SCHEDULE 14A INFORMATION
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the Commission
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) 14a-12 or Rule
COMMISSION FILE NO. 0-28452
UNITED SHIPPING & TECHNOLOGY, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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>
UNITED SHIPPING & TECHNOLOGY, INC.
9850 51ST AVENUE NORTH, SUITE 110
MINNEAPOLIS, MINNESOTA 55442
May 8, 2000
Dear Shareholder:
You are cordially invited to attend the 1999 Annual Meeting of
Shareholders of United Shipping & Technology, Inc. to be held in the Lake
Superior Room of the Marquette Hotel, 701 Marquette Avenue, Minneapolis,
Minnesota, on Friday, June 2, 2000, at 3:30 p.m. Minneapolis time.
At the Annual Meeting you will be asked to vote for the election of
eight directors. All of these nominees are currently directors and, I strongly
believe, represent a cohesive team and are moving the Company in the right
direction. By re-electing this group, the Board will be able to continue
implementing our new business strategy and continue the improvements we have
already started to see. The Board is also asking you to approve the
implementation of the Company's 2000 Stock Option Plan. The proposed 2000 Stock
Option Plan is critical for the Company to attract and retain the talent we need
to succeed. We are also asking you to ratify our decision to appoint Ernst &
Young LLP as the Company's independent public accountants for the fiscal year
ended June 30, 2000.
Whether or not you are able to attend the meeting in person, I urge you
to sign and date the enclosed proxy card and return it 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,
UNITED SHIPPING & TECHNOLOGY, INC.
/s/ Peter C. Lytle
Peter C. Lytle
President and Chief Executive Officer
<PAGE>
UNITED SHIPPING & TECHNOLOGY, INC.
9850 51ST AVENUE NORTH, SUITE 110
MINNEAPOLIS, MINNESOTA 55442
NOTICE OF 1999 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON FRIDAY JUNE 2, 2000
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Shareholders of
United Shipping & Technology, Inc. (the "Company"), a Utah corporation, will be
held in the Lake Superior Room of the Marquette Hotel, 701 Marquette Avenue,
Minneapolis, Minnesota, on Friday, June 2, 2000, at 3:30 p.m. Minneapolis time,
and at any adjournment or postponement thereof, for the following purposes, as
more fully described in the accompanying Proxy Statement:
1. To elect eight directors for the ensuing year and until their
successors are duly elected and qualified;
2. To consider and vote upon approval of the Company's 2000 Stock
Option Plan;
3. To ratify the appointment of Ernst & Young LLP, independent
certified public accountants, as auditors of the Company for
its fiscal year ending June 30, 2000; and
4. In their discretion, the proxies are authorized to vote upon
such other business as may properly come before the meeting or
any adjournment or postponement thereof.
The transfer books of the Company will not be closed for the Annual
Meeting. Only shareholders of record holding Common Stock at the close of
business on April 4, 2000, are entitled to receive notice of, and to vote at,
the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Kenneth D. Zigrino
Kenneth D. Zigrino
Secretary
Minneapolis, Minnesota
May 8, 2000
- --------------------------------------------------------------------------------
ALL SHAREHOLDERS ARE CORDIALLY INVITED AND REQUESTED TO ATTEND THE ANNUAL
MEETING IN PERSON. SHAREHOLDERS WHO ARE UNABLE TO ATTEND IN PERSON ARE REQUESTED
TO 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. YOUR PROXY IS BEING SOLICITED BY THE
BOARD OF DIRECTORS OF THE COMPANY. YOUR ATTENDANCE AT THE ANNUAL MEETING,
WHETHER IN PERSON OR BY PROXY, IS IMPORTANT TO ENSURE A QUORUM. IF YOU RETURN
YOUR PROXY, YOU STILL MAY VOTE YOUR SHARES IN PERSON BY GIVING WRITTEN NOTICE
(BY SUBSEQUENT PROXY OR OTHERWISE) TO THE SECRETARY OF THE COMPANY AT ANY TIME
PRIOR TO THE VOTE AT THE ANNUAL MEETING.
- --------------------------------------------------------------------------------
<PAGE>
UNITED SHIPPING & TECHNOLOGY, INC.
9850 51ST AVENUE NORTH, SUITE 110
MINNEAPOLIS, MINNESOTA 55442
-------------------
PROXY STATEMENT FOR
1999 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 2, 2000
------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors (the "Board of Directors" or the "Board")
of United Shipping & Technology, Inc. (the "Company"), to be voted at the Annual
Meeting of Shareholders (the "Annual Meeting") to be held in the Lake Superior
Room of the Marquette Hotel, 701 Marquette Avenue, Minneapolis, Minnesota on
Friday, June 2, 2000, at 3:30 p.m. Minneapolis time, and at any adjournment or
postponement thereof. The Notice of Annual Meeting, this Proxy Statement and the
enclosed proxy are first being mailed to shareholders on or about May 8, 2000.
The Board of Directors knows of no business which will be presented at
the Annual Meeting other than the matters referred to in the accompanying Notice
of Meeting. However, if any other matters are properly presented at the Annual
Meeting, it is intended that the persons named in the proxy will vote on such
matters in accordance with their judgment. If the enclosed proxy is executed and
returned, it nevertheless may be revoked at any time before it has been voted by
a later-dated proxy or a vote in person at the Annual Meeting. Shares
represented by properly executed proxies received on behalf of the Company will
be voted at the Annual Meeting (unless revoked prior to their vote) in the
manner specified therein. If no instructions are specified in a signed proxy
returned to the Company, the shares represented thereby will be voted (i) FOR
the election of the eight director nominees named herein; (ii) FOR the proposal
to approve the Company's 2000 Stock Option Plan; and (iii) FOR the appointment
of Ernst & Young LLP, independent certified public accountants, as auditors of
the Company for its fiscal year ending June 30, 2000. If any other matters are
properly presented at the Annual Meeting for action, including a question of
adjourning or postponing the Annual 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 their best judgement.
RECORD DATE AND OUTSTANDING COMMON STOCK
Only holders of the Common Stock of the Company whose names appear of
record on the books of the Company at the close of business on April 4, 2000
(the "Record Date"), are entitled to receive notice of, and to vote at, the
Annual Meeting. On the Record Date, the voting shares of the Company consisted
of 16,293,760 shares of Common Stock, each entitled to one vote per share.
REVOCABILITY OF PROXIES
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 (i) executing a later-dated proxy relating to the same shares and delivering
it to the Secretary of the Company prior to the vote at the Annual Meeting, (ii)
filing a written notice of revocation bearing a later date than the proxy with
the Secretary of the Company prior to the vote at the Annual Meeting, or (iii)
appearing in person at the Annual Meeting, filing a written notice of
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<PAGE>
revocation and voting in person the shares to which the proxy relates. Any
written notice or subsequent proxy should be delivered to United Shipping &
Technology, Inc., 9850 51st Avenue North, Suite 110, Minneapolis, Minnesota
55442, Attention: Kenneth D. Zigrino, Secretary of the Company, or
hand-delivered to the Secretary of the Company prior to the vote at the Annual
Meeting.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
The presence, in person or by proxy, of the holders of at least a
majority of the shares of Common Stock outstanding and entitled to vote is
necessary to constitute a quorum for the transaction of business at the Annual
Meeting. All votes will be tabulated by the inspector of election for the Annual
Meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes.
If a properly executed proxy is returned and the shareholder has
abstained from voting on any matter, the shares represented by such proxy will
be considered present at the Annual 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.
If a properly 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 Annual Meeting for determining a quorum, but will
not be considered to be represented at the Annual Meeting for purposes of
calculating the vote with respect to such matter.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Bylaws of the Company state that the Board shall consist of at
least three but not more than nine persons as determined by the Board or the
Company's shareholders. The Board has set the size of the Board at eight members
and has nominated for election to the Board the eight persons named below. The
shareholders are being requested to elect the eight nominees named below. All of
the nominees are currently members of the Board.
The persons named in the accompanying proxy will vote for the election
of the below named nominees, unless authority to vote is withheld. Shareholders
do not have cumulative voting rights with respect to the election of directors,
and proxies cannot be voted for a greater number of directors than the number of
nominees named below. The Board is informed that the nominees are willing to
serve as directors; however, if any nominee is unable to serve or for good cause
will not serve, the proxy may be voted for such other person as the proxies
shall, in their discretion, designate, or the Board may reduce the number of
directors to eliminate the vacancy.
NOMINEES FOR ELECTION AS DIRECTOR
The eight nominees receiving the highest number of affirmative votes of
the shares entitled to vote at the Annual Meeting shall be elected to the Board
of Directors. The following table sets forth certain information regarding the
nominees for election as director of the Company. All of the directors of the
Company elected at the Annual Meeting will serve for the ensuing year and until
their successors are duly elected and qualified. There are no family
relationships between any director or officer. THE BOARD OF DIRECTORS RECOMMENDS
THAT SHAREHOLDERS VOTE FOR THE NOMINEES LISTED BELOW.
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NAME AGE POSITION
- ---- --- --------
Peter C. Lytle 50 Chairman, President, Chief Executive Officer and
Director
Timothy G. Becker 40 Treasurer, Chief Financial Officer and Director
Marshall T. Masko 42 Vice Chairman and Director
James A. Bartholomew 43 Director
Marlin Rudebusch 52 Director
Susan M. Clemens 37 Director
Ronald G. Olson 59 Director
Peter W. Kooman 45 Director
PETER C. LYTLE. Mr. Lytle became employed by the Company in May 1998
and has served as the Company's Chairman, President, Chief Executive Officer and
a director since June 1998. From March 1998 to May 1998, Mr. Lytle rendered
consulting services to the Company in connection with its strategic
restructuring. Mr. Lytle is a principal with the Business Development Group (the
"BDG") which he co-founded in 1994. The BDG provides turnaround management
services and strategic planning to companies in the United States and Europe.
His responsibilities at the BDG included acting as Chief Executive Officer and
Chairman of Primo Piatto, Inc. during a successful acquisition of the Borden
Pasta Manufacturing business (which was subsequently sold to Dakota Growers
Pasta Company) and acting as Chairman of Pink Business Interiors during a
successful employee buyout and reorganization. From 1986 to 1994, Mr. Lytle was
employed by Land O' Lakes, Inc. in a variety of positions from Vice President of
Advanced Food Sciences to General Manager of Business Development. Prior to that
time he held positions with the Beatrice Companies as a Group Brand Manager, and
Allied International as Vice President of Marketing and Business Development. He
currently is on the Board of Directors of Humanetics Corporation, Agrotec, Inc.
and Pink Business Interiors, Inc. He is on the Board of Advisors for the Center
for Advanced Biotechnology in Africa, and Menu Direct, Inc.
