EXHIBIT 4.32
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THIS WARRANT MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID ACT AND APPLICABLE STATE
SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO INTEGRATED
BUSINESS SYSTEMS AND SERVICES, INC. THAT SUCH REGISTRATION IS NOT REQUIRED,
EXCEPT AS OTHERWISE SPECIFICALLY SET FORTH HEREIN.
Right to Purchase Up to 2,033,399 Shares of Common
Stock of INTEGRATED BUSINESS SYSTEMS AND SERVICES,
INC. (subject to adjustment)
AMENDED AND RESTATED COMMON STOCK PURCHASE WARRANT (CLASS B INVESTORS)
October 1, 2003
THIS INSTRUMENT AMENDS AND RESTATES THAT CERTAIN COMMON STOCK PURCHASE WARRANT,
DATED DECEMBER 31, 2001, AND REPLACES SAID COMMON STOCK PURCHASE WARRANT IN ITS
ENTIRETY.
FOR GOOD AND VALUABLE CONSIDERATION, THE RECEIPT OF WHICH IS HEREBY
ACKNOWLEDGED, INTEGRATED BUSINESS SYSTEMS AND SERVICES, INC. (the "Company")
hereby agrees that IBSS Class B Investors, LLC, a Michigan limited liability
company (successor to IBSS Class B Investors, a Michigan co-partnership), whose
address is do Seyburn, Kahn, Xxxx, Xxxx and Xxxxxx, P.C., 0000 Xxxx Xxxxxx,
Xxxxx 0000, Xxxxxxxxxx, Xxxxxxxx 00000, Attention: Xxxxx X. Xxxxxxx, Esq.
("Investor"), is entitled to purchase from the Company at any time or from time
to time before 5:00 p.m., Detroit time, on December 31, 2005 (or if such date is
not a Business Day, then at 5 p.m. Detroit time on the first Business Day after
such date), up to 2,033,399 shares of the Company's fully paid and nonassessable
shares of common stock, no par value per share ("Common Stock") at a purchase
price described below (the "Purchase Price").
Purchase Price. The Purchase Price per share shall be equal to seven and
three-eighths cents ($0.07275).
Representations and Warranties. The Company represents and warrants to the
Investor, as follows:
(a) Corporate Existence. The Company is a corporation duly
incorporated, validly existing and in good standing under South Carolina law and
has unconditional power and authority to conduct its business and own its
properties as now conducted and owned. The Company is qualified as a foreign
corporation to do business in all jurisdictions in which the nature of its
properties and business requires such qualification and in which noncompliance
with such qualification would materially affect the Company's business.
(b) Power and Authority. The Company has unconditional power and
authority, and has taken all required corporate and other action necessary
(including stockholder approval, if necessary) to execute and deliver this
Warrant, to issue and sell the Stock as herein provided and otherwise to carry
out the terms of this Agreement, and none of such actions violate any provision
of the Company's Bylaws or Articles of Incorporation, or result in the breach of
or constitute a default under any agreement or instrument to which the Company
is a party or by which it is bound, or result in the creation or imposition of
any material lien, claim or encumbrance on any Company asset. This Warrant
constitutes the valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms.
(c) Ownership and Status of Stock. As of December 31, 2001, the
Company has approximately 17,774,694 shares of Common Stock issued and
outstanding and approximately 5,361,539 shares isssuable upon the exercise of
then-outstanding options or warrants or upon conversion of any
then-outstanding convertible security. As of October 1, 2003, the Company had
approximately 23,656,051 shares of Common Stock issued and outstanding, and
approximately 66,778,044 shares issuable upon the exercise of then-outstanding
options or warrants or upon the conversion of any then-outstanding convertible
security. The Company has no shares of preferred stock (nor any other shares of
stock) issued or outstanding at this time, nor does the Company have issued or
outstanding any warrants, convertible securities, convertible debt, options, or
any other rights in the hands of any third party which are convertible into
shares of Common Stock except as set forth on the Company's Capitalization Table
dated December 28, 2001. No shares of Common Stock are held in the Company's
treasury. No shares of Common Stock are entitled to any cumulative voting
rights, pre-emptive rights (other than as set forth in documents executed
contemporaneously herewith).
As used herein the following terms have the following meanings:
1. The term "COMPANY" shall include Integrated Business
Systems and Services, Inc. and any corporation which shall succeed to
or assume the obligations of Integrated Business Systems and Services,
Inc.
2. The term "COMMON STOCK" includes (a) the Company's
Common Stock, no par value per share, as authorized on the date of this
Warrant, (b) any other capital stock of any class or classes (however
designated) of the Company, authorized on or after such date, the
holders of which shall have the right, without limitation as to amount,
either to all or to a share of the balance of current dividends and
liquidating dividends after the payment of dividends and distributions
on any shares entitled to preference, and the holders of which shall be
entitled to vote for the election of directors of the Company and (c)
any other securities into which or for which any of the securities
described in (a) or (b) may be converted or exchanged pursuant to a
plan of recapitalization, reorganization, merger, sale of assets or
otherwise.
3. The term "SHARES" means the Common Stock issued or
issuable upon exercise of this Warrant.
4. The term "SECURITIES ACT" means the Securities Act of
1933, or any successor federal statute, and the rules and regulations
of the Securities and Exchange Commission thereunder, all as the same
shall be in effect at the time.
5. The term "SECURITIES AND EXCHANGE COMMISSION" or
"COMMISSION" refers to the Securities and Exchange Commission or any
other federal agency then administering the Securities Act.
6. The term "SECURITIES EXCHANGE ACT" means the
Securities Exchange Act of 1934 or any successor federal statute, and
the rules and regulations of the Securities and Exchange Commission
thereunder, all as the same shall be in effect at the time.
7. The term "BUSINESS DAY" shall mean any day on which
the NASDAQ Stock Market is open for trading in the United States.
