Purchase Agreement - Xybernaut Corp., Balmore Funds and Austost Anstalt Schaan
PURCHASE AGREEMENT
This PURCHASE AGREEMENT (this "Agreement"), dated as of November 19, 1999,
is entered into by and among XYBERNAUT CORPORATION, a Delaware corporation (the
"Company"), with offices at 12701 Fair Lakes Circle, Fairfax, Virginia 22033,
and BALMORE FUNDS, S.A., a corporation organized under the laws of the British
Virgin Islands, with offices at c/o Trident Trust Company (BVI) Limited, Trident
Chambers, Road Town, Tortola, British Virgin Islands, and AUSTOST ANSTALT
SCHAAN, a corporation organized under the laws of the Liechtenstein, with
offices at Ladstrasse 163, 9494 Furstentums, Vaduz, Liechtenstein (together, the
"Buyers"), for the purchase and sale of shares of the common stock, par value
$.01 per share (the "Common Stock"), of the Company by the Buyers, in the
manner, and upon the terms, provisions and conditions set forth in this
Agreement.
Therefore, in consideration of the representations, warranties and
agreements contained herein and other good and valuable consideration, the
receipt and legal adequacy of which is hereby acknowledged by the parties, the
Company and the Buyers hereby agree as follows:
1. AGREEMENT TO SUBSCRIBE; PRICING.
(a) The Buyers hereby subscribe for a total of 1,000,000 shares of
the Company's Common Stock (the "Shares") at a price of $3.00 per share for an
aggregate purchase price of $3,000,000 (the "Purchase Price").
(b) The Buyers shall pay the Purchase Price by delivering
immediately available good funds in United States Dollars to the escrow agent
(the "Escrow Agent") identified in the Escrow Agreement attached hereto as
Exhibit 1(b) (the "Escrow Agreement").
(c) The closing under this Agreement shall take place at the offices
of Parker Chapin Flattau & Klimpl, LLP, 1211 Avenue of the Americas, New York,
New York 10036 at 1:00 p.m. E.S.T. upon the satisfaction of each of the
conditions set forth in Section 2 hereof (the Closing Date").
2. CONDITIONS PRECEDENT.
(a) The parties shall have executed and delivered this Agreement and
the Escrow Agreement.
(b) The Company shall have delivered certificates evidencing the
Shares to the Escrow Agent.
(c) The Buyers shall have delivered to the Escrow Agent the funds as
payment in full of the Purchase Price for the Shares in accordance with Section
1(b) hereof and the Escrow Agreement.
3. REGISTRATION STATEMENT. On or before November 30, 1999 (the "Filing
Date") the Company shall cause to be filed with the Securities and Exchange
Commission (the "Commission") a Registration Statement on Form S-3 (or any other
comparable form) to register
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for resale the Shares purchased by the Buyers pursuant to this Agreement.
Notwithstanding the foregoing, if 500,000 freely tradable shares of Common Stock
have been delivered to the Buyers prior to the filing of a Registration
Statement, the Filing Date shall be within 10 days after the 1999 Annual Meeting
of Stockholders of the Company. The Company shall use its best efforts to take
all steps necessary to cause the Registration Statement to be declared effective
by December 15, 1999, but in no event later than 90 days after the Filing Date.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BUYERS. Each of the
Buyers represents and warrants to the Company, and covenants for the benefit of
the Company, as follows:
(a) This Agreement has been duly authorized, validly executed and
delivered by the Buyers and constitutes a valid and binding agreement and
obligation of the Buyers enforceable against the Buyers in accordance with its
terms, subject to limitations on enforcement by general principles of equity and
bankruptcy or other laws affecting the enforcement of creditors' rights
generally;
(b) The Buyers have received and carefully reviewed copies of the
Public Documents (as hereinafter defined). No representations or warranties have
been made to the Buyers by the Company, the officers or directors of the
Company, or any agent, employee or affiliate of any of them, except as
specifically set forth herein or as set forth in the other documents expressly
referred to herein. Each of the Buyers understands that no Federal, state, local
or foreign governmental body or regulatory authority has made any finding or
determination relating to the fairness of an investment in the Shares and that
no Federal, state, local or foreign governmental body or regulatory authority
has recommended or endorsed, or will recommend or endorse, any investment in the
Shares. Each of the Buyers, in making the decision to purchase the Shares, has
relied upon independent investigation made by it and has not relied on any
information or representations made by third parties;
(c) Each of the Buyers understands that the Shares are being offered
and sold to it in reliance on specific provisions of Federal and state
securities laws and that the Company is relying upon the truth and accuracy of
the representations, warranties, agreements, acknowledgments and understandings
of each of the Buyers set forth herein for purposes of qualifying for exemptions
from registration under the Securities Act, and applicable state securities
laws;
(d) Each of the Buyers is an "accredited investor" as defined under
Rule 501 of Regulation D promulgated under the Securities Act;
(e) Each of the Buyers (i) is and will be acquiring the Shares for
such Buyer's own account, and not with a view to any resale or distribution of
the Shares, in whole or in part, in violation of the Securities Act or any
applicable securities laws and (ii) has not offered or sold any of the Shares
and has no present intention or agreement to divide the Shares with others for
purposes of selling, offering, distributing or otherwise disposing of any of the
Shares;
(f) The offer and sale of the Shares is intended to be exempt from
registration under the Securities Act, by virtue of Section 4(2) and Regulation
D promulgated under the Securities Act. Each of the Buyers understands that the
shares of Common Stock purchased
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hereunder have not been, and may never be, registered under the Securities Act;
that the Shares cannot be sold, transferred, assigned, pledged or subjected to
any lien or security interest unless they are first registered under the
Securities Act and such state and other securities laws as may be applicable or
in the opinion of counsel for the Company an exemption from registration under
