<PAGE>
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
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
U-SHIP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Jeffrey L. Cotter, Esq.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $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:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / 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 registration 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>
U-SHIP, INC.
5583 WEST 78TH STREET
EDINA, MINNESOTA 55439
November 15, 1996
Dear Shareholder:
You are cordially invited to attend the 1996 Annual Meeting of
Shareholders of U-Ship, Inc. to be held at the Minneapolis Marriott Southwest,
5801 Opus Parkway, Minneapolis, Minnesota 55343, on December 12 1996, at 3:30
p.m. Minneapolis time.
At the meeting you will be asked to vote for the election of 7
directors and to ratify the appointment by the Company's Board of Directors of
Arthur Andersen LLP as the Company's independent public accountants for the
fiscal year ending June 30, 1997.
I encourage you to vote FOR each of the nominees for director and FOR
ratification of the appointment of Arthur Andersen LLP. Whether or not you are
able to attend the meeting in person, I also urge you to sign and date the
enclosed proxy card and return it promptly in the enclosed envelope. If you do
attend the meeting in person, you may withdraw your proxy and vote personally on
any matters properly brought before the meeting.
Sincerely,
U-SHIP, INC.
/s/ Bruce H. Senske
Bruce H. Senske
President and Chief Executive Officer
<PAGE>
U-SHIP, INC.
5583 WEST 78TH STREET
EDINA, MINNESOTA 55439
____________________
NOTICE OF 1996 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 12, 1996
____________________
NOTICE IS HEREBY GIVEN that the 1996 Annual Meeting of Shareholders of U-
Ship, Inc. (the "Company") will be held at 3:30 p.m., Minneapolis time, on
December 12, 1996 at the Minneapolis Marriott Southwest, 5801 Opus Parkway,
Minneapolis, Minnesota 55343, for the following purposes, as more fully
described in the accompanying Proxy Statement:
1. To elect 7 directors, each for a term of one year, or until their
successors are elected.
2. To ratify the appointment of Arthur Andersen LLP as the Company's
independent public accountants for the fiscal year ending June 30, 1997.
3. To transact such other business as may properly come before the
meeting.
Only shareholders of record at the close of business on October 30, 1996,
are entitled to notice of and to vote at the meeting.
Whether you expect to attend the meeting in person, please complete, date,
and sign the enclosed proxy exactly as your name appears thereon and promptly
return it in the envelope provided, which requires no postage if mailed in the
United States. Proxies may be revoked at any time and if you attend the meeting
in person, your executed proxy will be returned to you upon request.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ B. Richard Vogen
B. Richard Vogen
Secretary
Minneapolis, Minnesota
November 15, 1996
<PAGE>
U-SHIP, INC.
5583 West 78th Street
Edina, Minnesota 55439
_____________
PROXY STATEMENT
FOR
1996 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
DECEMBER 12, 1996
____________________________
INTRODUCTION
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board") of U-Ship, Inc. (the "Company")
for use at the 1996 Annual Meeting of Shareholders (the "Meeting") to be held at
the Minneapolis Marriott Southwest, 5801 Opus Parkway, Minneapolis, Minnesota
55343 on December 12, 1996 at 3:30 p.m. Minneapolis time, and at any adjournment
thereof.
Proxies in the accompanying form are solicited on behalf, and at the
direction of the Board. All shares of the Company's common stock ("Common
Stock") represented by properly executed proxies, unless such proxies have
previously been revoked, will be voted at the Meeting and, where the manner of
voting is specified on the proxy, will be voted in accordance with such
specifications. Shares represented by properly executed proxies on which no
specification has been made will be voted FOR the election of the nominees for
director named herein, and FOR ratification and approval of the appointment of
the independent public accountants for the fiscal year ending June 30, 1997. If
any other matters are properly presented at the Meeting for action, including a
question of adjourning the meeting from time to time, the persons named in the
proxies and acting thereunder will have discretion to vote on such matters in
accordance with his or her best judgment. If a properly executed proxy is
returned and the shareholder has abstained from voting on any manner, the shares
represented by the proxy will be considered present at the Meeting for purposes
of determining a quorum and for purposes of calculating the vote, but will not
be considered to have been voted in favor of such matter.
