SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report March 12, 1998
(Date of earliest event reported) (February 2, 1998)
USCI, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-22282 13-3702647
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
6115-A Jimmy Carter Blvd., Norcross, Georgia 30071
(Address of principal executive offices) (Zip Code)
(770) 840-8888
(Registrant's telephone number including area code)
(Former name or former address if changed since last report)
<PAGE>
Item 5.
On February 2, 1998, the Registrant issued to each of
Decameron Partners, Inc. and Alan R. Dresher, additional
five-year warrants to purchase 50,000 shares of Common Stock
at $6.00 per share in consideration of the lenders'
extension of the due date of each of their $250,000
unsecured bridge loans (dated November 18, 1997) from
January 31, 1998 to February 28, 1998 (which loans were paid
in full). The Registrant also issued a five-year warrant to
purchase 25,000 shares of Common Stock at $6.00 per share to
Alan Baron, the principal of Decameron Partners in
consideration for his assistance in obtaining the extension
of the loans. Alan Baron is the son of Jerome Baron, a
director of the Registrant.
On February 24, 1998, pursuant to the terms and conditions
of a Private Placement Purchase Agreement of even date among
the Registrant, George Karfunkel, Michael Karfunkel,
Huberfeld Bodner Family Foundation, Inc., Laura
Huberfeld/Naomi Bodner Partnership and Ace Foundation, Inc.:
(a) George Karfunkel and Michael Karfunkel each sold $1
million principal amount of Notes of the Registrant to Laura
Huberfeld/Naomi Bodner Partnership and Huberfeld Bodner
Family Foundation at a purchase price equal to the face
amount of the Notes (b) the 1,600,000 warrants issued by the
Registrant to George Karfunkel and Michael Karfunkel were
cancelled and rescinded together with the $4,000,000
Replacement Promissory Notes dated November 18, 1997 issued
to George Karfunkel and Michael Karfunkel; and (c) the
Registrant issued Convertible Restated Notes as follows:
$1,000,000 to George Karfunkel, $1,000,000 to Michael
Karfunkel, $1,250,000 to Laura Huberfeld/Naomi Bodner
Partnership and $750,000 to Huberfeld Bodner Family
Foundation, Inc. The Registrant agreed, for each month or
portion thereof, from and after November 1, 1997 until the
principal of the Convertible Restated Notes and all accrued
interest is paid in full, to issue 100,000 Primary Warrants
for each $1 million principal amount outstanding under the
Convertible Restated Notes. To cover the period from
November 1, 1997 through March 31, 1998, the Registrant
issued
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five-year warrants to purchase 500,000 shares of the
Registrant's Common Stock to each of George Karfunkel and
Michael Karfunkel, five-year warrants to purchase 625,000
shares to Laura Huberfeld/Naomi Bodner Partnership and five-
year warrants to purchase 375,000 shares to Huberfeld Bodner
Family Foundation (collectively, the "Primary Warrants"),
each Primary Warrant with an exercise price of $5.00, and
each providing for the issuance of one warrant ("Secondary
Warrants") with the same terms and conditions for each
Primary Warrant exercised.
In addition, pursuant to the Private Placement Purchase
Agreement, the Registrant, in a private transaction exempt
from registration pursuant to Section 4(2) of the Securities
Act of 1933, as amended (the "Securities Act"), sold for
investment Convertible Notes in the amount of $750,000 to
each of George Karfunkel and Ace Foundation.
The Convertible Notes and the Convertible Restated Notes are
due and payable on or before August 1, 1998 and accrue
interest until maturity at the rate of 10% per annum and
after maturity, at the rate of 15% per annum. In the event
that the principal and all accrued interest on the Notes
have not been paid in full by the maturity date, at the
option of the Note holder, the principal and accrued
interest shall be convertible into shares of Common Stock of
the Registrant at a conversion price equal to the lesser of
$5.00 per share or 80% of the average closing sales price of
the Common Stock during the last five trading days prior to
conversion.
The Registrant has agreed to include the shares of Common
Stock issuable upon exercise of the Primary Warrants,
Secondary Warrants and upon conversion of the Convertible
Notes and Convertible Restated Notes in a registration
statement to be filed for the purpose of permitting the
resale of such shares. If the registration statement is not
declared effective by the Securities and Exchange Commission
("Effective Date") by June 30, 1998 or September 30, 1998,
then the interest rate under the unpaid Notes increases to
18% and 24% per annum, respectively, until the Effective
Date.
<PAGE>
Notwithstanding the foregoing, no conversion of any
Convertible Note or any Convertible Restated Note, and no
exercise of any of the Primary Warrants or Secondary
Warrants shall occur if it causes the holder to then be the
"beneficial owner", as defined in Section 13(d) of the
Securities Exchange Act of 1934, as amended, of more than
4.99% of the then outstanding Common Stock of the
Registrant.
On March 5, 1998, the Registrant, in a private transaction
exempt from registration pursuant to Section 4(2) of the
Securities Act, sold for investment 173,913 shares of Common
Stock to Alan R. Dresher and 250,000 shares of Common Stock
to Bulldog Capital Management at a purchase price of $5.75
per share, and issued five-year warrants to purchase one
share of Common Stock for each ten shares purchased at an
exercise price of $7.1875 per share to each purchaser. The
Registrant also paid $170,625 and issued a five-year warrant
to purchase 42,391 shares of Common Stock at $7.1875 per
share to Alan Baron as a finder's fee.
The Registrant has agreed to include the shares of Common
Stock purchased and the shares issuable upon exercise of the
warrants in a registration statement to be filed for the
purpose of permitting the resale of such shares.
The Registrant intends to use the proceeds of the private
placements for working capital.
Item 7c. Exhibits.
Exhibit 10.1 Warrant dated February 2, 1998 issued by
the Registrant to Decameron Partners, Inc..
Exhibit 10.2 Warrant dated February 2, 1998 issued by
the Registrant to Alan R. Dresher.
Exhibit 10.3 Warrant dated February 2, 1998 issued by
the Registrant to Alan Baron.
<PAGE>
Exhibit 10.4 Private Placement Purchase Agreement dated
February 24, 1998 among the Registrant,
George Karfunkel, Michael Karfunkel,
Huberfeld Bodner Family Foundation, Inc.,
Laura Huberfeld/Naomi Bodner Partnership
and Ace Foundation, Inc.
Exhibit 10.5 Convertible Restated Note dated February
24, 1998 issued by the Registrant in favor
of George Karfunkel.
Exhibit 10.6 Convertible Restated Note dated February
24, 1998 issued by the Registrant in favor
of Michael Karfunkel.
Exhibit 10.7 Convertible Restated Note dated February
24, 1998 issued by the Registrant in favor
of Laura Huberfeld/Naomi Bodner
Partnership.
Exhibit 10.8 Convertible Restated Note dated February
24, 1998 issued by the Registrant in favor
of Huberfeld Bodner Family Foundation, Inc.
Exhibit 10.9 Warrant dated February 24, 1998 issued by
the Registrant to George Karfunkel.
Exhibit 10.10 Warrant dated February 24, 1998 issued by
the Registrant to Michael Karfunkel.
Exhibit 10.11 Warrant dated February 24, 1998 issued by
the Registrant to Laura Huberfeld/Naomi
Bodner Partnership.
Exhibit 10.12 Warrant dated February 24, 1998 issued by
the Registrant to Huberfeld Bodner Family
Foundation, Inc.
Exhibit 10.13 Convertible Note dated February 24, 1998
issued by the Registrant in favor of George
Karfunkel.
<PAGE>
Exhibit 10.14 Convertible Note dated February 24, 1998
issued by the Registrant in favor of Ace
Foundation.
Exhibit 10.15 Warrant dated March 5, 1998 issued by the
Registrant to Alan R. Dresher.
Exhibit 10.16 Warrant dated March 5, 1998 issued by the
Registrant to Bulldog Capital Management.
Exhibit 10.17 Warrant dated March 5, 1998 issued by the
Registrant to Alan Baron.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
USCI, Inc.
(Registrant)
By: /s/ Robert J. Kostrinsky
Robert J. Kostrinsky
Executive Vice President
March 12, 1998
EXHIBIT 10.1
WARRANT TO PURCHASE 50,000
SHARES OF COMMON STOCK
THE WARRANT REPRESENTED HEREBY HAS NOT BEEN REGISTERED UNDER UNITED STATES
FEDERAL OR STATE SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD OR
OTHERWISE TRANSFERRED OR ASSIGNED FOR VALUE, DIRECTLY OR INDIRECTLY, NOR MAY
SUCH WARRANT BE TRANSFERRED ON THE BOOKS OF THE COMPANY, WITHOUT REGISTRATION
OF SUCH WARRANT UNDER ALL APPLICABLE UNITED STATES FEDERAL AND STATE
SECURITIES LAWS OR COMPLIANCE WITH AN APPLICABLE EXEMPTION THEREFROM, SUCH
COMPLIANCE, AT THE OPTION OF THE COMPANY, TO BE EVIDENCED BY AN OPINION OF THE
HOLDER'S COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY THAT NO
VIOLATION OF SUCH REGISTRATION PROVISIONS WOULD RESULT FROM ANY PROPOSED
TRANSFER OR ASSIGNMENT.
USCI, INC.
DATE: February 2, 1998
COMMON STOCK PURCHASE WARRANT
THIS CERTIFIES that, for value received, DECAMERON PARTNERS (the
"Warrantholder"), or his registered assigns, is entitled to purchase from
USCI, INC. a Delaware corporation (the "Company"), upon the terms and
conditions set forth herein, at any time or from time to time during the
Exercise Period (as defined below), the Shares (as defined below) at the
Purchase Price (as defined below). As used herein the term "this Warrant"
shall mean the warrants represented by this certificate and shall mean and
include this Warrant and any Warrants hereafter issued as a consequence of the
exercise or transfer of this Warrant in whole or in part.
1. Purchase of Shares. Subject to the terms and conditions
hereinafter set forth, the Warrantholder is entitled, upon surrender of this
Warrant to the Company, to purchase from the Company, if and to the extent
permitted by law, 50,000 shares of the Common Stock, par value $.0001 per
share, of the Company (the "Shares") for the purchase price specified in
Section 2 below.
2. Purchase Price. The purchase price shall be $6.00 per Share
during the Exercise Period as defined below (the "Purchase Price") and shall
be subject to adjustment as set forth in Section 8 below. The Warrantholder
may pay the Purchase Price by wire transfer, or certified or bank check
payable to the order of the Company.
3. Exercise Period. This Warrant shall be exercisable during the
five-year period commencing on the date hereof. ("Exercise Period").
4. Method of Exercise. While this Warrant remains outstanding and
exercisable in accordance with Section 3 above, the Warrantholder may exercise
at any time and from time to time, in whole or in part, the purchase rights
evidenced hereby. Such exercise shall be effected by:
(i) the surrender of this Warrant, together
with a duly executed Exercise Notice in the form attached hereto as Exhibit A
(the "Exercise Notice") to the Company; and
<PAGE>
(ii) the payment to the Company of an amount equal to
the aggregate purchase price for the Shares being purchased as set forth in
Section 2 above.
5. Certificates for Shares. Upon each exercise of the purchase
rights evidenced by this Warrant, the Warrantholder shall be deemed to be the
holder of record of the Shares being purchased upon such exercise,
notwithstanding that the transfer books of the Company shall then be closed or
certificates representing such Shares shall not then have been actually
delivered to the Warrantholder. One or more certificates for the Shares so
purchased shall be issued as soon as practicable thereafter, and in any event
within thirty (30) days of the delivery of the Exercise Notice and payment of
the aggregate purchase price for the Shares being purchased. In the event
that this Warrant is exercised in part, concurrently with the delivery to the
Warrantholder of the certificates for any Shares purchased, the Company will
deliver to the Warrantholder a new Warrant representing the right to purchase
the number of Shares for which this Warrant has not been exercised.
6. Reservation of Shares. The Company covenants that it will at
all
times keep available such number of authorized shares of its Common Stock,
free from all preemptive rights with respect thereto, as will be sufficient to
permit the exercise of this Warrant for the full number of Shares specified
herein. The Company further covenants that such Shares, when issued pursuant
to the exercise of this Warrant, will be duly and validly issued, fully paid
and non-assessable and free from all taxes, liens and charges with respect to
the issuance thereof.
7. Rights of Warrantholder. Prior to exercise of this Warrant, the
Warrant shall not entitle the Warrantholder to any rights of a shareholder
with respect to the Shares, including (without limitation) the right to vote
such Shares, receive preemptive rights or be notified of shareholder meetings,
nor shall the Warrant entitle such Warrantholder to any notice or other
communication concerning the business or affairs of the Company, except as
otherwise explicitly set forth below.
8. Adjustments. The number of shares of Common Stock purchasable
upon exercise of this Warrant and the Purchase Price shall be subject to
adjustment from time to time as follows:
8.1. Subdivisions, Combinations and Other Issuances. If the
Company shall at any time prior to the expiration of this Warrant subdivide
its Common Stock, by stock split or otherwise, combine its Common Stock or
issue additional shares of its Common Stock as a dividend with respect to any
shares of its Common Stock, the number of Shares purchasable upon exercise of
this Warrant shall forthwith be proportionately increased in the case of a
subdivision or stock dividend and proportionately decreased in case of a
combination. Appropriate adjustments shall also be made to the Purchase
Price, but the aggregate Purchase Price payable for the total number of Shares
purchasable under this Warrant (as adjusted) shall remain the same. Any
adjustment under this Section 8.1 shall become effective at the close of
business on the date the subdivision or combination becomes effective or as of
the record date of such dividend, or in the event that no record date is
fixed, upon the making of such dividend.
8.2. Acquisition, Reclassification or Reorganization. In the
event of any reclassification, capital reorganization or other change in the
Common Stock of the Company or in the event of any sale of all or
substantially all of the Company's assets or any merger, consolidation or
restructuring to which the Company is a party in which the Company's
stockholders before the transaction or series of transactions hold less than
50% of the voting power of the surviving entity immediately after the
transaction or series of transactions (other than as a result of a
<PAGE>
subdivision, combination or stock dividend provided for in Section 8.1 above),
lawful provision shall be made, and duly executed documents evidencing the
same shall be made and shall be delivered to the Warrantholder in substitution
for the Warrantholder's rights under this Warrant, so that the Warrantholder
shall have the right at any time and from time to time prior to the expiration
of this Warrant to purchase at a total price equal to that payable upon
exercise of this Warrant immediately prior to such event, the kind and amount
of shares of stock or other securities or property receivable in connection
with such reclassification, reorganization or change by a holder of the same
number of shares of Common Stock as were purchasable by the Warrantholder
immediately prior to such reclassification, reorganization or change. In any
such case appropriate provisions shall be made with respect to the rights and
interest of the Warrantholder so that the provisions hereof shall thereafter
be applicable with respect to any shares of stock or other securities or
property deliverable upon exercise hereof, and appropriate adjustments shall
be made to the Purchase Price per Share payable hereunder, provided the
aggregate Purchase Price shall remain the same.
8.3. Notice of Adjustment. Upon any adjustment of the number of
Shares purchasable upon exercise of this Warrant or the Purchase Price
pursuant to this Section 8, the Company within thirty (30) days thereafter
shall cause to be prepared a certificate of the Chief Financial or Accounting
Officer of the Company setting forth the number of Shares purchasable upon
exercise of this Warrant and the Purchase Price after such adjustment and
setting forth in reasonable detail the method of calculation used and cause a
copy of such certificate to be mailed to the Warrantholder.
9. Fractional Shares. No fractional share of Common Stock will be
issued with any exercise hereof, but in lieu of a fractional share upon
exercise hereof, the Warrantholder may purchase a whole share at the then
effective Purchase Price.
10. Registration of Shares.
10.1. The Company shall advise the Warrantholder by written
notice
at least four weeks prior to the filing of any registration statement under
the Securities Act of 1933, as amended, (the "Act") covering any securities of
the Company for its own account or for the account of others, except for any
registration statement filed on Form S-4 or Form S-8 or any comparable or
substantially equivalent form. Subject to the provisions of Subsection 10.2
below, the Company will, upon the written request of the Warrantholder
received by the Company within 14 days after receipt of the Company's notice,
include in any such registration statement such information as may be required
to permit a public offering of the Common Stock purchasable or purchased upon
exercise of this Warrant ("Registrable Securities"). In addition, upon the
written request of the Warrantholder, the Company as expeditiously as is
reasonable possible shall register (as defined below) the Registrable
Securities. For purposes of the immediately preceding sentence, "register"
shall mean a registration effected by preparing and filing a registration
statement or similar document in compliance with the Act, and the declaration
or ordering of effectiveness of such registration statement or document. The
Company shall supply prospectuses and such other documents as the
Warrantholder may reasonably request in order to facilitate the public sale or
other disposition of the Registrable Securities and do any and all other acts
and things which may be reasonably necessary to enable the Warrantholder to
consummate the public sale or other disposition of the Registrable Securities.
All costs and expenses of such Registration Statement shall be borne by the
Company, except that the Warrantholder shall bear the fees of its own counsel
and any underwriting discounts or commissions applicable to any of the
securities sold by it.
<PAGE>
10.2. If the registration for which the Company gives notice is
for an offering involving an underwriting, the Company shall so advise the
Warrantholder at the time he receives notice of the Company's filing of the
registration statement. In such event, the managing underwriter selected for
such underwriting shall have sole and nonreviewable discretion as to whether
to include any or all of the Registrable Securities in such an offering. If
the Registrable Securities shall be included in an offering involving an
underwriting, the Warrantholder will be required to execute the underwriting
agreement in customary form with the managing underwriter and any other such
documents requested by the managing underwriter.
11. Indemnification.
11.1. When pursuant to Section 10 a registration statement
registering the Registrable Securities is filed under the Act, amended or
supplemented, the Company will indemnify and hold harmless each Warrantholder
covered by such registration statement, amendment or supplement (such holder
being hereinafter called the "Distributing Holder"), and each person, if any,
who controls (within the meaning of the Act) the Distributing Holder, and each
underwriter (within the meaning of the Act) of such securities and each
person, if any, who controls (within the meaning of the Act) any such
underwriter, against any losses, claims, damages or liabilities, joint or
several, to which the Distributing Holder, any such controlling person or any
such underwriter may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities, or actions in respect thereof,
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any such registration statement or
any preliminary prospectus or final prospectus constituting a part thereof or
any amendment or supplement thereto, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading
and will reimburse the Distributing Holder or such controlling person or
underwriter in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Company will
not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in said registration
statement, said preliminary prospectus, said final prospectus or said
amendment or supplement in reliance upon and in conformity with written
information furnished by such Distributing Holder or any other Distributing
Holder for use in the preparation thereof.
11.2. The Distributing Holder will indemnify and hold harmless
the
Company, each of its directors, each of its officers who have signed said
registration statement and such amendments and supplements thereto, and each
person, if any, who controls the Company (within the meaning of the Act)
against any losses, claims, damages or liabilities, joint or several, to which
the Company or any such director, officer or controlling person may become
subject, under the Act or otherwise, insofar as such losses, claims, damages
or liabilities, or actions in respect thereof, arise out of or are based upon
any untrue or alleged untrue statement of any material fact contained in said
registration statement, said preliminary prospectus, said final prospectus, or
said amendment or supplement, or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in said registration statement,
said preliminary prospectus, said final prospectus or said amendment or
supplement in reliance upon and in conformity with written information
<PAGE>
furnished by such Distributing Holder for use in the preparation thereof; and
will reimburse the Company or any such director, officer or controlling person
for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action.
11.3. Promptly after receipt by an indemnified party under this
Section 11 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying
party, give the indemnifying party notice of the commencement thereof, but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section 11.
11.4. In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in and, to the extent that
it may wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section 11 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.
12. Restricted Securities. The Warrantholder understands that this
Warrant and the Shares purchasable hereunder constitute "restricted
securities" under the Act, inasmuch as they are being, or will be, acquired
from the Company in transactions not involving a public offering and
accordingly may not, under such laws and applicable regulations, be resold or
transferred without registration under the Act or an applicable exemption from
registration. The Warrantholder further acknowledges that the Shares and
issued upon exercise of this Warrant shall bear legends substantially in the
form of the legend appearing on the face hereof.
13. Certification of Investment Intent. Unless a current
registration
statement under the Act shall be in effect with respect to the securities to
be issued upon exercise of this Warrant, the Warrantholder, by accepting this
Warrant, covenants and agrees that, at the time of exercise hereof, such
holder will deliver to the Company a written certification satisfactory to the
Company that (i) the Warrantholder understands that the offering and sale of
the Shares is intended to be exempt from registration under the Act pursuant
to Section 4(2) thereof; (ii) the securities acquired by the holder are
acquired for investment purposes only; and (iii) such securities are not
acquired with a view to, or for sale in connection with, any distribution
thereof.
14. Successors and Assigns. The terms and provisions of this Warrant
shall inure to the benefit of, and be binding upon, the Company, the
Warrantholder and their respective successors and assigns.
15. Miscellaneous. This Warrant may be amended, supplemented or
otherwise modified only by an instrument in writing signed by the Company or
the Warrantholder against whom enforcement of such amendment, supplement or
other modification is sought. The headings in this Warrant are for purpose of
reference only and shall not limit or otherwise affect the meaning thereof.
<PAGE>
16. Governing Law. This Warrant shall be governed by the laws of
the
State of Delaware, excluding the conflicts of laws provisions thereof.
17. Registration; Exchange; Lost, Stolen, Mutilated or Destroyed
Warrants. Any Warrants issued upon the transfer or exercise in part of this
Warrant (together with this Warrant (the "Warrants")) shall be registered in a
register maintained by the Company. The Company shall be entitled to treat
the Warrantholder registered on such register as the owner in fact thereof for
all purposes and shall not be bound to recognize any equitable or other claim
to or interest in this Warrant on the part of any other person. This Warrant
shall be transferable only on the books of the Company upon delivery thereof
duly endorsed by the Warrantholder or by his duly authorized attorney or
representative, or accompanied by proper evidence of succession, assignment or
authority to transfer. In all cases of transfer by an attorney, executor,
administrator, guardian or other legal representative, duly authenticated
evidence of his or its authority shall be produced. Upon any registration of
transfer, the Company shall deliver a new Warrant or Warrants to the person
entitled thereto. The Warrants may be exchanged, at the option of the
Warrantholder thereof, for another Warrant, or other Warrants of different
denominations, of like tenor and representing in the aggregate the right to
purchase a like number of Shares upon surrender to the Company or its duly
authorized agent. If this Warrant is lost, stolen, mutilated or destroyed,
the Company shall, on such terms as to indemnity as it may in its discretion
impose, issue anew Warrant of like denomination and tenor as the Warrant so
lost, stolen, mutilated or destroyed.
USCI, INC.
By: /s/ [authorized officer]
<PAGE>
EXHIBIT A
EXERCISE NOTICE
USCI, INC.
Attention: Robert J. Kostrinsky, Treasurer
The undersigned hereby elects to purchase, pursuant to the provisions
of
the Common Stock Purchase Warrant dated as of February 2, 1998 (the
"Warrant"), issued by the Company and held by the undersigned, ______ shares
of the Company's Common Stock. All capitalized terms used herein and not
otherwise defined herein shall have their respective meanings as defined or
stated in the Warrant.
Payment of the aggregate purchase price for the Shares purchased
pursuant hereto as required under the Warrant accompanies this Exercise
Notice.
The undersigned hereby represents that (i) the undersigned understands
that the offering and sale of the Shares is intended to be exempt from
registration under the Securities Act of 1933, as amended (the "Act"),
pursuant to Section 4(2) thereof; (ii) the securities acquired by the
Warrantholder are acquired for investment purposes only; and (iii) such
securities are not acquired with a view to, or for sale in connection with,
any distribution thereof.
Date:_________________________
Signature:____________________
Address:______________________
______________________________
Name in which shares
should be registered: Social Security No. or EIN No.
______________________________ _____________________________
EXHIBIT 10.2
WARRANT TO PURCHASE 50,000
SHARES OF COMMON STOCK
THE WARRANT REPRESENTED HEREBY HAS NOT BEEN REGISTERED UNDER UNITED STATES
FEDERAL OR STATE SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD OR
OTHERWISE TRANSFERRED OR ASSIGNED FOR VALUE, DIRECTLY OR INDIRECTLY, NOR MAY
SUCH WARRANT BE TRANSFERRED ON THE BOOKS OF THE COMPANY, WITHOUT REGISTRATION
OF SUCH WARRANT UNDER ALL APPLICABLE UNITED STATES FEDERAL AND STATE
SECURITIES LAWS OR COMPLIANCE WITH AN APPLICABLE EXEMPTION THEREFROM, SUCH
COMPLIANCE, AT THE OPTION OF THE COMPANY, TO BE EVIDENCED BY AN OPINION OF THE
HOLDER'S COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY THAT NO
VIOLATION OF SUCH REGISTRATION PROVISIONS WOULD RESULT FROM ANY PROPOSED
TRANSFER OR ASSIGNMENT.
USCI, INC.
DATE: February 2, 1998
COMMON STOCK PURCHASE WARRANT
THIS CERTIFIES that, for value received, ALAN R. DRESHER, c/o A.R.
Dresher & Co., 1775 Broadway, 26 floor, New York, New York 10019 (the
"Warrantholder"), or his registered assigns, is entitled to purchase from
USCI, INC. a Delaware corporation (the "Company"), upon the terms and
conditions set forth herein, at any time or from time to time during the
Exercise Period (as defined below), the Shares (as defined below) at the
Purchase Price (as defined below). As used herein the term "this Warrant"
shall mean the warrants represented by this certificate and shall mean and
include this Warrant and any Warrants hereafter issued as a consequence of the
exercise or transfer of this Warrant in whole or in part.
1. Purchase of Shares. Subject to the terms and conditions
hereinafter set forth, the Warrantholder is entitled, upon surrender of this
Warrant to the Company, to purchase from the Company, if and to the extent
permitted by law, 50,000 shares of the Common Stock, par value $.0001 per
share, of the Company (the "Shares") for the purchase price specified in
Section 2 below.
2. Purchase Price. The purchase price shall be $6.00 per Share
during the Exercise Period as defined below (the "Purchase Price") and shall
be subject to adjustment as set forth in Section 8 below. The Warrantholder
may pay the Purchase Price by wire transfer, or certified or bank check
payable to the order of the Company.
3. Exercise Period. This Warrant shall be exercisable during the
five-year period commencing on the date hereof ("Exercise Period").
4. Method of Exercise. While this Warrant remains outstanding and
exercisable in accordance with Section 3 above, the Warrantholder may exercise
at any time and from time to time, in whole or in part, the purchase rights
evidenced hereby. Such exercise shall be effected by:
(i) the surrender of this Warrant, together with a
duly executed Exercise Notice in the form attached hereto as Exhibit A (the
"Exercise Notice") to the Company; and
<PAGE>
(ii) the payment to the Company of an amount equal to
the aggregate purchase price for the Shares being purchased as set forth in
Section 2 above.
5. Certificates for Shares. Upon each exercise of the purchase
rights evidenced by this Warrant, the Warrantholder shall be deemed to be the
holder of record of the Shares being purchased upon such exercise,
notwithstanding that the transfer books of the Company shall then be closed or
certificates representing such Shares shall not then have been actually
delivered to the Warrantholder. One or more certificates for the Shares so
purchased shall be issued as soon as practicable thereafter, and in any event
within thirty (30) days of the delivery of the Exercise Notice and payment of
the aggregate purchase price for the Shares being purchased. In the event
that this Warrant is exercised in part, concurrently with the delivery to the
Warrantholder of the certificates for any Shares purchased, the Company will
deliver to the Warrantholder a new Warrant representing the right to purchase
the number of Shares for which this Warrant has not been exercised.
6. Reservation of Shares. The Company covenants that it will at
all
times keep available such number of authorized shares of its Common Stock,
free from all preemptive rights with respect thereto, as will be sufficient to
permit the exercise of this Warrant for the full number of Shares specified
herein. The Company further covenants that such Shares, when issued pursuant
to the exercise of this Warrant, will be duly and validly issued, fully paid
and non-assessable and free from all taxes, liens and charges with respect to
the issuance thereof.
7. Rights of Warrantholder. Prior to exercise of this Warrant, the
Warrant shall not entitle the Warrantholder to any rights of a shareholder
with respect to the Shares, including (without limitation) the right to vote
such Shares, receive preemptive rights or be notified of shareholder meetings,
nor shall the Warrant entitle such Warrantholder to any notice or other
communication concerning the business or affairs of the Company, except as
otherwise explicitly set forth below.
8. Adjustments. The number of shares of Common Stock purchasable
upon exercise of this Warrant and the Purchase Price shall be subject to
adjustment from time to time as follows:
8.1. Subdivisions, Combinations and Other Issuances. If the
Company shall at any time prior to the expiration of this Warrant subdivide
its Common Stock, by stock split or otherwise, combine its Common Stock or
issue additional shares of its Common Stock as a dividend with respect to any
shares of its Common Stock, the number of Shares purchasable upon exercise of
this Warrant shall forthwith be proportionately increased in the case of a
subdivision or stock dividend and proportionately decreased in case of a
combination. Appropriate adjustments shall also be made to the Purchase
Price, but the aggregate Purchase Price payable for the total number of Shares
purchasable under this Warrant (as adjusted) shall remain the same. Any
adjustment under this Section 8.1 shall become effective at the close of
business on the date the subdivision or combination becomes effective or as of
the record date of such dividend, or in the event that no record date is
fixed, upon the making of such dividend.
8.2. Acquisition, Reclassification or Reorganization. In the
event of any reclassification, capital reorganization or other change in the
Common Stock of the Company or in the event of any sale of all or
substantially all of the Company's assets or any merger, consolidation or
restructuring to which the Company is a party in which the Company's
stockholders before the transaction or series of transactions hold less than
50% of the voting power of the surviving entity immediately after the
transaction or series of transactions (other than as a result of a
<PAGE>
subdivision, combination or stock dividend provided for in Section 8.1 above),
lawful provision shall be made, and duly executed documents evidencing the
same shall be made and shall be delivered to the Warrantholder in substitution
for the Warrantholder's rights under this Warrant, so that the Warrantholder
shall have the right at any time and from time to time prior to the expiration
of this Warrant to purchase at a total price equal to that payable upon
exercise of this Warrant immediately prior to such event, the kind and amount
of shares of stock or other securities or property receivable in connection
with such reclassification, reorganization or change by a holder of the same
number of shares of Common Stock as were purchasable by the Warrantholder
immediately prior to such reclassification, reorganization or change. In any
such case appropriate provisions shall be made with respect to the rights and
interest of the Warrantholder so that the provisions hereof shall thereafter
be applicable with respect to any shares of stock or other securities or
property deliverable upon exercise hereof, and appropriate adjustments shall
be made to the Purchase Price per Share payable hereunder, provided the
aggregate Purchase Price shall remain the same.
8.3. Notice of Adjustment. Upon any adjustment of the number of
Shares purchasable upon exercise of this Warrant or the Purchase Price
pursuant to this Section 8, the Company within thirty (30) days thereafter
shall cause to be prepared a certificate of the Chief Financial or Accounting
Officer of the Company setting forth the number of Shares purchasable upon
exercise of this Warrant and the Purchase Price after such adjustment and
setting forth in reasonable detail the method of calculation used and cause a
copy of such certificate to be mailed to the Warrantholder.
9. Fractional Shares. No fractional share of Common Stock will be
issued with any exercise hereof, but in lieu of a fractional share upon
exercise hereof, the Warrantholder may purchase a whole share at the then
effective Purchase Price.
