EXHIBIT 10.48
SHARE EXCHANGE AGREEMENT
AGREEMENT made as of the 17th day of October, 1997, by and among CXR TELCOM
CORPORATION, a Delaware corporation ("CXR"), MICROTEL INTERNATIONAL, INC., a
Delaware corporation ("MicroTel"), and ERIC P. BERGSTROM, STEVE T. ROBBINS AND
MIKE B. PETERSEN (individually, a "Selling Shareholder" and collectively, the
"Selling Shareholders"), all of the shareholders of CRITICAL COMMUNICATIONS
INCORPORATED, an Illinois corporation ("Critical").
RECITALS:
WHEREAS, MicroTel is the owner of One Hundred Percent (100%) of the
outstanding shares of common stock of CXR and CXR desires to acquire all of the
shares of Critical common stock owned by the Selling Shareholders (collectively,
the "Critical Shares"); and
WHEREAS, the Selling Shareholders desire to exchange the Critical Shares
with CXR in exchange for Five Hundred Thousand (500,000) shares of MicroTel
common stock, par value .0033 per share (the "MicroTel Shares"); and
WHEREAS, it is intended by the parties that the transaction qualify as a
tax-free reorganization pursuant to Section 368(a)(1)(B) of the Internal Revenue
Code and that the Contingent Stock Agreements satisfy the requirements of Rev.
Proc 84-42; and
WHEREAS, the Selling Shareholders have had an opportunity to investigate
CXR and MicroTel and become familiar with their affairs and financial condition
and to review the filings of MicroTel made with the Securities and Exchange
Commission ("SEC"), including Amendment No. 1 to the S-1 Registration Statement
filed with the SEC on September 24, 1997;
NOW, THEREFORE, in consideration of the mutual promises and conditions
contained in this contract, and for other good and valuable consideration, the
parties hereto hereby agree as follows:
SECTION 1. EXCHANGE OF THE SHARES.
(a) In reliance upon the representations and warranties of CXR and
MicroTel contained herein, subject to the terms and conditions set forth herein,
the Selling Shareholders hereby exchange with CXR all of the Critical Shares in
return for MicroTel Shares allocated among the Selling Shareholders as set forth
on Schedule 1 hereto and MicroTel shares pursuant to and subject to the
Contingent Stock Agreement.
(b) In reliance upon the representations and warranties of the Selling
Shareholders contained herein, and subject to the terms and conditions set forth
herein, CXR hereby exchanges
with the Selling Shareholders all of the Critical Shares in exchange for the
issuance of the MicroTel Shares.
(c) The Selling Shareholders shall deliver to CXR:
(A) an investor representation letter in the form of Exhibit A;
(B) the Escrow Agreement in the form of Exhibit B; together with the
50,000 MicroTel Shares and Stock Powers to be deposited with the
Escrow Agent;
(C) The Contingent Stock Agreements and Severance Agreements in the
forms of Exhibit C and Exhibit D, respectively;
(D) stock certificates of Critical, representing all of the
outstanding shares of common stock of Critical, endorsed in blank
or accompanied by duly executed assignment documents; and
(E) an opinion dated the date hereof of counsel to the Selling
Shareholders, satisfactory to CXR.
(d) CXR and/or MicroTel shall deliver to the Selling Shareholders:
(A) The Escrow Agreement in the form of Exhibit B;
(B) The Contingent Stock Agreements and Severance Agreements in the
forms of Exhibit C and Exhibit D, respectively;
(C) Stock certificates of MicroTel, representing Five Hundred
Thousand (500,000) shares of MicroTel common stock, registered in
the names of the Selling Shareholders in the amounts set forth on
Schedule 1;
(D) an opinion letter dated the date hereof of CXR's counsel,
satisfactory to Critical.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS.