When stock is held in the name of more than one person, each such person
should sign the proxy. If the shareholder is a corporation, the proxy should be
signed in the name of such corporation by an executive or other authorized
officer. If signed as attorney, executor administrator, trustee, guardian or in
any other representative capacity, the signator's full title should be given
and, if not previously furnished, a certificate or other evidence of appointment
should be furnished. If an executed proxy is returned by a broker holding
shares in street name which indicates that the broker does not have
discretionary authority as to certain shares to vote on one or more matters,
such shares will be considered present at the Meeting for purposes of
determining a quorum, but will not be considered to be represented at the
Meeting for purposes of calculating the vote with respect to such matter.
Any shareholder who executes and returns a proxy may revoke it at any time
before it is voted. Any shareholder who wishes to revoke a proxy can do so by
executing a later-dated proxy relating to the same shares and delivering it to
Mr. Bruce H. Senske, U-Ship, Inc., 5583 West 78th Street, Edina, Minnesota,
55439, prior to the vote at the Meeting, by written notice of revocation
received by Mr. Senske, prior to the vote at the Meeting, or by appearing in
person at the Meeting, filing a written notice of revocation and voting in
person the shares to which the proxy relates.
The Board has fixed the close of business on October 30, 1996 as the Record
Date for determining the holders of outstanding shares of Common Stock entitled
to notice of, and to vote at, the Meeting. On October 30, 1996, there were
4,017,015 shares of Common Stock issued, outstanding and entitled to vote. Each
holder of such stock is entitled to one vote, exercisable in person or by proxy,
for each share of stock held of record on the Record Date. The Notice of Annual
Meeting, this Proxy Statement and the enclosed form of proxy are first being
mailed to shareholders of the Company on or about November 15, 1996.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding ownership of
Common Stock as of September 30, 1996, by (i) each person known to the Company
to own beneficially more than 5% of its Common Stock, (ii) each director and
nominee for director and executive officer of the Company, and (iii) all
directors and executive officers of the Company as a group. Unless otherwise
indicated, each person in the table has sole voting and investment power as to
the shares shown. For the purposes of this proxy statement, beneficial
ownership is determined in accordance with the rules of the United States
Securities and Exchange Commission (the "Commission"), and includes any shares
as to which the person has sole or shared investment power and any shares which
the person has the right to acquire within 60 days of June 30, 1996, through the
exercise of any stock option or other right. Unless otherwise noted, the
address for the following persons is 5583 West 78th Street, Edina, Minnesota
55439.
<TABLE>
<CAPTION>
Amount and Nature of Percentage of
Name of Beneficial Owner or Group Beneficial Ownership(1) Outstanding Stock
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Brewster Diversified Services, Inc. 293,688(2) 7.19%
20 North Lake #316
Forest Lake, MN 55025
Donald L. Kotula 256,656(3) 6.24
Bruce H. Senske 246,442(4) 6.03
Gary W. Ramsden 92,668(5) 2.30
B. Richard Vogen 52,951(6) 1.31
Kenneth W. Liles 55,833(7) 1.39
Bryan M. Virgin 53,000(8) 1.30
Willis K. Drake 12,042(9) *
Ronald D. Schmidt 12,000(10) *
R. Michael Fox 5,750(11) *
All Directors and Officers as a Group (9 persons) 787,342(12) 18.35%
</TABLE>
____________________
* Indicates an amount less than 1%.
(1) The securities "beneficially owned" by a person are determined in
accordance with the definition of "beneficial ownership" set forth in the
regulations of the Commission and accordingly, may include securities owned
by or for, among others, the spouse, children or certain other relatives of
such person as well as other securities as to which the person has or
shares voting or investment power or has the right to acquire within 60
days. The same shares may be beneficially owned by more than one person.
(2) Includes 70,000 shares purchasable pursuant to the exercise of warrants.
(3) Includes 31,770 shares held by Mr. Kotula, 132,010 shares held by Norquip
Leasing, Inc. ("Norquip"), a company owned by Mr. Kotula, 5,375 shares
purchasable pursuant to options and warrants held by Mr. Kotula and 87,500
shares purchasable pursuant to warrants held by Norquip.
(4) Includes 69,235 shares purchasable pursuant to the exercise of warrants and
140,083 shares held in joint tenancy with Mr. Senske's wife.
