MODIFICATION AND WAIVER AGREEMENT
Modification and Waiver Agreement (this "Agreement") made this 13th day
of August 2002 by each of the parties identified on Schedule A ("Parties") and
iBIZ Technology Corp., a Florida corporation ("IBIZ").
WHEREAS, the Parties are holders of certain convertible debentures (as
described on Schedule A )(the "Securities"), shares of common stock and common
stock purchase warrants (as described on Schedule B) of IBIZ which were issued
by IBIZ pursuant to subscription agreements and stock purchase agreements from
and after October 2000 (collectively "Purchase Documents"); and
WHEREAS, as investors ("New Investors") are contemplating purchasing
secured convertible debentures of IBIZ in the aggregate of not less than
$250,000 ("New Investment"), and it would be beneficial to IBIZ and the Parties
for such purchase to be made.
NOW THEREFORE, for good and valuable mutual consideration, the receipt
of which is acknowledged and for the mutual promises herein contained, it is
agreed:
1. The Parties, each for itself, represent that the only convertible
debt of IBIZ owned by them is set forth on Schedule A.
2. The Parties, each for itself, represent that the only shares of
common stock and common stock purchase warrants of IBIZ owned by them is set
forth on Schedule B.
3. The Parties, each for itself, represent that they do not own any
other instruments convertible into equity of IBIZ or rights to acquire any of
the foregoing, except for the convertible debt, common stock, and warrants set
forth on Schedules A and B. The Parties agree that any security of IBIZ owned by
them that is not listed on Schedules A and B will be surrendered to IBIZ for
cancellation.
4. The Parties agree that, upon execution of this Agreement and ending
upon the earlier of (i) 12 months after the effectiveness of a registration
statement covering the shares of IBIZ common stock issuable pursuant to the New
Investment; or (ii) March 31, 2004, the Parties will not convey, hypothecate or
otherwise engage in any transaction which will result in a change in the
beneficial or record ownership of the Securities, including without limitation a
voluntary or involuntary sale, assignment, transfer, pledge, hypothecation,
encumbrance, disposal, loan, gift, attachment or levy (each a "Transfer");
notwithstanding the foregoing, the Parties will be permitted to convert the
Securities into shares of common stock of IBIZ and exercise the warrants into
shares of common stock of IBIZ and, subject to the limitations and restrictions
of this Agreement, sell such shares. Any such Transfer or attempted Transfer in
contravention of this Agreement shall be void and ineffective for any purpose
and shall not confer on any transferee or purported transferee any rights
whatsoever.
5. Provided the New Investment occurs on or before September 15, 2002,
except for the Events of Default listed on the attached Schedule C which may
occur after the date of this Agreement, the Parties agree among themselves that
they waive enforcement and collection of all defaults by IBIZ and accrued
damages, penalties, claims, rights and remedies arising from such defaults which
have occurred or accrued prior to the date hereof, or which may occur or accrue
under the Purchase Documents upon execution of this Agreement and ending after
the earlier of (i) 12 months after the effectiveness of a registration statement
covering the shares of IBIZ common stock issuable pursuant to the New
Investment; or (ii) March 31, 2004. Interest under the Securities will continue
to accrue as of the date of the original issuance of the Securities.
6. Nothwithstanding Section 7, IBIZ and the Parties agree that until
IBIZ either effectuates an increase in its authorized capital stock or a reverse
stock split of their outstanding shares of common stock (the "Transaction"),
each Party shall not convert any of their Securities or Warrants into shares of
IBIZ common stock. IBIZ covenants to file a preliminary proxy statement or
information statement relating to the Transaction with the Commission on or
before thirty days after the closing date of the New Investment ("Proxy Filing
Date"). IBIZ further covenants to complete the Transaction no later than ninety
days after the closing date of the New Investment ("Approval Date"). IBIZ 's
failure to either (i) file the proxy on or before the Proxy Filing Date; or (ii)
IBIZ's failure to obtain the Approval on or before the Approval Date shall be
deemed an Approval Default.
7. The Parties agree that, for a period commencing upon the completion
of the Transaction and ending upon the the earlier of (i) 12 months after the
effectiveness of a registration statement covering the shares of IBIZ common
stock issuable pursuant to the New Investment; or (ii) March 31, 2004, the first
four Parties listed on Schedule A will not sell on any given trading day more
than 2.97% of that day's trading volume of common stock of IBIZ and Esquire
Trade & Finance Inc. will not sell on any given trading day more than .34% of
that day's trading volume, Celeste Trust Reg. will not sell on any given trading
day more than .2% of that day's trading volume, Libra Finance SA will not sell
on any given trading day more than .04% of that day's trading volume, and Alpha
Capital Aktiengesellschaft will not sell on any given trading day more than .45%
of that day's trading volume.
