Exhibit 10.1
Form of Agreement of Amendment and Modification
Agreement of Amendment and Modification made as of July 1, 1998, by and
among Xybernaut Corporation, a Delaware corporation (the "Company"), Balmore
Funds, S.A. and Austost Anstalt Xxxxxx (collectively, the "Investors").
Capitalized terms used herein and not defined shall have the meanings
given to them in the Private Equity Line of Credit Agreement dated as of April
13, 1998 by and among the Company, the Investors and Settondown Capital
International Ltd. (the "Line of Credit Agreement").
Witnesseth:
Whereas, the Company and the Investors executed the Line of Credit
Agreement pursuant to which the Investors agreed, among other things, to
purchase, from time to time, up to $11,000,000 (the "Aggregate Purchase Price")
of the Common Stock of the Company;
Whereas, pursuant to the Line of Credit Agreement, the Investors
purchased securities of the Company for an aggregate purchase price of
$1,000,000;
Whereas, notwithstanding the limitations on the exercise of Put Options
by the Company set forth in Section 2.1 of the Line of Credit Agreement, the
Company, by execution hereof, hereby exercises, and the Investors hereby accept,
a Put Option in the aggregate principal amount of $3,000,000 (the "Initial Put
Option"); and
Whereas, the Company and the Investors desire to amend certain terms of
the Line of Credit Agreement to provide for the terms pertaining to the Initial
Put Option.
Now, therefore, in consideration of the mutual covenants, conditions
and promises contained herein, the parties hereto agree as follows:
1. Section 1.20 of the Line of Credit Agreement is hereby modified by
adding the following text at the end thereof:
"The Maximum Put Amount set forth in the table above shall not
be applicable to the exercise by the Company of the Initial Put Option."
2. Section 2.1 of the Line of Credit Agreement is hereby modified by
adding the following subsection (c):
"(c) Initial Put Option. The Company hereby exercises a
Put Option in the principal aggregate amount of $3,000,000 (the "Initial Put
Option") and the Investors hereby accept the
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exercise of such Initial Put Option. The number of shares of Common Stock
issuable upon exercise of such Initial Put Option shall be calculated by
dividing $3,000,000 by $5.50, the purchase price per share of Common Stock for
the Initial Put Option.
(i) As additional consideration for the acceptance of the
Initial Put Option, the Investors shall receive non-transferable and
non-tradeable warrants (the "Initial Put Warrants") to purchase a total
of 300,000 shares of Common Stock of the Company. Such warrants, which
shall be exercisable upon issuance, shall have a term of 3 years and
shall be exercisable at a price per share equal to the closing price on
the trading day immediately preceding the closing of the Initial Put
Option hereunder.
(ii) The shares of Common Stock issuable upon exercise of the
Initial Put Option and the Initial Put Warrants may not be sold,
transferred or otherwise disposed of before September 30, 1998.
(iii) Notwithstanding Section 2.9 to the contrary, commencing
on September 30, 1998, and monthly thereafter (each an "Initial Put
Repricing Date"), one-sixth of the shares of Common Stock issued upon
exercise of the Initial Put Option shall be subject to repricing on
each Initial Put Repricing Date. If the closing price of the Common
Stock on the trading date immediately preceding the Initial Put
Repricing Date is less than $7.20 per share, the shares of Common Stock
subject to repricing shall be repriced at the lowest closing bid price
of the Common Stock for the 30 days preceding the Initial Put Repricing
Date (the "Initial Put Reset Price"). The Company shall issue to the
Investors such number of shares (the "Initial Put Repricing Shares")
equal to the difference between (a) the quotient of 500,000 and the
Initial Put Reset Price and (b) the number of shares subject to
repricing. No additional shares of Common Stock shall be issued if the
Initial Put Reset Price is equal to or greater than $5.50.
(iv) If the closing price on the trading day immediately
preceding the applicable Initial Put Repricing Date (the "Closing
Price") or the Initial Put Reset Price of the Common Stock is less than
$5.00 per share on the Initial Put Repricing Date, the Company at its
option may pay to the Investors an amount, in cash, equal to 105% of
the Closing Price to be issued to the Investors (the "Initial Put
Repricing Amount") in lieu of issuing the Initial Put Repricing Shares
(which Initial Put Repricing Amount shall be multiplied by the number
of Initial Put Repricing Shares). If the Company elects to pay the
Initial Put Repricing Amount to the Investors in lieu of issuing the
Initial Put Repricing Shares the Company shall notify the Investors of
that election on the applicable Initial Put Repricing Date, and the
exercise price of the Initial Put Warrants shall be reduced to the then
Closing Price of the Common Stock. If the Company elects to pay the
current Initial Put Repricing Amount but fails to pay the Initial Put
Repricing Amount within five (5) business days of notifying the
Investors of such election, the Company will forfeit the right to pay
the Initial Put
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Repricing Amount in cash at any time in the future. If the Company does
not make the election to pay the Initial Put Repricing Amount, the
Company shall deliver the Initial Put Repricing Shares to the Investors
within seven (7) business days of the applicable Initial Put Repricing
Date. However, in the event the Company is unable to issue Initial Put
Repricing Shares which have been included in a registration statement,
which at that time is effective, the Company must pay the Initial Put
Repricing amount in cash as set forth herein.
(v) The shares of Common Stock issued at the closing of the
Initial Put Options and the Initial Put Repricing Shares are included
under the current effective registration statement filed in connection
with the equity line (the "Current Registration Statement"). The shares
issuable upon exercise of the Initial Put Warrants shall not be
registered under the Current Registration Statement, but will be
afforded piggyback registration rights.
(vi) The Investors agree not to enter into any put option,
short position or other similar position with respect to the shares of
Common Stock issued at the closing of the Initial Put Option or the
Initial Put Repricing Shares.
(vii) Notwithstanding the provisions of Section 2.3, the
Investors shall wire $3,000,000 for the Common Stock issuable upon
exercise of the Initial Put Option to Xxxxxx Xxxxxx Flattau & Klimpl,
LLP, who will serve as escrow agent for the receipt of executed
documents, original securities and the purchase price for the Initial
Put Option only. The wire instructions for Xxxxxx Xxxxxx Flattau &
Klimpl, LLP are as follows: CITIBANK N.A., 000 Xxxx 00xx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Account Name: Xxxxxx Xxxxxx Flattau & Klimpl,
LLP, Attorney Trust Account, Account No.: 00000000, Citibank ABA No.:
000000000, for International: Swift No. CITI-US 33."
3. The Company represents and warrants to the Investors that
the Form S-3 Registration Statement (also referred to as the Current
Registration Statement in Section 2(v) above) of the Company that was declared
effective on June 11, 1998, registered 1,045,296 shares of Common Stock in
respect of the Initial Put Option and pursuant to Rule 416 promulgated under the
Securities Act of 1933, as amended, an indeterminate number of shares of Common
Stock to cover Initial Put Repricing Shares.
4. This Agreement of Amendment and Modification may be
executed in counterparts, all of which shall be deemed to be duplicate originals
of the same document.
5. Except for this Agreement of Amendment and Modification,
all the terms, conditions and covenants of the Line of Credit Agreement shall
remain in full force and effect.
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In Witness Whereof, the parties hereto have executed this
Agreement of Amendment and Modification as of the date first set forth above.
Xybernaut Corporation
By:
Name:
Title:
Balmore Funds, S.A.
By:
Name:
Title:
Austost Anstalt Xxxxxx
By:
Name:
Title:
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