XYBERNAUT CORP
FORM OF EXHIBIT A ("FPP EXHIBIT A")
<DOCUMENT>
<TYPE>EX-10.45
<SEQUENCE>6
<FILENAME>w58917ex10-45.htm
<DESCRIPTION>FORM OF EXHIBIT A ("FPP EXHIBIT A")
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<TITLE>ex10-45</TITLE>
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<P align="right"><B>Exhibit 10.45</B>



<P align="center"><FONT size="2"><B>FORM OF EXHIBIT A (&#147;FPP EXHIBIT A&#148;) TO<BR>
ADDENDUM TO AGREEMENT FOR WHOLESALE FINANCING -<BR>
FLEXIBLE PAYMENT PLAN (&#147;FPP ADDENDUM&#148;) DATED ______________, ____
</B></FONT>

<P align="left"><FONT size="2"><B>Customer Names: Xybernaut Corporation, Xybernaut Solutions, Inc.
</B></FONT>

<P align="left"><FONT size="2"><B><I>Customers&#146; Organization Identification Nos. (assigned by State of incorporation/organization):</I></B><BR>
________________________________________
</FONT>

<P align="left"><FONT size="2"><B>Effective Date of this FPP Exhibit&nbsp;A: _________________, 2001
</B></FONT>

<P align="left"><FONT size="2"><B>SECTION 1. FPP Credit Line Fees, Rates and Repayment Terms:</B>
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
        <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">(a)</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="91%"><FONT size="2">FPP Application Processing Fee: $10,000;</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">(b)</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="91%"><FONT size="2">FPP Credit Line: Three Million Dollars ($3,000,000);</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">(c)</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="91%"><FONT size="2">Valuation Percentage:</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
        <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="91%"><FONT size="2">(i)&nbsp;&nbsp;70% of the amount of Customers&#146; Eligible Accounts other than
Concentration Accounts as of the date of determination as reflected in
the Customers&#146; most recent Collateral Report;</FONT></TD>
</TR>

<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="top">
        <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="91%"><FONT size="2">(ii)&nbsp;&nbsp;a percentage, determined from time to time by IBM Credit in its
sole discretion, of the amount of Customers&#146; Concentration Accounts
for a specific Concentration Account Debtor as of the date of
determination as reflected in the Customers&#146; most recent Collateral
Report; unless otherwise notified by IBM Credit, in writing, the
percentage for Concentration Accounts for a specific Concentration
Account Debtor shall be the same as the percentage set forth in
paragraph (i)&nbsp;of the Valuation Percentage;</FONT></TD>
</TR>

<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="top">
        <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="91%"><FONT size="2">(iii)&nbsp;&nbsp;0% of the Customers&#146; Existing Finished Goods Inventory which
includes the prior MA series (not manufactured by International
Business Machines Corporation) and the associated peripherals.</FONT></TD>
</TR>

<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="top">
        <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="91%"><FONT size="2">(iv)&nbsp;&nbsp;100% of the Customers&#146; Approved Inventory which is aged less than
150&nbsp;days.</FONT></TD>
</TR>

<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="top">
        <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="91%"><FONT size="2">The AWF is hereby amended by deleting the definition of &#147;Approved
Inventory&#148; therein in its entirety and substituting, in lieu thereof,
the following:</FONT></TD>
</TR>

<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="top">
        <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="91%"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Approved Inventory&#148; shall mean computer hardware and software
products in Customers&#146; possession which are manufactured or
distributed by or bearing the trademarks and trade names of any
companies approved, in writing, by IBM Credit to receive financing
pursuant to the terms in the AWF, provided, however, IBM Credit has a
first priority security interest in such products and such products
are in new condition.</FONT></TD>
</TR>

<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>
</TABLE>


<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
        <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">(d)</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="91%"><FONT size="2">Payment Due Dates will be the 5th, 15th, and 25th of each calendar
month;</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">(e)</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="91%"><FONT size="2">Monthly Service Fee: $1,000;</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">(f)</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="91%"><FONT size="2">Financing Period: 60&nbsp;days from the date of each invoice;</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">(g)</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="91%"><FONT size="2">No-Charge Financing Days: For products subsidized by a manufacturer
there will be no charge for a certain period of time from the date of
the invoice; or</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">Page 1 of 5</FONT>

