XYVISION, INC.
EXCHANGE AGREEMENT
This Agreement is made among Xyvision, Inc., a Delaware corporation (the
"Company"), and the persons and entities listed on Schedule I attached hereto
(the "Holders").
WHEREAS, each of the Holders is the owner of a Promissory Note issued by
the Company bearing interest at 4% per year and maturing 30 months from
issuance (the "Promissory Notes") principal amount set forth opposite such
Holder's name on Schedule I; and
WHEREAS, the Company and the Holders desire to exchange the Promissory
Notes for common stock of the Company;
NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement, the Company and the Holders agree as follows:
Exchange of Securities. Pursuant to the terms and conditions set forth in
this Agreement, at the Closing (as defined below) each Holder shall exchange
his, her or its Promissory Note for (a) such number of shares of common
stock, par value $.03 per share (the "Common Stock"), of the Company as is
equal to the principal amount of the Promissory Note delivered by such Holder
for cancellation pursuant to this Section 1, divided by $2.00 and (b) the
payment of all accrued and unpaid interest on such Promissory Note.
Representations of the Company. The Company represents to and agrees with the
Holders as follows:
2.1 Organization. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. The
Company has the corporate power and authority to own its properties and
conduct its business as described in the Company Reports (as defined in
Section 2.5 below).
2.2 Capitalization. The authorized capital stock of the Company consists of
(a) 50,000,000 shares of Common Stock, of which 8,844,099 shares were issued
and outstanding as of May 31, 1996, and (b) 3,000,000 shares of Preferred
Stock, $1.00 par value per share, of which (i) 100,000 shares have been
designated as Series A Junior Participating Preferred Stock (none of which
shares are issued or outstanding) and (ii) 300,000 shares have been
designated as Series B Preferred Stock, of which 232,049 shares were issued
and outstanding as of May 31, 1996. All of the issued and outstanding shares
of Common Stock are duly authorized, validly issued, fully paid and
nonassessable, and none of such shares have any pre-emptive rights.
2.3 Authority and Enforceability. The execution, delivery and performance by
the Company of this Agreement has been duly authorized by all necessary
corporate action. This Agreement has been duly executed and delivered by the
Company and constitutes the valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms. The execution,
delivery and performance by the Company of this Agreement will not conflict
with any of the terms, conditions or provisions of, or require a consent or
waiver under, its Certificate of Incorporation or By-Laws (each as amended to
date) or any indenture, lease, agreement or other instrument to which the
Company is a party or by which it or any of its properties is bound, or any
law, statute, regulation, decree, judgment or order applicable to the
Company.
2.4 Issuance of Stock. The shares of Common Stock to be issued pursuant to
this Agreement, when so issued, will be duly authorized, validly issued,
fully paid and nonassessable. The issuance of such shares will not be subject
to any pre-emptive rights.
2.5 Reports and Financial Statements. The Company has previously furnished to
each Holder
copies (excluding exhibits) of its (i) Annual Report on Form 10-K for the
fiscal year ended March 31, 1996, as filed with the Securities and Exchange
Commission (the "SEC"), and (ii) any other reports or registration statements
(other than Registration Statements on Form S-8) filed by the Company with
the SEC since March 31, 1996 (such report and other filings are referred to
as the "Company Reports"). As of their respective dates, the Company Reports
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The audited financial statements and unaudited interim
financial statements of the Company included in the Company Reports (i)
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, (ii) have been prepared in accordance with United States generally
accepted accounting principles (except as may be indicated therein or in the
notes thereto, and in the case of quarterly financial statements, as
permitted by Form 10-Q under the Securities Exchange Act of 1934), and (iii)
fairly present the
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consolidated financial condition, results of operations and cash flows of the
Company as of the respective dates thereof and for the periods referred to
therein. The Company has filed with the SEC all of the documents required to
be filed by the Company with the SEC since March 31, 1995.
2.6 Litigation. There is no action or proceeding pending or, to the knowledge
of the Company, threatened against the Company before any court or
administrative agency which challenges the transactions contemplated by this
Agreement or which might reasonably be foreseen to have a material adverse
effect on the consummation of the transactions contemplated by this
Agreement.
