Exhibit 4.2
UNDERWRITER'S WARRANT AGREEMENT dated as of February 28, 1997
between IFS International, Inc., a Delaware corporation (the "Company"),
and Duke & Co., Inc. (the "Underwriter").
W I T N E S S E T H:
WHEREAS, the Underwriter has agreed, pursuant to the
underwriting agreement (the "Underwriting Agreement") dated
February 21, 1997 between the Underwriter and the Company, to act as the
underwriter in connection with the Company's proposed public offering
(the "Public Offering") of 1,200,000 shares of preferred stock, par value
$.001 per share ("Preferred Stock"), and 1,700,000 redeemable Preferred
Stock purchase warrants ("Redeemable Warrants"), plus up to an additional
180,000 shares of Preferred Stock and 255,000 Redeemable Warrants
pursuant to the Underwriter's over-allotment option, which securities are
included in a registration statement on Form SB-2 (File No. 333-11653)
(hereinafter, the "Public Offering Registration Statement); and
WHEREAS, the Company proposes to issue to the Under- writer
warrants, one for the purchase of up to 120,000 shares of Preferred Stock
and the other for the purchase of up to 170,000 Redeemable Warrants; and
WHEREAS, the warrants issued pursuant to this Agreement are
being issued by the Company to the Underwriter or officers and partners
of the Underwriter and members of the selling group (the "Selling Group")
and/or their officers or partners, in consideration for, and as part of
the Underwriter's compensation in connection with, the Underwriter acting
as the underwriter pursuant to the Underwriting Agreement;
NOW, THEREFORE, in consideration of the foregoing premises, the
payment by the Underwriter to the Company of an aggregate of $290.00, the
receipt of which is hereby acknowledged by the Company, the agreements
herein set forth and other good and valuable consideration the receipt
and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. GRANT. Subject to the terms and conditions of this
Agreement, the Underwriter, and/or its designees who are officers or
partners of the Underwriter or members of the Selling Group in connection
with the Public Offering, are hereby granted the right to purchase, at
any time from February 21, 1998 until 5:00 P.M., New York City time, on
February 20, 2002 (the "Warrant Exercise Term"), up to (i) 120,000 shares
of Preferred Stock (the "Shares") at an initial exercise price (subject
to adjustment as provided in Article 8 hereof) of $6.25 per Share and
(ii) 170,000 Redeemable Warrants at an initial exercise price of $1.6875
per Redeemable Warrant. The right to purchase Shares as described in (i)
above is hereinafter referred to as "Warrant No. 1" and the right to
purchase Redeemable Warrants as described in (ii) above is hereinafter
referred to as "Warrant No. 2". Warrant No. 1 and Warrant No. 2 are
hereinafter referred to collectively as the "Warrants". Except as
specifically otherwise provided herein, the Shares and the Redeemable
Warrants issued pursuant to Warrant No. 1 and Warrant No. 2,
respectively, shall bear the same terms and conditions as described under
the caption "Description of Securities" in the Public Offering
Registration Statement, the Shares shall be governed by the terms of the
Certificate of Designation relating to the Preferred Stock and the
Redeemable Warrants shall be governed by the terms of the Warrant
Agreement dated as of February 21, 1997, executed in connection with the
Public Offering (the "Public Warrant Agreement"), and except that the
holder shall have registration rights under the Securities Act of 1933,
as amended (the "Act"), with respect to the Warrants, the Shares and the
Redeemable Warrants subject thereto, the shares of Preferred Stock
underlying the Redeemable Warrants issuable upon exercise of Warrant No.
2 and the shares of Common Stock issuable upon conversion of the
Preferred Stock, which registration rights are more fully described in
paragraph 6 of this Warrant Agreement. In the event of any reduction of
the exercise price of the Redeemable Warrants pursuant to the Public
Warrant Agreement, the same changes to the Redeemable Warrants subject to
Warrant No. 2 shall be simultaneously effected.
2. WARRANT CERTIFICATES. The warrant certificates (the
"Warrant Certificates") for Warrant No. 1 and Warrant No. 2 to be
delivered pursuant to this Agreement shall be in the forms set forth as
Exhibit A and Exhibit B attached hereto, respectively, and made a part
hereof, with such appropriate insertions, omissions, substitutions and
other variations as required or permitted by this Agreement.
3. EXERCISE OF WARRANTS.
3.1 CASH EXERCISE. The exercise price of the respective
Warrants shall be payable in cash or by check to the order of the
Company, or any combination of cash or check. Upon surrender of the
applicable Warrant Certificate with the annexed Form of Election to
Purchase duly executed, together with payment of the applicable exercise
price for the Shares and/or Redeemable Warrants purchased, at the
Company's principal offices, currently located at Rensselaer Technology
Park, 000 Xxxxxx Xxxx, Xxxx, Xxx Xxxx 00000, the registered holder of a
Warrant Certificate ("Holder" or "Holders") shall be entitled to receive
a certificate or certificates for the Shares and/or Redeemable Warrants
so purchased. The purchase rights represented by each Warrant
Certificate are exercisable at the option of the Holder thereof, in whole
or in part (but not as to fractional Shares or fractional Redeemable
Warrants). In the case of the purchase of less than all the Shares or
Redeemable Warrants, as the case may be, purchasable under any Warrant
Certificate, the Company shall cancel said Warrant Certificate upon the
surrender thereof and shall execute and deliver a new Warrant Certificate
of like tenor for the balance of the Shares or Redeemable Warrants, as
the case may be, purchasable thereunder.
