SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Amendment No. 1
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
(Mark One)
[ ] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
[X] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM JANUARY 1, 2002 TO AUGUST 31, 2002
COMMISSION FILE NUMBER 0-26140
MINORPLANET SYSTEMS USA, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 51-0352879
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1155 KAS DRIVE, SUITE 100
RICHARDSON, TEXAS 75081
(Address of principal executive offices, including zip code)
(Registrant's telephone number, including area code) (972) 301-2000
Securities Registered Pursuant to Section 12(b) of the Act: NONE
Securities Registered Pursuant to Section 12(g) of the Act:
COMMON STOCK, $.01 PAR VALUE
(Title of each Class)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO .
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
---
Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2).
YES NO X .
--- ---
i
The aggregate market value of the common equity held by non-affiliates of the
Registrant as of December 27, 2002 was $4,970,088.*
The number of shares outstanding of Registrant's Common Stock was
48,349,161 as of December 27, 2002.
- ------------------
* Excludes the Common Stock held by executive officers, directors and by
stockholders whose ownership exceeds 5% of the Common Stock outstanding at
December 27, 2002. Exclusion of such shares should not be construed to indicate
that any such person possesses the power, direct or indirect, to direct or cause
the direction of the management or policies of the Registrant or that such
person is controlled by or under common control with the Registrant.
ii
Minorplanet Systems USA, Inc.
FORM 10-K/A
For the Eight Month Transition Period Ended August 31, 2002
INDEX
<Table>
<Caption>
Page
----
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT .....................1
ITEM 11. EXECUTIVE COMPENSATION .................................................4
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS ........................14
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ........................17
</Table>
i
Minorplanet Systems USA, Inc. ("Minorplanet USA") is filing this
Amendment Number 1 to the transition report for the eight month transition
period ended August 31, 2002 that was filed with the Securities and Exchange
Commission on November 27, 2002 for the sole purpose of adding the information
required by Items 10, 11, 12 and 13 of Part III of Form 10-K in accordance with
General Instruction E(3) to Form 10-K.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
ORGANIZATION OF THE BOARD OF DIRECTORS AND MEETINGS
Minorplanet USA's board of directors consists of Michael D. Abrahams,
Gerry C. Quinn, John T. Stupka, Robert D. Kelly, Sir Martin W. Jacomb and
Michael Beverley each of whom was elected at the 2002 annual meeting of
stockholders. Effective August 25, 2002, Jana Bell resigned her position as a
member of the board of directors of Minorplanet USA to pursue other business
interests. Effective November 30, 2002, Sir James Spooner resigned his position
as a member of the board of directors of Minorplanet USA.
Of the six member of Minorplanet USA's board of directors, two
directors, Robert D. Kelly and Michael D. Abrahams, were designated by, and are
employees of, Minorplanet USA's majority stockholder, Minorplanet Systems PLC,
for election to Minorplanet USA's board of directors pursuant to rights granted
to it pursuant to the related Stock Purchase and Exchange Agreement dated
February 14, 2001. Sir Martin Jacomb is a non-employee director of Minorplanet
Systems PLC. See "Certain Relationships and Related Transactions" beginning on
page 17 and "Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters" on page 14. All directors serve until the next
annual meeting of the stockholders or until their respective successors are duly
elected and qualified, or until their earlier death or removal from office.
MINORPLANET USA'S DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS
GERRY C. QUINN - DIRECTOR SINCE JUNE 22, 1995
Mr. Quinn, age 53, served as President of The Eighteen Wheeler
Corporation and The F.B.R. Eighteen Corporation, both of which were affiliates
of Minorplanet USA, from April 1992 until February 1994. Mr. Quinn has served as
President of The Erin Mills Investment Corporation, since July 1989, a real
estate development company and stockholder of Minorplanet USA since September
1989. Prior to joining Erin Mills, Mr. Quinn served as a senior officer in Magna
International Inc. and Barrincorp, both publicly traded companies, and he served
as a partner in the public accounting firm of Ernst & Young. Currently, Mr.
Quinn is also a director of MotorVac Technologies, Inc.
JOHN T. STUPKA - DIRECTOR SINCE JUNE 22, 1998
Mr. Stupka, age 53, is currently self-employed providing consulting
services. From January 15, 2000 until August 2002, he served as President
- -Wireless Solutions and President for WorldCom. From August 1996 until October
1999 Mr. Stupka served as President, Chief Executive Officer and as a director
of SkyTel Communications, Inc., formerly known as Mobile Telecommunication
Technologies Corp. Prior to joining SkyTel, Mr. Stupka served as Senior Vice
President - Strategic Planning of SBC Communications, Inc. from August 1995 to
August 1996 and as President and Chief Executive Officer of Southwestern Bell
Mobile Systems, Inc. from November 1985 to August 1995.
ROBERT D. KELLY MA, FCA - DIRECTOR SINCE JUNE 21, 2001
Mr. Kelly, age 41, currently serves as Financial Director of
Minorplanet Systems PLC, a position held since July 1, 2000. Mr. Kelly also
currently serves as a Director on the Board of Directors of and as Secretary of
Minorplanet Systems PLC and its wholly-owned subsidiary, Minorplanet Limited,
positions he has held since July 1, 2000. Mr. Kelly also currently serves on the
Board of Directors of FirstNet Services Ltd. Prior to joining Minorplanet
Systems PLC in July 2000, Mr. Kelly served as European Financial Director for
Caudwell Communications Group Limited for one year and as Finance Director for
Kunick Leisure Limited for eleven years. Mr. Kelly is an Oxford law graduate,
who qualified as a chartered accountant with Coopers & Lybrand.
1
MICHAEL BEVERLEY DL, DA, SCA, SRSA - DIRECTOR SINCE MARCH 22, 2002
Mr. Beverley, age 54, retired on August 31, 2001 from Arthur Andersen
LLP. Mr. Beverley had served as a partner with Arthur Andersen since 1985,
finally serving as Managing Partner-UK Regions immediately prior to his
retirement. Mr. Beverley currently serves as a director of Opera North Limited
and West Yorkshire Police Community. Mr. Beverley previously served as a
director of Arthur Andersen & Co. Nominees and Arthur Andersen Investments
Limited.
MICHAEL D. ABRAHAMS CBE, DL - DIRECTOR SINCE MAY 21, 2002
Mr. Abrahams, age 65, currently serves as executive chairman of the
board of directors of Minorplanet Systems PLC. Mr. Abrahams also currently
serves as a director of The Rank Foundation Limited, M.D. Abrahams & Co.,
Trustees of the London Clinic Limited, Prudential Staff Pensions Limited,
Bagendon Nominees Limited, H.S.B.S. Investments Limited, The Rank Foundation,
Kingston Communications (Hull) PLC, Minorplanet Limited, and the London Clinic
Development Limited. Mr. Abrahams has previously served at deputy chairman of
Prudential PLC.
SIR MARTIN W. JACOMB - DIRECTOR SINCE MAY 21, 2002
Sir Jacomb, age 73, currently serves as a non-executive member of the
board of directors of Minorplanet Systems PLC. Sir Jacomb also currently serves
as chairman of Delta PLC, The British Council of the Oxford Playhouse Limited
and Five Arrows Limited, and as a director of Prudential PLC, Canary Wharf Group
PLC, the Oxford Playhouse Trust, Pasley-Tyler Holdings PLC, Rio Tinto Pension
Fund Trustees and Oxford Playhouse Productions Limited. Sir Jacomb has
previously served as a director of the Royal Opera House Covent Garden Limited,
as chairman of Prudential PLC and as a member of the Court of the Bank of
England.
EXECUTIVE OFFICERS
Except as disclosed under "Employment Agreements" below, all officers
serve until their successors are duly elected and qualified or their earlier
death, disability or removal from office.
DAVID H. BAGLEY - VICE PRESIDENT OF NETWORK OPERATIONS OF MINORPLANET
USA
Mr. Bagley, age 48, joined Minorplanet USA in October 1992 as Director
of Field Services and has since held several director-level positions which
utilized his 27 years of telecommunications experience prior to assuming his
current role of Vice President Network Operations in December of 1999. Before
joining Minorplanet USA, Mr. Bagley served as Vice President, South Central
Division at Comstock Communications from 1987 to 1992. From 1973 to 1987, Mr.
Bagley held various operational and technical management positions at
Southwestern Bell Telecom, United Technologies Communications Company and
General Dynamics Communications Company.
