SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
May 31, 2000
Date of report (date of earliest event reported)
UNITED SHIPPING & TECHNOLOGY, INC.
(Exact Name of Registrant as Specified in Charter)
UTAH 000-28452 87-0355929
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(State or Other (Commission File Number) (IRS Employer
Jurisdiction Identification No.)
of Incorporation)
9850 51st Avenue, North, Suite 110, Minneapolis, Minnesota 55442
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(Address of Principal Executive Offices)
(612) 941-4080
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(Registrant's telephone number, including area code)
ITEM 5. Other Events.
On May 31, 2000, United Shipping & Technology, Inc. (the "Company"),
completed the sale of the shares and warrants described herein to TH
Lee.Putnam Internet Partners, L.P. and TH Lee.Putnam Internet Parallel
Partners, L.P. (collectively, "TH Lee"), under the terms of a Securities
Purchase Agreement (the "Agreement") entered into between the Company and
TH Lee as of May 15, 2000.
Pursuant to the Agreement, the Company sold 2,806,796 shares of its
Series B Convertible Preferred Stock (the "Series B Preferred") to TH Lee,
at a price of $9.00 per share, for a total purchase price of $25,261,173
(the "Purchase Price").
The Company also issued TH Lee warrants (the "Preferred Warrants") to
purchase the number of shares of Series B Preferred equal to an aggregate
of $30 million divided by the 45-day average closing sales price of the
Company's common stock immediately prior to the date of exercise (the
"Market Price"), exercisable at the Market Price as of the date of
exercise. The term of the Preferred Warrants expires on November 30, 2001.
The Company also issued TH Lee warrants (the "Additional Warrants")
to purchase up to an aggregate of 452,901 shares of Series B Preferred. The
exercise price for the Additional Warrants is $9.00 per share, subject to
adjustment in order to prevent dilution. The term of the Additional
Warrants expires on November 30, 2001.
The Company also issued TH Lee warrants (the "Common Warrants" and,
together with the Preferred Warrants and the Additional Warrants, the
"Warrants") to purchase up to an aggregate of 425,000 shares of the
Company's common stock. The Common Warrants become exercisable in the event
and to the extent that 3,000,000 options granted under the Company's 2000
Stock Option Plan (the "2000 Plan Options") are exercised, on a pro rata
basis. The exercise price of the Common Warrants is equal to the lowest
exercise price of the initially approved 2000 Plan Options, subject to
adjustment to prevent dilution. The Common Warrants are subject to decrease
in exercise price and accelerated vesting in the event that the Company's
audited results for its fiscal year ended June 30, 2000 reflect (i)
accounts receivable write-offs and reserves in excess of $3 million or (ii)
goodwill write-offs in excess of $2 million. The exercise price of the
Common Warrants will be reduced by the excess of such write-offs and, if
the excess exceeds the aggregate exercise price of the Common Warrants, the
Company will be required to pay the additional amount to TH Lee in cash or
shares of its common stock. The term of the Common Warrants expires on May
31, 2004.
Exercise of the Preferred Warrants and the Additional Warrants is
conditioned upon (i) approval by the Company's stockholders of the issuance
of shares of its Series B Preferred upon the exercise of the Preferred
Warrants and the Additional Warrants and (ii) expiration or termination of
the Hart-Scott-Rodino Act waiting period applicable to the transactions
contemplated by the Agreement, including the exercise by TH Lee of the
Preferred Warrants and the Additional Warrants and TH Lee's conversion of
its shares of Series B Preferred into the Company's common stock. Exercise
of the Common Warrants is conditioned upon expiration or termination of the
Hart-Scott-Rodino Act waiting period applicable to the transactions
contemplated by the Agreement, including the exercise by TH Lee of the
Common Warrants.
The shares of Series B Preferred are convertible into shares of the
Company's common stock (or shares or units of any security into which the
Company's common stock is changed). The conversion rate is 1:1, subject to
adjustment to prevent dilution. The shares of Series B Preferred purchased
pursuant to the Agreement were, as of May 31, 2000, convertible into
2,806,796 shares of the Company's common stock, representing approximately
13% of the Company's common stock outstanding on a fully diluted basis.
