) Subject to the
terms and conditions of this Agreement, each party will use its reasonable
best efforts to take, or cause to be taken, all actions and to do, or cause to
be done, all things necessary, proper or advisable under applicable laws and
regulations to consummate the Mergers and the other transactions contemplated
by this Agreement.
(b) Neither Buyer nor the Company shall take any action, or
omit to take any action, that would cause its representations and warranties
contained herein to be inaccurate such that the conditions in Article 8 would
not be satisfied.
Section 7.2. Cooperation. Without limiting the generality of
Section 7.1(a), Buyer and the Company shall together, or pursuant to an
allocation of responsibility to be agreed between them, coordinate and
cooperate (i) in connection with the preparation of the Company Disclosure
Documents and the Buyer Disclosure Documents, (ii) in determining whether any
action by or in respect of, or filing with, any governmental body, agency,
official or authority is required, or any actions, consents, approvals or
waivers are required to be obtained from parties to any material contracts, in
connection with the consummation of the Mergers or the other transactions
contemplated by this Agreement and (iii) in seeking any such actions,
consents, approvals or waivers or making any such filings, furnishing
information required in connection therewith or with the Company Disclosure
Documents and the Buyer Disclosure Documents, and timely seeking to obtain any
such actions, consents, approvals or waivers. Subject to the terms and
conditions of this Agreement, Parent, Buyer and the Company will each use its
reasonable best efforts to have the Form S-4 declared effective by the SEC
under the 1933 Act as promptly as practicable after the Form S-4 is filed with
the SEC.
Section 7.3. Public Announcements. Buyer and the Company will
consult with each other before issuing any press release or making any public
statement with respect to this Agreement and the transactions contemplated by
this Agreement and, except, as may be required by applicable law or any
listing or similar agreement with any national securities exchange, will not
issue any such press release or make any such public statement prior to such
consultation.
Section 7.4. Access to Information. From the date hereof
until the Merger Date, the Company and Buyer (each, in such capacity, a
"Providing Party") will give (or cause to be given) to the other party (the
"Receiving Party"), its counsel, financial advisors, auditors and other
authorized representatives full access, during regular business hours, to the
offices, properties, books and records of the Providing Party, will furnish
(or cause to be furnished) to the Receiving Party, its counsel, financial
advisors, auditors and other authorized representatives such financial and
operating data and other information as such Receiving Party may reasonably
request and will instruct the employees, counsel and financial advisors of the
Providing Party and its Subsidiaries to cooperate with the Receiving Party in
its investigation of the business of the Providing Party and its Subsidiaries;
provided that no investigation pursuant to this Section shall affect any
representation or warranty given by the Providing Party to the Receiving Party
hereunder. Unless otherwise required by applicable law, each party hereto
agrees that it shall, and it shall cause its Subsidiaries and its and their
respective officers, directors, employees, auditors and agents to, hold in
confidence all non-public information so acquired and to use such information
solely for purposes of effecting the transactions contemplated by this
Agreement. The information obtained pursuant to this Section shall be subject
to any confidentiality agreements or other confidentiality obligations
currently binding upon the Providing Party or any of its Subsidiaries; provided
that the Providing Party shall use commercially reasonable efforts to obtain
any waivers under such agreements or obligations to permit the Providing Party
to comply with its obligations hereunder.
Section 7.5. Further Assurances. At and after the Merger
Date, the directors and officers of each of the surviving corporations in the
Mergers will be authorized to execute and deliver, in the name and on behalf
of (x) the Company or Tires Merger Sub, and (y) Buyer or Buyer Merger Sub, any
deeds, bills of sale, assignments or assurances and to take and do, in the
name and on behalf of (x) the Company or Tires Merger Sub, and (y) Buyer or
Buyer Merger Sub, any other actions and things to vest, perfect or confirm of
record or otherwise in such surviving corporation any and all right, title and
interest in, to and under any of the rights, properties or assets of the
Company or Buyer, as applicable, acquired or to be acquired by such surviving
corporation as a result of, or in connection with, the Mergers.
Section 7.6. Notices of Certain Events. Each of the Company
and Buyer shall promptly notify the other parties hereto of:
(a) any notice or other communication from any Person
alleging that the consent of such Person is or may be required in
connection with the transactions contemplated by this Agreement;
(b) any notice or other communication from any governmental
or regulatory agency or authority in connection with the transactions
contemplated by this Agreement; and
(c) any actions, suits, claims, investigations or
proceedings commenced or, to its knowledge threatened against, relating to
or involving or otherwise affecting such party that, if pending on the date
of this Agreement, would have been required to have been disclosed pursuant
to Section 3.13 or Section 4.12 only or that relate to the consummation of
the transactions contemplated by this Agreement.
Section 7.7. Tax-free Reorganization; Pooling. (a) Prior to
the Merger Date, each party shall use its reasonable best efforts to cause
each of the Mergers to qualify as a 368 Reorganization, and will not take any
action reasonably likely to cause either of the Mergers not to so qualify.
Buyer shall not take, or cause the Company to take, any action after the
Merger Date reasonably likely to cause either of the Mergers not to qualify as
a 368 Reorganization.
(b) Each party will use its reasonable best efforts to cause
the Mergers to qualify for pooling of interests accounting treatment as
described in Section 3.19 and Section 4.14 and will not take any action (or
suffer any omission) reasonably likely to cause the Mergers not to so
qualify.
Section 7.8. Affiliates. (a) At least 40 days prior to the
Merger Date, the Company shall deliver to Buyer a letter identifying all known
Persons who may be deemed affiliates of the Company for the purposes of Rule
145 of the 1933 Act or for purposes of applicable SEC accounting releases with
respect to pooling of interests accounting treatment. The Company shall use
its reasonable best efforts to obtain a written agreement from each Person who
may be so deemed as soon as practicable and, in any event, at least 30 days
prior to the Merger Date, substantially in the form of Exhibit A-1 hereto.
(b) At least 40 days prior to the Merger Date, Buyer shall
deliver to the Company a letter identifying all known Persons who may be
deemed affiliates of Buyer for the purposes of Rule 145 of the 1933 Act or
for the purposes of applicable SEC accounting releases with respect to
pooling of interests accounting treatment. Buyer shall use its reasonable
best efforts to obtain a written agreement from each Person who may be so
deemed as soon as practicable and, in any event, at least 30 days prior to
the Merger Date, substantially in the form of Exhibit A-2 hereto.
Section 7.9. Director and Officer Liability. (a) From and
after the Merger Date, Parent shall cause the Tires Surviving Corporation to
indemnify, defend and hold harmless any Person who is on the date hereof, or
has been at any time prior to the date hereof, or who becomes prior to the
Merger Date, an officer, director, or employee or agent (the "Indemnified
Party") of the Company or any of its Subsidiaries against all losses, claims,
damages, liabilities, costs and expenses (including attorney's fees and
expenses), judgments, fines, losses, and amounts paid in settlement in
connection with any actual or threatened action, suit, claim, proceeding or
investigation (each a "Claim") to the extent that any such Claim is based on,
or arises out of, (i) the fact that such Person is or was a director, officer,
employee or agent of the Company or any of its Subsidiaries at any time prior
to the Merger Date or is or was serving at the request of the Company or any
of its Subsidiaries as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise at any time
prior to the Merger Date, or (ii) this Agreement or any of the transactions
contemplated hereby or thereby in each case to the extent that any such Claim
pertains to any matter or fact arising, existing, or occurring prior to or at
the Merger Date, regardless of whether such Claim is asserted or claimed prior
to, at or after the Merger Date (the matters described in clauses (i) and (ii)
the "Pre-Merger Matters"), to the fullest extent indemnified under the
Company's articles of incorporation, bylaws in effect as of the date hereof or
indemnification agreements in effect at the date hereof, including provisions
relating to advancement of expenses incurred in the defense of any action or
suit; provided that such indemnification shall be subject to any limitation
imposed from time to time under applicable laws. Parent and the Tires
Surviving Corporation shall also honor the indemnification agreements between
the Company or any of its Subsidiaries, as the case may be, and any officer or
director of the Company or any such Subsidiary, as the case may be, existing
on the date of this Agreement.
(b) Parent and the Tires Surviving Corporation agree that
all rights to indemnification and all limitations or exculpation of
liabilities existing in favor of the Indemnified Party as provided in the
Company's articles of incorporation and bylaws as in effect as of the date
hereof shall continue in full force and effect with respect to Pre-Merger
Matters, without any amendment thereto, for a period of six years from the
Merger Date to the extent such rights are consistent with Ohio Law;
provided that, in the event any Claim or Claims with respect to any such
Pre-Merger Matters are asserted or made within such six year period, all
rights to indemnification in respect of any such Claim or Claims shall
continue until disposition of any and all such Claims; provided however,
that any determination required to be made with respect to whether an
Indemnified Party's conduct complies with the standards set forth under
Ohio Law, the Company's articles of incorporation or bylaws or such
agreements, as the case may be, shall be made by independent legal counsel
selected by the Indemnified Party and reasonably acceptable to Parent,
retained at Parent's expense; and provided further, that nothing in this
Section 7.9 shall impair any rights or obligations of any present or former
directors or officers of the Company.
(c) Parent or the Tires Surviving Corporation shall
maintain the Company's officers' and directors' liability insurance policy
as of the Merger Date ("D&O Insurance") with respect to Pre-Merger Matters
for a period of not less than six years after the Merger Date, provided,
that Parent or the Tires Surviving Corporation may substitute therefor
policies of substantially similar coverage and amounts containing terms no
less advantageous to such former directors or officers; provided further
that in satisfying its obligations under this Section, Parent shall not be
obligated to pay premiums in excess of 150% of the premium for D&O
Insurance paid by the Company per annum in its last full fiscal year, which
amount has previously been disclosed to Buyer but provided further that
Parent shall nevertheless be obligated to provide such coverage as may be
obtained for such amount.
(d) The terms of Section 7.9(a) - 7.9(c) shall also apply,
mutatis mutandis, to Buyer, and Parent shall have obligations with respect
to Buyer corresponding to those of Parent with respect to the Company set
forth in Section 7.9.
Section 7.10. Registration Statement; Form S-8. Buyer shall
cause Parent to (i) promptly prepare and file with the SEC the Form S-4 with
respect to the Parent Common Stock (and a registration statement on Form S-8
as necessary to register shares of Parent Common Stock underlying the Adjusted
Options) issuable in connection with the Mergers and shall cause Parent to use
its reasonable best efforts to cause the Form S-4 (and such registration
statement on Form S-8) to be declared effective by the SEC as soon as
practicable and (ii) take any action required to be taken under applicable
Blue Sky law in connection with such issuance of Parent Common Stock or
pursuant to any Adjusted Option.
Section 7.11. Governmental Authorization. Buyer shall cause
Parent to take all actions by or in respect of, or filing with, any
governmental body, agency, official or authority required for the execution,
delivery and performance by Parent of this Agreement and the consummation by
Parent of the transactions contemplated by this Agreement, including (a)
compliance with any applicable requirements of the HSR Act; (b) compliance
with any applicable requirements of the 1934 Act; (c) compliance with any
applicable requirements of the 1933 Act; (d) compliance with any applicable
foreign or state securities or Blue Sky laws; (e) compliance with any
applicable requirements of (i) the New Jersey Industrial Site Recovery Act, as
amended, and any rules or regulations promulgated thereunder and (ii) the
Connecticut Hazardous Waste Establishment Transfer Act, as amended, and any
rules or regulations promulgated thereunder; (f) any applicable requirements
of the Department of Transportation and (g) compliance with any applicable
requirements under pre-merger notification or similar statutes and rules of
the European Community, its member states, Canada and Mexico.
Section 7.12. Listing of Stock. Buyer shall make application
to the NYSE or such other stock exchanges as shall be agreed for the listing
of the Parent Common Stock to be used in connection with the Mergers (and the
shares of Parent Common Stock underlying any Adjusted Options) and to use its
reasonable best efforts to cause such Parent Common Stock to be listed on the
NYSE, subject to official notice of issuance.
Section 7.13. Certain Corporate Matters with Respect to
Parent. (a) Buyer shall cause Parent to take all necessary corporate action
for the establishment of the Parent stock option plan contemplated by Section
1.7 hereof and agrees to vote the shares of capital stock of Parent owned by
it in favor of the adoption of such plan as required under the laws of the
State of Delaware.
(b) From the date hereof until the Merger Date, Buyer shall
cause Parent (x) not to take any action inconsistent with the provisions of
this Agreement and (y) not to conduct business or activity other than in
connection with this Agreement.
Section 7.14. Employment. Buyer and Parent currently intend
to offer employment after the Merger Date to each employee at the Company's
Akron, Ohio headquarters who is willing to relocate his or her place of
employment to Memphis, Tennessee or any other location designated by Buyer and
Parent. As of the Merger Date, Parent shall assume the obligation of the
Company to perform any and all Management Retention Agreements identified in
the Company Disclosure Schedules.
Section 7.15. Certain Additional Benefits Matters. Buyer, the
Company and Parent hereby agree (a) that the Company (or, as appropriate,
Buyer and Parent) shall take all such actions as are necessary to carry out
the matters described in Section 7.15 of the Company Disclosure Schedule and
(b) that such actions shall not constitute a violation of any other provision
of this Agreement, including, without limitation, Section 5.1.
ARTICLE 8
Conditions to the Mergers
Section 8.1. Conditions to the Obligations of Each Party. The
obligations of the Company to consummate the Tires Sub Merger and of Buyer to
consummate the Buyer Sub Merger are subject to the satisfaction of the
following conditions:
(a) this Agreement and the transactions contemplated by this
Agreement shall have been approved and adopted by the shareholders of the
Company in accordance with the Ohio Law;
(b) the issuance of Parent Common Stock in connection with
this Agreement shall have been approved by the shareholders of Buyer in
accordance with the rules and regulations of the NYSE;
(c) any applicable waiting period under the HSR Act relating
to the Mergers shall have expired;
(d) no provision of any applicable law or regulation and no
judgment, injunction, order or decree of a court of competent jurisdiction
shall prohibit the consummation of either of the Mergers;
(e) the Form S-4 shall have been declared effective under
the 1933 Act and no stop order suspending the effectiveness of the Form S-4
shall be in effect and no proceedings for such purpose shall be pending
before or threatened by the SEC;
(f) the shares of Parent Common Stock to be issued in the
Mergers (as well as the shares of Parent Common Stock to be issued upon
exercise of the Adjusted Options) shall have been approved for listing on
the NYSE, subject to official notice of issuance;
(g) all actions by or in respect of or filings with any
governmental body, agency, official or authority required to permit the
consummation of the Tires Sub Merger and the Buyer Sub Merger shall have
been made or obtained other than any such actions or filings, the failure
of which to make or obtain shall not be reasonably likely to have a
Material Adverse Effect on Buyer or the Company; and
(h) Buyer and the Company shall have received a letter of
Arthur Andersen LLP and Ernst & Young LLP, respectively, and otherwise in
form and substance reasonably satisfactory to Buyer and the Company, that
confirms Buyer's management's assessment (in the case of Arthur Andersen
LLP) and the Company's management's assessment (in the case of Ernst &
Young LLP) that the Mergers will qualify for pooling of interests
accounting treatment under GAAP.
Section 8.2. Conditions to the Obligations of Buyer. The
obligations of Buyer to consummate the Buyer Sub Merger are subject to the
satisfaction of the following further conditions:
(a) (i) The Company shall have performed in all material
respects all of its obligations hereunder required to be performed by it at
or prior to the Merger Date, (ii) the representations and warranties of the
Company contained in this Agreement shall be true and correct at and as of
the Merger Date, as if made at and as of the Merger Date (except to the
extent expressly made as of an earlier date, in which case as of such
date), except where the failure of such representations and warranties to
be so true and correct (without giving effect to any limitation as to
"materiality" or "Material Adverse Effect" set forth therein) is not
reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on the Company and (iii) Buyer shall have received a
certificate signed by an executive officer of the Company to the foregoing
effect.
(b) Holders of not more than 5% of the outstanding shares
of Company Stock shall have perfected dissenters' rights in respect of such
Company Stock pursuant to Section 1701.85 of the Ohio Law.
(c) Buyer shall have received an opinion of its tax
counsel, Davis Polk & Wardwell, in form and substance reasonably
satisfactory to Buyer, and dated as of the Merger Date, to the effect that
the Mergers will constitute transactions described in Section 351 and/or
Section 368(a) of the Code and that neither Buyer nor its shareholders
shall recognize gain or loss for U.S. Federal income tax purposes as a
result of the Mergers (other than with respect to cash paid in lieu of
fractional shares). In rendering such opinion, Davis Polk & Wardwell may
require delivery of and rely upon the customary representations letters
delivered by Parent, Buyer and its Subsidiaries in form and substance
reasonably satisfactory to Davis Polk & Wardwell.
Section 8.3. Conditions to the Obligations of the Company.
The obligations of the Company to consummate the Tires Sub Merger are subject
to the satisfaction of the following further conditions:
(a) (i) Buyer shall have performed in all material
respects all of its obligations hereunder required to be performed by it at
or prior to the Merger Date, (ii) the representations and warranties of
Buyer contained in this Agreement shall be true and correct at and as of
the Merger Date, as if made at and as of the Merger Date (except to the
extent expressly made as of an earlier date, in which case as of such
date), except where the failure of such representations and warranties to
be so true and correct (without giving effect to any limitation as to
"materiality" or "Material Adverse Effect" set forth therein) is not
reasonably like to have, individually or in the aggregate, a Material
Adverse Effect on Buyer and (iii) the Company shall have received a
certificate signed by an executive officer of Buyer to the foregoing
effect.
