ASSIGNMENT, ASSUMPTION AND RELEASE
EXHIBIT
10.11
THIS
ASSIGNMENT, ASSUMPTION AND RELEASE (this
“Agreement”) is
made and entered into as of the 18th day of
May, 2005, by and among Laurus Master Fund, Ltd., a Cayman Islands company
(“Laurus”),
Sequiam Corporation, a California corporation (the “Borrower”), and
Xxx Xxxxxxxx Xxxxxx as Attorney in Fact for the Trust Under the Will of Xxxx
Xxxxxxxxxxx (the “Trust”).
R
E C I T A L S
WHEREAS, Laurus
is the owner and holder of that certain Secured Convertible Term Note, dated
April 27, 2004, in the initial principal amount of TWO MILLION AND NO/100
DOLLARS ($2,000,000) (the “Note”), made
by the Borrower (the “Laurus
Loan”);
WHEREAS, the
Note is evidenced and secured by those certain documents set forth in
Exhibit
A attached
hereto (the “Assigned
Loan Documents”);
WHEREAS, the
Trust has previously loaned the Borrower $1,350,000 pursuant to a series of
Notes as more fully described in Exhibit
B attached
hereto (the “Previous
Loans”);
WHEREAS, the
Trust has agreed to advance to the Borrower new funds in the principal amount of
$2,100,000 (the “Additional
Funds”) of
which the Trust will pay Laurus the cash portion of the Payoff Consideration (as
defined below);
WHEREAS, Laurus
has agreed to accept from the Borrower, in payment for the purchase by the Trust
of the Note outstanding after giving effect to the Agreement Effective Date, as
defined below, the principal amount of which will be $1,000,000 (the
“Remaining
Portion of the Note”), the
consideration set forth in Exhibit
C attached
hereto, (collectively, the “Payoff
Consideration”);
and
WHEREAS, in
consideration of the Trust advancing the Additional Funds on behalf of Borrower,
Laurus has agreed to assign its interest in the Assigned Loan Documents (as
hereinafter defined on Exhibit
A) to the
Trust and has agreed to the substitution of the Trust as the secured party
pursuant to such Assigned Loan Documents, and in consideration of the advance of
such funds by the Trust, the Borrower has consented to the assignment and
substitution of the Trust in place of Laurus as the secured party under the
Assigned Loan Documents, and consolidation of the Previous Loans from the Trust
under the Assigned Loan Documents.
NOW
THEREFORE, in
consideration of the payment to Laurus of the Payoff Consideration set forth on
Exhibit
B, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
A
G R E E M E N T
1. Laurus
represents that: (a) Laurus has good title to, and is the owner and holder of
the Remaining Portion of the Note; and (b) Laurus has full right, power and
authority to sell, assign and transfer to the Trust its rights and interests in
the Remaining Portion of the Note and the Assigned Loan
Documents.
2. Laurus
xxxxx xxxxx, assigns and transfers to the Trust all of Laurus’ right, title and
interest in and to the Remaining Portion of the Note and the Assigned Loan
Documents.
3. The Trust
hereby accepts assignment of the Remaining Portion of the Note and the Assigned
Loan Documents and assumes the obligations and liabilities as they relate to the
Remaining Portion of the Note after the date of this Agreement.
4. The
Borrower agrees that in consideration of the Trust advancing the Additional
Funds on behalf of the Borrower and acceptance of the assignment of the Assigned
Loan Documents, that the Borrower shall amend and restate the Note and the
Assigned Loan Documents to consolidate the Previous Loans with the Remaining
Portion of the Note assigned and assumed hereunder.
5. Laurus
hereby acknowledges that upon the occurrence of the Agreement Effective Date (as
defined below), Laurus hereby releases the Borrower and all of the Subsidiaries
(as defined in Exhibit
D) from
all actions and causes of action from all actions and causes of action, claims
and demands whatsoever, in law or in equity, that Laurus ever had, now has or
hereafter can, shall or may have against the Borrower or any of the Subsidiaries
under the Note or any of the Assigned Loan Documents.
