Exhibit 10.1
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated May 15, 1998, between the
person and/or entity whose name and address appears on the signature page
attached hereto (individually a "Holder" or collectively with the holders of the
other Securities issued pursuant to a 5% Convertible Preferred Stock and Common
Stock Purchase Agreement of even date herewith, as defined below, the "Holders")
and Xybernaut Corporation, a corporation having its principle place of business
at 12701 Four Lakes Circle, Fairfax, VA 22033.
WHEREAS, simultaneously with the execution and delivery of this
Agreement, the Holders are purchasing from the Company, pursuant to a 5%
Convertible Preferred Stock Securities Purchase Agreement dated the date hereof
(the "Agreement"), 110,294 shares of Common Stock, par value $.01 per share (the
"Common Shares") at a price of $3.40 per share, and 375 shares of Series C
Preferred Stock of the Company, par value $.01 per share (the "Convertible
Preferred Stock") at a price of $1,000 per share, each share convertible into
one share of the Company's Common Stock, $0.01 par value per share (the
"Conversion Shares" , and, collectively with the Common Shares, the "Shares"),
for an aggregate purchase price of $750,000; and
WHEREAS, the Company desires to grant to the Holders the
registration rights set forth herein with respect to the Shares.
NOW, THEREFORE, the parties hereto mutually agree as follows:
Section 1. Registrable Securities. As used herein the term
"Registrable Security" means each of the Conversion Shares; provided, however,
that with respect to any particular Registrable Security, such security shall
cease to be a Registrable Security when, as of the date of determination, (i) it
has been effectively registered under the Securities Act of 1933, as amended
(the "Securities Act") and disposed of pursuant thereto, (ii) registration under
the Securities Act is no longer required for the immediate public distribution
of such security as a result of the provisions of Rule 144, or (iii) it has
ceased to be outstanding. The term "Registrable Securities" means any and/or all
of the securities falling within the foregoing definition of a "Registrable
Security." In the event of any merger, reorganization, consolidation,
recapitalization or other change affecting the Common Stock, such adjustment
shall be made in the definition of "Registrable Security" as is appropriate in
order to prevent any dilution or enlargement of the rights granted pursuant to
this Section 1.
Section 2. Restrictions on Transfer. The Holder acknowledges and
understands that unless registered, the Conversion Shares, Common Shares and the
Convertible Preferred Stock are "restricted securities" as defined in Rule 144
promulgated under the Act. The Holder understands that no disposition or
transfer of the Common Shares, Conversion Shares or the Convertible Preferred
Stock may be made by Holder in the absence of (i) an opinion of counsel
reasonably satisfactory to the Company that such transfer may be made or (ii) a
registration statement under the Securities Act is then in effect with respect
thereto.
Section 3. Registration Rights. (a) The Company shall prepare and
file a registration statement (the "Registration Statement") with the Securities
and Exchange Commission ("SEC"), on one occasion, at the sole expense of the
Company (except as provided in Section 3(c) hereof), in respect of all holders
of Registrable Securities, so as to permit a non-underwritten public offering
and sale of the Registrable Securities under the Act. The number of Registrable
Securities to be registered shall be one hundred fifty (150%) percent of the
number of shares that would be required if all the Registrable Securities were
converted at a price of $3.40 per share on the effective date of the
Registration Statement.
(b) The Company will maintain any Registration Statement or
post-effective amendment filed under this Section 3 hereof current under the
Securities Act until the earlier of (i) the date that all of the Registrable
Securities have been sold pursuant to the Registration Statement, (ii) the date
the holders thereof receive an opinion of counsel that the Registrable
Securities may be sold under the provisions of Rule 144 or (iii) the second
anniversary of the effective date of the Registration Statement.
