EXHIBIT 10.2
RESTATED BRIDGE LOAN FINANCING AGREEMENT
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THIS RESTATED BRIDGE LOAN FINANCING AGREEMENT ("Financing Agreement")
is dated as of October 18, 1999, by and between XYBERNAUT CORPORATION, a
Delaware corporation, with headquarters located at 12701 Fair Lakes Circle,
Suite 550, Fairfax, Virginia 22033 (the "Company"), and CRYSTALITE INVESTMENTS
LTD., having an office at 111 Arlosorov Street, Tel Aviv, Israel (the
"Investor").
W I T N E S S E T H
WHEREAS, the Company wishes to induce the Investor to loan to the
Company, and the Investor is willing to loan to the Company, subject to the
terms and conditions set forth herein, up to One Million ($1,000,000) Dollars.
NOW, THEREFORE, for and in consideration of the premises and the mutual
agreement contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. LOAN. Subject to the terms and conditions set forth herein, the
Investor shall loan to the Company One Million ($1,000,000) Dollars (the "Loan")
in one or more installments, by delivery of such amount to the Company in same
day U.S. funds by wire transfer to an account designated by the Company.
2. NOTE. The terms of the Loan shall be set forth in and evidenced by
one or more Secured Promissory Note in substantially the form attached hereto as
Exhibit A in the aggregate
amount of One Million ($1,000,000) Dollars, payable to the order of the Investor
or its assignees (the "Notes").
3. MUTUAL DELIVERIES.
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(a) Upon the delivery by the Investor of the loan proceeds
from time to time, as provided in Section 1 above, the Company shall deliver to
the Investor the Notes.
(b) The Company shall also deliver, or cause to be delivered,
the original or execution copies of the following instruments and agreements
duly executed by all parties thereto other than the Investor (together with the
Notes - the "Related Agreements"):
(i) this Agreement with the Security Interest Provisions
(Exhibit A);
(ii) the Xybernaut Common Stock Purchase Warrants for
1,000,000 shares in the form attached hereto as Exhibit B (the "Warrants"); and
(iii) the opinion of counsel in the form annexed hereto as
Exhibit C.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to the Investor that:
(a) The Company has the corporate power and authority to enter
into this Financing Agreement and the Related Agreements and to perform its
obligations hereunder and thereunder. The execution and delivery by the Company
of this Financing Agreement and the Related Agreements and the consummation by
the Company of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action on the part of the Company. This
Financing Agreement and the Related Agreements have been duly executed and
delivered by the Company and constitute valid and binding obligations of the
Company enforceable against it in accordance with their respective terms,
subject to the effects of any
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and to the application of equitable
principles in any proceeding (legal or equitable).
(b) The execution, delivery and performance by the Company of
this Financing Agreement and the Related Agreements and the consummation of the
transactions contemplated hereby and thereby do not and will not breach or
constitute a default under any applicable law or regulation or of any agreement,
judgment, order, decree or other instrument binding on the Company which breach
or default could reasonably by expected to have a material adverse effect on the
Company.
(c) Except as set forth in Schedule 4(d) hereto, the Company
is in material compliance with all applicable laws, regulations, judgments,
decrees and orders material to the conduct of its business.
(d) Except as set forth in Schedule 4(d) hereto, there is no
pending, or to the knowledge of the Company, threatened, judicial,
administrative or arbitral action, claim, suit, proceeding or investigation
which might affect the validity or enforceability of this Financing Agreement or
the Related Agreements or which involves the Company and which if adversely
determined, could reasonably be expected to have a material adverse effect on
the Company.
(e) No consent or approval of, or exemption by, or filing
with, any party or governmental or public body or authority is required in
connection with the execution, delivery and performance under this Financing
Agreement or the Related Agreements or the taking of any action contemplated
hereunder or thereunder.