1. Exercise of Warrant. This Warrant may be exercised by the Investor in
whole or in part by surrender of this Warrant, with the form of
subscription attached as EXHIBIT A (the "SUBSCRIPTION FORM") duly
executed by the Investor, to the Company at its principal office or at
the office of its Warrant agent (as provided in Section 10),
accompanied by a full recourse secured promissory note, payable upon
the earlier of five days following written notice that the Securities
and Exchange Commission has declared effective the registration
statement described in Sections 1 and 8 hereof or two years from the
date of issuance of such note, in the form attached as EXHIBIT B (the
"SECURED NOTE"). Upon exercise of the Warrant by the Investor, the
Company shall proceed to file a registration statement with the
Securities and Exchange Commission to register the shares of Common
Stock underlying the exercised Warrant in accordance with
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Section 8 hereof within 60 days of the exercise of the Warrant. The
Company shall have up to six months from the date of the exercise of
this Warrant to cause the Securities and Exchange Commission to have
the registration statement declared effective. If the Company is not
able to cause the Securities and Exchange Commission to declare the
registration statement effective within such six month period, the
Purchase Price for this Warrant and the principal balance of the
Secured Note shall be reduced 1.5% per month for each month or portion
thereof in the next succeeding six months during which the Company is
unable to cause the Securities and Exchange Commission to declare the
registration statement effective, and shall be reduced 2.5% per month
or portion thereof in the next succeeding 12 months thereafter during
which the Company is unable to cause the Securities and Exchange
Commission to declare the registration statement effective. If
exercise(s) of this Warrant occur prior to the Expiration Date hereof
for less than the full amount of the shares which are subject to this
Warrant, the Company will issue a new Warrant or Warrants of like
tenor, in the name of the Investor for the number of shares remaining
unpurchased under the Warrant.
1A. Covenant Against Public Transfer. Holder agrees that, upon exercise of
this Warrant and the Company's issuance of shares pursuant thereto (the
"ISSUED SHARES"), Holder will refrain from selling, transferring or
otherwise disposing of such Issued Shares, in a transaction involving a
national securities exchange, the NASDAQ, or other brokers' board,
prior to October 1, 2004, except in connection with a sale of
substantially all of the outstanding shares of Company.
2. Delivery of Stock Certificates etc. on Exercise. The Company agrees
that the shares of Common Stock purchased upon exercise of this Warrant
shall be deemed to be issued to the Investor hereof as the record owner
of such shares as of the close of business on the date on which this
Warrant shall have been surrendered and payment made for such shares as
aforesaid.
As soon as practicable after the exercise of this Warrant in full or in
part, and in any event within 10 days thereafter, the Company at its
expense will cause to be issued in the name of the Investor hereof a
certificate or certificates for the number of duly and validly issued,
fully paid and nonassessable shares of Common Stock to which such
Investor shall be entitled on such exercise. To the extent the Purchase
Price is paid by a promissory note, the certificate or certificates
will be held in escrow until the note is paid in full.
3. Adjustments for Anti-Diluting Issues; Fractional Share Payments; Taxes.
3.1 Adjustment for Subdivisions and Certain Dividends and Distributions. If
the Company shall at any time (i) make subdivision of shares of Common Stock
outstanding or (ii) pay a dividend or make a distribution in shares of Common
Stock, the Purchase Price in effect immediately prior to such action shall be
proportionately decreased, and in case the Company shall at any time reduce the
number of shares of Common Stock outstanding, by combination or otherwise, the
Purchase Price in effect immediately prior to such combination shall be
proportionately increased. Any adjustment made pursuant to this Section 3.1
shall, in the case of a subdivision or combination, become effective as of the
effective date thereof, and shall, in the case of a dividend or distribution,
become effective as of the close of business of the record date for the
determination of shareholders entitled thereto.
3.2 Adjustment for Other Dividends and Distributions. In the event the
Company at any time or from time to time shall make or issue, or fix a record
date for the determination of holders of Common Stock entitled to receive, a
dividend or other distribution payable in securities of the Company other than
shares of Common Stock, then and in each such event provision shall be made so
that the holder of this Warrant shall receive upon exercise of this Warrant the
amount of securities of the Company that it would have received had this Warrant
been converted into Common Stock on the date of such event and had thereafter,
during the period from the date of such event to and including the exercise
date, retained such securities receivable by it as aforesaid during such period,
giving application to all other adjustments called for during such period under
this Section 3 with respect to the rights of the holder of this Warrant.
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3.3 Adjustment for Reorganizations, Reclassifications and Other Changes. If
the Common Stock issuable upon the exercise of this Warrant shall be changed
into the same or a different number of shares of any class or classes of stock,
whether by capital reorganization, reclassification or otherwise (other than a
merger, consolidation or sale of assets as provided in Section 3.4 below, or a
subdivision or combination of shares or stock dividend provided for in Section
3.1 above, or a reorganization provided for in Section 3.4 below), then and in
each such event the holder of this Warrant shall have the right thereafter to
convert this Warrant into the kind and amounts of shares of stock and other
securities and property receivable upon such reorganization, reclassification or
other change, by holders of the number of shares of Common Stock into which this
Warrant might have been converted immediately prior to such reorganization,
reclassification or change, all subject to further adjustment as provided
herein.
3.4 Adjustment for Mergers, Considerations or Sales of Assets. If at any
time or from time to time there shall be a capital reorganization of the
Company's capital stock (other than a subdivision, combination, reclassification
or exchange of shares provided for elsewhere in this Section 3) or a merger or
consolidation of the Company with or into another corporation, or the sale of
all or substantially all the Company's properties and assets to any other
person, then, as a part of such reorganization, merger, consolidation or sale,
provision shall be made so that the holder of this Warrant shall thereafter be
entitled to receive upon exercise of this Warrant, the number of shares of stock
or other securities of property of the Company, or of the successor corporation
resulting from such merger or consolidation or sale, to which a holder of that
number of shares of Common Stock deliverable upon exercise of this Warrant would
have been entitled on such capital reorganization, merger, consolidation or
sale. In any such case, appropriate adjustment shall be made in the application
of the provisions of this Section 3 with respect to the rights of the Holder of
this Warrant after the reorganization, merger, consolidation or sale to the end
that the provisions of this Section 3 (including adjustment of the Purchase
Price then in effect and the number of shares issuable upon exercise of this
Warrant) shall be applicable after that event as nearly equivalent as may be
practicable.