J. RAYMOND BILBAO - SENIOR VICE PRESIDENT, GENERAL COUNSEL AND
SECRETARY OF MINORPLANET USA
Mr. Bilbao, age 36, was initially employed by Minorplanet USA in June
1997 as Associate General Counsel. He served in that position until February
1999, when he was promoted to General Counsel and Secretary. Mr. Bilbao assumed
his current role of Senior Vice President, General Counsel and Secretary in June
of 2001 being primarily responsible for all legal and human resources matters.
From September 1996 to June 1997, Mr. Bilbao was a Senior Associate Attorney at
Neligan & Averch, LLP, a Dallas-based law firm, where he represented technology
clients in corporate and litigation matters. From September 1995 to September
1996, Mr. Bilbao was employed by Value-Added Communications, Inc., a
Dallas-based telecommunications company, last serving as its Vice President and
General Counsel. Mr. Bilbao also previously served as an associate attorney at
the law firms of Haney & Tickner, P.C. and Renfro, Mack & Hudman, P.C. In 1992,
Mr. Bilbao earned his Juris Doctor degree from St. Mary's University in San
Antonio, Texas, where he served as a writer for the St. Mary's Law Journal. Mr.
Bilbao is licensed to practice law in Texas and is admitted to practice before
the United States District Court for the Northern District of Texas.
ROBERT J. LAMBERT, JR. - VICE PRESIDENT OF INFORMATION TECHNOLOGY OF
MINORPLANET USA
Mr. Lambert, age 44, was originally employed by Minorplanet USA as
Director of Information Systems in September 1997. Mr. Lambert transitioned into
the role of director of Revenue Assurance and Billing, using his 20 years of
information systems and operations experience to successfully manage the billing
and collection operations for Minorplanet USA's entire customer base prior to
assuming his current role as Vice President of Information
2
Technology. From 1995 to 1997, Mr. Lambert served as director of Retail
Operations for CellStar, where he was responsible for the financial and
operational focus of the $100+ million organization. From 1986 to 1995, he was
employed at KPMG Peat Marwick as a Senior Consulting Manager.
JEFFREY MORRIS - GENERAL OFFICER OF MINORPLANET USA
Mr. Morris, age 43, joined Minorplanet USA as General Officer on August
26, 2002 with responsibility for sales and marketing in the North America. Mr.
Morris is a founding director of Minorplanet Systems PLC and has been involved
in all aspects of the development of Minorplanet Systems PLC since 1996. Mr.
Morris has served as a director on the board of directors of Minorplanet Systems
PLC since 1996. Mr. Morris currently serves as Chief Executive Officer of
Minorplanet Systems PLC serving in such position since August of 2002.
W. MICHAEL SMITH - EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER
AND TREASURER OF MINORPLANET USA
Mr. Smith, age 37, joined Minorplanet USA in November 1998 as Executive
Vice President, Chief Financial Officer and Treasurer. Previously, Mr. Smith
served as Vice President of Finance and Chief Financial Officer for TPN, Inc., a
provider of digital satellite programming from 1997 to 1998. Mr. Smith was
employed by AT&T Wireless Services from 1994 to 1997, where he served as
Director of Financial Planning and Control from 1994 to 1996 and as Director of
Finance and Controller from 1996 to 1997. Prior to his employment at AT&T
Wireless, Mr. Smith practiced public accounting for Arthur Anderson & Co., last
serving as a financial consultant and audit manager primarily representing high
technology clients. Mr. Smith earned a Masters in Accounting at the University
of North Texas and is a Certified Public Accountant.
RONALD THOMPSON - VICE PRESIDENT OPERATIONS OF MINORPLANET USA
Mr. Thompson, age 53, joined Minorplanet USA in June of 1999 as
Director of Installation and Service, subsequently serving as Director of
Manufacturing Operations prior to assuming his current role of Vice President
Operations in April of 2002. Mr. Thompson has over 17 years of experience in
manufacturing, service, installation and distribution. Previously, Mr. Thompson
served in various roles with AfterMarket Technology Corp./Autocraft
Industries/Fred Jones Companies for over 4 years last serving as Vice President
of Operations - Logistics Services SBU. Prior thereto, Mr. Thompson was employed
by DSS, Inc. as Vice President of Finance and Administration for over 10 years.
Mr. Thompson was formerly a Certified Public Accountant.
ANDREW TILLMAN -CHIEF EXECUTIVE OFFICER OF MINORPLANET USA
Mr. Tillman, age 44, joined Minorplanet USA on August 26, 2002 as Chief
Executive Officer. Mr. Tillman is a founding director of Minorplanet Systems PLC
and has served on its Board of Directors since its incorporation in 1996. Mr.
Tillman was instrumental in the design and development of the original VMI
system and still works closely with research and development being directly
involved in new product development. After assisting with the operational design
of the initial infrastructures for information technology, customer support and
marketing departments, Mr. Tillman assumed the role of Operations Director of
Minorplanet Systems PLC in 1997 with responsibility for internal systems and
infrastructures ensuring efficient product delivery serving in such capacity
until 1999. Mr. Tillman currently serves as Partnerships Director for
Minorplanet Systems PLC and is responsible for establishing and maintaining
strategic partnerships.
Other than Jeffrey Morris and Andrew Tillman who are cousins, there
are no family relationships among the directors and executive officers of
Minorplanet USA that require disclosure.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Minorplanet USA indemnifies each person who is or was a director,
officer, employee or agent of Minorplanet USA, or serves at Minorplanet USA's
request as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses,
judgments, fines and amounts incurred in that capacity.
Minorplanet USA will indemnify only for actions taken:
o in good faith in a manner the indemnified person reasonably
believed to be in or not opposed to the best interests of
Minorplanet USA; or
o with respect to criminal proceedings, not unlawful.
3
Minorplanet USA will also advance to the indemnified person payments
incurred in defending a proceeding to which indemnification might apply provided
the recipient agrees to repay all such advanced amounts if it is ultimately
determined that such person is not entitled to be indemnified. Minorplanet USA's
bylaws specifically provide that the indemnification rights granted thereunder
are nonexclusive. In accordance with Minorplanet USA's bylaws, Minorplanet USA
has purchased insurance on behalf of its directors and officers in amounts it
believes to be reasonable.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act of 1934 requires Minorplanet USA's
directors and executive officers, and persons who own more than ten percent of a
registered class of Minorplanet USA's equity securities to file with the SEC
initial statements of beneficial ownership of securities and subsequent changes
in beneficial ownership. Minorplanet USA's officers, directors and
greater-than-ten-percent stockholders are required by the SEC's regulations to
furnish Minorplanet USA with copies of all Section 16(a) forms they file.
To Minorplanet USA's knowledge, based solely on a review of the copies
of such reports furnished to Minorplanet USA and written representations that no
other reports were required, during the eight month transition period ended
August 31, 2002, its officers, directors and greater-than-ten-percent beneficial
owners timely complied with all Section 16(a) filing requirements applicable to
them. However, Andrew Tillman, our newly appointed Chief Executive Officer, and
Jeffrey Morris, our General Officer failed to timely file their initial Form 3
filings which were due in September of 2002 ultimately making such filings in
November and December of 2002 respectively.
ITEM 11. EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
Standard Arrangements. The board of directors has the authority to fix
the compensation of directors. Minorplanet USA's bylaws provide that directors
may be reimbursed for reasonable expenses for their services to Minorplanet USA,
and may be paid either a fixed sum for attendance at each board of directors
meeting or a stated annual director fee. Minorplanet USA currently reimburses
its directors for travel expenses. In addition, Minorplanet USA provides its
non-employee directors with an annual director's fee ranging from $25,000 to
$60,000 annually as follows:
<Table>
<Caption>
DIRECTOR ANNUAL DIRECTOR'S FEE
--------- ---------------------
Michael Beverley $60,000
Michael Abrahams $ 0(1)
Robert Kelly $25,000
Gerry Quinn $30,000
John Stupka $30,000
Sir Martin Jacomb $ 0(1)
</Table>
(1) Sir Martin Jacomb and Michael Abrahams have waived their rights to
receive a director's fee.
In addition to their annual director's fees, during the eight month
transition period ended August 31, 2002, John Stupka and Gerry Quinn each
received an additional one-time director's fee in the amount of $30,000 and
Michael Beverley received an additional one-time director's fee in the amount of
$60,000 for participation on board committees.
On June 22, 1998, Minorplanet USA granted John Stupka non-qualified
options to purchase 3,798 shares of common stock at an exercise price of $2.50
per share. These options were not granted under Minorplanet USA's 1994 stock
option plan, and therefore, unlike options granted under the 1994 stock option
plan, such options have not been registered under the Securities Act of 1933.
