EXHIBIT 4.7
NOTE AND WARRANT PURCHASE AGREEMENT
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This NOTE AND WARRANT PURCHASE AGREEMENT (this "Agreement"), dated as of
March 26, 2003, is entered into by and between Xybernaut Corporation, a Delaware
corporation (the "Company"), and the purchaser listed on Exhibit A attached
hereto ("Purchaser"), for the issuance and sale to Purchaser of the Note (as
defined below) and Warrants (as defined below), in the manner, and upon the
terms, provisions and conditions set forth in this Agreement.
WHEREAS, the parties desire that, upon the terms and subject to the terms
and conditions contained herein, the Company shall issue and sell to Purchaser
and Purchaser shall purchase the Note and Warrants; and
WHEREAS, such issuance and sale will be made in reliance upon the
provisions of Section 4(2) and Rule 506 of Regulation D ("Regulation D") of the
United States Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder (the "Securities Act"), or upon such other exemption from
the registration requirements of the Securities Act as may be available with
respect to any or all of the purchases of the Note and Warrants to be made
hereunder.
NOW, THEREFORE, in consideration of the representations, warranties and
agreements contained herein and other good and valuable consideration, the
receipt and legal adequacy of which is hereby acknowledged by the parties, the
Company and Purchaser hereby agree as follows:
1. PURCHASE AND SALE OF NOTE AND WARRANTS.
(a) At the Closing (as defined below), the Company shall issue and
sell to Purchaser, and Purchaser shall purchase from the Company, a promissory
note in the aggregate principal amount of $1,750,000 (the "Purchase Price"),
bearing interest at the rate of three and one-half percent (3 1/2%) per annum,
in substantially the form attached hereto as Exhibit B (the "Note").
(b) At the Closing, the Company shall issue to Purchaser warrants to
purchase an aggregate of one million seven hundred fifty thousand (1,750,000)
shares of the common stock of the Company, par value $.01 per share ("Common
Stock") in substantially the form attached hereto as Exhibit C (the "Long Term
Warrants") The Long Term Warrants shall be exercisable for a period of two (2)
years from the date of issuance and shall have an exercise price equal to $1.25
per share.
(c) At the Closing, the Company shall issue to Purchaser warrants to
purchase an aggregate of two million (2,000,000) shares of the Common Stock in
substantially the form attached hereto as Exhibit D (the "Short Term Warrants"
and, together with the Long Term Warrants, the "Warrants") The Short Term
Warrants shall be exercisable for a period which is the later of: (i) six (6)
months following the date of issuance, and (ii) one hundred and twenty (120)
days following the date the Registration Statement (as defined below) is
declared effective
by the Securities and Exchange Commission. The Short Term Warrants shall have an
exercise price equal to $.43 cents per share.
(d) In consideration of and in express reliance upon the
representations, warranties, covenants, terms and conditions of this Agreement,
the Company agrees to issue and sell to the Purchaser and the Purchaser agree to
purchase the Note and Warrants. The closing under this Agreement (the "Closing")
shall take place at the offices of Jenkens & Xxxxxxxxx Xxxxxx Xxxxxx LLP, The
Chrysler Building, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 upon the
satisfaction of each of the conditions set forth in Sections 4 and 5 hereof (the
"Closing Date").
(e) The Company has authorized and has reserved and covenants to
continue to reserve, free of preemptive rights and other similar contractual
rights of stockholders, a number of its authorized but unissued shares of its
Common Stock equal to at least 100% of the aggregate number of shares of Common
Stock to effect the exercise of the Warrants. Any shares of Common Stock
issuable upon exercise of the Warrants (and such shares when issued) are herein
referred to as the "Warrant Shares". The Note, the Warrants, and the Warrant
Shares are sometimes collectively referred to herein as the "Securities".
(f) If, at any time following the date hereof the Company files a
registration statement on Form S-3 (or other appropriate form then available,
except on Form X-0, X-0 or their respective successor forms) in connection with
a public or private offering of its securities to investors (a "Securities
Offering"), the Company shall include the Warrant Shares (the "Registrable
Securities") on such registration statement (the "Registration Statement").