(f) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the jurisdiction of
its incorporation. The Company is duly qualified and licensed and in good
standing as a foreign corporation in each jurisdiction in which its current
ownership or leasing of any properties or its ownership or leasing of any
properties or the character of its operations as currently conducted requires
such qualification or licensing, except where the failure to be so qualified
would not have a material adverse effect on the Company. The Company has all
corporate power and authority, and has obtained all necessary authorizations,
approvals, orders, licenses, certificates, franchises and permits of and from
all governmental or regulatory officials and bodies necessary to own or lease
its properties and conduct its business other than those authorizations,
approvals and such other documents the lack of which could not reasonably be
expected to have a material adverse effect on the Company.
(g) The execution, delivery and performance of this Agreement
by the Company and the Related Agreements to be delivered hereunder and the
consummation of the transactions contemplated hereby and thereby will not: (i)
violate any provision of the Company's articles of incorporation or bylaws, (ii)
violate, conflict with or result in the breach of any of the terms of, result in
a material modification of the effect of, otherwise, give any other contracting
party the right to terminate, or constitute (or with notice or lapse of time or
both constitute) a default under, any contract or other agreement to which the
Company is a party or by or to which the Company or any of the Company's assets
or properties may be bound or subject, (iii) violate any order, judgment,
injunction, award or decree of any court, arbitrator or
governmental or regulatory body by which the Company, or the assets or
properties of the Company are bound, (iv) to the Company's knowledge, violate
any statute, law or regulation.
(h) Except as set forth in Schedule 4(d) hereto, there has
been no material change in the capitalization, assets, or liabilities of the
Company since the issuance of the financial statements, for the period ending
June 30, 1999, delivered to Investor.
5. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR. The Investor hereby
represents and warrants to the Company that:
(a) The Investor has the corporate power and authority to
enter into this Financing Agreement and the Related Agreements and to perform
its obligations hereunder and thereunder. The execution and delivery by the
Investor of this Financial Agreement and the Related Agreements and the
consummation by the Investor of the transactions contemplated hereby and thereby
have been duly authorized by all necessary corporate action on the part of the
Investor. This Financing Agreement and the Related Agreements have been duly
executed and delivered by the Investor and constitute valid and binding
obligations of the Investor, enforceable against it in accordance with their
respective terms, subject to the effects of any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally and to the application of equitable principles in any
proceeding (legal or equitable).
(b) The execution, delivery and performance by the Investor of
this Financing Agreement and the Related Agreements and the consummation of the
transactions contemplated hereby and thereby do not and will not breach or
constitute a default under any applicable law or regulation or of any agreement,
judgment, order, decree or other instrument binding on the Investor.
(c) There is no pending, or to the knowledge of the Investor,
threatened, judicial, administrative or arbitral action, claim, suit, proceeding
or investigation which might affect the validity or enforceability of this
Financing Agreement or the Related Agreements.
(d) No consent or approval of, or exemption by, or filing
with, any party of governmental or public body or authority is required in
connection with the execution, delivery and performance under this Financing
Agreement or the Related Agreements or the taking of any action contemplated
hereunder or thereunder.
(e) The Investor has prior substantial investment experience,
including investment in non-listed and non-registered securities and has had the
opportunity to engage the services of an investment advisor, attorney or
accountant to read all of the documents furnished or made available by the
Company to the Investor in connection with this investment and to evaluate the
merits and risks of this investment.
6. COVENANTS OF THE COMPANY. The Company covenants and agrees that, so
long as the Note shall be outstanding, except as otherwise required under the
Related Agreements, the Company shall:
(a) Promptly pay and discharge all lawful taxes, assessments
and governmental charges or levies imposed upon it or upon its income and
profits, or upon any of its property, before the same shall become in default as
well as all lawful material claims for labor, materials and supplies which, if
unpaid, might become a lien or charge upon such properties or any part thereof;
provided, however, that it shall not be required to pay and discharge any such
tax, assessment, charge, levy or claim so long as the validity thereof shall be
contested in good
faith by appropriate proceedings, and the Company shall set aside on its books
adequate reserves with respect to any such tax, assessment, charge, levy or
claim so contested.
(b) Pay, or cause to be paid, all material debts and perform,
or cause to be performed, all material obligations promptly and in accordance
with the respective terms thereof.
(c) Implement and maintain a standard system of accounting in
accordance with generally accepted accounting principles ("GAAP").
