EXHIBIT 4.30
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 CLASS B CONTINGENT COMMON STOCK PURCHASE WARRANT
October 1, 2003
THIS INSTRUMENT AMENDS AND RESTATES THAT CERTAIN CLASS B. CONTINGENT COMMON
STOCK PURCHASE WARRANT, DATED DECEMBER 31, 2001, AND REPLACES SAID CLASS B.
CONTINGENT COMMON STOCK PURCHASE WARRANT IN ITS ENTIRETY.
INTEGRATED BUSINESS SYSTEMS & SERVICES, INC. (the "Company") hereby agrees that,
in consideration of IBSS Class B Investors, LLC, a Michigan limited liability
company (successor to IBSS Class B 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. (the
"Investor") loaning to the Company the sum of Two Million Thirty Three Thousand
Three Hundred Ninety Nine and 00/100 Dollars ($2,033,399) evidenced by and
pursuant to a Class B Secured Convertible Debenture executed by the Company
concurrently herewith (" Debenture"), the Investor is entitled, subject to the
Condition Precedent set forth below, to purchase from the Company at any time or
from time to time before 5:00 p.m., Detroit time, on the Expiration Date (unless
extended pursuant to the Extension Right), up to Two Million Thirty Three
Thousand Three Hundred Ninety Nine (2,033,399) shares (subject to adjustment as
provided herein) of the Company's fully paid and nonassessable shares of common
stock, no par value per share (the "Shares"), at the Purchase Price defined
below.
CONDITION PRECEDENT. Notwithstanding anything to the contrary contained herein,
this Amended and Restated Contingent Common Stock Purchase Warrant (this
"Warrant") shall be exercisable by the Investor if and only if the full amount
due under the Secured Debenture has not been paid on or before its Maturity Date
(as defined in the Debenture and as the same may be extended) or any other event
of default occurs thereunder ("Condition Precedent"). In the event the Condition
Precedent has occurred, the Investor shall be entitled to purchase one Share for
each dollar of unpaid principal balance outstanding under the Secured Debenture
on the date which is ten (10) days after the Maturity Date (as the same may be
extended) (e.g., if on that date the Company owes Fifty Thousand ($50,000)
Dollars to the Investor under the Debenture, the Investor shall be entitled to
purchase 50,000 Shares at the Purchase Price defined below). The Company's
obligations under this Warrant (e.g., to reserve shares in case of exercise, to
provide financial information, etc.) shall remain in force, however,
notwithstanding the presence or absence of any such event of default under the
Debenture. The Investors exercise of its rights under this Warrant shall not
reduce Company's liability under the Debenture.
EXTENSION RIGHT. In the event that the Investor surrenders this Warrant and
exercises its option hereunder and the Company is unable at that time to issue
to the Investor Shares that are "Registered Shares" (see Section 11), the
Company shall return to the Investor this Warrant and the Investor's Purchase
Price and the Expiration Date shall be automatically extended until 30 days
after the Company gives written notice to the Investor that the Company is able
to issue Registered Shares. In addition, on the first day of each month after
the Registration Deadline (see Section 11) during the time in which
Registered Shares have been requested but are not available, the number of
Shares that the Investor shall be entitled to purchase shall increase by five
(5%) percent.
PURCHASE PRICE. The Purchase Price per Share shall be equal to seven and
three-eighths cents ($0.07275).
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.
COVENANT AGAINST SHORT SALES. The Investor acknowledges and agrees that the
Investor does not on the date hereof and will not during the Restricted Period
hold or cause to be held (directly or indirectly through any other person or
entity) any "short" position in the Company's Common Stock or otherwise directly
or indirectly sell any of the Company's Common Stock in a "short sale." 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 Shares purchased hereunder,
or, (ii) the Registration Deadline.
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 Shares as herein provided and otherwise to
carry out the terms of this Warrant, and none of such actions violate any
provision of the Company's Bylaws or Articles of Incorporation, as amended, 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, which breach
would have a material adverse effect on the Company, 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 had approximately 17,774,694 shares of Common Stock issued and
outstanding and approximately 5,361,539 shares issuable upon the exercise of
then-outstanding options or warrants or upon the 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 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 other
than as reflected on the Company's Capitalization Table dated December 28, 2001.
No shares of the Company's Common Stock are held in the Company's treasury. No
shares of the Company's Common Stock are entitled to any cumulative voting
rights, pre-emptive rights (except as may be contained in documents executed
contemporaneously herewith).
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DEFINITIONS.