TIMOTHY G. BECKER. Mr. Becker is a director of the Company and has
served as its Chief Financial Officer and Treasurer since June 1998. From March
1998 to June 1998, Mr. Becker rendered consulting services to the Company in
connection with its strategic restructuring. Between February 1994 and March
1998, Mr. Becker worked as an independent financial workout consultant for his
own firm, the Becker Group, Ltd., and during this time Mr. Becker served as
Chief Financial Officer of Primo Piatto, Inc. Between February 1992 and February
1994, Mr. Becker was employed as Director of Business Systems for Munsingwear,
Inc. Prior to 1992, Mr. Becker was employed as Senior Manager with Ernst & Young
LLP's Restructuring and Reorganization Consulting Practice. Mr. Becker has over
16 years of experience with a variety of companies during periods of financial
crisis and rapid change along with positioning companies and their balance
sheets for sale, merger or acquisitions. Mr. Becker is a Certified Public
Accountant and is a member of the Board of Directors of the Minnesota Chapter of
Turnaround Management Association.
MARSHALL T. MASKO. Mr. Masko was elected as Vice Chairman and a
director of the Company in June 1998. In addition, Mr. Masko has been retained
as an independent consultant to assist the Company in its marketing efforts.
From April 1996 to February 1998, Mr. Masko served as the Senior Vice President
- - Marketing of NordicTrack. From August 1994 to March 1996, he served as Senior
Vice President and General Manager of K-tel, International. Prior to that, Mr.
Masko was Group Vice President - Marketing for NordicTrack from January 1990 to
July 1994. His career experience includes new product development, brand
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<PAGE>
management, advertising management, direct response marketing, international
marketing, sales and retail marketing, strategic planning and business
development.
JAMES A. BARTHOLOMEW. Mr. Bartholomew was elected to the Company's
Board in March 1998. Mr. Bartholomew has been a financial and strategic workout
consultant for the last 12 years with his own firm. Mr. Bartholomew is a
Certified Public Accountant and has been involved in a substantial number of
workout engagements including negotiations of acquisitions and divestitures,
negotiations with secured lenders, banks, asset based lenders, subordinated note
holders and unsecured creditors. For nine years prior to that he was employed by
the firm Deloitte, Haskins and Selles. He is a member of the Board of Directors
of the Minnesota Chapter of Turnaround Management Association.
MARLIN RUDEBUSCH. Mr. Rudebusch was elected to the Company's Board in
March 1998. Mr. Rudebusch is the Business Unit Director for Renal Systems
division of Minntech Corporation, by which he has been employed since December
1997. Between September 1994 and November 1997 he was the Vice President of
Marketing of Nutrition Medical and from 1993 to 1994 was Director of Marketing
at AudioScience. He served in various sales and marketing management positions
at Medtronic, Inc. between 1981 to 1993.
SUSAN M. CLEMENS. Ms. Clemens was elected to the Company's Board in
June 1998. Since February 1998, Ms. Clemens has been employed by Dakota Growers
Pasta Company in the position of Vice President of Human Resources. From August
1997 to February 1998, she was employed by Primo Piatto, Inc. as Vice President
of Human Resources and Administration. From January 1993 to August 1997, Ms.
Clemens was the Senior Human Resources Manager for Borden Foods Corporation.
Between 1986 and January 1993 Ms. Clemens was employed by Tiro Industries, Inc.
as Human Resources Manager.
RONALD G. OLSON. Mr. Olson was elected to the Company's Board in
December 1998. Since January 1990, Mr. Olson has served as President, Chief
Executive Officer and a Director of Grow Biz International, Inc. Mr. Olson has
also served as President and Chief Executive Officer of Franchise Business
Systems, Inc. since July 1988.
PETER W. KOOMAN. Mr. Kooman was elected to the Company's Board in
November 1999. Mr. Kooman is a Managing Director of Bayview Capital Group, a
private equity firm in Wayzata, Minnesota. Mr. Kooman joined Bayview Capital
Group in July 1999. Between April 1990, and June 1999, Mr. Kooman served as Vice
President and Chief Investment Officer for Waycrosse, Inc. in Minneapolis,
Minnesota. Between 1984 and 1989, Mr. Kooman held various officer positions with
First Bank Systems, most recently as Vice President of FBS Merchant Bank. Prior
to 1984, Mr. Kooman worked for Fleet Financial Group.
THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors held seven meetings during the fiscal year ended
June 30, 1999. Each director attended at least 75% of the total number of
meetings of the Board and the total number of meetings held by all committees of
the Board on which he or she served during the fiscal year ended June 30, 1999.
The Board has established Audit, Compensation and Executive committees.
The Audit Committee currently consists of James A. Bartholomew and
Ronald G. Olson. 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. Where appropriate, the Audit Committee also
reviews transactions with management involving actual or potential conflicts of
interest. During the fiscal year ended June 30, 1999, the Audit Committee held
one meeting.
5
<PAGE>
The Compensation Committee currently consists of Susan M. Clemens,
Marlin Rudebusch and James A. Bartholemew. 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. During the fiscal year ended June 30, 1999, the
Compensation Committee held one meeting.
In June 1998, the Board established an Executive Committee, which
consists of Peter C. Lytle, Susan M. Clemens and James A. Bartholomew. Subject
to certain limitations, the Executive Committee may exercise the power of the
Board when the Board is not in session. The Executive Committee held two
meetings during fiscal year 1999.
DIRECTOR COMPENSATION
CASH COMPENSATION. The Company has not paid any cash compensation to a
director in his or her capacity as a director and has no present plan to pay
directors' fees.
DIRECTOR STOCK OPTION PLAN. In February 1995, the Company adopted its
1996 Director Stock Option Plan (the "1996 Director Plan"), pursuant to which it
automatically awards each outside director 15,000 shares of Common Stock for
each year of service as a director. The term of each option granted under the
plan is five years and the exercise price per share for stock granted under the
plan is 100% of the fair market value per share on the date on which the
respective option is granted.
EXECUTIVE COMPENSATION
The following table sets forth the aggregate cash compensation paid to
or accrued by each of the Company's executive officers receiving in excess of
$100,000 (the "Named Executive Officers") for services rendered to the Company
during the fiscal years ended June 30, 1999, June 30, 1998 and June 30, 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------- ------------------------
FISCAL SECURITIES UNDERLYING
YEAR SALARY OPTIONS
---------- ---------- ------------------------
<S> <C> <C> <C>
Peter C. Lytle.......................... 1999 100,000 100,000 (1)
Chief Executive Officer 1998 16,667 125,000
Timothy G. Becker....................... 1999 100,000 100,000 (2)
Chief Financial Officer 1998 16,667 125,000
Kenneth D. Zigrino...................... 1999 100,000 100,000 (3)
Secretary and General Counsel 1998 12,500 125,000
</TABLE>
- ---------------
(1) Mr. Lytle's employment with the Company began on May 4, 1998. In
connection with consulting services rendered to the Company as an
independent contractor between March 1998 and the commencement of his
employment, the Company granted Mr. Lytle an option to purchase 125,000
shares of Common Stock, which option is fully vested. In October of
1998, Mr. Lytle was also granted an incentive stock option to purchase
100,000 shares of Common Stock. Such option vested as to 80% of the
shares on October 29, 1999 and the remainder vests on October 29, 2000.
(2) Mr. Becker's employment with the Company began on May 4, 1998. In
connection with consulting services rendered to the Company as an
independent contractor between March 1998 and the commencement of his
employment, the Company granted Mr. Becker an option to purchase
125,000 shares of Common Stock, which option is fully vested. In
October of 1998, Mr. Becker was also
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granted an incentive stock option to purchase 100,000 shares of Common
Stock. Such option vested as to 80% of the shares on October 29, 1999
and the remainder vests on October 29, 2000.
(3) Mr. Zigrino's employment with the Company began on May 4, 1998. In
connection with consulting services rendered to the Company as an
independent contractor between March 1998 and the commencement of his
employment, the Company granted Mr. Zigrino an option to purchase
125,000 shares of Common Stock, which option is fully vested. In
October of 1998, Mr. Zigrino was also granted an incentive stock option
to purchase 100,000 shares of Common Stock, which option is fully
vested.
The following tables summarize stock option grants and option exercises
during the fiscal year ended June 30, 1999 to or by the Named Executive Officers
and certain other information relative to such options.
OPTION GRANTS IN LAST FISCAL YEAR
(INDIVIDUAL GRANTS)
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF TOTAL OPTIONS
OPTIONS GRANTED TO EMPLOYEES IN EXERCISE
NAME GRANTED FISCAL YEAR PRICE EXPIRATION DATE
- -------------------- -------------- -------------------------- ---------- -----------------
<S> <C> <C> <C> <C>
Peter C. Lytle 100,000 (1) 27.4% $1.25 October 29, 2008
Timothy G. Becker 100,000 (2) 27.4% $1.25 October 29, 2008
Kenneth D. Zigrino 100,000 (3) 27.4% $1.25 October 29, 2008
</TABLE>
- --------------
(1) In October of 1998, the Company granted Mr. Lytle an incentive stock
option to purchase 100,000 shares of Common Stock. Such option vested
as to 80% of the shares on October 29, 1999 and the remainder vests on
October 29, 2000.
(2) In October of 1998, the Company granted Mr. Becker an incentive stock
option to purchase 100,000 shares of Common Stock. Such option vested
as to 80% of the shares on October 29, 1999 and the remainder vests on
October 29, 2000.
(3) In October of 1998, the Company granted Mr. Zigrino an incentive stock
option to purchase 100,000 shares of Common Stock, which option is
fully vested.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
SHARES NUMBER OF UNEXERCISED IN-THE-MONEY
ACQUIRED ON VALUE OPTIONS AT FY-END OPTIONS AT FY-END
NAME EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- --------------------- ------------- ---------- --------------------------- ---------------------------
<S> <C> <C> <C> <C>
Peter C. Lytle -- -- 125,000 / 100,000 (1) $309,375 / $62,000
Timothy G. Becker -- -- 125,000 / 100,000 (2) $309,375 / $62,000
Kenneth D. Zigrino -- -- 225,000 / 0 (3) $371,375 / $0
</TABLE>
- --------------
(1) In March 1998, the Company granted Mr. Lytle an option to purchase
125,000 shares of Common Stock. Such option has fully vested. In
October of 1998, Mr. Lytle was also granted an incentive stock option
to purchase 100,000 shares of Common Stock. Such option vested as to
80% of the shares on October 29, 1999 and the remainder vests on
October 29, 2000.
7
<PAGE>
(2) In March 1998, the Company granted Mr. Becker an option to purchase
125,000 shares of Common Stock. Such option has fully vested. In
October of 1998, Mr. Becker was also granted an incentive stock option
to purchase 100,000 shares of Common Stock. Such option vested as to
80% of the shares on October 29, 1999 and the remainder vests on
October 29, 2000.
(3) In March 1998, the Company granted Mr. Zigrino an option to purchase
125,000 shares of Common Stock. Such option has fully vested. In
October of 1998, Mr. Zigrino was also granted an incentive stock option
to purchase 100,000 shares of Common Stock. Such option has fully
vested.
