DEBENTURE INVESTMENT AGREEMENT
Between
IFS INTERNATIONAL, INC.
And
NEW YORK STATE SCIENCE AND
TECHNOLOGY FOUNDATION
00 Xxxxxxxxxx Xxxxxx,
Xxxxxx, Xxx Xxxx 00000
For
CONVERTIBLE SEVEN AND ONE-HALF PERCENT DEBENTURES
WHEREAS, IFS International, Inc., (hereinafter called the "Company"), will
be issuing three (3), seven and one-half percent (7 1/2%) convertible
debentures, two in the face amount of Eighty Thousand and 00/100 Dollars
($80,000.00) each and one in the face amount of Ninety Thousand and 00/100
Dollars ($90,000.00) (hereinafter called the "Debentures"), such Debentures to
be purchased by New York State Science and Technology Foundation, (hereinafter
called the "Purchaser"); and
WHEREAS, Wellsway Ventures, Inc. (hereinafter called "Wellsway"), the
parent company of IFS International, Inc. will be guaranteeing the repayment by
the Company of the Debentures and the performance by the Company of its
obligations under this Agreement; and
WHEREAS, any successor in interest to the Purchaser with respect to any
Debenture issued as aforesaid shall also be included in the definition of
"Purchaser"; and
WHEREAS, it is intended that the provisions of this Agreement shall apply
to each and
every Debenture issued hereunder.
NOW, THEREFORE, it is agreed by and between the Company and the Purchaser
as follows:
1. Representations and Warranties of the Company. The Company represents
and warrants as follows:
(a) The Company is a corporation duly incorporated, validly existing,
and in good standing under the laws of New York. It is duly qualified in
the State of Ohio and or will duly qualify as a foreign corporation and
will remain in good standing in all other jurisdictions, if any, where its
activities make such qualification necessary. It is duly authorized under
all applicable provisions of law to carry on its businesses as now
conducted.
(b) The Company is duly authorized under all applicable provisions of
law, its Certificate of Incorporation, and its By-Laws to enter into and
perform this Agreement. The entering into and performing of this Agreement
will not result in a breach or a default under any agreement or instrument
to which it is a party, and will not result in the creating of any security
interest, lien, charge, or encumbrance upon any of its assets under any
such agreement or instrument. This Agreement hereinafter provided for is,
and upon the execution and delivery hereof, it will be a valid and
enforceable obligation of the Company in accordance with its terms.
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(c) The Company's entire authorized stock consists of four million
(4,000,000) shares of common stock, $.00001 par value, of which four
thousand (4,000) shares are issued and outstanding and three million
(3,000,000) shares of convertible preferred stock, $.0001 par value, of
which two million three hundred sixty four thousand, five hundred
eighty-seven (2,364,587) shares are issued and outstanding. All such issued
and outstanding shares have been validly issued and are fully paid and
non-assessable.
(d) The Company has delivered or caused to be delivered to the
Purchaser, the financial statements listed below, upon which financial
statements the Purchaser has relied in making this investment:
The balance sheet and the statements of profit and loss and cash
flows of the Company as of April 30, 1988, as reported on by Coopers &
Xxxxxxx, and all interim reports requested by Purchaser.
The Company covenants that the foregoing financial statements were all
prepared in accordance with generally accepted accounting principles
consistently applied, and are correct and complete in all material respects
and fairly represent the financial condition of the Company as of the date
of said balance sheet and the results of the operations of the Company for
the periods covered by said financial statements. There has been no
material adverse change in the financial condition or the assets of the
Company since the last dated balance sheet or sheets.
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(e) The Company has good marketable title to all assets reflected in
the last dated balance sheet referred to above, except assets sold or
disposed of in the ordinary course of its business since the date of said
balance sheet. None of said assets are subject to any mortgages, security
interests, liens, charges, pledges, or encumbrances not referred to in said
balance sheet, except liens, if any, in respect to current taxes and other
encumbrances previously disclosed to Purchaser.
(f) The Company possesses all patents, trademarks, trade names,
copyrights, and licenses necessary to carry on its business as now
conducted without known conflict with the valid patents, trademarks, trade
names, copyrights and licenses of others.
(g) With the exception of those matters referred to at Addendum II
hereof, the Company is not a party to any agreement, or subject to any
corporate restrictions (including without limitation any agreements among
stockholders) that materially and adversely affect its business, its
assets, or its financial condition.
(h) No material litigation in any court or proceeding before any
commission or other administrative authority is pending or threatened
against the Company.
(i) The Company has filed all tax and similar returns as due and has
paid or provided for the payment of all taxes and assessments due. The
Company has no knowledge of any claims for unpaid taxes which might become
a lien upon its assets.
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(j) The Company has completed all financial transactions required to
be completed prior to the purchase herein all in accord with Addendum III
hereof.
2. Affirmative Covenants and Agreements of the Company. The Company
covenants and agrees that, until the earlier of (i) the lapse of five years from
the execution of this Agreement between the parties, or (ii) the Company redeems
all of the Debentures:
(a) The Company will promptly pay or discharge all taxes, assessments,
charges, or levies imposed upon it or upon any of its property and all
lawful claims for labor, material, or supplies which, if unpaid, might
become a lien or charge upon any such property. The Company may, however,
contest any such claim deferring payment pending court resolution of the
dispute unless the Purchaser in its reasonable judgment determines that
such failure to pay will seriously jeopardize the Company's ability to pay
the obligations due Purchaser in which event the Company may bond the claim
and proceed with its defense.
(b) The Company will do all things necessary to preserve and keep in
full force and effect its corporate existence and rights except that the
Company may merge or consolidate with or into Wellsway so long as a major
portion of the Company's operations now located in the State of New York do
not relocate outside of New York as a result of such transaction.
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(c) The Company will maintain its properties in good repair and
condition and will make all needed renewals and replacements so that its
business may be properly and advantageously conducted at all times. It will
comply with all statutes, ordinances, rules, regulations, and orders of any
federal, state, municipal authority or official having jurisdiction over
its property; provided that it may contest in good faith any statutes,
ordinances, rules, regulations, and orders of such bodies or officials in
any reasonable manner without adversely affecting its rights under this
Agreement.
(d) The Company will at all times keep proper books of record and
account in accordance with sound bookkeeping practices. The Company hereby
authorizes the Purchaser, upon ten (10) days' advance notice and at the
Purchaser's expense, to make or cause to be made, in such manner and at
such times as the Purchaser may reasonably require: (i) inspection and
audits of any books, records and papers in the custody or control of the
Company or others, relating to the Company's financial or business
conditions, including the making of copies thereof and extracts therefrom,
and (ii) inspections and appraisals of any of the Company's property or
assets. In the event that the Debentures or the common shares issued upon
conversion of the Debentures shall cease to be owned by a bona fide
investment or financial institution, the right of inspection referred to in
the previous sentence shall be subject to the consent of the Company, such
consent not to be unreasonably withheld. The Company hereby authorizes all
federal, state and municipal authorities to furnish reports of examination,
records, and other information relating to the conditions and affairs of
the Company and
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any desired information from reports, returns, files and records of such
authorities upon request therefor by the Purchaser. The Company will
furnish to the Purchaser copies of all financial reports and/or audited
financial statements at the same time said financial reports and/or
statements are sent to the Company's shareholders or to the shareholders of
Wellsway.
(e) The Company will furnish to the Purchaser promptly after their
effectiveness copies of all amendments or other documents modifying the
Certificate of Incorporation of the Company certified by the Secretary of
State, and copies of all amendments to the By-Laws of the Company certified
by its Secretary.
(f) The Company will promptly notify the Purchaser in writing upon the
occurrence of any Event of Default as defined in each Debenture.
(g) The Company's principals -- Xxxxxxx Xxxxxxx and Xxxxx Xxxxxxxx --
will maintain in the aggregate at least 35% ownership in the Company or in
any company into which the Company merges or is consolidated.
3. Negative Covenants and Agreements of the Company. The Company agrees
that without the written consent of the Purchaser:
(a) The Company will not guarantee the obligations of any person, firm
or
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corporation, except (i) guarantees of the obligations of Wellsway, or
(ii) endorsement of negotiable instruments for deposit or collection and
other activities in the ordinary course of business. The Company will not
lend or give any preferential treatment, or make any advances, directly or
indirectly, by way of loan, gift, bonus or otherwise, to any other persons,
firms or corporations or invest in the securities of any other
corporations, except in the ordinary course of business;
(b) The Company will not pledge or otherwise create or suffer the
imposition of any liens, security interests, charges or encumbrances upon
any of its properties, except in the ordinary course of business.
(c) With the exception of a merger or consolidation with Wellsway, the
Company will not consolidate with or merge into any other corporation, nor
sell, lease or otherwise dispose of all or any substantial part of its
assets to any other person, firm or corporation. The Company may sell and
dispose of such items of machinery and equipment as may become obsolete or
unfit for use or which in its judgment are no longer necessary for the
conduct of its business.
(d) The Company will not change the general character of its business
as conducted on the date hereof, or engage directly or indirectly in any
other type of business.
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(e) The Company will not pay any dividends on, make any other
distribution (except distributions of stock or securities) in respect of,
or apply to the purchase, redemption, or other acquisition for value of,
any shares of its stock of any class, unless the Company after such action
shall have retained earnings at least equal to the face value of the
outstanding principal balance of the Debentures.
