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 January 13, 1998
(Date of earliest event reported) (August 29, 1997)
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)
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Item 5.
On August 29, 1997, the Registrant, through its wholly owned subsidiary
Ameritel Communications, Inc. ("Ameritel") entered into an agreement
with Sun Television and Appliances, Inc. ("SunTV") under which Ameritel
agreed to provide cellular telephone service on an exclusive basis to
customers at all SunTV retail locations. As of the date of the
agreement, SunTV operated a total of 41 consumer electronics and home
appliances retail stores in Ohio, Pennsylvania, West Virginia and
Kentucky. The agreement also covers any additional SunTV stores that
may be opened in the future, subject to the availability of Ameritel
cellular telephone service. The agreement provides for the payment by
Ameritel to SunTV of a sales commission for each activation of Ameritel
cellular service by a SunTV customer. The agreement is terminable at
will by either party on 60 days prior notice.
On September 30, 1997, the Registrant, through Ameritel, entered into
an agreement with CompUSA, a retailer of personal computers and related
products and services, under which Ameritel agreed to provide cellular
telephone and paging services on a pilot basis to customers at seven
(7) CompUSA stores in Atlanta, Georgia and Phoenix, Arizona. Under the
agreement, CompUSA will receive a sales commission for each activation
of cellular telephone or paging service by a customer at any of these
CompUSA stores, as well as other advertising and promotional support
from Ameritel. The agreement does not have a definite term and is,
accordingly, terminable at will by either party. CompUSA is under no
obligation to extend the agreement to cover its approximately 130 other
stores.
In September 1997, Ameritel entered into a cellular services sales
agreement with Cable & Wireless, Inc. ("CWI"), a major
telecommunications carrier, under which CWI is authorized to offer
Ameritel's wireless services to CWI's existing and future customers.
Under the agreement Ameritel is responsible for delivery of the
cellular telephones and pagers to the subscribers. CWI will receive a
commission for each activation of Ameritel wireless service by a CWI
customer, as well as residual payments equal to a percentage of billed
charges for airtime usage. The agreement is for a term of 12 months
and will automatically renew for successive 12-month terms unless
either party gives notice of its intention not to renew at least ninety
(90) days prior to the expiration of the then-current term. In
addition, CWI may terminate the agreement at any time if certain
conditions are not met.
On October 10, 1997, Ameritel entered into a cellular radiotelephone
service referral agreement, effective as of October 1, 1997, with
RadioShack, a division of Tandy Corporation, under which RadioShack, a
major retailer of cellular service and products in the United States,
agreed to serve as a nonexclusive retail referral representative for
Ameritel in the sale of its cellular telephone service for
approximately 250 RadioShack stores in New York City; Westchester,
Rockland, Nassau and Suffolk counties in New York State; southern
Connecticut and north central New Jersey. Under the agreement,
RadioShack will receive a referral fee for each subscriber referred to
and activated by Ameritel and will also receive market development
support. The agreement is for a one year term and will automatically
renew for successive one-year terms unless either party gives notice of
its intent not to renew at least 90 days prior to the expiration of the
then-current term. In addition, either party may terminate the
agreement without cause at any time on 90 days prior notice.
On December 8, 1997, the RadioShack agreement was amended, effective as
of November 21, 1997, to add additional coverage areas including Puerto
Rico, Saint Thomas and St. Croix (Virgin Islands)(effective the earlier
of January 1, 1998 or the day immediately following the termination date
between RadioShack and its existing carrier for these areas) and two
counties in Missouri (effective November 21, 1997) and, in connection
therewith, to modify certain aspects of the referral fee
arrangements and to provide for additional market support by Ameritel.
On October 30, 1997, the Registrant, a wholly owned subsidiary of
Ameritel Communications, Inc. ("Ameritel"), and PaineWebber
Incorporated ("PaineWebber"), an investment banking firm, entered into
a letter agreement (the "PaineWebber Agreement") pursuant to which
PaineWebber agreed to establish through January 1, 1998 for Ameritel's
account irrevocable standby letter of credit financing in the aggregate
amount of up to $3.75 million for the purpose of enabling Ameritel to
satisfy its security obligations under agreements with RadioShack and
certain cellular service providers from whom it purchases cellular
service for resale. Under the PaineWebber Agreement the Registrant is
required to pledge, as a condition precedent to the issuance of any
letter of credit by PaineWebber, such number of shares of the
Registrant's common stock valued at $7.00 per share, as shall equal
125% of the principal amount of each letter of credit to be issued.
The agreement further requires the Registrant to replace any such
pledged shares with cash, U.S. government obligations or other
obligations guaranteed by the U.S. government in the amount of 125% of
the aggregate principal amount of all outstanding letters of credit
(i.e. up to $4,718,750) on or prior to the earlier to occur of the
completion of the Registrant's pending private placement or January 30,
1998. In addition, USCI and Ameritel executed guarantees of each
other's obligations under the PaineWebber Agreement.
To provide the shares of Common Stock required to be pledged as
collateral under the PaineWebber Agreement, the Registrant entered into
an agreement dated as of October 30, 1997 with certain of the
Registrant's stockholders (the "Stockholders") including Mr. Hahn, Mr.
Kostrinsky and two of the Registrant's directors, under which the
Stockholders agreed to deposit with the Registrant an aggregate of
545,045 shares of the Registrant's common stock owned by them for
delivery, as and when needed, to PaineWebber. As consideration for
this agreement, the Registrant agreed to issue to the Stockholders non-
qualified five year options to purchase an aggregate of 54,505 shares
of the Registrant's Common Stock at $6.00 per share.
As consideration to PaineWebber for providing the letter of credit
financing, the Registrant issued to PaineWebber a five-year warrant to
purchase up to 600,000 shares of the Registrant's Common Stock at a
purchase price of $6.00 per share. PaineWebber received certain
registration rights for the for the Common Stock issuable upon exercise
of the warrant.
On November 21, 1997, Ameritel entered into an agreement with Ritz
Camera Centers, Inc. ("Ritz Camera") under which Ameritel agreed, in a
pilot program, to provide cellular telephone service on an exclusive
basis to customers at Ritz Camera's 12 retail locations in Norfolk,
Virginia. The agreement also gives Ameritel the right, but not the
obligation, to provide cellular telephone service to any additional
stores subsequently opened by Ritz Camera in the Norfolk market. The
agreement provides for the payment by Ameritel to Ritz Camera of
commission and co-op payments for each activation of a cellular
telephone purchased by a Ritz Camera customer at one of the Norfolk
stores. The agreement may be terminated by either party, without
cause, on 60 days prior notice, subject to Ameritel's obligation to
continue the agreement through March 31, 1998.
On November 18, 1997, the Registrant obtained an unsecured loan in the
amount of $4.0 million from George Karfunkel and Michael Karfunkel.
The loan bears interest at 8.5% per annum and is payable on December
31, 1997, or completion of the Registrant's pending private placement,
whichever is sooner. As additional consideration for the loan, the
Registrant issued to each of the lenders a five-year warrant
exercisable to purchase up to 400,000 shares of the Registrant's Common
Stock at an exercise price of $6.00 per share. On December 30, 1997,
the Registrant issued to each of the lenders an additional five-year
warrant to purchase 200,000 shares of Common Stock at $6.00 per share
in consideration of the lenders' extension of the due date of the loans
until January 31, 1998. The Registrant agreed that for each share of
Common Stock acquired by the lenders upon the exercise of the warrants,
the Registrant will issue an additional warrant to purchase one share
of Common Stock at an exercise price equal to (a)the conversion price
of the Registrant's convertible preferred stock being offered in a
pending private placement, or (b)$7.00 if the private placement has not
been completed. The Registrant further agreed to issue an additional
warrant to purchase 200,000 shares of Common Stock to each lender, on
these same terms and conditions, for each month (or part thereof) in
which the indebtedness to the lenders remains unpaid after January 31,
1998. George Karfunkel is a shareholder of the Registrant. Michael
Karfunkel is George Karfunkel's brother. George and Michael Karfunkel
are the owners of American Stock Transfer & Trust Company, the
Registrant's transfer agent and a stockholder of the Registrant.
On January 2, 1998, the Registrant obtained an unsecured bridge loan in
the amount of $250,000 from Decameron Partners, and on January 5, 1998,
the Registrant received an unsecured bridge loan in the amount of
$250,000 from Mr. Alan R. Dresher. Each loan bears interest at 10% per
annum and is payable upon the earlier to occur of January 31, 1998 or
the completion of the Registrant's pending private placement. As
additional consideration for the loans, the Registrant issued to each
lender a five-year warrant to purchase 50,000 shares of Common Stock at
$6.00 per share. 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, as a finder's fee. Alan
Baron is the son of Jerome Baron, a director of the Registrant.
The Registrant intends to use the proceeds of the foregoing loans for
working capital.
On November 28, 1997, the Board of Directors of the Registrant elected
Stephen E. Pazian a director of the Registrant to fill a vacancy
created by the resignation of Lawrence Burstein on September 30, 1997.
Mr. Pazian is currently the President and Chief Executive Officer of
Edison Enterprises, a division of Edison International. Mr. Pazian
oversees the operations of Edison's family of companies: Edison Source,
which provides energy management services and pricing options to
businesses in the energy and electric markets; Edison Select which
provides products and services for the consumer market including
computer repair, Internet access, electrical repair and home security
service; and Edison EV which distributes, installs and services
electric vehicle charging equipment for residential, fleet and public
markets. From 1998 to 1997, Mr. Pazian was President of Ameritech
Security Monitoring Services, a business unit of Ameritech, Inc. From
1988 to 1996, he was Executive Officer of MobileComm, Bell South's
paging and voice messaging subsidiary. In connection with become a
director, Mr. Pazian received a five-year nonqualified option,
exercisable immediately, to purchase 25,000 shares of the Registrant's
Common Stock at an exercise price of $6.25 per share under the
Registrant's 1996 Stock Option Plan.
Item 7c. Exhibits.
Exhibit 10.1 Warrants (2) issued by the Registrant to Michael
Karfunkel.
Exhibit 10.2 Warrants (2) issued by the Registrant to Michael
Karfunkel.
Exhibit 10.3 Replacement Promissory Notes issued by the Registrant
to George Karfunkel.
Exhibit 10.4 Replacement Promissory Notes issued by the Registrant
to Michael Karfunkel.
Exhibit 10.5* Agreement between Ameritel Communications, Inc. and
Sun Television and Appliances, Inc. dated August 29, 1997.
Exhibit 10.6* Agreement between Ameritel Communications, Inc. and
CompUSA dated September 30, 1997.
Exhibit 10.7* Agreement between Ameritel Communications, Inc. and
Cable & Wireless, Inc. dated September 1997 and Addendum No. 1 thereto
dated October 15, 1997.
Exhibit 10.8* Agreement between Ameritel Communications, Inc. and
RadioShack, a division of Tandy Corporation, effective as of October 1,
1997 and Amendment 1 thereto effective as of November 21, 1997.
Exhibit 10.9* Agreement between Ameritel Communications, Inc. and
Ritz Camera Centers, Inc. dated November 21, 1997.
Exhibit 10.10 Agreement between the Registrant and PaineWebber
dated October 30, 1997.
Exhibit 10.11 Stock Option Agreements dated as of October 30, 1997
with certain stockholders of the Registrant.
Exhibit 10.12 Warrant Agreement dated October 30, 1997 between the
Registrant and PaineWebber.
Exhibit 10.13 Shareholder Collateral Agreement dated as of October
30, 1997.
Exhibit 10.14 Warrant issued by the Registrant to Alan R. Dresher.
Exhibit 10.15 Promissory Note issued by the Registrant to Alan R.
Dresher.
Exhibit 10.16 Warrant issued by the Registrant to Decameron
Partners.
Exhibit 10.17 Promissory Note issued by the Registrant to Decameron
Partners.
Exhibit 10.18 Warrant issued by the Registrant to Alan Baron.
* PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT
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
January 13, 1998
EXHIBIT 10.1
WARRANT TO PURCHASE 400,000
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: November 17, 1997
COMMON STOCK PURCHASE WARRANT
THIS CERTIFIES that, for value received, GEORGE KARFUNKEL (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, 400,000 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
period commencing November 17, 1997 and ending on the close of business on
November 17, 2002 ("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
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(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 November 17, 1997 (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.
______________________________ _____________________________
<PAGE>
WARRANT TO PURCHASE 200,000
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: December 30, 1997
COMMON STOCK PURCHASE WARRANT
THIS CERTIFIES that, for value received, GEORGE KARFUNKEL (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, 200,000 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
period commencing January 1, 1998 and ending on the close of business on
December 31, 2002 ("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.
2. 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.
4. 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 December 30, 1997 (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 400,000
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: November 17, 1997
COMMON STOCK PURCHASE WARRANT
THIS CERTIFIES that, for value received, MICHAEL KARFUNKEL (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, 400,000 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
period commencing November 17, 1997 and ending on the close of business on
November 17, 2002 ("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.
<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 November 17, 1997 (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.
______________________________ _____________________________
WARRANT TO PURCHASE 200,000
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: December 30, 1997
COMMON STOCK PURCHASE WARRANT
THIS CERTIFIES that, for value received, MICHAEL KARFUNKEL (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, 200,000 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
period commencing January 1, 1998 and ending on the close of business on
December 31, 2002 ("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 December 30, 1997 (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
No. GK-1
REPLACEMENT PROMISSORY NOTE
$1,000,000 New York, New York
November 18, 1997
FOR VALUE RECEIVED, the undersigned, USCI, Inc., a Delaware corporation,
with offices at 6115-A Jimmy Carter Blvd., Norcross GA 30071 ("Maker"),
promises to pay to the order of George Karfunkel ("Holder"), the principal sum
of ONE MILLION ($1,000,000) DOLLARS plus interest on the outstanding balance
at a rate per annum equal to the prime rate on the date hereof as set by
Citibank N.A., New York, New York.
The entire unpaid principal balance of this Note and unpaid accrued
interest shall immediately be due and payable on the earlier of January31,1998
or upon the closing of the private placement of Series A Preferred Stock
of the Maker.
This Note may be prepaid in part or in full at any time without penalty
or charge and with interest payable only through the date of prepayment.
This obligation shall bind the Maker and its successors and assigns and
the benefits hereof shall inure to the Holder hereof and his heirs, executors,
administrators and assigns.
The Maker hereby forever waives presentment, protest, notice of protest
and notice of dishonor of the within Note.
IN WITNESS WHEREOF, the undersigned has caused this Note to be executed
as of the day and year first above written.
WITNESS: MAKER:
USCI, Inc.
/s/ [witness signature] By: /s/ Bruce A. Hahn, Chairman
<PAGE>
No. GK-2
REPLACEMENT PROMISSORY NOTE
$1,000,000 New York, New York
November 18, 1997
FOR VALUE RECEIVED, the undersigned, USCI, Inc., a Delaware corporation,
with offices at 6115-A Jimmy Carter Blvd., Norcross GA 30071 ("Maker"),
promises to pay to the order of George Karfunkel ("Holder"), the principal sum
of ONE MILLION ($1,000,000) DOLLARS plus interest on the outstanding balance
at a rate per annum equal to the prime rate on the date hereof as set by
Citibank N.A., New York, New York.
The entire unpaid principal balance of this Note and unpaid accrued
interest shall immediately be due and payable on the earlier of January 31,
1998 or upon the closing of the private placement of Series A Preferred Stock
of the Maker.
This Note may be prepaid in part or in full at any time without penalty
or charge and with interest payable only through the date of prepayment.
This obligation shall bind the Maker and its successors and assigns and
the benefits hereof shall inure to the Holder hereof and his heirs, executors,
administrators and assigns.
The Maker hereby forever waives presentment, protest, notice of protest
and notice of dishonor of the within Note.
IN WITNESS WHEREOF, the undersigned has caused this Note to be executed
as of the day and year first above written.
WITNESS: MAKER:
USCI, Inc.
/s/ [witness signature] By: /s/ Bruce A. Hahn, Chairman
EXHIBIT 10.4
No. MK-1
REPLACEMENT PROMISSORY NOTE
$1,000,000 New York, New York
November 18, 1997
FOR VALUE RECEIVED, the undersigned, USCI, Inc., a Delaware corporation,
with offices at 6115-A Jimmy Carter Blvd., Norcross GA 30071 ("Maker"),
promises to pay to the order of Michael Karfunkel ("Holder"), the principal
sum of ONE MILLION ($1,000,000) DOLLARS plus interest on the outstanding
balance at a rate per annum equal to the prime rate on the date hereof as set
by Citibank N.A., New York, New York.
The entire unpaid principal balance of this Note and unpaid accrued
interest shall immediately be due and payable on the earlier of January 31,
1998 or upon the closing of the private placement of Series A Preferred Stock
of the Maker.
This Note may be prepaid in part or in full at any time without penalty
or charge and with interest payable only through the date of prepayment.
This obligation shall bind the Maker and its successors and assigns and
the benefits hereof shall inure to the Holder hereof and his heirs, executors,
administrators and assigns.
The Maker hereby forever waives presentment, protest, notice of protest
and notice of dishonor of the within Note.
IN WITNESS WHEREOF, the undersigned has caused this Note to be executed
as of the day and year first above written.
WITNESS: MAKER:
USCI, Inc.
/s/ [witness signature] By: /s/ Bruce A. Hahn, Chairman
<PAGE>
No. MK-2
REPLACEMENT PROMISSORY NOTE
$1,000,000 New York, New York
November 18, 1997
FOR VALUE RECEIVED, the undersigned, USCI, Inc., a Delaware corporation,
with offices at 6115-A Jimmy Carter Blvd., Norcross GA 30071 ("Maker"),
promises to pay to the order of Michael Karfunkel ("Holder"), the principal
sum of ONE MILLION ($1,000,000) DOLLARS plus interest on the outstanding
balance at a rate per annum equal to the prime rate on the date hereof as set
by Citibank N.A., New York, New York.
The entire unpaid principal balance of this Note and unpaid accrued
interest shall immediately be due and payable on the earlier of January 31,
1998 or upon the closing of the private placement of Series A Preferred Stock
of the Maker.
This Note may be prepaid in part or in full at any time without penalty
or charge and with interest payable only through the date of prepayment.
This obligation shall bind the Maker and its successors and assigns and
the benefits hereof shall inure to the Holder hereof and his heirs, executors,
administrators and assigns.
The Maker hereby forever waives presentment, protest, notice of protest
and notice of dishonor of the within Note.
IN WITNESS WHEREOF, the undersigned has caused this Note to be executed
as of the day and year first above written.
WITNESS: MAKER:
USCI, Inc.
/s/ [witness signature] By: /s/ Bruce A. Hahn, Chairman
EXHIBIT 10.5
NOTE: PORTIONS OF THIS EXHIBIT (MARKED WITH AN ASTERISK) HAVE BEEN OMITTED
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
AMERITEL COMMUNICATIONS, INC.
6115-A Jimmy Carter Boulevard
Norcross, Georgia 30071
August 29, 1997
SunTV
6600 Port Road
Groveport, Ohio 43125
Attn: Mr. Joseph Kapps
Gentlemen:
This letter confirms the procedure which Ameritel Communications, Inc.
("Ameritel") will follow in providing cellular services for the customers of
SunTV.
Ameritel shall porvide SunTV's customers with cellular services on an
exclusive basis, which shall include processing cellular telephone activations
and providing access to cellular mobile radio service ("Service") in all SunTV
retail store locations as set forth on Exhibit A attached hereto. In the
event that SunTV opens additional stores, such locations shall be added to
Exhibit A and Ameritel shall provide cellular services to SunTV's customers
at such locations pursuant to the terms and conditions hereof.
To enable Ameritel to activate the cellular telephones purchased by SunTV's
customers, customers will be required to call a toll-free Ameritel activation
line and submit specific information for credit processing. Customers may be
required to make a security deposit in order to receive Service. After credit
review has been completed and approved, and any required deposit received, the
customer's telephone will be activated.
Ameritel will maintain a toll-free 800 telephone number to permit SunTV's
customers participating in the SunTV-Ameritel program to initiate the
activation process and to make all inquiries. The 800 telephone number will
also provide access to the Ameritel automated information center, 24 hours a
day, seven days a week.
The 800 activation number will be included with each cellular telephone
purchased by SunTV's customers. SunTV's customers must select a rate plan in
accordance with the Ameritel published rate plans, as set forth in the
attached Cellular Schedule, or in any promotions approved in writing by
Ameritel.
SunTV acknowledges that Ameritel will only activate cellular telephones sold
to customers agreeing to use Ameritel Service. Cellular telephones purchased
by customers who intend to use Service provided by any carrier other than
Ameritel will not be activated by Ameritel and will not qualify for any
Ameritel cash back or other promotional offerings.
SunTV shall not sell any cellular telephones which have not received a typed
acceptance certificate from the FCC pursuant to Parts 2 and 69 of the U.S.
Code of Federal Regulation, are not compatible with the cellular systems
operated by the providers of Service to Ameritel, are not authenticatable or
which are otherwise not acceptable to Ameritel.
<PAGE>
SunTV shall comply with Ameritel's administrative procedures for provision of
cellular services, including delivery by facsimile, electronic transfer or
regular mail of such copies of customer service agreements, credit
applications and other documentation required in connection therewith. SunTV
shall also engage in commercially reasonable amounts of newspaper or other
advertising to promote the sale of cellular telephones.
Ameritel shall pay to SunTV the commission set forth on the attached Cellular
Schedule for each activation by Ameritel of a cellular telephone purchased by
a SunTV customer. Such commission shall be payable by the 25th day of the
month following the month in which the activation occurs.
Either party may terminate this agreement on 60 days prior written notice to
the other.
If this letter accurately sets forth the terms of our agreement, please so
indicate by signing the enclosed copy where indicated and returning same to
the undersigned.
Very truly yours,
Ameritel Communications, Inc.
By: /s/ Albert Bodamer
Senior Vice President
Accepted and Agreed
SunTV
By: /s/ John Lyme
<PAGE>
STORE # CITY STATE MARKET
To be rolled immediately:
3 Columbus OH Columbus
6 Columbus OH Columbus
7 Columbus OH Maryville
9 Columbus OH Columbus
12 Hebron OH Columbus
14 Zanesville OH Maryville
15 Ontario OH Mansfield
17 Findlay OH Toledo
20 Canton OH Saginaw
25 Mentor OH Cleveland
26 North Olmstead OH Akron
27 Parma OH Cleveland
29 Elyria OH Cleveland
30 North Randall OH Cleveland
32 Akron OH Akron
33 Fairlawn OH Akron
35 Columbus OH Maryville
37 Mayfield OH Cleveland
38 Lancaster OH Marysville
39 Lima OH Lima
43 Cincinnati OH Marysville
46 Florence KY Covington
47 Cincinnati OH Cincinnati
To be rolled in 30 to 60 days
19 West Mifflin PA Pittsburgh
21 Monroeville PA Pittsburgh
22 Pittsburgh PA Pittsburgh
23 Pittsburgh PA Pittsburgh
34 Pittsburgh PA Pittsburgh
36 Washington PA Pittsburgh
41 Johnstown PA Johnstown
Roll Out To Be Announced
16 Chillicothe OH Ross County
18 Cranberry Twp PA Butler
24 Steubenville OH Steubenville
28 Warren OH Youngstown
31 Youngstown OH Youngstown
40 Erie PA Erie
42 Beckley WV Beckley
44 St. Clairsville OH Wheeling
45 Parkersville WV Parkersburg
58 Charlestown WV Charlestown
62 Huntington WV Huntington
Cellular Schedule
Rate Plans Family Link Special Connect Cell Touch
- ---------- ----------- --------------- -----------
Monthly Service $19.95 $29.95 $49.95
Package
Included Minutes 0 30 120
Contract Length Month-to-Month 1 year 1 year
1 year
Addition Peak $.45/min-$.35/min $.30/min $.25/min
Offpeak $.45/min-$.35/min $.15/min $.25/min
Commission *
Prices effective March 1, 1997. All prices are subject to change without
notice. Rates shown do not include applicable loca tolls, roaming tolls, or
taxes.
* THIS PORTION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION
EXHIBIT 10.6
NOTE: PORTIONS OF THIS EXHIBIT (MARKED WITH AN ASTERISK) HAVE BEEN OMITTED
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
AMERITEL COMMUNICATIONS, INC.
