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2
MICROTEL INTERNATIONAL INC.
9485 HAVEN AVENUE, SUITE 100
RANCHO CUCAMONGA, CALIFORNIA 91730
September , 2004
Dear Stockholders:
You are cordially invited to attend the MicroTel International Inc.
2004 annual meeting of stockholders that will be held on October 19, 2004 at
10:00 a.m. local time, at our headquarters located at 9485 Haven Avenue,
Suite 100, Rancho Cucamonga, California 91730. All holders of our outstanding
common stock as of the close of business on September 10, 2004 are entitled
to vote at the 2004 annual meeting.
Enclosed are a copy of the notice of annual meeting of stockholders, a
proxy statement, a proxy card and our latest annual report. A current report
on our business operations and future plans will be presented at the meeting,
and stockholders will have an opportunity to ask questions. We plan to
broadcast this stockholders' meeting live.
We hope you will be able to attend the 2004 annual meeting. Whether or
not you expect to attend, it is important that you complete, sign, date and
return the proxy card in the enclosed envelope in order to make certain that
your shares will be represented at the 2004 annual meeting.
Sincerely,
Randolph D. Foote,
Secretary
MICROTEL INTERNATIONAL INC.
9485 HAVEN AVENUE, SUITE 100
RANCHO CUCAMONGA, CALIFORNIA 91730
----------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 19, 2004
----------------------
NOTICE IS HEREBY GIVEN that the 2004 annual 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 October 19, 2004 at 10:00 a.m., local time, for the following
purposes:
1. To elect Laurence P. Finnegan, Jr. as a Class II director to
serve a three-year term.
2. To consider and vote upon a proposal to amend our certificate
of incorporation in order to increase our authorized common
stock from 50,000,000 shares to 150,000,000 shares and make
clarifying changes.
3. To consider and vote upon a proposal to amend our certificate
of incorporation in order to clarify the mechanics of our
classified board.
4. To consider and vote upon a proposal to amend and restate our
certificate of incorporation in order to modernize and conform
our certificate of incorporation to current Delaware corporate
law and practices.
5. To consider and vote upon a proposal to ratify the amendment
and restatement of our bylaws.
6. To ratify the selection of our independent public accountants
to audit our consolidated financial statements for 2004.
7. To transact such other business as may properly come before the
meeting or any adjournments and postponements thereof.
Our board of directors has fixed the close of business on September 10,
2004 as the record date for determining those stockholders who will be entitled
to notice of and to vote at the meeting. Only holders of our common stock at the
close of business on the record date are entitled to vote at the meeting.
Stockholders whose shares are held in the name of a broker or other nominee and
who desire to vote in person at the meeting should bring with them a legal
proxy.
By Order of the Board of Directors,
Randolph D. Foote, Secretary
Rancho Cucamonga, California
September , 2004
YOUR VOTE IS IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE SIGN AND
DATE THE ACCOMPANYING PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE. Returning a signed proxy card will help us secure a quorum and avoid
the expense of additional proxy solicitation. If you later desire to revoke your
proxy for any reason, you may do so in the manner described in the attached
proxy statement.
TABLE OF CONTENTS
Page
----
VOTING AND PROXY...............................................................1
DIRECTORS, DIRECTOR NOMINEE AND EXECUTIVE OFFICERS.............................3
EXECUTIVE COMPENSATION AND RELATED INFORMATION.................................5
INFORMATION ABOUT OUR BOARD OF DIRECTORS, BOARD COMMITTEES
AND RELATED MATTERS.......................................................11
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT................19
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................................21
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.......................21
PROPOSAL 1 - ELECTION OF CLASS II DIRECTOR....................................22
PROPOSAL 2 - APPROVAL OF AMENDMENT TO OUR CERTIFICATE OF INCORPORATION
IN ORDER TO INCREASE OUR AUTHORIZED COMMON STOCK FROM 50,000,000
SHARES TO 150,000,000 SHARES AND MAKE CLARIFYING CHANGES..................23
PROPOSAL 3 - APPROVAL OF AMENDMENT TO OUR CERTIFICATE OF INCORPORATION
IN ORDER TO CLARIFY THE MECHANICS OF OUR CLASSIFIED BOARD RATIFICATION
OF AMENDMENT AND RESTATEMENT OF BYLAWS....................................25
PROPOSAL 4 - AMENDMENT AND RESTATEMENT OF CERTIFICATE OF INCORPORATION
IN ORDER TO MODERNIZE AND CONFORM OUR CERTIFICATE OF INCORPORATION
TO CURRENT DELAWARE CORPORATE LAW AND PRACTICES...........................26
PROPOSAL 5 - RATIFICATION OF AMENDMENT AND RESTATEMENT OF BYLAWS..............28
PROPOSAL 6 - RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS......31
OTHER MATTERS.................................................................32
STOCKHOLDER PROPOSALS.........................................................32
AVAILABLE INFORMATION.........................................................32
ANNUAL REPORT.................................................................33
APPENDIX A - AMENDED AND RESTATED AUDIT COMMITTEE CHARTER....................A-1
APPENDIX B - COMPENSATION COMMITTEE CHARTER..................................B-1
APPENDIX C - NOMINATING COMMITTEE CHARTER....................................C-1
APPENDIX D - AMENDED AND RESTATED CERTIFICATE OF INCORPORATION...............D-1
APPENDIX E - ARTICLE FOURTH OF EXISTING CERTIFICATE OF INCORPORATION.........E-1
APPENDIX F - ARTICLE EIGHTH OF EXISTING CERTIFICATE OF INCORPORATION.........F-1
APPENDIX G - AMENDED AND RESTATED BYLAWS.....................................G-1
MICROTEL INTERNATIONAL INC.