6. Laurus
hereby acknowledges that, upon the occurrence of the Agreement Effective Date
(as defined below): (a) all liens and security interests that Laurus may have in
the assets of Borrower and the Subsidiaries pursuant to the Assigned Loan
Documents (the “Collateral”) shall
be assigned to the Trust and Laurus shall no longer have any interest whatsoever
in the Collateral; (b) all Assigned Loan Documents shall be assigned to the
Trust; (c) counsel for the Trust is authorized to file UCC assignments in lieu
of continuation statements assigning to the Trust all UCC filings and filings
with the United States Patent and Trademark Office by Laurus against the
Borrower and releasing any and all liens of Laurus in the Collateral, including,
without limitation, any documents or instruments filed with the United States
Patent and Trademark Office or other municipal, county, state or federal agency;
and (d) release, or cause to be released, to the Trust all stock certificates
and stock powers made and delivered by the Borrower in favor of
Laurus.
7. In
consideration of Laurus’ agreements contained in this Agreement, the Borrower
hereby agrees to issue to Laurus the Warrant in the form attached hereto as
Exhibit
E (as
amended, modified or supplemented from time to time, the “Additional
Warrant”).
8. Laurus
and the Borrower hereby agree that the Additional Warrant shall be subject to
the terms and conditions of that certain Registration Rights Agreement, dated as
of April 27, 2004 by and between the Borrower and Laurus (as amended, modified
or supplemented from time to time, the “Registration
Rights Agreement”);
provided that (i) with respect to the Additional Warrant, the “Filing Date”
under and as defined in the Registration Rights Agreement shall be a date no
sooner than November 30, 2005, (ii) the term “Warrants” under and as defined in
the Registration Rights Agreement shall include the Additional Warrant, and
(iii) Laurus acknowledges and agrees that the Trust is entering into a
Registration Rights Agreement with the Borrower that is permitted by the terms
hereof and the Borrower may register the Warrants and/or shares of common stock
of Laurus and/or the Trust in one Registration Statement in the Borrower’s
discretion.
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9. The
Borrower hereby agrees to, on or prior to May 25, 2005, if required by
applicable law, file a Rule 424(b) supplement (the “Post
Effective Supplement”) to its
Registration Statement (as defined in the Registration Rights Agreement) with
the Securities and Exchange Commission (the “SEC”)
relating to the Note and the warrants issued in connection therewith (the
“Existing
Registration Statement”) which
Post-Effective Supplement shall state the Fixed Conversion Price applicable to
the conversion set forth on Exhibit
C after
giving effect to this Agreement.
10. Each
Agreement set forth herein shall be effective as of the date first above written
(the “Agreement
Effective Date”) on the
date when: (i) each of the Borrower, the Trust and Laurus shall have executed
and delivered to each party hereunder their respective counterpart to this
Agreement; (ii) Laurus shall have received the Payoff Consideration; (iii) the
Borrower shall have executed and delivered to Laurus the Additional Warrant;
(iv) the Trust shall have received this Agreement, the UCC 3’s, the Amended and
Restated Assigned Loan Documents as executed and delivered by the Borrower; (v)
Laurus shall have received evidence satisfactory to it that an account of a
broker designated by Laurus maintained at the Depository Trust Corporation has
been credited with the Conversion Shares referred to on Exhibit
C hereto
by the Borrower through its Deposit Withdrawal Agent Commission system; and (vi)
the Trust shall have delivered $1,081,011 of the Additional Funds to the
Borrower. For the avoidance of doubt (and notwithstanding anything to the
contrary contained herein) no release, assignment, assumption, termination or
discharge agreed to by Laurus in this Agreement shall apply to any of the
Registration Rights Agreement, that certain Common Stock Purchase Warrant dated
April 27, 2004 issued by the Borrower to Laurus, that certain Common Stock
Purchase Warrant dated October 27, 2004 issued by the Borrower to Laurus, or the
Additional Warrant or any of the Conversion Shares, as defined on Exhibit
B.
