AMENDMENT TO MODIFICATION AGREEMENT
AMENDMENT TO MODIFICATION AGREEMENT dated as of November 12, 1999
(the "Agreement"), among the entities listed on the signature page attached
hereto (collectively referred to as the "Investors" or individually as an
"Investor"), and DYNATEC INTERNATIONAL, INC., a corporation organized and
existing under the laws of the State of Utah (the "Company"), and trading on the
Nasdaq SmallCap Stock Market under the symbol "DYNX."
Recitals
WHEREAS, the parties to the Agreement previously have entered into a
Convertible Debenture and Private Equity Line of Credit Agreement dated as of
May 22, 1998 (the "Line of Credit Agreement"), a Registration Rights Agreement
dated as of May 15, 1998 (the "Registration Rights Agreement"), and an Escrow
Agreement dated as of May 15, 1998 (the "Escrow Agreement," and together with
the Line of Credit Agreement and the Registration Rights Agreement, the "Funding
Agreements"); and
WHEREAS, the Company, the Investors and Settondown Capital
International Ltd., entered into Modification Agreement dated as of June 25,
1999 (the "Modification Agreement"). Under the Modification Agreement, the
parties agreed to certain modifications to the Funding Agreements as set forth
therein; and
WHEREAS, the Company and the Investors desire to amend the terms and
conditions of the Modification Agreement as set forth below.
Agreement
NOW, THEREFORE, in consideration of the covenants and mutual promises
below and other good and valuable consideration, the receipt and legal
sufficiency of which the parties acknowledge by their signatures appearing
below, and intending to be legally bound hereby, the parties to this Agreement
hereby agree as follows:
1. Section 4 of the Modification Agreement is deleted and replaced with
the following language:
Section 4. Amendment to Obligation to Pay Liquidated Damages.
Pursuant to the Funding Agreements, including but not limited to
Section 3(e) of the Registration Rights Agreement, the Company is
obligated to pay liquidated damages to the Investors as a result of the
Company's failure to have the Registration Statement declared effective
by the SEC by the deadline set forth in the Funding Documents. Because
the Company has been unable to comply with this requirement, the
Company is presently obligated to pay the sum of Forty-five Thousand
Dollars ($45,000) per month to the Investors until such time as the
Registration Statement is effective, which amount was accrued and paid
by the Company for the period of September 23, 1998 through and
including February
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23, 1999. The Investors and the Company hereby agree that the Company
shall accrue amounts owed for liquidated damages for the period from
February 24, 1999 through and including June 23, 1999, which amount
shall be payable upon demand therefor by the Investors in cash or
stock, at the Company's option. The Investors may demand payment of
such accrued liquidated damages at any time after February 15, 2000. If
the Investors demand payment of such amount and the Company elects to
pay such amount in shares of its common stock, the number of shares
issuable upon such payment shall be determined by dividing the total
dollar amount of accrued liquidated damages to be paid in common stock
by the one hundred percent (100%) of the average of the closing bid
prices of the Company's common stock as quoted on the Nasdaq SmallCap
Market for the five (5) trading days immediately preceding the date
such payment demand is made by the Investors. The Company agrees that
it will cause such shares issued as payment for accrued liquidated
damages to be issued and delivered to the Investors within five (5)
business days after demand for payment is made by the Investors. No
liquidated damages shall accrue for the period from June 24, 1999 to
February 15, 2000 but liquidated damages shall accrue from and after
February 15, 2000 as described in the Funding Agreement, which
liquidated damages shall be payable in cash or common stock at the
Company's option as set forth above in this Section 4.
2. Section 6 of the Modification Agreement is deleted and replaced with
the following language:
Section 6. Amendment of Registration Rights Agreement.
Pursuant to the Registration Rights Agreement, the Company agreed to
prepare and file with the SEC the Registration Statement covering the
shares underlying the Convertible Debentures, the Placement Agent
Shares, the Additional Debentures, the shares issuable under the Equity
Line of Credit, and the shares underlying the Warrants. In light of the
cancellation of the Equity Line of Credit pursuant to Section 1 above,
the termination of the obligation of the Company to issue additional
Placement Agent Shares pursuant to Section 2 above, and the termination
of the obligation to issue or purchase the Additional Debentures
pursuant to Section 3 above, the parties to this Agreement, who are
also the parties to the Registration Rights Agreement hereby agree that
the Registration Rights Agreement shall mean and be enforceable as
follows:
(a) The term "Convertible Debentures," as used in the
Registration Rights Agreement, shall mean the One Million Five
Hundred Thousand ($1,500,000) principal amount of Convertible
Debentures, but shall exclude the Additional Debentures.
