<PAGE>
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 Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Rule 14a-12
Tech Squared Inc.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
N/A
- -------------------------------------------------------------------------------
(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)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
N/A
- -------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
N/A
- -------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11
(Set forth the amount on which the filing fee is calculated and state
how it was determined):
N/A
- -------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
N/A
- -------------------------------------------------------------------------------
(5) Total fee paid:
N/A
- -------------------------------------------------------------------------------
/ / 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:
N/A
- -------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
N/A
- -------------------------------------------------------------------------------
(3) Filing Party:
N/A
- -------------------------------------------------------------------------------
(4) Date Filed:
N/A
- -------------------------------------------------------------------------------
<PAGE>
TECH SQUARED INC.
May 9, 1997
TO: THE SHAREHOLDERS OF TECH SQUARED INC.
You are cordially invited to attend the Annual Meeting of Shareholders
of Tech Squared Inc., to be held on June 5, 1997, at 4:00 p.m. local
time at Norwest Financial Center, Building Conference Room, Second Floor,
7900 Xerxes Avenue South, Bloomington, Minnesota. I encourage you to attend.
Whether or not you plan to attend the meeting, I urge you to complete and
sign the accompanying Proxy Card and return it in the enclosed envelope. Also
attached for your review are the formal Notice of Meeting and Proxy
Statement.
On behalf of the Board of Directors and employees, thank you for your
continued support of Tech Squared Inc.
Very truly yours,
Joel A. Ronning,
CHAIRMAN OF THE BOARD
<PAGE>
TECH SQUARED INC.
5198 West 76th Street
Edina, Minnesota 55439
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JUNE 5, 1997
------------------------
TO: The Shareholders of Tech Squared Inc.
The Annual Meeting of Shareholders of Tech Squared Inc. (the "Company")
will be held on Thursday, June 5, 1995, at 4:00 p.m. local time at Norwest
Financial Center, Building Conference Room, Second Floor, 7900 Xerxes
Avenue South, Bloomington, Minnesota, for the following purposes:
1. To set the number of members of the Board of Directors at four;
2. To elect four directors to serve until the next Annual Meeting of
Shareholders or until their successors are duly elected and qualified;
3. To consider and act upon a proposal to ratify the selection of Arthur
Anderson LLP as independent auditors of the Company for the fiscal year
ending December 31, 1997; and
4. To transact such other business as may be properly brought before the
meeting or any adjournment thereof.
Only shareholders of record as shown on the books of the Company at
the close of business on April 15, 1997 will be entitled to vote at the
Annual Meeting or any adjournment thereof.
THIS NOTICE, THE PROXY STATEMENT, AND THE ENCLOSED PROXY CARD ARE SENT TO
YOU BY ORDER OF THE BOARD OF DIRECTORS.
May 9, 1997 Joel A. Ronning,
Edina, Minnesota CHAIRMAN OF THE BOARD
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE SIGN, DATE AND RETURN YOUR
PROXY CARD IN THE ENCLOSED ENVELOPE WHETHER OR NOT YOU EXPECT TO ATTEND IN
PERSON. SHAREHOLDERS WHO ATTEND THE MEETING MAY REVOKE THEIR PROXIES AND VOTE IN
PERSON IF THEY DESIRE.
<PAGE>
TECH SQUARED INC.
5198 West 76th Street
Edina, Minnesota 55439
------------------------
PROXY STATEMENT
------------------------
ANNUAL MEETING OF SHAREHOLDERS
JUNE 5, 1997
PROXY SOLICITED BY THE BOARD OF DIRECTORS
This Proxy Statement is furnished to the record holders of shares of
the common stock (the "Common Stock") and Class A, Series 1994 Preferred
Stock (the "Preferred Stock") of Tech Squared Inc., a Minnesota
corporation (the "Company"), as of the close of business on April 15, 1997,
by order of the Board of Directors. The Proxy Statement is furnished
in connection with the solicitation by the Board of Directors of the
enclosed proxy for the Annual Meeting of Shareholders, or any adjournment
thereof (the "Annual Meeting"), to be held on June 5, 1997, at 4:00 p.m.
local time at Norwest Financial Center, Building Conference Room, Second
Floor, 7900 Xerxes Avenue South, Bloomington, Minnesota.
Any proxy given pursuant to this solicitation and received by the
Secretary of the Company at or before the Annual Meeting will be voted in
accordance with the instructions given in such proxy. Any shareholder
giving a proxy may revoke it any time prior to its use at the Annual
Meeting either by giving written notice of such revocation to the
Secretary of the Company, filing a duly executed proxy bearing a later
date with the Secretary of the Company, or by appearing at the Annual
Meeting and filing written notice of revocation with the Secretary of the
Company prior to commencement of the Annual Meeting.
The Company expects that this Proxy Statement, the Notice of Meeting and
the Proxy Card will first be mailed to shareholders on or about May 9,
1997.
OUTSTANDING SHARES AND VOTING RIGHTS
Only holders of Common Stock or Preferred Stock of record at the close
of business on April 15, 1997 will be entitled to vote at the Annual
Meeting. On April 15, 1997, the Company had 10,374,870 shares of Common
Stock and 160,000 shares of Preferred Stock outstanding, each such share
entitling the holder thereof to one vote on each matter to be voted on at
the Annual Meeting. On each matter to be voted on at the Annual Meeting,
the Common Stock and Preferred Stock will vote together as one class.
Neither holders of shares of Common Stock nor holders of shares of Preferred
Stock possess cumulative voting rights.
The presence at the Annual Meeting, in person or by proxy, of the holders
of a majority of the outstanding shares of Common Stock and Preferred Stock,
taken together, is required for a quorum for the transaction of business. In
general, shares of Common Stock or Preferred Stock represented by a properly
signed and returned Proxy Card will be counted as shares present at the
Annual Meeting for purposes of determining a quorum, without regard to
whether the card reflects votes withheld from director nominees or
abstentions (or is left blank) or reflects a "broker non-vote" on a matter
(i.e., a card returned by a broker on behalf of its beneficial owner
customer that is not voted on a particular matter because voting
instructions have not been received and the broker has no discretionary
authority to vote).
The election of nominees for director and the approval of each of the
other proposals described in this Proxy Statement require the approval of a
majority of the shares present and entitled to vote in person or by proxy on
that matter. Elections to withhold authority and abstentions will be
treated as shares entitled to vote and will be
<PAGE>
counted as votes against a nominee or matter. Broker non-votes will be
treated as shares not entitled to vote on a matter and will not be
counted in determining whether that matter has been approved.