Notwithstanding anything to the contrary contained in the foregoing: (i) if an
investor or investors holding more than fifty percent (50%) of the securities
sold in the Securities Offering reasonably requests in writing to the Company
that the Registrable Securities should not be included on the Form S-3
registration statement for such Securities Offering, the Company shall not
include the Registrable Securities on such registration statement to the extent
it reasonably and in good faith believes such inclusion would adversely affect
the offering and sale (including pricing, timing or distribution) of the
securities; and (ii) if an underwriter of any Securities Offering advises the
Company in writing that, in such firm's good faith opinion, the inclusion of the
Registrable Securities on the registration statement for such Securities
Offering would adversely affect the offering and sale (including pricing, timing
or distribution) of the securities to be sold in the Securities Offering, then
the Company shall not include the Registrable Securities on such registration
statement.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER. Purchaser hereby
makes the following representations and warranties to the Company, and covenants
for the benefit of the Company:
(a) Purchaser is a corporation, limited liability company or
partnership duly incorporated or organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization.
(b) This Agreement, the Note, and the Warrants (collectively, the
"Transaction Documents") have been duly authorized, validly executed and
delivered by
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Purchaser and is a valid and binding agreement and obligation of Purchaser
enforceable against Purchaser in accordance with its terms, subject to
limitations on enforcement by general principles of equity and by bankruptcy or
other laws affecting the enforcement of creditors' rights generally, and
Purchaser has full power and authority to execute and deliver the Transaction
Documents and the other agreements and documents contemplated hereby and to
perform its obligations hereunder and thereunder.
(c) Purchaser has received and carefully reviewed copies of the Public
Documents (as defined below). Purchaser understands that no Federal, state,
local or foreign governmental body or regulatory authority has made any finding
or determination relating to the fairness of an investment in any of the
Securities and that no Federal, state, local or foreign governmental body or
regulatory authority has recommended or endorsed, or will recommend or endorse,
any investment in any of the Securities. Purchaser, in making the decision to
purchase the Securities, has relied upon independent investigation made by it
and has not relied on any information or representations made by third parties.
(d) Purchaser understands that the Securities are being offered and
sold to it in reliance on specific provisions of Federal and state securities
laws and that the Company is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings of
Purchaser set forth herein for purposes of qualifying for exemptions from
registration under the Securities Act, and applicable state securities laws.
(e) Purchaser is an "accredited investor" as that term is defined
under Rule 501 of Regulation D promulgated under the Securities Act.
(f) Purchaser is and will be acquiring the Securities for its own
account, and not with a view to any resale or distribution of the Note or
Warrants in whole or in part, in violation of the Securities Act or any
applicable securities laws.
(g) The offer and sale of the Securities is intended to be exempt from
registration under the Securities Act, by virtue of Section 4(2) and Rule 506 of
Regulation D promulgated under the Securities Act. Purchaser understands that
the Securities purchased hereunder have not been, and may never be, registered
under the Securities Act and that none of the Securities can be sold or
transferred unless they are first registered under the Securities Act and such
state and other securities laws as may be applicable or the Company receives an
opinion of counsel reasonably acceptable to the Company that an exemption from
registration under the Securities Act is available (and then the Securities may
be sold or transferred only in compliance with such exemption and all applicable
state and other securities laws).
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. The Company
represents and warrants to Purchaser, and covenants for the benefit of
Purchaser, as follows:
(a) The Company has been duly incorporated and is validly existing and
in good standing under the laws of the state of Delaware, with full corporate
power and authority to own, lease and operate its properties and to conduct its
business as currently conducted, and is duly registered and qualified to conduct
its business and is in good standing in each jurisdiction or place where the
nature of its properties or the conduct of its business requires such
registration
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or qualification, except where the failure to register or qualify would not have
a Material Adverse Effect. For purposes of this Agreement, "Material Adverse
Effect" shall mean any effect on the business, results of operations, prospects,
assets or financial condition of the Company that is material and adverse to the
Company and its subsidiaries and affiliates, taken as a whole and/or any
condition, circumstance, or situation that would prohibit or otherwise
materially interfere with the ability of the Company from entering into and
performing any of its obligations under this Agreement in any material respect.