8. The Parties agree that all of the proceeds received from the sale of
common stock referenced in Section 4 above will be subtracted from principal
first and then from interest.
9. The Parties agree that all of their sales of IBIZ's common stock
shall be made through a brokerage account that is approved by the New Investors
which approval shall not be unreasonably with held.
10. The Parties hereby agree and consent for the benefit of IBIZ that
IBIZ is granted the following redemption right in relation to the convertible
notes comprising the Securities: IBIZ will have the option, exercisable at any
time, of redeeming the Securities by paying to the Parties a sum of money equal
to a percentage of the principal amount of the Note ("Premium") together with
accrued but unpaid interest thereon ("Redemption Amount") outstanding on the day
notice of redemption ("Notice of Redemption") is given to a Party ("Redemption
Date"). A Notice of Redemption may not be given in connection with any portion
of convertible notes for which notice of conversion has been given by a Party at
any time before receipt of a Notice of Redemption. The Redemption Amount must be
paid in good funds to the Subscriber no later than the seventh (7th) business
day after the Redemption Date ("Optional Redemption Payment Date"). In the event
the Company fails to pay the Redemption Amount by the Optional Redemption
Payment Date, then the Redemption Notice will be null and void and the Company
will thereafter have no further right to effect an Optional Redemption. The
Premium shall be 105%.
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11. This Agreement shall supercede all prior modification and waiver
agreements executed by and among the Parties and IBIZ.
12. The signature of IBIZ and the Parties to this Agreement shall be an
acknowledgement of the terms of this Agreement and a covenant not to take or
suffer any action contrary to or inconsistent with the terms of this Agreement.
13. The notice, venue and jurisdiction provisions contained in the
Purchase Documents are incorporated herein and made a part hereof.
14. This Agreement shall become null and void, if the New Investment is
not completed by September 15, 2002 or upon an occurrence of an Approval
Default.
15. The New Investors are intended to be and are third party
beneficiaries hereof, and no amendment or modification to the instructions set
forth herein may be made without the consent of such New Investors.
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WHEREFORE, the Parties have signed this Agreement as of the date above written.
IBIZ TECHNOLOGY CORP.
By:_________________________________
LAURUS MASTER FUND LTD. THE KESHET FUND L.P.
By:__________________________________ BY:________________________________
KESHET L.P. TALBIYA B. INVESTMENTS LTD.
By:________________________________ By:________________________________
ESQUIRE TRADE & FINANCE INC. CELESTE TRUST REG.
By:________________________________ By:________________________________
ALPHA CAPITAL AKTIENGESELLSCHAFT LIBRA FINANCE SA
By:________________________________ By:________________________________
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SCHEDULE A
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- ------------------------------------------------------- ----------------------------------------- -----------------------
PARTIES PRINCIPAL AMOUNT OF CONVERTIBLE NOTES ISSUED ON OR ABOUT:
- ------------------------------------------------------- ----------------------------------------- -----------------------
LAURUS MASTER FUND LTD. $34,723.00 10/9/01
c/o Onshore Corporate Services Ltd. $25,000.00 8/21/01
P.O. Box 1234 G.T. $150,000.00 7/31/01
Queensgate House, South Church Street $500,000.00 4/26/01
Grand Cayman, Cayman Islands
Fax: 345-949-9877 The total aggregate balance as of
8/1/02 is $328,904
- ------------------------------------------------------- ----------------------------------------- -----------------------
THE KESHET FUND L.P. $45,000.00 1/15/02
135 West 50th Street, Suite 1700 $325,000.00 6/25/01
New York, NY 10020 $100,000.00 12/20/00
Fax: 212-541-4434 $115,000.00 10/30/00
The total aggregate balance as of
8/1/02 is $240,477
- ------------------------------------------------------- ----------------------------------------- -----------------------
KESHET L.P. $50,000.00 8/21/01
Ragnall House, 18 Peel Road $700,000.00 12/20/00
Douglas, Isle of Man $460,000.00 10/30/00
1M1 4L2, United Kingdom
Fax: 011-44-1624-661594 The total aggregate balance as of
8/1/02 is $1,013,325
- ------------------------------------------------------- ----------------------------------------- -----------------------
TALBIYA B. INVESTMENTS LTD. $125,000.00 10/30/00
Ragnall House, 18 Peel Road
Douglas, Isle of Man
1M1 4L2, United Kingdom
Fax: 011-44-1624-661594 The total aggregate balance as of
8/1/02 is $123,802
- ------------------------------------------------------- ----------------------------------------- -----------------------
ESQUIRE TRADE & FINANCE INC. $196,025.00 From and/or after
Schutzengelstrasse 36 October, 2000
Baar, Switzerland CH6342
