U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON DC 20549
FORM 10-QSB
(Mark One)
_X_ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 1, 2000
___ TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______ .
Commission File No. 0-27780
UNITED SHIPPING & TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
Utah 87-0355929
- ------------------------------------ -------------------------------------
(State or Other Jurisdiction (IRS Employer Identification No.)
of Incorporation or Organization)
9850 51st Avenue North, Suite 110, Minneapolis, MN 55442
--------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (612) 941-4080
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 ( )
As of February 1, 2000, there were 15,164,850 shares of common stock of the
registrant issued and outstanding.
Transitional Small Business Disclosure.
YES _____ NO __X__
<PAGE>
UNITED SHIPPING & TECHNOLOGY, INC.
FORM 10-QSB
FOR THE QUARTER ENDED JANUARY 1, 2000
INDEX
Page
----
PART I. FINANCIAL INFORMATION................................................3
ITEM 1.
a) Consolidated Financial Statements................................3
b) Consolidated Balance Sheets - January 1, 2000 and
June 30, 1999....................................................3
c) Consolidated Statements of Operations -
Three and Six months ended January 1, 2000
and January 2, 1999..............................................4
d) Consolidated Statements of Cash Flows -
Six months ended January 1, 2000 and
January 2, 1999..................................................5
e) Notes to Consolidated Financial Statements.......................6
ITEM 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations...................10
PART II. OTHER INFORMATION...................................................15
ITEM 1. Legal Proceedings...............................................15
ITEM 2. Changes in Securities and Use of Proceeds.......................15
ITEM 3. Defaults upon Senior Securities.................................16
ITEM 4. Submission of Matters to a Vote of Securities Holders...........16
ITEM 5. Other Information...............................................16
ITEM 6. Exhibits........................................................16
SIGNATURES....................................................................18
EXHIBIT INDEX.................................................................19
2
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UNITED SHIPPING & TECHNOLOGY, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Amounts in thousands, except share data)
<TABLE>
<CAPTION>
January 1, 2000 June 30, 1999
--------------- ---------------
(UNAUDITED)
ASSETS
<S> <C> <C>
Current assets:
Cash $ 6,258 $ 252
Accounts receivable, net of allowance for 66,807 275
doubtful accounts
Stock subscription receivable 4,500 250
Other current assets 4,240 1,199
--------------- ---------------
Total current assets 81,805 1,976
Property and equipment:
Land 779
Buildings and leasehold improvements 1,745
Furniture, equipment and vehicles 14,813 1,811
--------------- ---------------
17,337 1,811
Less: accumulated depreciation (1,996) (953)
--------------- ---------------
15,341 858
Goodwill 49,670 1,426
Other assets, net 2,711 128
--------------- ---------------
Total assets $ 149,527 $ 4,388
=============== ===============
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Trade accounts payable 23,041 557
Accrued auto and workers' compensation claims 20,647
Other accrued liabilities 37,464 228
Current portion of long-term debt and capital leases 6,799 40
--------------- ---------------
Total current liabilities 87,951 825
Long-term debt and capital leases 54,796 617
--------------- ---------------
Total liabilities 142,747 1,442
Shareholders' equity:
Common stock, $0.004 par value, 15,026,120 and 10,610,537 shares
issued and outstanding in 2000 and 1999, respectively 60 42
Additional paid-in capital 32,213 15,571
Accumulated deficit (25,514) (12,667)
Foreign currency translation 21
--------------- ---------------
Total shareholders' equity 6,780 2,946
--------------- ---------------
Total liabilities and shareholders' equity $ 149,527 $ 4,388
=============== ===============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
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UNITED SHIPPING & TECHNOLOGY, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(UNAUDITED)
(Amounts in thousands, except share data)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
January 1, 2000 January 2, 1999 January 1, 2000 January 2, 1999
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Revenue $ 138,908 $ 148 $ 192,632 $ 272
Cost of services 112,398 119 154,837 247
--------------- --------------- --------------- ---------------
Gross profit 26,510 29 37,795 25
Selling, general and administrative expenses 36,602 699 49,366 1,321
--------------- --------------- --------------- ---------------
Loss from operations (10,092) (670) (11,571) (1,296)
Interest expense 1,560 3 1,752 6
Other income (408) (454)
Interest income (14) (17) (22) (42)
--------------- --------------- --------------- ---------------
--------------- --------------- --------------- ---------------
Net loss $ (11,230) $ (656) $ (12,847) $ (1,260)
=============== =============== =============== ===============
Basic and diluted net loss per share $ (0.86) $ (0.13) $ (1.08) $ (0.25)
=============== =============== =============== ===============
--------------- --------------- --------------- ---------------
Basic and diluted weighted average number
of common shares outstanding 13,111,380 5,001,448 11,933,084 4,990,579
=============== =============== =============== ===============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
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UNITED SHIPPING & TECHNOLOGY, INC. AND SUBSIDIARIES
Consolidated Statement of Cash Flows
(UNAUDITED)
(Amounts in thousands, except share data)
<TABLE>
<CAPTION>
Six Months Ended
----------------
January 1, 2000 January 2, 1999
--------------- ---------------
<S> <C> <C>
OPERATING ACTIVITIES
Net Loss $ (12,847) $ (1,260)
Adjustments to reconcile net loss to net cash flows
used for operating activities-
Depreciation and amortization 3,275 201
Equity instruments issued in lieu of services received 4,307 --
(Gain)/Loss on retirement of equipment (68) --
Change in operating assets and liabilities:
Accounts receivable (5,051) (57)
Other current assets 1,735 (165)
Other assets (693) (204)
Accounts payable 4,924 311
Accrued liabilities and deferred revenue 259 (75)
--------------- ---------------
Cash used by operating activities (4,159) (1,249)
--------------- ---------------
</TABLE>
5
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<TABLE>
<S> <C> <C>
INVESTING ACTIVITIES
Proceeds from sale of equipment 187 --
Purchases of property and equipment (799) (196)
Acquisition of business, net of cash received (55,572) (90)
Redemption of short-term investments -- 1,700
Other, net 138 --
--------------- ---------------
Cash provided by (used in) investing activities (56,046) 1,414
--------------- ---------------
FINANCING ACTIVITIES
Payments on notes payable and long-term debt (3,168) (37)
Proceeds from notes payable and long-term debt 61,827 --
Proceeds from stock subscription 250 --
Proceeds from sale of common stock 7,282 --
--------------- ---------------
Cash provided (used) by financing activities 66,191 (37)
--------------- ---------------
Effect of currency exchange rate changes on cash 20 --
--------------- ---------------
Net increase (decrease) in cash and cash equivalents 6,006 128
Cash and cash equivalents, beginning of period 252 154
--------------- ---------------
--------------- ---------------
Cash and cash equivalents, end of period $ 6,258 $ 282
=============== ===============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
--------------- ---------------
Cash paid for interest $ 1,107 $ 6
=============== ===============
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES
Issuance of common stock through the conversion of debt $ 616 $ --
Issuance of common stock in exchange for the subscription
receivable 4,500 --
Value of warrants issued in lieu of services performed 45 --
Property and equipment returned to inventory $ 113 $ 380
Assets acquired in connection with the
acquisition of Jel Trucking, Inc. were as follows:
Allocation of cost based on fair value of assets acquired:
Property and equipment $ -- $ 62
Intangible assets -- 88
--------------- ---------------
-- 150
Less fair market value of common stock issued -- 60
--------------- ---------------
Net cash paid for acquisition $ -- $ 90
=============== ===============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
UNITED SHIPPING & TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
The consolidated financial statements included herein have been prepared by
United Shipping & Technology, Inc. which, together with its wholly-owned
subsidiaries, shall be referred to herein as the "Company," without audit,
pursuant to the rules and regulations of the Securities and Exchange Commission.
In the opinion of the Company, all adjustments consisting only of normal
recurring adjustments, necessary to present fairly the financial position of the
Company as of January 1, 2000, and the results of its operations for the three
and six months ended January 1, 2000 and January 2, 1999, and its cash flows for
the six months ended January 1, 2000 and January 2, 1999 have been included.
Certain information in footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations, although
the Company believes that the disclosures are adequate to make the information
presented not misleading. These consolidated financial statements should be read
in conjunction with the financial statements for the
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year ended June 30, 1999, and the footnotes thereto, included in the Company's
Report on Form 10-KSB, filed with the Securities and Exchange Commission.
1. Basis of Presentation:
Principles of consolidation - The consolidated financial statements include the
accounts of United Shipping & Technology, Inc. and its wholly owned
subsidiaries. All inter-company balances and transactions have been eliminated
in the consolidation.
Change in Fiscal Year - On November 10, 1999, the Company approved a change in
its fiscal year from a June 30th year end to a 52-53 week fiscal year ending on
the Saturday closest to June 30th, beginning in fiscal year 2000. Each quarter
will consist of a 13-week period ending on a Saturday. In fiscal years
consisting of 53 weeks, the final quarter will consist of 14 weeks. For fiscal
2000, the quarter end dates are October 2, 1999, January 1, 2000, April 1, 2000
and July 1, 2000.
2. Revenue Recognition:
The Company has historically generated revenue from: Same-day delivery
operations conducted through the Company's Advanced Courier Services, Inc.
subsidiary, and to a lesser extent, the per-package shipping revenue generated
from ongoing shipping volume at its intelligent shipping kiosks (ISKs), and the
sale of ISKs and custom built intelligent kiosks. Revenues for the six months
ended January 1, 2000 also include revenues from the Company's newly-acquired
same-day delivery business subsidiary, UST Delivery Services,Inc. ("Delivery
Services"), since the August 28, 1999 acquisition date.
Revenue from the same-day delivery services is recognized when services are
rendered to customers. Package shipping revenue is recognized when the package
is shipped.
3. Basic and Diluted Loss Per Share:
Basic loss per share excludes dilution and was computed by dividing net loss by
the weighted average number of shares of common stock outstanding during the
period. Dilutive loss per share reflects the potential dilution that could occur
if securities or other obligations to issue common stock were exercised or
converted into common stock or resulted in the issuance of common stock that
then shared in the earnings or losses of the Company. For all periods presented,
basic and diluted loss per share were equal, as the inclusion of dilutive
securities would be antidilutive. Total options and warrants outstanding as of
January 1, 2000 and January 2, 1999 were 5,328,571 and 4,662,870, respectively.
4. Comprehensive Loss:
Comprehensive loss was $(11,223), $(656) $(12,826) and $(1,260) for the three
months ended January 1, 2000, the three months ended January 2, 1999, the six
months ended January 1, 2000 and the six months ended January 2, 1999,
respectively. The difference between net loss and total comprehensive loss, if
any, related to foreign currency translation adjustments.
5. Use of Estimates:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
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Actual results could differ from those estimates.
6. Acquisitions:
On September 24, 1999 (with an effective date of August 28, 1999), the Company
acquired from CEX Holdings, Inc. ("CEX") all the outstanding shares of common
stock of Corporate Express Delivery Systems, Inc. ("CEDS"), a provider of same
day delivery solutions. The purchase price was approximately $62,500, subject to
adjustment as defined in the merger agreement. The purchase price is expected to
be finalized by the end of the fiscal year. The purchase price consisted of
$43,000 in cash provided by institutional debt financing from General Electric
Capital Corporation ("GE") and Bayview Capital Partners, LP ("Bayview"), and the
remainder in a combination of short and long-term notes issued to CEX (see Note
7). The acquisition has been accounted for under the purchase method of
accounting. The excess purchase price over the estimated fair value of the net
tangible assets acquired has been allocated to goodwill and is being amortized
on a straight-line basis over 15 years.
The purchase price allocation is preliminary, as the purchase price has not been
finalized with CEX and the Company has not had sufficient amount of time to
finalize the valuation of certain assets and liabilities acquired or evaluate
the effects of deferred taxes. The Company expects to make adjustments to the
allocation of the purchase price by the end of this fiscal year.
In connection with the August 28, 1999 acquisition of CEDS, management
formulated a plan to involuntarily terminate approximately 100 employees and to
consolidate certain facilities. Approximately $2,430 in anticipated costs
relating to such items was included in the acquisition cost allocation. This
plan has not been completely finalized, and adjustments to the acquisition cost
allocation may be made prior to the plan's anticipated completion, which is one
year. As of January 1, 2000 approximately $233 in costs (primarily related to
severance payments) were charged against the reserve and no amounts related to
such plan have been included in the determination of net loss for the period.
In connection with the acquisition of CEDS, the Company incurred or may incurr
fees for merger and acquisition related services totalling $5,000. These fees
consist of $3,000 upon the closing of the transaction and possible contingent
payments of $2,000. The contingent payments are due in annual increments of
$1,000 in fiscal years 2001 and 2002, upon the Company achieving various revenue
targets. The Company has currently paid $800 of the initial payment, with the
remainder payable in the third quarter of fiscal year 2000. Given the nature of
the contingent portion of the agreement, the Company will recognize the expense
associated with those payments at the time the targets are achieved. If the
revenue targets are not achieved the Company is not liable for the contingent
portion of the agreement.
The following unaudited pro forma financial information gives effect to the CEDS
acquisition as if it had occurred at the beginning of fiscal years 2000 and
1999. The pro forma results were prepared for comparative purposes only and are
not indicative of the results of operations which actually would result had the
acquisition occurred on the date indicated, or which may result in the future.
Six Months Ended
----------------
January 1, January 2,
2000 1999
Revenue $ 279,227 $ 312,862
Loss from operations (18,833) (14,665)
Net loss (14,583) (16,798)
Basic and diluted loss per share (1.22) (3.37)
Basic and diluted weighted average
common shares outstanding 11,933,084 4,990,579
7. Long-term Debt and Capital Leases:
Long-term debt and capital leases consisted of the following:
January 1, 2000 June 30, 1999
GE Revolving Note $ 41,029 0
Bayview Senior Subordinated Note and Warrant 3,292 0
Long-term Subordinated Note to CEX 6,519 0
Short-term Subordinated Note to CEX 4,404 0
Convertible Subordinated Note to CEX 3,600 0
6% Convertible Subordinated Note 2,190 0
Various Other Notes and Leases 561 657
------ -----
61,595 657
Less current maturities 6,799 40
------ -----
Total 54,796 617
====== =====
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<PAGE>
Borrowings under the GE Revolving Note are limited to the lesser of $55,000 or
an amount based on a defined portion of receivables less the amount outstanding
on the $5,000 Swing Line Note issued to GE. Interest is payable monthly at a
rate of Prime plus 0.6% (9.1% at January 1, 2000). The Company may elect the
rate of LIBOR plus 3% at its discretion from time to time. All amounts advanced
are due September 23, 2004. In addition, the Company is required to pay a
commitment fee of 0.375% on unused amounts of the total commitment, as defined
in the agreement.
The Bayview Senior Subordinated Note has interest payable quarterly at 12% and
is due September 30, 2004. The note is subordinate to the GE Revolving Note. The
initial carrying value of the Senior Subordinated Note was reduced by $1,708 for
the estimated fair value of the common stock warrant issued to Bayview, recorded
as Additional Paid in Capital on the financial statements. The unamortized
discount aggregated $1,595 at January 1, 2000. The discount is amortized over
the life of the note. The warrant has an exercise price of $3.3125 per share and
entitles Bayview to acquire, in whole or in part, 1,366,200 shares of the
Company's common stock, subject to adjustment for certain anti-dilution rights
as defined in the warrant purchase agreement. The Company is required to redeem
the warrants or repurchase the stock issued upon exercise at the request of the
holder or upon the happening of certain events, such as default, the sale of 50%
of the Company's stock or assets, or after the fifth anniversary of the date of
the warrant. The purchase price for the common stock upon exercise of the
warrant is at the market value (as defined in the warrant purchase agreement) of
the Company's common stock. The future carrying value of the warrant will be
adjusted periodically to its then estimated redemption value.
The Long-term Subordinated Note issued to CEX has interest payable quarterly at
12% and is due September 24, 2004. The note is subordinate to the GE Revolving
Note and the Bayview Senior Subordinated Note.
The $7,500 Short-term Subordinated Note issued to CEX has interest payable
quarterly at 9% and is due September 24, 2000. The note was reduced by the
mandatory prepayment from the exercise of the Company's warrants issued in
connection with the purchase of its Series A Preferred Stock in April and June
of 1998. The note is subordinate to the GE Revolving Note and the Bayview Senior
Subordinated Note.
The Convertible Subordinated Note issued to CEX has interest payable quarterly
at 6% and is due September 24, 2004. The note is subordinate to the Revolving
Note and the Senior Subordinated note. The note is convertible in whole or in
part into shares of the Company's common stock at an exchange rate of $4.59 per
share to a maximum of 784,314 shares, subject to certain anti-dilution rights
under an exchange agreement entered into in connection with the Convertible
Subordinated Note.
Substantially all of the assets and operations of the Company's Delivery Systems
subsidiary have been pledged to secure borrowing under the GE Revolving Note,
the Bayview Senior Subordinated Note and the CEX subordinated notes. The Company
is subject to certain restrictive covenants, the more significant of which
include limitations on dividends, loans and investments, capital expenditures,
new indebtedness and changes in capital structure. The Company is also required
to maintain certain financial covenants related to minimum EBITDA and minimum
fixed charge coverage ratio. The agreements with the lenders also require the
Company to obtain the consent of the lenders for additional acquisitions.
As a result of the acquisition of CEDS, the Company is also liable on a 6%
Convertible Subordinated Note. This Note was due January 31, 2000. The Company
has reached a tentative agreement with the holder of the Note to extend the
terms beyond January 31, 2000. Interest is payable quarterly.
On September 25, 1999, a $600 12% convertible note (plus accrued interest
thereon) was converted into 135,044 shares of common stock and a one year
warrant to purchase 33,758 shares of common stock at an exercise price of $4.57
per share.
8. Commitments and Contingencies:
The Company leases equipment, vehicles and buildings under various
non-cancelable operating and capital lease agreements with terms generally
ranging from three to ten years. Future minimum lease commitments under
9
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non-cancelable leases at January 1, 2000 range from $50,000 to $60,000. The
Company has not completed the valuation of these commitments and expects to
complete the valuation by the end of this fiscal year.
The Company is self-insured for automobile and workers' compensation claims.
However, the Company has elected to retain a portion of expected losses through
the use of deductibles. Provisions for losses expected under these programs are
recorded based upon the Company's estimates of the aggregate liability for
claims incurred. These estimates include the Company's actual experience based
on information received from the Company's insurance carriers and historical
assumptions of development of unpaid liabilities over time.
9. Equity:
The Company continues its efforts to reduce debt and raise additional cash for
acquisitions and working capital needs. In September 1999, four investors
converted their 1998 Notes in the aggregate principal amount of $600 plus
accrued interest to 135,044 shares of the Company's common stock at a purchase
price of $4.57 per share, and one-year warrants to purchase an aggregate of
33,758 shares of the Company's common stock at an exercise price of $4.57 per
share. Also in September 1999, in connection with the CEDS purchase, the Company
called the warrants issued in connection with its sale in April and June of 1998
of its Series A Preferred stock, and raised an additional $3,461 through the
issuance of 1,977,748 shares of Common Stock. In October 1999, the Company sold
to five accredited investors 124,000 shares of common stock at a purchase price
of $4.50 per share, together with warrants to purchase an aggregate of 41,333
shares of common stock at an exercise price of $4.50 per share for a period of
one year. In December 1999, the Company sold to an accredited investor 50,000
shares of common stock at a purchase price of $6.375 per share, together with a
warrant to purchase 5,000 shares of common stock at an exercise price of $6.375
per share for a period of five years. In December 1999, the Company also sold to
seven institutional investors an aggregate of 1,791,044 shares of common stock
at a purchase price of $5.025 per share, together with warrants to purchase an
aggregate of 179,104 shares of common stock at an exercise price of $12.50 per
share for a period of five years. The Company has recorded a subscription
receivable in the amount of $4,500 at the end of the quarter associated with the
sale of this stock. The cash related to this receivable was received on January
4, 2000. During the first six months of fiscal 2000, the Company also issued
337,747 shares of common stock through various stock sales and warrant
exercises. Total proceeds from these transactions amounted to $917. In January
2000, the Company sold to a director 22,083 shares of common stock at a purchase
price of $4.50 per share, in repayment of an existing debt for consulting fees
performed on behalf of the Company. Also in January 2000, the Company sold to
five accredited investors an aggregate of 25,000 shares of common stock at a
purchase price of $5.025 per share, together with warrants to purchase an
aggregate of 2,500 shares of common stock at an exercise price of $12.50 per
share for a period of five years.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
UNITED SHIPPING & TECHNOLOGY, INC. AND SUBSIDIARIES
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
IN ACCORDANCE WITH THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995, THE COMPANY NOTES THAT CERTAIN
STATEMENTS IN THIS FORM 10-QSB AND ELSEWHERE WHICH ARE FORWARD-LOOKING AND WHICH
PROVIDE OTHER THAN HISTORICAL INFORMATION, INVOLVE RISKS AND UNCERTAINTIES THAT
MAY IMPACT THE COMPANY'S RESULTS OF OPERATIONS. THESE FORWARD-LOOKING STATEMENTS
INCLUDE, AMONG OTHERS, STATEMENTS CONCERNING THE COMPANY'S GENERAL BUSINESS
STRATEGIES, FINANCING DECISIONS, AND EXPECTATIONS FOR FUNDING CAPITAL
EXPENDITURES AND OPERATIONS IN THE FUTURE. WHEN USED HEREIN, THE WORDS
"BELIEVE," "PLAN," "CONTINUE," "HOPE," "ESTIMATE," "PROJECT," "INTEND,"
"EXPECT," AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY SUCH FORWARD-LOOKING
STATEMENTS. ALTHOUGH THE COMPANY BELIEVES THAT THE EXPECTATIONS REFLECTED IN
SUCH FORWARD-LOOKING STATEMENTS ARE BASED ON REASONABLE ASSUMPTIONS, NO
STATEMENTS CONTAINED IN THIS FORM 10-QSB SHOULD BE RELIED UPON AS PREDICTIONS OF
FUTURE EVENTS. SUCH STATEMENTS ARE NECESSARILY DEPENDENT ON ASSUMPTIONS, DATA OR
METHODS THAT MAY BE INCORRECT OR IMPRECISE AND MAY BE INCAPABLE OF BEING
REALIZED. THE RISKS AND UNCERTAINTIES INHERENT IN THESE FORWARD-LOOKING
STATEMENTS COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED
IN OR IMPLIED BY THESE STATEMENTS.
READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THE
FORWARD-LOOKING STATEMENTS CONTAINED HEREIN, WHICH SPEAK ONLY AS OF THE DATE
HEREOF. THE INFORMATION CONTAINED IN THIS FORM 10-QSB IS BELIEVED BY THE COMPANY
TO BE ACCURATE AS OF THE DATE HEREOF. CHANGES MAY OCCUR AFTER THAT DATE, AND THE
COMPANY WILL NOT UPDATE THAT INFORMATION EXCEPT AS REQUIRED BY LAW IN THE NORMAL
COURSE OF ITS PUBLIC DISCLOSURE PRACTICES.
IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY
FROM THE EXPECTATIONS REFLECTED IN ANY FORWARD-LOOKING STATEMENT HEREIN
INCLUDED, AMONG OTHER THINGS, (1) THE ABILITY OF THE COMPANY TO SUCCESSFULLY AND
PROFITABLY OPERATE ITS RECENTLY-ACQUIRED SAME-DAY DELIVERY BUSINESS, CORPORATE
EXPRESS DELIVERY SYSTEMS, INC. ("CEDS"), AND TO INTEGRATE ITS OPERATIONS WITH
THE COMPANY'S EXISTING OPERATIONS; (2) THE ABILITY OF THE COMPANY TO MEET DEBT
SERVICE OBLIGATIONS AND COMPLY WITH DEBT COVENANTS WITH RESPECT TO THE DEBT
INCURRED IN CONNECTION WITH THE FINANCING FOR THE ACQUISITION OF CEDS; (3) THE
ABILITY OF THE COMPANY TO DEVELOP AN E-COMMERCE FULFILLMENT BUSINESS AND
INTEGRATE THIS WITH ITS SAME-DAY DELIVERY OPERATIONS; (4) THE ABILITY OF THE
COMPANY TO MANAGE UNCERTAINTIES SURROUNDING TECHNOLOGICAL CHANGES IN THE
SAME-DAY DELIVERY AND TRANSPORTATION INDUSTRIES, AND THE COMPANY'S DEPENDENCE
UPON COMPUTER AND COMMUNICATIONS SYSTEMS AND THIRD PARTIES WHO MANUFACTURE,
MAINTAIN AND MARKET THE SAME; (5) THE ABILITY OF THE COMPANY TO DEVELOP AND
IMPLEMENT A NATIONAL BRAND IDENTITY STRATEGY FOR
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ITS PRODUCTS AND SERVICES; (6) THE ABILITY OF THE COMPANY TO ACCESS PUBLIC AND
PRIVATE EQUITY MARKETS; AND (7) THE ABILITY OF THE COMPANY TO STEM OPERATING
LOSSES AND POSITION THE COMPANY TO ACHIEVE POSITIVE CASH FLOW.
OVERVIEW-RECENT SIGNIFICANT ACQUISITION
On September 24, 1999, the Company acquired the same-day delivery
operations of Corporate Express Delivery Systems, Inc. ("CEDS") from CEX
Holdings, Inc.("CEX") by a merger of CEDS with its wholly-owned subsidiary,
United Shipping & Technology Acquisition Corp. The purchase price was
approximately $62,500, subject to adjustment as defined in the merger agreement.
The purchase price consisted of $43,000 in cash provided by institutional debt
financing from General Electric Capital Corporation ("GE") and Bayview Capital
Partners, LP ("Bayview") and the remainder in a combination of short and
long-term notes issued to CEX. CEDS was the surviving corporation in the merger.
CEDS changed its name to its current name which is UST Delivery Systems, Inc.
("Delivery Systems"), but still conducts its business under the name Corporate
Express Delivery Systems. Delivery Systems is incorporated in Delaware.
With the acquisition of CEDS, the Company has become the leader in
nationwide customized delivery solutions for same-day, time-critical shipping
and distribution. The Company provides an array of same-day ground and air
delivery services, including scheduled delivery, on-demand delivery,
distribution services and air courier services. The Company's network consists
of approximately 240 locations in 80 of the top 100 metropolitan areas in the
United States. The Company's operations are supported by a fleet of
approximately 9,800 vehicles, including 4,700 company-leased and owned vehicles
and 5,100 vehicles utilized by independent contractors. The Company currently
has approximately 10,000 employees. The Company's Delivery Systems subsidiary
has offices in Australia, Canada, France, Hong Kong and the United Kingdom, to
facilitate its same-day international air delivery business.
The purchase of CEDS was the final step in the Company meeting its
goal of becoming the premier same-day express delivery and e-commerce
fulfillment service in the United States. With the acquisition of CEDS, the
Company now provides the following products and services to individual consumers
and businesses:
* same-day ground and air transportation services throughout the United
States and internationally;
* distribution, logistics and supply chain management services;
* the ability to fulfill any type of customer need in transferring virtually
any type of product or goods by many different forms and time scenarios;
and
* secure transfer of information over the Internet.
The Company now derives its revenues primarily from same-day ground
and air delivery operations. The Company's revenues for the fiscal year ended
June 30, 1999 were approximately $1,500. For the fiscal year ended January 30,
1999, CEDS' revenue from operations was approximately $648,300.
The Company has currently organized its operations in a number of
subsidiaries. The Company conducts the CEDS same-day delivery business through
UST Delivery Services, Inc. and continues to operate a portion of its
Minneapolis same-day delivery and package delivery services. The Company also
develops software and kiosk technology through its Intelligent Kiosk subsidiary.
The Company was incorporated in Utah in 1979 under the name Basin
Energy Corporation. The Company has amended its name several times since then.
In 1992 the Company changed its name to U-Ship, Inc., and in May 1999 to United
Shipping & Technology, Inc. From 1979 until 1991, the Company was engaged in
business activities that were unrelated to its current business. The Company's
principal executive offices are located at 9850 51st Avenue North, Suite 110,
Minneapolis, Minnesota 55442 and its telephone number is (612) 941-4080. The
Company's website is www.u-s-t.com.
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HISTORICAL BUSINESS AND EVOLUTION OF BUSINESS STRATEGY
In 1991, the Company began the development of self-service automated
shipping systems designed to be installed at the shipping hubs of major package
carriers such as United Parcel Service. The Company's kiosks had a limited test
experience with UPS, but to date the Company has not made significant sales of
hub-automation kiosks to UPS or any other carrier. Later, the Company began to
manufacture and operate self-service intelligent shipping Kiosks (ISKs) in
retail locations such as Kinko's Copy Centers and CopyMax stores.
In late 1997, as a result of lower than anticipated revenues from the
ISKs placed in retail locations, the Company began an extensive evaluation of
its strategies and results from its placement sites. Ultimately, in 1998, the
Company concluded that its historical ISK placement strategy was not profitable.
In the course of reviewing alternative directions for its business, the Company
determined that the same-day delivery business presented an opportunity to
employ its advanced technology in a large but fragmented market and obtain an
independent revenue stream in a growing industry. The Company also felt that the
same-day delivery industry could benefit from a variety of emerging economic and
technological trends, such as movement toward outsourcing of corporate services,
the explosive growth of e-commerce, the increasing use of the Internet and the
availability of sophisticated communications technology. Based on this
determination, the Company adopted a revised business strategy with the goal of
becoming the national leader in same-day delivery and related services through a
series of acquisitions of same-day delivery businesses. The Company's goal was
to develop a national network of delivery services and to combine it with
sophisticated communications technology and a same-day delivery
nationally-recognized brand identity. The Company felt that this combination
would allow customers to participate in Internet-based business, or e-commerce,
and to offer an array of integrated distribution and logistics services to
corporate clients and companies engaged in e-commerce.
The Company began its same-day delivery consolidation strategy in late
1998, through the acquisition of JEL Trucking, Inc., which enabled the Company
to offer same-day delivery and package delivery services in the Minneapolis/St.
Paul metropolitan area. In January 1999, the Company also acquired Twin City
Transportation, Inc., which expanded the Company's same-day delivery service in
the Minneapolis/St. Paul metropolitan area. On September 24, 1999, the Company
acquired Corporate Express Delivery Systems, with 1998 revenues in excess of
$600 million. The Company continues to explore the acquisition of additional
same-day delivery companies to increase market penetration and provide a
national platform for e-commerce fulfillment and logistics services. As of the
date of this report, the Company had no agreements pending to acquire any
additional companies.
In order to increase the strength of its market leadership in the
same-day delivery business and obtain the maximum economies of scale from our
consolidation efforts, the Company has made a determination that it must
continue to invest in upgrading and developing computer and communications
technology. The Company currently employs in most of its fleet, sophisticated
communications and dispatch systems. In addition, the Company has begun the
testing in its larger on-demand delivery operations of a satellite-driven,
computerized, on-demand routing system that utilizes Global Positioning System
technology and mobile data terminals to continuously track the location of every
vehicle and package in real time. The Company's ultimate goal is to expand the
capabilities of its communications systems to further improve its same-day
delivery, supply-chain management and logistics services, and to provide an
Internet-based platform for customized e-commerce delivery solutions. The
Company also continues to explore the opportunity of utilizing its kiosk
technology to provide more robust and comprehensive capabilities that can be
ultimately integrated with its same-day delivery operations.