(5) Includes 15,000 shares purchasable pursuant to the exercise of options.
(6) Includes 18,250 shares purchasable upon the exercise of options and
warrants.
(7) Includes 12,500 shares purchasable pursuant to the exercise of options.
(8) Includes 50,000 shares purchasable pursuant to the exercise of options.
(9) Includes 5,375 shares purchasable pursuant to the exercise of options and
warrants.
(10) Includes 5,000 shares purchasable pursuant to the exercise of options.
(11) Represents 5,750 shares purchasable pursuant to the exercise of options and
warrants.
2
<PAGE>
(12) Assumes no exercise of: (a) 957,737 shares of Common Stock issuable upon
exercise of outstanding employee stock options, outstanding director stock
options and warrants, including warrants issued in conjunction with bridge
financing completed by the Company in December 1995, or up to 175,000
shares of Common Stock issuable upon exercise of warrants granted to the
Underwriter in connection with the public offering completed by the Company
in June 1996.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's Articles of Incorporation provide that the exact number of
directors of the Company may from time to time be specified by the Company's
Bylaws (the "Bylaws") at not less than 3 nor more than fifteen. The Board has
amended the Bylaws such that the Board shall consist of at least 3 but not more
than 9 persons as determined by the Board or the Company's shareholders.
Further, the Board has nominated for election to the Board the 7 persons named
below. The shareholders are being requested to elect the 7 nominees named
below. All of the nominees are currently members of the Board.
All proxies will be voted in favor of the seven nominees, unless a contrary
choice is specified on the proxy. If, prior to the annual meeting, the Board
learns that any nominee will be unable to serve by reason of death, incapacity,
or other unexpected occurrence, the proxies which would have otherwise been
voted for such nominee will be voted for a substitute nominee, if any, selected
by the Board.
NAME AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
- ---------------- -------- ------------------------ ---------------
Bruce H. Senske 42 President and Chief 1993
Executive Officer of
the Company
Willis K. Drake 73 Founder of Control 1995
Data Corporation.
Founder, former
President and
Chairman of DataCard
Corporation
Donald L. Kotula 51 Founder, President 1995
and Chief Executive
Officer of Northern
Hydraulics
R. Michael Fox 50 Chief Executive 1993
Officer of Matrix
Associates, Inc.
Gary W. Ramsden 39 Realtor with Burnet 1992
Realty. Former
President of U-Ship
International, Ltd.
Ronald D. Schmidt 60 Chairman and Chief 1995
Executive of Zytec
Corporation
B. Richard Vogen 53 Secretary of the 1993
Company. Founder
and former President
and Chairman of
Vocam Systems, Inc.
BUSINESS EXPERIENCE
The names of the nominees, their principal occupations, and certain other
information regarding the nominees set forth below is based upon information
furnished to the Company by the respective nominees.
BRUCE H. SENSKE has served as the Company's Chief Executive Officer, Chief
Financial Officer, Treasurer and a director since January 1993. From 1988 to
1992, Mr. Senske was Vice President of Strategic Marketing and Product Planning
at Vocam Systems, a division of the Pitney Bowes Company, a manufacturer of
3
<PAGE>
transportation management software systems. Mr. Senske also currently serves as
Chief Executive Officer of both of the Company's subsidiaries.
WILLIS K. DRAKE joined the Company's Board in January 1995. Mr. Drake is
co-founder of Control Data Corporation. Mr. Drake is also founder, and former
President and Chairman of DataCard Corporation, a major manufacturer of plastic
transaction and identification cards, card personalization systems, and
transaction automation terminals. Mr. Drake has been retired since 1983.
However, as a director for Digi International, Analysts International, Inc. and
Telident, Inc., Mr. Drake remains active in providing entrepreneurial,
management, marketing and technical consultation to businesses in a variety of
industries.
DONALD L. KOTULA joined the Company's Board in January 1995. Mr. Kotula is
also the founder of Northern Hydraulics, a major retailer of construction and
light industrial equipment, tools and supplies. Mr. Kotula has served as
President and Chief Executive Officer of Northern Hydraulics since 1981.
