AMENDMENT AND ADDITIONAL ISSUANCE AGREEMENT
This
Amendment and Additional Issuance Agreement (“Amendment”),
dated
June 21, 2006, is made by and among Sequiam Corporation, a California
corporation (the “Company”)
and
the purchasers signatory hereto (collectively, the “New
Purchasers”)
for
purposes of amending as provided herein that certain Securities Purchase
Agreement (“Purchase
Agreement”),
dated
as of May 17, 2006, by and among the Company and the purchasers (the
“Purchasers”)
signatory thereto for the purchase by the New Purchasers of additional shares
of
the Company’s 10% Series B Convertible Preferred Stock (the “Preferred
Stock”)
and
warrants in the form of the Common Stock Purchase Warrants (the “Warrants”)
issued
pursuant to the Purchase Agreement. Capitalized
terms used and not otherwise defined herein that are defined in the Purchase
Agreement shall have the meanings given such terms in the Purchase
Agreement.
For
good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. Issuance
of New Preferred Stocks and New Warrants.
The
Company hereby issues to each New Purchaser, severally and not jointly with
the
other New Purchasers, (a) up to, in the aggregate among all New Purchasers,
380
shares of Preferred Stock of the Company with an aggregate Stated Value of
$380,000 on the same terms, conditions rights and preferences as the issuance
of
the Preferred Stock pursuant to the Purchase Agreement (the “New
Preferred Stock”)
and
(b) a common stock purchase warrant to purchase up to 1,809,524 shares of Common
Stock, in the aggregate, which warrant shall be in the form of, and on the
same
terms and conditions as, the Warrants purchased pursuant to the Purchase
Agreement (the “New
Warrants”).
Each
New Purchaser shall purchase a number of shares of New Preferred Stock equal
to
such New Purchaser’s Subscription Amount, as set forth on such Purchaser’s
signature page hereto (the “New
Subscription Amount”),
divided by $1,000, along with New Warrants otherwise pursuant to Section
2.2(a)(v) of the Purchase Agreement. Within 3 Trading Days of the date hereof,
the Company shall deliver the New Preferred Stock, New Warrants and opinion
of
counsel required pursuant to Section 5 to the respective New Purchaser, and
each
New Purchaser, severally and not jointly with the other New Purchasers, shall
wire the New Subscription Amount to the wire instructions attached hereto as
Annex
A.
The
closing of the issuance of the New Preferred Stock and the New Warrants shall
occur on or prior to June 30, 2006.
2. Documents.
The
rights and obligations of each New Purchaser, severally and not jointly with
the
other Purchasers, and of the Company with respect to the New Preferred Stock,
the New Warrants and the shares of Common Stock issuable under the New Preferred
Stock and the New Warrants (the “Additional
Underlying Shares”)
shall
be identical in all respects to the rights and obligations of the Purchasers
and
of the Company with respect to the Preferred Stock, the Warrants and the
Underlying Shares issued and issuable pursuant to the Purchase Agreement. Any
rights of the Purchasers or covenants of the Company which are dependant on
the
Purchasers holding securities of the Company or which are determined in
magnitude by each of the Purchasers’ purchase of securities pursuant to the
Purchase Agreement shall be deemed to include any securities purchased or
issuable hereunder to the New Purchasers. The Purchase Agreement is hereby
amended so that the term “Preferred Stock” includes the New Preferred Stock, the
term “Warrants” includes the New Warrants, the term “Underlying Shares” includes
the Additional Underlying Shares and the term “Purchasers” includes the New
Purchasers. Additionally, the Registration Rights Agreement entered into in
connection with the Purchase Agreement is hereby amended so that the term
“Registrable Securities” includes in the calculation thereof the Additional
Underlying Shares. Any obligations of the Company under the Purchase Agreement
shall not be tolled in any manner by the execution of this Amendment; provided,
however, that the timing of the Company’s obligation to file a Registration
Statement and cause it to be declared effective pursuant to the terms of the
Registration Rights Agreement shall be extended such that: (a) the Company
will
not be required to file a Registration Statement with the U.S. Securities and
Exchange Commission covering any of the Registrable Securities until June 23,
2006; and (b) that the term “Effectiveness Date” shall mean, with respect to the
initial Registration Statement required to be filed pursuant to the Registration
Rights Agreement, the 97th
calendar
day following May 17, 2006 (the 127th
calendar
day in the case of a review by the U.S. Securities and Exchange Commission
of
the initial Registration Statement).
3. Representations
and Warranties of the Company.
Except
as set forth on a disclosure schedule attached to this Amendment, the Company
hereby makes to each Purchaser the following representations and
warranties:
(a) Authorization;
Enforcement.