(b) The Company shall have received an opinion of its tax
counsel, Cravath, Swaine & Moore, in form and substance reasonably
satisfactory to the Company, and dated as of the Merger Date, to the effect
that the Mergers will constitute transactions described in Section 351
and/or Section 368(a) of the Code and that neither the Company nor its
shareholders shall recognize gain or loss for U.S. Federal income tax
purposes as a result of the Mergers (other than with respect to cash paid
in lieu of fractional shares). In rendering such opinion, Cravath, Swaine
& Moore may require delivery of and rely upon the customary representations
letters delivered by the Company and its Subsidiaries in form and substance
reasonably satisfactory to Cravath, Swaine & Moore.
ARTICLE 9
Termination
Section 9.1. Termination. This Agreement may be terminated
and the Mergers may be abandoned at any time prior to the Merger Date
(notwithstanding any approval of this Agreement by the shareholders of the
Company or Buyer):
(a) by mutual written consent of the Company and Buyer;
(b) by either the Company or Buyer, if the Mergers have not
been consummated by June 30, 1998; provided, however, that the right to
terminate this Agreement pursuant to this Section 9.01(b) shall not be
available to any party whose willful failure to perform any of its
obligations under this Agreement results in the failure of the Mergers to
be consummated by such time;
(c) by either the Company or Buyer, if there shall be any
law or regulation that makes consummation of either of the Mergers illegal
or otherwise prohibited or if any judgment, injunction, order or decree
enjoining Buyer or the Company from consummating their respective Mergers
is entered and such judgment, injunction, order or decree shall have become
final and non-appealable (provided that any judgment, injunction, order or
decree other than a temporary restraining order shall be deemed to have
become final and non-appealable thirty days following the entry thereof);
(d) (i) by the Company, if the approval of the shareholders
of Buyer contemplated by this Agreement shall not have been obtained by
reason of the failure to obtain the required vote at a duly held meeting of
shareholders or any adjournment thereof or (ii) by Buyer, if the Directors
of the Company determine not to call or hold the Company Shareholders'
Meeting as provided in Section 5.2 or if the approvals of the shareholders
of the Company contemplated by this Agreement shall not have been obtained
by reason of the failure to obtain the required vote at a duly held meeting
of shareholders or any adjournment thereof;
(e) by Buyer, if prior to the Company Shareholder Meeting,
the Directors of the Company shall have withdrawn, modified or changed in a
manner adverse to Buyer their approval or recommendation of this Agreement;
(f) by Buyer, upon a breach of any representation, warranty,
covenant or agreement of the Company, or if any representation or warranty
of the Company shall become untrue, the effect of which is a Material
Adverse Effect on the Company, in either case such that the conditions set
forth in Section 8.2(a) would be incapable of being satisfied by June 30,
1998 (or as otherwise extended);
(g) by the Company, upon a breach of any representation,
warranty, covenant or agreement of Buyer, or if any representation or
warranty of Buyer shall become untrue, the effect of which is a Material
Adverse Effect on Buyer, in either case such that the conditions set forth
in Section 8.3(a) would be incapable of being satisfied by June 30, 1998
(or as otherwise extended);
(h) by the Company, upon payment to Buyer of the amounts
referred to in Section 10.4(b), if prior to the Company Shareholder
Meeting, the Directors of the Company shall have withdrawn or modified in a
manner adverse to Buyer their approval or recommendation of this Agreement
or the Tires Sub Merger in order to permit the Company to execute a
definitive agreement in connection with a Superior Proposal.
The party desiring to terminate this Agreement pursuant to this
Section 9.1 shall give written notice of such termination to the other party
in accordance with Section 10.1.
Section 9.2. Effect of Termination. If this Agreement is
terminated pursuant to Section 9.1, this Agreement shall become void and of no
effect with no liability on the part of any party hereto, except that (a) the
agreements contained in the last sentence of Section 7.4, this Section 9.2 and
in Article 10 shall survive the termination hereof and (b) no such termination
shall relieve any party of any liability or damages resulting from any wilful
breach by that party of this Agreement.
ARTICLE 10
Miscellaneous
Section 10.1. Notices. Except as provided in Section 5.3, all
notices, requests and other communications to any party hereunder shall be in
writing (including telecopy or similar writing) and shall be given,
if to any Buyer Party, to:
Federal Express Corporation
1980 Nonconnah Boulevard
Memphis, TN 38132
Fax: (901) 395-5034
Attention: Kenneth R. Masterson
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Fax: (212) 450-4800
Attention: Dennis S. Hersch
if to the Company, to:
Caliber System, Inc.
3925 Embassy Parkway
Akron, OH 44333
Fax: (330) 665-8937
Attention: John E. Lynch, Jr.
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019-7475
Fax: (212) 474-3700
Attention: Robert A. Kindler
and
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
Fax: (212) 755-7306
Attention: Robert A. Profusek
or to such other address or telecopy number as such party may hereafter
specify for the purpose by notice to the other parties hereto. Each such
notice, request or other communication shall be effective (a) if given by
telecopy, when such telecopy is transmitted to the telecopy number specified
in this Section and the appropriate telecopy confirmation is received (b) if by
overnight delivery service, which shall be Buyer, with proof of delivery, the
next business day or (c) if given by any other means, when delivered at the
address specified in this Section.
Section 10.2. Entire Agreement; Non-Survival of
Representations and Warranties. (a) This Agreement and the Confidentiality
Agreement constitute the entire agreement among the parties with respect to
the subject matter hereof and thereof and supersede all prior agreements,
understandings and negotiations, both written and oral, between the parties
with respect to such subject matter. None of this Agreement or any other
agreement contemplated hereby or thereby (or any provision hereof or thereof)
is intended to confer on any Person other than the parties hereto or thereto
any rights or remedies (except that Sections 7.9 and 7.15 are intended to
confer rights and remedies on the Persons specified therein).
(b) The representations and warranties contained herein
shall not survive the Merger Date.
Section 10.3. Amendments; No Waivers. (a) Any provision of
this Agreement may be amended or waived prior to the Merger Date if, and only
if, such amendment or waiver is in writing and signed, in the case of an
amendment, by the Company, Buyer and Parent or, in the case of a waiver, by
the party against whom the waiver is to be effective; provided that after the
adoption of this Agreement by the shareholders of (i) the Company, no such
amendment or waiver shall, without the further approval of such shareholders,
alter or change (A) the amount or kind of consideration to be received in
exchange for any shares of capital stock of the Company, or (B) any of the
terms or conditions of this Agreement if such alteration or change would
adversely affect the holders of any shares of capital stock of the Company and
(ii) Buyer, no such amendment or waiver shall, without the further approval of
such shareholders, alter or change (A) the amount or kind of consideration to
be received in exchange for any shares of capital stock of Buyer or (B) any of
the terms or conditions of this Agreement if such alteration or change would
adversely affect the holders of any shares of capital stock of Buyer.
(b) No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
Section 10.4. Expenses. (a) Except as otherwise provided in
this Section, all costs and expenses incurred in connection with this
Agreement shall be paid by the party incurring such cost or expense.
(b) The Company agrees to pay Buyer in immediately available
funds by wire transfer an amount equal to
(i) $50,000,000 promptly, but in no event later than two
business days, after the termination of this Agreement as a
result of the occurrence of any of the events in (A) Section
9.1(d)(ii) or (B) Section 9.1(e); provided, however, that the
Company shall not be obligated to pay such amount if immediately
prior to the time such amount would otherwise be payable, the
condition set forth in Section 8.3(a) would not have been
satisfied; or
(ii) $100,000,000, promptly, but in no event later than two
business days, after the termination of this Agreement as a
result of the occurrence of any of the events set forth in
Section 9.1(h).
(c) In the event of a termination of this Agreement
pursuant to Section 9.1(d)(ii) or Section 9.1(e) when an Acquisition
Proposal is pending, the Company agrees to pay to Buyer in immediately
available funds by wire transfer an amount (in addition to the amounts
specified in Section 10.4(b)(i)) equal to $50,000,000 if, within 12 months
of such termination, the Company shall enter into an agreement providing
for, or there shall be consummated, a transaction which would constitute an
Acquisition Proposal. Such additional amount shall be paid within two
business days of the date such agreement is entered into or such
transaction is consummated, as the case may be.
(d) Buyer agrees to pay to the Company in immediately
available funds by wire transfer an amount equal to $50,000,000 promptly,
but in no event later than two business days, after the termination of this
Agreement as a result of the occurrence of any of the events set forth in
Section 9.1(d)(i); provided, however, that Buyer shall not be obligated to
pay such amount if immediately prior to the time such amount would
otherwise be payable, the condition set forth in Section 8.2(a) would not
have been satisfied.
Section 10.5. Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns; provided that no party may
assign, delegate or otherwise transfer any of its rights or obligations under
this Agreement without the consent of the other parties hereto; provided
further that Buyer may assign its rights, but not its obligations, under this
Agreement to a wholly-owned subsidiary of Buyer.
Section 10.6. Governing Law. This Agreement shall be
construed in accordance with and governed by the law of the State of Delaware
(without regard to principles of conflict of laws).
Section 10.7. Jurisdiction. Any suit, action or proceeding
seeking to enforce any provision of, or based on any matter arising out of or
in connection with, this Agreement or the transactions contemplated by this
Agreement may be brought against any of the parties in the United States
District Court for the Southern District of New York or any state court
sitting in the City of New York, Borough of Manhattan, and each of the parties
hereto hereby consents to the exclusive jurisdiction of such courts (and of
the appropriate appellate courts) in any such suit, action or proceeding and
waives any objection to venue laid therein. Process in any such suit, action
or proceeding may be served on any party anywhere in the world, whether within
or without the State of New York. Without limiting the generality of the
foregoing, each party hereto agrees that service of process upon such party at
the address referred to in Section 10.1, together with written notice of such
service to such party, shall be deemed effective service of process upon such
party.
Section 10.8. Counterparts; Effectiveness. This Agreement may
be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the
same instrument. This Agreement shall become effective when each party hereto
shall have received counterparts hereof signed by all of the other parties
hereto.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of
the day and year first above written.
<TABLE>
<S> <C>
FEDERAL EXPRESS CORPORATION
By: /s/ Kenneth R. Masterson
----------------------------------------
Name: Kenneth R. Masterson
Title: Executive Vice President, General
Counsel and Secretary
FAST HOLDING INC.
By: /s/ Scott E. Hansen
----------------------------------------
Name: Scott E. Hansen
Title: Vice President
FAST MERGER SUB INC.
By: /s/ Scott E. Hansen
----------------------------------------
Name: Scott E. Hansen
Title: Vice President
TIRES MERGER SUB INC.
By: /s/ Scott E. Hansen
----------------------------------------
Name: Scott E. Hansen
Title: Vice President
CALIBER SYSTEM, INC.
By: /s/ Daniel J. Sullivan
----------------------------------------
Name: Daniel J. Sullivan
Title: Chairman, President and Chief
Executive Officer
</TABLE>
EXHIBIT A-1
TO ANNEX A
FORM OF AFFILIATE'S POOLING LETTER
(Caliber System, Inc.)
Fast Holding Co.
[address]
[address]
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may be
deemed to be an "affiliate" of Caliber System, Inc., an Ohio corporation (the
"Company"), for purposes of paragraphs (c) and (d) of Rule 145 of the rules
and regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended
(the "Act"). Pursuant to the terms of the Agreement and Plan of Merger dated
as of October 5, 1997 (the "Agreement") among the Company, Federal Express
Corporation, a Delaware corporation ("Buyer"), Fast Holding Inc., a Delaware
corporation and a wholly owned subsidiary of Buyer ("Parent"), Fast Merger Sub
Inc., a Delaware corporation and a wholly owned subsidiary of Parent ("Buyer
Merger Sub") and Tires Merger Sub Inc., a Delaware corporation and a wholly
owned subsidiary of Parent, Tires Merger Sub will be merged with and into the
Company with the Company to be the survivor in the merger (the "Tires Sub
Merger").
As a result of the Tires Sub Merger, I will receive shares of
common stock, par value $0.10 per share of Parent ("Parent Common Stock") in
exchange for shares owned by me of common stock without par value of the
Company.
I represent, warrant and covenant to Parent that as of the date
I receive any Parent Common Stock as a result of the Tires Sub Merger:
A. I shall not make any sale, transfer or other disposition
in violation of the Act or the Rules and Regulations.
B. I have carefully read this letter and the Agreement and
discussed the requirements of such documents and other applicable
limitations upon my ability to sell, transfer or otherwise dispose of the
Parent Common Stock to the extent I felt necessary with my counsel or
counsel for the Company.
C. I have been advised that the issuance of Parent Common
Stock to me pursuant to the Tires Sub Merger has been registered with the
Commission under the Act on a Registration Statement on Form S-4. However,
I have also been advised that, since at the time the Tires Sub Merger was
submitted for a vote of the shareholders of the Company, I may be deemed to
have been an affiliate of the Company and the distribution by me of the
Parent Common Stock has not been registered under the Act, I may not sell,
transfer or otherwise dispose of the Parent Common Stock issued to me in
the Tires Sub Merger unless (i) such sale, transfer or other disposition
has been registered under the Act, (ii) such sale, transfer or under other
disposition is made in conformity with Rule 145 promulgated by the
Commission under the Act, or (iii) in the opinion of counsel reasonably
acceptable to Parent, or a "no action" letter obtained by the undersigned
from the staff of the Commission, such sale, transfer or other disposition
is otherwise exempt from registration under the Act.
D. I understand that Parent is under no obligation to
register the sale, transfer or other disposition of the Parent Common Stock
by me or on my behalf under the Act or to take any other action necessary
in order to make compliance with an exemption from such registration
available.
E. I also understand that there will be placed on the
certificates for the Parent Common Stock issued to me or any substitutions
therefor, a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933 APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE
TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED
___________ BETWEEN THE REGISTERED HOLDER HEREOF AND FAST HOLDING
INC., A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF
FAST HOLDING INC."
F. I also understand that unless the transfer by me of my
Parent Common Stock has been registered under the Act or is a sale made in
conformity with the provisions of Rule 145, Parent reserves the right to
put the following legend on the certificates issued to my transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED FROM A PERSON WHO
RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH RULE 145 PROMULGATED
UNDER THE SECURITIES ACT OF 1933 APPLIES. THE SHARES HAVE BEEN
ACQUIRED BY THE HOLDER NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION
WITH, ANY DISTRIBUTION THEREOF WITHIN THE MEANING OF THE SECURITIES
ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT IN ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OF 1933."
G. The undersigned understands that the Tires Sub Merger is
intended to be accounted for using the "pooling-of-interests" method and
that such treatment for financial accounting purposes is dependent upon the
accuracy of certain of the representations and warranties, and the
undersigned's compliance with certain of the covenants and agreements, set
forth herein. Accordingly, the undersigned will not sell, transfer or
otherwise dispose of the undersigned's interests in, or acquire or sell any
options or other securities relating to securities of Parent that would be
intended to reduce the undersigned's risk relative to, any shares of common
stock of Parent beneficially owned by the undersigned, during the period
commencing on the 30th day prior to the effectiveness of the Merger and
ending at such time as results covering at least 30 days of post-Merger
combined operations have been published by Parent, in the form of a
quarterly earnings report, an effective registration statement filed with
the Securities Exchange Commission ("SEC"), a report to the SEC on Form 10-
K, 10-Q or 8-K, or any other public filing or announcement which includes
such combined results of operations (the "Combined Financial Results
Report"). The undersigned also understand that stop transfer instructions
will be given to the transfer agent of Parent in order to prevent any
breach of the covenants and agreements the undersigned makes in this
Paragraph G, although such stop transfer instructions will be promptly
rescinded upon the publication of the Combined Financial Results Report.
H. The undersigned further understands and agrees that the
representations, warranties, covenants and agreements of the undersigned
set forth herein are for the benefit of Parent, Buyer, and the Buyer
Surviving Corporation (as defined in the Merger Agreement) and will be
relied upon by such entities and their respective counsel and accountants.
I. The undersigned understands and agrees that this letter
agreement shall apply to all shares of the capital stock of Parent that are
deemed to be beneficially owned by the undersigned pursuant to applicable
federal securities laws.
It is understood and agreed that the legends set forth in
Paragraphs E and F above shall be removed by delivery of substitute
certificates without such legend if such legend is not required for purposes
of the Act or this Agreement.
Execution of this letter should not be considered an admission
on my part that I am an "affiliate" of the Company as described in the first
paragraph of this letter or as a waiver of any rights I may have to object to
any claim that I am such an affiliate on or after the date of this letter.
Very truly yours,
-------------------------
Name:
Accepted this ____ day of ______________, 1997 by
FAST HOLDING INC.
By:
- -----------------------------------------------------
Name:
Title:
EXHIBIT A-2
TO ANNEX A
FORM OF AFFILIATE'S POOLING LETTER
(Federal Express Corporation)
Fast Holding Inc.
[address]
[address]
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may be
deemed to be an "affiliate" of Federal Express Corporation, a Delaware
corporation ("Buyer"), for purposes of paragraphs (c) and (d) of Rule 145 of
the rules and regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Act"). Pursuant to the terms of the Agreement and Plan of
Merger dated as of October 5, 1997 (the "Agreement") among Buyer, Caliber
System, Inc., an Ohio corporation ("Tires"), Fast Holding Inc., a Delaware
corporation and a wholly owned subsidiary of Buyer ("Parent"), Fast Merger Sub
Inc., a Delaware corporation and a wholly owned subsidiary of Parent ("Buyer
Merger Sub") and Tires Merger Sub Inc., a Delaware corporation and a wholly
owned subsidiary of Parent, Buyer Merger Sub will be merged with and into
Buyer with Buyer to be the survivor in the merger (the "Buyer Sub Merger").
As a result of the Buyer Sub Merger, I will receive shares of
common stock, par value $0.10 per share, of Parent (the "Parent Common Stock")
in exchange for shares owned by me of common stock, par value $0.10 per share,
of Buyer.
I represent, warrant and covenant to Parent that as of the date
I receive any Parent Common Stock as a result of the Buyer Sub Merger:
A. I shall not make any sale, transfer or other disposition
in violation of the Act or the Rules and Regulations.