Shares of Common Stock or Preferred Stock represented by properly
executed Proxy Cards will be voted in accordance with the choices
specified therein. Proxies that are signed by shareholders but that lack
any voting instructions will be voted FOR setting the number of members of
the Board of Directors at four; FOR the election of the nominees for
director listed in this Proxy Statement; FOR ratifying the appointment by
the Board of Directors of Arthur Andersen LLP as the Company's
independent auditors for the fiscal year ending December 31, 1997; and,
with respect to any other business that may properly come before the
Annual Meeting, according to the judgment of the persons named as proxies in
the Proxy Card.
ELECTION OF DIRECTORS
PROPOSALS 1 AND 2
NOMINATION
The Bylaws of the Company provide that the Board of Directors shall
consist of the number of directors (not more than 11) as established from
time to time by the shareholders; provided, however, that the number may
be increased or decreased by resolution of the Board of Directors. The
number of directors is currently set at four. The Board of Directors
recommends that the number of directors be set a four for the coming year
and that the nominees named below be elected to the Company's Board of
Directors. Directors elected at the Annual Meeting will serve until the next
Annual Meeting of Shareholders or until their successors are duly elected
and qualified.
The election of each director requires the affirmative vote of a majority
of the shares of Common Stock and Preferred Stock, voting together as one
class, represented in person or by proxy at the Annual Meeting. All
nominees have consented to serve if elected, but if any becomes unable to
serve, the persons named as proxies may exercise their discretion to vote for
a substitute nominee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR SETTING THE NUMBER OF
DIRECTORS AT FOUR AND FOR ELECTING THE NOMINEES FOR DIRECTOR SET FORTH BELOW.
INFORMATION ABOUT NOMINEES
The following information has been furnished to the Company by
the respective nominees for director.
<TABLE>
<CAPTION>
NAMES OF NOMINEES AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
- ----------------- --- -------------------- --------------
<S> <C> <C> <C>
Joel A. Ronning(1) 40 Chairman of the Board, Chief Executive 1995
Officer, Chief Financial Officer and
Secretary of the Company
Charles E.Reese, Jr. 43 President and Chief Operating Officer of the 1996
Company
James D. Kramer 56 President of Kramer, Geisler, Strand & Dayton 1990
Inc.
Richard J. Runbeck(1) 51 President of Runbeck & Associates, P.A. 1996
</TABLE>
- ------------------------
(1) Member of the Compensation Committee
OTHER INFORMATION ABOUT NOMINEES
JOEL A. RONNING has been a member of the Company's Board of Directors and
the President, Chief Executive Officer, Chief Financial Officer and Secretary
of the Company since May 10, 1995. Mr. Ronning is the founder of MacUSA, a
wholly-owned subsidiary of the Company, and has served as a director and its
Chief Executive Officer since April 1990. Mr. Ronning is also the Chief
Executive Officer and a director of Digital River, Inc., a Minneapolis,
Minnesota-based company specializing in electronic software distribution in
which the Company holds a 60% equity interest.
2.
<PAGE>
CHARLES E. REESE, JR. has served as a director of the Company since
June 1996 and has served as President and Chief Operating Officer of the
Company since August 1996. Mr. Reese is also a member of the Board of
Directors of Digital River, Inc. From April 1995 to August 1996 he was
Vice President of Sales and Marketing of The Weidt Group, a custom
software and internet site developer based in Minnetonka, Minnesota. Mr.
Reese served as Vice President of Sales from July 1987 to April 1995 for
LaserMaster Technologies, Inc., an Eden Prairie, Minnesota-based developer,
manufacturer and marketer of digital color printers and chemical-free
filmsetters.
JAMES D. KRAMER has served as a director of the Company since October
1990. From 1992 to May 1995 Mr. Kramer served as the Chief Executive
Officer of the Company. He has been the President of Kramer, Geisler,
Strand & Dayton Inc., a Minneapolis-based real estate appraisal and
consulting firm since 1977. Mr. Kramer is also the President of Real
Estate Graphics, Inc., a privately-held mail-order company co-founded by him
in 1977.
RICHARD J. RUNBECK has served as a director of the Company since July
1996. Since October 1985 he has been the President of Runbeck & Associates,
P.A., an accounting firm located in Brooklyn Center, Minnesota. Mr. Runbeck
is a member of the Board of Directors of Ontrack Data International,
Inc., a provider of data recovery services based in Eden Prairie, Minnesota.
ADDITIONAL INFORMATION ABOUT THE BOARD OF DIRECTORS
During the year ended December 31, 1997, the Board of Directors held
seven meetings and took action by unanimous written consent on three
occasions. None of the members of the Board of Directors proposed for
re-election attended less than 75% of the meetings of the Board of
Directors and Committees of the Board of Directors held during the period in
which they served as a director during the year ended December 31, 1996.
The Board of Directors has one standing committee. The
Compensation Committee is responsible for setting the compensation of
executive officers of the Company. The Compensation Committee held no
meetings during the fiscal year ended December 31, 1996.
SIGNIFICANT EMPLOYEES
STANLEY Y. TENENBAUM has been employed by the Company since September
1995, most recently as its Executive Director of Finance. From March 1994 to
June 1995 Mr. Tenenbaum was employed by Zeos International, Ltd., a
manufacturer of computer products based in Minneapolis, Minnesota, initially
as Controller and subsequently as Vice President of Procurement. From 1982 to
1993 Mr. Tenenbaum held various positions with the accounting firm of Ernst &
Young LLP, including the position of Senior Manager in the Entrepreneurial
Services Group.
RICHARD J. APPLE became the Company's Vice President of Marketing in
April 1997. From September 1996 to April 1997 he served as President of
William Tell Marketing, a marketer of Internet-related products to Internet
technology suppliers. From January 1990 to May 1996 Mr. Apple served in
various capacities with Zeos International, Ltd., a manufacturer of computer
products based in Minneapolis, Minnesota, most recently as Vice President,
Sales and Marketing. In connection with a merger in April 1995, Zeos
International, Ltd. changed its name to Micron Electronics, Inc. and now
operates as a domestic provider of personal computer systems through direct
sales channels and is based in Nampa, Idaho.