(c) All fees, disbursements and out-of-pocket expenses and costs
incurred by the Company in connection with the preparation and filing of any
Registration Statement under subparagraph 3(a) and in complying with applicable
securities and Blue Sky laws (including, without limitation, all attorneys'
fees) shall be borne by the Company. The Holder shall bear the cost of
underwriting discounts and commissions, if any, applicable to the Registrable
Securities being registered and the fees and expenses of its counsel. The
Company shall use its best efforts to qualify any of the securities for sale in
such states as such Holder reasonably designates and shall furnish
indemnification in the manner provided in Section 6 hereof. However, the Company
shall not be required to qualify in any state which will require an escrow or
other restriction relating to the Company and/or the sellers. The Company at its
expense will supply the Holder with copies of such Registration Statement and
the prospectus or offering circular included therein and other related documents
in such quantities as may be reasonably requested by the Holder.
(d) The Company shall not be required by this Section 3 to include
a Holder's Registrable Securities in any Registration Statement which is to be
filed if, in the opinion of counsel for the Company the proposed offering or
other transfer as to which such registration is requested is exempt from
applicable federal and state securities laws and would result in all purchasers
or transferees obtaining securities which are not "restricted securities", as
defined in Rule 144 under the Securities Act.
(e) In the event the Registration Statement to be filed by the
Company pursuant to Section 3 (a) above is not declared effective by the SEC
within ninety (90) days of the Closing Date, as defined in the Agreement, then,
unless waived by Holder, the Company will pay Holder, as liquidated damages for
such failure and not as a penalty, two (2%) percent of the outstanding principal
amount of the Preferred Shares for each month thereafter until the Company
procures registration of the Conversion Shares.
If the Company does not remit the damages to the Holder as set forth
above, the Company will pay the Holder's reasonable costs of collection,
including attorneys fees, in addition to the liquidated damages. Such payment
shall be made to the Holder immediately if the registration of the Conversion
Shares are not effected; provided, however, that the payment of such liquidated
damages shall not relieve the Company from its obligations to register the
Conversion Shares pursuant to this Section. The registration of the Conversion
Shares pursuant to this provision shall not affect or limit Holder's other
rights or remedies as set forth in this Agreement. Any payment pursuant to this
Section 3(e) shall be made either in cash or paid in additional shares of Common
Stock at the discretion of the Company.
(f) No provision contained herein shall preclude the Company from
selling securities pursuant to any Registration Statement in which it is
required to include Registrable Securities pursuant to this Section 3.
Section 4. Cooperation with Company. Holders will cooperate with the
Company in all respects in connection with this Agreement, including, timely
supplying all information reasonably requested by the Company and executing and
returning all documents reasonably requested in connection with the registration
and sale of the Registrable Securities.
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Section 5. Registration Procedures. If and whenever the Company is
required by any of the provisions of this Agreement to effect the registration
of any of the Registrable Securities under the Act, the Company shall (except as
otherwise provided in this Agreement), as expeditiously as possible:
(a) prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective and to comply
with the provisions of the Act with respect to the sale or other disposition of
all securities covered by such registration statement whenever the Holder or
Holders of such securities shall desire to sell or otherwise dispose of the same
(including prospectus supplements with respect to the sales of securities from
time to time in connection with a registration statement pursuant to Rule 415 of
the SEC);
(b) furnish to each Holder such numbers of copies of a summary
prospectus or other prospectus, including a preliminary prospectus or any
amendment or supplement to any prospectus, in conformity with the requirements
of the Act, and such other documents, as such Holder may reasonably request in
order to facilitate the public sale or other disposition of the securities owned
by such Holder;
(c) use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or blue sky
laws of such jurisdictions as the Holder, shall reasonably request, and do any
and all other acts and things which may be necessary or advisable to enable each
Holder to consummate the public sale or other disposition in such jurisdiction
of the securities owned by such Holder, except that the Company shall not for
any such purpose be required to qualify to do business as a foreign corporation
in any jurisdiction wherein it is not so qualified or to file therein any
general consent to service of process;
(d) use its best efforts to list such securities on NASDAQ or any
securities exchange on which any securities of the Company is then listed, if
the listing of such securities is then permitted under the rules of such
exchange or NASDAQ;
(e) enter into and perform its obligations under an underwriting
agreement, if the offering is an underwritten offering, in usual and customary
form, with the managing underwriter or underwriters of such underwritten
offering;
(f) notify each Holder of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto covered
by such registration statement is required to be delivered under the Act, of the
happening of any event of which it has knowledge as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing.