In March 1999, the Company introduced an Internet-based shipping
service called i-courier(TM). This service offers secure, trackable electronic
document transfer and storage for small or large files. The Company intends to
expand this service to include links to its dispatch system for on-line ordering
and package tracking. The Company also intends to expand the capabilities of
i-courier(TM)and to pursue other e-commerce opportunities.
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RESULTS OF OPERATIONS:
Comparison of Quarters Ended January 1, 2000 and January 2, 1999
- ----------------------------------------------------------------
Revenue for the quarter ended January 1, 2000, increased $138,760 to
$138,908 from $148 for the quarter ended January 2, 1999. The increase is
primarily due to the acquisition of CEDS.
Cost of service expense increased $112,279 to $112,398 from $119 for
the quarter ended January 2, 1999. The increase is primarily due to the CEDS
acquisition.
Selling, general and administrative expenses for the quarter ended
January 1, 2000, increased $35,903 to $36,602 from $699 for the quarter ended
January 2, 1999. The increase is primarily due to the CEDS acquisition.
Interest expense increased to $1,560 for the quarter ended January 1,
2000 compared to $3 for the quarter ended January 2, 1999. The increase is
primarily due to the increase in debt associated with the CEDS acquisition.
Other income increased by $408 for the quarter ended January 1, 2000. The
increase is primarily due to the CEDS acquisition.
Net loss for the quarter ended January 1, 2000, increased $10,574 to
$11,230 from $656 for the quarter ended January 2, 1999. The Company expects to
incur additional losses while it integrates the acquisition of CEDS into its
current business strategy.
Comparison of Six Month Periods Ended January 1, 2000 and January 2, 1999
- -------------------------------------------------------------------------
Revenue for the six months ended January 1, 2000 increased $192,360 to
$192,632 from $272 for the six months ended January 2, 1999. The increase is
primarily due to the acquisition of CEDS.
Cost of service expense increased $154,590 to $154,837 from $247 for
the six months ended January 2, 1999. The increase is primarily due to the
acquisition of CEDS.
Selling, general and administrative expenses for the six months ended
January 1, 2000, increased $48,045 to $49,366 from $1,321 for the six months
ended January 2, 1999. The increase is primarily due to the acquisition of CEDS.
Interest expense increased to $1,752 for the six months ended January
1, 2000 compared to $6 for the six months ended January 2, 1999. The increase is
primarily due to the increase in debt associated with the CEDS acquisition.
Other income increased by $454 for the six months ended January 1, 2000. The
increase is primarily due to the CEDS acquisition.
Net loss for the six months ended January 1, 2000, increased $11,587
to $12,847 from $1,260 for the six months ended January 2, 1999. The Company
expects to incur additional losses while it integrates the acquisition of CEDS
into its current business strategy.
LIQUIDITY AND CAPITAL RESOURCES:
Historically, the Company has operated at a loss and has funded its
operations from the proceeds of public and private equity offerings. Throughout
fiscal 1999 and continuing through the second quarter of fiscal 2000, the
Company has financed the implementation of its revised business strategy through
various private placements of debt and equity, including but not limited to
sales of common stock, sales of preferred stock (subsequently converted into
common stock), issuances of debt (some of which was subsequently converted into
common stock), warrant exercises and the sale of warrants. From July 1999
through January 18, 2000, the Company raised over $15,069 in connection with
these transactions, and issued an aggregate of 4,554,313 shares of common stock
(taking into account conversions of preferred stock and debt) at prices ranging
from $0.60 to $5.025 per share, and warrants to purchase an aggregate of
1,759,915 shares of common stock at exercise prices ranging from $0.60 to $12.50
per share for periods ranging from one to five years.
13
<PAGE>
The Company continues its efforts to reduce debt and raise additional
cash for acquisitions and working capital needs. In September 1999, four
investors converted their 1998 Notes in the aggregate principal amount of $600
plus accrued interest to 135,044 shares of the Company's common stock at a
purchase price of $4.57 per share, and one-year warrants to purchase an
aggregate of 33,758 shares of the Company's common stock at an exercise price of
$4.57 per share. Also in September 1999, in connection with the CEDS purchase,
the Company called the warrants issued in connection with its sale in April and
June of 1998 of its Series A Preferred stock, and raised an additional $3,461
through the issuance of 1,977,748 shares of Common Stock. In October 1999, the
Company sold to five accredited investors 124,000 shares of common stock at a
purchase price of $4.50 per share, together with warrants to purchase an
aggregate of 41,333 shares of common stock at an exercise price of $4.50 per
share for a period of one year. In December 1999, the Company sold to an
accredited investor 50,000 shares of common stock at a purchase price of $6.375
per share, together with a warrant to purchase 5,000 shares of common stock at
an exercise price of $6.375 per share for a period of five years. In December
1999, the Company also sold to seven institutional investors an aggregate of
1,791,044 shares of common stock at a purchase price of $5.025 per share,
together with warrants to purchase an aggregate of 179,104 shares of common
stock at an exercise price of $12.50 per share for a period of five years. The
Company has recorded a subscription receivable in the amount of $4,500 at the
end of the quarter associated with the sale of this stock. The cash related to
this receivable was received on January 4, 2000. During the first six months of
fiscal 2000, the Company also issued 337,747 shares of common stock through
various stock sales and warrant exercises. Total proceeds from these
transactions amounted to $917. In January 2000, the Company sold to a director
22,083 shares of common stock at a purchase price of $4.50 per share, in
repayment of an existing debt for consulting fees performed on behalf of the
Company. Also in January 2000, the Company sold to five accredited investors an
aggregate of 25,000 shares of common stock at a purchase price of $5.025 per
share, together with warrants to purchase an aggregate of 2,500 shares of common
stock at an exercise price of $12.50 per share for a period of five years.
The Company financed its acquisition of CEDS through a combination of
institutional debt financing and the notes to CEX. The Company entered into a
Revolving Note agreement which allows the Company to borrow from GE, in the
aggregate under the Revolving Note, $55,000. The note agreement required, among
other things, that there be unused availability of at least $14,000 at the time
of acquisition. As of January 1, 2000, the loan had an outstanding balance of
$41,029, and the unused portion was $13,971. The proceeds from this loan were
used to fund a portion of the acquisition purchase price and are being used to
fund the Company's present and future working capital needs.
In fiscal 2000 and beyond, the Company plans to focus on the various
aspects of its acquisition strategy, making acquisitions in the same-day
delivery market and supporting technology, and the acquisition or building of a
nationally recognized brand name to be used in conjunction with such services.
The Company believes that these efforts will require the Company to expend
significant capital. While the Company will seek to acquire companies that have
profits or positive cash flow, or that have the potential to generate positive
cash flow in the future, it is likely that any positive cash flow that would
otherwise result will be utilized in connection with the Company's ongoing
consolidation strategy. The Company believes that these revised strategies,
while initially requiring additional cash outlays, will result in greater
revenues from same-day delivery operations, and sales and licensure of ISK
technology, although no assurance can be given that such revenues will increase
appreciably as a result of these initiatives in the near future, if at all.
There can be no assurance that the Company will be able to generate
sufficient revenues to meet its operating cash and growth needs or that any
additional equity or debt funding will be available or at terms acceptable to
the Company in the future to continue operating in its current form. The
Company's loss for the fiscal year ended June 30, 1999 was $2,894. The Company's
loss for the six months ended January 1, 2000 was $14,647. The Company expects
to incur losses for the foreseeable future due to the ongoing activities of the
Company, and in pursuing other aspects of its revised business strategy. The
Company will continue to require substantial additional debt or equity funding
to continue to implement its revised business strategy, which may include
additional future acquisitions. The Company's cash needs and usage may vary
based on the outcome of these initiatives. There can be no assurance that the
necessary financing will be available to the Company or, if available, that the
same will be on terms satisfactory or favorable to it. While the Company is not
now in a position to determine the price at which
14
<PAGE>
its securities may be issued in any subsequent equity or debt financing, it is
likely that additional equity or debt financing will be highly dilutive to
existing shareholders.
THE COMPANY'S YEAR 2000 READINESS
Before the rollover of the year from 1999 to 2000, many installed
computer systems and software products were coded to accept only two digit date
entries and were unable to accept four digit date entries to distinguish 21st
century dates from 20th century dates. As a result, computer systems and
software used by many companies prior to the rollover date required upgrading or
replacement to comply with such "Year 2000" requirements. The failure of the
Company's products, the Company's vendors or the Company's customers to achieve
Year 2000 compliance could materially adversely affect the Company's business,
operating results, financial condition and cash flows.
As of February 7, 2000, the Company has not experienced and does not
anticipate any material adverse effects on the Company's systems and operations
as a result of Year 2000 issues. Business is continuing as usual, and internal
systems will continue to be monitored for any unlikely disruptions. Further, as
of February 7, 2000, the Company has not experienced any operation problems or
product failures as a result of Year 2000 issues with its vendors, service
providers, or customers.
Although the transition to the Year 2000 did not have any significant
impact on the Company or its systems and operations, the Company will continue
to monitor the impact of the Year 2000 on its systems and those of third-party
service providers. The contingency plans that were developed for use in the
event of Year 2000-related failures will be maintained and generalized for
ongoing business use.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
During February 2000, the parties in the Addvensky class action
litigation, as reported in the Company's Form 10-QSB for the quarter ended
October 2, 1999, met to continue mediation and reached a tentative agreement to
settle all claims.
The Company is subject to various other legal proceeding and claims,
either asserted or unasserted, which arise in the ordinary course of business.
Management does not believe that the outcome of any of these legal matters will
have a material adverse effect on the Company's results of operation or
consolidated financial position.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
In October 1999, the Company sold to five accredited investors 124,000
shares of common stock at a purchase price of $4.50 per share, together with
warrants to purchase an aggregate of 41,333 shares of common stock at an
exercise price of $4.50 per share for a period of one year.
On December 17, 1999, the Company sold to an accredited investor
50,000 shares of common stock at a purchase price of $6.375 per share, together
with a warrant to purchase 5,000 shares of common stock at an exercise price of
$6.375 per share for a period of five years.
On December 31, 1999, the Company sold to seven institutional
investors an aggregate of 1,791,044 shares of common stock at a purchase price
of $5.025 per share, together with warrants to purchase an aggregate of 179,104
shares of common stock at an exercise price of $12.50 per share for a period of
five years. The Company has recorded a subscription receivable in the amount of
$4,500 at the end of the quarter associated with the sale of this stock. The
cash related to this receivable was received on January 4, 2000.
15
<PAGE>
On January 7, 2000, the Company sold to a director 22,083 shares of
common stock at a purchase price of $4.50 per share, in repayment of an existing
debt for consulting fees performed on behalf of the Company.
On January 18, 2000, the Company sold to five accredited investors an
aggregate of 25,000 shares of common stock at a purchase price of $5.025 per
share, together with warrants to purchase an aggregate of 2,500 shares of common
stock at an exercise price of $12.50 per share for a period of five years.
No underwriter or placement agent was used in connection with any of
the above-referenced securities transactions, and no underwriting commissions
were paid. No means of general solicitation was used in offering the securities.
The securities in each transaction were sold to a limited group of accredited
investors in a private placement transactions, exempt from registration under
Section 4(2) of the Securities Act. All purchasers of the Company's securities
were sophisticated investors who qualified as accredited investors within the
meaning of Rule 501(a) of Regulation D under the Securities Act. Except where
otherwise indicated, the Company intends to use the net proceeds from the sale
of these securities for working capital and to fund acquisitions.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS.
Not Applicable.
ITEM 5. OTHER INFORMATION.
Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a. Exhibits required by Item 601 of Regulation S-B:
Exhibit 10.1 Form of Subscription Agreement and Letter of Investment
Intent between the Company and investors in private placements of
common stock and warrants in October 1999 (incorporated by reference
to the Company's Quarterly Report on Form 10-QSB for the quarter ended
October 2, 1999).
Exhibit 10.2 Form of warrant issued to investors in connection with
October 1999 private placements of common stock and warrants
(incorporated by reference to the Company's Quarterly Report on Form
10-QSB for the quarter ended October 2, 1999).
Exhibit 10.3 Subscription Agreement and Letter of Investment Intent
between the Company and an investor in private placement of common
stock and warrants on December 17, 1999.
Exhibit 10.4 Warrant issued to an investor in connection with December
17, 1999 private placement of common stock and warrants.
Exhibit 10.5 Form of Subscription Agreement and Letter of Investment
Intent between the Company and investors in private placement of
common stock and warrants on December 31, 1999.
Exhibit 10.6 Form of warrant issued to investors in connection with
December 31, 1999 private placement of common stock and warrants.
Exhibit 10.7 Form of Subscription Agreement and Letter of Investment
Intent between the Company and investors in private placement of
common stock and warrants on January 18, 2000.
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<PAGE>
Exhibit 10.8 Form of warrant issued to investors in connection with
January 18, 2000 private placement of common stock and warrants.
Exhibit 10.9 1995 Stock Option Plan, as amended.
Exhibit 10.10 1996 Director Stock Option Plan, as amended.
Exhibit 27 Financial Data Schedule.
b. The Company filed the following documents with the Securities and
Exchange Commission (File No. 0-27780) during the quarter for which
this report is filed:
(1) Current Report on Form 8-K, filed on October 8, 1999 and amended
on December 8, 1999, relating to the acquisition of the courier
operations of Corporate Express Delivery Systems, Inc.
(2) Current Report on Form 8-K, filed November 12, 1999, relating to
a change in the Company's independent public accountant.
(3) Current Report on Form 8-K, filed November 12, 1999, relating to
a change in the Company's fiscal year.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has duly
caused this report to be signed on its behalf by the undersigned; thereunto duly
authorized, in the City of Plymouth, State of Minnesota on February 15, 2000.
United Shipping & Technology, Inc.
By: /s/ Peter C. Lytle
------------------
Peter C. Lytle
President and Chief Executive Officer
18
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EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
Exhibit 10.1 Form of Subscription Agreement and Letter of Investment Intent
between the Company and investors in private placements of
common stock and warrants in October 1999 (incorporated by
reference to the Company's Quarterly Report on Form 10-QSB for
the quarter ended October 2, 1999).
Exhibit 10.2 Form of warrant issued to investors in connection with October
1999 private placements of common stock and warrants
(incorporated by reference to the Company's Quarterly Report
on Form 10-QSB for the quarter ended October 2, 1999).
Exhibit 10.3 Subscription Agreement and Letter of Investment Intent between
the Company and an investor in private placement of common
stock and warrants on December 17, 1999.
Exhibit 10.4 Warrant issued to an investor in connection with December 17,
1999 private placement of common stock and warrants.
Exhibit 10.5 Form of Subscription Agreement and Letter of Investment Intent
between the Company and investors in private placement of
common stock and warrants on December 31, 1999.
Exhibit 10.6 Form of warrant issued to investors in connection with
December 31, 1999 private placement of common stock and
warrants.
Exhibit 10.7 Form of Subscription Agreement and Letter of Investment Intent
between the Company and investors in private placement of
common stock and warrants on January 18, 2000.
Exhibit 10.8 Form of warrant issued to investors in connection with January
18, 2000 private placement of common stock and warrants.
Exhibit 10.9 1995 Stock Option Plan, as amended.
Exhibit 10.10 1996 Director Stock Option Plan, as amended.
Exhibit 27 Financial Data Schedule.
19
EXHIBIT 10.3
SUBSCRIPTION AGREEMENT
AND
LETTER OF INVESTMENT INTENT
United Shipping & Technology, Inc.
9850 51st Avenue North, Suite 110
Plymouth, MN 55442
Attention: Peter C. Lytle
Chief Executive Officer
Gentlemen:
The undersigned, _______________, desires to become shareholders of
United Shipping & Technology, Inc. a Utah corporation (the "Company"), and
hereby subscribes in the aggregate for 50,000 shares (the "Shares") of the
Company's common stock, $0.004 par value (the "Common Stock") for the sum of
$318,750.00, representing the purchase price of $6.375 per Share for each Share
subscribed for above, and a warrant (the "Warrant") to purchase 5,000 shares of
the Company's Common Stock at an exercise price of $6.375 per share for a period
of 5 years, said Warrant to have both demand and incidental registration rights.
As used herein, the term "Shares" shall also, where applicable, refer to the
Warrant and the shares of Common Stock issued or issuable upon exercise of the
Warrant.
1. The undersigned hereby acknowledges that this subscription is
contingent upon acceptance in whole or in part by the Company.
2. The undersigned acknowledges, represents and warrants that the
undersigned:
(a) is able to bear the economic risk of the investment in the
Shares;
(b) has knowledge and experience in financial and business
matters, is capable of evaluating the merits and risks of the
prospective investment in the Shares and is able to bear such risks;
(c) understands an investment in the Shares is highly
speculative but believes that the investment is suitable for it based
upon the undersigned's investment objectives and financial needs, and
has adequate means for providing for current financial needs and
personal contingencies and has no need for liquidity of investment with
respect to the Shares;
(d) has reviewed (i) copies of the Company's recent reports
filed under the Securities Exchange Act of 1934, including, the
Company's Form 10-KSB Report for the fiscal year ended June 30, 1999,
(ii) the Company's Form 10-QSB for the period ended October 2, 1999,
and (iii) the Company's Forms 8-K in connection with the Company's
purchase of Corporate Express Delivery Services, Inc.;
(e) has been given access to full and complete information
regarding the Company (including the opportunity to meet with Company
officers and review all documents as it may have
<PAGE>
requested in writing) and has utilized such access to its satisfaction
for the purpose of obtaining information about the Company;
(f) recognizes that the Shares, as an investment, involve a
high degree of risk; and
(g) realizes that (i) the purchase of Shares is a long-term
investment; (ii) purchasers of Shares must bear the economic risk of
investment for an indefinite period of time because the Shares have not
been registered under the Securities Act of 1933, as amended (the
"Act") and, therefore, cannot be sold unless they are subsequently
registered under the Act or an exemption from such registration is
available; and (iii) the transferability of the Shares is restricted,
and (A) requires the written consent of the Company, (B) requires
conformity with the restrictions contained in paragraph 3 below, and
(C) will be further restricted by a legend placed on the certificate(s)
representing the Shares stating that the Shares have not been
registered under the Act and referring to the restrictions on
transferability of the Shares, and by stop transfer orders or notations
on the Company's records referring to the restrictions on
transferability.
3. The undersigned has been advised that the Shares are not being
registered under the Act or the relevant state securities laws pursuant to
exemptions from the Act and laws, and that the Company's reliance upon such
exemptions is predicated in part on the undersigned's representations to the
Company as contained herein. The undersigned represents and warrants that the
Shares are being purchased for its own account and for investment and without
the intention of reselling or redistributing the same, that the undersigned has
made no agreement with others regarding any of such Shares and that its
financial condition is such that it is not likely that it will be necessary to
dispose of any of such Shares in the foreseeable future. The undersigned is
aware that, in the view of the Securities and Exchange Commission and applicable
state bodies that administer state securities laws, a purchase of Shares with an
intent to resell by reason of any foreseeable specific contingency or
anticipated change in market values, or any change in the condition of the
Company or its business, or in connection with a contemplated liquidation or
settlement of any loan obtained for the acquisition of the Shares and for which
the Shares were pledged as security, would represent an intent inconsistent with
the representations set forth above. The undersigned further represents and
agrees that if, contrary to its foregoing intentions, it should later desire to
dispose of or transfer any of such Shares in any manner, it shall not do so
without first obtaining (a) the opinion of counsel designated by the Company
that such proposed disposition or transfer lawfully may be made without the
registration of such Shares for such purpose pursuant to the Act, as then in
effect, and applicable state securities laws, or (b) such registrations (it
being expressly understood that the Company shall not have any obligation to
register the Shares for such purpose, except insofar as paragraph 4 hereof
requires the Company, in certain instances, to register Registrable Securities).
The undersigned agrees that the Company may place the following
restrictive legend on the certificate(s) representing the Shares, containing
substantially the following language:
"The shares represented by this Certificate were issued without
registration under the Securities Act of 1933, as amended (the "Act")
and without registration under Minnesota or any other state's
securities laws, in reliance upon exemptions contained in the Act and
such laws. No transfer of these shares or any interest therein may be
made except pursuant to effective registration statements under said
laws unless this Corporation has received an opinion of counsel
satisfactory to it that such transfer or disposition does not require
registration under said laws and, for any sales under Rule 144 of the
Act, such evidence as it shall request for compliance with that rule."
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<PAGE>
The undersigned agrees and consents that the Company may place a stop transfer
order on the Certificate(s) representing the Shares to assure the undersigned's
compliance with this Agreement and the matters referenced above.
The undersigned agrees to save and hold harmless, defend and indemnify
the Company and its directors, officers and agents from any claims, liabilities,
damages, losses, expenses or penalties arising out of any misrepresentation of
information furnished by the undersigned to the Company in this Subscription
Agreement.
4. The Company agrees to the following terms and conditions relative to
registration of the Shares under the Act:
(a) Definitions. As used in this Agreement, the following
terms shall have the meanings set forth respectively:
"Commission" shall mean the Securities and Exchange
Commission, or any other federal agency then administering the Act.
"Common Stock" shall mean the shares of Common Stock of the
Company, $0.004 par value.
"Holder" or, collectively, "Holders", means (i) the
undersigned purchaser of the Shares or Registrable Securities and (ii)
each person to whom Holder transfers the Shares or Registrable
Securities as provided herein.
"Other Securities" shall mean any stock (other than Common
Stock) or other securities of the Company which the Holder at any time
shall be entitled to receive, or shall have received, upon exercise of
the Warrants, in lieu of or in addition to Common Stock, or which at
any time shall be issuable or shall have been issued in exchange for or
in replacement of Common Stock or Other Securities.
"Registrable Securities" means the Shares, any shares of
Common Stock issued or which may be issued upon exercise of the
Warrants, and any Other Securities received with respect thereto or
with respect to the Shares; provided, however, that any such Common
Stock and Other Securities shall cease to be Registrable Securities
when (i) a Resale Registration Statement covering such Registrable
Securities has been declared effective and such Registrable Securities
have been disposed of pursuant to such effective Resale Registration
Statement, (ii) such Registrable Securities become eligible for sale
pursuant to Rule 144(k) (or any similar provision then in force) ("Rule
144") under the Act or (iii) such shares of Common Stock cease to be
outstanding. Registrable Securities may, for purposes of a registration
statement filed by the Company under the Act, include other securities
of the Company which it has a contractual obligation to register under
federal or state securities laws.
"Transfer" shall mean any sale, assignment, pledge, or other
disposition of any Shares or Registrable Securities, or of any interest
in either thereof, which would constitute a sale thereof within the
meaning of Section 2(3) of the Act.
All terms used in this Agreement which are not defined in Section 1
hereof have the meanings respectively set forth elsewhere in this Agreement.
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(b) Resale Registration. Despite anything in this Agreement to
the contrary, the Holder shall have the following rights regarding registration
of Registrable Securities.
(1) Required Registration. Upon request of a Holder owning at
least 5,000 Shares or Registrable Securities not theretofore
registered under the Act, the Company shall prepare and if it
is then eligible file a registration statement on Form S-3
under the Act covering the resale of the Registrable
Securities which are the subject of such requests and shall
use its best efforts to cause such registration statement to
become effective and to remain effective for at least 24
months. In addition, upon the receipt of the aforementioned
request, the Company shall promptly give written notice to all
other record Holders of Shares or Registrable Securities that
such registration is to be effected. The Company shall include
in such registration statement such Registrable Securities for
which it has received written requests to register by such
other Holders within fifteen (15) days after the Company's
written notice to such other Holders. The Company shall be
obligated to prepare, file and cause to become effective only
two (2) registration statements pursuant to this Section 4(b).
In the event that the holders of a majority of the Registrable
Securities for which registration has been requested pursuant
to this Section determine for any reason not to proceed with a
registration at any time before the registration statement has
been declared effective by the Commission, and such Holders
thereafter request the Company to withdraw such registration
statement, the Holders of such Registrable Securities agree to
bear their own expenses incurred in connection therewith and
to reimburse the Company for the expenses incurred by it
attributable to such registration statement, then, and in such
event, the Holders of such Registrable Securities shall not be
deemed to have exercised their right to require the Company to
register Registrable Securities pursuant to this Section 4(b).
(2) Incidental Registration. Each time the Company shall
determine to proceed with the actual preparation and filing of
a registration statement under the Act in connection with the
proposed offer and sale for money of any of its Common Stock
by it or any of its security holders (other than a
registration statement on From S-4 or S-8) or any other
successor forms prescribed by the commission, the Company will
give written notice of its determination to all Holders of
Shares and Registrable Securities. Upon the written request of
a Holder of any Shares and Registrable Securities given within
fifteen (15) days after receipt of any such notice from the
Company, the Company will, except as herein provided, cause
all such Registrable Securities, the Holders of which have so
requested registration thereof, to be included in such
registration statement, all to the extent requisite to permit
the sale or other disposition by the prospective seller or
sellers of the Registrable Securities to be so registered;
provided, however, that (a) nothing herein shall prevent the
Company from, at any time, abandoning or delaying any such
registration initiated by it; and (b) if the Company
determines not to proceed with a registration after the
registration statement has been filed with the Commission and
the Company's decision not to proceed is primarily based upon
the anticipated public offering price of the securities to be
sold by the Company, the Company shall promptly complete the
registration for the benefit of those selling security holders
who wish to proceed with a public offering of their securities
and who bear all expenses in excess of $25,000 incurred by the
Company as the result of such registration after the Company
has decided not to proceed. If any registration pursuant to
this Section shall be underwritten in whole or in part, the
Company may require that the Registrable Securities requested
for inclusion pursuant to this Section be included in the
underwriting on the same terms and conditions as the
securities otherwise being sold through the
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underwriters. If in the good faith judgment of the managing
underwriter of such public offering the inclusion of all of
the Registrable Securities originally covered by a request for
registration would reduce the number of shares to be offered
by the Company or interfere with the successful marketing of
the shares of stock offered by the Company, the number of
Registrable Securities otherwise to be included in the
underwritten public offering may be reduced pro rata among the
Holders thereof requesting such registration to a number that
the managing underwriter believes will not adversely affect
the sale of shares by the Company. Those securities which are
thus excluded from the underwritten public offering, and any
other Common Stock owned by such Holders, shall be withheld
from the market by the Holders thereof for a period, not to
exceed one hundred eighty (180) days, which the managing
underwriter reasonably determines is necessary in order to
effect the underwritten public offering.
(3) Registration Procedures. If and whenever the Company
is required by the provisions of Section 4(b)(1) or
4(b)(2) to effect the registration of any Registrable
Securities under the Act, the Company will:
(i) prepare and file with the Commission a registration
statement with respect to such Registrable
Securities, and use its best efforts to cause such
registration statement to become and remain effective
for such period as may be reasonably necessary to
effect the sale of such Registrable Securities;
(ii) prepare and file with the Commission such amendments
to such registration statement and supplements to the
prospectus contained therein as may be necessary to
keep such registration statement effective for such
period as may be reasonably necessary to effect the
sale of such Registrable Securities;
(iii) furnish to the Holders participating in such
registration and to the underwriters of the
Registrable Securities being registered such
reasonable number of copies of the registration
statement, preliminary prospectus, final prospectus
and such other documents as such Holders and
underwriters may reasonably request in order to
facilitate the public offering of such Registrable
Securities;
(iv) use its best efforts to register or qualify the
Registrable Securities covered by such registration
statement under such state securities or blue sky
laws of such jurisdictions as such participating
Holders may reasonably request within ten (10) days
following the original filing of such registration
statement, except that the Company shall not for any
purpose be required to execute a general consent to
service of process or to qualify to do business as a
foreign corporation in any jurisdiction wherein it is
not so qualified;
(v) notify the Holders participating in such
registration, promptly after it shall receive notice
thereof, of the time when such registration statement
has become effective or a supplement to any
prospectus forming a part of such registration
statement has been filed;
(vi) prepare and file with the Commission, promptly upon
the request of any such Holders, any amendments or
supplements to such registration statement or
prospectus which, in the reasonable opinion of
counsel for such Holders (and concurred in by counsel
for the Company), is required under the Act or the
rules
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<PAGE>
and regulations thereunder in connection with the
distribution of the Registrable Securities by such
Holder;
(vii) prepare and promptly file with the Commission such
amendment or supplement to such registration
statement or prospectus as may be necessary to
correct any statements or omissions if, at the time
when a prospectus relating to such securities is
required to be delivered under the Act, any event
shall have occurred as the result of which any such
prospectus or any other prospectus as then in effect
would include an untrue statement of a material fact
or omit to state any material fact necessary to make
the statements therein, in the light of the
circumstances in which they were made, not
misleading; and
(viii) advise such Holders, promptly after it shall receive
notice or obtain knowledge thereof, of the issuance
of any stop order by the Commission suspending the
effectiveness of such registration statement or the
initiation or threatening of any proceeding for that
purpose and promptly use its best efforts to prevent
the issuance of any stop order or to obtain its
withdrawal if such stop order should be issued.
(4) Expenses. With respect to any registration, requested
pursuant to Section 4(b)(1) (except as otherwise provided in
such section with respect to registrations voluntarily
terminated at the request of the requesting security holders)
and with respect to each inclusion of securities in a
registration statement pursuant to Section 4(b)(2) (except as
otherwise provided in Section 4(b)(2) with respect to
registrations terminated by the Company), the Company shall
bear the following fees, costs and expenses: all registration,
filing and NASD fees, printing expenses, fees and
disbursements of counsel and accountants for the Company, fees
and disbursements of counsel for the underwriter or
underwriters of such securities (if the Company and/or selling
Holders are required to bear such fees and disbursements), all
internal Company expenses, the premiums and other costs of
policies of insurance against liability arising out of the
public offering, and all legal fees and disbursements and
other expenses of complying with state securities or blue sky
laws of any jurisdictions in which the securities to be
offered are to be registered or qualified. Fees and
disbursements of counsel and accountants for such Holders,
underwriting discounts and commissions and transfer taxes for
such Holders and any other expenses incurred by such Holders
not expressly included above shall be borne by such Holders.
(5) Copies of Prospectus; Amendments of Prospectus. The
Company will furnish the Holder with a reasonable number of
copies of any prospectus or offering circular and one copy of
the registration statement included in such filings and will
amend or supplement the same as required during the nine (9)
month period following the effective date of the registration
statement, provided, that the expenses of any amendment or
supplement made or filed more than three (3) months after the
effective date of the registration statement, at the request
of the Holder, shall be borne by the Holder.
(6) Conditions of the Company's Obligations. It shall be a
condition of the Company's obligation to register the
Registrable Securities hereunder that the Holder agrees to
cooperate with the Company in the preparation and filing of
any such registration statement, or in its efforts to
establish that the proposed sale is exempt under the Act, as
to any proposed distribution. It shall also be a condition of
the Company's
6
<PAGE>
obligations under this Agreement that, in the case of the
filing of any registration statement, and to the extent
permissible under the Act, and controlling precedent
thereunder, the Company and the Holder provide
cross-indemnification agreements to each other in customary
scope covering the accuracy and completeness of the
information furnished by each.