Except as set forth in the Disclosure Schedule annexed hereto as Schedule
2, each Selling Shareholder represents and warrants as follows:
(a) That he has good and marketable title to the Critical Shares owned
by him, free and clear of all liens, security interests, options, rights of
first refusal and other encumbrances of any kind whatsoever and that the
Critical Shares have all been duly authorized, validly issued and are fully
paid and non-assessable.
(b) That this Agreement is, and as of the Closing will be, a legal, valid
and binding obligation of his enforceable against him in accordance with its
terms, except as such enforcement may be subject to (i) applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
now or hereafter affecting creditors' rights and remedies generally and (ii)
general principles of equity (regardless of whether such enforcement is sought
in a proceeding in equity or at law).
Except as set forth in the Disclosure Schedule annexed hereto as Schedule
2, each Selling Shareholder jointly and severally represents and warrants as
follows:
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(c) That all the Selling Shareholders, collectively, are the owners of One
Hundred Percent (100%) of the common stock of Critical.
(d) Critical is not a party to any option, warrant, purchase right, or
other contract or commitment that could require the Critical to sell, transfer
or otherwise dispose of any capital stock of Critical and that, as of the date
hereof there are no such options, warrants, purchase rights or other contracts
or commitments now existing.
(e) Critical is duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization; has all requisite power
and authority to own or lease, and operate its properties and assets and to
carry on its business as now conducted and as proposed to be conducted; and
is duly qualified or licensed to do business and is in good standing as a
foreign corporation in all jurisdictions in which it owns or leases property
or in which the conduct of its business requires it so to qualify or be
licensed.
(f) The Selling Shareholders have delivered to CXR and MicroTel true
and complete copies of the unaudited balance sheets and the related
statements of income and expense of Critical at August 31, 1997 for the eight
(8) months then ended (the "August 31 Financials"). The August 31 Financials
present fairly the financial condition of Critical as of such date and the
results of operations of Critical for such period in accordance with
generally accepted accounting principles, consistently applied. Since August
31, 1997, there has been no material adverse change in the financial
condition of Critical taken as a whole. MicroTel and CXR acknowledge that the
Selling Shareholders may have caused Critical to pay out any cash remaining
in Critical as of September 30, 1997 as a bonus or dividend to the Selling
Shareholders prior to the date hereof.
(g) Critical has no material liabilities or obligations with respect to
its business except:
(i) those liabilities or obligations set forth on the August 31
Financials and not heretofore paid or discharged; or
(ii) those liabilities or obligations incurred, consistently with past
business practice, in or as a result of the normal and ordinary course
of business since August 31, 1997; and
For purposes of this Agreement, the term "liabilities" shall include,
without limitation, any direct or indirect indebtedness, guaranty, endorsement,
claim, loss, damage, deficiency, cost, expense, obligation or responsibility,
fixed or unfixed, known or unknown, asserted or unasserted, choate or inchoate,
liquidated or unliquidated, secured or unsecured, including, but not limited to,
any claim, loss, damage, deficiency, cost, expense, obligation or responsibility
relating to any environmental matter.
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(h) With respect to its business, Critical has complied with each, and is
not in violation of any, law, ordinance, or governmental or regulatory rule or
regulation ("Regulations"), whether federal, state, local or foreign, the
violation of which would have a material adverse effect on Critical. Critical
owns, holds, possesses or lawfully uses in the operation of its business all
franchises, licenses, permits, easements, applications, filings, registrations
and other authorizations ("Authorizations") which are in any manner necessary
for it to conduct its business as now or previously conducted, the absence of
which would have a material adverse effect on Critical.
(i) No litigation, including any arbitration, investigation or other
proceeding of or before any court, arbitrator or governmental or regulatory
official, body or authority, is pending or, to the best knowledge of any Selling
Shareholder, threatened against Critical which would have a material adverse
effect on Critical, nor does any Selling Shareholder know of any reasonably
likely basis for any such litigation, arbitration, investigation or proceeding,
the result of which could materially and adversely affect Critical's business.
