<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended AUGUST 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to______
Commission file number 0-20548
FRITZ COMPANIES, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 94-3083515
- -------------------------------- -----------------------------
(State or other jurisdiction of (IRS Employer Identification
incorporation or organization) Number)
706 Mission Street, Suite 900, San Francisco, California 94103
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (415) 904-8360
Not applicable
- -------------------------------------------------------------------------------
Former name, former address and former fiscal year if changed from last report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.[X] Yes [ ] No
As of August 31, 1997 there were 35,653,000 shares of common stock outstanding.
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<PAGE> 2
FORM 10-Q
FRITZ COMPANIES, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
<S> <C> <C>
Item 1. Financial Statements:
Independent Accountants' Review Report 3
Condensed Consolidated Balance Sheets as of August 31,
1997 and May 31, 1997 4
Condensed Consolidated Statements of Operations for the three
months ended August 31, 1997 and 1996 5
Condensed Consolidated Statements of Cash Flows for the three
months ended August 31, 1997 and 1996 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II. OTHER INFORMATION 12
SIGNATURES 13
EXHIBIT INDEX 14
</TABLE>
<PAGE> 3
FRITZ COMPANIES, INC. FORM 10-Q
Independent Accountants' Review Report
Board of Directors and Stockholders
Fritz Companies, Inc.
We have reviewed the accompanying condensed consolidated balance sheet of Fritz
Companies, Inc. and subsidiaries (the Company) as of August 31, 1997, and the
related condensed consolidated statements of operations and cash flows for the
three months then ended included in the Company's Form 10-Q. These condensed
consolidated financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the condensed consolidated financial statements referred to above for
them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Fritz Companies, Inc. and
subsidiaries as of May 31, 1997, and the related consolidated statements of
operations, stockholders' equity, and cash flows for the year then ended (not
presented herein); and in our report dated July 16, 1997, we expressed an
unqualified opinion on those consolidated financial statements. In our opinion,
the information set forth in the accompanying condensed consolidated balance
sheet as of May 31, 1997, is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
KPMG Peat Marwick LLP
San Francisco, California
September 29, 1997
<PAGE> 4
FORM 10-Q
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS:
FRITZ COMPANIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNT)
(UNAUDITED)
<TABLE>
<CAPTION>
August 31, May 31,
1997 1997
--------- ----------
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and equivalents $ 44,470 $ 43,368
Accounts receivable, net of allowance for doubtful
accounts of $23,679 in August and $22,292 in May 440,113 414,550
Deferred income taxes 13,298 10,519
Prepaid expenses and other assets 25,657 27,978
--------- ---------
Total current assets 523,538 496,415
--------- ---------
PROPERTY AND EQUIPMENT - NET 94,551 100,879
--------- ---------
OTHER ASSETS:
Intangibles, net of accumulated amortization of $17,122
in August and $16,204 in May 112,351 110,691
Other assets 17,192 15,531
--------- ---------
Total other assets 129,543 126,222
--------- ---------
TOTAL ASSETS $ 747,632 $ 723,516
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term obligations and short-term
borrowings $ 36,664 $ 37,200
Accounts payable 294,592 276,228
Accrued liabilities 67,559 73,094
Income tax payable 10,654 7,148
--------- ---------
Total current liabilities 409,469 393,670
LONG-TERM OBLIGATIONS 91,775 84,884
DEFERRED INCOME TAXES 1,087 1,243
OTHER LIABILITIES 9,240 9,024
--------- ---------
TOTAL LIABILITIES 511,571 488,821
--------- ---------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock: par value $.01 per share;
60,000 shares authorized, 35,653 shares
issued and outstanding, (35,445 shares
issued and outstanding in May) 356 354
Additional paid-in capital 126,812 124,424
Retained earnings 116,701 112,895
Cumulative foreign currency translation adjustments (7,808) (2,978)
--------- ---------
Total stockholders' equity 236,061 234,695
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 747,632 $ 723,516
========= =========
</TABLE>
See accompanying independent accountants' review report and
notes to condensed consolidated financial statements.
<PAGE> 5
FORM 10-Q
FRITZ COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNT)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
-----------------------
August 31, August 31,
1997 1996
---------- ----------
<S> <C> <C>
REVENUE $ 326,699 $ 270,490
FREIGHT CONSOLIDATION COSTS 187,460 140,773
--------- ---------
NET REVENUE 139,239 129,717
--------- ---------
OPERATING EXPENSES:
Salaries and related costs 80,059 71,634
General and administrative 52,457 45,720
--------- ---------
Total operating expenses 132,516 117,354
--------- ---------
INCOME FROM OPERATIONS 6,723 12,363
OTHER EXPENSE, NET (868) (377)
--------- ---------
INCOME BEFORE TAX EXPENSE 5,855 11,986
INCOME TAX EXPENSE 2,049 4,195
--------- ---------
NET INCOME $ 3,806 $ 7,791
========= =========
Weighted average shares outstanding - primary 35,670 35,734
========= =========
Earnings per share - primary $ 0.11 $ 0.22
========= =========
Weighted average shares outstanding - fully
diluted 35,924 35,805
========= =========
Earnings per share - fully diluted $ 0.11 $ 0.22
========= =========
</TABLE>
See accompanying independent accountants' review report and
notes to condensed consolidated financial statements.
<PAGE> 6
FORM 10-Q
FRITZ COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNT)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
----------------------
August 31, August 31,
1997 1996
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 3,806 $ 7,791
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 6,852 5,940
Deferred income taxes (3,107) (1,681)
Effect of changes in:
Receivables (25,563) (14,119)
Prepaid expenses and other current assets 2,321 4,723
Payables and accrued liabilities 18,808 (15,879)
Accrued merger costs - (344)
-------- --------
Net cash provided by (used in) operating activities 3,117 (13,569)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (4,387) (9,490)
Acquisitions, new and contingent (1,172) (9,823)
Acquisitions, debt (1,661) (2,292)
Other (437) 681
-------- --------
Net cash used in investing activities (7,657) (20,924)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term obligations 6,591 1,439
Current portion of long-term obligations repaid (2,140) (1,461)
Net increase in short-term borrowings 1,305 21,000
Proceeds from stock options exercised 20 2,795
Other 114 31
-------- --------
Net cash provided by financing activities 5,890 23,804
-------- --------
Foreign currency translation effect on cash (248) (183)
-------- --------
INCREASE (DECREASE) IN CASH AND EQUIVALENTS 1,102 (10,872)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 43,368 86,461
-------- --------
CASH AND EQUIVALENTS AT END OF PERIOD $ 44,470 $ 75,589
======== ========
OTHER CASH FLOW INFORMATION:
Income taxes paid $ 1,561 $ 349
======== ========
Interest paid $ 786 $ 1,152
======== ========
</TABLE>
See accompanying independent accountants' review report and
notes to condensed consolidated financial statements.