(d) Provide to the Investor the following:
(i) as soon as available after the end of each fiscal year
of the Company, a consolidated balance sheet of the Company as at the end of
that fiscal year and the related statement of earnings, stockholders' equity and
changes in financial position of the Company for such fiscal year, in accordance
with GAAP and audited by independent certified public accountants of recognized
standing; and
(ii) as soon as available and in any event within ninety
(90) days after the end of each of the first three quarters of each fiscal year
(commencing the quarter ending September 30, 1999), an unaudited consolidated
balance sheet of the Company as of the end of that quarter, and the related
unaudited statement of earnings of the Company for the period from the beginning
of that fiscal year to the end of that quarter, certified by the principal
financial officer of the Company as having been prepared in accordance with
GAAP, subject to normal year-end adjustments.
(e) Do, or cause to be done, all things that may be necessary
to (i) maintain its due organization, valid existence and good standing under
the laws of its state of incorporation; (ii) preserve and keep in full force and
effect all qualifications, registrations and licenses in those
jurisdictions in which the failure to do so could or would have a material
adverse effect; (iii) maintain its power or authority to carry on its business
as now conducted; and (iv) use its best efforts to keep available the services
of its key present employees and agents and maintain its current relations with
suppliers, customers, distributors and joint venture partners (subject to the
business judgment of executive management).
(f) At all times maintain, preserve, protect and keep material
property used and useful in the conduct of its business in good repair, working
order and condition (subject to normal wear and tear), and from time to time
make all needful and proper repairs, renewals, replacements, betterment and
improvements thereto, so that the business carried on in connection therewith
may be properly conducted at all times.
(g) Keep adequately insured all property of a character
usually insured by similar corporations and carry such other insurance as is
usually carried by similar corporations.
(h) At all reasonable times upon the Investor's request and
upon advance notice to the Company and for good reason, permit representatives
designated by the Investor to have access to the books and records relating to
the operations and procedures of the Company (subject to execution of
confidentiality undertakings).
(i) Not assume, guaranty or otherwise, directly or indirectly,
become liable or responsible for the obligations of any other person or entity,
except for 75% or greater owned subsidiaries, for the purpose of paying or
discharging the obligations of such person or entity unless such guarantees
relate to the business of the Company, are incurred in the ordinary course of
its business and do not exceed in the aggregate $100,000.
(j) Not declare or pay any cash dividends or authorize or make
any other distribution on any class of equity securities of the Company, except
for the Series D and Series E Convertible Preferred Stock.
(k) Not consolidate with or merge with or into any entity or
sell, lease, transfer, exchange or otherwise dispose of any material part of its
properties and assets except in the ordinary course of business, however, the
Company may engage in any of the foregoing transactions with a parent or
subsidiary of the Company so long as such parent or subsidiary is no less
creditworthy than the Company and such parent or subsidiary assumes the
obligations of the Company hereunder.
(l) To pay to the Investor, fifty (50%) percent of the
proceeds (after related expenses) in excess of $1,000,000 from any and all
financings, whether in the form of debt or equity.
7. ASSIGNMENT. This Financing Agreement and the Related Agreements may
be assigned by the Investor to transferees or assignees of the Note, provided
that the Company consents to the assignment, which consent will not be
unreasonably withheld, and that the Company is, prior to or simultaneously with
such transfer, furnished with written notice of the name and address of such
transferee or assignee, and such assignee agrees in writing to be bound by the
terms hereof and provided further that, if the Note is only assigned or
transferred in part, then such assignment shall only be made in part on an
appropriate proportionate basis. If there is a conflict between this provision
and any provision of the Related Agreements, this provision shall govern.