3.2 CASHLESS EXERCISE FOR WARRANT NO. 1. At any time
during the Warrant Exercise Term, the Holder may, at its option, exchange
Warrant No. 1, in whole or in part (a "Warrant Exchange"), into the
number of Shares determined in accordance with this Section 3.2, by
surrendering the Warrant Certificate representing Warrant No. 1 at the
principal office of the Company, accompanied by a notice stating (i) such
Holder's intent to effect such exchange, (ii) the number of Shares
subject to Warrant No. 1 as to which the exchange is to be effected and
(iii) the date on which the Holder requests that such Warrant Exchange
occur (the "Notice of Exchange"). The Warrant Exchange shall take place
on the date specified in the Notice of Exchange or if the date the Notice
of Exchange is received by the Company is later than the date specified
in the Notice of Exchange, such later date (the "Exchange Date").
Certificates for the Shares issuable upon such Warrant Exchange and, if
applicable, a new warrant of like tenor evidencing the balance of the
Shares remaining subject to this Warrant, shall be issued as of the
Exchange Date and delivered to the Holder within three (3) business days
following the Exchange Date. In connection with any Warrant Exchange,
Warrant No. 1 shall represent the right to subscribe for and acquire the
number of Shares (rounded to the next highest integer) equal to (i) the
number of Shares specified by the Holder in its Notice of Exchange (the
"Total Number") less (ii) the number of Shares equal to the quotient
obtained by dividing (A) the product of the Total Number and the existing
exercise price of Warrant No. 1 by (B) the market price of a share of
Preferred Stock on the Exchange Date; and, in the case of any Warrant
Exchange for less than all of the Shares purchasable under Warrant No. 1,
the Company shall execute and deliver a new Warrant Certificate of like
tenor for the balance of the Shares purchasable thereunder. By way of
example, if the holder of Warrant No. 1 submits a Notice of Exchange
relating to 60,000 of the 120,000 Shares subject to Warrant No. 1 and the
current market price of a share of Preferred Stock on the Exchange Date
is $10.00, the holder will be entitled to receive 22,500 shares of
Preferred Stock, along with a new Warrant Certificate entitling the
holder to purchase 60,000 Shares.
4. ISSUANCE OF CERTIFICATES.
4.1. ISSUANCE. Upon exercise of the Warrants, the
issuance of certificates for the Shares and/or Redeemable Warrants, as
applicable shall be made forthwith (and in any event within three (3)
business days thereafter) without charge to the Holder thereof including,
without limitation, any tax which may be payable in respect of the
issuance thereof, and such certificates shall (subject to the provisions
of Article 5 hereof) be issued in the name of, or in such names as may be
directed by, the Holder thereof; provided, however, that the Company
shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issuance and delivery of any such
certificates in a name other than that of the Holder, and the Company
shall not be required to issue or deliver such certificates unless or
until the person or persons requesting the issuance thereof shall have
paid to the Company the amount of such tax or shall have established to
the satisfaction of the Company that such tax has been paid.
4.2. FORMS OF CERTIFICATES. The Warrant Certificates and
certificates representing the Shares and/or Redeemable Warrants shall be
executed on behalf of the Company by the manual or facsimile signature of
the present or any future Chairman or Vice Chairman of the Board of
Directors or President or Vice President of the Company under its
corporate seal reproduced thereon, attested to by the manual or facsimile
signature of the present or any future Secretary or Assistant Secretary
of the Company. Warrant Certificates shall be dated the date of
execution by the Company upon initial issuance, division, exchange,
substitution or transfer. The Warrant Certificates and, upon exercise of
the Warrants, in part or in whole, certificates representing the Shares
and/or Redeemable Warrants shall bear a legend substantially similar to
the following:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Act"), and may not be offered or sold except (i) pursuant to
an effective registration statement under the Act, (ii) to the
extent applicable, pursuant to Rule 144 under the Act (or any
similar rule under such Act relating to the disposition of
securities), or (iii) upon the delivery by the holder to the
Company of an opinion of counsel, reasonably satisfactory to
counsel to the Company, stating that an exemption from
registration under such Act is available."
5. RESTRICTION ON TRANSFER OF WARRANTS.
The Holder of a Warrant Certificate, by acceptance thereof,
covenants and agrees that the Warrant is being acquired as an investment
and not with a view to the distribution thereof, and that the Warrant may
not be sold, transferred, assigned, hypothecated or otherwise disposed
of, in whole or in part, for a period of one (1) year from the date
hereof, except to officers or partners of the Underwriter or to any
member of the Selling Group participating in the distribution to the
public of the Preferred Stock and Redeemable Warrants, and/or their
respective officers or partners.
6. PRICE.
6.1 INITIAL AND ADJUSTED EXERCISE PRICES. The initial
exercise price of Warrant No. 1 shall be $6.25 per Share and the initial
exercise price of Warrant No. 2 shall be $1.6875 per Redeemable Warrant.
The adjusted exercise price shall be the price which shall result from
time to time from any and all adjustments of the initial exercise price
in accordance with the provisions of Article 8 hereof.
6.2 EXERCISE PRICE. The term "exercise price" herein
shall mean the initial exercise price of Warrant No. 1 or Warrant No. 2,
as the case may be, or the adjusted exercise price, depending upon the
context.
7. REGISTRATION RIGHTS.
7.1 REGISTRATION UNDER THE SECURITIES ACT OF 1933. None
of the Warrants, the Shares, the Redeemable Warrants, the Preferred Stock
issuable upon exercise of the Redeemable Warrants (the Underlying
Shares") or the shares of Common Stock issuable upon conversion of the
Shares or the Underlying Shares (the "Conversion Shares") has been
registered for purposes of public distribution under the Securities Act
of 1933, as amended (the "Act").
