Exhibit 10.23
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 464,120 Shares of Common Stock
of Integrated Business Systems and Services, Inc.
subject to adjustment)
COMMON STOCK PURCHASE WARRANT
December 31, 2001
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 A Investors,, a Michigan co-partnership, whose
address is c/o 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 the Third Anniversary of the date
hereof (or if such anniversary is not a Business Day, then at 5 p.m. Detroit
time on the first Business Day after such third anniversary), up to 464,120
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 the lesser of:
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(i) One Dollar ($1.00) per share; or, (ii) one-half of the average closing sales
price per share (as reported in the Wall Street Journal) of the Common Stock for
the ten (10) trading days ended two (2) trading days prior to the exercise date.
Representations and Warranties. The Company represents and warrants to the
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Investor, as follows:
(a) Corporate Existence. The Company is a corporation duly
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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
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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
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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 The Company ha 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 (which may accompany this Warrant
as Exhibit ____). No shares of Common Stock are held in the
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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
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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 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
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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.
2. Delivery of Stock Certificates etc. on Exercise. The Company agrees that
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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.
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3.1 Adjustment for Subdivisions and Certain Dividends and Distributions. If the
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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
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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.
3.3 Adjustment for Reorganizations, Reclassifications and Other Changes. If the
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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
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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
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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
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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:
(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,
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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 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
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Securities referred to in this Section 3.5(4).
3.6 Fractional Share Payment. No fractional shares or script representing
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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
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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
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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
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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
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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 l 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
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certificate of incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale 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
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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
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(xxxx://xxx.xxx.xxx), the Company shall furnish to the Investor:
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(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 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
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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; and
(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 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
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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
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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
-8-
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
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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, 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
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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
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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 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:_______________________________________
Xxxxxx X. Xxxxxxxxxx
Chief Executive Officer
Accepted and Agreed by the Investor effective as of the date first set forth
above:
Investor
IBSS CLASS B INVESTORS, a Michigan co-partnership,
By: _____________________________
Its: ____________________________
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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) ____________________________________
Exhibit B
SECURED PROMISSORY NOTE
------------------------
$__________ date__________,________
Due Date: ____________ location__________,________
This Promissory Note (the "Note") is made as the date written above between
__________, whose address is _______________________ ("Borrower") and Integrated
Business Systems and Services, Inc., whose address is 000 Xxxxxx Xxx, Xxxxx 000
Xxxxxxxx, Xxxxx Xxxxxxxx 00000 ("Lender"), and is issued as payment of the
exercise price of a certain Common Stock Purchase Warrant for the purchase of
the Lender's stock dated January __, 2002 (the "Warrant"), which was issued by
Lender to Borrower.
Payment. FOR VALUE RECEIVED, Borrower promises to pay to the order of Lender the
-------
principal sum of ____________ ($_______) 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.
Notices. Any notices required by the terms of this Note, until further notice in
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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
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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.
_______________________________________
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 the Warrant
Dated: __________________, 20___
Signed in the presence of:
________________________________ ____________________________________________
(Name) (Address)
ACCEPTED AND AGREED:
[TRANSFEREE] ____________________________________________
(Signature)
_________________________________ ____________________________________________
(Name) (Address)
[TRANSFEREE] ____________________________________________
(Signature)
_________________________________ ____________________________________________
(Name) (Address)