11. Laurus
understands that the Additional Warrant is being offered and sold pursuant to an
exemption from registration contained in the Securities Act based in part upon
Laurus' representations contained in the Agreement, including, without
limitation, that Laurus is an "accredited investor" within the meaning of
Regulation D under the Securities Act of 1933, as amended (the "Securities
Act").
12. Laurus
has substantial experience in evaluating and investing in private placement
transactions of securities in companies similar to the Company so that it is
capable of evaluating the merits and risks of its investment in the Company and
has the capacity to protect its own interests. Laurus must bear the economic
risk of this investment until the Additional Warrant are sold pursuant to: (i)
an effective registration statement under the Securities Act; or (ii) an
exemption from registration is available with respect to such sale.
13. Laurus is
acquiring Additional Warrant and the shares underlying the Additional Warrant
(the “Warrant
Shares”) for
Laurus' own account for investment only, and not as a nominee or agent and not
with a view towards or for resale in connection with their
distribution.
14. The
authorized capital stock of the Borrower, as of the date hereof consists of
150,000,000 shares, of which 100,000,000 are shares of Common Stock, par value
$0.001 per share, 53,188,558 shares of which are issued and outstanding; and of
which 50,000,000 are shares of Preferred Stock, par value $0.001 per share, -0-
shares of which are issued and outstanding. All issued and outstanding shares of
the Borrower's Common Stock: (i) have been duly authorized and validly issued
and are fully paid and nonassessable; and (ii) were issued in compliance with
all applicable state and federal laws concerning the issuance of securities. The
rights, preferences, privileges and restrictions of the shares of the Borrower’s
common stock are as stated in the Borrower's Articles of Incorporation (the
"Charter"). The Warrant Shares have been duly and validly reserved for issuance.
When issued in compliance with the provisions of this Agreement and the
Borrower's Charter, the Warrant Shares will be validly issued, fully paid and
nonassessable, and will be free of any liens or encumbrances; provided, however,
that the Warrant Shares may be subject to restrictions on transfer under state
and/or federal securities laws as set forth herein or as otherwise required by
such laws at the time a transfer is proposed.
3
15. The
rights and obligations of this Agreement shall bind and inure to the benefit of
the parties and their respective administrators, personal representatives, legal
representatives, heirs, successors and permitted assigns. Nothing expressed or
implied herein shall be construed to give any other person any legal or
equitable rights hereunder. The rights and obligations of the parties to this
Agreement may not be assigned by any of the parties hereto without the prior
written consent of the other parties, which may not be unreasonably withheld.
16. The
validity, interpretation and enforcement of this Agreement shall be governed by,
and construed and enforced in accordance with the local laws of the State of New
York without giving effect to its conflicts of laws provisions, and to the
exclusion of the law of any other forum, without regard to the jurisdiction in
which any action or special proceeding may be instituted.
17. EACH
PARTY HERETO AGREES TO SUBMIT TO THE EXCLUSIVE PERSONAL JURISDICTION AND VENUE
OF THE STATE AND/OR FEDERAL COURTS LOCATED IN NEW YORK COUNTY, NEW YORK, FOR
RESOLUTION OF ALL DISPUTES ARISING OUT OF, IN CONNECTION WITH, OR BY REASON OF
THE INTERPRETATION, CONSTRUCTION, AND ENFORCEMENT OF THIS AGREEMENT, AND HEREBY
WAIVES THE CLAIM OR DEFENSE THEREIN THAT SUCH COURTS CONSTITUTE AN INCONVENIENT
FORUM.
18. AS A
MATERIAL INDUCEMENT FOR THIS AGREEMENT, EACH PARTY HEREBY KNOWINGLY,
VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY WAIVES ALL RIGHTS TO A TRIAL BY JURY
OF ANY ISSUES SO TRIABLE.
