Exhibit 10.12
1. Laurus Master Fund, Ltd.
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April 27, 2004
Sequiam Corporation
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Re: Incremental Funding
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Reference is made to that certain Securities Purchase Agreement, dated as
of April 27, 2004 (as amended, modified or supplemented from time to time, the
"Purchase Agreement"), between Sequiam Corporation, a California corporation
("Sequiam"), and Laurus Master Fund, Ltd. ("Laurus"), pursuant to which Sequiam
issued to Laurus a Secured Convertible Term Note in the aggregate principal
amount of Two Million Dollars ($2,000,000) (as amended, modified or supplemented
from time to time, the "Note"). Capitalized terms used but not defined herein
shall have the meanings ascribed to such terms in the Purchase Agreement or the
Note, as applicable.
In connection with the foregoing and subject to the conditions set forth
herein, Laurus hereby agrees to make available to Sequiam additional financing
in an aggregate principal amount of up to $1,000,000 (One Million Dollars) (such
amount, the "Incremental Funding Amount") in one installment, so long as (i)
Sequiam has given Laurus ten (10) business days prior written notice (or such
shorter period as is acceptable to Laurus) of its desire to incur the
Incremental Funding Amount (a "Funding Request"), (ii) Sequiam has paid to
Laurus such other fees and expenses (including legal fees and expenses) then due
and payable to Laurus in connection with either the Purchase Agreement, any
Related Agreement, or the Incremental Funding Amount, (iii) no Event of Default
has occurred and is continuing beyond any applicable cure period under the
Purchase Agreement or any Related Agreement, (iv) Sequiam has a sufficient
number of authorized shares of its Common Stock that would be required to be
registered to permit the full conversion by Laurus at the applicable Fixed
Conversion Price of the Incremental Funding Amount (as defined below) into
freely tradeable shares of the Company's Common Stock, (v) the Incremental
Funding Documents (as defined below) have been delivered to Laurus in form and
substance satisfactory to Laurus, and (vi) either (x) (A) the average closing
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price of the Common Stock as reported by Bloomberg, L.P. on the Principal Market
for the five (5) trading days immediately preceding the delivery of the
respective Funding Request was greater than or equal to 130% of the Fixed
Conversion Price at such time and (B) either (I) an effective current
Registration Statement (as defined in the Registration Rights Agreement dated as
of the date hereof by and between the Sequiam and Laurus) covering the shares of
Common Stock to be issued in connection with the conversion of the principal,
interest and fees owed under the Note and the exercise of the Warrant exists or
(II) an exemption from registration of the Common Stock is available to pursuant
to Rule 144 of the Securities Act or (y) (A) the aggregate amount of revenue
generated by Sequiam and its Subsidiaries for the two fiscal months of Sequiam
ended prior to the delivery of the respective Funding Request equals or exceeds
$333,333 for each such fiscal month and (B) Sequiam shall have delivered to
Laurus unaudited income statements for each fiscal month of Sequiam referred to
in the preceding clause (A) reflecting a revenue amount in excess of $333,333
for each such fiscal month (the calculation of which revenue amount shall be
reasonably satisfactory to Laurus), together with such other information and/or
documentation reasonably requested by Laurus, in each case certified by the
chief financial officer of Sequiam as being true and correct.
Prior to the disbursement of the Incremental Funding Amount, Sequiam shall
deliver to Laurus the following documents in substantially the form delivered to
Laurus on the date hereof in connection with the issuance of the Note and
otherwise in form and substance satisfactory to Laurus (the following documents
collectively referred to herein as the "Incremental Funding Documents):
(i) a Securities Purchase Agreement with respect to the Incremental
Funding Amount;
(ii) a Secured Convertible Term Note in the aggregate principal amount of
the Incremental Funding Amount (it being understood and agreed that
the initial Fixed Conversion Price with respect to the amounts
outstanding in connection with the Incremental Funding Amount shall be
an amount equal to the average closing price of the Company's Common
Stock for the twenty (20) trading days immediately prior to the date
of the funding of the Incremental Funding Amount; provided that such
initial Fixed Conversion Price shall not exceed 110% of the closing
price of the Company's Common Stock on the day immediately preceding
such funding date);
(iii) a Registration Rights Agreement for the shares of Common Stock into
which the Incremental Funding Amount (together with all interest and
fees that may be incurred in connection therewith) is convertible
into;
(iv) a Warrant to purchase (x) in the event that the Incremental Funding
Amount is equal to $1,000,000, 333,334 shares of Common Stock or (y)
in the event that the Incremental Funding Amount is less than
$1,000,000, a proportionate amount of shares of Common Stock at the
coverage rate set forth in the preceding clause (x); and
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(v) such other documentation (including, without limitation, corporate
resolutions and legal opinions) reasonably requested by Laurus.
Sequiam shall not be liable to Laurus for any additional administrative
fees associated with the Incremental Funding Amount except for the legal fees
incurred in preparation of the Incremental Funding Documents to be delivered by
Sequiam upon disbursement of the Incremental Funding Documents.
This is not and shall not be deemed to be a binding agreement by Laurus to
honor any Funding Request except as set forth herein. Laurus's obligation to
fund the Incremental Funding Amount shall be subject to the execution and
delivery by Sequiam (and its Subsidiaries, if applicable) of agreements and
other documentation required by Laurus in its sole discretion, exercised
reasonably, in accordance with the terms and conditions set forth herein. This
letter agreement shall automatically terminate, unless extended by Laurus in
writing, if Sequiam does not satisfy the conditions to the incurrence of the
Incremental Funding Amount set forth herein by May 1, 2005.
This letter (and your rights and obligations hereunder and thereunder)
shall not be assignable by Sequiam to any person or entity without the prior
written consent of Laurus (and any purported assignment without such consent
shall be null and void). This letter may not be amended or waived except by an
instrument in writing signed by Sequiam and Laurus. This letter may be executed
in any number of counterparts, each of which shall be an original and all of
which, when taken together, shall constitute one agreement. Delivery of an
executed signature page of this letter by facsimile transmission shall be
effective as delivery of a manually executed counterpart hereof or thereof, as
the case may be. This letter shall be governed by, and construed in accordance
with, the laws of the State of New York. This letter sets forth the entire
agreement between the parties hereto as to the matters set forth herein and
supersede all prior communications, written or oral, with respect to the matters
herein.
EACH OF SEQUIAM AND LAURUS HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY WITH
RESPECT TO ANY CLAIM, ACTION, SUIT OR PROCEEDING ARISING OUT OF OR CONTEMPLATED
BY THIS LETTER. YOU HEREBY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE
FEDERAL AND NEW YORK STATE COURTS LOCATED IN THE COUNTY OF NEW YORK IN
CONNECTION WITH ANY DISPUTE RELATED TO THIS LETTER OR ANY MATTERS CONTEMPLATED
HEREBY OR THEREBY.
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IN WITNESS WHEREOF, the parties have executed this letter agreement as of
the first date written above.
SEQUIAM CORPORATION
By:________________________
Name:
Title:
LAURUS MASTER FUND, LTD.
By:________________________
Name:
Title:
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