<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 6, 1995
REGISTRATION NO. 33-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
FRITZ COMPANIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 4731 94-3083515
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
706 MISSION STREET
SAN FRANCISCO, CALIFORNIA 94103
(415) 904-8360
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
LYNN C. FRITZ
CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE OFFICER
FRITZ COMPANIES, INC.
706 MISSION STREET
SAN FRANCISCO, CALIFORNIA 94103
(415) 904-8360
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
With copies to:
<TABLE>
<S> <C> <C>
RONALD B. MOSKOVITZ, ESQ. THOMAS W. HUGHES, ESQ. BRETT C. CAMPBELL, ESQ.
STEVEN J. TONSFELDT, ESQ. MICHAEL B. CLINE, ESQ. GENERAL COUNSEL AND SECRETARY
BROBECK, PHLEGER & HARRISON WINSTEAD SECHREST & MINICK P.C. INTERTRANS CORPORATION
ONE MARKET 5400 RENAISSANCE TOWER 125 E. JOHN CARPENTER FREEWAY,
SPEAR STREET TOWER 1201 ELM STREET SUITE 900
SAN FRANCISCO, CALIFORNIA 94105 DALLAS, TEXAS 75270 IRVING, TEXAS 75062
(415) 442-0900 (214) 745-5400 (214) 830-8888
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC:
As promptly as practicable after this Registration Statement becomes
effective and the effective time of the proposed merger (the "Merger") of a
wholly owned subsidiary of Fritz Companies, Inc. ("Fritz") with and into
Intertrans Corporation ("Intertrans"), as described in the Agreement and Plan of
Reorganization, dated as of February 14, 1995, as amended (the "Plan of
Reorganization"), attached as Appendix A to the Joint Proxy Statement/Prospectus
forming a part of this Registration Statement.
------------------------
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
AMOUNT TO PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) FEE
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value
$.01 per share............... 5,245,500 $50.16 $263,115,625 $90,730
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents the estimated maximum number of shares of common stock, $.01 par
value per share, of Fritz ("Fritz Common Stock") issuable in connection with
the Merger, based upon an assumed exchange ratio of 0.390 shares of Fritz
Common Stock for each outstanding share of common stock, no par value, of
Intertrans ("Intertrans Common Stock").
(2) Estimated pursuant to Rule 457(f) under the Securities Act of 1933, as
amended, based on the average of the high and low prices per share of
Intertrans Common Stock on March 3, 1995, as reported on the Nasdaq National
Market, and an assumed exchange ratio of 0.390 shares of Fritz Common Stock
for each outstanding share of Intertrans Common Stock.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME FURTHER EFFECTIVE IN ACCORDANCE WITH SECTION
8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
CROSS-REFERENCE SHEET SHOWING LOCATION
IN PROSPECTUS OF INFORMATION REQUIRED BY
ITEMS IN FORM S-4
<TABLE>
<CAPTION>
FORM S-4 REGISTRATION STATEMENT ITEM AND HEADING LOCATION IN PROSPECTUS
------------------------------------------------- -------------------------------------
<S> <C> <C>
(INFORMATION ABOUT THE TRANSACTION)
1. Forepart of Registration Statement and Outside
Front Cover Page of Prospectus................. Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages of
Prospectus..................................... Inside Front Cover Page; Available
Information; Incorporation of Certain
Information by Reference; Table of
Contents
3. Risk Factors, Ratio of Earnings to Fixed Charges
and Other Information.......................... Summary; Risk Factors; Introduction;
The Proposed Merger and Related
Transactions -- Pro Forma Combined
Condensed Financial Statements;
Fritz -- Selected Financial
Information; Fritz -- Market Prices
of Common Stock; Dividends;
Intertrans -- Selected Financial
Information; Intertrans -- Market
Prices of Common Stock; Dividends
4. Terms of the Transaction......................... Summary; Introduction; The Proposed
Merger and Related Transactions;
Description of Fritz Capital Stock;
Comparison of Rights of Holders of
Fritz Common Stock and Holders of
Intertrans Common Stock
5. Pro Forma Financial Information.................. Summary; The Proposed Merger and Re-
lated Transactions -- Pro Forma
Combined Condensed Financial
Information
6. Material Contacts with the Company Being
Acquired....................................... The Proposed Merger and Related
Transactions
7. Additional Information Required for Reoffering by
Persons and Parties Deemed to be
Underwriters................................... Not Applicable
8. Interests of Named Experts and Counsel........... Legal Matters; Experts
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities.................................... Not Applicable
(INFORMATION ABOUT THE REGISTRANT)
10. Information with Respect to S-3 Registrants...... Incorporation of Certain Information
by Reference; Summary; Risk Factors;
Introduction; Voting and Proxies;
The Proposed Merger and Related
Transactions; Fritz; Description of
Fritz Capital Stock
11. Incorporation of Certain Information by
Reference...................................... Incorporation of Certain Information
by Reference
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
FORM S-4 REGISTRATION STATEMENT ITEM AND HEADING LOCATION IN PROSPECTUS
------------------------------------------------- -------------------------------------
<S> <C> <C>
12. Information with Respect to S-2 or S-3
Registrants.................................... Not Applicable
13. Incorporation of Certain Information by
Reference...................................... Not Applicable
14. Information with Respect to Registrants Other
than S-2 or S-3 Registrants.................... Not Applicable
(INFORMATION ABOUT THE COMPANY BEING ACQUIRED)
15. Information with Respect to S-3 Companies........ Incorporation of Certain Information
by Reference; Summary; Risk Factors;
Introduction; Voting and Proxies;
The Proposed Merger and Related
Transactions; Intertrans
16. Information with Respect to S-2 or S-3
Companies...................................... Not Applicable
17. Information with Respect to Companies Other than
S-2 or S-3 Companies........................... Not Applicable
(VOTING AND MANAGEMENT INFORMATION)
18. Information if Proxies, Consents or
Authorizations Are to be Solicited............. Summary; Introduction; Voting and
Proxies; The Proposed Merger and
Related Transactions;
Fritz -- Management; Fritz --
Executive Compensation;
Fritz -- Stock Ownership of Manage-
ment and Principal Stockholders;
Intertrans -- Management;
Intertrans -- Executive
Compensation; Intertrans -- Stock
Ownership of Management and
Principal Shareholders; Description
of Fritz Capital Stock
19. Information if Proxies, Consents or
Authorizations Are Note to be solicited in an
Exchange Offer................................. Not Applicable
</TABLE>
<PAGE> 4
FRITZ COMPANIES, INC.
706 MISSION STREET
SAN FRANCISCO, CALIFORNIA 94103
(415) 904-8360
April , 1995
Dear Stockholder:
An Annual Meeting of Stockholders of Fritz Companies, Inc. ("Fritz") will
be held at [Bank of America NT & SA, 555 California Street], San Francisco,
California, on Tuesday, May 23, 1995 at a.m. local time.
At the Annual Meeting you will be asked to consider and vote upon (i) a
proposal to issue shares of Fritz Common Stock in connection with the merger
(the "Merger") of Fritz Air Freight, a wholly owned subsidiary of Fritz, with
and into Intertrans Corporation ("Intertrans") and (ii) the election of five
directors to the Fritz Board of Directors. In the Merger, each share of
Intertrans Common Stock outstanding immediately prior to the consummation of the
Merger (other than dissenting shares) will be converted into the right to
receive between 0.380 and 0.390 of a share of Fritz Common Stock, based upon the
closing sales price of Fritz Common Stock (the "Average Fritz Trading Price")
during an agreed upon period preceding the Annual Meeting. The agreement
providing for the Merger also sets forth certain circumstances in which the
Merger may be terminated by Intertrans if the Average Fritz Trading Price is
less than $41.00 per share and Fritz does not elect to adjust the Merger
exchange ratio to a number greater than 0.390. Similarly, the agreement provides
that the Merger may be terminated by Fritz if the Average Fritz Trading Price
exceeds $55.00 per share and Intertrans does not elect to adjust the Merger
exchange ratio to a number less than 0.380. In addition, all outstanding options
to purchase Intertrans Common Stock will be assumed by Fritz and converted into
options to purchase Fritz Common Stock.
Following the approval and consummation of the Merger and related
transactions, the Fritz Board of Directors intends to increase the size of the
Board from five to six directors and appoint Carsten S. Andersen, the current
President of Intertrans, to fill the vacancy created by such action.
Morgan Stanley & Co. Incorporated, the investment banking firm retained by
the Fritz Board of Directors to act as its financial advisor in connection with
the Merger, has rendered its opinion dated as of February 14, 1995 that the
share exchange ratio in the Merger is fair from a financial point of view to
Fritz.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AND THE
TRANSACTIONS RELATED THERETO AND HAS DETERMINED THAT THEY ARE FAIR TO AND IN THE
BEST INTERESTS OF FRITZ AND ITS STOCKHOLDERS. AFTER CAREFUL CONSIDERATION, YOUR
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
ISSUANCE OF FRITZ COMMON STOCK IN THE MERGER. YOUR BOARD OF DIRECTORS ALSO
RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ELECTION OF DIRECTORS NAMED IN THE
JOINT PROXY STATEMENT/PROSPECTUS.
In the material accompanying this letter, you will find a Notice of Annual
Meeting of Stockholders, a Joint Proxy Statement/Prospectus relating to the
actions to be taken by Fritz stockholders at the Annual Meeting and a proxy
card. The Joint Proxy Statement/Prospectus more fully describes the proposed
Merger, including the circumstances in which the Merger may be terminated or the
Merger exchange ratio adjusted to a number greater than 0.390 or less than
0.380, and includes information about Fritz and Intertrans.
ALL STOCKHOLDERS ARE INVITED TO ATTEND THE ANNUAL MEETING IN PERSON.
HOWEVER, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE,
SIGN, DATE AND RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE. IF YOU ATTEND THE
ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN THOUGH YOU HAVE
PREVIOUSLY RETURNED YOUR PROXY. IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED
AND VOTED AT THE ANNUAL MEETING.
Sincerely,
Lynn C. Fritz
President, Chairman of the Board
and Chief Executive Officer
<PAGE> 5
FRITZ COMPANIES, INC.
706 MISSION STREET
SAN FRANCISCO, CALIFORNIA 94103
(415) 904-8360
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 23, 1995
Notice is hereby given that an Annual Meeting of Stockholders of Fritz
Companies, Inc. ("Fritz") will be held on Tuesday, May 23, 1995, at a.m.,
local time, at [Bank of America NT & SA, 555 California Street], San Francisco,
California, for the following purposes:
(1) To consider and vote upon a proposal (the "Fritz Share Issuance
Proposal") to issue shares of Fritz Common Stock in connection with the
merger (the "Merger") of Fritz Air Freight, a California corporation and a
wholly owned subsidiary of Fritz ("Merger Sub"), with and into Intertrans
Corporation, a Texas corporation ("Intertrans"), pursuant to which, among
other things, (i) Intertrans will become a wholly owned subsidiary of
Fritz, (ii) each outstanding share of common stock, no par value, of
Intertrans ("Intertrans Common Stock") will be converted into the right to
receive between 0.380 and 0.390 of a share of common stock, par value $.01
per share, of Fritz ("Fritz Common Stock"), based upon the closing sales
price of Fritz Common Stock (the "Average Fritz Trading Price") during an
agreed upon period preceding the Annual Meeting, and (iii) all outstanding
options to purchase shares of Intertrans Common Stock will be assumed by
Fritz and become options to purchase Fritz Common Stock. The Merger is more
fully described in the accompanying Joint Proxy Statement/Prospectus. The
Agreement and Plan of Reorganization dated as of February 14, 1995, among
Fritz, Merger Sub and Intertrans (the "Plan of Reorganization") sets forth
certain circumstances in which the Merger may be terminated by Intertrans
if the Average Fritz Trading Price is less than $41.00 per share and Fritz
does not elect to adjust the Merger exchange ratio to a number greater than
0.390. Similarly, the Plan of Reorganization provides that the Merger may
be terminated by Fritz if the Average Fritz Trading Price exceeds $55.00
per share and Intertrans does not elect to adjust the Merger exchange ratio
to a number less than 0.380;
(2) To elect five directors to the Board of Directors; and
(3) To transact such other business as may properly come before the
Annual Meeting or any postponements or adjournments thereof.
Following the approval and consummation of the Merger and related
transactions, the Fritz Board of Directors intends to increase the size of the
Board from five to six directors and appoint Carsten S. Andersen, the current
President of Intertrans, to fill the vacancy created by such action.
Only stockholders of record at the close of business on April 10, 1995 are
entitled to notice of and to vote at the Annual Meeting, or at any postponements
or adjournments thereof. The affirmative vote of the holders of a majority of
the outstanding shares of Fritz Common Stock represented at the Annual Meeting,
in person or by proxy, is required to approve the Fritz Share Issuance Proposal.
Directors shall be elected by a plurality of votes present in person or
represented by proxy at the Annual Meeting and entitled to vote on the election
of directors.
A complete list of stockholders entitled to vote at the Annual Meeting will
be available for examination at Fritz's principal executive offices, for any
purposes germane to the Annual Meeting, during ordinary business hours, for a
period of at least 10 days prior to the Annual Meeting.
<PAGE> 6
- --------------------------------------------------------------------------------
/ /
/ IMPORTANT /
/ /
/ YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF VOTES THAT YOU /
/ OWN. WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, /
/ PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT WITHOUT /
/ DELAY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO ADDITIONAL POSTAGE IF /
/ MAILED IN THE UNITED STATES. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY /
/ THEN WITHDRAW YOUR PROXY AND VOTE IN PERSON. /
- --------------------------------------------------------------------------------
San Francisco, California
April , 1995
BY ORDER OF THE BOARD OF DIRECTORS,
Lynn C. Fritz
President, Chairman of the Board
and Chief Executive Officer
<PAGE> 7
INTERTRANS CORPORATION
125 E. JOHN CARPENTER FREEWAY, SUITE 900
IRVING, TEXAS 75062
(214) 830-8888
April , 1995
Dear Shareholder:
An Annual Meeting of Shareholders of Intertrans Corporation ("Intertrans")
will be held at [the principal executive offices of Intertrans located at 125 E.
John Carpenter Freeway, Suite 900, Irving, Texas,] on Tuesday, May 23, 1995 at
a.m. local time.
At the Annual Meeting you will be asked to consider and vote upon (i) a
proposal (the "Intertrans Merger Proposal") to approve and adopt an Agreement
and Plan of Reorganization (the "Plan of Reorganization") providing for the
merger (the "Merger") of Intertrans with a wholly owned subsidiary of Fritz
Companies, Inc. ("Fritz"), pursuant to which (a) each share of Intertrans Common
Stock outstanding immediately prior to the consummation of the Merger will be
converted into the right to receive between 0.380 and 0.390 of a share of Fritz
Common Stock, based upon the closing sales price of Fritz Common Stock (the
"Average Fritz Trading Price") during an agreed upon period preceding the Annual
Meeting, (b) all outstanding options to purchase shares of Intertrans Common
Stock will be converted into options to purchase shares of Fritz Common Stock
and (c) Intertrans will become a wholly owned subsidiary of Fritz and (ii) the
election of five directors to the Intertrans Board of Directors to serve until
the earlier of the next annual meeting of shareholders or consummation of the
Merger. The Plan of Reorganization also sets forth certain circumstances in
which the Merger may be terminated by Intertrans if the Average Fritz Trading
Price is less than $41.00 per share and Fritz does not elect to adjust the
Merger exchange ratio to a number greater than 0.390. Similarly, the Plan of
Reorganization provides that the Merger may be terminated by Fritz if the
Average Fritz Trading Price exceeds $55.00 per share and Intertrans does not
elect to adjust the Merger exchange ratio to a number less than 0.380.
Following the approval and consummation of the Merger and related
transactions, the Fritz Board of Directors intends to increase the size of the
Fritz Board from five to six directors and appoint Carsten S. Andersen, the
current President of Intertrans, to fill the vacancy created by such action.
Scott & Stringfellow, Inc., the investment banking firm retained by the
Intertrans Board of Directors to act as its financial advisor in connection with
the Merger, has rendered its opinion that the share exchange ratio in the Merger
is fair from a financial point of view to the holders of Intertrans Common
Stock.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AND THE
TRANSACTIONS RELATED THERETO AND HAS DETERMINED THAT THEY ARE FAIR TO AND IN THE
BEST INTERESTS OF INTERTRANS AND ITS SHAREHOLDERS. AFTER CAREFUL CONSIDERATION,
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
INTERTRANS MERGER PROPOSAL. YOUR BOARD OF DIRECTORS ALSO RECOMMENDS THAT
SHAREHOLDERS VOTE FOR THE ELECTION OF DIRECTORS NAMED IN THE JOINT PROXY
STATEMENT/PROSPECTUS.
In the materials accompanying this letter, you will find a Notice of Annual
Meeting of Shareholders, a Joint Proxy Statement/Prospectus relating to the
actions to be taken by Intertrans shareholders at the Annual Meeting and a proxy
card. The Joint Proxy Statement/Prospectus more fully describes the proposed
Merger, including the circumstances in which the Merger may be terminated or the
Merger exchange ratio adjusted to a number greater than 0.390 or less than
0.380, and includes information about Intertrans and Fritz.
ALL SHAREHOLDERS ARE INVITED TO ATTEND THE ANNUAL MEETING IN PERSON.
HOWEVER, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE,
SIGN, DATE AND RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE. IF YOU ATTEND THE
ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN THOUGH YOU HAVE
PREVIOUSLY RETURNED YOUR PROXY. IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED
AND VOTED AT THE ANNUAL MEETING.
Sincerely,
Sam N. Wilson
Chairman of the Board and Chief
Executive Officer
<PAGE> 8
INTERTRANS CORPORATION
125 E. JOHN CARPENTER FREEWAY, SUITE 900
IRVING, TEXAS 75062
(214) 830-8888
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 23, 1995
Notice is hereby given that an Annual Meeting of Shareholders of Intertrans
Corporation ("Intertrans") will be held on Tuesday, May 23, 1995, at a.m.,
local time, at [the principal executive offices of Intertrans located at 125 E.
John Carpenter Freeway, Suite 900, Irving, Texas,] for the following purposes:
(1) To consider and vote upon a proposal (the "Intertrans Merger
Proposal") to approve and adopt an Agreement and Plan of Reorganization
dated as of February 14, 1995 (the "Plan of Reorganization"), among
Intertrans, Fritz Companies, Inc., a Delaware corporation ("Fritz"), and
Fritz Air Freight, a California corporation and a wholly owned subsidiary
of Fritz ("Merger Sub"), and related Articles of Merger to be entered into
between Intertrans and Merger Sub (the "Merger"), pursuant to which, among
other things, (i) Merger Sub will be merged with and into Intertrans,
following which Intertrans will become a wholly owned subsidiary of Fritz,
(ii) each share of common stock, no par value, of Intertrans ("Intertrans
Common Stock") outstanding immediately prior to the consummation of the
Merger will be converted into the right to receive between 0.380 and 0.390
of a share of common stock, par value $.01 per share, of Fritz ("Fritz
Common Stock"), based upon the closing sales price of Fritz Common Stock
(the "Average Fritz Trading Price") during an agreed upon period preceding
the Annual Meeting and (iii) all outstanding options to purchase Intertrans
Common Stock will be assumed by Fritz and converted into options to
purchase Fritz Common Stock. The Plan of Reorganization also sets forth
certain circumstances in which the Merger may be terminated by Intertrans
if the Average Fritz Trading Price is less than $41.00 per share and Fritz
does not elect to adjust the Merger exchange ratio to a number greater than
0.390. Similarly, the Plan of Reorganization provides that the Merger may
be terminated by Fritz if the Average Fritz Trading Price exceeds $55.00
per share and Intertrans does not elect to adjust the Merger exchange ratio
to a number less than 0.380;
(2) To elect five directors to the Board of Directors to serve until
the earlier of the next annual meeting of Intertrans shareholders or
consummation of the Merger; and
(3) To transact such other business that may properly come before the
Annual Meeting or any postponements or adjournments thereof.
Following the approval and consummation of the Merger and related
transactions, the Fritz Board of Directors intends to increase the size of the
Fritz Board from five to six directors and appoint Carsten S. Andersen, the
current President of Intertrans, to fill the vacancy created by such action.
Only shareholders of record at the close of business on April 4, 1995 are
entitled to notice of and to vote at the Annual Meeting, or at any postponements
or adjournments thereof. The affirmative vote of the holders of two-thirds of
the outstanding shares of Intertrans Common Stock is required for the approval
of the Intertrans Merger Proposal. Directors shall be elected by a plurality of
votes present in person or represented by proxy at the Annual Meeting and
entitled to vote on the election of directors.
Under the Texas Business Corporation Act (the "TBCA"), a shareholder who
objects to the Merger can assert statutory dissenters' rights of appraisal by
strict compliance with the requirements of the TBCA. See "The Proposed Merger
and Related Transactions -- Dissenters' Rights" in the Joint Proxy
Statement/Prospectus accompanying this notice for a more detailed description of
dissenters' rights with respect to the Merger.
<PAGE> 9
A complete list of shareholders entitled to vote at the Annual Meeting will
be available for examination at Intertrans' principal executive offices, for any
purposes germane to the Annual Meeting, during ordinary business hours, for a
period of at least 10 days prior to the Annual Meeting.
- --------------------------------------------------------------------------------
/ /
/ IMPORTANT /
/ /
/ YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF VOTES THAT YOU /
/ OWN. WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, /
/ PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT WITHOUT /
/ DELAY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO ADDITIONAL POSTAGE IF /
/ MAILED IN THE UNITED STATES. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY /
/ THEN WITHDRAW YOUR PROXY AND VOTE IN PERSON. /
/ /
- --------------------------------------------------------------------------------
Irving, Texas
April , 1995
BY ORDER OF THE BOARD OF DIRECTORS,
Sam N. Wilson
Chairman of the Board and Chief
Executive Officer
PLEASE DO NOT SEND IN ANY
STOCK CERTIFICATES AT THIS TIME.
<PAGE> 10
[FRITZ COMPANIES, INC. LOGO] [INTERTRANS CORPORATION LOGO]
FRITZ COMPANIES, INC.
PROSPECTUS
------------------------
JOINT PROXY STATEMENT
FRITZ COMPANIES, INC.
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 23, 1995
INTERTRANS CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 23, 1995
This Joint Proxy Statement/Prospectus of Fritz Companies, Inc., a Delaware
corporation ("Fritz"), and Intertrans Corporation, a Texas corporation
("Intertrans"), is being used to solicit proxies on behalf of the Board of
Directors of Fritz from holders of the outstanding common stock of Fritz in
connection with an Annual Meeting of Stockholders to be held on May 23, 1995
(the "Fritz Annual Meeting") and to solicit proxies on behalf of the Board of
Directors of Intertrans from holders of the outstanding common stock of
Intertrans in connection with an Annual Meeting of Shareholders to be held on
May 23, 1995 (the "Intertrans Annual Meeting"). The Joint Proxy
Statement/Prospectus and the accompanying proxies are first being mailed to
stockholders of Fritz and shareholders of Intertrans on or about April , 1995.
At the Fritz Annual Meeting, stockholders of Fritz will be asked to
consider and vote upon a proposal (the "Fritz Share Issuance Proposal") to issue
shares of common stock, $.01 par value per share, of Fritz ("Fritz Common
Stock") to shareholders of Intertrans in connection with the merger (the
"Merger") of Fritz Air Freight, a California corporation and a wholly owned
subsidiary of Fritz ("Merger Sub"), with and into Intertrans pursuant to an
Agreement and Plan of Reorganization dated as of February 14, 1995, a copy of
which is attached to this Joint Proxy Statement/Prospectus as Appendix A,
together with the related Articles of Merger attached as an exhibit thereto
(collectively, the "Plan of Reorganization"). Stockholders of Fritz will also be
asked to consider and vote upon the election of five directors to the Fritz
Board of Directors.
At the Intertrans Annual Meeting, shareholders of Intertrans will be asked
to consider and vote upon a proposal (the "Intertrans Merger Proposal") to
approve and adopt the Plan of Reorganization and the transactions contemplated
thereby (including the Merger). Upon consummation of the Merger, among other
things, (i) the identity and separate existence of Merger Sub will terminate,
(ii) each outstanding share of common stock, no par value, of Intertrans
("Intertrans Common Stock"), other than dissenting shares, will be converted
into the right to receive between 0.380 and 0.390 of a share of Fritz Common
Stock, based upon the arithmetic mean (the "Average Fritz Trading Price") of the
closing sales prices of Fritz Common Stock on the Nasdaq National Market for
each of the 20 trading days ending on the fourth trading day immediately
preceding the scheduled date of the first to occur of the Fritz Annual Meeting
and the Intertrans Annual Meeting (the "Merger Exchange Ratio"), (iii)
Intertrans will become a wholly owned subsidiary of Fritz and (iv) all
outstanding options to purchase Intertrans Common Stock ("Intertrans Stock
Options") will be assumed by Fritz and converted into options to purchase Fritz
Common Stock. The Plan of Reorganization sets forth certain circumstances in
which the Merger may be terminated by Intertrans if the Average Fritz Trading
Price is less than $41.00 per share and Fritz does not elect to adjust the
Merger Exchange Ratio to a
1
<PAGE> 11
number greater than 0.390. Similarly, the Plan of Reorganization provides that
the Merger may be terminated by Fritz if the Average Fritz Trading Price exceeds
$55.00 per share and Intertrans does not elect to adjust the Merger Exchange
Ratio to a number less than 0.380. See "The Proposed Merger and Related
Transactions -- Description of Merger and Plan of Reorganization -- Manner and
Basis of Converting Intertrans Securities." Shareholders of Intertrans will also
be asked to consider and vote upon the election of five directors to the
Intertrans Board of Directors to serve until the earlier of the next annual
meeting of Intertrans shareholders or the consummation of the Merger.
Following the approval and consummation of the Merger and related
transactions, the Fritz Board of Directors intends to increase the size of the
Board from five to six directors and appoint Carsten S. Andersen, the current
President of Intertrans, to fill the vacancy created by such action.
This Joint Proxy Statement/Prospectus also constitutes the prospectus of
Fritz under the Securities Act of 1933, as amended (the "Securities Act"), for
the offering of an aggregate of up to 5,245,500 shares of Fritz Common Stock in
connection with the Merger. The information set forth in this Joint Proxy
Statement/Prospectus concerning Fritz and Merger Sub has been furnished by
Fritz, and the information set forth in this Joint Proxy Statement/Prospectus
concerning Intertrans has been furnished by Intertrans.
This Joint Proxy Statement/Prospectus and the accompanying form of proxy
are first being mailed to stockholders of Fritz and shareholders of Intertrans
on or about April , 1995.
------------------------
SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN FACTORS WHICH SHOULD BE
CONSIDERED CAREFULLY BY BOTH FRITZ STOCKHOLDERS AND INTERTRANS SHAREHOLDERS IN
EVALUATING THE MERGER AND THE ACQUISITION OF SECURITIES OFFERED HEREBY.
THE SHARES OF FRITZ COMMON STOCK TO BE ISSUED IN CONNECTION WITH THE MERGER
HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS JOINT PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------------
THE DATE OF THIS JOINT PROXY STATEMENT/PROSPECTUS IS APRIL , 1995.
2
<PAGE> 12
AVAILABLE INFORMATION
Fritz and Intertrans are each subject to the informational reporting
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith, each file reports, proxy statements and
other information with the Securities and Exchange Commission (the "SEC"). Such
reports, proxy statements and other information may be inspected and copied at
the public reference facilities maintained by the SEC at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the SEC's regional
offices located at Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511 and at Seven World Trade Center (13th Floor), New
York, New York 10019. Copies of such material may be obtained by mail from the
Public Reference Section of the SEC at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Each of Fritz's Common Stock and
Intertrans' Common Stock is quoted on the Nasdaq National Market, and such
reports, proxy statements and other information can also be inspected at the
offices of the Nasdaq National Market, Market Listing Qualifications, 1735 K
Street, N.W., Washington, D.C. 20006.
Fritz has filed with the SEC a registration statement on Form S-4,
including this Joint Proxy Statement/Prospectus and other information (herein,
together with all amendments and exhibits, referred to as the "Registration
Statement") under the Securities Act, with respect to the shares of Fritz Common
Stock to be issued to holders of Intertrans Common Stock in the Merger. This
Joint Proxy Statement/Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the SEC. For further information,
reference is hereby made to the Registration Statement. Copies of the
Registration Statement and the exhibits and schedules thereto may be inspected,
without charge, at the offices of the SEC, or obtained at prescribed rates from
the Public Reference Section of the SEC at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549.
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS JOINT PROXY
STATEMENT/PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. NEITHER THE DELIVERY OF THIS
JOINT PROXY STATEMENT/PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF FRITZ OR INTERTRANS SINCE SUCH DATE. THIS JOINT PROXY
STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF
AN OFFER TO BUY, ANY SECURITIES OTHER THAN THE SECURITIES OF FRITZ TO BE ISSUED
IN THE MERGER, OR AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, IN ANY
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents previously filed with the SEC by Fritz pursuant to
the Exchange Act are incorporated herein by reference:
1. Fritz's Annual Report on Form 10-K for the fiscal year ended December
31, 1994, filed with the SEC on March 3, 1995;
2. The description of Fritz's Common Stock contained in the Registration
Statement on Form 8-A filed with the SEC on August 17, 1992; and
3. Fritz's Current Report on Form 8-K, filed with the SEC on February
22, 1995.
The following documents previously filed with the SEC by Intertrans
pursuant to the Exchange Act are incorporated herein by reference:
1. Intertrans' Annual Report on Form 10-K for the fiscal year ended
October 31, 1994, filed with the SEC on January 27, 1995; and
2. Intertrans' Current Report on Form 8-K, filed with the SEC on
February 24, 1995.
3
<PAGE> 13
All reports and definitive proxy or information statements filed by Fritz
or Intertrans pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange
Act subsequent to the date of this Joint Proxy Statement/Prospectus and prior to
the date of the Fritz Annual Meeting and the Intertrans Annual Meeting shall be
deemed to be incorporated by reference into this Joint Proxy
Statement/Prospectus from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated herein by
reference shall be deemed to be modified or superseded for purposes of this
Joint Proxy Statement/Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated herein by reference modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Joint Proxy Statement/Prospectus.
THIS JOINT PROXY STATEMENT/PROSPECTUS INCORPORATES CERTAIN DOCUMENTS OF
FRITZ AND INTERTRANS BY REFERENCE WHICH ARE NOT PRESENTED HEREIN OR DELIVERED
HEREWITH. SUCH DOCUMENTS (NOT INCLUDING EXHIBITS THERETO) ARE AVAILABLE TO ANY
PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM THIS JOINT PROXY
STATEMENT/PROSPECTUS IS DELIVERED, UPON ORAL OR WRITTEN REQUEST, WITHOUT CHARGE,
IN THE CASE OF DOCUMENTS RELATING TO FRITZ, DIRECTED TO JAN H. RAYMOND, ESQ.,
CORPORATE SECRETARY, FRITZ COMPANIES, INC., 706 MISSION STREET, SAN FRANCISCO,
CALIFORNIA 94103, TELEPHONE NUMBER (415) 904-8360, AND, IN THE CASE OF DOCUMENTS
RELATING TO INTERTRANS, DIRECTED TO BRETT C. CAMPBELL, ESQ., CORPORATE
SECRETARY, INTERTRANS CORPORATION, 125 E. JOHN CARPENTER FREEWAY, SUITE 900,
IRVING, TEXAS 75062, TELEPHONE NUMBER (214) 830-8888. IN ORDER TO ENSURE TIMELY
DELIVERY OF THE DOCUMENTS, SUCH REQUESTS SHOULD BE MADE BY MAY 16, 1995.
4
<PAGE> 14
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AVAILABLE INFORMATION................................................................. 3
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE..................................... 3
SUMMARY............................................................................... 9
The Parties to the Proposed Merger............................................... 9
Fritz Annual Meeting of Stockholders............................................. 9
Intertrans Annual Meeting of Shareholders........................................ 10
The Merger....................................................................... 10
Market Price Data................................................................ 16
Risk Factors..................................................................... 17
Summary Historical and Pro Forma Combined Condensed Financial Information........ 17
Comparative Per Share Data....................................................... 20
RISK FACTORS.......................................................................... 21
Uncertainty as to Future Financial Results....................................... 21
Merger Expenses.................................................................. 21
Shares Eligible for Public Sale.................................................. 21
Absence of Dividends............................................................. 22
Competition...................................................................... 22
Dependence on International Trade................................................ 22
Control by Principal Stockholder................................................. 22
Dependence on Key Personnel...................................................... 22
Vulnerability to Economic Conditions............................................. 23
Role of Acquisitions............................................................. 23
Volatility of Share Price........................................................ 23
INTRODUCTION.......................................................................... 24
VOTING AND PROXIES.................................................................... 24
Date, Time and Place of Fritz Annual Meeting and Intertrans Annual Meeting....... 24
Record Date and Outstanding Shares............................................... 24
Voting Proxies................................................................... 25
Fritz Stockholder Vote Required.................................................. 25
Intertrans Shareholder Vote Required............................................. 25
Solicitation of Proxies; Expenses................................................ 26
THE PROPOSED MERGER AND RELATED TRANSACTIONS (RELATED TO PROPOSALS FOR BOTH FRITZ AND
INTERTRANS)......................................................................... 26
DESCRIPTION OF MERGER AND PLAN OF REORGANIZATION.................................... 26
Material Contacts and Board Deliberations........................................ 26
Fritz Reasons for the Merger; Recommendation of the Board of Directors........... 28
Intertrans Reasons for the Merger; Recommendation of the Board of Directors...... 29
Financial Advisors............................................................... 30
Effective Time................................................................... 39
</TABLE>
5
<PAGE> 15
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Manner and Basis of Converting Intertrans Securities............................. 39
Assumption of Intertrans Options................................................. 40
Conduct of Business Prior to the Merger.......................................... 41
Other Offers..................................................................... 42
Conduct of Business Following the Merger; Board of Directors and Management...... 43
Conditions to the Merger; Waiver................................................. 44
Termination or Amendment of the Plan of Reorganization........................... 45
Accounting Treatment............................................................. 46
Resale of Fritz Common Stock; Agreements with Intertrans Affiliates.............. 46
Interests of Certain Persons in the Merger....................................... 47
Fees and Expenses................................................................ 49
Governmental and Regulatory Approvals............................................ 50
Indemnification.................................................................. 50
Certain Federal Income Tax Considerations........................................ 50
DISSENTERS' RIGHTS.................................................................. 52
PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS................................... 54
ELECTION OF FRITZ DIRECTORS (PROPOSAL FOR FRITZ MEETING).............................. 61
ELECTION OF INTERTRANS DIRECTORS (PROPOSAL FOR INTERTRANS MEETING).................... 62
FRITZ................................................................................. 63
BUSINESS............................................................................ 63
General.......................................................................... 63
Business Strategy................................................................ 63
Customs Brokerage................................................................ 65
International Ocean and Airfreight Forwarding.................................... 66
Warehousing and Distribution Services............................................ 67
Information Systems.............................................................. 67
Marketing........................................................................ 68
Acquisition Overview............................................................. 68
Competition and Business Conditions.............................................. 70
Regulation and International Trade............................................... 70
Service Marks.................................................................... 70
Employees........................................................................ 71
Legal Proceedings................................................................ 71
Property......................................................................... 71
SELECTED FINANCIAL INFORMATION...................................................... 72
MARKET PRICES OF COMMON STOCK; DIVIDENDS............................................ 73
MANAGEMENT.......................................................................... 74
Executive Officers and Directors................................................. 74
Board Meetings and Committees.................................................... 75
Compensation of Directors........................................................ 75
EXECUTIVE COMPENSATION.............................................................. 76
</TABLE>
6
<PAGE> 16
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary of Cash and Other Compensation........................................... 76
Stock Option Grants to Executive Officers........................................ 77
Option Exercises and Holdings.................................................... 78
Employment Contracts............................................................. 78
Certain Transactions with Fritz.................................................. 78
Audit and Compensation Committee Report on Executive Compensation................ 78
Performance Graph................................................................ 81
STOCK OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS............................ 82
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934................ 82
INTERTRANS............................................................................ 83
BUSINESS............................................................................ 83
General.......................................................................... 83
Air Freight Forwarding........................................................... 83
Ocean Freight Forwarding......................................................... 84
Customs Brokerage................................................................ 84
Crating, Packing, Warehousing, Distribution and Ancillary Services............... 85
Competition, Markets and Significant Customers................................... 85
Employees........................................................................ 85
Regulation....................................................................... 85
Insurance........................................................................ 86
SELECTED FINANCIAL INFORMATION...................................................... 87
MARKET PRICES OF COMMON STOCK; DIVIDENDS............................................ 88
MANAGEMENT.......................................................................... 88
Executive Officers and Directors................................................. 88
Meetings and Committees of the Board of Directors................................ 89
Compensation of Directors........................................................ 90
EXECUTIVE COMPENSATION.............................................................. 90
Annual and Long-Term Compensation................................................ 90
Option Grants.................................................................... 91
Option Exercises and Year-End Option Values...................................... 91
Stock Option Plans............................................................... 91
Certain Employment Agreements and Related Arrangements........................... 93
Certain Business Relationships................................................... 94
Compensation Committee Report on Executive Compensation.......................... 94
Compensation Committee Interlocks and Insider Participation...................... 95
Shareholder Return Performance Graph............................................. 96
STOCK OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS............................ 97
Security Ownership of Certain Beneficial Owners.................................. 97
Security Ownership of Management................................................. 97
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934................ 98
DESCRIPTION OF FRITZ CAPITAL STOCK.................................................... 98
</TABLE>
7
<PAGE> 17
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Common Stock..................................................................... 98
Preferred Stock.................................................................. 98
Section 203 of the Delaware General Corporation Law.............................. 98
Transfer Agent and Registrar..................................................... 99
COMPARISON OF RIGHTS OF HOLDERS OF FRITZ COMMON STOCK AND HOLDERS OF INTERTRANS COMMON
STOCK............................................................................... 99
LEGAL MATTERS......................................................................... 102
EXPERTS............................................................................... 102
INDEPENDENT ACCOUNTANTS............................................................... 103
STOCKHOLDER PROPOSALS................................................................. 103
OTHER MATTERS......................................................................... 103
APPENDICES
A--Agreement and Plan of Reorganization
B--Opinion of Morgan Stanley & Co. Incorporated
C--Opinion of Scott & Stringfellow, Inc.
D--Form of Proxy for the Fritz Annual Meeting
E--Form of Proxy for the Intertrans Annual Meeting
F--Articles 5.11-5.13 of the Texas Business Corporation Act
</TABLE>
8
<PAGE> 18
SUMMARY
This Joint Proxy Statement/Prospectus relates to the proposed merger (the
"Merger") of Fritz Air Freight, a California corporation ("Merger Sub"), with
and into Intertrans Corporation, a Texas corporation ("Intertrans"), and the
issuance of shares of common stock, par value $.01 per share ("Fritz Common
Stock"), of Fritz Companies, Inc., a Delaware corporation ("Fritz"), in
connection therewith. Merger Sub is a wholly owned subsidiary of Fritz. The
following is intended as a summary of the information contained in this Joint
Proxy Statement/Prospectus, is not intended to be a complete statement of all
material features of the proposals to be voted on and is qualified in its
entirety by the more detailed information and financial statements and related
notes appearing elsewhere in this Joint Proxy Statement/Prospectus or
incorporated herein by reference. This Joint Proxy Statement/Prospectus also
relates to the election of directors with respect to both Fritz and Intertrans.
Unless the context indicates otherwise, the information contained in this Joint
Proxy Statement/Prospectus assumes a Merger Exchange Ratio of 0.385.
THE PARTIES TO THE PROPOSED MERGER
Fritz Companies, Inc. Fritz is a leader in global transportation logistics
and related information services for importers and exporters worldwide. Fritz's
principal logistics services include logistics management, customs brokerage,
international air and ocean freight consolidations and forwarding, warehousing
and distribution services, and other value-added services for the international
and domestic movement of goods and logistics information. Fritz provides these
logistics services as an integrated unit which allows domestic and multinational
corporations to outsource or partner the entire or certain segments of their
process in global sourcing and distribution from the point of purchase order to
final delivery. A key component of Fritz's integrated logistics programs is its
information systems, in which Fritz has invested substantial management and
financial resources. Fritz's principal executive offices are located at 706
Mission Street, San Francisco, California 94103, and its telephone number at
that location is (415) 904-8360.
Intertrans Corporation. Intertrans is a leader in the air and ocean freight
forwarding and transportation logistics industry. Intertrans provides its
customers with a full range of international air freight forwarding,
international ocean freight forwarding, customs brokerage, consulting and
ancillary packing, crating and other logistics and transport services. The
majority of Intertrans' business is related to international freight forwarding
from the United States to overseas destinations. Intertrans' domestic freight
forwarding activities are generally incidental to international trade. In the
various phases of its air and ocean freight forwarding business, Intertrans
plans and implements the shipment of freight by commercial air and ocean
carriers from point of origin to destination. Intertrans' principal executive
offices are located at 125 E. John Carpenter Freeway, Suite 900, Irving, Texas
75062, and its telephone number at that location is (214) 830-8888.
Fritz Air Freight. Merger Sub is a wholly owned subsidiary of Fritz with no
business operations other than in connection with facilitating the Merger.
Merger Sub's principal executive offices are located at 706 Mission Street, San
Francisco, California 94103, and its telephone number is (415) 904-8360.
FRITZ ANNUAL MEETING OF STOCKHOLDERS
Time, Date and Purpose. The Fritz Annual Meeting will be held at [Bank of
America NT & SA, 555 California Street], San Francisco, California, on Tuesday,
May 23, 1995 at a.m., local time. The purpose of the meeting is to consider
and vote upon (i) a proposal to issue shares of Fritz Common Stock to
shareholders of Intertrans in connection with the Merger (the "Fritz Share
Issuance Proposal") and (ii) the election of five directors to the Fritz Board
of Directors. Following the approval and consummation of the Merger and related
transactions, the Fritz Board of Directors intends to increase the size of the
Board from five to six directors and appoint Carsten S. Andersen, the current
President of Intertrans, to fill the vacancy created by such action. See "The
Proposed Merger and Related Transactions -- Description of Merger and Plan of
Reorganization -- Interests of Certain Persons in the Merger."
Record Date; Vote Required. The record date for determining stockholders of
Fritz who are entitled to notice of and to vote at the Fritz Annual Meeting is
April 10, 1995 (the "Fritz Record Date"). On the Fritz
9
<PAGE> 19
Record Date there were shares of Fritz Common Stock outstanding, held
by approximately holders of record. On such date, Fritz directors,
executive officers and their affiliates held in the aggregate approximately %
of the outstanding shares of Fritz Common Stock entitled to vote at the Fritz
Annual Meeting. Each share of Fritz Common Stock entitles the holder thereof to
one vote upon all matters submitted to a vote of stockholders. The presence in
person or by proxy of the holders of a majority of the outstanding shares of
Fritz Common Stock constitutes a quorum.
The affirmative vote of holders of a majority of the outstanding shares of
Fritz Common Stock represented at the Fritz Annual Meeting, in person or by
proxy, is required to approve the Fritz Share Issuance Proposal. A vote in favor
of the Fritz Share Issuance Proposal constitutes a vote in favor of the
assumption by Fritz of all Intertrans Stock Options, together with the
underlying Intertrans stock option plans ("Intertrans Stock Option Plans"). Lynn
C. Fritz, President, Chairman of the Board and Chief Executive Officer of Fritz,
holds in the aggregate in excess of 50% of the outstanding shares of Fritz
Common Stock and, accordingly, will have the power to cause the Fritz Share
Issuance Proposal to be approved. Directors shall be elected by a plurality of
votes present in person or represented by proxy at the Fritz Annual Meeting and
entitled to vote on the election of directors. See "Voting and Proxies."
INTERTRANS ANNUAL MEETING OF SHAREHOLDERS
Time, Date and Purpose. The Intertrans Annual Meeting will be held at [the
principal executive offices of Intertrans located at 125 E. John Carpenter
Freeway, Suite 900, Irving, Texas,] on Tuesday, May 23, 1995, at a.m. local
time. The purpose of the meeting is to consider and vote upon (i) a proposal to
approve and adopt the Plan of Reorganization (including the related Articles of
Merger) and the transactions contemplated thereby (including the Merger) (the
"Intertrans Merger Proposal") and (ii) the election of five directors to the
Intertrans Board of Directors to serve until the earlier of the next annual
meeting of shareholders or consummation of the Merger.
Record Date; Vote Required. The record date for determining shareholders of
Intertrans who are entitled to notice of and to vote at the Intertrans Annual
Meeting is April 4, 1995 (the "Intertrans Record Date"). On the Intertrans
Record Date, there were shares of Intertrans Common Stock outstanding,
held by approximately holders of record. On such date, Intertrans
directors, executive officers and their affiliates held in the aggregate
approximately % of the outstanding shares of Intertrans Common Stock
entitled to vote at the Intertrans Annual Meeting. Each share of Intertrans
Common Stock entitles the holder thereof to one vote upon all matters submitted
to a vote of shareholders. The presence in person or by proxy of a majority of
the outstanding shares of Intertrans Common Stock constitutes a quorum.
The affirmative vote of the holders of two-thirds of the outstanding shares
of Intertrans Common Stock is required for the approval of the Intertrans Merger
Proposal. Directors shall be elected by a plurality of votes present in person
or represented by proxy at the Intertrans Annual Meeting and entitled to vote on
the election of directors. See "Voting and Proxies."
THE MERGER
General. At the effective time of the Merger, the following will occur: (i)
the separate existence of Merger Sub will cease; (ii) Merger Sub will be merged
with and into Intertrans; (iii) all of the business, assets, liabilities and
obligations of Merger Sub will be assumed by Intertrans; and (iv) Intertrans
will become a wholly owned subsidiary of Fritz. In addition, each outstanding
share of Intertrans Common Stock (except dissenting shares) will be converted
into the right to receive between 0.380 and 0.390 of a share of Fritz Common
Stock based upon the arithmetic mean (the "Average Fritz Trading Price") of the
closing sales prices of Fritz Common Stock on the Nasdaq National Market for
each of the 20 trading days ending on the fourth trading day immediately
preceding the scheduled date of the first to occur of the Fritz Annual Meeting
and the Intertrans Annual Meeting (the "Merger Exchange Ratio") and all
Intertrans Stock Options will be assumed by Fritz and converted into options to
purchase shares of Fritz Common Stock at an exercise price based upon the Merger
Exchange Ratio. No fractional shares of Fritz Common Stock will be issued in the
10
<PAGE> 20
Merger and cash will be paid in lieu of the issuance of fractional shares. The
Plan of Reorganization sets forth certain circumstances in which the Merger may
be terminated by Intertrans if the Average Fritz Trading Price is less than
$41.00 per share and Fritz does not elect to adjust the Merger Exchange Ratio to
a number greater than 0.390. Similarly, the Plan of Reorganization provides that
the Merger may be terminated by Fritz if the Average Fritz Trading Price exceeds
$55.00 per share and Intertrans does not elect to adjust the Merger Exchange
Ratio to a number less than 0.380. See "The Proposed Merger and Related
Transactions -- Description of Merger and Plan of Reorganization -- Manner and
Basis of Converting Intertrans Securities."
Based on the number of shares of Intertrans Common Stock outstanding on
February 28, 1995, an aggregate of 4,396,777 shares of Fritz Common Stock will
be issued in the Merger. In addition, Fritz will assume outstanding options to
purchase an aggregate of 2,284,659 shares of Intertrans Common Stock (based on
the number of shares subject to outstanding Intertrans Stock Options on February
28, 1995), which, as adjusted to give effect to an assumed Merger Exchange Ratio
of 0.385, will become options to purchase an aggregate of 879,594 shares of
Fritz Common Stock. The conversion will be effected by multiplying the number of
shares of Intertrans Common Stock subject to each Intertrans Stock Option
immediately prior to the Merger by the Merger Exchange Ratio and dividing the
exercise price of each such option by the Merger Exchange Ratio. If a holder of
an Intertrans Stock Option exercises such option after February 28, 1995 and
before the effective time of the Merger, each share of Intertrans Common Stock
issued pursuant thereto will be converted into the right to receive that
fraction of a share of Fritz Common Stock as is equal to the Merger Exchange
Ratio at the effective time of the Merger.
The following table presents the equity interest of Fritz and Intertrans
stockholders on a pro forma combined basis as of February 28, 1995 (exclusive of
shares issuable upon the exercise of outstanding options to purchase shares of
Fritz Common Stock and Intertrans Common Stock), using an assumed Merger
Exchange Ratio of 0.385:
<TABLE>
<CAPTION>
SHARES %
---------- -----
<S> <C> <C>
Current Fritz stockholders...................................... 12,201,690 73.5%
Intertrans shareholders......................................... 4,396,777 26.5%
---------- -----
Total pro forma Fritz stockholders.............................. 16,598,467 100.0%
========== =====
</TABLE>
Material Contacts and Board Deliberations. Over the past two years,
representatives of Fritz and Intertrans have met informally from time to time to
discuss in general terms the potential synergies and compatibilities between
Intertrans and Fritz and the possibility of a transaction between their
respective companies at some point in the future. From November 1994 through
December 1994, senior executives of Intertrans and Fritz met to discuss a
potential merger of their respective companies and the key business and
financial issues involved in such a transaction. In January and February 1995,
senior executives of Intertrans and Fritz and their respective financial
advisors worked together to arrive at a mutually acceptable share exchange
ratio. In addition, in January and February 1995, senior executives of
Intertrans and Fritz conducted due diligence reviews. On February 14, 1995, the
Intertrans Board and the Fritz Board met separately at which time each
respective board concluded that the Merger was fair and in the best interests of
their respective companies and stockholders. In addition, at the respective
board meetings, the Intertrans Board and the Fritz Board unanimously approved
and adopted the Plan of Reorganization. The Plan of Reorganization was then
executed by Intertrans and Fritz. For a more detailed discussion of the
background behind the Merger, see "The Proposed Merger and Related
Transactions -- Description of Merger and Plan of Reorganization -- Material
Contacts and Board Deliberations."
Reasons for the Merger; Recommendations of Boards of Directors
Fritz. On February 14, 1995, the Fritz Board unanimously adopted and
approved the Plan of Reorganization and the Articles of Merger contemplated
thereby and recommended that all stockholders of Fritz vote for the adoption and
approval of the issuance of shares of Fritz Common Stock to be issued in
connection with the Merger. In reaching its determination to recommend approval
of the Merger, the Fritz Board considered a number of factors, including, but
not limited to, the following: (i) a review of the terms and conditions of the
Plan of Reorganization, a copy of which is attached hereto as Appendix A; (ii)
the addition of Intertrans adds significantly to Fritz's strength in the
airfreight forwarding market; (iii) the Merger enhances Fritz's position as a
freight consolidator through economies of scale in consolidating shipments;
11
<PAGE> 21
(iv) the addition of Intertrans' customer base complements Fritz's, thereby
creating a larger customer base which will present greater opportunities for
marketing products of the combined company; (v) Fritz and Intertrans have
complementary geographic competencies; (vi) Intertrans enhances the growth
prospects of Fritz in a consolidating freight forwarding environment; (vii) a
combination with Intertrans presents opportunities for further operating
leverage by recognizing economies of scale in operating costs, thereby
presenting opportunities for increased operating margins; (viii) Intertrans has
a strong technology base which is under development to enhance its global air
freight operations; (ix) Intertrans has a highly regarded, experienced
management team which is complementary to Fritz's management team; (x)
presentations by Fritz's management and Fritz's financial advisor, Morgan
Stanley & Co. Incorporated ("Morgan Stanley"); and (xi) the opinion received by
the Board from Morgan Stanley that the Merger Exchange Ratio was fair from a
financial point of view to Fritz. The Fritz Board also considered the following
potentially negative factors: (i) the charges expected to be incurred, primarily
in the second quarter of 1995, in connection with the Merger, including costs of
integrating the business and transaction expenses arising from the Merger, will
have an adverse effect on operating results; and (ii) the risk that benefits
sought to be achieved in the Merger will not be realized, which may adversely
affect the combined company's prospects, operations and margins. See "The
Proposed Merger and Related Transactions -- Fritz Reasons for the Merger;
Recommendation of the Board of Directors."
Intertrans. On February 14, 1995, the Board of Directors of Intertrans
unanimously adopted and approved the Plan of Reorganization and the Articles of
Merger contemplated thereby and recommended that all shareholders of Intertrans
vote for the Intertrans Merger Proposal (which, among other things, includes
adoption and approval of the Plan of Reorganization and consummation of the
Merger). In arriving at its recommendation, the Intertrans Board considered a
number of factors including, among other things: (i) the relationship between
the price to be paid pursuant to the Plan of Reorganization and the trading
history of shares of Intertrans Common Stock, including the fact that the
consideration to be received by the shareholders represents a significant
premium over the lowest closing price of the shares of Intertrans' Common Stock
during the two weeks preceding Intertrans' announcement of the Merger; (ii) a
review of the terms and conditions of the Plan of Reorganization, a copy of
which is attached hereto as Appendix A; (iii) the Board's familiarity with the
business, assets, earnings, properties, results of operations, financial
condition and prospects of Intertrans and Fritz and the nature of the industry
in which Intertrans and Fritz compete; (iv) the Board's perception that a
combination with Fritz would enhance Intertrans' position as a freight
consolidator through economies of scale in consolidating shipments; (v) the
Board's perception that a combination with Fritz would create a financially
strong company able to provide customers worldwide with the full range of
transportation logistics and integrated systems solutions; (vi) the Board's
perception of Fritz as a well-managed, competitive and financially strong
company, with extensive experience in air and ocean freight forwarding and
transportation logistics; (vii) the Board's perception that Fritz is capable of
assisting Intertrans in achieving its strategic objectives, including
positioning Intertrans for growth in a consolidating freight forwarding
environment; (viii) the Board's perception that Intertrans and Fritz each use
sophisticated information systems that are highly complementary and that will
position the combined company as a leader in total logistics and integrated
systems solutions; (ix) the Board's perception that a combination with Fritz
presents opportunities for further operating leverage by recognizing economies
of scale in operating costs, thus presenting opportunities for increased
operating margins; (x) the Board's belief that the Plan of Reorganization and
the transactions contemplated therein represented the best determinable value
for Intertrans; (xi) the fact that Intertrans and Fritz have complementary
geographic competencies; (xii) presentations by Intertrans' management and
Intertrans' financial advisor, Scott & Stringfellow, Inc. ("Scott &
Stringfellow"); and (xiii) the opinion received by the Board from Scott &
Stringfellow that the Merger Exchange Ratio is fair from a financial point of
view to the holders of Intertrans Common Stock. The Intertrans Board also
considered the following potentially negative factors: (i) the charges expected
to be incurred, primarily in the second quarter of 1995, in connection with the
Merger, including costs of integrating the business and transaction expenses
arising from the Merger, will have an adverse effect on operating results; (ii)
the risk that benefits sought to be achieved in the Merger will not be realized,
which may adversely affect the combined company's prospects, operations and
margins; and (iii) the possibility that the Merger might not be consummated and
the potential adverse effects of such a result on (a) the market price for
Intertrans
12
<PAGE> 22
Common Stock and (b) Intertrans' relationships with key management personnel,
its work force generally, its customers and others. In the Intertrans Board's
view, these considerations were not sufficient, either individually or
collectively, to outweigh the advantages of the proposed combination in the
manner in which it was proposed. See "The Proposed Merger and Related
Transactions -- Intertrans Reasons for the Merger; Recommendations of the Board
of Directors."
Opinions of Financial Advisors. Morgan Stanley & Co. Incorporated has
rendered to the Fritz Board its written opinion dated February 14, 1995 (the
"Morgan Stanley Opinion") that, as of such date, based upon the various
considerations set forth in the opinion, the Merger Exchange Ratio was fair from
a financial point of view to Fritz. The full text of the Morgan Stanley Opinion
which sets forth the assumptions made, matters considered and limitations on the
review undertaken, is attached as Appendix B to this Joint Proxy
Statement/Prospectus. Fritz stockholders are urged to read the opinion carefully
and in its entirety. The Morgan Stanley Opinion is directed only to the fairness
of the Merger Exchange Ratio to Fritz from a financial point of view and does
not constitute a recommendation to any stockholder of Fritz as to how such
stockholder should vote on the Fritz Share Issuance Proposal. The summary of the
Morgan Stanley Opinion set forth in this Joint Proxy Statement/Prospectus is
qualified in its entirety by reference to the full text of such opinion. See
"The Proposed Merger and Related Transactions -- Description of Merger and Plan
of Reorganization -- Financial Advisors" and "-- Interests of Certain Persons in
the Merger."
Scott & Stringfellow, Inc. has rendered to the Intertrans Board its written
opinion dated February 14, 1995 (the "Scott & Stringfellow Opinion") that the
Merger Exchange Ratio was fair from a financial point of view to the holders of
Intertrans Common Stock. The full text of the Scott & Stringfellow Opinion,
which sets forth assumptions made, matters considered, and limitations of the
review undertaken and which is attached hereto as Appendix C to this Joint Proxy
Statement/Prospectus, is incorporated herein by reference and should be read
carefully and in its entirety in connection with this Joint Proxy
Statement/Prospectus. The Scott & Stringfellow Opinion is directed only to the
fairness, from a financial point of view, as of the date of the opinion, of the
Merger Exchange Ratio to the holders of Intertrans Common Stock and does not
constitute a recommendation to any holders of Intertrans Common Stock as to how
such holders of Intertrans Common Stock should vote with respect to the Merger
or with respect to any other matter. The summary of the Scott & Stringfellow
Opinion set forth in this Joint Proxy Statement/Prospectus is qualified in its
entirety by reference to the full text of such opinion. See "The Proposed Merger
and Related Transactions -- Description of Merger and Plan of
Reorganization -- Financial Advisors" and "-- Interests of Certain Persons in
the Merger."
Effective Time. The Merger will be consummated on the date that Articles of
Merger, substantially in the form attached as an exhibit to the Plan of
Reorganization, are filed with the Office of the Secretary of State of the State
of Texas, such office issues a certificate of merger, and the filings required
under California law to be made with the Office of the Secretary of State of the
State of California are made (the "Effective Time" or the "Effective Date"). The
Effective Time is expected to occur as soon as practicable after the receipt of
the necessary approvals at the Fritz Annual Meeting and the Intertrans Annual
Meeting and satisfaction or waiver of the other conditions precedent to the
Merger, as set forth in the Plan of Reorganization. See "The Proposed Merger and
Related Transactions -- Description of Merger and Plan of
Reorganization -- Effective Time."
Exchange of Shares. At the Effective Time, each outstanding share of
Intertrans Common Stock (except for dissenting shares) will automatically be
converted into the right to receive between 0.380 and 0.390 of a share of Fritz
Common Stock, based upon the arithmetic mean (the "Average Fritz Trading Price")
of the closing sales prices of Fritz Common Stock on the Nasdaq National Market
for each of the 20 trading days ending on the fourth trading day immediately
preceding the scheduled date of the first to occur of the Fritz Annual Meeting
and the Intertrans Annual Meeting. The Plan of Reorganization sets forth certain
circumstances in which the Merger may be terminated by Intertrans if the Average
Fritz Trading Price is less than $41.00 per share and Fritz does not elect to
adjust the Merger Exchange Ratio to a number greater than 0.390. Similarly, the
Plan of Reorganization provides that the Merger may be terminated by Fritz if
the Average Fritz Trading Price exceeds $55.00 per share and Intertrans does not
elect to adjust the Merger Exchange Ratio to a number less than 0.380. See "The
Proposed Merger and Related Transactions -- Description of Merger and Plan of
Reorganization -- Manner and Basis of Converting Intertrans Securities."
13
<PAGE> 23
Exchange of certificates evidencing Intertrans Common Stock for certificates
evidencing Fritz Common Stock will be made upon surrender of certificates
evidencing Intertrans Common Stock to Fritz's exchange agent.
CERTIFICATES SHOULD NOT BE SURRENDERED FOR EXCHANGE PRIOR TO THE RECEIPT OF
THE NECESSARY APPROVALS OF THE FRITZ STOCKHOLDERS AT THE FRITZ ANNUAL MEETING
AND OF THE INTERTRANS SHAREHOLDERS AT THE INTERTRANS ANNUAL MEETING. IN
ADDITION, FORMER INTERTRANS SHAREHOLDERS SHOULD NOT SURRENDER THEIR CERTIFICATES
UNTIL THEY ARE PROVIDED WITH A LETTER OF TRANSMITTAL AND RELATED INSTRUCTIONS
AND MATERIALS FOR THE EXCHANGE OF THEIR CERTIFICATES AFTER THE EFFECTIVE TIME.
SEE "THE PROPOSED MERGER AND RELATED TRANSACTIONS -- DESCRIPTION OF MERGER AND
PLAN OF REORGANIZATION -- MANNER AND BASIS OF CONVERTING INTERTRANS SECURITIES."
Board of Directors and Management Following the Merger. Upon consummation
of the Merger, the Fritz Board of Directors intends to increase the size of the
Fritz Board from five to six directors and appoint Carsten S. Andersen, the
current President of Intertrans, a director of Fritz to fill the vacancy created
by such action. The Board of Directors of Fritz would then consist of Lynn C.
Fritz, Dennis L. Pelino, Ronald A. Marcillac, James Gilleran, and Preston
Martin, all of whom are current members of the Board of Directors of Fritz, and
Mr. Andersen. Mr. Fritz will continue to serve as Chairman of the Board. See
"Election of Fritz Directors" and "The Proposed Merger and Related
Transactions -- Description of Merger and Plan of Reorganization -- Interests of
Certain Persons in the Merger."
Conditions to Consummation of the Merger. Consummation of the Merger is
subject to various conditions, including the approval by Fritz's stockholders of
the Fritz Share Issuance Proposal, the approval by Intertrans' shareholders of
the Intertrans Merger Proposal, the receipt of certain consents and approvals
from various third parties and governmental agencies, receipt of opinions of
counsel to the effect that the Merger will qualify as a reorganization under
Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
and receipt of an opinion from KPMG Peat Marwick LLP, independent certified
public accountants, to the effect that, based upon certain material facts and
certain representations and warranties provided by Fritz and Intertrans
described in such opinion, the Merger would be properly accounted for as a
pooling of interests in accordance with generally accepted accounting
principles. Except for matters required by law, each of the parties to the Plan
of Reorganization may, at its option, waive compliance with any condition to its
obligation to consummate the Merger. See "The Proposed Merger and Related
Transactions -- Description of Merger and Plan of Reorganization -- Conditions
to the Merger; Waiver."
Pursuant to the Plan of Reorganization, Intertrans and Fritz have agreed to
certain restrictions with respect to the manner in which their respective
businesses will be conducted pending the Merger. See "The Proposed Merger and
Related Transactions -- Description of Merger and Plan of
Reorganization -- Conduct of Business Prior to the Merger."
Termination and Amendment. The Plan of Reorganization may be terminated,
notwithstanding Fritz stockholder and Intertrans shareholder approval, (i) by
Intertrans if the Average Fritz Trading Price is less than $41.00 per share,
subject to the right of Fritz to avoid such termination by increasing the Merger
Exchange Ratio to a fraction equal to $16.00 divided by the Average Fritz
Trading Price, (ii) by Fritz if the Average Fritz Trading Price exceeds $55.00
per share, subject to the right of Intertrans to avoid such termination by
decreasing the Merger Exchange Ratio to a fraction equal to $20.90 divided by
the Average Fritz Trading Price, (iii) by mutual agreement of the parties, (iv)
by either Fritz or Intertrans if the Merger is not consummated on or before July
31, 1995, or (v) upon the occurrence of certain other events. In addition, the
Plan of Reorganization may be amended by the mutual consent of the parties at
any time before or after approval of the Plan of Reorganization by the
shareholders of Intertrans and prior to the Effective Time, except that
following approval by the shareholders of Intertrans, no amendment with respect
to the Merger Exchange Ratio (or any other amendment which by law requires the
approval by the shareholders of Intertrans) may be made without further approval
by the shareholders of Intertrans. See "The Proposed Merger and Related
Transactions -- Description of Merger and Plan of Reorganization -- Termination
or Amendment of the Plan of Reorganization."
14
<PAGE> 24
Accounting Treatment. The Merger is expected to be accounted for as a
pooling of interests in accordance with the provisions of Accounting Principles
Board Opinion No. 16 on business combinations. As a condition to consummation of
the Merger, Fritz and Intertrans will receive an opinion from KPMG Peat Marwick
LLP, independent certified public accountants, to the effect that, based upon
certain material facts and certain representations and warranties provided by
Fritz and Intertrans described in such opinion, the business combination to be
effected by the Merger would be properly accounted for as a pooling of interests
in accordance with generally accepted accounting principles and all published
rules, regulations and policies of the SEC. See "The Proposed Merger and Related
Transactions -- Description of Merger and Plan of Reorganization -- Accounting
Treatment."
Resale of Fritz Common Stock; Agreements with Affiliates. The shares of
Fritz Common Stock to be issued in the Merger have been registered under the
Securities Act and will be freely transferable subject to certain limitations on
resale described in this Joint Proxy Statement/Prospectus. As a condition to
obligations under the Plan of Reorganization, Fritz shall have received
agreements from each person or entity who may be deemed an affiliate (as defined
in the Securities Act and the rules and regulations thereunder) of Intertrans
pursuant to which such persons will agree not to sell, transfer or otherwise
dispose of shares of Intertrans Common Stock or Fritz Common Stock during the
30-day period immediately preceding the Effective Time and until such time after
the Effective Time as Fritz has publicly released a report including the
combined financial results of Fritz and Intertrans for a period of at least 30
days of combined operations of Fritz and Intertrans. Furthermore, pursuant to
such agreements, the affiliates of Intertrans will agree to refrain from the
sale or transfer of any Fritz Common Stock received in connection with the
Merger except in accordance with the provisions of the Securities Act and the
general rules and regulations promulgated thereunder. Affiliates of Fritz will
also be subject to certain limitations on their ability to sell, transfer or
otherwise dispose of shares of Fritz Common Stock during the period preceding
and following the Merger. See "The Proposed Merger and Related
Transactions -- Description of Merger and Plan of Reorganization -- Resale of
Fritz Common Stock; Agreements with Intertrans Affiliates."
Interests of Certain Persons. In considering the recommendation of the
Board of Directors of Intertrans with respect to the Merger, shareholders should
be aware that certain members of Intertrans' management and Board of Directors
have interests in connection with the Merger and the agreements and transactions
contemplated thereby. See "The Proposed Merger and Related
Transactions -- Description of Merger and Plan of Reorganization -- Interests of
Certain Persons in the Merger."
Indemnification. The Restated Certificate of Incorporation and Restated
Bylaws of Fritz and the Restated Articles of Incorporation, as amended, and
Restated Bylaws of Intertrans provide for the indemnification of each respective
company's directors and officers against liabilities arising in the course of
performance of their duties to Fritz and Intertrans, respectively, subject to
certain limitations imposed by law. In the Plan of Reorganization, Fritz and
Intertrans have agreed that, until the occurrence of the earlier of the
Effective Time or termination of the Plan of Reorganization, they would not
adopt or propose any changes to their respective charter documents. In the Plan
of Reorganization, Intertrans has agreed that until the occurrence of the
earlier of the Effective Time or termination of the Plan of Reorganization, it
will keep in full force and effect its existing directors' and officers'
liability insurance and will not modify or reduce the coverage thereunder. See
"The Proposed Merger and Related Transactions -- Description of Merger and Plan
of Reorganization -- Indemnification."