B. I have carefully read this letter and the Agreement and
discussed the requirements of such documents and other applicable
limitations upon my ability to sell, transfer or otherwise dispose of the
Parent Common Stock to the extent I felt necessary with my counsel or
counsel for Buyer.
C. I have been advised that the issuance of Parent Common
Stock to me pursuant to the Buyer Sub Merger has been registered with the
Commission under the Act on a Registration Statement on Form S-4. However,
I have also been advised that, since at the time the Buyer Sub Merger was
submitted for a vote of the shareholders of Buyer, I may be deemed to have
been an affiliate of Buyer and the distribution by me of the Parent Common
Stock has not been registered under the Act, I may not sell, transfer or
otherwise dispose of the Parent Common Stock issued to me in the Buyer Sub
Merger unless (i) such sale, transfer or other disposition has been
registered under the Act, (ii) such sale, transfer or under other
disposition is made in conformity with Rule 145 promulgated by the
Commission under the Act, or (iii) in the opinion of counsel reasonably
acceptable to Parent, or a "no action" letter obtained by the undersigned
from the staff of the Commission, such sale, transfer or other disposition
is otherwise exempt from registration under the Act.
D. I understand that Parent is under no obligation to
register the sale, transfer or other disposition of the Parent Common Stock
by me or on my behalf under the Act or to take any other action necessary
in order to make compliance with an exemption from such registration
available.
E. I also understand that there will be placed on the
certificates for the Parent Common Stock issued to me or any substitutions
therefor, a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933 APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE
TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED
___________ BETWEEN THE REGISTERED HOLDER HEREOF AND PARENT, A COPY OF
WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF FAST HOLDING
INC."
F. I also understand that unless the transfer by me of my
Parent Common Stock has been registered under the Act or is a sale made in
conformity with the provisions of Rule 145, Parent reserves the right to
put the following legend on the certificates issued to my transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED FROM A PERSON WHO
RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH RULE 145 PROMULGATED
UNDER THE SECURITIES ACT OF 1933 APPLIES. THE SHARES HAVE BEEN
ACQUIRED BY THE HOLDER NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION
WITH, ANY DISTRIBUTION THEREOF WITHIN THE MEANING OF THE SECURITIES ACT
OF 1933 AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN
ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OF 1933."
G. The undersigned understands that the Buyer Sub Merger is
intended to be accounted for using the "pooling-of-interests" method and
that such treatment for financial accounting purposes is dependent upon the
accuracy of certain of the representations and warranties, and the
undersigned's compliance with certain of the covenants and agreements, set
forth herein. Accordingly, the undersigned will not sell, transfer or
otherwise dispose of the undersigned's interests in, or acquire or sell any
options or other securities relating to securities of Parent that would be
intended to reduce the undersigned's risk relative to, any shares of common
stock of Parent beneficially owned by the undersigned, during the period
commencing on the 30th day prior to the effectiveness of the Merger and
ending at such time as results covering at least 30 days of post-Merger
combined operations have been published by Parent, in the form of a
quarterly earnings report, an effective registration statement filed with
the Securities Exchange Commission ("SEC"), a report to the SEC on Form 10-
K, 10-Q or 8-K, or any other public filing or announcement which includes
such combined results of operations (the "Combined Financial Results
Report"). The undersigned also understand that stop transfer instructions
will be given to the transfer agent of Parent in order to prevent any
breach of the covenants and agreements the undersigned makes in this
Paragraph G, although such stop transfer instructions will be promptly
rescinded upon the publication of the Combined Financial Results Report.
H. The undersigned further understands and agrees that the
representations, warranties, covenants and agreements of the undersigned
set forth herein are for the benefit of Parent, Buyer and Buyer Surviving
Corporation (as defined in the Merger Agreement) and will be relied upon by
such entities and their respective counsel and accountants.
I. The undersigned understands and agrees that this letter
agreement shall apply to all shares of the capital stock of Parent that are
deemed to be beneficially owned by the undersigned pursuant to applicable
federal securities laws.
It is understood and agreed that the legends set forth in
Paragraphs E and F above shall be removed by delivery of substitute
certificates without such legend if such legend is not required for purposes
of the Act or this Agreement.
Execution of this letter should not be considered an admission
on my part that I am an "affiliate" of Buyer as described in the first
paragraph of this letter or as a waiver of any rights I may have to object to
any claim that I am such an affiliate on or after the date of this letter.
Very truly yours,
-------------------
Name:
Accepted this ____ day of ______________, 1997 by
FAST HOLDING INC.
By:
--------------------------------------------------
Name:
Title:
ANNEX B
[GOLDMAN, SACHS & CO. LETTERHEAD]
PERSONAL AND CONFIDENTIAL
- -------------------------
October 5, 1997
Board of Directors
Caliber System, Inc.
3925 Embassy Parkway
P.O. Box 5459
Akron, OH 44334-0459
Gentlemen:
You have requested our opinion as to the fairness from a financial point of
view to the holders of the outstanding shares of Common Stock, without par
value (the "Shares"), of Caliber System, Inc. (the "Company") of the exchange
ratio of 0.80 shares of Common Stock, par value $0.10 per share ("New FedEx
Common Stock") of Fast Holdings Inc., a Delaware corporation ("New FedEx") and
wholly-owned subsidiary of Federal Express Corporation ("Federal Express"), to
be received for each Share (the "Exchange Ratio") pursuant to the Agreement and
Plan of Merger, dated as of October 5, 1997, among Federal Express, New FedEx,
Fast Merger Sub Inc., a wholly-owned subsidiary of New FedEx, Tires Merger Sub
Inc., a wholly-owned subsidiary of New FedEx, and the Company (the
"Agreement"). The Agreement provides for the merger of Tires Merger Sub Inc.
with and into the Company and for the merger of Fast Merger Sub Inc. with and
into Federal Express and the conversion of each outstanding share of Federal
Express Common Stock, par value $0.10 per share, ("Federal Express Common
Stock") into one share of New FedEx Common Stock. As a result of the
transactions contemplated by the Agreement, each of the Company and Federal
Express will be a wholly-owned subsidiary of New FedEx, which will be a
publicly-traded corporation.
Goldman, Sachs & Co., as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings,
competitive biddings, secondary distributions of listed and unlisted
securities, private placements and valuations for estate, corporate and other
purposes. We are familiar with the Company, having acted as financial advisor
with respect to the spin-off of the Company's Roadway Express unit to
shareholders in 1996 and the divestiture of the Company's Central Freight
Lines Inc. unit in 1997, having acted as lead manager in connection with the
issuance of $200 million principal amount of the Company's 7.80% senior notes
due July 15, 2006 (the "7.80% Notes"), and having acted as its financial
advisor in connection with, and having participated in certain of the
negotiations leading to, the Agreement. Goldman, Sachs & Co. has also
provided certain investment banking services to Federal Express and its
subsidiaries from time to time, including having participated as a co-manager
in numerous issuances of lease debt pass through certificates and other debt
securities. Goldman, Sachs & Co. may provide investment banking services to
Federal Express and its subsidiaries in the future. Goldman, Sachs & Co.
provides a full range of financial advisory and securities services and, in the
course of its normal trading activities, may from time to time effect
transactions and hold securities, including derivative securities, of the
Company or Federal Express for its own account and for the accounts of
customers.
In connection with this opinion, we have reviewed, among other things, the
Agreement; Annual Reports to Stockholders and Annual Reports on Form 10-K of
the Company (formerly known as Roadway Services Inc.) for the five years ended
December 31, 1996 and of Federal Express for the five fiscal years ended May
31, 1997; certain interim reports to stockholders and Quarterly Reports on
Form 10-Q of the Company and Federal Express; certain other communications
from the Company and Federal Express to their respective stockholders; and
certain internal financial analyses and forecasts for the Company prepared by
its management. We also have held discussions with members of the senior
management of the Company and Federal Express regarding the past and current
business operations, financial condition and future prospects of their
respective companies. In addition, we have reviewed the reported price and
trading activity for the Shares and the Federal Express Common Stock, compared
certain financial and stock market information for the Company and Federal
Express with similar information for certain other companies the securities of
which are publicly traded, reviewed the financial terms of certain recent
business combinations in the freight transportation industry specifically and
in other industries generally and performed such other studies and analyses as
we considered appropriate.
We have relied upon the accuracy and completeness of all of the financial and
other information reviewed by us and have assumed such accuracy and
completeness for purposes of rendering this opinion. As you are aware, we were
informed by Federal Express that financial projections reflecting recent
developments for Federal Express beyond fiscal year 1998 were not available.
Accordingly, we note that our review of such information for purposes of
rendering our opinion was limited to discussions with management of Federal
Express of analysts' estimates for fiscal year 1999. In addition, we have not
made an independent evaluation or appraisal of the assets and liabilities of
the Company or Federal Express or any of their subsidiaries and we have not
been furnished with any such evaluation or appraisal, except for an evaluation
or appraisal of the Company's less-than-truckload carrier division (formerly
the Viking Division) prepared by an outside advisor to the Company. We have
assumed, with your consent, that the transaction contemplated by the Agreement
will be accounted for as a pooling of interests under generally accepted
accounting principles. Our advisory services and the opinion expressed herein
are provided for the information and assistance of the Board of Directors of
the Company in connection with its consideration of the transaction
contemplated by the Agreement and such opinion does not constitute a
recommendation as to how any holder of Shares should vote with respect to such
transaction.
Based upon and subject to the foregoing and based upon such other matters as we
consider relevant, it is our opinion that as of the date hereof the Exchange
Ratio pursuant to the Agreement is fair from a financial point of view to the
holders of Shares.
Very truly yours,
/s/ Goldman, Sachs & Co.
- ------------------------
GOLDMAN, SACHS & CO.
ANNEX C
VOTING AGREEMENT
AGREEMENT, dated as of October 5, 1997 between (i) Federal
Express Corporation, a Delaware corporation ("Buyer"), (ii) G. James Roush and
Sarah Roush Werner (each, with respect to the Free Shares (as defined below),
a "Shareholder", and a "Shareholder Party" and with respect to the Trust
Shares (as defined below), a "Beneficiary"), and (iii) G. James Roush and
Richard A. Chenoweth (each a "Trustee", and together, the "Trustees", in each
case together with any successors in their capacity as trustees under the
Trust Agreement (as defined below)). Capitalized terms used but not
separately defined herein shall have the meanings assigned to such terms in
the Merger Agreement (as defined below).
WHEREAS, the Beneficiaries and the Trustees, among others, are
parties to an Amended and Restated Voting Trust Agreement effective as of
November 1, 1992 (the "Trust Agreement");
WHEREAS, the Beneficiaries beneficially own, and the
Shareholder Parties are record and beneficial owners of, shares of common
stock, without par value, of the Company (the "Shares") and certain of such
Shares are subject to the Trust Agreement;
WHEREAS, in order to induce Buyer to enter into an Agreement
and Plan of Merger, dated as of the date hereof (the "Merger Agreement"),
among Buyer, Caliber System, Inc., an Ohio corporation (the "Company"), Fast
Holding Inc., a Delaware corporation, Fast Merger Sub Inc., a Delaware
corporation, and Tires Merger Sub, Inc., a Delaware corporation, Buyer has
requested the Beneficiaries, Shareholder and the Trustees, and the
Beneficiaries, Shareholder and the Trustees have agreed, to enter into this
Agreement with respect to the Shares;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
Voting Agreement
Section 1.1. Voting Agreement. (a) Each Beneficiary hereby
agrees to instruct the Trustees in accordance with the Trust Agreement, and
each Trustee hereby agrees, to the extent so instructed in accordance with
the Trust Agreement, to vote any Trust Shares held by them at the time of
any vote to approve and adopt the Merger Agreement (attached as Appendix A
hereto), the Tires Sub Merger and the transactions contemplated by the
Merger Agreement and any actions related thereto at any meeting of the
stockholders of the Company, and at any adjournment thereof, at which such
Merger Agreement and other related agreements (or any amended version
thereof), or such other actions, are submitted for the consideration and
vote of the stockholders of the Company (the "Meeting") in favor of the
approval and adoption of the Merger Agreement, the Tires Sub Merger and the
transactions contemplated by the Merger Agreement (collectively, the
"Proposal").
(b) Each Shareholder Party hereby agrees to vote such
person's Free Shares held by them at the time of the Meeting in favor of
the Proposal at the Meeting.
Section 1.2. Revocation of Proxy. Each Shareholder Party and
Trustee hereby revokes any and all previous proxies granted with respect to
the Shares; provided, however, that nothing contained herein shall in any way
affect the validity of the Trust Agreement.
ARTICLE 2
Representations and Warranties of Shareholder Parties
Each Shareholder Party represents and warrants, severally and
not jointly, to Buyer that:
Section 2.1. Authorization. Such Shareholder Party has the
legal capacity to execute, deliver and perform this Agreement. This
Agreement constitutes a valid and binding Agreement of such Shareholder
Party. If a Shareholder Party is married and the Shares set forth on Annex
A or Annex B hereto opposite such Shareholder Party's name constitute
community property under applicable laws, this Agreement has been duly
authorized, executed and delivered by, and constitutes the valid and
binding agreement of, such Shareholder Party's spouse. If this Agreement
is being executed in a representative or fiduciary capacity, the Person
signing this Agreement has full power and authority to enter into and
perform this Agreement.
Section 2.2. Non-Contravention. The execution, delivery and
performance by such Shareholder Party of this Agreement and the consummation
of the transactions contemplated hereby do not and will not (i) result in any
breach or violation of or be in conflict with or constitute a default under
any term of any agreement, law, rule, regulation, judgment, injunction, order,
decree or arrangement to which such Shareholder Party is a party or by which
such Shareholder Party is bound or (ii) require any consent or other action by
any Person under, constitute a default under, or give rise to any right of
termination, cancellation or acceleration or to a loss of any benefit to which
such Shareholder Party is entitled under any provision of any agreement or
other instrument binding on such Shareholder Party.
Section 2.3. Ownership of Shares. (a) The Shareholder Party
is the record (except for certain Shares held through revocable trusts) and
beneficial owner of the number of Shares set forth opposite the name of such
Shareholder Party on Annex A hereto (the "Free Shares"), free and clear of any
Lien and any other limitation or restriction. The Shareholder Party has sole
voting power, sole power of disposition, sole power of conversion, sole power
to demand appraisal rights and sole power to agree to all of the matters set
forth in this Agreement, in each case with respect to all of the Free Shares
with no limitations, qualifications or restrictions on such rights, subject to
applicable securities laws and the terms of this Agreement and subject, in the
case of Shares which constitute community property under applicable law, to
the rights and powers of such Shareholder Party's spouse under applicable
community property laws. None of the Free Shares is subject to any voting
trust or other agreement or arrangement with respect to the voting of such
Shares.
(b) Each Beneficiary is the beneficial holder of the number
of Shares set forth opposite the name of such Beneficiary on Annex B hereto
(the "Trust Shares"), free and clear of any Lien and any other limitation
or restriction other than as set forth in the Trust Agreement. Each
Beneficiary has sole power to issue instructions with respect to the
matters set forth in Section 1 hereof, sole power of disposition, sole
power of conversion, sole power to demand appraisal rights and sole power
to agree to all of the matters set forth in this Agreement, in each case
with respect to all of the Trust Shares with no limitations, qualifications
or restrictions on such rights, subject to applicable securities laws and
the terms of this Agreement and the Trust Agreement.
Section 2.4. Total Shares. Except for the Free Shares and the
Trust Shares, such Shareholder Party does not own any (i) shares of capital
stock or voting securities of the Company, (ii) securities of the Company
convertible into or exchangeable for shares of capital stock or voting
securities of the Company or (iii) other than any stock option relating to
such Shareholder Party's service as a director of the Company, options or
other rights to acquire from the Company any capital stock, voting securities
or securities convertible into or exchangeable for capital stock or voting
securities of the Company.
Section 2.5. Finder's Fees. No investment banker, broker,
finder or other intermediary is entitled to a fee or commission from Buyer
or the Company in respect of this Agreement based upon any arrangement or
agreement made by or on behalf of such Shareholder Party.
ARTICLE 3
Representations and Warranties of Trustees
Each Trustee represents and warrants, severally and not
jointly, to Buyer that:
Section 3.1. Authorization. The execution, delivery and
performance by such Trustee of this Agreement and the consummation of the
transactions contemplated hereby are within the powers of such Trustee and
have been duly authorized by all necessary action on the part of the Trustee.
This Agreement constitutes a valid and binding agreement of the Trustee.
Section 3.2. Non-contravention. The execution, delivery and
performance by Trustee of this Agreement and the consummation of the
transactions contemplated hereby do not and will not (i) violate any
applicable law, rule, regulation, judgment, injunction, order or decree, (ii)
require any consent or other action by any Person under, constitute a default
under, or give rise to any right of termination, cancellation or acceleration
or to a loss of any material benefit to which such Trustee or any Beneficiary
is entitled under any provision of any agreement or other instrument binding
on such Trustee or any Beneficiary or (iii) conflict with or result in a
breach of the Trust Agreement.
ARTICLE 4
Representations and Warranties of Buyer
Buyer represents and warrants to the Beneficiaries and the
Trustees:
Section 4.1. Corporate Authorization. The execution, delivery
and performance by Buyer of this Agreement and the consummation by Buyer of
the transactions contemplated hereby are within the corporate powers of Buyer
and have been duly authorized by all necessary corporate action. This
Agreement constitutes a valid and binding agreement of Buyer.
ARTICLE 5
Miscellaneous
Section 5.1. Further Assurances. Buyer, the Shareholder
Parties and the Trustees will execute and deliver, or cause to be executed and
delivered, all further documents and instruments and use their reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations, to consummate and make effective the transactions contemplated by
this Agreement.
Section 5.2. Amendments; Termination. Any provision of this
Agreement may be amended or waived if, but only if, such amendment or waiver
is in writing and is signed, in the case of an amendment, by each party to
this Agreement or in the case of a waiver, by the party against whom the
waiver is to be effective. This Agreement shall terminate upon the
termination of the Merger Agreement in accordance with its terms.
