THE OFFER AND SALE OF THE SECURITIES REFERRED TO IN THIS AGREEMENT (THE
"OFFERING") HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS AND SUCH SHARES
ARE BEING OFFERED AND SOLD IN RELIANCE ON THE EXEMPTION FROM THE SECURITIES
REGISTRATION AND QUALIFICATION REQUIREMENTS OF THE ACT AND SUCH LAWS OFFERED
BY SECTION 4(2) OF THE ACT. ACCORDINGLY, THE SECURITIES MAY NOT BE
TRANSFERRED OR RESOLD WITHOUT REGISTRATION AND QUALIFICATION UNDER THE ACT
AND APPLICABLE STATE SECURITIES LAWS, UNLESS AN EXEMPTION FROM SUCH
REGISTRATION AND QUALIFICATION UNDER THE ACT AND SUCH LAWS IS THEN AVAILABLE.
THE OFFER AND SALE OF THE SECURITIES EFFECTED HEREBY HAVE NOT BEEN APPROVED
OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE
SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE
FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THE OFFERING.
SUBSCRIPTION AGREEMENT
MICROTEL INTERNATIONAL, INC.
CONVERTIBLE PREFERRED STOCK - SERIES A
-------------------------------------------------------------------------------
THIS SUBSCRIPTION AGREEMENT (hereinafter the "Agreement") has been executed
by the undersigned (collectively the "Buyer") in connection with the sale of
certain Securities designated as Series A Convertible Preferred Stock
(hereinafter the "Preferred Shares"), which are convertible into shares of
common stock (hereinafter the "Conversion Shares") of MicroTel International,
Inc. (the "Company").
1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE
1.1 Each Buyer hereby subscribes for the number of Preferred Shares set
forth below on the signature page of this Agreement which Preferred Shares
shall be convertible into Conversion Shares of the Company in accordance with
the terms set forth in the Certificate of Designations, Rights and
Preferences of Preferred Stock attached as Exhibit A to this Agreement (the
"Conversion Shares"), at a purchase price of $10,000 per Preferred Share
payable in United States Dollars.
1.2 Buyer shall pay the purchase price by delivering same day funds in
United States Dollars to the Company upon delivery of the Preferred Shares by
the Company to Buyer.
2. REPRESENTATIONS AND WARRANTIES.
2.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants that as of the date of this Agreement:
(a) EXISTENCE. The Company is a corporation duly organized and in
good standing under the laws of the State of Delaware and is duly
qualified to do business and is in good standing in all states where
such qualification is necessary, except for those jurisdictions in which
the failure to qualify would not, in the aggregate, have a material
adverse effect on the Company's financial condition, results of
operations or business.
(b) AUTHORITY. The execution and delivery by the Company of this
Agreement and the Preferred Stock (i) are within the Company's
corporate powers; (ii) are duly authorized by the Company's board of
directors; (iii) are not in contravention of the terms of the Company's
certificate of incorporation or bylaws; (iv) are not in contravention of
any law or laws; (v) except for the filing of a Form D Notice with the
Securities and Exchange Commission and any exemption filing related
thereto which may be required pursuant to applicable state securities or
"blue sky" laws, do not require any governmental consent, registration
or approval; (vi) do not contravene any contractual or governmental
restriction binding upon the Company; and (vii) will not result in the
imposition of any lien, charge, security interest or encumbrance upon
any property of the Company under any existing indenture, mortgage, deed
of trust, loan or credit agreement or other material agreement or
instrument to which the Company is a party or by which the Company or
any of the Company's property may be bound or affected.
(c) BINDING EFFECT. This Agreement has been duly authorized,
executed and delivered by the Company and constitutes the valid and
legally binding obligation of the Company, enforceable in accordance
with its terms, subject to bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting creditors'
rights and to general equity principles.
(d) CAPITALIZATION. The authorized capital stock of the Company
consists of 25,000,000 shares of Common Stock, par value $.0033 per
share, 11,927,793 shares of which are issued and outstanding and
10,000,000 shares of Preferred Stock, par value $.01 per share, of which
none are outstanding. The shares of common stock issuable upon
conversion of the Preferred Stock (the "Conversion Shares") have been
duly and validly authorized and reserved for issuance and, when issued
and delivered in accordance with the terms of this Agreement, will be
duly and validly issued, fully paid and non-assessable.
(e) SEC DOCUMENTS. The Company has furnished each Buyer with a
true and complete copy of the Company's Report on Form 10-K for the
fiscal year ended December 31, 1997 and Form 10-Q for the quarter ended
March 31, 1998 (the "Disclosure Documents"). Except as disclosed in the
Disclosure Documents, since December 31, 1997 the Company has not
incurred any material liability except in the
2
ordinary course of its business consistent with past practice and there
has not been any change in the business, financial condition or results
of operations of the Company which has had a material adverse effect on
the Company. Since January 1, 1997, the Company 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 Disclosure 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 Disclosure Documents, and the Disclosure Documents did not contain
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 the Company included in the
Disclosure 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 accurate, complete and have been prepared
in accordance with the books and records of the Company 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 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 the Company as at
the dates thereof and the consolidated results of its operations and
cash flows for the periods then ended.
(f) LITIGATION. Except as set forth in the Disclosure Documents,
there is neither pending nor, to the Company's knowledge and belief,
threatened any action, suit, proceeding or claim, or any basis therefor,
to which the Company is or may be named as a party or its property is or
may be subject or which calls into question any of the transactions
contemplated by this Agreement.
(g) SECURITIES MATTERS. Subject to the accuracy of the
representations of the Buyers set forth in Section 2.2 hereof, the
offer, sale and issuance of the Preferred Stock and the Conversion
Shares as contemplated by this Agreement are exempt from the
registration requirements of the Securities Act of 1933 as amended (the
"Securities Act"). The Company has complied and will comply with all
applicable state "blue sky" or securities laws in connection with the
offer, sale and issuance of the Preferred Stock and the Conversion
Shares as contemplated by this Agreement.
(h) CERTIFICATES. The Company will issue one or more Certificates
representing the Preferred Shares in the name of Buyer with the
following restrictive legend set forth below (the "Restrictive Legend")
in such denominations to be specified by the Buyer:
"The Securities represented by this Certificate have not
been registered under the United States Securities Act of
1933 (the "Act") and may not be sold, transferred, pledged
or otherwise
3
hypothecated unless (a) they are covered by a registration
statement or a post-effective amendment thereto under the Act, or
(b) in the opinion of counsel for Buyer, which opinion shall be
reasonably acceptable to the Company, such sale, transfer, pledge
or hypothecation is otherwise exempt from the provisions of Section
5 of the Act."
(i) CONVERSION. Within two full business days of receipt by the
Company of a properly executed request for conversion in the form
annexed as Exhibit B hereto accompanied by the Preferred Shares to be
converted, the Company will deliver to its transfer agent its directive
and authorization to execute the conversion and to issue to Buyer the
common stock shares so authorized.
The Company acknowledges that a delay in issuance of its
authorization and directive for the conversion could result in economic
loss to the Buyer. Therefore, as compensation to the Buyer for such
loss, in the event that the Company fails to deliver said authorization
and directive within two full business days, the Company agrees to pay
liquidated damages to the Buyer for late issuance of said authorization
and directive in the amount of $500 per day for each day of delay after
three days, up to a maximum of $10,000 per conversion request. Nothing
herein shall create a liability to the Company for actions or delays of
the transfer agent once the authorization and directive have been
delivered to it by the Company. Any liquidated damages due Buyer will
be paid within seven (7) days of issuance of the shares resulting from
the conversion.
(j) ISSUANCE OF SHARES. Upon conversion of the Preferred Shares,
the Company will issue one or more certificates representing the
Conversion Shares in the name of the Buyer without restrictive legend,
except as may otherwise be required by applicable law, rule or
regulation, and in DTC eligible form, in such denominations to be
specified by the Buyer prior to conversion provided Buyer represents to
the Company that resale of the Conversion Shares will be made only in
compliance with applicable securities laws. Company further warrants
that no instructions other than these instructions, and instructions for
a "stop transfer" for any sale of Conversion Shares in excess of those
permitted to be sold under Section 2.2(c), have been given to the
transfer agent and also warrants that the Conversion Shares shall
otherwise be freely transferable on the books and records of the Company
subject to compliance with Federal and State securities laws.
2.2 REPRESENTATIONS AND WARRANTIES OF THE BUYER. Each Buyer represents
and warrants that as of the date of the execution of this Agreement:
(a) AUTHORIZATION. This Agreement constitutes a valid and legally
binding obligation of such Buyer.
(b) INVESTMENT REPRESENTATIONS (i) The Buyer has received and
reviewed the Company's Disclosure Documents and the Buyer or the Buyer's
designated
4
representatives have concluded a satisfactory due diligence
investigation of the Company and have had an opportunity to have all
their questions regarding the Company satisfactorily answered.
(ii) The Buyer acknowledges that the Preferred Stock and the
Conversion Shares are speculative and involve a high degree of risk
and the Buyer represents that it is able to sustain the loss of the
entire amount of its investment.
(iii) The Buyer (or its members and/or officers) has
previously invested in unregistered securities and has sufficient
financial and investing expertise to evaluate and understand the risks
of the Preferred Stock and the Conversion Shares.
(iv) The Buyer has received from the Company, and is relying
on, no representations (except as set forth in this Agreement) or
projections with respect to the Company's business and prospects.
(v) The Buyer is an "accredited investor" within the
meaning of Regulation D under the Securities Act.
(vi) The Buyer is acquiring the Preferred Stock and the
Conversion Shares for investment purposes only without intent to
distribute the same, and acknowledges that the Preferred Stock and the
Conversion Shares have not been registered under the Securities Act
and applicable state securities laws, and accordingly, constitute
"restricted securities" for purposes of the Securities Act and such
state securities laws.
(vii) The Buyer acknowledges that it will not be able to
transfer the Preferred Stock and the Conversion Shares except upon
compliance with the registration requirements of the Securities Act
and applicable state securities laws or exemptions therefrom.
(viii) The certificates and/or instruments evidencing the
Preferred Stock and the Conversion Shares will contain a legend to the
foregoing effect.
(c) LOCK-UP. The Buyer will not transfer any Preferred Shares or
Conversion Shares for a period of ninety (90) days after the date of the
Closing. No more than 20% of the aggregate number of Series A Preferred
Shares originally purchased and owned by the Buyer may be converted in any
thirty (30) day period, on a cumulative basis, after the ninetieth (90th)
day of issuance. Further, the Buyer will not, after conversion, sell more
than 20% of the Conversion Shares owned by it in any thirty day period, on
a cumulative basis, commencing with the ninety-first (91st) day after the
Closing.
3. CLOSING
3.1 The Buyer understands that the Company's obligation to sell the
Preferred Shares
5
is conditioned upon delivery by the Buyer to the Company of the purchase
price set forth in Section 1 herein.
3.2 The Company understands that Buyer's obligation to purchase the
Preferred Shares is conditioned upon delivery of certificate(s) representing
the Preferred Shares as described herein, and provision of an opinion of
counsel as provided in Subsection D (ii) herein below.
3.3 For this transaction to close, the Buyer must:
(i) Wire funds to the Pacific Continental Securities
Corporation, as Escrow Agent (the "Escrow Agent"), in the amount of
Five Hundred Thousand U.S. dollars ($500,000) (the "Purchase Price")
no later than 72 hours after receipt by the Company of the
Subscription Agreement executed by the Buyer and the Company. Wire
transfer instructions for the Escrow Agent are annexed as Exhibit C
hereto.
(ii) Deliver a signed Subscription Agreement.
3.4 For this transaction to close, the Company must:
(i) Deliver to the Buyer Certificate(s) for the Preferred
Shares.
(ii) Deliver to the Buyer the Company's Certificate of
Designation set forth in Exhibit A hereto.
(iii) Deliver to the Buyer an opinion letter from the
Company's counsel stating that (a) the Company is duly incorporated
and validly existing; (b) this Agreement, the issuance of the
Preferred Shares, and the issuance of the Common Stock upon conversion
of the Preferred Shares up to the number of shares of common stock
authorized in the Company's Certificate of Incorporation, have been
duly approved by all required corporate action, and that all such
securities upon due issuance, shall be validly issued and outstanding,
fully paid and nonassessable, and in each case, having the rights,
preferences and privileges set forth in the Certificate of
Incorporation; and (c) this Agreement is a valid and binding
obligation of the Company, enforceable in accordance with its terms,
except as enforceability of any indemnification provisions may be
limited by principles of public policy, and subject to laws of general
application relating to bankruptcy, insolvency and the relief of
debtors and rules of laws governing specific performance and other
equitable remedies; and
(iv) Deliver to the Buyer a signed Subscription Agreement
which shall be signed after execution of such Subscription Agreement
by Buyer; and
(v) Deliver to the Buyer executed warrants to purchase
common stock
6
of the Company in the form attached hereto as Exhibit D (the
"Warrants").
7
3.5 Upon confirmation by Buyer that it has received each of the items
set forth in 3.4(i)-(v), and by the Company that it has received a signed
Subscription Agreement, Escrow Agent shall, after deducting any amounts due
to it from the Company, release the balance of the purchase price to the
Company or as directed by the Company.
E. Pacific Continental Securities Corporation shall serve as agent
(the "Agent") in the transaction contemplated by this Agreement.
Agent's fee is solely the responsibility of the Company and Company
expressly agrees to pay Agent said fee as such is agreed upon between
the Company and the Agent. Neither the Company nor the Agent has any
recourse of any kind whatsoever against the Buyer for any monies owed
the Agent by the Company or for any monies paid by the Company to the
Agent. Company expressly indemnifies Buyer against any monies owed the
Agent.
4. REGISTRATION OF CONVERSION SHARES
4.1 The Company shall prepare and file with the SEC a registration
statement as soon as practical, which registration statement shall include
the Conversion Shares and shares of Common Stock issuable pursuant to the
Warrants ("Warrant Shares") and shall thereafter use its best efforts to have
such registration statement declared effective within 90 days after the
Closing Date (the "Target Date") and remain effective until the earlier of
the date on which all the Conversion Shares are sold or two years after the
Closing Date (the "Effective Period"). The Company shall prepare and file
with the SEC such amendments and supplements to such registration statement
and the prospectus used in connection therewith as may be necessary to keep
such registration statement effective throughout the Effective Period and to
comply with the provisions of the Securities Act with respect to the sale or
other disposition of the Conversion Shares or Warrant Shares covered by such
registration statement whenever the Buyer shall desire to sell or otherwise
dispose of the same.
4.2 If a registration statement covering all Shares is not effective by
the Target Date, the Company shall pay to the Buyers as liquidated damages an
aggregate amount equal to one percent ( 1%) of the total purchase price of
the Preferred Stock for each thirty (30) day period following the Target Date
until such time as the registration statement is declared effective. The
payment set forth above shall be pro-rated daily as to any period of less
than thirty (30) days. Such payment shall be made to each Buyer by cashier's
check or wire transfer in immediately available funds to such account as
shall be designated in writing by the Buyer and shall be paid irrespective of
the amount of Preferred Stock, Conversion Shares and Warrant Shares held by
Buyer on the Target Date and thereafter.
4.3 Any amount payable pursuant to the foregoing provisions shall be
delivered on or before the fifth (5th) day following the end of the calendar
month in which such payment or delivery obligation arose.
4.4 The Company shall file a request for acceleration of effectiveness
of the registration statement within five days after it has received a no
review/no further comment determination from the SEC.
8
4.5 It shall be a condition precedent to the obligation of the Company
to register any Conversion Shares and Warrant Shares pursuant to this Section
4 that Buyer shall furnish to the Company such information regarding the
Conversion Shares and Warrant Shares held and the intended method of
disposition thereof and other information concerning the Buyer as the Company
shall reasonably request and as shall be required in connection with the
registration statement to be filed by the Company. If after a registration
statement becomes effective the Company advises the Buyer that the Company
considers it appropriate to amend or supplement the applicable registration
statement, the Buyer shall suspend further sales of the Conversion Shares and
Warrant Shares until the Company advises the Buyer that such registration
statement has been amended or supplemented.
4.6 Whenever the Company is required by the provisions of this Section
4 to effect the registration of the Conversion Shares and Warrant Shares
under the Securities Act, the Company shall:
(i) Prepare and file with the SEC a registration statement
with respect to such securities and use its best efforts to cause such
registration statement to become and remain effective;
(ii) Prepare and file with the SEC such amendments to such
registration statement and supplements to the prospectus contained
therein as may be necessary to keep such registration statement
effective;
(iii) Furnish to the Buyer and to the underwriters (if any)
of the securities being registered such reasonable number of copies of
the registration statement, preliminary prospectus, final prospectus
and such other documents as the Buyer may reasonably request in order
to facilitate the public offering of such securities;
(iv) Use its best efforts to register or qualify the
securities covered by such registration statement under such state
securities or Blue Sky Laws of such jurisdictions as the Buyer may
reasonably request within twenty (20) days following the original
filing of such registration statement, except that the Company shall
not for any purpose be required to execute a general consent to
service of process or to qualify to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified;
(v) Notify the Buyer, promptly after it shall receive
notice thereof, of the time when such registration statement has
become effective or a supplement to any prospectus forming a part of
such registration statement has been filed;
(vi) Notify the Buyer promptly of any request by the SEC for
the amending or supplementing of such registration statement or
prospectus or for additional information; and
9
(vii) Prepare and promptly file with the SEC and promptly
notify the Buyer of the filing of such amendment or supplement to such
registration statement or prospectus as may be necessary to correct
any statements or omissions if, at the time when a prospectus relating
to such securities is required to be delivered under the Securities
Act, any event shall have occurred as the result of which any such
prospectus or any other prospectus as then in effect would include an
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading.
4.7 With respect to the inclusion of the Conversion Shares and Warrant
Shares in a registration statement pursuant to this Section 4, all
registration expenses, fees, costs and expenses of and incidental to such
registration, inclusion and public offering in connection therewith shall be
borne by the Company; provided, however, that the Buyer shall bear its own
professional fees and pro rata share of the underwriting discount and
commissions, if any. The fees, costs and expenses of registration to be
borne by the Company shall include, without limitation, all registration,
filing, printing expenses, fees and disbursements of counsel and accountants
for the Company, fees and disbursements of counsel for the underwriter or
underwriters of such securities (if any and if the Company and/or selling
security holders are required to bear such fees and disbursements), and all
legal fees and disbursements and other expenses of complying with state
securities or Blue Sky Laws of any jurisdiction in which the securities to be
offered are to be registered or qualified.
4.8 Subject to the conditions set forth below, in connection with any
registration of the Shares pursuant to this Section 4, the Company agrees to
indemnify and hold harmless the Buyer, any underwriter for the Company or
acting on behalf of the Buyer and each person, if any, who controls the
Buyer, within the meaning of Section 15 of the Securities Act, as follows:
(i) Against any and all loss, claim, damage and expense
whatsoever arising out of or based upon (including, but not limited
to, any and all expense whatsoever reasonably incurred in
investigating, preparing or defending any litigation, commenced or
threatened, or any claim whatsoever based upon) any untrue or alleged
untrue statement of a material fact contained in any preliminary
prospectus (if used prior to the effective date of the registration
statement), the registration statement or the prospectus (as from time
to time amended and supplemented), or in any application or other
document executed by the Company or based upon written information
furnished by the Company filed in any jurisdiction in order to qualify
the Company's securities under the securities laws thereof, or the
omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein not
misleading, or any other violation of applicable federal or state
statutory or regulatory requirements or limitations relating to action
or inaction by the Company in the course of preparing, filing, or
implementing such registered offering; provided, however, that the
indemnity agreement contained in this section shall not apply to
10
any loss, claim, damage, liability or action arising out of or
based upon any untrue or alleged untrue statement or omission made
in reliance upon and in conformity with any information furnished
in writing to the Company by or on behalf of the Buyer expressly
for use in connection therewith or arising out of any action or
inaction of the Buyer;
(ii) Subject to the proviso contained in Subsection (i)
above, against any and all loss, liability, claim, damage and
expense whatsoever to the extent of the aggregate amount paid in
settlement of any litigation, commenced or threatened, or of any
claim whatsoever based upon any untrue statement or omission
(including, but not limited to, any and all expense whatsoever
reasonably incurred in investigating, preparing or defending
against any such litigation or claim) if such settlement is
effected with the written consent of the Company; and
(iii) In no case shall the Company be liable under this
indemnity agreement with respect to any claim made against such
Company, underwriter or any such controlling person unless the
Company shall be notified, by letter or by facsimile confirmed by
letter, of any action commenced against such persons, promptly
after such person shall have been served with the summons or other
legal process giving information as to the nature and basis of the
claim. The failure to so notify the Company, if prejudicial in any
material respect to the Company's ability to defend such claim,
shall relieve the Company from its liability to the indemnified
person under this Section 4, but only to the extent that the
Company was prejudiced. The failure to so notify the Company shall
not relieve the Company from any liability which it may have
otherwise than on account of this indemnity agreement. The Company
shall be entitled to participate at its own expense in the defense
of any suit brought to enforce any such claim, but if the Company
elects to assume the defense, such defense shall be conducted by
counsel chosen by it, provided such counsel is reasonably
satisfactory to the Company or controlling persons, defendants in
any suit so brought. In the event the Company elects to assume the
defense of any such suit and retain such counsel, the Company,
underwriter or controlling persons, defendants in the suit, shall,
after the date they are notified of such election, bear the fees
and expenses of any counsel thereafter retained by them, as well as
any other expenses thereafter incurred by them in connection with
the defense thereof; provided, however, that if the Company,
underwriter or controlling persons reasonably believe that there
may be available to them any defense or counterclaim different than
those available to the Company or that representation of such
Company, underwriters or controlling persons by counsel for the
Company presents a conflict of interest for such counsel, then such
Company, underwriter and controlling person shall be entitled to
defend such suit with counsel of their own choosing and the Company
shall bear the fees, expenses and other costs of such separate
counsel.
11
4.9 Each Buyer agrees to indemnify and hold harmless the Company, each
underwriter for the offering, (if any), and each of their officers and
directors and agents and each other person, if any, who controls the Company
and underwriter within the meaning of Section 15 of the Securities Act
against any and all such losses, liabilities, claims, damages and expenses as
are indemnified against by the Company under Section 4.6 above; provided,
however, that such indemnification by Buyer hereunder shall be limited to any
losses, liabilities, claims, damages, or expenses to the extent caused by any
untrue statement of a material fact or omission of a material fact (required
to be stated therein or necessary to make statements therein not misleading),
if any made (or in settlement of any litigation effected with the written
consent of such Company, alleged to have been made) in any preliminary
prospectus, the registration statement or prospectus or any amendment or
supplement thereof or in any application or other document in reliance upon,
and in conformity with, written information furnished in respect of such
Company by or on behalf of such Company expressly for use in any preliminary
prospectus, the registration statement or prospectus or any amendment or
supplement thereof or in any such application or other document or arising
out of any action or inaction of such Company in implementing such registered
offering. Notwithstanding the foregoing, the indemnification obligation of
each Buyer shall not exceed the purchase price of the Notes paid by such
Buyer. In case any action shall be brought against the Company, or any other
person so indemnified, in respect of which indemnity may be sought against
any Company, such Company shall have the rights and duties given to the
Company, and each other person so indemnified shall have the rights and
duties given to the Buyer, by the provisions of Section 4.6. The person
indemnified agrees to notify the Company promptly after the assertion of any
claim against the person indemnified in connection with the sale of
securities.
