March 8, 2007
Exhibit
10.2 Letter of Intent and Term Sheet
March
8,
2007
Sequiam
Corporation
000
Xxxxxxx Xxxx
Orlando,
FL 32809
Attention:
Xxxx Xxxxxxxxxxx
Re:
Proposed Loan to Sequiam Corporation from Biometrics Investors, L.L.C.
Dear
Sirs:
Biometrics
Investors, L.L.C., a Delaware limited liability company (“Lender”) has acquired
that Second Amended, Restated and Consolidated Senior Secured Term Note dated
November 1, 2005 (the "Note") made by Sequiam Corporation (the “Company”) in the
initial aggregate principal amount of $3,650,000. This letter of intent states
the terms on which Biometrics Investors, L.L.C. (“Lender”), is prepared to
further amend and restate the Note and enter into a new Credit Agreement with
the Company providing for the advance of an additional loan amount as provided
below. The parties intend to be contractually bound by the terms stated in
this
letter of intent only upon execution and delivery of final loan and security
documents.
This
offer of terms stated in this letter of intent is valid for ten (10) days from
the date stated above.
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Issue
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Terms
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A.
The Note
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Subject
to the terms and conditions of this letter of intent, the Note would
be
amended and restated as follows:
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1.
Principal Amount: $6,500,000
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The
principal amount of the existing loan would be increased from $4,000,000
to $6,500,000
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2.
Interest Rate:
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The
interest rate on the Note would be twelve percent (12%) per annum.
Interest would be payable monthly in arrears.
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3.
Maturity Date:
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The
Note would be due and payable on April 15, 2009.
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4.
Principal Amortization:
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No
principal amortization would be required.
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B.
The First Additional Advance
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Subject
to the terms and conditions of this letter of intent, Xxxxxx would
advance
an additional $2,500,000 to the Company.
|
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1.
Produce Development Advances.
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Xxxxxx
would advance working capital to the Company for product development
purposes in the amount of $1,000,000. Disbursements of this advance
would
be conditioned on either the execution of contracts with new customers
or
the receipt of additional purchase orders from existing customers,
with
those purchase orders and contracts to be in form and on terms
satisfactory to Lender, including having gross margins acceptable
to
Lender..
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2.
Advances Based on Profitability.
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Lender
and the Company would establish criteria for improvement in the Company's
cash flow and decreases in the Company's operating losses. Based
on the
Company's achievement of these criteria, Xxxxxx will advance additional
working capital in an amount not to exceed $1,500,000.
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3.
Board Representation.
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The
Company will increase the number of seats on its Board of Directors
from
three to five, and two Lender representatives would be elected as
directors of the Company.
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C.
Collateral for the Loan and Loan Documentation
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1.
Guarantees.
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All
subsidiaries of the Company would guarantee the Loan.
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2.
Collateral.
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All
assets of the Company, including the stock of the subsidiaries, would
be
pledged to secure the loan.
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3.
Loan Documentation
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D.
Conditions to the First Additional
Advance
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These
conditions have to be satisfied before additional amounts are
advanced.
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1.
Issuance of Warrants to Lender.
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You
would receive warrants for an amount of common shares that would
represent
25% of the number of shares of common stock that the Company would
have if
all warrants and conversion rights were exercised ("Fully Diluted
Shares"). The Company would obtain waivers of anti-dilution restrictions
from the existing shareholders, warrant holders and convertible preferred
holders who have anti-dilution rights.
The
Company has advised Xxxxxx that the number of Fully Diluted Shares
is
156,335,113. If that number is correct, the Lender would receive
warrants
for 104,223,409 common shares. The price for the warrant exercise
would be
$.01.
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2.
Consent of Existing Holders.
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All
shareholders or warrant holders with existing protection against
dilution
would consent to the grant of the warrants and would waive dilution
rights
and any rights adjusting the price at which their warrants would
be
exercised.
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3.
Securities Law Requirements.
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The
Company would both have received advice of counsel regarding securities
law requirements regarding disclosure of the loan and the issuance
of the
warrants. The Company would agree to register the shares issued to
Lender
as a result of the exercise of the warrants at no cost to
Lender.
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E.
The Additional Advance
Amounts
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Subject
to the terms and conditions of this letter of intent, Xxxxxx would
advance
an additional $5,000,000 to the Company.
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1. Conditions
to the Additional Advances.
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These
advances would be conditioned entirely on Company achievement of
profitability and cash flow targets.
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2.
Advances against inventory and receivables
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The
Company would advance _____ % against Qualifying Inventory and _____
%
against Qualifying Receivables.
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3.
Collateral.
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Same
as for the first advance.
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4.
Warrants.
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You
would receive warrants for an amount of common shares that would
represent
15% of the number of shares of common stock that the Company would
have if
all warrants and conversion rights were exercised. The Company would
obtain waivers of anti-dilution restrictions from the existing
shareholders, warrant holders and convertible preferred holders who
have
anti-dilution rights. The price for the warrant exercise would be
$.01.
The total number of common shares that would be issued to the Lender
would
represent 40% of the of the number of shares of common stock that
the
Company would have if all warrants and conversion rights were
exercised
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BIOMETRICS
INVESTORS,
L.L.C.,
a
Delaware limited liability company
By:___________________________________
Name:
________________________________
Title: _________________________________