9485 HAVEN AVENUE, SUITE 100
RANCHO CUCAMONGA, CALIFORNIA 91730
------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 19, 2004
------------------
VOTING AND PROXY
We are furnishing this proxy statement in connection with the
solicitation of proxies by our board of directors for use at the 2004 annual
meeting of stockholders to be held at 10:00 a.m. local time on October 19, 2004,
at our offices at 9485 Haven Avenue, Suite 100, Rancho Cucamonga, California
91730, and at any and all adjournments and postponements of the meeting. This
proxy statement and the accompanying notice of annual meeting and proxy card are
first being mailed to stockholders on or about September , 2004.
Our annual report to stockholders is being mailed to stockholders
concurrently with this proxy statement. The annual report is not to be regarded
as proxy soliciting material or as a communication through which any
solicitation of proxies is made. A proxy card is enclosed for your use. The
shares represented by each properly executed unrevoked proxy card will be voted
as directed by the stockholder with respect to the matters described in the
proxy card. If no direction is made, the shares represented by each properly
executed proxy card will be voted "for" each of the proposals listed on the
proxy card. Any proxy given may be revoked at any time prior to its exercise by
filing with our secretary an instrument revoking the proxy or by filing a duly
executed proxy card bearing a later date. Any stockholder present at the meeting
who has given a proxy may withdraw it and vote his or her shares in person if he
or she so desires. However, a stockholder who holds shares through a broker or
other nominee must bring a legal proxy to the meeting if that stockholder
desires to vote at the meeting.
At the close of business on September 10, 2004, the record date for
determining the stockholders entitled to notice of and to vote at the 2004
annual meeting, we had issued and outstanding 24,695,548 shares of common
stock held by holders of record. Only holders of record of our common
stock at the close of business on the record date are entitled to notice of and
to vote at the annual meeting or at any adjournments and postponements of the
meeting.
Each share of our common stock issued and outstanding on the record
date entitles the holder of that share to one vote at the 2004 annual meeting
for all matters to be voted on at the meeting. The holders of a majority of our
shares of common stock issued and outstanding and entitled to vote at the
meeting, present in person or represented by proxy, shall constitute a quorum
for purposes of voting on the proposals.
Votes cast at the meeting will be tabulated by the person or persons
appointed by us to act as inspectors of election for the meeting. The inspectors
of election will treat shares of voting stock represented by a properly signed
and returned proxy card as present at the meeting for purposes of determining a
quorum, without regard to whether the proxy card is marked as casting a vote or
abstaining. Likewise, the inspectors of election will treat as present for
purposes of determining a quorum, shares of voting stock represented by "broker
non-votes," that is, shares held in record name by brokers or nominees that are
represented at the meeting but with respect to which the broker or nominee is
not entitled to vote on a particular proposal.
Directors are elected by a plurality. Therefore, for proposal 1, the
election of one Class II director to our board of directors, the nominee
receiving the highest number of votes will be elected. Abstentions and broker
non-votes will have no effect on proposal 1.
Approval of proposal 2, the amendment and restatement of our
certificate of incorporation in order to increase our authorized common stock
from 50,000,000 shares to 150,000,000 shares and make clarifying changes,
requires the affirmative vote of the majority of our outstanding shares of
common stock as of the record date.
