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CONSENT TO MODIFICATIONS
This Consent to Modifications, dated April 19, 2010, is given and
agreed to by the “Purchasers” under the Fifth Amended
and Restated Note and Warrant Purchase Agreement by and among the
Purchasers, Integral Vision, Inc., a Michigan corporation (the
"Company"), and J. M. Warren Law Offices, P.C., as Agent.
Factual Statements
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A.
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The undersigned is a Purchaser under the
Fifth Amended and Restated Note and Warrant Purchase Agreement (as
modified December 15, 2008, January 28, 2009, June 10, 2009,
June 23, 2009, and September 16, 2009), dated effective as of the
date of execution by such Purchaser, for the purchase of the Notes
and Warrants of the Company (the “Purchase
Agreement”).
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B.
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The Company intends to ask shareholders
at its next shareholders meeting to approve a one (1) for ten (10)
reverse stock split of its Common Stock or Shares. This
reverse stock split is part of its plan to encourage greater
interest in its shares among members of the financial community and
the investing public and possibly create a more liquid market for
the Company’s shareholders with respect to those shares
presently held by shareholders and issuable to Note and Warrant
holders. Warrants issued and issuable to Note holders need to
be amended to allow this reverse stock split.
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C.
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Limitations on equity security which can
be issued by the Company under employee compensation plans have not
been raised since March 2008. Since then, the Company has
been required to raise funds to maintain operations by issuing
equity securities which have diluted the interest of key officers
and employees in the future potential of the Company. It is
in the interest of the shareholders and Note and Warrant holders to
allow the Company to issue additional equity securities under its
employee compensation plans to restore the incentive compensation
for the Company’s key officers and employees to the levels
that were set in March 2008.
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D.
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The parties to this Purchase Agreement,
wish to modify certain portions of the Fifth Amended and Restated
Note and Warrant Purchase Agreement and Warrants (issued and
issuable) to accommodate the proposals outlined above. This
shall be accomplished by attaching said changes to the Purchase
Agreement in the form of an addendum to the Purchase Agreement and
by attaching an Amendment to Warrants that have already been issued
– with said “warrant amendment” attached hereto
as Exhibit A. Warrants issued by the Company after the
effective date of this Consent to Modifications will incorporate
the modifications herein.
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April 19, 2010 — Integral Vision, Inc. —
Consent to Modifications Page 1of 8
Agreement
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1.
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Modifications. The undersigned
agree to the modifications to the Purchase Agreement as
follows:
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Section 1. (d).: This section shall be amended by adding a fourth
paragraph which states as follows:
The number of Shares that each Warrant holder is entitled to
receive pursuant to this section and the exercise price for such
Shares shall be adjusted in the event the Company issued stock
dividends, recapitalizes, etc. as follows:
In the event the Company shall, after the issuance of any Class 2
Note that is currently accruing Warrants, issue any shares of
Common Stock (i) by stock dividend or any other distribution upon
the stock of the Company payable in Common Stock or in securities
convertible into or exercisable for shares of Common Stock or (ii)
in subdivision of its outstanding Common Stock, by reclassification
or otherwise, the current exercise price then in effect shall be
reduced proportionately and the number of shares of Common Stock
for which accrued Warrants are exercisable shall also be
proportionately increased so that the percentage of the
Company’s outstanding capital stock for which accrued
Warrants are exercisable will remain unchanged; and, in like
manner, in the event of any combination of shares of Common Stock,
by reclassification or otherwise, the current exercise price then
in effect shall be increased proportionately and the number of
shares of Common Stock for which accrued Warrants are exercisable
shall also be proportionately decreased so that the percentage of
the Company’s outstanding capital stock for which accrued
Warrants are exercisable will remain unchanged. An
adjustment made pursuant to this paragraph shall become
retroactively effective immediately after the record date in the
case of a dividend or other distribution and shall become
retroactively effective immediately after the effective date in the
case of a subdivision or combination. Retroactively
shall mean that such adjustment shall be made to both the accrued
Warrants earned to the record date or the effective date as set
forth in the previous sentence and to Warrants that may accrue in
the future. Section 4.15. Stock Ownership. The following
shall replace the current section in its entirety: April 19,
2010 — Integral Vision, Inc. — Consent to
Modifications Page 2of 8
The authorized capital stock of the Company
consists of (i) 90,000,000 shares of Common Stock, without par
value, of which 34,333,409 shares are outstanding, and (ii) 400,000
shares of Preferred Stock (though 7,000 shares of preferred stock
are retired), without par value, none of which are outstanding.
Such outstanding shares of Common Stock are duly authorized,
validly issued and outstanding and fully paid and
nonassessable. Except for the Warrants, the warrants to
purchase 7.0 million shares of the Company issued to investors who
purchased 7 million shares of the Company in April 2005
[“PIPE Investors”], the Class 3 Notes, and options to
purchase shares of Common Stock granted to employees, directors or
agents of the Company pursuant to the Company's stock option plans,
there are no outstanding options, warrants, rights, convertible
securities or other agreements or plans under which the Company may
become obligated to issue, sell or transfer shares of its capital
stock or other securities.
Section 8.11.: Limitations on equity securities which
may be issued under employee compensation plans. The
following shall replace the current section in its entirety:
Issue restricted stock bonuses, new stock options, or link other
bonus plans to the chan
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