(c) Restrictions on Sale. In the event of an underwritten
public offering for the account of the Company, upon the written request (the
"Lock-up Request") of the managing underwriter (or underwriters) of such
offering, each Holder agrees not to effect any public sale or distribution of
any securities similar to those being registered in such offering (other than
pursuant to such offering), including, without limitation, through sales of
Registrable Securities pursuant to a registration statement, during the 14 days
prior to, and during the 180-day period beginning on the effective date of the
registration statement relating to such offering (the "Lock-up Period");
provided, however, that the Holders shall not be required to comply with such
Lock-up Request unless the Company simultaneously demands analogous restrictions
on sale and uses all reasonable efforts to obtain from all other persons who are
contractually bound with the Company to comply with such Lock-up Requests and
from the Company's directors. In the event of the delivery of a Lock-up Request,
the time periods for which a registration statement is required to be kept
effective pursuant to Section 4(b) hereof shall be extended by the number of
days during the Lock-up Period.
(g) Transfer of Registration Rights. The registration rights
of Holder and any Holders under this Section 4 may be transferred to any
transferee of Registrable Securities that acquires at least 5,000 shares of the
Common Stock (appropriately adjusted for stock splits, stock dividends and the
like). Each such transferee shall be deemed to be a "Holder" for purposes of
this Section 4.
5. The undersigned represents and warrants that the undersigned is a
bona fide resident of, and is domiciled in, the State of Minnesota and that the
Shares are being purchased solely for the beneficial interest of the undersigned
and not as nominee, for, or on behalf of, or for the beneficial interest of, or
with the intention to transfer to, any other person, trust or organization,
except as specifically set forth in paragraph 8 of this Agreement.
THE FOLLOWING PARAGRAPH 6 IS REQUIRED IN CONNECTION WITH THE EXEMPTIONS FROM THE
ACT AND STATE LAWS BEING RELIED ON BY THE COMPANY WITH RESPECT TO THE OFFER AND
SALE OF THE SHARES. ALL OF SUCH INFORMATION WILL BE KEPT CONFIDENTIAL AND WILL
BE REVIEWED ONLY BY THE COMPANY, THE AGENT, IF ANY, AND THEIR RESPECTIVE
COUNSEL. The undersigned agrees to furnish any additional information which the
Company, the Agent, if any, or their respective legal counsel deem necessary in
order to verify the responses set forth below.
6. Accredited Status. The undersigned represents and warrants as
follows: (CHECK IF APPLICABLE):
_______ (a) The undersigned is an individual with a net worth, or a
joint net worth together with his or her spouse, in excess of
$1,000,000. (In calculating net worth, you may include equity
in personal property and real estate, including your principal
residence, cash, short-term investments, stock and securities.
Equity in personal property and real estate should be based on
the fair market value of such property minus debt secured by
such property.)
_______ (b) The undersigned is an individual with income in excess of
$200,000 in each of the prior two years and reasonably expects
an income in excess of $200,000 in the current year.
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<PAGE>
_______ (c) The undersigned is an individual who, with his or her
spouse, had joint income in excess of $300,000 in each of the
prior two years and reasonably expects joint income in excess
of $300,000 in the current year.
_______ (d) The undersigned is a director or executive officer of
United Shipping & Technology, Inc.
_______ (e) The undersigned, if other than an individual, is an
entity all of whose equity owners meet one of the tests set
forth in (A) through (D) above.
_______ (f) The undersigned is an entity, and is an "Accredited
Investor" as defined in Rule 501(a) of Regulation D under the
Act. This representation is based on the following (check one
or more, as applicable):
______ i. The undersigned (or, in the case of a trust, the
undersigned trustee) is a bank or savings and loan association
as defined in Sections 3(a)(2) and 3(a)(5)(A), respectively,
of the Act acting either in its individual or fiduciary
capacity.
______ ii. The undersigned is an insurance company as defined in
section 2(13) of the Act.
______ iii. The undersigned is an investment company registered under
the Investment Company Act of 1940 or a business development
company as defined in Section 2(a)(48) of that Act.
______ iv. The undersigned is a Small Business Investment Company
licensed by the U.S. Small Business Administration under
Section 301(c) or (d) of the Small Business Investment Act of
1958.
______ v. The undersigned is an employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security
Act of 1974 ("ERISA") and either (check one or more, as
applicable):
___ a. the investment decision is made by a plan
fiduciary, as defined in Section 3(21) of ERISA,
which is either a bank, savings and loan
association, insurance company, or registered
investment advisor; or
___ b. the employee benefit plan has total assets in
excess of $5,000,000; or
___ c. the plan is a self-directed plan with investment
decisions made solely by persons who are
"Accredited Investors" as defined under the Act.
______ vi. The undersigned is a private business development company
as defined in Section 202(a)(22) of the Investment Advisors
Act of 1940.
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<PAGE>
______ vii. The undersigned has total assets in excess of $5,000,000,
was not formed for the specific purpose of acquiring shares of
the Company and is one or more of the following (check one or
more, as appropriate):
___ a. an organization described in Section 501(c)(3) of
the Internal Revenue Code; or
___ b. a corporation; or
___ c. a Massachusetts or similar business trust; or
___ d. a partnership.
______ viii. The undersigned is a trust with total assets exceeding
$5,000,000 which was not formed for the specific purpose of
acquiring shares of the Company and whose purchase is directed
by a person who has such knowledge and experience in financial
and business matters that he or she is capable of evaluating
the merits and risks of the investment in the Shares. (IF ONLY
THIS RESPONSE IS CHECKED, please contact the Company to
receive and complete an information statement before this
subscription can be considered).
7. NASD Affiliation. The undersigned is affiliated or associated,
directly or indirectly, with a National Association of Securities Dealers, Inc.
("NASD") member firm or person.
Yes ________ No ________
If yes, list the affiliated member firm or person:_____________________
_______________________________________________________________________
_______________________________________________________________________
Your relationship to such member firm or person:_______________________
_______________________________________________________________________
_______________________________________________________________________
8. Entities. If the undersigned is not an individual but an entity, the
individual signing on behalf of such entity and the entity jointly and severally
agree and certify that:
(a) The undersigned was not organized for the specific purpose of
acquiring the Shares; and
(b) This Agreement has been duly authorized by all necessary action on
the part of the undersigned, has been duly executed by an authorized
officer or representative of the undersigned, and is a legal, valid and
binding obligation of the undersigned enforceable in accordance with
its terms.
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<PAGE>
9. Miscellaneous.
(a) Manner in which title is to be held: (check one)
_____ Individual Ownership
_____ Joint Tenants with Right of Survivorship*
_____ Partnership*
_____ Tenants in Common*
_____ Corporation
_____ Trust
_____ Other ________________________________
________________________________(describe)
(b) The undersigned agrees that the undersigned understands the meaning
and legal consequences of the agreements, representations and
warranties contained herein, agrees that such agreements,
representations and warranties shall survive and remain in full force
and effect after the execution hereof and payment for the Shares, and
further agrees to indemnify and hold harmless the Company, each current
and future officer, director, employee, agent and shareholder from and
against any and all loss, damage or liability due to, or arising out
of, a breach of any agreement, representation or warranty of the
undersigned contained herein.
(c) This Agreement shall be construed and interpreted in accordance
with Minnesota law without regard to conflict of law provisions.
(d) The undersigned agrees to furnish to the Company or the Agent, if
applicable, upon request, such additional information as may be deemed
necessary to determine the undersigned's suitability as an investor.
[NOTE: SIGNATURE PAGE FOLLOWS]
- ------------------------------
*Multiple signatures required.
10
<PAGE>
INDIVIDUAL SUBSCRIBER
Dated: December13, 1999.
- ------------------------------------ ------------------------------------
- ------------------------------------ ------------------------------------
Signature Signature
- ------------------------------------ ------------------------------------
Name Typed or Printed Name Typed or Printed
- ------------------------------------ ------------------------------------
Residence Address Residence Address
- ------------------------------------ ------------------------------------
- ------------------------------------ ------------------------------------
- ------------------------------------ ------------------------------------
City, State and Zip Code City, State and Zip Code
- ------------------------------------ ------------------------------------
Mailing Address Mailing Address
- ------------------------------------ ------------------------------------
- ------------------------------------ ------------------------------------
City, State and Zip Code City, State and Zip Code
- ------------------------------------ ------------------------------------
Tax Identification or Social Tax Identification or Social
Security Number Security Number
11
<PAGE>
ENTITY SUBSCRIBER
Dated: December 13, 1999.
By: ____________________________________
Signature
________________________________________
Name Typed or Printed
________________________________________
Address
________________________________________
City, State and Zip Code
________________________________________
Tax Identification
CERTIFICATE OF SIGNATORY
(To be completed if Shares are being subscribed for by an entity)
I certify that I am empowered and duly authorized by the Entity to
execute and carry out he terms of the Subscription Agreement and to purchase and
hold the Shares, and certify further that the Subscription has been duly and
validly authorized and executed on behalf of the Entity and constitutes a legal,
valid and binding obligation of the Entity.
IN WHITNESS WHEREOF, I have signed this certificate this _____day of
December, 1999.
-----------------------------------------
Signature
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<PAGE>
ACCEPTANCE BY THE COMPANY
United Shipping & Technology, Inc. hereby agrees to and accepts the foregoing
Subscription Agreement to the extent of 50,000 Shares and the Warrant.
UNITED SHIPPING & TECHNOLOGY, INC.
By
-----------------------------------------
Peter C. Lytle
Its: Chief Executive Officer
EXHIBIT 10.4
WARRANT
To Purchase Shares of
Common Stock of
UNITED SHIPPING & TECHNOLOGY, INC.
December 13, 1999
This Certifies that, in consideration of having purchased 50,000 shares
of the Company's Common Stock, and for other good and valuable consideration,
_____________ (the "Warrantholder"), is entitled to subscribe for and purchase
from the Company, at any time after the date hereof, and prior to December 13,
2004 (the "Expiration Date") up to 5,000 shares of the Company's Common Stock at
a purchase price of $6.375 per share (the "Purchase Price"), subject to
adjustment as hereinafter set forth.
1 Definitions. For the purposes of this Warrant the following terms
shall have the following meanings:
"Commission" shall mean the Securities and Exchange
Commission, or any other federal agency then administering the
Securities Act.
"Company" shall mean United Shipping & Technology, Inc., a
Utah corporation, and any corporation which shall succeed to, or
assume, the obligations of said corporation hereunder.
"Common Stock" shall mean the shares of Common Stock of the
Company, $0.004 par value.
"Other Securities" shall mean any stock (other than Common
Stock) or other securities of the Company which the Warrantholder at
any time shall be entitled to receive, or shall have received, upon the
exercise of the Warrants, in lieu of or in addition to Common Stock, or
which at any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock or Other Securities.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations of the Commission thereunder, as
in effect at the time.
"Subscription Form" shall mean the subscription forms attached
hereto.
"Transfer" shall mean any sale, assignment, pledge, or other
disposition of any Warrants and/or Warrant Shares, or of any interest
in either thereof, which would constitute a sale thereof within the
meaning of Section 2(3) of the Securities Act.
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<PAGE>
"Warrant Shares" shall mean the shares of Common Stock
purchased or purchasable by the Warrantholder upon the exercise of the
Warrants pursuant to Section 2 hereof.
"Warrantholder" shall mean the holder or holders of the
Warrants or any related Warrant Shares.
"Warrants" shall mean the Warrants (including this Warrant),
identical as to terms and conditions and date, issued by the Company in
connection with the sale of the Notes, and all Warrants issued in
exchange, transfer or replacement thereof.
All terms used in this Warrant which are not defined in Section 1
hereof have the meanings respectively set forth elsewhere in this Warrant.
2 Exercise of Warrant, Issuance of Certificate, and Payment for Warrant
Shares. The rights represented by this Warrant may be exercised at any time
after December 13, 1999, and prior to the Expiration Date, by the Warrantholder,
in whole or in part (but not as to any fractional share of Common Stock), by:
(a) delivery to the Company of a completed Subscription Form, (b) surrender to
the Company of this Warrant properly endorsed and signature guaranteed, and (c)
delivery to the Company of a certified or cashier's check made payable to the
Company in an amount equal to the aggregate Purchase Price of the shares of
Common Stock being purchased, at its principal office or agency in Minnesota (or
such other office or agency of the Company as the Company may designate by
notice in writing to the holder hereof). The Company agrees and acknowledges
that the shares of Common Stock so purchased shall be deemed to be issued to the
holder hereof as the record owner of such shares as of the close of business on
the date on which this Warrant, properly endorsed, and the Subscription Form
shall have been surrendered and payment made for such shares as aforesaid. Upon
receipt thereof, the Company shall, as promptly as practicable, and in any event
within fifteen (15) days thereafter, execute or cause to be executed and deliver
to the Warrantholder a certificate or certificates representing the aggregate
number of shares of Common Stock specified in said Subscription Form. Each stock
certificate so delivered shall be in such denomination as may be requested by
the Warrantholder and shall be registered in the name of the Warrantholder or
such other name as shall be designated by the Warrantholder. If this Warrant
shall have been exercised only in part, the Company shall, at the time of
delivery of said stock certificate or certificates, deliver to the Warrantholder
a new Warrant evidencing the rights of such holder to purchase the remaining
shares of Common Stock covered by this Warrant. The Company shall pay all
expenses, taxes, and other charges payable in connection with the preparation,
execution, and delivery of stock certificates pursuant to this Section 2, except
that, in case any such stock certificate or certificates shall be registered in
a name or names other than the name of the Warrantholder, funds sufficient to
pay all stock transfer taxes which shall be payable upon the execution and
delivery of such stock certificate or certificates shall be paid by the
Warrantholder to the Company at the time of delivering this Warrant to the
Company as mentioned above.
3 Ownership of this Warrant. The Company may deem and treat the
registered Warrantholder as the holder and owner hereof (notwithstanding any
notations of ownership or writing made hereon by anyone other than the Company)
for all purposes and shall not be
2
<PAGE>
affected by any notice to the contrary, until presentation of this Warrant for
transfer as provided herein and then only if such transfer meets the
requirements of Section 5.
4 Exchange, Transfer, and Replacement. Subject to Section 5 hereof,
this Warrant is exchangeable upon the surrender hereof by the Warrantholder to
the Company at its office or agency described in Section 2 hereof for new
Warrants of like tenor and date representing in the aggregate the right to
purchase the number of shares purchasable hereunder, each of such new Warrants
to represent the right to purchase such number of shares (not to exceed the
aggregate total number purchasable hereunder) as shall be designated by the
Warrantholder at the time of such surrender. Subject to Section 5 hereof, this
Warrant and all rights hereunder are transferable, in whole or in part, upon the
books of the Company by the Warrantholder in person or by duly authorized
attorney, and a new Warrant of the same tenor and date as this Warrant, but
registered in the name of the transferee, shall be executed and delivered by the
Company upon surrender of this Warrant, duly endorsed, at such office or agency
of the Company. Upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction, or mutilation of this Warrant, and, in
the case of loss, theft, or destruction, of indemnity or security reasonably
satisfactory to it, and upon surrender and cancellation of this Warrant, if
mutilated, the Company will make and deliver a new Warrant of like tenor, in
lieu of this Warrant. This Warrant shall be promptly canceled by the Company
upon the surrender hereof in connection with any exchange, transfer, or
replacement. The Company shall pay all expenses, taxes (other than stock
transfer taxes), and other charges payable in connection with the preparation,
execution, and delivery of Warrants pursuant to this Section 4.
5 Restrictions on Transfer. Notwithstanding any provisions contained in
this Warrant to the contrary, neither this Warrant nor the Warrant Shares shall
be transferable except upon the conditions specified in this Section 5, which
conditions are intended, among other things, to ensure compliance with the
provisions of the Securities Act in respect of the transfer of this Warrant or
such Warrant Shares. The holder of this Warrant agrees that such holder will not
transfer this Warrant or the related Warrant Shares (a) prior to delivery to the
Company of an opinion of counsel selected by the Warrantholder and reasonably
satisfactory to the Company, stating that such transfer is exempt from
registration under the Securities Act, or (b) until registration of such
Warrants and/or Warrant Shares under the Securities Act has become effective and
continues to be effective at the time of such transfer. An appropriate legend
may be endorsed on the Warrants and the certificates of the Warrant Shares
evidencing these restrictions. The holder of this Warrant further agrees that
such holder will not, for a period of 180 days from the date that a registration
statement covering securities offered by the Company is declared effective by
the Commission, offer to sell, contract to sell, or otherwise sell, dispose of,
loan, pledge or grant any rights with respect to the Warrant or the Warrant
Shares owned by the holder, otherwise than with the prior written consent of the
Company.
6 Antidilution Provisions. The rights granted hereunder are subject to
the following:
(a) Stock Splits. In case at any time the Company shall
subdivide its outstanding shares of Common Stock into a greater number
of shares, the Purchase Price in effect immediately prior to such
subdivision shall be proportionately reduced and the
3
<PAGE>
number of Warrant Shares purchasable pursuant to this Warrant
immediately prior to such subdivision shall be proportionately
increased, and conversely, in case at any time the Company shall
combine its outstanding shares of Common Stock into a smaller number of
shares, the Purchase Price in effect immediately prior to such
combination shall be proportionately increased and the number of
Warrant Shares purchasable upon the exercise of this Warrant
immediately prior to such combination shall be proportionately reduced.
Except as provided in this paragraph (a), no adjustment in the Purchase
Price and no change in the number of Warrant Shares so purchasable
shall be made pursuant to this Section 6 as a result of or by reason of
any such subdivision or combination.
(b) Reorganization, Reclassification, Consolidation, Merger,
or Sale. If any capital reorganization or reclassification or merger of
the Company with another corporation, or the sale of all or
substantially all of its assets to another corporation, shall be
effected in such a way that holders of shares of Common Stock shall be
entitled to receive Common Stock, Other Securities or assets with
respect to or in exchange for shares of Common Stock, then, as a
condition of such reorganization, reclassification, consolidation,
merger or sale, lawful and adequate provision shall be made whereby the
Warrantholder shall thereafter have the right to purchase and receive
upon the basis and upon the terms and conditions specified in the
Warrants and in lieu of the shares of Common Stock of the Company
immediately theretofore purchasable and receivable upon the exercise of
the Warrants such shares of Common Stock, Other Securities or assets as
may be issued or payable with respect to or in exchange for a number of
outstanding shares of Common Stock equal to the number of shares of
Common Stock immediately theretofore purchasable and receivable upon
the exercise of the Warrants had such reorganization, reclassification,
consolidation, merger or sale not taken place, and in any such case
appropriate provision shall be made with respect to the rights and
interests of the Warrantholder so that the provisions of the Warrants
(including, without limitation, provisions for adjustment of the
Purchase Price and the number of shares purchasable upon the exercise
of the Warrants) shall thereafter be applicable, as nearly as may be,
in relation to any shares of Common Stock, Other Securities or assets
thereafter deliverable upon the exercise of the Warrants.
7 Special Agreements of the Company.
(a) Will Reserve Shares. The Company will reserve and set
apart and have at all times the number of shares of authorized but
unissued Common Stock deliverable upon the exercise of the Warrants,
and it will have at all times any other rights or privileges provided
for herein sufficient to enable it at any time to fulfill all of its
obligations hereunder.
(b) Will Avoid Certain Actions. The Company will not, by
amendment of its Articles of Incorporation or through any
reorganization, transfer of assets, consolidation, merger, issue or
sale of securities or otherwise, avoid or take any action which would
have the effect of avoiding the observance or performance hereunder by
the Company, but will at all times in good faith assist in carrying out
of all the provisions of the
4
<PAGE>
Warrants and in taking all such actions as may be necessary or
appropriate in order to protect the rights of the Warrantholder against
dilution or other impairment.
8 Provisions for Registration. Despite anything in this Warrant to the
contrary, the Warrantholder shall have the following rights regarding
registration of Warrant Shares which may be hereafter acquired upon exercise of
this Warrant.
(a) Required Registration. If at any time the Company receives
the written request from the Holder of this Warrant, the Company shall
prepare and file a registration statement under the Securities Act
covering the Warrant Shares which are the subject of such requests and
shall use its best efforts to cause such registration statement to
become effective; provided, however, that all Warrant Shares covered by
such registration statement shall be converted into Common Stock prior
to inclusion in such registration statement. In addition, upon the
receipt of the aforementioned request, the Company shall promptly give
written notice to all other record holders of Warrant Shares that such
registration is to be effected. The Company shall include in such
registration statement such Warrant Shares for which it has received
written requests to register by such other record holders within
fifteen (15) days after the Company's written notice to such other
record holders. The Company shall be obligated to prepare, file and
cause to become effective only two (2) registration statements pursuant
to this Section 8(a). In the event that the holders of a majority of
the Warrant Shares for which registration has been requested pursuant
to this Section determine for any reason not to proceed with a
registration at any time before the registration statement has been
declared effective by the Commission, and such holders thereafter
request the Company to withdraw such registration statement, the
holders of such Warrant Shares agree to bear their own expenses
incurred in connection therewith and to reimburse the Company for the
expenses incurred by it attributable to such registration statement,
then, and in such event, the holders of such Warrant Shares shall not
be deemed to have exercised their right to require the Company to
register Warrant Shares pursuant to this Section 8(a).
(b) Incidental Registration. Each time the Company shall
determine to proceed with the actual preparation and filing of a
registration statement under the Securities Act in connection with the
proposed offer and sale for money of any of its Common Stock by it or
any of its security holders, the Company will give written notice of
its determination to all record holders of Warrant Shares. Upon the
written request of a record holder of any Warrant Shares given within
fifteen (15) days after receipt of any such notice from the Company,
the Company will, except as herein provided, cause all such Warrant
Shares, the record holders of which have so requested registration
thereof, to be included in such registration statement, all to the
extent requisite to permit the sale or other disposition by the
prospective seller or sellers of the Warrant Shares to be so
registered; provided, however, that (a) all such Warrant Shares to be
so registered shall be converted into Common Stock prior to sale
pursuant to such registration statement; (b) nothing herein shall
prevent the Company from, at any time, abandoning or delaying any such
registration initiated by it; and (c) if the Company determines not to
proceed with a registration after the registration statement has been
filed with the Commission and the Company's decision not to proceed is
primarily based upon the anticipated public
5
<PAGE>
offering price of the securities to be sold by the Company, the Company
shall promptly complete the registration for the benefit of those
selling security holders who wish to proceed with a public offering of
their securities and who bear all expenses in excess of $25,000
incurred by the Company as the result of such registration after the
Company has decided not to proceed. If any registration pursuant to
this Section shall be underwritten in whole or in part, the Company may
require that the Warrant Shares requested for inclusion pursuant to
this Section be included in the underwriting on the same terms and
conditions as the securities otherwise being sold through the
underwriters. If in the good faith judgment of the managing underwriter
of such public offering the inclusion of all of the Warrant Shares
originally covered by a request for registration would reduce the
number of shares to be offered by the Company or interfere with the
successful marketing of the shares of stock offered by the Company, the
number of Warrant Shares otherwise to be included in the underwritten
public offering may be reduced pro rata among the holders thereof
requesting such registration to a number that the managing underwriter
believes will not adversely affect the sale of shares by the Company.
Those securities which are thus excluded from the underwritten public
offering, and any other Common Stock owned by such holders, shall be
withheld from the market by the holders thereof for a period, not to
exceed one hundred eighty (180) days, which the managing underwriter
reasonably determines is necessary in order to effect the underwritten
public offering.
(c) Registration Procedures. If and whenever the Company is
required by the provisions of Sections 8(a) or 8(b) to effect the
registration of any Warrant Shares under the Securities Act, the
Company will:
1 prepare and file with the Commission a registration
statement with respect to such Warrant Shares, and use its
best efforts to cause such registration statement to become
and remain effective for such period as may be reasonably
necessary to effect the sale of such Warrant Shares, not to
exceed three (3) months;
2 prepare and file with the Commission such
amendments to such registration statement and supplements to
the prospectus contained therein as may be necessary to keep
such registration statement effective for such period as may
be reasonably necessary to effect the sale of such Warrant
Shares, not to exceed three (3) months;
3 furnish to the security holders participating in
such registration and to the underwriters of the Warrant
Shares being registered such reasonable number of copies of
the registration statement, preliminary prospectus, final
prospectus and such other documents as such security holders
and underwriters may reasonably request in order to facilitate
the public offering of such Warrant Shares;
6
<PAGE>
4 use its best efforts to register or qualify the
Warrant Shares covered by such registration statement under
such state securities or blue sky laws of such jurisdictions
as such participating holders may reasonably request within
ten (10) days following the original filing of such
registration statement, except that the Company shall not for
any purpose be required to execute a general consent to
service of process or to qualify to do business as a foreign
corporation in any jurisdiction wherein it is not so
qualified;
5 notify the security holders participating in such
registration, promptly after it shall receive notice thereof,
of the time when such registration statement has become
effective or a supplement to any prospectus forming a part of
such registration statement has been filed;
6 notify such holders promptly of any request by the
Commission for the amending or supplementing of such
registration statement or prospectus or for additional
information;
7 prepare and file with the Commission, promptly upon
the request of any such holders, any amendments or supplements
to such registration statement or prospectus which, in the
opinion of counsel for such holders (and concurred in by
counsel for the Company), is required under the Securities Act
or the rules and regulations thereunder in connection with the
distribution of the Warrant Shares by such holder;
8 prepare and promptly file with the Commission and
promptly notify such holders of the filing of such amendment
or supplement to such registration statement or prospectus as
may be necessary to correct any statements or omissions if, at
the time when a prospectus relating to such securities is
required to be delivered under the Securities Act, any event
shall have occurred as the result of which any such prospectus
or any other prospectus as then in effect would include an
untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the
light of the circumstances in which they were made, not
misleading;
9 advise such holders, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance of
any stop order by the Commission suspending the effectiveness
of such registration statement or the initiation or
threatening of any proceeding for that purpose and promptly
use its best efforts to prevent the issuance of any stop order
or to obtain its withdrawal if such stop order should be
issued; and
10 not file any amendment or supplement to such
registration statement or prospectus to which a majority in
interest of such holders shall have reasonably objected on the
grounds that such amendment or supplement does not comply in
all material respects with the requirements of the Securities
Act or the rules and regulations thereunder, after having been
furnished with a copy thereof
7
<PAGE>
at least five (5) business days prior to the filing thereof,
unless in the opinion of counsel for the Company the filing of
such amendment or supplement is reasonably necessary to
protect the Company from any liabilities under any applicable
federal or state law and such filing will not violate
applicable law.
(d) Expenses. With respect to any registration, requested
pursuant to Section 8(a) (except as otherwise provided in such section
with respect to registrations voluntarily terminated at the request of
the requesting security holders) and with respect to each inclusion of
securities in a registration statement pursuant to Section 8(b) (except
as otherwise provided in Section 8(b) with respect to registrations
terminated by the Company), the Company shall bear the following fees,
costs and expenses: all registration, filing and NASD fees, printing
expenses, fees and disbursements of counsel and accountants for the
Company, fees and disbursements of counsel for the underwriter or
underwriters of such securities (if the Company and/or selling security
holders are required to bear such fees and disbursements), all internal
Company expenses, the premiums and other costs of policies of insurance
against liability arising out of the public offering, and all legal
fees and disbursements and other expenses of complying with state
securities or blue sky laws of any jurisdictions in which the
securities to be offered are to be registered or qualified. Fees and
disbursements of counsel and accountants for the selling security
holders, underwriting discounts and commissions and transfer taxes for
selling security holders and any other expenses incurred by the selling
security holders not expressly included above shall be borne by the
selling security holders.
(e) Copies of Prospectus; Amendments of Prospectus. The
Company will furnish the Warrantholder with a reasonable number of
copies of any prospectus or offering circular and one copy of the
registration statement included in such filings and will amend or
supplement the same as required during the nine (9) month period
following the effective date of the registration statement, provided,
that the expenses of any amendment or supplement made or filed more
than three (3) months after the effective date of the registration
statement, at the request of the Warrantholder, shall be borne by the
Warrantholder.
(f) Conditions of the Company's Obligations. It shall be a
condition of the Company's obligation to register the Warrant Shares
hereunder that the Warrantholder agrees to cooperate with the Company
in the preparation and filing of any such registration statement, or in
its efforts to establish that the proposed sale is exempt under the
Securities Act, as to any proposed distribution. It shall also be a
condition of the Company's obligations under this Agreement that, in
the case of the filing of any registration statement, and to the extent
permissible under the Securities Act, and controlling precedent
thereunder, the Company and the Warrantholder provide
cross-indemnification agreements to each other in customary scope
covering the accuracy and completeness of the information furnished by
each.
8
<PAGE>
9 Notices. Any notice or other document required or permitted to be
given or delivered to the Warrantholder shall be delivered or sent by certified
mail to the Warrantholder at the last address shown on the books of the Company
maintained for the registry and transfer of the Warrants. Any notice or other
document required or permitted to be given or delivered to the Company shall be
delivered or sent by certified or registered mail to the principal office of the
Company.
10 No Rights as Shareholders; Limitation of Liability. This Warrant
shall not entitle any holder hereof to any of the rights of a shareholder of the
Company. No provisions hereof, in the absence of affirmative action by the
holder hereof to purchase shares of Common Stock, and no mere enumeration herein
of the rights or privileges of the holder hereof, shall give rise to any
liability of such holder for the Purchase Price or as a shareholder of the
Company whether such liability is asserted by the Company or by creditors of the
Company.
11 Governing Law. This Warrant shall be governed by, and construed and
enforced in accordance with, the laws of the State of Minnesota, without regard
to conflicts of laws principles.
12 Miscellaneous. This Warrant and any provision hereof may be changed,
waived, discharged, or terminated only by an instrument in writing signed by the
party (or any predecessor in interest thereof) against which enforcement of the
same is sought. The headings in this Warrant are for purposes of reference only
and shall not affect the meaning or construction of any of the provisions
hereof.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
a duly authorized officer, and to be dated as of the 13th day of December, 1999.
UNITED SHIPPING & TECHNOLOGY, INC.
By:
-----------------------------------
Peter C. Lytle
Chief Executive Officer
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE "1933 ACT") OR UNDER THE SECURITIES LAWS OF ANY
OTHER STATE AND MAY NOT BE TRANSFERRED WITHOUT (i) THE OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH TRANSFER MAY LAWFULLY BE MADE WITHOUT
REGISTRATION UNDER THE 1933 ACT OR THE SECURITIES LAWS OF ANY APPLICABLE STATE;
OR (ii) SUCH REGISTRATION."
9
<PAGE>
FULL SUBSCRIPTION FORM
To Be Executed By the Registered Warrantholder if It/
She/He Desires to Exercise in Full the Within Warrant
The undersigned hereby exercises the right to purchase the
_____________ shares of Common Stock covered by the within Warrant at the date
of this subscription and herewith makes payment of the sum of
$____________________________ representing the Purchase Price of $__________ per
share in effect at that date. Certificates for such shares shall be issued in
the name of and delivered to the undersigned, unless otherwise specified by
written instructions, signed by the undersigned and accompanying this
subscription.
