XiTec Announces Restructuring.

EAST WINDSOR, Conn.--(BUSINESS WIRE)--April 19, 1999--

XiTec, Inc. (the "Company") announced that it had signed a letter of intent with a private group of accredited investors (the "Investors") to obtain between $900,000 and $1,500,000 of new financing. In a related development, with the approval of the Company's Board of Directors, the Company announced that it had filed for protection under Chapter 11 of the Bankruptcy Code.

An entity to be organized by the Investors (the "Buyer") would make the investment in exchange for up to 1,500,000 shares of Series B Convertible Preferred Shares (the "Series B Shares"). Of the 1,500,000 Series B Shares to be purchased, 900,000 would be purchased at closing and up to an additional 600,000 would be purchased, at the Buyer's option, during a six month period following the closing. This offer will be made available to qualified existing equity/debt holders who may either purchase the Series B Convertible Preferred Shares through either the investors or directly from the Company at the closing.

The consummation of the financing transaction is subject to a number of significant contingencies, including a requirement that the Buyer raise the capital necessary to make its investment in the Company, and a requirement that at least three of the Company's major creditors convert approximately $1.1 million of debt into shares of Series A Convertible Preferred Shares (the "Series A Shares"). Moreover, the Company must work in good faith to convert other outstanding indebtedness into Series A Shares. "We believe that the Chapter 11 filing provides XiTec with the best forum to reach agreement with its creditors and to put XiTec in a position to close on this critical financing," said Michael Sullivan, XiTec's president and chief executive officer. "We are now in a better position to deal with the liquidity and cash flow issues that have hampered our ability to operate our core business," added Sullivan. The financing transaction would require bankruptcy court approval.

In light of these significant contingencies, there can be no assurance that the financing transaction contemplated by the letter of intent will be consummated.

The Series B Shares would contain a conversion feature permitting the Buyer to convert the shares into shares of Common Stock representing, on a fully diluted basis, as much as 44.44% of the outstanding Common Stock of the Company. The largest Series A shareholder would have the right to designate one member of the Company's board of directors, while the Buyer (so long as it owns 70% of the Series B Shares) would have the right to designate a majority of the directors to the Company's Board of Directors.

As part of the financing transaction, the Company has agreed to issue options to purchase 1,000,000 shares of the Company's common stock to persons designated by the Buyer, unless the Buyer fails to raise the capital necessary to make its investment. Moreover, the Company has agreed to issue to certain key employees options vesting over a period of 18 months, to purchase 1,000,000 shares of the Company's common stock. All of these options are exercisable at a price per share equal to the market value as of the date that the letter of intent was executed.

XiTec is a leader in the design, development and distribution of mini C-Arm fluoroscopic imaging systems with medical, veterinary and non-destructive test applications