Approval of proposal 3, the amendment of our certificate of
incorporation in order to clarify the mechanics of our classified board,
requires the affirmative vote of holders of not less than 67% of the outstanding
shares of our common stock as of the record date.
Except as described in the discussion of proposal 4 below, approval of
proposal 4, the amendment and restatement of our certificate of incorporation in
order to modernize and conform our certificate of incorporation to current
Delaware corporate law and practices, requires the affirmative vote of holders
of a majority of outstanding shares of our common stock as of the record date.
Approval of proposal 5, the ratification of the amendment and
restatement of our bylaws, is not required. However, the affirmative vote of a
majority of the shares of our common stock entitled to vote at and present in
person or represented by proxy at the meeting will constitute stockholder
ratification of the amendment and restatement of our bylaws.
Approval of proposal 6, the ratification of the selection of our
independent public accountants, is not required. However, the affirmative vote
of a majority of the shares of our common stock entitled to vote at and present
in person or represented by proxy at the meeting will constitute stockholder
ratification of the selection.
We will pay the expenses of soliciting proxies for the 2004 annual
meeting, including the cost of preparing, assembling and mailing the proxy
solicitation materials. Proxies may be solicited personally, by mail or by
telephone, or by our directors, officers and regular employees who will not be
additionally compensated. We have no present plans to hire special employees or
paid solicitors to assist in obtaining proxies, but we reserve the option to do
so if it appears that a quorum otherwise might not be obtained. The matters to
be considered and acted upon at the 2004 annual meeting are referred to in the
preceding notice and are discussed below more fully.
2
DIRECTORS, DIRECTOR NOMINEE AND EXECUTIVE OFFICERS
The names, ages and positions held by our directors, director nominee
and executive officers as of September 10, 2004 and their business experience
are as follows:
NAME AGE TITLES
---- --- ------
Carmine T. Oliva 61 Chairman of the Board, President,
Chief Executive Officer and
Director
Graham Jefferies 47 Executive Vice President and Chief
Operating Officer of our
Telecommunications Group and
Managing Director of various
subsidiaries
Randolph D. Foote 55 Senior Vice President, Chief
Financial Officer and
Secretary
Robert B. Runyon (1)(2) 78 Director
Laurence P. Finnegan, Jr. (1)(3) 67 Director and Director Nominee
Otis W. Baskin 59 Director
-----------
(1) Member of the compensation committee.
(2) Member of the nominating committee.
(3) Member of the audit committee.
CARMINE T. OLIVA has been Chairman of the Board, President and Chief
Executive Officer and a Class III director of MicroTel since March 26, 1997 and
of our subsidiary, XET Corporation, since he founded XET Corporation in 1983.
Mr. Oliva has been Chairman of the Board of XCEL Corporation, Ltd. since 1985,
and Chairman and Chief Executive Officer of CXR Telcom Corporation since March
1997. In 2002, Mr. Oliva obtained a French government working permit and assumed
responsibility as President of our CXR Anderson Jacobson ("CXR-AJ") subsidiary.
From January 1999 to January 2000, Mr. Oliva served as a director of Digital
Transmission Systems Inc. (DTSX), a publicly held company based in Norcross,
Georgia. From 1980 to 1983, Mr. Oliva was Senior Vice President and General
Manager, ITT Asia Pacific Inc. Prior to holding that position, Mr. Oliva held a
number of executive positions with ITT Corporation and its subsidiaries over an
eleven-year period. Mr. Oliva attained the rank of Captain in the United States
Army and is a veteran of the Vietnam War. Mr. Oliva earned a B.A. degree in
Social Studies/Business from Seton Hall University and an M.B.A. degree in
Business from The Ohio State University.
GRAHAM JEFFERIES was appointed Executive Vice President and Chief
Operating Officer of our Telecommunications Group on October 21, 1999. Mr.
Jefferies served as Executive Vice President of MicroTel from April 1999 through
October 1999. Mr. Jefferies has served CXR-AJ as a director since March 1997 and
as General Manager since July 2002, has served as Managing Director of Belix
Power Conversions Ltd., Belix Wound Components Ltd. and Belix Company Ltd. since
our acquisition of those companies in April 2000, as Managing Director of XCEL
Power Systems, Ltd. since September 1996 and as Managing Director of XCEL
Corporation, Ltd. since March 1992. Prior to joining us in 1992, he was Sales
and Marketing Director of Jasmin Electronics PLC, a major public United Kingdom
software and systems provider, from 1987 to 1992. Mr. Jefferies held a variety
of project management positions at GEC Marconi from 1978 to 1987. Mr. Jefferies
earned a B.S. degree in Engineering from Leicester University, and has
experience in mergers and acquisitions. Mr. Jefferies is a citizen and resident
of the United Kingdom.