Critical is not a party to or subject to the provisions of any judgment, order,
writ, injunction, decree or award of any court, arbitrator or governmental or
regulatory official, body or authority, which would materially and adversely
affect Critical.
(j) The assets, properties and operations of Critical's business are
insured under various policies of general liability and other forms of
insurance. Such policies are in amounts which are commercially reasonable in
the judgment of Critical in relation to its business and all premiums to date
have been paid in full.
(k) All patents, trademarks, service marks, trade names, copyright,
software, trade secrets, know-how and applications therefor ("Intellectual
Property") that are material to the business are identified in the Disclosure
Schedule. Critical has not received any notice or claim of infringement or any
other claim or proceeding relating to any third party's Intellectual Property.
No present or former employee of Critical, and no other person, owns or has any
proprietary, financial or other interest, direct or indirect, in whole or in
part, in any Intellectual Property that is material to Critical's business. All
confidentiality or non-disclosure agreements relating to Critical's business, to
which Critical, the Selling Shareholders or any of Critical's employees engaged
in Critical's business are parties, have been delivered to CXR and MicroTel, or
made available to CXR and MicroTel for inspection.
(l)(i) Critical has obtained all material permits, licenses and other
authorizations ("Environmental Authorizations") which are required
in connection with the conduct of its business under any statute,
rule, regulation, ordinance or other law relating to pollution or
protection of the environment ("Environmental Laws"), including
Environmental Laws relating to emissions, discharges, releases or
threatened releases of hazardous substance pollutants,
contaminants, or chemicals, or industrial, toxic or hazardous
substances or wastes into the environment (including without
limitation ambient air, surface water, groundwater, or land), or
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otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport, or handling of
hazardous substance pollutants, contaminants, or chemicals, or
industrial, toxic or hazardous substances or wastes. A complete
list of the permits, licenses and other approvals are set forth on
the Disclosure Schedule.
(ii) Critical is in compliance in all material respects in the conduct
of its business with all terms and conditions of the required
Environmental Authorizations, and is also in compliance in all
material respects with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in the Environmental
Authorizations or contained in any regulation, code, plan, order,
decree, judgment, injunction, notice or demand letter issued,
entered, promulgated or approved thereunder.
(iii) Critical is not aware of, nor has Critical received notice of,
any past, present or future events, conditions, circumstances,
activities, practices, incidents, actions or plans in the conduct
of its business which may interfere with or prevent compliance or
continued compliance with Environmental Laws or any regulations,
code, plan, order, decree, judgment, injunction, notice or demand
letter issued, entered, promulgated or approved thereunder, or
which may give rise to any common law or legal liability, or
otherwise form the basis of any claim, action, demand, suit,
proceeding, hearing, study or investigation, based on or related
to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling, or the emission,
discharge release or threatened release into the environment, of
any hazardous substance pollutants, contaminants, or chemicals,
or industrial, toxic or hazardous substances or wastes the result
of which would have a material adverse on Critical.
(iv) No third party claims or criminal or administrative actions,
suits, demands, claims, hearings, notices or demand letters, notices
of violation, investigations or proceedings asserting a violation of
Environmental Laws ("Third Party Claims"), are pending or, to the
best of the Selling Shareholders' knowledge, threatened against
Critical or its business, and no Third Party Claims are pending or to
the best of the Selling Shareholders' knowledge, threatened against
Critical or its business.
As used herein, the term "Environmental Law(s)" shall mean any and all
federal, state and local laws, statutes, codes, ordinances, regulations, rules,
judicial and administrative orders, or other requirements relating to the
environment, all as amended or modified from time to time, including laws and
regulations relating to emissions, discharges, releases or threatened releases
of pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes into the environment (including, without limitation,
ambient air, surface water, groundwater, or land), or otherwise relating to the
manufacture, processing, distribution, use,
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treatment, storage, disposal, transport, or handling of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or
wastes. Environmental Law includes, but is not limited to, the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), as amended
by the Superfund Amendments and Reauthorization Act of 1986 ("SARA"), the
Resource Conservation Recovery Act of 1976 ("RCRA"), the Clean Water Act, the
Clean Air Act, the Federal Insecticide, Fungicide and Rodenticide Act, the
Toxic Substances Control Act ("TSCA"), parallel and supplemental state
statutes, and all rules and regulations relating thereto, all as amended and
modified from time to time.
