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 6% Convertible Subordinated
Debenture due 2002 of the Company (the "Debentures") in the principal amount
set forth opposite such Holder's name on Schedule I; and
WHEREAS, the Company and the Holders desire to exchange the Debentures 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 Debenture for such number of shares of common stock, par
value $.03 per share (the "Common Stock"), of the Company as is equal to (a)
the principal amount of the Debenture delivered by such Holder for
cancellation pursuant to this Section 1 plus all accrued and unpaid interest
on such Debenture through the most recent Interest Payment Date under such
Debenture (May 5, 1996), divided by (b) $3.33.
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
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permitted by Form 10-Q under the Securities Exchange Act of 1934), and (iii)
fairly present the 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").
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 or 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 Debentures. Such Holder has good and marketable title to the
Debenture 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 Debenture to the Company for cancellation pursuant to this Agreement
shall extinguish all liability of the Company for amounts owed under such
Debenture or for other obligations with respect to such Debenture.
3.4 Accredited Investor. Such Holder 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 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 50% of the
principal amount of the Debentures 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 ▇▇▇▇ and
▇▇▇▇ 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).
4.3 Closing Deliveries. At the Closing:
(a) Each Holder shall deliver to the Company for cancellation the
Debenture(s) owned by such Holder.
(b) The Company shall deliver (or cause to be delivered) to each Holder:
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(i) A certificate representing the shares of Common Stock to which such
Holder is entitled pursuant to the terms of Section 1;
(ii) 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;
(iii) An opinion of ▇▇▇▇ and ▇▇▇▇, 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 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:
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If to the Company at: ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: President
with a copy to:▇▇▇▇ and ▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, 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.
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 Debentures 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: __________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chairman and Chief Executive Officer
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 DEBENTURES OWNED
Tudor Trust under agreement 81186
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustee c/▇
▇▇▇▇▇▇▇▇▇ Codran & Company ▇▇▇ ▇.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Tel: ▇▇▇-▇▇▇-▇▇▇▇
SS# ###-##-#### $1,970,000
▇▇▇▇▇▇▇ ▇▇▇▇▇ International
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ Tel: ▇▇▇▇-▇▇▇-▇▇▇▇ 30,000
5