EXHIBIT 4.1
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.
COMMON STOCK PURCHASE WARRANT
XYBERNAUT CORPORATION
EXPIRES AUGUST 29, 2005
No.: W-A02-1 Number of Shares: 2,857,143
Date of Issuance: August 29, 2002
1. Issuance. For good and valuable consideration, the receipt of which
is hereby acknowledged by Xybernaut Corporation, a Delaware corporation (the
"Company"), Rewell Holdings, Ltd., 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 August 29, 2005 (the "Expiration Date"), Two Million Eight Hundred
Fifty Seven Thousand One Hundred Forty Three (2,857,143) shares of the Company's
Common Stock, par value $.01 per share (the "Common Stock") at an initial
exercise price of $1.50 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. 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 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
are not enforceable against the Company except to the extent set forth herein.
6. Protection Against Dilution.
(a) 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.
(b) 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 6 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 of the Company shall be deemed a stock
dividend to the extent of the bargain purchase element of the rights.
7. Warrant Call. At any time or from time to time after the
Registration Statement (as defined in Section 9(b) hereof) has been declared
effective, 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 Common Stock trades at a price equal to or greater than $3.00 per share for
five (5) consecutive trading days prior to the date the Company calls the
Warrant. To be effective, the Call Notice must be given within ten (10) days
after the aforementioned five (5) 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.
8. Limitation on Exercise. Notwithstanding anything to the contrary
set forth in this Warrant or the Common Stock and Warrant Purchase Agreement of
even date herewith
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(the "Purchase Agreement"), the Holder shall not be entitled to exercise this
Warrant and the Company shall have no obligation to issue shares of Common Stock
upon such exercise of all or any portion of this Warrant to the extent that,
following such exercise, the Beneficial Ownership Number (as defined below) is
equal to or greater than 4.99% of the outstanding shares of Common Stock
(including the shares to be issued to the Holder upon such exercise).
Notwithstanding the foregoing, this Section 8 shall have no further force and
effect if there is an outstanding tender offer for any or all of the shares of
the Company's Common Stock, or the Holder, at its option, provides at least
sixty-five (65) days' advance written notice from the Holder that this Section 8
shall have no further force and effect. For purposes of this Section,
"Beneficial Ownership Number" shall equal the sum of (i) the number of shares of
Common Stock owned by the Holder and its affiliates (other than shares of Common
Stock which may be deemed beneficially owned through the ownership of the
unexercised portion of the Warrant or other rights to purchase Common Stock or
through the ownership of convertible securities), and (ii) the number of shares
of Common Stock issuable upon the exercise of the Warrant. For purposes of this
Section, "beneficial ownership" shall be determined in accordance with Section
13(d) of the Securities Exchange Act of 1934, as amended. The Holder, by its
acceptance of this Warrant, further agrees that if the Holder transfers or
assigns any of the Warrants to any party, such assignment shall be made subject
to the transferee's or assignee's specific agreement to be bound by the
provisions of this Section 8 as if such transferee or assignee were the original
Holder hereof.
9. 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"), or any applicable state securities laws, 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
satisfactory to counsel for the Company, setting forth the restrictions on
transfer contained in this Section.
(b) The Company agrees to file a registration statement, which
shall include the Warrant Shares, on Form S-3 or another available form (the
"Registration Statement"), pursuant to the Registration Rights Agreement between
the Company and the Holder dated as of August 29, 2002 (the "Registration Rights
Agreement").
10. 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:
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(i) if to the Company, to:
Xybernaut Corporation
12701 Fair Lakes Circle
Suite 550
Fairfax, Virginia 22033
Attn: John F. Moynahan, Sr. Vice President
and Chief Financial Officer
Telephone No.: (703) 631-6925
Facsimile No.: (703) 631-3903
with a copy to:
Jenkens & Gilchrist Parker Chapin LLP
The Chrysler Building
405 Lexington Avenue
New York, New York 10174
Attn: Martin Eric Weisberg, Esq.
Telephone No.: (212) 704-6000
Facsimile No.: (212) 704-6288
(ii) if to the Holder, to:
Rewell Holdings, Ltd.
Gretton House
P.O. Box 65
Duke Street
Grand Turk, Turks & Caicos Islands
British West Indies
Attention: Ms. C.B. Williams
Telephone No.: ___________
Facsimile No.: ____________
with a copy to:
Krieger & Prager, LLP
39 Broadway, Suite 1440
New York, New York 10006
Attention: Samuel Krieger, Esq.
Telephone No.: (212) 363-2900
Facsimile No.: (212) 363-2999
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.
11. Supplements and Amendments; Whole Agreement. This Warrant may be
amended or supplemented only by an instrument in writing signed by the parties
hereto. This
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Warrant and the Purchase Agreement, of even date herewith, by and between the
Company and the Holder 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.
12. 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.
13. 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.
14. 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 the 29th day of August 2002.
XYBERNAUT CORPORATION
By:
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Name:
Title:
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NOTICE OF EXERCISE OF WARRANT
The undersigned hereby irrevocably elects to exercise the right,
represented by the Warrant Certificate No. W-A02-1 dated as of August 29, 2002,
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:
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Dated:______________________
[HOLDER]
By:
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Name:
Title:
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