Exhibit 1
EXECUTION COPY
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SECURITIES PURCHASE AGREEMENT
by and among
BNS Co., XYGENT, INC.
and
HEXAGON HOLDINGS, INC.
Dated as of August 16, 2002
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SECURITIES PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into as of this 16th day of August, 2002
by and among BNS Co., a Delaware corporation (the "Seller" or "BNS"), Hexagon
Holdings, Inc., a Delaware corporation (the "Purchaser" or "Buyer"), and Xygent
Inc., a Delaware corporation ("Xygent" or "Company").
WHEREAS, the Seller has agreed to sell to Purchaser, and Purchaser has
agreed to purchase, in accordance with this Agreement, (i) 113,206 shares of
Common Stock (the "Shares") of Xygent, which represents all of BNS's shares of
Xygent and (ii) all the shares of stock of Xygent s.r.l. and Xygent SARL, held
directly by Seller (the "Foreign Shares" and together with the Shares, the
"Xygent Securities"), all for a total purchase price of $3,000,000.00 (the
"Purchase Price"), which shall be paid as set forth below in Sections 1.2 and
1.4;
NOW THEREFORE, in consideration of, and subject to, the mutual promises,
agreements, terms and conditions made herein, and intending to be legally bound,
the parties hereto do hereby agree as follows:
SECTION 1. PURCHASE AND SALE OF SECURITIES.
1.1. Purchase and Sale of Shares. At the Closing, subject to the terms and
conditions of this Agreement and on the basis of the representations and
warranties set forth herein, the Seller shall sell to the Purchaser, and the
Purchaser shall purchase from the Seller for investment, the Xygent Securities.
1.2. Payment of Closing Purchase Price. At the Closing, in consideration
for the sale of the Xygent Securities, the Purchaser shall pay to the Seller, in
immediately available funds, by wire transfer to the account or accounts
designated by the Seller, $2,250,000 (the "Closing Purchase Price"). The
Purchaser shall also pay the Buyer the Deferred Purchase Price as provided in
Section 1.4 below.
1.3. The Closing. The closing (the "Closing") of the purchase and sale of
the Xygent Securities contemplated hereby shall take place at the offices of the
Seller, at 10:00 a.m., Rhode Island time, on August 20, 2002 or at such other
date, time and/or location(s) as may be agreed upon by the parties hereto. The
date upon which the Closing occurs is referred to in this Agreement as the
"Closing Date". At the Closing, the Seller will deliver to the Purchaser the
Shares, free and clear of all Liens, with a blank stock power duly executed by
the Seller (it being understood that the Shares are represented by two stock
certificates, one stock certificate evidencing 100,000 shares and the other
stock certificate evidencing 13,206 shares) and the Purchaser will deliver to
the Seller the Closing Purchase Price as set forth in Section 1.2 and such
certificates and other documents as are contemplated hereby. Following the
Closing, the Seller undertakes to work with Purchaser to promptly transfer the
Foreign Shares to Buyer. In connection with the Closing, each party hereto shall
deliver to the other party such certificates, and other documents as are
contemplated hereby.
1.4. The Deferred Purchase Price.
1.4.1. No later than 60 days after the Closing Date (or at such other
time as provided for in Sections 1.4.2 or 1.4.4 below), the Purchaser shall pay
the Seller $750,000 (the "Deferred Purchase Price"), subject to any adjustment
as provided in this Section 1.4, in immediately available funds, by wire
transfer to the account or accounts designated by the Seller.
1.4.2. Xygent's Equity Value (as defined below) is no less than
$2,993,000 (the "Target Value"). The term "Equity Value" shall mean the
consolidated stockholders' equity of Xygent as of August 16, 2002 after giving
effect to the forgiveness or conversion of the Debt (as reflected on the balance
sheet) as determined in accordance with GAAP and shall not reflect any
adjustments on account of the transaction contemplated by this Agreement.
Purchaser shall review in good faith the Company's balance sheet as of August
16, 2002 and within 30 days after the Closing Date shall deliver to Seller a
statement in writing of the Equity Value (the "Statement") if, and only if,
Purchaser's review indicates that the Equity Value is less than the Target
Value. Seller shall have 10 days to accept (an "Acceptance") or object in
writing to the Statement (an "Objection"). In the event that Seller accepts the
Statement, then the Deferred Purchase Price shall be reduced dollar-for-dollar
by the amount that the Equity Value on the Statement is less than the Target
Value (but in no event shall the Deferred Purchase Price be reduced by more than
$750,000) and shall pay the Deferred Purchase Price to the Seller within two
Business Days following the delivery of the Acceptance in accordance with
Section 1.4.1.
