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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
Solicitation/Recommendation Statement
Pursuant to Section 14(d)(4)
of the Securities Exchange Act of 1934
Air Express International Corporation
(Name of Subject Corporation)
Air Express International Corporation
(Name of Person(s) Filing Statement)
Common Stock, $0.01 par value
(Title of Class of Securities)
009104100
(CUSIP Number of Class of Securities)
DENNIS M. DOLAN
Executive Vice President and Chief Financial Officer
AIR EXPRESS INTERNATIONAL CORPORATION
120 Tokeneke Road
Darien, Connecticut 06820
(203) 655-7900
(Name, address and telephone number of person
authorized to receive notice and communications
on behalf of the person(s) filing statement)
Copy to:
KATHERINE P. BURGESON, ESQ.
CUMMINGS & LOCKWOOD
Four Stamford Plaza
P. O. Box 120
Stamford, Connecticut 06904
(203) 351-4260
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EXHIBIT (a)(2)
[LOGO OF AIR EXPRESS INTERNATIONAL CORPORATION]
November 19, 1999
To Our Stockholders:
I am pleased to inform you that on November 15, 1999, Air Express
International Corporation entered into a Tender Offer and Merger Agreement with
Deutsche Post AG and DP Acquisition Corporation, a wholly owned subsidiary of
Deutsche Post AG, pursuant to which DP Acquisition Corporation has commenced a
cash tender offer to purchase all of the outstanding shares of Common Stock of
Air Express International for $33 in cash. Under the Agreement, if the
conditions to the Offer are met, including a tender of at least a majority of
the Shares, the Offer will be followed by a Merger in which any remaining
shares of Air Express International Common Stock will be converted into the
right to receive the highest price paid per share pursuant to the Offer in
cash, without interest.
Your Board of Directors has unanimously determined that the Offer and the
Merger are fair to, and in the best interests of, the Company and its
stockholders, has approved the Offer and the Merger and unanimously recommends
that the Air Express International stockholders accept the Offer and tender
their shares of Air Express International Common Stock pursuant to the Offer.
We believe that by teaming up, the two companies will be a formidable force
worldwide. We also believe that this transaction generates excellent value for
our stockholders.
In arriving at its recommendation, the Board of Directors gave careful
consideration to a number of factors described in the attached Schedule 14D-9
that is being filed today with the Securities and Exchange Commission,
including, among other things, the opinion of Morgan Stanley Dean Witter, the
financial advisor to Air Express International, that the $33 per share in cash
to be received by the holders of Air Express International Common Stock in the
Offer and the Merger is fair to such holders. The reference to the opinion of
Morgan Stanley Dean Witter is qualified by the text of such opinion included as
Exhibit (a)(1) to the attached Schedule 14D-9, which is incorporated by
reference herein and should be read in its entirety.
In addition to the attached Schedule 14D-9 relating to the Offer, enclosed is
the Offer to Purchase dated November 15, 1999 of DP Acquisition Corporation,
together with related materials, including a Letter of Transmittal to be used
for tendering your shares of Air Express International Common Stock. These
documents set forth the terms and conditions of the Offer and the Merger and
provide instructions as to how to tender your shares.
Very truly yours,
/S/ Guenter Rohrmann
_________________________
Guenter Rohrmann
President and CEO
[LOGO OF AIR FREIGHT FORWARDER]
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Item 1. Security and Subject Company.
The name of the subject company is Air Express International Corporation, a
Delaware corporation (the "Company"). The address of the principal executive
offices of the Company is 120 Tokeneke Road, Darien, Connecticut 06820. The
title of the class of equity securities to which this statement relates is the
Common Stock, $0.01 par value per share, of the Company (the "Shares").
Item 2. Tender Offer of the Bidder.
This statement relates to the tender offer (the "Offer") by DP Acquisition
Corporation ("Offeror"), a Delaware corporation and a direct or indirect
wholly owned subsidiary of Deutsche Post AG, a corporation organized under the
laws of the Federal Republic of Germany (the "Parent") disclosed in a Tender
Offer Statement on Schedule 14D-1, dated November 19, 1999 (the "Schedule 14D-
1"), filed by the Offeror and the Parent, to purchase all outstanding Shares
at $33 per Share (the "Offer Price"), net to the seller in cash, without
interest, upon the terms and subject to the conditions set forth in the Offer
to Purchase dated November 19, 1999 (the "Offer to Purchase"), and the related
Letter of Transmittal attached as Exhibits (a)(1) and (a)(2), respectively, to
the Schedule 14D-1 (the "Letter of Transmittal" which, together with the Offer
to Purchase, constitute the "Offer"). As set forth in the Offer to Purchase
the address of the principal executive offices of each of the Offeror and the
Parent is Heinrich-von-Stephan-Str. 1, 53175, Bonn, Germany.
The Offer is being made pursuant to the Tender Offer and Merger Agreement
dated November 15, 1999, by and among Parent, Offeror and the Company (the
"Merger Agreement"). A copy of the Merger Agreement is filed as Exhibit (c)(1)
to this Solicitation/Recommendation on Schedule 14D-9 (the "Schedule 14D-9"),
and is incorporated herein by reference in its entirety. The Merger Agreement
is summarized in Item 3 of this Schedule 14D-9.
Item 3. Identity and Background.
(a) The name and business address of the Company, which is the person filing
this statement, are set forth in Item 1 above. Unless the context otherwise
requires, references to the Company in this statement are to the Company and
its subsidiaries, viewed as a single entity.
(b) Except as described or referred to in the "Information Statement
Pursuant to Section 14(f) of the Securities Exchange Act of 1934 and Rule 14f-
1 Thereunder", which is attached as Annex 1 hereto and incorporated herein by
reference in its entirety (the "Information Statement"), or as described
elsewhere herein, to the knowledge of the Company, as of the date hereof,
there exists no material contract, agreement, arrangement or understanding and
no actual or potential conflict of interest between the person filing this
statement or its affiliates and: (1) the Parent, its executive officers,
directors or affiliates; or (2) the Offeror, its executive officers, directors
or affiliates.
In connection with the Offer and the Merger contemplated by the Merger
Agreement, Parent has asked Hendrik J. Hartong, Jr., Chairman of the Board of
Directors of the Company, to serve as a member of the board of managers of
Danzas Holdings Ltd., a wholly-owned subsidiary of Parent and a corporation
organized under the laws of Switzerland ("Danzas"). Mr. Hartong's nomination
and election to the board of managers of Danzas shall occur no earlier than
satisfaction or waiver of the Minimum Condition and certain other conditions
to the Offer (See "The Merger Agreement--The Offer"). Mr. Hartong shall be
compensated for his attendance at any board meetings in accordance with
Danzas' practices generally for the compensation of its directors.
There have been some preliminary discussions between representatives of
Parent and senior management of the Company concerning their continued
employment with the Company. During these discussions, Parent indicated its
desire that the current senior management of the Company remain with the
Company after the consummation of the Merger. Parent did not propose or agree
to any specific arrangement as to compensation or benefits.
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Upon consummation of the Merger, Guenter Rohrmann, Chief Executive Officer
of the Company, will be appointed Vice Chairman of the Company; Peter Wagner,
Chief Executive Officer of Logistics of Parent and Chief Executive Officer of
Danzas, will be elected Chairman of the Board of the Company; and Renato
Chiavi, head of intercontinental business at Danzas, will be appointed Chief
Executive Officer of the Company.
The Merger Agreement
The following summary of certain provisions of the Merger Agreement is
qualified in its entirety by reference to the full text of the Merger
Agreement.
The Merger Agreement; Other Arrangements
The following is a summary of the material provisions of the Merger
Agreement, a copy of which is filed as an exhibit to this Schedule 14D-9. The
summary is qualified in its entirety by reference to the Merger Agreement.
The Offer
The Merger Agreement provides for the making of the Offer.
Notwithstanding any other provision of the Offer, Offeror shall not be
required to accept for payment or pay for any Shares tendered pursuant to the
Offer and may, subject to the terms of the Merger Agreement, terminate the
Offer, if:
(a) at the Expiration Date (as it may be extended in accordance with the
terms of the Merger Agreement):
(i) the Minimum Condition has not been satisfied:
(ii) the applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 shall not have expired or been terminated;
(iii) approvals under the European Commission under Council Regulation
(EEC) No. 4064/89, United States Department of Transportation Aviation
Economic Regulations and Section 721 of the Defense Production Act of 1950
shall not have been completed, obtained or satisfied; or
(iv) any other domestic or foreign approvals, consents, filings,
notifications or other requirements of law, statute, rule or regulation
necessary in connection with the transactions contemplated by this
Agreement shall not have been completed, obtained or satisfied except for
such matters as would not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect or materially impair the
ability of Parent or Offeror to consummate the transactions contemplated by
the Merger Agreement or to own or exercise control over the Company and its
subsidiaries following the Offer; or
(b) at any time prior to the acceptance for payment of Shares, any of the
following conditions exist:
(i) any order, decree or injunction of a court or governmental agency of
competent jurisdiction or any law or regulation enjoins or prohibits the
consummation of the transactions contemplated by the Merger Agreement
(including the Offer or the Merger) or the ownership or exercise of control
by the Parent over the Company and its subsidiaries following the Offer;
(ii) any representations and warranties of the Company contained in the
Merger Agreement that are qualified as to materiality shall not be true and
correct and any of the representations and warranties that are not so
qualified shall not be true and correct in any material respects on and as
of the date of consummation of the Offer as if such representations and
warranties were made on and as of such date (except where such
representations and warranties are stated as of a specific date), or the
Company shall have breached the agreements and covenants required by the
Merger Agreement to be performed by it on or
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prior to such date in any material respect (provided that the Company may,
prior to the expiration of the Offer, seek to cure any such breach); or
(iii) the Merger Agreement shall have been terminated in accordance with
its terms.
The foregoing conditions are for the sole benefit of Parent and Offeror and
may, subject to the terms of the Merger Agreement, be waived by Parent and
Offeror in whole or in part at any time and from time to time in their
discretion.
Pursuant to the Merger Agreement, Offeror may waive any condition to the
Offer or change any of the terms or conditions of the Offer, except that,
without the prior written approval of the Company, Offeror may not reduce the
cash price per Share, change the form of consideration to be paid in the
Offer, reduce the number of Shares to be purchased, increase the minimum
number of Shares which must be tendered to satisfy the Minimum Condition,
impose additional conditions to the Offer, or otherwise amend the terms of the
Offer in a manner that is materially adverse to the stockholders of the
Company.
Directors
The Merger Agreement provides that effective upon the acceptance for payment
of Shares, Parent shall be entitled, subject to applicable law, to designate
the number of directors, rounded up to the next whole number, on the Board of
Directors that equals the product of (i) the total number of directors on the
Board of Directors and (ii) the percentage that the number of votes
represented by Shares beneficially owned by Parent (including Shares accepted
for payment pursuant to the Offer) bears to the total number of votes
represented by Shares then outstanding. The Company has agreed promptly to
take all action (including, without limitation, increasing the number of
Directors and securing the resignations of incumbent directors) necessary to
cause Parent's designees to be elected or appointed to the Board of Directors.
If Parent exercises its right to designate directors, Parent currently
intends to designate one or more of the following persons to serve as
directors of the Company: Peter Wagner, Renato Chiavi, Jim Fredholm, Dr. Hans
Oskar Zieschang, Dr. Bernd Boecken, Dr. Klaus Engelen and Dr. Andreas
Hunziker. Information concerning these individuals is included in the
Information Statement and is incorporated herein by reference.
The Merger Agreement provides that if Parent's designees are elected to the
Company Board, the Company Board shall have, until the Effective Time, at
least two directors who are directors as of the date hereof and who are not
officers or affiliates of the Company, Parent or any of their respective
subsidiaries (the "Independent Directors"). In such case, any amendment or
termination of the Merger Agreement by the Company, or any waiver by the
Company of any obligation of Parent or Offeror, may be effected only by the
action of a majority of the Independent Directors.
Stock Options
Upon consummation of the Offer, the options to purchase Shares ("Stock
Options") outstanding under the Company's stock option and other compensation
plans, whether or not then vested or exercisable, shall automatically be
converted into the right to receive cash in an amount equal to (i) the excess
of the Merger Consideration over the exercise price per share provided in such
Stock Option, multiplied by (ii) the number of Shares subject to such Stock
Option.
The Merger
The Merger Agreement provides that as promptly as practicable after all
conditions to the Offer and the Merger set forth therein have been satisfied
or, to the extent permitted thereunder, waived, but in no event later than two
business days thereafter, Offeror will be merged into the Company in
accordance with Delaware Law. As a result of the Merger, the separate
existence of Offeror will cease, and the Company will continue as the
Surviving Company.
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Pursuant to the Merger, each Share outstanding immediately prior to the
Effective Time (other than Shares beneficially owned by Parent and Shares held
by the Company in treasury) will be converted into the right to receive the
Merger Consideration except as described below. Stockholders who perfect their
right to appraisal of their Shares under Delaware Law shall be entitled to the
amounts determined pursuant to such proceedings.
Representations and Warranties
The Merger Agreement contains customary representations and warranties of
the parties thereto, including representations by the Company as to its
corporate existence and power, capitalization, corporate authorizations,
subsidiaries, the Company's filings with the Securities and Exchange
Commission (the "Commission"), financial statements, absence of certain
changes (including any change or effect that, individually or in the
aggregate, is or could reasonably be expected to be materially adverse to the
business, assets, prospects, financial condition or results of operations of
the Company and its subsidiaries, taken as a whole, other than those changes
in economic or financial conditions generally or affecting the freight
forwarding and global logistics industries generally (a "Material Adverse
Effect")), absence of undisclosed material liabilities, government
authorization, no violations, absence of litigation, compliance with laws,
employee matters, labor matters, certain contracts, taxes, intellectual
property, brokers, anti-takeover statutes, year 2000 compliance, proxy
statement information, recommendation documents and customs broker licenses
and approvals.
Covenants
The Merger Agreement contains various customary covenants of the parties
thereto. A description of certain of these covenants follows:
Conduct of Business. Prior to the date on which Parent's designees
constitute a majority of the Board of Directors (the "Control Date") or
earlier termination of the Merger Agreement, except as otherwise set forth in
the Merger Agreement, neither the Company nor any of its subsidiaries will
directly or indirectly do any of the following without Parent's prior written
consent, which shall not unreasonably be withheld:
(i) amend or otherwise change its certificate of incorporation or by-
laws;
(ii) issue, sell, pledge, dispose of or encumber, any of its capital
stock or any options, warrants, convertible securities or other rights of
any kind to acquire any capital stock (except for the issuance of Shares
pursuant to Stock Options outstanding as of the date of the Merger
Agreement);
(iii) sell, lease, license or otherwise dispose of or encumber any assets
except (a) in the ordinary course of business consistent with past practice
or (b) obsolete, worthless, or immaterial assets not in excess of
$1,000,000 in the aggregate;
(iv) (a) declare, set aside, or pay any dividend except for a dividend
declared and paid by a subsidiary to the Company, (b) split, combine or
reclassify any class of capital stock or issue or authorize or propose the
issuance of any other securities in substitution for shares of its capital
stock or (c) amend the terms of, or repurchase, redeem or otherwise acquire
any securities of the Company or any subsidiary, except for repurchases of
the capital stock of any subsidiaries in accordance with contractual
obligations entered into in connection with joint ventures which were
entered into in the ordinary course of business consistent with past
practice;
(v) (a) acquire any company, corporation, partnership, or other business
organization or division thereof or acquire a material amount of stock or
assets of any other person, (b) incur any indebtedness for borrowed money
or issue any debt securities (except in the ordinary course and in amounts
less than $2,000,000 in the aggregate) or assume, guarantee, endorse or
otherwise become responsible for the obligations of any person (other than
guarantees of indebtedness of a wholly-owned subsidiary of the Company), or
make any loans or advances, except in the ordinary course of business
consistent with past practice and in amounts not in excess of $1,000,000 in
the aggregate, (c) enter into or amend any material contract except in the
ordinary course of business and only in a manner that does not have a
Material Adverse Effect, or (d)
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authorize any new capital expenditures or purchase of fixed assets except
in the ordinary course of business consistent with past practice and in
amounts not in excess of $5,000,000 in the aggregate;
(vi) increase the compensation payable to its officers or employees,
except for increases in salary or wages of employees who are not officers
of the Company in the ordinary course of business and not in excess of 5%
of the aggregate annual salary or wages of all such employees, or grant any
new severance or termination pay to, or enter into any new employment or
severance agreement with any director, officer or employee or establish,
adopt or enter into or amend any collective bargaining, bonus, profit
sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or
other plan, agreement, trust, fund, policy or arrangement for the benefit
of any current or former directors, officers or employees, except, in each
case, as may be required by law, and except that the foregoing shall not
restrict the routine hiring of new lower level personnel in the ordinary
course of business consistent with past practice, immaterial changes in
policies affecting the workplace generally, or any of the foregoing
restrictions not including officers or directors of the Company that will
not, in the aggregate, increase the obligations of the Company thereunder
by more than $150,000;
(vii) change accounting policies or procedures, except for changes which
may be required under United States generally accepted accounting
principles or pursuant to Commission rules or regulations;
(viii) make any material tax election inconsistent with past practices or
settle or compromise any material federal, state, local or foreign tax
liability or agree to an extension of a statute of limitations;
(ix) pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise) other than in the ordinary course of business consistent with
past practice of liabilities reflected or reserved against in the financial
statements included in its Commission filings or incurred in the ordinary
course of business and consistent with past practice; or
(x) take or agree to take any of the actions described above, or any
action which would make any of the representations or warranties of the
Company contained in the Merger Agreement untrue or incorrect in any
material respect or prevent the Company from performing or cause the
Company not to perform its covenants under the Merger Agreement in any
material respect.
No Solicitation. Prior to the Control Date or earlier termination of the
Merger Agreement, the Company and its subsidiaries shall not, and shall cause
their officers, directors, employees, investment bankers, attorneys,
accountants, or other representatives not to, directly or indirectly, (i)
initiate, solicit or encourage the making, submission or announcement of any
Alternative Transaction (as hereinafter defined), (ii) take any other action
intended to facilitate any inquiries or the making of any proposal to effect
an Alternative Transaction, (iii) approve, endorse or recommend any
Alternative Transaction, (iv) enter into any letter of intent or similar
document or contract contemplating or otherwise relating to any Alternative
Transaction, (v) enter into discussions or negotiate with or disclose any
nonpublic information relating to the Company or any of its subsidiaries to
any person regarding an Alternative Transaction, or (vi) grant any waiver or
release under any standstill or similar agreement with respect to any class of
equity securities of the Company or any of its subsidiaries. The Company will
notify Parent promptly (but in no event later than 48 hours) after receipt by
the Company of any Alternative Transaction, any indication that any person is
considering proposing an Alternative Transaction or any request for nonpublic
information relating to the Company or any of its subsidiaries. The Company
shall identify the person proposing, and the terms and conditions of, any such
Alternative Transaction, indication or request and shall keep Parent fully
informed, on a current basis, of the status and details of any such
Alternative Transaction or request. Nothing contained in the Merger Agreement
shall prevent the Board of Directors from complying with Rule 14e-2 under the
Exchange Act with respect to any Alternative Transaction.
Notwithstanding the foregoing, the Board of Directors is permitted to
furnish nonpublic information to, or enter into discussions or negotiations
with, any person in response to a Superior Proposal if (i) the Company has
complied in all material respects with the foregoing provisions of the "No
Solicitation" covenant, (ii) the Board of Directors determines in good faith,
based on advice of outside legal counsel, that it is reasonably likely that
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the failure to consider the Superior Proposal would constitute a breach of its
fiduciary duties under applicable law, (iii) such person enters into a
confidentiality agreement with the Company with terms no less favorable to the
Company than those contained in the Confidentiality Agreement, and (iv) the
Company shall have given Parent written notice of the identity of such person
and of the Company's intention to take such action.
The Board of Directors shall be permitted to withdraw, or modify in a manner
adverse to Parent, its recommendation that the stockholders accept the Offer
and approve the Merger, if (i) the Company has complied in all material
respects with the foregoing provisions of the "No Solicitation" covenant, (ii)
a Superior Proposal is pending at the time the Board of Directors determines
to take such action, (iii) the Board of Directors determines in good faith,
based on advice of outside legal counsel, that it is reasonably likely that
the failure to do so would constitute a breach of its fiduciary duties under
applicable law, and (iv) the Company shall have delivered to Parent a prior
written notice advising Parent that it intends to take such action.
"Alternative Transaction" means any inquiry, proposal or offer for, or any
indication of interest in (other than the transactions contemplated by the
Merger Agreement) among other things, any merger, consolidation, amalgamation,
share exchange, business combination, issuance of securities, acquisition of
securities, tender offer, exchange offer or other similar transaction
involving (i) the Company or any subsidiary or the capital stock of the
Company, (ii) the acquisition of more than 15% of the Company's business or
assets, or more than 15% of the outstanding securities of any class of voting
securities of the Company or any of its subsidiaries, or (iii) any liquidation
or dissolution of the Company or any material subsidiary.
"Superior Proposal" means a bona fide, unsolicited, written proposal for an
Alternative Transaction on terms and conditions that the Company Board
determines, in its good faith judgment, based on advice of a financial advisor
of nationally recognized reputation, and taking into account all the terms and
conditions of the Alternative Transaction, is more favorable to the Company's
stockholders than the transaction contemplated in the Merger Agreement (after
giving effect to any changes to the Merger Agreement and the Offer as may be
proposed by Parent in response to the Alternative Transaction), and for which
financing, to the extent required, is then fully committed or reasonably
determined to be available by the Company Board.
Company Stockholders' Meeting. If required by Delaware Law, the Company
shall call and hold a meeting of its stockholders (the "Company Stockholders'
Meeting") promptly following consummation of the Offer for the purpose of
voting upon the approval of the Merger Agreement. If requested by Parent, the
Company shall use its reasonable best efforts to solicit from its stockholders
proxies in favor of the approval of the Merger Agreement. At any such meeting
all outstanding Shares then owned by Parent or any of its affiliates shall be
voted in favor of approval of the Merger.
Consents; Approvals. The Company and Parent agree to use their reasonable
efforts to obtain all consents and approvals (including all governmental and
regulatory approvals) and to make all filings (including all governmental or
regulatory filings) required in connection with the transactions contemplated
by the Merger Agreement.
Employees, Employee Benefits. The Merger Agreement contains certain
covenants relating to the treatment of employees of the Company after
consummation of the Offer. These include the continuation for one year of
benefits in the aggregate no less favorable than the level in effect
immediately prior to the consummation of the Offer; continuation of certain
compensation plans and insurance coverage for certain members of senior
management for specified time periods following consummation of the Offer; an
agreement to honor all employment, severance, change of control and other
compensation arrangements disclosed in the Merger Agreement; and payment of
severance benefits at specified levels to employees not covered by statutory
or contractual arrangements whose employment is terminated other than for
cause within 120 days following the Effective Time.
Indemnification and Insurance. After the Effective Time, the Surviving
Company shall indemnify and hold harmless each present and former director or
officer of the Company from liabilities for acts or omissions
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occurring at or prior to the Effective Time to the fullest extent permitted
under applicable law and the Company's certificate of incorporation and bylaws
and shall assume any indemnification agreements of the Company in effect as of
the date of the Merger Agreement. The Surviving Company shall also advance
expenses, as incurred, to the fullest extent permitted under applicable law or
any applicable indemnification agreement. In addition, the Merger Agreement
provides that for seven years after the Effective Time, the Surviving Company
shall provide directors' and officers' liability insurance covering acts or
omissions occurring prior to the Effective Time with respect to those persons
who are currently covered by the Company's directors' and officers' liability
insurance policy on terms with respect to coverage and amounts no less
favorable than those of such policy in effect as of the date of the Merger
Agreement, provided that in satisfying this obligation the Surviving Company
shall not be obligated to pay more than $300,000.
Conditions to the Merger
The obligations to consummate the Merger are subject to the satisfaction of
the following conditions:
(i) if required by Delaware Law, the approval of the Merger Agreement by
the stockholders of the Company in accordance with such law;
(ii) no injunction, order, decree, ruling, statute, rule, or regulation
shall prohibit consummation of the Merger; and
(iii) Offeror shall have purchased Shares pursuant to the Offer.