R. MICHAEL FOX has been a director of the Company since June 1993. Mr. Fox
has also been Chief Executive Officer of Matrix Associates, Inc. since 1989.
Matrix Associates, Inc. is a marketing and consulting firm concentrating on
mergers, acquisitions and turnarounds. Mr. Fox assists companies in defining
their markets, and provides strategic direction in re-engineering and capital
restructuring to improve profitability.
GARY W. RAMSDEN served as the President of U-Ship International, Ltd., a
subsidiary of the Company, from its inception in September 1991 to January 1993,
and has served as director of U-Ship, Inc. since its merger with U-Ship
International, Ltd. in June 1992. Mr. Ramsden is currently a realtor with
Burnet Reality in Eau Claire, Wisconsin. From October 1989 to March 1991, Mr.
Ramsden was employed in sales and management capacities for Crandell Moving and
Storage, Incorporated in Altoona, Wisconsin. From July 1988 to September 1989,
Mr. Ramsden was President of Five Star Moving Systems, Incorporated in
Shoreview, Minnesota.
RONALD D. SCHMIDT joined the Company's Board in June 1995. Mr. Schmidt has
been Chairman and Chief Executive Officer of Zytec Corporation, a designer and
manufacturer of custom electronic power supplies used in the computer industry
since 1984. Under Mr. Schmidt's leadership, Zytec received the Malcolm
Baldridge National Quality Award in 1991 for quality manufacturing excellence.
Mr. Schmidt held a variety of management positions with Control Data Corporation
before acquiring Zytec from Control Data in a leverage buyout in 1984.
B. RICHARD VOGEN joined the Company's Board in June 1993. Mr. Vogen
founded Vocam Systems, Inc. in 1985, and served as its President and Chairman
until its acquisition by the Pitney Bowes Company in 1990. After its
acquisition by Pitney Bowes, Mr. Vogen continued to serve as President of the
Vocam Systems division until June 30, 1994. Since that date, Mr. Vogen has
served as an independent management consultant.
COMMITTEES
The Board has established Capital and Funding, Audit and Compensation
Committees. The current members of the Capital and Funding were ratified on
January 29, 1996 and the current members of each of the other committees were
appointed on January 29, 1996. The members of the Capital and Funding Committee
are Bruce H. Senske, B. Richard Vogen and Donald L. Kotula. The Capital and
Funding Committee was granted the authority by the Board to approve the terms
and conditions of the public offering of Common Stock completed in June 1996.
The members of the Audit Committee are Gary W. Ramsden, Donald D. Schmidt
and Donald L. Kotula. The Audit Committee is empowered by the Board to review
the financial books and records of the Company in consultation with the
Company's accounting staff and its independent auditors and to review with the
accounting staff and independent auditors any questions raised with respect to
accounting and auditing policy and procedures.
4
<PAGE>
The members of the Compensation Committee are R. Michael Fox, Willis K.
Drake and B. Richard Vogen. The Compensation Committee is authorized by the
Board to establish general levels of compensation for all employees of the
Company, to set the annual salary of each of the executive officers of the
Company, to grant options and to otherwise administer the Company's stock option
plans, and to review and approve compensation and benefit plans of the Company.
The Compensation Committee consists exclusively of non-employee directors.
During the fiscal year ended June 30, 1996, the Board held 6 meetings, the
Capital and Funding Committee held 3 meetings, the Compensation Committee held 3
meetings and the Audit Committee held 3 meetings. Each of the directors
attended at least 88% of the meetings of the Board and each committee of which
he was a member held during the period of his Board membership in the fiscal
year ended June 30, 1996, with the exception of Mr. Drake who attended 60% of
such meetings.
COMPENSATION OF DIRECTORS
The Company has not paid any cash compensation to a director in his
capacity as a director. Non-employee directors have received automatic grants
of options to purchase Common Stock pursuant to the Company's 1996 Director
Stock Option Plan. See "Compensation of Executive Officers."
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table discloses the annual compensation received in each of
the last three fiscal years by the Company's Chief Executive Officer for
services rendered to the Company during the fiscal years ended June 30, 1996,
1995 and 1994. No other executive officer of the Company of the Company
received cash compensation in excess of $100,000 for the years presented.