4
COMPENSATION OF CERTAIN EXECUTIVE OFFICERS
Summary Compensation Table
The following is a table describing compensation awarded, paid to or
earned, for each of the last three full fiscal years and the eight month
transition period beginning January 1, 2002 and ended August 31, 2002, by
Minorplanet USA's: (a) Chief Executive Officer; (b) former Chief Executive
Officer; (c) other four most highly compensated executive officers during the
eight month transition period ended August 31, 2002; and (d) former executive
officers employed for only a portion of the eight month transition period ended
August 31, 2002, who would have been included as one of the other four most
highly compensated executive officers had they been still serving as executive
officers at the end of the eight month transition period. Some of the persons
named below are employed by Minorplanet USA under an employment agreement. Those
agreements are described on pages 8 and 9. Some of the persons named below are
no longer employed by Minorplanet USA as noted below.
<Table>
<Caption>
Long Term
Compensation
Awards
Annual -------------
Compensation Securities
--------------------- Underlying All Other
Name and Salary Bonus Options/ Compensation
Principal Position Year (Dollars) (Dollars) SARs (shares) (Dollars)
- ------------------ ------ --------- --------- ------------- ------------
Andrew Tillman 2002* -- -- -- --
Chief Executive Officer 2001 -- -- -- --
for Minorplanet USA 2000 -- -- -- --
1999 -- -- -- --
Jana A. Bell(1) 2002* 213,668 -- -- 175,000
President and Chief Executive Officer 2001 301,407 108,000 692,834 --
for Minorplanet USA 2000 300,000 120,000 -- 83,916
1999 300,000 187,500 -- --
Robert LaMere(2) 2002* 32,038 -- -- 230,227
Senior Vice President Transportation 2001 153,785 -- 394,120 --
Systems for Minorplanet USA 2000 147,870 39,998 20,000 --
1999 139,000 20,850 1,000 --
C. Marshall Lamm(3) 2002* 35,417 -- -- 214,005
Senior Vice President Operations for 2001 169,166 -- 493,400 --
Minorplanet USA 2000 148,750 42,480 40,000 --
1999 93,333 26,000 75,000 --
Todd A. Felker(4) 2002* 130,309 -- -- 115,135
Senior Vice President Sales and Marketing 2001 173,250 39,200 486,920 --
for Minorplanet USA 2000 165,000 42,660 20,000 --
1999 150,000 82,087 68,000
W. Michael Smith 2002* 119,066 -- -- --
Executive Vice President, Chief Financial 2001 170,100 39,800 485,120 --
Officer and Treasurer for Minorplanet USA 2000 162,961 43,011 20,000 --
1999 150,000 33,000 1,000 --
J. Raymond Bilbao(5) 2002* 119,000 -- -- --
Senior Vice President, General Counsel 2001 163,377 40,200 495,840 --
and Secretary for Minorplanet USA 2000 130,000 35,490 20,000 42,324
1999 120,000 29,777 68,000 --
David Bagley(6) 2002* 85,066 20,000 -- --
Vice President, Network Operations for 2001 115,000 15,077 21,000 --
Minorplanet USA 2000 100,000 13,163 5,000 55,031
1999 82,104 -- 2,501 --
</Table>
For the Transition Period beginning January 1, 2002 and ended August
31, 2002.
5
(1) Ms. Bell received compensation as the result of her exercise
of stock options and sale of shares of common stock of
Minorplanet USA acquired through her stock option exercise in
2000. Effective August 25, 2002, Mrs. Bell resigned her
employment with Minorplanet USA to pursue other business
interests. On September 24, 2002, Ms. Bell executed an
Agreement and General Release with Minorplanet USA in exchange
for a separation payment paid by Minorplanet USA to Ms. Bell
in the amount of $175,000 and the immediate vesting of 691,834
stock options which were previously unvested. On October 22,
2002, all stock options then held by Ms. Bell were forfeited.
(2) Effective March 15, 2002, Mr. LaMere resigned his employment
with Minorplanet USA in connection with the asset sale to
Aether Systems, Inc. consummated March 15, 2002. On March 15,
2002, Mr. LaMere executed an Agreement and General Release
with Minorplanet USA in exchange for a separation payment paid
by Minorplanet USA to Mr. LaMere in the amount of $116,107, an
additional $8,380 in vacation pay and the immediate vesting of
131,107 stock options which were previously unvested.
Additionally, Mr. LaMere forfeited 262,613 unvested stock
options. During the eight month transition period ended August
31, 2002, Mr. LaMere received $105,740 in compensation as a
result of his exercise of 138,387 stock options and sale of
shares of common stock of Minorplanet USA acquired through
such stock option exercises.
(3) Effective March 15, 2002, Mr. Lamm resigned his employment
with Minorplanet USA in connection with the asset sale to
Aether Systems consummated March 15, 2002. On March 15, 2002,
Mr. Lamm executed an Agreement and General Release with
Minorplanet USA in exchange for a separation payment paid by
Minorplanet USA to Mr. Lamm in the amount of $128,350, an
additional $6,619 in vacation pay and the immediate vesting of
164,400 stock options which were previously unvested.
Additionally, Mr. Lamm forfeited 328,800 unvested stock
options. During the eight month transition period ended August
31, 2002, Mr. Lamm received $79,036 in compensation as a
result of his exercise of 148,400 stock options and sale of
shares of common stock of Minorplanet USA acquired through
such stock option exercises.
(4) Effective September 10, 2002, Mr. Felker's employment with
Minorplanet USA was terminated. On October 8, 2002, Mr. Felker
executed an Agreement and General Release with Minorplanet USA
in exchange for a separation payment paid by Minorplanet USA
to Mr. Felker in the amount of $115,135, and the immediate
vesting of 485,920 stock options which were previously
unvested. On November 9, 2002, all stock options then held by
Mr. Felker were forfeited.
(5) Mr. Bilbao received compensation as a result of his exercise
of stock options and sale of shares of common stock of
Minorplanet USA acquired through his stock option exercises in
2000.
(6) Mr. Bagley received compensation as a result of his exercise
of stock options and sale of shares of common stock of
Minorplanet USA acquired through his stock option exercises in
2000.
Stock Options. Minorplanet USA grants stock options to certain of its
executive officers and employees under the 1994 stock option plan. During the
eight month transition period ended August 31, 2002, Minorplanet USA did not
grant any stock options under the 1994 stock option plan. As of August 31, 2002,
options representing 2,577,664 shares remained outstanding under the 1994 stock
option plan, and options to purchase 3,700,282 shares remained available for
grant thereunder. Also, options representing 3,798 shares originally granted to
John Stupka, a director on Minorplanet USA's board of directors, on June 22,
1998 and not governed by a the 1994 stock option plan, remained outstanding and
fully vested.
Option Grants in Last Fiscal Year
During the eight month transition period ended August 31, 2002, no
stock options were granted to Minorplanet USA's: (a) Chief Executive Officer;
(b) former Chief Executive Officer; (c) other four most highly compensated
executive officers during the eight month transition period ended August 31,
2002; and (d) former executive officers employed for only a portion of the eight
month transition period ended August 31, 2002, who would have been included as
one of the other four most highly compensated executive officers had they been
still serving as executive officers at the end of such eight month transition
period.
6
AGGREGATED OPTION EXERCISES AND YEAR END OPTION VALUES
The following table sets forth:
o the number of options exercised during the eight month
transition period ended August 31, 2002 by the: (a) Chief
Executive Officer; (b) former Chief Executive Officer; (c)
other four most highly compensated executive officers during
the eight month transition period ended August 31, 2002; and
(d) former executive officers employed for only a portion of
the eight month transition period ended August 31, 2002, who
would have been included as one of the other four most highly
compensated executive officers had they been still serving as
executive officers at the end of the eight month transition
period;
o the number of options held by them as of August 31, 2002; and
o the value of unexercised and exercised options held by them as
of August 31, 2002, calculated as the closing price per share
of the common stock on the last trading day of the eight month
transition period, which was $0.95, less the option exercise
price, multiplied by the number of shares.