3
RANDOLPH D. FOOTE was appointed as our Senior Vice President and Chief
Financial Officer on October 4, 1999 and as our Assistant Secretary on February
12, 2001. Mr. Foote has been our Secretary since September 2004 and the Vice
President and Chief Financial Officer of CXR Telcom Corporation and XET
Corporation since March 2000. Mr. Foote was the Corporate Controller of Unit
Instruments, Inc., a publicly traded semiconductor equipment manufacturer, from
October 1995 to May 1999. From March 1985 to October 1995, Mr. Foote was the
Director of Tax and Financial Reporting at Optical Radiation Corporation, a
publicly traded company that designed and manufactured products using advanced
optical technology. Prior to 1985, Mr. Foote held positions with Western Gear
Corporation and Bucyrus Erie Company, which were both publicly traded companies.
Mr. Foote earned a B.S. degree in Business Management from California State
Polytechnic University, Pomona and an M.B.A. degree in Tax/Business from Golden
Gate University.
ROBERT B. RUNYON has served as a Class III director since March 26,
1997 and also served as our Secretary from that date through August 2004. He has
been the owner and principal of Runyon and Associates, a human resources and
business advisory firm, since 1987. He has acted as Senior Vice President of Sub
Hydro Dynamics Inc., a privately held marine services company based in Hilton
Head, South Carolina, since September 1995. Prior to our merger with XET
Corporation, Mr. Runyon served XET Corporation both as a director since August
1983 and as a consultant in the areas of strategy development and business
planning, organization, human resources and administrative systems. He also
consults for companies in environmental products, marine propulsion systems and
architectural services sectors in these same areas. From 1970 to 1978, Mr.
Runyon held various executive positions with ITT Corporation, including Vice
President, Administration of ITT Grinnell, a manufacturing subsidiary of ITT.
From 1963 to 1970, Mr. Runyon held executive positions at BP Oil including Vice
President, Corporate Planning and Administration of BP Oil Corporation, and
Director, Organization and Personnel for its predecessor, Sinclair Oil
Corporation. Mr. Runyon was Executive Vice President, Human Resources at the
Great Atlantic & Pacific Tea Company from 1978 to 1980. Mr. Runyon earned a B.S.
degree in Economics/Industrial Management from University of Pennsylvania.
LAURENCE P. FINNEGAN, JR. has served as a Class II director since March
26, 1997. In addition to being a director of XET Corporation from 1985 to March
1997, Mr. Finnegan was XET Corporation's Chief Financial Officer from 1994 to
1997. Mr. Finnegan has held positions with ITT (1970-1974) as controller of
several divisions, Narco Scientific (1974-1983) as Vice President, Finance,
Chief Financial Officer, Executive Vice President and Chief Operating Officer,
and Fischer & Porter (1986-1994) as Senior Vice President, Chief Financial
Officer and Treasurer. Since August 1995, he has been a principal of GwynnAllen
Partners, Bethlehem, Pennsylvania, an executive management consulting firm.
Since December 1996, Mr. Finnegan has been a director and the President of GA
Pipe, Inc., a manufacturing company based in Langhorne, Pennsylvania. From
September 1997 to January 2001, Mr. Finnegan served as Vice President Finance
and Chief Financial Officer of QuestOne Decision Sciences, an efficiency
consulting firm based in Pennsylvania. Since August 2001, Mr. Finnegan has
served as a director and the Vice President and Chief Financial Officer of
VerdaSee Solutions, Inc., a consulting and software company based in
Pennsylvania. Mr. Finnegan earned a B.S. degree in Accounting from St. Joseph's
University.
OTIS W. BASKIN has served as a Class I director since February 6, 2004.
