<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Fritz Companies, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Fritz Companies, Inc.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
N/A
(2) Aggregate number of securities to which transactions applies:
N/A
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
N/A
(4) Proposed maximum aggregate value of transaction:
N/A
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registrations statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
FRITZ COMPANIES, INC.
706 Mission Street
San Francisco, California 94103
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TUESDAY, OCTOBER 29, 1996, 10:30 A.M.
TO THE STOCKHOLDERS:
Notice is hereby given that the Annual Meeting of Stockholders of Fritz
Companies, Inc. will be held at Bank of America NT & SA, 555 California Street,
San Francisco, California, on Tuesday, October 29, 1996, at 10:30 A.M. for the
following purposes:
(1) To elect five directors.
(2) To amend the 1992 Omnibus Equity Incentive Plan to increase the
number of shares authorized for issuance thereunder by 1,500,000.
(3) To adopt the Employee Stock Purchase Plan.
(4) To transact such other business as may properly come before the
meeting.
Only stockholders of record on the books of the Company as of 5:00 P.M.,
September 9, 1996, will be entitled to vote at the meeting and any adjournment
thereof.
Dated: September 23, 1996
By Order of the Board of Directors
JAN H. RAYMOND, Secretary
STOCKHOLDERS ARE REQUESTED TO MARK, DATE, SIGN AND RETURN THE ENCLOSED PROXY AS
PROMPTLY AS POSSIBLE.
<PAGE> 3
FRITZ COMPANIES, INC.
706 Mission Street
San Francisco, California 94103
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of Fritz
Companies, Inc. (the "Company") to be used at the Annual Meeting of Stockholders
on October 29, 1996, for the purposes set forth in the foregoing notice. This
proxy statement and the enclosed form of proxy were first sent to stockholders
on or about September 24, 1996.
If the enclosed form of proxy is properly signed and returned, the shares
represented thereby will be voted at the Annual Meeting in accordance with the
instructions specified thereon. If the proxy does not specify how the shares
represented thereby are to be voted, the proxy will be voted as recommended by
the Board of Directors. Any stockholder signing a proxy in the form accompanying
this Proxy Statement has the power to revoke it prior to or at the Annual
Meeting. A proxy may be revoked by a writing delivered to the Secretary of the
Company stating that the proxy is revoked, by a subsequent proxy signed by the
person who signed the earlier proxy, or by attendance at the Annual Meeting and
voting in person.
VOTING SECURITIES
Only stockholders of record on the books of the Company as of 5:00 P.M.,
September 9, 1996, will be entitled to vote at the Annual Meeting.
As of the close of business on September 9, 1996, there were outstanding
35,018,492 shares of Common Stock of the Company, entitled to one vote per
share. The holders of a majority of the outstanding shares of the Common Stock
of the Company, present in person or by proxy, will constitute a quorum for the
transaction of business at the Annual Meeting or any adjournment thereof.
Votes cast by proxy or in person at the 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 and
broker non-votes as shares that are present and entitled to vote for purposes of
determining the presence of a quorum. With regard to the election of directors,
votes may be cast "For" or "Withhold Authority" for each nominee; votes that are
withheld will be excluded entirely from the vote and will have no effect. Item 2
(the proposal to amend the 1992 Omnibus Equity Incentive Plan) and Item 3 (the
proposal to approve the Employee Stock Purchase Plan) require the affirmative
vote of a majority of shares present in person or by proxy and entitled to vote.
Accordingly, abstentions on Items 2 and 3 will have the effect of a negative
vote on these items. 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. Therefore, a broker non-vote will have no effect on Items 2 and
3, which require the affirmative vote of a majority of the shares represented at
the Annual Meeting and entitled to vote thereon.
ELECTION OF DIRECTORS
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 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
<PAGE> 4
elected a director. Set forth below is certain information concerning the
nominees which is based on data furnished by them.
<TABLE>
<CAPTION>
SERVED AS
BUSINESS EXPERIENCE DURING PAST DIRECTOR
NOMINEES FOR DIRECTOR AGE FIVE YEARS AND OTHER INFORMATION SINCE
- ----------------------- ---- ------------------------------------------------------ ---------
<S> <C> <C> <C>
Lynn C. Fritz.......... 53 Chairman of the Board. Mr. Fritz has been the 1977
Company's Chief Executive Officer since 1986. Mr.
Fritz is a Director of Manugistics (developer of
software for supply chain management).
Dennis L. Pelino....... 48 Chief Operating Officer since January 1994 and 1991
President since August 1996. Mr. Pelino was Executive
Vice President from January 1994 until August 1996 and
Senior Vice President from August 1992 until January
1994. Prior to August 1992, Mr. Pelino served the
Company in a variety of capacities.
Ronald A. Marcillac.... 55 Senior Vice President since August 1992. Prior to 1988
August 1992, Mr. Marcillac served the Company in a
variety of capacities.
James Gilleran......... 62 Chairman of the Board and Chief Executive Officer of 1992
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. Mr. Gilleran
is a director of Cooper Development Company (skincare
products).
Preston Martin......... 72 Chairman, President and Chief Executive Officer of 1992
Martin Holdings, Inc. (bank asset holding company),
Chairman of Martin Associates (consulting firm) and
Chairman of LINC Group, Inc. (insurance agency). Mr.
Martin is a director of SoCal Savings (financial
institution holding company) and INCO Homes (home
builder). Mr. Martin was previously Vice Chairman of
the Board of Governors of the Federal Reserve Board.
</TABLE>
FURTHER INFORMATION CONCERNING THE BOARD OF DIRECTORS
COMMITTEES OF THE BOARD
During the fiscal year ended May 31, 1996 ("fiscal 1996"), the Board of
Directors held four meetings and acted by unanimous written consent on a number
of occasions. The Company 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 the Company'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 the
Company and to administer the Company's equity incentive plan. During fiscal
1996, the Audit and Compensation Committee held four meetings.
ATTENDANCE AT MEETINGS
During fiscal 1996, there were no members of the Board of Directors who
attended fewer than seventy-five percent of the meetings of the Board of
Directors and all committees of the Board on which they served.
2
<PAGE> 5
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company 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 $24,000 annual retainer paid to nonemployee directors, 60% is paid in
Common Stock pursuant to the Nonemployee Director Restricted Stock Plan.
EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
The compensation paid to the Company's Chief Executive Officer and four
other most highly compensated executive officers for services in all capacities
to the Company and its subsidiaries during the fiscal years indicated is set
forth below.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
---------------------------------------------- -------------------------
OTHER ANNUAL SECURITIES ALL OTHER
NAME AND PRINCIPAL COMPENSA- RESTRICTED UNDERLYING COMPENSA-
POSITION YEAR(1) SALARY($) BONUS($) TION($)(2) STOCK($)(3) OPTIONS(#) TION($)(4)
- ------------------------------------- --------- -------- ------------ ----------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Lynn C. Fritz 1996 $ 500,000 -- $ 18,000 $ 328,125 30,000 --
Chairman of the Board 1995 $ 208,000 -- $ 7,500 -- 80,000 --
and Chief Executive 1994 $ 500,000 -- $ 18,000 -- 60,000 $ 8,040
Officer 1993 $ 500,000 -- $ 18,000 -- -- $ 8,040
Dennis L. Pelino 1996 $ 275,000 -- $ 6,000 $ 574,375 -- --
President and Chief 1995 $ 115,000 $ 50,000 $ 2,500 -- -- --
Operating Officer 1994 $ 275,000 $275,000 $ 10,900 $ 240,750 430,000 --
1993 $ 250,000 -- $ 6,000 $ 44,000 -- --
Ronald A. Marcillac 1996 $ 175,000 -- $ 6,000 $ 46,875 -- --
Senior Vice President 1995 $ 84,000 $ 10,000 $ 2,500 -- 10,000 --
1994 $ 250,000 $ 30,000 $ 6,000 -- 10,000 --
1993 $ 250,000 -- $ 6,000 $ 44,000 5,600 --
John H. Johung 1996 $ 250,000 -- $ 6,000 $1,629,375 (5) -- --
Executive Vice President 1995 $ 83,000 $ 25,000 $ 2,500 -- -- --
1994 $ 180,000 $ 60,000 $ 6,000 -- 20,000 --
1993 $ 160,000 $ 20,000 $ 6,000 $ 22,000 5,800 --
Jan H. Raymond 1996 $ 165,000 -- $ 6,000 $ 406,875 -- --
Senior Vice President, 1995 $ 55,000 $ 10,000 $ 2,500 -- 6,000 --
Secretary and General 1994 $ 128,000 $ 22,000 $ 6,000 -- 6,000 --
Counsel 1993 $ 119,000 $ 15,000 $ 6,000 $ 22,000 4,000 --
</TABLE>
- ------------
(1) Fiscal 1995 was a five-month period which ended on May 31, 1995.
(2) While the named executive officers enjoy certain perquisites, for fiscal
years 1994, 1995 and 1996 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 $23.4375 for
Mr. Fritz' 1996 award. It was $12.0375 for Mr. Pelino's 1994 grant and
$11.00 for Mr. Pelino's, Mr. Marcillac's, Mr. Johung's and Mr. Raymond's
1993 awards. 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 year 1996, the aggregate restricted stock holdings for the
named executives consisted of 144,000 shares worth $4,968,000 at the then
current fair market value (as represented by the closing price of the
Company's common stock on May 31, 1996), without giving effect to the
diminution of value attributable to the restrictions on such stock. Such
amount includes $328,125 for Mr. Fritz (14,000 shares), $1,587,000 for Mr.
Pelino (46,000 shares), $207,000 for Mr. Marcillac (6,000 shares),
$2,208,000 for Mr. Johung (64,000 shares) and $483,000 for Mr. Raymond
(14,000 shares). Dividends are paid on the
3
<PAGE> 6
restricted shares to the extent payable on the Company's Common Stock
generally. No shares granted to the named executives vest in less than three
years from the date of grant.
(4) The amounts shown consist of the premium benefits to Mr. Fritz in connection
with his participation in the Company's executive medical plan.
(5) Mr. Johung's restricted stock grant was made on June 1, 1995 in recognition
of contributions through that date to the Company. Mr. Johung received no
income from this grant because the shares vest 10 years from grant date on
June 1, 2005.
OPTIONS GRANTED TO EXECUTIVE OFFICERS
The following table sets forth certain information regarding stock options
granted during fiscal 1996 to the executive officers named in the foregoing
Summary Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS MARKET PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR PRICE ON OPTION TERM(4)
OPTIONS EMPLOYEES IN BASE PRICE DATE OF EXPIRATION ------------------------------
NAME GRANTED(#)(1) FISCAL YEAR ($/SH)(2) GRANT(2) DATE(3) 0%($) 5%($) 10%($)
- -------------------------- ------------- ------------- ----------- -------- ---------- ------ ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Lynn C. Fritz............. 30,000 12.05% $ 23.44 $23.44 6/12/05 -- $35,156 $70,313
Dennis L. Pelino.......... -- NA NA NA NA NA NA NA
Ronald A. Marcillac....... -- NA NA NA NA NA NA NA
John H. Johung............ -- NA NA NA NA NA NA NA
Jan H. Raymond............ -- NA NA NA NA NA NA NA
</TABLE>
- ---------------
(1) All such options were granted in June 1995 and become exercisable (a) as to
1/3 of the shares on the day after the first anniversary of the grant, (b)
as to an additional 1/3 of the shares on the day after the second
anniversary of the grant, and (c) as to the remaining 1/3 of the shares on
the day after the third anniversary of the grant. Under the terms of the
Company'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.
(3) All options granted in fiscal 1996 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 Securities and Exchange Commission and
therefore are not intended to forecast possible future appreciation, if any,
of the Company'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.
4
<PAGE> 7
The following table sets forth certain information with respect to
exercises of stock options during fiscal 1996 by the listed executive officers
and with respect to stock options held by each of the Company's executive
officers as of May 31, 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FY-END(#) AT FY-END($)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------- --------------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Lynn C. Fritz............... -- NA 66,666 103,334 $ 936,662 $ 1,035,212
Dennis L. Pelino............ 31,534 $915,688 425,800 10,000 $ 9,531,600 $ 195,000
Ronald A. Marcillac......... 15,599 $363,164 32,000 10,001 $ 864,000 $ 104,181
John H. Johung.............. -- NA 47,133 6,667 $ 1,152,293 $ 195,000
Jan H. Raymond.............. -- NA 26,000 6,000 $ 615,750 $ 62,500
</TABLE>
EMPLOYMENT AGREEMENTS
Effective January 1, 1994, the Company entered into a four-year employment
agreement with Dennis Pelino which provided for a base salary of $275,000
commencing in 1994, subject to annual review by the Audit and Compensation
Committee. The employment agreement also provided for an annual bonus of up to
100% of base salary and required the Audit and Compensation Committee to
consider making a supplemental payment in 1998 if the Company's performance
meets certain predetermined objectives, as determined by the Audit and
Compensation Committee.
In March 1995, the Audit and Compensation Committee reviewed the
performance of the Company based on the criteria set forth in the employment
agreement and determined that the goals as outlined had been achieved. As such,
the Committee chose to vest Mr. Pelino in the stock based incentives outlined in
the employment agreement.
The Committee then terminated the 1994 employment agreement and entered
into a new three year employment agreement with Mr. Pelino. The terms of the new
agreement provide Mr. Pelino with the same cash compensation as the 1994
agreement and a series of three restricted stock grants in the amount of 20,000
shares each. These grants vest in an amount which depends on his performance
against plan.
TRANSACTIONS WITH THE COMPANY
For many years, the Company 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 Mr. Fritz withdrew as a partner of the Partnership. As part
of such withdrawal, a distribution of real property (including certain
properties leased by the Company), cash and debt was made from the Partnership
to Mr. Fritz. The Company paid an aggregate of $757,659 to Mr. Fritz and a
related partnership in fiscal 1996 in connection with the leasing of two
properties from Mr. Fritz and the partnership. The Company believes that such
leases are on terms which are no less favorable to the Company than those which
could have been obtained from independent third parties.
In connection with the Company's U.S. customs brokerage operations, the
Company's customers are required to obtain surety bonds. The Company places such
customs bonds with Intercargo Corporation ("Intercargo") and other underwriters
of customs bonds. Mr. Fritz owns approximately 3.5% of the outstanding common
stock of Intercargo. During 1996, the Company placed approximately $2,823,000 of
insurance business with Intercargo and received $251,000 in insurance
commissions and fees from Intercargo. The Company believes that the amounts
received are substantially the same as the Company would have received from
other third parties.
5
<PAGE> 8
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 the Company's 1992 Omnibus Equity Incentive plan.