<Table>
<Caption>
Option Exercises
During
Transition Period Number of
Ended August 31, 2002 Securities Underlying Value of Unexercised
----------------------- Unexercised Options In-the-Money Options
Number of at August 31, 2002 at August 31, 2002
Shares --------------------- ---------------------
Acquired on Value Unexer- Unexer-
Name Exercise Realized Exercisable cisable Exercisable cisable
---- ----------- -------- ----------- ------- ----------- -------
Andrew Tillman -- -- -- -- -- --
Jana A. Bell -- -- 750,400 -- 0 0
Todd Felker -- -- 14,280 485,920 0 0
Marshall Lamm 148,800 $ 79,036 -- -- 0 0
Robert LaMere 138,387 $105,740 -- -- 0 0
W. Michael Smith -- -- 16,280 484,720 0 0
J. Raymond Bilbao -- -- 5,560 495,440 0 0
David Bagley -- -- 10,300 14,201 0 0
</Table>
Minorplanet USA's board of directors and its compensation committee
intend to further the interests of Minorplanet USA's stockholders by tying a
substantial portion of executive compensation to the market value of its common
stock. Toward this end, Minorplanet USA has designed its 1994 stock option plan
to support its ability to attract and retain qualified management and other
personnel necessary for its success and progress.
Savings Plan. Minorplanet USA has a 401(k) Retirement Investment
Profit-Sharing Plan that covers all of its employees once they become eligible
to participate. As permitted under the 401(k) Plan, employees may contribute up
to 20% of their pre-tax earnings. The maximum amount of contributions by any
employee each year is $11,000, the maximum amount permitted under the Internal
Revenue Code. Minorplanet USA matches 0.5% of an employee's contribution to the
401(k) Plan up to the legally permitted maximum matching of 3% of the employee's
contribution.
7
Employment Agreements
Minorplanet USA has current employment agreements with:
W. Michael Smith; and
J. Raymond Bilbao.
The terms of these employment agreements generally provide that such
officers are eligible to receive stock options in Minorplanet USA and to
participate in the incentive bonus plan for executive officers. In addition, the
agreements prohibit the officers from competing with Minorplanet USA during the
term of their employment and for eighteen months after their employment is
terminated.
In the event of a termination without cause, the employment agreement
provides for payments equal to:
o the balance of the compensation due under the agreement for
the remainder of the initial term or any renewal term, with a
minimum payment of six month's salary; and
o continued medical insurance benefits at Minorplanet USA's
expense for a period of twelve months.
If the employee is terminated within the six months prior to or within
two years following a change in control, other than for cause or death, the
employment agreements provide for payment of severance payments equal to the sum
of:
o 200% of the highest annual salary paid to the employee during
the prior two years; and
o the greater of the average of the annual discretionary bonuses
paid to the executive during the prior two years or $35,000.
The employment agreements also provide for a gross-up payment equal to
the amount of excise tax assessed on the lump severance payments. The employment
agreements further provide the same severance benefits which would be received
upon a change in control if a change in control occurs and the employee
terminates the employment agreement because of:
o the reduction of the employee's job title, position or
responsibilities without the employee's prior written consent;
o the change of the location where the employee is based to a
location which is more than fifty (50) miles from his present
location without the employee's prior written consent; or
o the reduction of the employee's annual salary and bonus by
more than 10% from the sum of the higher rate of the
employee's actual annual salary and bonus in effect within two
years immediately preceding the change of control.
Additionally upon a change in control or the termination of the
employment agreement by Minorplanet USA for a reason other than cause, all stock
options granted to the employee immediately vest. For purposes of the employment
agreements, a change in control is defined as:
o the subsequent acquisition by any person or group of 35% or
more of Minorplanet USA's securities;
o during any two year period, the members of the board of
directors at the beginning of the period cease to constitute a
majority of the board of directors unless the election or
nomination of new directors by the stockholders was approved
by 2/3 of directors still in office who were either directors
at the beginning of the period or whose election or nomination
for election was previously so approved;
o a merger of Minorplanet USA other than a merger in which the
stockholders of Minorplanet USA maintain more than 80% of the
voting control in the surviving entity or a merger effected as
part
8
of a recapitalization of Minorplanet USA in which no person
acquires more than 35% of the voting securities then
outstanding; and/or
o the approval by the stockholders of the complete liquidation
of Minorplanet USA or the sale of substantially all of the
assets of Minorplanet USA.
The initial terms of these employment agreements expired on June 21,
2002, and continue on a month to month basis until terminated by either party on
written notice.
The following paragraphs present additional details of the above
employment agreements.
W. Michael Smith. The agreement with Mr. Smith provides for Mr. Smith's
employment as Executive Vice President, Chief Financial Officer and Treasurer of
Minorplanet USA for an initial one year term which ended on June 21, 2002. The
Agreement continues on a month to month basis until terminated by either party
on written notice. The agreement granted Mr. Smith 484,120 stock options with a
3-year vesting period at an exercise price of $1.60. Under the terms of the
agreement, Mr. Smith was initially paid an annual salary of $170,100 and is
eligible for an annual discretionary bonus of 30% of his base salary pursuant to
the incentive bonus plan of executive officers. For more information regarding
the incentive bonus plan, please refer to pages 10 and 11. Effective January 1,
2002, Mr. Smith's base salary was increased to $178,600 pursuant to a meeting of
the compensation committee on March 22, 2002.
J. Raymond Bilbao. The agreement with Mr. Bilbao provides for Mr.
Bilbao's employment as Senior Vice President, General Counsel and Secretary of
Minorplanet USA for an initial term which ended on June 21, 2002. The Agreement
continues on a month to month basis until terminated by either party on written
notice. The agreement grants Mr. Bilbao 494,840 stock options with a 3-year
vesting period at an exercise price of $1.60. Under the terms of the agreement,
Mr. Bilbao was initially paid an annual salary of $170,000 and is eligible for
an annual discretionary bonus of 30% of his base salary pursuant to the
incentive bonus plan of executive officers. For more information regarding the
incentive bonus plan, please refer to pages 10 and 11. Effective January 1,
2002, Mr. Bilbao's base salary was increased to $178,500 pursuant to a meeting
of the compensation committee on March 22, 2002.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the eight month transition period ended August 31, 2002,
Minorplanet USA's former Chief Executive Officer, who was also a member of the
board of directors, annually reviewed and adjusted the salary structures of
executive officers who were not subject to employment agreements. Such decisions
were subject to review by Minorplanet USA's board of directors. During the eight
month transition period ended August 31, 2002, Minorplanet USA's board of
directors reviewed its Chief Executive Officer's compensation package.
9
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Minorplanet USA's compensation committee has prepared its report on the
eight month transition period ended August 31, 2002 executive compensation as
required by rules of the SEC. This report provides specific information
regarding compensation of Minorplanet USA's President and Chief Executive
Officer and its executive officers as a group.
Compensation Policies
Minorplanet USA structures compensation of its executives in a manner
that is intended to be competitive in the marketplace and to link compensation
to the long-term business objectives of Minorplanet USA and the enhancement of
stockholder value. Minorplanet USA has retained certain executives pursuant to
term employment contracts which govern their compensation and others are
evaluated on an ongoing basis. The initial term of these agreements expired on
June 21, 2002, after which these agreements continue on a month-to-month basis
unless terminated by either party upon thirty days advance written notice. See
"Directors and Executive Officers -- Employment Agreements" on pages 8 and 9. In
determining an executive's total compensation package, the compensation
committee considers several factors, including improvements in overall corporate
or business unit performance; increases in installed customer base; development
efforts that result in greater efficiency or competitive advantages to
Minorplanet USA; and the level of responsibility, prior experience, satisfaction
of individual performance goals and comparable industry compensation levels for
an equivalent position.
Decisions concerning compensation of executive officers with employment
contracts have been made by the compensation committee with the approval of the
board of directors. Those executives whose salaries are not established by
employment contract are set by the Chief Executive Officer and are subject to
review by the compensation committee and the board of directors. The board of
directors has delegated to the compensation committee, which currently consists
of Gerry C. Quinn, John Stupka and Robert D. Kelly, the task of discussing
strategy and policy matters related to the 1994 stock option plan, although it
also reviews other forms of compensation from time to time. None of the members
of the compensation committee is an officer or employee of Minorplanet USA or
holds options granted under the 1994 stock option plan.
Compensation Objectives
Minorplanet USA compensates its Chief Executive Officer and other
executives in a manner that is intended to:
o be competitive in the marketplace;
o link compensation to long-term business objectives; and
o link compensation to the enhancement of stockholder value.
Certain executives have been retained pursuant to term employment contracts
which govern their compensation and others are evaluated on an ongoing basis.