He is a Professor of Management at The George L. Graziadio School of Business
and Management at Pepperdine University in Malibu, California, where he served
as dean from 1995 to 2001. He has been a member of the full-time faculty of the
University of Houston - Clear Lake (1975-87), where he served as Coordinator of
the Management Faculty and Director of the Center for Advanced Management
Programs. He has also been Professor of Management at Arizona State University,
West Campus (1987-91) and The University of Memphis (1991-95), in addition to
serving as dean at both universities. Dr. Baskin has worked with AACSB
International (Association for the Advancement of Collegiate Schools of
Business) as Special Advisor to the President and as Chief Executive Officer
since 2002. He is an Associate with the Family Business Consulting Group, where
he advises family owned and closely held businesses. He has served as an advisor
to Exxon/Mobile Research and Engineering Corporation, NASA and the United States
Air Force. He earned a Ph.D. in Management, Public Relations and Communication
Theory from The University of Texas at Austin, an M.A. degree in Speech
Communication by the University of Houston, and a B.A. degree in Religion from
Oklahoma Christian University.
4
TERM OF OFFICE AND FAMILY RELATIONSHIPS
Our officers are appointed by, and serve at the discretion of, our
board of directors. There are no family relationships among our executive
officers, directors and director nominee.
EXECUTIVE COMPENSATION AND RELATED INFORMATION
COMPENSATION OF EXECUTIVE OFFICERS
The following table provides information concerning the annual and
long-term compensation for the years ended December 31, 2003, 2002 and 2001
earned for services in all capacities as an employee by 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 2003
(collectively, the "named executive officers"):
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION AWARD
ANNUAL COMPENSATION SECURITIES ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS UNDERLYING OPTIONS COMPENSATION
--------------------------- ---- ------ ----- ------------------ ------------
Carmine T. Oliva .................... 2003 $262,510 $70,000 53,000 $4,821(1)
President and Chief Executive 2002 $250,010 -- -- $4,821(1)
Officer 2001 $250,010 $40,000 100,000 $4,821(1)
Graham Jefferies .................... 2003 $200,801 $55,000 54,000 $10,320(3)
Executive Vice President and Chief 2002 $152,093 -- -- $9,000(3)
Operating Officer of Telecommuni- 2001 $142,639 $20,000 -- $7,697(3)
cations Group (2)
Randolph D. Foote.................... 2003 $150,000 $30,000 35,000 $1,886(4)
Senior Vice President, Chief 2002 $144,168 -- -- $1,604(4)
Financial Officer and Assistant 2001 $130,005 $15,000 -- --
Secretary(4)
---------------
(1) Represents the dollar value of insurance premiums we paid with respect to a
$1,000,000 term life insurance policy for the benefit of Mr. Oliva's
spouse.
(2) 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.
(3) Represents company contributions to Mr. Jefferies' retirement account.
(4) Represents company contributions to Mr. Foote's 401(k) retirement account.
RETIREMENT ACCOUNT MATCHING CONTRIBUTIONS
We match up to the lesser of $2,000 and 20% of Mr. Foote's
contributions to his 401(k) account. During 2003, our matching contribution
amounted to $1,886. This matching arrangement was generally made available to
all employees of MicroTel and provides for the same method of allocation of
benefits between management and non-management participants.
5
Also, XCEL Power Systems Ltd. makes matching contributions of up to 6%
of Mr. Jefferies' salary to an executives' defined contribution plan. Other
employees of XCEL Power Systems Ltd. may receive matching contributions to a
defined contribution plan of up to 4% of their salary. Amounts contributed to
the defined contribution plans are intended to be used to purchase annuities
upon retirement. During 2003, 2002 and 2001, Mr. Jefferies received matching
contributions of $10,320, $9,000 and $7,697, respectively.
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information regarding options granted in
the year ended December 31, 2003 to the executive officers named in the summary
compensation table. We did not grant any stock appreciation rights during 2003.
This information includes hypothetical potential gains from stock options
granted in 2003. These hypothetical gains are based entirely on assumed annual
growth rates of 5% and 10% in the value of our common stock price over the
ten-year life of the stock options granted in 2003. These assumed rates of
growth were selected by the Securities and Exchange Commission for illustrative
purposes only and are not intended to predict future stock prices, which will
depend upon market conditions and our future performance and prospects.
POTENTIAL
REALIZABLE VALUE
PERCENTAGE OF AT ASSUMED RATES
NUMBER OF TOTAL OF STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(3)
GRANT OPTIONS EMPLOYEES IN PRICE EXPIRATION ---------------------
NAMED OFFICER DATE GRANTED(1) FISCAL YEAR(2) PER SHARE DATE 5% 10%
------------- ---- ----------- ------- --------- ------------ ---- -----
Carmine T. Oliva...... 1/22/03 53,000 15.4% $0.35 1/22/13 $11,666 $29,564
Graham Jefferies...... 1/22/03 54,000 15.7% $0.35 1/22/13 $11,887 $30,122
Randolph D. Foote..... 1/22/03 35,000 10.2% $0.35 1/22/13 $ 7,704 $19,523
-------------------------
(1) Options vested in two equal semi-annual installments on July 22, 2003 and
January 22, 2004.
(2) Based on options to purchase 344,000 shares granted to our employees during
2003.
(3) Calculated using the potential realizable value of each grant.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following table provides information regarding the value of
unexercised options held by the named executive officers as of December 31,
2003. None of the named executives officers acquired shares through the exercise
of options during 2003.
NUMBER OF
SECURITIES UNDERLYING VALUE ($) OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 2003 DECEMBER 31, 2003 (1)
----------------- ---------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
Carmine T. Oliva................... 180,633 265,000 82,405 20,405
Graham Jefferies................... 126,287 27,000 75,990 20,790
Randolph D. Foote.................. 85,000 17,500 59,475 13,474
--------------
(1) Based on the last reported sale price of our common stock of $1.12 on
December 31, 2003 (the last trading day during 2003) as reported on the OTC
Bulletin Board, less the exercise price of the options.
6
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
CARMINE T. OLIVA
As of January 1, 2001, we entered into an employment agreement with
Carmine T. Oliva, our Chairman of the Board, President and Chief Executive
Officer. The agreement is subject to automatic renewal for two consecutive
two-year terms beginning on January 1, 2006, unless, during the required notice
periods (which run from September 1 to November 1 of the second 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 for an initial
base salary of $250,000 per year and states that Mr. Oliva is eligible to
receive merit or promotional increases and to participate in other benefit and
incentive programs we may offer.
If the board of directors 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 or the value of his annual salary
that would have been due through January 1, 2006, whichever is greater.
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 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 December 31, 2005, Mr.
Oliva will be entitled to be paid his annual salary for three years following
the termination or until December 31, 2005, whichever is the longer period. 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
or for two years, whichever is the longer 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:
o if the termination occurs prior to the expiration of the initial
term of the agreement on December 31, 2005, Mr. Oliva will be
entitled to be paid his annual salary and all other amounts
payable under the agreement for three years following the
termination or until December 31, 2005, whichever is the longer
period, which amounts shall be payable at his election in a lump
sum within 30 days after the termination or in installments;
o if the termination occurs during a renewal period, Mr. Oliva will
be entitled to be paid his annual salary through the period ending
two years after the expiration of the particular renewal period,
and to be paid all other amounts payable under the agreement;
o 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;
o Mr. Oliva will be entitled to receive any executive bonus awarded
but not yet paid;
7
o Mr. Oliva will be entitled to receive a gross up of all
compensatory payments listed above so that he receives those
payments substantially free of federal and state income taxes; and
o 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 two years 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. However, 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:
o 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;
o all loan collateral pledged by Mr. Oliva has been returned to Mr.
Oliva; and
o all personal guarantees given by Mr. Oliva or his family on our
behalf are voided.
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 and any renewals 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.
The agreement contains non-competition provisions that prohibit Mr.
Oliva from engaging or participating in a competitive business or soliciting our
customers or employees during the initial term and any renewal terms and for two
years afterward if termination is for cause or for one year afterward if
termination is without cause or following a change of control. The agreement
also contains provisions that restrict disclosure by Mr. Oliva of our
confidential information and assign ownership to us of inventions created by Mr.
Oliva in connection with his employment.
RANDOLPH D. FOOTE
On July 2, 2001, we entered into an employment agreement with Randolph
D. Foote at an initial annual salary of $130,000 and with an initial term of
three years. The agreement automatically renewed for a one-year term on July 2,
2004 and is scheduled to automatically renew for one additional one-year term on
July 2, 2005. Mr. Foote is to act as Senior Vice President and Chief Financial
Officer and is to perform additional services as may be approved by our board of
directors.
8
If the board of directors makes a substantial addition to or reduction
of Mr. Foote's duties, Mr. Foote 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. Foote
the value of one year of his annual salary within 30 days after the effective
date of the resignation.
If we terminate Mr. Foote for cause, our obligation to pay any further
compensation, severance allowance, or other amounts payable under the agreement
terminates on the date of termination. If we terminate Mr. Foote 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. Foote will be entitled to be paid
his annual salary through the expiration of the then 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. Foote is terminated
without cause within two years following a change of control, then:
o Mr. Foote will be entitled to be paid in installments or, at his
election in a lump sum within 30 days after termination, his
annual salary and other amounts payable under the agreement
through the expiration of the then current renewal period plus one
additional year;
o Mr. Foote 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;
o Mr. Foote will be entitled to receive any executive bonus awarded
but not yet paid; and
o Mr. Foote 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 or current
renewal term and the date he receives equivalent coverage and
benefits under plans and programs of a subsequent employer.
If Mr. Foote dies during the term of the agreement, amounts payable
under the agreement to or for the benefit of Mr. Foote will continue to be
payable to Mr. Foote's designee or legal representatives for one year following
his death. If Mr. Foote 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. Foote 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. Foote for one year
following the effective date of the termination.
The agreement contains non-competition provisions that prohibit Mr.
Foote from engaging or participating in a competitive business or soliciting our
customers or employees during the initial term and any renewal terms and for one
year afterward. The agreement also contains provisions that restrict disclosure
by Mr. Foote of our confidential information and assign ownership to us of
inventions created by Mr. Foote in connection with his employment.
9
GRAHAM JEFFERIES
On July 2, 2001, we entered into an employment agreement with Graham
Jefferies at an initial annual salary of 100,000 British pounds (approximately
$141,000 at the then current exchange rates) and with an initial term of three
years. The agreement automatically renewed for a one-year term on July 2, 2004
and is scheduled to automatically renew for one additional one-year term on July
2, 2005. Mr. Jefferies is to act as Managing Director of XCEL Corporation, Ltd.
and as Executive Vice President and Chief Operating Officer of our Telecom Group
and is to perform additional services as may be approved by our board of
directors. This agreement replaced a substantially similar agreement that had
been effective since May 1, 1998.
If the board of directors 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 within 30 days after the
effective date of the resignation.
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 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 then current renewal
period plus one additional year, 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:
o Mr. Jefferies will be entitled to be paid in installments or, at
his election in a lump sum within 30 days after termination, his
annual salary and other amounts payable under the agreement
through the expiration of the current renewal period plus one
additional year;
o 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;
o Mr. Jefferies will be entitled to receive any executive bonus
awarded but not yet paid; and
o 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 initial or current
renewal term and the date he receives equivalent coverage and
benefits under plans and programs of a subsequent employer.
10
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.
The agreement contains non-competition provisions that prohibit Mr.
Jefferies from engaging or participating in a competitive business or soliciting
our customers or employees during the initial term and any renewal terms and for
two years afterward if termination is for cause or for one year afterward if
termination is without cause or following a change of control. The agreement
also contains provisions that restrict disclosure by Mr. Jefferies of our
confidential information and assign ownership to us of inventions created by Mr.
Jefferies in connection with his employment.
INFORMATION ABOUT OUR BOARD OF DIRECTORS,
BOARD COMMITTEES AND RELATED MATTERS
BOARD OF DIRECTORS
Our business, property and affairs are managed under the direction of
our board. Directors are kept informed of our business through discussions with
our executive officers, by reviewing materials provided to them and by
participating in meetings of our board and its committees.
Our bylaws provide that our board of directors shall consist of at
least four directors. Our board is divided into three classes of directors:
Class I, Class II and Class III. The term of office of each class of directors
is three years, with one class expiring each year at our annual meeting of
stockholders. We currently have four directors on our board, with no vacancies.
Our current board consists of one Class I director whose term expires at our
2006 annual meeting, one Class II director whose term expires at our 2004 annual
meeting and two Class III directors whose term expires at our 2005 annual
meeting.
During 2003, our board held one meeting and took action by unanimous
written consent on three occasions. During 2003, no incumbent director attended
fewer than 75% of the aggregate of: (1) the total number of meetings of the
board of directors (held during the period for which he has been a director);
and (2) the total number of meetings held by all committees of the board on
which he served (during the periods that he served).
BOARD COMMITTEES
Our board of directors currently has an audit committee, a compensation
committee and a nominating committee.