6115-A Jimmy Carter Blvd.
Norcross GA 30071
Telephone 770-840-8888 Fax 770-840-0905
September 15, 1997
Mr. Mark Steinberg
Divisional Merchandise Manager
CompUSA
14951 North Dallas Parkway
Dallas, Texas 75240
Dear Mark:
I appreciate the time you gave to me this past week.
The program could support national distribution in all locations with no
inventory risk. There is an opportunity to have a defined stable gross
profit margin on each sale, while promoting for the first time a true
national, uniform airtime program and promotion that would be applicable in
all stores. This program could most effectively and efficiently be
supported by the national flyer program at CompUSA. With the power of this
media and the absolute power of airtime programs, there is no doubt that
CompUSA would become a dominant player in the wireless category.
We propose the following:
- - A pilot in your Arizona stores 287-Phoenix, 631-Phoenix, 227-Mesa and
147-Duluth, 487-Roswell and 491-Smyrna for a NET COST BUNDLING
PROGRAM.
- - We would utilize RAP III, which is an effortless administrative
process in which the store must have the consumer complete a nine-
line form. The consumer takes this form home with the product. The
original is sent by U.S. mail to USCI from CompUSA.
- - Once the customer has completed this form, a copy may remain at the
CompUSA store, but the actual transaction and sale of this product
will be the catalyst for commission due to CompUSA for each porduct
sold.
- - The consumer may activate the phone within seven days of purchase or
will be liable for a penalty, if the phone is kept and/or not
activated. (CompUSA has not responsibility for the penalty).
- - This procuess does not utilize fax machines or any connectivity to
our processing ehadquarters by the stores. It gives them a simple,
clean process.
- - The measurement of commissions is done by sale through your system
and has no relationship to the interaction between the consumer and
USCI. OBviously we would like operational support and enforcement
that the simple process isutilized and the RAP III forms are
completed and sent.
<PAGE>
- - The product would be placed at store level at no charge. We would
suggest the Motorola Flip 650 phone and the Motorola TeleTac 250,
which would be utilized as the two lead products in this program.
These products would be placed with a prescribed inventory model in
CompUSA at no charge and there would be no payment responsible from
CompUSA to the vendor, except in the case of internal product loss
(shrink), at store level.
- - Only in the event that product has not been sold and there is an
inventory shortage (shrink) would there be any liability for actual
product cost.
- - Ameritel would be resonsible for paying a * sell-through rebate
payable each month by the 15th of the month for all prior month's
sales billed by CompUSA to USCI, based upon a POS system Report by
store location.
- - All merchandise would be shipped direct to stores and preprogrammed.
- - There would be 100% return for defects and all overstocks would be
under the control of ameritel to determine stock adjustment time
periods, if necessary, by store location.
- - Ameritel will assign a senior headquarters Account Manager and will
have local service personnel in the market trained to support any
store level issues on a weekly basis.
- - Ameritel will place ads in the pilot market to advertise airtime and
access plan promotions and on a consistent basis will list CompUSA in
these advertisements.
- - Ameritel will combine advertising in both the Atlanta and Phoenix
markets for cellular and paging services at CompUSA and institutional
ads every Sunday and Thursday in addition to two CompUSA only ads
each month.
- - Based upon receiving cost allocation, Ameritel will contribute to
color flyer activity in each of the pilot markets in Arizona and
Atlanta.
- - Ameritel will contribute during the months of October, March and
April a * incentive plan for each cellular phone marketed under the
RAP process to store associates.
- - Ameritel will provide an employee program in both markets.
Based upon current sales trends in the Phoenix, Nashville, Memphis, Denver
and San Francisco markets, we believe that a conservative number of
activations can be produced in a level in excess of 25 numbers per month
per store.
The elements summarized in this letter would be implemented upon your
acceptance and approval of this special program for the Arizona and
Atlanta, GA markets. There would not be the necessity for additional
agreements if the information in this letter is acceptable.
Sincerely,
/s/ Bruce Hahn, Chairman, Chief Executive Officer
cc: Harold Wilson
Rob Lewis
Scott Edwards
Accepted for CompUSA
/s/ [authorized officer], 9/30/97
* THIS PORTION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION
EXHIBIT 10.7
NOTE: PORTIONS OF THIS EXHIBIT (MARKED WITH AN ASTERISK) HAVE BEEN OMITTED
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
ADDENDUM NO. 1
This Addendum No. 1 to the Cellular Service Sales Agreement effective
("Agreement") between Ameritel Communications, Inc. (the "Company") and
Cable & Wireless, Inc. ("CWI") modifies the Agreement as follows:
Notwithstanding any provision to the Agreement to the contrary, if at any
time during the initial term or any renewal term of the Agreement either of
the following situations occur: (1) If there is a transfer of control of
the business of CWI, either by merger, acquisition, sale of assets or
otherwise; or (2) If the Company does not match the rates, charges and
quantity discount structure for prospective wireless users set forth in a
firm, written quotation ("Wireless Quotation") received by CWI from another
wireless service provider ("Other Wireless Provider") whereby CWI would act
as an independent sales agent to sell the Other Wireless Provider's
Wireless services which are (i) materially the same as the Wireless
Services set forth in this Agreement, and (ii) for paging services,
provided under a national rate plan platform, and for cellular services,
provided in materially the same geographic areas as the cellular services
under the Agreement. In addition, the Wireless Quotation shall also
include a compensation plan that is at least equal to or more favorable
than the compensation plan set forth in the Agreement.
Ameritel Communications, Inc. Cable & Wireless, Inc.
By:/s/ Bruce Hahn, CEO By: /s/ Richard Yalen, COO
10/15/97 10/15/97
<PAGE>
CELLULAR SERVICE SALES AGREEMENT
THIS AGREEMENT is made and entered into by and between
Ameritel Communications, Inc. (the "Company") and Cable & Wireless, Inc.
("CWI") this day of September 1997.
WHEREAS, the Company has entered into or intends to enter into
agreements with certain facilities based carriers authorizing it to resell
access to and usage of the cellular radio systems ("Cellular Service"),
paging systems, including one-way paging, two-way paging and Voice Now
paging, ("Paging Service"), Specialized Mobile Radio ("SMR"), excluding
Personal Communications Services ("PCS"), (collectively "Wireless Service")
within the territories covered by such agreements as set forth in Schedule
1 ("Territories") as such may be amended from time to time by the Company,
and
WHEREAS, CWI desires on behalf of the Company to solicit
prospective Subscribers to the Company's Wireless Services.
NOW, THEREFORE, in consideration of the mutual agreements and
understandings herein contained, the parties hereto agree as follows:
1. RELATIONSHIP OF THE PARTIES.
The Company hereby agrees that CWI may solicit prospective
Subscribers to the Company's Wireless Service. The Company hereby reserves
to itself the right to market Wireless Service, either directly or through
other sales agents, representatives or referral partners, to potential
Subscribers in the Territories. During the term of this Agreement, CWI
shall not offer or sell Wireless Service provided or sold by any third
party, or refer any Subscribers or potential Subscribers to any other
provider of Wireless Service, in the Territories. During the term of this
Agreement and for a period of one (1) year following expiration or
termination thereof, CWI shall not solicit, directly or indirectly, any
Subscribers of the Company's Wireless Service for the purpose of persuading
such Subscribers to subscribe to Wireless Service provided by anyone other
than the Company. In the event that this Agreement is terminated by CWI
pursuant to the provisions of paragraphs 3(c), 4 or 7(a), the one year
restrictions against solicitation by CWI following such termination shall
not apply.
In performing their respective duties hereunder, the parties
shall adhere strictly to the highest standards of fair dealing and business
conduct. CWI shall adhere to such reasonable procedures as may be
established, from time to time, by the Company regarding the activation and
providing of Wireless Service hereunder, and to all applicable tariffs,
laws, rules and regulations.
2. DUTIES AND RESPONSIBILITIES OF CWI.
(a) Solicitation. The Company authorizes CWI to
solicit and offer Company Wireless Services to CWI's existing and
prospective customers.
<PAGE>
The Company shall have the sole right in its discretion to determine
whether to offer Wireless Service to any potential Subscriber referred by
CWI and to determine the terms and conditions of such Wireless Service.
CWI shall utilize forms of the Company's Subscriber application and
Wireless Services agreement, as set forth in Schedule 2 hereto, in its
solicitation activities ("Subscriber Forms"). Potential Subscribers may be
drawn from all classes of potential users of Wireless Service excepting
current Subscribers to the Company's Wireless Service. CWI shall forward
promptly all Subscriber Forms to the Company. No contract between the
Company and a Subscriber shall exist by reason of the delivery of any
Subscriber Form to the Company. Enrolled Subscribers shall be Wireless
Service customers of the Company, subject to the Company's terms and
policies then in effect. CWI shall have no right or obligation to bill or
collect from Subscribers or potential Subscribers any money or charges for
Wireless Service, to conduct any sales and marketing activities on behalf
of the Company except as expressly set forth herein, or to provide
Subscribers or potential Subscribers with any customer service and support.
In the event that an order referred by CWI is rejected, the Company will
notify CWI of the reason for such rejection.
(b) Regulatory Matters. This Agreement shall at all
times be subject to (i) changes or modifications to comply with, and
(ii) any necessary approvals of, local, state and federal regulatory
agencies having jurisdiction over the provision of Wireless Service in the
Territories. The Company may add, delete, suspend or modify the rates
for, and/or the particular services comprising, Wireless Service, and
determine whether such changes apply to both existing or future
Subscribers. CWI shall not take any action inconsistent with any efforts
by the Company or any provider of Wireless Service to the Company before
regulatory authorities or others regarding any modification of rates for
Wireless Service.
3. ACTIVATION PROCESSING RESPONSIBILITIES: Provisions of Wireless
Services
(a) The respective responsibilities of the Company and
CWI in connection with processing the activation of Wireless Service for
Subscribers are as set forth in Schedule 2 attached hereto.
(b)(i) The Company shall be responsible, at its cost
and expense, for providing and delivering (or arranging for delivery) to
Subscribers of the cellular telephones listed on Schedule 2A attached
hereto, which may be amended by the Company from time to time on notice to
CWI. In the event that Schedule 2A is amended by the addition of other
models of cellular telephones approved in advance by CWI, the Company may,
at its option, require the Subscriber to reimburse it for the Company's
cost of purchasing such telephones, if such cost exceeds $150.
(ii) The Company shall be responsible for
delivering, or arranging for the delivery, to Subscribers of all pagers
sold pursuant to the terms of this Agreement. The Company shall bill
Subscribers directly for all pagers purchased utilizing an acceptable Visa,
MasterCard, Discover or American Express credit card. In the event the
purchaser is a larger centrally billed Subscriber, the Company will invoice
the purchaser directly.
(c) Upon activation, the Company shall provide
Subscribers within the Territories with available Wireless Services
pursuant to the then current rates, terms and conditions of the Company's
Wireless Service agreement, as amended or modified from time to time by the
Company in its sole
<PAGE>
discretion. A copy of the Company's current rates and charges for Wireless
Service is attached as Schedule 2B. The Company shall provide CWI with
ninety (90) days notice of any changes in the Territories or in the
Company's schedule of rates and charges but shall incur no liability by
reason of its failure to do so. If such increase exceeds 10% in any twelve
month period, CWI shall have the right to terminate this Agreement
4. ACTIVATION COMMISSIONS; AIRTIME RESIDUALS.
During the term of this Agreement the Company shall pay to CWI
activation commissions ("Activation Commissions"), subject to applicable
chargebacks, and airtime residuals ("Airtime Residuals") in connection with
the enrollment of Subscribers solicited by CWI in accordance with the
attached Schedule 3 (which may be amended by the Company from time to time
on 30 days prior written notice to CWI). In the event that the activation
commissions or airtime residuals set forth in Schedule 3 are reduced by the
Company, CWI at its option may terminate this Agreement. Reductions of
airtime residuals shall not take effect retroactively. Activation
Commissions shall be payable by the Company after the completion of the
first billing cycle following activation of the Subscriber's cellular
telephone (approximately 45 days) and Airtime Residuals shall be payable
within sixty (60) days from each January 1st and July 1st occurring during
the term of this Agreement. Upon termination, CWI's right to receive
Activation Commissions and Airtime Residuals shall terminate, except for
Activation Commissions payable for activations of Wireless Service made
prior to the termination or expiration date.
Disputed amounts shall be paid upon resolution of the dispute.
CWI hereby acknowledges that it has not relied upon any representation,
warranty or guaranty, express or implied, as to its earnings pursuant to
this Agreement.
5. USE OF MARKS BY CWI;
PROTECTION OF THE COMPANY'S RIGHTS.
CWI may use the Marks in any materials utilized in its
solicitation activities on behalf of the Company, subject to the review and
prior written approval by the Company of any such proposed use. CWI shall
neither acquire, nor claim any right, title or interest in or to the Marks
through advertising and sale of the Company's Wireless Services or
otherwise. CWI acknowledges and agrees that it has no right, title or
interest in any of the Marks. If the Company notifies CWI to modify or
discontinue the use of any or all of the Marks, CWI shall do so as soon as
possible after receipt of such notice, at CWI's sole cost and expense. The
Company shall provide CWI at no charge with revised Company sales
literature which incorporates the new Marks and replace at the Company's
own cost and expense, any approved Wireless Services materials prepared by
CWI due to the Company's changes to its Marks. Upon termination or
expiration of this Agreement or this relationship, CWI shall have no right
to continue any use of a Mark. The Company agrees to indemnify and hold
CWI harmless from any and all claims, losses and damages or other expenses
(including reasonable attorney's fees) which arise or result from CWI's use
of a Mark provided that CWI complies with the terms of this Section 5. Any
unauthorized use of the Marks by CWI shall constitute an infringement of
the rights of the Company in and to the Marks, and shall constitute a
material breach of this Agreement.
<PAGE>
6. TERM AND EXTENSION OF RELATIONSHIP.
This Agreement shall be for an initial term of twelve (12)
months commencing on the date of full execution of this Agreement and shall
automatically be extended for successive twelve (12) month periods on the
same terms and conditions as are in effect at the time of such renewal
unless either party shall have given written notice to the other of its
intention not to renew this Agreement at least ninety (90) days prior to
the expiration of the then-current term hereof.
7. TERMINATION OR EXPIRATION OF AGREEMENT.
(a) Termination. Either party shall have the right to
terminate this Agreement immediately upon written notice if the other
(i) makes an assignment for the benefit of creditors; (ii) has an Order for
Relief under Title 11 of the United States Code entered by any United
States Court against it; (iii) has a trustee or receiver of any
substantial part of its assets appointed by any court; or (iv) breaches any
material term or condition of this Agreement which breach is not cured
within fifteen (15) days of notification thereof by the non-breaching
party.
(b) Obligations of CWI Upon Termination or Expiration.
Upon the expiration or termination of this Agreement for any reason, CWI,
shall at the Company's request and at its direction either return to the
Company all materials, if any, identifying or relating to the Company's
business or destroy such materials including but not limited to all
documents, records or other materials, and all copies either xerox or
computer, which were provided to CWI by the Company during the term of this
Agreement.
8. MISCELLANEOUS.
(a) Except to the extent governed by federal law, rules
or regulations, this Agreement shall be interpreted under and governed by
the laws of the State of Georgia without regard to conflicts of law
principles.
(b) If any provision of this Agreement is declared or
found to be illegal, unenforceable, or void, the parties shall negotiate in
good faith to agree on a substitute provision that is legal and enforceable
and which achieves to the greatest extent possible the legal and commercial
objectives of the original provision. If the remainder of this Agreement
is not materially affected by such declaration or finding and is capable of
substantial performance, then the remainder shall continue in full force to
the extent permitted by law.
(c) The rights of the Company and CWI hereunder are
cumulative, and no exercise or enforcement by the Company or CWI of any
right or remedy hereunder shall preclude the exercise or enforcement by the
Company or CWI of any right or remedy hereunder or any right or remedy to
which the Company or CWI is entitled by law. Neither the Company nor CWI
shall be deemed to have waived any of its rights under this Agreement by
virtue of any failure or refusal by that party to exercise any right under
this agreement or to require full compliance by the other party with its
obligations under this Agreement, or by virtue of any failure or refusal to
exercise any right or to require full compliance with respect to the
Company's agreement with any other referral agent. A waiver of any term or
provision of this Agreement may only be given by a written instrument
executed by the waiving party.
<PAGE>
(d) Neither the Company nor CWI shall be liable for
loss or damage or be deemed to be in breach of this Agreement if its
failure to perform its obligations results from (i) compliance with any
change that occurs during the term of this Agreement to any law, ruling,
order, regulation, requirement or instruction of any federal, state or
municipal government or any department or agency thereof or any court of
competent jurisdiction which materially adversely affects a party,
(ii) acts or omissions of the other party in violation of this Agreement,
or (iii) acts of God, fires, strikes, embargoes, war, insurrection, riot,
and other causes beyond the reasonable control of the party. Any delay
resulting from any of said causes shall extend performance accordingly or
excuse performance, in whole or in part, as may be reasonable.
(e) Each party ("Indemnifying Party") shall indemnify,
defend and hold the other party and its directors, officers, employees,
agents and/or any assignees thereof (and their respective heirs and legal
representatives) harmless against any liability for any third party claims
or demands arising out of (i) the negligence and wilful misconduct of the
Indemnifying Party, or (ii) any material breach by the Indemnifying Party
of this Agreement.
The Company shall indemnify, defend and hold CWI harmless
from and against all third-party claims, demands, actions, causes of
action, judgments, costs and reasonable attorney's fees and expenses of any
kind arising from or related to the provision and use of Wireless Services.
In no event shall either party be liable for any loss or profits or for any
indirect, incidental, special, exemplary, or consequential damages.
(f) This Agreement, including the exhibits and
schedules thereto, constitutes the entire agreement of the parties hereto
in respect of the subject matter contained herein.
(g) Neither party may assign or transfer this Agreement
without the prior written consent of the other, which consent may not be
unreasonably withheld except that either party may upon written notice to
the other assign its rights and obligations to its affiliates. Subject to
the foregoing sentence, this Agreement is binding upon the parties and
their respective executors, administrators, heirs, assigns and successors
in interest.
(h) All terms, provisions, representations, warranties,
covenants and obligations of either party shall survive the expiration or
termination of this Agreement and the performance by either party hereunder
and shall continue in full force and effect subsequent to, and
notwithstanding such expiration or termination or performance, until they
are satisfied in full or by their nature expire.
(i) Headings to the sections and paragraphs of this
Agreement are to facilitate reference only, do not form a part of this
Agreement, and shall not in any way affect the interpretation hereof.
(j) This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of
which together shall constitute one and the same instrument notwithstanding
that all parties are not signatories to each counterpart.
(k) This Agreement may not be modified, amended or
supplemented except by an agreement in writing signed by all of the parties
hereto.
<PAGE>
(l) Except as expressly provided herein, nothing herein
expressed or implied is intended or shall be construed to confer upon or
give to any person other than the parties hereto and their successors or
permitted assigns, any rights, benefits or remedies of any kind or
character whatsoever under or by reason of this Agreement.
(m) Neither party shall issue a news release, public
announcement, advertisement, or other form of publicity concerning the
existence or the terms of this Agreement without obtaining prior written
approval from the other party.
9. ACKNOWLEDGEMENT AND REPRESENTATIONS.
Each party represents and warrants that (i) the execution,
delivery and/or performance of this Agreement will not conflict with or
result in any breach of any provision of its charter or by-laws or any
agreement, contract or legally binding commitment or arrangement to which
it is a party, and (ii) it is not subject to any limitation or restriction
(including, without limitation, non-competition, and confidentiality
arrangements) which would prohibit, restrict or impede the performance of
any of its obligations under this Agreement. CWI is acting as an
independent sales agent of the Company and, the Company and CWI agree that
this Agreement does not constitute the parties as principal and agent, a
joint venture, partnership, employment or similar relationship among the
parties, and, unless authorized in writing, neither the Company nor CWI
shall make any express or implied agreements, guarantees or
representations, or incur any indebtedness or obligations, in the name of
or on behalf of the other.
10. DEFINITIONS.
As used in this Agreement, the following terms shall have the
meanings specified in this Article 10.
Marks. Trademarks, trade names, insignia, symbols, decorative
designs, or similar indicia which the Company owns or is licensed or
sublicensed to use in connection with the offering or provision of Wireless
Service or products relating thereto.
Subscriber. The ultimate user of Wireless Service provided by
or through the Company and who purchased Wireless Service from and is
responsible for the payment of charges to the Company.
11. NOTICES.
All notices, request, demands and other communications
hereunder shall be in writing and may be given by personal delivery, by
certified mail, return receipt requested, or by facsimile, electronically
confirmed and followed up immediately by regular mail, or by overnight
carrier to the following addresses or to such other addressor or shall be
designated in writing:
If to the Company:
Ameritel Communications, Inc.
6115-A Jimmy Carter Blvd.
Norcross, GA 30071
Attn: Albert Bodamer
<PAGE>
with a copy to:
Leonard R. Glass, Esq.
Cole, Schotz, Meisel, Forman & Leonard, P.A.
25 Main St.
Hackensack, NJ 07601
If to CWI:
Cable & Wireless, Inc.
8219 Leesburg Pike
Vienna, Virginia 22182
Attn: Contract Management
IN WITNESS WHEREOF, intending to be legally bound, the parties
have executed and delivered this Agreement in counterparts by their duly
authorized representatives as of the date first written above.
AMERITEL COMMUNICATIONS, INC.
By /s/ Bruce A. Hahn, Chairman
CABLE & WIRELESS, INC.
By /s/ Richard Yalen, COO
<PAGE>
SCHEDULE 1
THE TERRITORIES
A. Cellular Telephone Service
State MSA/RSA Name
AL Alabama 1 - Franklin
AL Alabama 1 - Franklin
AL Alabama 1 - Franklin
AL Alabama 1 - Franklin
AL Alabama 2 - Jackson
AL Alabama 2 - Jackson
AL Alabama 6 - Washington
AL Anniston
AL Birmingham
AL Florence
AL Gadsden
AL Huntsville
AL Mobile
AL Tuscaloosa
AZ Arizona 1 - Mohave
AZ Arizona 2 - Coconino
AZ Arizona 3 - Navajo
AZ Arizona 4 - Yuma
AZ Arizona 5 - Gila
AZ Arizona 6 - Graham
AZ Arizona 6 - Graham
AZ Arizona 6 - Graham
AZ Phoenix
AZ Tuscon
CA Bakersfield
CA California 10 - Sierra
CA California 11 - El Dorado
CA California 12 - Kings
CA California 3 - Alpine
CA California 4 - Madera
CA California 5 - San Luis Obispo
CA Chico
CA Fresno
CA Modesto
CA Napa
CA Redding
CA Sacramento
CA Salinas - Seaside - Monterey
CA San Francisco
CA San Jose
CA Santa Cruz
CA Santa Rosa - Petaluma
CA Stockton
CA Visalia - Tulare - Porterville
CA Yuba City
CO Colorado 3 - Garfield
CO Colorado Springs
CO Denver
CO Fort Collins - Loveland
CO Greeley
FL Honda 1 - Collier
FL Florida 3 - Hardee
FL Florida 5 - Putnam
FL Florida 5 - Putnam
FL Fort Myers
<PAGE>
GA Athens
GA Atlanta
GA Georgia 3 - Chattooga
HI Hawaii 2 - Maui
HI Honolulu
ID Boise
ID Idaho 4 - Elmore
IL Aurora - Elgin
IL Chicago
IL Illinois 6 - Montgomery
IL Kankakee
IL Rockford
IN Anderson
IN Bloomington - Normal
IN Gary - Hammond - East Chicago
IN Indiana 1 - Newton
IN Indiana 1 - Newton
IN Indiana 9 - Decatur
IN Indianapolis
IN Kokomo
IN Lafayette
IN Muncie
IN Terre Haute
KY Clarksville - Hopkinsville (TN-KY)
KY Kentucky 7 - Trimble
KY Kentucky 7 - Trimble
KY Kentucky 7 - Trimble
KY Lexington - Fayette
KY Louisville
NE Omaha
NJ Allentown - Bethlehem - Easton (PA-NJ)
NM Albuquerque
NM Las Cruces
NY Binghamton
NY Buffalo
NY Elmira
NY New York 1 - Jefferson
NY New York 2 - Frnaklin
NY New York 3 - Chautaugua
NY New York 4 - Yates
NY Rochester
NY Syracuse
NY Utica - Rome
OH Akron
OH Canton
OH Cleveland
OH Lorain - Elyria
OR Eugene - Springfield
OR Portland
OR Salem
TN Chattanooga (TN-GA)
TN Memphis (TN-AR-MS)
TN Nashville
TN Tennessee 2 - Cannon
TN Tennessee 5 - Fayette
TN Tennessee 5 - Fayette
TN Tennessee 5 - Fayette
TN Tennessee 5 - Fayette
TN Tennessee 7 - Bledsoe
<PAGE>
TN Tennessee 7 - Bledsoe
TN Tennessee 7 - Bledsoe
TN Tennessee 9 - Maury
TX El Paso
TX Galveston - Texas City
UT Provo - Orem
UT Salt Lake City
UT Utah 1 - Box Elder
UT Utah 2 - Morgan
VA Richmond
WA Bellingham
WA Bremerton
WA Olympia
WA Richland - Kennewick - Pasco
WA Seattle
WA Spokane
WA Tacoma
WA Washington 1 - Clallam
WA Washington 6 - Pacific
B. (Paging Services)
National Coverage - estimated 200 million POPs.