Section 6. Indemnification.
(a) In the event of the filing of any Registration Statement with
respect to Registrable Securities pursuant to Section 3 hereof, the Company
agrees to indemnify and hold harmless the Holder ("Distributing Holders")
against any losses, claims, damages or liabilities, joint or several (which
shall, for all purposes of this Agreement, include, but not be limited to, all
reasonable costs of defense and investigation and all attorneys' fees), to which
the Distributing Holders may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any such Registration
Statement, or any related preliminary prospectus, final prospectus, offering
circular, notification or amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
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misleading; provided, however, that the Company will not be liable (i) in any
such case to the extent that any such loss, claim, damage or liability arises
out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in such Registration Statement, preliminary
prospectus, final prospectus, offering circular, notification or amendment or
supplement thereto in reliance upon, and in conformity with, written information
furnished to the Company by the Distributing Holders, specifically for use in
the preparation thereof, or (ii) to pay any amounts paid in settlement of any
loss, claim, damage or liability if such settlement is effected without the
consent of the Company. This indemnity agreement will be in addition to any
liability which the Company may otherwise have.
(b) Each Distributing Holder agrees that it will indemnify and
hold harmless the Company, and each officer, director of the Company against any
losses, claims, damages or liabilities (which shall, for all purposes of this
Agreement, include, but not be limited to, all costs of defense and
investigation and all attorneys' fees) to which the Company or any such officer,
or director may become subject under the Securities Act or otherwise, insofar as
such losses claims, damages or liabilities (or actions in respect thereof);
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in a Registration Statement requested by such
Distributing Holder, or any related preliminary prospectus, final prospectus,
offering circular, notification or amendment or supplement thereto, or arise out
of or are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but in each case only to the extent that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in such Registration Statement, preliminary prospectus, final prospectus,
offering circular, notification or amendment or supplement thereto in reliance
upon, and in conformity with, written information furnished to the Company by
such Distributing Holder, specifically for use in the preparation thereof and,
provided further, that the indemnity agreement contained in this Section 6(b)
shall not inure to the benefit of the Company with respect to any person
asserting such loss, claim, damage or liability who purchased the Registrable
Securities which are the subject thereof if the Company failed to send or give
(in violation of the Securities Act or the rules and regulations promulgated
thereunder) a copy of the prospectus contained in such Registration Statement to
such person at or prior to the written confirmation to such person of the sale
of such Registrable Securities, where the Company was obligated to do so under
the Securities Act or the rules and regulations promulgated thereunder. This
indemnity agreement will be in addition to any liability which the Distributing
Holders may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 6 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 6, notify the indemnifying party of the commencement thereof,
but the omission so to notify the indemnifying party will not relieve the
indemnifying party from any liability which it may have to any indemnified party
otherwise than as to the particular item as to which indemnification is then
being sought solely pursuant to this Section 6. In case any such action is
brought against any indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
in, and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, assume the defense thereof, subject to the provisions
herein stated and after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the indemnifying party
will not be liable to such indemnified party under this Section 6 for any legal
or other reasonable out-of-pocket expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation, unless the indemnifying party shall not pursue the
action to its final conclusion. The indemnified party shall have the right to
employ separate counsel in any such action and to participate in the defense
thereof, but the fees and reasonable out-of-pocket expenses of such counsel
shall not be at the expense of the indemnifying party if the indemnifying party
has assumed the defense of the action with counsel reasonably satisfactory to
the indemnified party; provided that if the indemnified party is the
Distributing Holder, the reasonable fees and out-of-pocket expenses of such
counsel shall be at the expense of the indemnifying party if (i) the employment
of such counsel has been specifically authorized in writing by the indemnifying
party, or (ii) the named parties to any such action (including any impleaded
parties) include both
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the Distributing Holder and the indemnifying party and the Distributing Holder
shall have been advised by such counsel that there may be one or more legal
defenses available to the indemnifying party different from or in conflict with
any legal defenses which may be available to the Distributing Holder (in which
case the indemnifying party shall not have the right to assume the defense of
such action on behalf of the Distributing Holder, it being understood, however,
that the indemnifying party shall, in connection with any one such action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable only for
the reasonable fees and out-of-pocket expenses of one separate firm of attorneys
for the Distributing Holder, which firm shall be designated in writing by the
Distributing Holder). No settlement of any action against an indemnified party
shall be made without the prior written consent of the indemnified party, which
consent shall not be unreasonably withheld.