Our general policy is to discharge these responsibilities in a manner which
links executive performance to long term stockholder value. Our specific
objectives are to enhance the long term performance of the Company, enable the
Company to attract and retain outstanding executives and employees and provide
meaningful incentives, without subjecting the Company 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 expectation. Bonus awards are subject to significant variability
depending on the annual performance of the Company 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 the
Company. The bonuses for the Chief Executive Officer and Chief Operating Officer
are based solely on the performance of the Company.
The key performance criteria used to determine bonus compensation are the
Company'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 the Company. No specific
minimum holdings of Fritz stock are required formally; however, executives are
encouraged to hold significant stock in the Company. We believe that management
rewards should be at risk just as stockholders' gains are at risk. Mr. Fritz
continues to be the largest owner of the stock of the Company.
Stock Options are the primary long term incentive award for executives. We
believe that stock options focus attention on managing the Company from the
perspective of an owner with an equity stake in the business. The Company uses
both restricted stock and nonqualified stock options. Restricted stock is issued
primarily as a retention device and nonqualified stock options as a means of
providing ongoing long term incentives.
As a matter of policy, the Company believes it is important to retain the
flexibility to maximize the Company'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 the Company
and to document as necessary specific performance goals in order to seek to
preserve the Company's tax deductions.
The Company changed its fiscal reporting year commencing June 1, 1995. The
new fiscal reporting year established is June 1 through May 31.
The Company ended its 1996 fiscal year posting a loss of $3,400,000 or
($.10) per share for the fourth quarter ending May 31, 1996. The Company also
took an additional charge to earnings of $11,000,000 for
6
<PAGE> 9
reasons previously disclosed. As a result no cash bonus payments were made in
respect of fiscal 1996 to the officers of the Company.
As indicated in our prior reports, we are firmly committed to a goal
oriented compensation system based on how the Company performs. In years when
the Company meets its aggressive business plan, we intend to recognize this
achievement with substantial bonus awards.
Compensation Committee
JAMES E. GILLERAN
PRESTON MARTIN
July 31, 1996
7
<PAGE> 10
PERFORMANCE GRAPH
The following graph compares the percentage change in the Company's
cumulative total stockholder return on its Common Stock for the period from the
Company's initial public offering on October 16, 1992 to May 31, 1996 with the
cumulative total return of the NASDAQ Market Index and a peer group index
consisting of The Harper Group, Inc., Expediters International of Washington,
Inc., and Air Express International Corporation.
<TABLE>
<CAPTION>
Measurement Period Fritz Compa-
(Fiscal Year Covered) nies Inc Peer Group Broad Market
<S> <C> <C> <C>
1992 100.00 100.00 100.00
1992 144.93 98.67 108.02
1993 154.35 91.43 129.57
1994 272.46 112.99 136.03
1995 305.80 125.01 144.77
1996 400.00 158.96 204.34
</TABLE>
8
<PAGE> 11
OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table indicates, as to each named director and each named
executive officer, and as to all directors and executive officers as a group,
the number of shares and percentage of the Company's Common Stock beneficially
owned as of July 31, 1996.
<TABLE>
<CAPTION>
COMMON STOCK BENEFICIALLY
OWNED AS OF JULY 31, 1996
--------------------------
NUMBER OF
EXECUTIVE OFFICER OR DIRECTOR SHARES PERCENT
------------------------------------------------------------ ---------- -------
<S> <C> <C>
Lynn C. Fritz(1)............................................ 13,040,436(2) 37.4%
Dennis L. Pelino............................................ 471,800(3) 1.2
Ronald A. Marcillac......................................... 38,000 0.1
John H. Johung.............................................. 111,133(5) 0.3
Jan H. Raymond.............................................. 40,000(6) 0.1
James Gilleran.............................................. 6,148 --
Preston Martin.............................................. 4,648 --
All directors and executive officers as a group (seven
persons).................................................. 13,712,165(7) 39.3
</TABLE>
- ---------------
(1) The address of Mr. Fritz is 706 Mission Street, San Francisco, California
94103. Mr. Fritz may be deemed to be a "control person" of the Company
within the meaning of the rules and regulations of the Securities and
Exchange Commission by reason of his stock ownership and positions with the
Company. With the exception of Mr. Fritz, the only stockholders who were
known by the Company to own beneficially more than 5% of the Company's
Common Stock as of May 31, 1996 were Pilgrim Baxter Greig & Associates which
owned 2,232,100 shares (6.47%) on such date and Provident Investment Counsel
which owned 1,758,600 shares (5.09%) on such date. The address of Pilgrim
Baxter Greig & Associates is 1255 Drummers Lane, Suite 300, Wayne, PA 19087,
and the address of Provident Investment Counsel is 300 N. Lake Avenue,
Pasadena, CA 91101.
(2) Includes employee stock options exercisable within 60 days to purchase
76,666 shares.
(3) Includes employee stock options exercisable within 60 days to purchase
425,800 shares.
(4) Includes employee stock options exercisable within 60 days to purchase
32,000 shares.
(5) Includes employee stock options exercisable within 60 days to purchase
47,133 shares.
(6) Includes employee stock options exercisable within 60 days to purchase
26,000 shares.
(7) Includes shares which the directors and executive officers have the option
to purchase within 60 days.
PROPOSAL TO AMEND THE 1992 OMNIBUS EQUITY INCENTIVE PLAN
In October 1992, the Company adopted the 1992 Omnibus Equity Incentive Plan
(the "Plan") pursuant to which an aggregate of 1,520,000 shares of Common Stock
were originally reserved for issuance to key employees of the Company and its
subsidiaries. The Plan provides for awards of both nonqualified stock options
and incentive stock options within the meaning of Section 422 of the Code, stock
appreciation rights, restricted stock and performance awards entitling the
recipient to receive cash or Common Stock in the future following the attainment
of performance goals determined by the committee administering the Plan.
At the Annual Meeting held in May 1994, the stockholders of the Company
approved an amendment to the Plan to increase the number of shares authorized
for issuance under the Plan to 3,040,000 shares. In March 1996, the Board of
Directors of the Company conditionally amended the Plan, subject to stockholder
approval at the 1996 Annual Meeting, to increase the number of shares authorized
for issuance under the Plan by an additional 1,500,000 shares.
The reason for this increase is to ensure that a sufficient number of
shares of the Company's Common Stock is available under the Plan for awards to
attract, retain and motivate selected employees with outstanding experience and
ability. As of June 30, 1996, the number of shares remaining available for
future
9
<PAGE> 12
awards was 96,229, which would increase to 1,596,229 if the proposal is
approved. Set forth below is a summary of the principal features of the Plan.
PURPOSE
The purpose of the Plan is to promote the success and enhance the value of
the Company by linking the personal interests of participating employees and
consultants to those of the Company's stockholders and by providing such
employees and consultants with an incentive for outstanding performance. The
Plan is further intended to provide flexibility to the Company in its ability to
motivate, attract and retain the services of participating employees and
consultants upon whose judgment, interest and special efforts the Company is
largely dependent for the successful conduct of its operations.
ELIGIBILITY TO RECEIVE AWARDS
Key employees of the Company and its subsidiaries, and persons who provide
significant services to the Company or its subsidiaries, but who are neither
employees of the Company or its subsidiaries nor directors of the Company
("consultants") are eligible to be granted awards under the Plan. However,
incentive stock options (see below) may be granted only to employees. In 1994,
the Plan was amended to restrict eligibility for awards under the Plan to a
maximum of 400,000 shares per recipient in any twelve month period.
ADMINISTRATION
The plan is administered by the Audit and Compensation Committee of the
Board of Directors of the Company (the "Committee").