7.2 REGISTRABLE SECURITIES. As used herein the term
"Registrable Securities" means the Warrants, the Shares issuable upon
exercise of Warrant No. 1, the Redeemable Warrants issuable upon exercise
of Warrant No. 2, the Underlying Shares, the Conversion Shares and any
securities issued upon any stock split or stock dividend in respect of
any of the foregoing; provided, however, any of such securities shall
cease to be Registrable Securities when, as of the date of determination,
(i) it has been effectively registered under the Act and disposed of
pursuant thereto, (ii) registration under the Act is no longer required
for the immediate public distribution of such securities or (iii) it has
ceased to be outstanding. In the event of any merger, reorganization,
consolidation, recapitalization or other change in corporate structure
affecting the Common Stock or Preferred Stock, such adjustment shall be
made in the definition of "Registrable Securities" as is appropriate in
order to prevent any dilution or enlargement of the rights granted
pursuant to this Article 7.
7.3 PIGGYBACK REGISTRATION. If, at any time during the
seven years following the date of this Agreement, the Company proposes to
prepare and file one or more post-effective amendments to the Public
Offering Registration Statement filed in connection with the Public
Offering or any new registration statement or posteffective amendments
thereto covering equity or debt securities of the Company, or any such
securities of the Company held by its shareholders (other than pursuant
to a Form S-4 relating to a merger or acquisition or pursuant to a Form
S-8) (for purposes of this Article 7, collectively, a "Registration
Statement"), it will give written notice of its intention to do so by
registered mail ("Notice"), at least thirty (30) business days prior to
the filing of each such Registration Statement, to all holders of the
Registrable Securities. Upon the written request of such a holder (a
"Requesting Holder"), made within twenty (20) business days after receipt
of the Notice, that the Company include any of the Requesting Holder's
Registrable Securities in the proposed Registration Statement, the
Company shall, as to each such Requesting Holder, use its best efforts to
effect the registration under the Act of the Registrable Securities which
it has been so requested to register ("Piggyback Registration"), at the
Company's sole cost and expense and at no cost or expense to the
Requesting Holders (other than underwriting discounts and commissions
applicable to the sale of such Registrable Securities and the fees and
disbursements, if any, of counsel to the Requesting Holders); provided,
however, that the Company shall in any event be entitled to withdraw such
Registration Statement prior to its effectiveness if such Registration
Statement is withdrawn as to all securities proposed to be registered
thereunder.
7.4 DEMAND REGISTRATION.
(a) At any time during the Warrant Exercise Term,
any "Demand Holder" (as such term is defined in Section 7.4(d) below) of
the Registrable Securities shall have the right (which right is in
addition to the piggyback registration rights provided for under Section
7.3 hereof), exercisable by written notice to the Company (the "Demand
Registration Request"), to have the Company prepare and file with the
Securities and Exchange Commission (the "Commission"), on one occasion,
at the sole expense of the Company, a Registration Statement and such
other documents, including a prospectus, as may be necessary (in the
opinion of both counsel for the Company and counsel for such Demand
Holder), in order to comply with the provisions of the Act, so as to
permit a public offering and sale of the Registrable Securities by the
holders thereof for nine (9) consecutive months. In the event a Demand
Registration Request is made pursuant to this Section 7.4(a) and the
Registration Statement relating thereto is declared effective, no further
Demand Registration Request can be made by any holder of Registrable
Securities.
(b) The Company covenants and agrees to give written
notice of any Demand Registration Request to all holders of the
Registrable Securities within ten (10) days from the date of the
Company's receipt of any such Demand Registration Request. After
receiving notice from the Company as provided in this Section 7.4(b),
holders of Registrable Securities may request the Company to include
their Registrable Securities in the Registration Statement to be filed
pursuant to Section 7.4(a) hereof by notifying the Company of their
decision to have such securities included within ten (10) days of their
receipt of the Company's notice.
(c) In addition to the registration rights provided
for under Section 7.3 hereof and subsection (a) of this Section 7.4, at
any time during the Warrant Exercise Term, any Demand Holder (as defined
below in Section 7.4(d)) of Registrable Securities shall have the right,
exercisable by written request to the Company, to have the Company
prepare and file with the Commission, on one occasion in respect of all
holders of Registrable Securities, a Registration Statement so as to
permit a public offering and sale of such Registrable Securities for nine
(9) consecutive months; PROVIDED, HOWEVER, that all costs incident
thereto shall be at the expense of the holders of the Registrable
Securities included in such Registration Statement. If a Demand Holder
shall give notice to the Company at any time of its or their desire to
exercise the registration right granted pursuant to this Section 7.4(c),
then within ten (10) days after the Company's receipt of such notice, the
Company shall give notice to the other holders of Registrable Securities
advising them that the Company is proceeding with such registration and
offering to include therein the Registrable Securities of such holders,
provided they furnish the Company with such appropriate information in
connection therewith as the Company shall reasonably request in writing.
(d) The term "Demand Holder" as used in this Section
7.4 shall mean any holder or any combination of holders of Registrable
Securities, if included in such holders' Registrable Securities are that
aggregate number of shares of Preferred Stock (including Shares already
issued and not disposed of in a public offering and/or Shares issuable
pursuant to the exercise of Warrant No. 1 and Underlying Shares already
issued and not disposed of in a public offering and/or Underlying Shares
issuable pursuant to the exercise of Redeemable Warrants issued and not
disposed of in a public offering or issuable pursuant to exercise of
Warrant No. 2 (the "Total Preferred Shares")) as would constitute 50% or
more of the aggregate number of such Total Preferred Shares; provided
that, for purposes of such calculation, if any Holder has converted any
Shares and/or Underlying Shares into Conversion Shares prior to the time
that any notice requesting registration pursuant to this Section 7.4 is
given, and the Conversion Shares so issued are still deemed Registrable
Securities hereunder, such conversion shall be disregarded for purposes
of such calculation.