(f) The Company will not pay unreasonable compensation to employees
owning in excess of ten percent (10%) of the outstanding shares of any
class or kind of its stock.
(g) The Company's principals shall not engage in any competing
activities, loan monies to any competing companies or entities or acquire
any equity position in any competing company.
(h) The Company's principals will not pledge their holdings in the
Company or in any company into which the Company is merged or consolidated.
(i) The Company will not enter into any severance agreements with its
employees except in the ordinary course of business.
(j) Purchaser's consent for any of the foregoing will not be
unreasonably withheld and will be deemed given if its authorized agents do
not give the Company written
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objections within ten days after Purchaser receives written notice of the
prospective action Company wishes to take, sent in the manner provided in
Section 13 hereof.
4. New York Business. The Company covenants and agrees to keep its
principal place of business and its operations in New York State for five years
or until the Company has consolidated or merged or sold substantially all of its
assets, unless the Purchaser is no longer a creditor of the Company and has sold
substantially all of its interest in the Company. If the Company's principal
place of business or its operations leave New York State as a result of a merger
or the sale of its assets, the Company will, upon demand that the merged
corporation or the purchaser, as the case may be, immediately pay all principal
and interest due on any outstanding Debentures and will cause the repurchase of
any shares of Common Stock purchased by the Purchaser pursuant to its Conversion
Privilege at their then fair market value as part of such transaction. In
addition, the Company covenants and agrees to use the proceeds of the Debentures
so that the economic benefits resulting from the expenditures of such proceeds
shall accrue within New York State.
5. Conversion Privileges. Subject to the provisions for adjustment
hereinafter set forth in Section 6 and 10, each Debenture shall be convertible
at the option of the holder thereof, upon surrender to the Company of the
Debenture to be converted, into fully paid and non-assessable shares of common
stock of Wellsway ("Common Stock"), at the Conversion Price per share as set
forth in Section 6 of the Debenture (the "Conversion Price"). Any Debentures so
surrendered for conversion shall be surrendered to the Company together with a
written notice to the
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Company of the election to make such conversion and of the name or names in
which the certificate or certificates of Common Stock shall be issued. The
Company shall pay all taxes (except taxes upon or measured by the income of the
Purchaser) and other charges in respect of the issue of Common Stock upon any
such conversion.
6. Adjustment for Stock Changes. The number of shares of the Common Stock
and the number of shares of other stock of Wellsway, if any, into which each
Debenture is convertible shall be subject to adjustment from time to time as
follows:
(a) Whenever Wellsway shall (i) take a record of the holders of the
Common Stock for the purpose of determining the holders entitled to receive
a dividend declared payable in stock of Wellsway, (ii) subdivide the
outstanding shares of the Common Stock, (iii) combine the outstanding
shares of the Common Stock into a smaller number of shares, or (iv) issue
by reclassification of the Common Stock any shares of stock of Wellsway,
the Conversion Price shall be adjusted so that the holder of each Debenture
shall thereafter be entitled to receive upon the conversion of such
Debenture the number of shares of Common Stock of Wellsway which he would
own or be entitled to receive after the happening of any of the events
described above had such Debenture been converted immediately prior to the
happening of such event, subject to such further adjustment as may be
required by application of the provisions of this Section 6 and Section 10
hereof prior to the date of conversion.
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(b) Whenever Wellsway shall permit any person to subscribe for or
purchase shares of the Common Stock at a price per share less than the
Conversion Price, the provisions of Section 10 hereto shall apply.
(c) Anything in the provisions of sub-paragraph (b) of this Section 6
to the contrary notwithstanding, if Wellsway shall take a record of the
holders of the Common Stock for the purpose of determining the holders
entitled to receive any dividend, subscription or purchase rights and
shall, thereafter and before the delivery to shareholders of any such
dividend, subscription or purchase rights, legally rescind the
authorization or abandon its plan to pay or deliver such dividend,
subscription or purchase rights, then no adjustment in the number of shares
of the Common Stock or of other stock of Wellsway into which each Debenture
is convertible shall be required by reason of the taking of such record.
(d) Anything in the provisions of sub-paragraph (b) of this Section 6
to the contrary notwithstanding, no adjustment in the number of shares of
the Common Stock into which each Debenture is convertible shall be required
under such provisions as a result of any rights given to employees of the
Company, Wellsway or any of its subsidiaries under any employee stock
option or purchase plan now in existence, or hereinafter adopted with the
consent of the Purchaser.
(e) Whenever any adjustment is required in respect of the shares of
the Common
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Stock into which each Debenture is convertible, the Company
shall forthwith (i) cause to be prepared a statement describing in
reasonable detail the adjustment and the method of calculation used, and
certified by an independent firm of public accountants of recognized
standing selected by the Board of Directors of the Company, and (ii) cause
a copy of such notice to be mailed to the Purchaser at the close of
business on the day preceding the effective date of such adjustment.
(f) No fractions of shares of stock of any class of Wellsway at any
time authorized shall be issuable upon any conversion of the Debentures. In
lieu of any such fraction of a share, the person entitled to an interest in
respect of such fraction shall be entitled, as determined from time to time
by the Board of Directors of Wellsway, to either (i) a scrip certificate
for a fraction of a share, with such terms and conditions as the Board of
Directors of Wellsway shall prescribe, or (ii) the cash equivalent of such
fraction based upon the Conversion Price per share thereof on the date of
such conversion.
(g) The number of shares of the Common Stock outstanding at any time
shall, for the purposes of sub-paragraph (b) of this Section 6 include
shares of the Common Stock issuable in respect of outstanding scrip
certificates at the time still exchangeable for full shares of the Common
Stock.
(h) Wellsway shall at all times reserve and keep available out of its
authorized but unissued stock of each class the full number of shares of
such stock into which all
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Debentures from time to time outstanding are convertible.
(i) Conversion may be required by the Purchaser at any time before the
60th day subsequent to written notice of redemption pursuant to Section 9
of each Debenture and until a particular Debenture shall have been chosen
for redemption by the Company.
7. Key Man Insurance. The Company will, as long as it is bound by the terms
of Section 3 hereof, maintain Key Man Life Insurance policies in the amount of
$125,000.00 each on the lives of Xxxxxxx Xxxxxxx and Xxxxx Xxxxxxxx. The
proceeds of any such insurance are to be assigned to the Purchaser. Within 30
days after it receives written notice of the death of either Xx. Xxxxxxx or Xx.
Xxxxxxxx, the Purchaser shall have the option of requiring the Company to redeem
from the insurance proceeds (and only from the insurance proceeds) any or all
Debentures remaining outstanding, or after conversion a portion, or, if there
are sufficient funds, all of the shares of Common Stock purchased by the
Purchaser pursuant to its Conversion Privilege. The purchase price for shares of
Common Stock to be redeemed pursuant to this Section 7 shall be an amount per
share equal to the purchase price therefor paid by the Purchaser. Such optional
redemption shall be exercised by notice, in writing to the Company, which notice
shall specify the date of redemption (which date shall not be more than 10 days
after receipt of such notice, and in no event later than such 30-day period) and
the amount of Debentures or number of shares of Common Stock to be redeemed.
Upon the written request of the Purchaser, the Company will designate the
Purchaser the beneficiary of such insurance and make such ar-
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rangements and execute such documents as are necessary to give effect to the
intent of this Section 7. In no event, however, shall the Purchaser receive
greater than the sums due on all outstanding Debentures held by it and the fair
market value of its shares as hereinafter defined.
8. Registration Rights. The Purchaser shall have the following registration
rights with respect to the Debentures and any shares of Common Stock purchased
pursuant to its Conversion Privilege, Adjustment Shares and Additional Shares as
hereinafter defined ("Shares(s)").
(a) Restrictions on Transferability. Neither the Shares nor the
Debentures shall be transferable, except upon the conditions specified in
this Section 8, which conditions are intended to insure compliance with the
provisions of the Securities Act of 1933 in the case of Section 8(k)
hereof, to assist in an orderly distribution. The Purchaser will cause any
proposed transferee of any Debenture and/or Shares to take and hold the
Debentures and/or Shares subject to the provisions and upon the conditions
specified in this Section 8.
(b) Certain Definitions. As used in this Section 8, the following
terms shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act of 1933.
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"Restricted Securities" shall mean the securities of the Company and
the securities of Wellsway required to bear or bearing the legend set forth
in Section 8(c) hereof.
"Registrable Securities" shall mean (i) the Debentures; (ii) the
Shares and (iii) any securities issued in respect of Shares pursuant to any
stock split, stock dividend, recapitalization or similar event.
The terms "Register", "Registered" and "Registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act of 1933 and applicable rules and
regulations thereunder, and the declaration or ordering of the
effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses including, without
limitation, all registration and filing fees, printing expenses, blue sky
fees and expenses, and the expense of any special audits to or required by
any such registration (but excluding the compensation of regular employees
of the Company, which shall be paid in any event by the Company).
"Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities and all fees
and disbursements of counsel for any Holder.
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"Holder" shall mean any holder of the outstanding Shares or
Registrable Securities which have not been sold to the public.
(c) Restrictive Legend. Each Debenture and each certificate
representing (i) the Shares, or (ii) other securities issued in respect of
the Shares pursuant to any stock split, stock dividend, recapitalization,
merger, consolidation or similar event, shall (unless otherwise permitted
or unless the securities evidenced by such certificate shall have been
registered under the Securities Act of 1933) be stamped or otherwise
imprinted with a legend in the following form (in addition to any legend
required under applicable state securities laws):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD
OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT AND
ANY APPLICABLE STATE SECURITIES LAW OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.