19. Except as
otherwise provided herein, the parties shall pay their own fees and expenses,
including their own counsel fees, incurred in connection with this Agreement or
any transaction contemplated hereby.
20. This
Agreement may not be modified, amended, supplemented, canceled or discharged,
except by written instrument executed by all parties hereto. No failure to
exercise, and no delay in exercising, any right, power or privilege under this
Agreement shall operate as a waiver, nor shall any single or partial exercise of
any right, power or privilege hereunder preclude the exercise of any other
right, power or privilege. No waiver of any breach of any provision shall be
deemed to be a waiver of any preceding or succeeding breach of the same or any
other provision, nor shall any waiver be implied from any course of dealing
between the parties. No extension of time for performance of any obligations or
other acts hereunder or under any other agreement shall be deemed to be an
extension of the time for performance of any other obligations or any other
acts. The rights and remedies of the parties under this Agreement are in
addition to all other rights and remedies, at law or equity, that they may have
against each other except as may be specifically limited herein.
21. This
Agreement (including the exhibits and schedules attached hereto) and other
documents delivered at execution pursuant hereto, contain the entire
understanding of the parties in respect of its subject matter and supersedes all
prior agreements and understandings (oral or written) between or among the
parties with respect to such subject matter. The parties agree that prior drafts
of this Agreement shall not be deemed to provide any evidence as to the meaning
of any provision hereof or the intent of the parties with respect thereto. The
exhibits constitute a part hereof as though set forth in full above. This
Agreement is not intended to confer upon any person, other than the parties
hereto, any rights or remedies hereunder.
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22. This
Agreement may be executed in any number of counterparts, each of which shall be
an original but all of which together shall constitute one and the same
instrument. A telecopy signature of any party shall be considered to have the
same binding legal effect as an original signature.
23. The
parties agree and acknowledge that they have jointly participated in the
negotiation and drafting of this Agreement and that this Agreement has been
fully reviewed and negotiated by the parties and their respective counsel. In
the event of an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties and no
presumptions or burdens of proof shall arise favoring any party by virtue of the
authorship of any of the provisions of this Agreement. Any reference to any
federal, state, local, or foreign statute or law shall be deemed also to refer
to all rules and regulations promulgated thereunder, unless the context requires
otherwise.
24. The
parties to this Agreement acknowledge and agree that time is of the essence with
respect to each and every provision of this Agreement.
25. The
parties hereto agree to execute such instruments and documents as may be
required to carry out or effectuate the intent of this Agreement, so long as
such instruments and documents do not alter the rights and obligations of the
parties under this Agreement.
26. Each
party herein expressly represents and warrants to all other parties hereto that:
(i) before executing this Agreement, said party has fully informed itself of the
terms, contents, conditions and effects of this Agreement; (ii) said party has
relied solely and completely upon its own judgment in executing this Agreement;
(iii) said party has had the opportunity to seek and has obtained the advice of
counsel before executing this Agreement; (iv) said party has acted voluntarily
and of its own free will in executing this Agreement; (v) said party is not
acting under duress, whether economic or physical, in executing this Agreement;
and (vi) this Agreement is the result of arm’s length negotiations conducted by
and among the parties and their respective counsel.
27 The
parties hereby agree from time to time to execute and deliver such further and
other transfers, assignments and documents and do all matters and things which
may be convenient or necessary to more effectively and completely carry out the
intentions of this Agreement.