Note: Additional coverage areas and Wireless Services may be added to this
schedule by Ameritel upon notice to CWI.
<PAGE>
SCHEDULE 2
ACTIVATION PROCESSING RESPONSIBILITIES AND PROCEDURES
CABLE & WIRELESS
ACTIVATION & PROCESS FLOWS FOR CELLULAR & PAGING PROGRAMS
TABLE OF CONTENTS:
1. Cellular Conversion Activation Process Flow for Individually Billed
Customer.
2. Cellular Service & Equipment Activation Process Flow for Individually
Billed Customer.
3. Cellular Conversion Activation Process Flow for Business Billed
Customer.
4. Cellular Service & Equipment Activation Process Flow for Business
Billed Customer.
5. Paging Service & Activation Process Flow.
<PAGE>
CABLE & WIRELESS
CELLULAR CONVERSION ACTIVATION PROCESS FLOW
FOR INDIVIDUALLY BILLED CUSTOMER
1. CABLE & WIRELESS REPRESENTATIVE WILL NEED TO DO THE FOLLOWING TO
PROCESS A CUSTOMER:
- Check coverage (via hard copy materials or 800# to dedicated
C&W service unit at USCI). If covered, proceed to next bullet.
If not covered, transaction cancelled.
- Cable & Wireless Representative has customer complete an
Ameritel application (Attachment"A").
- Cable & Wireless Representative faxes application to dedicated
C&W service unit at USCI (Using Attachment E) for credit check.
Include current ESN on the application (Attachment "A").
- USCI faxes credit results back to Cable & Wireless
Representative (Using Attachment E). If deposit required, copy
of check or credit card information must be provided on the
application and faxed back to USCI. If customer has deposit
but does not wish to continue, transaction is canceled. If no
deposit required or customer wishes to pay deposit, proceed to
next bullet.
- Cable & Wireless Representative faxes Ameritel application to
USCI for processing (Using Attachment E).
- USCI and Ameritel process activation.
2. USCI WILL PROVIDE THE FOLLOWING BACK TO THE CABLE & WIRELESS
REPRESENTATIVE (We will fax the application back using Attachment E)
TO COMPLETE THE ACTIVATION PROCESS:
- Mobile number
- System ID (which will be written in the mobile number field
next to the mobile number)
3. AT THE SOLE OPTION OF C&W, PHONE WILL BE PROGRAMMED IN ONE OF THE
FOLLOWING THREE WAYS:
- CWI representative will program customer phone;
- Customer will call Ameritel's 1-800 number to program phone; or
- The customer will employ an independent company to program the
phone at a cost not to exceed $35.00, which cost will be
reimbursed by Ameritel and credited to the the customer's
account.
4. TRANSACTION IS COMPLETE.
[Flow chart of above]
Attachment "A" [copy of Ameritel Cellular Service Subscriber Application]
Attachment E [copy of sample fax cover sheet]
<PAGE>
CABLE & WIRELESS
CELLULAR SERVICE AND EQUIPMENT ACTIVATION
PROCESS FLOW FOR INDIVIDUALLY-BILLED CUSTOMER
1. CABLE & WIRELESS REPRESENTATIVE WILL NEED TO DO THE FOLLOWING TO
PROCESS A CUSTOMER:
- Check coverage (via hard copy materials or 800# to dedicated
C&W service unit at USCI). If covered, proceed to next bullet.
If not covered, transaction canceled.
- Cable & Wireless Representative has customer complete an
Ameritel application (Attachment"A").
- Cable & Wireless Representative faxes application to dedicated
C&W service unit at USCI (Using Attachment E) for credit check.
Include current ESN on the application (Attachment "A").
- USCI faxes credit results back to Cable & Wireless
Representative (Using Attachment E) on the application. If
deposit required, copy of check or credit card information must
be provided on the application and faxed back to USCI. If
customer has deposit but does not wish to continue, transaction
is canceled. If no deposit required or customer wishes to pay
deposit, proceed to next bullet.
- Calbe & Wireless Representative fills out Purchase Order
(Attachment D), and has customer sign the Minimum Service
Agreement (MSA) (Attachment "C") for the equipment.
- Cable & Wireless Representative faxes Purchase Order and MSA to
USCI (Using Attachment E) for processing.
- USCI and Ameritel process activation.
2. USCI FACILITATES SHIPMENT OF PRE-PROGRAMMED, ACTIVATED PHONE DIRECTLY
TO CUSTOMER. TRANSACTION IS COMPLETE.
[Flow chart of above]
Attachment "A" [copy of Ameritel Cellular Service Subscriber Application]
Attachment C [form of Minimum Service Agreement]
Attachment D [for of Cellular Order/Service Form]
Attachment E [copy of sample fax cover sheet]
<PAGE>
CABLE & WIRELESS
CELLULAR CONVERSION ACTIVATION PROCESS FLOW
FOR BUSINESS BILLED CUSTOMER
1. CABLE & WIRELESS REPRESENTATIVE WILL NEED TO DO THE FOLLOWING TO
PROCESS CUSTOMER(S):
- Check coverage for each customer (via hard copy materials or
800# to dedicated C&W service unit at USCI). If covered,
proceed to next bullet. If not covered, transaction cancelled.
- Cable & Wireless Representative has business customer complete
the business portion of the Ameritel application
(Attachment"A"). Three business references, a bank reference
and D&B must also accompany the Ameritel application.
- Cable & Wireless Representative faxes Ameritel application and
reference to a dedicated C&W service unit at USCI (Using
Attachment E) for credit check. May take up to 3 business
days.
- USCI faxes credit results back to Cable & Wireless
Representative (Using Attachment E) on the application. If
deposit required, copy of check or credit card information must
be provided on the application and faxed back to USCI. If
customer has deposit but does not wish to continue, transaction
is canceled. If no deposit required or customer wishes to pay
deposit, proceed to next bullet.
- Cable & Wireless fills out "BUSINESS-BILLED PHONE INFORMATION
SHEET" (Attachment "B") for each customer to be activated.
Must include each customer's current ESN.
- Cable & Wireless Representative faxes application and Business-
Billed Phone Information Sheet to USCI (Using Attachment E) for
processing.
- USCI and Ameritel process activation.
2. USCI WILL PROVIDE THE FOLLOWING BACK TO THE CABLE & WIRELESS
REPRESENTATIVE TO COMPLETE THE ACTIVATION PROCESS (via faxing
completed Attachment "B"):
- Mobile number for each line to be activated
- System ID for each line to be activated.
3. AT THE SOLE OPTION OF C&W, PHONE WILL BE PROGRAMMED IN ONE OF THE
FOLLOWING THREE WAYS:
- CWI representative will program customer phone;
- Customer will call Ameritel's 1-800 number to program phone; or
- The customer will employ an independent company to program the
phone at a cost not to exceed $35.00, which cost will be
reimbursed by Ameritel and credited to the customer's account.
4. TRANSACTION IS COMPLETE.
[Flow chart of above]
Attachment "A" [copy of Ameritel Cellular Service Subscriber Application]
Attachment B [form of Business-Billed Phone Information Form]
Attachment E [copy of sample fax cover sheet]
<PAGE>
CABLE & WIRELESS
CELLULAR CONVERSION AND EQUIPMENT ACTIVATION PROCESS FLOW
FOR BUSINESS-BILLED CUSTOMER(S):
1. CABLE & WIRELESS REPRESENTATIVE WILL NEED TO DO THE FOLLOWING TO
PROCESS CUSTOMER(S):
- Check coverage for each customer (via hard copy materials or
800# to dedicated C&W service unit at USCI). If covered,
proceed to next bullet. If not covered, transaction cancelled.
- Cable & Wireless Representative has business customer complete
the business portion of the Ameritel application
(Attachment"A"). Three business references, a bank reference
and D&B must also accompany the Ameritel application.
- Cable & Wireless Representative faxes Ameritel application and
reference materials to a dedicated C&W service unit at USCI
(Using Attachment E) for credit check. May take up to 3
business days.
- USCI faxes credit results back to Cable & Wireless
Representative (Using Attachment E) on the application. If
deposit required, copy of check or credit card information must
be provided on the application and faxed back to USCI. If
customer has deposit but does not wish to continue, transaction
is canceled. If no deposit required or customer wishes to pay
deposit, proceed to next bullet.
- Cable & Wireless has business customer sign the Minimum Service
Agreement (MSA) (Attachment "C") for each phone ordered.
- Cable & Wireless Representative fills out Purchase Order
(Attachment "D") for each phone ordered.
- Cable & Wireless fills out "Business-Billed Phone Information
Form (Attachment "B").
- Cable & Wireless Representative faxes application, MSA,
Purchase Order and Business-Billed Information Formto USCI
(Using Attachment E) for processing.
- USCI and Ameritel process activations.
2. USCI FACILITATES SHIPMENT OF PRE-PROGRAMMED, ACTIVATED PHONE DIRECTLY
TO CUSTOMER. TRANSACTION IS COMPLETE.
[Flow Chart of above]
Attachment "A" [copy of Ameritel Cellular Service Subscriber Application]
Attachment B [form of Business-Billed Phone Information Form]
Attachment E [copy of sample fax cover sheet]
[Paging Process Flow Chart]
Attachment E [copy of sample fax cover sheet]
Attachment F [copy of Paging Order/Service Form]
<PAGE>
SCHEDULE 2A
CELLULAR TELEPHONES TO BE PROVIDED BY AMERITEL
- - Motorola Flip
- - NEC 820
- - Nokia 638
- - Motorola Populus
- - Audiovox MVX 406
Note: The Company may, on notice to CWI in its sole discretion substitute
comparable equipment due to equipment shortages, discontinuations,
pricing and other competitive factors. The Company may also add
models pursuant to Section 3(b)(i) of this Agreement.
<PAGE>
SCHEDULE 2B
RATES AND CHARGES
CABLE & WIRELESS CORPORATE RATE PLANS
Listed below are rate plans that can be used by Cable & Wireless to market
to the end consumer.
Markets: Markets including: Denver, Phoenix, Salt Lake, Seattle, Portland,
Colorado Springs, Boise and more.
Minute Range Monthly Charge Peak Rate Off-Peak Rate
0-30 $16.95 $.35 $.35
31-100 $14.95 $.34 $.34
101-200 $12.95 $.33 $.33
201-300 $10.95 $.32 $.32
301 and over $8.95 $.31 $.31
Markets: Markets including: Nashville TN, Memphis TN, Jackson TN,
Chattanooga TN, Louisville KY, Lexington KY, Birmingham AL, Tuscaloosa AL,
Mobile AL, Huntsville AL, Richmond VA, Rockford IL and more.
Minute Range Monthly Charge Peak Rate Off-Peak Rate
0-30 $16.95 $.35 $.35
31-100 $14.95 $.30 $.30
101-200 $12.95 $.25 $.25
201-300 $10.95 $.23 $.23
301 and over $8.95 $.21 $.21
If the billing is consolidated under the individual corporation, then a 5%
discount will be applied to the account.
A more complete listing of rate plans will be provided at a later date.
[a graphics table depicting national retail rates]
AMERITEL CELLULAR PROGRAM
Ameritel provides Cable & Wireless with exciting rate plans and promotions
to market to potential customers.
Compensation: Ameritel will pay a * commission plus residuals for every
activation.
Ameritel will also * fund a variety of cellular phones prices at
approximately * for Cable & Wireless to market to their customers.
Total investment in Cable & Wireless is * per activation plus bonus
commissions.
ANNUAL REVENUE BONUS:
Annual Net Activations Bonus Commission
0 - 10,000 *
10,001 - 20,000 *
20,001 - 30,000 *
30,001 plus *
Net activations is equal to the number of current and active subscribers as
of year end December 31. Bonus Commission is calculated as a percentage of
only billable airtime revenues of qualified net activations.
6/23/97 Ameritel Confidential and Proprietary Information
* THIS PORTION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION
<PAGE>
CONVERSION PROGRAM
If a customer has an existing cellular phone, Ameritel will offer a special
promotion of 6 months of free monthly access.
Ameritel will also provide Calbe & Wireless an additional * commission for
this type of activation.
CORPORATE PAGING SERVICE PRICING
Numeric Service (Annual Billing/Rate Per Mo.)
Extended
Local Local Regional Nationwide
Standard: $6.95 $9.95 $17.95 $28.95
Total Corporate/Employee Units in Service
1-14 Pagers $5.95 $7.50 $12.95 $20.00
15-29 Pagers $5.00 $6.50 $11.95 $19.00
30-49 Pagers $4.50 $6.00 $10.95 $18.00
50 + Pagers $4.00 $5.50 $9.95 $17.00
Alpha Numeric Service (Annual Billing/Rate Per Mo.)
Extended
Local Local Regional Nationwide
Standard: $12.95 $19.95 $29.95 $44.95
Total Corporate/Employee Units in Service
1-14 Pagers $10.95 $11.95 $20.99 $35.95
15-29 Pagers $9.95 $10.95 $19.99 $34.95
30-49 Pagers $8.95 $9.95 $18.99 $33.95
50 + Pagers $7.95 $8.95 $17.99 $32.95
Multiple Communication Services Billing Discount = 5% off Corporate Base
Rates - (2) Year Billing Option Discount = an addition 5% off Base Rates
Enhanced Services:
Page Recall $0.75
Voice Mail
Standard $4.95
Plus $6.95
Executive $8.95
- - Standard = 5 mess., 30 sec mess., 30 sec greeting, 24 hr storage
- - Plus = 10 mess., 60 sec mess., 30 sec greeting, 48 hr storage
- - Executive = 20 mess., 120 sec mess., 60 sec greeting, 72 hr storage
System Greeting Free
Custom Greeting $2.00
Group Call $2.00
Live Operator Dispatch (per call) $0.50
800 Numbers
Personal (100 calls, $.25 overcall) $4.00
PIN (100 calls, $.25 overcall) $3.00
6/23/97 Ameritel Confidential and Proprietary Information
* THIS PORTION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION
<PAGE>
AMERITEL PAGING PROGRAM
Pager Products C&W Cost Retail Profit Margin %
Motorola Pronto FLX * * * *
Motorola Express Xtra * * * *
Motorola Wordline (Alpha) * * * *
Motorola Advisor Gold
FLX (Alpha) * * * *
ANNUAL REVENUE BONUS:
Annual Net Activations Bonus Commission
0 - 20,000 *
20,001 - 30,000 *
30,001 - 40,000 *
40,001 plus *
Net activations is equal to the number of current and active subscribers as
of year end December 31. Bonus Commission is calculated as a percentage of
only billable airtime revenues of qualified net activations.
CABLE & WIRELESS EMPLOYEE PAGING SERVICE RATES
- Annual Billing Plan w/Prepayment Required
Number of pages included/overcall cost per page
Numeric - Local *
Numeric - Extended Local *
Numeric - Regional *
Numeric - Nationwide *
Alpha-Numeric pages included/overcall Cost.
Alpha-Numeric - Local *
Alpha-Numeric - Extended Local *
Alpha-Numeric - Regional *
Alpha-Numeric - Nationwide *
Enhanced Services
Page Recall *
Voice Mail
Standard *
Plus *
Executive *
- - Standard = 5 mess., 30 sec mess., 30 sec greeting, 24 hr storage
- - Plus = 10 mess., 60 sec mess., 30 sec greeting, 48 hr storage
- - Executive = 20 mess., 120 sec mess., 60 sec greeting, 72 hr storage
System Greeting *
Custom Greeting *
Group Call *
Live Operator Dispatch (per call) *
800 Numbers
Personal (100 calls, $.25 overcall) *
PIN (100 calls, $.25 overcall) *
All Employees are required to prepay for ANNUAL service at time of
Activation.
6/23/97 Ameritel Confidential and Proprietary Information
* THIS PORTION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION
<PAGE>
SCHEDULE 3
ACTIVATION COMMISSIONS AND AIRTIME RESIDUALS
1. Activation Commissions. The Company shall pay CWI an
Activation Commission of * for each activation of Cellular Service of an
individual Subscriber solicited by CWI on the Company's behalf, less
chargebacks, as set forth in Section 2.
2. Chargebacks. The Company shall charge back, against Activation
Commissions payable to CWI, the amount of * (Activation Commissions) for
each Subscriber whose Cellular Service is terminated for any reason within
six (6) months after activation.
3. Activation Commission Payment Reports. Each payment of
Activation Commissions shall be accompanied by a written report prepared by
the Company which shall include the name of each Subscriber for whom an
Activation Commission is being paid, the telephone number and electronic
service number of the telephones activated, and details of chargebacks
deducted by the Company during the period covered by the report.
4. Airtime Residuals. The Company shall pay to CWI semi-annual
airtime residuals ("Airtime Residuals") which shall be equal to a
percentage of airtime charges billed to all Subscribers for Cellular
Service for each six (6) month period ending June 30th and December 31st
during the term of this Agreement, as follows:
Amount of Residual
Number of Subscribers (% of) Airtime Charges
0-10,000 *
10,001 - 20,000 *
20,001 - 30,000 *
30,000 + *
For purposes of determining the Airtime Residuals, the term "airtime
charges" shall mean the total mount of all charges billed in arrears by the
Company to Subscribers for minutes in excess of "free" minutes and shall
not include roaming charges, long distance charges, special features
charges, or monthly access charges. The number of Subscribers utilized in
calculating the Airtime Residuals shall be that number of active
Subscribers who, as of the close of business on each June 30th and
December 31st of each year during the term of this Agreement, have
continuously maintained Cellular Service over the entirety of the just
concluded six month period.
5. Paging Commissions.
(a) Airtime Residuals. The Company shall pay to CWI semi-
annual airtime residuals ("Paging Airtime Residuals") which shall be equal
to a percentage of airtime charges billed to Subscribers for Paging Service
during each six (6) month period ending June 30th and December 31st during
the term of this Agreement as follows:
Amount of Residual
Number of Subscribers (% of) Airtime Charges
0-20,000 *
20,001 - 30,000 *
30,001 - 40,000 *
40,000 + *
* THIS PORTION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION
<PAGE>
For purposes of determining the Paging Airtime Residual, the term "airtime
charges" shall mean the total of all charges billed by the Company for
pages by Subscribers (i.e., free pages awarded in promotions and otherwise
shall not be included in airtime charges). The number of Subscribers
utilized in calculating the Paging Airtime Residuals shall be that number
of active Subscribers who, as of the close of business on June 30th and
December 31st of each year during the period of the Agreement, have
continuously maintained Paging Service over the entirety of the just
concluded six month period.
EXHIBIT 10.8
NOTE: PORTIONS OF THIS EXHIBIT (MARKED WITH AN ASTERISK) HAVE BEEN OMITTED
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
FIRST AMENDMENT TO CELLULAR RADIOTELEPHONE SERVICE REFERRAL AGREEMENT
BETWEEN AMERITEL COMMUNICATIONS, INC. ("AMERITEL") AND RADIOSHACK
("RADIOSHACK") DATED OCTOBER 1, 1997
THIS FIRST AMENDMENT ("Amendment") is made part of and modifies the
Above Referenced Cellular Radiotelephone Service Referral Agreement
dated October 1, 1997 ("Agreement") between Ameritel Communications, Inc.
(hereinafter referred to as "Ameritel") and RadioShack (hereinafter
referred to as "RadioShack"). To the extent set forth below, the provisions
herein shall amend, modify and supersede the terms of the Agreement. To the
extent of any conflict between the provisions of this Amendment and the
Agreement, the provisions of this Amendment shall prevail. Ameritel and
RadioShack hereby agree to amend the Agreement as follows:
1. Effective as of November 21, 1997, Exhibit "A" and "D" of the Agreement
shall be deemed deleted, of no further force or effect and shall be
replaced with the attached revised Exhibit "A" and "D".
2..All other provisions of the Agreement not specifically modified herein
shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment to the Agreement as of the 8 day of December, 1997
AMERITEL COMMUNICATIONS, INC. RADIOSHACK
By: /s/ Bruce A. Hahn By: /s/ Mark E. Stanley
Title: CEO Title: Director, Wireless
Marketing and Business
Development
Date: 12/8/97 Date: December 8, 1997
<PAGE>
EXHIBIT A
REVISED NOVEMBER 21, 1997
This exhibit A sets forth the Areas, as that term is defined in this
Agreement, in which Ameritel provides CRS and RadioShack is appointed
as a nonexclusive retail referral representative for Ameritel's CRS:
GROUP A - Effective October 1, 1997
NEW YORK MSA
GROUP A - Effective November 21, 1997
MISSOURI #7 (PETTIS AND JOHNSON COUNTIES ONLY)
GROUP B - Effective the earlier of: (I) January 1, 1998, or (ii) the day
immediately following the termination date between RadioShack and its
existing carrier for these Areas.
ADJUNTAS AIBONITO AQUADILLA ARECIBO CEIBA CIALES
CULEBRA MAYAGUEZ PONCE RINCON SAINT CROIX SAINT THOMAS
SAN JAN CAGUAS VIRGUES UNITED STATES VIRGIN ISLANDS
EXHIBIT D
Fees and Promotional Funds
REVISED NOVEMBER 21, 1997
REFERRAL FEE. Ameritel will pay a referral fee of * Dollars to RadioShack
for Subscribers referred by RadioShack to Ameritel for CRS in the Group A
Areas (as defined in Exhibit A) For the Group B Areas (as defined in Exhbit
A), Ameritel will pay a referral fee of * to RadioShack for Subscribers
referred by RaioShack to Ameritel for CRS. Such funds, when due shall be
paid separately to:
Tandy Credit Services - Accounts Receivable
P. O. Box 901018
Fort Worth, TX 76101
2. AMF PAYMENT. Ameritel will pay to RadioShack an AMF payment
determined by multiplying * times all Charges (as hereinbefore defined) billed
to each Subscriber referred by RadioShack to Ameritel for CRS. Such funds,
when due shall be paid separately to:
RadioShack AMF Account
300 West Third Street, Suite 400
Fort Worth, TX 76102
Such AMF payment shall be due quarterly, beginning with the first month of the
second quarter after initial Activation.
3. MDF PAYMENT. Ameritel shall pay * for each Subscriber referred by
RadioShack to Ameritel into the MDF, which funds, when due shall be paid
separately to:
RadioShack Cellular Marketing Account
300 West Third Street, Suite 400
Fort Worth, TX 76102
MDF shall be due and payable by Ameritel within thirty (30) days of the end of
the calendar month in which the Activation of the Subscriber occurred. In
addition, Ameritel will pay to RadioShack an amount not to exceed * to be used
exclusively in the Areas during the months of October, November and December,
1997. These funds are to be utilized in the following advertising mediums,
* THIS PORTION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION
<PAGE>
or radio which advertising shall prominently display the Ameritel marks; and
may also be used to provide expanded support during advertising periods.
RadioShack shall provide back-up documentation to Ameritel for all such
expenses. RadioShack will provide Ameritel with notice prior to publication
of any media advertising. All promotions and advertising initiated under the
MDF program shall be jointly approved by Ameritel and RadioShack.
