EXHIBIT 4.1
FORM OF SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT, dated as of March 8, 1999
(this "Agreement"), is entered into by and among XYBERNAUT CORPORATION, a
Delaware corporation (Nasdaq SmallCap Market Symbol "XYBR"), with headquarters
located at 00000 Xxxx Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000 (the "Company"), and
the undersigned entities (the "Buyers").
W I T N E S S E T H:
WHEREAS, the Company and the Buyers are executing and
delivering this Agreement in accordance with and in reliance upon the exemption
from securities registration afforded, inter alia, by Rule 506 under Regulation
D ("Regulation D") as promulgated by the United States Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as amended (the "1933
Act"), Regulation S of the 1933 Act ("Regulation S") and/or Section 4(2) of the
1933 Act; and
WHEREAS, the Buyers wish to purchase and the Company wishes to
sell, upon the terms and subject to the conditions of this Agreement, shares of
Series D Preferred Stock, $.01 par value per share (the "Preferred Stock"), of
the Company which will be convertible into shares of Common Stock, $.01 par
value per share of the Company (the "Common Stock"), upon the terms and subject
to the conditions of the Certificate of Designation for the Preferred Stock
attached hereto as Exhibit 1 (the "Certificate of Designation") and the Common
Stock Purchase Warrant to purchase Common Stock attached hereto as Exhibit 4(l)
(the "Warrants") (the Preferred Stock, the Warrants and shares of Common Stock
issuable upon conversion on the Preferred Stock and the exercise of the Warrants
sometimes collectively referred to herein as the "Securities");
NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. AGREEMENT TO PURCHASE; PURCHASE PRICE.
a. PURCHASE. Each of the undersigned hereby agrees to initially
purchase from the Company its pro rata portion of shares of
Preferred Stock and Warrants for an aggregate purchase price
of $5,000,000 and, subject to the conditions set forth in
Sections 7, 8 and 9 hereof, additional shares of Preferred
Stock and Warrants in a second tranche having an aggregate
purchase price of $5,000,000, in the amount set forth on the
signature page of this Agreement, for a total offering of
$10,000,000 of such Preferred Stock and Warrants. The purchase
price for each share of Preferred Stock shall be $1,000 and
shall be payable in United States Dollars.
b. FORM OF PAYMENT. The Buyers shall pay the purchase price for
the Preferred Stock by delivering immediately available good
funds in United States Dollars to the escrow agent (the
"Escrow Agent") identified in the Escrow Agreement attached
hereto as Exhibit 1(b) (the "Escrow Agreement") as set forth
below.
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c. METHOD OF PAYMENT. Payment into escrow of the purchase price
for each tranche of the Preferred Stock shall be made by wire
transfer of funds to:
CITIBANK N.A.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Account Name: Xxxxxx Xxxxxx Flattau & Klimpl, LLP
Account No.: 00000000
Citibank ABA No.: 000000000
Not later than 2:00 p.m., New York time, on the date the Company and the Buyers
shall have executed this Agreement and returned a signed counterpart of this
Agreement to the Escrow Agent by facsimile, and thereafter on the Tranche II
Closing Date (as defined in Section 7(b) hereof) the Buyers shall deposit with
the Escrow Agent the aggregate purchase price for the appropriate tranche of the
Preferred Stock, in currently available funds.
2. BUYERS' REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO
INFORMATION; INDEPENDENT INVESTIGATION.
The Buyers represent and warrant to, and covenant and agree with, the
Company as follows:
a. None of the Buyers is a "U.S. Person" (as defined in Rule
902(o) of Regulation S). The Buyers are not acquiring the
Preferred Stock, the Warrants and the shares of Common Stock
issuable upon conversion of the Preferred Stock and exercise
of the Warrants for the account or benefit of any U.S. person.
The document effecting this purchase and sale has been
executed by the Buyers outside the "United States" (as defined
in Rule 902(p) of Regulation S).
b. The Securities were not offered to the Buyers in the United
States and at the time of execution of this Agreement and the
time of any offer to the Buyers to purchase the Securities
hereunder, the Buyers were physically outside of the United
States. The offer leading to the sale evidenced hereby was
made in an "offshore transaction" (as defined in Regulation
S).
c. Without limiting Buyers' right to sell the Common Stock
pursuant to a registration statement or an exemption from
registration, the Buyers are purchasing the Preferred Stock
and the Warrants and will be acquiring the shares of Common
Stock issuable upon conversion of the Preferred Stock and
exercise of the Warrants for their own account for investment
only and not with a view towards the public sale or
distribution thereof and not with a view to or for sale in
connection with any distribution thereof;
d. Each of the Buyers is (i) an "accredited investor" as that
term is defined in Rule 501 of the General Rules and
Regulations under the 1933 Act by reason of Rule 501(a)(3),
(ii) experienced in making investments of the kind described
in this Agreement and the related documents, (iii) able, by
reason of the business and financial experience of its
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officers (if an entity) and professional advisors (who are not
affiliated with or compensated in any way by the Company or
any of its affiliates or selling agents), to protect its own
interests in connection with the transactions described in
this Agreement, and the related documents, and (iv) able to
afford the entire loss of its investment in the Securities;
e. The Buyers are not subscribing for the Preferred Stock and the
Warrants as a result of or subsequent to any advertisement,
article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over
television or radio or presented at any seminar;
f. The Buyers will not sell, offer for sale, transfer or
otherwise convey the Preferred Stock, the Warrants or the
shares of Common Stock issuable upon conversion of the
Preferred Stock and exercise of the Warrants (the "Shares" or
"Common Stock") to a U.S. Person or for the account or benefit
of a U.S. Person unless in accordance with the provisions of
Regulation S, pursuant to registration of the Preferred Stock,
the Warrants or the Shares under the 1933 Act or pursuant to
an exemption from registration;
g. The Buyers understand that the shares of Preferred Stock and
the Warrants are being offered and sold, and the Shares are
being offered, to the Buyers in reliance on specific
exemptions from the registration requirements of United States
federal and state securities laws and that the Company is
relying upon the truth and accuracy of, and each of the
Buyers' compliance with, the representations, warranties,
agreements, acknowledgments and understandings of the Buyers
set forth herein in order to determine the availability of
such exemptions and the eligibility of the Buyers to acquire
the Preferred Stock and the Warrants and to receive an offer
of the Shares;
h. The Buyers and their advisors, if any, have been furnished
with all materials relating to the business, finances and
operations of the Company and materials relating to the offer
and sale of the Preferred Stock and the Warrants and the offer
of the Shares which have been requested by the Buyers,
including Schedule 2(h) hereto. The Buyers and their advisors,
if any, have been afforded the opportunity to ask questions of
the Company and have received complete and satisfactory
answers to any such inquiries. Without limiting the generality
of the foregoing, the Buyers have also had the opportunity to
obtain and to review the Company's (1) Annual Report on Form
10-K for the fiscal year ended December 31, 1997, (2)
Quarterly Report on Form 10-Q for the fiscal quarters ended
September 30, 1998, June 30, 1998 and March 31, 1998, (3) Form
8-K dated June 4, 1998, and (4) Form S-3/A filed on January
08, 1999, (collectively, the "Company's SEC Documents").