As used herein, the term "Hazardous Substance(s)" shall mean: (i)
any substance, the presence of which requires investigation or remediation
under any Environmental Law or under common law; (ii) any dangerous, toxic,
explosive, corrosive, flammable, infectious, radioactive, carcinogenic, or
otherwise hazardous substance which is regulated by any Environmental Law; or
(iii) urea-formaldehyde, polychlorinated biphenyls, asbestos or
asbestos-containing materials, petroleum and petroleum products, and any
radio-active material.
(m) There is no fact, development or, to the best of the Selling
Shareholders' knowledge, threatened development with respect to Critical's
business which could have a material adverse effect on such business which has
not been disclosed to CXR and MicroTel. Since August 31, 1997, except as
contemplated hereby or as requested by CXR or MicroTel, Critical operated its
business solely in the ordinary course consistent with past practice, and
Critical has not made any material commitment for capital expenditures or
entered into any material contracts.
SECTION 3. MICROTEL SHARES.
(a) Each Selling Shareholder acknowledges that CXR and MicroTel have
advised the Selling Shareholder that the MicroTel Shares have not been
registered under the Securities Act of 1933 as amended (the "Securities Act")
or any other securities regulation laws of any state. Each Selling
Shareholder is acquiring the MicroTel Shares for the account of the Selling
Shareholder for investment only and not with a view to resell or otherwise
distribute such MicroTel Shares, and each Selling Shareholder is not
acquiring the MicroTel Shares on behalf of any other person or entity. Each
Selling Shareholder does not intend to resell, transfer or dispose of all or
any part of the MicroTel Shares without registration under the Securities Act
or without an opinion from counsel acceptable to MicroTel that registration
is not required. Each Selling Shareholder is able to bear the economic risk
of this investment for an indefinite period of time under these circumstances
and agrees to execute an investor representation letter in substantially the
form attached hereto as Exhibit "A". Each Selling Shareholder acknowledges
that the MicroTel Shares are "restricted securities" as that term is defined
in Rule 144 of the General Rules and Regulations under the Securities Act.
Each Selling Shareholder understands that stop transfer instructions will be
issued to the transfer agent (if any) for MicroTel's stock.
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(b) To implement the provisions of subsection (a) above, each Selling
Shareholder consents to the placing of a legend in substantially the following
form on the back of the certificates issued to the Selling Shareholders:
THE SHARES REPRESENTED BY THIS STOCK CERTIFICATE HAVE BEEN ISSUED WITHOUT
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY OTHER STATE
LAWS REGULATING THE ISSUANCE OF SECURITIES AND ARE PURCHASED PURSUANT TO AN
INVESTMENT REPRESENTATION BY THE PURCHASER THEREOF. THESE SHARES SHALL NOT BE
OFFERED, SOLD, PLEDGED, HYPOTHECATED, DONATED, OR OTHERWISE TRANSFERRED, WHETHER
OR NOT FOR CONSIDERATION, BY THE SHAREHOLDER IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR SUCH SHARES EXCEPT UPON THE ISSUANCE TO THE COMPANY
OF A FAVORABLE OPINION OF ITS COUNSEL TO THE EFFECT THAT SUCH TRANSFER SHALL NOT
BE IN VIOLATION OF THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE
SECURITIES LAWS.
(c) For a period of one year from the date hereof, 50,000 of the MicroTel
Shares (divided PRO RATA among the Selling Shareholders) shall be held in escrow
with the firm of Gallagher, Briody & Butler as escrow agent in order to secure
MicroTel and CXR's rights to indemnification pursuant to the terms of Section 5
hereof pursuant to the Escrow Agreement annexed as Exhibit B.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF CXR AND MICROTEL.
