<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
<TABLE>
<S> <C>
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-12
MICROTEL INTERNATIONAL, INC.
-----------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
</TABLE>
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C> <C>
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
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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</TABLE>
<PAGE>
MICROTEL INTERNATIONAL, INC.
9485 HAVEN AVENUE, SUITE 100
RANCHO CUCAMONGA, CALIFORNIA 91730
------------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 16, 2001
------------------------
NOTICE IS HEREBY GIVEN that the special meeting of stockholders of MicroTel
International, Inc., a Delaware corporation, will be held at our headquarters
located at 9485 Haven Avenue, Suite 100, Rancho Cucamonga, California, on
January 16, 2001 at 11:00 a.m., local time, for the following purposes:
(1) To consider and vote upon a proposal to approve an amendment to our
Certificate of Incorporation to increase our authorized shares of common stock
from 25,000,000 shares to 50,000,000 shares;
(2) To consider and vote upon a proposal to approve a 2000 Stock Option
Plan, pursuant to which we may grant to key employees, officers, directors and
consultants and employees of companies that do business with our company,
options to purchase up to 2,000,000 shares of our common stock;
(3) To consider and vote upon a proposal to approve an amendment to our
Certificate of Designations, Preferences and Rights of Preferred Stock relating
to our Series A Preferred Stock (the "Certificate of Designations");
(4) To ratify the appointment of BDO Seidman, LLP as our independent
auditors for fiscal 2000; and
(5) To transact such other business as may properly come before the meeting
or any adjournments and postponements thereof.
The Board of Directors has fixed the close of business on November 20, 2000
as the record date for the determination of stockholders entitled to notice of
and to vote at the meeting. Only holders of our common stock or holders of our
Series A Preferred Stock at the close of business on the record date are
entitled to vote at the meeting. A list of stockholders entitled to vote at the
special meeting will be available for inspection at our executive offices.
Stockholders attending the meeting whose shares are held in the name of a broker
or other nominee should bring with them a Proxy or letter from that firm
confirming their ownership of shares.
Accompanying this Notice are a Proxy and a Proxy Statement. WHETHER OR NOT
YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE SIGN AND DATE THE ACCOMPANYING
PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. The Proxy may be revoked
at any time prior to its exercise at the meeting.
By Order of the Board of Directors,
[/S/ ROBERT B. RUNYON]
Robert B. Runyon, Secretary
Rancho Cucamonga, California
December 4, 2000
YOUR VOTE IS IMPORTANT
YOU ARE CORDIALLY INVITED TO ATTEND THE SPECIAL MEETING. HOWEVER, IF YOU
WILL NOT BE ABLE TO ATTEND OR EVEN IF YOU DO PLAN TO ATTEND, PLEASE PROMPTLY
COMPLETE, SIGN, DATE AND MAIL THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED.
RETURNING A SIGNED PROXY WILL NOT PREVENT YOU FROM VOTING IN PERSON AT THE
SPECIAL MEETING, IF YOU SO DESIRE, BUT WILL HELP US SECURE A QUORUM AND AVOID
THE EXPENSE OF ADDITIONAL PROXY SOLICITATION.
<PAGE>
MICROTEL INTERNATIONAL, INC.
9485 HAVEN AVENUE, SUITE 100
RANCHO CUCAMONGA, CALIFORNIA 91730
------------------------
SPECIAL MEETING OF STOCKHOLDERS
JANUARY 16, 2001
------------------------
PROXY STATEMENT
INTRODUCTION
This Proxy Statement is furnished to the holders of common stock, $.0033 par
value per share, and Series A Preferred Stock, $.01 par value per share ("Series
A Stock"), of MicroTel International, Inc., a Delaware corporation, in
connection with the solicitation of Proxies by and on behalf of the Board of
Directors ("Board"). The Proxies solicited hereby are to be voted at a special
meeting of stockholders to be held at 11:00 a.m., local time, on January 16,
2001, at our offices at 9485 Haven Avenue, Suite 100, Rancho Cucamonga,
California 91730, and at any and all adjournments and postponements thereof.
This Proxy Statement and the accompanying Proxy are being mailed to all
stockholders on or about December 8, 2000.
A Proxy is enclosed for your use. The shares represented by each properly
executed unrevoked Proxy will be voted as directed by the stockholder with
respect to the matters described therein. If no direction is made, the shares
represented by each properly executed Proxy will be voted FOR the amendment to
our Certificate of Incorporation; FOR the 2000 Stock Option Plan; FOR the
amendment to our Certificate of Designations; and FOR the ratification of the
appointment of our independent auditors.
Any Proxy given may be revoked at any time prior to the exercise thereof by
filing with our Secretary an instrument revoking such Proxy or by the filing of
a duly executed Proxy bearing a later date. Any stockholder present at the
meeting who has given a Proxy may withdraw it and vote his shares in person if
such stockholder so desires.
It is contemplated that the solicitation of Proxies will be made primarily
by mail. We will make arrangements with brokerage houses and other custodians,
nominees and fiduciaries to send Proxies and copies of this Proxy Statement to
the beneficial owners of the shares and will reimburse them for their expenses
in so doing. Should it appear desirable to do so in order to ensure adequate
representation of shares at the meeting, our officers, agents and employees may
communicate with stockholders, banks, brokerage houses and others by telephone
or in person to request that Proxies be furnished. All expenses incurred in
connection with this solicitation will be borne by us. We have no present plans
to hire special employees or paid solicitors to assist in obtaining Proxies, but
we reserve the option of doing so if it should appear that a quorum otherwise
might not be obtained.
Only holders of record of our common stock and Series A Stock at the close
of business on November 20, 2000 are entitled to notice of and to vote at the
special meeting. As of November 20, 2000, the record date for determining the
stockholders entitled to notice of and to vote at the special meeting, we had
issued and outstanding 20,569,759 shares of common stock and 25 shares of Series
A Stock. Each share of our common stock issued and outstanding on the record
date of November 20, 2000 entitles the holder thereof to one vote at the special
meeting for all matters to be voted on at such meeting, and each share of Series
A Stock entitles the holder of record thereof to one vote in connection with the
approval of the amendments to the Certificate of Designations.
For proposals 1, 2 and 4, the holders of a majority of our shares of common
stock issued and outstanding and entitled to vote at the special meeting,
present in person or represented by Proxy, shall constitute a quorum for
purposes of voting on such proposals. With respect to voting on proposal (3), in
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<PAGE>
order to obtain a quorum, there must be present in person or represented by
Proxy at the special meeting, (a) the holders of a majority of our shares of
common stock issued and outstanding and entitled to vote at the special meeting,
and (b) the holders of a majority of our shares of Series A Stock issued and
outstanding and entitled to vote at the special meeting. Except as otherwise
provided by statute, all matters coming before the special meeting shall be
decided by the vote of the holders of a majority of the stock present in person
or represented by Proxy at the special meeting and entitled to vote on such
matters (i.e., a majority of the common stock for proposals 1, 2 and 4 and a
majority of common stock and Series A Stock for proposal 3). Votes cast at the
special meeting will be tabulated by the persons appointed by us to act as
inspectors of election for the special meeting.
The inspectors of election will treat shares of voting stock represented by
a properly signed and returned Proxy as present at the special meeting for
purposes of determining a quorum, without regard to whether the Proxy is marked
as casting a vote or abstaining. Likewise, the inspectors of election will treat
shares of voting stock represented by "broker non-votes" (i.e., shares of voting
stock held in record name by brokers and nominees concerning which
(i) instructions have not been received from the beneficial owners or persons
entitled to vote; (ii) the broker or nominee does not have discretionary voting
power under applicable rules or the instrument under which it serves in such
capacity; or (iii) the record holder has indicated on the Proxy or has executed
a Proxy and otherwise notified us that it does not have authority to vote such
shares on that matter) as present for purposes of determining a quorum.
Abstentions concerning a particular proposal will have the same effect as votes
against such proposal.
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<PAGE>
PROPOSAL 1
AMENDMENT TO CERTIFICATE OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
Effective as of November 14, 2000, the Board approved by action taken
without a meeting of the directors by written consent, an amendment to Article
Fourth of our Certificate of Incorporation to increase the number of shares of
authorized common stock from 25,000,000 to 50,000,000 (the "Authorized Share
Increase"). The full text of the amendment is attached to this Proxy Statement
as EXHIBIT A. The Board believes that the Authorized Share Increase is in the
best interest of our company and our stockholders as it makes additional shares
of common stock available for acquisitions, financings, present and future
employee benefit programs, including the 2000 Stock Option Plan (the "2000
Plan"), and other corporate purposes.
In addition, the Board believes that the Authorized Share Increase is
desirable in light of our recent issuance of 150,000 shares of Series B
Preferred Stock, $.01 par value per share (the "Series B Stock") in connection
with our acquisition of substantially all of the assets of T-Com, LLC, a
privately-held Delaware limited liability company. The 150,000 shares of
Series B Stock will become convertible into common stock in three equal lots of
50,000 shares each on March 20, 2001, September 20, 2001 and March 20, 2002.
Each share of Series B Stock will be convertible into ten shares of common
stock. The Certificate of Designations, Preferences and Rights relating to the
Series B Stock provides that in the event that the authorized number of shares
of our common stock is not sufficient as of March 20, 2001 to permit the
conversion of the Series B Stock into common stock as provided for in such
certificate, each share of Series B Stock then outstanding shall become entitled
to such number of votes as would provide the aggregate number of shares of
Series B Stock then outstanding voting rights equal to ten percent of the then
outstanding common stock for any matter upon which stockholders are entitled to
vote. Currently, the authorized shares of common stock provided for in our
Certificate of Incorporation are not sufficient to satisfy our various
obligations to issue common stock, including our obligations to issue common
stock upon conversion of our Series B Stock. As of the date of this proxy
statement, 3,964,887 shares of common stock have been reserved for issuance upon
exercise of outstanding options and warrants. In addition, 714,286 shares of
common stock have been reserved for issuance upon conversion of our outstanding
shares of Series A Stock (assuming a conversion price of $.35 per share) and
1,500,000 shares of common stock have been reserved for issuance upon conversion
of our outstanding shares of Series B Stock. These reserved shares, when added
to the 20,569,759 shares of common stock outstanding, exceed our current
authorized shares of common stock by 1,748,932 shares. The Board believes that
it is in the best interests of our company and our stockholders to amend the
Certificate of Incorporation to provide sufficient shares of common stock to
enable us to satisfy our obligations to issue common stock as described above.
The additional shares of common stock resulting from the stockholder
approval of the Authorized Share Increase may be issued from time to time as the
Board may determine without further action of the stockholders. Although the
Board has no current plans to utilize such shares to entrench present
management, it may, in the future, be able to use the additional shares of
common stock as a defensive tactic against hostile takeover attempts. The
authorization of such additional shares of common stock will have no current
anti-takeover effect. No hostile takeover attempts are, to management's
knowledge, currently threatened.
The relative rights and limitations of the common stock would remain
unchanged under the amendment. Stockholders do not currently possess, nor upon
the approval of the proposed Authorized Share Increase will they acquire,
preemptive rights that would entitle such persons, as a matter of right, to
subscribe for the purchase of any shares, rights, warrants or other securities
or obligations convertible into, or exchangeable for, securities of our company.
RECOMMENDATION AND REQUIRED VOTE
The affirmative vote of the holders of a majority of the shares of common
stock present in person or represented by Proxy at the special meeting is
required for approval of this proposal. THE BOARD RECOMMENDS A VOTE FOR APPROVAL
OF THE PROPOSED AMENDMENT TO THE CERTIFICATE OF INCORPORATION.
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<PAGE>
PROPOSAL 2
ADOPTION OF 2000 STOCK OPTION PLAN
We currently have four stock option plans: the 1993 Stock Option Plan, the
Employee Stock and Stock Option Plan, the 1997 Stock Incentive Plan and the 2000
Plan. These plans are administered by our executive compensation and management
development committee, which currently consists of Robert Runyon and Laurence
Finnegan, our two non-employee directors.
The 1993 Stock Option Plan authorizes the issuance of incentive stock
options and non-qualified stock options to our employees and independent
contractors for the purchase of up to 300,000 shares of our common stock. The
1993 Stock Option Plan terminates on August 31, 2003. Our Board does not intend
to issue any additional options under the 1993 Stock Option Plan in the future.
The Employee Stock and Stock Option Plan authorizes the issuance of
non-qualified stock options and restricted and unrestricted stock grants to our
employees (including officers and directors who are employees) and consultants
for up to an aggregate of 520,000 shares of common stock. The Employee Stock and
Stock Option Plan terminates on July 1, 2004. Our Board does not intend to issue
any additional options or make any additional stock grants under the Employee
Stock and Stock Option Plan.
The 1997 Stock Incentive Plan authorizes the issuance of incentive stock
options, stock appreciation rights or stock awards to our employees and
directors for up to an aggregate of 1,600,000 shares of common stock, except
that incentive stock options may not be granted to non-employee directors. The
Board's adoption of the 1997 Stock Incentive Plan was ratified by our
stockholders at our 1998 annual meeting of stockholders. The 1997 Stock
Incentive Plan terminates on June 15, 2007. As of November 14, 2000, options to
purchase an aggregate of 1,441,596 shares of our common stock had been issued
under the 1997 Stock Incentive Plan.
Our 2000 Plan was adopted by the Board in November 2000, subject to
stockholder approval. The 2000 Plan authorizes the issuance of incentive stock
options and non-qualified options to our employees, officers, directors and to
consultants and employees of companies that do business with us for the purchase
of up to 2,000,000 shares of our common stock. As of November 14, 2000, we had
approximately 253 employees, officers and directors eligible to receive options
under the 2000 Plan, and no options had been issued under this plan. The
following description of the terms of the 2000 Plan is qualified in its entirety
by reference to the full text of the 2000 Plan, a copy of which is attached to
this Proxy Statement as EXHIBIT B.
SHARES SUBJECT TO THE 2000 PLAN
A total of 2,000,000 shares of our common stock are authorized for issuance
under the 2000 Plan. Any shares of common stock which are subject to an award
but are not used because the terms and conditions of the award are not met, or
any shares which are used by participants to pay all or part of the purchase
price of any option, may again be used for awards under the 2000 Plan.
ADMINISTRATION
It is the intent of the 2000 Plan that it be administered in a manner such
that option grants and exercises would be "exempt" under Rule 16b-3 of the
Securities Exchange Act of 1934, as amended. The executive compensation and
management development committee is empowered to select those eligible persons
to whom options shall be granted under the 2000 Plan; to determine the time or
times at which each option shall be granted, whether options will be ISOs or
NQOs, and the number of shares to be subject to each option; and to fix the time
and manner in which each such option may be exercised, including the exercise
price and option period, and other terms and conditions of such options, all
subject to the terms and conditions of the 2000 Plan. The committee has sole
discretion to interpret and administer the 2000 Plan, and its decisions
regarding the 2000 Plan are final, except that the Board can act
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<PAGE>
in place of the committee as the administrator of the 2000 Plan at any time or
from time to time, in its discretion.
OPTION TERMS
ISOs granted under the 2000 Plan must have an exercise price of not less
than 100% of the fair market value of a share of common stock on the date the
ISO is granted and must be exercised, if at all, within ten years from the date
of grant. In the case of an ISO granted to an optionee who owns more than 10% of
the total voting securities of our company on the date of grant, such exercise
price shall be not less than 110% of fair market value on the date of grant, and
the option period may not exceed five years. NQOs granted under the 2000 Plan
must have an exercise price of not less than 85% of the fair market value of a
share of common stock on the date the NQO is granted.
Options may be exercised during a period of time fixed by the committee
except that no option may be exercised more than ten years after the date of
grant. In the discretion of the committee, payment of the purchase price for the
shares of stock acquired through the exercise of an option may be made in cash,
shares of our common stock or a combination of cash and shares of our common
stock.
AMENDMENT AND TERMINATION
The 2000 Plan may be wholly or partially amended or otherwise modified,
suspended or terminated at any time and from time to time by the Board. However,
the Board may not materially impair any outstanding options without the express
consent of the optionee or materially increase the number of shares subject to
the 2000 Plan, materially increase the benefits to optionees under the 2000
Plan, materially modify the requirements as to eligibility to participate in the
2000 Plan or alter the method of determining the option exercise price without
stockholder approval. No option may be granted under the 2000 Plan after
November 14, 2010.
FEDERAL INCOME TAX CONSEQUENCES
NQOS
Holders of NQOs do not realize income as a result of a grant of the option,
but normally realize compensation income upon exercise of an NQO to the extent
that the fair market value of the shares of common stock on the date of exercise
of the NQO exceeds the exercise price paid. We will be required to withhold
taxes on ordinary income realized by an optionee upon the exercise of a NQO.
In the case of an optionee subject to the "short-swing" profit recapture
provisions of Section 16(b) of the Exchange Act, the optionee realizes income
only upon the lapse of the six-month period under Section 16(b), unless the
optionee elects to recognize income immediately upon exercise of his or her
option.
ISOS
Holders of ISOs will not be considered to have received taxable income upon
either the grant of the option or its exercise. Upon the sale or other taxable
disposition of the shares, long-term capital gain will normally be recognized on
the full amount of the difference between the amount realized and the option
exercise price paid if no disposition of the shares has taken place within
either two years from the date of grant of the option or one year from the date
of transfer of the shares to the optionee upon exercise. If the shares are sold
or otherwise disposed of before the end of the one-year or two-year periods, the
holder of the ISO must include the gain realized as ordinary income to the
extent of the lesser of the fair market value of the option stock minus the
option price, or the amount realized minus the option price. Any gain in excess
of these amounts, presumably, will be treated as capital gain. We will be
entitled to a tax
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<PAGE>
deduction in regard to an ISO only to the extent the optionee has ordinary
income upon the sale or other disposition of the option shares.
Upon the exercise of an ISO, the amount by which the fair market value of
the purchased shares at the time of exercise exceeds the option price will be an
"item of tax preference" for purposes of computing the optionee's alternative
minimum tax for the year of exercise. If the shares so acquired are disposed of
prior to the expiration of the one-year or two-year periods described above,
there should be no "item of tax preference" arising from the option exercise.
POSSIBLE ANTI-TAKEOVER EFFECTS
Although not intended as an anti-takeover measure by the Board, one of the
possible effects of the 2000 Plan could be to place additional shares, and to
increase the percentage of the total number of shares outstanding, in the hands
of the directors and officers of our company. Such persons may be viewed as part
of, or friendly to, incumbent management and may, therefore, under certain
circumstances be expected to make investment and voting decisions in response to
a hostile takeover attempt that may serve to discourage or render more difficult
the accomplishment of such attempt.
In addition, options may, in the discretion of the committee, contain a
provision providing for the acceleration of the exercisability of outstanding,
but unexercisable, installments upon the first public announcement of a tender
offer, merger, consolidation, sale of all or substantially all of our assets, or
other attempted changes in the control of our company. In the opinion of the
Board, such an acceleration provision merely ensures that optionees under the
2000 Plan will be able to exercise their options as intended by the Board and
stockholders prior to any such extraordinary corporate transaction which might
serve to limit or restrict such right. The Board is, however, presently unaware
of any threat of hostile takeover involving our company.
REGISTRATION OF SHARES ISSUED UNDER THE 2000 PLAN
We intend that the shares to be reserved for and issued under the 2000 Plan
may be registered under the Securities Act of 1933, as amended. Such
registration, if completed, would in most cases permit the unrestricted resale
in the public market of shares issued pursuant to the 2000 Plan. We intend to
file a registration statement on Form S-8 in the near future to register the
resale of all shares issuable pursuant to the exercise of options that may have
been or may be issued under the 2000 Plan.
RECOMMENDATION AND REQUIRED VOTE
The favorable vote of a majority of the shares of common stock present in
person or represented by Proxy at the special meeting is required to approve the
2000 Plan. As noted, the Board has approved the 2000 Plan. Stockholders should
be aware, however, that the Board may be viewed as having a conflict of interest
in approving, and recommending that stockholders approve, the 2000 Plan. THE
BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF THE 2000 PLAN.
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COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information concerning compensation paid to
our Chief Executive Officer and each of our other executive officers who
received an annual salary and bonus of more than $100,000 for services rendered
to us during the years ended December 31, 1999, 1998 and 1997:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARD
ANNUAL ------------
COMPENSATION SECURITIES
------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY OPTIONS COMPENSATION(1)
--------------------------- -------- -------- ------------ ---------------
<S> <C> <C> <C> <C>
Carmine T. Oliva, ............................... 1999 $198,872 -- --
President and Chief Executive 1998 $198,872 -- --
Officer(2) 1997 $214,301 -- --
James P. Butler, ................................ 1999 $122,769 -- --
Former Chief Financial Officer(3) 1998 $125,000 40,000 --
1997 $ 44,377 75,000 --
Graham Jefferies, ............................... 1999 $114,192 60,000 $5,116
Executive Vice President and 1998 $ 98,918 30,000 $5,567
Chief Operating Officer of 1997 $ 95,755 -- $6,527
Telecommunications Group(4)
Randolph D. Foote, .............................. 1999 $ 23,267 50,000 --
Senior Vice President, 1998 -- -- --
Chief Financial Officer(5) 1997 -- -- --
</TABLE>
------------------------
(1) Consists of contributions to Mr. Jefferies' retirement plan.
(2) Carmine T. Oliva became Chairman and Chief Executive Officer on March 26,
1997, upon Jack Talan's resignation concurrent with the merger of MicroTel
International, Inc. with XIT. Mr. Oliva's salary does not include payments
of $45,333 in 1997 of voluntarily deferred salary from years prior to 1997.
(3) Mr. Butler resigned as our Chief Financial Officer on October 4, 1999.
(4) Mr. Jefferies was appointed Executive Vice President and Chief Operating
Officer of our worldwide Telecommunications Group on October 21, 1999. Mr.
Jefferies is based in the United Kingdom and receives his remuneration in
British pounds. The compensation amounts listed for Mr. Jefferies are shown
in United States dollars, converted from British pounds using the average
conversion rates in effect during the time periods of compensation.
(5) Randolph D. Foote was appointed Senior Vice President and Chief Financial
Officer on October 4, 1999, following receipt of notification of the
resignation of our former Chief Financial Officer, James P. Butler.
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OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information regarding option grants in the year
ended December 31, 1999 to the named executive officers. We did not grant any
stock appreciation rights in the year ended December 31, 1999.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
PERCENT AT ASSUMED
OF TOTAL ANNUAL RATES
OPTIONS OF STOCK
NUMBER OF GRANTED PRICE
SECURITIES TO ALL APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OPTION TERM(2)
OPTIONS IN FISCAL PRICE EXPIRATION -------------------
NAME GRANT DATE GRANTED YEAR ($/SHARE)(1) DATE 5% ($) 10% ($)
---- ---------- ---------- --------- ------------ ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Carmine T. Oliva............. -- -- -- -- -- -- --
Randolph D. Foote............ 11/15/1999 50,000 11.6% 0.20 11/15/2009 6,289 15,937
Graham Jefferies............. 11/15/1999 60,000 14.0% 0.20 11/15/2006 7,547 19,125
James P. Butler(3)........... -- -- -- -- -- -- --
</TABLE>
------------------------
(1) The option was granted at an exercise price equal to the closing price of a
share of common stock on the grant date.
(2) Pursuant to applicable regulations, these amounts represent certain assumed
rates of appreciation only. Actual gain, if any, on stock option exercises
are dependent on the future performance of the common stock and overall
stock market conditions. The amounts reflected in this table may not
necessarily be achieved.
(3) Mr. Butler resigned as our Chief Financial Officer on October 4, 1999.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table provides information regarding option exercises in the
year ended December 31, 1999 by the named executive officers and the value of
unexercised options held by the named executive officers as of December 31,
1999.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE ($) OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 1999 DECEMBER 31, 1999(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Carmine T. Oliva................ -- -- 130,633 -- -- --
Randolph D. Foote............... -- -- 25,000 25,000 5,938 5,938
Graham Jefferies................ -- -- 96,287 30,000 7,125 7,125
James P. Butler(2).............. -- -- 115,000 -- -- --
</TABLE>
------------------------
(1) The closing price of our common stock on December 31, 1999 on the OTC
Bulletin Board was $.4375 per share.
(2) Mr. Butler resigned as our Chief Financial Officer on October 4, 1999.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
CARMINE T. OLIVA
Pursuant to an employment agreement dated January 1, 1996, Carmine T. Oliva
was employed as Chairman, President and Chief Executive Officer of XIT
Corporation for a term of five years at an annual
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salary of $250,000. In July 1996, Mr. Oliva voluntarily agreed to abate a
portion of his annual salary in connection with XIT Corporation's salary
abatement program then in effect. On May 6, 1997, the Board voted to assume the
obligations of XIT Corporation 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 our company on March 26, 1997.
On October 15, 1997, we entered into a replacement agreement with Mr. Oliva
on substantially the same terms and conditions as the prior agreement. The
replacement agreement is subject to automatic renewal for three successive
two-year terms commencing on October 15, 2002, unless, during the required
notice periods (which run from August 15 to October 15 of the year preceding the
year in which a two-year renewal period is to begin), either party gives written
notice of its desire not to renew. The agreement provides that Mr. Oliva's
salary was to continue at the abated amount of $198,865 per annum until such
time as we have reported two consecutive profitable quarters during the term of
the agreement or any renewals thereof, at which time his salary was to increase
to its pre-abatement level of $250,000 per annum. Based on our unaudited
quarterly financial statements, this increase to $250,000 occurred effective as
of November 1, 2000.
If the Board makes a substantial addition to or reduction of Mr. Oliva's
duties, Mr. Oliva may resign upon written notice given within 30 days of the
change in duties. Within 30 days after the effective date of a resignation under
these circumstances, we will be obligated to pay to Mr. Oliva the value of three
years of his annual salary.
If we terminate Mr. Oliva for cause, our obligation to pay any further
compensation, severance allowance, or other amounts payable under the agreement
terminates on the date of such termination. If we terminate Mr. Oliva without
cause (including by ceasing our operations due to bankruptcy or by our general
inability to meet our obligations as they become due), we must provide him with
60 days' prior written notice. If the termination without cause occurs prior to
the expiration of the initial term of the agreement on October 15, 2002,
Mr. Oliva will be entitled to be paid his annual salary for two and one-half
years following the termination. If the termination occurs during a renewal
period, Mr. Oliva will be entitled to be paid his annual salary through the
expiration of the particular renewal period, and to be paid all other amounts
payable under the agreement.
We may terminate the agreement upon 30 days' written notice in the event of
a merger or reorganization in which our stockholders immediately prior to the
merger or reorganization receive less than 50% of the outstanding voting shares
of the successor corporation and in the event of a sale of all or substantially
all of our assets or a sale, exchange or other disposition of two-thirds or more
of our outstanding capital stock. If Mr. Oliva is terminated without cause
within two years following a change of control, then:
- if the termination occurs prior to the expiration of the initial term of
the agreement on October 15, 2002, Mr. Oliva will be entitled to be paid
his annual salary and all other amounts payable under the agreement for
two and one-half years following the termination, which amounts shall be
payable at his election in a lump sum within 30 days after the termination
or in installments;
- if the termination occurs during a renewal period, Mr. Oliva will be
entitled to be paid his annual salary through the expiration of the
particular renewal period, and to be paid all other amounts payable under
the agreement;
- Mr. Oliva will be entitled to receive the average of his annual executive
bonuses awarded to him in the three years preceding his termination, over
the same time span and under the same conditions as his annual salary;
- Mr. Oliva will be entitled to receive any executive bonus awarded but not
yet paid; and
9
<PAGE>
- Mr. Oliva will continue to receive coverage in all benefit programs in
which he was participating on the date of his termination until the
earlier of the end of the initial term or renewal term in which the
termination occurred and the date he receives equivalent coverage and
benefits under plans and programs of a subsequent employer.
If Mr. Oliva dies during the term of the agreement, amounts payable under
the agreement to or for the benefit of Mr. Oliva will continue to be payable to
Mr. Oliva's designee or legal representatives for one year following his death.
If Mr. Oliva is unable to substantially perform his duties under the agreement
for an aggregate of 180 days in any 18-month period, we may terminate the
agreement by ten days' prior written notice to Mr. Oliva following the 180th day
of disability; provided, however, that we must continue to pay amounts payable
under the agreement to or for the benefit of Mr. Oliva for two years following
the effective date of the termination.
If the agreement is terminated for any reason and unless otherwise agreed to
by Mr. Oliva and us, then in addition to any other severance payments to which
Mr. Oliva is entitled, we must continue to pay Mr. Oliva's annual salary until:
- all obligations incurred by Mr. Oliva on our behalf, including any lease
obligations signed by Mr. Oliva related to the performance of his duties
under the agreement, have been voided or fully assumed by us or our
successor;
- all loan collateral pledged by Mr. Oliva has been returned to Mr. Oliva;
and
- all personal property of Mr. Oliva has been returned to Mr. Oliva's
principal place of residence at our expense.
The agreement provides that we will furnish a life insurance policy on Mr.
Oliva's life, in the amount of $1 million, payable to Mr. Oliva's estate in the
event of his death during the term of the agreement. This benefit is in return
for, and is intended to protect Mr. Oliva's estate from financial loss arising
from any and all personal guarantees that Mr. Oliva provided in favor of us, as
required by various corporate lenders. This benefit is also intended to enable
Mr. Oliva's estate to exercise all warrants and options to purchase shares of
our common stock.
As a condition to his entry into the employment agreement, Mr. Oliva
received a warrant to purchase up to 250,000 shares of our common stock at an
exercise price of $3.45 per share, exercisable at any time prior to 5:00 p.m.
New York City time on October 14, 2002. In February 2000, Mr. Oliva exchanged
this warrant for a warrant to purchase up to 125,000 shares of common stock at
an exercise price of $1.725 per share in an exchange offer made to all holders
of warrants with exercise prices exceeding $1.00.
GRAHAM JEFFERIES
On May 1, 1998, we entered into an employment agreement with Mr. Jefferies
for a term of two years at an initial annual salary of 67,000 British pounds
(approximately $106,500 at the then current exchange rates) that is subject to
automatic renewal for two successive one-year terms commencing on May 1, 2000.
Mr. Jefferies was to act as Managing Director of XCEL Corporation, Ltd. and to
perform additional services as may be approved by the Board.
If the Board makes a substantial addition to or reduction of Mr. Jefferies'
duties, Mr. Jefferies may resign upon written notice given within 30 days of the
change in duties. Within 30 days after the effective date of a resignation under
these circumstances, we will be obligated to pay to Mr. Jefferies the value of
one year of his annual salary.
10
<PAGE>
If we terminate Mr. Jefferies for cause, our obligation to pay any further
compensation, severance allowance, or other amounts payable under the agreement
terminates on the date of such termination. If we terminate Mr. Jefferies
without cause (including by ceasing our operations due to bankruptcy or by our
general inability to meet our obligations as they become due), we must provide
him with 60 days' prior written notice. Mr. Jefferies will be entitled to be
paid his annual salary through the expiration of the current renewal period, and
to be paid all other amounts payable under the agreement.
We may terminate the agreement upon 30 days' written notice in the event of
a merger or reorganization in which our stockholders immediately prior to the
merger or reorganization receive less than 50% of the outstanding voting shares
of the successor corporation and in the event of a sale of all or substantially
all of our assets or a sale, exchange or other disposition of two-thirds or more
of our outstanding capital stock. If Mr. Jefferies is terminated without cause
within two years following a change of control, then:
- Mr. Jefferies will be entitled to be paid his annual salary through the
expiration of the current renewal period, and to be paid all other amounts
payable under the agreement;
- Mr. Jefferies will be entitled to receive the average of his annual
executive bonuses awarded to him in the three years preceding his
termination, over the same time span and under the same conditions as his
annual salary;
- Mr. Jefferies will be entitled to receive any executive bonus awarded but
not yet paid; and
- Mr. Jefferies will continue to receive coverage in all benefit programs in
which he was participating on the date of his termination until the
earlier of the end of the current renewal term and the date he receives
equivalent coverage and benefits under plans and programs of a subsequent
employer.
If Mr. Jefferies dies during the term of the agreement, amounts payable
under the agreement to or for the benefit of Mr. Jefferies will continue to be
payable to Mr. Jefferies' designee or legal representatives for one year
following his death. If Mr. Jefferies is unable to substantially perform his
duties under the agreement for an aggregate of 180 days in any 18-month period,
we may terminate the agreement by ten days' prior written notice to
Mr. Jefferies following the 180th day of disability; provided, however, that we
must continue to pay amounts payable under the agreement to or for the benefit
of Mr. Jefferies for one year following the effective date of the termination.
BOARD COMMITTEES
The Board currently has an audit committee, an executive compensation and
management development committee and a nominating committee.
The audit committee makes recommendations to the Board regarding the
selection of independent auditors, reviews the results and scope of the audit
and other services provided by our independent auditors, reviews our financial
statements for each interim period, and reviews and evaluates our internal audit
and control functions. From January 1, 1999 through June 25, 1999, this
committee consisted of David Barrett, a former director of our company, and
Laurence Finnegan. Since June 26, 1999, this committee has consisted solely of
Laurence Finnegan.
The executive compensation and management development committee is
responsible for establishing and administering our policies involving the
compensation of all of our executive officers and establishing and recommending
to the Board the terms and conditions of all employee and consultant
compensation and benefit plans. From January 1, 1999 through June 25, 1999, this
committee consisted of David Barrett, a former director of our company, and
Robert B. Runyon. Since June 26, 1999, this committee has consisted of
Robert B. Runyon and Laurence Finnegan.
The nominating committee selects nominees for the Board. Since January,
2000, the nominating committee has consisted of Robert B. Runyon.
11
<PAGE>
COMPENSATION OF DIRECTORS
Each non-employee director is entitled to receive $1,000 per quarter as
compensation for their services. We reimburse all directors for out-of-pocket
expenses incurred in connection with attendance at board and committee meetings.
We may periodically award options or warrants to our directors under our
existing option and incentive plans and otherwise.
Mr. Runyon acts as a consultant to our company in the areas of strategy
development, business and organizational planning, human resources recruiting
and development and administrative systems. During 1999, Mr. Runyon received
approximately $1,670 in consulting fees and expenses. Also, additional
consulting fees and expenses totaling $9,441 were accrued during 1999 but have
not yet been paid. During 1999, we also paid premiums of $2,793 for life
insurance on Mr. Runyon for the benefit of his spouse, $30 for life insurance on
Mr. Runyon's spouse for the benefit of Mr. Runyon, and $3,534 for health
insurance.
On July 25, 2000, Mr. Runyon and Mr. Finnegan each received an option to
purchase 100,000 shares of common stock at $.50 per share under our 1997 Plan,
which option vests in two equal semi-annual installments commencing on
January 25, 2001 and expires on July 25, 2010.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Board has a relationship that would constitute an
interlocking relationship with executive officers and directors of another
entity.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report is provided by the executive compensation and management
development committee of the Board of Directors to assist stockholders 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 appropriates management
incentives.
- To align the Company's financial results and the compensation paid to the
Company's executive officers with the enhancement of stockholder 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 consistent 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
executive compensation and
12
<PAGE>
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, operative subsidiary/division and individual components.
To further align the financial interests of the executive with those of the
Company and its stockholders, 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 stockholders, from
performance-driven advancement of share value in the marketplace.
Within the controlling corporate policy direction of the executive
compensation and management development 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 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.
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
13
<PAGE>
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total stockholder
return on our common stock, based on its market price with the cumulative total
return on companies on the Nasdaq Stock Market (U.S.) and the Nasdaq Telecom
Index, assuming reinvestment of dividends for the period beginning December 31,
1994 through our fiscal year ended December 31, 1999. This graph assumes that
the value of the investment in our common stock and each of the comparison
groups was $100 on December 31, 1994.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
MICROTEL NASDAQ STOCK NASDAQ
<S> <C> <C> <C>
International, Inc. Market (U.S.) Telecommunications
12/94 $100.00 $100.00 $100.00
12/95 $181.82 $141.33 $130.91
12/96 $43.64 $173.89 $133.86
12/97 $43.64 $213.07 $195.75
12/98 $19.09 $300.25 $322.30
12/99 $12.74 $542.43 $561.27
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
12/94 12/95 12/96 12/97 12/98 12/99
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
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>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding beneficial ownership of
our common stock as of November 20, 2000 by:
- each person who is known by us to beneficially own more than five percent,
in the aggregate, of the outstanding shares of our common stock;
- each of our directors and each of the executive officers named in the
Summary Compensation Table; and
- all of our directors and executive officers as a group.
Beneficial ownership is determined in accordance with the rules of the SEC
and generally includes voting or investment power with respect to securities.
Except as indicated in the footnotes to the table, we believe each security
holder possesses sole voting and investment power with respect to all of the
shares of
14
<PAGE>
common stock owned by such security holder, subject to community property laws
where applicable. In computing the number of shares beneficially owned by a
security holder and the percentage ownership of that security holder, shares of
common stock subject to options or warrants held by that person that are
currently exercisable or are exercisable within 60 days after the date of the
table are deemed outstanding. Such shares, however, are not deemed outstanding
for the purpose of computing the percentage ownership of any other person or
group. On November 20, 2000, there were 20,569,759 shares of our common stock
outstanding.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT OF
NAME OF BENEFICIAL OWNER TITLE OF CLASS BENEFICIAL OWNERSHIP COMMON STOCK
------------------------ ------------------ -------------------- ------------
<S> <C> <C> <C>
Orbit II Partners, L.P..................... Common 2,838,810(1) 13.77%
Carmine T. Oliva........................... Common 1,585,806(2) 7.53%
Series A Stock 1 4.00%
Robert B. Runyon........................... Common 238,155(3) 1.15%
Laurence P. Finnegan, Jr................... Common 44,171(4) *
Graham Jefferies........................... Common 129,563(5) *
Randolph D. Foote.......................... Common 55,000(6) *
James P. Butler............................ Common --(7) --
All directors and executive
officers as a group (5 persons).......... Common 2,052,695(8) 9.64%
Series A Stock 1 4.00 %
</TABLE>
------------------------
* Less than 1.00%
(1) Includes 43,125 shares of common stock issuable upon exercise of warrants
issued to Orbit II Partners, L.P. Alan S. MacKenzie, Jr., David N. Marino
and Joel S. Kraut are: the managing partners of Orbit II Partners, L.P., an
NASD-registered broker-dealer and member of the American Stock Exchange; the
managing members of MKM Partners, LLC, an NASD-registered broker-dealer and
member of the Pacific Stock Exchange; and general partners of OTAF Business
Partners, a general partnership that has a controlling interest in Blackwood
Securities, LLC, an NASD member. The address for Orbit II Partners, L.P. is
2 Rector Street, 16th Floor, New York, New York 10006.
(2) Includes 81,889 shares of common stock held individually by Mr. Oliva's
wife. Also includes 130,633 shares of common stock issuable upon exercise of
options, 345,185 shares issuable upon exercise of warrants and 11,214 shares
of common stock issuable upon conversion of Series A Stock. Mr. Oliva is a
director and the Chairman of the Board, President and Chief Executive
Officer of our company. Mr. Oliva's address is c/o MicroTel International,
Inc., 9485 Haven Avenue, Suite 100, Rancho Cucamonga, California 91730.
(3) Includes 58,060 shares issuable upon exercise of options. Mr. Runyon is a
director and the Secretary of our company.
(4) Mr. Finnegan is a director of our company.
(5) Includes 126,287 shares of common stock issuable upon exercise of options.
Mr. Jefferies is the Executive Vice President and Chief Operating Officer of
our Telecommunications Group.
(6) Includes 50,000 shares of common stock issuable upon exercise of options.
Mr. Foote is the Senior Vice President and Chief Financial Officer of our
company.
(7) Mr. Butler is the former Chief Financial Officer of our company and is named
as an executive officer in the Summary Compensation Table.
(8) Includes 364,980 shares of common stock issuable upon exercise of options,
345,185 shares of common stock issuable upon exercise of warrants and 11,214
shares of common stock issuable upon conversion of Series A Stock.
15
<PAGE>
PROPOSAL 3
APPROVAL OF AMENDED AND RESTATED CERTIFICATE OF DESIGNATIONS,
PREFERENCES AND RIGHTS OF SERIES A PREFERRED STOCK
In May 1998, we created the Series A Stock by filing a Certificate of
Designations, Preferences and Rights of Preferred Stock with the Delaware
Secretary of State (the "Original Certificate"). Effective as of November 14,
2000, the Board approved by action taken without a meeting of directors by
written consent, an Amended and Restated Certificate of Designations,
Preferences and Rights relating to our Series A Stock (the "Amended and Restated
Certificate"). The Amended and Restated Certificate, if approved by the
stockholders, will reduce the number of authorized shares of Series A Stock from
250 to 200 shares, change the conversion price of the Series A Stock and correct
certain errors contained in the Original Certificate. The Original Certificate
provides that each outstanding share of Series A Stock is convertible into
shares of common stock at the conversion price of $10,000 divided by the lesser
of $1.26 and 100% of the arithmetic average of the three lowest closing bid
prices of our common stock over the 40 trading days prior to the date of
conversion. However, no more than 20% of the aggregate number of shares of
Series A Stock owned by any single holder may be converted in any 30-day period.
The Amended and Restated Certificate provides that each share of Series A Stock
is convertible into 50,530 shares of common stock.
The Board is now seeking the approval by the holders of common stock and
Series A Stock of the Amended and Restated Certificate, the full text of which
is attached to this Proxy Statement as EXHIBIT C. If stockholder approval is
received, we will file with the Delaware Secretary of State, the Amended and
Restated Certificate.
RECOMMENDATION AND REQUIRED VOTE
The affirmative vote of the holders of a majority of the shares of common
stock present in person or represented by Proxy at the special meeting, and the
affirmative vote of the holders of a majority of the shares of Series A Stock
present in person or represented by Proxy at the special meeting, voting
separately as a class, are required for the approval of this proposal. THE BOARD
RECOMMENDS A VOTE FOR THE APPROVAL OF THE AMENDED AND RESTATED CERTIFICATE.
16
<PAGE>
PROPOSAL 4
RATIFICATION OF INDEPENDENT AUDITORS
The Board appointed the firm of BDO Seidman, LLP, as our independent public
auditors for the year ended December 31, 2000, and is asking the stockholders to
ratify this appointment. A representative of BDO Seidman, LLP is expected to be
present at the special 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.
RECOMMENDATION
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE RATIFICATION OF THE
SELECTION OF BDO SEIDMAN, LLP AS OUR INDEPENDENT PUBLIC AUDITORS FOR THE YEAR
ENDING DECEMBER 31, 2000.
OTHER MATTERS
The Board knows of no matter to come before the special meeting other than
as specified herein. If other business should, however, be properly brought
before such meeting, the persons voting the proxies will vote them in accordance
with their best judgment.
SUBMISSION OF STOCKHOLDER PROPOSALS
Stockholders are advised that any stockholder proposal intended for
consideration at the next annual meeting of stockholders must be received by us
at the address set forth on the first page of this Proxy Statement no later than
February 15, 2001 to be included in the proxy material for the 2001 annual
meeting. It is recommended that stockholders submitting proposals direct them to
our Chief Financial Officer and utilize certified mail, return-receipt
requested, in order to ensure proof of timely delivery.
ANNUAL REPORT
A copy of the Company's Annual Report on Form 10-K/A for the fiscal year
ended December 31, 1999, as filed with the Securities and Exchange Commission,
is available without charge by writing to: MicroTel International, Inc., 9485
Haven Avenue, Suite 100, Rancho Cucamonga, California 91730, ATTENTION: Chief
Financial Officer
STOCKHOLDERS ARE URGED TO COMPLETE, SIGN AND RETURN PROMPTLY THE
ACCOMPANYING PROXY CARD IN THE ENCLOSED ENVELOPE.
By Order of the Board of Directors
[/S/ ROBERT B. RUNYON]
Robert B. Runyon, Secretary
Rancho Cucamonga, California
December 4, 2000
17
<PAGE>
EXHIBIT A
CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
Carmine T. Oliva and Robert B. Runyon certify that:
1. They are the president and secretary, respectively, of MicroTel
International, Inc., a Delaware corporation (the "Corporation").
2. Article Fourth of the Certificate of Incorporation of the
Corporation is amended and restated to read in its entirety as follows:
"FOURTH: The aggregate number of shares of all classes of capital
stock which the Company has the authority to issue is sixty million
(60,000,000), which is divided into two classes as follows:
Fifty Million (50,000,000) shares of Common Stock ("Common
Stock") with a par value of 1/3 cent per share, and
Ten Million (10,000,000) shares of Preferred Stock
("Preferred Stock") with a par value of $.01 per share.
The designations, voting powers, preferences and relative,
participating, optional or other special rights, and
qualifications, limitations or restrictions of the Preferred Stock
is as follows:
(1) Issuance in Series.
Shares of Preferred Stock may be issued in one or more
series at such time or times, and for such considerations as the
Board of Directors may determine. All shares of any one series of
Preferred Stock will be identical with each other in all
respects, except that shares of one series issued at different
times may differ as to dates from which dividends thereon may be
cumulative. All series will rank equally and be identical in all
respects, except as permitted by the following provisions of
paragraph 2 of this Article FOURTH.
(2) Authority of the Board with Respect to Series.
The Board of Directors is authorized, at any time and from
time to time, to provide for the issuance of the shares of
Preferred
<PAGE>
Stock in one or more series with such designations, preferences and
relative, participating, optional or other special rights and
qualifications, limitations or restrictions thereof as are stated
and expressed in the resolution or resolutions providing for the
issue thereof adopted by the Board of Directors, and as are not
stated and expressed in this Certificate of Incorporation or any
amendment hereto including, but not limited to, determination of
any of the following:
(i) The number of shares constituting that series
and the distinctive designation of that series;
(ii) The dividend rate or rates on the shares of that
series, whether dividends shall be cumulative, and, if so, from
which date or dates, the payment date or dates for dividends and
the relative rights of priority, if any, of payment of dividends on
shares of that series;
(iii) Whether that series shall have voting rights, in
addition to the voting rights provided by law, and, if so, the
terms of such voting rights;
(iv) Whether that series shall have conversion
privileges and, if so, the terms and conditions of such conversion,
including provision for adjustment of the conversion rate in such
events as the Board of Directors shall determine;
(v) Whether or not the shares of that series shall be
redeemable, and, if so, the terms and conditions of such
redemption, including the date or date upon or after which they
shall be redeemable, and the amount per share payable in case of
redemption, which amount may vary under different conditions and at
different redemption dates;
(vi) Whether that series shall have a sinking or
retirement fund for the redemption or purchase of shares of that
series, and, if so, the terms and amount of such sinking or
retirement fund;
(vii) The rights of the shares of that series in the
event of voluntary or involuntary liquidation, dissolution or
winding up of the Company, and the relative rights of priority, if
any, of payment of shares of that series;
(viii) Any other preferences, privileges and powers, and
relative participating, optional or other special rights,
-2-
<PAGE>
and qualifications, limitations or restrictions of a series, as the
Board of Directors may deem advisable and are not inconsistent with
the provisions of this Certificate of Incorporation.
(3) Dividends.
Dividends on outstanding shares of Preferred Stock shall be
paid or declared and set apart for payment in accordance with their
respective preferential and relative rights before any dividends
shall be paid or declared and set apart for payment on the
outstanding shares of Common Stock with respect to the same
dividend period.
(4) Liquidation.
If upon any voluntary or involuntary liquidation, dissolution
or winding up of the Company, the assets available for distribution
to holders of shares of Preferred Stock of all series shall be
insufficient to pay such holders the full preferential amount to
which they are entitled, then such assets shall be distributed
ratably among the shares of all series of Preferred Stock in
accordance with the respective preferential and relative amounts
(including unpaid cumulative dividends, if any) payable with
respect thereto.
(5) Reacquired Shares.
Shares of Preferred Stock which have been issued and
reacquired in any manner by the Company (excluding, until the
Company elects to retire them, shares which are held as treasury
shares but including shares redeemed, shares purchased and retired,
and shares which have been converted into shares of Common Stock)
will have the status of authorized and unissued shares of Preferred
Stock and may be reissued.
(6) Voting Rights.
Shares of Preferred Stock shall each have the number of votes
provided in the resolution or resolutions of the Board of Directors
creating any series of Preferred Stock, or as otherwise required by
law. Unless and except to the extent otherwise required by law or
provided in the resolution or resolutions of the Board of Directors
creating any series of Preferred Stock, the holders of the
Preferred Stock shall have no voting power with respect to any
matter whatsoever."
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<PAGE>
3. The foregoing amendment to the Certificate of Incorporation of
the Corporation has been duly approved by the Board of Directors of the
Corporation.
4. Pursuant to Sections 228(a) and 242 of the Delaware General
Corporation law, approval of the stockholders holding a majority of the
Common Stock was duly obtained at a Special Meeting of Stockholders of the
Corporation held on January 16, 2001.
IN WITNESS WHEREOF, this Certificate of Amendment of Certificate of
Incorporation has been signed by the President and Secretary of this
Corporation as of November 20, 2000.
--------------------------------
Carmine T. Oliva, President
--------------------------------
Robert B. Runyon, Secretary
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<PAGE>
EXHIBIT B
2000 PLAN
<PAGE>
MICROTEL INTERNATIONAL, INC.
2000 STOCK OPTION PLAN
1. PURPOSE OF THE PLAN. The purpose of this 2000 Stock Option Plan (the
"Plan") of MicroTel International, Inc., a Delaware corporation (the "Company"),
is to provide the Company with a means of attracting and retaining the services
of highly motivated and qualified directors and key personnel. The Plan is
intended to advance the interests of the Company by affording to directors and
key employees, upon whose skill, judgment, initiative and efforts the Company is
largely dependent for the successful conduct of its business, an opportunity for
investment in the Company and the incentives inherent in stock ownership in the
Company. In addition, the Plan contemplates the opportunity for investment in
the Company by consultants and employees of companies that do business with the
Company. For purposes of this Plan, the term Company shall include subsidiaries,
if any, of the Company.
2. LEGAL COMPLIANCE. It is the intent of the Plan that all options
granted under it ("Options") shall be either "Incentive Stock Options" ("ISOs"),
as such term is defined in Section 422 of the Internal Revenue Code of 1986, as
amended ("Code"), or non-qualified stock options ("NQOs"); provided, however,
that ISOs shall be granted only to employees of the Company. An Option shall be
identified as an ISO or an NQO in writing in the document or documents
evidencing the grant of the Option. All Options that are not so identified as
ISOs are intended to be NQOs. In addition, the Plan provides for the grant of
NQOs to consultants and employees of companies that do business with the
Company. It is the further intent of the Plan that it conform in all respects
with the requirements of Rule 16b-3 of the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended ("Rule 16b-3"). To the
extent that any aspect of the Plan or its administration shall at any time be
viewed as inconsistent with the requirements of Rule 16b-3 or, in connection
with ISOs, the Code, such aspect shall be deemed to be modified, deleted or
otherwise changed as necessary to ensure continued compliance with such
provisions.
3. ADMINISTRATION OF THE PLAN.
3.1 PLAN COMMITTEE. The Plan shall be administered by the
Company's Executive Compensation and Management Development Committee
("Committee"), whose members shall be appointed from time to time by the Board
of Directors of the Company ("Board") and shall be directors of the Company.
Notwithstanding the foregoing, the Board may act as the Committee and administer
the Plan at any time or from time to time.
3.2 GRANTS OF OPTIONS BY THE COMMITTEE. In accordance with
the provisions of the Plan, the Committee, by resolution, shall select those
eligible persons to whom Options shall be granted ("Optionees"); shall determine
the time or times at which each Option shall be granted, whether an Option is an
ISO or an NQO and the number of shares to be subject to each Option; and shall
fix the time and manner in which the Option may be exercised, the Option
exercise price, and the Option period. The Committee shall determine the form of
option agreement to evidence the foregoing terms and conditions of each Option,
which need not be identical, in the form provided for in SECTION 7. Such option
agreement may include such other
<PAGE>
provisions as the Committee may deem necessary or desirable consistent with the
Plan, the Code and Rule 16b-3.
3.3 COMMITTEE PROCEDURES. The Committee from time to time may
adopt such rules and regulations for carrying out the purposes of the Plan as it
may deem proper and in the best interests of the Company. The Committee shall
keep minutes of its meetings and records of its actions. A majority of the
members of the Committee shall constitute a quorum for the transaction of any
business by the Committee. The Committee may act at any time by an affirmative
vote of a majority of those members voting. Such vote may be taken at a meeting
(which may be conducted in person or by any telecommunication medium) or by
written consent of Committee members without a meeting.
3.4 FINALITY OF COMMITTEE ACTION. The Committee shall resolve
all questions arising under the Plan and option agreements entered into pursuant
to the Plan. Each determination, interpretation, or other action made or taken
by the Committee shall be final and conclusive and binding on all persons,
including, without limitation, the Company, its stockholders, the Committee and
each of the members of the Committee, and the directors, officers and employees
of the Company, including Optionees and their respective successors in interest.
3.5 NON-LIABILITY OF COMMITTEE MEMBERS. No Committee member
shall be liable for any action or determination made by him or her in good faith
with respect to the Plan or any Option granted under it.
4. BOARD POWER TO AMEND, SUSPEND, OR TERMINATE THE PLAN. The Board
may, from time to time, make such changes in or additions to the Plan as it may
deem proper and in the best interests of the Company and its stockholders. The
Board may also suspend or terminate the Plan at any time, without notice, and in
its sole discretion. Notwithstanding the foregoing, no such change, addition,
suspension, or termination by the Board shall (i) materially impair any option
previously granted under the Plan without the express written consent of the
optionee; or (ii) materially increase the number of shares subject to the Plan,
materially increase the benefits accruing to optionees under the Plan,
materially modify the requirements as to eligibility to participate in the Plan
or alter the method of determining the option exercise price described in
SECTION 8, without stockholder approval.
5. SHARES SUBJECT TO THE PLAN. For purposes of the Plan, the Committee
is authorized to grant Options for up to 2,000,000 shares of the Company's
common stock ("Common Stock"), or the number and kind of shares of stock or
other securities which, in accordance with SECTION 13, shall be substituted for
such shares of Common Stock or to which such shares shall be adjusted. The
Committee is authorized to grant Options under the Plan with respect to such
shares. Any or all unsold shares subject to an Option which for any reason
expires or otherwise terminates (excluding shares returned to the Company in
payment of the exercise price for additional shares) may again be made subject
to grant under the Plan.
6. OPTIONEES. Options shall be granted only to officers, directors or
key employees of the Company or consultants or employees of companies that do
business with the Company designated by the Committee from time to time as
Optionees. Any Optionee may hold more than
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<PAGE>
one option to purchase Common Stock, whether such option is an Option held
pursuant to the Plan or otherwise. An Optionee who is an employee of the Company
("Employee Optionee") and who holds an Option must remain a continuous full or
part-time employee of the Company from the time of grant of the Option to him
until the time of its exercise, except as provided in SECTION 10.3.
7. GRANTS OF OPTIONS. The Committee shall have the sole discretion to
grant Options under the Plan and to determine whether any Option shall be an ISO
or an NQO. The terms and conditions of Options granted under the Plan may differ
from one another as the Committee, in its absolute discretion, shall determine
as long as all Options granted under the Plan satisfy the requirements of the
Plan. Upon determination by the Committee that an Option is to be granted to an
Optionee, a written option agreement evidencing such Option shall be given to
the Optionee, specifying the number of shares subject to the Option, the Option
exercise price, whether the Option is an ISO or an NQO, and the other individual
terms and conditions of such Option. Such option agreement may incorporate
generally applicable provisions from the Plan, a copy of which shall be provided
to all Optionees at the time of their initial grants under the Plan. The Option
shall be deemed granted as of the date specified in the grant resolution of the
Committee, and the option agreement shall be dated as of the date of such
resolution. Notwithstanding the foregoing, unless the Committee consists solely
of non-employee directors, any Option granted to an executive officer, director
or 10% beneficial owner for purposes of Section 16 of the Securities Exchange
Act of 1934, as amended ("Section 16 of the 1934 Act"), shall either be (a)
conditioned upon the Optionee's agreement not to sell the shares of Common Stock
underlying the Option for at least six months after the date of grant or (b)
approved by the entire Board or by the stockholders of the Company.
8. OPTION EXERCISE PRICE. The price per share to be paid by the
Optionee at the time an ISO is exercised shall not be less than 100% of the Fair
Market Value (as hereinafter defined) of one share of the optioned Common Stock
on the date on which the Option is granted. No ISO may be granted under the Plan
to any person who, at the time of such grant, owns (within the meaning of
Section 424(d) of the Code) stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or of any parent thereof,
unless the exercise price of such ISO is at least equal to 110% of Fair Market
Value on the date of grant. The price per share to be paid by the Optionee at
the time an NQO is exercised shall not be less than 85% of the Fair Market Value
on the date on which the NQO is granted, as determined by the Committee. For
purposes of the Plan, the "Fair Market Value" of a share of the Company's Common
Stock as of a given date shall be: (i) the closing price of a share of the
Company's Common Stock on the principal exchange on which shares of the
Company's Common Stock are then trading, if any, on the day immediately
preceding such date, or, if shares were not traded on such date, then on the
next preceding trading day during which a sale occurred; or (ii) if the
Company's Common Stock is not traded on an exchange but is quoted on Nasdaq or a
successor quotation system, (1) the last sales price (if the Common Stock is
then listed as a National Market Issue under the Nasdaq National Market System)
or the Over-the-Counter Bulletin Board system or (2) the closing representative
bid price (in all other cases) for the Common Stock on the day immediately
preceding such date as reported by Nasdaq or such successor quotation system; or
(iii) if the Company's Common
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<PAGE>
Stock is not publicly traded on an exchange and not quoted on Nasdaq or a
successor quotation system, the closing bid price for the Common Stock on such
date as determined in good faith by the Committee; or (iv) if the Company's
Common Stock is not publicly traded, the fair market value established by the
Committee acting in good faith. In addition, with respect to any ISO, the Fair
Market Value on any given date shall be determined in a manner consistent with
any regulations issued by the Secretary of the Treasury for the purpose of
determining fair market value of securities subject to an ISO plan under the
Code.
9. CEILING OF ISO GRANTS. The aggregate Fair Market Value (determined
at the time any ISO is granted) of the Common Stock with respect to which an
Optionee's ISOs, together with incentive stock options granted under any other
plan of the Company and any parent, are exercisable for the first time by such
Optionee during any calendar year shall not exceed $100,000. If an Optionee
holds such incentive stock options that become first exercisable (including as a
result of acceleration of exercisability under the Plan) in any one year for
shares having a Fair Market Value at the date of grant in excess of $100,000,
then the most recently granted of such ISOs, to the extent that they are
exercisable for shares having an aggregate Fair Market Value in excess of such
limit, shall be deemed to be NQOs.
10. DURATION, EXERCISABILITY, AND TERMINATION OF OPTIONS.
10.1 OPTION PERIOD. The option period shall be determined by
the Committee with respect to each Option granted. In no event, however, may the
option period exceed ten years from the date on which the Option is granted, or
five years in the case of a grant of an ISO to an Optionee who is a 10%
stockholder at the date on which the Option is granted as described in SECTION
8.
10.2 EXERCISABILITY OF OPTIONS. Each Option shall be
exercisable in whole or in consecutive installments, cumulative or otherwise,
during its term as determined in the discretion of the Committee.
10.3 TERMINATION OF OPTIONS DUE TO TERMINATION OF EMPLOYMENT,
DISABILITY, OR DEATH OF OPTIONEE; TERMINATION FOR "CAUSE", OR RESIGNATION IN
VIOLATION OF AN EMPLOYMENT AGREEMENT. All Options granted under the Plan to any
Employee Optionee shall terminate and may no longer be exercised if the Employee
Optionee ceases, at any time during the period between the grant of the Option
and its exercise, to be an employee of the Company; provided, however, that the
Committee may alter the termination date of the Option if the Optionee transfers
to an affiliate of the Company. Notwithstanding the foregoing, (i) if the
Employee Optionee's employment with the Company shall have terminated for any
reason (other than involuntary dismissal for "cause" or voluntary resignation in
violation of any agreement to remain in the employ of the Company, including,
without limitation, any such agreement pursuant to SECTION 15), he may, at any
time before the expiration of three months after such termination or before
expiration of the Option, whichever shall first occur, exercise the Option (to
the extent that the Option was exercisable by him on the date of the termination
of his employment); (ii) if the Employee Optionee's employment shall have
terminated due to disability (as defined in Section 22(e)(3) of the Code and
subject to such proof of disability as the Committee may require), such Option
may be exercised by the Employee Optionee (or by his guardian(s), or
conservator(s), or other legal representative(s)) before the expiration of
twelve months after such termination or before expiration of the Option,
whichever shall first occur (to the extent that the Option was exercisable by
him on the date of the termination of his
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<PAGE>
employment); (iii) in the event of the
death of the Employee Optionee, an Option exercisable by him at the date of his
death shall be exercisable by his legal representative(s), legatee(s), or
heir(s), or by his beneficiary or beneficiaries so designated by him, as the
case may be, within twelve (12) months after his death or before the expiration
of the Option, whichever shall first occur (to the extent that the Option was
exercisable by him on the date of his death); and (iv) if the Employee
Optionee's employment is terminated for "cause" or in violation of any agreement
to remain in the employ of the Company, including, without limitation, any such
agreement pursuant to SECTION 14, his Option shall terminate immediately upon
termination of employment, and such Option shall be deemed to have been
forfeited by the Optionee. For purposes of the Plan, "cause" may include,
without limitation, any illegal or improper conduct (1) which injures or impairs
the reputation, goodwill, or business of the Company; (2) which involves the
misappropriation of funds of the Company, or the misuse of data, information, or
documents acquired in connection with employment by the Company; or (3) which
violates any other directive or policy promulgated by the Company. A termination
for cause may also include any resignation in anticipation of discharge for
cause or resignation accepted by the Company in lieu of a formal discharge for
cause.
11. MANNER OF OPTION EXERCISE; RIGHTS AND OBLIGATIONS OF OPTIONEES.
11.1 WRITTEN NOTICE OF EXERCISE. An Optionee may elect to
exercise an Option in whole or in part, from time to time, subject to the terms
and conditions contained in the Plan and in the agreement evidencing such
Option, by giving written notice of exercise to the Company at its principal
executive office.
11.2 CASH PAYMENT FOR OPTIONED SHARES. If an Option is
exercised for cash, such notice shall be accompanied by a cashier's or personal
check, or money order, made payable to the Company for the full exercise price
of the shares purchased.
11.3 STOCK SWAP FEATURE. At the time of the Option exercise,
and subject to the discretion of the Committee to accept payment in cash only,
the Optionee may determine whether the total purchase price of the shares to be
purchased shall be paid solely in cash or by transfer from the Optionee to the
Company of previously acquired shares of Common Stock, or by a combination
thereof. If the Optionee elects to pay the total purchase price in whole or in
part with previously acquired shares of Common Stock, the value of such shares
shall be equal to their Fair Market Value on the date of exercise, determined by
the Committee in the same manner used for determining Fair Market Value at the
time of grant for purposes of SECTION 8.
11.4 INVESTMENT REPRESENTATION FOR NON-REGISTERED SHARES AND
LEGALITY OF ISSUANCE. The receipt of shares of Common Stock upon the exercise of
an Option shall be conditioned upon the Optionee (or any other person who
exercises the Option on his or her behalf as permitted by SECTION 10.3)
providing to the Committee a written representation that, at the time of such
exercise, it is the intent of such person(s) to acquire the shares for
investment only and not with a view toward distribution. The certificate for
unregistered shares issued for investment shall be restricted by the Company as
to transfer unless the Company receives an opinion of counsel satisfactory to
the Company to the effect that such restriction is not necessary under then
pertaining law. The providing of such representation and such restrictions on
transfer shall not, however, be required upon any person's receipt of shares of
Common Stock under the
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<PAGE>
Plan in the event that, at the time of grant of the Option relating to such
receipt or upon such receipt, whichever is the appropriate measure under
applicable federal or state securities laws, the shares subject to the Option
shall be (i) covered by an effective and current registration statement under
the Securities Act of 1933, as amended, and (ii) either qualified or exempt from
qualification under applicable state securities laws. The Company shall,
however, under no circumstances be required to sell or issue any shares under
the Plan if, in the opinion of the Committee, (i) the issuance of such shares
would constitute a violation by the Optionee or the Company of any applicable
law or regulation of any governmental authority, or (ii) the consent or approval
of any governmental body is necessary or desirable as a condition of, or in
connection with, the issuance of such shares.
11.5 STOCKHOLDER RIGHTS OF OPTIONEE. Upon exercise, the
Optionee (or any other person who exercises the Option on his behalf as
permitted by SECTION 10.3) shall be recorded on the books of the Company as the
owner of the shares, and the Company shall deliver to such record owner one or
more duly issued stock certificates evidencing such ownership. No person shall
have any rights as a stockholder with respect to any shares of Common Stock
covered by an Option granted pursuant to the Plan until such person shall have
become the holder of record of such shares. Except as provided in SECTION 13, no
adjustments shall be made for cash dividends or other distributions or other
rights as to which there is a record date preceding the date such person becomes
the holder of record of such shares.
11.6 HOLDING PERIODS FOR TAX PURPOSES. The Plan does not
provide that an Optionee must hold shares of Common Stock acquired under the
Plan for any minimum period of time. Optionees are urged to consult with their
own tax advisors with respect to the tax consequences to them of their
individual participation in the Plan.
12. SUCCESSIVE GRANTS. Successive grants of Options may be made to any
Optionee under the Plan.
13. ADJUSTMENTS.
(a) If the outstanding Common Stock shall be hereafter
increased or decreased, or changed into or exchanged for a different number or
kind of shares or other securities of the Company or of another corporation, by
reason of a recapitalization, reclassification, reorganization, merger,
consolidation, share exchange, or other business combination in which the
Company is the surviving parent corporation, stock split-up, combination of
shares, or dividend or other distribution payable in capital stock or rights to
acquire capital stock, appropriate adjustment shall be made by the Committee in
the number and kind of shares for which options may be granted under the Plan.
In addition, the Committee shall make appropriate adjustment in the number and
kind of shares as to which outstanding and unexercised options shall be
exercisable, to the end that the proportionate interest of the holder of the
option shall, to the extent practicable, be maintained as before the occurrence
of such event. Such adjustment in outstanding options shall be made without
change in the total price applicable to the unexercised portion of the option
but with a corresponding adjustment in the exercise price per share.
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<PAGE>
(b) In the event of the dissolution or liquidation of the
Company, any outstanding and unexercised options shall terminate as of a future
date to be fixed by the Committee.
(c) In the event of a Reorganization (as hereinafter
defined), then,
(i) If there is no plan or agreement with respect to
the Reorganization ("Reorganization Agreement"), or if the Reorganization
Agreement does not specifically provide for the adjustment, change, conversion,
or exchange of the outstanding and unexercised options for cash or other
property or securities of another corporation, then any outstanding and
unexercised options shall terminate as of a future date to be fixed by the
Committee; or
(ii) If there is a Reorganization Agreement, and the
Reorganization Agreement specifically provides for the adjustment, change,
conversion, or exchange of the outstanding and unexercised options for cash or
other property or securities of another corporation, then the Committee shall
adjust the shares under such outstanding and unexercised options, and shall
adjust the shares remaining under the Plan which are then available for the
issuance of options under the Plan if the Reorganization Agreement makes
specific provisions therefor, in a manner not inconsistent with the provisions
of the Reorganization Agreement for the adjustment, change, conversion, or
exchange of such options and shares.
(d) The term "Reorganization" as used in this SECTION 13
shall mean any reorganization, merger, consolidation, share exchange, or other
business combination pursuant to which the Company is not the surviving parent
corporation after the effective date of the Reorganization, or any sale or lease
of all or substantially all of the assets of the Company. Nothing herein shall
require the Company to adopt a Reorganization Agreement, or to make provision
for the adjustment, change, conversion, or exchange of any options, or the
shares subject thereto, in any Reorganization Agreement which it does adopt.
(e) The Committee shall provide to each optionee then holding
an outstanding and unexercised option not less than 30 calendar days' advanced
written notice of any date fixed by the Committee pursuant to this SECTION 13
and of the terms of any Reorganization Agreement providing for the adjustment,
change, conversion, or exchange of outstanding and unexercised options. Except
as the Committee may otherwise provide, each optionee shall have the right
during such period to exercise his option only to the extent that the option was
exercisable on the date such notice was provided to the optionee.
Any adjustment to any outstanding ISO pursuant to this
SECTION 13, if made by reason of a transaction described in Section 424(a) of
the Code, shall be made so as to conform to the requirements of that Section and
the regulations thereunder. If any other transaction described in Section 424(a)
of the Code affects the Common Stock subject to any unexercised ISO theretofore
granted under the Plan (hereinafter for purposes of this SECTION 13 referred to
as the "old option"), the Board of Directors of the Company or of any surviving
or acquiring corporation may take such action as it deems appropriate, in
conformity with the requirements of that Code Section and the regulations
thereunder, to substitute a new option for the old option, in order to make the
new option, as nearly as may be practicable, equivalent to the old option, or to
assume the old option.
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<PAGE>
(f) No modification, extension, renewal, or other change in
any option granted under the Plan may be made, after the grant of such option,
without the optionee's consent, unless the same is permitted by the provisions
of the Plan and the option agreement. In the case of an ISO, optionees are
hereby advised that certain changes may disqualify the ISO from being considered
as such under Section 422 of the Code, or constitute a modification, extension,
or renewal of the ISO under Section 424(h) of the Code.
(g) All adjustments and determinations under this SECTION 13
shall be made by the Committee in good faith in its sole discretion.
14. CONTINUED EMPLOYMENT. As determined in the sole discretion of the
Committee at the time of grant and if so stated in a writing signed by the
Company, each Option may have as a condition the requirement of an Employee
Optionee to remain in the employ of the Company, or of its affiliates, and to
render to it his or her exclusive service, at such compensation as may be
determined from time to time by it, for a period not to exceed the term of the
Option, except for earlier termination of employment by or with the express
written consent of the Company or on account of disability or death. The failure
of any Employee Optionee to abide by such agreement as to any Option under the
Plan may result in the termination of all of his or her then outstanding Options
granted pursuant to the Plan. Neither the creation of the Plan nor the granting
of Option(s) under it shall be deemed to create a right in an Employee Optionee
to continued employment with the Company, and each such Employee Optionee shall
be and shall remain subject to discharge by the Company as though the Plan had
never come into existence. Except as specifically provided by the Committee in
any particular case, the loss of existing or potential profit in options granted
under this Plan shall not constitute an element of damages in the event of
termination of the employment of an employee even if the termination is in
violation of an obligation of the Company to the employee by contract or
otherwise.
15. TAX WITHHOLDING. The exercise of any Option granted under the Plan
is subject to the condition that if at any time the Company shall determine, in
its discretion, that the satisfaction of withholding tax or other withholding
liabilities under any federal, state or local law is necessary or desirable as a
condition of, or in connection with, such exercise or a later lapsing of time or
restrictions on or disposition of the shares of Common Stock received upon such
exercise, then in such event, the exercise of the Option shall not be effective
unless such withholding shall have been effected or obtained in a manner
acceptable to the Company. When an Optionee is required to pay to the Company an
amount required to be withheld under applicable income tax laws in connection
with the exercise of any Option, the Optionee may, subject to the approval of
the Committee, which approval shall not have been disapproved at any time after
the election is made, satisfy the obligation, in whole or in part, by electing
to have the Company withhold shares of Common Stock having a value equal to the
amount required to be withheld. The value of the Common Stock withheld pursuant
to the election shall be determined by the Committee, in accordance with the
criteria set forth in SECTION 8, with reference to the date the amount of tax to
be withheld is determined. The Optionee shall pay to the Company in cash any
amount required to be withheld that would otherwise result in the withholding of
a fractional share. The election by an Optionee who is an officer of the Company
within the meaning of Section 16 of the 1934 Act, to be effective, must meet all
of the requirements of Section 16 of the 1934 Act.
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<PAGE>
16. TERM OF PLAN.
16.1 EFFECTIVE DATE. Subject to stockholder approval, the
Plan shall become effective as of November 14, 2000.
16.2 TERMINATION DATE. Except as to options granted and
outstanding under the Plan prior to such time, the Plan shall terminate at
midnight on November 14, 2010, and no Option shall be granted after that time.
Options then outstanding may continue to be exercised in accordance with their
terms. The Plan may be suspended or terminated at any earlier time by the Board
within the limitations set forth in SECTION 4.
17. NON-EXCLUSIVITY OF THE PLAN. Nothing contained in the Plan is
intended to amend, modify, or rescind any previously approved compensation
plans, programs or options entered into by the Company. This Plan shall be
construed to be in addition to and independent of any and all such other
arrangements. Neither the adoption of the Plan by the Board nor the submission
of the Plan to the stockholders of the Company for approval shall be construed
as creating any limitations on the power or authority of the Board to adopt,
with or without stockholder approval, such additional or other compensation
arrangements as the Board may from time to time deem desirable.
18. GOVERNING LAW. The Plan and all rights and obligations under it
shall be construed and enforced in accordance with the laws of the State of
Delaware.
19. INFORMATION TO OPTIONEES. Optionees under the Plan who do not
otherwise have access to financial statements of the Company will receive the
Company's financial statements at least annually.
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EXHIBIT C
AMENDED AND RESTATED CERTIFICATE
<PAGE>
AMENDED AND RESTATED
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RIGHTS OF PREFERRED STOCK
OF MICROTEL INTERNATIONAL INC.,
A DELAWARE CORPORATION
The undersigned, Carmine T. Oliva, hereby certifies that:
A. He is the duly elected and acting President of MicroTel
International, Inc., a Delaware corporation (the "CORPORATION").
B. Pursuant to authority given by the Corporation's Certificate of
Incorporation, and in accordance with the provisions of Section 151 of the
General Corporation Law of the State of Delaware, the Board of Directors of the
Corporation has duly adopted the following recitals and resolutions:
WHEREAS, the Certificate of Incorporation of the Corporation provides
for two classes of shares known as Common Stock and Preferred Stock;
WHEREAS, the Board of Directors of the Corporation is authorized by the
Certificate of Incorporation to provide for the issuance of the shares of
Preferred Stock in series, and by filing a certificate pursuant to the
applicable law of the State of Delaware, to establish from time to time the
number of shares to be included in each such series, and to fix the designation,
powers, preferences and rights of the shares of each such series and the
qualifications, limitations or restrictions thereof;
WHEREAS, the Corporation filed with the Delaware Secretary of State on
May 20, 1998, a Certificate of Designations, Preferences and Rights of Preferred
Stock (the "Certificate of Designations");
WHEREAS, pursuant to the authority conferred upon the Board of
Directors by the Certificate of Incorporation and Section 242 of the Delaware
General Corporation Law, said Board of Directors, by action taken without a
meeting by written consent on November 14, 2000, duly adopted a resolution
providing for the amendment of the Certificate of Designations, in its entirety,
to read as set forth herein; and
WHEREAS, pursuant to Sections 228(a) and 242 of Delaware General
Corporation Law, approval of the stockholders holding a majority of the
Common Stock and a majority of the Series A Preferred Stock was duly
opbtained at a Special Meeting of Stockholders of the Corporation held on
January 16, 2001.
NOW, THEREFORE, BE IT RESOLVED, that the Certificate of Designations is
amended to read in full as follows:
A. DESIGNATION. One series of Preferred Stock, designated Series A
Preferred Stock, is hereby provided for, which shares shall have the rights,
privileges and preferences set forth below.
B. AUTHORIZED NUMBER. The number of shares constituting the Series A
Preferred Stock shall be 200, par value .01 per share.
<PAGE>
C. DIVIDEND PROVISIONS. The holders of shares of Series A Preferred
Stock shall not be entitled to receive dividends.
D. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up of
the Corporation, either voluntary or involuntary, the holders of shares of
Series A Preferred Stock shall be entitled to receive, prior and in preference
to any distribution of any of the assets of this Corporation to the holders of
the Common Stock by reason of their ownership, an amount per share equal to
$10,000 (the "STATED VALUE") for each outstanding share of Series A Preferred
Stock. If upon the occurrence of such event, the assets and funds thus
distributed among the holders of the Series A Preferred Stock shall be
insufficient to permit the payment to such holders of the full aforesaid
preferential amounts, then the entire assets and funds of the Corporation
legally available for distribution shall be distributed ratably among the
holders of the Series A Preferred Stock on a share-by-share basis in proportion
to the aggregate preferential amounts of each such series of Preferred Stock.
(b) A consolidation or merger of the Corporation with or into any
other corporation or corporations, or a sale, conveyance or disposition of all
or substantially all of the assets of this Corporation or the effectuation by
the Corporation of a transaction or series of related transactions in which more
than 50% of the voting power of the Corporation is disposed of, shall not be
deemed to be a liquidation, dissolution or winding up within the meaning of this
SECTION D but shall instead be treated pursuant to SECTION E hereto.
E. CONVERSION. The holders of the Series A Preferred Shares shall have
conversion rights as follows (the "CONVERSION RIGHTS"):
(1) CONVERSION RIGHTS.
(i) Each Series A Preferred Share shall be
convertible, at the option of the holders of such shares, at
any time, at the office of the Corporation or any transfer
agent for the Series A Preferred Shares, into 50,530 fully
paid and non-assessable Common Shares of the Corporation.
(ii) In the event of a call for redemption of any
Series A Preferred Shares pursuant to SECTION F hereof, each
holder of any Series A Preferred Shares shall have the right
to exercise the conversion rights set forth in this SECTION E
and the right to convert each share shall cease as to the
shares designated for redemption as of the close of business
on the business day immediately prior to the redemption date,
unless default is made in payment of the redemption price. if
the Corporation has received a notice of conversion with
respect to any Series A Preferred Shares the Corporation may
not redeem such Series A Preferred Shares provided the Series
A Preferred Shares are delivered for conversion as set forth
in SECTION E(2).
-2-
<PAGE>
(2) MECHANICS OF CONVERSION.
(i) No fractional shares of Common Stock shall be
issued upon conversion of the Series A Preferred Shares. In
lieu of any fractional share to which the holder would
otherwise be entitled, the Corporation shall round up to the
nearest whole share. In the case of a dispute as to the
calculation of the Conversion Rate, the Corporation's
calculation shall be deemed conclusive absent manifest error.
In order to convert Series A Preferred Shares into full shares
of Common Stock, the holder shall surrender the certificate or
certificates therefor, duly endorsed, by either overnight
courier or 2-day courier, to the office of the Corporation for
the Series A Preferred Shares, and shall give written notice
to the Corporation at such office that the holder elects to
convert the same, the number of shares of Series A Preferred
Shares so converted and a calculation of the Conversion Rate
(with an advance copy of the certificates) and the notice by
facsimile); provided, however, that the Corporation shall not
be obligated to deliver certificates evidencing the shares of
Common Stock issuable upon such conversion unless certificates
evidencing such Series A Preferred Shares are delivered to the
Corporation as provided above, or the holder notifies the
Corporation that such certificates have been lost, stolen or
destroyed and executes an agreement satisfactory to the
Corporation to indemnify the Corporation from any loss
incurred by it in connection with such certificates.
(ii) The Corporation shall use reasonable efforts to
cause to be issued and delivered within two (2) business days
after delivery to the Corporation of such Series A Preferred
Shares, or after such agreement and indemnification. to such
holder of Series A Preferred Shares at the address of the
holder on the stock books of the Corporation, a certificate or
certificates for the number of shares of Common Stock to which
he shall be entitled as aforesaid. The date on which notice of
conversion is given (the "DATE OF CONVERSION") shall be deemed
to be the date set forth in such notice of conversion provided
the original Series A Preferred Shares to be converted are
received by the Corporation within five (5) business days
thereafter and the person or persons entitled to receive the
shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of
such shares of Common Stock on such date. If the original
Series A Preferred Shares to be converted are not received by
the Corporation within five (5) business days after the
Conversion, the notice of conversion shall become null and
void.
(3) CONVERSION PRICE ADJUSTMENTS. The number of Common Shares
issuable upon conversion as set forth in SECTION E(1)(i) shall be
appropriately adjusted to reflect, as deemed equitable and appropriate
by the Corporation, any stock dividend, stock split or share
combination of the Common Stock. In the event of a merger,
reorganization, recapitalization or similar event of or with respect to
the Corporation (a "CORPORATE CHANGE") (other than a Corporate Change
in which all or substantially all of the consideration received by the
holders of the Corporation's equity securities upon such Corporate
Change consists of cash or assets other than securities issued by the
acquiring entity or any affiliate thereof), the Series A Preferred
Shares shall be convertible into
-3-
<PAGE>
such class and type of securities as the Holder would have received had
the Holder converted the Series A Preferred Shares immediately prior to
such Corporate Change, as appropriately adjusted to equitably reflect
the conversion price and any stock dividend, stock split or share
combination of the common stock after such corporate event.
(4) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The
Corporation shall at all times reserve and keep available out of its
authorized but unissued Common Shares solely for the purpose of
effecting the conversion of the Series A Preferred Shares such number
of its Common Shares as shall from time to time be sufficient to effect
the conversion of all outstanding Series A Preferred Shares; and if at
any time the number of authorized but unissued Common Shares shall not
be sufficient to effect the conversion of all then outstanding Series A
Preferred Shares, in addition to such other remedies as shall be
available to the holder of such Series A Preferred Shares, the
Corporation will take such corporate action as may, in the opinion of
its counsel, be necessary to increase its authorized but unissued
Common Shares to such number of shares as shall be sufficient for such
purposes.
F. REDEMPTION OF SERIES A PREFERRED SHARES.
(1) OPTIONAL REDEMPTION. The Corporation may redeem all
outstanding and unconverted Series A Preferred Shares for cash at a per
share price equal to $11,500 (115% of the Stated Value) for each Series
A Preferred Share by giving written notice to Buyer at least twenty
(20) days in advance of such redemption. Notwithstanding the above, the
Corporation may not redeem the Series A Preferred Shares unless there
are sufficient authorized and reserved Common Shares to permit
conversion by the holders thereof within such twenty (20) day period.
If the Corporation has received a notice of conversion with respect to
any Series A Preferred Shares, the Corporation may not redeem such
Series A Preferred Shares provided the Series A Preferred Shares are
delivered for conversion as set forth in SECTION E(2) during the notice
period prior to the redemption date as set forth in SECTION F(3)(11)
below.
(2) MANDATORY REDEMPTION. On May 22, 2003, the Corporation
shall redeem all Series A Preferred Shares then outstanding, by the
payment therefor of the redemption price of $11,500 per share.
(3) MANNER OF REDEMPTION OF SERIES A PREFERRED SHARES.
(i) If less than all of the outstanding Series A
Preferred Shares shall be called for redemption, the
particular shares of such series to be redeemed shall be
selected by lot or by such other equitable manner as may be
prescribed by resolution of the Board of Directors.
(ii) Notice of redemption of any Series A Preferred
Shares shall be given by the Corporation by fax or other
written communication, at least twenty (20) days prior to the
date fixed by the Board of Directors of the Corporation for
redemption (herein called the "REDEMPTION DATE"), to the
holders of record of the
-4-
<PAGE>
shares to be redeemed at their respective addresses then
appearing on the records of the Corporation. The notice of the
redemption shall state:
(A) the redemption date,
(B) the redemption price (which must be paid
within five (5) business days after the date of
redemption),
C) whether the redemption is an optional
redemption or a mandatory redemption,
(D) if less than all outstanding Series A
Preferred Shares are to be redeemed, the
identification of the Series A Preferred Shares to be
redeemed,
(E) the conversion rate on the date of the notice,
(F) that on the redemption date the redemption
price will become due and payable upon each Series A
Preferred Shares to be redeemed and the right to
convert each share of Series A Preferred Share shall
cease as of the close of business on the business
day prior to the redemption date, unless default
shall be made in the payment of the redemption price,
and
(G) the place or places where such Series A
Preferred Shares to be redeemed are to be surrendered
for payment of the redemption price.
(4) FAILURE TO REDEEM. If the Corporation fails to pay the
redemption price after calling any Series A Preferred Shares for
optional redemption under SECTION F(1), the Corporation shall have no
further right to redeem Series A Preferred Shares under SECTION F(1).
(5) REACQUIRED SHARES. Any shares of the Series A Preferred
Stock converted, redeemed or purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and cancelled
promptly after the acquisition thereof. All such shares shall upon
their cancellation become authorized but unissued shares of Series A
Preferred Stock and may be reissued at the direction of the Corporation
subject to the conditions or restrictions on issuance set forth herein.
G. CORPORATE EVENTS. In the event of (i) any declaration by the
Corporation of a record date of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than cash dividend) or other distribution or (ii) any capital
reorganization of the Corporation, any reclassification or recapitalization of
the capital stock of the Corporation, any merger or consolidation of the
Corporation, and any transfer of all or substantially all of the assets of the
Corporation to any other Corporation, or any other entity or person, or any
voluntary or involuntary dissolution, liquidation or winding up of the
Corporation, the Corporation shall mail to each holder of Series A Preferred
Shares at least twenty (20) days prior to the record date specified therein, a
notice specifying (A) the date
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<PAGE>
on which any such record is to be declared for the purpose of such dividend or
distribution and a description of such dividend or distribution, (B) the date on
which any such reorganization, reclassification, transfer, consolidation,
merger, dissolution, liquidation or winding up is expected to become effective,
and (C) the time, if any, that is to be fixed, as to when the holders of record
of Common Stock (or other securities) will receive for securities or other
property deliverable upon such reorganization, reclassification, transfer,
consolidation, merger, dissolution or winding up.
H. VOTING RIGHTS.
(1) The Holders of the Series A Preferred Shares shall not have
any voting rights except as set forth below or as otherwise from time
to time required by law.
(2) To the extent that under Delaware law the vote of the
holders of the Series A Preferred Shares, voting separately as a class,
is required to authorize a given action of the Corporation, the
affirmative vote or consent of the holders of at least a majority of
the outstanding Series A Preferred Shares shall constitute the approval
of such action by the class. To the extent that under Delaware law the
holders of the Series A Preferred Shares are entitled to vote on a
matter with holders of Common Stock voting together as one class, each
Series A Preferred Share shall be entitled to a number of votes equal
to the number of shares of Common Stock into which it is then
convertible using the record date for the taking of such vote of
stockholders as of the date of determination. Holders of the Series A
Preferred Shares shall be entitled to notice of all shareholder
meetings or written consents with respect to which they would be
entitled to vote, which notice would be provided pursuant to the
Corporation's bylaws and applicable statutes.
I. PROTECTIVE PROVISIONS. So long as the Series A Preferred Shares are
outstanding, the Corporation shall not take any action that would impair the
rights of the holders of the Series A Preferred Shares set forth herein and
shall not without first obtaining the approval (by vote or written consent, as
provided by law) of the holders of at least a majority in aggregate principal
amount of the Series A Preferred Shares then outstanding:
(1) Alter or change the rights, preferences or privileges of the
Series A Preferred Shares so as to affect adversely the Series A Preferred
Shares.
(2) For a period of eight (8) months from the issuance of the
Series A Preferred Shares, create any new class or series of stock which ranks
prior to or PARI PASSU to the Series A Preferred Shares with respect to
liquidation preference, other than any additional series of Preferred Shares
issued for a purchase price not to exceed $2 million, which may rank PARI PASSU.
(3) Do any act or thing which would result in taxation of the
holders of Series A Preferred Shares under Section 305 of the Internal Revenue
Code of 1985, as amended (or any comparable provision of the Internal Revenue
Code as hereafter from time to time amended).
-6-
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by its authorized officer as of November 20, 2000.
MICROTEL INTERNATIONAL, INC.
By:
--------------------------------------------
Carmine T. Oliva
President and Chief Executive Officer
<PAGE>
MICROTEL INTERNATIONAL, INC.
SPECIAL MEETING OF STOCKHOLDERS--TO BE HELD JANUARY 16, 2001
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
COMMON STOCK
The undersigned hereby appoints CARMINE T. OLIVA and RANDOLPH D. FOOTE, and
each of them, individually, the attorney, agent and proxy of the undersigned,
each with the power to appoint his substitute, to represent and vote, as
designated below, all shares of common stock of MicroTel International, Inc.
(the "Company") held of record by the undersigned on November 20, 2000, at the
Special Meeting of Stockholders to be held at the Company's headquarters located
at 9485 Haven Avenue, Suite 100, Rancho Cucamonga, California 91730 on
January 16, 2001, at 11:00 a.m., Pacific Time, and at any and all adjournments
thereof.
1. AMENDMENT OF CERTIFICATE OF INCORPORATION. Approval of the amendment of
the Certificate of Incorporation of the Company to increase the number of shares
of common stock authorized for issuance by the Company from 25,000,000 shares to
50,000,000 shares.
/ / FOR / / AGAINST / / ABSTAIN
2. ADOPTION OF 2000 STOCK OPTION PLAN. To consider and vote upon a proposal
to approve a 2000 Stock Option Plan, pursuant to which the Company may grant to
its key employees, officers and directors of the Company and to consultants and
employees of companies who do business with the Company options to purchase up
to 2,000,000 shares of the Company's common stock.
/ / FOR / / AGAINST / / ABSTAIN
3. APPROVAL OF AMENDED AND RESTATED CERTIFICATE OF DESIGNATIONS,
PREFERENCES AND RIGHTS OF PREFERRED STOCK. To consider and vote upon a proposal
to approve the filing with the Delaware Secretary of State, an Amended and
Restated Certificate of Designations, Preferences and Rights of Preferred Stock,
to, among other things, reduce the number of authorized shares of Series A
Preferred Stock from 250 to 200 and to change the conversion price of such
shares.
<PAGE>
4. APPOINTMENT OF INDEPENDENT AUDITORS. Ratification of the appointment of
BDO Seidman, LLP as independent auditors of the Company for the fiscal year
ended December 31, 2000.
/ / FOR / / AGAINST / / ABSTAIN
5. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof.
This Proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this Proxy will
be voted FOR Proposals 1, 2, 3 and 4.
Please sign exactly as name appears
hereon. When shares are held by
joint tenants, both should sign.
When signing as attorney, as
executor, administrator, trustee or
guardian, please give full title as
such. If a corporation, please sign
in full corporate name by President
or other authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
Dated: ______________________, 2000
Name: _____________________________
Common Shares: ____________________
___________________________________
Signature (if held jointly)
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
<PAGE>
MICROTEL INTERNATIONAL, INC.
SPECIAL MEETING OF STOCKHOLDERS--TO BE HELD JANUARY 16, 2001
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
SERIES A PREFERRED STOCK
The undersigned hereby appoints CARMINE T. OLIVA and RANDOLPH D. FOOTE, and
each of them, individually, the attorney, agent and proxy of the undersigned,
each with the power to appoint his substitute, to represent and vote, as
designated below, all shares of Series A Preferred Stock of MicroTel
International, Inc. (the "Company") held of record by the undersigned on
November 20, 2000, at the Special Meeting of Stockholders to be held at the
Company's headquarters located at 9485 Haven Avenue, Suite 100, Rancho
Cucamonga, California 91730 on January 16, 2001, at 11:00 a.m., Pacific Time,
and at any and all adjournments thereof.
1. APPROVAL OF AMENDED AND RESTATED CERTIFICATE OF DESIGNATIONS,
PREFERENCES AND RIGHTS OF PREFERRED STOCK. To consider and vote upon a proposal
to approve the filing with the Delaware Secretary of State, an Amended and
Restated Certificate of Designations, Preferences and Rights of Preferred Stock,
to, among other things, reduce the number of authorized shares of Series A
Preferred Stock from 250 to 200 and to change the conversion price of such
shares.
<PAGE>
This Proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this Proxy will
be voted FOR Proposal 1.
Please sign exactly as name
appears hereon. When shares are
held by joint tenants, both
should sign. When signing as
attorney, as executor,
administrator, trustee or
guardian, please give full
title as such. If a
corporation, please sign in
full corporate name by
President or other authorized
officer. If a partnership,
please sign in partnership name
by authorized person.
Dated: __________________, 2000
Name: _________________________
Common Shares: ________________
_______________________________
Signature (if held jointly)
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