(b) The Company has provided Purchaser with copies of the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 2001 (the
"Form 10-K") filed with the Commission, its Form 10-Q for each of the quarterly
periods ended March 31, 2002, June 30, 2002 and September 30, 2002, respectively
(the "Forms 10-Q) (the Forms 10-Q and Form 10-K collectively, the "Public
Documents"). At the time of their filing the Public Documents did not include
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements contained therein, in light of the
circumstances under which they were made, not misleading. As used herein,
"Commission Documents" means all reports, schedules, forms, statements and other
documents filed by the Company with the Commission after September 30, 2002
pursuant to the reporting requirements of the Exchange Act, including material
filed pursuant to Section 13(a) or 15(d) of the Exchange Act.
(c) The Securities have been duly authorized by all necessary
corporate action and, when paid for or issued in accordance with the terms
hereof, the Securities shall be validly issued and outstanding, free and clear
of all liens, encumbrances and rights of refusal of any kind. When the Warrant
Shares are issued and paid for in accordance with the terms of this Agreement
and as set forth in the Warrants, such shares will be duly authorized by all
necessary corporate action and validly issued and outstanding, fully paid and
nonassessable, free and clear of all liens, encumbrances and rights of refusal
of any kind and the holders shall be entitled to all rights accorded to a holder
of Common Stock.
(d) Each of the Transaction Documents have been duly authorized,
validly executed and delivered on behalf of the Company and is a valid and
binding agreement and obligation of the Company enforceable against the Company
in accordance with its terms, subject to limitations on enforcement by general
principles of equity and by bankruptcy or other laws affecting the enforcement
of creditors' rights generally, and the Company has full power and authority to
execute and deliver the Transaction Documents and the other agreements and
documents contemplated hereby and to perform its obligations hereunder and
thereunder.
(e) The execution and delivery of the Transaction Documents and the
consummation of the transactions contemplated by this Agreement by the Company,
will not (i) conflict with or result in a breach of or a default under any of
the terms or provisions of, (A) the Company's certificate of incorporation or
by-laws, each as amended to date or (B) of any material provision of any
indenture, mortgage, deed of trust or other material agreement or instrument to
which the Company is a party or by which it or any of its material properties or
assets is bound, (ii) result in a violation of any provision of any law,
statute, rule, regulation, or any existing applicable decree, judgment or order
by any court, Federal or state regulatory body, administrative agency, or other
governmental body having jurisdiction over the Company, or any of its material
properties or assets or (iii) result in the creation or imposition of any
material lien,
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charge or encumbrance upon any material property or assets of the Company or any
of its subsidiaries pursuant to the terms of any agreement or instrument to
which any of them is a party or by which any of them may be bound or to which
any of their property or any of them is subject except in the case of clauses
(i)(B), (ii) or (iii) for any such conflicts, breaches, or defaults or any
liens, charges, or encumbrances which would not have a Material Adverse Effect.
(f) The sale and issuance of the Securities in accordance with the
terms of and in reliance on the accuracy of Purchaser's representations and
warranties set forth in this Agreement will be exempt from the registration
requirements of the Securities Act.
(g) No consent, approval or authorization of or designation,
declaration or filing with any governmental authority on the part of the Company
is required in connection with the valid execution and delivery of this
Agreement or the offer, sale or issuance of the Securities or the consummation
of any other transaction contemplated by this Agreement (other than any filings
which may be required to be made by the Company with the Commission, The Nasdaq
Small Cap Market or pursuant to any state or "blue sky" securities laws
subsequent to the Closing).
(h) There is no action, suit, claim, investigation or proceeding
pending or, to the knowledge of the Company, threatened against the Company
which questions the validity of the Transaction Documents or the transactions
contemplated thereby or any action taken or to be taken pursuant thereto. Except
as disclosed in the Commission Documents, there is no action, suit, claim,
investigation or proceeding pending or, to the knowledge of the Company,
threatened, against or involving the Company or any subsidiary, or any of their
respective properties or assets which, if adversely determined, is reasonably
likely to result in a Material Adverse Effect.
(i) To the Company's knowledge, neither this Agreement or the
Transaction Documents contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements made herein or
therein, in the light of the circumstances under which they were made herein or
therein, not misleading.
(j) The Company has furnished or made available to the Purchaser true
and correct copies of the Company's Certificate of Incorporation as in effect on
the date hereof, and the Company's Bylaws as in effect on the date hereof.
(k) So long as the Warrants remain outstanding, the Company shall take
all action necessary to at all times have authorized, and reserved for the
purpose of issuance, 100% of the maximum number of shares of Common Stock to
effect the exercise of the Warrants.