4. EIF PAYMENT. Subject to Section 6, Item H of this Agreement and during
the months of March, April, July, August and October of each year of this
Agreement, Ameritel shall pay * for each Group A Area Subscriber referred by
RadioShack into the EIF. For Group B Area Subscribers, Ameritel shall pay
for each Subscriber referred by RadioShack into the EIF. Such funds, when
due shall be paid separately to:
RadioShack Cellular Marketing Account
300 West Third Street, Suite 400
Fort Worth, TX 76102
5. FIXTURE FUNDS. For the Group B Areas and the Group A Areas effective
November 21, 1997 only, Ameritel shall pay to RadioShack * per location
to be used for store displays and signage. The fixture fund payment shall
be a one time charge and shall be billed from RadioShack to Ameritel with
terms of *.
6. LAUNCH FUNDS. For the Group B Areas and the Group A Areas effective
November 21, 1997 only, Ameritel shall pay a one time charge to RadioShack
of * per location to be used for market launch expenses specific to those
Areas. Launch fund expenditures shall be subject to the terms of the
Agreement.
* THIS PORTION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION
<PAGE>
CELLULAR RADIOTELEPHONE SERVICE REFERRAL AGREEMENT
THIS AGREEMENT is made and entered into as of this 1st day of October,
1997 (the "Effective Date"), by and between Ameritel Communications, Inc., a
corporation organized under the laws of the State of Delaware with its
principal place of business at 6115 Jimmy Carter Boulevard, Suite A, Norcross,
Georgia 30071 (hereinafter referred to as "Ameritel") and RadioShack, as
hereinafter defined, with its principal place of business at 100 Throckmorton
Street, Suite 1600, Fort Worth, Texas 76102 (hereinafter referred to as
"RadioShack").
WITNESSETH
WHEREAS, Ameritel is involved in the purchase and resale of cellular
radiotelephone service ("CRS") which requires the use of cellular terminal
equipment by CRS Subscribers;
WHEREAS, RadioShack is engaged in the retail sale of consumer electronic
products, parts and accessories at retail store locations in the Areas;
WHEREAS, RadioShack desires to sell Equipment to its Customers and
desires to refer its Customers for CRS in the Areas to Ameritel;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, it is hereby agreed:
1. DEFINITIONS.
Account Maintenance Fee ("AMF"). A fee, payable by Ameritel to
RadioShack on a monthly basis starting with the second month after initial
Activation, calculated as a percentage (as defined in Exhibit "D" attached
hereto and made a part hereof of Subscriber's monthly Charges (as hereinafter
defined).
Activation. Ameritel's initiation of CRS to a Subscriber.
Affiliate. An individual, association, co-partnership, partnership,
limited partnership, limited liability company, corporation or joint-stock
company, trust or other business entity (hereinafter referred to as "Person"),
however organized, is an affiliate of any other entity or person that directly
or indirectly, through one (1) or more intermediaries, controls, is controlled
by or is under common control with such Person. Control shall be defined as
(i) ownership of a majority of the voting power of all classes of voting stock
or (ii) ownership of a majority of the beneficial interests in income and
capital of an entity other than a corporation.
Agreement. This document as originally executed by RadioShack and
Ameritel and, if from time to time supplemented or amended in accordance with
the terms hereof, as so supplemented or amended.
Areas. The Metropolitan Statistical Areas ("MSAs") and Rural Service
Areas ("RSAs") listed in Exhibit"A" attached hereto and made a part hereof in
which Ameritel is involved as a reseller of CRS.
Ameritel Marks. The Ameritel logo and other trademarks, trade names,
service marks, insignia, symbols, decorative designs or the like that Ameritel
owns or is licensed or sublicensed to use which Ameritel licenses RadioShack
to use in Section 7 of this Agreement or which are listed and/or illustrated
in Exhibit "B", attached hereto and made a part hereof.
<PAGE>
Cellular Radiotelephone Service" ("CRS"). A radiotelephone service in
which common carriers are authorized by the Federal Communications Commission
("FCC") under 47 CFR Part 22 and licensed under 47 CFR Part 22, Subpart H to
offer and provide service for hire to the general public through a cellular
system utilizing the channels and frequency bandwidths assigned under 47 CFR
Part 22, Subpart H, Section 22.905. CRS shall not mean or include any paging
services utilizing the channels and frequency bandwidths assigned and licensed
to radiotelephone service under 47 CFR Part 22, Subpart E, any Narrowband PCS
services utilizing the channels and frequency bandwidths assigned and licensed
under 47 CFR Part 24, Subpart D or any Broadband PCS services utilizing the
channels and frequency bandwidths assigned and licensed under 47 CFR Part 24,
Subpart E.
Charges. The net billable airtime, including, but not limited to,
monthly access charges where the rate plan includes packaged or free airtime
minutes, unless such free minutes are incremental to the rate plan for the
purpose of promotions, as mutually agreed by the parties, billed to a
Subscriber by Ameritel for the CRS services provided by Ameritel to
Subscriber, exclusive of all taxes, interconnect fees, roaming charges, and
long distance charges, service and product deposits, if any.
Customer. A Person purchasing Equipment from, or activating Equipment
through, RadioShack.
Deactivation. Ameritel's termination of CRS to any activated
Subscriber number in the Areas prior to the end of the Return Period.
Enrollment. The completion by RadioShack and the Customer of all pre-
activation procedures reasonably required by Ameritel as set forth in Exhibit
"E" attached hereto and made a part hereof, and the submission to, and
acceptance by, Ameritel of the Customer as a Subscriber.
Equipment. Radio transceiver, control unit and handset which are type-
accepted by the FCC for use on a CRS cellular system or a PCS cellular system,
including without limitation dual-mode, dual-band handsets and prepaid airtime
handsets.
Marks. When used without an "Ameritel" or"RadioShack" prefix, shall
refer to both Ameritel Marks and RadioShack Marks or either Ameritel Marks or
RadioShack Marks, as the context requires.
Number. A ten (10) digit phone number assigned to provide access to
CRS.
Personal Communications Services or PCS. A radiotelephone service in
which common carriers are authorized by the FCC and licensed under 47 CFR Part
24, Subpart E as currently in effect to offer and provide service for hire to
the general public utilizing the following frequency bandwidths: 1850-1890
MHz, 1930-1970 MHz, 2130-2150 MHz, and 2180-2200 MHz (Broadband PCS) and
including GSM (the DCS 1900 protocol for the North American System). PCS does
not include Cellular Radiotelephone Service as herein defined ("CRS").
Prepaid CRS. CRS offered through a RadioShack store in the Areas
whereby a Customer prepays for CRS usage and is not required to (1) commit to
a specific service term, (2) pay a periodic service charge or (3) obtain prior
credit approval.
RadioShack. The RadioShack Division of Tandy Corporation, a Delaware
corporation ("Tandy"), including all Tandy owned stores operating under the
trade names "RadioShack", "The Edge in Electronics", or "TechAmerica", and,
for purposes of this Agreement only, such of the other retail stores owned by
Tandy or an affiliate of Tandy which execute a separate agreement with
Ameritel agreeing to be bound by the terms of this Agreement.
<PAGE>
RadioShack Marks. The RadioShack logo and other trademarks, trade
names, service marks, insignia, symbols, decorative designs or the like that
RADIOSHACK owns or is licensed or sublicensed to use which RadioShack licenses
Ameritel to use in Section 8 of this Agreement or which are listed and/or
illustrated in Exhibit "C", attached hereto and made a part hereof.
Return. Acceptance by RadioShack of the return of the Equipment by the
Customer during the Return Period.
Return Period. The thirty (30) day period from the initial Activation
date of each Subscriber referred by RadioShack to Carrier and activated by
Carrier for CRS, during which a Subscriber may make a Return.
Subscriber. The Person to whom a Number is assigned and who purchases
CRS from Ameritel and who is responsible for payment of CRS charges to
Ameritel. For purposes of referral fee calculation, each CRS Number assigned
to a purchaser of Ameritel's CRS is deemed to be a separate Subscriber,
regardless of how many CRS Numbers may be used by any one Person.
Successor. A Person that succeeds to or acquires the rights, title or
interests of another Person.
2. ACKNOWLEDGMENTS AND REPRESENTATIONS.
Except as specifically provided herein, Ameritel and RadioShack
expressly disclaim the making of, and each acknowledges that it has not
received or relied upon, any guaranty, express or implied, as to the total
amount of referral fees or other revenue that it may earn over the term of
this Agreement as a result of the relationship established by this Agreement.
RadioShack acknowledges that-it has no knowledge of any representations
relating to its relationship with Ameritel by any officer, employee or agent
of Ameritel that are contrary to the terms herein. Ameritel acknowledges
that it has no knowledge of any representations relating to its relationship
with RadioShack by any officer, employee or agent of RadioShack that are
contrary to the terms herein. RadioShack and Ameritel represent to each
other, as an inducement to their entry into this Agreement, that each has made
no intentional misrepresentations to the other. Except as specifically
provided herein, RadioShack and Ameritel mutually agree that they shall not
have any liability to the other for any lost profits or any incidental,
indirect, collateral, consequential or punitive damages, even if advised of
the possibility of such damages, arising from a breach of this Agreement.
3. RELATIONSHIP OF THE PARTIES.
a. Ameritel hereby appoints RadioShack as a nonexclusive retail
referral representative for Ameritel in the Areas for those RadioShack stores
selected and approved by RadioShack, subject to all the terms and conditions
of this Agreement. RadioShack agrees that for those RadioShack stores
selected and approved by RadioShack during the term of this Agreement,
RadioShack will exclusively refer its customers for CRS in the Areas served by
Ameritel to Ameritel. It is expressly understood and agreed between the
parties hereto that Prepaid CRS shall be offered through RadioShack by a third
party. Customers for CRS residing outside the Areas served by Ameritel may
be referred to other RadioShack stores or carriers serving such other areas.
The foregoing exclusivity provision relates solely to CRS as defined herein
in. the Areas. No restrictions are intended or shall be placed on the
rights of RadioShack to offer for sale and to sell PCS Equipment or to solicit
orders for PCS as defined herein in the Areas. Ameritel shall have no
obligation to provide Customer service to PCS Customers, Prepaid CRS Customers
and CRS Customers referred to other carriers outside the Areas. RadioShack
shall have the option to add or delete approved RadioShack stores at its
discretion provided such number in the Areas shall always be at least 250
stores and shall provide Ameritel with thirty (30) days prior notice of any
store deletion or addition.
<PAGE>
b. Ameritel reserves the right, without obligation or liability to
RadioShack, to market CRS and Equipment in the Areas through Ameritel's own
representatives, agents resellers, and other third parties; provided however,
Ameritel agrees not to open or operate, either directly or indirectly, any
type of retail store for the purpose of becoming a referral representative or
agent for Ameritel in the same shopping center as an existing RadioShack or
franchisee or dealer store of RadioShack, excluding any such retail store
already existing as of the Effective Date hereof.
c. Upon Enrollment of a particular Customer as a Subscriber by
Ameritel and subject to the security interest granted herein by Ameritel to
RadioShack, that Subscriber shall become a CRS Customer of Ameritel until
Deactivation. For the term of this Agreement and for a period of ninety (90)
days thereafter, Ameritel hereby grants to RadioShack a security interest in
the base of Subscribers referred to Ameritel by RadioShack during the term of
this Agreement provided Ameritel has defaulted in the payment of amounts due
to RadioShack under the terms of this Agreement and such defaults have not
been cured in the time periods provided herein.
d. Ameritel and RadioShack acknowledge and agree that their
relationship arising from this Agreement does not constitute or create any
agency, joint venture, partnership, employment relationship or franchise
between them, but only establishes RadioShack as a nonexclusive retail
referral representative for the CRS provided by Ameritel in the Areas in
accordance with the terms herein.
e. In the event RadioShack or Tandy is acquired by or acquires or
merges with an entity which is licensed or has applied for a license to
provide CRS in one or more of the Areas, such transaction shall not be
considered a violation of any terms of this Agreement. In such event and
with respect to only said one or more Areas, any exclusivity provisions in
this Agreement shall continue to apply to the RadioShack Division of Tandy,
but not to the acquiring entity or entity acquired by or merged with
RadioShack or Tandy. The exclusivity provisions of this Agreement shall
continue in effect for those Areas in which the acquiring entity or merged or
acquired entity does not provide CRS.
f. Ameritel acknowledges that Tandy has or may have in the future
other operating divisions or subsidiaries which sell Equipment in the Areas,
and the terms of this Agreement, including Paragraph 3.a. above, will not
apply to any division or subsidiary of Tandy other than RadioShack. Tandy
reserves the right, without obligation or liability to Ameritel, to market
Equipment through other Tandy divisions, subsidiaries, associates or entities
and to refer the customers for such Equipment to competitors of Ameritel.
4. RADIOSHACK'S RESPONSIBILITIES.
In consideration for the rights granted RadioShack herein, RadioShack
covenants that it will use commercially reasonable efforts to perform the
following responsibilities in each of the Areas:
a. RadioShack will maintain trained sales personnel to market the CRS
provided by Ameritel to RadioShack's Customers.
b. RadioShack will provide sufficient materials and advertising to
Customers to promote the CRS provided by Ameritel.
c. To comply with the obligations set forth in Section 3.a.,
RadioShack will refer Customers to Ameritel for CRS, excluding Prepaid CRS, by
employing the following techniques (in addition to others): explaining CRS
operation and benefits; explaining the terms and conditions of purchase as
established by Ameritel with respect to the CRS and by RadioShack with respect
to the Equipment; providing sales literature for Ameritel; training the
Customer in use of the CRS provided by Ameritel; assisting Customers with
execution of Ameritel's CRS Subscriber enrollment application and agreement
(the "SEAA") as set forth in Exhibit "E", attached hereto and made a part
<PAGE>
hereof, and promptly forwarding such to Ameritel within thirty (30) days after
initial Activation; completing such other paperwork reasonably required to
enroll a Customer for the CRS provided by Ameritel; and collecting and
promptly forwarding all product and service security deposits, if any,
required by Ameritel from Subscribers. In the event the SEAA is not received
within thirty (30) days as stated above, RadioShack shall have sixty (60) days
after notice from Ameritel that such has not been received to deliver the
missing SEAA. Notice of the missing SEAA shall be sent to the RadioShack
District Manager and Tandy Credit Services (whose address is listed in Exhibit
"D"). The District Manager shall contact the Ameritel representative when
the missing SEM has been located and the representative shall personally pick
up the SEM from the RadioShack store where the initial Activation originated
from and sign-off that the missing SEAA has been received.
d. RadioShack, as between it and Ameritel, will be responsible for the
maintenance of all Equipment sold by RadioShack.
e. RadioShack will maintain sufficient liability insurance to protect
Ameritel from all Customer claims arising out of the acts, omissions, and/or
representations of RadioShack.
f. RadioShack will, for its own account, sell, or lease at
RadioShack's option, Equipment to be used by Subscribers of Ameritel.
RadioShack Equipment shall meet all applicable FCC standards. RadioShack
agrees to use all commercially reasonable efforts to maintain an inventory of
Equipment sufficient to meet reasonably anticipated demand by Subscribers.
Following the sale of existing inventories in the Areas, RadioShack will only
offer for sale authenticated cellular telephone Equipment. All Equipment
sales and leases shall be made by or on behalf of RadioShack for its own
account and not as agent for, or for the account of, Ameritel. RadioShack
shall establish the sales prices and lease charges for the Equipment, and
Ameritel shall have no control over such prices or charges. With respect to
the sale or lease of Equipment, Subscribers shall be Customers of RadioShack,
and Ameritel shall have no responsibility to RadioShack or Subscribers with
respect to the sale or lease of Equipment.
g. RadioShack acknowledges that it may be in receipt of certain
confidential information relating to Ameritel, including, but not limited to,
referral fee structures, revenues and sales volumes, marketing plans,
technical information, lists of Subscribers and other information not
generally known to the public relating to the Ameritel (collectively,
"Confidential Information"). In addition to the foregoing categories of
Confidential Information, there may be other information - which Ameritel
deems to be proprietary and confidential which Ameritel agrees that it will
mark "CONFIDENTIAL" prior to furnishing such other information to RadioShack.
RadioShack acknowledges that any Confidential Information of Ameritel that has
been disclosed to RadioShack has been disclosed to enable RadioShack to
perform its duties under this Agreement. RadioShack agrees that all such
Confidential Information of Ameritel is the property of Ameritel.
h. RadioShack agrees that, during and after the term of this
Agreement, neither it nor any Person affiliated with it or Tandy, shall
directly or indirectly, without prior written consent of the Ameritel,
divulge, use, sell, provide access to, exchange, give away or transfer any
Confidential Information to any third party, including any other division,
affiliate or subsidiary of Tandy other than RadioShack and the Tandy Credit
Services Division of Tandy. RadioShack further agrees that it will advise
its employees of these restrictions and will use reasonable efforts to prevent
the disclosure or improper use of Confidential Information by any current or
former employee. In the event that such Confidential Information is formally
requested by written discovery in any proceeding in any court or is subject to
a formal request made pursuant to the subpoena power of any court,
governmental agency or regulatory authority, RadioShack shall (1) produce the
information only upon the entry of an appropriate confidentiality or
protective order or (2) give Ameritel reasonably sufficient notice of the
<PAGE>
request with a reasonable opportunity for Ameritel to object to the production
of Confidential Information. Notwithstanding the foregoing, RadioShack may
use the Confidential Information, including the list of Subscribers, to
maintain warranty service, installation or maintenance of Equipment and the
resolution of disputes between RadioShack and Subscribers relating to
Equipment charges, leasing or installation, warranty or maintenance service,
and for its normal sales activities. This paragraph shall not be construed
in any way to limit use by RadioShack of lists compiled by RadioShack of its
Customers purchasing Equipment.
i. develop jointly with Ameritel a Subscriber loyalty program designed
to increase Subscriber retention.
5. AMERITEL RESPONSIBILITIES.
In consideration for the rights granted Ameritel herein, Ameritel
covenants that it will use all commercially reasonable efforts to perform the
following responsibilities in each of the Areas:
a. enter into and maintain for the term of this Agreement a binding
reseller contractual relationship with cellular carriers licensed to provide
CRS in the Areas and obtain through said reseller relationship sufficient
quantities of CRS to meet the needs of Customers and Subscribers for CRS;
b. operate and maintain to industry standards a Subscriber billing
system;
c. secure and maintain all necessary regulatory approvals to provide
CRS where required of non-facilities based cellular carriers in the Areas;
d. establish the rates and reasonable terms and conditions for the
sale of CRS to Subscribers;
e. establish reasonable administrative procedures and guidelines for
sale of CRS, Enrollment of CRS Subscribers, and provision of customer service
to Subscribers;
f. provide to RadioShack without charge for distribution in its stores
sufficient and appropriate amounts of promotional literature on the CRS
provided by Ameritel;
g. provide to RadioShack without charge sufficient information and
illustrative material on Ameritel for the preparation of catalogs, advertising
and other promotional activities by RadioShack;
h. provide without charge to RadioShack all enrollment applications,
forms and other documentation necessary for referring a Customer to Ameritel
for CRS;
i. process the credit information from prospective Subscribers
required by Ameritel for credit approval and activate the equipment purchased
by Customers in accordance with Ameritel's activation and processing
procedures.
j. maintain sufficient liability insurance to protect RadioShack from
all Subscriber claims arising out of the acts, omissions, and/or
representations of Ameritel;
k. provide training to RadioShack employees in Ameritel's
administrative and sales procedures associated with the referral of
Subscribers;
l. bill Subscribers for Ameritel's CRS charges and provide customer
service and assistance, including collections of CRS charges;
m. provide, for demonstration purposes, one Number for CRS to each one
of RadioShack's field management, with no charges to RadioShack for Activation
<PAGE>
fees or monthly access charges and three (300) hundred minutes per phone
Number of local airtime, excluding local and roaming charges. Any charges
for excess airtime minutes or local and roaming charges shall be the
responsibility of the field management individual using the demonstration
Number and shall be billed directly to that individual; provided, however,
Ameritel shall have the right to approve or disapprove such individual's use
of the demonstration Number subject to Ameritel's reasonable credit standards.
RadioShack shall have no liability for any such charges. Field management
includes the following: Regional Sales Manager, Regional Marketing Manager,
District Sales Manager, Regional Loss Prevention Manager and each Service
Center. RadioShack will provide the list of field management personnel for
each Areas covered by the Agreement.
n. offer a cellular radiotelephone service referral agreement (the
"CRS Agreement") with terms substantially similar to this Agreement to
RadioShack's independent dealers and franchisees in the Areas provided such
dealers or franchisees are either creditworthy or RadioShack, at its sole
option, guarantees their performance of the terms of the CRS Agreement entered
into with Ameritel. RadioShack will by letter provide Ameritel with a list of
such dealers and franchisees in the Area(s) covered by this Agreement and
RadioShack will update this list periodically throughout the term of this
Agreement. RadioShack may then notify its dealers and franchisees that, at
their election, they may contact Ameritel to enter into a CRS Agreement.
RadioShack's list of dealers and franchisees is confidential information, and
Ameritel will maintain its confidentiality in all respects.
o. provide the Accounts Receivable Department of RadioShack with a
NPA-NXX By Site listing of all area code/exchange combinations in use in the
Areas and update such listing at least quarterly during the term of this
Agreement to reflect new or changed area code/exchange combinations as are
issued to Ameritel.
p. notify RadioShack in writing within forty-five (45) days of
Activation of CRS for any Subscriber with respect to whom Ameritel contends
the Enrollment procedures followed by RadioShack were materially incomplete or
inaccurate. Said written notice shall include the name, address and phone
Number of the Subscriber and a detailed description of the material omission
or inaccuracy in the Enrollment procedures. Said written notice shall be
sent to the address set forth in Section 6.a. below. Failure of Ameritel to
provide the written notice within the prescribed time period shall operate as
a waiver of Ameritel's right, if any, to object to the completeness of the
Enrollment procedures and as a waiver of any right, if any, to contest the
payment of or charge back the referral fee with respect to such Subscriber
based on any such objection.
q. develop jointly with RadioShack a Subscriber loyalty program
designed to increase Subscriber retention.
r. make available to RadioShack Customers all available sales
promotions and base rate plans offered by Ameritel in the Areas. It is
understood that in the event promotional rate plans selected by RadioShack
Customers exceeds twenty-five percent (25%) of the total rate plans sold to
RadioShack Customers, Ameritel, at its option and upon sixty (60) days prior
notice to RadioShack, may reduce or suspend the availability of such
promotional rate plans.
s. maintain a customer service center during RadioShack store hours in
the Areas to insure prompt and efficient handling of customer
inquiries,-credit approvals and activations.
t. supply to RadioShack and its customers an 800 inbound telephone
number linked directly to the Ameritel customer service center.
u. furnish RadioShack with a monthly cycle report accompanying the
referral fee payment and a six month report accompanying all AMF payments,
each such report to include the Subscriber name, originating RadioShack store
number, the ESN and number of the equipment purchased by the Customer.