1.4.3. If Seller objects to the Statement, then the issues in dispute
will be submitted within 10 days after the delivery of the Seller's Objection to
a nationally recognized accounting firm (which firm shall be independent from
both Purchaser and Seller and their respective affiliates) to be agreed upon in
good faith by the Seller and Purchaser (the "Accountants") for resolution. If
issues in dispute are submitted to the Accountants for resolution, (i) each
party will furnish to the Accountants such work papers and other documents and
information relating to the disputed issues as the Accountants may request and
are available to that party (or its independent public accountants), and will be
afforded the opportunity to present to the Accountants any material relating to
the determination and to discuss the determination with the Accountants; (ii)
the determination by the Accountants, as set forth in a written notice delivered
to both Purchaser and Seller by the Accountants (which shall be delivered no
later than 10 days or such longer period to be agreed upon by the parties after
the submission of the dispute to the Accounts), will be binding and conclusive
on Purchaser and Seller; and (iii) Purchaser and Seller will each bear 50% of
the fees of the Accountants for such determination.
1.4.4. If the Accountants' final determination of the Equity Value
("Final Equity Value") is less than the Target Value, then the Deferred Purchase
Price shall be reduced dollar-for-dollar by the amount that the Final Equity
Value is less than Target Value (but in no event shall the Deferred Purchase
Price be reduced more than $750,000) and Purchaser shall pay in accordance with
Section 1.4.1 the Deferred Purchase Price to the Seller on the second Business
Day following the delivery of the Accountants' final determination.
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1.4.5. Purchaser's sole remedy for any adjustment to the Equity Value
shall be under this Section 1.4 and in no event shall Purchaser be entitled to
recover under Section 6 for any Buyer Losses which were adjusted pursuant to
this Section 1.4.
1.5. Intercompany Debt. Xygent's intercompany debt owed to Seller in the
principal amount of $3,500,000 shall be forgiven at the Closing (the "Debt").
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
The Purchaser represents and warrants to the Seller as follows:
2.1. Investment Intent. The Purchaser is acquiring the Xygent Securities
for its own account for the purpose of investment and not as a nominee or agent
and not with a view to the distribution of any part thereof. The Purchaser has
no present intention of selling, granting any participation in, or otherwise
distributing the Xygent Securities. The Purchaser does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer, or
grant participations to such person or to any third person, with respect to any
of the Xygent Securities.
2.2. Restricted Securities. The Purchaser understands that the Xygent
Securities may not be sold, transferred, or otherwise disposed of without
registration under the Securities Act, or an exemption therefrom, and that in
the absence of an effective registration statement covering the Xygent
Securities or an available exemption from registration under the Securities Act,
the Xygent Securities must be held indefinitely.
2.3. Accredited Investor. The Purchaser is an "accredited investor" as that
term is defined in Rule 501(a) promulgated pursuant to the Securities Act.
2.4. Authorization of Agreement. The Purchaser has the full legal right,
power and authority to execute and deliver this Agreement and to consummate the
transaction contemplated hereby. No further authorization, whether corporate or
otherwise, is necessary on the part of the Purchaser to consummate the
transactions contemplated hereby.
2.5. Valid and Binding Agreement. This Agreement constitutes the legal,
valid and binding obligation of Purchaser, enforceable against Purchaser in
accordance with its terms, except to the extent limited by bankruptcy,
insolvency, reorganization and other laws affecting creditors' rights generally
and general principles of equity.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE SELLER and XYGENT.
In connection with the sale of the Xygent Securities to the Buyer,
and in order to induce the Buyer to enter into this Agreement, each of Seller
and Xygent hereby represents and warrants to Buyer, as follows:
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3.1 Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, with full corporate power and authority to conduct its
business as conducted on the date hereof. The Company is duly qualified to
operate its business as a foreign corporation under the laws of each
jurisdiction where the nature of its businesses or the location of its
properties makes such qualification necessary and the failure to be so qualified
would have a Material Adverse Effect.
3.2 Capitalization.
(a) The Company's authorized capital stock consists of 400,000
shares of Common Stock, of which 146,460 are validly issued and outstanding. All
such issued and outstanding shares of Common Stock are fully paid and
nonassessable, and have been issued in full compliance with all applicable laws,
rules, regulations and ordinances.