OPTIONS
The price of shares of the Company's Common Stock subject to each option
(the "option price") is set by the Committee but may not be less than 50% of the
fair market value on the date of grant in the case of an option that is not an
incentive stock option (a nonqualified stock option"), and not less than 100% of
the fair market value in the case of an incentive stock option.
Options granted under the Plan are exercisable at the times and on the
terms established by the Committee, provided that options granted to officers
who are subject to section 16(b) of the Securities and Exchange Act of 1934
("Section 16(b)") may not be exercised until six months following the date of
grant. Subject to the foregoing limitations, the Committee may accelerate the
exercisability of any option.
The option price must be paid in full in cash or its equivalent at the time
of exercise. The Committee also may permit payment of the option price by the
tender of previously acquired shares of the Company's stock or such other legal
consideration which the Committee determines to be consistent with the Plan's
purpose and applicable law.
STOCK APPRECIATION RIGHTS
The Plan permits the grant of three types of SARs: Affiliated SARs,
Freestanding SARs and Tandem SARs, or any combination thereof. An Affiliated SAR
is an SAR that is granted in connection with a related option and which will be
deemed to automatically be exercised simultaneously with the exercise of the
related option. A Freestanding SAR is an SAR that is granted independently of
any option. A Tandem SAR is an SAR that is granted in connection with a related
option, the exercise of which requires a forfeiture of the right to purchase a
share under the related option (and when a share is purchased under the option,
the SAR is similarly cancelled).
The Committee has complete discretion to determine the number of SARs
granted to any optionee or recipient and the terms and conditions pertaining to
such SARs. However, the grant price must be at least equal to the fair market
value of a share of the Company's Common Stock on the date of grant in the case
of a Freestanding SAR and equal to the option price of the related option in the
case of an Affiliated SAR or Tandem SAR. An SAR that is granted to an officer
who is subject to Section 16(b) may not be exercised until at least six months
following the date of grant.
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<PAGE> 13
RESTRICTED STOCK AWARDS
The Plan permits the grant of restricted stock awards which are restricted
Common Stock bonuses that vest in accordance with terms established by the
Committee. Restricted stock granted to an officer subject to Section 16(b) may
not vest prior to six months following the date of its grant. The Committee may
impose restrictions and conditions on the shares, including, without limitation,
restrictions based upon the achievement of specific performance goals
(Company-wide, divisional and/or individual), and/or restrictions under
applicable federal or state securities law. The Committee may accelerate the
time at which any restrictions lapse, and/or remove any restrictions. During the
lifetime of the recipient, all rights with respect to the restricted stock
granted to the recipient under the Plan will be available only to such
recipient.
PERFORMANCE UNIT/SHARE AWARDS
The Plan permits the grant of performance unit and performance share awards
which are bonuses credited to an account established for the recipient and
payable in cash, Common Stock or a combination thereof. Each performance unit
has an initial value that is established by the Committee at the time of its
grant. Each performance share has an initial value equal to the fair market
value of a share of the Company's Common Stock on the date of its grant. The
number and/or value of performance units/shares that will be paid out to
recipients will depend upon the extent to which performance goals established by
the Committee are satisfied. The payment date for performance unit/share awards
granted to officers and directors subject to Section 16(b) may not be less than
six months from the date of grant.
After a performance unit/share award has vested, the recipient will be
entitled to receive a payout of the number of performance units/shares earned by
the recipient, to be determined as a function of the extent to which the
corresponding performance goals have been achieved. The Committee also may waive
the achievement of any performance goals for such performance unit/share.
Subject to the applicable award agreement, performance units/shares awarded
to recipients will be forfeited to the Company upon the earlier of the
recipient's termination of employment or the date set forth in the award
agreement.
NONTRANSFERABILITY OF AWARDS
Awards granted under the Plan may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by will or by the
applicable laws of descent and distribution. However, an optionee or recipient
may designate one or more beneficiaries to receive any exercisable or vested
awards following his or her death.
STOCK OPTIONS
As of June 30, 1996, no awards had been made under the Plan in the form of
stock appreciation rights or performance units; restricted stock grants of
333,928 shares of Common Stock were outstanding under the Plan, options to
purchase 1,846,732 shares of Common Stock were outstanding under the Plan, and
96,229 shares remained available for future awards under the Plan.
NEW PLAN BENEFITS
Regulations recently adopted by the Securities and Exchange Commission
require disclosure of benefits to the executive officers of the Company named in
the summary compensation table and to certain other categories of award
recipient, if such benefits are determinable. In addition to the grants of stock
options and restricted stock set forth below, it is likely that substantial
additional grants will be made to all of such persons and others during the life
of the Plan, and it is impossible to determine the amount of terms of such
future grants.
The following table sets forth as of May 31, 1996 (a) the aggregate number
of shares of the Company's Common Stock subject to awards granted under the Plan
since June 1, 1995 (all of which were in the form of stock options or restricted
stock), and (b) the fair market value of options based on the difference between
the
11
<PAGE> 14
exercise price and $34.50 per share, the closing price of the shares of Common
Stock on May 31, 1996 and the fair market value of restricted stock based on
$34.50 per share.
<TABLE>
<CAPTION>
NUMBER OF OPTIONS DOLLAR VALUE OF
AND OPTIONS AND
NAME OF INDIVIDUAL OF GROUP SHARES GRANTED SHARES GRANTED
----------------------------------------------------- ----------------- ---------------
<S> <C> <C>
Lynn C. Fritz........................................ 44,000 $ 814,875
Dennis L. Pelino..................................... 22,000 $ 759,000
Ronald A. Marcillac.................................. 2,000 $ 69,000
John H. Johung....................................... 62,000 $ 2,139,000
Jan H. Raymond....................................... 12,000 $ 414,000
All executive officers, as a group................... 142,000 $ 4,195,875
All employees who are not executive officers, as a
group.............................................. 346,272 $ 5,750,215
All directors who are not executive officers, as a
group.............................................. 600 $ 20,700
</TABLE>
REQUIRED VOTE
The affirmative vote of a majority of shares present in person or by proxy
at the Annual Meeting and entitled to vote is required to approve the proposed
amendment to the Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
APPROVAL OF THE AMENDMENT TO THE 1992 OMNIBUS EQUITY INCENTIVE PLAN.
PROPOSAL TO APPROVE THE EMPLOYEE STOCK PURCHASE PLAN
Effective July 1, 1996, the Company adopted the Employee Stock Purchase
Plan (the "Plan"). Adoption of the Plan is subject to the approval of a majority
of the shares of the Company's common stock which are present in person or by
proxy and entitled to vote at the Annual Meeting. The following summary of the
principal features of the Plan is qualified in its entirety by the full text of
the Plan, which appears as Exhibit A to this Proxy Statement.
PURPOSE
The purpose of the Plan is to promote the success, and enhance the value,
of the Company, by providing eligible employees of the Company and its
participating subsidiaries with the opportunity to purchase common stock of the
Company through payroll deductions. The Plan is intended to qualify as an
employee stock purchase plan under Section 423 of the Internal Revenue Code of
1986, as amended.
ELIGIBILITY TO PARTICIPATE
Most employees of the Company and its participating subsidiaries, who have
been so employed for at least one year, are eligible to elect to participate in
the Plan. However, an employee is not eligible if he or she normally is
scheduled to work less than or equal to twenty hours per week, or if he or she
has the right to acquire 5% or more of the voting stock of the Company or of any
subsidiary of the Company. Approximately 3,200 employees currently are eligible
to participate in the Plan, and approximately 501 have elected to participate in
the Plan.
