EXHIBIT 10.29
AMENDMENT TO CONVERTIBLE NOTE DATED JUNE 18, 2002
Reference is hereby made to the Convertible Note dated June
18, 2002 (the "Note") by and between BRIAZZ, INC., a Washington corporation (the
"Maker" or the "Borrower"), with principal offices located at 0000 0xx Xxxxxx
Xxxxx, Xxxxx 000, Xxxxxxx, XX 00000, and Laurus Master Fund, Ltd. (the "Payee"),
with principal offices at c/o Ironshore Corporate Services Ltd., X.X. Xxx 0000
G.T., Queensgate House, South Church Street Grand Cayman, Cayman Islands. Terms
used herein and not otherwise defined herein shall have the meaning set forth in
the Note.
Maker and Payee hereby amend the Note as follows:
1. The Maturity Date is August 1, 2004.
2. Section 2.1 of the Note is amended and replaced in its
entirety by adding the following:
"2.1 Scheduled Payments.
(a) In the event that the Borrower
closes on the investment in the Borrower contemplated by the
February 2003 letter of intent between the Borrower and DB
Advisors, LLC (the "DB FINANCING") by August 1, 2003, then the
Borrower shall repay $300,000 of the principal amount then
outstanding on this Note out of the proceeds of such
investment on or before August 4, 2003.
(b) Except as set forth in Section
2.1(a), no payment of principal shall be required under this
Note until the first business day of the calendar month
following the earlier to occur of (i) the closing of the DB
Financing, and (ii) July 31, 2003 (such first business day,
the "INITIAL REPAYMENT DATE"). Subject to the terms of this
Article II, the Borrower shall repay one-twelfth of the
principal amount outstanding on this Note as of the Initial
Repayment Date (to the extent such amount has not been
converted pursuant to Article III below), together with
interest accrued to date on such portion of the principal
amount plus any and all default payments and fees owing under
the Purchase Agreement but not previously paid, including, if
the payment required by Section 2.1(a) has been made, an
optional redemption fee of $6,250 (collectively the "MONTHLY
AMOUNT"), in accordance with Section 2.2 below, on the first
business day of each consecutive calendar month (each, a
"REPAYMENT DATE"), beginning on the Initial Repayment Date.
The Borrower shall continue to make the monthly interest
payments as described herein."
3. Section 2.2 of the Note is amended and replaced in its
entirety by adding the following:
"2.2 Cash or Common Stock. Subject to
the terms hereof, the Borrower has the sole option to
determine whether to satisfy payment of the Monthly Amount in
full on each Repayment Date either in cash or in shares of
Common Stock, or a combination of both. The Borrower shall
deliver to the Holder a written irrevocable notice in the form
of Exhibit B attached hereto electing to pay such Monthly
Amount in full on such Repayment Date in either cash or Common
Stock, or a combination of both ("REPAYMENT ELECTION NOTICE").
Such Repayment Election Notice shall be delivered at least ten
(10) days prior to the applicable
Repayment Date (the date of such notice being hereinafter
referred to as the "NOTICE DATE"). The Holder shall have the
right to defer for any period of time the payment of the
Monthly Amount in shares of Common Stock in its sole
discretion. However, any such deferred payment shall be deemed
to have been made on a timely basis by the Borrower. If such
Repayment Election Notice is not delivered within the
prescribed period set forth in the preceding sentence, then
the repayment shall be made in cash. If the Borrower elects or
is required to repay all or a portion of the Monthly Amount in
cash on a Repayment Date, then on such Repayment Date the
Borrower shall pay to the Holder such amount in satisfaction
of such obligation. If the Borrower repays any portion of the
Monthly Amount in shares of Common Stock, the number of such
shares to be issued for such Repayment Date, or the date when
all or part of the Monthly Amount is paid after a deferral by
the Holder, shall be the number determined by dividing (x) the
portion of the Monthly Amount to be paid in shares of Common
Stock, by (y) the Conversion Price as of such Notice Date."
