<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Check the appropriate box:
[x] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only
[ ] Definitive proxy statement (as permitted by Rule 14a-6(e)(2))
[ ] Definitive additional materials
[ ] Soliciting material pursuant to
Rule 14a-11(c) or Rule 14a-12
MICROTEL INTERNATIONAL, INC.
----------------------------
(Name of Registrant as Specified in Its Charter)
----------------------------------------------------------------------
(Name of Persons Filing Proxy Statement, if Other Than the Registrant)
Payment of filing fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction: (5) Total fee
paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
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MICROTEL INTERNATIONAL, INC.
4290 EAST BRICKELL STREET
ONTARIO, CALIFORNIA 91761
(909) 456-4321
MARCH 11, 1999
CONSENT SOLICITATION STATEMENT
TO THE STOCKHOLDERS OF MICROTEL INTERNTIONAL, INC.:
This Consent Solicitation Statement and the accompanying consent form
(the "Consent Solicitation") are furnished in connection with the solicitation
of stockholder consents by the Board of Directors of MicroTel International,
Inc. (the "Company"), in lieu of a meeting of stockholders, for approval by the
stockholders of the issuance by the Company of the Company's Series A
convertible preferred stock (the "Preferred Stock") as described herein. See
"THE PROPOSAL."
SUMMARY OF CONSENT PROCEDURE
Under Section 228 of the Delaware General Corporation Law (the "DGCL"),
any action permitted to be taken at an annual or special meeting of stockholders
of a Delaware corporation may be taken without a meeting, without prior notice
and without a vote, if consents in writing, setting forth the action so taken,
are signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Prompt notice must be given to those stockholders who have not consented in
writing. If the actions described herein are taken, the Company will promptly
notify the stockholders who have not consented to the actions taken as required
by Delaware Law. Stockholders will not have dissenter's rights of appraisal with
respect to this Consent Solicitation.
Holders of record of the Company's common stock, par value $0.0033 per
share (the "Common Stock"), at the close of business on March 4, 1999 (the
"Record Date"), are entitled to consent, withhold consent, or abstain with
respect to, the proposed approval of the issuance of the Preferred Stock by
executing and submitting the accompanying consent form. On the close of business
on March 4, 1999, the Company had outstanding 15,325,546 shares of Common Stock.
Each share of Common Stock is entitled to one vote with respect to this Consent
Solicitation. Consents evidencing a majority of the outstanding shares of the
Common Stock on the Record Date are required to approve the issuance of the
Preferred Stock.
<PAGE>
This Consent Solicitation will terminate on March 31, 1999 or such
other date in the discretion of the Company. All consent forms must be submitted
on or prior to that date. Any action other than the delivery of a properly
executed consent form prior to March 31, 1999, including abstentions will have
the same effect as if consent to the proposed amendment was explicitly withheld.
A consent form executed by a stockholder may be revoked at any time prior to
March 31, 1999 provided that a written, dated revocation is executed and
delivered to the Company. A revocation may be in any written form validly signed
by the stockholder as long as it clearly states that the consent form previously
submitted is no longer effective. The revocation should be addressed to James P.
Butler, Chief Financial Officer, MicroTel International, Inc., 4290 East
Brickell Street, Ontario, California 91761.
These consent solicitation materials are being mailed to stockholders
on or about March 11, 1999. Executed consent forms should be returned to
MicroTel International, Inc., Attn: James P. Butler, Chief Financial Officer,
4290 East Brickell Street, Ontario, California 91761. Questions regarding this
Consent Solicitation should be directed to either Carmine T. Oliva, Chief
Executive Officer or James P. Butler, Chief Financial Officer at the Company's
address shown herein or via telephone to (909) 456-4321.
THE PROPOSAL
BACKGROUND
In June 1998 the Company sold 50 shares of the Preferred Stock at
$10,000 per share to one institutional investor. On July 8, 1998, the Company
sold an additional 150 shares of Preferred Stock at the same per share price
to two other institutional investors. Before the Preferred Stock was sold,
the Company had been in default for approximately six months on its existing
bank debt. The Preferred Stock was sold to raise equity capital and thereby
permit the Company to refinance its indebtedness. The Preferred Stock was
issued pursuant to provisions of the Company's Certificate of Incorporation
providing for such Preferred Stock and did not require shareholder approval
as a matter of state law.
The Company received net proceeds totaling approximately $1,847,000
after deduction of commissions and transaction-related expenses, and utilized
such proceeds for working capital. The Preferred Stock was initially
convertible into the Common Stock of the Company at the option of the holder
thereof at any time after the ninetieth (90th) day of issuance thereof at the
conversion price per share of Preferred Share equal to $10,000 divided by the
lesser of (x) $1.25 and (y) One Hundred Percent (100%) of the arithmetic
average of the three lowest closing bid prices over the forty (40) trading
days prior to the exercise date of any such conversion. No more than 20% of
the aggregate number of shares of Preferred Stock originally purchased and
owned by any single entity could be converted in any thirty (30) day period
after the ninetieth (90th) day of issuance. In the event of any liquidation,
dissolution or winding up of the Company, the holders of shares of Preferred
Stock are entitled to receive, prior and in preference to any distribution of
any of the assets of the Company to the holders of the Company's Common
Stock, an amount per share equal to $10,000 for each outstanding share of
Preferred Stock. Any unconverted shares of Preferred Stock may be redeemed at
the option of the Company for cash at a per share price equal to $11,500 per
share and any shares of Preferred
<PAGE>
Stock which remain outstanding as of May 22, 2003 are subject to mandatory
redemption by the Company at the same per-share redemption price.
On October 5, 1998, the Company's registration statement on Form S-1
which registered the common stock underlying the Preferred Shares was
declared effective.
The Company's Common Stock is quoted on the Nasdaq SmallCapSM Market
("Nasdaq") which requires listed companies to adhere to certain rules (the
"Marketplace Rules") in order to maintain their continued listing. Marketplace
Rule 4310(25)(H)(i)(d)(2) provides that the Company obtain shareholder approval
"in connection with a transaction other than a public offering involving:...the
sale or issuance by the company of...securities convertible into...common
stock...equal to 20 percent or more of the common stock or 20 percent or more of
the voting power outstanding before the issuance for less than the greater of
book or market value of the stock."
The conversion of all shares of the Preferred Stock would result in the
issuance of the Company's Common Stock representing more than 20 percent of the
Common Stock outstanding before the issuance of the Preferred Stock.
Accordingly, the Company is deficient with respect to Marketplace Rule
4310(25)(H)(i)(d)(2).
Following the Company's announcement of the sale of the Preferred
Stock, the trading price of the Company's Common Stock declined below the
minimum bid requirement of $1.00 per share required by Nasdaq where it remained
until January 14, 1999. If the Company is unable to satisfy Nasdaq's minimum bid
maintenance criteria and cure its deficiency with regard to the issuance of the
Preferred Stock, its securities may be delisted from Nasdaq. In such an event,
trading in the Company's securities would thereafter be conducted in the
over-the-counter market in the "pink sheets" or on the NASD's "OTC Bulletin
Board." As a consequence of such delisting, the Company may find it more
difficult to obtain capital through an equity offering of its stock and the
trading price of the Common Stock may suffer a significant decline.
PRESENT SITUATION
On January 22, 1999, the Company attended a hearing conducted by Nasdaq
with respect to the Company's failure to maintain continued listing requirements
at which the Company presented its plan to regain compliance. On February
17,1999, the Company received written notice from Nasdaq that its Common Stock
would continue to be listed for an interim period (the "Exception Period")
during which the Company must cure its deficiencies in order to remain listed.
On February 22, 1999, the Board of Directors adopted resolutions
declaring it advisable and in the best interests of the stockholders of the
Company to submit to the holders of the Common Stock a proposal to approve the
issuance of the Preferred Stock. If the proposal is approved, the Company will
be in compliance with Marketplace Rule 4310(25)(H)(i)(d)(2).
<PAGE>
PURPOSE AND EFFECT OF THE ISSUANCE OF THE PREFERRED STOCK
In order to continue to operate, it was necessary for the Company to
refinance the existing domestic bank debt, which refinancing required that the
Company raise certain equity capital. Accordingly, the Company entered into the
transaction to sell the Preferred Stock. The Company's Board of Directors
believes that the sale of the Preferred Stock was in the best interest of the
Company and its shareholders under such circumstances. The exigent nature of the
Company's then financial condition did not allow it sufficient time to solicit
the consent of the holders of the Common Stock prior to the sale of the
Preferred Stock in compliance with the related Marketplace Rule. Further, the
Company did not contemplate the substantial decline which occurred in the
trading price of the Common Stock following the announcement of the sale
thereof, which decline created the potential for conversion of the Preferred
Stock into an amount of Common Stock in excess of 20 percent of the amount of
such stock outstanding prior to the sale of the Preferred Stock. In November
1998, the Company negotiated an agreement with the holders of the Preferred
Stock which established new terms for the conversion of the Preferred Stock
which assured that the number of shares of Common Stock to be issued upon
conversion of the Preferred Stock would exceed the requirement set forth in the
Marketplace Rules.
If the proposal is approved on or before March 31, 1999 by a majority
of shares outstanding, the Company will be in compliance with the Marketplace
Rules and, assuming it can meet the minimum bid requirements during the
Exception Period, its Common Stock will continue to be listed on Nasdaq. IF THE
PROPOSAL IS NOT APPROVED, THE COMMON STOCK WILL LIKELY BE DELISTED FROM NASDAQ.
The Board of Directors believes approval of the issuance of the Preferred Stock
is advisable and in the best interest of stockholders because it will help
insure that the Company's Common Stock continues to be listed with Nasdaq.
Therefore, the Company is in favor of the proposal and recommends
the execution of the Consent.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
As of the Record Date, there were 15,325,546 outstanding shares of
Common Stock, each entitled to one vote on the matter put to a vote of the
stockholders of the Company.
Holders of Common Stock entitled to vote were calculated, as of the
Record Date, to determine the number of shares constituting a majority of the
outstanding shares of Common Stock (required to approve the Written Consent).
The following table sets forth, as of March 1, 1999, the number of
shares of Common Stock (and the percentage of the Company's Common Stock)
beneficially owned by (i) each person known (based solely on Schedules 13D or
13G filed with the Securities and Exchange Commission) (the "Commission") to the
Company to be the beneficial owner of more than five percent (5%) of the Common
Stock, (ii) each director of the Company, (iii) each of the named executive
officers of the Company; and (iv) all directors and executive officers as a
group (based upon information furnished by such persons). Under the rules of the
Commission, a person is deemed to be a beneficial owner of a security if such
person has or shares the power to vote or
<PAGE>
direct the voting of such security. In general, a person is also deemed to be
a beneficial owner of any securities of which that person has the right to
acquire beneficial ownership within 60 days. Accordingly, more than one
person may be deemed to be a beneficial owner of the same securities.
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES
OF BENEFICIAL OWNER BENEFICIALLY OWNED (1) PERCENT OF CLASS (1)
- ------------------------- ----------------------- ---------------------
<S> <C> <C>
Robert J. Bertrand and 845,106 (2) 5.51%
Dorcas L. Bertrand (3)
851 Arbolando Drive
Fullerton, CA 92835
Carmine T. Oliva (3), (4), (5) 1,863,422 (6) 12.16%
c/o MicroTel International, Inc.
4290 East Brickell Street
Ontario, CA 91761
Laurence P. Finnegan, Jr. (4) 132,349 (7) (11)
3 Woods Lane
Ambler, PA 19002
Robert Runyon (4) 327,302 (8) 2.14%
10 Eagle Claw Drive
Hilton Head, SC 29926
David A. Barrett (4) 268,471 (9) 1.75%
7 Barnabas Road
Marion, MA 02738
James P. Butler (5) 115,000 (10) (11)
7716 E. Fieldcrest Lane
Orange, CA 92869
All executive
officers and directors as a group
(5 persons) 2,706,544 17.66%
</TABLE>
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(1) Includes shares of MicroTel Common Stock underlying the warrants,
options and convertible securities outstanding and held by the
beneficial owner with respect to whom the calculation is made, but does
not include shares of Common Stock that may be acquired within more
than 60 days after March 11, 1999 upon the exercise or conversion of
such warrants, options or convertible securities.
(2) Includes 595,106 shares held by the Bertrand Family Trust of which Mr.
Bertrand and his wife are trustees, as well as 250,000 shares which
will be issuable upon the exercise of MicroTel warrants to a
corporation owned by Mr. Bertrand.
<PAGE>
(3) Beneficial owner of 5% or more.
(4) Director of the Company.
(5) Officer of the Company.
(6) Includes 478,670 shares held jointly by Mr. Oliva and his wife, as well
as 81,889 shares held individually by Mr. Oliva's wife. Also includes
760,749 shares, issuable to Mr. Oliva upon the exercise of MicroTel
options and warrants.
(7) Includes 4,789 shares held jointly by Mr. Finnegan and his wife, and
88,178 shares issuable to Mr. Finnegan upon the exercise of MicroTel
options and warrants.
(8) Includes 147,217 shares issuable to Mr. Runyon upon the exercise of
MicroTel options and warrants.
(9) Includes 91,807 shares issuable to Mr. Barrett upon the exercise of
MicroTel options and warrants; 43,639 shares held by various trusts of
which Mr. Barrett is the trustee, and members of Mr. Barrett's
immediate family are beneficiaries; and 4,595 shares held by Mr.
Barrett's wife.
(10) Represents 115,000 shares issuable to Mr. Butler upon the exercise of
MicroTel options.
(11) Less than 1%.
INTEREST OF CERTAIN PERSONS AND SOLICIATION EXPENSES
The Company is soliciting this Consent Solicitation and the share
ownership of the directors, officers and control persons of the Company set
forth under "Voting Securities and Principal Holders Thereof", which aggregates
2,699,041 shares, will be voted FOR the Proposal. The expense of soliciting
consent pursuant to this Consent Solicitation including attorneys fees and
postage aggregating approximately $5,000 will be paid by the Company.
Solicitations will be made primarily thought the use of the mails. In addition,
after a copy of this Consent Solicitation is provided by mail to stockholders,
some of the officers and directors of the Company may solicit consents
personally, by telephone and by mail, if deemed appropriate.
STOCKHOLDERS' PROPOSALS
It is anticipated that the Company's next Annual Meeting of
Stockholders will be held in June 1999. Stockholders who seek to present
proposals at the Company's Annual Meeting of Stockholders must have submitted
their proposals to the Secretary of the Company on or before March 1, 1999. Such
proposals should be addressed to the Secretary, MicroTel International, Inc.,
4290 East Brickell Street, Ontario, CA 91761.
<PAGE>
FINANCIAL AND OTHER INFORMATION
The information required pursuant to Item 13(a) is hereby
incorporated by reference from the Company's Quarterly Report on Form 10-Q
for the period ended September 30, 1998 and the Company's Annual Report on
Form 10-K for the year ended December 31, 1997, both of which have been filed
with the Securities and Exchange Commission.
The Company will provide any documents incorporated herein by reference
at the request of the stockholder. Requests for such documents should be
directed to , MicroTel International, Inc. Attn: James P. Butler, Chief
Financial Officer, 4290 East Brickell Street, Ontario, CA 91761.
By order of the Board of Directors
James P. Butler
Chief Financial Officer
Dated: March 11, 1999 MICROTEL INTERNATIONAL, INC.
<PAGE>
MICROTEL INTERNATIONAL, INC. CONSENT FORM
WRITTEN CONSENT OF STOCKHOLDERS IN LIEU OF SPECIAL MEETING
The undersigned, a stockholder of record of MicroTel International,
Inc. (the "Company") as of the close of business on March 4, 1999, hereby takes
the following action, with respect to all stock of the Company held by the
undersigned, in connection with the solicitation by the Board of Directors of
the Company of written consents, pursuant to Section 228 of the Delaware General
Corporation Law, to the "The Proposal" which involves approval of the issuance
of the Company's Series A Preferred Stock described in the Company's Consent
Solicitation Statement, dated March 11, 1999, without a meeting:
(Place an "X" in the appropriate box)
CONSENT [ ] CONSENT WITHHELD [ ] ABSTAIN [ ]
If no box is marked with respect to the action described above, the
undersigned will be deemed to have consented to the proposed amendment.
Dated: ________________________, 1999
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Signature(s)
Please sign as registered and return
promptly in the enclosed envelope.
Executors, trustees and others signing
in a representative capacity should
include their names and the capacity in
which they sign.