The holders of shares of Series B Preferred are entitled to vote on
all matters submitted to the shareholders on an as-converted basis. For so
long as TH Lee owns shares of Series B Preferred convertible into at least
5% of the Company's common stock, the holders of shares of Series B
Preferred have the right to vote separately as a class for the election of
one member of the Company's Board of Directors. For so long as 20% of the
shares of Series B Preferred issued pursuant to the Agreement (excluding
any shares of Series B Preferred issued upon exercise of the Preferred
Warrants and the Additional Warrants) remain outstanding, the Company's
Board of Directors shall consist of not more than 8 directors without the
prior written approval of the holders of two-thirds of the shares of Series
B Preferred. For so long as 20% of the shares of Series B Preferred issued
pursuant to the Agreement (excluding any shares of Series B Preferred
issued upon exercise of the Preferred Warrants and the Additional Warrants)
remain outstanding, the affirmative vote of the holders of two-thirds of
the shares of Series B Preferred are required for the Company to (i) change
the preferences, rights or powers of, increase or decrease the authorized
number of, or issue additional shares of the Series B Preferred (or any
class of stock that ranks prior to or equal with the Series B Preferred),
(ii) change the Company's articles or bylaws, (iii) declare or pay
dividends or distributions on, or repurchase or redeem, the Company's
securities, other than (a) with respect to shares of Series B Preferred,
(b) the repurchase of options or common stock under the Company's stock
option plans, or (c) certain mandatory prepayments and repurchases required
under the terms an outstanding note and warrant of the Company, (iv) merge
or consolidate with, or transfer assets out of the ordinary course of
business to, any person, (v) liquidate, dissolve or reorganize, (vi) permit
a lien on all or substantially all of the Company's property in excess of
$5 million, other than in connection with refinancing the Company's
existing debt, or (vii) until such time as the stockholders' approval of
the transactions contemplated by the Agreement is obtained, issue any of
the Company's common stock or convertible securities, other than with
respect to the Permitted Issuances (as defined in the Certificate of
Designation for the Series B Preferred).
Shares of Series B Preferred receive dividends on an as-converted
basis (other than dividends payable solely in shares of common stock), and
have a per share liquidation preference of $9.00 (the "Liquidation Value"),
plus all accrued and unpaid dividends. The Company is required to redeem
any outstanding shares of Series B Preferred on May 31, 2006, at a price
equal to the aggregate Liquidation Value, plus all accrued and unpaid
dividends. The Company is required to offer to purchase any outstanding
shares of Series B Preferred upon a change of control (as defined in the
Agreement) of the Company, at a price equal to the aggregate Liquidation
Value, plus all accrued and unpaid dividends, in cash or shares of its
common stock (or the securities of the entity into which its common stock
became converted or was exchanged in connection with the change of
control).
The Company and TH Lee entered into a registration rights agreement
dated as of May 31, 2000 (the "Registration Rights Agreement"). Pursuant to
the Registration Rights Agreement, the holders of a majority of (i) the
Company's common stock issued upon the conversion of any shares of Series B
Preferred issued or issuable to TH Lee pursuant to the Agreement (whether
held by TH Lee or any successors or assigns of TH Lee) and (ii) any other
shares of the Company's common stock held by the persons referred to in
clause (i) (collectively, the "Registrable Securities") may request up to
two (2) long-form registrations of the Registrable Securities. Each holder
of Registrable Securities may request an unlimited number of short form
registrations of its Registrable Securities. The Registrable Securities
enjoy piggyback registration rights if the Company intends to register its
other securities.
The Company will use the Purchase Price primarily to meet certain of
its net obligations under the Credit Agreement dated September 24, 1999,
between General Electric Capital Corporation ("GE Capital") and the
Company's UST Delivery Systems, Inc. subsidiary ("CEDS") (the "Credit
Agreement"). The Credit Agreement was entered into in connection with GE
Capital's financing of the Company's purchase of CEDS' same day delivery
business in September 1999. The remainder of the proceeds will be used to
(i) settle outstanding litigation and workers compensation claims, (ii)
repay indebtedness under the convertible note issued by the Company to J.
Iver & Company dated April 25, 2000, if so required by its terms, and (iii)
general working capital.
The foregoing summaries of the Agreement, the Preferred Warrants, the
Additional Warrants, the Common Warrants, the Series B Preferred and the
Registration Rights Agreement are qualified in their entirety by reference
to the definitive forms of such instruments which have been filed as
exhibits to this Form 8-K.
ITEM 7. Exhibits.
Exhibit No. Description
2.1 Securities Purchase Agreement among United Shipping &
Technology, Inc., TH Lee.Putnam Internet Partners,
L.P. and TH Lee.Putnam Internet Parallel Partners,
L.P., dated as of May 15, 2000.
3.1 Articles of Incorporation of United Shipping &
Technology, Inc., as amended, together with Certificate
of Designation for United Shipping & Technology, Inc.
Series B Convertible Preferred Stock., dated as of May
31, 2000.
4.1 Stock Purchase Warrant to Acquire Series B Preferred
Stock, Certificate No. W-1, issued May 31, 2000,
granted by United Shipping & Technology, Inc. to TH
Lee.Putnam Internet Partners, L.P. for up to a number
of shares of Series B Preferred Stock equal to
$16,127,220, divided by the exercise price.
