WARRANT AGREEMENT
AGREEMENT, dated as of January ___, 1997, by and among IFS
INTERNATIONAL, INC., a Delaware corporation (the "Company"), AMERICAN STOCK
TRANSFER & TRUST COMPANY, a New York corporation, as Warrant Agent (the "Warrant
Agent"), and DUKE & CO., INC., a Florida corporation (the "Underwriter").
W I T N E S S E T H
WHEREAS, in connection with (i) a public offering pursuant to
a Registration Statement on Form SB-2 (Registration No. 333-11653) (the
"Registration Statement") filed pursuant to the Securities Act of 1933, as
amended (the "Act"), and declared effective by the Securities and Exchange
Commission on January __, 1997 of up to 1,200,000 shares of its Series A
Convertible Preferred Stock (the "Preferred Stock") and 1,700,000 Redeemable
Series A Convertible Preferred Stock Warrants (the "Warrants") (and up to
180,000 additional shares of Preferred Stock and up to 225,000 additional
Warrants covered by an over-allotment option granted by the Company to the
Underwriter), and pursuant to an underwriting agreement (the "Underwriting
Agreement") dated January ___, 1997 between the Company and the Underwriter, and
(ii) the issuance to the Underwriter or its designees of warrants to purchase up
to an aggregate of 120,000 shares of Preferred Stock and/or 170,000 Warrants
(the "Underwriter's Warrant"), the Company will issue up to an aggregate of
2,095,000 Warrants; and
WHEREAS, the Company desires the Warrant Agent to act on
behalf of the Company, and the Warrant Agent is willing to so act, in connection
with the issuance, registration, transfer, exchange and redemption of the
Warrants, the issuance of certificates representing the Warrants, the exercise
of the Warrants, and the rights of the holders thereof;
NOW THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth and for the purpose of defining the terms and
provisions of the Warrants and the certificates representing the Warrants and
the respective rights and obligations thereunder of the Company, the holders of
certificates representing the Warrants and the Warrant Agent, the parties hereto
agree as follows:
SECTION 1. Definitions. As used herein, the following
terms shall have the following meanings, unless the context shall
otherwise require:
(a) "Corporate Office" shall mean the office of the Warrant
Agent (or its successor) at which at any particular time its principal business
shall be administered, which office is located on the date hereof at 00 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
(b) "Exercise Date" shall mean, as to any Warrant, the date on
which the Warrant Agent shall have received both (i) the Warrant Certificate
representing such Warrant, with the exercise form thereon duly executed by the
Registered Holder thereof or his attorney duly authorized in writing, and (ii)
payment in cash, or by official bank or certified check made payable to the
Warrant Agent, of an amount in lawful money of the United States of America
equal to the applicable Purchase Price.
(c) "Initial Warrant Exercise Date" shall mean, as to each
Warrant, January ___, 1999, except that (i) in the event the Company gives
notice of redemption of the Warrants in accordance with Section 8 hereof prior
to January __, 1999 or (ii) in the event the Company gives notice of the
mandatory conversion of the Preferred Stock prior to January ___, 1999 in
accordance with the terms and conditions of the Preferred Stock as set forth in
the Certificate of Designations and Preferences filed with the Secretary of
State of Delaware with respect to the Preferred Stock (the "Certificate of
Designations"), the exercise period of the Warrants will commence on the date on
which notice of such redemption or mandatory conversion is given by the Company.
(d) "Market Price" shall mean, if the Preferred Stock is
listed on a national securities exchange or admitted to unlisted trading
privileges on such exchange or listed for trading on The Nasdaq Stock Market,
the last reported sale price of the Preferred Stock on such exchange or The
Nasdaq Stock Market, as the case may be, on the applicable day or, if no such
sale is made on such day, the average of the closing bid and asked prices for
such day on such exchange or The Nasdaq Stock Market, as the case may be.
(e) "Preferred Stock" shall mean Series A Convertible
Preferred Stock of the Company, $.001 par value; provided, however, that the
shares issuable upon exercise of the Warrants shall include (i) in the case of
any consolidation, merger, sale or conveyance of the character referred to in
Section 9(d) hereof, the stock, securities, or property provided for in such
section or (ii) in the case of any reclassification or change in the outstanding
shares of Preferred Stock issuable upon exercise of the Warrants as a result of
a subdivision or combination or consisting of a change in par value, or from par
value to no par value, or from no par value to par value, such shares of
Preferred Stock as so reclassified or changed.
(f) "Purchase Price" shall mean the price to be paid upon
exercise of each Warrant in accordance with the terms hereof, which price shall
be $6.25 per share, subject to adjustment from time to time pursuant to the
provisions of Section 9 hereof, and subject to the Company's right to reduce the
Purchase Price upon notice to all Warrant Holders.
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(g) "Redemption Price" shall mean the price at which the
Company may, at its option, redeem the Warrants in accordance with the terms
hereof, which price shall be $.10 per Warrant, subject to adjustment from time
to time pursuant to the provisions of Section 9 hereof.
(h) "Registered Holder" shall mean the person in whose name
any certificate representing Warrants shall be registered on the books
maintained by the Warrant Agent pursuant to Section 6.
(i) "Transfer Agent" shall mean American Stock Transfer &
Trust Company, as the Company's transfer agent, or its authorized successor, as
such.
(j) "Warrant Expiration Date" shall mean, with respect to each
Warrant, 5:00 p.m. (Eastern time) on January ___, 2002, or the Redemption Date
as defined in Section 8, whichever is earlier; provided that if such date shall
in the State of New York be a holiday or a day on which banks are authorized to
close, then 5:00 p.m. (Eastern time) on the next following day which in the
State of New York is not a holiday nor a day on which banks are authorized to
close. Upon notice to all Warrant Holders, the Company shall have the right to
extend the Warrant Expiration Date.
SECTION 2. Warrants and Issuance of Warrant Certificates.
(a) Each Warrant shall initially entitle the Registered Holder
of the Warrant Certificate representing such Warrant to purchase one (1) share
of Preferred Stock upon the exercise thereof, in accordance with the terms
hereof, subject to modification and adjustment as provided in Section 9.
(b) Upon execution of this Agreement, Warrant Certificates
representing the number of Warrants sold pursuant to the Underwriting Agreement
shall be executed by the Company and delivered to the Warrant Agent. Upon
written order of the Company signed by its President or Chairman or a Vice
President and by its Secretary or an Assistant Secretary, the Warrant
Certificates shall be countersigned, issued and delivered by the Warrant Agent.
(c) From time to time up to the Warrant Expiration Date, the
Transfer Agent shall countersign and deliver stock certificates in required
whole number denominations representing up to an aggregate of 2,095,000 shares
of Preferred Stock, subject to adjustment as described herein, upon the exercise
of Warrants in accordance with this Agreement.
