Exhibit 10.2
AMENDMENT NO. 1 TO CERTIFICATE OF DESIGNATIONS OF SDA AMERICA, INC.
This AMENDMENT NO. 1 TO CERTIFICATE OF DESIGNATIONS, dated as of August 11, 2004
(this "Amendment No. 1"), by and between SECURED DIGITAL APPLICATIONS, INC., a
Delaware corporation (the "Parent"), SDA AMERICA, INC., a Delaware corporation
(the "Company"), and LAURUS MASTER FUND, LTD., a Cayman Islands company
("Laurus").
Reference is made to (i) the CERTIFICATE TO SET FORTH DESIGNATIONS, VOTING
POWERS, PREFERENCES, LIMITATIONS, RESTRICTIONS, AND RELATIVE RIGHTS OF SERIES A
CONVERTIBLE PREFERRED STOCK, $.01 PAR VALUE PER SHARE (as amended, modified or
supplemented from time to time, the "Certificate of Designations"), of the
Company and (ii) the Securities Purchase Agreement, dated as of May 28, 2004,
among the Parent, the Company and Laurus (as amended, modified or supplemented
from time to time, the "Securities Purchase Agreement"). Unless otherwise
indicated, capitalized terms used herein without definition shall have the
meanings ascribed to such terms in the Certificate of Designations.
NOW, THEREFORE, in consideration for the execution and delivery by the
Company of all documents requested by the holders of the Series A Preferred
Stock and for other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto agree as follows:
1. Section 3(a) of the Certificate of Designations is hereby amended
by inserting the following new subsection (iv) at the end thereof:
"(iv) Notwithstanding anything to the contrary contained in this
Certificate of Designations, to the extent that all or a portion of the Monthly
Dividend Amount has accrued as set forth above in this Certificate of
Designation with respect to outstanding Series A Preferred Stock the proceeds of
which the Company is required to maintain (and is maintaining) in the Restricted
Account (as defined in the Restricted Account Agreement referred to in the
Securities Purchase Agreement) (such amount, the "Restricted Amounts"), such
Monthly Dividend Amounts that have accrued on such Series A Preferred Stock
shall not become payable until the earlier of (x) the first Monthly Dividend
Payment Date occurring immediately following the date on which the respective
Restricted Amount is released from the Restricted Account as set forth in the
Restricted Account Agreement (i.e., following a conversion, redemption or
otherwise, as applicable) and (y) any date on which the Company is dissolved.
For the avoidance of doubt, Monthly Dividend Amounts that have accrued with
respect to outstanding Series A Preferred Stock the proceeds of which do not
constitute a Restricted Amount shall be payable as set forth in this Certificate
of Designations without giving effect to this subclause (iv)".
2. Section 5(c) of the Certificate of Designations is hereby amended to
provide as follows:
(c) The number of shares of the Parent's Common Stock issuable upon
conversion of each share of Series A Preferred Stock shall equal (i)
the sum of (A) the State Value per share, as amended pursuant to
Section 5 hereof, and (B) at the Holder's election, accrued and unpaid
dividends on such share, (ii) divided by the Conversion Price (as
defined below).
The Conversion Price shall be set as follows: (a) for the first
$2,000,000 in Stated Value or accrued and unpaid dividends or fees
converted by Holder, the Conversion Price shall be $0.20; (b) for the
next $1,000,000 in Stated Value or accrued and unpaid dividends or
fees converted by Holder, the Conversion Price shall be $0.25; and (c)
for each succeeding amount converted, whether in Stated Value or
accrued and unpaid dividends or fees, the Conversion Price shall $0.35
per share.
3. This Amendment No. 1 shall be effective as of the date hereof
following the execution of same by each of the Company, the Parent and
the Laurus.
4. There are no other amendments to the Certificate of Designations.
5. Each of the Parent and the Company hereby represents and warrants to
Laurus that as of the date hereof all representations, warranties and
covenants made by the Company in connection with the Securities
Purchase Agreement, the Certificate of Designations and the Related
Agreements (as defined in the Securities Purchase Agreement) are true
correct and complete and all of the Parent's and the Company's
covenant requirements have been met. As of the date hereof, no Event
of Default under any Related Agreement has occurred or is continuing.
6. This Amendment No. 1 shall be binding upon the parties hereto and
their respective successors and permitted assigns and shall inure to
the benefit of and be enforceable by each of the parties hereto and
its successors and permitted assigns. THIS AMENDMENT NO. 1 SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF
THE STATE OF NEW YORK. This Amendment No. 1 may be executed in any
number of counterparts, each of which shall be an original, but all of
which shall constitute one instrument.
IN WITNESS WHEREOF, each of the Company, the Parent and Laurus have caused
this Amendment No. 1 to the Certificate of Designations to be signed in its name
this 11th day of August, 2004.
SECURED DIGITAL APPLICATIONS, INC.
By: /s/ Xxxxxxx Soon-Xxxx Xxx
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Name: Xxxxxxx Soon-Xxxx Xxx
Title: Chairman
SDA AMERICA, INC.
By: /s/ Xxxxxxx Soon-Xxxx Xxx
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Name: Xxxxxxx Soon-Xxxx Xxx
Title: President
LAURUS MASTER FUND, LTD.
By: /s/ Xxxxx Grin
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Name: Xxxxx Grin
Title: Fund Manager
