EXHIBIT 10.1
[RAPTOR NETWORKS TECHNOLOGY, INC. LETTERHEAD]
August 8, 2005
DMK Investments, LLC Transglobal Investments, LLC
14 Morning Dove 00000 Xxxxx Xxxxxx
Xxxxxx Xxxxxx, XX 00000 Xxxxxx Xxxxx, XX 00000
Uptrend Investment, Inc.
00000 Xxxxxxxxxx Xxxxx
Xxxxxx Xxxxx, XX 00000
Re: Intent to enter into amendment regarding Series C Warrants,
Series D Warrants and Registration Rights Agreement
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Dear Investors:
The purpose of this letter (the "Letter") is to set forth the
intentions of Raptor Networks Technology, Inc., a Colorado corporation (the
"Company") and DMK Investments, LLC, Transglobal Investments, LLC, and Uptrend
Investment, Inc. (collectively, the "Investors") with respect to proposed
amendments to the Series C Warrants, Series D Warrants and Registration Rights
Agreement entered into between the Company and the respective Investors on or
around June 1, 2004 (collectively, the "Agreements"), as set forth herein,
copies of which Agreements are attached hereto as Exhibit A, Exhibit B and
Exhibit C, respectively.
1. AMENDMENTS TO THE SERIES C WARRANTS. The Company and each of the
Investors shall enter into an amendment to the Series C Warrants that
expressly acknowledges that the anti-dilution provisions of the Series
C Warrants (including, without limitation, the last sentence of Section
4(d) of the Series C Warrants regarding a proportional increase in the
number of shares of the Company's common stock into which the Series C
Warrants are exercisable) were not triggered by the Company's repricing
of the Series C Warrants from $3.00 per share to $1.25 per share on or
around August 13, 2004, and will not be triggered by any future
repricing of the Series C Warrants that is mutually agreed to by the
Company and the Investors, should such future repricing occur.
2. AMENDMENTS TO THE SERIES D WARRANTS. The Company and each of the
Investors shall enter into an amendment to the Series D Warrants that:
2.1 reduces the exercise price of the Series D Warrants from
$3.50 per share to $0.50 per share effective as of the date of the
amendment;
DMK Investments, LLC
Uptrend Investment, Inc.
Transglobal Investments, LLC
August 8, 2005
Page -2-
2.2 waives any and all right to anti-dilution protection the
Investors might otherwise be entitled to as a result of (i) any
issuance or deemed issuance of securities by the Company prior to, or
as of, the date of the amendment and (ii) any future issuance or deemed
issuance of securities by the Company in conjunction with its private
placement as currently being conducted, and
2.3 in order to correct an apparent typo, amends the
parenthetical clause at the end of the first sentence of Section
6(c)(i)(A) of the Series D Warrants by replacing it with the following:
"(which, in the case of a deemed issuance or sale, shall be calculated
in accordance with subparagraph (iii) below)."
3. AMENDMENTS TO THE REGISTRATION RIGHTS AGREEMENT. The Company and
each of the Investors shall enter into an amendment to the Registration
Rights Agreement that:
3.1 waives any and all penalties the Investors might otherwise
be entitled to as a result of the Company failing to file a
registration statement in accordance with the deadlines set forth in
the Registration Rights Agreement;
3.2 establishes new Company obligations with respect to the
filing of a registration statement covering the shares of the Company's
common stock purchased by the Investors on or around June 1, 2004 (the
"Purchased Shares"), as well as the shares of the Company's common
stock underlying the Series C Warrants and Series D Warrants
(collectively, the "Registrable Securities"). These new obligations
shall supercede any registration requirement pursuant to the original
terms of the Registration Rights Agreement and shall require that the
Company register the Registrable Securities in the same registration
statement filed in conjunction with the Company's private placement
currently being conducted. The Company shall be obligated to file the
registration statement within sixty (60) days after the final closing
of the private placement. For every day the Company is late in filing
the registration statement beyond such sixty (60) days, the Company
shall issue to the Investors, on a pro rata basis, additional shares of
the Company's common stock in an amount equal to one percent (1%) of
the Purchased Shares until such Registrable Securities are first
eligible for sale under Rule 144 (as defined below) . The Company shall
use its commercially reasonable best efforts to cause the registration
statement to become effective and remain effective until the earlier to
occur of (i) the date on which all of the Registrable Securities have
been publicly sold pursuant to either the registration statement or
Rule 144 of the of the Securities Act of 1933 ("Rule 144"), (ii) the
date on which all of the Registrable Securities remaining to be sold
under the registration statement (in the reasonable opinion of counsel
to the holder of the Registrable Securities) may be immediately sold to
the public under Rule 144(k) or any successor provision, or (iii) a
period of two years from the date the registration statement is filed
with the Securities and Exchange Commission; and
3.3 expressly acknowledges that the Investors consent to the
Registrable Securities being registered in the same registration
statement along with such other securities of the Company as the
Company, in its sole determination, deems appropriate.
DMK Investments, LLC
Uptrend Investment, Inc.
Transglobal Investments, LLC
August 8, 2005
Page -3-
4. INTENT. It is understood that the provisions of this Letter are
intended to be legally binding obligations that set forth the principal
terms of amendments that shall be entered into between the Company and
each of the Investors; provided, however, that this Letter shall have
no force or effect unless (i) signed by all of the Investors and the
Company by September 30, 2005, (ii) approved by the unanimous consent
of the Company's Board of Directors and (iii) approved by the unanimous
consent of the Company's Audit Committee.
5. GOVERNING LAW. This Letter and any matter or dispute relating
thereto shall be governed by and construed in accordance with the laws
of the State of California, without regard to principles of conflict of
law.
6. COUNTERPARTS. This letter may be executed in one or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
7. FACSIMILE SIGNATURES. Any party may execute this Letter by facsimile
signature and the other parties shall be entitled to rely on such
facsimile signature as evidence that this Letter has been duly executed
by such party.
8. AUTHORITY. Each of the undersigned hereby represents that its
respective Board of Directors (or similar governing body) has approved
this Letter and authorized its execution by the undersigned.
If you agree with these principal terms, as outlined above, please sign
and deliver to the Company the enclosed copy of this Letter. If we do not
receive such signed copy from all Investors by September 30, 2005, this letter
shall be null and void. The execution of this Letter by the persons whose name
appear below, constitutes a representation on the part of such persons that such
person is authorized and empowered to provide such consent on behalf of the
entity whose name appears below.
Very truly yours,
/s/ Xxxxxx X. Xxxxxxxxxxxxxxx
Xxxxxx X. Xxxxxxxxxxxxxxx, President
[ACCEPTED AND AGREED TO BY SIGNATURE ON THE FOLLOWING PAGE]
DMK Investments, LLC
Uptrend Investment, Inc.
Transglobal Investments, LLC
August 8, 2005
Page -4-
ACCEPTED AND AGREED TO
this 20th day of September, 2005.
Raptor Networks Technology, Inc.
By: /s/ Xxxxxx X. Xxxxxxxxxxxxxxx
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Its: CEO
DMK Investments, LLC
By: /s/ Xxxxxx Xxxx
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Its: Manager
Transglobal Investments, LLC
By: /s/ Xxxxxx Xx
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Its: Manager/Member
Uptrend Investment, Inc.
By: /s/ Xxxxxxxxx X. Xxxx
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Its: President