(d) From time to time up to the Warrant Expiration Date, the
Warrant Agent shall countersign and deliver Warrant Certificates in required
whole number denominations to the persons entitled thereto in connection with
any transfer or exchange
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permitted under this Agreement; provided that no Warrant Certificates shall be
issued except (i) those initially issued hereunder, (ii) those issued on or
after the Initial Warrant Exercise Date upon the exercise of fewer than all
Warrants represented by any Warrant certificate to evidence any unexercised
Warrants held by the exercising Registered Holder, (iii) those issued upon any
transfer or exchange pursuant to Section 6; (iv) those issued in replacement of
lost, stolen, destroyed or mutilated Warrant Certificates pursuant to Section 7;
(v) those issued pursuant to the Underwriter's Warrant; and (vii) those issued
at the option of the Company, in such form as may be approved by its Board of
Directors, to reflect any adjustment or change in the Purchase Price, the number
of shares of Preferred Stock purchasable upon exercise of the Warrants or the
Redemption Price therefor made pursuant to Section 9.
(e) Pursuant to the terms of the Underwriter's Warrant, the
Underwriter and its designees may purchase up to an aggregate of 170,000
Warrants.
SECTION 3. Form and Execution of Warrant Certificates.
(a) The Warrant Certificates shall be substantially in the
form annexed hereto as Exhibit A, and may have such letters, numbers or other
marks of identification or designation and such legends, summaries or
endorsements printed, lithographed or engraved thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement or
as may be required to comply with any law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange on which
the Warrants may be listed, or to conform to usage. The Warrant Certificates
shall be dated the date of issuance thereof (whether upon initial issuance,
transfer, exchange or in lieu of mutilated, lost, stolen or destroyed Warrant
Certificates) and issued in registered form. Warrants shall be numbered serially
with the letter W on the Warrants.
(b) Warrant Certificates shall be executed on behalf of the
Company by its Chairman of the Board, President or any Vice President and by its
Secretary or an Assistant Secretary, by mutual signatures or by facsimile
signatures printed thereon, and shall have imprinted thereon a facsimile of the
Company's seal. In case any officer of the Company who shall have signed any of
the Warrant Certificates shall cease to be such officer of the Company before
the date of issuance of the Warrant Certificates or before countersignature by
the Warrant Agent and issue and delivery thereof, such Warrant Certificates may
nevertheless be countersigned by the Warrant Agent, issued and delivered with
the same force and effect as though the person who signed such Warrant
Certificates had not ceased to be such officer of the Company. After
countersignature by the Warrant Agent, Warrant Certificates shall be delivered
by the Warrant Agent to the Registered Holder
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without further action by the Company, except as otherwise provided by Section
4(a).
SECTION 4. Exercise
(a) Each Warrant may be exercised by the Registered Holder
thereof at any time on or after the Initial Warrant Exercise Date, but not after
the Warrant Expiration Date, upon the terms and subject to the conditions set
forth herein and in the applicable Warrant Certificate. A Warrant shall be
deemed to have been exercised immediately prior to the close of business on the
Exercise Date and the person entitled to receive the securities deliverable upon
such exercise shall be treated for all purposes as the holder upon exercise
thereof as of the close of business on the Exercise Date. As soon as practicable
on or after the Exercise Date, the Warrant Agent shall deposit the cash or check
received from the exercise of a Warrant in an account for the benefit of the
Company and shall notify the Company in writing of the exercise of the Warrants.
Promptly following, and in any event within five (5) days after the date of such
notice from the Warrant Agent, the Warrant Agent, on behalf of the Company,
shall cause to be issued and delivered by the Transfer Agent to the person or
persons entitled to receive the same a certificate or certificates for the
securities deliverable upon such exercise (plus a Warrant Certificate for any
remaining unexercised Warrants of the Registered Holder), provided that the
Warrant Agent shall refrain from causing such issuance of certificates pending
clearance of checks received in payment of the Purchase Price pursuant to such
Warrants. Upon the exercise of any Warrant and clearance of the funds received,
the Warrant Agent shall promptly remit the payment received for the Warrant to
the Company or as the Company may direct in writing. Notwithstanding anything in
the foregoing to the contrary, no Warrant will be exercisable unless at the time
of exercise the Company has filed with the Securities and Exchange Commission a
registration statement under the Act covering the shares of Preferred Stock
issuable upon exercise of such Warrant and such shares have been so registered
or qualified or deemed to be exempt under the securities laws of the state of
residence of the Registered Holder of such Warrant. The Company shall use its
best efforts to have all shares so registered or qualified on or before the date
on which the Warrants become exercisable.
(b) If, on the Exercise Date in respect of the exercise of any
Warrant at any time on or after the first anniversary of the date hereof, (i)
the Market Price of the Preferred Stock is greater than the then Purchase Price
of the Warrant, (ii) the exercise of the Warrant was solicited by the
Underwriter at such time as the Underwriter is a member of the National
Association of Securities Dealers, Inc. ("NASD"), (iii) the Warrant was not held
in a discretionary account, (iv) disclosure of the compensation arrangement was
made both at the time of the original offering and at the time of exercise, and
(v) the solicitation of the exercise
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of the Warrant was not in violation of Rule 10b-6 (as such rule or any successor
rule may be in effect as of such time of exercise) promulgated under the
Securities Exchange Act of 1934, as amended, then the Underwriter shall be
entitled to receive, upon exercise of the Warrant(s), a fee of five percent (5%)
of the Purchase Price (the "Solicitation Fee"). Within five days after the
exercise, the Warrant Agent shall send to the Underwriter a copy of the reverse
side of the Warrant certificate relating to each Warrant exercised. In the event
the Underwriter is entitled to a Solicitation Fee with respect to any such
exercise, the Underwriter shall deliver to the Company (i) a copy of the reverse
side of the Warrant(s) and (ii) a certificate, executed by the President or Vice
President of the Underwriter, certifying that the conditions set forth above
have been met with respect to such exercise. Within five days after receipt
thereof by the Company, the Company shall remit to the Underwriter the
Solicitation Fees to which the Underwriter is entitled. The Underwriter shall
reimburse the Warrant Agent, upon request, for its reasonable expenses relating
to compliance with this Section 4(b). In addition, the Underwriter and the
Company may, at any time during business hours, examine the records of the
Warrant Agent, including its ledger of original Warrant certificates returned to
the Warrant Agent upon exercise of Warrants. The provisions of this paragraph
may not be modified, amended or deleted without the prior written consent of the
Underwriter and the Company.
SECTION 5. Reservation of Shares; Listing; Payment of Taxes;
etc.
(a) The Company has reserved, and covenants that it will at
all times reserve and keep available out of its authorized Preferred Stock,
solely for the purpose of issuance upon exercise of Warrants, such number of
shares of Preferred Stock as shall then be issuable upon the exercise of all
outstanding Warrants. The Company covenants that all shares of Preferred Stock
which shall be issuable upon exercise of the Warrants shall, at the time of
delivery, be duly and validly issued, fully paid, nonassessable and free from
all taxes, liens and charges with respect to the issuance thereof (other than
those which the Company shall promptly pay or discharge) and that upon issuance
such shares shall be listed on each national securities exchange, if any, on
which the other shares of outstanding Preferred Stock of the Company are then
listed or, if applicable, The Nasdaq Stock Market.
