EXHIBIT 10.3
RESTRUCTURING AGREEMENT
THIS AGREEMENT, is made as of the 31st day of January, 2000, by and
among UNITED SHIPPING & TECHNOLOGY, INC., a Utah corporation ("UST"), UST
DELIVERY SYSTEMS, INC., a Delaware corporation f/k/a Corporate Express Delivery
Systems, Inc. ("CEDS"), and J. IVER & COMPANY, a California corporation
("Iver").
RECITALS:
WHEREAS, CEDS has issued its $2,190,000 Convertible Subordinated
Note due 2000 dated December 7, 1995 payable to Iver (the "Note");
WHEREAS, the Note is convertible into Common Stock of Corporate
Express, Inc., the former parent corporation of CEDS;
WHEREAS, UST has acquired all the issued and outstanding capital
stock of CEDS from Corporate Express pursuant to a Merger Agreement dated as of
September 8, 1999; and
WHEREAS, the parties hereto desire to exchange the Note for a new
note of UST convertible into Common Stock of UST.
NOW, THEREFORE, in consideration of the foregoing, the parties
hereto hereby agree as follow:
1. Exchange of Note for New Note. On or before the date of Closing
(as defined in paragraph 8 hereof), UST will make a payment to Iver in the
amount of $500,000, plus all unpaid and accrued interest on the Note through the
date of such payment, calculated at the rate of 6% per annum through January 31,
2000, and 12% per annum from February 1, 2000 through the date of such payment,
such payments to be made by wire transfer of immediately available funds to an
account designated by Iver. Any interest accruing on the Note after the date of
such payments (calculated at the rate of 12% per annum) through the date of
Closing, shall be payable on the first interest payment date for the New Note
(as hereinafter defined). UST shall execute and deliver to Iver, in exchange for
the Note, a new 9% Convertible Subordinated Note in the principal amount of
$1,690,000 dated the date of Closing in the form of Exhibit A hereto (the "New
Note"). For purposes of Article Four of the New Note, Iver shall be deemed to
have submitted a Notice to Set Conversion Price as of February 1, 2000 as to the
entire principal and interest payable on the New Note. The maturity date of the
Note shall be deemed to be extended to the date of Closing and all defaults
thereunder are hereby waived, subject to consummation of the Closing.
2. Warrant. UST will issue to Iver a Warrant in the form of Exhibit
B hereto (the "Warrant") to purchase 15,000 shares of Common Stock of UST at a
price of $12.925 per share, with the registration rights set forth in the
Warrant.
3. Sale of Assets. So long as the New Note remains outstanding, if
CEDS proposes to sell or shut down any of its existing delivery operations, CEDS
will promptly (and in any event prior to entering into any agreement with any
other party to purchase such operations) give Iver notice of such proposed sale
or shut-down. Iver agrees to keep confidential any information contained in such
notice prior to any public announcement of such proposed sale or closure by CEDS
or UST. CEDS will give Iver an equal opportunity along with other potential
buyers (but not a right of first refusal) to negotiate with CEDS and purchase
any such delivery operations that CEDS desires to sell. In the event Iver
acquires any such existing delivery operations from CEDS, CEDS will waive any
non-competition restrictions it may have against Iver (or its affiliates) as
such restrictions may relate to the operation of delivery operations in
competition with CEDS.
4. Payments Under Sublease. So long as both (a) the New Note remains
outstanding and (b) UST or any of its subsidiaries continue to lease and occupy
its San Diego, California facility, then (i) Iver will not be required to make
payments under the Sublease dated November 1, 1999 between CEDS, as landlord,
and Iver, as tenant, relating to CEDS' facility in San Diego, California and
rent otherwise payable after the Closing will be forgiven and not accumulated,
and (ii) CEDS will give Iver the use of an additional private office at the San
Diego, California facility rent free.
5. Payment of Legal and Accounting Fees. UST will reimburse Iver
upon submission of appropriate invoices for reasonable legal and accounting fees
and expenses incurred in connection with (i) review and negotiations relating to
the Note in connection with the acquisition of CEDS by UST and (ii) the review
and negotiation of this Agreement, the New Note and the Warrant.
6. Restrictions on Stock Sales. Notwithstanding anything in the New
Note or the Warrant to the contrary, in no event shall Iver sell more than
$600,000 of shares of UST Common Stock (calculated using the actual sales price
of the shares) obtained upon conversion of the New Note during any five (5) day
trading period. Except for the aforementioned restriction, and subject to
compliance with applicable securities laws and the other terms of this
Agreement, there shall be no restrictions imposed by UST on the sale of shares
obtained upon conversion of the New Note.
7. Representation and Warranties.
(a) The Company and UST represent and warrant to Iver as follows:
(i) UST is a corporation duly organized, validly existing and in
good standing under the laws of the State of Utah and has all the
requisite power and authority to carry on its business as presently
conducted and to execute, deliver and
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perform its obligations under this Agreement, the New Note and the Warrant
(collectively, the "Transaction Documents").