Fax: 041-7601031
- ------------------------------------------------------- ----------------------------------------- -----------------------
$110,075.00 From and/or after
CELESTE TRUST REG. October, 2000
C/o Trevisa-Treuhand-Anstalt
Landstrasse 8
Furstentums 9496
Balzers, Liechtenstein
Fax: 011-431-534-532895
- ------------------------------------------------------- ----------------------------------------- -----------------------
LIBRA FINANCE SA $26,250
P.O. Box 4603
Zurich, Switzerland
Fax: 011-411-201-6262
- ------------------------------------------------------- ----------------------------------------- -----------------------
ALPHA CAPITAL AKTIENGESELLSCHAFT $255,000 January 2002
Pradafant 7 April 2002
9490 Furstentums
Vaduz, Lichenstein
Fax: 011-42-32323196
- ------------------------------------------------------- ----------------------------------------- -----------------------
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SCHEDULE B
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- ------------------------------------------------------- ----------------------------------------- -----------------------
PARTIES NUMBER OF SHARES OF COMMON STOCK NUMBER OF WARRANTS
- ------------------------------------------------------- ----------------------------------------- -----------------------
LAURUS MASTER FUND LTD. 0 1,000,000 (7/31/01)
c/o Onshore Corporate Services Ltd. 350,000 (10/9/01)
P.O. Box 1234 G.T. 525,000 (8/21/01)
Queensgate House, South Church Street 1,500,000 (4/26/01)
Grand Cayman, Cayman Islands
Fax: 345-949-9877
- ------------------------------------------------------- ----------------------------------------- -----------------------
THE KESHET FUND L.P. 0 1,500,000 (6/22/01)
135 West 50th Street, Suite 1700 500,000 (1/15/02)
New York, NY 10020
Fax: 212-541-4434
- ------------------------------------------------------- ----------------------------------------- -----------------------
KESHET L.P. 0 0
Ragnall House, 18 Peel Road
Douglas, Isle of Man
1M1 4L2, United Kingdom
Fax: 011-44-1624-661594
- ------------------------------------------------------- ----------------------------------------- -----------------------
TALBIYA B. INVESTMENTS LTD. 0 175,000 (10/30/00)
Ragnall House, 18 Peel Road 175,000 (10/30/00)
Douglas, Isle of Man 400,000 (12/20/00)
1M1 4L2, United Kingdom
Fax: 011-44-1624-661594
- ------------------------------------------------------- ----------------------------------------- -----------------------
ESQUIRE TRADE & FINANCE INC. 0 210,000 (7/31/01)
Schutzengelstrasse 36
Baar, Switzerland CH6342
Fax: 041-7601031
- ------------------------------------------------------- ----------------------------------------- -----------------------
0 270,000 (7/31/01)
CELESTE TRUST REG.
C/o Trevisa-Treuhand-Anstalt
Landstrasse 8
Furstentums 9496
Balzers, Liechtenstein
Fax: 011-431-534-532895
- ------------------------------------------------------- ----------------------------------------- -----------------------
0 150,000 (1/1/02)
LIBRA FINANCE SA
P.O. Box 4603
Zurich, Switzerland
Fax: 011-411-201-6262
- ------------------------------------------------------- ----------------------------------------- -----------------------
2,459,704 5,000,000 (1/31/02)
ALPHA CAPITAL AKTIENGESELLSCHAFT 3,000,000 (4/25/02)
Pradafant 7
9490 Furstentums
Vaduz, Lichenstein
Fax: 011-42-32323196
- ------------------------------------------------------- ----------------------------------------- -----------------------
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SCHEDULE C
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EVENT OF DEFAULT
The occurrence of any of the following events of default
shall, at the option of the Parties hereof, make all sums of principal and
interest then remaining unpaid on the Securities and all other amounts payable
pursuant to the Securities immediately due and payable:
1. RECEIVER OR TRUSTEE. IBIZ shall make an assignment for the benefit
of creditors, or apply for or consent to the appointment of a receiver or
trustee for it or for a substantial part of its property or business; or such a
receiver or trustee shall otherwise be appointed.
2. BANKRUPTCY. Bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings or relief under any bankruptcy law or any law
for the relief of debtors shall be instituted by or against IBIZ and if
instituted against IBIZ are not dismissed within 45 days of initiation.
3. FAILURE TO DELIVER COMMON STOCK OR REPLACEMENT NOTE. IBIZ's failure
to deliver common stock to the Parties within 30 days after a conversion notice
is delivered to the Parties.
4. If at any time the Parties are unable to resell IBIZ's common stock
pursuant to an effective registration statement or pursuant to Rule 144 under
the Securities Act of 1933, as amended for a period of 45 days.
5. JUDGMENTS. Any money judgment, writ or similar final process shall
be entered or filed against IBIZ or any of its property or other assets for more
than $100,000, and shall remain unvacated, unbonded or unstayed for a period of
forty-five (45) days.
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