(b) The Company hereby agrees that, so long as any unexpired
Warrants remain outstanding, the Company will file such post-effective
amendments to the Registration Statement as may be necessary to permit it to
deliver to each person exercising a Warrant a prospectus meeting the
requirements of Section 10(a)(3) of the Act and otherwise complying therewith,
and will deliver such a prospectus to each such person.
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(c) The Company shall pay all documentary, stamp or similar
taxes and other governmental charges that may be imposed with respect to the
issuance of Warrants or the issuance or delivery of any shares upon exercise of
the Warrants; provided, however, that if the shares of Preferred Stock are to be
delivered in a name other than the name of the Registered Holder of the Warrant
Certificate representing any Warrant being exercised, then no such delivery
shall be made unless the person requesting the same had paid to the Warrant
Agent the amount of transfer taxes or charges incident thereto, if any.
(d) The Warrant Agent is hereby irrevocably authorized to
requisition the Company's Transfer Agent from time to time for certificates
representing shares of Preferred Stock issuable upon exercise of the Warrants,
and the Company will authorize the Transfer Agent to comply with all such proper
requisitions. The Company will file with the Warrant Agent a statement setting
forth the name and address of the Transfer Agent of the Company for shares of
Preferred Stock issuable upon exercise of the Warrants, unless the Warrant Agent
and the Transfer Agent are the same entity.
SECTION 6. Exchange and Registration of Transfer
(a) Warrant Certificates may be exchanged for other Warrant
Certificates representing an equal aggregate number of Warrants of the same
class or may be transferred in whole or in part. Warrant Certificates to be
exchanged shall be surrendered to the Warrant Agent at its Corporate Office, and
upon satisfaction of all the terms and provisions hereof, the Company shall
execute and the Warrant Agent shall countersign, issue and deliver in exchange
therefor the Warrant Certificate or Certificates which the Registered Holder
making the exchange shall be entitled to receive.
(b) The Warrant Agent shall keep at its office books in which,
subject to such reasonable regulations as it may prescribe, it shall register
Warrant Certificates and the transfer thereof in accordance with its regular
practice. Upon due presentment for registration of transfer of any Warrant
Certificate at such office, the Company shall execute and the Warrant Agent
shall issue and deliver to the transferee or transferees a new Warrant
Certificate or Certificates representing the aggregate number of Warrants so
transferred.
(c) With respect to all Warrant Certificates presented for
registration or transfer, or for exchange or exercise, the subscription form on
the reverse thereof shall be duly endorsed, or be accompanied by a written
instrument or instruments of transfer and subscription, in form satisfactory to
the Company and the Warrant Agent, duly executed by the Registered Holder or his
attorney-in-fact authorized in writing.
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(d) A service charge may be imposed by the Warrant Agent for
any exchange or registration of transfer of Warrant Certificates requested by a
Registered Holder. In addition, the Company may require payment by such
Registered Holder of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection therewith.
(e) All Warrant Certificates surrendered for exercise or for
exchange in case of mutilated Warrant Certificates shall be promptly cancelled
by the Warrant Agent and thereafter retained by the Warrant Agent until
termination of this Agreement or resignation as Warrant Agent, or, with the
prior written consent of the Underwriter, disposed of or destroyed, at the
direction of the Company.
(f) Prior to due presentment for registration of transfer
thereof, the Company and the Warrant Agent may deem and treat the Registered
Holder of any Warrant Certificate as the absolute owner thereof and of each
Warrant represented thereby (notwithstanding any notations of ownership or
writing thereon made by anyone other than a duly authorized officer of the
Company or the Warrant Agent) for all purposes and shall not be affected by any
notice to the contrary. The Warrants, which are being publicly offered with
shares of Preferred Stock pursuant to the Underwriting Agreement, may be
purchased separately from the shares and will be immediately transferable
separately from the Preferred Stock.
SECTION 7. Loss or Mutilation. Upon receipt by the Company and
the Warrant Agent of evidence satisfactory to them of the ownership of and loss,
theft, destruction or mutilation of any Warrant Certificate and (in case of
loss, theft or destruction) of indemnity satisfactory to them, and (in the case
of mutilation) upon surrender and cancellation thereof, the Company shall
execute and the Warrant Agent shall (in the absence of notice to the Company
and/or Warrant Agent that the Warrant Certificate has been acquired by a bona
fide purchaser) countersign and deliver to the Registered Holder in lieu thereof
a new Warrant Certificate of like tenor representing an equal aggregate number
of Warrants. Applicants for a substitute Warrant Certificate shall comply with
such other reasonable regulations and pay such other reasonable charges as the
Warrant Agent may prescribe pursuant to Section 6(d) or otherwise.
SECTION 8. Redemption
(a) Commencing January ___, 1998, on not less than thirty (30)
days prior written notice, the Warrants may, with the prior consent of the
Underwriter, be redeemed by the Company at the Redemption Price, provided the
Market Price of the Company's Preferred Stock equals or exceeds $8.00 per share,
subject to adjustment, for 20 consecutive trading days ending not more than
three days prior to the date on which the Company gives notice of
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redemption. All Warrants must be redeemed if any of the Warrants are redeemed.
(b) In case the Company shall desire to exercise its right to
so redeem the Warrants, it shall request the Warrant Agent, or the Underwriter,
to mail a notice of redemption to each of the Registered Holders of the Warrants
to be redeemed, first class, postage prepaid, not earlier than the forty-fifth
(45th) day before the date fixed for redemption and not later than the thirtieth
(30th) day before the date fixed for redemption, at such Registered Holder's
last address as it shall appear on the records of the Warrant Agent. Any notice
mailed in the manner provided herein shall be conclusively presumed to have been
duly given whether or not the Registered Holder receives such notice.
(c) The notice of redemption shall specify (i) the Redemption
Price, (ii) the date fixed for redemption, (iii) the place where the Warrant
Certificates shall be delivered and the Redemption Price paid, (iv) that the
Underwriter will assist each Registered Holder of a Warrant in connection with
the exercise thereof (if the Underwriter has conducted, or caused to be
conducted, the mailing) and (v) that the right to exercise the Warrant shall
terminate at 5:00 p.m. (Eastern time) on the business day immediately preceding
the date fixed for redemption (the "Redemption Date"). No failure to mail such
notice nor any defect therein or in the mailing thereof shall affect the
validity of the proceedings for such redemption except as to a holder (a) to
whom notice was not mailed or (b) whose notice was defective. An affidavit of
the Warrant Agent or of the Secretary or an Assistant Secretary of the
Underwriter or the Company that notice of redemption has been mailed shall, in
the absence of fraud, be prima facie evidence of the facts stated therein.
(d) Any right to exercise a Warrant that has been called for
redemption shall terminate at 5:00 p.m. (Eastern time) on the business day
immediately preceding the redemption date. On and after the Redemption Date,
Holders of the redeemed Warrants shall have no further rights except to receive,
upon surrender of the redeemed Warrant, the Redemption Price.
(e) From and after the date specified for redemption, the
Company shall, at the place specified in the notice of redemption, upon
presentation and surrender to the Company by or on behalf of the Registered
Holder thereof of one or more Warrants to be redeemed, deliver or cause to be
delivered to or upon the written order of such Holder a sum in cash equal to the
Redemption Price of each such Warrant. From and after the date fixed for
redemption and upon the deposit or setting aside by the Company of a sum
sufficient to redeem all the Warrants called for redemption, such Warrants shall
expire and become void and all rights hereunder and under the Warrant
Certificates, except the right to receive payment of the Redemption Price, shall
cease.
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SECTION 9. Adjustment of Exercise Price and Number of Shares
of Common Stock or Warrants.
(a) (i) Subject to the exceptions referred to in Section 9(h),
in the event the Company shall, at any time or from time to time after the date
hereof, sell any shares of Preferred Stock for a consideration per share less
than the Market Price of the Preferred Stock on the date of sale or issue any
shares of Preferred Stock as a stock dividend to the holders of Preferred Stock,
or subdivide or combine the outstanding shares of Preferred Stock into a greater
or lesser number of shares (any such sale, issuance, subdivision or combination
being herein called a "Change of Shares"), then, and thereafter upon each
further Change of Shares, the applicable Purchase Price in effect immediately
prior to such Change of Shares shall be changed to a price (including any
applicable fraction of a cent) determined by multiplying the Purchase Price in
effect immediately prior thereto by a fraction, the numerator of which shall be
the sum of (A) the total number of shares of Preferred Stock outstanding
immediately prior to such Change of Shares and (B) the number of shares of
Preferred Stock which the aggregate consideration received by the Company upon
such sale, issuance, subdivision or combination (determined in accordance with
subsection g(vi) below) could have purchased at the then current Purchase Price,
and the denominator of which shall be the total number of shares of Preferred
Stock outstanding immediately after such Change of Shares.
(ii) In the event that the Company shall at any
time or from time to time issue or sell any shares of its Common Stock for a
consideration per share of Common Stock less than the then applicable Purchase
Price and more than the then applicable Stated Price of the Preferred Stock (as
determined pursuant to the terms of the Certificate of Designation. The Purchase
Price shall thereupon be reduced to a price determined by dividing (x) an amount
equal to the sum of (i) the number of shares of Common Stock of the Company
outstanding immediately prior to such issue or sale multiplied by the then
applicable Purchase Price plus (ii) the consideration, if any, received by the
Company upon such issuance or sale by (y) the total number of shares of Common
Stock of the Company outstanding immediately after such issuance or sale. For
purposes of determining the number of shares of Common Stock outstanding before
and after such issuance or sale, and the consideration received in connection
therewith, the provisions of Section C.8. of the Certificate of Designations
shall be deemed to apply in all respects.
(b) Upon each adjustment of the applicable Purchase Price
pursuant to this Section 9, the total number of shares of Preferred Stock
purchasable upon the exercise of each Warrant shall (subject to the provisions
contained in Section 9(c)) be such number of shares (calculated to the nearest
tenth) purchasable at the applicable Purchase Price immediately prior to such
adjustment
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multiplied by a fraction, the numerator of which shall be the applicable
Purchase Price in effect immediately prior to such adjustment and denominator of
which shall be the applicable Purchase Price in effect immediately after such
adjustment.
(c) The Company may elect, upon any adjustment of the
applicable Purchase Price hereunder, to adjust the number of Warrants
outstanding, in lieu of adjusting the number of shares of Preferred Stock
purchasable upon the exercise of each Warrant as hereinabove provided, so that
each Warrant outstanding after such adjustment shall represent the right to
purchase one share of Preferred Stock. Each Warrant held of record prior to such
adjustment of the number of Warrants shall become that number of Warrants
(calculated to the nearest tenth) determined by multiplying the number one by a
fraction, the numerator of which shall be the applicable Purchase Price in
effect immediately prior to such adjustment and the denominator of which shall
be the applicable Purchase Price in effect immediately after such adjustment.
Upon each such adjustment of the number of Warrants, the Redemption Price in
effect immediately prior to such adjustment also shall be adjusted by
multiplying such Redemption Price by a fraction, the numerator of which shall be
the Purchase Price in effect immediately after such adjustment and the
denominator of which shall be the Purchase Price in effect immediately prior to
such adjustment. Upon each adjustment of the number of Warrants pursuant to this
Section 9, the Company shall, as promptly as practicable, cause to be
distributed to each Registered Holder of Warrant Certificates on the date of
such adjustment Warrant Certificates evidencing, subject to Section 10, the
number of additional Warrants, if any, to which such Holder shall be entitled as
a result of such adjustment or, at the option of the Company, cause to be
distributed to such Holder in substitution and replacement for the Warrant
Certificates held by such Holder prior to the date of adjustment (and upon
surrender thereof, if required by the Company) new Warrant Certificates
evidencing the number of Warrants to which such Holder shall be entitled after
such adjustment.
(d) Unless the Warrants have been called for redemption in
connection with the mandatory conversion of the Preferred Stock as a result of
such transaction, in the case of any consolidation or merger of the Company with
or into another corporation (other than a consolidation or merger in which the
Company is the continuing corporation and which does not result in any
reclassification, capital reorganization or other change of outstanding shares
of Preferred Stock), or in case of any sale or conveyance to another corporation
of the property of the Company as, or substantially as, an entirety (other than
a sale/leaseback, mortgage or other financing transaction), the Company shall
cause effective provision to be made so that each holder of a Warrant then
outstanding shall have the right thereafter, by exercising such Warrant, to
purchase the kind and number of shares of stock or
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other securities or property (including cash) receivable upon such
consolidation, merger, sale or conveyance by a holder of the number of shares of
Preferred Stock that might have been purchased upon exercise of such Warrant,
immediately prior to such consolidation, merger, sale or conveyance. Any such
provision shall include provision for adjustments that shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Section
9. The foregoing provisions shall similarly apply to successive consolidations,
mergers, sales or conveyances.
(e) Irrespective of any adjustments or changes in the Purchase
Price or the number of shares of Preferred Stock purchasable upon exercise of
the Warrants, the Warrant Certificates theretofore and thereafter issued shall,
unless the Company shall exercise its option to issue new Warrant Certificates,
continue to express the applicable Purchase Price per share, the number of
shares purchasable thereunder and the Redemption Price therefor as were
expressed in the Warrant Certificates when the same were originally issued.
(f) After each adjustment of the Purchase Price pursuant to
this Section 9, the Company will promptly after the fiscal quarter in which such
adjustment was triggered prepare a certificate signed by the Chairman or
President, and by the Secretary or an Assistant Secretary, of the Company
setting forth: (i) the applicable Purchase Price as so adjusted, (ii) the number
of shares of Preferred Stock purchasable upon exercise of each Warrant after
such adjustment, and, if the Company shall have elected to adjust the number of
Warrants, the number of Warrants to which the Registered Holder of each Warrant
shall then be entitled, and the adjustment in Redemption Price resulting
therefrom, and (iii) a brief statement of the facts accounting for such
adjustment. The Company will promptly file such certificate with the Warrant
Agent and cause a brief summary thereof to be sent by ordinary first class mail
to the Underwriter and to each Registered Holder of Warrants at his or her last
address as it shall appear on the registry books of the Warrant Agent. No
failure to mail such notice nor any defect therein or in the mailing thereof
shall affect the validity thereof except as to the holder to whom the Company
failed to mail such notice, or except as to the holder whose notice was
defective. The affidavit of an officer of the Warrant Agent or the Secretary or
an Assistant Secretary of the Company that such notice has been mailed shall, in
the absence of fraud, be prima facie evidence of the facts stated therein.