(b) Except (a) for the options set forth on the Schedule 3.2(b)
issued under Xygent's option plan and (b) as set forth in the Hexagon Stock
Purchase Agreement and the BNS Stock Purchase Agreement, there exist no (i)
outstanding options, warrants or rights to purchase or subscribe for any equity
securities or other ownership interests of the Company, (ii) obligations of the
Company, whether absolute or contingent, to issue any shares of equity
securities or other ownership interests, or (iii) indebtedness or securities
directly or indirectly convertible into any equity securities of the Company.
Except as set forth in the Stockholders' Agreement, no person is entitled to any
preemptive or similar right with respect to the issuance of any equity
securities of the Company.
3.3 Valid and Binding Agreement. This Agreement constitutes the
legal, valid and binding obligation of Seller, enforceable against Seller in
accordance with its terms, except to the extent limited by bankruptcy,
insolvency, reorganization and other laws affecting creditors' rights generally
and general principles of equity.
3.4 No Breach of Statute or Contract. Neither the execution and
delivery of this Agreement by Seller, nor compliance with the terms and
provisions of this Agreement by the Seller, will: (a) to its best knowledge
violate any statute or regulation of any governmental authority, domestic or
foreign, affecting Seller or Xygent; (b) require the issuance of any
authorization, license, consent or approval of any federal or state governmental
agency or any other person; or (c) conflict with or result in a breach of any of
the terms, conditions or provisions of any judgment, order, injunction, decree,
agreement or instrument to which Seller or Xygent is a party, or by which Seller
or Xygent is bound, or constitute a default thereunder, except for, in the case
of clauses (a) and (c), violations or conflicts which, individually or in the
aggregate, or, in the case of clause (b), where failure to obtain such
authorization, license, consent, or approval, individually or in the aggregate,
would not be reasonably likely to (x) have a Material Adverse Effect, (y)
impair, in any material respect, the ability of Seller to perform its
obligations under this Agreement, or (z) prevent or materially delay the
consummation of the transactions contemplated by this Agreement.
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3.5 Title to Shares.
(a) The Shares owned and held are owned by Seller, free and clear of
any lien, claim, restriction upon transfer (other than pursuant to applicable
securities laws or pursuant to the BNS Stock Purchase Agreement or the
Stockholders' Agreement), option, charge, security interest or other
encumbrance.
(b) Upon delivery by Seller of the certificates representing the
Shares owned and held by Seller pursuant to this Agreement, and assuming Buyer
acquires such Shares without knowledge of any adverse claim thereto, Buyer will
acquire good and valid title to the Shares, free and clear of any Lien.
3.6 Authorization of Agreement. The Seller has the full legal right,
power and authority to execute and deliver this Agreement and to consummate the
transaction contemplated hereby. No further authorization, whether corporate or
otherwise, is necessary on the part of the Seller to consummate the transactions
contemplated hereby.
3.7 Ownership of Business. Xygent has good and marketable title to,
or a valid leasehold interest in, to all of its tangible properties and tangible
assets (other than with respect to the matter set forth in Schedule 3.7), and
such tangible properties and tangible assets are all of the tangible assets or
tangible properties necessary in the operation of the business as it currently
exists except for immaterial Liens, Liens for current taxes not yet due or Liens
imposed pursuant to any lease agreement for office equipment, office space or
automobiles.
3.8 Balance Sheet. The Seller has caused the Company to deliver to
the unaudited balance sheet for period ending June 30, 2002, as attached in
Schedule 3.8 hereto (the "June 30 Balance Sheet"). The June 30 Balance Sheet has
been prepared from the books and records of Xygent in accordance with GAAP
applied on a consistent basis throughout the periods covered thereby subject to
normal adjustments in the ordinary course and the June 30 Balance Sheet present
fairly in all material respects the financial condition of Xygent as of such
date. All accounts, books, ledgers and official and other records material to
Xygent's business have been fully, properly and accurately kept in all material
respects; and fairly and accurately reflect the financial position of Xygent.
