THE SECURITIES REPRESENTED BY THIS CERTIFICATE (THE "SECURITIES") HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT")
OR STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT
AND UNDER APPLICABLE STATE SECURITIES LAWS OR XYBERNAUT CORPORATION (THE
"COMPANY") SHALL HAVE RECEIVED AN OPINION IN FORM, SCOPE AND SUBSTANCE
REASONABLY ACCEPTABLE TO THE COMPANY, OF COUNSEL, WHO IS REASONABLY ACCEPTABLE
TO THE COMPANY THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND
UNDER THE PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS IS NOT
REQUIRED.
COMMON STOCK PURCHASE WARRANT
XYBERNAUT CORPORATION
Expires November 19, 2005
No.: W-____ Number of Shares: ________
Date of Issuance: November 19, 2001
1. Issuance. In consideration of good and valuable consideration, the
receipt of which is hereby acknowledged by Xybernaut Corporation, a Delaware
corporation (the "Company"), ______________, or its registered assigns (the
"Holder") is hereby granted the right to purchase at any time until 5:00 P.M.,
New York City time, on November 19, 2005 (the "Expiration Date"), _____________
(____) fully paid and nonassessable shares (the "Warrant Shares") of the
Company's Common Stock, par value $.01 per share (the "Common Stock"), at an
exercise price (the "Exercise Price") per share equal to $2.55. The Exercise
Price and the number of shares for which the Warrant is exercisable shall be
subject to adjustment as provided herein. This Warrant is being issued in
connection with the Common Stock and Warrant Purchase Agreement dated as of
November 15, 2001 (the "Agreement"), and is subject to its terms and conditions.
In the event of any conflict between the terms of this Warrant and the
Agreement, the Agreement shall control.
2. Exercise of Warrants. Except as provided in Section 4 below,
exercise of the purchase rights represented by this Warrant may be made at any
time or times, before the close of business on the Expiration Date, or such
earlier date on which this Warrant may terminate as provided in this Warrant, by
the surrender of this Warrant and the Notice of Exercise Form annexed hereto
duly executed, at the office of the Company (or such other office or agency of
the Company as it may designate by notice in writing to the registered holder
hereof at the address of such holder appearing on the books of the Company) and
upon payment of an amount of consideration therefor payable by (i) certified
check or cashier's check or by wire transfer to an account designated by the
Company in an amount equal to the Exercise Price multiplied by the number of
Warrant Shares purchased, (ii) if the
Registration Statement (as defined in the Agreement) has not been declared
effective by November 19, 2002, by "cashless exercise", by surrendering this
Warrant certificate to the Company to receive a number of shares of Common Stock
equal to (A) the number of Warrant Shares with respect to which the Holder is
exercising this Warrant minus (B) the number of Warrant Shares which is equal to
the quotient obtained by dividing (x) the product of the Exercise Price and the
number of Warrant Shares being purchased upon such exercise by (y) the closing
bid price of the Common Stock on the date of such exercise or (iii) by a
combination of the foregoing methods. In any case where the consideration
payable upon such exercise is being paid in whole or in part pursuant to the
provisions of clause (ii), such exercise shall be accompanied by written notice
from the Holder of this Warrant specifying the manner of payment thereof and
containing a calculation (in accordance with clause(ii)(B) of this Section 2)
showing the number of Warrant Shares with respect to which rights are being
surrendered thereunder (the "Surrendered Shares") and the net number of shares
of Common Stock to be issued after giving effect to such surrender. The Company
shall cancel this Warrant with respect to any Surrendered Shares. In the event
of an exercise of this Warrant in accordance with this Section 2, the Holder
shall be entitled to receive a certificate for the number of shares of Common
Stock so purchased. Certificates for shares purchased hereunder shall be
delivered to the Holder hereof within three (3) business days after the date on
which this Warrant shall have been exercised as aforesaid.
3. Reservation of Shares. The Company hereby covenants that at all
times during the term of this Warrant there shall be reserved a sufficient
number of shares of its Common Stock as shall be required for issuance upon
exercise of this Warrant (the "Warrant Shares").
4. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant.
5. Loss, Theft, Destruction or Mutilation 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.
6. 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.
7. Adjustments of Exercise Price and Number of Warrant Shares. The
number and kind of securities purchasable upon the exercise of this Warrant and
the Exercise Price shall be subject to adjustment from time to time upon the
happening of any of the following.
In case the Company shall (i) declare or pay a dividend in shares of
Common Stock or make a distribution in shares of Common Stock to holders of its
outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock,
(iii) combine its outstanding shares of Common Stock into a smaller number of
shares of Common Stock or (iv) issue any shares of its capital stock in a
reclassification of the Common Stock, then the number of Warrant Shares
purchasable upon exercise of this Warrant immediately prior thereto shall be
adjusted so that the Holder shall be entitled to receive the kind and number of
Warrant Shares or other securities of the Company which he would have owned or
have been entitled to receive had such Warrant been exercised in advance
thereof.
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Upon each such adjustment of the kind and number of Warrant Shares or other
securities of the Company which are purchasable hereunder, the Holder shall
thereafter be entitled to purchase the number of Warrant Shares or other
securities resulting from such adjustment at an Exercise Price per such Warrant
Share or other security obtained by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of Warrant Shares purchasable
pursuant hereto immediately prior to such adjustment and dividing by the number
of Warrant Shares or other securities of the Company resulting from such
adjustment.
An adjustment made pursuant to this section 7 shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event.
8. Intentionally Omitted.
9. Notice of Adjustment. Whenever the number of Warrant Shares or
number or kind of securities or other property purchasable upon the exercise of
this Warrant or the Exercise Price is adjusted as herein provided, the Company
shall promptly mail by registered or certified mail, return receipt requested,
to the Holder notice of such adjustment or adjustments setting forth the number
of Warrant Shares (and other securities or property) purchasable upon the
exercise of this Warrant and the Exercise Price of such Warrant Shares (and
other securities or property) after such adjustment, setting forth a brief
statement of the facts requiring such adjustment and setting forth the
computation by which such adjustment was made. Such notice, in absence of
manifest error, shall be conclusive evidence of the correctness of such
adjustment.
10. Warrant Call. At any time or from time to time after the
Registration Statement (as defined in Section 11.2 hereof) has been declared
effective and after any lock-up period relating to the Warrant Shares has
expired, the Company, at its option, may, upon written notice to the Holder (the
"Call Notice"), call up to one hundred percent (100%) of this Warrant if the
volume weighted average price for the Common Stock (using the Bloomberg VWAP
function) is equal to or greater than $3.25 per share for ten (10) consecutive
trading days prior to the date the Company calls the Warrant. To be effective,
the Call Notice must be given within ten (10) days after the aforementioned ten
(10) day period. The rights and privileges granted pursuant to this Warrant with
respect to such Warrant Shares subject to the Call Notice shall terminate if
this Warrant is not exercised with respect to such Warrant Shares by the Holder
within ten (10) days after the Call Notice is received by the Holder. In the
event that this Warrant is not exercised by the Holder with respect to the
Warrant Shares subject to the Call Notice, this Warrant shall expire at 5:00
p.m. eastern time on the call date and the Company will remit to the Holder
$0.01 per Warrant Share and a new Warrant certificate representing the number of
Warrant Shares, if any, with respect to which this Warrant has not been
exercised or subject to a Call Notice upon such Holder tendering to the Company
the expired Warrant certificate.
11. Transfer to Comply With the Securities Act; Registration Rights.
11.1 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 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 the face thereof, in
form and substance
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satisfactory to counsel for the Company, setting forth the restrictions on
transfer contained in this Section.
11.2 The Company hereby agrees to register the Warrant Shares
pursuant to a registration statement to be filed by the Company pursuant to the
Registration Rights Agreement dated as of November 15, 2001 (the "Registration
Statement").
12. 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.
The addresses for such communications shall be with respect to the Holder of
this Warrant or of Warrant Shares issued pursuant hereto, addressed to such
Holder at its last know address or facsimile number appearing on the books of
the Company maintained for such purposes, or with respect to the Company,
addressed to:
Xybernaut Corporation
12701 Fair Lakes Circle
Suite 550
Fairfax, Virginia 22033
Facsimile no.: (703) 631-3903
Attn: John F. Moynahan
or to such other address or addresses or facsimile number or numbers as any such
party may most recently have designated in writing to the other party hereto by
notice given in accordance with this Section. Copies of notices to the Company
shall be sent to (i) Dr. Steven A. Newman, Xybernaut Corporation, 12701 Fair
Lakes Circle, Suite 550, Fairfax, Virginia 22033, Facsimile no.: (703) 631-3903
and (ii) Martin Eric Weisberg, Esq., Jenkens & Gilchrist Parker Chapin LLP, The
Chrysler Building, 405 Lexington Avenue, 7th Floor, New York, New York, 10174,
Facsimile no.: (212) 704-6288.
13. 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.
14. 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.
15. 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.
16. 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.
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IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of
November 19, 2001.
XYBERNAUT CORPORATION
By:________________________
Name: Steven A. Newman
Title: Vice Chairman
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NOTICE OF EXERCISE OF WARRANT
The undersigned hereby irrevocably elects to exercise the right,
represented by the Warrant certificate dated as of __________, 2001, to purchase
__________ shares of the Common Stock, par value $0.01 per share, of Xybernaut
Corporation and tenders herewith payment as follows (check applicable box(es)):
|_| by certified check, cashier's check or wire transfer of
$______________; and/or
|_| by the surrender for cancellation of such portion of the attached
Warrant as calculated in accordance with Section 2(ii) for the cashless exercise
of the Warrant and set forth below:
Number of Warrant Shares Surrendered for Cancellation:________________
Number of Warrant Shares to be Issued:________________________________
In exercising this Warrant, the undersigned hereby confirms and
acknowledges that the shares of Common Stock are being acquired solely for the
account of the undersigned and not as a nominee for any other party, and for
investment, and that the undersigned will not offer sell or otherwise dispose of
any such shares of Common Stock, except under circumstances that will not result
in a violation of the United States Securities Act of 1933, as amended, or any
foreign or state securities laws.
Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:
-------------------------------
(Name)
-------------------------------
(Address)
-------------------------------
Dated: ______________
----------------------------------
Name:
ACKNOWLEDGED BY:
XYBERNAUT CORPORATION
By:_________________________
Name:
Title:
By:_________________________
Name:
Title:
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