As filed with the Securities and Exchange Commission on April 3, 2000
REGISTRATION NO. 333-______
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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XYBERNAUT CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 54-1799851
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(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
12701 FAIR LAKES CIRCLE
FAIRFAX, VIRGINIA 22033
(703) 631-6925
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(Address, including zip code, and telephone number,
Including area code, of registrant's principal executive offices)
EDWARD G. NEWMAN
12701 FAIR LAKES CIRCLE
FAIRFAX, VIRGINIA 22033
(703) 631-6925
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(Name, address, including zip code, and telephone number,
Including area code, of agent for service)
Copy to:
Martin Eric Weisberg, Esq.
Parker Chapin Flattau & Klimpl, LLP
The Chrysler Building
405 Lexington Aveneue
New York, New York 10036
(212) 704-6000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the only securities on this Form are being offered pursuant to
dividend or interest reinvestment plans, please check the following box. |_|
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |_|
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If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. |_|
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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PROPOSED
TITLE OF EACH CLASS AMOUNT TO BE PROPOSED MAXIMUM MAXIMUM AMOUNT OF
OF SECURITIES TO BE REGISTERED REGISTERED(1) OFFERING PRICE AGGREGATE REGISTRATION
PER SHARE OFFERING PRICE FEE
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<S> <C> <C> <C> <C>
Common Stock, $.01 par value per share.. 1,000,000 (2) $17.157 (7) $17,157,000.00 $4,769.65
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Common Stock, $.01 par value per share.. 647,500(2) $17.157 (7) $11,109,157.50 $3,088.35
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Common Stock, $.01 par value per share.. 1,000,000(2)(3) $17.157 (7) $17,157,000.00 $4,769.65
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Common Stock, $.01 par value per share.. 1,996(2) $17.157 (7) $34,245.37 $9.52
- ---------------------------------------------------------------------------------------------------------- ---------------
Common Stock, $.01 par value per share.. 4,805 (2) $17.157 (7) $82,439.39 $22.92
- ---------------------------------------------------------------------------------------------------------- ---------------
Common Stock, $.01 par value per share.. 144,000 (2)(4) $17.157(7)(8) $2,470,608.00 $686.82
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Common Stock, $.01 par value per share.. 15,000(2)(5) $17.157 (8) $257,355.00 $71.54
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Common Stock, $.01 par value per share.. 30,000(2)(6) $18.000 (8) $540,000.00 $150.12
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Total Registration Fee.................. $13,568.57
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</TABLE>
(1) Represents the shares of common stock being registered for resale by the
selling stockholders.
(2) Pursuant to Rule 416, the shares of common stock offered hereby also
include such presently indeterminate number of shares of common stock as
shall be issued by us to the selling stockholders upon adjustment under
anti-dilution provisions covering the additional issuance of shares by
Xybernaut resulting from stock splits, stock dividends or similar
transactions. We are not registering additional shares of common stock
which may result from price fluctuations and the operation of exercise
formulas of the warrants. This presentation is not intended to constitute a
prediction as to the future market price of the common stock or as to the
number of shares of common stock issuable upon exercise of the warrants.
See "Risk Factors -- Dilution"; and "Description of Securities."
(3) Represents the number of shares issued upon exercise of warrants to
purchase 1,000,000 shares of our common stock.
(4) Represents the number of shares of common stock issued as compensation for
marketing services rendered to us and includes 100,000 shares of common
stock issuable upon exercise of warrants.
(5) Represents the number of shares issuable upon exercise of warrants to
purchase 15,000 shares of our common stock.
(6) Represents the number of shares issuable upon exercise of warrants to
purchase 30,000 shares of our common stock.
(7) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) and (g) of the Securities Act of 1933, as amended
(the "Securities Act"); based on the average ($17.157) of the bid ($17.125)
and asked ($17.188) price on the Nasdaq SmallCap Market on March 29, 2000.
(8) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(g) of the Securities Act, based on the higher of (a)
the exercise price of the warrants or (b) the offering price of securities
of the same class included in this registration statement.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
<PAGE>
The information in this prospectus is not complete. We may not sell these
securities until the registration statement filed with the Securities and
Exchange Commission is effective. This prospectus is not an offer to sell nor is
it seeking an offer to buy these securities in any state where the offer or sale
is not permitted.
SUBJECT TO COMPLETION, DATED APRIL __, 2000
PROSPECTUS
XYBERNAUT CORPORATION
2,843,301 SHARES OF COMMON STOCK
The stockholders of Xybernaut Corporation listed on page 10 of this
prospectus are offering for sale up to 2,843,301 shares of common stock of
Xybernaut under this prospectus.
The selling stockholders may offer their shares through public or private
transactions, at prevailing market prices, or at privately negotiated prices.
See "Plan of Distribution."
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NASDAQ SmallCap Market Symbol: "XYBR"
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On March 29, 2000, the closing price of one share of our common stock on
the NASDAQ SmallCap Market was $17.25.
THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY
CONSIDER THE FACTORS DESCRIBED UNDER THE CAPTION "RISK FACTORS" BEGINNING
ON PAGE 2 OF THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this prospectus is _________________, 2000
<PAGE>
RISK FACTORS
BEFORE YOU BUY SHARES OF OUR COMMON STOCK, YOU SHOULD BE AWARE THAT
THERE ARE VARIOUS RISKS ASSOCIATED WITH THAT PURCHASE, INCLUDING THOSE DESCRIBED
BELOW. YOU SHOULD CONSIDER CAREFULLY THESE RISK FACTORS, TOGETHER WITH ALL OF
THE OTHER INFORMATION IN THIS PROSPECTUS AND THE DOCUMENTS WE HAVE INCORPORATED
BY REFERENCE IN THE SECTION "WHERE YOU CAN FIND MORE INFORMATION ABOUT US,"
BEFORE YOU DECIDE TO PURCHASE SHARES OF OUR COMMON STOCK.
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RISKS ASSOCIATED WITH OUR HISTORY OF LOSSES AND FUTURE NEED FOR CAPITAL
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WE HAVE A HISTORY OF LOSSES AND, IF WE DO NOT ACHIEVE PROFITABILITY, WE MAY NOT
BE ABLE TO CONTINUE OUR BUSINESS IN THE FUTURE.
Our research, development, sales, marketing and general and
administrative expenses have resulted in significant losses and are expected to
continue to result in significant losses for the foreseeable future. We have
incurred the following losses since 1994:
Fiscal years ended:
o March 31, 1994 $47,352
o March 31, 1995 $1,303,892
o December 31, 1996 $5,238,536
o December 31, 1997 $9,479,966
o December 31, 1998 $13,111,488
o December 31, 1999 $16,775,797
THE "GOING CONCERN" QUALIFICATION ON THE REPORT OF OUR INDEPENDENT ACCOUNTANTS
MAY REDUCE OUR ABILITY TO RAISE ADDITIONAL FINANCING.
The report of our independent accountants on our December 31, 1999
consolidated financial statements contains an explanatory paragraph regarding
our ability to continue as a going concern. Our independent accountants cited
our history of operating losses and our need for additional capital as factors
which raised substantial doubt as to our ability to continue as a going concern.
This "going concern" qualification may reduce our ability to raise additional
financing.
WE COULD BE REQUIRED TO CUT BACK OR STOP OPERATIONS IF WE ARE UNABLE TO RAISE OR
OBTAIN NEEDED FINANCING.
The research, development, commercialization, manufacturing and
marketing of our products will likely require financial resources which are
significantly in excess of those presently available to us. If we are not able
to arrange financing or other third party arrangements on acceptable terms, we
may be unable to fully develop and commercialize any of our products and could
be required to cut back or stop operations.
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RISKS ASSOCIATED WITH THE INDUSTRY IN WHICH WE OPERATE
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OUR FUTURE REVENUES AND ABILITY TO PRODUCE NEW PRODUCTS DEPEND SUBSTANTIALLY ON
THE SUCCESS OF THE MOBILE ASSISTANT SERIES(R).
Our Mobile Assistant(R) Series currently consists of one product, the
MA IVTM. The Mobile Assistant Series is our principal product, and our success
will depend upon its commercial acceptance, which cannot be assured. Additional
product development will result in a significant increase in our research and
development expenses that may be unrecoverable should commercialization of new
products prove unsuccessful. We also could require additional funding if
research and development expenses are greater than we anticipate. As with most
high technology products, new models of the Mobile Assistant Series must be
introduced periodically for the Company to remain competitive. There can be no
assurance that these new models can be successfully developed or commercially
accepted.
WE MAY HAVE TO LOWER PRICES OR SPEND MORE MONEY TO EFFECTIVELY COMPETE AGAINST
COMPANIES WITH GREATER RESOURCES THAN US WHICH COULD RESULT IN LOWER REVENUES
AND/OR PROFITS.
The success of our products in the marketplace depends on many factors,
including product performance, price, ease of use, support of industry
standards, and customer support and service. Given these factors we cannot
assure you that we will be able to compete successfully. For example, if our
competitors offer lower prices, we could be forced to lower prices which would
result in reduced margins and a decrease in revenues. If we do not lower prices
we could lose sales and market share. In either case, if we are unable to
compete against our main competitors which include established companies like
Computing Devices International, a division of Ceridian Corporation, ViA Inc.,
Texas Microsystems, Telxon, Symbol, Norand, Teltronics, Inc. a subsidiary of
Interactive Solutions, Raytheon, and others, we would not be able to generate
sufficient revenues to grow the company or reverse our history of losses.
In addition, we may have to spend more money to effectively compete for
market share, including funds to expand our infrastructure, which is a capital
and time extensive process. Further, if other companies want to aggressively
compete against us, we may have to spend more money on advertising, promotion,
trade shows, product development, marketing and overhead expenses, hiring and
retaining personnel, and developing new technologies. These higher expenses
would hurt our net income and profits.
CURRENCY FLUCTUATIONS, ESPECIALLY IN THE JAPANESE YEN, MAY SIGNIFICANTLY
INCREASE OUR EXPENSES AND AFFECT OUR RESULTS OF OPERATIONS.
The exchange rates for some local currencies in countries where we
operate may fluctuate in relation to the U.S. dollar. Such fluctuations may have
an adverse effect on our expenses, revenues, earnings, assets or liabilities
when local currencies are translated into U.S. dollars. We are party to supplier
arrangements with several companies in Japan, including Shimadzu and Sony
Digital Products for the production of the MA IV system. The fees we pay to
these companies are paid in Japanese Yen. Any strengthening of the value of the
U.S. dollar against the Japanese Yen could
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<PAGE>
result in an increase in our production expenses which, if substantial, could
have a material adverse effect on our financial condition and results of
operations.
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RISKS ASSOCIATED WITH
OUR INTERNAL OPERATIONS AND POLICIES
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SINCE WE DO NOT INTEND TO DECLARE DIVIDENDS IN THE FORESEEABLE FUTURE, THE
RETURN ON YOUR INVESTMENT WILL DEPEND UPON APPRECIATION OF THE MARKET PRICE OF
YOUR SHARES.
We have never paid any dividends on our common stock. Our board of
directors does not intend to declare any dividends in the foreseeable future,
but intends to retain all earnings, if any, for use in our business operations.
As a result, the return on your investment in Xybernaut will depend upon any
appreciation in the market price of the common stock. The holders of common
stock are entitled to receive dividends when, as and if declared by the board of
directors out of funds legally available for dividend payments. The payment of
dividends, if any, in the future is within the discretion of our board of
directors and will depend upon our earnings, capital requirements and financial
condition, and other relevant factors.
OUR COMPUTER SYSTEMS AND THOSE OF OUR CUSTOMERS AND SUPPLIERS MAY NOT RECOGNIZE
THE YEAR 2000 WHICH MAY AFFECT OUR COMPUTER SYSTEMS AND DISRUPT OUR BUSINESS.
The year 2000 issue is the result of computer programs being written
using two digits rather than four to define the applicable year. Any of our
computer programs that have date-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including, a
temporary inability to process transactions, send invoices, or engage in similar
normal business activities.
We have utilized both internal and external resources to test,
reprogram or replace, as needed, our computing and communications hardware and
software for year 2000 modifications. Based on this evaluation, we have made
modifications to our computer system and determined that these systems will
properly utilize dates beyond December 31, 1999. As such, we are compliant with
the year 2000 issue.
As a result of the testing, we determined that our old phone system was
not year 2000 compliant. Our phone system was already scheduled for replacement
to add capacity, upgrade the telecommunications capabilities, and allow for
better customer service. In December 1999, we replaced the existing phone system
with one that provides enhanced capabilities and is year 2000 compliant. The
cost to purchase and install the new phone system was approximately $75,000. Our
estimate of the costs to remediate our year 2000 issue related to our telephone
system is based on presently available information. Outside of the phone system,
the cost of testing and modifying our computer systems to obtain year 2000
compliance was less than $10,000 in the aggregate.
We have contacted all of our significant suppliers and large customers
to determine the possible effect on our operations of their inability or failure
to remediate their own year 2000 Issue. However, we cannot guarantee that the
systems of other companies on which our systems rely will be timely converted,
or that a failure to convert by another company, or a conversion that is
incompatible with our systems, would not have material adverse effect on our
operations. We
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<PAGE>
believe that no exposure to contingencies related to the year 2000 issue for the
products we have sold.
We noted no significant product or system failures or miscalculations
related to the year 2000 issue on or around January 1, 2000.
Our estimates of the date of completion and cost of our year 2000
project are based on our best estimates, which we derived utilizing numerous
assumptions of future events including the continued availability of certain
resources, third party modification plans and other factors. The costs and
completion date of our year 2000 project could differ materially from our
estimates due to the lack of availability and cost of personnel trained in this
area, our ability to locate and correct all relevant computer codes, and similar
uncertainties.
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RISKS WHICH MAY DILUTE THE VALUE OF YOUR XYBERNAUT
SHARES OR LIMIT THE EFFECT OF THEIR VOTING POWER
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THE PRICE OF OUR COMMON STOCK IS HIGHLY VOLATILE.
The price of our common stock is highly volatile. During the period
from January 1, 1998 to March 29, 2000 the closing price of our common stock has
ranged from a high of $23.75 to a low of $1.00. Following periods of volatility
in the market price of a company's securities, securities class action
litigation has often been instituted against such a company. If similar
litigation were instituted against us, it could result in substantial costs and
a diversion of our management's attention and resources, which could have an
adverse effect on our business. The volatile fluctuations of the market price
are based on (1) the number of shares in the market at the time as well as the
number of shares we may be required to issue in the future, compared to the
market demand for our shares; (2) our performance and meeting expectations of
our performance, including the development and commercialization of our products
and proposed products; and (3) general economic and market conditions.
OUR EXECUTIVE OFFICERS, DIRECTORS AND PRINCIPAL STOCKHOLDERS, TOGETHER, MAY
EXERCISE CONTROL OVER ALL MATTERS SUBMITTED TO A VOTE OF STOCKHOLDERS.
As of March 29, 2000, our executive officers, directors and principal
stockholders beneficially owned, in the aggregate, approximately 18% of our
outstanding shares of common stock. These stockholders, if acting together, may
be able to effectively control most matters requiring approval by our
stockholders. The voting power of these stockholders under certain circumstances
could have the effect of delaying or preventing a change in control of
Xybernaut.
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<PAGE>
WE HAVE 5,239,755 SHARES OF OUR COMMON STOCK RESERVED FOR FUTURE ISSUANCES
WHICH CAN SUBSTANTIALLY DILUTE THE VALUE OF YOUR XYBERNAUT COMMON STOCK.
The issuance of reserved shares would dilute the equity interest of
existing stockholders and could have a significant adverse effect on the market
price of our common stock. As of March 29, 2000, we had 5,239,755 shares of
common stock reserved for possible future issuances upon conversion of
outstanding convertible securities, options and warrants. Certain convertible
securities, options and warrants are convertible into or exercisable for shares
of common stock at discounts from future market prices of the common stock.
Those discounts could result in substantial dilution to existing holders of
common stock. The sale of the common stock acquired at a discount could have a
negative impact on the trading price of the common stock and could increase the
volatility in the trading price of the common stock. See the section entitled
"Dilution" for a summary of the number of shares which could be issued upon
conversion of the outstanding preferred stock at various market prices.
In addition, we intend to seek additional financing which may result in
the issuance of additional shares of our capital stock and/or rights to acquire
additional shares of our capital stock. Those additional issuances of capital
would result in a reduction of your percentage interest in Xybernaut.
ANTI-TAKEOVER MEASURES IN OUR CERTIFICATE OF INCORPORATION COULD ADVERSELY
AFFECT THE VOTING POWER OF THE HOLDERS OF THE COMMON STOCK.
Our certificate of incorporation authorizes anti-takeover measures like
the authority to issue "blank check" preferred stock and the staggered terms of
the members of our board of directors. Those measures could have the effect of
delaying, deterring or preventing a change in control without any action by the
shareholders. In addition, issuance of preferred stock, without shareholder
approval, on those terms as the board of directors may determine, could
adversely affect the voting power of the holders of the common stock, including
the loss of voting control to others. See "Description of Securities."
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains certain forward-looking statements which
involve substantial risks and uncertainties. These forward-looking statements
can generally be identified because the context of the statement includes words
such as "may," "will," "except," "anticipate," "intend," "estimate," "continue,"
"believe," or other similar words. Similarly, statements that describe our
future plans, objectives and goals are also forward-looking statements. Our
factual results, performance or achievements could differ materially from those
expressed or implied in these forward-looking statements as a result of certain
factors, including those listed in "Risk Factors" and elsewhere in this
Prospectus.
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WHERE YOU CAN FIND MORE INFORMATION ABOUT US
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference rooms in Washington, D.C. New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
over the Internet at the SEC's Website at "http://www.sec.gov."
We have filed with the SEC a registration statement on Form S-3 to
register the shares being offered. This prospectus is part of that registration
statement and, as permitted by the SEC's rules, does not contain all the
information included in the registration statement. For further information with
respect to us and our common stock, you should refer to the registration
statement and to the exhibits and schedules filed as part of the registration
statement, as well as the documents discussed below.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update or supersede this information.
This prospectus may contain summaries of contracts or other documents.
Because they are summaries, they will not contain all of the information that
may be important to you. If you would like complete information about a contract
or other document, you should read the copy filed as an exhibit to the
registration statement or incorporated in the registration statement by
reference.
We incorporate by reference the documents listed below and any future
filings we will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934 (File No. 0-19041) until all of the shares
are sold:
o Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1999; and
o The description of our common stock contained in the
registration statement on Form 8-A filed on July 15, 1996
under the Exchange Act (File No. 0-15086), including all
amendments or reports filed for the purpose of updating that
description.
You may request a copy of these filings, at no cost, by writing to us
at 12701 Fair Lakes Circle, Fairfax, Virginia 22033, (703) 631-6925, Attention:
John F. Moynahan or by e-mail at [email protected].
You can review and copy the registration statement, its exhibits and
schedules, as well as the documents listed below, at the public reference
facilities maintained by the SEC as described above. The registration statement,
including its exhibits and schedules, are also available on the SEC's web site.
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<PAGE>
USE OF PROCEEDS
The selling stockholders are selling all of the shares covered by this
prospectus for their own accounts. Accordingly, we will not receive any proceeds
from the resale of the shares.
We will receive proceeds from the exercise, if any, of the warrants. We
will use those proceeds, if any, for working capital and general corporate
purposes.
We will bear the expenses relating to this registration, other than
discounts and commissions, which will be paid by the selling stockholders.
DILUTION
As of March 29, 2000, we had issued and outstanding 37,105,681 shares
of common stock. At that date, there were an additional 5,239,755 shares of
common stock reserved for possible future issuances as follows:
o options to purchase 4,432,571 shares at an exercise price
between $1.37 and $13.81 per share. We have registered the
shares issuable upon exercise of the options under the
Securities Act;
o warrants to purchase 192,500 shares at a price between $2.00
and $18.00 per share. Of the 192,500 shares, we have
registered a total of 10,000 shares issuable upon exercise of
these warrants. This prospectus covers an additional 145,000
shares of common stock issuable upon exercise of the warrants,
which shares will be freely tradable without restriction
(subject to prospectus delivery requirements) on the effective
date of the registration statement. The balance of 37,500
shares will be deemed to be "restricted securities" when
issued;
o 98,495 shares issuable upon conversion of 250 shares of series
D preferred stock and 100 shares of series E preferred stock,
all of which will be deemed to be "restricted securities" when
issued; and
o 516,189 shares issuable upon exercise of options under the
1996 Omnibus Stock Incentive Plan, the 1997 Stock Incentive
Plan and the 1999 Stock Incentive Plan which have not been
granted as of March 29, 2000.
During the terms of the outstanding options and warrants, we must give
the holders the opportunity to profit from a rise in the market price of the
common stock. The existence of the options and warrants may adversely affect the
terms on which we may obtain additional equity financing. Moreover, the holders
are likely to exercise their rights to acquire common stock at a time when we
would otherwise be able to obtain capital with more favorable terms than we
could obtain through the exercise of such securities.
The shares which will be deemed "restricted securities" may be sold
under Rule 144. Rule 144 permits sales of "restricted securities" by any person,
whether or not an affiliate of the issuer, after one year. At that time, sales
can be made subject to the Rule's volume and other limitations and
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after two years by non-affiliates without adhering to Rule 144's volume or other
limitations. In general, an "affiliate" is a person with the power to manage and
direct our policies. The SEC has stated that, generally, executive officers and
directors of an entity are deemed affiliates of the issuing entity.
Dilution Effects of the Conversion of Outstanding Preferred Stock
- -----------------------------------------------------------------
The outstanding series D and series E preferred stocks are convertible
into common stock over time at the discretion of the holders. While the
conversion timing, terms, conditions and formulas vary for each issue, if the
holders of this preferred stock were able to fully convert their shares into
common stock on March 29, 2000 and elected to do so, approximately 98,495
additional shares of common stock would be issued. In addition, you should note
the following:
o The outstanding convertible series D and series E preferred
securities are convertible at a floating rate based on the
historical market price of the common stock. As a result, the
lower the stock price preceding the time the holder converts,
the more common shares the holder will receive upon
conversion.
o To the extent the selling stockholders convert and then sell
their common stock, the common stock price may decrease due to
the additional shares in the market. This could allow the
selling stockholders to convert their convertible preferred
stock into greater amounts of common stock, the sales of which
would further depress the stock price.
o The significant downward pressure on the price of the common
stock as the selling shareholders convert and sell common
stock could encourage short sales by the selling stockholders
or others. This could place further downward pressure on the
price of the common stock.
o The conversion of the convertible preferred stock may result
in substantial dilution to the interests of other holders of
common stock since each holder of convertible preferred may
ultimately convert and sell the full amount issuable upon
conversion. In this regard, even though each selling
stockholder may not convert its preferred stock into more than
4.99% of the then outstanding common stock, this restriction
does not prevent a selling stockholder from converting and
selling some of its holding and then converting the rest of
its holdings. In this way, an individual selling stockholder
could sell more than 4.99% of the outstanding common stock
while never holding more than 4.99% of the outstanding common
stock at a time.
SELLING STOCKHOLDERS
This prospectus covers the resale by the selling stockholders of up to
2,843,301 shares of our common stock.
The following table lists the selling stockholders and certain
information regarding the beneficial ownership be each of the selling
stockholders of shares of our common stock as of March
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29, 2000, and as adjusted to reflect the sale of the shares. Information
concerning the selling stockholders, their pledgees, donees and other non-sale
transferees who may become selling stockholders, may change from time to time.
To the extent the selling stockholders or any of their representatives advise us
of such changes, we will report those changes in a prospectus supplement to the
extent required. See "Plan of Distribution."
The registration of the following shares through this Registration
Statement allows the following persons and entitiies to sell their shareholdings
on the open market and is not necessarily an indication of intent to sell their
shares of common stock
<TABLE>
<CAPTION>
Percentage
of Common
Shares of Common Stock -----------------------
Stock Beneficially Beneficially Shares of Common Shares of Common
Owned Prior to Owned Prior Stock to be Sold Stock Beneficially
Offering to the Owned
Offering after Offering
-----------------------
Number Percent
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<S> <C> <C> <C> <C> <C>
Balmore Funds, S.A. (1) 500,000 1.3% 500,000 0
*
Austost Anstalt Schaan (2) 500,000 1.3% 500,000 0
Crystalite Investments Ltd. (3) 1,000,000 (6) 2.7% 1,000,000 0 *
Dalston Holdings Limited (4) 647,500 1.7% 647,500 0
*
McGuire Woods Battle and Booth LLP 1,996 (7) * 1,996 0
*
Parker Chapin LLP 4,805 (7) * 4,805 0
*
International Business Solutions, Inc. (5) 144,000 (8) * 144,000 (11) 0
*
E. Dell Smith 15,000 (9) * 15,000 (11) 0
*
Christina S. Kohlhaas 30,000 (10) * 30,000 (11) 0
*
*
Total 7 % 0
=== ===
</TABLE>
* Less than 1%
(1) Francois Morax is the director and control person of Balmore
Funds S.A., a British Virgin Islands corporation.
(2) Thom Hackl is the representative and control person of Austost
Anstalt Schaan, a British Virgin Islands corporation.
(3) Mr. John Gainsford is the director and control person of
Crystalite Investments Ltd., a British Virgin Islands
corporation.
(4) Mr. C.B. Williams is the director and control person of
Dalston Holdings Limited, a Turks and Caicos company.
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<PAGE>
(5) Benjamin Cohen is the director and control person of
International Business Solutions, Inc.
(6) Represents the number of shares issued upon exercise of
warrants.
(7) Represents the number of shares of common stock issued as
partial compensation for legal services rendered to us for the
year ended December 31, 1999.
(8) Includes 100,000 shares of common stock issuable upon exercise
of warrants. These warrants are currently exercisable with
respect to 5,000 shares of common stock. See - "Description of
Securities".
(9) Represents the number of shares of common stock issuable upon
exercise of warrants. See - "Description of Securities".
(10) Represents the number of shares of common stock issuable upon
exercise of warrants. These warrants are currently exercisable
with respect to 20,000 shares of common stock. See -
"Description of Securities".
(11) Assumes that each selling stockholder will exercise all of its
warrants into common stock.
DESCRIPTION OF PRIVATE PLACEMENT TRANSACTIONS
The common stock have the material rights and obligations discussed
below and under the section entitled "Description of Securities." We have filed
the agreements relating to these rights and obligations with the SEC. We urge
you to read them in their entirety.
Balmore Funds, S.A. and Austost Anstalt Schaan acquired their shares of
common stock in a private placement transaction entered into on November 19,
1999. Under the terms of the purchase agreement dated as of November 19, 1999
among us and Balmore Funds, S.A. and Austost Anstalt Schaan, we agreed to sell
1,000,000 shares of our common stock at $3.00 per share for an aggregate
purchase price of $3,000,000. The average closing price of our common stock for
the month preceding November 19, 1999 was $3.24. In connection with our sale of
common stock to Balmore Funds, S.A. and Austost Anstalt Schaan, we agreed to
file a registration statement covering the resale of the common stock by
December 31, 1999 and cause the registration statement to be declared effective
by the SEC within 90 days after filing. If the registration statement is not
effective within 90 days after filing, we will have to pay to the holders
liquidated damages equal to 1% of the purchase price paid by Balmore Funds, S.A.
and Austost Anstalt Schaan for the shares of common stock purchased and
outstanding for the first 30 day period until the registration statement has
been declared effective and 2% of the purchase price paid by Balmore Funds, S.A.
and Austost Anstalt Schaan for the shares of common stock purchased and
outstanding for each subsequent 30 day period until the registration statement
has been declared effective. The company has obtained a waiver of such
liquidated damages from Balmore Funds, S.A. and Austost Anstalt Schaan.
Crystalite Investments Ltd. acquired its shares upon exercise of
warrants issued to it pursuant
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<PAGE>
to a loan financing agreement dated as of October 18, 1999, as amended and
restated, between us and Crystalite Investments Ltd. We received cash advances
from Crystalite Investments Ltd. totaling $1,000,000 between September 23, 1999
and December 31, 1999. These advances were issued in connection with the loan
financing agreement and a secured promissory note for the principal amount of
$1,000,000. Under the term of the loan financing agreement, we issued to
Crystalite Investments Ltd. warrants to purchase 1,000,000 shares of our common
stock. These warrants had a term of three years and an exercise price of $1.00
per share, which was the closing price of our common stock on September 21,
1999, the date the agreement between us and Crystalite Investments Ltd. was
reachded. Under the terms of the warrants, we agreed to register the shares of
common stock issuable upon exercise of the warrants. As of March 29, 2000, all
of these warrants have been exercised and converted into 1,000,000 shares of our
common stock.
Dalston Holdings Limited acquired its shares of common stock in a
private placement transaction entered into on January 3, 2000. Under the terms
of the common stock purchase agreement dated as of January 3, 2000 between us
and Dalston Holdings Fund Limited, we agreed to sell 647,500 shares of our
common stock at $4.00 per share for an aggregate purchase price of $2,590,000.
The average closing price of our common stock for the month preceding January 3,
2000 was $4.805. In connection with our sale of the common stock, we agreed to
register the common stock under the first registration statement we filed after
January 28, 2000.
Other than being investors in various private placements and other
financings for our common stock, Balmore Funds, S.A., Austost Anstalt Schaan,
Crystalite Investments Ltd. and Dalston Holdings Limited have not had any
material relationship with us during the past three years.
Each of McGuire Woods Battle and Booth LLP and Parker Chapin LLP are
counsel to our company. The shares of common stock were issued to McGuire Woods
Battle and Booth LLP and Parker Chapin LLP as partial compensation for legal
services rendered to us for the period ending December 31, 1999. George Allen,
Esq., a member of the firm McGuire Woods Battle and Booth LLP, is one of our
Directors. Martin Eric Weisberg, Esq., a member of the firm Parker Chapin LLP,
is our Secretary and one of our Directors.
International Business Solutions, Inc. provides marketing related
services to us and is one of our customers. In connection with the defined
marketing program to be implemented by International Business Solutions, Inc.
for the promotion of our products, we agreed on January 3, 2000 to issue 44,000
shares of common stock and warrants to purchase 100,000 shares of common stock
at $6.00 per share. The average closing prices of our common stock for the month
preceding January 3, 2000 was $4.805. The warrants are currently exercisable
with respect to 5,000 shares.
E. Dell Smith serves as a consultant to us on selected governmental and
business issues. In connection with such services, we agreed to issue E. Dell
Smith warrants to purchase 15,000 share of our common stock at $2.00 per share.
Warrants to purchase 10,000 shares of common stock were granted on October 25,
1999 and warrants to purchase 5,000 shares of common stock were granted on
January 3, 2000. The average closing prices of our common stock for the month
preceding October 25, 1999 was $1.805 and for the month preceding January 3,
2000 was $4.805.
Christina Kohlhaas has provided us with certain financial consulting
services. In connection with these services, on October 22, 1996 we issued
warrants to purchase 30,000 shares of our common stock at prices ranging from
$4.25 to $18.00 per share. The average closing prices of our common stock for
the month preceding October 22, 1996 was $4.41. The warrants are currently
exercisable with respect to 20,000 shares of common stock.
Other than as indicated above, the selling stockholders are not
affiliated with us.
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<PAGE>
DESCRIPTION OF SECURITIES
GENERAL
Our authorized capital stock consists of 80,000,000 shares of common
stock, par value $0.01 per share, and 6,000,000 shares of preferred stock, par
value $0.01 per share. As of March 29, 2000, we have 37,105,681 shares of common
stock, 250 shares of series D preferred stock and 100 shares of series E
preferred stock issued and outstanding. We have reserved 5,239,755 shares of
common stock for issuance upon conversion of the preferred stock and outstanding
options and warrants.
COMMON STOCK
Voting
The holders of our common stock are entitled to one vote for each share
held of record on all matters submitted to a vote of stockholders. Our
certificate of incorporation and by-laws do not provide for cumulative voting
rights in the election of directors. Accordingly, holders of a majority of the
shares of common stock entitled to vote in any election of directors may elect
all of the directors standing for election.
Dividends
Holders of common stock are entitled to receive ratably those dividends
as may be declared by our board of directors out of funds legally available for
that purpose.
Rights on Liquidation
In the event of our liquidation, dissolution or winding up, holders of
common stock are entitled to share ratably in the assets remaining after payment
of liabilities.
Pre-emptive or Redemption Rights
Holders of common stock have no preemptive, conversion or redemption
rights. All of the outstanding shares of common stock are fully-paid and
nonassessable.
PREFERRED STOCK
Our board of directors has the authority to issue up to 6,000,000
shares of preferred stock from time to time in one or more series. Our board has
the authority to establish the number of shares to be included in each series,
and to fix the designations, powers, preferences and rights of the shares of
each series and the applicable qualifications, limitations or restrictions. The
issuance of preferred stock may have the effect of delaying or preventing a
change in control. The issuance of preferred stock could decrease the amount of
earnings and assets available for distribution to the holders of common stock,
if any, or could adversely affect the rights and powers, including voting
rights, of the holders of the common stock. In certain circumstances, the
issuances could have the effect of decreasing the market price of the common
stock.
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<PAGE>
As of the date of this prospectus, we have not designated any shares of
preferred stock other than the series A, B, C, D and E preferred stock. The
series A, B and C preferred stock have been fully converted. As of March 29,
2000, there are 250 shares of series D preferred stock and 100 shares of series
E preferred stock issued and outstanding.
WARRANTS
Of the total 2,843,301 shares of common stock registered for sale by
the selling stockholders, 145,000 shares are issuable upon exercise of warrants.
The warrants were issued to the selling stockholders as compensation for certain
services provided to our company.
The warrants to purchase 100,000 shares of our common stock have a term
of twenty-four months and an exercise price of $6.00 per share. These warrants
are currently exercisable with respect to 5,000 shares of common stock and will
become exercisable for an additional 5,000 shares on May 1, 2000 and on the
first day of each of the eighteen consecutive months immediately thereafter.
The warrants to purchase 15,000 shares of our common stock have a term
of three years and an exercise price of $2.00 per share. These warrants are
currently fully exercisable.
The warrants to purchase 30,000 shares of our common stock have a term
of five years and are exercisable as follows: (i) $4.25 per share with respect
to 10,000 shares of common stock; (ii) $11.00 per share with respect to an
additional 10,000 shares of common stock on the day after the closing price of
the common stock equals or exceeds $11.00 per share for 25 consecutive trading
days or for 30 out of 35 consecutive trading days; and (iii) $18.00 per share
with respect to the remaining 10,000 shares on the day after the closing bid
price of the common stock equals or exceeds $18.00 per share for 20 consecutive
trading days. All of these warrants have adjustment provisions for standard
dilution events including stock splits, stock dividends and similar
transactions. These warrants are currently exercisable with respect to 20,000
shares.
ANTI-TAKEOVER CONSIDERATIONS.
Our certificate of incorporation authorizes the issuance of up to
6,000,000 shares of $0.01 par value preferred stock. The issuance of preferred
stock with such rights could have the effect of limiting stockholder
participation in certain transactions such as mergers or tender offers and could
discourage or prevent a change in our management. We have no present intention
to issue any additional preferred stock.
We have a classified or staggered board of directors which limits an
outsider's ability to effect a rapid change of control of our board. In
addition, at the 1998 Annual Meeting of Stockholders held on September 24, 1998,
our shareholders approved measures to amend our certificate of incorporation and
by-laws, where applicable, to:
o implement an advance notice procedure for the submission of
director nominations and other business to be considered at
annual meetings of stockholders;
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<PAGE>
o permit only the President, the Vice Chairman of our board, the
Secretary or our board of directors to call special meetings
of stockholders and to limit the business permitted to be
conducted at such meetings to be brought before the meetings
by or at the direction of our board;
o provide that a member of our board of directors may only be
removed for cause by an affirmative vote of holders of at
least 66 2/3% of the voting power of the then outstanding
shares entitled to vote generally in the election of directors
voting together as a single class;
o fix the size of our board of directors at a maximum of twelve
directors, with the authorized number of directors set at ten,
and our board of directors having the sole power and authority
to increase or decrease the number of directors acting by an
affirmative vote of at least a majority of the total number of
authorized directors most recently fixed by our board of
directors;
o provide that any vacancy on the board may be filled for the
unexpired term (or for a new term in the case of an increase
in the size of the board) only by an affirmative vote of at
least a majority of the remaining directors then in office
even if less than a quorum, or by the sole remaining director;
o eliminate stockholder action by written consent;
o require the approval of holders of 80% of the then outstanding
voting stock and/or the approval of 66 2/3% of the directors
for certain corporate transactions; and
o require an affirmative vote of 66 2/3% of the voting stock in
order to amend or repeal any adopted amendments to the
certificate of incorporation and bylaws adopted at the
meeting.
Those measures combined with the ability of our board of directors to
issue "blank check" preferred stock and the staggered terms of the members of
our board of directors, could have the effect of delaying, deterring or
preventing a change in control without any further action by the stockholders.
In addition, the issuance of preferred stock, without stockholder approval, on
such terms as our board may determine, could adversely affect the voting power
of the holders of the common stock, including the loss of voting control to
others.
TRANSFER AGENT AND REGISTRAR
Continental Stock Transfer & Trust Company is our Transfer Agent and
Registrar for our common stock and the redeemable warrants.
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<PAGE>
PLAN OF DISTRIBUTION
The selling stockholders and their pledgees, donees, transferees and
other subsequent owners, may offer their shares at various times in one or more
of the following transactions:
o on any U.S. securities exchange on which our common stock may
be listed at the time of sale
o in the over-the-counter market
o in privately negotiated transactions
o in connection with short sales; or
o in a combination of any of the above transactions.
The selling stockholders may offer their shares of common stock at
prevailing market prices at the time of sale, at prices related to those
prevailing market prices, at negotiated prices or at fixed prices.
The selling stockholders may also sell the shares under Rule 144
instead of under this prospectus, if Rule 144 is available for those sales.
The transactions in the shares covered by this prospectus may be
effected by one or more of the following methods:
o ordinary brokerage transactions and transactions in which the
broker solicits purchasers;
o purchases by a broker or dealer as principal, and the resale
by that broker or dealer for its account under this
prospectus, including resale to another broker or dealer;
o block trades in which the broker or dealer will attempt to
sell the shares as agent but may position and resell a portion
of the block as principal in order to facilitate the
transaction; or
o negotiated transactions between selling stockholders and
purchasers without a broker or dealer.
The selling stockholders and any broker-dealers or other persons acting
on the behalf of parties that participate in the distribution of the shares may
be deemed to be underwriters. Any commissions or profits they receive on the
resale of the shares may be deemed to be underwriting discounts and commissions
under the Securities Act.
As of the date of this prospectus, we are not aware of any agreement,
arrangement or understanding between any broker or dealer and any of the selling
stockholders with respect to the offer or sale of the shares under this
prospectus.
We have advised the selling stockholders that during the time each is
engaged in distributing shares covered by this prospectus, each must comply with
the requirements of the Securities Act and Rule 10b-5 and Regulation M under the
Exchange Act. Under those rules and regulations, they:
o may not engage in any stabilization activity in connection
with our securities;
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<PAGE>
o must furnish each broker which offers common stock covered by
this prospectus with the number of copies of this prospectus
which are required by each broker; and
o may not bid for or purchase any of our securities or attempt
to induce any person to purchase any of our securities other
than as permitted under the Exchange Act.
In the purchase agreements and warrants we executed in connection with
the transactions with the selling stockholders we agreed to indemnify and hold
harmless each selling stockholder against liabilities under the Securities Act,
which may be based upon, among other things, any untrue statement or alleged
untrue statement of a material fact or any omission or alleged omission of a
material fact, unless made or omitted in reliance upon written information
provided to us by that selling stockholder. We have agreed to bear the expenses
incident to the registration of the shares, other than selling discounts and
commissions.
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Section 145 of the Delaware General Corporation Law allows companies to
indemnify their directors and officers against expenses, judgments, fines and
amounts paid in settlement under the conditions and limitations described in the
law. Our certificate of incorporation authorizes us to indemnify our officers,
directors and other agent to the fullest extent permitted under Delaware law.
Our certificate of incorporation provides that a director is not
personally liable for monetary damages to us or our stockholders for breach of
his or her fiduciary duties as a director. A director will be held liable for a
breach of his or her duty of loyalty to us or our stockholders, his or her
intentional misconduct or willful violation of law, actions or in actions not in
good faith, an unlawful stock purchase or payment of a dividend under Delaware
law, or transactions from which the director derives an improper personal
benefit. This limitation of liability does not affect the availability of
equitable remedies against the director including injunctive relief or
rescission.
We have purchased a directors and officers liability and reimbursement
policy that covers liabilities of our directors and officers arising out of
claims based upon acts or omissions in their capacities as directors and
officers.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors, officers and controlling persons pursuant
to the foregoing provisions, or otherwise, we have been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
LEGAL MATTERS
Parker Chapin LLP, New York, New York will pass upon the validity of
the securities offered hereby. Martin Eric Weisberg, Esq., a member of the firm,
is our Secretary and one of our Directors.
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<PAGE>
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference to the Annual Report on Form 10-KSB for the year ended December 31,
1999, have been so incorporated in reliance on the report (which contains an
explanatory paragraph relating to our ability to continue as a going concern as
described in Note 1 to the consolidated financial statements) of Grant Thornton
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
RECENT DEVELOPMENTS
On March 30, 2000 the Company announced that it had executed a
definitive merger agreement with Selfware Inc., a leading provider of enterprise
management services and software for projects, maintenance and work flow.
Selfware is a privately-held company that was founded in 1983 and has over 30
full-time employees at its headquarters in Vienna, Virginia and an office in
Seattle, Washington. For the twelve months ended December 31, 1999, revenues for
Selfware were approximately $5.0 million, gross profit was approximately $2.0
million and net income was approximately $0.1 million. Under the terms of the
definitive agreement, the value of Selfware is determined by a formula with a
maximum valuation of approximately $8.1 million. The acquisition of Selfware by
Xybernaut will be effected by exchanging shares of Selfware for shares of
Xybernaut based on a ratio determined by the 30-day average closing price for
Xybernaut's common stock prior to closing. The approval of Selfware shareholders
for the acquisition is expected by April 7, 2000. The transaction is intended to
be accounted for as a pooling of interests. A fairness opinion for the
acquisition was provided to Xybernaut by a leading investment bank. Restated
financial statements to give effect to this proposed transaction have not been
presented herein because the transaction does not meet the significance tests
promulgated by Regulation S-X of the SEC.
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<PAGE>
<TABLE>
<CAPTION>
<S> <C>
========================================================= ==============================================
WE HAVE NOT AUTHORIZED ANY DEALER, SALESPERSON
OR ANY OTHER PERSON TO GIVE ANY INFORMATION OR TO _________
REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS. SHARES OF COMMON STOCK
YOU MUST NOT RELY ON ANY UNAUTHORIZED INFORMATION.
THIS PROSPECTUS DOES NOT OFFER TO SELL OR BUY ANY SHARES IN ANY JURISDICTION
WHERE IT IS UNLAWFUL. THE INFORMATION IN THIS PROSPECTUS IS CURRENT AS OF
_________________, 2000.
XYBERNAUT CORPORATION
TABLE OF CONTENTS
Page
----
Risk Factors.........................................2
Where You Can Find More
Information About Us.........................7
Use of Proceeds......................................8
Dilution.............................................8
Selling Stockholders ................................9
Description of Securities...........................13
Plan of Distribution ...............................16
Indemnification for Securities
Act Liabilities.............................17
Legal Matters.......................................17
Experts ............................................18 ____________
PROSPECTUS
____________
_________________________, 2000
========================================================= ======================================================
</TABLE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses which will be paid
by us in connection with the issuance and distribution of the securities being
registered on this registration statement. The selling stockholders will not
incur any of the expenses set forth below. All amounts shown are estimates.
Filing fee for registration statement............... $13,568.57
Legal fees and expenses............................. $10,000.00
Accounting expenses................................. $5,000.00
---------
Total............................................... $28,568.57
==========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware
(the "DGCL") provides, in general, that a corporation incorporated under the
laws of the State of Delaware, such as the registrant, may indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding (other than a derivative action
by or in the right of the corporation) by reason of the fact that such person is
or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such person in connection with such action, suit or proceeding if such person
acted in good faith and in a manner such person reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe such person's
conduct was unlawful. In the case of a derivative action, a Delaware corporation
may indemnify any such person against expenses (including attorneys' fees)
actually and reasonably incurred by such person in connection with the defense
or settlement of such action or suit if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification will be made in
respect of any claim, issue or matter as to which such person will have been
adjudged to be liable to the corporation unless and only to the extent that the
Court of Chancery of the State of Delaware or any other court in which such
action was brought determines such person is fairly and reasonably entitled to
indemnity for such expenses.
Our certificate of incorporation provides that directors will not be
personally liable for monetary damages to us or our stockholders for breach of
fiduciary duty as a director, except for liability resulting from a breach of
the director's duty of loyalty to us or our stockholders, intentional misconduct
or willful violation of law, actions or inactions not in good faith, an unlawful
stock purchase or payment of a dividend under Delaware law, or transactions from
which the director derives improper personal benefit. Such limitation of
liability does not affect the availability of equitable remedies such as
injunctive relief or rescission. Our certificate of incorporation also
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<PAGE>
authorizes us to indemnify our officers, directors and other agents, by bylaws,
agreements or otherwise, to the fullest extent permitted under Delaware law. We
have entered into an indemnification agreement with each of our directors and
officers which may, in some cases, be broader than the specific indemnification
provisions contained in our certificate of incorporation or as otherwise
permitted under Delaware law. Each indemnification agreement may require us,
among other things, to indemnify such officers and directors against certain
liabilities that may arise by reason of their status or service as a director or
officer, against liabilities arising from willful misconduct of a culpable
nature, and to obtain directors' and officers' liability insurance if available
on reasonable terms.
We maintain a directors and officers liability policy with Genesis
Insurance Company that contains a limit of liability of $3,000,000 per policy
year.
ITEM 16. EXHIBITS.
NUMBER DESCRIPTION OF EXHIBIT
4.1 Form of Warrant issued to Crystalite Investments, Ltd.
4.2 Form of Warrant issued to International Business Solutions,
Inc.
4.3 Form of Warrant issued to E. Dell Smith
4.4 Form of Warrant issued to Christina S. Kohlhaas.
4.5 Form of Warrant issued to E. Dell Smith
5 Opinion of Parker Chapin LLP.
10.1(1) Form of Purchase Agreement dated as of November 19, 1999.
10.2 Form of Restated Bridge Financing Agreement dated as of
October 18, 1999, restated as of December 30, 1999.
10.3 Form of Common Stock Purchase Agreement dated as of January 3,
2000.
10.4(1) Form of Registration Rights Agreement dated as of November 19,
1999.
10.5(1) Form of Escrow Agreement dated as of November 19, 1999.
23.1 Consent of Grant Thornton LLP
23.2 Consent of Parker Chapin LLP (included in their opinion filed
as Exhibit 5.1).
- -------------
(1) Incorporated by reference to the report on Form 10-KSB, file No.
000-21013
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
II-2
<PAGE>
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Securities and
Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment will be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time will be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the small business issuer pursuant to the foregoing provisions, or otherwise,
the small business issuer has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the small business issuer of expenses incurred or
paid by a director, officer or controlling person of the small business issuer
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the small business issuer will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of the issue.
The undersigned small business issuer hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to section 13(a) or section
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement will be deemed
II-3
to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time will be deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Fairfax, Commonwealth of Virginia on March 31, 2000.
XYBERNAUT CORPORATION
By:
Edward G. Newman
/s/ Edward G. Newman
--------------------------------
Chairman of the Board, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement on Form S-3 has been signed below by the following
persons in the capacities indicated on March 31, 2000.
<TABLE>
<CAPTION>
<S> <C>
/s/ Edward G. Newman Chairman of the Board,
- -------------------------------------------- President and Chief Executive Officer
Edward G. Newman
/s/ Kaz Toyosato Executive Vice President -
- -------------------------------------------- Asian Operations and Director
Kaz Toyosato
/s/ John F. Moynahan Senior Vice President and
- -------------------------------------------- Chief Financial Officer
John F. Moynahan
/s/ Martin Eric Weisberg Director
- -------------------------------------------
Martin Eric Weisberg
/s/ Lt. Gen. Harry E. Soyster Director
- --------------------------------------------
Lt. Gen. Harry E. Soyster
/s/ James J. Ralabate Director
- --------------------------------------------
James J. Ralabate
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
/s/ Keith P. Hicks Director
- --------------------------------------------
Keith P. Hicks
/s/ Steven A. Newman Executive Vice President and Vice Chairman
- --------------------------------------------
Steven A. Newman of the Board
/s/ Phillip E. Pearce Director
- --------------------------------------------
Phillip E. Pearce
/s/ Eugene J. Amobi Director
- --------------------------------------------
Eugene J. Amobi
/s/ Edwin Vogt Director
- --------------------------------------------
Edwin Vogt
</TABLE>
<PAGE>
SECURITIES AND
EXCHANGE
COMMISSION
WASHINGTON, D.C. 20549
-------------
EXHIBITS TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------
XYBERNAUT CORPORATION
(EXACT NAME OF ISSUER AS SPECIFIED
IN ITS CHARTER)
APRIL __, 2000
E-1
<PAGE>
<TABLE>
<CAPTION>
NUMBER DESCRIPTION OF EXHIBIT
<S> <C>
4.1 Form of Warrant issued to Crystalite Investments, Ltd.
4.2 Form of Warrant issued to International Business Solutions, Inc.
4.3 Form of Warrant issued to E. Dell Smith
4.4 Form of Warrant issued to Christina S. Kohlhaas.
4.5 Form of Warrant issued to E. Dell Smith
5 Opinion of Parker Chapin LLP.
10.1(1) Form of Purchase Agreement dated as of November 19, 1999.
10.2 Form of Restated Bridge Financing Agreement dated as of October 18, 1999, restated as of December 30, 1999.
10.3 Form of Common Stock Purchase Agreement dated as of January 3, 2000.
10.4(1) Form of Registration Rights Agreement dated as of November 19, 1999.
10.5(1) Form of Escrow Agreement dated as of November 19, 1999.
23.1 Consent of Grant Thornton LLP.
23.2 Consent of Parker Chapin LLP (included in their opinion filed as Exhibit 5.1).
- -------------
</TABLE>
(1) Incorporated by reference to the report on Form 10-KSB, file No. 000-21013
E-2
EXHIBIT 4.1
THESE SECURITIES AND THE SECURITIES ISSUABLE UPON THEIR EXERCISE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED UNLESS
COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT, A "NO ACTION"
LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION WITH RESPECT TO SUCH
TRANSFER, A TRANSFER MEETING THE REQUIREMENTS OF RULE 144 OF THE SECURITIES AND
EXCHANGE COMMISSION, OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER TO THE
EFFECT THAT ANY SUCH TRANSFER IS EXEMPT FROM SUCH REGISTRATION.
XYBERNAUT CORPORATION
COMMON STOCK PURCHASE WARRANT
1. Issuance. In consideration of good and valuable
consideration, the receipt of which is hereby acknowledged by Xybernaut
Corporation, a Delaware corporation (the "Company"), Crystalite Investments
Ltd., or registered assigns (the "Holder") is hereby granted the right to
purchase at any time until 5:00 P.M., New York City time, on October 1, 2004
(the "Expiration Date"), One Million (1,000,000) fully paid and nonassessable
shares of the Company's Common Stock, par value $.01 per share (the "Common
Stock") at an initial exercise price of $1.01 per share (the "Exercise Price"),
subject to further adjustment as set forth in Section 6 hereof.
2. Exercise of Warrants. This Warrant is exercisable in whole
or in part at the Exercise Price per share of Common Stock payable hereunder,
payable in cash or by certified or official bank check, or by "cashless
exercise", by means of tendering this Warrant Certificate to the Company to
receive a number of shares of Common Stock equal in Market Value to the
difference between the Market Value of the shares of Common Stock issuable upon
exercise of this Warrant and the total cash exercise price thereof. Upon
surrender of this Warrant Certificate with the annexed Notice of Exercise Form
duly executed, together with payment of the Exercise Price for the shares of
Common Stock purchased, the Holder shall be entitled to receive a certificate or
certificates for the shares of Common Stock so purchased. For the purposes of
this Section 2, "Market Value" shall be an amount equal to the average closing
bid price of a share of Common Stock for the ten (10) days preceding the
Company's receipt of the Notice of Exercise Form duly executed multiplied by the
number of shares of Common Stock to be issued upon surrender of this Warrant
Certificate.
3. Reservation of Shares. The Company hereby agrees that at
all times during the term of this Warrant there shall be reserved for issuance
upon exercise of this Warrant such number of shares of its Common Stock as shall
be required for issuance upon exercise of this Warrant (the "Warrant Shares").
<PAGE>
4. Mutilation or Loss of Warrant. Upon receipt by the Company
of evidence satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant, and (in the case of loss, theft or destruction) receipt of
reasonably satisfactory indemnification, and (in the case of mutilation) upon
surrender and cancellation of this Warrant, the Company will execute and deliver
a new Warrant of like tenor and date and any such lost, stolen, destroyed or
mutilated Warrant shall thereupon become void.
5. Rights of the Holder. The Holder shall not, by virtue
hereof, be entitled to any rights of a stockholder in the Company, either at law
or equity, and the rights of the Holder are limited to those expressed in this
Warrant and are not enforceable against the Company except to the extent set
forth herein.
6. Protection Against Dilution.
6.1 Adjustment Mechanism. If an adjustment of the
Exercise Price is required pursuant to this Section 6, the Holder shall be
entitled to purchase such number of additional shares of Common Stock as will
cause (i) the total number of shares of Common Stock Holder is entitled to
purchase pursuant to this Warrant, multiplied by (ii) the adjusted purchase
price per share, to equal (iii) the dollar amount of the total number of shares
of Common Stock Holder is entitled to purchase before adjustment multiplied by
the total purchase price before adjustment.
6.2 Capital Adjustments. In case of any stock split or
reverse stock split, stock dividend, reclassification of the Common Stock,
recapitalization, merger or consolidation, or like capital adjustment affecting
the Common Stock of the Company, the provisions of this Section 6 shall be
applied as if such capital adjustment event had occurred immediately prior to
the date of this Warrant and the original purchase price had been fairly
allocated to the stock resulting from such capital adjustment; and in other
respects the provisions of this Section shall be applied in a fair, equitable
and reasonable manner so as to give effect, as nearly as may be, to the purposes
hereof. A rights offering to stockholders shall be deemed a stock dividend to
the extent of the bargain purchase element of the rights.
7. Transfer to Comply with the Securities Act; Registration
Rights.
(a) This Warrant has not been registered under the Securities
Act of 1933, as amended, (the "Act") and has been issued to the Holder for
investment and not with a view to the distribution of either the Warrant or the
Warrant Shares. Neither this Warrant nor any of the Warrant Shares or any other
security issued or issuable upon exercise of this Warrant may be sold,
transferred, pledged or hypothecated in the absence of an effective registration
statement under the Act relating to such security or an opinion of counsel
satisfactory to the Company that registration is not required under the Act.
Each certificate for the Warrant, the Warrant Shares and any other security
issued or issuable upon exercise of this Warrant shall contain a legend on
<PAGE>
the face thereof, in form and substance satisfactory to counsel for the Company,
setting forth the restrictions on transfer contained in this Section.
(b) The Company hereby grants to the Holder piggyback
registration rights with respect to the Warrant Shares. In the event the Company
is filing a Registration Statement for itself or on behalf of any of its
shareholders, the Company shall notify the Holder in writing reasonably in
advance of such filing (but at least five business days) and give the Holder the
opportunity to include all or any party of the Warrant Shares (whether or not
previously issued, to the extent permissible under the Act or any regulation
promulgated thereunder. Upon the Holder's notification that the Holder desires
to have all or any portion of the Warrant Shares included in such registration,
the Company shall, at no cost or expense to the Holder, include or cause to be
included in such registration statement the Warrant Shares so identified by the
Holder.
(c) In addition to the registration rights referred to in the
preceding provisions of Section (b), effective after the expiration of the
effectiveness of the Registration Statement as contemplated by the Registration
Rights Agreement, the Holder shall have demand piggy-back registration rights
with respect to the Warrant Shares then held by the Holder or then subject to
issuance upon exercise of this Warrant (collectively, the "Remaining Warrant
Shares"), subject to the conditions set forth below. If, at any time after the
Registration Statement has ceased to be effective, the Company participates
(whether voluntarily or by reason of an obligation to a third party) in the
registration of any shares of the Company's stock, the Company shall give
written notice thereof to the Holder and the Holder shall have the right,
exercisable within ten (10) business days after receipt of such notice, to
demand inclusion of all or a portion of the Holder's Remaining Warrant Shares in
such registration statement.
8. Notices. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally,
telegraphed, telexed, sent by facsimile transmission or sent by certified,
registered or express mail, postage pre-paid. Any such notice shall be deemed
given when so delivered personally, telegraphed, telexed or sent by facsimile
transmission, or, if mailed, two days after the date of deposit in the United
States mails, as follows:
(i) if the to Company, to:
Xybernaut Corporation
12701 Fair Lakes Circle
Suite 550
Fairfax, Virginia 22033
Fax no.: 703-631-6734
Attn: Chief Financial Officer
<PAGE>
(ii) if to the Holder, to:
Crystalite Investments, Ltd.
111 Arlosorov Street
Tel Aviv, Israel
Fax no.: 011-972-3-691-0476
Any party may be notice given in accordance with this Section to the other
parties designate another address or person for receipt of notices hereunder.
9. Supplements and Amendments; Whole Agreement. This Warrant
may be amended or supplemented only by an instrument in writing signed by the
parties hereto. This Warrant of even date herewith contain the full
understanding of the parties hereto with respect to the subject matter hereof
and thereof and there are no representations, warranties, agreements or
understandings other than expressly contained herein and therein.
10. Governing Law. This Warrant shall be deemed to be a
contract made under the laws of the State of New York and for all purposes shall
be governed by and construed in accordance with the laws of such State
applicable to contracts to be made and performed entirely within such State.
11. Counterparts. This Warrant may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
12. Descriptive Headings. Descriptive headings of the several
Sections of this Warrant are inserted for convenience only and shall not control
or affect the meaning or construction of any of the provisions hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of
the __th day of December 1999.
XYBERNAUT CORPORATION
By:_______________________________________
Name: Steven A. Newman
Title: Vice Chairman
Attest:
- ------------------------------
- ------------------------------
Chief Administrative Officer
<PAGE>
FORM OF
NOTICE OF EXERCISE OF WARRANT
The undersigned hereby irrevocably elects to exercise the right,
represented by the Warrant Certificate dated as of __________, 1999, to purchase
__________ shares of the Common Stock, par value $.01 per share, of Xybernaut
Corporation and tenders herewith payment in accordance with Section 1 of said
Common Stock Purchase Warrant.
Please deliver the stock certificate to:
Dated:
CRYSTALITE INVESTMENTS, LTD.
By:__________________________________
EXHIBIT 4.2
THE SALE AND ISSUANCE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR UNDER THE SECURITIES LAW OF ANY STATE OR OTHER JURISDICTION. NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, HYPOTHECATED OR OTHERWISE DISPOSED
OF, UNLESS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO A TRANSACTION THAT IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH
REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS.
COMMON STOCK PURCHASE WARRANT
XYBERNAUT CORPORATION
EXPIRES JANUARY 2, 2002
No.: Number of Shares: 100,000
Date of Issuance: January 3, 2000
1. Issuance. In consideration of good and valuable
consideration, the receipt of which is hereby acknowledged by Xybernaut
Corporation, a Delaware corporation (the "Company"), International Business
Solutions, Inc., or registered assigns (the "Holder"), is hereby granted the
right to purchase at any time until 5:00 P.M., New York City time, on January 2,
2002 (the "Expiration Date"), one hundred thousand (100,000) fully paid and
nonassessable shares of the Company's Common Stock, par value $.01 per share
(the "Common Stock") at an initial exercise price of $6.00 per share (the
"Exercise Price").
2. Exercise of Warrants. This Warrant shall become exercisable
as to 5% of the total number of shares of Common Stock subject hereto on April
1, 2001 and on the first day of each of the nineteen (19) consecutive months
immediately thereafter. This Warrant is exercisable in whole or in part at the
Exercise Price per share of Common Stock payable hereunder, payable in cash or
by certified or official bank check. Upon surrender of this Warrant Certificate
with the annexed Notice of Exercise Form duly executed,
<PAGE>
together with payment of the Exercise Price for the shares of Common Stock
purchased, the Holder shall be entitled to receive a certificate or certificates
for the shares of Common Stock so purchased.
3. Reservation of Shares. The Company hereby agrees that at
all times during the term of this Warrant there shall be reserved for issuance
upon exercise of this Warrant such number of shares of its Common Stock as shall
be required for issuance upon exercise of this Warrant (the "Warrant Shares").
4. Mutilation or Loss of Warrant. Upon receipt by the Company
of evidence satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant, and (in the case of loss, theft or destruction) receipt of
reasonably satisfactory indemnification, and (in the case of mutilation) upon
surrender and cancellation of this Warrant, the Company will execute and deliver
a new Warrant of like tenor and date and any such lost, stolen, destroyed or
mutilated Warrant shall thereupon become void.
5. Rights of the Holder. The Holder shall not, by virtue
hereof, be entitled to any rights of a stockholder in the Company, either at law
or equity, and the rights of the Holder are limited to those expressed in this
Warrant and in the Consulting Agreement between the Company and Libra Finance SA
pursuant to which this Warrant was originally issued (the "Consulting
Agreement") and are not enforceable against the Company except to the extent set
forth herein and therein.
6. Transfer to Comply with the Securities Act; Registration
Rights.
6.1 This Warrant has not been registered under the
Securities Act of 1933, as amended, (the "Act") and has been issued to the
Holder for investment and not with a view to the distribution of either the
Warrant or the Warrant Shares. Neither this Warrant nor any of the Warrant
Shares or any other security issued or issuable upon exercise of this Warrant
may be offered, sold, transferred, pledged, encumbered, hypothecated or
otherwise disposed of in the absence of an effective registration statement
under the Act relating to such security or an opinion of counsel satisfactory to
the Company that registration is not required under the Act. Each certificate
for the Warrant, the Warrant Shares and any other security issued or issuable
upon exercise of this Warrant shall contain a legend on the face thereof, in
form and substance satisfactory to counsel for the Company, setting forth the
restrictions on transfer contained in this Section.
6.2 The Company hereby grants to the Holder piggyback
registration rights with respect to the Warrant Shares which rights shall
commence on the date of issuance of this Warrant. In the event the Company is
filing a registration statement for itself or on behalf of any of its
shareholders at any time after the date hereof, the Company shall notify the
Holder in writing reasonably in advance of such filing (but at least five (5)
business days) and give the
<PAGE>
Holder the opportunity to include all or any portion of the Warrant Shares
(whether or not previously issued, to the extent permissible under the Act or
any regulation promulgated thereunder). Upon the Holder's notification that the
Holder desires to have all or any portion of the Warrant Shares included in such
registration, the Company shall, at no cost or expense to the Holder, include or
cause to be included in such registration statement the Warrant Shares so
identified by the Holder, provided, however, that if, in the opinion of the
Company's managing underwriter or underwriters, if any, for such offering, the
inclusion of the Warrant Shares, when added to the securities being registered
by the Company or any selling stockholder(s), will exceed the maximum amount of
the Company's securities that can be marketed (x) at a price reasonably related
to their then current market value, or (y) without materially and adversely
affecting the entire terms of the offering, then the number of shares to be
included in such offering shall be reduced, and such shares shall be excluded
from such offering in a number deemed necessary by such managing underwriter or
underwriters, based upon and subject to a pro rata reduction of the number of
Warrant Shares the Holder of such securities proposed to include therein.
7. Notices. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally,
telegraphed, telexed, sent by facsimile transmission or sent by certified,
registered or express mail, postage pre-paid. Any such notice shall be deemed
given when so delivered personally, telegraphed, telexed or sent by facsimile
transmission, or, if mailed, two (2) days after the date of deposit in the
United States mails, as follows:
(1) if the to Company, to:
Xybernaut Corporation
12701 Fair Lakes Circle
Suite 550
Fairfax, Virginia 22033
Attn: Chief Financial Officer
Fax No.: (703) 631-3903
(2) if to the Holder, to:
International Business Solutions, Inc.
301 Park Ave.
New York, New York 10022
Attn:
Fax No. (212) 888-7580
Any party may be notice given in accordance with this Section to the other
parties designate another address or person for receipt of notices hereunder.
<PAGE>
8. Supplements and Amendments; Whole Agreement. This Warrant
may be amended or supplemented only by an instrument in writing signed by the
parties hereto. This Warrant of even date herewith and the Consulting Agreement
contain the full understanding of the parties hereto with respect to the subject
matter hereof and thereof and there are no representations, warranties,
agreements or understandings other than expressly contained herein and therein.
9. Governing Law. This Warrant shall be deemed to be a
contract made under the laws of the State of New York and for all purposes shall
be governed by and construed in accordance with the laws of such State
applicable to contracts to be made and performed entirely within such State.
10. Descriptive Headings. Descriptive headings of the several
Sections of this Warrant are inserted for convenience only and shall not control
or affect the meaning or construction of any of the provisions hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of
January 3, 2000.
XYBERNAUT CORPORATION
By:_______________________________________
Name: Steven A. Newman
Title: Vice Chairman
Attest:
- ----------------------------
- ----------------------------
Chief Administrative Officer
<PAGE>
NOTICE OF EXERCISE OF WARRANT
The undersigned hereby irrevocably elects to exercise the right,
represented by the Warrant Certificate dated as of __________, 2000, to purchase
__________ shares of the Common Stock, par value $.01 per share, of Xybernaut
Corporation and tenders herewith payment in accordance with Section 1 of said
Common Stock Purchase Warrant.
Please deliver the stock certificate to:
Dated:______________________
By:__________________________________
EXHIBIT 4.3
THE SALE AND ISSUANCE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR UNDER THE SECURITIES LAW OF ANY STATE OR OTHER JURISDICTION. NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, HYPOTHECATED OR OTHERWISE DISPOSED
OF, UNLESS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO A TRANSACTION THAT IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH
REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS.
COMMON STOCK PURCHASE WARRANT
XYBERNAUT CORPORATION
EXPIRES OCTOBER 24, 2002
No.: Number of Shares: 10,000
Date of Issuance: October 25, 1999
1. Issuance. In consideration of good and valuable
consideration, the receipt of which is hereby acknowledged by Xybernaut
Corporation, a Delaware corporation (the "Company"), E. Dell Smith or registered
assigns (the "Holder"), is hereby granted the right to purchase at any time
until 5:00 P.M., New York City time, on October 24, 2002 (the "Expiration
Date"), ten thousand (10,000) fully paid and nonassessable shares of the
Company's Common Stock, par value $.01 per share (the "Common Stock") at an
initial exercise price of $2.00 per share (the "Exercise Price").
2. Exercise of Warrants. This Warrant is exercisable in whole
or in part at the Exercise Price per share of Common Stock payable hereunder,
payable in cash or by certified or official bank check. Upon surrender of this
Warrant Certificate with the annexed Notice of Exercise Form duly executed,
together with payment of the Exercise Price for the shares of Common Stock
purchased, the Holder shall be entitled to receive a certificate or certificates
for the shares of Common Stock so purchased.
3. Reservation of Shares. The Company hereby agrees that at
all times during the term of this Warrant there shall be reserved for issuance
upon exercise of this Warrant
<PAGE>
such number of shares of its Common Stock as shall be required for issuance upon
exercise of this Warrant (the "Warrant Shares").
4. Mutilation or Loss of Warrant. Upon receipt by the Company
of evidence satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant, and (in the case of loss, theft or destruction) receipt of
reasonably satisfactory indemnification, and (in the case of mutilation) upon
surrender and cancellation of this Warrant, the Company will execute and deliver
a new Warrant of like tenor and date and any such lost, stolen, destroyed or
mutilated Warrant shall thereupon become void.
5. Rights of the Holder. The Holder shall not, by virtue
hereof, be entitled to any rights of a stockholder in the Company, either at law
or equity, and the rights of the Holder are limited to those expressed in this
Warrant and in the Consulting Agreement between the Company and Libra Finance SA
pursuant to which this Warrant was originally issued (the "Consulting
Agreement") and are not enforceable against the Company except to the extent set
forth herein and therein.
6. Transfer to Comply with the Securities Act; Registration
Rights.
6.1 This Warrant has not been registered under the
Securities Act of 1933, as amended, (the "Act") and has been issued to the
Holder for investment and not with a view to the distribution of either the
Warrant or the Warrant Shares. Neither this Warrant nor any of the Warrant
Shares or any other security issued or issuable upon exercise of this Warrant
may be offered, sold, transferred, pledged, encumbered, hypothecated or
otherwise disposed of in the absence of an effective registration statement
under the Act relating to such security or an opinion of counsel satisfactory to
the Company that registration is not required under the Act. Each certificate
for the Warrant, the Warrant Shares and any other security issued or issuable
upon exercise of this Warrant shall contain a legend on the face thereof, in
form and substance satisfactory to counsel for the Company, setting forth the
restrictions on transfer contained in this Section.
6.2 The Company hereby grants to the Holder piggyback
registration rights with respect to the Warrant Shares which rights shall
commence after the date of issuance of this Warrant. In the event the Company is
filing a registration statement for itself or on behalf of any of its
shareholders at any time after the date hereof, the Company shall notify the
Holder in writing reasonably in advance of such filing (but at least five (5)
business days) and give the Holder the opportunity to include all or any portion
of the Warrant Shares (whether or not previously issued, to the extent
permissible under the Act or any regulation promulgated thereunder). Upon the
Holder's notification that the Holder desires to have all or any portion of the
Warrant Shares included in such registration, the Company shall, at no cost or
expense to the Holder, include or cause to be included in such registration
statement the Warrant Shares so identified by the Holder, provided, however,
that if, in the opinion of the Company's managing underwriter or underwriters,
if any, for such offering, the inclusion of the Warrant Shares, when added to
the securities being registered by the Company or any selling stockholder(s),
will
<PAGE>
exceed the maximum amount of the Company's securities that can be marketed (x)
at a price reasonably related to their then current market value, or (y) without
materially and adversely affecting the entire terms of the offering, then the
number of shares to be included in such offering shall be reduced, and such
shares shall be excluded from such offering in a number deemed necessary by such
managing underwriter or underwriters, based upon and subject to a pro rata
reduction of the number of Warrant Shares the Holder of such securities proposed
to include therein.
7. Notices. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally,
telegraphed, telexed, sent by facsimile transmission or sent by certified,
registered or express mail, postage pre-paid. Any such notice shall be deemed
given when so delivered personally, telegraphed, telexed or sent by facsimile
transmission, or, if mailed, two (2) days after the date of deposit in the
United States mails, as follows:
(1) if the to Company, to:
Xybernaut Corporation
12701 Fair Lakes Circle
Suite 550
Fairfax, Virginia 22033
Attn: Chief Financial Officer
Fax No.: (703) 631-3903
(2) if to the Holder, to:
E. Del Smith and Company, Inc.
1130 Connecticut Avenue, N.W.
Suite 650
Washington, DC 20036
Attn: E. Del Smith
Fax No.:
Any party may be notice given in accordance with this Section to the other
parties designate another address or person for receipt of notices hereunder.
8. Supplements and Amendments; Whole Agreement. This Warrant
may be amended or supplemented only by an instrument in writing signed by the
parties hereto. This Warrant of even date herewith and the Consulting Agreement
contain the full understanding of the parties hereto with respect to the subject
matter hereof and thereof and there are no representations, warranties,
agreements or understandings other than expressly contained herein and therein.
<PAGE>
9. Governing Law. This Warrant shall be deemed to be a
contract made under the laws of the State of New York and for all purposes shall
be governed by and construed in accordance with the laws of such State
applicable to contracts to be made and performed entirely within such State.
10. Descriptive Headings. Descriptive headings of the several
Sections of this Warrant are inserted for convenience only and shall not control
or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of
October 25, 1999.
XYBERNAUT CORPORATION
By:_______________________________________
Name: Steven A. Newman
Title: Vice Chairman
Attest:
- ----------------------------
- ----------------------------
Chief Administrative Officer
<PAGE>
NOTICE OF EXERCISE OF WARRANT
The undersigned hereby irrevocably elects to exercise the right,
represented by the Warrant Certificate dated as of __________, 2000, to purchase
__________ shares of the Common Stock, par value $.01 per share, of Xybernaut
Corporation and tenders herewith payment in accordance with Section 1 of said
Common Stock Purchase Warrant.
Please deliver the stock certificate to:
Dated:______________________
By:__________________________________
EXHIBIT 4.4
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR ANY STATE SECURITIES LAWS.
SUCH SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED,
ASSIGNED, PLEDGED OR HYPOTHECATED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
ACT AND APPLICABLE STATE SECURITIES LAWS.
THE REGISTERED HOLDER OF THIS WARRANT, BY ITS ACCEPTANCE HEREOF, AGREES THAT IT
WILL NOT SELL, TRANSFER, ASSIGN, PLEDGE OR HYPOTHECATE THIS WARRANT EXCEPT AS
HEREIN PROVIDED.
VOID AFTER 5:00 P.M. EASTERN STANDARD TIME ON OCTOBER 21, 2001.
No. 2 As of October 22, 1996
COMMON STOCK PURCHASE WARRANT
-----------------------------
For the Purchase of 30,000 Shares of Common Stock
of
XYBERNAUT CORPORATION
(a Delaware corporation)
1. Warrant.
--------
This certifies that CHRISTINA S. KOHLHAAS (together with any
transferees as permitted by Section 3 hereof, the "Holder") is the registered
owner of this Common Stock Purchase Warrant (the "Warrant") of XYBERNAUT
CORPORATION, a Delaware corporation (the "Company"). Subject to the terms and
provisions set forth herein, the Holder is entitled, at any time and from time
to time from the date hereof until 5:00 p.m., New York City time, October 21,
2001, but not thereafter, to subscribe for, purchase and receive, in whole or in
part, up to THIRTY THOUSAND (30,000) shares of Common Stock, $0.01 par value
(the "Common Stock"), of the Company. If October 21, 2001, is a day on which
banking institutions are authorized by law to close, then this Warrant may be
exercised on the next succeeding day that is not such a day in accordance with
the terms and provisions hereof. This Warrant is exercisable as to each share of
Common Stock covered hereby at the price per share (the "Exercise Price") set
forth in Section 2 hereof. The term "Exercise Price" shall mean the initial
exercise price, or such exercise price as adjusted in the manner provided in
Sections 2 and 6 hereof, depending on the context.
<PAGE>
2. Exercise.
2.1 Restrictions on Exercise; Exercise Price. This Warrant shall become
exercisable:
(1) immediately as to 10,000 shares of Common Stock, at an Exercise
Price of $4.25 per share;
(2) as to an additional 10,000 shares of Common Stock on the day
after the closing bid price of the Common Stock equals or exceeds
$11.00 per share for 25 consecutive trading days or for 30 out of
35 consecutive trading days, at an Exercise Price of $11.00 per
share; and
(3) as to an additional 10,000 shares of Common Stock on the day
after the closing bid price of the Common Stock equals or exceeds
$18.00 per share for 20 consecutive trading days, at an Exercise
Price of $18.00 per share.
If the rights represented hereby shall not be exercised at or before
5:00 p.m., New York City time, on October 21, 2001, this Warrant shall become
and be void and without further force or effect and all rights represented
hereby shall cease and expire.
2.2 Exercise Procedure. In order to exercise this Warrant, the exercise
form attached hereto must be duly executed, guaranteed, completed and delivered
to the Company (to the attention of the Company's Chief Financial Officer),
together with this Warrant and payment of the Exercise Price for the shares of
the Common Stock being purchased. The payment of the Exercise Price shall be
made by a certified check or bank check payable to the order of the Company.
3. Restrictions on Transfer; Registration of Transfers.
----------------------------------------------------
3.1 Restrictions on Transfer. The registered Holder of this Warrant, by
her acceptance hereof, agrees that this Warrant shall not be transferable
without the prior written consent of the Company, which consent may be withheld
in the Company's sole discretion; provided, however, that the Holder may
transfer all or any part of this Warrant or any securities purchased upon the
exercise of all or any part of this Warrant to CSK Securities Research or Neal
J. Kohlhaas; provided further, that prior to any such permitted transfer, if
such transfer is not made pursuant to an effective registration statement under
the Securities Act of 1933, as amended (the "Act"), the Holder will, if
requested by the Company, deliver to the Company:
(1) an opinion of counsel satisfactory in form, substance and scope
to the Company that this Warrant or the securities purchased upon
the exercise of this Warrant may be transferred without
registration under the Act and any applicable state securities
laws;
<PAGE>
(2) an agreement by the proposed transferee to the impression of the
restrictive investment legend set forth below on this Warrant or
the securities to be received upon the exercise thereof;
(3) an agreement by such transferee that the Company may place a
notation in the stock books of the Company or a "stop transfer
order" with any transfer agent or registrar with respect to the
securities purchased upon the exercise of this Warrant; and
(4) an agreement by such transferee to be bound by the terms and
provisions of this Warrant (including, without limitation, of
this Section 3 relating to the transfer of all or any part of
this Warrant or of the securities purchased upon the exercise of
this Warrant).
The Holder agrees that this Warrant and each certificate
representing securities purchased upon the exercise of this Warrant shall bear a
legend as follows unless such securities have been registered under the Act:
"The securities represented by this warrant and each
certificate representing securities purchased upon exercise of
this warrant have not been registered under the Securities Act
of 1933, as amended (the "Act"), or any applicable state
securities laws. Such securities may not be offered for sale,
sold or otherwise transferred, assigned, pledged or
hypothecated except pursuant to an effective registration
statement under the Act, or pursuant to an exemption from
registration under the Act and pursuant to applicable state
securities laws."
3.2 Registration of Transfers. In order to make any permitted transfer
or assignment of this Warrant, the Holder must deliver to the Company the
assignment form attached hereto duly executed, guaranteed and completed,
together with this Warrant and payment of all transfer taxes, if any, payable in
connection therewith. Payment of any applicable transfer taxes shall be made by
certified check or bank check payable to the Company. The Company shall
thereafter transfer such portion of this Warrant as is specified in the
assignment form on the books of the Company and shall execute and deliver a new
warrant or warrants of like tenor with this Warrant to the appropriate
transferee(s) expressly evidencing the right to purchase the number of shares of
Common Stock purchasable hereunder or such portion of such number as shall be
contemplated by such transfer.
4. New Warrants to be Issued.
--------------------------
4.1 Partial Exercise or Transfer. Subject to the restrictions set forth
in Sections 2 and 3 hereof, this Warrant may be exercised or transferred in
whole or in part. In the event of the exercise or transfer hereof in part only,
upon surrender of this Warrant for cancellation, together with the duly executed
exercise or assignment form and funds sufficient to pay any required
<PAGE>
transfer tax, the Company shall cause to be delivered to the Holder without
charge a new warrant or new warrants of like tenor with this Warrant in the name
of the Holder evidencing the right to purchase, in the aggregate, the remaining
number of underlying shares of Common Stock purchasable hereunder after giving
effect to any such partial exercise or transfer.
4.2 Lost or Destroyed Warrant. Upon receipt by the Company of evidence
satisfactory to the Company, in its sole discretion, of the loss, theft,
destruction or mutilation of this Warrant and of an indemnification in favor of
the Company reasonably satisfactory to it, the Company shall execute and deliver
a new warrant of like tenor and date. Any such new warrants executed and
delivered as a result of such loss, theft, mutilation or destruction shall
represent the exact same contractual obligations on the part of the Company as
are represented by this Warrant.
5. Registration Rights.
--------------------
5.1 "Piggy-Back" Registration.
(1) Grant of Right.
(i) The Holder of this Warrant shall have the right (the
"Piggy-Back Right") for a period of three (3) years
beginning on the date hereof (the "Piggy-Back
Period"), to include all of the shares of Common
Stock underlying such Warrant (the "Registrable
Securities") as part of any registration of
securities filed by the Company (other than in
connection with a transaction contemplated by Rule
145(a) promulgated under the Act or pursuant to Form
S-8); provided, however, that if, in the opinion of
the Company's managing underwriter or underwriters,
if any, for such offering, the inclusion of the
Registrable Securities, when added to the securities
being registered by the Company or any selling
stockholder(s), will exceed the maximum amount of the
Company's securities that can be marketed (x) at a
price reasonably related to their then current market
value, or (y) without materially and adversely
affecting the entire terms of the offering, then the
number of shares to be included in such offering
shall be reduced, and such shares shall be excluded
from such offering in a number deemed necessary by
such managing underwriter or underwriters, based upon
and subject to a pro rata reduction of the number of
Registrable Securities the Holder of such securities
proposed to include therein.
(ii) In the event that the Holder is unable to exercise
her Piggy-Back Right due to the failure of the
Company to register any of its securities within the
Piggy-Back Period, the Company shall, as
<PAGE>
expeditiously as practicable following the expiration
of the Piggy-Back Period, register the Registrable
Securities by preparing and filing a registration
statement on Form S-8 or such other registration
statement form as may then be available to the
Company.
(2) Terms. The Company shall bear all fees and expenses attendant
to registering the Registrable Securities, but the Holder
shall pay any and all underwriting commissions, the expenses
of any legal counsel selected by the Holder to represent it in
connection with the sale of the Registrable Securities and
applicable transfer taxes, if any. In the event of such a
proposed registration, the Company shall furnish the then
Holder of outstanding Registrable Securities with not less
than thirty (30) days written notice prior to the proposed
date of filing of such registration statement. If the Holder
desires to exercise her Piggy-Back Right, the Holder shall
furnish the Company written notice, within twenty (20) days
after the receipt of the Company's notice of its intention to
file a registration statement, specifying the number of shares
of Registrable Securities the Holder intends to sell.
(3) Information Furnished by and Representations of the Holder. It
shall be a condition precedent to the Company's obligations to
the Holder of the Registrable Securities pursuant to this
Section 5 that she furnish to the Company in writing such
information regarding herself and the distribution proposed by
her as the Company may reasonably request. Additionally, in
connection with a proposed registration under this Section 5,
the Holder represents and warrants to the Company that she
will use her best efforts to comply with all applicable rules
and regulations of the Securities and Exchange Commission and
will make such representations and warranties to the Company
and the underwriters, in each case, as are customarily made by
selling shareholders to issuers and underwriters, as the case
may be, in underwritten public offerings.
5.2 Indemnification. The Company shall indemnify the Holder of the
Registrable Securities to be sold pursuant to any registration statement
described herein and each person, if any, who controls such Holder ("Controlling
Persons") within the meaning of Section 15 of the Act or Section 20(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), against all
loss, claim, damage, expense or liability (including all reasonable attorneys'
fees and other expenses reasonably incurred in investigating, preparing or
defending against any claim whatsoever) to which any of them may become subject
under the Act, the Exchange Act or otherwise, arising from such registration
statement; provided, however, that the Company will not be liable to the extent
that any loss, claim, damage, expense or liability arises out of information
furnished by or on behalf of such Holder, or her successors or assigns, in
writing, for specific inclusion in such registration statement. The Holder of
the Registrable Securities to be
<PAGE>
sold pursuant to such registration statement, and her successors and assigns,
shall severally (with the other holders of Registrable Securities), and not
jointly, indemnify the Company and each of its officers, directors, agents,
employees and Controlling Persons, against all loss, claim, damage, expense or
liability (including all reasonable attorneys' fees and other expenses
reasonably incurred in investigating, preparing or defending against any claim
whatsoever) to which they may become subject under the Act, the Exchange Act or
otherwise, arising from information furnished by or on behalf of such Holder, or
her successors or assigns, in writing, for specific inclusion in such
registration statement.
6. Adjustments to Exercise Price and Number of Securities.
-------------------------------------------------------
6.1 Subdivision and Combination. In case the Company shall at any time
subdivide or combine the outstanding shares of Common Stock, the Exercise Price
shall forthwith be proportionately decreased in the case of subdivision or
increased in the case of combination.
6.2 Adjustment in Number of Shares. Upon each adjustment of the
Exercise Price pursuant to the provisions of this Section 6, the number of
shares of Common Stock issuable upon the exercise of this Warrant shall be
adjusted to the nearest full number obtained by multiplying the Exercise Price
in effect immediately prior to such adjustment by the number of shares of Common
Stock issuable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product so obtained by the adjusted Exercise Price.
6.3 Recapitalization. For the purpose of this Warrant, the term "Common
Stock" shall also mean any other class of stock resulting from successive
changes or reclassifications of Common Stock consisting solely of changes in par
value, or from par value to no par value, or from no par value to par value.
6.4 Merger or Consolidation. In case of any consolidation of the
Company with, or merger of the Company with or into, another corporation (other
than a consolidation or merger which does not result in any reclassification or
change of the outstanding Common Stock), the corporation formed by such
consolidation or merger shall execute and deliver to the Holder a supplemental
warrant providing that the holder of each warrant then outstanding or to be
outstanding shall have the right thereafter (until the stated expiration of such
warrant) to receive, upon exercise of such warrant, the kind and amount of
shares of stock and other securities and property receivable upon such
consolidation or merger, by a holder of the number of shares of Common Stock of
the Company for which such warrants might have been exercised immediately prior
to such consolidation, merger, sale or transfer. Such supplemental warrants
shall provide for adjustments which shall be identical to the adjustments
provided in this Section 6. The above provisions of this Section shall similarly
apply to successive consolidations or mergers.
6.5 No Adjustment of Exercise Price in Certain Cases. No adjustment of
the Exercise Price shall be made:
<PAGE>
(1) Upon the issuance or sale of the shares of Common
Stock issuable upon the exercise of (i) this Warrant,
or (ii) any options granted under any stock option
plan of the Company; or
(2) If the amount of said adjustment shall be less than
two cents ($.02) per share of Common Stock; provided,
however, that in such case, any adjustment that would
otherwise be required then to be made shall be
carried forward and shall be made at the time of and
together with the next subsequent adjustment which,
together with any adjustment so carried forward,
shall amount to at least two cents ($.02) per share
of Common Stock.
6.6 Redemption of Warrants. This Warrant cannot be redeemed by the
Company without the prior written consent of the Holder.
6.7 Dividends and Other Distributions. In the event that the Company
shall at any time prior to the exercise in full of this Warrant declare a
non-cash dividend (other than a dividend consisting solely of shares of Common
Stock) or otherwise distribute to its stockholders any assets, property, rights,
evidences of indebtedness, securities (other than shares of Common Stock),
whether issued by the Company or by another, or any other thing of value other
than cash, the Holder of this Warrant shall thereafter be entitled, in addition
to the shares of Common Stock or other securities and property receivable upon
the exercise thereof, to receive, upon the exercise of such Warrant, the same
property, assets, rights, evidences of indebtedness, securities or any other
thing of value that it would have been entitled to receive at the time of such
dividend or distribution as if this Warrant had been exercised immediately prior
to such dividend or distribution. At the time of any such dividend or
distribution, the Company shall make appropriate reserves to ensure the timely
performance of the provisions of this Section 6.7.
6.8 Elimination of Fractional Interests. The Company shall not be
required to issue certificates representing fractions of shares of Common Stock
upon the exercise of this Warrant, nor shall it be required to issue scrip or
pay cash in lieu of any fractional interests, it being the intent of the parties
that all fractional interests shall be eliminated by rounding any fraction up to
the nearest whole number of shares of Common Stock or other securities,
properties or rights as shall be issuable upon the exercise hereof.
6.9 Reservation. The Company shall at all times reserve and keep
available out of its authorized shares of Common Stock, solely for the purpose
of issuance upon exercise of this Warrant, such number of shares of Common Stock
or other securities, properties or rights as shall be issuable upon the exercise
hereof. The Company covenants and agrees that, upon exercise of this Warrant and
payment of the Exercise Price therefor, all shares of Common Stock and other
securities, properties or rights issuable upon such exercise shall be duly and
validly issued, fully paid and nonassessable.
7. Certain Notice Requirements.
----------------------------
<PAGE>
7.1 Holder's Right to Receive Notice. Except as set forth in Section
8.2 hereof, nothing herein shall be construed as conferring upon the Holder the
right to vote or consent or to receive notice as a stockholder for the election
of directors or any other matter, or as having any rights whatsoever as a
stockholder of the Company.
7.2 Notice of Change in Exercise Price. The Company shall, promptly
after an event requiring a change in the Exercise Price pursuant to Section 6
hereof, send written notice to the Holder of such event and change (the "Price
Notice"). The Price Notice shall describe the event causing the change and the
method of calculating same and shall be prepared by the Company's Chief
Financial Officer.
7.3 Transmittal of Notices. All notices, requests, consents and other
communications under or relating to this Warrant shall be in writing and shall
be deemed to have been duly given or made when hand delivered, or when delivered
by a recognized overnight courier:
(1) if to the registered Holder of this Warrant, to: CSK
Securities Research 25 Woodview Lane Novato,
California 94945 Attention: Christina S. Kohlhaas
(2) if to the Company, to:
Xybernaut Corporation
12701 Fair Lakes Circle, Suite 550
Fairfax, Virginia 22033
Attention: Edward G. Newman
with a copy to:
Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, New York 10036-8735
Attention: Martin E. Weisberg, Esq.
Either of the Holder or the Company may change the foregoing address by a notice
given in the manner provided in this Section 8.4.
8. Miscellaneous.
--------------
8.1 Amendments. This Warrant may not be amended, altered or modified
except by a written instrument duly executed by the Company and the Holder.
<PAGE>
8.2 Headings. The headings contained herein are for the sole purpose of
convenience of reference, and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of this Warrant.
8.3 Entire Agreement. This Warrant, together with the other agreements
and documents being executed and delivered pursuant to or in connection with
this Warrant, constitute the entire agreement of the parties hereto with respect
to the subject matter hereof, and supersede all prior and contemporaneous
agreements and understandings of the parties, oral and written, with respect to
the subject matter hereof, all of which are merged herein.
8.4 Binding Effect. This Warrant shall inure solely to the benefit of
and shall be binding upon the Holder and the Holder's heirs, executors,
administrators, distributees, successors and permitted assigns, and upon the
Company and its successors and assigns, and no other person shall have or be
construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Warrant or any provisions herein contained.
8.5 Governing Law; Submission to Jurisdiction. This Warrant shall be
governed by and construed and enforced in accordance with the laws of the State
of Delaware, without giving effect to its conflict of laws principles. Any
action, suit or proceeding against the Company or the Holder arising out of or
relating in any way to this Warrant shall be brought and enforced in the courts
of the State of New York (located in New York County) or of the United States of
America for the Southern District of New York, and the Company and the Holder
irrevocably submit to such jurisdiction, which jurisdiction shall be exclusive
for all purposes relating to this Warrant. The parties hereto waive any
objection to such exclusive jurisdiction and that such courts represent an
inconvenient forum. The prevailing party in any such action shall be entitled to
recover from the other party all of its reasonable attorneys' fees and expenses
relating to such action, suit or proceeding and/or incurred in connection with
the preparation therefor. The Holder and the Company waive their right to trial
by jury with respect to any such action, suit or proceeding.
8.6 Waiver, Etc. The failure of the Company or the Holder to at any
time enforce any of the provisions of this Warrant shall not be deemed or
construed to be a waiver of any such provision, nor to in any way affect the
validity of this Warrant or any provision hereof or the right of the Company or
the Holder to thereafter enforce each and every provision of this Warrant. No
waiver of any breach, noncompliance or nonfulfillment of any of the provisions
of this Warrant shall be effective unless set forth in a written instrument
executed by the party or parties against whom or which enforcement of such
waiver is sought; and no waiver of any such breach, noncompliance or
nonfulfillment shall be construed or deemed to be a waiver of any other or
subsequent breach, noncompliance or nonfulfillment.
8.7 Severability. In the event that any provision of this Warrant shall
be determined to be illegal or unenforceable, the remaining provisions of this
Warrant shall remain binding and in full force and effect.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be
signed by its duly authorized officer as of October 22, 1996.
XYBERNAUT CORPORATION
By:_________________________________
Name: Edward G. Newman
Title: President and Chief Executive
Officer
<PAGE>
XYBERNAUT CORPORATION
Form to be used to exercise Warrant
-----------------------------------
XYBERNAUT CORPORATION
12701 Fair Lakes Circle, Suite 550
Fairfax, Virginia 22033
Date: ________________, 19__
The undersigned, the registered holder of the Warrant enclosed
herewith, hereby elects irrevocably to exercise the within Warrant and to
purchase __________ shares of Common Stock of Xybernaut Corporation, a Delaware
corporation, and hereby makes payment of $_____________ (at the rate of
$______________ per share) in payment of the Exercise Price pursuant thereto.
Please issue the shares as to which the Warrant is exercised in accordance with
the instructions given below.
------------------------------------
Signature
------------------------------------
Signature Guaranteed
INSTRUCTIONS FOR REGISTRATION OF SECURITIES
Name
----------------------------------------------------------------------------
(Print in Block Letters)
Address
-------------------------------------------------------------------------
NOTICE: The signature to this form must correspond with the
name as written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatsoever, and must be guaranteed by a
bank other than a savings bank, by a trust company, or by a firm having
membership on a registered national securities exchange.
<PAGE>
XYBERNAUT CORPORATION
Form to be used to assign Warrant
---------------------------------
ASSIGNMENT
(To be executed by the registered Holder to effect a transfer
of the within Warrant):
FOR VALUE RECEIVED, ________________________________ , the
registered holder of the Warrant enclosed herewith, does hereby sell, assign and
transfer unto __________________________ the right to purchase ____________
shares of Common Stock of Xybernaut Corporation, a Delaware corporation (the
"Company"), evidenced by the within Warrant and does hereby authorize the
Company to transfer such right on the books of the Company.
Dated:__________________, 199_
------------------------------------
Signature
------------------------------------
Signature Guaranteed
NOTICE: The signature to this form must correspond with the
name as written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatsoever, and must be guaranteed by a
bank other than a savings bank, by a trust company, or by a firm having
membership on a registered national securities exchange.
EXHIBIT 4.5
THE SALE AND ISSUANCE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR UNDER THE SECURITIES LAW OF ANY STATE OR OTHER JURISDICTION. NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, HYPOTHECATED OR OTHERWISE DISPOSED
OF, UNLESS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO A TRANSACTION THAT IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH
REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS.
COMMON STOCK PURCHASE WARRANT
XYBERNAUT CORPORATION
EXPIRES JANUARY 2, 2003
No.: Number of Shares: 5,000
Date of Issuance: January 3, 2000
1. Issuance. In consideration of good and valuable
consideration, the receipt of which is hereby acknowledged by Xybernaut
Corporation, a Delaware corporation (the "Company"), E. Dell Smith or registered
assigns (the "Holder"), is hereby granted the right to purchase at any time
until 5:00 P.M., New York City time, on January 2, 2003 (the "Expiration Date"),
five thousand (5,000) fully paid and nonassessable shares of the Company's
Common Stock, par value $.01 per share (the "Common Stock") at an initial
exercise price of $2.00 per share (the "Exercise Price").
2. Exercise of Warrants. This Warrant is exercisable in whole
or in part at the Exercise Price per share of Common Stock payable hereunder,
payable in cash or by certified or official bank check. Upon surrender of this
Warrant Certificate with the annexed Notice of Exercise Form duly executed,
together with payment of the Exercise Price for the shares of Common Stock
purchased, the Holder shall be entitled to receive a certificate or certificates
for the shares of Common Stock so purchased.
3. Reservation of Shares. The Company hereby agrees that at
all times during the term of this Warrant there shall be reserved for issuance
upon exercise of this Warrant
<PAGE>
such number of shares of its Common Stock as shall be required for issuance upon
exercise of this Warrant (the "Warrant Shares").
4. Mutilation or Loss of Warrant. Upon receipt by the Company
of evidence satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant, and (in the case of loss, theft or destruction) receipt of
reasonably satisfactory indemnification, and (in the case of mutilation) upon
surrender and cancellation of this Warrant, the Company will execute and deliver
a new Warrant of like tenor and date and any such lost, stolen, destroyed or
mutilated Warrant shall thereupon become void.
5. Rights of the Holder. The Holder shall not, by virtue
hereof, be entitled to any rights of a stockholder in the Company, either at law
or equity, and the rights of the Holder are limited to those expressed in this
Warrant and in the Consulting Agreement between the Company and Libra Finance SA
pursuant to which this Warrant was originally issued (the "Consulting
Agreement") and are not enforceable against the Company except to the extent set
forth herein and therein.
6. Transfer to Comply with the Securities Act; Registration
Rights.
6.1 This Warrant has not been registered under the
Securities Act of 1933, as amended, (the "Act") and has been issued to the
Holder for investment and not with a view to the distribution of either the
Warrant or the Warrant Shares. Neither this Warrant nor any of the Warrant
Shares or any other security issued or issuable upon exercise of this Warrant
may be offered, sold, transferred, pledged, encumbered, hypothecated or
otherwise disposed of in the absence of an effective registration statement
under the Act relating to such security or an opinion of counsel satisfactory to
the Company that registration is not required under the Act. Each certificate
for the Warrant, the Warrant Shares and any other security issued or issuable
upon exercise of this Warrant shall contain a legend on the face thereof, in
form and substance satisfactory to counsel for the Company, setting forth the
restrictions on transfer contained in this Section.
6.2 The Company hereby grants to the Holder piggyback
registration rights with respect to the Warrant Shares which rights shall
commence after the date of issuance of this Warrant. In the event the Company is
filing a registration statement for itself or on behalf of any of its
shareholders at any time after the date hereof, the Company shall notify the
Holder in writing reasonably in advance of such filing (but at least five (5)
business days) and give the Holder the opportunity to include all or any portion
of the Warrant Shares (whether or not previously issued, to the extent
permissible under the Act or any regulation promulgated thereunder). Upon the
Holder's notification that the Holder desires to have all or any portion of the
Warrant Shares included in such registration, the Company shall, at no cost or
expense to the Holder, include or cause to be included in such registration
statement the Warrant Shares so identified by the Holder, provided, however,
that if, in the opinion of the Company's managing underwriter or underwriters,
if any, for such offering, the inclusion of the Warrant Shares, when added to
the securities being registered by the Company or any selling stockholder(s),
will
<PAGE>
exceed the maximum amount of the Company's securities that can be marketed (x)
at a price reasonably related to their then current market value, or (y) without
materially and adversely affecting the entire terms of the offering, then the
number of shares to be included in such offering shall be reduced, and such
shares shall be excluded from such offering in a number deemed necessary by such
managing underwriter or underwriters, based upon and subject to a pro rata
reduction of the number of Warrant Shares the Holder of such securities proposed
to include therein.
7. Notices. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally,
telegraphed, telexed, sent by facsimile transmission or sent by certified,
registered or express mail, postage pre-paid. Any such notice shall be deemed
given when so delivered personally, telegraphed, telexed or sent by facsimile
transmission, or, if mailed, two (2) days after the date of deposit in the
United States mails, as follows:
(1) if the to Company, to:
Xybernaut Corporation
12701 Fair Lakes Circle
Suite 550
Fairfax, Virginia 22033
Attn: Chief Financial Officer
Fax No.: (703) 631-3903
(2) if to the Holder, to:
E. Del Smith and Company, Inc.
1130 Connecticut Avenue, N.W.
Suite 650
Washington, DC 20036
Attn: E. Del Smith
Fax No.:
Any party may be notice given in accordance with this Section to the other
parties designate another address or person for receipt of notices hereunder.
8. Supplements and Amendments; Whole Agreement. This Warrant
may be amended or supplemented only by an instrument in writing signed by the
parties hereto. This Warrant of even date herewith and the Consulting Agreement
contain the full understanding of the parties hereto with respect to the subject
matter hereof and thereof and there are no representations, warranties,
agreements or understandings other than expressly contained herein and therein.
<PAGE>
9. Governing Law. This Warrant shall be deemed to be a
contract made under the laws of the State of New York and for all purposes shall
be governed by and construed in accordance with the laws of such State
applicable to contracts to be made and performed entirely within such State.
10. Descriptive Headings. Descriptive headings of the several
Sections of this Warrant are inserted for convenience only and shall not control
or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of
January 3, 2000.
XYBERNAUT CORPORATION
By:_______________________________________
Name: Steven A. Newman
Title: Vice Chairman
Attest:
- ----------------------------
- ----------------------------
Chief Administrative Officer
<PAGE>
NOTICE OF EXERCISE OF WARRANT
The undersigned hereby irrevocably elects to exercise the right,
represented by the Warrant Certificate dated as of __________, 2000, to purchase
__________ shares of the Common Stock, par value $.01 per share, of Xybernaut
Corporation and tenders herewith payment in accordance with Section 1 of said
Common Stock Purchase Warrant.
Please deliver the stock certificate to:
Dated:______________________
By:__________________________________
EXHIBIT 5
April 3, 2000
Xybernaut Corporation
12701 Fair Lakes Circle
Fairfax, Virginia 22033
Gentlemen:
We have acted as counsel to Xybernaut Corporation, a Delaware
corporation (the "Company"), in connection with the Registration Statement on
Form S-3 (the "Registration Statement") being filed with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, relating to
the offering of 2,843,301 shares (the "Shares") of Common Stock, par value $.01
per share (the "Common Stock").
In connection with the foregoing, we have examined originals or
copies, satisfactory to us, of the Company's (i) Certificate of Incorporation
and (ii) By-laws. We have also reviewed such other matters of law and examined
and relied upon all such corporate records, agreements, certificates and other
documents as we have deemed relevant and necessary as a basis for the opinion
hereinafter expressed. In such examination, we have assumed the genuineness of
all signatures, the authenticity of all documents submitted to us as originals
and the conformity with the original documents of all documents submitted to us
as copies or facsimiles. As to any facts material to such opinion, we have, to
the extent that relevant facts were not independently established by us, relied
on certificates of public officials and certificates of officers or other
representatives of the Company.
Based upon and subject to the foregoing, we are of the opinion that the
Shares when sold will be validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference made to us under the caption "Legal
Matters" in the prospectus constituting part of the Registration Statement.
Very truly yours,
/s/ Parker Chapin LLP
PARKER CHAPIN LLP
EXHIBIT 10.2
RESTATED BRIDGE LOAN FINANCING AGREEMENT
----------------------------------------
THIS RESTATED BRIDGE LOAN FINANCING AGREEMENT ("Financing Agreement")
is dated as of October 18, 1999, by and between XYBERNAUT CORPORATION, a
Delaware corporation, with headquarters located at 12701 Fair Lakes Circle,
Suite 550, Fairfax, Virginia 22033 (the "Company"), and CRYSTALITE INVESTMENTS
LTD., having an office at 111 Arlosorov Street, Tel Aviv, Israel (the
"Investor").
W I T N E S S E T H
WHEREAS, the Company wishes to induce the Investor to loan to the
Company, and the Investor is willing to loan to the Company, subject to the
terms and conditions set forth herein, up to One Million ($1,000,000) Dollars.
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. LOAN. Subject to the terms and conditions set forth herein, the
Investor shall loan to the Company One Million ($1,000,000) Dollars (the "Loan")
in one or more installments, by delivery of such amount to the Company in same
day U.S. funds by wire transfer to an account designated by the Company.
2. NOTE. The terms of the Loan shall be set forth in and evidenced by
one or more Secured Promissory Note in substantially the form attached hereto as
Exhibit A in the aggregate
<PAGE>
amount of One Million ($1,000,000) Dollars, payable to the order of the Investor
or its assignees (the "Notes").
3. MUTUAL DELIVERIES.
------------------
(a) Upon the delivery by the Investor of the loan proceeds
from time to time, as provided in Section 1 above, the Company shall deliver to
the Investor the Notes.
(b) The Company shall also deliver, or cause to be delivered,
the original or execution copies of the following instruments and agreements
duly executed by all parties thereto other than the Investor (together with the
Notes - the "Related Agreements"):
(i) this Agreement with the Security Interest Provisions
(Exhibit A);
(ii) the Xybernaut Common Stock Purchase Warrants for
1,000,000 shares in the form attached hereto as Exhibit B (the "Warrants"); and
(iii) the opinion of counsel in the form annexed hereto as
Exhibit C.
4. 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 Financing Agreement and the Related Agreements and to perform its
obligations hereunder and thereunder. The execution and delivery by the Company
of this Financing Agreement and the Related Agreements and the consummation by
the Company of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action on the part of the Company. This
Financing Agreement and the Related Agreements have been duly executed and
delivered by the Company and constitute valid and binding obligations of the
Company enforceable against it in accordance with their respective terms,
subject to the effects of any
<PAGE>
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and to the application of equitable
principles in any proceeding (legal or equitable).
(b) The execution, delivery and performance by the Company of
this Financing Agreement and the Related Agreements and the consummation of the
transactions contemplated hereby and thereby 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 Company which breach
or default could reasonably by expected to have a material adverse effect on the
Company.
(c) Except as set forth in Schedule 4(d) hereto, the Company
is in material compliance with all applicable laws, regulations, judgments,
decrees and orders material to the conduct of its business.
(d) Except as set forth in Schedule 4(d) hereto, 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 Financing Agreement or
the Related Agreements or which involves the Company and which if adversely
determined, could reasonably be expected to have a material adverse effect on
the Company.
(e) 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 Financing
Agreement or the Related Agreements or the taking of any action contemplated
hereunder or thereunder.
<PAGE>
(f) 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. The Company is duly qualified and licensed and in good
standing as a foreign corporation in each jurisdiction in which its current
ownership or leasing of any properties or its ownership or leasing of any
properties or the character of its operations as currently conducted requires
such qualification or licensing, except where the failure to be so qualified
would not have a material adverse effect on the Company. The Company has all
corporate power and authority, and has obtained all necessary authorizations,
approvals, orders, licenses, certificates, franchises and permits of and from
all governmental or regulatory officials and bodies necessary to own or lease
its properties and conduct its business other than those authorizations,
approvals and such other documents the lack of which could not reasonably be
expected to have a material adverse effect on the Company.
(g) The execution, delivery and performance of this Agreement
by the Company and the Related Agreements to be delivered hereunder and the
consummation of the transactions contemplated hereby and thereby will not: (i)
violate any provision of the Company's articles 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
<PAGE>
governmental or regulatory body by which the Company, or the assets or
properties of the Company are bound, (iv) to the Company's knowledge, violate
any statute, law or regulation.
(h) Except as set forth in Schedule 4(d) hereto, there has
been no material change in the capitalization, assets, or liabilities of the
Company since the issuance of the financial statements, for the period ending
June 30, 1999, delivered to Investor.
5. 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 Financing Agreement and the Related Agreements and to perform
its obligations hereunder and thereunder. The execution and delivery by the
Investor of this Financial Agreement and the Related Agreements and the
consummation by the Investor of the transactions contemplated hereby and thereby
have been duly authorized by all necessary corporate action on the part of the
Investor. This Financing Agreement and the Related Agreements have been duly
executed and delivered by the Investor and constitute valid and binding
obligations 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 the application of equitable principles in any
proceeding (legal or equitable).
(b) The execution, delivery and performance by the Investor of
this Financing Agreement and the Related Agreements and the consummation of the
transactions contemplated hereby and thereby 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.
<PAGE>
(c) There is no pending, or to the knowledge of the Investor,
threatened, judicial, administrative or arbitral action, claim, suit, proceeding
or investigation which might affect the validity or enforceability of this
Financing Agreement or the Related Agreements.
(d) No consent or approval of, or exemption by, or filing
with, any party of governmental or public body or authority is required in
connection with the execution, delivery and performance under this Financing
Agreement or the Related Agreements or the taking of any action contemplated
hereunder or thereunder.
(e) The Investor has prior substantial investment experience,
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 all of the documents furnished or made available by the
Company to the Investor in connection with this investment and to evaluate the
merits and risks of this investment.
6. COVENANTS OF THE COMPANY. The Company covenants and agrees that, so
long as the Note shall be outstanding, except as otherwise required under the
Related Agreements, the Company shall:
(a) Promptly pay and discharge all lawful taxes, assessments
and governmental charges or levies imposed upon it or upon its income and
profits, or upon any of its property, before the same shall become in default as
well as all lawful material claims for labor, materials and supplies which, if
unpaid, might become a lien or charge upon such properties or any part thereof;
provided, however, that it shall not be required to pay and discharge any such
tax, assessment, charge, levy or claim so long as the validity thereof shall be
contested in good
<PAGE>
faith by appropriate proceedings, and the Company shall set aside on its books
adequate reserves with respect to any such tax, assessment, charge, levy or
claim so contested.
(b) Pay, or cause to be paid, all material debts and perform,
or cause to be performed, all material obligations promptly and in accordance
with the respective terms thereof.
(c) Implement and maintain a standard system of accounting in
accordance with generally accepted accounting principles ("GAAP").
(d) Provide to the Investor the following:
(i) as soon as available after the end of each fiscal year
of the Company, a consolidated balance sheet of the Company as at the end of
that fiscal year and the related statement of earnings, stockholders' equity and
changes in financial position of the Company for such fiscal year, in accordance
with GAAP and audited by independent certified public accountants of recognized
standing; and
(ii) as soon as available and in any event within ninety
(90) days after the end of each of the first three quarters of each fiscal year
(commencing the quarter ending September 30, 1999), an unaudited consolidated
balance sheet of the Company as of the end of that quarter, and the related
unaudited statement of earnings of the Company for the period from the beginning
of that fiscal year to the end of that quarter, certified by the principal
financial officer of the Company as having been prepared in accordance with
GAAP, subject to normal year-end adjustments.
(e) Do, or cause to be done, all things that may be necessary
to (i) maintain its due organization, valid existence and good standing under
the laws of its state of incorporation; (ii) preserve and keep in full force and
effect all qualifications, registrations and licenses in those
<PAGE>
jurisdictions in which the failure to do so could or would have a material
adverse effect; (iii) maintain its power or authority to carry on its business
as now conducted; and (iv) use its best efforts to keep available the services
of its key present employees and agents and maintain its current relations with
suppliers, customers, distributors and joint venture partners (subject to the
business judgment of executive management).
(f) At all times maintain, preserve, protect and keep material
property used and useful in the conduct of its business in good repair, working
order and condition (subject to normal wear and tear), and from time to time
make all needful and proper repairs, renewals, replacements, betterment and
improvements thereto, so that the business carried on in connection therewith
may be properly conducted at all times.
(g) Keep adequately insured all property of a character
usually insured by similar corporations and carry such other insurance as is
usually carried by similar corporations.
(h) At all reasonable times upon the Investor's request and
upon advance notice to the Company and for good reason, permit representatives
designated by the Investor to have access to the books and records relating to
the operations and procedures of the Company (subject to execution of
confidentiality undertakings).
(i) Not assume, guaranty or otherwise, directly or indirectly,
become liable or responsible for the obligations of any other person or entity,
except for 75% or greater owned subsidiaries, for the purpose of paying or
discharging the obligations of such person or entity unless such guarantees
relate to the business of the Company, are incurred in the ordinary course of
its business and do not exceed in the aggregate $100,000.
<PAGE>
(j) Not declare or pay any cash dividends or authorize or make
any other distribution on any class of equity securities of the Company, except
for the Series D and Series E Convertible Preferred Stock.
(k) Not consolidate with or merge with or into any entity or
sell, lease, transfer, exchange or otherwise dispose of any material part of its
properties and assets except in the ordinary course of business, however, the
Company may engage in any of the foregoing transactions with a parent or
subsidiary of the Company so long as such parent or subsidiary is no less
creditworthy than the Company and such parent or subsidiary assumes the
obligations of the Company hereunder.
(l) To pay to the Investor, fifty (50%) percent of the
proceeds (after related expenses) in excess of $1,000,000 from any and all
financings, whether in the form of debt or equity.
7. ASSIGNMENT. This Financing Agreement and the Related Agreements may
be assigned by the Investor to transferees or assignees of the Note, provided
that the Company consents to the assignment, which consent will not be
unreasonably withheld, and that the Company is, prior to or simultaneously with
such transfer, furnished with written notice of the name and address of such
transferee or assignee, and such assignee agrees in writing to be bound by the
terms hereof and provided further that, if the Note is only assigned or
transferred in part, then such assignment shall only be made in part on an
appropriate proportionate basis. If there is a conflict between this provision
and any provision of the Related Agreements, this provision shall govern.
<PAGE>
As a condition to any such assignment, the assignee shall
warrant, represent and acknowledge to the Company and to the Investor that: (i)
such assignee has adequate means of providing for its current needs and possible
contingencies, and anticipates no need now or in the foreseeable future to sell
its shares of Common Stock, (ii) such assignee has had an opportunity to ask
questions of and receive answers from the Company concerning its investment as
evidenced by the Loan and Warrant (hereinafter referred to as the "Investment")
in the Company, and all such questions have been answered to its full
satisfaction, (iii) such assignee intends to hold the Warrant, and any shares of
the Common Stock issued upon the exercise of the Warrant, of the Company for its
own account for investment, and not with a view toward any resale or other
distribution of such Common Stock, (iv) the Investment in the Company involves a
high degree of risk, no tax advantages will result from the Investment in the
Company, and such assignee must be able to bear the economic risk of complete
loss of the Investment in the Company, (v) such assignee has received no
representations and warranties from Company other than those otherwise set forth
herein, and (vi) such assignee has the knowledge and experience in financial and
business matters and is capable of evaluating the merits and risks of the
Investment, provided, however, if such assignee does not have such knowledge and
experience, such assignee has consulted with an attorney, accountant or other
financial consultant or advisor, as its Purchaser Representative, and such
person is capable of evaluating the risk of the Investment and of so advising
such assignee thereof.
8. 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 business days after deposit in the United
States Postal Service, by (a) advance copy by
<PAGE>
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
12701 Fair Lakes Circle
Suite 550
Fairfax, Virginia 22033
ATT: Mr. Steven Newman, Vice Chairman
Telephone No.: (703) 631-6925
Facsimile No.: (703) 631-6734
with a copy to:
Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, New York 10036
ATTN: Martin Eric Weisberg, Esq.
Telephone No.: (212) 704-6000
Facsimile No.: (212) 704-6288
PURCHASER: At the address set forth on the signature page of this
Agreement.
ESCROW AGENT: Krieger & Prager, Esqs.
39 Broadway, Suite 1440
New York, New York 10006
Telephone No.: (212) 363-2900
Facsimile No.: (212) 363-2999
9. SEVERABILITY. If a court of competent jurisdiction determines that
any provision of this Financing 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 Financing Agreement.
If any such invalidity, unenforceability or illegality of a
<PAGE>
provision of this Financing 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 Financing Agreement generally to achieve as closely as
possible, consistent with applicable law, the intent and spirit of such
provision specifically and this Financing Agreement generally.
10. EXECUTION IN COUNTERPARTS. This Financing Agreement may be executed
in counterparts, each of which shall be deemed an original, but all of which
together shall constitute the same Financing Agreement.
11. The Company shall pay all fees and disbursements of the Investor
with respect to the preparation and enforcement of this Agreement and the
Related Agreements.
12. GOVERNING LAW. This Agreement and the Related Agreements shall be
governed by and construed in accordance with the laws of the State of New York.
Each of the parties consents to the jurisdiction of the federal courts whose
districts encompass any part of the City of New York or the state courts of the
State of New York sitting in the City of New York 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 coveniens, to
the bringing of any such proceeding in such jurisdictions.
13. RESTATED AGREEMENT. As hereby restated, this Agreement supersedes
any prior agreement between the parties with respect to the subject matter
hereof, and the Notes heretofore delivered pursuant to this Agreement shall be
deemed amended in accordance with the provisions hereof.
<PAGE>
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Bridge Loan
Financing Agreement as of the date first written above.
XYBERNAUT CORPORATION
By: ______________________________________
Name: Steve Newman
Title: Vice Chairman
CRYSTALITE INVESTMENTS LTD.
By: ______________________________________
Name:
Title:
EXHIBIT 10.3
COMMON STOCK PURCHASE AGREEMENT
-------------------------------
THIS COMMON STOCK PURCHASE AGREEMENT ("Purchase Agreement") is dated as
of January 3, 2000, by and between XYBERNAUT CORPORATION, a Delaware
corporation, with headquarters located at 12701 Fair Lakes Circle, Suite 550,
Fairfax, Virginia 22033 (the "Company"), and DALSTON HOLDINGS LIMITED, having an
office at _____________________ (the "Investor").
W I T N E S S E T H
WHEREAS, the Company wishes sell to the Investor, and the Investor is
willing to buy from the Company, subject to the terms and conditions set forth
herein, six hundred forty-seven thousand five hundred (647,500) shares of Common
Stock of the Company, par value $.01 per share.
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. MUTUAL DELIVERIES.
(a) Upon the delivery by the Investor of the sum of Two
Million Five Hundred Ninety Thousand and 00/100 ($2,590,000) (the "Purchase
Price"), the Company shall deliver to the Investor one or more certificates for
647,500 shares of Common Stock of the Company (the "Shares") at the price of
$4.00 per share, bearing substantially the following legend:
<PAGE>
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 valid and binding obligations 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 the application of equitable
principles in any proceeding (legal or equitable).
(b) The execution, delivery and performance by the Company 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,
<PAGE>
judgment, order, decree or other instrument binding on the Company which breach
or default could reasonably by expected to have a material adverse effect on the
Company taken as a whole.
(c) Except as set forth in Form 10-QSB filed on November 12,
1999 (the "SEC Filing"), 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.
(d) 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.
(e) 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.
(f) 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 articles 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
<PAGE>
of the Company are bound, (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 has been duly executed and delivered by the Investor and
constitute valid and binding obligations 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 the application of equitable
principles in any proceeding (legal or equitable).
(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 prior substantial investment experience,
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 all of the documents furnished
<PAGE>
or made available by the Company to the Investor in connection with this
investment and to evaluate the merits and risks of this investment.
4. COVENANTS OF THE COMPANY. The Company covenants and agrees to use
its best efforts to register the Shares and to include the Shares in the first
registration statement to be filed subsequent to the effective date of the
registration statement currently pending before the Securities and Exchange
Commission.
5. DELIVERY OF SHARES.
a. Promptly following the delivery by the Investor of the
Purchase Price for the Common Stock in accordance with Section 1 hereof, the
Company will irrevocably instruct its transfer agent to issue the Shares to the
Investor with the legended certificates representing the Shares.
b. Within three (3) business days (such third business day,
the "Delivery Date") after the business day on which the Company has received
both of 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 sale of the Shares pursuant to Registration Statement ("Unlegended
Shares"); and (ii) transmit 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 may
be the Investor's address for
<PAGE>
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 provided 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 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
12701 Fair Lakes Circle
Suite 550
Fairfax, Virginia 22033
ATT: Mr. Steven Newman, Vice Chairman
Telephone No.: (703) 631-6925
Facsimile No.: (703) 631-6734
with a copy to:
<PAGE>
Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, New York 10036
ATTN: Martin Eric Weisberg, Esq.
Telephone No.: (212) 704-6000
Facsimile No.: (212) 704-6288
PURCHASER: At the address set forth on the first page of this Agreement.
with a copy to:
Krieger & Prager, LLP
39 Broadway, Suite 1440
New York, New York 10006
Telephone No.: (212) 363-2900
Facsimile No.: (212) 363-2999
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.
<PAGE>
9. GOVERNING LAW. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of New York.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Purchase Agreement
as of the date first written above.
XYBERNAUT CORPORATION
By: ______________________________________
Name:
Title:
DALSTON HOLDINGS LIMITED
By: ______________________________________
Name:
Title:
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We have issued our report dated February 25, 2000 accompanying the consolidated
financial statements of Xybernaut Corporation appearing in the Corporation's
Annual Report on Form 10-KSB for the year ended December 31, 1999 which are
incorporated by reference in this Registration Statement on Form S-3. We consent
to the incorporation by reference in the Registration Statement of the
aforementioned reports and to the use of our name as it appears under the
caption "Experts".
GRANT THORNTON LLP
Vienna, Virginia
March 31, 2000