Section 5.3. Expenses. Any cost and expense incurred in
connection with this Agreement shall be paid by the party incurring such cost
or expense.
Section 5.4. Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns; provided that no party may
assign, delegate or otherwise transfer any of its rights or obligations under
this Agreement without the consent of the other parties hereto, except that
Buyer may transfer or assign its rights and obligations to any Affiliate of
Buyer.
Section 5.5. Governing Law. This Agreement shall be
construed in accordance with and governed by the laws of the State of
Delaware.
Section 5.6. Counterparts; Effectiveness. This Agreement
may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were
upon the same instrument.
Section 5.7. Severability. If any term, provision or
covenant 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 and covenants of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
Section 5.8. Specific Performance. The parties hereto
agree that irreparable damage would occur in the event any provision of
this Agreement is not performed in accordance with the terms hereof and
that the parties shall be entitled to specific performance of the terms
hereof in addition to any other remedy to which they are entitled at law or
in equity.
Section 5.9. Voting Trust Agreement. If any term,
provision or covenant of this Agreement is inconsistent with any provision
of the Trust Agreement, the terms of the Trust Agreement shall prevail.
Section 5.10. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including telecopy
or similar writing) and shall be given, if to any of the Shareholder Parties
or the Trustees, to such Person at the address indicated on the signature
pages hereof, in each case,
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
New York, NY 10019-7475
Attention: Robert A. Kindler
if to the Buyer, to:
Federal Express Corporation
1980 Nonconnah Boulevard
Memphis, TN 38132
Fax: (901) 395-5034
Attention: Kenneth R. Masterson
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
825 Eighth Avenue
New York, NY 10017
Attention: Dennis S. Hersch
or to such other address or telecopy number such party may hereafter specify
for the purpose by notice to the other parties hereto. Each such notice,
request or other communication shall be effective (a) if given by telecopy,
when such telecopy is transmitted to the telecopy number specified in this
Section and the appropriate telecopy confirmation is received, (b) if by
overnight delivery service with proof of delivery, the next business day or
(c) if given by any other means, when delivered at the address specified in
this Section.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
FEDERAL EXPRESS CORPORATION
By: /s/ Kenneth R. Masterson
------------------------------------
Name: Kenneth R. Masterson
Title: Executive Vice President,
General Counsel and Secretary
G. JAMES ROUSH, as Shareholder and Trustee
By: /s/ G. James Roush
------------------------------------
Name: G. James Roush
Address: c/o John E. Lynch, Jr.
Caliber System, Inc.
3925 Embassy Boulevard
Akron, OH 44333
RICHARD A. CHENOWETH, as Trustee
By: /s/ Richard A. Chenoweth
------------------------------------
Name: Richard A. Chenoweth
Address: c/o John E. Lynch, Jr.
Caliber System, Inc.
3925 Embassy Boulevard
Akron, OH 44333
SARAH ROUSH WERNER
By: /s/ Sarah Roush Warner
------------------------------------
Name: Sarah Roush Warner
Address: c/o John E. Lynch, Jr.
Caliber System, Inc.
3925 Embassy Boulevard
Akron, OH 44333
Annex A
Free Shares
Shareholder No. of Shares Owned
- ------------------- ---------------------
G. James Roush 34,237
Sarah Roush Werner 697,466
Annex B
Trust Shares
Beneficiary No. of Shares Owned
- ------------------- -------------------
G. James Roush 2,000,000
Sarah Roush Werner 2,601,239
Appendix A
[omitted; please see Annex A
to the Joint Proxy Statement/Prospectus]
ANNEX D
THE OHIO GENERAL CORPORATION LAW: SECTION 1701.85
RELIEF FOR DISSENTING SHAREHOLDERS; QUALIFICATION; PROCEDURES
(A) (1) A shareholder of a domestic corporation
is entitled to relief as a dissenting shareholder in respect of the proposals
described in sections 1701.74, 1701.76, and 1701.84 of the Revised Code, only
in compliance with this section.
(2) If the proposal must be submitted to the
shareholders of the corporation involved, the dissenting shareholder
shall be a record holder of the shares of the corporation as to which
he seeks relief as of the date fixed for the determination of
shareholders entitled to notice of a meeting of the shareholders at
which the proposal is to be submitted, and such shares shall not have
been voted in favor of the proposal. Not later than ten days after
the date on which the vote on the proposal was taken at the meeting of
the shareholders, the dissenting shareholder shall deliver to the
corporation a written demand for payment to him of the fair cash value
of the shares as to which he seeks relief, which demand shall state
his address, the number and class of such shares, and the amount
claimed by him as the fair cash value of the shares.
(3) The dissenting shareholder entitled to relief under
divisions (C) of section 1701.84 of the Revised Code in the case of a
merger pursuant to section 1701.80 of the Revised Code and a
dissenting shareholder entitled to relief under division (E) of
section 1701.84 of the Revised Code in the case of a merger pursuant
to section 1701.801 of the Revised Code shall be a record holder of
the shares of the corporation as to which he seeks relief as of the
date on which the agreement of merger was adopted by the directors of
that corporation. Within twenty days after he has been sent the
notice provided in section 1701.80 or 1701.801 of the Revised Code,
the dissenting shareholder shall deliver to the corporation a written
demand for payment with the same information as that provided for in
division (A)(2) of this section.
(4) In the case of a merger or consolidation, a demand
served on the constituent corporation involved constitutes service on
the surviving or the new entity, whether the demand is served before,
on, or after the effective date of the merger or consolidation.
(5) If the corporation sends to the dissenting
shareholder, at the address specified in his demand, a request for the
certificates representing the shares as to which he seeks relief, the
dissenting shareholder, within fifteen days from the date of the
sending of such request, shall deliver to the corporation the
certificates requested so that the corporation may forthwith endorse
on them a legend to the effect that demand for the fair cash value of
such shares has been made. The corporation promptly shall return such
endorsed certificates to the dissenting shareholder. A dissenting
shareholder's failure to deliver such certificates terminates his
rights as a dissenting shareholder, at the option of the corporation,
exercised by written notice sent to the dissenting shareholder within
twenty days after the lapse of the fifteen-day period, unless a court
for good cause shown otherwise directs. If shares represented by a
certificate on which such a legend has been endorsed are transferred,
each new certificate issued for them shall bear a similar legend,
together with the name of the original dissenting holder of such
shares. Upon receiving a demand for payment from a dissenting
shareholder who is the record holder of uncertificated securities, the
corporation shall make an appropriate notation of the demand for
payment in its shareholder records. If uncertificated shares for
which payment has been demanded are to be transferred, any new
certificate issued for the shares shall bear the legend required for
certificated securities as provided in this paragraph. A transferee
of the shares so endorsed, or of uncertificated securities where such
notation has been made, acquires only such rights in the corporation
as the original dissenting holder of such shares had immediately after
the service of a demand for payment of the fair cash value of the
shares. A request under this paragraph, by the corporation is not an
admission by the corporation that the shareholder is entitled to
relief under this section.
(B) Unless the corporation and the dissenting shareholder
have come to an agreement on the fair cash value per share of the shares as
to which the dissenting shareholder seeks relief, the dissenting
shareholder or the corporation, which in case of a merger or consolidation
may be the surviving or new entity, within three months after the service
of the demand by the dissenting shareholder, may file a complaint in the
court of common pleas of the county in which the principal office of the
corporation that issued the shares is located or was located when the
proposal was adopted by the shareholders of the corporation, or, if the
proposal was not required to be submitted to the shareholders, was approved
by the directors. Other dissenting shareholders, within that three-month
period, may join as plaintiffs or may be joined as defendants in any such
proceeding, and any two or more such proceedings may be consolidated. The
complaint shall contain a brief statement of the facts, including the vote
and the facts entitling the dissenting shareholder to relief demanded. No
answer to such a complaint is required. Upon the filing of such a
complaint, the court, on motion of the petitioner, shall enter an order
fixing a date for hearing on the complaint and requiring that a copy of the
complaint and a notice of the filing and of the date for hearing be given
to the respondent or defendant in the manner in which summons is required
to be served or substituted service is required to be made in other cases.
On the day fixed for the hearing on the complaint or any adjournment of it,
the court shall determine from the compliant and from such evidence as is
submitted by either party whether the dissenting shareholder is entitled to
be paid the fair cash value of any shares and, if so, the number and class
of such shares. If the court finds that the dissenting shareholder is so
entitled, the court may appoint one or more persons as appraisers to
receive evidence and to recommend a decision on the amount of the fair cash
value. The appraisers have such power and authority as is specified in the
order of their appointment. The court thereupon shall make a finding as to
the fair cash value of a share and shall render judgment against the
corporation for the payment of it, with interest at such rate and from such
date as the court considers equitable. The cost of the proceeding,
including reasonable compensation to the appraisers to be fixed by the
court, shall be assessed or apportioned as the court considers equitable.
The proceeding is a special proceeding and final orders in it may be
vacated, modified, or reversed on appeal pursuant to the Rules of Appellate
Procedure and, to the extent not in conflict with those rules, Chapter
2505. of the Revised Code. If, during the pendency of any proceeding
instituted under this section, a suit or proceeding is or has been
instituted to enjoin or otherwise to prevent the carrying out of the action
as to which the shareholder has dissented, the proceeding instituted under
this section shall be stayed until the final determination of the other
suit or proceeding. Unless any provision in division (D) of this section
is applicable, the fair cash value of the shares that is agreed upon by the
parties or fixed under this section shall be paid within thirty days after
the date of final determination of such value under this division, the
effective date of the amendment to the articles, or the consummation of the
other action involved, whichever occurs last. Upon the occurrence of the
last such event, payment shall be made immediately to a holder of
uncertificated securities entitled to such payment. In the case of holders
of shares represented by certificates, payment shall be made only upon and
simultaneously with the surrender to the corporation of the certificates
representing the shares for which the payment is made.
(C) If the proposal was required to be submitted to the
shareholders of the corporation, fair cash value as to those shareholders
shall be determined as of the day prior to the day on which the vote by the
shareholders was taken, and, in the case of a merger pursuant to section
1701.80 or 1701.801 of the Revised Code, fair cash value as to shareholders
of a constituent subsidiary corporation shall be determined as of the day
before the adoption of the agreement of merger by the directors of the
particular subsidiary corporation. The fair cash value of a share for the
purposes of this section is the amount that a willing seller who is under
no compulsion to sell would be willing to accept and that a willing buyer
who is under no compulsion to purchase would be willing to pay, but in no
event shall the fair cash value of a share exceed the amount specified in
the demand of the particular shareholder. In computing such fair cash
value, any appreciation or depreciation in market value resulting from the
proposal submitted to the directors or to the shareholders shall be
excluded
(D) (1) The right and obligation of a dissenting
shareholder to receive such fair cash value and to sell such shares as to
which he seeks relief, and the right and obligation of the corporation to
purchase such shares and to pay fair cash value of them terminates if any
of the following applies:
(a) The dissenting shareholder has not complied
with this section, unless the corporation by its directors
waives such failure;
(b) The corporation abandons the action involved
or is finally enjoined or prevented from carrying it out, or
the shareholders rescind their adoption, of the action
involved;
(c) The dissenting shareholder withdraws his
demand, with the consent of the corporation by its
directors;
(d) The corporation and the dissenting
shareholder have not come to an agreement as to the fair
cash value per share, and neither the shareholder nor the
corporation filed or joined in a complaint under division
(B) of this section within the period provided in that
division.
(2) For purposes of division (D)(1) of this section, if
the merger or consolidation has become effective and the surviving or new
entity is not a corporation, action required to be taken by the directors
of the corporation shall be taken by the general partners of a surviving or
new partnership or the comparable representatives of any other surviving or
new entity.
(E) From the time of the dissenting shareholder's giving of
the demand until either the termination of the rights and obligations
arising from it or the purchase of the shares by the corporation, all other
rights accruing from such shares, including voting and dividend or
distribution rights, are suspended. If during the suspension, any dividend
or distribution is paid in money upon shares of such class or any dividend,
distribution, or interest is paid in money upon any securities issued in
extinguishment of or in substitution for such shares, an amount equal to
the dividend, distribution, or interest which, except for the suspension,
would have been payable upon such shares or securities, shall be paid to
the holder of record as a credit upon the fair cash value of the shares.
If the right to receive fair cash value is terminated other than by the
purchase of the shares by the corporation, all rights of the holder shall
be restored and all distributions which, except for the suspension, would
have been made shall be made to the holder of record of the shares at the
time of termination.
ANNEX E
FDX CORPORATION
1997 STOCK INCENTIVE PLAN(1)
1. PURPOSE OF PLAN
The purpose of the FDX Corporation 1997 Stock Incentive Plan
(the "Plan") is to aid FDX Corporation (the "Corporation") and its
subsidiaries in securing and retaining key employees and directors of
outstanding ability and to provide additional motivation to such employees and
directors to exert their best efforts on behalf of the Corporation and its
subsidiaries. The Corporation expects that it will benefit from the added
interest which such employees and directors will have in the welfare of the
Corporation as a result of their ownership or increased ownership of the
Corporation's Common Stock.
2. STOCK SUBJECT TO THE PLAN
The total number of shares of Common Stock of the Corporation
that may be optioned under the Plan is 3,000,000 shares, which may consist, in
whole or in part, of unissued shares or treasury shares. Any shares optioned
hereunder that are canceled or cease to be subject to the option may again be
optioned under the Plan.
3. ADMINISTRATION
The Plan shall be administered by those members, not less than
two, of the Compensation Committee of the Board of Directors, each of whom is
an "outside director" within the meaning of Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"), and a "non-employee director"
as defined in Rule 16b-3 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended (the "Committee"). Members of the
Committee shall be eligible for participation in the automatic grant of
options to directors hereunder.
The Committee shall have the sole authority to grant options
under the Plan and, consistent with the Plan, to determine the provisions of
the options to be granted, to interpret the Plan and the options granted under
the Plan, to adopt, amend and rescind rules and regulations for the
administration of the Plan and generally to administer the Plan and to make
all determinations in connection therewith which may be necessary or
advisable, and all such actions of the Committee shall be binding upon all
participants. Committee decisions and selections shall be made by a majority
of its members present at the meeting at which a quorum is present, and shall
be final. Any decision or selection reduced to writing and signed by all of
the members of the Committee shall be as fully effective as if it had been
made at a meeting duly held.
4. ELIGIBILITY
Unless otherwise determined by the Committee, key employees,
including officers, of the Corporation and its subsidiaries (but excluding
members of the Committee except as provided in paragraph 7) who are from time
to time responsible for the management, growth and protection of the business
of the Corporation and its subsidiaries are eligible to be granted options
under the Plan. The employees who shall receive options under the Plan shall
be selected from time to time by the Committee in its sole discretion, from
among those eligible, and the Committee shall determine, in its sole
discretion, the number of shares to be covered by the option or options
granted to each such employee selected, subject to the maximum number of stock
options which may be granted to an optionee under the Plan.
- ---------------
(1) In the event the Mergers contemplated by the Agreement and Plan of Merger
dated as of October 5, 1997 among Federal Express Corporation, Caliber
System, Inc., FDX Corporation, Fast Merger Sub Inc. and Tires Merger
Sub Inc. are not consummated, the name of this plan will be the
"Federal Express Corporation 1997 Stock Incentive Plan" and all
references to "FDX Corporation" shall be deemed references to "Federal
Express Corporation".
5. LIMIT ON AWARDS
Unless otherwise determined by the Committee, no option may be
granted under the Plan after October 5, 2007, but options theretofore granted
may extend beyond that date. No optionee shall receive options for more than
400,000 shares of the Corporation's Common Stock during any fiscal year under
the Plan.
6. TERMS AND CONDITIONS OF STOCK OPTIONS
All options granted under this Plan shall be subject to all the
applicable provisions of the Plan, including the following terms and
conditions, and to such other terms and conditions not inconsistent therewith
as the Committee shall determine.
(a) Option Price. The option price per share for options
granted to employees shall be determined by the Committee, but shall
not be less than 100% of the fair market value at the time the option
is granted. The fair market value shall, for all purposes of the
Plan, be the mean between the high and low prices at which shares of
such stock are traded on the New York Stock Exchange on the day on
which the option is granted. In the event that the method for
determining the fair market value of the shares provided for in this
paragraph (a) shall not be practicable, then the fair market value per
share shall be determined by such other reasonable method as the
Committee shall, in its discretion, select and apply at the time of
grant of the option concerned.
(b) Time of Exercise of Option. Unless otherwise determined by
the Committee, each option shall be exercisable during and over such
period ending not later than ten years from the date it was granted,
as may be determined by the Committee and stated in the option.
Unless otherwise determined by the Committee, no option shall be
exercisable during the year ending on the first anniversary date of
the granting of the option, except as provided in paragraphs 6(d) and
14 of the Plan.
(c) Payment. Each option may be exercised by giving written
notice to the Corporation specifying the number of shares to be
purchased and accompanied by payment in full (including applicable
taxes, if any) in cash therefor. No option shall be exercised for
less than the lesser of 50 shares or the full number of shares for
which the option is then exercisable. No optionee shall have any
rights to dividends or other rights of a stockholder with respect to
shares subject to his or her option until he or she has given written
notice of exercise of his or her option, paid in full for such shares
and, if requested, given the representation described in paragraph 11
of the Plan.
(d) Rights After Termination of Employment. Unless otherwise
determined by the Committee, if an optionee's employment by the
Corporation or a subsidiary or if a director's directorship terminates
by reason of such person's retirement, the optionee's option may
thereafter be exercised to the extent to which it was exercisable at
the time of retirement but may not be exercised after the expiration
of the period of twenty-four months from the date of such termination
of employment or directorship or of the stated period of the option,
whichever period is the shorter; provided, however, that if the
optionee dies within twenty-four months after such termination of
employment or directorship, any unexercised option, to the extent to
which it was exercisable at the time of the optionee's death, may
thereafter be exercised by the legal representative of the estate or
by the legatee of the option under the last will for a period of
twelve months from the date of the optionee's death or the expiration
of the stated period of the option, whichever period is the shorter.