Annual
Fiscal Compensation
Name and Principal Position Year Salary
- ---------------------------- ----------- ------------
Bruce H. Senske
Chief Executive Officer (1) 1996 $114,800
1995 $ 79,000
1994 $ 75,000
_________________
(1) No options have been granted by the Company to Mr. Senske. The Company
has no retirement, pension, profit-sharing or insurance plans for officers and
employees, other than an employee health insurance plan.
STOCK OPTIONS
In June 1995, the Board adopted the U-Ship, Inc. 1995 Stock Option Plan
(the "1995 Plan"). On January 29, 1996, the Board amended and its shareholders
approved the 1995 Plan. The purpose of the 1995 Plan is to provide a
continuing, long-term incentive to selected eligible officers, key employees and
consultants of the Company and of any subsidiary corporation of the Company, to
provide a means of rewarding outstanding performance on the part of selected
Company personnel, to enable the Company to maintain a competitive position and
to attract and retain key personnel necessary for continued growth and
profitability.
An aggregate of 450,000 shares of Common Stock are reserved for issuance
pursuant to stock options granted under the 1995 Plan. Officers and other key
employees of the Company and its subsidiaries who are responsible for or
contribute to the management, growth and/or profitability of the business of the
Company,
5
<PAGE>
as well as consultants, are eligible to be granted options under the 1995 Plan.
The number of options granted and the terms and conditions of such options need
not be uniform among participants, even as to options granted at the same time,
whether or not the participants are similarly situated. The 1995 Plan is
administered by a committee of the Board (the "Committee"), which shall be
appointed by the Board. The Committee will have the power to make grants,
determine the number of shares covered by each grant and other terms and
conditions of such grants, interpret the 1995 Plan, and adopt rules, regulations
and procedures with respect to the administration of the 1995 Plan.
The Committee may grant stock options that either qualify as "incentive
stock options" under section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), or as "non-qualified stock options" in such form and upon
such terms as the Committee may approve from time to time. No stock option
granted under the 1995 Plan shall be transferrable or assignable by the optionee
or exercised by anyone else during the optionee's lifetime.
During its fiscal year ended June 30, 1996, the Company granted no options
under the 1995 Plan to purchase shares of Common Stock.
The Board and the Company's shareholders adopted the Company's 1996
Director Stock Option Plan (the "Director Plan") on January 29, 1996. The
purpose of the Director Plan is to attract the best available individuals to
serve as non-employee, outside directors of the Company ("Outside Directors")
and to encourage their continued service on the Board. There are 100,000 shares
of Common Stock reserved for issuance pursuant to options granted under the
Director Plan.
The Director Plan provides for the automatic grant of options to purchase
shares of Common Stock to Outside Directors according to fixed terms. Each
Outside Director automatically received options to purchase 5,000 shares of
Common Stock upon first becoming an Outside Director (or upon approval of the
Director Plan by the Company's shareholders) and an additional option to
purchase 5,000 shares of Common Stock on each anniversary of the original grant,
up to a maximum of 15,000 shares of Common Stock. Each option granted under the
Director Plan has a term of five years and will be exercisable not earlier than
the first anniversary of the date of the grant of the option. The exercise
price for each share of Common Stock purchased pursuant to an option granted
under the Director Plan will be 100% of its fair market value on the date of the
grant of each option.
No option granted under the Director Plan may be transferred other than by
will or by the laws of descent and distribution, and all options granted under
the Director Plan are exercisable, during the lifetime of the Outside Director,
only by the Outside Director. Options granted under the Director Plan will not
constitute incentive stock options within the meaning of section 422 of the
Code.
During its fiscal year ended June 30, 1996, the Company granted 6 options
under the Director Plan to purchase an aggregate of 30,000 shares of Common
Stock.
PROPOSAL NO. 2
RATIFICATION OF
SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board has appointed Arthur Andersen LLP as independent public
accountants for the Company for the year ending June 30, 1997. A proposal to
ratify that appointment will be presented to shareholders at the Annual Meeting
of Shareholders. Ratification of the appointment requires the affirmative vote
of the holders of a majority of the shares of Common Stock represented at the
meeting. If the shareholders do not ratify the selection of Arthur Andersen LLP,
another firm of independent public accountants will be selected by the Board.