10. Registration of Shares.
10.1. The Company shall advise the Warrantholder by written
notice
at least four weeks prior to the filing of any registration statement under
the Securities Act of 1933, as amended, (the "Act") covering any securities of
the Company for its own account or for the account of others, except for any
registration statement filed on Form S-4 or Form S-8 or any comparable or
substantially equivalent form. Subject to the provisions of Subsection 10.2
below, the Company will, upon the written request of the Warrantholder
received by the Company within 14 days after receipt of the Company's notice,
include in any such registration statement such information as may be required
to permit a public offering of the Common Stock purchasable or purchased upon
exercise of this Warrant ("Registrable Securities"). In addition, upon the
written request of the Warrantholder, the Company as expeditiously as is
reasonable possible shall register (as defined below) the Registrable
Securities. For purposes of the immediately preceding sentence, "register"
shall mean a registration effected by preparing and filing a registration
statement or similar document in compliance with the Act, and the declaration
or ordering of effectiveness of such registration statement or document. The
Company shall supply prospectuses and such other documents as the
Warrantholder may reasonably request in order to facilitate the public sale or
other disposition of the Registrable Securities and do any and all other acts
and things which may be reasonably necessary to enable the Warrantholder to
consummate the public sale or other disposition of the Registrable Securities.
All costs and expenses of such Registration Statement shall be borne by the
Company, except that the Warrantholder shall bear the fees of its own counsel
and any underwriting discounts or commissions applicable to any of the
securities sold by it.
<PAGE>
10.2. If the registration for which the Company gives notice is
for an offering involving an underwriting, the Company shall so advise the
Warrantholder at the time he receives notice of the Company's filing of the
registration statement. In such event, the managing underwriter selected for
such underwriting shall have sole and nonreviewable discretion as to whether
to include any or all of the Registrable Securities in such an offering. If
the Registrable Securities shall be included in an offering involving an
underwriting, the Warrantholder will be required to execute the underwriting
agreement in customary form with the managing underwriter and any other such
documents requested by the managing underwriter.
11. Indemnification.
11.1. When pursuant to Section 10 a registration statement
registering the Registrable Securities is filed under the Act, amended or
supplemented, the Company will indemnify and hold harmless each Warrantholder
covered by such registration statement, amendment or supplement (such holder
being hereinafter called the "Distributing Holder"), and each person, if any,
who controls (within the meaning of the Act) the Distributing Holder, and each
underwriter (within the meaning of the Act) of such securities and each
person, if any, who controls (within the meaning of the Act) any such
underwriter, against any losses, claims, damages or liabilities, joint or
several, to which the Distributing Holder, any such controlling person or any
such underwriter may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities, or actions in respect thereof,
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any such registration statement or
any preliminary prospectus or final prospectus constituting a part thereof or
any amendment or supplement thereto, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading
and will reimburse the Distributing Holder or such controlling person or
underwriter in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Company will
not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in said registration
statement, said preliminary prospectus, said final prospectus or said
amendment or supplement in reliance upon and in conformity with written
information furnished by such Distributing Holder or any other Distributing
Holder for use in the preparation thereof.
11.2. The Distributing Holder will indemnify and hold harmless the
Company, each of its directors, each of its officers who have signed said
registration statement and such amendments and supplements thereto, and each
person, if any, who controls the Company (within the meaning of the Act)
against any losses, claims, damages or liabilities, joint or several, to which
the Company or any such director, officer or controlling person may become
subject, under the Act or otherwise, insofar as such losses, claims, damages
or liabilities, or actions in respect thereof, arise out of or are based upon
any untrue or alleged untrue statement of any material fact contained in said
registration statement, said preliminary prospectus, said final prospectus, or
said amendment or supplement, or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in said registration statement,
said preliminary prospectus, said final prospectus or said amendment or
supplement in reliance upon and in conformity with written information
<PAGE>
furnished by such Distributing Holder for use in the preparation thereof; and
will reimburse the Company or any such director, officer or controlling person
for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action.
11.3. Promptly after receipt by an indemnified party under this
Section 11 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying
party, give the indemnifying party notice of the commencement thereof, but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section 11.
11.4. In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in and, to the extent that
it may wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section 11 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.
12. Restricted Securities. The Warrantholder understands that this
Warrant and the Shares purchasable hereunder constitute "restricted
securities" under the Act, inasmuch as they are being, or will be, acquired
from the Company in transactions not involving a public offering and
accordingly may not, under such laws and applicable regulations, be resold or
transferred without registration under the Act or an applicable exemption from
registration. The Warrantholder further acknowledges that the Shares and
issued upon exercise of this Warrant shall bear legends substantially in the
form of the legend appearing on the face hereof.
13. Certification of Investment Intent. Unless a current registration
statement under the Act shall be in effect with respect to the securities to
be issued upon exercise of this Warrant, the Warrantholder, by accepting this
Warrant, covenants and agrees that, at the time of exercise hereof, such
holder will deliver to the Company a written certification satisfactory to the
Company that (i) the Warrantholder understands that the offering and sale of
the Shares is intended to be exempt from registration under the Act pursuant
to Section 4(2) thereof; (ii) the securities acquired by the holder are
acquired for investment purposes only; and (iii) such securities are not
acquired with a view to, or for sale in connection with, any distribution
thereof.
14. Successors and Assigns. The terms and provisions of this Warrant
shall inure to the benefit of, and be binding upon, the Company, the
Warrantholder and their respective successors and assigns.
15. Miscellaneous. This Warrant may be amended, supplemented or
otherwise modified only by an instrument in writing signed by the Company or
the Warrantholder against whom enforcement of such amendment, supplement or
other modification is sought. The headings in this Warrant are for purpose of
reference only and shall not limit or otherwise affect the meaning thereof.
<PAGE>
16. Governing Law. This Warrant shall be governed by the laws of the
State of Delaware, excluding the conflicts of laws provisions thereof.
17. Registration; Exchange; Lost, Stolen, Mutilated or Destroyed
Warrants. Any Warrants issued upon the transfer or exercise in part of this
Warrant (together with this Warrant (the "Warrants")) shall be registered in a
register maintained by the Company. The Company shall be entitled to treat
the Warrantholder registered on such register as the owner in fact thereof for
all purposes and shall not be bound to recognize any equitable or other claim
to or interest in this Warrant on the part of any other person. This Warrant
shall be transferable only on the books of the Company upon delivery thereof
duly endorsed by the Warrantholder or by his duly authorized attorney or
representative, or accompanied by proper evidence of succession, assignment or
authority to transfer. In all cases of transfer by an attorney, executor,
administrator, guardian or other legal representative, duly authenticated
evidence of his or its authority shall be produced. Upon any registration of
transfer, the Company shall deliver a new Warrant or Warrants to the person
entitled thereto. The Warrants may be exchanged, at the option of the
Warrantholder thereof, for another Warrant, or other Warrants of different
denominations, of like tenor and representing in the aggregate the right to
purchase a like number of Shares upon surrender to the Company or its duly
authorized agent. If this Warrant is lost, stolen, mutilated or destroyed,
the Company shall, on such terms as to indemnity as it may in its discretion
impose, issue anew Warrant of like denomination and tenor as the Warrant so
lost, stolen, mutilated or destroyed.
USCI, INC.
By: [authorized officer]
<PAGE>
EXHIBIT A
EXERCISE NOTICE
USCI, INC.
Attention: Robert J. Kostrinsky, Treasurer
The undersigned hereby elects to purchase, pursuant to the provisions of
the Common Stock Purchase Warrant dated as of February 2, 1998 (the
"Warrant"), issued by the Company and held by the undersigned, ______ shares
of the Company's Common Stock. All capitalized terms used herein and not
otherwise defined herein shall have their respective meanings as defined or
stated in the Warrant.
Payment of the aggregate purchase price for the Shares purchased
pursuant hereto as required under the Warrant accompanies this Exercise
Notice.
The undersigned hereby represents that (i) the undersigned understands
that the offering and sale of the Shares is intended to be exempt from
registration under the Securities Act of 1933, as amended (the "Act"),
pursuant to Section 4(2) thereof; (ii) the securities acquired by the
Warrantholder are acquired for investment purposes only; and (iii) such
securities are not acquired with a view to, or for sale in connection with,
any distribution thereof.
Date:_________________________
Signature:____________________
Address:______________________
______________________________
Name in which shares
should be registered: Social Security No. or EIN No.
______________________________ _____________________________
EXHIBIT 10.3
WARRANT TO PURCHASE 25,000
SHARES OF COMMON STOCK
THE WARRANT REPRESENTED HEREBY HAS NOT BEEN REGISTERED UNDER UNITED STATES
FEDERAL OR STATE SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD OR
OTHERWISE TRANSFERRED OR ASSIGNED FOR VALUE, DIRECTLY OR INDIRECTLY, NOR MAY
SUCH WARRANT BE TRANSFERRED ON THE BOOKS OF THE COMPANY, WITHOUT REGISTRATION
OF SUCH WARRANT UNDER ALL APPLICABLE UNITED STATES FEDERAL AND STATE
SECURITIES LAWS OR COMPLIANCE WITH AN APPLICABLE EXEMPTION THEREFROM, SUCH
COMPLIANCE, AT THE OPTION OF THE COMPANY, TO BE EVIDENCED BY AN OPINION OF THE
HOLDER'S COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY THAT NO
VIOLATION OF SUCH REGISTRATION PROVISIONS WOULD RESULT FROM ANY PROPOSED
TRANSFER OR ASSIGNMENT.
USCI, INC.
DATE: February 2, 1998
COMMON STOCK PURCHASE WARRANT
THIS CERTIFIES that, for value received, ALAN BARON (the
"Warrantholder"), or his registered assigns, is entitled to purchase from
USCI, INC. a Delaware corporation (the "Company"), upon the terms and
conditions set forth herein, at any time or from time to time during the
Exercise Period (as defined below), the Shares (as defined below) at the
Purchase Price (as defined below). As used herein the term "this Warrant"
shall mean the warrants represented by this certificate and shall mean and
include this Warrant and any Warrants hereafter issued as a consequence of the
exercise or transfer of this Warrant in whole or in part.
1. Purchase of Shares. Subject to the terms and conditions
hereinafter set forth, the Warrantholder is entitled, upon surrender of this
Warrant to the Company, to purchase from the Company, if and to the extent
permitted by law, 25,000 shares of the Common Stock, par value $.0001 per
share, of the Company (the "Shares") for the purchase price specified in
Section 2 below.
2. Purchase Price. The purchase price shall be $6.00 per Share
during the Exercise Period as defined below (the "Purchase Price") and shall
be subject to adjustment as set forth in Section 8 below. The Warrantholder
may pay the Purchase Price by wire transfer, or certified or bank check
payable to the order of the Company.
3. Exercise Period. This Warrant shall be exercisable during the
five-year period commencing on the date hereof ("Exercise Period").
4. Method of Exercise. While this Warrant remains outstanding and
exercisable in accordance with Section 3 above, the Warrantholder may exercise
at any time and from time to time, in whole or in part, the purchase rights
evidenced hereby. Such exercise shall be effected by:
(i) the surrender of this Warrant, together with a
duly executed Exercise Notice in the form attached hereto as Exhibit A (the
"Exercise Notice") to the Company; and
<PAGE>
(ii) the payment to the Company of an amount equal to
the aggregate purchase price for the Shares being purchased as set forth in
Section 2 above.
5. Certificates for Shares. Upon each exercise of the purchase
rights evidenced by this Warrant, the Warrantholder shall be deemed to be the
holder of record of the Shares being purchased upon such exercise,
notwithstanding that the transfer books of the Company shall then be closed or
certificates representing such Shares shall not then have been actually
delivered to the Warrantholder. One or more certificates for the Shares so
purchased shall be issued as soon as practicable thereafter, and in any event
within thirty (30) days of the delivery of the Exercise Notice and payment of
the aggregate purchase price for the Shares being purchased. In the event
that this Warrant is exercised in part, concurrently with the delivery to the
Warrantholder of the certificates for any Shares purchased, the Company will
deliver to the Warrantholder a new Warrant representing the right to purchase
the number of Shares for which this Warrant has not been exercised.
6. Reservation of Shares. The Company covenants that it will at all
times keep available such number of authorized shares of its Common Stock,
free from all preemptive rights with respect thereto, as will be sufficient to
permit the exercise of this Warrant for the full number of Shares specified
herein. The Company further covenants that such Shares, when issued pursuant
to the exercise of this Warrant, will be duly and validly issued, fully paid
and non-assessable and free from all taxes, liens and charges with respect to
the issuance thereof.
7. Rights of Warrantholder. Prior to exercise of this Warrant, the
Warrant shall not entitle the Warrantholder to any rights of a shareholder
with respect to the Shares, including (without limitation) the right to vote
such Shares, receive preemptive rights or be notified of shareholder meetings,
nor shall the Warrant entitle such Warrantholder to any notice or other
communication concerning the business or affairs of the Company, except as
otherwise explicitly set forth below.
8. Adjustments. The number of shares of Common Stock purchasable
upon exercise of this Warrant and the Purchase Price shall be subject to
adjustment from time to time as follows:
8.1. Subdivisions, Combinations and Other Issuances. If the
Company shall at any time prior to the expiration of this Warrant subdivide
its Common Stock, by stock split or otherwise, combine its Common Stock or
issue additional shares of its Common Stock as a dividend with respect to any
shares of its Common Stock, the number of Shares purchasable upon exercise of
this Warrant shall forthwith be proportionately increased in the case of a
subdivision or stock dividend and proportionately decreased in case of a
combination. Appropriate adjustments shall also be made to the Purchase
Price, but the aggregate Purchase Price payable for the total number of Shares
purchasable under this Warrant (as adjusted) shall remain the same. Any
adjustment under this Section 8.1 shall become effective at the close of
business on the date the subdivision or combination becomes effective or as of
the record date of such dividend, or in the event that no record date is
fixed, upon the making of such dividend.
8.2. Acquisition, Reclassification or Reorganization. In the
event of any reclassification, capital reorganization or other change in the
Common Stock of the Company or in the event of any sale of all or
substantially all of the Company's assets or any merger, consolidation or
restructuring to which the Company is a party in which the Company's
stockholders before the transaction or series of transactions hold less than
50% of the voting power of the surviving entity immediately after the
transaction or series of transactions (other than as a result of a
<PAGE>
subdivision, combination or stock dividend provided for in Section 8.1 above),
lawful provision shall be made, and duly executed documents evidencing the
same shall be made and shall be delivered to the Warrantholder in substitution
for the Warrantholder's rights under this Warrant, so that the Warrantholder
shall have the right at any time and from time to time prior to the expiration
of this Warrant to purchase at a total price equal to that payable upon
exercise of this Warrant immediately prior to such event, the kind and amount
of shares of stock or other securities or property receivable in connection
with such reclassification, reorganization or change by a holder of the same
number of shares of Common Stock as were purchasable by the Warrantholder
immediately prior to such reclassification, reorganization or change. In any
such case appropriate provisions shall be made with respect to the rights and
interest of the Warrantholder so that the provisions hereof shall thereafter
be applicable with respect to any shares of stock or other securities or
property deliverable upon exercise hereof, and appropriate adjustments shall
be made to the Purchase Price per Share payable hereunder, provided the
aggregate Purchase Price shall remain the same.
8.3. Notice of Adjustment. Upon any adjustment of the number of
Shares purchasable upon exercise of this Warrant or the Purchase Price
pursuant to this Section 8, the Company within thirty (30) days thereafter
shall cause to be prepared a certificate of the Chief Financial or Accounting
Officer of the Company setting forth the number of Shares purchasable upon
exercise of this Warrant and the Purchase Price after such adjustment and
setting forth in reasonable detail the method of calculation used and cause a
copy of such certificate to be mailed to the Warrantholder.
9. Fractional Shares. No fractional share of Common Stock will be
issued with any exercise hereof, but in lieu of a fractional share upon
exercise hereof, the Warrantholder may purchase a whole share at the then
effective Purchase Price.
10. Registration of Shares.
10.1. The Company shall advise the Warrantholder by written notice
at least four weeks prior to the filing of any registration statement under
the Securities Act of 1933, as amended, (the "Act") covering any securities of
the Company for its own account or for the account of others, except for any
registration statement filed on Form S-4 or Form S-8 or any comparable or
substantially equivalent form. Subject to the provisions of Subsection 10.2
below, the Company will, upon the written request of the Warrantholder
received by the Company within 14 days after receipt of the Company's notice,
include in any such registration statement such information as may be required
to permit a public offering of the Common Stock purchasable or purchased upon
exercise of this Warrant ("Registrable Securities"). In addition, upon the
written request of the Warrantholder, the Company as expeditiously as is
reasonable possible shall register (as defined below) the Registrable
Securities. For purposes of the immediately preceding sentence, "register"
shall mean a registration effected by preparing and filing a registration
statement or similar document in compliance with the Act, and the declaration
or ordering of effectiveness of such registration statement or document. The
Company shall supply prospectuses and such other documents as the
Warrantholder may reasonably request in order to facilitate the public sale or
other disposition of the Registrable Securities and do any and all other acts
and things which may be reasonably necessary to enable the Warrantholder to
consummate the public sale or other disposition of the Registrable Securities.
All costs and expenses of such Registration Statement shall be borne by the
Company, except that the Warrantholder shall bear the fees of its own counsel
and any underwriting discounts or commissions applicable to any of the
securities sold by it.
<PAGE>
10.2. If the registration for which the Company gives notice is
for an offering involving an underwriting, the Company shall so advise the
Warrantholder at the time he receives notice of the Company's filing of the
registration statement. In such event, the managing underwriter selected for
such underwriting shall have sole and nonreviewable discretion as to whether
to include any or all of the Registrable Securities in such an offering. If
the Registrable Securities shall be included in an offering involving an
underwriting, the Warrantholder will be required to execute the underwriting
agreement in customary form with the managing underwriter and any other such
documents requested by the managing underwriter.
11. Indemnification.
11.1. When pursuant to Section 10 a registration statement
registering the Registrable Securities is filed under the Act, amended or
supplemented, the Company will indemnify and hold harmless each Warrantholder
covered by such registration statement, amendment or supplement (such holder
being hereinafter called the "Distributing Holder"), and each person, if any,
who controls (within the meaning of the Act) the Distributing Holder, and each
underwriter (within the meaning of the Act) of such securities and each
person, if any, who controls (within the meaning of the Act) any such
underwriter, against any losses, claims, damages or liabilities, joint or
several, to which the Distributing Holder, any such controlling person or any
such underwriter may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities, or actions in respect thereof,
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any such registration statement or
any preliminary prospectus or final prospectus constituting a part thereof or
any amendment or supplement thereto, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading
and will reimburse the Distributing Holder or such controlling person or
underwriter in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Company will
not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in said registration
statement, said preliminary prospectus, said final prospectus or said
amendment or supplement in reliance upon and in conformity with written
information furnished by such Distributing Holder or any other Distributing
Holder for use in the preparation thereof.
11.2. The Distributing Holder will indemnify and hold harmless the
Company, each of its directors, each of its officers who have signed said
registration statement and such amendments and supplements thereto, and each
person, if any, who controls the Company (within the meaning of the Act)
against any losses, claims, damages or liabilities, joint or several, to which
the Company or any such director, officer or controlling person may become
subject, under the Act or otherwise, insofar as such losses, claims, damages
or liabilities, or actions in respect thereof, arise out of or are based upon
any untrue or alleged untrue statement of any material fact contained in said
registration statement, said preliminary prospectus, said final prospectus, or
said amendment or supplement, or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in said registration statement,
said preliminary prospectus, said final prospectus or said amendment or
supplement in reliance upon and in conformity with written information
<PAGE>
furnished by such Distributing Holder for use in the preparation thereof; and
will reimburse the Company or any such director, officer or controlling person
for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action.
11.3. Promptly after receipt by an indemnified party under this
Section 11 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying
party, give the indemnifying party notice of the commencement thereof, but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section 11.
11.4. In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in and, to the extent that
it may wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section 11 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.
12. Restricted Securities. The Warrantholder understands that this
Warrant and the Shares purchasable hereunder constitute "restricted
securities" under the Act, inasmuch as they are being, or will be, acquired
from the Company in transactions not involving a public offering and
accordingly may not, under such laws and applicable regulations, be resold or
transferred without registration under the Act or an applicable exemption from
registration. The Warrantholder further acknowledges that the Shares and
issued upon exercise of this Warrant shall bear legends substantially in the
form of the legend appearing on the face hereof.
13. Certification of Investment Intent. Unless a current registration
statement under the Act shall be in effect with respect to the securities to
be issued upon exercise of this Warrant, the Warrantholder, by accepting this
Warrant, covenants and agrees that, at the time of exercise hereof, such
holder will deliver to the Company a written certification satisfactory to the
Company that (i) the Warrantholder understands that the offering and sale of
the Shares is intended to be exempt from registration under the Act pursuant
to Section 4(2) thereof; (ii) the securities acquired by the holder are
acquired for investment purposes only; and (iii) such securities are not
acquired with a view to, or for sale in connection with, any distribution
thereof.
14. Successors and Assigns. The terms and provisions of this Warrant
shall inure to the benefit of, and be binding upon, the Company, the
Warrantholder and their respective successors and assigns.
15. Miscellaneous. This Warrant may be amended, supplemented or
otherwise modified only by an instrument in writing signed by the Company or
the Warrantholder against whom enforcement of such amendment, supplement or
other modification is sought. The headings in this Warrant are for purpose of
reference only and shall not limit or otherwise affect the meaning thereof.
<PAGE>
16. Governing Law. This Warrant shall be governed by the laws of the
State of Delaware, excluding the conflicts of laws provisions thereof.
17. Registration; Exchange; Lost, Stolen, Mutilated or Destroyed
Warrants. Any Warrants issued upon the transfer or exercise in part of this
Warrant (together with this Warrant (the "Warrants")) shall be registered in a
register maintained by the Company. The Company shall be entitled to treat
the Warrantholder registered on such register as the owner in fact thereof for
all purposes and shall not be bound to recognize any equitable or other claim
to or interest in this Warrant on the part of any other person. This Warrant
shall be transferable only on the books of the Company upon delivery thereof
duly endorsed by the Warrantholder or by his duly authorized attorney or
representative, or accompanied by proper evidence of succession, assignment or
authority to transfer. In all cases of transfer by an attorney, executor,
administrator, guardian or other legal representative, duly authenticated
evidence of his or its authority shall be produced. Upon any registration of
transfer, the Company shall deliver a new Warrant or Warrants to the person
entitled thereto. The Warrants may be exchanged, at the option of the
Warrantholder thereof, for another Warrant, or other Warrants of different
denominations, of like tenor and representing in the aggregate the right to
purchase a like number of Shares upon surrender to the Company or its duly
authorized agent. If this Warrant is lost, stolen, mutilated or destroyed,
the Company shall, on such terms as to indemnity as it may in its discretion
impose, issue a new Warrant of like denomination and tenor as the Warrant so
lost, stolen, mutilated or destroyed.
USCI, INC.
By: [authorized officer]
<PAGE>
EXHIBIT A
EXERCISE NOTICE
USCI, INC.
Attention: Robert J. Kostrinsky, Treasurer
The undersigned hereby elects to purchase, pursuant to the provisions of
the Common Stock Purchase Warrant dated as of February 2, 1998 (the
"Warrant"), issued by the Company and held by the undersigned, ______ shares
of the Company's Common Stock. All capitalized terms used herein and not
otherwise defined herein shall have their respective meanings as defined or
stated in the Warrant.
Payment of the aggregate purchase price for the Shares purchased
pursuant hereto as required under the Warrant accompanies this Exercise
Notice.
The undersigned hereby represents that (i) the undersigned understands
that the offering and sale of the Shares is intended to be exempt from
registration under the Securities Act of 1933, as amended (the "Act"),
pursuant to Section 4(2) thereof; (ii) the securities acquired by the
Warrantholder are acquired for investment purposes only; and (iii) such
securities are not acquired with a view to, or for sale in connection with,
any distribution thereof.
Date:_________________________
Signature:____________________
Address:______________________
______________________________
Name in which shares
should be registered: Social Security No. or EIN No.
______________________________ _____________________________
EXHIBIT 10.4
PRIVATE PLACEMENT PURCHASE AGREEMENT
AGREEMENT dated February 24, 1998 by and among USCI, INC., a Delaware
corporation having an office at 6115-A Jimmy Carter Blvd., Norcross, GA
30071 (the "Company"), GEORGE KARFUNKEL, having an office at 6201 15 Avenue,
Brooklyn, New York 11219 ("George"), MICHAEL KARFUNKEL, having an office at
6201 15 Avenue, Brooklyn, New York 11219 (Michael), HUBERFELD BODNER FAMILY
FOUNDATION, INC., having an office at 152 W. 57 Street, New York, New York
10019 (the "Foundation"), LAURA HUBERFELD/NAOMI BODNER PARTNERSHIP, having an
office at 152 W. 57 Street, New York, New York 10019 (the "Partnership"), and
ACE FOUNDATION, INC., having an office at 1650 49 Street, Brooklyn New York
11204 ("Ace").
For good and valuable consideration the parties hereto hereby agree as
follows:
1. Purchase and Transfer of Securities.
(a) The Company hereby sells to each of Ace and George, and each of
Ace and George hereby purchases from the Company, a note in the form of
Exhibit A (the "New Notes") and in the principal amount of $750,000. The
New Notes provide for terms upon which the holders thereof may convert
the New Notes into shares of common stock of the Company ("common
stock"). The purchase price for the New Notes is the principal amount
thereof. Such purchase price is being paid to the Company in cash
concurrently herewith, except that George shall credit against the
purchase price payable by him all interest accrued to date under his
Prior Note referred to below.
(b) George and Michael each own a promissory note of the Company dated
November 18, 1997 and in the principal amount of $2,000,000 (the "Prior
Notes"). The Prior Notes, as amended by a letter agreement dated January
30, 1998, provide among other things for the issuance of warrants (the
"Primary Warrants") which when exercised entitle the holder to acquire
shares of common stock of the Company and additional warrants
("Secondary Warrants"). The Primary Warrants and the Secondary Warrants
are collectively referred to as the "Warrants."
(c) The Company is concurrently herewith paying to George and Michael
all interest accrued to date under the Prior Notes. Such payment to
George is being made in part by the credit referred to in Section (a).
(d) The Prior Notes are hereby amended and restated to read as set
forth in Exhibit B. The Prior Notes as amended and restated are referred
to herein as the "Restated Notes." Each Restated Note shall be in the
same principal amount as the Prior Note which was replaced by such
Restated Note. The Warrants are hereby restated to read as set forth in
the exhibits to the Restated Notes. All warrants heretofore issued under
the Prior Notes are rescinded as if such warrants were never issued. The
Restated Notes provide for terms upon which the holders thereof may
convert the Restated Notes into shares of common stock.
<PAGE>
(e) George and Michael each hereby sells $1 million principal amount
of the Restated Notes to the Partnership and the Foundation (allocated
$1,250,000 to the Partnership and $750,000 to the Foundation). George
and Michael represent they own and are transferring the transferred
Restated Notes free and clear of all liens and claims. The purchase
price of for each Restated Note is the principal amount thereof, and is
concurrently herewith payable in cash by the respective buyers to the
respective sellers.
(f) The New Notes and the Restated Notes are collectively referred to
as the "Notes." The shares of common stock issuable on conversion of the
Notes and on exercise of the Warrants are referred to collectively
herein as the "Shares." The Notes, the Warrants and the Shares are
referred to collectively as the "Securities." The term "Subscriber"
means each of George, Michael, the Foundation, Ace and the Partnership.
2. Opinion of Counsel. Concurrently herewith, counsel to the Company
has rendered to Subscribers a favorable opinion (i) on the
validity and binding nature of this Agreement and the Securities,
(ii) that the execution and performance by the Company of its
obligations under this Agreement and the Securities shall not
conflict with any judgment or agreement applicable to the Company
or its properties, and (iii) that shares of common stock are duly
reserved for issuance on conversion of the Notes and on exercise
of the Warrants.
3. Registration.
(a) The Company will on or before April 30, 1998 file a registration
statement on Form S-3 (the "Registration Statement") for the public sale
by Subscribers of the Shares. The shares to be covered by the
Registration Statement are collectively referred to as the "registered
shares." The Company represents that it is eligible, and will at all
times through September 30, 1998, remain eligible to file registration
statements on Form S-3 for sales of shares by Company shareholders.
(b) The Company shall use its diligent efforts to cause the
Registration Statement to become effective not later than 60 days after
the date of filing, and to remain effective for four years. If required
under law, the registration shall be accompanied by blue sky clearances
in such five states as Subscribers may reasonably request.
(c) The Company shall pay all expenses of the registration hereunder,
other than Subscribers' underwriting discounts and counsel or other fees
incurred on a voluntary basis
(d) The Company shall supply to Subscribers a reasonable number of
copies of all registration materials and prospectuses. The Company and
Subscribers shall execute and deliver to each other indemnity agreements
which are conventional in registered offerings of this type. The
Subscribers shall reasonably cooperate with the Company in the
preparation and filing of the Registration Statement and appropriate
amendments thereto.
<PAGE>
(e) Each Subscriber may transfer all or any proportionate part of its
registration rights to transferees of the Securities, provided that such
transferee (i) is an accredited investors, (ii) makes the
representations and warranties made by Subscribers in Section 4, and
(iii) agrees to be bound by this Agreement as a "Subscriber."
(f) Once the registration statement is effective, the Company will
issue UNLEGENDED shares of common stock (in form which can be
transmitted by DWAC if desired by the respective Subscribers) on
conversion of the Notes and exercise of the Warrants, whether or not
such shares are sold simultaneously with such conversion or exercise.
(g) Should any Subscriber from time to time or times give to the
Company notice that it has assigned the Warrants or any portion thereof
to a transferee and that the conditions in the proviso in Section 3(e)
have been satisfied by such transferee, the Company shall within three
business days file a supplement to the registration statement to reflect
the name(s) of the transferee(s) as a selling shareholder.
4. Securities Representations.
(a) Each Subscriber represents and warrants for itself that it is
purchasing and has purchased the Securities solely for investment solely
for its own account and not with a view to or for the resale or
distribution thereof except as permitted under the Registration
Statement.
(b) Each Subscriber understands that it may sell or otherwise transfer
the Securities or the shares issuable on conversion of the Notes or
exercise of the Warrants only if such transaction is duly registered
under the Securities Act of 1933, as amended, under the Registration
Statement or otherwise, or if the Company shall have received the
favorable opinion of counsel to the Subscriber, which opinion shall be
reasonably satisfactory to counsel to the Company, to the effect that
such sale or other transfer may be made in the absence of registration
under the Securities Act of 1933, as amended, and registration or
qualification in every applicable state. The certificates representing
the aforesaid securities will be legended to reflect these restrictions,
and stop transfer instructions will apply.
(c) Each Subscriber represents for itself that it realizes that the
Securities are not a liquid investment, that it is able to bear the
economic risk of losing its entire investment in the Securities, that an
investment in the Company involves substantial risks, that it has
invested in previous transactions involving restricted securities, that
it has received all information it considers necessary or appropriate
for the purpose of deciding whether to purchase the Securities, and that
it has had an opportunity to ask questions and receive answers from the
Company regarding the terms and conditions of the investment in the
Securities and the business, properties, prospects and financial
condition of the Company.
<PAGE>
(d) No Subscriber has relied upon the advice of a "Purchaser
Representative" (as defined in Regulation D of the Securities Act) in
evaluating the risks and merits of this investment. Each Subscriber
represents for itself that it has the knowledge and experience to
evaluate the Company and the risks and merits relating thereto.
(e) Each Subscriber represents and warrants for itself that it is an
"accredited investor" as such term is defined in Rule 501 of Regulation
D promulgated pursuant to the Securities Act of 1933, as amended, and
shall be such on the date any Securities are issued to it; that it has
the power and authority to enter into this agreement, and that the
execution and delivery of, and performance under this Agreement shall
not conflict with any rule, regulation, judgment or agreement applicable
to the Subscriber.
(f) Each of the Foundation and Partnership represents and warrants
that it has not been organized, reorganized or recapitalized
specifically for the purposes of investing in the Securities.
5. Legal Fees. On closing of this offering, the Company will pay to
Oscar D. Folger, counsel to certain of the Purchasers, a fee equal
to $15,000, plus disbursements, plus the amount, if any, by which
such Counsel's hourly time charges shall exceed $5,000.
6. Miscellaneous.
This Agreement may not be changed or terminated except by written
agreement. It shall be binding on the parties and on their personal
representatives and permitted assigns. It sets forth all agreements of
the parties. It shall be enforceable by decrees of specific performance
(without posting bond or other security) as well as by other available
remedies. This Agreement shall be governed by, and construed in
accordance with, the laws of Delaware. The federal and state courts
sitting in the City of New York shall have exclusive jurisdiction over
all matters relating to this Agreement. Trial by jury is expressly
waived. The Company shall reimburse Subscriber for Subscriber's
reasonable legal fees and costs to enforce its right under this
Agreement.
All notices, requests, service of process, consents, and other
communications under this Agreement shall be in writing and shall be
deemed to have been delivered (i) on the date personally delivered or
(ii) one day after properly sent by Federal Express, addressed to the
respective parties at their address set forth in this Agreement or (iii)
on the day transmitted by facsimile so long as a confirmation copy is
simultaneously forwarded by Federal Express, in each case addressed to
the respective parties at their address set forth in this Agreement.
Either party hereto may designate a different address by providing
written notice of such new address to the other party hereto as provided
above. Service of process may be effected in the manner provided for
notices hereunder, and such service in such manner shall be deemed the
equivalent of personal service.
<PAGE>
This Agreement and the Securities may be signed in counterparts, each of
which shall be considered an original. This Agreement may be signed by
facsimile.
Dated: ________________________
USCI, Inc.
By ___________________________
_______________________________
George Karfunkel
______________________________
Michael Karfunkel
HUBERFELD BODNER FAMILY FOUNDATION, INC.
By ______________________
LAURA HUBERFELD/NAOMI BODNER PARTNERSHIP
By ___________________________________
ACE FOUNDATION, INC.
By __________________________________
<PAGE>
Exhibit A [New Notes]
THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED,
HYPOTHECATED, OR OTHERWISE TRANSFERRED, DISPOSED OF OR OFFERED FOR SALE, IN
WHOLE OR IN PART, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
THAT ACT COVERING THIS NOTE AND/OR THE COMMON STOCK ISSUABLE UPON CONVERSION
THEREOF, OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO USCI, INC., THAT
AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
Principal Sum: $750,000
Holder: __________________
CONVERTIBLE NOTE
(the "Note")
USCI, INC.
USCI, INC., a Delaware corporation (hereinafter called the "Corporation"),
hereby promises to pay the Principal Sum to the order of Holder on or before
August 1, 1998. This Note shall accrue interest until maturity at the rate of
10% per annum, payable at maturity. The Note shall accrue interest after
maturity, payable on demand, at the rate of 15% per annum. Interest shall be
computed on the basis of a 360-day year. All payments and prepayments
hereunder shall be applied first to accrued interest and then to principal.
1. This Note is one of the "New Notes" being issued under a Private
Placement Purchase Agreement between the Company and the Holder (the
"Purchase Agreement"). The term "Registration Statement" shall have the
meaning attributed thereto in the Purchase Agreement, and the term
"Effective Date" means the date on which the Registration Statement shall
be declared to be effective.
2. Conversion Rights.
(a) In the event that the principal and all accrued interest on this
Note have not been paid in full by the close of business on August
1, 1998, then until such principal and all accrued interest are
thereafter paid in full, the principal and accrued interest on
this Note shall be convertible by Subscriber from time to time, in
whole or in part, into shares of common stock of the Company
("Common Stock") at the lesser (the "Conversion Price") of $5 per
share (the "Cap") or 80% of the average closing sales price of
the Common Stock during the last five trading days prior to
conversion. If on any such date there are no sales prices, the
closing bid price for such date shall be used instead. Holder's
conversion rights are in addition to, and not in limitation of,
Holder's other rights and remedies to enforce its rights under
this Note. After maturity, the Company shall give to the Holder
not less than 30 days' and not more than 45 days' prior written
notice before the Company may repay this Note without Holder's
<PAGE>
prior written consent or demand. In addition, without Holder's
prior written consent, the Company may not repay this Note after
maturity prior to the Effective Date.
(b) In the event that the Holder elects to exercise its conversion
rights hereunder, such conversion shall be effective when Holder
shall give to the Company written notice of such election (which
may be effected by facsimile). The Company shall, within two
business days after receipt by the Company of notice of conversion
and the Note being converted, DWAC to Holder (or, at Holder's
option, deliver to Holder certificates for) the shares of Common
Stock issuable on such conversion.
(c) Certain Increases in Interest Rate.
(i) If the Effective Date has not occurred by June 30, 1998,
then, in addition to the Holder's other remedies the
interest rate under the Note shall be increased to 18% per
annum (or, if less, the highest rate permitted by law)
until the Effective Date.
(ii) If the Effective Date has not occurred by September 30,
1998, then, in addition to the Holder's other remedies, the
interest rate under the Note shall be further increased to
24% per annum (or, if less, the highest rate permitted by
law) until the Effective Date.
(d) The Company shall at all times reserve sufficient shares for
issuance on conversion and exercise of this Note and the Warrants
(as defined in the Purchase Agreement). The Company shall use its
best efforts promptly to list on NASDAQ all shares of Common Stock
which are issued upon conversion of this Note.
(e) The Note shall be convertible at any time only to the extent that
Holder would not as a result of such conversion (and after taking
into account any and all other Common Stock then beneficially
owned by Holder, whether pursuant to the Warrants or otherwise)
beneficially own more than 4.99% of the then outstanding Common
Stock. Beneficial ownership shall be defined in accordance with
Rule 13d-3 under the Securities Exchange Act of 1934. The opinion
of counsel to Holder shall prevail in the event of any dispute on
the calculation of Holder's beneficial ownership.
(f) If any capital reorganization or reclassification of the common
stock, or consolidation, or merger of the Company with or into
another corporation, or the sale or conveyance of all or
substantially all of its assets to another corporation shall be
effected, then, as a condition precedent of such reorganization or
sale, the Cap shall be appropriately adjusted and the following
additional provision shall be made: The Holder of the Note shall
from and after the date of such reorganization or sale have the
right to receive (in lieu of the shares of common stock of the
Company immediately theretofore receivable with respect to the
Note, upon the exercise of conversion rights), such shares of
stock, securities or assets as would have been issued or payable
with respect to or in exchange for the number of outstanding
shares of such common stock immediately theretofore receivable
<PAGE>
with respect to the Note (assuming the Note were then
convertible). In any such case, appropriate provision shall be
made with respect to the rights and interests of the Holder to the
end that such conversion rights (including, without limitation,
provisions for appropriate adjustments) shall thereafter be
applicable, as nearly as may be practicable in relation to any
shares of stock, securities or assets thereafter deliverable upon
the exercise thereof.
(g) The Company shall take whatever action is required by NASDAQ
("NASDAQ Action") to approve the issuance of shares on conversion
of the Notes and exercise of the Warrants issued to the
Subscribers (as defined in the Purchase Agreement). The Company
represents and warrants, and Holder acknowledges, that without
taking any NASDAQ Action, the maximum number of shares which will
be issued on conversion of the Notes and exercise of the Warrants
is 2,000,000, issuable on a first converted-first exercised basis.
Should NASDAQ Action not be completed by May 31, 1998, then until
such NASDAQ Action is completed, the Company shall on demand by
Holder made at any time or times redeem any portion of the Note
which Holder proposes to convert but may not then convert because
NASDAQ Action has not been completed. The redemption price shall
be equal to 125% of the principal and/or interest proposed to be
converted. The redemption price shall be payable within five
business days after demand for redemption is made, and shall
accrue interest payable in demand at 11% per annum.
3. The Company covenants and agrees that all shares of Common Stock which
may be issued upon conversion of this Note will, upon issuance, be duly
and validly issued, fully paid and non-assessable and no personal
liability will attach to the holder thereof.
4. Purchase for Investment. The Holder, by acceptance hereof, acknowledges
that the Note (and the Common Stock into which the Note is convertible)
has not been registered under the Act, covenants and agrees with the
Company that such Holder is taking and holding this Note (and the Common
Stock into which the Note is convertible) for investment purposes and not
with a view to, or for sale in connection with, a distribution thereof and
that this Note (and the Common Stock into which the Note is convertible)
may not be assigned, hypothecated or otherwise disposed of in the absence
of an effective registration statement under the Act or an opinion of
counsel for the Holder, which counsel shall be reasonably satisfactory to
the Company, to the effect that such disposition is in compliance with the
Act, and represents and warrants that such Holder is an "accredited
investor" that such Holder has, or with its representative has, such
knowledge and experience in financial and business matters to be capable
of evaluating the merits and risks in respect of this Note (and the Common
Stock into which the Note is convertible) and is able to bear the economic
risk of such investment.
<PAGE>
5. Certain Payments. In the event the Company fails to give irrevocable
instructions to its transfer agent to DWAC or deliver certificates for
securities as required under this Note within two days after conversion ,
or if the Company fails timely to make a redemption payment as required
hereunder, then, without limiting Holder's other rights and remedies
(including, without limitation, rights and remedies available to Holder
upon an event of default), the Company shall forthwith pay to the Holder
an amount accruing at the rate of $500 per day for each day of such breach
for each $100,000 principal amount of this Note, with pro rata payments
for principal amounts of less than $100,000.
6. Events of Default and Acceleration of the Note.
(a) An "event of default" with respect to this Note shall exist if any
of the following shall occur, if:
(i) The Company shall breach or fail to comply with any
provision of this Note and such breach or failure shall
continue for 15 days after written notice by any Holder of
any Note to the Company.
(ii) A receiver, liquidator or trustee of the Company or of a
substantial part of its properties shall be appointed by
court order and such order shall remain in effect for more
than 15 days; or the Company shall be adjudicated bankrupt
or insolvent; or a substantial part of the property of the
Company shall be sequestered by court order and such order
shall remain in effect for more than 15 days; or a petition
to reorganize the Company under any bankruptcy,
reorganization or insolvency law shall be filed against the
Company and shall not be dismissed within 45 days after such
filing.
(iii) The Company shall file a petition in voluntary bankruptcy or
request reorganization under any provision of any
bankruptcy, reorganization or insolvency law, or shall
consent to the filing of any petition against it under any
such law.
(iv) The Company shall make an assignment for the benefit of its
creditors, or admit in writing its inability to pay its
debts generally as they become due, or consent to the
appointment of a receiver, trustee or liquidator of the
Company, or of all or any substantial part of its
properties.
(b) If an event of default shall occur, the Holder may, in addition to
such Holder's other remedies, by written notice to the Company, declare
the principal amount of this Note, together with all interest accrued
thereon, to be due and payable immediately. Upon any such declaration,
such amount shall become immediately due and payable and the Holder
shall have all such rights and remedies provided for under the terms of
this Note and the Purchase Agreement.
<PAGE>
7. Miscellaneous.
All notices and other communications required or permitted to be given
hereunder shall be in writing and shall be given (and shall be deemed to
have been duly given upon receipt) by delivery in person, by telegram,
by facsimile, recognized overnight mail carrier, telex or other standard
form of telecommunications, or by registered or certified mail, postage
prepaid, return receipt requested, addressed as follows: (a) if to the
Holder, to such address as such Holder shall furnish to the Company in
accordance with this Section, or (b) if to the Company, to it at its
headquarters office, or to such other address as the Company shall
furnish to the Holder in accordance with this Section.
This Note shall be governed and construed in accordance with the laws of
the State of New York applicable to agreements made and to be
performed entirely within such state. The federal and state courts
sitting in the City of New York shall have exclusive jurisdiction over
all matters relating to this Agreement. Trial by jury is expressly
waived.
Service of process may be effected in the manner provided for notices
hereunder, and such service in such manner shall be deemed the
equivalent of personal service.
The Company waives protest, notice of protest, presentment, dishonor,
notice of dishonor and demand.
If any provision of this Note shall for any reason be held to be invalid
or unenforceable, such invalidity or unenforceability shall not affect
any other provision hereof, but this Note shall be construed as if such
invalid or unenforceable provision had never been contained herein.
The waiver of any event of default or the failure of the Holder to
exercise any right or remedy to which it may be entitled shall not be
deemed a waiver of any subsequent event of default or of the Holder's
right to exercise that or any other right or remedy to which the Holder
is entitled.
The Holder of this Note shall be entitled to recover its reasonable
legal and other costs of collecting on this Note, and such costs shall
be deemed added to the principal amount of this Note.
In addition to all other remedies to which the Holder may be entitled
hereunder, Holder shall also be entitled to decrees of specific
performance without posting bond or other security.
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed on
the date set forth below.
Dated: _____________________
USCI, INC.
By: ___________________________________
<PAGE>
Exhibit B [Restated Notes]
THIS NOTE, THE WARRANTS ISSUABLE HEREUNDER AND THE COMMON STOCK ISSUABLE UPON
CONVERSION OF THIS NOTE AND EXERCISE OF THE WARRANTS HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED,
OR OTHERWISE TRANSFERRED, DISPOSED OF OR OFFERED FOR SALE, IN WHOLE OR IN
PART, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THAT ACT
COVERING THIS NOTE AND/OR SUCH COMMON STOCK, OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO USCI, INC., THAT AN EXEMPTION FROM REGISTRATION IS
AVAILABLE.
Principal Sum:
Holder: __________________
CONVERTIBLE RESTATED NOTE
(the "Note")
USCI, INC.
USCI, INC., a Delaware corporation (hereinafter called the "Company"), hereby
promises to pay the Principal Sum to the order of Holder on or before August
1, 1998. This Note shall accrue interest until maturity at the rate of 8% per
annum, payable at maturity. The Note shall accrue interest after maturity,
payable on demand, at the rate of 15% per annum. Interest shall be computed
on the basis of a 360-day year. All payments and prepayments hereunder shall
be applied first to accrued interest and then to principal.
1. This Note is one of the "Restated Notes" being issued under a Private
Placement Purchase Agreement between the Company and the Holder (the
"Purchase Agreement") in replacement of the Prior Notes referred to in the
Purchase Agreement. The term "Registration Statement" shall have the
meaning attributed thereto in the Purchase Agreement, and the term
"Effective Date" means the date on which the Registration Statement shall
be declared to be effective.
2. Issuance of Warrants.
(a) For each month (or portion thereof) from and after November 1,
1997 until the principal of this Note and all accrued interest
thereon is paid in full, the Company shall on the written demand
of Holder issue to Holder warrants in the form of Exhibit 1 (the
"Warrants") to purchase a number of shares of common stock of the
Company equal to 100,000 for each $1,000,000 of the initial
principal amount hereof (whether or not any partial prepayments
have been made against such initial principal amount), with
appropriate pro ration for initial principal amounts of less than
$1,000,000. Holder may make one or more demands as aforesaid at
any time or times until the 60th day after the later to occur of
the Effective Date or the payment in full of the principal and
accrued interest of this Note.
<PAGE>
(b) For example, if the initial principal amount of this Note is
$1,000,000, then notwithstanding that a $400,000 partial
prepayment is made by the Company on March 1, 1998, the Company
shall on Holder's demand made on or after March 1, 1998 issue to
Holder 500,000 Warrants. By way of further example, if any portion
of this Note thereafter remains outstanding on April 1, 1998, the
Company shall on demand of Holder made on or after such date issue
to Holder 100,000 additional Warrants.
3. Increase in Interest Rate.
(a) If the Effective Date has not occurred by June 30, 1998, then, in
addition to the Holder's other remedies the interest rate under
the Note shall be increased to 18% per annum (or, if less, the
highest rate permitted by law) until the Effective Date.
(b) If the Effective Date has not occurred by September 30, 1998,
then, in addition to the Holder's other remedies, the interest
rate under the Note shall be further increased to 24% per annum
(or, if less, the highest rate permitted by law) until the
Effective Date.
4. Conversion Rights.
(a) In the event that the principal and all accrued interest on this
Note have not been paid in full by the close of business on August
1, 1998, then until such principal and all accrued interest are
thereafter paid in full, the principal and accrued interest on
this Note shall be convertible by Subscriber from time to time, in
whole or in part, into shares of common stock of the Company
("Common Stock") at the lesser (the "Conversion Price") of $5 per
share (the "Cap") or 80% of the average closing sales price of
the Common Stock during the last five trading days prior to
conversion. If on any such date there are no sales prices, the
closing bid price for such date shall be used instead. Holder's
conversion rights are in addition to, and not in limitation of,
Holder's other rights and remedies to enforce its rights under
this Note. After maturity, the Company shall give to the Holder
not less than 30 days' and not more than 45 days' prior written
notice before the Company may repay this Note without Holder's
prior written consent or demand. In addition, without Holder's
prior written consent, the Company may not repay this Note after
maturity prior to the Effective Date.
(b) In the event that the Holder elects to exercise its conversion
rights hereunder, such conversion shall be effective when Holder
shall give to the Company written notice of such election (which
may be effected by facsimile). The Company shall, within two
business days after receipt by the Company of notice of conversion
and the Note being converted, DWAC to Holder (or, at Holder's
option, deliver to Holder certificates for) the shares of Common
Stock issuable on such conversion.
<PAGE>
(c) The Note shall be convertible at any time only to the extent that
Holder would not as a result of such conversion (and after taking
into account any and all other Common Stock then beneficially
owned by Holder, whether pursuant to the Warrants or otherwise)
beneficially own more than 4.99% of the then outstanding Common
Stock. Beneficial ownership shall be defined in accordance with
Rule 13d-3 under the Securities Exchange Act of 1934. The opinion
of counsel to Holder shall prevail in the event of any dispute on
the calculation of Holder's beneficial ownership.
(d) If any capital reorganization or reclassification of the common
stock, or consolidation, or merger of the Company with or into
another corporation, or the sale or conveyance of all or
substantially all of its assets to another corporation shall be
effected, then, as a condition precedent of such reorganization or
sale, the Cap shall be appropriately adjusted and the following
additional provision shall be made: The Holder of the Note shall
from and after the date of such reorganization or sale have the
right to receive (in lieu of the shares of common stock of the
Company immediately theretofore receivable with respect to the
Note, upon the exercise of conversion rights), such shares of
stock, securities or assets as would have been issued or payable
with respect to or in exchange for the number of outstanding
shares of such common stock immediately theretofore receivable
with respect to the Note (assuming the Note were then
convertible). In any such case, appropriate provision shall be
made with respect to the rights and interests of the Holder to the
end that such conversion rights (including, without limitation,
provisions for appropriate adjustments) shall thereafter be
applicable, as nearly as may be practicable in relation to any
shares of stock, securities or assets thereafter deliverable upon
the exercise thereof.
(e) The Company shall take whatever action is required by NASDAQ
("NASDAQ Action") to approve the issuance of shares on conversion
of the Notes and exercise of the Warrants issued to the
Subscribers (each such term as defined in the Purchase Agreement).
The Company represents and warrants, and Holder acknowledges, that
without taking any NASDAQ Action, the maximum number of shares
which will be issued on conversion of the Notes and exercise of
the Warrants is 2,000,000, issuable on a first converted-first
exercised basis. Should NASDAQ Action not be completed by May 31,
1998, then until such NASDAQ Action is completed, the Company
shall on demand by Holder made at any time or times redeem any
portion of the Note which Holder proposes to convert but may not
then convert because NASDAQ Action has not been completed. The
redemption price shall be equal to 125% of the principal and/or
interest proposed to be converted. The redemption price shall be
payable within five business days after demand for redemption is
made, and shall accrue interest payable in demand at 11% per
annum.
5. The Company covenants and agrees that all shares of Common Stock which
may be issued upon conversion of this Note will, upon issuance, be duly
and validly issued, fully paid and non-assessable and no personal liability
will attach to the holder thereof. The Company shall at all times reserve
sufficient shares for issuance on conversion and exercise of the Notes and
the Warrants (as defined in the Purchase Agreement). The Company shall use
<PAGE>
its best efforts promptly to list on NASDAQ all shares of Common Stock
which are issued upon conversion of this Note.
6. Purchase for Investment. The Holder, by acceptance hereof, acknowledges
that the Note, the Warrants (and the Common Stock into which the Note is
convertible and into which the Warrants are exercisable) have not been
registered under the Act, covenants and agrees with the Company that such
Holder is taking and holding such securities for investment purposes and
not with a view to, or for sale in connection with, a distribution thereof
and that such securities may not be assigned, hypothecated or otherwise
disposed of in the absence of an effective registration statement under the
Act or an opinion of counsel for the Holder, which counsel shall be
reasonably satisfactory to the Company, to the effect that such disposition
is in compliance with the Act, and represents and warrants that such Holder
is an "accredited investor" that such Holder has, or with its
representative has, such knowledge and experience in financial and business
matters to be capable of evaluating the merits and risks in respect of such
securities and is able to bear the economic risk of such investment.
7. Certain Payments. In the event the Company fails to give irrevocable
instructions to its transfer agent to DWAC or deliver certificates for
securities as required under this Note within two days after conversion ,
or if the Company fails timely to make a redemption payment as required
hereunder, then, without limiting Holder's other rights and remedies
(including, without limitation, rights and remedies available to Holder
upon an event of default), the Company shall forthwith pay to the Holder an
amount accruing at the rate of $500 per day for each day of such breach for
each $100,000 principal amount of this Note, with pro rata payments for
principal amounts of less than $100,000.
8. Events of Default and Acceleration of the Note.
(a) An "event of default" with respect to this Note shall exist if any
of the following shall occur, if:
(i) The Company shall breach or fail to comply with any
provision of this Note and such breach or failure shall
continue for 15 days after written notice by any Holder of
any Note to the Company.
(ii) A receiver, liquidator or trustee of the Company or of a
substantial part of its properties shall be appointed by
court order and such order shall remain in effect for more
than 15 days; or the Company shall be adjudicated bankrupt
or insolvent; or a substantial part of the property of the
Company shall be sequestered by court order and such order
shall remain in effect for more than 15 days; or a petition
to reorganize the Company under any bankruptcy,
reorganization or insolvency law shall be filed against the
Company and shall not be dismissed within 45 days after such
filing.
(iii) The Company shall file a petition in voluntary bankruptcy or
request reorganization under any provision of any
bankruptcy, reorganization or insolvency law, or shall
consent to the filing of any petition against it under any
such law.
<PAGE>
(iv) The Company shall make an assignment for the benefit of its
creditors, or admit in writing its inability to pay its
debts generally as they become due, or consent to the
appointment of a receiver, trustee or liquidator of the
Company, or of all or any substantial part of its
properties.
(b) If an event of default shall occur, the Holder may, in addition to
such Holder's other remedies, by written notice to the Company,
declare the principal amount of this Note, together with all
interest accrued thereon, to be due and payable immediately. Upon
any such declaration, such amount shall become immediately due and
payable and the Holder shall have all such rights and remedies
provided for under the terms of this Note and the Purchase
Agreement.
Miscellaneous. All notices, demands and other communications required or
permitted to be given hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person,
by telegram, by facsimile, recognized overnight mail carrier, telex or other
standard form of telecommunications, or by registered or certified mail,
postage prepaid, return receipt requested, addressed as follows: (a) if to the
Holder, to such address as such Holder shall furnish to the Company in
accordance with this Section, or (b) if to the Company, to it at its
headquarters office, or to such other address as the Company shall furnish to
the Holder in accordance with this Section. This Note shall be governed and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely within such state. The federal
and state courts sitting in the City of New York shall have exclusive
jurisdiction over all matters relating to this Agreement. Trial by jury is
expressly waived.
Service of process may be effected in the manner provided for notices
hereunder, and such service in such manner shall be deemed the equivalent of
personal service.
The Company waives protest, notice of protest, presentment, dishonor, notice
of dishonor and demand. If any provision of this Note shall for any reason be
held to be invalid or unenforceable, such invalidity or unenforceability shall
not affect any other provision hereof, but this Note shall be construed as if
such invalid or unenforceable provision had never been contained herein.
The waiver of any event of default or the failure of the Holder to exercise
any right or remedy to which it may be entitled shall not be deemed a waiver
of any subsequent event of default or of the Holder's right to exercise that
or any other right or remedy to which the Holder is entitled.
The Holder of this Note shall be entitled to recover its reasonable legal and
other costs of collecting on this Note, and such costs shall be deemed added
to the principal amount of this Note.
In addition to all other remedies to which the Holder may be entitled
hereunder, Holder shall also be entitled to decrees of specific performance
without posting bond or other security.
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed on
the date set forth below.
Dated: _____________________
USCI, INC.
By: ___________________________________
<PAGE>
Exhibit 1
Neither this Warrant nor the shares of Common Stock issuable on exercise of
this Warrant have been registered under the Securities Act of 1933. None of
such securities may be transferred in the absence of registration under such
Act or an opinion of counsel to the effect that such registration is not
required.
USCI, INC.
WARRANT [PRIMARY]
DATED:
Number of Shares:
Holder:
Address:
_______________________________
1. THIS CERTIFIES THAT the Holder is entitled to purchase from USCI, INC.,
a Delaware corporation (hereinafter called the "Company"), the number of
shares of the Company's common stock ("Common Stock") set forth above,
at an exercise price equal to $5.00 per share. This Warrant may be
exercised in whole or in part at any time prior to expiration.
2. All rights granted under this Warrant shall expire on the fifth
anniversary of the date of issuance of this Warrant.
3. Upon each exercise of this Warrant (the "Primary Warrant") as to any
number shares, the Company shall also within two days after such exercise
issue to Holder a Warrant in the form of the Secondary Warrant attached
as an exhibit hereto (a "Secondary Warrant") to purchase the same number
of shares.
4. Notwithstanding anything to the contrary contained herein, Holder shall
have the right at any time to exercise this Warrant only so long as and
to the extent that, after taking into account any shares of Common Stock
otherwise beneficially owned by Holder (whether under any convertible
notes owned by Holder or otherwise) , such exercise would not cause the
Holder then to be the "beneficial owner" of more than 4.99% of the
Company's then outstanding Common Stock. For purposes hereof, the term
"beneficial owner" shall have the meaning ascribed to it in Section 13(d)
of the Securities Exchange Act of 1934. The opinion of legal counsel to
Holder, in form and substance satisfactory to the Company and the
Company's counsel, shall prevail in all matters relating to the amount of
Holder's beneficial ownership.
5. This Warrant and the Common Stock issuable on exercise of this Warrant
(the "Underlying Shares") may be transferred, sold, assigned or
hypothecated, only if registered by the Company under the Securities Act
of 1933 (the "Act") or if the Company has received from counsel to the
Company a written opinion to the effect that registration of the Warrant
<PAGE>
or the Underlying Shares is not necessary in connection with such
transfer, sale, assignment or hypothecation. The Warrant and the
Underlying Shares shall be appropriately legended to reflect this
restriction and stop transfer instructions shall apply. The Holder shall
through its counsel provide such information as is reasonably necessary
in connection with such opinion.
6. The holder of this warrant is entitled to certain registration rights
under an Agreement dated of even date herewith (the "Purchase
Agreement"). Upon each permitted transfer of this Warrant after the
registration statement has been declared effective, the Company will
within two business days after receipt of notice thereof supplement the
registration statement to reflect the name of the transferee as a selling
shareholder thereunder.
7. The Company shall take whatever action is required by NASDAQ ("NASDAQ
Action") to approve the issuance of shares on conversion and exercise of
the Notes and the Warrants (as defined in the Purchase Agreement). The
Company represents and warrants, and Holder acknowledges, that without
taking any NASDAQ Action, the maximum number of shares which will be
issued on conversion of the Notes and exercise of the Warrants is
2,000,000, issuable on a first converted-first exercised basis. Should
NASDAQ Action not be completed by May 31, 1998, then until such NASDAQ
Action is completed, the Company shall on demand by Holder made at any
time or times redeem any portion of the Warrant designated for redemption
(the "Redeemed Portion") at a redemption price equal to the pre-tax
profit Holder would have earned had Holder, at the close of business on
the date of its demand for redemption, exercised the Redeemed Portion and
simultaneously sold the shares received on such exercise at the closing
NASDAQ sales price on such date. The redemption price shall be payable
within five business days after demand for redemption is made, and shall
accrue interest payable on demand at 11% per annum.
8. Any permitted assignment of this Warrant shall be effected by the Holder
by (i) executing a standard form of assignment, (ii) surrendering the
Warrant for cancellation at the office of the Company, accompanied by the
opinion of counsel to the Company referred to above; and (iii) unless in
connection with an effective registration statement which covers the sale
of this Warrant and or the shares underlying the Warrant, delivery to the
Company of a statement by the transferee (in a form acceptable to the
Company and its counsel) that such Warrant is being acquired by the
Holder for investment and not with a view to its distribution or resale;
whereupon the Company shall issue, in the name or names specified by the
Holder (including the Holder) new Warrants representing in the aggregate
rights to purchase the same number of Shares as are purchasable under the
Warrant surrendered. Such Warrants shall be exercisable immediately upon
any such assignment of the number of Warrants assigned. The transferor
will pay all relevant transfer taxes. Replacement warrants shall bear the
same legend as is borne by this Warrant.
9. The term "Holder" should be deemed to include any permitted record
transferee of this Warrant.
10. The Company covenants and agrees that all shares of Common Stock and all
Secondary Warrants which may be issued upon exercise hereof will, upon
issuance, be duly and validly issued, fully paid and non-assessable and
<PAGE>
no personal liability will attach to the holder thereof. The Company
further covenants and agrees that, during the periods within which this
Warrant may be exercised, the Company will at all times have authorized
and reserved a sufficient number of shares of Common Stock for issuance
upon exercise of this Warrant and all other Warrants.
11. This Warrant shall not entitle the Holder to any voting rights or other
rights as a stockholder of the Company.
12. In the event that as a result of reorganization, merger, consolidation,
liquidation, recapitalization, stock split, combination of shares or
stock dividends payable with respect to such Common Stock, the
outstanding shares of Common Stock of the Company are at any time
increased or decreased or changed into or exchanged for a different
number or kind of share or other security of the Company or of another
corporation, then appropriate adjustments in the number and kind of such
securities then subject to this Warrant and in the exercise price
hereunder shall be made effective as of the date of such occurrence so
that the position of the Holder upon exercise will be the same as it
would have been had it owned immediately prior to the occurrence of such
events the Common Stock subject to this Warrant. Such adjustment shall
be made successively whenever any event listed above shall occur and the
Company will notify the Holder of the Warrant of each such adjustment.
Any fraction of a share resulting from any adjustment shall be eliminated
and the price per share of the remaining shares subject to this Warrant
adjusted accordingly.
13. The rights represented by this Warrant may be exercised at any time
within the period above specified by (i) surrender of this Warrant (with
a standard purchase form properly executed) at the principal executive
office of the Company (or such other office or agency of the Company as
it may designate by notice in writing to the Holder at the address of the
Holder appearing on the books of the Company); (ii) payment to the
Company of the exercise price for the number of Shares specified in the
above-mentioned purchase form together with applicable stock transfer
taxes, if any; and (iii) unless in connection with an effective
registration statement which covers the sale of the shares underlying the
Warrant, the delivery to the Company of a statement by the Holder (in a
form acceptable to the Company and its counsel) that such Shares are
being acquired by the Holder for investment and not with a view to their
distribution or resale.
14. Within two business days following each receipt by the Company of the
documents required to exercise all any part of this Warrant as provided
herein, the Company shall DWAC or deliver certificates of the shares of
common stock so purchased as directed by Holder, and shall also deliver
to Holder a warrant certificate for the Secondary Warrants issuable as a
result of such exercise. Such certificates shall bear appropriate
restrictive legends in accordance with applicable securities laws, but
shall be unrestricted and bear no legends once the registration statement
referred to above has been declared effective.
15. In the event the Company breaches its obligation to DWAC or to deliver
certificates for shares of common stock or Secondary Warrants as required
hereunder, or timely to make any payment required under this Warrant,
then, without limiting Holder's other rights and remedies, the Company
shall forthwith pay to the Holder an amount accruing at the rate of
<PAGE>
$1,000 per day for each day of such breach for each 20,000 shares of
common stock subject to this Warrant, with pro rata payments for shares
in an amount less than 20,000.
16. This Warrant shall be governed by and construed in accordance with the
laws of the State of New York. The federal and state courts in the city
of New York shall have exclusive jurisdiction over this instrument and
the enforcement thereof. Service of process shall be effective if by
certified mail, return receipt requested. All notices shall be in
writing and shall be deemed given upon receipt by the party to whom
addressed. This instrument shall be enforceable by decrees of specific
performances well as other remedies. The Holder shall be entitled to
recover its reasonable legal fees and costs in enforcing its rights
hereunder.
IN WITNESS WHEREOF, USCI, INC. has caused this Warrant to be signed by
its duly authorized officers under Its corporate seal, and to be dated as of
the date set forth above.
USCI, INC.
By__________________________
<PAGE>
Exhibit to Primary Warrant
Neither this Warrant nor the shares of Common Stock issuable on exercise of
this Warrant have been registered under the Securities Act of 1933. None of
such securities may be transferred in the absence of registration under such
Act or an opinion of counsel to the effect that such registration is not
required.
USCI, INC.
WARRANT [SECONDARY]
DATED:
Number of Shares:
Holder:
Address:
_______________________________
1. THIS CERTIFIES THAT the Holder is entitled to purchase from USCI, INC.,
a Delaware corporation (hereinafter called the "Company"), the number of
shares of the Company's common stock ("Common Stock") set forth above, at an
exercise price equal to $5.00 per share. This Warrant may be exercised in
whole or in part at any time prior to expiration.
2. All rights granted under this Warrant shall expire on the fifth
anniversary of the date of issuance of this Warrant.
3. [omitted]
4. Notwithstanding anything to the contrary contained herein, Holder shall
have the right to exercise this Warrant at any time only so long as and to the
extent that, after taking into account any shares of Common Stock otherwise
beneficially owned by Holder (whether under any convertible notes owned by
Holder or otherwise) , such exercise would not cause the Holder then to be the
"beneficial owner" of more than 4.99% of the Company's then outstanding
Common Stock. For purposes hereof, the term "beneficial owner" shall have the
meaning ascribed to it in Section 13(d) of the Securities Exchange Act of
1934. The opinion of legal counsel to Holder, in form and substance
satisfactory to the Company and the Company's counsel, shall prevail in all
matters relating to the amount of Holder's beneficial ownership.
5. This Warrant and the Common Stock issuable on exercise of this Warrant
(the "Underlying Shares") may be transferred, sold, assigned or hypothecated,
only if registered by the Company under the Securities Act of 1933 (the "Act")
or if the Company has received from counsel to the Company a written opinion
to the effect that registration of the Warrant or the Underlying Shares is not
necessary in connection with such transfer, sale, assignment or hypothecation.
The Warrant and the Underlying Shares shall be appropriately legended to
reflect this restriction and stop transfer instructions shall apply. The
Holder shall through its counsel provide such information as is reasonably
necessary in connection with such opinion.
<PAGE>
6. The holder of this warrant is entitled to certain registration rights
under an Agreement dated of even date herewith (the "Purchase Agreement").
Upon each permitted transfer of this Warrant after the registration statement
has been declared effective, the Company will within two business days after
receipt of notice thereof supplement the registration statement to reflect the
name of the transferee as a selling shareholder thereunder.
7. The Company shall take whatever action is required by NASDAQ ("NASDAQ
Action") to approve the issuance of shares on conversion and exercise of the
Notes and the Warrants (as defined in the Purchase Agreement). The Company
represents and warrants, and Holder acknowledges, that without taking any
NASDAQ Action, the maximum number of shares which will be issued on conversion
of the Notes and exercise of the Warrants is 2,000,000, issuable on a first
converted-first exercised basis. Should NASDAQ Action not be completed by May
31, 1998, then until such NASDAQ Action is completed, the Company shall on
demand by Holder made at any time or times redeem any portion of the Warrant
designated for redemption (the "Redeemed Portion") at a redemption price equal
to the pre-tax profit Holder would have earned had Holder, at the close of
business on the date of its demand for redemption, exercised the Redeemed
Portion and simultaneously sold the shares received on such exercise at the
closing NASDAQ sales price on such date. The redemption price shall be
payable within five business days after demand for redemption is made, and
shall accrue interest payable on demand at 11% per annum.
8. Any permitted assignment of this Warrant shall be effected by the Holder
by (i) executing a standard form of assignment, (ii) surrendering the Warrant
for cancellation at the office of the Company, accompanied by the opinion of
counsel to the Company referred to above; and (iii) unless in connection with
an effective registration statement which covers the sale of this Warrant and
or the shares underlying the Warrant, delivery to the Company of a statement
by the transferee (in a form acceptable to the Company and its counsel) that
such Warrant is being acquired by the Holder for investment and not with a
view to its distribution or resale; whereupon the Company shall issue, in the
name or names specified by the Holder (including the Holder) new Warrants
representing in the aggregate rights to purchase the same number of Shares as
are purchasable under the Warrant surrendered. Such Warrants shall be
exercisable immediately upon any such assignment of the number of Warrants
assigned. The transferor will pay all relevant transfer taxes. Replacement
warrants shall bear the same legend as is borne by this Warrant.
9. The term "Holder" should be deemed to include any permitted record
transferee of this Warrant.
10. The Company covenants and agrees that all shares of Common Stock which
may be issued upon exercise hereof will, upon issuance, be duly and validly
issued, fully paid and non-assessable and no personal liability will attach to
the holder thereof. The Company further covenants and agrees that, during the
periods within which this Warrant may be exercised, the Company will at all
times have authorized and reserved a sufficient number of shares of Common
Stock for issuance upon exercise of this Warrant and all other Warrants.
11. This Warrant shall not entitle the Holder to any voting rights or other
rights as a stockholder of the Company.
<PAGE>
12. In the event that as a result of reorganization, merger, consolidation,
liquidation, recapitalization, stock split, combination of shares or stock
dividends payable with respect to such Common Stock, the outstanding shares of
Common Stock of the Company are at any time increased or decreased or changed
into or exchanged for a different number or kind of share or other security of
the Company or of another corporation, then appropriate adjustments in the
number and kind of such securities then subject to this Warrant and in the
exercise price hereunder shall be made effective as of the date of such
occurrence so that the position of the Holder upon exercise will be the same
as it would have been had it owned immediately prior to the occurrence of such
events the Common Stock subject to this Warrant. Such adjustment shall be
made successively whenever any event listed above shall occur and the Company
will notify the Holder of the Warrant of each such adjustment. Any fraction
of a share resulting from any adjustment shall be eliminated and the price per
share of the remaining shares subject to this Warrant adjusted accordingly.
13. The rights represented by this Warrant may be exercised at any time
within the period above specified by (i) surrender of this Warrant (with a
standard purchase form properly executed) at the principal executive office of
the Company (or such other office or agency of the Company as it may designate
by notice in writing to the Holder at the address of the Holder appearing on
the books of the Company); (ii) payment to the Company of the exercise price
for the number of Shares specified in the above-mentioned purchase form
together with applicable stock transfer taxes, if any; and (iii) unless in
connection with an effective registration statement which covers the sale of
the shares underlying the Warrant, the delivery to the Company of a statement
by the Holder (in a form acceptable to the Company and its counsel) that such
Shares are being acquired by the Holder for investment and not with a view to
their distribution or resale.
14. Within two business days following each receipt by the Company of the
documents required to exercise all any part of this Warrant as provided
herein, the Company shall DWAC or deliver certificates of the shares of common
stock so purchased as directed by Holder. Such certificates shall bear
appropriate restrictive legends in accordance with applicable securities laws,
but shall be unrestricted and bear no legends once the registration statement
referred to above has been declared effective.
15. In the event the Company breaches its obligation to DWAC or to deliver
certificates for shares of common stock or Secondary Warrants as required
hereunder, or timely to make any payment required under this Warrant, then,
without limiting Holder's other rights and remedies, the Company shall
forthwith pay to the Holder an amount accruing at the rate of $1,000 per day
for each day of such breach for each 20,000 shares of common stock subject to
this Warrant, with pro rata payments for shares in an amount less than 20,000.
16. This Warrant shall be governed by and construed in accordance with the
laws of the State of New York. The federal and state courts in the city of New
York shall have exclusive jurisdiction over this instrument and the
enforcement thereof. Service of process shall be effective if by certified
mail, return receipt requested. All notices shall be in writing and shall be
deemed given upon receipt by the party to whom addressed. This instrument
shall be enforceable by decrees of specific performances well as other
remedies. The Holder shall be entitled to recover its reasonable legal fees
and costs in enforcing its rights hereunder.
<PAGE>
IN WITNESS WHEREOF, USCI, INC. has caused this Warrant to be signed by
its duly authorized officers under Its corporate seal, and to be dated as of
the date set forth above.
USCI, INC.
By__________________________
THIS NOTE, THE WARRANTS ISSUABLE HEREUNDER AND THE COMMON STOCK ISSUABLE UPON
CONVERSION OF THIS NOTE AND EXERCISE OF THE WARRANTS HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED,
OR OTHERWISE TRANSFERRED, DISPOSED OF OR OFFERED FOR SALE, IN WHOLE OR IN
PART, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THAT ACT
COVERING THIS NOTE AND/OR SUCH COMMON STOCK, OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO USCI, INC., THAT AN EXEMPTION FROM REGISTRATION IS
AVAILABLE.
Principal Sum: $1,000,000
Holder: George Karfunkel
CONVERTIBLE RESTATED NOTE
(the "Note")
USCI, INC.
USCI, INC., a Delaware corporation (hereinafter called the "Company"), hereby
promises to pay the Principal Sum to the order of Holder on or before August
1, 1998. This Note shall accrue interest until maturity at the rate of 8% per
annum, payable at maturity. The Note shall accrue interest after maturity,
payable on demand, at the rate of 15% per annum. Interest shall be computed
on the basis of a 360-day year. All payments and prepayments hereunder shall
be applied first to accrued interest and then to principal.
1. This Note is one of the "Restated Notes" being issued under a Private
Placement Purchase Agreement between the Company and the Holder (the
"Purchase Agreement") in replacement of the Prior Notes referred to in the
Purchase Agreement. The term "Registration Statement" shall have the
meaning attributed thereto in the Purchase Agreement, and the term
"Effective Date" means the date on which the Registration Statement shall
be declared to be effective.
2. Issuance of Warrants.
(a) For each month (or portion thereof) from and after November 1,
1997 until the principal of this Note and all accrued interest
thereon is paid in full, the Company shall on the written demand
of Holder issue to Holder warrants in the form of Exhibit 1 (the
"Warrants") to purchase a number of shares of common stock of the
Company equal to 100,000 for each $1,000,000 of the initial
principal amount hereof (whether or not any partial prepayments
have been made against such initial principal amount), with
appropriate pro ration for initial principal amounts of less than
$1,000,000. Holder may make one or more demands as aforesaid at
any time or times until the 60th day after the later to occur of
the Effective Date or the payment in full of the principal and
accrued interest of this Note.
<PAGE>
(b) For example, if the initial principal amount of this Note is
$1,000,000, then notwithstanding that a $400,000 partial
prepayment is made by the Company on March 1, 1998, the Company
shall on Holder's demand made on or after March 1, 1998 issue to
Holder 500,000 Warrants. By way of further example, if any portion
of this Note thereafter remains outstanding on April 1, 1998, the
Company shall on demand of Holder made on or after such date issue
to Holder 100,000 additional Warrants.
3. Increase in Interest Rate.
(a) If the Effective Date has not occurred by June 30, 1998, then, in
addition to the Holder's other remedies the interest rate under
the Note shall be increased to 18% per annum (or, if less, the
highest rate permitted by law) until the Effective Date.
(b) If the Effective Date has not occurred by September 30, 1998,
then, in addition to the Holder's other remedies, the interest
rate under the Note shall be further increased to 24% per annum
(or, if less, the highest rate permitted by law) until the
Effective Date.
4. Conversion Rights.
(a) In the event that the principal and all accrued interest on this
Note have not been paid in full by the close of business on August
1, 1998, then until such principal and all accrued interest are
thereafter paid in full, the principal and accrued interest on
this Note shall be convertible by Subscriber from time to time, in
whole or in part, into shares of common stock of the Company
("Common Stock") at the lesser (the "Conversion Price") of $5 per
share (the "Cap") or 80% of the average closing sales price of
the Common Stock during the last five trading days prior to
conversion. If on any such date there are no sales prices, the
closing bid price for such date shall be used instead. Holder's
conversion rights are in addition to, and not in limitation of,
Holder's other rights and remedies to enforce its rights under
this Note. After maturity, the Company shall give to the Holder
not less than 30 days' and not more than 45 days' prior written
notice before the Company may repay this Note without Holder's
prior written consent or demand. In addition, without Holder's
prior written consent, the Company may not repay this Note after
maturity prior to the Effective Date.
(b) In the event that the Holder elects to exercise its conversion
rights hereunder, such conversion shall be effective when Holder
shall give to the Company written notice of such election (which
may be effected by facsimile). The Company shall, within two
business days after receipt by the Company of notice of conversion
and the Note being converted, DWAC to Holder (or, at Holder's
option, deliver to Holder certificates for) the shares of Common
Stock issuable on such conversion.
<PAGE>
(c) The Note shall be convertible at any time only to the extent that
Holder would not as a result of such conversion (and after taking
into account any and all other Common Stock then beneficially
owned by Holder, whether pursuant to the Warrants or otherwise)
beneficially own more than 4.99% of the then outstanding Common
Stock. Beneficial ownership shall be defined in accordance with
Rule 13d-3 under the Securities Exchange Act of 1934. The opinion
of counsel to Holder shall prevail in the event of any dispute on
the calculation of Holder's beneficial ownership.
(d) If any capital reorganization or reclassification of the common
stock, or consolidation, or merger of the Company with or into
another corporation, or the sale or conveyance of all or
substantially all of its assets to another corporation shall be
effected, then, as a condition precedent of such reorganization or
sale, the Cap shall be appropriately adjusted and the following
additional provision shall be made: The Holder of the Note shall
from and after the date of such reorganization or sale have the
right to receive (in lieu of the shares of common stock of the
Company immediately theretofore receivable with respect to the
Note, upon the exercise of conversion rights), such shares of
stock, securities or assets as would have been issued or payable
with respect to or in exchange for the number of outstanding
shares of such common stock immediately theretofore receivable
with respect to the Note (assuming the Note were then
convertible). In any such case, appropriate provision shall be
made with respect to the rights and interests of the Holder to the
end that such conversion rights (including, without limitation,
provisions for appropriate adjustments) shall thereafter be
applicable, as nearly as may be practicable in relation to any
shares of stock, securities or assets thereafter deliverable upon
the exercise thereof.
(e) The Company shall take whatever action is required by NASDAQ
("NASDAQ Action") to approve the issuance of shares on conversion
of the Notes and exercise of the Warrants issued to the
Subscribers (each such term as defined in the Purchase Agreement).
The Company represents and warrants, and Holder acknowledges, that
without taking any NASDAQ Action, the maximum number of shares
which will be issued on conversion of the Notes and exercise of
the Warrants is 2,000,000, issuable on a first converted-first
exercised basis. Should NASDAQ Action not be completed by May 31,
1998, then until such NASDAQ Action is completed, the Company
shall on demand by Holder made at any time or times redeem any
portion of the Note which Holder proposes to convert but may not
then convert because NASDAQ Action has not been completed. The
redemption price shall be equal to 125% of the principal and/or
interest proposed to be converted. The redemption price shall be
payable within five business days after demand for redemption is
made, and shall accrue interest payable in demand at 11% per
annum.
<PAGE>
5. The Company covenants and agrees that all shares of Common Stock which
may be issued upon conversion of this Note will, upon issuance, be duly
and validly issued, fully paid and non-assessable and no personal liability
will attach to the holder thereof. The Company shall at all times reserve
sufficient shares for issuance on conversion and exercise of the Notes and
the Warrants (as defined in the Purchase Agreement). The Company shall use
its best efforts promptly to list on NASDAQ all shares of Common Stock
which are issued upon conversion of this Note.
6. Purchase for Investment. The Holder, by acceptance hereof, acknowledges
that the Note, the Warrants (and the Common Stock into which the Note is
convertible and into which the Warrants are exercisable) have not been
registered under the Act, covenants and agrees with the Company that such
Holder is taking and holding such securities for investment purposes and
not with a view to, or for sale in connection with, a distribution thereof
and that such securities may not be assigned, hypothecated or otherwise
disposed of in the absence of an effective registration statement under the
Act or an opinion of counsel for the Holder, which counsel shall be
reasonably satisfactory to the Company, to the effect that such disposition
is in compliance with the Act, and represents and warrants that such Holder
is an "accredited investor" that such Holder has, or with its
representative has, such knowledge and experience in financial and business
matters to be capable of evaluating the merits and risks in respect of such
securities and is able to bear the economic risk of such investment.
7. Certain Payments. In the event the Company fails to give irrevocable
instructions to its transfer agent to DWAC or deliver certificates for
securities as required under this Note within two days after conversion ,
or if the Company fails timely to make a redemption payment as required
hereunder, then, without limiting Holder's other rights and remedies
(including, without limitation, rights and remedies available to Holder
upon an event of default), the Company shall forthwith pay to the Holder an
amount accruing at the rate of $500 per day for each day of such breach for
each $100,000 principal amount of this Note, with pro rata payments for
principal amounts of less than $100,000.
8. Events of Default and Acceleration of the Note.
(a) An "event of default" with respect to this Note shall exist if any
of the following shall occur, if:
(i) The Company shall breach or fail to comply with any
provision of this Note and such breach or failure shall
continue for 15 days after written notice by any Holder of
any Note to the Company.
(ii) A receiver, liquidator or trustee of the Company or of a
substantial part of its properties shall be appointed by
court order and such order shall remain in effect for more
than 15 days; or the Company shall be adjudicated bankrupt
or insolvent; or a substantial part of the property of the
Company shall be sequestered by court order and such order
shall remain in effect for more than 15 days; or a petition
to reorganize the Company under any bankruptcy,
reorganization or insolvency law shall be filed against the
Company and shall not be dismissed within 45 days after such
filing.
<PAGE>
(iii) The Company shall file a petition in voluntary bankruptcy or
request reorganization under any provision of any
bankruptcy, reorganization or insolvency law, or shall
consent to the filing of any petition against it under any
such law.
(iv) The Company shall make an assignment for the benefit of its
creditors, or admit in writing its inability to pay its
debts generally as they become due, or consent to the
appointment of a receiver, trustee or liquidator of the
Company, or of all or any substantial part of its
properties.
(b) If an event of default shall occur, the Holder may, in addition to
such Holder's other remedies, by written notice to the Company,
declare the principal amount of this Note, together with all
interest accrued thereon, to be due and payable immediately. Upon
any such declaration, such amount shall become immediately due and
payable and the Holder shall have all such rights and remedies
provided for under the terms of this Note and the Purchase
Agreement.
Miscellaneous. All notices, demands and other communications required or
permitted to be given hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person,
by telegram, by facsimile, recognized overnight mail carrier, telex or other
standard form of telecommunications, or by registered or certified mail,
postage prepaid, return receipt requested, addressed as follows: (a) if to the
Holder, to such address as such Holder shall furnish to the Company in
accordance with this Section, or (b) if to the Company, to it at its
headquarters office, or to such other address as the Company shall furnish to
the Holder in accordance with this Section. This Note shall be governed and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely within such state. The federal
and state courts sitting in the City of New York shall have exclusive
jurisdiction over all matters relating to this Agreement. Trial by jury is
expressly waived.
Service of process may be effected in the manner provided for notices
hereunder, and such service in such manner shall be deemed the equivalent of
personal service.
The Company waives protest, notice of protest, presentment, dishonor, notice
of dishonor and demand. If any provision of this Note shall for any reason be
held to be invalid or unenforceable, such invalidity or unenforceability shall
not affect any other provision hereof, but this Note shall be construed as if
such invalid or unenforceable provision had never been contained herein.
The waiver of any event of default or the failure of the Holder to exercise
any right or remedy to which it may be entitled shall not be deemed a waiver
of any subsequent event of default or of the Holder's right to exercise that
or any other right or remedy to which the Holder is entitled.
The Holder of this Note shall be entitled to recover its reasonable legal and
other costs of collecting on this Note, and such costs shall be deemed added
to the principal amount of this Note.
<PAGE>
In addition to all other remedies to which the Holder may be entitled
hereunder, Holder shall also be entitled to decrees of specific performance
without posting bond or other security.
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed on
the date set forth below
Dated: February 24, 1998
USCI, INC.
By: [authorized officer]
EXHIBIT 10.6
THIS NOTE, THE WARRANTS ISSUABLE HEREUNDER AND THE COMMON STOCK ISSUABLE UPON
CONVERSION OF THIS NOTE AND EXERCISE OF THE WARRANTS HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED,
OR OTHERWISE TRANSFERRED, DISPOSED OF OR OFFERED FOR SALE, IN WHOLE OR IN
PART, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THAT ACT
COVERING THIS NOTE AND/OR SUCH COMMON STOCK, OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO USCI, INC., THAT AN EXEMPTION FROM REGISTRATION IS
AVAILABLE.
Principal Sum: $1,000,000
Holder: Michael Karfunkel
CONVERTIBLE RESTATED NOTE
(the "Note")
USCI, INC.
USCI, INC., a Delaware corporation (hereinafter called the "Company"), hereby
promises to pay the Principal Sum to the order of Holder on or before August
1, 1998. This Note shall accrue interest until maturity at the rate of 8% per
annum, payable at maturity. The Note shall accrue interest after maturity,
payable on demand, at the rate of 15% per annum. Interest shall be computed
on the basis of a 360-day year. All payments and prepayments hereunder shall
be applied first to accrued interest and then to principal.
1. This Note is one of the "Restated Notes" being issued under a Private
Placement Purchase Agreement between the Company and the Holder (the
"Purchase Agreement") in replacement of the Prior Notes referred to in the
Purchase Agreement. The term "Registration Statement" shall have the
meaning attributed thereto in the Purchase Agreement, and the term
"Effective Date" means the date on which the Registration Statement shall
be declared to be effective.
2. Issuance of Warrants.
(a) For each month (or portion thereof) from and after November 1,
1997 until the principal of this Note and all accrued interest
thereon is paid in full, the Company shall on the written demand
of Holder issue to Holder warrants in the form of Exhibit 1 (the
"Warrants" ) to purchase a number of shares of common stock of the
Company equal to 100,000 for each $1,000,000 of the initial
principal amount hereof (whether or not any partial prepayments
have been made against such initial principal amount), with
appropriate pro ration for initial principal amounts of less than
$1,000,000. Holder may make one or more demands as aforesaid at
any time or times until the 60th day after the later to occur of
the Effective Date or the payment in full of the principal and
accrued interest of this Note.
<PAGE>
(b) For example, if the initial principal amount of this Note is
$1,000,000, then notwithstanding that a $400,000 partial
prepayment is made by the Company on March 1, 1998, the Company
shall on Holder's demand made on or after March 1, 1998 issue to
Holder 500,000 Warrants. By way of further example, if any portion
of this Note thereafter remains outstanding on April 1, 1998, the
Company shall on demand of Holder made on or after such date issue
to Holder 100,000 additional Warrants.
3. Increase in Interest Rate.
(a) If the Effective Date has not occurred by June 30, 1998, then, in
addition to the Holder's other remedies the interest rate under
the Note shall be increased to 18% per annum (or, if less, the
highest rate permitted by law) until the Effective Date.
(b) If the Effective Date has not occurred by September 30, 1998,
then, in addition to the Holder's other remedies, the interest
rate under the Note shall be further increased to 24% per annum
(or, if less, the highest rate permitted by law) until the
Effective Date.
4. Conversion Rights.
(a) In the event that the principal and all accrued interest on this
Note have not been paid in full by the close of business on August
1, 1998, then until such principal and all accrued interest are
thereafter paid in full, the principal and accrued interest on
this Note shall be convertible by Subscriber from time to time, in
whole or in part, into shares of common stock of the Company
("Common Stock") at the lesser (the "Conversion Price") of $5 per
share (the "Cap") or 80% of the average closing sales price of
the Common Stock during the last five trading days prior to
conversion. If on any such date there are no sales prices, the
closing bid price for such date shall be used instead. Holder's
conversion rights are in addition to, and not in limitation of,
Holder's other rights and remedies to enforce its rights under
this Note. After maturity, the Company shall give to the Holder
not less than 30 days' and not more than 45 days' prior written
notice before the Company may repay this Note without Holder's
prior written consent or demand. In addition, without Holder's
prior written consent, the Company may not repay this Note after
maturity prior to the Effective Date.
(b) In the event that the Holder elects to exercise its conversion
rights hereunder, such conversion shall be effective when Holder
shall give to the Company written notice of such election (which
may be effected by facsimile). The Company shall, within two
business days after receipt by the Company of notice of conversion
and the Note being converted, DWAC to Holder (or, at Holder's
option, deliver to Holder certificates for) the shares of Common
Stock issuable on such conversion.
<PAGE>
(c) The Note shall be convertible at any time only to the extent that
Holder would not as a result of such conversion (and after taking
into account any and all other Common Stock then beneficially
owned by Holder, whether pursuant to the Warrants or otherwise)
beneficially own more than 4.99% of the then outstanding Common
Stock. Beneficial ownership shall be defined in accordance with
Rule 13d-3 under the Securities Exchange Act of 1934. The opinion
of counsel to Holder shall prevail in the event of any dispute on
the calculation of Holder's beneficial ownership.
(d) If any capital reorganization or reclassification of the common
stock, or consolidation, or merger of the Company with or into
another corporation, or the sale or conveyance of all or
substantially all of its assets to another corporation shall be
effected, then, as a condition precedent of such reorganization or
sale, the Cap shall be appropriately adjusted and the following
additional provision shall be made: The Holder of the Note shall
from and after the date of such reorganization or sale have the
right to receive (in lieu of the shares of common stock of the
Company immediately theretofore receivable with respect to the
Note, upon the exercise of conversion rights), such shares of
stock, securities or assets as would have been issued or payable
with respect to or in exchange for the number of outstanding
shares of such common stock immediately theretofore receivable
with respect to the Note (assuming the Note were then
convertible). In any such case, appropriate provision shall be
made with respect to the rights and interests of the Holder to the
end that such conversion rights (including, without limitation,
provisions for appropriate adjustments) shall thereafter be
applicable, as nearly as may be practicable in relation to any
shares of stock, securities or assets thereafter deliverable upon
the exercise thereof.
(e) The Company shall take whatever action is required by NASDAQ
("NASDAQ Action") to approve the issuance of shares on conversion
of the Notes and exercise of the Warrants issued to the
Subscribers (each such term as defined in the Purchase Agreement).
The Company represents and warrants, and Holder acknowledges, that
without taking any NASDAQ Action, the maximum number of shares
which will be issued on conversion of the Notes and exercise of
the Warrants is 2,000,000, issuable on a first converted-first
exercised basis. Should NASDAQ Action not be completed by May 31,
1998, then until such NASDAQ Action is completed, the Company
shall on demand by Holder made at any time or times redeem any
portion of the Note which Holder proposes to convert but may not
then convert because NASDAQ Action has not been completed. The
redemption price shall be equal to 125% of the principal and/or
interest proposed to be converted. The redemption price shall be
payable within five business days after demand for redemption is
made, and shall accrue interest payable in demand at 11% per
annum.
<PAGE>
5. The Company covenants and agrees that all shares of Common Stock which
may be issued upon conversion of this Note will, upon issuance, be duly
and validly issued, fully paid and non-assessable and no personal liability
will attach to the holder thereof. The Company shall at all times reserve
sufficient shares for issuance on conversion and exercise of the Notes and
the Warrants (as defined in the Purchase Agreement). The Company shall use
its best efforts promptly to list on NASDAQ all shares of Common Stock
which are issued upon conversion of this Note.
6. Purchase for Investment. The Holder, by acceptance hereof, acknowledges
that the Note, the Warrants (and the Common Stock into which the Note is
convertible and into which the Warrants are exercisable) have not been
registered under the Act, covenants and agrees with the Company that such
Holder is taking and holding such securities for investment purposes and
not with a view to, or for sale in connection with, a distribution thereof
and that such securities may not be assigned, hypothecated or otherwise
disposed of in the absence of an effective registration statement under the
Act or an opinion of counsel for the Holder, which counsel shall be
reasonably satisfactory to the Company, to the effect that such disposition
is in compliance with the Act, and represents and warrants that such Holder
is an "accredited investor" that such Holder has, or with its
representative has, such knowledge and experience in financial and business
matters to be capable of evaluating the merits and risks in respect of such
securities and is able to bear the economic risk of such investment.
7. Certain Payments. In the event the Company fails to give irrevocable
instructions to its transfer agent to DWAC or deliver certificates for
securities as required under this Note within two days after conversion ,
or if the Company fails timely to make a redemption payment as required
hereunder, then, without limiting Holder's other rights and remedies
(including, without limitation, rights and remedies available to Holder
upon an event of default), the Company shall forthwith pay to the Holder an
amount accruing at the rate of $500 per day for each day of such breach for
each $100,000 principal amount of this Note, with pro rata payments for
principal amounts of less than $100,000.
8. Events of Default and Acceleration of the Note.
(a) An "event of default" with respect to this Note shall exist if any
of the following shall occur, if:
(i) The Company shall breach or fail to comply with any
provision of this Note and such breach or failure shall
continue for 15 days after written notice by any Holder of
any Note to the Company.
(ii) A receiver, liquidator or trustee of the Company or of a
substantial part of its properties shall be appointed by
court order and such order shall remain in effect for more
than 15 days; or the Company shall be adjudicated bankrupt
or insolvent; or a substantial part of the property of the
Company shall be sequestered by court order and such order
shall remain in effect for more than 15 days; or a petition
to reorganize the Company under any bankruptcy,
reorganization or insolvency law shall be filed against the
Company and shall not be dismissed within 45 days after such
filing.
<PAGE>
(iii) The Company shall file a petition in voluntary bankruptcy or
request reorganization under any provision of any
bankruptcy, reorganization or insolvency law, or shall
consent to the filing of any petition against it under any
such law.
(iv) The Company shall make an assignment for the benefit of its
creditors, or admit in writing its inability to pay its
debts generally as they become due, or consent to the
appointment of a receiver, trustee or liquidator of the
Company, or of all or any substantial part of its
properties.
(b) If an event of default shall occur, the Holder may, in addition to
such Holder's other remedies, by written notice to the Company,
declare the principal amount of this Note, together with all
interest accrued thereon, to be due and payable immediately. Upon
any such declaration, such amount shall become immediately due and
payable and the Holder shall have all such rights and remedies
provided for under the terms of this Note and the Purchase
Agreement.
Miscellaneous. All notices, demands and other communications required or
permitted to be given hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person,
by telegram, by facsimile, recognized overnight mail carrier, telex or other
standard form of telecommunications, or by registered or certified mail,
postage prepaid, return receipt requested, addressed as follows: (a) if to the
Holder, to such address as such Holder shall furnish to the Company in
accordance with this Section, or (b) if to the Company, to it at its
headquarters office, or to such other address as the Company shall furnish to
the Holder in accordance with this Section. This Note shall be governed and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely within such state. The federal
and state courts sitting in the City of New York shall have exclusive
jurisdiction over all matters relating to this Agreement. Trial by jury is
expressly waived.
Service of process may be effected in the manner provided for notices
hereunder, and such service in such manner shall be deemed the equivalent of
personal service.
The Company waives protest, notice of protest, presentment, dishonor, notice
of dishonor and demand. If any provision of this Note shall for any reason be
held to be invalid or unenforceable, such invalidity or unenforceability shall
not affect any other provision hereof, but this Note shall be construed as if
such invalid or unenforceable provision had never been contained herein.
The waiver of any event of default or the failure of the Holder to exercise
any right or remedy to which it may be entitled shall not be deemed a waiver
of any subsequent event of default or of the Holder's right to exercise that
or any other right or remedy to which the Holder is entitled.
The Holder of this Note shall be entitled to recover its reasonable legal and
other costs of collecting on this Note, and such costs shall be deemed added
to the principal amount of this Note.
<PAGE>
In addition to all other remedies to which the Holder may be entitled
hereunder, Holder shall also be entitled to decrees of specific performance
without posting bond or other security.
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed on
the date set forth below
Dated: February 24, 1998
USCI, INC.
By: [authorized officer]
EXHIBIT 10.7
THIS NOTE, THE WARRANTS ISSUABLE HEREUNDER AND THE COMMON STOCK ISSUABLE UPON
CONVERSION OF THIS NOTE AND EXERCISE OF THE WARRANTS HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED,
OR OTHERWISE TRANSFERRED, DISPOSED OF OR OFFERED FOR SALE, IN WHOLE OR IN
PART, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THAT ACT
COVERING THIS NOTE AND/OR SUCH COMMON STOCK, OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO USCI, INC., THAT AN EXEMPTION FROM REGISTRATION IS
AVAILABLE.
Principal Sum: $1,250,000
Holder: Laura Huberfeld/Naomi Bodner Partnership
CONVERTIBLE RESTATED NOTE
(the "Note")
USCI, INC.
USCI, INC., a Delaware corporation (hereinafter called the "Company"), hereby
promises to pay the Principal Sum to the order of Holder on or before August
1, 1998. This Note shall accrue interest until maturity at the rate of 8% per
annum, payable at maturity. The Note shall accrue interest after maturity,
payable on demand, at the rate of 15% per annum. Interest shall be computed
on the basis of a 360-day year. All payments and prepayments hereunder shall
be applied first to accrued interest and then to principal.
1. This Note is one of the "Restated Notes" being issued under a Private
Placement Purchase Agreement between the Company and the Holder (the
"Purchase Agreement") in replacement of the Prior Notes referred to in the
Purchase Agreement. The term "Registration Statement" shall have the
meaning attributed thereto in the Purchase Agreement, and the term
"Effective Date" means the date on which the Registration Statement shall
be declared to be effective.
2. Issuance of Warrants.
(a) For each month (or portion thereof) from and after November 1,
1997 until the principal of this Note and all accrued interest
thereon is paid in full, the Company shall on the written demand
of Holder issue to Holder warrants in the form of Exhibit 1 (the
"Warrants") to purchase a number of shares of common stock of the
Company equal to 100,000 for each $1,000,000 of the initial
principal amount hereof (whether or not any partial prepayments
have been made against such initial principal amount), with
appropriate pro ration for initial principal amounts of less than
$1,000,000. Holder may make one or more demands as aforesaid at
any time or times until the 60th day after the later to occur of
the Effective Date or the payment in full of the principal and
accrued interest of this Note.
<PAGE>
(b) For example, if the initial principal amount of this Note is
$1,000,000, then notwithstanding that a $400,000 partial
prepayment is made by the Company on March 1, 1998, the Company
shall on Holder's demand made on or after March 1, 1998 issue to
Holder 500,000 Warrants. By way of further example, if any portion
of this Note thereafter remains outstanding on April 1, 1998, the
Company shall on demand of Holder made on or after such date issue
to Holder 100,000 additional Warrants.
3. Increase in Interest Rate.
(a) If the Effective Date has not occurred by June 30, 1998, then, in
addition to the Holder's other remedies the interest rate under
the Note shall be increased to 18% per annum (or, if less, the
highest rate permitted by law) until the Effective Date.
(b) If the Effective Date has not occurred by September 30, 1998,
then, in addition to the Holder's other remedies, the interest
rate under the Note shall be further increased to 24% per annum
(or, if less, the highest rate permitted by law) until the
Effective Date.
4. Conversion Rights.
(a) In the event that the principal and all accrued interest on this
Note have not been paid in full by the close of business on August
1, 1998, then until such principal and all accrued interest are
thereafter paid in full, the principal and accrued interest on
this Note shall be convertible by Subscriber from time to time, in
whole or in part, into shares of common stock of the Company
("Common Stock") at the lesser (the "Conversion Price") of $5 per
share (the "Cap") or 80% of the average closing sales price of
the Common Stock during the last five trading days prior to
conversion. If on any such date there are no sales prices, the
closing bid price for such date shall be used instead. Holder's
conversion rights are in addition to, and not in limitation of,
Holder's other rights and remedies to enforce its rights under
this Note. After maturity, the Company shall give to the Holder
not less than 30 days' and not more than 45 days' prior written
notice before the Company may repay this Note without Holder's
prior written consent or demand. In addition, without Holder's
prior written consent, the Company may not repay this Note after
maturity prior to the Effective Date.
(b) In the event that the Holder elects to exercise its conversion
rights hereunder, such conversion shall be effective when Holder
shall give to the Company written notice of such election (which
may be effected by facsimile). The Company shall, within two
business days after receipt by the Company of notice of conversion
and the Note being converted, DWAC to Holder (or, at Holder's
option, deliver to Holder certificates for) the shares of Common
Stock issuable on such conversion.
<PAGE>
(c) The Note shall be convertible at any time only to the extent that
Holder would not as a result of such conversion (and after taking
into account any and all other Common Stock then beneficially
owned by Holder, whether pursuant to the Warrants or otherwise)
beneficially own more than 4.99% of the then outstanding Common
Stock. Beneficial ownership shall be defined in accordance with
Rule 13d-3 under the Securities Exchange Act of 1934. The opinion
of counsel to Holder shall prevail in the event of any dispute on
the calculation of Holder's beneficial ownership.
(d) If any capital reorganization or reclassification of the common
stock, or consolidation, or merger of the Company with or into
another corporation, or the sale or conveyance of all or
substantially all of its assets to another corporation shall be
effected, then, as a condition precedent of such reorganization or
sale, the Cap shall be appropriately adjusted and the following
additional provision shall be made: The Holder of the Note shall
from and after the date of such reorganization or sale have the
right to receive (in lieu of the shares of common stock of the
Company immediately theretofore receivable with respect to the
Note, upon the exercise of conversion rights), such shares of
stock, securities or assets as would have been issued or payable
with respect to or in exchange for the number of outstanding
shares of such common stock immediately theretofore receivable
with respect to the Note (assuming the Note were then
convertible). In any such case, appropriate provision shall be
made with respect to the rights and interests of the Holder to the
end that such conversion rights (including, without limitation,
provisions for appropriate adjustments) shall thereafter be
applicable, as nearly as may be practicable in relation to any
shares of stock, securities or assets thereafter deliverable upon
the exercise thereof.
(e) The Company shall take whatever action is required by NASDAQ
("NASDAQ Action") to approve the issuance of shares on conversion
of the Notes and exercise of the Warrants issued to the
Subscribers (each such term as defined in the Purchase Agreement).
The Company represents and warrants, and Holder acknowledges, that
without taking any NASDAQ Action, the maximum number of shares
which will be issued on conversion of the Notes and exercise of
the Warrants is 2,000,000, issuable on a first converted-first
exercised basis. Should NASDAQ Action not be completed by May 31,
1998, then until such NASDAQ Action is completed, the Company
shall on demand by Holder made at any time or times redeem any
portion of the Note which Holder proposes to convert but may not
then convert because NASDAQ Action has not been completed. The
redemption price shall be equal to 125% of the principal and/or
interest proposed to be converted. The redemption price shall be
payable within five business days after demand for redemption is
made, and shall accrue interest payable in demand at 11% per
annum.
<PAGE>
5. The Company covenants and agrees that all shares of Common Stock which
may be issued upon conversion of this Note will, upon issuance, be duly
and validly issued, fully paid and non-assessable and no personal liability
will attach to the holder thereof. The Company shall at all times reserve
sufficient shares for issuance on conversion and exercise of the Notes and
the Warrants (as defined in the Purchase Agreement). The Company shall use
its best efforts promptly to list on NASDAQ all shares of Common Stock
which are issued upon conversion of this Note.
6. Purchase for Investment. The Holder, by acceptance hereof, acknowledges
that the Note, the Warrants (and the Common Stock into which the Note is
convertible and into which the Warrants are exercisable) have not been
registered under the Act, covenants and agrees with the Company that such
Holder is taking and holding such securities for investment purposes and
not with a view to, or for sale in connection with, a distribution thereof
and that such securities may not be assigned, hypothecated or otherwise
disposed of in the absence of an effective registration statement under the
Act or an opinion of counsel for the Holder, which counsel shall be
reasonably satisfactory to the Company, to the effect that such disposition
is in compliance with the Act, and represents and warrants that such Holder
is an "accredited investor" that such Holder has, or with its
representative has, such knowledge and experience in financial and business
matters to be capable of evaluating the merits and risks in respect of such
securities and is able to bear the economic risk of such investment.
7. Certain Payments. In the event the Company fails to give irrevocable
instructions to its transfer agent to DWAC or deliver certificates for
securities as required under this Note within two days after conversion ,
or if the Company fails timely to make a redemption payment as required
hereunder, then, without limiting Holder's other rights and remedies
(including, without limitation, rights and remedies available to Holder
upon an event of default), the Company shall forthwith pay to the Holder an
amount accruing at the rate of $500 per day for each day of such breach for
each $100,000 principal amount of this Note, with pro rata payments for
principal amounts of less than $100,000.
8. Events of Default and Acceleration of the Note.
(a) An "event of default" with respect to this Note shall exist if any
of the following shall occur, if:
(i) The Company shall breach or fail to comply with any
provision of this Note and such breach or failure shall
continue for 15 days after written notice by any Holder of
any Note to the Company.
(ii) A receiver, liquidator or trustee of the Company or of a
substantial part of its properties shall be appointed by
court order and such order shall remain in effect for more
than 15 days; or the Company shall be adjudicated bankrupt
or insolvent; or a substantial part of the property of the
Company shall be sequestered by court order and such order
shall remain in effect for more than 15 days; or a petition
to reorganize the Company under any bankruptcy,
reorganization or insolvency law shall be filed against the
Company and shall not be dismissed within 45 days after such
filing.
<PAGE>
(iii) The Company shall file a petition in voluntary bankruptcy or
request reorganization under any provision of any
bankruptcy, reorganization or insolvency law, or shall
consent to the filing of any petition against it under any
such law.
(iv) The Company shall make an assignment for the benefit of its
creditors, or admit in writing its inability to pay its
debts generally as they become due, or consent to the
appointment of a receiver, trustee or liquidator of the
Company, or of all or any substantial part of its
properties.
(b) If an event of default shall occur, the Holder may, in addition to
such Holder's other remedies, by written notice to the Company,
declare the principal amount of this Note, together with all
interest accrued thereon, to be due and payable immediately. Upon
any such declaration, such amount shall become immediately due and
payable and the Holder shall have all such rights and remedies
provided for under the terms of this Note and the Purchase
Agreement.
Miscellaneous. All notices, demands and other communications required or
permitted to be given hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person,
by telegram, by facsimile, recognized overnight mail carrier, telex or other
standard form of telecommunications, or by registered or certified mail,
postage prepaid, return receipt requested, addressed as follows: (a) if to the
Holder, to such address as such Holder shall furnish to the Company in
accordance with this Section, or (b) if to the Company, to it at its
headquarters office, or to such other address as the Company shall furnish to
the Holder in accordance with this Section. This Note shall be governed and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely within such state. The federal
and state courts sitting in the City of New York shall have exclusive
jurisdiction over all matters relating to this Agreement. Trial by jury is
expressly waived.
Service of process may be effected in the manner provided for notices
hereunder, and such service in such manner shall be deemed the equivalent of
personal service.
The Company waives protest, notice of protest, presentment, dishonor, notice
of dishonor and demand. If any provision of this Note shall for any reason be
held to be invalid or unenforceable, such invalidity or unenforceability shall
not affect any other provision hereof, but this Note shall be construed as if
such invalid or unenforceable provision had never been contained herein.
The waiver of any event of default or the failure of the Holder to exercise
any right or remedy to which it may be entitled shall not be deemed a waiver
of any subsequent event of default or of the Holder's right to exercise that
or any other right or remedy to which the Holder is entitled.
The Holder of this Note shall be entitled to recover its reasonable legal and
other costs of collecting on this Note, and such costs shall be deemed added
to the principal amount of this Note.
<PAGE>
In addition to all other remedies to which the Holder may be entitled
hereunder, Holder shall also be entitled to decrees of specific performance
without posting bond or other security.
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed on
the date set forth below
Dated: February 24, 1998
USCI, INC.
By: [authorized officer]
EXHIBIT 10.8
THIS NOTE, THE WARRANTS ISSUABLE HEREUNDER AND THE COMMON STOCK ISSUABLE UPON
CONVERSION OF THIS NOTE AND EXERCISE OF THE WARRANTS HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED,
OR OTHERWISE TRANSFERRED, DISPOSED OF OR OFFERED FOR SALE, IN WHOLE OR IN
PART, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THAT ACT
COVERING THIS NOTE AND/OR SUCH COMMON STOCK, OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO USCI, INC., THAT AN EXEMPTION FROM REGISTRATION IS
AVAILABLE.
Principal Sum: $750,000
Holder: Huberfeld Bodner Family Foundation, Inc.
CONVERTIBLE RESTATED NOTE
(the "Note")
USCI, INC.
USCI, INC., a Delaware corporation (hereinafter called the "Company"), hereby
promises to pay the Principal Sum to the order of Holder on or before August
1, 1998. This Note shall accrue interest until maturity at the rate of 8% per
annum, payable at maturity. The Note shall accrue interest after maturity,
payable on demand, at the rate of 15% per annum. Interest shall be computed
on the basis of a 360-day year. All payments and prepayments hereunder shall
be applied first to accrued interest and then to principal.
1. This Note is one of the "Restated Notes" being issued under a Private
Placement Purchase Agreement between the Company and the Holder (the
"Purchase Agreement") in replacement of the Prior Notes referred to in the
Purchase Agreement. The term "Registration Statement" shall have the
meaning attributed thereto in the Purchase Agreement, and the term
"Effective Date" means the date on which the Registration Statement shall
be declared to be effective.
2. Issuance of Warrants.
(a) For each month (or portion thereof) from and after November 1,
1997 until the principal of this Note and all accrued interest
thereon is paid in full, the Company shall on the written demand
of Holder issue to Holder warrants in the form of Exhibit 1 (the
"Warrants" ) to purchase a number of shares of common stock of the
Company equal to 100,000 for each $1,000,000 of the initial
principal amount hereof (whether or not any partial prepayments
have been made against such initial principal amount), with
appropriate pro ration for initial principal amounts of less than
$1,000,000. Holder may make one or more demands as aforesaid at
any time or times until the 60th day after the later to occur of
the Effective Date or the payment in full of the principal and
accrued interest of this Note.
<PAGE>
(b) For example, if the initial principal amount of this Note is
$1,000,000, then notwithstanding that a $400,000 partial
prepayment is made by the Company on March 1, 1998, the Company
shall on Holder's demand made on or after March 1, 1998 issue to
Holder 500,000 Warrants. By way of further example, if any portion
of this Note thereafter remains outstanding on April 1, 1998, the
Company shall on demand of Holder made on or after such date issue
to Holder 100,000 additional Warrants.
3. Increase in Interest Rate.
(a) If the Effective Date has not occurred by June 30, 1998, then, in
addition to the Holder's other remedies the interest rate under
the Note shall be increased to 18% per annum (or, if less, the
highest rate permitted by law) until the Effective Date.
(b) If the Effective Date has not occurred by September 30, 1998,
then, in addition to the Holder's other remedies, the interest
rate under the Note shall be further increased to 24% per annum
(or, if less, the highest rate permitted by law) until the
Effective Date.
4. Conversion Rights.
(a) In the event that the principal and all accrued interest on this
Note have not been paid in full by the close of business on August
1, 1998, then until such principal and all accrued interest are
thereafter paid in full, the principal and accrued interest on
this Note shall be convertible by Subscriber from time to time, in
whole or in part, into shares of common stock of the Company
("Common Stock") at the lesser (the "Conversion Price") of $5 per
share (the "Cap") or 80% of the average closing sales price of the
Common Stock during the last five trading days prior to
conversion. If on any such date there are no sales prices, the
closing bid price for such date shall be used instead. Holder's
conversion rights are in addition to, and not in limitation of,
Holder's other rights and remedies to enforce its rights under
this Note. After maturity, the Company shall give to the Holder
not less than 30 days' and not more than 45 days' prior written
notice before the Company may repay this Note without Holder's
prior written consent or demand. In addition, without Holder's
prior written consent, the Company may not repay this Note after
maturity prior to the Effective Date.
(b) In the event that the Holder elects to exercise its conversion
rights hereunder, such conversion shall be effective when Holder
shall give to the Company written notice of such election (which
may be effected by facsimile). The Company shall, within two
business days after receipt by the Company of notice of conversion
and the Note being converted, DWAC to Holder (or, at Holder's
option, deliver to Holder certificates for) the shares of Common
Stock issuable on such conversion.
<PAGE>
(c) The Note shall be convertible at any time only to the extent that
Holder would not as a result of such conversion (and after taking
into account any and all other Common Stock then beneficially
owned by Holder, whether pursuant to the Warrants or otherwise)
beneficially own more than 4.99% of the then outstanding Common
Stock. Beneficial ownership shall be defined in accordance with
Rule 13d-3 under the Securities Exchange Act of 1934. The opinion
of counsel to Holder shall prevail in the event of any dispute on
the calculation of Holder's beneficial ownership.
(d) If any capital reorganization or reclassification of the common
stock, or consolidation, or merger of the Company with or into
another corporation, or the sale or conveyance of all or
substantially all of its assets to another corporation shall be
effected, then, as a condition precedent of such reorganization or
sale, the Cap shall be appropriately adjusted and the following
additional provision shall be made: The Holder of the Note shall
from and after the date of such reorganization or sale have the
right to receive (in lieu of the shares of common stock of the
Company immediately theretofore receivable with respect to the
Note, upon the exercise of conversion rights), such shares of
stock, securities or assets as would have been issued or payable
with respect to or in exchange for the number of outstanding
shares of such common stock immediately theretofore receivable
with respect to the Note (assuming the Note were then
convertible). In any such case, appropriate provision shall be
made with respect to the rights and interests of the Holder to the
end that such conversion rights (including, without limitation,
provisions for appropriate adjustments) shall thereafter be
applicable, as nearly as may be practicable in relation to any
shares of stock, securities or assets thereafter deliverable upon
the exercise thereof.
(e) The Company shall take whatever action is required by NASDAQ
("NASDAQ Action") to approve the issuance of shares on conversion
of the Notes and exercise of the Warrants issued to the
Subscribers (each such term as defined in the Purchase Agreement).
The Company represents and warrants, and Holder acknowledges, that
without taking any NASDAQ Action, the maximum number of shares
which will be issued on conversion of the Notes and exercise of
the Warrants is 2,000,000, issuable on a first converted-first
exercised basis. Should NASDAQ Action not be completed by May 31,
1998, then until such NASDAQ Action is completed, the Company
shall on demand by Holder made at any time or times redeem any
portion of the Note which Holder proposes to convert but may not
then convert because NASDAQ Action has not been completed. The
redemption price shall be equal to 125% of the principal and/or
interest proposed to be converted. The redemption price shall be
payable within five business days after demand for redemption is
made, and shall accrue interest payable in demand at 11% per
annum.
<PAGE>
5. The Company covenants and agrees that all shares of Common Stock which
may be issued upon conversion of this Note will, upon issuance, be duly
and validly issued, fully paid and non-assessable and no personal liability
will attach to the holder thereof. The Company shall at all times reserve
sufficient shares for issuance on conversion and exercise of the Notes and
the Warrants (as defined in the Purchase Agreement). The Company shall use
its best efforts promptly to list on NASDAQ all shares of Common Stock
which are issued upon conversion of this Note.
6. Purchase for Investment. The Holder, by acceptance hereof, acknowledges
that the Note, the Warrants (and the Common Stock into which the Note is
convertible and into which the Warrants are exercisable) have not been
registered under the Act, covenants and agrees with the Company that such
Holder is taking and holding such securities for investment purposes and
not with a view to, or for sale in connection with, a distribution thereof
and that such securities may not be assigned, hypothecated or otherwise
disposed of in the absence of an effective registration statement under the
Act or an opinion of counsel for the Holder, which counsel shall be
reasonably satisfactory to the Company, to the effect that such disposition
is in compliance with the Act, and represents and warrants that such Holder
is an "accredited investor" that such Holder has, or with its
representative has, such knowledge and experience in financial and business
matters to be capable of evaluating the merits and risks in respect of such
securities and is able to bear the economic risk of such investment.
7. Certain Payments. In the event the Company fails to give irrevocable
instructions to its transfer agent to DWAC or deliver certificates for
securities as required under this Note within two days after conversion ,
or if the Company fails timely to make a redemption payment as required
hereunder, then, without limiting Holder's other rights and remedies
(including, without limitation, rights and remedies available to Holder
upon an event of default), the Company shall forthwith pay to the Holder an
amount accruing at the rate of $500 per day for each day of such breach for
each $100,000 principal amount of this Note, with pro rata payments for
principal amounts of less than $100,000.
8. Events of Default and Acceleration of the Note.
(a) An "event of default" with respect to this Note shall exist if any
of the following shall occur, if:
(i) The Company shall breach or fail to comply with any
provision of this Note and such breach or failure shall
continue for 15 days after written notice by any Holder of
any Note to the Company.
(ii) A receiver, liquidator or trustee of the Company or of a
substantial part of its properties shall be appointed by
court order and such order shall remain in effect for more
than 15 days; or the Company shall be adjudicated bankrupt
or insolvent; or a substantial part of the property of the
Company shall be sequestered by court order and such order
shall remain in effect for more than 15 days; or a petition
to reorganize the Company under any bankruptcy,
reorganization or insolvency law shall be filed against the
Company and shall not be dismissed within 45 days after such
filing.
<PAGE>
(iii) The Company shall file a petition in voluntary bankruptcy or
request reorganization under any provision of any
bankruptcy, reorganization or insolvency law, or shall
consent to the filing of any petition against it under any
such law.
(iv) The Company shall make an assignment for the benefit of its
creditors, or admit in writing its inability to pay its
debts generally as they become due, or consent to the
appointment of a receiver, trustee or liquidator of the
Company, or of all or any substantial part of its
properties.
(b) If an event of default shall occur, the Holder may, in addition to
such Holder's other remedies, by written notice to the Company,
declare the principal amount of this Note, together with all
interest accrued thereon, to be due and payable immediately. Upon
any such declaration, such amount shall become immediately due and
payable and the Holder shall have all such rights and remedies
provided for under the terms of this Note and the Purchase
Agreement.
Miscellaneous. All notices, demands and other communications required or
permitted to be given hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person,
by telegram, by facsimile, recognized overnight mail carrier, telex or other
standard form of telecommunications, or by registered or certified mail,
postage prepaid, return receipt requested, addressed as follows: (a) if to the
Holder, to such address as such Holder shall furnish to the Company in
accordance with this Section, or (b) if to the Company, to it at its
headquarters office, or to such other address as the Company shall furnish to
the Holder in accordance with this Section. This Note shall be governed and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely within such state. The federal
and state courts sitting in the City of New York shall have exclusive
jurisdiction over all matters relating to this Agreement. Trial by jury is
expressly waived.
Service of process may be effected in the manner provided for notices
hereunder, and such service in such manner shall be deemed the equivalent of
personal service.
The Company waives protest, notice of protest, presentment, dishonor, notice
of dishonor and demand. If any provision of this Note shall for any reason be
held to be invalid or unenforceable, such invalidity or unenforceability shall
not affect any other provision hereof, but this Note shall be construed as if
such invalid or unenforceable provision had never been contained herein.
The waiver of any event of default or the failure of the Holder to exercise
any right or remedy to which it may be entitled shall not be deemed a waiver
of any subsequent event of default or of the Holder's right to exercise that
or any other right or remedy to which the Holder is entitled.
The Holder of this Note shall be entitled to recover its reasonable legal and
other costs of collecting on this Note, and such costs shall be deemed added
to the principal amount of this Note.
<PAGE>
In addition to all other remedies to which the Holder may be entitled
hereunder, Holder shall also be entitled to decrees of specific performance
without posting bond or other security.
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed on
the date set forth below
Dated: February 24, 1998
USCI, INC.
By: [authorized officer]
EXHIBIT 10.9
Neither this Warrant nor the shares of Common Stock issuable on exercise of
this Warrant have been registered under the Securities Act of 1933. None of
such securities may be transferred in the absence of registration under such
Act or an opinion of counsel to the effect that such registration is not
required.
USCI, INC.
WARRANT [PRIMARY]
DATED: February 24, 1998
Number of Shares: 500,000
Holder: George Karfunkel
Address: 6201 15 Ave., Brooklyn NY 11219
1. THIS CERTIFIES THAT the Holder is entitled to purchase from USCI, INC.,
a Delaware corporation (hereinafter called the "Company"), the number of
shares of the Company's common stock ("Common Stock") set forth above,
at an exercise price equal to $5.00 per share. This Warrant may be
exercised in whole or in part at any time prior to expiration.
2. All rights granted under this Warrant shall expire on the fifth
anniversary of the date of issuance of this Warrant.
3. Upon each exercise of this Warrant (the "Primary Warrant") as to any
number shares, the Company shall also within two days after such exercise
issue to Holder a Warrant in the form of the Secondary Warrant attached
as an exhibit hereto (a "Secondary Warrant") to purchase the same number
of shares.
4. Notwithstanding anything to the contrary contained herein, Holder shall
have the right at any time to exercise this Warrant only so long as and
to the extent that, after taking into account any shares of Common Stock
otherwise beneficially owned by Holder (whether under any convertible
notes owned by Holder or otherwise) , such exercise would not cause the
Holder then to be the "beneficial owner" of more than 4.99% of the
Company's then outstanding Common Stock. For purposes hereof, the term
"beneficial owner" shall have the meaning ascribed to it in Section 13(d)
of the Securities Exchange Act of 1934. The opinion of legal counsel to
Holder, in form and substance satisfactory to the Company and the
Company's counsel, shall prevail in all matters relating to the amount of
Holder's beneficial ownership.
<PAGE>
5. This Warrant and the Common Stock issuable on exercise of this Warrant
(the "Underlying Shares") may be transferred, sold, assigned or
hypothecated, only if registered by the Company under the Securities Act
of 1933 (the "Act") or if the Company has received from counsel to the
Company a written opinion to the effect that registration of the Warrant
or the Underlying Shares is not necessary in connection with such
transfer, sale, assignment or hypothecation. The Warrant and the
Underlying Shares shall be appropriately legended to reflect this
restriction and stop transfer instructions shall apply. The Holder shall
through its counsel provide such information as is reasonably necessary
in connection with such opinion.
6. The holder of this warrant is entitled to certain registration rights
under an Agreement dated of even date herewith (the "Purchase
Agreement"). Upon each permitted transfer of this Warrant after the
registration statement has been declared effective, the Company will
within two business days after receipt of notice thereof supplement the
registration statement to reflect the name of the transferee as a selling
shareholder thereunder.
7. The Company shall take whatever action is required by NASDAQ ("NASDAQ
Action") to approve the issuance of shares on conversion and exercise of
the Notes and the Warrants (as defined in the Purchase Agreement). The
Company represents and warrants, and Holder acknowledges, that without
taking any NASDAQ Action, the maximum number of shares which will be
issued on conversion of the Notes and exercise of the Warrants is
2,000,000, issuable on a first converted-first exercised basis. Should
NASDAQ Action not be completed by May 31, 1998, then until such NASDAQ
Action is completed, the Company shall on demand by Holder made at any
time or times redeem any portion of the Warrant designated for redemption
(the "Redeemed Portion") at a redemption price equal to the pre-tax
profit Holder would have earned had Holder, at the close of business on
the date of its demand for redemption, exercised the Redeemed Portion and
simultaneously sold the shares received on such exercise at the closing
NASDAQ sales price on such date. The redemption price shall be payable
within five business days after demand for redemption is made, and shall
accrue interest payable on demand at 11% per annum.
8. Any permitted assignment of this Warrant shall be effected by the Holder
by (i) executing a standard form of assignment, (ii) surrendering the
Warrant for cancellation at the office of the Company, accompanied by the
opinion of counsel to the Company referred to above; and (iii) unless in
connection with an effective registration statement which covers the sale
of this Warrant and or the shares underlying the Warrant, delivery to the
Company of a statement by the transferee (in a form acceptable to the
Company and its counsel) that such Warrant is being acquired by the
Holder for investment and not with a view to its distribution or resale;
whereupon the Company shall issue, in the name or names specified by the
Holder (including the Holder) new Warrants representing in the aggregate
rights to purchase the same number of Shares as are purchasable under the
Warrant surrendered. Such Warrants shall be exercisable immediately upon
any such assignment of the number of Warrants assigned. The transferor
will pay all relevant transfer taxes. Replacement warrants shall bear the
same legend as is borne by this Warrant.
9. The term "Holder" should be deemed to include any permitted record
transferee of this Warrant.
<PAGE>
10. The Company covenants and agrees that all shares of Common Stock and all
Secondary Warrants which may be issued upon exercise hereof will, upon
issuance, be duly and validly issued, fully paid and non-assessable and
no personal liability will attach to the holder thereof. The Company
further covenants and agrees that, during the periods within which this
Warrant may be exercised, the Company will at all times have authorized
and reserved a sufficient number of shares of Common Stock for issuance
upon exercise of this Warrant and all other Warrants.
11. This Warrant shall not entitle the Holder to any voting rights or other
rights as a stockholder of the Company.
12. In the event that as a result of reorganization, merger, consolidation,
liquidation, recapitalization, stock split, combination of shares or
stock dividends payable with respect to such Common Stock, the
outstanding shares of Common Stock of the Company are at any time
increased or decreased or changed into or exchanged for a different
number or kind of share or other security of the Company or of another
corporation, then appropriate adjustments in the number and kind of such
securities then subject to this Warrant and in the exercise price
hereunder shall be made effective as of the date of such occurrence so
that the position of the Holder upon exercise will be the same as it
would have been had it owned immediately prior to the occurrence of such
events the Common Stock subject to this Warrant. Such adjustment shall
be made successively whenever any event listed above shall occur and the
Company will notify the Holder of the Warrant of each such adjustment.
Any fraction of a share resulting from any adjustment shall be eliminated
and the price per share of the remaining shares subject to this Warrant
adjusted accordingly.
13. The rights represented by this Warrant may be exercised at any time
within the period above specified by (i) surrender of this Warrant (with
a standard purchase form properly executed) at the principal executive
office of the Company (or such other office or agency of the Company as
it may designate by notice in writing to the Holder at the address of the
Holder appearing on the books of the Company); (ii) payment to the
Company of the exercise price for the number of Shares specified in the
above-mentioned purchase form together with applicable stock transfer
taxes, if any; and (iii) unless in connection with an effective
registration statement which covers the sale of the shares underlying the
Warrant, the delivery to the Company of a statement by the Holder in a
form acceptable to the Company and its counsel) that such Shares are
being acquired by the Holder for investment and not with a view to their
distribution or resale.
14. Within two business days following each receipt by the Company of the
documents required to exercise all any part of this Warrant as provided
herein, the Company shall DWAC or deliver certificates of the shares of
common stock so purchased as directed by Holder, and shall also deliver
to Holder a warrant certificate for the Secondary Warrants issuable as a
result of such exercise. Such certificates shall bear appropriate
restrictive legends in accordance with applicable securities laws, but
shall be unrestricted and bear no legends once the registration statement
referred to above has been declared effective.