2.7 Adverse Changes. Since March 31, 1996, (i) there has not occurred any
material adverse change, or any development which could reasonably be
foreseen to result in a material adverse change, in the condition (financial
or otherwise) of the Company, except as may be otherwise contemplated in the
Company Reports, and (ii) the Company has not entered into a material
transaction outside the ordinary course of its business, except as
contemplated by the Company Reports or this Agreement.
2.8 Resale of Common Stock. The shares of Common Stock issued to the Holders
pursuant to this Agreement will not be "restricted securities" within the
meaning of Rule 144 under the Securities Act of 1933, as amended (the
"Securities Act"), because they are being issued pursuant to the exemption to
the registration requirements of the Securities Act provided by Section
3(a)(9) of the Securities Act. Such shares of Common Stock may be freely
resold or transferred by the Holders who are not affiliates of the Company.
Those Holders who are deemed to be affiliates of the Company may resell the
shares of Common Stock issuable to him, her or it under this Agreement
subject to the provisions of Rule 144 (except for the holding period
requirement), absent registration or an appropriate exemption.
Representations of the Holders. Each Holder represents to and agrees with the
Company as follows:
3.1 Investment Intent. Such Holder is acquiring the shares of Common Stock
issuable to him, her or it under this Agreement for his, her or its own
account for investment and not with a view to, or for sale in connection
with, any distribution thereof; and such Holder has no present intention of
distributing or selling such shares.
3.2 Authority. Such Holder has full power and authority to enter into and to
perform this Agreement in accordance with its terms. Any required corporate
or other authorizations of the execution, delivery and performance by such
Holder of this Agreement have been obtained. This Agreement has been duly
executed and delivered by such Holder and constitutes the valid and binding
obligation of such Holder, enforceable in accordance with its terms. The
execution, delivery and performance by such Holder of this Agreement will not
violate any law, agreement or instrument to which such Holder is a party or
by which he, she or it is bound.
3.3 Ownership of Promissory Notes. Such Holder has good and marketable title
to the Promissory Note listed on Schedule I as owned by such Holder, free and
clear of any and all liens, encumbrances or adverse claims. The delivery by
such Holder of such Promissory Note to the Company for cancellation pursuant
to this Agreement shall extinguish all liability of the Company for amounts
owed under such Promissory Note or for other obligations with respect to such
Promissory Note.
3.4 Accredited Investor. Such Holder, or his, her or its financial advisor is
an "accredited investor" within the meaning of Rule 501(a) under the
Securities Act of 1933, as amended (the "Securities Act").
3.5 Investment Experience. Such Holder (i) is familiar with the Company, its
business and its recent financial performance, (ii) has obtained such
information concerning the Company as he, she or it or such financial advisor
has requested from representatives of the Company, and (iii) has sufficient
knowledge and experience in financial and business matters that he, she or it
is capable of evaluating the merits and risks of the transactions
contemplated by this Agreement.
Closing.
4.1 Closing Conditions. The Closing shall not occur unless and until this
Agreement has been executed by holders of an aggregate of at least 75% of the
principal amount of the Promissory Notes then outstanding. Following the
satisfaction of such condition, the Company shall deliver a written notice to
each Holder that such condition has been satisfied.
4.2 Closing Date. The Closing shall take place at the offices of Xxxx and
Xxxx at 10:00 a.m. on the date designated in the written notice delivered by
the Company to the Holders pursuant to Section 4.1 (provided that such date
shall not be less than five business days following the delivery of such
written notice by the Company).
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4.3 Closing Deliveries. At the Closing:
(a) Each Holder shall deliver to the Company for cancellation the Promissory
Note(s) owned by such Holder.
(b) The Company shall deliver (or cause to be delivered) to each Holder:
(i) A certificate representing the shares of Common Stock to which such
Holder is entitled pursuant to the terms of Section 1;
(ii) A check in payment of the accrued but unpaid interest on such Holder's
Promissory Note;
(iii) A certificate executed by the President of the Company, dated as of the
date of the Closing, certifying that the representations of the Company
contained in Section 2 remain true as of the date of the Closing;
(iv) An opinion of Xxxx and Xxxx, counsel to the Company, dated as of the
date of the Closing, as to the following matters:
(A) The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. The Company has the
corporate power and authority to own its properties and conduct its business
as described in the Company Reports.