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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
        <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="91%"><FONT size="2">Basis Points: Unless informed otherwise, for products not subsidized
by a manufacturer there will be a one-time charge of 25 basis points
for each invoice which is in addition to the Finance Charge Rate
beginning on day 1;</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">(h)</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="91%"><FONT size="2">FPP Financing Charge: Prime Rate plus 2.0%;</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">(i)</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="91%"><FONT size="2">FPP Working Capital Option (&#147;WCO&#148;): Outstanding advances authorized up
to the amount of eligible collateral. Total Outstanding Indebtedness
not to exceed the FPP credit line amount;</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">(j)</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="91%"><FONT size="2">WCO Term: 180&nbsp;days;</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">(k)</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="91%"><FONT size="2">FPP WCO Financing Charge: Prime Rate plus 2.0%;</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">(l)</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="91%"><FONT size="2">Maximum Payment Reschedule Option (&#147;PRO&#148;) Term: 30&nbsp;days;</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">(m)</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="91%"><FONT size="2">FPP PRO Financing Charge: Prime Rate plus 2.0%</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">(n)</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="91%"><FONT size="2">Delinquency Fee: Prime Rate plus 6.50%;</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">(o)</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="91%"><FONT size="2">**Shortfall Transaction Fee: Shortfall Amount multiplied by 0.30%.</FONT></TD>
</TR>
</TABLE>
<P><FONT size="2">Financing Charges will be based on the Average Daily Balance (&#147;ADB&#148;) and will
be billed monthly. WCO Advances will become part of Customers&#146; Outstanding
Indebtedness to IBM Credit.
</FONT>
<P align="left"><FONT size="2"><B>SECTION 2. Bank and Lockbox Information
</B></FONT>

<P><FONT size="2">Each Customer&#146;s Lockbox and Special Account shall be maintained at the
following Banks:
</FONT>
<P align="left"><FONT size="2">1)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NAME OF BANK: _____________________________________________<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ADDRESS: _________________________________________________<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PHONE NO.: ________________________________________________
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;LOCKBOX ADDRESS: __________________________________________
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SPECIAL ACCOUNT NO.: ______________________________________
</FONT>

<P align="left"><FONT size="2">2)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NAME OF BANK: _____________________________________________<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ADDRESS: __________________________________________________<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PHONE NO.: _________________________________________________
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;LOCKBOX ADDRESS: __________________________________________
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SPECIAL ACCOUNT NO.: ______________________________________
</FONT>

<P align="center"><FONT size="2">Page 2 of 5</FONT>

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<P align="left"><FONT size="2"><B>SECTION 3. Financial Covenants:
</B></FONT>