Minorplanet USA considers both objective and subjective criteria in determining
an executive's compensation package. These factors include:
o improvements in overall corporate performance;
o improvements in business unit performance;
o increases in installed customer base;
o development efforts that result in greater efficiency or
competitive advantage;
o level of responsibility;
o prior experience;
o satisfaction of individual performance goals; and
o comparable industry compensation for an equivalent position.
10
Components of Compensation
Minorplanet USA offers compensation to its Chief Executive Officer and
other executive officers that includes base salary, short-term cash incentive
compensation in the form of a bonus, if appropriate, and long-term incentive
compensation in the form of stock option grants. These elements are addressed
separately.
Base Salaries. Those executives whose salary structures are not
established by employment agreements are subject to annual adjustment by the
Chief Executive Officer. These adjustments and are subject to review by the
compensation committee and the board of directors, based on the compensation
policies described above. The compensation committee and the board of directors
may also consider such other factors in executive salary decisions as market
competition, inflation and other equity considerations. Salary increases reflect
job changes, promotions, market adjustment reviews and ordinary increases.
Executive salary increases during the eight month transition period ended August
31, 2002 ranged from 0% to 12%.
Eight Month Transition Period Ended August 31, 2002 Short-term
Incentives - Cash Bonuses and Commissions. Minorplanet USA has implemented an
incentive bonus plan for the members of the senior business team who report
directly to the Chief Executive Officer and for the Chief Executive Officer.
Under the incentive bonus plan in effect during the transition period ended
August 31, 2002, Minorplanet USA may pay each such person a bonus of up to 30%
of his or her base salary if he or she achieves certain defined goals and
objectives. For the Chief Executive Officer, Minorplanet USA may pay a bonus of
up to 50% of her base salary if she achieves certain defined goals and
objectives. For the Chief Executive Officer and the other executive officers,
the bonus is calculated as follows:
o 70% of the available bonus is tied directly to the achievement
of Minorplanet USA's overall business and financial goals;
o 20% of such bonus is tied to the satisfactory achievement of
each executive's individual functional area business goals;
and
o 10% of such bonus is payable at the Chief Executive Officer's
discretion, and for the Chief Executive Officer, at the
compensation committee's discretion.
Minorplanet USA's Chief Executive Officer retains the ability to
recommend to the compensation committee whether any executive achieved his or
her goals and is entitled to receive the bonus. As the Chief Executive Officer
also participates in the incentive bonus plan, the Chief Executive Officer's
bonus is directly determined by the compensation committee. As reflected in the
Summary Compensation Table of this proxy statement, no bonuses were awarded to
the Chief Executive Officer nor any other highly compensated executive officers
except for Mr. Bagley during the eight month transition period ended August 31,
2002. See "Directors and Executive Officers -- Employment Agreements" on page 8
and "Compensation of Certain Executive Officers - Summary Compensation Table" on
page 5.
Long-term Incentives - Stock Option Grants. The compensation committee
selects certain executive officers of Minorplanet USA to receive stock options
to purchase shares of common stock, which include both incentive stock options
and nonqualified stock options pursuant to the terms of the 1994 stock option
plan. The compensation committee administers the 1994 stock option plan,
determines those officers or other employees to whom options will be granted and
prescribes the terms and conditions of such options, which need not be identical
even for similarly situated employees.
The board of directors and its compensation committee intend to further
the interests of Minorplanet USA's stockholders by tying a substantial portion
of executive compensation to the market value of our common stock. Minorplanet
USA did not grant any stock options to the Chief Executive Officer or the other
executive officers during the eight month transition period ended August 31,
2002.
Policy with Respect to the $1 Million Deduction Limit
Section 162(m) of the Internal Revenue Code generally limits the U.S.
corporate income tax deduction for compensation paid to each executive officer
named in the Summary Compensation Table contained in the proxy statement of a
public company to $1 million for each year, unless certain requirements are met.
For the eight month transition period ended August 31, 2002, the limitation
imposed by Section 162(m) did not apply to the compensation paid to any
executive officers. Therefore, the board of directors has taken no action in
response to Section 162(m). The board of directors will consider actions to
qualify compensation for deduction should it appear
11
that the limits of Section 162(m) will be exceeded, but will retain the
discretion to pay non-deductible compensation if that would be in the best
interests of Minorplanet USA and its stockholders under the circumstances.
Summary
The compensation committee believes that Minorplanet USA's executive
compensation policies and actions provide Minorplanet USA's executive officers
with the appropriate incentives to achieve Minorplanet USA's short and long-term
goals and to enhance stockholder value.
COMPENSATION COMMITTEE
Gerry C. Quinn
John T. Stupka
Robert D. Kelly
12
PERFORMANCE GRAPH
The following graph compares total stockholder returns of Minorplanet
USA since December 31, 1996 to two indices:
o the NASDAQ CRSP Total Return Index for the NASDAQ Stock
Market, Composite; and
o the NASDAQ CRSP Total Return Index for Telecommunications
Stocks.
COMPARISON OF CUMULATIVE TOTAL RETURN ON INVESTMENT SINCE DECEMBER 31, 1996
[GRAPH]
<Table>
<Caption>
Nasdaq US Index Nasdaq Telecomm Index MNPL
--------------- --------------------- ------
12/31/1996 138.700 118.370 91.772
12/31/1997 169.890 172.927 28.800
12/31/1998 239.528 286.267 5.696
12/31/1999 444.239 510.585 11.392
12/31/2000 267.396 217.388 3.797
12/31/2001 212.164 145.507 7.595
8/31/2002 144.069 62.886 4.810
</Table>
The total return for Minorplanet USA's stock and for each index assumes
$100 invested on December 31, 1996 in Minorplanet USA's common stock, the NASDAQ
Composite Index and the NASDAQ Telecommunications Index, including the
reinvestment of dividends, although cash dividends have never been declared on
Minorplanet USA's stock. Minorplanet USA's common stock is traded on the NASDAQ
SmallCap Market and is a component of both the NASDAQ-US Index and the NASDAQ
Telecommunications Index.
The closing price of the common stock on the last trading day of the
eight month transition period ended August 31, 2002 was $0.95 per share.
Historical stock price performance is not necessarily indicative of future price
performance.
13
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
EQUITY COMPENSATION PLAN
The following table summarizes information about the Minorplanet USA's equity
compensation plan at August 31, 2002:
<Table>
<Caption>
(a) (b) (c)
Number of securities Weighted average Number of securities
to be exercise price of remaining available for
issued upon exercise outstanding further issuance under equity
of options, compensation plans
outstanding options, warrants and (excluding securities
Plan Category warrants and rights rights reflected in column (a))
- ------------- --------------------- ----------------- -----------------------------
Equity compensation plans 2,577,664 $1.59 3,700,282
approved by security holders
Equity compensation plans not 0 -- --
approved by security holders
--------- ----- ---------
Total 2,577,664 $1.59 3,700,282
</Table>
The following table sets forth certain information, as of December 27,
2002, regarding beneficial ownership of the common stock and the percentage of
total voting power held by:
o each stockholder who is known by Minorplanet USA to own more
than five percent (5%) of the outstanding common stock;
o each director;
o each executive officer; and
o all directors and executive officers as a group.
Unless otherwise noted, the persons named below have sole voting and investment
power with respect to such shares. The beneficial ownership information for
Mackay Shields LLC and Minorplanet Systems PLC is based on the most recent
Schedule 13D or 13G filed with the SEC by such stockholders.
<Table>
<Caption>
NUMBER OF SHARES OF
COMMON STOCK PERCENT OF CLASS
BENEFICIALLY BENEFICIALLY
NAME OF HOLDER OWNED OWNED
- -------------- ------------------- ----------------
Minorplanet Systems PLC 30,000,000 62.0%
Greenwich House
Sheepscar, Leeds LS4 2LE
United Kingdom
Mackay Shields LLC 11,249,035 23.2%
9 West 57th Street
New York, NY 10019
Gerry C. Quinn(1) 54,530 *
John T. Stupka(1) 3,798 *
Robert D. Kelly -- --
Andrew Tillman -- --
Michael Beverley -- --
</Table>
14
<Table>
<Caption>
NUMBER OF SHARES OF
COMMON STOCK PERCENT OF CLASS
BENEFICIALLY BENEFICIALLY
NAME OF HOLDER OWNED OWNED
- -------------- ------------------- ----------------
Sir Martin W. Jacomb -- --
Michael D. Abrahams -- --
David H. Bagley(1) 11,001 *
J. Raymond Bilbao(1) 5,560 *
Robert J. Lambert, Jr.(1) 12,383 *
W. Michael Smith(1) 16,280 *
Ron Thompson(1) 5,760 *
All directors and executive officers as a 109,312 *
group (12 persons)(2)
</Table>
- ---------
* Less than 1%
(1) This individual does not actually own any shares of common stock. This
number represents the number of shares that this individual may acquire
upon the exercise of stock options that are exercisable within 60 days
of December 27, 2002.