Termination
The Merger Agreement may be terminated at any time prior to the Effective
Time, notwithstanding approval of the Merger Agreement by the stockholders of
the Company:
(i) prior to the consummation of the Offer by mutual written consent of
Parent and the Company;
(ii) by either Parent or the Company, if the Offer shall not have been
consummated by March 31, 2000 (provided that the right to terminate shall
not be available to any party whose failure to fulfill any obligation under
the Merger Agreement has caused or resulted in the failure of the Offer to
occur on or before such date);
(iii) by either Parent or the Company, if any statute, rule or regulation
makes consummation of the Offer or the Merger illegal or otherwise
prohibited, or any final non-appealable judgment, injunction, order or
decree of any court or governmental body having competent jurisdiction
enjoins the Offer or the Merger; provided, however, that the party seeking
to terminate the Merger Agreement pursuant to this clause shall have used
commercially reasonable best efforts to remove any such judgment,
injunction, order or decree;
(iv) by Parent, if prior to the purchase of any Shares pursuant to the
Offer;
(a) the Company Board shall have failed to recommend or withdrawn or
materially modified in a manner adverse to Parent its approval or
recommendation of the Offer and the Merger;
(b) the Company shall have entered into, or shall have publicly
announced its intention to enter into, an agreement with respect to any
Superior Proposal; or
(c) any person other than Parent and its subsidiaries shall have
acquired, directly or indirectly, beneficial ownership of at least a
majority of the Shares outstanding;
(v) by the Company, if, prior to the consummation of the Offer, (a) the
Company notifies Parent in writing at least 72 hours prior to such
termination that it intends to enter into an agreement with respect to a
Superior Proposal, attaching the most current version of such agreement (or
a description of all material terms and conditions thereof), provided the
Company has complied in all material respects with the provisions of the
"No Solicitation" covenant described above; (b) Parent does not make,
within 72 hours after receipt of the Company's notification, an offer that
the Company Board determines, in good faith based
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on the advice of a financial advisor of nationally recognized reputation,
and taking into account all the terms and conditions of such offer, is at
least as favorable to the Company's stockholders as the Superior Proposal
(it being understood that the Company shall not enter into any binding
agreement regarding such Superior Proposal during such 72-hour period) and
(c) prior to or simultaneously with such termination, the Company makes
payment to Parent of the amounts payable pursuant to the Merger Agreement.
See "The Merger Agreement; Other Arrangements--Fees and Expenses"; or
(vi) by the Company, if the Offer has not been consummated by February
15, 2000 as a result of a breach by Parent or Offeror of any of their
representations and warranties or covenants such that Parent and Offeror
are unable to perform their obligations under the Merger Agreement after
the conditions to their obligations have been satisfied (but for those
conditions which are not satisfied due to or resulting from the facts
constituting such breach) and the Company is not in material breach of any
of its representations and warranties or covenants set forth in the Merger
Agreement.
If the Merger Agreement is terminated, it will become void and there shall
be no liability on the part of the Company, Parent or the Offeror, except (i)
for certain fees and expenses payable pursuant to the Merger Agreement (See
"The Merger Agreement; Other Arrangements--Fees and Expenses"), (ii) as
provided pursuant to a Confidentiality Agreement and under certain other
provisions of the Merger Agreement that shall survive termination, and (iii)
no such termination shall relieve any party from liability for any willful
breach of the Merger Agreement.
Fees and Expenses
Except as otherwise specified in the following sentence, all costs and
expenses incurred in connection with the Merger Agreement and the transactions
contemplated thereby shall be paid by the party incurring such cost or
expense.
The Merger Agreement provides that the Company shall pay to Parent in
immediately available funds (i) an amount equal to $23 million prior to or
simultaneously with the termination of the Merger Agreement pursuant to
subparagraphs (iv) and (v) under "The Merger Agreement; Other Arrangements--
Termination," and (ii) $2,000,000 as liquidated damages if the Offer shall not
have been consummated as a result of a material breach by the Company of its
representations and warranties set forth in the Merger Agreement, provided
that such breach existed as of the date of the Merger Agreement and provided
further that all of the other conditions to the Offer shall have been
satisfied (but for those conditions which are not satisfied due to or
resulting from the facts constituting such breach) and Parent and the Offeror
are not in material breach of any of their representations and warranties or
covenants set forth in the Merger Agreement.
Amendments and Waivers
Any provision of the Merger Agreement may be amended or waived prior to the
Effective Time, but only if such amendment or waiver is in writing and is
signed, in the case of an amendment, by each party to the Merger Agreement or,
in the case of a waiver, by each party to be bound thereby; provided, however,
that after approval of the Merger Agreement by the stockholders of the Company
no amendment may be made which by law requires further approval by such
stockholders without such further approval.
Confidentiality Agreement
On July 12, 1999, Danzas and the Company entered into a Confidentiality
Agreement (the "Confidentiality Agreement") containing customary provisions
pursuant to which, among other matters, Danzas and its affiliates agreed to
keep confidential all nonpublic, confidential or proprietary information
furnished to it by the Company relating to the Company, subject to certain
exceptions (the "Information"), and to use the Information solely in
connection with evaluating a possible transaction involving the Company and
Danzas. For a period of three years from the date of Confidentiality
Agreement, Danzas has agreed to certain restrictions on its ability to
acquire, or
8
<PAGE>
offer to acquire, Shares or take certain other actions, without the prior
written consent of the Company or the Board of Directors of the Company.
Danzas further agreed that, prior to September 7, 2002, that it would not,
directly or indirectly, solicit for employment or hire any employee of the
Company or any of its subsidiaries with whom Danzas has had contact or who
became known to Danzas in connection with Danzas' consideration of a possible
transaction involving Danzas and the Company, subject to certain exceptions. A
copy of the Confidentiality Agreement is filed as an Exhibit to this Schedule
14D-9 and the foregoing summary is qualified in its entirety by reference to
such agreement.
Item 4. The Solicitation or Recommendation.
(a) The Recommendation.
On November 13, 1999, the Board of Directors of the Company (the "Board" or
the "Board of Directors") held a telephonic Board meeting to consider the
proposed Merger Agreement with the Parent and the Offeror and the transactions
contemplated thereby. Cummings & Lockwood, the Company's legal counsel
("Company Counsel"), summarized the material provisions of the proposed Merger
Agreement, which had previously been furnished to members of the Board for
their review. Representatives of Morgan Stanley & Co. Incorporated ("Morgan
Stanley"), the Company's financial advisors, then presented its analysis of
the fairness of the proposed transaction, rendering an oral opinion (together
with a written opinion as delivered to the Company dated November 13, 1999) to
the effect that, as of such date and subject to the matters stated in such
opinion, the consideration to be paid in the Offer and the Merger is fair from
a financial point of view to the holders of Shares. A copy of the opinion
rendered by Morgan Stanley, setting forth the procedures followed, the matters
considered, the scope of the review undertaken and the assumptions made by
Morgan Stanley in arriving at its opinion is attached hereto as Exhibit (a)(1)
and is incorporated herein by reference. Stockholders are urged to read the
opinion of Morgan Stanley carefully in its entirety.
After a full discussion, the Board of Directors unanimously approved the
Merger Agreement and the transactions contemplated thereby and determined that
each of the Offer and the Merger is advisable, fair and in the best interests
of, the stockholders of the Company. The Board of Directors unanimously
recommended that all holders of Shares accept the Offer and approve and adopt
the Merger Agreement and the Merger.
(b) Background of the Offer
As a result of increasing competition and consolidation in the industry in
which the Company's business is conducted, the Board of Directors of the
Company has been actively studying the Company's strategic position, near and
long-term prospects and as a result has been reviewing its strategic
alternatives, including alternatives to remaining an independent company, in
order to increase stockholder value.
In April of 1999, a meeting of the Board of Directors was held at which it
was announced that four unrelated third parties had contacted the Company
expressing some interest in pursuing a strategic transaction with the Company.
Morgan Stanley attended the meeting and was retained to advise the Board of
Directors in connection with pursuing its strategic alternatives. The Board of
Directors authorized Morgan Stanley to approach each of the four parties to
assess their level of interest in entering into a strategic transaction with
the Company. Morgan Stanley proceeded to contact these four companies and
forwarded to each public information regarding the Company. The Parent,
through Danzas (all references in this Section 4 to the Parent shall include
Danzas), expressed the greatest level of interest in exploring a strategic
transaction with the Company.
During the period from June through July of 1999, senior management from the
Company and the Parent engaged in preliminary discussions regarding a possible
strategic transaction, including an acquisition of the Company by Parent. The
parties discussed each other's growth strategies and issues relating to
integrating their respective businesses, including systems compatibility,
potential revenue losses and likely synergies.
In anticipation of conducting financial, legal and other due diligence
review of the Company, Danzas executed a confidentiality and standstill
agreement dated as of July 12, 1999.
9
<PAGE>
On August 2, 1999, senior officers of the Company and the Parent and
representatives of Morgan Stanley met. At that meeting, the Company provided
to Parent certain confidential information regarding the Company and its
business and the parties discussed the possibility of a strategic transaction.
During the months of September and October, executive officers of the
Company met with representatives of the Parent on several occasions to further
discuss the possibility of a strategic transaction and to allow the Parent to
conduct certain basic business due diligence concerning the Company.
On September 10, 1999, the Board of Directors held a special meeting to
review and evaluate the possibility of a strategic transaction with the
Parent. The Board of Directors authorized management to continue discussions
with the Parent.
On September 24, 1999, a meeting was held between senior officers of the
Company and senior officers of the Parent. At this meeting, Hendrik J.
Hartong, Jr., the Chairman of the Company, informed Dr. Klaus Zumwinkel,
Chairman of Parent's Management Board, that the Board of Directors of the
Company was of the belief that a 100% acquisition would create the greatest
value for the Company's stockholders.
In meetings on October 14 and 15, 1999, the Parent communicated to the
Company a preliminary indication of interest to acquire the Company at $29 per
Share, subject to completion of business, legal and other due diligence,
negotiation of a satisfactory definitive acquisition agreement and receipt of
Parent Supervisory Board approval. The Company indicated to the Parent that
the proposed price of $29 per Share was not acceptable to the Company.
However, on the understanding that Parent would be prepared to increase its
indication of interest above $29 per Share, the Company agreed to permit the
Parent to continue its due diligence review in order to better evaluate the
Company.
From October 18 to October 20, 1999, additional commercial due diligence
took place. Senior management of the Company briefed senior management of the
Parent further on the Company's business and current and future growth
strategies.
On October 21, 1999, the Parent communicated to the Company a revised
preliminary indication of interest at $31 per Share, subject to completion of
business, legal and other due diligence, negotiation of a satisfactory
definitive acquisition agreement and receipt of Parent Supervisory Approval.
On October 22, 1999, the Board of Directors held a special meeting to review
the revised preliminary indication of interest, and, after consideration and
consultation with Morgan Stanley, indicated that the revised price was
inadequate.
On November 2, 1999, the Parent communicated to the Company a revised
preliminary indication of interest at $33 per Share, subject to completion of
business, legal and other due diligence, negotiation of a satisfactory
definitive acquisition agreement and receipt of Parent Supervisory Approval.
On November 3, 1999, the Board of Directors held a special meeting (i)
approving the continued due diligence by Danzas and the Parent and (ii)
authorizing the Company's representatives to negotiate with representatives of
the Parent and Danzas to determine whether a mutually satisfactory agreement
could be reached. Due diligence by and negotiations with representatives of
the Parent continued through November 13, 1999.
On November 8, 1999, the Company signed an exclusivity agreement in which
the Company confirmed that it had ceased all discussions and negotiations with
third parties and, subject to certain exceptions, agreed to negotiate
exclusively with Parent until November 15, 1999 and further agreed not to
grant any waiver or release under any standstill or similar agreement with a
third party.
Between November 4 and November 12, Parent and its legal, financial, tax,
and benefits advisors conducted extensive due diligence of the Company. During
the same time period, the Company, the Company's Counsel, Parent and Davis
Polk & Wardwell, Parent's counsel, reviewed and negotiated the terms of a
definitive merger agreement.
10
<PAGE>
On November 13, 1999, Parent's Supervisory Board met to discuss the proposed
transaction and a draft of the Merger Agreement. At the conclusion of the
meeting, the Supervisory Board approved the Merger Agreement and the
transactions contemplated thereby.
On November 13, 1999, the Board of Directors held a special telephonic
meeting to review the terms of the proposed transaction and the Merger
Agreement. Company Counsel advised the Board of Directors with respect to
certain legal matters and reviewed the principal aspects of the Merger
Agreement. Representatives of Morgan Stanley delivered an oral opinion
(together with a written opinion as delivered to the Company dated November
13, 1999) as to the fairness of the $33 per Share cash consideration to be
received in the Offer and the Merger to the Company's shareholders. The Board
of Directors, after analyzing the Company's current position and analyzing and
reviewing the Offer and the Merger Agreement, unanimously approved the Merger
Agreement and the transactions contemplated thereby and unanimously
recommended that all shareholders accept the Offer and tender their Shares
pursuant to the Offer, approve the Merger and approve and adopt the Merger
Agreement.
The Agreement was executed by the parties on November 14, 1999, and publicly
announced on November 15, 1999. A copy of a press release announcing the
transaction is attached hereto as Exhibit (a)(3) and incorporated herein by
reference. A copy of a letter to stockholders of the Company, which
accompanies this Schedule 14D-9, is attached hereto as Exhibit (a)(2) and
incorporated herein by reference.
(c) Reasons for Recommendation
In approving the Merger Agreement and the transactions contemplated thereby
and recommending that all holders of Shares accept the Offer and approve and
adopt the Merger Agreement and the Merger, the Board of Directors considered a
number of factors including:
(i) the terms of the Merger Agreement;
(ii) presentations by management of the Company at various previous
meetings of the Board regarding the financial condition, results of
operations, business and prospects of the Company, including the prospects
if the Company were to remain independent, and consideration of the state
of the Company's industry;
(iii) the results of the process undertaken by the Company and Morgan
Stanley to assess the level of interest of third parties in entering into a
strategic transaction or business combination with the Company;
(iv) the trading price of the Shares over the last six months and that
the $33 per Share Offer price represents a premium over such price, and
approximately 1.54% over the closing sales price for the Shares on The
NASDAQ Stock Market (the "NASDAQ NMS") on November 12, 1999, the last
trading day prior to the public announcement of the execution of the Merger
Agreement;
(v) the presentations of Morgan Stanley to the Board of Directors and the
opinion of Morgan Stanley to the effect as of the date thereof, the Offer
price of $33 to be received by the stockholders pursuant to the Merger
Agreement was fair from a financial point of view to such holders;
(vi) the fact that the Offer price is payable in cash, and that the Offer
was not subject to a financing conditions;
(vii) that the Offer will not be consummated unless the Shares tendered
pursuant to the Offer represent at least a majority of the outstanding
shares on a fully diluted basis;
(viii) that the Merger Agreement does not preclude the Board from
withdrawing or modifying its recommendation to the Stockholders if it
determines in good faith, based on advice of counsel, that the failure to
consider another proposal would be reasonably likely to constitute a breach
of the Board's fiduciary duty to the stockholders (See "The Merger
Agreement; Other Arrangements--No Solicitation");
11
<PAGE>
(ix) that the Merger Agreement does not preclude the Company from
providing information to and negotiating with third parties that have made
an unsolicited proposal for an Alternative Transaction if the Board
determines in good faith, based on advice of counsel, that failure to do so
would be reasonably likely to constitute a breach of the Board's fiduciary
duty to the stockholders ("The Merger Agreement; Other Arrangements--No
Solicitation");
(x) that subject to payment of a break-up fee as provided in the Merger
Agreement, the Company may accept an unsolicited third party acquisition
proposal that the Board in good faith, deems to be a Superior Proposal (See
"The Merger Agreement; Other Arrangements--No Solicitation"); and
(xi) the representation of the Offeror that it has sufficient funds
available to it to consummate the Offer and the Merger.
The description set forth above of the factors considered by the Board is
not exclusive, but rather represents a summary of the primary factors
considered. The members of the Board evaluated the Offer and the Merger in
light of their knowledge of the business, financial condition and prospects of
the Company, and based upon the advice of its financial and legal advisors.
The Company did not find it practicable to, and did not, quantify or otherwise
assign relative weights to the specific factors considered in reaching its
determination. Additionally, individual members of the Board may have given
different weights to different factors.
Item 5. Persons Retained, Employed or to be Compensated.
The Company has retained Morgan Stanley to act as financial advisor to the
Company with respect to the Offer, the Merger and matters arising in
connection therewith. Under the terms of an engagement letter dated May 3,
1999, between the Company and Morgan Stanley, the Company will pay Morgan
Stanley a fee equal to approximately $7,000,000. In addition, the Company has
agreed to reimburse Morgan Stanley for its reasonable out-of-pocket expenses,
estimated to be $50,000. The Company has also agreed to indemnify Morgan
Stanley and its affiliates and each of their directors, employees and
controlling persons against certain liabilities.
Morgan Stanley has provided certain investment banking and financial
services to the Company and Parent from time to time for which Morgan Stanley
has received customary compensation. In the ordinary course of its business,
Morgan Stanley may from time to time effect transactions and hold positions in
securities of the Company, for its own account or for the account of its
customers which can include positions for the account of Parent.
Except as disclosed herein, neither the Company nor any person acting on its
behalf currently intends to employ, retain or compensate any other person to
make solicitations or recommendations to security holders on its behalf
concerning the Offer or the Merger.
Item 6. Recent Transactions and Intent with Respect to Securities.
(a) No transactions in the Shares have been effected during the past sixty
days by the Company (except issuances of Shares upon the exercise of stock
options) or, to the best of Company's knowledge, by any executive officer,
director, affiliate or subsidiary of the Company.
(b) To the best of the Company's knowledge, to the extent permitted by
applicable securities laws, rules or regulations, except for (i) Shares the
sale of which may result in liability for the holder(s) under Section 16(b) of
the Exchange Act, and (ii) Shares which are subject to restrictions on
transfer, each executive officer, director and affiliate of the Company
currently intends to tender pursuant to the Offer all Shares over which he or
she has sole dispositive power.
Item 7. Certain Negotiations and Transactions by the Subject Company.
(a) Except as disclosed herein, the Company is not engaged in any
negotiation in response to the Offer which relates to or would result in (i)
an extraordinary transaction, such as a merger or reorganization, involving
12
<PAGE>
the Company or any subsidiary of the Company; (ii) a purchase, sale or
transfer of a material amount of assets by the Company or any subsidiary of
the Company; (iii) a tender offer for or other acquisition of securities by or
of the Company; or (iv) any material change in the present capitalization or
dividend policy of the Company.
(b) There are no transactions, Board resolutions, agreements in principle or
signed contracts in response to the Offer that relate to or would result in
one or more of the matters referred to in Item 7(a) above.
Item 8. Additional Information to be Furnished.
Information provided pursuant to 14f-1 under the Exchange Act. The
Information Statement attached as Annex I to this Statement is being furnished
to the Company's stockholders in connection with the designation by the
Purchaser of persons to the Board other than at a meeting of the Company's
stockholders, and such information is incorporated herein by reference.
Item 9. Material to be filed as Exhibits.
Exhibit Fairness Opinion of Morgan Stanley & Co. Incorporated dated
(a)(1) November 13, 1999.
Exhibit Form of Letter to Stockholders of the Company dated November 19,
(a)(2) 1999.
Exhibit Press Release dated November 15, 1999.*
(a)(3)
Exhibit Tender Offer and Merger Agreement, dated as of November 15, 1999,
(c)(1) by and among Deutsche Post AG, DP Acquisition Corporation and Air
Express International Corporation.*
Exhibit
(c)(2) Confidentiality Agreement, dated July 12, 1999 between the Company
and Danzas.*
- --------
* Not included in copies mailed to stockholders.
13
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Air Express International
Corporation
By: /s/ Dennis M. Dolan
----------------------------------
Dennis M. Dolan
Executive Vice President and Chief
Financial Officer
Dated: November 19, 1999
14
<PAGE>
ANNEX I
AIR EXPRESS INTERNATIONAL CORPORATION
120 TOKENEKE ROAD
DARIEN, CONNECTICUT 06820
INFORMATION STATEMENT PROVIDED PURSUANT TO SECTION 14(f)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
AND RULE 14f-1 THEREUNDER
General
This information statement (the "Information Statement") is being mailed on
or about November 19, 1999 as part of the Solicitation/Recommendation
Statement on Schedule 14D-9 (the "Schedule 14D-9") to holders of record of
shares of common stock, par value $0.01 per share (the "Shares") of Air
Express International Corporation (the "Company"). You are receiving this
Information Statement in connection with the possible election of persons
designated by Deutsche Post AG ("Parent") to a majority of the seats on the
Board of Directors of the Company (the "Board" or the "Board of Directors")
other than at a meeting of the stockholders of the Company. Such election
would occur pursuant to the Tender Offer and Merger Agreement (the "Merger
Agreement"), dated as of November 15, 1999, among Parent, DP Acquisition
Corporation (the "Offeror"), and the Company. The Merger Agreement is more
fully described under Item 3 of the Company's Solicitation/Recommendation
Statement on Schedule 14D-9, of which this Annex I is a part. Capitalized
terms used and not defined in this Annex I have the meanings assigned to them
in the Schedule 14D-9.
This Information Statement is required by Section 14(f) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and Rule 14f-1
promulgated thereunder. You are urged to read this Information Statement
carefully. You are not, however, required to take any action.
Pursuant to the Merger Agreement, the Offeror commenced the Offer on
November 19, 1999. The Offer currently is scheduled to expire at 12:00
Midnight, New York City time, on December 17, 1999, at which time, if the
Offer is not extended and all conditions to the Offer have been satisfied or
waived, the Offeror is obligated to purchase all Shares validly tendered
pursuant to the Offer and not withdrawn.
If the Merger Agreement is terminated or if Offeror does not accept the
Shares tendered for payment, then Offeror will not have any right to designate
directors for election to the Board of Directors.
The Parent Designees
Effective upon the acceptance for payment pursuant to the Offer of a number
of Shares that satisfies the Minimum Condition as defined in the Merger
Agreement, Parent shall be entitled to designate the number of directors,
rounded up to the nearest whole number, on the Board of Directors that equals
the product of (i) the total number of directors on the Board of Directors
(giving effect to the increase in the size of such Board of Directors pursuant
to the Merger Agreement) and (ii) the percentage that the number of Shares
beneficially owned by Parent bears to the total number of Shares outstanding,
and the Company shall promptly take all action necessary to cause Parent's
designees to be elected or appointed to the Board of Directors, including,
without limitation, increasing the number of directors, and seeking and
accepting resignations of incumbent directors. At such time, the Company will
also take all action necessary to cause persons designated by Parent to
constitute the number of members, rounded up to the nearest whole number, on
(i) each committee of the Board of
1
<PAGE>
Directors, (ii) each board of directors (or similar body) of each subsidiary
of the Company and (iii) each committee (or similar body) of each such board.
Notwithstanding the foregoing in the event that Parent's designees are elected
to the Board of Directors, the Company shall use its reasonable efforts to
ensure that at least two members of the Board of Directors as of the date
hereof who are not officers or affiliates of the Company (the "Continuing
Directors") shall remain members of the Board of Directors until the Effective
Time.
The Company's obligations to appoint Parent's designees to the Board of
Directors shall be subject to Section 14(f) of the 1934 Act and Rule 14f-1
promulgated thereunder. The Company shall promptly take all actions, as
Section 14(f) and Rule 14f-1 requires in order to fulfill its obligations
under the Merger Agreement. Parent has supplied to the Company in writing
information with respect to itself and its nominees, officers, directors and
affiliates required by Section 14(f) and Rule 14f-1.
Following the election or appointment of Parent's designees pursuant to the
Merger Agreement and until the Effective Time, the approval of a majority of
the Continuing Directors shall be required to authorize (and such
authorization shall constitute the authorization of the Board of Directors and
no other action on the part of the Company, including any action by any other
director of the Company, shall be required to authorize) any termination of
the Merger Agreement by the Company, any amendment of the Merger Agreement
requiring action by the Board of Directors, any extension of time for
performance of any obligation or action under the Merger Agreement by Parent
or Offeror and any waiver of compliance with any of the agreements or
conditions contained in the Merger Agreement for the benefit of the Company.
Pursuant to the provisions of the Merger Agreement described in the Schedule
14D-9, Parent may designate from among the persons identified below the
persons to be elected to the Board of Directors (the "Parent Designees"). It
is expected that the Parent Designees will assume office promptly upon the
acceptance for payment pursuant to the Offer of a number of Shares that
satisfies the Minimum Condition, which the Company expects will be promptly
thereafter, and that they will thereafter constitute at least a majority of
the Board of Directors. Parent has informed the Company that each of the
Parent Designees has consented to act as a director, if so designated.
None of the executive officers and directors of Parent or the Offeror
currently is a director of, or holds any position with, the Company. The
Company has been advised that, to the best knowledge of Parent and the
Offeror, none of Parent's or the Offeror's directors, executive officers,
affiliates or associates beneficially owns any equity securities, or rights to
acquire any equity securities, of the Company and none has been involved in
any transactions with the Company or any of its directors, executive officers,
affiliates or associates which are required to be disclosed pursuant to the
rules and regulations of the Securities and Exchange Commission (the
"Commission") other than those described herein.
2
<PAGE>
Set forth in the table below are the name, age and present principal
occupation or employment and five-year employment history for each of the
persons who may be designated by Parent as the Parent Designees. Except as
otherwise indicated, the business address of each of the Parent Designees is
Heinrich-von-Stephan-Str. 1, 53175 Bonn, Germany. Each person is a citizen of
the Federal Republic of Germany other than Jim Fredholm, who is a citizen of
the United States, and Dr. Andreas Hunziker, who is a citizen of Switzerland.
"Parent Designees" shall mean all of the individuals set forth below.
<TABLE>
<CAPTION>
Present Principal Occupation or Employment and
Material Positions Held During the Past Five
Name Age Years
---- --- -------------------------------------------------
<C> <C> <S>
Peter Wagner 53 Chief Executive Officer of Logistics of Parent
and Chief Executive Officer of Danzas.
Renato Chiavi 59 President and Director since the Offeror was
founded. Mr. Chiavi has served as a Member of
Group Management and Head of the Intercontinental
Business Unit of Danzas since March 1996.
Mr. Chiavi served as Head of the Intercontinental
Traffic Business Unit of Danzas from 1994 to 1996.
Jim Fredholm 47 Mr. Fredholm has served as a Member of Group
Danzas Management Ltd. Management and Chief Financial Officer of Danzas
Leimenstrasse 1 since 1998. From 1979 to 1998, Mr. Fredholm held
P.O. Box 4002 Basel various financial management positions in the
Switzerland transportation and retailing industries.
Dr. Hans Oskar Zieschang 59 Director of the Department of Mergers and
Corporations for Parent since 1998. Director
of Marketing and Sales of Deutsche Post
Parcelpost of Parent from 1996 to 1998. Chief
Executive Officer of PSG Postdienst Services
MbH from 1990 to 1996.
Dr. Bernd Boecken 56 Director of Finance of Parent since April 1995.
Prior to 1995, Dr. Boecken served as Director of
Finance of BAYER AG, Leverkusen, Germany.
Dr. Klaus Engelen 45 General Counsel, Executive Vice President and
Secretary since the Offeror was founded.
Dr. Engelen has served as General Counsel of
Parent since April 1998. Prior to April 1998, Dr.
Engelen served as General Counsel of Deutsche
Telecom GmbH.
Dr. Andreas Hunziker 40 Mr. Hunziker has served as a Member of Group
Danzas Management Ltd. Management and Head of Information Technology of
Leimenstrasse 1 Danzas since October 1996. From October 1992 to
P.O. Box 4002 Basel October 1996, Mr. Hunziker was a Senior Lecturer
Switzerland for Management Information at the University of
St. Gallen (HSG).
</TABLE>
Any other officer or director of Parent or the Offeror listed in Schedule I
to the Offer to Purchase dated November 19, 1999, filed as an exhibit to the
Tender Offer Statement on Schedule 14D-1 of Parent and the Offeror may also be
designated by Offeror as a Parent Designee. The information with respect to
the Parent Designees has been supplied by the Offeror for inclusion herein.
Certain Information Concerning The Company
The authorized capital stock of the Company consists of 100,000,000 shares
of common stock, par value $.01 per share, and 1,000,000 shares of preferred
stock, par value $1.00 per share. As of November 12, 1999 (i) 33,628,769
Shares were issued and outstanding, all of which have been duly authorized and
validly issued and are fully paid and nonassessable, (ii) 1,797,600 Shares
were held by the Company in its treasury, and (iii) Stock Options to purchase
an aggregate of 2,567,491 Shares at a weighted average exercise price of
$19.98 per share were outstanding. As of the date hereof, no shares of
preferred stock are issued and outstanding. The Shares are the only class of
voting securities of the Company. Each share of common stock is entitled to
one vote on each matter to be considered at meetings of stockholders including
the election of directors.
3
<PAGE>
Current Members of the Company's Board of Directors and Executive Officers
To the extent that the Company's Board of Directors will consist of persons
who are not among the Parent Designees, the Company's Board of Directors is
expected to consist of persons who are currently directors of the Company who
have not resigned.
The following table sets forth information with respect to each person who
is currently a director of the Company:
<TABLE>
<CAPTION>
Present Principal Occupation or Employment and Director
Material Positions Held During the Past Five Continuously
Name Age Years Since
---- --- ---------------------------------------------- ------------
<C> <C> <S> <C>
John M. Fowler.......... 50 Independent business consultant 1985
since August 1998. Executive Vice
President and Chief Financial
Officer, MoneyGram Payment Systems,
Inc., October 1996 through August
1998. Independent business
consultant from July 1995 through
October 1996. Executive Vice
President of Travelers Group Inc.
(formerly Primerica Corporation),
New York, New York, 1991 through
June 1995. Director of Transatlantic
Holdings, Inc. and MoneyGram Payment
Systems, Inc.
Hendrik J. Hartong...... 60 Chairman of the Board of the Company 1985
since 1985 (Chief Executive Officer
from 1985 to 1989); since 1988
General Partner of Brynwood Partners
II L.P. and since 1996 General
Partner of Brynwood Partners III,
L.P., private investment
partnerships. Director of Hurco
Companies, Inc. and Lincoln Snacks
Company.
Donald J. Keller........ 67 Chairman of the Board of Vlasic 1990
Foods International, Inc. since
March 1998; Chairman of the Board of
Prestone Products Corporation from
January 1995 through June 1997.
Chairman of the Board of B.
Manischewitz Company from March 1993
until May 1998 (President, Co-Chief
Executive Officer and a director
from May 1992 to March 1993).
Director of Dan River Inc.
Andrew L. Lewis IV...... 42 President, KRR Partners L.P., a 1986
private investment partnership,
since July 1993; Director of Hurco
Companies, Inc. and Independence
Blue Cross of Philadelphia.
Richard T. Niner........ 59 General Partner since 1988 of 1985
Brynwood Partners II L.P., and
General Partner of Wind River
Associates LP., private investment
partnerships. Director of Arrow
International, Inc., Case Pomeroy &
Company, Inc. and Hurco Companies,
Inc.
John Radziwill.......... 51 Private investor since August 1997. 1995
President of Radix Organization Inc.
from July 1976 until August 1997;
President of Radix Ventures Inc.
from 1979 until its acquisition by
the Company in June 1995.
Guenter Rohrmann........ 60 President and Chief Executive 1985
Officer of the Company since 1989.
</TABLE>
4
<PAGE>
Committees of the Board of Directors
The Board of Directors has an Executive Committee, an Audit Committee, a
Compensation and Stock Option Committee and a Nominating Committee.
The Executive Committee (consisting of Messrs. Hartong, Niner and Rohrmann)
has all of the powers of the Board of Directors between meetings of the Board,
subject to Delaware law.
The Audit Committee (consisting of Messrs. Lewis, Keller, Niner and Vargas)
has the responsibility of meeting with the Company's independent public
accountants and internal auditors to review the plan, scope and results of the
audit of the Company's annual financial statements and the recommendations of
the independent public accountants regarding the Company's internal accounting
systems and controls. The Audit Committee also recommends the appointment of
the independent public accountants for the ensuing year.
The Compensation and Stock Option Committee (consisting of Messrs. Fowler,
Keller, Lewis and Radziwill) reviews and approves the compensation of
officers, including the Chief Executive Officer, and administers the Company's
stock option plans.
The Nominating Committee (consisting of Messrs. Fowler, Hartong, Niner and
Rohrmann) screens and selects candidates to stand for election as directors of
the Company. The Nominating Committee will consider responsible
recommendations by shareholders of candidates to be nominated as directors of
the Company but does not intend to solicit such recommendations. All such
recommendations must be in writing to the Nominating Committee addressed to
the Secretary of the Company. By accepting a shareholder recommendation for
consideration, the Nominating Committee does not undertake to adopt or take
any other action concerning such recommendation or to give the shareholder its
reasons for any action or inaction.
During the year ended December 31, 1998, there were seven meetings of the
Board of Directors, three meetings of the Executive Committee, two meetings of
the Audit Committee, two meetings of the Compensation and Stock Option
Committee, and one meeting of the Nominating Committee. Each director attended
more than 75% of the aggregate of the meetings of the Board of Directors and
of the committees thereof on which he served.
Director Compensation
During 1998, each director who is not an officer of the Company received an
annual fee of $20,000 for serving as a director and $1,250 for each day of
attendance at meetings of the Board of Directors or a committee thereof.
5
<PAGE>
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth as of November 8, 1999 (except as otherwise
noted), information with respect to the beneficial ownership of the Company's
common stock by (i) each person known by the Company to own beneficially more
than 5% of the outstanding common stock of the Company, (ii) each executive
officer of the Company named in the Summary Compensation Table under
"Executive Compensation", (iii) each current director and (iv) all directors
and executive officers of the Company as a group. Unless otherwise indicated
in the footnotes to this table, beneficial ownership of shares represents sole
voting and investment power with respect to those shares:
<TABLE>
<CAPTION>
Percentage of
Shares Owned Outstanding
Beneficial Owner Beneficially (#) Shares (%)(1)
---------------- ---------------- -------------
<S> <C> <C>
Wellington Management Company (2).............. 1,697,250 5.05%
75 State Street
Boston, Massachusetts 02109
Hendrik J. Hartong, Jr. (3).................... 486,517 1.5
Guenter Rohrmann (4)........................... 480,507 1.4
Robert J. O'Connell (5)........................ 44,742 (12)
Dennis M. Dolan (6)............................ 102,938 (12)
Giorgio Laccona (7)............................ 45,935 (12)
Daniel J. McCauley (8)......................... 49,238 (12)
John M. Fowler (9)............................. 47,500 (12)
Donald J. Keller (9)........................... 7,563 (12)
Andrew L. Lewis IV (9)......................... 15,107 (12)
Richard T. Niner (10).......................... 359,587 1.0
John Radziwill................................. 411,002 1.2
All directors and executive officers as a group
(consisting of 11 persons) (11)............... 2,050,636 6.10
</TABLE>
- --------
(1) Shares issuable upon the exercise of stock options owned by that person
which can be exercised within 60 days of November 8, 1999, are deemed
outstanding for the purpose of computing the number and percentage of
outstanding shares owned by that person (and any group that includes
that person) but are not deemed outstanding for the purpose of computing
the percentage of outstanding shares owned by any other person.
(2) Based on information believed to be accurate as of September 30, 1999,
and includes shares with shared depositive power and shared investment
power.
(3) Includes 83,750 shares issuable upon the exercise of stock options.
(4) Includes 131,250 shares issuable upon the exercise of stock options.
(5) Includes 18,750 shares issuable upon the exercise of stock options.
(6) Includes 30,000 shares issuable upon the exercise of stock options.
(7) Includes 7,500 shares issuable upon the exercise of stock options.
(8) Includes 22,500 shares issuable upon the exercise of stock options.
(9) Includes 2,500 shares issuable upon the exercise of stock options.
(10) Includes 5,061 shares held in custodial accounts for the benefit of Mr.
Niner's children.
(11) Includes 306,250 shares issuable upon the exercise of stock options.
(12) Less than 1%.
6
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
that the Company's directors and executive officers, and each person who
beneficially owns more than ten percent of the Company's Common Stock, file
with the Securities and Exchange Commission an initial report of beneficial
ownership and subsequent reports of changes in beneficial ownership of the
Company's Common Stock and to furnish copies of such reports to the Company.
Based solely upon a review of the copies of the forms furnished to the Company
and inquiry of the Company's directors and executive officers, the Company
believes that all of its directors and executive officers, and all persons
owning beneficially more than ten percent of the Company's Common Stock,
complied in a timely manner with all filing requirements applicable to them
with respect to transactions during the year ended December 31, 1998.
7
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the cash compensation, as well as certain
other compensation, paid or accrued by the Company to the Chief Executive
Officer and each of the four most highly compensated executive officers of the
Company (other than the Chief Executive Officer) as of December 31, 1998, for
their services in all capacities for each of the years in the three-year
period ended December 31, 1998:
<TABLE>
<CAPTION>
Long-Term
Compensatiom
------------
Annual Compensation (1)
------------------------ Securities
Underlying
Options (2) All Other
(# of Compensation
Name and Principal Position Year Salary($) Bonus($) Shares) ($) (3)
--------------------------- ---- --------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Guenter Rohrmann............ 1998 560,000 500,000 75,000 115,299
President and Chief 1997 525,000 1,200,000 0 114,549
Executive Officer 1996 480,000 800,000 0 40,497
Robert J. O'Connell......... 1998 210,000 150,000 0 58,799
Senior Vice President 1997 200,000 250,000 15,000 55,299
1996 190,000 150,000 0 14,740
Dennis M. Dolan............. 1998 200,000 150,000 0 28,975
Executive Vice President 1997 190,000 250,000 15,000 26,000
and Chief Financial Officer 1996 175,000 150,000 0 13,088
Giorgio Laccona.............
Senior Vice President, 1998 185,000 150,000 0 28,012
General Manager 1997 170,000 250,000 15,000 24,600
The Americas 1996 155,000 150,000 0 12,488
Daniel J. McCauley.......... 1998 165,000 60,000 0 60,147
Vice President, Secretary 1997 155,000 100,000 15,000 58,699
and General Counsel 1996 145,000 75,000 0 7,000
</TABLE>
- --------
(1) Salary levels for each year are fixed at the beginning of the year.
Bonuses for each year are determined following the end of the year.
(2) Adjusted to reflect stock dividend paid on July 25, 1997.
(3) Consists of contributions by the Company to its 401(k) Retirement Plan,
which covers substantially all U.S.-based employees who are not covered by
a collective bargaining agreement. The Company contributes (i) a sum equal
to 3% of the salary of each eligible employee and (ii) a further sum, not
exceeding 3% of the employee's salary, equal to the amount, if any,
contributed by the employee, subject to certain limitations imposed by the
Internal Revenue Code. Contributions under the 401(k) Retirement Plan for
1998 for Messrs. Rohrmann, O'Connell, Dolan, Laccona and McCauley were
$9,300, $9,800, $9,300, $9,300 and $7,634, respectively. In addition, the
Company makes contributions under its Deferred Compensation Plan equal to
3% of the amounts deferred thereunder by the named executive officers.
Contributions under the Deferred Compensation Plan for 1998 for Messrs.
Rohrmann, O'Connell, Dolan, Laccona and McCauley were $36,000, $9,000,
$8,675, $8,212 and $5,513, respectively. A participant's interest in the
Company's contributions to the 401(k) Retirement Plan and the Deferred
Compensation Plan vests at the rate of 20% for each of the first five
years of service and is fully vested thereafter. The balance in 1998 and
1997 represents the dollar value of premiums paid by the Company with
respect to life insurance for the benefit of each of the named executive
officers.
8
<PAGE>
Stock Option Grants in 1998
The following table sets forth information with respect to the grant of
stock options during 1998 to the executive officers named in the Summary
Compensation Table.
<TABLE>
<CAPTION>
Individual Grants
------------------------------------------------
Potential
Percent of Realizable Value
Total at Assumed
Options Annual Rates of
Options Granted to Exercise Stock Price
Granted Employees in Price per Expiration Appreciation for
(# of Shs.) 1998(1) Share ($)(2) Date Option Term (3)
---------- ------------ ------------ ---------- -----------------
Name 5% 10%
---- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Guenter Rohrmann........ 75,000 47% 26.31 6/18/03 544,617 1,205,675
Robert J. O'Connell..... 0 -- -- -- -- --
Dennis M. Dolan......... 0 -- -- -- -- --
Giorgio Laccona......... 0 -- -- -- -- --
Daniel J. McCauley...... 0 -- -- -- -- --
</TABLE>
- --------
(1) Options with respect to a total of 160,000 shares were granted to
employees in 1998.
(2) All options were granted at an exercise price equal to the market value on
the date of grant.
(3) Represents the potential appreciation of the options over their stated
term of five-years, based upon assumed compounded rates of appreciation of
5% per year (equivalent to 27.6%) and 10% per year (equivalent to 61.1%).
The amounts set forth in these columns are not intended as forecasts of
future appreciation, which is dependent upon the actual increase, if any,
in the market price of the underlying shares, and there is no assurance
that the amounts of appreciation shown in the table actually will be
realized.
Aggregated Option Exercises in 1998 and
Option Value at December 31, 1998
The following table sets forth, for each of the executive officers named in
the Summary Compensation Table, information with respect to the exercise of
stock options during 1998 and holdings of unexercised options at the end of
the year:
<TABLE>
<CAPTION>
Number of Shares Value of Unexercised
Underlying Unexcercised In-the-Money
Options at Options at
Fiscal Year End(#) Fiscal Year End ($)(1)
------------------------- -------------------------
Shares
Acquired on Value
Exercise Realized
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Guenter Rohrmann........ 0 0 84,375 103,125 499,247 166,416
Robert J. O'Connell..... 31,500 497,777 9,375 16,875 33,283 33,283
Dennis M. Dolan......... 0 0 20,625 16,875 99,849 33,283
Giorgio Laccona......... 11,250 224,674 20,625 16,875 99,849 33,283
Daniel J. McCauley...... 0 0 15,000 15,000 66,567 22,189
</TABLE>
(1) Based on the excess of (i) the aggregate market value (closing price on
the NASDAQ National Market) of the underlying shares on December 31, 1998,
over (ii) the aggregate exercise price of the options.
9
<PAGE>
Employment Contracts and Change-of-Control Arrangements
The Company is party to an employment agreement with Mr. Rohrmann that
provides for an annual base salary and such annual incentive compensation
bonus as the Compensation and Stock Option Committee may determine. Mr.
Rohrmann's base salary is subject to review annually and currently is
$585,000. By its terms, the agreement will expire December 31, 2001. The
agreement provides that in event of a change of control (as defined below),
either party may terminate the executive's employment at any time, and upon
such termination, the Company would be required to pay in a lump sum the
balance of the base salary for the unexpired term of the agreement (but not
less than two times the annual base salary). A "change of control" is defined
in the agreement as (i) the acquisition by any person (which term includes any
entity or group) of shares of the Company's Common Stock representing more
than 40% of the shares outstanding or (ii) the sale or other disposition by
the Company of all or substantially all of its assets.
10
<PAGE>
Performance Graph
The following Performance Graph compares the cumulative total shareholder
return on the Company's Common Stock over the five years ended December 31,
1998, with the cumulative total return for the same period of (i) the Standard
& Poor's 500 Stock Index and (ii) a peer group comprised of four publicly held
companies: Airborne Freight Corporation, Expediters International of
Washington, Inc., Circle International Group, Inc. (formerly, The Harper
Group, Inc.), and Fritz Companies, Inc. Dividend reinvestment has been assumed
and, with respect to companies in the peer group, the returns of each company
have been weighted to reflect its stock market capitalization relative to that
of the other companies in the group.
FIVE YEAR CUMULATIVE TOTAL RETURNS
VALUE OF $100 INVESTED ON DECEMBER 31, 1993
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
Base Period
Company Name/Index Dec 93 Dec 94 Dec 95 Dec 96 Dec 97 Dec 98
- -------------------------- ----------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Air Express International
Corporation.............. $100 $152.67 $175.64 $250.23 $356.77 $256.81
S&P 500 Index............. 100 101.32 139.40 171.40 228.59 293.91
Peer Group................ 100 98.93 142.28 103.11 171.47 181.77
</TABLE>
Report of Compensation and Stock Option Committee
The Compensation and Stock Option Committee reviews and approves the annual
compensation of the Company's executive officers, as well as the Company's
policies and practices with respect to compensation of other management
personnel.
Compensation of executive officers consists primarily of base salary and
discretionary bonus awards tied to performance and, where appropriate, the
grant of stock options. Although the percentage of total compensation borne by
each of these components is not fixed, it is the view of the Committee that,
in the case of the most senior officers, the discretionary bonus should
represent a substantial percentage of total compensation and, indeed, a
greater percentage than is the case with officers having more narrowly defined
responsibilities.
In reviewing the compensation of the Company's executive officers (including
the grant of stock options), the Committee considers (i) the levels of
executive compensation paid by the Company's principal competitors in the air
freight and air freight forwarding industry (including those publicly held
companies in the peer group
11
<PAGE>
shown in the Performance Graph above), to the extent reliable information with
respect thereto is available, (ii) the Company's reported earnings, earnings
per share and profit margin (operating income as a percentage of revenues),
both in absolute terms as well as in relation to budget forecasts, results for
prior years and competitors' results (where publicly available), (iii) the
Company's return on equity and stock price performance relative to those of
its publicly held competitors and the market as a whole and (iv) the extent to
which the Company has achieved or exceeded its goals for the year. No specific
weight is accorded to any single factor and different factors may be accorded
greater or lesser weight in particular years or for particular officers.
Salary levels for each year are reviewed and fixed at the beginning of the
year based primarily on the Company's performance during the preceding year
and the general trends in executive salaries within the Company's industry.
Cash bonuses are determined and paid shortly following the end of the year
based primarily on the Company's performance, and that of its Common Stock,
during the year, the extent to which the Company's goals for the year were met
or exceeded and the success of management in addressing particular challenges
that were presented during the year.
In determining the cash bonuses to be paid for 1998 to the Company's senior
executive officers, including the Chief Executive Officer, the Committee noted
(a) that management continued to integrate successfully various operations
which had been acquired into the Company's logistics service and information
network and (b) that, while net income for the Company was at a level which
was the second highest in Company history, it did not exceed net income for
1997 and did not meet management's goals for the year. Accordingly, the cash
bonuses for the Company's executive officers and management in general were
reduced substantially from 1997 levels. The reduction reflected the
Committee's views of responsible management and of the appropriate levels of
bonus based upon the year's financial results.
Section 162(m) of the Internal Revenue Code generally limits (to $1,000,000
per covered executive) the deductibility of the annual compensation paid to a
company's chief executive officer and each of its other four most highly
compensated executive officers. That section and proposed regulations
thereunder contain certain exclusions from the deductibility limitation,
including compensation that is determined on the basis of performance goals as
well as compensation attributable to the exercise of stock options and rights,
under plans that meet certain criteria and are approved by shareholders. The
Company's 1996 Incentive Stock Plan, as amended, has been designed to satisfy
these criteria. Compensation attributable to the exercise of outstanding
options previously granted under the Company's 1991 Incentive Stock Plan is
also excludable from the deductibility limitation pursuant to certain
transition rules under the Internal Revenue Code. The Committee is continuing
to review the Company's compensation practices for covered executives with a
view to preserving the deductibility of their compensation to the maximum
extent possible, taking all relevant factors into account, and will consider
carefully the possible modification of any compensation arrangements that
might be expected to result in any material loss of deductions.
THE COMPENSATION AND
STOCK OPTION COMMITTEE
John M. Fowler, Chairman
Donald J. Keller
Andrew L. Lewis IV
John Radziwill
Compensation Committee Interlocks and Insider Participation
No member of the Compensation and Stock Option Committee is an officer or
employee of the Company or any of its subsidiaries or currently participates
in any of the Company's management compensation plans or programs. No
executive officer of the Company is a director or member of the compensation
committee of any other entity of which any member of the Company's
Compensation and Stock Option Committee is an officer or employee.
12
<PAGE>
EXHIBIT INDEX
Exhibit (a)(1) Fairness Opinion of Morgan Stanley & Co. Incorporated
dated November 13, 1999.
Exhibit (a)(2) Form of Letter to Stockholders of the Company dated
November 19, 1999.
Exhibit (a)(3) Press Release dated November 15, 1999.
Exhibit (c)(1) Tender Offer and Merger Agreement, dated as of November
15, 1999, by and among Deutsche Post AG, DP Acquisition
Corporation and Air Express International Corporation.
Exhibit (c)(2) Confidentiality Agreement, dated July 12, 1999 between
the Company and Danzas.
<PAGE>
EXHIBIT (a)(1)
[LOGO OF MORGAN STANLEY DEAN WITTER]
November 13, 1999
Board of Directors
Air Express International Corporation
120 Tokeneke Road
Darien, CT 08820
Members of the Board:
We understand that Air Express International Corporation ("AEI" or the
"Company"), Deutsche Post ("Buyer") and DP Acquisition Corp., a wholly owned
subsidiary of Buyer ("Acquisition Sub") propose to enter into a Tender Offer
and Merger Agreement, substantially in the form of the draft dated November
11, 1999 (the "Merger Agreement") which provides, among other things, for (i)
the commencement by Acquisition Sub of a tender offer (the "Tender Offer") for
all outstanding shares of common stock of AEI, par value $0.01 per share (the
"Common Stock"), for $33.00 per share net to the seller in cash, and (ii) the
subsequent merger (the "Merger") of Acquisition Sub with and into AEI.
Pursuant to the Merger, AEI will become a wholly owned subsidiary of Buyer and
each outstanding share of Common Stock, other than shares held in treasury or
held by Buyer or any affiliate of Buyer or as to which dissenters' rights have
been perfected, will be converted into the right to receive $33.00 per share
in cash (the "Consideration"). The terms and conditions of the Tender Offer
and the Merger are more fully set forth in the Merger Agreement.
You have asked for our opinion as to whether the Consideration to be received
by the holders of shares of Common Stock pursuant to the Merger Agreement is
fair from a financial point of view to such holders.
For purposes of the opinion set forth herein, we have:
(i) reviewed certain publicly available financial statements and other
information of the Company;
(ii) reviewed certain internal financial statements and other financial
and operating data concerning the Company prepared by the
management of the Company;
(iii) analyzed certain financial projections prepared by the management
of the Company;
(iv) discussed the past and current operations and financial condition
and the prospects of the Company with senior executives of the
Company;
(v) reviewed the reported prices and trading activity for the Common
Stock;
(vi) compared the financial performance of the Company and the prices
and trading activity of the Common Stock with that of certain
other comparable publicly-traded companies and their securities;
(vii) reviewed the financial terms, to the extent publicly available,
of certain comparable acquisition transactions;
(viii) participated in discussions and negotiations among
representatives of the Company, Buyer and their financial and
legal advisors;
(ix) reviewed the draft Merger Agreement; and
(x) performed such other analyses as we have deemed appropriate.