As used herein the following terms, unless the context otherwise requires, have
the following respective meanings:
(a) The term "Company" shall include Integrated Business Systems
and Services, Inc. and any corporation that shall succeed to
or assume the obligations of Integrated Business Systems &
Services, Inc. hereunder as provided herein.
(b) The term "Common Stock" includes (a) the Company's Common
Stock, no par value per share, as authorized on the date of
this Agreement, (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
ordinarily, in the absence of contingencies, be entitled to
vote for the election of a majority of directors of the
Company (even if the right so to vote has been suspended by
the happening of such a contingency) 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.
(c) The term "Shares" means the fully paid, nonassessable,
registered shares of Common Stock issued or issuable upon
exercise of this Warrant.
(d) The term "Expiration Date" shall mean April 30, 2006.
(e) The term "Other Securities" refers to any stock (other than
Common Stock) and other securities of the Company or any other
person (corporate or otherwise) which the Investor at any time
shall be entitled to receive, or shall have received, on the
exercise of this Warrant, in lieu of or in addition to Common
Stock, or which at any time shall be issuable or shall have
been issued in exchange for or in replacement of Common Stock
or Other Securities.
(f) 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.
(g) 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.
(h) 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.
1. EXERCISE OF WARRANT.
1.1 Exercise Procedure. This Warrant may be exercised by the
investor by surrender of this Warrant, with the form of subscription attached as
Exhibit A hereto (the "Subscription Form") duly executed by the Investor, to the
Company at its principal office or at the office of its Warrant Agent, if any
(as provided in Section 13), accompanied by payment, in cash or by certified or
official bank check payable to the order of the Company, in the amount obtained
by multiplying the number of Shares for which this Warrant is then exercisable
by the Purchase Price (as hereinafter defined) then in effect. If such
exercise(s) occur prior to the Expiration Date hereof, the Company will issue a
new Warrant or
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Warrants of like tenor, in the name of the Investor or as the Investor (upon
payment by the Investor of any applicable transfer taxes) may request.
1.2 Company Acknowledgment. The Company will, at the time of the
exercise of this Warrant, upon the request of the Investor, acknowledge in
writing its continuing obligation to afford to the Investor any rights to which
the Investor shall continue to be entitled after such exercise in accordance
with the provisions of this Warrant. If the Investor shall fail to make any such
request, such failure shall not affect the continuing obligation of the Company
to afford to the Investor any such rights.
1.3 Trustee for the Investor. In the event that a bank or trust
company shall have been appointed as trustee for the Investor pursuant to
Subsection 4.2, such bank or trust company shall have all the powers and duties
of a Warrant Agent appointed pursuant to Section 13 and shall accept, in its own
name for the account of the Company or such successor person as may be entitled
thereto, all amounts otherwise payable to the Company or such successor, as the
case may be, on exercise of this Warrant pursuant to this Section 1.
2. DELIVERY OF STOCK CERTIFICATES ETC. ON EXERCISE. The Company agrees
that the Shares purchased upon exercise of this Warrant shall be deemed to be
issued to the Investor (or its Transferee pursuant to Section 10 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
(including the payment by it of any applicable issue taxes) will cause to be
issued in the name of and delivered to the Investor, or as the Investor (upon
payment by the Investor of any applicable transfer taxes) may direct, a
certificate or certificates for the number of duly and validly issued, fully
paid and nonassessable Shares (or Other Securities) to which the Investor shall
be entitled on such exercise, together with any other stock or other securities
and property (including cash, where applicable) to which the Investor is
entitled upon such exercise pursuant to Section 1 or otherwise.
3. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES.
3.1 The Purchase Price hereof shall be subject to adjustment from
time to time as follows: in case the Company shall (i) pay a dividend on its
Common Stock, (ii) subdivide its outstanding shares of Common Stock, or (iii)
combine its outstanding shares of Common Stock into a small number of shares,
then, in such an event, the Purchase Price in effect immediately prior thereto
shall be adjusted proportionately so that the adjusted Purchase Price will bear
the same relation to the Purchase Price in effect immediately prior to any such
event as the total number of shares of Common Stock outstanding immediately
prior to any such event shall bear to the total number of shares of Common Stock
outstanding immediately after such event. An adjustment made pursuant to this
Subsection 3.1, (i) shall become effective retroactively immediately after the
record date in the case of a dividend and (ii) shall become effective
immediately after the effective date in the case of a subdivision or
combination. The Purchase Price, as so adjusted, shall be readjusted in the same
manner upon the happening of any successive event or events described herein.