Unless otherwise determined by the Committee, if an optionee's
employment by the Corporation or a subsidiary or if a director's
directorship terminates by reason of permanent disability, the
optionee's option may thereafter be exercised in full (except that no
option may be exercised less than six months from the date of grant)
but may not be exercised after the expiration of the period of twenty-
four months from the date of such termination of employment or
directorship or of the stated period of the option, whichever period
is the shorter; provided, however, that if the optionee dies within a
period of twenty-four months after such termination of employment or
directorship, any unexercised option, to the extent to which it was
exercisable at the time of the optionee's death, may thereafter be
exercised by the legal representative of the estate or by the legatee
of the option under a last will for a period of twelve months from the
date of the optionee's death or the expiration of the stated period of
the option, whichever period is the shorter.
Unless otherwise determined by the Committee, if an optionee's
employment by the Corporation or a subsidiary or if a director's
directorship terminates by reason of the optionee's death, the
optionee's option may thereafter be immediately exercised in full by
the legal representative of the estate or by the legatee of the option
under a last will, and for a period of twelve months from the date of
the optionee's death or the expiration of the stated period of the
option, whichever period is the shorter.
Unless otherwise determined by the Committee, if an optionee's
employment or if a director's directorship terminates for any reason
other than death, retirement or permanent disability, the optionee's
option shall thereupon terminate.
7. TRANSFERABILITY RESTRICTION
Unless otherwise determined by the Committee, the option by its
terms shall be personal and shall not be transferable by the optionee
otherwise than by will or by the laws of descent and distribution. During the
lifetime of an optionee, the option shall be exercisable only by the optionee,
or by a duly appointed legal representative, unless otherwise determined by
the Committee.
8. DESIGNATION OF CERTAIN OPTIONS AS INCENTIVE STOCK OPTIONS
Options or portions of options granted to employees hereunder
may, in the discretion of the Committee, be designated as "incentive stock
options" within the meaning of Section 422 of the Code. In addition to the
terms and conditions contained in paragraph 6 hereof, options designated as
incentive stock options shall also be subject to the condition that the
aggregate fair market value (determined at the time the options are granted)
of the Corporation's Common Stock with respect to which incentive stock
options are exercisable for the first time by any individual employee during
any calendar year (under this Plan and all other similar plans of the
Corporation and its subsidiaries) shall not exceed $100,000.
9. LOANS TO OPTIONEES
The Corporation may make interest-free demand loans to holders
of options which are not designated or qualified hereunder or by the Code as
"incentive stock options" for the purpose of exercising such options or for
the purpose of enabling optionees to pay any tax liability associated with the
exercise of any such option. Such loans shall be fully secured by shares of
Common Stock of the Corporation and shall in any event be repayable upon the
termination of the optionee's employment or directorship with the Corporation
for any reason. The Committee shall establish written procedures concerning
the application for and making such loans.
10. INVESTMENT REPRESENTATION
Upon any distribution of shares of Common Stock of the
Corporation pursuant to any provision of this Plan, the distributee may be
required to represent in writing that he or she is acquiring such shares for
his or her own account for investment and not with a view to, or for sale in
connection with, the distribution of any part thereof. The certificates for
such shares may include any legend which the Corporation deems appropriate to
reflect any restrictions or transfers.
11. TRANSFER, LEAVE OF ABSENCE, ETC.
For the purpose of the Plan: (a) a transfer of an employee from
the Corporation to a subsidiary, or vice versa, or from one subsidiary to
another, and (b) a leave of absence, duly authorized in writing by the
Corporation, shall not be deemed a termination of employment.
12. RIGHTS OF EMPLOYEES AND OTHERS
(a) No person shall have any rights or claims under the Plan
except in accordance with the provisions of the Plan.
(b) Nothing contained in the Plan shall be deemed to give any
employee the right to be retained in the service of the Corporation or
its subsidiaries.
13. CHANGES IN CAPITAL OR CONTROL
If the outstanding Common Stock of the Corporation subject to
the Plan shall at any time be changed or exchanged by declaration of a stock
dividend, stock split, combination of shares, recapitalization, merger,
consolidation or other corporate reorganization, the number and kind of shares
subject to this Plan and the option prices shall be approximately and
equitably adjusted so as to maintain the option price thereof.
Notwithstanding any other provision of the Plan, upon the occurrence of a
Change in Control, as hereinafter defined, each holder of an unexpired option
under the Plan shall have the right to exercise such option in whole or in
part without regard to the date that such option would be first exercisable,
and such right shall continue, with respect to any such holder whose
employment with the Corporation or subsidiary or whose directorship on the
Board of Directors terminates following a Change in Control, for a period
ending on the earlier of the date of expiration of such option or the date
which is twelve months after such termination of employment or directorship.
For purposes of the Plan, a "Change in Control" of the
Corporation shall be deemed to have occurred if:
(a) any person, as such term is used in Sections 13(d)(3)
and 14 (d)(2) of the Securities Exchange Act of 1934, as amended,
becomes a beneficial owner (within the meaning of Rule 13d-3 under
such Act) of 20% or more of the Corporation's outstanding Common
Stock;
(b) there occurs within any period of two consecutive
years any change in the directors of the Corporation such that the
members of the Corporation's Board of Directors prior to such change
do not constitute a majority of the directors after giving effect to
all changes during such two-year period unless the election, or the
nomination for election by the Corporation's stockholders, of each new
director was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of
the period; or
(c) the Corporation is merged, consolidated or
reorganized into or with, or sells all or substantially all of its
assets to, another corporation or other entity, and immediately after
such transaction less than 80% of the voting power of the then-
outstanding securities of such corporation or other entity immediately
after such transaction is held in the aggregate by holders of the
Corporation's Common Stock immediately before such transaction.
In addition, if the Corporation enters into an agreement or
series of agreements or the Board of Directors of the Corporation adopts a
resolution which results in the occurrence of any of the foregoing events, and
the employment or directorship of a holder of an option under the Plan is
terminated after the entering into of such agreement or series of agreements
or the adoption of such resolution, then, upon the occurrence of any of the
events described above, a Change in Control shall be deemed to have
retroactively occurred on the date of entering into the earliest of such
agreements or the adoption of such resolution.
14. USE OF PROCEEDS
Proceeds from the sale of shares pursuant to options granted
under this Plan shall constitute general funds of the Corporation.
15. AMENDMENTS
The Board of Directors may discontinue the Plan and the
Committee may amend the Plan from time to time, but no amendment, alteration
or discontinuation shall be made which, without the approval of the
stockholders, would:
(a) Except as provided in paragraph 13 of the Plan, increase
the total number of shares reserved for the purposes of the Plan;
(b) Decrease the option price of an option to less than 100% of
the fair market value on the date of the granting of the option; or
(c) Increase the maximum number of options which may be granted
to an optionee under the Plan.
Neither shall any amendment, alteration or discontinuation
impair the rights of any holder of an option theretofore granted without the
optionee's consent; provided, however, that if the Committee after consulting
with management of the Corporation determines that application of an
accounting standard in compliance with any statement issued by the Financial
Accounting Standards Board concerning the treatment of employee stock options
would have a significant adverse effect on the Corporation's financial
statements because of the fact that options granted before the issuance of
such statement are then outstanding, then the Committee in its absolute
discretion may cancel and revoke all outstanding options to which such adverse
effect is attributed and the holders of such options shall have no further
rights in respect thereof. Such cancellation and revocation shall be
effective upon written notice by the Committee to the holders of such options.
16. REPRICING RESTRICTION
Options granted under this Plan shall not be repriced by the
Corporation for any reason.
17. EFFECTIVE DATE OF PLAN
This Plan shall be effective upon its approval by the
Corporation's Board of Directors and stockholders.
18. COMPLIANCE WITH SECTION 16(b)
The Plan is intended to comply with all applicable conditions
of Rule 16b-3 of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended. All transactions involving the
Corporation's directors and executive officers are subject to such conditions,
regardless of whether the conditions are expressly set forth in the Plan. Any
provision of the Plan that is contrary to a condition of Rule 16b-3 shall not
apply to directors and executive officers of the Corporation.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Exculpation. Section 102(b)(7) of the Delaware Law permits a
corporation to include in its certificate of incorporation a provision
eliminating or limiting the personal liability of a director to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, provided that such provision may not eliminate or limit
the liability of a director for any breach of the director's duty of loyalty
to the corporation or its stockholders, for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
for the payment of unlawful dividends, or for any transaction from which the
director derived an improper personal benefit.
The FDX Charter limits the personal liability of a director to
FDX and its stockholders for monetary damages for a breach of fiduciary duty
as a director to the fullest extent permitted by the Delaware Law.
Indemnification. Section 145 of the Delaware Law permits a
corporation to indemnify any of its directors or officers who was or is a
party, or is threatened to be made a party to any third party proceeding by
reason of the fact that such person is or was a director or officer of the
corporation, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by such person
in connection with such action, suit or proceeding, if such person acted in
good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reason to believe that such person's
conduct was unlawful. In a derivative action, i.e., one by or in the right of
a corporation, the corporation is permitted to indemnify directors and
officers against expenses (including attorneys' fees) actually and reasonably
incurred by them in connection with the defense or settlement of an action or
suit if they acted in good faith and in a manner that they reasonably believed
to be in or not opposed to the best interests of the corporation, except that
no indemnification shall be made if such person shall have been adjudged
liable to the corporation, unless and only to the extent that the court in
which the action or suit was brought shall determine upon application that the
defendant directors or officers are fairly and reasonably entitled to
indemnity for such expenses despite such adjudication of liability.
The FDX Bylaws provide for indemnification of directors and
officers of FDX against liability they may incur in their capacities as such
to the fullest extent permitted by applicable law.
Caliber Directors and Officers. Pursuant to the Merger
Agreement, (i) FDX has agreed that, after the Merger Date, it will cause
Caliber to indemnify and hold harmless the present and former officers,
directors, employees and agents of Caliber against certain liabilities, (ii)
FDX or Caliber will maintain in effect for six years after the Merger Date
certain officers' and directors' liability insurance coverage provided, that
FDX will not be obligated to pay premiums in excess of 150% of the premium for
such coverage paid by Caliber per annum in its last full fiscal year, and
(iii) FDX and Caliber will honor certain officer and director indemnification
agreements of Caliber.
Item 21. Exhibits and Financial Statement Schedules.
(a) Exhibits.
<TABLE>
<CAPTION>
Exhibit
Number Description Page
- ------- ----------- ----
<S> <C> <C>
2.1 Agreement and Plan of Merger dated as of October 5, 1997 among the
Registrant (formerly known as Fast Holding Inc.), Federal Express
Corporation, Caliber System, Inc., Fast Merger Sub Inc. and Tires Merger
Sub Inc. (included as Annex A to the Joint Proxy Statement/Prospectus
contained in this Registration Statement).
3.1 Amended and Restated Certificate of Incorporation of Registrant.
3.2 Amended and Restated By-Laws of Registrant, Amended and Restated as
of December 2, 1997.
5.1 Opinion of Davis Polk & Wardwell regarding the validity of the securities
being registered.
10.1 The FDX Corporation 1997 Stock Incentive Plan (included as Annex E to
the Joint Proxy Statement/ Prospectus contained in this Registration
Statement).
15.1 Letter from Arthur Andersen LLP.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Arthur Andersen LLP.
23.3 Consent of Ernst & Young LLP.
23.4 Consent of Davis Polk & Wardwell (included in the opinion filed as
Exhibit 5.1 to this Registration Statement).
23.5 Consent of Goldman, Sachs & Co.
99.1 Form of FedEx Proxy Card.
99.2 Form of Caliber Proxy Card.
99.3 Voting Agreement dated as of October 5, 1997 between Federal Express
Corporation, G. James Roush, Sarah Roush Werner and Richard A.
Chenoweth (included as Annex C to the Joint Proxy Statement/Prospectus
contained in this Registration Statement).
</TABLE>
(b) Not applicable.
(c) Opinion of Goldman, Sachs & Co. (included as Annex B to the
Joint Proxy Statement/Prospectus contained in this Registration Statement).
Item 22. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) That prior to any public reoffering of the securities
registered hereunder through use of a prospectus which is a part of this
registration statement, by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c), the issuer undertakes
that such reoffering prospectus will contain the information called for
by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information
called for by the other items of the applicable form.
(2) That every prospectus (i) that is filed pursuant to
paragraph (1) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Securities Act of 1933
and is used in connection with an offering of securities subject to
Rule 415, will be filed as a part of an amendment to the registration
statement and will not be used until such amendment is effective, and
that, for purposes of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of
1934 (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(b) The undersigned registrant hereby undertakes to respond to
requests for information that is incorporated by reference into the Joint
Proxy Statement/Prospectus pursuant to Item 4, 10(b), 11 or 13 of this Form,
within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of responding to
the request.
(c) The undersigned registrant hereby undertakes to supply by
means of a post-effective amendment all information concerning a transaction,
and the company being acquired involved therein, that was not the subject of
and included in the registration statement when it became effective.
(d) 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.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Memphis,
State of Tennessee, on December 4, 1997.
FDX CORPORATION
(Registrant)
Date: December 4, 1997 By: /s/ George Hearn
---------------------------
Name: George Hearn
Title: President
---------------
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the following persons on
behalf of the Registrant in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- -------------------- ----------------------------- ------------------
<S> <C> <C>
/s/ George Hearn President, Director December 4, 1997
- --------------------
(George Hearn)
/s/ Scott E. Hansen Vice President and Secretary, December 4, 1997
- -------------------- Director
(Scott E. Hansen)
</TABLE>
EXHIBIT 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
of
FDX CORPORATION
FDX Corporation, a corporation organized and existing under the
laws of the State of Delaware (the "Corporation"), hereby certifies that the
Corporation was originally incorporated under the name "Fast Holding Inc." on
October 2, 1997, and that its original Certificate of Incorporation was filed
with the Secretary of State of the State of Delaware on the same date. The
Corporation further certifies that this Amended and Restated Certificate of
Incorporation amends, integrates and restates the provisions previously filed
with the Secretary of State of the State of Delaware.
ARTICLE FIRST: The name of the corporation is
FDX CORPORATION.
ARTICLE SECOND: The address of its registered office in the
State of Delaware is Corporation Service Company, 1013 Centre Road, City of
Wilmington, County of New Castle, Delaware 19805. The name of its registered
agent at such address is Corporation Service Company.
ARTICLE THIRD: The nature of the business or purposes to be
conducted or promoted is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of Delaware.
ARTICLE FOURTH: The total number of shares of all classes of
stock which the Corporation shall have authority to issue is 404,000,000
shares consisting of 4,000,000 shares of Series Preferred Stock, no par value
(herein called the "Series Preferred Stock"), and 400,000,000 shares of Common
Stock, par value $0.10 per share (herein called the "Common Stock").
The following is a statement of the powers, preferences and
rights, and the qualifications, limitations or restrictions thereof, in
respect of each class of stock of the Corporation:
I. SERIES PREFERRED STOCK
1. Conditions of Issuance. Series Preferred Stock may be
issued from time to time and in such amounts and for such consideration as may
be determined by the Board of Directors of the Corporation. The designation
and relative rights and preferences of each series, except to the extent such
designations and relative rights and preferences may be required by Delaware
law or this Amended and Restated Certificate of Incorporation, shall be such
as are fixed by the Board of Directors and stated in a resolution or
resolutions adopted by the Board of Directors authorizing such series (herein
called the "Series Resolution"). A Series Resolution authorizing any series
shall fix:
A. The designation of the series, which may be by
distinguishing number, letter or title;
B. The number of shares of such series;
C. The divided rate or rates of such shares, the date
at which dividends, if declared, shall be payable, and whether or not
such dividends are to be cumulative, in which case such Series
Resolution shall state the date or dates from which dividends shall be
cumulative;
D. The amounts payable on shares of such series in the
event of voluntary or involuntary liquidation, dissolution or winding
up;
E. The redemption rights and price or prices, if any,
for the shares of such series;
F. The terms and amount of any sinking fund or
analogous fund providing for the purchase or redemption of the shares
of such series, if any;
G. The voting rights, if any, granted to the holders
of the shares of such series in addition to those required by Delaware
law or this Amended and Restated Certificate of Incorporation;
H. Whether the shares of such series shall be
convertible into shares of the Corporation's Common Stock or any other
class of the Corporation's capital stock, and if convertible, the
conversion price or prices, any adjustment thereof and any other terms
and conditions upon which such conversion shall be made;
I. Any other rights, preferences, restrictions or
conditions relative to the shares of such series astray be permitted
by Delaware law or this Amended and Restated Certificate of
Incorporation.
2. Restrictions. In no event, so long as any Series
Preferred Stock shall remain outstanding, shall any dividend whatsoever be
declared or paid upon, nor shall any distribution be made upon, Common Stock,
other than a dividend or distribution payable in shares of such Common Stock,
nor (without the written consent of such number of the holders of the
outstanding Series Preferred Stock as shall have been specified in the Series
Resolution authorizing the issuance of such outstanding Series Preferred
Stock) shall any shares of Common Stock be purchased or redeemed by the
Corporation, nor shall any moneys be paid to or made available for a sinking
fund for the purchase or redemption of any Common Stock, unless in each
instance full dividends on all outstanding shares of the Series Preferred
Stock for all past dividend periods shall have been paid and the full dividend
on all outstanding shares of the Series Preferred Stock for the current
dividend period shall have been paid or declared and sufficient funds for the
payment thereof set apart and any arrears in the mandatory redemption of the
Series Preferred Stock shall have been made good.
3. Priority. Series Preferred Stock, with respect to both
dividends and distribution of assets on liquidation, dissolution or winding
up, shall rank prior to the Common Stock.