4.10 If the indemnification provided for in Sections 4.8 and 4.9 above
are unavailable or insufficient to hold harmless an indemnified party in
respect of any losses, claims, damages or liabilities (or actions in respect
thereof) referred to therein, then each indemnifying party shall contribute
to the amount paid or payable by such indemnified party as a result of such
losses, claims, damages or liabilities (or actions in respect thereof) in
such proportion as is appropriate to reflect the relative fault of the
indemnified party, on one hand, and such indemnifying party, on the other
hand, in connection with the statements or omissions which resulted in such
losses, claims, damages, or liabilities (or actions in respect thereof). The
relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the indemnified party, on one hand, or such indemnifying party,
on the other hand, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
No person who has committed fraudulent misrepresentation (within the meaning
of the Securities Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof referred to above in this Section
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim.
5. CLOSING DATE
12
The Preferred Share certificate shall be delivered to Buyer and the
funds therefore shall be delivered to Company on or before May 22, 1998 (the
"Closing Date") or at such other time mutually agreed to by the parties. 6.
GOVERNING LAW; INTERPRETATION
This Agreement shall be governed by and interpreted in accordance with
the laws of the State of Delaware. Facsimile signatures of this Agreement
shall be binding on all parties hereto. 7. ENTIRE AGREEMENT; AMENDMENT
This Agreement and the other documents delivered pursuant hereto
constitute the full and entire understanding and agreement between the
parties with regard to the subjects hereof and thereof, and no party shall be
liable or bound to any other party in any manner by any warranties,
representations or covenants except as specifically set forth herein or
therein. Except as expressly provided herein, neither this Agreement nor any
term hereof may be amended, waived, discharged or terminated other than by a
written instrument signed by the party against whom enforcement of any such
amendment, waiver, discharge or termination is sought.
8. NOTICES; ETC.
Any notice, demand or request required or permitted to be given by
either the Company or the Buyer pursuant to the terms of this Agreement shall
be in writing and shall be deemed given when delivered personally or by
facsimile, with a hard copy to follow by two day courier addressed to the
parties at the addresses of the parties set forth at the end of this
Agreement or such other address as a party may request by notifying the other
in writing.
9. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one instrument.
10. SEVERABILITY
In the event that any provision of this Agreement becomes or is declared
by a court of competent jurisdiction to be illegal, enforceable or void, this
Agreement shall continue in full force and effect without said provision,
provided that no such severability shall be effective if it materially
changes the economic benefit of this Agreement to any party.
11. TITLES AND SUBTITLES
The titles and subtitles used in this Agreement are used for convenience
only and are not to be considered in construing or interpreting this
Agreement.
13
IN WITNESS WHEREOF, this Agreement was duly executed on the date first
written above, as confirmed by signatory below. Facsimile signatures of this
agreement shall be binding on all parties hereto.
Official Signatory of Company:
MICROTEL INTERNATIONAL, INC.
0000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
By:
----------------------------------------
Xxxxxxx X. Xxxxx
President and Chief Executive Officer
FORTUNE FUND LIMITED SEEKER III
By:
----------------------------------------
Number of Shares of
Series A Preferred: 50