<PAGE>
6. PAYMENT OF FEES.
a. Referral Fee Payment. Ameritel shall pay RadioShack the
appropriate referral fee set forth in Exhibit "D" for each Subscriber in the
Areas referred by RadioShack to Ameritel for CRS and activated by Ameritel,
unless a Return is made prior to the end of the Return Period. Payment of
referral fees by Ameritel shall be made within thirty (30) days of the end of
the calendar month billing cycle in which the Activation of the Subscriber
occurred to the address set forth in Exhibit "D" of this Agreement.
b. Returns. Except for those Subscribers who make a Return prior to
the end of the Return Period, and notwithstanding anything to the contrary
contained elsewhere in this Agreement, Carrier shall pay all fees stated
herein for all Subscribers referred by RadioShack to Carrier for CRS,
regardless of Deactivation of such Subscriber;< provided, however, in the
event RadioShack, at its sole discretion, extends the Return Period beyond
thirty (30) days and the Subscriber ultimately Deactivates CRS within one
hundred eighty (180) days after initial Activation, Ameritel shall not be
liable for the fees stated herein for such Subscriber. RadioShack reserves
the right to reject any Subscriber request for a return of Equipment during
the Return Period which fails to meet the requirements of the RadioShack
Return Policy set forth in Exhibit "F", attached hereto and made a part
hereof; provided, however, that Exhibit "F" may be revised from time to time
by RadioShack in RadioShack's sole discretion.
c. AMF Payment. Ameritel shall pay RadioShack the appropriate AMF
set forth in Exhibit "D" for each Subscriber in the Areas referred by
RadioShack to Ameritel for CRS and activated by Ameritel, until the Subscriber
Deactivates their CRS Number. Payment of AMF by Ameritel shall be made
within thirty (30) days of the end of each calendar quarter following initial
Activation for which said Subscriber has not Deactivated during such period;
provided, however, there shall be an initial ninety (90) day grace period
starting on the Effective Date. For all Activations made during the
aforementioned grace period, Ameritel shall have an additional ninety (90)
days in which to make the appropriate AMF payments. AMF payments shall be
made to the address set forth in Exhibit "D". All payments of AMF shall be
accompanied by backup documentation identifying the RadioShack stores making
the referral, the date of the original referral, the Subscriber's name and CRS
Number.
d. Rate Plans and Rate Plan Migration. RadioShack shall receive the
highest referral fee payable by Ameritel under this Agreement for the
Enrollment of a Subscriber to any rate plan the offer of which by RadioShack
is permitted by Ameritel. Any Subscriber changing rate plans ("Plan
Migration") shall not under any circumstances be deemed a Deactivation from
Ameritel's CRS even if the Plan Migration is to a rate plan which RadioShack
is not permitted to offer Customers under this Agreement. A Plan Migration
shall (1) not result in non-payment to RadioShack of all or any portion of the
referral fee or AMF paid to RadioShack by Ameritel for the migrating
Subscriber, nor (2) entitle RadioShack to receive any more or less of a
referral fee or AMF from Ameritel as a result of a Plan Migration by the
Subscriber than the referral fee or AMF paid by Ameritel upon the initial
Activation of the Subscriber.
e. Audit Right. Upon reasonable notice, RadioShack or its designated
representatives shall have access during normal business hours to all the
books and records of Ameritel pertaining to the account of RadioShack
including, but not limited to, records of Activations, Deactivations,
Subscriber account suspensions, and referral fee accounts, for the purpose of
verifying that all fees earned have been properly credited and paid.
f. Payment of Market Development Funds and Promotional Funds. All
market development funds, advertising and promotional funds (the "MDF"), and
employee incentive funds (the "EIF") identified and set forth in Exhibit "D"
,shall be maintained and managed by RadioShack for use and expenditure in the
Areas, and shall be segregated from referral fee payments and, when paid, as
set forth in Exhibit "D", shall include all backup documentation supporting
the payment of such funds.
<PAGE>
g. Late Payments. Any payments due hereunder which are not received
by RadioShack from Ameritel within thirty (30) days after the date due stated
herein shall bear interest per month equal to the thirty (30) day LIBOR rate
in effect on the date payment was overdue or the maximum rate permitted by
law, whichever is lower, on the unpaid balance until paid. In the event
Ameritel fails to make payments due to RadioShack for a period of sixty (60)
days from the due date, RadioShack may elect, in its sole discretion elect, to
foreclose its security interest in the Subscriber base granted under Section
3c. provided the Ameritel LOC shall have been drawn down in full. These
remedies are in addition to any other remedies which may be available to
RadioShack herein or by law.
h. Referral Fee Chargebacks. Ameritel shall not charge back to
RadioShack any referral fee paid unless the Subscriber fails to remain
activated by Ameritel for one hundred eighty (180) days following initial
activation and RadioShack fails to comply with enrollment and administrative
procedures of Exhibit "E", or unless the Subscriber makes a Return during the
Return Period.
7. USE OF AMERITEL MARKS BY RADIOSHACK.
a. Acknowledgments. Radio Shack acknowledges that:
(i) the Ameritel Marks and the registrations thereof are good,
valid and enforceable in law and equity, and RadioShack agrees not to
challenge or assist in challenging the validity or registrations thereof;
(ii) any unauthorized use of the Ameritel Marks and any use of
such Ameritel Marks in violation of this Agreement shall constitute an
infringement of such Ameritel Marks; and,
(iii) the failure of RadioShack to carry out any obligation
relating to the Ameritel marks shall constitute immediate and irreparable
injury to the other party not compensable in money damages and shall warrant
preliminary and other injunctive and equitable relief upon a showing
satisfactory to the court to which an application for relief may be made for
the failure to carry out such obligation.
b. Permission to Use Marks. Subject to the terms and conditions
specified herein, Ameritel hereby permits RadioShack to use the Ameritel Marks
throughout the Areas in connection with CRS and the marketing and sale of
Equipment and CRS for the term of this Agreement.
c. Inspection.
(i) Ameritel shall have the right to inspect and test the
Equipment offered for sale by RadioShack, for the purpose of verifying the
RadioShack Equipment operates properly with CRS provided by Ameritel and for
protecting and maintaining the reasonable standards of quality established by
Ameritel for the Equipment marketed using Ameritel Marks.
(ii) All labels, packaging, designs, stationery, promotional
materials, and advertising of every kind using any of the Ameritel Marks shall
be developed by RadioShack in consultation with Ameritel, and shall not be
publicly disseminated without Ameritel's prior written approval, which shall
not be unreasonably withheld.
d. Sublicenses. RadioShack shall not directly or indirectly license
or attempt to license, whether orally or in writing, any other Person to use
any of the Ameritel Marks.
e. Disclaimer of Assignment. The parties expressly agree that
RadioShack shall not have any right, title, or interest in the Ameritel Marks,
or in the registrations thereof, except only the right to use the Ameritel
Marks in connection with the activities of RadioShack described herein.
Nothing contained in this Agreement shall be construed to grant or assign to
<PAGE>
RadioShack any additional right, title or interest in the Ameritel Marks, or
in the registrations thereof, except such limited right to use the Ameritel
Marks.
f. Restrictions on Use of Ameritel Marks.
(i) RadioShack shall use the Ameritel Marks in advertising as
provided in Section 10, and otherwise only as Ameritel has approved in
writing.
(ii) RadioShack shall not use any of the Ameritel Marks as part of
its corporate, trade or business names.
g. Modification or Discontinuation of Ameritel Marks. In the event
that Ameritel decides in its sole discretion to modify or discontinue the use
of any of the Ameritel Marks, or to substitute one or more other marks in
place of any of the Ameritel Marks, RadioShack agrees that within thirty (30)
days after receipt of written notice from Ameritel it shall (i) begin phasing
out its use of the unmodified or discontinued Ameritel Marks in accordance
with Section 15 of this Agreement; and (ii) commence using the modified or
substituted marks in accordance with this Agreement as if such marks had been
identified herein as Ameritel Marks.
h. Infringement and Indemnity.
(i) RadioShack shall promptly notify Ameritel of any event of
third party infringement of Ameritel Marks of which RadioShack receives
written notice. RadioShack agrees to reasonably assist Ameritel in the
prosecution of any claim or lawsuit-against infringement of the Ameritel Marks
by providing such relevant evidence as RadioShack may have within its control.
Ameritel agrees to reimburse RadioShack for all reasonable out-of-pocket
expenses as incurred (including attorney fees) in providing such relevant
evidence and reasonable assistance. To the extent permitted by law,
RadioShack shall have the right to intervene at its own expense in any legal
proceedings affecting the rights acquired by it under this Agreement.
Ameritel may at its own expense and in its sole discretion bring a claim or
lawsuit to restrain any infringement of the Ameritel Marks, in its own name,
and shall be entitled to receive and retain for its own use and benefit any
recovery awarded in such lawsuit. Ameritel may only name RadioShack as a
plaintiff or join RadioShack as a party to any such lawsuit after it has
obtained RadioShack's prior written permission and after Ameritel has agreed
in writing to reimburse RadioShack for all reasonable attorney's fees, costs
and expenses incurred.
(ii) Ameritel shall defend, indemnify and hold RadioShack harmless
from any damages and costs imposed on RadioShack as a result of any claim or
lawsuit brought against RadioShack arising out of RadioShack's authorized use
of the Ameritel Marks in accordance with this Agreement or examples furnished
by Ameritel, provided that (a) RadioShack shall promptly notify Ameritel of
any such claim or lawsuit, (b) Ameritel shall have the option to undertake and
conduct the defense of such claim or lawsuit, and (c) RadioShack shall not
settle or attempt to settle such claim or lawsuit without Ameritel's prior
written consent.
i. Termination.
Upon termination or expiration of this Agreement for any reason, all
rights and privileges granted to RadioShack under this Paragraph 7 shall
immediately terminate, and RadioShack, its trustees, receivers, successors or
assigns shall have no further right to use any of the Ameritel Marks.
RadioShack agrees that upon such termination or expiration it shall
immediately begin phasing out its use of the Ameritel Marks in accordance with
the terms of Section 15 of this Agreement.
<PAGE>
8. USE OF RADIOSHACK MARKS BY AMERITEL.
a. Acknowledgments. Ameritel acknowledges that:
(i) the RadioShack Marks and registrations and application
therefor are good, valid and enforceable in law and equity, and Ameritel
agrees not to challenge or assist in challenging the validity or registrations
thereof;
(ii) any unauthorized use of the RadioShack Marks and any use of
such RadioShack Marks in violation of this Agreement shall constitute an
infringement of such RadioShack Marks; and (iii) the failure of Ameritel to
carry out any obligation relating to RadioShack Marks shall constitute
immediate and irreparable injury to RadioShack not compensable in money
damages and shall warrant preliminary and other injunctive and equitable
relief upon a showing satisfactory to the court to which an application for
relief may be made for the failure to carry out such obligation.
b. Permission to Use Marks. RadioShack agrees to permit Ameritel to
use RadioShack Marks in advertisements solely for the purpose of advising
Customers that they may sign up for CRS and purchase Equipment at an
RadioShack store, provided the RadioShack Marks are used in accordance with
guidelines provided by RadioShack and as approved in writing by the Director
Wireless Marketing and Business Development of RadioShack, which approval
shall not be unreasonably withheld.
c. Approval for Use of RadioShack Marks. All labels, packaging,
designs, stationery, promotional materials, and advertising of every kind
using any~of the RadioShack Marks shall be developed by Ameritel in
consultation with RadioShack, and shall not be publicly disseminated without
RadioShack's prior written approval.
d. Sublicenses. Ameritel agrees not to directly or indirectly
license or attempt to license, whether orally or in writing, any other Person
to use the RadioShack Marks.
e. Disclaimer of Assignment. The parties expressly agree that
Ameritel shall not have any right, title or interest in the RadioShack Marks,
nor in the registrations thereof, except only the right to use the RadioShack
Marks as specified in Paragraph a. of this Section 8. Nothing contained in
this Agreement shall be construed to grant or assign to Ameritel any
additional right, title or interest in the RadioShack Marks, or in the
registrations thereof, except such limited right to use the RadioShack Marks.
f. Restrictions on the Use of RadioShack Marks.
(i) Ameritel shall use RadioShack Marks in advertising as provided
in Section 10, and otherwise only as RadioShack has approved in writing.
(ii) Ameritel shall not use or attempt to register the RadioShack
Marks as part of its corporate, trade or business names.
g. Modification or Discontinuation of RadioShack Marks. In the event
that RadioShack decides in its sole discretion to modify or discontinue the
use of any of the RadioShack Marks, or to substitute one or more marks in
place of the RadioShack Marks, Ameritel agrees that within thirty (30) days
after receipt of written notice from RadioShack it shall (i) begin phasing out
its use of the unmodified or discontinued RadioShack Marks in accordance with
Section 15 of this Agreement; and (ii) commence using the modified or
substituted marks in accordance with this Agreement as if such marks had been
identified herein as RadioShack Marks.
h. Infringement and Indemnity.
(i) Ameritel shall promptly notify RadioShack of any event of
<PAGE>
third party infringement of RadioShack Marks of which Ameritel receives
written notice. Ameritel agrees to reasonably assist RadioShack in the
prosecution of any claim or lawsuit against infringement of the RadioShack
Marks by providing such relevant evidence as Ameritel may have within its
control. RadioShack agrees to reimburse Ameritel for all reasonable
out-of-pocket expenses as incurred (including attorney fees) in providing such
relevant evidence and reasonable assistance. RadioShack may at its own
expense and at its sole discretion bring a claim or lawsuit to restrain any
such infringement of the RadioShack Marks, and shall be entitled to receive
and retain for its own use and benefit any recovery awarded in such lawsuit.
RadioShack may only name Ameritel as a plaintiff or join Ameritel as a party
to such lawsuit after it has obtained Ameritel's prior written permission and
after RadioShack has agreed in writing to reimburse Ameritel for all
reasonable attorney's fees, costs and expenses incurred.
(ii) RadioShack shall defend, indemnify and hold Ameritel harmless
from any claims, demands, damages, costs and liabilities imposed on Ameritel
as a result of any claim, demand, proceeding, or lawsuit brought against
Ameritel arising out of Ameritel's authorized use of the RadioShack Marks in
accordance with this Agreement, guidelines for RadioShack usage or examples
furnished, provided that (a) Ameritel shall promptly notify RadioShack of any
such claim, proceeding or lawsuit, (b) RadioShack shall have the right to
undertake and conduct the defense of such claim, proceeding or lawsuit, and
(c) Ameritel shall not settle or attempt to settle any such claim, proceeding
or lawsuit without RadioShack's prior written consent.
i. Termination. Upon termination or expiration of this Agreement for
any reason, all rights and privileges granted to Ameritel under this Paragraph
8 shall immediately terminate, and Ameritel, its trustees, receivers,
successors or assigns shall have no further right to use the RadioShack Marks.
Ameritel agrees that upon such termination or expiration it shall immediately
begin phasing out its use of the RadioShack Marks in accordance with Section
15 of this Agreement.
9. RULES AND PROCEDURES.
RadioShack agrees to comply, as applicable, with 47 CFR Parts 15 and 22
of the FCC rules, all tariffs, other governmental rules and procedures in
existence relating to the sale of CRS, the sale, lease, installation, warranty
service and repair of Equipment and the conduct of RadioShack's business
hereunder. Ameritel agrees to indemnify and hold RadioShack harmless against
liabilities from and costs of suits or claims arising out of RadioShack's use
of forms provided by Ameritel and RadioShack's actions or inactions which are
requested by Ameritel in writing for RadioShack's compliance with rules and
procedures prescribed by Ameritel in accordance with this paragraph.
10. COMPLIANCE WITH LAWS AND GOOD BUSINESS PRACTICES.
a. RadioShack shall secure and maintain in force all licenses and
permits, if any, required of RadioShack and its employees in the referral of
Subscribers and the sale, lease, installation and maintenance of Equipment,
including without limitation, all required FCC permits and notification
procedures, and shall conduct its business in compliance with all laws,
ordinances and regulations applicable to RadioShack's business. Ameritel
shall offer CRS in accordance with applicable rules, regulations, statutes and
decisions governing CRS and also secure and maintain all licenses required
thereby.
b. This Agreement shall at all times be subject to (i)changes or
modifications to comply with, and (ii)any necessary approvals of, local, state
and federal regulatory agencies having jurisdiction over the provision of CRS
in the Areas. Ameritel may add, delete, suspend or modify the rates for,
and/or the particular services comprising, CRS and determine whether such
changes apply to both existing or future Subscribers. RadioShack shall not
take any action inconsistent with any efforts by Ameritel or any provider of
CRS to Ameritel before regulatory authorities or others regarding any
modification of rates for CRS.
<PAGE>
c. All advertising and promotion by RadioShack and Ameritel shall be
factual and shall conform to the law.
d. Samples of advertising and marketing materials containing Marks of
the other party which have not been prepared or previously approved by such
other party, shall be submitted to the other party for written approval, which
approval shall not be withdrawn or unreasonably withheld. If written
disapproval is not received within five (5) days from the date of receipt of
such materials, it shall be deemed that the required approval has been given.
Neither party shall use any advertising or marketing materials that the other
party has disapproved.
11. ASSIGNMENT.
This Agreement may not be assigned by either party without the prior
written approval of the other party, which shall not be unreasonably withheld.
In the event of an assignment by one party which is approved by the other
party, the assignor shall remain liable for performance of its obligations and
assumption of its liabilities which are not performed or assumed by the
assignee.
12. TERM AND EXTENSION OF AGREEMENT.
Unless terminated pursuant to the provisions of Section 13 below, the
initial term of this Agreement shall be for a period of one year from the
Effective Date first listed above. Upon expiration of the initial term, the
term shall be automatically renewed for additional successive terms of one (1)
year, in perpetuity, unless either party gives the other party written notice,
not less than ninety (90) days prior to the expiration of the initial or any
renewal term, of its intention not to renew under the existing terms.
13. TERMINATION OF AGREEMENT.
a. Either party may terminate this Agreement upon thirty (30) days
written notice for material breach by the other party of any term, condition,
obligation or warranty under this Agreement if said breach is not cured within
said thirty (30) day period.
b. If a party becomes insolvent or bankrupt, makes an assignment for
the benefit of creditors, has a trustee or receiver appointed for it, becomes
the subject of a voluntary or involuntary insolvency, bankruptcy or
reorganization proceeding which, in the case of any involuntary proceeding, is
not dismissed within sixty (60) days after it is commenced, or ceases to
operate as a going concern, or ceases to participate in the CRS business in
the Area(s), then the other party may terminate this Agreement effective
immediately upon giving written notice to such party.
c. Either Ameritel or RadioShack may terminate this Agreement at any
time, without cause, by providing notice in writing to the other party at
least ninety (90) days in advance of the termination date.
14. REASONABLE ENROLLMENT AND OPERATING PROCEDURES.
Both RadioShack and Ameritel acknowledge that it is essential to an
effective and functional business relationship that Subscriber Enrollment
procedures, administrative guidelines and operating procedures be reasonable
in scope and substance and be followed in all material respects. Ameritel
agrees that it shall not adopt, promulgate, seek to implement or enforce any
Subscriber Enrollment procedure, guideline, or requirement which places an
unreasonable financial burden upon RadioShack or which is beyond the
reasonable operational capabilities of RadioShack. RadioShack agrees that it
shall use commercially reasonable efforts to comply in all material respects
with the reasonable Subscriber Enrollment procedures promulgated by Ameritel
and attached hereto as Exhibit"E."
<PAGE>
15. OBLIGATIONS TO PHASE OUT USE OF MARKS.
a. The parties agree that when they must discontinue use of one or
more of the other party's Marks as required by the terms of this Agreement,
they shall:
(1) upon expiration or termination, not thereafter use for any
purpose any actual or similar trade name, trademark or service mark or other
commercial symbol that suggests or indicates a connection or association with
the other party, or directly or indirectly at any time or in any manner,
identify itself as associated with the other party;
(2) upon modification or discontinuation of use of one of the
Marks, not thereafter use the unmodified or discontinued Mark;
(3) return to the other party or destroy, at the user's option,
all advertising and marketing materials, forms, and other materials containing
any Marks of the other party or otherwise identifying or relating to the other
party; and
(4) execute such notices and documents as may be required by any
applicable telephone company or any applicable telephone directory listing
agency to reflect the termination of all association of the parties.
b. Notwithstanding the above requirements of Paragraph a. of this
Section 15, when obligated to phase out its use of any or all Ameritel Marks,
RadioShack shall not be required to destroy or provide to Ameritel any
Equipment labeled with Ameritel Marks, provided RadioShack uses its best
efforts to remove all removable promotional labels with the Ameritel Marks and
uses its best efforts to timely sell its remaining stock of Equipment from
which the promotional labels containing Ameritel Marks cannot be reasonably
removed. RadioShack shall have no obligation to remove labels or Marks
identifying any manufacturer, including Ameritel.
16. SEVERABILITY AND SUBSTITUTION OF VALID PROVISIONS.
a. Except as expressly provided to the contrary herein, each term and
condition of this Agreement, and any portion thereof, shall be considered
severable and if, for any reason, any such provision hereof is held to be
invalid under, contrary to, or in conflict with any applicable present or
future law, regulation or public policy in a final, unappealable ruling issued
by any court, agency or tribunal with competent jurisdiction in a proceeding
to which both parties are a party, that ruling shall not impair the operation
of, or have any other effect upon, such other provisions of this Agreement as
may remain otherwise enforceable, which shall continue to be given full force
and effect and bind the parties hereto.
b. Ameritel and RadioShack shall mutually agree to a modification of
any invalid or unenforceable term or condition hereof to the extent required
to be valid and enforceable to carry out the intent and spirit of this
Agreement. In the event that regulatory developments make necessary minor
changes to the Agreement in order to carry out its intent and spirit, such
changes shall be permitted by the parties. Such modifications to this
Agreement shall be required only in the Areas directly affected by any such
ruling.
17. WAIVER OF OBLIGATIONS.
a. Ameritel and RadioShack, the latter acting only through an
authorized representative of the Wireless Marketing and Business Development
Department, may by written instrument unilaterally waive or reduce any
obligation of or restriction upon the other under this Agreement, effective
upon delivery of written notice thereof to the other party or on such other
effective date as stated in the notice of waiver.
b. Whenever this Agreement requires the consent of a party, such
request shall be in writing and no consent may be unreasonably withheld. All
consents or withholding of consent with reasons therefor shall be in writing.
<PAGE>
Neither party makes any guarantees upon which the other may rely, and assumes
no liability or obligation to the other, by granting any waiver, approval or
consent to the other, or by reason of any neglect, delay or denial of any
request therefor. Any waiver granted by either party shall be without
prejudice to any other right that party may have, will be subject to
continuing review, and may be revoked, at the waiving party's sole discretion,
at any time and for any reason, effective upon delivery to the other of ten
(10) days' prior written notice. Such revocation will not work to the
detriment of a party which has reasonably relied and acted upon such waiver
prior to delivery of the notice revoking said waiver.
c. Neither Ameritel nor RadioShack shall be deemed to have waived or
impaired any right, power or option reserved by this Agreement by virtue of
any custom or practice of the parties at variance with the terms hereof or any
failure, refusal or neglect of Ameritel or RadioShack to exercise any right
under this Agreement or to insist upon exact compliance by the other with its
obligations hereunder, including without limitation, any rule or procedure, or
any waiver, forbearance, delay, failure or omission by Ameritel to exercise
any right, power or option, whether of the same, similar or different nature,
with respect to one or more of Ameritel's authorized agents, retail referral
or marketing representatives.
18. RIGHTS OF PARTIES ARE CUMULATIVE.
The rights of Ameritel and RadioShack hereunder are cumulative and no
exercise or enforcement by Ameritel or RadioShack of any right or remedy
hereunder shall preclude the exercise or enforcement by Ameritel or RadioShack
of any other right or remedy hereunder or which Ameritel or RadioShack is
entitled by law to enforce.
19. GOVERNING LAW.
Except to the extent governed by United States law that preempts state
law, this Agreement shall be interpreted under and governed by the laws of the
State of Texas, irrespective of such state's conflict of laws principles.
20. BINDING EFFECT.
This Agreement is binding upon the parties hereto, their respective
executors, administrators, heirs, assigns and successors in interest.
21. IMPOSSIBILITY OF PERFORMANCE.
Neither Ameritel nor RadioShack shall be liable for loss or damage or
deemed to be in breach of this Agreement if its failure to perform its
obligations results from (a) compliance with any law, ruling, order,
regulation, requirement or instruction of any federal, state or municipal
government or any department or agency thereof or court of competent
jurisdiction, (b) acts of God, (c) acts or omissions of the other party, (d)
fires, strikes, embargoes, war, insurrection or riot, or (e) any other causes
beyond the parties' reasonable control. Any delay resulting from any of said
causes shall extend performance accordingly or excuse performance, in whole or
in part, as may be reasonable. Should RadioShack be unable to meet customer
demand for Equipment owing to product availability, Ameritel and RadioShack's
advertising commitments shall be adjusted appropriately until the markets have
returned to equilibrium.
22. INTERPRETATION.
a. The preambles and exhibits to this Agreement are a part of this
Agreement, which constitute the entire agreement of the parties, and there are
no other oral or written understandings or agreements between Ameritel and
RadioShack relating to the subject matter hereof.
b. Nothing in this Agreement is intended, nor shall be deemed, to
confer any rights or remedies upon any Person not a party hereto.