EMPLOYMENT AGREEMENTS, TERMINATION OF EMPLOYMENT
AND CHANGE IN CONTROL AGREEMENTS
The Company has employment contracts and severance agreements in effect
with Peter C. Lytle, its Chief Executive Officer and Timothy G. Becker, its
Chief Financial Officer.
The Company and Mr. Lytle are parties to an employment agreement dated
November 5, 1999, governing his employment with the Company. The agreement sets
forth Mr. Lytle's compensation level and eligibility for salary increases,
bonuses, benefits and option grants under stock option plans. Pursuant to the
agreement, Mr. Lytle's employment is voluntary and may be terminated by the
Company with two months prior written notice, and by Mr. Lytle with six months
written notice. If the Company terminates Mr. Lytle's employment without cause
or upon the happening of other events set forth in his employment agreement, Mr.
Lytle shall receive an amount equal to his base salary per month at the end of
each of the eighteen months following the date of his termination but in no
event shall he receive any such payments after he gains employment elsewhere.
The Company may immediately terminate Mr. Lytle's employment for cause upon
written notice without any further obligation to Mr. Lytle.
The Company and Mr. Becker are parties to an employment agreement dated
November 5, 1999, governing his employment with the Company. The agreement sets
forth Mr. Becker's compensation level and eligibility for salary increases,
bonuses, benefits and option grants under stock option plans. Pursuant to the
agreement, Mr. Becker's employment is voluntary and may be terminated by the
Company with two months prior written notice, and by Mr. Becker with six months
written notice. If the Company terminates Mr. Becker's employment without cause
or upon the happening of other events set forth in his employment agreement, Mr.
Becker shall receive an amount equal to his base salary per month at the end of
each of the eighteen months following the date of his termination but in no
event shall he receive any such payments after he gains employment elsewhere.
The Company may immediately terminate Mr. Becker's employment for cause upon
written notice without any further obligation to Mr. Becker.
PROPOSAL NO. 2
APPROVAL OF THE 2000 STOCK OPTION PLAN
GENERAL
To provide the Company with the flexibility to issue stock options in
the coming years, the Board of Directors has adopted, subject to shareholder
approval, the Company's 2000 Stock Option Plan (the "Plan"). The Board of
Directors has reserved 3,000,000 shares of Common Stock for issuance under the
Plan and a maximum of an additional 500,000 shares of Common Stock that will
become available for issuance under the Plan each year. A general description of
the Plan is set forth below, but such description is qualified in its entirety
by reference to the full text of the Plan, a copy of which appears at Appendix A
to this document.
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DESCRIPTION OF THE PLAN
PURPOSE. The purpose of the Plan is to promote the long-term financial
interest of the Company and any related company by (a) attracting and retaining
employees and other individuals providing services to the Company, (b)
motivating such individuals, by means of appropriate incentives, to achieve
long-range goals, (c) providing incentive compensation opportunities that are
competitive with those of other similar companies, and (d) conforming
participants' interests with those of the Company's shareholders through
compensation based on the Company's Common Stock.
TERM. The term of the Plan shall be limited in duration to ten (10)
years from the earlier of (a) the effective date of the Plan or (b) the date the
Plan is approved by the Company's shareholders. Further, the Plan may be
terminated at any time, provided that such termination will not adversely affect
options then outstanding.
ADMINISTRATION. The Plan is administered by the Compensation Committee
of the Company's Board of Directors (the "Committee"). The Committee has
authority and discretion (a) to determine whether and to what extent any award
or combination of awards will be granted, (b) to select from among eligible
individuals those persons who will receive awards, (c) to determine the number
of shares of Company Common Stock to be covered by each award, (d) to establish
the terms, conditions, performance criteria, restrictions and other provisions
of such awards, (e) to determine the treatment of awards upon the eligible
individual's retirement, disability, death, or other termination of employment
or service; (f) to cancel or amend the terms of any award, (g) to interpret the
Plan and (h) to delegate any of its powers to any member of the Committee or to
any other person. The Committee may establish, amend and rescind any rules and
regulations relating to the Plan and make all other determinations that may be
necessary or advisable for the administration of the Plan. The Committee may
also grant awards as alternatives to or replacements of awards outstanding under
the Plan or any other plan or arrangement.
ELIGIBILITY. All employees of the Company or any subsidiary are
eligible to receive incentive stock options ("ISOs") pursuant to the Plan. All
(a) common law employees, prospective employees or officers of the Company or
any subsidiary, (b) members of the Company's Board, (c) consultants and advisors
to the Company, and (d) employees of any related company or business partner of
the Company are eligible to receive non-qualified stock options ("NSOs").
OPTIONS. When an option is granted under the Plan, the Committee, in
its discretion, specifies the exercise price, the type of option (ISO or NSO) to
be granted, and the number of shares which may be purchased upon exercise of the
option. The exercise price of an option may not be less than 100% of the fair
market value of the Company's Common Stock on the date of grant. However, with
respect to any ISO granted to a holder of more than 10% of the outstanding
Company Common Stock, the exercise price may not be less than 110% of the fair
market value of the Company's Common Stock on the date of grant. Generally, the
fair market value of the Company's Common Stock is the closing price of the
Common Stock as reported on the Nasdaq Stock Market on the date the option is
granted. On April 4, 2000, the closing price of the Company Common Stock as
reported by the Nasdaq SmallCap Market was $13.125 per share. No individual may
receive an option grant to purchase more than 600,000 shares in any fiscal year.
The term during which an option may be exercised and whether an option
will be exercisable immediately, in stages or otherwise are set by the
Committee, but the term of any ISO may not exceed ten years from the date of
grant. Optionees may pay for shares upon exercise of options with cash,
cashier's check, Company Common Stock valued at the Stock's then fair market
value and acceptable to the Committee, or a combination of these methods. Except
as otherwise provided by the Committee, awards granted under the Plan are
nontransferable during the life of the optionee.
The Committee will determine the form of stock option agreements which
will be used for options granted under the Plan. Such agreements will govern the
right of an optionee to exercise an option upon
9
<PAGE>
termination of employment or affiliation with the Company during the life of an
optionee and following an optionee's death. The Board or the Committee may
impose additional or alternative conditions and restrictions on ISOs or NSOs
granted under the Plan; however, each ISO must contain such limitations and
restrictions upon its exercise as are necessary to ensure that the option will
be an ISO as defined under Section 422 of the Internal Revenue Code of 1986, as
amended.
RESTRICTED STOCK. Grants of restricted stock may be made by the
Committee, subject to the terms and provisions of the Plan, at any time and in
such amounts as the Committee shall determine. Each grant of restricted stock
and/or the vesting thereof may be conditioned upon the completion of a specified
period of service with the Company or a related company, upon the attainment of
specified performance objectives or upon such other criteria as the Committee
may determine. Voting rights and rights to receive a dividend shall be
determined by the Committee.
TAX OFFSET PAYMENTS. Grants of tax offset payments may be made by the
Committee in its discretion subject to the terms and provisions of the Plan. Tax
offset payments shall not exceed the amount necessary to pay applicable federal,
state, local and other taxes payable with respect to an award. Tax offset
payments shall be paid solely in cash.
CHANGE IN CONTROL. Upon a change in control (as defined in the Plan),
all or a portion of an award (as determined by the Committee) will become fully
exercisable and vested as to all shares subject to such award if (a) such award
is not assumed by the surviving corporation or its parent or (b) the surviving
corporation or its parent does not substitute such award with another award of
substantially the same terms.
AMENDMENT. The Committee may amend or terminate the Plan, or any part
thereof, at any time, provided, however, that no amendment or termination may
impair the terms and conditions of any outstanding option to the material
detriment of the optionee without the consent of the optionee. An amendment
shall be subject to the approval of the Company's shareholders only to the
extent required by applicable law, rule, or regulation.
ANTIDILUTION PROVISIONS. In the event of a corporate transaction
involving the Company, including without limitation any stock dividend,
combination or reverse stock split, sale of substantially all assets,
recapitalization, reorganization, merger, consolidation, split-up, spin-off,
distribution of assets or other change in corporate structure, the Committee may
adjust or substitute awards to preserve the benefits or potential benefits of
the awards. Actions by the Committee may include (a) adjustment of the number
and kind of shares which may be delivered under the Plan, (b) adjustment of the
number and kind of shares subject to outstanding awards, (c) adjustment of the
exercise price of outstanding options, and (d) any other adjustments that the
Committee determines to be appropriate.
FEDERAL INCOME TAX CONSEQUENCES
INCENTIVE STOCK OPTIONS. Under present law, an optionee who is granted
an ISO does not recognize taxable income at the time the option is granted or
upon its exercise, although the exercise is an adjustment item for alternative
minimum tax purposes and may subject the optionee to the alternative minimum
tax. Upon a disposition of the shares more than two years after grant of the
option and one year after exercise of the option, any gain or loss is treated as
long-term capital gain or loss. Net capital gains on shares held more than 12
months are generally taxed at a maximum federal rate of 20%. Capital losses are
generally allowed in full against capital gains and up to $3,000 against other
income. If the above holding periods are not satisfied, the optionee recognizes
ordinary income at the time of disposition equal to the difference between the
exercise price and the sale price of the shares. Any gain or loss recognized on
such a premature disposition of the shares in excess of the amount treated as
ordinary income is treated as long-term or short-term capital gain or loss,
depending on the holding period. Unless limited by Section 162(m) of the
Internal Revenue Code, the Company is entitled to a deduction in the same amount
as and at the time the optionee recognizes ordinary income.
10
<PAGE>
NON-STATUTORY STOCK OPTIONS. An optionee does not recognize any taxable
income at the time he or she is granted an NSO. Upon exercise, the optionee
recognizes taxable income generally measured by the excess of the then fair
market value of the shares over the exercise price. Any taxable income
recognized in connection with an option exercise by an employee of the Company
is subject to tax withholding by the Company. Unless limited by Section 162(m)
of the Internal Revenue Code, the Company is entitled to a deduction in the same
amount as and at the time the optionee recognizes ordinary income. Upon a
disposition of such shares by the optionee, any difference between the sale
price and the optionee's exercise price, to the extent not recognized as taxable
income as provided above, is treated as long-term or short-term capital gain or
loss, depending on the holding period. Net capital gains on shares held more
than 12 months may be taxed at a maximum federal rate of 20% (lower rates may
apply depending upon when the stock is acquired and the applicable income tax
bracket of the taxpayer). Capital losses are generally allowed in full against
capital gains and up to $3,000 against other income.
RESTRICTED STOCK. Restricted stock awards are generally taxed on the
later of grant or the expiration of a substantial risk of forfeiture. A
restricted stock award is subject to a "substantial risk of forfeiture" within
the meaning of Section 83 of the Internal Revenue Code to the extent the award
will be forfeited in the event that the recipient ceases to provide services to
the Company. Because the restricted stock grants are subject to a substantial
risk of forfeiture, the recipient will not recognize ordinary income at the time
the award is granted. Instead the recipient will recognize ordinary income on
the earlier of (a) the date the restricted stock is no longer subject to a
substantial risk of forfeiture or (b) when the restricted stock becomes
transferable. The amount of ordinary income to be recognized is equal to the
difference between the amount paid for the restricted stock and the fair market
value of the restricted stock on the date the restricted stock is no longer
subject to a substantial risk of forfeiture. The ordinary income recognized by
the recipient who is an employee will be subject to tax withholding by the
Company. Unless limited by Section 162(m) of the Internal Revenue Code, the
Company is entitled to a tax deduction in the same amount and at the same time
as the recipient recognizes ordinary income.
TAX OFFSET PAYMENTS. In the year of receipt of a tax offset payment,
the recipient will have taxable ordinary income, equal to the amount of the tax
offset payment. In the case of a recipient who is also an employee, any tax
offset payment will be subject to tax withholding by the Company. Unless limited
by Section 162(m) of the Internal Revenue Code, the Company will be entitled to
a tax deduction in the same amount and at the same time as the recipient
recognizes ordinary income.
The foregoing is only a summary of the general effect of federal income
taxation upon the optionee or recipient and the Company with respect to the
grant and exercise of options and awards under the Plan. This summary does not
purport to be complete and does not discuss the tax consequences arising in the
context of the optionee's or recipient's death or the income tax laws of any
municipality, state or foreign country in which the optionee's or recipient's
income or gain may be taxable.
NEW PLAN BENEFITS
The following table sets forth the anticipated grants of options to
Peter C. Lytle and Timothy G. Becker, executive officers of the Company. The
following table also sets forth the anticipated grants of options to numerous
non-executive officer employees of the Company. The Company anticipates that
these options will be granted to each individual subject to shareholder approval
of the Company's 2000 Stock Option Plan. There are no options currently
contemplated other than those described below, although the amount of awards
granted to date are not necessarily indicative of the amounts that will be
awarded in the future.
11
<PAGE>
2000 STOCK OPTION PLAN
<TABLE>
<CAPTION>
NAME AND POSITION DOLLAR VALUE NUMBER OF SHARES
- ----------------------------------------------------- ----------------- --------------------
<S> <C> <C>
Peter C. Lytle..................................... * 466,815
President, Chief Executive Officer and Director
Timothy G. Becker.................................. * 466,815
Treasurer, Chief Financial Officer and Director
Executive Group.................................... * 933,630
Non-Executive Director Group....................... * 0
Non-Executive Officer Employee Group............... * 1,710,000
</TABLE>
- -------------------
* Indeterminable, fair market value will be determined at the date of the 1999
Annual Meeting.
VOTE REQUIRED. The affirmative vote of holders of a majority of the
shares present in person or represented by proxy and entitled to vote at the
Annual Meeting is required to approve the Plan. Abstentions will be considered
shares entitled to vote in the tabulation of votes cast on the proposal and will
have the same effect as negative votes. Broker non-votes are counted towards a
quorum, but are not counted for any purpose in determining whether this matter
has been approved. THE BOARD OF DIRECTORS CONSIDERS THE PLAN TO BE IN THE BEST
INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS AND RECOMMENDS THAT YOU VOTE FOR
APPROVAL OF THE PLAN.
PROPOSAL NO. 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Ernst & Young LLP as independent
public accountants for the Company for the fiscal year ending June 30, 2000. A
proposal to ratify such appointment will be presented to the shareholders at the
Annual Meeting. Representatives of Ernst & Young LLP are expected to be present
at the Annual 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.
On November 10, 1999, the Company engaged Ernst & Young LLP as its
principal independent accountant to audit its financial statements. On the same
date, the Company informed Lurie, Besikof, Lapidus & Co., LLP that Lurie,
Besikof, Lapidus & Co., LLP would no longer serve as the Company's independent
accountant. The replacement of Lurie, Besikof, Lapidus & Co., LLP by Ernst &
Young LLP was approved by the Company's Board of Directors on November 10, 1999.
Except for an explanatory paragraph with respect to substantial doubt
about the Company's ability to continue as a going concern to the Company's
consolidated financial statements as of and for the years ended June 30, 1999
and 1998, Lurie, Besikof, Lapidus & Co., LLP's reports on the Company's
financial statements for the past two fiscal years have not contained an adverse
opinion or a disclaimer of opinion and were not qualified or modified as to
uncertainty, audit scope or accounting principles. There have been no
disagreements, during or subsequent to the Company's past two fiscal years,
between the Company and Lurie, Besikof, Lapidus & Co., LLP on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure, which, if not resolved to Lurie, Besikof, Lapidus & Co.,
LLP's satisfaction, would have caused Lurie, Besikof, Lapidus & Co., LLP to make
reference to the subject matter of such disagreements in connection with its
report.
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE IN FAVOR OF THE APPOINTMENT
OF ERNST & YOUNG LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR
ENDING JUNE 30, 2000.
12
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT AND OTHERS
The following table contains certain information known to the Company
regarding beneficial ownership of its Common Stock as of March 31, 2000, (i)
each person who is known to the Company to own beneficially more than five
percent of the Company's Common Stock, (ii) each of the Company's directors,
(iii) each Named Executive Officer, and (iv) all current executive officers and
directors as a group. Unless otherwise noted, each person identified below has
sole voting and investment power with respect to such shares.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED (1) BENEFICIALLY OWNED (2)
- ------------------------------------ ---------------------- ----------------------
<S> <C> <C>
Richard and Mabeth Neslund(3)
15210 Wayzata Boulevard
Wayzata, MN 55391..................... 1,948,900 12.0%
Bayview Capital Partners LP(4)
641 East Lake Street, Suite 230
Wayzata, MN 55391..................... 1,366,220 8.4%
RS Investment Management Co. LLC
338 Market Street, Suite 200
San Francisco, CA 94111............... 1,058,243 6.5%
Entities Affiliated with Brahman
Management Corp.(5)
277 Park Avenue, 26th Floor
New York, NY 10172.................... 985,074 6.0%
Entities Affiliated with Tudor
Investment Corporation(6)
600 Steamboat Road
Greenwich, CT 06830................... 985,074 6.0%
Peter C. Lytle (7).................... 639,785 3.8%
Kenneth D. Zigrino (8)................ 412,500 2.5%
Timothy G. Becker (9)................. 325,687 2.0%
Marshall T. Masko (10)................ 311,584 1.9%
Susan Clemens (11).................... 130,001 *
Ronald G. Olson (12).................. 28,000 *
James A. Bartholomew (13) ............ 20,000 *
Marlin Rudebusch (14)................. 20,000 *
</TABLE>
13
<PAGE>
<TABLE>
<S> <C> <C>
Peter W. Kooman (15).................. 14,865 *
All directors and officers as
a group (9 persons) (16).............. 1,902,422 10.9%
</TABLE>
- -------------------
*Represents less than 1%.
(1) Beneficial ownership is determined in accordance with the rules of the
SEC and includes 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. Unless otherwise
indicated, the address for each listed shareholder is c/o United
Shipping & Technology, Inc., 9850 51st Avenue North, Suite 110,
Minneapolis, Minnesota 55442. To the Company's knowledge, except as
indicated in the footnotes to this table, the persons named in this
table have sole voting and investment power with respect to all shares.
The number of shares beneficially owned includes shares issuable
pursuant to warrants and stock options that are exercisable within 60
days of March 31, 2000.
(2) Percentage of beneficial ownership is based on 16,293,760 shares
outstanding as of March 31, 2000. Shares issuable pursuant to warrants
and stock options are deemed outstanding for computing the percentage
of the person holding such warrants or stock options but are not deemed
outstanding for computing the percentage of any other person. Assumes
no exercise of: (a) 4,455,746 shares of Common Stock issuable upon
exercise of outstanding employee stock options, director stock options
or warrants, including warrants issued in conjunction with bridge
financing completed by the Company in December 1995 or private
placements, or upon exercise of warrants granted to broker-dealers in
connection with private placements and a public offering of the
Company's securities.
(3) Includes 1,885,567 shares owned directly and 63,333 shares purchasable
pursuant to warrants.
(4) Includes 1,366,220 shares purchasable pursuant to warrants.
(5) Includes 506,600 shares owned directly and 50,660 shares purchasable
pursuant to warrants held by BY Partners, L.P., 238,400 shares owned
directly and 23,840 shares purchasable pursuant to warrants held by
Brahman Institutional Partners, L.P., 79,400 shares owned directly and
7,940 shares purchasable pursuant to warrants held by Brahman Partners
II, L.P., 61,800 shares owned directly and 6,180 shares purchasable
pursuant to warrants held by Brahman C.P.F. Partners, L.P., and 9,322
shares owned directly and 932 shares purchasable pursuant to warrants
held by Brahman Partners II Offshore, Ltd. Peter A. Hochfelder, Robert
J. Sobel and Mitchell A. Kuflick, together the executive officers and
directors of Brahman Capital Corp. and the sole managers of Brahman
Management, L.L.C., each are deemed to have beneficial ownership of the
above referenced shares.
(6) Includes 891,940 shares owned directly and 89,194 shares purchasable
pursuant to warrants held by the Raptor Global Portfolio Ltd., 3,582
shares owned directly and 358 purchasable pursuant to warrants held by
Altar Rock Fund L.P. Tudor Investment Corporation expressly disclaims
beneficial ownership of such shares. Mr. Paul Tudor Jones II, the
controlling shareholder of Tudor Investment Corporation, also disclaims
beneficial ownership in such shares.
(7) Includes 251,600 shares owned directly, 125,000 shares purchasable
pursuant to warrants and 263,185 shares purchasable pursuant to stock
options.
(8) Includes 125,000 shares owned directly, 62,500 shares purchasable
pursuant to warrants and 225,000 shares purchasable pursuant to stock
options.
14
<PAGE>
(9) Includes 41,688 shares owned directly, 20,834 shares purchasable
pursuant to warrants and 263,185 shares purchasable pursuant to stock
options.
(10) Includes 181,584 shares owned directly and 130,000 shares purchasable
pursuant to stock options.
(11) Includes 83,334 shares owned directly and 41,667 shares purchasable
pursuant to warrants and 5,000 shares purchasable pursuant to stock
options.
(12) Includes 5,000 shares purchasable pursuant to options and 23,000 shares
purchasable pursuant to a warrant.
(13) Includes 20,000 shares purchasable pursuant to options.
(14) Includes 20,000 shares purchasable pursuant to options.
(15) Includes 13,514 shares owned directly and 1,351 shares purchasable
pursuant to warrants.
(16) Includes an aggregate of 1,205,722 shares purchasable pursuant to
currently exercisable stock options and warrants.