(B) The authorized capital stock of the Company consists of (a) 50,000,000
shares of Common Stock, $.03 par value per share, and (b) 3,000,000 shares of
Preferred Stock, $1.00 par value per share, of which 100,000 shares have been
designated as Series A Junior Participating Preferred Stock and 300,000
shares have been designated as Series B Preferred Stock.
(C) The execution, delivery and performance by the Company of the Exchange
Agreement have been duly authorized by all necessary corporate action on the
part of the Company. The Exchange Agreement constitutes a valid and binding
obligation of the Company, enforceable in accordance with its terms. The
execution, delivery and performance by the Company of the Exchange Agreement
(including the issuance of the Common Stock) will not conflict with or result
in a reach of any of the terms or provisions of, or constitute a default
under, the Certificate of Incorporation or the By-laws of the Company.
(D) The shares of Common Stock to be issued pursuant to the Exchange
Agreement have been duly authorized and, when so issued, will be validly
issued, fully paid and nonassessable (assuming the simultaneous consummation
of the other transactions contemplated by Section 4.3 of the Exchange
Agreement).
(E) To the knowledge of such counsel, there are no material legal or
administrative proceedings pending or threatened against the Company which
challenges, or might reasonably be foreseen to have a material adverse effect
on, the consummation of the transactions contemplated by the Exchange
Agreement.
(c) All of the transactions to take place at the Closing shall be deemed to
occur simultaneously. The Company and the Holder shall not be obligated to
proceed with the Closing unless all of the closing deliveries provided for in
this Section 4.3 are delivered as provided.
4.4 Termination. If the Closing has not occurred by September 30, 1996, this
Agreement shall terminate and the parties hereto shall have no further
obligations under this Agreement (provided that such termination shall not
relieve the parties of liability for breaches of this Agreement prior to such
termination).
Covenants.
5.1 Information Requirements. The Company shall use its best efforts to
comply with the current public information requirements set forth in section
(c) of Rule 144 under the Securities Act of 1933.
5.2 Listing of Common Stock. The Company shall use its best efforts to have
the Common Stock quoted on the OTC Bulletin Board display service operated by
the National Association of Securities Dealers, Inc., the Nasdaq Stock Market
or a national securities exchange.
Miscellaneous.
6.1 Notices. All notices and other communications given under this Agreement
shall be in writing. Any such notice or communication shall be deemed
delivered upon personal delivery, one
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business day after it is sent via a reputable nationwide overnight courier
service, or two business days after it is sent by registered or certified
mail, return receipt requested, in each case to the address set forth below:
If to the Company at: 000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000-0000
Attention: President
with a copy to: Xxxx and Xxxx 00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
or if to a Holder at: his or its address set forth on
Schedule I.
6.2 Brokers. The Company and each Holder agree to indemnify the other parties
to this Agreement for and against any claims or liabilities relating to
broker's or finder's fees or commissions or consulting fees relating to the
transactions contemplated by this Agreement which may be asserted by any
person or entity on the basis of any agreement or representation alleged to
have been made by the Company or such Holder, respectively.
6.3 Amendments and Waivers. Any term of this Agreement may be amended, and
the observance of any term of this Agreement may be waived, with the written
consent of the Company and Holders owning an aggregate of at least 66 2/3 of
the aggregate principal amount of the Promissory Notes owned by all Holders
then a party to this Agreement; provided, that this Agreement may be amended
with the consent of less than all of the Holders only in a manner that
affects all Holders in the same fashion. In the event that this Agreement is
amended with the consent of less than all of the Holders, the Company shall
promptly give notice of such amendment to those Holders who did not consent
to such amendment. Any such amendment or waiver shall be binding upon all
Holders.
6.4 Successors and Assigns. This Agreement, and the rights and obligations
hereunder, shall be binding upon, and shall inure to the benefit of, the
respective successors, assigns and heirs of the parties hereto.
6.5 Entire Agreement. This Agreement, together with the exhibits hereto,
embodies the entire agreement and understanding between the Company and the
Holders with respect to the subject matter hereof, and supersedes all prior
agreements and understandings relating thereto.
6.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of
which shall be one and the same document.
6.7 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts.
Executed as of the dates written below.
COMPANY:
XYVISION, INC.