3.9 No Material Changes. From July 1, 2002 to the date hereof:
(a) the Company has not issued any stock, notes or other corporate
securities or granted any options, warrants or rights calling for the issue
thereof (other than any options set forth on Schedule 3.2(b) or the Debt);
(b) the Company has not conducted its business or entered into any
contract or agreement other than in the Ordinary Course of Business consistent
with past practice;
(c) there has been no damage, destruction or other casualty loss to
or forfeiture of any portion of the property or assets of the Company which,
after giving effect to payments under applicable insurance policies, has had a
Material Adverse Effect;
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(d) there has been no material increase in, or plan or commitment to
increase, the compensation payable or to become payable to any of the Company `s
officers or employees;
(e) except for the Debt, there has been no guarantee or indebtedness
for borrowed money incurred or committed to by the Company, (i) other than
guarantees or indebtedness incurred or committed to in the Ordinary Course of
Business and (ii) other than indebtedness in an aggregate amount not exceeding
$10,000;
(f) the Company has undertaken no capital expenditures or
commitments to make capital expenditures in excess of $10,000 individually or
$50,000 in the aggregate;
(g) the Company has not entered into or amended material employment,
consulting, severance, compensation or similar agreement with any individual
(other than with respect to employees of the Foreign Subsidiaries) or any
agreement with any labor union or association representing any employee or any
employee benefit plan or arrangement. Schedule 3.9(g) lists all of the current
employees of the Company and its Foreign Subsidiaries; and
(h) the Company has not acquired, nor disposed, nor encumbered (nor
has it agreed to acquire, dispose of encumber) any substantial assets or
property, real or personal, of the Company other than in the Ordinary Course of
Business, or delivered or paid any in-kind dividend on or made any other in-kind
distribution in respect of the Shares.
It is being understood in connection with the foregoing representation and
warranty that the Company has had virtually no sales and continues to lose
money.
3.10 Tax Matters
(a) The Company has filed all Tax Returns that it was or is
required to file, and all such Tax Returns were correct and complete in all
material respects. All Taxes owed by the Company (whether or not shown on any
Tax Return) have been paid (except for Taxes not yet due and payable) and all
Taxes required under GAAP to be accrued in the books and records of the Company
have been adequately reflected in the Company's books of account. The Company
currently is not the beneficiary of, or subject to, any extension of time within
which to file any Tax Return.
(b) There is no material dispute or claim concerning any Tax
liability of the Company, either claimed or raised, or, to the knowledge of
Seller, threatened by any governmental body, nor to the knowledge of Seller is
there any basis for such a claim of liability.
3.11 No Litigation. There is no suit, action, arbitration, or legal,
administrative or other proceeding, or governmental investigation (including,
without limitation, any claim alleging the invalidity, infringement or
interference of any Intellectual Property or rights thereunder owned or licensed
by the Company) pending, or to the knowledge of Seller, threatened, by or
against the Company or any property or rights of the Company that relates in any
material way to the business or value of the Shares.
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3.12 Intellectual Property.
(a) To the Seller's best knowledge, the Company owns or otherwise has
the right to use all Intellectual Property for the operation of the Company's
business as presently conducted, including all Intellectual Property relating to
the XactMeasure software product as currently distributed by the Company. The
Company's patents, trademarks and domain names are set forth on Schedule
3.12(a).
(b) To the Seller's best knowledge, there has been no unauthorized
use, disclosure, infringement or misappropriation of any Intellectual Property
rights of the Company and the Company has received no notice that the use by the
Company of the Intellectual Property currently used in operating its business
infringes any Intellectual Property rights of any third parties.
(c) The Company is not, nor will it be, as a result of the execution
and delivery of this Agreement or the consummation of the transactions
contemplated by this Agreement, in material breach of any license, sublicense or
other agreement relating to the Intellectual Property rights of the Company or
Intellectual Property rights of any third parties.
(d) The Company has taken reasonable steps in accordance with normal
industry practice to maintain the confidentiality of the Company's material
trade secrets and other confidential Intellectual Property.
3.13 Absence of Undisclosed Liabilities. Except (i) as disclosed in
Schedules to this Agreement, (ii) the existing agreements and standard licenses
set forth on Schedule 3.13 (as to which licenses the Company has no knowledge of
claims relating thereto), (iii) arising in the Company's Ordinary Course of
Business, (iv) as set forth on the June 30 Balance Sheet or (v) the Debt, to the
best knowledge of Seller there are no liabilities or obligations (including,
without limitation, any tax liabilities or accruals) of the Company, that are,
in the aggregate, material to the Company's business or which could have
Material Adverse Effect.
SECTION 4. CLOSING CONDITIONS OF THE PURCHASER.
The Purchaser's obligation to consummate the Closing is subject to the
satisfaction, on or prior to the Closing Date, of the following conditions:
4.1. Representations and Warranties. All representations and warranties of
the Seller contained in this Agreement shall be true and correct on and as of
the Closing Date as if made on such date.
4.2. Performance by the Seller. The Seller shall have performed or
complied with all obligations and covenants required by this Agreement to be
performed or complied with by it prior to or at the Closing.