(ii) CEDS is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all the
requisite power and authority to carry on its business as presently
conducted and to execute, deliver and perform its obligations under the
Transaction Documents.
(iii) Each of the Transaction Documents to which UST is a party has
been duly authorized, executed and delivered by UST and constitutes a
legal, valid and binding obligation of UST enforceable against UST in
accordance with its terms, subject to applicable bankruptcy, insolvency
and similar laws affecting creditors' rights generally, and subject, as to
enforceability, to general principles of equity.
(iv) Each of the Transaction Documents to which CEDS is a party has
been duly authorized, executed and delivered by CEDS and constitutes a
legal, valid and binding obligation of CEDS enforceable against CEDS in
accordance with its terms, subject to applicable bankruptcy, insolvency
and similar laws affecting creditors' rights generally, and subject, as to
enforceability, to general principles of equity.
(v) No consent or action of, or filing or registration with, any
governmental or public regulatory body or authority is required to
authorize, or is otherwise required in connection with the execution,
delivery or performance by UST and CEDS of the Transaction Documents.
(vi) Neither the execution and delivery of the Transaction
Documents, nor the issuance and delivery of the Common Stock of UST upon
conversion of the New Note or exercise of the Warrant in accordance with
their terms, nor the fulfillment of or compliance with the terms and
provisions of the Transaction Documents by UST and CEDS, will (i) result
in the creation or imposition of any mortgage, lien, charge or encumbrance
of any nature whatsoever upon any of the properties or assets of UST or
CEDS, or (ii) violate or result in a breach or default under any of the
terms of the charter documents or by-laws of UST or CEDS, any material
contract or instrument to which UST or CEDS is a party or by which either
of them or their respective property is bound, or any law or regulation,
or any order, writ, injunction or decree of any court or government
instrumentality, to which UST or CEDS is subject or by which either of
them or their respective property is bound.
(vii) Neither UST or CEDS is an "investment company" or an entity
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(viii) The Common Stock of UST issued and delivered upon conversion
of the New Note and/or exercise of the Warrant in accordance with their
terms will be duly authorized, validly issued, and fully paid and
non-assessable.
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(b) Iver represents and warrants to the Company and UST as follows:
(i) Iver has been advised that the New Note and the Warrant
(collectively, the "Securities") are not being registered under the
Securities Act of 1933 (the "Act") or the relevant state securities laws
pursuant to exemptions from the Act and such laws, and that UST's and the
Company's reliance upon such exemptions is predicated in part on Iver's
representations to UST and the Company as contained herein.
(ii) Iver represents and warrants that the Securities are being
purchased for its own account and for investment and without the intention
of reselling or redistributing the same, that Iver 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. Iver is aware
that, in the view of the Securities and Exchange Commission and applicable
state bodies that administer state securities laws, a purchase of
Securities 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 UST, the Company or their respective businesses, would
represent an intent inconsistent with the representations set forth above.
Iver represents and warrants that it is an "accredited investor" as
defined in Rule 501, of Regulation D under the Act.
(iii) Iver 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 satisfactory to UST 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 the Company and UST
shall not have any obligation to register the Securities for such purpose,
except insofar as the Securities require UST, in certain instances, to
register Common Stock.
(iv) Iver agrees that UST may place the following restrictive legend
on the certificate(s) representing the Securities, containing
substantially the following language:
"The Securities 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 Securities 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.
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8. Conditions to Closing. The consummation of the transactions
contemplated by this Agreement (the "Closing") are subject to the following
conditions:
(i) Iver shall surrender the original Note to UST
(ii) UST shall execute and deliver the New Note to Iver.
(iii) UST will execute and deliver the Warrant to Iver.
(iv) Iver shall have received a favorable opinion of counsel to UST
and CEDS as to the matters set forth in Exhibit C hereto.
9. Indemnification. The following provisions shall apply to any
registration of Common Stock pursuant to the terms of the Securities:
(a) UST will indemnify and hold harmless Iver and each person, if
any, who controls Iver within the meaning of the Act against any losses, claims,
damages or liabilities, joint or several, to which Iver or such controlling
person may become subject, under the Act or otherwise, insofar as such losses,
claims, damages, or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in any part of any Registration Statement relating to the Common
Stock issuable upon conversion or exercise of the Securities, when such part
became effective, any preliminary prospectus or preliminary prospectus
supplement, the Prospectus, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading; and will reimburse Iver and each such controlling person
for any legal or other expenses reasonably incurred by Iver or such controlling
person in connection with investigating or defending any such loss, claim,
damage, liability, or action; provided, however, that UST will not be liable in
any such case to the extent that any such loss, claim, damage, or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in any of such documents in reliance upon
and in conformity with written information furnished to UST by Iver specifically
for use therein. This indemnity agreement will be in addition to any liability
which UST may otherwise have.