4.2 Stock Purchase Warrant to Acquire Series B Preferred
Stock, Certificate No. W-2, issued May 31, 2000,
granted by United Shipping & Technology, Inc. to TH
Lee.Putnam Internet Parallel Partners, L.P. for up to a
number of shares of Series B Preferred Stock equal to
$13,872,780, divided by the exercise price.
4.3 Stock Purchase Warrant to Acquire Common Stock,
Certificate No. W-3, issued May 31, 2000, granted by
United Shipping & Technology, Inc. to TH Lee.Putnam
Internet Partners, L.P. for up to 228,469 shares of
Common Stock.
4.4 Stock Purchase Warrant to Acquire Common Stock,
Certificate No. W-4, issued May 31, 2000, granted by
United Shipping & Technology, Inc. to TH Lee.Putnam
Internet Parallel Partners, L.P. for up to 196,531
shares of Common Stock.
4.5 Stock Purchase Warrant to Acquire Series B Preferred
Stock, Certificate No. W-5, issued May 31, 2000,
granted by United Shipping & Technology, Inc. to TH
Lee.Putnam Internet Partners, L.P. for up to 243,468
shares of Series B Preferred Stock.
4.6 Stock Purchase Warrant to Acquire Series B Preferred
Stock, Certificate No. W-6, issued May 31, 2000,
granted by United Shipping & Technology, Inc. to TH
Lee.Putnam Internet Parallel Partners, L.P. for up to
209,433 shares of Series B Preferred Stock.
10.1 Registration Rights Agreement, among United Shipping &
Technology, Inc., TH Lee.Putnam Internet Partners, L.P.
and TH Lee.Putnam Internet Parallel Partners, L.P.,
dated as of May 31, 2000.
SIGNATURES
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.
Date: May 31, 2000 By: /s/ Kenneth D. Zigrino
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Name: Kenneth D. Zigrino
Title: Vice President - Administration,
General Counsel and Secretary
INDEX TO EXHIBITS
EXHIBIT NUMBER
2.1 Securities Purchase Agreement among United Shipping &
Technology, Inc., TH Lee.Putnam Internet Partners,
L.P. and TH Lee.Putnam Internet Parallel Partners,
L.P., dated as of May 15, 2000.
3.1 Articles of Incorporation of United Shipping &
Technology, Inc., as amended, together with Certificate
of Designation for United Shipping & Technology, Inc.
Series B Convertible Preferred Stock., dated as of May
31, 2000.
4.1 Stock Purchase Warrant to Acquire Series B Preferred
Stock, Certificate No. W-1, issued May 31, 2000,
granted by United Shipping & Technology, Inc. to TH
Lee.Putnam Internet Partners, L.P. for up to a number
of shares of Series B Preferred Stock equal to
$16,127,220, divided by the exercise price.
4.2 Stock Purchase Warrant to Acquire Series B Preferred
Stock, Certificate No. W-2, issued May 31, 2000,
granted by United Shipping & Technology, Inc. to TH
Lee.Putnam Internet Parallel Partners, L.P. for up to a
number of shares of Series B Preferred Stock equal to
$13,872,780, divided by the exercise price.
4.3 Stock Purchase Warrant to Acquire Common Stock,
Certificate No. W-3, issued May 31, 2000, granted by
United Shipping & Technology, Inc. to TH Lee.Putnam
Internet Partners, L.P. for up to 228,469 shares of
Common Stock.
4.4 Stock Purchase Warrant to Acquire Common Stock,
Certificate No. W-4, issued May 31, 2000, granted by
United Shipping & Technology, Inc. to TH Lee.Putnam
Internet Parallel Partners, L.P. for up to 196,531
shares of Common Stock.
4.5 Stock Purchase Warrant to Acquire Series B Preferred
Stock, Certificate No. W-5, issued May 31, 2000,
granted by United Shipping & Technology, Inc. to TH
Lee.Putnam Internet Partners, L.P. for up to 243,468
shares of Series B Preferred Stock.
4.6 Stock Purchase Warrant to Acquire Series B Preferred
Stock, Certificate No. W-6, issued May 31, 2000,
granted by United Shipping & Technology, Inc. to TH
Lee.Putnam Internet Parallel Partners, L.P. for up to
209,433 shares of Series B Preferred Stock.
10.1 Registration Rights Agreement, among United Shipping &
Technology, Inc., TH Lee.Putnam Internet Partners, L.P.
and TH Lee.Putnam Internet Parallel Partners, L.P.,
dated as of May 31, 2000.
