Exhibit 10.5
AMENDMENT NO. 1 TO SECURITES PURCHASE AGREEMENT
This AMENDMENT NO. 1 TO SECURITIES PURCHASE AGREEMENT, dated as of August
19, 2004 (this "Amendment No. 1"), by and between SECURED DIGITAL APPLICATIONS,
INC., a Delaware corporation (the "Company"), SDA AMERICA, INC., a Delaware
corporation ("SDA America"), and LAURUS MASTER FUND, LTD., a Cayman Islands
company ("Laurus").
Reference is made to that certain Securities Purchase Agreement, dated as
of May 28, 2004, among the Company, SDA America and Laurus related to the Series
A Preferred referred to therein (as amended, modified or supplemented from time
to time, the "Securities Purchase Agreement"). Capitalized terms used herein
without definition shall have the meanings ascribed to such terms in the
Securities Purchase Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Section 6.5 of the Securities Purchase Agreement is amended to read as
follows:
"6.5 Use of Funds.
The Company agrees that it and its Subsidiaries will use the proceeds
of the sale of the Series A Preferred as follows: (a) for acquisition of
100% of the equity interests of one or more other companies that meet the
following criteria: (i) revenue in excess of $10,000,000 for the four most
recently ended fiscal quarters of such company, (ii) positive net income
for the four most recently ended fiscal quarters of such company, (iii)
positive cash flow from operations for the four most recently ended fiscal
quarters of such company, (iv) the fair market value of such company, as
set forth in an appraisal from an independent appraiser acceptable to the
Purchaser (which appraisal shall be delivered by the Company to the
Purchaser), is greater than or equal to $5,000,000, (v) such company
provides audited financial statements for its two most recently ended
fiscal years to the Purchaser and/or (vi) the Board of Directors of the
Company approves the acquisition of such company; and (b) for working
capital purposes, so long as the amount of proceeds utilized in accordance
with this clause (b) does not exceed the stated amount of Series A
Preferred which has been converted into Common Stock of the Company in
accordance with the terms of this Agreement and the Related Agreements. The
Company agrees that it and its Subsidiaries will use the proceeds of the
sale of the Warrant for working capital. In connection with the foregoing
it is understood that the entire amount of the proceeds of the Series A
Preferred will be deposited in the Restricted Account on the Closing Date,
shall be subject to the terms and conditions of the Restricted Account
Agreement and shall be maintained in the Restricted Account unless the
Company or any of its Subsidiaries utilizes such proceeds in accordance
with this Section 6.5."
2. This Amendment No. 1 shall be effective as of the date hereof
following the execution of same by each of the Company, SDA America
and Laurus.
3. There are no other amendments to the Securities Purchase Agreement.
4. Each of the Company and SDA America 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 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.
5. 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.
[Remainder of Page Intentionally Blank]
[Signature Page Follows]
IN WITNESS WHEREOF, each of the Company, SDA America and Laurus has caused
this Amendment No. 1 to the Securities Purchase Agreement signed in its name
effective as of this 19th 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/ Xxxx Xxxxxx
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Name: Xxxx Xxxxxx
Title: Counsel