Date:_______________, 1996 By: __________________________
Xxxxxx X. Xxxxxx
Chairman and Chief Executive Officer
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HOLDER:
Date:_____________________, 1996 ____________________________________
(print name of Holder)
_____________________________________
(Signature)
_____________________________________
(Print title, if applicable)
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SCHEDULE I
NAME AND ADDRESS PRINCIPAL AMOUNT OF OF HOLDERS 4% NOTES OWNED
Tudor Trust under agreement 81186 $2,378,500
Xxxxxxx X. Xxxxxx, Trustee c/o Braverman &
Codron 000 X. Xxxxxxx Xxxxxx Xxx Xxxxxxx,
Xxxxxxxxxx 00000 Tel: 000-000-0000 SS#
###-##-####
Xxxxxxxx Partners 1,087,500
000 Xxxxxxxxxx Xxxx, Xxxxx 000 Xxxxxxxx Xxxxxx,
XX 00000 Tel: 000-000-0000
Xxxxxxx & Co. 340,500
c/o Xxxxx-Xxxxxxx Associates Xxx Xxxxx Xxxxx
Xxx. Xxxxx 0000 Xxx Xxxx, XX 00000 Tel: (212)
000-0000
Ashkirk Ltd. 150,000
c/o Xxxxx Xxxxx Xxx Xxxxxx Xxxxxxx 00 Xxxx
Xxxxx 00000 Tel: 000-0000-0000
Austin Friars (FP Financial Services, Inc.) 120,000
c/o Xxxxx-Xxxxxxx Associates Xxx Xxxxx Xxxxx
Xxx. Xxxxx 0000 Xxx Xxxx, XX 00000 Tel: (212)
000-0000
Carlisle Investment 112,500
c/o Xxxxx Xxxxx Xxx Xxxxxx Xxxxxxx 00 Xxxx
Xxxxx 00000 Tel: 000-000-0000-0000
Credit Suisse Luxembourg 90,000
Reg Comm B11 756 Xxxx Social 56 Grand-Rue 1160
Luxembourg Contact: Xx. X. Xxxxxx Tel:
000-000-00-00-000
Xxxxxxx xx Xxxxxxx 72,000
c/o Xxxxx Xxxxx Xxx Xxxxxx Xxxxxxx 00 Xxxx
Xxxxx 00000 Tel: 000-000-0000-0000
Count Xxxxxxx Xxxxxxxx 70,500
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Xxxxxxx Xxxxx Xxxxx xxxxx Xxxxxxxx xx Xxxxxxx
00 00000 Xxxx Xxxxx Tel: 000-000-000-000
Boganan Ltd. 46,5002
Xxxxxxx Xxxxx Xxx Xxxxx Xxxx #00 00000 Xxxx
Xxxxx Attn: Xxxxx Xxxxx
Xxxx Xxxxxx 30,000
c/o Fairfield Research 00 Xxxxxx Xxxxxx Xxx
Xxxxxx, XX 00000 Tel: 000-000-0000
Count Xxxxx Xxxxxxxx 30,000
Xxxxxxx Xxxxx Xxxxx xxxxx Xxxxxxxx xx Xxxxxxx
00 00000 Xxxx Xxxxx Attn: Xxxxx Xxxxx Tel:
000-000-000-000
Xxxxx Xxxxxx 15,000
c/o Fairfield Research 00 Xxxxxx Xxxxxx Xxx
Xxxxxx, XX 00000 Tel: 000-000-0000
Union Bank of Switzerland 15,000
c/o The Chase Manhattan Bank Global Securities
Services Chase XxxxxXxxx Xxxxxx Xxxxxxxx, XX
00000 Attn: Xxxxx Xxxxxxx Tel: 000-000-0000
Bank of New York-Geneva 7,500
X.X. Xxx 00000 5' Quaimont Blanc C 1201 Geneva
Switzerland Attn: TLH Xxxxxx Tel:
00-00-000-0000
Xxx Xxxxxxx 3,000
0000 Xxxxxxxxx 00xx Xxxxxx Xxxxxxxx, XX 00000
Tel: 000-000-0000
1. Comprised of three Notes in the amounts of $773,500, $600,000 and
$30,000, each in the name of Tudor Trust; one Note in the amount of $600,000
originally issued to JTH Associates and acquired by Tudor Trust; and one Note
in the amount of $375,000 originally issued to United Mineworkers of America
and acquired by Tudor Trust.
2. Comprised of two Notes in the amounts of $39,000 and $7,500.
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