EXHIBIT 4.11
AGREEMENT FOR PAYMENT OF ACCOUNT
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AGREEMENT FOR PAYMENT OF ACCOUNT dated as of March 20, 2002 (this
"Agreement"), by and between XYBERNAUT CORPORATION, a Delaware corporation
("Xybernaut"), and Zykronix, Inc., a California corporation ("Zykronix").
WHEREAS, Zykronix and Xybernaut entered into a Master Product and
Design Agreement dated April 12, 2001 (the "Master Agreement"), pursuant to
which Xybernaut engaged the services of Zykronix under various work orders upon
the terms and conditions contained in the Master Agreement; and
WHEREAS, Xybernaut wishes to reach an agreement on an alternative
payment plan to compensate Zykronix for balances owed to Zykronix as of February
4, 2002, as well as to provide for payment of certain Future Deliverables (as
hereinafter defined) pursuant to the Master Agreement; and
WHEREAS, Xybernaut and Zykronix have reached agreement on the terms
for the satisfaction of such balances owing to Zykronix and for the payment of
certain Future Deliverables.
NOW, THEREFORE, for good and valuable consideration, the receipt and
legal sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Payment of Account through February 4, 2002: The total unpaid
balance of the account owed by Xybernaut to Zykronix, including, but not limited
to, all services, goods, expenses, and products provided by Zykronix to
Xybernaut from April 12, 2001 through and up to February 4, 2002 under the
Master Agreement, is for all purposes agreed by the parties to be $432,280.15
(the "Past Due Balance"). Zykronix hereby agrees to accept and receive as
payment in full for the entire Past Due Balance cash installment payments to be
paid by Xybernaut in accordance with the schedule provided for on Attachment A
to this Agreement. Xybernaut
understands that interest in respect to the Past Due Balance in the amount of
$5,046.01 will be paid to Zykronix pursuant to Attachment A. Zykronix
acknowledges and agrees that as of the date of this Agreement Xybernaut has
already made the first four installment payments set forth on Attachment A
totaling $235,601.35 in reduction of the Past Due Balance, thus the remaining
Past Due Balance is $201,724.81.
2. Payment of Account for Future Deliverables: Xybernaut and Zykronix
agree that Zykronix will provide to Xybernaut the products and services outlined
in Attachment B (the "Future Deliverables") pursuant to the terms of the Master
Agreement. It is estimated that the total cost of the Future Deliverables will
be approximately $892,106.00 (the "Future Deliverables Balance"). Zykronix will
accept as payment in full for the Future Deliverables Balance the following: (a)
a cash payment equal to one-half (1/2) of the Future Deliverables Balance in the
amount of $446,053.00 (the "Future Deliverables Cash Payment") and (b) the
issuance of shares of Xybernaut common stock, par value $0.01 per share (the
"Common Stock") for the remaining one-half (1/2) of the Future Deliverables
Balance valued at $446,053.00 as provided for herein (the "Future Deliverables
Stock Grant").
3. Future Deliverables Cash Payment: Zykronix agrees to receive as
payment in full for the Future Deliverables Cash Payment, in cash installment
payments to be paid by Xybernaut in accordance with the schedule provided for on
Attachment C to this Agreement. If upon final delivery, performance and
acceptance by Xybernaut of the Future Deliverables, there is a difference
between the actual xxxxxxxx (in accordance with the Master Agreement) for the
Future Deliverables and the Future Deliverables Balance, this difference, if
any, will be paid in cash on the date of the final payment set forth on
Attachment C. Xybernaut will only continue to make Future Deliverables Cash
Payments if Zykronix delivers and performs with respect to the Future
Deliverables in accordance with the terms, provisions and conditions of the
Master Agreement. Any scheduled installment payments that are not paid by
Xybernaut because of non-performance by Zykronix will be paid in full at the
next payment date set forth on Attachment C after such non-performance has been
resolved to the satisfaction of Xybernaut, in addition to the regularly
scheduled payment for that payment date. Xybernaut will then continue to make
scheduled Future Deliverables Cash Payments in accordance with
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Attachment C for all performing Future Deliverables. The making of the payment
following the non-performance of any Future Deliverables shall not relieve
Zykronix for the consequences to Xybernaut of such non-performance to the extent
provided for in the Master Agreement.
