EXHIBIT 10.11
Neither this Warrant nor the shares of Common Stock issuable on exercise of
this Warrant have been registered under the Securities Act of 1933. None of
such securities may be transferred in the absence of registration under such
Act or an opinion of counsel to the effect that such registration is not
required.
USCI, INC.
WARRANT [PRIMARY]
DATED: February 24, 1998
Number of Shares: 625,000
Holder: Xxxxx Xxxxxxxxx/Xxxxx Xxxxxx Partnership
Address: 000 X. 00 Xx., Xxx Xxxx, XX 00000
1. THIS CERTIFIES THAT the Holder is entitled to purchase from USCI, INC.,
a Delaware corporation (hereinafter called the "Company"), the number of
shares of the Company's common stock ("Common Stock") set forth above,
at an exercise price equal to $5.00 per share. This Warrant may be
exercised in whole or in part at any time prior to expiration.
2. All rights granted under this Warrant shall expire on the fifth
anniversary of the date of issuance of this Warrant.
3. Upon each exercise of this Warrant (the "Primary Warrant") as to any
number shares, the Company shall also within two days after such exercise
issue to Holder a Warrant in the form of the Secondary Warrant attached
as an exhibit hereto (a "Secondary Warrant") to purchase the same number
of shares.
4. Notwithstanding anything to the contrary contained herein, Holder shall
have the right at any time to exercise this Warrant only so long as and
to the extent that, after taking into account any shares of Common Stock
otherwise beneficially owned by Holder (whether under any convertible
notes owned by Holder or otherwise) , such exercise would not cause the
Holder then to be the "beneficial owner" of more than 4.99% of the
Company's then outstanding Common Stock. For purposes hereof, the term
"beneficial owner" shall have the meaning ascribed to it in Section 13(d)
of the Securities Exchange Act of 1934. The opinion of legal counsel to
Xxxxxx, in form and substance satisfactory to the Company and the
Company's counsel, shall prevail in all matters relating to the amount of
Holder's beneficial ownership.
5. This Warrant and the Common Stock issuable on exercise of this Warrant
(the "Underlying Shares") may be transferred, sold, assigned or
hypothecated, only if registered by the Company under the Securities Act
of 1933 (the "Act") or if the Company has received from counsel to the
Company a written opinion to the effect that registration of the Warrant
or the Underlying Shares is not necessary in connection with such
transfer, sale, assignment or hypothecation. The Warrant and the
Underlying Shares shall be appropriately legended to reflect this
restriction and stop transfer instructions shall apply. The Holder shall
through its counsel provide such information as is reasonably necessary
in connection with such opinion.
6. The holder of this warrant is entitled to certain registration rights
under an Agreement dated of even date herewith (the "Purchase
Agreement"). Upon each permitted transfer of this Warrant after the
registration statement has been declared effective, the Company will
within two business days after receipt of notice thereof supplement the
registration statement to reflect the name of the transferee as a selling
shareholder thereunder.
7. The Company shall take whatever action is required by NASDAQ ("NASDAQ
Action") to approve the issuance of shares on conversion and exercise of
the Notes and the Warrants (as defined in the Purchase Agreement). The
Company represents and warrants, and Holder acknowledges, that without
taking any NASDAQ Action, the maximum number of shares which will be
issued on conversion of the Notes and exercise of the Warrants is
2,000,000, issuable on a first converted-first exercised basis. Should
NASDAQ Action not be completed by May 31, 1998, then until such NASDAQ
Action is completed, the Company shall on demand by Holder made at any
time or times redeem any portion of the Warrant designated for redemption
(the "Redeemed Portion") at a redemption price equal to the pre-tax
profit Holder would have earned had Holder, at the close of business on
the date of its demand for redemption, exercised the Redeemed Portion and
simultaneously sold the shares received on such exercise at the closing
NASDAQ sales price on such date. The redemption price shall be payable
within five business days after demand for redemption is made, and shall
accrue interest payable on demand at 11% per annum.