3.5 Adjustment for Sales Below Purchase Price. For purposes of this Section
3.5, "ADDITIONAL SHARES OF COMMON STOCK" shall mean all shares of Common Stock
issued or deemed issued by the Company after the date hereof, whether or not
subsequently reacquired or retired by the Company, excluding (i) shares of
Common Stock issued upon exercise of this Warrant; and (ii) up to 4,882,776
shares of Common Stock (as adjusted for all stock dividends, stock splits,
subdivisions and combinations) issued to employees, officers, directors,
consultants or other persons performing services for the Company (if so issued
solely because of any such person's status as an officer, director, employee,
consultant or other person performing services for the Company and not as part
of any offering of the Company's securities) pursuant to any warrant, stock
option plan, stock purchase plan, management incentive plan, consulting
agreement or arrangement or other contract or undertaking approved by the Board.
(1) If at any time or from time to time the Company shall
issue or sell Additional Shares of Common Stock, other than
pursuant to Sections 3.1, 3.2, 3,3 or 3.4 above, for a
consideration per share less than the then existing Purchase
Price, then and in each case the then existing Purchase Price
shall be reduced, as of the opening of business on the date of
such issue or sale, to a price determined by multiplying the
existing Purchase Price by a fraction (A) the numerator of
which shall be (x) the number of shares of Common Stock
outstanding immediately prior to such issue or sale, plus (y)
the number of shares of Common Stock that the aggregate
consideration received by the Company for the total number of
Additional Shares of Common Stock so issued would purchase at
such Purchase Price, and (B) the denominator of which shall be
the number of shares of Common Stock outstanding immediately
prior to such issue or sale plus the number of such Additional
Shares of Common Stock so issued.
(2) For the purpose of making any adjustment in the
Purchase Price or number of shares of Common Stock purchasable
on exercise of this Warrant as provided above, the
consideration received by the Company for any issue or sale of
securities shall:
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(A) to the extent it consists of cash, be
computed at the net amount of cash received by the
Company after deduction of any underwriting or
similar commissions, concessions or compensation paid
or allowed by the Company in connection with such
issue or sale;
(B) to the extent it consists of services or
property other than cash, be computed at the fair
value of such services or property as determined in
good faith by the Board; and
(C) if Additional Shares of Common Stock,
Convertible Securities (as hereinafter defined), or
rights or options to purchase either Additional
Shares of Common Stock or Convertible Securities are
issued or sold together with other stock or
securities or other assets of the Company for a
consideration that covers both, be computed as the
portion of the consideration so received that may be
reasonably determined in good faith by the Board to
be allocable to such Additional Shares of Common
Stock, Convertible Securities or rights or options.
(3) For the purpose of the adjustment provided in Section
3.5(1), if the Company shall issue any rights or options for
the purchase of, or stock or other securities convertible
into, Additional Shares of Common Stock (such convertible
stock or securities being hereinafter referred to as
"CONVERTIBLE SECURITIES"), then, in each case, if the
Effective Price (as hereinafter defined) of such rights,
options or Convertible Securities shall be less than the then
existing Purchase Price, the Company shall be deemed to have
issued at the time of the issuance of such rights or options
or Convertible Securities the maximum number of Additional
Shares of Common Stock issuable upon conversion or exercise
thereof and to have received as consideration for the issuance
of such shares an amount equal to the total amount of the
consideration, if any, received by the Company for the
issuance of such rights or options or Convertible Securities,
plus, in the case of such options or rights, the minimum
amounts of consideration, if any, payable to the Company upon
exercise or conversion of such options or rights. For purposes
of the foregoing, "EFFECTIVE PRICE" shall mean the quotient
determined by dividing the total of all such consideration by
such maximum number of Additional Shares of Common Stock. No
further adjustment of the Purchase Price adjusted upon the
issuance of such rights, options or Convertible Securities
shall be made as a result of the actual issuance of Additional
Shares of Common Stock on the exercise of any such rights or
options or the conversion of any such Convertible Securities.
If any such rights or options or the conversion privilege
represented by any such Convertible Securities shall expire
without having been exercised, the Purchase Price adjusted
upon the issuance of such rights, options or Convertible
Securities shall be readjusted to the Purchase Price that
would have been in effect had an adjustment been made on the
basis that the only Additional Shares of Common Stock so
issued were the Additional Shares of Common Stock, if any,
actually issued or sold on the exercise of such rights or
options, or rights of conversion of such Convertible
Securities, and such Additional Shares of Common Stock, if
any, were issued or sold for the consideration actually
received by the Company upon such exercise, plus the
consideration, if any, actually received by the Company for
the granting of all such rights and options, whether or not
exercised, plus the consideration received for issuing or
selling the Convertible Securities actually converted plus the
consideration, if any, actually received by the Company on the
conversion of such Convertible Securities.
(4) For the purpose of the adjustment provided for in
Section 3.5(1), if the Company shall issue any rights or
options for the purchase of Convertible Securities, then in
each such case, if the Effective Price thereof is less than
the existing Purchase Price, the Company shall be deemed to
have issued at the time of the issuance of such rights or
options the maximum number of Additional Shares of Common
Stock issuable upon conversion of the total amount of
Convertible Securities covered by such rights or options
5
and to have received as consideration for the issuance of such
Additional Shares of Common Stock an amount equal to the
amount of consideration, if any, received by the Company for
the issuance of such rights or options, plus the minimum
amounts of consideration, if any, payable to the Company upon
the conversion of such Convertible Securities. For the
purposes of the foregoing, "EFFECTIVE PRICE" shall mean the
quotient determined by dividing the total amount of such
consideration by such maximum number of Additional Shares of
Common Stock. No further adjustment of such Purchase Price
adjusted upon the issuance of such rights or options shall be
made as a result of the actual issuance of the Convertible
Securities upon the exercise of such rights or options or upon
the actual issuance of Additional Shares of Common Stock upon
the conversion of such Convertible Securities. The provisions
of Section 3.5(3) for the readjustment of such Purchase Price
upon the expiration of rights or options or the rights of
conversion of Convertible Securities, shall apply mutatis
mutandis to the rights, options and Convertible Securities
referred to in this Section 3.5(4).
3.6 Fractional Share Payment. No fractional shares or script representing
fractional shares shall be issued upon the exercise of this Warrant and if the
exercise of this Warrant results in a fraction, in lieu of any such fractional
share the Company shall pay cash equal to such fraction multiplied by the then
effective Purchase Price.
3.7 Taxes. The issuance of certificates for shares of Common Stock upon the
exercise of this Warrant shall be made without charge to the Investor for any
tax in respect of the issuance of such certificates, and such certificates shall
be issued in the respective names of, or in such names as may be directed by,
the Investor provided, however, that the Company shall not be required to pay
any tax which may be payable in respect of any transfer involved in the issuance
and delivery of any such certificate in the name other than that of the
Investor, and the Company shall not be required to issue or deliver such
certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
establish to the satisfaction of the Company that such tax has been paid.
3.8 Accountant's Certificate as to Adjustments. In the case of any
adjustment or readjustment in the Purchase Price or number of shares of Common
Stock issuable on the exercise of this Warrant, the Company at its expense will
promptly cause independent certified public accountants of recognized standing
selected by the Company to compute such adjustment or readjustment in accordance
with the terms of this Warrant and prepare a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based, including a statement of (a) the
consideration received or receivable by the Company for any additional shares of
Common Stock issued or sold or deemed to have been issued or sold, (b) the
number of shares of Common Stock outstanding or deemed to be outstanding, and
(c) the Purchase Price in effect and number of shares of Common Stock for which
this Warrant was exercisable immediately prior to such issue or sale and as each
is adjusted and readjusted on account thereof. The Company will forthwith mail a
copy of each such certificate to Investor.
3.9 Covenant Against Short Sales. The Investor acknowledges that on the
date hereof and at no time since the Investor's execution of any subscription or
other document contemplating the issuance of this Warrant, the Investor has not
held or caused to be held, directly or indirectly, a "short" position in the
Common Stock, and the Investor agrees that, during the Restricted Period, the
Investor will I not (directly or indirectly through any other person or entity)
hold or maintain a short position in or undertake a short sale of any of the
Company's equity securities or equity-linked securities. The Restricted Period
shall begin on the date of this Warrant and shall continue so long as this
Warrant remains in effect (and, if this Warrant is exercised, then during the
period which ends sixty (60) days after the earlier of: (i) the effectiveness of
a Registration Statement as to the Common Stock purchased hereunder, or, (ii)
the Registration Deadline.
4. No Dilution or Impairment. The Company will not, by amendment of its
certificate of incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale
6
of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will
at all times in good faith assist in the carrying out of all such terms
and in the taking of all such action as may be necessary or appropriate
in order to protect the rights of the holders of this Warrant against
dilution or other impairment. Without limiting the generality of the
foregoing, the Company (a) will not increase the par value of any
shares of stock receivable on the exercise of this Warrant above the
amount payable therefor on such exercise, (b) will at all times reserve
and keep available out of its authorized capital stock, solely for the
purpose of issue upon exercise of this Warrant as herein provided, such
number of shares of Common Stock as shall then be issuable upon
exercise of this Warrant in full and shall take all such action as may
be necessary or appropriate in order that all shares of Common Stock
that shall be so issuable shall be duly and validly issued and fully
paid and nonassessable and free from all taxes, liens and charges with
respect to the issue thereof, (c) will not effect a subdivision or
split up of shares or similar transaction with respect to any class of
the Common Stock without effecting an equivalent transaction with
respect to all other classes of Common Stock, and (d) will not issue
any capital stock of any class which is preferred as to dividends or as
to the distribution of assets upon voluntary or involuntary
dissolution, liquidation or winding up, unless the rights of the
holders thereof shall be limited to a fixed sum or percentage of par
value in respect of participation in dividends and in any such
distribution of assets.
5. Reporting Requirements. Prior to the exercise or expiration of the
right to EXERCISE THIS WARRANT; TO THE EXTENT THE FOLLOWING DOCUMENTS
AND/OR INFORMATION IS NOT, AT THE TIMES INDICATED BELOW (including any
extension of such times as permitted under the regulations of the
Securities and Exchange Commission), AVAILABLE PUBLICLY THROUGH THE
INTERNET OR THROUGH THE XXXXX FILING SYSTEM ACCESSIBLE THROUGH THE
SECURITIES AND EXCHANGE COMMISSION'S WEB SITE AT (XXXX://XXX.XXX.XXX),
the Company shall furnish to the Investor:
(a) Within 45 days after the end of each of the first
three calendar quarterly accounting periods in each fiscal year of the
Company unaudited consolidated income statements of the Company and its
subsidiaries for each such quarterly period and for the six-month and
nine-month periods, as applicable, from the beginning of the applicable
fiscal year to the end of the applicable calendar quarter, and a
consolidated balance sheet of the Company and its subsidiaries as of
the end of each such quarterly period, setting forth in each case
comparisons to the corresponding period(s) in the preceding fiscal
year, all such statements having been prepared in accordance with
generally accepted accounting principles, consistently applied; and, to
the extent requested by the INVESTOR, comparisons in each case to the
Company's quarterly budget for the corresponding quarterly period;
provided, however, that where the Company or its counsel reasonably
deems such budget information to constitute material non-public
information under applicable federal or state securities laws, then the
Company shall have no obligation to deliver such budget information
hereunder unless and until Investor has executed such confidentiality
and public trading lock-up agreements as shall be deemed satisfactory
to the Company and its legal counsel.
(b) Within 90 days after the end of each fiscal year of
the Company, consolidated statements of income of the Company and its
subsidiaries for such fiscal year, and a consolidated balance sheet of
the Company and its subsidiaries as of the end of such fiscal year,
setting forth in each case comparisons to the preceding fiscal year,
all prepared in accordance with generally accepted accounting
principles, consistently applied; and accompanied by (i) a copy of the
opinion received by the Company from an independent accounting firm of
recognized standing acceptable to the Investor, (ii) to the extent
requested by the Investor, a certificate from such accounting firm,
addressed to the Company's board of directors, stating that in the
course of its examination nothing came to its attention that caused it
to believe that there was any default by the Company or any of its
subsidiaries in the fulfillment of or compliance with any of the terms,
covenants, provisions or conditions of any material agreement to which
the Company or any such subsidiary is a party or, if such accountants
have reason to believe any such default by the Company or any such
subsidiary exists, a certificate specifying the nature and period of
existence thereof, (iii) to the extent requested by the Investor, a
copy of such firm's annual management
7
letter to the board of directors; and (iv) to the extent requested by
the INVESTOR, comparisons of the Company's statements of income to the
Company's annual budget for the corresponding annual period; provided,
however, that where the Company or its counsel reasonably deems such
budget information to constitute material non-public information under
applicable federal or state securities laws, then the Company shall
have no obligation to deliver such budget information hereunder unless
and until Investor has executed such confidentiality and public trading
lock-up agreements as shall be deemed satisfactory to the Company and
its legal counsel.
(c) Promptly following receipt thereof, any additional
reports, management letters or other detailed information concerning
significant aspects of the Company's operations and financial affairs
given to the Company by its independent accountants (and not otherwise
contained in other materials provided hereunder).
(d) At least 30 days but not more than 90 days prior to
the end of each fiscal year of the Company, to the extent requested by
the INVESTOR, an annual budget prepared on a monthly basis for the
Company and its subsidiaries for the succeeding fiscal year (displaying
anticipated statements of income, changes in financial position and
balance sheets), and promptly upon preparation thereof any other
significant budgets which the Company prepares and any revisions of
such annual or other budgets; provided, however, that where the Company
or its counsel reasonably deems such budget information to constitute
material non-public information under applicable federal or state
securities laws, then the Company shall have no obligation to deliver
such budget information hereunder unless and until the Investor has
executed such confidentiality and public trading lock-up agreements as
shall be deemed satisfactory to the Company and its legal counsel.
(e) Within ten days after transmission thereof, copies of
all financial statements, proxy statements, reports and any other
general written communications which the Company sends to its
stockholders and copies of all registration statements and all regular,
special or periodic reports which it files, or any of its officers or
directors file with respect to the Company, with the Securities and
Exchange Commission or with any securities exchange on which any of the
Company's securities are then listed, and copies of all press releases
and other statements made available generally by the Company to the
public concerning material developments in the Company's business.
(f) With reasonable promptness, such other information
and financial data concerning the Company and its Subsidiaries as any
person entitled to receive information under this Section 5 may
reasonably request.
(g) Accompanying the financial statements referred to in
subparagraph (a) above, to the extent requested by the Investor, an
Officer's Certificate from the Chief Financial Officer of the Company
stating that neither the Company nor any of its subsidiaries is in
default under any of its other material agreements or, if any such
default exists, specifying the nature and period of existence thereof,
and what actions the Company and its subsidiaries have taken and
propose to take with respect thereto.
Each of the financial statements referred to in subparagraph (a) and
(b) above will be true and correct in all material respects as of the dates and
for the periods stated therein, subject in the case of the unaudited financial
statements to changes resulting from normal year-end audit adjustments.
The Company shall permit the Investor, or agents thereof, at any
reasonable time and from time to time to examine and make copies of and extracts
from the records and books of account of, and visit the properties of, the
Company and any of its subsidiaries, and to discuss the affairs, finances, and
accounts of the Company and any of the subsidiaries with any of their officers
or directors and independent accountants. The Investor's rights under this
subparagraph shall be conditioned upon the
8
prior execution by Investor and delivery to the Company of an appropriate
confidential and public trading lock-up agreement with the Company.
6. (RESERVED]
7. Assignment; Exchange of Warrant. With the prior written consent of the
Company (which shall not be unreasonably withheld or delayed), this
Warrant may be transferred by Investor (a "TRANSFEROR") with respect to
any or all of the Shares; provided, however, that any member of
Investor may assign or transfer its membership interest in Investor
without obtaining the consent of the Company. On the surrender for
exchange of this Warrant, with the Transferor's endorsement in the form
of EXHIBIT C attached hereto (the "TRANSFEROR ENDORSEMENT FORM"), the
Company at its expense will issue and deliver to or on the order of the
Transferor thereof a new Warrant or Warrants of like tenor, in the name
of the Transferor and/or the transferee(s) specified in such Transferor
Endorsement Form (each a "TRANSFEREE"), filling in the aggregate on the
face or faces thereof for the number of shares of Common Stock called
for on the face or faces of the Warrant so surrendered by the
Transferor.
8. Registration Rights, Procedure; Indemnification. The Company shall
within sixty (60) days following exercise of this Warrant prepare and
file at its expense with all applicable federal, state and stock
exchange authorities, and use its best efforts to cause to become
effective as soon as possible (but in any event within 180 days after
the date of exercise), a registration statement with respect to the
Common Stock issued by the Company in connection with the exercise of
this Warrant to enable the holder of this Warrant to resell such Common
Stock following the effective date of the registration statement,
subject, however, to any limitations on resale that may be imposed by
law if holder is an affiliate of the Company. The Company shall also
file the appropriate applications with the NASDAQ Stock Market, or the
Over-the-Counter Bulletin Board so that such Common Stock is freely
tradeable on the NASDAQ Stock Market or the Over-the-Counter Bulletin
Board following the effective date of the registration statement. If
the Company is unable to cause the Securities and Exchange Commission
to declare the registration statement effective within six months of
the date of exercise of this Warrant, the Purchase Price and the
outstanding principal balance of the Secured Note shall be reduced as
set forth in Section 1 hereof. At its expense, the Company will keep
the registration effective for so long as the holder holds shares of
Common Stock (or, if earlier, until such time as Investor may sell all
of its stock in a single transaction on the NASDAQ Stock Market or the
Over-the-Counter Bulletin Board without registration pursuant to Rule
144 of the Securities Act of 1933). The Company shall indemnify the
holder against any losses, claims, damages or expenses (including
reasonable attorney fees) arising out of any untrue statement or
alleged untrue statement of any material fact contained in any
registration statement filed by the Company pursuant to this Warrant
(except for erroneous information supplied to the Company by the
holder).
9. Replacement of Warrant. On receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of the
Warrant and, in the case of any such loss, theft or destruction of the
Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of any
such mutilation, on surrender and cancellation of the Warrant, the
Company at its expense will execute and deliver, in lieu thereof, a new
Warrant of like tenor; provided, however, if the original Investor is
the registered holder and the Warrant is lost, stolen or destroyed, the
affidavit of the President, Treasurer or any Assistant Treasurer of the
registered holder setting forth the circumstances with respect to such
loss, theft or destruction shall be accepted as satisfactory evidence
thereof, and no indemnity bond or other security shall be required as a
condition to the execution and delivery by the Company of a new Warrant
in replacement of such lost, stolen or destroyed Warrant other than the
registered holder's written agreement to indemnify the Company.
10. Warrant Agent. The Company may, by written notice to Investor, appoint
an agent for the purpose of issuing Common Stock on the exercise of the
Warrant pursuant to Section 1, exchanging the Warrant pursuant to
Section 7, and replacing the Warrant pursuant to Section 9,
9
or any of the foregoing, and thereafter any such issuance, exchange or
replacement, as the case may be, shall be made at such office by such
agent.
11. Remedies. The Company stipulates that the remedies at law of the holder
of this Warrant in the event of any default or threatened default by
the Company in the performance of or compliance with any of the terms
of this Warrant are not and will not be adequate, and that such terms
may be specifically enforced by a decree for the specific performance
of any agreement contained herein or by an injunction against a
violation of any of the terms hereof or otherwise.
12. Transferability, etc. This Warrant is issued upon the following terms,
to all of which each holder or owner hereof by the taking hereof
consents and agrees:
(a) title to this Warrant or a portion hereof may be transferred
by endorsement (by the Transferor executing the Transferor
Endorsement Form) and delivery in the manner set forth in
Section 7 following any required consent by the Company;
(b) subject to the Company consent requirements in Section 7, any
person in possession (which possession may be joint) of this
Warrant with an executed Transferor Endorsement Form naming
such person as a Transferee under the heading "Transferees" is
authorized to represent himself as absolute owner of the
portion of this Warrant stated in such Transferor Endorsement
Form opposite the name of such person under the heading
"Number Transferred" and is empowered to transfer absolute
title to such portion of this Warrant by endorsement and
delivery thereof to a bona fide purchaser thereof for value;
each prior taker or owner waives and renounces all of his
equities or rights in this Warrant in favor of each such bona
fide purchaser, but shall remain obligated under any
confidentiality agreement and/or public trading lock-up
agreement executed in connection with this Warrant and each
such bona fide purchaser shall acquire absolute title hereto
and to all rights represented hereby; and
(c) until this Warrant is transferred on the books of the Company,
the Company may treat the registered holder hereof as the
absolute owner hereof for all purposes, notwithstanding any
notice to the contrary.
13. Notices, etc. All notices and other communications from the Company to
the holder of this Warrant shall be mailed by first class registered or
certified mail, postage prepaid, at such address as may have been
furnished to the Company in writing by such holder or, until any such
holder furnishes to the Company an address, then to, and at the address
of, the last holder of this Warrant who has so furnished an address to
the Company.
14. Miscellaneous. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or
termination is sought. This Warrant shall be construed and enforced in
accordance with and governed by the laws of the State of Michigan. The
headings in this Warrant are for purposes of reference only, and shall
not limit or otherwise affect any of the terms hereof. This Warrant is
being executed as an instrument under seal. The invalidity or
unenforceability of any provision hereof shall in no way affect the
validity or enforceability of any other provision.
15. Consent to Jurisdiction. The Company hereby irrevocably submits to the
jurisdiction of the state courts of the State of Michigan and any
United States federal court sitting in the State of Michigan in any
action or proceeding arising out of or relating to this Warrant or any
other agreement or transaction contemplated hereby, and the Company
hereby irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in any such state or federal
court. The Company hereby irrevocably waives, to the fullest extent it
may effectively do so, the defense of an inconvenient forum to the
maintenance of such action or proceeding. The Company hereby
irrevocably consents to the service of any and all process in any such
action or
10
proceeding at its address set forth on the first page hereof or any
place of business of the Company in the State of Michigan. Nothing in
this Section shall affect the right of the holder of this Warrant to
serve legal process in any other manner permitted by law or affect the
right of the holder to bring any action or proceeding against the other
party or its property in courts of any other jurisdictions.
16. Facsimile Signature. The Company may execute this Warrant and transmit
its signature by facsimile, which shall be fully binding, and the
Company shall deliver a manually signed original as soon as is
practicable thereafter.
IN WITNESS WHEREOF, each of the Company and the Investor has executed this
Warrant under seal as of the date first written above.
INTEGRATED BUSINESS SYSTEMS AND SERVICES, INC.
BY: /s/ Xxxxxx X. Xxxxxxxxxx
-------------------------------
XXXXXX X. XXXXXXXXXX
CHIEF EXECUTIVE OFFICER
Accepted and Agreed by the Investor effective as of the date first set forth
above:
Investor
!BSS CLASS B INVESTORS, LLC, a Michigan limited liability company (successor to
IBSS CLASS B INVESTORS, a Michigan co-partnership)
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------
Its: Agent
11
EXHIBIT A
FORM OF SUBSCRIPTION
(To be signed only on exercise of Warrant)
TO INTEGRATED BUSINESS SYSTEMS AND SERVICES, INC.
The undersigned, the holder of the within Warrant, hereby irrevocably elects to
exercise this Warrant for, and to purchase thereunder, ______ shares of Common
Stock of Integrated Business Systems and Services, Inc. ("IBSS") and herewith
makes payment of $________ in the form of a secured promissory note to exercise
the Warrant, and requests that the certificates for such shares be issued in the
name of, and delivered to __________________________________________________,
whose address is
___________________________________________________________________.
DATED:
________________________________________________
(Signature must conform to name of holder as
specified on the face of the Warrant)
(Address) _______________________________________
12
EXHIBIT B
SECURED PROMISSORY NOTE
$__________ date _________, __________
Due Date: ___________ location _________, __________
This Promissory Note (the "Note") is made as the date written above
between _______________, whose address is _______________________ ("Borrower")
and INTEGRATED BUSINESS SYSTEMS AND SERVICES, INC., whose address is 0000 Xxxx
Xxxx, Xxxxx X, Xxxxxxxx, Xxxxx Xxxxxxxx 00000 ("Lender"), and is issued as
payment of the exercise price of a certain Amended And Restated Common Stock
Purchase Warrant for the purchase of the Lender's stock dated October 1, 2003
(the "Warrant"), which was issued by Lender to Borrower.