<PAGE> 7
FORM 10-Q
FRITZ COMPANIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. GENERAL
The accompanying condensed consolidated financial statements of Fritz
Companies, Inc. and subsidiaries (the Company) for the three months ended
August 31, 1997 and 1996 are unaudited and, in the opinion of management,
contain all adjustments, consisting only of normal and recurring
adjustments, necessary for a fair presentation of the results of such
periods. Certain prior year amounts have been reclassified to conform to
the current year's financial statement presentation.
The significant accounting policies followed by the Company are
described in Note 1 to the audited consolidated financial statements for
the year ended May 31, 1997. In accordance with SEC regulations, certain
information and footnote disclosures normally included in the annual
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted for the purposes of
the consolidated interim financial statements. The condensed consolidated
financial statements should be read in conjunction with the consolidated
financial statements, including the notes thereto, for the year ended May
31, 1997 included in the Company's Form 10-K filed on July 31, 1997. The
results of operations for the three months ended August 31, 1997 are not
necessarily indicative of the results to be expected for the full year.
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, Earnings Per Share
(Statement 128). The statement establishes standards for the computation,
presentation, and disclosure of earnings per share (EPS). It requires dual
presentation of Basic EPS and Diluted EPS. Basic EPS excludes all dilution
while Diluted EPS reflects potential dilution. Statement 128 is effective
for financial statements for periods ending after December 15, 1997.
Earlier application is not permitted. The Company does not expect adoption
of this statement will have a material impact to previously reported EPS
amounts.
In June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income," which requires enterprises to report, by major component and in
total, all changes in equity from nonowner sources; and Statement of
Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information," which establishes annual and interim
reporting standards for a public company's operating segments and related
disclosures about its products, services, geographic areas and major
customers. Both standards are effective for the Company's fiscal year 1999
with earlier application permitted. The effect of adoption of these
statements will be limited to the form and content of the Company's
disclosures and will not impact the Company's results of operations, cash
flow or financial position.
2. COMMON STOCK
The increase in common stock issued and paid in capital was primarily
due to shares issued upon exercise of options, restricted stock grants, and
issuance of shares under the employee stock purchase plan. The weighted
average price used to calculate the impact of common stock equivalents on
primary earnings per share for the three months ended August 1997 was lower
than the weighted average price for the same period in 1996. The lower
average price resulted in fewer common stock equivalents for the three
months ended August 31, 1997, as compared to the same period in 1996.
<PAGE> 8
FRITZ COMPANIES, INC. FORM 10-Q
3. INCOME TAXES
Income tax expense for the three months ended August 31, 1997 consisted
of approximately $5.1 million of current tax provision and $3.1 million of
deferred tax benefit.
4. ACQUISITIONS
The Company recorded approximately $3.4 million and $8.6 million for
the quarters ended August 31, 1997 and 1996, respectively, of additional
purchase price relating to achievement of specified net revenue or pre-tax
income levels of certain prior acquisitions. At August 31, 1997, the
remaining maximum payments in connection with acquisitions providing a
contingent purchase price is approximately $8.9 million. There is no
certainty these businesses will achieve the revenue or profit levels to
require these contingent payments.
Net obligations recorded in relation to acquisitions were $0.3 million
and $0.3 million of current and long-term obligations, respectively, for
1997 and $2.2 million and $2.7 million of current and long-term
obligations, respectively, for 1996.
5. CONTINGENCIES
The Company is party to routine litigation incident to its business,
primarily claims for goods lost or damaged in transit or improperly
shipped. Most of the lawsuits in which the Company is the defendant are
covered by insurance and are being defended by the Company's insurance
carriers.
In 1996, a total of six complaints were filed (three in federal court
and three in state court of California) against the Company and certain of
its directors and officers, purporting to be brought on behalf of a class
of purchasers of the Company's stock between August 28, 1995 and July 23,
1996. The complaints allege various violations of Federal Securities law
and California Corporate Securities law in connection with prior
disclosures made by the Company and seek unspecified damages.
Three of the class action suits filed against the Company in state
court were dismissed with prejudice by the Superior Court of California for
the County of San Francisco on grounds the claims asserted under the
California Corporate Securities law and common law fraud were not legally
tenable. One of the cases dismissed is being appealed. The three cases
filed in federal court, now consolidated to a single case, remain pending.
On September 12, 1997, the Company's motion to dismiss that consolidated
case was argued before the federal court. No ruling has yet been handed
down.
The Company is unable to predict the ultimate outcome of these suits
and it is possible that the outcome could have a significant adverse impact
on the Company's future consolidated results of operations. However, the
Company believes the ultimate outcome of these matters will not have a
significant adverse impact on the Company's consolidated financial
position.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
The following discussion is applicable to the Company's financial
condition and results of operations for the three months ended August 31,
1997 and 1996. See Note 1 of Notes to Condensed Consolidated Financial
Statements.
<PAGE> 9
FRITZ COMPANIES, INC. FORM 10-Q
RESULTS OF OPERATIONS
The following table provides the revenue, net revenue and percentages
attributable to the Company's principle logistics services during the
periods indicated (in thousands, except percent):
<TABLE>
<CAPTION>
THREE MONTHS ENDED AUGUST 31,
----------------------------------------
1997 % 1996 %
------------------ -------------------
REVENUE:
<S> <C> <C> <C> <C>
Customs brokerage $ 41,222 12.6 $ 40,884 15.1
Ocean freight forwarding 97,455 29.8 80,795 29.9
Airfreight forwarding 143,256 43.9 114,988 42.5
Warehousing and distribution 44,766 13.7 33,823 12.5
======== ===== ======== =====
Total revenue $326,699 100.0 $270,490 100.0
======== ===== ======== =====
NET REVENUE:
Customs brokerage $ 41,222 29.6 $ 40,884 31.5
Ocean freight forwarding 30,222 21.7 28,149 21.7
Airfreight forwarding 38,091 27.4 34,137 26.3
Warehousing and distribution 29,704 21.3 26,547 20.5
======== ===== ======== =====
Total net revenue $139,239 100.0 $129,717 100.0
======== ===== ======== =====
</TABLE>
THREE MONTHS ENDED AUGUST 31, 1997 COMPARED WITH THREE MONTHS ENDED
AUGUST 31, 1996
Revenue and Net Revenue: For the first quarter of fiscal year 1998,
revenue increased 20.8% to $326.7 million from $270.5 million for the
comparable period and net revenue increased 7.3% to $139.2 million from
$129.7 million for the comparable period. All of the Company's principal
service areas reported revenue increases. The increase in revenue and net
revenue was primarily due to ocean freight, airfreight and warehousing and
distribution services, which was the result of continued expansion of
overseas and domestic services, increased demand from existing integrated
logistics customers and continued expansion of warehouse facilities. All
products continued to experience some pressure on prices and margins due to
the competitive environment. The Company continues to focus on improving
productivity, efficiency and providing value added customer service at
competitive prices.
