EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, effective September 1, 2000, by and among
MICROTEL INTERNATIONAL, INC., Delaware corporation ("MicroTel"), CXR TELCOM
CORPORATION, a Delaware corporation ("CXR"), a wholly-owned subsidiary of
MicroTel; and T-COM, LLC ("T-Com"), a Delaware limited liability company,
with reference to the following RECITALS:
A. T-Com is engaged in the business of the manufacture and sale of
telecommunications test equipment (the "Business").
B. Subject to the terms and conditions hereinafter set forth, T-Com
desires to sell and CXR desires to purchase the Business, its operations, and
all of the Assets of T-Com used therein.
NOW, THEREFORE, in consideration of the recitals and of the respective
covenants, representations, warranties and agreements herein contained, and
intending to be legally bound hereby, the parties hereto agree as follows:
1. PURCHASE AND SALE
1.1 AGREEMENT TO SELL. At the Closing hereunder (as defined in Section
2.1 hereof) and except as otherwise specifically provided in Section 1.3,
T-Com shall grant, sell, convey, assign, transfer and deliver to CXR, all
right, title and interest of T-Com in and to (a) the Business as a going
concern, (b) the name "T-Com", (c) all purchase orders and accounts
receivable, and (d) all of the assets, properties and rights of T-Com
constituting the Business or used therein, of every kind and description,
real, personal and mixed, tangible and intangible, wherever situated (which
Business, name, goodwill, assets, properties and rights are herein sometimes
called the "Assets"), free and clear of all mortgages, liens, pledges,
security interests, charges, claims, restrictions and encumbrances of any
nature whatsoever.
1.2 INCLUDED ASSETS. The Assets shall include without limitation the
following assets, properties and rights of T-Com used directly or indirectly
in the conduct of, or generated by or constituting, the Business, except as
otherwise expressly set forth in Section 1.3 hereof:
(a) all machinery, equipment, tools, vehicles, furniture, furnishings,
leasehold improvements, goods, and other tangible personal property used
in the Business;
(b) all cash in all of T-Com's bank accounts, except for the Excluded
Account (as defined herein);
(c) all receivables;
(d) all prepaid items, unbilled costs and fees, and accounts, notes and
other receivables;
(e) all supplies, raw materials, work-in-process, finished goods and
other inventories;
(f) to the extent permitted by applicable law, all rights under any
written or oral contract, agreement, lease, plan, instrument,
registration, license, certificate of occupancy, operating permit or
other permit or approval of any nature, or other document, commitment,
arrangement, undertaking, practice or authorization;
(g) all right, title and interest of T-Com in, to and under all
purchase orders;
(h) all rights under any written or oral distribution, dealer, sales
agency or sales representative agreements;
(i) all of T-Com's right, title and interest in and to the name "T-Com";
(j) all rights under any trademark, service ▇▇▇▇, trade name or
copyright, whether registered or unregistered, and any applications
therefor;
(k) all technologies, methods, formulations, data bases, trade secrets,
know-how, inventions and other intellectual property used in the
Business or under development;
(l) all rights in action arising out of occurences before or after the
Closing, including without limitation all rights under express or
implied warranties relating to the Assets; and
(m) all information, files, records, data, plans, contracts and
recorded knowledge, including customer and supplier lists, related to
the foregoing.
1.3 EXCLUDED ASSETS. Notwithstanding the foregoing, the Assets shall not
include any of the following (the "Excluded Assets"):
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(a) the seal, articles of organization, limited liability company
operating agreement, minute books, stock books, tax returns, books of
account or other records having to do with the organisation of T-Com as
a limited liability company;
(b) the rights which accrue or will accrue to T-Com LLC under this
Agreement; and
(c) T-Com's bank account at ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, account number
A112129057, together with all of the cash held therein (the "Excluded
Account"); and
(d) the rights to any of T-Com's claims for any federal, state, local,
or foreign tax refunds.
1.4 AGREEMENT TO PURCHASE. At the Closing hereunder, CXR shall purchase
the Assets from T-Com in exchange for the purchase price payable under
Section 1.5 and assumption of the liabilities and obligations of T-Com as
provided in Section 1.8 of this Agreement. Except as specifically provided in
Section 1.8 hereof, neither CXR for MicroTel shall assume or be responsible
for any liabilities or obligations of T-Com or any liabilities or
obligations of the Business which arise prior to the Closing Date (as defined
in Section 2.1).
1.5 PURCHASE PRICE. The purchase price payable by CXR for the Assets
(the "Purchase Price"), subject to adjustment as provided in Section 1.7
below, shall be shares of MicroTel preferred stock and warrants exercisable
for shares of common stock as follows:
(a) One hundred and fifty thousand (150,000) Series B Convertible
Preferred Shares (the "Preferred Shares") of MicroTel. The Preferred
Shares shall be convertible into common shares of MicroTel in three (3)
equal lots of 50,000 shares at the end of six (6), twelve(12), and
eighteen (18) months, respectively, following the Closing Date, at a
conversion rate of ten (10) shares of MicroTel common stock for each
Preferred Share. The conversion rights shall be cumulative, with all
150,000 Preferred Shares being convertible after eighteen (18) months.
The Preferred Shares shall have a liquidation preference of $6.40 per
share and have no divided rights. The relative rights and preferences of
the Preferred Shares shall be set forth in a Certificate of Designation
in the form attached hereto as Exhibit A; and
(b) Warrants exercisable for 250,000 shares of MicroTel common stock
at an exercise price of $1.25 per share for a period of twenty-four (24)
months following the Closing Date (the "Warrants"). The Warrants shall
provide for a cashless exercise feature, and shall be evidenced by a
warrant agreement substantially in the form attached hereto as Exhibit B.
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1.6 PAYMENT OF PURCHASE PRICE. As consideration for the Assets, on
the Closing Date CXR will:
(a) Deliver to ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ as Escrow Agent (the
"Escrow Agent") 75,000 Preferred Shares of MicroTel which shall be held by
the Escrow Agent pursuant to the terms set forth in the Escrow Agreement
attached hereto as Exhibit C, for a period of six (6) months after the
Closing Date (the "Escrowed Shares"), such Escrowed Shares to be use for
payment of any adjustments to be made to the Purchase Price pursuant to
Section 1.7 and any right of set off pursuant to Section 6.4 hereof; and
(b) Deliver to T-Com 75,000 Preferred Shares of MicroTel and all of
the Warrants.
1.7 CLOSING ADJUSTMENTS. (a) Within thirty days after the Closing
Date, a Balance Sheet of the Assets of the Business acquired pursuant
to this Agreement as of August 31, 2000 (the "Closing Balance Sheet")
and a computation of the accounts receivable shall be prepared by
T-Com and CXR. The total net tangible assets (total assets less
intangible assets, less current liabilities, less long term
liabilities) set forth on the Closing Balance Sheet shall be no less
than One Million Dollars ($1,000,000) and the aggregate of all cash,
returnable deposits and accounts receivable having an aging of not
more than 90 days from the date of billing shall be Four Hundred
and Ninety Thousand Dollars ($490,000). The Closing Balance Sheet
shall be prepared using the same accounting methods and practices
consistently employed by T-Com in connection with the preparation
of Estimated Balance Sheet (as defined in Section 3.4). Any
dispute as to the amount and calculation shall be resolved pursuant
to the procedures set forth in paragraph (c) of this Section.
(b) (i) In the event that the Closing Balance Sheet indicates that
the total net tangible assets is less than $1,000,000, or the amount
of all cash, returnable deposits and accounts receivable having an
aging of not more than 90 days from the date of billing is less
that $490,000, CXR shall be entitled to an adjustment to the
Purchase Price in an amount equal to such difference. The adjustment
shall be made by delivering to CXR the number of Preferred Shares
equal in value to such adjustment as of the Closing Date and held in
escrow pursuant to the terms of the Escrow Agreement; and
(ii) In the event that more than five percent (5%) of the
accounts receivable remain uncollected at the end of six (6) months
following the Closing Date (the "Uncollected Receivables"), CXR
shall be entitled to an adjustment in Purchase Price in an amount
equal to the amount of the uncollected accounts receivable. The
adjustment shall be made by delivering to CXR the number of
Preferred Shares equal in value to such adjustment as of the
Closing Date and held in escrow pursuant to terms of the Escrow
Agreement. If and when such an adjustment is made and upon
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delivery of the Preferred Shares to CXR, CXR shall transfer all
rights to the Uncollected Receivables to T-Com and make no further
claim thereto.
(c) If at the end of 10 days following the completion of the
Closing Balance Sheet T-Com and CXR shall have failed to agree upon
the total net tangible assets or the aggregate of all cash,
returnable deposits and accounts receivable having an aging of not
more than 90 days from the date of billing, or T-Com and CXR have
failed to prepare the Closing Balance Sheet within 30 days after the
Closing Date, the matter shall be submitted to arbitration within
30 days unless the parties agree in writing to extend such 30 day
period in an attempt to negotiate a settlement. The arbitrator (the
"Arbitrator") shall be one of the nationally recognized accounting
firms mutually agreed upon by T-Com and CXR. If T-Com and CXR fail
to agree upon the selection of the Arbitrator within 20 days
following expiration of the 30 day period, an Arbitrator shall be
selected in accordance with the rules of the American Arbitration
Association. The arbitration shall be conducted in accordance with
the rules of the American Arbitration Association then in effect,
and the Arbitrator's decision shall be final and binding upon the
parties in all respects and shall not be appealable to any court.
As part of the decision and award, the Arbitrator shall assess the
costs and expenses of the arbitration (including reasonable attorneys'
fees of the prevailing party) against the non-prevailing party.
1.8 ASSUMPTION OF LIABILITIES. At the Closing hereunder CXR shall
assume and agree to pay, discharge or perform, as appropriate, the following
liabilities and obligations of T-Com:
(a) all liabilities and obligations of T-Com reflected on the July
31, 2000 Balance Sheet (as defined in Section 3.4); or which arise
or have arisen in the ordinary course of business since July 31,
2000 in respect of the Business which remain unpaid and undischarged
on the Closing Date; and
(b) all liabilities and obligations of T-Com in respect of all
contracts of T-Com disclosed to CXR which relate to the Business
including, but not limited to obligations to provide normal customer
service and warrant obligations to existing accounts for products
shipped prior to the Closing Date.
In no event, however, shall CXR or MicroTel assume or incur any
liability or obligation under this Section 1.8 or otherwise in respect of any
of the following:
(t) any liability whatsoever to Imperial Bank in relation to the
revolving and term loans made to T-Com on or about June 9, 1998
(the "Loans"), including any accrued and unpaid interest and all
other fees or costs associated therewith;
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(u) any federal, state or local income or other tax (i) payable with
respect to the Business, assets, properties or operations of T-Com
or its members or any affiliated entity for any period prior to the
Closing Date, or (ii) incident to or arising as a consequence of the
negotiation or consummation by T-Com, or by any of its members or any
member of any affiliated group of which T-Com is a member, of this
Agreement and the transactions contemplated hereby;
(v) any liability or obligation under or in connection with the
Excluded Assets;
(w) any liabilities of T-Com to its members or any of its affiliated
companies;
(x) except for any liability assumed pursuant to 1.8 (a), any
liability or obligation arising prior to or as a result of the Closing to any
employees, agents, independent contractors or sales representatives of T-Com,
whether or not employed by CXR after the Closing;
(y) except for CXR's responsibility to pay for its own cost of legal
fees incurred to prepare purchase and sale documents, any liability or
obligation of T-Com arising or incurred in connection with the negotiation,
preparation and execution of this Agreement and the transaction contemplated
hereby and fees and expenses of counsel, accountants and other experts; or
(z) any liability or obligation of T-Com to pay a brokerage or
finder's fee or commission.
1.9 ALLOCATION OF PURCHASE PRICE. CXR and T-Com shall negotiate in
good faith prior to the Closing Date and determine the allocation of the
consideration paid by CXR for the Assets. Each party hereto agrees (i) that
any such allocation shall be consistent with the requirements of Section 1060
of the Internal Revenue Code of 1986, as amended and the regulations
thereunder, (ii) to complete jointly and to file separately all necessary
forms with its federal income tax return consistent with such allocation for
the tax year in which the Closing Date occurs and (iii) that such party will
not take a position on any income, transfer or gains tax return, before any
governmental or regulatory authority charged with the collection of any such
tax or in any judicial proceeding, that is in any manner inconsistent with
the terms of any such allocation without the consent of the other parties.
2. CLOSING
2.1 TIME AND PLACE OF CLOSING. The closing of the sale and purchase
of the Assets (the "Closing") shall take place at a time mutually agreed to
by the parties hereto on or before September 20, 2000 at such place and in
such manner as may be mutually agreed upon by CXR, MicroTel and T-Com,
provided that the parties agree the Closing shall be effective as of September
1, 200. The date of the Closing is referred to herein as the "Closing Date."
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2.2 ITEMS TO BE DELIVERED AT CLOSING. At the Closing:
(a) CXR and MicroTel shall deliver to T-Com:
(i) the certificates representing 75,000 Preferred Shares;
(ii) the Warrants;
(iii) an executed counterpart of an assignment and assumption
agreement substantially in the form of Exhibit D attached
hereto (the "▇▇▇▇ of Sale, Assignment and Assumption
Agreement");
(iv) an option of counsel substantially in the form of Exhibit E
attached hereto;
(v) a Secretary's Certificate for each CXR and MicroTel
substantially in the form of Exhibit F attached hereto
evidencing the approval of the transactions contemplated
herein;
(vi) a certificate of an executive officer of each of CXR and
MicroTel attesting to the accuracy of the representations and
warranties of CXR and MicroTel substantially in the form of
Exhibit G attached hereto; and
(vii) such other documents or instruments as T-Com may reasonably
require.
(b) T-Com shall deliver to CXR and MicroTel:
(i) a ▇▇▇▇ of sale in customary form:
(ii) a copy of the Settlement Agreement and Release between T-Com
and Imperial Bank substantially in the form of Exhibit H,
which agreement and release shall be in full force and effect
as of the Closing;
(iii) consents for the assignment of all agreements requiring
consent relating to all leased real property and equipment
utilized in the Business;
(iv) the Estimated Balance Sheet (as defined in Section 3.4) as of
August 31, 2000 showing total net tangible assets (total
assets less intangible assets, less current liabilities, less
term liabilities) to be no less than One Million Dollars
($1,000,000) and the aggregate of all cash, returnable
deposits and accounts receivable having an aging of not more
than 90
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days from the date of billing to be Four Hundred and Ninety
Thousand Dollars ($490,000):
(v) an investor representation letter from T-Com in the form of
Exhibit I attached hereto;
(vi) an executed counterpart of the ▇▇▇▇ of Sale, Assignment and
Assumption Agreement;
(vii) an opinion of counsel substantially in the form of Exhibit J
attached hereto;
(viii) a certificate of the managing member of T-Com in the form of
Exhibit K attached hereto evidencing approval of the
transactions contemplated herein;
(ix) a certificate of an officer of T-Com attesting to the accuracy
of T-Com's representations and warranties contained herein
substantially in the form of Exhibit L attached hereto; and
(x) such other documents or instruments as CXR and MicroTel may
reasonably require.
(c) CXR, MicroTel, T-Com and the Escrow Agent shall execute the Escrow
Agreement and CXR shall deliver to the Escrow Agent 75,000 Preferred
Shares to be held in escrow pursuant to the terms of the Escrow
Agreement.
2.3 DELIVERY OF POSSESSION. At the Closing, T-Com shall make available to CXR
all of the cash, accounts receivable, contracts, licenses, customer lists and
all other documents, books, records, papers, files and data belonging to T-Com
that are part of the Assets or relate thereto; and, simultaneously with such
delivery, all such steps shall be taken as may be required to put CXR in actual
possession and operating control of the Assets. T-Com shall execute and deliver
such further documents and instruments as CXR may reasonably request in order to
cause full possession and control of all of the Assets and of all other things
and matters pertaining to the operation of the Business to be transferred and
delivered to CXR.
2.4 THIRD PARTY CONSENTS. To the extent that T-Com's rights under any
agreement, contract, commitment, lease, or other Asset to be assigned to CXR
hereunder may not be assigned without the consent of another person which has
not been obtained, this Agreement shall not constitute an agreement to assign
the same if an attempted assignment would constitute a breach thereof or be
unlawful, and T-Com, at its expense, shall use its best efforts to obtain any
such required consents as promptly as possible. If any such consent shall
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not be obtained or if any attempted assignment would be ineffective or would
impair CXR's rights under the Asset in question so that CXR would not in effect
acquire the benefit of all such rights, T-Com, to the maximum extent permitted
by law and the Asset, shall act after the Closing as CXR's agent in order to
obtain for it the benefits thereunder and shall cooperate, to the maximum extent
permitted by law and the Asset, with CXR in any other reasonable arrangement
designed to provide such benefits to CXR.
2.5 FURTHER ASSURANCES. T-Com from time to time after the Closing, at
CXR's request, will execute, acknowledge and deliver to CXR such other
instruments of conveyance and transfer and will take such other actions and
execute and deliver such other documents, certifications and further
assurances as CXR may reasonably require in order to vest more effectively in
CXR, or to put CXR more fully in possession of, any of the Assets, or to
better enable CXR to complete, perform or discharge any of the liabilities or
obligations assumed by CXR at Closing pursuant to Section 1.8 hereof. Each of
the parties hereto will cooperate with the other and execute and deliver to
the other parties hereto such other instruments and documents and take such
other actions as may be reasonably requested from time to time by any other
party hereto as necessary to carry out, evidence and confirm the intended
purposes of this Agreement.
2.6 TERMINATION. If the Closing shall not have taken place on or before
October 31, 2000, or such later date as shall be mutually agreed to in
writing by CXR, MicroTel and T-Com, all of the rights and obligations of the
parities hereunder this Agreement shall terminate, without liability to any
other party. This provision does not apply if the failure to close results
from a breach of this Agreement by either party, rather than the failure of a
condition precedent to Closing to occur by such date.
3. REPRESENTATIONS AND WARRANTIES OF T-COM
T-Com hereby represents and warrants to CXR and MicroTel, as of the date of
hereof and as of the Closing Date, as follows:
3.1 EXISTENCE. T-Com is a limited liability company duly organized, validly
existing and in good standing under the laws of Delaware. T-Com is duly
qualified to do business and is in good standing as a foreign limited liability
company in each jurisdiction where the conduct of the Business by it requires it
to be so qualified.
3.2 POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. T-Com has the power,
authority and legal right to execute, deliver and perform this Agreement. The
execution, delivery and performance of this Agreement by T-Com have been duly
authorized by all necessary action. This Agreement has been, and the other
agreements, documents and instruments required to be delivered by T-Com in
accordance with the provisions hereof (the "T-Com Documents") will be, duly
executed and delivered by T-Com, and this Agreement
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constitutes, and the T-Com Documents when executed and delivered will
constitute, the legal, valid and binding obligations of T-Com, enforceable
against T-Com in accordance with their respective terms.
3.3 VALIDITY OF CONTEMPLATED TRANSACTIONS, ETC. The execution, delivery
and performance of this Agreement by T-Com does not and will not violate,
conflict with or result in the breach of any term, condition or provision of,
or require the consent of any other person under, (a) any existing law,
ordinance, or governmental rule or regulation to which T-Com is subject, (b)
any judgment, order, writ, injunction, decree or award of any court,
arbitrator or governmental or regulatory official, body or authority which is
applicable to T-Com, (c) the articles of organization or limited liability
company operating agreement of T-Com, (d) any mortgage, indenture, material
agreement, contract, commitment, lease, plan, or other instrument, document
or understanding, oral or written, to which T-Com is a party, by which T-Com
may have rights or by which any of the Assets may be bound or affected, or
give any party with rights thereunder the right to terminate, modify,
accelerate or otherwise change the existing rights or obligations of T-Com
thereunder. Except as disclosed by T-Com and agreed to by CXR and MicroTel at
or before Closing, no authorization, approval or consent of, and no
registration or filing with, any governmental or regulatory official, body or
authority is required in connection with the execution, delivery or
performance of this Agreement by T-Com.
3.4 FINANCIAL STATEMENTS. T-Com has delivered to CXR true and complete
copies of (a) the unaudited balance sheets of T-Com and the related
statements of income, cash flow and changes in members' equity for the past
three (3) fiscal years, and (b) and estimated balance sheet dated as of the
August 31, 2000 (the "Estimated Balance Sheet") reflecting total net tangible
assets (total assets less intangible assets, less current liabilities, less
long term liabilities) of no less than one million dollars ($1,000,000) and
an aggregate of all cash, returnable deposits and accounts receivable having
an aging of not more than 90 days from the date of billing in the amount of
Four Hundred and Ninety Thousand Dollars ($490,000) (collectively the
"Financial Statements"). All of the Financial Statements have been prepared
using the same accounting methods and practices consistently applied
throughout the periods involved. Such Financial Statements, including the
related notes, fairly represent the financial position, assets and
liabilities (whether accrued, absolute, contingent or otherwise) of T-Com at
the dates indicated and such statements of income, cash flow fairly present
the results of operations, cash flow and changes in shareholders equity for
the periods indicated. The Financial Statement contain all adjustments, which
are solely of a normal recurring nature, necessary to present fairly the
financial position for the period then ended.
3.5 ABSENCE OF UNDISCLOSED LIABILITIES. T-Com has no liabilities or
obligations with respect to the Business except those reflected on the
Balance Sheet or incurred in the ordinary course of business since that date.
For purposes of this Agreement, the term "liabilities" shall include, without
limitation, any direct or indirect indebtedness, guaranty,
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endorsement, claim, loss, damage, deficiency, cost, expense, obligation or
responsibility relating to or incurred in connection with the operation of
the Business. There have been no material changes in the operations of the
Business since July 31, 2000.
3.6 ACCOUNTS RECEIVABLES. The accounts receivable set forth on the
Balance Sheet and the Estimated Balance Sheet or arising since the date
thereof are valid and genuine; have arisen solely our of bona fide sales and
deliveries of goods, performance of services and other business transactions
in the ordinary course of business consistent with past practice; are not
subject to valid defenses, set-offs or counterclaims; and are collectible
within 90 days after billing at the full recorded amount thereof. T-Com has
delivered to CXR and MicroTel a complete listing of all accounts receivable.
3.7 LEASE TERMINATION. The Sublease Agreement, dated April 1, 1999,
between T-Com as subtenant and Verbatim Corporation as tenant under the
master lease with ▇.▇. ▇▇▇▇▇▇ & Associates, a California corporation, as
landlord, a copy of which is attached hereto as Exhibit M, terminates on
December 31, 2000 by its own terms with no lease termination costs.
3.8 LITIGATION. No litigation, including any arbitration,
investigation or other proceeding of or before any court, arbitrator or
governmental or regulatory official, body or authority, is pending or, to the
best knowledge of T-Com, threatened against T-Com which relates to the
Business, the Assets or the transactions contemplated by this Agreement, nor
does T-Com know of any reasonably likely basis for any litigation,
arbitration, investigation or proceeding, that if determined adversely to
T-Com could be reasonable expected to materially adversely affect the
Business, the Assets or the transactions contemplated hereby. T-Com is not a
party to or subject to the provisions of any judgment, order, writ,
injunction, decree or award of any court, arbitrator or governmental or
regulatory official, body or authority, which may adversely affect T-Com, the
Assets or the transactions contemplated hereby.
3.9 PRODUCT LIABILITY. T-Com is not subject to or aware of any product
liability or similar claim for injury to person or property which arises out
of or is based upon any express or implied representation, warranty, agreement
or guaranty made by T-Com or alleged to have been made by T-Com, or which is
imposed or asserted to be imposed by operation of law, in connection with any
service performed or product sold or leased by or on behalf of T-Com on or
prior to the Closing Date, including without limitation any claim relating to
any product delivered in connection with performance or services or any
claim reasonably likely to be asserted with respect to any product delivered
or service performed by T-Com prior to the Closing Date.
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4. REPRESENTATIONS AND WARRANTIES OF CXR AND MICROTEL.
CXR and MicroTel represent and warrant to T-Com, as of the date hereof
and as of the Closing Date, as follows:
4.1 CORPORATE EXISTENCE. Each of CXR and MicroTel are corporations duly
organized, validly existing and in good standing under the laws of the
jurisdiction of their incorporation. Each of CXR and MicroTel is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction where the conduct of its business requires it to be so
qualified.
4.2 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. Each of
CXR and MicroTel has the corporate power, authority and legal right to
execute, deliver and perform this Agreement. The execution, delivery and
performance of this Agreement by CXR and MicroTel have been duly authorized
by all necessary corporate action. This Agreement has been, and the other
agreements, documents and instruments required to be delivered by CXR and
MicroTel in accordance with the provisions hereof (the "CXR and MicroTel
Documents") will be, duly executed and delivered by CXR and MicroTel, and
this Agreement constitutes, and CXR and MicroTel Documents when executed and
delivered will constitute, the legal, valid and binding obligations of CXR
and MicroTel as applicable, enforceable against CXR and MicroTel in
accordance with their respective terms, it being understood that, as of the
date hereof, a sufficient number of shares of common stock are not available
for issuance as of the date hereof for the conversion of the Preferred Shares
and exercise of the Warrants.
5. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All representations and warranties made by the parties in this Agreement
or in any certificate, schedule, statement, document or instrument furnished
hereunder or in connection with negotiation, execution and performance of
this Agreement shall survive the Closing for a period of one (1) years.
Notwithstanding any investigation or audit conducted before or after the
Closing Date or the decision of any party to complete the Closing, each party
shall be entitled to rely upon the representations and warranties set forth
herein and therein.
6. INDEMNIFICATION
6.1 INDEMNIFICATION OBLIGATION OF T-COM. For one year after the
Closing Date, T-Com will reimburse, indemnify and hold harmless CXR and
MicroTel and their respective successors and assigns against and in respect
of any and all actions, suits, claims, proceedings, investigations, demands,
damages, losses, deficiencies, liabilities, costs and expenses incurred or
suffered by CXR and MicroTel that result from, relate to or arise out of:
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(a) any material breach of the representations, warranties or covenants
of T-Com contained in this Agreement or in a certificate, agreement or other
instrument delivered by T-Com pursuant to this Agreement, or
(b) any liabilities or obligations of T-Com other than those
specifically assumed by CXR pursuant to this Agreement.
6.2 INDEMNIFICATION OBLIGATION OF CXR AND MICROTEL. For one year after
the Closing Date, CXR and MicroTel will jointly and severally reimburse,
indemnify and hold harmless T-Com and its successors or assigns against and
in respect of any and all actions, suits, claims, proceedings,
investigations, demands, damages, losses, deficiencies, liabilities, costs
and expenses incurred or suffered by T-Com that result from, relate to or
arise out of:
(a) any material breach of the representations, warranties or covenants
of CXR or MicroTel contained in this Agreement or in a certificate, agreement
or other instrument delivered by CXR or MicroTel pursuant to this Agreement,
or
(b) any liabilities or obligations of T-Com which have been assumed by
CXR pursuant to this Agreement.
6.3 METHOD OF ASSERTING CLAIMS, ETC. (a) In the event that any claim or
demand for which a party or parties (the "Indemnifying Party") would be
liable to another party or party (the "Indemnified Party") is asserted
against or sought to be collected from the Indemnified Party by a third
party, the Indemnified Party shall promptly notify the Indemnifying Party of
such claim or demand, specifying the nature of such claim or demand and the
amount or the estimated amount thereof to the extent then feasible (which
estimate shall not be conclusive of the final amount of such claim and
demand) (the "Claim Notice"). The Indemnifying Party shall have thirty days
from the personal delivery or mailing of the Claim Notice (the "Notice
Period") to notify the Indemnified Party, (i) whether or not they dispute
their liability to the Indemnified Party hereunder with respect to such claim
or demand and (ii) notwithstanding any dispute, whether or not they desire,
at their sole cost and expense, to defend the Indemnified Party against such
claim or demand.
In the event that the Indemnified Party notifies the Indemnified Party
within the Notice Period that they desire to defend the Indemnified Party
against such claim or demand then, except as hereinafter provided, the
Indemnifying Party shall have the right to defend the Indemnified Party by
appropriate proceedings, which proceedings shall be promptly settled or
prosecuted by them to a final conclusion. If any Indemnified Party desires to
participate in, but not control, any such defense or settlement, it may do so
at its sole cost and expense.
If the Indemnifying Party elects not to defend the Indemnified Party
against such claim or demand, whether by not giving the Indemnified Party
timely notice as provided above or
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otherwise, then the amount of any such claim or demand, or if the same be
contested by the Indemnifying Party, then that portion thereof as to which
such defense is unsuccessful, shall be conclusively deemed to be a liability
of the Indemnifying Party hereunder.
If, in the reasonable opinion of the Indemnified Party, any such claim
or demand or the litigation or resolution of any such claim or demand
involves an issue or matter which could have a materially adverse effect on
the business, operations, assets, properties or prospects of the Indemnified
Party, then the Indemnified Party shall have the right to participate in, but
not control, the defense or settlement of any such claim or demand and its
reasonable costs and expenses shall be included as part of the
indemnification obligation of the Indemnifying Party hereunder.
(b) In the event an Indemnified Party should have a claim against the
Indemnifying Party hereunder that does not involve a claim or demand being
asserted against or sought to be collected from it by a third party, the
Indemnified Party shall promptly send a Claim Notice with respect to such
claim to the Indemnifying Party.
6.4 PAYMENT. (a) Upon the determination of liability under Section 6,
the appropriate party shall pay to the other, as the case may be, within ten
days after such determination, the amount of any claim for indemnification
made hereunder.
(b) MicroTel and CXR shall be entitled to set off against the Escrowed
Shared held pursuant to the terms of the Escrow Agreement an amount equal to
the indemnification obligation if it is determined that Microtel and CXR are
entitled to indemnification. For the purposes of such payment, the Escrowed
Shares shall be valued based upon the fair market value of the underlying
common shares into which the Escrowed Shares would be convertible as of the
date such indemnification is to be made.
(c) T-Com shall be permitted, at its option, to satisfy any liability it
may have under this Section 6 to MicroTel or CXR by delivering to CXR
Preferred Shares acquired by T-Com pursuant to this Agreement, which
Preferred Shares shall be valued for these purposes based upon the fair
market value of the underlying common shares into which the Preferred Shares
would be convertible as of the date such indemnification is to be made.
6.5 LIMITATIONS. No claim for indemnification shall be made under this
Section 6 more than one year after the Closing Date. No claim for
indemnification shall be made under this Section 6 until the total of all
claims against the Indemnifying Party shall equal or exceed $50,000, and
thereafter any such claim shall be only for the amount in excess of $50,000.
The liability of any Indemnifying Party under this Section 6 shall not exceed
the lesser of One Million Dollars ($1,000,000) or the value of all of the
Preferred Shares as of the date that the claim is paid.
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7. CONDITIONS PRECEDENT TO THE CLOSING
7.1 CONDITIONS OF OBLIGATIONS OF T-COM. The obligation of T-Com to
effect the Asset Purchase is subject to the satisfaction on or before the
Closing Date of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of CXR and MicroTel set forth in this Agreement shall be true and
correct in all material respects as of the date of this Agreement and as
of the Closing Date as though made on and as of the Closing Date.
(b) PERFORMANCE BY CXR AND MICROTEL. CXR and MicroTel shall each have
performed and satisfied all agreements and conditions which it is
respectively required by this Agreement to perform or satisfy prior to
or on the Closing Date and shall have delivered all documents required
to be delivered hereunder.
(c) LITIGATION AFFECTING CLOSING. No court order shall have been issued
or entered which would be violated by the completion of the transaction
contemplated herein. No person who or which is not a party to this
Agreement shall have commenced or threatened to commence any litigation
seeking to restrain or prohibit, or to obtain substantial damages in
connection with this Agreement or the transactions contemplated by this
Agreement.
(d) FORM AND CONTENT OF DOCUMENTS. The form and content of all
documents, certificates and other instruments to be delivered by CXR and
MicroTel shall be reasonably satisfactory to T-Com.
(e) CONSENTS AND APPROVALS. Any required consent, approval,
authorization or order required in connection with the sale of the
Assets shall have been obtained or made and shall be in effect on the
Closing Date.
(f) CLOSING DOCUMENTS. CXR and MicroTel shall have executed and
delivered the closing documents set forth in Section 2.2 hereof.
(g) CERTIFICATE OF DESIGNATION. MicroTel shall have filed a Certificate
of Designation with the Secretary of State of Delaware.
(h) PURCHASE PRICE. CXR shall have delivered the Purchase Price as
provided in Section 1.6 hereof.
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7.2 CONDITIONS OF OBLIGATIONS OF CXR AND MICROTEL. The obligation of CXR
and MicroTel to effect the Asset Purchase is subject to the satisfaction on
or before the Closing Date of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of T-Com set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and as of the Closing
Date as though made on and as of the Closing Date.
(b) PERFORMANCE BY T-COM. T-Com shall have performed and satisfied with
all agreements and conditions which it is required by this Agreement to
perform or satisfy prior to or on the Closing Date, and shall have
delivered all documents required to be delivered hereunder.
(c) LITIGATION AFFECTING CLOSING. No court order shall have been issued
or entered which would be violated by the completion of the transaction
contemplated herein. No person who or which is not a party to this
Agreement shall have commenced or threatened to commence any litigation
seeking to restrain or prohibit, or to obtain substantial damages in
connection with this Agreement or the transactions contemplated by this
Agreement.
(d) FORM AND CONTENT DOCUMENTS. The form and content of all documents,
certificates and other instruments to be delivered by T-Com shall be
reasonably satisfactory to CXR and MicroTel.
(e) CONSENTS AND APPROVALS. Any required consent, approval,
authorization or order required in connection with the sale of the Assets
shall have been obtained or made and shall be in effect on the Closing
Date.
(f) CLOSING DOCUMENTS. T-Com shall have been executed and delivered the
closing documents set forth in Section 2.2 hereof.
(g) ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE STATEMENTS. T-Com shall
have delivered to CXR and MicroTel not more than two (2) days before the
Closing, complete and accurate statements as of such date of all accounts
receivable and accounts payable, together with a certificate of an officer
of T-Com attesting that said statements of accounts receivable and accounts
payable are true and correct as of such date and containing an undertaking
to notify CXR and MicroTel of any material changes occurring up to the
Closing Date.
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8. POST CLOSING MATTERS
8.1 HIRING OF T-COM'S EMPLOYEES. As of the Closing, CXR shall offer
employment to, and T-Com shall use its best efforts to assist CXR in
employing as new employees of CXR, eleven (11) persons presently engaged in
the Business who are identified on Exhibit N attached hereto and made a part
hereof (the "Employees"). T-Com shall terminate effective immediately prior
to the Closing all employment arrangements and agreements it has with all of
the Employees. CXR shall retain such Employees in the same manner as any
other employees of CXR. During the Noncompete Period described below, neither
T-Com nor its members or any affiliate will directly or indirectly hire or
offer employment to any Employee who becomes an employee of XCR or MicroTel
or any affiliate unless such company first terminates the employment of such
employee.
8.2 EMPLOYEE BENEFITS. All former T-Com Employees who are employed by
CXR on or after the Closing Date shall be new employees of CXR and any prior
employment by T-Com of such employees shall not affect entitlement to, or the
amount of, salary or other cash compensation which CXR may make available to
its employees. All employees who are employed by CXR shall no longer be
considered employees or T-Com for any purposes.
8.3 NONSOLICITATION. T-Com agrees that, for the period of two (2)
years following the Closing Date (the "Noncompete Period"), neither T-Com nor
its members or affiliates will (directly or indirectly) call on or solicit, or
divert or take away from CXR or any affiliate the business of, or divulge to
any competitor or potential competitor of CXR or any affiliate or other entity
who or which at the Closing Date was, or at any time preceding the Closing
Date had been a customer of the Business or whose identity is known to T-Com
at the Closing Date as one whom CXR or any affiliate intends to solicit within
the succeeding year. Nothing contained in this Section shall be deemed to
limit or impair, or be limited or impaired by, the provisions otherwise
appearing herein.
8.4 PAYMENTS RECEIVED. T-Com and CXR each agree that after the Closing
they will hold and will promptly transfer and deliver to the other, from time
to time as and when received by them, any cash, checks with appropriate
endorsements (using their best efforts not to convert such checks into cash),
or other property that they may receive on or after the Closing which
properly belongs to the other party, including without limitation any
insurance proceeds, and will account to the other for all such receipts. From
and after Closing, CXR shall have the right and authority to endorse without
recourse the name of T-Com on any check or any other evidences or
indebtedness received by CXR on account of the Business and the Assets
transferred to CSR hereunder.
8.5 AUTHORIZATION OF COMMON STOCK. T-Com acknowledges that MicroTel
does not have a sufficient number of shares of common stock available
for issuance for the conversion of the Preferred Shares and exercise of the
Warrants. MicroTel will take all
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necessary corporate action to increase the number of authorized shares of
MicroTel common stock within six (6) months of the Closing Date to ensure
that a sufficient number of shares of its common stock will be duly
authorized to be issued upon conversion as provided for herein of the
Preferred Shares and exercise of the Warrants delivered to T-Com pursuant
this Agreement.
8.6 TRANSFER OF MICROTEL SHARES. Until such time as the common shares
underlying the Preferred Shares are registered under the Securities Act of
1933, T-Com shall not transfer or sell the Preferred Shares or the common
shares underlying the Preferred Shares (collectively the "Shares"), provided,
however, that T-Com may transfer the Preferred Shares to members of T-Com,
employees of T-Com and Imperial Bank (the "Permitted Transferees"), and
provided further that T-Com shall obtain from such Permitted Transferee and
deliver to MicroTel an Investor Representation Letter in the form attached
hereto as Exhibit O. T-Com agrees that any sale of the Shares hereunder shall
not be effective, and MicroTel shall be under no obligation to register any
transfer of the Shares, unless and until such Investor Representation Letter is
delivered to Microtel. T-Com shall be permitted to transfer the Warrants to
Permitted Transferees.
8.7 REGISTRATION. MicroTel agrees that within the hundred and twenty
(120) days following the Closing Date it will, for and at MicroTel's cost,
file a registration statement with the Securities and Exchange Commission
under the Securities Act of 1933 to cause the common stock issuable upon
conversion of the Preferred Shares and exercise of the Warrants (the "Common
Conversion Shares") to become registered thereunder for resale by T-Com or a
Permitted Transferee (the "Registration Statement") and MicroTel agrees that
it will use its best efforts to cause such Registration Statement to be
declared effective. MicroTel also agrees to qualify the sale of all the
Common Conversion Shares under state securities laws as may be required in
connection with the sale of shares of common stock by T-Com.
9. MISCELLANEOUS
9.1 USE OF NAME. From and after the Closing Date, T-Com will sign such
consents and take such other action as CXR shall reasonably request in order
to permit CXR to use the name "T-Com" and variants thereof. From and after the
Closing Date, neither T-Com not its members or affiliates shall use the name
"T-Com" or any names similar thereto or variants thereof, except for
administrative purposes as necessary for the winding down of T-Com LLC and
for the purposes of exercising its rights under this Agreement, and T-Com
shall change the name of T-Com, LLC within two (2) years of Closing to a
non-similar name.
9.2 AMENDMENT. This Agreement may be amended by the parties hereto by
an instrument in writing signed on behalf of each of the parties hereto.
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9.3 EXTENSION; WAIVER. At any time prior to the Closing, the parties
hereto may extend the time for the performance of any of the obligations or
other acts of the other parties hereto, waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and 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 of behalf of such party.
9.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement.
9.5 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This Agreement
(including the documents and the instruments referred to herein) constitutes
the entire agreement of the parties with respect to the subject matter hereof
and supersedes all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof. This Agreement
is not intended to confer upon any person other than the parties hereto any
rights or remedies hereunder.
9.6 GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement shall be
governed and construed in accordance with the laws of the State of California
without regard to principles of conflicts of law. Each party hereby
irrevocably submits to the jurisdiction of any California state court or any
federal court in the State of California in respect of any suit, action or
proceeding arising out of or relating to this Agreement, and irrevocably
accept for themselves and in respect of their property, generally and
unconditionally, the jurisdiction of the aforesaid courts.
9.7 NOTICES. Any notice, request, demand, waiver, consent, approval or
other communication which is required or permitted hereunder shall be in
writing and shall be deemed given only if delivered personally or sent by
registered or certified mail, postage prepaid, as follows:
If to T-Com, to:
T-Com, LLC
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▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
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If to CXR or MicroTel to:
MicroTel International, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
With a required copy to:
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
or to such other address as the addressee may have specified in a notice duly
given to the sender as provided herein. Such notice, request, demand, waiver,
consent, approval or other communication will be deemed to have been given as
of the date so delivered.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the date set forth above.
MICROTEL INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chairman, President and CEO
CXR TELCOM CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chairman and CEO
T-COM, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
---------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇
President
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LIST OF EXHIBITS
Exhibit A: Certificate of Designation
Exhibit B: Form of Warrant Agreement
Exhibit C: Escrow Agreement
Exhibit D: ▇▇▇▇ of Sale, Assignment and Assumption Agreement
Exhibit E: Opinion of Counsel for MicroTel and CXR
Exhibit F: Secretary's Certificate for MicroTel and CXR
Exhibit G: Officer's Certificate for MicroTel and CXR
Exhibit H: Settlement Agreement and Release between T-Com LLC and
Imperial Bank
Exhibit I: Form of Investor Representation Letter
Exhibit J: Opinion of Counsel for T-Com
Exhibit K: Managing Member's Certificate for T-Com
Exhibit L: Officer's Certificate for T-Com
Exhibit M: T-Com Lease Agreement
Exhibit N: Employees
Exhibit O: Form of Transferee Investor Representation Letter
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[MICROTEL INTERNATIONAL INC. LETTERHEAD]
October 2, 2000
T-Com, LLC
▇▇ ▇▇▇ ▇▇▇▇▇▇, #▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇
RE: ASSET PURCHASE OF T-COM, LLC BY CXR TELECOM
CORPORATION (THE "TRANSACTION")
Dear Sirs:
This letter is to confirm our agreement concerning the effective date
for the above-referenced Transaction.
Whereas, an agreement in principle and a valuation for the Transaction
were executed by CXR Telcom Corporation ("CXR"), MicroTel International, Inc.
("MicroTel") and T-Com, LLC ("T-Com") on July 17, 2000 and July 26, 2000,
respectively, and all agreed upon actions required of T-Com to posture itself
in a business mode acceptable to CXR and MicroTel were made effective August
1, 2000; and
Whereas, MicroTel, CXR and T-Com have each indicated that they are
agreeable to making the effective date for the Transaction August 1, 2000 as
that date had been originally anticipated as the closing date for the
Transaction; and
Whereas, MicroTel and CXR have conferred with their accountants and
auditors, who, in light of the foregoing, have advised that they have no
objection to making the effective date for the Transaction August 1, 2000.
MicroTel, CXR and T-Com, for good and valuable consideration, receipt of
which is hereby acknowledged, agree, notwithstanding anything to the contrary
contained in the Asset Purchase Agreement relating to the Transaction, or any
of the Exhibits thereto, that as between the parties for all purposes the
Transaction shall be deemed to be effective as of August 1, 2000.
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Voice (▇▇▇) ▇▇▇-▇▇▇▇ FAX (▇▇▇) ▇▇▇-▇▇▇▇
Please indicate your agreement with the foregoing by signing and returning
the enclosed copy of this letter.
MICROTEL INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
CXR TELCOM CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Agreed to:
T-Com, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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