Document:

exv10w2

 

EXHIBIT 10.2

SECURITY AGREEMENT

          This SECURITY AGREEMENT (this “Agreement”) is dated as of October 31, 2005 by and
between Xybernaut Corporation, a Delaware corporation and Xybernaut Solutions, Inc., a Virginia
corporation, debtors and debtors-in-possession (together, “Xybernaut” or
“Borrower”), and LC Capital Master Fund, Ltd., a Cayman Islands company (“LC
Fund”).

          RECITALS:

          WHEREAS Xybernaut is currently a debtor and debtor-in-possession in bankruptcy cases (the
“Case”) commenced under chapter 11 of title 11 of the United States Code (the
“Bankruptcy Code”) before the United States Bankruptcy Court for the Eastern District of
Virginia, Alexandria Division (the “Court”), Case Nos. 05-12801;

          WHEREAS, Xybernaut has requested and LC Fund has agreed to make one or more loans to Xybernaut
in an amount not exceeding five million dollars ($5,000,000) (the “Loans”) pursuant to the
terms of the Note (as hereinafter defined) subject to and upon the terms and conditions set forth
herein and therein;

          NOW, THEREFORE, in consideration of the premises and in order to induce LC Fund to make the
Loans to Xybernaut, the parties agree as follows:

     1. Definitions.

          1.1 Definitions. Capitalized words and terms used herein and not otherwise defined
shall have the following meanings:

          “Account Debtor” means any “account debtor,” as such term is defined in the applicable
section of the UCC.

          “Accounts” means any “account,” as such term is defined in the applicable section of
the UCC, now owned or hereafter acquired by Xybernaut and, in any event, shall include, without
limitation, all accounts receivable, book debts and other forms of obligations (other than forms of
obligations evidenced by Chattel Paper, Documents or Instruments) now owned or hereafter received
or acquired by or belonging or owing to Xybernaut (including, without limitation, under any trade
name, style or division thereof) whether arising out of goods sold or services rendered by
Xybernaut or from any other transaction, whether or not the same involves the sale of goods or
services by Xybernaut (including, without limitation, any such obligation which may be
characterized as an account or contract right under the UCC) and all of Xybernaut’s rights in, to
and under all purchase orders or receipts now owned or hereafter acquired by it for goods or
services, and all of Xybernaut’s rights to any goods represented by any of the foregoing
(including, without limitation, unpaid seller’s rights of rescission, replevin, reclamation and
stoppage in transit and rights to returned, reclaimed or repossessed goods), and all moneys due or
to become due to Xybernaut under all purchase orders and contracts for the sale of goods or
the performance of services or both by Xybernaut (whether or not yet earned by performance on the
part of Xybernaut or in connection with any other transaction), now in existence or hereafter
occurring, including, without limitation, the right to receive the proceeds of said purchase orders
and contracts, and all collateral security and guarantees of any kind given by any person with
respect to any of the foregoing.

 

 

          “Budget” shall mean both an eight (8) month (“8 Month Budget”) and monthly
(“Monthly Budget”) cash expense budget detailing Xybernaut’s anticipated cash receipts and
expenditures, including professional fees and expenses, as amended or supplemented from time to
time with the approval of LC Fund, which budget (and any amendments thereto) shall be in form and
substance acceptable to LC Fund. Such Budget shall be updated on a monthly basis by Xybernaut and
be subject to approval by LC Fund. For avoidance of doubt, professional fees to be paid under the
Budget (including as rolled forward) shall not exceed $1,000,000 in the aggregate. A copy of each
of the 8 Month Budget and first Monthly Budget is attached hereto as Exhibit 1.

          “Chattel Paper, Instruments and Documents” shall mean any and all chattel paper,
instruments, securities, bills of lading, warehouse receipts and other documents of title (all as
defined in the applicable UCC sections, if any) and documents of any kind now existing or hereafter
acquired or arising, whether arising from or related to the disposition of Inventory, Equipment, or
otherwise, and all rights now or hereafter existing in and to all security agreements, leases,
securities, letters of credit and other contracts, documents and instruments securing or otherwise
relating to any such accounts, rights or instruments (all as defined in the applicable UCC
sections, if any).

          “Collateral” shall have the meaning assigned to such term in Section 2.1 of this
Agreement.

          “Contract Rights” means any and all of Xybernaut’s right, title, estate and interest
in and to all contracts, contract rights, undertakings, franchise agreements or other agreements,
whether written or oral (other than rights evidenced by Chattel Paper, Documents or Instruments) in
or under which Xybernaut may now or hereafter have any right, title or interest, including, without
limitation, with respect to an Account, any agreement relating to the terms of payment or the terms
of performance thereof.

          “Default” shall mean an event which, with the giving of notice, lapse of time or both
would become an Event of Default.

          “Deposit Accounts” shall mean any and all deposit accounts now owned or hereafter
acquired by Xybernaut, including without limitation those set forth in Exhibit 4.

          “Equipment” means any “equipment,” as such term is defined in the applicable section
of the UCC, owned by Xybernaut and used by Xybernaut at any location, other than Equipment which
(i) is acquired by Xybernaut pursuant to purchase money financing, (ii) is encumbered by liens
securing such purchase money financing
and (iii) may not be pledged as collateral pursuant to the terms of such purchase money
financing.

 

 

          “Event of Default” shall have the meaning assigned to such term in the Note.

          “Final DIP Order” shall mean the final order entered by the Court pursuant to Section
364 of the Bankruptcy Code and Bankruptcy Rule 4001(c) on October 27, 2005 which authorized the
incurrence by Xybernaut of all indebtedness and obligations under the Note.

          “Financing Orders” shall mean the Interim DIP Order and the Final DIP Order
authorizing Xybernaut to obtain the Loans from LC Fund under the Note and to grant security
therefor, in each case, in form and substance acceptable to LC Fund.

          “General Intangibles” shall have the meaning given to it in the UCC.

          “Instruments” means any “instrument,” as such term is defined in the applicable
section of the UCC now owned or hereafter acquired by Xybernaut, including, without limitation, all
notes, certificated securities, and other evidences of indebtedness.