15
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In April 1998, various individual accredited investors, including
executive officers and directors of the Company, purchased 785,837 Units, each
Unit consisting of two shares of its $.004 par value per share Series A
Cumulative Convertible Preferred Stock and one warrant to purchase one share of
Common Stock at a price of $1.75 per share, at a price of $1.20 per Unit, for a
total consideration received by the Company of $943,003. Each Preferred Share
could be voted on an as-if-converted basis and was convertible into the
Company's $.004 par value Common Stock, commencing November 1, 1998, subject to
anti-dilution adjustments. Each share of Preferred Stock was entitled to a 5%
cumulative annual dividend. Effective February 25, 1999, the Company exercised
its right to effect a mandatory conversion of the outstanding Preferred Stock.
The Warrants could be exercised to purchase Common Stock at any time before May
1, 2001. On September 10, 1999, the Company exercised its option to effect a
mandatory redemption of the Warrants, subject to the rights of the holders to
exercise the Warrants prior to redemption. These Units were sold by the Company
without the services of an Agent. The closing of these transactions was
completed on May 4, 1998. The following executive officers and directors
purchased Preferred Stock and warrants in the amounts set forth respectively:
<TABLE>
<CAPTION>
NUMBER OF
PREFERRED
NAME POSITION SHARES NUMBER OF WARRANTS
---- -------- ------ ------------------
<S> <C> <C> <C>
Peter C. Lytle President, Chief Executive Officer 250,000 125,000
and Director
Susan M. Clemens Director 83,334 41,667
Kenneth D. Zigrino Vice President and Secretary 125,000 62,500
Marshall T. Masko Director 83,334 41,667
Timothy G. Becker Chief Financial Office and Director 41,668 20,884
Bruce M. Senske Executive Officer 30,000 15,000
</TABLE>
The above persons purchased Units for the same consideration as was
paid by nonaffiliated purchasers. In separate closings on June 2, 1998, and June
8, 1998, the Company also completed a private placement in which it sold to
non-affiliated accredited investors, some of whom are officers and directors of
the Company, 1,441,912 Units. The Units were offered by R.J. Steichen & Co., a
non-exclusive agent of the Company on a "best-efforts, all or none" basis, at a
purchase price of $1.20 per Unit. The total consideration received by the
Company for the sale of these Units was $1,477,856, net of interest ($7,080) and
the Agent's commissions and nonaccountable expenses and other expenses of the
private placement.
In March 1998, Messrs. Lytle, Masko, Becker and Zigrino rendered
consulting services to the Company in connection with its strategic
restructuring, preceding its ultimate financing in April 1998. For their
services, the Company issued to each of them an option for the purchase of
125,000 shares of Common Stock. Each option is exercisable at a price of $0.40
per share over a five-year period. Such options had vested to the extent of
61,312 shares as of June 30, 1998, and the remainder of the options vested as of
May 3, 1999, the date of shareholder approval of an amendment to the Company's
1995 Stock Option Plan increasing the number of shares available for the grant
of options thereunder.
Beginning in May, 1998, Marshall T. Masko, a director of the Company,
provided consulting services to the Company at a rate of $125 per hour. During
1998 Mr. Masko received $12,500 for his services; in 1999 Mr. Masko was
compensated in Common Stock of the Company having a value of $99,375; and as of
April 1, 2000, Mr. Masko received $37,625 for his work as a consultant to the
Company.
In connection with its acquisition of Corporate Express Delivery
Systems, Inc., the Company called the warrants it issued in connection with its
sale in April and June of 1998 of its Series A Cumulative Convertible Preferred
Stock. The Company amended the warrants issued in connection with its Series A
Convertible Preferred Stock which were purchased by Peter C. Lytle, Timothy G.
Becker, Kenneth D. Zigrino
16
<PAGE>
and Susan M. Clemens, each an officer or director of the Company. These warrants
were amended so as to eliminate the mandatory call provisions in the warrants,
and allow the warrants owned by the above named individuals to remain
exercisable in accordance with their terms.
On November 1, 1999, Kenneth D. Zigrino, the Company's Secretary and
General Counsel, became a consultant to the Company rather than an employee. Mr.
Zigrino provides consulting services to the Company at a rate of $175 per hour.
From November 1, 1999 through March 1, 2000 Mr. Zigrino was paid an aggregate of
$93,100 for his work as a consultant to the Company. Also, in connection with
Mr. Zigrino's becoming a consultant to the Company rather than an employee, Mr.
Zigrino's 100,000 incentive stock options were amended so that they became fully
vested and became nonstatutory stock options.
On January 18, 2000 Peter W. Kooman, a director of the Company,
purchased in a private placement transaction with the Company, 13,514 shares of
Common Stock at a purchase price of $5.025 per share, together with warrants to
purchase 1,351 shares of Common Stock at an exercise price of $12.50 per share,
exercisable for a period of five years.
The Company has employment contracts and severance agreements in effect
with Peter C. Lytle and Timothy G. Becker, both of whom are executive officers
of the Company. The employment contracts and severance agreements are described
in "Executive Compensation."
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 the Company's directors and officers and the holders of 10% or more of
the Company's stock to file with the SEC initial reports of changes in ownership
of equity securities of the Company. Based on the Company's review of copies of
such reports received by it, or written representations from reporting persons,
the Company believes that during fiscal year 1999 its directors and executive
officers filed all reports on a timely basis.
SHAREHOLDER PROPOSALS
Any shareholder who desires to submit a proposal for action by the
shareholders at the next annual meeting, in addition to meeting the shareholder
eligibility and other requirements of the Securities and Exchange Commission's
rules governing such proposals, must submit such proposal in writing to Kenneth
D. Zigrino, United Shipping & Technology, Inc., at 9850 51st Avenue North, Suite
110, Minneapolis, Minnesota 55442 by January 5, 2001. If the Company receives
notice of a shareholder proposal after March 20, 2001, persons named as proxies
for the 1999 Annual Meeting of Shareholders will have discretionary voting
authority to vote on such proposal at the meeting. Due to the complexity of the
respective rights of the shareholders and the Company in this area, 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
proposal be submitted by certified mail, return receipt requested.
PROXY SOLICITATION
The cost of this solicitation of proxies will be paid by the Company.
The Company has retained Georgeson Shareholder Communications, Inc. to assist in
the solicitation of proxies, at an estimated cost of $8,000 plus reimbursement
of out-of-pocket expenses. Proxies will also be solicited by mail, except that
solicitation personally or by telephone may also be made by the Company's
regular employees who will receive no additional compensation for their services
in connection with the solicitation. Arrangements will be made with brokerage
houses and other custodians, nominees and fiduciaries for the forwarding of
solicitation materials and the annual report to beneficial owners of stock held
by such persons. The Company will reimburse such parties for their expenses in
so doing.
17
<PAGE>
ANNUAL REPORT TO SHAREHOLDERS AND FORM 10-KSB
A copy of the 1999 Annual Report to Shareholders of the Company
accompanies this Proxy Statement. A copy of the Company's Annual Report on Form
10-KSB for fiscal year 1999 will be provided without charge upon written request
of any shareholder whose proxy is being solicited by the Board of Directors. The
written request should be directed to Shareholder Relations, attention: Kenneth
D. Zigrino, at United Shipping & Technology, Inc., 9850 51st Avenue North, Suite
110, Minneapolis, Minnesota 55442. No part of the 1999 Annual Report to
Shareholders is incorporated herein and no part thereof is to be considered
proxy soliciting material.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Peter C. Lytle
Peter C. Lytle
President and Chief Executive Officer
Minneapolis, Minnesota
May 8, 2000
18
<PAGE>
APPENDIX A
UNITED SHIPPING & TECHNOLOGY, INC.
2000 STOCK OPTION PLAN
SECTION 1
DEFINED TERMS
In addition to the other definitions contained herein, the following
definitions shall apply:
1.1. AWARD. The term "Award" shall mean any award or benefit granted in
accordance with the terms of the Plan. Awards under the Plan may be in the form
of (i) Stock Options; (ii) Restricted Stock; and/or (iii) Tax Offset Payments.
The terms and conditions of the Award shall be set forth in an "Award
Agreement."
1.2. BOARD. The term "Board" shall mean the Board of Directors of the
Company.
1.3. CHANGE IN CONTROL. The term "Change in Control" shall mean:
(a) the acquisition by any person or group deemed a person
under Sections 3(a)(9) and 13(d)(3) of the Exchange Act (other
than the Company and its subsidiaries as determined
immediately prior to that date) of beneficial ownership,
directly or indirectly (with beneficial ownership determined
as provided in Rule 13d-3, or any successor rule, under the
Exchange Act), of a majority of the total combined voting
power of all classes of Stock of the Company having the right
under ordinary circumstances to vote at an election of the
Board, if such person or group deemed a person prior to such
acquisition was not a beneficial owner of at least five
percent (5%) of such total combined voting power of the
Company;
(b) the date of approval by the stockholders of the Company of
an agreement providing for the merger or consolidation of the
Company with another corporation or other entity where (x)
stockholders of the Company immediately prior to such merger
or consolidation would not beneficially own following such
merger or consolidation shares entitling such stockholders to
a majority of all votes (without consolidation of the rights
of any class of stock to elect directors by a separate class
vote) to which all stockholders of the surviving corporation
would be entitled in the election of directors, or (y) where
the members of the Board, immediately prior to such merger or
consolidation, would not, immediately after such merger or
consolidation, constitute a majority of the board of directors
of the surviving corporation; or
(c) the sale of all or substantially all of the assets of the
Company.
1.4. CODE. The term "Code" shall mean the Internal Revenue Code of
1986, as amended. A reference to any provision of the Code shall include
reference to any successor provision of the Code.
1.5. COMMITTEE. The term "Committee" shall mean a committee described
in Section 10.
1.6. COMPANY. The term "Company" shall mean United Shipping &
Technology, Inc.
1.7. COVERED SHARES. The term "Covered Shares" shall mean the number of
shares of Stock that an Eligible Individual may purchase pursuant to an Option.
1.8. DIRECTOR. The term "Director" shall mean a member of the Company's
Board.
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1.9. ELIGIBLE INDIVIDUAL. The term "Eligible Individual" shall mean (a)
any common law employee, prospective employee, or officer of the Company, (b)
members of the Company's Board, (c) consultants and advisors to the Company, and
(d) employees of any Related Company or business partner of the Company. All
Eligible Individuals must be natural persons who provide bona fide services to
the Company or a Related Company. In addition, the services provided to the
Company or Related Company must not be in connection with an offer or sale of
securities in a capital raising transaction and must not directly or indirectly
promote or maintain a market for the Company's Stock. An Award may be granted to
an Eligible Individual prior to the date the Eligible Individual performs
services for the Company or Related Company, provided that such Award shall not
become vested prior to the date the Eligible Individual first performs such
services.
1.10. EXCHANGE ACT. The term "Exchange Act" shall mean the Securities
Act of 1934, as amended.
1.11. EXERCISE PRICE. The term "Exercise Price" shall mean the exercise
price of each Option granted under Section 4 established by the Committee and
determined by any reasonable method established by the Committee at the time the
Option is granted. Options granted pursuant to Section 4 of the Plan shall not
have an Exercise Price of less than 100% of the Fair Market Value of the
Company's Stock on the date the Option is granted.