We have assumed and relied upon without independent verification the accuracy
and completeness of the information reviewed by us for the purposes of this
opinion. With respect to the financial forecasts, we have
1
<PAGE>
assumed that they have been reasonably prepared on bases reflecting the best
currently available estimates and judgments of the future financial
performance of the Company. We have not made any independent valuation or
appraisal of the assets or liabilities of the Company, nor have we been
furnished with any such appraisals. Our opinion is necessarily based on
economic, market and other conditions as in effect on, and the information
made available to us as of, the date hereof.
We have acted as financial advisor to the Board of Directors of the Company in
connection with this transaction and will receive a fee for our services. In
the past, Morgan Stanley & Co. Incorporated and its affiliates have provided
financial advisory and financing services for the Company and have received
fees for the rendering of these services.
It is understood that this letter is for the information of the Board of
Directors of the Company only and may not be used for any other purpose
without our prior written consent.
Based on the foregoing, we are of the opinion on the date hereof that the
Consideration to be received by the holders of shares of Common Stock pursuant
to the Merger Agreement is fair from a financial point of view to such
holders.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
/s/ Marko C. Remec
By: _________________________________
Marko C. Remec
Managing Director
2
<PAGE>
EXHIBIT (a)(2)
[LOGO OF AIR EXPRESS INTERNATIONAL CORPORATION]
November 19, 1999
To Our Stockholders:
I am pleased to inform you that on November 15, 1999, Air Express
International Corporation entered into a Tender Offer and Merger Agreement with
Deutsche Post AG and DP Acquisition Corporation, a wholly owned subsidiary of
Deutsche Post AG, pursuant to which DP Acquisition Corporation has commenced a
cash tender offer to purchase all of the outstanding shares of Common Stock of
Air Express International for $33 in cash. Under the Agreement, if the
conditions to the Offer are met, including a tender of at least a majority of
the Shares, the Offer will be followed by a Merger in which any remaining
shares of Air Express International Common Stock will be converted into the
right to receive the highest price paid per share pursuant to the Offer in
cash, without interest.
Your Board of Directors has unanimously determined that the Offer and the
Merger are fair to, and in the best interests of, the Company and its
stockholders, has approved the Offer and the Merger and unanimously recommends
that the Air Express International stockholders accept the Offer and tender
their shares of Air Express International Common Stock pursuant to the Offer.
We believe that by teaming up, the two companies will be a formidable force
worldwide. We also believe that this transaction generates excellent value for
our stockholders.
In arriving at its recommendation, the Board of Directors gave careful
consideration to a number of factors described in the attached Schedule 14D-9
that is being filed today with the Securities and Exchange Commission,
including, among other things, the opinion of Morgan Stanley Dean Witter, the
financial advisor to Air Express International, that the $33 per share in cash
to be received by the holders of Air Express International Common Stock in the
Offer and the Merger is fair to such holders. The reference to the opinion of
Morgan Stanley Dean Witter is qualified by the text of such opinion included as
Exhibit (a)(1) to the attached Schedule 14D-9, which is incorporated by
reference herein and should be read in its entirety.
In addition to the attached Schedule 14D-9 relating to the Offer, enclosed is
the Offer to Purchase dated November 15, 1999 of DP Acquisition Corporation,
together with related materials, including a Letter of Transmittal to be used
for tendering your shares of Air Express International Common Stock. These
documents set forth the terms and conditions of the Offer and the Merger and
provide instructions as to how to tender your shares.
Very truly yours,
/S/ Guenter Rohrmann
_________________________
Guenter Rohrmann
President and CEO
[LOGO OF AIR FREIGHT FORWARDER]
<PAGE>
Exhibit (a)(3)
News Release
FOR IMMEDIATE RELEASE
For more information, please contact:
Jay Jacobson, Investor Relations (203) 655-7978
AIR EXPRESS INTERNATIONAL (AEI) SIGNS
-------------------------------------
DEFINITIVE MERGER AGREEMENT WITH DEUTSCHE POST;
-----------------------------------------------
DEUTSCHE POST GAINS BASE IN U.S.A.
----------------------------------
DARIEN, CT., November 15 1999 -- Air Express International Corporation
(Nasdaq: AEIC), the largest U.S.-based international freight forwarder, and
Deutsche Post AG, Europe's largest mail, parcel and logistics company, today
announced that they have signed a definitive merger agreement. Under the terms
of the merger agreement, Deutsche Post will acquire AEI for $33 per share in
cash or approximately $1.14 billion. AEI's Board of Directors and Deutsche
Post's supervisory board have both approved the agreement.
Pursuant to the merger agreement, Deutsche Post will commence a tender
offer for all outstanding shares of AEI at a price of $33 per share in cash.
Upon consummation of the tender offer, any remaining shares of AEI will be
acquired in a cash merger at the same price.
The tender offer is subject to various conditions including the tender of a
majority of the outstanding shares on a fully diluted basis, and receipt of U.S.
and European governmental and regulatory approvals and other conditions
customary for similar transactions.
Deutsche Post plans to integrate all activities into the Danzas
Intercontinental Business Unit. As a result, Deutsche Post gains a major
stronghold in the U.S.A., and Danzas becomes the leading airfreight forwarder
worldwide.
The new Chief Executive Officer (CEO) of Danzas-AEI will be Renato Chiavi,
who now heads up intercontinental business at Danzas. AEI's present CEO,
Guenter Rohrmann, will assume the position of Vice Chairman of Danzas-AEI and
will be responsible for the integration. Peter Wagner will be Chairman of the
combined company. Hendrik J. Hartong, Jr., AEI's present Chairman, will join
the Danzas board.
<PAGE>
Commenting on the proposed transaction, Dr. Klaus Zumwinkel, Board Chairman
of Deutsche Post, stated, "With Air Express International, Deutsche Post gains
an ideal base in the U.S. The acquisition is another milestone on the strategic
road to becoming the leading international logistics firm."
Zumwinkel continued, "The Deutsche Post group expects to achieve total
sales of DEM 55 billion (about $29.3 billion or EURO 28.1 billion) in the year
2000 with some 270,000 employees. In the year of its IPO, Deutsche Post will be
Number One in Europe in its mail, parcel express and logistics activities plus a
strong position in financial services."
Peter Wagner, a member of the Deutsche Post Board and CEO of Danzas,
stated, "We believe the acquisition of AEI will create substantial synergies.
This joining of forces will position Danzas even better in the U.S. and
therefore in transatlantic and transpacific business. When the transaction is
completed, Danzas will be the leading global airfreight forwarder, as AEI is
already the leading U.S.-based airfreight forwarder. This will help us give
customers what they want -- one stop shopping."
AEI Chairman Hartong declared, "AEI and Danzas have each been very strong
forwarders in their own rights, and they will be even stronger as partners. By
teaming up, the two companies will be a formidable force worldwide as a provider
of integrated logistics solutions." Hartong continued, "We believe the
transaction generates excellent value for our shareholders, and we urge them to
accept the offer."
Guenter Rohrmann, AEI's President and CEO, added, "This transaction is very
favorable for the customers of both AEI and Danzas. They will be able to draw
upon the greatly expanded resources of the combined organizations, whose sum
will be much greater than the parts."
Headquartered in Darien, CT, AEI is the oldest and largest international
airfreight forwarder in the U.S. and a world leader in integrated logistics
services, delivering multi-modal transportation, warehousing and distribution,
customs brokerage and information management solutions across a network of 705
locations in more than 135 countries. With 7,770 employees worldwide, the
Company generated gross revenues of more than $1.5 billion (DEM 2.8 billion and
EURO 1.4 billion) in 1998. Information on AEI is available on the World Wide
Web at www.aeilogistics.com.
--------------------
25
<PAGE>
The Danzas Group is one of Europe's leading logistics providers. Around
29,000 employees produce annual sales of over CHF 7 billion. Founded in 1815
and headquartered in Basal, Switzerland, Danzas is present in 50 countries on
all continents. Information on Danzas is available on the World Wide Web at
www.danzas.com.
- --------------
This press release contains forward-looking statements. Such statements
are subject to risks and uncertainties that could cause actual results to vary
materially from those anticipated; among these are the Company's dependence upon
conditions in the air and ocean freight forwarding industry, the size and
resources of many of the Company's competitors and the need for the Company to
continue to effectively integrate acquired businesses and successfully deliver
its primary services. Additional information with respect to these and other
factors which could materially affect the Company is included in the Company's
filings with the Securities and Exchange Commission, including its most recent
proxy statement and 10-K.
CONTACTS:
<TABLE>
<S> <C> <C> <C>
AEI Investor Relations Mr. Dennis Dolan Darien, CT USA 203 655 5713
Deutsche Post Press Relations Dr. Martin Dopychai Bonn, Germany 49 228 182 9988
Danzas Press Relations Mr. Patrick Kaiser Basel, Switzerland 41 61 268 7612
AEI Press Relations Ms. Candace Bouchard Darien, CT USA 203 655 5792/5753
</TABLE>
26
<PAGE>
Exhibit (c)(1)
[Insert Merger Agreement]
<PAGE>
Exhibit (c)(1)
TENDER OFFER AND MERGER AGREEMENT
by and among
DEUTSCHE POST AG,
DP ACQUISITION CORPORATION,
and
AIR EXPRESS INTERNATIONAL CORPORATION
Dated as of November 15, 1999
<PAGE>
This TENDER OFFER AND MERGER AGREEMENT, dated as of November 15, 1999 (this
"Agreement"), by and among DEUTSCHE POST AG, a corporation organized under the
laws of the Federal Republic of Germany ("Parent"), DP ACQUISITION CORPORATION,
a Delaware corporation and a direct or indirect wholly owned Subsidiary of
Parent ("Merger Sub"), and AIR EXPRESS INTERNATIONAL CORPORATION, a Delaware
corporation (the "Company").
WITNESSETH:
WHEREAS, the Board of Directors of the Company has (i) determined that each
of the Offer and the Merger (as hereinafter defined) is advisable, fair and in
the best interests of the Company and its stockholders and (ii) resolved to
approve and adopt this Agreement and the transactions contemplated hereby and to
recommend acceptance of the Offer and approval and adoption by the stockholders
of the Company of this Agreement and the Merger;
WHEREAS, Merger Sub shall make a cash tender offer to acquire all of the
issued and outstanding shares of common stock of the Company, $0.01 par value
(such issued and outstanding shares being the "Shares"), for $33.00 per Share,
net to the selling stockholder in cash, in accordance with the terms and subject
to the terms and conditions set forth herein and in the offering documents
relating to the Offer (as defined in Section 1.1);
WHEREAS, pursuant to the Merger, each outstanding Share shall be exchanged
for the right to receive the Merger Consideration (hereinafter defined), and
each outstanding Stock Option (as hereafter defined) shall be settled out upon
the terms and subject to the conditions set forth herein.
NOW THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Parent, Merger Sub and the Company hereby agree as follows:
ARTICLE 1
THE OFFER
Section 1.1. The Offer.
(a) Each of the Company and the Parent shall publicly announce the
execution of this Agreement promptly following its execution, and shall
cooperate with the timing of such announcements consistent with Company's
obligations as a reporting company under the Securities Exchange Act of 1934
(the "Exchange Act").
(b) Provided that nothing shall have occurred that has resulted in a
failure to satisfy any of the conditions set forth in Annex I to this Agreement,
not later than
<PAGE>
five business days after execution of this Agreement, Merger Sub shall, and
Parent shall cause Merger Sub to, commence (within the meaning of Rule l4d-2
under the Exchange Act) an offer to purchase all Shares at a price of $33.00 per
Share, net to the selling stockholder in cash (the "Offer," which term shall
include any amendments to such Offer not prohibited by this Agreement). The
obligation to consummate the Offer shall be subject to the condition that there
shall be validly tendered in accordance with the terms of the Offer and not
withdrawn a number of Shares that, together with the Shares then beneficially
owned by Parent, represents at least a majority of the Shares outstanding on a
fully diluted basis (the "Minimum Condition") and to the other conditions set
forth in Annex I to this Agreement. The Offer shall be made by means of an offer
to purchase containing the Minimum Condition and the further conditions set
forth in Annex I. Merger Sub hereby covenants and agrees that it shall hold the
Offer open for not less than 20 business days. Simultaneously with the
commencement of the Offer, Merger Sub shall file with the Securities and
Exchange Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1, as
amended and supplemented, with respect to the Offer (the "Schedule 14D-1") and
the related Letter of Transmittal, as amended or supplemented, (collectively
with the Schedule 14D-1 the "Offer Documents") provided that prior to the filing
of the Offer Documents, Merger Sub shall have afforded the Company's counsel
with a reasonable opportunity to review and make comments with respect to the
Offer Documents. The Parent agrees to provide the Company and its counsel with
any comments that the Parent or its counsel may receive from the SEC or its
staff with respect to the Offer Documents promptly after receipt thereof. Each
of the Parent, Company and Merger Sub shall promptly correct any information
provided by it for use in the Offer Documents that shall have become false or
misleading in any material respect and Merger Sub further agrees to take all
steps necessary to cause the Offer Documents as so corrected to be filed with
the SEC and disseminated to the holders of Shares, as and to the extent required
by applicable federal securities laws.
(c) Parent and Merger Sub expressly reserve the right to waive any of the
conditions to the Offer and to modify the terms and conditions of the Offer from
time to time, except that, without the prior written approval of the Company,
the Offer shall not be amended (i) to reduce the cash price per Share to be paid
pursuant thereto, (ii) to reduce the number of Shares to be purchased
thereunder, (iii) to change the form of consideration to be paid in the Offer,
(iv) to increase the minimum number of Shares which must be tendered to satisfy
the Minimum Condition, (v) to impose additional conditions to the Offer or (vi)
otherwise to amend the terms of the Offer in a manner that is materially adverse
to the stockholders of the Company. In the event that the conditions set forth
in paragraphs (a)(ii), (a)(iii) or (a)(iv) of Annex I shall not have been
satisfied or waived at the scheduled or any extended expiration date of the
Offer, Parent and Merger Sub shall extend the expiration date of the Offer in
increments of not less than five business days; provided that Parent and Merger
Sub shall not be required to extend the expiration date of the Offer past
February 15, 2000.
2
<PAGE>
Section 1.2. Company Action.
(a) The Company hereby consents to the Offer and represents that its Board
of Directors has adopted and approved this Agreement and the transactions
contemplated hereby including the Offer and the Merger, has determined that this
Agreement and the transactions contemplated hereby including the Offer and the
Merger are advisable, fair to and in the best interest of the Company and its
stockholders, and has resolved (subject to Section 5.2) to recommend acceptance
of the Offer to the Company's stockholders, and to recommend that the Company's
stockholders tender their Shares in the Offer and vote to approve and adopt this
Agreement and the Merger. The Company hereby consents to the inclusion in the
Offer Documents of the recommendation of the Board of Directors described in the
first sentence of this Section 1.2(a), except as such consent may be withdrawn
by the Board of Directors of the Company in accordance with Section 5.2 hereof.
The Company represents that it has received the opinion (the "Fairness Opinion")
of Morgan Stanley Dean Witter ("Company Financial Advisor") to the effect that
the consideration offered pursuant to the Offer and Merger is fair to
stockholders of the Company from a financial point of view; it being understood
and acknowledged that such opinion has been rendered to the Board of Directors
of the Company.
(b) On the date the Offer Documents are filed with the SEC, the Company
shall file with the SEC and mail to the holders of Shares a
Solicitation/Recommendation Statement on Schedule 14D-9, as amended and
supplemented (the "Schedule 14D-9"), which shall reflect the recommendation of
the Board of Directors that the Company's stockholders accept the Offer and, if
applicable, vote to approve and adopt this Agreement and the Merger; provided
that prior to the filing of such Schedule 14D-9, the Company shall have provided
Merger Sub's counsel with a reasonable opportunity to review and make comments
with respect to such Schedule 14D-9 provided that no representation is made by
the Company with respect to information supplied by the Parent or Merger Sub
specifically for inclusion in the Schedule 14D-9. Such recommendation shall not
be withdrawn or adversely modified except in accordance with Section 5.2 hereof.
The Company agrees to provide Parent and its counsel with any comments that the
Company or its counsel may receive from the SEC or its staff with respect to the
Schedule 14D-9 promptly after receipt thereof. Each of the Company, Parent and
Merger Sub shall promptly correct any information provided by it for use in the
Schedule 14D-9 that shall have become false or misleading in any material
respect and the Company further agrees to take all steps necessary to cause such
Schedule 14D-9 as so corrected to be filed with the SEC and disseminated to the
stockholders of the Company, in each case as and to the extent required by
applicable federal securities laws.
(c) The Company shall promptly furnish Parent and Merger Sub the names and
addresses of the holders of Shares and, if available, of non-objecting
beneficial owners of Shares and lists of securities positions of Shares held in
stock depositories, each as of the most recent practicable date, and shall from
time to time furnish Parent and Merger Sub with such additional information,
including updated or additional lists of
3
<PAGE>
stockholders, mailing labels and lists of securities positions, and other
assistance as Merger Sub may reasonably request in order to be able to
communicate the Offer to all stockholders of the Company including those
stockholders who become stockholders after the date of the mailing of the Offer
Documents. Subject to the requirements of law, and except for such steps as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Merger, Parent and Merger Sub shall, and shall cause each of
their affiliates to, hold the information contained in any of such labels and
lists in confidence, use such information only in connection with the Offer and
the Merger, and, if this Agreement is terminated, deliver to the Company all
copies of such information or extracts therefrom then in their possession or
under their control.
Section 1.3. Directors.
(a) Effective upon the acceptance for payment of Shares pursuant to the
Offer, Parent shall be entitled to designate such number of directors, rounded
up to the next whole number, on the Board of Directors of the Company as will
give Parent, subject to compliance with Section 14(f) of the Exchange Act,
representation on the Board of Directors of the Company equal to the product of
(i) the total number of directors on the Board of Directors of the Company
(giving effect to the increase in the size of such Board pursuant to this
Section 1.3) and (ii) the percentage that the number of votes represented by
Shares beneficially owned by Parent (including Shares accepted for payment
pursuant to the Offer) bears to the number of votes represented by Shares then
outstanding. In furtherance thereof, at such time the Company shall, upon
request of Parent and in compliance with Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder, promptly take all action (including, without
limitation, increasing the size of its Board of Directors or securing the
resignations of such number of its incumbent directors, or both), as is
necessary to enable such designees of Parent to be so elected or appointed to
the Company's Board of Directors, and the Company shall take all actions
available to the Company to cause such designees of Parent to be so elected or
appointed. At such time, the Company shall, if requested by Parent, also take
all action necessary to cause persons designated by Parent to constitute at
least the same percentage (rounded up to the next whole number) as is on the
Company's Board of Directors of (i) each committee of the Company's Board of
Directors, (ii) each board of directors (or similar body) of each Subsidiary of
the Company and (iii) each committee (or similar body) of each such board.
Subject to applicable law, the Company shall promptly take all action requested
by Parent necessary to effect any such election, including mailing to its
stockholders the information required by Section 14(f) of the Exchange Act and
Rule 14(f)-1 promulgated thereunder (or, at Parent's request, furnishing such
information to Parent for inclusion in the Offer Documents initially filed with
the SEC and distributed to the stockholders of the Company) as is necessary to
enable Parent's designees to be elected to the Company's Board of Directors.
Each of Parent and Merger Sub shall furnish to the Company, and be solely
responsible for, any information with respect to itself and its nominees,
directors and affiliates required by Section 14(f) of the Exchange Act and Rule
14f-1 promulgated thereunder.
4
<PAGE>
(b) Notwithstanding the foregoing, the Company shall use its reasonable
efforts to ensure that, in the event that Parent's designees are elected to the
Board of Directors of the Company, such Board of Directors shall have, at all
times prior to the Effective Time, at least two directors who are directors on
the date of this Agreement and who are not officers or affiliates of the Company
(it being understood that for purposes of this sentence, a director of the
Company shall not be deemed an affiliate of the Company solely as a result of
his status as a director or stockholder of the Company), Parent or any of their
respective Subsidiaries (the "Independent Directors"); and provided further,
that, in such event, if the number of Independent Directors shall be reduced
below two for any reason whatsoever the remaining Independent Director(s) may
designate a person to fill such vacancy who shall be deemed to be an Independent
Director for purposes of this Agreement or, if no Independent Directors then
remain, the other directors may designate two persons to fill such vacancies who
shall not be officers or affiliates of the Company, Parent or any of their
respective Subsidiaries, and such persons shall be deemed to be Independent
Directors for purposes of this Agreement.
(c) From and after the time, if any, that Parent's designees constitute a
majority of the Company's Board of Directors and prior to the Effective Time,
any amendment of this Agreement, any termination of this Agreement by the
Company, any extension of time for performance of any of the obligations of
Parent or Merger Sub hereunder, or any waiver of any condition to the Company's
obligations hereunder or any of the Company's rights hereunder may be effected
only by the action of a majority of the Independent Directors of the Company,
which action shall be deemed to constitute the action of any committee
specifically designated by the Board of Directors of the Company to approve the
actions contemplated hereby and the full Board of Directors of the Company.
Section 1.4. Stock Options.
(a) Upon consummation of the Offer, each of the outstanding options to
purchase Company Common Stock (collectively, a "Stock Option") granted under the
Company's 1991 Employee Incentive Stock Plan and 1996 Employees Incentive Stock
Plan, as amended, or any other employee or director stock option or compensation
plan or arrangement of the Company (collectively, the "Company Stock Option
Plans"), whether or not then vested or exercisable, shall automatically and
without any action on the part of the holder thereof (the "Option Holder"), be
converted into the right to receive cash in an amount equal to (i) the excess of
the Merger Consideration over the exercise price per share provided in such
Stock Option, multiplied by (ii) the number of shares of Company Stock subject
to such Stock Option. Promptly after the consummation of the Offer, the Company
shall cause each Option Holder to be paid the amount necessary to redeem such
holder's Stock Options in accordance with this Section 1.4. Notwithstanding any
other provisions of this Section, payment may be withheld in respect of any
Stock Option until necessary consents, if any, are obtained.
5
<PAGE>
ARTICLE 2
THE MERGER
Section 2.1. The Merger; Closing.
(a) The Merger. At the Effective Time (as defined in Section 2.2 hereof),
and subject to and upon the terms and conditions of this Agreement and in
accordance with the Delaware General Corporation Law (the "DGCL"), Merger Sub
shall be merged (the "Merger") with and into the Company, the separate corporate
existence of Merger Sub shall cease, and the Company shall continue as the
surviving corporation being the successor to all the property, rights, powers,
privileges, liabilities and obligations of both Merger Sub and the Company. The
Company as the surviving corporation after the Merger is hereinafter sometimes
referred to as the "Surviving Company."
(b) The Closing. Upon the terms and subject to the conditions set forth in
this Agreement, the closing of the Merger (the "Closing") shall take place at a
time and on a date to be specified by the parties hereto, which shall be no
later than the second business day after satisfaction or waiver of the
conditions set forth in Article VII, unless another time or date is agreed to in
writing by the parties hereto. The Closing will be held at the offices of Davis
Polk & Wardwell, 450 Lexington Avenue, New York, NY, unless another place is
agreed to in writing by the parties hereto.
Section 2.2. Effective Time. As promptly as practicable after the
satisfaction of or, to the extent permitted hereunder, waiver of the conditions
to the Merger set forth herein, but in no event later than two (2) business days
thereafter, the parties hereto shall file all necessary documentation, together
with any required related certificates, with the Secretary of State of the State
of Delaware, in such form as required by, and executed in accordance with the
relevant provisions of, the DGCL (the time of such filing, or such later date as
is set forth in the Certificate of Merger, being the "Effective Time").
Section 2.3. Effect of the Merger. The Merger shall have the effects set
forth in the relevant provisions of the DGCL.
Section 2.4. Certificate of Incorporation in Bylaws. The certificate of
incorporation and bylaws of Merger Sub as in effect immediately prior to the
Effective Time shall be the certificate of incorporation and bylaws of the
Surviving Company until thereafter changed or amended as provided therein or by
the DGCL provided that, at the Effective Time, such certificate of incorporation
shall be amended to provide that the name of the corporation shall be Danzas Air
Express International Corporation.
Section 2.5. Directors and Officers
(a) Directors. The directors of Merger Sub immediately prior to the
Effective Time shall be the initial directors of the Surviving Company, each to
hold office
6
<PAGE>
in accordance with the certificate of incorporation and bylaws, until their
respective successors are duly elected or appointed and qualified in accordance
with the certificate of incorporation and bylaws or until their earlier death,
resignation or removal.
(b) Officers. The officers of the Company immediately prior to the
Effective Time shall serve as the officers of the Surviving Company until their
successors shall have been duly elected or appointed and shall have been
qualified in accordance with the certificate of incorporation and bylaws or
until their earlier death, resignation or removal.
