Document:

PURCHASE AGREEMENT

THIS PURCHASE AGREEMENT, dated as of January 21, 2000, is by and between TERA
COMPUTER COMPANY, a Washington corporation, with headquarters located at 411
First Avenue South, Suite 600, Seattle, WA 98104-2860 (the "Company"), and the
party identified on the signature page of this Agreement (the "Investor").

                              W I T N E S S E T H:

     WHEREAS, the Company and the Investor are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Rule 506 of Regulation D as promulgated by the Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as amended (the "1933
Act"); and

     WHEREAS, upon the terms and subject to the conditions of this Agreement, or
an agreement substantially similar to this Agreement, the Investor and certain
other parties (collectively, the "Investors") wish to purchase shares of the
common stock, $.01 par value, of the Company (the "Common Stock");

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

     1. AGREEMENT TO PURCHASE; CLOSING

          (a) Subscription for Shares. The Investor hereby agrees to purchase
from the Company, and the Company hereby agrees to issue and sell to the
Investor, the number of shares of Common Stock (the "Shares") set forth on the
signature page hereof by such Investor's name. The purchase price per share
shall be equal to $5.00, subject to adjustment as set forth below (the "Purchase
Price").

     If prior to the date the Company files the Registration Statement pursuant
to Section 2(a) of the Registration Rights Agreement the average closing price
of the Company's Common Stock, as reported on Nasdaq, is less than $5.00 per
share over a period of five consecutive trading days, then the effective
Purchase Price under this Agreement shall be lowered to $4.625. In such event,
the Company promptly shall issue additional shares of Common Stock to the
Investor determined by dividing the Investor's aggregate Purchase Price by
$4.625 per share, less the number of shares of Common Stock issued to the
Investor on the Closing Date.

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          (b) Form and Method of Payment. The Investor shall pay the Purchase
Price for the number of Shares purchased hereby directly to the Company in
United States Dollars by certified or bank check or wire transfer to an account
designated by the Company against issuance to such Investor of the Shares. The
Company shall deliver the certificates for the Shares directly to each Investor,
against payment of the Purchase Price for the Shares to the Company on the
Closing Date.

          (c) Closing. The date and time of the issuance and sale of the Shares
shall be at 10:00 a.m., Seattle Time, on January 24, 2000, at the offices of
Company's counsel in Seattle, Washington, or at such other mutually agreed date,
time and place (the "Closing Date").

          (d) The Company's Conditions Precedent to Sale and Issuance of the
Shares. The Investor understands that the Company's obligation to sell and issue
the Shares on the Closing Date is conditioned upon:

               (i) Delivery by any or all of the Investors to the Company of
good funds as payment in full for such number of shares of Common Stock as have
an aggregate Purchase Price of not less than $15,000,000;

               (ii)The execution and delivery by the Investor of the
Registration Rights Agreement substantially in the form of Appendix I hereto
(the "Registration Rights Agreement"); and

               (iii) The accuracy on the Closing Date of the representations and
warranties of the Investor contained in this Agreement as if made on the Closing
Date and the performance by the Investor on or before the Closing Date of all
covenants and agreements of the Investor required to be performed on or before
the Closing Date.

          (e) The Investor's Conditions Precedent to the Sale and Issuance of
the Shares. The Company understands that the Investor's obligations to purchase
the Shares on the Closing Date is conditioned upon:

               (i) Delivery by the Company to the Investor of the certificates
for the Shares in accordance with this Agreement;

               (ii) Delivery by any or all of the Investors to the Company of
good funds as payment in full for such number of shares of Common Stock as have
an aggregate Purchase Price of not less than $15,000,000, including the Shares
to be purchased by the Investor under this Agreement;

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<PAGE>

               (iii) The execution and delivery by the Company of the
Registration Rights Agreement;

               (iv) The accuracy on the Closing Date of the representations and
warranties of the Company contained in this Agreement as if made on the Closing
Date and the performance by the Company on or before the Closing Date of all
covenants and agreements of the Company required to be performed on or before
the Closing Date and receipt by the Investor of a certificate, dated the Closing
Date, of the Chief Executive Officer or the Chief Financial Officer of the
Company confirming such matters and such other matters as the Investor may
reasonably request; and

               (v) Receipt by the Investors on the Closing Date of an opinion of
the counsel for the Company, dated the Closing Date, in form, scope and
substance reasonably satisfactory to the Investor, to the effect set forth in
Annex II.