The
Company has the requisite corporate power and authority to enter into and to
consummate the transactions contemplated by this Amendment and otherwise to
carry out its obligations hereunder and thereunder. The execution and delivery
of this Amendment by the Company and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary action on the
part of the Company and no further action is required by the Company, its board
of directors or its stockholders in connection therewith other than in
connection with the Required Approvals. This Amendment has been duly executed
by
the Company and, when delivered in accordance with the terms hereof will
constitute the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms except (i) as limited by general
equitable principles and applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors’ rights generally, (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may
be
limited by applicable law.
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(b) No
Conflicts.
The
execution, delivery and performance of this Amendment by the Company and the
consummation by the Company of the transactions contemplated hereby do not
and
will not: (i) conflict with or violate any provision of the Company’s
certificate or articles of incorporation, bylaws or other organizational or
charter documents, or (ii) conflict with, or constitute a default (or an event
that with notice or lapse of time or both would become a default) under, result
in the creation of any Lien (except as contemplated by the Security Documents)
upon any of the properties or assets of the Company, or give to others any
rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any material agreement, credit facility,
debt
or other material instrument (evidencing Company debt or otherwise) or other
material understanding to which the Company is a party or by which any property
or asset of the Company is bound or affected, or (iii) subject to the Required
Approvals, conflict with or result in a violation of any law, rule, regulation,
order, judgment, injunction, decree or other restriction of any court or
governmental authority to which the Company is subject (including federal and
state securities laws and regulations), or by which any property or asset of
the
Company is bound or affected; except in the case of each of clauses (ii) and
(iii), such as could not have or reasonably be expected to result in a Material
Adverse Effect.
(c) Issuance
of the New Preferred Stock.
The New
Preferred Stock and New Warrants are duly authorized and, upon the execution
of
this Amendment by a Purchaser, will be duly and validly issued, fully paid
and
nonassessable, free and clear of all Liens imposed by the Company other than
restrictions on transfer provided for in the Transaction Documents. The
Additional Underlying Shares, when issued in accordance with the terms of the
New Preferred Stock and the New Warrants, will be validly issued, fully paid
and
nonassessable, free and clear of all Liens imposed by the Company. The Company
has reserved from its duly authorized capital stock a number of shares of Common
Stock for issuance of the Additional Underlying Shares.
(d) Equal
Consideration.
Except
as set forth in this Amendment, no consideration has been offered or paid to
any
person to amend or consent to a waiver, modification, forbearance or otherwise
of any provision of any of the Transaction Documents.
(e) Other
Events of Default.
As of
the date of this Amendment, to the knowledge of the Company, no Triggering
Event
exists that has not been waived.
(f) Affirmation
of Prior Representations and Warranties.
The
Company hereby represents and warrants to the Purchasers that its
representations and warranties listed in Section 3.1 of the Purchase Agreement
are true and correct as of the date hereof.
4. Representations
and Warranties of the Purchasers.
Each
New Purchaser hereby, for itself and for no other New Purchaser, represents
and
warrants as of the date hereof to the Company as follows:
3
(a) Authority.
The
execution, delivery and performance by such New Purchaser of the transactions
contemplated by this Amendment have been duly authorized by all necessary
corporate or similar action on the part of such New Purchaser. This Amendment
has been duly executed by such New Purchaser, and when delivered by such New
Purchaser in accordance with the terms hereof, will constitute the valid and
legally binding obligation of such New Purchaser, enforceable against it in
accordance with its terms, except (i) as limited by general equitable principles
and applicable bankruptcy, insolvency, reorganization, moratorium and other
laws
of general application affecting enforcement of creditors’ rights generally,
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable
law.
(b) Own
Account.
Such
New Purchaser understands that the New Preferred Stock and New Warrants are
“restricted securities” and have not been registered under the Securities Act or
any applicable state securities law and is acquiring the New Preferred Stock
and
New Warrants as principal for its own account and not with a view to or for
distributing or reselling such New Preferred Stock or New Warrants or any part
thereof in violation of the Securities Act or any applicable state securities
law, has no present intention of distributing any of such Securities in
violation of the Securities Act or any applicable state securities law and
has
no arrangement or understanding with any other persons regarding the
distribution of such New Preferred Stock and New Warrants (this representation
and warranty not limiting such New Purchaser’s right to sell the Additional
Underlying Shares pursuant to the Registration Statement or otherwise in
compliance with applicable federal and state securities laws) in violation
of
the Securities Act or any applicable state securities law. Such New Purchaser
is
acquiring the New Preferred Stock and New Warrants hereunder in the ordinary
course of its business. Such New Purchaser does not have any agreement or
understanding, directly or indirectly, with any Person to distribute any of
the
New Preferred Stock , New Warrants or Additional Underlying Shares.
(c) New
Purchaser Status.
Such
New Purchaser is an “accredited investor” as defined in Rule 501(a)(1), (a)(2),
(a)(3), (a)(7) or (a)(8) under the Securities Act. Such New Purchaser is not
required to be registered as a broker-dealer under Section 15 of the Exchange
Act.
(d) General
Solicitation.
Such
New Purchaser is not purchasing the New Preferred Stock or New Warrants as
a
result of any advertisement, article, notice or other communication regarding
the New Preferred Stock or New Warrants published in any newspaper, magazine
or
similar media or broadcast over television or radio or presented at any seminar
or any other general solicitation or general advertisement.
(e) Affirmation
of Prior Representations and Warranties.
Such
New Purchaser hereby represents and warrants to the Company that the
representations and warranties listed in Section 3.2 of the Purchase Agreement
are true and correct as to itself as of the date hereof.
4
5. Delivery
of Opinion.
Concurrently herewith, the Company shall deliver to the New Purchasers an
opinion of outside counsel regarding this Amendment and the issuance of the
New
Preferred Stock and New Warrants in form and substance reasonably acceptable
to
the New Purchasers.
6. Public
Disclosure.
The
Company shall, on the Trading Day following the date hereof, issue a Current
Report on Form 8-K, reasonably acceptable to the New Purchasers, disclosing
the
material terms of the transactions contemplated hereby, and shall attach this
Amendment thereto. The Company shall consult with the New Purchasers in issuing
any other press releases with respect to the transactions contemplated
hereby.
7. Other
Purchaser Consent.
Each of
the Purchasers hereby consents to: (a) the execution by the Company of this
Amendment; (b) the issuance of the New Preferred Stock and the New Warrants
to
the New Purchasers; and (c) any modification of the Transaction Documents
contained herein and further provides its waiver (solely with regards to the
transactions described herein) with respect to: (x) Section 4.4 of the Purchase
Agreement regarding integration; (y) Section 4.13 of the Purchase Agreement
regarding the participation in future financings; and (z) Section 4.14 of the
Purchase Agreement regarding subsequent equity sales, provided that such
issuance occurs prior to June 30, 2006 and the aggregate amount of such issuance
does not exceed the $380,000 Stated Value of Preferred Stock.
8. Effect
on Transaction Documents.
Except
as expressly set forth in this Amendment, all of the terms and conditions of
the
Transaction Documents shall continue in full force and effect after the
execution of this Amendment and shall not be in any way changed, modified or
superseded by the terms set forth herein, including but not limited to, any
other obligations the Company may have to the New Purchasers under the
Transaction Documents.
Notwithstanding the foregoing, this Amendment shall be deemed for all purposes
as an amendment to any Transaction Document as required to serve the purposes
hereof, and in the event of any conflict between the terms and provisions of
the
Preferred Stock, the Registration Rights Agreement or any other Transaction
Document, on the one hand, and the terms and provisions of this Amendment,
on
the other hand, the terms and provisions of this Amendment shall
prevail.
5
9. Short
Sales and Confidentiality After The Date Hereof.
Each
New Purchaser severally and not jointly with the other New Purchasers covenants
that neither it nor any Affiliate acting on its behalf or pursuant to any
understanding with it will execute any Short Sales during the period commencing
from
the
time that such Purchaser first received notice (written or oral) from the
Company or any other Person setting forth the material terms of the transactions
contemplated under this Amendment and
ending at the time that the transactions contemplated by this Amendment are
first publicly announced as described in Section 6 of this Amendment. Each
New
Purchaser, severally and not jointly with the other New Purchasers, covenants
that until such time as the transactions contemplated by this Amendment are
publicly disclosed by the Company as described in Section 6 of this Amendment,
such New Purchaser will maintain the confidentiality of all disclosures made
to
it in connection with this transaction (including the existence and terms of
this transaction). Each New Purchaser understands and acknowledges, severally
and not jointly with any other New Purchaser, that the Commission currently
takes the position that coverage of short sales of shares of the Common Stock
“against the box” prior to the Effective Date of the Registration Statement with
the Securities is a violation of Section 5 of the Securities Act, as set forth
in Item 65, Section A, of the Manual of Publicly Available Telephone
Interpretations, dated July 1997, compiled by the Office of Chief Counsel,
Division of Corporation Finance. Notwithstanding the foregoing, no New Purchaser
makes any representation, warranty or covenant hereby that it will not engage
in
Short Sales in the securities of the Company after the time that the
transactions contemplated by this Amendment are first publicly announced as
described in Section 6 of this Amendment. Notwithstanding the foregoing, in
the
case of a New Purchaser that is a multi-managed investment vehicle whereby
separate portfolio managers manage separate portions of such New Purchaser's
assets and the portfolio managers have no direct knowledge of the investment
decisions made by the portfolio managers managing other portions of such New
Purchaser's assets, the covenant set forth above shall only apply with respect
to the portion of assets managed by the portfolio manager that made the
investment decision to purchase the Securities covered by this
Amendment.
