EXHIBIT 4.17
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND MAY NOT BE
TRANSFERRED UNTIL (i) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), SHALL HAVE BECOME EFFECTIVE WITH RESPECT
THERETO OR (ii) RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER THE SECURITIES
ACT IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER NOR IS SUCH
TRANSFER IN VIOLATION OF ANY APPLICABLE STATE SECURITIES LAWS. THIS LEGEND SHALL
BE ENDORSED UPON ANY WARRANT ISSUED IN EXCHANGE FOR THIS WARRANT OR ANY SHARES
OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT.
WARRANT TO PURCHASE COMMON STOCK
OF
IFS INTERNATIONAL HOLDINGS, INC.
This is to certify that, FOR VALUE RECEIVED, Commonwealth Associates,
L.P. or assigns ("Holder"), is entitled to purchase, subject to the provisions
of this Warrant, from IFS International Holdings, Inc., a Delaware corporation
(the "Company"), Three Hundred Fifty Thousand (350,000) fully paid, validly
issued and nonassessable shares of common stock, $.001 par value, of the Company
("Common Stock"), at a price of $2.50 per share at any time or from time to time
during the seven year period commencing upon the date hereof (the "Exercise
Period"), subject to adjustment as set forth herein. The number of shares of
Common Stock to be received upon the exercise of this Warrant and the price to
be paid for each share of Common Stock may be adjusted from time to time as
hereinafter set forth. The shares of Common Stock deliverable upon such
exercise, and as adjusted from time to time, are hereinafter sometimes referred
to as "Warrant Shares" and the exercise price of a share of Common Stock in
effect at any time and as adjusted from time to time is hereinafter sometimes
referred to as the "Exercise Price". This Warrant, together with warrants of
like tenor, constituting in the aggregate warrants (the "Warrants") to purchase
up to 850,000 shares of Common Stock, was originally issued in connection with
advisory services provided to the Company by Commonwealth Associates, L.P.
("Commonwealth").
(a) EXERCISE OF WARRANT; CANCELLATION OF WARRANT.
(1) This Warrant may be exercised in whole or in part at any time or from time
to time during the Exercise Period; provided, however, that (i) if either such
day is a day on which banking institutions in the State of New York are
authorized by law to close, then on the next succeeding day which shall not be
such a day, and (ii) in the event of any merger, consolidation or sale of
substantially all the assets of the Company as an entirety resulting in any
distribution to the Company's stockholders, prior to termination of the Exercise
Period, the Holder shall have the right to exercise this Warrant commencing at
such time through the termination of the Exercise Period into the kind and
amount of shares of stock and other securities and property (including cash)
receivable by a holder of the number of shares of Common Stock into which this
Warrant might have been exercisable had the Holder exercised immediately prior
to such event and held all stock and other securities and property received upon
such event from the date of such event through the date of exercise. This
Warrant may be exercised by presentation and surrender hereof to the Company at
its principal office with the Purchase Form annexed hereto duly executed and
accompanied by payment of the Exercise Price for the number of Warrant Shares
specified in such form. As soon as practicable after each such exercise of the
Warrants, but not later than seven (7) days following the receipt of good and
available funds, the Company shall issue and deliver to the Holder a certificate
or certificate for the Warrant Shares issuable upon such exercise, registered in
the name of the Holder or its designee. If this Warrant should be exercised in
part only, the Company shall, upon surrender of this Warrant for cancellation,
execute and deliver a new Warrant evidencing the rights of the Holder thereof to
purchase the balance of the Warrant Shares purchasable thereunder. Upon receipt
by the Company of this Warrant at its office in proper form for exercise, the
Holder shall be deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock transfer books of
the Company shall then be closed or that certificates representing such shares
of Common Stock shall not then be physically delivered to the Holder.
(2) At any time during the Exercise Period, the Holder may, at its option,
exercise this Warrant on a cashless basis by exchanging this Warrant, in whole
or in part (a "Warrant Exchange"), into the number of Warrant Shares determined
in accordance with this Section (a)(2), by surrendering this Warrant at the
principal office of the Company or at the office of its stock transfer agent,
accompanied by a notice stating such Holder's intent to effect such exchange,
the number of Warrant Shares to be exchanged and 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 later, the date the Notice of Exchange is received by the
Company (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 seven (7) days following
the Exchange Date. In connection with any Warrant Exchange, this Warrant shall
represent the right to subscribe for and acquire the number of Warrant Shares
equal to (i) the number of Warrant Shares specified by the Holder in its Notice
of Exchange (the "Total Number") less (ii) the number of Warrant Shares equal to
the quotient obtained by dividing (A) the product of the Total Number and the
existing Exercise Price by (B) the current market value of a share of Common
Stock. Current market value shall have the meaning set forth Section (c) below,
except that for purposes hereof, the date of exercise, as used in such Section
(c), shall mean the Exchange Date.