          “Intellectual Property” means any and all of Xybernaut’s right, title, estate and
interest, whether now existing or hereafter acquired, in and to all corporate and other business
records in any form, including in form for use by computers or data processing machines; royalties,
patents, inventions, copyrights, trade secrets and other confidential information relating to the
business of Xybernaut, including, by way of illustration and not limitation, each and every kind of
know-how practiced by Xybernaut and its employees; licenses, customer lists, advertising, marks,
designs, logos, slogans, indicia, corporate names, company names, business names, fictitious
business names, trade names, trade styles and registrations issued with respect to any of the
foregoing used in Xybernaut’s business or in which Xybernaut otherwise has an interest; and all
other information of any kind or character, whether or not reduced in writing, with respect to the
conduct by Xybernaut of its businesses not generally known by the public; and the goodwill
associated with the foregoing, including, without limitation, the Intellectual Property identified
on Exhibit 2 hereto.

          “Interim DIP Order” shall mean the interim order entered by the Court pursuant to
Section 364 of the Bankruptcy Code and Bankruptcy Rule 4001(c) on October 27, 2005, which
authorized the incurrence by Xybernaut of certain indebtedness and obligations under the Note.

          “Inventory” means any “inventory,” as such term is defined in the applicable section
of the UCC, wherever located, now or hereafter owned or acquired by, Xybernaut and, in any event,
shall include, without limitation, all inventory, merchandise, goods and other personal property
which are held by or on behalf of Xybernaut for sale or lease or are furnished or are to be
furnished under a contract of service or which constitute raw materials, work in process or
materials used or consumed or to be used or

 

 

consumed in Xybernaut’s business, or the processing, packaging, promotion, delivery or
shipping of the same, and all finished goods, whether or not such inventory is listed on any
schedules, assignments or reports furnished to the Agent from time to time and whether or not the
same is in transit or in the constructive, actual or exclusive occupancy or possession of Xybernaut
or is held by Xybernaut or by others for Xybernaut’s accounts, including, without limitation, all
goods covered by purchase orders and contracts with suppliers and all goods billed and held by
suppliers and all inventory which may be located on premises of Xybernaut or of any carriers,
forwarding agents, truckers, warehousemen, vendors, selling agents or other persons.

          “Lien” shall mean any lien, mortgage, encumbrance, pledge, charge, lease, easement,
servitude, right of others or security interest of any kind, including any thereof arising under
any conditional sale or other title retention agreement.

          “Petition Date” shall mean July 25, 2005.

          “Note” shall mean the Secured Promissory Note dated of even date herewith executed by
Xybernaut in favor of LC Fund in the original principal amount of five million dollars
($5,000,000), as such note may be modified, amended, supplemented, extended or replaced from time
to time.

          “Proceeds” means “proceeds,” as such term is defined in the applicable section of the
UCC and, in any event, shall include, without limitation, (i) any and all accounts, chattel paper,
deposit accounts, instruments, cash and other proceeds, payable to Xybernaut from time to time in
respect of the Collateral, (ii) any and all proceeds of any insurance, indemnity, warranty or
guaranty payable to Xybernaut from time to time with respect to any of the Collateral, (iii) any
and all payments (in any form whatsoever) made or due and payable to Xybernaut from time to time in
connection with any requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any governmental body, authority, bureau or agency (or any person acting
under color of governmental authority), (iv) any claim of Xybernaut against third parties (a) for
past, present or future infringement of any patent or patent license or (b) for past, present or
future infringement or dilution of any trademark or trademark license or for injury to the goodwill
associated with any trademark, trademark registration or trademark licensed under any trademark
license and (v) any and all other amounts from time to time paid or payable under or in connection
with any of the Collateral. In addition, the term “Proceeds” shall include, without limitation,
all accounts, chattel paper, deposit accounts, instruments, equipment, inventory, consumer goods,
farm products, documents, general intangibles and other Proceeds which arise from the sale, lease,
transfer or other use or disposition of any kind of Collateral or Proceeds and all Proceeds of any
type described above acquired with cash Proceeds.

          “Secured Obligations” means all indebtedness, obligations and other liabilities of
Xybernaut to LC Fund now or hereafter arising pursuant to the Note or this Security Agreement,
including, without limitation, the indebtedness evidenced thereby and hereby.

 

 

          “UCC” means the Uniform Commercial Code as the same may, from time to time, be in
effect in the State of New York; provided, however, in the event that, by reason of
mandatory provisions of law, any or all of the attachment, perfection or priority of LC Fund’s
security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, the term “UCC” shall mean the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such
attachment, perfection or priority and for purposes of definitions related to such provisions.

          2. Security Agreement.

               2.1 Security. (a) Grant of Security Interest. As security for the prompt and
complete payment and performance when due of all the Secured Obligations, Xybernaut hereby assigns,
conveys, mortgages, pledges, hypothecates and transfers to LC Fund, and hereby grants to LC Fund a
security interest in all of Xybernaut’s right, title and interest in, to and under the following,
whether now owned or existing or hereafter acquired and wherever located (all of which being
hereinafter collectively called the “Collateral”):

         (i) all Accounts;

         (ii) all Inventory;

         (iii) all Equipment;

         (iv) all Contract Rights;

         (v) Chattel Paper, Instruments and Documents;

         (vi) Intellectual Property;

         (vii) all General Intangibles;

         (viii) all Deposit Accounts;

         (ix) all Post-petition Collection Accounts;

         (x) the GUC Escrow Fund (as defined in the Note and solely with respect to an
Event of Default based upon: (1) a breach of the representations and warranties
contained in Section 14; or (2) Section 13(j) of the Note);

         (xi) all other goods and real or personal property whether tangible or
intangible, including without limitation, all other rights to payment not specified
above, and whether now or hereafter owned or existing, leased, consigned by or to,
or acquired by, Xybernaut and wherever located; and

 

 

                    (xii) to the extent not otherwise included, all Proceeds of each of the
foregoing and all accessions to, substitutions and replacements for, and rents,
profits and products of each of the foregoing.

               2.2 Grantor Liable.

                    (a) It is expressly agreed by Xybernaut that, anything herein to the contrary notwithstanding,
Xybernaut shall remain liable under each of its agreements included in the Collateral to observe
and perform all the conditions and obligations to be observed and performed by it thereunder and
Xybernaut shall comply and perform with or pursuant to the terms and provisions of each such
agreement. LC Fund shall not have any obligation or liability under any agreement included in the
Collateral by reason of or arising out of this Agreement or the granting to LC Fund of a security
interest therein or the receipt by LC Fund of any payment relating to any agreement included in the
Collateral pursuant hereto, nor shall LC Fund be required or obligated in any manner to perform or
fulfill any of the obligations of Xybernaut under or pursuant to any agreement included in the
Collateral, or to make any payment, or to make any inquiry as to the nature or the sufficiency of
any payment received by it or the sufficiency of any performance by any party under any agreement
included in the Collateral, or to present or file any claim, or to take any action to collect or
enforce any performance or the payment of any amounts which may have been assigned to it or to
which it may be entitled at any time or times. Xybernaut waives any rights under Section 506(c) of
the Bankruptcy Code respecting the Collateral.