10.
Amendments
and Waivers.
The
provisions of this Amendment, including the provisions of this sentence, may
not
be amended, modified or supplemented, and waivers or consents to departures
from
the provisions hereof may not be given, unless the same shall be in writing
and
signed by the Company and each Purchaser (including the New Purchasers).
11.
Notices.
Any and
all notices or other communications or deliveries required or permitted to
be
provided hereunder shall be delivered as set forth in the Purchase
Agreement.
12.
Successors
and Assigns.
This
Amendment shall inure to the benefit of and be binding upon the successors
and
permitted assigns of each of the parties and shall inure to the benefit of
each
New Purchaser. The Company may not assign (except by merger) its rights or
obligations hereunder without the prior written consent of all of the New
Purchasers of the then-outstanding Securities. Each New Purchaser may assign
their respective rights hereunder in the manner and to the Persons as permitted
under the Purchase Agreement.
13.
Execution
and Counterparts.
This
Amendment may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to
the
other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile
transmission or by e-mail delivery of a “.pdf” format data file, such signature
shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if such
facsimile or “.pdf” signature page were an original thereof.
6
14.
Governing
Law.
All
questions concerning the construction, validity, enforcement and interpretation
of this Amendment shall be determined in accordance with the provisions of
the
Purchase Agreement.
15.
Severability.
If any
term, provision, covenant or restriction of this Amendment is held by a court
of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their commercially reasonable
efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may
be
hereafter declared invalid, illegal, void or unenforceable.
16.
Headings.
The
headings in this Amendment are for convenience only, do not constitute a part
of
the Amendment and shall not be deemed to limit or affect any of the provisions
hereof.
17.
Independent
Nature of Holders’ Obligations and Rights.
The
obligations of each New Purchaser hereunder are several and not joint with
the
obligations of any other New Purchasers hereunder, and no New Purchaser shall
be
responsible in any way for the performance of the obligations of any other
New
Purchaser hereunder. Nothing contained herein or in any other agreement or
document delivered at any closing, and no action taken by any New Purchaser
pursuant hereto, shall be deemed to constitute the New Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the New Purchasers are in any way acting in concert
with respect to such obligations or the transactions contemplated by this
Amendment. Each New Purchaser shall be entitled to protect and enforce its
rights, including without limitation the rights arising out of this Amendment,
and it shall not be necessary for any other New Purchaser to be joined as an
additional party in any proceeding for such purpose.
[SIGNATURE
PAGE FOLLOWS]
7
Executed
as of June 21, 2006 by the undersigned duly authorized representatives of the
Company and New Purchasers:
SEQUIAM
CORPORATION
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By:
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Name:
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Title:
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[SIGNATURE
PAGES OF NEW PURCHASERS FOLLOW]
8
[SIGNATURE
PAGE OF SQUM ADDITIONAL ISSUANCE NEW PURCHASER]
IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Amendment
to be duly executed by their respective authorized signatories as of the date
first indicated above.
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Name
of New Purchaser:
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Signature
of Authorized Signatory of New Purchaser:
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Name
of Authorized Signatory:
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Title
of Authorized Signatory:
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Email
Address of New Purchaser:
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Fax
Number of New Purchaser:
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Address
for Notice of New Purchaser:
Address
for Delivery of Securities for New Purchaser (if not same as
above):
New
Subscription Amount:
Shares
of
Preferred Stock:
Warrant
Shares:
EIN
Number: [PROVIDE
THIS UNDER SEPARATE COVER]
9
[SIGNATURE
PAGE OF SQUM ADDITIONAL ISSUANCE PURCHASER]
As
to
Section 7 only:
The
undersigned hereby consents to: (a) the execution by the Company of this
Amendment; (b) the issuance of the New Preferred Stock and the New Warrants
to
the New Purchasers; and (c) any modification of the Transaction Documents
contained herein and further provides its waiver (solely with regards to the
transactions described herein) with respect to: (x) Section 4.4 of the Purchase
Agreement regarding integration; (y) Section 4.13 of the Purchase Agreement
regarding the participation in future financings; and (z) Section 4.14 of the
Purchase Agreement regarding subsequent equity sales, provided that such
issuance occurs prior to June 30, 2006 and the aggregate amount of such issuance
does not exceed the $380,000 Stated Value of Preferred
Stock.
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Name
of Purchaser:
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Signature
of Authorized Signatory of Purchasers:
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Name
of Authorized Signatory:
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Title
of Authorized Signatory:
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10
ANNEX
A
[INSERT
WIRE INSTRUCTIONS]
11