(l) The Company shall issue irrevocable instructions to its transfer
agent, and any subsequent transfer agent, to issue certificates, registered in
the name of the Purchaser or its nominee(s), for the Warrant Shares in such
amounts as specified from time to time by the Purchaser to the Company upon
exercise of the Warrants, in the form of Exhibit E attached hereto (the
"Irrevocable Transfer Agent Instructions"). Prior to registration of the Warrant
Shares under the Securities Act, all such certificates shall bear the
restrictive legend specified in Section 6 of this Agreement. The Company
warrants that no instruction other than the
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Irrevocable Transfer Agent Instructions referred to in this Section 3(l) will be
given by the Company to its transfer agent and that the Securities shall
otherwise be freely transferable on the books and records of the Company as and
to the extent provided in this Agreement. Nothing in this Section 3(l) shall
affect in any way the Purchaser' obligations and agreements set forth in Section
6 to comply with all applicable prospectus delivery requirements, if any, upon
the resale of the Warrant Shares. If Purchaser provides the Company with an
opinion of counsel, in form, substance and scope reasonably acceptable to the
Company, to the effect that a public sale, assignment or transfer of the
Securities may be made without registration under the Securities Act or
Purchaser provide the Company with reasonable assurances that the Securities can
be sold pursuant to Rule 144 without any restriction as to the number of
securities acquired as of a particular date that can then be immediately sold,
the Company shall permit the transfer, and, in the case of the Warrant Shares,
promptly instruct its transfer agent to issue one or more certificates in such
name and in such denominations as specified by Purchaser and without any
restrictive legend. The Company acknowledges that a breach by it of its
obligations under this Section 3(l) will cause irreparable harm to Purchaser by
vitiating the intent and purpose of the transaction contemplated hereby.
Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations under this Section 3(l) will be inadequate and agrees, in the event
of a breach or Purchaser' reasonable perception of a threatened breach by the
Company of the provisions of this Section 3(l), that Purchaser shall be
entitled, in addition to all other available remedies, to an order and/or
injunction restraining any breach and requiring immediate issuance and transfer,
without the necessity of showing economic loss and without any bond or other
security being required.
(m) The Company has complied and will comply with all applicable
federal and state securities laws in connection with the offer, issuance and
sale of the Note, the Warrants, and the Warrant Shares hereunder. Neither the
Company nor anyone acting on its behalf, directly or indirectly, has or will
sell, offer to sell or solicit offers to buy any of the Securities, or similar
securities to, or solicit offers with respect thereto from, or enter into any
preliminary conversations or negotiations relating thereto with, any person, or
has taken or will take any action so as to bring the issuance and sale of any of
the Securities under the registration provisions of the Securities Act and
applicable state securities laws. Neither the Company nor any of its affiliates,
nor any person acting on its or their behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D under
the Securities Act) in connection with the offer or sale of any of the
Securities.
4. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO SELL THE NOTE
AND WARRANTS. The obligation of the Company to issue and sell the Note and
Warrants to Purchaser is subject to the satisfaction or waiver, at or before the
Closing Date, of each of the conditions set forth below. These conditions are
for the Company's sole benefit and may be waived by the Company at any time in
its sole discretion.
(a) Purchaser shall have executed and delivered each of the
Transaction Documents.
(b) Purchaser shall have performed, satisfied and complied in all
material respects with all covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with by Purchaser
at or prior to the Closing Date.
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(c) The representations and warranties of Purchaser shall be true and
correct in all material respects as of the date when made and as of the Closing
Date as though made at that time, except for representations and warranties that
are expressly made as of a particular date, which shall be true and correct in
all material respects as of such date.
(d) At the Closing Date, upon receipt of the Transaction Documents,
Purchaser shall have delivered to the Company immediately available funds as
payment in full of the Purchase Price for the Note and Warrants.
5. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PURCHASER TO PURCHASE THE
NOTE AND WARRANTS. The obligation of Purchaser to acquire and pay for the Note
and Warrants is subject to the satisfaction or waiver, at or before the Closing
Date, of each of the conditions set forth below. These conditions are for
Purchaser's sole benefit and may be waived by Purchaser at any time in its sole
discretion.
(a) The Company shall have executed and delivered the Transaction
Documents.
(b) The Company shall have performed, satisfied and complied in all
material respects with all covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with by the Company
at or prior to the Closing Date.