                    (b) Xybernaut agrees that, from time to time at its own expense, Xybernaut will promptly
execute and deliver all further instruments and documents, and take all further action, that may be
necessary or that LC Fund may reasonably request, in order to perfect, preserve and protect any
security interest granted or purported to be granted hereby in Collateral. With respect to the
foregoing and the grant of the security interest hereunder, Xybernaut hereby authorizes LC Fund to
file one or more financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral without the signature of (or by signing on behalf of) Xybernaut. A
carbon, photographic or other reproduction of this Agreement or any financing statement covering
the Collateral or any part thereof shall be sufficient as a financing statement where permitted by
law.

               2.3 Perfected Security Interest.

                    (a) Xybernaut hereby represents and warrants that, upon entry of the initial Financing Order,
this Agreement and the pledge of the Collateral pursuant hereto creates a valid and perfected
security interest in all now or hereafter acquired of the Collateral, securing payment of the
Secured Obligations, subject to no other Liens other than Liens and encumbrances not exceeding
$100,000 in the aggregate and scheduled on Exhibit 3 hereto (the “Permitted Liens”). Until
the Secured Obligations have been paid in full, the security interests and Liens granted to LC Fund
hereunder shall remain in full force and effect and shall not be subordinated to or made
pari passu with any other Lien or security interest. Xybernaut hereby agrees to
cooperate with LC
Fund to make all filings and other action necessary or desirable to perfect and protect such
security interest.

 

 

                    (b) Except as expressly provided in the Financing Orders, Xybernaut shall not incur, create,
assume, suffer to exist or permit any claim to have administrative priority which pari
passu with or senior to the administrative priority granted to LC Fund under the Financing
Orders.

                    (c) Other than Permitted Liens, Xybernaut represents and warrants that it owns its Collateral
free and clear of any Lien.

               2.4 Place of Payment. All payments to be made by Xybernaut to LC Fund hereunder shall
be made in lawful currency of the United States of America and in immediately available funds by
wire to an account specified from time to time by LC Fund to Xybernaut. Such payments shall be
made without setoff or deduction of any kind.

               2.5 Certain Covenants. As a condition to LC Fund’s making each Loan to Xybernaut,
Xybernaut agrees that (a) it shall use the proceeds of each Loan only for the purposes set forth in
the schedule of payments annexed to the related Loan Request and then only for such items and in
such amounts as permitted by paragraph 7 of the Note and only to the extent the Borrower has
insufficient cash to pay such expenses after utilization of all available trade credit, (b) it
shall provide LC Fund with copies of monthly operating reports filed with the Court and monthly
financials, important notices of matters affecting the administration of the Case, the Collateral
(including all notices relating to intellectual property and pending patents), matters affecting
the Budget, and the failure to provide copies of such information shall constitute a default
hereunder, (c) it shall maintain and preserve the Collateral, including but not limited to
maintaining adequate insurance, paying maintenance fees, defending against any infringements of
intellectual property (as may be commercially reasonable) and pursuing patent approvals, and (d) it
shall ensure that its operations remain within the Budget (except as otherwise agreed to in writing
by LC Fund and after sixty (60) days from the date hereof, should Borrower not have deviated from
the Budget, LC Fund shall agree to a deviation in the Budget of up to but not exceeding a five
percent (5%) deviation in the aggregate of cash receipts items on the Budget), and (d) it shall
deliver to LC Fund not later than ten (10) days before the end of each month hereafter the Monthly
Budget for the succeeding month and an updated 8 Month Budget rolling forward the 8 Month Budget by
one (1) month, with respect to which from the date of actual receipt of the foregoing, LC Fund
shall have five (5) days to notify Borrower in writing of any objection to the Monthly Budget
(which objection shall be limited to a deviation from the applicable part of the 8 Month Budget)
and ten (10) days to notify Borrower in writing of any objection to the rolled forward portion of
the 8 Month Budget. Furthermore, while the Secured Obligations are outstanding, LC Fund shall be
entitled to audit and inspect Borrower’s books and records and the Collateral, at Borrower’s
expense. Finally, while the Secured Obligations are outstanding, at its election, LC Fund shall be
entitled to appoint an observer to the Board(s) of Directors of the Borrower.

 

 

          Xybernaut agrees that failure to comply with this Section 2.5 shall constitute an Event of
Default under the Note and, subject to the terms of the Financing Order, LC Fund shall be entitled
to exercise any of the remedies herein provided or in the Note or any and all other rights or
remedies available to LC Fund under applicable law.

               2.6 Further Assurances. Xybernaut agrees that from time to time, at its expense, it
will promptly execute and deliver all further instruments and documents, and take all further
action, that may be necessary or desirable, or that LC Fund may request, in order to perfect and
protect any security interest granted or purported to be granted hereby or to enable LC Fund to
exercise and enforce its rights and remedies hereunder with respect to any Collateral.

          3. Remedies, Rights Upon Default.

               3.1 Remedies. Subject to the terms of the Financing Orders, if an Event of Default
shall occur and be continuing, LC Fund may exercise all rights and remedies granted to it under
this Agreement, the Note and all other rights provided at law or in equity, including all rights
and remedies of a secured party under the UCC and including the right to immediately terminate its
commitment to make any Loans available under the Note. Without limiting the generality of the
foregoing, but subject to the terms of the Financing Orders, Xybernaut expressly agrees that in any
such event LC Fund, without demand of performance or other demand, advertisement or notice of any
kind (except the notice specified below of time and place of public or private sale) to or upon
Xybernaut or any other person (all and each of which demands, advertisements and/or notices are
hereby expressly waived to the maximum extent permitted by the UCC and other applicable law), may
forthwith collect, receive, appropriate and realize upon the Collateral, or any part thereof,
and/or may forthwith sell, lease, assign, give an option or options to purchase, or sell or
otherwise dispose of and deliver said Collateral (or contract to do so), or any part thereof, in
one or more parcels at public or private sale or sales, at any exchange or broker’s board or at any
of LC Fund’s offices in the United States or elsewhere at such prices as it may deem best, for cash
or on credit or for future delivery without assumption of any credit risk. LC Fund shall have the
right upon any such public sale or sales, and, to the extent permitted by law, upon any such
private sale or sales, to purchase the whole or any part of said Collateral so sold, free of any
right or equity of redemption, which equity of redemption Xybernaut hereby releases. Xybernaut
further agrees, at LC Fund’s request, to assemble the Collateral and make it available to LC Fund
at places which LC Fund shall reasonably select, whether at Xybernaut’s premises or elsewhere. LC
Fund shall apply the net proceeds of any such collection, recovery, receipt, appropriation,
realization or sale, towards payment of the Secured Obligations hereof, Xybernaut remaining liable
for any deficiency remaining unpaid after such application, and only after so paying over such net
proceeds and after the payment by LC Fund of any other amount required by any provision of law need
LC Fund account for the surplus, if any, to the person entitled by law to receive such surplus or
to Xybernaut. To the maximum extent permitted by applicable law, Xybernaut waives all claims,
damages, and demands against LC Fund arising out of the repossession, retention or sale of the
Collateral except such as arise out of the gross negligence or willful misconduct of LC Fund.
Xybernaut agrees that LC Fund need not give more than seven (7) days’ notice