7.5 COVENANTS OF THE COMPANY WITH RESPECT TO
REGISTRATION. The Company covenants and agrees as follows:
(a) In connection with any registration under
Section 7.4 hereof, the Company shall file the Registration Statement as
expeditiously as possible, but in no event later than thirty (30)
business days following receipt of any demand therefor (unless delayed by
the failure of a holder of Registrable Securities to promptly furnish
such information necessary to complete such registration statement),
shall use its best efforts to have any such Registration Statement
declared effective at the earliest possible time, and shall furnish each
holder of Registrable Securities such number of prospectuses as shall
reasonably be requested; provided, however, if such 30th business day
falls on or after the 45th day following the last day of the Company's
most recently completed fiscal year and prior to the 90th day following
the last day of such fiscal year, unless the then applicable rules and
regulations of the Commission permit the filing of a registration
statement on a form which the Company is then eligible to use in respect
of the Registrable Securities if the Company has not yet filed audited
financial statements for the most recently completed fiscal year, the
Company shall not be required to file such Registration Statement until
the filing of the Company's audited financial statements in respect of
such fiscal year, but in any event the filing of the Registration
Statement shall be made by no later than the 90th day following the last
day of such fiscal year.
(b) The Company shall pay all costs, fees and
expenses in connection with all Registration Statements filed pursuant to
Sections 7.3 and 7.4(a) hereof (excluding any underwriting discounts and
commissions which may be incurred in connection with the sale of any
Registrable Securities and excluding any fees and expenses of counsel for
any Requesting Holder or Demand Holder), including, without limitation,
the Company's legal and accounting fees, printing expenses, and blue sky
fees and expenses. The holders of Registrable Securities included in any
Registration Statement filed pursuant to Section 7.4(c) hereof will pay
all costs, fees and expenses in connection with such Registration
Statement, including their own legal fees and expenses, if any.
(c) The Company will take all reasonably necessary
action which may be required in qualifying or registering the Registrable
Securities included in a Registration Statement for offering and sale
under the securities or blue sky laws of such states as are reasonably
requested by the holders of such securities, provided that the Company
shall not be obligated to execute or file any general consent to service
of process or to qualify as a foreign corporation to do business under
the laws of any such jurisdiction.
(d) The Company shall indemnify any holder of the
Registrable Securities to be sold pursuant to any Registration Statement
and each person, if any, who controls such holder within the meaning of
Section 15 of the Act or Section 20(a) of the Securities Exchange Act of
1934, as amended ("Exchange Act"), against all loss, claim, damage,
expense or liability (including all expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever) to
which any of them may become subject under the Act, the Exchange Act or
otherwise, arising from such Registration Statement to the same extent
and with the same effect as the provisions pursuant to which the Company
has agreed to indemnify the Underwriter contained in Section 6 of the
Underwriting Agreement (which indemnity will not apply to losses, claims,
damages, expenses or liabilities arising from information provided in
writing by or on behalf of the holder to the Company expressly for
inclusion in the Registration Statement) and to provide for just and
equitable contribution as set forth in Section 7 of the Underwriting
Agreement.
(e) Each holder of Registrable Securities to be sold
pursuant to a Registration Statement will furnish to the Company such
information as may be reasonably be requested by the Company for
inclusion in the Registration Statement. Any holder of Registrable
Securities to be sold pursuant to a Registration Statement, and its
successors and assigns, shall severally, and not jointly, indemnify, the
Company, its officers and directors and each person, if any, who controls
the Company within the meaning of Section 15 of the Act or Section 20(a)
of the Exchange Act, against all loss, claim, damage, expense or
liability (including all expenses reasonably incurred in investigating,
preparing or defending against any claim whatsoever) to which they may
become subject under the Act, the Exchange Act or otherwise, arising from
information furnished in writing by or on behalf of such holder, or its
successors or assigns, for specific inclusion in such Registration
Statement to the same extent and with the same effect as the provisions
contained in Section 6 of the Underwriting Agreement pursuant to which
the Underwriter has agreed to indemnify the Company and to provide for
just and equitable contribution as set forth in Section 6 of the
Underwriting Agreement.
(f) Nothing contained in this Agreement shall be
construed as requiring any Holder to exercise his Warrants prior to the
initial filing of any Registration Statement or the effectiveness
thereof.
(g) If the Company shall fail to materially comply
with the provisions of this Article 7, the Company shall, in addition to
any other equitable or other relief available to the holders of
Registrable Securities, be liable for any or all actual damages (but not
punitive or consequential damages) sustained by the holders of
Registrable Securities, requesting registration of their Registrable
Securities.
(h) The Company shall not permit the inclusion of
any securities other than the Registrable Securities to be included in
any Registration Statement filed pursuant to Section 7.4 hereof, or,
unless otherwise required by the terms of a contract existing on the date
of this Agreement, permit any other registration statement to be or
remain effective during the ninety (90) day period commencing on the
effectiveness of a Registration Statement filed pursuant to Section 7.4
hereof (except for a Form S-4 relating to a merger or acquisition or a
Form S-8 or successor form), without the prior written consent of the
Demand Holders, which consent shall not be unreasonably withheld.
(i) The Company shall deliver promptly to each
holder of Registrable Securities whose securities are included in a
Registration Statement copies of all correspondence between the
Commission and the Company, its counsel or auditors and all memoranda
relating to discussions with the Commission or its staff with respect to
the Registration Statement and permit each holder of Registrable
Securities and underwriters to do such investigation, upon reasonable
advance notice, with respect to information contained in or omitted from
the Registration Statement as it deems reasonably necessary to comply
with applicable securities laws or rules of the National Association of
Securities Dealers, Inc. ("NASD"); provided that each such holder of
Registrable Securities agrees not to disclose such information without
the prior consent of the Company. Such investigation shall include
access to books, records and properties and opportunities to discuss the
business of the Company with its officers and independent auditors, all
to such reasonable extent and at such reasonable times and as often as
any such holder of Registrable Securities or underwriter shall reasonably
request.