PAYMENT. FOR VALUE RECEIVED, Borrower promises to pay to the order of Lender the
principal sum of _____________ ($________) Dollars (adjusted as set forth below)
(the "Principal Amount"), together with interest on the unpaid balance of the
Principal Amount, as follows:
INTEREST. Interest shall accrue on the unpaid balance of the Principal Sum at
the rate of 9% per annum. In no event shall the interest rate payable under this
Note exceed the maximum rate permitted by law.
MATURITY; PREPAYMENT. The Principal Sum, together with accrued and unpaid
interest thereon, shall be due and payable upon the first to occur of the
following: (i) five days following Borrower's receipt of written notice from
Lender that the Securities and Exchange Commission has declared effective the
registration statement described in Sections 1 and 8 of the Warrant; or (ii) the
second anniversary of this Note (the "Maturity Date"). Borrower may prepay any
and all principal and accrued interest due under this Note at any time without
additional interest or penalty.
Principal and interest shall be paid by the Borrower in lawful money of the
United States of America at Lender's address shown above, or at such other
address as the Lender may designate in writing to the Borrower.
ADJUSTMENT TO PRINCIPAL AMOUNT. Lender acknowledges that the principal amount of
this Note may be reduced in the event that the effective date of the
Registration Statement described in Sections 1 and 8 of the Warrant is delayed
(or does not occur). The amount by which the principal amount may be reduced is
at set forth in Section 1 of the Warrant.
DEFAULT; REMEDIES. This Note shall be in default if Borrower either: (a) does
not pay the principal and accrued interest within 5 days of the Maturity Date;
or (b) institutes proceedings for an order for relief, or consents to the
institution of such a proceeding against it, or files a petition or consent
seeking reorganization or arrangement under, the federal bankruptcy laws, or
consents to the appointment of a receiver or trustee or assignee in bankruptcy
of it or its property, or makes an assignment for the benefit of creditors, or
admits in writing its inability to pay its debts generally as they become due.
Lender shall have the right to exercise any and all rights available to it under
South Carolina law. In the event an action is commenced to collect amounts due
under this Note, the substantially prevailing party in such action shall be
entitled to recover its attorney fees. No delay on the part of Lender in the
exercise of any of the aforesaid rights or remedies shall operate as a waiver
thereof, and no single or partial exercise of any right or remedy by the Lender
shall preclude the exercise of any other right or remedy. Any remedy provided
hereunder shall be in addition to all other remedies available to Lender and
such remedies shall be cumulative.
ASSIGNMENT. This Note and all rights and remedies of the Lender shall inure to
the benefit of the Lender's legal representatives, successors and assigns and to
any other holder who derives title to or interest in this Note, and shall bind
the Borrower and its legal representatives, successors and assigns.
13
NOTICES. Any notices required by the terms of this Note, until further notice in
writing, shall be sent by registered or certified mail, return receipt
requested, postage prepaid, to the Borrower and Lender at their respective
addresses shown above.
WAIVER; SEVERABILITY. Borrower waives presentment, demand for payment, notice of
dishonor, notice of protest, and protest, and all other notices or demands in
connection with the delivery, acceptance, performance, default, endorsement of
this instrument (except for any notice or grace period expressly provided in
this Note); and agrees that no obligation hereunder shall be discharged by any
extension, indulgence or release given to any guarantor or other person or by
the release or non-enforcement of any security given in connection herewith.
Notwithstanding anything herein to the contrary, nothing shall limit any rights
granted to Lender by other instruments or by law.
SECURITY. Borrower's promise to pay this Note is also secured by a security
interest in [treasury xxxx, certificate of deposit] being held by Lender. Upon a
default by Borrower under this Promissory Note, Lender, in addition to any other
remedies which it may have at law or equity, may foreclose its security interest
on the collateral.
GOVERNING LAW. This Note shall be deemed to be delivered in the State of South
Carolina and shall be governed by and be construed in accordance with the laws
of the State of South Carolina.
CHOICE OF FORUM. The parties agree that all actions arising directly or
indirectly out of this Agreement shall be litigated exclusively in the United
States District Court for South Carolina or the Richland County, South Carolina
Circuit Court, and the parties hereby irrevocably consent to the jurisdiction
and venue of those courts over the parties to this Agreement.
DUE AUTHORITY. Borrower represents and warrants to Lender that this Note is a
valid, binding obligation of the Borrower and enforceable in accordance with its
terms, and Borrower's execution of this Note does not conflict with any other
legal obligation of Borrower.
__________________________________
14
EXHIBIT C
FORM OF TRANSFEROR ENDORSEMENTS
(To be signed only on transfer of Warrant)
For value received, the undersigned hereby sells, assigns, and transfers unto
the person(s) named below under the heading "Transferees" the right represented
by the within Warrant to purchase the percentage and number of shares of Common
Stock of Integrated Business Systems and Services, Inc. to which the within
Warrant relates specified under the headings "Percentage Transferred" and
"Number Transferred," respectively, opposite the name(s) of such person(s) and
appoints each such person Attorney to transfer its respective right on the books
of Integrated Business Systems and Services, Inc. with full power of
substitution in the premises.