Section 2.6. Merger Consideration; Cancellation of Securities. At the
Effective Time, by virtue of the Merger and without any action on the part of
Parent, Merger Sub, the Company or the holders of any of the Shares:
(a) Merger Consideration. Each Share issued and outstanding
immediately prior to the Effective Time (excluding (i) any Shares to be
canceled pursuant to Section 2.6(b) and (ii) Shares that are owned by
stockholders of the Company who satisfy all of the requirements to demand
payment for such Shares in accordance with Section 262 of the DGCL) shall
be converted into the right to receive $33.00 in cash or any higher price
per Share paid pursuant to the Offer, without interest (the amount payable
for one Share being referred to as the "Merger Consideration").
(b) Cancellation of Shares. Each Share owned by Parent, Merger Sub or
any Subsidiary of the Company or Parent immediately prior to the Effective
Time and each Share held by the Company in treasury shall, by virtue of the
Merger and without any action on the part of the holder thereof, be
canceled and retired without payment of any consideration therefor and
cease to exist.
(c) Common Stock of Merger Sub. Each share of the common stock of
Merger Sub issued and outstanding immediately prior to the Effective Time
shall be converted into and exchanged for one validly issued, fully paid
and nonassessable share of common stock of the Surviving Company with the
same rights, powers and privileges as the shares so converted. Each
certificate of Merger Sub evidencing ownership of any common stock of
Merger Sub shall evidence, from and after the Effective Time, ownership of
shares of the Surviving Company.
Section 2.7. Dissenting Shares.
(a) Notwithstanding Section 2.6, Shares that are issued and outstanding
immediately prior to the Effective Time and which are held by stockholders who
have not voted such Shares in favor of the Merger (or consented thereto in
writing), who shall have delivered a written objection to the Merger and a
demand for appraisal of such Shares in accordance with Section 262 of the DGCL
(insofar as such Section is applicable to the Merger and provides for appraisal
rights with respect thereto) and who shall not have failed to perfect or shall
not have effectively withdrawn or lost their rights to
7
<PAGE>
appraisal and payment under the DGCL (the "Dissenting Shares"), shall not be
converted into the right to receive the Merger Consideration, but shall instead
entitle the holder thereof to receive that consideration determined pursuant to
Section 262 of the DGCL; provided, however, that if such holder shall have
failed to perfect or shall have effectively withdrawn or otherwise lost such
holder's right to appraisal, such holder's Shares shall thereupon be deemed to
have been converted, at the Effective Time, into the right to receive the Merger
Consideration, without any interest thereon.
(b) The Company shall give Parent (i) prompt notice of any demands for
appraisal pursuant to the applicable provisions of the DGCL received by the
Company, withdrawals of such demands, and any other instruments served pursuant
to the DGCL and received by the Company and (ii) the opportunity to participate
in all negotiations and proceedings with respect to demands for appraisal under
the DGCL. The Company shall not, except with the prior written consent of
Parent, make any payment with respect to any such demands for appraisal or offer
to settle or settle any such demands.
Section 2.8. Transmittal of Merger Consideration.
(a) Payment Agent. Parent shall appoint a bank or trust company which is
reasonably satisfactory to the Company to act as paying agent (the "Payment
Agent") for the purpose of exchanging certificates representing Shares for the
Merger Consideration. At or before the Closing, Parent shall deposit, or shall
cause to be deposited, with the Payment Agent, for the benefit of the holders of
Shares, the amount of the product of the Merger Consideration multiplied by the
number of Shares then issued and outstanding minus the sum of (i) the number of
Dissenting Shares and (ii) the number of Shares to be cancelled and retired
pursuant to Section 2.6(b) (the "Payment Fund").
(b) Payment Procedures. Promptly after the Effective Time, Parent and the
Surviving Corporation shall cause the Payment Agent to mail to each holder of a
certificate or certificates which immediately prior the Effective Time evidenced
outstanding Shares (the "Certificates"), (i) a Letter of Transmittal specifying
that delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates (or affidavits of loss in
lieu thereof in accordance with Section 2.8(e)) to the Payment Agent, and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for payment of the applicable Merger Consideration. Upon surrender of a
Certificate for cancellation or submission of an affidavit of loss in lieu
thereof in accordance with Section 2.8(e) herein to the Payment Agent together
with such Letter of Transmittal, duly executed, the holder of such Certificate
shall be entitled to receive in exchange therefor and the Payment Agent shall
send to the holder of such Certificate a check in the amount (after giving
effect to any required tax withholdings) equal to the Merger Consideration
multiplied by the number of Shares theretofore represented by such Certificate,
and the Certificate so surrendered shall forthwith be canceled. Such payment
shall be mailed promptly after receipt of such Certificate together with a
properly completed Letter of Transmittal. No interest will be paid or accrued on
8
<PAGE>
any amount payable upon due surrender of the Certificates. Until so surrendered,
each such Certificate shall represent after the Effective Time for all purposes
only the right to receive such Merger Consideration, without interest thereon.
If any portion of the Merger Consideration is to be paid to a Person other than
the Person in whose name the surrendered Certificate is registered, it shall be
a condition to such payment that the Certificate 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 Payment Agent any transfer or
other taxes required as a result of such payment to a Person other than the
registered holder of such Certificate or establish to the satisfaction of the
Payment Agent that such tax has been paid or is not payable.
(c) Termination of Payment Fund. Any portion of the Payment Fund that
remains unclaimed by the stockholders of the Company for six months after the
Effective Time shall be returned to Parent. Any stockholders of the Company who
have not theretofore complied with this Article 2 shall thereafter look only to
Parent for payment of the applicable Merger Consideration upon due surrender of
their Certificates (or affidavits of loss in lieu thereof in accordance with
Section 2.8(e)), in each case, without any interest thereon. Notwithstanding the
foregoing, none of Parent, the Surviving Corporation, the Payment Agent or any
other Person shall be liable to any former holder of Shares for any amount
properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws. Any amounts remaining unclaimed by holders of
Shares two years after the Effective Time (or such earlier date immediately
prior to such time when the amounts would otherwise escheat to or become
property of any governmental authority) shall become, to the extent permitted by
applicable law, the property of Parent free and clear of any claims or interest
of any Person previously entitled thereto.
(d) Any portion of the Merger Consideration made available to the Payment
Agent pursuant to Section 2.8(a) to pay for Shares for which appraisal rights
have been perfected shall be returned to Parent, upon demand.
(e) Lost, Stolen or Destroyed Certificates. In the event any Certificate
shall have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the Person claiming such Certificate to be lost, stolen or
destroyed, in form reasonably satisfactory to the Surviving Company, and, if
required by the Surviving Company, the posting by such Person of a bond, in such
reasonable amount as the Surviving Company may direct, as indemnity against any
claim that may be made against it with respect to such Certificate, the Payment
Agent will pay in exchange for such lost, stolen or destroyed Certificate the
applicable Merger Consideration in respect thereof pursuant to Section 2. 8(b)
upon receipt by the Payment Agent of such affidavit.
(f) Withholding Rights. Each of Parent, the Company and the Surviving
Company shall deduct and withhold from any amounts otherwise payable pursuant to
this Agreement to any holder of Shares or Stock Options such amounts as it is
required to deduct and withhold with respect to the making of such payment under
the
9
<PAGE>
Internal Revenue Code of 1986 (the "Code"), or any provision of state, local or
foreign tax law. To the extent that amounts are so withheld, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of the Shares or Stock Options, as the case may be, in respect of
which such deduction and withholding was made by Parent, the Company or the
Surviving Company, as the case may be.
Section 2.9. Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed, the Merger Consideration
delivered upon the surrender of a Certificate or an affidavit of loss in lieu
thereof in accordance with Section 2.8(e) herein in accordance with the terms
hereof shall be deemed to have been paid in full satisfaction of all rights
pertaining to the Shares theretofore represented by such Certificate, and there
shall be no further registration of transfers on the records of the Surviving
Company of Shares which were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates are presented to the Surviving
Company for any reason, they shall be canceled and exchanged as provided in this
Article 2 provided that the Payment Agent shall have received an appropriate
Letter of Transmittal.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger Sub as
follows:
Section 3.1. Organization and Qualification; Subsidiaries. The Company is a
corporation and each of its Subsidiaries is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
formation, has the requisite corporate power and authority and is in possession
of all franchises, grants, authorizations, licenses, permits, easements,
consents, certificates, approvals and orders ("Approvals") necessary to own,
lease and operate the properties it purports to own, lease or operate and to
carry on its business as it is now being conducted, except for such matters as
would not have, individually or in the aggregate, a Company Material Adverse
Effect (as defined below). The Company and each of its Subsidiaries is duly
qualified or licensed as a foreign entity to do business, and is in good
standing in each jurisdiction where the character of its properties owned,
leased or operated or the nature of its activities make such qualification or
licensing necessary, except for such matters as would not have, either
individually or in the aggregate, a Company Material Adverse Effect. The Company
has heretofore made available to Parent true and complete copies of the
certificate of incorporation and bylaws or equivalent organizational documents
of the Company and of each Material Subsidiary as currently in effect on the
date hereof.
10
<PAGE>
Section 3.2. Capitalization.
(a) The authorized capital stock of the Company consists of 100,000,000
shares of common stock, par value $.01 per share ("Company Common Stock"), and
1,000,000 shares of preferred stock, par value $1.00 per share ("Company
Preferred Stock"). As of November 12, 1999 (i) 33,628,769 shares of Company
Common Stock were issued and outstanding, all of which have been duly authorized
and validly issued and are fully paid and nonassessable, (ii) 1,797,600 shares
of Company Common Stock were held by the Company in its treasury, and (iii)
Stock Options to purchase an aggregate of 2,567,491 shares of Company Common
Stock at a weighed average exercise price of $19.98 per share were outstanding.
As of the date hereof, no shares of Company Preferred Stock are issued and
outstanding.
(b) Except as set forth in Section 3.2 of the written disclosure schedule
provided by Company to Parent prior to the date hereof (the "Company Disclosure
Schedule") or as set forth in this Section, there are no outstanding (i) shares
of capital stock or voting securities of the Company (except for Shares issued
after November 12, 1999 pursuant to Stock Options outstanding on November 12,
1999 under the Company Stock Option Plans), (ii) securities of the Company
convertible into or exchangeable or exercisable for shares of capital stock or
voting securities of the Company or (iii) options, warrants or other rights,
agreements, arrangements or commitments of any character relating to the issued
or unissued capital stock or other securities or other equity interests of the
Company obligating the Company to issue any capital stock, voting securities or
securities convertible into or exchangeable or exercisable for capital stock or
voting securities of the Company. All shares of Company Common Stock subject to
issuance pursuant to the exercise of Stock Options shall, upon issuance on the
terms and conditions specified in the instruments pursuant to which they are
issuable, be duly authorized, validly issued, fully paid and nonassessable.
Except as set forth in Section 3.2 of the Company Disclosure Schedule, there are
no obligations, contingent or otherwise, of the Company or of any Subsidiary of
the Company to repurchase, redeem or otherwise acquire any of the securities
referred to in clauses (i), (ii) or (iii) above.
Section 3.3. Authority Relative to this Agreement. The execution, delivery
and performance by the Company of this Agreement and the consummation of the
transactions contemplated hereby are within the Company's corporate powers and,
except for the affirmative vote of the holders of a majority of the outstanding
Shares in connection with the consummation of the Merger (if required by law),
have been duly authorized by all necessary corporate action on the part of the
Company. The affirmative vote of the holders of a majority of the outstanding
Shares (if required by law) is the only vote of the holders of any of the
Company's capital stock necessary in connection with the consummation of the
Merger. The Board of Directors of the Company has determined that it is
advisable, fair and in the best interest of the Company's stockholders for the
Company to enter into this Agreement, has adopted and approved the Offer, the
Merger and this Agreement and has or will recommend that the Company's
stockholders accept the Offer and approve this Agreement, the Merger and the
transactions contemplated hereby. This
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Agreement has been duly and validly executed and delivered by the Company and,
assuming the due authorization, execution and delivery by Parent and Merger Sub,
as applicable, constitutes a legal, valid and binding obligation of the Company.
Section 3.4. Subsidiaries. All of the outstanding capital stock of, or
other voting securities or 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 any
restriction on the right to vote, sell or otherwise dispose of such capital
stock or other voting securities or ownership interests). There are no
outstanding (i) securities of the Company or any of its Material Subsidiaries
convertible into or exchangeable or exercisable for shares of capital stock or
other voting securities or ownership interests in any Material Subsidiary of the
Company or (ii) options or other rights to acquire from the Company or any of
its Material Subsidiaries, or other obligations of the Company or any of its
Material Subsidiaries to issue, any capital stock or other voting securities or
ownership interests in, or any securities convertible into or exchangeable or
exercisable for any capital stock or other voting securities or ownership
interests in, any Material Subsidiary of the Company. There are no outstanding
obligations of the Company or any of its Material Subsidiaries to repurchase,
redeem or otherwise acquire any of the securities referred to in clauses (i) or
(ii) above.
Section 3.5. SEC Filings; Financial Statements
(a) SEC Filings. The Company has filed all forms, reports, exhibits and
other documents required to be filed with the SEC under the Exchange Act since
March 31, 1997 and has made available to Parent accurate and complete copies of
(i) its Quarterly Reports on Form 10-Q for the periods ended March 31, 1997,
June 30, 1997, September 30, 1997, March 31, 1998, June 30, 1998, September 30,
1998, March 31, 1999, June 30, 1999 and September 30, 1999 and its Annual Report
on Form 10-K for the fiscal years ended December 31, 1997 and December 31, 1998,
(ii) all Form 8-K's filed and all proxy or information statements relating to
the Company's meetings of, or actions taken without a meeting by, the Company's
stockholders (whether annual or special) held since December 31, 1997, (iii) all
other reports or registration statements (other than reports on Forms 3, 4 or 5
filed on behalf of affiliates of the Company) filed by the Company with the SEC
under the Exchange Act and the Securities Act of 1933 (the "Securities Act"),
since March 31, 1997, and (iv) all amendments and supplements to all such
reports and registration statements filed by the Company with the SEC
(collectively, the "Company SEC Reports"). As of its filing date, each Company
SEC Report (i) complied as to form in all material respects with the
requirements of the Exchange Act, or the Securities Act, as applicable, and (ii)
did not at the time it was filed or declared effective, as the case may be, (or
if amended or superseded by a filing prior to the date of this Agreement, then
on the date of such filing) contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. No Subsidiary of the Company has any class of
securities registered pursuant to the Exchange Act.
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(b) Financial Statements. Each of the consolidated financial statements
(including, in each case, any related notes thereto) contained in the Company
SEC Reports was prepared in accordance with generally accepted accounting
principles in effect in the United States of America applied on a consistent
basis throughout the periods involved ("GAAP") (except as may be indicated in
the notes thereto) and each fairly presents the consolidated financial position
of the Company and its Subsidiaries as at the respective dates thereof and the
consolidated results of its operations and cash flows for the periods indicated,
except that the unaudited interim financial statements were or are subject to
normal and recurring year-end adjustments which were not or are not expected to
be, in the aggregate, material in amount.
Section 3.6. Absence of Certain Changes. Except as specifically disclosed
in the Company's SEC Reports filed prior to the date hereof or as set forth in
Section 3.6 of the Company Disclosure Schedule, since December 31, 1998, the
Company directly and through its Subsidiaries has conducted the business of the
Company only in the ordinary course consistent with past practices, and during
such period there has not been any event, occurrence, development or state of
circumstances or facts that, individually or in the aggregate, has had or could
reasonably be expected to have a Company Material Adverse Effect and the Company
is not aware of any event, occurrence, development or state of circumstances or
facts which may reasonably be expected to occur or exist that, individually or
in the aggregate, would have a Company Material Adverse Effect. Except as
disclosed in the Company SEC Reports filed prior to the date hereof or as set
forth in Section 3.6 of the Company Disclosure Schedule, (I) since December 31,
1998 there has not been: (a) any declaration, setting aside or payment of any
dividend or other distribution in respect of any class of capital stock of the
Company or any repurchase, redemption or other acquisition by the Company or any
of its Subsidiaries of any outstanding shares of capital stock or other
securities of, or other ownership interests in, the Company or any of its
Subsidiaries, except in the administration of the Company Stock Option Plans
consistent with past practice and, in the case of Subsidiaries other than
Material Subsidiaries or wholly-owned Subsidiaries, repurchases of capital stock
of such Subsidiary in accordance with contractual arrangements entered into in
connection with joint ventures disclosed on Section 3.13 of the Company
Disclosure Schedule which were entered into in the ordinary course of business
consistent with past practice; (b) any damage, destruction or loss, whether or
not covered by insurance, that, individually or in the aggregate, has had or
could reasonably be expected to have a Company Material Adverse Effect; (c) any
material change in accounting methods, principles or practices by the Company,
except insofar as may have been required by a concurrent change in GAAP or
otherwise by the rules and regulations of the SEC applicable to the Company; (d)
any amendment of any term of any outstanding security of the Company or any of
its Subsidiaries that would materially increase the obligations of the Company
and its Subsidiaries; (e) any incurrence, assumption or guarantee by the Company
or any of its Subsidiaries of any indebtedness for borrowed money other than in
the ordinary course of business and in amounts and on terms consistent with past
practices; (f) any creation or other incurrence by the Company or any of its
Subsidiaries of any material Lien on any assets other than in the ordinary
course of business consistent with past practices; (g) any
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making of any material loan, advance or capital contribution to or investment in
any Person by the Company or any of its Subsidiaries other than loans, advances
or capital contributions to or investments in wholly-owned Subsidiaries of the
Company made in the ordinary course of business consistent with past practices;
or (h) any transaction or commitment made, or any contract or agreement entered
into, by the Company or any of its Subsidiaries relating to its assets or
business (including the acquisition or disposition of any assets) or any
relinquishment by the Company or any of its Subsidiaries of any contract,
license or other right, in either case, material to the Company and its
Subsidiaries, taken as a whole, other than transactions, commitments, contracts
or agreements in the ordinary course of business consistent with past practices
and those contemplated by this Agreement; and (II) since June 30, 1999, there
has not been any (1) grant of any severance or termination pay to (or amendment
to any existing arrangement with) any director, officer or employee of the
Company or any of its Subsidiaries, (2) increase in benefits payable under any
existing severance or termination pay policies or employment agreements, (3) any
entering 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 of its Subsidiaries, (4) establishment, adoption
or amendment (except as required by applicable law) of any collective
bargaining, bonus, profit-sharing, thrift, pension, retirement, deferred
compensation, compensation, stock option, restricted stock or other benefit plan
or arrangement covering any director, officer or employee of the Company or any
of its Subsidiaries, or (5) increase in compensation, bonus or other benefits
payable to any director, officer or employee of the Company or any of its
Subsidiaries, other than in the case of (II), in the ordinary course of business
consistent with past practice or, with respect to employees other than officers
or directors of the Company or any of its Subsidiaries, in amounts which in the
aggregate are de minimus. "Lien" means, with respect to any property or asset,
any mortgage, lien, pledge, charge, security interest, encumbrance or other
adverse claim of any kind in respect of such property or asset.
Section 3.7. No Undisclosed Liabilities. Except as set forth in Section 3.7
of the Company Disclosure Schedule or as reflected in the Company SEC Reports
filed prior to the date hereof, neither the Company nor any Subsidiary of the
Company has any liabilities or obligations (absolute, accrued, contingent or
otherwise) which are, in the aggregate, material to the business, operations or
financial condition of the Company and its Subsidiaries taken as a whole, except
liabilities or obligations (a) adequately provided for in the Company's balance
sheet as of September 30, 1999 (including any related notes thereto) included in
the SEC Reports filed prior to the date hereof, (b) disclosed elsewhere in the
SEC Reports filed prior to the date hereof; or (c) incurred since September 30,
1999 in the ordinary course of business consistent with past practices and which
could not, individually or in the aggregate, be reasonably expected to have a
Company Material Adverse Effect.
Section 3.8. Governmental Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby require no action by or in respect of,
or filing with,
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any governmental body, agency, official or authority, domestic or foreign, other
than (i) the filing of a certificate of merger with respect to the Merger with
the Delaware Secretary of State; (ii) compliance with any applicable
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the
"HSR Act"), Section 721 of the Defense Production Act of 1950 (the "Exon-Florio
Provision), the United States Department of Transportations Aviation Economic
Regulations (the "DOT Approval"), and the European Commission under Council
Regulation (EEC) No. 4064/89 (the "European Approval"), (iii) compliance with
any applicable requirements of the Exchange Act or any other applicable
securities or takeover laws, whether state or foreign, and (iv) and any actions
or filings the absence of which would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect or
materially to impair the ability of the Company to consummate the transactions
contemplated by this Agreement. Notwithstanding anything contained in this
Section 3.8, the Company makes no representation or warranty with respect to
governmental consents or approvals in foreign jurisdictions which are necessary
in connection with the transactions contemplated hereby and not otherwise
identified in this Section.
Section 3.9. No Violation. Except as set forth in Section 3.9 of the
Company Disclosure Schedule or as reflected in the Company SEC Reports filed
prior to the date hereof, and subject to the approval and adoption of this
Agreement by the Company's stockholders, if applicable, the execution and
delivery of this Agreement by the Company does not, and the performance of this
Agreement by the Company will not, and the consummation by the Company of the
transactions contemplated hereby will not: (i) contravene, conflict with, or
result in any violation or breach of any provision of the certificate of
incorporation or bylaws of the Company, (ii) assuming compliance with the
matters referred to in Section 3.8, contravene, conflict with, result in any
violation or breach of any provision of any federal, foreign, state or
provincial law, rule, regulation, order, judgment or decree (collectively,
"Laws") applicable to the Company or any Subsidiary of the Company or by which
any of their respective properties are bound or affected, or (iii) require any
consent or other action by any Person under, constitute a default under, or
cause or permit the termination, cancellation, acceleration or other change of
any right or obligation or the loss of any benefit to which the Company or any
of its Subsidiaries is entitled under any provision of any agreement or other
instrument binding upon the Company or any of its Subsidiaries or any license,
franchise, permit, certificate, approval or other similar authorization
affecting the assets or business of the Company and its Subsidiaries, or (iv)
result in the creation of a Lien on any of the properties or assets of the
Company or any Subsidiary of the Company pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any Subsidiary of the Company
is a party or by which the Company or any Subsidiary of the Company or any of
their respective properties are bound or affected, except in the cases of
clauses (ii), (iii) and (iv) for such matters that could not, individually or in
the aggregate, have a Company Material Adverse Effect.
Section 3.10. Absence of Litigation; Compliance with Law. Except as set
forth in Section 3.10 of the Company Disclosure Schedule or as reflected in the
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Company SEC Reports filed prior to the date hereof, (i) there are no claims,
actions, suits, proceedings or investigations pending against or, to the
knowledge of the Company, threatened against or affecting the Company or against
or affecting any Subsidiary of the Company or any of their respective properties
before any court or arbitrator or before or by any governmental body, agency or
official, domestic or foreign, which could reasonably be expected to have a
Company Material Adverse Effect or materially impair the ability of the Company
to consummate the transactions contemplated by this Agreement, and (ii) there is
no judgment, decree, injunction, rule or order outstanding against the Company
or any of its Subsidiaries other than, in each case, those that the outcome of
which, individually or in the aggregate, could not reasonably be expected to
have a Company Material Adverse Effect or a material adverse effect on the
Company's ability to consummate the transactions contemplated by this Agreement.
Each of the Company and its Subsidiaries is and has been in compliance with all
applicable Laws, except where the failure to comply has not had and would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
Section 3.11. Employee Benefit Plan; Employment Agreement.
Except as set forth in Section 3.11 of the Company Disclosure Schedule or
as reflected in the Company SEC Reports filed prior to the date hereof, and
except for such matters as could not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect:
(a) neither the Company nor any Subsidiary of the Company maintains,
sponsors, contributes or is party to, nor has at any time in the past three
years maintained, sponsored, contributed or was a party to, (i) any
employee pension benefit plan (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) or any
similar pension benefit plan under the laws of any foreign jurisdiction (a
"Pension Plan"), (ii) any employee welfare benefit plan (as defined in
Section 3(1) of ERISA) or any similar welfare benefit plan under the laws
of any foreign jurisdiction (a "Welfare Plan"), or (iii) any employment,
severance or similar contract, plan, arrangement or policy and any other
plan or arrangement (written or oral) providing for compensation, bonuses,
profit-sharing, stock option or other stock related rights or other forms
of incentive or deferred compensation for the benefit of any current or
former employee or director of any of the Company or any Subsidiary of the
Company (collectively, "Employee Plans");
(b) with respect to each Employee Plan, the Company has made available
to Parent (i) an accurate and complete copy of such Employee Plan
(including all amendments thereto); (ii) an accurate and complete copy of
the annual report, if required under ERISA, with respect to such Employee
Plan for each of the last two years; (iii) an accurate and complete copy of
the most recent summary plan description, together with each Summary of
Material Modifications, if required under ERISA, with respect to such
Employee Plan, (iv) if such Employee Plan is funded through a trust or any
third party funding vehicle, an accurate and complete copy of the trust or
other funding agreement
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(including all amendments thereto) and accurate and complete copies of the
most recent financial statements thereof; and (v) accurate and complete
copies of all material Contracts relating to such Employee Plan, including
service provider agreements, insurance contracts, minimum premium
contracts, stop-loss agreements, investment management agreements,
subscription and participation agreements and recordkeeping agreements;
(c) neither the Company nor any Subsidiary of the Company is or has
ever been required to be treated as a single employer with any other Person
under Section 4001(b)(1) of ERISA or Section 414(b), (c), (m) or (o) of the
Code; neither the Company nor any Subsidiary of the Company has ever been a
member of an "affiliated service group" within the meaning of Section
414(m) of the Code; neither the Company nor any Subsidiary of the Company
has ever made a complete or partial withdrawal from a multiemployer plan
resulting in "withdrawal liability," as such term is defined in Section
4201 of ERISA (without regard to any subsequent reduction or waiver of such
liability under either Section 4207 or 4208 of ERISA);
(d) neither the Company nor any Subsidiary of the Company has any
commitment to create any Welfare Plan or any Pension Plan, or to modify or
change any existing Welfare Plan or Pension Plan (other than to comply with
applicable law) in a manner that would affect any current or former
employee or director of any of the Company or any Subsidiary of the
Company;
(e) no Employee Plan provides death, medical or health benefits
(whether or not insured) with respect to any current or former employee or
director of any of the Company or any Subsidiary of the Company after any
termination of service of such employee or director (other than (i) benefit
coverage mandated by applicable law, including coverage provided pursuant
to Section 4980B of the Code, and (ii) benefits the full cost of which are
borne by current or former employees or directors of the Company or any
Subsidiary of the Company (or their beneficiaries));
(f) with respect to any Employee Plan constituting a group health plan
within the meaning of Section 4980B(g)(2) of the Code, the provisions of
Section 4980B of the Code ("COBRA") have been complied with in all material
respects;
(g) neither the Company nor any Subsidiary nor any predecessor thereof
sponsors, maintains or contributes to, or has in the past three years
sponsored, maintained or contributed to, any Employee Plan subject to Title
IV of ERISA (other than a Multiemployer Plan, as defined below); neither
the Company nor any Subsidiary has (i) engaged in, or is a successor or
parent corporation to an entity that has engaged in, a transaction
described in Sections 4069 or 4212(c) of ERISA or (ii) incurred, or
reasonably expects to incur prior to the Consummation Time, (A) any
liability under Title IV of ERISA arising in connection with the
termination of, or a complete or partial withdrawal from, any plan covered
or previously covered by Title IV of ERISA or (B) any liability under
Section 4971 of the Code that in either case could become a liability of
the Surviving Corporation or any of its Subsidiaries or the Parent or any
of its ERISA
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Affiliates after the Effective Time; and if a "complete withdrawal" by the
Company and all of its ERISA Affiliates were to occur immediately prior to
the Effective Time with respect to all Employee Plans that are
multiemployer plans, as defined in Section 3(37) of ERISA ("Multiemployer
Plans"), none of the Company or the Surviving Company, any of their
Subsidiaries or any of their ERISA Affiliates would incur any withdrawal
liability under Title IV of ERISA ("ERISA Affiliate" of any Person means
any other Person which, together with such Person, would be treated as a
single employer under Section 414 of the Code);
(h) each of the Employee Plans has been operated and administered in
all material respects in accordance with applicable Laws, and no events
have occurred with respect to any Employee Plan that could result in
payment or assessment of any excise taxes under Sections 4972, 4975, 4976,
4977, 4979, 4980B, 4980D, 4980E or 5000 of the Code;
(i) each of the Employee Plans intended to be qualified under Section
401(a) of the Code has received a favorable determination letter from the
Internal Revenue Service, and the Company is not aware of any reason why
any such determination letter could be revoked;
(j) the consummation of the transactions contemplated by this
Agreement will not (either alone or together with any other event) entitle
any employee or director of the Company or any of its Subsidiaries to
severance pay or accelerate the time of payment or vesting or trigger any
payment or funding (through a grantor trust or otherwise) of compensation
or benefits under, increase the amount payable or trigger any other
material obligation pursuant to, any Employee Plan; and there is no
contract, agreement, plan or arrangement covering any employee or former
employee of the Company or any affiliate that, individually or
collectively, could give rise to the payment of any amount that would not
be deductible pursuant to Sections 162(m) or 280G of the Code;
(k) there has been no amendment to, written interpretation or
announcement (whether or not written) by the Company or any Subsidiary
relating to, or change in employee participation or coverage under, any
Employee Plan which would increase the expense of maintaining such Employee
Plan above the level of the expense incurred in respect thereof for the
fiscal year ended December 31, 1998; and
(l) all contributions and payments accrued under each Employee Plan,
determined in accordance with prior funding and accrual practices, as
adjusted to include proportional accruals for the period ending as of
September 30, 1999, have been discharged and paid on or prior to the date
hereof except to the extent reflected as a liability on the Company's
balance sheet dated as of September 30, 1999.
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Section 3.12. Labor Matters.
(a) Except as set forth in Section 3.12 of the Company Disclosure Schedule
or as reflected in the Company SEC Reports filed prior to the date hereof, (i)
there are no lawsuits or administrative proceedings pending or, to the knowledge
of the Company, threatened, between the Company or any Subsidiary of the Company
and any of their respective employees, other than such pending or threatened
lawsuits or administrative proceedings which, individually or in the aggregate,
could not reasonably be expected to have a Company Material Adverse Effect; and
(ii) the Company has no knowledge of any material labor dispute, other than
routine individual grievances, or any material activity or proceeding by a labor
union or representative thereof to organize any employees of the Company or any
of its Subsidiaries, which employees were not subject to a collective bargaining
agreement on December 31, 1998, or any material strikes, slowdowns, work
stoppages, lockouts, or threats thereof, by or with respect to any employees of
the Company or of any Subsidiary of the Company.
(b) Set forth on Section 3.12 of the Company Disclosure Schedule is a list
of all collective bargaining agreements to which the Company or any of its
Material Subsidiaries is a party.
Section 3.13. Contracts. Neither Company nor any of the Subsidiaries is in
default under or in violation of any provision of any note, bond, indenture,
mortgage, deed of trust, loan agreement or any other agreement to which it is a
party or by which it is bound or to which any of their respective properties or
assets is subject, other than such defaults or violations as could not
reasonably be expected to have a Company Material Adverse Effect. All such
contracts and agreements to which Company or any of its Subsidiaries is a party
or by which any of their respective assets is bound are valid, except to the
extent of an invalidity which could not reasonably be expected to have a Company
Material Adverse Effect. All such material contracts or agreements are listed as
exhibits in the Company SEC Reports filed prior to the date hereof or are set
forth on Section 3.13 to the Company Disclosure Schedule.
Section 3.14. Taxes.
(a) Except as set forth on Schedule 3.14(a) to the Company Disclosure
Schedule or as reflected in the Company SEC Reports filed prior to the date
hereof, the Company has duly and timely filed all federal, state and local or
foreign Tax Returns (as hereinafter defined) required under applicable law to be
filed by the Company on its own behalf and on behalf of its Subsidiaries on a
consolidated basis. All such Tax Returns are accurate and complete in all
material respects. Except as set forth in Schedule 3.14(a) of the Company
Disclosure Schedule or as reflected in the Company SEC Reports filed prior to
the date hereof, all Taxes (as defined hereinafter) due and payable by the
Company and its Subsidiaries prior to the date hereof have been paid except as
would not have, individually or in the aggregate, a Company Material Adverse
Effect. There are no outstanding agreements or waivers extending the statutory
period of limitation applicable
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to any Tax Return of the Company or any of its Subsidiaries for any period,
except for such extensions or waivers which, individually or in the aggregate,
would not reasonably be expected to have a Company Material Adverse Effect.
(b) Except as would not have, individually or in the aggregate, a Company
Material Adverse Effect, neither the Company nor any of its Subsidiaries is a
party to any action, suit or proceeding by any governmental, quasi-governmental
or regulatory department or authority for the assessment or collection of Taxes,
and there is no audit, examination, deficiency or refund litigation or matter in
controversy with respect to any Taxes and no claim by any taxing department or
authority is pending in any jurisdiction where the Company or its Subsidiaries
do not file Tax Returns to the effect that the Company or any of its
Subsidiaries is or may be subject to taxation by that jurisdiction.
(c) The Company and its Subsidiaries have withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or owing
to any employee, independent contractor, creditor, stockholder or other party,
except as would not have, individually or in the aggregate, a Company Material
Adverse Effect.
(d) "Taxes" shall mean any and all taxes, charges, fees, levies or other
assessments, including income, gross receipts, excise, real or personal
property, sales, withholding, social security, retirement, unemployment,
occupation, use, goods and services, license, value added, capital, net worth,
payroll, profits, franchise, transfer and recording taxes, fees and charges, and
any other taxes, assessment or similar charges imposed by the Internal Revenue
Service or any taxing authority (whether domestic or foreign including any
state, county, local or foreign government or any subdivision or taxing agency
thereof (including a United States possession)) (a "Taxing Authority"), whether
computed on a separate, consolidated, unitary, combined or any other basis; and
such term shall include any interest whether paid or received, fines, penalties
or additional amounts attributable to, or imposed upon, or with respect to, any
such taxes, charges, fees, levies or other assessments. "Tax Return" shall mean
any report, return, document, declaration or other information or filing
required to be supplied to any Taxing Authority, including information returns,
any documents with respect to or accompanying payments of estimated Taxes, or
with respect to or accompanying requests for the extension of time in which to
file any such report, return, document, declaration or other information.
Section 3.15. Intellectual Property. The Company and its Subsidiaries own,
or are licensed or otherwise possess the right to use, all patents, trademarks,
tradenames, servicemarks, copyrights, computer software and all other rights
with respect to intellectual property that is material to the conduct of the
Company's business.
Section 3.16. Brokers. Except for the Company Financial Advisor and its
affiliates with respect to which the Company is solely liable, no broker, finder
or investment banker is entitled to any brokerage, finder's or other fee or
commission from the Company or any of its Subsidiaries in connection with the
transactions contemplated by this Agreement.
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Section 3.17. Environmental Matters.
(a) Except as set forth in the Company SEC Reports filed prior to the date
hereof and except for such matters as would not have, individually or in the
aggregate, a Company Material Adverse Effect:
(i) no Hazardous Substance has been discharged, emitted, released or
is present at any property now or previously owned, leased or operated by
the Company or any of its Subsidiaries, in any such case in violation of
Environmental Laws; and
(ii) the Company and its Subsidiaries are and have been in compliance
with all Environmental Laws and all Environmental Permits.
(b) None of the transactions contemplated by this Agreement will trigger
any filing or other action under any environmental transfer statute, including
without limitation, the Connecticut Hazardous Waste Establishment Transfer Act.
(c) For purposes of this Section, the following terms shall have the
meanings set forth below:
(i) "Company" and "Subsidiary" shall include any entity which is, in
whole or in part, a predecessor of the Company or any Subsidiary of the
Company;
(ii) "Environmental Laws" means any federal, state, local and foreign
statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, codes, plans, injunctions, permits,
concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to human health, the environment or to emissions,
discharges or releases of pollutants, contaminants, or other hazardous
substances or wastes into the environment, including without limitation
ambient air, surface water, ground water or land, or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants or other
hazardous substances or wastes or the clean-up or other remediation
thereof;
(iii) "Environmental Permits" means, with respect to any Person, 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 such Person as currently conducted; and
(iv) "Hazardous Substances" means any toxic, radioactive, corrosive or
otherwise hazardous substance, including petroleum, its derivatives,
by-products and other hydrocarbons, or any substance having any constituent
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elements displaying any of the foregoing characteristics, which in any
event is regulated under Environmental Laws.
Section 3.18. Antitakeover Statutes. The Company has taken all action
necessary to exempt the Offer, the Merger, this Agreement and the transactions
contemplated hereby from the provisions of Section 203 of DGCL, and,
accordingly, no such Section applies or purports to apply to any such
transactions.
Section 3.19. Year 2000 Compliance. The Company has (i) initiated a review
and assessment of all areas within the business and operations of the Company
and its Subsidiaries (including those areas affected by suppliers and vendors)
that could be adversely affected by the "Year 2000 Problem" (that is, the risk
that computer software and systems used by the Company or any of its
Subsidiaries (or their respective suppliers and vendors) may be unable to
recognize and perform properly date-sensitive functions involving certain dates
prior to and any date after December 31, 1999), (ii) developed a plan and
timeline for addressing the Year 2000 Problem on a timely basis, which plan and
timeline have been made available to Parent and (iii) to date, implemented such
plan in accordance with such timetable. The Company reasonably believes that all
computer software and systems (including those of suppliers and vendors) that
are material to the business or operations of the Company and its Subsidiaries
as presently conducted will on a timely basis be able to perform properly
date-sensitive functions for all dates before and from and after January 1,
2000.
Section 3.20. Proxy Statement. If applicable, the information supplied by
the Company for inclusion or incorporation by reference in the proxy or
information statement to be sent to the stockholders of the Company in
connection with the meeting of the stockholders of the Company to consider
approval of this Agreement ((the "Company Stockholders' Meeting") and such proxy
or information statement, the "Proxy Statement") will not, on the date the Proxy
Statement or any amendment thereof or supplement thereto is first mailed to
stockholders of the Company, at the time of the Company Stockholders' Meeting,
and at the Effective Time 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. If at any time prior to the Effective Time any event relating to the
Company or any of its respective affiliates, officers or directors should be
discovered by the Company which should be set forth in an amendment or a
supplement to the Proxy Statement, the Company shall promptly inform Parent and
Merger Sub. The Proxy Statement shall comply in all material respects as to form
and substance with the requirements of the Exchange Act.
Section 3.21. Recommendation Documents. The Schedule 14D-9 and any other
documents required to be filed with the SEC by the Company or required to be
distributed or otherwise disseminated to the Company's stockholders in
connection with the transactions contemplated by this Agreement, and any
amendments or supplements thereto, when filed, distributed or disseminated, as
applicable, shall in all material respects conform with the requirements of the
Exchange Act (except that the foregoing
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representation shall not apply with respect to the accuracy of information
relating to Parent which has been furnished in writing by Parent specifically
for inclusion in the Schedule 14D-9). As of its filing date, and on the date it
is first published, sent or given to holders of Shares, the Schedule 14D-9 or
any supplement or amendment thereto and any other documents provided therewith
shall not contain any misstatement of material fact or omit to state any
material fact necessary in order to make the statements contained therein, in
light of the circumstances in which they were made, not misleading. The Company
agrees to correct the Schedule 14D-9 and any other documents sent or delivered
to the holders of Shares therewith if and to the extent that any of them shall
become false or misleading in any material respects, and the Company further
agrees to take all steps necessary to cause the Schedule 14D-9 as so corrected
to be disseminated to holders of Shares, in each case as and to the extent
required by applicable law.
Section 3.22. Customs Broker Licenses and Approvals.
Except for such matters as would not have, individually or in the
aggregate, Company Material Adverse Effect:
(a) The Company and each of its Subsidiaries that is engaged in the
Customs business is a duly licensed Customs broker, and holds a valid
permit in each location where it conducts Customs business, under 19 U.S.C.
ss. 1641 and applicable Customs regulations. Such licenses and permits are
in full force and effect and have not been surrendered, suspended or
revoked by operation of law or otherwise. The Company and each of its
Subsidiaries that is engaged in the Customs business maintains a licensed
officer required under 19 C.F.R. ss. 111.11(c) in support of its corporate
license and employs a licensed person in each Customs broker district as
required under 19 C.F.R. ss. 111.19.
(b) The Company and each of its Subsidiaries that is engaged in the
Customs business has complied in all respects with 19 U.S.C. ss. 1641 and
19 C.F.R. Part III.
(c) The Company and each separately incorporated branch office where
the Company acts as an ocean freight forwarder or a non-vessel-operating
common carrier is duly licensed as an ocean transportation intermediary by
the Federal Maritime Commission and is in full compliance with all laws and
regulations applicable to ocean transportation intermediaries. Such
licenses are in full force and effect and have not been surrendered,
suspended or revoked by operation of law or otherwise.
(d) The Company and each of its Subsidiaries that is engaged in the
Customs business or as an air freight forwarder or ocean transportation
intermediary is in compliance with the laws and regulations administered by
the United States Customs Service ("Customs"), United States Department of
Commerce, and Federal Maritime Commission. There are no claims pending
against, or to the knowledge of the Company, threatened against or
affecting the Company or any of its Subsidiaries, by Customs, U.S.
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Department of Commerce, or Federal Maritime Commission for duties, taxes,
fees, penalties or liquidated damages in excess of $10,000 each or $300,000
in the aggregate.
(e) The Company and each of its Subsidiaries that is engaged in the
Customs business or as an air freight forwarder or ocean transportation
intermediary is not the subject of any investigation, audit, debarment,
denial order, charging letter, or license revocation or suspension
proceeding by Customs, U.S. Department of Commerce, or Federal Maritime
Commission.
(f) "Customs business" means those activities involving transactions
with Customs concerning the entry and admissibility of merchandise, its
classification and valuation, the payment of duties, taxes, or other
charges assessed or collected by Customs upon merchandise by reason of its
importation, or the refund, rebate, or drawback thereof.
(g) "Ocean transportation intermediary" means an ocean freight
forwarder or a non-vessel-operating common carrier. For the purposes of
this part, the term:
(i) "Ocean freight forwarder" means a person that:
1. in the United States, dispatches shipments from the
United States via a common carrier and books or otherwise
arranges space for those shipments on behalf of shippers; and
2. processes the documentation or performs related
activities incident to those shipments; and
(ii) "Non-vessel-operating common carrier" means a common carrier
that does not operate the vessels by which the ocean transportation is
provided, and is a shipper in its relationship with an ocean common
carrier.
(h) "Air freight forwarder" means a Person that dispatches shipments
from the United States via an air carrier and books or otherwise arranges
space for those shipments on behalf of shippers or acts as a shipper and
processes the documentation or performs related activities incident to
those shipments.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF
PARENT AND MERGER SUB
Parent and Merger Sub hereby represent and warrant to the Company as
follows:
Section 4.1. Organization and Qualification; Subsidiaries. Each of Parent
and Merger Sub is an entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its formation and has the
requisite corporate power and authority and is in possession of all Approvals
necessary to own, lease and operate the properties it purports to own, lease or
operate and to carry on its business as it is now being conducted, except for
such matters as would have, individually or in the aggregate, a Parent Material
Adverse Effect (as defined below). Parent owns directly or indirectly all of the
outstanding capital stock of Merger Sub.
Section 4.2. Authority Relative to this Agreement. Each of Parent and
Merger Sub has all necessary corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Parent and Merger Sub and the consummation by Parent and
Merger Sub of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of Parent and Merger
Sub, and no other corporate proceedings on the part of Parent or Merger Sub are
necessary to authorize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly and validly executed and delivered by
Parent and Merger Sub and, assuming the due authorization, execution and
delivery by the Company, constitutes a legal, valid and binding obligation of
Parent and Merger Sub.
Section 4.3. Acquisition Funding. At the expiration of the Offer, the
Merger Sub will have available cash sufficient to consummate the Offer and the
Merger and to pay all fees and expenses in connection therewith.
Section 4.4. Governmental Authorization. The execution, delivery and
performance by Parent and Merger Sub of this Agreement and the consummation by
Parent and Merger Sub of the transactions contemplated hereby require no action
by or in respect of, or filing with, any governmental body, agency, official or
authority, domestic or foreign, other than (i) the filing of a certificate of
merger with respect to the Merger with the Delaware Secretary of State; (ii)
compliance with any applicable requirements of the HSR Act, the Exon-Florio
Provision, the DOT Approval, and the European Approval, (iii) compliance with
any applicable requirements of the Exchange Act and any other applicable
securities or takeover laws, whether state or foreign; and (iv) any actions or
filings the absence of which would not reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect or materially
to impair the ability of Parent and Merger Subsidiary to consummate the
transactions contemplated by this Agreement. Notwithstanding anything contained
in this Section 4.4, Parent and Merger Sub make no
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representation or warranty with respect to governmental consents or approvals in
foreign jurisdictions which are necessary in connection with the transactions
contemplated hereby and are not otherwise identified in this Section.
Section 4.5. No Violation. The execution and delivery of this Agreement by
Parent and Merger Sub does not, and the performance of this Agreement by Parent
and Merger Sub will not, and the consummation by Parent and Merger Sub of the
transactions contemplated hereby will not, (i) contravene, conflict with, result
in any violation or breach of any provision of the certificate of incorporation
or bylaws of Parent or Merger Sub, (ii) assuming compliance with the matters
referred to in Section 4.4, contravene, conflict with, result in any violation
or breach of any provision of any Laws applicable to Parent or Merger Sub or by
which any of their respective properties are bound or affected, (iii) require
any consent or other action by any Person under, constitute a default under, or
cause or permit the termination, cancellation, acceleration or other change of
any right or obligation or the loss of any benefit to which Parent or any of its
Subsidiaries is entitled under any provision of any agreement or other
instrument binding upon Parent or any of its Subsidiaries or any license,
franchise, permit, certificate, approval or other similar authorization
affecting the assets or business of Parent and its Subsidiaries or (iv) result
in the creation of a Lien on any of the properties or assets of Parent or Merger
Sub pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instruction or obligation to which
Parent or Merger Sub is a party or by which Parent or Merger Sub or any of their
respective properties are bound or affected, except in the case of clauses (ii),
(iii) and (iv) for any such matters that could not, individually or in the
aggregate, reasonably be expected to have a Parent Material Adverse Effect. The
Chairman, Chief Executive Officer and General Counsel of Parent, and the head of
Danzas Intercontinental Business Unit (or such other individual as shall be
designated as the lead representative of Parent overseeing the integration of
the Company and Danzas during the period prior to the Effective Time) (the
"Parent Officers") are not aware of any fact that causes them to believe that
Parent and Merger Sub will be unable to perform their obligations under this
Agreement assuming the conditions to their obligations set forth in Annex I are
satisfied.
Section 4.6. Offer Documents. The Offer and the Offer Documents shall in
all material respects conform with the requirements of the Exchange Act (except
that the foregoing representation shall not apply with respect to the accuracy
of information relating to the Company which has been excerpted or derived from
public sources or furnished in writing by the Company specifically for inclusion
in the Offer Documents). As of their respective dates, and on the date they are
first published, sent or given to holders of Shares, the Offer Documents shall
not contain any misstatement of material fact or omit to state any material fact
necessary to make the statements contained therein, in light of the
circumstances in which they were made, not misleading. Parent and Merger Sub
agree to correct the Schedule 14D-1 and the other Offer Documents if and to the
extent that any of them shall become false or misleading in any material
respects, and Parent and Merger Sub further agree to take all steps necessary to
cause the Schedule 14D-1 as so corrected to be disseminated to holders of
Shares, in each case as and to the extent
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required by applicable law. If applicable, the information with respect to
Parent and any of its Subsidiaries that Parent furnishes to the Company in
writing specifically for use in the Proxy Statement 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 such Proxy Statement or
any amendment or supplement thereto is first mailed to stockholders of the
Company and at the time of the Company's Stockholders' Meeting.
Section 4.7. Brokers. Except for Deutsche Banc Alex. Brown, Deutsche Bank
Securities Inc. and their affiliates, with respect to which Parent is solely
liable, no broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission from Parent in connection with the
transactions contemplated by this Agreement.