JEFFREY L. ABRAMOVITZ has been the Company's Controller since November
1996. From March 1996 to November 1996 he was employed by the accounting firm
of Ernst & Young LLP as a Manager in the Entrepreneurial Services Group. From
November 1992 to February 1996, Mr. Abramovitz was employed by NovaCare,
Inc., a provider of rehabilitation services to outpatient and long term care
patients based in King of Prussia, Pennsylvania, which included service as
West Regional Vice President and Controller from September 1994 to February
1996. Mr. Abramovitz held various accounting and finance positions at
Northwest Airlines from May 1988 to November 1992.
REPORTING UNDER SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act") requires executive officers and directors of the Company, and
persons who beneficially own more than 10 percent of the Company's
outstanding shares of Common Stock or Preferred Stock, to file initial
reports of ownership and reports of changes in ownership of securities of
the Company with the Securities and Exchange Commission and any exchange
on which the Company's shares are traded. Officers, directors and
persons owning more than 10 percent of the Company's outstanding Common
Stock or Preferred Stock are required by Securities and Exchange Commission
regulation to furnish the Company with copies of all Section 16(a) forms
filed. Based solely on a review of the copies of such reports and
amendments thereto furnished to or obtained by the Company or written
representations that no other reports were required, the Company
believes that during the year ended December 31, 1996, the Company's
directors, officers and beneficial owners of more than 10 percent of the
Company's shares of Common Stock or Preferred Stock complied with all
applicable filing requirements except that Mr. Reese did not timely file
an initial report of ownership and one transaction report, and Mr. Runbeck
did not file an initial report of ownership.
3.
<PAGE>
COMPENSATION AND OTHER BENEFITS
SUMMARY COMPENSATION TABLE
The following table sets forth certain cash and non-cash
compensation awarded to or earned by the Chief Executive Officer of the
Company during the Company's fiscal years ended December 31, 1994, 1995
and 1996. No other executive officer of the Company earned or was
awarded total compensation in excess of $100,000 in the fiscal year ended
December 31, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------------- ------------------------
NAME AND PRINCIPAL OTHER ANNUAL SECURITIES UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION OPTIONS COMPENSATION
- -------------------- ----------- --------- ------------- ----------------- ------------------------ -------------------
<S> <C> <C> <C> <C> <C> <C>
Joel A. Ronning (1) 1996 70,298(2) -- 13,250(3) -- 9,800(5)
Chairman, Chief Executive 1995 128,000 -- 14,745(3) 2,664,996(4) --
Officer and Chief 1994 279,750 -- -- -- --
Financial Officer
</TABLE>
- ------------------------
(1) Amounts listed relating to periods prior to May 10, 1995 are salaries paid
to Mr. Ronning in his capacity as President and Chief Executive Officer of
MacUSA. From January 1, 1995 through October 1995, Mr. Ronning was paid a
salary of $128,000. The Company currently accrues and pays Mr. Ronning an
amount equal to approximately $325 per month relating primarily to his
health insurance and other employee benefits. In March 1996, the Board of
Directors approved a monthly salary of $10,000 for Mr. Ronning. Payment of
such salary will begin at Mr. Ronning's discretion and after approval of the
Company's bank. No compensation was paid under this arrangement to Mr.
Ronning in the fiscal year ended December 31, 1996.
(2) Includes $70,000 in salary paid by Digital River, Inc.
(3) The amounts shown as Other Annual Compensation for Mr. Ronning relate to an
automobile owned by the Company and used by Mr. Ronning.
(4) In April 1995, MacUSA granted to Mr. Ronning, pursuant to the MacUSA, Inc.
1995 Stock Option Plan (the "MacUSA Plan"), three options to purchase
1,099,990 shares, 1,370,010 shares and 199,996 shares of Common Stock,
respectively, at an exercise price of $1.01 per share (as-converted after
the Merger).
(5) Represents compensation resulting from a loan to Mr. Ronning on which
interest is payable at an annual rate of 5% which is below the market rate
assumed, for purposes of determining compensation, to be 10%. See "CERTAIN
TRANSACTIONS - Transactions by MacUSA Prior to the Merger."
AGGREGATED OPTION/SAR EXERCISES AND FISCAL YEAR-END OPTION/SAR VALUE TABLE
The following table provides information regarding the exercise of
options to purchase shares of the Company's Common Stock by the
Company's Chief Executive Officer during the year ended December 31, 1996,
and the year-end value of options held by the Chief Executive Officer.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-
UNDERLYING UNEXERCISED THE-MONEY OPTIONS/ SARS AT
OPTIONS/ SARS AT FISCAL YEAR- FISCAL YEAR-END
SHARES ACQUIRED ON VALUE REALIZED END (#)(EXERCISABLE/ ($)(EXERCISABLE/
NAME EXERCISE(#) ($) UNEXERCISABLE) UNEXERCISABLE)(1)
- ----------------- ----------------------- ----------------- ----------------------------- -------------------------------
<S> <C> <C> <C> <C>
Joel A. Ronning -- -- 199,956/2,470,000 --/ --
</TABLE>
(1) Based on a closing Common Stock bid price of $0.31 per share on December 31,
1996. The value of in-the-money options is calculated as the difference
between the fair market value of the Common Stock underlying the options at
fiscal year end and the exercise price of the options. Exercisable options
refer to those options that are exercisable as of December 31, 1996, while
unexercisable options refer to those options that become exercisable at
various times thereafter.
4.
<PAGE>
DIRECTOR COMPENSATION
Upon initial election to the Board of Directors, each non-employee
director receives an option to purchase 50,000 shares of Common Stock
under the Tech Squared Inc. 1995 Non-Employee Director Stock Option Plan (the
"Director Plan"). Options granted under the Director Plan have an
exercise price equal to the fair market value of one share of Common
Stock on the date of grant. The options become exercisable in three equal
installments on each of the date of initial election to the Board of
Directors and the first two anniversaries of the date of such election.
Options vest and become exercisable only if the director is a member of
the Board of the Directors on the vesting date. Options granted under the
Director Plan expire seven years from the date of grant. During the
fiscal year ended December 31, 1996 Mr. Runbeck and Mr. Reese, each of whom
became members of the Company's Board of Directors in 1996, were granted
options to purchase 50,000 shares of Common Stock under the Director Plan.
At the time Mr. Reese received such options he was not an employee of the
Company. The Company generally reimburses non-employee directors for
out-of-pocket expenses incurred to attend the Board of Directors meetings.
The Company does not pay director fees to members of the Board of
Directors who are full-time employees of the Company and does not
reimburse such persons for out-of-pocket expenses in connection with
attending Board of Director meetings.
The Company is a party to a Consulting Agreement with Mr. Kramer and is
a party to an Asset Liquidation Agreement with an entity affiliated with Mr.