CXR and MicroTel jointly and severally represent and warrant as follows:
(a) CXR and MicroTel are duly organized, validly existing and in good
standing under the laws of their jurisdictions of incorporation; have all
requisite power and authority to own or lease, and operate their respective
properties and assets and to carry on their respective businesses as now
conducted and as proposed to be conducted; and are duly qualified or licensed
to do business and are in good standing as foreign corporations in all
jurisdictions in which they own or lease property or in which the conduct of
their respective businesses require them so to qualify or be licensed.
(b) MicroTel and CXR have taken all corporate actions necessary to
authorize them to enter into and perform their obligations under this
Agreement and to consummate the transactions contemplated hereby (including,
without limitation, the issuance and sale of the MicroTel Shares). Upon
issuance, the MicroTel Shares will be duly authorized, fully paid and
non-assessable, not subject to pre-emptive rights and free and clear of all
liens, claims and encumbrances except as provided in this Agreement. This
Agreement, the Contingent Stock Agreement and the other agreements
contemplated herein and therein are the legal, valid and binding obligation
of CXR and MicroTel, enforceable against CXR and MicroTel in accordance with
its terms, except as such enforcement may be subject to (i) applicable
bankruptcy,
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insolvency, fraudulent conveyance, reorganization, moratorium and similar
laws now or hereafter affecting creditors' rights and remedies generally and
(ii) general principles of equity (regardless of whether such enforcement is
sought in a proceeding in equity or at law).
(c) MicroTel has furnished the Selling Shareholders with a true and
complete copy of (a) MicroTel's Form 10-K for the fiscal year ended December
31, 1996, (b) MicroTel's Form 10-Q for the quarters ended March 31, 1997 and
June 30, 1997, and (c) Amendment No. 1 to S-1 Registration Statement dated
September 24, 1997 (as such documents have since the time of their filing
been amended, "the SEC Documents"). Since January 1, 1997, MicroTel has
filed with the Securities and Exchange Commission (the "SEC") all documents
required to be filed pursuant to the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the rules and regulations promulgated
thereunder. As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Exchange Act, and the rules
and regulations of the SEC thereunder applicable to such SEC Documents, and
none of the SEC Documents (as of their respective dates) contained any untrue
statement of a material fact or omitted 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 financial
statements of MicroTel included in the SEC Documents (the "Financial
Statements") comply as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the
SEC with respect thereto. The Financial Statements are in all material
respects accurate, complete and have been prepared in accordance with the
books and records of MicroTel and in accordance with generally accepted
accounting principles applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto or, in the case of
the unaudited statements included in the SEC Documents, as permitted by
Form 10-Q of the SEC) and fairly present (subject, in the case of the
unaudited statements, to normal, recurring audit adjustments that are not
material) the consolidated financial position of MicroTel as at the dates
thereof and the consolidated results of its operations and cash flows for
the periods then ended. Since June 30, 1997, there has not been any material
adverse change in the business, operations, or assets of MicroTel and its
subsidiaries taken as a whole.
(d) The authorized capital stock of MicroTel consists of 25,000,000
shares of Common Stock, par value $.0033 per share and 10,000,000 shares of
Preferred Stock, par value $.01 per share. As of the date of this Agreement
11,391,216 shares of Common Stock were outstanding (excluding the MicroTel
Shares). No shares of Preferred Stock are issued or outstanding. The
MicroTel Shares to be issued pursuant to this Agreement will be, when issued,
validly issued, fully paid and nonassessable and not subject to preemptive
rights and free and clear of all liens, claims and encumbrances other than
provided herein or in the Exhibits hereto. There are currently outstanding
options to purchase 2,217,839 shares of Common Stock and outstanding warrants
to purchase 2,189,879 shares of Common Stock.