ARTICLE 5
CONDUCT OF BUSINESS
Section 5.1. Conduct of Business by the Company. During the period from the
date of this Agreement and continuing until the earlier of the termination of
this Agreement or the Consummation Time, the Company covenants and agrees that
neither the Company nor any Subsidiary of the Company shall directly or
indirectly do any of the following without the prior written consent of Parent,
which shall not unreasonably be withheld:
(a) amend or otherwise change the Company's certificate of
incorporation or bylaws;
(b) issue, sell, pledge, dispose of or encumber, or authorize the
issuance, sale, pledge, disposition or encumbrance of, any capital stock of
the Company or any of its Subsidiaries of any class, or any options,
warrants, convertible securities or other rights of any kind to acquire any
capital stock of the Company or any of its Subsidiaries of any class
(except for the issuance of Shares issuable pursuant to Stock Options under
the Company Stock Option Plans which Stock Options are outstanding on the
date hereof);
(c) sell, lease, license, pledge, or otherwise dispose of or encumber
any assets of the Company or of any Subsidiary except for (i) sale of
assets in the ordinary course of business and in a manner consistent with
past practice, (ii) disposition of obsolete or worthless assets and (iii)
sales of immaterial assets, provided that any sale, lease, license, pledge
or other disposition of assets pursuant to Subsection 5.1(c)(ii) or (iii)
shall not exceed $1,000,000 in the aggregate;
(d) except as set forth in Section 5.1(d) of the Company Disclosure
Schedule, (i) declare, set aside, or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect
of any class of capital stock (or other equity interest) of the Company,
except that a Subsidiary of the Company may
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declare and pay a dividend to the Company, (ii) split, combine or
reclassify any class of capital stock (or other equity interest) of the
Company or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of, or in substitution for shares of any
class of capital stock (or other equity interest) of the Company or (iii)
amend the terms of, repurchase, redeem or otherwise acquire, or permit any
Subsidiary of the Company to repurchase, redeem or otherwise acquire, any
securities of the Company or any Subsidiary of the Company, except, in the
case of Subsidiaries other than Material Subsidiaries or wholly-owned
Subsidiaries, repurchases of capital stock of such Subsidiaries in
accordance with contractual arrangements entered into in connection with
joint ventures disclosed in Section 13.3 of the Company Disclosure Schedule
which were entered into in the ordinary course of business consistent with
past practice;
(e) except as set forth on Schedule 5.1(e), (i) acquire (by merger,
consolidation, acquisition of stock or assets) any company, corporation,
partnership, or other business organization or division thereof, or acquire
a material amount of stock or assets of any other Person, (ii) incur any
indebtedness for borrowed money or issue any debt securities (except in the
ordinary course of business and in amounts not in excess of $2 million in
the aggregate) or assume, guarantee or otherwise become responsible for the
obligations of any Person (other than indebtedness of wholly-owned
Subsidiaries of the Company) or make any loans or advances, except in the
ordinary course of business consistent with past practice and in amounts
not in excess of $1,000,000 in the aggregate, (iii) enter into or amend any
material Contract, except in the ordinary course of business and only in a
manner that does not have a Company Material Adverse Effect, or (iv)
authorize any new capital expenditures or purchase of fixed assets except
in the ordinary course of business consistent with past practice and in
amounts not in excess of $5,000,000 in the aggregate;
(f) except as set forth in Section 5.1(f) of the Company Disclosure
Schedule, increase the compensation payable or to become payable to its
officers or employees, except for increases in salary or wages of employees
of the Company or of any Subsidiary of the Company who are not officers of
the Company, which increases are in the ordinary course of business and do
not exceed 5% of the aggregate annual salary or wages of all such
employees, or grant any new severance or termination pay to, or enter into
any new employment or severance agreement with any director, officer or
employee of the Company or of any Subsidiary of the Company, except as
disclosed in this Agreement, or establish, adopt or enter into or amend any
collective bargaining, bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund,
policy or arrangement for the benefit of any current or former directors,
officers or employees, except, in each case, as may be required by law and
except that the foregoing shall not restrict routine hiring of new lower
level personnel in the ordinary course of business consistent with past
practice, immaterial changes in policies affecting the workplace generally,
or any of the foregoing restrictions not involving officers or directors of
the Company that will not, in the aggregate, increase the obligations of
the Company thereunder by more than $150,000.
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(g) take any action to change accounting policies or procedures
(including, without limitation, procedures with respect to revenue
recognition, payments of accounts payable and collection of accounts
receivable) except for changes which may be required under GAAP or pursuant
to SEC rules or regulations;
(h) make any material Tax election inconsistent with past practices or
settle or compromise any material federal, state, local or foreign Tax
liability or agree to an extension of a statute of limitations;
(i) pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise) other than the payment, discharge or satisfaction in the
ordinary course of business and consistent with past practice of
liabilities (i) reflected or reserved against in the financial statements
of the Company included in the Company SEC Reports made available to the
Parent prior to the date hereof, or (ii) incurred in the ordinary course of
business and consistent with past practice; or
(j) take, or agree in writing or otherwise to take, any of the actions
described in Sections 5.1 (a) through (i) above, or any action which would
make any of the representations or warranties of the Company contained in
this Agreement untrue or incorrect in any material respect or prevent the
Company from performing or cause the Company not to perform its covenants
under this Agreement in any material respect.
Section 5.2. No Solicitation.
(a) Non-Solicitation of Alternative Transactions. During the period from
the date of this Agreement and continuing until the earlier of the termination
of this Agreement or the Consummation Time, the Company and its Subsidiaries
shall not, and shall cause their officers, directors or employees or any
investment banker, attorney or accountant or other representative retained by
them (any of the foregoing being a "Company Representative") not to, directly or
indirectly, (i) initiate, solicit or encourage the making, submission or
announcement of any Alternative Transaction (as defined below), (ii) take any
other action intended to facilitate any inquiries or the making of any proposal
to effect an Alternative Transaction, (iii) approve, endorse or recommend any
Alternative Transaction, (iv) enter into any letter of intent or similar
document or any contract contemplating or otherwise relating to any Alternative
Transaction, (v) enter into discussions or negotiate with or disclose any
nonpublic information relating to the Company or any of its Subsidiaries or
afford access to the properties, books or records of the Company or any of its
Subsidiaries to any Person regarding an Alternative Transaction, (vi) grant any
waiver or release under any standstill or similar agreement with respect to any
class of equity securities of the Company or any of its Subsidiaries, or (vii)
authorize or permit any of the officers, directors, or employees of the Company
or its Subsidiaries or any Company Representative to take any such action set
forth in clauses (i) through (vi). The Company will notify Parent promptly (but
in no event later than 48 hours) after receipt by the Company (or any Company
Representative) of (x) any Alternative Transaction, (y)
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any indication that any Person is considering proposing an Alternative
Transaction or (z) any request for nonpublic information relating to the Company
or any of its Subsidiaries or for access to the properties, books or records of
the Company or any of its Subsidiaries by any Person who may be considering
proposing, or has proposed, an Alternative Transaction. The Company shall
provide such notice orally and in writing and shall identify the Person
proposing, and the terms and conditions of, any such Alternative Transaction,
indication or request. The Company shall keep Parent fully informed, on a
current basis, of the status and details of any such Alternative Transaction or
request. Nothing contained in this Agreement shall prevent the Board of
Directors of the Company from complying with Rule 14e-2 under the Exchange Act
with respect to any Alternative Transaction.
(b) Notwithstanding the foregoing, nothing contained in Section 5.2(a)
shall prohibit the Board of Directors of the Company (through the Company
Representative) from furnishing non-public information to, or entering into
discussions or negotiations with, any Person in response to a Superior Proposal
(defined below) made by such Person (and not withdrawn) if (i) the Company has
complied in all material respects with the provisions of this Section 5.2,
including the notice provisions hereof, (ii) the Board of Directors of the
Company determines in good faith, based on advice of outside legal counsel, that
it is reasonably likely that the failure to consider the Superior Proposal would
constitute a breach of its fiduciary duties to the Company's stockholders under
applicable law, (iii) prior to furnishing such nonpublic information to, or
entering into discussions or negotiations with, such Person the Company requires
such Person to enter into a confidentiality agreement with the Company with
terms no less favorable to the Company than those contained in the
Confidentiality Agreement, and (iv) prior to furnishing any such nonpublic
information to, or entering into discussions or negotiations with any such
Person, the Company gives Parent written notice of the identity of such Person
and of the Company's intention to take such action.
(c) The Board of Directors of the Company shall be permitted to withdraw,
or modify in a manner adverse to Parent, its recommendation referred to in
Sections 1.2 and 6.1, but only if (i) the Company has complied in all material
respects with the provisions of this Section 5.2, including the notice
provisions hereof, (ii) a Superior Proposal is pending at the time the Board of
Directors of the Company determines to take such action, (iii) the Board of
Directors of the Company determines in good faith, based on advice of outside
legal counsel, that it is reasonably likely that the failure to do so would
constitute a breach of its fiduciary duties to the Company's stockholders under
applicable law, and (iv) the Company shall have delivered to Parent a prior
written notice advising Parent that it intends to take such action.
(d) Definitions. The following terms shall have the meanings set forth
below:
(i) "Alternative Transaction" means any inquiry, proposal or offer
for, or any indication of interest in,
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1. any merger, consolidation, amalgamation, share exchange,
business combination, issuance of securities, acquisition of
securities, tender offer, exchange offer, or other similar transaction
(i) in which the Company or any Subsidiary of the Company is a
constituent corporation or involving the capital stock of the Company,
(ii) in which a Person or "group" (as defined in the Exchange Act and
the rules promulgated thereunder) or Persons directly or indirectly
acquires the Company or any Subsidiary of the Company or more than 15%
of the Company's business or assets, or directly or indirectly becomes
the beneficial owner (as such term is used in Section 13d-3 of the
Exchange Act) or record owner of securities representing, or
exchangeable for or convertible into, more than 15% of the outstanding
securities of any class of voting securities of the Company or any of
the Company's Subsidiaries, or filing a registration statement in
connection therewith or (iii) in which the Company or any Subsidiary
of the Company issues securities representing more than 15% of the
outstanding securities of any class of voting securities of the
Company;
2. any sale, lease, exchange, transfer, license, acquisition or
disposition of more than 15% of the assets of the Company and its
Subsidiaries, taken as a whole;
3. any liquidation or dissolution of the Company or any material
Subsidiary of the Company; or
4. any other transaction involving a proposal or offer from a
third party which the Board of Directors of the Company determines in
good faith is of the nature of transaction contemplated hereby;
provided that an Alternative Transaction shall not include the transactions
contemplated hereby.
(ii) "Superior Proposal" means a bona fide, unsolicited, written
proposal for an Alternative Transaction, on terms and conditions that the
Board of Directors of the Company determines, in its good faith judgment,
based on advice of the Company Financial Advisor or other financial advisor
of nationally recognized reputation, and taking into account all the terms
and conditions of the Alternative Transaction, is more favorable to the
Company's stockholders than the transaction contemplated hereby (after
giving effect to any changes to this Agreement and the Offer as may be
proposed by Parent in response to the Alternative Transaction), and for
which financing, to the extent required, is then fully committed or
reasonably determined to be available by the Board of Directors of the
Company.
(e) Termination of Existing Discussions. The Company shall, and shall cause
its Subsidiaries and the directors, employees and other agents and advisors of
the Company and its Subsidiaries to, immediately cease and cause to be
terminated any existing discussions or negotiations with any parties (other than
Parent and Merger Sub), conducted heretofore with respect to any Alternative
Transaction.
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(f) Agreement With Others. Nothing in this Section 5.2 shall (i) permit the
Company to terminate this Agreement or (ii) permit the Company to enter into any
written agreement with respect to an Alternative Transaction during the term of
this Agreement (it being agreed that during the term of this Agreement the
Company shall not enter into any written agreement with any Person that provides
for, or in any way facilitates, an Alternative Transaction, other than a
confidentiality agreement in the form referred to above), it being understood
that Section 8.1(e) and (f) sets forth the rights of the Company to terminate
this Agreement.
ARTICLE 6
ADDITIONAL AGREEMENTS
Section 6.1. Proxy Statement. If required by the DGCL, as promptly as
practicable following the consummation of the Offer, the Company shall, in
consultation with Parent, prepare and file with the SEC and will use its best
efforts to have cleared by the SEC and thereafter mail to its stockholders as
promptly as practicable, the Proxy Statement. The Proxy Statement shall, subject
to Section 5.2 of this Agreement, include the recommendation of the Board of
Directors of the Company in favor of the approval of this Agreement.
Section 6.2. Company Stockholders' Meeting. If required by the DGCL, the
Company shall call and hold the Company Stockholders' Meeting as promptly as
practicable following consummation of the Offer for the purpose of voting upon
the approval of this Agreement, and the Company shall use its reasonable efforts
to hold the Company Stockholders' Meeting as soon as practicable, subject to
applicable law. If requested by Parent, the Company shall use its reasonable
best efforts to solicit from its stockholders proxies in favor of the approval
of this Agreement. Subject to Section 5.2, the Board of Directors of the Company
shall recommend approval of this Agreement by the Company's stockholders, and
shall take all other action necessary or advisable to secure the vote or consent
of stockholders required by the DGCL and the certificate of incorporation and
bylaws of the Company to obtain such approval. At any such meeting all
outstanding Shares then owned by Parent, Merger Sub or their Subsidiaries or
affiliates shall be voted in favor of the Merger and for approval and adoption
of this Agreement.
Section 6.3. Employee Benefits and Stock Options. The Parent, Merger Sub
and the Company hereby acknowledge and agree that the Surviving Company shall
not assume or continue any outstanding stock options under the Company Stock
Option Plans, or any other stock options, or substitute any additional options
for such outstanding options.
Section 6.4. Consents; Approvals. The Company and Parent shall each use
their reasonable efforts to obtain all consents, waivers, approvals,
authorizations or orders (including, without limitation, all governmental and
regulatory rulings and approvals), and the Company and Parent shall make all
filings (including without limitation, all filings with governmental or
regulatory agencies) required in connection
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with the authorization, execution and delivery of this Agreement by the Company
and Parent and the consummation by them of the transactions contemplated hereby.
The Company and Parent shall furnish all information required to be included in
any proxy statement or information statement prepared in connection with the
Company Stockholders' Meeting, or for any application or other filing to be made
pursuant to the rules and regulations of any Governmental Body in connection
with the transactions contemplated by this Agreement. Without limiting the
generality of the foregoing, the Company and Parent shall, promptly after the
date of this Agreement, prepare and file the notifications required under the
HSR Act, the Exon-Florio Provision, the DOT Approval, the European Approval and
any other domestic or foreign approvals, filings, notifications or other
requirements of law, statute, rule or regulation necessary in connection with
the transactions contemplated by this Agreement which would, if not obtained or
satisfied, have a Company Material Adverse Effect or a Parent Material Adverse
Effect. The Company and Parent shall respond as promptly as practicable to any
inquiries or requests received from any governmental agency with respect to such
approvals, filings, notifications or other requirements. Each of the Company and
Parent shall (i) give the other party prompt notice of the commencement of any
legal or administrative proceeding or other action before any Governmental Body
and of any notice or other communication from any governmental or regulatory
agency or authority in connection with the Offer, the Merger or the transactions
contemplated hereby and (ii) keep the other party informed as to the status of
any such proceeding, including any communications received by or transmitted to
any Governmental Body relating to the Offer, the Merger or the transactions
contemplated hereby. The Company and Parent will consult and cooperate with one
another, and will consider in good faith the views of one another, in connection
with any analysis, appearance, presentation, memorandum, brief, argument,
opinion or proposal made or submitted in connection with any legal or
administrative proceeding under or relating to the HSR Act, the Exon-Florio
Provision, the DOT Approval, the European Approval, or any other federal, state
or foreign antitrust or fair trade law.
Section 6.5. Further Assurances. Upon the terms and subject to the
conditions hereof, each of the parties hereto shall use all reasonable efforts
to take, or cause to be taken, all actions and to do, or cause to be done, all
other things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement, to
obtain in a timely manner all necessary waivers, consents and approvals and to
effect all necessary registrations and filings, and to otherwise satisfy or
cause to be satisfied all conditions precedent to its obligations under this
Agreement. At and after the Effective Time, the officers and directors of the
Surviving Company will be authorized to execute and deliver, in the name and on
behalf of the Company or Merger Sub, any deeds, bills of sale, assignments or
assurances and to take and do, in the name and on behalf of the Company or
Merger Sub, any other actions and things to vest, perfect or confirm of record
or otherwise in the Surviving Company any and all right, title and interest in,
to and under any of the rights, properties or assets of the Company acquired or
to be acquired by the Surviving Company as a result of, or in connection with,
the Merger.
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Section 6.6. Employees, Employee Benefits.
(a) Affected Employees. Individuals who are employed by the Company and its
Subsidiaries as of the consummation of the Offer shall remain employees of the
Company and its Subsidiaries following the consummation of the Offer (each such
employee, an "Affected Employee"); provided however that this Section shall not
be construed to limit the ability of the applicable employer to terminate the
employment of any Affected Employee at any time.
(b) Past Service Credit. Parent will, or will cause the Company to, give
individuals who are employed by the Company and its Subsidiaries as of the
consummation of the Offer full credit for purposes of eligibility, vesting,
benefit accrual (excluding, however, benefit accrual under any defined benefit
pension plans) and determination of the level of benefits under any employee
benefit plans or arrangements maintained by Parent or any Subsidiary of Parent
for such Affected Employees' service with the Company or any Subsidiary of the
Company to the same extent recognized by the Company immediately prior to the
consummation of the Offer.
(c) Limitations and Deductibles. Parent will, or will cause the Company to,
(i) waive all limitations as to preexisting conditions, exclusions and waiting
periods imposed by Parent or the Company with respect to participation and
coverage requirements applicable to the Affected Employees under any welfare
benefit plans that such employees may be eligible to participate in after the
consummation of the Offer, other than limitations or waiting periods that are
already in effect with respect to such employees and that have not been
satisfied as of the consummation of the Offer under any welfare plan maintained
for the Affected Employees immediately prior to the consummation of the Offer,
and (ii) provide each Affected Employee with credit for any co-payments and
deductibles paid prior to the consummation of the Offer in satisfying any
applicable deductible or out-of-pocket requirements under any welfare plans that
such employees are eligible to participate in after the consummation of the
Offer.
(d) Post Closing Coverage and Benefits. For a period of one year
immediately following the consummation of the Offer, the coverage and benefits
provided to the Affected Employees who remain employed with the Surviving
Company, Parent or any Subsidiary of Parent pursuant to employee benefit plans
or arrangements maintained by Parent, or any Subsidiary of Parent shall be, in
the aggregate, no less favorable than those provided to such employees
immediately prior to the consummation of the Offer. For a period of two years
immediately following the consummation of the Offer, the Company shall, and,
following the Effective Time, the Surviving Company shall and the Parent shall
cause the Surviving Company to, maintain in effect on substantially the same
terms as in effect immediately prior to the consummation of the Offer the
Deferred Compensation Plan, as amended by Amendment No. 1, effective as of
January 1, 1997, as amended by Amendment No. 2, effective as of January 1, 1999
(the "Deferred Compensation Plan"). For a period of ten years thereafter, the
Surviving Company shall maintain in effect the Rabbi Trust established under the
Deferred Compensation Plan. For
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a period of not less than the premium schedules set forth in the Split Dollar
Life Insurance Plan, the Surviving Company shall and the Parent shall cause the
Surviving Company to maintain in effect on substantially the same terms as
immediately prior to the consummation of the Offer the Split Dollar Life
Insurance Plan for the employees, officers and directors of the Company named
therein.
(e) Executive Agreements. As of the consummation of the Offer, Parent shall
cause the Surviving Company to honor in accordance with their terms all
employment, severance, change of control, and other compensation agreements and
arrangements disclosed in Section 3.11 or 6.6(e) of the Company Disclosure
Schedule (each an "Executive Agreement"). Parent and the Company hereby agree
that the consummation of the Offer by the Company's stockholders shall
constitute a "Change in Control" (or words of similar effect) for purposes of
any Executive Agreement and all other Employee Plans, pursuant to the terms of
such plan.
(f) Severance Pay. Parent shall, or shall cause the Surviving Company, to
pay severance benefits to each of the Affected Employees (other than those who
(i) are parties to the Executive Agreements referred to in Section 6.6(e) or
(ii) are entitled to receive severance benefits under any existing contract,
statute, regulation or law) whose employment is terminated other than for Cause
within 120 days following the Effective Time, equal to two weeks of the Affected
Employee's base earnings on the date the Affected Employee's employment is
terminated for each year of service with the Company or an affiliate, up to a
maximum of six months of base earnings. "Cause" shall mean conduct by the
Affected Employee constituting a crime related to his employment, or
constituting a felony.
Section 6.7. Public Announcements. Parent and the Company shall consult
with each other before issuing any press release with respect to the Offer, the
Merger or this Agreement, and shall not issue any such press release or make any
such public statement without the prior consent of the other party, which shall
not be unreasonably withheld; provided, however, that a party may, without prior
consent of the other party, issue such press release or make such public
statement as may upon the advice of counsel be required by law or the NASDAQ
Stock Market Inc. if it has used all reasonable efforts to consult with the
other party.
Section 6.8. Conveyance Taxes. Parent and the Company shall cooperate in
the preparation, execution and filing of all returns, questionnaires,
applications, or other documents regarding any real property transfer or gains,
sales, use, transfer, value added, stock transfer and stamp taxes, any transfer,
recording, registration and other fees, and any similar taxes which become
payable by, and are imposed on, the Company in connection with the transactions
contemplated hereby that are required to be filed on or before the Effective
Time.
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Section 6.9. Indemnification, Exculpation and Insurance.
(a) Indemnification. The Surviving Company shall indemnify and hold
harmless from liabilities for acts or omissions occurring at or prior to the
Effective Time each present and former director or officer of the Company (each
an "Indemnified Person") to the fullest extent permitted under applicable law
and the Company's certificate of incorporation and bylaws, and shall assume,
without further action, as of the Effective Time, any indemnification agreements
of the Company in effect as of the date hereof. The Surviving Company shall also
advance expenses, as incurred, to the fullest extent permitted under applicable
law, the Company's certificate of incorporation and bylaws, or any applicable
indemnification agreement.
(b) Successors and Assigns. In the event that the Surviving Company or any
of its successors or assigns (i) consolidates with or merges into any other
Person and is not the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers or conveys all or substantially all of
its properties and assets to any Person, then, and in each such case, proper
provision will be made so that the successors and assigns of Parent assume the
obligations set forth in this Section 6.9.
(c) Directors and Officers Liability Insurance. For seven years after the
Effective Time, the Surviving Company shall maintain in effect the Company's
current directors' and officers' liability insurance covering acts or omissions
occurring prior to the Effective Time with respect to those persons who are
currently covered by the Company's directors' and officers' liability insurance
policy on terms with respect to such coverage and amount no less favorable than
those of such policy in effect on the date hereof; provided, however, that (i)
the Surviving Company may substitute therefor policies of Parent or its
Subsidiaries containing terms with respect to coverage and amount no less
favorable to such directors or officers, as long as full coverage continues for
the period of their service prior to the Effective Time, and (ii) that in
satisfying its obligation under this Section 6.9(c), the Surviving Company shall
not be obligated to pay more than $300,000.
(d) Rights of Indemnified Parties. The provisions of this Section 6.9. (i)
are intended to be for the benefit of, and will be enforceable by, each
Indemnified Person, and (ii) are in addition to, and not in substitution for,
any other rights to indemnification or contribution that any such Indemnified
Person may have by contract or otherwise.
Section 6.10. Access to Information
(a) From the date hereof until the later of the Effective Time or the
termination of this Agreement, the Company shall (i) give to Parent and its
authorized representatives reasonable access to the offices, properties, books
and records of the Company and its Subsidiaries and such financial and other
information as may reasonably be requested upon reasonable prior notice and (ii)
shall instruct the Company's employees and authorized representatives to
cooperate with Parent in its investigation of the business
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of the Company and its Subsidiaries. Any access pursuant to this Section shall
be conducted in such manner as not to interfere unreasonably with the conduct of
the business of the Company and will be coordinated through the executive
officers of the Company. No information or knowledge obtained in any
investigation pursuant to this Section shall affect or be deemed to modify any
representation or warranty made by any party hereunder. Parent shall instruct
its representatives to cooperate with the Company in minimizing any disruption
to the Company's business.
(b) All information obtained by Parent pursuant to this Section shall be
held in confidence to the extent required by, and in accordance with, the
provisions of the letter agreement dated July 12, 1999 between Parent and the
Company (the "Confidentiality Agreement") which shall continue in effect.
Section 6.11. Notices of Certain Events.
(a) The Company and Parent shall promptly notify each other of 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) The Company shall promptly notify Parent of any actions, suits, claims,
investigations or proceedings commenced or, to its knowledge threatened against,
relating to or involving or otherwise affecting the Company or any of its
Subsidiaries that, if pending on the date of this Agreement, would have been
disclosed pursuant to Section 3.10 or that relate to the consummation of the
transactions contemplated by this Agreement.
(c) Parent shall promptly notify the Company of any actions, suits, claims,
investigations or proceedings commenced or, to its knowledge threatened against,
relating to or involving or otherwise affecting Parent or any of its
Subsidiaries that relate to the consummation of the transactions contemplated by
this Agreement.
Section 6.12. Merger Without Meeting of Shareholders. If Parent, Merger Sub
or any other Subsidiary of Parent shall acquire at least 90% of the outstanding
Shares pursuant to the Offer or otherwise, the parties hereto agree, at the
request of Parent, to take all necessary and appropriate action to cause the
Merger to be effective as soon as practicable after the acceptance for payment
of, and payment for, the Shares pursuant to the Offer without a meeting of
stockholders of the Company in accordance with the DGCL.
Section 6.13. Certain Notices.
(a) The Company shall, in a timely manner, give all notices and take such
other actions in respect of the transactions contemplated hereby as may be
required under the terms of each collective bargaining agreement to which the
Company or its Subsidiaries is a party.
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(b) If a Parent Officer becomes aware of any fact that causes such Parent
Officer to believe that the Company has breached its representations and
warranties or covenants so that the condition in paragraph (b)(ii) of Annex I
will not be satisfied, such Parent Officer will promptly notify the Company of
such fact.
ARTICLE 7
CONDITIONS TO THE MERGER
Section 7.1. Conditions to the Obligations of Each Party. The respective
obligations of the Company, Parent and Merger Sub to consummate the Merger are
subject to the satisfaction of the following conditions:
(a) if required by the DGCL, this Agreement shall have been approved
and adopted by the stockholders of the Company in accordance with such law;
(b) no preliminary or permanent injunction or other order, decree or
ruling by any court or governmental body or regulatory authority, domestic
or foreign, which prevents consummation of the Merger shall have been
issued and remain in effect (each party agreeing to use its reasonable
efforts to have any such injunction, order, decree or ruling lifted);
(c) no statute, rule or regulation of any government or governmental
agency, domestic or foreign, shall prevent the consummation of the Merger;
and
(d) Merger Sub shall have purchased Shares pursuant to the Offer.