(c) Each of the representations and warranties of the Company shall be
true and correct in all material respects as of the date when made and as of the
Closing Date as though made at that time, except for representations and
warranties that speak as of a particular date, which shall be true and correct
in all material respects as of such date.
(d) No statute, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction which prohibits the
consummation of any of the transactions contemplated by this Agreement at or
prior to the Closing Date.
(e) As of the Closing Date, no action, suit or proceeding before or by
any court or governmental agency or body, domestic or foreign, shall be pending
against or affecting the Company, or any of its properties, which questions the
validity of the Agreement, the Note, the Warrants or the transactions
contemplated thereby or any action taken or to be taken pursuant thereto. As of
the Closing Date, no action, suit, claim or proceeding before or by any court or
governmental agency or body, domestic or foreign, shall be pending against or
affecting the Company, or any of its properties, which, if adversely determined,
is reasonably likely to result in a Material Adverse Effect.
(f) No Material Adverse Effect shall have occurred at or before the
Closing Date.
(g) The Company shall have reserved out of its authorized and unissued
Common Stock, solely for the purpose of effecting the exercise of the Warrants,
a number of
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shares of Common Stock equal to at least 100% of the number of Warrant Shares
issuable upon exercise of the Warrants assuming the Warrants were granted on the
Closing Date (after giving effect to the Warrants to be issued on the Closing
Date and assuming the Warrants were fully exercisable on such date regardless of
any limitation on the timing or amount of such exercises).
6. LEGEND. Each certificate representing the Note, the Warrants and
the Warrant Shares shall be stamped or otherwise imprinted with a legend
substantially in the following form (in addition to any legend required by
applicable state securities or "blue sky" laws): "THE SECURITIES REPRESENTED BY
THIS CERTIFICATE (THE "SECURITIES") HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE
SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS
REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS
OR XYBERNAUT CORPORATION SHALL HAVE RECEIVED AN OPINION OF COUNSEL THAT
REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE
PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED." The Company
agrees to reissue certificates representing any of the Securities, without the
legend set forth above if at such time, prior to making any transfer of any such
Securities, such holder thereof shall give written notice to the Company
describing the manner and terms of such transfer and removal as the Company may
reasonably request. Such proposed transfer will not be effected until: (a) the
Company has either (i) received an opinion of counsel that the registration of
the Note, Warrants or Warrant Shares under the Securities Act is not required in
connection with such proposed transfer; or (ii) filed a registration statement
under the Securities Act covering such proposed disposition has been filed by
the Company with the Commission, which registration statement has become
effective under the Securities Act; and (b) the Company has received an opinion
of counsel that either: (i) the registration or qualification under the
securities or "blue sky" laws of any state is not required in connection with
such proposed disposition, or (ii) compliance with applicable state securities
or "blue sky" laws has been effected. The Company will use reasonable efforts to
respond to any such notice from a holder within five (5) business days. In the
case of any proposed transfer under this Section 6, the Company will use
reasonable efforts to comply with any such applicable state securities or "blue
sky" laws, but shall in no event be required, in connection therewith, to
qualify to do business in any state where it is not then qualified or to take
any action that would subject it to tax or to the general service of process in
any state where it is not then subject. The restrictions on transfer contained
in this Section 6 shall be in addition to, and not by way of limitation of, any
other restrictions on transfer contained in any other section of this Agreement.
7. FEES AND EXPENSES. Each party shall pay the fees and expenses of
its advisors, counsel, accountants and other experts, if any, and all other
expenses, incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement; provided, however, that
the Company shall pay up to $7,500 for the reasonable attorneys' fees and
expenses (exclusive of disbursements and out-of-pocket expenses) incurred by
Purchaser in connection with the preparation, negotiation, execution and
delivery of this Agreement and the other transaction documents.
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8. INDEMNIFICATION.
(a) The Company hereby agrees to indemnify and hold harmless
Purchaser and its officers, directors, shareholders, employees, agents and
attorneys against any and all losses, claims, damages, liabilities and
reasonable expenses (collectively "Claims") incurred by each such person in
connection with defending or investigating any such Claims, whether or not
resulting in any liability to such person, to which any such indemnified party
may become subject, insofar as such Claims arise out of or are based upon any
breach of any representation, warranty or agreement made by the Company in this
Agreement.