(b) RESERVATION OF SHARES. The Company shall at all times reserve for
issuance and/or delivery upon exercise of this Warrant such number of shares of
its Common Stock as shall be required for issuance and delivery upon exercise of
the Warrants.
(c) FRACTIONAL SHARES. No fractional shares or script representing
fractional shares shall be issued upon the exercise of this Warrant. 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 a share, determined as follows:
(1) If the Common Stock is listed on a national securities exchange or admitted
to unlisted trading privileges on such exchange or qualified for trading on the
Nasdaq National Market, the current market value shall be the last reported sale
price of the Common Stock on such exchange or market on the last business day
prior to the date of exercise of this 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 market; or
(2) If the Common Stock is not so listed or admitted to unlisted trading
privileges, but is traded on the Nasdaq SmallCap Market, the current market
value shall be the average of the closing bid and asked prices for such day on
such market and if the Common Stock is not so traded, the current market value
shall be the mean of the last reported bid and asked prices reported by the NASD
Electronic Bulletin Board on the last business day prior to the date of the
exercise of this Warrant; or
(3) If the Common Stock is not so listed or admitted to unlisted trading
privileges and bid and asked prices are not so reported, the current market
value shall be an amount, not less than book value thereof as at the end of the
most recent fiscal quarter of the Company ending prior to the date of the
exercise of the Warrant, determined in such reasonable manner as may be
prescribed by the Board of Directors of the Company.
(d) EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT. This Warrant is
exchangeable, without expense, at the option of the Holder, upon presentation
and surrender hereof to the Company or at the office of its stock transfer
agent, if any, for other warrants of different denominations entitling the
holder thereof to purchase in the aggregate the same number of shares of Common
Stock purchasable hereunder. Upon surrender of this Warrant to the Company at
its principal office or at the office of its stock transfer agent, if any, with
the Assignment Form annexed hereto duly executed and funds sufficient to pay any
transfer tax, the Company shall, without charge, execute and deliver a new
Warrant in the name of the assignee named in such instrument of assignment and
this Warrant shall promptly be cancelled. This Warrant may be divided or
combined with other warrants which carry the same rights upon presentation
hereof at the principal office of the Company or at the office of its stock
transfer agent, if any, together with a written notice specifying the names and
denominations in which new Warrants are to be issued and signed by the Holder
hereof. The term "Warrant" as used herein includes any Warrants into which this
Warrant may be divided or exchanged. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Warrant, if mutilated, the Company will execute and deliver a new Warrant of
like tenor and date. Any such new Warrant executed and delivered shall
constitute an additional contractual obligation on the part of the Company,
whether or not this Warrant so lost, stolen, destroyed, or mutilated shall be at
any time enforceable by anyone.
(e) RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be
entitled to any rights of a shareholder in the Company, either at law or equity,
and the rights of the Holder are limited to those expressed in the Warrant and
are not enforceable against the Company except to the extent set forth herein.
(f) ANTI-DILUTION PROVISIONS. Subject to the provisions of Section l
hereof, the Exercise Price in effect at any time and the number and kind of
securities purchasable upon the exercise of the Warrants shall be subject to
adjustment from time to time upon the happening of certain events as follows:
(1) In case the Company shall hereafter (i) declare a dividend or make a
distribution on its outstanding shares of Common Stock in shares of Common
Stock, (ii) subdivide or reclassify its outstanding shares of Common Stock into
a greater number of shares, or (iii) combine or reclassify its outstanding
shares of Common Stock into a smaller number of shares, the Exercise Price 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 of
Common Stock outstanding after giving effect to such action, and the numerator
of which shall be the number of shares of Common Stock outstanding immediately
prior to such action. Such adjustment shall be made successively whenever any
event listed above shall occur.
(2) In case the Company shall fix a record date for the issuance of rights or
warrants to all holders of its Common Stock entitling them to subscribe for or
purchase shares of Common Stock (or securities convertible into Common Stock) at
a price (the "Subscription Price") (or having a conversion price per share) less
than the current market price (as defined in Subsection (8) below) or less than
the Exercise Price on such record date, the Exercise Price shall be adjusted so
that the same shall equal the lower of (i) the price determined by multiplying
the Exercise Price in effect immediately prior to the date of such issuance by a
fraction, the numerator of which shall be the sum of the number of shares of
Common Stock outstanding on the record date mentioned below and the number of
additional shares of Common Stock which the aggregate offering price of the
total number of shares of Common Stock so offered (or the aggregate conversion
price of the convertible securities so offered) would purchase at such current
market price per share of the Common Stock (as defined in Subsection (8) below),
and the denominator of which shall be the sum of the number of shares of Common
Stock outstanding on such record date and the number of additional shares of
Common Stock offered for subscription or purchase (or into which the convertible
securities so offered are convertible) or (ii) in the event the Subscription
Price is equal to or higher than the current market price but is less than the
Exercise Price, the price determined by multiplying the Exercise Price in effect
immediately prior to the date of issuance by a fraction, the numerator of which
shall be the sum of the number of shares outstanding on the record date
mentioned below and the number of additional shares of Common Stock which the
aggregate offering price of the total number of shares of Common Stock so
offered (or the aggregate conversion price of the convertible securities so
offered) would purchase at the Exercise Price in effect immediately prior to the
date of such issuance, and the denominator of which shall be the sum of the
number of shares of Common Stock outstanding on the record date mentioned below
and the number of additional shares of Common 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 Common Stock are not delivered (or securities
convertible into Common 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 Common Stock (or securities convertible into Common Stock) actually
delivered.
(3) In case the Company shall hereafter distribute to the holders of its Common
Stock evidences of its indebtedness or assets (excluding cash dividends or
distributions and dividends or distributions referred to in Subsection (1)
above) or subscription rights or warrants (excluding those referred to in
Subsection (2) above), then in each such case the Exercise Price in effect
thereafter shall be determined by multiplying the Exercise Price in effect
immediately prior thereto by a fraction, the numerator of which shall be the
total number of shares of Common Stock outstanding multiplied by the current
market price per share of Common Stock (as defined in Subsection (8) 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
Common Stock outstanding multiplied by such current market price per share of
Common 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 effective immediately after the record date for the
determination of shareholders entitled to receive such distribution.
(4) In case the Company shall hereafter issue shares of its Common Stock
(excluding shares issued (a) in any of the transactions described in Subsection
(1) above, (b) upon exercise of options granted to the Company's officers,
directors and employees under a plan or plans adopted by the Company's Board of
Directors and approved by its shareholders, if such shares would otherwise be
included in this Subsection (4), provided that this provision shall only exclude
those shares purchased upon exercise of options granted under a plan or plan
existing on the date hereof to the extent of options issued or available for
issuance on the date hereof and options issued under such plan or plans to the
extent that such additional options do not exceed five (5) percent of the
Company's outstanding shares of Common Stock on the date hereof, (c) upon
exercise of options, warrants and convertible securities outstanding as of the
date hereof, or exercise of the Warrants, (d) to shareholders of any corporation
which merges into the Company or a subsidiary of the Company in proportion to
their stock holdings of such corporation immediately prior to such merger, upon
such merger, (e) issued in a private placement through Commonwealth, as
placement agent, or upon exercise or conversion of any securities issued in or
in connection with such a private placement (including agent, consulting or
advisory warrants) or (f) issued in a bona fide public offering pursuant to a
firm commitment underwriting, but only if no adjustment is required pursuant to
any other specific subsection of this Section (f) (without regard to Subsection
(9) below) with respect to the transaction giving rise to such rights) for a
consideration per share (the "Offering Price") less than the current market
price (as defined in Subsection (8) below) or less than the Exercise Price, the
Exercise Price shall be adjusted immediately thereafter so that it shall equal
the lower of (i) the price determined by multiplying the Exercise Price in
effect immediately prior thereto by a fraction, the numerator of which shall be
the sum of the number of shares of Common Stock outstanding immediately prior to
the issuance of such additional shares and the number of shares of Common Stock
which the aggregate consideration received (determined as provided in Subsection
(7) below) for the issuance of such additional shares would purchase at such
current market price per share of Common Stock (as defined in Subsection (8)
below), and the denominator of which shall be the number of shares of Common
Stock outstanding immediately after the issuance of such additional shares or
(ii) in the event the Offering Price is equal to or higher than the current
market price per share but less than the Exercise Price, the price determined by
multiplying the Exercise Price in effect immediately prior to the date of
issuance by a fraction, the numerator of which shall be the number of shares of
Common Stock outstanding immediately prior to the issuance of such additional
shares and the number of shares of Common Stock which the aggregate
consideration received (determined as provided in subsection (7) below) for the
issuance of such additional shares would purchase at the Exercise Price in
effect immediately prior to the date of such issuance, and the denominator of
which shall be the number of shares of Common Stock outstanding immediately
after the issuance of such additional shares. Such adjustment shall be made
successively whenever such an issuance is made.
(5) In case the Company shall hereafter issue any securities convertible into or
exchangeable for its Common Stock (excluding securities issued in transactions
described in Subsections (2) and (3) above) for a consideration per share of
Common Stock (the "Conversion Price") initially deliverable upon conversion or
exchange of such securities (determined as provided in Subsection (7) below)
less than the current market price (as defined in Subsection (8) below) or less
than the Exercise Price, the Exercise Price shall be adjusted immediately
thereafter so that it shall equal the lower of (i) the price determined by
multiplying the Exercise Price in effect immediately prior thereto by a
fraction, the numerator of which shall be the sum of the number of shares of
Common Stock outstanding immediately prior to the issuance of such securities
and the number of shares of Common Stock which the aggregate consideration
received (determined as provided in Subsection (7) below) for such securities
would purchase at such current market price per share of Common Stock (as
defined in Subsection (8) below), and the denominator of which shall be the sum
of the number of shares of Common Stock outstanding immediately prior to such
issuance and the maximum number of shares of Common Stock of the Company
deliverable upon conversion of or in exchange for such securities at the initial
conversion or exchange price or rate or (ii) in the event the Conversion Price
is equal to or higher than the current market price per share but less than the
Exercise Price, the price determined by multiplying the Exercise Price in effect
immediately prior to the date of issuance by a fraction, the numerator of which
shall be the sum of the number of shares outstanding immediately prior to the
issuance of such securities and the number of shares of Common Stock which the
aggregate consideration received (determined as provided in subsection (7)
below) for such securities would purchase at the Exercise Price in effect
immediately prior to the date of such issuance, and the denominator of which
shall be the sum of the number of shares of Common Stock outstanding immediately
prior to the issuance of such securities and the maximum number of shares of
Common Stock of the Company deliverable upon conversion of or in exchange for
such securities at the initial conversion or exchange price or rate. Such
adjustment shall be made successively whenever such an issuance is made.
(6) Whenever the Exercise Price payable upon exercise of each Warrant is
adjusted pursuant to Subsections (1), (2), (3), (4) and (5) above, the number of
Shares purchasable upon exercise of this Warrant shall simultaneously be
adjusted by multiplying the number of Shares initially issuable upon exercise of
this Warrant by the Exercise Price in effect on the date hereof and dividing the
product so obtained by the Exercise Price, as adjusted.
(7) For purposes of any computation respecting consideration received pursuant
to Subsections (4) and (5) above, the following shall apply:
(A) in the case of the issuance of shares of Common Stock for cash, the
consideration shall be the amount of such cash, provided that in no case shall
any deduction be made for any commissions, discounts or other expenses incurred
by the Company for any underwriting of the issue or otherwise in connection
therewith;
(B) in the case of the issuance of shares of Common Stock for a
consideration in whole or in part other than cash, the consideration other than
cash shall be deemed to be the fair market value thereof as determined in good
faith by the Board of Directors of the Company (irrespective of the accounting
treatment thereof), whose determination shall be conclusive; and
(C) in the case of the issuance of securities convertible into or
exchangeable for shares of Common Stock, the aggregate consideration received
therefor shall be deemed to be the consideration received by the Company for the
issuance of such securities plus the additional minimum consideration, if any,
to be received by the Company upon the conversion or exchange thereof (the
consideration in each case to be determined in the same manner as provided in
clauses (A) and (B) of this Subsection (7)).
(8) For the purpose of any computation under Subsections (2), (3), (4) and (5)
above, the current market price per share of Common Stock at any date shall be
determined in the manner set forth in Section (c) hereof except that the current
market price per share shall be deemed to be the higher of (i) the average of
the prices for 5 consecutive business days before such date or (ii) the price on
the business day immediately preceding such date.
(9) No adjustment in the Exercise Price shall be required unless such adjustment
would require an increase or decrease of at least five cents ($0.05) in such
price; provided, however, that any adjustments which by reason of this
Subsection (9) 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 Section (f) shall be made to the nearest cent or to the
nearest one-hundredth of a share, as the case may be. Anything in this Section
(f) 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 Section (f), as it shall determine, in its sole
discretion, to be advisable in order that any dividend or distribution in shares
of Common Stock, or any subdivision, reclassification or combination of Common
Stock, hereafter made by the Company shall not result in any Federal Income tax
liability to the holders of Common Stock or securities convertible into Common
Stock (including Warrants).
(10) Whenever the 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 issuable upon exercise of each Warrant, and,
if requested, information describing the transactions giving rise to such
adjustments, to be mailed to the Holders at their last addresses appearing in
the Warrant Register, and shall cause a certified copy thereof to be mailed to
its transfer agent, if any. In the event the Company does not provide the Holder
with such notice and information within 10 days of a request by the Holder, then
notwithstanding the provisions of this Section (f), the Exercise Price shall be
immediately adjusted to equal the lowest Offering Price, Subscription Price or
Conversion Price, as applicable, since the date of this Warrant, and the number
of shares issuable upon exercise of this Warrant shall be adjusted accordingly.
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 (f), and a
certificate signed by such firm shall be conclusive evidence of the correctness
of such adjustment.
(11) In the event that at any time, as a result of an adjustment made pursuant
to Subsection (1) above, the Holder of this Warrant thereafter shall become
entitled to receive any shares of the Company, other than Common Stock,
thereafter the number of such other shares so receivable upon exercise of this
Warrant 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
Common Stock contained in Subsections (1) to (9), inclusive above.
(12) Irrespective of any adjustments in the Exercise Price or the number or kind
of shares purchasable upon exercise of this Warrant, Warrants theretofore or
thereafter issued may continue to express the same price and number and kind of
shares as are stated in the similar Warrants initially issuable pursuant to this
Agreement.
(13) In the event that for each of the 30 trading days immediately prior to any
issuance referred to below, the closing bid price of the Common Stock has
exceeded three times the then Exercise Price (the "Determination Price"), the
Company may issue securities and paragraphs (4) and (5) shall not apply to such
issuance unless the price at which such securities are issued is below the
Determination Price and the average closing bid price of the Common Sock for the
ten trading days immediately after such issuance is less than the Exercise Price
immediately prior to such issuance (in which event paragraph (4) and (5) shall
apply retroactively to the date of issuance).
(g) OFFICER'S CERTIFICATE. Whenever the Exercise Price shall be adjusted as
required by the provisions of the foregoing Section, the Company shall forthwith
file in the custody of its Secretary or an Assistant Secretary at its principal
office and with its stock transfer agent, if any, an officer's certificate
showing the adjusted Exercise Price determined as herein provided, setting forth
in reasonable detail the facts requiring such adjustment, including a statement
of the number of shares of Common Stock into which this Warrant is then
exercisable, and such other facts as shall be necessary to show the reason for
and the manner of computing such adjustment. Each such officer's certificate
shall be made available at all reasonable times for inspection by the holder or
any holder of a Warrant executed and delivered pursuant to Section (a) and the
Company shall, forthwith after each such adjustment, mail a copy by certified
mail of such certificate to the Holder or any such holder.
(h) NOTICES TO WARRANT HOLDERS. So long as this Warrant shall be
outstanding, (i) if the Company shall pay any dividend or make any distribution
upon the Common Stock or (ii) if the Company shall offer to the holders of
Common Stock for subscription or purchase by them any share of any class or any
other rights or (iii) if any capital reorganization of the Company,
reclassification of the capital stock of the Company, consolidation or merger of
the Company with or into another corporation, sale, lease or transfer of all or
substantially all of the property and assets of the Company to another
corporation, or voluntary or involuntary dissolution, liquidation or winding up
of the Company shall be effected, then in any such case, the Company shall cause
to be mailed by certified mail to the Holder, at least fifteen days prior the
date specified in (x) or (y) below, as the case may be, a notice containing a
brief description of the proposed action and stating the date on which (x) a
record is to be taken for the purpose of such dividend, distribution or rights,
or (y) such reclassification, reorganization, consolidation, merger, conveyance,
lease, dissolution, liquidation or winding up is to take place and the date, if
any is to be fixed, as of which the holders of Common Stock or other securities
shall receive cash or other property deliverable upon such reclassification,
reorganization, consolidation, merger, conveyance, dissolution, liquidation or
winding up.
(i) RECLASSIFICATION, REORGANIZATION OR MERGER. In case of any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the Company, or in case of any consolidation or merger of the
Company with or into another corporation (other than a merger with a subsidiary
in which merger the Company is the continuing corporation and which does not
result in any reclassification, capital reorganization or other change of
outstanding shares of Common Stock of the class issuable upon exercise of this
Warrant) or in case of any sale, lease or conveyance to another corporation of
the property of the Company as an entirety, the Company shall, as a condition
precedent to such transaction, cause effective provisions to be made so that the
Holder shall have the right thereafter by exercising this Warrant at any time
prior to the expiration of the Warrant, to purchase the kind and amount of
shares of stock and other securities and property receivable upon such
reclassification, capital reorganization and other change, consolidation,
merger, sale or conveyance by a holder of the number of shares of Common Stock
which might have been purchased upon exercise of this Warrant immediately prior
to such reclassification, change, consolidation, merger, sale or conveyance had
the Holder exercised this Warrant and received such stock and other securities
and property and continued to hold such stock and other securities and property
through the date of exercise. Any such provision shall include provision for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Warrant. The foregoing provisions of this
Section (i) shall similarly apply to successive reclassifications, capital
reorganizations and changes of shares of Common Stock and to successive
consolidations, mergers, sales or conveyances. In the event that in connection
with any such capital reorganization or reclassification, consolidation, merger,
sale or conveyance, additional shares of Common Stock shall be issued in
exchange, conversion, substitution or payment, in whole or in part, for a
security of the Company other than Common Stock, any such issue shall be treated
as an issue of Common Stock covered by the provisions of Subsection (1) of
Section (f) hereof.
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REGISTRATION UNDER THE SECURITIES ACT OF 1933.
(1) If the Company shall determine to proceed with the actual preparation and
filing of a registration statement under the Act during the seven year period
commencing on the date hereof (the "Registration Rights Period") in connection
with the proposed offer and sale of any of its securities by it or any of its
security holders (other than a registration statement on Form S-4, S-8 or other
limited purpose form), then the Company will give 20 days prior written notice
of its determination to all record holders of the Warrants and Warrant Shares
(the "Holders"). Upon the written request from any Holder, the Company will,
except as herein provided, cause all such Warrant Shares to be included in such
registration statement, all to the extent requisite to permit the sale or other
disposition by the prospective seller or sellers of the Warrant Shares to be so
registered; provided, further, that nothing herein shall prevent the Company
from, at any time, abandoning or delaying any registration. If any registration
pursuant to this Section j(1) shall be underwritten in whole or in part, the
Company may require that the Warrant Shares requested for inclusion by the
Holders be included in the underwriting on the same terms and conditions as the
securities otherwise being sold through the underwriters. The obligation of the
Company under this Section j(1) is limited to two registration statements.
The Holder may, at its option, request the registration of the Warrant Shares in
a registration statement made by the Company as contemplated by Section (j)(1)
prior to the acquisition of the Warrant Shares upon exercise of the Warrants and
even though the holder has not given notice of exercise of the Warrants. The
Holder may thereafter at its option, exercise the Warrants at any time or from
time to time subsequent to the effectiveness under the Act of the registration
statement in which the Warrant Shares were included.
(2) At any time after the date hereof, the Holder shall have the right on one
occasion to demand the registration of all the Warrant Shares held by such
Holder. If the Holder makes such request, the Company shall in accordance with
clause (3) below register the Warrant Shares within 90 days of such request
under the Securities Act of 1933, as amended, and thereafter keep such
registration statement continuously effective until all securities registered
thereby have been sold by the Holder. If the registration statement that is
required to be filed hereunder is withdrawn for any reason (which shall not in
any way diminish the obligations of the Company under this Section (j)) before,
at or after effectiveness, if the Company shall fail to keep such registration
statement current as required hereby or if the Company shall fail to register
all the Warrant Shares requested to be registered, then the Holder shall have
one additional demand registration right hereunder.
<PAGE>
(3) Whenever required under this Agreement to effect the registration of any
Warrant Shares, the Company will:
(A) prepare and file with the SEC a registration statement, use its
reasonable best efforts to cause such registration statement to become effective
and thereafter to file and if appropriate, cause to become effective such
amendments to such registration statement and supplements to the prospectus
contained therein as may be necessary to keep such registration statement
effective;
(B) furnish to the Holders participating in such registration and to the
underwriters of the securities being registered such reasonable number of copies
of the registration statement, preliminary prospectus, final prospectus and such
other documents as such underwriters may reasonably request in order to
facilitate the public offering of such securities;
(C) use its best efforts to register or qualify the securities covered by
such registration statement under such state securities or blue sky laws of such
jurisdictions as the Holders may reasonably request in writing within 20 days
following the original filing of such registration statement, except that the
Company shall not for any purpose be required to execute a general consent to
service of process or to qualify to do business as a foreign corporation in any
jurisdiction wherein it is not so qualified or subject itself to taxation in any
such jurisdiction;
(D) notify the Holders, promptly after it shall receive notice thereof, of
the time when such registration statement has become effective or a supplement
to any prospectus forming a part of such registration statement has been filed;
(E) notify the Holders promptly of any request by the SEC for the amending
or supplementing of such registration statement or prospectus or for additional
information;
(F) prepare and file with the SEC, promptly upon the request of any
Holders, any amendments or supplements to such registration statement or
prospectus which, in the opinion of counsel for such Holders (and concurred in
by counsel for the Company), is required under the Act or the rules and
regulations thereunder in connection with the distribution of Common Stock by
such Holders;
(G) prepare and promptly file with the SEC and promptly notify such Holders
of the filing of such amendment or supplement to such registration statement or
prospectus as may be necessary to correct any statements or omissions if, at the
time when a prospectus relating to such securities is required to be delivered
under the Act, any event shall have occurred as the result of which any such
prospectus or any other prospectus as then in effect would include an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances in which they
were made, not misleading;
(H) advise the Holders, promptly after it shall receive notice or obtain
knowledge thereof, of the issuance of any stop order by the SEC suspending the
effectiveness of such registration statement or the initiation or threatening of
any proceeding for that purpose and promptly use its best efforts to prevent the
issuance of any stop order or to obtain its withdrawal if such stop order should
be issued;
(I) cause the securities of the Holder to be listed or designated for
trading on such securities exchange or automated quotation system as any
securities of the same class of the Company are then listed or quoted or, if no
such listing or quotation then exists, as reasonably determined by the Company;
(J) make documents, files, books, records, officers, directors and
employees of the Company available to the Holder and provided the Holder's
underwriters, if any, shall have agreed to be bound by the provisions of this
clause (J), to such underwriters, and make such other accommodations as are
reasonably necessary for the Holder and the Holder's underwriters, if any, to
perform a due diligence review of the Company; provided, however, that all such
information ("Confidential Information") will be kept confidential and not
utilized by Holder except as contemplated herein and except as required by law
or court order. The term "Confidential Information" does not include information
which (i) is already in possession of such other party (other than that which is
subject to another confidentiality agreement), (ii) becomes generally available
to the public, or (iii) becomes available on a non-confidential basis from a
source other than the Company; and
(K) provide such opinions, certifications, indemnifications, and take such
other actions, including, without limitation, entering into such agreements
(including underwriting agreements), as are reasonably required and appropriate,
to permit the Holder to make a public offering of the Warrant Shares requested
to be registered. The Company may require each Holder of Warrant Shares as to
which any registration is being effected to furnish to the Company such
information regarding the distribution of such Warrant Shares as the Company may
from time to time reasonably request in writing.
(4) All fees, costs and expenses of and incidental to the registrations pursuant
to Section (j)(1) shall be borne by the Company, provided, however, that the
Holders shall bear their pro rata share of the underwriting discount and
commissions and transfer taxes. The fees, costs and expenses of registration to
be borne by the Company as provided above shall include, without limitation, all
registration, filing, and NASD fees, printing expenses, fees and disbursements
of counsel and accountants for the Company, and all legal fees and disbursements
and other expenses of complying with state securities or blue sky laws of any
jurisdictions in which the securities to be offered are to be registered and
qualified (except as provided above). Fees and disbursements of counsel and
accountants for the Holders and any other expenses incurred by the Holders not
expressly included above shall be borne by the Holders.
(5) The Company will indemnify and hold harmless each Holder of Warrant Shares
which are included in a registration statement pursuant to the provisions of
Section (j)(1) hereof, its directors and officers, and any underwriter (as
defined in the Act) for such Holder and each person, if any, who controls such
Holder or such underwriter within the meaning of the Act, from and against, and
will reimburse such Holder and each such underwriter and controlling person with
respect to, any and all loss, damage, liability, cost and expense to which such
Holder or any such underwriter or controlling person may become subject under
the Act or otherwise, insofar as such losses, damages, liabilities, costs or
expenses are caused by any untrue statement or alleged untrue statement of any
material fact contained in such registration statement, any prospectus contained
therein or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading; provided, however,
that the Company will not be liable in any such case to the extent that any such
loss, damage, liability, cost or expenses that is based solely upon an untrue
statement or alleged untrue statement or omission or alleged omission so made in
conformity with information about such Holder, such underwriter or such
controlling person furnished by such Holder, such underwriter or such
controlling person in writing specifically for use in the preparation thereof.