Certain Federal Income Tax Considerations. Consummation of the Merger is
conditioned upon receipt by Fritz and Intertrans of opinions from their
respective legal counsel that the Merger will qualify as a reorganization for
federal income tax purposes under Section 368(a) of the Code. Accordingly, it is
anticipated that no gain or loss will generally be recognized by Intertrans
shareholders upon their receipt of shares of Fritz Common Stock in exchange for
their shares of Intertrans Common Stock, except to the extent of cash received
in lieu of fractional shares or in respect of dissenting shares. Such legal
opinions will be subject to certain limitations and qualifications and will be
based upon certain factual assumptions and representations. Furthermore, such
legal opinions will not be binding on the Internal Revenue Service. ALL
SHAREHOLDERS SHOULD READ CAREFULLY THE DISCUSSION UNDER "THE PROPOSED MERGER AND
RELATED TRANSACTIONS -- DESCRIPTION OF MERGER AND PLAN OF
15
<PAGE> 25
REORGANIZATION -- CERTAIN FEDERAL INCOME TAX CONSIDERATIONS." IN VIEW OF THE
COMPLEXITIES OF FEDERAL INCOME AND OTHER TAX LAWS, EACH SHAREHOLDER SHOULD
CONSULT WITH SUCH SHAREHOLDER'S TAX ADVISOR REGARDING, AMONG OTHER THINGS, THE
FEDERAL, STATE AND LOCAL INCOME TAX CONSEQUENCES OF THE MERGER APPLICABLE TO
SUCH SHAREHOLDER'S SPECIFIC CIRCUMSTANCES.
Comparative Rights of Shareholders. As a result of the Merger, holders of
Intertrans Common Stock will be exchanging their shares of a Texas corporation,
which is governed by the Texas Business Corporation Act (the "TBCA") and
Intertrans' Restated Articles of Incorporation, as amended, and Restated Bylaws,
for shares of Fritz Common Stock issued by a Delaware corporation governed by
the Delaware General Corporation Law ("DGCL") and Fritz's Restated Certificate
of Incorporation and Restated Bylaws. Holders of Intertrans Common Stock should
be aware that certain significant differences exist between the rights of
shareholders of a Texas corporation and those of a stockholder of a Delaware
corporation. See "Comparison of Rights of Holders of Fritz Common Stock and
Holders of Intertrans Common Stock."
Availability of Dissenters' Rights. Under Article 5 of the TBCA,
shareholders of Intertrans who object to the Merger may, under certain
circumstances and by following prescribed statutory procedures, have the right
to seek a determination of the "fair value" of such holder's shares. The failure
of such a dissenting shareholder to follow such procedures, described more fully
elsewhere in this Joint Proxy Statement/ Prospectus, may result in termination
or waiver of such holder's dissenters' rights. See "The Proposed Merger and
Related Transactions -- Dissenters' Rights" for a more detailed description of
dissenters' rights with respect to the Merger.
No statutory appraisal rights are available to stockholders of Fritz in
connection with the Merger.
Regulatory Approvals. On , 1995, Fritz and Intertrans,
respectively, filed Pre-Merger Notifications under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), with the Federal
Trade Commission and the Antitrust Division of the U.S. Department of Justice.
The waiting period applicable to the consummation of the Merger under the HSR
Act terminated on , 1995. To the knowledge of Fritz and Intertrans,
no other regulatory approvals that have not been received are required to
consummate the transactions contemplated by the Plan of Reorganization.
MARKET PRICE DATA
Fritz Common Stock is traded in the over-the-counter market on the Nasdaq
National Market under the symbol "FRTZ." Intertrans Common Stock is traded in
the over-the-counter market on the Nasdaq National Market under the symbol
"ITRN."
The following table sets forth the closing sales price per share of Fritz
Common Stock and Intertrans Common Stock, as reported on the Nasdaq National
Market on (i) December 30, 1994, (ii) February 14, 1995, the last full trading
day before the execution of the Plan of Reorganization by Fritz and Intertrans
and (iii) April , 1995, the latest practicable trading day before printing
this Joint Proxy Statement/Prospectus, and the equivalent pro forma per share
value of Intertrans Common Stock based on Fritz Common Stock prices.
Stockholders of Fritz and shareholders of Intertrans are encouraged to obtain
current market information for shares of Fritz Common Stock and Intertrans
Common Stock.
<TABLE>
<CAPTION>
FRITZ INTERTRANS INTERTRANS
COMMON STOCK COMMON STOCK PRO FORMA
PRICE PRICE EQUIVALENT(1)
------------ ------------ -------------------
<S> <C> <C> <C>
December 30, 1994................. $47.00 $ 13.00 $ 18.00
February 14, 1995................. 48.50 16.625 18.43
April , 1995....................
</TABLE>
- ---------------
(1) Represents the equivalent pro forma value of one share of Intertrans Common
Stock calculated by multiplying the closing sales price of one share of
Fritz Common Stock on the dates listed above by the
16
<PAGE> 26
Merger Exchange Ratio that would be in effect if the "Average Fritz
Trading Price" (as defined in the Plan of Reorganization) were to equal
such closing sales price. See "The Proposed Merger and Related
Transactions -- Description of Merger and Plan of Reorganization -- Manner
and Basis of Converting Intertrans Securities."
See "Fritz -- Market Prices of Common Stock; Dividends" and
"Intertrans -- Market Prices of Common Stock; Dividends."
RISK FACTORS
The consummation of the Merger and an investment in shares of Fritz Common
Stock each involve certain risks. Before voting on the Intertrans Merger
Proposal and acquiring the securities offered hereby, shareholders of Intertrans
should carefully consider the information set forth in "Risk Factors."
Similarly, before voting on the Fritz Share Issuance Proposal, stockholders of
Fritz should carefully consider such information.
SUMMARY HISTORICAL AND PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
The following selected historical financial information of Fritz and
Intertrans has been derived from historical financial statements and should be
read in conjunction with such financial statements and the notes thereto
incorporated herein by reference. Historical operating information for periods
prior to January 1, 1992, and balance sheet data prior to December 31, 1993, for
Fritz are derived from financial statements not incorporated herein by
reference. Historical operating information for periods prior to November 1,
1991, and balance sheet data prior to October 31, 1993, for Intertrans are
derived from financial statements not incorporated herein by reference. The
selected pro forma combined condensed financial information of Fritz and
Intertrans is derived from the unaudited pro forma combined condensed financial
statements and should be read in conjunction with such pro forma statements and
notes thereto included elsewhere in this Joint Proxy Statement/Prospectus. For
further information regarding the pro forma combined operating results of the
two companies, see "The Proposed Merger and Related Transactions -- Pro Forma
Combined Condensed Financial Statements."
The pro forma combined condensed financial information does not purport to
represent what Fritz's financial position or results of operations would
actually have been had the Merger occurred at the beginning of the earliest
period presented or to project Fritz's financial position or results of
operations for any future date or period. In addition, the pro forma combined
condensed financial information does not incorporate any benefits from cost
savings or synergies of operations of the combined company.
17
<PAGE> 27
SELECTED HISTORICAL FINANCIAL DATA
FRITZ
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FISCAL YEARS ENDED DECEMBER 31,
----------------------------------------------------
1990 1991 1992 1993 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue..................................... $161,581 $201,753 $248,766 $341,758 $515,969
Net revenue(1).............................. 108,212 121,194 141,573 169,941 245,448
Income from operations...................... 10,158 12,427 16,991 21,105 31,372
Net income.................................. 7,002 7,900 13,117 14,024 19,571
Net income per share -- fully diluted....... 1.30 1.70
Pro forma net income(2)..................... 4,486 5,435 10,519
Pro forma net income per share -- fully
diluted................................... 0.58 0.70 1.28
BALANCE SHEET DATA (AT END OF PERIOD):
Total assets................................ 114,042 135,542 156,788 190,888 399,703
Long-term obligations, net of current
portion................................... 19,735 17,328 -- 2,220 33,048
Stockholders' equity (deficit)(3)........... (19,553) (17,376) 21,078 39,129 107,459
</TABLE>
- ---------------
(1) Fritz's net revenue is determined by deducting freight consolidation costs
from freight forwarding revenue.
(2) From January 1, 1990 until immediately prior to Fritz's initial public
offering in October 1992 (the "Termination Date"), Fritz had operated as an
S Corporation for federal and certain state income tax purposes. As a
result, Fritz's 1990, 1991 and 1992 earnings through the Termination Date
were taxed, with certain exceptions, for federal and certain state income
tax purposes directly to Lynn C. Fritz. The pro forma income statement data
for 1990 through 1992 reflects adjustments to the historical income
statement data assuming Fritz had not elected S Corporation status for
income tax purposes, including the repurchase of the minority interest in
its subsidiaries sold to the sole stockholder to qualify for S Corporation
status. The provisions for federal and state income taxes assume effective
tax rates of 40% for each of 1990 and 1991 and 35% for 1992. The lower
effective tax rate beginning in 1992 was principally due to Fritz's expanded
operations in foreign countries which had lower income tax rates.
(3) In October 1992, Fritz sold 2,932,500 shares of newly issued Fritz Common
Stock in an initial public offering for net proceeds of approximately
$40,289,000. In November 1994, Fritz sold 1,150,000 shares of newly issued
Fritz Common Stock in a secondary public offering for net proceeds of
approximately $42,160,000.
18
<PAGE> 28
INTERTRANS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FISCAL YEARS ENDED OCTOBER 31,
----------------------------------------------------
1990 1991 1992 1993 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS:
Revenue(1).................................. $205,881 $276,677 $366,844 $376,762 $452,156
Net revenue(1).............................. 126,375 161,784 206,331 207,268 257,420
Income from operations...................... 7,152 9,441 11,122 12,341 14,837
Net income.................................. 5,645 6,771 7,749 8,690 10,562
Net income per share -- fully diluted....... 0.55 0.62 0.67 0.74 0.87
BALANCE SHEET DATA (AT END OF PERIOD):
Total assets................................ 60,803 88,323 89,168 107,086 129,388
Long-term debt, net of current portion...... -- -- -- -- --
Shareholders' equity........................ 29,961 42,879 46,847 56,925 68,739
</TABLE>
FRITZ AND INTERTRANS
UNAUDITED SELECTED PRO FORMA COMBINED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1992 1993 1994
-------- -------- --------
<S> <C> <C> <C>
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS:
Revenue(1)..................................................... $455,097 $549,026 $773,389
Net revenue(1)................................................. 210,011 243,042 332,583
Income from operations......................................... 28,113 33,446 46,209
Net income..................................................... 18,426 22,603 29,589
Net income per share -- fully diluted.......................... 1.45 1.48 1.82
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31, 1994
--------------------
<S> <C>
UNAUDITED PRO FORMA COMBINED BALANCE SHEET DATA:
Total assets.............................................................. $524,091
Long-term obligations, net of current portion............................. 33,048
Stockholders' equity...................................................... 159,125
</TABLE>
- ---------------
(1) Intertrans revenue includes amounts that were received as an agent for ocean
freight, foreign collect freight, and customs duty, and other services
(i.e., pass-through charges). Net revenue is calculated by deducting such
pass-through charges. Direct transportation costs, which are the costs
associated with the Intertrans activity as an indirect carrier, are
classified as operating expense.
In order to conform to the Fritz financial reporting practices, the
pass-through charges would be deducted to arrive at revenue, and direct
transportation costs would be deducted to arrive at net revenue. Should
these adjustments be made, Intertrans revenue would be $126,374,000,
$161,784,000, $206,331,000, $207,268,000 and $257,420,000 for the years
ended 1990, 1991, 1992, 1993 and 1994, respectively, and Intertrans net
revenue would be $38,428,000, $51,275,000, $68,438,000, $73,101,000 and
$87,135,000, for the years ended 1990, 1991, 1992, 1993 and 1994,
respectively. See Note 4 to Pro Forma Combined Consolidated Condensed
Financial Statements relating to discussion on accounting policies of Fritz
and Intertrans.
19
<PAGE> 29
COMPARATIVE PER SHARE DATA
The following table sets forth certain historical per share data of Fritz
and Intertrans and combined per share data on an unaudited pro forma basis,
based on the assumption that the Merger occurred at the beginning of the
earliest period presented and was accounted for as a pooling of interests. The
pro forma comparative per share data gives effect to the Merger at an assumed
Merger Exchange Ratio of 0.385 of a share of Fritz Common Stock for each share
of Intertrans Common Stock. The pro forma comparative per share data does not
purport to represent what Fritz's financial position or results of operations
would actually have been had the Merger occurred at the beginning of the
earliest period presented or to project Fritz's financial position or results of
operations for any future date or period. This data should be read in
conjunction with the pro forma condensed combined financial statements included
elsewhere herein and the separate historical financial statements and notes
thereto of Fritz and Intertrans incorporated herein by reference.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
1992 1993 1994
----- ------ -----
<S> <C> <C> <C>
HISTORICAL -- FRITZ
Net income -- fully diluted.................................... $1.28 $ 1.30 $1.70
Dividends...................................................... -- -- --
Book value..................................................... 8.81
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED OCTOBER 31,
------------------------------
1992 1993 1994
----- ------ -----
<S> <C> <C> <C>
HISTORICAL -- INTERTRANS
Net income -- fully diluted.................................... $0.67 $ 0.74 $0.87
Dividends...................................................... 0.10 0.125 0.20
Book value..................................................... 6.04
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
1992 1993 1994
----- ------ -----
<S> <C> <C> <C>
PRO FORMA COMBINED PER FRITZ SHARE
Net income -- fully diluted.................................... $1.45 $ 1.48 $1.82
Book value..................................................... 9.60
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
1992 1993 1994
----- ------ -----
<S> <C> <C> <C>
EQUIVALENT PRO FORMA COMBINED PER INTERTRANS SHARE
Net income -- fully diluted.................................... $0.56 $ 0.57 $0.70
Book value..................................................... 3.70
</TABLE>
20
<PAGE> 30
RISK FACTORS
The following factors should be considered carefully in evaluating the
proposals to be considered and voted upon at each of the Fritz Annual Meeting
and the Intertrans Annual Meeting and the acquisition of the securities offered
hereby. For periods following the Merger, references to the services, business,
financial results or financial condition of Fritz should be considered to refer
to Fritz and its subsidiaries, including Intertrans, unless the context
otherwise requires.
UNCERTAINTY AS TO FUTURE FINANCIAL RESULTS
Fritz and Intertrans believe that the Merger will offer opportunities for
long-term efficiencies in operations that should positively affect future
operating results of the combined companies. However, the combined companies
will be more complex and diverse than either Fritz or Intertrans individually,
and the combination and continued operation of their distinct business
operations will present difficult challenges for each company's management due
to the increased time and resources required in the management effort. While the
managements and Boards of Directors of both Fritz and Intertrans believe that
the combination can be effected in a manner which will realize the value of the
two companies, neither management group has experience in combinations of this
size. Accordingly, there can be no assurance that the process of effecting the
business combination can be effectively managed to realize the operational
efficiencies anticipated to result from the Merger.
Following the Merger, in order to maintain and increase profitability, the
combined companies will need to successfully integrate and streamline
overlapping functions. Fritz and Intertrans have different systems and
procedures in many operational areas which must be rationalized and integrated.
There can be no assurance that integration will be accomplished smoothly or
successfully. The difficulties of such integration may be increased by the
necessity of coordinating geographically separated organizations. The
integration of certain operations following the Merger will require the
dedication of management resources which may temporarily distract attention from
the day-to-day business of the combined companies. Failure to effectively
accomplish the integration of the two companies' operations could have an
adverse effect on Fritz's results of operations and financial condition.
MERGER EXPENSES
Transaction costs relating to the negotiation of, preparation for and
consummation of the Merger and the anticipated combination of certain operations
of Fritz and Intertrans are expected to result in a one-time charge to the
combined company's earnings. Although it will not be feasible to determine the
actual amount of the charge until the operational and transition plans are
completed, the management of each of Fritz and Intertrans believes that the
charge will be between $23 million and $28 million before taxes, although such
amount may be increased by unanticipated additional expenses incurred in
connection with the Merger. See "The Proposed Merger and Related
Transactions -- Pro Forma Combined Condensed Financial Statements." This charge,
the actual amount of which will be based on future developments, is expected to
include the estimated costs associated with workforce reductions, facility
consolidations, contractual obligations including lease buyouts and other
related restructuring activities, all of which will be incurred to eliminate
duplicate management information systems and facilities and operations and
excess capacity in the combined operations. While the exact timing of this
charge cannot be determined at this time, management of each of Fritz and
Intertrans anticipates that this charge to earnings will be recorded primarily
in the quarter in which the Merger is consummated. In addition, there can be no
assurance that Fritz will not incur additional charges in subsequent quarters to
reflect costs associated with the Merger.
SHARES ELIGIBLE FOR PUBLIC SALE
Sales of substantial amounts of Fritz Common Stock in the public market
after the consummation of the Merger could adversely affect prevailing market
prices. The approximately 4,396,777 shares of Fritz Common Stock (as of February
28, 1995) to be issued in the Merger will be eligible for immediate sale in the
public market, subject to certain limitations under the Securities Act
applicable to affiliates of Intertrans and certain
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agreements entered into by certain affiliates of Intertrans and Fritz which
prohibit such persons from disposing of any Fritz Common Stock during the period
immediately following the Effective Time. In addition, approximately 879,594
shares of Fritz Common Stock issuable upon the exercise of Intertrans Stock
Options assumed by Fritz in the Merger (based on the number of shares subject to
outstanding Intertrans Stock Options on February 28, 1995) are anticipated to be
eligible for sale pursuant to a Registration Statement on Form S-8 following the
Merger. See "The Proposed Merger and Related Transactions -- Description of
Merger and Plan of Reorganization -- Resale of Fritz Common Stock; Agreements
with Intertrans Affiliates" and "-- Assumption of Intertrans Options."
ABSENCE OF DIVIDENDS
Although Intertrans in the past has paid cash dividends to its shareholders
from time to time, Fritz has not paid any cash dividends since its initial
public offering and Fritz, after the Merger, does not anticipate paying cash
dividends for the foreseeable future. See "Intertrans -- Market Prices of Common
Stock; Dividends" and "Fritz -- Market Prices of Common Stock; Dividends."
COMPETITION
Fritz experiences competition in all of its business operations, including
competition with customs brokers, ocean freight forwarders, air freight
forwarders, airlines and steamship companies. Some of the firms with which Fritz
competes have substantially greater financial resources than Fritz. Although
Fritz competes on a number of factors, including information systems capability,
global network capacity, reliability, responsiveness, expertise, convenience,
scope of operations and price, there can be no assurance that competition in one
of these areas may not adversely affect Fritz's results of operations.
DEPENDENCE ON INTERNATIONAL TRADE
Fritz's principal businesses are directly related to, and their future
performance is dependent upon, the volume of international trade, particularly
trade between the United States and foreign nations. Such trade is influenced by
many factors, including economic and political conditions in the United States
and abroad, major work stoppages, exchange controls, currency fluctuations, wars
and other armed conflicts and United States and foreign laws relating to
tariffs, trade restrictions, foreign investment and taxation. There can be no
assurance that trade-related events beyond the control of Fritz, such as a
failure of various nations to reach or adopt international trade agreements and
an increase in bilateral or multilateral trade restrictions, may not have a
material adverse effect on Fritz's results of operations.
CONTROL BY PRINCIPAL STOCKHOLDER
Lynn C. Fritz is Fritz's Chairman of the Board, Chief Executive Officer and
President. Upon completion of the Merger, Mr. Fritz will own approximately %
of the then outstanding Fritz Common Stock (based upon the number of shares of
Fritz Common Stock and Intertrans Common Stock outstanding on the Fritz Record
Date and the Intertrans Record Date, respectively, and assuming a Merger
Exchange Ratio of 0.385). Accordingly, Mr. Fritz will retain substantial power
to direct the election of the entire Board of Directors of Fritz and, in
general, to determine the outcome of any other matters submitted to Fritz's
stockholders for approval, including mergers, consolidations or the sale of all
or substantially all of Fritz's assets. Due to his significant ownership
position, Mr. Fritz may be able, in concert with others, to prevent or cause a
change in control of Fritz. See "Fritz -- Stock Ownership of Management and
Principal Stockholders."
DEPENDENCE ON KEY PERSONNEL
Fritz's future performance is substantially dependent upon the continued
services of Mr. Fritz, its Chairman, President and Chief Executive Officer, and
its senior operating executive, Dennis L. Pelino. Of these key personnel, only
Mr. Pelino has an employment contract. See "Fritz -- Executive Compensation --
Employment Contracts." Following the Merger, it is anticipated that Carsten S.
Andersen will be an integral part of Fritz's senior management team. The loss of
the services of any of such persons could have a material
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adverse effect upon Fritz and its operations. In addition, Fritz's continued
growth depends on its ability to attract and retain skilled employees. There can
be no assurance that Fritz will be able to retain its existing personnel or
attract additional qualified employees in the future.
VULNERABILITY TO ECONOMIC CONDITIONS
Fritz's future operating results may be dependent on the economic
environments in which Fritz operates. Demand for Fritz's services could be
adversely affected by economic conditions in industries of Fritz's customers.
Fritz's business has also experienced and is expected to experience seasonality,
in part due to international trade patterns. Fritz expects that product demand
(and consequently results of operations) will continue to be sensitive to global
economic conditions and other factors beyond the control of Fritz.
ROLE OF ACQUISITIONS
Fritz has selectively used acquisitions to augment its global expansion and
internal growth. In the year ended December 31, 1994, Fritz completed 18
acquisitions of interests in companies which, according to such companies'
internal records, had net revenue in 1993 of approximately $60 million. Fritz
intends to grow both externally through acquisitions and internally through its
operating strategies. Fritz may not, however, be successful in making
acquisitions in the future. Fritz may experience competition in making
acquisitions and there can be no assurance that Fritz will continue to find
attractive acquisition candidates. Furthermore, acquisitions involve a number of
special risks, including the diversion of management's attention to the
assimilation of the operations and personnel of the acquired companies, possible
adverse short-term effects on Fritz's reported operating results, and the
amortization of acquired intangible assets. In addition, Fritz relies upon the
representations and warranties of the acquired companies in the applicable
acquisition agreements and upon its own due diligence investigations. There can
be no assurance that these representations and warranties are true and correct
or that Fritz's due diligence investigations will discover all matters of a
material nature relating to the acquisitions.
VOLATILITY OF SHARE PRICE
The stock market has from time to time experienced extreme price and volume
fluctuations which have been unrelated to the operating performance of
particular companies. The market price for shares of Fritz Common Stock may be
highly volatile depending on various factors, including, but not limited to, the
state of the national economy, stock market conditions, industry reports,
actions by governmental agencies, announcements by Fritz or its competitors and
general world economic conditions. See "Fritz -- Market Prices of Common Stock;
Dividends."
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INTRODUCTION
This Joint Proxy Statement/Prospectus is furnished in connection with the
solicitation by Fritz and by Intertrans of proxies to be voted, respectively, at
the Fritz Annual Meeting to be held on May 23, 1995, and the Intertrans Annual
Meeting also to be held on May 23, 1995. This Joint Proxy Statement/Prospectus
is first being mailed to stockholders of Fritz and Intertrans on or about April
, 1995.
The purpose of the Fritz Annual Meeting is to consider and vote upon the
Fritz Share Issuance Proposal. Stockholders of Fritz will also be asked to
consider and vote upon the election of five directors to the Fritz Board of
Directors. The purpose of the Intertrans Annual Meeting is to consider and vote
upon the approval of the Intertrans Merger Proposal (which, among other things,
includes approval of the Merger and Plan of Reorganization). Shareholders of
Intertrans will also be asked to consider and vote upon the election of five
directors to the Intertrans Board of Directors to serve until the earlier of the
next annual meeting of Intertrans shareholders or the consummation of the
Merger. At the Effective Time, Merger Sub will be merged with and into
Intertrans, the separate existence of Merger Sub will cease, all of the rights,
privileges, powers, franchises, properties, assets, liabilities and obligations
of Merger Sub will be vested in Intertrans and Intertrans will become a wholly
owned subsidiary of Fritz. See "The Proposed Merger and Related Transactions."
THE BOARD OF DIRECTORS OF FRITZ HAS UNANIMOUSLY DETERMINED THAT THE PLAN OF
REORGANIZATION AND THE TRANSACTIONS CONTEMPLATED THEREBY ARE FAIR TO AND IN THE
BEST INTERESTS OF FRITZ AND ITS STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS THAT THE
STOCKHOLDERS OF FRITZ APPROVE THE FRITZ SHARE ISSUANCE PROPOSAL. THE BOARD OF
DIRECTORS OF FRITZ ALSO RECOMMENDS THAT ITS STOCKHOLDERS VOTE FOR THE ELECTION
OF DIRECTORS NAMED HEREIN.
THE BOARD OF DIRECTORS OF INTERTRANS HAS UNANIMOUSLY DETERMINED THAT THE
MERGER IS FAIR TO AND IN THE BEST INTERESTS OF INTERTRANS AND ITS SHAREHOLDERS
AND UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS OF INTERTRANS APPROVE THE
INTERTRANS MERGER PROPOSAL. THE BOARD OF DIRECTORS OF INTERTRANS ALSO RECOMMENDS
THAT ITS SHAREHOLDERS VOTE FOR THE ELECTION OF DIRECTORS NAMED HEREIN.
This Joint Proxy Statement/Prospectus also constitutes the prospectus of
Fritz under the Securities Act for the offering of Fritz Common Stock in
connection with the Merger.
The principal executive offices of Fritz are located at 706 Mission Street,
San Francisco, California 94103, and its telephone number at that location is
(415) 904-8360. The principal executive offices of Intertrans are located at 125
E. John Carpenter Freeway, Suite 900, Irving, Texas 75062, and its telephone
number at that location is (214) 830-8888.
VOTING AND PROXIES
DATE, TIME AND PLACE OF FRITZ ANNUAL MEETING AND INTERTRANS ANNUAL MEETING
The Fritz Annual Meeting will be held at [Bank of America NT & SA, 555
California Street], San Francisco, California, on May 23, 1995, at a.m.,
local time. The Intertrans Annual Meeting will be held at [the principal
executive offices of Intertrans located at 125 E. John Carpenter Freeway, Suite
900, Irving, Texas,] on May 23, 1995, at a.m., local time.
RECORD DATE AND OUTSTANDING SHARES
Stockholders of record of Fritz Common Stock at the close of business on
April 10, 1995 (the "Fritz Record Date") are entitled to notice of and to vote
at the Fritz Annual Meeting. On the Fritz Record Date, there were approximately
holders of record of Fritz Common Stock, and shares of Fritz Common
Stock were issued and outstanding. Each share of Fritz Common Stock is entitled
to one vote per share.
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Shareholders of record of Intertrans Common Stock at the close of business
on April , 1995 (the "Intertrans Record Date") are entitled to notice of and
to vote at the Intertrans Annual Meeting. On the Intertrans Record Date, there
were approximately holders of record of Intertrans Common Stock, and
shares of Intertrans Common Stock were issued and outstanding. Each
share of Intertrans Common Stock is entitled to one vote per share.
VOTING PROXIES
All properly executed proxies that are not revoked will be voted at the
Fritz Annual Meeting or the Intertrans Annual Meeting and at any postponements
or adjournments thereof in accordance with the instructions contained therein.
Forms of proxies for the Annual Meeting of Stockholders of Fritz and the Annual
Meeting of Shareholders of Intertrans are set forth at Appendices D and E,
respectively. Proxies containing no instructions regarding the proposal
specified in the form of proxy will be voted, in the case of the Fritz Annual
Meeting, in favor of the Fritz Share Issuance Proposal and in favor of the
election of directors named herein, and, in the case of the Intertrans Annual
Meeting, in favor of the approval of the Intertrans Merger Proposal and in favor
of the election of directors named herein. If any other matters are properly
brought before either the Fritz Annual Meeting or the Intertrans Annual Meeting,
all proxies will be voted in accordance with the judgment of the persons voting
the proxies. Either Annual Meeting may be adjourned, and additional proxies
solicited, if the vote necessary to approve a proposal has not been obtained.
Any adjournment of either Annual Meeting will require the affirmative vote of
the holders of at least a majority of the shares represented, whether in person
or by proxy, at such Annual Meeting (regardless of whether those shares
constitute a quorum).
A Fritz stockholder or an Intertrans shareholder who has executed and
returned a proxy may revoke such proxy at any time before it is voted at the
Fritz Annual Meeting or the Intertrans Annual Meeting, respectively, by
executing and returning a proxy bearing a later date, by filing written notice
of such revocation with the Secretary of Fritz or the Secretary of Intertrans,
as appropriate, stating that such proxy is revoked, or by attending the Fritz
Annual Meeting or the Intertrans Annual Meeting, as the case may be, and voting
in person.
FRITZ STOCKHOLDER VOTE REQUIRED
The approval of the Fritz Share Issuance Proposal requires the affirmative
vote of a majority of the shares of Fritz Common Stock represented in person or
by proxy at the Fritz Annual Meeting. Lynn C. Fritz, President, Chairman of the
Board and Chief Executive Officer of Fritz, holds in the aggregate in excess of
50% of the outstanding shares of Fritz Common Stock and, accordingly, will have
the power to cause the Fritz Share Issuance Proposal to be approved. Directors
shall be elected by a plurality of votes present in person or represented by
proxy at the Fritz Annual Meeting and entitled to vote on the election of
directors. The holders of a majority of the outstanding shares of Fritz Common
Stock, present in person or by proxy, will constitute a quorum for the
transaction of business at the Fritz Annual Meeting or any adjournment thereof.
Votes cast by proxy or in person at the Fritz Annual Meeting will be
tabulated by the election inspectors appointed for the meeting and will
determine whether or not a quorum is present. The election inspectors will treat
abstentions as shares that are present and entitled to vote for purposes of
determining the presence of a quorum but as unvoted for purposes of determining
the approval of any matter submitted to the stockholders for a vote. If a broker
indicates on the proxy that it does not have discretionary authority as to
certain shares to vote on a particular matter, those shares will not be
considered as present and entitled to vote with respect to that matter.
INTERTRANS SHAREHOLDER VOTE REQUIRED
Approval of the Intertrans Merger Proposal requires the affirmative vote of
the holders of two-thirds of the outstanding shares of Intertrans Common Stock.
Directors shall be elected by a plurality of votes present in person or
represented by proxy at the Intertrans Annual Meeting and entitled to vote on
the election of directors. The holders of a majority of the outstanding shares
of Intertrans Common Stock, present in person
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or by proxy, will constitute a quorum for the transaction of business at the
Intertrans Annual Meeting or any adjournment thereof.
Votes cast by proxy or in person at the Intertrans Annual Meeting will be
tabulated by the election inspectors appointed for the meeting and will
determine whether or not a quorum is present. The election inspectors will treat
abstentions as shares that are present and entitled to vote for purposes of
determining the presence of a quorum but as unvoted for purposes of determining
the approval of any matter submitted to the shareholders for a vote. If a broker
indicates on the proxy that it does not have discretionary authority as to
certain shares to vote on a particular matter, those shares will not be
considered as present and entitled to vote with respect to that matter.
SOLICITATION OF PROXIES; EXPENSES
Fritz and Intertrans will each bear their respective costs of solicitation
of proxies from their stockholders. Fritz will bear the cost of printing and
filing this Joint Proxy Statement/Prospectus and the Registration Statement of
which it is a part. In addition to solicitation by mail, the directors, officers
and employees of Fritz and Intertrans may solicit proxies from stockholders by
telephone, telegram or letter or in person for no additional compensation.
Brokers, nominees, fiduciaries and other custodians have been requested by Fritz
and Intertrans to forward solicitation material to the beneficial owners of
Fritz Common Stock and Intertrans Common Stock held of record by them. Such
custodians will be reimbursed by Fritz and Intertrans for their expenses.
Although it is not presently anticipated, Fritz or Intertrans may retain a
proxy solicitation firm to aid in the solicitation of proxies from its
stockholders. If such a firm or firms are retained, they would be paid customary
fees (which, in each case, are not expected to exceed $10,000) and reimbursement
for out-of-pocket expenses.
THE PROPOSED MERGER AND RELATED TRANSACTIONS
(RELATED TO PROPOSALS FOR BOTH FRITZ AND INTERTRANS)
DESCRIPTION OF MERGER AND PLAN OF REORGANIZATION
The detailed terms of, and conditions to, the Merger and certain related
transactions are contained in the Plan of Reorganization, a copy of which is
attached hereto as Appendix A. The statements made in this Joint Proxy
Statement/Prospectus with respect to the terms and conditions of the Merger and
the transactions related thereto are qualified in their entirety by reference to
the more complete information set forth in the Plan of Reorganization.
MATERIAL CONTACTS AND BOARD DELIBERATIONS
Over the past two years, representatives of Fritz and Intertrans have met
informally from time to time to discuss in general terms the potential synergies
and compatibilities between Intertrans and Fritz and the possibility of a
transaction between their respective companies at some point in the future.
The most recent series of discussions between representatives of the two
companies was initiated on November 23, 1994, when Carsten S. Andersen, the
President of Intertrans, met with Dennis L. Pelino, the Senior Vice President
and Chief Operating Officer of Fritz, to discuss their respective companies'
offices worldwide, information systems and other areas of mutual interest.
On November 30, 1994, another meeting was held between Messrs. Andersen,
Pelino and Lynn C. Fritz, the President, Chief Executive Officer and Chairman of
the Board of Fritz, to discuss key business issues.
On December 13, 1994, a meeting was held between Mr. Andersen and John H.
Johung, the Senior Vice President and Chief Financial Officer of Fritz, to
discuss financial aspects of a possible transaction between the companies, with
a view toward establishing a basis upon which the Intertrans Common Stock could
be valued.
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During the week of December 14, 1994, there were numerous telephone
conferences between Mr. Andersen and Mr. Johung concerning the possible
transaction.
On December 19, 1994, Sam N. Wilson, the Chairman of the Board of Directors
and Chief Executive Officer of Intertrans, and Messrs. Andersen, Fritz and
Johung met in San Francisco, California to review a presentation by Fritz
regarding a proposed business combination.
From January 5, 1995 through January 11, 1995, senior executives of
Intertrans and Fritz met several times to discuss various aspects of the
proposed transaction. In particular, Messrs. Andersen and Johung met on January
9 and 10, 1995.
On January 12, 1995, Mr. Fritz transmitted a letter to Mr. Wilson denoting
a proposed range of exchange ratios between Intertrans Common Stock and Fritz
Common Stock.
On January 13, 1995, a meeting was held between Messrs. Andersen and Pelino
at which time they exchanged document requests for due diligence purposes.
Beginning on or around January 14, 1995, documents were exchanged on an
ongoing basis between Intertrans and Fritz.
On January 17, 1995, a meeting was held in San Francisco, California
between Mr. Andersen and Mr. Fritz.
On January 18, 1995, there was a meeting of the Fritz Board of Directors at
which the Board was apprised of the discussions of a potential transaction with
Intertrans. At the same meeting, the Board approved further negotiations toward
a definitive agreement and formally retained Morgan Stanley as its financial
advisor in connection with the transaction.
On January 18, 1995, there was a meeting of the Intertrans Board of
Directors at which the Board was apprised of the discussions of a potential
transaction with Fritz. At the same meeting, the Board approved further
negotiations toward a definitive agreement and selected Scott & Stringfellow as
its financial advisor in connection with the potential transaction.
On January 18, 1995, Mr. Wilson made a telephone call to Mr. Fritz
informing him that the Intertrans Board of Directors had approved further
negotiations toward a definitive agreement and that it had selected Scott &
Stringfellow as its financial advisor in connection with the transaction.
From January 18 through January 20, 1995, due diligence meetings were held
in San Francisco, California between John R. Witt and Robert Stephens of
Intertrans and Mr. Johung, Steve Mattessich, Ron Marcillac, Walter Menezes and
Mark Sarago of Fritz.
On January 20, 1995, a meeting was held in San Francisco, California
between Mr. Andersen and Mr. Fritz.
On January 24, 1995, a meeting was held in Irving, Texas among Messrs.
Wilson, Witt and Andersen and representatives from Scott & Stringfellow.
On February 3, 1995, Messrs. Andersen and Pelino met to discuss
organizational issues.
On February 7, 1995, a meeting was held in Irving, Texas among
representatives from Scott & Stringfellow and Morgan Stanley followed by
subsequent discussions among representatives of Scott & Stringfellow, Morgan
Stanley, KPMG Peat Marwick LLP and Mr. Witt.
On February 8, 1995, a meeting was held in San Francisco, California among
Mr. Fritz and representatives of Morgan Stanley and Scott & Stringfellow.
Later that same day, a meeting was held in San Francisco, California among
representatives from Morgan Stanley and Scott & Stringfellow to discuss
valuation issues.
On February 8, 1995, a meeting was held in Irving, Texas among Mr. Witt and
representatives of Morgan Stanley and KPMG Peat Marwick LLP.
After February 8, 1995, there were numerous telephone conferences among
Messrs. Witt, Fritz, Johung, Wilson and Thomas W. Hughes of Winstead Sechrest &
Minick P.C., outside legal counsel to Intertrans, and a representative from each
of Morgan Stanley and Scott & Stringfellow.
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On February 10, 1995, a meeting of the Fritz Board of Directors was
convened to discuss the status of the negotiations with representatives
regarding the proposed transaction. At this meeting, Morgan Stanley presented
its financial analysis regarding the transaction. Representatives of Brobeck,
Phleger & Harrison, outside legal counsel to Fritz, described to the Board the
terms set forth in the draft acquisition agreement. Following these discussions,
the Fritz Board of Directors authorized the Fritz officers to continue with
their negotiations as to the terms of the Merger.
Between February 11, 1995 and February 12, 1995, there were numerous
telephone conferences among Messrs. Wilson, Witt, Hughes, Fritz and Johung and
representatives from each of Morgan Stanley and Scott & Stringfellow.
On February 13, 1995, the Fritz Board of Directors reconvened for a meeting
at which the current status of the negotiations relating to the transaction were
reviewed.
On February 14, 1995, there was a meeting of the Intertrans Board of
Directors to approve the Plan of Reorganization. Scott & Stringfellow informed
the Intertrans Board that in its opinion, and based upon the information then
available, the Merger Exchange Ratio was fair from a financial point of view to
the holders of Intertrans Common Stock, and responded to various questions
raised by members of the Board regarding such opinion. After considering the
terms of the proposed transaction and the opinion of Scott & Stringfellow, the
Intertrans Board determined that the consideration to be paid to Intertrans'
shareholders pursuant to the Plan of Reorganization was fair to Intertrans'
shareholders and that the proposed Merger was in the best interests of
Intertrans and its shareholders. The Intertrans Board then unanimously adopted
and approved the Plan of Reorganization and the Merger contemplated thereby.
Following approval by the Board, Intertrans executed and delivered the Plan of
Reorganization to Fritz.
On February 14, 1995, there was a meeting of the Fritz Board of Directors.
Morgan Stanley informed the Fritz Board of its opinion that the Merger Exchange
Ratio was fair from a financial point of view to Fritz, and responded to various
questions raised by members of the Board regarding such opinion. After
considering the terms of the proposed transaction and the opinion of Morgan
Stanley, the Fritz Board determined that the Plan of Reorganization was fair to
Fritz stockholders and that the proposed Merger was in the best interests of
Fritz and its stockholders. The Fritz Board then unanimously adopted and
approved the Plan of Reorganization and the Merger contemplated thereby.
Following approval by the Board, Fritz executed and delivered the Plan of
Reorganization to Intertrans.
On February 14, 1995, Intertrans and Fritz issued a joint press release
announcing the execution of the Plan of Reorganization.
FRITZ REASONS FOR THE MERGER; RECOMMENDATION OF THE BOARD OF DIRECTORS
The Fritz Board of Directors believes that the Merger provides benefits to
Fritz and its stockholders. In reaching its determination to recommend approval
of the Merger and the issuance of shares of Fritz Common Stock in connection
therewith, the Fritz Board considered a number of factors, including, but not
limited to, the following:
(i) The terms and conditions of the Plan of Reorganization, a copy of
which is attached hereto as Appendix A.
(ii) The addition of the Intertrans business to its own adds
significantly to Fritz's strength in the airfreight forwarding
market.
(iii) The Merger enhances Fritz's position as a freight consolidator
through economies of scale in consolidating shipments.
(iv) The addition of Intertrans' customer base complements Fritz's,
thereby creating a larger customer base which will present greater
opportunities for marketing products of the combined company.
(v) Fritz and Intertrans have complementary geographic competencies. The
combination strengthens Fritz's geographical presence.
(vi) A combination with Intertrans enhances the growth prospects of Fritz
in a consolidating freight forwarding environment.
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(vii) A combination with Intertrans presents opportunities for further
operating leverage by recognizing economies of scale in operating
costs, thereby presenting opportunities for increased operating
margins.
(viii) Intertrans has a strong technology base which is under development
to enhance its global air freight operations. This technology is
highly complementary with the development plans Fritz has undertaken
with regard to international information systems.
(ix) Intertrans has a highly regarded, experienced management team which
is complementary to Fritz's management team.
(x) Fritz's management and Fritz's financial advisor, Morgan Stanley,
made presentations regarding the Merger to the Board.
(xi) Morgan Stanley delivered an opinion, which is attached hereto as
Appendix B, that the Merger Exchange Ratio was fair from a financial
point of view to Fritz.
The Fritz Board also considered the following potentially negative factors:
(i) the charges expected to be incurred, primarily in the second quarter of
1995, in connection with the Merger, including costs of integrating the business
and transaction expenses arising from the Merger, will have an adverse effect on
operating results; and (ii) the risk that benefits sought to be achieved in the
Merger will not be realized, which may adversely affect the combined company's
prospects, operations and margins. See "Risk Factors -- Uncertainty as to Future
Financial Results" and "-- Merger Expenses."
In reaching its decision, the Fritz Board considered these factors as a
whole and did not attempt to assign relative weights to specific factors. AFTER
TAKING INTO CONSIDERATION A WIDE VARIETY OF FACTORS, BOTH POSITIVE AND NEGATIVE,
THE BOARD OF DIRECTORS OF FRITZ, BY UNANIMOUS VOTE, HAS DETERMINED THAT THE
MERGER AND THE TRANSACTIONS RELATED THERETO ARE FAIR TO AND IN THE BEST
INTERESTS OF THE STOCKHOLDERS OF FRITZ. AFTER CAREFUL CONSIDERATION, THE FRITZ
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE FRITZ
SHARE ISSUANCE PROPOSAL.
INTERTRANS REASONS FOR THE MERGER; RECOMMENDATION OF THE BOARD OF DIRECTORS
On February 14, 1995, the Board of Directors of Intertrans determined that
the Merger was fair to and in the best interests of Intertrans' shareholders. In
making such determination, the Intertrans Board considered various factors,
including, without limitation, the following:
(i) The relationship between the price to be paid pursuant to the Plan
of Reorganization and the trading history of shares of Intertrans
Common Stock, including the fact that the consideration to be
received by the shareholders represents a significant premium over
the lowest closing price of the shares of Intertrans' Common Stock
during the two weeks preceding Intertrans' announcement of the
Merger;
(ii) The terms and conditions of the Plan of Reorganization;
(iii) The Intertrans Board's familiarity with the business, assets,
earnings, properties, results of operations, financial condition and
prospects of Intertrans and Fritz and the nature of the industry in
which Intertrans and Fritz compete;
(iv) The Intertrans Board's perception that a combination with Fritz
would enhance Intertrans' position as a freight consolidator through
economies of scale in consolidating shipments;
(v) The Intertrans Board's perception that a combination with Fritz
would create a financially strong company able to provide customers
worldwide with the full range of transportation logistics and
integrated systems solutions;
(vi) The Intertrans Board's perception of Fritz as a well-managed,
competitive and financially strong company, with extensive
experience in the air and ocean freight forwarding and
transportation logistics industry;
(vii) The Intertrans Board's perception, based on discussions with Fritz's
management, that Fritz has the ability to assist Intertrans in
achieving its strategic objectives, including positioning Intertrans
for growth in a consolidating freight forwarding environment;
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(viii) The Board's perception that Intertrans and Fritz each use
sophisticated information systems that are highly complementary and
that will position the combined company as a leader in total
logistics and integrated systems solutions;
(ix) The Intertrans Board's perception that a combination with Fritz
presents opportunities for further operating leverage by recognizing
economies of scale in operating costs, thus presenting opportunities
for increased operating margins;
(x) The Board's belief that the Plan of Reorganization and the
transactions contemplated therein represented the best determinable
value for Intertrans;
(xi) The fact that Intertrans and Fritz have complementary geographic
competencies;
(xii) The presentations of Intertrans' management and Scott & Stringfellow
to the Intertrans Board regarding the Merger; and
(xiii) The oral opinion of Scott & Stringfellow confirmed in writing on
February 14, 1995, that the Merger Exchange Ratio was fair, from a
financial point of view, to holders of Intertrans Common Stock.
The Intertrans Board also considered the following potentially negative
factors: (i) the charges expected to be incurred, primarily in the second
quarter of 1995, in connection with the Merger, including costs of integrating
the business and transaction expenses arising from the Merger, will have an
adverse effect on operating results; (ii) the risk that benefits sought to be
achieved in the Merger will not be realized, which may adversely affect the
combined company's prospects, operations and margins; and (iii) the possibility
that the Merger might not be consummated and the potential adverse effects of
such a result on (a) the market price for Intertrans Common Stock and (b)
Intertrans' relationships with key management personnel, its work force
generally, its customers and others. In the Intertrans Board's view, these
considerations were not sufficient, either individually or collectively, to
outweigh the advantages of the proposed combination in the manner in which it
was proposed. See "Risk Factors -- Uncertainty as to Future Financial Results"
and "-- Merger Expenses."
As to the possibility that the Merger might foreclose other options that
could be viewed as preferable, the Intertrans Board was not aware of any such
proposals, and the terms of the Plan of Reorganization are such that legitimate
proposals could be considered by the Intertrans Board at any time, subject to
certain limitations that were acceptable to the Intertrans Board. See "-- Other
Offers."
In evaluating the fairness of the Merger to the shareholders of Intertrans,
the Intertrans Board considered the interests of the shareholders as a whole and
did not give special consideration to any individual shareholder or group of
shareholders. In view of the wide variety of factors considered in connection
with the evaluation of the Merger, the Intertrans Board did not find it
practicable to assign relative weights to the specific factors considered in
reaching its conclusion.
THE INTERTRANS BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AND
THE TRANSACTIONS RELATED THERETO AND HAS DETERMINED THAT THEY ARE FAIR TO AND IN
THE BEST INTERESTS OF INTERTRANS AND ITS SHAREHOLDERS. AFTER CAREFUL
CONSIDERATION, THE INTERTRANS BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE FOR THE INTERTRANS MERGER PROPOSAL.
FINANCIAL ADVISORS
Fritz
Fritz retained Morgan Stanley & Co. Incorporated to act as its financial
advisor in connection with the Merger. Morgan Stanley was selected by the Fritz
Board to act as Fritz's financial advisor based on Morgan Stanley's
qualifications, expertise and reputation, as well as Morgan Stanley's investment
banking relationship and familiarity with Fritz.
Morgan Stanley has rendered to the Fritz Board its written opinion dated
February 14, 1995 (the "Morgan Stanley Opinion") that, as of such date, based
upon the various considerations set forth in the
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opinion, the Merger Exchange Ratio was fair from a financial point of view to
Fritz. No limitations were imposed by the Fritz Board upon Morgan Stanley with
respect to the investigations made or procedures followed by it in rendering its
fairness opinion.
The full text of the Morgan Stanley Opinion which sets forth assumptions
made, matters considered and limitations on the review undertaken, is attached
as Appendix B to this Joint Proxy Statement/Prospectus. Fritz stockholders are
urged to read the opinion carefully and in its entirety. The Morgan Stanley
Opinion is directed only to the fairness of the Merger Exchange Ratio to Fritz
from a financial point of view and does not constitute a recommendation to any
stockholder of Fritz as to how such stockholder should vote on the Fritz Share
Issuance Proposal. The summary of the Morgan Stanley Opinion set forth in this
Joint Proxy Statement/Prospectus is qualified in its entirety by reference to
the full text of such opinion.
In rendering its opinion, Morgan Stanley, among other things: (i) analyzed
certain publicly available financial statements and other information of
Intertrans; (ii) analyzed certain internal financial statements and other
financial and operating data concerning Intertrans prepared by the management of
Intertrans; (iii) analyzed certain financial projections prepared by the
management of Intertrans; (iv) discussed the past and current operations and
financial condition and the prospects of Intertrans with senior executives of
Intertrans; (v) analyzed certain publicly available financial statements and
other information of Fritz; (vi) analyzed certain internal financial statements
and other financial and operating data concerning Fritz prepared by the
management of Fritz; (vii) analyzed certain financial projections prepared by
the management of Fritz; (viii) discussed the past and current operations and
financial condition and the prospects of Fritz with senior executives of Fritz;
(ix) analyzed the pro forma impact of the Merger on Fritz's earnings per share
and consolidated capitalization; (x) reviewed the reported prices and trading
activity for the Intertrans Common Stock and the Fritz Common Stock; (xi)
compared the financial performance of Intertrans and the prices and trading
activity of the Intertrans Common Stock with that of certain other comparable
publicly-traded companies and their securities; (xii) compared the financial
performance of Fritz and the prices and trading activity of the Fritz Common
Stock with that of certain other comparable publicly traded companies and their
securities; (xiii) reviewed the financial terms, to the extent publicly
available, of certain comparable merger and acquisition transactions; (xiv)
participated in discussions and negotiations among representatives of Intertrans
and Fritz and their financial and legal advisors; (xv) reviewed the Plan of
Reorganization; and (xvi) performed such other analyses as Morgan Stanley deemed
appropriate.
In rendering its opinion, Morgan Stanley assumed and relied upon without
independent verification the accuracy and completeness of the information
reviewed by it for purposes of rendering its opinion. With respect to the
financial projections, Morgan Stanley assumed that they were reasonably prepared
on bases reflecting the best currently available estimates and judgments of the
future financial performance of Intertrans and Fritz, respectively. Morgan
Stanley did not make any independent valuation or appraisal of the assets or
liabilities of Intertrans or Fritz, nor was it furnished with any such
appraisals. The Morgan Stanley Opinion states that it is necessarily based on
economic, market and other conditions as in effect on, and the information made
available to Morgan Stanley as of, the date of such opinion.
The following is a brief summary of certain financial analyses performed by
Morgan Stanley and reviewed with the Fritz Board in connection with the Morgan
Stanley Opinion:
Comparative Stock Price Performance: As part of its analysis, Morgan
Stanley reviewed the recent stock market performance of the Fritz Common Stock
and the Intertrans Common Stock and compared such performance to that of a group
of freight forwarding companies including Harper Group, Inc., Expeditors
International of Washington, Inc. and Air Express International Corporation (the
"Freight Forwarding Comparables"). Morgan Stanley observed that over the 12
months preceding February 9, 1995, Fritz outperformed the Freight Forwarding
Comparables by 46% and outperformed Intertrans by 46%.
Exchange Ratio Analysis: Morgan Stanley also reviewed the ratios of the
prices of Intertrans Common Stock to Fritz Common Stock over various periods
ended February 3, 1995. The ratios of closing stock prices of Intertrans Common
Stock and Fritz Common Stock for the various periods ending February 3, 1995
were: 0.389 for the previous 12 months; 0.336 for the previous 6 months; 0.281
for the past 30 days; 0.277 for the past 10 days; and 0.284 for February 3,
1995. Morgan Stanley observed that the Merger Exchange Ratio of 0.380 to 0.390
represented a range of discounts and premia of (2.3)% to 0.3%, 13.2% to 16.2%,
35.1% to
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38.7%, 37.3% to 40.9% and 34.0% to 37.6%, respectively, over the aforementioned
ratios of Intertrans to Fritz Common Stock prices.
Peer Group Comparison: Morgan Stanley compared certain financial
information of Intertrans to a group of publicly traded companies including the
Freight Forwarding Comparables and Fritz. Such financial information included,
among other things, market valuation and market value as a multiple of earnings.
In particular, such analysis showed that, based on the closing price for the
Fritz Common Stock on February 9, 1995, and the closing price for the Intertrans
Common Stock on February 3, 1995 (the date before the unusual trading activity
in the Intertrans Common Stock), Intertrans traded at 13.5 times forecasted
earnings for calendar year 1995 and Fritz traded at 23.3 times forecasted
earnings for calendar year 1995 (in each case based on a consensus of research
analysts' estimates). Based on closing prices as of February 9, 1995, and
research analysts' estimated earnings for calendar year 1995, Harper Group, Inc.
traded at 13.8 times, Expeditors International of Washington, Inc. traded at
16.5 times and Air Express International Corporation traded at 14.9 times.
Contribution Analysis: Morgan Stanley analyzed the pro forma contribution
of each of Intertrans and Fritz to the combined company if the Merger were to be
consummated. Such analysis was based on financial data provided by the
managements of Intertrans and Fritz. Such analysis showed that, for calendar
year 1995 adjusting Intertrans' statistics, Intertrans would contribute
approximately 23%, 29% and 32% of the net revenues, EBIT (earnings before
interest and taxes) and net income of the combined company, respectively. Morgan
Stanley observed that the Merger Exchange Ratio of 0.380 to 0.390 would result
in a pro forma ownership for Intertrans shareholders in the combined company of
29.0% to 29.5%, respectively.
Analysis of Selected Precedent Transactions: Morgan Stanley reviewed the
following nine stock-for-stock transactions which, it observed, were not
directly comparable to the Merger: the mergers of Martin Marietta Corporation
with Lockheed Corporation; BISYS Group, Inc. with Concord Holding Corporation;
Sybase, Inc. with Powersoft Corporation; CCB Financial Corporation with Security
Capital Bancorp; Avid Technology, Inc. with Digidesign, Inc.; Intuit, Inc. with
ChipSoft, Inc.; Arrow Electronics, Inc. with Anthem Electronics, Inc.; Wellfleet
Communications, Inc. with SynOptics Communications, Inc.; and Adobe Systems,
Inc. with Aldus Corporation. The analysis showed transaction exchange ratios
resulting, on average, in a premium of approximately 34% over the exchange
ratios as calculated over various time periods. Morgan Stanley also noted that,
excluding the mergers of Martin Marietta Corporation with Lockheed Corporation,
Intuit with ChipSoft and Wellfleet with Synoptics, the average premium increased
to 40.3%. Morgan Stanley observed that the Merger Exchange Ratio of 0.380 to
0.390 resulted in average premia of 30.0% to 33.4% over the ratios of Intertrans
to Fritz Common Stock prices over various time periods.
Pro Forma Analysis of the Merger: Morgan Stanley analyzed certain pro forma
effects of the Merger on the earnings and capitalization of Fritz. These
analyses were based on certain forecasts for calendar year 1995 provided by both
Intertrans' and Fritz's senior management and for calendar year 1996 based on
Morgan Stanley and consensus research analysts' estimates regarding the
financial performance of Intertrans and Fritz, respectively. Based on such
analyses, Morgan Stanley computed the resulting pickup to Fritz's earnings per
share for the fiscal years ending December 31, 1995 and 1996, pursuant to the
Merger before taking into account any cost savings and other synergies that may
be achieved if the Merger were consummated and before certain nonrecurring
costs. Such analyses showed that the transaction would be additive to Fritz's
earnings per share in 1995 and 1996.
Discounted Cash Flow Analysis: Morgan Stanley performed a discounted cash
flow analysis of Intertrans based on certain financial projections prepared by
Intertrans' management for the fiscal year ended 1995 and extrapolated to 1999
based on certain Morgan Stanley assumptions. Morgan Stanley discounted the
unlevered free cash flows (net income plus depreciation and amortization plus
deferred taxes plus after-tax net interest less capital expenditures less
investment in working capital) over the forecast period at a range of discount
rates of 14% to 15%. The sum of the present values of such free cash flows was
then added to the present value of Intertrans' terminal value, computed using a
forward multiple range of 1999 earnings of 15 to 17 times, and discounted at the
aforementioned range of discount rates. Based on this analysis, Morgan Stanley
calculated per share values for Intertrans ranging from approximately $17.75 to
$20.04, based on Intertrans' fully diluted shares outstanding.
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In connection with its review of the Merger by the Fritz Board, Morgan
Stanley performed a variety of financial and comparative analyses for purposes
of its opinion. The summary of the Morgan Stanley analyses set forth above does
not purport to be a complete description of the presentation by Morgan Stanley
to the Fritz Board. Morgan Stanley believes that its analyses and the summary
set forth above must be considered as a whole and that selecting portions of its
analyses, or of the above summary, could create an incomplete view of the
process underlying the analyses performed by Morgan Stanley in connection with
the preparation of its opinion letter. In performing its analyses, Morgan
Stanley made numerous assumptions with respect to industry performance, general
business and economic conditions and other matters, many of which are beyond the
control of Fritz or Intertrans. The analyses performed by Morgan Stanley are not
necessarily indicative of actual values or actual future results, which may be
significantly more or less favorable than suggested by such analyses. In
addition, analyses relating to value of businesses do not purport to be
appraisals or to reflect the prices at which businesses actually may be sold.
Fritz retained Morgan Stanley based upon its experience and expertise.
Morgan Stanley is an internationally recognized investment banking and advisory
firm. Morgan Stanley, as part of its investment banking business, is regularly
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for corporate and other purposes. Morgan Stanley makes a market
in Fritz Common Stock and may continue to provide investment banking services to
Fritz in the future. In the course of its market-making and other trading
activities, Morgan Stanley may, from time to time, have a long or short position
in, and buy and sell, securities of Fritz and Intertrans. Morgan Stanley and its
affiliates have provided financial advisory and financing services to Fritz
since 1992 and have received customary fees in connection with these services,
including the initial public offering of Fritz in October, 1992 and a secondary
offering in November, 1994.
Pursuant to a letter agreement dated as of January 18, 1995 between Fritz
and Morgan Stanley, if the Merger is successfully consummated, Fritz will pay
Morgan Stanley a transaction fee of $1,750,000. Fritz has also agreed to
reimburse Morgan Stanley for its out-of-pocket expenses and to indemnify Morgan
Stanley and its affiliates, their respective directors, officers, agents and
employees and each person, if any, controlling Morgan Stanley, or any of its
affiliates against certain liabilities and expenses, including liabilities under
federal securities laws incurred in connection with its services.
Intertrans
Intertrans retained Scott & Stringfellow to act as its financial advisor in
connection with a possible merger with Fritz and to render a written opinion to
the Intertrans Board as to the fairness, from a financial point of view, of the
Merger Exchange Ratio to the holders of Intertrans Common Stock. Scott &
Stringfellow rendered to the Intertrans Board a written opinion dated February
14, 1995 (the "Scott & Stringfellow Opinion"), that as of that date the Merger
Exchange Ratio was fair from a financial point of view to the holders of
Intertrans Common Stock.
The full text of the Scott & Stringfellow Opinion, which sets forth certain
assumptions made, matters considered, and limitations of the review undertaken,
attached hereto as Appendix C to this Joint Proxy Statement/Prospectus, is
incorporated herein by reference and should be read carefully and in its
entirety in connection with this Joint Proxy Statement/Prospectus. The summary
of the Scott & Stringfellow Opinion set forth in this Joint Proxy
Statement/Prospectus is qualified in its entirety by reference to the opinion.
The Scott & Stringfellow Opinion is directed only to the fairness, from a
financial point of view, as of the date of the opinion, of the Merger Exchange
Ratio to the holders of Intertrans Common Stock and does not constitute a
recommendation to any holders of Intertrans Common Stock as to how such holders
of Intertrans Common Stock should vote with respect to the Merger or with
respect to any other matter.
In developing its opinion, Scott & Stringfellow reviewed and analyzed,
among other things: (i) the Plan of Reorganization dated February 14, 1995; (ii)
Intertrans Annual Reports to shareholders for the four years ended October 31,
1993 and Annual Reports on Form 10-K and related audited financial statements
for the five years ended October 31, 1994; (iii) Fritz's Annual Reports to
shareholders, Annual Reports on Form
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10-K and related audited financial statements for the two years ended December
31, 1993 and Fritz's audited financial statements for the two years ended
December 31, 1991; (iv) Fritz's Quarterly Reports on Form 10-Q and related
unaudited financial statements for the periods ended March 31, 1994, June 30,
1994, and September 30, 1994; (v) Fritz's draft unaudited financial statements
for the year ended December 31, 1994; (vi) certain other internal information,
primarily financial in nature, concerning the business and operations of
Intertrans furnished to Scott & Stringfellow by Intertrans for purposes of its
analysis; (vii) certain other internal information, primarily financial in
nature, concerning the business and operations of Fritz furnished to Scott &
Stringfellow by Fritz for purposes of its analysis; (viii) certain publicly
available information concerning the estimates of the future financial
performance of Fritz prepared by financial analysts unaffiliated with either
Intertrans or Fritz (the "Analysts' Estimates"), (ix) certain publicly available
information regarding the trading market for the common stocks of Intertrans and
Fritz and the price ranges within which the respective stocks have traded; (x)
certain publicly available information with respect to certain other freight
forwarding companies and the trading markets for certain of such other
companies' securities; and (xi) certain publicly available and other information
concerning the nature and terms of certain other transactions that Scott &
Stringfellow considered relevant to its inquiry. Scott & Stringfellow also met
with certain officers and employees of Intertrans and Fritz to discuss the
foregoing as well as other matters Scott & Stringfellow believed relevant to its
inquiry. Finally, Scott & Stringfellow conducted such other studies, analyses
and investigations and considered such other information as it deemed
appropriate.
In conducting its review and arriving at its opinion, Scott & Stringfellow
relied upon and assumed the accuracy and completeness of information furnished
to it by and on behalf of Intertrans and Fritz or publicly available. Scott &
Stringfellow has not attempted independently to verify such information, nor has
Scott & Stringfellow made any independent appraisal of the assets or liabilities
of Intertrans or Fritz. With respect to financial projections, Scott &
Stringfellow assumed that they were reasonably prepared on bases reflecting the
best currently available estimates and judgments of future financial performance
of Intertrans and Fritz. In addition, although Scott & Stringfellow discussed
the prospects of Intertrans and Fritz with certain representatives of their
respective managements, Scott & Stringfellow was provided with only limited
financial projections and other similar analyses prepared by Fritz's management
with respect to Fritz. Accordingly, in rendering its opinion, Scott &
Stringfellow advised the Intertrans Board that it also relied upon the Analysts'
Estimates in lieu of such financial projections or other similar analyses with
respect to Fritz. The Scott & Stringfellow Opinion was necessarily based upon
market, economic and other conditions as they existed and could be evaluated on
the date of the opinion and the information made available to Scott &
Stringfellow through the date of the opinion. No limitations or instructions
were imposed by Intertrans with respect to the investigation made or the
procedures followed by Scott & Stringfellow in connection with rendering its
opinion.
In connection with rendering its opinion to the Intertrans Board, Scott &
Stringfellow performed a variety of financial analyses. The summary of the
analyses, as set forth below, does not purport to be a complete description of
such analyses. The preparation of fairness opinions is a complex process
involving various determinations as to the most appropriate and relevant methods
of financial analysis and the application of those methods in particular
circumstances and, therefore, such an opinion is not readily susceptible to
partial analysis or summary description. Moreover, the evaluation of the
fairness, from a financial point of view, as of the date of the opinion, of the
Merger Exchange Ratio to holders of Intertrans Common Stock was to some extent a
subjective one based on the experience and judgment of Scott & Stringfellow and
not merely the result of mathematical analysis of financial data. Accordingly,
notwithstanding the separate factors summarized below, Scott & Stringfellow
believes that its analyses must be considered as a whole and that selecting
portions of its analyses and of the factors considered by it, without
considering all analyses and factors, could create an incomplete view of the
processes underlying the analyses conducted by Scott & Stringfellow and its
opinion.
The ranges of valuations resulting from any particular analysis described
below should not be taken to be Scott & Stringfellow's view of the actual value
of Intertrans or Fritz. Scott & Stringfellow's analyses involved numerous
assumptions with respect to industry performance, business and economic
conditions and other matters, many of which are beyond the control of Intertrans
or Fritz. Any estimates contained in the analyses
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performed by Scott & Stringfellow are not necessarily indicative of actual
values or future results, which may be significantly more or less favorable than
suggested by such analyses. In addition, analyses relating to the values of
businesses do not purport to be appraisals or to reflect the prices at which
businesses actually may be sold. Because such estimates involve complex
considerations and are inherently subject to uncertainty, Scott & Stringfellow
does not assume responsibility for their accuracy.
The Scott & Stringfellow Opinion is just one of the factors taken into
consideration by the Intertrans Board in determining to approve the Plan of
Reorganization. The Scott & Stringfellow Opinion did not address the relative
merits of the Merger as compared to any alternative business strategies that
might exist for Intertrans, nor did it address the effect of any other business
combination in which Intertrans might engage.
The following is a summary of the analyses performed by Scott &
Stringfellow in connection with its opinion.
Historical Common Stock and Valuation Multiple Data. Scott & Stringfellow
reviewed stock price and trading volume data for Intertrans and Fritz for their
respective fiscal 1993 and fiscal 1994 years, as well as for their fiscal 1995
years through February 13, 1995. For the 12 months ended February 3, 1995,
Intertrans Common Stock's closing prices ranged from $12.00 to $15.50 per share
and its average daily trading volume was approximately 42,000 shares. Intertrans
Common Stock closed at a price of $13.75 per share on Friday, February 3, 1995.
On February 6, 1995, Intertrans Common Stock closed at a price of $15.125 per
share on trading volume which was approximately four times the 12 month trailing
average daily trading volume. From February 6 to February 10, 1995, Intertrans
Common Stock traded from 132,500 to 266,000 shares per day, and its closing
stock prices ranged from $15.125 to $16.625 per share. Prior to February 8,
1995, Intertrans Common Stock had never closed at a price higher than $15.50 per
share. Accordingly, Scott & Stringfellow used the closing price of Intertrans
Common Stock on February 3, 1995, rather than on a subsequent date, as a base
for calculating various Intertrans Common Stock prices to be used in calculating
premiums and in other analyses.
Scott & Stringfellow calculated that, from the beginning of Intertrans'
1993 fiscal year through February 3, 1995, Intertrans Common Stock traded within
the following valuation multiple ranges: (i) 12.4x to 17.8x current year
earnings per share; (ii) 9.4x to 13.3x current year after-tax cash flow per
share; (iii) 1.5x to 2.2x current year net revenue per share; and (iv) 1.9x to
2.6x ending stockholders' equity per share. Based on the closing price of
Intertrans Common Stock of $13.75 on February 3, 1995, and on fiscal 1995
projections provided by Intertrans, Intertrans Common Stock was trading at
multiples of 13.8x earnings per share, 10.5x after-tax cash flow per share, and
1.7x net revenue per share as of that date.