(b) Purchaser hereby agrees to indemnify and hold harmless the
Company and its officers, directors, shareholders, employees, agents and
attorneys against any and all losses, claims, damages, liabilities and expenses
incurred by such person in connection with defending or investigating any such
claims or liabilities, whether or not resulting in any liability to such person,
to which any such indemnified party may become subject under the Securities Act,
or under any other statute, at common law or otherwise, insofar as such Claims
arise out of or are based upon any breach of any representation, warranty or
agreement made by Purchaser in this Agreement.
9. GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York,
without regard to its conflicts of laws principles. This Agreement shall be
interpreted and construed without any presumption against a party by virtue of
such party causing this Agreement to be drafted. Any legal action or proceeding
with respect to this Agreement or any of the transactions contemplated hereby
may be brought in the courts of the State of New York or of the United States of
America for the Southern District of New York, and, by execution and delivery of
this Agreement, each of the Company and Purchaser hereby unconditionally and
irrevocably consents to the personal jurisdiction of the aforesaid courts for
itself and in respect of its property, generally and unconditionally. Each of
the Company and Purchaser hereby unconditionally and irrevocably waives, in
connection with any such action or proceeding brought in the aforesaid courts,
any objection, including, without limitation, any objection to the laying of
venue or based on the grounds of forum non conveniens, which they may now or
hereafter have to the bringing of any such action or proceeding in such courts,
and the right to seek and/or obtain a trial by jury.
10. NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, express overnight
courier, registered first class mail, or telecopier (provided that any notice
sent by telecopier shall be confirmed by other means pursuant to this Section
10), initially to the address set forth below, and thereafter at such other
address, notice of which is given in accordance with the provisions of this
Section.
(a) if to the Company:
Xybernaut Corporation
00000 Xxxx Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
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with a copy to:
Jenkens & Xxxxxxxxx Xxxxxx Xxxxxx LLP
The Chrysler Building
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxx Xxxxxxxx
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
(b) if to Purchaser:
At the address of Purchaser set forth on Exhibit A to this
Agreement.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; when receipt is
acknowledged, if telecopied; or when actually received or refused if sent by
other means.
11. ENTIRE AGREEMENT. This Agreement constitutes the entire understanding
and agreement of the parties with respect to the subject matter hereof and
supersedes all prior and/or contemporaneous oral or written proposals or
agreements relating thereto all of which are merged herein. This Agreement may
not be amended or any provision hereof waived in whole or in part, except by a
written amendment signed by both of the parties.
12. COUNTERPARTS. This Agreement may be executed by facsimile signature and
in counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[the remainder of this page intentionally left blank]
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IN WITNESS WHEREOF, this Agreement was duly executed on the date first
written above.
XYBERNAUT CORPORATION
By:
-------------------------------------
Name:
Title:
SUNDIAL INVESTMENTS, LIMITED
By:
-------------------------------------
Name:
Title:
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EXHIBIT A
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PURCHASER
NAMES AND ADDRESSES NUMBER OF WARRANTS DOLLAR AMOUNT
OF PURCHASER PURCHASED OF INVESTMENT
------------ --------- -------------
Sundial Investments, Limited 3,750,000 $1,750,000
Xxxxxxx Xxxxx
X.X. Xxx 00, Xxxx Xxxxxx
Grand Turk, Turks & Caicos Islands
British West Indies
EXHIBIT B
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FORM OF NOTE
EXHIBIT C
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FORM OF LONG TERM WARRANT
EXHIBIT D
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FORM OF SHORT TERM WARRANT
EXHIBIT E
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FORM OF IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
XYBERNAUT CORPORATION
as of March __ , 2003
[Name and Address of Company's transfer agent]
LADIES AND GENTLEMEN:
Reference is made to that certain Note and Warrant Purchase Agreement,
dated as of March __ , 2003, by and among Xybernaut Corporation, a Delaware
corporation (the "COMPANY"), and the Purchaser named therein (the "PURCHASER")
pursuant to which the Company is issuing to the Purchaser a promissory note (the
"NOTE") and warrants (the "WARRANTS") to purchase shares of the Company's common
stock, par value $.01 per share (the "COMMON STOCK"). This letter shall serve as
our irrevocable authorization and direction to you (provided that you are the