(2) All directors and executive officers (12 persons) do not actually own
any shares of common stock but collectively beneficially own 109,312
shares of common stock issuable upon the exercise of stock options that
are exercisable within 60 days of December 27, 2002.
15
CHANGE OF CONTROL OF MINORPLANET USA
As a result of the recapitalization transaction completed by
Minorplanet USA on June 21, 2001, Minorplanet Systems PLC became our majority
stockholder and now beneficially owns approximately 62% of our outstanding
common stock, or 30,000,000 shares. The details of this transaction and
Minorplanet System PLC's control rights are set forth above under the caption
"CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS - Minorplanet Systems PLC Change
of Control and Recapitalization Transactions" on page 17.
BENEFICIAL SECURITY OWNERSHIP OF DIRECTORS OR MANAGEMENT IN
MINORPLANET SYSTEMS PLC
The following table lists all directors and director nominees which
beneficially own shares in Minorplanet Systems PLC as of December 27, 2002.
<Table>
<Caption>
Amount
Name And Nature Of
Title Of Of Beneficial Beneficial Percent
Class Owner Ownership Of Class
-------- ------------- ------------- --------
Ordinary Robert D. Kelly, Director -- --
Ordinary Andrew Tillman
Chief Executive Officer 647,182(1) *
Ordinary Sir Martin W. Jacomb,
Director 715,054(2) *
Ordinary Michael D. Abrahams,
Director 2,382,041(3) 3%
Ordinary Jeffrey C. Morris
General Officer 8,727,400(4) 12%
Ordinary Officers and Directors as a
Group(5) 12,491,677 16.5%
</Table>
* Less than 1%
(1) This number includes 647,182 ordinary shares that Mr. Tillman may
acquire upon the exercise of ordinary share options that are
exercisable within 60 days of December 27, 2002.
(2) Sir Jacomb does not actually own any ordinary shares. This number
represents the number of ordinary shares that Sir Jacomb may acquire
upon the exercise of ordinary share options that are exercisable within
60 days of December 27, 2002.
(3) Mr. Abrahams is deemed to beneficially own 307,424 ordinary shares
held by his wife, Mrs. E. Abrahams and 1,103,769 shares that are held
by M. D. Abrahams & Co., a company controlled by Mr. Abrahams.
(4) Mr. Morris' is deemed to beneficially own 2,450,200 ordinary shares
held by his wife, Mrs. D. Morris.
(5) These directors and officers as a group actually own 11,824,495
ordinary shares and beneficially 667,182 ordinary shares that may be
acquired upon the exercise of ordinary share options that are
exercisable within 60 days of December 27, 2002.
16
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
MINORPLANET SYSTEMS PLC CHANGE OF CONTROL AND RECAPITALIZATION TRANSACTION
On June 21, 2001, Minorplanet USA completed the stock issuance
transactions approved by its stockholders at the 2001 annual meeting on June 4,
2001. As part of these transactions, Minorplanet USA effected the 1-for-5
reverse stock split on June 5, 2001 that was approved by its stockholders. As a
result of the closing of transactions contemplated by that certain Stock
Purchase and Exchange Agreement by and among Minorplanet USA, Minorplanet
Systems PLC and Mackay Shields LLC, dated February 14, 2001, we issued
30,000,000 shares of our common stock (post reverse stock split) in a change of
control transaction to Minorplanet Systems PLC, which is now our majority
stockholder owning approximately 62% of our common stock on a non-fully-diluted
basis, which is now our sole voting equity security. In exchange for this stock
issuance, Minorplanet Systems PLC paid us $10,000,000 in cash and transferred to
us all of the shares of its wholly-owned subsidiary, Minorplanet Limited, which
holds an exclusive, royalty-free, 99-year license to market, sale and operate
Minorplanet Systems PLC's vehicle management information technology in the
United States, Canada and Mexico. Minorplanet Systems PLC raised the $10,000,000
cash proceeds from a private placement of its shares in the United Kingdom.
Pursuant to the aforementioned purchase agreement, on June 21, 2001,
Minorplanet USA appointed two additional directors to the board of directors
that were designated by Minorplanet Systems PLC: Messrs. Robert Kelly and Andrew
Tillman. The purchase agreement provides Minorplanet Systems PLC with the right
to designate two of its directors in the future, and to maintain proportionate
representation on the board of directors and its committees. However, given
Minorplanet System PLC's current ownership, it has the right to elect all
directors if it decides to do so in the future. In addition, the purchase
agreement also provides that so long as Minorplanet Systems PLC has the right to
designate at least two directors, i.e., it owns at least 5% of the outstanding
common stock of Minorplanet USA, none of the following actions may be taken
unless approved by all of the Minorplanet Systems PLC's designated directors:
o any capital expenditure by Minorplanet USA that is not
contemplated in any current annual budget which exceeds
$200,000;
o the hiring and firing of any officer or senior executive
reporting to the chief executive officer who has an annual
salary of $130,000 or more, or entering into employment
agreements with these individuals or amendments to existing
agreements;
o the direct or indirect redemption, purchase or making of any
payments with respect to stock appreciation rights and similar
types of stock plans;
o the sale, lease or transfer of any assets of Minorplanet USA
representing 5% or more of its consolidated assets, or the
merger, consolidation, recapitalization, reclassification or
other changes to the capital stock of Minorplanet USA; except
as required under law, the taking or instituting of bankruptcy
or similar proceedings;
o the issuance, purchase, acquisition or redemption of any
capital stock or any notes or debt convertible into equity;
o the acquisition of another entity;
o the entering into any agreement or contract which commits
Minorplanet USA to pay more than $1,000,000 or with a term in
excess of 12 months and requiring payments in the aggregate
which exceed $200,000;
o the amendment of Minorplanet USA's certificate of
incorporation or bylaws that would adversely affect holders of
Minorplanet USA's common stock or Minorplanet USA's rights
under the aforementioned purchase agreement;
o the exiting of, or entering into a different line of business;
17
o the incurrence of any indebtedness or liability or the making
of any loan except in the ordinary course of business;
o the placing of any lien on Minorplanet USA's assets or
properties; or
o the adoption or implementation of any anti-takeover provision
that would adversely affect Minorplanet USA.
In addition to, and simultaneous with, the stock issuance transactions
with Minorplanet Systems PLC, we issued 12,670,497 shares of our common stock to
the then holders of our Senior Notes due 2005 in exchange for the cancellation
of senior notes with an aggregate principal amount of $80,022,000 in an exchange
offer. The total principal amount of Senior Notes that remains outstanding is
$14,333,000.
Minorplanet USA currently pays Minorplanet Limited, the operating
subsidiary of Minorplanet Systems PLC, an annual fee of $1.0 million to aid in
funding research and development of future products covered by the license
rights. The fee is to be evaluated and may be increased based on actual research
and development costs incurred by Minorplanet Systems PLC.
On September 26, 2002, we entered into a letter addendum to the
exclusive license and distribution agreement with Minorplanet Limited to provide
executive sales and marketing consulting services for the three-month period
ended November 23, 2002. Under terms of the agreement, we are not required to
pay the initial consulting fees totaling $880,000 unless and until we have filed
a Form 10-K reporting net income and positive cash flow for the previous
12-month period.
Please see the beneficial ownership table on page 16 regarding shares
of Minorplanet Systems PLC beneficially owned by our directors. The biographies
of each director disclose all positions they hold in Minorplanet Systems PLC.
REGISTRATION RIGHTS IN CONNECTION WITH THE JUNE 21, 2001 RECAPITALIZATION
TRANSACTIONS
The holders of Minorplanet USA's common stock that acquired their
shares pursuant to the June 21, 2001 purchase agreement or the exchange offer
transactions Minorplanet USA completed on June 21, 2001 are entitled to certain
registration rights pursuant to a registration rights agreement Minorplanet USA
also entered into with these stockholders. Pursuant to this registration rights
agreement, 15,293,745 shares of Minorplanet USA's common stock (2,700,000 shares
of which were owned by Minorplanet Systems PLC) were registered for resale under
a Form S-3 registration statement that was declared effective with the SEC on
October 23, 2001. On up to three separate occasions, but no more than twice in
any twelve-month period, the holders of at least ten percent (10%) of
Minorplanet USA shares that were registered are entitled to request that it
undertake an underwritten offering of such shares if the proposed offering has
anticipated aggregate proceeds in excess of $10,000,000 at the time of the
request. Minorplanet USA is required to keep this Form S-3 registration
statement effective until any holders entitled to sell shares of Minorplanet
USA's common stock under it are otherwise entitled to sell such shares without
restriction pursuant to Rule 144 under the Securities Act of 1933.
