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EXHIBIT 10.1
MODIFICATION AGREEMENT
THIS MODIFICATION AGREEMENT made as of the _____ day of October, 2000 by
and among ESAT, INC., a Nevada corporation (the "Company"), and WENTWORTH LLC, a
Cayman Islands limited liability company ("Investor ").
W I T N E S S E T H:
WHEREAS, the parties hereto have previously executed and delivered the
Transaction Documents, as more particularly defined in the Private Equity Credit
Agreement (the "Agreement") dated as of August 9, 2000 (a copy of which has been
filed with the Securities and Exchange Commission as an Exhibit to the Company's
Form 10-Q dated August 14, 2000); and
WHEREAS, the Company wishes to deliver a Put Notice in the principal
amount of $2,000,000, a copy of which is annexed hereto, which amount would be
substantially in excess of the Maximum Put Amount as defined in the Private
Equity Credit Agreement; and
WHEREAS, the Investor has agreed to accept such Put Notice.
NOW , THEREFORE, it is agreed by and between the parties as follows:
1. Solely for the purpose of the Put Notice attached hereto:
(i) The "Maximum Put Amount" is hereby amended to read
"$2,000,000".
(ii) "Discount" shall mean 15%.
(iii) "Market Price" on any given date shall mean the
average of the closing bid prices for the five (5) Trading Days immediately
preceding a Call Date as determined, from time to time by the Investor, but
prior to the Closing Date.
(iv) "Call Date" shall mean the Trading Date on which
Investor is deemed to have delivered a Call Notice to the Company. The date of
delivery of a Call Notice to the Company
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shall be determined in the same manner as for Put Notices under Section 2.2(b)
of the Agreement.
(v) "Call Notice" shall mean a written notice, substantially
in the form of Exhibit ___ hereto, to the Company from the Investor in which
Investor determines (based on the Market Price set forth in Section 1 (iii)
above) the number of shares of Common Stock the Company is required to deliver
to the Investor. Investor may deliver one or more Call Notices to the Company
for an aggregate of not more than $2,000,000 of Company Common Stock.
(vi) "Closing Date" shall mean with respect to a Call
Notice, two (2) business days following the Call Notice on which the Company
shall deliver , either via the DTC FAST Program or otherwise, the number of
shares of Common Stock set forth in the Call Notice.
(vii) Section 2.3 of the Agreement is amended to read as
follows: "The Company acknowledges that the Investor has delivered the
Investment Amount specified in the Put Notice, simultaneous with the execution
of this Modification Agreement."
(viii) Section 2.4 of the Agreement is amended to read as
follows: "The Company agrees to issue to Investor on each Closing Date,
transferable divisible warrants (the "Warrants"), to purchase shares of Common
Stock equal to 15% of the number of Shares delivered under the relevant Call
Notice. Such Warrants (substantially in the form of Exhibit ____), shall bear an
exercise price per share of Common Stock equal to 125% of the Market Price with
respect to such relevant Put, and shall be exercisable immediately upon
issuance, and for a period of five (5) years thereafter, together with cashless
exercise and registration rights under the Registration Rights Agreement. The
Company shall , within sixty (60) days from the date of this Modification
Agreement, register the Company Common Stock underlying such Warrants by a
Post-Effective Amendment to Registration Statement No._______________ pursuant
to Rule 462 under the Securities Act.
(ix) Investor hereby waives compliance by the Company with the
provisions of Sections 7.2 (i) and (k) of the Agreement.
2. The Company agrees, by all necessary corporate action, to cause the
Certificate of Designations for the Series D and Series E Convertible Preferred
Stock to be amended as set forth in the amended Certificates annexed hereto as
Exhibit ____, and to file same promptly with the Secretary of State of the State
of Nevada. The Investor, as the sole shareholder of the Series D and Series E
Convertible
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Preferred Stock, consents to said amendment.
3. The Company acknowledges that notwithstanding the provisions of that
certain Securities Purchase Agreement by and between the Company and the
Investor dated December 29, 1999, as amended and modified, Section 2(k) of the
Securities Purchase Agreement shall not apply to short selling activity made
pursuant to Puts or in reasonable anticipation of Puts given, or to be given,
under the Private Equity Credit Agreement.
4. Except as specifically set forth herein, nothing contained herein
shall in any way be deemed to effect or modify the representations, warranties,
rights and obligations of the respective parties as set forth in the Transaction
Documents.
5. As hereby modified and amended, the Transaction Documents remain in
full force and effect.
6. The Company undertakes, within ten (10) Business Days, to file any
necessary amendment to the Registration Statement currently filed with the
Securities and Exchange Commission in respect of the resale of the Shares.
WHEREFORE, the parties have executed this agreement as of the date first
above written.
ESAT, INC.
By:
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Name:
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Title:
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WENTWORTH LLC
By:
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Name:
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Title:
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