Operating Expenses: Operating expenses increased 12.9% from $117.4
million to $132.5 million for the first quarter of fiscal year 1998
compared to the comparable period of fiscal year 1997. The increase in
salaries and related costs was due to growth in the number of personnel to
support the Company's continued expansion of its overseas and domestic
services and to accommodate the increase in shipping volumes caused by the
UPS strike. The increase in general and administrative expenses was
primarily due to expenditures to support the Company's expansion, including
data processing costs, communications and occupancy related costs which
include warehouse related expenses.
<PAGE> 10
FRITZ COMPANIES, INC. FORM 10-Q
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and equivalents increased $1.1 million to $44.5
million at August 31, 1997 from $43.4 million at May 31, 1997. The increase
in cash was primarily due to net increases in long-term debt financing
activities which was primarily used to fund capital expenditures and
acquisition payments. The Company's investing activities for this period
included capital expenditures of approximately $4.4 million which primarily
includes expenditures for computer hardware, building and leasehold
improvements and warehouse equipment. The Company's financing activities
for this period included long-term funding of $6.6 million for a warehouse
in Singapore.
The Company paid cash of $2.8 million relating to acquisitions. These
payments consisted of reductions to existing debt totaling $1.6 million,
and additional payments totaling $1.2 million from achievement of specified
net revenue or pre-tax income levels.
As of August 31, 1997, utilization of the syndicated multicurrency
credit facility (the Credit Facility) was $38.7 million, consisting of
$24.0 million of borrowings under the Credit Facility and $14.7 million for
outstanding letters of credit. Therefore, the Company's total available
borrowing capacity under the Credit Facility as of August 31, 1997 was
approximately $21.3 million.
CURRENCY AND OTHER RISK FACTORS
The nature of the Company's worldwide operations involves a multitude
of currencies other than the U.S. Dollar. Accordingly, the Company is
exposed to the inherent risks of international currency markets and
governmental interference. The Company seeks to compensate for currency
exposures by accelerating international payment among the Company's offices
and agents. The Company's translation adjustment for the three months ended
August 31, 1997 increased due to the strengthening of the U.S. dollar
relative to the currencies on Asia, Europe and Latin America.
In addition, the Company's ability to provide service to its customers
is highly dependent on good working relationships with a variety of
entities such as airlines, steamship carriers and governmental agencies.
However, changes in space allotments available from carriers, governmental
deregulation efforts, "modernization" of the regulations governing customs
clearance, and/or changes in the international trade and tariff environment
could affect the Company's business in unpredictable ways.
There are also risks and uncertainties associated with the Company's
acquisition strategy, such as the complexities of integrating systems and
operations of acquired companies.
<PAGE> 11
FRITZ COMPANIES, INC. FORM 10-Q
Management believes the Company's business has not been adversely affected
by inflation in the past. Historically, the Company has generally been
successful in passing cost increases to its customers by means of price
increases. However, due to the competitive marketplace, continued future
cost increases could erode the Company's margin.
Additional risks and uncertainties include:
(i) The Company's ability to implement its program to
improve operating results and cash flow,
(ii) Dependence of the Company on international trade and
worldwide economic conditions,
(iii) Dependence of the Company on the continued services of
key executives and managers,
(iv) Risks associated with the Company's acquisition
strategy, including:
(a) Diversion of management's attention to the
assimilation of the operations and
personnel of acquired companies,
(b) Potential adverse short-term effects of
acquisitions on the Company's operating
results, and
(c) Integration of financial reporting systems
and acquired assets.
(v) The possible inability of the Company's information
systems to keep pace with the increasing complexity and
growth of the Company's business,
(vi) The increasing level of investment required by the
transition of the Company from prior predominance of
customs brokerage revenue to its increasing emphasis on
integrated logistics and providing a full range of
international transportation and supply chain
management services,
(vii) Diversion of management focus and resources as a result
of pending litigation,
(viii) Other risks disclosed elsewhere in this Form 10-Q or
in the Company's other filings with the Securities and
Exchange Commission.
SAFE HARBOR STATEMENT
Except for the historical information contained herein, the matters
discussed in this Form 10-Q contain forward looking statements that involve
risks and uncertainties. The Company's actual results could differ
materially. Factors that could cause or contribute to such differences
include, but are not limited to, those discussed herein, as well as those
discussed elsewhere in the Company's Securities & Exchange Commission
filings.
<PAGE> 12
FRITZ COMPANIES, INC. FORM 10-Q
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.31 Credit Facility dated July 19, 1996 between National Bank
of Canada and the Registrant totaling $30.0 million
(Canadian dollars), principal repayable on demand,
interest repayable on the 26th day of each month based on
either the Canadian or American prime rate of the Bank.
The Registrant has the option to set interest based on
Libor, plus 75 basis points. Credit Facility borrowings
are collateralized based on the Registrants net accounts
receivable balance. Edgar Filing Only.
15 Letter regarding unaudited interim financial information.
Edgar Filing Only.
27 Financial Data Schedule. Edgar Filing Only.
(b) Reports on Form 8-K
No Reports on Form 8-K were filed in the quarter ended August 31,
1997.
<PAGE> 13
FRITZ COMPANIES, INC. FORM 10-Q
S I G N A T U R E S
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FRITZ COMPANIES, INC.