(e) MicroTel covenants that, for a period of two years from the date
hereof, it will file with the SEC all documents acquired to be filed by
MicroTel pursuant to the Exchange Act.
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(f) MicroTel will report the transfer of the MicroTel Shares and the
MicroTel shares pursuant to the Contingent Stock Agreement as qualified
securities in a tax-free reorganization pursuant to Section 368(a)(1)(B) of
the Code.
SECTION 5. INDEMNIFICATION OBLIGATION OF CRITICAL AND THE SELLING
SHAREHOLDERS.
(a) For a period of three years after the date hereof, the Selling
Shareholders shall jointly and severally reimburse, indemnify and hold harmless
and defend CXR and MicroTel and their successors and assigns (an "Indemnified
Party") against and in respect of:
(i) any misrepresentation, breach of warranty or nonfulfillment or
any agreement or covenant on the part of any or all of the Selling
Shareholders under this Agreement or any Closing Document to which
any or all of the Selling Shareholders are a party; and
(ii) any and all actions, suits, claims, proceedings, investigations,
demands, assessments, audits, fines, judgments, costs and other
expenses (including, without limitation, reasonable legal fees and
expenses) incident to Section 5(a)(i) or to the enforcement of
this Section 5(a).
(b) For a period of three years, CXR and MicroTel shall jointly and
severally reimburse, indemnify and hold harmless and defend the Selling
Shareholders (an "Indemnified Party") against and in respect of:
(i) any misrepresentation, breach of warranty or nonfulfillment or
any agreement or covenant on the part of CXR or MicroTel under this
Agreement or any Closing Document to which CXR and/or MicroTel are a
party; and
(ii) any and all actions, suits, claims, proceedings, investigations,
demands, assessments, audits, fines, judgments, costs and other
expenses (including, without limitation, reasonable legal fees and
expenses) incident to Section 5(b)(ii) or to the enforcement of this
Section 5(b).
(c) Notwithstanding the above, the aggregate amount of the Selling
Shareholders' liability to indemnify CXR and MicroTel in respect of all of CXR
and MicroTel's claims for indemnification shall not exceed $1 Million.
(d) All disputes under this Section 5 shall be settled by arbitration
in Ontario, California if arbitration is requested by the Selling
Shareholders (or in the office of the American Arbitration Association
located nearest thereto) and in Chicago, Illinois if arbitration is requested
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by MicroTel before a single arbitrator pursuant to the rules of the American
Arbitration Association. Arbitration may be commenced at any time by any
party hereto giving written notice to each other party to a dispute that such
dispute has been referred to arbitration under this Section 5. The
arbitrator shall be selected by the joint agreement of the Selling
Shareholders and MicroTel, but if they do not so agree within 20 days after
the date of the notice referred to above, the selection shall be made
pursuant to the rules from the panels of arbitrators maintained by such
Association. Any award rendered by the arbitrator shall be conclusive and
binding upon the parties hereto; provided, however, that any such award shall
be accompanied by a written opinion of the arbitrator giving the reasons for
the award. This provision for arbitration shall be specifically enforceable
by the parties and the decision of the arbitrator in accordance herewith
shall be final and binding and there shall be no right of appeal therefrom.
Any arbitration award shall be binding and enforceable in the Superior Court
of the State of California or Circuit Court of the State of Illinois, as the
case may be. The prevailing party in such arbitration as determined by the
arbitrator shall be entitled to reasonable attorneys fees and costs of such
arbitration shall be entitled to reasonable attorneys fees and costs of such
arbitration, costs of suit to enforce such arbitration award and all costs of
collection of such arbitration award.
(e) If it is finally determined that MicroTel is entitled to
indemnification under this Agreement, MicroTel shall, unless the Selling
Shareholders satisfy the indemnification obligation in cash within thirty (30)
days of such final and non-appealable determination, be entitled to set off an
amount equal to the indemnification obligation against the MicroTel Shares held
in escrow pursuant to the terms of the Escrow Agreement.