Upon request of Purchaser, the Company or Wellsway shall remove the
foregoing legend from the Debentures and/or the certificate or issue to
Purchaser a new Debenture and/or certificate therefor free of any transfer
legend, if, with such request, the Company (or Wellsway, as the case may
be) shall have received either the opinion referred to in Section 8(d)(i)
hereof or the "no-action" letter referred to in Section 8(d)(ii) hereof, or
a combination of subsections (i) and (ii) thereof to the effect that any
transfer by Purchaser
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of the securities evidenced by such Debenture and/or certificate will not
violate the Securities Act of 1933.
(d) Notice of Proposed Transfers. Purchaser agrees to comply in all
respect with the provisions of this Section 8(d). At least fifteen days
prior to any proposed transfer of any Restricted Securities (other than
under circumstances described in Section 8(g) hereof), Purchaser shall give
written notice to the Company (or to Wellsway in the case of a proposed
transfer of the Shares) of Purchaser's intention to effect such transfer.
Each such notice shall describe the manner and circumstances of the
proposed transfer in sufficient detail, and shall be accompanied by either
(i) a written opinion of legal counsel which shall be reasonably
satisfactory in form and substance to the Company's counsel, to the effect
that the proposed transfer of the Restricted Securities may be effected
without Registration under the Securities Act of 1933, or (ii) a
"no-action" letter from the Commission to the effect that the distribution
of such securities without Registration under the Securities Act of 1933
will not result in a recommendation by the staff of the Commission that
action be taken with respect thereto, or a combination of subsections (i)
and (ii) immediately herein-above, whereupon the Purchaser shall be
entitled to transfer such Restricted Securities in accordance with the
terms of the notice delivered to the Company or Wellsway. Each certificate
evidencing the Restricted Securities transferred as above provided shall
bear the appropriate restrictive legend set forth in Section 8(c) above,
except that such certificate shall not bear such restrictive legend if the
opinion of counsel referred to above is to the further effect that such
legend is not required in order
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to establish compliance with the Securities Act of 1933.
(e) Company Registration.
(i) If, after the date hereof, Wellsway shall determine to
Register any of its currently non-registered securities either for its
own account or the account of a security holder, or holders exercising
their respective demand Registration rights, other than: (i) a
Registration relating solely to employee benefit plans, (ii) a
Registration relating solely to a business combination whether under
Commission Rule 145 transaction or otherwise; (iii) the 600,000 shares
to be registered to the account of certain security holders of
Wellsway pursuant to the Acquisition Agreement under which Wellsway
became the parent company for the Company; or (iv), a Registration on
any registration form which does not permit secondary sales or does
not include substantially the same information as would be required to
be included in a registration statement covering the sale of
Registrable Securities, or unless the Managing Underwriter shall
object to the inclusion of the Purchaser's Registrable Securities in
the offering, the Company shall, or shall cause Wellsway to:
(A) promptly give the Purchaser written notice thereof
(which shall include a list of the jurisdictions in which
Wellsway intends to attempt to qualify such securities under the
applicable blue sky or other
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state securities laws); and
(B) include in such Registration (and any related
qualification under blue sky laws or other compliance), and in
any underwriting involved therein, all the Registrable Securities
specified in a written request or requests, made by the Purchaser
within fifteen (15) days after receipt of the written notice
described in clause (i)(A) above, except as set forth in Section
8(e)(ii) below. Such written request may specify all or a part of
the Purchaser's Registrable Securities.
(ii) Underwriting. If the registration of which the Company or
Wellsway gives notice is for a registered public offering involving an
underwriting, the Company or Wellsway shall so advise Purchaser as a
part of the written notice given pursuant to Section 8(e)(i)(A). In
such event the right of the Purchaser to Registration pursuant to
Section 8(e) shall be conditioned upon the Purchaser's participation
in such underwriting and the inclusion of the Purchaser's Registrable
Securities in the underwriting to the extent provided herein. If
Purchaser proposes to distribute its securities through such
underwriting, Purchaser shall (together with Wellsway and other
shareholders distributing their securities through such underwriting)
enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for underwriting by Wellsway.
Notwith-
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standing any other provision of this Section 8(e), if the
underwriter determines that marketing factors require a limitation on
the number of shares to be underwritten, the underwriter may (subject
to the allocation priority set forth below) limit the number of
Registrable Securities to be included in the Registration and
underwriting to such amount as the underwriter may deem appropriate.
The Company or Wellsway shall so advise Purchaser, and the number of
shares of securities that are entitled to be included in the
Registration and underwriting shall be allocated as follows: The
number of shares that may be included in the Registration and
underwriting shall be allocated among all selling shareholders, other
than Wellsway, in proportion, as nearly as practicable, to the
respective amounts of Registrable Securities so held. If the Purchaser
disapproves of the terms of any such underwriting, it may elect to
withdraw therefrom by written notice to the Company or Wellsway and
the underwriter. Any Registrable Securities or other securities
excluded or withdrawn from such underwriting shall be withdrawn from
such Registration.
(f) Expenses of Registration. All Registration Expenses incurred in
connection with any Registration, qualification or compliance pursuant to
this Section 8 shall be borne by the Company or Wellsway, and all Selling
Expenses shall be borne by the holders of the securities so registered pro
rata on the basis of the number of their shares so registered.
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(g) Registration Procedures. In the case of each registration effected
pursuant to Section 8, the Company or Wellsway will keep Purchaser advised
in writing as to the initiation of such Registration and as to the
completion thereof. At its expense, the Company shall, or shall cause
Wellsway to:
(i) Keep such Registration effective for a period of 90 days or
until the Purchaser has completed the distribution described in the
registration statement relating thereto, whichever first occurs;
(ii) Furnish such number of prospectuses and other documents
incident thereto as Purchaser from time to time may reasonably
request.
(h) Indemnification.
(i) The Company will indemnify Purchaser, each of its officers,
directors and employees, and each person controlling or controlled by
the Purchaser, with respect to which Registration, qualification or
compliance has been effected pursuant to this Section 8, against all
claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any prospectus,
offering circular or other document (including any related
registration statement, notifi-
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cation or the like) incident to any such Registration, qualification
or compliance, or based on any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, or any violation by the
Company or Wellsway of any securities act or any rule or regulation
thereunder applicable to the Company or Wellsway and relating to
action or inaction required of the Company or Wellsway in connection
with such Registration, qualification or compliance and will reimburse
the Purchaser, each of its officers, directors and employees and each
person controlling or controlled by the Purchaser, for any legal and
any other expenses reasonably incurred in connection with
investigating and/or defending any such claim, loss, damage, liability
or action, provided that the Company will not be liable in any such
case to the extent that any such claim, loss, damage, liability or
expense arises out of or is based on any untrue statement or omission
resulting from written information furnished by Purchaser and stated
to be specifically for use in such Registration, qualification or
compliance.
(ii) The Purchaser will, if Registrable Securities held by the
Purchaser are included in the securities as to which such
Registration, qualification or compliance is being effected, indemnify
the Company, Wellsway and each of their respective directors and
officers, each person who controls or is controlled by
the Company or Wellsway, each other Holder and each of their officers,
directors
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and employees, and each person controlling or controlled by such
Holder, against all claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained
in any such registration statement, prospectus, offering circular or
other document, or any omission (or alleged omission) to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the Company
and/or Wellsway and such Holders, directors, officers, partners,
persons, or control persons for any legal or any other expenses
reasonably incurred in connection with investigating or defending any
such claim, loss, damage liability or action, in each case to the
extent, but only to the extent, that such untrue statement (or alleged
untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other
document in reliance upon and in conformity with written information
furnished by the Purchaser and stated to be specifically for use
therein.
(iii) Each party entitled to indemnification under this Section
8(h) ("Indemnified Party") shall give notice to the party required to
provide indemnification ("Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which
indemnity may be sought, and shall permit the Indemnifying Party to
assume the defense of any such claim or any litigation resulting
therefrom, provided that counsel for the Indemnifying Party, who shall
conduct the defense of such claim or any litigation resulting
therefrom, shall be
-24-
approved by the Indemnified Party (whose approval shall not be
unreasonably withheld), and the Indemnified Party may participate in
such defense at such party's expense, and provided further that the
failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations under this
Section 8. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement which
does not include as an unconditional term thereof the giving by the
claimant or plaintiff, to such Indemnified Party, of a release from
all liability in respect to such claim or litigation. Each Indemnified
Party shall furnish such information regarding itself or the claim in
question as an Indemnifying Party may reasonably request in writing
and as shall be reasonably required in connection with defense of such
claim and litigation resulting therefrom.
(i) Information by Purchaser. Purchaser shall furnish such information
regarding Purchaser and the distribution proposed by Purchaser as the
Company or Wellsway may reasonably request in writing and as shall be
reasonably required in connection with any Registration, qualification or
compliance referred to in this Section 8.
(j) Transfer or Assignment of Registration Rights. The rights to cause
Wellsway to Register securities granted under Section 8(e) may be
transferred or assigned to a
-25-
transferee or assignee of any Registrable Securities, provided Wellsway is
given written notice at the time of or within a reasonable time after said
transfer or assignment, stating the name and address of said transferee or
assignee and identifying the Registrable Securities transferred or assigned
or the securities with respect to which such Registration rights are being
transferred or assigned, and provided further that the transferee or
assignee of such rights is not deemed by the Board of Directors of the
Company, in its reasonably judgment, to be a competitor of the Company; and
provided further that the transferee or assignee of such rights assumes the
obligations of the Purchaser under this Section 8.