(g) For purposes of Section 9(a) and 9(c) hereof, the
following provisions (i) to (vi) shall also be applicable.
(i) The number of shares of Preferred Stock
outstanding at any given time shall include shares of Preferred Stock owned or
held by or for the account of the Company and the sale or issuance of such
treasury shares or the distribution of any
12
such treasury shares shall not be considered a Change of Shares for purposes of
said sections.
(ii) No adjustment of the Purchase Price shall be
made unless such adjustment would require an increase or decrease of at least
$0.05 in such price; provided that any adjustments which by reason of this
clause (ii) are not required to be made shall be carried forward and shall be
made at the time of and together with the next subsequent adjustment which,
together with any adjustment(s) so carried forward, shall require an increase or
decrease of at least $0.05 in the Purchase Price then in effect hereunder.
(iii) In case of (1) the sale by the Company solely
for cash of any rights or warrants to subscribe for or purchase, or any options
for the purchase of, Preferred Stock or any securities convertible into or
exchangeable for Preferred Stock without the payment of any further
consideration other than cash, if any (such convertible or exchangeable
securities being herein called "Convertible Securities"), or (2) the issuance by
the Company, without the receipt by the Company of any consideration therefor,
of any rights or warrants to subscribe for or purchase, or any options for the
purchase of, Preferred Stock or Convertible Securities, in each case, if (and
only if) the consideration payable to the Company upon the exercise of such
rights, warrants or options shall consist solely of cash, whether or not such
rights, warrants or options, or the right to convert or exchange such
Convertible Securities, are immediately exercisable, and the price per share for
which Preferred Stock is issuable upon the exercise of such rights, warrants or
options or upon the conversion or exchange of such Convertible Securities
(determined by dividing (x) the minimum aggregate consideration payable to the
Company upon the exercise of such rights, warrants or options, plus the
consideration received by the Company for the issuance or sale of such rights,
warrants or options, plus, in the case of such Convertible Securities, the
minimum aggregate amount of additional consideration, if any, other than such
Convertible Securities, payable upon the conversion or exchange thereof, by (y)
the total maximum number of shares of Preferred Stock issuable upon the exercise
of such rights, warrants or options or upon the conversion or exchange of such
Convertible Securities issuable upon the exercise of such rights, warrants or
options) is less than the then current Purchase Price immediately prior to the
date of the issuance or sale of such rights, warrants or options, then the total
maximum number of shares of Preferred Stock issuable upon the exercise of such
rights, warrants or options or upon the conversion or exchange of such
Convertible Securities (as of the date of the issuance or sale of such rights,
warrants or options) shall be deemed to be outstanding shares of Preferred Stock
for purposes of Sections 9(a) and 9(c) hereof and shall be deemed to have been
sold for cash in an amount equal to such price per share.
13
(iv) If the exercise or purchase price provided for
in any right, warrant or option referred to in clause (iii) above, or the rate
at which any Convertible Securities referred to in clause (ii) or (iii) above
are convertible into or exchangeable for Preferred Stock, shall change at any
time (other than under or by reason of provisions designed to protect against
dilution) then the Purchase Price in effect at the time of such change will be
readjusted to the Purchase Price that would have been in effect at such time had
such rights, warrants, options or Convertible Securities still outstanding
provided for such changed exercise or purchase price or rate, as the case may
be, at the time initially granted, issued, or sold; such adjustment of the
Purchase Price will be made whether the result thereof is to increase or reduce
the Purchase Price then in effect hereunder. Upon the expiration of any such
right, warrant or option, or the termination of any right to convert or exchange
any Convertible Security, without the exercise of such right, warrant or option,
the Purchase Price then in effect hereunder will be adjusted to the Purchase
Price that would have been in effect at the time of such expiration or
termination had such right, warrant or option or Convertible Security never been
issued, but such subsequent adjustment shall not affect the number of shares of
Preferred Stock issued upon any exercise of this Warrant prior to the date such
adjustment is made. Except as otherwise provided in this paragraph (iv), no
adjustment of the Purchase Price will be made when securities are actually
issued upon the exercise of such rights, warrants or options or upon the
conversion or exchange of such Convertible Securities.
(v) In case of the sale for cash of any shares of
Preferred Stock, any Convertible Securities, any rights or warrants to subscribe
for or purchase, or any options for the purchase of, Preferred Stock or
Convertible Securities, the consideration received by the Company therefore
shall be deemed to be the gross sales price therefor after deducting therefrom
any expense paid or incurred by the Company or any underwriting discounts or
commissions or concessions paid or allowed by the Company in connection
therewith.
(h) No adjustment to the Purchase Price or to the number of
shares of Preferred Stock purchasable upon the exercise of each Warrant will be
made, however;
(i) upon the grant or exercise of any options which
may hereafter be granted or exercised under any employee benefit plan or
director plan of the Company as described in the Registration Statement; or
(ii) upon the sale or exercise of the Warrants,
including without limitation the sale or exercise of any of the Warrants
underlying the Underwriter's Warrants; or
14
(iii) upon the sale of any shares of Preferred Stock
in the public offering pursuant to the Registration Statement, including,
without limitation, shares sold upon the exercise of any over-allotment option
granted to the Underwriter in connection with such offering; or
(iv) upon the issuance or sale of Preferred Stock or
Convertible Securities upon the exercise of any rights or warrants to subscribe
for or purchase, or any options for the purchase of, Preferred Stock or
Convertible Securities outstanding on the date of the original sale of the
Warrants, or upon the issuance or sale of any securities of the Company referred
to in the Registration Statement; or
(v) upon the issuance or sale of Preferred Stock upon
conversion or exchange of any Convertible Securities outstanding on the date of
the original sale of the Warrants; or
(i) Any determination as to whether an adjustment in the
Purchase Price in effect hereunder is required pursuant to Section 9, or as to
the amount of any such adjustment, if required, shall be binding upon the
holders of the Warrants and the Company if made in good faith by the Board of
Directors of the Company.
(j) If and whenever the Company shall grant to the holders of
Preferred Stock, as such, rights or warrants to subscribe for or to purchase, or
any options for the purchase of, Preferred Stock or securities convertible into
or exchangeable for or carrying a right, warrant or option to purchase Preferred
Stock, the Company shall concurrently therewith grant to each of the then
Registered Holders of the Warrants all of such rights, warrants or options to
which each such holder would have been entitled if, on the date of determination
of stockholders entitled to the rights, warrants or options being granted by the
Company, such holder were the holder of record of the number of whole shares of
Preferred Stock then issuable upon exercise (assuming, for purposes of this
Section 9(j), that the exercise of Warrants is permissible during periods prior
to the Initial Warrant Exercise Date) of his Warrants. Such grant by the Company
to the holders of the Warrants shall be in lieu of any adjustment which
otherwise might be called for pursuant to this Section 9.