1.12. FAIR MARKET VALUE. The term "Fair Market Value" of a share of
Stock on a given date shall mean the closing price of the share of Stock as
reported on the Nasdaq Stock Market on such date, if the share of Stock is then
quoted on the Nasdaq Stock Market or, if the market is closed on that date, the
closing price of the share of Stock on the previous trading day. If the Stock is
not listed on the Nasdaq Stock Market, Fair Market Value shall be determined in
good faith by the Board or Committee.
1.13. INCENTIVE STOCK OPTION. The term "Incentive Stock Option" or
"ISO" shall mean an Option that is intended to satisfy the requirements of
Section 422(b) of the Code.
1.14. NON-EMPLOYEE DIRECTOR. The term "Non-Employee Director" shall
mean a "non-employee director" as defined in Rule 16b-3(b)(3)(i) of the Exchange
Act.
1.15. NON-QUALIFIED STOCK OPTION. The term "Non-Qualified Stock Option"
or "NSO" shall mean an Option that is not intended to satisfy the requirements
applicable to an "incentive stock option" described in Section 422(b) of the
Code. NSO grants may be awarded to any Eligible Individual.
1.16. OPTION. The term "Option" or "Stock Option" shall mean an ISO or
NSO granted pursuant to the Plan. The grant of an Option entitles the Eligible
Individual to purchase shares of Stock at an Exercise Price established by the
Committee.
1.17. PERFORMANCE AWARD. The term "Performance Award" shall mean an
award or grant of shares based upon the achievement of performance objectives,
as contemplated by Section 5.
1.18. PLAN. The term "Plan" shall mean this 2000 Stock Option Plan.
1.19. RELATED COMPANY. The term "Related Company" shall mean any
corporation other than the Company and any partnership, joint venture or other
entity in which the Company owns, directly or indirectly, at least a 20%
beneficial ownership interest. A Related Company includes a subsidiary of the
Company and an unbroken chain of corporations beginning with the Company if each
of the corporations other than the last corporation in the unbroken chain owns
50% or more of the voting stock in one of the other corporations in such chain.
1.20. STOCK. The term "stock" shall mean shares of common stock, $.004
par value, of the Company.
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1.21. STOCK OPTION AGREEMENT. The term "Stock Option Agreement" or
"Agreement" shall mean any written agreement evidencing the terms and conditions
of an ISO or NSO granted under the Plan. The Agreement shall be subject to the
terms and conditions of the Plan.
SECTION 2
PURPOSE
The United Shipping & Technology, Inc. 2000 Stock Option Plan has been
established by United Shipping & Technology, Inc. to (i) attract and retain
individuals eligible to participate in the Plan; (ii) motivate Eligible
Individuals, by means of appropriate incentives, to achieve long-range goals;
(iii) provide incentive compensation opportunities that are competitive with
those of other similar companies; and (iv) further identify Eligible
Individuals' interests with those of the Company's other shareholders through
compensation that is based on the Company's common stock; and thereby promote
the long-term financial interest of the Company and any Related Company,
including the growth in value of the Company's equity and enhancement of
long-term shareholder return.
SECTION 3
PARTICIPATION
Subject to the terms and conditions of the Plan, the Committee may
determine and designate, from time to time, Eligible Individuals who will be
granted one or more Awards under the Plan at the Exercise Price. In its sole
discretion and without shareholder approval, the Committee may grant to an
Eligible Individual any Award or Awards permitted under the provisions of the
Plan. Awards may be granted as alternatives to or replacement of Awards
outstanding under the Plan, or any other plan or arrangement of the Company or
Related Company (including a plan or arrangement of a business or entity, all or
a portion of which is acquired by the Company or a Related Company). Only
employees are eligible to be granted Incentive Stock Options.
SECTION 4
STOCK OPTIONS
4.1 GENERAL. The grant of an Option entitles the Eligible Individual to
purchase shares of Stock at an Exercise Price established by the Committee. Any
Option awarded to Eligible Individuals under this Section 4 may be either NSOs
or ISOs, as determined in the discretion of the Committee. To the extent that
any Stock Option does not qualify as an ISO, it shall constitute an NSO.
4.2 OPTION AWARDS. Subject to the following provisions, Options awarded
under the Plan shall be in such form and shall have such terms as the Committee
may determine and specify in a Stock Option Agreement entered into between the
Eligible Individual and the Company.
(a) EXERCISE OF AN OPTION. An Option shall be exercisable in
accordance with such terms and conditions and during such
periods as may be established by the Committee. In no event
shall any fraction of a share of Stock be issued upon the
exercise of an Option. An Option must be exercised for at
least 100 shares of Stock, or such lesser number of shares of
Stock if the remaining portion of an Option is for fewer than
100 shares of Stock.
(b) EXERCISE PRICE. The Exercise Price of an Option granted
under this Section 4 shall be established by the Committee or
shall be determined by a method established by the Committee
at the time the Option is granted, except that the Exercise
Price shall not be less than 100% of the Fair Market Value of
the Company's Stock on the date of grant.
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(c) PAYMENT OF OPTION EXERCISE PRICE. The payment of the
Exercise Price of an Option granted under this Section 4 shall
be subject to the following:
(1) Subject to the following provisions of this
Subsection 4.2(c), the full Exercise Price
for shares of Stock purchased upon the
exercise of any Option shall be paid at the
time of such exercise or such other time as
approved by the Committee.
(2) Payment of the Exercise Price shall be made
in such manner as the Committee may provide
in the Award, which may include cash
(including cash equivalents), tendering of
shares of Stock acceptable to the Committee
and either already owned by the Eligible
Individual or subject to Awards hereunder
(so-called "cashless" or "immaculate"
exercise methods), and any other manner
permitted by law and approved by the
Committee, or any combination of the
foregoing. If the Company determines that a
Stock Option may be exercised using shares
of Restricted Stock, then unless the
Committee provides otherwise, the shares
received upon the exercise of a Stock Option
which are paid for using Restricted Stock
shall be restricted in accordance with the
original terms of the Restricted Stock
Award. In the case of any deferred payment
arrangement, interest shall be compounded at
least annually and shall be charged at the
minimum rate of interest necessary to avoid
the treatment as interest, under any
applicable provisions of the Code, of any
amounts other than amounts stated to be
interest under the deferred payment
arrangement.
(3) An Eligible Individual may elect to pay the
Exercise Price upon the exercise of an
Option by irrevocably authorizing a third
party to sell shares of Stock (or a
sufficient portion of the shares) acquired
upon exercise of the Option and remit to the
Company a sufficient portion of the sale
proceeds to pay the entire Exercise Price
and any tax withholding resulting from such
exercise.
(d) SETTLEMENT OF OPTION. Shares of Stock delivered pursuant
to the exercise of an Option shall be subject to such
conditions, restrictions and contingencies as the Committee,
in its discretion, may establish in addition to such
conditions, restrictions, and contingencies set forth in the
Agreement.
(e) RELOAD OPTIONS. The Committee may grant "reload" options,
pursuant to the terms and conditions established by the
Committee and any applicable requirements of Rule 16b-3 of the
Exchange Act ("Rule 16b-3") or any other applicable law. The
Eligible Individual would be granted a new Option when the
payment of the Exercise Price of a previously granted Option
is made by the delivery of shares of the Company's Stock owned
by the Eligible Individual pursuant to Section 4.2(c)(2)
hereof and/or when shares of the Company's Stock are tendered
or forfeited as payment of the amount to be withheld under
applicable income tax laws in connection with the exercise of
an Option. The new Option would be an Option to purchase the
number of shares not exceeding the sum of (i) the number of
shares of the Company's Stock provided as consideration upon
the exercise of the previously granted Option to which such
"reload" option relates and (ii) the number of shares of the
Company's Stock tendered or forfeited as payment of the amount
to be withheld under applicable income tax laws in connection
with the exercise of the Option to which such "reload" option
relates. "Reload" options may be granted with respect to
Options granted under this Plan. Such "reload" options shall
have a per share exercise price equal to the Fair Market Value
as of the date of grant of the new Option.
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(f) VESTING. Eligible Individuals shall vest in all Options in
accordance with the terms and conditions of the Agreement
entered into by and between the Eligible Individual and the
Company. The total number of shares of Stock subject to an
Option may, but need not, vest and therefore become
exercisable in periodic installments that may, but need not,
be equal.
(g) OPTION TERM. The term of each Option shall be fixed by the
Committee. In the event that the Plan is terminated pursuant
to terms and conditions of Section 11, the Plan shall remain
in effect as long as any Awards under it are outstanding.
(h) TERMINATION OF EMPLOYMENT. Following the termination of
Eligible Individual's employment with the Company or a Related
Company, the Option shall be exercisable to the extent
determined by the Committee and specified in the Award
Agreement. The Committee may provide different
post-termination exercise provisions with respect to
termination of employment for different reasons.
(i) INCENTIVE STOCK OPTIONS. ISO grants may only be awarded to
employees of the Company, a "parent corporation," or a
"subsidiary corporation" as those terms are defined in
Sections 424(e) and 424(f) of the Code. In order for an
employee to be eligible to receive an ISO grant, the employee
must be employed by the Company, parent corporation, or
subsidiary corporation during the period beginning on the date
the Option is granted and ending on the day three months prior
to the date such Option is exercised. Notwithstanding the
provisions of Section 4.2, no ISO shall (i) have an Exercise
Price which is less than 100% of the Fair Market Value of the
Stock on the date of the ISO Award, (ii) be exercisable more
than ten (10) years after the ISO is awarded, or (iii) be
awarded more than ten (10) years after the Effective Date of
this Plan. No ISO awarded to an employee who owns more than
10% of the total combined voting power of all classes of Stock
of the Company, its "parent corporation" or any "subsidiary
corporation" shall (i) have an Exercise Price of less than
110% of the Fair Market Value of the Stock on the date of the
ISO Award or (ii) be exercisable more than five (5) years
after the date of the ISO Award. Notwithstanding Section 8.7,
no ISO shall be transferable other than by will and the laws
of descent and distribution. To the extent that the aggregate
fair market value (determined at the time of grant) of shares
of Stock with respect to ISOs are exercisable for the first
time by the employee during any calendar year, in combination
with shares first exercisable under all other plans of the
Company and any Related Company, exceeds $100,000, such
Options shall be treated as NSOs.
(j) EARLY EXERCISE. The Option may, but need not, include a
provision whereby the Eligible Individual may elect at any
time prior to his or her termination of employment with the
Company to exercise the Option as to any part or all of the
shares of Stock subject to the Option prior to the full
vesting of the Option. Any unvested shares of Stock so
purchased may be subject to a repurchase option in favor of
the Company or to any other restrictions the Committee
determines to be appropriate.
SECTION 5
PERFORMANCE AWARDS
The Committee shall have the right to designate Awards as "Performance
Awards." The grant or vesting of a Performance Award shall be subject to the
achievement of performance objectives established by the Committee based on one
or more of the following criteria, in each case applied to the Company on a
consolidated basis or to a business unit, as specified by the Committee in an
Award Agreement, and which the Committee may use as an absolute measure, as a
measure of improvement relative to prior performance, or as a measure of
comparable performance relative to a peer group of companies: sales, operating
profits,
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operating profits before interest expenses and taxes, net earnings, earnings per
share, return on equity, return on assets, return on invested capital, total
shareholder return, cash flow, debt to equity ratio, market share, stock price,
economic value added, and market value added. The terms and conditions of a
Performance Award shall be set forth in an Award Agreement entered into between
the Company and the Eligible Individual.
SECTION 6
RESTRICTED STOCK
Subject to the following provisions, the Committee may grant Awards of
Restricted Stock to an Eligible Individual in such form and on such terms and
conditions as the Committee may determine and specify in a Restricted Stock
Award Agreement entered into between the Company and the Eligible Individual:
(a) The Restricted Stock Award shall specify the number of
shares of Restricted Stock to be awarded, the price, if any,
to be paid by the Eligible Individual and the date or dates on
which, or the conditions upon the satisfaction of which, the
Restricted Stock will vest. The grant and/or the vesting of
Restricted Stock may be conditioned upon the completion of a
specified period of service with the Company or a Related
Company, upon the attainment of specified performance
objectives or upon such other criteria as the Committee may
determine.
(b) Stock certificates representing the Restricted Stock
awarded to an Eligible Individual shall be registered in the
Eligible Individual's name, but the Committee may direct that
such certificates be held by the Company or its designee on
behalf of the Eligible Individual. Except as may be permitted
by the Committee, no share of Restricted Stock may be sold,
transferred, assigned, pledged or otherwise encumbered by an
Eligible Individual until such share has vested in accordance
with the terms of the Restricted Stock Award. At the time the
Restricted Stock vests, a certificate for such vested shares
shall be delivered to the Eligible Individual (or his or her
designated beneficiary in the event of death), free from the
restrictions imposed thereon except that any restrictions
under federal or state securities laws shall continue to
apply.
(c) The Committee may provide that the Eligible Individual
shall have the right to vote or receive dividends on
Restricted Stock. Unless the Committee provides otherwise,
Stock received as a dividend on, or in connection with a stock
split of, Restricted Stock shall be subject to the same
restrictions as the Restricted Stock.
(d) Except as may be provided by the Committee, in the event
of an Eligible Individual's termination of employment or
relationship with the Company prior to all of his or her
Restricted Stock becoming vested, or in the event any
conditions to the vesting of Restricted Stock have not been
satisfied prior to any deadline for the satisfaction of such
conditions as set forth in the Restricted Stock Award, the
shares of Restricted Stock which have not vested shall be
forfeited, and the Committee may provide that (i) any purchase
price paid by the Eligible Individual be returned to the
Eligible Individual or (ii) a cash payment equal to the
Restricted Stock's fair market value on the date of
forfeiture, if lower, be paid to the Eligible Individual.
(e) The Committee may waive, in whole or in part, any or all
of the conditions to receipt of, or restrictions with respect
to, any or all of the Eligible Individual's Restricted Stock.
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SECTION 7
TAX OFFSET PAYMENTS
The Committee may provide for a Tax Offset Payment to be made by the
Company to an Eligible Individual with respect to one or more Awards granted
under the Plan. The Tax Offset Payment shall be in an amount specified by the
Committee, which shall not exceed the amount necessary to pay the federal,
state, local and other taxes payable with respect to the applicable Award,
assuming that the Eligible Individual is taxed at the maximum tax rate
applicable to such income. The Tax Offset Payment shall be paid solely in cash.
No Eligible Individual shall be granted a Tax Offset Payment in any fiscal year
with respect to more than the number of shares of Stock covered by Awards
granted to such Eligible Individual in such fiscal year. The terms and
conditions of a Tax Offset Payment Award shall be set forth in an Award
Agreement entered into between the Company and the Eligible Individual.
SECTION 8
OPERATION AND ADMINISTRATION
8.1 GENERAL. The operation and administration of this Plan, including
any Awards granted under this Plan, shall be subject to the provisions of
Section 8.
8.2 EFFECTIVE DATE. Subject to the approval of the shareholders of the
Company, the Plan shall be effective as of April 1, 2000 (the "Effective Date")
provided, however, that to the extent that Awards are granted under the Plan
prior to its approval by the shareholders of the Company, the Awards shall be
subject to the approval of the Plan by the shareholders of the Company. The term
of the Plan shall be limited in duration to ten (10) years from the earlier of
(a) the Effective Date or (b) the date the Plan is approved by the Company's
shareholders.
8.3 SHARES SUBJECT TO PLAN. The shares of Stock for which Awards may be
granted under this Plan shall be subject to the following:
(a) Subject to the following provisions of this Section 8.3,
the maximum aggregate number of shares of Stock that may be
issued and sold under the Plan shall be 3,000,000 shares. The
number of shares of Stock so reserved for issuance shall be
subject to adjustment pursuant to Sections 8.3 (b) and 8.3(d).
The shares of Stock may be authorized, but unissued, or
reacquired Stock.
(b) On January 1st of each year, commencing with year 2001,
the aggregate number of shares of Stock that may be awarded
under the Plan shall automatically increase by the lesser of
(a) 500,000 shares of Stock, (b) 3.5% of the outstanding
shares of Stock on such date, or (c) a lesser amount
determined by the Committee.
(c) To the extent an Award terminates without having been
exercised, or shares awarded are forfeited, such shares shall
again be available issue under the Plan. Shares of Stock
surrendered in payment of the Exercise Price and shares of
Stock which are withheld in order to satisfy federal, state or
local tax liability, shall not count against the maximum
aggregate number of shares authorized to be issued pursuant to
this Plan, and shall again be available for issuance pursuant
to the terms of the Plan.
(d) In the event of any merger, reorganization, consolidation,
sale of substantially all assets, recapitalization, stock
dividend, stock split, combination or reverse stock split,
spin-off, split-up, split-off, distribution of assets or other
change in corporate structure affecting the Stock, a
substitution or adjustment, as may be determined to be
appropriate by the
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Committee or the Board in its sole discretion, shall be made
in the aggregate number of shares reserved for issuance under
the Plan. However, no such adjustment shall exceed the
aggregate value of any outstanding Award prior to such
substitution or adjustment. The Board or Committee may make
such other adjustments as it deems appropriate.
(e) No Eligible Individual shall be granted Options,
Restricted Stock, or any combination thereof with respect to
more than 600,000 shares of Stock in any fiscal year (subject
to adjustment as provided in Section 8.3(d).
8.4 SECURITIES LAWS RESTRICTIONS. Issuance of shares of Stock or other
amounts under the Plan shall be subject to the following:
(a) If at any time the Committee determines that the issuance
of Stock under the Plan is or may be unlawful under the laws
of any applicable jurisdiction, the right to exercise any
Stock Option or receive any Restricted Stock shall be
suspended until the Committee determines that such issuance is
lawful. The Company shall have no obligation to effect any
registration of qualification of the Stock under federal or
state laws.
(b) Any person exercising a Stock Option or receiving
Restricted Stock shall make such representations (including
representations to the effect that such person will not
dispose of the Stock so acquired in violation of federal and
state securities laws) and furnish such information as may, in
the opinion of counsel for the Company, be appropriate to
permit the Company to issue the Stock in compliance with
applicable federal and state securities laws. The Committee
may refuse to permit the exercise of a Stock Option or
issuance of Restricted Stock until such representations and
information have been provided.
(c) The Company may place an appropriate legend evidencing any
transfer restrictions on all shares of Stock issued under the
Plan and may issue stop transfer instructions in respect
thereof.
(d) To the extent that the Plan provides for issuance of stock
certificates to reflect the issuance of shares of Stock, the
issuance may be effected on a non-certificated basis, to the
extent not prohibited by applicable law or the applicable
rules of any stock exchange.
8.5 TAX WITHHOLDING. Each Eligible Individual shall, no later than the
date as of which the value of an Award first becomes includible in such person's
gross income for applicable tax purposes, pay, pursuant to such arrangements as
the Company may establish from time to time, any federal, state, local or other
taxes of any kind required by law to be withheld with respect to the Award. The
obligations of the Company under the Plan shall be conditional on such payment,
and the Company (and, where applicable, any Related Company), shall, to the
extent permitted by law, have the right to deduct any such taxes from any
payment of any kind otherwise due to the Eligible Individual.
8.6 PAYMENTS. Awards may be settled in any of the methods described in
Section 4.2(c). Any Award settlement, including payment deferrals, may be
subject to such conditions, restrictions and contingencies as the Committee
shall determine. The Committee may permit or require the deferral of any Award
payment, subject to such rules and procedures as it may establish, which may
include provisions for the payment or crediting of interest, or dividend
equivalents, including converting such credits into deferred Stock equivalents.
Each Related Company shall be liable for payment of cash due under the Plan with
respect to any Eligible Individual to the extent that such benefits are
attributable to the services rendered for that Related Company by the Eligible
Individual. Any disputes relating to liability of a Related Company for cash
payments shall be resolved by the Committee.
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8.7 TRANSFERABILITY. Except as otherwise provided by the Committee,
Awards under the Plan may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by beneficiary designation,
will or by the laws of descent and distribution. If the Committee makes an Award
transferable, the Award Agreement shall set forth such additional terms and
conditions regarding transferability as the Committee deems appropriate.
8.8 FORM AND TIME OF ELECTIONS. Unless otherwise specified herein, each
election required or permitted to be made by any Eligible Individual or other
person entitled to benefits under the Plan, and any permitted modification, or
revocation thereof, shall be in writing filed with the Committee at such times,
in such form, and subject to such restrictions and limitations, not inconsistent
with the terms of the Plan, as the Committee shall require.
8.9 AGREEMENT WITH COMPANY. Any Award under the Plan shall be subject
to such terms and conditions, not inconsistent with the Plan, as the Committee
shall, in its sole discretion, prescribe. The terms and conditions of any Award
shall be reflected in an Award Agreement. A copy of the Award Agreement shall be
provided to the Eligible Individual, and the Committee may, but need not
require, the Eligible Individual to sign the Award Agreement.
8.10 LIMITATION OF IMPLIED RIGHTS.
(a) Neither an Eligible Individual nor any other person shall,
by reason of participation in the Plan, acquire any right in
or title to any assets, funds or property of the Company or
any Related Company whatsoever, including, without limitation,
any specific funds, assets, or other property which the
Company or any Related Company, in its sole discretion, may
set aside in anticipation of a liability under the Plan. An
Eligible Individual shall have only a contractual right to the
Stock or amounts, if any, payable under the Plan, unsecured by
any assets of the Company or any Related Company, and nothing
contained in the Plan shall constitute a guarantee that the
assets of the Company or any Related Company shall be
sufficient to pay any benefits to any Eligible Individual.
(b) This Plan does not constitute a contract of employment,
and selection as a Eligible Individual will not give the
Eligible Individual the right to be retained in the employ of
the Company or any Related Company, nor any right or claim to
any future grants or to any benefit under the Plan, unless
such right or claim has specifically accrued under the terms
of the Plan. Except as otherwise provided in the Plan, no
Award under the Plan shall confer upon an Eligible Individual
any rights of a shareholder of the Company prior to the date
on which the Eligible Individual fulfills all conditions for
receipt of such rights.
8.11 TERMINATION FOR CAUSE. If the employment of an Eligible Individual
is terminated by the Company or a Related Company for "cause," then the
Committee shall have the right to cancel any Options granted to the Eligible
Individual under the Plan. The term "cause" shall mean (1) the Eligible
Individual's violation of any provision of any non-competition agreement or
confidentiality agreement with the Company; (2) an illegal or negligent action
by the Eligible Individual that materially and adversely affects the Company;
(3) the Eligible Individual's failure or refusal to perform his/her duties
(except when prevented by reason of illness or disability); or (4) conviction of
the Eligible Individual of a felony involving moral turpitude.
8.12 EVIDENCE. Evidence required of anyone under the Plan may be by
certificate, affidavit, document or other information which the person acting on
it considers pertinent and reliable, and signed, made or presented by the proper
party or parties.
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SECTION 9
CHANGE IN CONTROL
In the event of a Change in Control, if specifically documented in
either a special form of Award Agreement at the time of grant or amendment to an
existing Award Agreement, in each case on an individual-by-individual basis:
(a) all or a portion (as determined by the Committee) of
outstanding Stock Options awarded to such individual under the
Plan shall become fully exercisable and vested; and
(b) the restrictions applicable to all or a portion (as
determined by the Committee) of any outstanding Restricted
Stock awards under the Plan held by an Eligible Individual
shall lapse and such shares shall be deemed fully vested.
Notwithstanding the foregoing, no acceleration of vesting or
termination of restrictions on Restricted Stock shall occur if (a) all Awards
are assumed by a surviving corporation or its parent or (b) the surviving
corporation or its parent substitutes Awards with substantially the same terms
for such Awards. The Committee shall have the right to cancel Awards in the
event of a Change in Control, provided that in exchange for such cancellation,
the Eligible Individual shall receive a cash payment equal to the Change in
Control consideration less the exercise price of the Awards.
SECTION 10
COMMITTEE
10.1 ADMINISTRATION. The Plan shall be administered by the Compensation
Committee of the Board or such other committee of Directors as the Board shall
designate, which shall consist of not less than two Non-Employee Directors. The
members of the Committee shall be Non-Employee Directors and shall serve at the
pleasure of the Board. To the extent that the Board determines it to be
desirable to qualify Awards granted hereunder as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the Plan shall
be administered by a Committee of two or more "outside directors" within the
meaning of Section 162(m) of the Code. To the extent that the Board determines
it to be desirable to qualify Awards as exempt under Rule 16b-3, the Award
transactions contemplated hereunder shall be structured to satisfy the
requirements for exemption under Rule 16b-3. All determinations made by the
Committee pursuant to the provisions of the Plan shall be final and binding on
all persons, including the Company and Eligible Individuals. The Board may
administer the Plan or exercise any or all of the administration duties of the
Committee at any time when a Committee meeting the requirements of this Section
has not been appointed, and the Board may exempt Awards pursuant to Rule
16b-3(d)(1) of the Exchange Act.
10.2 POWERS OF COMMITTEE. The Committee shall have the following
authority with respect to Awards under the Plan: to grant Awards; to adopt,
alter and repeal such administrative rules, guidelines and practices governing
the Plan as it shall deem advisable; to interpret the terms and provisions of
the Plan and any Award granted under the Plan; and to otherwise supervise the
administration of the Plan. In particular, and without limiting its authority
and powers, the Committee shall have the authority:
(a) to determine whether and to what extent any Award or
combination of Awards will be granted hereunder;
(b) to select the Eligible Individuals to whom Awards will be
granted;
(c) to determine the number of shares of Stock to be covered
by each Award granted hereunder subject to the limitations
contained herein;
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(d) to determine the terms and conditions of any Award granted
hereunder, including, but not limited to, any vesting or other
restrictions based on such performance objectives and such
other factors as the Committee may establish, and to determine
whether the performance objectives and other terms and
conditions of the Award are satisfied;
(e) to determine the treatment of Awards upon the Eligible
Individual's retirement, disability, death, termination for
cause or other termination of employment or service;
(f) to determine that amounts equal to the amount of any
dividends declared with respect to the number of shares
covered by an Award (i) will be paid to the Eligible
Individual currently or (ii) will be deferred and deemed to be
reinvested or (iii) will otherwise be credited to the Eligible
Individual or that the Eligible Individual has no rights with
respect to such dividends;
(g) to amend the terms of any Award, prospectively or
retroactively; provided, however, that no amendment shall
impair the rights of the Eligible Individual without his or
her written consent; and
(h) to substitute new Stock Options for previously granted
Stock Options, or for options granted under other plans or
agreements, in each case including previously granted options
having higher option prices.
Determinations by the Committee under the Plan relating to the form,
amount, and terms and conditions of Awards need not be uniform, and may be made
selectively among Eligible Individuals who receive Awards under the Plan,
whether or not such Eligible Individuals are similarly situated. The Committee
shall have the power to accelerate the time at which an Award may first be
exercised or the time during which an Award or any part thereof will vest in
accordance with the Plan, notwithstanding any provisions in an Award Agreement
stating the time at which the Award may first be exercised or the time during
which the Award will vest.
10.3 DELEGATION BY COMMITTEE. Except to the extent prohibited by
applicable law or the applicable rules of a stock exchange, the Committee may
allocate all or any portion of its responsibilities and powers to any one or
more of its members and may delegate all or any part of its responsibilities and
powers to any person or persons selected by it. Any such allocation or
delegation may be revoked by the Committee at any time.
10.4 INFORMATION TO BE FURNISHED TO COMMITTEE. The Company and any
Related Company shall furnish the Committee with such data and information as it
determines may be required for it to discharge its duties. The records of the
Company and any Related Company as to an Eligible Individual's employment,
termination of employment, leave of absence, reemployment and compensation shall
be conclusive on all persons unless determined to be incorrect. Eligible
Individuals and other persons entitled to benefits under the Plan must furnish
the Committee such evidence, data or information as the Committee considers
desirable to carry out the terms of the Plan.
10.5 NON-LIABILITY OF BOARD AND COMMITTEE. No member of the Board or
the Committee, nor any officer or employee of the Company acting on behalf of
the Board or the Committee, shall be personally liable for any action,
determination or interpretation taken or made with respect to the Plan, and all
members of the Board or the Committee and all officers or employees of the
Company acting on their behalf shall, to the extent permitted by law, be fully
indemnified and protected by the Company with respect to any such action,
determination or interpretation.
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SECTION 11
AMENDMENT AND TERMINATION
The Board may, at any time, amend or terminate the Plan, provided that
no amendment or termination may, in the absence of written consent to the change
by the affected Eligible Individual (or, if the Eligible Individual is not then
living, the affected beneficiary), adversely affect the rights of any Eligible
Individual or beneficiary under any Award granted under the Plan prior to the
date such amendment is adopted by the Board; provided that adjustments made
pursuant to Subsection 8.3(d) shall not be subject to the foregoing limitations
of this Section 11. An amendment shall be subject to approval by the Company's
shareholders only to the extent required by applicable laws, regulations or
rules of a stock exchange or similar entity.
SECTION 12
GENERAL PROVISIONS
12.1 AWARD AGREEMENTS. No Eligible Individual will have rights under an
Award granted to such Eligible Individual unless and until an Award Agreement
has been duly executed on behalf of the Company and the Eligible Individual.
12.2 NO LIMIT ON OTHER COMPENSATION ARRANGEMENTS. Nothing contained in
the Plan shall prevent the Company or any Related Company from adopting or
continuing in effect other or additional compensation arrangements, and such
arrangements may be either generally applicable or applicable only in specific
cases.
12.3 HEADINGS. The headings of the sections and subsections of this
Plan are intended for the convenience of the parties only and shall in no way be
held to explain, modify, construe, limit, amplify or aid in the interpretation
of the provisions hereof.
12.4 BENEFICIARIES. An Eligible Individual may, from time to time, name
any beneficiary or beneficiaries (who may be named contingently or successively)
to whom any benefit under the Plan may be paid or transferred in case of death.
Each designation will revoke all prior designations, shall be in a form
prescribed by the Committee, and will be effective only when filed by the
Eligible Individual in writing with the Committee during his or her lifetime. In
the absence of any such designation, benefits outstanding at the Eligible
Individual's death shall be paid or transferred to his or her estate. There
shall be no third party beneficiaries of or to this Plan. Any beneficiary of the
Eligible Individual shall have only a claim to such benefits as may be
determined to be payable hereunder, if any, and shall not, under any
circumstances other than the right to claim such benefits, be deemed a third
party beneficiary of or to this Plan.
12.5 REPURCHASE OPTION. The terms of any repurchase option shall be
specified in the Award Agreement.
12.6 GOVERNING LAW. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of Minnesota,
except to the extent preempted by federal law, without regard to the principles
of comity or the conflicts of law provisions of any jurisdiction.
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UNITED SHIPPING & TECHNOLOGY, INC.
9850 51ST AVENUE NORTH, SUITE 110
MINNEAPOLIS, MINNESOTA 55442
(612) 941-4080
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 May 8, 2000, hereby appoints Peter
C. Lytle and Kenneth D. Zigrino as proxies (each with the power to act alone and
with the power of substitution and revocation), to represent the undersigned and
to vote, as designated below, all shares of Common Stock of United Shipping &
Technology, Inc. (the "Company") held of record by the undersigned on April 4,
2000, at the Annual Meeting of Shareholders to be held in the Lake Superior Room
of the Marquette Hotel, 701 Marquette Avenue, Minneapolis, Minnesota on Friday,
June 2, 2000, at 3:30 p.m., Minneapolis time, and at any adjournment or
postponement thereof.
1. To elect eight directors for the ensuing year and until their
successors are duly elected and qualified.
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the to vote for all nominees
contrary below) listed below
PETER C. LYTLE, TIMOTHY G. BECKER, MARSHALL T. MASKO, JAMES A.
BARTHOLOMEW, MARLIN RUDEBUSCH, SUSAN M. CLEMENS, RONALD G. OLSON AND
PETER W. KOOMAN.
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL, WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
--------------------------------------------------------------
2. To consider and vote upon the Company's 2000 Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To ratify the appointment of Ernst & Young LLP independent certified
public accountants, as auditors of the Company for its fiscal year
ending June 30, 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment or
postponement thereof.
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.
