EXHIBIT 4.1
NOTE AGREEMENT
THIS NOTE AGREEMENT (the "Agreement") dated as of ______, 199_, by and
between U-Ship, Inc., a Utah corporation (the "Company"), and
____________________________________ (the "Investor"), a ______________________.
In consideration of the foregoing, the mutual promises set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Loan/Promissory Note. The Investor agrees to purchase _____ units
("Units") of the Company's 12% Unsecured Notes with Warrants at a purchase price
of $100,000 per Unit, for an aggregate purchase price of $500,000. The Company
agrees to deliver and issue to the Investor for the Units purchased, a
promissory note in the form attached hereto as Exhibit A (the "Note"), in such
amount. The delivery of the Note shall be made concurrently with delivery of
funds to the Company in the amount set forth above. The principal amount of the
Note shall bear interest from the date thereof at the rate of twelve percent
(12%) per annum.
2. Warrants. In consideration of the loan, the Company shall issue to
the Investor, concurrently with delivery of the Note, a warrant with respect to
each Unit purchase, in the form attached hereto as Exhibit B (the "Warrant"), to
purchase a number of shares of Common Stock of the Company $.004 par value per
share (the "Common Stock") equal, for each Unit purchased hereunder, to $5,000
divided by the last sale price of the Common Stock as reported by the Nasdaq
SmallCap Market at the close of business on the date the Company receives and
accepts this Note Agreement from the Investor. The Warrant shall be exercisable
to purchase Common Stock commencing ninety (90) days after the date hereof and
terminating five (5) years from the date of issuance. The shares of Common Stock
issuable upon exercise of the Warrants are referred to hereinafter as the
"Warrant Shares."
3. Repayment of Note. All outstanding principal and accrued interest on
the Note shall be due and payable on the third anniversary of the issuance of
the Note. The Note may be prepaid in whole or in part at any time and from time
to time without premium or penalty as provided in the Note.
4. Representations and Warranties of the Company. The Company
represents and warrants to the Investor that this Agreement has been duly
authorized by all necessary corporate action on behalf of the Company, has been
duly executed and delivered by an authorized officer of the Company, and is a
valid and binding agreement on the part of the Company. All corporate action
necessary for the authorization, issuance, and delivery of the Note, the
Warrant, and the Warrant Shares has been taken on or prior to the date hereof.
5. Representations and Warranties of the Investor. The Investor
represents and warrants to the Company as follows:
(a) The Investor has had the opportunity to ask questions
of, and receive answers from the Company, or an agent
of the Company, concerning the terms and conditions
of the investment and the business and affairs of the
Company, and to obtain any additional information
necessary to verify such information, as the Investor
considers necessary or advisable in order to form a
decision concerning an investment in the Company.
(b) The Note, the Warrant, the shares purchasable upon
conversion of the Note and the Warrant Stock are
being acquired for investment for the Investor's own
account and not with the view to, or for resale in
connection with, any distribution or public offering
thereof. The Investor understands that neither Note,
nor the Warrant or the Warrant Shares has been
registered under the Securities Act of 1933, as
amended (the "Securities Act"), or any state
securities laws by reason of the contemplated
issuance in transactions exempt from the registration
requirements of the Securities Act and applicable
state securities laws and that the reliance of the
Company and others upon these exemptions is
predicated in part upon this representation by the
Investor. The Investor further understands that the
Note, the Warrant, and the Warrant Shares may not be
transferred or resold without registration under the
Securities Act and any applicable state securities
laws, or an exemption from the requirements of the
Securities Act and applicable state securities laws.
(c) The Investor's principal office or residence is set
forth on Page 1 hereof.
(d) The Investor has carefully reviewed the Company's
Confidential Private Placement Memorandum dated
December 21, 1998, as amended December 31, 1998 (the
"Memorandum").
(e) The Investor is able to bear the loss of the entire
investment in the Note, the Warrant, the shares
purchasable upon conversion of the Note and the
Warrant Stock without any material adverse effect on
the Investor's financial position or prospects, and
the Investor has such knowledge and experience of
financial and business matters to be capable of
evaluating the merits and risks of the investment to
be made pursuant to this Agreement. Without limiting
the foregoing, the Investor understands that the
securities offered hereby are highly speculative,
involve a high degree of risk and immediate
substantial dilution, and should be purchased by
persons who can afford the loss of their entire
investment. The Investor has carefully considered the
risks and speculative factors described under "Risk
Factors" in the Memorandum, and the Company's 10-KSB
Report for the year ended June 30, 1998 and
particularly section captioned "Management's
Discussion and Analysis - Factors that May Affect
Operating Results."