Kramer. See "CERTAIN TRANSACTIONS - Transactions by the Company Subsequent to
the Merger."
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
The Company has not entered into an employment agreement with Mr.
Ronning. On August 30, 1994, Mr. Ronning entered into an employment
agreement with Digital River, Inc. ("Digital River"), a subsidiary of the
Company, which calls for Mr. Ronning to dedicate at least one-third of his
time (averaged over the calendar year) and at least 54 hours of each
calendar month to duties as Chief Executive Officer of Digital River.
Pursuant to the terms of the agreement with Digital River, Mr. Ronning may
not, directly or indirectly, provide services to any company competing with
Digital River, except that Mr. Ronning may serve as an officer and
director of the Company or MacUSA provided that the Company and MacUSA limit
their activities relating to the superdistribution of software and/or
the superdistribution of software and related documentation utilizing
encrypting and decrypting technologies. Mr. Ronning's agreement with
Digital River terminates on August 30, 1997. In June 1996 the Digital
River Board of Directors approved resolutions authorizing Digital River to
employ Mr. Ronning on a full-time basis at an annual salary of $140,000 and
to grant certain stock options to Mr. Ronning. Mr. Ronning and Digital
River have not amended the existing employment agreement or entered into
a revised employment agreement which includes such terms.
CERTAIN TRANSACTIONS
Pursuant to an Agreement and Plan of Merger effective as of May 9, 1995
(the "Merger Agreement"), a wholly-owned subsidiary of The Jaguar
Group, Ltd. ("Jaguar"), merged with and into MacUSA (the "Merger").
Pursuant to the Merger Agreement, Jaguar issued to the shareholders of
MacUSA 24.7 shares of common stock, no par value, for each of the
284,685 shares of MacUSA common stock outstanding, for an aggregate of
7,031,720 shares or approximately 82% of the shares outstanding
immediately following the Merger. The Merger was accounted for as a
"reverse acquisition" under the purchase method of accounting, pursuant to
which MacUSA was deemed to have acquired Jaguar, though Jaguar continues as a
surviving legal entity. Prior to the Merger, Joel A. Ronning, the founder
and Chief Executive Officer of MacUSA, held over 95% of the outstanding
common stock of MacUSA. Immediately following the Merger, Mr. Ronning
owned 76.4% of the outstanding Common Stock of the Company, and MacUSA
became a wholly-owned subsidiary of the Company. Mr. Ronning also became a
director and the President, Chief Executive Officer, Chief Financial Officer
and Secretary of the Company. Following the Merger, on July 10, 1995, the
shareholders of the Company approved the change in the Company's name from
the Jaguar Group, Ltd. to Tech Squared Inc. All share amounts and exercise
prices discussed herein are shown on an "as converted" basis.
5.
<PAGE>
TRANSACTIONS BY MACUSA PRIOR TO THE MERGER.
LOAN TO MR. RONNING. In 1993, MacUSA loaned $200,000 to Mr. Ronning.
The note bears interest at 5% per year payable quarterly and is due on
demand upon 30 days written notice. As of December 31, 1996, Mr. Ronning had
not paid any of the interest on the note accruing in 1995 or 1996. The
balance as of December 31, 1996, including the accrued and unpaid interest,
was $203,962.
DIVIDEND TO MR. RONNING, REIMBURSEMENT OF TAXES AND PERSONAL GUARANTY.
Prior to the Merger, MacUSA declared a dividend of $1,188,000 payable to
the former shareholders of MacUSA in connection with the conversion of
MacUSA from a Subchapter S corporation to a Subchapter C corporation.
The Company paid approximately $261,000 of this dividend during 1995 and
approximately $200,731 during 1996, of which Mr. Ronning received $260,000
in 1995 and $200,000 in 1996. The remainder of the dividend payable to
Mr. Ronning is evidenced by a note payable to Mr. Ronning (the "Note") in
the principal amount of $682,096. The Note does not bear interest, is due on
demand and, under the terms of a Debt Subordination Agreement dated January
3, 1996 between the Company, Mr. Ronning and Norwest Bank Minnesota,
National Association ("Norwest"), is subordinated to indebtedness owed by the
Company to Norwest pursuant to the terms of the Credit and Security
Agreement with Norwest dated January 3, 1996. Additionally, dividend
payments of 50% of the net proceeds from the sale of certain
investments, limited to $300,000, and payments of 50% of the net proceeds
from any new equity capital raised by the Company, limited to $300,000, may
be made. The Company is not allowed to make any other dividend payments
without the written consent of Norwest. In March 1996, the Company agreed
to reimburse Mr. Ronning for any personal tax he is required to pay
as a result of the non-interest bearing status of the Note. Borrowings
under the Credit and Security Agreement with Norwest are personally
guaranteed by Mr. Ronning up to a maximum of $500,000.
GRANT OF OPTION TO A FORMER DIRECTOR. In April 1995, MacUSA granted
to David H. McCaffrey, a former director of the Company, pursuant to the
MacUSA Plan, an option to purchase 100,010 shares of Common Stock at an
exercise price of $1.01 per share. The option was exercisable upon the
earlier of Mr. McCaffrey helping the Company raise $1,500,000 prior to June
30, 1995, the Company earning greater than $1,400,000 in after-tax income in
any one fiscal year and April 28, 2001, and expired upon the earlier of four
years from the date first exercisable and April 28, 2005. In March 1996, the
Company cancelled this option and granted Mr. McCaffrey a new option to
purchase 100,000 shares of Common Stock at an exercise price of $1.00 per
share. The new option was exercisable in four equal annual installments and
was to expire in March 2003. In April 1996, Mr. McCaffrey
relinquished all of his options to purchase shares of Common Stock in
connection with his resignation as a director of the Company.
GRANT OF OPTION TO A FORMER DIRECTOR. In April 1995, MacUSA granted
to Draper Jaffray, a former employee and former director of the Company,
pursuant to the MacUSA Plan, an option to purchase 100,010 shares of Common
Stock at an exercise price of $1.01 per share. The option became
exercisable in full on February 1, 1996 and was to expire on January 31,
1997. In February 1996 Digital River engaged Mr. Jaffray as Vice President of
Business Development. In November 1996 the Company agreed in principle to
amend the terms of Mr. Jaffray's option to reduce the exercise price per
share to $0.50 and to extend the term of the option to the period during
which Mr. Jaffray maintains his employment with Digital River.
TRANSACTIONS BY JAGUAR PRIOR TO THE MERGER.