<PAGE>
15. In the event the Company breaches its obligation to DWAC or to deliver
certificates for shares of common stock or Secondary Warrants as required
hereunder, or timely to make any payment required under this Warrant,
then, without limiting Holder's other rights and remedies, the Company
shall forthwith pay to the Holder an amount accruing at the rate of
$1,000 per day for each day of such breach for each 20,000 shares of
common stock subject to this Warrant, with pro rata payments for shares
in an amount less than 20,000.
16. This Warrant shall be governed by and construed in accordance with the
laws of the State of New York. The federal and state courts in the city
of New York shall have exclusive jurisdiction over this instrument and
the enforcement thereof. Service of process shall be effective if by
certified mail, return receipt requested. All notices shall be in
writing and shall be deemed given upon receipt by the party to whom
addressed. This instrument shall be enforceable by decrees of specific
performances well as other remedies. The Holder shall be entitled to
recover its reasonable legal fees and costs in enforcing its rights
hereunder.
IN WITNESS WHEREOF, USCI, INC. has caused this Warrant to be signed by
its duly authorized officers under Its corporate seal, and to be dated as of
the date set forth above.
USCI, INC.
By [authorized officer]
EXHIBIT 10.10
Neither this Warrant nor the shares of Common Stock issuable on exercise of
this Warrant have been registered under the Securities Act of 1933. None of
such securities may be transferred in the absence of registration under such
Act or an opinion of counsel to the effect that such registration is not
required.
USCI, INC.
WARRANT [PRIMARY]
DATED: February 24, 1998
Number of Shares: 500,000
Holder: Michael Karfunkel
Address: 6201 15 Ave., Brooklyn NY 11219
1. THIS CERTIFIES THAT the Holder is entitled to purchase from USCI, INC.,
a Delaware corporation (hereinafter called the "Company"), the number of
shares of the Company's common stock ("Common Stock") set forth above,
at an exercise price equal to $5.00 per share. This Warrant may be
exercised in whole or in part at any time prior to expiration.
2. All rights granted under this Warrant shall expire on the fifth
anniversary of the date of issuance of this Warrant.
3. Upon each exercise of this Warrant (the "Primary Warrant") as to any
number shares, the Company shall also within two days after such exercise
issue to Holder a Warrant in the form of the Secondary Warrant attached
as an exhibit hereto (a "Secondary Warrant") to purchase the same number
of shares.
4. Notwithstanding anything to the contrary contained herein, Holder shall
have the right at any time to exercise this Warrant only so long as and
to the extent that, after taking into account any shares of Common Stock
otherwise beneficially owned by Holder (whether under any convertible
notes owned by Holder or otherwise) , such exercise would not cause the
Holder then to be the "beneficial owner" of more than 4.99% of the
Company's then outstanding Common Stock. For purposes hereof, the term
"beneficial owner" shall have the meaning ascribed to it in Section 13(d)
of the Securities Exchange Act of 1934. The opinion of legal counsel to
Holder, in form and substance satisfactory to the Company and the
Company's counsel, shall prevail in all matters relating to the amount of
Holder's beneficial ownership.
<PAGE>
5. This Warrant and the Common Stock issuable on exercise of this Warrant
(the "Underlying Shares") may be transferred, sold, assigned or
hypothecated, only if registered by the Company under the Securities Act
of 1933 (the "Act") or if the Company has received from counsel to the
Company a written opinion to the effect that registration of the Warrant
or the Underlying Shares is not necessary in connection with such
transfer, sale, assignment or hypothecation. The Warrant and the
Underlying Shares shall be appropriately legended to reflect this
restriction and stop transfer instructions shall apply. The Holder shall
through its counsel provide such information as is reasonably necessary
in connection with such opinion.
6. The holder of this warrant is entitled to certain registration rights
under an Agreement dated of even date herewith (the "Purchase
Agreement"). Upon each permitted transfer of this Warrant after the
registration statement has been declared effective, the Company will
within two business days after receipt of notice thereof supplement the
registration statement to reflect the name of the transferee as a selling
shareholder thereunder.
7. The Company shall take whatever action is required by NASDAQ ("NASDAQ
Action") to approve the issuance of shares on conversion and exercise of
the Notes and the Warrants (as defined in the Purchase Agreement). The
Company represents and warrants, and Holder acknowledges, that without
taking any NASDAQ Action, the maximum number of shares which will be
issued on conversion of the Notes and exercise of the Warrants is
2,000,000, issuable on a first converted-first exercised basis. Should
NASDAQ Action not be completed by May 31, 1998, then until such NASDAQ
Action is completed, the Company shall on demand by Holder made at any
time or times redeem any portion of the Warrant designated for redemption
(the "Redeemed Portion") at a redemption price equal to the pre-tax
profit Holder would have earned had Holder, at the close of business on
the date of its demand for redemption, exercised the Redeemed Portion and
simultaneously sold the shares received on such exercise at the closing
NASDAQ sales price on such date. The redemption price shall be payable
within five business days after demand for redemption is made, and shall
accrue interest payable on demand at 11% per annum.
8. Any permitted assignment of this Warrant shall be effected by the Holder
by (i) executing a standard form of assignment, (ii) surrendering the
Warrant for cancellation at the office of the Company, accompanied by the
opinion of counsel to the Company referred to above; and (iii) unless in
connection with an effective registration statement which covers the sale
of this Warrant and or the shares underlying the Warrant, delivery to the
Company of a statement by the transferee (in a form acceptable to the
Company and its counsel) that such Warrant is being acquired by the
Holder for investment and not with a view to its distribution or resale;
whereupon the Company shall issue, in the name or names specified by the
Holder (including the Holder) new Warrants representing in the aggregate
rights to purchase the same number of Shares as are purchasable under the
Warrant surrendered. Such Warrants shall be exercisable immediately upon
any such assignment of the number of Warrants assigned. The transferor
will pay all relevant transfer taxes. Replacement warrants shall bear the
same legend as is borne by this Warrant.
9. The term "Holder" should be deemed to include any permitted record
transferee of this Warrant.
<PAGE>
10. The Company covenants and agrees that all shares of Common Stock and all
Secondary Warrants which may be issued upon exercise hereof will, upon
issuance, be duly and validly issued, fully paid and non-assessable and
no personal liability will attach to the holder thereof. The Company
further covenants and agrees that, during the periods within which this
Warrant may be exercised, the Company will at all times have authorized
and reserved a sufficient number of shares of Common Stock for issuance
upon exercise of this Warrant and all other Warrants.
11. This Warrant shall not entitle the Holder to any voting rights or other
rights as a stockholder of the Company.
12. In the event that as a result of reorganization, merger, consolidation,
liquidation, recapitalization, stock split, combination of shares or
stock dividends payable with respect to such Common Stock, the
outstanding shares of Common Stock of the Company are at any time
increased or decreased or changed into or exchanged for a different
number or kind of share or other security of the Company or of another
corporation, then appropriate adjustments in the number and kind of such
securities then subject to this Warrant and in the exercise price
hereunder shall be made effective as of the date of such occurrence so
that the position of the Holder upon exercise will be the same as it
would have been had it owned immediately prior to the occurrence of such
events the Common Stock subject to this Warrant. Such adjustment shall
be made successively whenever any event listed above shall occur and the
Company will notify the Holder of the Warrant of each such adjustment.
Any fraction of a share resulting from any adjustment shall be eliminated
and the price per share of the remaining shares subject to this Warrant
adjusted accordingly.
13. The rights represented by this Warrant may be exercised at any time
within the period above specified by (i) surrender of this Warrant (with
a standard purchase form properly executed) at the principal executive
office of the Company (or such other office or agency of the Company as
it may designate by notice in writing to the Holder at the address of the
Holder appearing on the books of the Company); (ii) payment to the
Company of the exercise price for the number of Shares specified in the
above-mentioned purchase form together with applicable stock transfer
taxes, if any; and (iii) unless in connection with an effective
registration statement which covers the sale of the shares underlying the
Warrant, the delivery to the Company of a statement by the Holder (in a
form acceptable to the Company and its counsel) that such Shares are
being acquired by the Holder for investment and not with a view to their
distribution or resale.
14. Within two business days following each receipt by the Company of the
documents required to exercise all any part of this Warrant as provided
herein, the Company shall DWAC or deliver certificates of the shares of
common stock so purchased as directed by Holder, and shall also deliver
to Holder a warrant certificate for the Secondary Warrants issuable as a
result of such exercise. Such certificates shall bear appropriate
restrictive legends in accordance with applicable securities laws, but
shall be unrestricted and bear no legends once the registration statement
referred to above has been declared effective.
<PAGE>
15. In the event the Company breaches its obligation to DWAC or to deliver
certificates for shares of common stock or Secondary Warrants as required
hereunder, or timely to make any payment required under this Warrant,
then, without limiting Holder's other rights and remedies, the Company
shall forthwith pay to the Holder an amount accruing at the rate of
$1,000 per day for each day of such breach for each 20,000 shares of
common stock subject to this Warrant, with pro rata payments for shares
in an amount less than 20,000.
16. This Warrant shall be governed by and construed in accordance with the
laws of the State of New York. The federal and state courts in the city
of New York shall have exclusive jurisdiction over this instrument and
the enforcement thereof. Service of process shall be effective if by
certified mail, return receipt requested. All notices shall be in
writing and shall be deemed given upon receipt by the party to whom
addressed. This instrument shall be enforceable by decrees of specific
performances well as other remedies. The Holder shall be entitled to
recover its reasonable legal fees and costs in enforcing its rights
hereunder.
IN WITNESS WHEREOF, USCI, INC. has caused this Warrant to be signed by
its duly authorized officers under Its corporate seal, and to be dated as of
the date set forth above.
USCI, INC.
By [authorized officer]
EXHIBIT 10.11
Neither this Warrant nor the shares of Common Stock issuable on exercise of
this Warrant have been registered under the Securities Act of 1933. None of
such securities may be transferred in the absence of registration under such
Act or an opinion of counsel to the effect that such registration is not
required.
USCI, INC.
WARRANT [PRIMARY]
DATED: February 24, 1998
Number of Shares: 625,000
Holder: Laura Huberfeld/Naomi Bodner Partnership
Address: 152 W. 57 St., New York, NY 10019
1. THIS CERTIFIES THAT the Holder is entitled to purchase from USCI, INC.,
a Delaware corporation (hereinafter called the "Company"), the number of
shares of the Company's common stock ("Common Stock") set forth above,
at an exercise price equal to $5.00 per share. This Warrant may be
exercised in whole or in part at any time prior to expiration.
2. All rights granted under this Warrant shall expire on the fifth
anniversary of the date of issuance of this Warrant.
3. Upon each exercise of this Warrant (the "Primary Warrant") as to any
number shares, the Company shall also within two days after such exercise
issue to Holder a Warrant in the form of the Secondary Warrant attached
as an exhibit hereto (a "Secondary Warrant") to purchase the same number
of shares.
4. Notwithstanding anything to the contrary contained herein, Holder shall
have the right at any time to exercise this Warrant only so long as and
to the extent that, after taking into account any shares of Common Stock
otherwise beneficially owned by Holder (whether under any convertible
notes owned by Holder or otherwise) , such exercise would not cause the
Holder then to be the "beneficial owner" of more than 4.99% of the
Company's then outstanding Common Stock. For purposes hereof, the term
"beneficial owner" shall have the meaning ascribed to it in Section 13(d)
of the Securities Exchange Act of 1934. The opinion of legal counsel to
Holder, in form and substance satisfactory to the Company and the
Company's counsel, shall prevail in all matters relating to the amount of
Holder's beneficial ownership.
<PAGE>
5. This Warrant and the Common Stock issuable on exercise of this Warrant
(the "Underlying Shares") may be transferred, sold, assigned or
hypothecated, only if registered by the Company under the Securities Act
of 1933 (the "Act") or if the Company has received from counsel to the
Company a written opinion to the effect that registration of the Warrant
or the Underlying Shares is not necessary in connection with such
transfer, sale, assignment or hypothecation. The Warrant and the
Underlying Shares shall be appropriately legended to reflect this
restriction and stop transfer instructions shall apply. The Holder shall
through its counsel provide such information as is reasonably necessary
in connection with such opinion.
6. The holder of this warrant is entitled to certain registration rights
under an Agreement dated of even date herewith (the "Purchase
Agreement"). Upon each permitted transfer of this Warrant after the
registration statement has been declared effective, the Company will
within two business days after receipt of notice thereof supplement the
registration statement to reflect the name of the transferee as a selling
shareholder thereunder.
7. The Company shall take whatever action is required by NASDAQ ("NASDAQ
Action") to approve the issuance of shares on conversion and exercise of
the Notes and the Warrants (as defined in the Purchase Agreement). The
Company represents and warrants, and Holder acknowledges, that without
taking any NASDAQ Action, the maximum number of shares which will be
issued on conversion of the Notes and exercise of the Warrants is
2,000,000, issuable on a first converted-first exercised basis. Should
NASDAQ Action not be completed by May 31, 1998, then until such NASDAQ
Action is completed, the Company shall on demand by Holder made at any
time or times redeem any portion of the Warrant designated for redemption
(the "Redeemed Portion") at a redemption price equal to the pre-tax
profit Holder would have earned had Holder, at the close of business on
the date of its demand for redemption, exercised the Redeemed Portion and
simultaneously sold the shares received on such exercise at the closing
NASDAQ sales price on such date. The redemption price shall be payable
within five business days after demand for redemption is made, and shall
accrue interest payable on demand at 11% per annum.
8. Any permitted assignment of this Warrant shall be effected by the Holder
by (i) executing a standard form of assignment, (ii) surrendering the
Warrant for cancellation at the office of the Company, accompanied by the
opinion of counsel to the Company referred to above; and (iii) unless in
connection with an effective registration statement which covers the sale
of this Warrant and or the shares underlying the Warrant, delivery to the
Company of a statement by the transferee (in a form acceptable to the
Company and its counsel) that such Warrant is being acquired by the
Holder for investment and not with a view to its distribution or resale;
whereupon the Company shall issue, in the name or names specified by the
Holder (including the Holder) new Warrants representing in the aggregate
rights to purchase the same number of Shares as are purchasable under the
Warrant surrendered. Such Warrants shall be exercisable immediately upon
any such assignment of the number of Warrants assigned. The transferor
will pay all relevant transfer taxes. Replacement warrants shall bear the
same legend as is borne by this Warrant.
9. The term "Holder" should be deemed to include any permitted record
transferee of this Warrant.
<PAGE>
10. The Company covenants and agrees that all shares of Common Stock and all
Secondary Warrants which may be issued upon exercise hereof will, upon
issuance, be duly and validly issued, fully paid and non-assessable and
no personal liability will attach to the holder thereof. The Company
further covenants and agrees that, during the periods within which this
Warrant may be exercised, the Company will at all times have authorized
and reserved a sufficient number of shares of Common Stock for issuance
upon exercise of this Warrant and all other Warrants.
11. This Warrant shall not entitle the Holder to any voting rights or other
rights as a stockholder of the Company.
12. In the event that as a result of reorganization, merger, consolidation,
liquidation, recapitalization, stock split, combination of shares or
stock dividends payable with respect to such Common Stock, the
outstanding shares of Common Stock of the Company are at any time
increased or decreased or changed into or exchanged for a different
number or kind of share or other security of the Company or of another
corporation, then appropriate adjustments in the number and kind of such
securities then subject to this Warrant and in the exercise price
hereunder shall be made effective as of the date of such occurrence so
that the position of the Holder upon exercise will be the same as it
would have been had it owned immediately prior to the occurrence of such
events the Common Stock subject to this Warrant. Such adjustment shall
be made successively whenever any event listed above shall occur and the
Company will notify the Holder of the Warrant of each such adjustment.
Any fraction of a share resulting from any adjustment shall be eliminated
and the price per share of the remaining shares subject to this Warrant
adjusted accordingly.
13. The rights represented by this Warrant may be exercised at any time
within the period above specified by (i) surrender of this Warrant (with
a standard purchase form properly executed) at the principal executive
office of the Company (or such other office or agency of the Company as
it may designate by notice in writing to the Holder at the address of the
Holder appearing on the books of the Company); (ii) payment to the
Company of the exercise price for the number of Shares specified in the
above-mentioned purchase form together with applicable stock transfer
taxes, if any; and (iii) unless in connection with an effective
registration statement which covers the sale of the shares underlying the
Warrant, the delivery to the Company of a statement by the Holder (in a
form acceptable to the Company and its counsel) that such Shares are
being acquired by the Holder for investment and not with a view to their
distribution or resale.
14. Within two business days following each receipt by the Company of the
documents required to exercise all any part of this Warrant as provided
herein, the Company shall DWAC or deliver certificates of the shares of
common stock so purchased as directed by Holder, and shall also deliver
to Holder a warrant certificate for the Secondary Warrants issuable as a
result of such exercise. Such certificates shall bear appropriate
restrictive legends in accordance with applicable securities laws, but
shall be unrestricted and bear no legends once the registration statement
referred to above has been declared effective.
<PAGE>
15. In the event the Company breaches its obligation to DWAC or to deliver
certificates for shares of common stock or Secondary Warrants as required
hereunder, or timely to make any payment required under this Warrant,
then, without limiting Holder's other rights and remedies, the Company
shall forthwith pay to the Holder an amount accruing at the rate of
$1,000 per day for each day of such breach for each 20,000 shares of
common stock subject to this Warrant, with pro rata payments for shares
in an amount less than 20,000.
16. This Warrant shall be governed by and construed in accordance with the
laws of the State of New York. The federal and state courts in the city
of New York shall have exclusive jurisdiction over this instrument and
the enforcement thereof. Service of process shall be effective if by
certified mail, return receipt requested. All notices shall be in
writing and shall be deemed given upon receipt by the party to whom
addressed. This instrument shall be enforceable by decrees of specific
performances well as other remedies. The Holder shall be entitled to
recover its reasonable legal fees and costs in enforcing its rights
hereunder.
IN WITNESS WHEREOF, USCI, INC. has caused this Warrant to be signed by
its duly authorized officers under Its corporate seal, and to be dated as of
the date set forth above.
USCI, INC.
By [authorized officer]
EXHIBIT 10.12
Neither this Warrant nor the shares of Common Stock issuable on exercise of
this Warrant have been registered under the Securities Act of 1933. None of
such securities may be transferred in the absence of registration under such
Act or an opinion of counsel to the effect that such registration is not
required.
USCI, INC.
WARRANT [PRIMARY]
DATED: February 24, 1998
Number of Shares: 375,000
Holder: Huberfeld Bodner Family Foundation, Inc.
Address: 152 W. 57 St., New York NY 10019
1. THIS CERTIFIES THAT the Holder is entitled to purchase from USCI, INC.,
a Delaware corporation (hereinafter called the "Company"), the number of
shares of the Company's common stock ("Common Stock") set forth above,
at an exercise price equal to $5.00 per share. This Warrant may be
exercised in whole or in part at any time prior to expiration.
2. All rights granted under this Warrant shall expire on the fifth
anniversary of the date of issuance of this Warrant.
3. Upon each exercise of this Warrant (the "Primary Warrant") as to any
number shares, the Company shall also within two days after such exercise
issue to Holder a Warrant in the form of the Secondary Warrant attached
as an exhibit hereto (a "Secondary Warrant") to purchase the same number
of shares.
4. Notwithstanding anything to the contrary contained herein, Holder shall
have the right at any time to exercise this Warrant only so long as and
to the extent that, after taking into account any shares of Common Stock
otherwise beneficially owned by Holder (whether under any convertible
notes owned by Holder or otherwise) , such exercise would not cause the
Holder then to be the "beneficial owner" of more than 4.99% of the
Company's then outstanding Common Stock. For purposes hereof, the term
"beneficial owner" shall have the meaning ascribed to it in Section 13(d)
of the Securities Exchange Act of 1934. The opinion of legal counsel to
Holder, in form and substance satisfactory to the Company and the
Company's counsel, shall prevail in all matters relating to the amount of
Holder's beneficial ownership.
<PAGE>
5. This Warrant and the Common Stock issuable on exercise of this Warrant
(the "Underlying Shares") may be transferred, sold, assigned or
hypothecated, only if registered by the Company under the Securities Act
of 1933 (the "Act") or if the Company has received from counsel to the
Company a written opinion to the effect that registration of the Warrant
or the Underlying Shares is not necessary in connection with such
transfer, sale, assignment or hypothecation. The Warrant and the
Underlying Shares shall be appropriately legended to reflect this
restriction and stop transfer instructions shall apply. The Holder shall
through its counsel provide such information as is reasonably necessary
in connection with such opinion.
6. The holder of this warrant is entitled to certain registration rights
under an Agreement dated of even date herewith (the "Purchase
Agreement"). Upon each permitted transfer of this Warrant after the
registration statement has been declared effective, the Company will
within two business days after receipt of notice thereof supplement the
registration statement to reflect the name of the transferee as a selling
shareholder thereunder.
7. The Company shall take whatever action is required by NASDAQ ("NASDAQ
Action") to approve the issuance of shares on conversion and exercise of
the Notes and the Warrants (as defined in the Purchase Agreement). The
Company represents and warrants, and Holder acknowledges, that without
taking any NASDAQ Action, the maximum number of shares which will be
issued on conversion of the Notes and exercise of the Warrants is
2,000,000, issuable on a first converted-first exercised basis. Should
NASDAQ Action not be completed by May 31, 1998, then until such NASDAQ
Action is completed, the Company shall on demand by Holder made at any
time or times redeem any portion of the Warrant designated for redemption
(the "Redeemed Portion") at a redemption price equal to the pre-tax
profit Holder would have earned had Holder, at the close of business on
the date of its demand for redemption, exercised the Redeemed Portion and
simultaneously sold the shares received on such exercise at the closing
NASDAQ sales price on such date. The redemption price shall be payable
within five business days after demand for redemption is made, and shall
accrue interest payable on demand at 11% per annum.
8. Any permitted assignment of this Warrant shall be effected by the Holder
by (i) executing a standard form of assignment, (ii) surrendering the
Warrant for cancellation at the office of the Company, accompanied by the
opinion of counsel to the Company referred to above; and (iii) unless in
connection with an effective registration statement which covers the sale
of this Warrant and or the shares underlying the Warrant, delivery to the
Company of a statement by the transferee (in a form acceptable to the
Company and its counsel) that such Warrant is being acquired by the
Holder for investment and not with a view to its distribution or resale;
whereupon the Company shall issue, in the name or names specified by the
Holder (including the Holder) new Warrants representing in the aggregate
rights to purchase the same number of Shares as are purchasable under the
Warrant surrendered. Such Warrants shall be exercisable immediately upon
any such assignment of the number of Warrants assigned. The transferor
will pay all relevant transfer taxes. Replacement warrants shall bear the
same legend as is borne by this Warrant.
9. The term "Holder" should be deemed to include any permitted record
transferee of this Warrant.
<PAGE>
10. The Company covenants and agrees that all shares of Common Stock and all
Secondary Warrants which may be issued upon exercise hereof will, upon
issuance, be duly and validly issued, fully paid and non-assessable and
no personal liability will attach to the holder thereof. The Company
further covenants and agrees that, during the periods within which this
Warrant may be exercised, the Company will at all times have authorized
and reserved a sufficient number of shares of Common Stock for issuance
upon exercise of this Warrant and all other Warrants.
11. This Warrant shall not entitle the Holder to any voting rights or other
rights as a stockholder of the Company.
12. In the event that as a result of reorganization, merger, consolidation,
liquidation, recapitalization, stock split, combination of shares or
stock dividends payable with respect to such Common Stock, the
outstanding shares of Common Stock of the Company are at any time
increased or decreased or changed into or exchanged for a different
number or kind of share or other security of the Company or of another
corporation, then appropriate adjustments in the number and kind of such
securities then subject to this Warrant and in the exercise price
hereunder shall be made effective as of the date of such occurrence so
that the position of the Holder upon exercise will be the same as it
would have been had it owned immediately prior to the occurrence of such
events the Common Stock subject to this Warrant. Such adjustment shall
be made successively whenever any event listed above shall occur and the
Company will notify the Holder of the Warrant of each such adjustment.
Any fraction of a share resulting from any adjustment shall be eliminated
and the price per share of the remaining shares subject to this Warrant
adjusted accordingly.
13. The rights represented by this Warrant may be exercised at any time
within the period above specified by (i) surrender of this Warrant (with
a standard purchase form properly executed) at the principal executive
office of the Company (or such other office or agency of the Company as
it may designate by notice in writing to the Holder at the address of the
Holder appearing on the books of the Company); (ii) payment to the
Company of the exercise price for the number of Shares specified in the
above-mentioned purchase form together with applicable stock transfer
taxes, if any; and (iii) unless in connection with an effective
registration statement which covers the sale of the shares underlying the
Warrant, the delivery to the Company of a statement by the Holder (in a
form acceptable to the Company and its counsel) that such Shares are
being acquired by the Holder for investment and not with a view to their
distribution or resale.
14. Within two business days following each receipt by the Company of the
documents required to exercise all any part of this Warrant as provided
herein, the Company shall DWAC or deliver certificates of the shares of
common stock so purchased as directed by Holder, and shall also deliver
to Holder a warrant certificate for the Secondary Warrants issuable as a
result of such exercise. Such certificates shall bear appropriate
restrictive legends in accordance with applicable securities laws, but
shall be unrestricted and bear no legends once the registration statement
referred to above has been declared effective.
<PAGE>
15. In the event the Company breaches its obligation to DWAC or to deliver
certificates for shares of common stock or Secondary Warrants as required
hereunder, or timely to make any payment required under this Warrant,
then, without limiting Holder's other rights and remedies, the Company
shall forthwith pay to the Holder an amount accruing at the rate of
$1,000 per day for each day of such breach for each 20,000 shares of
common stock subject to this Warrant, with pro rata payments for shares
in an amount less than 20,000.
16. This Warrant shall be governed by and construed in accordance with the
laws of the State of New York. The federal and state courts in the city
of New York shall have exclusive jurisdiction over this instrument and
the enforcement thereof. Service of process shall be effective if by
certified mail, return receipt requested. All notices shall be in
writing and shall be deemed given upon receipt by the party to whom
addressed. This instrument shall be enforceable by decrees of specific
performances well as other remedies. The Holder shall be entitled to
recover its reasonable legal fees and costs in enforcing its rights
hereunder.
IN WITNESS WHEREOF, USCI, INC. has caused this Warrant to be signed by
its duly authorized officers under Its corporate seal, and to be dated as of
the date set forth above.
USCI, INC.
By [authorized officer]
EXHIBIT 10.13
THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED,
HYPOTHECATED, OR OTHERWISE TRANSFERRED, DISPOSED OF OR OFFERED FOR SALE, IN
WHOLE OR IN PART, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
THAT ACT COVERING THIS NOTE AND/OR THE COMMON STOCK ISSUABLE UPON CONVERSION
THEREOF, OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO USCI, INC., THAT
AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
Principal Sum: $750,000
Holder: GEORGE KARFUNKEL
CONVERTIBLE NOTE
(the "Note")
USCI, INC.
USCI, INC., a Delaware corporation (hereinafter called the "Corporation"),
hereby promises to pay the Principal Sum to the order of Holder on or before
August 1, 1998. This Note shall accrue interest until maturity at the rate of
10% per annum, payable at maturity. The Note shall accrue interest after
maturity, payable on demand, at the rate of 15% per annum. Interest shall be
computed on the basis of a 360-day year. All payments and prepayments
hereunder shall be applied first to accrued interest and then to principal.
1. This Note is one of the "New Notes" being issued under a Private
Placement Purchase Agreement between the Company and the Holder (the
"Purchase Agreement"). The term "Registration Statement" shall have the
meaning attributed thereto in the Purchase Agreement, and the term
"Effective Date" means the date on which the Registration Statement shall
be declared to be effective.
2. Conversion Rights.
(a) In the event that the principal and all accrued interest on this
Note have not been paid in full by the close of business on August
1, 1998, then until such principal and all accrued interest are
thereafter paid in full, the principal and accrued interest on
this Note shall be convertible by Subscriber from time to time, in
whole or in part, into shares of common stock of the Company
("Common Stock") at the lesser (the "Conversion Price") of $5 per
share (the "Cap") or 80% of the average closing sales price of the
Common Stock during the last five trading days prior to
conversion. If on any such date there are no sales prices, the
closing bid price for such date shall be used instead. Holder's
conversion rights are in addition to, and not in limitation of,
Holder's other rights and remedies to enforce its rights under
this Note. After maturity, the Company shall give to the Holder
not less than 30 days' and not more than 45 days' prior written
notice before the Company may repay this Note without Holder's
prior written consent or demand. In addition, without Holder's
prior written consent, the Company may not repay this Note after
maturity prior to the Effective Date.
<PAGE>
(b) In the event that the Holder elects to exercise its conversion
rights hereunder, such conversion shall be effective when Holder
shall give to the Company written notice of such election (which
may be effected by facsimile). The Company shall, within two
business days after receipt by the Company of notice of conversion
and the Note being converted, DWAC to Holder (or, at Holder's
option, deliver to Holder certificates for) the shares of Common
Stock issuable on such conversion.
(c) Certain Increases in Interest Rate.
(i) If the Effective Date has not occurred by June 30, 1998,
then, in addition to the Holder's other remedies the
interest rate under the Note shall be increased to 18% per
annum (or, if less, the highest rate permitted by law)
until the Effective Date.
(ii) If the Effective Date has not occurred by September 30,
1998, then, in addition to the Holder's other remedies, the
interest rate under the Note shall be further increased to
24% per annum (or, if less, the highest rate permitted by
law) until the Effective Date.
(d) The Company shall at all times reserve sufficient shares for
issuance on conversion and exercise of this Note and the Warrants
(as defined in the Purchase Agreement). The Company shall use its
best efforts promptly to list on NASDAQ all shares of Common Stock
which are issued upon conversion of this Note.
(e) The Note shall be convertible at any time only to the extent that
Holder would not as a result of such conversion (and after taking
into account any and all other Common Stock then beneficially
owned by Holder, whether pursuant to the Warrants or otherwise)
beneficially own more than 4.99% of the then outstanding Common
Stock. Beneficial ownership shall be defined in accordance with
Rule 13d-3 under the Securities Exchange Act of 1934. The opinion
of counsel to Holder shall prevail in the event of any dispute on
the calculation of Holder's beneficial ownership.
(f) If any capital reorganization or reclassification of the common
stock, or consolidation, or merger of the Company with or into
another corporation, or the sale or conveyance of all or
substantially all of its assets to another corporation shall be
effected, then, as a condition precedent of such reorganization or
sale, the Cap shall be appropriately adjusted and the following
additional provision shall be made: The Holder of the Note shall
from and after the date of such reorganization or sale have the
right to receive (in lieu of the shares of common stock of the
Company immediately theretofore receivable with respect to the
Note, upon the exercise of conversion rights), such shares of
stock, securities or assets as would have been issued or payable
with respect to or in exchange for the number of outstanding
<PAGE>
shares of such common stock immediately theretofore receivable
with respect to the Note (assuming the Note were then
convertible). In any such case, appropriate provision shall be
made with respect to the rights and interests of the Holder to the
end that such conversion rights (including, without limitation,
provisions for appropriate adjustments) shall thereafter be
applicable, as nearly as may be practicable in relation to any
shares of stock, securities or assets thereafter deliverable upon
the exercise thereof.
(g) The Company shall take whatever action is required by NASDAQ
("NASDAQ Action") to approve the issuance of shares on conversion
of the Notes and exercise of the Warrants issued to the
Subscribers (as defined in the Purchase Agreement). The Company
represents and warrants, and Holder acknowledges, that without
taking any NASDAQ Action, the maximum number of shares which will
be issued on conversion of the Notes and exercise of the Warrants
is 2,000,000, issuable on a first converted-first exercised basis.