For the 12 months ended February 13, 1995, Fritz Common Stock's closing
prices ranged from $28.25 to $51.00 per share. Scott & Stringfellow calculated
that, from the beginning of Fritz's 1993 fiscal year through February 13, 1995,
Fritz Common Stock traded within the following valuation multiple ranges: (i)
15.3x to 27.6x current year earnings per share; (ii) 10.7x to 19.3x current year
after-tax cash flow per share; (iii) 1.2x to 2.2x current year net revenue per
share; and (iv) 3.0x to 8.3x ending stockholders' equity per share. Based on the
closing price of Fritz Common Stock of $49.00 on February 13, 1995, and on 1995
projections provided by Fritz, Fritz Common Stock was trading at multiples of
23.3x earnings per share, 16.3x after-tax cash flow per share, and 1.8x net
revenue per share as of that date.
Comparative Growth Records. Scott & Stringfellow analyzed the growth of net
revenue, operating income and earnings per share of Intertrans and Fritz from
their respective fiscal 1991 to fiscal 1994 years, based on historical data, as
well as the projected growth of these income statement items in fiscal 1995
based on the internal budgets of Intertrans and Fritz. In fiscal 1992, fiscal
1993, and fiscal 1994: (i) Intertrans net revenue increased 34%, 7%, and 19%,
respectively, versus the prior year; (ii) Intertrans operating income increased
18%, 11%, and 20%, respectively, versus the prior year; and (iii) Intertrans
earnings per share increased 10%, 10%, and 16%, respectively, versus the prior
year. The compound annual growth rates of Intertrans net revenue, operating
income, and earnings per share from fiscal 1991 to fiscal 1994 were 19%, 16%,
and 12%, respectively. The anticipated growth rates of Intertrans net revenue,
operating income, and earnings per share in fiscal 1995 versus fiscal 1994,
based on Intertrans internal budgets, were 15%, 19%, and 15%, respectively.
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In 1992, 1993, and 1994: (i) Fritz net revenue increased 17%, 20%, and 44%,
respectively, versus the prior year; (ii) Fritz operating income increased 37%,
24%, and 48%, respectively, versus the prior year; and (iii) Fritz earnings per
share increased 66%, 14%, and 29%, respectively, versus the prior year.
(Supplemental pro forma earnings per share of $1.16 were used for 1992.
Supplemental pro forma earnings per share reflects the issuance of shares to
fund the payment of certain undistributed taxable S Corporation earnings to
Fritz's former sole stockholder upon the termination of Fritz's status as an S
Corporation.) The compound annual growth rates of Fritz net revenue, operating
income, and earnings per share from 1991 to 1994 were 27%, 36%, and 34%,
respectively. The projected growth rates of Fritz net revenue, operating income,
and earnings per share in 1995 versus 1994, based on Fritz projections, were
37%, 41%, and 24%, respectively.
Exchange Ratio and Premium Analyses. Scott & Stringfellow calculated the
nominal value range of Fritz Common Stock to be received for each share of
Intertrans Common Stock, based on the Average Fritz Trading Price ranging from
$41.00 to $55.00 per share, to be from $15.99 to $20.90. Based on multiplying
the closing price of Fritz Common Stock as of February 13, 1994 of $49.00 per
share times the resulting Merger Exchange Ratio of 0.380, the implied nominal
value (the "Nominal Value") of Fritz Common Stock to be received in exchange for
each share of Intertrans Common Stock was $18.62.
Scott & Stringfellow calculated the premium to holders of Intertrans Common
Stock of the Nominal Value to the closing stock prices of Intertrans Common
Stock on February 3, 1995 and on the date one month prior thereto, as well as to
the average closing stock price of Intertrans Common Stock during the 12 months
ended February 3, 1995, and to the high and low closing prices of Intertrans
Common Stock during the 12 months ended February 3, 1995. Based upon the Nominal
Value, Scott & Stringfellow calculated premiums to holders of Intertrans Common
Stock equal to: 35% of the closing stock price of Intertrans Common Stock of
$13.75 on February 3, 1995; 47% of the closing stock price of Intertrans Common
Stock one month earlier; 40% of the average closing stock price of Intertrans
Common Stock during the 12 months ended February 3, 1995; and 20% and 55% of the
high and low closing prices, respectively, of Intertrans Common Stock during the
12 months ended February 3, 1995.
Scott & Stringfellow calculated the premium to holders of Intertrans Common
Stock of the "Minimum Nominal Value" (represented by multiplying an Average
Fritz Trading Price of $41.00 per share times the resulting Merger Exchange
Ratio of 0.390) to the closing stock prices of Intertrans Common Stock on
February 3, 1995 and on the date one month prior thereto, as well as to the
average closing stock price of Intertrans Common Stock during the 12 months
ended February 3, 1995, and to the high and low closing prices of Intertrans
Common Stock during the 12 months ended February 3, 1995. Based upon the Minimum
Nominal Value, Scott & Stringfellow calculated premiums to holders of Intertrans
Common Stock equal to: 16% of the closing stock price of Intertrans Common Stock
on February 3, 1995; 27% of the closing stock price of Intertrans Common Stock
one month earlier; 20% of the average closing stock price of Intertrans Common
Stock during the 12 months ended February 3, 1995; and 3% and 33% of the high
and low closing prices, respectively, of Intertrans Common Stock during the 12
months ended February 3, 1995.
Scott & Stringfellow calculated the premium to holders of Intertrans Common
Stock of the "Maximum Nominal Value" (represented by multiplying an Average
Fritz Trading Price of $55.00 per share times the resulting Merger Exchange
Ratio of 0.380) to the closing stock prices of Intertrans Common Stock on
February 3, 1995 and on the date one month prior thereto, as well as to the
average closing stock price of Intertrans Common Stock during the 12 months
ended February 3, 1995, and to the high and low closing prices of Intertrans
Common Stock during the 12 months ended February 3, 1995. Based upon the Maximum
Nominal Value, Scott & Stringfellow calculated premiums to holders of Intertrans
Common Stock equal to: 52% of the closing stock price of Intertrans Common Stock
of $13.75 on February 3, 1995; 66% of the closing stock price of Intertrans
Common Stock one month earlier; 57% of the average closing stock price of
Intertrans Common Stock during the 12 months ended February 3, 1995; and 31% and
74% of the high and low closing prices, respectively, of Intertrans Common Stock
during the 12 months ended February 3, 1995.
Scott & Stringfellow also calculated multiples of the Nominal Value, the
Minimum Nominal Value and the Maximum Nominal Value to Intertrans projected
fiscal 1995 earnings per share, after-tax cash flow per share, and net revenue
per share, and to Intertrans October 31, 1994 shareholders' equity per share
(adjusted
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for two acquisitions made by Intertrans following October 31, 1994). The results
of the calculations were multiples of the Nominal Value, the Minimum Nominal
Value, and the maximum Nominal Value to: (i) Intertrans' projected fiscal 1995
earnings per share of 18.6x, 16.0x and 20.9x, respectively; (ii) Intertrans'
projected fiscal 1995 after-tax cash flow per share of 14.2x, 12.2x and 16.0x,
respectively; (iii) Intertrans' projected fiscal 1995 net revenue per share of
2.3x, 2.0x and 2.6x, respectively; and (iv) Intertrans' October 31, 1994
shareholders' equity per share (adjusted for two acquisitions made by Intertrans
following October 31, 1994) of 3.0x, 2.6x, and 3.4x, respectively.
Analysis of Contribution and Ownership of the Merger. Scott & Stringfellow
performed an analysis of Intertrans' and Fritz's respective pro forma
contributions to the combined company of net revenue, operating income, EBITDA
(earnings before interest, taxes, depreciation and amortization), net income and
market capitalization, if the Merger were to be consummated. Income statement
calculations were based on a projected calendar 1995 income statement provided
by Fritz and on a projected fiscal year 1995 income statement (adjusted to a
calendar year period) provided by Intertrans. Closing stock prices of Intertrans
Common Stock as of February 3, 1995 and Fritz Common Stock as of February 13,
1995, and outstanding shares of Common Stock and options to purchase Common
Stock as of December 31, 1994 as provided by Intertrans and Fritz, were used.
Neither projected operating synergies and cost savings nor transaction
adjustments and nonrecurring costs were taken into account for this analysis.
The analysis yielded a pro forma percentage contribution for calendar year 1995
by Intertrans of: (i) 23% of net revenue; (ii) 29% of operating income; (iii)
28% of EBITDA; (iv) 32% of net income (31%, applying Fritz's income tax rate to
Intertrans); and (v) 21% of market capitalization. Based on the Merger Exchange
Ratio of 0.380 to 0.390, Intertrans shareholders would have approximately 29.0%
pro forma, fully-diluted ownership in the combined company.
Comparison With Selected Publicly Traded Companies. Scott & Stringfellow
analyzed certain market, income statement, growth and performance data of
Intertrans and Fritz, comparing these statistics to comparable data for three
publicly traded freight forwarding companies: Air Express International
Corporation, Expeditors International of Washington, Inc., and The Harper Group,
Inc. (hereinafter collectively referred to as the "Peer Group"). Using February
13, 1995 closing market prices, available trailing 12 month income statement
data, and median First Call earnings per share estimates for 1995, this analysis
showed, among other things, that the Peer Group traded at: (i) an average price
to 1994 earnings per share multiple of 17.1x; and (ii) an average price to 1995
earnings per share multiple of 14.7x. This analysis showed that, based on
closing market prices as of February 3, 1995 for Intertrans and February 13,
1995 for Fritz and members of the Peer Group, the equity market capitalization
of Intertrans and Fritz was $156 million and $598 million, respectively, and the
equity market capitalization of the Peer Group ranged from $254 million to $404
million and averaged $309 million.
Scott & Stringfellow analyzed the growth of net revenue, operating income
and earnings per share of Intertrans, Fritz, and the Peer Group from their
respective fiscal 1991 to fiscal 1994 years, based on historical data, as well
as the projected growth of these income statement items in fiscal 1995 based on
the projections of Intertrans and Fritz and based on median First Call estimates
for the Peer Group. The compound annual growth rates of Intertrans net revenue,
operating income, and earnings per share from fiscal 1991 to fiscal 1994 were
19%, 16% and 12%, respectively. The projected growth rate of Intertrans earnings
per share in fiscal 1995 versus fiscal 1994, based on Intertrans projections,
was 15%. The compound annual growth rates of Fritz net revenue, operating
income, and earnings per share from 1991 to 1994 were 27%, 36% and 34%,
respectively. The projected growth rate of Fritz earnings per share in 1995
versus 1994, based on Fritz projections, was 24%. The average compound annual
growth rates of the Peer Group net revenue, operating income, and earnings per
share from 1991 to 1994 were approximately 12%, 10%, and 9%, respectively. The
ranges of compound annual growth rates of the Peer Group member net revenue,
operating income, and earnings per share from 1991 to 1994 were 0% to 25%, -4%
to 19%, and 1% to 18%, respectively. The projected growth rates of the Peer
Group member earnings per share in 1995 versus 1994, based on median First Call
estimates, ranged from 15% to 17% and averaged 16%.
Scott & Stringfellow also calculated a 12 month trailing return on average
shareholders' equity for Intertrans (17%), Fritz (34%), and the Peer Group
(average of 17%; range of 11% to 25%), based on available information).
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Pro Forma Analysis of the Merger. Scott & Stringfellow analyzed certain
projected income statement and other data provided by the management of
Intertrans and Fritz, and the Analysts' Estimates. For this analysis, Scott &
Stringfellow assumed the Merger closed on January 1, 1995 for income statement
purposes, and that the Merger would be accounted for as a pooling of interests
under generally accepted accounting principles. Based on this data and these
assumptions, Scott & Stringfellow analyzed certain pro forma effects resulting
from the Merger. The pro forma analysis suggested that, including management
estimates of operating synergies and cost savings and excluding nonrecurring
costs resulting from the Merger, on a pro forma common share equivalent basis,
the pro forma combined company's projected calendar 1995 earnings per share
would be dilutive and the pro forma combined company's projected calendar 1996
earnings per share may be dilutive versus Intertrans' stand-alone projected
earnings per share for the same periods.
Net Present Value Analysis. Scott & Stringfellow prepared net present value
analyses that indicated theoretical value ranges for Intertrans Common Stock and
Fritz Common Stock. Scott & Stringfellow used information provided by Intertrans
and Fritz, as well as the Analysts' Estimates, to calculate projected future
cash flows for each of Intertrans and Fritz. Based on discount rates ranging
from 13% to 18%, and terminal value multiples ranging from 12.0x to 15.5x net
income for Intertrans and 18.0x to 22.0x net income for Fritz, the sums of
future free cash flows and the range of related terminal values were discounted
to present values. Based on these calculations, Scott & Stringfellow then
derived present values per share ranging from $10.96 to $17.40 for Intertrans
Common Stock, and ranging from $45.86 to $69.93 for Fritz Common Stock. Based on
multiplying the closing price of Fritz Common Stock as of February 13, 1995 of
$49.00 per share times the resulting Merger Exchange Ratio of 0.380, the Nominal
Value of Fritz Common Stock to be received in exchange for each share of
Intertrans Common Stock was $18.62.
Analysis of Selected Merger/Acquisition Transactions. Scott & Stringfellow
reviewed certain publicly available and other information concerning the nature
and terms of selected transactions involving the merger/acquisition of all or
part of certain companies in the international logistics services/freight
forwarding industry or businesses somewhat similar to companies which operate in
the industry. Many of the companies acquired recorded operating losses in the 12
months prior to the respective transactions, some of the reviewed transactions
occurred over five years ago, and only incomplete information was available for
some transactions. Scott & Stringfellow calculated a range of multiples of price
to trailing 12 month revenue and net revenue and a range of multiples of
enterprise value (equity market value, plus net debt) to trailing 12 month
revenue and net revenue for transactions for which relevant data was available.
Based on the Nominal Value of Fritz Common Stock to be received in exchange for
each share of Intertrans Common Stock, the comparable price to revenue and net
revenue multiples and enterprise value to revenue and net revenue multiples of
Intertrans in connection with the Merger were materially greater than the
highest comparable multiples calculated in this analysis. Scott & Stringfellow
did not consider any of the merger/acquisition transactions reviewed in this
analysis to be directly comparable to the Merger and did not consider any of the
target companies acquired or merged to be directly comparable to Intertrans.
Scott & Stringfellow is an investment banking firm engaged in, among other
things, the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes. The Intertrans Board
selected Scott & Stringfellow to serve as its financial advisor in connection
with a possible merger with Fritz on the basis of Scott & Stringfellow's
experience and expertise. Scott & Stringfellow is familiar with the
international transportation logistics services/freight forwarding industry in
general, and with Intertrans and its business in particular.
In the ordinary course of its business as a broker-dealer, Scott &
Stringfellow may, from time to time, have a long or short position in, and buy
or sell, securities of Intertrans or Fritz for its own account or for the
accounts of its customers.
Intertrans paid Scott & Stringfellow a fee of $10,000 upon the signing of
an engagement letter dated January 20, 1995, and a fee of $40,000 upon the
delivery of its written opinion of fairness. Intertrans has agreed to pay Scott
& Stringfellow an additional fee of $500,000 upon the consummation of the
Merger. Intertrans has further agreed to indemnify Scott & Stringfellow, and its
affiliates, directors, officers, employees
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and agents, against certain liabilities, including certain liabilities under the
federal securities laws, in connection with Scott & Stringfellow's engagement.
In the event the Merger does not close, Intertrans has agreed to reimburse Scott
& Stringfellow for its out-of-pocket expenses incurred in connection with the
engagement, up to a total of $15,000.
EFFECTIVE TIME
The Plan of Reorganization provides for the merger of Merger Sub with and
into Intertrans. As a result of the Merger, Merger Sub will cease to exist and
Intertrans will become a wholly owned subsidiary of Fritz. Intertrans, as the
surviving corporation in the Merger, will possess all the rights, privileges,
powers and franchises and be subject to all of the restrictions, disabilities
and duties of Intertrans and Merger Sub.
Under the Plan of Reorganization, the Merger will become effective when (i)
the Intertrans Merger Proposal (which, among other things, includes approval of
the Merger and the Plan of Reorganization) has been approved by the shareholders
of Intertrans and the Fritz Share Issuance Proposal has been approved by the
stockholders of Fritz, (ii) the various other conditions described in the Plan
of Reorganization have been satisfied, (iii) Articles of Merger substantially in
the form of Exhibit 1.01 to the Plan of Reorganization have been filed in the
Office of the Secretary of State of the State of Texas and (iv) all other
filings or recordings required by applicable law, including those to be made
with the Office of the Secretary of State of the State of California, have been
made. See "-- Conditions to the Merger; Waiver." It is anticipated that if the
necessary approvals are obtained at the Fritz Annual Meeting and the Intertrans
Annual Meeting and all other conditions of the Merger have been satisfied or
waived, the Merger will occur as soon as practicable following the conclusion of
such meetings.
MANNER AND BASIS OF CONVERTING INTERTRANS SECURITIES
Conversion of Intertrans Common Stock to Fritz Common Stock. At the
Effective Time, each outstanding share of Intertrans Common Stock, except for
(i) shares of Intertrans Common Stock held by Fritz, (ii) any treasury shares
and (iii) shares of Intertrans Common Stock as to which dissenters' rights have
been perfected (see "-- Dissenters' Rights") will, automatically and without any
action on the part of the holder thereof, cease to be outstanding and be
converted into the right to receive that fraction of a share of Fritz's Common
Stock as is equal to the "Merger Exchange Ratio," which will be determined as
follows: (i) if the Average Fritz Trading Price (as defined below) is at least
equal to $46.15 but not greater than $47.37, the Merger Exchange Ratio will
equal the quotient of (A) $18.00 divided by (B) the Average Fritz Trading Price,
calculated to the nearest one-one thousandth of a share; (ii) if the Average
Fritz Trading Price is at least equal to $41.00 but less than or equal to
$46.15, the Merger Exchange Ratio will equal 0.390; (iii) if the Average Fritz
Trading Price is greater than or equal to $47.37 but not greater than $55.00,
the Merger Exchange Ratio will equal 0.380; (iv) if the Average Fritz Trading
Price is less than $41.00, Intertrans will have the right to terminate the Plan
of Reorganization unless Fritz elects to increase the Merger Exchange Ratio to a
fraction equal to (A) $16.00 divided by (B) such Average Fritz Trading Price,
calculated to the nearest one-one thousandth of a share; or (v) if the Average
Fritz Trading Price is greater than $55.00, Fritz will have the right to
terminate the Plan of Reorganization unless Intertrans elects to decrease the
Merger Exchange Ratio to a fraction equal to (A) $20.90 divided by (B) such
Average Fritz Trading Price, calculated to the nearest one-one thousandth of a
share.
As used above, the term "Average Fritz Trading Price" means the arithmetic
mean of each of the closing sale prices per share of Fritz's Common Stock on the
Nasdaq National Market for each of the 20 trading days ending on the fourth
trading day immediately preceding the scheduled date of the first to occur of
the shareholder meetings of Fritz and Intertrans contemplated by this Joint
Proxy Statement/Prospectus (the "Determination Date").
In the event that (i) Intertrans elects to terminate the Plan of
Reorganization because the Average Fritz Trading Price is less than $41.00 and
Fritz has not elected to increase the Merger Exchange Ratio to a fraction equal
to (A) $16.00 divided by (B) such Average Fritz Trading Price, calculated to the
nearest one-one thousandth of a share, or (ii) Fritz elects to terminate the
Plan of Reorganization because the Average Fritz
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Trading Price is greater than $55.00 and Intertrans has not elected to decrease
the Merger Exchange Ratio to a fraction equal to (A) $20.90 divided by (B) such
Average Fritz Trading Price, calculated to the nearest one-one thousandth of a
share, then the party initiating the termination (the "Terminating Party") must
give notice of termination (the "Termination Notice") to the other party (the
"Receiving Party") prior to 12:00 midnight (San Francisco time) on the
Determination Date. Such termination will become effective automatically,
without the action of either party, at 12:00 midnight (San Francisco time) on
the trading day immediately preceding the date of the first to occur of the
annual shareholder meetings contemplated by this Joint Proxy
Statement/Prospectus unless, prior to such time, the Receiving Party shall
deliver notice to the Terminating Party to the effect that it has elected to
increase or decrease the Merger Exchange Ratio, as the case may be, in the
manner contemplated by (i) and (ii) above. If the Average Fritz Trading Price is
less than $41.00 and Intertrans does not deliver the Termination Notice to Fritz
within the prescribed period, or, alternatively, if the Average Fritz Trading
Price is greater than $55.00 and Fritz does not deliver the Termination Notice
to Intertrans within the prescribed period, then the Plan of Reorganization will
automatically continue in full force and effect and the Merger Exchange Ratio
will be fixed at 0.390 and 0.380, respectively.
THE ELECTION TO TERMINATE THE MERGER AND THE PLAN OF REORGANIZATION
PURSUANT TO THE FOREGOING WILL BE MADE IN THE SOLE DISCRETION OF THE BOARD OF
DIRECTORS OF THE TERMINATING PARTY AND THE ELECTION TO INCREASE OR DECREASE THE
MERGER EXCHANGE RATIO, AS THE CASE MAY BE, WILL BE MADE IN THE SOLE DISCRETION
OF THE BOARD OF DIRECTORS OF THE RECEIVING PARTY. SUCH ACTION WILL NOT, IN AND
OF ITSELF, REQUIRE PRIOR STOCKHOLDER APPROVAL.
Fractional Shares. No fractional shares of Fritz Common Stock will be
issued in connection with the Merger. All shares of Fritz Common Stock to which
a holder of shares of Intertrans Common Stock is entitled will be aggregated. If
a fractional share of Fritz Common Stock results from such aggregation, in lieu
of such fractional share, each holder of Intertrans Common Stock who would
otherwise have been entitled to receive a fraction of a share of Fritz Common
Stock upon surrender of a stock certificate that, immediately prior to the
Effective Time, represented outstanding shares of Intertrans Common Stock (a
"Certificate") will be entitled to receive a cash payment from the Exchange
Agent (as hereinafter defined) equal to such fraction multiplied by the closing
price per share of Fritz Common Stock on the last business day prior to the
Effective Date on which Fritz Common Stock traded on the Nasdaq National Market.
Exchange of Certificates. As soon as practicable after the Effective Date,
Fritz's exchange agent (the "Exchange Agent"), will mail to each holder of
record of a Certificate whose shares are being converted into Fritz Common
Stock, (i) a letter of transmittal and (ii) instructions for use in effecting
the surrender of the Certificates in exchange for certificates evidencing Fritz
Common Stock. After the Effective Time, the stock transfer books of Intertrans
will be closed and there will be no further registration of transfers on the
stock transfer books of Intertrans or its transfer agent of the shares of
Intertrans Common Stock that were outstanding immediately prior to the Effective
Time.
INTERTRANS SHAREHOLDERS SHOULD NOT SEND IN THEIR INTERTRANS STOCK
CERTIFICATES UNTIL THEY RECEIVE INSTRUCTIONS AND TRANSMITTAL FORMS FROM THE
EXCHANGE AGENT AFTER COMPLETION OF THE MERGER.
ASSUMPTION OF INTERTRANS OPTIONS
In December 1983, Intertrans adopted the 1983 Incentive Stock Option Plan
(the "1983 ISO Plan"), pursuant to which 693,000 shares of Intertrans Common
Stock have been reserved for issuance. In September 1984, Intertrans adopted the
1984 Incentive Stock Option Plan (the "1984 ISO Plan"), pursuant to which
750,000 shares of Intertrans Common Stock have been reserved for issuance. In
December 1987, Intertrans adopted the 1987 Flexible Stock Option Plan (the "1987
Flexible Plan"), pursuant to which 750,000 shares of Intertrans Common Stock
have been reserved for issuance. In January 1990, Intertrans adopted the 1990
Incentive Stock Option Plan (the "1990 ISO Plan"), pursuant to which 1,500,000
shares of Intertrans
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Common Stock have been reserved for issuance. In December 1992, Intertrans
adopted the 1992 Nonqualified Stock Option Plan (the "1992 Plan"), pursuant to
which 1,200,000 shares of Intertrans Common Stock have been reserved for
issuance. The 1983 ISO Plan, the 1984 ISO Plan and the 1990 ISO Plan are
hereinafter collectively referred to as the "ISO Plans." The ISO Plans, the 1987
Flexible Plan and the 1992 Plan are hereinafter collectively referred to as the
"Intertrans Stock Option Plans." The shares of Intertrans Common Stock reserved
for issuance under the Intertrans Stock Option Plans have been proportionately
adjusted, as necessary, to reflect the three-for-two share dividend effected
February 17, 1987, and the two-for-one share dividend effected June 7, 1993. The
options granted under the ISO Plans are intended to qualify as "incentive stock
options" within the meaning of Section 422A of the Code. The 1987 Flexible Plan
provides for the issuance of both incentive stock options and nonstatutory stock
options. The 1992 Plan provides for the issuance of nonstatutory stock options.
For a description of the Intertrans Stock Option Plans, see
"Intertrans -- Executive Compensation -- Stock Option Plans."
As of February 28, 1995, there were options outstanding to purchase
2,284,659 shares of Intertrans Common Stock at exercise prices ranging from
$3.125 to $13.875, with a weighted average exercise price of approximately $8.76
per share, which options had been issued under the Intertrans Stock Option
Plans.
Prior to the Effective Time, Intertrans and Fritz will take such action as
is necessary to cause each unexpired and unexercised option to purchase shares
of Intertrans Common Stock (each an "Intertrans Stock Option"), to be
automatically converted at the Effective Time into an option (each a "Fritz
Stock Option") to purchase a number of shares of Fritz Common Stock equal to the
number of shares of Intertrans Common Stock that could have been purchased under
the Intertrans Stock Option immediately prior to the Effective Time multiplied
by the Merger Exchange Ratio (with the resulting number of shares of Fritz
Common Stock rounded down to the nearest whole share), at a price per share of
Fritz Common Stock equal to the option exercise price determined pursuant to the
Intertrans Stock Option divided by the Merger Exchange Ratio (with the resulting
exercise price rounded up to the nearest whole cent). For example, with an
assumed Merger Exchange Ratio of 0.385, an Intertrans Stock Option to purchase
1,000 shares of Intertrans Common Stock at the weighted average exercise price
of $8.76 per share would be converted into a Fritz Stock Option to purchase 385
shares of Fritz Common Stock at an exercise price of $22.75 per share. Other
than the shares issuable upon exercise of outstanding Intertrans Stock Options
and the exercise prices thereof, all terms and conditions of such options will
remain generally the same after the Merger. Each holder of such an assumed
Intertrans Stock Option will be issued a written instrument evidencing the
assumption and specifying the adjusted number of shares of Fritz Common Stock
subject to such option and the adjusted exercise price. Such instrument of
assumption will be issued as soon as practicable following the Effective Time.
The various Intertrans Stock Option Plans under which the assumed options remain
outstanding will be assumed by Fritz in connection with the Merger.
All employees of Intertrans that have received stock options under the 1992
Plan (1,109,500 shares as of February 28, 1995, including shares subject to
options held by Sam N. Wilson, currently the Chief Executive Officer of
Intertrans, and Carsten S. Andersen, currently the President of Intertrans) will
receive fully vested options to purchase Fritz Common Stock regardless of the
vesting status of such options, as contemplated by the 1992 Plan.
Fritz intends to file a Registration Statement on Form S-8 under the
Securities Act covering the shares of Fritz Common Stock issuable upon the
exercise of Fritz Stock Options created by the assumption by Fritz of the
Intertrans Stock Options and to cause such Registration Statement to become
effective on the Effective Date or as soon thereafter as practicable.
CONDUCT OF BUSINESS PRIOR TO THE MERGER
Fritz has agreed in the Plan of Reorganization that until the Effective
Time it will conduct its business in the ordinary course, and without the prior
written consent of Intertrans, will not (i) adopt or propose any change in its
charter documents, (ii) take any action that would result in a failure to
maintain the trading of Fritz Common Stock on Nasdaq without causing such stock
to be listed for trading on a national securities exchange at or prior to the
termination of its trading on Nasdaq, (iii) issue any Fritz securities, except
as
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provided for in the Plan of Reorganization, (iv) knowingly enter into any
transaction that would require this Joint Proxy Statement/Prospectus to be
delayed or recirculated under circumstances which would in the reasonable
judgment of Intertrans delay the occurrence of the Effective Date beyond July
31, 1995, except as provided for in the Plan of Reorganization, and (v) agree or
commit to do any of the foregoing nor permit any of its subsidiaries to agree or
commit to do any of the foregoing.
In addition, Fritz has agreed to (i) give Intertrans access until the
Effective Time to its financial and operating information, (ii) use reasonable
best efforts to conduct its business in the ordinary course, (iii) comply in all
material respects with its obligations, (iv) notify Intertrans of certain events
enumerated in the Plan of Reorganization, (v) comply with a confidentiality
agreement entered into between Fritz and Intertrans, (vi) take all action
necessary to cause Merger Sub to perform its obligations under the Plan of
Reorganization and to consummate the Merger on the terms and conditions set
forth in the Plan of Reorganization, and (vii) cause to be delivered to each
person Fritz believes to be an "affiliate" of Fritz a notice informing such
persons of restrictions on transfer resulting from the Merger being accounted
for as a pooling of interests, as defined in the Plan of Reorganization.
The Merger Sub has agreed (i) not to issue any shares of its capital stock,
any securities convertible into or exchangeable for its capital stock, or any
option, warrant or other right to acquire its capital stock to any person or
entity other than Fritz and (ii) not to incur any indebtedness or liabilities of
any kind except pursuant to the Plan of Reorganization.
Intertrans has agreed in the Plan of Reorganization that until the
Effective Time it will conduct its business in the ordinary course, and without
the prior written consent of Fritz, will (i) not adopt or propose any change to
its charter documents, (ii) not enter into or amend any employment agreements or
increase the compensation payable or to become payable by it to any of its
officers, directors, or consultants over the amount payable as of January 31,
1995, or increase the compensation payable to any other employees, other than as
permitted in the Plan of Reorganization, (iii) not issue any Intertrans
securities, except pursuant to the exercise of Intertrans Stock Options, (iv)
keep in full force and effect its existing directors' and officers' liability
insurance and not modify or reduce the coverage thereunder, (v) other than the
payment of dividends in accordance with its existing dividend policy, which
policy is consistent with current Intertrans past practice, not pay any dividend
or make any other distribution to holders of its capital stock nor will
Intertrans or any of its subsidiaries redeem or otherwise acquire any Intertrans
securities, (vi) not, directly or indirectly, dispose of or acquire any material
properties or assets except in the ordinary course of business, (vii) not incur
any additional indebtedness for borrowed money in excess of $100,000 in the
aggregate, except pursuant to existing arrangements which have been disclosed to
Fritz prior to February 14, 1995, (viii) not amend or change the period of
exercisability or accelerate the exercisability of any outstanding options or
warrants to acquire shares of capital stock, or accelerate, amend or change the
vesting period of any outstanding restricted stock, other than expressly
provided in the Intertrans Stock Option Plans, (ix) not knowingly enter into any
transaction that would require this Joint Proxy Statement/Prospectus to be
delayed or recirculated under circumstances which would in the reasonable
judgment of Fritz delay the occurrence of the Effective Date beyond July 31,
1995, except as permitted in the Plan of Reorganization, and (x) not, and not
permit any of its subsidiaries to, agree or commit to do any of the foregoing.
In addition, Intertrans has agreed (i) to give Fritz access until the
Effective Time to its financial and operating information, (ii) use reasonable
best efforts to conduct its business in the ordinary course, (iii) comply in all
material respects with its obligations, (iv) notify Fritz of certain events
enumerated in the Plan of Reorganization, (v) comply with a confidentiality
agreement entered into between Fritz and Intertrans, (vi) cause each person who
is an "affiliate" of Intertrans to deliver to Fritz on or prior to the Effective
Date an Intertrans Affiliates Agreement (see "-- Resale of Fritz Common Stock;
Agreements with Intertrans Affiliates").
OTHER OFFERS
Intertrans has agreed (i) that Intertrans and its subsidiaries will not
directly or indirectly take any action to solicit, initiate or encourage any
Acquisition Proposal (as defined below) or subject to the fiduciary duties
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of the Intertrans Board of Directors under applicable law as advised by counsel
to Intertrans, engage in negotiations with or disclose any nonpublic information
relating to Intertrans or any of its subsidiaries to any person or entity that
may be considering making or has made an Acquisition Proposal, (ii) that its
Board of Directors will not withdraw or modify, or propose to withdraw or
modify, in a manner adverse to Fritz, the approval or recommendation by such
Board of Directors of the Plan of Reorganization, the Merger or other
transactions contemplated thereby or approve, recommend or propose to approve or
recommend any Acquisition Proposal (other than an Acquisition Proposal made by
Fritz), or approve or authorize Intertrans entering into any agreement with
respect to any Acquisition Proposal, and (iii) to notify Fritz with respect to
certain events concerning Acquisition Proposals and requests for information.
Notwithstanding the foregoing, in the event the Board of Directors of Intertrans
receives an Acquisition Proposal that, in the exercise of its fiduciary
obligations, it determines to be a Superior Proposal (as defined below), the
Board of Directors may (subject to the following) withdraw or adversely modify
its approval or recommendation of the Plan of Reorganization, the Merger and the
other transactions contemplated thereby and approve or recommend any such
Superior Proposal, or approve or authorize Intertrans' entering into an
agreement with respect to such Superior Proposal, in each case at any time after
the fourth business day following notice to Fritz (a "Notice of Superior
Proposal"). Intertrans may take any of these actions only if an Acquisition
Proposal that was a Superior Proposal at the time of delivery of a Notice of
Superior Proposal continues to be a Superior Proposal in light of any improved
transaction proposed by Fritz prior to the expiration of the fourth business day
period specified above.
As defined in the Plan of Reorganization, an "Acquisition Proposal" is any
offer or proposal for, or any indication of interest in, a merger or other
business combination involving Intertrans or any of its subsidiaries or the
acquisition of any equity interest in, or a substantial portion of the assets
of, Intertrans or any of its subsidiaries, other than the transactions
contemplated by the Plan of Reorganization.
Pursuant to the Plan of Reorganization, a "Superior Proposal" means any
bona fide Acquisition Proposal to acquire, directly or indirectly, a material
equity interest in or a material amount of voting securities or assets of
Intertrans or any of its subsidiaries for consideration consisting of cash
and/or securities, and otherwise on terms which the Board of Directors of
Intertrans determines in its good faith reasonable judgment (based on the advice
of a financial advisor of nationally recognized reputation) to provide greater
aggregate value to Intertrans' shareholders than the transactions contemplated
by the Plan of Reorganization (or otherwise proposed by Fritz as contemplated
above).
CONDUCT OF BUSINESS FOLLOWING THE MERGER; BOARD OF DIRECTORS AND MANAGEMENT
It is expected that, upon consummation of the Merger, Intertrans will
operate as a wholly owned subsidiary of Fritz.
Upon consummation of the Merger, the Fritz Board of Directors intends to
increase the size of the Fritz Board from five to six directors and appoint
Carsten S. Andersen, the current President of Intertrans, a director of Fritz to
fill the vacancy created by such action. The Board of Directors of Fritz would
then consist of Lynn C. Fritz, Dennis L. Pelino, Ronald A. Marcillac, James
Gilleran, and Preston Martin, all of whom are current members of the Board of
Directors of Fritz, and Mr. Andersen. Mr. Fritz will continue to serve as
Chairman of the Board. See "Election of Fritz Directors" and "The Proposed
Merger and Related Transactions -- Description of Merger and Plan of
Reorganization -- Interests of Certain Persons in the Merger."
Pursuant to the terms of the Plan of Reorganization, from and after the
consummation of the Merger, until successors are duly elected or appointed and
qualified in accordance with applicable law, the directors of Merger Sub at the
time of the Merger will become directors of Intertrans, and the officers of
Intertrans at the time of the Merger will remain the officers of Intertrans. In
addition, upon consummation of the Merger, Fritz will cause Sam N. Wilson,
Chairman and Chief Executive Officer of Intertrans, to be designated an advisory
director to the Board of Directors of Fritz and will appoint Mr. Andersen as
Executive Vice President of Fritz and Managing Director of Fritz's air freight
operations. For certain information regarding Mr. Andersen, see
"Intertrans -- Management" and "-- Executive Compensation."
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CONDITIONS TO THE MERGER; WAIVER
The respective obligations of Fritz and Intertrans are subject to the
fulfillment or satisfaction, on and as of the Effective Date, of each of the
following conditions (any one or more of which may be waived in writing by such
parties):
(i) Fritz's stockholders shall have duly approved the issuance of the
Fritz Common Stock in connection with the Merger and Intertrans'
shareholders shall have duly approved the Intertrans Merger Proposal
(which, among other things, includes approval of the Merger and Plan of
Reorganization);
(ii) The Registration Statement of which this Joint Proxy
Statement/Prospectus is a part shall have become effective under the
Securities Act and shall not be the subject of any stop order or similar
proceedings;
(iii) Fritz and Intertrans shall have received an opinion from KPMG
Peat Marwick LLP, independent certified public accountants, in form
reasonably satisfactory to Fritz and Intertrans, to the effect that, based
upon certain material facts and certain representations and warranties
provided by Fritz and Intertrans described in such opinion, the business
combination effected by the Merger would be properly accounted for as a
pooling of interests in accordance with generally accepted accounting
principles and all published rules, regulations and policies of the SEC;
(iv) No statute, rule, regulation, executive order, decree, injunction
or restraining order shall have been enacted, promulgated or enforced which
prohibits the consummation of the Merger;
(v) There shall have been obtained any and all governmental
authorizations, permits, approvals and consents of securities or "blue sky"
commissions of any jurisdiction or any other governmental body or agency
that may reasonably be deemed necessary so that the consummation of the
Merger will be in compliance with applicable laws; and
(vi) The waiting period (and any extension thereof) applicable to the
consummation of the Merger under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, shall have expired or been
terminated.
The obligations of Fritz and Merger Sub to consummate the Merger are
subject to the fulfillment or satisfaction, on and as of the Effective Date, of
each of the following conditions (any one or more of which may be waived in
writing by Fritz):
(i) The representations and warranties of Intertrans in the Plan of
Reorganization (other than representations and warranties regarding certain
litigation or certain other legal proceedings connected with the Merger)
shall be true and accurate in all material respects on and as of the
Effective Date with the same force and effect as if they had been made on
the Effective Date (except to the extent a representation or warranty
speaks specifically as of an earlier date) and Intertrans shall have
provided Fritz with an officers certificate, dated as of the Effective
Date, to that effect;
(ii) Intertrans shall have performed and complied in all material
respects with all of its covenants contained in the Plan of Reorganization
on or before the Effective Date and Fritz shall receive an Intertrans'
officers certificate to that effect;
(iii) Except as set forth in the Intertrans disclosure schedule, there
shall have been no change or development involving a prospective change
since October 31, 1994, which would result in a material adverse effect on
the condition (financial or otherwise), business, properties, assets,
liabilities (including contingent liabilities), results of operations or
prospects of Intertrans and its subsidiaries taken as a whole;
(iv) Fritz shall have received from each person or entity who may be
deemed to be an affiliate of Intertrans a duly executed Intertrans
Affiliates Agreement (see "-- Resale of Fritz Common Stock; Agreements with
Intertrans Affiliates"), and such Intertrans Affiliates Agreement shall
remain in full force and effect;
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(v) All written consents, assignments, waivers or authorizations,
other than governmental authorizations, that are required as a result of
the Merger for the continuation in full force and effect of any material
contracts or leases of Intertrans shall have been obtained; and
(vi) Fritz shall have received from its counsel an opinion to the
effect that the Merger will constitute a reorganization within the meaning
of the Section 368 of the Code.
The obligations of Intertrans to consummate the Merger are subject to the
fulfillment or satisfaction, on and as of the Effective Date, of each of the
following conditions (any one or more of which may be waived in writing by
Intertrans):
(i) The representations and warranties of Fritz in the Plan of
Reorganization (other than representations and warranties regarding certain
litigation or certain other legal proceedings connected with the Merger)
shall be true and accurate in all material respects on and as of the
Effective Date with the same force and effect as if they had been made on
the Effective Date (except to the extent a representation or warranty
speaks specifically as of an earlier date and except for changes
contemplated by the Plan of Reorganization) and Fritz shall have provided
Intertrans with an Officers Certificate, dated as of the Effective Date, to
that effect;
(ii) Fritz shall have performed and complied in all material respects
with all of its covenants contained in the Plan of Reorganization on or
before the Effective Date and Intertrans shall receive Fritz's officers
certificate to that effect;
(iii) Except as set forth in the Fritz disclosure schedule, there
shall have been no change or development involving a prospective change
since September 30, 1994, which would result in a material adverse effect
on the condition (financial or otherwise), business, properties, assets,
liabilities (including contingent liabilities), results of operations or
prospects of Fritz and its subsidiaries taken as a whole; and
(iv) Intertrans shall have received from its counsel an opinion to the
effect that the Merger will constitute a reorganization within the meaning
of the Section 368 of the Code.
TERMINATION OR AMENDMENT OF THE PLAN OF REORGANIZATION
The Plan of Reorganization may be terminated at any time prior to the
Effective Time whether before or after the approval by the stockholders of Fritz
or shareholders of Intertrans:
(i) By Intertrans, if the Average Fritz Trading Price is less than
$41.00 unless Fritz elects to increase the Merger Exchange Ratio to a
fraction equal to (A) $16.00 divided by (B) such Average Fritz Trading
Price, calculated to the nearest one-one thousandth of a share;
(ii) By Fritz, if the Average Fritz Trading Price is greater than
$55.00 unless Intertrans elects to decrease the Merger Exchange Ratio to a
fraction equal to (A) $20.90 divided by (B) such Average Fritz Trading
Price, calculated to the nearest one-one thousandth of a share;
(iii) By the mutual consent of the Boards of Directors of Fritz,
Merger Sub and Intertrans;
(iv) By either Fritz or Intertrans, if, at the Intertrans Annual
Meeting the requisite vote of Intertrans shareholders on the Intertrans
Merger Proposal shall not have been obtained;
(v) By either Fritz or Intertrans, respectively, at any time after
July 31, 1995; provided that the right to terminate the Plan of
Reorganization pursuant to this provision is not available to any party
whose failure to fulfill any obligation under the Plan of Reorganization
has been the significant cause of, or resulted in, the failure of the
Effective Date to occur on or before such date;
(vi) By Fritz, if it is not in material breach of its obligations
under the Plan of Reorganization and if any person or entity other than
Fritz or any of Fritz's affiliates purchase 40% or more of the outstanding
shares of Intertrans Common Stock;
(vii) By either Fritz or Intertrans, if, at the Fritz Annual Meeting
the requisite vote of Fritz stockholders in favor of the Fritz Share
Issuance Proposal shall not have been obtained;
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(viii) By Fritz, if it is not in material breach of its obligations
under the Plan of Reorganization and the Board of Directors of Intertrans
shall have withdrawn or adversely modified its recommendation of the
Merger, or recommended or approved the acceptance by shareholders of any
Acquisition Proposal (other than an Acquisition Proposal made by Fritz or
an affiliate of Fritz);
(ix) By either Fritz or Intertrans, respectively, (A) if there has
been a breach of any representation and warranty in the Plan of
Reorganization by the other party such that a party's conditions to the
consummation of the Merger cannot be satisfied, or (B) if there has been a
material breach on the part of Intertrans or Fritz or Merger Sub,
respectively, of any covenant or agreement contained in the Plan of
Reorganization such that a party's conditions to the consummation of the
Merger cannot be satisfied, and in the case of both of the foregoing
subclauses (A) and (B), such breach has not been promptly cured after
notice to the breaching party; or
(x) By Intertrans, if the Board of Directors of Intertrans shall have
proposed a definitive agreement with respect to a Superior Proposal as
defined in, and in compliance with the procedures set forth in, the Plan of
Reorganization.
At any time before or after the approval of the Plan of Reorganization and
the Merger by the shareholders of Intertrans and prior to the Effective Time,
the Plan of Reorganization may be amended or supplemented by Fritz or Intertrans
with respect to any of the terms contained therein, except that following the
approval by Intertrans shareholders, no amendment or change to the Merger
Exchange Ratio (or any other amendment which by law requires the approval by the
shareholders of Intertrans) will be made without the further approval of the
shareholders of Intertrans.
ACCOUNTING TREATMENT
The Merger is expected to be treated as a "pooling of interests" in
accordance with the provisions of Accounting Principles Board Opinion No. 16 on
business combinations. It is a condition to the consummation of the Merger that,
among other things, the parties receive an opinion from KPMG Peat Marwick LLP,
independent certified public accountants, to the effect that, based upon certain
material facts and certain representations and warranties provided by Fritz and
Intertrans described in such opinion, the Merger would be properly accounted for
as a pooling of interests in accordance with generally accepted accounting
principles and all published rules, regulations and policies of the SEC. See
"-- Conditions to the Merger; Waiver."
Under the pooling of interests method of accounting, (i) the recorded
assets and liabilities of Fritz and Intertrans will be carried forward to the
combined companies at their recorded amounts, (ii) income of the combined
companies will include income of Fritz and Intertrans for the entire fiscal year
in which the Merger occurs, and (iii) the reported income of the separate
companies for prior periods will be combined and restated as income of the
combined companies. The management of each of Fritz and Intertrans anticipates
that all expenses relative to the Merger will be recorded primarily in the
quarter in which the Merger is consummated. See "Risk Factors -- Merger
Expenses."
If dissenter's rights were exercised with respect to shares of Intertrans
Common Stock which, together with certain shares of Intertrans Common Stock that
are disqualified or tainted for "pooling-of-interests" purposes, constitute more
than 10% of the shares of Intertrans Common Stock outstanding immediately prior
to the Effective Time, the Merger would not qualify as a "pooling-of-interests"
for financial accounting purposes. If the number of shares with respect to which
dissenters' rights are exercised exceeds the 10% limitation, it is likely that
the Merger would not be consummated, unless such condition is waived. See
"-- Dissenter's Rights" and "-- Description of Merger and Plan of
Reorganization -- Conditions to the Merger; Waiver."
RESALE OF FRITZ COMMON STOCK; AGREEMENTS WITH INTERTRANS AFFILIATES
The shares of Fritz Common Stock to be issued in the Merger will be
registered under the Securities Act on a Registration Statement of which this
Joint Proxy Statement/Prospectus is a part, thereby allowing such shares of
Fritz Common Stock to be traded without restriction by all holders not deemed to
be affiliates of Intertrans prior to the consummation of the Merger.
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As a condition to the Merger, prior to the Effective Time, each principal
executive officer, each director and each other person who may be deemed to be
an affiliate of Intertrans will be required to deliver to Fritz an affiliates
agreement ("Intertrans Affiliates Agreement") pursuant to which, among other
things, such persons will agree not to sell, transfer or otherwise dispose of
any shares of Intertrans Common Stock or Fritz Common Stock during the 30-day
period immediately preceding the Effective Time and until such time after the
Effective Time as Fritz has publicly released a report including the combined
financial results of Fritz and Intertrans for a period of at least 30 days of
combined operations of Fritz and Intertrans within the meaning of Accounting
Series Release No. 130, as amended, of the SEC. Furthermore, pursuant to the
Intertrans Affiliates Agreements, each of such persons will agree to refrain
from the sale or transfer of any Fritz Common Stock received in connection with
the Merger except in accordance with the provisions of the Securities Act and
the general rules and regulations promulgated thereunder. Compliance with
Intertrans Affiliates Agreement is an element required for Fritz to account for
the Merger as a "pooling-of-interests." Upon consummation of the Merger, based
on the number of shares of Intertrans Common Stock outstanding or subject to
currently exercisable options as of April , 1995, the persons who may be
deemed to be affiliates of Intertrans are expected to receive an aggregate of
, or %, of the outstanding shares of Fritz Common Stock (assuming no
dissenting shares).
Affiliates of Fritz will also be subject to certain limitations on their
ability to sell, transfer or otherwise dispose of shares of Fritz Common Stock
during the period preceding the Merger. Fritz has agreed that it will, at least
30 days prior to the Effective Date, cause to be delivered to each person Fritz
believes to be an affiliate of Fritz a notice informing such persons of
restrictions on transfer resulting from the Merger being accounted for as a
pooling of interests in accordance with generally accepted accounting principles
and all published rules, regulations and policies of the SEC.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Board of Directors and Management. In considering the recommendation of
the Board of Directors of Intertrans with respect to the Merger, shareholders
should be aware that certain officers and directors of Intertrans have interests
in connection with the Merger.
As of the Intertrans Record Date, members of the Board of Directors and
executive officers of Intertrans beneficially owned shares of
Intertrans Common Stock, including shares issuable upon the exercise of stock
options. In particular, as of the Intertrans Record Date, Sam N. Wilson,
Chairman of the Board and Chief Executive Officer of Intertrans, beneficially
owned shares, and Carsten S. Andersen, President of Intertrans,
beneficially owned shares, of Intertrans Common Stock, including
shares issuable upon the exercise of stock options. Following the consummation
of the Merger and assuming they will own the same number of shares of Intertrans
Common Stock at the time of the Merger as they did at the Intertrans Record
Date, the officers and members of the Board of Directors of Intertrans
immediately prior to the Merger will beneficially own shares of Fritz
Common Stock including shares issuable upon the exercise of stock options
(assuming a Merger Exchange Ratio of 0.385). Of such shares, Mr. Wilson will
beneficially own and Mr. Andersen will beneficially own .
See "Intertrans -- Stock Ownership of Management and Principal Shareholders."
The Board of Directors of Intertrans will be reconstituted after the
Merger, but the officers of Intertrans immediately prior to the Effective Time
will be officers of Intertrans, as a subsidiary of Fritz. See "-- Conduct of
Business Following the Merger; Board of Directors and Management."
Effective August 7, 1992, Intertrans entered into a Services Agreement with
Mr. Wilson in which Mr. Wilson agreed to serve as Chief Executive Officer for a
three-year period. The Services Agreement also calls for Mr. Wilson to provide
consulting services to Intertrans for a ten-year period following the
termination of his employment as Chief Executive Officer. Among the benefits
accorded to Mr. Wilson under the Services Agreement and a related Option
Agreement, is an option to purchase 500,000 shares of Intertrans Common Stock
under a Nonqualified Stock Option Agreement pursuant to the 1992 Plan. The
vesting of these options will accelerate as a result of the Merger and all
unexercised options will become immediately exercisable. If Mr. Wilson
terminates his employment as a result of the Merger, as he is entitled to do, he
will receive unpaid
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salary to the date of termination, plus his severance amount, as a lump sum or
in equal monthly installments, equal to the sum of the aggregate annual salary
for each year a portion thereof which he would have received had his employment
not been terminated. In light of the anticipated termination of Mr. Wilson's
Services Agreement in August of 1995 pursuant to its terms, such severance
amount is not expected to exceed $50,000. Following his tenure as Chief
Executive Officer, Mr. Wilson has agreed to provide consulting services to
Intertrans for a ten-year period for a compensation of $200,000 per annum. The
consulting arrangement with Mr. Wilson will come into effect upon Mr. Wilson's
resignation as Chief Executive Officer of Intertrans in connection with the
Merger. If Intertrans terminates Mr. Wilson's consulting services or Mr. Wilson
voluntarily resigns following the Merger, Mr. Wilson will be entitled to receive
unpaid compensation through the date of termination, plus severance amount, as a
lump sum or in equal monthly installments, equal to the aggregate annual
compensation for each year or portion thereof which he would have received had
his consulting services not been terminated. In addition, Mr. Wilson will be
entitled to exercise any stock options which are exercisable on the date of
termination. If Mr. Wilson's consulting services are terminated by reason of his
death, his estate will be entitled to receive any unpaid compensation for
services rendered through the date of termination and exercise any stock options
which are exercisable on the date of termination. In addition, Mr. Wilson's
estate or his beneficiary will be entitled to receive a lump sum payment of
$2,000,000 less the sum of all compensation actually paid to Mr. Wilson for his
consulting services. This obligation is fully insured by key man life insurance
policies maintained by Intertrans. See "Intertrans -- Executive Compensation"
below. Notwithstanding any express term of the Services Agreement to the
contrary, Mr. Wilson has represented to Fritz that he will not take any action
or make any election under the Services Agreement that would (i) for a specified
period of time following the Merger, give rise to the payment of any amount that
would not be deductible pursuant to the terms of Sections 162(a)(1) or 280G of
the Code, or (ii) adversely impact the ability of the transactions contemplated
by the Plan of Reorganization to qualify as a plan of reorganization in
accordance with the provisions of Section 368(a) of the Code. See
"Intertrans -- Executive Compensation -- Certain Employment Agreements and
Related Arrangements."
Following the Merger, Mr. Andersen, the current President of Intertrans,
will become Executive Vice President of Fritz and Managing Director of Fritz's
air freight operations following the Merger and will report directly to Mr.
Fritz. Upon consummation of the Merger, the Fritz Board of Directors intends to
increase the size of the Fritz Board of Directors from five to six directors and
appoint Mr. Andersen a director of Fritz to fill the vacancy created by such
action. The parties anticipate that prior to the consummation of the Merger,
Fritz and Mr. Andersen will enter into an Employment Agreement setting forth the
terms of Mr. Andersen's new employment relationship with Fritz, which agreement
will supersede his existing Employment Agreement with Intertrans. See
"Intertrans -- Executive Compensation -- Certain Employment Agreements and
Related Arrangements."
Pursuant to the Plan of Reorganization, all outstanding options to purchase
Intertrans Common Stock will be assumed by Fritz and converted into options to
purchase Fritz Common Stock. All employees of Intertrans that have received
stock options under the 1992 Plan (1,109,500 shares as of February 28, 1995,
including all options to purchase Intertrans Common Stock held by Messrs. Wilson
and Andersen described above) will receive fully vested options to purchase
Fritz Common Stock regardless of the vesting status of such options prior to the
Merger, as contemplated by the 1992 Plan. See "-- Assumption of Intertrans
Options."
Financial Advisors. Intertrans paid Scott & Stringfellow a fee of $10,000
upon the signing of an engagement letter dated January 20, 1995, and a fee of
$40,000 upon the delivery of its written opinion of fairness. Intertrans has
agreed to pay Scott & Stringfellow an additional fee of $500,000 upon the
consummation of the Merger. Intertrans has further agreed to indemnify Scott &
Stringfellow, and its affiliates, directors, officers, employees and agents,
against certain liabilities, including certain liabilities under the federal
securities laws, in connection with Scott & Stringfellow's engagement. In the
event the Merger does not close, Intertrans has agreed to reimburse Scott &
Stringfellow for its out-of-pocket expenses incurred in connection with the
engagement, up to a total of $15,000. See "-- Financial Advisors."
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Pursuant to a letter agreement dated as of January 18, 1995 between Fritz
and Morgan Stanley, if the Merger is successfully consummated, Fritz will pay
Morgan Stanley a transaction fee of $1,750,000. Fritz has also agreed to
reimburse Morgan Stanley for its out-of-pocket expenses and to indemnify Morgan
Stanley and its affiliates, their respective directors, officers, agents and
employees and each person, if any, controlling Morgan Stanley, or any of its
affiliates against certain liabilities and expenses, including liabilities under
federal securities laws in connection with its services. Morgan Stanley and its
affiliates have provided financial advisory and financing services to Fritz
since 1992 and have received customary fees in connection with these services,
including the initial public offering of Fritz in October, 1992 and a secondary
offering in November, 1994. See "-- Financial Advisors."
FEES AND EXPENSES
Except as set forth in the following paragraphs, both Intertrans and Fritz
have agreed to bear their own fees and expenses, including counsel fees and fees
of brokers and investment bankers contracted by each party, in connection with
the transaction contemplated by the Plan of Reorganization.
If (i) the Plan of Reorganization is terminated by either Fritz or
Intertrans because the requisite vote of the Intertrans shareholders at the
Intertrans Annual Meeting is not obtained, and (ii) prior to the Intertrans
Annual Meeting an Acquisition Proposal is received by Intertrans, then, at the
time of such termination, Intertrans shall pay to Fritz an amount equal to
$3,000,000. Furthermore, if following such termination the principal transaction
contemplated by any Acquisition Proposal is consummated within 12 months of such
termination, then, concurrently with the consummation of such transaction,
Intertrans shall pay to Fritz an additional amount of $4,500,000.
If (i) the Plan of Reorganization is terminated by either Fritz or
Intertrans because the requisite vote of the Intertrans shareholders at the
Intertrans Annual Meeting is not obtained, and (ii) prior to the Intertrans
Annual Meeting no Acquisition Proposal is received by Intertrans, and following
such termination (iii) a definitive agreement relating to any Acquisition
Proposal is entered into by Intertrans or one of its affiliates within six
months of such termination, and (iv) the principal transaction contemplated by
such definitive agreement is consummated within 12 months of the termination,
then, concurrently with the consummation of such transaction, Intertrans shall
pay to Fritz an amount equal to $7,500,000.
If (i) the Plan of Reorganization is terminated (A) by Fritz or Intertrans
because the Effective Date has not occurred on or before July 31, 1995, or (B)
by Fritz, provided that Fritz is not in material breach of any of its
obligations under the Plan of Reorganization, because any person or entity has
purchased 40% or more of the outstanding shares of Intertrans Common Stock, or
because Intertrans has breached its representations, warranties or covenants
without promptly curing such breach after receiving notice of such breach, and
(ii) the principal transaction contemplated by any Acquisition Proposal is
consummated within nine months of any termination described in (A) or (B),
regardless of whether the Acquisition Proposal had been received by Intertrans
at the time of termination, then, concurrently with the consummation of such
transaction, Intertrans shall pay to Fritz an amount equal to $7,500,000.
If the Plan of Reorganization is terminated (i) by Fritz, provided that
Fritz is not in material breach of any of its obligations under the Plan of
Reorganization, because the Board of Directors of Intertrans withdraws or
adversely modifies its recommendation of the Merger or recommends or approves
any acceptance by Intertrans' shareholders of any Acquisition Proposal, or (ii)
by Intertrans because its Board of Directors enters into a definitive agreement
with respect to a Superior Proposal as defined in, and in compliance with, the
Plan of Reorganization, then, at the time any termination described in (i) or
(ii), Intertrans shall pay to Fritz an amount equal to $3,000,000. Furthermore,
if following any termination described in (i) or (ii), the principal transaction
contemplated by any Acquisition Proposal is consummated within 12 months of the
termination, regardless of whether such Acquisition Proposal was received by
Intertrans at the time of termination, then, concurrently with the consummation
of such transaction, Intertrans shall pay to Fritz an amount equal to
$4,500,000.
If the Plan of Reorganization is terminated by Fritz or Intertrans because
the requisite vote of the Fritz stockholders at the Fritz Annual Meeting is not
obtained with respect to the Fritz Share Issuance Proposal,
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and at the time of such termination (i) Intertrans is not in material breach of
any of its obligations under the Plan of Reorganization, and (ii) the Board of
Directors of Intertrans shall not have (x) withdrawn or adversely modified its
recommendation of Merger or (y) recommended or approved any acceptance by
Intertrans' shareholders of any Acquisition Proposal, then, at the time of such
termination, Fritz shall pay to Intertrans an amount equal to $2,500,000.
GOVERNMENTAL AND REGULATORY APPROVALS
To the knowledge of Fritz and Intertrans, no governmental or regulatory
approvals are required for consummation of the Merger, other than compliance
with the provisions of applicable securities and "blue sky" laws of various
jurisdictions and the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"). On , 1995, Fritz and Intertrans,
respectively, filed Pre-Merger Notifications under the HSR Act with the Federal
Trade Commission and the Antitrust Division of the U.S. Department of Justice.
The waiting period applicable to the consummation of the Merger under the HSR
Act terminated on , 1995.
Federal and state antitrust enforcement authorities are entitled to
scrutinize the legality under the antitrust laws of transactions such as the
Merger. At any time before or after the Effective Time, and notwithstanding that
the HSR Act waiting period has expired, any such agency could take any action
under antitrust laws that it deems necessary or desirable in the public
interest. Such action could include seeking divesture of businesses acquired as
a result of the Merger. Private parties may also bring legal actions under
antitrust laws under certain circumstances.
INDEMNIFICATION
The Restated Certificate of Incorporation and Restated Bylaws of Fritz and
the Restated Articles of Incorporation, as amended, and Restated Bylaws of
Intertrans provide for the indemnification of each respective company's
directors and officers against liabilities arising in the course of performance
of their duties to Fritz and Intertrans, respectively, subject to certain
limitations imposed by law. In the Plan of Reorganization, Fritz and Intertrans
have agreed that, until the occurrence of the earlier of the Effective Time or
termination of the Plan of Reorganization, they would not adopt or propose any
changes to their respective charter documents. Fritz has also entered into
indemnification agreements with its directors and all of its executive officers.
These indemnification agreements provide indemnification rights that are
substantially similar to those found in Fritz's Restated Certificate of
Incorporation and Restated Bylaws.
In the Plan of Reorganization, Intertrans has agreed that until the
occurrence of the earlier of the Effective Time or termination of the Plan of
Reorganization, it will keep in full force and effect its existing directors'
and officers' liability insurance and will not modify or reduce the coverage
thereunder.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion summarizes certain of the principal federal income
tax considerations associated with the Merger under the Code. As it is not
feasible to describe all of the tax consequences associated with the Merger,
each stockholder should consult his or her tax advisor with respect to the tax
consequences of the Merger applicable to his or her specific circumstances. In
particular, the following discussion does not address the potential tax
consequences applicable to Intertrans shareholders who are dealers in
securities, who acquired their Intertrans Common Stock through stock option or
stock purchase programs or other employee plans, or who are subject to special
treatment under the Code (such as insurance companies, tax-exempt organizations,
nonresident alien individuals or foreign entities), nor any potential tax
consequences applicable to the holders of Intertrans Stock Options assumed by
Fritz in the Merger. The following summary is based on the Code, applicable
Treasury Regulations, judicial authority and administrative rulings and
practice, all as of the date hereof. There can be no assurance that future
legislative, judicial or administrative changes or interpretations will not
adversely affect the statements and conclusions set forth herein. Any such
changes or interpretations could be applied retroactively and could affect the
tax consequences of the Merger to Intertrans, Fritz and their respective
stockholders. Furthermore, the following discussion addresses only
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certain federal income tax matters and does not consider any state, local or
foreign tax consequences of the Merger or other transactions described in this
Joint Proxy Statement/Prospectus.
Neither Fritz nor Intertrans has requested a ruling from the Internal
Revenue Service in connection with the Merger. However, the Merger has been
structured with the intention that it qualify as a reorganization under Sections
368(a)(1)(A) and 368(a)(2)(E) of the Code. It is a condition to the respective
obligations of Fritz and Intertrans to consummate the Merger that counsel to
each of Fritz and Intertrans deliver an opinion to Fritz and Intertrans,
respectively, to the effect that the Merger will qualify as a reorganization
under Section 368(a) of the Code. Such tax opinions will be subject to certain
assumptions and qualifications and will be based on (i) various representations
of the management of Intertrans and Fritz and certain Intertrans shareholders,
including representations from Intertrans and certain of Intertrans'
shareholders to the effect that as of the Effective Time there will be no plan
or intention on the part of Intertrans shareholders to sell or otherwise dispose
of a number of shares of Fritz Common Stock received in the Merger so as to
jeopardize the qualification of the Merger as a reorganization for federal
income tax purposes and (ii) the assumption that the Merger will be consummated
as described in the Plan of Reorganization and this Joint Proxy
Statement/Prospectus. Such opinions will neither be binding on the Internal
Revenue Service nor preclude it from adopting a contrary position.
Qualification of the Merger as a reorganization depends on compliance with
certain technical requirements of federal income tax law, including, among
others, the requirement that a continuity of proprietary interest be maintained
by the shareholders of the merged corporation. In order for this requirement to
be satisfied, the shareholders of Intertrans must not, pursuant to a plan or
intention existing at or prior to the Merger, dispose of so much of either (A)
their shares of Intertrans Common Stock in anticipation of the Merger or (B) the
Fritz Common Stock received pursuant to the Merger such that the holders of
shares of Intertrans Common Stock, as a group, would no longer have a
significant equity interest in the Intertrans business being conducted by the
combined companies after the Merger. It is the position of the Internal Revenue
Service that the continuity of interest requirement generally will be considered
satisfied if the shareholders of the merged corporation receive in the aggregate
(and have no plan to dispose of) stock of the acquiring corporation equal in
value to at least 50% of the value of all of the formerly outstanding stock of
the acquired corporation as of the effective date of the reorganization, and a
decision of the United States Supreme Court indicates that continuity of
interest in the range of 40% is sufficient.
With the exception of cash paid in lieu of fractional shares and cash paid
to dissenting shareholders, the Plan of Reorganization provides that all of the
consideration paid by Fritz to Intertrans' shareholders in exchange for their
Intertrans Common Stock pursuant to the Merger will consist of Fritz Common
Stock. Furthermore, Intertrans, pursuant to the Plan of Reorganization, is
obligated to obtain from each of its affiliates a representation that such
affiliate has no plan to sell, transfer or otherwise dispose of or convey more
than 50% of the Fritz Common Stock received by them pursuant to the Merger. See
"-- Resale of Fritz Common Stock; Agreements with Intertrans Affiliates."
Satisfaction of the continuity of interest requirement, however, depends in part
on actions that may be taken by Intertrans' shareholders either before or after
the consummation of the Merger over which neither Intertrans nor Fritz had any
control. Accordingly, there can be no assurance that the continuity of interest
requirement will be satisfied with respect to the Merger. If the continuity of
interest requirement (or any other requirement for reorganization treatment
under the Code) is not satisfied, the Merger will not be treated as a
reorganization and material adverse tax consequences will result to Intertrans,
Fritz and some or all of the holders of Intertrans Common Stock.
Tax Consequences to Intertrans Shareholders. Assuming the Merger is treated
as a reorganization under the Code, the following federal income tax
consequences, among others, generally will apply to Intertrans' shareholders:
(i) No gain or loss will be recognized by the holders of Intertrans'
Common Stock with respect to the receipt of Fritz Common Stock in exchange
for such Intertrans Common Stock pursuant to the Merger (except with
respect to any cash or other property received, including, without
limitation, cash received in lieu of fractional shares of Fritz Common
Stock).
51
<PAGE> 61
(ii) The aggregate tax basis of the Fritz Common Stock received by
Intertrans shareholders will be the same as the aggregate tax basis of the
Intertrans Common Stock surrendered in the Merger, decreased by the amount
of any tax basis allocable to fractional shares of Fritz Common Stock in
lieu of which cash will be paid.
(iii) The holding period of the Fritz Common Stock received by each
Intertrans shareholder will include the period for which the Intertrans
Common Stock surrendered in exchange therefor was considered to be held,
provided the Intertrans Common Stock so surrendered is held as a capital
asset at the Effective Time.
(iv) Payment received by holders of Intertrans Common Stock in lieu of
fractional shares of Fritz Common Stock will be treated as payment in
redemption of such fractional shares and, provided that the redeemed
interest is held as a capital asset at the Effective Time, will generally
result in the recognition of capital gain or loss by such holders measured
by the difference between the amount received and the tax basis allocable
to such fractional shares.
(v) A holder of shares of Intertrans Common Stock who exercises
dissenters' rights with respect to such shares and receives payment for
such shares in cash generally will recognize capital gain or loss measured
by the difference between the amount of cash received and such holder's
basis in the Dissenting Shares (as defined below), provided that the shares
are held as a capital asset at the Effective Time. However, different tax
consequences, including treatment of the payment as the equivalent of a
dividend distribution or the treatment of all or a portion of any such gain
as ordinary income, could apply depending upon the shareholder's particular
circumstances, such as whether the shareholder exercises dissenters' rights
with respect to all or only a portion of the shareholder's Intertrans
Common Stock, whether the shareholder is deemed under applicable
attribution rules to own Intertrans Common Stock held by related parties
and whether any of the shares with respect to which the shareholder
exercises dissenters rights were acquired pursuant to an incentive stock
option within the meaning of Section 422 of the Code. Accordingly,
Intertrans shareholders should consult their tax advisors with respect to
the income tax consequences of exercising dissenters' rights under their
particular circumstances.
Irrespective of the reorganization status of the Merger, a recipient of
shares of Fritz Common Stock will recognize gain if and to the extent any such
shares are considered to be received in exchange for services or property (other
than Intertrans Common Stock). All or a portion of such gain may be taxable as
ordinary income. Gain also will be recognized if and to the extent an Intertrans
shareholder is treated as receiving (directly or indirectly) consideration other
than Fritz Common Stock in exchange for his or her Intertrans Common Stock.
Tax Consequences to Fritz and Intertrans. Assuming the Merger is treated as
a reorganization under the Code, generally no gain or loss will be recognized by
Fritz or Intertrans as a result of the Merger. The Merger will not have any tax
consequences for Fritz stockholders.
THE FOREGOING DISCUSSION IS FOR GENERAL INFORMATION ONLY AND IS NOT A
COMPLETE DESCRIPTION OF ALL POTENTIAL TAX CONSEQUENCES WHICH MAY OCCUR AS A
RESULT OF THE MERGER. STOCKHOLDERS SHOULD THEREFORE CONSULT THEIR TAX ADVISORS
REGARDING THE FEDERAL TAX CONSEQUENCES OF THE MERGER, THE HOLDING AND DISPOSING
OF FRITZ COMMON STOCK RECEIVED IN THE MERGER, THE EXERCISE OF ANY OPTIONS TO
PURCHASE FRITZ COMMON STOCK ASSUMED IN THE MERGER AND THE TAX CONSEQUENCES OF
THE MERGER ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR OTHER JURISDICTION.
DISSENTERS' RIGHTS
Holders of Intertrans Common Stock may dissent from approval of the
Intertrans Merger Proposal under Article 5 (Sections 5.11-5.13) of the Texas
Business Corporation Act ("Article 5") and require Intertrans to purchase for
cash the shares of Intertrans Common Stock owned by such holder at their fair
market value. If any holder of Intertrans Common Stock elects to exercise such
dissenters' rights and properly follows the
52
<PAGE> 62
procedures set forth in Article 5, such holder will not be entitled to receive
any of the consideration to which such holder would otherwise have been entitled
in respect of such shares under the terms of the Plan of Reorganization.
The following summary of the provisions of Article 5 is not intended to be
a complete statement of such provisions and is qualified in its entirety by
reference to the full text of sections of Article 5 dealing with dissenters'
rights, which are reproduced in full as Appendix F to this Joint Proxy
Statement/Prospectus.
If the Merger is approved by the required vote of Intertrans' shareholders
and is not abandoned or terminated, each holder of shares of Intertrans Common
Stock who votes against approval and adoption of the Plan of Reorganization, and
who follows the procedures set forth in Article 5 and whose shares constitute
Dissenting Shares (as defined below) will be entitled to have his or her shares
of Intertrans Common Stock purchased by Intertrans for cash at their fair market
value. The fair market value of shares of Intertrans Common Stock will be
determined as of the day before the Intertrans Annual Meeting, excluding any
appreciation or depreciation in anticipation of the proposed action. In this
Joint Proxy Statement/Prospectus, "Dissenting Shares" shall refer to those
shares of Intertrans Common Stock with respect to which the holders thereof have
voted against the approval of the Plan of Reorganization and Merger and
perfected their purchase demand in accordance with Article 5 and have not
effectively withdrawn or lost such rights.
A shareholder of Intertrans wishing to exercise dissenters' rights must
file with Intertrans, prior to the Intertrans Annual Meeting, a written
objection to the Merger, setting out that the shareholder's right to dissent
will be exercised if the Merger is effective and giving the shareholder's
address, to which notice thereof will be delivered or mailed in that event. The
demand is not effective for any purpose unless it is received by Intertrans or
its transfer agent not later than the date of the Intertrans Annual Meeting. A
holder who wishes to exercise dissenters' rights should mail or deliver his or
her written demand to Intertrans at 125 E. John Carpenter Freeway, Suite 900,
Irving, Texas 75062, directed to the attention of Intertrans' General Counsel.
The demand should specify the holder's name and mailing address and state that
such holder will exercise his or her right to dissent in the event that the
Merger is effected. Only a holder of record shares of Intertrans Common Stock at
April 4, 1995 (or his or her duly appointed representative) is entitled to
assert a purchase demand for the shares registered in that holder's name.
Within 10 days after the Merger is effected, Intertrans will deliver or
mail to the shareholder written notice (the "Approval Notice") that the Merger
has been effected, and the shareholder may, within 10 days from the delivery or
mailing of the Approval Notice, make written demand on Intertrans for payment of
the fair value of the shareholder's shares. The demand must state the number and
class of the shares owned by the shareholder and the fair value of the shares as
estimated by the shareholder. Any shareholder failing to make demand within the
10-day period will be bound by the Merger and thereupon will be entitled to
receive only such consideration as provided for in the Plan of Reorganization.
Within 20 days after receipt by Intertrans of a demand for payment made by
a dissenting shareholder in accordance with the preceding paragraph, Intertrans
will deliver or mail to the shareholder a written notice that will either (i)
set out that Intertrans accepts the amount claimed in the demand and agrees to
pay that amount within 90 days after the date on which the Merger was effected,
and, in the case of shares represented by certificates, upon the surrender of
the certificates duly endorsed, or (ii) contain an estimate by Intertrans of the
fair value of the shares, together with an offer to pay the amount of that
estimate within 90 days after the date on which the Merger was effected, upon
receipt of notice within 60 days after that date from the shareholder that the
shareholder agrees to accept that amount and, in the case of shares represented
by certificates, upon surrender of the certificates duly endorsed.
If Intertrans and the shareholder fail to agree upon the fair market value
of such shareholder's Dissenting Shares within 60 days after the Merger is
effected, then within 60 days after the expiration of the 60-day period,
Intertrans or any shareholder who has made a valid written purchase demand may
file a petition in a court of competent jurisdiction in Dallas County, Texas,
requesting a determination as to the fair market value of such Dissenting
Shares. The court will determine whether the shareholder has complied with the
provisions of Article 5 and has therefore become entitled to the valuation of
and payment for his shares. If a valuation
53
<PAGE> 63
procedure is called for, the court will appoint qualified appraisers to
determine the value. Court costs will be allocated between the parties in such
manner as the court determines.
Any holder of Dissenting Shares who has duly demanded the purchase of his
or her shares under Article 5 will not thereafter be entitled to vote or
exercise any other rights of a shareholder except the right to receive payment
for his shares pursuant to Article 5 and the right to maintain an appropriate
action to obtain relief on the ground that the corporate action would be or was
fraudulent.
If any holder of shares of Intertrans Common Stock who demands the purchase
of his or her shares under Article 5 fails to perfect, or effectively withdraws
or loses his or her right to such purchase, the shares of such holder will be
converted into a right to receive that number of shares of Fritz Common Stock
equal to the Merger Exchange Ratio multiplied by the number of shares of
Intertrans Common Stock held by such person, in accordance with the Plan of
Reorganization.
If holders of more than an insignificant number of shares of Intertrans
Common Stock elect to exercise their dissenters' rights, such action could
adversely impact the ability of Fritz to account for the business combination
contemplated by the Merger as a "pooling of interests" under generally accepted
accounting principles.
PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma combined condensed financial statements
assume a business combination between Fritz and Intertrans accounted for on a
pooling of interests basis and are based on the respective historical financial
statements and the notes thereto, which are incorporated by reference in this
Joint Proxy Statement/Prospectus. The pro forma combined condensed balance sheet
combines Fritz's December 31, 1994 consolidated balance sheet with Intertrans'
October 31, 1994 consolidated balance sheet, giving effect to the Merger as if
it occurred on December 31, 1994. The pro forma combined condensed statements of
income combines Fritz's historical consolidated statements of income for each of
the three fiscal years ended December 31, 1994, 1993 and 1992, respectively,
with the corresponding Intertrans historical consolidated statements of income
for each of the three fiscal years ended October 31, 1994, 1993 and 1992,
respectively.
The pro forma information is presented for illustrative purposes only and
is not necessarily indicative of the operating results or financial position
that would have occurred if the Merger had been consummated at the beginning of
the earliest period presented, nor is it necessarily indicative of the future
operating results or financial position. The unaudited pro forma combined
condensed financial statements do not incorporate any benefits from cost savings
or synergies of operations of the combined company.
These pro forma combined condensed financial statements are based on, and
should be read in conjunction with, the historical consolidated financial
statements and the related notes thereto of Fritz and Intertrans incorporated by
reference herein. See "Incorporation of Certain Information by Reference."
54
<PAGE> 64
FRITZ COMPANIES, INC.
AND INTERTRANS CORPORATION
PRO FORMA COMBINED CONDENSED BALANCE SHEET
(IN THOUSANDS, UNAUDITED)
<TABLE>
<CAPTION>
FRITZ AS OF INTERTRANS AS OF PRO FORMA PRO FORMA
DECEMBER 31, 1994 OCTOBER 31, 1994 ADJUSTMENTS COMBINED
----------------- ---------------- ------------ ---------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and other current assets........ $ 45,968 $ 23,236 $ -- $ 69,204
Accounts receivable, net............. 245,381 74,650 -- 320,031
--------- -------- -------- ---------
Total current assets......... 291,349 97,886 -- 389,235
PROPERTY AND EQUIPMENT -- NET........ 62,284 14,811 (5,000)(3) 72,095
INTANGIBLES AND OTHER ASSETS......... 46,070 16,691 -- 62,761
--------- -------- -------- ---------
TOTAL ASSETS................. $ 399,703 $129,388 $ (5,000) $ 524,091
========= ======== ======== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term
obligations....................... $ 7,219 $ -- $ $ 7,219
Accounts payable and accrued
expenses.......................... 240,594 58,140 20,500 (3) 319,234
Income tax payable................... 4,493 2,207 (7,175)(3) 22
497 (5)
--------- -------- -------- ---------
Total current liabilities.... 252,306 60,347 13,822 326,475
LONG-TERM OBLIGATIONS................ 33,048 -- -- 33,048
DEFERRED INCOME TAXES................ 2,989 303 (1,750)(3) 1,542
OTHER LIABILITIES.................... 3,901 -- -- 3,901
--------- -------- -------- ---------
TOTAL LIABILITIES............ 292,244 60,650 12,072 364,966
--------- -------- -------- ---------
STOCKHOLDERS' EQUITY:
Preferred stock...................... -- -- --
Common stock......................... 275 26,310 -- 26,585
Additional paid-in capital........... 94,394 25 -- 94,419
Retained earnings.................... 47,597 47,730 (16,575)(3) 78,255
(497)(5)
Treasury stock -- at cost............ (35,000) (6,386) -- (41,386)
Cumulative foreign currency
translation adjustment............ 193 1,059 -- 1,252
--------- -------- -------- ---------
Total stockholders' equity... 107,459 68,738 (17,072) 159,125
--------- -------- -------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY....... $ 399,703 $129,388 $ (5,000) $ 524,091
========= ======== ======== =========
</TABLE>
See notes to pro forma combined condensed financial statements.
55
<PAGE> 65
FRITZ COMPANIES, INC.
AND INTERTRANS CORPORATION
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FRITZ INTERTRANS
YEAR ENDED YEAR ENDED PRO FORMA PRO FORMA
DECEMBER 31, 1994 OCTOBER 31, 1994 ADJUSTMENTS COMBINED
----------------- ---------------- ----------- ----------
<S> <C> <C> <C> <C>
REVENUE.............................. $515,969 $452,156 $(194,736)(4) $773,389
FREIGHT CONSOLIDATION COSTS.......... 270,521 194,736 (24,451)(4) 440,806
-------- -------- --------- --------
NET REVENUE.......................... 245,448 257,420 (170,285) 332,583
-------- -------- --------- --------
OPERATING EXPENSES:
Direct transportation costs........ -- 170,285 (170,285)(4) --
Salaries and related costs......... 139,102 -- 44,252 (4) 183,354
General and administrative and
other........................... 74,974 72,298 (44,252)(4) 103,020
-------- -------- --------- --------
Total Operating Expenses... 214,076 242,583 (170,285) 286,374
-------- -------- --------- --------
INCOME FROM OPERATIONS............... 31,372 14,837 -- 46,209
OTHER INCOME (EXPENSES) -- NET....... (1,263) 576 -- (687)
-------- -------- --------- --------
INCOME BEFORE TAXES ON INCOME........ 30,109 15,413 -- 45,522
TAXES ON INCOME...................... 10,538 4,851 544 (5) 15,933
-------- -------- --------- --------
NET INCOME........................... $ 19,571 $ 10,562 $ (544) $ 29,589
======== ======== ========= ========
Net income per share -- primary.... $ 1.73 $ 0.87 $ 1.85
======== ======== ========
Weighted average shares
outstanding..................... 11,337 12,161 16,019
======== ======== ========
Net income per share -- fully
diluted......................... $ 1.70 $ 0.87 $ 1.82
======== ======== ========
Weighted average shares
outstanding..................... 11,519 12,206 16,218
======== ======== ========
</TABLE>
See notes to pro forma combined condensed financial statements.
56
<PAGE> 66
FRITZ COMPANIES, INC.
AND INTERTRANS CORPORATION
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FRITZ INTERTRANS
YEAR ENDED YEAR ENDED PRO FORMA PRO FORMA
DECEMBER 31, 1993 OCTOBER 31, 1993 ADJUSTMENTS COMBINED
----------------- ---------------- ----------- ---------
<S> <C> <C> <C> <C>
REVENUE.................................. $ 341,758 $376,762 $(169,494)(4) $ 549,026
FREIGHT CONSOLIDATION COSTS.............. 171,817 169,494 (35,327)(4) 305,984
--------- -------- --------- ---------
NET REVENUE.............................. 169,941 207,268 (134,167) 243,042
--------- -------- --------- ---------
OPERATING EXPENSES:
Direct transportation costs............ -- 134,167 134,167 (4) --
Salaries and related costs............. 97,879 -- 38,409 (4) 136,288
General and administrative and other... 50,957 60,760 (38,409)(4) 73,308
--------- -------- --------- ---------
Total Operating Expenses....... 148,836 194,927 (134,167) 209,596
--------- -------- --------- ---------
INCOME FROM OPERATIONS................... 21,105 12,341 33,446
OTHER INCOME (EXPENSES) -- NET........... 471 858 1,329
--------- -------- --------- ---------
INCOME BEFORE TAXES ON INCOME............ 21,576 13,199 34,775
TAXES ON INCOME.......................... 7,552 4,509 111 (5) 12,172
--------- -------- --------- ---------
NET INCOME............................... $ 14,024 $ 8,690 $ (111) 22,603
========= ======== ========= =========
Net income per share -- primary........ $ 1.30 $ 0.75 $ 1.48
========= ======== =========
Weighted average shares outstanding.... 10,819 11,577 15,276
========= ======== =========
Net income per share -- fully
diluted............................. $ 1.30 $ 0.74 $ 1.48
========= ======== =========
Weighted average shares outstanding.... 10,820 11,684 15,318
========= ======== =========
</TABLE>
See notes to pro forma combined condensed financial statements.
57
<PAGE> 67
FRITZ COMPANIES, INC.
AND INTERTRANS CORPORATION
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FRITZ INTERTRANS
YEAR ENDED YEAR ENDED PRO FORMA PRO FORMA
DECEMBER 31, 1992 OCTOBER 31, 1992 ADJUSTMENTS COMBINED
----------------- ---------------- ----------- ---------
<S> <C> <C> <C> <C>
REVENUE................................. $248,766 $366,844 $(160,513)(4) $ 455,097
FREIGHT CONSOLIDATION COSTS............. 107,193 160,513 (22,620)(4) 245,086
-------- -------- --------- ---------
NET REVENUE............................. 141,573 206,331 (137,893) 210,011
-------- -------- --------- ---------
OPERATING EXPENSES:
Direct transportation costs........... -- 137,893 (137,893)(4) --
Salaries and related costs............ 82,456 -- 35,416 (4) 117,872
General and administrative and
other.............................. 42,126 57,316 (35,416)(4) 64,026
-------- -------- --------- ---------
Total Operating Expenses...... 124,582 195,209 (137,893) 181,898
-------- -------- --------- ---------
INCOME FROM OPERATIONS.................. 16,991 11,122 -- 28,113
OTHER INCOME (EXPENSES) -- NET.......... (1,543) 1,043 -- (500)
-------- -------- --------- ---------
INCOME BEFORE TAXES ON INCOME........... 15,448 12,165 -- 27,613
TAXES ON INCOME......................... 2,331 4,416 (158)(5) 6,589
-------- -------- --------- ---------
NET INCOME.............................. $ 13,117 $ 7,749 $ 158 $ 21,024
======== ======== ========= =========
PRO FORMA(a):
Historical income before taxes on
income............................. $ 15,448 $ 12,165 -- $ 27,613
Pro forma adjustment for acquisition
of minority interest............... 733 -- -- 733
-------- -------- --------- ---------
Pro forma income before taxes on
income............................. 16,181 12,165 28,346
Pro forma taxes on income............. 5,662 4,416 (158)(5) 9,920
-------- -------- --------- ---------
Pro forma net income.................. $ 10,519 $ 7,749 $ 158 $ 18,426
======== ======== ========= =========
Pro forma net income per share --
primary............................ $ 1.28 $ 0.68 $ 1.45
======== ======== =========
Weighted average shares outstanding... 8,299 11,481 12,719
======== ======== =========
Pro forma net income per share --
fully diluted...................... $ 1.28 $ 0.67 $ 1.45
======== ======== =========
Weighted average shares outstanding... 8,299 11,512 12,731
======== ======== =========
</TABLE>
- ---------------
(a) The pro forma data for Fritz reflects adjustments assuming Fritz had not
elected S Corporation status for income tax purposes in 1992. For
additional discussion, see Note 6 of the Notes to Pro Forma Combined
Condensed Financial Statements. Intertrans pro forma data have not been
adjusted.
See notes to pro forma combined condensed financial statements.
58
<PAGE> 68
FRITZ COMPANIES, INC.
AND INTERTRANS CORPORATION
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. PERIODS COMBINED
The Fritz statements of income for each of the years in the three-year
period ended December 31, 1994 have been combined with the Intertrans statements
of income for each of the years in the three-year period ended October 31, 1994.
The Fritz consolidated balance sheet as of December 31, 1994 has been
combined with the Intertrans consolidated balance sheet as of October 31, 1994.
NOTE 2. PRO FORMA EARNINGS PER SHARE
The pro forma combined condensed statement of income for Fritz and
Intertrans has been prepared as if the Merger was completed at the beginning of
the periods presented. The pro forma combined net income per share is based on
combined weighted average number of common and common equivalent shares of Fritz
and Intertrans Common Stock for each period, based on an assumed exchange ratio
of 0.385 share, of Fritz Common Stock for each share of Intertrans Common Stock.
NOTE 3. BASIS OF PRESENTATION
Pro forma basis of presentation
The pro forma combined condensed financial statements reflect the issuance
of 4,379,151 shares of Fritz Common Stock in exchange for an aggregate of
11,374,417 shares of Intertrans Common Stock in connection with the Merger based
on an assumed exchange ratio of 0.385 shares of Fritz Common Stock for each
share of Intertrans Common Stock outstanding on October 31, 1994.
The following table provides the pro forma share issuances in connection
with the Merger:
<TABLE>
<S> <C>
Intertrans Common Stock outstanding at October 31, 1994.......... 11,374,417
Exchange Ratio................................................... 0.385
----------
Number of shares of Fritz Common Stock exchanged................. 4,379,151
Number of shares of Fritz Common Stock outstanding at
December 31, 1994.............................................. 12,195,075
----------
Number of shares of Fritz Common Stock outstanding after
completion of the Merger....................................... 16,574,226
==========
</TABLE>
The actual number of shares of Fritz Common Stock to be issued will be
determined at the Effective Time based on the number of shares of Intertrans
Common Stock outstanding at such time.
Transaction costs and restructuring expenses
Fritz and Intertrans estimate they will incur direct transaction costs of
approximately $3 million associated with the Merger, consisting of transaction
fees for investment bankers, attorneys, accountants, financial printing and
other related charges. These nonrecurring costs will be charged to operations in
the fiscal quarter in which the Merger is consummated. The pro forma combined
condensed balance sheet gives effect to such expenses as if they had been
incurred as of December 31, 1994, but effects of these costs have not been
reflected in the pro forma combined condensed statement of income.
In addition, it is expected that, as a result of the Merger, the combined
company will incur significant restructuring expenses estimated to be between
$20 million and $25 million. The restructuring expenses will include:
- severance and outplacement;
- elimination of duplicate management information systems and facilities,
including cancellation of leases;
59
<PAGE> 69
FRITZ COMPANIES, INC.
AND INTERTRANS CORPORATION
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
- cancellation and continuation of certain contractual obligations; and
- costs associated with the integration of the merged companies.
The income tax effect of these expenses has also been reflected as a pro
forma adjustment. The restructuring expenses are reflected in the pro forma
combined condensed balance sheet and are not reflected in the pro forma combined
condensed statement of income.
NOTE 4. CONFORMING ADJUSTMENTS
In order to conform to the accounting policies of Fritz, the revenue and
freight consolidation costs for Intertrans were reduced so that pass-through
amounts paid as agent for ocean freight, foreign collect freight, and customs
duty, and other services are not included in the pro forma combined condensed
statements of income.
In addition, certain amounts for Intertrans have been reclassified to
conform to the financial statement classification followed by Fritz.
NOTE 5. PROVISION FOR INCOME TAXES
The provision for income taxes has been adjusted to reflect the effect of
applying Fritz's effective income tax rate of 35% to the results of operations
of Intertrans after applying the pro forma adjustments.
NOTE 6. PRO FORMA ADJUSTMENTS
During the period January 1, 1992 to October 22, 1992 (Fritz's initial
public offering -- "Termination Date"), Fritz operated as an S Corporation for
federal and certain state income tax purposes. As a result, Fritz's 1992
earnings through the Termination Date were taxed, with certain exceptions, for
federal and certain state income tax purposes directly to the majority
stockholder. The pro forma income statement data for 1992 reflects adjustments
to the historical income statement data assuming Fritz had not elected S
Corporation status for income tax purposes, including the repurchase of the
minority interest in its subsidiaries sold to the sole stockholder to qualify
for S Corporation Status. The provisions for federal and state income taxes
assume an effective tax rate of 35% for 1992.
60
<PAGE> 70
ELECTION OF FRITZ DIRECTORS
(PROPOSAL FOR FRITZ MEETING)
The persons named below are nominees for director to serve until the next
annual meeting of stockholders and until their successors shall have been
elected. The nominees constitute the present Board of Directors.
In the absence of instructions to the contrary, shares represented by the
proxy will be voted and the proxies will vote for the election of all such
nominees to the Board of Directors. If any of such persons is unable or
unwilling to be a candidate for the office of director at the date of the Fritz
Annual Meeting, or any adjournment thereof, the proxies will vote for such
substitute nominee as shall be designated by the proxies. The management has no
reason to believe that any of such nominees will be unable or unwilling to serve
if elected a director. Set forth below is certain information concerning the
nominees which is based on data furnished by them.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR SERVED AS
NOMINEES FOR DIRECTOR AGE POSITION HELD WITH FRITZ DIRECTOR SINCE
- --------------------- --- -------------------------------------------------- --------------
<S> <C> <C> <C>
Lynn C. Fritz 52 Chairman of the Board, Chief Executive Officer and 1977
President
Dennis L. Pelino 47 Chief Operating Officer and Senior Vice President 1991
Ronald A. Marcillac 54 Senior Vice President 1988
James Gilleran 61 Chairman of the Board and Chief Executive Officer 1992
of The Bank of San Francisco and its parent, The
San Francisco Company
Preston Martin 71 Chairman, President and CEO of Martin Holdings, 1992
Inc. (bank asset holding company), Chairman of
Martin Associates (consulting firm) and Chairman
of LINC Group, Inc. (insurance agency)
</TABLE>
For certain biographical information regarding the directors of Fritz and
certain information regarding committees of the Board of Directors and director
compensation, see "Fritz -- Management."
Following the approval and consummation of the Merger and related
transactions, the Fritz Board of Directors intends to increase the size of the
Board from five to six directors and appoint Carsten S. Andersen, the current
President of Intertrans, to fill the vacancy created by such action. For certain
biographical information regarding Mr. Andersen, see "Intertrans -- Management."
61
<PAGE> 71
ELECTION OF INTERTRANS DIRECTORS
(PROPOSAL FOR INTERTRANS MEETING)
The persons named below are nominees for director to serve until the
earlier of (i) the next annual meeting of Intertrans shareholders and until
their successors shall have been elected or (ii) the consummation of the Merger.
The nominees constitute the present Board of Directors.
In the absence of instructions to the contrary, shares represented by the
proxy will be voted and the proxies will vote for the election of all such
nominees to the Board of Directors. If any of such persons is unable or
unwilling to be a candidate for the office of director at the date of the
Intertrans Annual Meeting, or any adjournment thereof, the proxies will vote for
such substitute nominee as shall be designated by the proxies. The management
has no reason to believe that any of such nominees will be unable or unwilling
to serve if elected a director. Set forth below is certain information
concerning the nominees which is based on data furnished by them.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR SERVED AS
NOMINEES FOR DIRECTOR AGE POSITION HELD WITH INTERTRANS DIRECTOR SINCE
- --------------------- --- -------------------------------------------------- --------------
<S> <C> <C> <C>
Sam N. Wilson 59 Chairman of the Board and Chief Executive Officer 1978
Carsten S. Andersen 51 President 1987
W. Ted Minick 54 Director and Shareholder of Winstead Sechrest & 1981
Minick P.C. (law firm)
Sheldon Frankel 58 Certified public accountant with Fox, Byrd, Golden 1980
& Frankel (accounting firm)
Cesareo Llano 55 Chairman of the Board of Stair Cargo Services, 1992
Inc., a division of Intertrans
</TABLE>
For certain biographical information regarding the directors of Intertrans
and certain information regarding committees of the Board of Directors and
director compensation, see "Intertrans -- Management."
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FRITZ
BUSINESS
GENERAL
Fritz Companies, Inc. ("Fritz") is a leader in global transportation
logistics and related information services for importers and exporters
worldwide. Fritz's principal logistics services include logistics management,
customs brokerage, international air and ocean freight consolidations and
forwarding, warehousing and distribution services, and other value-added
services for the international and domestic movement of goods and logistics
information. Fritz provides these logistics services as an integrated unit which
allows domestic and multinational corporations to outsource or partner the
entire or certain segments of their process in global sourcing and distribution
from the point of purchase order to final delivery. A key component of Fritz's
integrated logistics programs is its information systems, in which Fritz has
invested substantial management and financial resources.
Fritz believes that its integrated logistics programs reduce customers'
inventory costs and improve customers' profitability through more effective
management of customers' global supply and distribution channels. Fritz is
increasingly providing its customers with customized global transportation
logistics programs which integrate some or all of Fritz's services. As part of
such programs, Fritz's information systems are often integrated with those of
its customers and, in some cases, Fritz's personnel are stationed at the
customers' offices. Fritz's goal is to become the primary or exclusive supplier
of global logistics services to its major customers.
Fritz's diverse customer base includes many of the Fortune 1,000
multinational corporations which source or distribute products globally. Fritz
currently provides its services to approximately 20,000 customers worldwide and
is the largest customs broker in the United States according to the United
States Customs Service. Fritz does not own or operate ships or aircraft.
Fritz was incorporated in Delaware in August 1988 and is a successor to a
company incorporated in California in 1933. Internationally, Fritz operates a
number of subsidiaries under the names "Fritz Transportation International,"
"Fritz Air Freight," "Starber International," "Fritz-Fliway" and "Fritz
Companies," among others.
BUSINESS STRATEGY
Fritz's business strategy includes the following principal elements:
Emphasize Integrated Transportation Logistics. Fritz believes that by being
a leader in integrated transportation logistics, it will continue to be able to
provide superior service to its customers and to differentiate itself from its
competitors. While Fritz has offered multiple services for many years, it is
increasingly providing integrated logistics programs for a number of major
customers in which Fritz manages the customers' transportation, customs
clearance and warehousing and distribution activities. These programs are
specifically tailored to meet each customer's sourcing and distribution
requirements. The implementation of these programs often includes the
integration of Fritz's information systems with those of its customers, and, in
some cases, the stationing of Company personnel at the customers' offices.
Maintain and Enhance Technological Leadership Position. Fritz believes that
it is a leader in information processing for integrated transportation logistics
and that maintaining and strengthening such leadership position will be critical
to its continued success. Since 1971, Fritz has invested substantial management
and financial resources in the development of its information systems. Fritz's
on-line, interactive, nationwide brokerage system was one of the first to link
with the United States Customs Service through the Automated Broker Interface.
In late 1991, Fritz introduced the first module of Fritz Logistics Expediting
System ("FLEX"), an advanced information system designed to manage, process and
track international freight transactions. FLEX is an ongoing information
research and development project of Fritz, and Fritz believes that it is the
most comprehensive source of information for importers and exporters worldwide
for managing the logistics of their global sourcing and distribution activities.
Specifically, the system permits Fritz and its customers to track the flow of
particular goods from the point of purchase order through vendor compliance, the
transportation selection and customs clearance processes to the point of
delivery. Fritz continues to seek to
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develop new products and services which take advantage of advancements in
information technology. For example, Fritz recently introduced a Supplier Hub
Module, which manages just-in-time inventory sourcing from multiple vendors in
the manufacturing process.
Increase Penetration of Existing Customers. The broad range of services
offered by Fritz and Fritz's efforts to develop integrated transportation
logistics programs have enabled Fritz to expand its sales and services to
existing customers. Specialized teams of marketing and operational personnel who
focus on specific industries enable Fritz to better analyze its customers'
transportation logistics requirements. In addition, its dedicated marketing
staff for major accounts and its Shippers Council enable Fritz to maintain close
contact with its major customers on an ongoing basis. Fritz believes it has the
opportunity to expand its business significantly within its existing customer
base.
Strengthen Fritz's Global Network. Fritz has increased the number of
offices and logistics centers it operates worldwide. Fritz intends to continue
to strengthen its global network of Fritz-owned offices by opening new offices
and making selective acquisitions. Such expansion is expected to occur in major
commercial centers both in the United States and abroad. Fritz believes that
such expansion will enhance its ability to offer uniform services on a worldwide
basis, thereby enabling it to earn increased revenue from existing and new
customers, particularly with respect to shipments originating in countries other
than the United States. See "Risk Factors -- Dependence on International Trade."
Pursue Strategic Acquisitions. Fritz has selectively used strategic
acquisitions to augment its global expansion and internal growth. In the year
ended December 31, 1994, Fritz completed 18 acquisitions of interests in
companies. Fritz continues to evaluate and make acquisitions which enhance its
position as a logistics provider and which extend its presence as a major
freight forwarder and customs broker into new geographic regions of the United
States and the world. See "Risk Factors -- Role of Acquisitions."
Expand Customer Base. Fritz intends to increase the number of major
corporations worldwide for which it provides transportation logistics services.
Fritz has developed marketing programs directed at large, complex users of such
services, which have enabled it to add such companies to its customer base. In
addition, Fritz believes that its efforts to strengthen its international office
network will enhance its ability to add major customers throughout the world.
Fritz intends to continue to pursue acquisition opportunities, which would
enable it to gain access to additional customers in specific markets within and
outside the United States. See "Risk Factors -- Role of Acquisitions."
Expand Presence in Niche Markets. Fritz believes that its focus on industry
specialization will enhance its product growth in niche markets. Fritz believes
that it is a leader in project logistics management and forwarding services
involving large scale government and commercial projects. Fritz's project
logistics services include multiple-origin transportation planning and
evaluation, vendor compliance, risk/opportunity assessment, performance
measurement, procedure documentation, and forwarding of heavy material and
equipment and its attendant logistics information from multiple origins to
project locations. Recently, through internal development and an acquisition,
Fritz has expanded its project logistics services significantly for its
customers in the fields of petrochemical/energy development and exploration,
power plant construction, shipbuilding, construction of manufacturing/assembly
facilities, civil infrastructure building and foreign military sales by the
United States.
Fritz believes that it is one of the largest customs duty-drawback
specialists in the United States. The duty-drawback services involve recovery of
customs duties paid by importers when imported goods are partially or entirely
re-exported. Fritz has developed a comprehensive, proprietary, interactive,
on-line system which integrates the duty claims for its customers' import and
export activities. With certain recent acquisitions, Fritz has expanded its
logistics services for sourcing and distribution of high fashion merchandise
from Europe to North America and Asia and intra-Europe.
Penetrate New Regions. As more countries with closed or highly controlled
economies have moved toward free market systems, the opportunity for
international trade with these emerging growth regions has improved
significantly. Since its initial public offering in October 1992, Fritz has
significantly expanded its overseas and domestic expansion. See "-- Acquisition
Overview." See "Risk Factors -- Dependence on International Trade."
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Focus on Quality. Fritz believes that providing quality services has been a
critical factor in its past success. Accuracy and completeness of documentation,
on-time delivery and availability of logistics information are important
measures of the quality of Fritz's services. In order to enhance the quality and
effectiveness of its services, Fritz analyzes statistical measures of
performance and solicits customer participation in this process. Fritz is a past
recipient of the President's "E" Certificate For Export Service awarded by the
United States Department of Commerce.
CUSTOMS BROKERAGE
Fritz is the largest customs broker in the United States according to the
United States Customs Service. Fritz's customs brokerage operations for air and
ocean imports cover approximately 190 ports of entry in the United States and
Fritz believes it employs more individually licensed customs brokers in the
United States than any other firm. Fritz believes that its customs brokerage
operation is among the most sophisticated in the United States as a result of
its size, technology and integration with other transportation logistics
services provided to customers by Fritz. In addition, Fritz provides customs
brokerage services in selected ports overseas. Customs brokerage activities
accounted for 41%, 42.5% and 46.5% of Fritz's net revenue in 1994, 1993 and
1992, respectively.
As a customs broker in the United States, Fritz is engaged by importers for
the purpose of preparing all documentation required for entry of merchandise
into the United States. In this capacity, Fritz is responsible for coordinating
all events and communicating the status of shipments from the time of shipment
arrival through customs clearance. Fritz receives commercial and transportation
documentation, reviews it for completeness and accuracy, prepares and files all
documents necessary to clear customs, obtains customs bonds, assists the
importer in obtaining the appropriate commodity classification and arranges for
payment of collect freight charges. In most cases, Fritz also deposits import
duties with the United States Customs Service on behalf of the importer. In
addition, Fritz provides ancillary customs brokerage services to its customers,
including placement of surety bonds, duty reduction programs and duty-drawback
(recovery of duties paid when imported merchandise is re-exported). Fritz also
provides bonded warehouse services which enable importers to defer payment of
customs duty until release of the cargo in conjunction with their production or
distribution schedules. See "-- Warehousing and Distribution Services."
In providing customs brokerage services, Fritz has access to information
concerning a shipment's origin, destination and mode of transportation. As a
result, Fritz has been able to obtain additional business by identifying
opportunities where service to a customer can be improved or expenses reduced
through greater utilization of Fritz's other services, including cost-effective
cargo consolidations, routing from overseas origin to ports of entry, cargo
insurance, container unloading, inventory warehousing and arranging for the
domestic delivery of cleared cargo to its final destination.
Fritz believes it has been a leader in the use of computer technology for
customs brokerage activities on behalf of its clients. Fritz was one of the
first customs brokerage operations to link with the United States Customs
Service through the Automated Broker Interface information system and to develop
a comprehensive, proprietary, on-line, interactive customs brokerage system
which permits customers to monitor the status of a shipment as it passes through
the government clearance process. Fritz's information systems enable Fritz to
electronically prepare documents, transmit information necessary for cargo
pre-clearance through customs, expedite cargo release and provide nationwide
control of customs clearance at multiple ports of entry for its customers. See
"-- Information Systems."
Fritz's customs brokerage services are provided by Fritz's licensed customs
brokers and support staff who have substantial knowledge of the complex tariff
and government regulations with respect to the payment of custom duties and
other fees, commodity classification, valuation and import restrictions. In
addition, Fritz has concentrated on developing substantial customs brokerage
expertise within particular client industries. Fritz believes that its focus on
industry specialization is unique among its competitors and enables Fritz to
provide high levels of service to customers in these industries. Fritz provides
ongoing training programs, which include preparation for the United States
customs broker license examination, to employees as well as customers. Fritz
filed 1,610,000, 1,399,000 and 1,281,000 entries to the United States Customs
Service during 1994, 1993 and 1992, respectively.
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As a customs broker operating in the United States, Fritz is licensed by
the United States Department of the Treasury and regulated by the United States
Customs Service. Fritz's fees for customs brokerage services are not regulated
and Fritz does not have a fixed fee schedule for such services. Instead, customs
brokerage fees are based upon the complexity of the transaction and the type of
services required and are generally not related to the value of its customers'
goods. In addition to its fees, Fritz bills the importer for amounts which Fritz
pays on the importer's behalf, including duties, collect freight charges and
similar payments.
Fritz offers its customs brokerage services to all shippers, not
exclusively to its ocean or airfreight forwarding customers. Fritz's largest
customs brokerage customer in 1994 and 1993 accounted for 19.8% and 25.7%,
respectively, of Fritz's customs brokerage revenue, and 3.9% and 5.4% of Fritz's
revenue in 1994 and 1993. Fritz's contracts with such customer expire in March
1996 and February 1997. No other customer accounted for more than 5.0% of
Fritz's revenue in 1994.
INTERNATIONAL OCEAN AND AIRFREIGHT FORWARDING
Fritz believes that it is one of the largest forwarders of international
ocean and airfreight in the United States. Fritz's revenue from international
ocean freight forwarding is derived from logistics service both as an indirect
ocean carrier (a "Non-Vessel Operating Common Carrier" or "NVOCC") and as an
authorized agent for shippers and importers. Fritz's revenue from international
airfreight forwarding is derived from logistics service both as an indirect air
carrier and as an authorized cargo sales agent of various airlines.
Fritz also provides ancillary logistics services including inland
transportation of freight from point of origin to distribution center or the
carrier's cargo terminal, warehousing, cargo assembly, protective packing and
consolidation, document preparation and electronic transmittal, electronic
purchase order/shipment tracking, inventory management, expedited document
delivery for customs clearance and priority notification to consignee of cargo
arrival. Fritz serves a broad range of freight forwarding customers. Fritz's
principal ocean freight forwarding customers are retailers, as well as
industrial companies shipping automobiles and related parts, heavy equipment,
steel, chemicals, forest products and produce. In general, airfreight has a high
value relative to its weight and the cost of shipment is only a small portion of
its value. The principal customers for airfreight are shippers of medical
equipment and parts, drugs and pharmaceuticals, computer and high technology
equipment and parts, aircraft and automotive parts, electrical equipment,
machinery and machine parts, chemicals, high fashion apparel, measuring and
testing instruments.
As an indirect ocean carrier (NVOCC) and an indirect air carrier, Fritz
procures customer shipments, consolidates shipments bound for a particular
destination, determines the routing over which the consolidated shipments will
move, selects the direct carrier or charters a ship or aircraft, and tenders
each consolidated lot as a single shipment to the direct carrier for
transportation to a distribution point. Fritz's rates are based on the shipment
weight (airfreight) or volume (ocean freight) and generally decrease as the
weight or volume of the shipment increases. Fritz ordinarily charges the shipper
a rate less than the rate which the shipper would be charged by a steamship line
or an airline. As a result of its consolidation of customers' shipments, Fritz
is able to obtain lower rates from steamship lines or airlines than the rates
Fritz charges to its customers for individual shipments. In addition, in certain
tradelanes, due to the high volume of freight controlled by Fritz, Fritz is able
to obtain lower contracted rates from certain carriers. This rate differential
is the primary source of Fritz's net ocean and airfreight forwarding revenue as
an indirect carrier.
By accepting goods for ocean or air shipment as an indirect carrier, Fritz
assumes the role of a carrier and becomes responsible to the shipper for the
safe delivery of the shipments subject to a legal limitation on liability of
$500 per ordinary shipping unit in the case of ocean freight and $20.00 per
kilogram in the case of airfreight. Because Fritz's relationship to the
steamship line or airline is also that of a shipper to a carrier, the steamship
line or airline generally assumes the same responsibility to Fritz as Fritz
assumes to its clients.
As an authorized agent for shippers and importers, and as an authorized
cargo agent of various airlines, Fritz arranges for the transportation of
individual shipments and receives a commission from the direct carrier for
arranging the shipments. When acting as such an agent, Fritz does not
consolidate shipments or have responsibility for shipments once they have been
tendered to the direct carrier.
As part of Fritz's freight forwarding activities, Fritz provides project
forwarding and logistics services involving governmental and commercial
projects, including foreign military sales, power plant construction,
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shipbuilding, construction of manufacturing assembly facilities, civil
infrastructures and other large scale installations. Fritz's project forwarding
services provide integrated logistics for conveying heavy materials and
equipment from multiple origins to project sites. Such services include managing
the customer's transportation, customs clearance and warehousing and
distribution activities in connection with these projects. Most of such
shipments are transported by ocean carrier. The government portion of Fritz's
project forwarding business requires a United States Government security
clearance of Fritz's management team and employees assigned to the project and
security cleared warehouses where the cargo is received and stored according to
the forwarding schedule.
In addition to its ocean and airfreight forwarding services, Fritz provides
forwarding services and cross marketing in the United States for a number of its
foreign agents. Fritz is compensated by sharing in the agents' profits on their
consolidation shipments.
Fritz is licensed by the Federal Maritime Commission of the United States
(the "FMC") and is a member of the International Air Transport Association.
WAREHOUSING AND DISTRIBUTION SERVICES
As part of its integrated global logistics services, Fritz provides an
array of warehousing and distribution services to its import and export
customers.
Warehousing. Warehousing services are available for Fritz's customers in
certain of its facilities, as well as in space leased from others. Fritz
maintains approximately 2.1 million square feet of its own and leased warehouse
space. Fritz's warehousing services include receiving, deconsolidation and
decontainerization, cargo loading and unloading, assembly of freight, customer
inventory management, protective packing and storage. For import shipments,
Fritz provides bonded warehouse services to importers to enable them to defer
payment of customs duties and to coordinate cargo releases with the customer's
production or distribution schedules. The goods stored in the bonded warehouses
are supervised by customs officials until the importer is ready to withdraw or
re-export them. Fritz receives storage charges for use of its warehouses and
fees for other services.
Distribution. Fritz provides surface transportation and domestic
distribution services involving the movement of shipments for local and
long-haul delivery to and from customers' doors. In this capacity, Fritz
procures shipments from its customers, consolidates less than truckload
quantities, determines the routing, selects the carrier and tenders each
shipment to such carrier for transportation. Fritz provides this service both as
an indirect carrier and as an agent. Fritz also provides logistics services by
coordinating the most efficient and cost-effective mode of long-haul surface
transportation to its customers.
INFORMATION SYSTEMS
A primary component of Fritz's overall business strategy is the continued
development of advanced information systems. Fritz believes that it is a leader
in information processing for integrated transportation logistics, as a result
of its efforts to utilize improving technology and responding to customer needs.
Since 1971, Fritz has invested substantial management and financial resources in
the development of its information systems. The basis for Fritz's information
systems is the concept that an international freight transaction is a single
integrated unit of events rather than a series of separate, unrelated
transactions.
Fritz Automated Systems for Transportation ("FAST"), Fritz's on-line,
interactive, nationwide customs brokerage system, was one of the first to link
with the United States Customs Service information systems. Using FAST, Fritz's
customers are able to monitor the status of a shipment as it passes through the
customs process.
FLEX, which first became operational for certain functions in late 1991, is
under continuing development. Fritz believes that FLEX is the most comprehensive
source of information for importers and exporters worldwide to manage their
international sourcing and distribution activities. FLEX currently permits Fritz
and its customers to track the flow of particular goods from a foreign point of
origin through the transportation process and United States customs clearance to
its point of delivery. At any time, a participating customer can input an
inquiry to FLEX and receive the current status of its shipment, which
facilitates management of the customer's sourcing process. Most of the current
users of FLEX are multinational corporations which utilize large numbers of
foreign suppliers. Several of such customers utilize the FLEX system to generate
special
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reports on supplier compliance with purchase order requirements in order to
enhance the effectiveness of their merchandising programs. Fritz's objective is
to expand the use of the FLEX system by its customers. Management believes that
expanded use of FLEX will be an important tool in achieving its business
strategy in the future. In certain cases, Fritz deploys its personnel and
computers in the offices of its on-line customers in order to assist them in the
logistics management and tracking process.
As part of its ongoing research and development program, Fritz has linked
FAST and FLEX to monitor the status of its shipments as they pass through the
customs clearance process. Fritz believes that as development continues, the
vast majority of Fritz's major customers ultimately will elect to utilize FLEX.
Fritz continues to seek to develop new products and services which take
advantage of advancements in information technology.
MARKETING
An important part of Fritz's business strategy is its customer-oriented
marketing approach. Fritz's marketing efforts focus on senior transportation
executives, financial officers and purchasing directors of large complex users
of international transportation logistics services. In connection with Fritz's
emphasis on developing and maintaining long-term relationships with such
customers, Fritz has developed several special marketing programs, including the
national accounts program, the Shippers Council and the National Advisory Board.
The national accounts program was established in 1971 in order to increase
the visibility of Fritz's services to large complex users of international
transportation logistics services. Fritz's Senior Director Integrated Logistics
supervises the marketing efforts of a team of national account sales executives
who are responsible for securing new business from such major companies and
assisting in maintaining customer relationships with such companies.
The Shippers Council program was formed by Fritz in 1984 as a forum for
major importers and exporters, some of which are not currently customers of
Fritz, to discuss their transportation logistics requirements, views of global
trade and other related topics. Shippers Council meetings are generally held
three times a year, and representatives of approximately 20 to 30 companies
participate in each meeting. Participants in the Shippers Council are invited to
participate on an ongoing basis in Fritz's National Advisory Board. The National
Advisory Board assists Fritz in formulating strategies designed to better serve
the needs of Fritz's customers. The Shippers Council and the National Advisory
Board help Fritz to maintain close contact with its customers and the global
trade community on a continuing basis.
In addition to these major marketing programs, Fritz has employees working
on regional accounts and providing support to national accounts located in their
region. Fritz has regional sales teams responsible for obtaining new business
from local and regional customers in their areas. Managers at each office are
responsible for customer service and coordinate the reporting of customers'
requirements and expectations with the Chief Operating Officer and the regional
directors.
ACQUISITION OVERVIEW
Management believes that the number of logistics services industry
participants will continue to consolidate over the next few years. Fritz has
selectively used acquisitions to augment its internal growth. Acquisitions
completed to date have provided Fritz with broader geographic coverage and
expanded customer penetration. Management anticipates that it will continue to
make selective acquisitions in the future. See
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"Risk Factors "Intertrans -- Role of Acquisitions." Information regarding major
acquisitions completed in 1993, 1994 and the first two months of 1995 is as
follows:
<TABLE>
<CAPTION>
PRINCIPAL ACQUISITION
ACQUIRED COMPANY LOCATION DATE PRINCIPAL BUSINESS
- --------------------------------- ----------------- ---------- -------------------------------------------
<S> <C> <C> <C>
FOR THE PERIOD JANUARY 1, 1993 THROUGH DECEMBER 31, 1993
DOMESTIC:
Anchor International Baltimore, MD 01/29/93 International Freight Forwarder/Customs
Corporation Broker
Watkins Customs Brokers, Inc. Jacksonville, FL 06/30/93 International Freight Forwarder/Customs
Broker
C&S International Corporation Philadelphia, PA 07/31/93 International Freight Forwarder/Customs
Broker
Fermin Morales, Inc. San Juan, PR 08/31/93 International Freight Forwarder/Customs
Broker
Ja-Mar Forwarding, Inc./Globe NJ & NY 10/01/93 International Freight Forwarder/Customs
Shipping Co., Inc. Broker
Americana Brokers, Inc. Sweetgrass, MT 12/31/93 Customs Broker
INTERNATIONAL:
Masters Airfreight Pte. Ltd. Singapore 08/30/93 Intra-Asia Freight Forwarding, Logistics
Services
FOR THE PERIOD JANUARY 1, 1994 THROUGH DECEMBER 31, 1994
DOMESTIC:
T.G. International, Inc. Houston, TX 03/01/94 International Project Logistics
FNC International, Inc. San Francisco, CA 07/01/94 Ocean Freight/Third Party Logistics
FCI Logistics, Inc. Tulsa, OK 07/01/94 Domestic Logistics Management
Unlimited Warehousing, Chicago, IL 07/18/94 Warehousing and Domestic Distribution
Inc./Unlimited National, Inc.
Superior Packing, Inc. Houston, TX 09/30/94 Crating and Packing
Milton Snedeker Corporation NY 10/01/94 International Freight Forwarder/Customs
Broker
Global Crating, Inc. Tulsa, OK 11/10/94 Packing and Crating
M.J. & Shea-Company, Inc. Charlotte, NC 11/15/94 Customs Broker
Air Compak International, Inc. Rochester, NY 11/18/94 International Freight Forwarder/Customs
Broker
INTERNATIONAL:
Cargo World (Bristol) Limited Bristol, U.K. 01/31/94 International Freight Forwarder/Customs
Broker
D.H. Ward (Shipping) Limited Birmingham, U.K. 01/31/94 International Freight Forwarder/Customs
Broker
I-Dika Milano S.R.L. Italy 03/20/94 International Freight Forwarder High
Fashion Logistics
Trace S.A. & Seatrace S.A. France 03/31/94 International Freight Forwarder
Union Transport (Private) Sri Lanka 04/01/94 International Freight Forwarder
Limited
Fong Ching Air Freight Co. Ltd. Taiwan 04/01/94 International Freight Forwarder
Starber International Inc. Canada 05/01/94 International Freight Forwarder/Customs
Broker
Fliway AFA International Australia 07/01/94 International Freight Forwarder/Customs
Broker
Trans-Shoes Agenciam. Transp. Brazil 07/01/94 Export Logistics Management
FOR THE PERIOD JANUARY 1, 1995 THROUGH FEBRUARY 28, 1995
DOMESTIC:
Lin Warehousing Group, Inc. NJ 01/01/95 Warehouse and Distribution
</TABLE>
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COMPETITION AND BUSINESS CONDITIONS
Fritz's principal businesses are directly related to the volume of
international trade, particularly trade between the United States and foreign
nations. The extent of such trade is influenced by many factors, including
economic and political conditions in the United States and abroad, major work
stoppages, exchange controls, currency fluctuations, wars and other armed
conflicts and United States and foreign laws relating to tariffs, trade
restrictions, foreign investments and taxation. Fritz encounters competition
from a large number of firms with respect to the services provided by Fritz.
Much of such competition comes from local or regional firms which have only one
or a small number of offices and do not offer the breadth of services and
integrated approach offered by Fritz. However, some of such competition comes
from major United States and foreign-owned firms which have networks of offices
and offer a wide variety of services. Fritz believes that quality of service,
including information systems capability, global network capacity, reliability,
responsiveness, expertise and convenience, scope of operations and price are the
most important competitive factors in its industry.
As a customs broker, Fritz encounters strong competition in every port in
which it does business. Fritz has customs brokerage offices in most major ports
in the United States, Canada, Europe and other selected foreign ports, and
although it competes with several large United States and foreign firms, its
principal competition comes from local and regional firms. According to the
United States Customs Service, Fritz is the largest customs broker in the United
States. As an ocean freight forwarder, Fritz encounters strong competition in
every port in which it does business. This includes competition from steamship
companies and both large forwarders with multiple offices and local and regional
forwarders with one or a small number of offices. As an airfreight forwarder, in
addition to competition from other airfreight forwarders, Fritz encounters
competition from air carriers which actively solicit freight from shippers. In
recent years, there has been a trend towards consolidation in the airfreight
industry which could lead to intensified competition. Fritz's warehousing and
distribution services are generally an extension of its other businesses.
Accordingly, Fritz does not experience intense competition in this area of its
business. See "Risk Factors -- Competition."
REGULATION AND INTERNATIONAL TRADE
As a customs broker operating in the United States, Fritz is licensed by
the United States Department of the Treasury and regulated by the United States
Customs Service. Fritz's fees for acting as a customs broker are not regulated.
Fritz's airfreight forwarding business is subject to regulation, as an indirect
air cargo carrier, under the Federal Aviation Act by the Department of
Transportation (the "DOT"), the successor to the Civil Aeronautics Board,
although Part 296 of the DOT's Economic Aviation Regulations exempts airfreight
forwarders from most of such act's requirements. In its ocean freight forwarding
business, Fritz is licensed as an ocean freight forwarder by the FMC. The FMC
does not regulate Fritz's fees in any material respect. Fritz's ocean freight
NVOCC business is subject to regulation, as an indirect ocean cargo carrier,
under the FMC tariff filing and surety bond requirements, and under the Shipping
Act of 1984, particularly those terms proscribing rebating practices. Fritz is
regulated as a direct and an indirect truck cargo carrier by the Interstate
Commerce Commission for which Fritz has ICC licenses as both a common carrier
and a property broker. For dispatch purposes, Fritz also holds an FCC Radio
License. Fritz's marine cargo insurance brokerage business is licensed by the
California Insurance Department. Fritz's offshore operations are subject to
similar regulation by the regulatory authorities of the respective foreign
jurisdictions.
Fritz's principal businesses are directly related to, and their future
performance is dependent upon, the volume of international trade, particularly
trade between the United States and foreign nations. Such trade is influenced by
many factors, including economic and political conditions in the United States
and abroad, major work stoppages, exchange controls, currency fluctuations, wars
and other armed conflicts and United States and foreign laws relating to
tariffs, trade restrictions, foreign investments and taxation. See "Risk
Factors -- Dependence on International Trade."
SERVICE MARKS
Fritz holds registered service marks in the United States and numerous
foreign countries for "Fritz Companies" and certain related names and intends to
maintain these service marks.
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EMPLOYEES
As of December 31, 1994, Fritz had 4,968 employees. Fritz is not party to
any collective bargaining agreement, and Fritz considers its relationship with
its employees to be satisfactory.
LEGAL PROCEEDINGS
Fritz is party to routine litigation incident to its business, primarily
claims for goods lost or damaged in transit or improperly shipped. Some of the
lawsuits to which Fritz is party are covered by insurance and are being defended
by Fritz's insurance carriers. Fritz has established reserves which management
believes are adequate to cover any other litigation losses which may occur.
PROPERTY
Fritz operates 234 offices and logistics centers worldwide, including its
headquarters in San Francisco, California. Fritz also operates approximately 40
warehousing and distribution centers, which range in size from approximately
3,000 square feet to approximately 670,000 square feet. The warehousing and
distribution centers totaled approximately 2.1 million square feet as of
December 31, 1994, of which Fritz owns approximately 744,000 square feet, and
leases the balance. The leases for Fritz's principal properties generally have
terms of three years or more and often include options to renew. While some of
Fritz's leases are month-to-month and others expire in the near term, Fritz does
not believe that the expiration of any of its leases will have a material
adverse effect on its operations.
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SELECTED FINANCIAL INFORMATION
The following selected financial information of Fritz has been derived from
historical financial statements and should be read in conjunction with such
financial statements and notes thereto incorporated herein by reference.
Historical information for income statement data for periods prior to January 1,
1992, and for balance sheet data prior to December 31, 1993, are derived from
financial statements not incorporated herein by reference.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1990 1991 1992 1993 1994
-------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenue(1)
Customs brokerage........................ $ 55,677 $ 59,930 $ 65,896 $ 72,322 $100,511
Ocean freight forwarding................. 52,727 62,390 78,153 124,957 174,448
Airfreight forwarding.................... 37,601 64,198 84,920 117,343 193,022
Warehousing and distribution............. 15,576 15,235 19,797 27,136 47,988
-------- -------- -------- -------- --------
Total................................. 161,581 201,753 248,766 341,758 515,969
-------- -------- -------- -------- --------
Net revenue(1)
Customs brokerage........................ 55,677 59,930 65,896 72,322 100,511
Ocean freight forwarding................. 25,527 27,405 32,774 41,647 57,436
Airfreight forwarding.................... 13,966 19,648 24,740 33,238 49,110
Warehousing and distribution............. 13,042 14,211 18,163 22,734 38,391
-------- -------- -------- -------- --------
Total................................. 108,212 121,194 141,573 169,941 245,448
-------- -------- -------- -------- --------
Operating expenses
Salaries and related costs............... 63,313 71,739 82,456 97,879 139,102
General and administrative............... 34,741 37,028 42,126 50,957 74,974
-------- -------- -------- -------- --------
Total................................. 98,054 108,767 124,582 148,836 214,076
-------- -------- -------- -------- --------
Income from operations..................... 10,158 12,427 16,991 21,105 31,372
Other income (expense) -- net(2)........... (2,784) (3,697) (1,543) 471 (1,263)
-------- -------- -------- -------- --------
Income before taxes on income.............. 7,374 8,730 15,448 21,576 30,109
Taxes on income(3)......................... 372 830 2,331 7,552 10,538
-------- -------- -------- -------- --------
Net income................................. $ 7,002 $ 7,900 $ 13,117 $ 14,024 $ 19,571
======== ======== ======== ======== ========
Net income per share-primary............... $ 1.30 $ 1.73
======== ========
Net income per share -- fully diluted...... $ 1.30 $ 1.70
======== ========
PRO FORMA INCOME STATEMENT DATA(3):
Income before taxes on income.............. $ 7,476 $ 9,058 $ 16,181
Taxes on income............................ 2,990 3,623 5,662
-------- -------- --------
Net income................................. $ 4,486 $ 5,435 $ 10,519
======== ======== ========
Net income per share -- primary and fully
diluted.................................. $ 0.58 $ 0.70 $ 1.28
======== ======== ========
Weighted average shares outstanding
(in thousands):
Primary............................... 7,731 7,731 8,299 10,819 11,337
Fully diluted......................... 7,731 7,731 8,299 10,820 11,519
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital (deficit).................. $ (7,038) $(10,245) $ 4,534 $ 8,763 $ 39,043
Total assets............................... 114,042 135,542 156,788 190,888 399,703
Long-term obligations, net of current
portion.................................. 19,735 17,328 -- 2,220 33,048
Stockholders' equity (deficit)(4).......... (19,553) (17,376) 21,078 39,129 107,459
Number of employees........................ 2,022 2,170 2,527 3,140 4,968
</TABLE>
- ---------------
(1) Management believes that net revenue, determined by deducting freight
consolidation costs from freight forwarding revenue, is a better measure
than total revenue of the relative importance of Fritz's principal services
to its results of operations.
72
<PAGE> 82
(2) Includes interest expense of $2,583,000, $3,171,000 and $911,000 for the
years ended December 31, 1990, 1991 and 1992, respectively, on borrowings of
$35,000,000 in 1988 in connection with a reorganization.
(3) From January 1, 1990 until immediately prior to Fritz's initial public
offering in October 1992 (the "Termination Date"), Fritz had operated as an
S Corporation for federal and certain state income tax purposes. As a
result, Fritz's 1990, 1991 and 1992 earnings through the Termination Date
were taxed, with certain exceptions, for federal and certain state income
tax purposes directly to Lynn C. Fritz. The pro forma income statement data
for 1990 through 1992 reflects adjustments to the historical income
statement data assuming Fritz had not elected S Corporation status for
income tax purposes, including the repurchase of the minority interest in
its subsidiaries sold to the sole stockholder to qualify for S Corporation
status. The provisions for federal and state income taxes assume effective
tax rates of 40% for each of 1990 and 1991 and 35% for 1992. The lower
effective tax rate beginning in 1992 was principally due to Fritz's expanded
operations in foreign countries which had lower income tax rates.
(4) In October 1992, Fritz sold 2,932,500 shares of newly issued Fritz Common
Stock in an initial public offering for net proceeds of approximately
$40,289,000. In November 1994, Fritz sold 1,150,000 shares of newly issued
Fritz Common Stock in a secondary public offering for net proceeds of
approximately $42,160,000.
MARKET PRICES OF COMMON STOCK; DIVIDENDS
Fritz Common Stock is traded in the over-the-counter market on the Nasdaq
National Market under the symbol "FRTZ." The following table sets forth the high
and low closing sale prices during the periods indicated as reported by Nasdaq.
<TABLE>
<CAPTION>
QUARTER ENDED HIGH LOW
--------------------------------------------------------- ------- -------
<S> <C> <C>
1993:
March 31, 1993......................................... $27.25 $22.00
June 30, 1993.......................................... $27.00 $21.25
September 30, 1993..................................... $30.25 $25.75
December 31, 1993...................................... $30.50 $25.875
1994:
March 31, 1994......................................... $31.875 $26.00
June 30, 1994.......................................... $31.50 $28.25
September 30, 1994..................................... $35.50 $30.50
December 31, 1994...................................... $47.00 $35.00
1995:
March 31, 1995......................................... $ $
June 30, 1995 (through April , 1995)................. $ $
</TABLE>
On February 14, 1995, the last trading day immediately prior to the time
which Fritz and Intertrans first publicly announced their intent to undertake
the Merger, the closing sale price of Fritz Common Stock as reported by Nasdaq
was $48.50 per share. On April , 1995, the last trading day for which
quotations were available at the time of printing this Joint Proxy
Statement/Prospectus, the closing sale price of Fritz Common Stock as reported
by Nasdaq was $ per share.
No cash dividends have been paid on the Fritz Common Stock since Fritz's
initial public offering. Fritz does not anticipate paying cash dividends in the
foreseeable future.
73
<PAGE> 83
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of Fritz as of February 28, 1995, and
certain information about them, are set forth below:
<TABLE>
<CAPTION>
NAME AGE POSITION HELD WITH FRITZ
- ----------------------- ---- -------------------------------------------
<S> <C> <C>
Lynn C. Fritz 52 Chairman of the Board, President and Chief
Executive Officer
Dennis L. Pelino 47 Chief Operating Officer, Senior Vice
President and Director
Ronald A. Marcillac 54 Senior Vice President and Director
James Gilleran 61 Director
Preston Martin 71 Director
John H. Johung 50 Senior Vice President and Chief Financial
Officer
Jan H. Raymond 45 Senior Vice President, Secretary and
General Counsel
Stephen M. Mattessich 40 Vice President and Corporate Controller
</TABLE>
All executive officers are elected annually by Fritz and serve at the
discretion of the Board of Directors.
Lynn C. Fritz became Chief Executive Officer of Fritz in 1986 after serving
in numerous positions since joining Fritz on a full-time basis in 1965. Mr.
Fritz received his B.A. degree from Georgetown University and his J.D. degree
from Lincoln University School of Law. Mr. Fritz was honored with the "Marketing
Executive of the Year -- 1991" award by the National Account Marketing
Association.
Dennis L. Pelino, who joined Fritz in 1986 as Director of Sales and
Marketing, became a director of Fritz in 1991 and was appointed Chief Operating
Officer, a new position within Fritz, in October 1993. Since 1988, Mr. Pelino
has been responsible for all company-owned international operations, as well as
Fritz's transportation services as an indirect carrier and key warehousing
distribution services. Mr. Pelino is also responsible for Fritz's independent
agent network and national account marketing and sales programs. Since his
appointment as Chief Operating Officer, Mr. Pelino has also been responsible for
all domestic operations.
Ronald A. Marcillac joined Fritz in 1963 and served Fritz in numerous
positions since that time, most recently as Senior Vice President since August
1992. He became a director of Fritz in 1988. Mr. Marcillac is currently
responsible for Fritz's Information Systems and insurance brokerage operations.
He is a graduate of the University of San Francisco with a B.S. degree in
economics and has a customs broker's license from the Department of the
Treasury.
James Gilleran has been the Chairman of the Board and Chief Executive
Officer of The Bank of San Francisco and its parent, The San Francisco Company
since November 1994. Mr. Gilleran was Superintendent of the California State
Banking Department from 1989 until November 1994. From 1987 to 1989 Mr. Gilleran
was president of the Commonwealth Group, an investment banking firm. Mr.
Gilleran was previously managing partner of the San Francisco office of KPMG
Peat Marwick LLP, independent certified public accountants. Mr. Gilleran is a
director of Cooper Development Company.
Preston Martin is Chairman, President and Chief Executive Officer of Martin
Holdings, Inc., a bank asset holding company, Chairman of Martin Associates, a
consulting firm, and Chairman of LINC Group, Inc., an insurance agency. Mr.
Martin is a director of SoCal Savings, a financial institution holding company,
and Inco Homes Corporation, a home builder. Mr. Martin was previously Vice
Chairman of the Board of Governors of the Federal Reserve Board.
John H. Johung has been the Vice President, Chief Financial Officer of
Fritz since August 1992 and was appointed Senior Vice President in November
1994. He served as Corporate Controller -- Principal Accounting Officer of Fritz
from 1970 to 1982. He left Fritz in 1983 to pursue a consulting career in
taxation and financial planning, and rejoined Fritz in March 1990 as Director of
Financial Planning.
74
<PAGE> 84
Jan H. Raymond has been General Counsel of Fritz since 1985 and was
appointed Senior Vice President in 1993. Prior to joining Fritz, Mr. Raymond was
an associate with the law firm of Brobeck, Phleger & Harrison. Mr. Raymond, who
is a licensed customs broker, holds a B.S. degree from Cornell University with a
J.D. degree from the University of California at Berkeley's Boalt Hall School of
Law.
Stephen M. Mattessich was appointed Vice President of Fritz in November
1994. Since April 1993, Mr. Mattessich has served as Fritz's Corporate
Controller and Principal Accounting Officer. Mr. Mattessich served as Regional
Controller from May 1992 to March 1993. Prior to joining Fritz, Mr. Mattessich
served as Treasurer/Controller for Lep International, Inc. (U.S. Operations) for
six years and as a manager at Ernst & Young LLP.
BOARD MEETINGS AND COMMITTEES
During 1994, the Board of Directors held five meetings and acted by
unanimous written consent on a number of occasions. Fritz has an Audit and
Compensation Committee, but does not have a nominating committee.
The members of the Audit and Compensation Committee are James Gilleran and
Preston Martin. Among the functions performed by this committee in its capacity
as an Audit Committee are to make recommendations to the Board of Directors with
respect to the engagement or discharge of independent auditors, to review with
the independent auditors the plan and results of the auditing engagement, to
review Fritz's internal auditing procedures and system of internal accounting
controls and to make inquiries into matters within the scope of its functions.
Among the functions performed by this committee in its capacity as a
Compensation Committee are to review and make recommendations to the Board of
Directors concerning the compensation of the key management employees of Fritz
and to administer Fritz's equity incentive plan. During 1994, the Audit and
Compensation Committee held three meetings.
During 1994, there were no members of the Board of Directors who attended
fewer than 75% of the meetings of the Board of Directors or fewer than 75% of
the meetings of committees of the Board on which they served.
COMPENSATION OF DIRECTORS
Directors who are not employees of Fritz are paid directors fees consisting
of $24,000 per year and $1,000 for each Board meeting attended. Directors who
attend meetings of the Audit and Compensation Committee receive an additional
$1,000 for each meeting not held on the same day as a Board meeting. Of the
$24,000 annual retainer paid to nonemployee directors, 60% is paid in Fritz
Common Stock pursuant to the Nonemployee Director Restricted Stock Plan. The
cash portion of directors' fees can be deferred under Fritz's Deferred
Compensation Plan.
75
<PAGE> 85
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND OTHER COMPENSATION
The compensation paid to Fritz's Chief Executive Officer and four other
most highly compensated executive officers (the "Named Fritz Officers") for
services rendered in all capacities to Fritz and its subsidiaries during the
years indicated is set forth below.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION -------------------------
----------------------------------------- RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING ALL OTHER
COMPENSATION AWARD(S) OPTIONS/ COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) ($)(2) ($)(3) SARS(#) ($)(4)
- -------------------------------- ----- ---------- ------------ ------------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Lynn C. Fritz 1994 $500,000 $ -- $18,000 $ -- 30,000 $ 8,040
President and Chief 1993 500,000 -- 18,000 -- -- 8,040
Executive Officer 1992 500,000 70,000 18,000 -- -- 10,609
Dennis L. Pelino 1994 $268,752 $275,000 $10,899 $ 267,500 215,000 --
Senior Vice President and 1993 250,000 -- 6,000 49,000 -- --
Chief Operating Officer 1992 250,000 65,000 6,000 -- 28,000 --
Ronald A. Marcillac 1994 $249,996 $ 30,000 $ 6,000 $ -- 5,000 --
Senior Vice President 1993 250,000 -- 6,000 49,000 2,800 --
1992 225,000 30,000 6,000 -- 28,000 --
John H. Johung 1994 $175,002 $ 60,000 $ 6,000 $ -- 10,000 --
Senior Vice President, 1993 160,000 20,000 6,000 24,500 2,900 --
Chief Financial Officer 1992 135,000 17,500 6,000 -- 14,000 --
Jan H. Raymond 1994 $127,497 $ 22,000 $ 6,000 $ -- 3,000 --
Senior Vice President, 1993 120,000 15,000 6,000 25,250 2,000 --
Secretary and General 1992 115,000 18,000 6,000 -- 12,000 --
Counsel
</TABLE>
- ---------------
(1) Pursuant to a newly adopted deferred compensation plan, receipt of all or
parts of such bonuses may have been deferred.
(2) While the Named Fritz Officers enjoy certain perquisites, for fiscal years
1992, 1993 and 1994, these did not exceed the lesser of $50,000 or 10% of
each officer's salary and bonus.
(3) The fair market value of these shares on the grant dates was $26.75 for Mr.
Pelino's 1994 grant and $24.50 for Mr. Pelino's 1993 grant, $24.50 for Mr.
Marcillac, $24.50 for Mr. Johung and $24.50-26.00 for Mr. Raymond. The fair
market value on the grant date, however, is not necessarily indicative of
the restricted stock's real value, which is impossible to determine until
the vesting date; it is at this point that executives recognize income on
the stock and must pay taxes on it. As of the end of fiscal 1994, the
aggregate restricted stock holdings for the Named Fritz Officers consisted
of 16,000 shares worth $752,000 at the then-current fair market value (as
represented by the closing price of Fritz's Common Stock on December 30,
1994), without giving effect to the diminution of value attributable to the
restrictions on such stock. Such amount included $564,000 for Mr. Pelino
(12,000 shares), $94,000 for Mr. Marcillac (2,000 shares), $47,000 for Mr.
Johung (1,000 shares) and $47,000 for Mr. Raymond (1,000 shares). Dividends
are paid on the restricted shares to the extent payable on Fritz Common
Stock generally. No shares granted to the Named Fritz Officers vest in less
than three years from the date of grant.
(4) The amounts shown consist of the premium benefits to Mr. Fritz in connection
with his participation in Fritz's executive medical plan and, for 1992 only,
include the benefits of certain split dollar insurance policies on Mr. Fritz
for which Fritz is not the beneficiary. Premiums on these policies after
1992 were paid by Mr. Fritz.
76
<PAGE> 86
STOCK OPTION GRANTS TO EXECUTIVE OFFICERS
The following table sets forth certain information regarding stock options
granted during 1994 to the Named Fritz Officers. The table also lists potential
realizable values of such options on the basis of assumed annual compounded
stock appreciation rates of 0%, 5% and 10% over the life of the options which
are set at a maximum of 10 years.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------------------------ POTENTIAL REALIZABLE VALUE
NUMBER OF PERCENT OF AT ASSUMED ANNUAL RATES OF
SECURITIES TOTAL OPTIONS/ STOCK PRICE APPRECIATION FOR
UNDERLYING SARS GRANTED EXERCISE OF MARKET PRICE OPTION TERM(4)
OPTIONS/SARS TO EMPLOYEES BASE PRICE ON DATE OF EXPIRATION ----------------------------------
NAME GRANTED(#)(1) IN FISCAL YEAR ($/SH)(2) GRANT(2) DATE(3) 0%($) 5%($) 10%($)
- ---------------- ------------- -------------- ----------- ------------ ---------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Lynn C. Fritz... 30,000 5.9% $ 30.00 $30.00 2004 -- $ 566,005 $1,434,368
Dennis L.
Pelino........ 15,000 3.0 $ 30.00 $30.00 2004 -- $ 283,003 $ 717,184
200,000 39.4 $ 24.075 $26.75 2004 $535,000 $3,899,586 $9,061,522
Ronald A.
Marcillac..... 5,000 1.0 $ 30.00 $30.00 2004 -- $ 94,334 $ 239,061
John H.
Johung........ 10,000 2.0 $ 30.00 $30.00 2004 -- $ 188,668 $ 478,123
Jan H. Raymond.. 3,000 0.6 $ 30.00 $30.00 2004 -- $ 56,601 $ 143,437
</TABLE>
- ---------------
(1) With the exception of Mr. Pelino's grant of options to purchase 200,000
shares, all such options were granted in March 1994 and become exercisable
(a) as to one-third (33.3%) of the shares on the day after the first
anniversary of the grant, (b) as to an additional one-third (33.3%) of the
shares on the day after the second anniversary of the grant, and (c) as to
the remaining one-third (33.3%) of the shares on the day after the third
anniversary of the grant. Mr. Pelino's grant of options to purchase 200,000
shares was made in January 1994 and such options become exercisable on
January 1, 1998. Under the terms of Fritz's Stock Option Plan, the Audit and
Compensation Committee retains discretion, subject to plan limits, to modify
the terms of outstanding options.
(2) All options were granted at fair market value except for 200,000 of Mr.
Pelino's options which were granted at 90% of the market value on the date
of grant.
(3) All options granted in fiscal 1994 were granted for a term of 10 years.
(4) Realizable values are reported net of the option exercise price. The dollar
amounts under these columns are the result of calculations at the 5% and 10%
rates (determined from the price at the date of grant, not the stock's
current market value) set by the SEC and therefore are not intended to
forecast possible future appreciation, if any, of Fritz's stock price.
Actual gains, if any, on stock option exercises are dependent on the future
performance of the common stock as well as the optionholder's continued
employment through the vesting period. The potential realizable value
calculation assumes that the optionholder waits until the end of the option
term to exercise the option.
77
<PAGE> 87
OPTION EXERCISES AND HOLDINGS
The following table sets forth certain information with respect to
exercises of stock options during 1994 by the Named Fritz Officers and with
respect to stock options held by each of the Named Fritz Officers officers as of
December 31, 1994.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY OPTIONS/
FY-END(#) SARS AT FY-END($)
SHARES ACQUIRED VALUE ----------------------------- -----------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------- --------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Lynn C. Fritz -- -- 0 30,000 $ 0 $ 510,000
Dennis L. Pelino 9,333 $ 144,712 9,333 224,334 $ 298,656 $ 5,101,352
Ronald A. Marcillac 12,000 $ 169,450 9,466 14,334 $ 302,912 $ 346,352
John M. Johung -- -- 11,233 15,667 $ 346,156 $ 344,344
Jan H. Raymond 4,000 $ 63,050 5,000 8,000 $ 153,000 $ 204,000
</TABLE>
EMPLOYMENT CONTRACTS
Effective January 1, 1994, Fritz entered into a four-year employment
agreement with Dennis Pelino which provides for a base salary of $275,000
commencing in 1994, subject to annual review by the Audit and Compensation
Committee. The employment agreement also provides for an annual bonus of up to
100% of base salary and requires the Audit and Compensation Committee to
consider making a supplemental payment in 1998 if Fritz's performance meets
certain predetermined objectives, as determined by the Audit and Compensation
Committee.
CERTAIN TRANSACTIONS WITH FRITZ
For many years, Fritz leased certain of its facilities from Sanjaylyn
Company, a California partnership (the "Partnership"). Lynn C. Fritz and his
sister and brother each owned a one third interest in the Partnership until
March 31, 1993, when Lynn C. Fritz withdrew as a partner of the Partnership. As
part of such withdrawal, a distribution of real property (including properties
in Blaine, Washington, Dallas, Texas, and San Francisco, California (two) leased
by Fritz), cash and debt was made from the Partnership to Mr. Fritz. Fritz paid
$550,000 to Mr. Fritz in 1994 in connection with the leasing of such properties
from Mr. Fritz. Fritz believes that all of such leases with Mr. Fritz are on
terms which are no less favorable to Fritz than those which could have been
obtained from independent third parties.
In 1994, Mr. Fritz paid off an unsecured note and an advance from Fritz in
the aggregate amount of $470,000. In addition, Fritz paid $400,000 to Mr. Fritz
for the purchase of the land on which the Blaine facility is located.
In connection with Fritz's U.S. customs brokerage operations, Fritz's
customers are required to obtain surety bonds. Fritz places such customs bonds
with Intercargo Corporation ("Intercargo") and other underwriters of customs
bonds. Mr. Fritz owns approximately 3.49% of the outstanding common stock of
Intercargo. During 1994, Fritz placed approximately $597,885 of insurance
business with Intercargo and received $71,923 in insurance commissions and fees
from Intercargo. Fritz believes that the amounts received are substantially the
same as Fritz would have received from other third parties.
AUDIT AND COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
To the Board of Directors:
As members of the Audit and Compensation Committee, it is our duty to
evaluate and determine the appropriate levels of compensation for officers
and directors and to administer Fritz's 1992 Omnibus Equity Incentive Plan.
Our general policy is to discharge these responsibilities in a manner which
links
78
<PAGE> 88
executive performance to long term stockholder value. Our specific
objectives are to enhance the long term performance of Fritz, enable Fritz
to attract and retain outstanding executives and employees and provide
meaningful incentives, without subjecting Fritz to excessive cost.
Generally, base salary for senior officers, including the officers
named in the Summary Compensation Table, is set by reviewing the average
salary for positions of similar level of responsibility in the peer group.
Our peer group, for compensation purposes, is comprised of a group of
companies whose growth and financial profiles are similar to our own. These
companies, in general, are applied technology and service-driven growth
companies and they include among them the industry peer group set forth in
the corporate performance graph elsewhere in this proxy statement.
We review the base pay of our senior executives and adjust it up or
down based on the competitive peer group level, the strategic importance of
the position at Fritz and the skill of the executive as demonstrated by
past performance. We also periodically review base pay and adjust as
warranted in situations where responsibilities are enhanced.
The cash bonus provides an annual reward for exceptional performance
which exceeds expectations. Bonus awards are subject to significant
variability depending on the annual performance of Fritz and the individual
executive. In the case of most executive officers, bonus compensation is
based on a combination of the performance of the executive and the
performance of Fritz. The bonuses for the CEO and COO are based solely on
the performance of Fritz.
The key performance criteria used to determine bonus compensation are
Fritz's annual return to its stockholders as measured by return on equity,
its overall performance relative to the peer group as measured by revenue
growth and profitability, and the effectiveness of the executive's
leadership, vision and management skills.
Stock based incentives are used as a means of rewarding executives for
making decisions which lead to substantial growth in stockholder value and
for the perceived long term value of the executive to Fritz. No specific
minimum holdings of Fritz stock are required formally; however, executives
are encouraged to hold significant stock in Fritz. We believe that
management rewards should be at risk just as stockholders' gains are at
risk. Mr. Fritz holds stock in Fritz Companies and currently holds
6,478,520 shares or 53% of Fritz's outstanding Common Stock.
Stock options are the primary long term incentive award for
executives. We believe that stock options focus attention on managing Fritz
from the perspective of an owner with an equity stake in the business.
Fritz uses both restricted stock and nonqualified stock options. Restricted
stock is issued primarily as a retention device and nonqualified options as
a means of providing ongoing long term incentives.
As a matter of policy, Fritz believes it is important to retain the
flexibility to maximize Fritz's tax deductions. Amendments to Section
162(m) of the Internal Revenue Code have eliminated the deductibility of
most compensation over a million dollars in any given year. It will be the
policy of this Committee to consider the impact, if any, of Section 162(m)
on Fritz and to document as necessary specific performance goals in order
to seek to preserve Fritz's tax deductions.
During 1994, Fritz performed at an exceptional level as measured by
its revenue growth, net income, earnings per share and return on equity.
Mr. Fritz's total cash compensation has remained constant for the past
three years. We reviewed his total compensation against the average of the
peer group companies and believe it continues to be competitive at the
current level. Therefore, in spite of excellent corporate performance, no
increase in his total cash compensation is recommended. Mr. Fritz has
contributed significantly to the tremendous results achieved on behalf of
stockholders. As a result of his long term importance to Fritz, we have
approved a nonqualified option grant of 40,000 shares to Mr. Fritz.
79
<PAGE> 89
Mr. Pelino did not receive a bonus for 1993 performance and we feel,
given his total cash compensation and the performance of Fritz, that one is
highly deserved. We have approved a bonus for him of $275,000.
As indicated in our 1993 Report on Audit and Compensation, we are
firmly committed to a goal oriented compensation system based on how Fritz
performs. In years when Fritz meets in all respects its aggressive business
plan, we intend to recognize this achievement with substantial bonus
awards.
Compensation Committee
James E. Gilleran
Preston Martin
March 1, 1995
80
<PAGE> 90
PERFORMANCE GRAPH
The following graph compares the percentage change in Fritz's cumulative
total stockholder return on its Common Stock for the period from Fritz's initial
public offering on October 16, 1992 to December 31, 1994 with the cumulative
total return of the Nasdaq Market Index and a peer group index consisting of The
Harper Group, Inc., Expeditors International of Washington, Inc., Intertrans
Corporation and Air Express International Corporation.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURNS AMONG
FRITZ COMPANIES, INC., NASDAQ MARKET INDEX AND PEER GROUP INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD FRITZ COMPANIES NASDAQ PEER
(FISCAL YEAR COVERED) INC. MARKET INDEX GROUP*
<S> <C> <C> <C>
10/16/92 100.00 100.00 100.00
12/31/92 144.93 108.02 100.27
12/31/93 154.35 129.57 97.07
12/31/94 272.46 136.03 115.95
</TABLE>
*The Peer Group is made up of the following securities:
Air Express International Corporation The Harper Group, Inc.
Expeditors International of Washington, Inc. Intertrans Corporation
Notes:
A. Assumes $100 invested on October 16, 1992 (the date of Fritz's initial
public offering).
B. Assumes dividends reinvested.
81
<PAGE> 91
STOCK OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of Fritz Common Stock as of February 28, 1995 and as of the
consummation of the Merger by (i) each person who is known by Fritz to own
beneficially more than 5% of the outstanding Fritz Common Stock, (ii) each Fritz
director, (iii) each Named Fritz Officer and (iv) all of Fritz's directors and
executive officers as a group. All shares are subject to the named person's sole
voting and investment power except as otherwise indicated.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED
AS OF FEBRUARY 28, 1995 PERCENT OF COMMON STOCK
----------------------- ---------------------------
NAME OF BENEFICIAL OWNER NUMBER OF SHARES PRE-MERGER POST-MERGER(1)
---------------------------------- ----------------------- ---------- --------------
<S> <C> <C> <C>
Lynn C. Fritz (2)................. 6,488,520(3) 53.1% 39.1%
Dennis L. Pelino.................. 26,333(4) * *
Ronald A. Marcillac............... 13,132(5) * *
John H. Johung.................... 16,066(6) * *
Jan H. Raymond.................... 7,500(7) * *
James Gilleran.................... 2,541 * *
Preston Martin.................... 3,041 * *
Stephen M. Mattessich............. 1,338(8) * *
All directors and executive
officers as a group (eight
persons)........................ 6,558,471(9) 53.5 39.4
</TABLE>
- ---------------
* Less than one percent
(1) Gives effect to the issuance of 4,396,777 shares of Fritz Common Stock in
connection with the Merger, based on the number of shares of Intertrans
Common Stock outstanding on February 28, 1995, assumes a Merger Exchange
Ratio of 0.385 and assumes no dissenters' rights are exercised.
(2) The address of Mr. Fritz is 706 Mission Street, San Francisco, California
94103. Mr. Fritz may be deemed to be a "control person" of Fritz within the
meaning of the rules and regulations of the SEC by reason of his stock
ownership and positions with Fritz. Mr. Fritz is the only stockholder who
was known by Fritz to own beneficially more than 5% of Fritz's common Stock
on December 31, 1994.
(3) Includes employee stock options exercisable within 60 days to purchase
10,000 shares.
(4) Includes employee stock options exercisable within 60 days to purchase
14,333 shares.
(5) Includes employee stock options exercisable within 60 days to purchase
11,132 shares.
(6) Includes employee stock options exercisable within 60 days to purchase
15,066 shares.
(7) Includes employee stock options exercisable within 60 days to purchase 6,500
shares.
(8) Includes employee stock options exercisable within 60 days to purchase 1,338
shares.
(9) Includes shares which the directors and executive officers have the option
to purchase within 60 days.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires Fritz's executive officers and
directors, and persons who own more than ten percent of a registered class of
Fritz's equity securities, to file with the SEC reports of ownership and changes
in ownership of Fritz's Common Stock and other equity securities of Fritz.
Officers, directors and greater than ten-percent shareholders are required by
SEC regulation to furnish Fritz with copies of all Section 16(a) forms they
file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Form 5s were
required for those persons, Fritz believes that there was compliance for the
period from January 1, 1994 to December 31, 1994 with all Section 16 filing
requirements applicable to its officers, directors and greater than ten-percent
beneficial owners.
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<PAGE> 92
INTERTRANS
BUSINESS
GENERAL
Intertrans, a Texas corporation incorporated in 1978, provides
international air freight forwarding, international ocean freight forwarding,
customs brokerage, consulting and ancillary packing, crating, and other
logistics and transport services.
In the various phases of its air and ocean freight forwarding business,
Intertrans plans and implements the shipment of freight by commercial air and
ocean carriers from point of origin to destination. This involves identification
of shipping alternatives for customers in terms of timeliness and cost,
negotiation of rates with carriers, monitoring shipments until delivery,
advising with respect to new or updated import/export regulations or
restrictions and arranging passage of goods through customs. The freight
forwarding and customs brokerage industry is highly fragmented and competitive
with a significant volume of business being conducted by independent local
agents and brokers. Intertrans believes that price and quality of service are
the most important competitive factors in the industry. See "-- Competition,
Markets and Significant Customers."
The majority of Intertrans' business is related to international freight
forwarding from the United States to overseas destinations. Intertrans' domestic
freight forwarding activities are generally incidental to international trade.
The fees for most of Intertrans' services are denominated in United States
dollars and are payable in the United States.
In addition to seeking increased market share in areas served by existing
offices, Intertrans expands by opening new offices or acquiring existing freight
forwarding or customs brokerage businesses in locations where it perceives a
demand for its services. The availability of experienced local personnel is also
a factor in identifying new markets for expansion. Although Intertrans continues
to evaluate opportunities to acquire freight forwarding and customs brokerage
businesses in both foreign and domestic markets, it does not currently have
binding commitments for any such acquisitions.
Intertrans has 25 foreign offices in eleven countries, excluding
administrative offices and unconsolidated joint ventures. These figures include
six offices in two countries relating to companies acquired subsequent to
October 31, 1994, and one office opened in November 1994 by Intertrans'
subsidiary in the United Kingdom, Freight Intertrans U.K. Such offices were
established to support United States operations and to increase export
activities from those countries to worldwide destinations. In addition,
Intertrans currently utilizes local independent freight forwarders as agents to
service foreign points of origination and destination in which Intertrans does
not have offices.
AIR FREIGHT FORWARDING
In its air freight forwarding operations, Intertrans prepares air waybills,
collects through charges, provides handling services, routes and traces
shipments, investigates and settles claims, arranges for and performs transfer
services, provides shipping advice, prepares shipping and customs documentation
and furnishes various other incidental services. The types of items shipped in
the air freight forwarding portion of Intertrans' business are typically of a
relatively small size and require rapid delivery. Intertrans does not own or
operate any aircraft.
In connection with shipments between locations for which Intertrans has a
significant amount of business, Intertrans will often consolidate consignments
into a single shipment. The amount which Intertrans charges its customers is
based upon the weight or cubic displacement of the item to be shipped.
Typically, as the weight of a shipment increases, the shipping cost per pound
charged by commercial air carriers to Intertrans and by Intertrans to its
customers decreases. As a result, by consolidating the shipments of its
customers and presenting them to a commercial air carrier as a single shipment,
Intertrans is normally able to offer its customers a lower rate than they could
individually obtain, and as a general rule, realizes a higher gross profit
margin on consolidated shipments than on unconsolidated shipments. The
differential between the rate charged to Intertrans by an air carrier and the
rate which Intertrans charges to its customers, plus fees for incidental
services and a commission paid to Intertrans by the commercial air carrier for
utilizing its services,
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<PAGE> 93
represents the gross profit made by Intertrans in connection with such
shipments. In the case of unconsolidated shipments, Intertrans derives its
income primarily from commissions paid by the air carrier. Intertrans monitors
the rates charged by commercial air carriers in the markets serviced by
Intertrans and adjusts, as it deems appropriate and to the extent competitive
factors allow, the rates it charges its customers to reflect changes in such
rates.
In a typical international consolidated air shipment, Intertrans' customers
or common carriers deliver to one of Intertrans' offices the articles to be
exported. At such office, the shipments are consolidated and are delivered to a
commercial air carrier for shipment. Upon arrival at the air carrier's foreign
destination, a local independent freight forwarder acting as an agent for
Intertrans takes delivery of the consolidated shipment and breaks it down into
its various components. These separate components are then either picked up by
the consignee or delivered by an independent carrier to their final destination
at the consignee's expense.
Charges for ancillary services such as preparation of shipping
documentation, investigating and settling claims, performing transfer services,
providing specialized consulting services, providing packing and crating
services, and acting as a charter broker are billed directly to the customer.
Intertrans' liability to its customers for lost or damaged goods in
consolidated shipments is limited contractually to a maximum of $9.07 per pound
unless the shipper specifically requires excess valuation coverage or insurance
for the goods being shipped. In that event, Intertrans obtains insurance in the
amount by which the value of such goods exceeds such contractual limitation. The
air carriers utilized by Intertrans to make the actual shipment are liable to
Intertrans for a maximum of $9.07 per pound by international treaty. Intertrans,
when acting as agent for an air carrier in connection with unconsolidated
shipments, generally does not have any contractual liability for lost or damaged
goods following delivery thereof to the air carrier. Intertrans maintains
insurance coverage which it believes is adequate to protect itself against
losses attributable to lost or damaged shipments. Under Texas and other
applicable law, contractual limitations on Intertrans' liability may not be
effective with respect to representations, oral or written, made by Intertrans
or its authorized employees and agents. To date, no material claims in excess of
the aforementioned contractual limitations have been made against Intertrans.
OCEAN FREIGHT FORWARDING
In its ocean freight forwarding operations, Intertrans acts as consultant
to shippers, prepares required shipping and customs documentation, obtains cargo
space, coordinates delivery of shipments to ocean carriers and furnishes other
miscellaneous services required by the customer, such as packing, crating and
warehousing. The majority of Intertrans' ocean freight forwarding business
relates to shipments with points of origin in the United States. In contrast to
air freight forwarding, the types of articles shipped in the ocean freight
forwarding industry are typically bulky items not requiring rapid delivery.
Intertrans does not own or operate any ships.
As an ocean freight forwarder, Intertrans derives revenues primarily from
consolidated ocean shipments, commissions earned as agent for procuring
shipments to be carried by ocean carriers and from fees charged to customers for
additional services provided by Intertrans, such as preparation of
documentation, procuring insurance, packing, crating and consultation. The
commissions paid to Intertrans by shipping lines for utilizing their services
are established by the carrier or by shipping conferences of which the carrier
is a member. The fees charged by Intertrans to its customers for additional
services are determined by negotiation between Intertrans and such customers.
CUSTOMS BROKERAGE
Intertrans acts as a customs broker for goods being imported into the
United States and other countries where it has offices. In connection with such
activity, Intertrans prepares all customs documentation necessary for imported
items to clear customs and arranges for payment of any required customs fees.
Intertrans' revenues from acting as a customs broker are derived mostly
from fees for such services paid to it by its customers. Intertrans does not
have a fixed fee schedule for such services. Customs brokerage fees are based
upon the complexity of the transaction, the nature of the shipment, the value of
the articles comprising the shipment and the type of services required.
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<PAGE> 94
Intertrans offers its customs brokerage services to all customers and not
merely those using its air and ocean freight forwarding services.
CRATING, PACKING, WAREHOUSING, DISTRIBUTION AND ANCILLARY SERVICES
Intertrans offers a broad range of logistical services, including routine
and custom crating, packing, warehousing and distribution, invoicing and other
services both in connection with its air and ocean freight forwarding business
and independently of such activities. Most crating, packing, warehousing and
distribution is performed in connection with Intertrans' freight forwarding
business. Rates for routine crating and packing are based upon the number of
items to be crated or packed and the type of crating or packing required. Fees
charged in connection with custom crating and packing are determined by
negotiation between Intertrans and its customers. Rates for warehousing and
distribution services are determined by negotiation between Intertrans and its
customers and are dependent on length of time of storage, required space, type
of commodity and complexity of distribution services.
Intertrans also charges various fees for services ancillary to its freight
forwarding activities, such as preparing shipping documentation, investigating
and settling claims, performing transfer services, providing consulting services
and acting as a charter broker. Fees for ancillary services are determined by
negotiation or are set by Intertrans prior to the time such services are
provided.
COMPETITION, MARKETS AND SIGNIFICANT CUSTOMERS
Intertrans' business is directly related to international trade. As a
result, Intertrans' business could be influenced by many economic and political
factors such as domestic or international trade barriers, tariffs or taxes
imposed by the United States or foreign nations, civil or international unrest
and fluctuations in currency exchange rates. Intertrans cannot forecast the
occurrence of these events and the effects, if any, on Intertrans' operations as
a result of these conditions. Intertrans competes with a large number of freight
forwarding concerns, some of which have greater financial resources than those
of Intertrans, in an industry which is highly fragmented and in which Intertrans
believes no competitor controls a significant share of the market. Primary
competitors include other independent freight forwarders, as well as commercial
air and ocean carriers, integrated transportation companies and cargo sales
agents and brokers.
Intertrans believes that quality of service, including reliability,
responsiveness, expertise, convenience, scope of operations and price are the
most important competitive factors in the freight forwarding industry.
Intertrans believes that the quality of its services and the prices it charges
are competitive with its industry.
Intertrans' growth in recent years has resulted in diversification of its
customer base. No single customer accounted for more than 6% of Intertrans'
gross revenues in fiscal 1994.
Intertrans has full service operations, excluding administrative offices
and unconsolidated joint ventures, in over forty cities within the United States
as well as in Japan, Singapore, Hong Kong, Mexico, Puerto Rico, Belgium, nine
cities within the United Kingdom, four cities in Germany, four cities in Sweden
and two cities in The Netherlands. Additionally, Intertrans is party to a
long-term agreement whereby it can provide its customers freight forwarding
services throughout the Confederation of Independent States (formerly the Soviet
Union).
EMPLOYEES
As of October 31, 1994, Intertrans had 1,276 employees, 269 of whom were
engaged in sales, marketing and management activities and 1,007 of whom were
engaged in operations. In addition, Intertrans gained over seventy-five
employees with the acquisitions of Jet Air AB and Airtex International B.V.
subsequent to October 31, 1994. Intertrans considers its relationship with its
employees to be satisfactory.
REGULATION
Intertrans' air freight forwarding business is subject to regulation, as an
indirect air cargo carrier, under the Federal Aviation Act by the Department of
Transportation (the "DOT"), the successor to the Civil Aeronautics Board. Part
296 of the DOT's Economic Aviation Regulations exempts air freight forwarders
from most, but not all, of such act's requirements. The major provisions of the
act that remain applicable to
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<PAGE> 95
Intertrans are the following: subsection 403(b)(2), which forbids solicitation
of certain rebates; Section 404(a), which requires Intertrans to provide safe
service, equipment and facilities; Section 404(b), which prohibits
discrimination with respect to foreign air cargo transportation; Section 407(a),
which requires the keeping of certain accounts; Section 411, which prohibits
unfair or deceptive practices; and Section 415, which authorizes the DOT to
inquire into Intertrans' management for certain purposes.
In its ocean freight forwarding business, Intertrans is licensed as an
ocean freight forwarder by the Federal Maritime Commission (the "FMC") and is
also licensed by the FMC as a Non-Vessel Operating Common Carrier. The FMC also
prescribes qualifications for acting as a shipping agent, including certain
surety bonding requirements.
Intertrans is licensed as a customs broker by the U.S. Customs Service,
Department of the Treasury. All customs brokers are required to maintain
prescribed records and are subject to periodic inspections by the U.S. Customs
Service. As a customs broker, Intertrans is also required to maintain within
each U.S. customs district, where it performs customs brokerage services, an
individual who is a licensed customs broker. Intertrans may operate more than
one office location within any one U.S. customs district. In addition, offices
located in foreign countries are required to meet similar regulatory
requirements.
In certain foreign markets in which Intertrans operates, the air freight
forwarding business is subject to rate schedules and other restrictions which in
the first instance are agreed to by the International Air Transport Association
and subsequently approved by the governments concerned. Intertrans also is
subject to certain foreign regulations and is a member of various trade
associations which impose certain standards on Intertrans' method of conducting
business.
Intertrans monitors compliance with the regulatory standards applicable to
its business principally through a policy of periodic office visits by
Intertrans' personnel. However, such regulations are sometimes vague, generally
complex and always subject to change, and therefore there can be no assurance
that Intertrans' operations will at all times be conducted wholly in compliance
with all applicable regulations or that any failure to maintain such compliance
will not result in loss or liability to Intertrans. To date, Intertrans has not
experienced any material loss or liability by reason of such regulations.
Intertrans does not believe that current regulation of its activities
imposes significant economic restraints upon its operations or upon the entry of
new competitors into the industry in general or into the markets that are served
by Intertrans in particular.
INSURANCE
Intertrans maintains liability and casualty insurance in amounts it
believes are appropriate for its business. Due to the decentralized nature of
Intertrans' operations, management believes that any interruption of its
business would be isolated to one or a few locations at a given time and that
any such loss would not materially effect Intertrans as a whole. Therefore,
Intertrans does not maintain business interruption insurance.
86
<PAGE> 96
SELECTED FINANCIAL INFORMATION
The following selected financial information of Intertrans has been derived
from historical financial statements and should be read in conjunction with such
financial statements and notes thereto incorporated herein by reference.
Historical information for income statement data for periods prior to November
1, 1991, and for balance sheet data prior to October 31, 1993, for balance sheet
data are derived from financial statements not incorporated herein by reference.
<TABLE>
<CAPTION>
FISCAL YEARS ENDED OCTOBER 31,
------------------------------------------------------------
1990 1991 1992 1993 1994
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Gross revenues(1)................... $205,881 $276,677 $366,844 $376,762 $452,156
Net revenues(1)..................... 126,375 161,784 206,331 207,268 257,420
Direct transportation costs......... 87,946 110,510 137,893 134,167 170,285
Selling, general and administrative
expenses.......................... 29,338 40,312 56,041 59,141 70,742
Other expenses...................... 1,939 1,521 1,275 1,619 1,556
Operating earnings.................. 7,152 9,441 11,122 12,341 14,837
Net earnings........................ 5,645 6,771 7,749 8,690 10,562
Net earnings per common share --
primary(2)........................ 0.55 0.62 0.68 0.75 0.87
Net earnings per common
share -- fully diluted(2)......... 0.55 0.62 0.67 0.74 0.87
Weighted average number of common
shares and common share
equivalents(2):
Primary........................... 10,297 10,874 11,481 11,577 12,161
Fully diluted..................... 10,297 10,919 11,512 11,684 12,206
BALANCE SHEET DATA:
Working capital..................... $ 19,803 $ 21,308 $ 24,876 $ 30,151 $ 37,539
Total assets........................ 60,803 88,323 89,168 107,086 129,388
Total debt.......................... -- -- -- -- --
Total shareholders' equity.......... 29,961 42,879 46,847 56,925 68,739
Book value per share................ 3.07 4.05 4.44 5.17 6.04
</TABLE>
- ---------------
(1) Intertrans revenue includes amounts that were received as an agent for ocean
freight, foreign collect freight, and customs duty, and other services
(i.e., pass-through charges). Net revenue is calculated by deducting such
pass-through charges. Direct transportation costs, which are the costs
associated with the Intertrans activity as an indirect carrier, are
classified as operating expense.
In order to conform to the Fritz financial reporting practices, the
pass-through charges would be deducted to arrive at revenue, and direct
transportation costs would be deducted to arrive at net revenue. Should
these adjustments be made, Intertrans revenue would be $126,374,000,
$161,784,000, $206,332,000, $207,278,000 and $257,420,000 for the years
ended 1990, 1991, 1992, 1993 and 1994, respectively, and Intertrans net
revenue would be $38,428,000, $51,275,000, $68,438,000, $73,101,000 and
$87,135,000, for the years ended 1990, 1991, 1992, 1993 and 1994,
respectively.
(2) Net earnings per common share, weighted average number of common shares and
common share equivalents, and book value per share have been adjusted to
reflect a two-for-one Intertrans Common Stock split on June 7, 1993.
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<PAGE> 97
MARKET PRICES OF COMMON STOCK; DIVIDENDS
Intertrans Common Stock is traded in the over-the-counter market on the
Nasdaq National Market under the symbol "ITRN." The following table sets forth
the high and low closing sale prices during the periods indicated as reported by
Nasdaq.
<TABLE>
<CAPTION>
QUARTER ENDED HIGH LOW
--------------------------------------------------------- ------- -------
<S> <C> <C>
1993:
January 31, 1993....................................... $12.25 $ 9.625
April 30, 1993......................................... $12.75 $10.125
July 31, 1993.......................................... $12.625 $ 9.75
October 31, 1993....................................... $12.25 $11.00
1994:
January 31, 1994....................................... $14.375 $11.50
April 30, 1994......................................... $15.50 $13.00
July 31, 1994.......................................... $14.25 $12.125
October 31, 1994....................................... $14.25 $12.00
1995:
January 31, 1995....................................... $13.875 $12.375
April 30, 1995 (through April 1995)................ $ $
</TABLE>
On February 14, 1995, the last trading day immediately prior to the time
which Fritz and Intertrans first publicly announced their intent to undertake
the Merger, the closing sale price of Intertrans Common Stock as reported by
Nasdaq was $16.625 per share. On April , 1995, the last trading day for which
quotations were available at the time of printing this Joint Proxy
Statement/Prospectus, the closing sale price of Intertrans Common Stock as
reported by Nasdaq was $ per share.
Cash dividends were paid to holders of Intertrans Common Stock during the
fiscal year ended October 31, 1994, at the rate of $0.20 per common share. Cash
dividends were paid to holders of Intertrans Common Stock during the fiscal year
ended October 31, 1993, at the rate of $0.025 per common share for each of the
first three quarters and $0.05 per common share during the fourth quarter. On
December 1, 1994, the Board of Directors of Intertrans declared a quarterly cash
dividend of $0.05 per share on the Intertrans Common Stock payable on January 3,
1995, to all shareholders of record as of December 15, 1994. It is the intention
of Intertrans to pay future cash dividends quarterly on Intertrans Common Stock
if the Merger is not consummated.
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of Intertrans as of February 28, 1995,
and certain information about them, are set forth below:
<TABLE>
<CAPTION>
NAME AGE POSITION HELD WITH INTERTRANS
--------------------- --- ---------------------------------------------------
<S> <C> <C>
Sam N. Wilson 59 Chairman of the Board and Chief Executive Officer
Carsten S. Andersen 51 President and Director
W. Ted Minick 54 Director
Sheldon Frankel 58 Director
Cesareo Llano 55 Director
David R. Pulk 47 Senior Vice President
John R. Witt 44 Chief Financial Officer
</TABLE>
All directors hold office until the next annual meeting of shareholders
following their election and until their successors are duly elected and
qualified. All officers serve at the discretion of the Board of Directors.
Sam N. Wilson, a founder of Intertrans, has been Chairman of the Board
since its incorporation in 1978 and resumed duties as Chief Executive Officer of
Intertrans in August 1992, at the request of the Board of Directors. Mr. Wilson
has served Intertrans in various senior management positions at different times,
including President. From May 1975 to September 1980, Mr. Wilson served as Vice
President of Circle Airfreight Corporation, a large international freight
forwarding concern and a subsidiary of The Harper
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<PAGE> 98
Group, Inc. For more than seventeen years prior thereto, Mr. Wilson served in
various managerial capacities with Texas Instruments, Inc., including five years
as an International Distribution Manager.
Carsten S. Andersen has served as President of Intertrans since August 1992
and has been a director since March 1987. Mr. Andersen has also served in other
senior management positions at various times, including Executive Vice President
from June 1989 to August 1992 and President and Chief Operating Officer from
February 1987 to June 1989. From September 1983 to February 1987, Mr. Andersen
served as Vice President of Intertrans. From September 1981 to September 1983,
he was President of Time Manager U.S.A., Inc., a consulting firm specializing in
productivity and personnel planning. From June 1976 to August 1981, Mr. Andersen
was with The Harper Group, Inc., with duties including Director of Financial
Planning, Director of North America Operations and Senior Vice President of
Operations of Circle Airfreight Corporation.
W. Ted Minick has been a director of Intertrans since January 1981. From
1976 to the present time, Mr. Minick has been a director and shareholder of the
law firm of Winstead Sechrest & Minick P.C., Houston, Texas, which law firm
serves as independent legal counsel to Intertrans.
Sheldon Frankel has been a director of Intertrans since December 1980. From
1966 to the present time, Mr. Frankel has been a certified public accountant
with the accounting firm of Fox, Byrd, Golden & Frankel (and its predecessors),
Dallas, Texas, which accounting firm provides certain accounting services to
Intertrans.
Cesareo Llano has been a director of Intertrans since March 1992, with
special responsibility for Intertrans' Latin American operations conducted
primarily through its Stair Cargo Services division, headquartered in Miami,
Florida. Mr. Llano has also served as Chairman of the Board of Stair Cargo
Services, Inc. since its incorporation in 1977 and as President from January
1977 to March 1993. Stair Cargo Services, Inc. was acquired by Intertrans on
June 14, 1991, and was merged into Intertrans on January 7, 1994. From 1961 to
1976, Mr. Llano was Executive Vice President of Frontier Freight Forwarders,
Inc. and was a Director of Terrabank, N.A. from 1985 to 1990. He was also past
President of the Florida Customs Brokers & Forwarders Association, Director of
the International Air Freight Forwarders Association and a member of the
Advisory Board of the National Customs Brokers & Forwarders Association.
David R. Pulk has served as Senior Vice President of Intertrans since
February 1987. From December 1983 to February 1987, Mr. Pulk served as Vice
President of Intertrans. From August 1981 to December 1983, Mr. Pulk was a Vice
President of Air Express International, Inc. and was responsible for development
of new services and marketing. From June 1970 to August 1981, Mr. Pulk was
employed by Circle Airfreight Corporation in various capacities. In 1978, Mr.
Pulk was elected Vice President of Circle Airfreight Corporation and in 1980, he
was elected Senior Vice President in charge of sales and marketing within the
United States. When he terminated his employment with Circle Airfreight
Corporation in 1981, Mr. Pulk was also Director of Overseas Operations.
John R. Witt, Chief Financial Officer, joined Intertrans in March 1992.
From 1988 to 1992, Mr. Witt held the position of Executive Vice President and
Chief Financial Officer of Mr. Gatti, Inc., a 300-unit restaurant chain. From
1983 to 1988, he was Executive Vice President of Dalcor Financial, Inc., a
Dallas-based real estate and venture capital investment firm. Prior to 1983, Mr.
Witt was a manager with the accounting firm of KPMG Peat Marwick LLP.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the fiscal year ended October 31, 1994, the Board of Directors met
three times. Except for Carsten S. Andersen, who missed only one meeting of the
Board of Directors in fiscal 1994, no director attended less than 75% of such
Board of Directors meetings.
The Board of Directors has a Compensation Committee and an Audit Committee.
The Board of Directors does not have a nominating committee.
The Compensation Committee, composed of Sam N. Wilson, W. Ted Minick and
Sheldon Frankel, met three times during the fiscal year ended October 31, 1994.
The function of the Compensation Committee
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is to make recommendations to the Board of Directors with respect to
compensation and benefit programs for executive officers of Intertrans.
The Audit Committee, composed of W. Ted Minick and Sheldon Frankel, met
three times during the fiscal year ended October 31, 1994. The function of the
Audit Committee is to (i) recommend each year to the Board of Directors
independent auditors to audit the financial statements of Intertrans and its
consolidated subsidiaries, (ii) review the scope of the audit plan, (iii)
discuss with the auditors the results of Intertrans' annual audit and any
related matters, and (iv) review transactions posing a potential conflict of
interest among Intertrans and its directors, officers and affiliates.
COMPENSATION OF DIRECTORS
In accordance with the terms of the Intertrans Corporation 1992
Nonqualified Stock Option Plan adopted by the Board of Directors on December 11,
1992, and approved by the shareholders on March 30, 1993, directors of
Intertrans who are not employed by Intertrans (or any affiliate of Intertrans)
are eligible to receive nonqualified stock options to purchase shares of
Intertrans Common Stock based on the number of meetings attended during the
year, up to a maximum of 6,000 shares per year. The exercise price of any
options granted to nonemployee directors may not be less than the fair market
value of the Intertrans Common Stock on the date of grant of the option.
Intertrans reimburses all directors for their expenses incurred in
attending meetings as well as other expenses incurred in connection with their
service as directors of Intertrans.
EXECUTIVE COMPENSATION
ANNUAL AND LONG-TERM COMPENSATION
The following table sets forth certain information with respect to annual
and long term compensation for services in all capacities for the years ended
October 31, 1994, 1993, and 1992, paid to the Chief Executive Officer and the
other executive officers of Intertrans who received in excess of $100,000 in
total annual salary and bonus for fiscal 1994 (the "Named Intertrans Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION -----------------------
--------------------------------- RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING
NAME AND PRINCIPAL COMPENSATION AWARD(S) OPTIONS ALL OTHER
POSITION YEAR SALARY BONUS (1) (2) GRANTED COMPENSATION
- -------------------------- ---- -------- ------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Sam N. Wilson 1994 $200,000 $ 0 -- -- 0 --
Chairman and Chief 1993 200,000 0 -- -- 0 --
Executive Officer 1992 136,600 0 -- -- 500,000 --
Carsten S. Andersen 1994 $200,000 $ 0 -- -- 0 --
President 1993 200,000 0 -- -- 0 --
1992 183,294 0 -- -- 300,000 --
David R. Pulk 1994 $175,000 $15,000 -- -- 0 --
Senior Vice President 1993 175,000 0 -- -- 25,000 --
1992 167,679 4,992 -- -- 0 --
John R. Witt 1994 $106,104 $12,500 -- -- 5,000 --
Chief Financial Officer 1993 103,000 12,500 -- -- 25,000 --
1992 65,897 0 -- -- 46,000 --
</TABLE>
- ---------------
(1) The value of the perquisites and other personal property for the listed
officers did not exceed the lesser of either (a) $50,000 or (b) 10% of the
total annual salary and bonus of such officers. Therefore, no such amounts
are reported.
(2) Share amounts have been adjusted to reflect a two-for-one share dividend
which was issued to all holders of record of Intertrans Common Stock as of
June 7, 1993. Intertrans has not issued stock appreciation rights or
restricted stock awards.
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<PAGE> 100
OPTION GRANTS
The following table sets forth certain information regarding options
granted to the Named Intertrans Officers during the fiscal year ended October
31, 1994:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
INDIVIDUAL GRANTS REALIZABLE VALUE AT
------------------------------------------------------------- ASSUMED ANNUAL
PERCENT OF RATES OF STOCK
NUMBER OF TOTAL PRICE APPRECIATION
SECURITIES OPTIONS GRANTED EXERCISE FOR OPTION TERM(2)
UNDERLYING TO EMPLOYEES IN PRICE PER EXPIRATION -------------------
NAME OPTIONS GRANTED(1) FISCAL YEAR SHARE DATE 5% 10%
- ------------------------ ------------------ --------------- --------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
John R. Witt............ 5,000 2.6% $ 12.125 10/6/04 $38,127 $96,621
</TABLE>
- ---------------
(1) The stock options granted to Mr. Witt vest over a three (3) year period in
equal amounts beginning one year after the date of grant and have a term
equal to ten (10) years from the date of grant. The exercise price of the
options granted to Mr. Witt was equal to the fair market value of the
Intertrans Common Stock on the date of grant.
(2) The amounts set forth under "Potential Realized Value at Assumed Annual
Rates of Stock Price Appreciation for Option Term" reflect required
disclosures pursuant to regulations of the SEC. The actual value realized,
if any, could be more or less than the assumed values depending upon the
performance of the stock. The values disclosed are not intended to be, and
should not be interpreted by investors as, representations or projections of
future value or price of the Intertrans Common Stock. APB Opinion No. 25
states that no compensation is received by an employee upon grant of a stock
option where the option price is equal to or higher than the quoted market
price on the date of grant. Accordingly, Intertrans has recorded no
compensation expense related to the grant of these stock options.
OPTION EXERCISES AND YEAR-END OPTION VALUES
The following table sets forth certain information with respect to options
exercised during the fiscal year ended October 31, 1994, by the Named Intertrans
Officers and the value of unexercised options held by the Named Intertrans
Officers at October 31, 1994:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
OPTIONS EXERCISED NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
IN FISCAL 1994 OPTIONS AT IN-THE-MONEY OPTIONS
-------------------------- OCTOBER 31, 1994 AT OCTOBER 31, 1994(1)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Sam N. Wilson.......... 0 $ 0 333,333 166,667 1,562,498 781,252
Carsten S. Andersen.... 42,105 426,313 276,845 100,000 1,657,401 46,875
David R. Pulk.......... 30,000 236,250 37,167 16,667 242,171 54,168
John R. Witt........... 8,000 52,000 30,999 37,001 168,745 156,880
</TABLE>
- ---------------
(1) The value is based on the closing price on the Nasdaq National Market of
Intertrans Common Stock on that date.
STOCK OPTION PLANS
In December 1983, Intertrans adopted the 1983 Incentive Stock Option Plan
(the "1983 ISO Plan"), pursuant to which 693,000 shares of Intertrans Common
Stock have been reserved for issuance. In September 1984, Intertrans adopted the
1984 Incentive Stock Option Plan (the "1984 ISO Plan"), pursuant to which
750,000 shares of Intertrans Common Stock have been reserved for issuance. In
December 1987, Intertrans adopted the 1987 Flexible Stock Option Plan (the "1987
Flexible Plan"), pursuant to which 750,000 shares of Intertrans Common Stock
have been reserved for issuance. In January 1990, Intertrans adopted the 1990
Incentive Stock Option Plan (the "1990 ISO Plan"), pursuant to which 1,500,000
shares of Intertrans
91
<PAGE> 101
Common Stock have been reserved for issuance. In December 1992, Intertrans
adopted the 1992 Nonqualified Stock Option Plan (the "1992 Plan"), pursuant to
which 1,200,000 shares of Intertrans Common Stock have been reserved for
issuance. The 1983 ISO Plan, the 1984 ISO Plan and the 1990 ISO Plan are
hereinafter collectively referred to as the "ISO Plans." The ISO Plans, the 1987
Flexible Plan and the 1992 Plan are hereinafter collectively referred to as the
"Intertrans Stock Option Plans." The shares of Intertrans Common Stock reserved
for issuance under the Intertrans Stock Option Plans have been proportionately
adjusted, as necessary, to reflect the three-for-two share dividend effected
February 17, 1987, and the two-for-one share dividend effected June 7, 1993. The
options granted under the ISO Plans are intended to qualify as "incentive stock
options" within the meaning of Section 422A of the Code. The 1987 Flexible Plan
provides for the issuance of both incentive stock options and nonstatutory stock
options. The 1992 Plan provides for the issuance of nonstatutory stock options.
Incentive stock options may be granted under the ISO Plans and the 1987
Flexible Plan to key employees of Intertrans, including officers and directors
who are employees of Intertrans. Stock options may be granted under the 1992
Plan to directors who are not employees and to officers of Intertrans. Under the
1992 Plan, nonemployee directors receive an option to purchase 6,000 shares of
Intertrans Common Stock each year on November 1, subject to reduction to the
extent such director was unable to attend scheduled director meetings.
The ISO Plans, the 1987 Flexible Plan and the 1992 Plan may be administered
by the Board of Directors, a majority of whom are disinterested persons, or a
committee appointed by the Board of Directors composed of no less than three
directors who are disinterested persons. A committee comprised of Sheldon
Frankel and W. Ted Minick currently administers the ISO Plans, the 1987 Flexible
Plan and the 1992 Plan. The Board of Directors or the committee administering
the plans designates the optionees, the date of grants and the exercise prices.
The exercise price of any incentive stock options granted may not be less
than the fair market value of the Intertrans Common Stock on the date of grant
of the option. The exercise price of any nonstatutory stock option granted to
nonemployee directors under the 1992 Plan may not be less than the fair market
value of the Intertrans Common Stock on the date of grant of the option. The
exercise price of any nonstatutory stock options granted under the 1987 Flexible
Plan and the 1992 Plan (except with respect to nonemployee directors) shall be
determined from time to time in the sole discretion of the Board of Directors or
the committee administering such plan. Under the ISO Plans, options may not be
granted to any person who owns shares representing in excess of 10% of the total
combined voting power of all classes of stock of Intertrans on the date of grant
of the options. With respect to the 1987 Flexible Plan, no options may be
granted to any person who owns shares representing in excess of 5% of the total
combined voting power of all classes of stock of Intertrans as of the date of
grant of the options.
Options granted under ISO Plans become exercisable with respect to
one-third of the shares subject to such options on the date one year subsequent
to the date of grant of such options. Thereafter, options become exercisable
with respect to an additional one-third of such shares on each of the dates two
years and three years, respectively, following the date of grant of such
options. Options granted under the ISO Plans remain exercisable until exercise
or termination. All options granted pursuant to the 1983 ISO Plan and the 1984
ISO Plan terminate on the eighth anniversary of the date of grant and options
granted pursuant to the 1990 ISO Plan terminate on the tenth anniversary of the
date of grant.
Options granted under the 1987 Flexible Plan become fully exercisable
beginning on the second anniversary date of the date upon which such options are
granted. Options granted under the 1987 Flexible Plan remain exercisable until
exercise or termination. All options granted under the 1987 Flexible Plan
terminate on the tenth anniversary of the date of grant.
Options granted under the 1992 Plan to nonemployee directors become
exercisable immediately on grant. Except in the case of termination or a change
in control, options granted to officers under the 1992 Plan become exercisable
as set forth in the option agreement entered into with each option recipient. In
the event of a termination or change in control of Intertrans, a holder of an
option will be entitled to (a) all or a portion of the full number of shares not
previously exercised, without regard to the period of exercisability, or (b)
retain the option or accept in substitution for a new option covering the
appropriate number of shares of the
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<PAGE> 102
successor corporation or entity to the extent the holder of such option has
elected not to exercise the option. All options granted under the 1992 Plan
terminate on the tenth anniversary of the date of grant or, with respect to
options granted to officers, such earlier date as the committee administering
such options may determine.
For a discussion of the assumption by Fritz in the Merger of the Intertrans
Stock Options, together with the underlying stock options, see "The Proposed
Merger and Related Transactions -- Description of Merger and Plan of
Reorganization -- Assumption of Intertrans Options."
CERTAIN EMPLOYMENT AGREEMENTS AND RELATED ARRANGEMENTS
Chief Executive Officer -- Services Agreement and Option
Arrangements. Effective on August 7, 1992, Intertrans entered into a Services
Agreement with Sam N. Wilson pursuant to which Mr. Wilson has agreed to serve as
Chief Executive Officer for a three-year period, subject to a two-year extension
if deemed appropriate by Mr. Wilson and Intertrans. The Services Agreement also
calls for Mr. Wilson to provide consulting services to Intertrans for a ten-year
period following the termination of his employment as Chief Executive Officer.
As compensation for his services as Chief Executive Officer, Mr. Wilson
will receive $200,000 per annum in salary, plus benefits and incentives. Among
the benefits accorded to Mr. Wilson is an option to purchase 250,000 shares of
Intertrans Common Stock (now 500,000 shares as a result of the two-for-one share
dividend which was issued to all holders of record of Intertrans Common Stock as
of June 21, 1993) under a Nonqualified Stock Option Agreement. These option
shares have an exercise price equal to the fair market value on the date of
grant and vest over a three-year period in equal amounts beginning one year
after the August 7, 1992, date of grant. The vesting of these options will
accelerate in the event of a change in control of Intertrans at which time all
unexercised options become immediately exercisable. If Mr. Wilson's employment
terminates by reason of his death, disability or resignation without Good Reason
(as defined below), or if Intertrans terminates his employment for cause,
Mr.Wilson (or his estate) will be entitled to receive any unpaid salary through
the date of termination and exercise any stock options which are exercisable on
the date of termination. In addition, if Mr. Wilson's employment terminates by
reason of death, his estate or beneficiary will be entitled to receive a lump
sum from Intertrans (discussed below). If Mr. Wilson terminates his employment
for Good Reason, he will be entitled to receive unpaid salary through the date
of termination, plus a severance amount equal to the sum of the aggregate annual
salary for each year or portion thereof which he would have received had his
employment not been terminated. In addition, Mr. Wilson will be entitled to
exercise any stock options which are exercisable on the date of termination.
"Good Reason" will be considered to exist with respect to any termination if
there has been a material nonconsensual reduction in Mr. Wilson's duties and
responsibilities, any reduction in Mr. Wilson's salary or other benefits or the
occurrence of a change in control of Intertrans.
Following his tenure as Chief Executive Officer, Mr. Wilson has agreed to
provide consulting services to Intertrans for a ten-year period for $200,000 per
annum. The consulting arrangement with Mr. Wilson will not come into effect,
however, if Mr. Wilson's employment as Chief Executive Officer is terminated by
Intertrans for cause or by Mr. Wilson without Good Reason. If Intertrans
terminates Mr. Wilson's consulting services or Mr. Wilson voluntarily resigns
following a change in control of Intertrans, Mr. Wilson will be entitled to
receive unpaid compensation through the date of termination, plus a severance
amount equal to the sum of the aggregate annual compensation for each year or
portion thereof which he would have received had his consulting services not
been terminated. In addition, Mr. Wilson will be entitled to exercise any stock
options which are exercisable on the date of termination. If Mr. Wilson's
consulting services are terminated by reason of his death, his estate will be
entitled to receive any unpaid compensation for services rendered through the
date of termination and exercise any stock options which are exercisable on the
date of termination. In addition, Mr. Wilson's estate or beneficiary will be
entitled to receive a lump sum payment of $2,000,000, less the sum of all
compensation actually paid to Mr. Wilson for his consulting services. This
obligation is fully insured by key man life insurance policies maintained by
Intertrans.
President -- Employment Agreement and Option Agreement. Effective on August
1, 1992, Intertrans entered into an Employment Agreement with Carsten S.
Andersen in which Mr. Andersen has agreed to serve
93
<PAGE> 103
as President for a five-year period for a salary of $200,000 per annum, plus
benefits and incentives. Among the benefits accorded to Mr. Andersen is an
option to purchase 150,000 shares of Intertrans Common Stock (now 300,000 shares
as a result of the two-for-one share dividend which was issued to all holders of
record of Intertrans Common Stock as of June 7, 1993) under a Nonqualified Stock
Option Agreement pursuant to the 1992 Plan. These option shares have an exercise
price equal to the fair market value on the date of grant and vest over a
three-year period in equal amounts beginning one year after the August 1, 1992,
date of grant. The vesting of these options will accelerate in the event of a
change in control of Intertrans at which time all unexercised options become
immediately exercisable. For a two-year period following the expiration of the
Employment Agreement, Mr. Andersen may be entitled to receive payments totalling
$200,000 per annum in respect of an agreement not to compete with Intertrans in
certain geographical areas during that period. However, the noncompetition
covenant and the obligation to pay amounts to Mr. Andersen in respect thereof
may be waived by Intertrans. If Intertrans terminates Mr. Andersen's employment
for cause or Mr. Andersen voluntarily terminates his employment, Mr. Andersen
will be entitled to receive unpaid salary through the date of termination and
exercise any stock options which are exercisable on the date of termination. In
addition, for a two-year period following termination, Mr. Andersen may be
entitled to receive payments totalling $100,000 per annum in respect of an
agreement not to compete with Intertrans in certain geographical areas during
that period. Again, the noncompetition covenant and the obligation to pay
amounts to Mr. Andersen in respect thereof may be waived by Intertrans. If Mr.
Andersen's employment is terminated without cause, Mr. Andersen will be entitled
to receive unpaid salary through the date of termination, plus a severance
amount equal to the sum of the aggregate annual salary for each year or portion
thereof which he would have received had his employment not been terminated. In
addition, Mr. Andersen will be entitled to exercise any options which are
exercisable on the date of termination and may be entitled to receive payments
of $16,667 per month for each full month after August 1, 1997, up to a possible
24 months, during which he is precluded from competing with Intertrans. The
noncompetition covenant and the obligation to pay amounts to Mr. Andersen in
respect thereof may be waived by Intertrans. If Mr. Andersen's employment
terminates by reason of death or disability, Mr. Andersen (or his estate) will
be entitled to receive unpaid salary through the date of termination and
exercise any stock options which are exercisable on the date of termination.
CERTAIN BUSINESS RELATIONSHIPS
W. Ted Minick, a member of Intertrans' Board of Directors, is a director
and shareholder of Winstead Sechrest & Minick P.C., a law firm that was retained
during the last fiscal year and currently serves as independent legal counsel to
Intertrans.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following report of the Compensation Committee shall not be deemed to
be soliciting material or to be filed with the SEC under the Securities Act or
the Exchange Act or incorporated by reference in any document so filed.
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation:
Intertrans has continued its policy of structuring executive officer
compensation to provide competitive annual base salaries and benefits,
supplemented with incentives in the form of awards of stock options and, to
a lesser extent, cash bonuses. As previously reported, the emphasis on
stock options as a reward for performance and as an incentive for future
performance, in preference to cash bonuses and other immediate compensatory
benefits, tends to align the interests of the executives and Intertrans'
shareholders, an important goal of Intertrans' compensation strategy. Such
a strategy provides executive officers with a "personal stake" in the
financial and operating performance of Intertrans, and they are thus
encouraged to enhance productivity and efficiencies in their respective
areas of responsibility. Further, grants of stock options which are not
immediately exercisable in full, but which become exercisable over time
(typically three years), encourage executives to remain with Intertrans and
to associate their personal financial well being with the financial and
operating performance of Intertrans. The Committee considers the total
compensation (earned or potentially available) of each executive officer in
establishing each element of compensation.
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<PAGE> 104
In 1992, the Compensation Committee negotiated and structured
multi-year compensation arrangements with Carsten S. Andersen, the
President of Intertrans, and (acting without the participation of Mr.
Wilson) Sam N. Wilson, the Chief Executive Officer of Intertrans. Messrs.
Andersen and Wilson remain subject to the employment agreements negotiated
in 1992, and their compensation has remained unchanged.
In the early part of each fiscal year, the Committee reviews and
approves, with any modifications it deems appropriate, an annual salary
plan for Intertrans' senior executives, including the Chief Executive
Officer. The salary plan is developed under the direction of the Chief
Executive Officer based on performance judgments as to past and expected
future contributions of the individual executives. In addition, the
Committee considers information on compensation paid by competitors, to the
extent available. Although the Chief Executive Officer's compensation is
currently set in a three-year employment contract, it remains the
Committee's responsibility (acting without the participation of Mr. Wilson)
to review and fix the base salary of the Chief Executive Officer based upon
competitive compensation data and the Committee's assessment of his
performance and its expectation as to his future contributions in leading
Intertrans. Inasmuch as stock options are a significant component of the
Chief Executive Officer's compensation arrangement, no adjustment was made
in 1994.
All senior executives participate in Intertrans' stock option plans,
under which granted options typically vest over three years. Intertrans has
employed stock options as a means to reward and provide incentives for key
employees since 1983. Intertrans believes the stock options are a highly
effective means of compensating and motivating employees, as evidenced by
Intertrans' historically strong financial and operating performance. During
fiscal 1994, stock option committees comprised of disinterested directors
considered stock option grants to various key employees and approved grants
of options to a number of employees. No additional options were granted to
the Chief Executive Officer or the President.
Members of the Compensation Committee
Sam N. Wilson
W. Ted Minick
Sheldon Frankel
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Sam N. Wilson, a member of the Compensation Committee, served as Chief
Executive Officer and Chairman of the Board of Intertrans during the last fiscal
year.
W. Ted Minick, a member of the Compensation Committee, is a director and
shareholder of Winstead Sechrest & Minick P.C., a law firm that was retained
during the last fiscal year and currently serves as independent legal counsel to
Intertrans.
95
<PAGE> 105
SHAREHOLDER RETURN PERFORMANCE GRAPH
The following graph shows a five-year comparison of cumulative returns for
Intertrans, the Nasdaq Stock Market (U.S. and Foreign) and Nasdaq Trucking and
Transportation Stocks Index. The total cumulative return on investment (change
in month-end stock price plus reinvested dividends) for each of the periods for
Intertrans, the Nasdaq Stock Market (U.S. and Foreign) and the Nasdaq Trucking
and Transportation Index is based on the stock price or index at the end of
fiscal 1988.
The graph shall not be deemed to be soliciting material or to be filed with
the SEC under the Securities Act or the Exchange Act or incorporated by
reference in any documents so filed.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURNS AMONG
INTERTRANS CORPORATION, NASDAQ STOCK MARKET
AND NASDAQ TRUCKING & TRANSPORTATION STOCKS
<TABLE>
<CAPTION>
NASDAQ
NASDAQ STOCK TRUCKING &
MEASUREMENT PERIOD INTERTRANS MARKET TRANSPORTA-
(FISCAL YEAR COVERED) CORPORATION (US & FOREIGN) TION STOCKS
<S> <C> <C> <C>
10/31/89 100.0 100.0 100.0
10/31/90 86.3 75.2 70.9
10/31/91 154.1 126.0 109.4
10/30/92 138.3 141.1 127.0
10/29/93 171.3 182.3 164.0
10/31/94 191.5 182.4 160.0
</TABLE>
Notes:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends (plotted only at the end of each
fiscal year).
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the monthly interval, based on the fiscal year-end, is a trading day,
the preceding trading day is used.
D. The index level for all series was set to $100.00 on 10/31/89.
96
<PAGE> 106
STOCK OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table provides information as of February 9, 1995, as to the
ownership of Intertrans Common Stock by each person known by Intertrans to be
the beneficial owner of 5% or more of the Intertrans Common Stock:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP(1) CLASS
----------------------------------------------- -------------------- ----------
<S> <C> <C>
Luther King Capital Management Corporation..... 791,950 6.9%
301 Commerce Street, Suite 1600
Fort Worth, Texas 76102
</TABLE>
- ---------------
(1) Except as otherwise indicated, (a) none of the shares shown in this table or
referred to in the notes hereto are shares of which the persons named in
this table have the right to acquire beneficial ownership as specified in
Rule 13d-3(d)(1) promulgated under the Exchange Act, and (b) each person
named in this table possesses sole voting and investment power with respect
to the shares shown as owned by such person.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the number of outstanding shares of
Intertrans beneficially owned by (i) each director, (ii) each Named Intertrans
Officer and (iii) all directors and executive officers as a group as of February
28, 1995:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL
MANAGEMENT OWNERSHIP(1) PERCENT OF CLASS
-------------------------------------------- -------------------- ----------------
<S> <C> <C>
Sam N. Wilson............................... 476,335(2) 4.2
Carsten S. Andersen......................... 470,538(3) 4.1
Cesareo Llano............................... 222,589 1.9
David R. Pulk............................... 112,017(4) *
Sheldon Frankel............................. 57,500(5) *
W. Ted Minick............................... 43,800(6) *
John R. Witt................................ 30,911(7) *
All directors and executive officers as a
group (seven (7) persons)................. 1,413,686(8) 12.4
</TABLE>
- ---------------
(1) Except as otherwise indicated, (a) none of the shares shown in this table or
referred to in the notes hereto are shares of which the persons named in
this table have the right to acquire beneficial ownership as specified in
Rule 13d-3(d)(1) promulgated under the Exchange Act, and (b) each person
named in this table possesses sole voting and investment power with respect
to the shares shown as owned by such person.
(2) Includes 333,333 shares subject to options which are exercisable or will
become exercisable within 60 days of the date hereof.
(3) Includes 990 shares owned by Mr. Andersen's spouse and 240,000 shares
subject to options which are exercisable or will become exercisable within
60 days of the date hereof.
(4) Includes 150 shares owned by an adult child of Mr. Pulk who currently
resides at Mr. Pulk's home and 37,167 shares subject to options which are
exercisable or will become exercisable within 60 days of the date hereof.
(5) Includes 4,000 shares held in trust for the benefit of Mr. Frankel's adult
children and 32,000 shares subject to options which are exercisable or will
become exercisable within 60 days of the date hereof.
(6) Includes 26,000 shares subject to options which are exercisable or will
become exercisable within 60 days of the date hereof.
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<PAGE> 107
(7) Includes 30,999 shares subject to options which are exercisable or will
become exercisable within 60 days of the date hereof.
(8) Includes an aggregate of 699,499 shares subject to options held by officers
and directors which are exercisable or will become exercisable within 60
days of the date hereof.
* Represents less than 1% of the Intertrans Common Stock issued and
outstanding.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires Intertrans' directors and
executive officers, and persons who own more than 10% of a registered class of
Intertrans' equity securities, to file reports of ownership and changes on Forms
3, 4 and 5 with the SEC and the National Association of Securities Dealers, Inc.
Directors, executive officers and greater than 10% shareholders are required by
SEC regulation to furnish Intertrans with copies of all Forms 3, 4 and 5 they
file.
Based solely on Intertrans' review of the copies of such forms it has
received and representations that no other reports were required, Intertrans
believes that all of its directors, executive officers and greater than 10%
shareholders complied with all filing requirements applicable to them with
respect to transactions during fiscal 1994, except that Brent R. Burns
inadvertently failed to file one Form 4 reporting a gift in a timely manner and
Sheldon Frankel, W. Ted Minick, Charles F. Schroeder III and John R. Witt each
inadvertently failed to file one Form 5 in a timely manner.
DESCRIPTION OF FRITZ CAPITAL STOCK
The authorized capital stock of Fritz consists of 60,000,000 shares of
Fritz Common Stock and 1,000,000 shares of Preferred Stock ("Preferred Stock").
As of February 28, 1995, there were 12,201,690 shares of Fritz Common Stock
issued and outstanding and no shares of Preferred Stock issued and outstanding.
COMMON STOCK
Holders of shares of Fritz Common Stock are entitled to one vote per share
on all matters to be voted on by stockholders. Subject to the preferences that
may be applicable to any outstanding Preferred Stock, holders of Fritz Common
Stock are entitled to receive ratably such dividends as may be declared by the
Board of Directors in its discretion from funds legally available therefor. In
the event of a liquidation, dissolution, or winding up of Fritz, holders of
Fritz Common Stock are entitled to share ratably in all assets remaining after
payment of liabilities and the liquidation preference of any outstanding
Preferred Stock. Holders of Fritz Common Stock have no preemptive rights and
have no rights to convert their Common Stock into any other securities. The
outstanding shares of Fritz Common Stock are, and the Fritz Common Stock to be
outstanding upon completion of the offering will be, validly issued, fully paid
and nonassessable.
PREFERRED STOCK
The Board of Directors has the authority to cause Fritz to issue up to
1,000,000 shares of Preferred Stock in one or more series and to fix the rights,
preferences, privileges and restrictions thereof, including dividend rights,
conversion rights, voting rights, terms of redemption, liquidation preferences
and the number of shares constituting any series or the designation of such
series, without any further vote or action by the stockholders. The issuance of
Preferred Stock may have the effect of delaying, deferring or preventing a
change in control of Fritz without further action by the stockholders and could
adversely affect the rights and powers, including voting rights, of the holders
of Fritz Common Stock. In certain circumstances, this could have the effect of
decreasing the market price of the Fritz Common Stock. Fritz has no present
plans to issue any shares of Preferred Stock.
SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW
Fritz is subject to the provisions of Section 203 of the Delaware General
Corporation Law. In general, this statute prohibits certain publicly held
Delaware corporations from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless (i) the
corporation has elected in its certificate of
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<PAGE> 108
incorporation or bylaws not to be governed by this Delaware law (Fritz has not
made such an election), (ii) prior to the time the stockholder became an
interested stockholder, the board of directors approved either the business
combination or the transaction which resulted in the person becoming an
interested stockholder, (iii) the stockholder owned at least 85% of the
outstanding voting stock of the corporation (excluding shares held by directors
who were also officers or held in certain employee stock plans) upon
consummation of the transaction which resulted in a stockholder becoming an
interested stockholder or (iv) the business combination was approved by the
board of directors and by two-thirds of the outstanding voting stock of the
corporation (excluding shares held by the interested stockholder). "Interested
stockholder" is a person who, together with affiliates and associates, owns (or,
if such person is an affiliate or associate of the corporation, any time within
the prior three years did own) 15% or more of the corporation's outstanding
voting stock. The term "business combination" is defined generally to include
mergers, consolidations, stock sales, asset-based transactions, and other
transactions resulting in a financial benefit to the interested stockholder.
TRANSFER AGENT AND REGISTRAR
Mellon Securities Transfer Services serves as the transfer agent and
registrar for the Fritz Common Stock.
COMPARISON OF RIGHTS OF HOLDERS OF FRITZ
COMMON STOCK AND HOLDERS OF INTERTRANS COMMON STOCK
As a result of the Merger, holders of Intertrans Common Stock will be
exchanging their shares of a Texas corporation which is governed by the Texas
Business Corporation Act (the "TBCA") and Intertrans' Restated Articles of
Incorporation, as amended, and Restated Bylaws, for shares of the common stock
of Fritz, a Delaware corporation which is governed by the Delaware General
Corporation Law (the "DGCL") and Fritz's Restated Certificate of Incorporation
and Restated Bylaws. The following is a summary of certain of the more
significant differences affecting the rights of Intertrans shareholders and
certain similarities.
Mergers and Consolidations. The TBCA requires the approval of the holders
of two-thirds of the outstanding Intertrans Common Stock entitled to vote
thereon for mergers or consolidations, and for sales, leases or exchanges of
substantially all of Intertrans' property and assets, if not made in the usual
and regular course of business. The TBCA would permit Intertrans to merge with
another corporation without obtaining the approval of Intertrans' shareholders
if: (i) Intertrans is the sole surviving corporation of the merger; (ii)
Intertrans' Restated Articles of Incorporation, as amended, would not change;
(iii) each shareholder of Intertrans immediately prior to the effective time of
the merger will hold identical shares of Intertrans Common Stock immediately
after the merger; (iv) the voting power of the number of voting shares
outstanding immediately after the merger, plus the voting power of the number of
voting shares issuable as a result of the merger (either by the conversion of
securities issued pursuant to the merger or the exercise of rights to purchase
securities issued pursuant to the merger), will not exceed by more than 20% the
voting power of the total number of voting shares of the corporation outstanding
immediately before the merger; (v) the number of participating shares
outstanding immediately after the merger, plus the number of participating
shares issuable as a result of the merger (either by the conversion of
securities issued pursuant to the merger or the exercise of rights to purchase
securities issued pursuant to the merger), will not exceed by more than 20% the
total number of participating shares of the corporation outstanding immediately
before the resolution approving the plan of merger.
The DGCL requires the approval of the Board of Directors and the holders of
a majority of the outstanding Fritz Common Stock entitled to vote thereon for
mergers or consolidations, and for sales, leases or exchanges of substantially
all of Fritz's property and assets. The DGCL would permit Fritz to merge with
another corporation without obtaining the approval of Fritz's stockholders if:
(i) Fritz is the surviving corporation of the merger; (ii) the merger agreement
does not amend Fritz's Restated Certificate of Incorporation; (iii) each share
of Fritz Common Stock outstanding immediately prior to the effective date of the
merger is to be an identical outstanding or treasury share of Fritz Common Stock
after the merger; and (iv) any authorized but unissued shares or treasury shares
of Fritz Common Stock to be issued or delivered under the plan of merger plus
those initially issuable upon conversion of any other securities or obligations
to
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be issued or delivered under such plan do not exceed 20% of the shares of Fritz
Common Stock outstanding immediately prior to the effective date of the merger.
Anti-Takeover Provisions. The TBCA contains no specific provision designed
as an anti-takeover measure. Fritz, however, is subject to the provisions of
Section 203 of the DCGL ("Section 203") which prohibits a "business combination"
(defined in Section 203 as generally including mergers, sales and leases of
assets, issuances of securities, and similar transactions) by Fritz or a
subsidiary with an "interested stockholder" (defined in Section 203 as generally
the beneficial owner of 15% or more of Fritz Common Stock) within three years
after the person or entity becomes an interested stockholder, unless (i) prior
to the person or entity becoming an interested stockholder, the business
combination or the transaction pursuant to which such person or entity became an
interested stockholder shall have been approved by Fritz's Board of Directors,
(ii) upon consummation of the transaction in which he became an interested
stockholder, the interested stockholder holds at least 85% of the Fritz Common
Stock (excluding shares held by persons who are both officers and directors and
shares held by certain employee benefit plans), or (iii) the business
combination is approved by Fritz's Board of Directors and by the holders of at
least two-thirds of the outstanding Fritz Common Stock, excluding shares owned
by the interested stockholder.
Appraisal Rights. The rights of appraisal of dissenting shareholders of
Intertrans are governed by the TBCA. Pursuant thereto, any shareholder has the
right to dissent from any merger or consolidation, except as described below, of
which Intertrans is a constituent corporation. No such appraisal rights are
available for the shares of any class or series of Intertrans Common Stock if
(i) as of the record date fixed to determine the shareholders entitled to
receive notice of and to vote at the meeting of shareholders to act upon the
agreement of merger or consolidation, such shares were either listed on a
national securities exchange or held of record by more than 2,000 shareholders,
and (ii) the shareholder is not required by the terms of the plan of merger or
the plan of exchange to accept for his shares any consideration other than (a)
shares of a corporation that, immediately after the effective time of the merger
or exchange, will be part of a class or series of shares of which are listed, or
authorized for listing upon official notice of issuance, on a national
securities exchange, or authorized for listing upon official notice of issuance,
on a national securities exchange, or held of record by not less than 2,000
holders, and (b) cash in lieu of fractional shares otherwise entitled to be
received. Intertrans shareholders may dissent from the merger and receive the
right to an appraisal of such shareholder's shares. See "The Proposed Merger and
Related Transactions -- Dissenters' Rights."
Under Delaware law, stockholders are entitled to certain limited rights of
appraisal. No appraisal rights shall be available, however, for the holders of
any shares of a stock of a constituent Delaware corporation to a merger if that
corporation survives the merger and the merger did not require for its approval
the vote of the stockholders of such constituent Delaware corporation. Moreover,
under Delaware law, no appraisal rights are available to stockholders of a
Delaware constituent corporation to a merger for any shares of stock which, at
the record date for the vote on such merger, were either (a) listed on a
national securities exchange or (b) held of record by more than 2,000
stockholders. Appraisal rights are available to Delaware stockholders in any
event if such stockholders are required by the terms of an agreement of merger
or consolidation to accept for such stock of the constituent corporation
anything except (a) shares of stock of the corporation surviving or resulting
from such merger or consolidation, (b) shares of stock of any other corporation
which, at the effective date of the merger or consolidation, will be either
listed on a national securities exchange or held of record by more than 2,000
stockholders, (c) cash in lieu of fractional shares of the corporation described
in clauses (a) and (b) above, or (d) any combination of the shares of stock and
cash in lieu of fractional shares described in clauses (a), (b) and (c) above.
Charter Amendments. Under Texas law an amendment to the articles of
incorporation requires the approval of the holders of at least two-thirds of the
outstanding shares of stock of the corporation entitled to vote thereon, unless
a specified portion, but not less than a majority, of the outstanding shares is
provided for in the corporation's articles of incorporation. Delaware law
provides that amendments to the certificate of incorporation require the
approval of holders of a majority of the outstanding shares of stock of the
corporation entitled to vote thereon, unless the certificate of incorporation
provides for a greater vote. The Restated Certificate of Incorporation of Fritz
makes no such provision.
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Special Meetings. A special meeting of shareholders of a Texas corporation
may be called by the holders of shares entitled to cast not less than 10% of the
votes at the meeting. Stockholders of a Delaware corporation do not have a right
to call special meetings unless it is conferred in the corporation's certificate
of incorporation or by laws. The Restated Bylaws of Fritz allow special meetings
to be called at any time by the president, any two of the directors, or the
holders of not less than one-tenth of all the shares having voting power at such
meeting.
Actions Without a Meeting. The TBCA permits shareholders of a corporation
to act without a meeting if a consent in writing to such action is signed by all
shareholders or, if permitted by the articles of incorporation, by a consent in
writing to such action signed by the holders of the number of shares required to
approve the proposed action. Intertrans' Restated Articles of Incorporation, as
amended, does not permit shareholders to take action by a written consent of
less than all shareholders. Delaware law provides that stockholders may take
action without a meeting if a consent in writing to such action is signed by the
requisite number of stockholders necessary to approve the action.
Dividends. A Delaware corporation may pay dividends not only out of surplus
(the excess of net assets over capital) but also out of net profits for the
current or preceding fiscal year if it has no surplus, subject to any
restrictions contained in the certificate of incorporation. Fritz's Restated
Certificate of Incorporation contains no restrictions on dividend payments. A
Texas corporation may make distributions only out of surplus.
Limitation of Liability and Indemnification. Both the TBCA and the DGCL
permit a corporation to indemnify directors against expenses, judgments, fines
and amounts paid in settlement that are actually and reasonably incurred. The
determination of indemnification is made by the board of directors, special
independent legal counsel, or by the stockholders or shareholders. A corporation
must indemnify expenses, including attorney's fees, for a director who is wholly
successful, on the merits or otherwise, in defense of a proceeding in which he
is a named defendant. A Texas corporation may restrict the circumstances where
indemnification is required or permitted by the TBCA.
Cumulative Voting for Directors. A Texas corporation has cumulative voting
for directors unless expressly prohibited by the articles of incorporation.
Intertrans' Restated Articles of Incorporation, as amended, expressly prohibit
cumulative voting for directors. Cumulative voting must be expressly provided
for in the certificate of incorporation of a Delaware corporation. Fritz's
Restated Certificate of Incorporation does not provide for cumulative voting.
Filling Vacancies on the Board of Directors. Under Texas law, the board of
directors may fill not more than two (2) vacancies created by an increase in the
number of directors on the board of directors, during the period between any two
successive annual meetings. The board of directors of a Delaware corporation may
fill any number of vacancies created by an increase in the number of directors
on such board. Fritz's Restated Bylaws provide for a minimum of three (3)
directors, the exact number to be fixed (i.e., increased or decreased) either by
a resolution or bylaw duly adopted by the Board of Directors, provided that a
decrease in the number of directors constituting the Board of Directors shall
not shorten the term of an incumbent director. The Restated Bylaws allow the
Board of Directors to fill vacancies by the affirmative vote of a majority of
the remaining directors then in office.
Removal of Directors. A Texas corporation may provide for removal of a
director with or without cause by a vote of the holders of a specified portion,
but not less than a majority, of the shares then entitled to vote at an election
of directors. Stockholders of a Delaware corporation holding a majority of the
outstanding shares may remove a director with or without cause.
Inspection of Books and Records. Under Texas law, any person who has been a
shareholder of record for at least 6 months preceding his demand, or who is the
holder of at least 5% of all of the outstanding shares of stock of a corporation
is entitled to examine a corporation's relevant books and records for any proper
purpose. Under Delaware law, any stockholder has such right.
Other. The foregoing is an attempt to summarize the more important
differences in the corporation laws of the two states and does not purport to be
a complete listing of differences in the rights and remedies of holders of
shares of a Texas corporation, as opposed to a Delaware corporation. Such
differences can be
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determined in full by reference to the TBCA and to the DGCL. In addition, the
laws of Texas and Delaware provide that some of the statutory provisions as they
affect various rights of holders of shares may be modified by provisions in the
articles of incorporation, charter or bylaws of the corporation.
LEGAL MATTERS
Certain legal matters in connection with the Fritz Common Stock to be
issued in connection with the Merger will be passed upon for Fritz by Brobeck,
Phleger & Harrison, San Francisco, California. Winstead, Sechrest & Minick,
P.C., Dallas, Texas, is acting as counsel for Intertrans in connection with
certain legal matters relating to the Merger. W. Ted Minick, a member of
Intertrans' Board of Directors, is a director and shareholder of Winstead,
Sechrest & Minick, P.C.
EXPERTS
The consolidated financial statements and schedule of Fritz as of December
31, 1994 and 1993 and for each of the years in the two-year period ended
December 31, 1994 incorporated by reference to Fritz's Annual Report on Form
10-K for the year ended December 31, 1994, have been audited by KPMG Peat
Marwick LLP, independent certified public accountants, as set forth in their
report thereon included therein and incorporated herein by reference. The
consolidated financial statements and schedule of Fritz for the year ended
December 31, 1992 incorporated by reference to Fritz's Annual Report on Form
10-K for the year ended December 31, 1994, have been audited by Deloitte &
Touche LLP, independent auditors, as set forth in their report thereon included
therein and incorporated herein by reference. Such consolidated financial
statements and schedule have been incorporated herein by reference in reliance
upon such reports given upon the authority of such firms as experts in
accounting and auditing.
The consolidated financial statements and schedule of Intertrans as of
October 31, 1994 and 1993 and for each of the years in the three-year period
ended October 31, 1994 incorporated by reference to Intertrans' Annual Report on
Form 10-K for the year ended October 31, 1994, have been audited by KPMG Peat
Marwick LLP, independent certified public accountants, as set forth in their
report thereon included therein and incorporated herein by reference. Such
consolidated financial statements have been incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
The firm of KPMG Peat Marwick LLP served as independent certified public
accountants for Fritz and Intertrans for the fiscal years ended December 31,
1994 and October 31, 1994, respectively. Representatives of KPMG Peat Marwick
LLP will be present at the Fritz Annual Meeting and Intertrans Annual Meeting
and will have the opportunity at such meetings to make a statement if such
representatives desire to do so. In addition, such representatives will be
available to respond to appropriate questions raised at the meetings.
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INDEPENDENT ACCOUNTANTS
On April 13, 1993, the Audit and Compensation Committee of Fritz selected
KPMG Peat Marwick LLP to audit Fritz's 1993 consolidated financial statements
and dismissed the firm of Deloitte & Touche LLP which had served as Fritz's
principal accountant. The accountant's report on Fritz's financial statements
for the two years prior to such dismissal did not contain an adverse opinion or
a disclaimer of opinion, and was not qualified or modified as to uncertainty,
audit scope, or accounting principles. The decision to change accountants was
recommended and approved by the Audit and Compensation Committee of the Fritz
Board of Directors. Fritz believes that during 1991, 1992 and the portion of
1993 up to the date of the dismissal, there were no disagreements between Fritz
and Deloitte & Touche LLP on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of Deloitte & Touche LLP
would have caused Deloitte & Touche LLP to make reference to the subject matter
of the disagreements in connection with its report.
STOCKHOLDER PROPOSALS
If any stockholder intends to present a proposal for action at Fritz's 1996
Annual Meeting and wishes to have such proposal set forth in management's proxy
statement, such stockholder must forward the proposal to Fritz so that it is
received on or before December , 1995. Proposals should be addressed to Fritz
at 706 Mission Street, San Francisco, California 94103, Attention: Corporate
Secretary. Such proposals may be included in next year's proxy statement if they
comply with certain rules and regulations promulgated by the SEC.
If the Merger is not consummated, it is currently anticipated that the 1996
Annual Meeting of Shareholders of Intertrans will be held on or about March 30,
1996. If such meeting is held, shareholder proposals intended to be presented at
such meeting must be forwarded to Intertrans so that it is received on or before
, 1995 for inclusion in the proxy materials for such meeting.
Proposals should be addressed to Intertrans at 125 E. John Carpenter Freeway,
Suite 900, Irving, Texas 75062, Attention: Corporate Secretary. Such proposals
may be included in next year's proxy statement if they comply with certain rules
and regulations promulgated by the SEC.
OTHER MATTERS
As of the date of this Joint Proxy Statement/Prospectus, other than the
matters set forth herein and in the Notice accompanying this Joint Proxy
Statement/Prospectus, there are no other matters which the managements of Fritz
and Intertrans intend to present or have reason to believe others will present
to the Fritz Annual Meeting or the Intertrans Annual Meeting, respectively. If
other matters properly come before the Annual Meetings, those who act as proxies
will vote in accordance with their judgment.
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APPENDIX A
CONFORMED
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION
DATED AS OF
FEBRUARY 14, 1995
BY AND AMONG
FRITZ COMPANIES, INC.,
FRITZ AIR FREIGHT
AND
INTERTRANS CORPORATION
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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TABLE OF CONTENTS
<TABLE>
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ARTICLE I THE MERGER................................................................ A-1
1.01 The Merger................................................................... A-1
1.02 Conversion of Shares......................................................... A-2
1.03 Exchange of Certificates..................................................... A-3
1.04 Dissenting Shares............................................................ A-4
1.05 Fractional Shares............................................................ A-4
1.06 Intertrans Stock Option Plans................................................ A-4
1.07 Registration of Intertrans Stock Option Plans................................ A-5
1.08 Benefits Arrangements........................................................ A-5
ARTICLE II THE SURVIVING CORPORATION................................................ A-5
2.01 Articles of Incorporation.................................................... A-5
2.02 Bylaws....................................................................... A-5
2.03 Directors and Officers....................................................... A-5
ARTICLE III REPRESENTATIONS AND WARRANTIES OF INTERTRANS............................ A-5
3.01 Corporate Existence and Power................................................ A-5
3.02 Corporate Authorization...................................................... A-6
3.03 Governmental Authorization................................................... A-6
3.04 Non-Contravention............................................................ A-6
3.05 Capitalization............................................................... A-7
3.06 Subsidiaries................................................................. A-7
3.07 SEC Filings.................................................................. A-8
3.08 Financial Statements......................................................... A-8
3.09 Disclosure Documents......................................................... A-8
3.10 Absence of Certain Changes................................................... A-9
3.11 No Undisclosed Liabilities................................................... A-10
3.12 Litigation................................................................... A-10
3.13 Taxes........................................................................ A-10
3.14 Employee Benefit Plans; ERISA................................................ A-11
3.15 Material Agreements.......................................................... A-12
3.16 Properties................................................................... A-12
3.17 Environmental Matters........................................................ A-13
3.18 Labor Matters................................................................ A-13
3.19 Compliance with Laws......................................................... A-13
3.20 Trademarks, Tradenames, Etc. ................................................ A-13
3.21 Finders' Fees................................................................ A-13
3.22 Opinion of Financial Advisor................................................. A-14
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF FRITZ.................................. A-14
4.01 Corporate Existence and Power................................................ A-14
4.02 Corporate Authorization...................................................... A-14
4.03 Governmental Authorization................................................... A-14
4.04 Non-Contravention............................................................ A-15
4.05 Capitalization of Fritz...................................................... A-15
4.06 Organization of Merger Sub................................................... A-16
4.07 Subsidiaries................................................................. A-16
4.08 SEC Filings.................................................................. A-16
4.09 Financial Statements......................................................... A-17
4.10 Disclosure Documents......................................................... A-17
4.11 Absence of Certain Changes................................................... A-17
4.12 No Undisclosed Liabilities................................................... A-17
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<TABLE>
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4.13 Litigation................................................................... A-18
4.14 Taxes........................................................................ A-18
4.15 Employee Benefit Plans; ERISA................................................ A-18
4.16 Material Agreements.......................................................... A-19
4.17 Properties................................................................... A-20
4.18 Environmental Matters........................................................ A-20
4.19 Labor Matters................................................................ A-20
4.20 Compliance with Laws......................................................... A-20
4.21 Trademarks, Tradenames, Etc. ................................................ A-20
4.22 Finders' Fees................................................................ A-20
4.23 Opinion of Financial Advisor................................................. A-20
ARTICLE V COVENANTS OF INTERTRANS................................................... A-21
5.01 Conduct of Intertrans........................................................ A-21
5.02 Shareholders' Meeting; Proxy Material........................................ A-21
5.03 Access to Financial and Operation Information................................ A-22
5.04 Other Offers................................................................. A-22
5.05 Maintenance of Business...................................................... A-23
5.06 Compliance with Obligations.................................................. A-23
5.07 Notices of Certain Events.................................................... A-23
5.08 Confidentiality.............................................................. A-23
5.09 Compliance with the Securities Act........................................... A-24
ARTICLE VI COVENANTS OF FRITZ AND MERGER SUB........................................ A-24
6.01 Conduct of Fritz............................................................. A-24
6.02 Stockholders' Meeting; Proxy Material; Registration Statement................ A-24
6.03 Access to Financial and Operation Information................................ A-24
6.04 Maintenance of Business...................................................... A-25
6.05 Compliance with Obligations.................................................. A-25
6.06 Notices of Certain Events.................................................... A-25
6.07 Confidentiality.............................................................. A-25
6.08 Obligations of Merger Sub.................................................... A-25
6.09 Notice to Affiliates......................................................... A-25
ARTICLE VII COVENANTS OF FRITZ AND INTERTRANS....................................... A-26
7.01 Advice of Changes............................................................ A-26
7.02 Regulatory Approvals......................................................... A-26
7.03 Actions Contrary to Stated Intent............................................ A-26
7.04 Certain Filings.............................................................. A-26
7.05 Communications............................................................... A-26
7.06 Satisfaction of Conditions Precedent......................................... A-26
7.07 Stockholders' Meeting Dates.................................................. A-27
ARTICLE VIII CONDITIONS TO THE MERGER............................................... A-27
8.01 Conditions to Obligations of Fritz and Merger Sub............................ A-27
8.02 Conditions to Obligations of Intertrans...................................... A-27
8.03 Conditions to Obligations of Each Party...................................... A-28
ARTICLE IX TERMINATION OF AGREEMENT................................................. A-28
9.01 Termination.................................................................. A-28
9.02 Effect of Termination........................................................ A-29
ARTICLE X MISCELLANEOUS............................................................. A-29
10.01 Further Assurances........................................................... A-29
10.02 Fees and Expenses............................................................ A-30
10.03 Survival..................................................................... A-31
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10.04 Notices...................................................................... A-31
10.05 Governing Laws............................................................... A-31
10.06 Binding upon Successors and Assigns; Assignment.............................. A-32
10.07 Severability................................................................. A-32
10.08 Entire Agreement............................................................. A-32
10.09 Other Remedies............................................................... A-32
10.10 Amendment and Waivers........................................................ A-32
10.11 No Waiver.................................................................... A-32
10.12 Construction of Agreement.................................................... A-32
10.13 Counterparts................................................................. A-32
EXHIBITS
Exhibit 1.01 Form of Articles of Merger
Exhibit 5.09 Form of Affiliates Agreement
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is entered
into as of the 14th day of February, 1995, by and among FRITZ COMPANIES, INC., a
Delaware corporation ("Fritz"), FRITZ AIR FREIGHT, a California corporation and
a wholly owned subsidiary of Fritz ("Merger Sub"), and INTERTRANS CORPORATION, a
Texas corporation ("Intertrans").
RECITALS
A. The Boards of Directors of Fritz, Merger Sub and Intertrans have each
determined to engage in the transactions contemplated hereby, pursuant to which
(i) Merger Sub will merge (the "Merger") with and into Intertrans, (ii) each
share of common stock, no par value, of Intertrans ("Intertrans Common Stock")
(except for shares of Intertrans Common Stock owned by Intertrans, Fritz or
Merger Sub and shares of Intertrans Common Stock as to which appraisal rights,
if available, shall have been perfected) shall be converted into the right to
receive a fraction of a share of common stock, par value $.01 per share, of
Fritz ("Fritz Common Stock") in the manner herein described, and (iii) the
capital stock of Merger Sub shall be converted into shares of Intertrans Common
Stock, all upon the terms and subject to the conditions set forth herein.
B. The Board of Directors of Intertrans has approved, and has resolved,
subject to the terms of this Agreement, to recommend that shareholders of
Intertrans approve, the Merger, this Agreement and the Articles of Merger (as
defined in Section 1.01(b)).
C. The Board of Directors of Fritz has approved the Merger, this Agreement
and the Articles of Merger, and has resolved to recommend that stockholders of
Fritz approve the issuance of Fritz Common Stock in connection with the Merger.
Fritz, as the sole shareholder of Merger Sub, has approved the Merger, this
Agreement and the Articles of Merger.
D. The parties intend for the transactions contemplated by this Agreement
to qualify as a plan of reorganization in accordance with the provisions of
Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
and to be accounted for as a "pooling of interests" pursuant to Opinion No. 16
of the Accounting Principles Board.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein, the
parties agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01 THE MERGER.
(a) Subject to the terms and conditions of this Agreement, Merger Sub shall
be merged with and into Intertrans in accordance with the Texas Business
Corporation Act ("Texas Law") and the General Corporation Law of the State of
California ("California Law"), whereupon the separate existence of Merger Sub
shall cease, and Intertrans shall be the surviving corporation (the "Surviving
Corporation").
(b) As soon as practicable after satisfaction or, to the extent permitted
hereunder, waiver of all conditions to the Merger, Intertrans and Merger Sub
shall file articles of merger, in substantially the form attached hereto as
Exhibit 1.01 (the "Articles of Merger"), in the Office of the Secretary of State
of the State of Texas and the Office of the Secretary of State of the State of
California and make all other filings or recordings required by Texas Law and
California Law in connection with the Merger. The Merger shall become effective
at such time as the Articles of Merger are duly filed with the Office of the
Secretary of State of the State of Texas, such office issues a certificate of
merger, and the filings required under California Law to be made with the Office
of the Secretary of State of the State of California are made (the "Effective
Time"). The date on which the Effective Time shall occur is referred to herein
as the "Effective Date."
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(c) From and after the Effective Time, the Surviving Corporation shall
possess all the rights, privileges, powers and franchises and be subject to all
of the restrictions, disabilities and duties of Intertrans and Merger Sub, all
as provided under Texas Law and California Law.
SECTION 1.02 CONVERSION OF SHARES.
(a) At the Effective Time:
(i) each share of common stock of Merger Sub outstanding immediately
prior to the Effective Time shall, automatically and without any action on
the part of the holder thereof, be converted into one share of common
stock, no par value, of the Surviving Corporation;
(ii) each share of Intertrans Common Stock held by Intertrans as
treasury stock or owned by Fritz or any Subsidiary (defined in Section 3.06
below) of Fritz immediately prior to the Effective Time shall,
automatically and without any action on the part of the holder thereof, be
cancelled and retired and all rights in respect thereof shall cease to
exist without any conversion thereof or payment therefor; and
(iii) each share of Intertrans Common Stock outstanding immediately
prior to the Effective Time shall, except as otherwise provided in clause
(ii) above or as provided in Section 1.04 with respect to shares of
Intertrans Common Stock as to which appraisal rights, if available, shall
have been exercised, automatically and without any action on the part of
the holder thereof, cease to be outstanding and be converted into the right
to receive that fraction of a share of Fritz Common Stock as is equal to
the "Exchange Ratio," which shall be determined in the manner provided
below.
(b) For purposes of this Agreement, the "Exchange Ratio" shall be
calculated as follows:
(i) if the Average Fritz Trading Price (as defined below) is at least
equal to $46.15 but not greater than $47.37, the Exchange Ratio shall equal
the quotient of (A) $18.00 divided by (B) the Average Fritz Trading Price,
calculated to the nearest one-one thousandth of a share;
(ii) if the Average Fritz Trading Price is at least equal to $41.00
but less than or equal to $46.15, the Exchange Ratio shall equal 0.390;
(iii) if the Average Fritz Trading Price is greater than or equal to
$47.37 but not greater than $55.00, the Exchange Ratio shall equal 0.380;
(iv) if the Average Fritz Trading Price is less than $41.00,
Intertrans shall have the right to terminate this Agreement in the manner
provided in subsection (c) below unless Fritz shall elect, in the manner
provided in subsection (c) below, to increase the Exchange Ratio to a
fraction equal to (A) $16.00 divided by (B) such Average Fritz Trading
Price, calculated to the nearest one-one thousandth of a share; or
(v) if the Average Fritz Trading Price is greater than $55.00, Fritz
shall have the right to terminate this Agreement in the manner provided in
subsection (c) below unless Intertrans shall elect, in the manner provided
in subsection (c) below, to decrease the Exchange Ratio to a fraction equal
to (A) $20.90 divided by (B) such Average Fritz Trading Price, calculated
to the nearest one-one thousandth of a share.
As used herein, the term "Average Fritz Trading Price" shall mean the arithmetic
mean of each of the closing sales prices per share of Fritz Common Stock on the
Nasdaq National Market for each of the 20 trading days ending on the fourth
trading day immediately preceding the scheduled date of the first of the
shareholder meetings contemplated by Sections 5.02 and 6.02(b) (such date, the
"Determination Date").
(c) In the event that Intertrans shall elect to terminate this Agreement in
the circumstances contemplated by clause (iv) of subsection (b) above or in the
event that Fritz shall elect to terminate this Agreement in the circumstances
contemplated by clause (v) of such subsection (b), then the party initiating the
termination (the "Terminating Party") shall give notice of termination (the
"Termination Notice") to the other party hereto (the "Receiving Party") prior to
12:00 midnight (San Francisco time) on the Determination Date. Such termination
shall become effective automatically, without the action of either party, at
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12:00 midnight (San Francisco time) on the trading day immediately preceding the
date of the first of the shareholder meetings contemplated by Sections 5.02 and
6.02(b) unless, prior to such time, the Receiving Party shall deliver notice to
the Terminating Party to the effect that it has elected to increase or decrease
the Exchange Ratio, as the case may be, in the manner contemplated by such
clauses (iv) and (v) above.
(d) If between the date of this Agreement and the Effective Time the
outstanding shares of Intertrans Common Stock or Fritz Common Stock shall have
been changed into a different number of shares or a different class, by reason
of any stock dividend, subdivision, reclassification, recapitalization,
split-up, combination, exchange of shares or the like, the Exchange Ratio shall
be correspondingly adjusted.
SECTION 1.03 EXCHANGE OF CERTIFICATES.
(a) Prior to the Effective Date, Fritz shall appoint a bank or trust
company or other third party reasonably acceptable to Intertrans to act as
exchange agent (the "Exchange Agent") in the Merger.
(b) Promptly after the Effective Time, but in no event later than one
business day thereafter, Fritz shall make available for exchange in accordance
with this Section 1.03, the shares of Fritz Common Stock issuable pursuant to
Section 1.02 in exchange for outstanding shares of Intertrans Common Stock and
an amount of cash sufficient to satisfy Fritz's obligations under Section 1.05.
(c) As soon as practicable after the Effective Date, the Exchange Agent
shall mail to each holder of record of a stock certificate that, immediately
prior to the Effective Time, represented outstanding shares of Intertrans Common
Stock (a "Certificate") whose shares are being converted into Fritz Common Stock
pursuant to Section 1.02, (i) a letter of transmittal (which shall be in such
form and have such other provisions as Fritz may reasonably specify and shall be
reasonably acceptable to Intertrans), and (ii) instructions for use in effecting
the surrender of the Certificates in exchange for certificates evidencing Fritz
Common Stock. Upon surrender of a Certificate for cancellation to the Exchange
Agent, together with such letter of transmittal, duly executed, the holder of
such Certificate shall be entitled to receive in exchange therefor a certificate
for the number of whole shares of Fritz Common Stock to which the holder of
shares of Intertrans Common Stock is entitled pursuant to Section 1.02 (and an
amount of cash in lieu of any fractional share of Fritz Common Stock in
accordance with Section 1.05) and is represented by the Certificate so
surrendered. The Certificate so surrendered shall forthwith be cancelled. In the
event of a transfer of ownership of shares of Intertrans Common Stock which is
not registered in the transfer records of Intertrans or its transfer agent,
Fritz Common Stock may be delivered to a transferee if the Certificate
representing such shares of Intertrans Common Stock is presented to the Exchange
Agent and accompanied by all documents required to evidence and effect such
transfer and to evidence that any applicable stock transfer taxes have been
paid. Until surrendered as contemplated by this Section 1.03(c), each
Certificate shall be deemed at any time after the Effective Time to represent
the right to receive upon such surrender such whole number of shares of Fritz
Common Stock as provided by Section 1.02 and an amount of cash in lieu of any
fractional share of Fritz Common Stock in accordance with Section 1.05.
(d) No dividends on the Fritz Common Stock shall be paid to the holder of
any unsurrendered Certificate until the holder of record of such Certificate
shall surrender such Certificate; provided, however, that upon surrender of a
Certificate which immediately prior to the Effective Time represented shares of
Intertrans Common Stock, there shall be paid to the holder of such Certificate
the amount of dividends, if any, without interest, which theretofore became
payable, but which were not paid by reason of the foregoing, with respect to the
number of whole shares of Fritz Common Stock represented by the Certificate or
Certificates issued upon such surrender. Subject to the effect, if any, of
applicable escheat and other laws, following surrender of any Certificate, there
shall be delivered to the person entitled thereto, without interest, the amount
of dividends so withheld as of any date subsequent to the Effective Date and
prior to such date of delivery.
(e) To the extent permitted by applicable law, all Fritz Common Stock
delivered, and cash in lieu of any fractional shares of Fritz Common Stock paid,
upon the surrender for exchange of shares of Intertrans Common Stock in
accordance with the terms hereof shall be deemed to have been delivered and paid
in full satisfaction of all rights pertaining to such shares. After the
Effective Time, there shall be no further
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registration of transfers on the stock transfer books of Intertrans or its
transfer agent of the shares of Intertrans Common Stock that were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented for any reason, they shall be cancelled and exchanged
as provided in this Section 1.03.
SECTION 1.04 DISSENTING SHARES. Notwithstanding the terms of Section
1.02, to the extent that appraisal rights are available under Part 5 of the
Texas Law, shares of Intertrans Common Stock outstanding immediately prior to
the Effective Time and held by a holder who has properly exercised dissenters'
rights for such shares in accordance with Texas Law and who, as of the Effective
Time, has not effectively withdrawn or lost such dissenters' rights ("Dissenting
Shares") shall not be converted into a right to receive shares of Fritz Common
Stock as provided in Section 1.02, but shall instead be converted into the right
to receive such consideration as may be determined to be due with respect to
such Dissenting Shares pursuant to Texas Law. If after the Effective Time such
holder fails to perfect or withdraws or loses his right to appraisal, such
shares of Intertrans Common Stock shall be treated as if they had been converted
as of the Effective Time into a right to receive shares of Fritz Common Stock as
provided in Section 1.02. Intertrans shall give Fritz prompt notice of any
demands received by Intertrans for appraisal of shares of Intertrans Common
Stock. Intertrans shall not, except with the prior written consent of Fritz,
make any payment with respect to, or settle or offer to settle, any such
demands.
SECTION 1.05 FRACTIONAL SHARES. Notwithstanding any other provision of
this Agreement to the contrary, no fractional shares of Fritz Common Stock shall
be issued in connection with the Merger. All shares of Fritz Common Stock to
which a holder of shares of Intertrans Common Stock is entitled immediately
prior to the Effective Time shall be aggregated. If a fractional share results
from such aggregation, in lieu of any such fractional share, each holder of
shares of Intertrans Common Stock who would otherwise have been entitled to
receive a fraction of a share of Fritz Common Stock upon surrender of
Certificates for exchange pursuant to Section 1.03 shall be entitled to receive
from the Exchange Agent a cash payment equal to such fraction multiplied by the
closing price per share of Fritz Common Stock on the last business day prior to
the Effective Date on which Fritz Common Stock is traded on the Nasdaq National
Market ("Nasdaq").
SECTION 1.06 INTERTRANS STOCK OPTION PLANS.
(a) Prior to the Effective Time, Intertrans and Fritz shall take such
action as may be necessary to cause each unexpired and unexercised option to
purchase shares of Intertrans Common Stock (each an "Intertrans Option"),
including those granted under Intertrans' 1983, 1984, and 1990 Incentive Stock
Option Plans, Intertrans' 1987 Flexible Stock Option Plan, and Intertrans' 1992
Nonqualified Stock Option Plan (collectively, the "Intertrans Stock Option
Plans"), to be automatically converted at the Effective Time into an option (a
"Fritz Option") to purchase a number of shares of Fritz Common Stock equal to
the number of shares of Intertrans Common Stock that could have been purchased
under the Intertrans Option multiplied by the Exchange Ratio (with the resulting
number of shares rounded down to the nearest whole share), at a price per share
of Fritz Common Stock equal to the option exercise price determined pursuant to
the Intertrans Option divided by the Exchange Ratio (with the resulting exercise
price rounded up to the nearest whole cent). Such Fritz Option shall otherwise
be subject to substantially similar terms and conditions as the Intertrans
Option (with appropriate adjustment to reflect that following the Effective Date
all references to "the Company" in the Intertrans Stock Option Plans shall be
deemed to be references to Fritz). Fritz shall (i) on or prior to the Effective
Time, assume all of Intertrans' obligations with respect to Intertrans Options
as so amended, (ii) on or prior to the Effective Time, reserve for issuance the
number of shares of Fritz Common Stock that will become subject to Fritz Options
pursuant to this Section 1.06, (iii) from and after the Effective Time, upon
exercise of the Fritz Options in accordance with the terms thereof, make
available for issuance all shares of Fritz Common Stock covered thereby and (iv)
at the Effective Time, issue to each holder of an outstanding Intertrans Option
a document evidencing the foregoing assumption by Fritz.
(b) It is the intention of the parties that Intertrans Options assumed by
Fritz qualify following the Effective Time of the Merger as incentive stock
options as defined in Section 422 of the Code to the extent Intertrans Options
qualified as incentive stock options prior to the Effective Time.
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SECTION 1.07 REGISTRATION OF INTERTRANS STOCK OPTION PLANS. Fritz will
file on the Effective Date a registration statement on Form S-8 under the
Securities Act of 1933, as amended (the "Securities Act"), covering the shares
of Fritz Common Stock issuable upon the exercise of Fritz Options created upon
the assumption by Fritz of Intertrans Options under Section 1.06, and will use
its reasonable best efforts to cause such registration statement to become
effective on the Effective Date or as soon thereafter as practicable and to
maintain such registration in effect until the exercise or expiration of such
Fritz Options.
SECTION 1.08 BENEFITS ARRANGEMENTS. Fritz and Intertrans each agree to
appoint personnel from their respective human resources departments who will
meet and in good faith negotiate to reach agreement prior to the Effective Date
with respect to the manner in which Intertrans employee benefit plans, other
than those governed by Section 1.06 above, will be treated after the Merger. The
parties agree that to the extent practicable Fritz will provide benefits for
Intertrans employees and officers following the Merger that are substantially
identical to the benefits provided to similarly situated Fritz employees and
officers; provided, further, that the Intertrans employees and officers as of
the Effective Date shall receive past service credit for their years of service
(including fractional years) with Intertrans.
ARTICLE II
THE SURVIVING CORPORATION
SECTION 2.01 ARTICLES OF INCORPORATION. At the Effective Time, the
Articles of Incorporation of Intertrans, as in effect immediately prior to the
Effective Time, shall be the Articles of Incorporation of the Surviving
Corporation. Prior to the Effective Date, Fritz shall propose those amendments
to the Articles of Incorporation of Intertrans it deems appropriate, which
amendments shall be incorporated into the Articles of Merger (and Plan of Merger
associated therewith).
SECTION 2.02 BYLAWS. At the Effective Time, the Bylaws of Intertrans, as
in effect immediately prior to the Effective Time, shall be the Bylaws of the
Surviving Corporation. Prior to the Effective Date, Fritz shall propose those
amendments to the Bylaws of Intertrans it deems appropriate, which amendments
shall be incorporated into the Articles of Merger (and Plan of Merger associated
therewith).
SECTION 2.03 DIRECTORS AND OFFICERS. From and after the Effective Time,
until successors are duly elected or appointed and qualified in accordance with
applicable law, the directors of Merger Sub at the Effective Time shall become
directors of the Surviving Corporation, and the officers of Intertrans at the
Effective Time shall become the initial officers of the Surviving Corporation.
In addition, at the Effective Time, Fritz shall take all necessary action to
cause (i) Carsten S. Andersen to be appointed to the Board of Directors of
Fritz, (ii) Sam N. Wilson to be designated an advisory director to the Board of
Directors of Fritz, and (iii) Carsten S. Andersen to be appointed Executive Vice
President of Fritz and Managing Director of the Surviving Corporation, with all
such appointments and designations to become effective as of the Effective Time.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF INTERTRANS
Except as disclosed in a document referring specifically to this Agreement
(the "Intertrans Disclosure Schedule") which has been delivered to Fritz prior
to the date hereof or as disclosed in public filings made by Intertrans with the
Securities and Exchange Commission ("SEC") prior to the date hereof, Intertrans
represents and warrants to Fritz as set forth below:
SECTION 3.01 CORPORATE EXISTENCE AND POWER. Intertrans is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Texas, and has all corporate powers and all material governmental
licenses, authorizations, consents and approvals (collectively, "Governmental
Authorizations") required to carry on its business as now conducted, except such
Governmental Authorizations the failure of which to have obtained would not have
a Material Adverse Effect on Intertrans. Intertrans is duly
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qualified to do business as a foreign corporation and is in good standing in
each jurisdiction where the character of the property owned or leased by it or
the nature of its activities makes such qualification necessary, except where
the failure to be so qualified would not have a Material Adverse Effect on
Intertrans. For purposes of this Agreement, a "Material Adverse Effect," with
respect to any person or entity, means a material adverse effect on the
condition (financial or otherwise), business, properties, assets, liabilities
(including contingent liabilities), results of operations or prospects of such
person or entity and its subsidiaries, taken as a whole; and "Material Adverse
Change" means a change or a development involving a prospective change which
would result in a Material Adverse Effect. Intertrans has delivered to Fritz
true and complete copies of Intertrans' Articles of Incorporation and Bylaws as
currently in effect.
SECTION 3.02 CORPORATE AUTHORIZATION. The execution, delivery and
performance by Intertrans of this Agreement and the Articles of Merger and the
consummation by Intertrans of the transactions contemplated hereby and thereby
are within Intertrans' corporate powers and have been duly authorized by all
necessary corporate action, except for the approval by Intertrans' shareholders
in connection with the consummation of the Merger. This Agreement and the
Articles of Merger constitute, or upon execution will constitute, valid and
binding agreements of Intertrans, enforceable against Intertrans in accordance
with their respective terms.
SECTION 3.03 GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by Intertrans of this Agreement and the Articles of Merger and the
consummation of the Merger by Intertrans require no action by or in respect of,
or filing with, any governmental body, agency, official or authority other than:
(a) the filing of the Articles of Merger in accordance with Texas Law and
California Law;
(b) compliance with any applicable requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act");
(c) compliance with any applicable requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and the rules and regulations
promulgated thereunder;
(d) compliance with any applicable requirements of the Securities Act and
the rules and regulations promulgated thereunder;
(e) compliance with any applicable foreign or state securities or "blue
sky" laws;
(f) compliance with any applicable notification requirements of the U.S.
Customs Service, Federal Maritime Commission, or IATA/Cargo Network Service; and
(g) such other filings or registrations with, or authorizations, consents
or approvals of, governmental bodies, agencies, officials or authorities, the
failure of which to make or obtain (i) would not reasonably be expected to have
a Material Adverse Effect on Intertrans or the Surviving Corporation or (ii)
would not materially adversely affect the ability of Intertrans, Fritz or Merger
Sub to consummate the transactions contemplated hereby and operate their
businesses as heretofore operated.
SECTION 3.04 NON-CONTRAVENTION. The execution, delivery and performance
by Intertrans of this Agreement and the Articles of Merger and the consummation
by Intertrans of the transactions contemplated hereby and thereby do not and
will not:
(a) contravene or conflict with the Articles of Incorporation or Bylaws of
Intertrans;
(b) assuming compliance with the matters referred to in Section 3.03 and
assuming the requisite approval of Intertrans' shareholders of the Merger,
contravene or conflict with or constitute a violation of any provision of any
law, regulation, judgment, injunction, order or decree binding upon or
applicable to Intertrans or any Subsidiary of Intertrans;
(c) conflict with or result in a breach or violation of, or constitute a
default under, or result in the termination or cancellation of, or loss of a
material benefit under, or right to accelerate, any material agreement, contract
or other instrument binding upon Intertrans or any Subsidiary of Intertrans or
any material license, franchise, permit or other similar authorization held by
Intertrans or any Subsidiary of Intertrans; or
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(d) result in the creation or imposition of any Lien (as defined below) on
any material asset of Intertrans or any Subsidiary of Intertrans,
except, with respect to clauses (b), (c) and (d) above, for contraventions,
defaults, losses, Liens and other matters referred to in such clauses that in
the aggregate would not be reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect on Intertrans. For purposes of this
Agreement, the term "Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset.
SECTION 3.05 CAPITALIZATION. The authorized capital stock of Intertrans
consists of 23,000,000 shares of Intertrans Common Stock and 2,000,000 shares of
preferred stock, $10.00 par value per share (the "Intertrans Preferred Stock").
As of January 31, 1995, there were outstanding:
(a) 11,380,212 shares of Intertrans Common Stock;
(b) no shares of Intertrans Preferred Stock; and
(c) Intertrans Options to purchase an aggregate of 2,289,356 shares of
Intertrans Common Stock.
All outstanding shares of Intertrans Common Stock have been duly authorized and
validly issued and are fully paid and nonassessable and free from any preemptive
rights. Except as set forth in this Section and as otherwise contemplated by
this Agreement, and except for changes since January 31, 1995 resulting from the
exercise of Intertrans Options, there are outstanding (i) no shares of capital
stock or other voting securities of Intertrans, (ii) no securities of Intertrans
convertible into or exchangeable for shares of capital stock or voting
securities of Intertrans and (iii) no options or other rights to acquire from
Intertrans, and no obligation of Intertrans to issue, any capital stock, voting
securities or securities convertible into or exchangeable for capital stock or
other voting securities of Intertrans (the items in clauses (i), (ii) and (iii)
being referred to collectively as the "Intertrans Securities"). There are no
outstanding obligations of Intertrans or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any Intertrans Securities. Except as contemplated by
this Agreement, no holder of Intertrans Securities has, as of the date hereof,
any contractual right to include any such securities in any registration
statement proposed to be filed by Fritz under the Securities Act.
SECTION 3.06 SUBSIDIARIES.
(a) Each Subsidiary of Intertrans is a corporation duly incorporated,
validly existing and in good standing under the laws of its jurisdiction of
incorporation, has all corporate powers and all material Governmental
Authorizations required to carry on its business as now conducted, except such
Governmental Authorizations the failure of which to have obtained would not have
a Material Adverse Effect on Intertrans, and is duly qualified to do business as
a foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by or the nature of its activities
make such qualification necessary, except for those jurisdictions where failure
to be so qualified would not, individually or in the aggregate, have a Material
Adverse Effect on Intertrans. For purposes of this Agreement, (i) "Subsidiary"
means, with respect to any entity, any corporation of which securities or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions are directly or
indirectly owned by such entity, and (ii) "Joint Venture" means, with respect to
any entity, any corporation or organization (other than such entity and any
Subsidiary thereof) of which such entity or any Subsidiary thereof is, directly
or indirectly, the beneficial owner of 40% or more of any class of equity
securities or equivalent profit participation interest. All Subsidiaries and
Joint Ventures material to the business of Intertrans ("Material Intertrans
Subsidiaries") and their respective jurisdictions of incorporation or
organization and Intertrans' ownership interest therein are identified in the
Intertrans Disclosure Schedule. Other than its investments in its Subsidiaries
and Joint Ventures, Intertrans does not own, directly or indirectly, any
outstanding capital stock or equity interest in any corporation, partnership,
joint venture or other entity.
(b) All of the outstanding capital stock of, or other ownership interests
in, each Material Intertrans Subsidiary that is owned by Intertrans, directly or
indirectly, is owned by Intertrans, directly or indirectly, free and clear of
any material Lien and free of any other material limitation or restriction on
its rights as owner
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thereof (including any restriction on the right to vote, sell or otherwise
dispose of such capital stock or other ownership interests), other than those
imposed by applicable law. There are no existing options, calls or commitments
of any character relating to the issued or unissued capital stock or other
securities or equity interests (collectively, "Intertrans Subsidiary
Securities") of any Material Intertrans Subsidiary.
SECTION 3.07 SEC FILINGS.
(a) Intertrans has since January 1, 1992 filed all proxy statements,
schedules and reports required to be filed by it with the SEC pursuant to the
Exchange Act.
(b) Intertrans has delivered to Fritz:
(i) its annual reports on Form 10-K for its fiscal years ended October
31, 1994 and 1993;
(ii) its proxy or information statements relating to meetings of, or
actions taken without a meeting by, the shareholders of Intertrans held
since January 1, 1992;
(iii) all of its registration statements filed with the SEC since
December 31, 1993; and
(iv) all of its other reports, statements and schedules filed with the
SEC since October 31, 1994.
(c) As of its filing date, no such report or statement filed pursuant to
the Exchange Act contained any untrue statement of a material fact or omitted 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.
(d) No such registration statement, as amended or supplemented, if
applicable, filed pursuant to the Securities Act, as of the date such statement
or amendment became effective, contained any untrue statement of a material fact
or omitted to state any material fact required to be stated therein or necessary
to make the statements therein not misleading.
SECTION 3.08 FINANCIAL STATEMENTS. The audited consolidated financial
statements of Intertrans included in its annual reports on Form 10-K referred to
in Section 3.07 present fairly, in conformity with generally accepted accounting
principles applied on a consistent basis (except as may be indicated in the
notes thereto), the consolidated financial position of Intertrans and its
consolidated subsidiaries as of the dates thereof and their consolidated results
of operations and cash flows for the periods then ended (subject to normal
year-end adjustments in the case of any interim financial statements). For
purposes of this Agreement, "Intertrans Balance Sheet" means the consolidated
balance sheet of Intertrans as of October 31, 1994, and the notes thereto,
contained in Intertrans' annual report on Form 10-K filed for its fiscal year
then ended, and "Intertrans Balance Sheet Date" means October 31, 1994.
SECTION 3.09 DISCLOSURE DOCUMENTS. None of the information supplied or to
be supplied by Intertrans for inclusion in (i) the combined proxy statement
relating to the meetings of Intertrans' and Fritz's shareholders to be held in
connection with the Merger (as the same may be amended or supplemented from time
to time, the "Joint Proxy Statement"), and (ii) the registration statement on
Form S-4 or other appropriate registration form to be filed with the SEC by
Fritz in connection with the offer and issuance of the Fritz Common Stock in or
as a result of the Merger (as the same may be amended or supplemented from time
to time, the "Registration Statement") including the Joint Proxy Statement
included therein, will, in the case of the Joint Proxy Statement, at the time of
mailing of the Joint Proxy Statement to shareholders of Intertrans and at the
time of the meeting of such shareholders to be held in connection with the
Merger, contain any untrue statement of a material fact or omits or will omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading or will, in the case of the Registration Statement, at the
time the Registration Statement becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading. The Joint Proxy Statement will comply as to form in all material
respects with the provisions of the Exchange Act and the rules and regulations
thereunder, except that no representation or warranty is made by Intertrans with
respect to information supplied by Fritz or Merger Sub for inclusion therein.
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SECTION 3.10 ABSENCE OF CERTAIN CHANGES. Since the Intertrans Balance
Sheet Date, and, with respect to the matters referred to in subsection (f),
since January 1, 1993, Intertrans and its Subsidiaries have in all material
respects conducted their business in the ordinary course and there has not been:
(a) any Material Adverse Change with respect to Intertrans or any event,
occurrence or development of a state of circumstances or facts known to
Intertrans which as of the date hereof could reasonably be expected to have a
Material Adverse Effect on Intertrans;
(b) any declaration, setting aside or payment of any dividend or other
distribution in respect of any shares of capital stock of Intertrans other than
the declaration, setting aside or payment of dividends in accordance with its
existing dividend policy, which policy is not inconsistent with Intertrans' past
practice;
(c) any repurchase, redemption or other acquisition by Intertrans of or any
of its Subsidiaries of any outstanding shares of capital stock or other
securities of, or other ownership interests in, Intertrans or any such
Subsidiary;
(d) any amendment of any material term of any outstanding Intertrans
Securities or any Intertrans Subsidiary Securities;
(e) any damage, destruction or other casualty loss (whether or not covered
by insurance) affecting the business, assets, liabilities, earnings or prospects
of Intertrans or any of its Subsidiaries which, individually or in the
aggregate, has had or would reasonably be expected to have a Material Adverse
Effect on Intertrans;
(f) any action by Intertrans or, to Intertrans' knowledge, any affiliate of
Intertrans which would preclude the ability of Fritz to account for the business
combination to be effected by the Merger as a "pooling of interests" under
generally accepted accounting principles;
(g) any increase in indebtedness for borrowed money or capitalized lease
obligations of Intertrans, except in the ordinary course of business;
(h) any sale, assignment, transfer or other disposition of any tangible or
intangible asset material to the business of Intertrans, except in the ordinary
course of business and for a fair and adequate consideration;
(i) any amendment, termination or waiver by Intertrans of any right of
substantial value under any material agreement, contract or other written
commitment to which it is a party or by which it is bound;
(j) any increase in the compensation payable or to become payable by
Intertrans to any of its officers, directors, consultants or employees (except
for salary or rate increases granted to such persons in the ordinary course of
business and consistent with prior practice);
(k) any material reduction in the amounts of coverages provided by existing
casualty and liability insurance policies with respect to the business or
properties of Intertrans;
(l) any (i) grant of any severance or termination pay to any director,
officer or employee of Intertrans or any of its Subsidiaries, (ii) entering into
of any employment, deferred compensation or other similar agreement (or any
amendment to any such existing agreement) with any director, officer or employee
of Intertrans or any such Subsidiary, (iii) any increase in benefits payable
under any existing severance or termination pay policies or employment
agreements, or (iv) any increase in compensation, bonus or other benefits
payable to directors, officers or employees of Intertrans or any such
Subsidiary, in each case other than in the ordinary course of business
consistent with past practice;
(m) any new (or amendment to or alteration of any existing) bonus,
incentive compensation, severance, stock option, stock appreciation right,
pension, matching gift, profit-sharing, employee stock ownership, retirement,
pension group insurance, death benefit, or other fringe benefit plan,
arrangement or trust agreement adopted or implemented by Intertrans which would
result in a material increase in cost to Intertrans;
(n) any capital expenditures, capital additions or capital improvements
incurred or undertaken by Intertrans, except in the ordinary course of business;
or
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(o) the entering into of any agreement by Intertrans or any person on
behalf of Intertrans to take any of the foregoing actions.
SECTION 3.11 NO UNDISCLOSED LIABILITIES. There are no liabilities of
Intertrans or any of its Subsidiaries of any kind whatsoever that are,
individually or in the aggregate, material to Intertrans and its Subsidiaries,
taken as a whole, other than:
(a) liabilities disclosed or provided for in the Intertrans Balance Sheet
(including the notes thereto);
(b) liabilities incurred in the ordinary course of business consistent with
past practice since the Intertrans Balance Sheet Date; and
(c) liabilities under this Agreement.
SECTION 3.12 LITIGATION. Other than actions, suits, proceedings, claims
or investigations occurring in the ordinary course of business involving
respective amounts in controversy of less than $40,000 each, there is no action,
suit, proceeding, claim or investigation pending or, to the knowledge of
Intertrans, overtly threatened, against Intertrans or any of its Subsidiaries or
any of their assets or against or involving any of its officers, directors or
employees in connection with the business or affairs of Intertrans, including,
without limitation, any claims for indemnification arising under any agreement
to which Intertrans or any of its Subsidiaries is a party, which could,
individually or in the aggregate, have a Material Adverse Effect on Intertrans.
Intertrans is not subject to or in default with respect to any writ, order,
judgment, injunction or decree which could, individually or in the aggregate,
have a Material Adverse Effect on Intertrans.
SECTION 3.13 TAXES.
(a) Intertrans and each of its Subsidiaries (i) has filed when due (taking
into account extensions) with the appropriate federal, state, local, foreign and
other governmental agencies, all material tax returns, estimates and reports
required to be filed by it, (ii) either paid when due and payable or established
adequate reserves or otherwise accrued on the Intertrans Balance Sheet all
material federal, state, local or foreign taxes, levies, imposts, duties,
licenses and registration fees and charges of any nature whatsoever, and
unemployment and social security taxes and income tax withholding, including
interest and penalties thereon ("Taxes") and there are no tax deficiencies
claimed in writing by any Taxing authority and received by Intertrans that, in
the aggregate, would result in any tax liability in excess of the amount of the
reserves or accruals, and (iii) has or will establish in accordance with its
normal accounting practices and procedures accruals and reserves that, in the
aggregate, are adequate for the payment of all Taxes not yet due and payable and
attributable to any period preceding the Effective Time. The Intertrans
Disclosure Schedule sets forth those tax returns of Intertrans (or any
predecessor entities) for all periods that currently are the subject of audit by
any federal, state, local or foreign taxing authority.
(b) There are no material taxes, interest, penalties, assessments or
deficiencies claimed in writing by any Taxing authority and received by
Intertrans or any of its Subsidiaries to be due in respect of any tax returns
filed by Intertrans (or any predecessor corporations) or any of its
Subsidiaries. Neither Intertrans nor any predecessor corporation, nor any of
their respective Subsidiaries, has executed or filed with the IRS or any other
Taxing authority any agreement or other document extending, or having the effect
of extending, the period of assessment or collection of any Taxes.
(c) Intertrans is not a party to or bound by (or will prior to the
Effective Date become a party to or bound by) any Tax indemnity, Tax sharing or
Tax allocation agreement or other similar arrangement which includes a party
other than Intertrans and its Subsidiaries. Neither Intertrans nor any of its
Subsidiaries has been a member of an affiliated group other than one of which
Intertrans was the common parent, or filed or been included in a combined,
consolidated or unitary Tax return other than one filed by Intertrans (or a
return for a group consisting solely of its Subsidiaries and predecessors).
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SECTION 3.14 EMPLOYEE BENEFIT PLANS; ERISA.
(a) To the knowledge of Intertrans, neither Intertrans nor any of its
Subsidiaries is a party to any oral or written (i) employment, severance,
collective bargaining or consulting agreement not terminable on 60 days' or less
notice, (ii) agreement with any executive officer or other key employee of
Intertrans or any Subsidiary of Intertrans (A) the benefits of which are
contingent, or the terms of which are materially altered, upon the occurrence of
a transaction involving Intertrans or any Subsidiary of Intertrans of the nature
of any of the transactions contemplated by this Agreement, (B) providing any
term of employment or compensation guarantee extending for a period longer than
one year, or (C) providing severance benefits or other benefits after the
termination of employment of such executive officer or key employee regardless
of the reason for such termination of employment, (iii) agreement, plan or
arrangement under which any person may receive payments subject to the tax
imposed by Section 4999 of the Code, or (iv) agreement or plan, including,
without limitation, any stock option plan, stock appreciation right plan,
restricted stock plan or stock purchase plan, the benefits of which would be
increased, or the vesting of benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement.
(b) Neither Intertrans nor any corporation or other entity which under
Section 4001(b) of ERISA is under common control with Intertrans (an "Intertrans
ERISA Affiliate") maintains or within the past five years has maintained,
contributed to, or been obligated to contribute to, any "Employee Pension
Benefit Plan" ("Pension Plan") or any "Employee Welfare Benefit Plan" ("Welfare
Plan") as such terms are defined in Sections 3(2) and 3(1) respectively of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), which is
subject to ERISA. Each Pension Plan and Welfare Plan disclosed in the Intertrans
Disclosure Schedule (which Plans have been heretofore delivered to Fritz) and
maintained by Intertrans has been maintained in all material respects in
compliance with their terms and all provisions of ERISA and the Code (including
rules and regulations thereunder) applicable thereto.
(c) All material information regarding the Freight Intertrans (UK) Limited
Retirement and Death Benefits Scheme (the "UK Plan") requested by Fritz has been
made available to Fritz. To the knowledge of Intertrans, the assets, investments
and policies held by the trustees of the UK Plan are sufficient to satisfy the
liabilities and obligations (both current and contingent) which the UK Plan has
to its members as of the date of this Agreement. The UK Plan is an exempt
approved scheme within the meaning of the UK Income and Corporation Taxes Act
1988 and has at all times complied in all material respects with and been
administered in accordance with all applicable laws, regulations and
requirements.
(d) To the knowledge of Intertrans, no Pension Plan or Welfare Plan is
currently subject to an audit or other investigation by the IRS, the Department
of Labor, the Pension Benefit Guaranty Corporation or any other governmental
agency nor are any such Plans subject to any lawsuits or legal proceedings of
any kind or to any material pending disputed claims by employees or
beneficiaries covered under any such Plan or by any other parties.
(e) No "prohibited transaction," as defined in Section 406 of ERISA or
Section 4975 of the Code, resulting in liability to Intertrans or any Intertrans
ERISA Affiliate has occurred with respect to any Pension Plan or Welfare Plan.
Intertrans has no knowledge of any breach of fiduciary responsibility under Part
4 of Title I of ERISA which has resulted in liability of Intertrans, any
trustee, administrator or fiduciary of any Pension Plan or Welfare Plan.
(f) Neither Intertrans nor any Intertrans ERISA Affiliate, since January 1,
1986, has maintained or contributed to, or been obligated or required to
contribute to, a "Multiemployer Plan," as such term is defined in Section
4001(a)(3) of ERISA. Neither Intertrans nor any Intertrans ERISA Affiliate has
either withdrawn, partially or completely, or instituted steps to withdraw,
partially or completely, from any Multiemployer Plan nor has any event occurred
which would enable a Multiemployer Plan to give notice of and demand payment of
any withdrawal liability with respect to Intertrans or any Intertrans ERISA
Affiliate.
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(g) There is no contract, agreement, plan or arrangement covering any
employee or former employee of Intertrans or any Intertrans ERISA Affiliate
that, individually or collectively, could give rise to the payment of any amount
that would not be deductible pursuant to the terms of Sections 162(a)(1) or 280G
of the Code.
(h) With respect to Intertrans and each Intertrans ERISA Affiliate, the
Intertrans Disclosure Schedule correctly identifies each material agreement,
policy, plan or other arrangement, whether written or oral, express or implied,
fixed or contingent, to which Intertrans is a party or by which Intertrans or
any property or asset of Intertrans is bound, which is or relates to a pension,
option, bonus, deferred compensation, retirement, stock purchase,
profit-sharing, severance pay, health, welfare, incentive, vacation, sick leave,
medical disability, hospitalization, life or other insurance or fringe benefit
plan, policy or arrangement.
(i) Neither Intertrans nor any Intertrans ERISA Affiliate maintains or has
maintained or contributed to any Pension Plan that is or was subject to Section
302 or Title IV of ERISA or Section 412 of the Code. Intertrans has made
available to Fritz, for each Pension Plan which is intended to be "qualified"
within the meaning of Section 401(a) of the Code, a copy of the most recent
determination letter issued by the IRS to the effect that each such Plan is so
qualified and that each trust created thereunder is tax exempt under Section 501
of the Code, and Intertrans is unaware of any fact or circumstances that would
jeopardize the qualified status of each such Pension Plan or the tax exempt
status of each trust created thereunder.
SECTION 3.15 MATERIAL AGREEMENTS.
(a) The Intertrans Disclosure Schedule, together with the public filings
made by Intertrans with the SEC (other than Intertrans Property Leases, as
hereinafter defined), includes a complete and accurate list of all contracts,
agreements, leases and instruments to which Intertrans or any of its
Subsidiaries is a party or by which it or its properties or assets are bound
which individually involve net payments or receipts in excess of $200,000 per
annum, inclusive of contracts entered into with customers and suppliers in the
ordinary course of business, or that pertain to employment or severance benefits
for any officer, director or employee of Intertrans, whether written or oral,
but exclusive of contracts, agreements, leases and instruments terminable
without penalty by Intertrans upon 60 days' or less prior written notice to the
other party or parties thereto (the "Material Intertrans Agreements").
(b) Neither Intertrans nor, to the knowledge of Intertrans, any other party
is in default under any Material Intertrans Agreement and no event has occurred
which (after notice or lapse of time or both) would become a breach or default
under, or would permit modification, cancellation, acceleration or termination
of any Material Intertrans Agreement or result in the creation of any security
interest upon, or any person obtaining any right to acquire, any properties,
assets or rights of Intertrans which, in any such case, has had or would
reasonably be expected to have a Material Adverse Effect on Intertrans.
(c) To the knowledge of Intertrans, each such Material Intertrans Agreement
is in full force and effect and is valid and legally binding and there are no
material unresolved disputes involving or with respect to any Material
Intertrans Agreement. No party to a Material Intertrans Agreement has advised
Intertrans that it intends either to terminate a Material Intertrans Agreement
or to refuse to renew a Material Intertrans Agreement upon the expiration of the
term thereof.
(d) Intertrans is not in violation of, or in default with respect to, any
term of its Articles of Incorporation or Bylaws.
SECTION 3.16 PROPERTIES. To the knowledge of Intertrans, all leases of
real property to which Intertrans is a party or by which it is bound
("Intertrans Property Leases") which are material to the business of Intertrans
and its Subsidiaries taken as a whole, are in full force and effect. To the
knowledge of Intertrans, there exists no default under such leases, nor any
event which with notice or lapse of time or both would constitute a default
thereunder by Intertrans or any of its Subsidiaries, which default would have a
Material Adverse Effect on Intertrans. All of the properties and assets owned by
Intertrans and each of its Subsidiaries are owned by each of them, respectively,
free and clear of any Lien, except for Liens which do not have a Material
Adverse Effect on Intertrans. Intertrans and its Subsidiaries have good and
marketable title subject to no Liens, other than those permitted under this
Section 3.16, to all of the properties and assets necessary for
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the conduct of their business other than to the extent that the failure to have
such title would not have a Material Adverse Effect on Intertrans.
SECTION 3.17 ENVIRONMENTAL MATTERS.
(a) To the knowledge of Intertrans, no notice, notification, demand,
request for information, citation, summons, complaint or order has been
received, no complaint has been filed, no penalty has been assessed and no
investigation or review is pending, or to Intertrans' knowledge, has been
threatened by any governmental entity or other party with respect to any (i)
alleged violation by Intertrans or any of its Subsidiaries of any Environmental
Law, (ii) alleged failure by Intertrans or any such Subsidiary to have any
environmental permit, certificate, license, approval, registration or
authorization required in connection with the conduct of its business or (iii)
Regulated Activity.
(b) To the knowledge of Intertrans, neither Intertrans nor any of its
Subsidiaries has any material Environmental Liabilities and there has been no
release of Hazardous Substances into the environment by Intertrans or any such
Subsidiary or with respect to any of their respective properties which has had,
or would reasonably be expected to have, a Material Adverse Effect on
Intertrans.
(c) For the purposes of this Agreement, the following terms have the
following meanings:
"Environmental Laws" shall mean any and all Federal, state, local and
foreign statutes, laws (including case law), regulations, ordinances,
rules, judgments, orders, decrees, codes, plans, injunctions, permits,
concessions, grants, franchises, licenses, agreements and governmental
restrictions relating to human health, the environment or to emissions,
discharges or releases of pollutants, contaminants, Hazardous Substances or
wastes into the environment or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, Hazardous Substances or wastes or the
clean-up or other remediation thereof.
"Environmental Liabilities" shall mean all liabilities, whether vested
or unvested, contingent or fixed, actual or potential, which (i) arise
under or relate to Environmental Laws and (ii) relate to actions occurring
or conditions existing on or prior to the Effective Time.
"Hazardous Substances" shall mean any toxic, radioactive, caustic or
otherwise hazardous substance, including petroleum, its derivatives,
by-products and other hydrocarbons, or any substance having any constituent
elements displaying any of the foregoing characteristics.
"Regulated Activity" shall mean any generation, treatment, storage,
recycling, transportation, disposal or release of any Hazardous Substances.
SECTION 3.18 LABOR MATTERS. Except as set forth on the Intertrans
Disclosure Schedule, neither Intertrans nor any of its Subsidiaries is a party
to any collective bargaining agreement or other labor union contract applicable
to persons employed by Intertrans or any such Subsidiary, nor do the executive
officers of Intertrans know of any activities or proceedings of any labor union
to organize any such employees.
SECTION 3.19 COMPLIANCE WITH LAWS. Except for violations which do not
have and would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on Intertrans, neither Intertrans nor any
of its Subsidiaries is in violation of, or has violated, any applicable
provisions of any laws, statutes, ordinances or regulations or any term of any
judgment, decree, injunction or order binding against it.
SECTION 3.20 TRADEMARKS, TRADENAMES, ETC. Intertrans owns or possesses
all intellectual property, patents, trademarks, tradenames, servicemarks,
copyrights and licenses, and all rights with respect to the foregoing, necessary
for the conduct of its business as now conducted, without any known conflict
with the rights of others.
SECTION 3.21 FINDERS' FEES. Except for Scott & Stringfellow (the
"Intertrans Financial Advisor"), whose fees in the amount previously disclosed
in writing to Fritz will be paid by Intertrans, there is no investment banker,
broker, finder or other intermediary which has been retained by or is authorized
to act on
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behalf of Intertrans or any of its Subsidiaries who is entitled to any fee or
commission from Fritz or any of its affiliates upon consummation of the
transactions contemplated by this Agreement.
SECTION 3.22 OPINION OF FINANCIAL ADVISOR. Intertrans has received the
opinion of the Intertrans Financial Advisor to the effect that, as of the date
hereof, the Exchange Ratio is fair, from a financial point of view, to the
shareholders of Intertrans.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF FRITZ
Except as disclosed in a document referring specifically to this Agreement
(the "Fritz Disclosure Schedule") which has been delivered to Intertrans on or
prior to the date hereof or as disclosed in public filings made by Fritz with
the SEC prior to the date hereof, Fritz represents and warrants to Intertrans as
set forth below:
SECTION 4.01 CORPORATE EXISTENCE AND POWER. Fritz is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware. Merger Sub is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of California. Each of Fritz and
Merger Sub has all corporate powers and all material Governmental Authorizations
required to carry on its business as now conducted, except such Governmental
Authorizations the failure of which to have obtained would not have a Material
Adverse Effect on Fritz. Fritz is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the character of
the property owned or leased by it or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified would have
a Material Adverse Effect on Fritz. Fritz has delivered to Intertrans true and
complete copies of Fritz's Certificate of Incorporation and Bylaws and Merger
Sub's Articles of Incorporation and Bylaws, each as currently in effect.
SECTION 4.02 CORPORATE AUTHORIZATION. The execution, delivery and
performance by Fritz and Merger Sub of this Agreement, by Fritz of the
Affiliates Agreements (as defined in Section 5.09) and by Merger Sub of the
Articles of Merger and the consummation by Fritz and Merger Sub of the
transactions contemplated hereby and thereby are within the corporate powers of
Fritz and Merger Sub and have been duly authorized by all necessary corporate
action, except for the approval by Fritz's stockholders in connection with the
issuance of shares of Fritz Common Stock in the Merger. This Agreement
constitutes a valid and binding agreement of Fritz and Merger Sub, and the
Affiliates Agreements and Articles of Merger will upon execution constitute
valid and binding agreements of Fritz and Merger Sub, respectively, enforceable
in each case against each in accordance with their respective terms.
SECTION 4.03 GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by Fritz and Merger Sub of this Agreement and, in the case of Fritz,
the Affiliates Agreements and, in the case of Merger Sub, the Articles of Merger
and the consummation of the Merger by Fritz and Merger Sub, require no action by
or in respect of, or filing with, any governmental body, agency, official or
authority other than:
(a) the filing of the Articles of Merger in accordance with Texas Law and
California Law;
(b) compliance with any applicable requirements of the HSR Act;
(c) compliance with any applicable requirements of the Exchange Act and the
rules and regulations promulgated thereunder;
(d) compliance with any applicable requirements of the Securities Act and
the rules and regulations promulgated thereunder;
(e) compliance with any applicable foreign or state securities or "blue
sky" laws; and
(f) such other filings or registrations with, or authorizations, consents
or approvals of, governmental bodies, agencies, officials or authorities, the
failure of which to make or obtain (i) would not reasonably be expected to have
a Material Adverse Effect on Fritz or (ii) would not materially adversely affect
the ability of
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Intertrans, Fritz or Merger Sub to consummate the transactions contemplated
hereby and operate their businesses as heretofore operated.
SECTION 4.04 NON-CONTRAVENTION. The execution, delivery and performance
by Fritz and Merger Sub of this Agreement and, in the case of Fritz, the
Affiliate Agreement and, in the case of Merger Sub, the Articles of Merger, the
consummation by Fritz and Merger Sub of the transactions contemplated hereby and
thereby do not and will not:
(a) contravene or conflict with the Certificate or Articles of
Incorporation, as the case may be, or Bylaws of Fritz or Merger Sub;
(b) assuming compliance with the matters referred to in Section 4.03,
contravene or conflict with or constitute a violation of any provision of any
law, regulation, judgment, injunction, order or decree binding upon or
applicable to Fritz or Merger Sub or any Subsidiary of Fritz;
(c) conflict with or result in a breach or violation of, or constitute a
default under, or result in the termination or cancellation of or loss of a
material benefit under, or right to accelerate, any material agreement, contract
or other instrument binding upon Fritz or Merger Sub or any Subsidiary of Fritz
or any material license, franchise, permit or other similar authorization held
by Fritz or Merger Sub or any Subsidiary of Fritz; or
(d) result in the creation or imposition of any Lien on any material asset
of Fritz or Merger Sub or any Subsidiary of Fritz,
except, with respect to clauses (b), (c) and (d) above, for contraventions,
defaults, losses, Liens and other matters referred to in such clauses that in
the aggregate would not be reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect on Fritz.
SECTION 4.05 CAPITALIZATION OF FRITZ.
(a) The authorized capital stock of Fritz consists of 60,000,000 shares of
Fritz Common Stock and 1,000,000 shares of preferred stock, $.01 par value per
share ("Fritz Preferred Stock"). As of January 31, 1995, there were outstanding:
(i) 12,200,614 shares of Fritz Common Stock;
(ii) no shares of Fritz Preferred Stock; and
(iii) employee and director stock options to purchase an aggregate of
811,098 shares of Fritz Common Stock.
All outstanding shares of Fritz Common Stock have been duly authorized and
validly issued and are fully paid and nonassessable and free from any preemptive
rights. Except as set forth in this Section and as otherwise contemplated by
this Agreement, and except for changes since January 31, 1995 resulting from the
exercise of employee and director stock options, there are outstanding (i) no
shares of capital stock or other voting securities of Fritz, (ii) no securities
of Fritz convertible into or exchangeable for shares of capital stock or voting
securities of Fritz and (iii) no options or other rights to acquire from Fritz,
and no obligation of Fritz to issue, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or other voting
securities of Fritz (the items in clauses (i), (ii) and (iii) being referred to
collectively as the "Fritz Securities"). There are no outstanding obligations of
Fritz or any of its Subsidiaries to repurchase, redeem or otherwise acquire any
Fritz Securities. No holder of Fritz Securities has, as of the date hereof, any
contractual right to include any such securities in any registration statement
proposed to be filed by Fritz under the Securities Act. On or prior to the
Effective Date, Fritz expects to adopt an employee stock purchase plan.
(b) All shares of Fritz Common Stock issued in the Merger and upon exercise
of the Fritz Options referred to in Sections 1.06 shall, upon issuance, be fully
paid, validly issued and nonassessable. Fritz has reserved sufficient shares of
Fritz Common Stock for issuance (i) in the Merger and (ii) upon exercise in full
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of all Fritz Options, based on the number of shares of Intertrans Common Stock
and the number of Intertrans Options outstanding on the date hereof.
SECTION 4.06 ORGANIZATION OF MERGER SUB. The authorized capital stock of
Merger Sub consists of 2,400 shares of common stock, par value $10.00 per share,
all of which are outstanding. All the issued and outstanding capital stock of
Merger Sub is owned by Fritz. Merger Sub has not conducted any business prior to
the date hereof and has no assets, liabilities or obligations of any nature
other than those incident to its formation and pursuant to this Agreement.
SECTION 4.07 SUBSIDIARIES.
(a) Each Subsidiary of Fritz is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, has all corporate powers and all material Governmental
Authorizations required to carry on its business as now conducted, except such
Governmental Authorizations the failure of which to have obtained would not have
a Material Adverse Effect on Fritz, and is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by or the nature of its activities
make such qualification necessary, except for those jurisdictions where failure
to be so qualified would not, individually or in the aggregate, have a Material
Adverse Effect on Fritz. For purposes of this Agreement, (i) "Subsidiary" means,
with respect to any entity, any corporation of which securities or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions are directly or
indirectly owned by such entity, and (ii) "Joint Venture" means, with respect to
any entity, any corporation or organization (other than such entity and any
Subsidiary thereof) of which such entity or any Subsidiary thereof is, directly
or indirectly, the beneficial owner of 40% or more of any class of equity
securities or equivalent profit participation interest. All Subsidiaries and
Joint Ventures material to the business of Fritz ("Material Fritz Subsidiaries")
and their respective jurisdictions of incorporation or organization and Fritz's
ownership interest therein are identified in the Fritz Disclosure Schedule.
Other than its investments in its Subsidiaries and Joint Ventures, Fritz does
not own, directly or indirectly, any outstanding capital stock or equity
interest in any corporation, partnership, joint venture or other entity.
(b) All of the outstanding capital stock of, or other ownership interests
in, each Material Fritz Subsidiary that is owned by Fritz, directly or
indirectly, is owned by Fritz, directly or indirectly, free and clear of any
material Lien and free of any other material limitation or restriction on its
rights as owner thereof (including any restriction on the right to vote, sell or
otherwise dispose of such capital stock or other ownership interests), other
than those imposed by applicable law. There are no existing options, calls or
commitments of any character relating to the issued or unissued capital stock or
other securities or equity interests (collectively, "Fritz Subsidiary
Securities") of any Material Fritz Subsidiary.
SECTION 4.08 SEC FILINGS.
(a) Fritz has since January 1, 1992 filed all proxy statements, schedules
and reports required to be filed by it with the SEC pursuant to the Exchange
Act.
(b) Fritz has delivered to Intertrans:
(i) its annual reports on Form 10-K for its fiscal years ended
December 31, 1993 and 1992;
(ii) its quarterly report on Form 10-Q for its fiscal quarter ending
March 31, June 30 and September 30, 1994;
(iii) its proxy or information statements relating to meetings of, or
actions taken without a meeting by, the stockholders of Fritz held since
January 1, 1992; and
(iv) all of its other reports, statements, schedules and registration
statements filed with the SEC since December 31, 1993.
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(c) As of its filing date, no such report or statement filed pursuant to
the Exchange Act contained any untrue statement of a material fact or omitted 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.
(d) No such registration statement, as amended or supplemented, if
applicable, filed pursuant to the Securities Act, as of the date such statement
or amendment became effective, contained any untrue statement of a material fact
or omitted to state any material fact required to be stated therein or necessary
to make the statements therein not misleading.
SECTION 4.09 FINANCIAL STATEMENTS. The audited consolidated financial
statements Fritz included in its annual reports on Form 10-K and the unaudited
financial statements of Fritz included in its quarterly reports on Form 10-Q
referred to in Section 4.08 present fairly, in conformity with generally
accepted accounting principles applied on a consistent basis (except as may be
indicated in the notes thereto), the consolidated financial position of Fritz
and its consolidated subsidiaries as of the dates thereof and their consolidated
results of operations and cash flows for the periods then ended (subject to
normal year-end adjustments in the case of any interim financial statements).
For purposes of this Agreement, "Fritz Balance Sheet" means the consolidated
balance sheet of Fritz as of September 30, 1994, and the notes thereto,
contained in Fritz's quarterly report on Form 10-Q filed for its fiscal quarter
then ended, and "Fritz Balance Sheet Date" means September 30, 1994.
SECTION 4.10 DISCLOSURE DOCUMENTS. None of the information supplied or to
be supplied by Fritz or Merger Sub for inclusion in the Joint Proxy Statement
and the Registration Statement, will, in the case of the Joint Proxy Statement,
at the time of mailing of the Joint Proxy Statement to stockholders of Fritz and
at the time of the meeting of such stockholders to be held in connection with
the Merger, contain any untrue statement of a material fact or omits or will
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading or will, in the case of the Registration
Statement, at the time the Registration Statement becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading. The Registration Statement and Joint Proxy
Statement will comply as to form in all material respects with the provisions of
the Securities Act and Exchange Act, respectively, and the rules and regulations
thereunder, except that no representation or warranty is made by Fritz with
respect to information supplied by Intertrans for inclusion therein.
SECTION 4.11 ABSENCE OF CERTAIN CHANGES. Since the Fritz Balance Sheet
Date, and, with respect to the matters referred to in subsection (c), since
January 1, 1993, Fritz and its Subsidiaries have in all material respects
conducted their business in the ordinary course and there has not been:
(a) any Material Adverse Change with respect to Fritz or any event,
occurrence or development of a state of circumstances or facts known to Fritz
which as of the date hereof could reasonably be expected to have a Material
Adverse Effect on Fritz;
(b) any amendment of any material term of any outstanding Fritz Securities
or any Fritz Subsidiary Securities;
(c) any action by Fritz or, to Fritz's knowledge, any affiliate of Fritz
which would preclude the ability of Fritz to account for the business
combination to be effected by the Merger as a "pooling of interests" under
generally accepted accounting principles;
(d) the entering into of any agreement by Fritz or any person on behalf of
Fritz to take any of the foregoing actions.
SECTION 4.12 NO UNDISCLOSED LIABILITIES. There are no liabilities of
Fritz or any of its Subsidiaries of any kind whatsoever that are, individually
or in the aggregate, material to Fritz and its Subsidiaries, taken as a whole,
other than:
(a) liabilities disclosed or provided for in the Fritz Balance Sheet
(including the notes thereto);
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(b) liabilities incurred in the ordinary course of business consistent with
past practice since the Fritz Balance Sheet Date; and
(c) liabilities under this Agreement.
SECTION 4.13 LITIGATION. Other than actions, suits, proceedings, claims
or investigations occurring in the ordinary course of business involving
respective amounts in controversy of less than $40,000 each, there is no action,
suit, proceeding, claim or investigation pending or, to the knowledge of Fritz,
overtly threatened, against Fritz or any of its Subsidiaries or any of their
assets or against or involving any of its officers, directors or employees in
connection with the business or affairs of Fritz, including, without limitation,
any claims for indemnification arising under any agreement to which Fritz or any
of its Subsidiaries is a party, which could, individually or in the aggregate,
have a Material Adverse Effect on Fritz. Fritz is not subject to or in default
with respect to any writ, order, judgment, injunction or decree which could,
individually or in the aggregate, have a Material Adverse Effect on Fritz.
SECTION 4.14 TAXES.
(a) Fritz and each of its Subsidiaries (i) has filed when due (taking into
account extensions) with the appropriate federal, state, local, foreign and
other governmental agencies, all material tax returns, estimates and reports
required to be filed by it, (ii) either paid when due and payable or established
adequate reserves or otherwise accrued on the Fritz Balance Sheet all material
Taxes, and there are no tax deficiencies claimed in writing by any Taxing
authority and received by Fritz that, in the aggregate, would result in any tax
liability in excess of the amount of the reserves or accruals, and (iii) has or
will establish in accordance with its normal accounting practices and procedures
accruals and reserves that, in the aggregate, are adequate for the payment of
all Taxes not yet due and payable and attributable to any period preceding the
Effective Time. The Fritz Disclosure Schedule sets forth those tax returns of
Fritz (or any predecessor entities) for all periods that currently are the
subject of audit by any federal, state, local or foreign taxing authority.
(b) There are no material taxes, interest, penalties, assessments or
deficiencies claimed in writing by any taxing authority and received by Fritz or
any of its Subsidiaries to be due in respect of any tax returns filed by Fritz
(or any predecessor corporations) or any of its Subsidiaries. Neither Fritz nor
any predecessor corporation, nor any of their respective Subsidiaries, has
executed or filed with the IRS or any other Taxing authority any agreement or
other document extending, or having the effect of extending, the period of
assessment or collection of any Taxes.
(c) Fritz is not a party to or bound by (or will prior to the Effective
Date become a party to or bound by) any Tax indemnity, Tax sharing or Tax
allocation agreement or other similar arrangement which includes a party other
than Fritz and its Subsidiaries. Neither Fritz nor any of its Subsidiaries has
been a member of an affiliated group other than one of which Fritz was the
common parent, or filed or been included in a combined, consolidated or unitary
Tax return other than one filed by Fritz (or a return for a group consisting
solely of its Subsidiaries and predecessors).
SECTION 4.15 EMPLOYEE BENEFIT PLANS; ERISA.
(a) Neither Fritz nor any corporation or other entity which under Section
4001(b) of ERISA is under common control with Fritz (a "Fritz ERISA Affiliate")
maintains or within the past five years has maintained, contributed to, or been
obligated to contribute to, any Pension Plan or any Welfare Plan which is
subject to ERISA. Each Pension Plan and Welfare Plan disclosed in the Fritz
Disclosure Schedule (which Plans have been heretofore delivered to Fritz) and
maintained by Fritz has been maintained in all material respects in compliance
with their terms and all provisions of ERISA and the Code (including rules and
regulations thereunder) applicable thereto.
(b) Neither Fritz nor any Fritz ERISA Affiliate maintains or has maintained
or contributed to any Pension Plan that is or was subject to Section 302 or
Title IV of ERISA or Section 412 of the Code. Fritz has made available to
Intertrans, for each Pension Plan which is intended to be "qualified" within the
meaning of Section 401(a) of the Code, a copy of the most recent determination
letter issued by the IRS to the effect that
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each such Plan is so qualified and that each trust created thereunder is tax
exempt under Section 501 of the Code, and Fritz is unaware of any fact or
circumstances that would jeopardize the qualified status of each such Pension
Plan or the tax exempt status of each trust created thereunder.
(c) To the knowledge of Fritz, no Pension Plan or Welfare Plan is currently
subject to an audit or other investigation by the IRS, the Department of Labor,
the Pension Benefit Guaranty Corporation or any other governmental agency nor
are any such Plans subject to any lawsuits or legal proceedings of any kind or
to any material pending disputed claims by employees or beneficiaries covered
under any such Plan or by any other parties.
(d) No "prohibited transaction," as defined in Section 406 of ERISA or
Section 4975 of the Code, resulting in liability to Fritz or any Fritz ERISA
Affiliate has occurred with respect to any Pension Plan or Welfare Plan. Fritz
has no knowledge of any breach of fiduciary responsibility under Part 4 of Title
I of ERISA which has resulted in liability of Fritz, any trustee, administrator
or fiduciary of any Pension Plan or Welfare Plan.
(e) Neither Fritz nor any Fritz ERISA Affiliate, since January 1, 1986, has
maintained or contributed to, or been obligated or required to contribute to, a
"Multiemployer Plan," as such term is defined in Section 4001(a)(3) of ERISA.
Neither Fritz nor any Fritz ERISA Affiliate has either withdrawn, partially or
completely, or instituted steps to withdraw, partially or completely, from any
Multiemployer Plan nor has any event occurred which would enable a Multiemployer
Plan to give notice of and demand payment of any withdrawal liability with
respect to Fritz or any Fritz ERISA Affiliate.
(f) With respect to Fritz and each Fritz ERISA Affiliate, the Fritz
Disclosure Schedule correctly identifies each material agreement, policy, plan
or other arrangement, whether written or oral, express or implied, fixed or
contingent, to which Fritz is a party or by which Fritz or any property or asset
of Fritz is bound, which is or relates to a pension, option, bonus, deferred
compensation, retirement, stock purchase, profit-sharing, severance pay, health,
welfare, incentive, vacation, sick leave, medical disability, hospitalization,
life or other insurance or fringe benefit plan, policy or arrangement.
SECTION 4.16 MATERIAL AGREEMENTS.
(a) The Fritz Disclosure Schedule, together with the public filings made by
Fritz with the SEC (other than Fritz Property Leases, as hereinafter defined),
includes a complete and accurate list of all contracts, agreements, leases and
instruments to which Fritz or any of its Subsidiaries is a party or by which it
or its properties or assets are bound which individually involve net payments or
receipts in excess of $200,000 per annum, inclusive of contracts entered into
with customers and suppliers in the ordinary course of business, or that pertain
to employment or severance benefits for any officer, director or employee of
Fritz, whether written or oral, but exclusive of contracts, agreements, leases
and instruments terminable without penalty by Fritz upon 60 days' or less prior
written notice to the other party or parties thereto (the "Material Fritz
Agreements").
(b) Neither Fritz nor, to the knowledge of Fritz, any other party is in
default under any Material Fritz Agreement and no event has occurred which
(after notice or lapse of time or both) would become a breach or default under,
or would permit modification, cancellation, acceleration or termination of any
Material Fritz Agreement or result in the creation of any security interest
upon, or any person obtaining any right to acquire, any properties, assets or
rights of Fritz which, in any such case, has had or would reasonably be expected
to have a Material Adverse Effect on Fritz.
(c) To the knowledge of Fritz, each such Material Fritz Agreement is in
full force and effect and is valid and legally binding and there are no material
unresolved disputes involving or with respect to any Material Fritz Agreement.
No party to a Material Fritz Agreement has advised Fritz that it intends either
to terminate a Material Fritz Agreement or to refuse to renew a Material Fritz
Agreement upon the expiration of the term thereof.
(d) Fritz is not in violation of, or in default with respect to, any term
of its Certificate of Incorporation or Bylaws.
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SECTION 4.17 PROPERTIES. To the knowledge of Fritz, all leases of real
property to which Fritz is a party or by which it is bound ("Fritz Property
Leases") which are material to the business of Fritz and its Subsidiaries taken
as a whole are in full force and effect. To the knowledge of Fritz, there exists
no default under such leases, nor any event which with notice or lapse of time
or both would constitute a default thereunder by Fritz or any of its
Subsidiaries, which default would have a Material Adverse Effect on Fritz. All
of the properties and assets owned by Fritz and each of its Subsidiaries are
owned by each of them, respectively, free and clear of any Lien, except for
Liens which do not have a Material Adverse Effect on Fritz. Fritz and its
Subsidiaries have good and marketable title subject to no Liens, other than
those permitted under this Section 4.17, to all of the properties and assets
necessary for the conduct of their business other than to the extent that the
failure to have such title would not have a Material Adverse Effect on Fritz.
SECTION 4.18 ENVIRONMENTAL MATTERS.
(a) To the knowledge of Fritz, no notice, notification, demand, request for
information, citation, summons, complaint or order has been received, no
complaint has been filed, no penalty has been assessed and no investigation or
review is pending, or to Fritz's knowledge, has been threatened by any
governmental entity or other party with respect to any (i) alleged violation by
Fritz or any of its Subsidiaries of any Environmental Law, (ii) alleged failure
by Fritz or any such Subsidiary to have any environmental permit, certificate,
license, approval, registration or authorization required in connection with the
conduct of its business or (iii) Regulated Activity.
(b) To the knowledge of Fritz, neither Fritz nor any of its Subsidiaries
has any material Environmental Liabilities and there has been no release of
Hazardous Substances into the environment by Fritz or any such Subsidiary or
with respect to any of their respective properties which has had, or would be
reasonably expected to have, a Material Adverse Effect on Fritz.
SECTION 4.19 LABOR MATTERS. Except as set forth in the Fritz Disclosure
Schedule, neither Fritz nor any of its Subsidiaries is a party to any collective
bargaining agreement or other labor union contract applicable to persons
employed by Fritz or any such Subsidiary, nor do the executive officers of Fritz
know of any activities or proceedings of any labor union to organize any such
employees.
SECTION 4.20 COMPLIANCE WITH LAWS. Except for violations which do not
have and would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on Fritz, neither Fritz nor any of its
Subsidiaries is in violation of, or has violated, any applicable provisions of
any laws, statutes, ordinances or regulations or any term of any judgment,
decree, injunction or order binding against it.
SECTION 4.21 TRADEMARKS, TRADENAMES, ETC. Fritz owns or possesses all
intellectual property, patents, trademarks, tradenames, servicemarks, copyrights
and licenses, and all rights with respect to the foregoing, necessary for the
conduct of its business as now conducted, without any known conflict with the
rights of others.
SECTION 4.22 FINDERS' FEES. Except for Morgan Stanley & Co. Incorporated
(the "Fritz Financial Advisor"), whose fees in the amount previously disclosed
in writing to Intertrans will be paid by Fritz, there is no investment banker,
broker, finder or other intermediary which has been retained by or is authorized
to act on behalf of Fritz or any of its Subsidiaries who is entitled to any fee
or commission from Fritz or any of its affiliates upon consummation of the
transactions contemplated by this Agreement.
SECTION 4.23 OPINION OF FINANCIAL ADVISOR. Fritz has received the opinion
of the Fritz Financial Advisor to the effect that, as of the date hereof, the
Exchange Ratio is fair, from a financial point of view, to Fritz.
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ARTICLE V
COVENANTS OF INTERTRANS
From the date hereof until the occurrence of the earlier of (i) the
Effective Time or (ii) termination of this Agreement pursuant to Section 9.01
hereof, Intertrans agrees that:
SECTION 5.01 CONDUCT OF INTERTRANS. Intertrans and its Subsidiaries shall
in all material respects conduct their business in the ordinary course. Without
limiting the generality of the foregoing, from the date hereof until the
Effective Time, except as contemplated hereby or previously disclosed by
Intertrans to Fritz in writing, without the prior written consent of Fritz:
(a) Intertrans will not adopt or propose any change in its Articles of
Incorporation or Bylaws;
(b) Intertrans will not enter into or amend any employment agreements (oral
or written) or increase the compensation payable or to become payable by it to
any of its officers, directors, or consultants over the amount payable as of
January 31, 1995, or increase the compensation payable to any other employees
(other than (A) increases in the ordinary course of business which are not in
the aggregate material to Intertrans, or (B) pursuant to plans disclosed in
Intertrans Disclosure Schedule), or adopt or amend any employee benefit plan or
arrangement (oral or written); or
(c) Except pursuant to the exercise of Intertrans Options, Intertrans will
not issue any Intertrans Securities;
(d) Intertrans will keep in full force and effect its existing directors'
and officers' liability insurance and will not modify or reduce the coverage
thereunder;
(e) Other than the payment of dividends in accordance with its existing
dividend policy, which policy is consistent with Intertrans' past practice,
Intertrans will not pay any dividend or make any other distribution to holders
of its capital stock nor will Intertrans or any of its Subsidiaries redeem or
otherwise acquire any Intertrans Securities;
(f) Intertrans will not, directly or indirectly, dispose of or acquire any
material properties or assets except in the ordinary course of business;
(g) Intertrans will not incur any additional indebtedness for borrowed
money in excess of $100,000 in the aggregate, except pursuant to existing
arrangements which have been disclosed to Fritz prior to the date hereof;
(h) Other than as expressly provided in the Intertrans Stock Option Plans,
Intertrans will not amend or change the period of exercisability or accelerate
the exercisability of any outstanding options or warrants to acquire shares of
capital stock, or accelerate, amend or change the vesting period of any
outstanding restricted stock;
(i) Except as may be permitted by Sections 5.02, 5.04 and 9.01 of this
Agreement, Intertrans will not knowingly enter into any transaction that would
require the Joint Proxy Statement to be delayed or recirculated under
circumstances which would in the reasonable judgment of Fritz delay the
occurrence of the Effective Date beyond the date specified in Section 9.01(iii);
and
(j) Intertrans will not, and will not permit any of its Subsidiaries to,
agree or commit to do any of the foregoing.
SECTION 5.02 SHAREHOLDERS' MEETING; PROXY MATERIAL. Intertrans shall
cause a meeting of its shareholders to be duly called and held as soon as
reasonably practicable following the effectiveness of the Registration Statement
for the purpose of voting on the approval and adoption of this Agreement and the
Merger. The Board of Directors of Intertrans shall, subject to their fiduciary
duties exercised in a manner
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consistent with the terms of Section 5.04, recommend approval and adoption of
this Agreement and the Merger by Intertrans' shareholders. In connection with
such meeting, Intertrans:
(a) will, together with Fritz and Merger Sub, promptly prepare and file
with the SEC, will use all reasonable efforts to have cleared by the SEC and
will thereafter mail to its shareholders as promptly as practicable the Joint
Proxy Statement and all other proxy materials for such meeting;
(b) will use all reasonable efforts to obtain the necessary approvals by
its shareholders of this Agreement and the transactions contemplated hereby; and
(c) will otherwise comply with all legal requirements applicable to such
meeting.
SECTION 5.03 ACCESS TO FINANCIAL AND OPERATION INFORMATION. Intertrans
will give Fritz, its counsel, financial advisors, auditors and other authorized
representatives reasonable access during normal business hours to the offices,
properties, books and records of Intertrans and its Subsidiaries will furnish to
Fritz, its counsel, financial advisors, auditors and other authorized
representatives such financial and operating data as such persons may reasonably
request and will instruct Intertrans' employees, counsel and financial advisors
to cooperate with Fritz in its investigation of the business of Intertrans and
its Subsidiaries and in the planning for the combination of the businesses of
Intertrans and Fritz following the consummation of the Merger; provided that no
investigation pursuant to this Section shall affect any representation or
warranty given by Intertrans to Fritz hereunder. In addition, following public
announcement of this Agreement, Intertrans will cooperate in arranging joint
meetings among representatives of Intertrans and Fritz and persons with whom
Intertrans maintains business relationships. All requests for information made
pursuant to this Section shall be directed to the Chief Financial Officer of
Intertrans or such person as may be designated by him. All information obtained
pursuant to this Section 5.03 shall be governed by the Confidentiality Agreement
dated January 23, 1995 between Fritz and Intertrans (the "Confidentiality
Agreement").
SECTION 5.04 OTHER OFFERS.
(a) Intertrans and its Subsidiaries will not, and will use their best
efforts to cause their respective officers, directors, employees or other agents
not to, directly or indirectly, (i) take any action to solicit, initiate or
encourage any Acquisition Proposal (as hereinafter defined), or (ii) subject to
the fiduciary duties of the Board of Directors under applicable law as advised
by counsel to Intertrans, engage in negotiations with, or disclose any nonpublic
information relating to Intertrans or any of its Subsidiaries or afford access
to the properties, books or records of Intertrans or any of its Subsidiaries to,
any person or entity that may be considering making, or has made, an Acquisition
Proposal. To the extent that Intertrans or its Subsidiaries or any of their
respective officers, directors, employees or other agents are currently involved
in any discussions with respect to any Acquisition Proposal or contemplated or
proposed Acquisition Proposal, Intertrans and its Subsidiaries shall terminate,
and shall use their best efforts to cause their respective officers, directors,
employees or other agents to terminate, such discussions immediately. The term
"Acquisition Proposal" as used herein means any offer or proposal for, or any
indication of interest in, a merger or other business combination involving
Intertrans or any of its Subsidiaries or the acquisition of any equity interest
in, or a substantial portion of the assets of, Intertrans or any of its
Subsidiaries, other than the transactions contemplated by this Agreement.
(b) Subject to the following sentence, the Board of Directors of Intertrans
shall not (i) withdraw or modify, or propose to withdraw or modify, in a manner
adverse to Fritz, the approval or recommendation by such Board of Directors of
this Agreement, the Merger or the other transactions contemplated hereby, (ii)
approve or recommend, or propose to approve or recommend, any Acquisition
Proposal (other than an Acquisition Proposal made by Fritz or an affiliate of
Fritz) or (iii) approve or authorize Intertrans' entering into any agreement
with respect to any Acquisition Proposal. Notwithstanding the foregoing, in the
event the Board of Directors of Intertrans receives an Acquisition Proposal
that, in the exercise of its fiduciary obligations (as determined in good faith
by the Board of Directors based on the advice of outside counsel), it determines
to be a Superior Proposal (as defined below), the Board of Directors may
(subject to the following sentences) withdraw or adversely modify its approval
or recommendation of this Agreement, the Merger and the other transactions
contemplated hereby and approve or recommend any such Superior Proposal, or
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approve or authorize Intertrans' entering into an agreement with respect to such
Superior Proposal, in each case at any time after the fourth business day
following notice to Fritz (a "Notice of Superior Proposal") advising Fritz that
the Board of Directors has received a Superior Proposal, specifying the material
terms of the structure of such Superior Proposal. Intertrans may take any of the
foregoing actions pursuant to the preceding sentence only if an Acquisition
Proposal that was a Superior Proposal at the time of delivery of a Notice of
Superior Proposal continues to be a Superior Proposal in light of any improved
transaction proposed by Fritz prior to the expiration of the four business day
period specified in the preceding sentence. For purposes of this Agreement, a
"Superior Proposal" means any bona fide Acquisition Proposal to acquire,
directly or indirectly, a material equity interest in or a material amount of
voting securities or assets of Intertrans or any of its subsidiaries for
consideration consisting of cash and/or securities, and otherwise on terms which
the Board of Directors of Intertrans determines in its good faith reasonable
judgment (based on the advice of a financial advisor of nationally recognized
reputation) to provide greater aggregate value to Intertrans' shareholders than
the transactions contemplated by this Agreement (or otherwise proposed by Fritz
as contemplated above).
(c) In addition to the procedures provided for in subsection (b) above,
Intertrans will (i) promptly notify Fritz after receipt of any Acquisition
Proposal or any inquiries indicating that any person is considering making or
wishes to make an Acquisition Proposal, identifying in such notice the person
making or considering making such Acquisition Proposal, (ii) promptly notify
Fritz after receipt of any request for nonpublic information relating to
Intertrans or any of its Subsidiaries or for access to the properties, books or
records of Intertrans or any of its Subsidiaries by any person or entity that
may be considering making, or has made, an Acquisition Proposal, identifying in
such notice the person making such request and (iii) keep Fritz advised in a
timely manner of the status and principal terms of any such Acquisition
Proposal, indication or request.
SECTION 5.05 MAINTENANCE OF BUSINESS. Intertrans will use its reasonable
best efforts to carry on its business, keep available the services of its
officers and employees and preserve its relationships with those of its
customers, agents, suppliers, licensors and others having business relationships
with it that are material to its business in substantially the same manner as it
has prior to the date hereof. If Intertrans becomes aware of a material
deterioration or facts which are likely to result in a material deterioration in
the relationship with any material customer, supplier, licensor or others having
business relationships with it, it will promptly bring such information to the
attention of the Fritz in writing.
SECTION 5.06 COMPLIANCE WITH OBLIGATIONS. Intertrans and its Subsidiaries
shall each use its reasonable best efforts to comply in all material respects
with (i) all applicable federal, state, local and foreign laws, rules and
regulations, (ii) all material agreements and obligations, including its
respective articles of incorporation and bylaws, by which it, its properties or
its assets may be bound, and (iii) all decrees, orders, writs, injunctions,
judgments, statutes, rules and regulations applicable to Intertrans and its
Subsidiaries and their respective properties or assets.
SECTION 5.07 NOTICES OF CERTAIN EVENTS. Intertrans shall, upon obtaining
knowledge of any of the following, promptly notify Fritz of:
(a) any notice or other communication from any person alleging that the
consent of such person is or may be required in connection with the Merger;
(b) any notice or other communication from any governmental or regulatory
agency or authority in connection with the Merger; and
(c) any actions, suits, claims, investigations or other judicial
proceedings commenced or threatened against Intertrans or any of its
Subsidiaries which, if pending on the date of this Agreement, would have been
required to have been disclosed pursuant to Section 3.12 or which relate to the
consummation of the Merger.
SECTION 5.08 CONFIDENTIALITY. Intertrans agrees that the Confidentiality
Agreement shall remain in full force and effect at all times prior to the
Effective Time and after any termination of this Agreement, and Intertrans
agrees to comply with the terms of such agreement.
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SECTION 5.09 COMPLIANCE WITH THE SECURITIES ACT. Intertrans shall use its
reasonable best efforts to cause each person who is an "affiliate," as that term
is used in paragraphs (c) and (d) of Rule 145 under the Securities Act, of
Intertrans to deliver to Fritz on or prior to the Effective Date an Affiliates
Agreement in substantially the form attached hereto as Exhibit 5.09 (an
"Affiliates Agreement").
ARTICLE VI
COVENANTS OF FRITZ AND MERGER SUB
From the date hereof until the occurrence of the earlier of (i) the
Effective Time or (ii) termination of this Agreement pursuant to Section 9.01
hereof, Fritz and Merger Sub agree that:
SECTION 6.01 CONDUCT OF FRITZ. Fritz and its Subsidiaries shall in all
material respects conduct their business in the ordinary course. Without
limiting the generality of the foregoing, from the date hereof until the
Effective Time, except as contemplated hereby or previously disclosed by Fritz
to Intertrans in writing, without the prior written consent of Intertrans:
(a) Fritz will not adopt or propose any change in its Certificate of
Incorporation or Bylaws;
(b) Fritz will not take any action that would result in a failure to
maintain the trading of Fritz Common Stock on Nasdaq without causing such stock
to be listed for trading on a national securities exchange at or prior to the
termination of its trading on Nasdaq;
(c) Except pursuant to the exercise of options described in Section 4.05,
except the granting of stock options in the ordinary course of business
consistent with past practice, and except pursuant to the employee stock
purchase plan contemplated by Section 4.05, Fritz will not issue any Fritz
Securities;
(d) Except as may be permitted by Sections 6.02 and 9.01, Fritz will not
knowingly enter into any transaction that would require the Joint Proxy
Statement to be delayed or recirculated under circumstances which would in the
reasonable judgment of Intertrans delay the occurrence of the Effective Date
beyond the date specified in Section 9.01(iii); and
(e) Fritz will not, and will not permit any of its Subsidiaries to, agree
or commit to do any of the foregoing.
SECTION 6.02 STOCKHOLDERS' MEETING; PROXY MATERIAL; REGISTRATION
STATEMENT.
(a) Fritz shall promptly prepare and file with the SEC under the Securities
Act the Registration Statement and shall use all reasonable efforts to cause the
Registration Statement to be declared effective as promptly as practicable.
Fritz shall take any action required to be taken under foreign or state
securities or "blue sky" laws in connection with the issuance of Fritz Common
Stock in the Merger.
(b) Fritz shall cause a meeting of its stockholders to be duly called and
held as soon as reasonably practicable following the effectiveness of the
Registration Statement for the purpose of voting on the approval of the issuance
of Fritz Common Stock in connection with the Merger. The Board of Directors of
Fritz shall, subject to their fiduciary duties, recommend approval and adoption
of such matters by Fritz's stockholders. In connection with such meeting, Fritz:
(i) will, together with Merger Sub and Intertrans, promptly prepare
and file with the SEC, will use all reasonable efforts to have cleared by
the SEC and will thereafter mail to its stockholders as promptly as
practicable the Joint Proxy Statement and all other proxy materials for
such meeting;
(ii) will use all reasonable efforts to obtain the necessary approvals
by its stockholders of this Agreement and the transactions contemplated
hereby; and
(iii) will otherwise comply with all legal requirements applicable to
such meeting.
SECTION 6.03 ACCESS TO FINANCIAL AND OPERATION INFORMATION. Fritz will
give Intertrans, its counsel, financial advisors, auditors and other authorized
representatives reasonable access during normal business
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hours to the offices, properties, books and records of Fritz and its
Subsidiaries will furnish to Intertrans, its counsel, financial advisors,
auditors and other authorized representatives such financial and operating data
as such persons may reasonably request and will instruct the Fritz's employees,
counsel and financial advisors to cooperate with Intertrans in its investigation
of the business of Fritz and its Subsidiaries and in the planning for the
combination of the businesses of Intertrans and Fritz following the consummation
of the Merger; provided that no investigation pursuant to this Section shall
affect any representation or warranty given by Fritz to Intertrans hereunder. In
addition, following public announcement of this Agreement, Fritz will cooperate
in arranging joint meetings among representatives of Fritz and Intertrans and
persons with whom Fritz maintains business relationships. All requests for
information made pursuant to this Section shall be directed to the Chief
Financial Officer of Fritz or such person as may be designated by him. All
information obtained pursuant to this Section 6.03 shall be governed by the
Confidentiality Agreement.
SECTION 6.04 MAINTENANCE OF BUSINESS. Fritz will use its reasonable best
efforts to carry on its business, keep available the services of its officers
and employees and preserve its relationships with those of its customers,
suppliers, licensors and others having business relationships with it that are
material to its business in substantially the same manner as it has prior to the
date hereof. If Fritz becomes aware of a material deterioration or facts which
are likely to result in a material deterioration in the relationship with any
material customer, supplier, licensor or others having business relationships
with it, it will promptly bring such information to the attention of Intertrans
in writing.
SECTION 6.05 COMPLIANCE WITH OBLIGATIONS. Fritz and its Subsidiaries
shall each use its reasonable best efforts to comply in all material respects
with (i) all applicable federal, state, local and foreign laws, rules and
regulations, (ii) all material agreements and obligations, including its
respective certificate or articles of incorporation and bylaws, by which it, its
properties or its assets may be bound, and (iii) all decrees, orders, writs,
injunctions, judgments, statutes, rules and regulations applicable to Fritz and
its Subsidiaries and their respective properties or assets.
SECTION 6.06 NOTICES OF CERTAIN EVENTS. Fritz shall, upon obtaining
knowledge of any of the following, promptly notify Intertrans of:
(a) any notice or other communication from any person alleging that the
consent of such person is or may be required in connection with the Merger;
(b) any notice or other communication from any governmental or regulatory
agency or authority in connection with the Merger; and
(c) any actions, suits, claims, investigations or other judicial
proceedings commenced or threatened against Fritz or any of its Subsidiaries
which, if pending on the date of this Agreement, would have been required to
have been disclosed pursuant to Section 4.13 or which relate to the consummation
of the Merger.
SECTION 6.07 CONFIDENTIALITY. Fritz agrees that the Confidentiality
Agreement shall remain in full force and effect at all times prior to the
Effective Time and after any termination of this Agreement, and Fritz agrees to
comply with the terms of such agreement.
SECTION 6.08 OBLIGATIONS OF MERGER SUB. Fritz will take all action
necessary to cause Merger Sub to perform its obligations under this Agreement
and to consummate the Merger on the terms and conditions set forth in this
Agreement. Merger Sub will not issue any shares of its capital stock, any
securities convertible into or exchangeable for its capital stock, or any
option, warrant or other right to acquire its capital stock to any person or
entity other than Fritz or a wholly owned Subsidiary of Fritz. Merger Sub shall
not incur any indebtedness or liabilities of any kind except pursuant to this
Agreement.
SECTION 6.09 NOTICE TO AFFILIATES. Fritz shall, at least 30 days prior to
the Effective Date, cause to be delivered to each person Fritz believes to be an
"affiliate," as that term is used in paragraphs (c) and (d) of Rule 145 under
the Securities Act, of Fritz a notice informing such persons of restrictions on
transfer resulting from the Merger being accounted for as a pooling of interests
in accordance with generally accepted accounting principles and all published
rules, regulations and policies of the SEC.
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ARTICLE VII
COVENANTS OF FRITZ AND INTERTRANS
From the date hereof until the occurrence of the earlier of (i) the
Effective Time or (ii) termination of this Agreement pursuant to Section 9.01
hereof, Intertrans and Fritz agree that:
SECTION 7.01 ADVICE OF CHANGES. Each party will promptly advise each
other party in writing (i) of any event known to its executive officers
occurring subsequent to the date of this Agreement that would render any
representation or warranty of such party contained in this Agreement, if made on
or as of the date of such event or the Effective Date, untrue, inaccurate or
misleading in any material respect and (ii) of any Material Adverse Change in
the business condition of the party.
SECTION 7.02 REGULATORY APPROVALS. Each party shall execute and file, or
join in the execution and filing of, any application or other document that may
be necessary in order to obtain the authorization, approval or consent of any
governmental body, federal, state, local or foreign, which may be reasonably
required, or that the other company may reasonably request, in connection with
the consummation of the Merger. Each party shall use its reasonable best efforts
to obtain all such authorizations, approvals and consents.
SECTION 7.03 ACTIONS CONTRARY TO STATED INTENT. No party hereto shall,
from or after the date hereof and either before or after the Effective Time,
take any action that would prevent the Merger from qualifying as a
reorganization under Section 368(a) of the Code or prevent the business
combination to be effected by the Merger from being accounted for as a "pooling
of interests" under generally accepted accounting principles. Each of Fritz and
Intertrans shall use its reasonable best efforts to cause its affiliates not to
take any action that would preclude the ability of Fritz to account for the
business combination to be effected by the Merger as a "pooling of interests."
SECTION 7.04 CERTAIN FILINGS. Intertrans and Fritz shall cooperate with
one another:
(a) in connection with the preparation, filing and causing to become
effective or clearance, as applicable of the Joint Proxy Statement and the
Registration Statement and in connection with the registration or qualification
of, or ascertaining the availability of or obtaining appropriate exemptions from
registration or qualification with respect to, the Fritz Common Stock issued in
connection with the Merger covered by the Registration Statement under
applicable state securities or "blue sky" laws;
(b) in connection with the preparation of any filing required by the HSR
Act;
(c) in determining whether any action by or in respect of, or filing with,
any governmental body, agency or official, or authority is required, or any
actions, consents, approvals or waivers are required to be obtained from parties
to any material contracts, in connection with the consummation of the
transactions contemplated by this Agreement; and
(d) in seeking any such actions, consents, approvals or waivers or making
any such filings, furnishing information required in connection therewith or
with the Joint Proxy Statement or the Registration Statement and seeking timely
to obtain any such actions, consents, approvals or waivers.
SECTION 7.05 COMMUNICATIONS. Neither Intertrans nor Fritz will furnish
any written communication to its stockholders or to the public generally if the
subject matter thereof relates to the transactions contemplated by this
Agreement without the prior approval of the other of them as to the content
thereof, which approval shall not be unreasonably withheld; provided that the
foregoing shall not be deemed to prohibit any disclosure required by any
applicable law.
SECTION 7.06 SATISFACTION OF CONDITIONS PRECEDENT. Fritz and Intertrans
will each use its reasonable best efforts to satisfy or cause to be satisfied
all the conditions precedent that are set forth in Article VIII, as applicable
to each of them, and to cause the transactions contemplated by this Agreement to
be consummated, and, without limiting the generality of the foregoing, to obtain
all material consents and authorizations
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of third parties and to make all filings with, and give all notices to, third
parties that may be necessary or reasonably required on its part in order to
effect the transactions contemplated hereby.
SECTION 7.07 STOCKHOLDERS' MEETING DATES. The parties agree that they
will use their reasonable best efforts to cause their respective stockholder
meetings referred to in Sections 5.02 and 6.02(b) to be held on the same day.
Such stockholder meetings shall be convened 40 days following the date on which
the Registration Statement shall be declared effective by the SEC, unless
otherwise mutually agreed by the parties hereto.
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01 CONDITIONS TO OBLIGATIONS OF FRITZ AND MERGER SUB. The
obligations of Fritz and Merger Sub hereunder are subject to the fulfillment or
satisfaction, on and as of the Effective Date, of each of the following
conditions (any one or more of which may be waived by Fritz, but only in a
writing signed by Fritz):
(a) Accuracy of Representations and Warranties. The representations and
warranties of Intertrans contained in Article III (other than representations
and warranties regarding litigation or other proceedings connected with the
Merger, which shall be governed solely by the standard set forth in Section
8.03(e)) shall be true and accurate in all material respects on and as of the
Effective Date with the same force and effect as if they had been made on the
Effective Date (except to the extent a representation or warranty speaks
specifically as of an earlier date) and Intertrans shall have provided Fritz
with a certificate executed by the President and the Chief Financial Officer of
Intertrans, dated as of the Effective Date, to such effect.
(b) Covenants. Intertrans shall have performed and complied with all of
its covenants contained in Articles V and VII in all material respects on or
before the Effective Date, and Fritz shall receive a certificate to such effect
signed by Intertrans' President and Chief Financial Officer.
(c) No Material Adverse Change. Except as set forth in the Intertrans
Disclosure Schedule, there shall have been no Material Adverse Change in
Intertrans since the Intertrans Balance Sheet Date.
(d) Affiliates Agreements. Fritz shall have received from each person or
entity who may be deemed pursuant to Section 5.09 to be an affiliate of
Intertrans a duly executed Affiliates Agreement, and such Affiliates Agreements
shall remain in full force and effect.
(e) Consents. All written consents, assignments, waivers or
authorizations, other than Governmental Authorizations, that are required as a
result of the Merger for the continuation in full force and effect of any
material contracts or leases of Intertrans shall have been obtained.
(f) Tax-Free Reorganization. Fritz shall have received a written opinion
from its counsel to the effect that the Merger will constitute a reorganization
within the meaning of Section 368 of the Code. In preparing such opinion,
counsel may rely on (and to the extent reasonably required, the parties and
Intertrans' shareholders shall make) reasonable representations related thereto.
SECTION 8.02 CONDITIONS TO OBLIGATIONS OF INTERTRANS. Intertrans'
obligations hereunder are subject to the fulfillment or satisfaction, on and as
of the Effective Date, of each of the following conditions (any one or more of
which may be waived by Intertrans, but only in a writing signed by Intertrans):
(a) Accuracy of Representations and Warranties. The representations and
warranties of Fritz set forth in Article IV (other than representations and
warranties regarding litigation or other proceedings connected with the Merger,
which shall be governed solely by the standard set forth in Section 8.03(e))
shall be true and accurate in all material respects on and as of the Effective
Date with the same force and effect as if they had been made on the Effective
Date (except to the extent a representation or warranty speaks specifically as
of an earlier date and except for changes contemplated by this Agreement) and
Fritz shall have provided Intertrans with a certificate executed by the
President and the Chief Financial Officer of Fritz, dated as of the Effective
Date, to such effect.
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(b) Covenants. Fritz shall have performed and complied with all of its
covenants contained in Section 2.03 and Articles VI and VII in all material
respects on or before the Effective Date, and Intertrans shall receive a
certificate to such effect signed by Fritz's President and Chief Financial
Officer.
(c) No Material Adverse Change. Except as set forth in the Fritz
Disclosure Schedule, there shall have been no Material Adverse Change in Fritz
since the Fritz Balance Sheet Date.
(d) Tax-Free Reorganization. Intertrans shall have received a written
opinion from its counsel to the effect that the Merger will constitute a
reorganization within the meaning of Section 368 of the Code. In preparing such
opinion, counsel may rely on (and to the extent reasonably required, the parties
and Intertrans' shareholders shall make) reasonable representations related
thereto.
SECTION 8.03 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective
obligations of Intertrans and Fritz hereunder are subject to the fulfillment, on
and as of the Effective Date, of each of the following conditions (any one or
more of which may be waived by such parties, but only in a writing signed by
such parties):
(a) Stockholder Approval. Fritz's stockholders shall have duly approved
the issuance of Fritz Common Stock in connection with the Merger, and
Intertrans' shareholders shall have duly approved this Agreement, the Articles
of Merger and the Merger, all in accordance with applicable laws and regulatory
requirements.
(b) Registration Statement. The Registration Statement shall have become
effective under the Securities Act and shall not be the subject of any stop
order or proceedings seeking a stop order, and the Joint Proxy Statement shall
on the Effective Date not be subject to any proceedings commenced or threatened
by the SEC.
(c) Opinion of Accountants. Fritz and Intertrans shall have received an
opinion from KPMG Peat Marwick, in form reasonably satisfactory to Fritz and
Intertrans (and generally in accordance with Statement of Auditing Standards No.
50), to the effect that the business combination to be effected by the Merger
would be properly accounted for as a pooling of interests in accordance with
generally accepted accounting principles and all published rules, regulations
and policies of the SEC.
(d) Illegality or Legal Constraint. No statute, rule, regulation,
executive order, decree, injunction or restraining order shall have been
enacted, promulgated or enforced (and not repealed, superseded or otherwise made
inapplicable) by any court or governmental authority which prohibits the
consummation of the Merger (each party agreeing to use its reasonable best
efforts to have any such order, decree or injunction lifted).
(e) Governmental Authorizations. There shall have been obtained any and
all Governmental Authorizations, permits, approvals and consents of securities
or "blue sky" commissions of any jurisdiction and of any other governmental body
or agency, that may reasonably be deemed necessary so that the consummation of
the Merger will be in compliance with applicable laws, the failure to comply
with which would have a Material Adverse Effect on Fritz, Intertrans or the
Surviving Corporation or would be reasonably likely to subject any of Fritz,
Merger Sub, Intertrans or any of their respective directors or officers to
substantial penalties or criminal liability.
(f) HSR Act. The waiting period (and any extension thereof) applicable to
the consummation of the Merger under the HSR Act shall have expired or been
terminated.
ARTICLE IX
TERMINATION OF AGREEMENT
SECTION 9.01 TERMINATION. In addition to those termination rights
provided for in Sections 1.02(b)(iv) and (v) hereof, this Agreement may be
terminated at any time prior to the Effective Time whether before or after the
approval by the stockholders of Intertrans or Fritz:
(i) by mutual consent of the Boards of Directors of Fritz, Merger Sub
and Intertrans;
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(ii) by Fritz or Intertrans, if, at the meeting of Intertrans
shareholders (including any adjournment or postponement thereof) called
pursuant to Section 5.02 hereof, the requisite vote of the shareholders of
Intertrans shall not have been obtained;
(iii) by Fritz or Intertrans, if the Effective Date shall not have
occurred on or before July 31, 1995; provided that the right to terminate
this Agreement pursuant to this clause (iii) shall not be available to any
party whose failure to fulfill any obligation under this Agreement has been
the significant cause of, or resulted in, the failure of the Effective Date
to occur on or before such date;
(iv) by Fritz, if it is not in material breach of its obligations
under this Agreement and if any person or entity other than Fritz or any of
Fritz's affiliates shall purchase forty percent (40%) or more of the
outstanding shares of Intertrans Common Stock;
(v) by Fritz or Intertrans, if, at the meeting of Fritz stockholders
(including any adjournment or postponement thereof) called pursuant to
Section 6.02(b) hereof, the requisite vote of stockholders of Fritz shall
not have been obtained;
(vi) by Fritz, if it is not in material breach of its obligations
under this Agreement and if the Board of Directors of Intertrans shall
have: (A) withdrawn or adversely modified its recommendation of the Merger;
or (B) recommended or approved any acceptance by Intertrans' stockholders
of any Acquisition Proposal (other than an Acquisition Proposal made by
Fritz or an affiliate of Fritz);
(vii) by Fritz, if it is not in material breach of its obligations
under this Agreement, and if (A) there has been a breach by Intertrans of
any of its representations and warranties hereunder such that Section
8.01(a) will not be satisfied or (B) there has been a material breach on
the part of Intertrans of any of its covenants or agreements contained in
this Agreement such that Section 8.01(b) will not be satisfied, and, in
both case (A) and case (B), such breach has not been promptly cured after
notice to Intertrans;
(viii) by Intertrans, if it is not in material breach of its
obligations under this Agreement, and if (A) there has been a breach by
Fritz or Merger Sub of any of their respective representations and
warranties hereunder such that Section 8.02(a) will not be satisfied or (B)
there has been a material breach on the part of Fritz or Merger Sub of any
of their respective covenants or agreements contained in this Agreement
such that Section 8.02(b) will not be satisfied, and, in both case (A) and
case (B), such breach has not been promptly cured after notice to Fritz and
Merger Sub; or
(ix) by Intertrans, if the Board of Directors shall have entered into
a definitive agreement with respect to a Superior Proposal in compliance
with the procedures set forth in Section 5.04.
SECTION 9.02 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either Fritz or Intertrans as provided in Section 9.01 hereof, this
Agreement shall forthwith become void (except as set forth in Sections 10.02 and
10.03) and there shall be no liability on the part of Fritz, Merger Sub or
Intertrans or their respective officers or directors, except for the liability
of any party then in breach of its obligations under this Agreement and except
for any breach of a party's obligations under those surviving provisions
referred to in Sections 10.02 and 10.03.
ARTICLE X
MISCELLANEOUS
SECTION 10.01 FURTHER ASSURANCES. Each party agrees to cooperate fully
with the other parties and to execute such further instruments, documents and
agreements and to give such further written assurances as may be reasonably
requested by any other party to better evidence and reflect the transactions
described herein and contemplated hereby and to carry into effect the intents
and purposes of this Agreement.
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SECTION 10.02 FEES AND EXPENSES.
(a) Except as set forth in subsection (b) below, each party shall bear its
own fees and expenses, including counsel fees and fees of brokers and investment
bankers contracted by such party, in connection with the transaction
contemplated hereby.
(b) Notwithstanding the terms of subsection (a) above, the following
payments shall be made in connection with the termination of this Agreement
pursuant to Section 9.01:
(i) If (A) this Agreement shall be terminated by either Fritz or
Intertrans in the circumstances contemplated by Section 9.01(ii), and (B)
prior to the time of the Intertrans shareholder meeting called pursuant to
Section 5.02 an Acquisition Proposal (other than an Acquisition Proposal
made by Fritz or one of its affiliates) shall have been received by
Intertrans, then, at the time of such termination, Intertrans shall pay to
Fritz in immediately available funds an amount equal to $3,000,000, and,
furthermore, if following such termination (C) the principal transaction
contemplated by any Acquisition Proposal (other than an Acquisition
Proposal made by Fritz or one of its affiliates) shall have been
consummated within 12 months of the date on which this Agreement shall have
been terminated (the "Termination Date"), then, concurrently with the
consummation of such transaction, Intertrans shall pay to Fritz in
immediately available funds an additional amount equal to $4,500,000;
(ii) If (A) this Agreement shall be terminated by either Fritz or
Intertrans in the circumstances contemplated by Section 9.01(ii), and (B)
prior to the time of the Intertrans shareholder meeting called pursuant to
Section 5.02 no Acquisition Proposal (other than an Acquisition Proposal
made by Fritz or one of its affiliates) shall have been received by
Intertrans, and following such termination (C) a definitive agreement
relating to any Acquisition Proposal (other than an Acquisition Proposal
made by Fritz or one of its affiliates) shall have been entered into by
Intertrans or one of its affiliates within six months of the Termination
Date, and (D) the principal transaction contemplated by such definitive
agreement shall have been consummated within 12 months of the Termination
Date, then, concurrently with the consummation of such transaction,
Intertrans shall pay to Fritz in immediately available funds an amount
equal to $7,500,000;
(iii) If (A) this Agreement shall be terminated by either Fritz or
Intertrans in the circumstances contemplated by Section 9.01(iii) or by
Fritz in the circumstances contemplated by Sections 9.01(iv) or (vii), and
(B) the principal transaction contemplated by any Acquisition Proposal
(other than an Acquisition Proposal made by Fritz or one of its affiliates)
shall have been consummated within nine months of the Termination Date,
whether or not such Acquisition Proposal shall have been received by
Intertrans at the Termination Date, then, concurrently with the
consummation of such transaction, Intertrans shall pay to Fritz in
immediately available funds an additional amount equal to $7,500,000;
(iv) If (A) this Agreement shall be terminated by Fritz in the
circumstances contemplated by Section 9.01(vi) or by Intertrans in the
circumstances contemplated by Section 9.01(ix), then, at the time of such
termination, Intertrans shall pay to Fritz in immediately available funds
an amount equal to $3,000,000, and, furthermore, if following such
termination (B) the principal transaction contemplated by any Acquisition
Proposal (other than an Acquisition Proposal made by Fritz or one of its
affiliates) shall have been consummated within 12 months of the Termination
Date, whether or not such Acquisition Proposal shall have been received by
Intertrans at the Termination Date, then, concurrently with the
consummation of such transaction, Intertrans shall pay to Fritz in
immediately available funds an additional amount equal to $4,500,000;
(v) If (A) this Agreement shall be terminated by Fritz or Intertrans
in the circumstances contemplated by Section 9.01(v), and (B) at the time
of such termination Intertrans is not in material breach of its obligations
under this Agreement, and (C) at the time of such termination the Board of
Directors of Intertrans shall not have (x) withdrawn or adversely modified
its recommendation of the Merger or (y) recommended or approved any
acceptance by Intertrans' stockholders of any Acquisition Proposal (other
than an Acquisition Proposal made by Fritz or an affiliate of Fritz), then,
at the time of
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such termination, Fritz shall pay to Intertrans in immediately available
funds an additional amount equal to $2,500,000.
SECTION 10.03 SURVIVAL. The agreements of Intertrans, Fritz and Merger
Sub contained in Articles I and X and Section 2.03 shall survive the
consummation of the Merger. The agreements of Intertrans, Fritz and Merger Sub
contained in Sections 5.08, 6.07, 9.02 and 10.02 shall survive the termination
of this Agreement. All other representations, warranties, agreements and
covenants in this Agreement shall be deemed to be conditions to the Merger and
shall not survive the consummation of the Merger or the termination of this
Agreement.
SECTION 10.04 NOTICES. Whenever any party hereto desires or is required
to give any notice, demand, or request with respect to this Agreement, each such
communication shall be in writing and shall be effective only if it is delivered
by personal service or mailed, United States registered or certified mail,
postage prepaid, or sent by prepaid overnight courier or confirmed telecopier,
addressed as follows:
Fritz and Merger Sub:
Fritz Companies, Inc.
706 Mission Street
San Francisco, CA 94103
Telecopy: (415) 904-8326
Attention: Jan H. Raymond, Esq.
Senior Vice President and General Counsel
With copy to:
Brobeck, Phleger & Harrison
One Market Plaza
Spear Street Tower
San Francisco, CA 94105
Telecopy: (415) 442-1010
Attention: Ronald B. Moskovitz, Esq.
Intertrans:
Intertrans Corporation
125 E. John Carpenter Freeway
Suite 900
Irving, TX 75062
Telecopy: (214) 830-8869
Attention: John Witt
Chief Financial Officer
With copy to:
Intertrans Corporation
125 E. John Carpenter Freeway
Suite 900
Irving, TX 75062
Telecopy: (214) 830-8869
Attention: Brett Campbell, Esq.
General Counsel
Such communications shall be effective when they are received by the
addressee thereof. Any party may change its address for such communications by
giving notice thereof to the other parties in conformity with this Section.
SECTION 10.05 GOVERNING LAWS. The corporate law of the States of Texas
and California shall govern all issues concerning the Merger. The laws of the
State of Delaware (irrespective of its choice of law
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principles) shall govern all other issues concerning the validity of this
Agreement, the construction of its terms, and the interpretation and enforcement
of the rights and duties of the parties.
SECTION 10.06 BINDING UPON SUCCESSORS AND ASSIGNS; ASSIGNMENT. This
Agreement and the provisions hereof shall be binding upon each of the parties,
their permitted successors and assigns. This Agreement may not be assigned by
any party without the prior consent of the other; provided, however, that Fritz
shall be permitted at any time prior to the Effective Time to cause the
assignment of Merger Sub's rights and obligations under this Agreement to
another wholly owned Subsidiary of Fritz (without in any way relieving Fritz of
its obligations under this Agreement with respect to Merger Sub or the Merger).
SECTION 10.07 SEVERABILITY. If any provision of this Agreement, or the
application thereof, shall for any reason or to any extent be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances shall continue in full force and effect and in
no way be affected, impaired or invalidated.
SECTION 10.08 ENTIRE AGREEMENT. This Agreement, together with the
Confidentiality Agreement, and the other agreements and instruments referenced
herein constitute the entire understanding and agreement of the parties with
respect to the subject matter hereof and supersede all prior and contemporaneous
agreements or understandings, inducements or conditions, express or implied,
written or oral, between the parties with respect hereto.
SECTION 10.09 OTHER REMEDIES. Except as otherwise provided herein, any
and all remedies herein expressly conferred upon a party shall be deemed
cumulative with and not exclusive of any other remedy conferred hereby or by law
on such party, and the exercise of any one remedy shall not preclude the
exercise of any other.
SECTION 10.10 AMENDMENT AND WAIVERS. Any term or provision of this
Agreement may be amended, and the observance of any term of this Agreement may
be waived (either generally or in a particular instance and either retroactively
or prospectively) only by a writing signed by the party to be bound thereby. The
waiver by a party of any breach hereof or default in the performance hereof
shall not be deemed to constitute a waiver of any other default or any
succeeding breach or default, unless such waiver so expressly states. At any
time before or after approval of this Agreement and the Merger by the
shareholders of Intertrans and prior to the Effective Time, this Agreement may
be amended or supplemented by Intertrans or Fritz with respect to any of the
terms contained in this Agreement, except that following approval by the
shareholders of Intertrans there shall be no amendment or change to the
provisions hereof with respect to the Exchange Ratio without further approval by
the shareholders of Intertrans, and no other amendment shall be made which by
law requires further approval by such shareholders without such further
approval.
