Exhibit 10.5
AGREEMENT
THIS AGREEMENT (the "Agreement") is entered into as of August 17, 2000, by
and among XXXXXX.XXX, INC., a corporation duly organized and existing under the
laws of the State of Delaware (the "Company") and Xxxxxx Private Equity, LLC
(hereinafter referred to as "Investor").
RECITALS:
WHEREAS, pursuant to the Company's offering ("Equity Line") of up to
Twenty Million Dollars ($20,000,000), which amount will be increased Forty
Million Dollars ($40,000,000) on the date, if any, that the Company's Common
Stock becomes listed on the Nasdaq Small Cap Market or National Market, if and
only if the lowest closing price for the Company's Common Stock is equal to or
greater than $2.50 for each of the 15 trading days immediately preceding such
listing (the "Maximum Offering Amount"), excluding any funds paid upon exercise
of the Warrants, of Common Stock of the Company pursuant to that certain
Investment Agreement (the "Investment Agreement") between the Company and
Investor dated on or about August 17, 2000, the Company has agreed to sell and
Investor has agreed to purchase, from time to time as provided in the Investment
Agreement, shares of the Company's Common Stock for a maximum aggregate offering
amount of up to the Maximum Offering Amount; and
WHEREAS, pursuant to the terms of the Investment Agreement, the Company
has agreed, among other things, to issue to the Investor Commitment Warrants, as
defined in the Investment Agreement, to purchase a number of shares of Common
Stock, exercisable for five (5) years from their respective dates of issuance.
TERMS:
NOW, THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants and conditions set forth in Agreement and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Issuance of Commitment Warrants. As compensation for entering into the Equity
Line, Investor received a warrant convertible into 5,490,000 shares of the
Company's Common Stock, in the form attached hereto as Exhibit A (the
"Commitment Warrants").
2. Issuance of Additional Warrants. On the date (the "First Put Date") of the
first Put Notice that is delivered to Investor pursuant to the Investment
Agreement, Investor shall receive additional warrants (the "Additional
Warrants"), to purchase a number of shares of Common Stock, if necessary, such
that the sum of the number of Commitment Warrants and the number of Additional
Warrants issued to Investor shall equal at least 4.0% of the number of fully
diluted shares (the "First Put Date Fully Diluted Shares") of Common Stock of
the Company as determined on that date. In addition, on each six month
anniversary of the First Put Date (each, a "Six Month Anniversary Date"), the
Company shall issue to the Investor a number of additional warrants (also,
"Additional Warrants"), to purchase a number of shares of Common Stock equal to
"N," where "N" is defined as follows:
"N" = NACS x PPD x X%
where,
"NACS" (the number of additional common shares) = the number, if any, of
additional shares of Common Stock that the Company has issued during the period
beginning on the First Put Date and ending on the applicable Six-Month
Anniversary date, not including any shares that were included in the
determination of the First Put Date Fully Diluted Shares and not including
issuances to the Investor.
"PPD" (percentage price drop) =
Lowest Evaluation Price - Market Price
Lowest Evaluation Price
"Evaluation Price" = the lowest closing price of the Company's Common
Stock for the five (5) trading days immediately preceding the First Put Date and
the lowest closing price of the Company's Common Stock for the five (5) trading
days immediately preceding each Six Month Anniversary Date.
"Lowest Evaluation Price" = the lowest Evaluation Price determined at any
time prior to and not including the Six Month Anniversary for which "N" is being
determined.
"Market Price" = the lowest closing price of the Company's Common Stock
for the five (5) trading days immediately preceding the Six Month Anniversary
Date for which "N" is being determined.
"X" shall equal 4% on the First Put Date, and shall be reduce by 0.5% for
each Six Month Anniversary that occurs thereafter.
In no event shall "N" be less than zero.
The Additional Warrants shall initially be exerciseable at the same price as
the Commitment Warrants (as most recently reset), shall have the same reset
provisions as the Commitment Warrants (which resets shall occur on each six
month anniversary of the date of issuance of the applicable Additional Warrant
throughout the term of the applicable Additional Warrant), shall have piggyback
registration rights and shall have a 5-year term.
3. Opinion of Counsel. Concurrently with the issuance and delivery of the
Commitment Opinion (as defined in the Investment Agreement) to the Investor, or
on the date that is six (6) months after the date of this Agreement, whichever
is sooner, the Company shall deliver to the Investor an Opinion of Counsel
(signed by the Company's independent counsel) covering the issuance of the
Commitment Warrants and the Additional Warrants, and the issuance and resale of
the Common Stock issuable upon exercise of the Warrants and the Additional
Warrants.
4. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Georgia applicable to agreements made
in and wholly to be performed in that jurisdiction, except for matters arising
under the Act or the Securities Exchange Act of 1934, which matters shall be
construed and interpreted in accordance with such laws.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
this 17th day of August, 2000.
XXXXXX.XXX, INC. INVESTOR:
XXXXXX PRIVATE EQUITY, LLC.
By: /s/ Xxxxx Xxxxxxx By: /s/ Xxxx X. Xxxxxx
--------------------------------- ----------------------------------
Xxxxx Xxxxxxx, President & CEO Xxxx X. Xxxxxx, Manager
xXxxxx.xxx, Inc. 0000 Xxxxxxx Xxxxxx Xxxx
000 Xxxxxxx 00 Xxxx. 000, Xxxxx 000
Xxxxxxx, XX 00000 Xxxxxxx, XX 00000
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