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SECTION 5. CLOSING CONDITIONS OF THE SELLER
5.1. Representations and Warranties. All representations and warranties of
the Purchaser contained in this Agreement shall be true and correct on and as of
the Closing Date as if made on such date.
5.2. Performance by the Purchaser. The Purchaser shall have performed or
complied with all obligations and covenants required by this Agreement to be
performed or complied with by it prior to or at the Closing.
SECTION 6. INDEMNIFICATION
6.1 Survival of Representations and Warranties. The representations and
warranties of each party hereto shall survive the Closing and remain operative
and in full force and effect but only to the extent provided in Section 6.2 or
6.3 regardless of any investigation made by or on behalf of any other party
hereto, any person controlling any such party or any of their officers or
directors, whether prior to or after the execution of this Agreement. Except as
expressly set forth in this Agreement, Seller and Xygent make no representations
or warranties, whether express or implied, and disclaim all other
representations and warranties.
6.2 Indemnity by Seller. Seller hereby agrees to indemnify, defend and
hold harmless Buyer and its directors, officers, employees, agents and
affiliates (the "Buyer Indemnitees") against and in respect of, and pay and
reimburse the Buyer Indemnitees for, all liabilities, damages, losses (other
than diminution of value), expenses, and costs (including reasonable attorneys'
and accountants' fees and expenses), whether or not resulting from third party
claims, net of any insurance proceeds received (collectively, "Buyer Losses"),
as a result of or arising out of (a) the inaccuracy of any representation or
warranty made by Seller herein (b) any breach or nonfulfillment after the
Closing of any agreement or covenant of Seller contained herein or in any
agreement or instrument required to be entered into in connection herewith that
survives the Closing; (c) any lawsuit or claim by any shareholder of Seller in
its capacity as a shareholder of Seller relating to or in any way arising out of
the transactions contemplated by this Agreement, except to the extent any such
lawsuit or claim arises from a breach of this Agreement by Xxxxx. Seller shall
be required to indemnify and hold harmless the Buyer Indemnitees under this
Section 6.2 with respect to a particular Buyer Loss attributable or arising out
of any breach of the representations or warranties of Seller under this
Agreement only in the event that the aggregate amount of all Buyer Losses
theretofore incurred exceeds the amount of $150,000 (the "Basket"). In the event
that the aggregate amount of Buyer Losses exceeds such Basket, all Buyer Losses,
including Buyer Losses taken into account for purposes of determining whether
such Basket has been met, will be subject to indemnification. In no event shall
the amount of Buyer Losses required to be indemnified by Seller under the
provisions of this Section 6.2 exceed $1,500,000. Nothing in the preceding three
sentences shall limit Seller's liability under this Section 6.2 for Buyer Losses
attributable or arising out of any fraud by Seller. The indemnification provided
for in this Section 6.2 shall terminate on August 16, 2003 (and no claims shall
be made by any Buyer Indemnitee under this Section 6.2 thereafter) except that:
(i) any Buyer Loss of which any
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Buyer Indemnitee has notified Seller in accordance with the requirements of
Section 6.4 on or prior to the date such indemnification would otherwise
terminate in accordance with this Section 6.2, as to which the obligation of
Seller shall continue until the liability of Seller shall have been determined
pursuant to this Section 6.2 or Seller shall have reimbursed the Buyer
Indemnitees for the full amount of such Buyer Loss in accordance with this
Section 6.2; (ii) the indemnification and payments by Seller shall continue
until the expiration of the applicable statute of limitations as to Buyer Losses
attributable to or arising out of any fraud by Seller; and (iii) the
indemnification and payments by Seller shall continue until the expiration of
the applicable statute of limitations as to Buyer Losses attributable to or
arising out of a breach of any representations or warranties of Seller contained
in Sections 3.2, 3.5 or 3.6 of this Agreement; provided, however, that a Buyer
Indemnitee shall not be entitled to indemnification from Seller in the event
that the subject claim for indemnification relates to any claim and such Buyer
Indemnitee delayed giving notice thereof to Seller to such an extent as to cause
material prejudice to the defense of such claim. The indemnity provided by this
Section 1.4 is subject to Section 1.4.5
6.3 Indemnity by Xxxxx. The Buyer shall defend, indemnify and hold
harmless Seller and its directors, officers, employees, agents and affiliates
(the "Seller Indemnitees") against and in respect of, and pay and reimburse the
Seller Indemnitees for, any and all claims, losses (other than diminution of