 

 

(which notification shall be deemed given when mailed or delivered on an overnight basis,
postage prepaid, addressed to the Xybernaut at its address referred to in Section 4.2 hereof) of
the time and place of any public sale or of the time after which a private sale may take place and
that such notice is reasonable notification of such matters. Xybernaut shall remain liable for any
deficiency if the proceeds of any sale or disposition of the Collateral are insufficient to pay all
amounts to which LC Fund is entitled, Xybernaut also being liable for the reasonable fees of any
attorneys employed by LC Fund to collect such deficiency.

     3.2 Expenses of LC Fund. Xybernaut also agrees to pay all costs and expenses of LC
Fund, including, without limitation, reasonable attorneys’ fees, incurred in connection with the
enforcement of any of its rights and remedies hereunder.

     3.3 Waiver. Xybernaut hereby waives presentment, demand, protest or any notice not
specifically required herein (to the maximum extent permitted by applicable law) of any kind in
connection with this Agreement or any Collateral.

     3.4 Waiver of Rights by LC Fund. No course of dealing or failure or delay on the part
of LC Fund in exercising any right, power or privilege hereunder or with respect to the Note shall
operate as a waiver hereof or thereof, nor shall a single or partial exercise thereof preclude any
other or further exercise or the exercise of any other right, power or privilege. The rights of LC
Fund with respect to the Note and the rights of LC Fund under this Agreement are cumulative and not
exclusive of any rights or remedies which LC Fund would otherwise have.

     4. Miscellaneous.

     4.1 Modification of Agreement. No modification or waiver of any provision of this
Agreement, and no consent to any departure by Xybernaut therefrom, shall be effective unless the
same shall be in writing and signed by LC Fund. Any such waiver or consent shall be effective only
in the specific instance and for the purpose for which given. No notice to or demand on Xybernaut
in any case shall entitle Xybernaut to any other or further notice or demand in the same, similar
or other circumstances.

     4.2 Notices. All notices, requests and other communications hereunder shall be in
electronic, telephonic or written (including bank wire, telegram, telecopier, telex or similar
writing) form and shall be given to the party to whom addressed, at its address or telephone,
telecopier or telex number set forth below, or such other address or telephone, telecopier or telex
number as such party may hereafter specify for the purpose by notice to the other parties listed
below. Each such notice, request or communication shall be effective (i) if given by telephone,
telex, telecopy or electronic means, when such communication is transmitted to the address
specified below and the appropriate answer is received, (ii) if given by mail, three (3) days after
such communication is deposited in the mails with first class postage prepaid, addressed as
aforesaid or (iii) if given by any other means, when delivered at the address specified below.

 

 

If to Xybernaut:

Perry L. Nolen, President

Xybernaut Corporation

12701 Fair Lakes Circle, Suite 550

Fairfax, Virginia 22033

Fax: (703) 654-7070

Phone: (703) 654-3591

With a copy to:

Thomas Cabaniss, Esq.

McGuire Woods LLP

Bank of America Corporate Center

100 North Tryon Street

Suite 2900Charlotte, NC 28202-4011

Fax: (704) 373-4011

Phone: (704) 373-8953

If to LC Fund:

Steven G. Lampe

Lampe, Conway & Co. LLC

680 Fifth Avenue, Suite 1202

New York, New York 10019-5429

Fax: (212) 581-8999

Phone: (212) 581-8989

With a copy to:

John R. Ashmead, Esq.

Seward & Kissel LLP

One Battery Park Plaza

New York, New York 10004

Fax: (212) 480-8421

Phone: (212) 574-1366

          4.3 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED, INTERPRETED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHT OF THE PARTIES SHALL BE GOVERNED BY, THE LAWS OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAWS, EXCEPT TO THE EXTENT GOVERNED BY THE BANKRUPTCY CODE.

          4.4 WAIVER OF JURY TRIAL. XYBERNAUT AND LC FUND HEREBY WAIVE TRIAL BY JURY IN ANY
LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THIS AGREEMENT OR
THE VALIDITY, PROTECTION, INTERPRETATION, COLLECTION OR

 

 

ENFORCEMENT HEREOF, OR ANY OTHER CLAIM OR DISPUTE HOWSOEVER ARISING, BETWEEN XYBERNAUT AND LC
FUND.

          4.5 Survival of Agreement. All covenants, agreements, representations and warranties
made in this Agreement shall survive the delivery by Xybernaut of the Note and shall continue in
full force and effect so long as the Note shall be unexpired or any sums offsetted or due hereunder
or under the Note or any amount required to be reimbursed or paid by Xybernaut hereunder or
thereunder shall remain unpaid. Whenever in this Agreement LC Fund is referred to, such reference
shall be deemed to include the successors and assigns of LC Fund, and all covenants, promises and
agreements by or on behalf of Xybernaut which are contained in this Agreement or the Note shall
inure to the benefit of the successors and assigns of LC Fund. The rights and duties of Xybernaut,
however, may not be assigned or transferred.

          4.6 Severability. The provisions of this Agreement shall be deemed severable. If any
part of this Agreement shall be held unenforceable, by any court of competent jurisdiction, the
remainder shall remain in full force and effect, and such unenforceable provision shall be reformed
by such court so as to give maximum legal effect to the intention of the parties as expressed
therein.

          4.7 Headings. Section headings in this Agreement are included herein for convenience
of reference only and shall not constitute a part of this Agreement for any other purpose.

          4.8 Counterparts. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original and it shall not be necessary in making
proof of this Agreement to produce or account for more than one such counterpart.

