AMENDMENT AND WAIVER
TO
SECURITIES PURCHASE AGREEMENT AND RELATED AGREEMENTS
This AMENDMENT (this "AMENDMENT"), dated as of October __, 2004, is entered
into by and between SEQUIAM CORPORATION, a California corporation (the
"COMPANY"), and LAURUS MASTER FUND, LTD., a Cayman Islands company ("LAURUS"),
for the purpose of amending the terms of (i) the Securities Purchase Agreement,
dated as of April 27, 2004, by and between the Company and Laurus (as amended,
modified or supplemented from time to time, the "SECURITIES PURCHASE
AGREEMENT"), (ii) the Secured Convertible Term Note, dated April 27, 2004 (as
amended, modified or supplemented from time to time, the "TERM NOTE") issued by
the Company pursuant to the Securities Purchase Agreement, (iii) the Common
Stock Purchase Warrant, dated April 27, 2004 (as amended, modified or
supplemented from time to time, the "WARRANT") issued by the Company pursuant to
the Securities Purchase Agreement, and (iv) the Registration Rights Agreement by
and between the Company and Laurus, dated as of April 27, 2004 (as amended,
modified or supplemented from time to time, the "REGISTRATION RIGHTS AGREEMENT"
and, together with the Securities Purchase Agreement, the Term Note and the
Warrant, the "LOAN DOCUMENTS"). Capitalized terms used herein without definition
shall have the meanings ascribed to such terms in the Securities Purchase
Agreement.
WHEREAS, the Company and Laurus have agreed to make certain changes to the
Loan Documents as set forth herein;
NOW, THEREFORE, in consideration of the above, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Section 1.2 of the Term Note is hereby amended by deleting the first
sentence of said Section and inserting the following new sentence in lieu
thereof:
"Amortizing payments of the aggregate principal amount outstanding
under this Note at any time (the "PRINCIPAL AMOUNT") shall begin on
May 2, 2005 and shall recur on the first business day of each
succeeding month thereafter until the Maturity Date (each, an
"AMORTIZATION DATE")."
2. Section 2.1 of the Term Note is hereby amended by deleting the last
sentence of said Section and inserting the following new sentence in lieu
thereof:
"For purposes hereof, the "FIXED CONVERSION PRICE" means $0.33
(subject to adjustments as provided herein)."
3. Section 6.12(f)(i) of the Securities Purchase Agreement is hereby
amended by inserting the following new clause (w) immediately preceding clause
(x) of such section:
"(w) unsecured subordinated indebtedness of the Company and/or any of
its Subsidiaries in an aggregate principal amount not to exceed
$1,025,000 so long as such indebtedness incurred under this clause (w)
is subject to the terms of a Subordination Agreement in form and
substance satisfactory to the Purchaser,"
4. Clause (d) of the second paragraph of the Warrant is hereby amended by
deleting said clause in its entirety and inserting the following new clause (d)
in lieu thereof:
"(d) The "Exercise Price" applicable under this Warrant shall be as
follows:
(i) a price of $0.41 for the first 222,222 shares acquired
hereunder;
(ii) a price of $0.50 for the next 222,222 shares acquired
hereunder; and
(iii) a price of $0.58 for any additional shares acquired
hereunder."
5. The definition of "Effectiveness Date" set forth in the Registration
Rights Agreement is hereby amended by deleting said definition in its entirety
and inserting the following new definition in lieu thereof:
"Effectiveness Date" means (i) with respect to the initial
Registration Statement required to be filed hereunder, a date no later
than December 19, 2004 and (ii) with respect to each additional
Registration Statement required to be filed hereunder, a date no later
than thirty (30) days following the applicable Filing Date."
6. Section 2(b) of the Registration Rights Agreement is hereby amended by
deleting said section in its entirety.
7. Laurus agrees to hereby forever release the Company from its technical
default of Section 6.12(f) of the Securities Purchase Agreement and forever
waive its right to receive any and all damages whatsoever regarding such
technical default solely with respect to the creation of the following debt
obligations: (a) Promissory Note, dated as of September 7, 2004, made by the
Company in favor of Eagle Funding, LLC; (b) Promissory Note, dated as of
September 30, 2004, made by the Company in favor of Xxx Xxxxxxxx Xxxxxx; and (c)
Promissory Note, dated as of September 30, 2004, made by the Company in favor of
Xxx Xxxxxxxx Xxxxxx, Attorney-in-Fact For the Trust Under the Will of Xxxx
Xxxxxxxxxxx.
8. In satisfaction of due and unpaid fees in the aggregate amount of
$49,333.33, incurred by the Company under Section 2(b)(ii) of the Registration
Rights Agreement, the Company shall issue to Laurus a warrant to purchase Four
Hundred and Seventy Thousand (470,000) shares of common stock of the Company at
a purchase price of $0.33 per share.
9. This Amendment to each of the Loan Documents shall be effective as of
the date hereof following: (i) the execution of same by each of the Company and
Laurus; and (ii) the execution and delivery of the Subordination Agreement
attached hereto as Exhibit I by the subordinated creditors party thereto and
Laurus (as amended, modified or supplemented from time to time, the
"Subordination Agreement").
10. The Company and Laurus hereby agree that the Subordination Agreement
shall be included as a "Related Agreement" under, and as defined in, the
Securities Purchase Agreement and for all purposes of the Securities Purchase
Agreement and the other Related Agreements.
11. Except as specifically set forth in this Amendment, there are no other
amendments or waivers to the Loan Documents, and all of the other forms, terms
and provisions of the Loan Documents remain in full force and effect.
12. The Company hereby represents and warrants to Laurus that as of the
date hereof all representations, warranties and covenants made by Company in
connection with the Loan Documents are true, correct and complete and all of
Company's and its Subsidiaries' covenant requirements have been met.
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13. This Amendment shall be binding upon the parties hereto and their
respective successors and permitted assigns and shall inure to the benefit of
and be enforceable by each of the parties hereto and its successors and
permitted assigns. THIS AMENDMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK. This Amendment may be
executed in any number of counterparts, each of which shall be an original, but
all of which shall constitute one instrument.
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IN WITNESS WHEREOF, each of the Company and Laurus has caused this
Amendment to the Loan Documents to be signed in its name effective as of this __
day of October, 2004.
SEQUIAM CORPORATION
By:________________________________
Name:
Title:
LAURUS MASTER FUND, LTD.
By:______________________________
Name:
Title:
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