<PAGE>
c. The headings of the several paragraphs hereof are for convenience
only and do not define, limit or construe the contents of such paragraphs.
23. INDEMNITY.
Each party hereto agrees to defend, indemnify and save harmless the
other party and its successors and assigns and its employees and agents and
their heirs, legal representatives and assigns from (i) any and all claims or
demands whatsoever, including the costs, expenses and reasonable attorney's
fees incurred on account thereof, that may be made (a) by the indemnifying
party's employees or any other persons for bodily injury or damage to property
occasioned by the acts or omissions of the party or the employees or agents of
any of them, and (b) by the indemnifying party's employees under workers'
compensation or similar acts; and (ii) from any breach by it of the terms of
this Agreement.
24. SURVIVAL.
The terms, provisions, representations, and warranties contained in this
Agreement that by their sense and context are intended to survive the
performance thereof by either or both parties hereunder shall so survive the
completion of performances and termination of this Agreement, including the
making of any and all payments, including, but not limited to, AMF payments
due hereunder; provided, however, that Ameritel shall not be obligated to make
such AMF payments if the Agreement is terminated due to breach by RadioShack
or in the event RadioShack terminates this Agreement by serving Ameritel with
ninety (90) days notice of termination pursuant to the terms of this
Agreement. In the event this Agreement is terminated by RadioShack as
aforesaid, Ameritel's obligation to make AMF payments shall cease upon the
expiration of the ninety (90) day notice period.
25. NOTICES.
Except as otherwise provided in this Agreement, all notices required or
permitted to be given hereunder shall be in writing and shall be valid and
sufficient if dispatched by certified or registered mail, postage prepaid, in
any post office of the United States or by national overnight courier, and
addressed to the party to be notified as instructed below. Notices given
hereunder shall be considered to have been received five (5) days after
mailing thereof, or when actually received, whichever occurs first.
Notices to Ameritel shall be sent to:
6115 Jimmy Carter Boulevard, Suite A
Norcross, Georgia 30071
with copies to
Leonard R. Glass, Esq.
Cole, Schotz, Meisel, Forman & Leonard, P.A.
25 Main Street
Hackensack, New Jersey 07601
Except with respect to the notices required under Sections 5.q. and 6.a.,
notices to RadioShack shall be sent to:
RadioShack
100 Throckmorton Street, Suite 1600
Fort Worth, Texas 76102
Attn: Wireless Marketing and Business Development
with copies to:
General Counsel
Tandy Corporation
100 Throckmorton, Suite 1800
Fort Worth, Texas 76102
<PAGE>
26. MERGER OF AGREEMENTS.
This Agreement supersedes all previous agreements and understandings
between the parties regarding the subject matter of this Agreement, and no
statement, agreement or understanding, oral or written, not contained herein
will be recognized or enforced. No change or amendment to the Agreement
shall be effective unless in writing and signed by Ameritel and RadioShack.
27. CONDITIONS PRECEDENT
It shall be a condition precedent to the execution of this Agreement
by RadioShack that Ameritel provide to RadioShack in a form and issued by a
bank acceptable to RadioShack an irrevocable revolving letter of credit
("LOC") in the initial principal amount of Two Million Five Hundred
Thousand and 00/100 Dollars ($2,500,000.00), which amount shall be
increased to an amount equal to six (6) weeks liability for referral fees,
AMF, MDF and EIF payments to RadioShack, whichever is greater. It being
the intent of the parties that at any point in time during the term of this
Agreement that Ameritel shall have posted a revolving LOC in an amount no
less than * and equal to the rolling past six (6) weeks liability for
referral fees, AMF payments, MDF payments and EIF payments earned by
RadioShack under this Agreement. Said LOC shall be for the benefit of
RadioShack and may be drawn upon by RadioShack in the event and to the
extent Ameritel fails to make payments due to RadioShack within sixty
(60)days of the due date. Upon three (3) days notice, RadioShack may draw
against the LOC for the amount due, provided payment has not been made
within such three (3) day period. This remedy shall be in addition to,
and not in lieu of, any other remedies which may be available to
RadioShack.
IN WITNESS WHEREOF, the parties hereto have executed, sealed and delivered
this Agreement in two (2) counterparts as of the Effective Date.
"Ameritel" "RadioShack"
AMERITEL COMMUNICATIONS, RADIOSHACK, A DIVISION
INC. OF TANDY CORPORATION
BY: /s/ Bruce A. Hahn BY: /s/ Mark E. Stanley
TITLE: CEO TITLE: Director, Wireless
Wireless Marketing
and Business Development
DATE: 10/10/97 DATE: October 10,1997
* THIS PORTION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION
<PAGE>
List of Exhibits
Exhibit A:List of Areas
Exhibit B:List of Ameritel Marks
Exhibit C:List of RadioShack Marks
Exhibit D:Payment of Fees and Promotional Funds
Exhibit E:Ameritel Enrollment and Administrative Procedures
Exhibit F:RadioShack Return Policy
EXHIBIT A
This Exhibit A sets forth the Areas, as that term is defined in this
Agreement, in which Ameritel provides CRS and RadioShack is appointed as a
nonexclusive retail referral representative for Ameritel's CRS:
NEW YORK MSA
EXHIBIT B
Ameritel Marks
Ameritel logo (optional)
EXHIBIT C
RadioShack Marks
RadioShack
RadioShack logo
Tandy
The Edge
The Edge in Electronics
TechAmerica
(Logos will be provided as needed for advertising purposes only)
<PAGE>
EXHIBIT D
Fees and Promotional Funds
1. REFERRAL FEE. Ameritel will pay a referral fee of * to RadioShack for
Subscribers referred by RadioShack to Ameritel for CRS. Such funds, when due
shall be paid separately to:
Tandy Credit Services - Accounts Receivable
P. O. Box 901018
Fort Worth, TX 76101
2. AMF PAYMENT. Ameritel will pay to RadioShack an AMF payment
determined by multiplying * times all Charges (as hereinbefore defined) billed
to each Subscriber referred by RadioShack to Ameritel for CRS. Such funds,
when due shall be paid separately to:
RadioShack AMF Account
300 West Third Street, Suite 400
Fort Worth, TX 76102
Such AMF payment shall be due quarterly, beginning with the first month of the
second quarter after initial Activation.
3. MDF PAYMENT. Ameritel shall pay * for each Subscriber referred by
RadioShack to Ameritel into the MDF, which funds, when due shall be paid
separately to:
RadioShack Cellular Marketing Account
300 West Third Street, Suite 400
Fort Worth, TX 76102
MDF shall be due and payable by Ameritel within thirty (30) days of the end of
the calendar month in which the Activation of the Subscriber occurred. In
addition, Ameritel will pay to RadioShack an amount not to exceed * to be used
exclusively in the Areas during the months of October, November and December,
1997. These funds are to be utilized in the following advertising mediums,
which shall include, but not be limited to: newspaper, direct mail, fliers, TV
or radio which advertising shall prominently display the Ameritel marks; and
may also be used to provide expanded support during advertising periods.
RadioShack shall provide back-up documentation to Ameritel for all such
expenses. RadioShack will provide Ameritel with notice prior to publication
of any media advertising. All promotions and advertising initiated under the
MDF program shall be jointly approved by Ameritel and RadioShack.
4. EIF PAYMENT. Subject to Section 6, Item H of this Agreement and during
the months of March, April, July, August and October of each year of this
Agreement, Ameritel shall pay * for each Subscriber referred by RadioShack
into the EIF which funds, when due shall be paid separately to:
RadioShack Cellular Marketing Account
300 West Third Street, Suite 400
Fort Worth, TX 76102
* THIS PORTION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION
<PAGE>
EXHIBIT E
Ameritel Enrollment and Administrative Procedures
1. With respect to each credit card sale of CRS to be provided by Ameritel,
each RadioShack sales maker shall require the Customer to tender a valid
credit card (Visa, MasterCard, Discover or American Express) and a valid
driver's license with picture identification for the purpose of verifying
signature and Customer identification. RadioShack shall also obtain the
Customer's agreement to charge Two Hundred Fifty Dollar and 00/100 ($250.00)
on such credit card in the event the Customer fails to remain activated for
CRS with Ameritel for one hundred eighty (180) days by requiring the Customer
to execute Ameritel's CRS SEAA and agreement.
2. If the Customer does not tender a valid credit card and a valid driver's
license as required in Paragraph 1 above, RadioShack shall collect a Two
Hundred Fifty and 00/100 Dollars ($250.00) cash or money order product deposit
at the store level.
3. In the event the Customer is not approved in accordance with Ameritel's
reasonable credit standards, then RadioShack shall collect a Five Hundred and
00/100 Dollars ($500.00) cash or money order security deposit at store level.
4. RadioShack shall forward the funds outlined in Paragraphs 2 and 3 above
directly to Ameritel within thirty (30) days following the month in which the
funds are received together with a written report setting forth the name and
address of the Customer, date of sale, store number, ESN number, CRS phone
Number, and date of Activation to:
Accounting Manager
Ameritel Communications, Inc.
6115-A Jimmy Carter Boulevard
Norcross, Georgia 30071
<PAGE>
EXHIBIT F
RadioShack Return Policy
This Exhibit "F" sets forth the RadioShack Return Policy which shall be
utilized in all Areas in allowing a Return of Equipment. Such policy may be
changed from time to time at the sole discretion of RadioShack; provided,
however, that any change which increases the Return Policy to ninety (90) days
or more shall require the mutual agreement of Carrier and/or a modification of
this Agreement. Carrier shall have the right at any reasonable time to
request a copy of the current Return Policy. Set forth below is the current
Return Policy:
"RadioShack's written policy is a 30-Day Guaranteed Satisfaction pledge.
RadioShack will replace or provide a full refund on any product or service,
including price guarantee adjustment for any reason within thirty (30) days of
purchase.
If a RadioShack customer has a problem with a RadioShack product and requests
replacement or refund within thirty (30) days, it is the RadioShack policy to
grant the replacement or refund.
If a RadioShack customer comes in with a RadioShack item, and within thirty
(30) days a lower price is offered on the same item, the customer is entitled
to a refund of the difference in price.
When the customer comes in with the item and proof of purchase within
thirty (30) days, it is the RadioShack policy to give a refund or exchange
under this policy."
EXHIBIT 10.9
NOTE: PORTIONS OF THIS EXHIBIT (MARKED WITH AN ASTERISK) HAVE BEEN OMITTED
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
AMERITEL COMMUNICATIONS, INC.
6115-A Jimmy Carter Blvd.
Norcross GA 30071
Telephone 770-840-8888 Fax 770-840-0905
November 21, 1997
Ritz Camera
6711 Ritz Way
Beltsville, Maryland 20705
Attn: Richard Tranchida
Gentlemen:
This letter confirms the procedure which Ameritel Communications, Inc.
("Ameritel") will follow in providing cellular services for the
customers of Ritz Camera ("Ritz Camera").
1. Ameritel shall act as the exclusive provider to Ritz Camera's
customers of cellular 800 Mhz. Services in the Norfolk, VA test market
only which shall include processing cellular telephone activations,
credit reviews and providing access to cellular mobile radio service
("CMRS") in the Ritz Camera retail store locations set forth on
Exhibit A attached hereto. In the event that Ritz Camera opens
additional stores, Ritz Camera shall give Ameritel reasonable prior
notice of such openings and Ameritel shall have the right, but not the
obligation, to provide cellular services to Ritz Camera's customers at
such locations pursuant to the terms and conditions hereof.
2. Ameritel's customer service center shall remain open during regular
Ritz Camera store hours to insure prompt and efficient handling of
customer inquiries.
3. Ritz Camera's customers must select a rate plan in accordance with
the Ameritel published rate plans or in any promotions approved in
writing by Ameritel.
4. Ritz Camera acknowledges that Ameritel will only activate cellular
telephones sold to customers agreeing to use CMRS provided by Ameritel.
Cellular telephones purchased by customers who intend to use CMRS
provided by any carrier other than Ameritel will not be activated by
Ameritel and will not qualify for any Ameritel cash back or other
promotional offerings.
<PAGE>
5. Ritz Camera shall not sell any cellular telephones which have not
received a typed acceptance certificate from the FCC pursuant to the
U.S. Code of Federal Regulation, are not compatible with the systems
operated by the providers of Service to Ameritel, are not
authenticatable or which are otherwise not acceptable to Ameritel.
6. Ritz Camera shall comply with Ameritel's administrative procedures
for provision of CMRS, including (i) delivery by facsimile, electronic
transfer and/or regular mail of such copies of customer service
agreements, credit applications and other documentation required in
connection therewith and (ii) requiring each CMRS customer to present a
valid credit card (Visa, Mastercard, Discover or American Express) and a
valid driver's license for signature comparison purposes and obtaining a
signature authorizing a charge in the amount of $250 against the
customer's credit card in the event of termination of CMRS prior to six
months. In addition, customers may be required to make a security
deposit in order to receive CMRS.
7. Ritz Camera shall, at its cost, engage in commercially reasonable
amounts of newspaper or other advertising to promote the sale of
cellular telephones. Ameritel shall, at its cost, place advertising of
its cellular telephone services in the daily local newspapers in
Norfolk, Virginia. In addition, Ameritel shall participate, at a
mutually agreed upon cost, in Ritz Camera's Sunday advertising
circulars.
8. Ameritel shall pay to Ritz Camera the commission and co-op payments
set forth on the attached Schedule B for each activation by Ameritel of
a cellular telephone purchased by a Ritz Camera customer. Such
commission and co-op payments shall be payable by the 15th day of the
month following the month in which the activation occurs.
Each payment of commission shall be accompanied by a written report
prepared by Ameritel which shall set forth with respect to each
activation for which commission is being paid (i) the mobile number and
ESN of the telephone, (ii) the date of activation, (iii) the Ritz Camera
store at which the customer purchased the telephone and (iv) the amount
of commission paid therefor, including details of any chargebacks
against commission taken pursuant to the following paragraph.
Ritz Camera shall not be entitled to receive or retain any
commission for the activation of any cellular telephone deactivated
prior to six months from the date of activation if Ritz Camera has not
complied with the procedures set forth in Section 6 of this agreement.
In each such instance, the commission paid for such activations, if any,
shall, at Ameritel's option, either be set off against other commissions
due to Ritz Camera hereunder or billed to Ritz Camera for payment within
15 days of the invoice date.
<PAGE>
9. Ameritel will agree to continue this pilot through March 31, 1998,
subject to expansion to additional stores if the average units sold per
month are a minimum of ten units per month per store and both parties
determine to proceed. In the event the unit sales are lower, it will be
at the discretion of both parties to determine if expansion is mutually
acceptable.
10. Either party may terminate this agreement on 60 days prior written
notice to the other.
If this letter accurately sets forth the terms of our agreement,
please so indicate by signing the enclosed copy where indicated and
returning same to the undersigned.
Very truly yours,
Ameritel Communications, Inc.
By: /s/ Bruce A. Hahn
Chief Executive Officer
Accepted and Agreed
Ritz Camera
By: /s/ Richard M. Tranchida
Vice President
Exhibit A
Coverage:
Virginia
Store# Address City St. Zip
28 507 N. Military Hwy Norfolk VA 23502
29 722 Hilltop N. Shopping Ctr. VA Beach VA 23451
107 703 Lynnhaven Pkwy VA Beach VA 23452
229 880 N. Military Hwy Norfolk VA 23502
230 12300 Jefferson Ave. Newport News VA 23602
246 1402 Greenbriar Pkwy So. Chesapeake VA 23320
254 4576-D Pembroke Mall VA Beach VA 23462
296 4200 Portsmouth, Suite E218 Chesapeake VA 23321
558 1800 West Mercury Blvd. Hampton VA 23666
272 1709 B. Laskin Rd. VA Beach VA 23452
273 2145 Coliseum Dr. Hampton VA 23666
579 5950 E. Virginia Beach Blvd. Norfolk VA 23502
Exhibit B
Commissions Per Activation:
* plus * adv. co-op (applies to pilot in Norfolk, VA only)
(Will be paid as one total amount)
Terms: Advertising co-op subject to attached policy (Exhibit C)
* THIS PORTION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION
<PAGE>
Exhibit C
Ameritel Communications, Inc.
CO-OP AD POLICY
November 12, 1997
Advertising Market Development Funds and co-op are offered by Ameritel
Communications, Inc. and supported by each of the carrier services,
manufacturer of product and Ameritel Communications, Inc. These funds
are to be utilized for the promotion of approved media in an effort to
increase sales and obtain subscribers on the paging services. The
following guidelines are applicable for the use of MDF advertising co-op
funds.
1. All advertising commitments must be in writing and signed by
Ameritel Communications, Inc. management.
2. These funds represent a consolidation of the carrier, manufacturer
and Ameritel Communications, Inc. and may in part of in total be paid
separately by the manufacturer and/or Ameritel Communications, Inc. The
use of all funds must be pre-approved, delineating specific media size
of ad and cost per ad.
3. The amount of stores to be covered by each individual ad must be
agreed upon in writing by Ameritel Communications, Inc.
4. Ad layouts must present proper logos, activation and promotional
disclaimers, correct service rate plans authorized, and use of cash back
rebates for both product and air time promotions. Any misrepresentation
will result in non-payment of the ad.
5. All ad layouts must be approved by Ameritel Communications, Inc.
prior to being placed. If a general ad layout is to be used repeatedly
then the signing of that layout will be required once. The change of
product and retail price may be inserted without approval. If the use
of cash back, air time rates or carrier change in any single ad then it
requires additional pre-approval.
6. All ad debits must be submitted to attention: ADVERTISING CO-OP
DEPARTMENT OF AMERITEL COMMUNICATIONS, INC. The ad claims must be
supported by original tear sheets with a debit that matches the precise
agreed upon allocation of funds for that specific ad, media, date and a
copy of the original authorized advertisement.
a. If a flyer is utilized or catalogue is utilized as part of the
media, then the claim applied to the flyer must be attached to an
original flyer or catalogue designating the agreed upon space and proof
of circulation.
8. If the advertising charges do not match the agreed upon amount in
the vendor ad agreement the claim will be returned to the store's
Advertising Department unpaid. Ameritel Communications, Inc. will wait
for the claim to be created and submitted.
9. In the event the advertising charges exceed the agreed upon
allocation of any ad agreement the balance will be reconciled as a non-
payment and the specific charges not paid will be summarized in a
reconciliation letter directed to the Ad Department of the retailer and
the buyer with a final payment if funds are available.
EXHIBIT 10.10
Investment Banking Division
PaineWebber Incorporated
1285 Avenue of the Americas
New York, NY 10019
212-713-2000
October 30, 1997
USCI, Inc.
P.O.Box 1645
6115-A Jimmy Carter Blvd.
Norcross, GA 30071
Attn: Robert J. Kostrinsky
Ladies and Gentlemen:
1. USCI, Inc. ("USCI") may request that PaineWebber Incorporated
("PWI") establish for the account of its wholly owned subsidiary, Ameritel
Communications, Inc. ("Ameritel") the following Irrevocable Standby Letters of
Credit:
Principal
Tranche In Favor Of Amount Purpose
A Radio Shack $2,500,000 To provide
alternative source
of funding if
Ameritel fails to
make commission
payments within 60
days of payment
due date.
B GTE $ 250,000 To provide
alternative source
of funding if
Ameritel fails to
make airtime
payments to
cellular carriers.
AirTouch-Ohio/Michigan $ 150,000
AirTouch-Los Angeles $ 100,000
Ameritech-Michigan $ 50,000
Ameritech-Ohio $ 50,000
AT&T-New York $ 400,000
BellSouth-Florida $ 100,000
Puerto Rico Telephone Co. $ 50,000
Southwestern Bell $ 100,000
(each in form and substance reasonably satisfactory to PWI, "Letter of
Credit"). Upon the terms and subject to the conditions of this letter
agreement, PWI shall issue from time to time during the period from the
Effective Date through January 1, 1998, each Letter of Credit requested by
USCI to be issued by PWI for the account of Ameritel.
2. This letter agreement and the rights and obligations of PWI and
USCI hereunder shall become effective on the date when each of the following
conditions has been fulfilled ("Effective Date").
<PAGE>
(a) PWI shall have received duly executed copies of Guaranty
Agreements (each, a "Guaranty"), in the form of Exhibit A attached hereto,by
each of the following (each, a "Guarantor"); (i) USCI and (ii) Ameritel;
(b) PWI shall have received a warrant (the "Warrant") to
purchase common stock of USCI, in the form of Exhibit B attached hereto, which
warrant (x) shall be immediately exercisable, (y) shall entitle PWI to
purchase, upon such exercise, 600,000 shares of USCI common stock at the
exercise price of $6.00 per share, and (z) shall have been duly authorized and
issued; and
(c) PWI shall have received each of the following, in form and
substance satisfactory to PWI, (i) a certificate of the Secretary of Assistant
Secretary of USCI dated the Effective Date with respect to authorization,
execution and delivery of this letter agreement, the Warrant, the Guaranty by
USCI and the applications (as defined below). To which shall be attached
copies of the resolutions and bylaws of USCI referred to therein, (ii) copies
of USCI's certificate of incorporation and good standing certificate,
certified or issued, as the case may be, as of a recent date by the Secretary
of State of Delaware, (iii) an opinion of counsel to USCI dated the Effective
Date, and (iv) such additional materials as PWI may have reasonably requested.
3. The obligation of PWI to issue each letter of Credit requested by
USCI to be issued by PWI is subject to fulfillment of each of the following
conditions:
(a) PWI shall have received a duly completed and executed
Applications For Irrevocable Standby Letter of Credit for such Letter of
Credit, in the form of Exhibit C attached hereto ("Applications"); and
(b) PWI shall have received (x) a letter of credit fee in the
amount of 0.625% of the principal amount os such Letter of Credit and (y) the
issuance fee in the amount of $200 for such Letter of Credit.
(c) Deposit into USCI's accounts with PWI [account number
________] for the purpose of securing the full and punctual payment of USCI's
obligations under the applications with respect to the Letters of Credit, such
number of duly authorized, validly issued, fully paid and non-assessable
shares of common stock of USCI, free and clear of any liens and encumbrances
(other than the security interests granted pursuant to the Guaranties and the
Applications ("Original Collateral") valued at $7.00 per share, as shall
equal, in the aggregate, 125% of the principal amount of the Letter of Credit
to be issues.
4. Each Letter of Credit shall expire one year from date of issuance.
On or prior to the earlier of (x) the issuance after the Effective Date of
capital stock of USCI and (y) January 30, 1998, USCI shall provide replacement
collateral to PWI by substituting Cash Equivalents (as defined below) in the
amount of 125% of the aggregate principal amount of all outstanding Letters of
Credit (i.e., up to $4,718,750)("Replacement Collateral") for the Original
Collateral (such substitution, the "Collateral Substitution"). Upon the
receipt of evidence that the Replacement Collateral has been deposited with
PWI, PWI shall release the Original Collateral. For purposes hereof, "Cash
Equivalents" shall mean, to the extent owned by USCI free and clear of all
liens or encumbrances, United States Dollars or any obligations of the United
States of America or unconditionally guaranteed by the full faith and credit
of the United States of America, in each case having a remaining maturity of
not more than one year.
6. Pursuant to Section 5-1401 of the General Obligations Law of the
State of New York, this letter shall be governed by, and construed in
accordance with, the laws of the State of New York. This letter may be
executed in any number of counterparts, each of which shall be identical and
all of which taken together, shall constitute one and the same instrument, and
any party hereto may execute this letter by signing any such counterpart.
<PAGE>
If the foregoing correctly sets forth your understanding of our agreement with
respect to the matters discussed above, please confirm your acceptance and
agreement by countersigning and returning to us the enclosed counterpart of
this letter.
Very truly yours,
PAINEWEBBER INCORPORATED
By: __________________________
(Name and Title)
Acknowledged and Agreed:
USCI, INC.
By: /s/ Robert J. Kostrinsky
Executive Vice President, Treasurer
(Name and Title)
AMERITEL, INC.
By: /s/ Robert J. Kostrinsky
Executive Vice President, Treasurer
(Name and Title)
EXHIBIT 10.11
NONQUALIFIED STOCK OPTION AGREEMENT
THIS NONQUALIFIED STOCK OPTION AGREEMENT (the "Agreement"), entered into
as of the 30th day of October, 1997, between USCI, Inc., a Delaware
corporation, located at 6115-A Jimmy Carter Blvd., Norcross, Georgia 30071
(the "Corporation") and Jerome S. Baron ("Optionee").