As a condition to any such assignment, the assignee shall
warrant, represent and acknowledge to the Company and to the Investor that: (i)
such assignee has adequate means of providing for its current needs and possible
contingencies, and anticipates no need now or in the foreseeable future to sell
its shares of Common Stock, (ii) such assignee has had an opportunity to ask
questions of and receive answers from the Company concerning its investment as
evidenced by the Loan and Warrant (hereinafter referred to as the "Investment")
in the Company, and all such questions have been answered to its full
satisfaction, (iii) such assignee intends to hold the Warrant, and any shares of
the Common Stock issued upon the exercise of the Warrant, of the Company for its
own account for investment, and not with a view toward any resale or other
distribution of such Common Stock, (iv) the Investment in the Company involves a
high degree of risk, no tax advantages will result from the Investment in the
Company, and such assignee must be able to bear the economic risk of complete
loss of the Investment in the Company, (v) such assignee has received no
representations and warranties from Company other than those otherwise set forth
herein, and (vi) such assignee has the knowledge and experience in financial and
business matters and is capable of evaluating the merits and risks of the
Investment, provided, however, if such assignee does not have such knowledge and
experience, such assignee has consulted with an attorney, accountant or other
financial consultant or advisor, as its Purchaser Representative, and such
person is capable of evaluating the risk of the Investment and of so advising
such assignee thereof.
8. NOTICES. Any notice required or permitted hereunder shall be given
in writing (unless otherwise specified herein) and shall be deemed effectively
given upon personal delivery or seven business days after deposit in the United
States Postal Service, by (a) advance copy by
fax, and (b) mailing by express courier or registered or certified mail with
postage and fees prepaid, addressed to each of the other parties thereunto
entitled at the following addresses, or at such other addresses as a party may
designate by ten days advance written notice to each of the other parties
hereto.
COMPANY: XYBERNAUT CORPORATION
12701 Fair Lakes Circle
Suite 550
Fairfax, Virginia 22033
ATT: Mr. Steven Newman, Vice Chairman
Telephone No.: (703) 631-6925
Facsimile No.: (703) 631-6734
with a copy to:
Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, New York 10036
ATTN: Martin Eric Weisberg, Esq.
Telephone No.: (212) 704-6000
Facsimile No.: (212) 704-6288
PURCHASER: At the address set forth on the signature page of this
Agreement.
ESCROW AGENT: Krieger & Prager, Esqs.
39 Broadway, Suite 1440
New York, New York 10006
Telephone No.: (212) 363-2900
Facsimile No.: (212) 363-2999
9. SEVERABILITY. If a court of competent jurisdiction determines that
any provision of this Financing Agreement is invalid, unenforceable or illegal
for any reason, such determination shall not affect or impair the validity,
legality and enforceability of the other provisions of this Financing Agreement.
If any such invalidity, unenforceability or illegality of a
provision of this Financing Agreement becomes known or apparent to any of the
parties hereto, the parties shall negotiate promptly and in good faith in an
attempt to make appropriate changes and adjustments to such provision
specifically and this Financing Agreement generally to achieve as closely as
possible, consistent with applicable law, the intent and spirit of such
provision specifically and this Financing Agreement generally.
10. EXECUTION IN COUNTERPARTS. This Financing Agreement may be executed
in counterparts, each of which shall be deemed an original, but all of which
together shall constitute the same Financing Agreement.
11. The Company shall pay all fees and disbursements of the Investor
with respect to the preparation and enforcement of this Agreement and the
Related Agreements.
12. GOVERNING LAW. This Agreement and the Related Agreements shall be
governed by and construed in accordance with the laws of the State of New York.
Each of the parties consents to the jurisdiction of the federal courts whose
districts encompass any part of the City of New York or the state courts of the
State of New York sitting in the City of New York in connection with any dispute
arising under this Agreement and hereby waives, to the maximum extent permitted
by law, any objection, including any objection based on forum non coveniens, to
the bringing of any such proceeding in such jurisdictions.
13. RESTATED AGREEMENT. As hereby restated, this Agreement supersedes
any prior agreement between the parties with respect to the subject matter
hereof, and the Notes heretofore delivered pursuant to this Agreement shall be
deemed amended in accordance with the provisions hereof.
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IN WITNESS WHEREOF, the parties have executed this Bridge Loan
Financing Agreement as of the date first written above.
XYBERNAUT CORPORATION
By: ______________________________________
Name: Steve Newman
Title: Vice Chairman
CRYSTALITE INVESTMENTS LTD.
By: ______________________________________
Name:
Title: