<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
<TABLE>
<S> <C>
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule
14a-12
</TABLE>
<TABLE>
<S> <C> <C>
MICROTEL INTERNATIONAL, INC.
- --------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------
(Name of Person(s) 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:
----------------------------------------------------------
</TABLE>
<PAGE>
MICROTEL INTERNATIONAL, INC.
9485 HAVEN AVENUE, SUITE100
RANCHO CUCAMONGA, CALIFORNIA 91730
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 27, 2000
------------------------
TO THE STOCKHOLDERS OF MICROTEL INTERNATIONAL, INC.:
You are hereby notified that the annual (the "Annual Meeting") of the
stockholders of MicroTel International, Inc., a Delaware corporation (the
"Company") will be held at the Company's corproate Headquarters at 9485 Haven
avenue, Suite 100, Rancho Cucamonga, California 91730 on Tuesday, June 27, 2000
at 11:00 a.m. local time for the following purposes:
1. To approve amendment of the Company's Certificate of Incorporation to
increase the aggregate number of authorized shares of common stock from
25,000,000 shares to 50,000,000 shares.
2. To increase the available common shares reserved for the Company's
MicroTel International Inc. 1997 Stock Incentive Plan from 1,600,000
shares to 3,000,000 shares in order to provide shares available to issue
stock options for current and new acquisition key employees.
3. To ratify the appointment of BDO Seidman, LLP as the independent
auditors of the Company for the fiscal year ending December 31, 2000.
Only stockholders of record at the close of business on May 3, 2000 (the
"Record Date") are entitled to notice of and to vote at the Annual Meeting.
A proxy statement and proxy are enclosed herewith and are solicited by and
on behalf of the Board of Directors of the Company. All stockholders are
cordially invited to attend the Annual Meeting in person. If you are unable to
attend the Annual Meeting in person please sign, date and return the enclosed
proxy promptly in the enclosed addressed envelope which requires no postage if
mailed within the United States. If you attend the meeting in person, you may
withdraw your proxy and vote your shares in person even though you have
previously signed and returned your proxy. Also enclosed herewith is the
Company's Annual Report for 1999.
By Order of the Board of Directors
[SIGNATURE]
Robert B. Runyon, Secretary
Rancho Cucamonga, California
<PAGE>
MICROTEL INTERNATIONAL, INC.
9485 HAVEN AVENUE, SUITE 100
RANCHO CUCAMONGA, CALIFORNIA 91730
DATE:
------------------------
PRELIMINARY PROXY STATEMENT
---------------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies for use at the annual meeting (the "Annual Meeting") of stockholders of
MicroTel International, Inc. (the "Company"), to be held on Tuesday, June 27,
2000, and at any adjournments thereof. The accompanying proxy is solicited by
the Board of Directors of the Company and is revocable by the stockholder by
notifying the Company's secretary at any time before it is voted, or by voting
in person at the Annual Meeting. This proxy statement and accompanying proxy
will be distributed to stockholders beginning on or about May 13, 2000. The
principal executive offices of the Company are located at 9485 Haven Avenue,
Suite 100, Rancho Cucamonga, California 91730 and its telephone number is
(909) 297-2699.
OUTSTANDING SHARES AND VOTING RIGHTS
Only stockholders of record at the close of business on May 3, 2000 are
entitled to receive notice of, and vote at, the Annual Meeting. As of April 22,
2000, the number and class of stock outstanding and entitled to vote at the
meeting was 18,493,516 shares of common stock, par value $.0033 per share (the
"Common Stock"). Each share of Common Stock is entitled to one vote on all
matters. No other class of securities will be entitled to vote at the meeting.
There are no cumulative voting rights.
For the purposes of the annual meeting, a quorum is representation in person
or by proxy at the Annual Meeting of at least a majority of the outstanding
Common Stock of the Company. All shares at the Annual Meeting by proxies will be
voted if properly signed and dated. Where a choice is indicated, shares will be
voted accordingly. Where no choice is specified, the proxies will be voted FOR
Proposal 1, FOR Proposal 2 and FOR Proposal 3. Where brokers have not received
any instructions from their clients on how to vote on a particular proposal,
brokers are permitted to vote on routine proposals but not on nonroutine
matters. The absence of votes on nonroutine matters are "broker nonvotes."
Abstentions and broker nonvotes will be counted as present for purposes of
establishing a quorum, but will have no effect on the election of directors.
Abstentions and broker nonvotes on proposals other than the election of
directors will be counted as present for purposes of the proposal and will have
the effect of a vote against the proposal.
BOARD OF DIRECTORS
The Board currently consists of three members, following the resignation,
effective as of June 25, 1999, of Mr. David A. Barrett. A search is will be
conducted to locate a qualified candidate or candidates for additional
director(s). The Company intends to increase the number of Directors to five.
The Board of Directors is responsible for the management and direction of the
Company and for establishing broad corporate policies. Members of the Board of
Directors are kept informed of the Company's business by various reports and
documents provided to them regularly, as well as by operating and financial
reports presented by the Chairman of the Board and Chief Executive Officer and
the Chief Financial Officer at meetings of the Board of Directors and committees
of the Board.
The Board of Directors of the Company is divided into three classes. The
term of office of each class of directors is three years, with one class
expiring each year at the Annual Meeting of Stockholders. There
<PAGE>
are currently three directors, one of which is in Class II and two of which are
in Class III. No directors are up for reelection in 2000.
DIRECTOR'S MEETINGS AND COMMITTEES
The Board of Directors met three times during fiscal year ended
December 31, 1999. All of the directors named above attended all of the meetings
of the Board of Directors and of the committees, if any, of which they were
members. The Board has two standing committees: an Audit Committee and an
Executive Compensation and Management Development Committee. The Executive
Compensation and Management Development Committee met five times. The Audit
Committee did not meet during the year ended December 31, 1999.
The Audit Committee is presently comprised solely of Mr. Finnegan. Among the
Audit Committee's principal functions are making recommendations to the Board of
Directors concerning the engagement of independent auditors, reviewing the
Company's financial management and financial results and reviewing the adequacy
of the Company's system of internal accounting controls.
The Executive Compensation and Management Development Committee is comprised
solely of Mr. Runyon. It is responsible for establishing and administering the
Company's policies involving the compensation of all executive officers of the
Company and establishing and recommending to the Board of Directors the terms
and conditions of all employee compensation and benefit plans.
COMPENSATION OF DIRECTORS
During the year ended December 31, 1997, the Board of Directors adopted a
policy for non-employee director compensation which includes annual and
per-meeting-attended fees but which would not be implemented until such time as
the Board determines the Company's operating results are sufficiently profitable
to support such compensation. Until the new policy is implemented, each
non-employee director is entitled to receive one thousand dollars ($1,000) per
quarter as compensation, none of which was paid during 1999. The Company
reimburses all directors for out-of-pocket expenses incurred in connection with
attendance at Board and committee meetings.
DIRECTORS AND EXECUTIVE OFFICERS
The current directors and executive officers of MicroTel are as follows:
<TABLE>
<CAPTION>
NAME AGE TITLES
- ---- -------- ---------------------------------------------------
<S> <C> <C>
Carmine T. Oliva.......................... 57 Chairman of the Board of Directors, President and
Chief Executive Officer
Laurence P. Finnegan, Jr.................. 61 Director
Robert B. Runyon.......................... 74 Secretary and Director
Randolph D. Foote......................... 51 Senior Vice President and Chief Financial Officer
Graham Jefferies.......................... 42 Executive Vice President
</TABLE>
CARMINE T. OLIVA (Class III Director) has been the Chairman, President and
Chief Executive Officer of the Company since March 26, 1997 and of XIT
Corporation, a subsidiary of the Company, since its founding in 1983. From 1980
to 1983, Mr. Oliva was Senior Vice President and General Manager, ITT Asia
Pacific Inc. Prior to that position, Mr. Oliva held a number of executive
positions with ITT Corporation and its subsidiaries over an eleven-year period.
Mr. Oliva is the founder of XIT. Mr. Oliva attained the rank of Captain in the
United States Army and is a veteran of the Vietnam War.
LAURENCE P. FINNEGAN, JR. (Class II Director) was appointed as a Director of
MicroTel on March 26, 1997. In addition to being a director of XIT since 1985,
Mr. Finnegan joined XIT as its Chief Financial Officer on a part-time basis in
1994. Mr. Finnegan has held positions with ITT (1970-74) as
2
<PAGE>
controller of several divisions, Narco Scientific (1974-1983) as Vice President
Finance, Chief Financial Officer and Executive Vice President, and Fischer &
Porter (1986-1994) as Senior Vice President, Chief Financial Officer and
Treasurer. Since 1994, he has been a principal of Gwyn Allen Partners,
Bethlehem, Pennsylvania, an executive management consulting firm, and President
of GA Pipe, Inc., a manufacturing company based in Langhorne, Pennsylvania.
ROBERT B. RUNYON (Class III Director) was appointed as a Director and
Secretary of MicroTel on March 26, 1997. He is the owner and principal of Runyon
and Associates, a human resources and business advisory firm since 1990. Prior
to the Merger, Mr. Runyon served XIT both as a director and as consultant in the
areas of strategy development and business planning, organization, human
resources, and administrative systems. He also consults for companies in
environmental products, marine propulsion systems and architectural services
sectors in these same areas. From 1970 to 1978, Mr. Runyon held various
executive positions with ITT Corporation including Vice President,
Administration of ITT Grinnell, a manufacturing subsidiary of ITT. From 1963 to
1970, Mr. Runyon held executive positions at BP Oil including Vice President,
Corporate Planning and Administration of BP Oil Corporation, and director,
organization and personnel for its predecessor, Sinclair Oil Corporation.
Mr. Runyon was Executive Vice President, Human Resources at the Great
Atlantic & Pacific Tea Company from 1978 to 1980.
RANDOLPH D. FOOTE was appointed Senior Vice President and Chief Financial
Officer on October 4, 1999. Mr. Foote was the Corporate Controller of Unit
Instruments, Inc., a public semiconductor equipment manufacturer, from 1995 to
1999. From 1985 to 1995, Mr. Foote was the Director of Tax and Financial
Reporting at Optical Radiation Corporation, a public company, which was a
designer and manufacturer of products using advanced optical technology. Prior
to 1985, Mr. Foote held positions with Western Gear Corporation and Bucyrus Erie
Company which were both public companies.
GRAHAM JEFFERIES was appointed Executive Vice President and Chief Operating
Officer of the Company's worldwide Telecommunications Group on October 21, 1999.
Mr. Jefferies is also Managing Director of the Company's United Kingdom
operations. Prior to joining the Company in 1992, he was Sales and Marketing
Director of Jasmin Electronics PLC, a major UK software and systems provider,
from 1987 to 1992. Mr. Jefferies held a variety of project management positions
at GEC Marconi from 1978 to 1987. Mr. Jefferies has an Honours degree in
Electronics and has experience in mergers and acquisitions.
3
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth certain information regarding the beneficial
ownership of the Company's common stock as of April 22, 2000 by the following:
(i) each person who is beneficial owner of more than five percent (5%) of the
Company's outstanding common stock; (ii) each Director; (iii) each of the named
executive officers of the Company; and (iv) all Directors and executive officers
as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED PERCENT OF CLASS
- ------------------------------------ ------------------ ----------------
<S> <C> <C>
Orbit II Partners, LP ...................................... 2,821,485(1) 13.72%
2 Rector Street 16(th) Floor
New York, NY 10006
Carmine T. Oliva ........................................... 1,915,053(2) 9.92%
c/o MicroTel International, Inc.
9485 Haven Avenue, Suite 100
Rancho Cucamonga, CA 91730
Samuel J. Oliva ............................................ 828,443(3) 4.43%
80 Brandywyne Drive
Florham Park, NJ 07932
Laurence P. Finnegan, Jr. .................................. 132,349(4) *
3 Woods Lane
Ambler, PA 19002
Robert B. Runyon ........................................... 327,303(5) 1.76%
10 Eagle Claw Drive
Hilton Head, SC 29926
Randolph D. Foote .......................................... 55,000(6) *
c/o MicroTel International, Inc
9485 Haven Avenue, Suite 100
Rancho Cucamonga, CA 91730
Graham Jefferies ........................................... 129,563(7) *
c/o XCEL Powers Systems, Ltd.
Brunswick Road, Cobbs Wood
Ashford, Kent TN23 1 EB, U. K.
All executive officers and directors as a group (6 3,387,711 16.99%
persons)..................................................
</TABLE>
- ------------------------
* (less than 1%)
(1) Orbit II Partners L. P. and its Managing Partners, Alan Mackenzie, Jr.,
David Marino and Joel S. Kraut have a beneficial interest in 172,500 common
shares issuable upon the exercise of warrants and 1,743,285 common shares
upon the conversion of Series A Preferred Stock in addition to ownership of
755,700 shares of common stock. The Managing Partners are also
Administrative Members of OTAF, LLC, a New York limited liability company
that owns 150,000 shares issuable upon the exercise of warrants.
(2) 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 765,749
shares, issuable to Mr. Oliva upon the exercise of MicroTel options and
warrants and 50,530 common shares issuable from the conversion of one share
of Series A Convertible Preferred Stock.
(3) Includes 116,155 shares issuable to Mr. Oliva upon the exercise of MicroTel
warrants and 101,060 shares issuable from the conversion of Series A
Convertible Preferred Stock.
(4) 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.
4
<PAGE>
(5) Includes 147,217 shares issuable to Mr. Runyon upon the exercise of MicroTel
options and warrants.
(6) Includes 50,000 shares issuable to Mr. Foote upon exercise of MicroTel
options.
(7) Includes 126,287 shares issuable to Mr. Jefferies upon exercise of MicroTel
options.
PROPOSALS TO STOCKHOLDERS
PROPOSAL NO. 1
INCREASE AUTHORIZED CAPITAL FROM 25,000,000 SHARES TO 50,000,000 SHARES
The Board of Directors has authorized the Company to seek shareholder
approval to increase the authorized common shares from 25,000,000 shares to
50,000,000 shares. The Board has decided that it is in the best interest of the
stockholders for the Company to amend its Certificate of Incorporation for the
increase in authorized shares to more appropriately reflect the capital
structure that meets the present and future needs of the Company. In the event
that the Amendment is approved, the Company will thereafter amend the
Certificate of Incorporation. The Board recommends that the Company's
shareholders approve such an amendment. At the current time, the Company does
not have sufficient shares to issue if an opportunity arose to acquire another
business in part or in whole for Company shares. An increase in the quantity of
common shares available will provide shares for the Company to make acquisitions
utilizing stock.
The authorization of an additional 25,000,000 shares would give the Board of
Directors the ability to issue such shares of common stock from time to time as
the Board deems necessary. The Board believes it is necessary to have the
ability to issue such additional shares of common stock for any proper corporate
purpose, such as future acquisitions, stock and option grants and convertible
debt and equity financing. The Company has no specific plans, understandings or
agreements at present for the issuance of the proposed additional shares of
common stock. The Board of Directors, however, believes that if an increase in
the authorized number of shares of common stock were to be postponed until a
specific need arose, the delay and expense incident to obtaining approval from
the Company's shareholders at that time could significantly impair the Company's
ability to consummate an acquisition or meet financial requirements or other
objectives.
PROPOSAL NO. 2
INCREASE STOCK RESERVED FOR STOCK OPTIONS FROM 1,600,000 SHARES
TO 3,000,000 SHARES
The MicroTel International Inc. 1997 Stock Incentive Plan ("the Plan") sets
aside 1,600,000 common shares for the exercise of stock options issued under the
Plan. As of April 22, 2000, there were 125,000 shares available for new stock
option issuances. The Board of Directors believes that the current quantity of
shares available for stock options of approximately 125,000 shares is not
sufficient to provide appropriate incentives to key employees, especially when
new executives may enter the Company's employment through acquisitions.
Therefore, the Board has passed a resolution approving amendment to the Plan to
increase the quantity of common shares set aside for the plan from 1,600,000 to
3,000,000, subject to stockholders' approval.
PROPOSAL NO. 3
APPOINTMENT OF ACCOUNTANTS FOR THE COMPANY
Upon the recommendations of the Audit Committee, the Board of Directors has
appointed the firm of BDO Seidman, LLP, independent public auditors for the
company during the 1999 Fiscal Year, to serve in the same capacity for the
fiscal year ending December 31, 2000 and is asking the shareholders to ratify
this appointment. A representative of BDO Seidman, LLP, who is expected to be
present at the Annual Meeting, will have the opportunity to make a statement if
he or she desires to do so, and will be available to respond to appropriate
questions.
5
<PAGE>
In the event that the shareholders do not approve the selection of BDO
Seidman, LLP, the appointment of the independent auditors will be reconsidered
by the Board of Directors. Even if the selection is ratified, the Board of
Directors in its discretion may direct the appointment of a different
independent auditing firm at any time during the year if the Board of Directors
believes that such change would be in the best interests of the Company and its
shareholders.
BOARD OF DIRECTORS RECOMMENDATIONS
The Board of Directors believes that (1) the increase in authorized common
shares from 25,000,000 to 50,000,000; (2) the increase in common stock reserved
for the MicroTel International Inc. 1997 Stock Incentive Plan from 1,600,000
common shares to 3,000,000 common shares; (3) ratification of the appointment of
BDO Seidman, LLP to serve as the Company's independent auditor for the fiscal
year ended December 31, 2000 are in the best interest of the Company and its
stockholders and unanimously recommends a vote "FOR" each of the proposals set
forth and described in this Proxy statement.
OTHER MATTERS
The Company knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters properly come before
the Annual Meeting, it is the intention of the persons named in the enclosed
form of Proxy to vote the shares they represent as the Board of Directors may
recommend. Discretionary authority with respect to such other matters is
expressly granted by the execution of the enclosed Proxy.
SUMMARY COMPENSATION TABLE
The cash compensation paid by the Company during the years ended
December 31, 1999, 1998 and 1997 to its Chief Executive Officer and other
executive officers earning salary and bonus exceeding $100,000 annually is
presented in the Summary Compensation Table below.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
----------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
----------------------------------------- ----------------------- --------
(A) (B) (C) (D) (E) (F) (G) (H)
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING PAYOUTS
NAME AND PRINCIPAL COMPENSATION AWARDS(S) OPTIONS/ LTIP
POSITION (1) YEAR SALARY ($)(2) BONUS ($) ($)(3) ($) SARS (#) ($)
- ------------------ -------- ------------- --------- ------------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Carmine T. Oliva, ........ 1999 198,872 -0- -0- -0- -0- -0-
President, CEO 1998 198,872 -0- -0- -0- -0- -0-
1997 239,364 -0- -0- -0- -0- -0-
Randolph D. Foote, ....... 1999 23,367 -0- 1,800 -0- 50,000 -0-
Senior Vice Pres., CFO 1998 -0- -0- -0- -0- -0- -0-
1997 -0- -0- -0- -0- -0- -0-
Graham Jefferies, EVP..... 1999 114,192 -0- 6,199 -0- 60,000 -0-
1998 98,918 -0- 6,097 -0- 30,000 -0-
1997 95,755 -0- 6,527 -0- -0- -0-
James P. Butler, ......... 1999 122,769 -0- 5,400 -0- -0- -0-
Former CFO 1998 125,000 -0- 7,200 -0- 40,000 -0-
(Resigned 10/4/99) 1997 44,377 -0- 2,700 -0- 75,000 -0-
<CAPTION>
(A) (I)
NAME AND PRINCIPAL ALL OTHER
POSITION (1) COMPENSATION(4)
- ------------------ ----------------
<S> <C>
Carmine T. Oliva, ........ -0-
President, CEO -0-
-0-
Randolph D. Foote, ....... -0-
Senior Vice Pres., CFO -0-
-0-
Graham Jefferies, EVP..... 5,116
5,567
6,527
James P. Butler, ......... -0-
Former CFO -0-
(Resigned 10/4/99) -0-
</TABLE>
- ------------------------------
(1) Carmine T. Oliva became Chairman and Chief Executive Officer on 3/26/97,
upon Jack Talan's resignation concurrent with the merger of the Registrant
with XIT Corporation.
(1) Randolph D. Foote was appointed Senior Vice President and Chief Financial
Officer on October 4, 1999, following receipt of notification of the
resignation of the Registrant's former Chief Financial Officer, James P.
Butler.
(1) Mr. Jefferies was appointed Executive Vice President and Chief Operating
Officer of the worldwide Telecommunications Group on October 21, 1999.
Mr. Jefferies is based in the United Kingdom and receives his remuneration
in British pounds. The compensation amounts listed for Mr. Jefferies are
shown in U. S. dollars, converted from British pounds using the average
conversion rates in effect during the time periods of compensation.
6
<PAGE>
(2) Mr. Oliva's salary includes payments of $45,333 in 1997 of voluntarily
deferred salary from years prior to 1997.
(3) Consists solely of an automobile allowance.
(4) Consists of contributions to Mr. Jefferies retirement plan.
LONG TERM INCENTIVE PLAN
In 1997, the Company's Board of Directors approved a Long Term Incentive
Plan -- the 1997 Stock Incentive Plan (the "1997 Plan") -- which provides
incentive compensation opportunities for officers and other key employees in the
form of stock options, stock appreciation rights, restricted stock and other
forms consistent with the objectives of the 1997 Plan. Adoption of the 1997 Plan
was approved by the stockholders at the 1998 Annual Meeting of Stockholders. The
following two tables depict stock option grants to and exercises by the named
executives for the year ended December 31, 1999 and the status of outstanding
stock options issued to them at December 31, 1999.
OPTIONS/SAR GRANTS GRANTED DURING THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
POTENTIAL REALIZED
VALUE AT ASSUMED
ANNUAL RATES OF ALTERNATIVE TO
STOCK PRICE (F) AND (G):
APPRECIATION FOR GRANT DATE
INDIVIDUAL GRANTS OPTIONTERM (1) VALUE
------------------------------------- ---------------------- --------------
(A) (B) (C) (D) (E) (F) (G) (F)
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/
UNDERLYING SARS EXERCISE
OPTIONS/ GRANTED TO OR BASE GRANT DATE
SARS EMPLOYEES IN PRICE EXPIRATION 10% 5% PRESENT VALUE
NAME GRANTED(#) FISCAL YEAR ($/SHARE) DATE ($) ($) ($)
- ---- ---------- ------------ --------- ---------- -------- -------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Carmine T. Oliva, CEO..... -0- -0- n/a n/a n/a n/a n/a
Randolph D. Foote, CFO.... 50,000 11.6% 0.20 11/15/09 6,289 15,937 7,357
Graham Jefferies, EVP..... 60,000 14.0% 0.20 11/15/06 7,547 19,125 8,828
James P. Butler, Former
CFO (Resigned
10/4/99)................ -0- -0- n/a n/a n/a n/a n/a
</TABLE>
- ------------------------
(1) The dollar amounts under the 5% and 10% columns in the table shown above are
the result of calculations required by the SEC's rules and are not intended
to forecast any future appreciation in the Company's stock price. No gain to
the Named Executive Officer is possible without appreciation in the price of
the Company's common stock, which would benefit all stockholders.
AGGREGATED OPTIONS/SAR EXERCISES IN 1999
AND OPTIONS/SAR VALUES AT DECEMBER 31, 1999
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E)
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SARS OPTIONS/SARS
ACQUIRED VALUE AT 12/31/99 (#) AT 12/31/99 ($)
ON EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ---------------------- --------------------
<S> <C> <C> <C> <C>
Carmine T. Oliva, CEO................ -0- -0- 130,633/0 0/0
Randolph D. Foote, CFO............... -0- -0- 25,000/25,000 5,938/5,938
Graham Jefferies, EVP................ -0- -0- 96,287/30,000 7,125/7,125
James P. Butler, Former CFO ......... -0- -0- 115,000/0 0/0
(Resigned 10/4/99)
</TABLE>
7
<PAGE>
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS.
Pursuant to the employment agreement dated January 1, 1996 between the
Company and XIT Corporation, Carmine T. Oliva was employed as Chairman,
President and Chief Executive Officer of XIT Corporation for a term of five
years at an annual salary of $250,000. In July 1996, Mr. Oliva voluntarily
agreed to abate a portion of his annual salary in connection with XIT's salary
abatement program then in effect. On May 6, 1997, the Board of Directors of the
Company voted to assume the obligations of XIT under this Agreement in light of
the appointment of Mr. Oliva to the positions of Chairman of the Board,
President and Chief Executive Officer of the Company. On October 15, 1997, the
Company and Mr. Oliva entered into a replacement agreement on substantially the
same terms and conditions as the prior agreement. The current agreement is
subject to automatic renewal for three successive two year terms commencing on
October 15, 2001, unless, during the required notice periods as provided
therein, either party gives written notice of its desire not to renew and
provides that Mr. Oliva's salary continues at the abated amount of $198,865 per
annum until such time as the Company has reported two (2) consecutive profitable
quarters during the term of the agreement or any renewals thereof. In the event
of Mr. Oliva's termination for cause, the Company's obligation to pay any
compensation, severance allowance, or other amounts payable under the Agreement
terminates on the date of such termination. In the event of a termination
without cause, Mr. Oliva shall be paid his annual salary for two and one-half
years following the effective date of such termination or until October 15,
2002, whichever is longer. If such termination without cause occurs during a
renewal period, Mr. Oliva shall be paid his annual salary through the expiration
of that particular renewal period as well as any and all other amounts payable
pursuant to the Agreement. The Company may terminate the agreement upon thirty
days written notice in the event of a merger, sale or reorganization of the
Company in which the shareholders of the Company immediately prior to such
reorganization receive less than fifty percent of the outstanding voting shares
of the successor corporation.
On May 1, 1998, the Company and Mr. Jefferies entered into an employment
agreement for a term of two years at an initial annual salary of 67,000 British
pounds (approximately $106,500 at current exchange rates) that is subject to
automatic renewal for two successive one year terms commencing on May 1, 2000,
unless, during the required notice periods as provided therein, either party
gives written notice of its desire not to renew. In the event Mr. Jefferies's
duties are substantially changed (the "Redesignation"), resulting in a
substantial net change in the scope of his responsibilities, Mr. Jefferies may
elect not to accept such Redesignation and resign. In such event, if the
Redesignation occurs during the initial term of the agreement, the Company shall
pay Mr. Jefferies his annual salary for one year or through May 1, 2000
whichever is longer. If the Redesignation occurs during a renewal period, the
Company shall pay Mr. Jefferies his annual salary for one year following the
effective date of his resignation. In the event of Mr. Jefferies' termination
for cause, the Company's obligation to pay any compensation, severance
allowance, or other amounts payable under the Agreement terminates on the date
of such termination. In the event of a termination without cause during the
initial term of the agreement, Mr. Jefferies shall be paid his annual salary for
one year following the effective date of such termination or until May 1, 2000,
whichever is longer. If such termination without cause occurs during a renewal
period, Mr. Jefferies shall be paid his annual salary through the expiration of
that particular renewal period as well as any and all other amounts payable
pursuant to the Agreement. The Company may terminate the agreement upon thirty
days written notice in the event of a merger, sale or reorganization of the
Company in which the shareholders of the Company immediately prior to such
reorganization receive less than fifty percent of the outstanding voting shares
of the successor corporation.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION.
The Executive Compensation and Management Development Committee of the Board
of Directors, composed of one outside director, is responsible for establishing
and administering the Company's policies involving the compensation of all
executive officers of the Company and establishing and recommending to
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the Board of Directors the terms and conditions of all employee compensation and
benefit plans. No employee of the Company serves on this committee. During the
fiscal year ended December 31, 1999, the Executive Compensation and Management
Development Committee of the Board of Directors consisted of Robert Runyon and,
prior to June 26, 1999, David Barrett.
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEE
This report is provided by the Executive Compensation and Management
Development Committee of the Board of Directors to assist shareholders in
understanding the Company's objectives, policies and procedures in establishing
its executive compensation structure and system. The Committee is responsible
for (a) reviewing and approving base salaries, bonuses and incentive awards for
all executive officers, (b) reviewing and establishing the base salary, bonuses
and incentive awards for the Chief Executive Officer, and (c) reviewing,
approving and recommending to the Board of Directors the content, terms and
conditions of all employee compensation and benefit plans, or changes thereto.
The compensation philosophy and policy of the Company is based upon four
central objectives:
- To provide an executive compensation structure and system which is both
competitive in the outside industrial marketplace and also internally
equitable based upon the weight and level of responsibilities in the
respective executive positions.
- To attract, retain and motivate qualified executives within this
structure, and reward them for outstanding performance-to-objectives and
business results through financial and other appropriate management
incentives.
- To align the Company's financial results and the compensation paid to the
Company's executive officers with the enhancement of shareholder value.
- To structure the Company's compensation policy so that executive officers'
compensation is dependent, in one part, on the achievement of its current
year business plan objectives, and in another part, on the long term
increase in company net worth and the resultant improvement in shareholder
value, and to maintain an appropriate balance between short and long range
performance objectives, over time.
The Company's compensation programs consist of base salary, an annual
incentive bonus, and the award of stock options and other equity-based
incentives. The base salary is targeted to recognize each executive's unique
value and historical contributions to the success of the Company in light of the
industry salary norms for the equivalent position in the relevant market. The
Compensation and Management Development Committee reviews the compensation of
the Chief Executive Officer, and with the Chief Executive Officer, the base
compensation of all executive officers and other key employees on an annual
basis to assure that a competitive position is maintained.
The annual incentive bonus is based upon actual performance compared to
pre-established quantitative and qualitative performance objectives, derived
from the Company's business plan and operating budgets, which can include
Company, operating subsidiary/division and individual components.
To further align the financial interests of the executive with those of the
Company and its shareholders, the long range executive incentive program is
primarily equity based, and provides the opportunity for the executive to earn
stock options and thereby benefit, along with all shareholders, from
performance-driven advancement of share value in the marketplace.
Within the controlling corporate policy direction of the Compensation
Committee and the Board of Directors, the equity incentive program (1997 Stock
Incentive Plan) includes (a) the criteria for option awards, (b) the number of
shares and timing of option grants, (c) internal equity in terms of grantee
levels
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of responsibility and potential to impact Company performance, (d) measured
consistency within the competitive marketplaces, (e) relation to financial
results, (f) the mutuality of interest between grantee and shareholders, and
(g) the essential objectives, processes and controls.
The Company also maintains certain other executive benefits that are
considered necessary in order to offer fully competitive opportunities to its
executives. These include, but are not limited to, 401(k) retirement savings
plans, profit sharing opportunities, car allowances, employment agreements, and
indemnification agreements.
In 1997, all Company compensation policies, programs and procedures were
revised and updated to recognize the new and changed conditions resulting from
the merger of privately held XIT Corporation and publicly traded MicroTel
International, Inc., which was effective March 26, 1997, and to position the new
MicroTel entity for its future growth and development. The Compensation
Committee will continue to monitor and evaluate the executive compensation
system and its application throughout the organization to assure that it
continues to reflect the Company's compensation philosophy and objectives.
CHIEF EXECUTIVE OFFICER COMPENSATION
The base salary of Carmine T. Oliva, Chairman and Chief Executive Officer,
is targeted to fairly recognize his unique leadership skills and management
responsibilities compared to similarly positioned executives in the industry and
general marketplaces. The criteria for measurement includes data available from
objective, professionally conducted market studies, integrated with additional
competitive intelligence secured from a range of industry and general market
sources.
The Committee has determined that no increase in base salary for Mr. Oliva
would be considered until the Company's cash flow can be significantly
strengthened. Also, no bonus was paid to Mr. Oliva or to other executive
officers for 1999, as corporate financial performance fell short of objectives.
However, to assure strength and continuity in the office of the Chief
Executive, Mr. Oliva's employment contract was renegotiated, and the new
agreement became effective in October, 1997. The agreement is based on a
five-year commitment, with three successive two-year automatic renewals,
predicated upon a mutual agreement between the Company and Mr. Oliva at those
times.
Respectfully submitted,
Executive Compensation and Management
Development Committee
MicroTel International, Inc.
Robert B. Runyon, Chairman
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PERFORMANCE GRAPH
The following table represents the sixty (60) month cumulative total return
among the Company, the NASDAQ Stock Market (US) ("NASDAQ") and the NASDAQ
Telecom Index ("Telecom"), assuming $100 was invested on December 31, 1994,
including reinvestment of dividends.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONTH MICROTEL INTERNATIONAL, INC.,
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE NASDAQ TELECOMMUNICATIONS INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
<S> <C> <C> <C> <C> <C> <C>
12/94 12/95 12/96 12/97 12/98 12/99
MICROTEL INTERNATIONAL, INC. $100.00 181.82 43.64 43.64 19.09 12.74
NASDAQ STOCK MARKET (U.S.) $100.00 141.33 173.89 213.07 300.25 542.43
NASDAQ TELECOMMUNICATIONS $100.00 130.91 133.86 195.75 322.30 561.27
</TABLE>
* $100 INVESTED ON 12/31/94 IN STOCK OR INDEX --
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31, 1999.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On April 9, 1998, the Company's wholly-owned subsidiary XCEL Arnold
Circuits, Inc. sold substantially all of the assets used in its Arnold Circuits
business to Arnold Circuits, Inc., a company wholly owned by Robert Bertrand.
Mr. Bertrand, the Trustee of The Bertrand Family Trust, a beneficial owner of
more than five percent (5%) of the Company's outstanding common stock as of
December 31, 1998. Mr. Bertrand had owned and operated the Arnold Circuits
business until September of 1995, when the assets of that business were acquired
by XCEL Arnold Circuits, Inc.
The purchase price for the assets was $2 million plus the assumption of
liabilities of the Arnold Circuits business. The purchase price was paid by a
cash payment of $1,350,000 and delivery of a promissory note (the "Note") in the
amount of $650,000. The cash proceeds were used to retire bank debt and certain
other debt, including debt owed to Mr. Bertrand and a related entity. As
security for the Note, XCEL Arnold Circuits, Inc. was granted a second lien on
substantially all the assets of Arnold Circuits, Inc. Payment of the Note was
guaranteed by Mr. Bertrand and a related entity. Certain provisions of the
transactions would permit XCEL Arnold Circuits, Inc. to share in any gain of the
sale of the Arnold Circuits business while the Note is outstanding.
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The purchase price for the Arnold Circuits business was arrived at via
negotiation between Messrs. Oliva and Bertrand and was approved by the Board of
Directors. Prior to reaching agreement with Mr. Bertrand, the Company
unsuccessfully attempted for several months to locate a buyer for the Arnold
Circuits business. Given the extent of the operating losses of the Arnold
Circuits business in 1997, the Company believes the terms of the transaction
with Mr. Bertrand were no less favorable to the Company than would have been
obtained in an arm's-length transaction with a third party, assuming an
interested third party had been found.
In connection with the transaction, in reconciliation of inter-company
accounts, the Company issued to Mr. Bertrand and an affiliated entity two
non-interest bearing promissory notes totaling $350,000 which are payable on the
consummation by the Company of a financing transaction and, if no financing
transaction occurs by May 31, 1998, on demand. In July 1998, the Company made a
payment of $100,000 against the notes and no demand has been made for the
balance.
During 1999, Arnold Circuits, Inc. defaulted under the terms of the note
receivable. The Company offset the balance of the note payable against the note
receivable and then wrote-off the unpaid balance of $452,000.
In November 1996, the Company entered into an agreement (the "Agreement")
with the Daniel Dror, former Chairman of the Company, which involved certain
mutual obligations. In December 1997, Mr. Dror defaulted on the repayment of the
first installment of a debt obligation which was an obligation set forth in the
Agreement. Also in December 1997, Mr. Dror filed suit in the District Court for
Galveston County, Texas alleging the Company had breached an alleged oral
modification of the Agreement. In January 1998, the Company answered the
complaint denying the allegation and litigation commenced in Texas.
In April 1998, the Company brought an action in California against Mr. Dror
for breach of the Agreement and sought recovery of all stock, warrants and debt
due the Company. The Company obtained a judgement in the amount of $211,000
against the former Chairman in this litigation. In December 1997, Elk
International Corporation, Limited ("Elk"), a stockholder of the Company,
brought an action in Texas against the Company's current Chairman and an
unrelated party, alleging certain misrepresentations during the merger
discussions between XIT and the Company. In February 1999, Elk filed suit
against the Company, the current Chairman and counsel to the Company in
connection with a stop transfer placed by the Company on certain common shares
then held by Elk. Elk is described in the litigation as a Bahamian corporation
with an investment office in Galveston County, Texas. Mr. Dror stipulated in the
litigation that he manages the affairs of Elk in the United States.
On March 1, 1999, the parties entered into a settlement agreement which
terminated all of the foregoing actions. Pursuant to the terms of the settlement
agreement, the Company cancelled 750,000 options to purchase the Company's
common stock formerly held by Elk and issued to Elk warrants to purchase
1,000,000 shares of the Company's restricted common stock. Additionally, the
Company issued 100,000 shares of its restricted common stock to Elk and 25,000
shares each to two other parties to the settlement agreement. The Company also
agreed to pay certain legal expenses, totaling $60,000, over a period of six
months. The aggregated fair value of the settlement was approximately $130,000
and is reflected in the Company's consolidated financial statements for the
period ended December 31, 1998.
On December 23, 1999, Resonance Ltd. and Rana General Holding Ltd. sold all
their shares of Series A Convertible Preferred Stock and the prorated portion of
warrants applicable to the unconverted preferred shares. The purchasers of such
shares and prorated stock warrants were Orbit II Partners, L. P., a limited
partnership formed under the laws of Delaware, Samuel J. Oliva, Samuel G. Oliva
and Carmine T. Oliva. Carmine T. Oliva is the Company's President and Chairman
of the Board. Samuel J. Oliva and Samuel G. Oliva are relatives of Carmine T.
Oliva. The conversion ratio of the preferred shares sold and outstanding was
changed to a fixed factor whereby one share of preferred is convertible into
50,530 shares of common stock. Also, all the warrants issued in conjunction with
the preferred stock (except those issued
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to the broker) were amended to reduce the exercise price to $0.25 per share and
to extend the expiration date to December 22, 2002. These conversion and
exercise terms were also applied to the remaining preferred stock and warrants
applicable to the preferred stock that were not part of this exchange.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission and the NASDAQ Small Cap-SM- Market initial reports of
ownership and reports of changes in ownership of Common Stock and other equity
securities of the company. Officers, directors and greater than ten-percent
shareholders are required by Securities and Exchange Commission regulation to
furnish the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required during the fiscal year ended December 31, 1999, the
following Section 16(a) reports were not filed on a timely basis: Carmine T.
Oliva -- 2 reports, 1 purchase transaction; Larry Finnegan -- 1 report, no
transactions; Graham Jefferies -- 2 reports, no transactions.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the United
States Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the United States Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements and other information can be inspected and copied at
the public reference facilities maintained by the Commission at Room 1024, 450
Fifth Street, N. W., Washington, D. C. 20549; Northwestern Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661; and 7 World Trade
Center, New York, New York 10048 and are also available on the Commission's
Internet World Wide Web site at http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
This Proxy Statement incorporates certain documents by reference which are
not presented herein or delivered herewith. These documents are available upon
request from MicroTel International, Inc., Corporate Secretary, 9485 Haven
Avenue, Suite 100, Ranch Cucamonga, California 91730, telephone number
(909) 297-2699.
The Company hereby undertakes to provide without charge to each person to
whom a copy of this Proxy Statement has been delivered, on the written or oral
request of such person, a copy of any or all of the documents incorporated by
reference in this Proxy Statement, other than the exhibits to such documents,
unless such exhibits are specifically incorporated herein by reference. Requests
for these documents should be directed to the office indicated above.
The following documents heretofore filed by the Company under the Exchange
Act with the Commission are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1999 (a copy of which accompanies this Proxy Statement).
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Proxy Statement and prior to
the Annual Meeting of Stockholders shall be deemed to be incorporated in this
Proxy Statement by reference and to be incorporated by reference herein modifies
or supersedes such statement. Any such statement so modified or superseded shall
not be deemed to constitute a part of this Proxy Statement except as so
superseded or modified.
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<PAGE>
The information contained in this Proxy Statement does not purport to be
comprehensive and should be read together with the information and financial
statements (including the notes thereto) appearing in the documents incorporated
herein by reference.
A copy of the Company's Annual Report for the year ended December 31, 1999
accompanies this Proxy Statement.
STOCKHOLDERS' PROPOSALS
It is anticipated that the Company's next Annual Meeting of Stockholders
will be held in June 2001. 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 February 1, 2001.
GENERAL
The Company does not intend to hire a proxy solicitor. In addition to the
use of mails, proxies may be solicited by personal interview, telephone and
telegraph, by directors, officers and regular employees of the Company, without
special compensation therefor. The Company expects to reimburse banks, brokers
and other persons for their reasonable out-of-pocket expenses in handling proxy
materials for beneficial owners of the Company's Common Stock.
The Board of Directors knows of no business other than that set forth above
to be transacted at the meeting, but if other matters requiring a vote of the
stockholder arise, the persons designated as proxies will vote the shares of
Common Stock represented by the proxies in accordance with their judgment on
such matters. If a stockholder specifies a different choice on the proxy, his or
her shares of Common Stock will be voted in accordance with the specification so
made.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WE URGE YOU TO FILL IN,
SIGN AND RETURN THE ACCOMPANYING FORM OF PROXY IN THE PREPAID ENVELOPE PROVIDED,
NO MATTER HOW LARGE OR SMALL YOUR HOLDING MAY BE.
BY ORDER OF THE BOARD OF DIRECTORS
[SIGNATURE]
Robert B. Runyon,
Secretary
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<PAGE>
MICROTEL INTERNATIONAL, INC.
ANNUAL MEETING OF STOCKHOLDERS--TUESDAY, JUNE 27, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints CARMINE T. OLIVA and RANDOLPH D. FOOTE and
each of them, with full power of substitution, as proxies to represent the
undersigned at the Annual Meeting of Stockholders to be held at the Company's
corporate offices at 9485 Haven Ave, Suite 100, Rancho Cucamonga, CA 91730,
Tuesday, June 27, 2000 at 10:30 a.m. local time and at any adjournment thereof,
and to vote the shares of stock the undersigned would be entitled to vote if
personally present, as indicated on the reverse side hereof.
The shares represented by the proxy will be voted as directed. If no
contrary instruction is given, the shares will be voted FOR Proposals No. 1 and
2.
PLEASE MARK BOXES IN BLUE OR BLACK INK.
<TABLE>
<S> <C>
Proposal No. 1. Increase authorized shares from 25,000,000 to 50,000,000.
/ / FOR / / AGAINST / / ABSTAIN
Proposal No. 2. Increase shares available for stock options from 1,600,000
to 3,000,000.
/ / FOR / / AGAINST / / ABSTAIN
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Proposal No. 3. Ratify selection of BDO Seidman, LLP, independent public
accountants to audit the financial statements for the year
ending December 31, 2000.
/ / FOR / / AGAINST / / ABSTAIN
Proposal No. 4. In their discretion, the proxies are authorized to vote upon
such other business as may properly come before the meeting.
</TABLE>
(Please date, sign as name
appears at left, and return
promptly. If the stock is
registered in the name of two
or more persons, each should
sign. When signing as Corporate
Officer, Partner, Executor,
Administrator, Trustee, or
Guardian, please give full
title. Please note any change
in your address alongside the
address as it appears in the
Proxy.
Dated ___________________, 2000
_______________________________
Signature
_______________________________
Print Name
PLEASE SIGN, DATE AND RETURN PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