WHEREAS, the Corporation has entered into an agreement of even date
herewith with PaineWebber Inc. (PWI"), pursuant to which PWI has agreed to
provide certain Letter of Credit financing for the account of the
Corporation's wholly-owned subsidiary, Ameritel Communications, Inc., and the
Corporation has agreed to deposit up to 674,107 shares of the Corporation's
Common Stock as collateral (the "Collateral Shares") for the issuance of such
Letters of Credit, and
WHEREAS, the Optionee and certain other stockholders of the Corporation
have agreed to provide the Corporation with the Collateral Shares pursuant to
the terms and conditions of that certain agreement dated of even date herewith
by and among such parties, and
WHEREAS, in consideration for the Optionee depositing 23,906 Collateral
Shares, the Board of Directors of the Corporation has determined to grant a
nonqualified stock option to the Optionee to purchase 2,391 shares of the
Corporation's Common Stock, par value $.0001 per share (the "Common Stock"),
upon the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual promises set forth
herein, and for other good and valuable consideration, the receipt of which
is hereby acknowledged, the parties, intending to be legally bound, agree as
follows:
1. Grant of Option. The Corporation hereby grants to the Optionee
a nonqualified stock option (the "Option") to purchase 2,391 shares of Common
Stock (the "Shares") at a price of $6.00 per Share. Unless otherwise provided
herein, this Option shall become exercisable in full commencing on the date
hereof. The Corporation shall have authority in its discretion to prescribe
in that this option may be exercised in different installments during the term
of the option. An option may be exercised at any time or from time to time
during the term of the option as to any or all full shares which have become
purchasable under the provisions of the option, but not at any time as to less
than 25 shares unless the remaining shares which have become so purchasable
are less than 25 shares. The purchase price of the shares shall be paid in
full upon the exercise of the option, and the Company shall not be required
to deliver certificates for such shares until such payment has been made.
2. Method of Exercise. The Optionee shall exercise the Option,
whether in whole or in part, by written notice (the "Notice of Exercise")
directed to the Secretary of the Corporation, specifying the number of Shares
to be purchased and the purchase price being paid. The Notice of Exercise
shall be accompanied by a certified or bank check payable to the order of the
Corporation in payment of the purchase price for the number of Shares
specified therein. Subject to section 7(a) herein, upon the Corporation's
receipt of the Notice of Exercise and payment of the purchase price of the
Shares covered thereby, the Corporation shall cause a certificate representing
such Shares to be issued to the Optionee.
3. Termination of Option.
(a) Except as otherwise provided herein, the Option shall
terminate immediately upon any of the following events, whichever occurs
first:
<PAGE>
(i) The date, if any, set by the Board of Directors as an
accelerated expiration date in the event of the liquidation or dissolution of
the Corporation; or
(ii) The expiration of the five-year term of the Option
on the fifth anniversary of the date of this Agreement.
4. Right to Exercise. During the Optionee's lifetime the Option is
exercisable only by the Optionee, and is not assignable or transferable by the
Optionee, whether voluntarily, by operation of law, or otherwise, and no other
person or entity shall acquire any rights thereof. In the event of the
termination of the Optionee's service to the Corporation due to the Optionee's
death or Disability, the Option may be exercised to the extent exercisable on
the date of such termination, in accordance with Section 1 hereof, by the
Optionee or, if applicable, the Optionee's estate, duly appointed executor,
Administrator, or legal representative, or by or on behalf of such person or
persons to whom the Optionee's rights under the Option pass by will or by the
laws of descent and distribution.
5. Certain Changes. The number, kind, and purchase price of the
Shares shall be proportionately adjusted by the Board of Directors of the
Corporation for any increase, decrease, or change in the outstanding Common
Stock by reason of a stock dividend, recapitalization, merger consolidation,
split-up, combination, exchange of shares, or similar transaction (but not by
reason of the issuance or purchase of Common Stock by the Corporation in
consideration for money, services, or property).
6. Limitations of Exercise. If, at any time, the Board of Directors
determines, in its discretion, that the listing, registration or qualification
of the Shares upon any securities exchange, or under any state or federal law,
or the consent or approval of any governmental regulatory body, is necessary
or desirable as a condition of, or in connection with, the issuance or
purchase thereof, the Option may not be exercised unless and until, such
listing, registration, qualification, consent, or approval shall have been
effected or obtained and is free, of any conditions, which the Board of
Directors, in its sole discretion, deems unacceptable.
7. Conditions of Exercise. Unless the Shares are covered by a then
current and effective registration statement or qualified Offering Statement
under Regulation A under the securities Act of 1933, as amended (the "Act")),
any exercise of this Option by the Optionee shall be deemed to be an
acknowledgement, representation and agreement by the Optionee that (i) such
Shares are being purchased for investment and are being acquired by the
Optionee for investment only and not with a view to distribute or resale
(other than a distribution or resale which, in the opinion of counsel
satisfactory to the Company, may be made without violating the registration
provisions of the Act), (ii) the Optionee has ben advised and understands that
(1) the Shares have not been registered under the Act and are "restricted
securities" within the meaning of Rule 144 under the Act and are subject to
restrictions on transfer and (2) the Company is under no obligation to
register the Shares under the Act or to take any action which would make
available to the Optionee any exemption from such registration, (iii) such
shares may not be transferred without compliance with all applicable federal
and state securities laws, and (iv) an appropriate legend referring to the
foregoing restrictions on transfer and any other restrictions imposed herein
may be endorsed on the certificates. Notwithstanding the foregoing, if the
Company determines that issuance of the Shares should be delayed pending (A)
registration under federal or state securities laws, (B) the receipt of an
opinion of counsel satisfactory to the Company that an appropriate exemption
from such registration is available (C) the listing or inclusion of the Shares
on any securities exchange or an automated quotation system or (D) the consent
or approval of any governmental regulatory body whose consent or approval is
necessary in connection with the issuance of such Shares, the Company may
defer exercise of this Option until any of the events described in this
sentence has occurred.
<PAGE>
8. Construction of Agreement. This Option is not subject to any of
the Corporation's stock option plans. The Board of Directors of the
Corporation is vested with conclusive authority to interpret and construe this
Option.
9. Status of Optionee.
(a) Nothing in this Agreement shall confer upon the Optionee any right
to continue in the employ of the Corporation, or, if applicable, any parent
or subsidiary thereof, or, if applicable, a Section 425(a) Company, or shall
interfere in any way with the right of such entities to terminate the
Optionee's relationship with the Corporation at any time without their
incurring any liability therefor.
(b) The Optionee shall have no rights as a stockholder of the
Corporation with respect to the Shares until their issuance in accordance with
Section 2 hereof.
10. Reservation of Shares. The Board of Directors of the Corporation
shall be under no obligation to reserve shares of Common Stock to fill the
Option. Neither the Option, nor any reservation of Common Stock thereunder,
shall constitute the establishment of a trust, and no particular shares of
Common Stock shall be identified as being optioned or reserved for the
Optionee.
11. Notices. All notices permitted or required hereunder shall be in
writing and shall be sent by certified mail, return receipt requested, postage
prepaid, to the respective addresses of the parties set forth above, or to
such other address as the party to receive the notice designates by notice to
the other party. Any such notice shall be deemed effective on delivery.
12. Entire Agreement. This Agreement is the entire agreement, and
supersedes and terminates all prior agreements between the parties with
respect to the subject matter contained herein.
13. Amendment or Termination. Except as otherwise provided herein,
this Agreement may be modified, amended, or terminated only by written
instrument executed by both parties.
14. Waiver. No waiver of any of the provisions of this Agreement
shall be effective unless in writing and signed by the party to be charged
with such waiver, and such waiver shall be strictly limited to the terms of
such writing.
15. Binding Effect. Except as otherwise provided in Section 4 hereof,
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto, and their heirs, devisees, executors, administrators, legal
representatives, successors, and assigns.
16. Law. This Agreement shall be governed by the laws of the State
of Georgia. The parties hereby consent to the jurisdiction of the State of
Georgia as a forum for litigating any disputes arising hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
OPTIONEE USCI, INC.
/s/ Jerome S. Baron By: /s/ [authorized officer]
<PAGE>
NONQUALIFIED STOCK OPTION AGREEMENT
THIS NONQUALIFIED STOCK OPTION AGREEMENT (the "Agreement"), entered into
as of the 30th day of October, 1997, between USCI, Inc., a Delaware
corporation, located at 6115-A Jimmy Carter Blvd., Norcross, Georgia 30071
(the "Corporation") and Janice Glass ("Optionee").
WHEREAS, the Corporation has entered into an agreement of even date
herewith with PaineWebber Inc. (PWI"), pursuant to which PWI has agreed to
provide certain Letter of Credit financing for the account of the
Corporation's wholly-owned subsidiary, Ameritel Communications, Inc., and the
Corporation has agreed to deposit up to 674,107 shares of the Corporation's
Common Stock as collateral (the "Collateral Shares") for the issuance of such
Letters of Credit, and
WHEREAS, the Optionee and certain other stockholders of the Corporation
have agreed to provide the Corporation with the Collateral Shares pursuant to
the terms and conditions of that certain agreement dated of even date herewith
by and among such parties, and
WHEREAS, in consideration for the Optionee depositing 75,000 Collateral
Shares, the Board of Directors of the Corporation has determined to grant a
nonqualified stock option to the Optionee to purchase 7,500 shares of the
Corporation's Common Stock, par value $.0001 per share (the "Common Stock"),
upon the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual promises set forth
herein, and for other good and valuable consideration, the receipt of which
is hereby acknowledged, the parties, intending to be legally bound, agree as
follows:
1. Grant of Option. The Corporation hereby grants to the Optionee
a nonqualified stock option (the "Option") to purchase 7,500 shares of Common
Stock (the "Shares") at a price of $6.00 per Share. Unless otherwise provided
herein, this Option shall become exercisable in full commencing on the date
hereof. The Corporation shall have authority in its discretion to prescribe
in that this option may be exercised in different installments during the term
of the option. An option may be exercised at any time or from time to time
during the term of the option as to any or all full shares which have become
purchasable under the provisions of the option, but not at any time as to less
than 25 shares unless the remaining shares which have become so purchasable
are less than 25 shares. The purchase price of the shares shall be paid in
full upon the exercise of the option, and the Company shall not be required
to deliver certificates for such shares until such payment has been made.
2. Method of Exercise. The Optionee shall exercise the Option,
whether in whole or in part, by written notice (the "Notice of Exercise")
directed to the Secretary of the Corporation, specifying the number of Shares
to be purchased and the purchase price being paid. The Notice of Exercise
shall be accompanied by a certified or bank check payable to the order of the
Corporation in payment of the purchase price for the number of Shares
specified therein. Subject to section 7(a) herein, upon the Corporation's
receipt of the Notice of Exercise and payment of the purchase price of the
Shares covered thereby, the Corporation shall cause a certificate representing
such Shares to be issued to the Optionee.
3. Termination of Option.
(a) Except as otherwise provided herein, the Option shall
terminate immediately upon any of the following events, whichever occurs
first:
<PAGE>
(i) The date, if any, set by the Board of Directors as an
accelerated expiration date in the event of the liquidation or dissolution of
the Corporation; or
(ii) The expiration of the five-year term of the Option
on the fifth anniversary of the date of this Agreement.
4. Right to Exercise. During the Optionee's lifetime the Option is
exercisable only by the Optionee, and is not assignable or transferable by the
Optionee, whether voluntarily, by operation of law, or otherwise, and no other
person or entity shall acquire any rights thereof. In the event of the
termination of the Optionee's service to the Corporation due to the Optionee's
death or Disability, the Option may be exercised to the extent exercisable on
the date of such termination, in accordance with Section 1 hereof, by the
Optionee or, if applicable, the Optionee's estate, duly appointed executor,
Administrator, or legal representative, or by or on behalf of such person or
persons to whom the Optionee's rights under the Option pass by will or by the
laws of descent and distribution.
5. Certain Changes. The number, kind, and purchase price of the
Shares shall be proportionately adjusted by the Board of Directors of the
Corporation for any increase, decrease, or change in the outstanding Common
Stock by reason of a stock dividend, recapitalization, merger consolidation,
split-up, combination, exchange of shares, or similar transaction (but not by
reason of the issuance or purchase of Common Stock by the Corporation in
consideration for money, services, or property).
6. Limitations of Exercise. If, at any time, the Board of Directors
determines, in its discretion, that the listing, registration or qualification
of the Shares upon any securities exchange, or under any state or federal law,
or the consent or approval of any governmental regulatory body, is necessary
or desirable as a condition of, or in connection with, the issuance or
purchase thereof, the Option may not be exercised unless and until, such
listing, registration, qualification, consent, or approval shall have been
effected or obtained and is free, of any conditions, which the Board of
Directors, in its sole discretion, deems unacceptable.
7. Conditions of Exercise. Unless the Shares are covered by a then
current and effective registration statement or qualified Offering Statement
under Regulation A under the securities Act of 1933, as amended (the "Act")),
any exercise of this Option by the Optionee shall be deemed to be an
acknowledgement, representation and agreement by the Optionee that (i) such
Shares are being purchased for investment and are being acquired by the
Optionee for investment only and not with a view to distribute or resale
(other than a distribution or resale which, in the opinion of counsel
satisfactory to the Company, may be made without violating the registration
provisions of the Act), (ii) the Optionee has ben advised and understands that
(1) the Shares have not been registered under the Act and are "restricted
securities" within the meaning of Rule 144 under the Act and are subject to
restrictions on transfer and (2) the Company is under no obligation to
register the Shares under the Act or to take any action which would make
available to the Optionee any exemption from such registration, (iii) such
shares may not be transferred without compliance with all applicable federal
and state securities laws, and (iv) an appropriate legend referring to the
foregoing restrictions on transfer and any other restrictions imposed herein
may be endorsed on the certificates. Notwithstanding the foregoing, if the
Company determines that issuance of the Shares should be delayed pending (A)
registration under federal or state securities laws, (B) the receipt of an
opinion of counsel satisfactory to the Company that an appropriate exemption
from such registration is available (C) the listing or inclusion of the Shares
on any securities exchange or an automated quotation system or (D) the consent
or approval of any governmental regulatory body whose consent or approval is
necessary in connection with the issuance of such Shares, the Company may
defer exercise of this Option until any of the events described in this
sentence has occurred.
<PAGE>
8. Construction of Agreement. This Option is not subject to any of
the Corporation's stock option plans. The Board of Directors of the
Corporation is vested with conclusive authority to interpret and construe this
Option.
9. Status of Optionee.
(a) Nothing in this Agreement shall confer upon the Optionee any right
to continue in the employ of the Corporation, or, if applicable, any parent
or subsidiary thereof, or, if applicable, a Section 425(a) Company, or shall
interfere in any way with the right of such entities to terminate the
Optionee's relationship with the Corporation at any time without their
incurring any liability therefor.
(b) The Optionee shall have no rights as a stockholder of the
Corporation with respect to the Shares until their issuance in accordance with
Section 2 hereof.
10. Reservation of Shares. The Board of Directors of the Corporation
shall be under no obligation to reserve shares of Common Stock to fill the
Option. Neither the Option, nor any reservation of Common Stock thereunder,
shall constitute the establishment of a trust, and no particular shares of
Common Stock shall be identified as being optioned or reserved for the
Optionee.
11. Notices. All notices permitted or required hereunder shall be in
writing and shall be sent by certified mail, return receipt requested, postage
prepaid, to the respective addresses of the parties set forth above, or to
such other address as the party to receive the notice designates by notice to
the other party. Any such notice shall be deemed effective on delivery.
12. Entire Agreement. This Agreement is the entire agreement, and
supersedes and terminates all prior agreements between the parties with
respect to the subject matter contained herein.
13. Amendment or Termination. Except as otherwise provided herein,
this Agreement may be modified, amended, or terminated only by written
instrument executed by both parties.
14. Waiver. No waiver of any of the provisions of this Agreement
shall be effective unless in writing and signed by the party to be charged
with such waiver, and such waiver shall be strictly limited to the terms of
such writing.
15. Binding Effect. Except as otherwise provided in Section 4 hereof,
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto, and their heirs, devisees, executors, administrators, legal
representatives, successors, and assigns.
16. Law. This Agreement shall be governed by the laws of the State
of Georgia. The parties hereby consent to the jurisdiction of the State of
Georgia as a forum for litigating any disputes arising hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
OPTIONEE USCI, INC.
/s/ Janice Glass By: /s/ [authorized officer]
<PAGE>
NONQUALIFIED STOCK OPTION AGREEMENT
THIS NONQUALIFIED STOCK OPTION AGREEMENT (the "Agreement"), entered into
as of the 30th day of October, 1997, between USCI, Inc., a Delaware
corporation, located at 6115-A Jimmy Carter Blvd., Norcross, Georgia 30071
(the "Corporation") and Bruce A. Hahn ("Optionee").
WHEREAS, the Corporation has entered into an agreement of even date
herewith with PaineWebber Inc. (PWI"), pursuant to which PWI has agreed to
provide certain Letter of Credit financing for the account of the
Corporation's wholly-owned subsidiary, Ameritel Communications, Inc., and the
Corporation has agreed to deposit up to 674,107 shares of the Corporation's
Common Stock as collateral (the "Collateral Shares") for the issuance of such
Letters of Credit, and
WHEREAS, the Optionee and certain other stockholders of the Corporation
have agreed to provide the Corporation with the Collateral Shares pursuant to
the terms and conditions of that certain agreement dated of even date herewith
by and among such parties, and
WHEREAS, in consideration for the Optionee depositing 350,000 Collateral
Shares, the Board of Directors of the Corporation has determined to grant a
nonqualified stock option to the Optionee to purchase 35,000 shares of the
Corporation's Common Stock, par value $.0001 per share (the "Common Stock"),
upon the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual promises set forth
herein, and for other good and valuable consideration, the receipt of which
is hereby acknowledged, the parties, intending to be legally bound, agree as
follows:
1. Grant of Option. The Corporation hereby grants to the Optionee
a nonqualified stock option (the "Option") to purchase 35,000 shares of Common
Stock (the "Shares") at a price of $6.00 per Share. Unless otherwise provided
herein, this Option shall become exercisable in full commencing on the date
hereof. The Corporation shall have authority in its discretion to prescribe
in that this option may be exercised in different installments during the term
of the option. An option may be exercised at any time or from time to time
during the term of the option as to any or all full shares which have become
purchasable under the provisions of the option, but not at any time as to less
than 25 shares unless the remaining shares which have become so purchasable
are less than 25 shares. The purchase price of the shares shall be paid in
full upon the exercise of the option, and the Company shall not be required
to deliver certificates for such shares until such payment has been made.
2. Method of Exercise. The Optionee shall exercise the Option,
whether in whole or in part, by written notice (the "Notice of Exercise")
directed to the Secretary of the Corporation, specifying the number of Shares
to be purchased and the purchase price being paid. The Notice of Exercise
shall be accompanied by a certified or bank check payable to the order of the
Corporation in payment of the purchase price for the number of Shares
specified therein. Subject to section 7(a) herein, upon the Corporation's
receipt of the Notice of Exercise and payment of the purchase price of the
Shares covered thereby, the Corporation shall cause a certificate representing
such Shares to be issued to the Optionee.
3. Termination of Option.
(a) Except as otherwise provided herein, the Option shall
terminate immediately upon any of the following events, whichever occurs
first:
<PAGE>
(i) The date, if any, set by the Board of Directors as an
accelerated expiration date in the event of the liquidation or dissolution of
the Corporation; or
(ii) The expiration of the five-year term of the Option
on the fifth anniversary of the date of this Agreement.
4. Right to Exercise. During the Optionee's lifetime the Option is
exercisable only by the Optionee, and is not assignable or transferable by the
Optionee, whether voluntarily, by operation of law, or otherwise, and no other
person or entity shall acquire any rights thereof. In the event of the
termination of the Optionee's service to the Corporation due to the Optionee's
death or Disability, the Option may be exercised to the extent exercisable on
the date of such termination, in accordance with Section 1 hereof, by the
Optionee or, if applicable, the Optionee's estate, duly appointed executor,
Administrator, or legal representative, or by or on behalf of such person or
persons to whom the Optionee's rights under the Option pass by will or by the
laws of descent and distribution.
5. Certain Changes. The number, kind, and purchase price of the
Shares shall be proportionately adjusted by the Board of Directors of the
Corporation for any increase, decrease, or change in the outstanding Common
Stock by reason of a stock dividend, recapitalization, merger consolidation,
split-up, combination, exchange of shares, or similar transaction (but not by
reason of the issuance or purchase of Common Stock by the Corporation in
consideration for money, services, or property).
6. Limitations of Exercise. If, at any time, the Board of Directors
determines, in its discretion, that the listing, registration or qualification
of the Shares upon any securities exchange, or under any state or federal law,
or the consent or approval of any governmental regulatory body, is necessary
or desirable as a condition of, or in connection with, the issuance or
purchase thereof, the Option may not be exercised unless and until, such
listing, registration, qualification, consent, or approval shall have been
effected or obtained and is free, of any conditions, which the Board of
Directors, in its sole discretion, deems unacceptable.
7. Conditions of Exercise. Unless the Shares are covered by a then
current and effective registration statement or qualified Offering Statement
under Regulation A under the securities Act of 1933, as amended (the "Act")),
any exercise of this Option by the Optionee shall be deemed to be an
acknowledgement, representation and agreement by the Optionee that (i) such
Shares are being purchased for investment and are being acquired by the
Optionee for investment only and not with a view to distribute or resale
(other than a distribution or resale which, in the opinion of counsel
satisfactory to the Company, may be made without violating the registration
provisions of the Act), (ii) the Optionee has ben advised and understands that
(1) the Shares have not been registered under the Act and are "restricted
securities" within the meaning of Rule 144 under the Act and are subject to
restrictions on transfer and (2) the Company is under no obligation to
register the Shares under the Act or to take any action which would make
available to the Optionee any exemption from such registration, (iii) such
shares may not be transferred without compliance with all applicable federal
and state securities laws, and (iv) an appropriate legend referring to the
foregoing restrictions on transfer and any other restrictions imposed herein
may be endorsed on the certificates. Notwithstanding the foregoing, if the
Company determines that issuance of the Shares should be delayed pending (A)
registration under federal or state securities laws, (B) the receipt of an
opinion of counsel satisfactory to the Company that an appropriate exemption
from such registration is available (C) the listing or inclusion of the Shares
on any securities exchange or an automated quotation system or (D) the consent
or approval of any governmental regulatory body whose consent or approval is
necessary in connection with the issuance of such Shares, the Company may
defer exercise of this Option until any of the events described in this
sentence has occurred.
<PAGE>
8. Construction of Agreement. This Option is not subject to any of
the Corporation's stock option plans. The Board of Directors of the
Corporation is vested with conclusive authority to interpret and construe this
Option.
9. Status of Optionee.
(a) Nothing in this Agreement shall confer upon the Optionee any right
to continue in the employ of the Corporation, or, if applicable, any parent
or subsidiary thereof, or, if applicable, a Section 425(a) Company, or shall
interfere in any way with the right of such entities to terminate the
Optionee's relationship with the Corporation at any time without their
incurring any liability therefor.
(b) The Optionee shall have no rights as a stockholder of the
Corporation with respect to the Shares until their issuance in accordance with
Section 2 hereof.
10. Reservation of Shares. The Board of Directors of the Corporation
shall be under no obligation to reserve shares of Common Stock to fill the
Option. Neither the Option, nor any reservation of Common Stock thereunder,
shall constitute the establishment of a trust, and no particular shares of
Common Stock shall be identified as being optioned or reserved for the
Optionee.
11. Notices. All notices permitted or required hereunder shall be in
writing and shall be sent by certified mail, return receipt requested, postage
prepaid, to the respective addresses of the parties set forth above, or to
such other address as the party to receive the notice designates by notice to
the other party. Any such notice shall be deemed effective on delivery.
12. Entire Agreement. This Agreement is the entire agreement, and
supersedes and terminates all prior agreements between the parties with
respect to the subject matter contained herein.
13. Amendment or Termination. Except as otherwise provided herein,
this Agreement may be modified, amended, or terminated only by written
instrument executed by both parties.