SERVICES PROVIDED BY AN ENTITY AFFILIATED WITH A FORMER
SIGNIFICANT SHAREHOLDER. In December 1994, Jaguar acquired a 20% interest in
Austin Friars Securities Limited ("Austin Friars") in connection with its
merger with Ionian Capital, Ltd., a company which merged with Jaguar in
December 1994 ("Ionian"). Austin Friars is an English investment banking
firm which is a member of the London Stock Exchange. Prior to the Merger,
Jaguar transferred its 20% interest in Austin Friars to John R. Silseth, a
former director and former officer of Ionian and, prior to the Merger, a
more than 10% beneficial owner of the Company's Common Stock (hereinafter
referred to as John R. Silseth, Sr.), for no consideration. Austin Friars
acted as the sponsor to the Company in a private placement pursuant to
Regulation S promulgated under the Security's Act of 1933 (the "Private
Placement") completed by the Company in September 1995. In connection with
services performed as sponsor in the Private Placement, Austin Friars
received fees totaling approximately $211,000 and 61,869 shares of Common
Stock. In connection with the Private Placement, the Company entered into
a Corporate Advisory Services Agreement (the "Advisory Agreement") with
Austin Friars. Under the terms of the Advisory Agreement, Austin Friars
provided general
6.
<PAGE>
corporate advice for which the Company was required to pay Austin Friars
monthly installments of $1,500. The Advisory Agreement was terminated by the
Company in September 1995. Subsequent to termination of the Advisory
Agreement, the Company engaged Austin Friars to provide advisory services to
the Company. As of April 1, 1997, all amounts owed to Austin Friars had been
paid.
CONSULTING ARRANGEMENT WITH THE SON OF A FORMER SIGNIFICANT SHAREHOLDER.
In January 1995, Jaguar entered into a Benefit Plan Consulting Agreement
with John R. Silseth II, the son of John R. Silseth, Sr., pursuant to which
Jaguar issued and registered on Form S-8, 90,000 shares of Common Stock for
services rendered in connection with Jaguar's merger with Ionian and
certain other consulting services.
ARRANGEMENT BETWEEN A FORMER DIRECTOR AND MR. KRAMER. In April 1995,
Jaguar sold all of the common stock of The Winnek Companies, Inc.,
an Oklahoma corporation, which at the time was a wholly-owned subsidiary of
the Company, to William D. Long who was, at that time, a director and an
officer of Jaguar. Under the terms of the agreement, James D. Kramer, a
director of the Company, received, in trust, 40,000 shares of Jaguar
common stock and all of the Stock Purchase Warrants that had been issued to
Mr. Long pursuant to the December 1994 merger of Ionian with and into
Jaguar. The agreement calls for Mr. Kramer to make sales of such Common
Stock and warrants and to use the proceeds to satisfy and redeem the
Company's outstanding Preferred Stock. Any sales of such stock and
warrants at less than $3.00 per share require the approval of Mr. Long. The
agreement terminates on May 1, 1997, when all cash, shares or warrants
remaining in trust are to be returned to Mr. Long.
COMPENSATION TO A FORMER EXECUTIVE OFFICER. In April 1995 the
Company issued to Robert O. Knutson, the former Secretary of Jaguar,
10,000 shares of restricted Common Stock in lieu of $5,000 payable to him
for services rendered to Jaguar. In addition, the Company paid $3,228
to Mr. Knutson for legal services he performed for the Company.
During 1995, the Company repaid Donald F. Shiff $26,820 for amounts
advanced by him to the Company. All of the cash advances made by Mr. Shiff to
the Company occurred prior to the Merger. Of the advances made by Mr.
Shiff, $7,750 were advanced during 1995.
TRANSACTIONS BY THE COMPANY SUBSEQUENT TO THE MERGER.
PAYMENT TO MR. KRAMER FOR AMOUNTS OWED BY THE COMPANY. During 1995,
the Company repaid $14,600 to James D. Kramer, a director and the former
Chief Executive Officer of the Company, for amounts advanced to
Jaguar by a shareholder of the Company. Mr. Kramer had purchased the
receivable payable by the Company from that shareholder.
ARRANGEMENT WITH AN ENTITY AFFILIATED WITH MR. KRAMER. In June 1995,
the Company entered into an Asset Liquidation Agreement with Jaguar
Ventures, Limited, a Minnesota corporation ("JVL"). Mr. Kramer owns
approximately one-third of the capital stock of JVL and is a director and
officer of JVL. Pursuant to the agreement the Company retained JVL to
assist in the disposition of the Company's holdings of 390,000 shares of
common stock in Renoir Galleries Ltd. (the "Renoir Shares"). Under the
term of the Asset Liquidation Agreement, the Company would pay JVL
one-third of the proceeds in excess of $250,000 realized in connection
with the sale of the Renoir Shares and grant JVL options to purchase 150,000
shares of Common Stock at an exercise price of $1.50 per share. In
September 1995, the Company entered into a Consulting Agreement with JVL,
which superseded and replaced the June 1995 Asset Liquidation Agreement,
pursuant to which the Company agreed to grant JVL an option to purchase
300,000 shares of Common Stock at an exercise price of $1.75 per share and
to purchase 20,000 shares of Jaguar Resources, Inc. at $2.00 per share as
compensation for certain advisory services and pursuant to which JVL would
be paid a $25,000 finder's fee in connection with the Private Placement.
In November 1995, the Company entered into an Agreement with JVL, which
superseded and replaced the September 1995 and June 1995 agreements,
pursuant to which JVL provided certain consulting and advisory services to
the Company. Under the terms of the Agreement, the Company granted
JVL an option to purchase 300,000 shares of Common Stock at an exercise
price of $1.75 per share and paid $25,000 in fees to JVL and $25,000 to
Donald F. Shiff. The option expires on November 15, 2000. Pursuant to the
terms of the agreement, JVL has certain piggyback registration rights
relating to the option and the shares of Common Stock issuable upon
exercise thereof.
7.