     2. INVESTOR'S REPRESENTATIONS AND WARRANTIES

     The Investor represents and warrants to, and covenants and agrees with, the
Company as follows:

          (a) Purchase for Investment. The Investor is purchasing the Shares for
its own account for investment only and not with a view towards the public sale
or distribution thereof except for sales that are exempt form the registration
requirements of the 1933 Act and/or resales registered under the 1933 Act. The
Investor understands that its investment in the Shares involves a high degree of
risk.

          (b) Accredited Investor. The Investor is an "accredited investor" as
that term is defined in Rule 501 of Regulation D under the 1933 Act.

          (c) Reoffers and Resales. All subsequent offers and sales of the
Shares by the Investor shall be made pursuant to registration of the Shares
being offered and sold under the 1933 Act or pursuant to an exemption from
registration.

          (d) Company Reliance. The Investor understands that the Shares are
being offered to it in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and that the
Company is relying upon the truth and accuracy of, and the Investor's compliance
with, the representations, warranties, agreements, acknowledgments and
understandings of the Investor set forth herein in order to determine the
availability of such exemptions and the eligibility of the Investor to acquire
the Shares.

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<PAGE>

          (e) Information Provided. The Investor and its advisors, if any, have
been furnished with all materials relating to the business, finances, and
operations of the Company and materials relating to the offer and sale of the
Shares that have been reasonably requested by the Investor. The Investor and its
advisors, if any, have been afforded the opportunity to ask questions of the
management of the Company and have received complete and satisfactory answers to
any such inquiries.

          (f) Absence of Approvals. The Investor understands that no federal or
state agency or any other government or governmental agency has passed on or
made any recommendation or endorsement of the Shares.

          (g) Purchase Agreement. This Agreement has been duly and validly
authorized, executed, and delivered on behalf of the Investor and is a valid and
binding agreement of the Investor enforceable in accordance with its terms,
subject to general principles of equity and to bankruptcy, insolvency,
moratorium and other similar laws affecting the enforcement of creditors' rights
generally.

     3. COMPANY'S REPRESENTATIONS AND WARRANTIES

     The Company represents and warrants to, and covenants and agrees with, the
Investor that:

          (a) Organization and Authority. The Company is a corporation duly
organized and validly existing under the laws of the State of Washington, and
has all requisite corporate power and authority (i) to own, lease, and operate
its properties and to carry on its business as now being conducted, and (ii) to
execute, deliver, and perform its obligations under this Agreement and the
Registration Rights Agreement, and to consummate the transactions contemplated
hereby and thereby. The Company is duly qualified to do business as a foreign
corporation and is in good standing in all jurisdictions wherein such
qualification is necessary and where failure so to qualify could have a material
adverse effect on the business, properties, operations, condition (financial or
other), results of operations or prospects of the Company. The Company has no
subsidiaries.

          (b) Capitalization. The authorized capital stock of the Company
consists of (i) 50,000,000 shares of Common Stock, $.01 par value, and (ii)
5,000,000 shares of Preferred Stock, $.01 par value. The Company's outstanding
securities are as set forth in Schedule 3(b). The Company does not have
outstanding any material amount of securities (or obligations to issue any such
securities) convertible into, exchangeable for or otherwise entitling the
holders

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<PAGE>

thereof to acquire shares of Common Stock, except as disclosed in the Disclosure
Documents, in this Agreement or in Schedule 3(b) hereof. The outstanding shares
of Common Stock and outstanding options, warrants, and other securities to
purchase Common Stock have been duly authorized and validly issued. None of such
outstanding shares of Common Stock, options, warrants, and other securities has
been issued in violation of the preemptive rights of any security holder of the
Company.

          (c) Concerning the Shares. The Shares have been duly authorized and
the Shares, when issued and paid for in accordance with this Agreement, will be
duly and validly issued, fully paid, non-assessable and free from liens, and
will not subject the holder thereof to personal liability by reason of being
such holder. There are no preemptive or similar rights of any security holder of
the Company or any other person to acquire any securities of the Company. The
Common Stock currently is listed for trading on the Nasdaq National Market
System ("Nasdaq") and, except as set forth in Schedule 3(c), (i) the Company and
the Common Stock meet the currently applicable criteria for continued listing
and trading on Nasdaq; (ii) the Company has not been notified in the last two
years by Nasdaq of any failure or potential failure to meet the criteria for
continued listing and trading on Nasdaq; (iii) no suspension of trading in the
Common Stock is in effect; (iv) the Company knows of no reason that the Common
Stock will not be eligible for listing on Nasdaq; and (v) the Company has
delivered to Nasdaq all required notices.

          (d) Purchase Agreement; Registration Rights Agreement. This Agreement
and the Registration Rights Agreement have been duly and validly authorized by
the Company. This Agreement has been duly executed and delivered on behalf of
the Company and this Agreement is, and the Registration Rights Agreement, when
executed and delivered by the Company, will be, valid and binding obligations of
the Company enforceable in accordance with their respective terms, subject to
general principles of equity and to bankruptcy, insolvency, moratorium and other
similar laws affecting the enforcement of creditors' rights generally and limits
upon rights to indemnity.

          (e) Non-Contravention. The execution and delivery of this Agreement by
the Company and the issuance by the Company of the Shares as contemplated by
this Agreement and the completion of the other transactions contemplated in this
Agreement and the Registration Rights Agreement, do not and will not conflict
with or result in a breach by the Company of any of the terms or provisions of,
or constitute a default under, the Restated and Amended Articles of
Incorporation or Bylaws of the Company, or any indenture, mortgage, deed of
trust or other material

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<PAGE>

agreement or instrument to which the Company is a party or by which it or any of
its properties or assets are bound which would have a material adverse effect on
the Company, or any applicable law, rule or regulation or any applicable decree,
judgment or order of any court, United States federal or state regulatory body,
administrative agency or other governmental body having jurisdiction over the
Company or any of its properties or assets which would have a material adverse
effect on the Company.

          (f) Approvals. No authorization, approval or consent of any court,
governmental body, regulatory agency or Nasdaq is required to be obtained by the
Company for the issuance and sale of the Shares, as contemplated by this
Agreement, except for the filing of one or more Forms D with respect to the
Shares as required under Regulation D under the 1933 Act and Listing
Applications on Nasdaq.

          (g) Information Provided. The Company has made available to the
Investors copies of all periodic reports, statements and other documents that
the Company has filed with the SEC under the Securities Exchange Act of 1934
(the "1934 Act") since January 1, 1999 (collectively, the "Disclosure
Documents"), each in the form (including exhibits and any amendments thereto)
required to be filed with the SEC. All information provided by or on behalf of
the Company to the Investor in connection with the transactions contemplated by
the Agreement, including, without limitation, the Disclosure Documents, does not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the light of the
circumstances in which they were made, not misleading. The Company has publicly
disclosed all material adverse information concerning the Company.

          (h) Absence of Certain Changes. Except as disclosed in the Disclosure
Documents, since September 30, 1999, there has been no material adverse change
and no material adverse development in the business, properties, operations,
condition (financial or other), results of operations or prospects of the
Company, and the Company has no material (individually or in the aggregate)
liabilities, debts or obligations whether accrued, absolute, contingent or
otherwise, and whether due or to become due.

          (i) Absence of Certain Proceedings. There is no action, suit or
proceeding, before or by any court, public board or body or governmental agency
pending or, to the knowledge of the Company, threatened against the Company and,
to the knowledge of the Company, there is no inquiry or investigation before or
by any court, public board or body or governmental agency pending or threatened
against the Company, in any such case wherein an unfavorable decision,

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<PAGE>

ruling or finding would have a material adverse effect on the properties,
business, condition (financial or other), results of operations or prospects of
the Company or the transactions contemplated by this Agreement or any of the
documents contemplated hereby or which would adversely affect the validity or
enforceability of, or the authority or ability of the Company to perform its
obligations under, this Agreement or any of such other documents.

          (j) SEC Filings. The Company has timely filed all required forms,
reports and other documents with the SEC. Except as set forth on Schedule 3(j),
all such forms, reports and other documents complied, when filed, in all
material respects, with all applicable requirements of the 1933 Act and the 1934
Act.

          (k) No Solicitation. No form of general solicitation or general
advertising was used by the Company or, to the best of its knowledge, any other
person acting on behalf of the Company, in respect of or in connection with the
offer and sale of the Shares. Neither the Company nor any person authorized to
act on its behalf has sold or offered for sale any shares of Common Stock, or
solicited any offers to buy any shares of Common Stock so as thereby to cause
the issuance or sale of the Shares to be in violation of Section 5 of the 1933
Act. The transactions contemplated hereby are exempt from the registration
requirements of the 1933 Act, assuming the accuracy of the representations and
warranties of each of the Investors to the extent relevant for such
determination.

          (l) Financial Statements; Contracts. The financial statements of the
Company included in the Disclosure Documents were prepared in accordance with
U.S. generally accepted accounting principles, consistently applied, and the
rules and regulations of the SEC during the periods involved (except (i) as may
be otherwise indicated in such financial statements or the notes thereto or in a
subsequently filed Disclosure Document, (ii) in the case of unaudited interim
statements, to the extent they do not include footnotes or are condensed or
summary statements, or (iii) as set forth in Schedule 3(j)) and present
accurately and completely the financial position of the Company as of the dates
thereof and the results of operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal, immaterial year-end
audit adjustments). The Disclosure Documents contain as exhibits all materials
contracts that were required to be filed as exhibits thereto by applicable SEC
regulations (each a "Contract"). Neither the Company nor, to the best knowledge
of the Company, any of the parties thereto, is in breach or violation of any
Contract, which breach or violations relates to indebtedness for borrowed money
or would have a material adverse effect on the Company's

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<PAGE>

operations, taken as a whole ("Material Adverse Effect"). No event, occurrence
or condition exists which, with the lapse of time, the giving of notice, or
both, or the happening of any further event or condition, would become a breach
or default by the Company under any Contract which breach or default would have
a Material Adverse Effect.

          (m) Intellectual Property. The Company owns or possesses adequate and
enforceable rights to use all patents, patent applications, trademarks,
trademark applications, trade names, service marks, copyrights, copyright
applications, licenses, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures) and other similar rights and proprietary knowledge (collectively,
"Intangibles") used or necessary for the conduct of its business as now being
conducted and described in the Disclosure Documents. The Company, to the best of
its knowledge, does not infringe any right of any other person with respect to
any Intangibles nor is there any claim of infringement made by a third party
against or involving the Company which infringement or claim, individually or in
the aggregate, if the subject of an unfavorable decision, ruling or finding,
would have a Material Advese Effect.

          (n) Certain Practices. Neither the Company, nor any director, officer
and, to the best knowledge of the Company, any agent, employee or other person
acting on behalf of the Company has, in the course of his or her actions for, or
on behalf of, the Company, used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; made any direct or indirect unlawful payment to any foreign
or domestic government official or employee from corporate funds; violated or is
in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977,
as amended; or made any bribe, rebate, payoff, influence payment, kickback or
other unlawful payment to any foreign or domestic government official or
employee. Without limited the generality of the foregoing, the Company has not
directly or indirectly made or agreed to make (whether or not said payment is
lawful) any payment to obtain, or with respect to, sales other than usual and
regular compensation to its or their employees and sales representatives with
respect to such sales.

          (o) Key Employees. Each Key Employee (as defined below) is currently
serving the Company in the capacity disclosed in Section 3(o). No Key Employee,
to the best of the knowledge of the Company is, or is now expected to be, in
violation of any material term of any employment contract, confidentiality,
disclosure or proprietary information agreement, non-competition agreement, or
any other contract or agreement or any restrictive covenant, and the continued
employment of each Key Employee does not

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subject the Company to any liability with respect to any of the foregoing
matters. No Key Employee has, to the best of the knowledge of the Company, any
intention to terminate or limit his or her employment with, or services to, the
Company, nor is any such Key Employee subject to any constraints which would
cause such employee to be unable to devote his or her full time and attention to
such employee or services. The term "Key Employee" means each of: Burton J.
Smith, James E. Rottsolk, Charles D. Callahan, Susan L. Coatney, Kenneth W.
Johnson, Brian D. Koblenz, Gerald E. Loe, Katherine L. Rowe and Richard M.
Russell.

     4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS

          (a) Transfer Restrictions. The Investor acknowledges that (i) except
as provided in the Registration Rights Agreement, the Shares have not been and
are not being registered under the 1933 Act, and may not be transferred unless
(i) subsequently registered thereunder; (ii) such Investor shall have delivered
to the Company an opinion of counsel, reasonably satisfactory in form, scope,
and substance to the Company, to the effect that the Shares to be sold or
transferred may be sold or transferred pursuant to an exemption from such
registration other than Rule 144 under the 1933 Act; or (iii) in compliance with
Rule 144 under the 1933 Act. In addition, the Investor acknowledges that neither
the Company nor any other person is under any obligation to register the Shares
(other than pursuant to the Registration Rights Agreement) under the 1933 Act or
to comply with the terms and conditions of any exemption thereunder (other than
pursuant to Section 4(d) hereof and pursuant to the Registration Rights
Agreement).

          (b) Restrictive Legend. The Investor acknowledges and agrees that,
until such time as any of the Shares have been registered under the 1933 Act as
contemplated by the Registration Rights Agreement, the certificates for the such
Shares shall bear a restrictive legend in substantially the following form (and
a stop-transfer order may be placed against transfer of the certificates for
such Shares):

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SHARES ACT OF 1933, AS AMENDED. THE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR AN OPINION OF COUNSEL THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT.

Once the applicable Registration Statement required to be filed by the Company
pursuant to Section 2 of the Registration Rights Agreement has been declared
effective,

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thereafter (i) upon request of the Investor the Company will substitute
certificates without the above-referenced legend for certificates for any Shares
issued prior to the date such Registration Statement is declared effective by
the SEC which bear such legend and promptly remove any stop-transfer restriction
relating to such Shares, but in no event later than three business days after
surrender of such certificates by the Investor, and (ii) the Company shall not
place any restrictive legend on certificates for any Shares issued or impose any
stop-transfer restriction thereon.

          (c) Form D. The Company agrees to file a Form D with the SEC with
respect to the Shares as required under Regulation D promulgated under the 1933
Act and, upon request, to provide a copy thereof to the Investor. Each Investor
agrees to cooperate with the Company in connection with such filing and, upon
request of the Company, to provide all information relating to such Investor
reasonably required for such filing.

          (d) Registration; Authorization for Trading; Reporting Status. On or
before the date that is 30 days after the Closing Date, the Company shall
prepare and file, at its expense, a Registration Statement on Form S-3 with the
SEC pursuant to the Registration Rights Agreement and a listing application with
Nasdaq with respect to the Shares. From the Closing Date until such time as the
Registration Statement is no longer required to be in effect, the Company shall
file all reports required to be filed with the SEC pursuant to Section 13 or
15(d) of the 1934 Act and the Company shall not terminate its status as an
issuer required to file reports under the 1934 Act even if the 1934 Act or the
rules and regulations thereunder would permit such termination. The Company
shall take all reasonable steps within the control of the Company to maintain
the listing of the Common Stock on Nasdaq.

          (e) Use of Proceeds. The proceeds of sale of the Shares will be used
for general working capital purposes and in the operation of the Company's
business. Neither the Company nor any agent acting on its behalf has taken or
will take any action which might cause this Agreement or the transactions
contemplated hereby to violate Regulation G, Regulation T or any other
regulation of the Board of Governors of the Federal Reserve System or to violate
the 1934 Act, in each case as in effect now or as the same may hereafter be in
effect.

          (f) Blue Sky Laws. On or before the Closing Date, the Company shall
take such action as shall be necessary to qualify, or to obtain an exemption
from qualification for, the Shares for sale to the Investor pursuant to this
Agreement under such of the Shares or "blue sky" laws of jurisdictions as shall
be applicable

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to the offer and sale of the Shares pursuant to this Agreement. The Company
shall furnish copies of all filings, applications, orders, and grants or
confirmations of exemptions relating to such Shares or "blue sky" laws to the
Investors within five days of filing or receipt thereof, as the case may be.

          (g) Best Efforts. Each of the parties shall use its best efforts
timely to satisfy each of the conditions to the other party's obligations to
sell and purchase the Shares on the Closing Date.

          (h) Brokers' or Finders' Fees. Each party agrees to indemnify and hold
the other parties harmless from and against any obligation or liability for
brokers' or finders' fees or agents' commissions or other like payment based in
any way on agreements, arrangements or understandings claimed to have been made
by such indemnifying party with any third party.

          (i) Expenses. The Company agrees to pay the reasonable and documented
fees and expenses of counsel for the Investor in connection with the
negotiation, preparation, execution and delivery of this Agreement and other
Registration Rights Agreement.

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     5. MISCELLANEOUS

          (a) Governing Law. This Agreement shall be governed by and interpreted
in accordance with the internal laws of the State of Washington.

          (b) Counterparts. This Agreement may be executed in counterparts and
by the parties hereto on separate counterparts, all of which together shall
constitute one and the same instrument. A facsimile copy of this Agreement
bearing a signature on behalf of a party hereto shall be legal and binding on
such party.

          (c) Headings, etc. The headings, captions and footers of this
Agreement are for convenience of reference and shall not form part of, or affect
the interpretation of, this Agreement.

          (d) Severability. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement or
the validity or enforceability of this Agreement in any other jurisdiction.

          (e) Amendments. No amendment, modification, waiver, discharge or
termination of any provision of this Agreement nor consent to any departure by
the Investor or the Company therefrom shall in any event be effective unless the
same shall be in writing and signed by the party to be charged with enforcement,
and then shall be effective only in the specific instance and for the purpose
for which given. No course of dealing between the parties hereto shall operate
as an amendment of this Agreement.

          (f) Waivers. Failure of any party to exercise any right or remedy
under this Agreement or otherwise, or delay by a party in exercising such right
or remedy, or any course of dealings between the parties, shall not operate as a
waiver thereof or an amendment hereof, nor shall any single or partial exercise
of any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or
exercise of any other right or power.

          (g) Notices. Any notices required or permitted to be given under the
terms of this Agreement shall be delivered personally (which shall include
telephone line facsimile transmission) or by courier and shall be effective upon
receipt (or on the next business day, if the date of such receipt is not a
business day), if delivered personally or by courier, in the case of the Company
addressed to the Company at its address shown in the introductory paragraph

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of this Agreement, Attention: Chief Financial Officer (facsimile number (206)
701-2218), with a copy to Stoel Rives LLP, Suite 3600, One Union Square, 600
University Street, Seattle, WA 98101, Attn: Christopher J. Voss, Esq. (facsimile
number (206) 386-7500) or, in the case of each Investor, at its address shown on
the signature page of this Agreement, or such other address or telephone line
facsimile transmission number as a party shall have provided by notice to the
other party in accordance with this provision.

          (h) Survival. The respective representations, warranties, covenants,
and agreements of the Investor and the Company contained in this Agreement or
made by or on behalf of them, respectively, pursuant to this Agreement shall
survive the delivery of and payment for the Shares, and shall remain in full
force and effect regardless of any investigation made by or on behalf of them or
any person controlling or advising any of them.

          (i) Entire Agreement. This Agreement and the annexes and schedules
attached hereto set forth the entire agreement between the parties with respect
to the subject matter hereof and supersede all prior agreements and
understandings, whether written or oral, with respect thereto.

          (j) Termination. The Company and Investor shall have the right to
terminate this Agreement if the Closing Date shall not have occurred on or
before January 28, 2000, other than solely by reason of a breach of this
Agreement by the terminating party. Any such termination shall be effective upon
the giving of notice thereof by the Company or the Investor, as applicable. Upon
such termination, the terminating party shall have no further obligation to the
other party hereunder and the other party shall remain liable for any breach of
this Agreement or the other documents contemplated hereby which occurred on or
prior to the date of such termination.

          (k) Further Assurances. Each party to this Agreement will perform any
and all acts and execute any and all documents as may be necessary and proper
under the circumstances in order to accomplish the intents and purposes of this
Agreement and to carry out its provisions.

          (l) Construction. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.

          (m) Failure to Pay. The failure to pay any amounts due under this
Agreement or the Registration Rights Agreement when they come due shall result
in the imposition of interest on such amounts at a rate equal to the lesser of

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(i) 18% per annum and (ii) the highest amount permitted by law.

          (n) Remedies; Characterization. The remedies provided in this
Agreement shall be cumulative and in addition to all other remedies available
under this Agreement, at law or in equity (including a decree of specific
performance and/or other injunctive relief), no remedy contained herein shall be
deemed a waiver of compliance with the provisions giving rise to such remedy and
nothing herein shall limit a party's right to actual damages for any failure by
the other party to comply with the terms of this Agreement. The parties covenant
to each other that there shall be no characterization concerning this Agreement
other than as expressly provided herein. Each party acknowledges that a breach
by it of its obligations hereunder will cause irreparable harm to the other
party and that the remedy at law for any such breach may be inadequate. Each
party therefore agrees that, in the event of any such breach or threatened
breach, the other party shall be entitled, in addition to all other available
remedies, to an injunction restraining any breach, without the necessity of
showing economic loss and without any bond or other security being required.

          (o) Binding Nature. This Agreement shall be binding up and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns. Nothing in this Agreement shall be construed so as to confer any
benefit on any person other than the parties hereto and their respective
successors and permitted assigns.

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<PAGE>

     IN WITNESS WHEREOF, this Agreement has been duly executed by the Investor
and the Company by their respective officers thereunto duly authorized as of the
date set forth above.

                                   TERA COMPUTER COMPANY

                                   By /s/ JAMES E. ROTTSOLK
                                      -----------------------------------------
                                      Name:  James E. Rottsolk
                                      Title:  President and CEO

INVESTOR

Name:
     -----------------------------------

     By:
        --------------------------------
     Title:
           -----------------------------

Address:
        --------------------------------
        --------------------------------
        --------------------------------

Telephone:
          ------------------------------
Facsimile:
          ------------------------------

Federal Tax ID No.:
                    --------------------

No. of Shares:
               -------------------------

                                       15
<PAGE>
                            Schedule to Exhibit 10.2

Schedule to Parties to Purchase Agreement

Banca del Gottardo

Castle Creek Technology Partners LLC

William David Corbett

Cranshire Capital, L.P.

EDJ Limited

Jack E. Erlanger

Harpel Family Partnership

Harpel International, L.P.

Harpel Partners, L.P.

Harpel Select Growth, L.P.

Headwater Holdings, LLC

William Hott

JMG Capital Partners, L.P.

JMG Triton Offshore Fund Ltd.

Ivan Lieberburg

Christopher A. Marlett Living Trust

MDB Capital Group, LLC

Montrose Investments Ltd.

Nob Hill Capital Associates, L.P.

Nob Hill Capital Partners, L.P.

Timothy R. Pask

Raymond Scott

Gary J. Shemano aka The Shemano Group Investment Account

David Stefansky

Strong River Investments

Trans-Union Group, Inc.

Viviana Partners, L.P.

Von Graffenried AG PrivatbankEXHIBIT 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."

                                       2
<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.

                                       3
<PAGE>

                  (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

                                       4
<PAGE>

                  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

                                       5
<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.

                                       7
<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.

                                       8
<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.

                                       9
<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

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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

                                       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

                                       12
<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

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