8. Any permitted assignment of this Warrant shall be effected by the Holder
by (i) executing a standard form of assignment, (ii) surrendering the
Warrant for cancellation at the office of the Company, accompanied by the
opinion of counsel to the Company referred to above; and (iii) unless in
connection with an effective registration statement which covers the sale
of this Warrant and or the shares underlying the Warrant, delivery to the
Company of a statement by the transferee (in a form acceptable to the
Company and its counsel) that such Warrant is being acquired by the
Holder for investment and not with a view to its distribution or resale;
whereupon the Company shall issue, in the name or names specified by the
Holder (including the Holder) new Warrants representing in the aggregate
rights to purchase the same number of Shares as are purchasable under the
Warrant surrendered. Such Warrants shall be exercisable immediately upon
any such assignment of the number of Warrants assigned. The transferor
will pay all relevant transfer taxes. Replacement warrants shall bear the
same legend as is borne by this Warrant.
9. The term "Holder" should be deemed to include any permitted record
transferee of this Warrant.
10. The Company covenants and agrees that all shares of Common Stock and all
Secondary Warrants which may be issued upon exercise hereof will, upon
issuance, be duly and validly issued, fully paid and non-assessable and
no personal liability will attach to the holder thereof. The Company
further covenants and agrees that, during the periods within which this
Warrant may be exercised, the Company will at all times have authorized
and reserved a sufficient number of shares of Common Stock for issuance
upon exercise of this Warrant and all other Warrants.
11. This Warrant shall not entitle the Holder to any voting rights or other
rights as a stockholder of the Company.
12. In the event that as a result of reorganization, merger, consolidation,
liquidation, recapitalization, stock split, combination of shares or
stock dividends payable with respect to such Common Stock, the
outstanding shares of Common Stock of the Company are at any time
increased or decreased or changed into or exchanged for a different
number or kind of share or other security of the Company or of another
corporation, then appropriate adjustments in the number and kind of such
securities then subject to this Warrant and in the exercise price
hereunder shall be made effective as of the date of such occurrence so
that the position of the Holder upon exercise will be the same as it
would have been had it owned immediately prior to the occurrence of such
events the Common Stock subject to this Warrant. Such adjustment shall
be made successively whenever any event listed above shall occur and the
Company will notify the Holder of the Warrant of each such adjustment.
Any fraction of a share resulting from any adjustment shall be eliminated
and the price per share of the remaining shares subject to this Warrant
adjusted accordingly.
13. The rights represented by this Warrant may be exercised at any time
within the period above specified by (i) surrender of this Warrant (with
a standard purchase form properly executed) at the principal executive
office of the Company (or such other office or agency of the Company as
it may designate by notice in writing to the Holder at the address of the
Holder appearing on the books of the Company); (ii) payment to the
Company of the exercise price for the number of Shares specified in the
above-mentioned purchase form together with applicable stock transfer
taxes, if any; and (iii) unless in connection with an effective
registration statement which covers the sale of the shares underlying the
Warrant, the delivery to the Company of a statement by the Holder (in a
form acceptable to the Company and its counsel) that such Shares are
being acquired by the Holder for investment and not with a view to their
distribution or resale.
14. Within two business days following each receipt by the Company of the
documents required to exercise all any part of this Warrant as provided
herein, the Company shall DWAC or deliver certificates of the shares of
common stock so purchased as directed by Xxxxxx, and shall also deliver
to Holder a warrant certificate for the Secondary Warrants issuable as a
result of such exercise. Such certificates shall bear appropriate
restrictive legends in accordance with applicable securities laws, but
shall be unrestricted and bear no legends once the registration statement
referred to above has been declared effective.
15. In the event the Company breaches its obligation to DWAC or to deliver
certificates for shares of common stock or Secondary Warrants as required
hereunder, or timely to make any payment required under this Warrant,
then, without limiting Holder's other rights and remedies, the Company
shall forthwith pay to the Holder an amount accruing at the rate of
$1,000 per day for each day of such breach for each 20,000 shares of
common stock subject to this Warrant, with pro rata payments for shares
in an amount less than 20,000.
16. This Warrant shall be governed by and construed in accordance with the
laws of the State of New York. The federal and state courts in the city
of New York shall have exclusive jurisdiction over this instrument and
the enforcement thereof. Service of process shall be effective if by
certified mail, return receipt requested. All notices shall be in
writing and shall be deemed given upon receipt by the party to whom
addressed. This instrument shall be enforceable by decrees of specific
performances well as other remedies. The Holder shall be entitled to
recover its reasonable legal fees and costs in enforcing its rights
hereunder.
IN WITNESS WHEREOF, USCI, INC. has caused this Warrant to be signed by
its duly authorized officers under Its corporate seal, and to be dated as of
the date set forth above.
USCI, INC.
By [authorized officer]