Dated:
------------------------------
Signature:
-------------------------------
Address:
10
<PAGE>
PARTIAL SUBSCRIPTION FORM
To be Executed by the Registered Warrantholder if It/She/He
Desires to Exercise in Part Only the Within Warrant
The undersigned hereby exercises the right to purchase __________
shares of the total shares of Common Stock covered by the within Warrant at the
date of this subscription and herewith makes payment of the sum of $____________
representing the Purchase Price of $_________ per share in effect at this date.
Certificates for such shares and a new Warrant of like tenor and date
for the balance of the shares not subscribed for (if any) shall be issued in the
name of and delivered to the undersigned, unless otherwise specified by written
instructions, signed by the undersigned and accompanying this subscription.
The shares hereby subscribed for constitute ______________ shares of
Common Stock (to the nearest whole share) resulting from adjustment of
______________ shares of the total of __________________ shares of Common Stock
covered by the within Warrant, as said shares were constituted at the date of
the Warrant.
Dated:
------------------------------
Signature:
-------------------------------
Address:
11
EXHIBIT 10.5
UNITED SHIPPING & TECHNOLOGY, INC.
SUBSCRIPTION AGREEMENT
AND
LETTER OF INVESTMENT INTENT
IMPORTANT: PLEASE READ CAREFULLY BEFORE SIGNING.
SIGNIFICANT REPRESENTATIONS ARE CALLED FOR HEREIN.
United Shipping & Technology, Inc.
9850 51st Avenue North, Suite 110
Minneapolis, MN 55442
Ladies and Gentlemen:
THIS AGREEMENT, made effective the 30th day of December, 1999, between
United Shipping & Technology, Inc., a Utah corporation (the "Company"), and the
investors listed on Schedule I attached hereto, as may be amended pursuant to
Section 4 hereof, (each a "Purchaser" and collectively the "Purchasers"). Each
Purchaser agrees to purchase, and the Company agrees to sell and issue to each
Purchaser, the number of shares for the aggregate purchase price as set forth
opposite each Purchaser's name on Schedule I attached hereto at the Closing on
January 3, 2000 or at such other date as the Purchasers and the Company may
mutually agree in writing (the "Closing"). Each of the Purchaser's has also
completed the Purchaser Certification attached hereto as Attachment A.
1. Subject to the terms and conditions of this Agreement, the
Company agrees to sell to Purchasers, and Purchasers agree to
purchase from the Company at the Closing, an aggregate of ____
shares of the Company's $0.004 par value Common Stock (the
"Shares") at $5.025 per Share. Each Purchaser will purchase
the number of Shares as set forth opposite each Purchaser's
name on Schedule I attached hereto. Purchasers acknowledge
that this subscription is contingent upon acceptance in whole
or in part by the Company.
2. At the Closing, the Purchasers will deliver an aggregate
amount of $_______ by certified check or wire transfer to the
Company in payment of the full purchase price of the Shares
and the Warrant described below (the "Purchase Price"). Each
Purchaser will pay the Purchase Price as set forth opposite
each Purchaser's name on Schedule I attached hereto. The
Shares and such Warrant are collectively hereinafter sometimes
referred to as the "Securities". Checks shall be payable to
"United Shipping & Technology, Inc." Wire transfers to the
Company shall be made to:
Bank:
ABA No.:
Acct. Name:
Acct. No.:
3. At the Closing, the Company will deliver to Purchasers, Common
Stock Purchase Warrants (each a "Warrant" and collectively the
"Warrants") for the purchase of for an aggregate amount of
_______ shares of the Company's $0.004 par value Common Stock
(the "Warrant Shares"), which is an amount equal to 10% of the
Shares purchased by Purchasers, at an exercise price of
<PAGE>
$12.50 per Warrant Share. Each Purchaser will be issued a
Warrant exercisable for the number of Warrant Shares as set
forth opposite each Purchaser's name on Schedule I attached
hereto. Such Warrants have a term of three years. Pursuant to
Section 14 of this Agreement, the Company is granting to
Purchasers certain Registration Rights in connection with the
Registrable Securities (as defined in Section 14(a) hereof).
Pursuant to Section 10 of each Warrant, the Warrants may be
redeemed by the Company under certain circumstances.
4. At the Closing, the Purchasers shall have the right to
designate another related entity as an additional Purchaser
and such Purchaser's allocation of the Shares and Warrants, as
well as the Purchase Price paid by such Purchaser shall be set
forth opposite such Purchaser's name on a revised Schedule I
attached hereto. Such additional Purchaser will be deemed to
have accepted the terms of this Agreement and the
representations made by Purchasers in this Agreement,
including the fact that such additional Purchaser qualifies as
an accredited investor as defined in Rule 501(a) of Regulation
D under the Securities Act of 1933, as amended (the "Act"). In
the event the Purchasers do not elect to designate another
related entity as a Purchaser, Schedule I attached hereto
shall not be revised.
5. Each Purchaser acknowledges and represents as follows:
(a) That such Purchaser has received and carefully
reviewed the Company's Annual Report on Form 10-KSB
for the year ended June 30, 1999, the Company's
Quarterly Report on Form 10-QSB for the quarter ended
October 2, 1999, the Company's Current Reports on
Form 8-K filed October 8, 1999 (and as amended
December 8, 1999) and November 12, 1999 and all other
relevant documents as filed with the Securities and
Exchange Commission;
(b) That such Purchaser believes it is able to bear the
economic risk of the investment in the Securities;
(c) That such Purchaser believes that it has knowledge
and experience in financial and business matters,
that it is capable of evaluating the merits and risks
of the prospective investment in the Securities and
that it is able to bear such risks;
(d) That such Purchaser understands an investment in the
Securities is highly speculative but believes that
the investment is suitable for it based upon its
investment objectives and financial needs, and has
adequate means for providing for its current
financial needs and personal contingencies and has no
need for liquidity of investment with respect to the
Securities;
(e) That such Purchaser has been given access to full and
complete information regarding the Company, including
the opportunity to meet with Company officers and
review all the documents as it may have requested in
writing;
(f) That such Purchaser recognizes that the Securities,
as an investment, involve a high degree of risk; and
(g) That such Purchaser realizes that (i) the purchase of
Securities is a long-term investment; (ii) the
purchasers of Securities must bear the economic risk
of investment for an indefinite period of time
because the Securities have not been registered under
the
2
<PAGE>
the Act, and, therefore, cannot be sold unless they
are subsequently registered under the Act or an
exemption from such registration is available; and
(iii) the transferability of the Securities is
restricted, and prior to registration of the
Securities (A) requires the written consent of the
Company, (B) requires conformity with the
restrictions contained in paragraphs 6 and 7 below,
and (C) will be further restricted by a legend placed
on the certificate(s) representing the Securities
stating that such Securities have not been registered
under the Act and referring to the restrictions on
transferability of the Securities, and by stop
transfer orders or notations on the Company's records
referring to the restrictions on transferability.
6. Each Purchaser has been advised that the Securities it is
purchasing hereunder have not been registered under the Act or
relevant state securities laws, the Securities it is
purchasing hereunder are being sold to Purchaser pursuant to
exemptions from the Act and such laws, and that the Company's
reliance upon such exemptions is predicated in part on such
Purchaser's representations to the Company as contained
herein. Each Purchaser represents and warrants that the
Securities it is purchasing hereunder are being purchased for
its own account and for investment and without the intention
of reselling or redistributing the same, that it has made no
agreement with others regarding any of such Securities and
that its financial condition is such that it is not likely
that it will be necessary to dispose of any of such Securities
in the foreseeable future. Each Purchaser is aware that, in
the view of the Securities and Exchange Commission and
applicable state bodies that administer state securities laws,
a purchase of the Securities it is purchasing hereunder with
an intent to resell by reason of any foreseeable specific
contingency or anticipated change in market value, or any
change in the condition of the Company or its business, or in
connection with a contemplated liquidation or settlement of
any loan obtained for the acquisition of the Securities it is
purchasing hereunder and for which the Securities it is
purchasing hereunder were pledged as security, would represent
an intent inconsistent with the representations set forth
above. Each Purchaser further represents and agrees that if,
contrary to its foregoing intentions, it should later desire
to dispose of or transfer any of such Securities in any
manner, it shall not do so without first obtaining (a) the
opinion of counsel reasonably acceptable to the Company that
such proposed disposition or transfer lawfully may be made
without the registration of such Securities for such purpose
pursuant to the Act, as then in effect, and applicable state
securities laws, or (b) such registrations (it being expressly
understood that except as set forth in this Agreement and the
Warrants, the Company shall not have any obligation to
register the Securities for such purpose).
Each Purchaser agrees that the Company may place the following
restrictive legend on the certificate(s) representing the
Securities it is purchasing hereunder, containing
substantially the following language:
The shares represented by this certificate were
issued without registration under the Securities Act
of 1933, as amended (the "Act"), and without
registration under state securities laws, in reliance
upon exemptions contained in the Act and such laws.
No transfer of these shares or any interest therein
may be made except pursuant to effective registration
statements under said laws or pursuant to Rule 144(k)
of the Act unless this corporation has received an
opinion of counsel satisfactory to it that such
transfer or disposition does not require registration
under said laws and, for any sales under Rule 144 of
the Act, such evidence as it shall request for
compliance with that rule.
3
<PAGE>
Each Purchaser agrees and consents that the Company may place
a stop transfer order on the certificate(s) representing the
Securities it is purchasing hereunder to assure such
Purchaser's compliance with this Agreement and the matters
referenced above.
The Company agrees to take all necessary actions, including
instructing its transfer agent, to remove the above legend
promptly upon compliance with the requirements set forth in
such legend.
Each of the parties hereto agrees to save and hold harmless,
defend and indemnify the other parties hereto and their
directors, officers and agents from any claims, liabilities,
damages, losses, expenses or penalties arising out of any
misrepresentation of information furnished by such party in
this Agreement.
7. Each Purchaser represents and warrants that such Purchaser is domiciled
or organized in the state listed in Schedule I to this Agreement and
that the Shares it is purchasing hereunder are being purchased solely
for the beneficial interest of such Purchaser and not as nominee, for,
or on behalf of, or for the beneficial interest of, or with the
intention to transfer to, any other person, trust or organization,
except as specifically set forth in Section 11 of this Agreement.
8. The obligation of the Purchasers to consummate the transactions described in
this Agreement is subject to satisfaction of the following conditions: (i) Peter
C. Lytle, the President and Chief Executive Officer of the Company shall have
delivered to the Purchasers a certificate to the effect that each representation
and warranty of the Company in this Agreement is true and correct as of the
Closing, that as of the Closing there does not exist a Material Adverse Change
and that as of the Closing the Company is not in breach or violation of any of
the covenants contained in this Agreement, and (ii) pursuant to other agreements
with certain third parties unrelated to the Purchasers, an additional $4,500,000
has been invested in the Company on similar terms and conditions as this
Agreement.
9. [Intentionally Omitted.]
10. [Intentionally Omitted.]
11. Entities. If the Purchaser is not an individual but an entity, the
individual signing on behalf of such entity and the entity jointly and
severally agree and certify that:
A. The Purchaser was not organized for the specific purpose of
acquiring the Securities; and
B. This Agreement has been duly authorized by all necessary
action on the part of the Purchaser, has been duly executed by
an authorized officer or representative of the Purchaser, and
is a legal, valid and binding obligation of the Purchaser
enforceable in accordance with its terms.
12. The Company represents and warrants to the Purchaser as follows:
(a) The Company and its subsidiaries are corporations duly
organized and validly existing in good standing under the laws
of the jurisdiction in which they are incorporated, and have
the requisite corporate power to own their properties and to
carry on their business as now being conducted. Each of the
Company and its subsidiaries is duly qualified as a foreign
corporation to do business and is in good standing in every
jurisdiction in which the nature of the business conducted by
it makes such qualification necessary, except to the extent
that the failure to be so qualified or be
4
<PAGE>
in good standing would not have a Material Adverse Effect.
"Material Adverse Effect" or "Material Adverse Change" means
any material adverse effect on or material adverse change to,
respectively, (i) the business, properties, operations,
financial condition or results of operations of the Company
and its subsidiaries, taken as a whole, (ii) the ability of
the Company to perform its obligations hereunder or under the
agreements or instruments to be entered into in connection
herewith, or (iii) the Shares, the Warrant or the Warrant
Shares.
(b) (i) The Company has the requisite corporate power and
authority to enter into and perform its obligations under this
Agreement and the Warrant, to issue and sell the Shares in
accordance with the terms hereof, and to issue the Warrant
Shares upon the exercise of the Warrant, in accordance with
the Warrant, (ii) the execution and delivery of this Agreement
and the Warrant by the Company and the consummation by it of
the transactions contemplated hereby and thereby, including,
without limitation, the issuance of the Shares and the Warrant
and the reservation for issuance and the issuance of the
Warrant Shares upon exercise of the Warrant have been duly
authorized by the Company's Board of Directors and no further
consent or authorization is required by the Company, its Board
of Directors or its shareholders, (iii) this Agreement and the
Warrant have been duly executed and delivered by the Company,
and (iv) this Agreement and the Warrant constitute the valid
and binding obligations of the Company enforceable against the
Company in accordance with their terms, except as such
enforceability may be limited by general principles of equity
or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors' rights and
remedies.
(c) The Shares, the Warrant and the Warrant Shares are duly
authorized, reserved and, upon issuance in accordance with the
terms hereof and the Warrant, as the case may be, shall be
validly issued, fully paid and non-assessable, free from all
taxes, liens and charges with respect to the issue thereof,
will give rise to rights of purchase in favor of Bayview
Capital Partners LP pursuant to certain agreements entered
into between Bayview Capital Partners LP and the Company,
which purchase rights the Company has received a written
waiver of from Bayview Capital Partners LP, and will not give
rise to any other preemptive rights or antidilution rights.
(d) The execution, delivery and performance of this Agreement and
the Warrant by the Company, and the consummation by the
Company of the transactions contemplated hereby and thereby
(including, without limitation, the issuance of the Shares,
the Warrant and the Warrant Shares) will not (i) result in a
violation of the Articles of Incorporation or By-laws of the
Company or its subsidiaries or (ii) violate or conflict with,
or result in a breach of any provision of, or constitute a
default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation
of, any material agreement, indenture or instrument to which
the Company or any of its subsidiaries is a party, except
where any such violation or default would not have a Material
Adverse Effect, or result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and
state securities laws and regulations and the rules and
regulations of the principal market or exchange on which the
Common Stock is traded or listed) applicable to the Company or
any of its subsidiaries or by which any property or asset of
the Company or any of its subsidiaries is bound or affected.
Neither the Company nor its subsidiaries is in violation of
any term of or in default under its Articles of Incorporation
or By-laws or their organizational charter or By-laws,
respectively, or in violation of any term of or in default
under any material contract, agreement, mortgage,
indebtedness, indenture, instrument, judgment, decree or order
or any statute, rule or regulation applicable to the Company
or its subsidiaries, except where any such violation or
5
<PAGE>
default would not have a Material Adverse Effect. The business
of the Company and its subsidiaries is not being conducted in
violation of any law, ordinance or regulation of any
governmental entity which violation could have a Material
Adverse Effect. Except as specifically contemplated by this
Agreement and as required under the Act, the Company is not
required to obtain any consent, authorization or order of, or
make any filing or registration with, any court or
governmental or regulatory or self-regulatory agency in order
for it to execute, deliver or perform any of its obligations
under or contemplated by this Agreement or the Warrant in
accordance with the terms hereof or thereof. All consents,
authorizations, orders, filings and registrations which the
Company is required to obtain pursuant to the preceding
sentence have been obtained or effected on or prior to the
date hereof. Upon consummation of the transactions set forth
in this Agreement, the Company will not be in violation of the
listing requirements of the NASDAQ Smallcap Market and the
Company does not reasonably anticipate that the Common Stock
will be delisted by the NASDAQ Smallcap Market in the
foreseeable future. The Company and its subsidiaries are
unaware of any facts or circumstances which might give rise to
any of the foregoing.
(e) Since January 1, 1998, the Company has filed all reports,
schedules, forms, statements and other documents required to
be filed by it with the SEC pursuant to the reporting
requirements of the Securities Exchange Act of 1934, as
amended (the "1934 Act") (all of the foregoing filed prior to
the date hereof and all exhibits included therein and
financial statements and schedules thereto and documents
incorporated by reference therein being hereinafter referred
to as the "SEC Documents"). The Company (i) has delivered or
made available to the undersigned or its representative true
and complete copies of the SEC Documents as each Buyer or its
representative has requested from the Company and (ii) agrees
to deliver or make available to Purchaser or its
representative true and complete copies of any additional SEC
Documents, upon request. As of their respective dates, the SEC
Documents, except for Company's Current Report on Form 8-K
filed June 9, 1998 which was amended on June 19, 1998, the
Company's Quarterly Report on Form 10-QSB for the quarter
ended September 30, 1998 which was amended on February 2,
1999, the Company's Current Report on Form 8-K filed on
January 27, 1999 which was amended on March 29, 1999, the
Company's Current Report on Form 8-K filed on October 8, 1999
which was amended on December 8, 1999 and the Company's Annual
Report on Form 10-KSB for the year ended June 30, 1999 which
the Company expects to amend to augment the business
description and cautionary statements to properly capture the
acquisition of Corporate Express Delivery System, Inc.,
complied in all material respects with the requirements of the
1934 Act and the rules and regulations of the SEC promulgated
thereunder applicable to the SEC Documents, and none of the
SEC Documents, at the time they were filed with the SEC, or as
amended, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not
misleading. As of their respective dates, the financial
statements of the Company included in the SEC Documents
complied as to form in all material respects with applicable
accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial
statements have been prepared in accordance with generally
accepted accounting principles, consistently applied during
the periods involved (except (i) as may be otherwise indicated
in such financial statements or the notes thereto, or (ii) in
the case of unaudited interim statements, to the extent they
may exclude footnotes or may be condensed or summary
statements) and fairly present in all material respects the
financial position of the Company as of the dates thereof and
the results of its operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments). No other information
provided by or on behalf of the Company to the undersigned
6
<PAGE>
which is not included in the SEC Documents contains any untrue
statement of a material fact. The Company has not provided and
will not provide to Purchaser any material non-public
information.
(f) Except as disclosed in SEC Documents filed prior to the date
hereof, since January 1, 1999, or as disclosed in Section
12(l) of this Agreement, there has been no material adverse
change and no material adverse development in the business,
properties, operations, financial condition or results of
operations of the Company and its subsidiaries taken as a
whole. The Company has not taken any steps, and does not
currently expect to take any steps, to seek protection
pursuant to any bankruptcy law nor does the Company or its
subsidiaries have any knowledge or reason to believe that its
creditors intend to initiate involuntary bankruptcy
proceedings.
(g) Neither the Company, nor any of its affiliates, nor any person
acting on its or their behalf, has engaged in any form of
general solicitation or general advertising (within the
meaning of Regulation D under the Act) in connection with the
offer or sale of any of the Shares, the Warrant or the Warrant
Shares offered hereby.
(h) Neither the Company, nor any of its affiliates, nor any person
acting on its or their behalf has, directly or indirectly,
made any offers or sales of any security or solicited any
offers to buy any security, under circumstances that would
require registration of any of the Shares, the Warrant or the
Warrant Shares under the Act or cause the offering of any of
the Shares, the Warrant or the Warrant Shares to be integrated
with prior offerings by the Company for purposes of the Act or
any applicable stockholder approval provisions, including,
without limitation, under the rules and regulations of the
National Association of Securities Dealers Automated Quotation
system ("NASDAQ").
(i) The Company is currently eligible to register securities,
including the resale of the Shares and the Warrant Shares, on
a registration statement on Form S-3 under the Act.
(j) All information relating to or concerning the Company or any
of its subsidiaries set forth in this Agreement, the SEC
Documents or provided to the Purchaser in connection with the
transactions contemplated hereby is true and correct in all
material respects and the Company has not omitted to state any
material fact necessary in order to make the statements made
herein or therein, in light of the circumstances under which
they were made, not misleading. No event or circumstances has
occurred or information exists with respect to the Company or
any of its subsidiaries or its or their business, properties,
operations or financial conditions, which, under applicable
law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly
announced or disclosed (assuming for the purpose that the
Company's reports filed under the 1934 Act are being
incorporated into an effective registration statement filed by
the Company under the Act).
(k) The attached Schedule II is the current status of the
Company's year 2000 readiness. To the best of the Company's
knowledge, Schedule II is a true and correct statement of the
Company's year 2000 readiness as of the date of this
Agreement.
(l) Since December 17, 1999, the Company has not entered into any
agreement for, and the Company and is not presently
contemplating, the issuance of any shares of Common Stock or
any warrant or warrants for the purchase of shares of Common
Stock, or any security convertible into Common Stock, upon
terms more favorable than those set forth in this Agreement
and in the
7
<PAGE>
Warrant. Since September 30, 1999 the Company has effected the
following transactions involving its Common Stock: an
aggregate of 225,000 stock options exercisable at a price of
$4.50 per share and an aggregate of 850,000 stock options
exercisable at a price of $4.95 per share were granted under
the Company's 1995 Stock Option Plan, and an aggregate of
146,083 shares of Common Stock were sold to seven accredited
individuals at a price of $4.50 per share along with warrants
for the purchase of an aggregate of 41,333 shares of Common
Stock at an exercise of $4.50 per share.
(m) The Company (both before and after giving effect to the
transactions contemplated by this Agreement) is solvent (i.e.
its assets have a fair market value in excess of the amount
required to pay its probable liabilities on its existing debts
as they become absolute and matured).
13. The Company covenants and agrees as follows:
(a) The Company agrees to file all reports, schedules, forms,
statements and other documents required to be filed by it with
the SEC pursuant to the reporting requirements of the 1934
Act. The financial statements of the Company will be prepared
in accordance with generally accepted accounting principles,
consistently applied except for changes required by GAAP, and
will fairly present in all material respects the consolidated
financial position of the Company and its consolidated
subsidiaries and results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments).
(b) The Company shall promptly secure the listing of the
Registrable Securities upon the Nasdaq Smallcap Market
(subject to official notice of issuance) and shall maintain,
so long as Purchaser owns any Warrant or Registrable Security,
the listing of all Registrable Securities from time to time
issuable under the terms of this Agreement and the Warrant on
each national securities exchange and automated quotation
system, if any, upon which shares of Common Stock are then
listed.
(c) Each of the Company and Purchaser shall pay its respective
costs and expenses incurred by such party in connection with
the negotiation, investigation, preparation, execution,
delivery and performance of this Agreement and the Warrant;
provided, that Purchaser may request, and in the event of such
request, the Company shall, reimburse Purchaser for
Purchaser's accountable attorneys' fees and expenses incurred
in connection with the preparation of this Agreement and the
Warrant up to an aggregate of $17,000.
(d) The Company will exercise best efforts to conduct its business
in compliance with all applicable laws, rules, ordinances and
regulations of the jurisdictions in which it is conducting
business, including, without limitation, all applicable local,
state and federal environmental laws and regulations the
failure to comply with which would have a Material Adverse
Effect.
(e) The Company will not conduct any future offering that will be
integrated with the issuance of the Shares, the Warrant or the
Warrant Shares which would result in a violation of the Act.
14. (a) The Company shall prepare, and, on or prior to thirty (30)
Business Days after the Closing, file with the SEC a
registration statement of the Company filed under the Act,
subject to any other provision of this Agreement (the
"Registration Statement") or Registration Statements (as is
necessary) on Form S-3 (or, if such form is unavailable for
such a registration, on such other form as is available for
such a registration, subject to the consent of the Purchaser
and the provisions
8
<PAGE>
of Section 14(b) hereof, which consent will not be
unreasonably withheld), covering the resale of all of (i) the
Shares, (ii) the Warrant Shares issued or issuable upon
exercise of the Warrant and (iii) any shares of capital stock
issued or issuable with respect to the Shares, the Warrant
Shares or the Warrant as a result of any stock split, stock
dividend, recapitalization, exchange or similar event ((i),
(ii), and (iii) collectively, the "Registrable Securities"),
which Registration Statement(s) shall state that, in
accordance with Rule 416 promulgated under the Act, such
Registration Statement(s) also covers such indeterminate
number of additional shares of Common Stock as may become
issuable to prevent dilution resulting from stock splits,
stock dividends or similar transactions. The Registrable
Securities shall not include the Warrant. Such Registration
Statement shall initially register for resale the number of
Registrable Securities, subject to adjustment as provided in
Section 14(c) hereof. Such registered shares of Common Stock
shall be allocated among the Purchasers pro rata based on the
total number of Registrable Securities issued or issuable as
of each date that a Registration Statement, as amended,
relating to the resale of the Registrable Securities is
declared effective by the SEC. The Company shall use its best
efforts to have the Registration Statement declared effective
by the SEC within one hundred and thirty-five (135) days after
the Closing.
(b) [Intentionally Omitted.]
(c) The Company will use its best efforts to effect the
registration of the Registrable Securities for resale by
Purchasers in accordance with the intended method of
disposition thereof and, pursuant thereto, the Company shall
have the following obligations:
(i) (A) The Company shall promptly prepare and file with
the SEC a Registration Statement with respect to the
Registrable Securities (on or prior to thirty (30)
Business Days after the Closing pursuant to Section
14(a)hereof and use its best efforts to cause such
Registration Statement(s) relating to Registrable
Securities to become effective as soon as possible
after such filing (but no later than one hundred and
thirty-five (135) days after the Closing, and keep
the Registration Statement(s) effective pursuant to
Rule 415 at all times until the earlier of (i) six
months after the date as of which Purchaser may sell
all of the Registrable Securities without restriction
pursuant to Rule 144(k) promulgated under the Act (or
successor thereto) or (ii) the date on which each
Purchaser shall have sold all of the Registrable
Securities (the "Registration Period"), which
Registration Statement(s) (including any amendments
or supplements thereto and prospectuses contained
therein) shall not contain any untrue statement of a
material fact or omit to state a material fact
required to be stated therein, or necessary to make
the statements therein, in light of the circumstances
in which they were made, not misleading.
(B) (x) In the event that such Registration Statement
is not declared effective by the SEC within one
hundred and one hundred and thirty-five (135) days
after the Closing (the "Scheduled Effective Date"),
for each consecutive thirty (30) day period following
the Scheduled Effective Date, Purchaser shall, until
such time as the Registration Statement is declared
effective by the SEC (all such payments to be made in
cash and nonrefundable on the first day of each
thirty (30) day period), be entitled to an amount
from the Company equal to the product of (A) one half
of one percent, multiplied by (B) $5.025 multiplied
by (C) the aggregate number of such Purchaser's
Registrable Securities, as such price and aggregate
number of Registrable Securities may be adjusted for
any stock split, stock dividend, recapitalization or
similar event. The Scheduled
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<PAGE>
Effective Date shall be extended for any period
during which the filing of an amendment is precluded
by reason of the Company's response to a comment or
objection from Purchasers' counsel not timely made
pursuant to Section 14(c)(i)(B)(xi) hereof.
(y) Upon the occurrence of a Triggering
Event (as defined below), each Purchaser shall have
the right, at such Purchaser's option, to require the
Company to redeem all or a portion of such
Purchaser's Registrable Securities equal to the
greater of (x) the product of (A) the aggregate
number of such Purchaser's Registrable Securities,
multiplied by (B) the average of the last closing
sale price of such security on the principal
securities exchange or trading market where such
security is listed or traded, or, if applicable, in
the over-the-counter market on the electronic
bulletin board for such security on the ten
consecutive trading days immediately preceding the
applicable date; and (y) the product of (A) the
aggregate number of such Purchaser's Registrable
Securities, multiplied by (B) $5.025, multiplied by
(C) 130% (the "Triggering Event Redemption Price"),
as such price and aggregate number of Registrable
Securities may be adjusted for any stock split, stock
dividend, recapitalization or similar event.
A "Triggering Event" shall be deemed to have occurred at such
time as any of the following events:
(i) notice from the Company that Common Stock issued
or issuable cannot be sold under the Registration
Statement covering such Common Stock, for any period
of ten (10) consecutive trading days or any twenty
(20) non-consecutive trading days during any period
of one hundred and eighty (180) consecutive days that
is (A) after the date the Registration Statement has
been declared effective by the SEC, and (B) prior to
the time that the Registrable Securities may be sold
without limitation in accordance with Rule 144(k)
under the Act;
(ii) the failure of the Common Stock to be listed on
NASDAQ or any other national securities exchange for
a period of ten (10) consecutive trading days during
any period of twelve (12) months;
(iii) the failure to have the Registration Statement
declared effective by the SEC within two-hundred and
seventy (270) days after the Closing;
(iv) the failure by the Company to make any payment
in accordance with Section 14(c)(i)(B)(x) hereof
within seven (7) days after the date such payment is
due; or
(v) the Company's notice to any Purchaser, including
by way of public announcement, at any time, of its
intention not to comply with proper requests for
issuance of any Warrant Shares.
(ii) The Company shall prepare and file with the SEC such
amendments (including post-effective amendments) and
supplements to the Registration Statement(s) and the
prospectus(es) used in connection with the
Registration Statement(s), which prospectus(es) are
to be filed pursuant to Rule 424 promulgated under
the Act, as may be necessary to keep the Registration
Statement(s) effective at all times during the
Registration Period, and, during such period, comply
with the provisions of the Act with respect to the
disposition of all Registrable Securities of the
Company covered by the
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<PAGE>
Registration Statement(s) until such time as all of
such Registrable Securities shall have been disposed
of in accordance with the intended methods of
disposition by the seller or sellers thereof as set
forth in the Registration Statement(s). As soon as
practicable following the expiration of a Suspension
Period, as defined in Section 14(c)(v)(B) hereto, the
Company shall use its best efforts to cause any such
necessary amendment, supplement and/or new
Registration Statement to become effective as soon as
practicable following the filing thereof. In addition
any such amendment or new Registration Statement
shall for purposes of Section 14(c)(i) above be
deemed to be a "Registration Statement".
(iii) The Company shall furnish to each Purchaser whose
Registrable Securities are included in the
Registration Statement(s) and its legal counsel
without charge (i) promptly after the same is
prepared and filed with the SEC at least one copy of
the Registration Statement and any amendment thereto,
including financial statements and schedules, all
documents incorporated therein by reference and all
exhibits, the prospectus(es) included in such
Registration Statement(s) (including each preliminary
prospectus) and, with regards to the Registration
Statement referred to in Section 14(a) hereof, upon
request of a Purchaser, any correspondence by or on
behalf of the Company to the SEC or the staff of the
SEC and any correspondence from the SEC or the staff
of the SEC to the Company or its representatives,
(ii) upon the effectiveness of any Registration
Statement, ten (10) copies of the prospectus included
in such Registration Statement and all amendments and
supplements thereto (or such other number of copies
as such Purchaser may reasonably request) and (iii)
such other documents, including any preliminary
prospectus, as such Purchaser may reasonably request
in order to facilitate the disposition of the
Registrable Securities owned by such Purchaser.
(iv) The Company shall use reasonable efforts to (i)
register and qualify the Registrable Securities
covered by the Registration Statement(s) under such
other securities or "blue sky" laws of such
jurisdictions in the United States as any Purchaser
reasonably requests, except that the Company shall
not for any purpose be required to execute a general
consent to service of process or to qualify to do
business as a foreign corporation in any jurisdiction
wherein it is not so qualified, (ii) prepare and file
in those jurisdictions, such amendments (including
post-effective amendments) and supplements to such
registrations and qualifications as may be necessary
to maintain the effectiveness thereof during the
Registration Period, (iii) take such other actions as
may be necessary to maintain such registrations and
qualifications in effect at all times during the
Registration Period, and (iv) take all other actions
reasonably necessary or advisable to qualify the
Registrable Securities for sale in such
jurisdictions. The Company shall promptly notify each
Purchaser who holds Registrable Securities of the
receipt by the Company of any notification with
respect to the suspension of the registration or
qualification of any of the Registrable Securities
for sale under the securities or "blue sky" laws of
any jurisdiction in the United States or its receipt
of actual notice of the initiation or threatening of
any proceeding for such purpose.
(v) (A) The Company shall promptly notify Purchaser, (i)
when a prospectus or any prospectus supplement or
post-effective amendment has been filed and, with
respect to a Registration Statement or any
post-effective amendment, when the same has become
effective, (ii) of any request by the SEC or any
state securities authority for amendments and
supplements to a Registration Statement and
prospectus or for additional
11
<PAGE>
information after the Registration Statement has
become effective, (iii) of the issuance by the SEC of
any stop order suspending the effectiveness of a
Registration Statement, (iv) of the issuance by any
state securities commission or other regulatory
authority of any order suspending the qualification
or exemption from qualification of any of the
Registrable Securities under state securities or
"blue sky" laws, and (v) of the happening of any
event which makes any statement made in a
Registration Statement or related prospectus untrue
or which requires the making of any changes in such
Registration Statement or prospectus so that they
will not contain any untrue statement of a material
fact or omit to state any material fact required to
be stated therein or necessary to make the statements
therein, in light of the circumstances under which
they were made, not misleading. As soon as
practicable following expiration of the Suspension
Period (as defined below), the Company shall prepare
and file with the SEC and furnish a supplement or
amendment to such prospectus so that, as thereafter
deliverable to the purchasers of such Registrable
Securities, such prospectus will not contain any
untrue statement of a material fact or omit to state
a material fact necessary to make the statements
therein, in light of the circumstances under which
they were made, not misleading.
(B) Upon receipt of any notice (a "Suspension
Notice") by Purchaser from the Company of the
happening of any event of the kind described in
Section 14(c)(v)(A), Purchaser shall forthwith
discontinue disposition of the Registrable Securities
pursuant to the Registration Statement covering such
Registrable Securities until such Purchaser's receipt
of the copies of the supplemented or amended
Prospectus contemplated by Section 14(c)(v)(A) or
until Purchaser is advised in writing (the "Advice")
by the Company that the use of the prospectus may be
resumed, and has received copies of any additional or
supplemental filings which are incorporated by
reference in the prospectus, and, if so directed by
the Company, will, or will request any broker-dealer
acting as Purchaser's agent to, deliver to the
Company (at Company's expense) all copies, other than
permanent file copies then in Purchaser's or a
broker-dealer's possession, of the prospectus
covering such Registrable Securities current at the
time of receipt of such notice; provided, however,
that in no event shall the period from the date on
which Purchaser receives a Suspension Notice to the
date on which Purchaser receives either the Advice or
copies of the supplemented or amended prospectus
contemplated by Section 14(c)(v)(A) (the "Suspension
Period") exceed sixty (60) days.
(vi) The Company shall permit each Purchaser and a single
firm of counsel, initially Schulte Roth & Zabel LLP
or such other counsel as thereafter designated as
selling shareholders' counsel by the Purchasers who
hold a majority of the Registrable Securities being
sold, to review and comment upon the Registration
Statement(s) and all amendments and supplements
thereto at least seven (7) days prior to their filing
with the SEC, and not file any document in a form to
which such counsel reasonably objects. The Company
shall not submit a request for acceleration of the
effectiveness of a Registration Statement(s) or any
amendment or supplement thereto without the prior
approval of such counsel, which consent shall not be
unreasonably withheld.
(vii) The Company shall hold in confidence and not make any
disclosure of information concerning a Purchaser
provided to the Company by a Purchaser or on its
behalf unless (i) disclosure of such information is
necessary to comply with federal or state securities
laws, (ii) the disclosure of such information is
necessary to avoid or correct a
12
<PAGE>
misstatement or omission in any Registration
Statement, (iii) the release of such information is
ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental
body of competent jurisdiction, or (iv) such
information has been made generally available to the
public other than by disclosure in violation of this
or any other agreement. The Company agrees that it
shall, upon learning that disclosure of such
information concerning a Purchaser is sought in or by
a court or governmental body of competent
jurisdiction or through other means, give prompt
written notice to such Purchaser and allow such
Purchaser, at the Purchaser's expense, to undertake
appropriate action to prevent disclosure of, or to
obtain a protective order for, such information. It
shall be a condition of the Company's obligation to
register the Registrable Securities hereunder that
the Purchaser agrees to cooperate with the Company in
the preparation and filing of any such registration
statement, as to any proposed distribution.
(viii) The Company shall take all other reasonable actions
necessary to expedite and facilitate disposition by
the Purchasers of the Registrable Securities pursuant
to a Registration Statement.
(ix) The Company shall use its best efforts to cause the
Registrable Securities covered by the applicable
Registration Statement to be registered with or
approved by such other governmental agencies or
authorities as may be necessary to consummate the
disposition of such Registrable Securities.
(x) The Company shall otherwise use its best efforts to
comply with all applicable rules and regulations of
the SEC in connection with any registration
hereunder.
(d) The Company hereby indemnifies each of the holders of any
Shares, the Warrant and of any Warrant Shares, and the
officers, partners, employees, agents, directors and each
other individual or entity, if any, who control any such
holder, within the meaning of Section 15 of the Act, against
all losses, claims, damages, liabilities or any other costs,
fees or expenses (including without limitation, reasonable
attorneys' fees) caused by (1) any untrue statement or alleged
untrue statement of a material fact contained in any
Registration Statement or prospectus prepared in connection
with any Registration Statement (and as amended or
supplemented if the Company shall have furnished any
amendments thereof or supplements thereto), any preliminary
prospectus or any state securities law filings; (2) any
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein, in the case of a prospectus or preliminary
prospectus, in light of the circumstances under which the
statements therein were made, not misleading; or (3) any
violation or alleged violation by the Company of the Act, the
1934 Act, any other law, including, without limitation, any
state securities law, or any rule or regulation thereunder
relating to the offer or sale of the Registrable Securities
pursuant to a Registration Statement, except insofar as such
losses, claims, damages, or liabilities are caused by any
untrue statement or omission contained in information
furnished in writing to the Company by such holder expressly
for use therein, if such prospectus was timely made available
by the Company to such holder in accordance with this
Agreement. To the extent that the foregoing undertaking by the
Company may be unenforceable for any reason, the Company shall
make the maximum contribution to the payment and satisfaction
of each of the losses, claims, damages, liabilities, costs,
fees and expenses which is permissible under applicable law.
Each such holder by its acceptance hereof severally agrees
that it will indemnify and hold harmless the Company, each of
its officers who signs such Registration Statement, and
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<PAGE>
each person, if any, who controls the Company, within the
meaning of Section 15 of the Act, with respect to losses,
claims, damages, liabilities or any costs, fees or expenses
(including without limitation, reasonable attorneys' fees)
which are caused, and solely to the extent they are caused, by
any untrue statement or alleged untrue statement, omission or
alleged omission contained in information furnished in writing
to the Company by such holder expressly for use therein;
provided however, that such holder shall be liable under this
Section 14 for only that amount as does not exceed the net
proceeds to such holder as a result of the sale of Registrable
Securities pursuant to such Registration Statement.
15. Miscellaneous.
A. Manner in which title is to be held: as set forth on the
signature page of this Agreement.
B. Each of the parties hereto agrees that such party understands
the meaning and legal consequences of the agreements,
representations and warranties contained herein, and agrees
that such agreements, representations and warranties shall
survive and remain in full force and effect after the
execution hereof and payment for and delivery of the Shares
and the Warrant.
C. This Agreement shall be construed and interpreted in
accordance with Minnesota law without regard to conflict of
law provisions.
D. The Purchaser agrees to furnish to the Company, upon request,
such additional information as may be deemed necessary to
determine the Purchaser's suitability as an investor.
[NOTE: SIGNATURE PAGES TO FOLLOW]
<PAGE>
SIGNATURE PAGE
Dated: ______________________, ______.
By: _________________________________
Name: _______________________________
Title: ______________________________
_____________________________________
Address
_____________________________________
City, State and Zip Code
_____________________________________
Mailing Address
_____________________________________
_____________________________________
City, State and Zip Code
_____________________________________
Tax Identification or Social Security Number
<PAGE>
CERTIFICATE OF SIGNATORY
(TO BE COMPLETED ONLY IF SHARES ARE BEING SUBSCRIBED BYAN ENTITY.)
I, ________________________, am the ______________, of
____________________ (the "Entity").
I certify that I am empowered and duly authorized by the Entity to
execute and carry out the terms of the Subscription Agreement and Letter of
Investment Intent and to purchase and hold the Shares, and certify further that
the Subscription Agreement and Letter of Investment Intent has been duly and
validly executed on behalf of the Entity and constitutes a legal and binding
obligation of the Entity.
IN WITNESS WHEREOF, I have set my hand this _____ day of __________,
_____.
Signature:____________________________
Title:________________________________
Name (Print):_________________________
<PAGE>
ACCEPTANCE BY THE COMPANY
United Shipping & Technology, Inc. hereby accepts the foregoing
subscription to the extent of an aggregate of __________ shares of its Common
Stock and Warrants to purchase an aggregate of 89,552 shares of Common Stock,
and agrees to the provisions of this Agreement applicable to United Shipping &
Technology, Inc.
UNITED SHIPPING & TECHNOLOGY, INC.
By
-------------------------------------------
Peter C. Lytle
President and Chief Executive Officer
<PAGE>
ATTACHMENT A
PURCHASER CERTIFICATION
THE COMPLETION OF THIS PURCHASER CERTIFICATION IS REQUIRED IN CONNECTION WITH
THE EXEMPTIONS FROM THE ACT AND STATE LAWS BEING RELIED ON BY THE COMPANY WITH
RESPECT TO THE OFFER AND SALE OF THE SHARES AND THE WARRANT. ALL OF SUCH
INFORMATION WILL BE KEPT CONFIDENTIAL AND WILL BE REVIEWED ONLY BY THE COMPANY
AND ITS COUNSEL. Purchaser agrees to furnish any additional information which
the Company or its legal counsel deem necessary in order to verify the responses
set forth below.
1. Accredited Status. The Purchaser represents and warrants as follows
(CHECK ONE):
_______ A. The Purchaser is an individual
with a net worth, or a joint net
worth together with his or her
spouse, in excess of $1,000,000. (In
calculating net worth, you may
include equity in personal property
and real estate, including your
principal residence, cash,
short-term investments, stock and
securities. Equity in personal
property and real estate should be
based on the fair market value of
such property minus debt secured by
such property.)
_______ B. The Purchaser is an individual
with income in excess of $200,000 in
each of the prior two years and
reasonably expects an income in
excess of $200,000 in the current
year.
_______ C. The Purchaser is an individual
who, with his or her spouse, had
joint income in excess of $300,000
in each of the prior two years and
reasonably expects joint income in
excess of $300,000 in the current
year.
_______ D. The Purchaser is a director or
executive officer of United Shipping
& Technology, Inc.
_______ E. The Purchaser, if other than an
individual, is an entity all of
whose equity owners meet one of the
tests set forth in (A) through (D)
above.
_______ F. The Purchaser is an entity, and
is an "accredited investor" as
defined in Rule 501(a) of Regulation
D under the Act. This representation
is based on the following (check one
or more, as applicable):
______ 1. The Purchaser (or, in
the case of a trust, the
undersigned trustee) is a
bank or savings and loan
association as defined in
Sections 3(a)(2) and
3(a)(5)(A), respectively,
of the Act acting either in
its individual or fiduciary
capacity.
______ 2. The Purchaser is an
insurance company as
defined in section
2(13) of the Act.
<PAGE>
______ 3. The Purchaser is an
investment company
registered under the
Investment Company Act of
1940 or a business
development company as
defined in Section 2(a)(48)
of that Act.
______ 4. The Purchaser is a Small
Business Investment Company
licensed by the United
States Small Business
Administration under
Section 301(c) or (d) of
the Small Business
Investment Act of 1958.
______ 5. The Purchaser is an
employee benefit plan
within the meaning of Title
I of the Employee
Retirement Income Security
Act of 1974 ("ERISA") and
either (check one or more,
as applicable):
___ a. the investment
decision is made
by a plan
fiduciary,
as defined in
Section 3(21) of
ERISA, which is
either a bank,
savings and loan
association,
insurance company,
or registered
investment
advisor; or
___ b. the employee
benefit plan has
total assets in
excess of
$5,000,000; or
___ c. the plan is a
self-directed plan
with investment
decisions made
solely by persons
who are
"accredited
investors" as
defined under the
Act.
______ 6. The Purchaser is a private
business development
company as
defined in Section 202(a)
(22) of the Investment
Advisers Act of 1940.
______ 7. The Purchaser has total
assets in excess of
$5,000,000, was not formed
for the specific purpose of
acquiring the Shares and is
one or more of the
following (check one or
more, as appropriate):
___ a. an organization
described in
Section 501(c)(3)
of the Internal
Revenue Code; or
___ b. a corporation; or
___ c. a Massachusetts or
similar business
trust; or
___ d. a partnership.
______ 8. The Purchaser is a trust
with total assets exceeding
$5,000,000 which was not
formed for the specific
purpose of acquiring the
Securities and whose
purchase is directed by a
person who has such
knowledge and experience in
financial
<PAGE>
and business matters that
he or she is capable of
evaluating the merits and
risks of the investment in
the Securities. (IF ONLY
THIS RESPONSE IS CHECKED,
please contact the Company
to receive and complete an
information statement
before this subscription
can be considered).
2. NASD Affiliation. The Purchaser is affiliated or associated, directly
or indirectly, with a National Association of Securities Dealers, Inc.
("NASD") member firm or person.
Yes ________ No ________
If yes, list the affiliated member firm or person: ____________________
________________________________________________________________________________
________________________________________________________________________________
Your relationship to such member firm or person: ______________________
________________________________________________________________________________
________________________________________________________________________________
Dated: _______________________________
By:___________________________________
Name: ________________________________
Title: _______________________________
<PAGE>
SCHEDULE II
YEAR 2000 COMPLIANCE AT CORPORATE EXPRESS DELIVERY SYSTEMS
We are pleased to announce that we at Corporate Express Delivery
Systems (formerly U.S. Delivery, United TransNet, Tricor, Midnite Express, and
Air Courier Dispatch) are in the final stages of our Year 2000 efforts for items
deemed at-risk for non-compliance. We are also well into the process of creating
contingency plans for operations in the unlikely occurrence of disruptions
relating to systems or supplier failures. We are confident at this time that
Corporate Express Delivery Systems will continue to meet our customers'
expectations with no significant disruptions due to the Year 2000 bug.
THE YEAR 2000 BUG
Year 2000 compliance includes the ability for systems to operate
correctly upon the beginning of the year 2000. It also includes the ability to
accept and process any date prior to January 1, 2000 and any date after December
31, 1999. This ability must exist before the year 2000 to handle future dates in
contracts, credit card expiration dates, etc., and must exist after the year
2000 to handle historical billing, inquiry, and reporting. Year 2000 compliance
also includes the ability to correctly handle leap year within the year of 2000.
BACKGROUND
Corporate Express Delivery Systems engaged the Year 2000 Compliance
practice of MCI/SHL SystemHouse (now a division of EDS) to assist in identifying
an inventory of items potentially at risk, and to perform an assessment of our
compliance. Our efforts then focused on upgrading, modifying or replacing these
items. The overall effort is sponsored within Corporate Express Delivery Systems
by our Chief Executive Officer and is under the direct supervision of our Chief
Information Officer.
COMPLIANCE STATUS
There are many areas potentially affected by this event that have been
evaluated and addressed. We have grouped these areas as follows:
VOICE All non-compliant voice communications components have been
COMMUNICATIONS upgraded or replaced.
DATA All non-compliant data communications components have been
COMMUNICATIONS upgraded or replaced.
SERVERS Several operational system servers and file and print servers
have been identified as non-compliant and are in the final
stages of being upgraded, replaced, or phased out of service.
OPERATIONAL Some operational systems have been identified as non-compliant
SYSTEMS and are in the final stages of being upgraded, replaced, or
phased out of service.
PC HARDWARE All non-compliant PCs have been upgraded or replaced.
PC SOFTWARE All non-compliant PC software has been upgraded, replaced, or
phased out of use.
INFRASTRUCTURE All non-compliant Infrastructure and Facilities components
AND FACILITIES have been upgraded, replaced or phased out of use.
<PAGE>
YEAR 2000 SUPPORT
Corporate Express Delivery Systems plans to have a full support
capability at and around the time of the rollover into Year 2000. Our staff will
be on-site at corporate headquarters and all divisions to verify all major
utilities, hardware, software, and other systems and to identify and address any
areas of failure. We are prepared to implement our Contingency Plans immediately
upon any significant failure.
CONTINGENCY PLANNING
While not expecting significant problems, Corporate Express Delivery
Systems is developing contingency plans in the event of Year 2000 failures. Each
of our operational functions is being assessed for potential failures, including
systems failures, infrastructure failures, supplier problems, etc. Based upon
the risk assessment, we will take all or some of our contingency plans where
appropriate.
Contingency plans for all critical business processes will be complete
by September 30, 1999.
SUPPLIER COMPLIANCE PROGRAM
CEDS has confirmed Year 2000 readiness with all corporate suppliers. We
continue to monitor suppliers that provide our most critical products and
services.
SUMMARY
We are aware of and understand the seriousness of the Year 2000 issues.
We believe we have a planned, disciplined approach to mitigate those issues.
Therefore we believe that the Year 2000 problem does not pose a material risk to
our business. We are confident that Corporate Express Delivery Systems will not
experience any significant disruption to our business as a result of this event.
EXHIBIT 10.6
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
EITHER THE SECURITIES ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS AND MAY
NOT BE SOLD, TRANSFERRED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE DISTRIBUTED
FOR VALUE UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND
SUCH LAWS COVERING SUCH SECURITIES, OR THE COMPANY RECEIVES AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT,
OFFER, PLEDGE OR OTHER DISTRIBUTION FOR VALUE IS EXEMPT FROM THE REGISTRATION
AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND SUCH LAWS.
WARRANT
-------
TO PURCHASE _____ SHARES OF COMMON STOCK
OF
UNITED SHIPPING & TECHNOLOGY, INC.
THIS CERTIFIES THAT, for good and valuable consideration, _________ or
its registered assigns (the "Holder"), is entitled to subscribe for and purchase
from United Shipping & Technology, Inc., a Utah corporation (the "Company"), at
any time after January 3, 2000, to and including 5:00 p.m. Minneapolis,
Minnesota time on January 3, 2004, as may be adjusted pursuant to Section 3(b)
hereof, (the "Expiration Date"), ___________ fully paid and nonassessable shares
of the Common Stock of the Company at the price of $12.50 per share (the
"Warrant Exercise Price"), subject to the antidilution provisions of this
Warrant. The shares which may be acquired upon exercise of this Warrant are
referred to herein as the "Warrant Shares." As used herein, the term "Common
Stock" means and includes the Company's presently authorized common stock $.004
par value, and shall also include any capital stock of any class of the Company
hereafter authorized which shall not be limited to a fixed sum or percentage in
respect of the rights of the holders thereof to participate in dividends or in
the distribution of assets upon the voluntary or involuntary liquidation,
dissolution, or winding up of the Company.
This Warrant is subject to the following provisions, terms and
conditions:
1. Exercise: Transferability.
(a) Subject to the provisions of Section 3 hereof, the rights
represented by this Warrant may be exercised by the Holder hereof, in whole or
in part (but not as to a fractional share of Common Stock), by written notice of
exercise (in the form attached hereto) delivered to the Company at the principal
office of the Company prior to the Expiration Date and accompanied or preceded
by the surrender of this Warrant along with payment of the Warrant Exercise
Price as described below for such Warrant Shares.
<PAGE>
(b) Payment of the Warrant Exercise Price may be made as follows (or by
any combination of the following): (i) in United States currency by cash or
delivery of a check payable to the order of the Company or by wire transfer to
the account of the Company, or (ii) by cancellation of such number of the
Warrant Shares otherwise issuable to the Holder upon such exercise as shall be
specified in the written notice of exercise, such that the excess of the Current
Market Price (as defined below) of such specified number of Warrant Shares on
the date of exercise over the portion of the Warrant Exercise Price attributable
to such Warrant Shares shall equal the Warrant Exercise Price attributable to
the Warrant Shares to be issued upon such exercise, in which case upon delivery
of such written notice of exercise such amount shall be deemed to have been paid
to the Company and the number of Warrant Shares issuable upon such exercise
shall be reduced by such specified number. "Current Market Price" shall mean, on
any date specified herein, the average closing sale price of such security on
the principal securities exchange or trading market where such security is
listed or traded, or, if applicable, in the over-the-counter market on the
electronic bulletin board for such security, during the ten (10) consecutive
trading days commencing fifteen (15) trading days before such date.
2. Exchange and Replacement. Subject to Sections 1 and 7 hereof, this
Warrant is exchangeable upon the surrender hereof by the Holder to the Company
at its office for new Warrants of like tenor and date representing in the
aggregate the right to purchase the number of Warrant Shares purchasable
hereunder, each of such new Warrants to represent the right to purchase such
number of Warrant Shares (not to exceed the aggregate total number purchasable
hereunder) as shall be designated by the Holder at the time of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it of the
loss, theft, destruction, or mutilation of this Warrant, and, in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to it,
and upon surrender and cancellation of this Warrant, if mutilated, the Company
will make and deliver a new Warrant of like tenor, in lieu of this Warrant. This
Warrant shall be promptly canceled by the Company upon the surrender hereof in
connection with any exchange or replacement. The Company shall pay all expenses,
taxes (other than stock transfer taxes), and other charges payable in connection
with the preparation, execution, and delivery of Warrants pursuant to this
Section 2.
3. Issuance of the Warrant Shares.
(a) The Company agrees that the Warrant Shares purchased hereby shall
be and are deemed to be issued to the Holder as of the close of business on the
date on which this Warrant shall have been surrendered and the payment made for
such Warrant Shares as aforesaid. Subject to the provisions of the next section,
certificates for the Warrant Shares so purchased shall be delivered to the
Holder within a reasonable time, not exceeding fifteen (15) business days after
the rights represented by this Warrant shall have been so exercised, and, unless
this Warrant has expired, a new Warrant representing the right to purchase the
number of Warrant Shares, if any, with respect to which this Warrant shall not
then have been exercised shall also be delivered to the Holder within such time.
2
<PAGE>
(b) Notwithstanding the foregoing, however, the Company shall not be
required to deliver any certificate for Warrant Shares upon exercise of this
Warrant except in accordance with exemptions from the applicable securities
registration requirements or registrations under applicable securities laws.
Such Holder shall also provide the Company with written representations from the
Holder and the proposed transferee satisfactory to the Company regarding the
transfer or, at the election of the Company, an opinion of counsel reasonably
satisfactory to the Company to the effect that the proposed transfer of this
Warrant or disposition of Warrant Shares may be effected without registration or
qualification (under any Federal or State law) of this Warrant or the Warrant
Shares. Upon receipt of such written notice and either such representations or
opinion by the Company, such Holder shall be entitled to transfer this Warrant,
or to exercise this Warrant in accordance with its terms and dispose of the
Warrant Shares, all in accordance with the terms of the notice delivered by such
Holder to the Company, provided that an appropriate legend, if any, respecting
the aforesaid restrictions on transfer and disposition may be endorsed on this
Warrant or the certificates for the Warrant Shares. Nothing herein, however,
shall obligate the Company to effect registration under federal or state
securities laws, except as provided in Section 14 of the Subscription Agreement
(as defined below). If a registration is not in effect and if an exemption is
not available when the Holder seeks to exercise the Warrant, the Expiration Date
will be extended, if need be, to prevent the Warrant from expiring, until such
time as either registration becomes effective or an exemption is available, and
the Warrant shall then remain exercisable for a period of at least thirty (30)
calendar days from the date the Company delivers to the Holder written notice of
the availability of such registration or exemption. The Holder agrees to execute
such documents and make such representations, warranties, and agreements as may
be required solely to comply with the exemption relied upon by the Company, or
the registration made, for the issuance of the Warrant Shares.
4. Covenants of the Company. The Company covenants and agrees that all
Warrant Shares will, upon issuance, be duly authorized and issued, fully paid,
nonassessable, and free from all taxes, liens, and charges with respect to the
issue thereof except for all taxes, liens and charges imposed by the Holder. The
Company further covenants and agrees that during the period within which the
rights represented by this Warrant may be exercised, the Company will at all
times have authorized and reserved for the purpose of issue or transfer upon
exercise of the rights evidenced by this Warrant a sufficient number of shares
of Common Stock to provide for the exercise of the rights represented by this
Warrant.
5. Antidilution Adjustments. The provisions of this Warrant are subject
to adjustment as provided in this Section 5.
(a) The Warrant Exercise Price shall be adjusted from time to time such
that in case the Company shall hereafter:
(i) pay any dividends on any class of stock of the Company payable in
Common Stock or securities convertible into Common Stock;
3
<PAGE>
(ii) subdivide its then outstanding shares of Common Stock into a
greater number of shares; or
(iii) combine outstanding shares of Common Stock, by reclassification
or otherwise;
then, in any such event, the Warrant Exercise Price in effect immediately prior
to such event shall (until adjusted again pursuant hereto) be adjusted
immediately after such event to a price (calculated to the nearest full cent)
determined by dividing (a) the number of shares of Common Stock outstanding
immediately prior to such event, multiplied by the then existing Warrant
Exercise Price, by (b) the total number of shares of Common Stock outstanding
immediately after such event (excluding any shares of Common Stock issuable in
respect of any securities convertible into Common Stock), and the resulting
quotient shall be the adjusted Warrant Exercise Price per share. An adjustment
made pursuant to this Subsection shall become effective immediately after the
record date in the case of a dividend or distribution and shall become effective
immediately after the effective date in the case of a subdivision, combination
or reclassification. If, as a result of an adjustment made pursuant to this
Subsection, the Holder of any Warrant thereafter surrendered for exercise shall
become entitled to receive shares of two or more classes of capital stock or
shares of Common Stock and other capital stock of the Company, the Board of
Directors (whose determination shall be conclusive) shall determine reasonably
and in good faith the allocation of the adjusted Warrant Exercise Price between
or among shares of such classes of capital stock or shares of Common Stock and
other capital stock. All calculations under this Subsection shall be made to the
nearest cent or to the nearest 1/100 of a share, as the case may be. In the
event that at any time as a result of an adjustment made pursuant to this
Subsection, the Holder of any Warrant thereafter surrendered for exercise shall
become entitled to receive any shares of the Company other than shares of Common
Stock, thereafter the Warrant Exercise Price of such other shares so receivable
upon exercise of any Warrant shall be subject to adjustment from time to time in
a manner and on terms as nearly equivalent as practicable to the provisions with
respect to Common Stock contained in this Section 5.
(b) Upon each adjustment of the Warrant Exercise Price pursuant to
Section 5(a) above, the Holder of each Warrant shall thereafter (until another
such adjustment) be entitled to purchase at the adjusted Warrant Exercise Price
the number of shares, calculated to the nearest full share, obtained by
multiplying the number of shares specified in such Warrant (as adjusted as a
result of all adjustments in the Warrant Exercise Price in effect prior to such
adjustment) by the Warrant Exercise Price in effect prior to such adjustment and
dividing the product so obtained by the adjusted Warrant Exercise Price.
(c) In case of any consolidation or merger to which the Company is a
party other than a merger or consolidation in which the Company is the
continuing or surviving corporation, or in case of any sale, transfer or
conveyance to another entity of the property of the Company as an entirety or
substantially as an entirety, or in the case the Company shall permit any other
entity to consolidate with or merge into the Company and the Company shall be
the continuing or surviving entity but, in connection with such consolidation or
merger, the Common Stock or other capital stock
4
<PAGE>
which the Holder at any time shall be entitled to receive, or shall have
received upon the exercise of the Warrant, shall be changed into or exchanged
for stock or other securities of any other entity or cash or any other property,
or in the case that the Company shall effect a capital reorganization or
reclassification of the Common Stock or other capital stock which the Holder at
any time shall be entitled to receive, or shall have received, upon the exercise
of the Warrant (other than a capital reorganization or reclassification
described in Section 5(a)(iii)), there shall be no adjustment under Section 5(a)
hereof, but the Holder of each Warrant then outstanding shall have the right
thereafter to convert such Warrant into the kind and amount of shares of stock
and other securities and property which such Holder would have owned or have
been entitled to receive immediately after such consolidation, merger, statutory
exchange, sale, or conveyance had such Warrant been exercised immediately prior
to the effective date of such consolidation, merger, statutory exchange, sale,
or conveyance and in any such case, if necessary, appropriate adjustment shall
be made in the application of the provisions set forth in this Section with
respect to the rights and interests thereafter of any Holders of the Warrant, to
the end that the provisions set forth in this Section shall thereafter
correspondingly be made applicable, as nearly as may reasonably be, in relation
to any shares of stock and other securities and property thereafter deliverable
on the exercise of the Warrant. The provisions of this Subsection shall
similarly apply to successive consolidations, mergers, statutory exchanges,
sales or conveyances.
(d) Upon any adjustment of the Warrant Exercise Price, then and in each
such case, the Company shall within ten (10) days after the date when the
circumstances giving rise to the adjustment occurred give written notice
thereof, by first-class mail, postage prepaid, addressed to the Holder as shown
on the books of the Company, which notice shall state the Warrant Exercise Price
resulting from such adjustment and the increase or decrease, if any, in the
number of shares of Common Stock purchasable at such price upon the exercise of
this Warrant, setting forth in reasonable detail the method of calculation and
the facts upon which such calculation is based.
6. No Voting Rights. This Warrant shall not entitle the Holder to any
voting rights or other rights as a shareholder of the Company.
7. Notice of Transfer of Warrant or Resale of the Warrant Shares.
(a) Subject to the sale, assignment, hypothecation, or other transfer
restrictions set forth in Section 1 hereof, the Holder, by acceptance hereof,
agrees to give written notice to the Company before transferring this Warrant or
transferring any Warrant Shares of such Holder's intention to do so, describing
briefly the manner of any proposed transfer. Promptly upon receiving such
written notice, the Company shall present copies thereof to the Company's
counsel and to counsel to the original purchaser of this Warrant. If in the
opinion of each such counsel the proposed transfer may be effected without
registration or qualification (under any federal or state securities laws), the
Company, as promptly as practicable, shall notify the Holder of such opinion,
whereupon the Holder shall be entitled to transfer this Warrant or to dispose of
Warrant Shares received upon the previous exercise of this Warrant, all in
accordance with the terms of the notice delivered by the Holder to the Company;
provided that an appropriate legend may be endorsed on this Warrant or the
certificates
5
<PAGE>
for such Warrant Shares respecting restrictions upon transfer thereof necessary
or advisable in the opinion of counsel to the Company and satisfactory to the
Company to prevent further transfers which would be in violation of Section 5 of
the Securities Act of 1933, as amended (the "1933 Act") and applicable state
securities laws; and provided further that the Holder and prospective transferee
or purchaser shall execute such documents and make such representations,
warranties, and agreements as may be required solely to comply with the
exemptions relied upon by the Company for the transfer or disposition of the
Warrant or Warrant Shares.
(b) If in the opinion of either of the counsel referred to in this
Section 7, the proposed transfer or disposition of this Warrant or such Warrant
Shares described in the written notice given pursuant to this Section 7 may not
be effected without registration or qualification of this Warrant or such
Warrant Shares the Company shall promptly give written notice thereof to the
Holder, and the Holder will limit its activities in respect to such as, in the
opinion of both such counsel, are permitted by law.
8. Fractional Shares.
(a) Fractional shares shall not be issued upon the exercise of this
Warrant, but in any case where the Holder would, except for the provisions of
this Section, be entitled under the terms hereof to receive a fractional share,
the Company shall, upon the exercise of this Warrant for the largest number of
whole shares then called for, pay a sum in cash equal to the sum of (a) the
excess, if any, of the Current Market Price (as defined in Section 1(b) hereof)
of such fractional share over the proportional part of the Warrant Exercise
Price represented by such fractional share, plus (b) the proportional part of
the Warrant Exercise Price represented by such fractional share.
9. Registration Rights. Subject to the registration rights set forth in
the Subscription Agreement and Letter of Investment Intent, dated as of December
30, 1999, (the "Subscription Agreement") from the Company to the Holder:
(a) If at any time prior to the expiration of seven (7) years from the
date hereof, the Company proposes to register under the 1933 Act (except by a
Form S-4 or Form S-8 Registration Statement or any successor forms thereto) or
qualify for a public distribution under Section 3(b) of the 1933 Act, any of its
equity securities or debt with equity features, it will give written notice to
all Holders of this Warrant, any Warrants issued pursuant to Section 2 and/or
Section 3(a) hereof, and any Warrant Shares of its intention to do so and, on
the written request of any such Holder given within twenty (20) days after
receipt of any such notice (which request shall specify the Warrant Shares
intended to be sold or disposed of by such Holder and describe the nature of any
proposed sale or other disposition thereof), the Company will use its best
efforts to cause all such Warrant Shares, the Holders of which shall have
requested the registration or qualification thereof, to be included in such
registration statement proposed to be filed by the Company; provided, however,
that nothing herein shall prevent the Company from, at any time, abandoning or
delaying any registration.
6
<PAGE>
(b) Further, at any time prior to the expiration of this Warrant, and
provided that a registration statement on Form S-3 (or equivalent) is then
available to the Company, and on a one-time basis only, upon request by the
Holder or Holders of a majority in interest of this Warrant, of any Warrants
issued pursuant to Section 2 and/or Section 3(a) hereof, and of any Warrant
Shares, the Company will promptly take all necessary steps to register or
qualify, under the 1933 Act and the securities laws of such states as the
Holders may reasonably request, such number of Warrant Shares issued and to be
issued upon exercise of the Warrants requested by such Holders in their request
to the Company, provided, however, that this demand right shall not apply to any
Warrant Shares which any Holder is able to sell pursuant to Rule 144 promulgated
under the 1933 Act during a three-month period prior to the effective date of
any such registration statement. In addition, if any registration pursuant to
this Section 9(b) is underwritten in whole or in part, the Company may require
that the Warrant Shares requested for inclusion pursuant to this Section 9(b) be
included in the underwriting on the same terms and conditions as the securities
otherwise being sold through the underwriters. If a greater number of Warrant
Shares is offered for participation in the proposed offering than in the
reasonable opinion of the managing underwriter of the proposed offering can be
accommodated without adversely affecting the proposed offering, then the amount
of Warrant Shares proposed to be offered by such Holders for registration, as
well as the number of securities of any other selling shareholders participating
in the registration, shall be proportionately reduced to a number deemed
satisfactory by the managing underwriter. Furthermore, upon the receipt of such
request, the Company shall promptly give written notice to all other record
Holders of the Warrant Shares not theretofore registered under the 1933 Act and
sold that such registration is to be effected. The Company shall include in such
registration statement such Warrant Shares for which it has received written
requests to register by such other record Holders within thirty (30) days after
the delivery of the Company's written notice to such other record Holders. The
Company shall be obligated to prepare, file and cause to become effective only
one registration statement pursuant to this Section 9(b) and to pay all costs
and expenses associated with such registration statement as provided in Section
9(c). The Company shall keep effective and maintain any registration,
qualification, notification, or approval specified in this Paragraph (b) for a
period of one hundred twenty (120) days.
(c) With respect to each inclusion of securities in a registration
statement pursuant to this Section 9, the Company shall bear the following fees,
costs, and expenses: all registration, filing and NASD fees, printing expenses,
fees and disbursements of counsel and accountants for the Company, fees and
disbursements of counsel for the underwriter or underwriters of such securities
(if the offering is underwritten and the Company is required to bear such fees
and disbursements), all internal expenses, the premiums and other costs of
policies of insurance against liability arising out of the public offering, and
legal fees and disbursements and other expenses of complying with state
securities laws of any jurisdictions in which the securities to be offered are
to be registered or qualified. Fees and disbursements of special counsel and
accountants for the selling Holders, underwriting discounts and commissions, and
transfer taxes for selling Holders and any other expenses relating to the sale
of securities by the selling Holders not expressly included above shall be borne
by the selling Holders.
7
<PAGE>
10. Mandatory Redemption.
(a) At any time after January 3, 2002, in the event the Current Market
Price (as defined in this Section 10 (b)), is at least $25.00 per share for
twenty (20) consecutive trading days, the Board of Directors of the Company
shall have the right upon thirty (30) days' notice to the Holder to purchase
this Warrant for a purchase price equal to (i) the number of Warrant Shares, as
adjusted herein, as to which this Warrant has not been exercised at the
expiration of said thirty (30)-day period (the "Unexercised Warrant Shares"),
multiplied by (ii) $0.01 per Unexercised Warrant Share. Nothing herein shall be
construed to prevent the Holder from exercising this Warrant as to the
Unexercised Warrant Shares prior to the expiration of said thirty (30)-period.
Upon expiration of such thirty (30)-day period, all unexercised purchase rights
under this Warrant shall be void. The above-referenced purchase price shall be
payable in full by the Company on or before fifteen (15) days after the
expiration of the above referenced thirty (30)-day notice.
(b) For the purposes of this Section 10 only, the Current Market Price
for the Company's Common Stock shall be the closing sale price per share of
Common Stock (as adjusted for any stock dividend, split, combination or
reclassification). The closing sale price for each day shall be the last
reported sale price, on the principal national securities exchange on which the
Common Stock is listed or admitted to trading, or if not listed or admitted to
trading on any national securities exchange, the closing sale price for such day
reported by the Nasdaq National Market System or Nasdaq SmallCap Market, as the
case may be, if the Common Stock is traded over-the-counter and quoted in the
Nasdaq National Marker System or Nasdaq SmallCap Market, as the case may be, or
if the Common Stock is so traded, but not so quoted, the average of the closing
reported bid and asked prices of the Common Stock as reported by Nasdaq or any
comparable system or, if the Common Stock is not listed on Nasdaq or any
comparable system, the average of the closing bid and ask prices as furnished by
two members of the National Association of Securities Dealers, Inc. selected
from time to time by the Company for that purpose. If the Common Stock is not
traded in such matter that the quotations referred to above are available for
the period required hereunder, Current Market Price per share of Common Stock
shall be deemed the fair value as determined reasonably and in good faith by the
Board of Directors, irrespective of any accounting treatment.
11. Miscellaneous. The Company will not, by amendment of its Articles
of Incorporation or through reorganization, consolidation, merger, dissolution
or sale of assets, or by any other voluntary act or deed, avoid or seek to avoid
the observance or performance of any of the covenants, stipulations or
conditions to be observed or performed hereunder by the Company, but will, at
all times in good faith, assist, insofar as it is able, in the carrying out of
all provisions hereof and in the taking of all other action which may be
necessary in order to protect the rights of the Holder hereof against dilution.
The Company agrees to provide Holder with detailed quarterly and annual
financial statements as soon as available, in a form reasonably satisfactory to
Holder, as well as any other documents as Holder or its counsel may reasonably
request in a form satisfactory to Holder, so long as this Warrant or any Warrant
Shares are outstanding and unregistered.
8
<PAGE>
Upon written request of the Holder of this Warrant, the Company will
promptly provide such holder with a then current written list of the names and
addresses of all Holders of warrants originally issued under the terms of, and
concurrent with, this Warrant.
The representations, warranties and agreements herein contained shall
survive the exercise of this Warrant. References to the "holder of" include the
immediate holder of shares purchased on the exercise of this Warrant, and the
word "holder" shall include the plural thereof. This Common Stock Purchase
Warrant shall be interpreted under the laws of the State of Minnesota.
All shares of Common Stock or other securities issued upon the exercise
of the Warrant shall be validly issued, fully paid and non-assessable, and the
Company will pay all taxes due and payable by the issuer in respect of the
issuance thereof.
Notwithstanding anything contained herein to the contrary, the holder
of this Warrant shall not be deemed a Shareholder of the Company for any purpose
whatsoever until and unless this Warrant is duly exercised.
Neither this Warrant nor any term hereof may be changed, waived,
discharged or terminated orally but only by an instrument in writing signed by
the part against which enforcement of the change, waiver, discharge or
termination is sought.
IN WITNESS WHEREOF, United Shipping & Technology, Inc. has caused this
Warrant to be signed by its duly authorized officer and this Warrant to be dated
January 3, 2000.
UNITED SHIPPING & TECHNOLOGY, INC.
By
-------------------------------------------
Peter C. Lytle
President and Chief Executive Officer
9
<PAGE>
TO: UNITED SHIPPING & TECHNOLOGY, INC.
NOTICE OF EXERCISE OF WARRANT -- To Be Executed by the Registered Holder in
- ----------------------------- Order to Exercise the Warrant
The undersigned hereby irrevocably elects to exercise the attached Warrant to
purchase for cash, in accordance with the payment provisions set forth in
Section 1 of the Warrant, __________________ of the shares issuable upon the
exercise of such Warrant, and requests that certificates for such shares
(together with a new Warrant to purchase the number of shares, if any, with
respect to which this Warrant is not exercised) shall be issued in the name of
------------------------------------------
(Print Name)
Please insert social security
or other identifying number
of registered Holder of
certificate (_____________) Address:
------------------------------------------
------------------------------------------
Date:
------------ ------------------------------------------
Signature*
*The signature on the Notice of Exercise of Warrant must correspond to the name
as written upon the face of the Warrant in every particular without alteration
or enlargement or any change whatsoever. When signing on behalf of a
corporation, partnership, trust or other entity, PLEASE indicate your
position(s) and title(s) with such entity.
<PAGE>
CASHLESS EXERCISE FORM
(To be executed upon exercise of Warrant
pursuant to Section 1)
TO: UNITED SHIPPING & TECHNOLOGY, INC.
The undersigned hereby irrevocably elects a cashless exercise of the
right of purchase represented by the within Warrant Certificate for, and to
purchase thereunder, _______________ shares of Common Stock, as provided for in
Section 1 therein.
Please issue a certificate or certificates for such Common Stock in the
name of, and pay any cash for any fractional share to:
Name__________________________
(Please print name)
Address________________________________
Social Security No.___________
Signature______________________________
NOTE: The above signature should correspond exactly with the name on
the first page of this Warrant Certificate or with the name of the assignee
appearing in the assignment form below.
And if said number of shares shall not be all the shares purchasable
under the within Warrant Certificate, a new Warrant Certificate is to be issued
in the name of said undersigned for the balance remaining of the shares
purchasable thereunder.
<PAGE>
ASSIGNMENT FORM
To be signed only upon authorized transfer of Warrants.
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers unto _______________________________ the right to purchase the
securities of United Shipping & Technology, Inc. to which the within Warrant
relates and appoints ______________________, attorney, to transfer said right on
the books of United Shipping & Technology, Inc. with full power of substitution
in the premises.
Dated:
----------- ------------------------------
(Signature)
Address:
------------------------------
------------------------------
EXHIBIT 10.7
SUBSCRIPTION AGREEMENT
AND
LETTER OF INVESTMENT INTENT
United Shipping & Technology, Inc.
9850 51st Avenue North, Suite 110
Plymouth, MN 55442
Attention: Peter C. Lytle
Chief Executive Officer
Gentlemen:
The undersigned, _________________, desires to become a shareholder of
United Shipping & Technology, Inc. a Utah corporation (the "Company"), and
hereby subscribes for ___________ shares (the "Shares") of the Company's common
stock, $0.004 par value (the "Common Stock") at a purchase price of $5.025 per
share, and a warrant (the "Warrant") to purchase __________ shares of the
Company's Common Stock at an exercise price of $12.50 per share for a period of
three (3) years, said Warrant to have both demand and incidental registration
rights. As used herein, the term "Shares" shall also, where applicable, refer to
the Warrant and the shares of Common Stock issued or issuable upon exercise of
the Warrant.
1. The undersigned hereby acknowledges that this subscription is
contingent upon acceptance in whole or in part by the Company.
2. The undersigned acknowledges, represents and warrants that the
undersigned:
(a) is able to bear the economic risk of the investment in the
Shares;
(b) has knowledge and experience in financial and business
matters, is capable of evaluating the merits and risks of the
prospective investment in the Shares and is able to bear such risks;
(c) understands an investment in the Shares is highly
speculative but believes that the investment is suitable for it based
upon the undersigned's investment objectives and financial needs, and
has adequate means for providing for current financial needs and
personal contingencies and has no need for liquidity of investment with
respect to the Shares;
(d) has reviewed (i) copies of the Company's recent reports
filed under the Securities Exchange Act of 1934, including, the
Company's Form 10-KSB Report for the fiscal year ended June 30, 1999,
(ii) the Company's Form 10-QSB for the period ended October 2, 1999,
and (iii) the Company's Forms 8-K1998 Annual Report, and (iv) the
Company's proxy statement in connection with its 1998 annual meeting of
shareholders held on May 3, 1999;
(e) has been given access to full and complete information
regarding the Company (including the opportunity to meet with Company
officers and review all documents as it may have requested in writing)
and has utilized such access to its satisfaction for the purpose of
obtaining information about the Company;
(f) recognizes that the Shares, as an investment, involve a
high degree of risk; and
(g) realizes that (i) the purchase of Shares is a long-term
investment; (ii) purchasers of
<PAGE>
Shares must bear the economic risk of investment for an indefinite
period of time because the Shares have not been registered under the
Securities Act of 1933, as amended (the "Act") and, therefore, cannot
be sold unless they are subsequently registered under the Act or an
exemption from such registration is available; and (iii) the
transferability of the Shares is restricted, and (A) requires the
written consent of the Company, (B) requires conformity with the
restrictions contained in paragraph 3 below, and (C) will be further
restricted by a legend placed on the certificate(s) representing the
Shares stating that the Shares have not been registered under the Act
and referring to the restrictions on transferability of the Shares, and
by stop transfer orders or notations on the Company's records referring
to the restrictions on transferability.
3. The undersigned has been advised that the Shares are not being
registered under the Act or the relevant state securities laws pursuant to
exemptions from the Act and laws, and that the Company's reliance upon such
exemptions is predicated in part on the undersigned's representations to the
Company as contained herein. The undersigned represents and warrants that the
Shares are being purchased for its own account and for investment and without
the intention of reselling or redistributing the same, that the undersigned has
made no agreement with others regarding any of such Shares and that its
financial condition is such that it is not likely that it will be necessary to
dispose of any of such Shares in the foreseeable future. The undersigned is
aware that, in the view of the Securities and Exchange Commission and applicable
state bodies that administer state securities laws, a purchase of Shares with an
intent to resell by reason of any foreseeable specific contingency or
anticipated change in market values, or any change in the condition of the
Company or its business, or in connection with a contemplated liquidation or
settlement of any loan obtained for the acquisition of the Shares and for which
the Shares were pledged as security, would represent an intent inconsistent with
the representations set forth above. The undersigned further represents and
agrees that if, contrary to its foregoing intentions, it should later desire to
dispose of or transfer any of such Shares in any manner, it shall not do so
without first obtaining (a) the opinion of counsel designated by the Company
that such proposed disposition or transfer lawfully may be made without the
registration of such Shares for such purpose pursuant to the Act, as then in
effect, and applicable state securities laws, or (b) such registrations (it
being expressly understood that the Company shall not have any obligation to
register the Shares for such purpose, except insofar as paragraph 4 hereof
requires the Company, in certain instances, to register Registrable Securities).
The undersigned agrees that the Company may place the following
restrictive legend on the certificate(s) representing the Shares, containing
substantially the following language:
"The shares represented by this Certificate were issued without
registration under the Securities Act of 1933, as amended (the "Act")
and without registration under Minnesota or any other state's
securities laws, in reliance upon exemptions contained in the Act and
such laws. No transfer of these shares or any interest therein may be
made except pursuant to effective registration statements under said
laws unless this Corporation has received an opinion of counsel
satisfactory to it that such transfer or disposition does not require
registration under said laws and, for any sales under Rule 144 of the
Act, such evidence as it shall request for compliance with that rule."
The undersigned agrees and consents that the Company may place a stop transfer
order on the Certificate(s) representing the Shares to assure the undersigned's
compliance with this Agreement and the matters referenced above.
The undersigned agrees to save and hold harmless, defend and indemnify
the Company and its directors, officers and agents from any claims, liabilities,
damages, losses, expenses or penalties arising out of any misrepresentation of
information furnished by the undersigned to the Company in this Subscription
Agreement.
2
<PAGE>
4. The Company agrees to the following terms and conditions relative to
registration of the Shares under the Act:
(a) Definitions. As used in this Agreement, the following terms shall
have the meanings set forth respectively:
"Commission" shall mean the Securities and Exchange
Commission, or any other federal agency then administering the Act.
"Common Stock" shall mean the shares of Common Stock of the
Company, $0.004 par value.
"Holder" or, collectively, "Holders," means (i) the
undersigned purchaser of the Shares or Registrable Securities and (ii)
each person to whom Holder transfers the Shares or Registrable
Securities as provided herein.
"Other Securities" shall mean any stock (other than Common
Stock) or other securities of the Company which the Holder at any time
shall be entitled to receive, or shall have received, upon exercise of
the Warrants, in lieu of or in addition to Common Stock, or which at
any time shall be issuable or shall have been issued in exchange for or
in replacement of Common Stock or Other Securities.
"Registrable Securities" means the Shares, any shares of
Common Stock issued or which may be issued upon exercise of the
Warrants, and any Other Securities received with respect thereto or
with respect to the Shares; provided, however, that any such Common
Stock and Other Securities shall cease to be Registrable Securities
when (i) a Resale Registration Statement covering such Registrable
Securities has been declared effective and such Registrable Securities
have been disposed of pursuant to such effective Resale Registration
Statement, (ii) such Registrable Securities become eligible for sale
pursuant to Rule 144 (or any similar provision then in force) ("Rule
144") under the Act or (iii) such shares of Common Stock cease to be
outstanding. Registrable Securities may, for purposes of a registration
statement filed by the Company under the Act, include other securities
of the Company which it has a contractual obligation to register under
federal or state securities laws.
"Transfer" shall mean any sale, assignment, pledge, or other
disposition of any Shares or Registrable Securities, or of any interest
in either thereof, which would constitute a sale thereof within the
meaning of Section 2(3) of the Act.
All terms used in this Agreement which are not defined in Section 1
hereof have the meanings respectively set forth elsewhere in this Agreement.
(b) Resale Registration. Despite anything in this Agreement to the
contrary, the Holder shall have the following rights regarding registration of
Registrable Securities.
(1) Required Registration. Upon request of a Holder owning at
least 5,000 Shares or Registrable Securities not theretofore
registered under the Act, the Company shall prepare and if it
is then eligible file a registration statement on Form S-3
under the Act covering the resale of the Registrable
Securities which are the subject of such requests and shall
use its best efforts to cause such registration statement to
become effective and to remain effective for at least 24
months. In addition, upon the receipt of the
3
<PAGE>
aforementioned request, the Company shall promptly give
written notice to all other record Holders of Shares or
Registrable Securities that such registration is to be
effected. The Company shall include in such registration
statement such Registrable Securities for which it has
received written requests to register by such other Holders
within fifteen (15) days after the Company's written notice to
such other Holders. The Company shall be obligated to prepare,
file and cause to become effective only two (2) registration
statements pursuant to this Section 4(b). In the event that
the holders of a majority of the Registrable Securities for
which registration has been requested pursuant to this Section
determine for any reason not to proceed with a registration at
any time before the registration statement has been declared
effective by the Commission, and such Holders thereafter
request the Company to withdraw such registration statement,
the Holders of such Registrable Securities agree to bear their
own expenses incurred in connection therewith and to reimburse
the Company for the expenses incurred by it attributable to
such registration statement, then, and in such event, the
Holders of such Registrable Securities shall not be deemed to
have exercised their right to require the Company to register
Registrable Securities pursuant to this Section 4(b).
(2) Incidental Registration. Each time the Company shall
determine to proceed with the actual preparation and filing of
a registration statement under the Act in connection with the
proposed offer and sale for money of any of its Common Stock
by it or any of its security holders (other than a
registration statement on From S-4 or S-8) or any other
successor forms prescribed by the commission, the Company will
give written notice of its determination to all Holders of
Shares and Registrable Securities. Upon the written request of
a Holder of any Shares and Registrable Securities given within
fifteen (15) days after receipt of any such notice from the
Company, the Company will, except as herein provided, cause
all such Registrable Securities, the Holders of which have so
requested registration thereof, to be included in such
registration statement, all to the extent requisite to permit
the sale or other disposition by the prospective seller or
sellers of the Registrable Securities to be so registered;
provided, however, that (a) nothing herein shall prevent the
Company from, at any time, abandoning or delaying any such
registration initiated by it; and (b) if the Company
determines not to proceed with a registration after the
registration statement has been filed with the Commission and
the Company's decision not to proceed is primarily based upon
the anticipated public offering price of the securities to be
sold by the Company, the Company shall promptly complete the
registration for the benefit of those selling security holders
who wish to proceed with a public offering of their securities
and who bear all expenses in excess of $25,000 incurred by the
Company as the result of such registration after the Company
has decided not to proceed. If any registration pursuant to
this Section shall be underwritten in whole or in part, the
Company may require that the Registrable Securities requested
for inclusion pursuant to this Section be included in the
underwriting on the same terms and conditions as the
securities otherwise being sold through the underwriters. If
in the good faith judgment of the managing underwriter of such
public offering the inclusion of all of the Registrable
Securities originally covered by a request for registration
would reduce the number of shares to be offered by the Company
or interfere with the successful marketing of the shares of
stock offered by the Company, the number of Registrable
Securities otherwise to be included in the underwritten public
offering may be reduced pro rata among the Holders thereof
requesting such registration to a number that the managing
underwriter believes will not adversely affect the sale of
shares by the Company. Those securities which are thus
excluded from the underwritten public offering, and any other
Common Stock owned by such Holders, shall be withheld from the
market by the Holders thereof for a period, not to exceed one
hundred eighty
4
<PAGE>
(180) days, which the managing underwriter reasonably
determines is necessary in order to effect the underwritten
public offering.
(3) Registration Procedures. If and whenever the Company is
required by the provisions of Section 4(b)(1) or 4(b)(2) to
effect the registration of any Registrable Securities under
the Act, the Company will:
(i) prepare and file with the Commission a registration
statement with respect to such Registrable
Securities, and use its best efforts to cause such
registration statement to become and remain effective
for such period as may be reasonably necessary to
effect the sale of such Registrable Securities;
(ii) prepare and file with the Commission such amendments
to such registration statement and supplements to the
prospectus contained therein as may be necessary to
keep such registration statement effective for such
period as may be reasonably necessary to effect the
sale of such Registrable Securities;
(iii) furnish to the Holders participating in such
registration and to the underwriters of the
Registrable Securities being registered such
reasonable number of copies of the registration
statement, preliminary prospectus, final prospectus
and such other documents as such Holders and
underwriters may reasonably request in order to
facilitate the public offering of such Registrable
Securities;
(iv) use its best efforts to register or qualify the
Registrable Securities covered by such registration
statement under such state securities or blue sky
laws of such jurisdictions as such participating
Holders may reasonably request within ten (10) days
following the original filing of such registration
statement, except that the Company shall not for any
purpose be required to execute a general consent to
service of process or to qualify to do business as a
foreign corporation in any jurisdiction wherein it is
not so qualified;
(v) notify the Holders participating in such
registration, promptly after it shall receive notice
thereof, of the time when such registration statement
has become effective or a supplement to any
prospectus forming a part of such registration
statement has been filed;
(vi) prepare and file with the Commission, promptly upon
the request of any such Holders, any amendments or
supplements to such registration statement or
prospectus which, in the reasonable opinion of
counsel for such Holders (and concurred in by counsel
for the Company), is required under the Act or the
rules and regulations thereunder in connection with
the distribution of the Registrable Securities by
such Holder;
(vii) prepare and promptly file with the Commission such
amendment or supplement to such registration
statement or prospectus as may be necessary to
correct any statements or omissions if, at the time
when a prospectus relating to such securities is
required to be delivered under the Act, any event
shall have occurred as the result of which any such
prospectus or any other prospectus as then in effect
would include an untrue statement of a material fact
or omit to state any material fact necessary to make
the statements therein, in the light of the
circumstances in which they were made, not
misleading; and
5
<PAGE>
(viii) advise such Holders, promptly after it shall receive
notice or obtain knowledge thereof, of the issuance
of any stop order by the Commission suspending the
effectiveness of such registration statement or the
initiation or threatening of any proceeding for that
purpose and promptly use its best efforts to prevent
the issuance of any stop order or to obtain its
withdrawal if such stop order should be issued.
(4) Expenses. With respect to any registration, requested
pursuant to Section 4(b)(1) (except as otherwise provided in
such section with respect to registrations voluntarily
terminated at the request of the requesting security holders)
and with respect to each inclusion of securities in a
registration statement pursuant to Section 4(b)(2) (except as
otherwise provided in Section 4(b)(2) with respect to
registrations terminated by the Company), the Company shall
bear the following fees, costs and expenses: all registration,
filing and NASD fees, printing expenses, fees and
disbursements of counsel and accountants for the Company, fees
and disbursements of counsel for the underwriter or
underwriters of such securities (if the Company and/or selling
Holders are required to bear such fees and disbursements), all
internal Company expenses, the premiums and other costs of
policies of insurance against liability arising out of the
public offering, and all legal fees and disbursements and
other expenses of complying with state securities or blue sky
laws of any jurisdictions in which the securities to be
offered are to be registered or qualified. Fees and
disbursements of counsel and accountants for such Holders,
underwriting discounts and commissions and transfer taxes for
such Holders and any other expenses incurred by such Holders
not expressly included above shall be borne by such Holders.
(5) Copies of Prospectus; Amendments of Prospectus. The
Company will furnish the Holder with a reasonable number of
copies of any prospectus or offering circular and one copy of
the registration statement included in such filings and will
amend or supplement the same as required during the nine (9)
month period following the effective date of the registration
statement, provided, that the expenses of any amendment or
supplement made or filed more than three (3) months after the
effective date of the registration statement, at the request
of the Holder, shall be borne by the Holder.
(6) Conditions of the Company's Obligations. It shall be a
condition of the Company's obligation to register the
Registrable Securities hereunder that the Holder agrees to
cooperate with the Company in the preparation and filing of
any such registration statement, or in its efforts to
establish that the proposed sale is exempt under the Act, as
to any proposed distribution. It shall also be a condition of
the Company's obligations under this Agreement that, in the
case of the filing of any registration statement, and to the
extent permissible under the Act, and controlling precedent
thereunder, the Company and the Holder provide
cross-indemnification agreements to each other in customary
scope covering the accuracy and completeness of the
information furnished by each.
(c) Restrictions on Sale. In the event of an underwritten
public offering for the account of the Company, upon the written request (the
"Lock-up Request") of the managing underwriter (or underwriters) of such
offering, each Holder agrees not to effect any public sale or distribution of
any securities similar to those being registered in such offering (other than
pursuant to such offering), including, without limitation, through sales of
Registrable Securities pursuant to a registration statement, during the 14 days
prior to, and during the 180-day period beginning on the effective date of the
registration statement
6
<PAGE>
relating to such offering (the "Lock-up Period"); provided, however, that the
Holders shall not be required to comply with such Lock-up Request unless the
Company simultaneously demands analogous restrictions on sale and uses all
reasonable efforts to obtain from all other persons who are contractually bound
with the Company to comply with such Lock-up Requests and from the Company's
directors. In the event of the delivery of a Lock-up Request, the time periods
for which a registration statement is required to be kept effective pursuant to
Section 4(b) hereof shall be extended by the number of days during the Lock-up
Period.
(d) Transfer of Registration Rights. The registration rights
of Holder and any Holders under this Section 4 may be transferred to any
transferee of Registrable Securities that acquires at least 5,000 shares of the
Common Stock (appropriately adjusted for stock splits, stock dividends and the
like). Each such transferee shall be deemed to be a "Holder" for purposes of
this Section 4.
5. The undersigned represents and warrants that the undersigned is a
bona fide resident of, and is domiciled in, the State of _______________ and
that the Shares are being purchased solely for the beneficial interest of the
undersigned and not as nominee, for, or on behalf of, or for the beneficial
interest of, or with the intention to transfer to, any other person, trust or
organization, except as specifically set forth in paragraph 8 of this Agreement.
THE FOLLOWING PARAGRAPH 6 IS REQUIRED IN CONNECTION WITH THE EXEMPTIONS FROM THE
ACT AND STATE LAWS BEING RELIED ON BY THE COMPANY WITH RESPECT TO THE OFFER AND
SALE OF THE SHARES. ALL OF SUCH INFORMATION WILL BE KEPT CONFIDENTIAL AND WILL
BE REVIEWED ONLY BY THE COMPANY, THE AGENT, IF ANY, AND THEIR RESPECTIVE
COUNSEL. The undersigned agrees to furnish any additional information which the
Company, the Agent, if any, or their respective legal counsel deem necessary in
order to verify the responses set forth below.
6. Accredited Status. The undersigned represents and warrants as
follows:
(CHECK IF APPLICABLE):
_______ (a) The undersigned is an individual with a net worth, or a
joint net worth together with his or her spouse, in excess of
$1,000,000. (In calculating net worth, you may include equity
in personal property and real estate, including your principal
residence, cash, short-term investments, stock and securities.
Equity in personal property and real estate should be based on
the fair market value of such property minus debt secured by
such property.)
_______ (b) The undersigned is an individual with income in excess of
$200,000 in each of the prior two years and reasonably expects
an income in excess of $200,000 in the current year.
_______ (c) The undersigned is an individual who, with his or her
spouse, had joint income in excess of $300,000 in each of the
prior two years and reasonably expects joint income in excess
of $300,000 in the current year.
_______ (d) The undersigned is a director or executive officer of
United Shipping & Technology, Inc.
7
<PAGE>
7. NASD Affiliation. The undersigned is affiliated or associated,
directly or indirectly, with a National Association of Securities Dealers, Inc.
("NASD") member firm or person.