 

 

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and
delivered in counterparts by their respective officers thereunto duly authorized as of the date
first above written.

	 	 	 	 	 	 	 
	 	 	XYBERNAUT CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Perry L. Nolen	 	 
	 

	 	 	 	Name: Perry L. Nolen

Title: President & CEO	 	 
	 
	 	 	 	 	 	 
	 	 	XYBERNAUT SOLUTIONS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Edward P. Maddox	 	 
	 

	 	 	 	Name: Edward P. Maddox

Title: President	 	 
	 
	 	 	 	 	 	 
	 	 	LC CAPITAL MASTER FUND, LTD.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Richard F. Conway	 	 
	 

	 	 	 	Name: Richard F. Conway

Title: Managerexv10w10

 

Exhibit 10.10

Employment Agreement

     This EMPLOYMENT AGREEMENT (“Agreement”) is made as of the 15th day of November, 2005 by
THOMAS P. DANAHER AND COMPANY, INC., a Virginia corporation formerly known as Thomas P. Danaher and
Company, Inc. (“Employer”), and THOMAS P. DANAHER (“Employee”).

RECITALS

     Employer is engaged in the business of operating an insurance agency.

     On the date hereof, Employee has sold all of the outstanding shares of Employer to Alliance
Bank Corporation, the sole shareholder of Employer (the “Sale Transaction”). Employee has been
involved in the management of Employer as its sole owner, president and chief executive officer and
possesses managerial, sales and marketing and other experience, knowledge, skills and expertise in
such business.

     The parties have mutually agreed upon the terms and conditions of Employee’s continued
employment by Employer as hereinafter set forth.

AGREEMENT

     NOW, THEREFORE, the parties intending to be legally bound, agree as follows:

     Section 1. Employment.

          (a) Employee shall be employed as the President of Employer. He shall perform such services
for Employer as may reasonably be assigned to Employee from time to time by Employer’s board of
directors or its designee upon the terms and conditions hereinafter set forth.

          (b) The parties acknowledge that the board of directors of Employer shall direct and oversee
the business affairs of Employer and that the relationship between Employer and Employee shall be
that of an employer and an employee. The board of directors shall have the sole authority to set
and establish the hours of operation of the business of Employer and to set and establish
reasonable work schedules and standards applicable to Employee.

          (c) Employee and Employer acknowledge that Employer has engaged an employee leasing company to
provide certain human resources services to employees of Employer and that Employee is considered
an employee of such employee leasing company pursuant to the terms of the agreement between
Employer and such employee leasing company. In addition, Employee and Employer acknowledge that
Employee is an employee of Employer and that any termination or alteration of the arrangement
between Employer and the employee leasing company shall not alter either party’s rights or
obligations under this Agreement in any
manner. Nothing herein promised by Employer shall be duplicative of any obligations of the
employee leasing company to Employee.

 

 

     Section 2. Term. The term of this Agreement shall continue until September 30, 2008
unless sooner terminated in the manner provided herein (the “Initial Term”). After the expiration
of the Initial Term, this Agreement shall be renewed automatically for successive additional terms
of one (1) year each unless either party gives the other notice of nonrenewal at least ninety (90)
days prior to the expiration of the then current term.

     Section 3. Exclusive Service. Employee shall devote his best efforts and full time to
rendering services on behalf of Employer in furtherance of its best interests. Employee shall
comply with all policies, standards and regulations of Employer now or hereafter promulgated, and
shall perform his duties under this Agreement to the best of his abilities and in accordance with
standards of conduct applicable to senior executive officers of insurance agencies.

     Section 4. Salary.

          (a) As compensation while employed hereunder, Employee, during his faithful performance of
this Agreement, in whatever capacity rendered, shall receive an annual base salary of $150,000
payable on such terms and in such equal installments as Employer may reasonably establish, but in
no event less frequently than monthly. The board of directors, in its discretion, may increase
Employee’s base salary during the term of this Agreement, but in no event shall the annual base
salary be reduced.

          (b) Employer shall withhold state and federal income taxes, social security taxes and such
other payroll deductions as may from time to time be required by law or agreed upon in writing by
Employee and Employer. Employer shall also withhold and remit to the proper party any amounts
agreed to in writing by Employer and Employee for participation in any corporate sponsored employee
benefit plans for which a contribution is required.

          (c) Except as otherwise expressly set forth hereunder, no compensation shall be paid pursuant
to this Agreement in respect of any month or portion thereof subsequent to any termination of
Employee’s employment by Employer.

     Section 5. Corporate Benefit Plans.

          (a) Employee shall be entitled to participate in or become a participant in any employee
benefit plan maintained by Employer for which he is or will become eligible on such terms as the
board of directors may, in its discretion, establish, modify or otherwise change.

          (b) Employer shall provide Employee with a disability insurance policy providing benefits
commensurate with other senior executive employees of Employer as amended by the board of directors
from time to time.

     Section 6. Bonuses. Employee shall receive only such bonuses as the board of
directors, in its discretion, decides to pay to Employee.

2

 

     Section 7. Expense Account.

          (a) Employer shall reimburse Employee for reasonable and customary business expenses incurred
in the conduct of Employer’s business. Such expenses will include business meals, out-of-town
lodging and travel expenses, and membership dues and costs to attend meetings and conventions of
business-appropriate organizations and associations. Employee agrees to timely submit records and
receipts of reimbursable items and shall comply with the reasonable rules and policies of Employer
regarding such reimbursement. Employer agrees to make prompt payment to Employee following receipt
and verification of such reports in accordance with Employer’s reasonable rules and policies in
respect of reimbursement of business expenses as in effect from time to time.

          (b) During the term of this Agreement, Employer will provide Employee an allowance of $750 per
month for an automobile for personal and business use and will pay or reimburse Employee for all
maintenance, insurance, fuel and taxes on such automobile.

     Section 8. Vacation and Sick Leave. Employee shall be entitled to twenty (20) days of
vacation per calendar year and such sick leave as the board of directors may from time to time
designate for full-time employees of Employer.

     Section 9. Termination.

          (a) Notwithstanding the termination of Employee’s employment pursuant to any provision of this
Agreement, the parties shall be required to carry out any provisions of this Agreement which
contemplate performance by them subsequent to such termination. In addition, no termination shall
affect any liability or other obligation of either party which shall have accrued prior to such
termination, including, but not limited to, any liability, loss or damage on account of breach of
this Agreement. No termination of employment shall terminate the obligation of Employer to make
payments of any benefits earned and accrued as of the date of termination of employment provided
hereunder or the obligations of Employee under Sections 10, 11 and 12.

          (b) Notwithstanding the provisions in Section 2 above, Employee’s employment hereunder may be
terminated (i) by Employee upon thirty (30) days written notice to Employer or (ii) by mutual
agreement in writing at any time.

          (c) This Agreement shall terminate upon the death of Employee; provided, however, that in such
event Employer shall pay to the estate of Employee the compensation including salary and accrued
bonus, if any, which otherwise would be payable to Employee through the end of the month in which
his death occurs.

          (d) Employer may terminate Employee’s employment other than for “Cause”, as defined in Section
9(e), at any time upon written notice to Employee, which termination shall be effective
immediately. Employee may resign thirty (30) days after notice to Employer for “Good Reason.” In
the event the Employee’s employment terminates pursuant to this Section 9(d), Employee shall
receive a monthly amount equal to one-twelfth (1/12) his rate of annual base salary in effect
immediately preceding such termination (“Termination

3

 

 Compensation”) in each month for the greater of (i) twelve (12) months or (ii) the remainder
of the then current term of this Agreement. Payments of the Termination Compensation shall be made
at the times such payments would have been made in accordance with Section 4(a) if Employee’s
employment had not terminated. Notwithstanding anything in this Agreement to the contrary, if
Employee commits a material breach of Section 10 or 11 that is not promptly cured by Employee
following receipt of notice of such breach from Employer, Employee will not thereafter be entitled
to receive any further compensation or benefits of any nature or kind whether pursuant to this
Section 9(d) or otherwise. In addition, notwithstanding anything in this Agreement to the
contrary, Employer shall not be required to make payment of the Termination Compensation or any
portion thereof to the extent such payment is prohibited by the terms of the regulations presently
found at 12 C.F.R. part 359 or to the extent that any other governmental approval of the payment
required by law is not received.

          For purposes of this Agreement, “Good Reason” shall mean:

                    (i) The assignment of duties to Employee by Employer which result in a significant reduction
in Employee’s authority or responsibility, without his express written consent;

                    (ii) The removal of Employee from his position as President;

                    (iii) A reduction by Employer of Employee’s annual base salary (which shall also constitute a
breach of Section 4(a) hereof; or

                    (iv) The failure of Employer to obtain the assumption of and agreement to perform this
Agreement by any successor as contemplated in Section 17 hereof.

          (e) Employer shall have the right to terminate Employee’s employment under this Agreement at
any time for Cause, which termination shall be effective immediately. Termination for “Cause” shall
include termination for one or more of the following: Employee’s personal dishonesty involving the
business of Employer, incompetence, willful misconduct, breach of fiduciary duty, willful failure
to perform stated duties, willful violation of any law, rule or regulation (other than traffic
violations or similar offenses) or final cease-and-desist order, conviction of a felony or of a
misdemeanor involving moral turpitude, misappropriation of Employer’s assets or those of its
Affiliates or material breach of any other provision of this Agreement. In the event Employee’s
employment under this Agreement is terminated for Cause, Employee shall thereafter have no right to
receive compensation or other benefits under this Agreement.

          (f) Employer may terminate Employee’s employment under this Agreement, after having
established the Employee’s disability by giving to Employee written notice of its intention to
terminate his employment for disability and his employment with Employer shall terminate effective
on the 90th day after receipt of such notice if within 90 days after such receipt Employee shall
fail to return to the full-time performance of the essential functions of his position (and if
Employee’s disability has been established pursuant to the definition of “disability” set forth
below). For purposes of this Agreement, “disability” means either (i) disability which after the
expiration of more than 13 consecutive weeks after its

4

 

commencement is determined to be total and permanent by a physician selected and paid for by
Employer or its insurers, and acceptable to Employee or his legal representative, which consent
shall not be unreasonably withheld or (ii) disability as defined in the policy of disability
insurance maintained by Employer or its Affiliates with respect to or for the benefit of Employee,
whichever shall be more favorable to Employee. Notwithstanding any other provision of this
Agreement, Employer shall comply with all requirements of the Americans with Disabilities Act, 42
U.S.C. § 12101 et. seq.

          (g) If Employee is suspended and/or temporarily prohibited from participating in the conduct
of Employer’s affairs by a notice served pursuant to the Federal Deposit Insurance Act, Employer’s
obligations under this Employment Agreement shall be suspended as of the date of service unless
stayed by appropriate proceedings. If the charges in the notice are dismissed, Employer may in its
discretion (i) pay Employee all or part of the compensation withheld while its contract obligations
were suspended, and (ii) reinstate (in whole or in part) any of its obligations which were
suspended.

          (h) If Employee is removed and/or permanently prohibited from participating in the conduct of
Employer’s affairs by an order issued under the Federal Deposit Insurance Act or the Code of
Virginia, all obligations of Employer under this Agreement other than the obligation to pay any
earned and accrued benefits as of the date of the prohibition shall terminate as of the effective
date of the order, and the obligations of Employee hereunder pursuant to Sections 10 and 11 shall
not be affected.

          (i) (1) If Employee’s employment is terminated by Employer without Cause within one year after
a Change of Control shall have occurred of if he resigns for Good Reason within one year after a
Change in Control shall have occurred, then on or before Employee’s last day of employment with
Employer, Employer shall pay to Employee as compensation for services rendered to Employer and its
Affiliates a cash amount (subject to any applicable payroll or other taxes required to be withheld)
equal to eighteen (18) month’s base salary; provided, however, that Employer may pay said amounts
in equal monthly installments over the eighteen (18) months succeeding the date of termination,
payable on the first day of each such month.

                    (2) For purposes of this Agreement, a Change of Control occurs, if, after the date of this
Agreement, (i) any person, including a “group” as defined in Section 13(d)(3) of the Securities
Exchange Act of 1934, becomes the owner or beneficial owner of Employer securities have 50% or more
of the combined voting power of the then outstanding Employer securities that may be cast for the
election of Employer’s directors other than a result of an issuance of securities initiated by
Employer, or open market purchases approved by the board of directors, as long as the majority of
the board of directors approving the purchases is a majority at the time the purchases are made; or
(ii) as the direct or indirect result of, or in connection with, a tender or exchange offer, a
merger or other business combination, a sale of assets, a contested election of directors, or any
combination of these events, the persons who were directors of Employer before such events cease to
constitute a majority of Employer’s Board or any successor’s board, within two years of the last of
such transactions; provided however, that it shall not be a “Change of Control” if, as a result of
any of the transactions described above, the voting securities or all or substantially all of the
assets of Employer are
transferred to or otherwise are held by any Affiliate of Alliance Bank Corporation. For
purposes of this Agreement, a Change of Control occurs on the date on which an event described in
(i) (ii) occurs. If a Change of Control occurs on account of a series of transactions or events,
the Change of Control occurs on the date of the last of such transactions or events.