(b) Iver will indemnify and hold harmless UST, each of its
directors, each of its officers who have signed any Registration Statement, and
each person, if any, who controls UST within the meaning of the Act, against any
losses, claims, damages, or liabilities to which UST or any such director,
officer, or controlling person may become subject, under the Act or otherwise,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any part of any Registration
Statement relating to the Common Stock issuable upon conversion or exercise of
the Securities, when such part became effective, any preliminary prospectus or
preliminary prospectus supplement, the Prospectus, or any amendment or
supplement thereto, or arise out of or are
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based upon the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to UST by
Iver specifically for use therein; and will reimburse any legal or other
expenses reasonably incurred by UST or any such director, officer, or
controlling person in connection with investigating or defending any such loss,
claim, damage, liability, or action. This indemnity agreement will be in
addition to any liability which Iver may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section, notify the indemnifying party of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability that it may have to any indemnified party otherwise than under
this Section. In case any such action is brought against any indemnified party,
and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the extent
that it may wish, jointly with any other indemnifying party similarly notified,
to assume the defense thereof, with counsel satisfactory to such indemnified
party (who shall not, without the consent of the indemnified party, be counsel
to the indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. An indemnifying party shall not be liable for any
settlement of a claim or action effected without its written consent, which
shall not be unreasonably withheld.
(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party for any loss,
claim, damage, liability, or action described in subsection (a) or (b) above,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of the losses, claims, damages or liabilities
referred to in subsection (a) or (b) above on the following basis: (1) if such
loss, claim, damage, liability, or action arises under subsection (a) above,
then (i) in such proportion as is appropriate to reflect the relative benefits
received by UST on the one hand and Iver on the other from the offering of the
Common Stock issuable upon conversion or exercise of the Securities or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of UST on the one
hand and Iver on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities as well as any other
relevant equitable consideration; and (2) if such loss, claim, damage,
liability, or action arises under subsection (b) above, then in such proportion
as is appropriate to reflect the relative fault of Iver on the one hand and UST
on the other in connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities as well as any other relevant
equitable
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considerations. For the purposes of clause (1) above, the relative benefits
received by UST on the one hand and Iver on the other shall be deemed to be in
the same proportion as the total net proceeds from the offering (before
deducting expenses) received by UST bear to the total net proceeds from the
offering (before deducting expenses) received by Iver. For the purposes of
clauses (1) and (2) above, the relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by UST or Iver and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The amount paid by an indemnified party as a
result of the losses, claims, damages or liabilities referred to in the first
sentence of this subsection (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any action or claim which is the subject of this
subsection (d). No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
10. Notices. All notices to be given under this Agreement shall be
in writing and shall be sent by (i) first class U.S. mail, postage prepaid, (ii)
overnight courier, or (iii) facsimile (with a copy by overnight courier) to:
In the case of UST and CEDS:
United Shipping & Technology, Inc.
0000 00xx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Facsimile: 000-000-0000
Attention: Xxxxxxx Xxxxxx
With a copy to:
Xxxxxx X. Xxxx
Faegre & Xxxxxx LLP
2200 Norwest Center
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Facsimile: 000-000-0000
In the case of Iver:
Xxxxxxx Xxxxxx
P.O. Box 9030
0000 Xxxxxxx Xxxxxx Xxxxxxx
Xxxxx Xxxxx Xx, Xxxxxxxxxx 00000
Facsimile: 000-000-0000
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With a copy to:
Xxxxxx X. Xxxxxxx
Xxxxx & Xxxxxx L.L.P.
Xxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Facsimile: 000-000-0000
11. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective executors, heirs,
successors, and permitted assigns.
12. Amendment, Modification or Waiver. No amendment, modification or
waiver of any condition, provision or term of this Agreement shall be valid or
of any effect unless made in writing, signed by the party or parties to be bound
or such party's duly authorized representative and specifying with particularity
and nature and extent of such amendment, modification or wavier. Any waiver by
any party of any default of another party shall not affect or impair any right
arising from any subsequent default. Nothing herein shall limit the remedies and
rights of the parties hereto under this Agreement.
13. Severability. To the extent any provision of this Agreement
shall be invalid or unenforceable, it shall be considered deleted herefrom and
the remainder of such provision and of this Agreement shall be unaffected and
shall continue in full force and effect.
14. Entire Agreement. This Agreement and the documents referred to
herein contain the entire understanding of the parties in respect of the
transactions contemplated and supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
15. Captions. All captions in the Sections of this Agreement are
inserted for convenience of reference only and shall not constitute a part of
this Agreement or act as a limitation of the scope of the particular Sections to
which they apply.
16. Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which shall be considered one and the same Agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other.
17. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Minnesota.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the date first above-written.
UNITED SHIPPING &
TECHNOLOGY, INC.
By:
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Its:
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UST DELIVERY SYSTEMS, INC.
By:
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Its:
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J. IVER & COMPANY
By:
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Xxxxxxx Xxxxxx, President
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