Exhibit 4.3
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
THIS COMMON STOCK AND WARRANT PURCHASE AGREEMENT is dated as of
December 20, 2004 (this "Purchase Agreement"), by and between XYBERNAUT
CORPORATION, a Delaware corporation, having its principal place of business
located at 00000 Xxxx Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000 (the
"Company"), and WESTERN VENTURES LTD., a company incorporated under the laws of
Anguilla, having its principal place of business located at 0 Xxx Xxxxx Xxxxxx,
Xxx Xxxx, Xxxxxx (the "Investor").
W I T N E S S E T H
WHEREAS, the Company wishes to sell to the Investor, and the Investor
is willing to purchase from the Company, subject to the terms and conditions set
forth herein, $5,000,000 (the "Purchase Price") of shares of common stock, par
value $.01 per share (the "Common Stock"), of the Company.
NOW, THEREFORE, for and in consideration of the premises and the mutual
agreement contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. PURCHASE AND SALE; MUTUAL DELIVERIES. (a) Upon the following terms
and conditions, the Company shall issue and sell to the Investor and the
Investor shall purchase from the Company that number of shares of Common Stock
equal to $5,000,000 divided by $0.9272 cents per share, which price is based
upon an approximately 20% discount to the average closing bid price of the
Common Stock for the ten (10) trading days ending on December 7, 2004 (the
"Closing Price"), resulting in 5,392,580 shares (the "Shares") to be issued upon
the payment, in cash or through the reduction or cancellation of existing
indebtedness of the Company to the Investor, of the Purchase Price. Upon receipt
of the Purchase Price, which payment and receipt must occur not later than 5:00
p.m. New York Time on or before Monday, December 20, 2004 (the "Closing Date"),
the Company shall deliver to the Investor one or more certificates representing
the Shares, bearing substantially the following legend:
THE SECURITIES REPRESENTED HEREBY (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 IN THE ABSENCE OF 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.
(b) The Company shall also deliver, or cause to be delivered, the
original or execution copies of this Purchase Agreement.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to the Investor that:
(a) The Company has the corporate power and authority to enter into
this Purchase Agreement, and to perform its obligations hereunder. The
execution and delivery by the Company of this Purchase Agreement and the
consummation by the Company of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of the
Company. This Purchase Agreement has been duly executed and delivered by
the Company and constitute the valid and binding obligation of the Company
enforceable against it in accordance with their respective terms, subject
to the effects of any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally and to
general equitable principles.
(b) Except as set forth in the SEC Documents (as hereinafter
defined), there is no pending, or to the knowledge of the Company,
threatened, judicial, administrative or arbitral action, claim, suit,
proceeding or investigation which might affect the validity or
enforceability of this Purchase Agreement or which involves the Company and
which if adversely determined, could reasonably be expected to have a
material adverse effect on the Company and its subsidiaries taken as a
whole.
(c) No consent or approval of, or exemption by, or filing with, any
party or governmental or public body or authority is required in connection
with the execution, delivery and performance under this Purchase Agreement
or the taking of any action contemplated hereunder or thereunder.
(d) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation.
(e) The execution, delivery and performance of this Agreement by the
Company, and the consummation of the transactions contemplated hereby, will
not (i) violate any provision of the Company's certificate of incorporation
or bylaws, (ii) violate, conflict with or result in the breach of any of
the terms of, result in a material modification of the effect of,
otherwise, give any other contracting party the right to terminate, or
constitute (or with notice or lapse of time or both constitute) a default
under, any contract or other agreement to which the Company is a party or
by or to which the Company or any of the Company's assets or properties may
be bound or subject, (iii) violate any order, judgment, injunction, award
or decree of any court, arbitrator or governmental or regulatory body by
which the Company, or the assets or properties of the Company are bound and
(iv) to the Company's knowledge, violate any statute, law or regulation.
3. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR. The Investor hereby
represents and warrants to the Company that:
(a) The Investor has the corporate power and authority to enter into
this Purchase Agreement and to perform its obligations hereunder. The
execution and delivery by the Investor of this Purchase Agreement, and the
consummation by the Investor of the transactions contemplated hereby, have
been duly authorized by all necessary corporate action on the part of the
Investor. This Purchase Agreement
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has been duly executed and delivered by the Investor and constitute the
valid and binding obligation of the Investor, enforceable against it in
accordance with their respective terms, subject to the effects of any
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally and to general equitable
principles.
(b) The execution, delivery and performance by the Investor of this
Purchase Agreement, and the consummation of the transactions contemplated
hereby, do not and will not breach or constitute a default under any
applicable law or regulation or of any agreement, judgment, order, decree
or other instrument binding on the Investor.
(c) The Investor has such knowledge and prior substantial investment
experience in financial and business matters, including investment in
non-listed and non-registered securities, and has had the opportunity to
engage the services of an investment advisor, attorney or accountant to
read the SEC Documents and to evaluate the merits and risks of investment
in the Company and the Securities.
(d) The Investor is an "accredited investor" as that term is defined
in Rule 501(a) of Regulation D promulgated under the Securities Act of
1933, as amended (the "Securities Act").
(e) The Investor is not a "U.S. Person" as that term is defined in
Regulation S promulgated under the Securities Act.
(f) The Investor is acquiring the Shares, the Investor Warrants (as
defined in Section 4(d)) and the shares of Common Stock issuable upon
exercise of the Investor Warrants (the "Warrant Shares") solely for the
Investor's own account for investment and not with a view to or for sale in
connection with a distribution of any of the Shares or the Warrant Shares
(the Shares, Warrants and Warrant Shares collectively, the "Securities");
(g) The Investor does not have a present intention to sell the
Securities, nor a present arrangement or intention to effect any
distribution of any of the Securities to or through any person or entity
for purposes of selling, offering, distributing or otherwise disposing of
any of the Securities;
(h) The Investor may be required to bear the economic risk of the
investment indefinitely because none of the Securities may be sold,
hypothecated or otherwise disposed of unless subsequently registered under
the Securities Act and applicable state securities laws or an exemption
from registration is available. Any resale of any of the Securities can be
made only pursuant to (i) a registration statement under the Securities Act
which is effective and current at the time of sale or (ii) a specific
exemption from the registration requirements of the Securities Act. In
claiming any such exemption, the Investor will, prior to any offer or sale
or distribution of any Securities advise the Company and, if requested,
provide the Company with a favorable written opinion of counsel, in form
and substance satisfactory to counsel to the Company, as to the
applicability of such exemption to the proposed sale or distribution;
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(i) The Investor understands that the exemption afforded by Rule 144
promulgated by the Securities and Exchange Commission under the Securities
Act ("Rule 144") will not become available for at least one year from the
date of payment for the Securities and any sales in reliance on Rule 144,
if then available, can be made only in accordance with the terms and
conditions of that rule, including, among other things, a requirement that
the Company then be subject to, and current, in its periodic filing
requirements under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and, among other things, a limitation on the amount of
shares of Common Stock that may be sold in specified time periods and the
manner in which the sale can be made; that, while the Company's Common
Stock is registered under the Exchange Act and the Company is presently
subject to the periodic reporting requirements of the Exchange Act, there
can be no assurance that the Company will remain subject to such reporting
obligations or current in its filing obligations; and that, in case Rule
144 is not applicable to a disposition of the Securities, compliance with
the registration provisions of the Securities Act or some other exemption
from such registration provisions will be required; and
(j) The Investor understands that legends shall be placed on the
certificates evidencing the Securities to the effect that the Securities
have not been registered under the Securities Act or applicable state
securities laws and appropriate notations thereof will be made in the
Company's stock books. Stop transfer instructions will be placed with the
transfer agent of the securities constituting the Common Stock.
4. COVENANTS OF THE COMPANY. (a) Registration Rights. The Company
covenants and agrees to enter into a registration rights agreement governing the
registration of the Securities with the Investor dated as of the date hereof.
(b) Current Public Information. The Company has furnished or made
available to the Investor true and correct copies of all registration
statements, reports and documents, including proxy statements (other than
preliminary proxy statements), filed with the Securities and Exchange
Commission (the "SEC") by or with respect to the Company since December 31,
2003 and prior to the date of this Agreement, pursuant to the Securities
Act or the Exchange Act (collectively, the "SEC Documents"). The SEC
Documents are the only filings made by or with respect to the Company since
December 31, 2003 pursuant to Sections 13(a), 13(c), 14 and 15(d) of the
Exchange Act or pursuant to the Securities Act. The Company has filed all
reports, schedules, forms, statements and other documents required to be
filed under Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act since
December 31, 2003 and prior to the date of this Agreement. The Company
meets the "Registrant Requirement" for eligibility to use Form S-3 under
the Securities Act in order to register the Company's Common Stock for
resales.
(c) SEC Documents. The Company has not provided to the Investor any
information which 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. As of their respective dates, the SEC
Documents complied, and all similar documents filed with the SEC prior to
the Closing Date will comply, in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may
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be, and rules and regulations of the SEC promulgated thereunder and other
federal, state and local laws, rules and regulations applicable to such SEC
Documents, and none of the SEC Documents contained, nor will any similar
document filed with the SEC prior to the Closing Date contain, any untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading.
The financial statements of the Company included in the SEC Documents, as
of the dates thereof, complied, and all similar documents filed with the
SEC prior to the Closing Date will comply, as to form in all material
respects with applicable accounting requirements and the published rules
and regulations of the SEC and other applicable rules and regulations with
respect thereto. Such financial statements were prepared in accordance with
generally accepted accounting principles applied on a consistent basis
during the periods involved (except (i) as may be otherwise indicated in
such financial statements or the notes thereto or (ii) in the case of
unaudited interim statements, to the extent they may not include footnotes
or may be condensed or summary statements as permitted by Form 10-Q of the
SEC) and fairly present in all material respects the financial position of
the Company and its consolidated subsidiaries as of the dates thereof and
the consolidated results of operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end
audit adjustments).
(d) Warrants. The Company agrees to issue to the Investor at the
Closing Date, transferable divisible warrants (the "Warrants") to purchase
(i) up to 2,696,290 shares of Common Stock which shall bear an exercise
price per share of Common Stock of an amount equal to 100% of the Closing
Price and shall be exercisable immediately upon issuance, and for a period
of three (3) years following such issuance and (ii) up to 2,696,290 shares
of Common Stock which shall bear an exercise price per share of Common
Stock of an amount equal to 100% of the Closing Price and shall be
exercisable immediately upon issuance, and for a period of six (6) months
following such issuance. Subject to the terms and conditions of the
Warrants, the Company, at its option, may, upon written notice to the
Investor, call up to one hundred percent (100%) of the Warrants if the
Common Stock trades at a price equal to or greater than $3.00 per share for
five (5) consecutive trading days prior to the date the Company calls the
Warrants.
(e) Reimbursement. If (i) the Investor, other than by reason of its
gross negligence or willful misconduct, becomes involved in any capacity in
any action, proceeding or investigation brought by any stockholder of the
Company, in connection with or as a result of the consummation of the
transactions contemplated by this Purchase Agreement, or if such Investor
impleaded in any such action, proceeding or investigation by any Person, or
(ii) the Investor, other than by reason of its gross negligence or willful
misconduct or by reason of its trading of the Common Stock in a manner that
is illegal under the federal securities laws or other actions, becomes
involved in any capacity in any action, proceeding or investigation brought
by the Commission against or involving the Company or in connection with or
as a result of the consummation of the transactions contemplated by this
Purchase Agreement, or if the Investor is impleaded in any such action,
proceeding or investigation by any Person, then in any such case, the
Company will reimburse the Investor for its reasonable legal and other
expenses (including the cost
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of any investigation and preparation) incurred in connection therewith, as
such expenses are incurred. In addition, other than with respect to any
such matter in which the Investor is a named party, the Company will pay
the Investor the charges, as reasonably determined by the Investor, for the
time of any officers or employees of the Investor devoted to appearing and
preparing to appear as witnesses, assisting in preparation for hearings,
trials or pretrial matters, or otherwise with respect to inquiries,
hearing, trials, and other proceedings relating to the subject matter of
this Agreement. The reimbursement obligations of the Company under this
paragraph shall be in addition to any liability which the Company may
otherwise have, shall extend upon the same terms and conditions to any
Affiliates of the Investors who are actually named in such action,
proceeding or investigation, and partners, directors, agents, employees and
controlling persons (if any), as the case may be, of the Investors and any
such Affiliate, and shall be binding upon and inure to the benefit of any
successors, assigns, heirs and personal representatives of the Company, the
Investors and any such Affiliate and any such Person. The Company also
agrees that neither the Investor nor any such Affiliate, partners,
directors, agents, employees or controlling persons shall have any
liability to the Company or any person asserting claims on behalf of or in
right of the Company in connection with or as a result of the consummation
of the transactions contemplated by this Purchase Agreement except to the
extent that any losses, claims, damages, liabilities or expenses incurred
by the Company result from the gross negligence or willful misconduct of
the Investor or any such Affiliate. The Company further agrees to reimburse
the Investor for its reasonable attorney's and other professional fees in
connection with the negotiation and execution of this Purchase Agreement.
(f) NASD Compliance. The Company shall timely provide to the
Investor a copy of all materials required to be filed by the Company and/or
received by the Company from the National Association of Securities Dealers
("NASD") under Corporate Financing Rule 2710, and use reasonable efforts to
cooperate with the Investor and any broker selling Shares on behalf of the
Investor to facilitate the Investor and/or broker to obtain any additional
consents, authorizations or approvals that may be necessary for the NASD to
permit the Investor to sell the Shares.
5. DELIVERY OF SHARES. (a) Promptly following the delivery by the
Investor of the Purchase Price for the Shares in accordance with Section 1
hereof, the Company will irrevocably instruct its transfer agent to issue to the
Investor legended certificates representing the Shares.
(b) Within five (5) business days (such third business day, the
"Delivery Date") after the business day on which the Company has received
both the notice of sale (by facsimile or other delivery) and the original
Common Stock certificate (and if the same are not delivered to the Company
on the same date, the date of delivery of the second of such items), the
Company (i) shall deliver, and shall cause legal counsel selected by the
Company to deliver, to its transfer agent (with copies to Investor) an
appropriate instruction and opinion of such counsel, for the delivery of
unlegended Shares issuable upon the sale of the Shares pursuant to the
registration statement for the Shares; provided that such registration
statement at the time of sale has been declared effective by the Commission
and is current (the "Unlegended Shares"); and (ii) transmit
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the certificates representing the Unlegended Shares (together, unless
otherwise instructed by the Investor, with Common Stock not sold), to the
Investor at the address specified in a notice of sale (which address may be
the Investor's address for notices as contemplated by Section 6 hereof or a
different address) via express courier, by electronic transfer or
otherwise.
(c) In lieu of delivering physical certificates representing the
Unlegended Shares, if the Company's transfer agent is participating in the
Depository Trust Company ("DTC") Fast Automated Securities Transfer
program, upon request of the Investor and its compliance with the
provisions contained in this paragraph, so long as the certificates
therefor do not bear a legend and the Investor thereof is 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 Unlegended Shares by crediting the account of Investor's Prime
Broker with DTC through its Deposit Withdrawal Agent Commission system.
6. NOTICES. Any notice required or permitted hereunder shall be given
in writing (unless otherwise specified herein) and shall be deemed effectively
given upon personal delivery or seven (7) business days after deposit in the
United States Postal Service, by (a) advance copy by fax, and (b) mailing by
express courier or registered or certified mail 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
ATTN: Chief Financial Officer
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with a copy to: Jenkens & Xxxxxxxxx Xxxxxx Xxxxxx LLP
The Chrysler Building
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
ATTN: Xxxxxx Xxxx Xxxxxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Investor: Western Ventures Ltd.
0 Xxx Xxxxx Xxxxxx
Xxx Xxxx, Xxxxxx
ATTN: Xxxx Xxxxxxxx
Telephone No.: _____________
Facsimile No.: ______________
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with a copy to: Xxxxxxx & Prager LLP
00 Xxxxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
7. SEVERABILITY. If a court of competent jurisdiction determines that
any provision of this Purchase Agreement is invalid, unenforceable or illegal
for any reason, such determination shall not affect or impair the validity,
legality and enforceability of the other provisions of this Purchase Agreement.
If any such invalidity, unenforceability or illegality of a provision of this
Purchase Agreement becomes known or apparent to any of the parties hereto, the
parties shall negotiate promptly and in good faith in an attempt to make
appropriate changes and adjustments to such provision specifically and this
Purchase Agreement generally to achieve as closely as possible, consistent with
applicable law, the intent and spirit of such provision specifically and this
Purchase Agreement generally.
8. EXECUTION IN COUNTERPARTS. This Purchase Agreement may be executed
in counterparts, each of which shall be deemed an original, but all of which
together shall constitute the same Purchase Agreement.
9. CONSENT TO JURISDICTION. Each of the Company and the Investor (i)
hereby irrevocably submits to the jurisdiction of the United States District
Court sitting in the Southern District of New York and the courts of the State
of New York located in New York county for the purposes of any suit, action or
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby and (ii) hereby waives, and agrees not to assert in any such
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of such court, that the suit, action or proceeding is brought in an
inconvenient forum or that the venue of the suit, action or proceeding is
improper. Each of the Company and the Investor consents to process being served
in any such suit, action or proceeding by any means permissible under applicable
law and agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing in this Section 9 shall affect or limit any
right to serve process in any other manner permitted by law.
10. GOVERNING LAW; Waiver of Jury. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York, without
regard to principles of conflicts of law thereof. This Agreement shall not be
interpreted or construed with any presumption against the party causing this
Agreement to be drafted. In any action, suit or proceeding in any jurisdiction
arising out of or related directly or indirectly to this Agreement, whether
brought by the Company against the Investor or the Investor against the Company,
the Company and the Investor each hereby absolutely, unconditionally,
irrevocably and expressly waives forever trial by jury.
[SIGNATURES CONTINUED]
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IN WITNESS WHEREOF, the parties have executed this Purchase Agreement
as of the date first written above.
XYBERNAUT CORPORATION
By:
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Name:
Title:
WESTERN VENTURES LTD.
By:
---------------------------------
Name:
Title:
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