(f) The Investor is (check all that apply):
______(i) A natural person whose individual net worth (assets
less liabilities), or joint net worth with his or her spouse, exceeds
$1,000,000.
______(ii) A natural person whose individual income was in
excess of $200,000, or whose joint income with his or her spouse was in excess
of $300,000, each of the two most recent years, and who has a reasonable
expectation of reaching the same income level for the current year.
______(iii) A bank, insurance company, registered investment
company, business development company, small business investment company, or
employee benefit plan.
______(iv) A savings and loan association, credit union, or
similar financial institution, or a registered broker or dealer.
______(v) A private business development company.
______(vi) An organization described in Section 501(c)(3) of
the Internal Revenue Code with assets in excess of $5,000,000.
______(vii) A corporation, Massachusetts or similar business
trust, or partnership with assets in excess of $5,000,000.
______(viii) A trust with assets in excess of $5,000,000.
______(ix) A director or an executive officer of the Company.
______(x) An entity in which all of the equity owners are
accredited investors (Not available for an Irrevocable Trust).
______(xi) A self-directed XXX, Xxxxx, or similar plan of
which the individual directing the investments qualifies as an "accredited
investor" under one or more items (i)-(x), above.
Also check the item(s) (i)-(x) which applies.
(g) This Agreement has been duly authorized by all
necessary action on the part of the Investor, has
been duly executed and delivered by the Investor, and
is a valid and binding agreement of the Investor.
(h) If the Investor is an entity, the Investor was not
organized for the specific purpose of acquiring the
Note, the Warrant, the shares purchasable upon
conversion of the Note or the Warrant Stock.
(i) Investor is NOT subject to backup withholding
provisions of Section 3406(a)(i)(C) of the Internal
Revenue Code of 1986, as amended (note: you are
subject to backup withholding if (i) you fail to
furnish your Social Security number or taxpayer
identification number herein; (ii) the Internal
Revenue Service notifies the Company that you
furnished an incorrect Social Security number or
taxpayer identification number; (iii) you are
notified that
you are subject to backup withholding; or (iv) you
fail to certify that you are not subject to backup
withholding or fail to certify your Social Security
number or taxpayer identification number).
6. Other.
(a) This Agreement, including the appendices attached hereto,
constitutes the entire agreement of the parties relative to
the subject matter hereof and supersedes any and all other
agreements and understandings, whether written or oral,
relative to the matters discussed herein.
(b) This Agreement shall be construed and enforced in accordance
with the laws of the State of Minnesota, without regard to
conflicts of laws principles.
(c) This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SIGNATURE PAGE TO FOLLOW
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of the date set forth above.
INVESTOR: U-SHIP, INC.
By
Print Full Name Xxxxx X. Xxxxx
Chief Executive Officer
Signature
Address
Telephone Number
Taxpayer ID Number
or
Social Security Number
CERTIFICATE OF SIGNATORY
(To be completed if Investor is an 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 Note Agreement and to purchase and hold
the Note and the Warrant and certify further that the Note Agreement 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 __________,
199_.
Signature
Print Name and Title
EXHIBIT A
PROMISSORY NOTE
$__________ Minneapolis, Minnesota
__________, 199__
FOR VALUE RECEIVED, effective this ___ day of ___________, 199__, the
undersigned, U-Ship, Inc., a Utah corporation, ("BORROWER"), hereby agrees and
promises to pay to the order of ____________________ ("HOLDER") at such place as
Holder may from time to time designate, the principal sum of
_____________________ Dollars upon such terms and conditions as are set forth
below.
Simple interest on the unpaid principal balance shall accrue from date
hereof until this Note is fully paid at a fixed per annum interest rate of
12.0%. Interest shall be calculated on the basis of actual days elapsed in a
365-day year.
The principal of and interest on this Note are payable as follows:
Commencing on the 1st day of April 1999, and continuing on the 1st day
of each July, October and January thereafter, Borrower shall make
quarterly payments of interest at the rate specified above. Unless
sooner paid, the entire balance of unpaid principal and accrued
interest shall be due and payable in full on ___________ (the "Maturity
Date").