<P><FONT size="2">Definitions: The following terms shall have the following respective meanings
in this Exhibit. All amounts shall be determined in accordance with U.S.
generally accepted accounting principles (GAAP).
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">&#147;Consolidated Net Income&#148; shall mean, for any period, the net income (or
loss), after taxes, of Customers on a consolidated basis for such period
determined in accordance with GAAP.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">&#147;Current&#148; shall mean within the ongoing twelve month period.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">&#147;Current Assets&#148; shall mean assets that are cash or expected to become
cash within the ongoing twelve months.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">&#147;Current Liabilities&#148; shall mean payment obligations resulting from past
or current transactions that require settlement within the ongoing twelve
month period. All indebtedness to IBM Credit shall be considered a Current
Liability for purposes of determining compliance with the Financial
Covenants.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">&#147;EBITDA&#148; shall mean, for any period (determined on a consolidated basis in
accordance with GAAP), (a)&nbsp;the Consolidated Net Income of Customers for
such period, plus (b)&nbsp;each of the following to the extent reflected as an
expense in the determination of such Consolidated Net Income: (i)&nbsp;the
Customers&#146; provisions for taxes based on income for such period; (ii)
Interest Expense for such period; and (iii)&nbsp;depreciation and amortization
of tangible and intangible assets of Customers for such period.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">&#147;Fixed Charges&#148; shall mean, for any period, an amount equal to the sum,
without duplication, of the amounts for such as determined for the
Customers on a consolidated basis, of (i)&nbsp;scheduled repayments of principal
of all indebtedness (as reduced by repayments thereon previously made),
(ii)&nbsp;Interest Expense, (iii)&nbsp;capital expenditures (iv)&nbsp;cash dividends
paid, (v)&nbsp;leasehold improvement expenditures and (vi)&nbsp;all provisions for
U.S. and non U.S. Federal, state and local taxes.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">&#147;Fixed Charge Coverage Ratio&#148; shall mean the ratio as of the last day of
any fiscal period of (i)&nbsp;EBITDA as of the last day of such fiscal period to
(ii)&nbsp;Fixed Charges.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">&#147;Interest Expense&#148; shall mean, for any period, the aggregate consolidated
interest expense of Customers during such period in respect of Indebtedness
determined on a consolidated basis in accordance with GAAP, including,
without limitation, amortization of original issue discount on any
Indebtedness and of all fees payable in connection with the incurrence of
such Indebtedness (to the extent included in interest expense), the
interest portion of any deferred payment obligation and the interest
component of any capital lease obligations.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">&#147;Long Term&#148; shall mean beyond the ongoing twelve month period.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">&#147;Long Term Assets&#148; shall mean assets that take longer than a year to be
converted to cash. They are divided into four categories: tangible assets,
investments, intangibles and other.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">&#147;Long Term Debt&#148; shall mean payment obligations of indebtedness which
mature more than twelve months from the date of determination, or mature
within twelve months from such date but are renewable or extendible at the
option of the debtor to a date more than twelve months from the date of
determination.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">&#147;Net Profit after Tax&#148; shall mean Revenue plus all other income, minus all
costs, including applicable taxes.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">Page 3 of 5</FONT>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">&#147;Revenue&#148; shall mean the monetary expression of the aggregate of products
or services transferred by an enterprise to its customers for which said
customers have paid or are obligated to pay, plus other income as allowed.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">&#147;Subordinated Debt&#148; shall mean Customers&#146; indebtedness to third parties as
evidenced by an executed Notes Payable Subordination Agreement in favor of
IBM Credit.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">&#147;Tangible Net Worth&#148; shall mean:</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
        <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="91%"><FONT size="2">Total Net Worth minus;</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
        <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="87%"><FONT size="2">(a)&nbsp;goodwill, organizational expenses, pre-paid expenses,
deferred charges, research and development expenses, software
development costs, leasehold expenses, trademarks, trade names,
copyrights, patents, patent applications, privileges, franchises,
licenses and rights in any thereof, and other similar intangibles
(but not including contract rights) and other current and
non-current assets as identified in Customers&#146; financial
statements;</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="87%"><FONT size="2">(b)&nbsp;all accounts receivable from employees, officers, directors,
stockholders and affiliates; and</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="87%"><FONT size="2">(c)&nbsp;preferred stock that is callable or redeemable at the option
of the holders.</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">&#147;Total Assets&#148; shall mean the total of Current Assets and Long Term Assets.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">&#147;Total Liabilities&#148; shall mean the Current Liabilities and Long Term Debt
less Subordinated Debt, resulting from past or current transactions, that
require settlement in the future.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">&#147;Total Net Worth&#148; (the amount of owner&#146;s or stockholder&#146;s ownership in an
enterprise) is equal to Total Assets minus Total Liabilities.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="96%"><FONT size="2">&#147;Working Capital&#148; shall mean Current Assets minus Current Liabilities.</FONT></TD>
</TR>
</TABLE>
<P><FONT size="2">Customers will be required to maintain the following financial ratios,
percentages and amounts as of the last day of the fiscal period under review by
IBM Credit:
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="96%">
<TR valign="bottom">
        <TD width="3%">&nbsp;</TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="44%">&nbsp;</TD>
        <TD width="6%">&nbsp;</TD>
        <TD width="44%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD nowrap align="left"><FONT size="1"><B>Covenant</B></FONT></TD>
</TR>
<TR valign="bottom">
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD nowrap align="left"><FONT size="1"><B>Covenant</B></FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD nowrap align="left"><FONT size="1"><B>Requirements</B></FONT></TD>
</TR>
<TR valign="bottom">
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD nowrap align="center"><HR size="1" noshade></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD nowrap align="center"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">(i)</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
Total Liabilities to Tangible
Net Worth
</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">Less than or Equal to 3.0</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">(ii)</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
Current Assets to Current
Liabilities
</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">Equal to or Greater than 1.2</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">(iii)</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
Minimum Cash Balance
</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">Equal to or Greater than $1,000,000</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2"><B>SECTION 4. Insurance Covenant:
</B></FONT>