Yes ________ No ________
If yes, list the affiliated member firm or person:
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Your relationship to such member firm or person:
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8. Entities. If the undersigned is not an individual but an entity, the
individual signing on behalf of such entity and the entity jointly and severally
agree and certify that:
(a) The undersigned was not organized for the specific purpose of
acquiring the Shares; and
(b) This Agreement has been duly authorized by all necessary action on
the part of the undersigned, has been duly executed by an authorized
officer or representative of the undersigned, and is a legal, valid and
binding obligation of the undersigned enforceable in accordance with
its terms.
9. Miscellaneous.
(a) Manner in which title is to be held: (check one)
_____ Individual Ownership
_____ Joint Tenants with Right of Survivorship*
(b) The undersigned agrees that the undersigned understands the meaning
and legal consequences of the agreements, representations and
warranties contained herein, agrees that such agreements,
representations and warranties shall survive and remain in full force
and effect after the execution hereof and payment for the Shares, and
further agrees to indemnify and hold harmless the Company, each current
and future officer, director, employee, agent and shareholder from and
against any and all loss, damage or liability due to, or arising out
of, a breach of any agreement, representation or warranty of the
undersigned contained herein.
(c) This Agreement shall be construed and interpreted in accordance
with Minnesota law without regard to conflict of law provisions.
(d) The undersigned agrees to furnish to the Company or the Agent, if
applicable, upon request, such additional information as may be deemed
necessary to determine the undersigned's suitability as an investor.
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*Multiple signatures required.
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[NOTE: SIGNATURE PAGE FOLLOWS]
9
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INDIVIDUAL SUBSCRIBER
Dated: January 13, 2000.
- ------------------------------------ ------------------------------------
- ------------------------------------ ------------------------------------
Signature Signature
- ------------------------------------ ------------------------------------
Name Typed or Printed Name Typed or Printed
- ------------------------------------ ------------------------------------
Residence Address Residence Address
- ------------------------------------ ------------------------------------
- ------------------------------------ ------------------------------------
- ------------------------------------ ------------------------------------
City, State and Zip Code City, State and Zip Code
- ------------------------------------ ------------------------------------
Mailing Address Mailing Address
- ------------------------------------ ------------------------------------
- ------------------------------------ ------------------------------------
City, State and Zip Code City, State and Zip Code
- ------------------------------------ ------------------------------------
Tax Identification or Social Tax Identification or Social
Security Number Security Number
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ACCEPTANCE BY THE COMPANY
-------------------------
United Shipping & Technology, Inc. hereby agrees to and accepts the foregoing
Subscription Agreement to the extent of ____________ Shares and the Warrant.
UNITED SHIPPING & TECHNOLOGY, INC.
By
-----------------------------------
Peter C. Lytle
Its: Chief Executive Officer
11
EXHIBIT 10.8
WARRANT
TO PURCHASE SHARES OF
COMMON STOCK OF
UNITED SHIPPING & TECHNOLOGY, INC.
JANUARY 18, 2000
This Certifies that, in consideration of having purchased _________
shares of the Company's Common Stock, and for other good and valuable
consideration, ___________ (the "Warrantholder"), is entitled to subscribe for
and purchase from the Company, at any time after the date hereof, and prior to
January 18, 2005 (the "Expiration Date") up to _________ shares of the Company's
Common Stock at a purchase price of $12.50 per share (the "Purchase Price"),
subject to adjustment as hereinafter set forth.
1 Definitions. For the purposes of this Warrant the following terms
shall have the following meanings:
"Commission" shall mean the Securities and Exchange
Commission, or any other federal agency then administering the
Securities Act.
"Company" shall mean United Shipping & Technology, Inc., a
Utah corporation, and any corporation which shall succeed to, or
assume, the obligations of said corporation hereunder.
"Common Stock" shall mean the shares of Common Stock of the
Company, $0.004 par value.
"Other Securities" shall mean any stock (other than Common
Stock) or other securities of the Company which the Warrantholder at
any time shall be entitled to receive, or shall have received, upon the
exercise of the Warrants, in lieu of or in addition to Common Stock, or
which at any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock or Other Securities.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations of the Commission thereunder, as
in effect at the time.
"Subscription Form" shall mean the subscription forms attached
hereto.
"Transfer" shall mean any sale, assignment, pledge, or other
disposition of any Warrants and/or Warrant Shares, or of any interest
in either thereof, which would constitute a sale thereof within the
meaning of Section 2(3) of the Securities Act.
<PAGE>
"Warrant Shares" shall mean the shares of Common Stock
purchased or purchasable by the Warrantholder upon the exercise of the
Warrants pursuant to Section 2 hereof.
"Warrantholder" shall mean the holder or holders of the
Warrants or any related Warrant Shares.
"Warrants" shall mean the Warrants (including this Warrant),
identical as to terms and conditions and date, issued by the Company in
connection with the sale of the Notes, and all Warrants issued in
exchange, transfer or replacement thereof.
All terms used in this Warrant which are not defined in Section 1
hereof have the meanings respectively set forth elsewhere in this Warrant.
2 Exercise of Warrant, Issuance of Certificate, and Payment for Warrant
Shares. The rights represented by this Warrant may be exercised at any time
after the date hereof, and prior to the Expiration Date, by the Warrantholder,
in whole or in part (but not as to any fractional share of Common Stock), by:
(a) delivery to the Company of a completed Subscription Form, (b) surrender to
the Company of this Warrant properly endorsed and signature guaranteed, and (c)
delivery to the Company of a certified or cashier's check made payable to the
Company in an amount equal to the aggregate Purchase Price of the shares of
Common Stock being purchased, at its principal office or agency in Minnesota (or
such other office or agency of the Company as the Company may designate by
notice in writing to the holder hereof). The Company agrees and acknowledges
that the shares of Common Stock so purchased shall be deemed to be issued to the
holder hereof as the record owner of such shares as of the close of business on
the date on which this Warrant, properly endorsed, and the Subscription Form
shall have been surrendered and payment made for such shares as aforesaid. Upon
receipt thereof, the Company shall, as promptly as practicable, and in any event
within fifteen (15) days thereafter, execute or cause to be executed and deliver
to the Warrantholder a certificate or certificates representing the aggregate
number of shares of Common Stock specified in said Subscription Form. Each stock
certificate so delivered shall be in such denomination as may be requested by
the Warrantholder and shall be registered in the name of the Warrantholder or
such other name as shall be designated by the Warrantholder. If this Warrant
shall have been exercised only in part, the Company shall, at the time of
delivery of said stock certificate or certificates, deliver to the Warrantholder
a new Warrant evidencing the rights of such holder to purchase the remaining
shares of Common Stock covered by this Warrant. The Company shall pay all
expenses, taxes, and other charges payable in connection with the preparation,
execution, and delivery of stock certificates pursuant to this Section 2, except
that, in case any such stock certificate or certificates shall be registered in
a name or names other than the name of the Warrantholder, funds sufficient to
pay all stock transfer taxes which shall be payable upon the execution and
delivery of such stock certificate or certificates shall be paid by the
Warrantholder to the Company at the time of delivering this Warrant to the
Company as mentioned above.
3 Ownership of this Warrant. The Company may deem and treat the
registered Warrantholder as the holder and owner hereof (notwithstanding any
notations of ownership or writing made hereon by anyone other than the Company)
for all purposes and shall not be
2
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affected by any notice to the contrary, until presentation of this Warrant for
transfer as provided herein and then only if such transfer meets the
requirements of Section 5.
4 Exchange, Transfer, and Replacement. Subject to Section 5 hereof,
this Warrant is exchangeable upon the surrender hereof by the Warrantholder to
the Company at its office or agency described in Section 2 hereof for new
Warrants of like tenor and date representing in the aggregate the right to
purchase the number of shares purchasable hereunder, each of such new Warrants
to represent the right to purchase such number of shares (not to exceed the
aggregate total number purchasable hereunder) as shall be designated by the
Warrantholder at the time of such surrender. Subject to Section 5 hereof, this
Warrant and all rights hereunder are transferable, in whole or in part, upon the
books of the Company by the Warrantholder in person or by duly authorized
attorney, and a new Warrant of the same tenor and date as this Warrant, but
registered in the name of the transferee, shall be executed and delivered by the
Company upon surrender of this Warrant, duly endorsed, at such office or agency
of the Company. Upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction, or mutilation of this Warrant, and, in
the case of loss, theft, or destruction, of indemnity or security reasonably
satisfactory to it, and upon surrender and cancellation of this Warrant, if
mutilated, the Company will make and deliver a new Warrant of like tenor, in
lieu of this Warrant. This Warrant shall be promptly canceled by the Company
upon the surrender hereof in connection with any exchange, transfer, or
replacement. The Company shall pay all expenses, taxes (other than stock
transfer taxes), and other charges payable in connection with the preparation,
execution, and delivery of Warrants pursuant to this Section 4.
5 Restrictions on Transfer. Notwithstanding any provisions contained in
this Warrant to the contrary, neither this Warrant nor the Warrant Shares shall
be transferable except upon the conditions specified in this Section 5, which
conditions are intended, among other things, to ensure compliance with the
provisions of the Securities Act in respect of the transfer of this Warrant or
such Warrant Shares. The holder of this Warrant agrees that such holder will not
transfer this Warrant or the related Warrant Shares (a) prior to delivery to the
Company of an opinion of counsel selected by the Warrantholder and reasonably
satisfactory to the Company, stating that such transfer is exempt from
registration under the Securities Act, or (b) until registration of such
Warrants and/or Warrant Shares under the Securities Act has become effective and
continues to be effective at the time of such transfer. An appropriate legend
may be endorsed on the Warrants and the certificates of the Warrant Shares
evidencing these restrictions. The holder of this Warrant further agrees that
such holder will not, for a period of 180 days from the date that a registration
statement covering securities offered by the Company is declared effective by
the Commission, offer to sell, contract to sell, or otherwise sell, dispose of,
loan, pledge or grant any rights with respect to the Warrant or the Warrant
Shares owned by the holder, otherwise than with the prior written consent of the
Company.
6 Antidilution Provisions. The rights granted hereunder are subject to
the following:
(a) Stock Splits. In case at any time the Company shall
subdivide its outstanding shares of Common Stock into a greater number
of shares, the Purchase Price in effect immediately prior to such
subdivision shall be proportionately reduced and the
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<PAGE>
number of Warrant Shares purchasable pursuant to this Warrant
immediately prior to such subdivision shall be proportionately
increased, and conversely, in case at any time the Company shall
combine its outstanding shares of Common Stock into a smaller number of
shares, the Purchase Price in effect immediately prior to such
combination shall be proportionately increased and the number of
Warrant Shares purchasable upon the exercise of this Warrant
immediately prior to such combination shall be proportionately reduced.
Except as provided in this paragraph (a), no adjustment in the Purchase
Price and no change in the number of Warrant Shares so purchasable
shall be made pursuant to this Section 6 as a result of or by reason of
any such subdivision or combination.
(b) Reorganization, Reclassification, Consolidation, Merger,
or Sale. If any capital reorganization or reclassification or merger of
the Company with another corporation, or the sale of all or
substantially all of its assets to another corporation, shall be
effected in such a way that holders of shares of Common Stock shall be
entitled to receive Common Stock, Other Securities or assets with
respect to or in exchange for shares of Common Stock, then, as a
condition of such reorganization, reclassification, consolidation,
merger or sale, lawful and adequate provision shall be made whereby the
Warrantholder shall thereafter have the right to purchase and receive
upon the basis and upon the terms and conditions specified in the
Warrants and in lieu of the shares of Common Stock of the Company
immediately theretofore purchasable and receivable upon the exercise of
the Warrants such shares of Common Stock, Other Securities or assets as
may be issued or payable with respect to or in exchange for a number of
outstanding shares of Common Stock equal to the number of shares of
Common Stock immediately theretofore purchasable and receivable upon
the exercise of the Warrants had such reorganization, reclassification,
consolidation, merger or sale not taken place, and in any such case
appropriate provision shall be made with respect to the rights and
interests of the Warrantholder so that the provisions of the Warrants
(including, without limitation, provisions for adjustment of the
Purchase Price and the number of shares purchasable upon the exercise
of the Warrants) shall thereafter be applicable, as nearly as may be,
in relation to any shares of Common Stock, Other Securities or assets
thereafter deliverable upon the exercise of the Warrants.
7 Special Agreements of the Company.
(a) Will Reserve Shares. The Company will reserve and set
apart and have at all times the number of shares of authorized but
unissued Common Stock deliverable upon the exercise of the Warrants,
and it will have at all times any other rights or privileges provided
for herein sufficient to enable it at any time to fulfill all of its
obligations hereunder.
(b) Will Avoid Certain Actions. The Company will not, by
amendment of its Articles of Incorporation or through any
reorganization, transfer of assets, consolidation, merger, issue or
sale of securities or otherwise, avoid or take any action which would
have the effect of avoiding the observance or performance hereunder by
the Company, but will at all times in good faith assist in carrying out
of all the provisions of the
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Warrants and in taking all such actions as may be necessary or
appropriate in order to protect the rights of the Warrantholder against
dilution or other impairment.
8 Provisions for Registration. Despite anything in this Warrant to the
contrary, the Warrantholder shall have the following rights regarding
registration of Warrant Shares which may be hereafter acquired upon exercise of
this Warrant.
(a) Required Registration. If at any time the Company receives
the written request from the Holder of this Warrant, the Company shall
prepare and file a registration statement under the Securities Act
covering the Warrant Shares which are the subject of such requests and
shall use its best efforts to cause such registration statement to
become effective; provided, however, that all Warrant Shares covered by
such registration statement shall be converted into Common Stock prior
to inclusion in such registration statement. In addition, upon the
receipt of the aforementioned request, the Company shall promptly give
written notice to all other record holders of Warrant Shares that such
registration is to be effected. The Company shall include in such
registration statement such Warrant Shares for which it has received
written requests to register by such other record holders within
fifteen (15) days after the Company's written notice to such other
record holders. The Company shall be obligated to prepare, file and
cause to become effective only two (2) registration statements pursuant
to this Section 8(a). In the event that the holders of a majority of
the Warrant Shares for which registration has been requested pursuant
to this Section determine for any reason not to proceed with a
registration at any time before the registration statement has been
declared effective by the Commission, and such holders thereafter
request the Company to withdraw such registration statement, the
holders of such Warrant Shares agree to bear their own expenses
incurred in connection therewith and to reimburse the Company for the
expenses incurred by it attributable to such registration statement,
then, and in such event, the holders of such Warrant Shares shall not
be deemed to have exercised their right to require the Company to
register Warrant Shares pursuant to this Section 8(a).
(b) Incidental Registration. Each time the Company shall
determine to proceed with the actual preparation and filing of a
registration statement under the Securities Act in connection with the
proposed offer and sale for money of any of its Common Stock by it or
any of its security holders, the Company will give written notice of
its determination to all record holders of Warrant Shares. Upon the
written request of a record holder of any Warrant Shares given within
fifteen (15) days after receipt of any such notice from the Company,
the Company will, except as herein provided, cause all such Warrant
Shares, the record holders of which have so requested registration
thereof, to be included in such registration statement, all to the
extent requisite to permit the sale or other disposition by the
prospective seller or sellers of the Warrant Shares to be so
registered; provided, however, that (a) all such Warrant Shares to be
so registered shall be converted into Common Stock prior to sale
pursuant to such registration statement; (b) nothing herein shall
prevent the Company from, at any time, abandoning or delaying any such
registration initiated by it; and (c) if the Company determines not to
proceed with a registration after the registration statement has been
filed with the Commission and the Company's decision not to proceed is
primarily based upon the anticipated public
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<PAGE>
offering price of the securities to be sold by the Company, the Company
shall promptly complete the registration for the benefit of those
selling security holders who wish to proceed with a public offering of
their securities and who bear all expenses in excess of $25,000
incurred by the Company as the result of such registration after the
Company has decided not to proceed. If any registration pursuant to
this Section shall be underwritten in whole or in part, the Company may
require that the Warrant Shares requested for inclusion pursuant to
this Section be included in the underwriting on the same terms and
conditions as the securities otherwise being sold through the
underwriters. If in the good faith judgment of the managing underwriter
of such public offering the inclusion of all of the Warrant Shares
originally covered by a request for registration would reduce the
number of shares to be offered by the Company or interfere with the
successful marketing of the shares of stock offered by the Company, the
number of Warrant Shares otherwise to be included in the underwritten
public offering may be reduced pro rata among the holders thereof
requesting such registration to a number that the managing underwriter
believes will not adversely affect the sale of shares by the Company.
Those securities which are thus excluded from the underwritten public
offering, and any other Common Stock owned by such holders, shall be
withheld from the market by the holders thereof for a period, not to
exceed one hundred eighty (180) days, which the managing underwriter
reasonably determines is necessary in order to effect the underwritten
public offering.
(c) Registration Procedures. If and whenever the Company is
required by the provisions of Sections 8(a) or 8(b) to effect the
registration of any Warrant Shares under the Securities Act, the
Company will:
1 prepare and file with the Commission a registration
statement with respect to such Warrant Shares, and use its
best efforts to cause such registration statement to become
and remain effective for such period as may be reasonably
necessary to effect the sale of such Warrant Shares, not to
exceed three (3) months;
2 prepare and file with the Commission such
amendments to such registration statement and supplements to
the prospectus contained therein as may be necessary to keep
such registration statement effective for such period as may
be reasonably necessary to effect the sale of such Warrant
Shares, not to exceed three (3) months;
3 furnish to the security holders participating in
such registration and to the underwriters of the Warrant
Shares being registered such reasonable number of copies of
the registration statement, preliminary prospectus, final
prospectus and such other documents as such security holders
and underwriters may reasonably request in order to facilitate
the public offering of such Warrant Shares;
6
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4 use its best efforts to register or qualify the
Warrant Shares covered by such registration statement under
such state securities or blue sky laws of such jurisdictions
as such participating holders may reasonably request within
ten (10) days following the original filing of such
registration statement, except that the Company shall not for
any purpose be required to execute a general consent to
service of process or to qualify to do business as a foreign
corporation in any jurisdiction wherein it is not so
qualified;
5 notify the security holders participating in such
registration, promptly after it shall receive notice thereof,
of the time when such registration statement has become
effective or a supplement to any prospectus forming a part of
such registration statement has been filed;
6 notify such holders promptly of any request by the
Commission for the amending or supplementing of such
registration statement or prospectus or for additional
information;
7 prepare and file with the Commission, promptly upon
the request of any such holders, any amendments or supplements
to such registration statement or prospectus which, in the
opinion of counsel for such holders (and concurred in by
counsel for the Company), is required under the Securities Act
or the rules and regulations thereunder in connection with the
distribution of the Warrant Shares by such holder;
8 prepare and promptly file with the Commission and
promptly notify such holders of the filing of such amendment
or supplement to such registration statement or prospectus as
may be necessary to correct any statements or omissions if, at
the time when a prospectus relating to such securities is
required to be delivered under the Securities Act, any event
shall have occurred as the result of which any such prospectus
or any other prospectus as then in effect would include an
untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the
light of the circumstances in which they were made, not
misleading;
9 advise such holders, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance of
any stop order by the Commission suspending the effectiveness
of such registration statement or the initiation or
threatening of any proceeding for that purpose and promptly
use its best efforts to prevent the issuance of any stop order
or to obtain its withdrawal if such stop order should be
issued; and
10 not file any amendment or supplement to such
registration statement or prospectus to which a majority in
interest of such holders shall have reasonably objected on the
grounds that such amendment or supplement does not comply in
all material respects with the requirements of the Securities
Act or the rules and regulations thereunder, after having been
furnished with a copy thereof
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at least five (5) business days prior to the filing thereof,
unless in the opinion of counsel for the Company the filing of
such amendment or supplement is reasonably necessary to
protect the Company from any liabilities under any applicable
federal or state law and such filing will not violate
applicable law.
(d) Expenses. With respect to any registration, requested
pursuant to Section 8(a) (except as otherwise provided in such section
with respect to registrations voluntarily terminated at the request of
the requesting security holders) and with respect to each inclusion of
securities in a registration statement pursuant to Section 8(b) (except
as otherwise provided in Section 8(b) with respect to registrations
terminated by the Company), the Company shall bear the following fees,
costs and expenses: all registration, filing and NASD fees, printing
expenses, fees and disbursements of counsel and accountants for the
Company, fees and disbursements of counsel for the underwriter or
underwriters of such securities (if the Company and/or selling security
holders are required to bear such fees and disbursements), all internal
Company expenses, the premiums and other costs of policies of insurance
against liability arising out of the public offering, and all legal
fees and disbursements and other expenses of complying with state
securities or blue sky laws of any jurisdictions in which the
securities to be offered are to be registered or qualified. Fees and
disbursements of counsel and accountants for the selling security
holders, underwriting discounts and commissions and transfer taxes for
selling security holders and any other expenses incurred by the selling
security holders not expressly included above shall be borne by the
selling security holders.
(e) Copies of Prospectus; Amendments of Prospectus. The
Company will furnish the Warrantholder with a reasonable number of
copies of any prospectus or offering circular and one copy of the
registration statement included in such filings and will amend or
supplement the same as required during the nine (9) month period
following the effective date of the registration statement, provided,
that the expenses of any amendment or supplement made or filed more
than three (3) months after the effective date of the registration
statement, at the request of the Warrantholder, shall be borne by the
Warrantholder.
(f) Conditions of the Company's Obligations. It shall be a
condition of the Company's obligation to register the Warrant Shares
hereunder that the Warrantholder agrees to cooperate with the Company
in the preparation and filing of any such registration statement, or in
its efforts to establish that the proposed sale is exempt under the
Securities Act, as to any proposed distribution. It shall also be a
condition of the Company's obligations under this Agreement that, in
the case of the filing of any registration statement, and to the extent
permissible under the Securities Act, and controlling precedent
thereunder, the Company and the Warrantholder provide
cross-indemnification agreements to each other in customary scope
covering the accuracy and completeness of the information furnished by
each.
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9 Notices. Any notice or other document required or permitted to be
given or delivered to the Warrantholder shall be delivered or sent by certified
mail to the Warrantholder at the last address shown on the books of the Company
maintained for the registry and transfer of the Warrants. Any notice or other
document required or permitted to be given or delivered to the Company shall be
delivered or sent by certified or registered mail to the principal office of the
Company.
10 No Rights as Shareholders; Limitation of Liability. This Warrant
shall not entitle any holder hereof to any of the rights of a shareholder of the
Company. No provisions hereof, in the absence of affirmative action by the
holder hereof to purchase shares of Common Stock, and no mere enumeration herein
of the rights or privileges of the holder hereof, shall give rise to any
liability of such holder for the Purchase Price or as a shareholder of the
Company whether such liability is asserted by the Company or by creditors of the
Company.
11 Governing Law. This Warrant shall be governed by, and construed and
enforced in accordance with, the laws of the State of Minnesota, without regard
to conflicts of laws principles.
12 Miscellaneous. This Warrant and any provision hereof may be changed,
waived, discharged, or terminated only by an instrument in writing signed by the
party (or any predecessor in interest thereof) against which enforcement of the
same is sought. The headings in this Warrant are for purposes of reference only
and shall not affect the meaning or construction of any of the provisions
hereof.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
a duly authorized officer, and to be dated as of January 18, 2000.
UNITED SHIPPING & TECHNOLOGY, INC.
By:
----------------------------------
Peter C. Lytle
Chief Executive Officer
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE "1933 ACT") OR UNDER THE SECURITIES LAWS OF ANY
OTHER STATE AND MAY NOT BE TRANSFERRED WITHOUT (i) THE OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH TRANSFER MAY LAWFULLY BE MADE WITHOUT
REGISTRATION UNDER THE 1933 ACT OR THE SECURITIES LAWS OF ANY APPLICABLE STATE;
OR (ii) SUCH REGISTRATION."
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<PAGE>
FULL SUBSCRIPTION FORM
To Be Executed By the Registered Warrantholder if It/
She/He Desires to Exercise in Full the Within Warrant
The undersigned hereby exercises the right to purchase the
_____________ shares of Common Stock covered by the within Warrant at the date
of this subscription and herewith makes payment of the sum of
$____________________________ representing the Purchase Price of $__________ per
share in effect at that date. Certificates for such shares shall be issued in
the name of and delivered to the undersigned, unless otherwise specified by
written instructions, signed by the undersigned and accompanying this
subscription.
Dated:______________________________
Signature:_____________________________
Address:
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<PAGE>
PARTIAL SUBSCRIPTION FORM
To be Executed by the Registered Warrantholder if It/She/He
Desires to Exercise in Part Only the Within Warrant
The undersigned hereby exercises the right to purchase __________
shares of the total shares of Common Stock covered by the within Warrant at the
date of this subscription and herewith makes payment of the sum of $____________
representing the Purchase Price of $_________ per share in effect at this date.
Certificates for such shares and a new Warrant of like tenor and date
for the balance of the shares not subscribed for (if any) shall be issued in the
name of and delivered to the undersigned, unless otherwise specified by written
instructions, signed by the undersigned and accompanying this subscription.
The shares hereby subscribed for constitute ______________ shares of
Common Stock (to the nearest whole share) resulting from adjustment of
______________ shares of the total of __________________ shares of Common Stock
covered by the within Warrant, as said shares were constituted at the date of
the Warrant.
Dated:__________________________
Signature:__________________________
Address:
11
EXHIBIT 10.9
UNITED SHIPPING & TECHNOLOGY, INC.
(FORMERLY KNOWN AS U-SHIP, INC.)
1995 STOCK OPTION PLAN
1. PURPOSE
The purpose of this 1995 Stock Option Plan, as amended on May 3, 1999,
(the "Plan") is to promote the interests of United Shipping & Technology, Inc.
(formerly known as U-Ship, Inc.), a Utah corporation (the "Company"), by
providing employees of the Company and certain independent contractors with an
opportunity to acquire a proprietary interest in the Company, and thereby
develop a stronger incentive to contribute to the Company's continued success
and growth. In addition, the opportunity to acquire a proprietary interest in
the Company by the offering and availability of stock options will assist the
Company in attracting and retaining key personnel and consultants of outstanding
ability.
2. DEFINITIONS
Wherever used in the Plan, the following terms have the meanings set
forth below:
2.1 "Board" means the Board of Directors of the Company.
2.2 "Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
2.3 "Committee" means the Committee which may be designated from time
to time by the Board to administer the Plan pursuant to Section 3.5.
2.4 "Company" means United Shipping & Technology, Inc. and any
Subsidiary of the Company.
2.5 "Incentive Stock Option" or "ISO" means the stock option which is
intended to qualify as an incentive stock option as defined in Section 422 of
the Code.
2.6 "Non-Statutory Stock Option" or "NSO" means a stock option that is
not intended to, or does not, qualify as an incentive stock option as defined in
Section 422 of the Code.
2.7 "Option" means, where required by the context of the Plan, an ISO
and/or NSO granted pursuant to the Plan.
2.8 "Optionee" means a Participant in the Plan who has been granted one
or more Options under the Plan.
<PAGE>
2.9 "Participant" means an individual described in Section 5 of this
Plan who may be granted Options under the Plan.
2.10 "Stock" means the Common Stock, $.004 par value, of the Company.
2.11 "Subsidiary" means any corporation, other than the Company, in an
unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain owns 50% or
more of the voting stock in one of the other corporations in such chain.
3. ADMINISTRATION
3.1 The Plan shall be administered by the Board, which shall have full
power, subject to the provisions of the Plan, to grant Options, construe and
interpret the Plan, establish rules and regulations with respect to the Plan and
Options granted hereunder, and perform all other acts, including the delegation
of administrative responsibilities, that it believes reasonable and necessary.
3.2 The Board shall have the sole discretion, subject to the provisions
of the Plan, to determine the Participants eligible to receive Options pursuant
to the Plan and the amount, type, and terms of any Options and the terms and
conditions of option agreements relating to any Option. On a case by case basis,
the Board may, in its sole discretion, accelerate the schedule of the time or
times when an Option granted under the Plan may be exercised.
3.3 The Board may correct any defect, supply any omission, or reconcile
any inconsistency in the Plan or in any Option granted hereunder in the manner
and to the extent it shall deem necessary to carry out the terms of the Plan.
3.4 Any decision made, or action taken, by the Board arising out of or
in connection with the interpretation and administration of the Plan shall be
final, conclusive and binding upon all Optionees.
3.5 The Board may designate a Committee from time to time to administer
the Plan. If designated, the Committee shall be composed of not less than two
persons (who need not be members of the Board) who are appointed from time to
time by the Board. If the Board has appointed a Committee pursuant to this
Section 3.5 of the Plan, then the Committee may administer the Plan and exercise
all of the rights and powers granted to the Board in this Plan, including,
without limitation, the right to grant Options pursuant to the Plan and to
establish the Option price as provided in the Plan.
<PAGE>
4. SHARES SUBJECT TO THE PLAN
4.1 NUMBER. The total number of shares of Stock reserved for issuance
upon exercise of Options under the Plan is 1,950,000. Such shares shall consist
of authorized but unissued Stock. If any Option granted under the Plan lapses or
terminates for any reason before being completely exercised, the shares covered
by the unexercised portion of such Option may again be made subject to Options
under the Plan.
4.2 CHANGES IN CAPITALIZATION. In the event of any change in the
outstanding shares of Stock of the Company by reason of any stock dividend,
split, recapitalization, reorganization, merger, consolidation, combination,
exchange of shares, or rights offering to purchase stock at a price
substantially below fair market value, or other similar corporate change, the
aggregate number of shares which may be subject to Options under the Plan and
the terms of any outstanding Option, including the number and kind of shares
subject to such Options and the purchase price per share thereof, shall be
appropriately adjusted by the Board, consistent with such change and in such
manner as the Board, in its sole discretion, may deem equitable to prevent
substantial dilution or enlargement of the rights granted to or available for
Optionees. Notwithstanding the preceding sentence, in no event shall any
fraction of a share of Stock be issued upon the exercise of an Option.
5. ELIGIBLE PARTICIPANTS
The following persons are Participants eligible to participate in the
Plan:
5.1 INCENTIVE STOCK OPTIONS. Incentive Stock Options may be granted
only to employees of the Company or any Subsidiary, including officers and
directors who are also employees of the Company or any Subsidiary; provided,
however, that officers who are not employed full-time shall not be eligible for
Incentive Stock Options.
5.2 NON-STATUTORY STOCK OPTIONS. Non-statutory stock options may be
granted to (i) any employee of the Company or any Subsidiary, including any
officer or director who is also an employee of the Company or any Subsidiary;
and (ii) any consultant to, or other independent contractor of, the Company.
6. GRANT OF OPTIONS
6.1 DISCRETIONARY GRANTS. Subject to the terms, conditions, and
limitations set forth in this Plan, the Company, by action of its Board, may
from time to time grant Options to purchase shares of the Company's Stock to
those eligible Participants as may be selected by the Board, in such amounts and
on such other terms as the Board in its sole discretion shall determine. In
making stock option grants the Board shall specify in each stock option
agreement the vesting schedule which shall apply to each such grant.