(k) In case the Company shall, at any time prior to the
exercise of a Warrant, make any distribution of its assets to holders of the
Preferred Stock, then the Registered Holder of such Warrant who exercises his
Warrant after the record date for determination of those Registered Holders of
Preferred Stock entitled to such distribution of assets shall be entitled to
receive, upon exercise of the Warrant, in addition to Preferred Stock, the
amount of such distribution which would have been payable to such Registered
Holder had he been the holder of record of the Preferred Stock receivable upon
exercise of such Warrant on
15
the record date for the determination of those entitled to such distribution.
SECTION 10. Fractional Warrants and Fractional Shares.
(a) If the number of shares of Preferred Stock purchasable
upon the exercise of each Warrant is adjusted pursuant to Section 9 hereof, the
Company shall nevertheless not be required to issue fractions of shares, upon
exercise of the Warrants or otherwise, or to distribute certificates that
evidence fractional shares. With respect to any fraction of a share called for
upon any exercise hereof, the Company shall pay to the Holder an amount in cash
equal to such fraction multiplied by the current market value of such fractional
share, determined as follows:
(i) If the Preferred Stock is listed on a national
securities exchange or admitted to unlisted trading privileges on such exchange
or listed for trading on The Nasdaq Stock Market, the current value shall be the
last reported sale price of the Preferred Stock on The Nasdaq Stock Market or
such exchange on the last business day prior to the date of exercise of the
Warrant, or if no such sale is made on such day, the average of the closing bid
and asked prices for such day on such exchange; or
(ii) If the Preferred Stock is not listed or admitted
to unlisted trading privileges, the current value shall be the mean of the last
reported bid and asked prices reported by the National Quotation Bureau, Inc. on
the last business day prior to the date of the exercise of the Warrant; or
(iii) If the Preferred Stock is not so listed or
admitted to unlisted trading privileges and bid and asked prices are not so
reported, the current value shall be an amount determined in such reasonable
manner as may be prescribed by the Board of Directors of the Company.
SECTION 11. Warrant Holders Not Deemed Stockholders. No holder
of Warrants shall, as such, be entitled to vote or to receive dividends or be
deemed the holder of Preferred Stock that may at any time be issuable upon
exercise of such Warrants for any purpose whatsoever, nor shall anything
contained herein be construed to confer upon the holder of Warrants, as such,
any of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action (whether
upon any recapitalization, issuance or reclassification of stock, change of par
value or change of stock to no par value, consolidation, merger or conveyance or
otherwise), or to receive notice of meetings, or to receive dividends or
subscription rights, until such Holder shall have exercised such Warrants and
been issued shares of Preferred Stock in accordance with the provisions hereof.
16
SECTION 12. Rights of Action. All rights of action with
respect to this Agreement are vested in the respective Registered Holders of the
Warrants, and any Registered Holder of a Warrant, without consent of the Warrant
Agent or of the holder of any other Warrant, may, in his own behalf and for his
own benefit, enforce against the Company his right to exercise his Warrants for
the purchase of shares of Preferred Stock in the manner provided in the Warrant
Certificates and this Agreement.
SECTION 13. Agreement of Warrant Holders. Every holder of a
Warrant, by his acceptance thereof, consents and agrees with the Company, the
Warrant Agent and every other holder of a Warrant that:
(a) The Warrants are transferable only on the registry books
of the Warrant Agent by the Registered Holder thereof in person or by his
attorney duly authorized in writing and only if the Warrant Certificates
representing such Warrants are surrendered at the office of the Warrant Agent,
duly endorsed or accompanied by a proper instrument of transfer satisfactory to
the Warrant Agent and the Company in their sole discretion, together with
payment of any applicable transfer taxes; and
(b) The Company and the Warrant Agent may deem and treat the
person in whose name the Warrant Certificate is registered as the holder and as
the absolute, true and lawful owner of the Warrants represented thereby for all
purposes, and neither the Company nor the Warrant Agent shall be affected by any
notice or knowledge to the contrary, except as otherwise expressly provided in
Section 7 hereof.
SECTION 14. Cancellation of Warrant Certificates. If the
Company shall purchase or acquire any Warrant or Warrants, the Warrant
Certificate or Warrant Certificates evidencing the same shall thereupon be
delivered to the Warrant Agent and cancelled by it and retired.
SECTION 15. Concerning the Warrant Agent. The Warrant Agent
acts hereunder as agent and in a ministerial capacity for the Company, and its
duties shall be determined solely by the provisions of this Agreement. The
Warrant Agent shall not, by issuing and delivering Warrant Certificates or by
any other act hereunder, be deemed to make any representations as to the
validity, value or authorization of the Warrant Certificates or the Warrants
represented thereby or of any securities or other property delivered upon
exercise of any Warrant or whether any stock issued upon exercise of any Warrant
is fully paid and nonassessable.
The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of Warrant Certificates to make or cause to be made
any adjustment of the Purchase Price or the Redemption Price provided in this
Agreement, or to determine
17
whether any fact exists which may require any such adjustments, or with respect
to the nature or extent of any such adjustment, when made, or with respect to
the method employed in making the same. The Warrant Agent shall not (i) be
liable for any recital or statement of facts contained herein or for any action
taken, suffered or omitted by it in reliance on any Warrant Certificate or other
document or instrument believed by it in good faith to be genuine and to have
been signed or presented by the proper party or parties, (ii) be responsible for
any failure on the part of the Company to comply with any of its covenants and
obligations contained in this Agreement or in any Warrant Certificate, or (iii)
be liable for any act or omission in connection with this Agreement except for
its own negligence or willful misconduct.
The Warrant Agent may at any time consult with counsel
satisfactory to it (who may be counsel for the Company or for the Underwriter)
and shall incur no liability or responsibility for any action taken, suffered or
omitted by it in good faith in accordance with the opinion or advice of such
counsel.
Any notice, statement, instruction, request, direction, order
or demand of the Company shall be sufficiently evidenced by an instrument signed
by the Chairman of the Board, President, any Vice President, its Secretary, or
Assistant Secretary (unless other evidence in respect thereof is herein
specifically prescribed). The Warrant Agent shall not be liable for any action
taken, suffered or omitted by it in accordance with such notice, statement,
instruction, request, direction, order or demand believed by it to be genuine.
The Company agrees to pay the Warrant Agent reasonable
compensation for its services hereunder and to reimburse it for its reasonable
expenses hereunder; it further agrees to indemnify the Warrant Agent and save it
harmless against any and all losses, expenses and liabilities, including
judgments, costs and counsel fees, for anything done or omitted by the Warrant
Agent in the execution of its duties and powers hereunder except loses, expenses
and liabilities arising as a result of the Warrant Agent's negligence or willful
misconduct.
In the event of a dispute under this Agreement between the
Company and the Underwriter regarding proceeds received by the Warrant Agent
from the exercise of the Warrants, the Warrant Agent shall have the right, but
not the obligation, to bring an interpleader action to resolve such dispute.
The Warrant Agent may resign its duties and be discharged from
all further duties and liabilities hereunder (except liabilities arising as a
result of the Warrant Agent's own negligence or willful misconduct), after
giving 30 days' prior written notice to the Company. At least 15 days prior to
the date such resignation is to become effective, the Warrant Agent shall
18
cause a copy of such notice of resignation to be mailed to the Registered Holder
of each Warrant Certificate at the Company's expense. Upon such resignation, or
any inability of the Warrant Agent to act as such hereunder, the Company shall
appoint a new warrant agent in writing. If the Company shall fail to make such
appointment within a period of 15 days after it has been notified in writing of
such resignation by the resigning Warrant Agent, then the Registered Holder of
any Warrant Certificate may apply to any court of competent jurisdiction for the
appointment of a new warrant agent. Any new warrant agent, whether appointed by
the Company or by such a court shall be a bank or trust company having a capital
and surplus as shown by its last published report to its stockholders, of not
less than Ten Million ($10,000,000.00) Dollars, or a stock transfer company.
After acceptance in writing of such appointment by the new warrant agent is
received by the Company, such new warrant agent shall be vested with the same
powers, rights, duties and responsibilities as if it had been originally named
herein as the Warrant Agent, without any further assurance, conveyance, act or
deed; but if for any reason it shall be necessary or expedient to execute and
deliver any further assurance, conveyance, act or deed, the same shall be done
at the expense of the Company and shall be legally and validly executed and
delivered by the resigning Warrant Agent. Not later than the effective date of
any such appointment the Company shall file notice thereof with the resigning
Warrant Agent and shall forthwith cause a copy of such notice to be mailed to
the Registered Holder of each Warrant Certificate.
Any corporation into which the Warrant Agent or any new
warrant agent may be converted or merged or any corporation resulting from any
consolidation to which the Warrant Agent or any new warrant agent shall be a
party or any corporation succeeding to the trust business of the Warrant Agent
shall be a successor warrant agent under this Agreement without any further act,
provided that such corporation is eligible for appointment as successor to the
Warrant Agent under the provisions of the preceding paragraph. Any such
successor warrant agent shall promptly cause notice of its succession as warrant
agent to be mailed to the Company and to the Registered Holder of each Warrant
Certificate.
The Warrant Agent, its subsidiaries and affiliates, and any of
its or their officers or directors, may buy and hold or sell Warrants or other
securities of the Company and otherwise deal with the Company in the same manner
and to the same extent and with like effects as though it were not Warrant
Agent. Nothing herein shall preclude the Warrant Agent from acting in any other
capacity for the Company or for any other legal entity.
SECTION 16. Modification of Agreement. Subject to the
provisions of Section 4(b), the Warrant Agent and the Company may by
supplemental agreement make any changes or corrections in this
19
Agreement (i) that they shall deem appropriate to cure any ambiguity or to
correct any defective or inconsistent provision or manifest mistake or error
herein contained or (ii) that they may deem necessary or desirable and which
shall not adversely affect the interests of the holders of Warrant Certificates;
provided, however, that this Agreement shall not otherwise be modified,
supplemented or altered in any respect except with the consent in writing of the
Registered Holders of Warrant Certificates representing not less than a majority
of the outstanding Warrants, and provided, further, that no change in the number
of or nature of the securities purchasable upon the exercise of any Warrant, or
the Purchase Price therefor, or the acceleration of the Warrant Expiration Date,
shall be made without the consent in writing of the Registered Holder of the
Warrant Certificate representing such Warrant, other than such changes as are
specifically prescribed by this Agreement as originally executed.
SECTION 17. Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed to have been
made three days after such is mailed first class registered or certified mail,
postage prepaid as follows: if to the Registered Holder of a Warrant
Certificate, at the address of such holder as shown on the registry books
maintained by the Warrant Agent; if to the Company, at Rensselaer Technology
Park, 000 Xxxxxx Xxxx, Xxxx, Xxx Xxxx 00000, Attention: Xxxxx X. Xxxxxxxx, or at
such other address as may have been furnished to the Warrant Agent in writing by
the Company, with a copy sent to Xxxxxx Xxxxxx Xxxxxx & Xxxx, P.C., 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx X. XxXxxxxxxx, Esq.; if to
the Warrant Agent, at American Stock Transfer & Trust Company, 00 Xxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000; if to Duke & Co., Inc., at 000 Xxxxx Xxxxxx, 0xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: President, with a copy sent to
Zimet, Haines, Xxxxxxxx & Xxxxxx, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxx Xxxxxx Xxxxxx, Esq.
SECTION 18. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York, without
reference to principles of conflict of laws.
SECTION 19. Binding Effect. This Agreement shall be binding
upon and inure to the benefit of the Company, the Warrant Agent and the
Underwriter, and their respective successors and assigns, and the holders from
time to time of the Warrant Certificates. Nothing in this Agreement is intended
or shall be construed to confer upon any other person any right, remedy or
claim, in equity or at law, or to impose upon any other person any duty,
liability or obligation.
SECTION 20. Termination. This Agreement shall terminate
at the close of business on the Warrant Expiration Date of all the
Warrants or such earlier date upon which all Warrants have been
20
exercised, except that the Warrant Agent shall account to the Company for cash
held by it and the provisions of Section 15 hereof shall survive such
termination.
SECTION 21. Counterparts. This Agreement may be
executed in several counterparts, which taken together shall
constitute a single document.
IN WITNESS WHEREOF, the parties hereto have caused this
warrant Agreement to be duly executed as of the date first above written.
IFS INTERNATIONAL, INC.
By:_______________________________
Authorized Officer
AMERICAN STOCK TRANSFER
& TRUST COMPANY
By:_______________________________
Authorized Officer
DUKE & CO., INC.
By:_______________________________
Authorized Officer
21
EXHIBIT A
(FORM OF FACE OF WARRANT CERTIFICATE)
No. ______________________ _____________ Warrants
VOID AFTER ___________________, 2002
SERIES A CONVERTIBLE PREFERRED STOCK PURCHASE WARRANT CERTIFICATE
FOR PURCHASE OF SERIES A CONVERTIBLE PREFERRED STOCK
IFS INTERNATIONAL, INC.
THIS CERTIFIES THAT FOR VALUE RECEIVED
or registered assigns (the "Registered Holder") is the owner of the number of
Series A Convertible Preferred Stock Purchase Warrants ("Warrants") specified
above. Each Warrant initially entitles the Registered Holder to purchase,
subject to the terms and conditions set forth in this Certificate and the
Warrant Agreement (as hereinafter defined), one (1) fully paid and nonassessable
share of Series A Convertible Preferred Stock, $.001 par value (the "Preferred
Stock"), of IFS INTERNATIONAL, INC., a Delaware corporation (the "Company"), at
any time from __________________, 1999 (or earlier in certain circumstances as
provided in the Warrant Agreement referred to below) to the Expiration Date (as
hereinafter defined), upon the presentation and surrender of this Warrant
Certificate with the Subscription Form on the reverse hereof duly executed, at
the corporate office of AMERICAN STOCK TRANSFER & TRUST COMPANY as Warrant
Agent, or its successor (the "Warrant Agent"), accompanied by payment of $6.25
(the "Purchase Price") in lawful money of the United States of America in cash
or by official bank or certified check made payable to the Warrant Agent.
This Warrant Certificate and each Warrant represented hereby
are issued pursuant to and are subject in all respects to the terms and
conditions set forth in the Warrant Agreement (the "Warrant Agreement") dated
__________________, 1997, by and among the Company, the Warrant Agent and Duke &
Co., Inc. (the "Underwriter").
In the event of certain contingencies provided for in the
Warrant Agreement, the Purchase Price or the number of shares of
A-1
Preferred Stock subject to purchase upon the exercise of each Warrant
represented hereby are subject to modifications or adjustments.
Each Warrant represented hereby is exercisable at the option
of the Registered Holder, but no fractional shares of Preferred Stock will be
issued. In case of the exercise of less than all the Warrants represented
hereby, the Company shall cancel this Warrant Certificate upon the surrender
hereof and shall execute and deliver a new Warrant Certificate or Warrant
Certificates of like tenor, which the Warrant Agent shall countersign, for the
balance of such Warrants.
The term "Expiration Date" shall mean 5:00 p.m. (New York
time) on ____________________, 2002, or such earlier date as the Warrants shall
be redeemed. If such date shall in the State of New York be a holiday or a day
on which the banks are authorized to close, then the Expiration Date shall mean
5:00 p.m. (New York time) the next following day which in the State of New York
is not a holiday or a day on which banks are authorized to close.
The Company shall not be obligated to deliver any securities
pursuant to the exercise of this Warrant unless a registration statement under
the Securities Act of 1933, as amended, with respect to such securities is
effective. This Warrant shall not be exercisable by a Registered Holder in any
state in which it would be unlawful for the Company to deliver the shares of
Preferred Stock upon exercise of this Warrant.
The Warrant Certificate is exchangeable, upon the surrender
hereof by the Registered Holder at the corporate office of the Warrant Agent,
for a new Warrant Certificate or Warrant Certificates of like tenor representing
an equal aggregate number of Warrants, each of such new Warrant Certificates to
represent such number of Warrants as shall be designated by such Registered
Holder at the time of such surrender. Upon due presentment of this Warrant
Certificate at such office for registration of transfer, together with any
transfer fee and any tax or other governmental charge imposed in connection with
such transfer, a new Warrant Certificate or Warrant Certificates representing an
equal aggregate number of Warrants will be issued to the transferee in exchange
therefor, subject to the limitations provided in the Warrant Agreement.
Prior to the exercise of any Warrant represented hereby, the
Registered Holder shall not be entitled to any rights of a stockholder of the
Company, including, without limitation, the right to vote or to receive
dividends or other distributions, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided in the Warrant
Agreement.
A-2
Commencing ______________, 1998, this Warrant may, with the
prior consent of the Underwriter, be redeemed at the option of the Company, at a
redemption price of $.10 per Warrant, provided the Market Price (as defined in
the Warrant Agreement) for the securities issuable upon exercise of such Warrant
shall exceed $8.00 per share (subject to adjustment as set forth in the Warrant
Agreement) for 20 consecutive trading days ending not more than three days prior
to the date on which the Company gives notice of redemption. Notice of
redemption shall be given not later than the thirtieth day, and not earlier than
the forty fifth day, before the date fixed for redemption, all as provided in
the Warrant Agreement. On and after the date fixed for redemption, the
Registered Holder shall have no rights with respect to this Warrant except to
receive the $.10 per Warrant upon surrender of this Certificate.
Prior to due presentment for registration of transfer hereof,
the Company and the Warrant Agent may deem and treat the Registered Holder as
the absolute owner hereof and of each Warrant represented hereby
(notwithstanding any notations of ownership or writing hereon made by anyone
other than a duly authorized officer of the Company or the Warrant Agent) for
all purposes and shall not be affected by any notice to the contrary.
The Company has agreed to pay a fee of 5% of the Purchase
Price to the Underwriter upon certain conditions as specified in the Warrant
Agreement upon the exercise of this Warrant.
This Warrant Certificate and each Warrant represented hereby
shall be governed by and construed in accordance with the laws of the State of
New York.
This Warrant Certificate shall not be valid unless
countersigned by the Warrant Agent.
A-3
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed, manually or in facsimile by two of its officers
thereunto duly authorized, and a facsimile of its corporate seal to be imprinted
hereon.
IFS INTERNATIONAL, INC.
By:_______________________________
Its
By:_______________________________
Its
Date:_____________________________
[Seal]
COUNTERSIGNED:
AMERICAN STOCK TRANSFER & TRUST COMPANY,
as Warrant Agent
By ____________________________________
Its
Authorized Officer
A-4
(FORM OF REVERSE OF WARRANT CERTIFICATE)
SUBSCRIPTION FORM
To Be Executed by the Registered Holder
in Order to Exercise Warrants
The undersigned Registered Holder hereby irrevocably elects to
exercise _____________________(________________________ ) Warrants represented
by this Warrant Certificate, and to purchase the securities issuable upon the
exercise of such Warrants, and requests that certificates for such securities
shall be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
_____________________________________
_____________________________________
_____________________________________
_____________________________________
[please print or type name and address]
and be delivered to
_____________________________________
_____________________________________
_____________________________________
_____________________________________
[please print or type name and address]
and if such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the balance of such
Warrants be registered in the name of, and delivered to, the Registered Holder
at the address stated below.
The undersigned represents that the exercise of the
within Warrant was solicited by a member of the National
Association of Securities Dealers, Inc. ("NASD"). If not solicited
by an NASD member, please write "unsolicited" in the space below.
A-5
Please indicate the name of the NASD member firm which solicited the exercise of
the Warrant. Unless otherwise indicated by listing the name of another NASD
member firm or by writing "unsolicited," it will be assumed that the exercise
was solicited by Duke & Co., Inc.
______________________________
Name of soliciting NASD Member
______________________________
Dated:___________________________ Signature
______________________________
Xxxxxx Xxxxxxx
______________________________
City, State and Zip Code
______________________________
Taxpayer ID Number
______________________________
Signature Guaranteed:
A-6
ASSIGNMENT
To Be Executed by the Registered Holder
in Order to Assign Warrants
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
_____________________________________
_____________________________________
_____________________________________
_____________________________________
[please print or type name and address]
____________________ (____________________) of the Warrants represented by this
Warrant Certificate, and hereby irrevocably constitutes and appoints Attorney to
transfer this Warrant Certificate on the books of the Company, with full power
of substitution in the premises.
Dated: ________________________________ ___________________________________
Signature Guaranteed:
___________________________________
THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST
CORRESPOND TO THE NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN
EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER,
AND MUST BE GUARANTEED BY A MEDALLION BANK.
A-7