Representatives of Arthur Andersen LLP will be present at the meeting, will have
an opportunity to make a statement if they desire to do so, and will be
available to respond to appropriate questions from shareholders in attendance.
6
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
BREWSTER TRANSACTIONS
During the fiscal years ended June 30, 1994 and 1995, Brewster Diversified
Services, Inc. ("Brewster") loaned the Company an aggregate of $705,000
evidenced by promissory notes. The loans, as amended, bore interest at 10% per
annum and called for a $50,000 principal payment on January 1, 1996. In
addition, the Company was required to make principal payments of $100,000 on
January 1, 1997 and 1998, and on January 1, 1999, the Company was required today
any remaining unpaid principal and any accrued interest. As additional
consideration for the loans, the Company issued Brewster warrants for the
purchase of 140,000 shares of its Common Stock exercisable at $2.96 per share.
In addition, pursuant to a Stock Exchange Agreement dated December 2, 1993,
Brewster entered into an agreement with certain of the Company's shareholders to
exchange 100,000 shares of Brewster's common stock for an additional 250,000
shares of Common Stock in the following amounts: 60,000 shares from each of Gary
Ramsden, Keith Ramsden, Marvin Ramsden and Elwood Taylor; 10,000 shares from
Bruce Senske.
In December 1994, Brewster agreed to convert $355,000 of the Company's
indebtedness to it, plus accrued interest of $52,173, into Common Stock at a
rate of $3.20 per share. The $350,000 remaining balance due Brewster under
promissory notes was converted into a subordinated convertible debenture,
bearing an interest rate of 10% per annum, with conversion rights to convert the
balance to Common Stock at the time of a public offering at the offering price.
The Company completed a public offering of its stock in May 1996. In October
1995, Brewster converted the balance of the debenture, plus accrued interest of
$32,123, into Common Stock at a rate of $3.00 per share. Also in October 1995,
Brewster exchanged a warrant to purchase 125,000 shares of Common Stock for a
warrant to purchase 55,000 shares of Common Stock bearing the same exercise
price and maturity date. Between the third quarter of fiscal year 1994 and the
second quarter of fiscal year 1995, the high and low bid prices for Common Stock
were $8.00 and $2.00, respectively. The Company determined that the prices at
which the above conversions were effected, $3.20 and $3.00 per share,
respectively, were at the fair market value for the Common Stock, taking into
account that the shares issued were restricted securities under applicable
federal and state securities laws.
LOANS FROM OFFICERS, DIRECTORS AND RELATED PARTIES; CONVERSION OF INDEBTEDNESS
INTO STOCK AND WARRANTS
Between January 1994 and September 1995, the Company borrowed an aggregate
of the following amounts from the persons and/or entities set forth below for
operating capital: $52,945 from Bruce Senske, $350,000 from Norquip Leasing,
Inc. (a company owned by Donald L. Kotula), $70,000 from William Bartkowski,
$200,000 from Donald L. Johnson, and $50,00 from B. Richard Vogen. The Company
gave each individual a promissory note bearing interest at the rates from 8% to
First Bank Reference Rate plus 4% per annum. These noteholders received
warrants for the purchase of one share of Common Stock for every $4.00 loaned to
the Company. The warrants are exercisable at $3.50 to $4.00 per share. Such
consideration was determined to be fair by the Board in consideration of the
noteholders' financial assistance to the Company.
In October 1995, the noteholders converted the following loan amounts into
Common Stock at the rate of $3.00 per share: Bruce Senske, $25,000; Norquip
Leasing, Inc., $350,000 plus accrued interest of $46,030; B. Richard Vogen,
$50,000, plus accrued interest of $4,104; and William Bartkowski, $70,000 plus
accrued interest of $3,414. Such conversion was determined to be fair by the
Board in consideration of the noteholders' financial assistance to the Company
and the fact that such sales were effected directly by the Company without the
assistance of an underwriter.
In January 1995, the Company established a bank line of credit of $250,000
which was supported by the personal guaranty of Ronald Randall, a private
investor, in consideration for his personal guaranty. Mr. Randall received
warrants for the purchase of 62,500 shares of Common Stock. In October 1995,
Mr. Randall assumed the bank's right to receive payment under the line of credit
and converted the $250,000 remaining on the line of credit to 83,333 shares of
Common Stock.