SECTION 6. CONTINGENT STOCK ISSUABLE TO SELLING SHAREHOLDERS. Simultaneous
herewith, MicroTel and CXR and each of the Selling Shareholders shall execute
and deliver a Contingent Stock Agreement, substantially in the form attached
hereto as Exhibit "C". For each Selling Shareholder, the percentage to be
inserted for each year shall be determined by multiplying such Selling
Shareholder's percentage ownership of Critical by the percentage below:
PERIOD PERCENTAGE
------ ----------
October 1, 1997 to
December 31, 1998 9%
1999 6%
2000 4%
2001 3%
2002 2%
(through September 30, 2002)
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The maximum number of MicroTel shares to be issued pursuant to the
Contingent Stock Agreements shall be 500,000.
SECTION 7. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made by the parties in this Agreement shall survive the date hereof
for a period of three years.
SECTION 8. REPURCHASE RIGHT.
For a period of five (5) years commencing in fiscal 1998, if (i) gross
annual sales of the Critical Products and any New Products (as defined in
Schedule 2 to the Contingent Stock Agreement) (the Critical Products and any
New Products collectively, the "Critical Line of Business") less all refunds
("Gross Sales") are less than $750,000 (the "Sales Target") in any two
consecutive fiscal years or (ii) MicroTel or its affiliates desire to
transfer for consideration all or any part of the Technology to any third
party; MicroTel must offer to sell the Critical Products, any New Products
and the Technology to the Employees still employed by it or its affiliates
(the "Remaining Employees") pursuant to the terms of this Article.
FAILURE TO MEET SALES TARGET. Within 105 days of the end of MicroTel's fiscal
year, MicroTel shall give to the Remaining Employees by registered or
certified mail the Gross Sales together with appropriate backup for such
calculation. Upon receipt of such calculation, if the Gross Sales have failed
to meet the Sales Target for the second consecutive fiscal year, the
Remaining Employees shall have 45 days to give notice to MicroTel by
registered or certified mail of their intent to value the Critical Line of
Business (the "Appraisal Request"). Within 20 days of MicroTel's receipt of
the Appraisal Request, the Remaining Employees and MicroTel shall each select
an independent certified appraiser at their own cost and expense who, within
20 days of their selection, shall value the Critical Line of Business. The
average of the appraisals shall be the price for the Remaining Employees to
purchase the Critical Line of Business (the "Purchase Price"). The Remaining
Employees shall have thirty days following determination of the Purchase
Price to elect to purchase the Critical Line of Business at the Purchase
Price by giving notice of such intent to MicroTel. Thereafter, MicroTel and
the Remaining Employees shall utilize reasonable best efforts to consummate
the purchase of the Critical Line of Business as quickly as possible. The
Remaining Employees shall be able to issue a promissory note in favor of
MicroTel for 50% of the Purchase Price. Said note shall bear interest at the
prime rate, be secured by the Critical Line of Business and have a maturity
of not more than five years.
PROPOSED SALE TO THIRD PARTY. If, at any time during the period ending five
years from the date of this Agreement, MicroTel desires to dispose of the
Technology or Critical Products or enter into any transaction the result of
which would be that MicroTel no longer owned the Technology or the Critical
Products pursuant to a bona fide offer made by an unaffiliated third party,
MicroTel shall give notice of the proposed sale to the Remaining Employees by
registered
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or certified mail. The notice shall identify the entity to whom the transfer
is to be made together with a copy of the offer containing all of the terms
and conditions, including price, of the intended disposition. The Remaining
Employees, for forty-five (45) days after receipt of said notice, shall have
the option to purchase the Technology or the Critical Products. The purchase
price for the transfer of the Technology or the Critical Products pursuant to
this section shall be the price at which MicroTel or its affiliate proposes
to dispose of such asset as described in the notice referred to in this
section.