4. Voting Rights. Holders of Series Preferred Stock shall
have no right to vote for the election of Directors of the Corporation or on
any other matter unless a vote of such class is required by Delaware law, this
Amended and Restated Certificate of Incorporation or a Series Resolution.
5. Filing of Amendments. The Board of Directors shall adopt
amendments to this Amended and Restated Certificate of Incorporation fixing,
with respect to each series of Series Preferred Stock, the matters described in
paragraph 1 of this Subdivision I.
II. COMMON STOCK
All shares of Common Stock shall be identical and shall entitle
the holders thereof to the same rights and privileges.
1. Dividends. When and as dividends are declared upon the
Common Stock, whether payable in cash, in property or in shares of stock of
the Corporation, the holders of Common Stock shall be entitled to share
equally, share for share, in such dividends.
2. Voting Rights. The holders of Common Stock shall have the
sole right to vote for the election of Directors of the Corporation or on any
other matter unless required by Delaware law, this Amended and Restated
Certificate of Incorporation or a Series Resolution. The holders of Common
Stock shall be entitled to one vote for each share held.
III. OTHER PROVISIONS
1. No holder of any of the shares of any class or series of
stock or of options, warrants or other rights to purchase shares of any class
or series of stock or of other securities of the Corporation shall have any
pre-emptive right to purchase or subscribe for any unissued stock of any class
or series or any additional shares of any class or series to be issued by
reason of any increase of the authorized capital stock of the Corporation of
any class or series, or bonds, certificates of indebtedness, debentures or
other securities convertible into or exchangeable for stock of the Corporation
of any class or series, or carrying any right to purchase stock of any class
or series, but any such unissued stock, additional authorized issue of shares
of any class or series of stock or securities convertible into or exchangeable
for stock, or carrying any right to purchase stock, may be issued and disposed
of pursuant to resolution of the Board of Directors to such persons, firms,
corporations or associations, whether such holders or others, and upon such
terms as may be deemed advisable by the Board of Directors in the exercise of
its sole discretion.
2. Shares of Common Stock may be issued from time to time as
the Board of Directors of the Corporation shall determine and on such terms
and for such consideration as shall be fixed by the Board of Directors.
ARTICLE FIFTH: Certain Business Combinations
1. Higher Vote for Certain Business Combinations. In addition
to any affirmative vote of holders of a class or series of capital stock of
the Corporation required by law or this Amended and Restated Certificate of
Incorporation, and except as otherwise expressly provided in paragraph 2 of
this ARTICLE FIFTH, a Business Combination (as hereinafter defined) with or
upon a proposal by a Related Person (as hereinafter defined) shall require the
affirmative vote of the holders of at least 80% of the voting power of the
then outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of Directors (the "Voting Stock"). Such affirmative
vote shall be required notwithstanding the fact that no vote may be required
or that a lesser percentage may be specified, by law or in any agreement with
any national securities exchange or otherwise.
2. When Higher Vote is Not Required. The provisions of
paragraph 1 of this ARTICLE FIFTH shall not be applicable to a particular
Business Combination and such Business Combination shall require only such
affirmative vote as is required by law and other provisions of this Amended
and Restated Certificate of Incorporation, if all of the conditions specified
in either of the following paragraphs (A) or (B) are met:
(A) Approval by Directors. The Business Combination
has been approved by a majority of the Continuing Directors (as
hereinafter defined).
(B) Price and Procedure Conditions. All of the
following conditions shall have been met:
(1) The aggregate amount of the cash and the Fair
Market Value (as hereinafter defined) as of the date of the
consummation of the Business Combination of consideration other
than cash to be received per share by holders of Common Stock in
such Business Combination shall be at least equal to the higher
of the following:
(i) (if applicable) the highest per share
price (including any brokerage commissions, transfer taxes
and soliciting dealer's fees) paid by the Related Person for
any shares of Common Stock acquired by it (a) within the
two-year period immediately prior to the first public
announcement of the proposal of the Business Combination
(the "Announcement Date") or (b) in the transaction in which
it became a Related Person, whichever is higher; or
(ii) the Fair Market Value per share of Common
Stock on the Announcement Date or on the date on which the
Related Person became a Related Person (such latter date is
referred to in this ARTICLE FIFTH as the "Determination
Date"), whichever is higher; or
(2) The aggregate amount of the cash and the Fair Market Value
as of the date of the consummation of the Business Combination of
consideration other than cash to be received per share by holders of Shares
of any other class or series of outstanding Voting Stock shall be at least
equal to the highest of the following (it being intended that the requirements
of this-paragraph 2(B)(2) shall be required to be met with respect to every
class of outstanding Voting Stock whether or not the Related Person has
previously acquired any shares of a particular class of Voting Stock):
(i) (if applicable) the highest per share
price (including any broker commissions, transfer taxes and
soliciting dealers' fees), paid by the Related Person for
any shares of such class or series of Voting Stock acquired
by it (a) within the two-year period immediately prior to
the Announcement Date or (b) in the transaction in which it
became a Related Person, whichever is higher;
(ii) (if applicable) the highest preferential
amount per share to which the holders of shares of such
class or series of Voting Stock are entitled in the event of
any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation; and
(iii) the Fair Market Value per share of such
class or series of Voting Stock on the Announcement Date or
on the Determination Date, whichever is higher.
(3) The consideration to be received by holders of a particular
class or series of outstanding Voting Stock (including Common Stock) shall be
in cash or in the same form as the Related Person has previously paid for
shares of such class of Voting Stock. If the Related Person has paid for
shares of any class or series of Voting Stock with varying forms of
consideration, the form of consideration given for such class or series of
Voting Stock in the Business Combination shall be either cash or the form used
to acquire the largest number of shares of such class or series of Voting
Stock previously acquired by it.
(4) No Extraordinary Event (as hereinafter defined) shall have
occurred after the Related Person became a Related Person and prior to the
consummation of the Business Combination.
(5) A proxy or information statement describing the proposed
Business Combination and complying with the requirements of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder (or
any subsequent provisions replacing such Act, rules or regulations) is mailed
to public stockholders of the Corporation at least 30 days prior to the
consummation of such Business Combination (whether or not such proxy or
information statement is required pursuant to such Act or subsequent
provisions).
3. Certain Definitions. For purposes of this ARTICLE FIFTH:
(A) A "person" shall mean any individual, firm,
corporation or other entity.
(B) The term "Business Combination" shall mean any of the
following transactions, when entered into by the Corporation or a
subsidiary of the Corporation with, or upon a proposal by, a Related
Person or any other corporation (whether or not itself a Related
Person which is, or after such transaction would be, an Affiliate (as
hereinafter defined) of a Related Person:
(1) the merger or consolidation of the Corporation
or any subsidiary of the Corporation; or
(2) the sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one or a series of
transactions) of any assets of the Corporation or any subsidiary
of the Corporation having an aggregate Fair Market Value of
$5,000,000 or more;
(3) the issuance or transfer by the Corporation or
any subsidiary of the Corporation (in one or a series of
transactions) of securities of the Corporation or that subsidiary
having an aggregate Fair Market Value of $5,000,000 or more; or
(4) the adoption of a plan or proposal for the
liquidation or dissolution of the Corporation; or
(5) the reclassification of securities (including a
reverse stock split), recapitalization, consolidation or any
other transaction (whether or not involving a Related Person)
which has the direct or indirect effect of increasing the voting
power, whether or not then exercisable, of a Related Person in
any class or series of capital stock of the Corporation or any
subsidiary of the Corporation; or
(6) any agreement, contract or other arrangement
providing directly or indirectly for the foregoing.
(C) The term "Related Person" shall mean any person
(other than the Corporation, a subsidiary of the Corporation or any
profit sharing, employee stock ownership or other employee benefit
plan of the Corporation or a subsidiary of the Corporation or any
trustee of or fiduciary with respect to any such plan acting in such
capacity) which:
(1) is the beneficial owner, directly or indirectly,
of more than 10% of the voting power of the outstanding Voting
Stock, or
(2) is an Affiliate of the Corporation and at any
time within the two-year period immediately prior to the date in
question was the beneficial owner, directly or indirectly, of 10%
or more of the voting power of the then outstanding Voting Stock;
or
(3) is an assignee of or has otherwise succeeded to
any shares of Voting Stock which were at any time within the two-
year period immediately prior to the date in question beneficially
owned by any Related Person, if such assignment or succession
shall have occurred in the course of a transaction or series of
transactions not involving a public offering within the meaning
of the Securities Act of 1933.
(D) A person shall be a "beneficial owner" of any
Voting Stock:
(1) which such person or any of its Affiliates or
Associates (as hereinafter defined) beneficially owns, directly or
indirectly; or
(2) which such person or any of its Affiliates or
Associates has (i) the right to acquire (whether such right is
exercisable immediately or only after the passage of time), pursuant
to any agreement, arrangement or understanding or upon the
exercise of conversion rights, exchange rights, warrants or
options, or otherwise, or (ii) the right to vote pursuant to any
agreement, arrangement or understanding; or
(3) which are beneficially owned, directly or
indirectly by any other person with which such person or any of
its Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of any shares of Voting Stock.
For the purposes of determining whether a person is a Related
Person pursuant to subparagraph (C) of this paragraph 3, the number
of shares of Voting Stock deemed to be outstanding shall include
shares deemed owned through application of subparagraph (D) of this
paragraph 3 but shall not include any other shares of Voting Stock
which may be issuable pursuant to any agreement, arrangement or
understanding, or upon exercise of conversion rights, warrants or
options, or otherwise.
(E) The term "Continuing Director" shall mean any
member of the Board of Directors who is not affiliated with a Related
Person and who was a member of the Board of Directors immediately
prior to the time that the Related Person became a Related Person, and
any successor to a Continuing Director who is not affiliated with the
Related Person and is recommended to succeed a Continuing Director by
a majority of Continuing Directors who are then members of the Board
of Directors.
(F) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 under the Securities
Exchange Act of 1934, as in effect on August 1, 1984.
(G) The term "Extraordinary Event" shall mean, as to
any Business Combination and Related Person, any of the following
events that is not approved by a majority of the Continuing Directors:
(1) any failure to declare and pay at the regular
date therefor any full quarterly dividend (whether or not
cumulative) on outstanding Preferred or Preference Stock; or
(2) any reduction in the annual rate of dividends
paid on the Common Stock (except as necessary to reflect any
subdivision of the Common Stock); or
(3) any failure to increase the annual rate of
dividends paid on the Common Stock as necessary to reflect any
reclassification, (including any reverse stock split),
recapitalization, reorganization or any similar transaction that
has the effect of reducing the number of outstanding shares of
the Common Stock; or
(4) any Related Person shall become the beneficial
owner of any additional shares of Voting Stock except as part of
the transaction which resulted in such Related Person becoming a
Related Person; or
(5) the receipt by the Related Person, after such
Person has become a Related Person, of a direct or indirect
benefit (except proportionately as a shareholder) from any loans,
advances, guarantees, pledges or other financial assistance or
any tax credits or other tax advantages provided by the
Corporation or any subsidiary of the Corporation, whether in
anticipation of or in connection with the Business Combination or
otherwise.
(H) "Fair Market Value" means: (i) in the case of
stock, the highest closing sale price during the 30-day period
immediately preceding the date in question of a share of such stock on
the Composite Tape for New York Stock Exchange-Listed Stocks, or, if
such stock is not quoted on the Composite Tape, on the New York Stock
Exchange, or, if such stock is not listed on such Exchange, on the
principal United States securities exchange registered under the
Securities Exchange Act of 1934 on which such stock is listed, or, if
such stock is not listed on any such exchange, the highest closing bid
quotation with respect to a share of such stock during the 30-day
period preceding the date in question on the National Association of
Securities Dealers, Inc. Automated Quotations System or any system
then in use, or if no such quotations are available, the fair market
value on the date in question of a share of such stock as determined
by the Board of Directors in good faith; and (ii) in the case of
property other than cash or stock, the fair market value of such
property on the date in question as determined by the Board of
Directors in good faith.
(I) In the event of any Business Combination in which
the Corporation survives, the phrase "consideration other than cash to
be received" as used in subparagraphs B(1) and (2) of paragraph 2 of
this ARTICLE FIFTH shall include the shares of Common Stock and/or the
shares of any other class of outstanding Voting Stock retained by the
holders of such shares.
4. Powers of the Board of Directors. A majority of all
Continuing Directors shall have the power to make all determinations with
respect to this ARTICLE FIFTH, on the basis of information known to them after
reasonable inquiry, including, without limitation, the transactions that are
Business Combinations, the persons who are Related Persons, the number of
shares of Voting Stock owned by any person, the time at which a Related Person
becomes a Related Person and the Fair Market Value of any assets, securities
or other property, and any such determinations of such Directors shall be
conclusive and binding.
5. No Effect on Fiduciary Obligations of Related Persons.
Nothing contained in this ARTICLE FIFTH shall be construed to relieve any
Related Person from any fiduciary obligation imposed by law.
6. Amendment or Repeal. The affirmative vote of the holders
of not less than 80% of the total voting power of the Voting Stock of the
Corporation, voting together as a single class, shall be required in order to
amend, repeal or adopt any provision inconsistent with this ARTICLE FIFTH.
ARTICLE SIXTH: In addition to any affirmative vote of holders
of a class or series of capital stock of the Corporation required by law or
this Amended and Restated Certificate of Incorporation, unless the Business
Combination (as defined in ARTICLE FIFTH of this Amended and Restated
Certificate of Incorporation) has been approved by a majority of the
Continuing Directors (as defined in ARTICLE FIFTH of this Amended and Restated
Certificate of Incorporation), a Business Combination with or upon a proposal
by a Related Person (as defined in ARTICLE FIFTH of this Amended and Restated
Certificate of Incorporation) shall require the affirmative vote of the
holders of not less than a majority of the Voting Stock (as defined in ARTICLE
FIFTH of this Amended and Restated Certificate of Incorporation) beneficially
owned by stockholders other than such Related Person. Such affirmative vote
shall be required notwithstanding the fact that no vote may be required or
that a lesser percentage may be specified by law or in any agreement with any
national securities exchange or otherwise.
The affirmative vote of the holders, other than the Related
Person proposing the amendment, repeal or adoption of any provision
inconsistent with this ARTICLE SIXTH, of not less than a majority of the
Voting Stock of the Corporation, voting together as a single class, shall be
required in order to amend, repeal or adopt any provision inconsistent with
this ARTICLE SIXTH.
ARTICLE SEVENTH: The corporation is to have perpetual
existence.
ARTICLE EIGHTH: In furtherance and not in limitation of the
powers conferred by statute, the Board of Directors is expressly authorized:
The Board of Directors shall have power to make, alter, amend
and repeal the By-laws (except so far as the By-laws adopted by the
stockholders shall otherwise provide). Any By-laws made by the Directors
under the powers conferred hereby may be altered, amended or repealed by the
Directors or by the stockholders. Notwithstanding the foregoing and anything
contained in this Amended and Restated Certificate of Incorporation to the
contrary, Sections 5 and 11 of Article II of the By-laws shall not be altered,
amended or repealed and no provision inconsistent therewith shall be adopted
without the affirmative vote of the holders of at least 80% of the voting
power of all the shares of the Corporation entitled to vote generally in the
election of Directors, voting together as a single class. Notwithstanding
anything contained in this Amended and Restated Certificate of Incorporation
to the contrary, the affirmative vote of the holders of at least 80% of the
voting power of all shares of the Corporation entitled to vote generally in
the election of Directors, voting together as a single class, shall be
required to alter, amend, adopt any provision inconsistent with or repeal this
ARTICLE EIGHTH.
To authorize and cause to be executed mortgages and liens upon
the real and personal property of the Corporation.
To set apart out of any of the funds of the Corporation
available for dividends a reserve or reserves for any proper purpose and to
abolish any such reserve in the manner in which it was created.
By a majority of the whole Board, to designate one or more
committees, each committee to consist of one or more of the Directors of the
Corporation. The Board may designate one or more Directors as alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of the committee. The By-laws may provide that in the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board
of Directors to act at the meeting in the place of any such absent or
disqualified member. Any such committee, to the extent provided in the
resolution of the Board of Directors, or in the By-laws of the Corporation,
shall have and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the Corporation,
and may authorize the seal of the Corporation to be affixed to all papers
which may require it; but no such committee shall have the power or authority
in reference to amending the Amended and Restated Certificate of
Incorporation, adopting an agreement of merger or consolidation, recommending
to the stockholders the sale, lease or exchange of all or substantially all of
the Corporation's property and assets, recommending to the stockholders a
dissolution of the Corporation or a revocation of a dissolution, or amending
the By-laws of the Corporation; and, unless the resolution or By-laws
expressly so provide, no such committee shall have the power or authority to
declare a dividend or to authorize the issuance of stock.
When and as authorized by the stockholders in accordance with
statute, to sell, lease or exchange all or substantially all of the property
and assets of the Corporation, including its good will and its corporate
franchises, upon such terms and conditions and for such consideration, which
may consist in whole or in part of money or property including shares of stock
in, and/or other securities of, any other corporation or corporations, as its
Board of Directors shall deem expedient and for the best interests of the
Corporation.
ARTICLE NINTH: Whenever a compromise or arrangement is
proposed between this Corporation and its creditors or any class of them
and/or between this Corporation and its stockholders or any class of them, any
court of equitable jurisdiction within the State of Delaware may, on the
application in a summary way of this Corporation or of any creditor or
stockholder thereof, or on the application of any receiver or receivers
appointed for this Corporation under the provisions of Section 291 of Title 8
of the Delaware Code or on the application of trustees in dissolution or of any
receiver or receivers appointed for this Corporation under the provisions of
Section 279 of Title 8 of the Delaware Code order a meeting of the creditors
or class of creditors and/or of the stockholders/or class stockholders of this
Corporation, as the case may be, to be summoned in such manner as the said
court directs. If a majority in number representing three-fourths in value
of the creditors or class of creditors and/or of the stockholders or class
of stockholders of this Corporation, as the case may be, agree to any
compromise or arrangement and to any reorganization of this Corporation as
consequence of such compromise or arrangement, the said compromise or
arrangement and the said reorganization shall, if sanctioned by the court
to which the said application has been made, be binding on all the
creditors or class of creditors and/or on all the stockholders or class of
stockholders of this Corporation, as the case may be, and also on this
Corporation.