3.2 Notwithstanding anything in Subsection 3.1, in no event xxxx
the Purchase Price exceed one ($1.00) dollar per Share.
3.3 Upon each adjustment of the Purchase Price pursuant to
Subsection 3.1, the number of shares of Common Stock purchasable upon exercise
of this Warrant shall be adjusted to the number of shares of Common Stock,
calculated to the nearest one hundredth of a share, obtained by multiplying the
number of shares of Common Stock purchasable immediately prior to such
adjustment upon the exercise of this Warrant by the Purchase Price in effect
prior to such adjustment and dividing the product so obtained by the new
Purchase Price.
4
3.4 In case of any capital reorganization of the Company, or of
any reclassification of the Common Stock, this Warrant shall be exercisable
after such capital reorganization or reclassification upon the terms and
conditions specified in this Warrant, for the number of shares of stock or other
securities which the Common Stock issuable (at the time of such capital
reorganization or reclassification) upon exercise of this Warrant Certificate
would have been entitled to receive upon such capital reorganization or
reclassification if such exercise had taken place immediately prior to such
action. The subdivision or combination of shares of Common Stock at any time
outstanding into a greater or lesser number of shares of Common Stock shall not
be deemed to be a reclassification of the Common Stock of the Company for the
purposes of this Subsection 3.4.
3.5 Whenever the Purchase Price is adjusted as herein provided,
the Company shall compute the adjusted Purchase Price in accordance with
Subsection 3.1 and shall prepare a certificate signed by its Chairman of the
Board, Vice Chairman of the Board, President or Vice President and its principal
accounting officer setting forth the adjusted Purchase Price and showing in
reasonable detail the method of such adjustment and the fact requiring the
adjustment and upon which such calculation is based, and such certificate shall
forthwith be forwarded to the Investor.
3.6 In case at any time after the date of this Warrant:
(a) The Company shall declare a dividend (or any other
distribution) on its shares of Common Stock payable otherwise than in cash out
of its earned surplus; or
(b) The Company shall authorize the granting to the
holders of its shares of Common Stock of rights to subscribe for or purchase any
shares of capital stock of any class or of any other rights; or
(c) The Company shall authorize any reclassification of
the shares of its Common Stock (other than a subdivision or combination of its
outstanding shares of Common Stock), or any consolidation or merger to which it
is a party and for which approval of any shareholders of the Company is
required, or the sale or transfer of all or substantially all of its assets or
all or substantially all of its issued and outstanding stock; or
(d) Events shall have occurred resulting in the voluntary
and involuntary dissolution, liquidation or winding up of the Company;
then the Company shall cause notice to be sent to the Investor at least 20 days
prior (or 10 days prior in any case specified in clause (a) or (b) above, or on
the date of any case specified in clause (d) above) to the applicable record
date hereinafter specified, a notice stating (1) the date on which a record is
to be taken for the purpose of such dividend, distribution or rights, or, if a
record is not to be taken, the date as of which the holders of shares of Common
Stock of record to be entitled to such dividend, distribution or rights are to
be determined or (2) the date on which such reclassification, consolidation,
merger, sale, transfer, initial public offering, dissolution, liquidation or
winding up is expected to become effective, and the date as of which it is
expected that holders of shares of Common Stock of record shall be entitled to
exchange their shares for securities or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up. Failure to give any such notice of any defect therein
shall not affect the validity of the proceedings referred to in clauses (a),
(b), (c) and (d) above.
4. ADJUSTMENTS FOR REORGANIZATION, CONSOLIDATION, MERGER, ETC.
4.1 Reorganization, Consolidation, Merger, etc. In case at any
time or from time to time, the Company shall (a) effect a reorganization, (b)
consolidate with or merge into any other person, or (c) transfer all or
substantially all of its properties or assets to any other person under any plan
or arrangement contemplating the dissolution of the Company, then, in each such
case, as a condition to the consummation of such a transaction, proper and
adequate provisions shall be made by the Company
5
whereby the Investor, on the exercise hereof as provided in Section 1 at any
time after the consummation of such reorganization, consolidation or merger or
the effective date of such dissolution, as the case may be, shall receive, in
lieu of the Common Stock (or Other Securities) issuable on such exercise prior
to such consummation or such effective date, the stock and other securities and
property (including cash) to which the Investor would have been entitled upon
such consummation or in connection with such dissolution, the case may be, if
the Investor had so exercised this Warrant, immediately prior thereto.