i. The Buyers understand that their investment in the Securities
involves a high degree of risk;
j. The Buyers understand that no United States federal or state
agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the
Securities;
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k. This Agreement has been duly and validly authorized, executed
and delivered on behalf of the Buyers and is a valid and
binding agreement of the Buyers enforceable in accordance with
its terms, subject as to enforceability to general principles
of equity and to bankruptcy, insolvency, moratorium and other
similar laws affecting the enforcement of creditors' rights
generally;
l. As of the Closing Date, neither the Buyers, their agents nor
any of their affiliates, has a short position in the Common
Stock of the Company.
m. Notwithstanding the provisions hereof or of the Preferred
Stock, in no event (except with respect to an automatic
conversion of the Preferred Stock as provided in the
Certificate of Designation) shall a Buyer be entitled to
convert any shares of Preferred Stock to the extent after such
conversion, the sum of (1) the number of shares of Common
Stock beneficially owned by the Buyers and their affiliates
(other than shares of Common Stock which may be deemed
beneficially owned through the ownership of the unconverted
portion of the Preferred Stock and the unexercised portion of
any Warrants), and (2) the number of shares of Common Stock
issuable upon the conversion of the Preferred Stock and
exercise of the Warrants with respect to which the
determination of this proviso is being made, would result in
beneficial ownership by the Buyers and their affiliates of
more than 4.99% of the outstanding shares of Common Stock. For
purposes of the proviso to the immediately preceding sentence,
beneficial ownership shall be determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), except as otherwise provided in
clause (1) of such proviso. The preceding shall not interfere
with any Buyer's right to convert the Preferred Stock or
exercise the Warrants which in the aggregate total more than
4.99% of the outstanding shares of Common Stock, over time, as
long as no single Buyer owns more than 4.99% of the
outstanding Common Stock at any given time.
3. COMPANY REPRESENTATIONS, ETC.
The Company represents and warrants to the Buyers that:
a. ORGANIZATION AND GOOD STANDING. The Company is a corporation
duly incorporated and existing in good standing under the laws
of the State of Delaware and has all requisite corporate
authority to own its properties and to carry on its business
as now being conducted. The Company is duly qualified as a
foreign corporation to do business and is in good standing in
every jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification
necessary, other than those in which the failure so to qualify
would not be expected to have a material adverse effect on the
business or financial condition of the Company, or materially
and adversely affect the ability of the Company to perform its
obligations pursuant to this Agreement. Except as disclosed in
Schedule 3(a), the Company's SEC Documents or any public
filings made by the Company with the SEC after the date hereof
including the Company's SEC Documents (the "Commission
Filings"), the Company does not presently own or control,
directly or indirectly, any interest in any other corporation,
partnership, association or other business entity.
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b.
CONCERNING THE SHARES. The authorized capital stock of the
Company consists of 40,000,000 shares of Common Stock, $.01
par value per share, and Schedule 3(b) sets forth the number
of shares which are issued and outstanding, and the number of
shares of Preferred Stock, $.01 par value per share, which are
issued and outstanding. All of the outstanding shares of
Common Stock and Preferred Stock of the Company have been duly
and validly authorized and issued and are fully paid and
nonassessable. No shares of Common Stock are subject to
preemptive or similar rights. Except as specifically disclosed
herein, there are no outstanding options, warrants, rights to
subscribe to, calls or commitments of any character whatsoever
relating to, or, except as a result of the purchase and sale
of the Preferred Stock and the Warrants, securities, rights or
obligations convertible into or exchangeable for, or giving
any person any right to subscribe for or acquire, any shares
of Common Stock, or contracts, commitments, understandings, or
arrangements by which the Company or any subsidiary is or may
become bound to issue additional shares of Common Stock or
securities or rights convertible or exchangeable into shares
of Common Stock.
c. NO "DIRECTED SELLING EFFORTS". In connection with the offer
and sale of the Preferred Stock, the Warrants and the Shares,
no distributor or any affiliates or any person acting on
behalf of the Company or any affiliate of the Company or any
distributor has engaged in any "directed selling efforts" (as
such term is defined under Regulation S) nor conducted any
general solicitation relating to the offer to persons residing
within the United States or to "U.S. Persons" (as that term is
defined under Regulation S).
d. REPORTING COMPANY STATUS. The Company has registered its
Common Stock pursuant to Section 12 of the Exchange Act and
the Common Stock is listed and traded on the Nasdaq SmallCap
Market. The Company is in compliance, to the extent
applicable, with all reporting obligations under either
Section 12(b), 12(g) or 15(d) of the Exchange Act. The Company
has complied in all material respects and to the extent
applicable with all reporting obligations, under either
Section 13(a) or 15(d) of the Exchange Act for a period of at
least twelve (12) months immediately preceding the offer and
sale of the Securities. The Company is a "reporting issuer" as
defined in Rule 902 of Regulation S and will remain a
reporting issuer for at least one year from the date hereof.
Except as set forth in Schedule 3(d) hereto, the Company has
received no notice, either oral or written, with respect to
the continued eligibility of the Common Stock for such listing
on the Nasdaq Small Cap Market.
e. AUTHORIZED SHARES. The Company has sufficient authorized and
unissued Shares as may be reasonably necessary to effect the
conversion of the Preferred Stock and the exercise of the
Warrants. The Shares have been duly authorized and, when
issued upon conversion of the Preferred Stock and upon
exercise of the Warrants, will be duly and validly issued,
fully paid and non-assessable and will not subject the holder
thereof to personal liability by reason of being such holder.
f. SECURITIES PURCHASE AGREEMENT; ESCROW AGREEMENT; REGISTRATION
RIGHTS AGREEMENT AND COMMON STOCK. The Company has the
requisite corporate power and authority to enter into and
perform its obligations under this Agreement, and all exhibits
attached hereto, and to issue the Preferred Stock, the
Warrants, and the shares
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of Common Stock underlying the Preferred Stock and the
Warrants. This Agreement, the Escrow Agreement and the
Registration Rights Agreement, the form of which is attached
hereto as Exhibit 4(e) (the "Registration Rights Agreement"),
and the transactions contemplated thereby, have been duly and
validly authorized by the Company, this Agreement has been
duly executed and delivered by the Company and this Agreement
is, and the Escrow Agreement and the Registration Rights
Agreement, when executed and delivered by the Company, will
be, valid and binding agreements of the Company enforceable in
accordance with their respective terms, subject as to
enforceability to general principles of equity and to
bankruptcy, insolvency, moratorium, and other similar laws
affecting the enforcement of creditors' rights generally; and
the Preferred Stock and the Warrants will be duly and validly
authorized and, when executed and delivered on behalf of the
Company in accordance with this Agreement, will be a valid and
binding obligation of the Company in accordance with its
terms, subject to general principles of equity and to
bankruptcy, insolvency, moratorium, or other similar laws
affecting the enforcement of creditors' rights generally.
g. NON-CONTRAVENTION. Except as set forth on Schedule 3(g)(ii)
hereto, the execution and delivery of this Agreement, the
Escrow Agreement and the Registration Rights Agreement by the
Company, the issuance of the Securities, and the consummation
by the Company of the other transactions contemplated by this
Agreement, the Escrow Agreement, the Registration Rights
Agreement, and the Preferred Stock do not and will not
conflict with or result in a breach by the Company of any of
the terms or provisions of, or constitute a default under (i)
the articles of incorporation or by-laws of the Company, each
as currently in effect, (ii) 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 properties or
assets are bound, including any listing agreement for the
Common Stock or any "lock-up" or similar provision of any
underwriting or similar agreements except as herein set forth,
(iii) to its knowledge, any existing applicable law, rule, or
regulation or any applicable decree, judgment, or (iv) to its
knowledge, order of any court, United States federal or state
regulatory body, administrative agency, or other governmental
body having jurisdiction over the Company or any of its
properties or assets, except such conflict, breach or default
which would not have a material adverse effect on the
transactions contemplated herein.
h. COMPLIANCE WITH LAW. The business of the Company is not being
conducted in violation of any law, ordinance or regulation of
any governmental entity, except for possible violations that
either singly or in the aggregate would not be expected to
have a material adverse effect on the business or financial
condition of the Company, or materially and adversely affect
the ability of the Company to perform its obligations pursuant
to this Agreement. The Company is not required under federal,
state or local law, rule or regulation to obtain any consent,
authorization or order of, or make any filing or registration
with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under this
Agreement or issue and sell the Common Stock, Preferred Stock,
or the Warrants, in accordance with the terms hereof.
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i. APPROVALS. No authorization, approval or consent of any court,
governmental body, regulatory agency, self-regulatory
organization, or stock exchange or market or the stockholders
of the Company is required to be obtained by the Company for
the issuance and sale of the Securities to the Buyers as
contemplated by this Agreement, except such authorizations,
approvals and consents that have been obtained.
j. SEC FILINGS. None of the Company's SEC Documents filed with
the SEC since (and including) the filing of the Form 10-K SB
for the fiscal year ended December 31, 1997 contained, at the
time they were filed, any untrue statement of a material fact
or omit to state any material fact required to be stated
therein or necessary to make the statements made therein in
light of the circumstances under which they were made, not
misleading. Except as set forth on Schedule 3(j) hereto, the
Company has since September 30, 1998 timely filed all
requisite forms, reports and exhibits thereto with the SEC and
such filings comply in all material respects with the
requirements of the 1933 Act or the Exchange Act, as the case
may be, and the rules and regulations of the SEC promulgated
thereunder. The Company has not provided to any of the Buyers
any information that, according to applicable law, rule or
regulation, should have been disclosed publicly prior to the
date hereof by the Company, but which has not been so
disclosed. The financial statements of the Company included in
the documents referred to in Section 2(h) hereof comply as to
form in all material respects with applicable accounting
requirements and the published rules and regulations of the
SEC or other applicable rules and regulations with respect
thereto.
k. ABSENCE OF CERTAIN CHANGES. Since the filing of the Company's
Quarterly Report on Form 10-Q for fiscal quarter ended on
September 30, 1998, there has been no material adverse change
and no material adverse development in the business,
properties, operations, financial condition, or results of
operations of the Company, except as disclosed in the
documents referred to in Section 2(h) hereof or the Commission
Filings.
l. FULL DISCLOSURE. There is no fact known to the Company (other
than general economic conditions known to the public
generally) or as disclosed in the documents referred to in
Section 2(h), that has not been disclosed in writing to the
Buyers that (i) would reasonably be expected to have a
material adverse effect on the business or financial condition
of the Company or (ii) would reasonably be expected to
materially and adversely affect the ability of the Company to
perform its obligations pursuant to this Agreement.
m. ABSENCE OF LITIGATION. Except as set forth in Schedule 3(m)
hereto or the Commission Filings, and in the documents
referred to in Section 2(h), which the Buyers have reviewed,
there is no action, suit, proceeding, inquiry or investigation
before or by any court, public board or body pending or, to
the knowledge of the Company, threatened against or affecting
the Company, wherein an unfavorable decision, ruling or
finding would have a material adverse effect on the business
or financial condition of the Company or the transactions
contemplated by this Agreement or any of the documents
contemplated hereby or which would adversely affect the
validity or enforceability of, or the authority or ability of
the Company to perform its obligations
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under, this Agreement or any of such other documents. Except
as set forth in Schedule 3(m) hereto, and in the documents
referenced in Section 2(h) or the Commission Filings, no
judgment, order, decree, writ or award has been issued by, or
to the Company's knowledge, requested of any court,
arbitrator, or governmental agency which would have a material
adverse effect on the business or financial condition of the
Company or the transactions contemplated by this Agreement or
any of the documents annexed hereto, or which would adversely
and materially affect the Company's ability to perform its
obligations under this Agreement or any document annexed
hereto.
n. ABSENCE OF EVENTS OF DEFAULT. Except as set forth in Schedule
3(n) hereto and Section 3(g) or the Commission Filings, no
Event of Default, as defined in the agreement to which the
Company is a party, and no event which, with the giving of
notice or the passage of time or both, would become an Event
of Default (as so defined in such agreement), has occurred and
is continuing, which would have a material adverse effect on
the Company's financial condition or results of operations.
o. PRIOR ISSUES. Schedule 3(o) sets forth all of the presently
outstanding unconverted shares of convertible securities of
the Company as at March 2, 1999.
4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
a. TRANSFER RESTRICTIONS. Each of the Buyers acknowledges that
(1) the shares of Preferred Stock and the Warrants have not
been and are not being registered under the provisions of the
1933 Act and, except as provided in the Registration Rights
Agreement, the Shares have not been and are not being
registered under the 1933 Act, and may not be transferred
unless (A) in accordance with Regulation S, (B) subsequently
registered thereunder or (C) an exemption from registration
exists and the Buyers shall have delivered to the Company any
information reasonably necessary for the Company's independent
counsel to prepare and deliver an opinion of counsel,
reasonably satisfactory in form, scope and substance to the
Company, to the effect that the Securities to be sold or
transferred may be sold or transferred pursuant to an
exemption from such registration; (2) any sale of the
Securities made in reliance on Rule 144 promulgated under the
1933 Act may be made only in accordance with the terms of said
Rule and further, if said Rule is not applicable, any resale
of such Securities under circumstances in which the seller, or
the person through whom the sale is made, may be deemed to be
an underwriter, as that term is used in the 1933 Act, may
require compliance with some other exemption under the 1933
Act or the rules and regulations of the SEC thereunder; and
(3) neither the Company nor any other person is under any
obligation to register the Securities (other than pursuant to
the Registration Rights Agreement) under the 1933 Act or to
comply with the terms and conditions of any exemption
thereunder.
b. The Buyers covenant that they will not knowingly make any
sale, transfer or other disposition of the Preferred Stock,
the Warrants and/or Shares in violation of the 1933 Act
(including Regulation S), the Exchange Act, or the rules and
regulations of the SEC promulgated under any of the foregoing.
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c. The Buyers, their agents and any and all of their affiliates
will abide by all SEC rules and regulations regarding
shorting.
d. RESTRICTIVE LEGEND. Each of the Buyers acknowledges and agrees
that the Preferred Stock, and, until such time as the Common
Stock has been registered under the 1933 Act as contemplated
by the Registration Rights Agreement and sold pursuant to an
effective registration statement ("Registration Statement") or
an exemption from registration, the Shares issued to the Buyer
upon conversion of the Preferred Stock and exercise of the
Warrants shall bear a restrictive legend in substantially the
following form:
THESE SECURITIES (THE "SECURITIES") HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD
OR OFFERED FOR SALE EXCEPT IN ACCORDANCE WITH REGULATION S,
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE
ACCEPTABLE TO THE CORPORATION THAT SUCH REGISTRATION IS NOT
REQUIRED.
e. REGISTRATION RIGHTS AGREEMENT. The parties hereto agree to
enter into the Registration Rights Agreement, in substantially
the form attached hereto as Exhibit 4(e), on or before the
Tranche I Closing Date (as defined in Section 7(b) hereof),
and the Company shall cause such Registration Rights Agreement
to remain in full force and effect for so long as the
Securities are outstanding, and the Company shall comply with
the terms thereof.
f. FILINGS. The Company undertakes and agrees to make all
necessary filings in connection with the sale of the Preferred
Stock and the Warrants to the Buyers under any United States
laws and regulations, or by any domestic securities exchange
or trading market, and to provide a copy thereof to the Buyers
promptly after such filing.
g. REPORTING STATUS. So long as the Buyers beneficially own any
of the Preferred Stock and/or the Warrants, the Company shall
file all reports required to be filed with the SEC pursuant to
Section 13 or 15(d) of the Exchange Act, and the Company shall
not terminate its status as an issuer required to file reports
under the Exchange Act even if the Exchange Act or the rules
and regulations thereunder would permit such termination.
h. USE OF PROCEEDS. The Company will use the proceeds from the
sale of the Preferred Stock and the Warrants (excluding
amounts paid by the Company for legal fees and finder's fees
in connection with the sale of the Preferred Stock and the
Warrants) for the production and marketing of the Company's
Mobile Assistant(R)IV and related products and for general
working capital purposes and acquisitions; provided, however,
no proceeds from the sale of the Preferred Stock or the
Warrants will be used directly or indirectly to engage in a
transaction or any transaction with an Affiliate (as
hereinafter defined)of the Company. For purposes of this
section, "Affiliate" shall mean a person
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that directly, or indirectly through one or more
intermediaries controls, or is controlled by, or is under
common control with such designated person.
i. CERTAIN AGREEMENTS. (i) The Company covenants and agrees that
it will not, without the prior written consent of the Buyers,
enter into any subsequent or further offer or sale of Common
Stock or securities convertible into Common Stock with any
third party ("Subsequent Financing") until the earlier of (a)
the date which is one hundred eighty (180) days after the
Effective Date (as defined below) or (b) the date on which 85%
of the Preferred Stock shares have been converted into shares
of Common Stock (the "Non-Financing Period"). If the Company
receives a proposal for a Subsequent Financing during the
Non-Financing Period, upon receipt of such proposed terms the
Company covenants and agrees to promptly furnish a notice to
the Buyers which sets forth the terms of the proposed
Subsequent Financing. The Buyers shall have the right,
exercisable for a period of ten (10) days after receipt of the
written notice from the Company, to consummate the Subsequent
Financing with the Company on the same terms and conditions as
the proposed Subsequent Financing within ten (10) days after
making the election. If the Buyers do not exercise their right
to consummate the Subsequent Financing as set forth herein,
the Company shall be free to enter into the proposed
Subsequent Financing on substantially the same terms as
disclosed to the Buyers. If the Buyers exercise their right
within such ten (10) day period but do not close the
Subsequent Financing, other than due to a breach by the
Company, the Buyers shall be liable to the Company if the
counterparty to the Subsequent Financing no longer wishes to
engage in the transaction. Notwithstanding the foregoing, the
Company may enter into a Subsequent Financing without the
prior written consent of the Buyers if such Subsequent
Financing is exempt from securities registration under
Regulation D and the Company is not required to file a
registration statement with respect to the underlying
securities within one hundred twenty (120) days of the
Effective Date (as defined below) or if the proceeds from such
Subsequent Financing are used to redeem all of the then
outstanding Preferred Stock.
(ii) Subject to the conditions of subparagraph (i)(iv), the
provisions of subparagraph (i)(i) will not apply to (x) the issuance of
securities (other than for cash) in connection with a merger, consolidation,
strategic alliance, sale of assets, disposition or entering into a binding
agreement with an investment banking firm of recognized regional or national
status to obtain financing and provide investment banking services or (y) the
exchange of the capital stock for assets, stock or other joint venture
interests.
(iii) The term "Effective Date" means the effective date of
the Registration Statement covering the Registrable Securities (as defined in
the Registration Rights Agreement).
(iv) Notwithstanding the foregoing, the provisions of this
paragraph 4(i) shall be null and void if the Buyers fail to pay the full
purchase price on the Tranche II Closing Date.
j. AVAILABLE SHARES. The Company shall have at all times
authorized and reserved for issuance, free from preemptive
rights, shares of Common Stock sufficient to yield the number
of shares of Common Stock issuable upon conversion and/or
exercise as may be required to satisfy the conversion rights
of the Buyers pursuant to the terms and
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conditions of the Preferred Stock and the exercise rights of
the Buyers pursuant to the terms of the Warrants.
k. DILUTION. The Company acknowledges that the number of Shares
issuable upon conversion of the Preferred Stock and/or
exercise of the Warrants may increase substantially in certain
circumstances, including, but not limited to, when the trading
price of the Common Stock declines prior to a conversion and
that the issuance of the Shares upon such a conversion of the
Preferred Stock may have a dilutive effect of the ownership
interest of the other shareholders of the Company.
l. WARRANTS. The Company agrees to issue to each of the Buyers on
each Closing Date such Buyers' pro rata share of the Warrants
to purchase an aggregate of two hundred thousand (200,000)
shares of Common Stock per $10,000,000 of Preferred Stock
purchased (or such pro rata amount if more or less than
$10,000,000 is purchased). Such Warrants shall bear an
exercise price equal to one hundred twenty-five percent (125%)
of the Closing Price (as defined in the Warrant) and shall
expire on the third anniversary of the issuance date of the
Warrant, in the form annexed hereto as Exhibit 4(l), together
with registration rights granted pursuant to the Registration
Rights Agreement.
m. LISTING OF COMMON STOCK. The Company shall (a) as soon as
practicable, prepare and file with the Nasdaq Small Cap Market
(as well as any other national securities exchange, market or
trading facility on which the Common Stock is then listed) an
additional shares listing application covering the amount of
shares of Common Stock issued upon the conversion of the
Series D Preferred Stock or the exercise of the Warrants, (b)
take all steps necessary to cause such shares to be approved
for listing on the Nasdaq Small Cap Market (as well as on any
other national securities exchange, market or trading facility
on which the Common Stock is then listed) as soon as possible
thereafter, and (c) provide to the Buyers evidence of such
listing, and the Company shall maintain the listing of its
Common Stock on such exchange or market. The Company will
comply with the listing and trading requirements of its Common
Stock on Nasdaq Small Cap Market (including, without
limitation, maintaining sufficient net tangible assets) and
will comply in all respects with the Company's reporting,
filing and other obligations under the bylaws or rules of the
Nasdaq Small Cap Market. In the event the Company receives
notification from Nasdaq or any other controlling entity
stating that the Company is not in compliance with the listing
qualifications of the Nasdaq Small Cap Market, the Company
will take all action necessary to bring the Company within
compliance with all applicable listing standards of the Nasdaq
Small Cap Market.
n. EXCHANGE ACT REGISTRATION. The Company will maintain the
registration of its Common Stock under Section 12 of the
Exchange Act, will comply in all respects with its reporting
and filing obligations under the Exchange Act, and will not
take any action or file any document (whether or not permitted
by Exchange Act or the rules thereunder) to terminate or
suspend such registration or to terminate or suspend its
reporting and filing obligations under said Act.
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o. CORPORATE EXISTENCE. The Company will take all steps necessary
to preserve and continue the corporate existence of the
Company.
p. NOTICE OF CERTAIN EVENTS AFFECTING REGISTRATION. The Company
will immediately notify each of the Buyers upon the occurrence
of any of the following events in respect of a registration
statement or related prospectus in respect of an offering of
Registrable Securities (as defined in the Registration Rights
Agreement): (i) receipt of any request for additional
information by the SEC or any other federal or state
governmental authority during the period of effectiveness of
the Registration Statement for amendments or supplements to
the Registration Statement or related prospectus; (ii) the
issuance by the SEC or any other federal or state governmental
authority of any stop order suspending the effectiveness of
the Registration Statement or the initiation of any
proceedings for that purpose; (iii) receipt of any
notification with respect to the suspension of the
qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose;
(iv) the happening of any event that makes any statement made
in the Registration Statement or related prospectus or any
document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires the
making of any changes in the Registration Statement, related
prospectus or documents so that, in the case of the
Registration Statement, it will not contain any untrue
statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading, and that in the case of the
related prospectus, it will not contain any untrue statement
of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they
were made, not misleading; and (v) the Company's reasonable
determination that a post-effective amendment to the
Registration Statement would be appropriate. The Company will
promptly make available to the Buyers any such supplement or
amendment to the related prospectus.
q. LEGAL OPINION. The Company's independent counsel shall deliver
to the Buyers upon execution of this Agreement and upon the
Closing of the second tranche (dated as of the Tranche II
Closing Date), an opinion in the form of Exhibit 4(q). The
Company will obtain for the Buyers, at the Company's expense,
any and all opinions of counsel which may be reasonably
required in order to convert the Preferred Stock and/or
exercise the Warrants, including, but not limited to,
obtaining for the Buyers an opinion of counsel, subject only
to receipt of a notice of conversion, and/or subject only to a
receipt of a notice of exercise in the form annexed to the
Warrant, and in connection with the resale of the Shares by
the Buyers directing the transfer agent to remove the legend
from the certificate.
r. PERMITTED OFFERINGS. Notwithstanding anything to the contrary
set forth herein (including, without limitation, Section 4(i)
hereof), the Company shall be permitted to issue and sell its
Common Stock or securities, convertible into its Common Stock
in a registered offering or private placement, provided, that
the proceeds of such offering shall be applied first to redeem
all the Preferred Stock in accordance with the terms of
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the Certificate of Designation and after all the Preferred
Stock has been so redeemed, any remaining proceeds may be used
in accordance with the Company's direction.
5. TRANSFER AGENT INSTRUCTIONS.
a. Promptly following the Tranche I Closing Date, the Company
will irrevocably instruct its transfer agent to issue Common
Stock from time to time upon conversion of the Preferred Stock
and/or exercise of the Warrants in such amounts as specified
from time to time by the Company to the transfer agent,
bearing the restrictive legend specified in Section 4(d) of
this Agreement prior to registration of the Shares under the
1933 Act and resale of the Shares, registered in the name of
the Buyers or its nominee and in such denominations to be
specified by the Buyers in connection with each conversion of
the Preferred Stock and/or exercise of the Warrants. The
Company warrants that no instruction other than such
instructions referred to in this Section 5 and stop transfer
instructions to give effect to Section 4(a) hereof prior to
registration and sale of the Shares under the 1933 Act will be
given by the Company to the transfer agent and that the Shares
shall otherwise be freely transferable on the books and
records of the Company as and to the extent provided in this
Agreement, the Registration Rights Agreement, and applicable
law. Nothing in this Section shall affect in any way the
Buyers' obligations and agreement to comply with all
applicable securities laws upon resale of the Securities. If
the Buyers provide the Company with an opinion of counsel
reasonably satisfactory to the Company that registration of a
resale by the Buyers of any of the Securities in accordance
with clause (1)(B) of Section 4(a) of this Agreement is not
required under the 1933 Act, the Company shall (except as
provided in clause (2) of Section 4(a) of this Agreement)
permit the transfer of the Shares and, in the case of the
Shares, promptly instruct the Company's transfer agent to
issue one or more certificates for Common Stock without legend
in such name and in such denominations as specified by the
Buyers.
b. The Company will permit the Buyers to exercise its right to
convert the Preferred Stock by telecopying an executed and
completed Notice of Conversion to the Company and delivering
within three (3) business days thereafter, the original Notice
of Conversion and the certificates representing the Preferred
Stock being converted to the Company by express courier, with
a copy to the transfer agent. Each date on which a Notice of
Conversion is telecopied to and received by the Company in
accordance with the provisions hereof shall be deemed a
Conversion Date. The Company will transmit the certificates
representing the Converted Shares issuable upon conversion of
any Preferred Stock (together with certificates representing
the Preferred Stock not being so converted) to the Buyer via
express courier, by electronic transfer or otherwise, within
three (3) business days after receipt by the Company of the
original Notice of Conversion and the certificate representing
the Preferred Stock being converted (the "Delivery Date").
c. The Company understands that a delay in the issuance of the
Shares of Common Stock beyond the Delivery Date could result
in economic loss to the Buyers. As compensation to the Buyers
for such loss, the Company agrees to pay late payments to the
Buyers for late issuance of Shares upon Conversion in
accordance with the
E-15
following schedule (where "No. Business Days Late" is defined
as the number of business days beyond five (5) business days
from Delivery Date); provided, however, the Company shall not
be obligated to make any payment under this Section if the
cause of such delay in the issuance of the Shares of Common
Stock is not caused by the Company or is the result of an act,
omission or circumstance beyond the control of the Company
and/or its agents.
Late Payment For Each
$10,000 of Initial Preferred Stock
No. Business Days Late Principal Amount Being Converted
1 $100
2 $200
3 $300
4 $400
5 $500
6 $600
7 $700
8 $800
9 $900
10 $1,000
>10 $1,000 +$200 for each
Business Day Late
beyond 10 days
The Company shall pay any payments incurred under this Section in immediately
available funds upon demand. Nothing herein shall limit each of the Buyer's
right to pursue actual damages for the Company's failure to issue and deliver
the Common Stock to that Buyer. Furthermore, in addition to any other remedies
which may be available to the Buyers, in the event that the Company fails for
any reason to effect delivery of such shares of Common Stock within five (5)
business days after the Delivery Date, the Buyers will be entitled to revoke the
relevant Notice of Conversion by delivering a notice to such effect to the
Company whereupon the Company and the Buyers shall each be restored to their
respective positions immediately prior to delivery of such Notice of Conversion.
d. Subject to the completeness and accuracy of each of the
Buyer's representations and warranties herein, upon the
conversion of any Preferred Stock by a person who is a
non-U.S. Person, and following the expiration of any
applicable Restricted Period (as those terms are defined in
Regulation S), the Company, shall, at its expense, take all
necessary action (including the issuance of an opinion of
counsel) to assure that the Company's transfer agent shall
issue stock certificates without restrictive legend or stop
orders in the name of the Buyer (or its nominee (being a
non-U.S. Person) or such non-U.S. Persons as may be designated
by the Buyer) and in such denominations to be specified at
conversion representing the number of shares of Common Stock
issuable
E-16
upon such conversion, as applicable. Nothing in this Section
5, however, shall affect in any way the Buyers' or such
nominee's obligations and agreement to comply with all
applicable securities laws upon resale of the Securities.
e. In lieu of delivering physical certificates representing the
Common Stock issuable upon conversion, provided the Company's
transfer agent is participating in the Depository Trust
Company ("DTC") Fast Automated Securities Transfer program,
upon request of the Buyers and their compliance with the
provisions contained in this paragraph, so long as the
certificates therefor do not bear a legend and the Buyers
thereof are not obligated to return such certificate for the
placement of a legend thereon, the Company shall use its best
efforts to cause its transfer agent to electronically transmit
the Common Stock issuable upon conversion to the Buyers by
crediting the account of the Buyers' Prime Broker with DTC
through its Deposit Withdrawal Agent Commission system.
6. DELIVERY INSTRUCTIONS.
The Preferred Stock shall be delivered by the Company to the
Escrow Agent pursuant to Section 1(b) hereof, on a delivery against payment
basis on each Closing Date.
7. CLOSING DATE.
a. The date and time of the issuance and sale of each tranche of
the Preferred Stock (each, a "Closing Date") shall occur no
later than 1:00 P.M., New York time on the date of the
fulfillment or waiver of all of the closing conditions
pursuant to Sections 8 and 9, or such other mutually agreed to
time. The closing shall occur on such date at the offices of
the Escrow Agent. Notwithstanding anything to the contrary
contained herein, the Escrow Agent will be authorized to
release the funds representing the Purchase Price for the
Preferred Stock and the Warrants, and the Preferred Stock and
the Warrants only upon satisfaction of each of the conditions
set forth in Sections 8 and 9 hereof.
b. Notwithstanding anything to the contrary contained in Section
7(a), the Closing Date of the first tranche of $5,000,000
shall be upon the execution by the parties of this Agreement,
and the payment of the Purchase Price and the delivery of the
original stock certificates evidencing the Preferred Stock and
the Warrants (the "Tranche I Closing Date") and the Closing
Date of the second tranche of $5,000,000 shall be within three
(3) business days of the Effective Date (the "Tranche II
Closing Date"); provided, that such Closing Date is a business
day, and, if not, then the immediately following business day.
8. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
Each of the Buyers understands that the Company's obligation
to sell the Preferred Stock and the Warrants on each Closing Date to the Buyers
pursuant to this Agreement is conditioned upon:
E-17
a. Acceptance by the Buyers of this Agreement as evidenced by
execution of this Agreement and all agreements annexed hereto
by the Buyers for at least $10,000,000 of Preferred Stock (or
such lesser amount as the Company, in its sole discretion,
shall determine);
b. Delivery by the Buyers to the Escrow Agent of good funds as
payment in full of an amount equal to the Purchase Price for
the Preferred Stock and the Warrants in accordance with
Section 1(c) hereof;
c. The accuracy in all material respects on each Closing Date of
the representations and warranties of the Buyers contained in
this Agreement as if made on such Closing Date, except for
representation and warranties that are expressly made as of a
particular date, and the performance by the Buyers on or
before each Closing Date of all covenants and agreements of
the Buyers required to be performed on or before such Closing
Date;
d. There shall not be in effect any law, rule or regulation
prohibiting or restricting the transactions contemplated
hereby, or requiring any consent or approval which shall not
have been obtained.
9. CONDITIONS TO EACH BUYERS' OBLIGATION TO PURCHASE.
The Company understands that each Buyer's obligation to
purchase the Preferred Stock on each Closing Date is conditioned upon:
a. Acceptance by the Company of an Agreement for the sale of
Preferred Stock and the Warrants, as evidenced by execution of
this Agreement and all agreements annexed hereto by the
Company;
b. Delivery by the Company to the Escrow Agent of the original
shares of Preferred Stock and the Warrants in accordance with
this Agreement;
c. The accuracy in all material respects on each Closing Date of
the representations and warranties of the Company contained in
this Agreement as if made on each Closing Date, except for
representation and warranties that are expressly made as of a
particular date, and the performance by the Company on or
before each Closing Date of all covenants, agreements and
conditions of the Company required by this Agreement, the
Registration Rights Agreement, the Escrow Agreement and the
Warrants to be performed on or before each Closing Date; and
d. On each Closing Date, the Buyers having received an opinion of
counsel for the Company, dated as of such Closing Date, in
form, scope and substance reasonably satisfactory to the
Buyers, to the effect set forth in Exhibit 4(q) attached
hereto, and the Registration Rights Agreement annexed hereto
as Exhibit 4(e).
e. The Company shall have obtained all permits and qualifications
required by any state for the offer and sale of the Preferred
Stock and the Warrants, or shall have the availability of
exemptions therefrom. The sale and issuance of the Preferred
Stock and
E-18
the Warrants shall be legally permitted by all laws and
regulations to which the Company is subject.
f. No statute, rule, regulation, executive order, decree, ruling
or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent
jurisdiction that materially prohibits or directly, materially
and adversely affects any of the transactions contemplated by
this Agreement, and no proceeding shall have been commenced
that may have the effect of materially prohibiting or
adversely affecting any of the transactions contemplated by
this Agreement.
g. Since the Tranche I Closing Date, no event that had or is
reasonably likely to have a material adverse effect on the
business or financial condition of the Company, or materially
and adversely affect the ability of the Company to perform its
obligations pursuant to this Agreement has occurred.
h. The trading of the Common Stock is not suspended by the SEC,
the Nasdaq Small Cap Market or such other exchange, and the
Common Stock shall have been approved for listing or quotation
on and shall not have been delisted from the Nasdaq Small Cap
Market. The issuance of shares of Preferred Stock and the
Warrants with respect to the applicable Closing, if any, shall
not violate the shareholder approval requirements of the
Nasdaq Small Cap Market.
i. The parties hereto shall have entered into the Escrow
Agreement to hold the Preferred Stock and the Warrants
issuable upon each Closing Date and the Purchase Prices due
hereunder, which shall remain in full force and effect as of
each Closing Date.
j. On each Closing Date the Company will deliver a certificate of
an officer of the Company confirming the satisfaction of the
conditions set forth in Sections 9(c), (f) and (g) hereof;
provided that the statements regarding compliance with Section
9(f) shall be limited to rules, regulations, orders, executive
degrees, rulings, injunctions or proceedings applicable to the
Company.
10. GOVERNING LAW; SPECIFIC PERFORMANCE.
This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Delaware without giving effect to the
principles thereof regarding the conflict of laws. Each of the parties consents
to the exclusive jurisdiction of the federal courts whose districts encompass
any part of the State of Delaware in connection with any dispute arising under
this Agreement and hereby waives, to the maximum extent permitted by law, any
objection, including any objection based on FORUM NON CONVENIENS, to the
bringing of any such proceeding in such jurisdictions. Each party waives its
right to a trial by jury. Each party to this Agreement irrevocably consents to
the service of process in any such proceeding by the mailing of copies thereof
by registered or certified mail, postage prepaid, to such party at its address
set forth herein. Nothing herein shall affect the right of any party to serve
process in any other manner permitted by law.
11. NOTICES. Any notice required or permitted hereunder shall be given in
writing (unless otherwise specified herein) and shall be deemed
effectively given, (i) on the date delivered, (a)
E-19
by personal delivery, or (b) if advance copy is given by fax, (ii)
seven business days after deposit in the United States Postal Service
by regular or certified mail, or (iii) three business days mailing by
international express courier, with postage and fees prepaid, addressed
to each of the other parties thereunto entitled at the following
addresses, or at such other addresses as a party may designate by ten
days advance written notice to each of the other parties hereto.
COMPANY: XYBERNAUT CORPORATION
00000 Xxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxxx X. Xxxxxx, Vice Chairman
Telecopier No.: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxx Flattau & Klimpl, LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxx Xxxxxxxx, Esq.
Telecopier No.: (000) 000-0000
BUYER: At the address set forth on Schedule of Buyers
attached hereto.
with a copy to:
Xxxxxxx & Prager
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telecopier No.: (000) 000-0000
ESCROW AGENT: Xxxxxx Xxxxxx Flattau & Klimpl, LLP
0000 Xxxxxx xx xxx Xxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No. (000) 000-0000
12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The Company's
representations and warranties shall survive the execution and delivery
hereof of this Agreement and the delivery of the Preferred Stock and
the Purchase Price, and shall inure to the benefit of the Buyers and
their respective successors and assigns. The Company's covenants set
forth in Section 5 hereof shall terminate upon the redemption of all of
the
E-20
Preferred Stock in accordance with the Company's Certificate of
Designation for the Preferred Stock.
13. MISCELLANEOUS
a. INDEMNIFICATION. The Company agrees to indemnify and hold
harmless each of the Buyers and each officer, director of the
Buyers or person, if any, who controls the Buyers within the
meaning of the Securities Act against any losses, claims,
damages or liabilities, joint or several (which shall, for all
purposes of this Agreement, include, but not be limited to,
all costs of defense and investigation and all attorneys'
fees), to which the Buyers may become subject, under the
Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise
out of or are based upon the breach of any term of this
Agreement. This indemnity agreement will be in addition to any
liability which the Company may otherwise have.
b. ATTORNEYS' FEES. The Company agrees to pay the following
amounts for attorneys' fees and expenses incurred by the
Buyers in connection with negotiating the terms of this
Agreement and the transactions contemplated hereby:
i. $10,000 upon the closing of the first tranche of
$5,000,000; and
ii. $2,500 upon the closing of the second tranche of
$5,000,000.
c. ASSIGNMENT. The provisions of this Agreement shall be binding
upon and inure to the benefit of, the parties and their
respective successors and assigns.
d. COUNTERPARTS; FACSIMILE; AMENDMENTS. This Agreement may be
executed in multiple counterparts, each of which may be
executed by less than all of the parties and shall be deemed
to be an original instrument which shall be enforceable
against the parties actually executing such counterparts and
all of which together shall constitute one and the same
instrument. Except as otherwise stated herein, in lieu of the
original documents, a facsimile transmission or copy of the
original documents shall be as effective and enforceable as
the original. This Agreement may be amended only by a writing
executed by the Company on the one hand, and all of the
Buyers, on the other hand.
e. ENTIRE AGREEMENT. This Agreement and the Exhibits, which
include, but are not limited to the Certificate of
Designation, the Warrant, the Escrow Agreement, and the
Registration Rights Agreement, set forth the entire agreement
and understanding of the parties relating to the subject
matter hereof and supersedes all prior and contemporaneous
agreements, negotiations and understandings between the
parties, both oral and written relating to the subject matter
hereof. The terms and conditions of all Exhibits and Schedules
to this Agreement are incorporated herein by this reference
and shall constitute part of this Agreement as is fully set
forth herein.
E-21
f. SEVERABILITY. In the event that any provision of this
Agreement becomes or is declared by a court of competent
jurisdiction to be illegal, unenforceable or void, this
Agreement shall continue in full force and effect without said
provision; provided that such severability shall be
ineffective if it materially changes the economic benefit of
this Agreement to any party
g. TITLE AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement.
h. REPORTING ENTITY FOR THE COMMON STOCK. The reporting entity
relied upon for the determination of the trading price or
trading volume of the Common Stock on any given trading day
for the purposes of this Agreement and all Exhibits shall be
Bloomberg, L.P. or any successor thereto. The written mutual
consent of the Buyers and the Company shall be required to
employ any other reporting entity.
i. REPLACEMENT OF CERTIFICATES. Upon (i) receipt of evidence
reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of a certificate representing the
Preferred Stock, the Warrants, or shares of Common Stock
underlying the Preferred Stock or the Warrants, and (ii) in
the case of any such loss, theft or destruction of such
certificate, upon delivery of an indemnity agreement or
security reasonably satisfactory in form and amount to the
Company or (iii) in the case of any such mutilation, on
surrender and cancellation of such certificate, the Company at
its expense will execute and deliver, in lieu thereof, a new
certificate of like tenor.
j. PUBLICITY. The Company and the Buyers shall consult with each
other in issuing any press releases or otherwise making public
statements with respect to the transactions contemplated
hereby and no party shall issue any such press release or
otherwise make any such public statement without the prior
written consent of the other parties, which consent shall not
be unreasonably withheld or delayed, except that no prior
consent shall be required if such disclosure is required by
law, in which such case the disclosing party shall provide the
other parties with prior notice of such public statement.
Notwithstanding the foregoing, the Company shall not publicly
disclose the name of the Buyers without the prior written
consent of the Buyers, except to the extent required by law,
in which case the Company shall provide the Buyers with prior
written notice of such public disclosure.
[end of page]
E-22
IN WITNESS WHEREOF, this Agreement has been duly executed by
the Buyers or one of their officers thereunto duly authorized as of the date
first above written.
XYBERNAUT CORPORATION
By:
Name: Xxxxxx X. Xxxxxx
Title: Vice Chairman
CRYSTALITE INVESTMENTS LTD. (BVI)
By:
Name:
Title:
BULK TRADE INC. (BVI)
By:
Name:
Title:
E-23
SCHEDULE OF BUYERS TO THE
SERIES D CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
FOR XYBERNAUT CORPORATION
NUMBER OF INVESTOR'S REPRESENTATIVES'
INVESTOR ADDRESS SHARES OF PREFERRED ADDRESS
INVESTOR NAME AND FACSIMILE NUMBER STOCK AND FACSIMILE NUMBER
------------- -------------------- ------------------- ---------------------------
Crystalite Investments Ltd 000 Xxxxxxxxx Xx. Xxxxxxx X: 3,000 Xxxxxx X. Xxxxxxx, Esq.
Tel Aviv Israel Tranche II: 3,000 Xxxxxxx and Xxxxxx, Esqs.
Facsimile No: 011-972-3-6910476 000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
Bulk Trade Inc (BVI) Akara Building Tranche I: 2,000 Xxxxxx X. Xxxxxxx, Esq.
Wickhams Cay #1 Tranche II: 2,000 Xxxxxxx and Xxxxxx, Esqs.
Road Town, Tortola 000 Xxxxx Xxxxxx
XXX Xxx Xxxx, Xxx Xxxx 00000
Facsimile No: Facsimile No.: (212) 213-2077
E-24