ARTICLE TENTH: Meetings of stockholders may be held within or
without the State of Delaware, as the By-laws may provide. The books of the
Corporation may be kept (subject to any provision contained in the statutes)
outside the State of Delaware at such place or places as may be designated
from time to time by the Board of Directors or in the By-laws of the
Corporation. Elections of Directors need not be by written ballot unless
the By-laws of the Corporation shall so provide.
ARTICLE ELEVENTH: The Corporation reserves the right to amend,
alter, change or repeal any provision contained in this Amended and Restated
Certificate of Incorporation, in the manner now or hereafter prescribed by
statute, and all rights conferred upon stockholders herein are granted subject
to this reservation.
ARTICLE TWELFTH: Any action required or permitted to be taken
by the stockholders of the Corporation must be effected at a duly called
annual or special meeting of such holders and may not be effected by any
consent in writing by such holders. Except as otherwise required by law and
subject to the rights of the holders of any class or series of stock having a
preference over the Common Stock as to dividends or upon liquidation, special
meetings of stockholders of the Corporation may be called only by the Board of
Directors pursuant to a resolution approved by a majority of the entire Board
of Directors. Notwithstanding anything contained in this Amended and Restated
Certificate of Incorporation to the contrary, the affirmative vote of the
holders of at least 80% of the voting power of all shares of the Corporation
entitled to vote generally in the election of Directors, voting together as a
single class, shall be required to alter, amend, adopt any provision
inconsistent with or repeal this ARTICLE TWELFTH.
ARTICLE THIRTEENTH: No Director shall be personally liable to
the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a Director, provided that this ARTICLE THIRTEENTH shall not
eliminate or limit the liability of a Director (i) for any breach of the
Director's duty of loyalty to the Corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or
a knowing violation of law, (iii) under Section 174 of Title 8 of the Delaware
Code or any amendment or successor provision thereto, or (iv) for any
transaction from which the Director derived an improper personal benefit.
This ARTICLE THIRTEENTH shall not eliminate or limit the liability of a
Director for any act or omission occurring prior to the date when this ARTICLE
THIRTEENTH becomes effective. Neither the amendment nor repeal of this
ARTICLE THIRTEENTH, nor the adoption of any provision of the Amended and
Restated Certificate of Incorporation inconsistent with this ARTICLE
THIRTEENTH shall eliminate or reduce the effect of this ARTICLE THIRTEENTH
with respect to any matter occurring, or any cause of action, suit or claim
that, but for this ARTICLE THIRTEENTH, would accrue or arise prior to such
amendment, repeal or adoption of an inconsistent provision.
* * * *
This Amended and Restated Certificate of Incorporation was
duly adopted in accordance with the provisions of Section 242 and 245 of
the General Corporation Law of the State of Delaware.
The Board of Directors of the Corporation approved the
Corporation's Amended and Restated Certificate of Incorporation as set forth
herein pursuant to a Consent in Lieu of Meeting of the Board of Directors
effective as of December 2, 1997.
Federal Express Corporation, the holder of all of the
outstanding stock of the Corporation, acting by written consent pursuant to
Section 228(a) of the General Corporation Law of the State of Delaware,
approved the Amended and Restated Certificate of Incorporation as set forth
herein as of December 2, 1997
FDX CORPORATION
By: /s/ George Hearn
----------------------------
(Corporate Seal) George Hearn
President
ATTEST:
/s/ Scott E. Hansen
- -----------------------------
Scott E. Hansen
Vice President and Secretary
EXHIBIT 3.2
FDX CORPORATION
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AMENDED AND RESTATED
B Y - L A W S
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ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of
Wilmington, County of New Castle, State of Delaware.
Section 2. The corporation may also have offices at such
other places both within and without the State of Delaware as the board of
directors may from time to time determine or the business of the corporation
may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election
of directors shall be held in the City of Memphis, State of Tennessee, at such
place as may be fixed from time to time by the board of directors, or at such
other place either within or without the State of Delaware as shall be
designated from time to time by the board of directors and stated in the
notice of the meeting. Meetings of stockholders for any other purpose may be
held at such time and place, within or without the State of Delaware, as shall
be stated in the notice of the meeting or in a duly executed waiver of notice
thereof.
Section 2. Annual meetings of stockholders, commencing with
the year 1998, shall be held on the last Monday of September if not a legal
holiday, and if a legal holiday, then on the next secular day following, at
10:00 A.M., or at such other date and time as shall be designated from time to
time by the board of directors and stated in the notice of the meeting, at
which they shall elect by a plurality vote the class of the board of directors
then scheduled to stand for election as provided in Section 1 of Article III
herein and transact such other business as may properly be brought before the
meeting.
Section 3. Written notice of the annual meeting stating the
place, date and hour of the meeting shall be given to each stockholder
entitled to vote at such meeting not less than ten nor more than sixty days
before the date of the meeting.
Section 4. The officer who has charge of the stock ledger of
the corporation shall prepare and make, at least ten days before every meeting
of stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for the purpose germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place
of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
Section 5. Special meetings of the stockholders, for any
purpose or purposes, unless otherwise prescribed by statute or by the
certificate of incorporation, may be called by the chairman of the board and
chief executive officer and shall be called by the chairman of the board and
chief executive officer or secretary at the request in writing of a majority
of the board of directors. Such request shall state the purpose or purposes
of the proposed meeting.
Section 6. Written notice of a special meeting stating the
place, date and hour of the meeting and the purpose or purposes for which the
meeting is called shall be given not less than ten nor more than sixty days
before the date of the meeting to each stockholder entitled to vote at such
meeting.
Section 7. Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum shall not be present
or represented at any meeting of the stockholders, the stockholders entitled
to vote thereat, present in person or represented by proxy, shall have power
to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented.
At such adjourned meeting at which a quorum shall be present or represented
any business may be transacted which might have been transacted at the meeting
as originally notified. If the adjournment is for more than thirty days, or
if after the adjournment a new record date is fixed for the adjourned meeting,
a notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote
of the holders of a majority of the stock having voting power present in
person or represented by proxy shall decide any question brought before such
meeting, unless the question is one upon which by express provision of the
statute or of the certificate of incorporation a different vote is required,
in which case such express provision shall govern and control the decision of
such question.
Section 10. Unless otherwise provided in the certificate of
incorporation, each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such stockholder, but no proxy shall be voted on
after three years from its date, unless the proxy provides for a longer period.
Section 11. Any action required or permitted to be taken by
the stockholders of the corporation must be effected at a duly called annual
or special meeting of such holders and may not be effected by any consent in
writing by such holders. Except as otherwise required by law and subject to
the rights of the holders of any class or series of stock having a preference
over the common stock of the corporation as to dividends or upon liquidation,
special meetings of stockholders of the corporation may be called only by the
board of directors pursuant to a resolution approved by a majority of the
entire board of directors.
ARTICLE III
DIRECTORS
Section 1. Subject to the provisions of any resolution or
resolutions of the board of directors providing for the issuance of any series
of preferred stock pursuant to article fourth of the certificate of
incorporation, the number of directors which shall constitute the whole board
shall be not less than nine or more than fifteen and the board of directors
shall be divided into three classes as nearly equal in number as possible, as
determined by the board of directors. The terms of office of the directors
originally classified shall be as follows: that of Class III shall expire at
the next annual meeting of stockholders in 1998, Class I at the second
succeeding annual meeting of stockholders in 1999 and Class II at the third
succeeding annual meeting of stockholders in 2000. At each annual meeting of
stockholders after such original classification, directors chosen to succeed
those whose terms then expire shall be elected for a term of office expiring
at the third succeeding annual meeting of stockholders after their election.
Subject to the provisions of any resolution or resolutions of the board of
directors providing for the issuance of any series of preferred stock pursuant
to article fourth of the certificate of incorporation, if the number of
directors is increased by the board of directors and any newly created
directorships are filled by the board of directors, as provided in Section 2
of this Article, such additional directors shall be classified by the board of
directors as provided above so that the three classes remain as nearly equal
in number as possible and shall hold office until the next election of the
class for which such directors shall have been chosen and until their
successors shall have been elected and qualified. Directors elected by the
board of directors, as provided in Section 2 of this Article, to fill a
vacancy shall hold office for a term expiring at the annual meeting at which
the term of the class to which they shall have been elected expires. The
foregoing notwithstanding, each director shall serve until his successor shall
have been duly elected and qualified, unless he shall resign, become
disqualified, disabled or shall otherwise be removed. No decrease in the
number of directors constituting the board of directors shall shorten the term
of any incumbent director.
Section 2. Subject to the provisions of any resolution or
resolutions of the board of directors providing for the issuance of any series
of preferred stock pursuant to article fourth of the certificate of
incorporation, vacancies and newly created directorships resulting from an
increase in the authorized number of directors shall be filled by a majority
of the directors then in office, though less than a quorum, or by a sole
remaining director, and the directors so chosen shall hold office until the
next election of the class for which they shall have been chosen and until
their successors are duly elected and shall qualify, unless sooner displaced.
If there are no directors in office, then an election of directors may be held
in the manner provided by statute. If, at the time of filling any vacancy or
any newly created directorship, the directors then in office shall constitute
less than a majority of the whole board (as constituted immediately prior to
any such increase), the Court of Chancery may, upon application of any
stockholder or stockholders holding at least ten percent of the total number
of shares at the time outstanding having the right to vote for such directors,
summarily order an election to be held to fill any such vacancies or newly
created directorships, or to replace the directors chosen by the directors
then in office.
Section 3. The business of the corporation shall be managed by
its board of directors which may exercise all such powers of the corporation
and do all such lawful acts and things as are not by statute or by the
certificate of incorporation or by these by-laws directed or required to be
exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The board of directors of the corporation may hold
meetings, both regular and special, either within or without the State of
Delaware.
Section 5. The first meeting of each newly elected board of
directors shall be held at such time and place as shall be fixed by the vote
of the stockholders at the annual meeting and no notice of such meeting shall
be necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event of the failure of
the stockholders to fix the time or place of such first meeting of the newly
elected board of directors, or in the event such meeting is not held at the
time and place so fixed by the stockholders, the meeting may be held at such
time and place as shall be specified in a notice given as hereinafter provided
for special meetings of the board of directors, or as shall be specified in a
written waiver signed by all of the directors.
Section 6. Regular meetings of the board of directors may be
held without notice at such time and at such place as shall from time to time
be determined by the board.
Section 7. Special meetings of the board may be called by the
chairman of the board and chief executive officer on one day's notice to each
director, either personally or by mail or by telegram; special meetings shall
be called by the chairman of the board and chief executive officer or
secretary in like manner and on like notice on the written request of two
directors.
Section 8. At all meetings of the board a majority of
directors shall constitute a quorum for the transaction of business and the
act of a majority of the directors present at any meeting at which there is a
quorum shall be the act of the board of directors, except as may be otherwise
specifically provided by statute or by the certificate of incorporation. If a
quorum shall not be present at any meeting of the board of directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 9. Unless otherwise restricted by the certificate of
incorporation or these by-laws, any action required or permitted to be taken
at any meeting of the board of directors or of any committee thereof may be
taken without a meeting, if all members of the board or committee, as the case
may be, consent thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the board or committee.
COMMITTEES OF DIRECTORS
Section 10. The board of directors may, by resolution passed
by a majority of the whole board, designate one or more committees, each
committee to consist of one or more of the directors of the corporation. The
board may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. In the absence or disqualification of a member of a committee,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the board of directors to act at the meeting in the place of
any such absent or disqualified member. Any such committee, to the extent
provided in the resolution of the board of directors, shall have and may
exercise all the powers and authority of the board of directors in the
management of the business and affairs of the corporation, and may authorize
the seal of the corporation to be affixed to all papers which may require it;
but no such committee shall have the power or authority in reference to
amending the certificate of incorporation, adopting an agreement of merger or
consolidation, recommending to the stockholders the sale, lease or exchange of
all or substantially all of the corporation's property and assets,
recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution, or amending the by-laws of the corporation; and,
unless the resolution or the certificate of incorporation expressly so
provide, no such committee shall have the power or authority to declare a
dividend or to authorize the issuance of stock. Such committee or committees
shall have such name or names as may be determined from time to time by
resolution adopted by the board of directors.
Section 11. Each committee shall keep regular minutes of its
meetings and report the same to the board of directors when required.
COMPENSATION OF DIRECTORS
Section 12. Unless otherwise restricted by the certificate of
incorporation, the board of directors shall have the authority to fix the
compensation of directors. The directors may be paid their expenses, if any,
of attendance at each meeting of the board of directors and may be paid a
fixed sum for attendance at each meeting of the board of directors and/or a
stated salary as director. No such payment shall preclude any director from
serving the corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees may be allowed like
compensation for attending committee meetings.
INDEMNIFICATION
Section 13. The corporation shall indemnify to the full extent
authorized or permitted by the General Corporation Law of the State of
Delaware any person made, or threatened to be made, a party to any threatened,
pending or completed action, suit or proceeding (whether civil, criminal,
administrative or investigative) by reason of the fact that he, his testator
or intestate is or was a director of the corporation or serves or served as a
director, officer, employee or agent of any other enterprise at the request of
the corporation.
MANDATORY RESIGNATION
Section 14. Directors who are also officers of the corporation
shall submit a letter of resignation as such to the board of directors upon
any termination of employment as an officer of the company and directors who
are not officers of the corporation shall likewise submit a letter of
resignation upon any change in that director's principal business or other
activity in which the director was engaged at the time of his or her election.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or
of the certificate of incorporation or of these by-laws, notice is required to
be given to any director or stockholder, it shall not be construed to mean
personal notice, but such notice may be given in writing, by mail, addressed
to such director or stockholder, at his address as it appears on the records
of the corporation, with postage thereon prepaid, and such notice shall be
deemed to be given at the time when the same shall be deposited in the United
States mail. Notice to directors may also be given by telegram.
Section 2. Whenever any notice is required to be given under
the provisions of the statutes or of the certificate of incorporation or of
these by-laws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein,
shall be deemed equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by
the board of directors and shall be a chairman of the board and chief
executive officer, a vice-chairman, a president and chief operating officer, a
vice-president, a secretary and a treasurer. The board of directors may also
choose additional vice-presidents, and one or more assistant secretaries and
assistant treasurers. Any number of offices may be held by the same person,
unless the certificate of incorporation or these by-laws otherwise provide.
Section 2. The board of directors at its first meeting after
each annual meeting of stockholders shall choose a chairman of the board and
chief executive officer, a vice-chairman, a president and chief operating
officer, one or more vice-presidents, a secretary and a treasurer.
Section 3. The board of directors may appoint such other
officers and agents as it shall deem necessary who shall hold their offices
for such terms and shall exercise such powers and perform such duties as shall
be determined from time to time by the board.
Section 4. The salaries of all officers and agents of the
corporation shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office
until their successors are chosen and qualify. Any officer elected or
appointed by the board of directors may be removed at any time by the
affirmative vote of a majority of the board of directors. Any vacancy
occurring in any office of the corporation shall be filled by the board of
directors.
THE CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
Section 6. The chairman of the board and chief executive
officer shall be the chief executive officer of the corporation, shall preside
at all meetings of the stockholders and the board of directors, shall have
general and active management of the business of the corporation and shall see
that all orders and resolutions of the board of directors are carried into
effect.
Section 7. He shall execute bonds, mortgagee and other
contracts requiring a seal, under the seal of the corporation, except where
required or permitted by law to be otherwise signed and executed and except
where the signing and execution thereof shall be expressly delegated by the
board of directors to some other officer or agent of the corporation.
THE VICE-CHAIRMAN
Section 8. In the absence of the chairman of the board and
chief executive officer or in the event of his inability or refusal to act,
the vice-chairman shall perform the duties of the chairman of the board and
chief executive officer and, when so acting, shall have all the powers of and
be subject to all the restrictions upon the chairman of the board and chief
executive officer. The vice-chairman shall perform such other duties and
shall have such other powers as the board of directors may from time to time
prescribe.
THE PRESIDENT AND
CHIEF OPERATING OFFICER
Section 9. The president and chief operating officer shall be
the chief operating officer of the corporation and shall perform such duties
as shall be prescribed to him from time to time by the board of directors.
Section 10. In the absence of the chairman of the board and
chief executive officer or the vice-chairman, or in the event of his or their
inability or refusal to act, the president and chief operating officer shall
perform the duties of the chairman of the board and chief executive officer,
and when so acting, shall have all the powers of and be subject to all of the
restrictions upon the chairman of the board and chief executive officer.
THE VICE-PRESIDENTS
Section 11. In the absence of the president and chief
operating officer or in the event of his inability or refusal to act, the
vice-president (or in the event there be more than one vice-president, the
vice-presidents in the order designated, or in the absence of any designation,
then in the order of their election) shall perform the duties of the president
and chief operating officer and, when so acting, shall have all the powers of
and be subject to all the restrictions upon the president and chief operating
officer. The vice-presidents shall perform such other duties and have such
other powers as the board of directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 12. The secretary shall attend all meetings of the
board of directors and all meetings of the stockholders and record all the
proceedings of the meetings of the corporation and of the board of directors
in a book to be kept for that purpose and shall perform like duties for the
standing committees when required. He shall give, or cause to be given,
notice of all meetings of the stockholders and special meetings of the board
of directors, and shall perform such other duties as may be prescribed by the
board of directors or president, under whose supervision he shall be. He shall
have custody of the corporate seal of the corporation and he, or an assistant
secretary, shall have authority to affix the same to any instrument requiring
it and when so affixed, it may be attested by his signature or by the
signature of such assistant secretary. The board of directors may give
general authority to any other officer to affix the seal of the corporation
and to attest the affixing by a signature.