the Shares Act is available (and then the Shares may be sold, transferred,
assigned, pledged or subjected to a lien or security interest only in compliance
with such exemption and all applicable state and other securities laws); and
that the following legends will be placed upon the certificate for the Shares:
"The Shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Securities Act"),
and may not be offered for sale, sold or otherwise transferred,
pledged or subjected to any lien or security interest, in the absence
of an effective registration statement under the Securities Act or a
written opinion of counsel for the Company that the Shares may be
offered for sale, sold, transferred, pledged or subjected to a lien or
security interest pursuant to an exemption under the Securities Act
and such state and other securities laws as may be applicable."
(g) Each of the Buyers (i) has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of an investment in the Company; and (ii) recognizes that such Buyer's
investment in the Company involves a high degree of risk; and
(h) Each of the Buyers is capable of evaluating the risks and merits
of an investment in the Shares by virtue of its experience as an investor and
its knowledge, experience, and sophistication in financial and business matters
and such Buyer is capable of bearing the entire loss of its investment in the
Shares.
(i) None of the Buyers is a registered broker-dealer or an affiliate
of a registered broker-dealer.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. The Company
represents and warrants to the Buyers, and covenants for the benefit of the
Buyers, as follows:
(a) The Company has been duly incorporated and is validly existing
and in good standing under the laws of the State of Delaware, with full
corporate power and authority to own, lease and operate its properties and to
conduct its business as currently conducted, and is duly registered and
qualified to conduct its business and is in good standing in each jurisdiction
or place where the nature of its properties or the conduct of its business
requires such registration or qualification, except where the failure to
register or qualify is not reasonably anticipated to have a material adverse
effect on the business or financial condition of the Company ("Material Adverse
Effect");
(b) The Company has furnished the Buyers with copies of the
Company's most recent Annual Report on Form 10-KSB (the "Form 10-KSB") filed
with the Commission, its Form 10- QSB for the quarterly period ended September
30, 1999 (the "Form 10-QSB";
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collectively with the Form 10-KSB, the "Public Documents"). The Public Documents
at the time of their filing did not include any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading;
(c) The Shares, when paid for by the Buyers, shall be duly
authorized and validly issued and when issued and delivered, will be fully paid
and nonassessable;
(d) This Agreement has been duly authorized, validly executed and
delivered on behalf of the Company and is a valid and binding agreement and
obligation of the Company enforceable against the Company in accordance with its
terms, subject to limitations on enforcement by general principles of equity and
by bankruptcy or other laws affecting the enforcement of creditors' rights
generally, and the Company has full power and authority to execute and deliver
this Agreement and the other agreements and documents contemplated hereby and to
perform its obligations hereunder and thereunder;
(e) The execution and delivery of this Agreement, the issuance of
the Shares and the consummation of the transactions contemplated by this
Agreement by the Company, will not conflict with or result in a breach of or a
default under any of the terms or provisions of, the Company's certificate of
incorporation or by-laws, or of any material provision of any indenture,
mortgage, deed of trust or other material agreement or instrument to which the
Company is a party or by which it or any of its material properties or assets is
bound, any material provision of any law, statute, rule, regulation, or any
existing applicable decree, judgment or order by any court, Federal or state
regulatory body, administrative agency, or other governmental body having
jurisdiction over the Company, or any of its material properties or assets or
will result in the creation or imposition of any material lien, charge or
encumbrance upon any material property or assets of the Company or any of its
subsidiaries pursuant to the terms of any agreement or instrument to which any
of them is a party or by which any of them may be bound or to which any of their
property or any of them is subject;
(f) Except as disclosed herein, and based upon the representations
and warranties of the Buyers set forth herein, no authorization, approval,
filing with or consent of any governmental body is required for the issuance and
sale of the Shares to the Buyers pursuant to this Agreement;
(g) There is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, now pending against or
affecting the Company, or any of its properties, which would reasonably be
anticipated to result in a Material Adverse Effect, except as disclosed to the
Buyers or set forth in the Public Documents;
(h) Subsequent to the dates as of which information is given in the
Public Documents, except as contemplated herein, the Company has not incurred
any material liabilities or material obligations, direct or contingent, or
entered into any material transactions not in the ordinary course of business,
and there has not been any change in its capitalization or any Material Adverse
Effect; and
(i) The Company has sufficient title and ownership of all
trademarks, service marks, trade names, copyrights, patents, trade secrets and
other proprietary rights necessary for
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its business as now conducted and as proposed to be conducted as described in
the Public Documents without any conflict with or infringement of the rights of
others. Except as set forth in the Public Documents, there are no material
outstanding options, licenses or agreements of any kind relating to the
foregoing, nor is the Company bound by or party to any material options,
licenses or agreements of any kind with respect to the trademarks, service
marks, trade names, copyrights, patents, trade secrets, licenses and other
proprietary rights of any other person or entity.
