AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of December 31, 1996 among
MICROTEL INTERNATIONAL, INC., a Delaware corporation ("MicroTel"), XIT
ACQUISITION INC., a New Jersey corporation and a wholly owned subsidiary of
MicroTel ("Sub"), and XIT CORPORATION, a New Jersey corporation (formerly XCEL
Corporation) ("XIT").
W I T N E S S E T H:
WHEREAS the respective Boards of Directors of MicroTel, Sub and XIT
have approved the merger of XIT and Sub;
WHEREAS, to effect such transaction, the respective Boards of Directors
of MicroTel, Sub and XIT, and MicroTel acting as the sole shareholder of Sub,
have approved the merger of XIT and Sub (the "Merger"), pursuant and subject to
the terms and conditions of this Agreement, whereby each issued and outstanding
share of Common Stock, no par value, of XIT ("XIT Common Stock") will be
converted into the right to receive shares of Common Stock, par value $.0033 per
share, of MicroTel ("MicroTel Common Stock") as provided herein;
WHEREAS MicroTel, Sub and XIT desire to make certain representations,
warranties and agreements in connection with the Merger and also to prescribe
various conditions to the Merger;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the parties agree
as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Subject to the provisions of this Agreement, a
certificate of merger (the "Certificate of Merger") shall be duly prepared,
executed and acknowledged by the Sub and XIT and thereafter delivered to the
Secretary of State of the State of New Jersey, for filing, as provided in the
New Jersey Business Corporation Act (the "NJBCA"), as soon as practicable on the
Closing Date (as defined in Section 1.2). The Merger shall become effective upon
the filing of the Certificate of Merger with the Secretary of State of the State
of New Jersey or at such later time as is provided in the Certificate of Merger
(the "Effective Time"). As a result of the Merger, the Surviving Corporation
shall become a wholly-owned subsidiary of MicroTel at the Effective Time. For
federal income tax purposes, it is intended that the Merger shall constitute a
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "Code").
1.2 Closing. Subject to the Merger receiving all requisite shareholder
approvals and subject to the provisions of this Agreement, the parties shall
hold a closing (the "Closing") on (i) the later of (A) twenty days following the
tabulation date for the written consents of the shareholders of XIT approving
the Merger and (B) the first business day on which the last of the conditions
set forth in Article VI to be fulfilled prior to the Closing is fulfilled or
waived or (ii) such other date as the parties hereto may agree (the "Closing
Date"), at 10:00 A.M. (local time) at such time and place as the parties hereto
may agree.
1.3 Effects of the Merger.
(a) At the Effective Time, the separate existence of Sub shall cease
and Sub shall be merged with and into XIT (Sub and XIT are sometimes
referred to herein as the "Constituent Corporations") and XIT shall
continue as the surviving corporation under the corporate name "XIT
Corporation" (the "Surviving Corporation").
(b) At and after the Effective Time, the Surviving Corporation shall
possess all the rights, privileges, powers and franchises, and be
subject to all the restrictions, disabilities and duties of each of the
Constituent Corporations; and all and singular rights, privileges,
powers and franchises of each of the Constituent Corporations, and all
property, real, personal and mixed, and all debts due to either of the
Constituent Corporations on whatever account, and all other things in
action or belonging to each of the Constituent Corporations, shall be
vested in the Surviving Corporation; and all property, rights,
privileges, powers and franchises, and all and every other interest
shall be thereafter the property of the Surviving Corporation as they
were of the Constituent Corporations; but all rights of creditors and
all liens upon any property of either of the Constituent Corporations
shall be preserved unimpaired, and all debts, liabilities and duties of
the Constituent Corporations shall thenceforth attach to the Surviving
Corporation, and may be enforced against it to the same extent as if
said debts and liabilities had been incurred by it.
1.4 Certificate of Incorporation, By-Laws and Directors and Officers.
The Certificate of Incorporation of the Surviving Corporation in effect
immediately prior to the Effective Time shall be and remain the Certificate of
Incorporation of the Surviving Corporation, until thereafter amended in
accordance with the provisions therein and as provided by the NJBCA. The By-Laws
of the Surviving Corporation in effect immediately prior to the Effective Time
shall be the By-Laws of the Surviving Corporation until thereafter amended in
accordance with its terms. The initial directors and officers of the Surviving
Corporation shall be the directors and officers of the Surviving Corporation
immediately prior to the Effective Time, in each case until their successors are
duly elected and qualified.
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ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
2.1 Effect on Capital Stock. As of the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any shares of XIT
Common Stock or capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of the
capital stock of Sub shall be converted into and become one fully paid
and nonassessable share of Common Stock, no par value, of the Surviving
Corporation.
(b) Cancellation of Treasury Stock. All shares of XIT Common Stock that
are owned by XIT as treasury stock shall be canceled and retired and
shall cease to exist and no stock of MicroTel or other consideration
shall be delivered in exchange therefor.
(c) Conversion of XIT Common Stock. Each issued and outstanding share
of XIT Common Stock (other than shares to be canceled in accordance
with Section 2.1(b) and shares held by persons who perfect their
dissenters' right) shall be converted into the right to receive such
number of fully paid and nonassessable shares of MicroTel Common Stock
such that the shareholders, optionholders and warrantholders of XIT own
or have the right to acquire in the aggregate 65% of the outstanding
shares of MicroTel Common Stock on a fully diluted basis. All shares of
XIT Common Stock shall no longer be outstanding and shall automatically
be canceled and retired and shall cease to exist, and each holder of a
certificate representing any such shares shall cease to have any rights
with respect thereto, except the right to receive the shares of
MicroTel Common Stock to be issued in consideration therefor upon the
surrender of such certificate in accordance with Section 2.2.
(d) Dissenting Shares. Notwithstanding anything herein to the contrary,
shares of XIT Common Stock that are outstanding immediately prior to
the Effective Time and that are held by shareholders, if any, who are
entitled to assert a right to dissent from the Merger and who demand
and validly perfect their rights to receive the "fair value" of their
shares with respect to the Merger under Chapter 11 of the NJBCA (the
"Dissenting Shares") shall not be converted into or be exchangeable for
the right to receive shares of MicroTel Common Stock, but the holders
of such shares of XIT Common Stock shall be entitled solely to payment
of the "fair value" of such shares in accordance with the provisions of
the NJBCA; except that (i) if such demand to receive "fair value" shall
be withdrawn upon the consent of the Surviving Corporation, (ii) if
this Merger Agreement shall be terminated, or the Merger shall not be
consummated, (iii) if no demand or petition for the determination of
"fair value" by a court shall have been made or filed within the time
provided in the provisions of the NJBCA or (iv) if a court of competent
jurisdiction shall determine that such holder of Dissenting Shares is
not entitled to the
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relief provided by the provisions of the NJBCA, then the right of such
holder of Dissenting Shares to be paid the "fair value" of his or her
shares of XIT Common Stock shall cease and with respect to clauses (i),
(iii) and (iv) above such Dissenting Shares shall thereupon be deemed
to have been converted into and to have become exchangeable for, as of
the Effective Time, the right to receive the number of shares of
MicroTel Common Stock into which such shares would have been converted
in the Merger in accordance with Section 2.1(c) hereof, without any
interest thereon, and with respect to clause (ii) above the status of
such shareholder shall be restored retroactively without prejudice to
any corporate proceeding which may have been taken during the interim.
(e) Assumption of XIT Stock Options and Warrants. At the Effective
Time, each option to purchase shares of XIT Common Stock and each
outstanding warrant to purchase shares of XIT Common Stock which is
then outstanding, whether or not then vested or exercisable, shall be
assumed by MicroTel on the terms set forth in Sections 5.6 and 5.7 of
this Agreement. Prior to the Effective Time, the Board of Directors of
XIT shall take such action as may be required under the governing
option agreements and warrant agreements or otherwise to effectuate
such assumption by MicroTel.
2.2 Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time, MicroTel shall deposit
with American Securities Transfer Co., the transfer agent for MicroTel
(the "Exchange Agent"), for the benefit of the holders of shares of XIT
Common Stock, for exchange in accordance with this Article II, through
the Exchange Agent, certificates representing the shares of MicroTel
Common Stock (the "MicroTel Certificates") issuable pursuant to Section
2.1 in exchange for outstanding shares of XIT Common Stock.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record
of a certificate or certificates which immediately prior to the
Effective Time represented outstanding shares of XIT Common Stock (the
"XIT Certificates") whose shares were converted into the right to
receive shares of MicroTel Common Stock pursuant to Section 2.1, (i) a
MicroTel Certificate representing that number of whole shares of
MicroTel Common Stock to which such holder has the right to receive
pursuant to the provisions of this Article II, and (ii) a check
representing the cash consideration to which such holder may be
entitled on account of a fractional share of MicroTel Common Stock as
provided in Section 2.2(e). Upon mailing of such MicroTel Certificates
all outstanding XIT Certificates other than Dissenting Shares shall be
canceled.
(c) No Further Ownership Rights in XIT Common Stock. All shares of
MicroTel Common Stock issued in accordance with the terms hereof shall
be deemed to have been issued in full satisfaction of all rights
pertaining to such shares of XIT Common Stock, and there shall be no
further registration of transfers on the stock transfer books of the
Surviving Corporation of the shares of XIT Common Stock which were
outstanding
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immediately prior to the Effective Time. If, after the Effective Time,
XIT Certificates are presented to the Surviving Corporation for any
reason, they shall forthwith be canceled.
(d) No Fractional Shares. No certificates representing fractional
shares of MicroTel Common Stock shall be issued for exchange of XIT
Certificates, and such fractional share interests will not entitle the
owner thereof to vote or to any rights of a shareholder of MicroTel and
each holder of XIT Common Stock will receive cash in lieu of any
fraction of MicroTel Common Stock in an amount equal to such fraction
multiplied by the average of the closing bid prices of MicroTel Common
Stock on the Nasdaq SmallCap Market during the five trading days
preceding the Closing Date. Payment of such amounts shall be made by
MicroTel.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of MicroTel and Sub. MicroTel
and Sub represent and warrant to XIT as follows:
(a) Organization, Standing and Power. Each of MicroTel and its
subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of its state or country of incorporation
or organization, has all requisite power and authority to own, lease
and operate its properties and to carry on its business as now being
conducted, and is duly qualified and in good standing to do business in
each jurisdiction in which the nature of its business or the ownership
or leasing of its properties makes such qualification necessary other
than in such jurisdictions where the failure so to qualify would not
have a material adverse effect on MicroTel and its subsidiaries taken
as a whole. Schedule 3.1(a) hereto lists each of the direct and
indirect subsidiaries of MicroTel. All issued and outstanding shares of
capital stock of each subsidiary have been duly authorized, are fully
paid and nonassessable, and, except as set forth on Schedule 3.1(a),
are lawfully owned of record and beneficially by MicroTel or another
subsidiary free and clear of all pledges, liens, claims, security
interests and other charges or defects in title of any nature
whatsoever. Except for the subsidiaries or as set forth in Schedule
3.1(a) and except for shares representing less than 1% of the
outstanding shares of any corporation, MicroTel owns no shares of any
corporation and has no interest, either of record, beneficially or
equitably, in any association, partnership, joint venture or other
legal entity.
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(b) Capital Structure. The authorized capital stock of MicroTel
consists of 25,000,000 shares of MicroTel Common Stock, par value
$.0033 per share and 10,000,000 shares of MicroTel Preferred Stock, par
value $.01 per share. As of the close of business on December 27, 1996,
2,860,559 shares of MicroTel Common Stock were outstanding; no shares
of MicroTel Common Stock were held by MicroTel in its treasury, and no
shares of MicroTel Preferred Stock were issued or outstanding. All
outstanding shares of MicroTel capital stock are, and the shares of
MicroTel Common Stock to be issued pursuant to this Agreement will be,
validly issued, fully paid and nonassessable and not subject to
preemptive rights. Except for options and warrants described in
Schedule 3.1(b) hereto, there are no options, warrants, calls,
agreements or other rights to purchase or otherwise acquire from
MicroTel at any time, or upon the happening of any stated event, any
shares of the capital stock of MicroTel or any of its subsidiaries,
whether or not presently issued or outstanding.
(c) Certificate of Incorporation, By-Laws, and Minute Books. The copies
of the Certificate of Incorporation and all amendments thereto and of
the By-Laws, as amended, of MicroTel and its subsidiaries which have
been delivered to XIT are true, correct and complete copies thereof.
The minute books of MicroTel and its subsidiaries which have been made
available for inspection contain accurate minutes of all meetings and
accurate consents in lieu of meetings of the Board of Directors (and
any committee thereof) and of the shareholders of MicroTel and its
subsidiaries since the respective dates of incorporation and accurately
reflect all transactions referred to in such minutes and consents in
lieu of meetings.
(d) Authority. MicroTel and Sub have all requisite power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized by the Boards of Directors of MicroTel and Sub and MicroTel
as the sole shareholder of Sub. No other corporate or shareholder
proceedings on the part of MicroTel or Sub are necessary to authorize
the Merger and the other transactions contemplated hereby.
(e) Conflict with Other Agreements; Approvals. This Agreement has been
duly executed and delivered by MicroTel and Sub and constitutes a valid
and binding obligation of MicroTel and Sub enforceable in accordance
with its terms. The execution and delivery of this Agreement does not,
and the consummation of the transactions contemplated hereby will not
conflict with, or result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation or
the loss of a material benefit under, or the creation of a lien,
pledge, security interest or other encumbrance on assets (any such
conflict, violation, default, right of termination, cancellation or
acceleration, loss or creation, a "Violation") pursuant to any
provision of the Certificate of Incorporation or By-laws of MicroTel or
any of its subsidiaries or, except as set forth on Schedule 3.2(e)
hereto result in any Violation of any loan or credit agreement, note,
mortgage, indenture,
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lease, benefit plan or other agreement, obligation, instrument, permit,
concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to MicroTel or any of its
subsidiaries or their respective properties or assets which Violation
would have a material adverse effect on MicroTel and its subsidiaries
taken as a whole. No consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative
agency or commission or other governmental authority or
instrumentality, domestic or foreign (a "Governmental Entity") is
required by or with respect to MicroTel or any of its subsidiaries in
connection with the execution and delivery of this Agreement by
MicroTel and Sub or the consummation by MicroTel and Sub of the
transactions contemplated hereby, the failure to obtain which would
have a material adverse effect on MicroTel and its subsidiaries, taken
as a whole, except for (i) the filing of such documents with, and the
obtaining of such orders from the Securities and Exchange Commission
(the "SEC") and the various state authorities, including state
securities authorities, that are required in connection with the
transactions contemplated by this Agreement and (ii) the filing of the
Certificate of Merger with the Secretary of State of the State of New
Jersey.
(f) SEC Documents; Financial Statements. (i) MicroTel has furnished XIT
with a true and complete copy of each report, schedule, registration
statement and definitive proxy statement filed by MicroTel with the
Securities and Exchange Commission (the "SEC") since January 1, 1993
(as such documents have since the time of their filing been amended,
the "MicroTel SEC Documents") which are all the documents (other than
preliminary material) that MicroTel was required to file with the SEC
since such date. As of their respective dates, the MicroTel SEC
Documents complied in all material respects with the requirements of
the Securities Act of 1933, as amended (the "Securities Act"), or the
Exchange Act of 1934, as amended (the "Exchange Act"), as the case may
be, and the rules and regulations of the SEC thereunder applicable to
such MicroTel SEC Documents, and none of the MicroTel SEC Documents
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.
(ii) MicroTel has delivered to XIT true and complete copies of (x) the
consolidated balance sheet of MicroTel at December 31, 1995 and the
related consolidated statement of income, changes in shareholders'
equity, changes in financial position and notes thereto for the year
then ended, certified by BDO Xxxxxxx, LLP, independent public
accountant (the "MicroTel 1995 Financials"); and (y) an unaudited
consolidated balance sheet of MicroTel at September 30, 1996 and
related consolidated statement of income, changes in shareholders'
equity, changes in financial position and notes thereto for the periods
ended September 30, 1996 (the "MicroTel 1996 Financials"). The MicroTel
1995 Financials have been prepared 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
the MicroTel 1996 Financials have been prepared on a consistent basis
during the periods involved (except as may be indicated in the notes
thereto) subject
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to normal, recurring audit adjustments. The MicroTel 1995 Financials
and the MicroTel 1996 Financials fairly present the consolidated
financial position of MicroTel and its consolidated subsidiaries as at
the dates thereof and the consolidated results of their operations and
cash flows for the periods then ended. The financial statements of
MicroTel included in the MicroTel SEC Documents 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.
(g) Books and Records. The books and records of MicroTel and each of
its subsidiaries accurately reflect the transactions to which MicroTel
or the subsidiary is a party or by which their properties are subject
or bound, and the assets and liabilities of MicroTel or the subsidiary,
and such books and records, together with internal accounting
procedures and controls maintained by MicroTel and the subsidiaries,
provide reasonable assurance that (i) transactions are executed with
management's authorization; (ii) transactions are recorded as necessary
to permit preparation of MicroTel's consolidated financial statements
and to maintain accountability for the assets of MicroTel and each
subsidiary; (iii) access to the assets of MicroTel and each subsidiary
is permitted only in accordance with management's authorization; (iv)
the reported accountability of the assets of MicroTel and each
subsidiary is compared with existing assets at reasonable intervals;
and (v) the assets recorded on the books and records of MicroTel and
the subsidiaries accurately reflect the assets owned by such
corporations, except for assets owned by MicroTel and the subsidiaries
which have been written off.
(h) Compliance with Laws. MicroTel and its subsidiaries hold all
permits, licenses, variances, exemptions, orders and approvals of all
Governmental Entities which are material to the operation of the
businesses of MicroTel and its subsidiaries, taken as a whole (the
"MicroTel Permits"). MicroTel and its subsidiaries are in compliance
with the terms of the MicroTel Permits, except where the failure so to
comply would not have a material adverse effect on MicroTel and its
subsidiaries taken as a whole. The businesses of MicroTel and its
subsidiaries are not being conducted in violation of any law, ordinance
or regulation of any Governmental Entity, except for possible
violations which individually or in the aggregate do not, and, insofar
as reasonably can be foreseen, in the future will not, have a material
adverse effect on MicroTel and its subsidiaries taken as a whole. None
of MicroTel, any subsidiary nor any of their officers and directors has
: (i) made any contributions to any candidate for political office, or
failed to disclose fully any such contributions, in violation of law;
(ii) made any payment to any state, federal or foreign governmental
officer or official, or other person charged with similar public or
quasi-public duties, except as allowed by applicable law; (iii) used
any corporate funds for any unlawful contribution, gift, entertainment
or other unlawful expense relating to political activity; (iv) made any
direct or indirect unlawful payment to any foreign or domestic
government official or employee or any purchasing agent or person
charged with similar duties of any entity with which MicroTel does
business from corporate funds; (v) made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment; or (vi) engaged
in any transaction, maintained any bank account or used any corporate
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funds except for transactions, bank accounts and funds which have been
and are accurately reflected in the normally maintained books and
records of MicroTel or the subsidiary; and neither MicroTel nor any
subsidiary has reimbursed or repaid, directly or indirectly, any
officer or director for any such illegal or improper contribution or
payment. No investigation or review by any Governmental Entity with
respect to MicroTel or any of its subsidiaries is pending or, to the
knowledge of MicroTel, threatened, nor has any Governmental Entity
indicated an intention to conduct the same, other than, in each case,
those the outcome of which, as far as reasonably can be foreseen, will
not have a material adverse effect on MicroTel and its subsidiaries
taken as a whole.
(i) Absence of Certain Changes or Events. Except as set forth in the
1996 MicroTel Financials, or except as contemplated by this Agreement,
since September 30, 1996, MicroTel and its subsidiaries have conducted
their respective businesses only in the ordinary and usual course, and,
as of the date of this Agreement, there has not been (i) any damage,
destruction or loss, whether covered by insurance or not, which has, or
insofar as reasonably can be foreseen in the future is reasonably
likely to have, a material adverse effect on MicroTel and its
subsidiaries taken as a whole; (ii) any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock
or property) with respect to any of MicroTel's capital stock; or (iii)
any transaction, commitment, dispute or other event or condition
(financial or otherwise) of any character (whether or not in the
ordinary course of business) individually or in the aggregate having or
which, insofar as reasonably can be foreseen, in the future is
reasonably likely to have, a material adverse effect on MicroTel and
its subsidiaries taken as a whole. There is no fact, development or
threatened development with respect to the markets, products, services,
clients, representatives, customers, facilities, personnel, vendors,
suppliers, operations, assets or prospects of the business of MicroTel
or its subsidiaries which are known to MicroTel which would materially
adversely affect the business of MicroTel or its subsidiaries
considered as a whole, other than such conditions as may affect as a
whole the economy generally. MicroTel has used its best efforts to keep
available for XIT the services of the employees, agents and sales
representatives, customers and suppliers of MicroTel active in the
conduct of its business. MicroTel does not have any reason to believe
that any loss of any employee, agent or sales representative, customer,
distributor or supplier or other advantageous arrangement will result
because of the consummation of the transactions contemplated hereby.
(j) Accounts Receivable. The accounts receivable of MicroTel and its
subsidiaries as set forth in the 1996 MicroTel Financials or arising
since the date thereof are valid and genuine; arise out of bona fide
sales and deliveries of goods, performance of services and other
business transactions in the ordinary course of business; are not
subject to valid defenses, set-offs or counterclaims; and except as
reserved for in the 1996 MicroTel Financials, are collectible within 90
days after billing at the full recorded amounts thereof.
(k) Inventory. Except as reserved for in the 1996 MicroTel Financials,
all inventory, including without limitation raw materials, work-in
process and finished goods, of
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MicroTel and its subsidiaries reflected in the 1996 MicroTel Financials
or acquired since the date thereof was acquired and has been maintained
in the ordinary course of business of MicroTel and its subsidiaries
consistent with past practice; consists of items of a quality, quantity
and condition useable, rentable or saleable in the ordinary course of
business of MicroTel and its subsidiaries consistent with past
practice; is valued at reasonable amounts based on the ordinary course
of business of MicroTel and its subsidiaries during the past six
months; and is not subject to any material write-down or write-off.
(l) Liabilities and Obligations. Except as described in Schedule
3.2(l), neither MicroTel nor any subsidiary has any liabilities or
obligations (direct or indirect, contingent or absolute, matured or
unmatured) of any nature, whether arising out of contract, tort,
statute or otherwise, including federal or state income tax
liabilities, except (i) liabilities and obligations in the amounts and
categories reflected, reserved against or given effect to in 1996
MicroTel Financials or the SEC Documents; (ii) liabilities and
obligations incurred in the ordinary course of business between
September 30, 1996 and the date hereof which are consistent with past
practice; or (iii) liabilities and obligations that would not have,
either individually or in the aggregate, a material adverse effect on
the business, prospects, results of operations or condition of
MicroTel, taken as a whole.
(m) Litigation. Except as disclosed in the MicroTel SEC Documents filed
prior to the date of this Agreement or on Schedule 3.1(m) hereto, there
is no suit, action or proceeding pending, or, to the knowledge of
MicroTel, threatened against or affecting MicroTel or any subsidiary of
MicroTel which is reasonably likely to have a material adverse effect
on MicroTel and its subsidiaries taken as a whole, nor is there any
judgment, decree, injunction, rule or order of any Governmental Entity
or arbitrator outstanding against MicroTel or any subsidiary of
MicroTel having, or which, insofar as reasonably can be foreseen, in
the future could have, any such effect.
(n) Taxes. Except as described in Schedule 3.2(n), (i) all federal,
state and local tax returns, reports and statements (including all
income tax, unemployment compensation, social security, payroll, sales
and use, excise, privilege, property, ad valorem, franchise, license,
school and any other tax under laws of the United States or any state
or municipal or political subdivision thereof) required to be filed by
MicroTel or any subsidiary (the "Tax Returns"), have been filed with
the appropriate governmental agencies in all jurisdictions in which
such returns, reports and statements are required to be filed, and all
such returns, reports and statements properly reflect the taxes of
MicroTel and its subsidiaries for the periods, properties or events
covered thereby; (ii) all federal, state and local taxes, assessments,
interest, penalties, deficiencies, fees and other governmental charges
or impositions, including those enumerated above in respect of the Tax
Returns or other taxes due (all the foregoing, the "Taxes"), have been
properly accrued or paid; (iii) the accruals for Taxes contained in the
1996 MicroTel Financials are adequate to cover the tax liabilities of
MicroTel and its subsidiaries as of September 30, 1996, and
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nothing has occurred subsequent to that date to make any of such
accruals inadequate; (iv) amounts reflected as carryforwards of credits
against United States federal and state income tax and of net operating
losses on the MicroTel 1995 Financials, or on the books of MicroTel and
on the books of any subsidiary are accurate in amount, subject to
subsequent limitations relating to the Merger; (v) neither MicroTel nor
any subsidiary has knowledge of any basis for any additional assessment
of Taxes; (vi) MicroTel and each of its subsidiaries have made all
deposits required by law with respect to employees' withholding taxes;
(vii) neither MicroTel nor any subsidiary has received any notice of
assessment or proposed assessment by the Internal Revenue Service or
any other taxing authority in connection with any Tax Returns and there
are no pending tax examinations of or tax claims asserted against
MicroTel or any subsidiary. Neither MicroTel nor any subsidiary has
waived any law or regulation fixing, or consented to the extension of,
any period of time for assessment of any Taxes.
(o) Assets. Except as described in Schedule 3.1(o), MicroTel and its
subsidiaries have good and marketable title to all their real and
personal properties and assets, including without limitation those
assets and properties reflected in the 1996 MicroTel Financials in the
amounts and categories reflected therein, free and clear of all
mortgages, liens, pledges, charges or encumbrances or other third party
interests of any nature whatsoever, except (i) the lien of current
taxes not yet due and payable, (ii) properties, interests, and assets
disposed of by MicroTel or any subsidiary since September 30, 1996
solely in the ordinary course of business consistent with past
practice, (iii) such secured indebtedness as is disclosed in the 1996
MicroTel Financials or the SEC Documents covering the properties
referred to therein, and (iv) such imperfections of title, easements
and encumbrances, if any, as are not substantial in character, amount
or extent and do not materially detract from the value, or interfere
with the present or proposed use, of the properties subject thereto.
Other than properties disposed of by MicroTel or any subsidiary since
September 30, 1996 solely in the ordinary course of business consistent
with past practice, all buildings, structures, facilities, equipment
and other items of tangible personal property reflected in the 1996
MicroTel Financials or acquired since the date thereof are in good
operating condition and repair, subject to normal wear and maintenance,
are useable in the regular and ordinary course of business of MicroTel
and its subsidiaries and conform to all applicable laws, ordinances,
codes, rules and regulations and Authorizations (hereinafter defined)
relating to their construction, use and operation. The method of
amortization or depreciation used by MicroTel for financial reporting
purposes is sufficient to write-off entirely each building, structure,
facility and item of equipment or other tangible personal property
during its useful life. The location of all real property owned by
MicroTel or its subsidiaries is disclosed in Schedule 3.1(o).
(p) Contracts. All written or oral contracts, agreements, leases,
mortgages or commitments ("Contracts"), excluding purchase or sales
orders placed in the ordinary course of business and other Contracts
involving payments of less than $50,000 over the term thereof, to which
MicroTel or any subsidiary is a party or may be bound and which cannot
be terminated by MicroTel without penalty within 30 days after written
notice are
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listed on Schedule 3.1(p). Except as described in Schedule 3.1(p)
hereto, all Contracts are valid and in full force and effect on the
date hereof, and neither MicroTel nor any subsidiary has violated any
provision of, or committed or failed to perform any act which with
notice, lapse of time or both would constitute a default under the
provisions of, any Contract, the termination or violation of which
might have a materially adverse effect upon the business, assets,
liabilities, financial condition, results of operations or prospects of
MicroTel or any subsidiary. True and complete copies of all Contracts,
together with all amendments thereto, disclosed in Schedule 3.1(p)
hereto have been delivered to XIT or made available for inspection.
Schedule 3.1(p) hereto identifies all Contracts which require the
consent or approval of third parties to the execution and delivery of
this Agreement or to the consummation and performance of the
transactions contemplated hereby.
(q) Labor Matters. Neither MicroTel nor any subsidiary is a party to or
bound by any collective bargaining agreements with respect to any
employees of MicroTel or any subsidiary. Except as described in
Schedule 3.1(q), since January 1, 1990 there has not been, nor to the
knowledge of MicroTel was there or is there threatened, any strike,
slowdown, picketing or work stoppage by any union or other group of
employees against MicroTel or any subsidiary or any of their premises,
or any other labor trouble or other occurrence, event or condition of a
similar character adversely affecting, or which may adversely affect,
the business, results of operations or prospects of MicroTel or any
subsidiary.
(r) Benefit Plans. Schedule 3.1(r) hereto lists all employee benefit
plans, contracts, agreements or arrangements sponsored, maintained or
contributed to by MicroTel or any of its United States subsidiaries
(collectively, the "MicroTel Employee Benefit Plans") including without
limitation all employment, pension, retirement, deferred compensation,
incentive, bonus, profit-sharing, stock purchase, stock option,
performance share, stock appreciation right, phantom stock, life
insurance, death or survivor's benefit, health insurance, sickness,
disability, medical, surgical, hospital, severance, layoff or vacation
plans, contracts, agreements or arrangements. Accurate summaries of the
material benefits provided under all Employee Benefit Plans have been
delivered to XIT and Sub. Except as described in Schedule 3.1(r), (i)
neither MicroTel nor any of its subsidiaries has incurred any
obligation to contribute any material amount to any multi-employer
plan, as defined in Section 3(37) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), (ii) neither MicroTel nor
any of its subsidiaries has incurred any material liability under Title
IV of ERISA arising in connection with the termination of, or complete
or partial withdrawal from, any plan covered or previously covered by
Title IV of ERISA, and (iii) each MicroTel Employee Benefit Plan is in
compliance with all applicable laws and regulations in all material
respects.
(s) Patents, Trademarks, etc. MicroTel and its subsidiaries have all
patents, trademarks, trade names, service marks, trade secrets,
copyrights and other proprietary intellectual property rights as are
material in connection with the businesses of MicroTel
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and its subsidiaries, taken as a whole with no material conflict with,
or infringement of, any patent, trademark, trade name, service xxxx,
trade secret, copyright or other proprietary intellectual property
rights. Schedule 3.1(s) contains a complete and correct listing of all
patents, trademarks, tradenames, service marks, copyrights and
applications with respect thereto and license agreements owned or filed
by any of MicroTel or its subsidiaries or in which they have an
interest and the nature of such interest.
(t) Licenses, Permits, Etc. MicroTel and its subsidiaries own or
possess in the operation of their business all franchises, licenses,
permits, consents, approvals, rights, waivers and other authorizations,
governmental or otherwise ("Authorization"), which are necessary for
them to conduct their business as now conducted except where the
failure to obtain such Authorization would not have, either
individually or in the aggregate, a material adverse effect on the
business, prospects, results of operations or condition of MicroTel,
taken as a whole. Neither MicroTel nor any subsidiary is in material
default, or has received any notice of any claim of default, with
respect to any such Authorization or any notice of any other claim or
proceeding or threatened proceeding relating to any such Authorization
or claimed lack of any necessary Authorization. Except as described in
Schedule 3.1(t), neither the execution or delivery of this Agreement
nor the consummation of the transactions contemplated hereby will
require any notice or consent under or have any material adverse effect
upon any such Authorization.
(u) Environmental Matters.
(i) MicroTel has obtained all permits, licenses and other
authorizations which are required under Environmental Laws. As used in
this Agreement, Environmental Laws shall include, without limitation,
any and all federal, state, local and foreign laws and requirements
relating to health and safety and pollution or protection of the
environment, including laws and requirements 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, treatment, storage,
disposal, transport, or handling of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes.
(ii) MicroTel is in full compliance with all terms and
conditions of the required permits, licenses and authorizations, and is
also in full compliance with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in any and all Environmental Laws or
contained in any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated or
approved thereunder by any federal, state or local court or other
governmental authority, agency or instrumentality except where the
failure to comply would not have, either individually or in the
aggregate, a material adverse effect on the business, prospects,
results of operations or condition of MicroTel, taken as a whole.
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(iii) MicroTel is not aware of, nor has MicroTel received
notice of, any past, present or future events, conditions,
circumstances, activities, practices, incidents, actions or plans which
may interfere with or prevent compliance or continued compliance with
Environmental Laws or any regulation, code, plan, order, decree,
judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder by any federal, state or local court
or other governmental authority, agency or instrumentality 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 pollutant, contaminant, chemical, or
industrial, toxic or hazardous substance or waste.
(iv) There is no civil, criminal or administrative action,
suit, demand, claim, hearing, notice or demand letter, notice of
violation, investigation, or proceeding pending or threatened against
MicroTel relating in any way to any Environmental Law or any
regulation, code, plan, order, decree, judgment, injunction, notice or
demand letter issued, entered, promulgated or approved thereunder.
(v) There are no tanks in, on or under any of MicroTel's
properties or facilities that are used or have been used for the
storage of petroleum products or any other substance, nor have any such
tanks ever been located in, on or under any such properties or
facilities. There are no asbestos-containing materials in, on or at any
of MicroTel's properties or facilities.
(v) Interim Operations of Sub. Sub was formed solely for the purpose of
engaging in the transactions contemplated hereby, has engaged in no
other business activities, has no assets or liabilities and has
conducted its operations only as contemplated hereby.
(w) Transactions and Affiliates. Except as described in Schedule
3.1(w), no director or officer of MicroTel or any subsidiary or any
member of his or her immediate family, is a party to any Contract or
other business arrangement or relationship of any kind with MicroTel or
any subsidiary or, except for the ownership of not more than 1% of the
stock of a company having a class of securities registered pursuant to
the Exchange Act, has an ownership interest in any business, corporate
or otherwise, which is a party to, or in any property which is the
subject of, business arrangements or relationships of any kind with
MicroTel or any subsidiary.
(x) Brokers. Except for X.X. Xxxxxx and Co., Inc. and Xxxx Xxxxxxx,
Esq., no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
Merger based upon arrangements made by or on behalf of XIT or MicroTel
and the fee payable to such brokers is (i) $50,000 in cash and five
year warrants to purchase 125,000 shares of MicroTel Common Stock at
$3.00 per share payable to X.X. Xxxxxx and Co. and (ii) $50,000 in cash
and five year warrants to
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purchase 25,000 shares of MicroTel Common Stock at $3.00 per share
payable to Xxxx Xxxxxxx. The number of warrants may be reallocated by
X.X. Xxxxxx and Co., Inc. and Xxxx Xxxxxxx as mutually agreed to by
such brokers, but in any event the total number of warrants to be
issued to such brokers shall not exceed 150,000. The fees of Xxxxxx and
Xxxxxxx shall be paid following the closing of the Merger and not later
than upon the completion of any equity, debt or convertible debt
financing by MicroTel.
3.2 Representations and Warranties of XIT. XIT represents and warrants
to MicroTel and Sub as follows:
(a) Organization, Standing and Power. Each of XIT and its subsidiaries
is a corporation duly organized, validly existing and in good standing
under the laws of its state or country of incorporation or
organization, has all requisite power and authority to own, lease and
operate its properties and to carry on its business as now being
conducted, and is duly qualified and in good standing to do business in
each jurisdiction in which the nature of its business or the ownership
or leasing of its properties makes such qualification necessary other
than in such jurisdictions where the failure so to qualify would not
have a material adverse effect on XIT and its subsidiaries taken as a
whole. Schedule 3.2(a) hereto lists each of the direct and indirect
subsidiaries of XIT. All issued and outstanding shares of capital stock
of each subsidiary have been duly authorized, are fully paid and
nonassessable, and, except as set forth on Schedule 3.2(a), are
lawfully owned of record and beneficially by XIT or another subsidiary
free and clear of all pledges, liens, claims, security interests and
other charges or defects in title of any nature whatsoever. Except for
the subsidiaries or as set forth in Schedule 3.2(a) and Capital Source
Partners, a California Real Estate Partnership, XIT owns no shares of
any corporation and has no interest, either of record, beneficially or
equitably, in any association, partnership, joint venture or other
legal entity.
(b) Capital Structure. The authorized capital stock of XIT consists of
10,000,000 shares of XIT Common Stock, no par value, and 1,000 shares
of XIT Preferred Stock, no par value. As of the close of business on
December 27, 1996, 4,177,941 shares of XIT Common Stock were
outstanding; no shares of XIT Common Stock were held by XIT in its
treasury, and no shares of XIT Preferred Stock were outstanding. All
outstanding shares of XIT capital stock are validly issued, fully paid
and nonassessable and not subject to preemptive rights. Except for
options and warrants described in Schedule 3.2(b) hereto, there are no
options, warrants, calls, agreements or other rights to purchase or
otherwise acquire from XIT at any time, or upon the happening of any
stated event, any shares of the capital stock of XIT or any of its
subsidiaries, whether or not presently issued or outstanding.
(c) Certificate of Incorporation, By-Laws, and Minute Books. The copies
of the Certificate of Incorporation and all amendments thereto and of
the By-Laws, as amended, of XIT and its subsidiaries which have been
delivered to XIT are true, correct and complete copies thereof. The
minute books of XIT and its subsidiaries which have been
-15-
made available for inspection contain accurate minutes of all meetings
and accurate consents in lieu of meetings of the Board of Directors
(and any committee thereof) and of the shareholders of XIT and its
subsidiaries since the respective dates of incorporation and accurately
reflect all transactions referred to in such minutes and consents in
lieu of meetings.
(d) Authority. XIT has all requisite power and authority to enter into
this Agreement and, subject to approval of this Agreement by the
shareholders of XIT, to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by the Board of Directors of XIT, and except for the
approval and adoption of this Agreement and the Merger by its
shareholders, no other corporate or shareholder proceedings on the part
of XIT are necessary to authorize the Merger and the other transactions
contemplated hereby.
(e) Conflict with Agreements; Approvals. This Agreement has been duly
executed and delivered by XIT and, subject to such approval of this
Agreement by the shareholders of XIT, constitutes a valid and binding
obligation of XIT enforceable in accordance with its terms. The
execution and delivery of this Agreement does not, and the consummation
of the transactions contemplated hereby will not, conflict with, or
result in any Violation of, or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or the loss of a
material benefit under, or the creation of a lien, pledge, security
interest or other encumbrance on assets pursuant to any provision of
the Certificate of Incorporation or By-laws of XIT or any of its
subsidiaries or, except as set forth on Schedule 3.2(e) hereto or
result in any Violation of any loan or credit agreement, note,
mortgage, indenture, lease, benefit plan or other agreement,
obligation, instrument, permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to XIT or any of its subsidiaries or their respective
properties or assets which Violation would have a material adverse
effect on XIT and its subsidiaries taken as a whole. No consent,
approval, order or authorization of, or registration, declaration or
filing with, any Governmental Entity is required by or with respect to
XIT or any of its subsidiaries in connection with the execution and
delivery of this Agreement by XIT or the consummation by XIT of the
transactions contemplated hereby, the failure to obtain which would
have a material adverse effect on XIT and its subsidiaries, taken as a
whole, except for the filing of the Certificate of Merger with the
Secretary of State of the State of New Jersey.
(f) Financial Statements. XIT has delivered to MicroTel true and
complete copies of (i) the consolidated balance sheet of XIT at
September 30, 1995 and the related consolidated statement of income,
changes in shareholders' equity, changes in financial position and
notes thereto for the year then ended, certified by KPMG Peat Marwick,
independent public accountant (the "XIT 1995 Financials"); and (ii) an
unaudited consolidated balance sheet of XIT at September 30, 1996 and
related consolidated
-16-
statement of income, changes in shareholders' equity, changes in
financial position and notes thereto for the periods ended September
30, 1996 (the "XIT 1996 Financials"), all of which have been prepared
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 XIT 1996 Financials, to normal, recurring audit
adjustments) the consolidated financial position of XIT and its
consolidated subsidiaries as at the dates thereof and the consolidated
results of their operations and cash flows for the period then ended.
(g) Books and Records. The books and records of XIT and each of its
subsidiaries accurately reflect the transactions to which XIT or the
subsidiary is a party or by which their properties are subject or
bound, and the assets and liabilities of XIT or the subsidiary, and
such books and records, together with internal accounting procedures
and controls maintained by XIT and the subsidiaries, provide reasonable
assurance that (i) transactions are executed with management's
authorization; (ii) transactions are recorded as necessary to permit
preparation of XIT's consolidated financial statements and to maintain
accountability for the assets of XIT and each subsidiary; (iii) access
to the assets of XIT and each subsidiary is permitted only in
accordance with management's authorization; (iv) the reported
accountability of the assets of XIT and each subsidiary is compared
with existing assets at reasonable intervals; and (v) the assets
recorded on the books and records of XIT and the subsidiaries
accurately reflect the assets owned by such corporations, except for
assets owned by XIT and the subsidiaries which have been written off.
(h) Compliance with Laws. XIT and its subsidiaries hold all permits,
licenses, variances, exemptions, orders and approvals of all
Governmental Entities which are material to the operation of the
businesses of XIT and its subsidiaries, taken as a whole (the "XIT
Permits"). XIT and its subsidiaries are in compliance with the terms of
the XIT Permits, except where the failure so to comply would not have a
material adverse effect on XIT and its subsidiaries taken as a whole.
The businesses of XIT and its subsidiaries are not being conducted in
violation of any law, ordinance or regulation of any Governmental
Entity, except for possible violations which individually or in the
aggregate do not, and, insofar as reasonably can be foreseen, in the
future will not, have a material adverse effect on XIT and its
subsidiaries taken as a whole. None of XIT, any subsidiary nor any of
their officers and directors has: (i) made any contributions to any
candidate for political office, or failed to disclose fully any such
contributions, in violation of law; (ii) made any payment to any state,
federal or foreign governmental officer or official, or other person
charged with similar public or quasi-public duties, except as allowed
by applicable law; (iii) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expense relating to
political activity; (iv) made any direct or indirect unlawful payment
to any foreign or domestic government official or employee or any
purchasing agent or person charged with similar duties of any entity
with which XIT does business from corporate funds; (v) made any bribe,
rebate, payoff, influence payment, kickback or other unlawful payment;
or (vi) engaged in any transaction,
-17-
maintained any bank account or used any corporate funds except for
transactions, bank accounts and funds which have been and are
accurately reflected in the normally maintained books and records of
XIT or the subsidiary; and neither XIT nor any subsidiary has
reimbursed or repaid, directly or indirectly, any officer or director
for any such illegal or improper contribution or payment. No
investigation or review by any Governmental Entity with respect to XIT
or any of its subsidiaries is pending or, to the knowledge of XIT,
threatened, nor has any Governmental Entity indicated an intention to
conduct the same, other than, in each case, those the outcome of which,
as far as reasonably can be foreseen, will not have a material adverse
effect on XIT and its subsidiaries taken as a whole.
(i) Absence of Certain Changes or Events. Except as set forth in the
XIT 1996 Financials, or except as contemplated by this Agreement, since
September 30, 1996, XIT and its subsidiaries have conducted their
respective businesses only in the ordinary and usual course, and, as of
the date of this Agreement, there has not been (i) any damage,
destruction or loss, whether covered by insurance or not, which has, or
insofar as reasonably can be foreseen in the future is reasonably
likely to have, a material adverse effect on XIT and its subsidiaries
taken as a whole; (ii) any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock or property)
with respect to any of XIT's capital stock; or (iii) any transaction,
commitment, dispute or other event or condition (financial or
otherwise) of any character (whether or not in the ordinary course of
business) individually or in the aggregate having or which, insofar as
reasonably can be foreseen, in the future is reasonably likely to have,
a material adverse effect on XIT and its subsidiaries taken as a whole.
There is no fact, development or threatened development with respect to
the markets, products, services, clients, representatives, customers,
facilities, personnel, vendors, suppliers, operations, assets or
prospects of the business of XIT or its subsidiaries which are known to
XIT which would materially adversely affect the business of XIT or its
subsidiaries considered as a whole, other than such conditions as may
affect as a whole the economy generally. XIT has used its best efforts
to keep available for MicroTel the services of the employees, agents
and sales representatives, customers and suppliers of XIT active in the
conduct of its business. XIT does not have any reason to believe that
any loss of any employee, agent or sales representative, customer,
distributor or supplier or other advantageous arrangement will result
because of the consummation of the transactions contemplated hereby.
(j) Accounts Receivable. The accounts receivable of XIT and the
subsidiaries as set forth in the XIT 1996 Financials or arising since
the date thereof are valid and genuine; arise out of bona fide sales
and deliveries of goods, performance of services and other business
transactions in the ordinary course of business; are not subject to
valid defenses, set-offs or counterclaims; and except as reserved for
in the XIT 1996 Financials are collectible within 90 days after billing
at the full recorded amounts thereof.
(k) Inventory. Except as reserved for in the XIT 1996 Financials, all
inventory, including without limitation raw materials, work-in process
and finished goods, of XIT
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and its subsidiaries reflected in the XIT 1996 Financials or acquired
since the date thereof was acquired and has been maintained in the
ordinary course of business of XIT and its subsidiaries consistent with
past practice; consists of items of a quality, quantity and condition
useable, rentable or saleable in the ordinary course of business of XIT
and its subsidiaries consistent with past practice; is valued at
reasonable amounts based on the ordinary course of business of XIT and
its subsidiaries during the past six months; and is not subject to any
material write-down or write-off.
(l) Liabilities and Obligations. Except as described in Schedule
3.2(l), neither XIT nor any subsidiary has any liabilities or
obligations (direct or indirect, contingent or absolute, matured or
unmatured) of any nature, whether arising out of contract, tort,
statute or otherwise, including federal or state income tax
liabilities, except (i) liabilities and obligations in the amounts and
categories reflected, reserved against or given effect to in the XIT
1996 Financials; (ii) liabilities and obligations incurred in the
ordinary course of business between September 30, 1996 and the date
hereof which are consistent with past practice; or (iii) liabilities
and obligations that would not have, either individually or in the
aggregate, a material adverse effect on the business, prospects,
results of operations or condition of XIT, taken as a whole.
(m) Litigation. There is no suit, action or proceeding pending, or, to
the knowledge of XIT, threatened against or affecting XIT or any
subsidiary of XIT which is reasonably likely to have a material adverse
effect on XIT and its subsidiaries taken as a whole, nor is there any
judgment, decree, injunction, rule or order of any Governmental Entity
or arbitrator outstanding against XIT or any subsidiary of XIT having,
or which, insofar as reasonably can be foreseen, in the future could
have, any such effect.
(n) Taxes. Except as described in Schedule 3.2(n), (i) all Tax Returns
have been filed with the appropriate governmental agencies in all
jurisdictions in which such returns, reports and statements are
required to be filed, and all such returns, reports and statements
properly reflect the taxes of XIT and its subsidiaries for the periods,
properties or events covered thereby; (ii) all Taxes have been properly
accrued or paid; (iii) the accruals for Taxes contained in the XIT 1996
Financials are adequate to cover the tax liabilities of XIT and its
subsidiaries as of September 30, 1996, and nothing has occurred
subsequent to that date to make any of such accruals inadequate; (iv)
amounts reflected as carryforwards of credits against United States
federal income tax and of net operating losses on the XIT 1996
Financials or on the books of XIT and on the books of any subsidiary
are accurate in amount, subject to subsequent limitations relating to
the Merger, if any; (v) neither XIT nor any subsidiary has knowledge of
any basis for any additional assessment of Taxes; (vi) XIT and each of
its subsidiaries have made all deposits required by law with respect to
employees' withholding taxes; (vii) neither XIT nor any subsidiary has
received any notice of assessment or proposed assessment by the
Internal Revenue Service or any other taxing authority in connection
with any Tax Returns and there are no pending tax examinations of or
tax claims asserted against XIT or any subsidiary.
-19-
Neither XIT nor any subsidiary has waived any law or regulation fixing,
or consented to the extension of, any period of time for assessment of
any Taxes.
(o) Assets. Except as described in Schedule 3.2(o), XIT and its
subsidiaries have good and marketable title to all their real and
personal properties and assets, including without limitation those
assets and properties reflected in the XIT 1996 Financials in the
amounts and categories reflected therein, free and clear of all
mortgages, liens, pledges, charges or encumbrances or other third party
interests of any nature whatsoever, except (i) the lien of current
taxes not yet due and payable, (ii) properties, interests, and assets
disposed of by XIT or any subsidiary since September 30, 1996 solely in
the ordinary course of business consistent with past practice, (iii)
such secured indebtedness as is disclosed in the XIT 1996 Financials
covering the properties referred to therein, and (iv) such
imperfections of title, easements and encumbrances, if any, as are not
substantial in character, amount or extent and do not materially
detract from the value, or interfere with the present or proposed use,
of the properties subject thereto. All buildings, structures,
facilities, equipment and other items of tangible personal property
reflected on the XIT 1996 Financials or acquired since the date thereof
are in good operating condition and repair, subject to normal wear and
maintenance, are useable in the regular and ordinary course of business
of XIT and its subsidiaries and conform to all applicable laws,
ordinances, codes, rules and regulations and Authorizations
(hereinafter defined) relating to their construction, use and
operation. The method of amortization or depreciation used by XIT for
financial reporting purposes is sufficient to write-off entirely each
building, structure, facility and item of equipment or other tangible
personal property during its useful life. The location of all real
property owned by XIT or its subsidiaries is disclosed in Schedule
3.2(o).
(p) Contracts. All Contracts, excluding purchase or sales orders placed
in the ordinary course of business and other Contracts involving
payments of less than $50,000 over the term thereof, to which XIT or
any subsidiary is a party or may be bound and which cannot be
terminated by XIT without penalty within 30 days after written notice
are listed on Schedule 3.2(p). Except as described in Schedule 3.2(p),
all Contracts are valid and in full force and effect on the date
hereof, and neither XIT nor any subsidiary has violated any provision
of, or committed or failed to perform any act which with notice, lapse
of time or both would constitute a default under the provisions of, any
Contract, the termination or violation of which might have a materially
adverse effect upon the business, assets, liabilities, financial
condition, results of operations or prospects of XIT or any subsidiary.
True and complete copies of all Contracts, together with all amendments
thereto, disclosed in Schedule 3.2(p) have been delivered to MicroTel
or made available for inspection. Schedule 3.2(p) identifies all
Contracts which require the consent or approval of third parties to the
execution and delivery of this Agreement or to the consummation and
performance of the transactions contemplated hereby.
(q) Labor Matters. Neither XIT nor any subsidiary is a party to or
bound by any collective bargaining agreements with respect to any
employees of XIT or any subsidiary.
-20-
Since January 1, 1990 there has not been, nor to the knowledge of XIT
was there or is there threatened, any strike, slowdown, picketing or
work stoppage by any union or other group of employees against XIT or
any subsidiary or any of their premises, or any other labor trouble or
other occurrence, event or condition of a similar character adversely
affecting, or which may adversely affect, the business, results of
operations or prospects of XIT or any subsidiary.
(r) Benefit Plans. Schedule 3.2(r) hereto lists all employee benefit
plans, contracts, agreements or arrangements sponsored, maintained or
contributed to by XIT or any of its United States subsidiaries
(collectively, the "XIT Employee Benefit Plans") including without
limitation all employment, pension, retirement, deferred compensation,
incentive, bonus, profit-sharing, stock purchase, stock option,
performance share, stock appreciation right, phantom stock, life
insurance, death or survivor's benefit, health insurance, sickness,
disability, medical, surgical, hospital, severance, layoff or vacation
plans, contracts, agreements or arrangements. Accurate summaries of the
material benefits provided under all XIT Employee Benefit Plans have
been delivered to MicroTel and Sub. Except as described in 3.2(r), (i)
neither XIT nor any of its subsidiaries has incurred any obligation to
contribute any material amount to any multi-employer plan, as defined
in Section 3(37) of ERISA, (ii) neither XIT nor any of its subsidiaries
has incurred any material liability under Title IV of ERISA arising in
connection with the termination of, or complete or partial withdrawal
from, any plan covered or previously covered by Title IV of ERISA, and
(iii) each XIT Employee Benefit Plan is in compliance with all
applicable laws and regulations in all material respects.
(s) Patents, Trademarks, etc. XIT and its subsidiaries have all
patents, trademarks, trade names, service marks, trade secrets,
copyrights and other proprietary intellectual property rights as are
material in connection with the businesses of XIT and its subsidiaries,
taken as a whole with no material conflict with, or infringement of,
any patent, trademark, trade name, service xxxx, trade secret,
copyright or other proprietary intellectual property rights. Schedule
3.2(s) contains a complete and correct listing of all patents,
trademarks, tradenames, service marks, copyrights and applications with
respect thereto and license agreements owned or filed by any of the XIT
or its subsidiaries or in which they have an interest and the nature of
such interest.
(t) Licenses, Permits, etc. XIT and its subsidiaries own or possess in
the operation of their business all franchises, licenses, permits,
consents, approvals, rights, waivers and other authorizations,
governmental or otherwise ("Authorization"), which are necessary for
them to conduct their business as now conducted except where the
failure to obtain such Authorization would not have, either
individually or in the aggregate, a material adverse effect on the
business, prospects, results of operations or condition of XIT, taken
as a whole. Neither XIT nor any subsidiary is in material default, or
has received any notice of any claim of default, with respect to any
such Authorization or any notice of any other claim or proceeding or
threatened proceeding relating to any such Authorization or claimed
lack of any necessary Authorization. Neither the execution or delivery
of this
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Agreement nor the consummation of the transactions contemplated hereby
will require any notice or consent under or have any material adverse
effect upon any such Authorization.
(u) Environmental Matters.
(i) XIT has obtained all permits, licenses and other
authorizations which are required under Environmental Laws.
(ii) XIT is in full compliance with all terms and conditions
of the required permits, licenses and authorizations, and is also in
full compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and
timetables contained in any and all Environmental Laws or contained in
any regulation, code, plan, order, decree, judgment, injunction, notice
or demand letter issued, entered, promulgated or approved thereunder by
any federal, state or local court or other governmental authority,
agency or instrumentality except where the failure to comply would not
have, either individually or in the aggregate, a material adverse
effect on the business, prospects, results of operations or condition
of XIT, taken as a whole.
(iii) XIT is not aware of, nor has XIT received notice of, any
past, present or future events, conditions, circumstances, activities,
practices, incidents, actions or plans which may interfere with or
prevent compliance or continued compliance with Environmental Laws or
any regulation, code, plan, order, decree, judgment, injunction, notice
or demand letter issued, entered, promulgated or approved thereunder by
any federal, state or local court or other governmental authority,
agency or instrumentality 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 pollutant,
contaminant, chemical, or industrial, toxic or hazardous substance or
waste.
(iv) There is no civil, criminal or administrative action,
suit, demand, claim, hearing, notice or demand letter, notice of
violation, investigation, or proceeding pending or threatened against
XIT relating in any way to any Environmental Law or any regulation,
code, plan, order, decree, judgment, injunction, notice or demand
letter issued, entered, promulgated or approved thereunder.
(v) Except as disclosed on Schedule 3.2(u), there are no tanks
in, on or under any of XIT's properties or facilities that are used or
have been used for the storage of petroleum products or any other
substance, nor have any other tanks ever been located in, on or under
any such properties or facilities. There are no asbestos-containing
materials in, on or at any of XIT properties or facilities.
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(v) Vote Required. The affirmative vote of a majority of the
outstanding shares of XIT Common Stock is the only vote of the holders
of any class or series of XIT capital stock necessary to approve this
Agreement and the transactions contemplated hereby.
(w) Transactions and Affiliates. Except as described in Schedule
3.2(w), no director or officer of XIT or any subsidiary or any member
of his or her immediate family, is a party to any Contract or other
business arrangement or relationship of any kind with XIT or any
subsidiary or, except for the ownership of not more than 1% of the
stock of a company having a class of securities registered pursuant to
the Exchange Act, has an ownership interest in any business, corporate
or otherwise, which is a party to, or in any property which is the
subject of, business arrangements or relationships of any kind with XIT
or any subsidiary.
(x) Brokers. Except for X.X. Xxxxxx and Co., Inc. and Xxxx Xxxxxxx,
Esq., no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
Merger based upon arrangements made by or on behalf of XIT or MicroTel
and the fee payable to such brokers is (i) $50,000 in cash and five
year warrants to purchase 125,000 shares of MicroTel Common Stock at
$3.00 per share payable to X.X. Xxxxxx and Co. and (ii) $50,000 in cash
and five year warrants to purchase 25,000 shares of MicroTel Common
Stock at $3.00 per share payable to Xxxx Xxxxxxx. The number of
warrants may be reallocated by X.X. Xxxxxx and Co., Inc. and Xxxx
Xxxxxxx as mutually agreed to by such brokers, but in any event the
total number of warrants to be issued to such brokers shall not exceed
150,000.The fees of Xxxxxx and Xxxxxxx shall be paid following the
closing of the Merger and not later than upon the completion of any
equity, debt or convertible debt financing by MicroTel.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 Covenants of XIT and MicroTel. During the period from the date of
this Agreement and continuing until the Effective Time, XIT and MicroTel each
agree as to itself and its subsidiaries that (except as expressly contemplated
or permitted by this Agreement, or to the extent that the other party shall
otherwise consent in writing):
(a) Ordinary Course. Each party and their respective subsidiaries shall
carry on their respective businesses in the usual, regular and ordinary
course in substantially the same manner as heretofore conducted and use
all reasonable efforts to preserve intact their present business
organizations, keep available the services of their present officers
and employees and preserve their relationships with customers,
suppliers and others having business dealings with them to the end that
their goodwill and ongoing businesses shall not be impaired in any
material respect at the Effective Time.
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(b) Dividends; Changes in Stock. No party shall, nor shall any party
permit any of its subsidiaries to, nor shall any party propose to, (i)
declare or pay any dividends on or make other distributions in respect
of any of its capital stock, (ii) split, combine or reclassify any of
its capital stock or issue or authorize or propose the issuance of any
other securities in respect of, in lieu of or in substitution for
shares of its capital stock or (iii) repurchase or otherwise acquire,
or permit any subsidiary to purchase or otherwise acquire, any shares
of its capital stock.
(c) Issuance of Securities. No party shall, nor shall any party permit
any of its subsidiaries to, issue, deliver or sell, or authorize or
propose the issuance, delivery or sale of, any shares of its capital
stock of any class, any voting debt or any securities convertible into,
or any rights, warrants or options to acquire, any such shares, voting
debt or convertible securities, other than (i) the issuance of XIT
Common Stock or MicroTel Common Stock, as the case may be, upon the
exercise of stock options or warrants as disclosed in this Agreement in
each case outstanding on the date of this Agreement in each case in
accordance with their present terms; (ii) the issuance of shares of XIT
Common Stock to directors of XIT in satisfaction of unpaid and accrued
fees for attendance at meetings of the Board of Directors of XIT and in
satisfaction of loans in the aggregate not to exceed $250,000 (with
such shares valued at a price per share not less than the average of
the closing bid prices of MicroTel Common Stock on the Nasdaq SmallCap
Market during the five trading days preceding such issuance), (iii) the
issuance of XIT Common Stock in connection with the acquisition of
Microwave Printed Circuits, Inc. not to exceed $250,000 in value; (iv)
the issuance of up to 2% of the outstanding shares of XIT Common Stock
or MicroTel Common Stock, as the case may be; or (v) the issuance of
such number of shares of XIT Common Stock or MicroTel Common Stock, as
the case may be, as approved by the other party.
(d) Governing Documents. No party shall amend or propose to amend its
Certificate of Incorporation or By-laws.
(e) No Solicitations. No party shall, nor shall any party permit any of
its subsidiaries to, nor shall it authorize or permit any of its
officers, directors or employees or any investment banker, financial
advisor, attorney, accountant or other representative retained by it or
any of its subsidiaries to, solicit or encourage (including by way of
furnishing information), or take any other action to facilitate, any
inquiries or the making of any proposal which constitutes, or may
reasonably be expected to lead to, any takeover proposal, or agree to
or endorse any takeover proposal. Each party shall promptly advise the
other orally and in writing of any such inquiries or proposals. As used
in this Agreement, "takeover proposal" shall mean any tender or
exchange offer, proposal for a merger, consolidation or other business
combination involving a party hereto or any subsidiary of such party or
any proposal or offer to acquire in any manner a substantial equity
interest in, or a substantial portion of the assets of, such party or
any of its subsidiaries other than the transactions contemplated by
this Agreement.
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(f) No Acquisitions. No party shall, nor shall any party permit any of
its subsidiaries to, acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial equity interest in
or a substantial portion of the assets of, or by any other manner, any
business or any corporation, partnership, association or other business
organization or division thereof or otherwise acquire or agree to
acquire any assets in each case which are material, individually or in
the aggregate, to such party and its subsidiaries taken as a whole.
Notwithstanding the foregoing, XIT may enter into an Asset or Stock
Purchase Agreement with Microwave Printed Circuits, Inc. for the
purpose of acquiring such entity.
(g) No Dispositions. Other than in the ordinary course of business
consistent with prior practice, no party shall, nor shall any party
permit any of its subsidiaries to, sell, lease, encumber or otherwise
dispose of, or agree to sell, lease, encumber or otherwise dispose of,
any of its assets, which are material, individually or in the
aggregate, to such party and its subsidiaries taken as a whole.
(h) Indebtedness. No party shall, nor shall any party permit any of its
subsidiaries to, incur any indebtedness for borrowed money or guarantee
any such indebtedness or issue or sell any debt securities or warrants
or rights to acquire any debt securities of such party or any of its
subsidiaries or guarantee any debt securities of others other than in
each case in the ordinary course of business consistent with prior
practice or as mutually agreed to by the parties hereto.
(i) Compensation. Except as set forth in Section 5.8(c), no party shall
grant any increase in the salary or other compensation of its officers
or other employees or grant any bonus to any officer or other employee
or enter into any employment agreement or make any loan to or enter
into any material transaction of any other nature with any officer or
other employee of such party other than salary increases or bonuses
consistent with the normal compensation policies of such party.
(j) No New Severance. No party shall take any action to institute any
new severance or termination pay practices with respect to any
directors or officers or other employees of such party or to increase
the benefits payable under its severance or termination pay practices.
(k) Benefit Plans. No party shall adopt or amend, in any respect,
except as may be required by applicable law or regulation, any bonus,
profit sharing, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment or other employee benefit
plan, agreement, trust, fund, plan or arrangement for the benefit or
welfare of any directors or officers or other employees except as
otherwise contemplated by this Agreement.
4.2 Other Actions. No party shall, nor shall any party permit any of
its subsidiaries to, take any action that would or is reasonably likely to
result in any of its representations and
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warranties set forth in this Agreement being untrue as of the date made (to the
extent so limited), or in any of the conditions to the Merger set forth in
Article VI not being satisfied.
4.3 Advice of Changes; Filings. Each party shall confer on a regular
and frequent basis with the other, report on operational matters and promptly
advise the other orally and in writing of any change or event having, or which,
insofar as can reasonably be foreseen, could have, a material adverse effect on
such party and its subsidiaries taken as a whole. Each party shall promptly
provide the other (or its counsel) copies of all filings made by such party with
any State or Federal Governmental Entity in connection with this Agreement and
the transactions contemplated hereby and thereby.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Preparation and Delivery of Private Placement Memorandum and
Information Statement; Shareholder Approval.
(a) MicroTel and XIT shall promptly prepare a joint Private Placement
Memorandum and Information Statement (the "PPM") and deliver such PPM
to the XIT shareholders along with such private placement
questionnaires, investor representation agreements and other documents
necessary to effectuate the issuance of shares of MicroTel Common Stock
in the Merger in compliance with Regulation D of the Securities Act
(the "Private Placement Documents").
(b) MicroTel shall use its best efforts to take any action (other than
qualifying to do business in any jurisdiction in which it is now not so
qualified) required to be taken under any applicable state securities
laws in connection with the issuance of MicroTel Common Stock in the
Merger and XIT shall furnish all information concerning XIT and the
holders of XIT Common Stock as may be reasonably requested in
connection with any such action.
(c) XIT shall, as soon as practical after the date hereof and the
delivery of the Private Placement Documents to the XIT shareholders,
seek the written consent of the shareholders of XIT in accordance with
the NJBCA and XIT's Bylaws in lieu of a meeting. XIT shall use its best
efforts to obtain the consents of shareholders necessary to approve
this Agreement.
(d) When seeking shareholder approval of this Agreement, XIT shall
provide its shareholders with the PPM and the other Private Placement
Documents which shall contain all information reasonably necessary for
such shareholders to make an informed decision regarding approval of
this Agreement.
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5.2 Restricted MicroTel Shares; Registration Rights; Lock-Up Agreements
(a) The shares of MicroTel Common Stock to be issued in the Merger will
not be registered under the Securities Act, and accordingly, will
constitute "restricted securities" for purposes of the Securities Act
and, the XIT shareholders will not be able to transfer such shares
except upon compliance with the registration requirements of the
Securities Act and applicable state securities laws or an exemption
therefrom. The certificates evidencing the shares of MicroTel Common
Stock to be issued in the Merger shall contain a legend to the
foregoing effect.
(b) MicroTel shall within six months of the Effective Date file a
registration statement with the SEC to permit the sale of shares of
MicroTel Common Stock by the XIT shareholders from time to time and the
shares of MicroTel Common Stock underlying the XIT Warrants to be
assumed by MicroTel pursuant to Section 5.7 of this Agreement. Such
registration statement shall remain in effect for two years after the
Effective Date. The XIT shareholders and warrantholders shall also have
"piggyback" registration rights.
(c) Notwithstanding the registration rights granted pursuant to this
Agreement, the MicroTel shares issued in the Merger to the XIT
shareholders and the MicroTel Shares to be issued pursuant to the XIT
Warrants and XIT Options assumed by MicroTel pursuant to this Agreement
shall be subject to "lock-up" agreements preventing the transfer of
such shares until the termination of such lock-up agreements. The
lock-up agreements will terminate with respect to 25% of such shares on
each of the following dates: 6 months after the Closing Date, 12 months
after the Closing Date, 15 months after the Closing Date and 18 months
after the Closing Date.
5.3 Access to Information. Upon reasonable notice, MicroTel and XIT
shall each (and shall cause each of their respective subsidiaries to) afford to
the officers, employees, accountants, counsel and other representatives of the
other, access, during normal business hours during the period prior to the
Effective Time, to all its properties, books, contracts, commitments and records
and, during such period, each of MicroTel and XIT shall (and shall cause each of
their respective subsidiaries to) furnish promptly to the other (a) a copy of
each report, schedule, registration statement and other document filed or
received by it during such period pursuant to the requirements of Federal or
state securities laws and (b) all other information concerning its business,
properties and personnel as such other party may reasonably request. Unless
otherwise required by law, the parties will hold any such information which is
nonpublic in confidence until such time as such information otherwise becomes
publicly available through no wrongful act of either party, and in the event of
termination of this Agreement for any reason each party shall promptly return
all nonpublic documents obtained from any other party, and any copies made of
such documents, to such other party.
5.4 Legal Conditions to Merger. Each of MicroTel, Sub and XIT will take
all reasonable actions necessary to comply promptly with all legal requirements
which may be imposed on itself with respect to the Merger and will promptly
cooperate with and furnish
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information to each other in connection with any such requirements imposed upon
any of them or any of their subsidiaries in connection with the Merger. Each of
MicroTel, Sub and XIT will, and will cause its subsidiaries to, take all
reasonable actions necessary to obtain (and will cooperate with each other in
obtaining) any consent, authorization, order or approval of, or any exemption
by, any Governmental Entity or other public or private third party, required to
be obtained or made by MicroTel, XIT or any of their subsidiaries in connection
with the Merger or the taking of any action contemplated thereby or by this
Agreement.
5.5 Employee Benefit Plans. MicroTel and XIT agree that the XIT Benefit
Plans and its subsidiaries in effect at the date of this Agreement shall, to the
extent practicable, remain in effect until otherwise determined after the
Effective Time. XIT and MicroTel agree that where consolidation of XIT Benefit
Plans into MicroTel Benefit Plans is required by regulation or is otherwise
deemed by XIT and MicroTel to be in the best interests of XIT and MicroTel, that
the consolidated Plans will be conformed to the extent practicable such that the
benefits accruing to XIT employees will be no less favorable to XIT employees as
a result of such consolidation.
5.6 Stock Options.
(a) At the Effective Time, each outstanding option to purchase shares
of XIT Common Stock (a "XIT Stock Option") issued pursuant to any stock
option plan of XIT (collectively, the "XIT Plans"), whether vested or
unvested, shall be assumed by MicroTel. Each XIT Stock Option shall be
deemed to constitute an option to acquire, on the same terms and
conditions as were applicable under such XIT Stock Option, the same
number of shares of MicroTel Common Stock as the holder of such XIT
Stock Option would have been entitled to receive pursuant to the Merger
had such holder exercised such option in full immediately prior to the
Effective Time.
(b) As soon as practicable after the Effective Time, MicroTel shall
deliver to the holders of XIT Stock Options appropriate notices setting
forth such holders' rights pursuant to the respective XIT Plans and the
agreements evidencing the grants of such options.
(c) MicroTel shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of MicroTel Common Stock for
delivery upon exercise of the XIT Stock Options assumed in accordance
with this Section 5.6. As soon as practicable after the Effective Time,
MicroTel shall file a registration statement on Form S-8 (or any
successor or other appropriate forms), or another appropriate form with
respect to the shares of MicroTel Common Stock subject to such options
and shall use its best efforts to maintain the effectiveness of such
registration statement or registration statements (and maintain the
current status of the prospectus or prospectuses contained therein) for
so long as such options remain outstanding.
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5.7 Warrants.
(a) At the Effective Time, each outstanding warrant to purchase shares
of XIT Common Stock ("XIT Warrants") whether vested or unvested, shall
be assumed by MicroTel. Each XIT Warrant shall be deemed to constitute
a warrant to acquire, on the same terms and conditions as were
applicable under the XIT Warrant Agreements, the same number of shares
of MicroTel Common Stock as the holder of such XIT Warrant would have
been entitled to receive pursuant to the Merger had such holder
exercised such warrant in full immediately prior to the Effective Time.
(b) As soon as practicable after the Effective Time, MicroTel shall
deliver to the holders of XIT Warrants appropriate notices setting
forth such holders' rights pursuant to the respective agreements
evidencing the grants of such Warrants.
(c) MicroTel shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of MicroTel Common Stock for
delivery upon exercise of the XIT Warrants assumed in accordance with
this Section 5.7.
5.8 MicroTel Board of Directors and Officers.
(a) At the Effective Time of the Merger all of the officers and
directors of MicroTel, other than Xxxx Xxxxx, shall resign as officers
and directors and the current officers and directors of XIT shall be
appointed as officers and directors of MicroTel in addition to Xxxx
Xxxxx who shall be appointed as a director of MicroTel for a term of
not less than two years after the Effective Date. Xxxx Xxxxx shall also
be appointed as a member of the audit committee during such two year
period.
(b) At least 10 days prior to the Closing Date, MicroTel shall file
with the SEC and transmit to all holders of record of MicroTel Common
Stock the information required by Section 14(f) of the Exchange Act
regarding the election of a majority of directors of MicroTel without a
meeting of security holders.
(c) At the Effective Time of the Merger, MicroTel shall have entered
into employment agreements with Messrs. Xxxxx Xxxxxxx and Xxxxx Xxxxxx
on terms mutually agreeable to both Messrs. Xxxxxxx and Mourad as well
as MicroTel and XIT and the employment contract between Xxxxxxx Xxxxxxx
and MicroTel shall remain in full force and effect as of the Closing
Date.
5.9 Expenses. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby and thereby shall be paid by
the party incurring such expense.
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ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation To Effect the Merger. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction prior to the Closing Date of the following conditions:
(a) Shareholder Approval. This Agreement shall have been approved and
adopted by the affirmative vote of a majority of the outstanding shares
of XIT Common Stock.
(b) Other Approvals. All authorizations, consents, orders or approvals
of, or declarations or filings with, or expirations of waiting periods
imposed by, any Governmental Entity the failure to obtain which would
have a material adverse effect on MicroTel or the Surviving
Corporation, taken as a whole, shall have been filed, occurred or been
obtained including the filings required by Section 5.8(b) of this
Agreement. MicroTel shall have received all state securities or "Blue
Sky" permits and other authorizations necessary to issue the MicroTel
Common Stock in exchange for the XIT Common Stock and to consummate the
Merger.
(c) Regulation D. The number of shareholders of XIT exchanging XIT
shares for shares of MicroTel Common Stock in the Merger who do not
qualify as "accredited investors" as defined in Rule 501 of Regulation
D of the Securities Act total no more than 35 shareholders.
(d) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court
of competent jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the consummation of the Merger shall be in
effect.
(e) Business Review. MicroTel shall have completed to its reasonable
satisfaction a review of the business, operations, finances, assets and
liabilities of XIT and its subsidiaries and shall not have determined
that any of the representations or warranties of XIT contained herein
are, as of the date hereof or the Closing Date, inaccurate in any
material respect or that XIT is otherwise in violation of any of the
provisions of this Agreement.
(f) Dissenting Shares. Holders of no more than five percent (5%) of the
outstanding XIT Common Stock shall have elected and perfected appraisal
rights under the NJBCA, the holders of which have not, as of the
Effective Date, effectively withdrawn or become ineligible for
dissenters' rights.
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6.2 Conditions of Obligations of MicroTel and Sub. The obligations of
MicroTel and Sub to effect the Merger are subject to the satisfaction of the
following conditions unless waived by MicroTel and Sub:
(a) Representations and Warranties. The representations and warranties
of XIT set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and (except to the
extent such representations and warranties speak as of an earlier date)
as of the Closing Date as though made on and as of the Closing Date,
except as otherwise contemplated by this Agreement, and MicroTel shall
have received a certificate signed on behalf of XIT by the Chief
Executive Officer and by the Chief Financial Officer of XIT to such
effect.
(b) Performance of Obligations of XIT. XIT shall have performed in all
material respects all obligations required to be performed by it under
this Agreement at or prior the Closing Date, and MicroTel shall have
received a certificate signed on behalf of XIT by the Chief Executive
Officer and by the Chief Financial Officer of XIT to such effect.
(c) Opinion of Counsel for XIT. MicroTel shall have received an opinion
dated the Closing Date of Xxxxxxxxx, Xxxxxx & Xxxxxx, counsel for XIT,
in form and substance reasonably satisfactory to MicroTel and its
counsel relating to such matters as are customarily delivered in
connection with a merger transaction.
(d) Tax Opinion. MicroTel shall have received an opinion of Xxxxxxx
Xxxxxxx Xxxxxxxx & Xxxxxxx LLP, counsel to MicroTel, to the effect that
the Merger will be treated for Federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code.
(e) Consents. XIT shall have obtained the consent or approval of each
person whose consent or approval shall be required in connection with
the transactions contemplated hereby under any loan or credit
agreement, note, mortgage, indenture, lease or other agreement or
instrument, except those for which failure to obtain such consents and
approvals would not, in the reasonable opinion of MicroTel,
individually or in the aggregate, have a material adverse effect on XIT
and its subsidiaries taken as a whole upon the consummation of the
transactions contemplated hereby.
6.3 Conditions of Obligations of XIT. The obligation of XIT to effect
the Merger is subject to the satisfaction of the following conditions unless
waived by XIT:
(a) Representations and Warranties. The representations and
warranties of MicroTel and Sub set forth in this Agreement shall
be true and correct in all material respects as of the date of
this Agreement and (except to the extent such representations
speak as of an earlier date) as of the Closing Date as though
made on and as of the Closing Date, except as otherwise
contemplated by this Agreement, and XIT shall have received a
certificate signed on behalf
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of MicroTel by the Chief Executive Officer and by the Chief
Financial Officer of MicroTel to such effect.
(b) Performance of Obligations of MicroTel and Sub. MicroTel and Sub
shall have performed in all material respects all obligations required
to be performed by them under this Agreement at or prior to the Closing
Date, and XIT shall have received a certificate signed on behalf of
MicroTel by the Chief Executive Officer and by the Chief Financial
Officer of MicroTel to such effect.
(c) Opinion of Counsel for MicroTel. XIT shall have received an opinion
dated the Closing Date of Xxxxxxx Xxxxxxx Xxxxxxxx & Xxxxxxx LLP,
counsel for MicroTel, in form and substance reasonably satisfactory to
XIT and its counsel relating to such matters as are customarily
delivered in connection with a merger transaction.
(d) Tax Opinion. XIT shall have received an opinion of Xxxxxxxxx,
Xxxxxx & Xxxxxx, counsel to XIT, to the effect that the Merger will be
treated for Federal income tax purposes as a reorganization with the
meaning of Section 368(a) of the Code.
(e) Consents. MicroTel shall have obtained the consent or approval of
each person whose consent or approval shall be required in connection
with the transactions contemplated hereby under any loan or credit
agreement, note, mortgage, indenture, lease or other agreement or
instrument, except those for which failure to obtain such consents and
approvals would not, in the reasonable opinion of XIT, individually or
in the aggregate, have a material adverse effect on MicroTel and its
subsidiaries, taken as a whole, or upon the consummation of the
transactions contemplated hereby.
(f) Business Review. XIT shall have completed to its reasonable
satisfaction a review of the business, operations, finances, assets and
liabilities of MicroTel and its subsidiaries and shall not have
determined that any of the representations or warranties of MicroTel
contained herein are, as of the date hereof or the Closing Date,
inaccurate in any material respect or that MicroTel is otherwise in
violation of any of the provisions of this Agreement.
(g) Resignation of Officers and Directors. Each officer and director of
MicroTel, other than Xxxx Xxxxx, shall have delivered his resignation
as an officer and/or director of MicroTel.
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ARTICLE VI
TERMINATION AND AMENDMENT
7.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of the matters presented in
connection with the Merger by the shareholders of XIT:
(a) by mutual consent of MicroTel and XIT;
(b) by either MicroTel or XIT if there has been a material breach of
any representation, warranty, covenant or agreement on the part of the
other set forth in this Agreement which breach has not been cured
within 5 business days following receipt by the breaching party of
notice of such breach, or if any permanent injunction or other order of
a court or other competent authority preventing the consummation of the
Merger shall have become final and non-appealable;
(c) by either MicroTel or XIT if the Merger shall not have been
consummated before March 31, 1997; or
(d) by either party if any required approval of the shareholders of XIT
shall not have been obtained of.
7.2 Effect of Termination. In the event of termination of this
Agreement by either XIT or MicroTel as provided in Section 7.1, this Agreement
shall forthwith become void and there shall be no liability or obligation on the
part of MicroTel, Sub or XIT or their respective officers or directors. All
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby and thereby shall be paid by the party
incurring such expenses.
7.3 Amendment. This Agreement may be amended by the parties hereto, by
action taken or authorized by their respective Boards of Directors, at any time
before or after approval of the matters presented in connection with the Merger
by the shareholders of XIT, but, after any such approval, no amendment shall be
made which by law requires further approval by such shareholders without such
further approval. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
7.4 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Board of
Directors, may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party.
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ARTICLE VIII
GENERAL PROVISIONS
8.1 Nonsurvival of Representations, Warranties and Agreements. None of
the representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for the agreements contained in Sections 5.2, 5.3, 5.5, 5.6, 5.7,
5.8, 5.9, 7.2 and 8.1.
8.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (which is
confirmed) or mailed by registered or certified mail (return receipt requested)
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
(a) If to MicroTel or Sub, to
MicroTel International, Inc.
0000 Xxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxx, XX 00000
Attention: Xx. Xxxx Xxxxx, Chairman
Facsimile No.: 000-000-0000
with a copy to
Xxxxxxx Xxxxxxx Xxxxxxxx & Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Facsimile No.: 000-000-0000
and
(b) if to XIT, to
XIT Corporation
0000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxx,
Chairman, President and Chief Executive Officer
Facsimile No.: 000-000-0000
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with a copy to
Xxxxxxxxx, Xxxxxx & Xxxxxx
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxxx, Esq.
Facsimile No.: 000-000-0000
8.3 Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include", "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation". The phrase "made available" in this Agreement shall mean that the
information referred to has been made available if requested by the party to
whom such information is to be made available.
8.4 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
8.5 Entire Agreement; No Third Party Beneficiaries; Rights of
Ownership. This Agreement (including the documents and the instruments referred
to herein) (a) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof, (b) except as provided in Section 5.2, 5.6
and 5.7, is not intended to confer upon any person other than the parties hereto
any rights or remedies hereunder.
8.6 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware.
8.7 No Remedy in Certain Circumstances. Each party agrees that, should
any court or other competent authority hold any provision of this Agreement or
part hereof or thereof to be null, void or unenforceable, or order any party to
take any action inconsistent herewith or not to take any action required herein,
the other party shall not be entitled to specific performance of such provision
or part hereof or thereof or to any other remedy, including but not limited to
money damages, for breach hereof or thereof or of any other provision of this
Agreement or part hereof or thereof as a result of such holding or order.
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8.8 Publicity. Except as otherwise required by law or the rules of the
SEC, so long as this Agreement is in effect, neither MicroTel nor XIT shall, or
shall permit any of its subsidiaries to, issue or cause the publication of any
press release or other public announcement with respect to the transactions
contemplated by this Agreement without the written consent of the other party,
which consent shall not be unreasonably withheld.
8.9 Assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties hereto (whether
by operation of law or otherwise) without the prior written consent of the other
parties, except that Sub may assign, in its sole discretion, any or all of its
rights, interests and obligations hereunder to MicroTel or to any direct or
indirect wholly owned subsidiary of MicroTel. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns.
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IN WITNESS WHEREOF, MicroTel, Sub and XIT have caused this Agreement to
be signed by their respective officers thereunto duly authorized, as of the date
set forth above.
Attest: MICROTEL INTERNATIONAL, INC.
/s/XXXXX XXXXXXX By: /s/XXXX XXXXX
------------------------------- ---------------------------
Name: Xxxxx Xxxxxxx Name: Xxxx Xxxxx
Title: Secretary Title: Chairman
Attest: XIT ACQUISITION CORP.
/s/XXXXX XXXXXXX By: /s/XXXX XXXXX
------------------------------- ---------------------------
Name: Xxxxx Xxxxxxx Name: Xxxx Xxxxx
Title: Secretary Title: Chairman
Attest: XIT CORPORATION
/s/XXXXXX X. XXXXXXXXX By: /s/XXXXXXX X. XXXXX
------------------------------- ---------------------------
Name: Xxxxxx X. Xxxxxxxxx Xxxxxxx X. Xxxxx
Title: Assistant Secretary Chairman, President and
Chief Executive Officer
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