value), costs, expenses, obligations, liabilities, damages, recoveries and
deficiencies, including costs of investigation, interest, penalties and
reasonable attorneys' fees, that Seller may incur, sustain or suffer ("Seller
Losses") resulting from or arising out of (a) the inaccuracy of any
representation or warranty made by Buyer herein that survives the Closing or (b)
any breach or nonfulfillment after the Closing of any agreement or covenant of
Buyer contained in this Agreement. The indemnification provided for in this
Section 6.3 shall terminate on August 16, 2003 (and no claims shall be made by
the Stockholders under this 6.3 thereafter) except that (i) any Seller Loss of
which Seller has notified the Buyer in accordance with the requirements of
Section 6.4 on or prior to the date such indemnification would otherwise
terminate in accordance with this Section 6.3, as to which the obligation of the
Buyer shall continue until the liability of the Buyer shall have been determined
pursuant to this 6.3 or the Buyer shall have reimbursed Seller for the full
amount of such Seller Loss in accordance with this Section 6.3 and (ii) the
indemnification and payments by Xxxxx shall continue until the expiration of the
applicable statute of limitations as to Seller Losses attributable to or arising
out of any fraud; provided, however, that a Seller Indemnitee shall not be
entitled to indemnification from Buyer in the event that the subject claim for
indemnification relates to any claim and such Seller Indemnitee delayed giving
notice thereof to Buyer to such an extent as to cause material prejudice to the
defense of such claim.
6.4 Procedure for Indemnification. A claim for indemnification may be
asserted by prompt notice to the party from whom indemnification is sought.
6.5 Matters Involving Third Parties. (a) If any third party shall notify
a Buyer Indemnitee or Seller Indemnitee (the "Indemnified Party") with respect
to any matter (a "Third Party Claim") which may give rise to a claim for
indemnification against the Buyer or Seller (the
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"Indemnifying Party") under this Section 6, then the Indemnified Party shall
promptly notify the Indemnifying Party thereof in writing as provided above.
(b) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice so
long as (i) the Indemnifying Party notifies the Indemnified Party in writing of
its election to defend and (ii) the Indemnifying Party conducts the defense of
the Third Party Claim diligently. In the event that the Indemnified Party shall
in good faith determine that it may have available to it one or more defenses or
counterclaims that are inconsistent with one or more of those that may be
available to the Indemnifying Party in respect of a claim subject to
indemnification hereunder, the Indemnified Party shall have the right at all
times to take over and assume control of the defense, settlement, negotiations
or litigation relating to any such claim at the sole cost of the Indemnifying
Party, provided that if the Indemnified Party does so take over and assume
control, the Indemnified Party shall not settle such claim or litigation without
the written consent of the Indemnifying Party, such consent not to be
unreasonably withheld.
(c) So long as the Indemnifying Party is conducting the defense of the
Third Party Claim diligently, (i) the Indemnified Party may retain separate
co-counsel at its sole cost and expense and participate in the defense of the
Third Party Claim, and (ii) the Indemnified Party will not consent to the entry
of any judgment or enter into any settlement with respect to the Third Party
Claim without the prior written consent of the Indemnifying Party, such consent
not to be unreasonably withheld.
(d) In the event that the Indemnifying Party does not diligently
conduct the defense, (i) the Indemnified Party may defend against the Third
Party Claim and (ii) the Indemnifying Party will remain responsible for any
losses the Indemnified Party may suffer resulting from, arising out of, relating
to, in the nature of, or cause by the Third Party Claim to the extent provided
in this Section 6.
(e) Except with the prior written consent of the Indemnified Party,
which shall not be unreasonably withheld, no Indemnifying Party, in the defense
of any such claim or litigation, shall consent to entry of any judgment or enter
into any settlement if such judgment or settlement provides for injunctive or
other nonmonetary relief affecting the Indemnified Party or that does not
include as an unconditional term thereof the giving by each claimant or
plaintiff to such Indemnified Party of a release from all liability with respect
to such claim or litigation.
6.6 Exclusive Remedies. Except for the indemnity set forth in Section
7.1, this Section 6 shall provide the sole and exclusive remedy for any and all
Losses whether sustained by Buyer (i.e., Buyer Losses) or Seller (i.e., Seller
Losses) or their successor or assigns; provided that the foregoing shall not
limit the right of the parties to such equitable remedies that may be available
or any party's remedies in respect of fraud by the other party in connection
herewith.