TECHNOLOGY. As used herein, "Technology" means the following released
products, together with any modifications or enhancements to such products or
any new products based on such products to the extent Critical has rights to
such technology: (i) DTS92, Integrated Digital Data test-set: comprehensive
DDS DS0/4-wire circuit testing; (ii) CC195, Analog TIMS test set with
Wideband, Class Services and DID circuit testing; (iii) T124, Comprehensive
single-port T1 test set; and (iv) 2b128, Basic Rate ISDN test set, complete
TA emulation from U-Interface; together with any modifications or
enhancements to any such technology.
SECTION 10. MISCELLANEOUS.
(a) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, next-day air
courier, certified first-class mail, return receipt requested, telex, or
facsimile:
If to MicroTel and/or CXR, addressed to:
Carmine T. Oliva, Chairman,
President and Chief Executive Officer
c/o MicroTel International, Inc.
4290 E. Brickell Street
Ontario, CA 91761
with a copy to:
Martin J. Conroy, Esq.
Gallagher, Briody & Butler
212 Carnegie Center
Suite 402
Princeton, New Jersey 08540
If to Critical and the Selling Shareholders, addressed to:
Critical Communications, Inc.
218 Riverside Avenue
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St. Charles, Illinois 60174
Attn: Mike B. Petersen
with a copy to:
Richard W. Burke, Jr., Esq.
Burke, Warren, Mackay & Serritella, P.C.
330 N. Wabash
Suite 2200
Chicago, Illinois 60611
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; one business day after
being timely delivered to a next-day air courier; five business days after being
deposited in the mail, postage prepaid, if mailed; when answered back if
telexed; and when receipt is acknowledged by the recipient's telecopier machine,
if telecopied.
(b) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties, heirs,
personal representatives, successors and assigns, and no other persons shall
acquire or have any right under or by virtue of this Agreement.
(c) AMENDMENT AND WAIVER. This Agreement may only be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may only be given, provided that the same are in writing and signed by all
parties to this Agreement.
(d) COUNTERPARTS. This Agreement (and any exhibits hereto) may be
executed in any number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
(e) GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, as applied to contracts
made and performed within the State of California, without regard to principles
of conflicts of law. Critical and each Selling Shareholder hereby irrevocably
submits to the jurisdiction of any California state court or any federal court
in the State of California in respect of any suit, action or proceeding arising
out of or relating to this Agreement, and irrevocably accept for themselves and
in respect of their property, generally and unconditionally, the jurisdiction of
the aforesaid courts.
(f) ENTIRE AGREEMENT. This Agreement together with the agreements annexed
as exhibits hereto are intended by the parties as a final expression of their
agreement and intended to be a complete and exclusive statement of the agreement
and understanding of the parties hereto in respect of the subject matter
contained herein.
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(g) SEVERABILITY. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their best efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
(h) TRANSFER TAXES. The Selling Shareholders shall pay to the appropriate
tax authorities the transfer tax, if any, applicable to the exchange of shares,
contemplated by this Agreement.
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IN WITNESS WHEREOF, the parties hereto have evidenced their agreement to
the foregoing by executing this Agreement the date and year first set forth
above.
MICROTEL INTERNATIONAL, INC.
By: /s/ Carmine T. Oliva
--------------------------------
Carmine T. Oliva, Chairman,
President and Chief Executive
Officer
CXR TELCOM CORPORATION
By: /s/ Henry A. Mourad
--------------------------------
Henry A. Mourad, President
/s/ Eric P. Bergstrom
--------------------------------
Eric P. Bergstrom
/s/ Steve T. Robbins
--------------------------------
Steve T. Robbins
/s/ Mike B. Petersen
--------------------------------
Mike B. Petersen
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SCHEDULE 1
NAME SHARE ALLOCATION
---- ----------------
Eric P. Bergstrom 49,986
Steve T. Robbins 124,990
Mike B. Petersen 325,024
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Total: 500,000
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