<PAGE>
CONSULTING ARRANGEMENT WITH MR. KRAMER. In December 1995, the
Company entered into a Consulting Agreement with James D. Kramer and Larry
Kramer, the brother of James D. Kramer (collectively, the "Kramers"),
whereby the Kramers are acting as consultants to the Company in
connection with selling substantially all of the stock or assets of
Tabor Resources Corporation, a wholly-owned subsidiary of the Company
("Tabor"). Under the terms of the agreement with the Kramers, the
Kramers will be paid a commission of 4% of the cash realized by the Company
relating to the sale of Tabor assets. In March 1996, and amended in
April 1996, Tabor entered into an Asset Purchase Agreement with Hanover Gold
Company, Inc. ("Hanover") for the sale of certain assets of Tabor. Under
the terms of the agreement, Tabor has agreed to sell all of its property
and mining rights in the Alder Gulch area of the Virginia City Mining
District in southwest Montana in exchange for 525,000 shares of Hanover
common stock (the "Hanover Shares"). Based on the closing price on April 15,
1997, the market value of the Hanover Shares was approximately $624,750.
Payment under the Kramer agreement relating to the sale of Tabor assets to
Hanover will be due upon recognition by the Company of any cash proceeds
from the Hanover Shares.
GRANT FROM MR. RONNING OF AN OPTION TO ACQUIRE A MAJORITY INTEREST IN
AN ENTITY AFFILIATED WITH MR. RONNING. In December 1995, MacUSA, a
wholly-owned subsidiary of the Company, was granted an option by Mr. Ronning
to acquire the 60% of the outstanding common stock (the "Digital River
Shares") of Digital River, Inc., a Minnesota corporation ("Digital River"),
owned by Mr. Ronning. The option (the "Digital River Option") is
exercisable at any time through December 31, 2000 for total consideration of
one dollar. The Digital River Shares are subject to the provisions of a
Stock Purchase Agreement dated August 30, 1994 (the "Stock Purchase
Agreement"), between Mr. Ronning, Fujitsu Limited, a company organized under
the laws of Japan ("Fujitsu"), Digital River, and MacUSA (collectively,
the "Parties") and to the provisions of certain related agreements,
primarily, a Memorandum of Understanding, an Investors Rights Agreement,
a Voting Rights Agreement and a Personal Guaranty and Stock Pledge
Agreement among certain of the Parties (collectively, the "Digital River
Agreements"). Pursuant to the terms of the Memorandum of Understanding, as a
condition to the transfer of the Digital River Shares to MacUSA, MacUSA
is required to become a party to the Digital River Agreements. By its
terms, the Digital River Option is subject to the terms and conditions
of the Digital River Agreements and terminates automatically if any of
its terms, including the transfer of the Digital River Shares to the
Company pursuant to exercise thereof, violate a term or provision of any of
the Digital River Agreements. Digital River is engaged in the business of
electronic software distribution. Mr. Ronning is the President and a director
of Digital River.
TAX INDEMNIFICATION AGREEMENT WITH MR. RONNING. In December 1995,
the Company entered into a Tax Indemnification Agreement with Mr. Ronning
whereby the Company agreed to indemnify Mr. Ronning for the amount of any
penalties or interest resulting from the redetermination of Mr. Ronning's
share of taxable income attributable to MacUSA and the amount of any
additional taxes due from Mr. Ronning, to the extent such tax adjustment
results in a future decrease in the taxable income of MacUSA. Prior to
the Merger, Mr. Ronning owned approximately 95% of MacUSA, which was
a Subchapter S corporation within the meaning of Section 1361 of the
Internal Revenue Code. Pursuant to the Merger, MacUSA's Subchapter S status
was terminated.
SALE BY THE COMPANY OF AN OWNERSHIP INTEREST IN AN ENTITY TO A
FORMER SIGNIFICANT SHAREHOLDER. On December 31, 1995, the Company owned
390,000 shares of common stock in Renoir Galleries Ltd. ("Renoir"), a
start-up venture with no current operations, representing approximately 20%
of the outstanding shares of Renoir. Renoir was attempting to develop a
business which publishes, reproduces and markets fine arts with particular
emphasis on a mail order business and on the works of the French
Impressionist, Pierre-Augustee Renoir. Business development activities
at this entity have essentially been discontinued. Accordingly,
management did not believe the venture, or the Company's ownership interest
therein, had any realizable value. In March 1996, the Company agreed in
principal to transfer its ownership interest in Renoir to Minneapple
Capital, Ltd., a company controlled by John R. Silseth, Sr., a former
significant shareholder of the Company, for nominal consideration of certain
consulting services.
8.
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
Shareholders of record as of the close of business on April 15, 1997
are entitled to receive notice of and to vote at the Annual Meeting. As
of the record date there were outstanding and entitled to be voted at
the Annual Meeting, 10,374,870 shares of Common Stock and 160,000 shares
of Preferred Stock.
SHARE OWNERSHIP OF MANAGEMENT
The following table sets forth information regarding the
beneficial ownership of Common Stock and Preferred Stock of the Company as
of April 15, 1997, unless otherwise indicated, by each director, by each
executive officer named in the Summary Compensation Table and by all
directors and executive officers (regardless of compensation level) of the
Company as a group.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK SHARES OF PREFERRED STOCK TOTAL VOTING SHARES
BENEFICIALLY OWNED(1) BENEFICIALLY OWNED(1) BENEFICIALLY OWNED(2)
------------------------- ------------------------------ -------------------------
PERCENT OF PERCENT OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER AMOUNT CLASS AMOUNT CLASS AMOUNT TOTAL
- -------------------------------------- ---------- ------------- ------------- --------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Joel A. Ronning 6,910,022(3) 65.3% -- -- 6,910,222(3) 64.4%
Charles E. Reese, JR. 125,000(4) 1.2% -- -- 125,000(4) 1.2%
James D. Kramer 174,332(5) 1.7% -- -- 174,332(5) 1.6%
Richard J. Runbeck 16,667(6) * -- -- 16,667(6) *
All Directors and 7,226,021(7) 67.2% -- -- 7,226,021(7) 66.2%
Executive Officers as a
Group (4 persons)
</TABLE>
- ------------------------
* Less than 1% of the outstanding shares.
(1) Unless otherwise noted, all of the shares are held by individuals possessing
sole voting and dispositive power with respect to the shares shown. Shares
not outstanding, but deemed beneficially owned by virtue of the right of a
person or member of a group to acquire them within 60 days, are treated as
outstanding only when determining the amount and percent owned by such
person or group.
(2) Each share of Preferred Stock of the Company has the right to vote on all
matters voted upon by the holders of Common Stock. Accordingly, the
Preferred Stock and Common Stock have been considered to be one voting class
to show Total Voting Shares Beneficially Owned. The percentage of
outstanding shares is calculated based upon 10,374,870 shares of Common
Stock and 160,000 shares of Preferred Stock outstanding as of the close of
business on April 15, 1997.
(3) Includes 199,956 shares that Mr. Ronning has the right to acquire on or
before June 15, 1997 pursuant to the exercise of stock options.
(4) Includes 125,000 shares that Mr. Reese has the right to acquire on or before
June 15, 1997 pursuant to the exercise of stock options.
(5) Includes 12,648 shares owned beneficially by Mr. Kramer by virtue of his
interest in a partnership which owns shares, 68,266 shares held jointly by
Mr. Kramer and his spouse, 13,305 shares owned beneficially by Mr. Kramer's
spouse by virtue of her interest in a partnership which owns shares and
9,159 shares held by members of Mr. Kramer's family. Also includes 33,333
shares that Mr. Kramer has the right to acquire on or before June 15, 1997
pursuant to the exercise of stock options and stock purchase warrants. Does
not include 300,000 shares that Jaguar Ventures Ltd. ("JVL") has the right
to acquire on or before June 15, 1997 upon the exercise of stock options,
which Mr. Kramer may be deemed to beneficially own by virtue of his
ownership of one-third of the outstanding capital stock of JVL and his
status as an officer and director of JVL.
(6) Includes 16,667 shares that Mr. Runbeck has the right to acquire on or
before June 15, 1997 pursuant to the exercise of stock options.
(7) Includes 374,956 shares that all directors and executive officers as a group
have the right to acquire on or before June 15, 1997 pursuant to the
exercise of stock options and stock purchase warrants.
9.
<PAGE>
SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information regarding the beneficial
ownership of Common Stock and Preferred Stock of the Company as of April 15,
1997, unless otherwise indicated, by each person known by the Company to be the
owner of more than five percent of the Company's outstanding Common Stock or
Preferred Stock.
<TABLE>
<CAPTION>
TOTAL VOTING
SHARES OF COMMON SHARES OF PREFERRED STOCK SHARES
STOCK BENEFICIALLY BENEFICIALLY BENEFICIALLY
OWNED(1) OWNED(1) OWNED(2)
------------------------- ------------------------------ -------------------------
PERCENT OF PERCENT OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER AMOUNT CLASS AMOUNT CLASS AMOUNT TOTAL
- -------------------------------------- ---------- ------------- ------------- --------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ginger Elliot -- -- 60,000 37.5% 60,000 *
P.O. Box 1036
Kirtland, NM 87417
Betty Plattner -- -- 50,000 31.3% 50,000 *
1414 Highland Dr.
Solana Beach, CA 92075
Lela D. McCauley -- -- 20,000 12.5% 20,000 *
P.O. Box 574
Okmulgee, OK 74447
Marianne M. Long, as -- -- 20,000 12.5% 20,000 *
Trustee for Lauren A. Long
and Kathryn W. Long
Zelmay Long -- -- 10,000 6.3% 10,000 *
1733 S. Florence Av.
Tulsa, OK 74104
</TABLE>
- ---------------------------------
* Less than 1% of the outstanding shares.
(1) Unless otherwise noted, all of the shares are held by individuals possessing
sole voting and dispositive power with respect to the shares shown. Shares
not outstanding, but deemed beneficially owned by virtue of the right of a
person or member of a group to acquire them within 60 days, are treated as
outstanding only when determining the amount and percent owned by such
person or group.
(2) Each share of Preferred Stock of the Company has the right to vote on all
matters voted upon by the holders of Common Stock. Accordingly, the
Preferred Stock and Common Stock have been considered to be one voting class
to show Total Voting Shares Beneficially Owned. The percentage of
outstanding shares is calculated based upon 10,374,870 shares of Common
Stock and 160,000 shares of Preferred Stock outstanding as of the close of
business on April 15, 1997.
SELECTION OF INDEPENDENT AUDITORS
PROPOSAL 3
The Board of Directors has approved the selection of Arthur Andersen LLP
as independent auditors to make an examination of the accounts of the
Company for the fiscal year ending December 31, 1997, and to perform
other appropriate accounting services. Arthur Andersen LLP has acted as
independent auditors of the Company since December 28, 1995.
PREVIOUS INDEPENDENT ACCOUNTANTS
On December 28, 1995, the Board of Directors of the Company decided to
change its independent accountants for the fiscal year beginning January 1,
1995. On such date, the Board of Directors of the Company dismissed Sartain
Fischbein & Co. as independent accountants of the Company. Glenn Elliott &
Associates, Inc. had acted as the Company's independent accountants for the
fiscal year ended May 31, 1993 (on May 30, 1995, the
10.
<PAGE>
Company changed its fiscal year end from May 31 to December 31), prior to
the Company becoming a reporting company under the Securities Exchange Act of
1934. (Sartain Fischbein & Co. and Glenn Elliott & Associates, Inc. are
collectively referred to herein as the "Tech Squared Former Accountants.")
On December 28, 1995, the Board of Directors of MacUSA also decided to
change independent accountants for the fiscal year beginning January 1,
1995 and dismissed Price Waterhouse LLP (the "MacUSA Former Accountants").
(Sartain Fischbein & Co., Glenn Elliott & Associates, Inc. and Price
Waterhouse LLP are collectively referred to herein as the "Former
Accountants.")
The reports of the Tech Squared Former Accountants on the
Registrant's financial statements for the fiscal years ended May 31, 1993
and May 31, 1994, contained no adverse opinion or disclaimer of
opinion. Except for the modifications of: (a) the Sartain Fischbein &
Co. opinion dated September 20, 1994 on the Company's financial statements
for the fiscal year ended May 31, 1994 relating to the uncertain nature
of the Company's ability to recover certain investments in mining
claims and exploration costs and to the uncertainty of the Company's
ability to continue as a going concern and (b) the Glenn Elliott &
Associates, Inc. opinion dated November 9, 1993 on the Company's financial
statements for the fiscal year ended May 31, 1993 relating to the
uncertainty of the Company's ability to continue as a going concern,
the opinions of the Tech Squared Former Accountants were not qualified or
modified as to uncertainty, audit scope or accounting principle. The
reports of the MacUSA Former Accountants on the MacUSA financial statements
for the years ended December 31, 1993 and December 31, 1994 contained
no adverse opinion or disclaimer of opinion and were not qualified or
modified as to uncertainty, audit scope or accounting principle.
The Board of Directors of each of the Company and MacUSA approved the
change in independent accountants. Neither the Company nor MacUSA has
an audit committee.
The Company believes, and has been advised by each of the Former
Accountants during the preparation and filing of its Report on Form 8-K to
report the change in accountants, that, in connection with the audits for
the two fiscal years ended December 31, 1994, there have been no
disagreements with the Former Accountants on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope
or procedure, which disagreements, if not resolved to the satisfaction of
the Former Accountants, would have caused them to make reference thereto in
their report on the financial statements for such years. During the two
most recent fiscal years, there have been no reportable events (as
defined in Regulation S-B Item 304(a)(1)(iv)(B)).
ENGAGEMENT OF NEW INDEPENDENT ACCOUNTANTS
On December 28, 1995, the Board of Directors of the Company approved
the engagement of Arthur Andersen LLP as its new independent accountants
for the fiscal year ending December 31, 1995. During the two fiscal years
ended December 31, 1996, the Company has not consulted with Arthur Andersen
LLP on items which concerned the subject matter of a disagreement or
reportable event with any of the Former Accountants (as described in
Regulation S-B Item 304(a)(2)).
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed Arthur Andersen LLP to serve as
the Company's independent auditors for the fiscal year ending December 31,
1997, and to perform other accounting services. The Company has requested
and expects a representative of Arthur Andersen LLP to be present at the
Annual Meeting to make a statement if such representative so desires and to
respond to appropriate questions.
Although it is not required to do so, the Board of Directors wishes
to submit the appointment of Arthur Andersen LLP as the Company's
independent auditors to the shareholders for ratification. The
affirmative vote of the holders of a majority of the outstanding shares of
Common Stock and Preferred Stock, voting together as one class, present in
person or by proxy at the Annual Meeting and entitled to vote is required to
ratify the appointment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS FOR THE
FISCAL YEAR ENDING DECEMBER 31, 1997.
11.
<PAGE>
SUBMISSION OF SHAREHOLDER PROPOSALS
FOR THE NEXT ANNUAL MEETING
Shareholder proposals intended to be presented in the proxy
materials relating to the next Annual Meeting of Shareholders must be
received by the Company on or before January 6, 1998.
OTHER BUSINESS
As of the date hereof, the Company does not intend to present, nor has
it been informed that other persons intend to present, any matters for
action at the Annual Meeting other than those specifically referred to
herein. As to other business, if any, that may properly come before the
Annual Meeting, it is intended that proxies solicited by the Board of
Directors will be voted in accordance with the judgment of the person or
persons voting the proxies.
COSTS AND METHOD OF SOLICITATIONS
The cost of soliciting proxies, including the preparation, assembly
and mailing of the proxies and soliciting material, as well as the
cost of forwarding such material to the beneficial owners of the Company's
Common Stock and Preferred Stock will be borne by the Company.
Directors, officers and regular employees of the Company may, without
compensation other than their regular compensation, solicit proxies by
telephone, telegraph or personal conversation. The Company may reimburse
brokerage firms and others for expenses in forwarding proxy materials to
beneficial owners of shares.
ANNUAL REPORT
A copy of the Company's Annual Report to Shareholders for the fiscal
year ended December 31, 1996 accompanies this Notice of Annual Meeting
and Proxy Statement. The Annual Report to Shareholders describes the
financial condition of the Company as of December 31, 1996.
THE COMPANY WILL FURNISH WITHOUT CHARGE A COPY OF ITS ANNUAL REPORT ON
FORM 10-KSB (EXCLUSIVE OF EXHIBITS) FOR THE FISCAL YEAR ENDED DECEMBER 31,
1996 TO EACH PERSON WHO IS A SHAREHOLDER OF THE COMPANY AS OF APRIL 15,
1997, UPON RECEIPT FROM ANY SUCH PERSON OF A WRITTEN REQUEST FOR SUCH AN
ANNUAL REPORT ON FORM 10-KSB. SUCH REQUESTS SHOULD BE SENT TO: TECH SQUARED
INC., 5198 WEST 76TH STREET, EDINA, MINNESOTA 55439, ATTENTION: CHIEF
FINANCIAL OFFICER.
A Proxy Card is enclosed for your use. You are requested to SIGN, DATE
AND RETURN THE PROXY CARD IN THE ACCOMPANYING ENVELOPE. No postage is
required if mailed within the United States.
BY ORDER OF THE
BOARD OF DIRECTORS
Joel A. Ronning,
CHAIRMAN OF THE BOARD
12.
<PAGE>
<TABLE>
<S> <C> <C>
TECH SQUARED INC. PROXY
5198 WEST 76TH STREET
EDINA, MINNESOTA 55439
</TABLE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Joel A. Ronning and Charles E. Reese, Jr.,
and each of them, with full power of substitution, proxies to represent and
vote, as designated below, all of the shares of the Common Stock and Preferred
Stock of Tech Squared Inc. registered in the name of the undersigned at the
close of business on April 15, 1997, with the powers the undersigned would
possess if personally present at the 1997 Annual Meeting of Shareholders to be
held at the Norwest Financial Center, Building Conference Room, Second Floor,
7900 Xerxes Avenue South, Bloomington, Minnesota, at 4:00 p.m. local time on
June 5, 1997, and at any adjournment thereof, hereby revoking any proxy or
proxies previously given.
1. Proposal to set the number of directors at four:
/ / FOR / / AGAINST / / ABSTAIN
2. ELECTION OF DIRECTORS:
<TABLE>
<S> <C>
FOR all nominees listed below / / WITHHOLD AUTHORITY / /
(except as marked to the contrary below) to vote for all nominees listed below
</TABLE>
(To WITHHOLD authority to vote for any individual nominee strike a line through
the nominee's name below)
Joel A. Ronning Charles E. Reese, Jr. James D. Kramer Richard J.
Runbeck
3. To ratify the selection of Arthur Andersen LLP as the independent
auditors of the Company for the fiscal year ending December 31, 1997:
/ / FOR / / AGAINST / / ABSTAIN
4. In their discretion, the appointed proxies are authorized to vote upon
such other business as may properly come before the meeting or any adjournment.
(CONTINUED ON OTHER SIDE)
<PAGE>
THIS PROXY, WHEN PROPERLY
EXECUTED, WILL BE VOTED AS
DIRECTED. IF NO DIRECTION IS
GIVEN, THE PROXY WILL BE VOTED
"FOR" EACH PROPOSAL AND IN THE
PROXY'S DISCRETION ON ANY OTHER
MATTERS TO COME BEFORE THE
MEETING.
Dated
----------------------------------,
1997
----------------------------------
(Signature)
----------------------------------
(Second signature)
PLEASE DATE AND SIGN ABOVE exactly
as your name appears at left,
indicating where appropriate,
official position or
representative capacity.