4. Section 2.3 of the Note is amended and replaced in its
entirety by adding the following:
"2.3 No Effective Registration.
Notwithstanding anything to the contrary herein, the Borrower
shall be prohibited from exercising its right to repay the
Monthly Amount in shares of Common Stock (and must deliver
cash in respect thereof) on the applicable Repayment Date if
at any time from the Notice Date until the time at which the
Holder receive such shares (i) there fails to exist an
effective resale registration statement and such failure
constitutes a breach of the Borrower's obligations to the
Holder under any agreement entered into between them, or (ii)
an Event of Default hereunder exists or occurs, in each case
unless otherwise waived in writing by the Holder in whole or
in part at the Holder's option.
5. Section 2.4 of the Note is amended and replaced in its
entirety by adding the following:
"2.4 Share Price/Issuance Limitations.
(a) Notwithstanding anything to the
contrary herein, if the average VWAP of the Common Stock as
reported by Bloomberg, L.P. on the Principal Market for the 11
trading days preceding a Repayment Date was less than 115% of
the Fixed Price, then the Borrower may not pay any portion of
the Monthly Amount in shares of Common Stock. "VWAP" shall
mean the daily volume weighted average price of the Common
Stock on the Principal Market as reported by Bloomberg, L.P.
using the AQR function on the date or dates in question.
(b) Notwithstanding anything to the
contrary herein, the Borrower may only exercise its right to
repay the Monthly Amount in shares of Common Stock with
respect to an amount convertible into 25% or less of the
aggregate number of shares of the Borrower's Common Stock
traded on the Principal Market during the 30 calendar day
period immediately preceding the Notice Date, unless otherwise
waived in writing by the Holder in whole or in part at the
Holder's option.
6. Section 3.1(a) of the Note is amended and replaced in its
entirety by adding the following:
"(a) If Payment Default (as defined
below) occurs and is continuing, the Holder shall have the
right, but not the obligation, to convert all or any portion
of the unpaid Monthly Amount relating to the principal portion
of such Monthly Amount into fully paid and nonassessable
shares of common stock of the Borrower as such stock exists on
the date of issuance of this Note, or any shares of capital
stock of the Borrower into which such stock shall hereafter be
changed or reclassified (the "COMMON STOCK") at the Fixed
Price as defined in Section 3.1(b) hereof (the "CONVERSION
PRICE"), determined as provided herein. Upon delivery to the
Borrower of a Notice of Conversion as described in Section 8
of the Securities Purchase Agreement entered into between the
Borrower and certain persons who are signatories thereto,
including the Holder, relating to this Note (the "PURCHASE
AGREEMENT") of the Holder's written request for conversion
(the date of giving such notice of conversion being a
"CONVERSION DATE"), the Borrower shall issue and deliver to
the Holder within three business days from the Conversion Date
that number of shares of Common Stock for the portion of the
Note converted in accordance with the foregoing. At the
election of the Holder, the Borrower will deliver accrued but
unpaid interest on the Note in cash or in shares of Common
Stock through the Conversion Date directly to the Holder on or
before the Delivery Date (as defined in the Purchase
Agreement). The number of shares of Common Stock to be issued
upon each conversion of this Note shall be determined by
dividing that portion of the principal of the Note to be
converted and interest (unless the Holder elects to take
interest in cash), if any, up to the Monthly Amount by the
Conversion Price. In the event of any conversions of
outstanding principal amount under this Note in part pursuant
to this Article III, such conversions shall be deemed to
constitute conversions of outstanding principal amount
applying to Monthly Amounts for the Repayment Dates in
chronological order if more than one Monthly Amount is the
subject of a Payment Default. "PAYMENT DEFAULT" means the
failure by the Borrower to pay any amount due under this Note
when due and such failure continues for a period of five (5)
days after the due date."