4. Future Deliverables Stock Grant: The Future Deliverables Stock
Grant will be satisfied by Xybernaut issuing 295,400 shares of Common Stock to
Zykronix based upon a value of $1.51 per share (the "Agreed Upon Value Per
Share"), which amount represents a ten percent (10%) discount from the $1.68
closing market price of Xybernaut's Common Stock on March 19, 2002 (the day
preceding the date of this Agreement). To the extent that Zykronix does not
deliver and perform with respect to the Future Deliverables in accordance with
the terms, provisions and conditions of the Master Agreement, Zykronix will
return to Xybernaut for cancellation the portion of the Future Deliverables
Stock Grant attributable to such deliveries or performances. For purposes of
determining the number of shares to cancel pursuant to the preceding sentence,
the value of each Future Deliverable computed as percentage of the value of the
total Future Deliverables on Attachment B will be applied to the total Future
Deliverables Stock Grant. The issuance of the Future Deliverables Stock Grant,
as is the case with all stock grants by Xybernaut, is subject to the approval of
Xybernaut's Board of Directors.
5. Registration of Shares: Xybernaut hereby grants to Zykronix
"piggyback registration rights" with respect to the shares of Common Stock to be
issued to Zykronix hereunder in respect of the Future Deliverables Stock Grant
in the next registration statement filed by Xybernaut with respect to its Common
Stock occurring after April 15, 2002 (other than a registration statement on
Form S-4 or Form S-8 or any successor thereto). Xybernaut will advise Zykronix
about any such registration statement reasonably in advance of the filing
thereof, and, if Zykronix requests in writing that its shares of Common Stock to
be included in such registration statement, Xybernaut shall use its reasonable
best efforts to cause the Zykronix shares of Common Stock to be included therein
and to cause the registration statement to be declared effective by the
Securities and Exchange Commission (the "Commission"). Notwithstanding the
foregoing, Xybernaut shall have the right to exclude such number of the
Zykronix's shares from the registration statement as Xybernaut may reasonably
determine would have an adverse affect on the registration statement or the
price to be received by Xybernaut for
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the shares covered by the registration statement (if the registration statement
is a primary registration statement filed by Xybernaut). If Xybernaut cuts back
the shares of Zykronix in any registration statement for which Zykronix has
exercised its piggyback registration rights as provided in the immediately
preceding sentence, Zykronix shall continue to have piggyback registration
rights for succeeding registration statements. Xybernaut shall be responsible
for the compliance of any such registration statement with applicable securities
laws; provided that Zykronix shall be responsible for any information about
Zykronix specifically required by applicable securities laws. All fees and
expenses incident to the registration of the Zykronix shares shall be borne by
Xybernaut. If a registration statement including the Zykronix shares is not
filed by June 1, 2002 or is not declared effective within ninety (90) days after
the filing thereof, Xybernaut will increase or recommence, whichever may be
applicable at the time, the weekly payments to Zykronix identified in Section 2
of this Agreement, by $50,000 weekly until the remainder of the balance is
repaid, except if the failure to cause the registration statement to become
effective is due to information supplied by Zykronix. In the event weekly
payments are increased or commenced pursuant to this Section 5 such installments
will bear simple interest at the rate of 10.5% per annum (computed on the basis
of a year of 365 days). At such time as the registration statement is declared
effective, Xybernaut shall no longer be required to make the cash payments
provided for in this Section 5. Upon the making of any cash payment pursuant to
the second preceding sentence, the amount of Future Deliverables Stock Grant
shall be reduced, on a dollar for dollar basis, based upon the Agreed Upon Value
Per Share, and Zykronix shall return to Xybernaut for cancellation, a number of
shares of Common Stock equal to the amount of such cash payment, excluding
interest payments thereon. Xybernaut shall not be required to include any shares
of Zykronix Common Stock if such shares are available to be sold pursuant to
Rule 144 promulgated under the Securities Act of 1933, as amended (the "Act").
6. Zykronix Lockup Period: Zykronix can only sell shares of Common
Stock issued to it hereunder in respect of the Future Deliverables Stock Grant
to the extent, and only to the extent, that it has performed in respect of the
Future Deliverables pursuant to the terms and conditions of the Master
Agreement. The value of each Future Deliverable is computed as a percent of the
total of the Future Deliverables on Attachment B. This percentage, applied to
the total Future Deliverables Stock Grant, represents the number of shares of
stock
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that Zykronix can sell upon completion of each of the Future Deliverables based
upon the Agreed Upon Value Per Share. A pro-rata portion of shares of Common
Stock can be sold to the extent that Zykronix delivers a portion of a given
Future Deliverable (e.g., Zykronix can sell 50% of the allotted shares based
upon the Agreed Upon Value Per Share if it delivers 100 displays out of a 200
display order pursuant to the terms of the Master Agreement). Upon delivery of a
Future Deliverable by Zykronix, and acceptance thereof by Xybernaut, each in
accordance with the terms and provisions of the Master Agreement, Xybernaut will
provide written notification indicating the agreed upon number of shares that
can be sold by Zykronix based upon the applicable Future Deliverable. Xybernaut
shall be entitled to place stop orders with the transfer agent for Common Stock
for purposes of affecting the lock-up provided for in this Section 6.
7. Zykronix Representations: Zykronix represents and warrants to
Xybernaut that (a) it is an "accredited investor", which is defined under Rule
501(a)(3) of the Securities Act of 1933, as amended (the "Act"), as a
corporation with total assets in excess of $5,000,000; (b) it is acquiring the
shares of Common Stock issued in respect of the Future Deliverables Stock Grant
for its own account and for investment purposes only; (c) it has no present
intention to distribute any of such shares publicly and has no present
agreement, understanding or arrangement to subdivide, sell, assign, transfer or
otherwise dispose of all or any part of such shares subscribed for to any other
person or entity. Notwithstanding the above, it is acknowledged that Zykronix
may publicly sell the shares in the open market without restriction through its
broker if a registration statement covering the shares is declared effective by
the Commission pursuant to Section 5 hereof to the extent such sale is not
otherwise prohibited by this Agreement. Zykronix acknowledges that Xybernaut
will be relying on the representations and warranties of Zykronix set forth in
this Section 7 in issuing the Common Stock to Zykronix under an exemption from
registration under the Act.
8. Zykronix Services: Zykronix will continue to work under all
outstanding and new Xybernaut work orders pursuant to the terms and conditions
of the Master Agreement. Except as expressly modified herein, the parties agree
that the Master Agreement remains in full force and effect and is not otherwise
merged or amended by this Agreement.
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9. Zykronix Release: Provided Xybernaut is not in breach under the
terms of this Agreement, Zykronix shall forebear and suspend any legal,
equitable or other action against Xybernaut for collection of the Past Due
Balance and the Future Deliverables Balance. Upon receipt by Zykronix of the
cash payments and stock grant contemplated herein, registration of shares of
Common Stock pursuant to paragraphs 4 and 5 herein, respective (if such
registration is requested) Zykronix shall release Xybernaut, its subsidiaries,
officers, directors, employees, agents, successors and assigns from any and all
claims, damages, liabilities, actions or causes of action for money owed by
Xybernaut to Zykronix, its subsidiaries, officers, directors, employees, agents,
successors and assigns for services rendered pursuant to the Master Agreement
during the period from April 12, 2001 through the date of this Agreement and
thereafter in any regard relating to the Past Due Balance of the Future
Deliverables Balance.
10. Governing Law; Jurisdiction: This Agreement shall be governed by
and construed in accordance with the law of the Commonwealth of Virginia,
without regard to Virginia's conflicts of law principles. This Agreement shall
not be interpreted or construed with any presumption against the party that
caused this Agreement to be drafted. Zykronix and Xybernaut hereby consent to
the jurisdiction of the Federal District Court of the Northern District of
Virginia with respect to any action, suit or other proceeding arising out of or
relating to this Agreement.
11. Miscellaneous:
(a) This Agreement may not be amended, modified or waived, except
by an instrument in writing signed by each of the parties hereto. This
Agreement, together with the attachments hereto, the Master Agreement and the
attachments to the Master Agreement constitute the entire understanding and
agreement of the parties with respect to the subject matter hereof.
(b) Should there be any conflict between the terms and provisions
of the Master Agreement and this Agreement, the terms and provisions of this
Agreement shall govern and be controlling.
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(c) This Agreement may not be assigned by either party without
the prior written consent of the other party hereto. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their successors
and permitted assigns.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their authorized officers as of the date first written above.
XYBERNAUT CORPORATION ZYKRONIX, INC.
By: ___________________________ By: ___________________________
Name: ___________________________ Name: ___________________________
Title: ___________________________ Title: ___________________________
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Attachment A
Agreement for Payment of Account
Past Due Balance
SCHEDULED
DATE AMOUNT DESCRIPTION
---- ------ -----------
02/06/2002 $ 85,601.35 Inventory
02/13/2002 $ 30,000.00 Inventory
02/20/2002 $ 30,000.00 Inventory
02/27/2002 $ 30,000.00 Inventory
03/06/2002 $ 30,000.00 Inventory
03/13/2002 $ 30,000.00 Inventory
03/20/2002 $ 30,000.00 Inventory
03/27/2002 $ 40,000.00 Inventory
04/03/2002 $ 40,000.00 Inventory
04/10/2002 $ 40,000.00 Inventory
04/17/2002 $ 46,678.80 Inventory
04/17/2002 $ 5,046.01 Interest
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$437,326.16
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Attachment B
Agreement for Payment of Account
Future Deliverables
WORK ESTIMATED PERCENT
ORDER DESCRIPTION AMOUNT OF TOTAL
----- ----------- ------ --------
F 34 of 86 Digital 8.4" Displays $ 49,266 5.52%
108 of 214 Digital 6.4" Displays $143,100 16.04%
K 1000 Adapters (Audio Out) + NRE $ 45,000 5.04%
L 360 of 1,000 Digital 8.4" Displays $466,200 52.26%
M 15-20 Each of Slightly Damaged 6.4" and 8.4" Displays (40% off) $ 31,440 3.52%
O 50 Black 8.4" Cases $ 1,500 0.17%
P Incorporate New Logo (NRE) $ 1,500 0.17%
R 115 6.4" Analog Displays $154,100 17.27%
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$892,106 100.00%
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Attachment C
Agreement for Payment of Account
Future Deliverables Cash Payments
SCHEDULED
DATE AMOUNT
---- ------
04/24/2002 $ 40,000.00 Inventory
05/01/2002 $ 40,000.00 Inventory
05/08/2002 $ 40,000.00 Inventory
05/15/2002 $ 40,000.00 Inventory
05/22/2002 $ 40,000.00 Inventory
05/29/2002 $ 40,000.00 Inventory
06/05/2002 $ 40,000.00 Inventory
06/12/2002 $ 40,000.00 Inventory
06/19/2002 $ 40,000.00 Inventory
06/26/2002 $ 40,000.00 Inventory
07/03/2002 $ 40,000.00 Inventory
07/10/2002 $ 6,053.00 Inventory
07/10/2002 $ - Difference, if any
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$446,053.00
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