ADMINISTRATION, AMENDMENT AND TERMINATION
The Plan is administered by a committee (the "Committee") appointed by the
Board of Directors of the Company. The members of the Committee also are members
of the Company's Board of Directors, and serve at the pleasure of the Board.
Subject to the terms of the Plan, the Committee has all discretion and
authority necessary or appropriate to control and manage the operation and
administration of the Plan, including the power to designate the subsidiaries of
the Company which will be permitted to participate in the Plan. The Committee
may make
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<PAGE> 15
whatever rules, interpretations, and computations, and take any other actions to
administer the Plan that it considers appropriate to promote the Company's best
interests, and to ensure that the Plan remains qualified under Section 423 of
the Internal Revenue Code. The Committee may delegate one or more of its
functions to any one of its members or to any other person.
The Company's Board of Directors, in its sole discretion, may amend or
terminate the Plan at any time and for any reason.
NUMBER OF SHARES OF COMMON STOCK AVAILABLE UNDER THE PLAN
A maximum of 200,000 shares of common stock is available for issuance
pursuant to the Plan. However, no more than 100,000 shares of common stock
actually will be issued unless and until the Committee determines that the
additional 100,000 shares (or a portion thereof) may be issued. Shares sold
under the Plan may be newly issued shares or treasury shares. In the event of
any stock split or other change in the capital structure of the Company, the
Company's Board of Directors may make such adjustment, if any, as it deems
appropriate in the number, kind and purchase price of the shares available for
purchase under the Plan.
ENROLLMENT AND CONTRIBUTIONS
Eligible employees elect whether or not to enroll in the Plan as of the
first business day of February, May, August or November of any year. The
enrollment period is three months and eligible employees automatically are
re-enrolled every three months; provided, however, that employees may cancel
their enrollment at any time (subject to Plan rules).
Employee contributions to the Plan are made through payroll deductions.
Participating employees generally may contribute up to 10% of their eligible
compensation through after-tax payroll deductions. An employee later may
increase or decrease his or her contribution percentage, in accordance with Plan
rules.
PURCHASE OF SHARES
On the last business day of each January, April, July and October, each
participating employee's payroll deductions (plus accumulated interest) are used
to purchase shares of Company common stock for the employee. The price of the
shares purchased will be the lower of (1) 100% of the stock's market value on
the business day immediately preceding the first day of the quarter, or (2) 90%
of the "average closing price per share". The "average closing price per share"
is the simple average of the stock's market value on the purchase date and on
the two business days immediately before the purchase date. Market value under
the Plan means the closing price of Company common stock on the NASDAQ/National
Market for the day in question. The purchase price for shares under the Plan is
subject to increase if necessary to ensure that the Plan continues to qualify
under Section 423 of the Internal Revenue Code. Shares purchased for the
employees will be deposited into individual brokerage accounts established for
each employee.
TERMINATION OF PARTICIPATION
Participation in the Plan terminates when a participating employee's
employment with the Company ceases for any reason, the employee withdraws from
the Plan, or the Plan is terminated or amended such that the employee is no
longer eligible to participate.
TAX ASPECTS
Based on management's understanding of current federal income tax laws, the
tax consequences of the purchase of shares of common stock under the Plan are as
follows.
An employee will not have taxable income when the shares of common stock
are purchased for him or her, but the employee generally will have taxable
income when the employee sells or otherwise disposes of stock purchased through
the Plan.
13
<PAGE> 16
For shares which are not disposed of until more than 24 months after the
enrollment date under which the shares were purchased (the "24-month holding
period"), gain up to the amount of the discount (if any) from the market price
of the stock on the enrollment date (or re-enrollment date) is taxed as ordinary
income. Any additional gain above that amount is taxed at long-term capital gain
rates. If, after the 24-month holding period, the employee sells the stock for
less than the purchase price, the difference is a long-term capital loss. Shares
sold within the 24-month holding period are taxed at ordinary income rates on
the amount of discount received from the stock's market price on the purchase
date. Any additional gain (or loss) is taxed to the stockholder as long-term or
short-term capital gain (or loss). The purchase date begins the holding period
for determining whether the gain (or loss) is short-term or long-term.
The Company will receive a deduction for federal income tax purposes for
the ordinary income an employee must recognize when he or she disposes of stock
purchased under the Plan within the 24-month holding period. The Company will
not receive such a deduction for shares disposed of after the 24-month holding
period.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
THE PROPOSAL TO APPROVE THE EMPLOYEE STOCK PURCHASE PLAN.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Officers, directors and greater than ten-percent shareholders are required by
SEC regulation to furnish the Company 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 Forms 5 were
required for those persons, the Company believes that, during the period from
June 1, 1995 to May 31, 1996 all filing requirements applicable to its officers,
directors, and greater than ten-percent beneficial owners were complied with.
AUDITORS
KPMG Peat Marwick serves as the Company's principal accountant.
Representatives of KPMG Peat Marwick will be present at the Annual Meeting with
the opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions.
OTHER MATTERS
As of the date of this Proxy Statement, there are no other matters which
management intends to present or has reason to believe others will present to
the meeting. If other matters properly come before the meeting, those who act as
proxies will vote in accordance with their judgment.
STOCKHOLDER PROPOSALS
If any stockholder intends to present a proposal for action at the
Company's 1997 Annual Meeting and wishes to have such proposal set forth in
management's proxy statement, such stockholder must forward the proposal to the
Company so that it is received on or before May 26, 1997. Proposals should be
addressed to the Company at 706 Mission Street, San Francisco, California 94103,
Attention: Corporate Secretary.
14
<PAGE> 17
COST OF SOLICITATION
All expenses in connection with the solicitation of this proxy, including
the charges of brokerage houses and other custodians, nominees or fiduciaries
for forwarding documents to stockholders, will be paid by the Company.
Dated: September 23, 1996.
By Order of the Board of Directors
JAN H. RAYMOND, Secretary
15
<PAGE> 18
EXHIBIT A
FRITZ COMPANIES, INC.
EMPLOYEE STOCK PURCHASE PLAN
SECTION 1
PURPOSE
Fritz Companies, Inc. hereby establishes The Fritz Companies, Inc. Employee
Stock Purchase Plan, effective as of August 1, 1996, in order to provide
eligible employees of the Company and its participating Subsidiaries with the
opportunity to purchase Common Stock through payroll deductions. The Plan is
intended to qualify as an employee stock purchase plan under Section 423(b) of
the Code.
SECTION 2
DEFINITIONS
2.1 "1934 Act" means the Securities Exchange Act of 1934, as amended.
Reference to a specific Section of the 1934 Act or regulation thereunder shall
include such Section or regulation, any valid regulation promulgated under such
Section, and any comparable provision of any future legislation or regulation
amending, supplementing or superseding such Section or regulation.
2.2 "Board" means the Board of Directors of the Company.
2.3 "Code" means the Internal Revenue Code of 1986, as amended. Reference
to a specific Section of the Code or regulation thereunder shall include such
Section or regulation, any valid regulation promulgated under such Section, and
any comparable provision of any future legislation or regulation amending,
supplementing or superseding such Section or regulation.
2.4 "Committee" shall mean the committee appointed by the Board to
administer the Plan. The members of the Committee shall serve at the pleasure of
the Board and shall be comprised solely of members of the Board who are
"disinterested persons" under Rule 16b-3 under the 1934 Act. Any member of the
Committee may resign at any time by notice in writing mailed or delivered to the
Secretary of the Company. As of the effective date of the Plan, the Committee
shall be administered by the Audit and Compensation Committee of the Board.