5

 

     Section 10. Negative Covenants. Employee covenants and agrees that, in consideration
of the covenants and agreements of Employer herein and the consideration to be received by Employee
as an employee and pursuant to the Sale Transaction, he shall not (a) during the period of his
employment with Employer, and (b)(i) for a period of three (3) years thereafter, or (ii)
notwithstanding clause (b)(i), if and only if Employee’s employment is terminated pursuant to
Section 9(i) above, for a period of one (1) year thereafter (the “Non-Compete Period”), either for
his account or as an agent, partner, manager or other representative of any person or entity,
directly or indirectly, through one or more intermediaries, except on behalf of Employer in the
ordinary course of his employment with Employer or its successors or assigns, sell to, provide
products or services to, solicit or accept any risk management, insurance or bond business or
engagement or any substantially similar business or engagement from any of the “Customers of the
Company”. As used herein, “Customers of Employer” includes all persons and entities to whom
Employer has sold an insurance policy or product or a bond or risk management product of any type
or nature that is in effect on the date hereof or hereafter during employee’s employment with
Employer and any other person or entity to whom Employer has made a written proposal to provide any
of the above, within the eighteen (18) month period preceding the date of cessation for any reason
of Employee’s employment with Employer.

          (a) Employee hereby covenants and agrees that he shall not during the Non-Compete Period,
except on behalf of Employer in the ordinary course of his employment with Employer or its
successors or assigns:

                    (i) Use or permit others to use, disclose or divulge to others or copy or reproduce any data
or information relating to Employer or its Affiliates or otherwise used in the business of any of
them (including, without limitation, intellectual property, customer lists, sales records, bids,
proposals, contracts, business systems and procedures, financial records and information relating
to the businesses and operations of customers of Employer), whether in written or unwritten form or
in a form produced or stored by any magnetic, electrical or mechanical means or process, other than
data or information published or disclosed other than by Employee or which is readily available
from public or trade sources.

                    (ii) Either for his account or as an agent, partner, manager, or other representative of any
person or entity, directly or indirectly, through one or more intermediaries: (A) engage in
competition anywhere within Washington, DC MSA (as more particularly described on Exhibit
10(a)(ii)) (the “Restricted Territory”) with the operation of Employer or its successors or assigns
of the business of an insurance agency, including, without limitation, marketing and sales of risk
management, insurance and bond products and services, policies and other substantially similar
agreements (collectively, the “Business”); or (B) own, manage, operate, control or participate in
the ownership (other than as the owner of equity securities representing two percent (2%) or less
of the outstanding equity securities of any entity, the equity securities of which are publicly
held or traded), management, operation, membership or control of any person or entity that competes
with Employer in the Business or provides or offers to
provide to any person or entity products or services provided by Employer in the Business or
products or services substantially similar to those provided by Employer in the Business, anywhere
in the Restricted Territory.

6

 

     Section 11. Assignment of Intellectual Property. (a) Employer has and will retain
sole and exclusive ownership of all of the “Intellectual Property” (defined below) and all of the
“Work Product” (defined below). Employee hereby disclaims any and all rights and interests in and
to the Intellectual Property and the Work Product, and he hereby unconditionally and irrevocably
assigns and transfers to Employer all right, title and interest Employee currently has or in the
future may have, by operation of law or otherwise, in or to the Intellectual Property or the Work
Product, including, without limitation, any patents, copyrights, trademarks, servicemarks and other
intellectual property rights relating thereto.

          (b) Employee agrees that he will not take any actions inconsistent with Employer’s sole and
exclusive ownership of the Intellectual Property and the Work Product. Employee further agrees
that, upon request of Employer and at Employer’s expense, he will execute, deliver, file and record
all further instruments and documents (including, without limitation, registrations and assignments
of copyrights, trademarks, patents and other intellectual property rights), and take all further
action, as Employer deems necessary or prudent in order to insure that Employer has full ownership
of and full and exclusive rights to the Intellectual Property and the Work Product. Employee
hereby irrevocably appoints Employer as his attorney-in-fact, with full power of substitution, to
execute any and all such instruments and documents for Employee and in Employee’s name and on
Employee’s behalf.

          (c) Employee agrees that he has disclosed or will disclose all Work Product to the appropriate
Employer supervisor. Employee further agrees that the Work Product is subject to the
confidentiality provisions of this Agreement set forth above.

          (d) “Intellectual Property” means any and all computer software, programs and applications
(including applicable object codes and source codes), inventions, copyrights, copyright
applications, patents, patent rights and licenses, patent applications, trademarks, trademark
rights, trade names, trade name rights, servicemarks, servicemark rights, trade secrets, domain
names, developments, methods, processes, ideas, works, concepts, know-how and other intellectual
property now or hereafter owned by or licensed to Employer.

          (e) “Work Product” means all work product, property, data, documentation, know-how, concepts,
plans, inventions, improvements, techniques, processes, information and other Intellectual Property
used or useful in or relating to any business or part thereof of Employer developed, created,
conceived or reduced to practice by Employee, whether alone or in cooperation with others, during
the period Employee has been and hereafter is employed by Employer, its parent or any of its
subsidiaries or affiliates. The term “Work Product” does not include any preexisting intellectual
property disclosed by Employee on Schedule 11 attached hereto.

7

 

     Section 12. Injunctive Relief, Damages, Etc.

          (a) Each of the covenants and agreements of Employee set forth in the foregoing Sections 10
and 11 shall be deemed to be and construed as a covenant and agreement independent of any other
provision of this Agreement, and the existence of any claim or cause of action by Employee against
Employer or any of its Affiliates shall not constitute a defense to the enforcement of any such
covenant or agreement. Employee hereby acknowledges and agrees that Employer will sustain
irreparable injury in the event of a breach or threatened breach by him of any of the covenants and
agreements set forth in Section 10 or Section 11 and that Employer does not and will not have an
adequate remedy at law for such breach or threatened breach. Accordingly, Employee hereby consents
and agrees that if he breaches or threatens to breach any such covenant or agreement, Buyer shall
be entitled to immediate injunctive relief and to specific performance and that he shall not assert
in any proceeding instituted against him by Employer the defense or claim that Employer has an
adequate remedy at law or that an adequate remedy at law exists. The foregoing shall not, however,
be deemed to limit the remedies of Employer at law or in equity for any such breach or threatened
breach.