transfer agent of the Company at such time) to issue shares of Common Stock upon
exercise of the Warrants (the "WARRANT SHARES") to or upon the order of a
Purchaser from time to time upon (i) surrender to you of a properly completed
and duly executed Exercise Notice, and (ii) in the case of a Warrant being
exercised, a copy of the Warrant (with the original Warrant delivered to the
Company) being exercised (or, in each case, an indemnification undertaking with
respect to the Warrants in the case of their loss, theft or destruction). So
long as you have previously received (x) written confirmation from counsel to
the Company that a registration statement covering resales of the Warrant
Shares, has been declared effective by the Securities and Exchange Commission
(the "SEC") under the Securities Act of 1933, as amended (the "1933 ACT"), and
no subsequent notice by the Company or its counsel of the suspension or
termination of its effectiveness and (y) a copy of such registration statement,
and if the Purchaser represents in writing that the Warrant Shares were sold
pursuant to the Registration Statement, then certificates representing the
Warrant Shares shall not bear any legend restricting transfer of the Warrant
Shares, and should not be subject to any stop-transfer restriction. Provided,
however, that if you have not previously received (i) written confirmation from
counsel to the Company that a registration statement covering resales of the
Warrant Shares has been declared effective by the SEC under the 1933 Act, and
(ii) a copy of such registration statement, then the certificates for the
Warrant Shares shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE SECURITIES ACT"), OR ANY STATE SECURITIES LAWS
AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
UNLESS REGISTERED UNDER THE SECURITIES ACT OR APPLICABLE
STATE SECURITIES LAWS, OR XYBERNAUT CORPORATION SHALL HAVE
RECEIVED AN OPINION OF COUNSEL THAT REGISTRATION OF SUCH
SECURITIES UNDER THE SECURITIES ACT AND UNDER THE
PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED."
and, provided further, that the Company may from time to time notify you to
place transfer restrictions on the certificates for the Warrant Shares in the
event a registration statement covering the Warrant Shares is subject to
amendment for events then current.
A form of written confirmation from counsel to the Company that a
registration statement covering resales of the Warrant Shares has been declared
effective by the SEC under the 1933 Act is attached hereto as Exhibit I.
Please be advised that each Purchaser is relying upon this letter as an
inducement to enter into the Purchase Agreement and, accordingly, each Purchaser
is a third party beneficiary to these instructions.
Please execute this letter in the space indicated to acknowledge your
agreement to act in accordance with these instructions. Should you have any
questions concerning this matter, please contact me at ___________.
Very truly yours,
XYBERNAUT CORPORATION
By:
-------------------------------------
Name:
-----------------------------
Title:
-----------------------------
ACKNOWLEDGED AND AGREED:
[TRANSFER AGENT]
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
Date:
-------------
cc: Purchaser
EXHIBIT I
---------
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
[Name and address of Company's transfer agent]
Re: XYBERNAUT CORPORATION
---------------------
Ladies and Gentlemen:
We are counsel to Xybernaut Corporation, a Delaware corporation (the
"COMPANY"), and have represented the Company in connection with that certain
Note and Warrant Purchase Agreement (the "PURCHASE AGREEMENT"), dated as of
March __ , 2003, by and between the Company and the Purchaser named therein (the
"PURCHASER") pursuant to which the Company issued to the Purchaser a promissory
Note (the "NOTE") and warrants (the "WARRANTS") to purchase shares of the
Company's common stock, par value $.01 per share (the "COMMON STOCK"). Pursuant
to the Purchase Agreement, the Company agreed, among other things, to register
the Registrable Securities (as defined in the Purchase Agreement), including the
shares of Common Stock issuable upon exercise of the Warrants, under the
Securities Act of 1933, as amended (the "1933 ACT"). In connection with the
Company's obligations under the Purchase Agreement, on ________________, 2003,
the Company filed a Registration Statement on Form S-3 (File No. 333-________)
(the "REGISTRATION STATEMENT") with the Securities and Exchange Commission (the
"SEC") relating to the resale of the Registrable Securities which names the
Purchaser as selling stockholder thereunder.
In connection with the foregoing, we advise you that a member of the
SEC's staff has advised us by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at [ENTER TIME
OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge,
after telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and accordingly, the
Registrable Securities are available for resale under the 1933 Act pursuant to
the Registration Statement.
Very truly yours,
[COMPANY COUNSEL]
By:
-------------------------------------
cc: [LIST NAME OF PURCHASER]