14. Waiver. No waiver of any of the provisions of this Agreement
shall be effective unless in writing and signed by the party to be charged
with such waiver, and such waiver shall be strictly limited to the terms of
such writing.
15. Binding Effect. Except as otherwise provided in Section 4 hereof,
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto, and their heirs, devisees, executors, administrators, legal
representatives, successors, and assigns.
16. Law. This Agreement shall be governed by the laws of the State
of Georgia. The parties hereby consent to the jurisdiction of the State of
Georgia as a forum for litigating any disputes arising hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
OPTIONEE USCI, INC.
/s/ Bruce A. Hahn By: /s/ [authorized officer]
<PAGE>
NONQUALIFIED STOCK OPTION AGREEMENT
THIS NONQUALIFIED STOCK OPTION AGREEMENT (the "Agreement"), entered into
as of the 30th day of October, 1997, between USCI, Inc., a Delaware
corporation, located at 6115-A Jimmy Carter Blvd., Norcross, Georgia 30071
(the "Corporation") and Robert J. Kostrinsky ("Optionee").
WHEREAS, the Corporation has entered into an agreement of even date
herewith with PaineWebber Inc. (PWI"), pursuant to which PWI has agreed to
provide certain Letter of Credit financing for the account of the
Corporation's wholly-owned subsidiary, Ameritel Communications, Inc., and the
Corporation has agreed to deposit up to 674,107 shares of the Corporation's
Common Stock as collateral (the "Collateral Shares") for the issuance of such
Letters of Credit, and
WHEREAS, the Optionee and certain other stockholders of the Corporation
have agreed to provide the Corporation with the Collateral Shares pursuant to
the terms and conditions of that certain agreement dated of even date herewith
by and among such parties, and
WHEREAS, in consideration for the Optionee depositing 53,500 Collateral
Shares, the Board of Directors of the Corporation has determined to grant a
nonqualified stock option to the Optionee to purchase 5,350 shares of the
Corporation's Common Stock, par value $.0001 per share (the "Common Stock"),
upon the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual promises set forth
herein, and for other good and valuable consideration, the receipt of which
is hereby acknowledged, the parties, intending to be legally bound, agree as
follows:
1. Grant of Option. The Corporation hereby grants to the Optionee
a nonqualified stock option (the "Option") to purchase 5,350 shares of Common
Stock (the "Shares") at a price of $6.00 per Share. Unless otherwise provided
herein, this Option shall become exercisable in full commencing on the date
hereof. The Corporation shall have authority in its discretion to prescribe
in that this option may be exercised in different installments during the term
of the option. An option may be exercised at any time or from time to time
during the term of the option as to any or all full shares which have become
purchasable under the provisions of the option, but not at any time as to less
than 25 shares unless the remaining shares which have become so purchasable
are less than 25 shares. The purchase price of the shares shall be paid in
full upon the exercise of the option, and the Company shall not be required
to deliver certificates for such shares until such payment has been made.
2. Method of Exercise. The Optionee shall exercise the Option,
whether in whole or in part, by written notice (the "Notice of Exercise")
directed to the Secretary of the Corporation, specifying the number of Shares
to be purchased and the purchase price being paid. The Notice of Exercise
shall be accompanied by a certified or bank check payable to the order of the
Corporation in payment of the purchase price for the number of Shares
specified therein. Subject to section 7(a) herein, upon the Corporation's
receipt of the Notice of Exercise and payment of the purchase price of the
Shares covered thereby, the Corporation shall cause a certificate representing
such Shares to be issued to the Optionee.
3. Termination of Option.
(a) Except as otherwise provided herein, the Option shall
terminate immediately upon any of the following events, whichever occurs
first:
<PAGE>
(i) The date, if any, set by the Board of Directors as an
accelerated expiration date in the event of the liquidation or dissolution of
the Corporation; or
(ii) The expiration of the five-year term of the Option
on the fifth anniversary of the date of this Agreement.
4. Right to Exercise. During the Optionee's lifetime the Option is
exercisable only by the Optionee, and is not assignable or transferable by the
Optionee, whether voluntarily, by operation of law, or otherwise, and no other
person or entity shall acquire any rights thereof. In the event of the
termination of the Optionee's service to the Corporation due to the Optionee's
death or Disability, the Option may be exercised to the extent exercisable on
the date of such termination, in accordance with Section 1 hereof, by the
Optionee or, if applicable, the Optionee's estate, duly appointed executor,
Administrator, or legal representative, or by or on behalf of such person or
persons to whom the Optionee's rights under the Option pass by will or by the
laws of descent and distribution.
5. Certain Changes. The number, kind, and purchase price of the
Shares shall be proportionately adjusted by the Board of Directors of the
Corporation for any increase, decrease, or change in the outstanding Common
Stock by reason of a stock dividend, recapitalization, merger consolidation,
split-up, combination, exchange of shares, or similar transaction (but not by
reason of the issuance or purchase of Common Stock by the Corporation in
consideration for money, services, or property).
6. Limitations of Exercise. If, at any time, the Board of Directors
determines, in its discretion, that the listing, registration or qualification
of the Shares upon any securities exchange, or under any state or federal law,
or the consent or approval of any governmental regulatory body, is necessary
or desirable as a condition of, or in connection with, the issuance or
purchase thereof, the Option may not be exercised unless and until, such
listing, registration, qualification, consent, or approval shall have been
effected or obtained and is free, of any conditions, which the Board of
Directors, in its sole discretion, deems unacceptable.
7. Conditions of Exercise. Unless the Shares are covered by a then
current and effective registration statement or qualified Offering Statement
under Regulation A under the securities Act of 1933, as amended (the "Act")),
any exercise of this Option by the Optionee shall be deemed to be an
acknowledgement, representation and agreement by the Optionee that (i) such
Shares are being purchased for investment and are being acquired by the
Optionee for investment only and not with a view to distribute or resale
(other than a distribution or resale which, in the opinion of counsel
satisfactory to the Company, may be made without violating the registration
provisions of the Act), (ii) the Optionee has ben advised and understands that
(1) the Shares have not been registered under the Act and are "restricted
securities" within the meaning of Rule 144 under the Act and are subject to
restrictions on transfer and (2) the Company is under no obligation to
register the Shares under the Act or to take any action which would make
available to the Optionee any exemption from such registration, (iii) such
shares may not be transferred without compliance with all applicable federal
and state securities laws, and (iv) an appropriate legend referring to the
foregoing restrictions on transfer and any other restrictions imposed herein
may be endorsed on the certificates. Notwithstanding the foregoing, if the
Company determines that issuance of the Shares should be delayed pending (A)
registration under federal or state securities laws, (B) the receipt of an
opinion of counsel satisfactory to the Company that an appropriate exemption
from such registration is available (C) the listing or inclusion of the Shares
on any securities exchange or an automated quotation system or (D) the consent
or approval of any governmental regulatory body whose consent or approval is
necessary in connection with the issuance of such Shares, the Company may
defer exercise of this Option until any of the events described in this
sentence has occurred.
<PAGE>
8. Construction of Agreement. This Option is not subject to any of
the Corporation's stock option plans. The Board of Directors of the
Corporation is vested with conclusive authority to interpret and construe this
Option.
9. Status of Optionee.
(a) Nothing in this Agreement shall confer upon the Optionee any right
to continue in the employ of the Corporation, or, if applicable, any parent
or subsidiary thereof, or, if applicable, a Section 425(a) Company, or shall
interfere in any way with the right of such entities to terminate the
Optionee's relationship with the Corporation at any time without their
incurring any liability therefor.
(b) The Optionee shall have no rights as a stockholder of the
Corporation with respect to the Shares until their issuance in accordance with
Section 2 hereof.
10. Reservation of Shares. The Board of Directors of the Corporation
shall be under no obligation to reserve shares of Common Stock to fill the
Option. Neither the Option, nor any reservation of Common Stock thereunder,
shall constitute the establishment of a trust, and no particular shares of
Common Stock shall be identified as being optioned or reserved for the
Optionee.
11. Notices. All notices permitted or required hereunder shall be in
writing and shall be sent by certified mail, return receipt requested, postage
prepaid, to the respective addresses of the parties set forth above, or to
such other address as the party to receive the notice designates by notice to
the other party. Any such notice shall be deemed effective on delivery.
12. Entire Agreement. This Agreement is the entire agreement, and
supersedes and terminates all prior agreements between the parties with
respect to the subject matter contained herein.
13. Amendment or Termination. Except as otherwise provided herein,
this Agreement may be modified, amended, or terminated only by written
instrument executed by both parties.
14. Waiver. No waiver of any of the provisions of this Agreement
shall be effective unless in writing and signed by the party to be charged
with such waiver, and such waiver shall be strictly limited to the terms of
such writing.
15. Binding Effect. Except as otherwise provided in Section 4 hereof,
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto, and their heirs, devisees, executors, administrators, legal
representatives, successors, and assigns.
16. Law. This Agreement shall be governed by the laws of the State
of Georgia. The parties hereby consent to the jurisdiction of the State of
Georgia as a forum for litigating any disputes arising hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
OPTIONEE USCI, INC.
/s/ Robert J. Kostrinsky By: /s/ [authorized officer]
<PAGE>
NONQUALIFIED STOCK OPTION AGREEMENT
THIS NONQUALIFIED STOCK OPTION AGREEMENT (the "Agreement"), entered into
as of the 30th day of October, 1997, between USCI, Inc., a Delaware
corporation, located at 6115-A Jimmy Carter Blvd., Norcross, Georgia 30071
(the "Corporation") and Edgar Puthuff ("Optionee").
WHEREAS, the Corporation has entered into an agreement of even date
herewith with PaineWebber Inc. (PWI"), pursuant to which PWI has agreed to
provide certain Letter of Credit financing for the account of the
Corporation's wholly-owned subsidiary, Ameritel Communications, Inc., and the
Corporation has agreed to deposit up to 674,107 shares of the Corporation's
Common Stock as collateral (the "Collateral Shares") for the issuance of such
Letters of Credit, and
WHEREAS, the Optionee and certain other stockholders of the Corporation
have agreed to provide the Corporation with the Collateral Shares pursuant to
the terms and conditions of that certain agreement dated of even date herewith
by and among such parties, and
WHEREAS, in consideration for the Optionee depositing 42,639 Collateral
Shares, the Board of Directors of the Corporation has determined to grant a
nonqualified stock option to the Optionee to purchase 4,264 shares of the
Corporation's Common Stock, par value $.0001 per share (the "Common Stock"),
upon the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual promises set forth
herein, and for other good and valuable consideration, the receipt of which
is hereby acknowledged, the parties, intending to be legally bound, agree as
follows:
1. Grant of Option. The Corporation hereby grants to the Optionee
a nonqualified stock option (the "Option") to purchase 4,264 shares of Common
Stock (the "Shares") at a price of $6.00 per Share. Unless otherwise provided
herein, this Option shall become exercisable in full commencing on the date
hereof. The Corporation shall have authority in its discretion to prescribe
in that this option may be exercised in different installments during the term
of the option. An option may be exercised at any time or from time to time
during the term of the option as to any or all full shares which have become
purchasable under the provisions of the option, but not at any time as to less
than 25 shares unless the remaining shares which have become so purchasable
are less than 25 shares. The purchase price of the shares shall be paid in
full upon the exercise of the option, and the Company shall not be required
to deliver certificates for such shares until such payment has been made.
2. Method of Exercise. The Optionee shall exercise the Option,
whether in whole or in part, by written notice (the "Notice of Exercise")
directed to the Secretary of the Corporation, specifying the number of Shares
to be purchased and the purchase price being paid. The Notice of Exercise
shall be accompanied by a certified or bank check payable to the order of the
Corporation in payment of the purchase price for the number of Shares
specified therein. Subject to section 7(a) herein, upon the Corporation's
receipt of the Notice of Exercise and payment of the purchase price of the
Shares covered thereby, the Corporation shall cause a certificate representing
such Shares to be issued to the Optionee.
3. Termination of Option.
(a) Except as otherwise provided herein, the Option shall
terminate immediately upon any of the following events, whichever occurs
first:
<PAGE>
(i) The date, if any, set by the Board of Directors as an
accelerated expiration date in the event of the liquidation or dissolution of
the Corporation; or
(ii) The expiration of the five-year term of the Option on
the fifth anniversary of the date of this Agreement.
4. Right to Exercise. During the Optionee's lifetime the Option is
exercisable only by the Optionee, and is not assignable or transferable by the
Optionee, whether voluntarily, by operation of law, or otherwise, and no other
person or entity shall acquire any rights thereof. In the event of the
termination of the Optionee's service to the Corporation due to the Optionee's
death or Disability, the Option may be exercised to the extent exercisable on
the date of such termination, in accordance with Section 1 hereof, by the
Optionee or, if applicable, the Optionee's estate, duly appointed executor,
Administrator, or legal representative, or by or on behalf of such person or
persons to whom the Optionee's rights under the Option pass by will or by the
laws of descent and distribution.
5. Certain Changes. The number, kind, and purchase price of the
Shares shall be proportionately adjusted by the Board of Directors of the
Corporation for any increase, decrease, or change in the outstanding Common
Stock by reason of a stock dividend, recapitalization, merger consolidation,
split-up, combination, exchange of shares, or similar transaction (but not by
reason of the issuance or purchase of Common Stock by the Corporation in
consideration for money, services, or property).
6. Limitations of Exercise. If, at any time, the Board of Directors
determines, in its discretion, that the listing, registration or qualification
of the Shares upon any securities exchange, or under any state or federal law,
or the consent or approval of any governmental regulatory body, is necessary
or desirable as a condition of, or in connection with, the issuance or
purchase thereof, the Option may not be exercised unless and until, such
listing, registration, qualification, consent, or approval shall have been
effected or obtained and is free, of any conditions, which the Board of
Directors, in its sole discretion, deems unacceptable.
7. Conditions of Exercise. Unless the Shares are covered by a then
current and effective registration statement or qualified Offering Statement
under Regulation A under the securities Act of 1933, as amended (the "Act")),
any exercise of this Option by the Optionee shall be deemed to be an
acknowledgement, representation and agreement by the Optionee that (i) such
Shares are being purchased for investment and are being acquired by the
Optionee for investment only and not with a view to distribute or resale
(other than a distribution or resale which, in the opinion of counsel
satisfactory to the Company, may be made without violating the registration
provisions of the Act), (ii) the Optionee has ben advised and understands that
(1) the Shares have not been registered under the Act and are "restricted
securities" within the meaning of Rule 144 under the Act and are subject to
restrictions on transfer and (2) the Company is under no obligation to
register the Shares under the Act or to take any action which would make
available to the Optionee any exemption from such registration, (iii) such
shares may not be transferred without compliance with all applicable federal
and state securities laws, and (iv) an appropriate legend referring to the
foregoing restrictions on transfer and any other restrictions imposed herein
may be endorsed on the certificates. Notwithstanding the foregoing, if the
Company determines that issuance of the Shares should be delayed pending (A)
registration under federal or state securities laws, (B) the receipt of an
opinion of counsel satisfactory to the Company that an appropriate exemption
from such registration is available (C) the listing or inclusion of the Shares
on any securities exchange or an automated quotation system or (D) the consent
or approval of any governmental regulatory body whose consent or approval is
necessary in connection with the issuance of such Shares, the Company may
defer exercise of this Option until any of the events described in this
sentence has occurred.
<PAGE>
8. Construction of Agreement. This Option is not subject to any of
the Corporation's stock option plans. The Board of Directors of the
Corporation is vested with conclusive authority to interpret and construe this
Option.
9. Status of Optionee.
(a) Nothing in this Agreement shall confer upon the Optionee any right
to continue in the employ of the Corporation, or, if applicable, any parent
or subsidiary thereof, or, if applicable, a Section 425(a) Company, or shall
interfere in any way with the right of such entities to terminate the
Optionee's relationship with the Corporation at any time without their
incurring any liability therefor.
(b) The Optionee shall have no rights as a stockholder of the
Corporation with respect to the Shares until their issuance in accordance with
Section 2 hereof.
10. Reservation of Shares. The Board of Directors of the Corporation
shall be under no obligation to reserve shares of Common Stock to fill the
Option. Neither the Option, nor any reservation of Common Stock thereunder,
shall constitute the establishment of a trust, and no particular shares of
Common Stock shall be identified as being optioned or reserved for the
Optionee.
11. Notices. All notices permitted or required hereunder shall be in
writing and shall be sent by certified mail, return receipt requested, postage
prepaid, to the respective addresses of the parties set forth above, or to
such other address as the party to receive the notice designates by notice to
the other party. Any such notice shall be deemed effective on delivery.
12. Entire Agreement. This Agreement is the entire agreement, and
supersedes and terminates all prior agreements between the parties with
respect to the subject matter contained herein.
13. Amendment or Termination. Except as otherwise provided herein,
this Agreement may be modified, amended, or terminated only by written
instrument executed by both parties.
14. Waiver. No waiver of any of the provisions of this Agreement
shall be effective unless in writing and signed by the party to be charged
with such waiver, and such waiver shall be strictly limited to the terms of
such writing.
15. Binding Effect. Except as otherwise provided in Section 4 hereof,
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto, and their heirs, devisees, executors, administrators, legal
representatives, successors, and assigns.
16. Law. This Agreement shall be governed by the laws of the State
of Georgia. The parties hereby consent to the jurisdiction of the State of
Georgia as a forum for litigating any disputes arising hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
OPTIONEE USCI, INC.
/s/ Edgar Puthuff By: /s/ [authorized officer]
EXHIBIT 10.12
WARRANT TO PURCHASE 600,000 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: October 30, 1997
COMMON STOCK PURCHASE WARRANT
THIS CERTIFIES that, for value received, PAINEWEBBER INCORPORATED (the
"Warrantholder"), or its 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, 600,000 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
period commencing October 30, 1997 and ending on the close of business on
October 30, 2002 ("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
(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.
<PAGE>
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
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
<PAGE>
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.
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
<PAGE>
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 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
<PAGE>
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/ Bruce A. Hahn, Chairman
<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 October 30, 1997 (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 10.13
AGREEMENT
AGREEMENT, dated as of October 30, 1997, between and among USCI, Inc.,
a Delaware corporation ("USCI") and Bruce A. Hahn, Robert J. Kostrinsky,
Janice Glass, Edgar Puthuff and Jerome S. Baron (each a "Shareholder" and
collectively, the "Shareholders").
WHEREAS, USCI has entered into an agreement of even date herewith with
PaineWebber Inc. ("PWI") (the "LC Agreement") pursuant to which PWI has agreed
to provide certain Letter of Credit financing for the account of USCI's
wholly-owned subsidiary, Ameritel Communications, Inc., and USCI has agreed
to deposit up to 674,107 shares of USCI Common Stock (the "Shares") as
collateral for the issuance of such Letters of Credit, and
WHEREAS, the Shareholders have agreed to provide USCI with the Shares
pursuant to the terms and conditions hereof.
NOW, THEREFORE, the parties agree as follows:
18. Upon execution of this Agreement, each Shareholder shall deliver
to USCI such number of Shares of USCI Common Stock registered in such
Shareholder's name, free and clear of any liens or encumbrances, as set forth
opposite such Shareholder's name on Schedule A attached hereto together with
stock powers endorsed in blank.
19. USCI shall deposit the Shares into USCI's account with PWI
(Account No. ____) solely in accordance with the provisions of the LC
Agreement, a copy of which is attached hereto.
20. Pursuant to Section 5 of the LC Agreement, upon the earlier to
occur of (i) the issuance after October 30, 1997 of capital stock of USCI
pursuant to the USCI private placement and (ii) January 30, 1998, USCI shall
provide PWI with "Replacement Collateral" as defined, and in the amount set
forth, in the LC Agreement and shall thereafter direct PWI to promptly deliver
the Shares directly back to the Shareholders.
21. As consideration for providing the Shares hereunder, each
Shareholder shall, upon execution of this Agreement, receive a five year
option to purchase, at a price of $6.00 per share, such number of shares of
USCI Common Stock as set forth opposite such Shareholder's name in Schedule
A attached hereto.
22. This Agreement shall be governed by and construed in accordance
with the laws of the State of Georgia.
23. This Agreement may be executed in any number of counterparts, each
of which shall be identical, and all of which taken together shall constitute
one and the same instrument and any party hereto may execute this Agreement
by signing such counterpart.
24. This Agreement represents the entire agreement among the parties
with respect to the subject matter hereof.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
USCI, Inc. Shareholders:
By: /s/ [authorized officer] /s/ Bruce A. Hahn
/s/ Robert J. Kostrinsky
/s/ Janice Glass
/s/ Edgar Puthuff
/s/ Jerome S. Baron
SCHEDULE A
Name of Shareholder No. of Shares to be Deposited
Bruce A. Hahn 350,000
Robert J. Kostrinsky 53,500
Janice Glass 75,000
Edgar Puthuff 42,639
Jerome S. Baron 23,906
Name of Shareholder No. of Shares Subject to Option
Bruce A. Hahn 35,000
Robert J. Kostrinsky 5,350
Janice Glass 7,500
Edgar Puthuff 4,264
Jerome S. Baron 2,391
EXHIBIT 10.14
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: January 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, 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
period commencing January 5, 1998 and ending on the close of business on
January 4, 2003 ("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.
<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 January 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 10.15
PROMISSORY NOTE
$250,000 New York, New York
January 5, 1998
FOR VALUE RECEIVED, the undersigned, USCI, Inc., a Delaware corporation,
with offices at 6115-A Jimmy Carter Blvd., Norcross GA 30071 ("Maker"),
promises to pay to the order of ALAN R. DRESHER, c/o A.R. Dresher & Co.,
1775 Broadway, New York, New York 10019 ("Holder"), the principal sum
of TWO HUNDRED FIFTY THOUSAND ($250,000) DOLLARS plus interest on the
outstanding
balance at a rate of 10 per cent per annum.
The entire unpaid principal balance of this Note and unpaid accrued
interest shall immediately be due and payable on the earlier of January 31, 1998
Or upon the closing of the private placement of Series A Preferred Stock
of the Maker.
This Note may be prepaid in part or in full at any time without penalty
or charge and with interest payable only through the date of prepayment.
This obligation shall bind the Maker and its successors and assigns and
the benefits hereof shall inure to the Holder hereof and his heirs, executors,
administrators and assigns.
The Maker hereby forever waives presentment, protest, notice of protest
and notice of dishonor of the within Note.
IN WITNESS WHEREOF, the undersigned has caused this Note to be executed
as of the day and year first above written.
WITNESS: MAKER:
USCI, Inc.
/s/ [witness signature] By: /s/ Bruce A. Hahn, Chairman
EXHIBIT 10.16
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: January 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
period commencing January 2, 1998 and ending on the close of business on
January 1, 2003 ("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.
<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 January 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 10.17
PROMISSORY NOTE
$250,000 New York, New York
January 2, 1998
FOR VALUE RECEIVED, the undersigned, USCI, Inc., a Delaware corporation,
with offices at 6115-A Jimmy Carter Blvd., Norcross GA 30071 ("Maker"),
promises to pay to the order of DECAMERON PARTNERS ("Holder"), the principal sum
of TWO HUNDRED FIFTY THOUSAND ($250,000) DOLLARS plus interest on the
outstanding
balance at a rate of 10 per cent per annum.
The entire unpaid principal balance of this Note and unpaid accrued
interest shall immediately be due and payable on the earlier of January 31, 1998
or upon the closing of the private placement of Series A Preferred Stock
of the Maker.
This Note may be prepaid in part or in full at any time without penalty
or charge and with interest payable only through the date of prepayment.
This obligation shall bind the Maker and its successors and assigns and
the benefits hereof shall inure to the Holder hereof and his heirs, executors,
administrators and assigns.
The Maker hereby forever waives presentment, protest, notice of protest
and notice of dishonor of the within Note.
IN WITNESS WHEREOF, the undersigned has caused this Note to be executed
as of the day and year first above written.
WITNESS: MAKER:
USCI, Inc.
/s/ [witness signature] By: /s/ Bruce A. Hahn, Chairman
EXHIBIT 10.18
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: January 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
period commencing January 2, 1998 and ending on the close of business on
January 1, 2003 ("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.
<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 January 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.
______________________________ _____________________________