In addition to the registration rights described above, pursuant to
this registration rights agreement the holders of at least fifteen percent (15%)
of the then outstanding common stock issued pursuant to the June 21, 2001
purchase agreement and exchange offer transactions are entitled to require
Minorplanet USA, on up to five separate occasions, but no more than twice in any
twelve-month period, to register shares of its common stock for resale if the
proposed offering has anticipated aggregate proceeds in excess of $10,000,000 at
the time the registration request is made. Also, subject to certain limitations,
all of these stockholders that are deemed to be parties to this registration
rights agreement are generally entitled to include such shares (a piggyback
right) in any transaction in which Minorplanet USA sells its common stock to the
public. The foregoing registration rights are subject to limitations as to
amount by the underwriters of any offering and to black-out periods in which
Minorplanet USA's management may delay an offering for a limited period of time.
As of June 16, 2002, such stockholders were free to resell all of their
shares subject to compliance with applicable securities laws.
18
REGISTRATION STATEMENT ON FORM S-3
On September 18, 1998, Minorplanet USA completed a registration of
certain warrants and warrant shares under the Securities Act of 1933, when the
SEC declared its registration statement on Form S-3 to be effective. Minorplanet
USA was required to register these warrants and warrant shares under a warrant
registration rights agreement it entered into as part of a debt offering
completed in 1997. Under the terms of the warrant registration rights agreement,
Minorplanet USA is required to use its best efforts to keep the registration
statement continuously effective until either the warrants expire or they all
have been exercised, whichever occurs first. However, during any consecutive
365-day period, Minorplanet USA may temporarily halt the effectiveness of the
registration statement on up to two occasions for no more than 45 consecutive
days if certain conditions are met. The temporary halt must be in connection
with a proposed acquisition, business combination or other development affecting
Minorplanet USA, and the board of directors must determine that disclosure of
the proposed development would not be in the best interests of Minorplanet USA.
Minorplanet USA will not receive any income from the sale of the warrants by the
selling warrant holders. However, if or when any warrants are exercised,
Minorplanet USA will receive the exercise price for the warrant shares. During
the eight month transition period ended August 31, 2002, no warrant shares were
exercised.
REGISTRATION STATEMENT ON FORM S-8
In connection with the closing of the transactions contemplated by the
Stock Purchase and Exchange Agreement, the stockholders approved Amendment
Number 2 to Minorplanet USA's 1994 Amended and Restated Stock Option Plan (the
"Plan") which increased the number of shares of common stock available for
issuance (on a post reverse stock split basis) to 5,100,000 shares. Accordingly,
on October 10, 2001, Minorplanet USA filed a Form S-8 registration statement
covering an additional 4,729,737 shares that may be issued under the Plan.
19
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
December 27, 2002
MINORPLANET SYSTEMS USA, INC.
By: /s/ Andrew Tillman
-----------------------
Andrew Tillman,
Chief Executive Officer
20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Amendment Number 1 to the Transition Report on Form 10-K/A for the
transition period from January 1, 2002 to August 31, 2002, has been signed below
by the following persons on behalf of the Registrant in the capacities and on
the dates indicated.
<Table>
<Caption>
Signature Title Date
/s/ Andrew Tillman Chief Executive Officer, (Principal
- --------------------- Executive Officer) December 27, 2002
Andrew Tillman
/s/ W. Michael Smith Executive Vice President and
- --------------------- Chief Financial Officer
W. Michael Smith (Principal Financial and Accounting Officer) December 27, 2002
/s/ Michael Beverley
- ---------------------
Michael Beverley Director December 27, 2002
/s/ Robert Kelly
- ---------------------
Robert Kelly Director December 27, 2002
/s/ Gerry C. Quinn
- ---------------------
Gerry C. Quinn Director December 27, 2002
/s/ John T. Stupka
- ---------------------
John T. Stupka Director December 27, 2002
/s/ Michael Abrahams
- ---------------------
Michael Abrahams Director December 27, 2002
/s/ Sir Martin Jacomb
- ---------------------
Sir Martin Jacomb Director December 27, 2002
</Table>
21
CERTIFICATION
I, Andrew Tillman, certify that:
1. I have reviewed this Amendment Number 1 to the transition report on
Form 10-K/A of Minorplanet Systems USA, Inc.;
2. Based upon my knowledge, this transition report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this transition report;
3. Based upon my knowledge, the financial statements, and other financial
information included in this transition report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this transition report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in the Exchange Act Rules 13a-14 and 15d-14), for the
registrant and have:
a. Designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its controlled subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this transition report is being prepared;
b. Evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this transition report (the "Evaluation
Report");
c. Presented in this transition report our conclusions about
the effectiveness of the disclosure controls and procedures
based upon our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of the registrant's board of directors (or persons
performing the equivalent functions);
a. All significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in internal
controls; and
b. Any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in
this transition report whether there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date December 27, 2002
By (x) Andrew Tillman
------------------
Andrew Tillman, Chief Executive Officer
----------------------------------------
22
CERTIFICATION
I, W. Michael Smith, certify that:
I have reviewed this Amendment Number 1 to the transition report on Form
10-K/A of Minorplanet Systems USA, Inc.;
1. Based upon my knowledge, this transition report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this transition report;
2. Based upon my knowledge, the financial statements, and other financial
information included in this transition report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this transition report;
3. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in the Exchange Act Rules 13a-14 and 15d-14), for the
registrant and have:
a. Designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its controlled subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this transition report is being prepared;
b. Evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this transition report (the "Evaluation
Report");
c. Presented in this transition report our conclusions about
the effectiveness of the disclosure controls and procedures
based upon our evaluation as of the Evaluation Date;
4. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of the registrant's board of directors (or persons
performing the equivalent functions);
d. All significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in internal
controls; and
e. Any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
5. The registrant's other certifying officers and I have indicated in
this transition report whether there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date December 27, 2002
By (x) W. Michael Smith
--------------------
W. Michael Smith, Executive Vice President, Chief Financial Officer &
---------------------------------------------------------------------
Treasurer
---------
23
INDEX TO EXHIBITS
<Table>
<Caption>
EXHIBIT
NUMBER TITLE
- ------- -----
2.1 - Stock Purchase and Exchange Agreement by and between the Company, Minorplanet
Systems PLC and Mackay Shields LLC, dated February 14, 2001.(21)
2.2 - Asset Purchase Agreement by and between the Company and Aether Systems, Inc.