(k) "Market Stand-off" Agreement. The Purchaser agrees, if requested
by the Company or Wellsway and an underwriter of Common Stock (or other
securities) of Wellsway, not to sell or to otherwise transfer or dispose of
any Common Stock (or other securities) of Wellsway held by it during the
ninety (90) day period following the effective date of a registration
statement of Wellsway filed under the Securities Act of 1933, except for
Shares which are the subject to such registration statement.
9. Representations and Warranties of the Purchaser. The Purchaser
represents and warrants to the Company as follows:
(a) It and/or its officers or employees are experienced in evaluating
and investing in newly organized, high technology companies such as the
Company.
-26-
(b) It presently intends to acquire the Debentures, and pursuant to
its Conversion Privileges, Company Shares for investment for its own
account and not with the view to, or for resale in connection with, any
distribution thereof. It understands that neither the Debentures nor the
Shares have not been registered under the Securities Act of 1933 by reason
of the specified exemption from the registration provisions of such
Securities Act which depends upon, among other things, the bona fide nature
of its investment as expressed herein.
(c) It has had an opportunity to discuss the Company's business,
management and financial affairs with its management and has had the
opportunity to review the Company's facilities.
10. Anti-dilution Protection.
(a) The Purchaser shall receive additional shares of Common Stock
("Additional Shares"), upon conversion or thereafter, in the event Wellsway
issues Common Stock at any time theretofore or thereafter for a
consideration (as determined in good faith by Wellsway's Board of
Directors) ("New Price") less than Forty-Seven cents ($0.47) per Share
("Original Price") for Shares purchased upon conversion prior to
______________, 1991; Sixty cents ($0.60) per Share ("Original Price") for
Shares purchased upon conversion after _______________, 1991 but prior to
_______________, 1992; and Eighty-Two cents ($0.82) per Share ("Original
Price") for Shares purchased after
-27-
_____________, 1993 but prior to _______________, 1994.
(b) The number of such Additional Shares to be issued to the Purchaser
shall be equal to the number obtained by (i) subtracting the New Price from
the applicable Original Price, (ii) multiplying such number thereby
obtained by the number of shares purchased at such Original Price and held
by the Purchaser or otherwise obtainable by conversion at that time, and
then (iii) dividing that product by the New Price.
(c) For purposes of this provision, the Original Price shall be
adjusted for stock splits, stock dividends, recombinations,
reclassifications and the like, and same shall be applicable to the New
Price as established in Section 10(a).
(d) This section shall not apply to the issuance of Common Stock
through (i) Employee Stock Plans or Employee Incentive Stock Options Plans
or (ii) fringe benefit plans, provided, however, that the total number of
shares excluded from operation of this Section 10 by subsections (i) and
(ii) shall not exceed 25 percent of Wellsway's capitalization outstanding
from time to time on a fully diluted basis.
(e) The provisions of Section 10(a) hereof shall not apply after (i)
the lapse of a period of five years from the execution of this Agreement,
or (ii) the Company completes a public offering of its securities.
-28-
11. Meetings. The Company will provide the Purchaser in a timely manner
with notices, agendas, minutes and other relevant documents pertaining to the
Board of Directors' and Shareholders' meetings. At its option, Purchaser's
representatives will be authorized to attend Board and Shareholder meetings as
non-voting participating guests.
12. Survival of Representations, Warranties, Covenants and Agreements. All
representations and warranties, covenants and provisions in this Agreement or
any certificate or document delivered in connection with this Agreement or
pursuant thereto shall survive the making of the investment provided for herein
and the delivery of the Debentures. Any partial invalidity of the provisions
hereof shall not invalidate the remaining portions hereof.
13. Notices and Demands. Any notices or demands required by this Agreement
shall be in writing and shall be deemed sufficiently given if (i): delivered
personally; (ii) mailed, certified or registered mail, return receipt requested;
or (iii) sent by overnight courier service providing written evidence of
delivery, to the party entitled to such notice or demand at the address set
forth below opposite its name, or at such other address as either party may
notify the other in writing.
IFS INTERNATIONAL, INC. Rensselaer Technology Park
000 Xxxxxx Xxxx
Xxxx, Xxx Xxxx 00000
NEW YORK STATE SCIENCE 00 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
AND TECHNOLOGY FOUNDATION Xxxxxx, Xxx Xxxx 00000
-29-
14. No Oral Modification or Waiver. This Agreement may not be changed,
modified or rescinded orally. Any change, modification or rescission must be in
writing and signed by the Company and the Purchaser or its transferees and
assignees. Any waiver of the provisions of this Agreement shall not be effective
unless made in writing and signed by the person against whom the enforcement of
any such waiver is sought.
15. Construction and Miscellaneous.
(a) Entire Agreement. This Agreement and any Debentures issued
hereunder contain the entire agreement and understanding of the parties.
There are no other understandings, terms, or conditions, oral or written,
and neither party has relied upon any representation, whether oral or
written, express or implied, not contained herein. All prior
understandings, terms, conditions, or agreements are deemed superseded
and/or merged in this Agreement.
(b) Binding Effect. This Agreement shall bind and inure to the benefit
of the parties, their respective successors (by merger, consolidation or
otherwise) and assignees.
(c) Severability. In the event any parts of this Agreement are found
to be void or unenforceable, the remaining provisions of the Agreement
shall nevertheless be binding with the same effect as though the void parts
were deleted.
-30-
(d) Governing Law. This Agreement has been negotiated, executed and
shall be performed in the State of New York and shall be governed by the
laws of that State.
(e) Grammatical Usage. In construing this Agreement, feminine pronouns
shall be substituted for those masculine in form (and vice versa), and
plural terms shall be substituted for singular and singular for plural, in
any place or situation where the context so requires.
(f) Captions. The captions to this Agreement are inserted only for
purposes of convenient reference and in no way define, limit or prescribe
the scope of intent of this Agreement or any part hereof.
(g) Counterparts. This Agreement may be executed in several
counterparts, each of which shall be considered a legal original for all
purposes. Any fully signed counterpart may be introduced into evidence in
any action or proceeding without having to produce the others.
-31-
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their duly authorized officers as of the ___ day of
________________. 1989.
IFS INTERNATIONAL, INC.
By:___________________________
Title:________________________
NEW YORK STATE SCIENCE
AND TECHNOLOGY FOUNDATION
By:___________________________
Title:________________________
-32-
GUARANTY AGREEMENT
WHEREAS, IFS International, Inc., a New York corporation ("IFS"), has made
certain covenants and agreements (collectively, the "Obligations") with the New
York State Science and Technology Foundation, a New York corporation (the
"Foundation"), pursuant to (1) those certain 7.5% Convertible Debentures issued
on _______, 1989 by IFS in favor of the Foundation (the "Debentures) and (2)
that certain Debenture Investment Agreement by and between IFS and the
Foundation dated _________, 1989 (the "Agreement");
WHEREAS, Wellsway Ventures, Inc. (the "Guarantor") is the parent or holding
company of IFS;
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the Guarantor hereby guarantees to the Foundation
the prompt performance by IFS of the Obligations and the payment of any losses,
costs and expenses, including reasonable attorneys' fees incurred by the
Foundation (all the foregoing being herein collectively called "Losses") arising
out of the nonperformance of the Obligations; this Guaranty Agreement being upon
the following terms and conditions:
1. This instrument shall be an absolute and continuing guaranty, and shall
remain in full force and effect for all
periods during which IFS or its successors or assigns has any Obligations under
the Debentures and the Agreement.
2. If Guarantor becomes liable for any obligations of IFS to the Foundation
other than under this Guaranty Agreement,such liability shall not be in any
manner impaired or affected hereby, and the rights of the Foundation hereunder
shall be cumulative of any and all other rights that the Foundation may ever
have against Guarantor. The exercise by the Foundation of any right or remedy
hereunder or under any other instrument, or at law or in equity, shall not
preclude the concurrent or subsequent exercise of any other right or remedy.
3. In the event of default by IFS in the performance of the Obligations,
Guarantor shall, on demand and without further notice, without any notice having
been given to Guarantor previous to such demand of the acceptance by the
Foundation of this Guaranty Agreement, perform any part of the Obligations or
pay any and all losses incurred by the Foundation as a result of such
nonperformance by IFS, and it shall not be necessary for the Foundation, in
order to enforce such performance or payment by Guarantor, first to institute
suit or exhaust its remedies against IFS.
4. Guarantor hereby agrees that its obligations under the terms of this
Guaranty Agreement shall not be released,
diminished, impaired, reduced, or affected by the occurrence of any one or more
of the following events:
(a) Any waiver, change, discharge, amendment, extension, or other
modification of any nature whatsoever to the terms and provisions of the
Debentures and/or the Agreement.
(b) Any neglect, delay, omission, failure or refusal by the Foundation
to take or prosecute any action against IFS for a breach of the Debentures
and/or the Agreement;
(c) Any failure by the Foundation or IFS to notify Guarantor of any
waiver, change, discharge, amendment, extension, or other modification of
any of the terms or provisions of the Debentures and/or the Agreement or a
breach of any nature whatsoever of any of the respective terms or
provisions thereof by either IFS or the Foundation.