Should NASDAQ Action not be completed by May 31, 1998, then until
such NASDAQ Action is completed, the Company shall on demand by
Holder made at any time or times redeem any portion of the Note
which Holder proposes to convert but may not then convert because
NASDAQ Action has not been completed. The redemption price shall
be equal to 125% of the principal and/or interest proposed to be
converted. The redemption price shall be payable within five
business days after demand for redemption is made, and shall
accrue interest payable in demand at 11% per annum.
3. The Company covenants and agrees that all shares of Common Stock which
may be issued upon conversion of this Note will, upon issuance, be duly
and validly issued, fully paid and non-assessable and no personal
liability will attach to the holder thereof.
4. Purchase for Investment. The Holder, by acceptance hereof, acknowledges
that the Note (and the Common Stock into which the Note is convertible)
has not been registered under the Act, covenants and agrees with the
Company that such Holder is taking and holding this Note (and the Common
Stock into which the Note is convertible) for investment purposes and not
with a view to, or for sale in connection with, a distribution thereof and
that this Note (and the Common Stock into which the Note is convertible)
may not be assigned, hypothecated or otherwise disposed of in the absence
of an effective registration statement under the Act or an opinion of
counsel for the Holder, which counsel shall be reasonably satisfactory to
the Company, to the effect that such disposition is in compliance with the
Act, and represents and warrants that such Holder is an "accredited
investor" that such Holder has, or with its representative has, such
knowledge and experience in financial and business matters to be capable
of evaluating the merits and risks in respect of this Note (and the Common
Stock into which the Note is convertible) and is able to bear the economic
risk of such investment.
<PAGE>
5. Certain Payments. In the event the Company fails to give irrevocable
instructions to its transfer agent to DWAC or deliver certificates for
securities as required under this Note within two days after conversion ,
or if the Company fails timely to make a redemption payment as required
hereunder, then, without limiting Holder's other rights and remedies
(including, without limitation, rights and remedies available to Holder
upon an event of default), the Company shall forthwith pay to the Holder
an amount accruing at the rate of $500 per day for each day of such breach
for each $100,000 principal amount of this Note, with pro rata payments
for principal amounts of less than $100,000.
6. Events of Default and Acceleration of the Note.
(a) An "event of default" with respect to this Note shall exist if any
of the following shall occur, if:
(i) The Company shall breach or fail to comply with any
provision of this Note and such breach or failure shall
continue for 15 days after written notice by any Holder of
any Note to the Company.
(ii) A receiver, liquidator or trustee of the Company or of a
substantial part of its properties shall be appointed by
court order and such order shall remain in effect for more
than 15 days; or the Company shall be adjudicated bankrupt
or insolvent; or a substantial part of the property of the
Company shall be sequestered by court order and such order
shall remain in effect for more than 15 days; or a petition
to reorganize the Company under any bankruptcy,
reorganization or insolvency law shall be filed against the
Company and shall not be dismissed within 45 days after such
filing.
(iii) The Company shall file a petition in voluntary bankruptcy or
request reorganization under any provision of any
bankruptcy, reorganization or insolvency law, or shall
consent to the filing of any petition against it under any
such law.
(iv) The Company shall make an assignment for the benefit of its
creditors, or admit in writing its inability to pay its
debts generally as they become due, or consent to the
appointment of a receiver, trustee or liquidator of the
Company, or of all or any substantial part of its
properties.
(b) If an event of default shall occur, the Holder may, in addition to
such Holder's other remedies, by written notice to the Company, declare
the principal amount of this Note, together with all interest accrued
thereon, to be due and payable immediately. Upon any such declaration,
such amount shall become immediately due and payable and the Holder
shall have all such rights and remedies provided for under the terms of
this Note and the Purchase Agreement.
<PAGE>
7. Miscellaneous.
All notices and other communications required or permitted to be given
hereunder shall be in writing and shall be given (and shall be deemed to
have been duly given upon receipt) by delivery in person, by telegram,
by facsimile, recognized overnight mail carrier, telex or other standard
form of telecommunications, or by registered or certified mail, postage
prepaid, return receipt requested, addressed as follows: (a) if to the
Holder, to such address as such Holder shall furnish to the Company in
accordance with this Section, or (b) if to the Company, to it at its
headquarters office, or to such other address as the Company shall
furnish to the Holder in accordance with this Section.
This Note shall be governed and construed in accordance with the laws of
the State of New York applicable to agreements made and to be
performed entirely within such state. The federal and state courts
sitting in the City of New York shall have exclusive jurisdiction over
all matters relating to this Agreement. Trial by jury is expressly
waived.
Service of process may be effected in the manner provided for notices
hereunder, and such service in such manner shall be deemed the
equivalent of personal service.
The Company waives protest, notice of protest, presentment, dishonor,
notice of dishonor and demand.
If any provision of this Note shall for any reason be held to be invalid
or unenforceable, such invalidity or unenforceability shall not affect
any other provision hereof, but this Note shall be construed as if such
invalid or unenforceable provision had never been contained herein.
The waiver of any event of default or the failure of the Holder to
exercise any right or remedy to which it may be entitled shall not be
deemed a waiver of any subsequent event of default or of the Holder's
right to exercise that or any other right or remedy to which the Holder
is entitled.
The Holder of this Note shall be entitled to recover its reasonable
legal and other costs of collecting on this Note, and such costs shall
be deemed added to the principal amount of this Note.
In addition to all other remedies to which the Holder may be entitled
hereunder, Holder shall also be entitled to decrees of specific
performance without posting bond or other security.
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed on
the date set forth below.
Dated: _____________________
USCI, INC.
By: [authorized officer]
EXHIBIT 10.14
THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED,
HYPOTHECATED, OR OTHERWISE TRANSFERRED, DISPOSED OF OR OFFERED FOR SALE, IN
WHOLE OR IN PART, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
THAT ACT COVERING THIS NOTE AND/OR THE COMMON STOCK ISSUABLE UPON CONVERSION
THEREOF, OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO USCI, INC., THAT
AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
Principal Sum: $750,000
Holder: ACE FOUNDATION
CONVERTIBLE NOTE
(the "Note")
USCI, INC.
USCI, INC., a Delaware corporation (hereinafter called the "Corporation"),
hereby promises to pay the Principal Sum to the order of Holder on or before
August 1, 1998. This Note shall accrue interest until maturity at the rate of
10% per annum, payable at maturity. The Note shall accrue interest after
maturity, payable on demand, at the rate of 15% per annum. Interest shall be
computed on the basis of a 360-day year. All payments and prepayments
hereunder shall be applied first to accrued interest and then to principal.
1. This Note is one of the "New Notes" being issued under a Private
Placement Purchase Agreement between the Company and the Holder (the
"Purchase Agreement"). The term "Registration Statement" shall have the
meaning attributed thereto in the Purchase Agreement, and the term
"Effective Date" means the date on which the Registration Statement shall
be declared to be effective.
2. Conversion Rights.
(a) In the event that the principal and all accrued interest on this
Note have not been paid in full by the close of business on August
1, 1998, then until such principal and all accrued interest are
thereafter paid in full, the principal and accrued interest on
this Note shall be convertible by Subscriber from time to time, in
whole or in part, into shares of common stock of the Company
("Common Stock") at the lesser (the "Conversion Price") of $5 per
share (the "Cap") or 80% of the average closing sales price of the
Common Stock during the last five trading days prior to
conversion. If on any such date there are no sales prices, the
closing bid price for such date shall be used instead. Holder's
conversion rights are in addition to, and not in limitation of,
Holder's other rights and remedies to enforce its rights under
this Note. After maturity, the Company shall give to the Holder
not less than 30 days' and not more than 45 days' prior written
notice before the Company may repay this Note without Holder's
prior written consent or demand. In addition, without Holder's
prior written consent, the Company may not repay this Note after
maturity prior to the Effective Date.
<PAGE>
(b) In the event that the Holder elects to exercise its conversion
rights hereunder, such conversion shall be effective when Holder
shall give to the Company written notice of such election (which
may be effected by facsimile). The Company shall, within two
business days after receipt by the Company of notice of conversion
and the Note being converted, DWAC to Holder (or, at Holder's
option, deliver to Holder certificates for) the shares of Common
Stock issuable on such conversion.
(c) Certain Increases in Interest Rate.
(i) If the Effective Date has not occurred by June 30, 1998,
then, in addition to the Holder's other remedies the
interest rate under the Note shall be increased to 18% per
annum (or, if less, the highest rate permitted by law)
until the Effective Date.
(ii) If the Effective Date has not occurred by September 30,
1998, then, in addition to the Holder's other remedies, the
interest rate under the Note shall be further increased to
24% per annum (or, if less, the highest rate permitted by
law) until the Effective Date.
(d) The Company shall at all times reserve sufficient shares for
issuance on conversion and exercise of this Note and the Warrants
(as defined in the Purchase Agreement). The Company shall use its
best efforts promptly to list on NASDAQ all shares of Common Stock
which are issued upon conversion of this Note.
(e) The Note shall be convertible at any time only to the extent that
Holder would not as a result of such conversion (and after taking
into account any and all other Common Stock then beneficially
owned by Holder, whether pursuant to the Warrants or otherwise)
beneficially own more than 4.99% of the then outstanding Common
Stock. Beneficial ownership shall be defined in accordance with
Rule 13d-3 under the Securities Exchange Act of 1934. The opinion
of counsel to Holder shall prevail in the event of any dispute on
the calculation of Holder's beneficial ownership.
(f) If any capital reorganization or reclassification of the common
stock, or consolidation, or merger of the Company with or into
another corporation, or the sale or conveyance of all or
substantially all of its assets to another corporation shall be
effected, then, as a condition precedent of such reorganization or
sale, the Cap shall be appropriately adjusted and the following
additional provision shall be made: The Holder of the Note shall
from and after the date of such reorganization or sale have the
right to receive (in lieu of the shares of common stock of the
Company immediately theretofore receivable with respect to the
Note, upon the exercise of conversion rights), such shares of
stock, securities or assets as would have been issued or payable
with respect to or in exchange for the number of outstanding
shares of such common stock immediately theretofore receivable
<PAGE>
with respect to the Note (assuming the Note were then
convertible). In any such case, appropriate provision shall be
made with respect to the rights and interests of the Holder to the
end that such conversion rights (including, without limitation,
provisions for appropriate adjustments) shall thereafter be
applicable, as nearly as may be practicable in relation to any
shares of stock, securities or assets thereafter deliverable upon
the exercise thereof.
(g) The Company shall take whatever action is required by NASDAQ
("NASDAQ Action") to approve the issuance of shares on conversion
of the Notes and exercise of the Warrants issued to the
Subscribers (as defined in the Purchase Agreement). The Company
represents and warrants, and Holder acknowledges, that without
taking any NASDAQ Action, the maximum number of shares which will
be issued on conversion of the Notes and exercise of the Warrants
is 2,000,000, issuable on a first converted-first exercised basis.
Should NASDAQ Action not be completed by May 31, 1998, then until
such NASDAQ Action is completed, the Company shall on demand by
Holder made at any time or times redeem any portion of the Note
which Holder proposes to convert but may not then convert because
NASDAQ Action has not been completed. The redemption price shall
be equal to 125% of the principal and/or interest proposed to be
converted. The redemption price shall be payable within five
business days after demand for redemption is made, and shall
accrue interest payable in demand at 11% per annum.
3. The Company covenants and agrees that all shares of Common Stock which
may be issued upon conversion of this Note will, upon issuance, be duly
and validly issued, fully paid and non-assessable and no personal
liability will attach to the holder thereof.
4. Purchase for Investment. The Holder, by acceptance hereof, acknowledges
that the Note (and the Common Stock into which the Note is convertible)
has not been registered under the Act, covenants and agrees with the
Company that such Holder is taking and holding this Note (and the Common
Stock into which the Note is convertible) for investment purposes and not
with a view to, or for sale in connection with, a distribution thereof and
that this Note (and the Common Stock into which the Note is convertible)
may not be assigned, hypothecated or otherwise disposed of in the absence
of an effective registration statement under the Act or an opinion of
counsel for the Holder, which counsel shall be reasonably satisfactory to
the Company, to the effect that such disposition is in compliance with the
Act, and represents and warrants that such Holder is an "accredited
investor" that such Holder has, or with its representative has, such
knowledge and experience in financial and business matters to be capable
of evaluating the merits and risks in respect of this Note (and the Common
Stock into which the Note is convertible) and is able to bear the economic
risk of such investment.
<PAGE>
5. Certain Payments. In the event the Company fails to give irrevocable
instructions to its transfer agent to DWAC or deliver certificates for
securities as required under this Note within two days after conversion ,
or if the Company fails timely to make a redemption payment as required
hereunder, then, without limiting Holder's other rights and remedies
(including, without limitation, rights and remedies available to Holder
upon an event of default), the Company shall forthwith pay to the Holder
an amount accruing at the rate of $500 per day for each day of such breach
for each $100,000 principal amount of this Note, with pro rata payments
for principal amounts of less than $100,000.
6. Events of Default and Acceleration of the Note.
(a) An "event of default" with respect to this Note shall exist if any
of the following shall occur, if:
(i) The Company shall breach or fail to comply with any
provision of this Note and such breach or failure shall
continue for 15 days after written notice by any Holder of
any Note to the Company.
(ii) A receiver, liquidator or trustee of the Company or of a
substantial part of its properties shall be appointed by
court order and such order shall remain in effect for more
than 15 days; or the Company shall be adjudicated bankrupt
or insolvent; or a substantial part of the property of the
Company shall be sequestered by court order and such order
shall remain in effect for more than 15 days; or a petition
to reorganize the Company under any bankruptcy,
reorganization or insolvency law shall be filed against the
Company and shall not be dismissed within 45 days after such
filing.
(iii) The Company shall file a petition in voluntary bankruptcy or
request reorganization under any provision of any
bankruptcy, reorganization or insolvency law, or shall
consent to the filing of any petition against it under any
such law.
(iv) The Company shall make an assignment for the benefit of its
creditors, or admit in writing its inability to pay its
debts generally as they become due, or consent to the
appointment of a receiver, trustee or liquidator of the
Company, or of all or any substantial part of its
properties.
(b) If an event of default shall occur, the Holder may, in addition to
such Holder's other remedies, by written notice to the Company, declare
the principal amount of this Note, together with all interest accrued
thereon, to be due and payable immediately. Upon any such declaration,
such amount shall become immediately due and payable and the Holder
shall have all such rights and remedies provided for under the terms of
this Note and the Purchase Agreement.
<PAGE>
7. Miscellaneous.
All notices and other communications required or permitted to be given
hereunder shall be in writing and shall be given (and shall be deemed to
have been duly given upon receipt) by delivery in person, by telegram,
by facsimile, recognized overnight mail carrier, telex or other standard
form of telecommunications, or by registered or certified mail, postage
prepaid, return receipt requested, addressed as follows: (a) if to the
Holder, to such address as such Holder shall furnish to the Company in
accordance with this Section, or (b) if to the Company, to it at its
headquarters office, or to such other address as the Company shall
furnish to the Holder in accordance with this Section.
This Note shall be governed and construed in accordance with the laws of
the State of New York applicable to agreements made and to be
performed entirely within such state. The federal and state courts
sitting in the City of New York shall have exclusive jurisdiction over
all matters relating to this Agreement. Trial by jury is expressly
waived.
Service of process may be effected in the manner provided for notices
hereunder, and such service in such manner shall be deemed the
equivalent of personal service.
The Company waives protest, notice of protest, presentment, dishonor,
notice of dishonor and demand.
If any provision of this Note shall for any reason be held to be invalid
or unenforceable, such invalidity or unenforceability shall not affect
any other provision hereof, but this Note shall be construed as if such
invalid or unenforceable provision had never been contained herein.
The waiver of any event of default or the failure of the Holder to
exercise any right or remedy to which it may be entitled shall not be
deemed a waiver of any subsequent event of default or of the Holder's
right to exercise that or any other right or remedy to which the Holder
is entitled.
The Holder of this Note shall be entitled to recover its reasonable
legal and other costs of collecting on this Note, and such costs shall
be deemed added to the principal amount of this Note.
In addition to all other remedies to which the Holder may be entitled
hereunder, Holder shall also be entitled to decrees of specific
performance without posting bond or other security.
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed on
the date set forth below.
Dated: _____________________
USCI, INC.
By: [authorized officer]
EXHIBIT 10.15
WARRANT TO PURCHASE 17,391
SHARES OF COMMON STOCK
THE WARRANT REPRESENTED HEREBY HAS NOT BEEN REGISTERED UNDER UNITED STATES
FEDERAL OR STATE SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD OR
OTHERWISE TRANSFERRED OR ASSIGNED FOR VALUE, DIRECTLY OR INDIRECTLY, NOR MAY
SUCH WARRANT BE TRANSFERRED ON THE BOOKS OF THE COMPANY, WITHOUT REGISTRATION
OF SUCH WARRANT UNDER ALL APPLICABLE UNITED STATES FEDERAL AND STATE
SECURITIES LAWS OR COMPLIANCE WITH AN APPLICABLE EXEMPTION THEREFROM, SUCH
COMPLIANCE, AT THE OPTION OF THE COMPANY, TO BE EVIDENCED BY AN OPINION OF THE
HOLDER'S COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY THAT NO
VIOLATION OF SUCH REGISTRATION PROVISIONS WOULD RESULT FROM ANY PROPOSED
TRANSFER OR ASSIGNMENT.
USCI, INC.
DATE: March 5, 1998
COMMON STOCK PURCHASE WARRANT
THIS CERTIFIES that, for value received, ALAN R. DRESHER, c/o A.R.
Dresher & Co., 1775 Broadway, 26 floor, New York, New York 10019 (the
"Warrantholder"), or his registered assigns, is entitled to purchase from
USCI, INC. a Delaware corporation (the "Company"), upon the terms and
conditions set forth herein, at any time or from time to time during the
Exercise Period (as defined below), the Shares (as defined below) at the
Purchase Price (as defined below). As used herein the term "this Warrant"
shall mean the warrants represented by this certificate and shall mean and
include this Warrant and any Warrants hereafter issued as a consequence of the
exercise or transfer of this Warrant in whole or in part.
1. Purchase of Shares. Subject to the terms and conditions
hereinafter set forth, the Warrantholder is entitled, upon surrender of this
Warrant to the Company, to purchase from the Company, if and to the extent
permitted by law, 17,391 shares of the Common Stock, par value $.0001 per
share, of the Company (the "Shares") for the purchase price specified in
Section 2 below.
2. Purchase Price. The purchase price shall be $7.1875 per Share
during the Exercise Period as defined below (the "Purchase Price") and shall
be subject to adjustment as set forth in Section 8 below. The Warrantholder
may pay the Purchase Price by wire transfer, or certified or bank check
payable to the order of the Company.
3. Exercise Period. This Warrant shall be exercisable during the
five-year period commencing on the date hereof ("Exercise Period").
4. Method of Exercise. While this Warrant remains outstanding and
exercisable in accordance with Section 3 above, the Warrantholder may exercise
at any time and from time to time, in whole or in part, the purchase rights
evidenced hereby. Such exercise shall be effected by:
(i) the surrender of this Warrant, together with a
duly executed Exercise Notice in the form attached hereto as Exhibit A (the
"Exercise Notice") to the Company; and
<PAGE>
(ii) the payment to the Company of an amount equal to
the aggregate purchase price for the Shares being purchased as set forth in
Section 2 above.
5. Certificates for Shares. Upon each exercise of the purchase
rights evidenced by this Warrant, the Warrantholder shall be deemed to be the
holder of record of the Shares being purchased upon such exercise,
notwithstanding that the transfer books of the Company shall then be closed or
certificates representing such Shares shall not then have been actually
delivered to the Warrantholder. One or more certificates for the Shares so
purchased shall be issued as soon as practicable thereafter, and in any event
within thirty (30) days of the delivery of the Exercise Notice and payment of
the aggregate purchase price for the Shares being purchased. In the event
that this Warrant is exercised in part, concurrently with the delivery to the
Warrantholder of the certificates for any Shares purchased, the Company will
deliver to the Warrantholder a new Warrant representing the right to purchase
the number of Shares for which this Warrant has not been exercised.
6. Reservation of Shares. The Company covenants that it will at
all
times keep available such number of authorized shares of its Common Stock,
free from all preemptive rights with respect thereto, as will be sufficient to
permit the exercise of this Warrant for the full number of Shares specified
herein. The Company further covenants that such Shares, when issued pursuant
to the exercise of this Warrant, will be duly and validly issued, fully paid
and non-assessable and free from all taxes, liens and charges with respect to
the issuance thereof.
7. Rights of Warrantholder. Prior to exercise of this Warrant, the
Warrant shall not entitle the Warrantholder to any rights of a shareholder
with respect to the Shares, including (without limitation) the right to vote
such Shares, receive preemptive rights or be notified of shareholder meetings,
nor shall the Warrant entitle such Warrantholder to any notice or other
communication concerning the business or affairs of the Company, except as
otherwise explicitly set forth below.
8. Adjustments. The number of shares of Common Stock purchasable
upon exercise of this Warrant and the Purchase Price shall be subject to
adjustment from time to time as follows:
8.1. Subdivisions, Combinations and Other Issuances. If the
Company shall at any time prior to the expiration of this Warrant subdivide
its Common Stock, by stock split or otherwise, combine its Common Stock or
issue additional shares of its Common Stock as a dividend with respect to any
shares of its Common Stock, the number of Shares purchasable upon exercise of
this Warrant shall forthwith be proportionately increased in the case of a
subdivision or stock dividend and proportionately decreased in case of a
combination. Appropriate adjustments shall also be made to the Purchase
Price, but the aggregate Purchase Price payable for the total number of Shares
purchasable under this Warrant (as adjusted) shall remain the same. Any
adjustment under this Section 8.1 shall become effective at the close of
business on the date the subdivision or combination becomes effective or as of
the record date of such dividend, or in the event that no record date is
fixed, upon the making of such dividend.
8.2. Acquisition, Reclassification or Reorganization. In the
event of any reclassification, capital reorganization or other change in the
Common Stock of the Company or in the event of any sale of all or
substantially all of the Company's assets or any merger, consolidation or
restructuring to which the Company is a party in which the Company's
stockholders before the transaction or series of transactions hold less than
50% of the voting power of the surviving entity immediately after the
transaction or series of transactions (other than as a result of a
<PAGE>
subdivision, combination or stock dividend provided for in Section 8.1 above),
lawful provision shall be made, and duly executed documents evidencing the
same shall be made and shall be delivered to the Warrantholder in substitution
for the Warrantholder's rights under this Warrant, so that the Warrantholder
shall have the right at any time and from time to time prior to the expiration
of this Warrant to purchase at a total price equal to that payable upon
exercise of this Warrant immediately prior to such event, the kind and amount
of shares of stock or other securities or property receivable in connection
with such reclassification, reorganization or change by a holder of the same
number of shares of Common Stock as were purchasable by the Warrantholder
immediately prior to such reclassification, reorganization or change. In any
such case appropriate provisions shall be made with respect to the rights and
interest of the Warrantholder so that the provisions hereof shall thereafter
be applicable with respect to any shares of stock or other securities or
property deliverable upon exercise hereof, and appropriate adjustments shall
be made to the Purchase Price per Share payable hereunder, provided the
aggregate Purchase Price shall remain the same.
8.3. Notice of Adjustment. Upon any adjustment of the number of
Shares purchasable upon exercise of this Warrant or the Purchase Price
pursuant to this Section 8, the Company within thirty (30) days thereafter
shall cause to be prepared a certificate of the Chief Financial or Accounting
Officer of the Company setting forth the number of Shares purchasable upon
exercise of this Warrant and the Purchase Price after such adjustment and
setting forth in reasonable detail the method of calculation used and cause a
copy of such certificate to be mailed to the Warrantholder.
9. Fractional Shares. No fractional share of Common Stock will be
issued with any exercise hereof, but in lieu of a fractional share upon
exercise hereof, the Warrantholder may purchase a whole share at the then
effective Purchase Price.
10. Registration of Shares.
10.1. The Company shall advise the Warrantholder by written
notice
at least four weeks prior to the filing of any registration statement under
the Securities Act of 1933, as amended, (the "Act") covering any securities of
the Company for its own account or for the account of others, except for any
registration statement filed on Form S-4 or Form S-8 or any comparable or
substantially equivalent form. Subject to the provisions of Subsection 10.2
below, the Company will, upon the written request of the Warrantholder
received by the Company within 14 days after receipt of the Company's notice,
include in any such registration statement such information as may be required
to permit a public offering of the Common Stock purchasable or purchased upon
exercise of this Warrant ("Registrable Securities"). In addition, upon the
written request of the Warrantholder, the Company as expeditiously as is
reasonable possible shall register (as defined below) the Registrable
Securities. For purposes of the immediately preceding sentence, "register"
shall mean a registration effected by preparing and filing a registration
statement or similar document in compliance with the Act, and the declaration
or ordering of effectiveness of such registration statement or document. The
Company shall supply prospectuses and such other documents as the
Warrantholder may reasonably request in order to facilitate the public sale or
other disposition of the Registrable Securities and do any and all other acts
and things which may be reasonably necessary to enable the Warrantholder to
consummate the public sale or other disposition of the Registrable Securities.
All costs and expenses of such Registration Statement shall be borne by the
Company, except that the Warrantholder shall bear the fees of its own counsel
and any underwriting discounts or commissions applicable to any of the
securities sold by it.
<PAGE>
10.2. If the registration for which the Company gives notice is
for an offering involving an underwriting, the Company shall so advise the
Warrantholder at the time he receives notice of the Company's filing of the
registration statement. In such event, the managing underwriter selected for
such underwriting shall have sole and nonreviewable discretion as to whether
to include any or all of the Registrable Securities in such an offering. If
the Registrable Securities shall be included in an offering involving an
underwriting, the Warrantholder will be required to execute the underwriting
agreement in customary form with the managing underwriter and any other such
documents requested by the managing underwriter.
11. Indemnification.
11.1. When pursuant to Section 10 a registration statement
registering the Registrable Securities is filed under the Act, amended or
supplemented, the Company will indemnify and hold harmless each Warrantholder
covered by such registration statement, amendment or supplement (such holder
being hereinafter called the "Distributing Holder"), and each person, if any,
who controls (within the meaning of the Act) the Distributing Holder, and each
underwriter (within the meaning of the Act) of such securities and each
person, if any, who controls (within the meaning of the Act) any such
underwriter, against any losses, claims, damages or liabilities, joint or
several, to which the Distributing Holder, any such controlling person or any
such underwriter may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities, or actions in respect thereof,
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any such registration statement or
any preliminary prospectus or final prospectus constituting a part thereof or
any amendment or supplement thereto, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading
and will reimburse the Distributing Holder or such controlling person or
underwriter in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Company will
not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in said registration
statement, said preliminary prospectus, said final prospectus or said
amendment or supplement in reliance upon and in conformity with written
information furnished by such Distributing Holder or any other Distributing
Holder for use in the preparation thereof.
11.2. The Distributing Holder will indemnify and hold harmless
the
Company, each of its directors, each of its officers who have signed said
registration statement and such amendments and supplements thereto, and each
person, if any, who controls the Company (within the meaning of the Act)
against any losses, claims, damages or liabilities, joint or several, to which
the Company or any such director, officer or controlling person may become
subject, under the Act or otherwise, insofar as such losses, claims, damages
or liabilities, or actions in respect thereof, arise out of or are based upon
any untrue or alleged untrue statement of any material fact contained in said
registration statement, said preliminary prospectus, said final prospectus, or
said amendment or supplement, or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in said registration statement,
said preliminary prospectus, said final prospectus or said amendment or
supplement in reliance upon and in conformity with written information
<PAGE>
furnished by such Distributing Holder for use in the preparation thereof; and
will reimburse the Company or any such director, officer or controlling person
for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action.
11.3. Promptly after receipt by an indemnified party under this
Section 11 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying
party, give the indemnifying party notice of the commencement thereof, but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section 11.
11.4. In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in and, to the extent that
it may wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section 11 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.
12. Restricted Securities. The Warrantholder understands that this
Warrant and the Shares purchasable hereunder constitute "restricted
securities" under the Act, inasmuch as they are being, or will be, acquired
from the Company in transactions not involving a public offering and
accordingly may not, under such laws and applicable regulations, be resold or
transferred without registration under the Act or an applicable exemption from
registration. The Warrantholder further acknowledges that the Shares and
issued upon exercise of this Warrant shall bear legends substantially in the
form of the legend appearing on the face hereof.
13. Certification of Investment Intent. Unless a current registration
statement under the Act shall be in effect with respect to the securities to
be issued upon exercise of this Warrant, the Warrantholder, by accepting this
Warrant, covenants and agrees that, at the time of exercise hereof, such
holder will deliver to the Company a written certification satisfactory to the
Company that (i) the Warrantholder understands that the offering and sale of
the Shares is intended to be exempt from registration under the Act pursuant
to Section 4(2) thereof; (ii) the securities acquired by the holder are
acquired for investment purposes only; and (iii) such securities are not
acquired with a view to, or for sale in connection with, any distribution
thereof.
14. Successors and Assigns. The terms and provisions of this Warrant
shall inure to the benefit of, and be binding upon, the Company, the
Warrantholder and their respective successors and assigns.
15. Miscellaneous. This Warrant may be amended, supplemented or
otherwise modified only by an instrument in writing signed by the Company or
the Warrantholder against whom enforcement of such amendment, supplement or
other modification is sought. The headings in this Warrant are for purpose of
reference only and shall not limit or otherwise affect the meaning thereof.
<PAGE>
16. Governing Law. This Warrant shall be governed by the laws of the
State of Delaware, excluding the conflicts of laws provisions thereof.
17. Registration; Exchange; Lost, Stolen, Mutilated or Destroyed
Warrants. Any Warrants issued upon the transfer or exercise in part of this
Warrant (together with this Warrant (the "Warrants")) shall be registered in a
register maintained by the Company. The Company shall be entitled to treat
the Warrantholder registered on such register as the owner in fact thereof for
all purposes and shall not be bound to recognize any equitable or other claim
to or interest in this Warrant on the part of any other person. This Warrant
shall be transferable only on the books of the Company upon delivery thereof
duly endorsed by the Warrantholder or by his duly authorized attorney or
representative, or accompanied by proper evidence of succession, assignment or
authority to transfer. In all cases of transfer by an attorney, executor,
administrator, guardian or other legal representative, duly authenticated
evidence of his or its authority shall be produced. Upon any registration of
transfer, the Company shall deliver a new Warrant or Warrants to the person
entitled thereto. The Warrants may be exchanged, at the option of the
Warrantholder thereof, for another Warrant, or other Warrants of different
denominations, of like tenor and representing in the aggregate the right to
purchase a like number of Shares upon surrender to the Company or its duly
authorized agent. If this Warrant is lost, stolen, mutilated or destroyed,
the Company shall, on such terms as to indemnity as it may in its discretion
impose, issue anew Warrant of like denomination and tenor as the Warrant so
lost, stolen, mutilated or destroyed.
USCI, INC.
By: [authorized officer]
<PAGE>
EXHIBIT A
EXERCISE NOTICE
USCI, INC.
Attention: Robert J. Kostrinsky, Treasurer
The undersigned hereby elects to purchase, pursuant to the provisions of
the Common Stock Purchase Warrant dated as of March 5, 1998 (the
"Warrant"), issued by the Company and held by the undersigned, ______ shares
of the Company's Common Stock. All capitalized terms used herein and not
otherwise defined herein shall have their respective meanings as defined or
stated in the Warrant.
Payment of the aggregate purchase price for the Shares purchased
pursuant hereto as required under the Warrant accompanies this Exercise
Notice.
The undersigned hereby represents that (i) the undersigned understands
that the offering and sale of the Shares is intended to be exempt from
registration under the Securities Act of 1933, as amended (the "Act"),
pursuant to Section 4(2) thereof; (ii) the securities acquired by the
Warrantholder are acquired for investment purposes only; and (iii) such
securities are not acquired with a view to, or for sale in connection with,
any distribution thereof.