dated March 15, 2002.(22)
3.1 - Restated Certificate of Incorporation of the Company, as amended.(29)
3.2 - Second Amended and Restated By-Laws of the Company.(20)
4.1 - Specimen of certificate representing Common Stock, $.01 par value, of the
Company.(1)
4.2 - Indenture dated September 23, 1997 by and among the Company, HighwayMaster
Corporation and Texas Commerce Bank, National Association (the "Indenture").(8)
4.3 - First Supplemental Indenture, dated June 20, 2001, to the Indenture.(28)
4.4 - Pledge Agreement dated September 23, 1997, by and among the Company, Bear,
Stearns & Co. Inc. and Smith Barney Inc.(8)
4.5 - Registration Rights Agreement dated September 23, 1997, by and among the
Company, HighwayMaster Corporation, Bear, Stearns & Co. Inc. and Smith Barney
Inc.(8)
4.9 - Warrant Registration Rights Agreement dated September 23, 1997, by and among the
Company, Bear, Stearns & Co. Inc. and Smith Barney, Inc.(8)
10.1 - Registration Rights Agreement by and between the Company, Minorplanet Systems
PLC and Mackay Shields LLC, dated as of June 21, 2001.(23)
10.2 - Exclusive License and Distribution Agreement by and between Minorplanet Limited,
(an @Track subsidiary) and Mislex (302) Limited, dated June 21, 2001(20)
10.3 - Amended and Restated 1994 Stock Option Plan of the Company, dated February 4,
1994.(1)(4)(5)
10.4 - Amendment No. 1 to the Amended and Restated 1994 Stock Option Plan.(24)
10.5 - Amendment No. 2 to the Amended and Restated 1994 Stock Option Plan.(25)
10.6 - Amendment No. 3 to the Amended and Restated 1994 Stock Option Plan.(30)
10.7 - Stock Option Agreement, dated June 22, 1998, by and between the Company and John
Stupka.(10)
10.8 - Product Development Agreement, dated December 21, 1995, between HighwayMaster
Corporation and IEX Corporation.(2)(3)
10.9 - Software Transfer Agreement, dated April 25, 1997, between HighwayMaster
Corporation and Burlington Motor Carriers, Inc.(6)(7)
10.10 - Lease Agreement, dated March 20, 1998, between HighwayMaster Corporation and
Cardinal Collins Tech Center, Inc.(9)
10.11 - Stock Option Agreement dated November 24, 1998, by and between the Company and
Michael Smith.(10)
10.12 - Agreement No. 980427 between Southwestern Bell Telephone Company, Pacific Bell,
Nevada Bell, Southern New England Telephone and HighwayMaster Corporation
executed on January 13, 1999.(11)(12)
10.13 - Administrative Carrier Agreement entered into between HighwayMaster Corporation
and Southwestern Bell Mobile Systems, Inc. on March 30, 1999.(11)(12)
10.14 - Addendum to Agreement entered into between HighwayMaster Corporation and
International Telecommunications Data Systems, Inc. on February 4, 1999.(11)(12)
10.15 - Second Addendum to Agreement entered into between HighwayMaster
</Table>
<Table>
<Caption>
EXHIBIT
NUMBER TITLE
- ------- -----
Corporation and International Telecommunications Data Systems, Inc. on
February 4, 1999.(11)(12)
10.16 - Stock Option Agreement dated June 24, 1999, by and between the Company and J.
Raymond Bilbao.(13)
10.17 - Fleet-on-Track Services Agreement entered into between GTE Telecommunications
Services Incorporated and HighwayMaster Corporation on May 3, 1999.(13)(14)
10.18 - Stock Option Agreement dated September 3, 1999, by and between the Company and
J. Raymond Bilbao.(15)
10.19 - Stock Option Agreement dated September 3, 1999, by and between the Company and
W. Michael Smith.(15)
10.20 - Limited Liability Company Agreement of HighwayMaster of Canada, LLC executed
March 3, 2000.(16)
10.21 - Monitoring Services Agreement dated May 25, 2000, by and between the Company and
Criticom International Corporation.(17)(18)
10.22 - Commercial Lease Agreement dated April 26, 2000 by and between the Company and
10th Street Business Park, Ltd.(18)
10.23 - Stock Option Agreement dated July 18, 2001, by and between the Company and J.
Raymond Bilbao(19)
10.24 - Stock Option Agreement dated June 21, 2001, by and between the Company and J.
Raymond Bilbao(19)
10.25 - Stock Option Agreement dated July 18, 2001, by and between the Company and W.
Michael Smith(19)
10.26 - Stock Option Agreement dated June 21, 2001, by and between the Company and W.
Michael Smith(19)
10.27 - Employment Agreement, dated June 21, 2001, between J. Raymond Bilbao and the
Company(20)
10.28 - Employment Agreement, dated June 21, 2001, between W. Michael Smith and the
Company(20)
10.29 - Agreement No. 980427-03, dated January 31, 2002 between SBC Ameritech, SBC
Pacific Bell, SBC Southern New England Telephone, SBC Southwestern Bell
Telephone, L.P. and the Company(27)(28)
10.30 - Agreement and General Release Between the Company and Todd A. Felker dated
October 8, 2002(31)
10.31 - Agreement and Mutual Release Between the Company and Jana A. Bell dated
September 24, 2002(31)
11.0 - Statement Regarding Computation of Per Share Earnings(31)
16.1 - Letter from Arthur Andersen to the SEC (Omitted pursuant to Item 304T of
Regulation S-K)
21.1 - List of Subsidiaries of Registrant(31)
23.1 - Consent of Deloitte & Touche LLP(31)
99.0 - Receipt of representation from Arthur Andersen, LLP(26)
99.1 - Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, by Andrew Tillman, Chief
Executive Officer(32)
99.2 - Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, by W. Michael Smith, Executive
Vice President and Chief Financial Officer(32)
</Table>
- -------
(1) Filed in connection with the Company's Registration Statement on Form
S-1, as amended (No. 33-91486), effective June 22, 1995.
(2) Filed in connection with the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1995.
(3) Certain confidential portions deleted pursuant to Application for
Confidential Treatment filed in connection with the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1995.
(4) Indicates management or compensatory plan or arrangement required to be
identified pursuant to Item 14(a)(4).
(5) Filed in connection with the Company's Form 10-Q Quarterly Report for
the quarterly period ended June 30, 1996.
(6) Filed in connection with the Company's Form 10-Q Quarterly Report for
the quarterly period ended March 31, 1997.
(7) Certain confidential portions deleted pursuant to Order Granting
Application for Confidential Treatment issued in connection with the
Company's Form 10-Q Quarterly Report for the quarterly period ended
March 31, 1997.
(8) Filed in connection with the Company's Registration Statement on Form
S-4, as amended (No. 333-38361).
(9) Filed in connection with the Company's Form 10-Q Quarterly Report for
the quarterly period ended September 30, 1998.
(10) Filed in connection with the Company's Form 10-K fiscal year ended
December 31, 1998.
(11) Filed in connection with the Company's Form 10-Q Quarterly Report for
the quarterly period ended March 31, 1999.
(12) Certain confidential portions deleted pursuant to Order Granting
Application for Confidential Treatment issued June 22, 1999 in
connection with the Company's Form 10-Q Quarterly Report for the
quarterly period ended March 31, 1999.
(13) Filed in connection with the Company's Form 10-Q Quarterly Report for
the quarterly period ended June 30, 1999.
(14) Certain confidential portions deleted pursuant to letter granting
application for confidential treatment issued October 10, 1999 in
connection with the Company's Form 10-Q Quarterly Report for the
quarterly period ended June 30, 1999.
(15) Filed in connection with the Company's Form 10-Q Quarterly Report for
the quarterly period ended September 30, 1999.
(16) Filed in connection with the Company's Form 10-Q Quarterly Report for
the quarterly period ended March 31, 2000.
(17) Certain confidential portions deleted pursuant to Order Granting
Application for Confidential Treatment issued December 5, 2000 in
connection with the Company's Form 10-Q Quarterly Report for the
quarterly period ended June 30, 2000.
(18) Filed in connection with the Company's Form 10-Q Quarterly Report for
the quarterly period ended June 30, 2000.
(19) Filed in connection with the Company's Form 10-Q Quarterly Report for
the quarterly period ended September 30, 2001.
(20) Filed in connection with the Company's Current Report on Form 8-K filed
with the SEC on June 29, 2001.
(21) Filed as Appendix A to the Company's Definitive Proxy Statement on
Schedule 14A filed with the SEC on May 11, 2001.
(22) Filed in connection with the Company's Current Report on Form 8-K filed
with the SEC on March 27, 2002. Certain confidential portions deleted
pursuant to Order Granting Application for Confidential Treatment
issued in connection with the Company's Current Report on Form 8-K
filed with the SEC on March 27, 2002.
(23) Filed in connection with the Company's Form S-3 Registration Statement
filed with the SEC on October 10, 2001 (File No. 333-71340).
(24) Incorporated by reference to Exhibit A to the proxy statement contained
in the Company's Definitive Schedule 14A with the SEC on April 25,
2000.
(25) Incorporated by reference to Exhibit F to the proxy statement contained
in the Company's Definitive Schedule 14A filed with the SEC on May 11,
2001.
(26) Filed in connection with the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2001.
(27) Filed in connection with the Company's Form 10-Q Quarterly Report for
the quarterly period ending March 31, 2002.
(28) Certain confidential portions deleted pursuant to Order Granting
Application for Confidential Treatment issued in connection with the
Company's Quarterly Report on Form 10-Q for the quarterly period ending
March 31, 2002.
(29) Incorporated by reference to Exhibit A to the information statement
contained in the Company's Definitive Schedule 14C filed with the SEC
on June 27, 2002.
(30) Filed in connection with the Company's Form 10-Q Quarterly Report for
the quarterly period ending June 30, 2002.
(31) Filed in connection with the Company's Form 10-K Transition Report for
the eight month period ending August 31, 2002.
(32) Filed herewith.