(d) The merger or consolidation of IFS into any other corporation.
(e) The insolvency of IFS, any assignment (voluntary or involuntary)
by IFS for the benefit of its creditors, the institution (or subsequent
decree) under any voluntary or involuntary proceedings, or the filing of
any petition under any applicable liquidation, insolvency, reorganization,
bankruptcy or similar debtor relief laws from time to time in effect.
(g) The illegality of the Debentures and/or the Agreement.
5. The provisions of this Guaranty Agreement are binding upon Guarantor and
upon its successors and assigns. Guarantor represents to the Foundation that it
has, or will have, a direct or indirect interest in IFS and Guarantor will
receive direct and indirect material benefits from the performance by IFS of its
Obligations under the terms of the Debentures and the Agreement. Guarantor may
not, without the prior written consent of the Foundation, assign any of its
obligations, rights, liabilities, or duties under this Guaranty Agreement.
6. This Guaranty Agreement is for the benefit of the Foundation and its
successors and assigns, and in the event of a permitted assignment by the
Foundation of the Agreement and/or the Debentures, or any part thereof, or any
of the rights and benefits thereunder, the rights and benefits hereunder may be
transferred therewith.
7. All notices, requests, demands and other communications hereunder shall
be in writing and shall be deemed
3
to have been duly given, if delivered in person, telegraphed, telefaxed or upon
actual receipt if mailed by certified or registered mail, postage prepaid:
If Guarantor, to:
Wellsway Ventures, Inc.
If to the Foundation, to:
New York State Science and Technology Foundation
00 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxx 00000
or such other address as the party to be notified shall have furnished to the
other part in writing.
9. This Guaranty Agreement may be amended or modified only by a written
instrument executed jointly by Guarantor and the Foundation or by their
respective successors or assigns.
10. This Guaranty Agreement is being executed and delivered, and is
intended to be performed, in the State of New York, and the substantive laws of
such state shall govern the validity, construction, enforcement, and
interpretation hereof.
11. If any provision of this Guaranty Agreement is held to be illegal,
invalid, or unenforceable under present or future laws effective during the term
hereof, such provision shall be fully severable; the appropriate term or
provision shall be construed and enforced as if such illegal, invalid, or
unenforceable provision had never comprised a part of this
4
Guaranty Agreement; and the remaining provisions hereof shall remain in full
force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom. Furthermore, in lieu of
such illegal, invalid, or unenforceable provision there shall be added
automatically as a part of this Guaranty Agreement a provision as similar in
terms to such illegal, invalid, or unenforceable provision as may be possible
and be legal, valid and enforceable.
12. This Guaranty Agreement embodies the entire agreement between the
parties and supersedes all prior agreements and understandings, if any, relating
to the subject matter hereof.
13. This Guaranty Agreement shall be binding upon and inure to the benefit
of the Guarantor and the Foundation, and their respective, successors and
assigns.
5
RESTRUCTURING AGREEMENT
Agreement made as of the 6th day of May, 1993 among IFS INTERNATIONAL, INC.
a New York corporation having its principal place of business at Rensselaer
Technology Park, 000 Xxxxxx Xxxx, Xxxx, Xxx Xxxx 00000 ("IFS"); NEW YORK STATE
SCIENCE AND TECHNOLOGY FOUNDATION a New York corporation having its principal
office and place of business at 00 Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxx
Xxxx 00000 ("Foundation"); and WELLSWAY VENTURES, INC. a Delaware corporation
having its principal place of business at
_____________________________________________________ ("Wellsway").
WHEREAS, the Foundation previously purchased IFS's seven and one-half
percent (7.5%) Convertible Debenture in the principal amount of $80,000.00 due
July 6, 1992 (referred to herein as Debenture Number 1); IFS's seven and
one-half percent (7.5%) Convertible Debenture in the principal amount of
$80,000.00 due July 6, 1993 (referred to herein as Debenture Number 2) and IFS's
seven and one-half percent (7.5%) Convertible Debenture in the principal amount
of $90,000.00 due July 6, 1994 (referred to herein as Debenture Number 3). These
Debentures were all issued in accordance with the provisions of a certain
Debenture
-1-
Investment Agreement between the parties dated July 6, 1989, (the
"Debenture Agreement"); and
WHEREAS, Wellsway guaranteed IFS repayment of the Debentures and IFS'
performance of its obligations under the Debenture Agreement pursuant to the
provisions of a certain Guaranty Agreement dated July 6, 1989 (referred to
herein as the ("Guaranty"); and
WHEREAS, upon the request of IFS, the Foundation has agreed to extend and
modify the payment terms of the Debentures and the Foundation has agreed to such
revisions on the terms and conditions set forth herein.
NOW, THEREFORE, in pursuant of said agreement and in consideration of the
mutual promises, covenants and agreements contained herein and other good and
valuable consideration the receipt of which is hereby acknowledged by the
parties, IFS and the Foundation agree as follows:
1. Debenture Number 1 is hereby replaced in its entirety by IFS's Debenture
in the principal amount of One Hundred Three
-2-
Thousand Dollars ($103,000.00) which Debenture shall be designated as Debenture
Number 4 and shall be due and payable July 6, 1995. The other terms and
conditions of Debenture Number 4 are as more fully set forth in said Debenture a
true copy of which is attached hereto and made a part hereof.
2. Debenture Number 2 is hereby be replaced in its entirety by IFS's
Debenture in the principal amount of One Hundred Three Thousand Dollars
($103,000.00) which Debenture shall be designed as Debenture Number 5. Debenture
Number 5 shall be due and payable July 6, 1996. The other terms and conditions
of Debenture Number 5 are as more fully set forth in said Debenture a true copy
of which is attached hereto and made a part hereof.
3. Debenture Number 3 is hereby replaced in its entirety by IFS's Debenture
in the principal amount of One Hundred Fifteen Thousand Eight Hundred
Seventy-five Dollars ($115,875.00) which Debenture shall be designated as
Debenture Number 6. Debenture Number 6 shall be due and payable July 6, 1997.
The other terms and conditions of Debenture Number 6 are as more fully set forth
in said Debenture a true copy of which is attached hereto and made a part
hereof.
-3-
4. IFS hereby warrants and covenants to the Foundation that as of the date
of this Agreement there are no disputes, offsets, claims or counter-claims of
any kind or nature whatsoever under the Debentures or the Debenture Agreement or
on the documents executed in connection herewith or therewith or the obligations
represented or evidenced thereby.
5. Wellsway hereby ratifies and reaffirms the Guaranty and covenants that
the terms of such Guaranty shall remain in full force and effect and shall apply
to Debentures Numbered 4, 5 and 6 and the Debenture Agreement as modified
pursuant to the terms of this Restructuring Agreement.
6. Any capitalized term not expressly defined herein shall have the meaning
ascribed to it in the Debenture Agreement.
7. All references in the Debenture Agreement to the Debentures shall be
deemed to include Debentures Numbered 4, 5 and 6 attached hereto.
8. All other terms of the Debenture Agreement that are not specifically
changed by this Restructuring Agreement remain in full
-4-
force and effect and shall apply to the new Debentures. Any reference in the
Debenture Agreement to the term "Debentures" is hereby deemed to include the
Debentures 4, 5 and 6 attached hereto.
9. This Restructuring Agreement may be executed in one or more
counterparts, each of which shall be considered an original for all purposes,
but all of which together shall constitute one and the same instrument.
10. This Restructuring Agreement has been negotiated, executed and shall be
performed in the State of New York and shall be governed by and construed in
accordance with the laws of New York State, without regard to principals of
conflict of laws. This Agreement shall be binding upon and inure to the benefit
of IFS, Wellsway, the Foundation and their respective successors and assigns.
11. No provision of this Agreement may be amended, modified, supplemented,
changed, waived, discharged or terminated unless each party consents thereto in
writing.
IN WITNESS WHEREOF, the parties hereto have caused this
-5-
instrument to be executed by their duly authorized officers as of the date first
set above.
IFS INTERNATIONAL, INC.
By:_____________________________
Its:
NEW YORK STATE SCIENCE AND
TECHNOLOGY FOUNDATION
By:_____________________________
Its:
WELLSWAY VENTURES, INC.
By:_____________________________
Its:
-5-
SECOND RESTRUCTURING AGREEMENT
Agreement made as of the 30th day of April, 1995 among IFS INTERNATIONAL,
INC. a New York corporation having its principal place of business at Rensselaer
Technology Park, 000 Xxxxxx Xxxx, Xxxx, Xxx Xxxx 00000 ("IFS"); NEW YORK STATE
SCIENCE AND TECHNOLOGY FOUNDATION a New York corporation having its principal
office and place of business at 00 Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxx
Xxxx 00000 ("Foundation"); and WELLSWAY VENTURES, INC. a Delaware corporation
having its principal place of business at 000 Xxxxxx Xxxx, Xxxx, Xxx Xxxx 00000
("Wellsway").