4.2 Dissolution. In the event of any dissolution of the Company
following the transfer of all or substantially all of its properties or assets,
the Company, prior to such dissolution, shall at its expense deliver or cause to
be delivered the stock and other securities and property (including cash, where
applicable) receivable by the Investor after the effective date of such
dissolution pursuant to this Section 4 to a bank or trust company having its
principal office in Detroit, Michigan, as trustee for the Investor.
4.3 Continuation of Terms. Upon any reorganization, consolidation,
merger or transfer (and any dissolution following any transfer) referred to in
this Section 4, this Warrant shall continue in full force and effect and the
terms hereof shall be applicable to the shares of stock and other securities and
property receivable on the exercise of this Warrant after the consummation of
such reorganization, consolidation or merger on the effective date of
dissolution following any such transfer as the case may be, and shall be binding
upon the issuer of any such stock or other securities, including, in the case of
any such transfer, the person acquiring all or substantially all of the
properties or assets of the Company, whether or not such person shall have
expressly assumed the terms of this Warrant as provided in Section 10.
5. ACCOUNTANT'S CERTIFICATE AS TO ADJUSTMENTS. In each case of any
adjustment or readjustment in the Shares 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 (and not
objected to by the holder of this Warrant) 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 (or Other Securities) issued or sold or deemed
to have been issued or sold, (b) the number of shares of Common Stock (or Other
Securities) outstanding or deemed to be outstanding, and (c) the Purchase Price
in effect and number and type of Shares 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 the Investor, and will, on the written request at any time of the
Investor, furnish to the Investor a like certificate setting forth the Purchase
Price and the number and type of Shares at the time in effect and showing how it
was calculated.
6. 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 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 Investor against
dilution or other impairment. Without limiting the generality of the foregoing,
the Company (a) will not increase the par value of any Shares 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
6
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.
7. NOTICES OF RECORD DATE, ETC. In the event of:
(a) any taking by the Company of a record of the holders of any
class of securities for the purpose of determining the holders
thereof who are entitled to receive any dividend or other
distribution, or any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any
other securities or property of the Company, or to receive any
other right, or
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of
the Company or any transfer of all or substantially all the
assets of the Company to or consolidation or merger of the
Company with or into any other person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company, then and in each such event the
Company will mail or cause to be mailed to the Investor a
notice specifying (i) the date on which any such record is to
be taken for the purpose of such dividend, distribution or
right and stating the amount and character of such dividend,
distribution, or right and the date on which the holders of
Common Stock will be entitled thereto, and (ii) the date on
which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger,
dissolution, liquidation or winding-up is to take place, and
the time, if any is to be fixed, as to which the holders of
record of Common Stock (or Other Securities) shall be entitled
to exchange their shares of Common Stock (or Other Securities)
for securities or other property deliverable on such
reorganization, reclassification, recapitalization, transfer,
consolidation, merger, dissolution, liquidation or winding-up.
Such notice shall be mailed at least 20 days prior to the date
specified in such notice on which any such action is to be
taken.
8. 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
lockup 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 and changes in
financial position of the Company and its subsidiaries for
such fiscal year, and a consolidated balance sheet of the
Company and its subsidiaries as of
7
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 the 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 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; 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
8 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, where the existence of such default if
not
8
cured within any applicable cure period would have a material
adverse effect on the Company, 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
sub-paragraph shall be conditioned upon the prior execution by the Investor and
delivery to the Company of an appropriate confidentiality and public trading
lock-up agreement with the Company.
9. RESERVATION OF STOCK, ETC. ISSUABLE ON EXERCISE OF WARRANT; FINANCIAL
STATEMENTS. The Company will at all times reserve and keep available, solely for
issuance and delivery on the exercise of this Warrant, all shares of Common
Stock (or Other Securities) from time to time issuable on the exercise of this
Warrant. This Warrant entitles the Investor hereof to receive copies of all
financial and other information distributed or required to be distributed to the
holders of the Company's Common Stock.
10. ASSIGNMENT; EXCHANGE OF WARRANT. This Warrant, and the rights evidenced
hereby, may be transferred by the Investor ("Transferor") with respect to any or
all of the Shares. On the surrender for exchange of this Warrant, with the
Transferor's endorsement in the form of Exhibit B attached hereto (the
"Transferor Endorsement Form"), to the Company, the Company at its expense (but
with payment by the Transferor of any applicable transfer taxes) 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 this Warrant so surrendered by the
Transferor. The Company hereby covenants expeditiously to register the
Transferor and/or any such Transferees on its securities record books as the
registered holder(s) of this Warrant or the portion hereof transferred as
specified in such Transferor Endorsement Form.