7
<PAGE>
During 1994, the Company became indebted to Kenneth Liles in the amount of
$79,000 for software development work performed by Mr. Liles for the Company.
In October 1995, Mr. Liles converted such indebtedness into 26,333 shares of
Common Stock. Such conversion was determined to be fair by the Board in
consideration of Mr. Liles' work on behalf of the Company.
REPURCHASE OF COMMON STOCK BY COMPANY
The Company purchased 200,000 shares of its Common Stock for nominal
consideration from the following related parties for the corresponding amounts:
Gary Ramsden, 25,000 shares; Keith Ramsden, 25,000 shares; Elwood Taylor, 25,000
shares; Marvin Ramsden, 25,000 shares; and Brewster, 100,000 shares. The
aforementioned transactions were entered into by such holders on the condition
that the Company would receive at least $1,350,000 of bridge financing by
April 28, 1996 on terms substantially equivalent to those contained herein. The
Company obtained bridge financing in excess of such amount in December 1995.
PRIVATE PLACEMENT
During fiscal year ended June 30, 1996, the Company sold an aggregate of
67,250 shares of its Common Stock for an aggregate amount of $204,000 (between
$3.00 and $3.20 per share) in various private placement transactions with four
of its directors, a related party and a former officer. More specifically, the
Company sold 8,333, 8,333, 3,333, 5,000, 11,250 and 1,000 shares of Common Stock
to B. Richard Vogen, Donald L. Kotula, Willis K. Drake, Ronald D. Schmidt,
Ronald L. Randall and Donald Johnson, respectively. Each of the aforementioned
directors, officer and related party paid $25,000, $25,000, $10,000, $15,000,
$36,000 and $3,000, respectively, for his shares. The remaining 30,000 shares
were sold to outside investors.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
directors and executive officers of the Company and persons who own more than
10% of the Common Stock to file with the Commission initial reports of ownership
and reports of changes in ownership of Common Stock. Initial reports are
required to be filed within 10 days of an individual becoming a director,
executive officer or owner of 10% or more of Common Stock. Reports of changes
in ownership are required to be filed within the first 10 days of the month
succeeding the month in which a change occurs. To the Company's knowledge,
based solely on a review of copies of reports filed with the Commission, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than 10% beneficial owners required through the end of the Company's
fiscal year ended June 30, 1996 were completed.
MANAGEMENT OF THE COMPANY
The following table provides information with respect to the Company's
executive officers. Each executive officer has been appointed to serve until
his successor is duly appointed by the Board or his earlier removal or
resignation from office.
NAME AGE POSITION
- ------------------- ---- ----------------------------------------
Bruce H. Senske 42 President and Chief Executive Officer
B. Richard Vogen 53 Secretary
Bryan M. Virgin 39 Vice President of Sales and Marketing
Kenneth W. Liles 41 Vice President of Technologies
BRUCE H. SENSKE See "Election of Directors."
8
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B. RICHARD VOGEN See "Election of Directors."
BRYAN M. VIRGIN has served as the Company's Vice President, Marketing and
Sales since June 1996. From August 1992 to May 1996, Mr. Virgin was Vice
President of Marketing for Growing Healthy Inc., a frozen baby food company.
From 1989 to 1992, Mr. Virgin was Vice President of Waters Molitor, Inc., a
marketing and promotional consulting firm. Prior to 1989, Mr. Virgin held
various positions at General Mills.
KENNETH W. LILES has served as the Company's Vice President of Technologies
since March 1994. In September 1992, Mr. Liles founded Instrument Systems,
Inc., a hardware/software integration consulting company, and served as its
Chief Executive Officer through March 1994. Prior to 1992, Mr. Liles held
various engineering positions with EG&G Automotive Research, Honeywell Inc.,
LTV -- Vought Aerospace Group, Control Data Corporation, Rosemount, Inc. and
Pratt & Whitney Aircraft.
OTHER MATTERS
The Board knows of no other matters that may be brought before the meeting
which require submission to a vote of the shareholders. If any other matters
are properly brought before the meeting, however, the persons named in the
enclosed proxy or their substitutes will vote in accordance with their best
judgment on such matters.