2.5 "Common Stock" means the common stock of the Company.
2.6 "Company" means Fritz Companies, Inc., a Delaware corporation.
2.7 "Compensation" means a Participant's base salary or regular wages
(including sick pay and vacation pay). A Participant's compensation shall not
include any other type of remuneration.
2.8 "Eligible Employee" means every Employee of an Employer, except any
Employee who (a) has not completed at least one year of service since his or her
last hire date, (b) customarily works not more than 20 hours per week, or (c)
immediately after the grant of an option under the Plan, would own stock and/or
hold outstanding options to purchase stock possessing five percent (5%) or more
of the total combined voting power or value of all classes of stock of the
Company or of any Subsidiary of the Company (including stock attributed to such
Employee pursuant to Section 424(d) of the Code), provided that the Committee,
in its discretion, from time to time may determine that officers of the Company
(as defined in Rule 16a-1 promulgated under the 1934 Act) shall not be Eligible
Employees. Notwithstanding any contrary provision of clause (a) of the preceding
sentence: (1) if an Employee who has satisfied the one year service requirement
terminates employment with all Subsidiaries and, within one year of the
termination, is rehired by an Employer, then the Employee shall be deemed to
have satisfied the one year service requirement as of his or her rehire date,
and (2) if an Employee becomes such as a direct result of the acquisition by the
Company or a Subsidiary of the equity or assets of a non-Subsidiary, then solely
for purposes of the Plan, the Employee shall receive service credit for his or
her service with the non-Subsidiary commencing with the Employee's last date of
hire with the non-Subsidiary.
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<PAGE> 19
2.9 "Employee" means an individual who is a common-law employee of any
Employer, whether such employee is so employed at the time the Plan is adopted
or becomes so employed subsequent to the adoption of the Plan.
2.10 "Employer" or "Employers" means any one or all of the Company and
those Subsidiaries which, with the consent of the Board, have adopted the Plan.
2.11 "Enrollment Date" means the first business day of each Plan Year
Quarter and/or such other dates determined by the Committee (in its discretion)
from time to time.
2.12 "Grant Date" means any date on which a Participant is granted an
option under the Plan.
2.13 "Participant" means an Eligible Employee who (a) has become a
Participant in the Plan pursuant to Section 4.1 and (b) has not ceased to be a
Participant pursuant to Section 8 or Section 9.
2.14 "Plan" means The Fritz Companies, Inc. Employee Stock Purchase Plan,
as set forth in this instrument and as hereafter amended from time to time.
2.15 "Plan Year" means the period of 12 consecutive months from August 1,
1996, through July 31, 1997, and each successive 12-month period thereafter.
2.16 "Plan Year Quarter" means any of the four periods of three consecutive
months which comprise the Plan Year: (a) August 1 through October 31, (b)
November 1 through January 31, (c) February 1 through April 30, and (d) May 1
through July 31.
2.17 "Purchase Date" means the last business day of each Plan Year Quarter,
or such other specific business days as may be established by the Committee from
time to time prior to an Enrollment Date for all options to be granted on such
Enrollment Date.
2.18 "Subsidiary" means any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other than
the last corporation in the unbroken chain then owns stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.
SECTION 3
SHARES SUBJECT TO THE PLAN
3.1 Number Available. A maximum of 200,000 shares of Common Stock shall be
available for issuance pursuant to the Plan. However, no more than 100,000
shares of Common Stock actually shall be issued under the Plan unless and until
the Committee determines that the additional 100,000 shares may be issued.
Shares sold under the Plan may be newly issued shares or treasury shares.
3.2 Adjustments. In the event of any reorganization, recapitalization,
stock split, reverse stock split, stock dividend, combination of shares, merger,
consolidation, offering of rights or other similar change in the capital
structure of the Company, the Board may make such adjustment, if any, as it
deems appropriate in the number, kind and purchase price of the shares available
for purchase under the Plan and in the maximum number of shares subject to any
option under the Plan.
SECTION 4
ENROLLMENT
4.1 Participation. Each Eligible Employee may elect to become a
Participant by enrolling or re-enrolling in the Plan effective as of any
Enrollment Date. In order to enroll, an Eligible Employee must complete, sign
and submit to the Company an enrollment form in such form as may be specified by
the Committee from time to time. Any enrollment form received by the Company no
later than seven calendar days before an Enrollment Date shall be effective on
that Enrollment Date, provided that the Committee, in its discretion, may (on a
uniform and nondiscriminatory basis) specify an earlier or later deadline for
the
A-2
<PAGE> 20
submission of enrollment forms. Any Participant whose option expires and who has
not withdrawn from the Plan automatically will be re-enrolled in the Plan on the
Enrollment Date immediately following the Purchase Date on which his or her
option expires.
4.2 Payroll Withholding. On his or her enrollment form, each Participant
must elect to make Plan contributions via payroll withholding from his or her
Compensation. Pursuant to such procedures as the Committee may specify from time
to time, a Participant may elect to have withholding equal to a specific dollar
amount or a whole percentage from 1% to 10% (or such lesser percentage that the
Committee may establish from time to time for all options to be granted on any
Enrollment Date), provided that the dollar amount or percentage elected shall
result in expected withholding of (a) not less than $15.00 per pay period, and
(b) not more than $10,000 per Plan Year. A Participant may elect to increase or
decrease his or her rate of payroll withholding (effective as of any Enrollment
Date) by submitting a new enrollment form in accordance with such procedures as
may be established by the Committee from time to time. A Participant may stop
his or her payroll withholding by submitting a new enrollment form in accordance
with such procedures as may be established by the Committee from time to time.
In order to be effective, an enrollment form must be received by the Company no
later than seven calendar days before the date elected for the change or
cessation, provided that the Committee, in its discretion, may (on a uniform and
nondiscriminatory basis) specify an earlier or later deadline for the submission
of enrollment forms. Any Participant who is automatically re-enrolled in the
Plan will be deemed to have elected to continue his or her contributions at the
percentage last elected by the Participant.
SECTION 5
OPTIONS TO PURCHASE COMMON STOCK
5.1 Grant of Option. On each Enrollment Date on which the Participant
enrolls or re-enrolls in the Plan, he or she shall be granted an option to
purchase shares of Common Stock.
5.2 Duration of Option. Each option granted under the Plan shall expire on
the earliest to occur of (a) the completion of the purchase of shares on the
last Purchase Date occurring within 27 months of the Grant Date of such option,
(b) such shorter option period as may be established by the Committee from time
to time prior to an Enrollment Date for all options to be granted on such
Enrollment Date, or (c) the date on which the Participant ceases to be such for
any reason. Until otherwise determined by the Committee for all options to be
granted on an Enrollment Date, the period referred to in clause (b) in the
preceding sentence shall mean the period from the applicable Enrollment Date
through the last business day prior to the immediately following Enrollment
Date.
5.3 Number of Shares Subject to Option. The number of shares available for
purchase by each Participant under the option will be established by the
Committee from time to time prior to an Enrollment Date for all options to be
granted on such Enrollment Date. In addition and notwithstanding the preceding,
an option (taken together with all other options then outstanding under this
Plan and under all other similar employee stock purchase plans of the Employers)
shall not give the Participant the right to purchase shares at a rate which
accrues in excess of $25,000 of fair market value at the applicable Grant Dates
of such shares (less the fair market value at the applicable Grant Dates of any
shares previously purchased during such year under options which have expired or
terminated) in any calendar year during which such Participant is enrolled in
the Plan at any time.