(j) If, in connection with a registration which
includes Registrable Securities pursuant to this Article 7, the Company
shall enter into an underwriting agreement with one or more underwriters
selected for such underwriting, such agreement shall contain such
representations, warranties and covenants by the Company and such other
terms as are customarily contained in agreements of that type used by the
underwriters. The holders of Registrable Securities shall be parties to
any underwriting agreement relating to an underwritten sale of their
Registrable Securities and may, at their option, require that any or all
the representations and warranties of the Company to or for the benefit
of such underwriters shall, to the extent that they may be applicable,
also be made to and for the benefit of such holders of Registrable
Securities. Such holders of Registrable Securities shall not be required
to make any representations or warranties to or agreements with the
Company or the underwriters except as they may relate to such holders of
Registrable Securities and their intended methods of distribution.
8. ADJUSTMENTS OF EXERCISE PRICE AND NUMBER OF
SHARES.
8.1 STOCK DIVIDEND, SPLIT, ETC.. In case the Company
shall (i) declare a dividend or make a distribution on its outstanding
shares of Preferred Stock in shares of Preferred Stock, (ii) subdivide or
reclassify its outstanding shares of Preferred Stock into a greater
number of shares, or (iii) combine or reclassify its outstanding shares
of Preferred Stock into a smaller number of shares, the exercise price
under Warrant No. 1 in effect at the time of the record date for such
dividend or distribution or of the effective date of such subdivision,
combination or reclassification shall be adjusted so that it shall equal
the price determined by multiplying the exercise price by a fraction, the
denominator of which shall be the number of shares or Preferred Stock
outstanding after giving effect to such action, and the numerator of
which shall be the number of shares of Preferred Stock outstanding
immediately prior to such action.
8.2 RIGHTS OR WARRANTS. In the case the Company shall
fix a record date for the issuance of rights or warrants to all holders
of its Preferred Stock entitling them to subscribe for or purchase shares
of Preferred Stock (or securities convertible into Preferred Stock) at a
price (the "Subscription Price") (or having a conversion price per share)
less than the current market price of the Preferred Stock (as defined in
Section 8.5 below) on such record date, the exercise price of Warrant No.
1 shall be adjusted so that it shall thereafter equal the price
determined by multiplying (i) the exercise price in effect immediately
prior to the date of such issuance and (ii) a fraction, the numerator of
which shall be the sum of the number of shares of Preferred Stock
outstanding on such record date and the number of additional shares of
Preferred Stock which the aggregate offering price of the total number of
shares of Preferred Stock so offered for subscription or purchase (or the
aggregate conversion price of the convertible securities so offered)
would purchase at such current market price per share of the Preferred
Stock, and the denominator of which shall be the sum of the number of
shares of Preferred Stock outstanding on such record date and the number
of additional shares of Preferred Stock offered for subscription or
purchase (or into which the convertible securities so offered are
convertible). Such adjustment shall be made successively whenever such
rights or warrants are issued and shall become effective immediately
after the record date for the determination of shareholders entitled to
receive such rights or warrants; and to the extent that shares of
Preferred Stock are not delivered (or securities convertible into
Preferred Stock are not delivered) after the expiration of such rights or
warrants the exercise price shall be readjusted to the exercise price
which would then be in effect had the adjustments made upon the issuance
of such rights or warrants been made upon the basis of delivery of only
the number of shares of Preferred Stock (or securities convertible into
Preferred Stock) actually delivered.
8.3 EVIDENCES OF INDEBTEDNESS OR ASSETS. In case the
Company shall hereafter distribute to the holders of its Preferred Stock
evidences of its indebtedness or assets (excluding cash dividends or
distributions of securities of the type referred to in Section 8.1 above)
or subscription rights or warrants (excluding those referred to in
Section 8.2 above), then in each such case the exercise price of Warrant
No. 1 in effect thereafter shall be determined by multiplying (i) the
exercise price in effect immediately prior thereto and (ii) a fraction,
the numerator of which shall be the total number of shares of Preferred
Stock outstanding multiplied by the current market price per share of
Preferred Stock (as defined in Section 8.5 below), less the fair market
value (as determined by the Company's Board of Directors) of said assets
or evidences of indebtedness so distributed or of such rights or
warrants, and the denominator of which shall be the total number of
shares of Preferred Stock outstanding multiplied by such current market
price per share of Preferred Stock. Such adjustment shall be made
successively whenever such a record date is fixed. Such adjustment shall
be made whenever any such distribution is made and shall become
effectively immediately after the record date for the determination of
shareholders entitled to receive such distribution.
8.4 ADJUSTMENT OF NUMBER OF SHARES. Whenever the
Exercise Price payable upon exercise of Warrant No. 1 is adjusted
pursuant to Sections 8.1, 8.2 or 8.3 above, the number of Shares
purchasable upon exercise of Warrant No. 1 shall simultaneously be
adjusted by multiplying the number of Shares initially issuable upon
exercise of Warrant No. 1 by the exercise price in effect on the date
hereof and dividing the product so obtained by the exercise price, as
adjusted.
8.5 DETERMINATION OF CURRENT MARKET PRICE. For the
purpose of any computation under Sections 8.2 and 8.3 above, the current
market price per share of Preferred Stock at any date shall be deemed to
be the average of the daily closing prices for twenty (20) consecutive
business days before such date. The closing price for each day shall be
the last sale price regular way or, in case no such reported sale takes
place on such day, the average of the last reported bid and asked prices
regular way, in either case on the principal national securities exchange
on which the Preferred Stock is admitted to trading or listed, or as
reported by National Association of Securities Dealers, Inc. Automatic
Quotation System ("NASDAQ") or other similar organization if NASDAQ is no
longer reporting such information, or if not so available, the fair
market price as determined by the Board of Directors.
8.6 NO ADJUSTMENT FOR DE MINIMUS ADJUSTMENT. No
adjustment in the Exercise Price shall be required unless such adjustment
would require an increase or decrease of at least ten cents ($0.10) in
such price; provided, however, that any adjustments which by reason of
this Section 8.6 are not required to be made shall be carried forward and
taken into account in any subsequent adjustment required to be made
hereunder. All calculations under this Article 8 shall be made to the
nearest cent or to the nearest one-hundredth of a share, as the case may
be. Anything in this Article 8 to the contrary notwithstanding, the
Company shall be entitled, but shall not be required, to make such
changes in the exercise price, in addition to those required by this
Article 8, as it shall determine, in its sole discretion, to be advisable
in order that any dividend or distribution in shares of Preferred Stock,
or any subdivision, reclassification or combination of Preferred Stock,
hereafter made by the Company shall not result in any Federal income tax
liability to the holders of Preferred Stock or securities convertible
into Preferred Stock (including Redeemable Warrants issuable upon
exercise of Warrant No. 2).
8.7 NOTICE. Whenever on exercise price is adjusted, as
herein provided, the Company shall promptly, but no later than 10 days
after any request for such an adjustment by the Holder, cause a notice
setting forth the adjusted exercise price and adjusted number of Shares
and/or Warrants issuable upon exercise of the Warrants and, if requested,
information describing the transactions giving rise to such adjustments,
to be mailed to the Holder, at the address set forth herein, and shall
cause a certified copy thereof to be mailed to its transfer agent, if
any. The Company may retain a firm of independent certified public
accountants selected by the Board of Directors (who may be the regular
accountants employed by the Company) to make any computation required by
this Section 8, and a certificate signed by such firm shall be conclusive
evidence of the correctness of such adjustment.
8.8 OTHER SECURITIES. In the event that at any time, as
a result of any adjustment made pursuant to this Article 8, the Holder
thereafter shall become entitled to receive any securities of the Company
other than Preferred Stock and Redeemable Warrants, thereafter the number
of such other securities receivable upon exercise of the Warrants shall
be subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the
Preferred Stock and Redeemable Warrants contained in Sections 8.1 to 8.6,
inclusive above.
9. EXCHANGE AND REPLACEMENT OF WARRANT CERTIFICATES.
9.1 EXCHANGE. Each Warrant Certificate is exchangeable
without expense, upon the surrender hereof by the registered Holder at
the principal executive office of the Company, for a new Warrant
Certificate of like tenor and date representing in the aggregate the
right to purchase the same number of Shares or Redeemable Warrants, as
the case may be, in such denominations as shall be designated by the
Holder thereof at the time of such surrender.
9.2 REPLACEMENT. Upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction or
mutilation of any Warrant Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it, and
reimbursement to the Company of all reasonable expenses incidental
thereto, and upon surrender and cancellation of any Warrants, if
mutilated, the Company will make and deliver a new Warrant Certificate of
like tenor, in lieu thereof.
10. ELIMINATION OF FRACTIONAL INTERESTS. The Company shall
not be required to issue certificates representing fractions of shares of
Preferred Stock or Redeemable Warrants and shall not be required to issue
scrip or pay cash in lieu of fractional interests, it being the intent of
the parties that all fractional interests shall be eliminated by rounding
any fraction up to the nearest whole number of shares of Preferred Stock
or Redeemable Warrants, as the case may be.
11. RESERVATION AND LISTING OF SECURITIES. The Company shall
at all times reserve and keep available out of its authorized shares of
Preferred Stock, solely for the purpose of issuance upon the exercise of
Warrant No. 1 and the exercise of the Redeemable Warrants subject to
Warrant No. 2, such number of shares of Preferred Stock as shall be
issuable upon the exercise thereof. The Company covenants and agrees
that, upon exercise of Warrant No. 1 and payment of the exercise price
therefor, all shares of Preferred Stock issuable upon such exercise shall
be duly and validly issued, fully paid, non-assessable and not subject to
the preemptive rights of any shareholder, and that, upon exercise of
Warrant No. 2 and payment of the exercise price therefor, the Redeemable
Warrants will be valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms. As long
as the Warrants shall be outstanding, the Company shall use its best
efforts to cause all shares of Preferred Stock and all Redeemable
Warrants issuable upon the exercise of the Warrants, as well as the
Underlying Shares and the Conversion Shares, to be listed on or quoted by
NASDAQ or listed on such national securities exchanges as reasonably
requested by the Underwriter.
12. NOTICES TO WARRANT HOLDERS. Nothing contained in this
Agreement shall be construed as conferring upon the Holder or Holders the
right to vote or to consent or to receive notice as a shareholder in
respect of any meetings of shareholders for the election of directors or
any other matter, or as having any rights whatsoever as a shareholder of
the Company. If, however, at any time prior to the expiration of the
Warrants and their exercise, any of the following events shall occur:
(a) the Company shall take a record of the holders of its
shares of Preferred Stock and/or Redeemable Warrants for the
purpose of entitling them to receive a dividend or distribution
payable otherwise than in cash, or a cash dividend or
distribution payable otherwise than out of current or retained
earnings, as indicated by the accounting treatment of such
dividend or distribution on the books of the Company; or
(b) the Company shall offer to all the holders of its
Preferred Stock and/or Redeemable Warrants any additional
shares of capital stock of the Company or securities
convertible into or exchangeable for shares of capital stock of
the Company, or any option, right or warrant to subscribe
therefor; or
(c) a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation or
merger) or a sale of all or substantially all of its property,
assets and business as an entirety shall be proposed;
then, in any one or more of said events, the Company shall give written
notice of such event at least fifteen (15) days prior to the date fixed
as a record date or the date of closing the transfer books for the
determination of the shareholders entitled to such dividend,
distribution, convertible or exchangeable securities or subscription
rights, options or warrants, or entitled to vote on such proposed
dissolution, liquidation, winding up or sale. Such notice shall specify
such record date or the date of closing of the transfer books, as the
case may be. Failure to give such notice or any defect therein shall not
affect the validity of any action taken in connection with the
declaration or payment of any such dividend or distribution, or the
issuance of any convertible or exchangeable securities or subscription
rights, options or warrants, or any proposed dissolution, liquidation,
winding up or sale.
13. NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed to have
been duly made when delivered, or mailed by registered or certified mail,
return receipt requested:
(a) If to a registered Holder of the Warrants, to
the address of such Holder as shown on the books of the Company; or
(b) If to the Company, to Rensselaer Technology
Park, 000 Xxxxxx Xxxx, Xxxx, Xxx Xxxx 00000, Attn: Chairman, or to such
other address as the Company may designate by notice to the Holders.
14. SUPPLEMENTS AND AMENDMENTS. The Company and the
Underwriter may from time to time supplement or amend this Agreement
without the approval of any Holders of Warrant Certificates in order to
cure any ambiguity, to correct or supplement any provision contained
herein which may be defective or inconsistent with any provisions herein,
or to make any other provisions in regard to matters or questions arising
hereunder which the Company and the Underwriter may deem necessary or
desirable and which the Company and the Underwriter deem not to adversely
affect the interests of the Holders of Warrant Certificates.
15. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company and the Holders inure to
the benefit of their respective successors and assigns hereunder.
16. TERMINATION. This Agreement shall terminate at the close
of business on February 20, 2005. Notwithstanding the foregoing, this
Agreement will terminate on any earlier date when all Warrants have been
exercised and all the Shares issuable upon exercise of Warrant No. 1 and
all the Redeemable Warrants issuable upon exercise of Warrant No. 2 (or
the Underlying Shares) have been resold to the public; provided, however,
that the provisions of Section 7.5 shall survive such termination until
the close of business on February 20, 2008.
17. GOVERNING LAW. This Agreement and each Warrant
Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of New York and for all purposes shall be construed
in accordance with the laws of said State.
18. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
shall be construed to give to any person or corporation other than the
Company and the Underwriter and any other registered holder or holders of
the Warrant Certificates, Warrants or the underlying securities any legal
or equitable right, remedy or claim under this Agreement; and this
Agreement shall be for the sole and exclusive benefit of the Company and
the Underwriter and any other holder or holders of the Warrant
Certificates, Warrants or the underlying securities.
19. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and such counterparts shall
together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the day and year first above
written.
[SEAL] IFS INTERNATIONAL, INC.
By: Name:
Title:
Attest:
Name:
Title
DUKE & CO., INC.
By: Name:
Title:
Attest:
Name:
Title
EXHIBIT A
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES
ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED OR
SOLD EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
ACT, (ii) TO THE EXTENT APPLICABLE, PURSUANT TO RULE 144 UNDER SUCH ACT
(OR ANY SIMILAR RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF
SECURITIES), OR (iii) UPON THE DELIVERY BY THE HOLDER TO THE COMPANY OF
AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THE
COMPANY, STATING THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE
IS RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO
HEREIN.
EXERCISABLE ON OR BEFORE
5:00 P.M., NEW YORK TIME, FEBRUARY 20, 2002
No. WW-1 120,000 Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that or
registered assigns is the registered holder of 120,000 Warrants to
purchase, at any time from February 21, 1998 until 5:00 P.M. New York
City time on February 20, 2002 ("Expiration Date"), up to 120,000 shares
("Shares") of fully-paid and nonassessable preferred stock, par value
$.001 per share ("Preferred Stock"), of IFS International, Inc., a
Delaware corporation (the "Company"), at the initial exercise price,
subject to adjustment in certain events (the "Exercise Price"), of $6.25
per Share upon surrender of this Warrant Certificate and payment of the
Exercise Price at an office or agency of the Company, but subject to the
conditions set forth herein and in the Warrant Agreement dated as of
February 21, 1997 between the Company and Duke & Co., Inc. (the "Warrant
Agreement"). Payment of the Exercise Price may be made in cash, or by
certified or official bank check in New York Clearing House funds payable
to the order of the Company, or any combination of cash or check.
No Warrant may be exercised after 5:00 P.M., New York City
time, on the Expiration Date, at which time all Warrants evidenced
hereby, unless exercised prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of
a duly authorized issue of Warrants issued pursuant to the Warrant
Agreement, which Warrant Agreement is hereby incorporated by reference in
and made a part of this instrument and is hereby referred to in a
description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Company and the holders (the words "holders"
or "holder" meaning the registered holders or registered holder) of the
Warrants.
The Warrant Agreement provides that upon the occurrence of
certain events, the Exercise Price and/or number of the Company's
securities issuable thereupon may, subject to certain conditions, be
adjusted. In such event, the Company will, at the request of the holder,
issue a new Warrant Certificate evidencing the adjustment in the Exercise
Price and the number and/or type of securities issuable upon the exercise
of the Warrants; provided, however, that the failure of the Company to
issue such new Warrant Certificates shall not in any way change, alter,
or otherwise impair, the rights of the holder as set forth in the Warrant
Agreement.
Upon due presentment for registration of transfer of this
Warrant Certificate at an office or agency of the Company, a new Warrant
Certificate or Warrant Certificates of like tenor and evidencing in the
aggregate a like number of Warrants shall be issued to the transferee(s)
in exchange for this Warrant Certificate, subject to the limitations
provided herein and in the Warrant Agreement, without any charge except
for any tax, or other governmental charge imposed in connection
therewith.