7. Section 3.1(b) of the Note is amended and replaced in its
entirety by adding the following:
"(b) Subject to adjustment as provided
in Section 3.1(c) hereof, the Conversion Price per share shall
be $0.10 with respect to the first Basket Amount (as defined
below) converted into shares of Common Stock under the Note
after July 31, 2003 (the initial "FIXED PRICE"), and $0.30
with respect to any amounts converted into shares of Common
Stock under the Note in excess of the Basket Amount (the
secondary "FIXED PRICE"). The "Basket Amount" is the dollar
amount equal to one-half of the principal amount outstanding
under the Note on the Initial Repayment Date after taking into
effect any payment made in accordance with Section 2.1(a) of
the Note, plus an additional $37,500 if the payment required
by Section 2.1(a) has been made. If a Payment Default has
occurred and be continuing hereunder then the Conversion Price
shall be equal to the lower of (i) the applicable Fixed Price;
or (ii) seventy percent (70%) of the average of the three
lowest closing prices for the Common Stock on NASD OTC
Bulletin Board, NASDAQ SmallCap Market, NASDAQ National Market
System, American Stock Exchange, or New York Stock Exchange
(whichever of the foregoing is at the time the principal
trading exchange or market for the Common Stock, the
"PRINCIPAL MARKET"), or on any securities exchange or other
securities market on which the Common Stock is then being
listed or traded, for the thirty (30) trading days prior to
but not including the Conversion Date. All references in this
Note to the Fixed Price shall be deemed to be references to
the applicable Fixed Price as set forth in this
paragraph."
8. Section 3.3 of the Note Section 3.1(b) of the Note is amended
and replaced in its entirety by adding the following:
"3.3 Overall Limit on Common Stock
Issuable. At such time as the Borrower again becomes subject
to rules or regulations of a Principal Market which requires
the Borrower to receive shareholder approval of the issuance
of shares of Common Stock pursuant to the terms of this Note,
the number of shares of Common Stock issuable by the Borrower
and acquirable by the Holder, shall not exceed 19.9% of the
number of shares of Common Stock outstanding on the Closing
Date or such other limit imposed by such rules or regulations
of a Principal Market, subject to appropriate adjustment for
stock splits, stock dividends, or other similar
recapitalizations affecting the Common Stock (the "MAXIMUM
COMMON STOCK ISSUANCE"), unless the issuance of shares
hereunder in excess of the Maximum Common Stock Issuance shall
first be approved by the Borrower's shareholders. If the
Borrower becomes subject to rules or regulations of a
Principal Market such that the limitations imposed by the
previous sentence become effective, then at any point in time
and from time to time (each, a "TRIGGER DATE") the number of
shares of Common Stock issued pursuant to conversion of the
Note, together with the number of shares of Common Stock that
would then be issuable by the Borrower in the event of the
conversion of the entire Note, would exceed the Maximum Common
Stock Issuance but for this Section, then the Borrower shall,
at the Borrower's election, either (a) promptly call a
shareholders meeting to obtain shareholder approval for the
issuance of the shares of Common Stock hereunder in excess of
the Maximum Common Stock Issuance, which such shareholder
approval shall be obtained within 60 days of the Trigger Date,
or (b) purchase from the Holder for cash such principal amount
of the Note plus accrued interest and fees which cannot be
converted due to such Maximum Common Stock Issuance
limitation, which such cash payment shall be paid within five
(5) business days after a Trigger Date if this clause (b) is
elected, or, if clause (a) is elected, five (5) business days
following the Borrower's failure to so obtain shareholder
approval the Borrower shall pay to the Holder an amount equal
to the MCSI payment multiplied by 105%, as the case may be.
The Borrower shall make such election within three (3)
business days following the Trigger Date by giving written
notice to the Holder."
9. Holder waives Section 4.10 of the Note through September 30,
2003. In the event that Section 9.4 of the Purchase Agreement
is terminated, Section 4.10 of the Note will automatically
terminate.
10. There are no other modifications to the Note.
Dated: July 31, 2003
BRIAZZ, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
Name/Title: _____________________
Dated: _________________________
AGREED AND ACCEPTED
LAURUS MASTER FUND, LTD.
By: /s/ Xxxxxx Grin
-------------------------
Name:
Title:
