EX-10.1






Exhibit 10.1




AMENDMENT NO. 1 TO AMENDED AND RESTATED SECURED PROMISSORY NOTE



This Amendment No. 1 to Amended and Restated Secured Promissory Note (this
"Amendment”), dated as of July 7, 2006, is entered into by and among XYBERNAUT CORPORATION,
a Delaware corporation, and XYBERNAUT SOLUTIONS, INC., a Virginia corporation, debtors and Chapter
11 debtors-in-possession (collectively, “Borrowers”) and EAST RIVER CAPITAL LLC, a Delaware
limited liability company (“Lender”).



W I T N E S S E T H




WHEREAS, the Borrowers and Lender have entered into that certain Amended and Restated Secured
Promissory Note, dated May 1, 2006 (the “Restated Note”) pursuant to which the Lender has
provided Loans to Borrowers upon the terms and conditions set forth in the Restated
Note;1



WHEREAS, the Restated Note amends and restates the terms of that certain Secured Promissory
Note, dated March 23, 2006;



WHEREAS, in connection with the Note and the Restated Note, the Borrowers and the Lender are
parties to that certain Security Agreement dated March 23, 2006 (the “Security
Agreement”) and the Borrowers, Lender and the Escrow Agent are parties to that certain
Escrow Agreement dated March 23, 2006 (the “Escrow Agreement” and, collectively with the
Restated Note and the Security Agreement, the “Loan Documents”);



WHEREAS, the Borrowers have requested the Lender to provide Loans in the amount of $100,000 to
be used to pay certain ordinary course expenses of the Borrowers;



WHEREAS, the Lender has agreed to provide such Loans, subject to the terms and conditions set
forth herein;



WHEREAS, the Creditors’ Committee has consented to the terms of this Amendment and to the use
of proceeds of such Loans as provided herein;



WHEREAS, the Borrowers and the Lender have agreed to make certain amendments to the Restated
Note and have entered into this Amendment to evidence and effectuate such amendments;



NOW, THEREFORE, in consideration of the premises and covenants set forth herein and other good
and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:



1. Amendments.



(a) Use of Proceeds. Section 7 of the Restated Note is hereby amended to add the
following to the end of Section 7:



“Notwithstanding anything to the contrary in this Note, without
the prior written consent of the Lender, Borrowers shall not use the
Loans or any portion thereof, other than in the ordinary course of
the trade or business of the Borrowers.”



(b) Issuance of Stock; Reconstitution of Board of Directors. Section 23 of the
Restated Note is hereby deleted in its entirety and replaced with the following:



“Intentionally deleted.”



(c) Warrants, Equity Rights. Section 24 of the Restated Note is hereby deleted in its
entirety and replaced with the following:



“Intentionally deleted.”



2. Use of Loans. The $100,000 of Loans to be provided to the Borrowers in accordance
with this Amendment shall be used by the Borrowers solely for payroll.



3. Conditions Precedent to Amendment. The provisions contained herein shall be
effective as of the date hereof, but only upon the satisfaction of each of the following conditions
precedent, in a manner satisfactory to Lender:



(a) The Lender shall have received an original of this Amendment, duly authorized, executed
and delivered by the Borrowers, the Creditors’ Committee and the Lender;



(b) The Final DIP Order shall be in full force and effect and shall not have been reversed,
stayed, modified or amended without the express written consent of the Lender;



(c) No application or motion shall have been made to the Bankruptcy Court for any stay,
modification or amendment of the Final DIP Order, and no stay with respect to same shall have been
entered; and



(d) The Lender shall have received, in form and substance satisfactory to the Lender, all
consents, waivers, acknowledgments and other agreements from those persons which the Lender may
deem necessary or desirable in order to effectuate the provisions or purposes of this Amendment.



4. Additional Representations, Warranties and Covenants. Each Borrower, jointly and
severally, represents, warrants and covenants with and to the Lender as follows, which
representations, warranties and covenants are continuing and shall survive the execution and
delivery hereof:



(a) Borrowers shall not, directly or indirectly, amend, modify, alter or change the terms of
any of the Loan Documents without the prior written consent of Lender;



(b) this Amendment has been duly authorized, executed and delivered by all necessary action on
the part of each Borrower which is a party hereto and the agreements and obligations contained
herein constitute legal, valid and binding obligations of each Borrower enforceable against such
Borrower in accordance with their terms; and



(c) neither the execution and delivery of this Amendment, nor the consummation of the
transaction herein contemplated, nor compliance with the provisions hereof (i) does or shall
conflict with or result in the breach of, or constitute a default under, any mortgage, deed of
trust, agreement, security agreement or instrument to which any Borrower is a party or may be
bound, (ii) shall violate any order that has been entered by the Bankruptcy Court, or (iii) shall
violate any provision of the Certificate of Incorporation or Bylaws of any Borrower.



5. Effect of this Amendment. Except as modified pursuant hereto, no other changes or
modifications to the Loan Documents are intended or implied, and in all other respects the Loan
Documents are hereby specifically ratified, restated and confirmed by all parties hereto as of the
date hereof. To the extent of conflict between the terms of this Amendment and the other Loan
Documents, the terms of this Amendment shall control. The Restated Note and this Amendment shall
be read and construed as one agreement.



6. Reservation of Rights. Notwithstanding the Creditors’ Committee’s consent to the
Loans contemplated by this Amendment and use of such Loans for the purposes stated by this
Amendment, the Creditors’ Committee reserves all of its rights and claims in respect of the GUC
Escrow and its funding against all entities, and Borrowers and Lenders agree and acknowledge that
by consenting and agreeing to and acknowledging this Amendment, such rights and claims of the
Creditors’ Committee on behalf of its constituency are neither waived nor impaired. The Borrowers
and the Lender each reserve all of their rights in respect of the GUC Escrow.



7. Further Assurances. The parties hereto shall execute and deliver such additional
documents and take such additional action as may be reasonably necessary or desirable to effectuate
the provisions and purposes of this Amendment.



8. Governing Law. This Amendment will be deemed to be a contract made under and
governed by the laws of the State of New York (including for such purpose sections 5-1401 and
5-1402 of the General Obligations Law of the State of New York) but excluding any principles of
conflicts of law or other rule of law that would cause the application of the law of any
jurisdiction other than the laws of the State of New York and the Bankruptcy Code.



9. Binding Effect. This Amendment shall be binding upon and inure to the benefit of
each of the parties hereto and their respective successors and assigns.



10. Headings. The headings listed herein are for convenience only and do not
constitute matters to be construed in interpreting this Amendment.



11. Counterparts. This Amendment may be executed in any number of counterparts, but
all of such counterparts shall together constitute but one and the same agreement. In making proof
of this Amendment, it shall not be necessary to produce or account for more than one counterpart
thereof signed by each of the parties hereto. This Amendment may be executed and delivered by
telecopier with the same force and effect as if it were a manually executed and delivered
counterpart.



1 Capitalized terms used and not defined herein
shall have the respective meanings ascribed to such terms in the Restated Note.



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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their
respective officers thereunto duly authorized as of the day and year first above written.



	 	 	 
	BORROWERS:

	 	XYBERNAUT CORPORATION

Debtor and Debtor-in-Possession
	 
	 	 
	
 
	 	By:/s/ Perry L. Nolen
	
 
	 	 
	
 
	 	Name: Perry L. Nolen

Title: President & CEO
	 
	 	 
	
 
	 	XYBERNAUT SOLUTIONS, INC.

Debtor and Debtor-in-Possession
	 
	 	 
	
 
	 	By: /s/ Edward P. Maddox
	
 
	 	 
	
 
	 	Name: Edward P. Maddox

Title: President
	 
	 	 
	LENDER:

	 	EAST RIVER CAPITAL LLC
	 
	 	 
	
 
	 	By: /s/ James A. Coyne
	
 
	 	 
	
 
	 	Name: James A. Coyne

Title: Manager






AGREED, ACKNOWLEDGED AND CONSENTED TO:



OFFICIAL COMMITTEE OF UNSECURED CREDITORS


OF XYBERNAUT CORPORATION, ET AL.



By: /s/ Michael B. Schaedle


Michael B. Schaedle



Blank Rome LLP



One Logan Square



130 N. 18th Street, 3rd Floor



Philadelphia, PA 19103



Attorneys for the Official Committee of Unsecured Creditors




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