WHEREAS, the Foundation previously purchased IFS's seven and one-half
percent (7.5%) Convertible Debenture in the principal amount of $80,000.00 due
July 6, 1992 (referred to herein as Debenture Number 1); IFS's seven and
one-half percent (7.5%) Convertible Debenture in the principal amount of
$80,000.00 due July 6, 1993 (referred to herein as Debenture Number 2) and IFS's
seven and one-half percent (7.5%) Convertible Debenture in the principal amount
of $90,000.00 due July 6, 1994 (referred to herein as Debenture Number 3). These
Debentures were all issued in accordance with the provisions of a certain
Debenture Investment
-1-
Agreement between the parties dated July 6, 1989, (the "Debenture Agreement");
and
WHEREAS, Wellsway guaranteed IFS's repayment of the Debentures and IFS's
performance of its obligations under the Debenture Agreement pursuant to the
provisions of a certain Guaranty Agreement dated July 6, 1989 (referred to
herein as the ("Guaranty"); and
WHEREAS, upon the request of IFS, the Foundation agreed to extend and
modify the payment terms of the Debentures on the terms and conditions set forth
in a certain Restructuring Agreement dated as of May 6, 1993 ("First
Restructuring Agreement"). IFS issued Debentures numbered 4, 5 and 6 pursuant to
the First Restructuring Agreement to replace Debentures numbered 1, 2 and 3; and
WHEREAS, upon the request of IFS, the Foundation has agreed to convert
$71,875 of the principal amount outstanding under Debentures numbered 4, 5, 6
(as defined in the First Restructuring Agreement) into shares of IFS's common
stock; agreed to waive all accrued interest on Debentures numbered 4, 5 and 6
from May 6, 1993 to April 30, 1995; and agreed to restructure the payment terms
of
-2-
the remaining principal balance of Debentures numbered 4, 5 and 6 upon the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements contained herein and other good and valuable consideration, the
receipt of which is hereby acknowledged by the parties, IFS and the Foundation
agree as follows:
1. A portion of the total principal amount of the Debentures equal to
$71,875 is hereby converted into 259,673 shares of Wellsway Ventures, Inc.
$.00001 par value common stock.
2. The Foundation hereby waives its right to receive interest accrued on
Debentures numbered 4, 5 and 6 from May 6, 1993 through April 30, 1995 in the
amount of $37,187.52.
3. Debenture Number 4 is hereby replaced in its entirety by IFS's Debenture
in the principal amount of Eighty Thousand Dollars ($80,000.00), which Debenture
shall be designated as Debenture Number 7 and shall be due and payable April 30,
1998. The other terms and conditions of Debenture Number 7 are as more fully set
forth in said Debenture, a true copy of which is attached hereto
-3-
and made a part hereof.
4. Debenture Number 5 is hereby replaced in its entirety by IFS's Debenture
in the principal amount of Eighty Thousand Dollars ($80,000.00), which Debenture
shall be designated as Debenture Number 8. Debenture Number 8 shall be due and
payable April 30, 1999. The other terms and conditions of Debenture Number 8 are
as more fully set forth in said Debenture, a true copy of which is attached
hereto and made a part hereof.
5. Debenture Number 6 is hereby replaced in its entirety by IFS's Debenture
in the principal amount of Ninety Thousand Dollars ($90,000.00), which Debenture
shall be designated as Debenture Number 9. Debenture Number 9 shall be due and
payable April 30, 2000. The other terms and conditions of Debenture Number 9 are
as more fully set forth in said Debenture, a true copy of which is attached
hereto and made a part hereof.
6. IFS hereby warrants and covenants to the Foundation that as of the date
of this Agreement there are no disputes, offsets, claims or counter-claims of
any kind or nature whatsoever under the Debentures or the Debenture Agreement or
on the documents executed
-4-
in connection herewith or therewith or the obligations represented or evidenced
thereby.
7. Wellsway hereby ratifies and reaffirms the Guaranty and covenants that
the terms of such Guaranty shall remain in full force and effect and shall apply
to Debentures numbered 7, 8 and 9 and to the Debenture Agreement as modified
pursuant to the terms of this Second Restructuring Agreement.
8. Any capitalized term not expressly defined herein shall have the meaning
ascribed to it in the Debenture Agreement.
9. All references in the Debenture Agreement to the Debentures shall be
deemed to include Debentures numbered 7, 8 and 9 attached hereto.
10. All other terms of the Debenture Agreement that are not specifically
changed by this Restructuring Agreement remain in full force and effect and
shall apply to the new Debentures. Any reference in the Debenture Agreement to
the term "Debentures" is hereby deemed to include Debentures 7, 8 and 9 attached
hereto.
-5-
11. This Restructuring Agreement may be executed in one or more
counterparts, each of which shall be considered an original for all purposes,
but all of which together shall constitute one and the same instrument.
12. This Restructuring Agreement has been negotiated, executed and shall be
performed in the State of New York and shall be governed by and construed in
accordance with the laws of New York State, without regard to principles of
conflict of laws. This Agreement shall be binding upon and inure to the benefit
of IFS, Wellsway, the Foundation and their respective successors and assigns.
13. No provision of this Agreement may be amended, modified, supplemented,
changed, waived, discharged or terminated unless each party consents thereto in
writing.
-6-
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their duly authorized officers as of the date first set above.
IFS INTERNATIONAL, INC.
By:_____________________________
Its:
NEW YORK STATE SCIENCE AND
TECHNOLOGY FOUNDATION
By:_____________________________
Its:
WELLSWAY VENTURES, INC.
By:_____________________________
Its:
-7-
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR
OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THE SECURITIES UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAW OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
7.5% CONVERTIBLE DEBENTURE
Due: April 30, 1998 No. 7
$80,000.00 April 30, 1995
FOR VALUE RECEIVED, IFS INTERNATIONAL, INC. (hereinafter called "Borrower")
a New York Corporation with its principal office and place of business at
Rensselaer Technology Park, 000 Xxxxxx Xxxx, Xxxx, Xxx Xxxx 00000, promises to
pay to the order of NEW YORK STATE SCIENCE AND TECHNOLOGY FOUNDATION, 00
Xxxxxxxxxx Xxxxxx, Xxxxxx, Xxx Xxxx 00000 (hereinafter called "Holder") Eighty
Thousand and 00/100 Dollars ($80,000.00) at 00 Xxxxxxxxxx Xxxxxx, Xxxxxx, Xxx
Xxxx 00000 or at such other address as the Holder shall designate in writing,
with interest at the rate of seven and one-half percent (7.5%) per annum on the
outstanding balance as follows:
1. Due Date. The outstanding principal amount of this Debenture, together
with all accrued and unpaid interest thereon shall be due on April 30, 1998
unless sooner accelerated by the Holder (see paragraph 7) or redeemed by the
Borrower (see paragraph 9).
2. Interest Accrual. Interest on all sums advanced will be accrued and
compounded quarterly from the date of issuance to April 30, 1996 and the total
accumulated compounded interest due on that date will thereafter be paid in
accordance with paragraph 3 below.
3. Interest Payments. Beginning May 1, 1996, and on the
-1-
like day of each July, October, January, and April thereafter, accrued and
unpaid interest on the sum of (i) the principal balance outstanding and (ii) the
unpaid balance of deferred interest determined pursuant to paragraph 2 above
will be payable quarterly. In addition to such interest payment, Borrower shall
pay when such interest payment is due one eighth (1/8) of the amount of interest
determined pursuant to paragraph 2. A delinquency charge of four percent (4%)
(plus collection fees) will be immediately due and payable on the unpaid
principal and interest if such principal and/or interest is not paid on the date
it is due.
4. Issuance as Part of Series. This Debenture is one of a duly authorized
issue of seven and one-half percent (7.5%) Convertible Debentures due 1998
through 2000 and so designated. The Debentures were issued under and pursuant to
a Debenture Investment Agreement dated as of July 6, 1989, as modified pursuant
to the terms of a certain Restructuring Agreement dated as of May 6, 1993
("First Restructuring Agreement") and as further modified pursuant to a certain
second restructuring agreement dated as of April 30, 1995 ("Second Restructuring
Agreement"). The Debenture Investment Agreement as so modified by the First
Restructuring Agreement and the Second Restructuring Agreement is hereinafter
called the "Agreement". The Agreement has been duly executed by the Borrower and
the Holder and the terms and provisions of which are applicable to and
includable in this Debenture as if set forth herein and constitute a description
of the respective rights, limitation or rights, obligations, duties and
immunities of the Borrower, the Holder and all subsequent Holders of the
Debentures.
5. Registration and Transfer. This Debenture shall be registered in the
Holder's name on the books of the Borrower and may be transferred only by
delivery to a subsequent Holder and registration in the name of such subsequent
Holder on the books of the Borrower. This Debenture shall continue to be subject
to successive transfers and registrations but payment of any obligation
hereunder to the then registered Holder shall constitute full satisfaction of
the obligation represented by such payment.
6. Conversion Privileges. Subject to the provisions of the Agreement, the
Holder of this Debenture, may convert it into shares of common stock of Wellsway
Ventures, Inc. ("Wellsway"), a Delaware corporation which is the parent or
holding company of the Borrower at any time with seven days' prior notice to the
Borrower. This
-2-
Debenture delivered to the Borrower shall command conversion to
common stock of Wellsway in accordance with the prices in the following table,
subject to the provisions of Section 5, 6 and 10 of the Agreement:
Price of
Period Common Stock
------ ------------
April 30, 1995 - April 30, 1997 $.42 per share
May 1, 1997 - April 30, 1998 $.574 per share
7. Acceleration by Holder. The entire unpaid principal, deferred interest
and accrued interest shall become due and payable, at the option of the Holder,
upon the happening of any of the following (Event(s) of Default):
(a) If the Borrower defaults in the payment of any sum due hereunder
or under the other Debentures or under the Agreement, and such default is
not cured within five (5) business days from the date the Holder gives
written notice of default to the Borrower.
