EXHIBIT 10.7
SUBSCRIPTION AGREEMENT
AND
LETTER OF INVESTMENT INTENT
United Shipping & Technology, Inc.
0000 00xx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx
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
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.
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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
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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
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(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
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(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
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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.
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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]
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INDIVIDUAL SUBSCRIBER
Dated: January 13, 2000.
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Signature Signature
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Name Typed or Printed Name Typed or Printed
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Residence Address Residence Address
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City, State and Zip Code City, State and Zip Code
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Mailing Address Mailing Address
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City, State and Zip Code City, State and Zip Code
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Tax Identification or Social Tax Identification or Social
Security Number Security Number
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ACCEPTANCE BY THE COMPANY
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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
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Xxxxx X. Xxxxx
Its: Chief Executive Officer
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