Section 7. Notices. Any notice pursuant to this Agreement by the
Company or by the Holder shall be in writing and shall be deemed to have been
duty given if delivered by (i) hand, (ii) by facsimile and followed by mail
delivery, or (iii) if mailed by certified mail, return receipt requested,
postage prepaid, addressed as follows:
(a) If to the Holder, to its, his or her address set forth on the
signature page of this Agreement, with a copy to the person designated in the
Agreement.
(b) If to the Company,
at Xybernaut Corporation,
12701 Four Lakes Circle
Fairfax, VA 22033
Attn: Edward G. Newman, President,
(tele) (703) 631-6925
(fax) (703) 631-7070
and a copy to
Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, NY 10036
Attn: Martin Eric Weisberg, Esq.
or to such other address as any such party may designate by notice
to the other party. Notices shall be deemed given at the time they are delivered
personally or five (5) days after they are mailed in the manner set forth above.
If notice is delivered by facsimile to the Company and followed by mail,
delivery shall be deemed given two (2) days after such facsimile is sent.
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Section 8. Assignment. This Agreement is binding upon and inures to
the benefit of the parties hereto and their respective heirs, successors and
permitted assigns. This Agreement cannot be assigned, amended or modified by the
parties hereto, except by written agreement executed by the parties. If
requested by the Company, the Holder shall have furnished to the Company an
opinion of counsel reasonably satisfactory to the Company to such effect.
Section 9. Conflicts. In the event of any inconsistency or conflict
between the terms and provisions of this Agreement, and the terms and provisions
of the Purchase Agreement or the Certificate of Designation, the terms and
provisions of the Certificate of Designation shall prevail.
Section 10. Counterparts. This Agreement may be executed i
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 11. Headings. The Headings in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 12. Governing Law; Venue. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York applicable
to contracts made and to be performed entirely within such State, without regard
to its principles of conflicts of laws. Each of the parties hereto agrees that
ion the event of any dispute arising hereunder venue shall be New York, New York
and each party hereby submits to the jurisdiction of the United States Federal
Court in the Southern District of New York.
Section 13. Severability. If any provision of this Agreement shall
for any reason be held invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provision hereof and this Agreement
shall be construed as if such invalid or unenforceable provision had never been
contained herein.
[End of Page]
[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, on the day and year first written.
XYBERNAUT CORPORATION
By _____________________________
Officer
LIBERTYVIEW PLUS FUND, Purchaser
By _____________________________
Officer
Address: Libertyview Plus Fund
c/o Libertyview Capital Management
101 Hudson Street
Suite #3700
Jersey City, New Jersey 07302
(tele) 201-200-9093
(fax) 201-200-1140
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LIBERTYVIEW FUND, LLC, Purchaser
By _____________________________
Officer
CPR (USA) INC., Purchaser
By _____________________________
Officer
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