(b) If any judgment in excess of Ten Thousand and 00/100 Dollars
($10,000.00) is entered against the Borrower and such judgment is not
satisfied of record with ten (10) days after written notice from the
Holder, or if the Borrower fails to file an appeal from such judgment and
provide a bond sufficient to pay the same or otherwise obtain a stay of
enforcement of such judgment within ten (10) days after notice from the
Holder.
(c) In the event the Borrower makes a general assignment for the
benefit of creditors, is subject to a proceeding under any bankruptcy or
insolvency laws, has a receiver appointed for all or substantially all of
its assets, or suffers an acceleration of or warrant of attachment for any
other indebtedness in excess of $10,000, and fails to pay any such
indebtedness within ten (10) days after written notice from the Holder or,
in the case of any involuntary bankruptcy proceedings, fails to secure a
discharge or dismissal of such proceedings within sixty (60) days after it
is commenced.
-3-
(d) If any of the Borrower's covenants in the Agreement are not
performed or complied with within ten (10) days after written notice of
breach of covenant from any Holder of any Debenture issued under the
Agreement.
(e) If any of the Borrower's representations and warranties in the
Agreement prove to have been materially false when made.
(f) In the event of destruction or condemnation of Borrower's premises
and failure of the Borrower to continue its business at a new location
within a reasonable time after such destruction or condemnation.
8. No Waiver. No delay by any Holder in exercising and no failure or
omission to exercise and no single or partial exercise of any right or power
hereunder shall preclude other or further exercise hereof or the exercise of any
other right or power by the Holder of any debenture or of any subsequent Holder
thereof.
9. Redemption by Borrower. Subject to the Holder's rights under Section 6,
hereof, this Debenture is subject to call or redemption by the Borrower at any
time after one year from the date hereof on sixty (60) days' written notice to
the Holder for Eighty Thousand and 00/100 Dollars ($80,000.00) plus all unpaid
accrued interest. If less than all of the Debentures are to be called, the
specific Debenture to be called will first be the Debenture due in 1998, then
the Debenture due in 1999, and finally the Debenture due in 2000.
10. Attorneys' Fees. If this Debenture is not paid in accordance with its
terms, the Holder may charge and Borrower must pay reasonable attorneys fees to
the Holder should this debenture be referred to counsel for collection.
11. Construction and Miscellaneous. The provisions of this Debenture and of
the Agreement shall bind and inure to the benefit of the Borrower, the Holder
and their respective successors and assigns, including any subsequent Holders.
This Debenture shall be construed in accordance with the laws of the State of
New York. Any modification of this Debenture must be in writing and signed by
both the Borrower and the Holder in order to become binding. No purported waiver
of any of the provisions of this Debenture shall
-4-
be enforceable unless contained in a writing signed by or on behalf of the party
sought to be charged with any such waiver. The captions or paragraph headings of
this Debenture are for convenient reference only and in no way define, limit or
prescribe the meaning and interest of the various provisions hereof.
IN WITNESS WHEREOF, IFS International, Inc. has caused its corporate seal
to be hereto affixed and this Debenture to be signed by its duly authorized
officer the day and year first written hereinabove.
(SEAL) IFS INTERNATIONAL, INC.
By:__________________________
Attest
---------------------------
Secretary
-5-
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR
OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THE SECURITIES UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAW OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
7.5% CONVERTIBLE DEBENTURE
Due: April 30, 1999 No. 8
$80,000.00 April 30, 1995
FOR VALUE RECEIVED, IFS INTERNATIONAL, INC. (hereinafter called "Borrower")
a New York Corporation with its principal office and place of business at
Rensselaer Technology Park, 000 Xxxxxx Xxxx, Xxxx, Xxx Xxxx 00000, promises to
pay to the order of NEW YORK STATE SCIENCE AND TECHNOLOGY FOUNDATION, 00
Xxxxxxxxxx Xxxxxx, Xxxxxx, Xxx Xxxx 00000 (hereinafter called "Holder") Eighty
Thousand and 00/100 Dollars ($80,000.00) at 00 Xxxxxxxxxx Xxxxxx, Xxxxxx, Xxx
Xxxx 00000 or at such other address as the Holder shall designate in writing,
with interest at the rate of seven and one-half percent (7.5%) per annum on the
outstanding balance as follows:
1. Due Date. The outstanding principal amount of this Debenture, together
with all accrued and unpaid interest thereon shall be due on April 30, 1999
unless sooner accelerated by the Holder (see paragraph 7) or redeemed by the
Borrower (see paragraph 9).
2. Interest Accrual. Interest on all sums advanced will be accrued and
compounded quarterly from the date of issuance to April 30, 1996 and the total
accumulated compounded interest due on that date will thereafter be paid in
accordance with paragraph 3 below.
3. Interest Payments. Beginning May 1, 1996, and on the
-1-
like day of each July, October, January, and April thereafter, accrued and
unpaid interest on the sum of (i) the principal balance outstanding and (ii) the
unpaid balance of deferred interest determined pursuant to paragraph 2 above
will be payable quarterly. In addition to such interest payment, Borrower shall
pay when such interest payment is due one eighth (1/8) of the amount of interest
determined pursuant to paragraph 2. A delinquency charge of four percent (4%)
(plus collection fees) will be immediately due and payable on the unpaid
principal and interest if such principal and/or interest is not paid on the date
it is due.
4. Issuance as Part of Series. This Debenture is one of a duly authorized
issue of seven and one-half percent (7.5%) Convertible Debentures due 1998
through 2000 and so designated. The Debentures were issued under and pursuant to
a Debenture Investment Agreement dated as of July 6, 1989, as modified pursuant
to the terms of a certain Restructuring Agreement dated as of May 6, 1993
("First Restructuring Agreement") and as further modified pursuant to a certain
second restructuring agreement dated as of April 30, 1995 ("Second Restructuring
Agreement"). The Debenture Investment Agreement as so modified by the First
Restructuring Agreement and the Second Restructuring Agreement is hereinafter
called the "Agreement". The Agreement has been duly executed by the Borrower and
the Holder and the terms and provisions of which are applicable to and
includable in this Debenture as if set forth herein and constitute a description
of the respective rights, limitation or rights, obligations, duties and
immunities of the Borrower, the Holder and all subsequent Holders of the
Debentures.
5. Registration and Transfer. This Debenture shall be registered in the
Holder's name on the books of the Borrower and may be transferred only by
delivery to a subsequent Holder and registration in the name of such subsequent
Holder on the books of the Borrower. This Debenture shall continue to be subject
to successive transfers and registrations but payment of any obligation
hereunder to the then registered Holder shall constitute full satisfaction of
the obligation represented by such payment.
6. Conversion Privileges. Subject to the provisions of the Agreement, the
Holder of this Debenture, may convert it into shares of common stock of Wellsway
Ventures, Inc. ("Wellsway"), a Delaware corporation which is the parent or
holding company of the Borrower at any time with seven days' prior notice to the
Borrower. This
-2-
Debenture delivered to the Borrower shall command conversion to common stock of
Wellsway in accordance with the prices in the following table, subject to the
provisions of Section 5, 6 and 10 of the Agreement:
Price of
Period Common Stock
------ ------------
April 30, 1995 - April 30, 1997 $.42 per share
May 1, 1997 - April 30, 1999 $.574 per share
7. Acceleration by Holder. The entire unpaid principal, deferred interest
and accrued interest shall become due and payable, at the option of the Holder,
upon the happening of any of the following (Event(s) of Default):
(a) If the Borrower defaults in the payment of any sum due hereunder
or under the other Debentures or under the Agreement, and such default is
not cured within five (5) business days from the date the Holder gives
written notice of default to the Borrower.
(b) If any judgment in excess of Ten Thousand and 00/100 Dollars
($10,000.00) is entered against the Borrower and such judgment is not
satisfied of record with ten (10) days after written notice from the
Holder, or if the Borrower fails to file an appeal from such judgment and
provide a bond sufficient to pay the same or otherwise obtain a stay of
enforcement of such judgment within ten (10) days after notice from the
Holder.
(c) In the event the Borrower makes a general assignment for the
benefit of creditors, is subject to a proceeding under any bankruptcy or
insolvency laws, has a receiver appointed for all or substantially all of
its assets, or suffers an acceleration of or warrant of attachment for any
other indebtedness in excess of $10,000, and fails to pay any such
indebtedness within ten (10) days after written notice from the Holder or,
in the case of any involuntary bankruptcy proceedings, fails to secure a
discharge or dismissal of such proceedings within sixty (60) days after it
is commenced.
-3-
(d) If any of the Borrower's covenants in the Agreement are not
performed or complied with within ten (10) days after written notice of
breach of covenant from any Holder of any Debenture issued under the
Agreement.
(e) If any of the Borrower's representations and warranties in the
Agreement prove to have been materially false when made.
(f) In the event of destruction or condemnation of Borrower's premises
and failure of the Borrower to continue its business at a new location
within a reasonable time after such destruction or condemnation.
8. No Waiver. No delay by any Holder in exercising and no failure or
omission to exercise and no single or partial exercise of any right or power
hereunder shall preclude other or further exercise hereof or the exercise of any
other right or power by the Holder of any debenture or of any subsequent Holder
thereof.