Upon the exercise of less than all of the Warrants evidenced by
this Certificate, the Company shall forthwith issue to the holder hereof
a new Warrant Certificate representing such number of unexercised
Warrants.
The Company may deem and treat the registered holder(s) hereof
as the absolute owner(s) of this Warrant Certificate (notwithstanding any
notation of ownership or other writing hereon made by anyone), for the
purpose of any exercise hereof, and of any distribution to the holder(s)
hereof, and for all other purposes, and the Company shall not be affected
by any notice to the contrary.
All terms used in this Warrant Certificate which are defined in
the Warrant Agreement shall have the meanings assigned to them in the
Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed under its corporate seal.
Dated: February 28, 1997 IFS INTERNATIONAL, INC.
By: Name:
Title:
Attest:
Name:
Title
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase _______ Shares and
herewith tenders in payment for such Shares cash or a certified or
official bank check payable in New York Clearing House Funds to the order
of in the amount of $ , all in accordance
with the terms hereof. The undersigned requests that a certificate for
such Shares be registered in the name of , whose
address is and that such Certificate be delivered
to whose address is .
Dated: Signature:
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant Certificate.)
(Insert Social Security or Other
Identifying Number of Holder)
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED
hereby sells, assigns and transfers unto
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
, Attorney, to transfer the within Warrant Certificate on the books of
the within-named Company, with full power of substitution.
Dated: Signature:
(Signature must conform in all respects to name
of holder as specified on the face of the
Warrant Certificate)
(Insert Social Security or Other
Identifying Number of Assignee)
EXHIBIT B
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES
ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED OR
SOLD EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
ACT, (ii) TO THE EXTENT APPLICABLE, PURSUANT TO RULE 144 UNDER SUCH ACT
(OR ANY SIMILAR RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF
SECURITIES), OR (iii) UPON THE DELIVERY BY THE HOLDER TO THE COMPANY OF
AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THE
COMPANY, STATING THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE
IS RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO
HEREIN.
EXERCISABLE ON OR BEFORE
5:00 P.M., NEW YORK TIME, FEBRUARY 20, 2002
No. WW-2 170,000 Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that or
registered assigns is the registered holder of 170,000 Warrants to
purchase, at any time from February 21, 1998 until 5:00 P.M. New York
City time on February 21, 2002 ("Expiration Date"), up to 170,000
Redeemable Series A Convertible Preferred Stock Purchase Warrants
("Redeemable Warrants"), of IFS International, Inc., a Delaware
corporation (the "Company"), at the initial exercise price, subject to
adjustment in certain events (the "Exercise Price"), of $1.6875 per
Redeemable Warrant upon surrender of this Warrant Certificate and payment
of the Exercise Price at an office or agency of the Company, but subject
to the conditions set forth herein and in the Warrant Agreement dated as
of February 21, 1997 between the Company and Duke & Co., Inc. (the
"Warrant Agreement"). Payment of the Exercise Price may be made in cash,
or by certified or official bank check in New York Clearing House funds
payable to the order of the Company, or any combination of cash or check.
No Warrant may be exercised after 5:00 P.M., New York City time, on
the Expiration Date, at which time all Warrants evidenced hereby, unless
exercised prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a
duly authorized issue of Warrants issued pursuant to the Warrant
Agreement, which Warrant Agreement is hereby incorporated by reference in
and made a part of this instrument and is hereby referred to in a
description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Company and the holders (the words "holders"
or "holder" meaning the registered holders or registered holder) of the
Warrants.
The Warrant Agreement provides that upon the occurrence of certain
events, the Exercise Price and/or number of the Company's securities
issuable thereupon may, subject to certain conditions, be adjusted. In
such event, the Company will, at the request of the holder, issue a new
Warrant Certificate evidencing the adjustment in the Exercise Price and
the number and/or type of securities issuable upon the exercise of the
Warrants; provided, however, that the failure of the Company to issue
such new Warrant Certificates shall not in any way change, alter, or
otherwise impair, the rights of the holder as set forth in the Warrant
Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant
Certificate or Warrant Certificates of like tenor and evidencing in the
aggregate a like number of Warrants shall be issued to the transferee(s)
in exchange for this Warrant Certificate, subject to the limitations
provided herein and in the Warrant Agreement, without any charge except
for any tax, or other governmental charge imposed in connection
therewith.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as
the absolute owner(s) of this Warrant Certificate (notwithstanding any
notation of ownership or other writing hereon made by anyone), for the
purpose of any exercise hereof, and of any distribution to the holder(s)
hereof, and for all other purposes, and the Company shall not be affected
by any notice to the contrary.
All terms used in this Warrant Certificate which are defined in the
Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate
to be duly executed under its corporate seal.
Dated: February 28, 1997 IFS INTERNATIONAL, INC.
By: Name:
Title:
Attest:
Name:
Title
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase _________ Redeemable
Warrants and herewith tenders in payment for such Redeemable Warrants
cash or a certified or official bank check payable in New York Clearing
House Funds to the order of in the amount of $
, all in accordance with the terms hereof. The undersigned requests that
a certificate for such Redeemable Warrants be registered in the name of
, whose address is and that such Certificate be
delivered to whose address is .
Dated: Signature:
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant Certificate.)
(Insert Social Security or Other
Identifying Number of Holder)
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED
hereby sells, assigns and transfers unto
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
, Attorney, to transfer the within Warrant Certificate on the books of
the within-named Company, with full power of substitution.
Dated: Signature:
(Signature must conform in all respects to name
of holder as specified on the face of the
Warrant Certificate)
(Insert Social Security or Other
Identifying Number of Assignee)