6. INDEMNIFICATION.
(a) The Company hereby agrees to indemnify and hold harmless the
Buyers and its officers, directors, shareholders, employees, agents and
attorneys against any and all losses, claims, damages, liabilities and expenses
incurred by each such person in connection with defending or investigating any
such claims or liabilities, whether or not resulting in any liability to such
person, to which any such indemnified party may become subject under the
Securities Act, or under any other statute, at common law or otherwise, insofar
as such losses, claims, demands, liabilities and expenses arise out of or are
based upon (i) any untrue statement or alleged untrue statement of a material
fact made by the Company, (ii) any omission or alleged omission of a material
fact with respect to the Company, or (iii) any breach of any representation,
warranty or agreement made by the Company in this Agreement.
(b) The Buyers hereby agree to indemnify and hold harmless the
Company and its officers, directors, shareholders, employees, agents and
attorneys against any and all losses, claims, damages, liabilities and expenses
incurred by each such person in connection with defending or investigating any
such claims or liabilities, whether or not resulting in any liability to such
person, to which any such indemnified party may become subject under the
Securities Act, or under any other statute, at common law or otherwise, insofar
as such losses, claims, demands, liabilities and expenses arise out of or are
based upon (i) any untrue statement or alleged untrue statement of a material
fact made by the Buyers, (ii) any omission or alleged omission of a material
fact with respect to the Buyers or (iii) any breach of any representation,
warranty or agreement made by the Buyers in this Agreement.
7. GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement shall be
governed by and interpreted in accordance with the laws of the State of New York
without giving effect to the rules governing the conflicts of laws. Each of the
parties consents to the exclusive jurisdiction of the Federal courts whose
districts encompass any part of 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
conveniens, to the bringing of any such proceeding in such jurisdictions. Each
party waives its right to a trial by jury. Each party to this Agreement
irrevocably consents to the service of process in any such proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
such party at its address set forth herein or its agent. Each of the Buyers
appoints the Escrow Agent as such Buyer's agent for service of process in any
such proceeding. Nothing herein shall affect the right of any party to serve
process in any other manner permitted by law.
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8. NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, express overnight
courier, registered first class mail, overnight courier, or telecopier,
initially to the address set forth below, and thereafter at such other address,
notice of which is given in accordance with the provisions of this Section.
(a) if to the Company:
Xybernaut Corporation
12701 Fair Lakes Circle
Fairfax, Virginia 22033
Attn: Dr. Steven A. Newman
Vice Chairman
Telephone: (703) 631-6925
Telecopier: (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: (212) 704-6000
Telecopier: (212) 704-6288
(b) if to the Buyers:
Balmore Funds, S.A.
c/o Trident Trust Company (BVI) Limited
Trident Chambers
Road Town
Tortola, British Virgin Islands
Attn: Francois Morax
Telecopier No.: 011-411-201-4800
Austost Anstalt Schaan
Ladstrasse 163
9494 Furstentums
Vaduz, Liechtenstein
Attn: Thomas Hackl
Telecopier No.: 011-431-534-532895
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; three (3) business days
after being deposited in the mail, postage prepaid, if mailed; the next business
day after being deposited with an overnight courier, if deposited with a
nationally recognized, overnight courier service; when receipt is acknowledged,
if telecopied.
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9. ENTIRE AGREEMENT. This Agreement constitutes the entire understanding
and agreement of the parties with respect to the subject matter hereof and
supersedes all prior and/or contemporaneous oral or written proposals or
agreements relating thereto all of which are merged herein. This Agreement may
not be amended or any provision hereof waived in whole or in part, except by a
written amendment signed by both of the parties.
10. COUNTERPARTS. This Agreement may be executed by facsimile signature
and in counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, this Agreement was duly executed on the date first
written above.
XYBERNAUT CORPORATION
By:_______________________________
Name: Steven A. Newman
Title: Vice-Chairman
BALMORE FUNDS, S.A.
By:_______________________________
Name:
Title:
AUSTOST ANSTALT SCHAAN
By:_______________________________
Name:
Title:
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