          (b) Employee, by his signature hereto, acknowledges: (i) that his covenants and agreements in
Sections 10 and 11 are reasonably necessary for the protection of Employer’s legitimate business
interests; (ii) that these covenants and agreements pose no undue hardship on Employee and are
reasonably limited as to duration and scope; and (iii) that these covenants and agreements are in
addition to any covenants or agreements Employee may make in any agreements executed or to be
executed by Employee in connection with the Sale Transaction. Further, the covenants contained in
Sections 10 and 11 shall be presumed to be enforceable, and any reading causing unenforceability
shall yield to a construction permitting enforcement. If any provision, term, phrase, or word in
such covenants shall be found unenforceable, it shall be severed and the remaining covenants
enforced in accordance with the tenor of such Sections to the greatest extent permitted by law. In
the event a court should determine not to enforce such a covenant as written due to overbreadth,
the parties specifically agree that the court shall enforce the covenant to the extent reasonable
as determined by the court, whether said revision be in time, territory, or scope of prohibited
activities.

     Section 13. Governing Law. This Employment Agreement shall be subject to and
construed in accordance with the laws of the Commonwealth of Virginia, without giving effect to its
principles of conflict of laws.

     Section 14. Notices. All notices, consents, waivers and other communications under
this Agreement must be in writing and will be deemed to have been duly given when (a) delivered by
hand (with written confirmation of receipt), (b) sent by telecopier (with written confirmation of
receipt), provided that a copy is mailed by registered mail, return receipt requested, or (c) when
received by the addressee, if sent by a nationally recognized overnight delivery service, in each
case to the appropriate addresses and/or telecopier numbers set forth below (or to such other
address and/or telecopier numbers as a party may designate by notice to the other parties in the
manner provided in this Section):

8

 

Employee:

Thomas P. Danaher

503 North Quaker                    

Alexandria, Virginia 22304

Facsimile
No.:                                   
               

Employer:

Alliance Bank Corporation

Suite 350

14280 Park Meadow Drive

Chantilly, Virginia 20151

Facsimile No.: (703) 378-7210

Attention: Paul M. Harbolick, Jr.

     Section 15. Waiver. The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party in exercising any
right, power, or privilege under this Agreement will operate as a waiver of such right, power or
privilege, and no single or partial exercise of any such right, power or privilege will preclude
any other or further exercise of such right, power or privilege or the exercise of any other right,
power or privilege. To the maximum extent permitted by applicable law, (a) no claim or right
arising out of this Agreement can be discharged by one party, in whole or in part, by a waiver or
renunciation of the claim or right unless in writing signed by the other party; (b) no waiver that
is given by a party will be applicable except in the specific instance for which it is given; and
(c) no notice to or demand on one party will be deemed to be a waiver of any obligation of such
party or of the right of the party giving such notice or demand to take further action without
notice or demand as provided in this Agreement.

     Section 16. Entire Agreement and Modification. This Agreement supersedes all prior
agreements between the parties with respect to its subject matter, and constitutes a complete and
exclusive statement of the terms of the agreement between the parties with respect to its subject
matter. This Agreement may not be amended except by a written agreement executed by the parties
hereto.

     Section 17. Assignments, Successors, and No Third-Party Rights. Neither this
Agreement nor any interest herein may be assigned by Employee. Employer may assign this Agreement
and any interest herein, including but not limited to the restrictive covenants and other
provisions of Sections 10 and 11, to any entity which acquires all or substantially all of the
assets of Employer. Upon assignment of this Agreement by the Company pursuant to the preceding
sentence, Employee acknowledges and agrees that he shall continue to be bound by this Agreement.
Subject to the preceding provisions of this Section 17, this Agreement will apply to, be binding in
all respects upon, and inure to the benefit of the heirs, successors, personal representatives and
permitted assigns of the parties. Nothing expressed or referred to in this Agreement will be
construed to give any Person other than the parties to this Agreement any

9

 

legal or equitable right, remedy or claim under or with respect to this Agreement or any
provision of this Agreement. This Agreement and all of its provisions and conditions are for the
sole and exclusive benefit of the parties to this Agreement and their heirs, successors, personal
representatives and permitted assigns.

     Section 18. Severability. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement that is held invalid or
unenforceable only in part or degree or in a particular circumstance will remain in full force and
effect to the extent not held invalid or unenforceable and in all other circumstances.

     Section 19. Section Headings, Construction. The headings of Sections in this
Agreement are provided for convenience only and will not affect its construction or interpretation.
Except as otherwise expressly set forth herein, all references to “Section” or “Sections” refer to
the corresponding Section or Sections of this Agreement. All words used in this Agreement will be
construed to be of such gender or number as the circumstances require. Unless otherwise expressly
provided, the word “including” does not limit the preceding words or terms.

     Section 20. Counterparts. This Agreement may be executed in one or more counterparts,
each of which will be deemed to be an original but all of which, when taken together, will be
deemed to constitute one agreement.

10

 

     IN WITNESS WHEREOF, Employee has executed this Agreement and Employer has caused this
Agreement to be executed by its duly authorized officer, all as of the date first above written.

	 	 	 	 	 	 	 	 	 
	 	 	 	 	THOMAS P. DANAHER AND COMPANY, INC.
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	  /s/ Thomas P. Danaher
 

Thomas P. Danaher,
	 	 
	 

	 	 	 	 	 	President	 	 
	ATTEST:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	  /s/ Daisy F. Newberry	 	 	 	EMPLOYEE	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	  /s/ Thomas P. Danaher
 

Thomas P. Danaher
	 	 

ATTEST:

	 	 	 
	  /s/ Daisy F. Newberry
 

	 	 

11

 

Exhibit 10(a)(ii)

Restricted Territory

Washington, DC-MD-VA-WV PMSA, including the following:

Alexandria City, VA

Arlington County, VA

Berkeley County, WV

Calvert County, MD

Charles County, MD

Clarke County, VA

Culpeper County, VA

District of Columbia

Fairfax County, VA

Fairfax City, VA

Falls Church City, VA

Fauquier County, VA

Frederick County, MD

Fredericksburg City, VA

Jefferson County, WV

King George County, VA

Loudoun County, VA

Manassas Park City, VA

Manassas City, VA

Montgomery County, MD

Prince George’s County, MD

Prince William County, VA

Spotsylvania County, VA

Stafford County, VA

Warren County, VA

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