Registrant
Dated: September 30, 1997
-------------------------------------
Lynn C. Fritz
Chairman and Chief Executive Officer
--------------------------------------
Dennis L. Pelino
President and Chief Operating Officer
--------------------------------------
Robert Arovas
Executive Vice President and
Chief Financial Officer
-------------------------------------
Ronald W. Womack
Vice President of Finance and
Principal Accounting Officer
<PAGE> 14
FRITZ COMPANIES, INC. FORM 10-Q
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
<S> <C>
10.31 Credit Facility dated July 19, 1996 between National Bank of Canada 15
and the Registrant totaling $30.0 million (Canadian dollars),
principal repayable on demand, interest repayable on the 26th day of
each month based on either the Canadian or American prime rate of the
Bank. The Registrant has the option to set interest based on Libor,
plus 75 basis points. Credit Facility borrowings are collateralized
based on the Registrants net accounts receivable balance.
15 Letter regarding unaudited interim financial information 38
27 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 10.31
TERMS AND CONDITIONS OF CREDIT FACILITY
1. OPERATING CREDIT FACILITY
1.1 AMOUNT AND PURPOSE
The Bank, subject to the terms and conditions hereof, agrees to make
available to the Borrower an operating credit facility of 30 000
000,00$, in Canadian Dollars or its equivalent in American Dollars, to
finance the Borrower's operating requirements, which operating credit
replaces any operating credit previously granted by the Bank in favour
of the Borrower.
1.2 TERM
This operating credit may be review from time to time by the Bank and
is repayable on demand.
1.3 MODES OF FINANCING
Subject to the terms and conditions provided herein, the Borrower may,
within the amount available to it under the present credit, avail
itself of one or the other of the following forms or a combination
thereof:
1.3.1 Floating Rate Advances in Canadian Dollars; and/or
1.3.2 Floating Rate Advances in American Dollars; and/or
1.3.3 Bankers' acceptances in Canadian Dollars; and/or
1.3.4 Letters of guarantee or Letters of credit in Canadian Dollars or
in any other currency acceptable to the Bank; and/or
1.3.5 Libor Loans.
15
<PAGE> 2
1.4 INTEREST RATE
1.4.1 Floating Rate advances in Canadian Dollars:
Floating Rate advances in Canadian dollars shall bear interest, until
payment in full, at an annual interest rate equal to the Canadian
Prime Rate of the Bank.
1.4.2 Floating Rate advances in American Dollars:
Floating Rate advances in American Dollars shall bear interest, until
payment in full, at an annual interest rate equal to the American
Prime Rate of the Bank.
1.4.3 Payment of interest
Interest on the Floating Rate advances shall be payable montly on the
26th day of each month (or any other day of the month that the Bank
may choose) with interest at the same rate on any amount in arrears.
1.5 ADVANCES AND REPAYMENT
The Borrower may draw upon the amount made available to it by virtue
of these presents, by satisfying the terms and conditions specified
herein and subject to the execution of any document that may be
requested by the Bank in order to give full effect to the provisions
contained herein.
Disbursement and repayment of the operating credit shall be made in
multiples of 25 000,00$.
The principal amount of the Floating Rate advances shall be payable on
demand.
The Borrower may repay all or part of its Floating Rate advances at
any time during the credit, without penalty.
The Bankers' acceptances and the Libor Loan shall be repaid only at
maturity.
16
<PAGE> 3
1.6 BANKER'S ACCEPTANCES
The utilization of the present credit by way of Bankers' acceptances
may be exercised by the Borrower at any time subject to the following
conditions:
-A prior written notice of two business days must be given to the
Bank.
-The drawing shall be for an aggregate minimum amount of 500 000,00$
Cndian dollars and in integral multiples of 100 000,00$ Cndian dollars
for any sums in excess of such amount.
-The Borrower may use 100% of the present credit by way of Bankers'
acceptances, without exceeding the amount of credit then available.
-The period choosen shall not be less than 3 days and shall not exceed
30 days, and the Borrower shall not be entitled to claim any day of
grace for payment.
-The Borrower shall pay stamping fees on the nominal face value of the
Bankers' Acceptances, at the rate of 0,75% per annum (for the number
of days included in the selected period); such fees shall be payable
at the time of acceptance of such Bankers' Acceptances.
-Subject to the terms and conditions herein, the Bank undertakes to
remit to the Borrower, the nominal face value of the Bankers'
Acceptance issued less the discount applicable thereto.
-Without restricting the right of the Bank to ask on its demand the
repayment of the credit, the Borrower may, by giving a prior written
notice of two business days to the Bank before the maturity of any
Bankers'
17
<PAGE> 4
Acceptances, reissue in whole or in part, such Bankers' Acceptances,
the whole in accordance with and subject to the provisions of this
Offer.
-Bankers' Acceptances shall constitute a utilization of the credit to
the extent of their nominal face value and shall automatically, on the
maturity date thereof, be deemed to have been converted to Floating
Rate Advances and shall then bear interest at the interest rate
hereinabove mentioned in paragraph 1.4.1, unless the Borrower repaid
such Bankers' Acceptances or shall have given the necessary notice in
order to reissue such Bankers' Acceptances.
-Notwithstanding the foregoing, the acceptance by the Bank of Bankers'
Acceptances is conditionnal to availability of funds on the money
market.
1.7 LETTERS OF GUARANTEE, LETTERS OF CREDIT
Any request for the issuance of a Letter of guarantee or a Letter of
credit, which request may be made at any time by the Borrower, shall
be subject to the following conditions:
1.7.1 WRITTEN NOTICE
A prior written notice of two (2) business days must be given to the
Bank.
1.7.2 LIMITED AMOUNT
The total amount of Letters of guarantee and Letters of credit must
never exceed 5 000 000,00$ in Canadian dollars or its equivalent in
any other currency acceptable to the Bank.
1.7.3 MATURITY DATES
Letters of guarantee shall mature on a date which shall not be less
than 30 days and no more than 365 days; Letters of credit shall be
payable at sight or shall mature on a date which shall not be more
than 90 days; Letters of guarantee and Letters of credit shall
constitute a utilization of the credit to the extent of their nominal
face value and
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<PAGE> 5
shall automatically, when paid, become Floating Rate Advances and
shall then bear interest at the interest rate hereinabove mentioned in
paragraphs 1.4.1 or 1.4.2 as the case may be.
1.7.4 COMMISSIONS
1.7.4.1 LETTERS OF GUARANTEE
For each letter of guarantee to be issued by the Bank, the borrower
shall pay to the Bank a commission of 0,75% per annum, based on the
amount of the Letter of guarantee and calculated as and from the date
of issuance for the entire duration of such Letter; such commission
being payable in advance at the date of issuance of the Letter of
guarantee.
1.7.4.2 LETTERS OF CREDIT
The Borrower shall pay to the Bank at the date of issuance of any
letter of credit a commission based on the usual scheduled fees of the
Bank.
1.7.5 DOCUMENTATION
No Letter of guarantee shall be issued by the Bank unless the Borrower
has executed and delivered the documents required in connection
therewith, which documents shall be in accordance with the forms in
use at the Bank.
1.8 LIBOR LOAN
Advances in U.S. dollars at Libor rate are subject to the following
conditions:
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<PAGE> 6
1.8.1 WRITTEN NOTICE
A prior written notice of three (3) business days must be given to the
Bank.
This notice, which will have to be substantially in the form attached
hereto as Schedule "B", will indicate the amount that the Borrower
intends to submit to the Libor Loans, the selected period of time and
the date on which the Libor loan option will be applicable
(hereinafter called "reference date"). Upon the Bank receiving this
notice, the choice made by the Borrower in the notice shall be
considered as final and irrevocable.
1.8.2 AMOUNT AND MATURITY DATES
The Libor loan shall be in minimum amounts of 500 000,00$ U.S. dollars
and integral multiples of 100 000,00$ U.S. dollars above this amount,
without exceeding the amount of credit then available.
The Libor loan option shall be, at the borrower's choice, for periods
of time of 1 month, 3 months or 6 months ("Libor period) subject to
availability of the market.
1.8.3 INTEREST RATE
The amount which at any time and from time to time remains outstanding
and upon which the Borrower has elected to repay as a Libor loan,
shall bear interest, computed daily, on the daily balance of the said
amount, from the reference date, at an annual rate equal to the Libor
rate plus 0,75%. Such interest shall be payable at the maturity of
each Libor period. However, when the Libor period exceeds 3 months,
interest shall be payable quarterly beginning the first day of the
quarter following the reference date.
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<PAGE> 7
1.8.4 ANNUAL EQUIVALENT
The interest applicable to the Libor loan option are computed daily on
a basis of a year of 360 days, consequently, the actual annual rate of
interest applicable to the Libor loan shall be equal to:
(Libor rate plus 0,75%) x 365 * = % per annum
360
* In a leap-year, 365 is replaced by 366.
1.8.5 AVAILABILITY
Notwithstanding the foregoing, the acceptance by the Bank of each
Libor loan request by the Borrower, is conditionnal to availability of
U.S. dollars on the London Interbank Market.
1.9 FINANCING CONDITIONS
The aggregate total amount of advances made by virtue of this
Operating Credit Facility, including Bankers' Acceptances, Letters of
guarantee, Letters of credit and Libor Loans, shall not at any time
exceed the value of 80% of the Borrower's net accounts receivable
(excluding contra or inter-company accounts, accounts of doubtful
quality and those aged 90 days or more).
The value of the Borrower's net accounts receivable shall be
established, from time to time, by the Bank, taking into account
claims ranking prior to the security of the Bank. The Borrower shall
furnish to the Bank, on the 20th day of each month, a detailed list of
its accounts receivable according to age, and a detailed list of its
accounts payable for the month ending on the last day of the preceding
month.
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<PAGE> 8
2. CURRENCY AND PLACE OF PAYMENT
All amounts due by the Borrower under this Offer shall be paid by the
Borrower to the Bank at the branch of the Bank where the Borrower operates
its bank account.
The advances in U.S. dollars together with the interest, commissions and
fees relating thereto, shall be repaid by the Borrower in U.S. dollars. The
advances in Canadian dollars together with the interest, commissions and
fees relating thereto shall be repaid by the Borrower in Canadian dollars.
3. SECURITY
The repayment of advances made hereunder, the payment of interest, fees and
all other amounts payable thereunder and in virtue of the security
documents, and the performance of all obligations present and future of the
Borrower towards the Bank, as well as the obligations of the Bank under the
Bankers' Acceptance, Letters of guarantee and Letters of credit, shall be
secured by the following security to be granted to the Bank by the
Borrower, which security shall be in accordance with the forms in use at
the Bank:
-a first ranking movable hypothec in the amount of 30 000 000,00$ on
the universality of the accounts receivable of the Borrower, present
and future;
-a general assignment of all accounts receivable of the Borrower, to
be registered in the province of Ontario and in all other provinces
where the Borrower has a place of business;
-a subordination agreement and a postponement of claims by Fritz
Companies Inc. and Fritz Companies Canada Inc. in favour of the Bank
for all sums due or to become due by the Borrower (which was
approximately 7 154 000,00$ as of December 31, 1995).
22
<PAGE> 9
4. REPRESENTATIONS AND WARRANTIES OF THE BORROWER
The Borrower represents and warrants to the Bank that:
4.1 It is a duly constituted, registered and organized company and is
in good standing under the laws governing it, and it has the powers,
permits and licences required to carry on its business and to own,
operate and administer its property.
4.2 There has been no material adverse change in its financial
position since the date of its most recent financial statements dated
December 31st, 1995, which have been provided to the Bank. These
statements represent fairly, at the date they were drawn up, its
financial position. The Borrower does not foresee incurring any
significant liabilities which have not already been disclosed to the
Bank.
4.3 It is not a party to any litigation or legal proceedings which
could have a material effect on its financial position or on its
ability to carry on its business.
4.4 It has good and marketable title to all its property free and
clear of all prior claims, mortgages, hypothecs, pledges, liens or
other similar encumbrances except for such security granted in favour
of the Bank.
4.5 It is not in default under the agreements to which it is a party
nor under the legislation and regulations applicable to the conduct
of its business including, without limitation, any environmental
requirements.
4.6 All taxes, assessments, deductions at source, income tax or
annuities for which the payment thereof is guaranteed by prior claim
and/or legal hypothec have been paid by the Borrower without
subrogation or consolidation.
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5. CONDITIONS PRECEDENT TO ANY RENEWAL OR DISBURSEMENT
At the time of the renewal or disbursement of the credit facility, the
Borrower shall, as applicable, provide, execute or perform the following to
the satisfaction of the Bank and its legal advisers:
5.1 REPRESENTATIONS AND WARRANTIES
The representations and warranties contained in the Section
entitled "REPRESENTATIONS AND WARRANTIES OF THE BORROWER" hereof
shall continue to be true and exact and shall survive the
execution of this or any subsequent agreements.
5.2 DOCUMENTS REQUIRED
The following documents shall be furnished to the Bank in form
and substance satisfactory to it:
-a duly certified copy of the corporate documents of the Borrower
and certificates of good standing and conformity;
-a duly certified copy of the borrowing by-law and resolution of
the Board of Directors of the Borrower relating to its authority
to execute these presents and to perform its obligations
hereunder and in virtue of the security documents;
-a certificate setting forth the functions and signatures of the
individuals authorized to represent the Borrower;
-a copy of the standard agreement or contract used by the
Borrower with its clients;
-the instruments or contracts creating the security contemplated
in section 3 herein, duly executed and registered in all places
where such registration and filing is necessary and duly
signified or served, if necessary;
-a written opinion, in form and substance acceptable to the Bank
and its legal advisers, from the legal advisers of the Borrower
regarding the status and the capacity to perform the obligations
described in this Offer and in virtue of the security documents;
24
<PAGE> 11
-a written opinion from the Bank's legal advisers regarding the
registration, validity and rank of the security documents
provided for in this Offer;
-any other document that the Bank may reasonably request.
6. OBLIGATIONS OF THE BORROWER
6.1 POSITIVE COVENANTS
Until payment in full of any amounts due under the terms of this
Offer, the Borrower shall:
6.1.1 carry on its business in a diligent and continuous manner;
6.1.2 use the proceeds of the credit facility for the purposes
provided for herein;
6.1.3 keep and maintain books of account and other accounting records
in accordance with generally accepted accounting principles and
shall furnish to the Bank its consolidated and non-consolidated
audited annual financial statements within 90 days of the end of
its fiscal year, as well as its In-house consolidated and
non-consolidated financial statements, on a monthly basis,
within 20 days of the end of each month;
6.1.4 maintain, at any time, on a cosolidated basis, a Working Capital
Ratio greater than or equal to 1.00 : 1.00;
6.1.5 at all times during normal business hours, and upon reasonable
notice, give the Bank's representatives the right to inspect its
establishments and provide access thereto, and further permit
the Bank's representatives to examine its books of account and
other records, and, if a default has occurred, take extracts
therefrom and/or copies thereof;
6.1.6 maintain, at all times, insurance coverage on its property
against loss or damage caused by fire and any other risk;
6.1.7 obtain and maintain in effect the permits and licenses required
to carry on its business;
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<PAGE> 12
6.1.8 notify the Bank, without delay, of any event of default or any
event which, following notice or the expiry of a delay, could
constitue an event of default;
6.1.9 punctuallypay all taxes, assessments, deductions at source,
income tax or annuities for which the payment thereof is
guaranteed by prior claim and/or legal hypothec, without
subrogation or consolidation;
6.1.10 provide the Bank with all informations and documents that the
Bank may reasonably request.
6.2 NEGATIVE COVENANTS
The Borrower undertakes not to carry out the following
transactions or operations without obtaining the prior written
consent from the Bank:
6.2.1 substantially change the nature of its operations or business;
6.2.2 change the control or the shareholding of the Borrower, which is
totally (100%) held by Fritz Companies Canada Inc.; or, merge
with another company, dissolve or wind up the company, unless
the Borrower stays within the control of the Fritz Family of
Companies;
6.2.3 declare or pay bonus to its officer, directors or shareholders
and/or declare or pay dividends on its shares for an amount
higher than its net earnings;
6.2.4 purchase or redeem its shares or otherwise reduce its capital;
6.2.5 grant a loan or an investment or provide financial assistance to
any subsidiary, affiliated or associated company, or to any
third party by way of a guarantee or otherwise other than in the
ordinary course of business;
6.2.6 grant loans to its officers, directors or shareholders other
than in the ordinary course of business;
6.2.7 give a security or a lien on its accounts receivables, save and
except such security granted to the Bank.
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7. DEFAULT
7.1 EVENTS OF DEFAULT
The occurence of one or more of the following events, shall constitute
a default under these presents:
7.1.1 if the Borrower fails to make a payment, on demand or when due,
of principal and/or interest under the terms hereof;
7.1.2 if the Borrower fails to make a payment, within ten (10) days
when due, of fees, commissions or any other amount which may
become due hereunder or under any of the security documents
provided for herein; or
7.1.3 if the Borrower fails to perform or otherwise breaches any
obligation hereunder or pursuant to any of the security documents
provided for herein, and if such default has not been remedied
within fifteen (15) days following the date of notification
thereof by the Bank; or
7.1.4 if the Borrower becomes subject to the provisions of the
Bankruptcy and Insolvency Act (Canada) or of any other
bankruptcy, insolvency or winding up legislation; or, if for any
reason the Borrower ceases to carry on its business or if an
adverse material change occur in its financial situation; or
7.1.5 if proceedings are instituted for the Borrower's dissolution,
winding-up or suspension of its operations; or
7.1.6 if the property of the Borrower or a substantial part thereof
becomes subject to a hypothecary recourse or be subject to a
taking of possession by a creditor or be seized or if a
sequestrator is appointed; or
7.1.7 if the Borrower is in default under the terms of any other
contracts, agreements or writings with the Bank or any other
financial institution, in an aggregate amount of at least THREE
MILLION DOLLARS (3 000 000,00$); or
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<PAGE> 14
7.1.8 if any representation or warranty made by the Borrower herein or
in any document or certificate furnished to the Bank in
connection herewith proves to be materially incorrect or
erroneous in an important manner.
7.2 REMEDIES BY THE BANK IN THE EVENT OF DEFAULT
Without restricting the right of the Bank under these presents or
under the security documents, upon the occurrence of any event of
default, the Bank may:
-declare the principal, the interest and any other amounts owing
to the Bank immediately due and payable and require immediate
payment of the amount of any Letter of credit or Letter of
guarantee then outstanding and of the nominal face value of the
Bankers' Acceptances (even if the bearer of such Letter of
guarantee, Letter of credit or Bankers' Acceptances has not
requested the payment in full or in part or has requested only
partial payment thereof from the Bank);
-terminate the Borrower's right to use the credit facility or any
form of utilization of same;
-exerciseall its rights and recourses available under the law,
under these presents or under the security documents.
All amounts paid by the Bank for costs and expenses incurred for
the recovery of the sums due to the Bank by the Borrower or in
connection with the realization of the security, shall bear
interest at the Canadian or American Prime Rate of the Bank, as
the case may be, plus 2% per annum, until complete and full
payment of such amounts.
In the case of an event of default and the enforcement of the
security, all sums of money received in connection with the
credit facility, including pursuant to a payment made by the
Borrower hereunder, or to the realization of the security, shall
be applied, at the Bank's discretion, to any of the indebtedness
of the Borrower.
7.3 RELATIONS BETWEEN THE BANK AND THE BORROWER
The Bank may grant delays, accept or waive security, accept
arrangements,
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<PAGE> 15
grant releases and discharges and transact with the Borrower as
it shall deem acceptable without in any way limiting the
responsibility of the Borrower or infringing on the rights of the
Bank under the security provided for hereunder, unless otherwise
specified in writing by the Bank and the Borrower.
The omission on the part of the Bank to notify the Borrower of
any event of default hereunder or to avail itself of any of its
rights hereunder shall not be construed as a waiver of such event
of default or right.
The acceptance by the Bank following any default by the Borrower
of any sum owing to it or the exercise by it of any right or
recourse shall not preclude it from exercising any other right or
recourse, all its rights and recourses being cumulative and not
alternative, and in addition to and not in substitution for any
other rights or remedies by the Bank, whether pursuant to any
agreement or otherwise provided by law.
8. MISCELLANEOUS PROVISIONS
8.1 DEFINITIONS
For the purposes hereof, the following words and expressions
shall have the following meaning:
"ADVANCE" OR "ADVANCES": means a utilization in Canadian or
American dollars made by the Borrower of the credit facility
hereunder, other than by way of Letters of guarantee, Letters of
Credit, Bankers' Acceptances or Libor loans.
"AMERICAN DOLLARS" OR "U.S. DOLLARS" OR "U.S.": means lawful
money of the United States of America.
"AMERICAN PRIME RATE": means the annual variable rate of interest
announced from time to time by the Bank and used to determine the
interest rates on American Dollars Commercial Loans granted by
the Bank in Canada.
"BANKERS' ACCEPTANCE(S)": means any bill of exchange in Canadian
dollars drawn by the Borrower on the form provided by the Bank
and accepted by it, pursuant to section 1.6.
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"BUSINESS DAY": means any day, other than a Saturday, Sunday or
any other day which is a legal holiday, on which the offices of
the Bank are open for business in the Province of Quebec. When
this expression is used in a Libor loan it means any day on which
the Bank can make transactions in U.S. dollars on the London
Interbank Market.
"CANADIAN DOLLARS" OR "CNDIAN DOLLARS" OR "CNDIAN$" OR "$": means
lawful money of Canada.
"CANADIAN PRIME RATE": means the annual variable rate of interest
announced from time to time by the Bank and used to determine the
interest rates on Canadian Dollars commercial loans granted by
the Bank in Canada.
"CREDIT" OR "OPERATING CREDIT" OR "OPERATING CREDIT FACILITY" OR
"CREDIT FACILITY" OR "INDEBTEDNESS": means the aggregate amount
of principal, interest and accessoires due by the Borrower
hereunder.
"EQUIVALENT": means the amount stated in the currency to which
may be converted the amount stated in another currency at the
rate of exchange at which the Bank, in accordance with standard
banking practice, would purchase at a cash price at noon
(Montreal time) the required currency paying with the currency to
be converted, on the Canadian Money Market or the Canadian
Foreign Exchange Market, as the case may be, on the business day
when conversion is made.
"FLOATING RATE ADVANCES": means floating rate advances in
Canadian dollars or floating rate advances in American dollars or
a combination thereof, as the case may be.
"LIBOR LOAN": means, as at any time, that portion of the credit
facility with respect to which the Borrower has elected to pay
interest at the Libor rate and "LIBOR LOANS" means the aggregate
of the Libor Loans.
"LIBOR RATE": means the average, rounded upwards, if necessary,
to the nearest whole multiple of 1/16% of the annual rates of
interest, at which the Bank, in accordance with its normal
practice, would be prepared to offer to leading banks in the
London Interbank Market for a period equal to the period selected
by the Borrower and for deposits in U.S. dollars of comparable
amounts to such amount selected by the Borrower, at or about
10:00 A.M., Montreal time, two (2) business days prior to a
draw-down date for an advance in U.S. dollars.
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"WORKING CAPITAL RATIO": means the ratio between total current
assets and total current liabilities.
8.2 ACCOUNTING TERMS
Unless another definition is provided hereunder, each accounting
term used in this Offer shall have the meaning ascribed to it in
accordance with accounting principles generally accepted by the
Canadian Institute of Chartered Accountants.
8.3 CALCULATION OF INTEREST AND ARREARS
8.3.1 Unless otherwise provided for herein, interest on any
amount due hereunder shall be calculated daily and not in
advance on the basis of a 365-day year (except for the
Libor Loans where the interest is calculated on the basis
of a 360-days year).
8.3.2 For the purposes of the Interest Act (Canada) in the case
of a leap year, the annual interest rate corresponding to
the interest calculated on the basis of a 365-day year is
equal to the interest rate thus calculated multiplied by
366 and divided by 365.
8.3.3 Any amount of principal, interest, commission, discount or
of any other nature remaining unpaid at maturity, shall
bear interest at the rate provided for herein, being
understood that the said interest rate on arrears shall not
exceed the maximum rate provided by law.
8.3.4 Interest on arrears shall be compounded monthly and payable
on demand.
8.3.5 The determination made by the Bank concerning the interest
rate shall be final and shall bind the Borrower unless
there is a manifest error.
8.4 RECORDS
The Bank shall keep records evidencing the transactions effected
under this credit facility. Such records shall be presumed to
reflect these transactions and the debt due to the Bank.
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8.5 LEGAL COUNSEL CHOSEN BY THE BANK
The Bank reserves its right to choose its legal counsel for the
purposes hereof. All reasonable and documented legal fees and
disbursements concerning the preparation, execution and
registration where required, of this offer, and the security
documents, including other ancillary or accessory documentation,
shall be paid by the Borrower. However, under no circumstances
shall the Borrower pay for fees, an amount exceeding 15 000,00$.
8.6 NON-BUSINESS DAYS
Should any payment of capital or interest hereunder become due on
a day which is not a Business Day, the due date thereof shall be
extended to the immediately following Business Day.
8.7 FINAL AGREEMENT AND INTERPRETATION
As soon as this Offer is signed by the Borrower, it shall
constitute the final agreement between the parties hereto with
the exception of any further written modification agreed by the
parties and replaces and supersedes any prior agreements verbal
or written between the parties related to the credit facility
described herein.
Notwithstanding the foregoing, this Offer does not create
novation and does not constitute any derogation to the rights,
privileges and remedies of the Bank under the terms of any
agreements, promissory notes and/or any instruments or contracts
regarding the credit facility or the security contemplated herein
and executed by the Borrower prior to the date of this Offer. The
Borrower represents and warrants that the rights, privileges and
remedies of the Bank under these agreements, promissory notes and
security documents have not been modified and cover the
Borrower's obligations contemplated herein, the whole without
novation.
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8.8 OTHERS DOCUMENTS
The Borrower shall do all things and sign all documents which may
be deemed necessary or appropriate by the Bank for the purposes
of giving full effect to the terms, conditions, undertakings and
security provided herein.
8.9 ADDITIONAL CHARGES
The Borrower undertakes to pay to the Bank the following charges,
as determined by the Bank:
8.9.1 in the event that the cost for the Bank of the credit were
to increase as a result of a law, regulation or
administrative guideline or decision (including, without
limitation, as a result of the application of reserves,
taxes or requirements regarding the capital adequacy of the
Bank), the Borrower shall pay such additional cost on
demand; and
8.9.2 the Borrower shall pay all taxes and additional fees that
could result from the application of the goods and Services
Tax (Canada) and of any applicable provincial taxes of a
similar nature.
8.10 INVALIDITY OF ANY PROVISIONS HEREUNDER
Any provision of this Offer which is or becomes prohibited or
unenforceable in any jurisdiction, shall not invalidate, affect
or impair the remaining provisions hereof and any such
prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provisions in any other
jurisdiction.
8.11 AMENDMENTS
No amendment, modification, renewal or waiver of any provision of
this Offer shall in any event be effective unless it is expressly
set out in writing and signed by the Bank and the Borrower.
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8.12 COUNTERPARTS
This offer may be executed in any number of counterparts, each of
which so executed shall be deemed an original, and all such
counterparts taken together shall be deemed to constitute one and
the same instrument.
8.13 MATERIAL CHANGE
If a material change occurs in the nature of the risk inherent in
the credit described herein, the Bank reserves the right to
cancel the said credit at its sole discretion and to demand
repayment of any sum already advanced in respect thereof.
Material change means a material adverse change in, or a material
adverse effect upon, the operations, business, properties,
condition (financial or otherwise) or prospects of the Borrower
or the Borrower and its Subsidiaries taken as a whole.
9. REVIEW
Notwithstanding any provisions to the contrary, the terms and conditions
provided for herein are subject to review by the Bank on September 30,
1997.
10. NO ASSIGNMENT BY THE BORROWER
The Borrower shall not transfer or assign its rights hereunder or the
amounts to be received by it hereunder.
11. ACCESS TO INFORMATION
The Borrower hereby authorizes any personal information agent, financial
institution, creditor, tax authority, employer or any other person,
including any public body, holding information concerning the Borrower or
its property including any financial information or with respect to any
undertaking or surety given by the Borrower in favour of third parties,
to supply such information to the Bank for the purposes of verifying
information provided to the Bank or that will be provided by the Borrower
and to ensure its solvency.
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12. NOTICES
Any notice or demand to or upon the respective parties hereto shall be in
writing and shall be validly communicated by the delivery thereof to its
addressee, by hand delivery, certified mail, postage prepaid, or by
telecopying the same, to the addressee hereinafter mentioned, or at such
other address as any of the parties hereto may hereafter notify the other
in writing:
NATIONAL BANK OF CANADA
North American Corporate Banking
Eastern Division
600, de la Gauchetiere west
Montreal (Quebec)
H3B 4L2
Telecopier: (514) 394-6073
At the attention of: Tony Loffreda, Manager
STARBER FRITZ INC.
410, St-Nicolas Street
3rd floor
Montreal (Quebec)
H2Y 2P5
Telecopier: (514) 845-1581
At the attention of: Richard Gervais, Vice-President
with a copy to: GENERAL COUNSEL
FRITZ COMPANIES INC.
706 Mission Street
San Francisco, California, U.S.A.
Any such notice or demand sent as aforesaid shall be deemed to have been
received by the party to whom it is addressed upon delivery, if
delivered, and on the actual receipt thereof, if sent by certified mail,
and when transmitted, if sent
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by telecopier; provided, however, that in the event normal mail
service or telecopier service shall be interrupted by strike, force
majeure or other cause, then the party sending the notice or demand
shall use anyone of the said services which has not been so
interrupted or, failing the availability of any such service, any
other mode of communication which shall ensure prompt receipt of such
notice or demand by the other party.
13. GOVERNING LAW
This Offer shall be construed and interpreted in accordance with the laws
of the Province of Quebec and the laws of Canada applicable herein.
14. LANGUAGE (QUEBEC)
The parties declare that they have requested and do hereby confirm their
request that the present Offer and the ancillary documents related
thereto be in English; les parties declarent qu'elles ont exiges et par
la presente confirment leur demande que la presente offre ainsi que les
documents connexes soient rediges en anglais.
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ACCEPTANCE
We declare to have taken cognizance of this Offer and hereby accept all of its
terms and conditions and obligations.
Signed on Friday , this 19 day of July, 1996.
----------------------------------- ----------
STARBER FRITZ INC.
PER: Richard Gervais
--------------------
Richard Gervais
Vice-President
INTERVENTION
We, the undersigned, hereby declare to have taken cognizance of the present
Offer and undertake to fulfil the obligations and conditions set out in section
3. of this Offer and to execute any document which may be submitted to us by the
Bank in order to give full effect to our commitments.
Signed on Friday , this 19 day of July 1996.
----------------------- -------------
FRITZ COMPANIES INC. FRITZ COMPANIES CANADA INC.
PER: John H. Johung PER: John H. Johung
------------------------------ --------------
John H. Jouung John H. Johung
Executive Vice President Director
& Chief Financial Officer
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<PAGE> 1
EXHIBIT 15
The Board of Directors and Stockholders
Fritz Companies, Inc.:
Re: Registration Statement No. 33-78472, 33-57238, 33-93070, 333-15921
and 333-07639
With respect to the subject registration statement, we acknowledge our awareness
of the use therein of our report dated September 29, 1997 related to our review
of interim financial information.
Pursuant to Rule 436 (c) under the Securities Act of 1933, such report is not
considered part of a registration statement prepared or certified by an
accountant or a report prepared or certified by an accountant within the meaning
of sections 7 and 11 of the Act.
KPMG Peat Marwick LLP
San Francisco, California
September 30, 1997
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<TABLE> <S> <C>
<ARTICLE> 5
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