Exhibit 6
May 22, 2000
Xxxx Xxxxxxxx
Chief Executive Officer
XxxxxXxxx.xxx
Xxxxx 000
000 Xxxxxxx Xxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Dear Xxxx:
This letter supplements that certain Stock Purchase Agreement, dated as
of April 18, 2000 and executed as of the date hereof ("Agreement"), by and among
Intellect Capital Group, LLC, a Delaware limited liability company (the
"Purchaser"), and XxxxxXxxx.Xxx, Inc., a Nevada corporation (the "Company").
Capitalized terms used but not otherwise defined herein shall have the same
meaning as set forth in the Agreement.
In accordance with Article 2 of the Agreement, Purchaser shall receive
shares of the Company's Series B Preferred Stock, which, no later than 30 days
from the date upon which such Purchased Stock shall be issued (the "Purchased
Stock Issuance Date"), shall be convertible into that number of fully paid and
nonassessable shares of the Company's Common Stock equal to fifty percent (50%)
of the Company's Common Stock then outstanding following the conversion (the
"Conversion Date").
Pursuant to Section 3.2 of the Agreement, Company represents and
warrants to Purchaser as follows:
The Company has sufficient number of shares of Common Stock authorized
in order to reserve a number of shares to permit the conversion of the
Purchased Shares.
As of the date hereof, Company has 50,000,000 shares of Common Stock
authorized, with 12,914,377 shares of Common Stock issued and outstanding (the
"Outstanding Shares"); an additional 7,640,739 shares of Common Stock obligated
for issuance pursuant to (i) agreements for the conversion of other securities
into shares of Common Stock, (ii) agreements for the exercise of warrants and
options in exchange for shares of Common Stock and (iii) other commitments of
the Company to issue or sell shares of Common Stock and/or securities
convertible into shares of Common Stock (the "Obligated Shares"); and
contemplates issuing at least 4,800,000 shares in conjunction with the current
private placement of common stock ("Placement Shares"). Thus, as of the date
hereof and in accordance with the terms of the Agreement, the Purchaser is
entitled to receive at least 25,355,116 shares of the Company's
Common Stock upon conversion of the Purchased Stock into shares of Common Stock
(the "Conversion Shares").
If the Company were to immediately convert its Purchases Shares into
Conversion Shares, the Company would not have a sufficient number of shares of
Common Stock authorized in order to reserve a number of shares to permit the
conversion of the Purchased Shares into the Conversion Shares, as indicated by
the following table:
OUTSTANDING SHARES 12,914,377
OBLIGATED SHARES 7,640,739
PLACEMENT SHARES 4,800,000
CONVERSION SHARES 25,355,116
----------
TOTAL SHARES SUBJECT TO ISSUANCE 50,710,232
SHARES AUTHORIZED 50,000,000
----------
SHARES IN EXCESS OF AUTHORIZATION 710,232
In order for there to be a sufficient number of shares of Common Stock
authorized to reserve a number of shares for the Conversion Shares, the Company
must increase the number of authorized shares of its Common Stock. In order to
increase the number of authorized shares of its Common Stock, the Company must
amend its Articles of Incorporation, which requires the approval of the
Company's shareholders in accordance with Nevada law.
In consideration of the mutual covenants and agreements set forth in the
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, by signing this letter ("Letter
Agreement"), the Company hereby agrees as follows:
1. As an inducement to the Purchaser for entering into the
Agreement and contemporaneously with the execution thereof by the Purchaser, and
contemporaneously with the execution of this Letter Agreement by the Company,
the Company shall cause each of its directors and officers and all of its
shareholders who have beneficial ownership of at least 10% of the Company's
currently outstanding Common Stock to enter into a Shareholder Agreement with
Purchaser in the form attached hereto as EXHIBIT A ("Shareholder Agreement").
2. No later than five (5) business days after the Purchased Stock
Issuance Date, the Company shall file with the Securities and Exchange
Commission a form of proxy seeking shareholder approval of an amendment to the
Company's Articles of Incorporation that will increase the authorized number of
shares of our Common Stock from 50,000,000 to 200,000,000 shares (the "Proxy).
The Company may include other matters for shareholder consideration and approval
in the Proxy as it deems necessary or advisable, including but not limited to,
seeking shareholder approval for changing the Company's name from
"XxxxxXxxx.xxx" to "PhotoLoft, Inc."
3. In the event that the Company does not file the Proxy within
five (5) business days after the Purchased Stock Issuance Date, Purchaser shall
be entitled to receive from Company, and Company shall pay to Purchaser, a
penalty of $1,000 for each day during which the Proxy remains unfiled.
4. In the event that the Company is unable to obtain the necessary
shareholder approval of the amendment to the Company's Articles of Incorporation
that will increase the authorized number of shares of our common stock from
50,000,000 to 200,000,000 shares prior to the Conversion Date and to the extent
that the Company has insufficient shares of Common Stock available to issue the
Conversion Shares, then for each Conversion Share that cannot be issued on the
Conversion Date as a result of such deficit, the Company shall pay to Purchaser
an amount equal to the market value of a share of the Company's Common Stock on
the Conversion Date.
If the foregoing is in accordance with your understanding, please so
indicate by signing this letter in the space indicated below and return it to us
no later than May __, 2000.
Very truly yours,
INTELLECT CAPITAL GROUP, LLC
By: _____________________________
Xxxxxx X. Xxxxxx
Chief Executive Officer
ACCEPTED AND AGREED
AS OF MAY __, 2000
XXXXXXXXX.XXX
By: _________________________
Xxxx Xxxxxxxx
Chief Executive Officer