Date:_________________________
Signature:____________________
Address:______________________
______________________________
Name in which shares
should be registered: Social Security No. or EIN No.
______________________________ _____________________________
EXHIBIT 10.16
WARRANT TO PURCHASE 25,000
SHARES OF COMMON STOCK
THE WARRANT REPRESENTED HEREBY HAS NOT BEEN REGISTERED UNDER UNITED STATES
FEDERAL OR STATE SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD OR
OTHERWISE TRANSFERRED OR ASSIGNED FOR VALUE, DIRECTLY OR INDIRECTLY, NOR MAY
SUCH WARRANT BE TRANSFERRED ON THE BOOKS OF THE COMPANY, WITHOUT REGISTRATION
OF SUCH WARRANT UNDER ALL APPLICABLE UNITED STATES FEDERAL AND STATE
SECURITIES LAWS OR COMPLIANCE WITH AN APPLICABLE EXEMPTION THEREFROM, SUCH
COMPLIANCE, AT THE OPTION OF THE COMPANY, TO BE EVIDENCED BY AN OPINION OF THE
HOLDER'S COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY THAT NO
VIOLATION OF SUCH REGISTRATION PROVISIONS WOULD RESULT FROM ANY PROPOSED
TRANSFER OR ASSIGNMENT.
USCI, INC.
DATE: March 5, 1998
COMMON STOCK PURCHASE WARRANT
THIS CERTIFIES that, for value received, Bulldog Capital Management
(the "Warrantholder"), or his registered assigns, is entitled to purchase
from USCI, INC. a Delaware corporation (the "Company"), upon the terms and
conditions set forth herein, at any time or from time to time during the
Exercise Period (as defined below), the Shares (as defined below) at the
Purchase Price (as defined below). As used herein the term "this Warrant"
shall mean the warrants represented by this certificate and shall mean and
include this Warrant and any Warrants hereafter issued as a consequence of the
exercise or transfer of this Warrant in whole or in part.
1. Purchase of Shares. Subject to the terms and conditions
hereinafter set forth, the Warrantholder is entitled, upon surrender of this
Warrant to the Company, to purchase from the Company, if and to the extent
permitted by law, 25,000 shares of the Common Stock, par value $.0001 per
share, of the Company (the "Shares") for the purchase price specified in
Section 2 below.
2. Purchase Price. The purchase price shall be $7.1875 per Share
during the Exercise Period as defined below (the "Purchase Price") and shall
be subject to adjustment as set forth in Section 8 below. The Warrantholder
may pay the Purchase Price by wire transfer, or certified or bank check
payable to the order of the Company.
3. Exercise Period. This Warrant shall be exercisable during the
five-year period commencing on the date hereof ("Exercise Period").
4. Method of Exercise. While this Warrant remains outstanding and
exercisable in accordance with Section 3 above, the Warrantholder may exercise
at any time and from time to time, in whole or in part, the purchase rights
evidenced hereby. Such exercise shall be effected by:
(i) the surrender of this Warrant, together with a
duly executed Exercise Notice in the form attached hereto as Exhibit A (the
"Exercise Notice") to the Company; and
<PAGE>
(ii) the payment to the Company of an amount equal to
the aggregate purchase price for the Shares being purchased as set forth in
Section 2 above.
5. Certificates for Shares. Upon each exercise of the purchase
rights evidenced by this Warrant, the Warrantholder shall be deemed to be the
holder of record of the Shares being purchased upon such exercise,
notwithstanding that the transfer books of the Company shall then be closed or
certificates representing such Shares shall not then have been actually
delivered to the Warrantholder. One or more certificates for the Shares so
purchased shall be issued as soon as practicable thereafter, and in any event
within thirty (30) days of the delivery of the Exercise Notice and payment of
the aggregate purchase price for the Shares being purchased. In the event
that this Warrant is exercised in part, concurrently with the delivery to the
Warrantholder of the certificates for any Shares purchased, the Company will
deliver to the Warrantholder a new Warrant representing the right to purchase
the number of Shares for which this Warrant has not been exercised.
6. Reservation of Shares. The Company covenants that it will at
all
times keep available such number of authorized shares of its Common Stock,
free from all preemptive rights with respect thereto, as will be sufficient to
permit the exercise of this Warrant for the full number of Shares specified
herein. The Company further covenants that such Shares, when issued pursuant
to the exercise of this Warrant, will be duly and validly issued, fully paid
and non-assessable and free from all taxes, liens and charges with respect to
the issuance thereof.
7. Rights of Warrantholder. Prior to exercise of this Warrant, the
Warrant shall not entitle the Warrantholder to any rights of a shareholder
with respect to the Shares, including (without limitation) the right to vote
such Shares, receive preemptive rights or be notified of shareholder meetings,
nor shall the Warrant entitle such Warrantholder to any notice or other
communication concerning the business or affairs of the Company, except as
otherwise explicitly set forth below.
8. Adjustments. The number of shares of Common Stock purchasable
upon exercise of this Warrant and the Purchase Price shall be subject to
adjustment from time to time as follows:
8.1. Subdivisions, Combinations and Other Issuances. If the
Company shall at any time prior to the expiration of this Warrant subdivide
its Common Stock, by stock split or otherwise, combine its Common Stock or
issue additional shares of its Common Stock as a dividend with respect to any
shares of its Common Stock, the number of Shares purchasable upon exercise of
this Warrant shall forthwith be proportionately increased in the case of a
subdivision or stock dividend and proportionately decreased in case of a
combination. Appropriate adjustments shall also be made to the Purchase
Price, but the aggregate Purchase Price payable for the total number of Shares
purchasable under this Warrant (as adjusted) shall remain the same. Any
adjustment under this Section 8.1 shall become effective at the close of
business on the date the subdivision or combination becomes effective or as of
the record date of such dividend, or in the event that no record date is
fixed, upon the making of such dividend.
8.2. Acquisition, Reclassification or Reorganization. In the
event of any reclassification, capital reorganization or other change in the
Common Stock of the Company or in the event of any sale of all or
substantially all of the Company's assets or any merger, consolidation or
restructuring to which the Company is a party in which the Company's
stockholders before the transaction or series of transactions hold less than
50% of the voting power of the surviving entity immediately after the
transaction or series of transactions (other than as a result of a
<PAGE>
subdivision, combination or stock dividend provided for in Section 8.1 above),
lawful provision shall be made, and duly executed documents evidencing the
same shall be made and shall be delivered to the Warrantholder in substitution
for the Warrantholder's rights under this Warrant, so that the Warrantholder
shall have the right at any time and from time to time prior to the expiration
of this Warrant to purchase at a total price equal to that payable upon
exercise of this Warrant immediately prior to such event, the kind and amount
of shares of stock or other securities or property receivable in connection
with such reclassification, reorganization or change by a holder of the same
number of shares of Common Stock as were purchasable by the Warrantholder
immediately prior to such reclassification, reorganization or change. In any
such case appropriate provisions shall be made with respect to the rights and
interest of the Warrantholder so that the provisions hereof shall thereafter
be applicable with respect to any shares of stock or other securities or
property deliverable upon exercise hereof, and appropriate adjustments shall
be made to the Purchase Price per Share payable hereunder, provided the
aggregate Purchase Price shall remain the same.
8.3. Notice of Adjustment. Upon any adjustment of the number of
Shares purchasable upon exercise of this Warrant or the Purchase Price
pursuant to this Section 8, the Company within thirty (30) days thereafter
shall cause to be prepared a certificate of the Chief Financial or Accounting
Officer of the Company setting forth the number of Shares purchasable upon
exercise of this Warrant and the Purchase Price after such adjustment and
setting forth in reasonable detail the method of calculation used and cause a
copy of such certificate to be mailed to the Warrantholder.
9. Fractional Shares. No fractional share of Common Stock will be
issued with any exercise hereof, but in lieu of a fractional share upon
exercise hereof, the Warrantholder may purchase a whole share at the then
effective Purchase Price.
10. Registration of Shares.
10.1. The Company shall advise the Warrantholder by written notice
at least four weeks prior to the filing of any registration statement under
the Securities Act of 1933, as amended, (the "Act") covering any securities of
the Company for its own account or for the account of others, except for any
registration statement filed on Form S-4 or Form S-8 or any comparable or
substantially equivalent form. Subject to the provisions of Subsection 10.2
below, the Company will, upon the written request of the Warrantholder
received by the Company within 14 days after receipt of the Company's notice,
include in any such registration statement such information as may be required
to permit a public offering of the Common Stock purchasable or purchased upon
exercise of this Warrant ("Registrable Securities"). In addition, upon the
written request of the Warrantholder, the Company as expeditiously as is
reasonable possible shall register (as defined below) the Registrable
Securities. For purposes of the immediately preceding sentence, "register"
shall mean a registration effected by preparing and filing a registration
statement or similar document in compliance with the Act, and the declaration
or ordering of effectiveness of such registration statement or document. The
Company shall supply prospectuses and such other documents as the
Warrantholder may reasonably request in order to facilitate the public sale or
other disposition of the Registrable Securities and do any and all other acts
and things which may be reasonably necessary to enable the Warrantholder to
consummate the public sale or other disposition of the Registrable Securities.
All costs and expenses of such Registration Statement shall be borne by the
Company, except that the Warrantholder shall bear the fees of its own counsel
and any underwriting discounts or commissions applicable to any of the
securities sold by it.
<PAGE>
10.2. If the registration for which the Company gives notice is
for an offering involving an underwriting, the Company shall so advise the
Warrantholder at the time he receives notice of the Company's filing of the
registration statement. In such event, the managing underwriter selected for
such underwriting shall have sole and nonreviewable discretion as to whether
to include any or all of the Registrable Securities in such an offering. If
the Registrable Securities shall be included in an offering involving an
underwriting, the Warrantholder will be required to execute the underwriting
agreement in customary form with the managing underwriter and any other such
documents requested by the managing underwriter.
11. Indemnification.
11.1. When pursuant to Section 10 a registration statement
registering the Registrable Securities is filed under the Act, amended or
supplemented, the Company will indemnify and hold harmless each Warrantholder
covered by such registration statement, amendment or supplement (such holder
being hereinafter called the "Distributing Holder"), and each person, if any,
who controls (within the meaning of the Act) the Distributing Holder, and each
underwriter (within the meaning of the Act) of such securities and each
person, if any, who controls (within the meaning of the Act) any such
underwriter, against any losses, claims, damages or liabilities, joint or
several, to which the Distributing Holder, any such controlling person or any
such underwriter may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities, or actions in respect thereof,
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any such registration statement or
any preliminary prospectus or final prospectus constituting a part thereof or
any amendment or supplement thereto, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading
and will reimburse the Distributing Holder or such controlling person or
underwriter in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Company will
not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in said registration
statement, said preliminary prospectus, said final prospectus or said
amendment or supplement in reliance upon and in conformity with written
information furnished by such Distributing Holder or any other Distributing
Holder for use in the preparation thereof.
11.2. The Distributing Holder will indemnify and hold harmless the
Company, each of its directors, each of its officers who have signed said
registration statement and such amendments and supplements thereto, and each
person, if any, who controls the Company (within the meaning of the Act)
against any losses, claims, damages or liabilities, joint or several, to which
the Company or any such director, officer or controlling person may become
subject, under the Act or otherwise, insofar as such losses, claims, damages
or liabilities, or actions in respect thereof, arise out of or are based upon
any untrue or alleged untrue statement of any material fact contained in said
registration statement, said preliminary prospectus, said final prospectus, or
said amendment or supplement, or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in said registration statement,
said preliminary prospectus, said final prospectus or said amendment or
supplement in reliance upon and in conformity with written information
<PAGE>
furnished by such Distributing Holder for use in the preparation thereof; and
will reimburse the Company or any such director, officer or controlling person
for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action.
11.3. Promptly after receipt by an indemnified party under this
Section 11 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying
party, give the indemnifying party notice of the commencement thereof, but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section 11.
11.4. In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in and, to the extent that
it may wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section 11 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.
12. Restricted Securities. The Warrantholder understands that this
Warrant and the Shares purchasable hereunder constitute "restricted
securities" under the Act, inasmuch as they are being, or will be, acquired
from the Company in transactions not involving a public offering and
accordingly may not, under such laws and applicable regulations, be resold or
transferred without registration under the Act or an applicable exemption from
registration. The Warrantholder further acknowledges that the Shares and
issued upon exercise of this Warrant shall bear legends substantially in the
form of the legend appearing on the face hereof.
13. Certification of Investment Intent. Unless a current registration
statement under the Act shall be in effect with respect to the securities to
be issued upon exercise of this Warrant, the Warrantholder, by accepting this
Warrant, covenants and agrees that, at the time of exercise hereof, such
holder will deliver to the Company a written certification satisfactory to the
Company that (i) the Warrantholder understands that the offering and sale of
the Shares is intended to be exempt from registration under the Act pursuant
to Section 4(2) thereof; (ii) the securities acquired by the holder are
acquired for investment purposes only; and (iii) such securities are not
acquired with a view to, or for sale in connection with, any distribution
thereof.
14. Successors and Assigns. The terms and provisions of this Warrant
shall inure to the benefit of, and be binding upon, the Company, the
Warrantholder and their respective successors and assigns.
15. Miscellaneous. This Warrant may be amended, supplemented or
otherwise modified only by an instrument in writing signed by the Company or
the Warrantholder against whom enforcement of such amendment, supplement or
other modification is sought. The headings in this Warrant are for purpose of
reference only and shall not limit or otherwise affect the meaning thereof.
<PAGE>
16. Governing Law. This Warrant shall be governed by the laws of the
State of Delaware, excluding the conflicts of laws provisions thereof.
17. Registration; Exchange; Lost, Stolen, Mutilated or Destroyed
Warrants. Any Warrants issued upon the transfer or exercise in part of this
Warrant (together with this Warrant (the "Warrants")) shall be registered in a
register maintained by the Company. The Company shall be entitled to treat
the Warrantholder registered on such register as the owner in fact thereof for
all purposes and shall not be bound to recognize any equitable or other claim
to or interest in this Warrant on the part of any other person. This Warrant
shall be transferable only on the books of the Company upon delivery thereof
duly endorsed by the Warrantholder or by his duly authorized attorney or
representative, or accompanied by proper evidence of succession, assignment or
authority to transfer. In all cases of transfer by an attorney, executor,
administrator, guardian or other legal representative, duly authenticated
evidence of his or its authority shall be produced. Upon any registration of
transfer, the Company shall deliver a new Warrant or Warrants to the person
entitled thereto. The Warrants may be exchanged, at the option of the
Warrantholder thereof, for another Warrant, or other Warrants of different
denominations, of like tenor and representing in the aggregate the right to
purchase a like number of Shares upon surrender to the Company or its duly
authorized agent. If this Warrant is lost, stolen, mutilated or destroyed,
the Company shall, on such terms as to indemnity as it may in its discretion
impose, issue anew Warrant of like denomination and tenor as the Warrant so
lost, stolen, mutilated or destroyed.
USCI, INC.
By: [authorized officer]
<PAGE>
EXHIBIT A
EXERCISE NOTICE
USCI, INC.
Attention: Robert J. Kostrinsky, Treasurer
The undersigned hereby elects to purchase, pursuant to the provisions of
the Common Stock Purchase Warrant dated as of March 5, 1998 (the
"Warrant"), issued by the Company and held by the undersigned, ______ shares
of the Company's Common Stock. All capitalized terms used herein and not
otherwise defined herein shall have their respective meanings as defined or
stated in the Warrant.
Payment of the aggregate purchase price for the Shares purchased
pursuant hereto as required under the Warrant accompanies this Exercise
Notice.
The undersigned hereby represents that (i) the undersigned understands
that the offering and sale of the Shares is intended to be exempt from
registration under the Securities Act of 1933, as amended (the "Act"),
pursuant to Section 4(2) thereof; (ii) the securities acquired by the
Warrantholder are acquired for investment purposes only; and (iii) such
securities are not acquired with a view to, or for sale in connection with,
any distribution thereof.
Date:_________________________
Signature:____________________
Address:______________________
______________________________
Name in which shares
should be registered: Social Security No. or EIN No.
______________________________ _____________________________
EXHIBIT 10.17
WARRANT TO PURCHASE 42,391
SHARES OF COMMON STOCK
THE WARRANT REPRESENTED HEREBY HAS NOT BEEN REGISTERED UNDER UNITED STATES
FEDERAL OR STATE SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD OR
OTHERWISE TRANSFERRED OR ASSIGNED FOR VALUE, DIRECTLY OR INDIRECTLY, NOR MAY
SUCH WARRANT BE TRANSFERRED ON THE BOOKS OF THE COMPANY, WITHOUT REGISTRATION
OF SUCH WARRANT UNDER ALL APPLICABLE UNITED STATES FEDERAL AND STATE
SECURITIES LAWS OR COMPLIANCE WITH AN APPLICABLE EXEMPTION THEREFROM, SUCH
COMPLIANCE, AT THE OPTION OF THE COMPANY, TO BE EVIDENCED BY AN OPINION OF THE
HOLDER'S COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY THAT NO
VIOLATION OF SUCH REGISTRATION PROVISIONS WOULD RESULT FROM ANY PROPOSED
TRANSFER OR ASSIGNMENT.
USCI, INC.
DATE: March 5, 1998
COMMON STOCK PURCHASE WARRANT
THIS CERTIFIES that, for value received, ALAN BARON (the
"Warrantholder"), or his registered assigns, is entitled to purchase from
USCI, INC. a Delaware corporation (the "Company"), upon the terms and
conditions set forth herein, at any time or from time to time during the
Exercise Period (as defined below), the Shares (as defined below) at the
Purchase Price (as defined below). As used herein the term "this Warrant"
shall mean the warrants represented by this certificate and shall mean and
include this Warrant and any Warrants hereafter issued as a consequence of the
exercise or transfer of this Warrant in whole or in part.
1. Purchase of Shares. Subject to the terms and conditions
hereinafter set forth, the Warrantholder is entitled, upon surrender of this
Warrant to the Company, to purchase from the Company, if and to the extent
permitted by law, 42,391 shares of the Common Stock, par value $.0001 per
share, of the Company (the "Shares") for the purchase price specified in
Section 2 below.
2. Purchase Price. The purchase price shall be $7.1875 per Share
during the Exercise Period as defined below (the "Purchase Price") and shall
be subject to adjustment as set forth in Section 8 below. The Warrantholder
may pay the Purchase Price by wire transfer, or certified or bank check
payable to the order of the Company.
3. Exercise Period. This Warrant shall be exercisable during the
five-year period commencing on the date hereof ("Exercise Period").
4. Method of Exercise. While this Warrant remains outstanding and
exercisable in accordance with Section 3 above, the Warrantholder may exercise
at any time and from time to time, in whole or in part, the purchase rights
evidenced hereby. Such exercise shall be effected by:
(i) the surrender of this Warrant, together with a
duly executed Exercise Notice in the form attached hereto as Exhibit A (the
"Exercise Notice") to the Company; and
<PAGE>
(ii) the payment to the Company of an amount equal to
the aggregate purchase price for the Shares being purchased as set forth in
Section 2 above.
5. Certificates for Shares. Upon each exercise of the purchase
rights evidenced by this Warrant, the Warrantholder shall be deemed to be the
holder of record of the Shares being purchased upon such exercise,
notwithstanding that the transfer books of the Company shall then be closed or
certificates representing such Shares shall not then have been actually
delivered to the Warrantholder. One or more certificates for the Shares so
purchased shall be issued as soon as practicable thereafter, and in any event
within thirty (30) days of the delivery of the Exercise Notice and payment of
the aggregate purchase price for the Shares being purchased. In the event
that this Warrant is exercised in part, concurrently with the delivery to the
Warrantholder of the certificates for any Shares purchased, the Company will
deliver to the Warrantholder a new Warrant representing the right to purchase
the number of Shares for which this Warrant has not been exercised.
6. Reservation of Shares. The Company covenants that it will at all
times keep available such number of authorized shares of its Common Stock,
free from all preemptive rights with respect thereto, as will be sufficient to
permit the exercise of this Warrant for the full number of Shares specified
herein. The Company further covenants that such Shares, when issued pursuant
to the exercise of this Warrant, will be duly and validly issued, fully paid
and non-assessable and free from all taxes, liens and charges with respect to
the issuance thereof.
7. Rights of Warrantholder. Prior to exercise of this Warrant, the
Warrant shall not entitle the Warrantholder to any rights of a shareholder
with respect to the Shares, including (without limitation) the right to vote
such Shares, receive preemptive rights or be notified of shareholder meetings,
nor shall the Warrant entitle such Warrantholder to any notice or other
communication concerning the business or affairs of the Company, except as
otherwise explicitly set forth below.
8. Adjustments. The number of shares of Common Stock purchasable
upon exercise of this Warrant and the Purchase Price shall be subject to
adjustment from time to time as follows:
8.1. Subdivisions, Combinations and Other Issuances. If the
Company shall at any time prior to the expiration of this Warrant subdivide
its Common Stock, by stock split or otherwise, combine its Common Stock or
issue additional shares of its Common Stock as a dividend with respect to any
shares of its Common Stock, the number of Shares purchasable upon exercise of
this Warrant shall forthwith be proportionately increased in the case of a
subdivision or stock dividend and proportionately decreased in case of a
combination. Appropriate adjustments shall also be made to the Purchase
Price, but the aggregate Purchase Price payable for the total number of Shares
purchasable under this Warrant (as adjusted) shall remain the same. Any
adjustment under this Section 8.1 shall become effective at the close of
business on the date the subdivision or combination becomes effective or as of
the record date of such dividend, or in the event that no record date is
fixed, upon the making of such dividend.
8.2. Acquisition, Reclassification or Reorganization. In the
event of any reclassification, capital reorganization or other change in the
Common Stock of the Company or in the event of any sale of all or
substantially all of the Company's assets or any merger, consolidation or
restructuring to which the Company is a party in which the Company's
stockholders before the transaction or series of transactions hold less than
50% of the voting power of the surviving entity immediately after the
transaction or series of transactions (other than as a result of a
<PAGE>
subdivision, combination or stock dividend provided for in Section 8.1 above),
lawful provision shall be made, and duly executed documents evidencing the
same shall be made and shall be delivered to the Warrantholder in substitution
for the Warrantholder's rights under this Warrant, so that the Warrantholder
shall have the right at any time and from time to time prior to the expiration
of this Warrant to purchase at a total price equal to that payable upon
exercise of this Warrant immediately prior to such event, the kind and amount
of shares of stock or other securities or property receivable in connection
with such reclassification, reorganization or change by a holder of the same
number of shares of Common Stock as were purchasable by the Warrantholder
immediately prior to such reclassification, reorganization or change. In any
such case appropriate provisions shall be made with respect to the rights and
interest of the Warrantholder so that the provisions hereof shall thereafter
be applicable with respect to any shares of stock or other securities or
property deliverable upon exercise hereof, and appropriate adjustments shall
be made to the Purchase Price per Share payable hereunder, provided the
aggregate Purchase Price shall remain the same.
8.3. Notice of Adjustment. Upon any adjustment of the number of
Shares purchasable upon exercise of this Warrant or the Purchase Price
pursuant to this Section 8, the Company within thirty (30) days thereafter
shall cause to be prepared a certificate of the Chief Financial or Accounting
Officer of the Company setting forth the number of Shares purchasable upon
exercise of this Warrant and the Purchase Price after such adjustment and
setting forth in reasonable detail the method of calculation used and cause a
copy of such certificate to be mailed to the Warrantholder.
9. Fractional Shares. No fractional share of Common Stock will be
issued with any exercise hereof, but in lieu of a fractional share upon
exercise hereof, the Warrantholder may purchase a whole share at the then
effective Purchase Price.
10. Registration of Shares.
10.1. The Company shall advise the Warrantholder by written
notice
at least four weeks prior to the filing of any registration statement under
the Securities Act of 1933, as amended, (the "Act") covering any securities of
the Company for its own account or for the account of others, except for any
registration statement filed on Form S-4 or Form S-8 or any comparable or
substantially equivalent form. Subject to the provisions of Subsection 10.2
below, the Company will, upon the written request of the Warrantholder
received by the Company within 14 days after receipt of the Company's notice,
include in any such registration statement such information as may be required
to permit a public offering of the Common Stock purchasable or purchased upon
exercise of this Warrant ("Registrable Securities"). In addition, upon the
written request of the Warrantholder, the Company as expeditiously as is
reasonable possible shall register (as defined below) the Registrable
Securities. For purposes of the immediately preceding sentence, "register"
shall mean a registration effected by preparing and filing a registration
statement or similar document in compliance with the Act, and the declaration
or ordering of effectiveness of such registration statement or document. The
Company shall supply prospectuses and such other documents as the
Warrantholder may reasonably request in order to facilitate the public sale or
other disposition of the Registrable Securities and do any and all other acts
and things which may be reasonably necessary to enable the Warrantholder to
consummate the public sale or other disposition of the Registrable Securities.
All costs and expenses of such Registration Statement shall be borne by the
Company, except that the Warrantholder shall bear the fees of its own counsel
and any underwriting discounts or commissions applicable to any of the
securities sold by it.
<PAGE>
10.2. If the registration for which the Company gives notice is
for an offering involving an underwriting, the Company shall so advise the
Warrantholder at the time he receives notice of the Company's filing of the
registration statement. In such event, the managing underwriter selected for
such underwriting shall have sole and nonreviewable discretion as to whether
to include any or all of the Registrable Securities in such an offering. If
the Registrable Securities shall be included in an offering involving an
underwriting, the Warrantholder will be required to execute the underwriting
agreement in customary form with the managing underwriter and any other such
documents requested by the managing underwriter.
11. Indemnification.
11.1. When pursuant to Section 10 a registration statement
registering the Registrable Securities is filed under the Act, amended or
supplemented, the Company will indemnify and hold harmless each Warrantholder
covered by such registration statement, amendment or supplement (such holder
being hereinafter called the "Distributing Holder"), and each person, if any,
who controls (within the meaning of the Act) the Distributing Holder, and each
underwriter (within the meaning of the Act) of such securities and each
person, if any, who controls (within the meaning of the Act) any such
underwriter, against any losses, claims, damages or liabilities, joint or
several, to which the Distributing Holder, any such controlling person or any
such underwriter may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities, or actions in respect thereof,
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any such registration statement or
any preliminary prospectus or final prospectus constituting a part thereof or
any amendment or supplement thereto, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading
and will reimburse the Distributing Holder or such controlling person or
underwriter in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Company will
not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in said registration
statement, said preliminary prospectus, said final prospectus or said
amendment or supplement in reliance upon and in conformity with written
information furnished by such Distributing Holder or any other Distributing
Holder for use in the preparation thereof.
11.2. The Distributing Holder will indemnify and hold harmless the
Company, each of its directors, each of its officers who have signed said
registration statement and such amendments and supplements thereto, and each
person, if any, who controls the Company (within the meaning of the Act)
against any losses, claims, damages or liabilities, joint or several, to which
the Company or any such director, officer or controlling person may become
subject, under the Act or otherwise, insofar as such losses, claims, damages
or liabilities, or actions in respect thereof, arise out of or are based upon
any untrue or alleged untrue statement of any material fact contained in said
registration statement, said preliminary prospectus, said final prospectus, or
said amendment or supplement, or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in said registration statement,
said preliminary prospectus, said final prospectus or said amendment or
supplement in reliance upon and in conformity with written information
<PAGE>
furnished by such Distributing Holder for use in the preparation thereof; and
will reimburse the Company or any such director, officer or controlling person
for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action.
11.3. Promptly after receipt by an indemnified party under this
Section 11 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying
party, give the indemnifying party notice of the commencement thereof, but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section 11.
11.4. In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in and, to the extent that
it may wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section 11 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.
12. Restricted Securities. The Warrantholder understands that this
Warrant and the Shares purchasable hereunder constitute "restricted
securities" under the Act, inasmuch as they are being, or will be, acquired
from the Company in transactions not involving a public offering and
accordingly may not, under such laws and applicable regulations, be resold or
transferred without registration under the Act or an applicable exemption from
registration. The Warrantholder further acknowledges that the Shares and
issued upon exercise of this Warrant shall bear legends substantially in the
form of the legend appearing on the face hereof.
13. Certification of Investment Intent. Unless a current registration
statement under the Act shall be in effect with respect to the securities to
be issued upon exercise of this Warrant, the Warrantholder, by accepting this
Warrant, covenants and agrees that, at the time of exercise hereof, such
holder will deliver to the Company a written certification satisfactory to the
Company that (i) the Warrantholder understands that the offering and sale of
the Shares is intended to be exempt from registration under the Act pursuant
to Section 4(2) thereof; (ii) the securities acquired by the holder are
acquired for investment purposes only; and (iii) such securities are not
acquired with a view to, or for sale in connection with, any distribution
thereof.
14. Successors and Assigns. The terms and provisions of this Warrant
shall inure to the benefit of, and be binding upon, the Company, the
Warrantholder and their respective successors and assigns.
15. Miscellaneous. This Warrant may be amended, supplemented or
otherwise modified only by an instrument in writing signed by the Company or
the Warrantholder against whom enforcement of such amendment, supplement or
other modification is sought. The headings in this Warrant are for purpose of
reference only and shall not limit or otherwise affect the meaning thereof.
<PAGE>
16. Governing Law. This Warrant shall be governed by the laws of the
State of Delaware, excluding the conflicts of laws provisions thereof.
17. Registration; Exchange; Lost, Stolen, Mutilated or Destroyed
Warrants. Any Warrants issued upon the transfer or exercise in part of this
Warrant (together with this Warrant (the "Warrants")) shall be registered in a
register maintained by the Company. The Company shall be entitled to treat
the Warrantholder registered on such register as the owner in fact thereof for
all purposes and shall not be bound to recognize any equitable or other claim
to or interest in this Warrant on the part of any other person. This Warrant
shall be transferable only on the books of the Company upon delivery thereof
duly endorsed by the Warrantholder or by his duly authorized attorney or
representative, or accompanied by proper evidence of succession, assignment or
authority to transfer. In all cases of transfer by an attorney, executor,
administrator, guardian or other legal representative, duly authenticated
evidence of his or its authority shall be produced. Upon any registration of
transfer, the Company shall deliver a new Warrant or Warrants to the person
entitled thereto. The Warrants may be exchanged, at the option of the
Warrantholder thereof, for another Warrant, or other Warrants of different
denominations, of like tenor and representing in the aggregate the right to
purchase a like number of Shares upon surrender to the Company or its duly
authorized agent. If this Warrant is lost, stolen, mutilated or destroyed,
the Company shall, on such terms as to indemnity as it may in its discretion
impose, issue anew Warrant of like denomination and tenor as the Warrant so
lost, stolen, mutilated or destroyed.
USCI, INC.
By: [authorized officer]
<PAGE>
EXHIBIT A
EXERCISE NOTICE
USCI, INC.
Attention: Robert J. Kostrinsky, Treasurer
The undersigned hereby elects to purchase, pursuant to the provisions
of
the Common Stock Purchase Warrant dated as of March 5, 1998 (the
"Warrant"), issued by the Company and held by the undersigned, ______ shares
of the Company's Common Stock. All capitalized terms used herein and not
otherwise defined herein shall have their respective meanings as defined or
stated in the Warrant.
Payment of the aggregate purchase price for the Shares purchased
pursuant hereto as required under the Warrant accompanies this Exercise
Notice.
The undersigned hereby represents that (i) the undersigned understands
that the offering and sale of the Shares is intended to be exempt from
registration under the Securities Act of 1933, as amended (the "Act"),
pursuant to Section 4(2) thereof; (ii) the securities acquired by the
Warrantholder are acquired for investment purposes only; and (iii) such
securities are not acquired with a view to, or for sale in connection with,
any distribution thereof.
Date:_________________________
Signature:____________________
Address:______________________
______________________________
Name in which shares
should be registered: Social Security No. or EIN No.
______________________________ _____________________________