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SECTION 7. OTHER MATTERS
7.1. Seller Health and Welfare Plans. Xygent shall be responsible for the
health and welfare plans for the Xygent employees after the Closing. The Buyer
shall cause Xygent to indemnify the Seller for any costs or liabilities incurred
by Seller in connection with the provision of any health and welfare benefits
for Xygent employee after the Closing under the Seller's health and welfare
plans
7.2. Termination of Certain Agreements. The parties agree that effective as
of the Closing, the Stockholders' Agreement, the Hexagon Stock Purchase
Agreement and the BNS Stock Purchase Agreement shall each be terminated without
liability to any party. Prior to the termination of the Stockholders' Agreement,
the Company, Buyer and Seller hereby waive any rights that each may have under
such Agreement with respect to the transactions contemplated by this Agreement.
7.3. Directors. As of the Closing, Xxxx Xxxxx, Xxxxx XxXxxx, Xxxxxx Xxxxxx,
and Xxxxxx Xxxx shall cease to hold any position (whether as an officer or
director) with Xygent and its Foreign Subsidiaries and to the extent that such
individuals have not resigned as of the Closing, the parties shall take all such
action as is required to remove such individuals from their respective positions
effective as of the Closing.
7.4. Further Assurances. Each party undertakes to take such actions as may
be reasonably required to give effect to the transactions contemplated by this
Agreement, including without limitation, releasing and holding Seller harmless
of any obligations of the Seller with respect to Xygent and its operations which
may remain post-closing. It is understood, however, that the parties are not
immediately aware of any such obligations.
SECTION 8. DEFINITIONS.
8.1. Certain Defined Terms. As used herein, the following terms shall have
the meaning herein specified:
"Agreement" means this Securities Purchase Agreement.
"BNS Stock Purchase Agreement" means the Stock Purchase Agreement, dated as
of April 8, 2002, as in effect from time to time, between Xygent and Seller.
"Business Day" means any day excluding Saturday, Sunday and any day which is
a legal holiday under the laws of the State of Rhode Island or is a day on which
banking institutions located in Providence, Rhode Island are authorized or
required by law or other governmental action to close.
"Closing" has the meaning set forth herein at Section 1.3.
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"Closing Date" has the meaning set forth herein at Section 1.3.
"Foreign Subsidiaries" shall be Xygent s.r.l, an Italian company, Xygent
GmbH, a German company, Xygent (UK) Limited, an English company, and Xygent
SARL, a French company.
"Hexagon Stock Purchase Agreement" means the Stock Purchase Agreement,
dated April 27, 2001, as in effect from time to time, between Xygent, Buyer and
Seller
"Intellectual Property" means patents, patent applications, copyrights,
trade secrets, inventions, know-how, trademarks, service marks, trade names, and
rights of privacy and publicity.
"Lien" means any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind in respect of such asset, whether or not filed, recorded
or otherwise perfected under applicable law (including any conditional sale or
other title retention agreement, any lease in the nature thereof, any option or
other agreement to sell or give a security interest in and any filing of or
agreement to give any financing statement under the Uniform Commercial Code (or
equivalent statutes) of any jurisdiction).
"Material Adverse Effect" means a material adverse effect on the assets,
results of operations, or financial condition of the Company or its business;
provided that any adverse effect that is covered by conditions affecting the
economy generally or in the industry in which the Company operates shall not be
taken into account in determining whether there has been a Material Adverse
Effect.
"Ordinary Course of Business" means the ordinary course of business of the
Company consistent with past custom and practice (it is being understood that
the Company has had virtually no sales and continues to lose money).
"Person" means and includes any individual, partnership, joint venture,
corporation, limited liability company, trust, joint-stock company,
unincorporated entity, organization or other legal entity.
"Securities Act" means the Securities Act of 1933, as amended.
"Stockholders Agreement" means the Stockholders' Agreement dated as of
April 27, 2001, as in effect from time to time, among Xygent, Purchaser and
Seller.
"Tax" means any federal, state, local and foreign profits, franchise, gross
receipts, payroll, employment, sales, use, property, withholding, excise and
other tax, duty or assessment of any nature whatsoever, together with all
interest, penalties and additions imposed with respect thereto. "Taxes" shall
mean the plural of Tax. The term "taxable" shall have a correlative meaning.
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"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto and including any amendment thereof.
SECTION 9. MISCELLANEOUS
9.1. Amendments and Waivers. The parties hereto may amend, modify,
terminate, waive or consent to any provision of this Agreement if such
amendment, modification, termination, waiver or consent is set forth in a
writing signed by all the parties hereto.