<P><FONT size="2">Customers agree to maintain standard all-risk insurance coverage on all
locations in the amount of at least Three Million Dollars ($3,000,000) and
provide IBM Credit with a copy of the insurance policy. IBM Credit Corporation
must be named as a lender loss payee.
</FONT>
<P align="left"><FONT size="2"><B>SECTION 5. Financial Report Preparation Requirements:
</B></FONT>

<P><FONT size="2">Reports due under the terms of the FPP Addendum shall be prepared as follows:
</FONT>
<P align="center"><FONT size="2">Page 4 of 5</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<P><FONT size="2">Annual Reports shall be audited by an independent certified public accountant
and submitted no later than ninety (90)&nbsp;days after the close of the fiscal year
on a consolidated and consolidating (US operation) basis.
</FONT>
<P><FONT size="2">Quarterly Reports shall be prepared internally by the Customers and delivered
to IBM Credit no later than forty-five (45)&nbsp;days after the close of the quarter
on a consolidated and consolidating (US operation) basis.
</FONT>
<P><FONT size="2">Customers must submit the following within forty (45)&nbsp;days after the end of
Customers&#146; fiscal quarter:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
        <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="91%"><FONT size="2">Covenant Compliance Certificate</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="91%"><FONT size="2">Inventory Location Certificate</FONT></TD>
</TR>
</TABLE>
<P><FONT size="2">Customers must submit the following within ninety (90)&nbsp;days after the end of
Customers&#146; fiscal year, and as requested by IBM Credit from time to time:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
        <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="91%"><FONT size="2">A forecast income statement, balance sheet and cash flow statement
for the next 12&nbsp;months or through the current fiscal year and the
following fiscal year; and</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="91%"><FONT size="2">business narrative that at a minimum should include an explanation on
how Customers plan to accomplish significant changes in revenue,
gross profit margin, expenses, operating profit margin and net profit.
The Customers&#146; business strategy, anticipated business climate, and
the headcount that will produce the projected financial results should
also be included.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2"><B>SECTION 6. Documentation Requirements:
</B></FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
        <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="91%"><FONT size="2">Executed Amended and Restated AWF</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="91%"><FONT size="2">Executed FPP Addendum</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="91%"><FONT size="2">Executed Contingent Blocked Account Amendment to a Lockbox Agreement;</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="91%"><FONT size="2">Subordination or Intercreditor Agreements from all creditors having a
lien which is superior to IBM Credit&#146;s in any Collateral;</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="91%"><FONT size="2">Executed Waiver of Landlord Lien for all premises in which a landlord
has the right of levy for rent;</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="91%"><FONT size="2">Bank Statement or other evidence acceptable by IBM Credit that
demonstrates Xybernaut First &#038; Second round $10.2M equity funding
from private placement is in place prior to IBM Credit funding;</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="91%"><FONT size="2">ILOC Addendum</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="91%"><FONT size="2">Any and all other documents and/or agreements IBM Credit, in its sole
discretion, deems reasonably necessary.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="91%"><FONT size="2">Listing of all creditors providing accounts receivable financing to
Customer;</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="91%"><FONT size="2">Termination of release of Uniform Commercial Code filing;</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2"><B>SECTION 7. Additional Collateral Requirements:
</B></FONT>

<P><FONT size="2">Customers will cause an institution acceptable to IBM Credit to issue in favor
of IBM Credit an Irrevocable Letter of Credit (ILOC), in the amount of
$1,000,000. Such ILOC shall be in a form, and for a term, acceptable to IBM
Credit.
</FONT>

<P align="center"><FONT size="2">Page 5 of 5</FONT>

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