9. Redemption by Borrower. Subject to the Holder's rights under Section 6,
hereof, this Debenture is subject to call or redemption by the Borrower at any
time after one year from the date hereof on sixty (60) days' written notice to
the Holder for Eighty Thousand and 00/100 Dollars ($80,000.00) plus all unpaid
accrued interest. If less than all of the Debentures are to be called, the
specific Debenture to be called will first be the Debenture due in 1998, then
the Debenture due in 1999, and finally the Debenture due in 2000.
10. Attorneys' Fees. If this Debenture is not paid in accordance with its
terms, the Holder may charge and Borrower must pay reasonable attorneys fees to
the Holder should this debenture be referred to counsel for collection.
11. Construction and Miscellaneous. The provisions of this Debenture and of
the Agreement shall bind and inure to the benefit of the Borrower, the Holder
and their respective successors and assigns, including any subsequent Holders.
This Debenture shall be construed in accordance with the laws of the State of
New York. Any modification of this Debenture must be in writing and signed by
both the Borrower and the Holder in order to become binding. No
-4-
purported waiver of any of the provisions of this Debenture shall be enforceable
unless contained in a writing signed by or on behalf of the party sought to be
charged with any such waiver. The captions or paragraph headings of this
Debenture are for convenient reference only and in no way define, limit or
prescribe the meaning and interest of the various provisions hereof.
IN WITNESS WHEREOF, IFS International, Inc. has caused its corporate seal
to be hereto affixed and this Debenture to be signed by its duly authorized
officer the day and year first written hereinabove.
(SEAL) IFS INTERNATIONAL, INC.
By:__________________________
Attest
---------------------------
Secretary
-5-
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR
OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THE SECURITIES UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAW OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
7.5% CONVERTIBLE DEBENTURE
Due: April 30, 2000 No. 9
$90,000.00 April 30, 1995
FOR VALUE RECEIVED, IFS INTERNATIONAL, INC. (hereinafter called "Borrower")
a New York Corporation with its principal office and place of business at
Rensselaer Technology Park, 000 Xxxxxx Xxxx, Xxxx, Xxx Xxxx 00000, promises to
pay to the order of NEW YORK STATE SCIENCE AND TECHNOLOGY FOUNDATION, 00
Xxxxxxxxxx Xxxxxx, Xxxxxx, Xxx Xxxx 00000 (hereinafter called "Holder") Ninety
Thousand and 00/100 Dollars ($90,000.00) at 00 Xxxxxxxxxx Xxxxxx, Xxxxxx, Xxx
Xxxx 00000 or at such other address as the Holder shall designate in writing,
with interest at the rate of seven and one-half percent (7.5%) per annum on the
outstanding balance as follows:
1. Due Date. The outstanding principal amount of this Debenture, together
with all accrued and unpaid interest thereon shall be due on April 30, 2000
unless sooner accelerated by the Holder (see paragraph 7) or redeemed by the
Borrower (see paragraph 9).
2. Interest Accrual. Interest on all sums advanced will be accrued and
compounded quarterly from the date of issuance to April 30, 1996 and the total
accumulated compounded interest due on that date will thereafter be paid in
accordance with paragraph 3 below.
3. Interest Payments. Beginning May 1, 1996, and on the like day of each
July, October, January, and April thereafter,
-1-
accrued and unpaid interest on the sum of (i) the principal balance outstanding
and (ii) the unpaid balance of deferred interest determined pursuant to
paragraph 2 above will be payable quarterly. In addition to such interest
payment, Borrower shall pay when such interest payment is due one eighth (1/8)
of the amount of interest determined pursuant to paragraph 2. A delinquency
charge of four percent (4%) (plus collection fees) will be immediately due and
payable on the unpaid principal and interest if such principal and/or interest
is not paid on the date it is due.
4. Issuance as Part of Series. This Debenture is one of a duly authorized
issue of seven and one-half percent (7.5%) Convertible Debentures due 1998
through 2000 and so designated. The Debentures were issued under and pursuant to
a Debenture Investment Agreement dated as of July 6, 1989, as modified pursuant
to the terms of a certain Restructuring Agreement dated as of May 6, 1993
("First Restructuring Agreement") and as further modified pursuant to a certain
second restructuring agreement dated as of April 30, 1995 ("Second Restructuring
Agreement"). The Debenture Investment Agreement as so modified by the First
Restructuring Agreement and the Second Restructuring Agreement is hereinafter
called the "Agreement". The Agreement has been duly executed by the Borrower and
the Holder and the terms and provisions of which are applicable to and
includable in this Debenture as if set forth herein and constitute a description
of the respective rights, limitation or rights, obligations, duties and
immunities of the Borrower, the Holder and all subsequent Holders of the
Debentures.
5. Registration and Transfer. This Debenture shall be registered in the
Holder's name on the books of the Borrower and may be transferred only by
delivery to a subsequent Holder and registration in the name of such subsequent
Holder on the books of the Borrower. This Debenture shall continue to be subject
to successive transfers and registrations but payment of any obligation
hereunder to the then registered Holder shall constitute full satisfaction of
the obligation represented by such payment.
6. Conversion Privileges. Subject to the provisions of the Agreement, the
Holder of this Debenture, may convert it into shares of common stock of Wellsway
Ventures, Inc. ("Wellsway"), a Delaware corporation which is the parent or
holding company of the Borrower at any time with seven days' prior notice to the
Borrower. This Debenture delivered to the Borrower shall command conversion to
-2-
common stock of Wellsway in accordance with the prices in the following table,
subject to the provisions of Section 5, 6 and 10 of the Agreement:
Price of
Period Common Stock
------ ------------
April 30, 1995 - April 30, 1997 $.42 per share
May 1, 1997 - April 30, 2000 $.574 per share
7. Acceleration by Holder. The entire unpaid principal, deferred interest
and accrued interest shall become due and payable, at the option of the Holder,
upon the happening of any of the following (Event(s) of Default):
(a) If the Borrower defaults in the payment of any sum due hereunder
or under the other Debentures or under the Agreement, and such default is
not cured within five (5) business days of the following (Event(s) of
Default):
(a) If the Borrower defaults in the payment of any sum due hereunder
or under the other Debentures or under the Agreement, and such default is
not cured within five (5) business days from the date the Holder gives
written notice of default to the Borrower.
(b) If any judgment in excess of Ten Thousand and 00/100 Dollars
($10,000.00) is entered against the Borrower and such judgment is not
satisfied of record with ten (10) days after written notice from the
Holder, or if the Borrower fails to file an appeal from such judgment and
provide a bond sufficient to pay the same or otherwise obtain a stay of
enforcement of such judgment within ten (10) days after notice from the
Holder.
(c) In the event the Borrower makes a general assignment for the
benefit of creditors, is subject to a proceeding under any bankruptcy or
insolvency laws, has a receiver appointed for all or substantially all of
its assets, or suffers an acceleration of or warrant of attachment for any
other indebtedness in excess of
-3-
$10,000, and fails to pay any such indebtedness within ten (10) days after
written notice from the Holder or, in the case of any involuntary
bankruptcy proceedings, fails to secure a discharge or dismissal of such
proceedings within sixty (60) days after it is commenced.
(d) If any of the Borrower's covenants in the Agreement are not
performed or complied with within ten (0) days after written notice of
breach of covenant from any Holder of any Debenture issued under the
Agreement.
(e) If any of the Borrower's representations and warranties in the
Agreement prove to have been materially false when made.
(f) In the event of destruction or condemnation of Borrower's premises
and failure of the Borrower to continue its business at a new location
within a reasonable time after such destruction or condemnation.
8. No Waiver. No delay by any Holder in exercising and no failure or
omission to exercise and no single or partial exercise of any right or power
hereunder shall preclude other or further exercise hereof or the exercise of any
other right or power by the Holder of any debenture or of any subsequent Holder
thereof.
9. Redemption by Borrower. Subject to the Holder's rights under Section 6,
hereof, this Debenture is subject to call or redemption by the Borrower at any
time after one year from the date hereof on sixty (60) days' written notice to
the Holder for Ninety Thousand and 00/100 Dollars ($90,000.00) plus all unpaid
accrued interest. If less than all of the Debentures are to be called, the
specific Debenture to be called will first be the Debenture due in 1998, then
the Debenture due in 1998, and finally the Debenture due in 2000.
10. Attorneys' Fees. If this Debenture is not paid in accordance with its
terms, the Holder may charge and Borrower must pay reasonable attorneys fees to
the Holder should this debenture be referred to counsel for collection.
11. Construction and Miscellaneous. The provisions of this Debenture and of
the Agreement shall bind and inure to the benefit
-4-
of the Borrower, the Holder and their respective successors and assigns,
including any subsequent Holders. This Debenture shall be construed in
accordance with the laws of the State of New York. Any modification of this
Debenture must be in writing and signed by both the Borrower and the Holder in
order to become binding. No purported waiver of any of the provisions of this
Debenture shall be enforceable unless contained in a writing signed by or on
behalf of the party sought to be charged with any such waiver. The captions or
paragraph headings of this Debenture are for convenient reference only and in no
way define, limit or prescribe the meaning and interest of the various
provisions hereof.
IN WITNESS WHEREOF, IFS International, Inc. has caused its corporate seal
to be hereto affixed and this Debenture to be signed by its duly authorized
officer the day and year first written hereinabove.
(SEAL) IFS INTERNATIONAL, INC.
By:__________________________
Attest
---------------------------
Secretary
-5-