ARTICLE 8
TERMINATION
Section 8.1. Termination. This Agreement may be terminated at any time
prior to the Effective Time, notwithstanding approval hereof by the stockholders
of the Company:
(a) at any time prior to the consummation of the Offer by mutual
written consent of the Parent and the Company;
(b) by either Parent or the Company if the Offer shall not have been
consummated by March 31, 2000 (provided that the right to terminate this
Agreement under this Section 8.1(b) shall not be available to any party
whose failure to fulfill any obligation under this Agreement has been the
cause of or resulted in the failure of the Offer to occur on or before such
date);
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(c) by either Parent or the Company, if there shall be any statute,
rule or regulation of any government or governmental agency, domestic or
foreign, that makes acceptance for payment of, and payment for, the Shares
pursuant to the Offer or consummation of the Merger illegal or otherwise
prohibited, or any judgment, injunction, order or decree of any court or
governmental body having competent jurisdiction enjoining the acceptance
for payment of, and payment for, the Shares pursuant to the Offer or
consummation of the Merger and such judgment, injunction, order or decree
shall have become final and nonappealable; provided, however, that the
party seeking to terminate this Agreement pursuant to this Section 8.1(c)
shall have used commercially reasonable best efforts to remove any such
judgment, injunction, order or decree;
(d) by Parent, if prior to the purchase of any Shares pursuant to the
Offer,
(i) the Board of Directors of the Company shall have failed to
recommend or withdrawn or materially modified in a manner adverse to
Parent its approval or recommendation of the Offer and the Merger, or
(ii) the Company shall have entered into, or shall have publicly
announced its intention to enter into, an agreement with respect to
any Superior Proposal; or
(iii) any Person other than Parent and its Subsidiaries shall
have acquired, directly or indirectly, beneficial ownership of at
least a majority of the Shares outstanding;
(e) by the Company, if, prior to purchase of any Shares pursuant to
the Offer, (i) the Company notifies Parent in writing at least 72 hours
prior to such termination that it intends to enter into an agreement with
respect to a Superior Proposal, attaching the most current version of such
agreement (or a description of all material terms and conditions thereof),
provided the Company has complied in all material respects with the
provisions of Section 5.2, including the notice provisions therein; (ii)
Parent does not make, within 72 hours after receipt of the Company's
notification pursuant to clause (i), an offer that the Board of Directors
of the Company determines, in good faith based on the advice of the Company
Financial Advisor or other financial advisor of nationally recognized
reputation, and taking into account all the terms and conditions of such
offer, is at least as favorable to the Company's stockholders as the
Superior Proposal (it being understood that the Company shall not enter
into any binding agreement regarding such Superior Proposal during such
72-hour period) and (iii) prior to or simultaneously with such termination,
the Company makes payment to Parent of the amounts payable pursuant to
Section 8.3.
(f) by the Company, if the Offer has not been consummated by February
15, 2000 as a result of a breach by Parent or Merger Sub of any of their
representations and warranties or covenants such that Parent and Merger Sub
are unable to
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perform their obligations under this Agreement after the conditions to
their obligations set forth in Annex I have been satisfied (but for those
conditions which are not satisfied due to or resulting from the facts
constituting such breach) and the Company is not in material breach of any
of its representations and warranties or covenants set forth in this
Agreement.
(g) The party desiring to terminate this Agreement pursuant to this
Section 8.1 (other than pursuant to Section 8.1(a)) shall give written
notice of such termination to the other parties hereto.
Section 8.2. Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 8.1, this Agreement shall forthwith become void
and there shall be no liability on the part of any party hereto or any of its
affiliates, directors, officers, stockholders or any other agent or advisor of
such party except (i) as set forth in Section 8.3 hereof, (ii) as provided
pursuant to the Confidentiality Agreement, and (iii) nothing herein shall
relieve any party from liability for any willful breach hereof. Notwithstanding
the foregoing, the agreements contained in this Section 8.2, and in Sections
6.7, 6.10(b), 8.3, 9.10, and 9.11 shall survive any termination hereof pursuant
to Section 8.1.
Section 8.3. Fees and Expenses.
(a) Except as otherwise specified in this Section 8.3, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such cost or expense.
(b) The Company agrees to pay to Parent (by wire transfer of immediately
available funds) an amount equal to
(i) $23 million prior to or simultaneously with the termination of
this Agreement as a result of the occurrence of any of the events set forth
in Sections 8.1(d) or 8.1(e); and
(ii) $2,000,000 as liquidated damages (and not as a penalty) if the
condition set forth in paragraph (b)(ii) of Annex I hereto shall not have
been met as a result of a breach by the Company of its representations and
warranties set forth in this Agreement; provided that such breach existed
as of the date hereof and provided further that all of the other conditions
set forth in Annex I shall have been satisfied (but for those conditions
which are not satisfied due to or resulting from the facts constituting
such breach) and Parent and Merger Sub are not in material breach of any of
their representations and warranties or covenants set forth in this
Agreement.
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ARTICLE 9
GENERAL PROVISIONS
Section 9.1. Effectiveness of Representations, Warranties and Agreements;
Knowledge, Etc.
(a) Survival. Except as otherwise provided in this Section 9.1 the
representations, warranties and agreements of each party hereto shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any other party hereto, any person controlling any such party or
any of their officers or directors, whether prior to or after the execution of
this Agreement. The representations, warranties and agreements in this Agreement
shall terminate at the consummation of the Offer or upon the earlier termination
of this Agreement pursuant to Section 8.1, as the case may be, except those
agreements which by their terms are designed to survive, including Sections 6.6,
6.7 and 6.9, shall survive the consummation of the Offer indefinitely.
Section 9.2. Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered or otherwise received by the parties at the
following addresses (or at such other address for a party as shall be specified
by like changes of address which shall be effective upon receipt):
(a) If to Parent or Merger Sub:
Deutsche Post AG
D-53105
Bonn, Germany
Fax: (49 228 182 6932)
Attention: Klaus Engelen
With copies to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Fax: (212) 450-4800
Attention: Christopher Mayer
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(b) If to the Company:
Air Express International Corporation
120 Tokeneke Road
PO Box 1231
Darien, CT 06820
Fax: (203) 655-5734
Attention: Daniel J. McCauley
With copies to:
Cummings & Lockwood
4 Stamford Plaza, PO Box 120
107 Elm Street
Stamford, CT 06904
Fax: (203) 708-3889
Attention: Katherine P. Burgeson
Section 9.3. Certain Definitions. For purposes of this Agreement, the term:
(a) "affiliate" means a Person that directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with, the first mentioned Person;
(b) "business day" shall have the meaning ascribed to such term under
Rule 14D-1 of the Exchange Act;
(c) "Consummation Time" means the time at which (i) Merger Sub shall
have accepted Shares for payment pursuant to the Offer and (ii) persons
designated by Parent shall constitute a majority of the Board of Directors
of the Company.
(d) "Contract" shall mean any written, oral or other agreement,
contract, subcontract, lease, understanding, instrument, note, warranty,
insurance policy, benefit plan, or legally binding commitment or
undertaking of any nature;
(e) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a Person,
whether through the ownership of stock, by contract or otherwise;
(f) "Governmental Body" shall mean any: (a) nation, state,
commonwealth, province, territory, county, city, municipality, district or
other jurisdiction of any nature; (b) federal, state, local, municipal,
foreign or other government; or (c) governmental or quasi-governmental
authority of any nature (including any
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governmental division, department, agency, commission, board,
instrumentality, official, organization, unit, body, Person or entity and
any court or other tribunal);
(g) "knowledge" or "to the knowledge" when used with respect to Parent
or of the Parent and its Subsidiaries means the actual knowledge of any
executive officer of Parent after reasonable inquiry; when used with
respect to the Company means the actual knowledge of an executive officer
of the Company after reasonable inquiry;
(h) "Material Adverse Effect" when used with respect to the Company
and its Subsidiaries or the Parent and its Subsidiaries shall have the
meaning described below. When used in conjunction with the Company or any
of its Subsidiaries, or Parent or any of its respective Subsidiaries, as
the case may be, the term "Material Adverse Effect" means any change or
effect that, individually or in the aggregate, is materially adverse to the
business, assets, prospects, financial condition or results of operations
of the Company and its Subsidiaries taken as a whole ("Company Material
Adverse Effect") or of Parent and its Subsidiaries taken as a whole
("Parent Material Adverse Effect"), respectively, but other than those
adverse effects occurring as a result of (i) changes in economic or
financial conditions generally or (ii) changes in conditions affecting the
freight forwarding and global logistics industries generally.
(i) "Material Subsidiary" means any Subsidiary that constitutes a
"significant subsidiary" of the Company within the meaning of Rule 1-02 of
Regulation S-X of the Exchange Act.
(j) "Person" or "person" means an individual, corporation,
partnership, limited liability company, association, trust, unincorporated
organization, Governmental Body, other entity or group (as defined in
Section 13(d)(3) of the Exchange Act);
(k) "Subsidiary" or "Subsidiaries" of the Company, the Surviving
Company, Parent or any other Person means any corporation, partnership,
joint venture or other legal entity of which the Company, the Surviving
Company, Parent or such other Person, as the case may be, (either alone or
through or together with any other Subsidiary) owns, directly or
indirectly, such amount of the stock or other equity interests, the holders
of which are generally entitled to vote for the election of the board of
directors or other governing body of such corporation or other legal
entity, that the Company, the Surviving Company, Parent or such other
Person has the power to elect a majority of the directors or members of the
governing body of such corporation or other legal entity.
(l) A reference in this Agreement to any statute shall be such
statute, as amended from time to time, and the rules and regulations
promulgated thereunder.
(m) A reference in this Agreement to "material" means material to the
applicable entity and its Subsidiaries, taken as a whole.
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Section 9.4. Amendment. This Agreement may be amended by the parties hereto
at any time prior to the Effective Time; provided, however, that, after approval
of this Agreement by the stockholders of the Company, no amendment may be made
which by law requires further approval by such stockholders without further
approval. This Agreement may not be amended except by an instrument in writing
signed by the parties hereto.
Section 9.5. Waiver. At any time prior to the Effective Time, any party
hereto may with respect to any other party hereto (a) extend the time for the
performance of any of the obligations or other acts, (b) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid only if
set forth in an instrument in writing signed by the party or parties to be bound
thereby. 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.
Section 9.6. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 9.7. Severability. If any term or other provision of this Agreement
is held by a court of competent jurisdiction or other authority to be invalid,
illegal or incapable of being enforced by any rule of law or public policy, all
other conditions and provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated hereof is not affected in any manner adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
Section 9.8. Entire Agreement. This Agreement and the Company Disclosure
Schedule together constitute the entire agreement and supersede all prior
agreements and undertakings (other than the Confidentiality Agreement), both
written and oral, among the parties, or any of them, with respect to the subject
matter hereof and, except as otherwise expressly provided herein, are not
intended to confer upon any other person any rights or remedies hereunder.
Section 9.9. Assignment, Merger Sub. This Agreement shall not be assigned
by operation of law or otherwise without the prior written consent of each party
hereto, except that Parent and Merger Sub may assign all or any of their rights
hereunder to any affiliate provided that no such assignment shall relieve the
assigning party of its obligations hereunder.
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Section 9.10. Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto and their respective successors
and assigns, and, except as expressly provided in Section 6.9(d), nothing
contained in this Agreement, express or implied, is intended to or shall confer
upon any other Person any right, benefit or remedy of any nature whatsoever
under or by reason of this Agreement.
Section 9.11. Governing Law; Consent to Jurisdiction. This Agreement shall
be governed by, and construed in accordance with, the internal laws of the State
of Delaware applicable to Contracts executed and fully performed within the
State of Delaware, without regard to the conflicts of laws provisions thereof.
In addition, the Company, Parent and Merger Sub hereby (i) consent to submit to
the personal jurisdiction of any Federal court located in the State of Delaware
or any Delaware court in the event any dispute arises of this Agreement or any
of the transactions contemplated thereby; (ii) agree not to attempt to deny or
defeat such personal jurisdiction by motion or other request to leave from any
such court; (iii) agree not to bring any action relating to this Agreement or
any of the transactions contemplated hereby in any court other than the Federal
court located in the State of Delaware or a Delaware state court; (iv) waive any
right to trial by jury with respect to any claim or proceeding relating or
arising out of this Agreement and (v) waive the right, if any, to seek or claim
protection under sovereign immunity or other similar provision under any law,
rule, regulation, treaty or otherwise. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
Section 9.12. Specific Performance. The parties hereto agree that
irreparable damage would occur if any provision of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
or to enforce specifically the performance of the terms and provisions hereof in
any federal court located in the State of Delaware or any Delaware state court,
in addition to any other remedy to which they are entitled at law or in equity.
45
<PAGE>
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
DEUTSCHE POST AG
By: /s/ Klaus Zumwinkel
----------------------------------------
Name: Klaus Zumwinkel
Title: Chairman of the Board of Management
By: /s/ Peter Wagner
----------------------------------------
Name: Peter Wagner
Title: Member of the Board of Management
DP ACQUISITION CORPORATION
By: /s/ Renato Chiavi
----------------------------------------
Name: Renato Chiavi
Title: President
By: /s/ Klaus Engelen
----------------------------------------
Name: Klaus Engelen
Title: Executive Vice President, General
Counsel and Secretary
AIR EXPRESS INTERNATIONAL CORPORATION
By: /s/ Hendrik J. Hartong, Jr.
----------------------------------------
Name: Hendrik J. Hartong, Jr.
Title: Chairman of the Board of Directors
By: /s/ Guenter Rohrmann
----------------------------------------
Name: Guenter Rohrmann
Title: President and Chief Executive Officer
46
<PAGE>
ANNEX I
Conditions of the Offer
Notwithstanding any other provision of the Offer, Merger Sub shall not be
required to accept for payment or pay for any Shares, and may, subject to the
terms of this Agreement, terminate the Offer, if:
(a) at the expiration of the Offer (as it may be extended in accordance
with the terms hereof), (i) the Minimum Condition has not been satisfied or (ii)
the applicable waiting period under the HSR Act shall not have expired or been
terminated, (iii) the Exon-Florio Provision, the DOT Approval and the European
Approval shall not have been completed, obtained or satisfied, or (iv) any other
domestic or foreign approvals, consents, filings, notifications or other
requirements of law, statute, rule or regulation necessary in connection with
the transactions contemplated by this Agreement shall not have been completed,
obtained or satisfied, except for such matters as would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect or materially impair the ability of Parent or Merger Sub to consummate
the transactions contemplated by this Agreement or to own or exercise control
over the Company and its Subsidiaries following the Offer; or
(b) at any time on or after November 15, 1999 and prior to the acceptance
for payment of Shares, any of the following conditions exist:
(i) any order, decree or injunction of a court or governmental agency
of competent jurisdiction or any law or regulation enjoins or prohibits the
consummation of the transactions contemplated by this Agreement (including
the Offer or the Merger) or the ownership or exercise of control by the
Parent over the Company and its Subsidiaries following the Offer; or
(ii) any representations and warranties of the Company contained in
this Agreement that are qualified as to materiality shall not be true and
correct and any of the representations and warranties that are not so
qualified shall not be true and correct in any material respects on and as
of the date of consummation of the Offer as if such representations and
warranties were made on and as of such date (except where such
representations and warranties are stated as of a specific date), or the
Company shall have breached the agreements and covenants required by this
Agreement to be performed by it on or prior to such date in any material
respect (provided that the Company may, prior to the expiration of the
Offer, seek to cure any such breach); or
(iii) this Agreement shall have been terminated in accordance with its
terms.
The foregoing conditions are for the sole benefit of Parent and Merger Sub
and may, subject to the terms of this Agreement, be waived by Parent and Merger
Sub in whole or in part at any time and from time to time in their discretion.
A-1
<PAGE>
Exhibit (c)(2)
[Insert Confidentiality Agreement]
<PAGE>
Exhibit (c)(2)
MORGAN STANLEY DEAN WITTER
1585 Broadway
New York, New York 10056
(212) 761-4000
Danzas Holding Ltd. July 12, 1999
Leimenstrasse 1
4002 Basel
Switzerland
CONFIDENTIALITY AGREEMENT
-------------------------
Dear Sirs:
In connection with your possible interest in the acquisition (the "Transaction")
of the business of Air Express International Corp., and its subsidiaries (the
"Company"), you have requested that we or our representatives furnish you or
your representatives with certain information relating to the Company or the
Transaction. All such information (whether written or oral) furnished (whether
before or after the date hereof) by us or our directors, officers, employees,
affiliates, representatives (including, without limitation, financial advisors,
attorneys and accountants) or agents (collectively, "our Representatives") to
you or your directors, officers, employees, affiliates, representatives
(including, without limitation, financial advisors, attorneys and accountants)
or agents or your potential sources of financing for the Transaction
(collectively, "your Representatives") and all analyses, compilations,
forecasts, studies or other documents prepared by you or your Representatives
in connection with your or their review of, or your interest in, the Transaction
which contain or reflect any such information is hereinafter referred to as the
"Information". The term Information will not, however, include information which
(i) is or becomes publicly available other than as a result of a disclosure by
you or your Representatives or (ii) is or becomes available to you on a
nonconfidential basis from a source (other than us or our Representatives)
which, to the best of your knowledge after due inquiry, is not prohibited from
disclosing such information to you by a legal, contractual or fiduciary
obligation to us.
Accordingly, you hereby agree that:
1. You and your Representatives (i) will keep this Information confidential and
will not (except as required by applicable law, regulation or legal process,
and only after compliance with paragraph 3 below), without our prior written
consent, disclose any Information in any manner whatsoever, and (ii) will
not use any Information other than in connection with the Transaction;
provided, however, that you may reveal the Information to your
Representatives (a) who need to know the Information for the purpose of
evaluating the Transaction, (b) who are informed by you of the confidential
nature of the Information and (c) who agree to act in accordance with the
terms of this letter agreement. You will cause your Representatives to
observe the terms of this letter agreement, and you will be responsible for
any breach of this letter agreement by any of your Representatives.
<PAGE>
MORGAN STANLEY DEAN WITTER
2. You and your Representatives will not (except as required by applicable
law, regulation or legal process, and only after compliance with paragraph
3 below), without our prior written consent, disclose to any person the
fact that the Information exists or has been made available, that you are
considering the Transaction or any other transaction involving the
Company, or that discussions or negotiations are taking or have taken
place concerning the Transaction or involving the Company or any term,
condition or other fact relating to the Transaction or such discussions or
negotiations, including, without limitation, the status thereof.
3. In the event that you or any of your Representatives are requested
pursuant to, or required by, applicable law, regulation or legal process
to disclose any of the information, you will notify us promptly so that we
may seek a protective order or other appropriate remedy or, in our sole
discretion, waive compliance with the terms of this letter agreement. In
the event that no such protective order or other remedy is obtained, or
that the Company does not waive compliance with the terms of this latter
agreement, you will furnish only that portion of the Information which you
are advised by counsel is legally required and will exercise all
reasonable efforts to obtain reliable assurance that confidential
treatment will be accorded the Information.
4. If you determine not to proceed with the Transaction, you will promptly
inform our Representative, Morgan Stanley & Co. Incorporated ("Morgan
Stanley"), of that decision and, in that case, and at any time upon the
request of the Company or any of our Representatives, you will either (i)
promptly destroy all copies of the written Information in your or your
Representatives' possession and confirm such destruction to us in writing,
or (ii) promptly deliver to the Company at your own expense all copies of
the written Information in your or your Representatives' possession. Any
oral Information will continue to be subject to the terms of this letter
agreement.
5. You acknowledge that neither we, nor Morgan Stanley or its affiliates, nor
our other Representatives, nor any of our or their respective officers,
directors, employees, agents or controlling persons within the meaning of
Section 20 of the Securities Exchange Act of 1934, as amended, makes any
express or implied representation or warranty as in the accuracy or
completeness of the Information, and you agree that no such person will
have any liability relating to the Information or for any errors therein
or omissions therefrom. You further agree that you are not entitled to
rely on the accuracy or completeness of the Information and that you will
be entitled to rely solely on such representations and warranties as may
be included in any definitive agreement with respect to the Transaction,
subject to such limitations and restrictions as may be contained therein.
6. You are aware, and you will advise your Representatives who are informed
of the matters that are the subject of this letter agreement, of the
restrictions imposed by the United States securities laws on the purchase
or sale of securities by any person who has received material, non-public
information from the issuer of such securities and on the communication of
such information to any other person whom it is reasonably foreseeable
that such other person is likely to purchase or sell such securities in
reliance upon such information.
7. You agree that, for a period of three years from the date of this letter
agreement, neither you nor any of your affiliates will, without the prior
written consent of the Company or its Board of Directors: (i) acquire,
offer to acquire, or agree to acquire, directly or indirectly, by purchase
or otherwise, any voting securities or direct or indirect rights to
acquire any voting securities of the Company or any subsidiary thereof, or
of any successor to or person in control of the Company, or any assets of
the Company or any subsidiary or division thereof or of any such successor
or
<PAGE>
MORGAN STANLEY DEAN WITTER
controlling person; (ii) make, or in any way participate in, directly
or indirectly, any "solicitation" of "proxies" (as such terms are used in
the rules of the Securities Exchange Commission) to vote, or seek to
advise or influence any person or entity with respect to the voting of,
any voting securities of the Company; (iii) make any public announcement
with respect to, or submit a proposal for, or offer of (with or without
conditions) any extraordinary transaction involving the Company or its
securities or agents; (iv) form, join or in any way participate in a
"group" (as defined in Section 13 (d)(3) of the Securities Exchange Act
of 1934, as amended) in connection with any of the foregoing; or (v)
request the Company or any of our Representatives, directly or
indirectly, to amend or waive any provisions of this paragraph. You will
promptly advise the Company of any inquiry or proposal made to you with
respect to any of the foregoing.
8. You agree that, for a period of three years from the date of this letter
agreement, you will not, directly or indirectly, solicit for employment
or hire any employee of the Company or any of its subsidiaries with whom
you have had contact or who became known to you in connection with your
consideration of this Transaction; provided, however, that the foregoing
provision will not prevent you from employing any such person who
contacts you on his or her own initiative without any direct or indirect
solicitation by or encouragement from you.
9. You agree that all (i) communications regarding the Transaction, (ii)
requests for additional information, facility tours or management
meetings, and (iii) discussions or questions regarding procedures with
respect to the Transaction, will be first submitted or directed to Morgan
Stanley and not to the Company. You acknowledge and agree that (a) we and
our Representatives are free to conduct the process leading up to a
possible Transaction as we and our Representatives, in our sole
discretion, determine (including, without limitation, by negotiating with
any prospective buyer and entering into a preliminary or definitive
agreement without prior notice to you or any other person), (b) we
reserve the right, in our sole discretion, to change the procedures
relating to our consideration of the Transaction at any time without
prior notice to you or of any other person, to reject any and all
proposals made by you or any of your Representatives with regard to the
Transaction, and to terminate discussions and negotiations with you at
any time and for any reason, and (c) unless and until a written
definitive agreement concerning the Transaction has been executed,
neither we nor any of our Representatives will have any liability to you
with respect to the Transaction, whether by virtue of this latter
agreement, any other written or oral expression with respect to the
Transaction or otherwise.
10. You acknowledge that remedies of law may be inadequate to protect us
against any actual or threatened breach of this letter agreement by you
or by your Representatives, and, without prejudice to any other rights
and remedies otherwise available to us, you agree to the granting of
injunctive relief in our favor without proof of actual damages. In the
event of litigation relating to this letter agreement, if a court of
competent jurisdiction determines in a final, nonappealable order that
this letter agreement has been breached by you or by your
Representatives, then you will reimburse the Company for its costs and
expenses (including, without limitation, legal fees and expenses)
incurred in connection with all such litigation.
11. You agree that no failure or delay by us for exercising any right, power
or privilege hereunder will operate as a waiver thereof, nor will any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of my right, power or privilege hereunder.
12. This letter agreement will be governed by and construed in accordance
with the laws of the State of New York applicable to contracts between
residents of the State and executed in and to be performed in that State.
<PAGE>
MORGAN STANLEY DEAN WITTER
13. This letter agreement contains the entire agreement between you and us
concerning the confidentiality of the Information, and no modifications of
this letter agreement or waiver of the terms and conditions hereof will be
binding upon you or us, unless approved in writing by each of you and us.
Please confirm your agreement with the foregoing by signing and returning to the
undersigned the duplicate copy of this letter enclosed herewith.
Very truly yours,
DANZAS Holding Ltd.
By: /s/ Per Utnegaard
---------------------------
Name Per Utnegaard
---------------------------
Title Senior Vice President
---------------------------
Accepted and Agreed as of the date
first written above:
- ----------------------------------
AIR EXPRESS INTERNATIONAL CORP.
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