5.4 Other Terms and Conditions. Each option shall be subject to the
following additional terms and conditions:
(a) payment for shares purchased under the option shall be made only
through payroll withholding under Section 4.2;
(b) if determined by the Committee (in its discretion and on a uniform
and nondiscriminatory basis), funds credited to each Participant's account
may be credited with interest at a rate (which may be a variable rate)
determined by the Committee from time to time in its discretion;
A-3
<PAGE> 21
(c) purchase of shares upon exercise of the option will be
accomplished only in installments in accordance with Section 6.1;
(d) the price per share under the option will be determined as
provided in Section 6.1; and
(e) the option in all respects shall be subject to such other terms
and conditions (applied on a uniform and nondiscriminatory basis), as the
Committee shall determine from time to time in its discretion.
SECTION 6
PURCHASE OF SHARES
6.1 Exercise of Option. Subject to Section 6.2, on each Purchase Date, the
funds then credited to each Participant's account shall be used to purchase
whole shares of Common Stock. Any cash remaining after whole shares of Common
Stock have been purchased shall be carried forward in the Participant's account
for the purchase of shares on the next Purchase Date. The price per share of the
shares purchased under any option shall be the lower of:
(a) the closing price per share of Common Stock on the business day
immediately preceding the Grant Date for such option on the NASD National
Market System; or
(b) 90% of the "average closing price per share" (for this purpose,
the "average closing price per share" means the arithmetic mean of the
closing prices per share of Common Stock on the Purchase Date and the two
business days immediately preceding the Purchase Date, as reported for each
such business day on the NASD National Market System).
Notwithstanding the preceding, the purchase price under any option shall be
increased to the extent necessary to ensure that the maximum discount permitted
by Section 423(b) of the Code is not exceeded (all as determined by the
Committee in its sole discretion). Thus, the price per share under any option
shall equal at least 85% of the lower of: (1) the closing price per share of
Common Stock on the NASD National Market System on the Grant Date, or (2) the
closing price per share of Common Stock on the NASD National Market System on
the Purchase Date.
6.2 Crediting of Shares. Shares purchased on any Purchase Date shall be
delivered to a custodian or broker designated by the Committee to hold shares
for the benefit of the Participants. As determined by the Committee from time to
time, such shares shall be delivered as physical certificates or by means of a
book entry system. The Participant may direct the broker to sell such shares at
any time (subject to applicable securities laws). However, except as determined
by the Committee (in its discretion and on a uniform and nondiscriminatory
basis), the Participant may not direct that his or her shares be transferred to
another broker or to any other person (including the Participant).
6.3 Exhaustion of Shares. If at any time the shares available under the
Plan are over-enrolled, enrollments shall be reduced proportionately to
eliminate the over-enrollment. Such reduction method shall be "bottom up", with
the result that all option exercises for one share shall be satisfied first,
followed by all exercises for two shares, and so on, until all available shares
have been exhausted. Any funds that, due to over-enrollment, cannot be applied
to the purchase of whole shares shall be refunded to the Participants (with
interest).
SECTION 7
WITHDRAWAL
7.1 Withdrawal. A Participant may withdraw from the Plan by submitting a
completed enrollment form to the Company. A withdrawal will be effective only if
it is received by the Company at least seven calendar days before the proposed
date of withdrawal, provided that the Committee, in its discretion, may specify
(on a uniform and nondiscriminatory basis) an earlier or later deadline for the
submission of
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<PAGE> 22
enrollment forms. When a withdrawal becomes effective, the Participant's payroll
contributions shall cease and all amounts then credited to the Participant's
account shall be distributed to him or her (without interest for the current
Plan Year Quarter). Notwithstanding any contrary provision of the Plan, if a
Participant withdraws from the Plan, he or she shall be permitted to re-enroll
in the Plan as of the earlier of (a) any Enrollment Date which occurs six months
or more after the date of his or her withdrawal, or (b) the first Enrollment
Date of the next Plan Year.
SECTION 8
CESSATION OF PARTICIPATION
8.1 Termination of Status as Eligible Employee. A Participant shall cease
to be a Participant immediately upon the cessation of his or her status as an
Eligible Employee (for example, because of his or her termination of employment
from all Employers for any reason). As soon as practicable after such cessation,
the Participant's payroll contributions shall cease and all amounts then
credited to the Participant's account shall be distributed to him or her (with
interest). If a Participant is on a Company-approved leave of absence, his or
her participation in the Plan shall continue for so long as he or she remains an
Eligible Employee and has not withdrawn from the Plan pursuant to Section 7.1.
SECTION 9
DESIGNATION OF BENEFICIARY
9.1 Designation. Each Participant may, pursuant to such uniform and
nondiscriminatory procedures as the Committee may specify from time to time,
designate one or more Beneficiaries to receive any amounts credited to the
Participant's account at the time of his or her death. Notwithstanding any
contrary provision of this Section 9, Sections 9.1 and 9.2 shall be operative
only after (and for so long as) the Committee determines (on a uniform and
nondiscriminatory basis) to permit the designation of Beneficiaries.
9.2 Changes. A Participant may designate different Beneficiaries (or may
revoke a prior Beneficiary designation) at any time by delivering a new
designation (or revocation of a prior designation) in like manner. Any
designation or revocation shall be effective only if it is received by the
Committee. However, when so received, the designation or revocation shall be
effective as of the date the designation or revocation is executed (whether or
not the Participant still is living), but without prejudice to the Committee on
account of any payment made before the change is recorded. The last effective
designation received by the Committee shall supersede all prior designations.
9.3 Failed Designations. If a Participant dies without having effectively
designated a Beneficiary, or if no Beneficiary survives the Participant, the
Participant's Account shall be payable to his or her estate.
SECTION 10
ADMINISTRATION
10.1 Plan Administrator. The Plan shall be administered by the Committee.
The Committee shall have the authority to control and manage the operation and
administration of the Plan.
10.2 Actions by Committee. Each decision of a majority of the members of
the Committee then in office shall constitute the final and binding act of the
Committee. The Committee may act with or without a meeting being called or held
and shall keep minutes of all meetings held and a record of all actions taken by
written consent.
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10.3 Powers of Committee. The Committee shall have all powers and
discretion necessary or appropriate to supervise the administration of the Plan
and to control its operation in accordance with its terms, including, but not by
way of limitation, the following discretionary powers:
(a) To interpret and determine the meaning and validity of the
provisions of the Plan and the options and to determine any question
arising under, or in connection with, the administration, operation or
validity of the Plan or the options;
(b) To determine any and all considerations affecting the eligibility
of any employee to become a Participant or to remain a Participant in the
Plan;
(c) To cause an account or accounts to be maintained for each
Participant;
(d) To determine the time or times when, and the number of shares for
which, options shall be granted;
(e) To establish and revise an accounting method or formula for the
Plan;
(f) To designate a custodian or broker to receive shares purchased
under the Plan and to determine the manner and form in which shares are to
be delivered to the designated custodian or broker;
(g) To determine the status and rights of Participants and their
Beneficiaries or estates;
(h) To employ such brokers, counsel, agents and advisers, and to
obtain such broker, legal, clerical and other services, as it may deem
necessary or appropriate in carrying out the provisions of the Plan;
(i) To establish, from time to time, rules for the performance of its
powers and duties and for the administration of the Plan;
(j) To adopt such procedures and subplans as are necessary or
appropriate to permit participation in the Plan by employees who are
foreign nationals or employed outside of the United States;
(k) To determine the interest rate and methodology for calculating the
interest to be credited to Participants' accounts; and
(l) To delegate to any one or more of its members or to any other
person, severally or jointly, the authority to perform for and on behalf of
the Committee one or more of the functions of the Committee under the Plan.