(6) Each Holder of Warrant Shares included in a registration pursuant to the
provisions of Section (j)(1) hereof will indemnify and hold harmless the
Company, its directors and officers, any controlling person and any underwriter
from and against, and will reimburse the Company, its directors and officers,
any controlling person and any underwriter with respect to, any and all loss,
damage, liability, cost or expense to which the Company or any controlling
person and/or any underwriter may become subject under the Act or otherwise,
insofar as such losses, damages, liabilities, costs or expenses are caused by
any untrue statement or alleged untrue statement of any material fact contained
in such registration statement, any prospectus contained therein or any
amendment or supplement thereto, or are based solely upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was so made in reliance upon and in strict conformity with
written information about such Holder furnished by or on behalf of such Holder
specifically for use in the preparation thereof.
(7) Promptly after receipt by an indemnified party pursuant to the provisions of
Sections (j)(5) or (j)(6) of notice of the commencement of any action involving
the subject matter of the foregoing indemnity provisions such indemnified party
will, if a claim thereof is to be made against the indemnifying party pursuant
to the provisions of said Sections (j)(5) or (j)(6), promptly notify the
indemnifying party of the commencement thereof; but the omission to so notify
the indemnifying party will not relieve it from any liability which it may have
to any indemnified party except to the extent that the indemnifying party has
been materially prejudiced thereby or otherwise than hereunder. In case such
action is brought against any indemnified party and it notifies the indemnifying
party of the commencement thereof, the indemnifying party shall have the right
to participate in, and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party, provided, however, if counsel
for the indemnified party concludes that a single counsel cannot under
applicable legal and ethical considerations, represent both the indemnifying
party and the indemnified party, the indemnified party or parties have the right
to select separate counsel to participate in the defense of such action on
behalf of such indemnified party or parties. After notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such indemnified party
pursuant to the provisions of said Sections (j)(5) or (j)(6) for any legal or
other expense subsequently incurred by such indemnified party in connection with
the defense thereof other than reasonable costs of investigation, unless (i) the
indemnified party shall have employed counsel in accordance with the provisions
of the preceding sentence, (ii) the indemnifying party shall not have employed
counsel satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after the notice of the commencement of the action or
(iii) the indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party. No indemnifying
party under this Agreement will enter into any settlement or consent to any
entry of judgment which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to the indemnified party of a release from
all liability in respect of such claim or litigation.
(8) If the indemnification provided for in this Section (j)(5) or (j)(6) is held
by a court of competent jurisdiction to be unavailable to an indemnified party
or is insufficient to indemnify an indemnified party with respect to any loss,
liability, claim, damage, or expense referred to therein, then the indemnifying
party, in lieu of or in addition to, as appropriate, indemnifying such
indemnified party hereunder, will contribute to the amount paid or payable by
such indemnified party as a result of such loss, liability, claim, damage, or
expense in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party will be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission. The obligation of the Holder to make a contribution
pursuant to this Section (j)(8) shall be limited to the net proceeds received by
the Holder from the sale of the Warrant Shares sold by it, less any amounts paid
pursuant to Section (j)(6).
(9) The obligations of the Company and the Holder under this Section (j) will
survive the completion of any offering of Warrant Shares in the registration
statement under this Agreement, and otherwise.
IN WITNESS WHEREOF, IFS INTERNATIONAL HOLDINGS, INC. has executed this Warrant
on the date set forth below.
IFS INTERNATIONAL HOLDINGS, INC.
By:
Dated: February , 2000
<PAGE>
PURCHASE FORM
Dated
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The undersigned hereby irrevocably elects to exercise the within Warrant to the
extent of purchasing shares of Common Stock and hereby makes payment of in
payment of the actual exercise price thereof.
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name
(Please typewrite or print in block letters)
Address
Signature
<PAGE>
ASSIGNMENT FORM
FOR VALUE RECEIVED, hereby sells, assigns and transfers unto
----------------------------------------------------
Name
(Please typewrite or print in block letters)
Address
the right to purchase Common Stock represented by this Warrant to the extent of
shares as to which such right is exercisable and does hereby irrevocably
constitute and appoint Attorney, to transfer the same on the books of the
Company with full power of substitution in the premises.
Date
Signature