9.2. Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement shall be in
writing and delivered personally, mailed by certified or registered mail, return
receipt requested and postage prepaid, sent via a nationally recognized
overnight courier, or via facsimile. Such notices, demands and other
communications will be addressed and directed to the parties listed below as
follows:
If to Seller or Xygent (pre-Closing), to: BNS Co., 000 Xxxx Xxxxxx Xxxx,
Xxxxxxx, Xxxxx Xxxxxx 00000, fax: (000) 000-0000, Att: President. With a copy
to: Ropes & Gray, Xxx Xxxxxxxxxxxxx Xxxxx, Xxxxxx, XX 00000, fax: (617)
000-0000, Att: Xxxxxx X. Xxxxxx.
If to Buyer or Xygent (post-Closing), to: Hexagon AB, Kronobryggan, S-261
31, Landskrona, Sweden, fax: x00 000 00 00 00, Att: Xxxx Xxxxxxx. With a copy
to: Xxxxxxxxxx Xxxxxxxxx Advokatbyra, Box 1384, 000 00 Xxxxxxxxxxx, Xxxxxx, fax:
x00 00 000 00 00, Att: Xxxxxx Xxxxxxxxx.
or to such successor entity, other address or to the attention of such other
Person as the recipient party shall have specified by prior written notice to
the sending party; provided that the failure to deliver copies of notices as
indicated above shall not affect the validity of any notice. Any such
communication shall be deemed to have been received (i) when delivered, if
personally delivered, (ii) one Business Day after being sent by nationally
recognized overnight courier, (iii) in the case of transmission by facsimile,
when confirmation of receipt is obtained, or (iv) on the third Business Day
following the date on which the piece of mail containing such communication is
posted if sent by certified or registered mail.
9.3. Severability. If and to the extent that any provision in this
Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions of the
Agreement or obligations of the parties hereto under such provisions, or of such
provision or obligation in any other jurisdiction, or of such provision to the
extent not invalid, illegal or unenforceable shall not in any way be affected or
impaired thereby.
9.4. Heading. Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.
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9.5. Applicable Law. This Agreement shall be governed by, and shall be
construed and enforced in accordance with, the laws of the State of Rhode Island
without regard to the principles of conflicts of laws.
9.6. Successors and Assigns. This Agreement shall be binding upon the
parties hereto and their respective successors and permitted assigns and shall
inure to the benefit of the parties hereto and such successors and permitted
assigns. No party may assign this Agreement without the consent of the other
parties.
9.7. Consent to Jurisdiction and Service of Process. All judicial
proceedings arising under or with respect to this Agreement must be brought in a
State or Federal Court of competent jurisdiction in the State of Rhode Island,
and by execution and delivery of this Agreement, the parties hereto accept for
themselves and in connection with their properties, generally and
unconditionally, the jurisdiction of the aforesaid courts, and irrevocably agree
to be bound by any judgment rendered thereby in connection with this Agreement,
subject, however, to rights of appeal. The parties hereto hereby agree that
service upon it in any manner provided in Section 9.2 shall constitute
sufficient notice, such service being hereby acknowledged by the parties hereto
to be effective and binding service in every respect.
9.8. WAIVER OF JURY TRIAL. THE PARTIES HERETO WAIVE, TO THE FULL EXTENT
PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY LITIGATION IN ANY COURT WITH
RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THIS AGREEMENT OR ANY OTHER
DOCUMENT OR TRANSACTION CONTEMPLATED HEREBY OR THE VALIDITY, PROTECTION,
INTERPRETATION, COLLECTION OR ENFORCEMENT OF ANY OF THE FOREGOING.
9.9. Counterparts; Effectiveness. This Agreement and any amendments,
waivers, consents or supplements may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument. This Agreement shall
become effective upon the execution and delivery of a counterpart hereof by each
of the parties hereto.
9.10. Entirety. This Agreement and the Schedules thereto embody the entire
agreement among the parties and supersede all prior agreements and
understandings, if any, relating to the subject matter hereof and thereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by the respective duly authorized officers of the undersigned as of the
date first written above.
HEXAGON HOLDINGS, INC.
By: /s/ Xxx Xxxxxx
---------------------------------
Name: Xxx Xxxxxx
Title: Chairman
BNS Co.
By: /s/ Xxxxxx X. Xxxxx
-----------------------------
Name: Xxxxxx X. Xxxxx
Title: President and CEO
XYGENT INC.
By: /s/ Xxxxxx X. Xxxxx
-----------------------------
Name: Xxxxxx X. Xxxxx
Title: President and CEO