11. REGISTRATION RIGHTS, PROCEDURE; INDEMNIFICATION. The Company shall
within sixty (60) days after the Maturity Date of the Secured Debenture (as the
same may be extended), 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
its filing), a registration statement with respect to the Shares issuable by the
Company in connection with an exercise of this Warrant such that, upon exercise
by the Investor of this Warrant, Investor shall receive shares of Common Stock
in the Company which shall be immediately freely tradeable on the NASDAQ Stock
Market or the Over-the-Counter Bulletin Board (herein "Registered Shares"). The
last day of the 180 day period described in this Section is the "Registration
Deadline." At its expense, the Company will keep such registration effective for
so long as the Investor holds Shares issued or issuable hereunder (or, if
earlier, until such time as the Investor may sell all of the Investors Shares 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 Investor 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 Investor).
12. REPLACEMENT OF WARRANT. On receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of this Warrant
and, in the case of any such loss, theft or destruction of this Warrant, on
delivery of an indemnity agreement or security reasonably satisfactory in form
and
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amount to the Company or, in the case of any such mutilation, on surrender and
cancellation of this Warrant, the Company at its expense will execute and
deliver, in lieu thereof, a new Warrant of like tenor; provided, however, if the
Investor is the initial Investor and this 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 Investors written agreement to
indemnify the Company.
13. WARRANT AGENT. The Company may, by written notice to the Investor,
appoint an agent having an office in Detroit, Michigan for the purpose of
issuing Common Stock (or Other Securities) on the exercise of this Warrant
pursuant to Section 1, exchanging this Warrant pursuant to Section 10, and
replacing this Warrant pursuant to Section 12, 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.
14. REMEDIES. The Company stipulates that in the event of the Company's
default under this Warrant, the Investor shall be irreparably harmed the
Investor's damages will be substantial and difficult, if not impossible;
therefore, the remedies at law of the Investor 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 tents hereof or otherwise.
15. NEGOTIABILITY, ETC. This Warrant is issued upon the following terms, to
all of which the Investor 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 same manner as in the
case of a negotiable instrument transferable by endorsement
and delivery;
(b) 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, notwithstanding the requirements of Section 10 hereof;
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 and/or public trading lockup agreement
executed by such prior owner 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.
16. NOTICES, ETC. All notices and other communications from the Company to
the Investor 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 the Investor or, until the Investor furnishes to the Company an
address, then to, and at the address of, the Investor who has so furnished an
address to the Company.
17. 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
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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.
18. CONSENT TO JURISDICTION. The Company hereby irrevocably submits to the
jurisdiction of the Oakland County Michigan Circuit Court and any United States
federal court sitting in the City of Pontiac, 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 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 other place of business
of the Company in the State of Michigan. In the event the Company ceases to have
a place of business in the State of Michigan it agrees to give the Investor
hereof written notice prior to the existence of such fact and at the Company's
expense to irrevocably appoint an agent within the State of Michigan acceptable
to the Investor authorized to accept such service of process on the Company's
behalf. The Company agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Section 18 shall affect the right of the Investor to serve legal process in any
other manner permitted by law or affect the right of the Investor to bring any
action or proceeding against the other party or its property in courts of any
other jurisdictions.
19. COVENANT AGAINST SHORT SALES. The Investor acknowledges and agrees that
the Investor does not on the date hereof and shall not during the Restricted
Period, hold or cause to be held (directly or indirectly through any other
person or entity) any "short" position in the Company's equity securities or
equity-linked securities or otherwise sell any of the Company's equity
securities or equity-linked securities in a "short sale." 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 Shares purchased hereunder, or, (ii) the
Registration Deadline.
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IN WITNESS WHEREOF, each of the Company and the Investor has executed
this Warrant under seal effective 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:
IBSS 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
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EXHIBIT A
FORM OF SUBSCRIPTION
(To be signed only on exercise of Warrant)
To Integrated Business Systems & 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 & Services, inc. and herewith makes payment
of $_________ therefor, 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 this Warrant)
(Address) ____________________________________________
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EXHIBIT B
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 & 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 __________________________ 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: _______________, _____
Signed in the presence of:
_______________________________ ____________________________________________
(Name) (Address)
ACCEPTED AND AGREED:
[TRANSFEREE] ____________________________________________
Signature
_______________________________ ____________________________________________
(Name) (Address)
[TRANSFEREE] ____________________________________________
Signature
_______________________________ ____________________________________________
(Name) (Address)
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