Expenses incurred in connection with the solicitation of proxies will be
paid by the Company. The proxies are being solicited principally by mail. In
addition, directors, officers and regular employees of the Company may solicit
proxies personally or by telephone, for which they will receive no consideration
other than their regular compensation. The Company will also request brokerage
houses, nominees, custodians and fiduciaries to forward soliciting material to
the beneficial owners of Common Stock and will reimburse such persons for their
expenses so incurred.
SHAREHOLDER PROPOSALS
Shareholders wishing to present proposals for action by the shareholders at
the next annual meeting must present such proposals at the principal offices of
the Company not later than June 30, 1997. Due to the complexity of the
respective rights of the shareholders and the Company in connection with
inclusion of shareholder proposals in issuers' proxy materials, any shareholder
desiring to propose such an action is advised to consult with his or her legal
counsel with respect to such rights. It is suggested that any such proposals be
submitted by certified mail, return receipt requested.
ANNUAL REPORT TO SHAREHOLDERS
A copy of the Company's Annual Report to shareholders for the fiscal year
ended June 30, 1996, accompanies this Notice of Annual Meeting, Proxy Statement
and related form of proxy. No part of the Annual Report is incorporated herein
and no part thereof is to be considered proxy soliciting material.
9
<PAGE>
FORM 10-KSB
THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH PERSON WHOSE PROXY IS BEING
SOLICITED, UPON WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED JUNE 30, 1996, AS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE FINANCIAL STATEMENTS
AND THE FINANCIAL STATEMENT SCHEDULES THERETO. THE COMPANY WILL FURNISH TO ANY
SUCH PERSON ANY EXHIBIT DESCRIBED IN THE LIST ACCOMPANYING THE FORM 10-KSB, UPON
THE PAYMENT, IN ADVANCE, OF FEES BASED ON THE COMPANY'S REASONABLE EXPENSES IN
FURNISHING SUCH EXHIBIT(S). REQUESTS FOR COPIES OF SUCH REPORT AND/OR
EXHIBIT(S) SHOULD BE DIRECTED TO MR. BRUCE H. SENSKE, CHIEF EXECUTIVE OFFICER,
AT THE COMPANY'S PRINCIPAL ADDRESS.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Bruce H. Senske
Bruce H. Senske
President and Chief Executive Officer
Minneapolis, Minnesota
November 15, 1996
10
<PAGE>
U-SHIP, INC.
5583 WEST 78TH STREET
EDINA, MINNESOTA 55439
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, having duly received the Notice of Annual Meeting of
Shareholders and the Proxy Statement, dated November 15, 1996, hereby appoints
Bruce H. Senske as proxy to represent the undersigned and to vote, as designated
below, all shares of common stock of U-Ship, Inc. held of record by the
undersigned on October 30, 1996, at the Annual Meeting of Shareholders to be
held on December 12, 1996 at 3:30 p.m. at the Minneapolis Marriott Southwest,
5801 Opus Parkway, Minneapolis, Minnesota 55343.
1. To elect 7 directors of the Company, each for a term of one year and until
their successors shall be elected and duly qualified.
FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the to vote for all nominees
contrary below) / / listed below / /
BRUCE H. SENSKE, WILLIS K. DRAKE, DONALD L. KOTULA, R. MICHAEL FOX
GARY W. RAMSDEN, RONALD D. SCHMIDT, B. RICHARD VOGEN
INSTRUCTION: To withhold authority to vote for any individual, write that
nominee's name in the space provided below.
- -------------------------------------------------------------------------------
2. To ratify the appointment of Arthur Andersen LLP as the Company's
independent public accountants for the fiscal year ending June 30, 1997.
FOR / / AGAINST / / ABSTAIN / /
<PAGE>
3. To transact such other business as may properly come before the meeting or
any adjournment thereof.
FOR / / AGAINST / / ABSTAIN / /
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED ON THE
PROXY BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1 THROUGH 3. ABSTENTIONS WILL BE COUNTED TOWARD THE
EXISTENCE OF A QUORUM.
Please sign exactly as name appears on this proxy. When shares are held by
joint tenants, both should sign. If signing as attorney, executor,
administrator, trustee or guardian, please give 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 an authorized
person.
Dated: ____________________________________
___________________________________________
___________________________________________
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