[The
Remainder of this Page is Intentionally Left Blank]
5
IN
WITNESS WHEREOF, the
undersigned have hereunto executed this Assignment, Assumption and Release
effective as of the date first written above.
| LENDER: | ||
| LAURUS MASTER FUND, LTD. | ||
| By: |
/s/ Xxxxxx Grin | |
| Name: |
Xxxxxx
Grin | |
| Title: |
Director | |
| BORROWER: | ||
| SEQUIAM CORPORATION | ||
| By: |
/s/ Xxxxxxxx XxxxxxXxxxxx | |
| Name: |
Xxxxxxxx
XxxxxxXxxxxx | |
| Title: |
CEO | |
| TRUST: | ||
| XXX XXXXXXXX XXXXXX AS ATTORNEY IN FACT FOR THE TRUST UNDER THE WILL OF XXXX SYENNINGSEN | ||
| /s/ Xxx Xxxxxxxx Xxxxxx | ||
6
EXHIBIT
A
ASSIGNED
LOAN DOCUMENTS
|
1. |
Securities
Purchase Agreement, dated April 27, 2004, between
the Borrower and Laurus, as amended. |
|
2. |
Master
Security Agreement, dated April 27, 2004, by
the Borrower, Sequiam Software, Inc., a California corporation
(“Software”),
Sequiam Sports, Inc., a Delaware corporation (“Sports”),
Sequiam Biometrics, Inc., a Florida corporation (“Biometrics”),
Sequiam Education, Inc., a Florida corporation (“Education”),
and Fingerprint Detection Technologies, Inc. (“Fingerprint”)
(Software, Sports, Biometrics, Education and Fingerprint are sometimes
collectively referred to as the “Subsidiaries”)
in favor of Laurus. |
|
3. |
Subordination
Agreement,
dated
April 27, 2004,
among
Xxxx Xxxxxxxxxxx, Xxxx XxxxxxXxxxxx and
Laurus. |
|
4. |
Stock
Pledge Agreement, dated April 27, 2004, among Laurus, the Borrower and the
Subsidiaries, together with all stock powers and stock certificates
delivered therewith. |
|
5. |
Note. |
|
6. |
Grant
of Security Interest in Patents and Trademarks, dated April 27,
2004, in
favor of Laurus by:
(a) Sequiam; (b) Software; (c) Sports; and (d)
Biometrics. |
|
7. |
Subsidiary
Guaranty,
dated
April 27, 2004, by
the Subsidiaries in favor of Laurus. |
|
8. |
Subordination
Agreement, dated October 27, 2004, by and between Xxx Xxxxxxxx Xxxxxx, Xxx
Xxxxxxxx Xxxxxx, Attorney-in-Fact for the Trust Under the Will of Xxxx
Xxxxxxxxxxx and Laurus. |
|
9. |
Subordination
Agreement, dated October 27, 2004, by and between Eagle Funding, LLC and
Laurus. |
7
EXHIBIT
B
PREVIOUS
LOANS
Promissory
Note dated as of December 18, 2003 made by the Borrower, to the order of the
Trust with a current principal obligation in the amount of $400,000.
Promissory
Note dated as of January 30, 2004 made by the Borrower, to the order of the
Trust with a current principal obligation in the amount of $400,000.
Promissory
Note dated as of September 30, 2004 made by the Borrower, to the order of the
Trust with a current principal obligation in the amount of
$500,000.
Promissory
Note dated as of December 16, 2004 made by the Borrower, to the order of the
Trust with a current principal obligation in the amount of $50,000.
8
EXHIBIT
C
PAYOFF
CONSIDERATION
|
Cash: |
$1,000,000.00
(plus accrued and unpaid interest as of May 18, 2005 at an amount equal to
$18,989.76 ). |
|
Stock: |
Laurus
shall convert, in accordance with the Note, the remaining principal
balance of the Note ($818,182.00) into common stock of the Borrower at
Fixed Conversion Price (as defined in the Note) equal to $[market
price at closing]
(the “Conversion Shares”). |
9
EXHIBIT
D
SUBSIDIARIES
SEQUIAM
SOFTWARE, INC.
SEQUIAM
BIOMETRICS, INC.
SEQUIAM
EDUCATION, INC.
SEQUIAM
SPORTS, INC.
FINGERPRINT
DETECTION TECHNOLOGIES, INC.
10
EXHIBIT
E
ADDITIONAL
WARRANT
[See
Attached]
11