Percentage Number
Transferees Transferred Transferred
----------- ----------- -----------
_____________________________________________
Signature must conform to name of holder as
specified on the face of this Warrant
Dated:________________, 20_____ _____________________________________________
(Address)
Signed in the presence of:
_______________________________ _____________________________________________
(Name) (Signature)
_____________________________________________
(Address)
ACCEPTED AND AGREED:
_____________________________________________
[TRANSFEREE] (Signature)
_______________________________ _____________________________________________
(Name) (Address)
[TRANSFEREE]
_______________________________
(Name)
15
ACKNOWLEDGMENT OF GUARANTORS
This Acknowledgment of Guarantors ("Acknowledgment") is given effective
as of October 1, 2003 by Xxxxxx Xxxxxxxxxx and Xxxxxx Xxxxxx (individually
"Guarantor" and collectively "Guarantors"), jointly and severally, in favor of
IBSS Class A Investors, LLC and IBSS Class B Investors, LLC (individually a
"Creditor" and collectively "Creditors").
PRELIMINARY STATEMENT
A. On December 31, 2001, Guarantors issued their Guaranties
("Guaranties") to Creditors of that certain $928,241.00 Class A Secured
Convertible Debenture and $2,033,399.00 Class B Secured Convertible Debenture
(the "Debentures").
B. Concurrent herewith, Creditors and IBSS have agreed to amend
the Debentures (referred to herein as the "Amendments") in order to: (i) extend
the Maturity Date (as amended, each Debenture matures in the earlier to occur of
December 31, 2005 and the date of the closing of a liquidity event); and, (ii)
suspend the accrual of interest during the period October 1, 2003 until the
Maturity Date of each Debenture (provided no default occurs thereunder).
C. In addition, concurrent herewith, IBSS and the Creditors have
agreed to fix the conversion price set forth in the Debentures and extend the
expiration dates of certain Warrants issued concurrent with the Debentures.
D. Guarantors, by entering into this Acknowledgment, wish to
confirm that the Amendments shall not effect their liability under the
Guaranties. Creditors would not have agreed to the Amendments, unless the
Guarantors entered into this Acknowledgment.
NOW, THEREFORE, the Guarantors acknowledge as follows:
1. Acknowledgment. Guarantors hereby acknowledge that the
Creditors' entering into the Amendments with IBSS shall not
effect the Guarantors' liability to Creditors under their
Guaranties.
IN WITNESS WHEREOF, Guarantors have executed this Acknowledgment
effective as of the date written above,
"Guarantors"
_____________________________________________
XXXXXX XXXXXXXXXX
_____________________________________________
XXXXXX XXXXXX
16
October 1, 2003
Integrated Business Systems and Services, Inc.
Attn: Xxxxxx Xxxxxxxxxx, CEO
0000 Xxxx Xxxx, Xxxxx X
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
RE: LETTER OF INTENT: IBSS Class A Investors, LLC; IBSS Class B
Investors, LLC December 31, 2001 Restructuring; Amendments to
Conversion Price and Expiration Dates
Gentlemen:
As you know, the undersigned IBSS Class A Investors, LLC and IBSS Class
B Investors, LLC (collectively "Investors"), entered into various Convertible
Debentures, Stock Purchase Warrants and other agreements, dated December 31,
2001 (the "December 31, 2001 Restructuring") with Integrated Business Systems
and Services, Inc. ("IBSS").
On September 25 and 26, 2003, the Investors contacted you to advise of
their intent to convert their Convertible Debentures and to fully exercise their
Warrants. IBSS asked the Investors to forbear from converting their Debentures
and exercising their Warrants, and in exchange for such forbearance, IBSS and
the Investors on October 1, 2003, reached the understandings set forth below.
The Investors and IBSS agree as follows:
1. Fixed Conversion Price. The Conversion Price (or Exercise
Price, as the case may be) in such of the "Convertible Instruments" listed
below, shall be deemed to be the Conversion Price (or Exercise Price) which
would have been applicable if the holder of the Convertible Debenture (or Stock
Purchase Warrant) had exercised such holder's conversion rights (or exercise its
purchase rights) as of October 1, 2003.
The Convertible Instruments to which this provision applies are the
following (each executed effective as of December 31, 2001 except as otherwise
indicated below):
(a) Class A Secured Convertible Debenture.
(b) Class A Contingent Common Stock Purchase Warrant.
(c) Class B Secured Convertible Debenture.
(d) Class B Contingent Common Stock Purchase Warrant.
(e) Common Stock Purchase Warrant (issued to IBSS Class A
Investors).
(f) Common Stock Purchase Warrant (issued to IBSS Class B
Investors).
Integrated Business Systems and Services, Inc.
Attn: Xxxxxx Xxxxxxxxxx, CEO
October 1, 2003
Page 2
2. Extended Maturity Dates. The Maturity Dates of the Class A
Secured Convertible Debenture and the Class B Secured Convertible Debenture are
hereby amended; as amended, the Maturity Dates of each such Debenture shall be
the earlier to occur of: (i) December 31, 2005; and (ii) the date of the closing
of a Liquidity Event (as that term is defined in the Debentures). (Extension of
the Maturity Dates as set forth in the prior sentence shall automatically extend
the date for the holders thereof to elect a conversion of such Debentures.)
3. Extended Expiration Dates. The Expiration Dates of the Common
Stock Purchase Warrants issued to IBSS Class A Investors and IBSS Class B
Investors (which expiration date is at present December 31, 2004) is hereby
extended to December 31, 2005.
4. Suspension of Interest Accrual. Provided that no Default
occurs under the Class A Secured Convertible Debenture or the Class B Secured
Convertible Debenture, interest under the Class A Secured Convertible Debenture
and the Class B Secured Convertible Debenture will not accrue on the unpaid
principal balance thereof during the period October 1, 2003 until the Maturity
Date.
Please signify your binding agreement to the foregoing by executing a
copy of this Letter Of Intent where indicated below. This Letter Of Intent may
be executed in multiple counterparts, each of which when taken together shall be
deemed to be a complete agreement. Telecopied signatures shall be binding as
originals.
INTEGRATED BUSINESS SYSTEMS AND SERVICES, INC.
By: ___________________________________
Xxxxxx Xxxxxxxxxx, CEO
IBSS CLASS A INVESTORS, LLC IBSS CLASS B INVESTORS, LLC
By: ___________________________________ By: ________________________________
Xxxxx Xxxxxxx, Agent Xxxxx Xxxxxxx, Agent
2