10.4 Decisions of Committee. All actions, interpretations, and decisions
of the Committee shall be conclusive and binding on all persons, and shall be
given the maximum possible deference allowed by law.
10.5 Administrative Expenses. All expenses incurred in the administration
of the Plan by the Committee, or otherwise, including legal fees and expenses,
shall be paid and borne by the Employers, except any stamp duties or transfer
taxes applicable to the purchase of shares may be charged to the account of each
Participant. Any brokerage fees for the purchase of shares by a Participant
shall be paid by the Company, but fees and taxes (including brokerage fees) for
the transfer, sale or resale of shares by a Participant, or the issuance of
physical share certificates, shall be borne solely by the Participant.
10.6 Eligibility to Participate. No member of the Committee who is also an
employee of an Employer shall be excluded from participating in the Plan if
otherwise eligible, but he or she shall not be entitled, as a member of the
Committee, to act or pass upon any matters pertaining specifically to his or her
own account under the Plan.
10.7 Indemnification. Each of the Employers shall, and hereby does,
indemnify and hold harmless the members of the Committee and the Board, from and
against any and all losses, claims, damages or liabilities (including attorneys'
fees and amounts paid, with the approval of the Board, in settlement of any
claim) arising out of or resulting from the implementation of a duty, act or
decision with respect to the Plan, so long as such duty, act or decision does
not involve gross negligence or willful misconduct on the part of any such
individual.
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SECTION 11
AMENDMENT, TERMINATION, AND DURATION
11.1 Amendment, Suspension, or Termination. The Board, in its sole
discretion, may amend or terminate the Plan, or any part thereof, at any time
and for any reason. If the Plan is terminated, the Board, in its discretion, may
elect to terminate all outstanding options either immediately or upon completion
of the purchase of shares on the next Purchase Date, or may elect to permit
options to expire in accordance with their terms (and participation to continue
through such expiration dates). If the options are terminated prior to
expiration, all amounts then credited to Participants' accounts which have not
been used to purchase shares shall be returned to the Participants (with
interest) as soon as administratively practicable.
11.2 Duration of the Plan. The Plan shall commence on the date specified
herein, and subject to Section 11.1 (regarding the Board's right to amend or
terminate the Plan), shall remain in effect thereafter.
SECTION 12
GENERAL PROVISIONS
12.1 Participation by Subsidiaries. One or more Subsidiaries of the
Company may become participating Employers by adopting the Plan and obtaining
approval for such adoption from the Board. By adopting the Plan, an Subsidiary
shall be deemed to agree to all of its terms, including (but not limited to) the
provisions granting exclusive authority (a) to the Board to amend the Plan, and
(b) to the Committee to administer and interpret the Plan. Any Subsidiary may
terminate its participation in the Plan at any time. The liabilities incurred
under the Plan to the Participants employed by each Employer shall be solely the
liabilities of that Employer, and no other Employer shall be liable for benefits
accrued by a Participant during any period when he or she was not employed by
such Employer.
12.2 Inalienability. In no event may either a Participant, a former
Participant or his or her Beneficiary, spouse or estate sell, transfer,
anticipate, assign, hypothecate, or otherwise dispose of any right or interest
under the Plan; and such rights and interests shall not at any time be subject
to the claims of creditors nor be liable to attachment, execution or other legal
process. Accordingly, for example, a Participant's interest in the Plan is not
transferable pursuant to a domestic relations order. The preceding shall not
affect the Participant's right to direct the sale or transfer of shares that
have been allocated to the Participant's account at the broker designated by the
Committee (subject to the provisions of the Plan).
12.3 Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
12.4 Requirements of Law. The granting of options and the issuance of
shares shall be subject to all applicable laws, rules, and regulations, and to
such approvals by any governmental agencies or securities exchanges as the
Committee may determine are necessary or appropriate.
12.5 Compliance with Rule 16b-3. Any transactions under this Plan with
respect to officers (as defined in Rule 16a-1 promulgated under the 1934 Act)
are intended to comply with all applicable conditions of Rule 16b-3. To the
extent any provision of the Plan or action by the Committee fails to so comply,
it shall be deemed null and void, to the extent permitted by law and deemed
advisable by the Committee. Notwithstanding any contrary provision of the Plan,
if the Committee specifically determines that compliance with Rule 16b-3 no
longer is required, all references in the Plan to Rule 16b-3 shall be null and
void.
12.6 No Enlargement of Employment Rights. Neither the establishment or
maintenance of the Plan, the granting of options, the purchase of shares, nor
any action of any Employer or the Committee, shall be held or construed to
confer upon any individual any right to be continued as an employee of the
Employer nor, upon dismissal, any right or interest in any specific assets of
the Employers other than as provided in the Plan. Each Employer expressly
reserves the right to discharge any employee at any time, with or without cause.
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<PAGE> 25
12.7 Apportionment of Costs and Duties. All acts required of the Employers
under the Plan may be performed by the Company for itself and its Subsidiaries,
and the costs of the Plan may be equitably apportioned by the Committee among
the Company and the other Employers. Whenever an Employer is permitted or
required under the terms of the Plan to do or perform any act, matter or thing,
it shall be done and performed by any officer or employee of the Employers who
is thereunto duly authorized by the Employers.
12.8 Construction and Applicable Law. The Plan is intended to qualify as
an "employee stock purchase plan" within the meaning of Section 423(b) of the
Code. Any provision of the Plan which is inconsistent with Section 423(b) of the
Code shall, without further act or amendment by the Company or the Committee, be
reformed to comply with the requirements of Section 423(b). The provisions of
the Plan shall be construed, administered and enforced in accordance with such
Section and with the laws of the State of California (excluding California's
conflict of laws provisions).
12.9 Captions. The captions contained in and the table of contents
prefixed to the Plan are inserted only as a matter of convenience, and in no way
define, limit, enlarge or describe the scope or intent of the Plan nor in any
way shall affect the construction of any provision of the Plan.
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<PAGE> 26
FRITZ COMPANIES, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 29, 1996
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 at Bank of
America NT & SA, 555 California Street, San Francisco, California, on October
29, 1996 at 10:30 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 September 9, 1996,
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)
* FOLD AND DETACH HERE *
<PAGE> 27
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF FRITZ
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS NOS. 1, 2 AND 3
Please mark
your vote as [X]
indicated in
this example
Item 1--Election of Directors
FOR all nominees WITHHOLD
listed to the right AUTHORITY
(except as marked to the to vote for all
contrary) nominees listed
[ ] [ ]
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
Item 2--To approve the Proposal to amend the 1992 Omnibus Equity Incentive Plan
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Item 3--To approve the Proposal to adopt the Employee Stock Purchase Plan
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Item 4--In their discretion, upon any and all such other matters as may
properly come before the meeting or any adjournment thereof
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: _______________________________, 1996
PLEASE SIGN, DATE, AND RETURN YOUR PROXY
PROMPTLY IN THE ENVELOPE PROVIDED, WHICH
REQUIRES NO POSTAGE IF MAILED IN
THE UNITED STATES.
* FOLD AND DETACH HERE *