The outstanding principal balance evidenced by this Note may be prepaid
in full or in part at any time. All monthly payments made under this Note shall
be applied first to interest, and then to principal.
This Note is given pursuant to the terms and provisions of that certain
Note Agreement between the parties dated the date hereof.
It is agreed that time is of the essence in the performance of this
Note.
The occurrence of any of the following shall be deemed an "Event of
Default" under this Note:
(1) the Company defaults in the payment of interest on this Note
when the same becomes due and payable and the Default
continues for a period of 30 days;
(2) the Company defaults in the payment of the principal of this
Note when the same becomes due and payable at the Maturity
Date, upon redemption or otherwise;
(3) a court of competent jurisdiction enters a final judgment for
the payment of money in excess of $500,000 against the Company
or any subsidiary and such judgment
remains undischarged for a period (during which execution
shall not be effectively stayed) of 30 days;
(4) the Company pursuant to or within the meaning of any
Bankruptcy Law:
(a) commences a voluntary case,
(b) consents to the entry of an order for relief against
it in an involuntary case,
(c) consents to the appointment of a Custodian of it or
for all or substantially all of its property, or
(d) makes a general assignment for the benefit of its
creditors,
(5) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(a) is for relief against the Company or any material
subsidiary in an involuntary case,
(b) appoints a Custodian of the Company or any material
subsidiary or for all or substantially all of its
property, or
(c) orders the liquidation of the Company or any material
subsidiary, and the order or decree remains unstayed
and in effect for 60 days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar
Federal or State Law for the relief of debtors. The term "Custodian" means any
receiver, trustee, assignee, liquidator or similar official under any Bankruptcy
Law.
Upon the occurrence of an Event of Default, Holder shall have the right
and option to declare, upon 10 days' prior written notice to Borrower, all
remaining unpaid principal, interest, and other amounts due under this Note to
be immediately due and payable. Holder may exercise this option to accelerate at
any time after the occurrence of any Event of Default, regardless of any
forbearance by Holder. The remedies of Holder, as provided herein and in the
Loan Documents shall be cumulative and concurrent and may be pursued singularly,
successively, or together at the discretion of Holder and may be exercised as
often as the occasion therefor shall arise.
Upon the occurrence of an Event of Default as described above, Borrower
shall pay Holder all expenses and costs of collection, or any other action taken
as a result thereof, including, but not limited to, attorney's fees and costs,
whether or not suit or other formal action has been commenced.
Borrower waives presentment for payment, protest and notice of
non-payment and dishonor or any other notice otherwise provided by law.
No delay or omission on the part of Holder in exercising any right
hereunder shall operate as a waiver of such right or any other remedy under this
Note. A waiver of any one occasion or occasions shall not be construed as a bar
to or waiver of any such right or remedy on a future occasion.
Other than pursuant to registration under federal and any applicable
state securities laws or an exemption from such registration, the availability
of which the Company shall determine in its sole discretion, this Note may not
be transferred, sold or otherwise disposed of unless the Company has received
from the transferee hereof such representations and agreements as the Company
shall determine in its sole discretion may be necessary to permit such transfer.
The Holder, by acceptance hereof, agrees to give written notice to the Company
before transferring this Note of the Holder's intention to do so, describing the
manner of any proposed transfer. Within thirty (30) days after receiving such
written notice, the Company shall notify the Holder as to whether such transfer
may be effected and of the conditions to any such transfer.
All demands and notices to be given hereunder shall be delivered or
sent by certified mail, return receipt requested; in the case of the Company,
addressed to its corporate headquarters, 0000 Xxxx 00xx Xxxxxx, Xxxxx, Xxxxxxxxx
00000, and in the case of the Holder, addressed to the address written above, in
either case, until a new address shall have been substituted by like notice.
IN WITNESS WHEREOF, the Company has caused this Note to be executed on
its behalf by its duly authorized officer; on the day and year first above
written.
U-SHIP, INC.
By:
Xxxxx X. Xxxxx
Chief Executive Officer
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR UNDER APPLICABLE STATE SECURITIES LAWS. THIS NOTE HAS BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, ASSIGNED,
TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND SUCH STATE LAWS OR PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE ACT AND SUCH STATE LAWS, THE AVAILABILITY
OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY WHOSE
AUTHORIZED OFFICER HAS SIGNED THIS NOTE ABOVE.