(b) The terms "Stock" or "Securities" of the Company,
as used in the Registration Rights Agreement, shall mean the
shares of common stock underlying the principal amount of the
Convertible Debentures and the shares of common stock
underlying
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the Warrants issued and outstanding as of the date of this
Agreement (together with the shares of common stock underlying
the Warrants issued to the Placement Agent).
(c) The parties to this Agreement intend that this
Section 6 amend and supersede any conflicting terms in the
Registration Rights Agreement.
3. Section 7(a) of the Modification Agreement is deleted and replaced
with the following language:
(a) No Mandatory Conversion. Notwithstanding
anything to the contrary in the Funding Agreements or in the
Convertible Debentures, the Convertible Debentures shall not
automatically be converted into shares of the Company's common
stock at the Maturity Date.
4. Section 13 of the Modification Agreement is deleted and replaced
with the following language:
Section 13. Rescission. At the option of the Investors,
Section 4 of this Agreement may be rescinded if (i) the Registration
Statement is not declared effective on or before February 15, 2000, or
(ii) if the Company fails to obtain the approval of the transactions
contemplated by the Funding Agreements as contemplated by Section 6.13
of the Line of Credit Agreement or otherwise before February 15, 2000;
or (iii) if the Company does not timely deliver cash or common stock
pursuant to Section 4 of this Agreement. In the event of rescission of
Section 4 of this Agreement pursuant to this Section 13, all liquidated
damages otherwise payable under the Funding Agreements shall be deemed
to have accrued at all times during the term of this Agreement and
shall be due and payable in accordance with the terms of the Funding
Agreements, assuming the parties had never executed and delivered this
Agreement.
5. Registration Rights. The Company covenants that it will prepare and
file with the Securities and Exchange Commission (the "Commission") a
registration statement on an appropriate form, determined by the Company in
consultation with its securities counsel, covering resales of the shares of
common stock issuable by the Company for interest accrued and, to the extent
possible, accruing with respect to the principal amount of the Convertible
Debentures, and covering resales of the shares of common stock issuable by the
Company as liquidated damages under the Modification Agreement, as amended
hereby. The Company further covenants that it will file the registration
statement referred to in the preceding sentence within thirty (30) days after
the effective date of the registration statement filed pursuant to the Funding
Agreements, and to use its best efforts to cause such registration statement to
be declared effective by the Commission as soon as possible thereafter and to
keep such registration statement effective for a period of six (6) months from
the effective date of such registration statement.
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6. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument. A facsimile copy of an original signature shall
have the same effect as an original signature.
7. Headings. The headings in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
8. Severability. If any provision of this Agreement shall for any
reason be held invalid or unenforceable, such invalidity or unenforceability
shall not affect any other provision hereof, and this Agreement shall be
construed as if such invalid or unenforceable provision were not contained
herein.
9. Entire Agreement. This Agreement is the final expression of, and
contains the entire Agreement between, the parties with respect to the subject
matter hereof, and supersedes all prior understandings with respect thereto. The
parties to this Agreement expressly intend to amend certain terms of the
Modification Agreement and the other documents and instruments modified thereby,
including the Line of Credit Agreement and the Registration Rights Agreement,
and intend that the terms of this Agreement shall control in the event of any
disagreement between the terms of this Agreement and the Modification Agreement,
the Line of Credit Agreement or the Registration Rights Agreement.
10. Definitions. Capitalized terms used in this Agreement but not
specifically defined in this Agreement shall have the meanings set forth in the
Funding Agreements.
11. Limited Effect of Amendment. Except to the extent specifically
modified or amended by this Agreement, the terms and conditions of the Funding
Agreements, as modified by the Modification Agreement, shall not be amended,
modified, superceded or affected in any way and shall continue to have full
force and effect on the parties thereto.
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IN WITNESS WHEREOF, the parties hereto have executed this Modification
Agreement as of the 12th day of November, 1999.
DYNATEC INTERNATIONAL, INC. XXXXX ENTERPRISES
By: /s/ By: /s/
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Its: Chief Executive Officer Its: Director
By: /s/
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Its: Chief Financial Officer TLG REALTY
By: /s/
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Its: President
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BALMORE FUNDS, S.A.
By: /s/
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Its:
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AUSTOST ANSTALT XXXXXX
By: /s/
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Its:
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HEWLETT FUND
By: /s/
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Its:
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