SECTION 10.11 NO WAIVER. The failure of any party to enforce any of the
provisions hereof shall not be construed to be a waiver of the right of such
party thereafter to enforce such provisions.
SECTION 10.12 CONSTRUCTION OF AGREEMENT. A reference to an Article,
Section or an Exhibit shall mean an Article of, a Section in, or Exhibit to,
this Agreement unless otherwise explicitly set forth. The titles and headings
herein are for reference purposes only and shall not in any manner limit the
construction of this Agreement which shall be considered as a whole. The words
"include," "includes" and "including" when used herein shall be deemed in each
case to be followed by the words "without limitation."
SECTION 10.13 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be an original as against any party whose
signature appears thereon and all of which together shall constitute one and the
same instrument. This Agreement shall become binding when one or more
counterparts hereof, individually or taken together, shall bear the signatures
of all of the parties reflected hereon as signatories.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
FRITZ COMPANIES, INC.
By /S/ LYNN C. FRITZ
------------------------------------
Name: Lynn C. Fritz
Title: President
FRITZ AIR FREIGHT
By /S/ LYNN C. FRITZ
------------------------------------
Name: Lynn C. Fritz
Title: President
INTERTRANS CORPORATION
By /S/ SAM N. WILSON
------------------------------------
Name: Sam N. Wilson
Title: Chief Executive Officer
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<PAGE> 150
EXHIBIT 1.01
ARTICLES OF MERGER
MERGING
FRITZ AIR FREIGHT
INTO
INTERTRANS CORPORATION
Pursuant to the provisions of the Texas Business Corporation Act, the
foreign corporation and the domestic corporation herein named do hereby adopt
the following Articles of Merger for the purpose of merging the foreign
corporation with and into the domestic corporation.
1. The names of the constituent corporations are Fritz Air Freight, which
is a corporation organized under the laws of the State of California, and
Intertrans Corporation, which is a corporation organized under the laws of the
State of Texas.
2. Intertrans Corporation shall be the surviving corporation under its
present name pursuant to the terms of the Texas Business Corporation Act.
3. A plan of merger (the "Plan") was approved and adopted by the
shareholders of each of the undersigned corporations in the manner prescribed by
the laws of their respective jurisdictions of incorporation. A copy of the Plan,
which sets forth, inter alia, the manner in which the exchange, classification
or cancellation of issued shares of the undersigned corporations shall be
effected, is attached hereto as Exhibit A.
4. As to each of the undersigned corporations, (a) the designation and the
number of shares of each class outstanding and (b) the number of votes to which
such shares are entitled, are as follows:
<TABLE>
<CAPTION>
DESIGNATION OF NUMBER OF NUMBER OF
CLASS SHARES VOTES
-------------- --------- ---------
<S> <C> <C> <C>
Intertrans Corporation........................ Common
Fritz Air Freight............................. Common
</TABLE>
5. As to Intertrans Corporation, the total number of shares of Common Stock
(and the total number of votes associated therewith) voted for and against the
Plan, respectively, and as to Fritz Air Freight, the total number of shares of
Common Stock (and the total number of votes associated therewith) voted for and
against the Plan, respectively, are as follows:
<TABLE>
<CAPTION>
DESIGNATION OF NUMBER OF NUMBER OF NUMBER OF
CLASS SHARES VOTES FOR VOTES AGAINST
-------------- --------- --------- -------------
<S> <C> <C> <C> <C>
Intertrans Corporation................... Common
Fritz Air Freight........................ Common
</TABLE>
Executed on , 1995
Intertrans Corporation
By:
----------------------------------
Name:
Title:
Fritz Air Freight
By:
----------------------------------
Name:
Title:
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<PAGE> 151
EXHIBIT A
PLAN OF MERGER
THIS PLAN OF MERGER is dated , 1995 by and between Intertrans
Corporation, a Texas corporation ("Intertrans"), and Fritz Air Freight, a
California corporation ("Merger Corporation").
RECITALS
WHEREAS, the shareholders of Intertrans (each individually a "Shareholder"
and collectively, the "Shareholders") own in the aggregate shares of
Common Stock, no par value (the "Intertrans Common Stock") of Intertrans,
constituting all of the outstanding capital stock of Intertrans;
WHEREAS, Intertrans is a corporation duly organized and existing under the
laws of the State of Texas;
WHEREAS, Merger Corporation is a corporation duly organized and existing
under the laws of the State of California, with authorized capital stock of
2,400 shares of common stock, $10.00 par value per share, all of which
immediately prior to the Effective Time, as defined in Section 2 hereof, will be
issued and outstanding and held by Fritz Companies, Inc., a Delaware corporation
("Fritz"); and
WHEREAS, Intertrans and Merger Corporation deem it advisable to merge
Merger Corporation with and into Intertrans pursuant to Section 368(a) of the
Internal Revenue Code of 1986, as amended, upon the terms and conditions
hereinafter set forth (the "Merger").
NOW THEREFORE, in consideration of the foregoing, Intertrans and Merger
Corporation hereby adopt this Plan of Merger:
1. THE MERGER. In accordance with the provisions of this Plan of Merger,
the Texas Business Corporation Act (the "TBCA") and the California General
Corporation Law (the "CGCL"), at the Effective Time, Merger Corporation shall be
merged with and into Intertrans, which shall be the surviving corporation
(hereinafter sometimes the "Surviving Corporation"), and the Surviving
Corporation shall thereupon (a) be a wholly owned subsidiary of Fritz, (b)
continue its corporate existence under the laws of the State of Texas, (c)
retain its present name, (d) succeed to all rights, assets, liabilities and
obligations of Merger Corporation in accordance with and as more particularly
set forth in this Plan of Merger and pursuant to the TBCA. At the Effective
Time, the separate existence of Merger Corporation shall cease.
2. ARTICLES OF MERGER; EFFECTIVE TIME. At the closing of the Merger, the
parties hereto shall cause the Merger to be consummated by the execution and
filing of Articles of Merger (the "Articles of Merger") with the Secretary of
State of the States of Texas and California, together with the appropriate fees
and franchise taxes, in accordance with the provisions of the TBCA and the CGCL.
The Merger shall become effective upon the issuance of a Certificate of Merger
by the Secretary of State of the State of Texas (the "Effective Time").
3. CAPITALIZATION. The number of authorized shares of the capital stock of
the Surviving Corporation shall be 25,000,000 shares, consisting of 23,000,000
shares of common stock, no par value, and 2,000,000 shares of preferred stock,
$10.00 par value per share.
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<PAGE> 152
4. ARTICLES OF INCORPORATION. At the Effective Time, the Articles of
Incorporation of Intertrans, as in effect immediately prior to the Effective
Time, shall be the Articles of Incorporation of the Surviving Corporation
amended as follows:
[Insert amendments to Articles of Incorporation]
5. BYLAWS. At the Effective Time, the Bylaws of Intertrans, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the Surviving
Corporation amended as follows:
[Insert amendments to Bylaws]
6. DIRECTORS AND OFFICERS. At the Effective Time (a) each of the officers
of Intertrans immediately prior to the Effective Time shall be an officer of the
Surviving Corporation, in the same capacity or capacities, to serve until his
successor shall have been duly appointed and qualified and (b) each director of
Intertrans shall cease to hold such position, and the directors of Merger
Corporation immediately prior to the Effective Time shall be the directors of
Surviving Corporation, each of whom shall hold such position until his successor
shall have been elected and qualified to serve, or otherwise as provided in the
Articles of Incorporation or Bylaws of the Surviving Corporation.
7. CAPITAL STOCK OF MERGER CORPORATION. Each share of common stock of
Merger Corporation validly issued and outstanding immediately prior to the
Effective Time shall, at the Effective Time and by virtue of the Merger
thereupon, be converted into and become one share of Intertrans Common Stock.
Each share of such Intertrans Common Stock issued pursuant to this Section 7
shall be validly issued, fully paid and nonassessable.
8. CAPITAL STOCK OF INTERTRANS. Each and every share of Intertrans Common
Stock issued and outstanding immediately prior to the Effective Time (except for
stock owned directly or indirectly by Intertrans, a subsidiary of Intertrans,
Fritz or a subsidiary of Fritz and except for shares held by Shareholders who
have validly exercised dissenters' rights under the TBCA) shall be converted as
of the Effective Time into the right to receive of a share of common
stock, par value $.01 per share of Fritz (the "Fritz Common Stock"). At the
Effective Time each outstanding option to purchase Intertrans Common Stock shall
pertain to and apply to Fritz Common Stock which a holder of the number of
underlying shares of Intertrans Common Stock would have been entitled pursuant
to the Merger.
9. SHAREHOLDER APPROVAL. This Plan of Merger shall be submitted to the
shareholders of Intertrans for their approval or rejection pursuant to the TBCA
and to the shareholder of Merger Corporation for their approval or rejection
pursuant to the CGCL. In the event that such shareholder approval is obtained by
both Intertrans and Merger Corporation, Intertrans and Merger Corporation hereby
agree that they will cause to be executed and filed and/or recorded any document
or documents prescribed by the laws of the States of Texas and California, and
that they will cause to be performed all necessary acts required by such states
and elsewhere to effectuate the Merger.
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<PAGE> 153
EXHIBIT 5.09
FORM OF AFFILIATES AGREEMENT
THIS AFFILIATES AGREEMENT (the "Agreement") is entered into as of this
day of , 1995 by and between FRITZ COMPANIES, INC., a Delaware
corporation ("Fritz"), and the undersigned shareholder ("Shareholder") of
INTERTRANS CORPORATION, a Texas corporation ("Intertrans").
This Agreement is entered into in connection with that certain Agreement
and Plan of Reorganization dated as of February 14, 1995 (the "Reorganization
Agreement") among Fritz, Intertrans, and Fritz Air Freight, a California
corporation and a wholly owned subsidiary of Fritz ("Merger Sub"). The
Reorganization Agreement provides for the merger (the "Merger") of Merger Sub
with and into Intertrans in a transaction in which issued and outstanding shares
of common stock, no par value, of Intertrans (the "Intertrans Stock") will be
converted into shares of common stock, $.01 par value per share, of Fritz (the
"Fritz Stock") on the terms and conditions set forth in the Reorganization
Agreement. Capitalized terms used herein and not defined herein shall have their
defined meanings as set forth in the Reorganization Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties and covenants set forth herein, the parties agree as
follows:
1. TAX AND ACCOUNTING TREATMENT. Shareholder understands and agrees that
it is intended that the Merger will be treated as a "reorganization" for federal
income tax purposes and as a "pooling of interests" in accordance with generally
accepted accounting principles and the applicable General Rules and Regulations
published by the Securities and Exchange Commission (the "SEC"). Shareholder
further understands and agrees that Shareholder may be deemed to be an
"Affiliate" of Intertrans (i) for application of the pooling of interests
requirements and (ii) within the meaning of Rule 145 ("Rule 145") promulgated
under the Securities Act of 1933, as amended (the "Securities Act"), although
nothing contained herein should be construed as an admission of either such
fact.
2. RELIANCE UPON REPRESENTATIONS, WARRANTIES AND COVENANTS. Shareholder
has been informed that the treatment of the Merger as a "pooling of interests"
for financial accounting purposes is dependent, in part, upon the accuracy of
Shareholder's representations and warranties set forth herein and Shareholder's
compliance with Shareholder's covenants set forth herein, and that a
reorganization for federal income tax purposes requires that a sufficient number
of former shareholders of Intertrans maintain a meaningful continuing equity
ownership interest in Fritz after the Merger. Shareholder understands that the
representations and warranties and covenants set forth herein will be relied
upon by Fritz, Intertrans, their respective counsel and accounting firms and
other shareholders of Intertrans.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SHAREHOLDER. Shareholder
represents, warrants and covenants as follows:
(a) Shareholder has full power and authority to execute this
Agreement, to make the representations, warranties and covenants herein
contained and to perform Shareholder's obligations hereunder.
(b) Appendix A attached hereto sets forth all shares of Intertrans
Stock owned by Shareholder, including all Intertrans Stock as to which
Shareholder has sole or shared voting or investment power and all rights
and options to acquire Intertrans Stock.
(c) Shareholder will not sell, transfer, exchange, pledge, or
otherwise dispose of, or make any offer or agreement relating to any of the
foregoing with respect to, any shares of Fritz Stock that Shareholder may
acquire in connection with the Merger or acquire upon exercise of any
option or right to acquire Fritz Stock, which option or right is acquired
in connection with the Merger, or any securities that may be paid as a
dividend or otherwise distributed thereon or with respect thereto or issued
or delivered in exchange or substitution therefor (all such shares and
other securities of Fritz being herein sometimes collectively referred to
as "Restricted Securities"), or any option, right or other interest with
respect to any Restricted Securities, unless (i) such transaction is
permitted pursuant to Rule 145(c) and 145(d) under the Securities Act (as
described in Section 5 below), (ii) counsel representing Shareholder shall
have
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advised Fritz in a written opinion letter satisfactory to Fritz and Fritz's
legal counsel, and upon which Fritz and its legal counsel may rely, that no
registration under the Securities Act would be required in connection with
the proposed sale, transfer or other disposition, (iii) a registration
statement under the Securities Act covering the Fritz Stock proposed to be
sold, transferred or otherwise disposed of, describing the manner and terms
of the proposed sale, transfer or other disposition, and containing a
current prospectus, shall have been filed with the SEC and made effective
under the Securities Act, or (iv) an authorized representative of the SEC
shall have rendered written advice to Shareholder (sought by Shareholder or
counsel to Shareholder, with a copy thereof and all other related
communications delivered to Fritz) to the effect that the SEC would take no
action, or that the staff of the SEC would not recommend that the SEC take
action, with respect to the proposed disposition if consummated.
(d) Notwithstanding any other provision of this Agreement to the
contrary, Shareholder will not sell, transfer, exchange, pledge or
otherwise dispose of, or in any other way reduce Shareholder's risk of
ownership or investment in, or make any offer or agreement relating to any
of the foregoing with respect to any Intertrans Stock or any rights,
options or warrants to purchase Intertrans Stock, or any Restricted
Securities or other securities of Fritz (i) during the 30-day period
immediately preceding the Effective Time of the Merger and (ii) until such
time after the Effective Time of the Merger as Fritz has publicly released
a report including the combined financial results of Fritz and Intertrans
for a period of at least 30 days of combined operations of Fritz and
Intertrans within the meaning of Accounting Series Release No. 130, as
amended, of the SEC. Fritz agrees to publish such financial results
expeditiously in a manner consistent with its prior practices; provided
that nothing contained herein shall obligate Fritz to publish its financial
results other than on a quarterly basis. Furthermore, Shareholder agrees
not to take any action, including causing any of Shareholder's Intertrans
Stock to become Dissenting Shares, as defined in the Reorganization
Agreement, that would preclude Fritz from accounting for the business
combination to be effected by the Merger as a "pooling of interests."
(e) Shareholder has, and as of the Effective Time of the Merger will
have, no present plan or intention (a "Plan") to sell, transfer, exchange,
pledge (other than in a pre-existing bona fide margin account) or otherwise
dispose of, including a distribution by a partnership to its partners, or a
corporation to its stockholders, or any other transaction which results in
a reduction in the risk of ownership (any of the foregoing, a "Sale") of
more than fifty percent (50%) of the shares of Fritz Stock that Shareholder
may acquire in connection with the Merger, or any securities that may be
paid as a dividend or otherwise distributed thereon or with respect thereto
or issued or delivered in exchange or substitution therefor. For purposes
of the preceding sentence, shares of Intertrans Stock (or the portion
thereof) (i) with respect to which dissenters' rights are exercised, (ii)
which are exchanged for cash in lieu of fractional shares of Fritz Stock,
or (iii) with respect to which a Sale (A) in a Related Transaction (as
defined below) or (B) will occur prior to the Merger, shall be considered
to be shares of Intertrans Stock that are exchanged for Fritz Stock in the
Merger and then disposed of pursuant to a Plan. Shareholder is not aware
of, or participating in, any Plan on the part of Intertrans shareholders to
engage in Sales of the shares of Fritz Stock to be issued in the Merger
such that the aggregate fair market value, as of the Effective Time of the
Merger, of the shares subject to such Sales would exceed fifty percent
(50%) of the aggregate fair market value of all shares of outstanding
Intertrans Stock immediately prior to the Merger. For purposes of the
preceding sentence, shares of Intertrans Stock (i) with respect to which
dissenters' rights are exercised, (ii) which are exchanged for cash in lieu
of fractional shares of Fritz Stock or (iii) with respect to which a
pre-Merger Sale occurs in a Related Transaction, shall be considered to be
shares of Intertrans Stock that are exchanged for Fritz Stock in the Merger
and then disposed of pursuant to a Plan. A Sale of Fritz Stock shall be
considered to have occurred pursuant to a Plan if, among other things, such
Sale occurs in a Related Transaction. For purposes of this Section 3(e), a
"Related Transaction" shall mean a transaction that is in contemplation of,
or related or pursuant to, the Merger or the Reorganization Agreement. If
any of Shareholder's representations in this Section 3(e) ceases to be true
at any time prior to the Effective Time of the Merger, Shareholder shall
deliver to each of Intertrans and Fritz, prior to the Effective Time of the
Merger, a written statement to that effect, signed by Shareholder.
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<PAGE> 155
4. RULE 144 AND 145. From and after the Effective Time of the Merger and
for so long as is necessary in order to permit Shareholder to sell the Fritz
Stock held by and pursuant to Rule 145 and, to the extent applicable, Rule 144
under the Securities Act, Fritz will use its reasonable best efforts to file on
a timely basis all reports required to be filed by it pursuant to Section 13 of
the Securities Exchange Act of 1934, as amended, referred to in paragraph (c)(1)
of Rule 144 under the Securities Act, in order to permit Shareholder to sell the
Fritz Stock held by it pursuant to the terms and conditions of Rule 145 and the
applicable provisions of Rule 144. Shareholder understands that, except as set
forth in the Reorganization Agreement, Fritz is under no obligation to register
the sale, transfer or other disposition of any Restricted Securities by or on
behalf of Shareholder or to take any other action necessary in order to make
compliance with an exemption from registration available.
5. LIMITED RESALES. Shareholder understands that, in addition to the
restrictions imposed under Section 3 of this Agreement, the provisions of Rule
145 limit Shareholder's public resales of Restricted Securities, in the manner
set forth in subsections (a), (b) and (c) below, until such time as Shareholder
has beneficially owned, within the meaning of Rule 144(d), the Restricted
Securities for a period of at least two years (or in some cases three years)
after the date of the Merger, and thereafter if and for so long as Shareholder
remains a Fritz affiliate:
(a) Unless and until the restriction "cut-off" provisions of Rule
145(d)(2) or Rule 145(d)(3) set forth below become available, public
resales of Restricted Securities may only be made by Shareholder in
compliance with the requirements of Rule 145(d)(1). Rule 145(d)(1) permits
such resales only (i) while Fritz meets the public information requirements
of Rule 144(c), (ii) in brokers' transactions or in transactions with a
market maker and (iii) where the aggregate number of Restricted Securities
sold at any time together with all sales of Fritz Stock sold for
Shareholder's account during the preceding three-month period does not
exceed the greater of (i) 1% of the Fritz Common Stock outstanding or (ii)
the average weekly volume of trading in Fritz Stock on all national
securities exchanges and/or reported through the automated quotation system
of a registered securities association during the four calendar weeks
preceding the date of receipt of the order to execute the sale.
(b) Shareholder may make unrestricted resales of Restricted Securities
pursuant to Rule 145(d)(2) if (i) Shareholder has beneficially owned
(within the meaning of Rule 144(d) under the Securities Act) the Restricted
Securities for at least two years after the Effective Time of the Merger,
(ii) Shareholder is not an affiliate of Fritz and (iii) Fritz meets the
public information requirements of Rule 144(c).
(c) Shareholder may make unrestricted resales of Restricted Securities
pursuant to Rule 145(d)(3) if Shareholder has beneficially owned (within
the meaning of Rule 144(d) under the Securities Act) the Restricted
Securities for at least three years and is not, and has not been for at
least three months, an affiliate of Fritz.
(d) Fritz acknowledges that the provisions of Section 3(c) of this
Agreement will be satisfied as to any sale by the undersigned of the
Restricted Securities pursuant to Rule 145(d) by delivery to Fritz of a
broker's letter and a letter from the undersigned with respect to that sale
stating that each of the above-described requirements of Rule 145 (d)(1)
has been met or is inapplicable by virtue of Rule 145(d)(2) or Rule
145(d)(3); provided, that Fritz has no reasonable basis to believe such
sales were not made in compliance with such provisions of Rule 145(d).
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6. NOTICES. All notices, requests, demands or other communications which
are required or may be given pursuant to the terms of this Agreement shall be in
writing and shall be deemed to have been duly given upon receipt, if delivered
by hand, by telecopy or telegram, or three days after deposit in the United
States mail, postage prepaid, addressed to a party as follows:
If to Fritz:
Fritz Companies, Inc.
706 Mission Street
Suite 1000
San Francisco, CA 94103
Telecopy: (415) 904-8024
Attention: Jan H. Raymond, Esq.
Senior Vice President and
General Counsel
With a copy to:
Brobeck, Phleger & Harrison
One Market Plaza
Spear Street Tower
San Francisco, CA 94105
Telecopy: (415) 442-1010
Attention: Ronald B. Moskovitz, Esq.
If to Shareholder:
At the address set forth beneath the Shareholder's signature below.
or to such other address as any party may designate for itself by notice given
as provided in this Agreement.
7. TERMINATION. This Agreement shall be terminated and shall be of no
further force and effect upon the termination of the Reorganization Agreement
pursuant to Article IX thereof.
8. BINDING AGREEMENT. This Agreement will inure to the benefit of and be
binding upon and enforceable against the parties and their successors and
assigns, including administrators, executors, representatives, heirs, legatees
and devisees of Shareholder and any pledgee holding Restricted Securities as
collateral.
9. WAIVER. No waiver by any party hereto of any condition or of any breach
of any provision of this Agreement shall be effective unless in writing and
signed by each party hereto.
10. GOVERNING LAW. This Agreement shall be governed by and construed,
interpreted and enforced in accordance with the laws of the State of Delaware
(irrespective of its choice of law provisions).
11. ATTORNEYS' FEES. In the event of any legal action or proceeding to
enforce or interpret the provisions hereof, the prevailing party shall be
entitled to reasonable attorneys' fees, whether or not the proceeding results in
a final judgment.
12. EFFECT OF HEADINGS. The section headings herein are for convenience
only and shall not affect the construction or interpretation of this Agreement.
13. THIRD PARTY RELIANCE. Counsel to and accountants for the parties shall
be entitled to rely upon the representations, warranties and covenants contained
in this Agreement.
14. COUNTERPARTS. This Agreement shall be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one instrument.
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<PAGE> 157
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
FRITZ COMPANIES, INC.
By
------------------------------------
Name:
Title:
SHAREHOLDER:
--------------------------------------
Name:
Address:
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APPENDIX A
INTERTRANS SECURITIES
<TABLE>
<CAPTION>
NUMBER OF SHARES
----------------
<S> <C>
Intertrans Common Stock......................................................
Options to Purchase Intertrans Common Stock..................................
</TABLE>
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<PAGE> 159
APPENDIX B
MORGAN STANLEY
MORGAN STANLEY & CO.
INCORPORATED
555 CALIFORNIA STREET
SAN FRANCISCO, CALIFORNIA
94104
(415) 576-2000
February 14, 1995
Board of Directors
Fritz Companies, Inc.
706 Mission Street
San Francisco, CA 94103
Members of the Board:
We understand that Intertrans Corporation ("Intertrans"), Fritz Companies, Inc.
("Fritz") and Fritz Air Freight, a wholly owned subsidiary of Fritz ("Merger
Sub") have entered into an Agreement and Plan of Reorganization, dated as the
date hereof (the "Merger Agreement"), which provides, among other things, for
the merger (the "Merger") of Merger Sub with and into Intertrans. Pursuant to
the Merger, Intertrans will become a wholly owned subsidiary of Fritz and each
outstanding share of common stock, no par value, of Intertrans (the "Intertrans
Common Stock"), other than shares held in treasury or held by Fritz or any
affiliate of Fritz or as to which dissenters' rights have been perfected, will
be converted into the right to receive a fraction of a share (the "Exchange
Ratio") of Fritz common stock, $0.01 par value per share (the "Fritz Common
Stock"). The Exchange Ratio shall be determined by dividing $18.00 by the
Average Fritz Trading Price (as defined in the Merger Agreement), but in no case
shall the Exchange Ratio be less than 0.380 or more than 0.390. The Merger
Agreement sets forth certain circumstances which may provide for an Exchange
Ratio greater than 0.390 or less than 0.380. The terms and conditions of the
Merger are more fully set forth in the Merger Agreement.
You have asked for our opinion as to whether the Exchange Ratio pursuant to the
Merger Agreement is fair from a financial point of view to Fritz.
For purposes of the opinion set forth herein, we have:
<TABLE>
<S> <C>
(i) analyzed certain publicly available financial statements and other
information of Intertrans;
(ii) analyzed certain internal financial statements and other financial and
operating data concerning Intertrans prepared by the management of
Intertrans;
(iii) analyzed certain financial projections prepared by the management of
Intertrans;
(iv) discussed the past and current operations and financial condition and the
prospects of Intertrans with senior executives of Intertrans;
(v) analyzed certain publicly available financial statements and other
information of Fritz;
(vi) analyzed certain internal financial statements and other financial and
operating data concerning Fritz prepared by the management of Fritz;
(vii) analyzed certain financial projections prepared by the management of Fritz;
(viii) discussed the past and current operations and financial condition and the
prospects of Fritz with senior executives of Fritz;
(ix) analyzed the pro forma impact of the Merger on Fritz's earnings per share and
consolidated capitalization;
</TABLE>
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<PAGE> 160
<TABLE>
<S> <C>
(x) reviewed the reported prices and trading activity for the Intertrans Common
Stock and the Fritz Common Stock;
(xi) compared the financial performance of Intertrans and the prices and trading
activity of the Intertrans Common Stock with that of certain other comparable
publicly-traded companies and their securities;
(xii) compared the financial performance of Fritz and the prices and trading
activity of the Fritz Common Stock with that of certain other comparable
publicly-traded companies and their securities;
(xiii) reviewed the financial terms, to the extent publicly available, of certain
comparable merger and acquisition transactions;
(xiv) participated in discussions and negotiations among representatives of
Intertrans and Fritz and their financial and legal advisors;
(xv) reviewed the Merger Agreement; and
(xvi) performed such other analyses as we have deemed appropriate.
</TABLE>
We have assumed and relied upon without independent verification the accuracy
and completeness of the information reviewed by us for the purposes of this
opinion. With respect to the financial projections, we have assumed that they
have been reasonably prepared on bases reflecting the best currently available
estimates and judgments of the future financial performance of Intertrans and
Fritz, respectively. We have not made any independent valuation or appraisal of
the assets or liabilities of Intertrans, 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 Fritz 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 Fritz 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 Fritz 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
Exchange Ratio pursuant to the Merger Agreement is fair from a financial point
of view to Fritz.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
By: /s/ GEORGE F. BOUTROS
-----------------------------------------
George F. Boutros
Managing Director
B-2
<PAGE> 161
APPENDIX C
SCOTT & STRINGFELLOW, INC.
Established 1893
Investment Bankers and Brokers
<TABLE>
<S> <C>
909 East Main Street Richmond, VA 23219
Member TEL (804) 643-1811
NYSE/SIPC FAX (804) 343-7184
</TABLE>
February 14, 1995
Board of Directors
Intertrans Corporation
125 East John Carpenter Freeway
Irving, Texas 75062
Gentlemen:
You have asked Scott & Stringfellow, Inc. ("S&S") to render our opinion
relating to the fairness, from a financial point of view, of the consideration
to be received by the shareholders of Intertrans Corporation ("Intertrans")
pursuant to an Agreement and Plan of Reorganization among Fritz Companies, Inc.
("Fritz"), Fritz Air Freight ("Merger Sub"), and Intertrans, dated February 14,
1995 and a related Plan of Merger (collectively, the "Merger Agreement"). The
Merger Agreement provides for the merger of Merger Sub with and into Intertrans
(the "Merger"). The Agreement further provides that each share of Intertrans
Common Stock which is issued and outstanding immediately prior to the Effective
Time (as defined in Section 1.01(b) of the Merger Agreement) shall be converted
into the number of shares of Fritz Common Stock determined in accordance with
the Exchange Ratio (as defined in Section 1.02(b) of the Merger Agreement).
Additionally, each Intertrans Option (as defined in Section 1.06(a) of the
Merger Agreement) shall be automatically converted at the Effective Time into a
Fritz Option (as defined in Section 1.06(a)) in accordance with the Exchange
Ratio.
As part of its investment banking business, S&S is regularly engaged in the
valuation of businesses and their securities in connection with mergers and
acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes. In the ordinary course of
our business as a broker-dealer, we may, from time to time, have a long or short
position in, and buy or sell, securities of Intertrans or Fritz for our own
account or for the accounts of our customers. S&S will also receive a fee from
Intertrans for rendering this opinion.
In developing our opinion, we have, among other things, reviewed and
analyzed: (i) the Merger Agreement dated February 14, 1995; (ii) Intertrans
annual reports to shareholders for the four years ended October 31, 1993 and
annual reports on Form 10-K and related audited financial statements for the
five years ended October 31, 1994; (iii) Fritz's annual reports to shareholders,
annual reports on Form 10-K and related audited financial statements for the two
years ended December 31, 1993 and Fritz's audited financial statements for the
two years ended December 31, 1991; (iv) Fritz's quarterly reports on Form 10-Q
and related unaudited financial statements for the periods ended March 31, 1994,
June 30, 1994, and September 30, 1994; (v) Fritz's draft unaudited financial
statements for the year ended December 31, 1994; (vi) certain other internal
information, primarily financial in nature, concerning the business and
operations of Intertrans furnished to us by Intertrans for purposes of our
analysis; (vii) certain other internal information, primarily financial in
nature, concerning the business and operations of Fritz furnished to us by Fritz
for purposes of our analysis; (viii) certain publicly available information
concerning the estimates of the future financial performance of Fritz prepared
by financial analysts unaffiliated with either Intertrans or Fritz (the
"Analysts' Estimates"); (ix) certain publicly available information regarding
the trading market for the common stocks of Intertrans and Fritz and the price
ranges within which the respective stocks have traded;
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(x) certain publicly available information with respect to certain other
companies that we believe to be comparable to Intertrans or Fritz and the
trading markets for certain of such other companies' securities; and (xi)
certain publicly available and other information concerning the nature and terms
of certain other transactions that we consider relevant to our inquiry. We have
also met with certain officers and employees of Intertrans and Fritz to discuss
the foregoing as well as other matters we believe relevant to our inquiry.
Finally, we have conducted such other studies, analyses and investigations and
considered such other information as we deemed appropriate.
In conducting our review and arriving at our opinion, we have relied upon
and assumed the accuracy and completeness of the information furnished to us by
and on behalf of Intertrans and Fritz. We have not attempted independently to
verify such information, nor have we made any independent appraisal of the
assets of Intertrans or Fritz. We have taken into account our assessment of
general economic, financial market and industry conditions as they exist and can
be evaluated at the date hereof, as well as our experience in business valuation
in general. In addition, although we have discussed the prospects of Intertrans
and Fritz with certain representatives of their respective managements, we have
been provided with only limited financial projections and other similar analyses
prepared by Fritz's management with respect to Fritz. Accordingly, in rendering
our opinion, with your consent, we also have relied upon the Analysts' Estimates
in lieu of such financial projections or other similar analyses with respect to
Fritz.
Our opinion is necessarily based upon market, economic and other conditions
as they exist and can be evaluated on the date hereof and the information made
available to us through the date hereof. Our opinion is directed only to the
fairness, from a financial point of view, of the Exchange Ratio to the holders
of Intertrans Common Stock and does not constitute a recommendation to any
shareholder of Intertrans as to how such shareholder should vote with respect to
the Merger. Our opinion does not address the relative merits of the Merger as
compared to any alternative business strategies that might exist for Intertrans,
nor does it address the effect of any other business combination in which
Intertrans might engage.
It is understood that this opinion may be included in its entirety in the
Joint Proxy Statement (as defined in Section 3.09 of the Agreement). This
opinion may not, however, be summarized, excerpted from or otherwise publicly
referred to without our prior written consent.
On the basis of our analysis and review and in reliance on the accuracy and
completeness of the information furnished to us and subject to the conditions
noted above, it is our opinion that, as of the date hereof, the Exchange Ratio
is fair from a financial point of view to the holders of Intertrans Common
Stock.
Very truly yours,
/s/ SCOTT & STRINGFELLOW, INC.
--------------------------------------
SCOTT & STRINGFELLOW, INC.
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APPENDIX D
FRITZ COMPANIES, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 23, 1995
The undersigned stockholder of Fritz Companies, Inc., a Delaware corporation
("Fritz"), hereby constitutes and appoints Lynn C. Fritz, Dennis L. Pelino and
Ronald A. Marcillac, and each of them, the attorneys and proxies of the
undersigned, each with the power of substitution, to attend and act for the
undersigned at the Annual Meeting of Stockholders of Fritz to be held on at
[Bank of America NT & SA, 555 California Street], San Francisco, California, on
May 23, 1995 at a.m. local time, and at any adjournments or postponements
thereof, and in connection therewith to vote and represent all of the shares of
Common Stock of Fritz held of record by the undersigned on April 10, 1995, as
follows on the reverse side of this proxy.
Said attorneys and proxies, and each of them, shall have all the powers
which the undersigned would have if acting in person. The undersigned hereby
revokes any other proxy to vote at such meeting and hereby ratifies and confirms
all that said attorneys and proxies, and each of them, may lawfully do by virtue
hereof. Said proxies, without hereby limiting their general authority, are
specifically authorized to vote in accordance with their best judgment with
respect to all matters incident to the conduct of the meeting and all matters
presented at the meeting but which are not known to the Board of Directors at
the time of the solicitation of this proxy.
(Continued and to be signed on the reverse side)
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PLEASE MARK YOUR CHOICE
LIKE THIS /X/ IN BLUE OR
BLACK INK
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF FRITZ
<TABLE>
<S> <C> <C>
- ---------------------------------- ----------------------------------
ACCOUNT NUMBER COMMON
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL NOS. 1 AND 2
1. A proposal (the "Fritz Share Issuance Proposal") to issue shares of common
stock, par value $.01 per share, of Fritz ("Fritz Common Stock") in
connection with the merger (the "Merger") of Fritz Air Freight, a wholly
owned subsidiary of Fritz ("Merger Sub") with and into Intertrans
Corporation, a Texas corporation ("Intertrans"), whereby each share of
common stock, no par value, of Intertrans ("Intertrans Common Stock")
outstanding immediately prior to the consummation of the Merger will be
converted into the right to receive between 0.380 and 0.390 of a share of
Fritz Common Stock, based upon the arithmetic mean (the "Average Fritz
Trading Price") of the closing sales prices of Fritz Common Stock on the
Nasdaq National Market for each of the 20 trading days ending on the fourth
trading day immediately preceding the scheduled date of the Annual Meeting.
The Agreement and Plan of Reorganization dated as of February 14, 1995,
among Fritz, Merger Sub and Intertrans (the "Plan of Reorganization") sets
forth certain circumstances in which the Merger may be terminated by
Intertrans if the Average Fritz Trading Price is less than $41.00 per share
and Fritz does not elect to adjust the Merger exchange ratio to a number
greater than 0.390. Similarly, the Plan of Reorganization provides that the
Merger may be terminated by Fritz if the Average Fritz Trading Price exceeds
$55.00 per share and Intertrans does not elect to adjust the Merger exchange
ratio to a number less than 0.380. In addition, all outstanding options to
purchase Intertrans Common Stock will be assumed by Fritz and converted
into options to purchase Fritz Common Stock; and
/ / FOR / / AGAINST / / ABSTAIN
2. Election of five directors to the Board of Directors.
<TABLE>
<S> <C>
/ / FOR all nominees listed below (Except as marked / / WITHHOLD AUTHORITY to vote for all nominees
to the contrary below) listed below
</TABLE>
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE STRIKE
A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW:
Lynn C. Fritz; Dennis L. Pelino; Ronald A. Marcillac; James Gilleran;
Preston Martin
Each of the above-named proxies present at said meeting, either in person
or by substitute, shall have and exercise all the powers of said proxies
hereunder. This proxy will be voted in accordance with the choices specified
by the undersigned on this proxy. In their discretion, each of the above-named
proxies is authorized to vote upon such other business incident to the conduct
of the Annual Meeting as may properly come before the meeting or any
postponements or adjournments thereof. IF NO INSTRUCTIONS TO THE CONTRARY ARE
INDICATED HEREON, THIS PROXY WILL BE TREATED AS A GRANT OF AUTHORITY TO VOTE
FOR PROPOSAL NOS. 1 AND 2 AND ON ANY OTHER MATTERS TO BE VOTED UPON.
The undersigned acknowledges receipt of a copy of the Notice of Annual
Meeting of Stockholders and Joint Proxy Statement/Prospectus relating to the
meeting.
IMPORTANT: In signing this proxy please sign exactly as your name(s) is
(are) shown on the share certificate to which the proxy applies. When signing
as an attorney, executor, administrator, trustee or guardian, please give your
full title as such. If a corporation, please sign in full corporate name by
President or other authorized officer. If a partnership, please sign in
partnership name by authorized person. EACH JOINT TENANT MUST SIGN.
--------------------------------------
Signature
--------------------------------------
(Additional signature if held jointly)
DATED: -------------------------, 1995
PLEASE SIGN, DATE, AND RETURN YOUR PROXY PROMPTLY IN THE ENVELOPE PROVIDED,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
D-2
<PAGE> 165
APPENDIX E
INTERTRANS CORPORATION
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
MAY 23, 1995
The undersigned shareholder of Intertrans Corporation, a Texas corporation
("Intertrans"), hereby constitutes and appoints Sam N. Wilson, Carsten S.
Andersen and Brett C. Campbell, and each of them, the attorneys and proxies of
the undersigned, each with the power of substitution, to attend and act for the
undersigned at the Annual Meeting of Shareholders of Intertrans to be held at
[the principal executive offices of Intertrans located at 125 E. John Carpenter
Freeway, Suite 900, Irving, Texas], on May 23, 1995 at a.m. local time, and
at any adjournments or postponements thereof, and in connection therewith to
vote and represent all of the shares of Common Stock of Intertrans held of
record by the undersigned on April 4, 1995, as follows on the reverse side of
this proxy.
Said attorneys and proxies, and each of them, shall have all the powers
which the undersigned would have if acting in person. The undersigned hereby
revokes any other proxy to vote at such meeting and hereby ratifies and confirms
all that said attorneys and proxies, and each of them, may lawfully do by virtue
hereof. Said proxies, without hereby limiting their general authority, are
specifically authorized to vote in accordance with their best judgment with
respect to all matters incident to the conduct of the meeting and all matters
presented at the meeting but which are not known to the Board of Directors at
the time of the solicitation of this proxy.
(Continued and to be signed on the reverse side)
E-1
<PAGE> 166
PLEASE MARK YOUR CHOICE
LIKE THIS /X/ IN BLUE OR
BLACK INK
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF INTERTRANS
<TABLE>
<S> <C> <C>
- ---------------------------------- ----------------------------------
ACCOUNT NUMBER COMMON
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL NOS. 1 AND 2
1. A proposal (the "Intertrans Merger Proposal") to approve and adopt an
Agreement and Plan of Reorganization dated as of February 14, 1995 (the "Plan
of Reorganization"), among Intertrans, Fritz Companies, Inc., a Delaware
corporation ("Fritz"), and Fritz Air Freight, a California corporation and a
wholly owned subsidiary of Fritz ("Merger Sub"), and related Articles of
Merger to be entered into between Intertrans and Merger Sub (the "Merger"),
pursuant to which, among other things, (i) Merger Sub will be merged with and
into Intertrans, following which Intertrans will become a wholly owned
subsidiary of Fritz, (ii) each share of common stock, no par value, of
Intertrans ("Intertrans Common Stock") outstanding immediately prior to the
consummation of the Merger will be converted into the right to receive
between 0.380 and 0.390 of a share of common stock, par value $.01 per share,
of Fritz ("Fritz Common Stock"), based upon the arithmetic mean (the "Average
Fritz Trading Price") of the closing sales prices of Fritz Common Stock on
the Nasdaq National Market for each of the 20 trading days ending on the
fourth trading day immediately preceding the scheduled date of the Annual
Meeting and (iii) all outstanding options to purchase Intertrans Common
Stock, together with the underlying Intertrans Stock Option Plans, will be
assumed by Fritz and converted into options to purchase Fritz Common Stock.
The Plan of Reorganization also sets forth certain circumstances in which the
Merger may be terminated by Intertrans if the Average Fritz Trading Price is
less than $41.00 per share and Fritz does not elect to adjust the Merger
exchange ratio to a number greater than 0.390. Similarly, the Plan of
Reorganization provides that the Merger may be terminated by Fritz if the
Average Fritz Trading Price exceeds $55.00 per share and Intertrans does not
elect to adjust the Merger exchange ratio to a number less than 0.380; all as
more fully described in the accompanying Joint Proxy Statement/Prospectus;
and
/ / FOR / / AGAINST / / ABSTAIN
2. Election of five directors to the Board of Directors to serve until the
earlier of the next annual meeting of Intertrans shareholders or consummation
of the Merger.
<TABLE>
<S> <C>
/ / FOR all nominees listed below (Except as marked / / WITHHOLD AUTHORITY to vote for all nominees
to the contrary below) listed below
</TABLE>
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE STRIKE
A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW:
Sam N. Wilson; Carsten S. Andersen; W. Ted Minick; Sheldon Frankel;
Cesareo Llano
Each of the above-named proxies present at said meeting, either in person or
by substitute, shall have and exercise all the powers of said proxies hereunder.
This proxy will be voted in accordance with the choices specified by the
undersigned on this proxy. In their discretion, each of the above-named proxies
is authorized to vote upon such other business incident to the conduct of the
Annual Meeting as may properly come before the meeting or any postponements or
adjournments thereof. IF NO INSTRUCTIONS TO THE CONTRARY ARE INDICATED HEREON,
THIS PROXY WILL BE TREATED AS A GRANT OF AUTHORITY TO VOTE FOR PROPOSAL NOS. 1
AND 2 AND ON ANY OTHER MATTERS TO BE VOTED UPON.
The undersigned acknowledges receipt of a copy of the Notice of Annual
Meeting of Shareholders and Joint Proxy Statement/Prospectus relating to the
meeting.
IMPORTANT: In signing this proxy please sign exactly as your name(s) is
(are) shown on the share certificate to which the proxy applies. When signing as
an attorney, executor, administrator, trustee or guardian, please give your full
title as such. If a corporation, please sign in full corporate name by President
or other authorized officer. If a partnership, please sign in partnership name
by authorized person. EACH JOINT TENANT MUST SIGN.
--------------------------------------
Signature
--------------------------------------
(Additional signature if held jointly)
DATED: -------------------------, 1995
PLEASE SIGN, DATE, AND RETURN YOUR PROXY PROMPTLY IN THE ENVELOPE PROVIDED,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
E-2
<PAGE> 167
APPENDIX F
ARTICLES 5.11-5.13 OF THE TEXAS BUSINESS CORPORATION ACT
ART 5.11. RIGHTS OF DISSENTING SHAREHOLDERS IN THE EVENT OF CERTAIN CORPORATE
ACTIONS
A. Any shareholder of a domestic corporation shall have the right to
dissent from any of the following corporate actions:
(1) Any plan of merger to which the corporation is a party if
shareholder approval is required by Article 5.03 or 5.16 of this Act and
the shareholder holds shares of a class or series that was entitled to vote
thereon as a class or otherwise;
(2) Any sale, lease, exchange or other disposition (not including any
pledge, mortgage, deed of trust or trust indenture unless otherwise
provided in the articles of incorporation) of all, or substantially all,
the property and assets, with or without good will, of a corporation
requiring the special authorization of the shareholders as provided by this
Act;
(3) Any plan of exchange pursuant to Article 5.02 of this Act in which
the shares of the corporation of the class or series held by the
shareholder are to be acquired.
B. Notwithstanding the provisions of Section A of this Article, a
shareholder shall not have the right to dissent from any plan of merger in which
there is a single surviving or new domestic or foreign corporation, or from any
plan of exchange, if (1) the shares held by the shareholder are part of a class
shares of which are listed on a national securities exchange, or are held of
record by not less than 2,000 holders, on the record date fixed to determine the
shareholders entitled to vote on the plan of merger or the plan of exchange, and
(2) the shareholder is not required by the terms of the plan of merger or the
plan of exchange to accept for his shares any consideration other than (a)
shares of a corporation that, immediately after the effective time of the merger
or exchange, will be part of a class or series of shares of which are (i)
listed, or authorized for listing upon official notice of issuance, on a
national securities exchange, or (ii) held of record by not less than 2,000
holders, and (b) cash in lieu of fractional shares otherwise entitled to be
received.
ART. 5.12. PROCEDURE FOR DISSENT BY SHAREHOLDERS AS TO SAID CORPORATE ACTIONS
A. Any shareholder of any domestic corporation who has the right to dissent
from any of the corporate actions referred to in Article 5.11 of this Act may
exercise that right to dissent only by complying with the following procedures:
(1)(a) With respect to proposed corporate action that is submitted to
a vote of shareholders at a meeting, the shareholder shall file with the
corporation, prior to the meeting, a written objection to the action,
setting out that the shareholder's right to dissent will be exercised if
the action is effective and giving the shareholder's address, to which
notice thereof shall be delivered or mailed in that event. If the action is
effected and the shareholder shall not have voted in favor of the action,
the corporation, in the case of action other than a merger, or the
surviving or new corporation (foreign or domestic) or other entity that is
liable to discharge the shareholder's right of dissent, in the case of a
merger, shall, within ten (10) days after the action is effected, deliver
or mail to the shareholder written notice that the action has been
effected, and the shareholder may, within ten (10) days from the delivery
or mailing of the notice, make written demand on the existing, surviving,
or new corporation (foreign or domestic) or other entity, as the case may
be, for payment of the fair value of the shareholder's shares. The fair
value of the shares shall be the value thereof as of the day immediately
preceding the meeting, excluding any appreciation or depreciation in
anticipation of the proposed action. The demand shall state the number and
class of the shares owned by the shareholder and the fair value of the
shares as estimated by the shareholder. Any shareholder failing to make
demand within the ten (10) day period shall be bound by the action.
(b) With respect to proposed corporate action that is approved
pursuant to Section A of Article 9.10 of this Act, the corporation, in the
case of action other than a merger, and the surviving or
F-1
<PAGE> 168
new corporation (foreign or domestic) or other entity that is liable to
discharge the shareholder's right of dissent, in the case of a merger,
shall, within ten (10) days after the date the action is effected, mail to
each shareholder of record as of the effective date of the action notice of
the fact and date of the action and that the shareholder may exercise the
shareholder's right to dissent from the action. The notice shall be
accompanied by a copy of this Article and any articles or documents filed
by the corporation with the Secretary of State to effect the action. If the
shareholder shall not have consented to the taking of the action, the
shareholder may, within twenty (20) days after the mailing of the notice,
make written demand on the existing, surviving, or new corporation (foreign
or domestic) or other entity, as the case may be, for payment of the fair
value of the shareholder's shares. The fair value of the shares shall be
the value thereof as of the date the written consent authorizing the action
was delivered to the corporation pursuant to Section A of Article 9.10 of
this Act, excluding any appreciation or depreciation in anticipation of the
action. The demand shall state the number and class of shares owned by the
dissenting shareholder and the fair value of the shares as estimated by the
shareholder. Any shareholder failing to make demand within the twenty (20)
day period shall be bound by the action.
(2) Within twenty (20) days after receipt by the existing, surviving,
or new corporation (foreign or domestic) or other entity, as the case may
be, of a demand for payment made by a dissenting shareholder in accordance
with Subsection (1) of this Section, the corporation (foreign or domestic)
or other entity shall deliver or mail to the shareholder a written notice
that shall either set out that the corporation (foreign or domestic) or
other entity accepts the amount claimed in the demand and agrees to pay
that amount within ninety (90) days after the date on which the action was
effected, and, in the case of shares represented by certificates, upon the
surrender of the certificates duly endorsed, or shall contain an estimate
by the corporation (foreign or domestic) or other entity of the fair value
of the shares, together with an offer to pay the amount of that estimate
within ninety (90) days after the date on which the action was effected,
upon receipt of notice within sixty (60) days after that date from the
shareholder that the shareholder agrees to accept that amount and, in the
case of shares represented by certificates, upon the surrender of the
certificates duly endorsed.
(3) If, within sixty (60) days after the date on which the corporate
action was effected, the value of the shares is agreed upon between the
shareholder and the existing, surviving, or new corporation (foreign or
domestic) or other entity, as the case may be, payment for the shares shall
be made within ninety (90) days after the date on which the action was
effected and, in the case of shares represented by certificates, upon
surrender of the certificates duly endorsed. Upon payment of the agreed
value, the shareholder shall cease to have any interest in the shares or in
the corporation.
B. If, within the period of sixty (60) days after the date on which the
corporate action was effected, the shareholder and the existing, surviving, or
new corporation (foreign or domestic) or other entity, as the case may be, do
not so agree, then the shareholder or the corporation (foreign or domestic) or
other entity may, within sixty (60) days after the expiration of the sixty (60)
day period, file a petition in any court of competent jurisdiction in the county
in which the principal office of the domestic corporation is located, asking for
a finding and determination of the fair value of the shareholder's shares. Upon
the filing of any such petition by the shareholder, service of a copy thereof
shall be made upon the corporation (foreign or domestic) or other entity, which
shall, within ten (10) days after service, file in the office of the clerk of
the court in which the petition was filed a list containing the names and
addresses of all shareholders of the domestic corporation who have demanded
payment for their shares and with whom agreements as to the value of their
shares have not been reached by the corporation (foreign or domestic) or other
entity. If the petition shall be filed by the corporation (foreign or domestic)
or other entity, the petition shall be accompanied by such a list. The clerk of
the court shall give notice of the time and place fixed for the hearing of the
petition by registered mail to the corporation (foreign or domestic) or other
entity and to the shareholders named on the list at the addresses therein
stated. The forms of the notices by mail shall be approved by the court. All
shareholders thus notified and the corporation (foreign or domestic) or other
entity shall thereafter be bound by the final judgment of the court.
C. After the hearing of the petition, the court shall determine the
shareholders who have complied with the provisions of this Article and have
become entitled to the valuation of and payment for their shares, and
F-2
<PAGE> 169
shall appoint one or more qualified appraisers to determine that value. The
appraisers shall have power to examine any of the books and records of the
corporation the shares of which they are charged with the duty of valuing, and
they shall make a determination of the fair value of the shares upon such
investigation as to them may seem proper. The appraisers shall also afford a
reasonable opportunity to the parties interested to submit to them pertinent
evidence as to the value of the shares. The appraisers shall also have such
power and authority as may be conferred on Masters in Chancery by the Rules of
Civil Procedure or by the order of their appointment.
D. The appraisers shall determine the fair value of the shares of the
shareholders adjudged by the court to be entitled to payment for their shares
and shall file their report of that value in the office of the clerk of the
court. Notice of the filing of the report shall be given by the clerk to the
parties in interest. The report shall be subject to exceptions to be heard
before the court both upon the law and the facts. The court shall by its
judgment determine the fair value of the shares of the shareholders entitled to
payment for their shares and shall direct the payment of that value by the
existing, surviving, or new corporation (foreign or domestic) or other entity,
together with interest thereon, beginning 91 days after the date on which the
applicable corporate action from which the shareholder elected to dissent was
effected to the date of such judgment, to the shareholders entitled to payment.
The judgment shall be payable to the holders of uncertificated shares
immediately but to the holders of shares represented by certificates only upon,
and simultaneously with, the surrender to the existing, surviving, or new
corporation (foreign or domestic) or other entity, as the case may be, of duly
endorsed certificates for those shares. Upon payment of the judgment, the
dissenting shareholders shall cease to have any interest in those shares or in
the corporation. The court shall allow the appraisers a reasonable fee as court
costs, and all court costs shall be allotted between the parties in the manner
that the court determines to be fair and equitable.
E. Shares acquired by the existing, surviving, or new corporation (foreign
or domestic) or other entity, as the case may be, pursuant to the payment of the
agreed value of the shares or pursuant to payment of the judgment entered for
the value of the shares, as in this Article provided, shall, in the case of a
merger, be treated as provided in the plan of merger and, in all other cases,
may be held and disposed of by the corporation as in the case of other treasury
shares.
F. The provisions of this Article shall not apply to a merger if, on the
date of the filing of the articles of merger, the surviving corporation is the
owner of all the outstanding shares of the other corporations, domestic or
foreign, that are parties to the merger.
G. In the absence of fraud in the transaction, the remedy provided by this
Article to a shareholder objecting to any corporate action referred to in
Article 5.11 of this Act is the exclusive remedy for the recovery of the value
of his shares or money damages to the shareholder with respect to the action. If
the existing, surviving, or new corporation (foreign or domestic) or other
entity, as the case may be, complies with the requirements of this Article, any
shareholder who fails to comply with the requirements of this Article shall not
be entitled to bring suit for the recovery of the value of his shares or money
damages to the shareholder with respect to the action.
ART. 5.13. PROVISIONS AFFECTING REMEDIES OF DISSENTING SHAREHOLDERS
A. Any shareholder who has demanded payment for his shares in accordance
with either Article 5.12 or 5.16 of this Act shall not thereafter be entitled to
vote or exercise any other rights of a shareholder except the right to receive
payment for his shares pursuant to the provisions of those articles and the
right to maintain an appropriate action to obtain relief on the ground that the
corporate action would be or was fraudulent, and the respective shares for which
payment has been demanded shall not thereafter be considered outstanding for the
purposes of any subsequent vote of shareholders.
B. Upon receiving a demand for payment from any dissenting shareholder, the
corporation shall make an appropriate notation thereof in its shareholder
records. Within twenty (20) days after demanding payment for his shares in
accordance with either Article 5.12 or 5.16 of this Act, each holder of
certificates representing shares so demanding payment shall submit such
certificates to the corporation for notation thereon that such demand has been
made. The failure of holders of certificated shares to do so shall, at the
option of the
F-3
<PAGE> 170
corporation, terminate such shareholder's rights under Articles 5.12 and 5.16 of
this Act unless a court of competent jurisdiction for good and sufficient cause
shown shall otherwise direct. If uncertificated shares for which payment has
been demanded or shares represented by a certificate on which notation has been
so made shall be transferred, any new certificate issued therefor shall bear
similar notation together with the name of the original dissenting holder of
such shares and a transferee of such shares shall acquire by such transfer no
rights in the corporation other than those which the original dissenting
shareholder had after making demand for payment of the fair value thereof.
C. Any shareholder who has demanded payment for his shares in accordance
with either Article 5.12 or 5.16 of this Act may withdraw such demand at any
time before payment for his shares or before any petition has been filed
pursuant to Article 5.12 or 5.16 of this Act asking for a finding and
determination of the fair value of such shares, but no such demand may be
withdrawn after such payment has been made or, unless the corporation shall
consent thereto, after any such petition has been filed. If, however, such
demand shall be withdrawn as hereinbefore provided, or if pursuant to Section B
of this Article the corporation shall terminate the shareholder's rights under
Article 5.12 or 5.16 of this Act, as the case may be, or if no petition asking
for a finding and determination of fair value of such shares by a court shall
have been filed within the time provided in Article 5.12 or 5.16 of this Act, as
the case may be, or if after the hearing of a petition filed pursuant to Article
5.12 or 5.16, the court shall determine that such shareholder is not entitled to
the relief provided by those articles, then, in any such case, such shareholder
and all persons claiming under him shall be conclusively presumed to have
approved and ratified the corporate action from which he dissented and shall be
bound thereby, the right of such shareholder to be paid the fair value of his
shares shall cease, and his status as a shareholder shall be restored without
prejudice to any corporate proceedings which may have been taken during the
interim, and such shareholder shall be entitled to receive any dividends or
other distributions made to shareholders in the interim.
F-4
<PAGE> 171
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of Delaware (the
"Delaware Law") empowers a Delaware corporation to indemnify any persons who
are, or are threatened to be made, parties to any threatened, pending or
completed legal action, suit or proceedings, whether civil, criminal,
administrative or investigative (other than action by or in the right of such
corporation), by reason of the fact that such person was an officer or director
of such corporation, or is or was serving at the request of such corporation as
a director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided that such officer or
director acted in good faith and in a manner he reasonably believed to be in or
not opposed to the corporation's best interests, and, for criminal proceedings,
had no reasonable cause to believe his conduct was illegal. A Delaware
corporation may indemnify officers and directors in an action by or in the right
of the corporation under the same conditions, except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to be
liable to the corporation in the performance of his duty. Where an officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him against the expenses which
such officer or director actually and reasonably incurred.
In accordance with the Delaware Law, the Restated Certificate of
Incorporation, as amended, of Fritz contains a provision to limit the personal
liability of the directors of the Registrant for violations of their fiduciary
duty. This provision eliminates each director's liability to the Registrant or
its stockholders for monetary damages except (i) for any breach of the
director's duty of loyalty to the Registrant or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware Law providing
for liability of directors for unlawful payment of dividends or unlawful stock
purchases or redemptions, or (iv) for any transaction from which a director
derived an improper personal benefit. The effect of this provision is to
eliminate the personal liability of directors for monetary damages for actions
involving a breach of their fiduciary duty of care, including any such actions
involving gross negligence.
Article FIFTH of the Restated Certificate of Incorporation, as amended, of
the Registrant and Article V of the Restated Bylaws of the Registrant provide
for indemnification of the officers and directors of the Registrant to the
fullest extent permitted by applicable law.
The Registrant has entered into indemnification agreements with each
director and executive officer which provide indemnification to such directors
and executive officers under certain circumstances for acts or omissions which
may not be covered by directors' and officers' liability insurance.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- ------------------------------------------------------------------------
<S> <C>
2.1 Agreement and Plan of Reorganization dated as of February 14, 1995 among
the Registrant, Fritz Air Freight and Intertrans Corporation
("Intertrans") (included as Appendix A to the Joint Proxy
Statement/Prospectus included in Part I of this Registration Statement).
4.1 Specimen certificate of the Registrant's Common Stock. (Incorporated by
reference to Exhibit 4.1 to Registration Statement No. 33-50808, filed
on August 17, 1992.)
+5.1 Opinion of Brobeck, Phleger & Harrison, counsel to the Registrant.
+8.1 Form of Tax Opinion of Brobeck, Phleger & Harrison, counsel to the
Registrant.
+8.2 Form of Tax Opinion of Winstead, Sechrest & Minick, P.C.
</TABLE>
II-1
<PAGE> 172
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- ------------------------------------------------------------------------
<S> <C>
+23.1 Consent of Brobeck, Phleger & Harrison (included in Exhibit 5.1).
+23.2 Consent of Winstead, Sechrest & Minick, P.C. (included in Exhibit 8.2).
*23.3 Consents of KPMG Peat Marwick LLP.
*23.4 Consent of Deloitte & Touche LLP.
*23.5 Consent of Carsten S. Andersen.
*23.6 Consent of Morgan Stanley & Co. Incorporated.
*23.7 Consent of Scott & Stringfellow, Inc.
24.1 Power of Attorney (included on page II-4).
</TABLE>
- ---------------
* Filed herewith
+ To be filed by amendment
(b) Financial Statement Schedules
None
ITEM 22. UNDERTAKINGS
The Registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, as amended (the "Securities Act"),
each filing of the Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is incorporated by reference
in the Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this Registration Statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
The Registrant undertakes that every prospectus (i) that is filed pursuant
to the immediately preceding paragraph, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Act and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to the Registration Statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-2
<PAGE> 173
The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this Form S-4, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through the
date of responding to the request.
The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-3
<PAGE> 174
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of San Francisco, State of
California, on March 6, 1995.
FRITZ COMPANIES, INC.
By: /s/ LYNN C. FRITZ
----------------------------------
Lynn C. Fritz, Chairman of the
Board, President and
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints, jointly and severally, Lynn C. Fritz, Dennis L.
Pelino and John H. Johung, and each one of them, his attorneys-in-fact, each
with the power of substitution, for him in any and all capacities, to sign this
Registration Statement and any and all amendments hereto (including
post-effective amendments), and to file the same, with exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that each of said
attorneys-in-fact, or his substitute or substitutes, may do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ----------------
<S> <C> <C>
/s/ LYNN C. FRITZ President, Chairman of the March 6, 1995
- --------------------------------------------- Board and Chief Executive
Lynn C. Fritz Officer (Principal
Executive Officer and
Director)
/s/ JOHN H. JOHUNG Senior Vice President and March 6, 1995
- --------------------------------------------- Chief Financial Officer
John H. Johung (Principal Financial
Officer)
/s/ STEPHEN MATTESSICH Vice President and Corporate March 6, 1995
- --------------------------------------------- Controller (Principal
Stephen Mattessich Accounting Officer)
/s/ DENNIS L. PELINO Chief Operating Officer, March 6, 1995
- --------------------------------------------- Senior Vice President and
Dennis L. Pelino Director
/s/ RONALD A. MARCILLAC Senior Vice President and March 6, 1995
- --------------------------------------------- Director
Ronald A. Marcillac
/s/ JAMES GILLERAN Director March 6, 1995
- ---------------------------------------------
James Gilleran
/s/ PRESTON MARTIN Director March 6, 1995
- ---------------------------------------------
Preston Martin
</TABLE>
II-4
<PAGE> 175
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- --------------------------------------------------------------------------------
<S> <C>
2.1 Agreement and Plan of Reorganization dated as of February 14, 1995 among the
Registrant, Fritz Air Freight and Intertrans Corporation ("Intertrans")
(included as Appendix A to the Joint Proxy Statement/Prospectus included in Part
I of this Registration Statement).
4.1 Specimen certificate of the Registrant's Common Stock. (Incorporated by
reference to Exhibit 4.1 to Registration Statement No. 33-50808, filed on August
17, 1992).
+5.1 Opinion of Brobeck, Phleger & Harrison, counsel to the Registrant.
+8.1 Form of Tax Opinion of Brobeck, Phleger & Harrison, counsel to the Registrant.
+8.2 Form of Tax Opinion of Winstead, Sechrest & Minick, P.C. .
+23.1 Consent of Brobeck, Phleger & Harrison (included in Exhibit 5.1).
+23.2 Consent of Winstead, Sechrest & Minick, P.C. (included in Exhibit 8.2).
*23.3 Consents of KPMG Peat Marwick LLP.
*23.4 Consent of Deloitte & Touche LLP.
*23.5 Consent of Carsten S. Andersen.
*23.6 Consent of Morgan Stanley & Co. Incorporated.
*23.7 Consent of Scott & Stringfellow, Inc. .
24.1 Power of Attorney (included on page II-4).
</TABLE>
- ---------------
* Filed herewith
+ To be filed by amendment
<PAGE> 1
EXHIBIT 23.3
CONSENTS OF KPMG PEAT MARWICK LLP
The Board of Directors
Fritz Companies, Inc.:
We consent to the use of our report dated February 20, 1995, on the
consolidated balance sheets of Fritz Companies, Inc. and subsidiaries as of
December 31, 1994 and 1993, and the related consolidated statements of income,
stockholders' equity, and cash flows for each of the years in the two-year
period ended December 31, 1994, and the related financial statement schedule,
which report appears in the December 31, 1994 annual report on Form 10-K of
Fritz Companies, Inc., incorporated herein by reference and to the reference to
our firm under the heading "Experts" in the Joint Proxy Statement/Prospectus.
San Francisco, California
March 3, 1995
KPMG PEAT MARWICK LLP
The Board of Directors
Intertrans Corporation:
We consent to the use of our report dated January 10, 1995, on the
consolidated balance sheets of Intertrans Corporation and subsidiaries as of
October 31, 1994 and 1993, and the related consolidated statements of earnings,
shareholders' equity, and cash flows for each of the years in the three-year
period ended October 31, 1994, and the related financial statement schedule,
which report appears in the October 31, 1994 annual report on Form 10-K of
Intertrans Corporation, incorporated herein by reference and to the reference to
our firm under the heading "Experts" in the Joint Proxy Statement/Prospectus.
Dallas, Texas
March 3, 1995
KPMG PEAT MARWICK LLP
<PAGE> 1
EXHIBIT 23.4
CONSENT OF DELOITTE & TOUCHE LLP
We consent to the incorporation by reference in this Registration Statement
of Fritz Companies, Inc. on Form S-4 of our report dated March 8, 1993,
appearing in the Annual Report on Form 10-K of Fritz Companies, Inc. for the
year ended December 31, 1994 and to the reference to us under the heading
"Experts" in the Prospectus, which is part of this Registration Statement.
DELOITTE & TOUCHE LLP
March 1, 1995
<PAGE> 1
EXHIBIT 23.5
CONSENT OF CARSTEN S. ANDERSEN
I hereby consent (i) to being named in the Registration Statement on Form
S-4 (the "Form S-4") of Fritz Companies, Inc. as a person intended to be
appointed as a director of Fritz Companies, Inc., (ii) to this letter being
filed as an exhibit to the Form S-4 and (iii) to the use of my name and
biographical information in the Form S-4 and the reference therein to this
letter.
Very truly yours,
/s/ CARSTEN S. ANDERSEN
Carsten S. Andersen
March 3, 1995
<PAGE> 1
EXHIBIT 23.6
CONSENT OF MORGAN STANLEY & CO. INCORPORATED
March 3, 1995
Fritz Companies, Inc.
706 Mission Street
San Francisco, CA 94103
Dear Sirs:
We hereby consent to the inclusion in the Registration Statement on Form
S-4, relating to the proposed merger of Intertrans Corporation with Fritz Air
Freight, a wholly owned subsidiary of Fritz Companies, Inc., of our opinion
letter appearing as Appendix B to the Joint Proxy Statement/Prospectus which is
a part of the Registration Statement, and to the references of our firm name
therein. In giving such consent, we do not thereby admit that we come within the
category of persons whose consent is required under Section 7 of the Securities
Act of 1993 or the rules and regulations adopted by the Securities and Exchange
Commission thereunder nor do we admit that we are experts with respect to any
part of such Registration Statement within the meaning of the term "experts" as
used in the Securities Act of 1933, as amended, or the rules and regulations of
the Securities and Exchange Commission thereunder.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
By: /s/ GEORGE F. BOUTROS
------------------------------------
George F. Boutros
Managing Director
<PAGE> 1
EXHIBIT 23.7
CONSENT OF SCOTT & STRINGFELLOW, INC.
We hereby consent to the use in this Registration Statement on Form S-4 of
our letter to the Board of Directors of Intertrans Corporation, dated February
14, 1995, included as an exhibit to the Joint Proxy Statement/Prospectus that is
a part of this Registration Statement, and to the references to such letter and
to our firm in such Joint Proxy Statement/Prospectus. In giving such consent we
do not thereby admit that we come within the category of persons whose consent
is required under Section 7 of the Securities Act of 1933 or the rules and
regulations of the Securities and Exchange Commission thereunder.
/s/ SCOTT & STRINGFELLOW, INC.
Scott & Stringfellow, Inc.
Richmond, Virginia
March 6, 1995