<PAGE>
6.2 LIMITATIONS. Options specified in Section 6.1 above may be (i)
"Incentive Stock Options" so designated by the Board and which, when granted,
are intended to qualify as incentive stock options as defined in Section 422 of
the Code; (ii) "Non-Statutory Stock Options" so designated by the Board and
which, when granted, are not intended to, or do not, qualify as incentive stock
options under Section 422 of the Code; or (iii) a combination of both. The date
on which the Board approves the granting of an Option shall be the date of grant
of such Option, unless a different date is specified by the Board on such date
of approval. Notwithstanding the foregoing, with respect to the grant of any
Incentive Stock Option under the Plan, the aggregate fair market value of Stock
(determined as of the date the Option is granted) with respect to which
incentive stock options are exercisable for the first time by an Optionee in any
calendar year (under all such stock option plans of the Company or Subsidiaries)
shall not exceed $100,000. Each grant of an Option under the Plan shall be
evidenced by a written stock option agreement between the Company and the
Optionee setting forth the terms and conditions, not inconsistent with the Plan,
under which the Option so granted may be exercised pursuant to the Plan and
containing such other terms with respect to the Option as the Board in its sole
discretion may determine.
7. OPTION PRICE AND FORM OF PAYMENT
7.1 INCENTIVE STOCK OPTIONS. The purchase price for a share of Stock
subject to an Incentive Stock Option granted hereunder shall not be less than
100% of the fair market value of the Stock at the time the option is granted.
Notwithstanding the foregoing, in the case of an Incentive Stock Option granted
to any Optionee then owning more than 10% of the voting power of all classes of
the Company's stock, the purchase price per share of the Stock subject to such
Option shall not be less than 110% of the fair market value of the Stock on the
date of grant of the Incentive Stock Option, determined as provided in Section
7.3.
7.2 NON-STATUTORY STOCK OPTIONS. The purchase price for a share of
Stock subject to a non-statutory stock option shall be not less than 100% of the
fair market value of the Stock.
7.3 DETERMINATION OF FAIR MARKET VALUE. For purposes of this Section 7,
the "fair market value" of the Stock shall be determined as follows:
(a) if the Stock of the Company is listed or admitted to
unlisted trading privileges on a national securities exchange, the fair
market value on any given day shall be the closing sale price for the
Stock, or if no sale is made on such day, the closing bid price for
such day on such exchange;
(b) if the Stock is not listed or admitted to unlisted trading
privileges on a national securities exchange, the fair market value on
any given day shall be the closing sale price for the Stock as reported
on the NASDAQ National Market System on such day, or if no sale is made
on such day, the closing bid price for such day as entered by a market
maker for the Stock;
<PAGE>
(c) if the Stock is not listed on a national securities
exchange, is not admitted to unlisted trading privileges on any such
exchange, and is not eligible for inclusion in the NASDAQ National
Market System, the fair market value on any given day shall be the
average of the closing representative bid and asked prices as reported
by the National Quotation Bureau, Inc. or, if the Stock is not quoted
on the National Association of Securities Dealers Automated Quotations
System, then as reported in any publicly available compilation of the
bid and asked prices of the Stock in any over-the-counter market on
which the Stock is traded; or
(d) if there exists no public trading market for the Stock,
the fair market value on any given day shall be an amount determined in
good faith by the Board in such manner as it may reasonably determine
in its discretion, provided that such amount shall not be less than the
book value per share as reasonably determined by the Board as of the
date of determination or less than the par value of the Stock.
7.4 PAYMENT OF PURCHASE PRICE. Except as provided herein, the purchase
price of each share of Stock purchased upon the exercise of any Option shall be
paid:
(a) in United States dollars in cash or by check, bank draft
or money order payable to the order of the Company; or
(b) at the discretion of the Board, through the delivery of
shares of Stock, having initially or as a result of successive
exchanges of shares, an aggregate fair market value (as determined in
the manner provided under this Plan) equal to the aggregate purchase
price for the Stock as to which the Option is being exercised; or
(c) at the discretion of the Board, by a combination of both
(a) and (b) above; or
(d) by such other method as may be permitted in the written
stock option agreement between the Company and the Optionee.
If such form of payment is permitted, the Board shall determine
procedures for tendering Stock as payment upon exercise of an Option and may
impose such additional limitations and prohibitions on the use of Stock as
payment upon the exercise of an Option as it deems appropriate.
If the Board in its sole discretion so agrees, the Company may finance
the amount payable by an Optionee upon exercise of any Option upon such terms
and conditions as the Board may determine at the time such Option is granted
under this Plan.
<PAGE>
8. EXERCISE OF OPTIONS
8.1 MANNER OF EXERCISE. An Option, or any portion thereof, shall be
exercised by delivering a written notice of exercise to the Board and paying to
the Company the full purchase price of the Stock to be acquired upon the
exercise of the Option. Until certificates for the Stock acquired upon the
exercise of an Option are issued to an Optionee, such Optionee shall not have
any rights as a shareholder of the Company with respect to such stock.
8.2 LIMITATIONS AND CONDITIONS ON EXERCISE OF OPTIONS. In addition to
any other limitations or conditions contained in this Plan or that may be
imposed by the Board from time to time or in the stock option agreement to be
entered into with respect to Options granted hereunder, the following
limitations and conditions shall apply to the exercise of Options granted under
this Plan:
8.2.1 No Incentive Stock Option may be exercisable by its
terms after the expiration of 10 years from the date of the grant
thereof.
8.2.2 No Incentive Stock Option granted pursuant to the Plan
to an eligible Participant then owning more than 10% of the voting
power of all classes of the Company's stock may be exercisable by its
terms after the expiration of five years from the date of the grant
thereof.
9. INVESTMENT PURPOSES
Unless a registration statement under the Securities Act of 1933 is in
effect with respect to Stock to be purchased upon exercise of Options to be
granted under the Plan, the Company shall require that an Optionee agree with
and represent to the Company in writing that he or she is acquiring such shares
of Stock for the purpose of investment and with no present intention to
transfer, sell or otherwise dispose of such shares of Stock other than by
transfers which may occur by will or by the laws of descent and distribution,
and no shares of Stock may be transferred unless, in the opinion of counsel to
the Company, such transfer would be in compliance with applicable securities
laws. In addition, unless a registration statement under the Securities Act of
1933 is in effect with respect to the Stock to be purchased under the Plan, each
certificate representing any shares of Stock issued to an Optionee hereunder
shall have endorsed thereon a legend in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED WITHOUT
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT")
AND WITHOUT REGISTRATION UNDER ANY APPLICABLE STATE SECURITIES LAWS, IN
RELIANCE UPON EXEMPTION(S) CONTAINED THEREIN. NO TRANSFER OF THESE
SHARES OR ANY INTEREST THEREIN MAY BE MADE EXCEPT PURSUANT TO EFFECTIVE
REGISTRATION STATEMENTS UNDER SAID LAWS UNLESS
<PAGE>
THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO IT THAT
SUCH TRANSFER OR DISPOSITION DOES NOT REQUIRE REGISTRATION UNDER SAID
LAWS AND, FOR ANY SALES UNDER RULE 144 OF THE ACT, SUCH EVIDENCE AS IT
SHALL REQUEST FOR COMPLIANCE WITH THAT RULE, OR APPLICABLE STATE
SECURITIES LAWS.
10. TRANSFERABILITY OF OPTIONS
No Option granted under the Plan shall be transferable by an Optionee
(whether by sale, assignment, hypothecation or otherwise) other than by will or
the laws of descent and distribution. An option shall be exercisable during the
Optionee's lifetime only by the Optionee or by the Optionee's guardian or legal
representative.
11. TERMINATION OF EMPLOYMENT
11.1 GENERALLY. Except as otherwise provided in this Section 11, if an
Optionee's employment with the Company or Subsidiary is terminated (hereinafter
"Termination") other than by death or Disability (as hereinafter defined), the
Optionee may exercise any Option granted under the Plan, to the extent the
Optionee was vested in and entitled to exercise the Option at the date of
Termination, for a period of 3 months after the date of Termination or until the
term of the Option has expired, whichever date is earlier.
11.2 DEATH OR DISABILITY OF OPTIONEE. In the event of the death or
Disability of an Optionee prior to expiration of an Option held by him or her,
the following provisions shall apply:
11.2.1 If the Optionee is at the time of his or her Disability
employed by the Company or a Subsidiary and has been in continuous
employment (as determined by the Board in its sole discretion) since
the date of grant of the Option, then the Option may be exercised by
the Optionee until the earlier of one year following the date of such
Disability or the expiration date of the Option, but only to the extent
the Optionee was vested in and entitled to exercise such Option at the
time of his or her Disability. For the purpose of this Section 11, the
term "Disability" shall mean a permanent and total disability as
defined in Section 22(e)(3) of the Code. The determination of whether
an Optionee has a Disability within the meaning of Section 22(e)(3)
shall be made by the Board in its sole discretion.
11.2.2 If the Optionee is at the time of his or her death
employed by the Company or a Subsidiary and has been in continuous
employment (as determined by the Board in its sole discretion) since
the date of grant of the Option, then the Option may be exercised by
the Optionee's estate or by a person who acquired the right to exercise
the Option by will or the laws of descent and distribution, until the
earlier of one year from the date of the Optionee's death or the
expiration date of the Option, but only to the extent the Optionee was
vested in and entitled to exercise the Option at the time of death.
<PAGE>
11.2.3 If the Optionee dies within three months after
Termination, the Option may be exercised until the earlier of nine
months following the date of death or the expiration date of the
Option, by the Optionee's estate or by a person who acquires the right
to exercise the Option by will or the laws of descent or distribution,
but only to the extent the Optionee was vested in and entitled to
exercise the Option at the time of Termination.
11.3 TERMINATION FOR CAUSE. If the employment of an Optionee is
terminated by the Company or a Subsidiary for cause, then the Board shall have
the right to cancel any Options granted to the Optionee under the Plan.
11.4 SUSPENSION OR TERMINATION FOR MISCONDUCT. If the Board reasonably
believes that an Optionee has committed an act of misconduct, it may suspend the
Optionee's right to exercise any Option pending a determination by the Board. If
the Board determines that an Optionee has committed an act of embezzlement,
fraud, dishonesty, nonpayment of an obligation owed to the Company, breach of
fiduciary duty or deliberate disregard of the Company's rules resulting in loss,
damage or injury to the Company, or if an Optionee makes an unauthorized
disclosure of any Company trade secret or confidential information, engages in
any conduct constituting unfair competition with respect to the Company, or
induces any party to breach a contract with the Company, neither the Optionee
nor the Optionee's estate shall be entitled to exercise any Option whatsoever.
In making such determination, the Board shall act fairly and shall give the
Optionee an opportunity to appear and present evidence on the Optionee's behalf
at a hearing before the Board.
12. AMENDMENT AND TERMINATION OF PLAN
12.1 The Board may at any time terminate or amend this Plan in any
respect, provided, however, that the Board shall not, without the approval of
the shareholders of the Company, amend this Plan in any manner that requires
such shareholder approval pursuant to any law, regulation or rule relating the
listing of the Company's securities.
12.2 No amendment, suspension or termination of this Plan shall,
without the Optionee's consent, alter or impair any of the rights or obligations
under any Option theretofore granted to him or her under the Plan.
12.3 The Board may amend the Plan, subject to the limitations cited
above, in such manner as it deems necessary to permit the granting of Incentive
Stock Options meeting the requirements of future amendments to the Code.
12.4 Upon the dissolution or liquidation of the Company, or upon a
merger, consolidation, acquisition of property or stock, or reorganization as a
result of which the Company is not the surviving corporation or upon a sale of
substantially all the property or stock of the Company to another corporation,
any option granted hereunder shall terminate and no such event shall cause any
option to be exercisable for any shares other than those as to which it was
exercisable prior to such termination in accordance with its terms; provided,
however, that the Company may in its discretion
<PAGE>
and immediately prior to any such transaction, cause a new option to be
substituted for such option or cause such old option to be assumed, by an
employer corporation, or a parent or subsidiary of such corporation; and such
new or substituted option shall apply to all shares issued in addition to or in
substitution, replacement or modification of the shares theretofore covered by
such option; provided that:
(a) the excess of the aggregate fair market value of the
shares subject to the option immediately after the substitution or
assumption over the aggregate option price of such shares shall not be
more than the excess of the aggregate fair market value of all shares
subject to the option immediately before such substitution or
assumption over the aggregate option price of such shares,
(b) the new option or the assumption of the existing option
shall not give the optionee additional benefits which he did not have
under the old option or prior to such assumption, and
(c) a propriety adjustment of the original option price shall
be made among original shares subject to the option and any additional
share or shares issued in substitution, replacement or modification
thereof.
13. MISCELLANEOUS PROVISIONS
13.1 NO RIGHT TO CONTINUED EMPLOYMENT. No person shall have any claim
or right to be granted an Option under the Plan, and the grant of an Option
under the Plan shall not be construed as giving an Optionee the right to
continued employment with the Company. The Company further expressly reserves
the right at any time to dismiss an Optionee or reduce an Optionee's
compensation with or without cause, free from any liability, or any claim under
the Plan, except as provided herein or in a stock option agreement.
13.2 TRANSFER OF STOCK AND PAYMENT OF WITHHOLDING TAXES. The Company
shall have the right to require that payment or provision for payment of any and
all withholding taxes due upon the grant or exercise of an Option hereunder or
the disposition of any Stock or other property acquired upon exercise of an
Option be made by an Optionee. Stock acquired upon exercise of an Incentive
Stock Option may not be disposed of by the Optionee before the later of two
years from the date of grant or one year from the date of exercise unless
adequate provision is made for payment to the Company of funds sufficient for
payment of any withholding and other taxes required by any governmental
authority in respect of the disposition of such stock. The Company may place a
legend on certificates restricting the transfer of Stock issued pursuant to
Incentive Stock Options in order to obtain compliance with tax withholding
requirements. In connection therewith, the Board shall have the right to
establish such rules and regulations or impose such terms and conditions in any
agreement relating to an Option granted hereunder with respect to such tax
withholding as the Board may deem necessary and appropriate.
<PAGE>
13.3 GOVERNING LAW. The Plan shall be administered in the State of
Minnesota, and the validity, construction, interpretation, and administration of
the Plan and all rights relating to the Plan shall be determined solely in
accordance with the laws of such state, unless controlled by applicable federal
law, if any.
14. EFFECTIVE DATE
The effective date of the Plan is June 5, 1995 subject, however, to
approval of this Plan by shareholders of the Company in the manner prescribed by
law not later than June 5, 1996. No Option may be granted after June 5, 2005,
provided, however, that the Plan and all outstanding Options shall remain in
effect until such outstanding Options have expired or been canceled.
EXHIBIT 10.10
UNITED SHIPPING & TECHNOLOGY, INC.
(FORMERLY KNOWN AS U-SHIP, INC.)
1996 DIRECTOR STOCK OPTION PLAN
1. Purpose of the Plan. The purpose of this 1996 Director Stock Option
Plan, adopted by the Board on January 29, 1996, and amended on May 3, 1999, (the
"Plan") is to attract and retain the best available individuals to serve as
Directors of United Shipping & Technology, Inc. (formerly known as U-Ship,
Inc.), a Utah corporation (the "Company"), to provide additional incentive to
the Outside Directors of the Company to serve as Directors, and to encourage
their continued service on the Board.
The Company intends that the options granted hereunder shall
not constitute incentive stock options within the meaning of Section 422 of the
Internal Revenue Code of 1986. The Plan is intended to comply with the
requirements of Rule 16b-3 under the Exchange Act.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Common Stock" shall mean the Common Stock, $.004 par
value per share, of the Company.
(c) "Company" shall mean United Shipping & Technology, Inc.
and any subsidiary of the Company.
(d) "Committee" shall mean a committee of the Board appointed
by the Board to administer the Plan.
(e) "Continuous Service as a Director" shall mean the absence
of any interruption or termination of service as a Director. Continuous
Service as a Director shall not be considered interrupted in the case
of sick leave, military leave, or any other leave of absence approved
by the Board or Committee.
(f) "Director" shall mean a member of the Board.
(g) "Employee" shall mean any person, including officers and
Directors, employed by the Company or any Parent or Subsidiary of the
Company. The payment of fees to a Director shall not be sufficient in
and of itself to constitute "employment" by the Company.
(h) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(i) "Option" shall mean a stock option granted pursuant to the
Plan.
<PAGE>
(j) "Optioned Stock" shall mean the Common Stock subject to an
Option.
(k) "Optionee" shall mean an Outside Director who receives an
option.
(l) "Outside Director" shall mean a Director who is not an
Employee, including an officer who is not employed full-time by the
Company.
(m) "Parent" shall mean a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Internal
Revenue Code of 1986, as amended.
(n) "Plan" shall mean this 1996 Director Stock Option Plan.
(o) "Share" shall mean a share of Common Stock, as adjusted in
accordance with Section 12 of the Plan.
(p) "Subsidiary" shall mean a "subsidiary corporation,"
whether now or hereafter existing, as defined in Section 424(f) of the
Internal Revenue Code of 1986, as amended.
3. Stock Subject to the Plan. Subject to the provisions of Section 12
of the Plan, the maximum aggregate number of shares which may be optioned and
sold under the Plan is 210,000 shares of Common Stock. The shares may be
authorized, but unissued, or reacquired Common Stock.
If an Option expires or becomes unexercisable for any reason
without having been exercised in full, the unexercised Shares which were subject
thereto shall, unless the Plan has been terminated, become available for future
grant under the Plan. If Shares which were acquired upon exercise of an Option
are subsequently repurchased by the Company, such Shares shall not become
available for future grant under the Plan.
4. Automatic Grant of Options. All grants of Options hereunder shall be
automatic and non-discretionary and shall be made strictly in accordance with
the following provisions:
(a) No person shall have any discretion to select which
Outside Directors shall be granted Options or to determine the number
of Shares to be covered by Options granted to Outside Directors.
(b) Each Outside Director, including persons who are Outside
Directors on the date of adoption of the Plan, shall be automatically
granted an option to purchase 15,000 Shares (the "First Option") upon
the later to occur of (i) the effective date of the Plan, as determined
in accordance with Section 8 hereof, or (ii) the date on which such
person first becomes an Outside Director, whether through election by
the shareholders of the Company or appointment by the Board to fill a
vacancy.
(c) After the First Option has been granted to an Outside
Director, such Outside Director shall thereafter be automatically
granted an Option to purchase 15,000 shares on the
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<PAGE>
first and each successive anniversary of the grant of the First Option;
provided, however, that in no event shall an Outside Director be
granted options to purchase in the aggregate more than 45,000 shares
pursuant to the Plan.
(d) Notwithstanding the provisions of Sections 4(b) and (c)
hereof, in the event that a grant would cause the number of Shares
subject to outstanding Options to Outside Directors plus Shares
previously purchased upon exercise of Options by Outside Directors to
exceed 210,000 Shares, then each such automatic grant shall be for that
number of Shares determined by dividing the total number of Shares
remaining available for grant by the number of Outside Directors on the
automatic grant date. Any further grants shall then be deferred until
such time, if any, as additional Shares become available for grant
under the Plan through action of the shareholders to increase the
number of Shares which may be issued under the Plan or through
cancellation or expiration of Options previously granted hereunder.
5. Option Terms and Conditions. The terms and conditions of an Option
granted hereunder shall be as follows:
(a) the term of each Option shall be five (5) years, subject
to Sections 12 and 13 hereof.
(b) the First Option shall become exercisable in full
beginning on the later of (i) the first anniversary of the grant of the
Option or (ii) twelve (12) months after the date on which the Plan is
first approved by the shareholders of the Company in accordance with
Rule 16b-3 under the Exchange Act and each subsequent Option shall
become exercisable in full beginning on the first anniversary of the
grant of such Option, provided in each case that the Outside Director
shall have maintained Continuous Service as an Outside Director
throughout such 12-month period.
(c) the Option shall be exercisable only while the Outside
Director serves as an Outside Director of the Company, and for a period
of six (6) months after ceasing to be an Outside Director pursuant to
Section 10(b) hereof.
(d) the exercise price per Share shall be 100% of the fair
market value per Share on the date of grant of the Option, as
determined in accordance with Section 9(a) hereof.
(e) the effectiveness of any Options granted hereunder is
conditioned upon shareholder approval of the Plan in accordance with
Rule 16b-3 under the Exchange Act.
6. Administration of and Grants of Options under the Plan.
(a) Administration. Except as otherwise required herein, the
Plan shall be administered by the Board or a Committee.
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<PAGE>
(b) Powers of the Board or Committee. Subject to the
provisions and restrictions of the Plan, the Board or Committee shall
have the authority, in its discretion: (i) to determine, upon review of
relevant information and in accordance with Section 9(a) hereof, the
fair market value of the Common Stock; (ii) to interpret the Plan;
(iii) to prescribe, amend and rescind rules and regulations relating to
the Plan; (iv) to authorize any person to execute on behalf of the
Company any instrument required to effectuate the grant of an Option
hereunder; and (v) to make all other determinations deemed necessary or
advisable for the administration of the Plan. On a case by case basis,
the Board or Committee may, in their sole discretion, accelerate the
Schedule of the time or times when an Option granted under the Plan may
be exercised.
(c) Effect of Board or Committee Decision. All decisions,
determinations and interpretations of the Board or Committee shall be
final and binding on all Optionees and any other holders of any Options
granted under the Plan.
(d) Suspension or Termination of Option. If the Board or
Committee reasonably believes that an Optionee has committed an act of
misconduct, it may suspend the Optionee's right to exercise any Option
pending a determination by the Board or Committee (excluding the
Outside Director accused of such misconduct). If the Board or Committee
(excluding the Outside Director accused of such misconduct) determines
that an Optionee has committed an act of embezzlement, fraud,
dishonesty, nonpayment of an obligation owed to the Company, breach of
fiduciary duty or deliberate disregard of the Company's rules resulting
in loss, damage or injury to the Company, or if an Optionee makes an
unauthorized disclosure of any Company trade secret or confidential
information, engages in any conduct constituting unfair competition
with respect to the Company, or induces any party to breach a contract
with the Company, neither the Optionee nor the Optionee's estate shall
be entitled to exercise any Option whatsoever. In making such
determination, the Board or Committee (excluding the Outside Director
accused of such misconduct) shall act fairly and shall give the
Optionee an opportunity to appear and present evidence on the
Optionee's behalf at a hearing before the Board or Committee.
(e) Date of Grant of Options. The date of grant of an Option
shall, for all purposes, be the date determined in accordance with
Section 4 hereof, notwithstanding the fact that an Optionee may not
have entered into an option agreement with the Company on such date.
Notice of the grant of an Option shall be given to the Optionee within
a reasonable time after the date of such grant.
7. Eligibility. Options may be granted only to Outside Directors. All
options shall be automatically granted in accordance with the terms set forth in
Section 4 hereof. The Plan shall not confer upon any Optionee any right with
respect to continuation of service as a Director or nomination to serve as a
Director, nor shall it interfere in any way with any rights which a Director or
the Company may have to terminate such Director's directorship at any time.
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<PAGE>
8. Term of Plan. The effective date of this Plan is January 29, 1996,
the date upon which it was adopted by the Board. The Plan shall continue in
effect for a term of ten (10) years unless terminated sooner under Section 13
hereof.
9. Fair Market Value and Form of Consideration.
(a) Fair Market Value. The fair market value per share shall
be determined as follows:
(i) if the Common Stock is listed on a national
securities exchange or admitted to unlisted trading privileges
on such exchange, the fair market value on any given day shall
be the closing sale price for the Common Stock on such day, as
reported in the Wall Street Journal or other newspaper of
general circulation;
(ii) if the Common Stock is not listed on a national
securities exchange, the fair market value on any given day
shall be the closing sale price for the Common Stock on the
NASDAQ National Market System on such day, as reported in the
Wall Street Journal or other newspaper of general circulation;
(iii) if the Common Stock is not listed on a national
securities exchange, is not admitted to unlisted trading
privileges on any such exchange, and is not eligible for
inclusion on the NASDAQ National Market System, the fair
market value on any given day shall be the average of the
closing representative bid and asked prices on such day, as
reported on the NASDAQ System, and if not reported on such
system, then as reported by the National Quotation Bureau,
Inc. or such other publicly available compilation of the bid
and asked prices of the Common Stock in any over- the-counter
market on which the Common Stock is traded; or
(iv) if there exists no public trading market for the
Common Stock, the fair market value on any given day shall be
an amount determined by the Board or Committee in such manner
as it may reasonably determine in its discretion, provided
that such amount shall not be less than the book value per
share as reasonably determined by the Board or Committee as of
the date of determination nor less than the par value of the
Stock.
(b) Form of Consideration. The consideration to be paid for
the Shares to be issued upon exercise of an Option shall consist
entirely of cash or such other form of consideration as the Board or
Committee may determine, in its sole discretion, to be appropriate for
payment, including but not limited to other shares of Common Stock
having a fair market value on the date of surrender equal to the
aggregate exercise price of the Shares as to which the Option is
exercised, or any combination of such methods of payment.
5
<PAGE>
10. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any
Option granted hereunder shall be exercisable at such times as are set
forth in Section 5 hereof. An Option may not be exercised for a
fraction of a Share.
An Option shall be deemed to be exercised when written notice
of such exercise has been given to the Company in accordance with the
terms of the Option by the person entitled to exercise the Option and
full payment for the Shares with respect to which the Option is
exercised has been received by the Company. Full payment may consist of
any consideration and method of payment allowable under Section 9(b)
hereof. Until the issuance (as evidenced by the appropriate entry on
the books of the Company or of a duly authorized transfer agent of the
Company) of the stock certificate evidencing such Shares, no right to
vote or receive dividends or any other rights as a shareholder shall
exist with respect to the Optioned Stock, notwithstanding the exercise
of the Option. A share certificate for the number of Shares so acquired
shall be issued to the Optionee as soon as practicable after exercise
of the Option. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the stock certificate is
issued, except as provided in Section 12 hereof.
Exercise of an Option in any manner shall result in a decrease
in the number of Shares which thereafter may be available, both for
purposes of the Plan and for sale under the Option, by the number of
Shares as to which the Option was exercised.
(b) Termination of Status as a Director. If an Optionee ceases
to serve as a Director, the Optionee may, but only within twelve (12)
months after the date the Optionee ceases to be an Outside Director of
the Company, exercise his or her Option to the extent the Optionee was
entitled to exercise it at the date of such termination. To the extent
that the Optionee was not entitled to exercise an Option at the date of
such termination, or if the Optionee does not exercise such Option
within the time specified herein, the Option shall terminate.
(c) Death of Optionee. In the event of the death of an
Optionee occurring:
(i) during the term of the Option, and provided that
the Optionee was at the time of death a Director of the
Company and had been in Continuous Service as a Director since
the date of grant of the Option, the Option may be exercised,
at any time within twelve (12) months following the date of
death, by the Optionee's estate or by a person who acquired
the right to exercise the Option by bequest or inheritance,
but only to the extent of the right to exercise that would
have accrued had the Optionee continued living and remained in
Continuous Service a Director for twelve (12) months after the
date of death; or
(ii) within thirty (30) days after the termination of
Continuous Service as a Director, the Option may be exercised,
at any time within six (6) months following
6
<PAGE>
the date of death, by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or
inheritance, but only to the extent of the right to exercise
that had accrued at the date of termination of Continuous
Service as a Director.
11. Non-Transferability of Options. The Option may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner other
than by will or by the laws of descent or distribution and may be exercised,
during the lifetime of the Optionee, only by the Optionee.
12. Adjustments Upon Changes in Capitalization or Merger. The number of
Shares of Common Stock covered by each outstanding Option, and the number of
Shares of Common Stock which have been authorized for issuance under the Plan
but as to which Options have not yet been granted or which have been returned to
the Plan upon cancellation or expiration of an Option, as well as the price per
Share of Common Stock covered by each such outstanding Option, shall be
proportionately adjusted for any increase or decrease in the number of issued
and outstanding Shares of Common Stock resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of the Common
Stock, or any other increase or decrease in the number of issued shares of
Common Stock effected without receipt of consideration by the Company; provided,
however, that conversion of any convertible securities of the Company shall not
be deemed to have been "effected without receipt of consideration." Such
adjustment shall be made by the Board, whose determination in that respect shall
be final, binding and conclusive. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, or options or rights to purchase
shares of stock of any class shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares of Common Stock
subject to an Option.
In the event of the proposed dissolution or liquidation of the
Company, each Option will terminate immediately prior to the consummation of
such proposed action, unless otherwise provided by the Board. The Board may, in
the exercise of its sole discretion in such instances, declare that any Option
shall terminate as of a date fixed by the Board and give each Optionee the right
to exercise his or her Option as to all or any part of the Optioned Stock,
including Shares as to which the Option would not otherwise be exercisable. In
the event of a proposed sale of all or substantially all of the assets of the
Company, or the merger of the Company with or into another corporation, the
Option shall be assumed or an equivalent option shall be substituted by such
successor corporation or a parent or subsidiary of such successor corporation,
unless the Board determines, in the exercise of its sole discretion and in lieu
of such assumption or substitution, that the Optionee shall have the right to
exercise the Option as to all of the Optioned Stock, including Shares as to
which the Option would not otherwise be exercisable. If the Board makes an
Option fully exercisable in lieu of assumption or substitution in the event of a
merger or sale of assets, the Board shall notify the Optionee that the Option
shall be fully exercisable for a period of ten (10) days from the date of such
notice, and the Option will terminate upon the expiration of such period.
7
<PAGE>
13. Amendment, Termination and Approval of the Plan. The Board may at
any time amend or terminate the Plan, except that the Board shall not amend the
Plan more than once every six (6) months with respect to the provisions of the
Plan relating to the amount, price, and timing of grants, other than to comply
with changes in the Internal Revenue Code of 1986, the Employee Retirement
Income Security Act of 1974, as amended, or the regulations thereunder. No
Option may be granted after the Plan is terminated. The foregoing provisions of
this Section notwithstanding, no amendment or termination shall, without the
consent of the holder of an Option, alter or impair any rights or obligations
under any Option theretofore granted under the Plan except as is permitted
pursuant to Section 12 of the Plan.
If any amendment to the Plan requires approval by the
shareholders of the Company for continued applicability of Rule 16b-3 under the
Exchange Act, or for initial or continued listing of the Common Stock or other
securities of the Company upon any stock exchange, then such amendment shall be
approved by the holders of a majority of the Company's outstanding capital stock
entitled to vote.
14. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, state securities laws, and the requirements of the NASD or any stock
exchange upon which the Shares may then be listed, and shall be further subject
to the approval of counsel for the Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may
require the person exercising such Option to represent and warrant at the time
of any such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares, if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law. Such Shares may also be issued
with appropriate legends on stock certificates representing such Shares, and the
Company may place stop transfer orders with respect to such Shares.
Inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any Shares hereunder,
shall relieve the Company of any liability in respect of the failure to issue or
sell such Shares as to which such requisite authority shall not have been
obtained.
15. Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
16. Option Agreement. Options shall be evidenced by written option
agreements as the Board or Committee shall approve.
8
<PAGE>
17. Information to Optionees. The Company shall provide to each
Optionee, during the period for which such Optionee has one or more Options
outstanding, copies of all annual reports and other information which are
provided to all shareholders of the Company.
9
<TABLE> <S> <C>
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<NAME> UNITED SHIPPING & TECHNOLOGY, INC.
<S> <C>
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<FISCAL-YEAR-END> JUL-01-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> JAN-01-2000
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