Section 13. The assistant secretary, or if there be more than
one, the assistant secretaries in the order determined by the board of
directors (or if there be no such determination, then in the order of their
election), shall, in the absence of the secretary or in the event of a
inability or refusal to act, perform the duties and exercise the powers of the
secretary and shall perform such other duties and have such other powers as
the board of directors may from time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 14. The treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the board of
directors.
Section 15. He shall disburse the funds of the corporation as
may be ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors,
at its regular meetings, or when the board of directors so requires, an
account of all his transactions as treasurer and of the financial condition of
the corporation.
Section 16. If required by the board of directors, he shall
give the corporation a bond (which shall be renewed every six years) in such
sum and with such surety or sureties as shall be satisfactory to the board of
directors for the faithful performance of the duties of his office and for the
restoration to the corporation, in case of his death, resignation, retirement
or removal from office, of all books, papers, vouchers, money and other
property of whatever kind in his possession or under a control belonging to
the corporation.
Section 17. The assistant treasurer, or if there shall be more
than one, the assistant treasurers in the order determined by the board of
directors (or if there be no such determination, then in the order of their
election), shall, in the absence of the treasurer or in the event of his
inability or refusal to act, perform the duties and exercise the powers of the
treasurer and shall perform such other duties and have such other powers as
the board of directors may from time to time prescribe.
INDEMNIFICATION
Section 18. The corporation shall indemnify to the full extent
authorized or permitted by the General Corporation Law of the State of
Delaware any person made, or threatened to be made, a party to any threatened,
pending or completed action, suit or proceeding (whether civil, criminal,
administrative or investigative) by reason of the fact that he, his testator
or intestate is or was an officer or Managing Director of the corporation or
serves or served as a director, officer, employee or agent of any other
enterprise at the request of the corporation.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Every holder of stock in the corporation shall be
entitled to have a certificate signed by, or in the name of the corporation
by, the chairman of the board and chief executive officer or the president and
chief operating officer or a vice-president and the treasurer or an assistant
treasurer, or the secretary or an assistant secretary of the corporation,
certifying the number of shares owned by him in the corporation.
Section 2. Where a certificate is countersigned (1) by a
transfer agent other than the corporation or its employee, or (2) by a
registrar other than the corporation or its employee, any other signature on
the certificate may be facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the corporation with
the same effect as if he were such officer, transfer agent or registrar at the
date of issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate
or certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing
such issue of a new certificate or certificates, the board of directors may,
in its discretion and as a condition precedent to the issuance thereof,
require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such
manner as it shall require and/or to give the corporation a bond in such sum
as it may direct as indemnity against any claim that may be made against the
corporation with respect to the certificate alleged to have been lost, stolen
or destroyed.
TRANSFERS OF STOCK
Section 4. Upon surrender to the corporation or the transfer
agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the corporation to issue a new certificate
to the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
FIXING RECORD DATE
Section 5. In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, or to express consent to corporate action in
writing without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the board of directors may fix, in
advance, a record date, which shall not be more than sixty nor less than ten
days before the date of such meeting, nor more than sixty days prior to any
other action. A determination of stockholders of record entitled to notice of
or to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the board of directors may fix a new record
date for the adjourned meeting.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation
subject to the provisions of the certificate of incorporation if any, may be
declared by the board of directors at any regular or special meeting, pursuant
to law. Dividends may be paid in cash, in property, or in shares of the
capital stock, subject to the provisions of the certificate of incorporation.
Section 2. Before payment of any dividend, there may be set
aside out of any funds of the corporation available for dividends such sum or
sums as the directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the corporation, or
for such other purpose as the directors shall think conducive to the interest
of the corporation, and the directors may modify or abolish any such reserve
in the manner in which it was created.
ANNUAL STATEMENT
Section 3. The board of directors shall present at each annual
meeting, and at any special meeting of the stockholders when called for by
vote of the stockholders, a full and clear statement of the business and
condition of the corporation.
CHECKS
Section 4. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person
or persons as the board of directors may from time to time designate.
FISCAL YEAR
Section 5. The fiscal year of the corporation shall be fixed
by resolution of the board of directors.
SEAL
Section 6. The corporate seal shall have inscribed thereon the
name of the corporation, the year of its organization and the words "Corporate
Seal, Delaware." The seal may be used by causing it or a facsimile thereof to
be impressed or affixed or reproduced or otherwise.
ARTICLE VIII
AMENDMENTS
Section 1. Subject to the provisions of the certificate of
incorporation of the corporation, these by-laws may be altered, amended, or
repealed or new by-laws may be adopted by the stockholders or by the board of
directors, when such power is conferred upon the board of directors by the
certificate of incorporation, at any regular meeting of the stockholders or of
the board of directors or at any special meeting of the stockholders or of the
board of directors if notice of such alteration, amendment, repeal or adoption
of new by-laws is contained in the notice of such special meeting.
Notwithstanding the foregoing and anything contained in these bylaws to the
contrary, Sections 1 and 2 of Article III herein shall not be altered, amended
or repealed and no provision inconsistent therewith shall be adopted without
the affirmative vote of the holders of at least 80% of the voting power of all
the shares of the corporation entitled to vote generally in the election of
directors, voting together as a single class. Notwithstanding anything
contained in these by-laws to the contrary, the affirmative vote of the
holders of at least 80% of the voting power of all shares of the corporation
entitled to vote generally in the election of directors, voting together as a
single class, shall be required to alter, amend, adopt any provision
inconsistent with or repeal this Article VIII.
EXHIBIT 5.1
[Letterhead of Davis Polk & Wardwell]
December 4, 1997
Caliber System, Inc.
3925 Embassy Parkway
Akron, Ohio 44333
Dear Sirs:
We have acted as counsel to FDX Corporation ("FDX") in
connection with the merger of a subsidiary of FDX with and into Caliber
System, Inc. ("Caliber") and the merger of another subsidiary of FDX with and
into Federal Express Corporation ("FedEx") (collectively, the "Mergers")
pursuant to the terms of the Agreement and Plan of Merger dated as of October
5, 1997, among FDX, FedEx, Caliber, Tires Merger Sub Inc. and Fast Merger Sub
Inc. (the "Merger Agreement") and the preparation and filing of FDX's
Registration Statement on Form S-4 (the "Registration Statement") filed with
the Securities and Exchange Commission under the Securities Act of 1933, as
amended (the "Securities Act"), relating to the registration by FDX of shares
(the "Shares") of common stock, par value $0.10 per share, of FDX to be issued
in the Mergers.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates and other instruments, and have conducted such other
investigations of fact and law, as we have deemed necessary or advisable for
the purposes of this opinion.
In rendering this opinion we have assumed that prior to the
issuance of any of the Shares (i) the Registration Statement, as then amended,
will have become effective under the Securities Act, (ii) the stockholders of
FDX will have approved the issuance of the Shares in connection with the
Mergers in accordance with the General Corporation Law of Delaware, (iii) the
stockholders of Caliber will have approved and adopted the Merger Agreement in
accordance with the General Corporation Law of Ohio and (iv) the transactions
contemplated by the Merger Agreement will have been consummated in accordance
with the terms of the Merger Agreement.
On the basis of the foregoing, we are of the opinion that the
Shares have been duly authorized and the Shares, when issued and delivered in
accordance with the terms and conditions of the Merger Agreement, will have
been validly issued, fully paid and non-assessable.
We are members of the Bar of the State of New York and the
foregoing opinion is limited to the laws of the State of New York, the federal
laws of the United States of America and the General Corporation Law of the
State of Delaware.
This letter is furnished to you solely for use in connection
with the Mergers and may not be used for any other purpose without our express
permission. We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement. In addition, we consent to the reference to us
under the caption "Legal Matters" in the Proxy Statement/Prospectus
constituting a part of the Registration Statement. In giving such consent we
do not thereby admit that we are in the category of persons whose consent is
required under Section 7 of the Securities Act or the rules and regulation
promulgated thereunder
Very truly yours,
/s/ Davis Polk & Wardwell
EXHIBIT 15.1
[Arthur Andersen LLP Letterhead]
Federal Express Corporation:
We are aware that Federal Express Corporation has incorporated by reference in
this Amendment No. 1 to Form S-4 Registration Statement its Form 10-Q for the
quarter ended August 31, 1997, which includes our report dated October 6, 1997
covering the unaudited interim financial information contained therein.
Pursuant to Regulation C of the Securities Act of 1933, that report is not
considered a part of the registration statement prepared or certified by our
firm or a report prepared or certified by our firm within the meaning of
Sections 7 and 11 of the Act.
Very truly yours,
Arthur Andersen LLP
Memphis, Tennessee
December 1, 1997
EXHIBIT 23.1
[Arthur Andersen LLP Letterhead]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in the Joint Proxy Statement/Prospectus
constituting part of this Amendment No. 1 to the Registration Statement on
Form S-4 of FDX Corporation of our reports dated June 30, 1997 included (or
incorporated by reference) in Federal Express Corporation's Form 10-K for
the fiscal year ended May 31, 1997, and to all references to our Firm
included in this registration statement.
ARTHUR ANDERSEN LLP
Memphis, Tennessee
December 1, 1997
EXHIBIT 23.2
[Arthur Andersen LLP Letterhead]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of
our report dated October 28, 1997, included in the Joint Proxy
Statement/Prospectus constituting part of this Amendment No. 1 to the
Registration Statement on Form S-4, covering our audit of the balance sheet
of FDX Corporation as of October 3, 1997.
Arthur Andersen LLP
Memphis, Tennessee
December 1, 1997.
EXHIBIT 23.3
[Ernst & Young LLP Letterhead]
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
Amendment No. 1 to the Joint Proxy Statement/Prospectus that is made part of
this Registration Statement (Form S-4) and to the incorporation by reference
therein of our report dated January 23, 1997 (except Note K, as to which the
date is March 27, 1997), with respect to the consolidated financial statements
and schedule of Caliber System, Inc. included in its Annual Report (Form 10-K)
for the year ended December 31, 1996, filed with the Securities and Exchange
Commission.
ERNST & YOUNG LLP
Akron, Ohio
December 2, 1997
EXHIBIT 23.5
[GOLDMAN, SACHS & CO. LETTERHEAD]
PERSONAL AND CONFIDENTIAL
- -------------------------
December 3, 1997
Board of Directors
Caliber System, Inc.
3925 Embassy Parkway
P.O. Box 5459
Akron, OH 44334-0459
Re: Registration Statement (File No. 333-39483) of FDX Corporation:
Gentlemen:
Reference is made to our opinion letter, dated October 5, 1997, with respect
to the fairness from a financial point of view to the holders of the
outstanding shares of Common Stock, without par value (the "Shares"), of
Caliber System, Inc. (the "Company") of the exchange ratio of 0.80 shares of
Common Stock, par value $0.10 per share ("New FedEx Common Stock") of FDX
Corporation (formerly known as Fast Holdings Inc.), a Delaware corporation
("New FedEx") and wholly-owned subsidiary of Federal Express Corporation
("Federal Express"), to be received for each Share pursuant to the Agreement
and Plan of Merger, dated as of October 5, 1997, among Federal Express, New
FedEx, Fast Merger Sub Inc., a wholly-owned subsidiary of New FedEx, Tires
Merger Sub Inc., a wholly-owned subsidiary of New FedEx, and the Company (the
"Agreement"). The Agreement provides for the merger of Tires Merger Sub
Inc. with and into the Company and for the merger of Fast Merger Sub Inc.
with and into Federal Express and the conversion of each outstanding share
of Federal Express Common Stock, par value $0.10 per share, ("Federal
Express Common Stock") into one share of New FedEx Common Stock. As a
result of the transactions contemplated by the Agreement, each of the
Company and Federal Express will be a wholly-owned subsidiary of New FedEx,
which will be a publicly-traded corporation.
The foregoing opinion letter is provided for the information and assistance of
the Board of Directors of the Company in connection with its consideration of
the transaction contemplated therein and is not to be used, circulated, quoted
or otherwise referred to for any other purpose, nor is it to be filed with,
included in or referred to in whole or in part in any registration statement,
proxy statement or any other document, except in accordance with our prior
written consent. We understand that New FedEx has determined to include our
opinion in the above referenced Registration Statement.
In that regard, we hereby consent to the references to the opinion of our Firm
dated October 5, 1997, under the captions "SUMMARY - Opinion of Financial
Advisor," "The MERGER - Caliber's Reasons for the Caliber Merger;
Recommendation of the Caliber Directors," "THE MERGER - Opinion of Caliber's
Financial Advisor" and to the inclusion of the foregoing opinion in the Joint
Proxy Statement/Prospectus included in the above-mentioned Registration
Statement, as amended. In giving such consent, we do not thereby admit that we
come within the category of persons whose consent is required under Section 7
of the Securities Act of 1933 or the rules and regulations of the Securities
and Exchange Commission thereunder.
Very truly yours,
/s/ GOLDMAN, SACHS & CO.
EXHIBIT 99.1
[Form of Proxy Card]
FEDERAL EXPRESS CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE CORPORATION
FOR THE SPECIAL MEETING OF STOCKHOLDERS JANUARY 12, 1998
The undersigned hereby constitutes and appoints KENNETH R. MASTERSON and
THEODORE L. WEISE, and each of them, his or her true and lawful agents and
proxies with full power of substitution in each, to represent the undersigned
and to vote all of the shares of stock of the undersigned in Federal Express
Corporation at the Special Meeting of Stockholders of said Corporation to be
held at the Memphis Marriott, 2626 Thousand Oaks Boulevard, Memphis, Tennessee
on Monday January 12, 1998, and at any adjournments thereof, on Items 1, 2 and
3 as specified on the reverse side hereof and on such other matters as may
properly come before said meeting. The undersigned hereby revokes any
previous proxies with respect to matters covered by this Proxy.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE
BOXES, SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE
IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. MR. MASTERSON AND
MR. WEISE CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
SEE REVERSE SIDE
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THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1
THROUGH 3
The Board of Directors of Federal Express recommends a vote FOR :
<TABLE>
<S> <C> <C> <C>
1. APPROVAL OF THE ISSUANCE OF FDX COMMON STOCK IN FOR [ ] AGAINST [ ] ABSTAIN [ ]
CONNECTION WITH THE MERGER OF FAST MERGER SUB INC.
WITH AND INTO FEDERAL EXPRESS CORPORATION AND THE
MERGER OF TIRES MERGER SUB INC. WITH AND INTO CALIBER
SYSTEM, INC., WITH THE RESULT THAT BOTH FEDERAL
EXPRESS AND CALIBER WILL BE WHOLLY-OWNED
SUBSIDIARIES OF FDX
2. APPROVAL OF THE FDX 1997 STOCK INCENTIVE PLAN. FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. IN THE DISCRETION OF THE PROXIES, TO VOTE UPON SUCH FOR [ ] AGAINST [ ] ABSTAIN [ ]
OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING, INCLUDING ANY ADJOURNMENTS OR
POSTPONEMENTS THEREOF.
</TABLE>
( ) COMMENTS ON REVERSE SIDE [ ] I REQUEST MY NAME BE DISCLOSED WITH MY
VOTE AND COMMENTS, IF ANY.
SIGNATURE(S)________________________________________ DATE_____________________
The signer hereby revokes all proxies heretofore given by the signer to vote
at said meeting or any adjournments thereof. Please sign exactly as name
appears on this card. Joint owners should each sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title
as such.
EXHIBIT 99.2
[Form of Proxy Card]
CALIBER SYSTEM, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS
FOR THE SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON JANUARY 9, 1998
The undersigned hereby appoints J.E. LYNCH, JR. and D.J. SULLIVAN, each of
them with full power of substitution, as proxies of the undersigned, and
hereby authorizes such member or members to represent and to vote all shares
of common stock without par value of Caliber held of record by the undersigned
as of the close of business on November 28, 1997, at the Special Meeting of
Shareholders of Caliber to be held on January 9, 1998, at 9:00 a.m. at the
Law Offices of Jones, Day, Reavis & Pogue, North Point, 901 Lakeside
Avenue, Cleveland, Ohio and at any adjournments or postponements thereof,
upon all subjects that may properly come before the meeting including
matters described in the Joint Proxy Statement/Prospectus furnished
herewith. The undersigned hereby revokes any previous proxies with respect
to matters covered by this Proxy.
This Proxy, when properly executed, will be voted in the manner marked herein
by the undersigned shareholder. THE DIRECTORS RECOMMEND A VOTE FOR THE
PROPOSALS. TO VOTE IN ACCORDANCE WITH THE DIRECTORS' RECOMMENDATION, JUST
SIGN AND RETURN THIS PROXY; NO BOXES NEED TO BE CHECKED.
Your vote is important. Failure to sign and return this Proxy, or attend the
Special Meeting and vote by ballot, will have the same effect as a vote
against the merger.
SEE REVERSE SIDE
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The Directors of Caliber recommend a vote FOR:
1. The approval and the adoption of the Agreement and Plan of Merger
dated as of October 5, 1997 among Caliber, Federal Express
Corporation, a Delaware corporation, FDX Corporation ("FDX"), a
Delaware corporation (formerly known as Fast Holding Inc.), Fast
Merger Sub Inc., a Delaware corporation and wholly-owned subsidiary
of FDX and Tires Merger Sub Inc., a Delaware corporation and
wholly-owned subsidiary of FDX.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. In the discretion of the proxies, to vote upon such other business
as may properly come before the meeting, including any adjournment
or postponement thereof.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Confidential Vote Requested [ ]
When shares are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee, guardian, corporate officer or
partner, please give full title as such. If a corporation, please sign in
corporate name by president or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
PLEASE MARK, SIGN, DATE AND MAIL PROMPTLY
________________________________________________________
SIGNATURE(S) DATE