The audit committee selects our independent auditors, reviews the
results and scope of the audit and other services provided by our independent
auditors and reviews our financial statements for each interim period and for
our year end. Since June 26, 1999, this committee has consisted of Laurence
Finnegan. The audit committee held four meetings during 2003. Our board of
directors has determined that Mr. Finnegan is an audit committee financial
expert. Our board of directors has also determined that Robert Runyon, Otis
Baskin and Mr. Finnegan are "independent" as defined in NASD Marketplace Rule
4200(a)(15). The audit committee operates pursuant to a charter approved by our
board of directors and audit committee, according to the rules and regulations
of the Securities and Exchange Commission. A copy of the charter, as amended and
restated, is attached as APPENDIX A to this proxy statement.
11
The compensation committee is responsible for establishing and
administering our policies involving the compensation of all of our executive
officers and establishing and recommending to our board of directors the terms
and conditions of all employee and consultant compensation and benefit plans.
Our entire board of directors also may perform these functions with respect to
our employee stock option plans. Since June 26, 1999, this committee has
consisted of Messrs. Runyon and Finnegan. The compensation committee took action
by written consent on two occasions for 2003. The compensation committee
operates pursuant to a charter approved by our board of directors and
compensation committee. A copy of the charter is attached as APPENDIX B to this
proxy statement.
The nominating committee selects nominees for the board of directors.
Beginning in and since 2000, the nominating committee has consisted of Mr.
Runyon. The nominating committee met three times during 2003 for the purpose of
selecting a new director to fill a vacancy on the board. The nominating
committee utilizes a variety of methods for identifying and evaluating nominees
for director, including candidates that may be referred by stockholders.
Stockholders that desire to recommend candidates for the board for evaluation
may do so by contacting MicroTel in writing, identifying the potential candidate
and providing background information. Candidates may also come to the attention
of the nominating committee through current board members, professional search
firms and other persons. In evaluating potential candidates, the nominating
committee will take into account a number of factors, including, among others,
the following:
o independence from management;
o whether the candidate has relevant business experience;
o judgment, skill, integrity and reputation;
o existing commitments to other businesses;
o corporate governance background;
o financial and accounting background, to enable the nominating
committee to determine whether the candidate would be suitable for
audit committee membership; and
o the size and composition of the board.
The nominating committee operates pursuant to a charter approved by our
board of directors and nominating committee. A copy of the charter is attached
as APPENDIX C to this proxy statement. The nominee named in our proxy card for
the 2004 annual meeting was selected by our nominating committee and ratified by
our full board of directors by unanimous written consent.
SECURITY HOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS
The board of directors has established a process to receive
communications from security holders. Security holders and other interested
parties may contact any member (or all members) of the board of directors, or
the independent directors as a group, any committee of the board of directors or
any chair of any such committee, by mail or electronically. To communicate with
the board of directors, any individual directors or any group or committee of
directors, correspondence should be addressed to the board of directors or any
such individual directors or group or committee of directors by either name or
title. All such correspondence should be sent "c/o Corporate Secretary" at 9485
Haven Avenue, Suite 100, Rancho Cucamonga, California 91730. To communicate with
any of our directors electronically, security holders should send an email to
our Corporate Secretary at: rfoote@microtel1.com.
12
All communications received as set forth in the preceding paragraph
will be opened by the Corporate Secretary for the sole purpose of determining
whether the contents represent a message to our directors. Any contents that are
not in the nature of advertising, promotions of a product or service, patently
offensive material or matters deemed inappropriate for the board of directors
will be forwarded promptly to the addressee. In the case of communications to
the board of directors or any group or committee of directors, our Corporate
Secretary will make sufficient copies (or forward such information in the case
of e-mail) of the contents to send to each director who is a member of the group
or committee to which the envelope or e-mail is addressed.
POLICY WITH REGARD TO BOARD MEMBERS' ATTENDANCE AT ANNUAL MEETINGS
It is our policy that our directors are invited and encouraged to
attend all of our annual meetings. We did not hold an annual meeting of
stockholders in 2003. At the date of our 2002 annual meeting, we had three
members on our board of directors, one of whom was in attendance at our
2002 annual meeting.
COMPENSATION OF DIRECTORS
During 2003, each non-employee director was entitled to receive $1,500
per month as compensation for their services. In addition, since November 1,
2002, each board member chairing a standing committee has been entitled to
receive $500 per month 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. On January 22,
2003, we granted to each non-employee director an option to purchase up to
51,000 shares of our common stock at an exercise price of $0.35 per share. The
options vested in two equal installments on January 22, 2003 and January 22,
2004.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the board of directors has a relationship that would
constitute an interlocking relationship with executive officers and directors of
another entity. During 2003, Mr. Oliva made salary recommendations to our
executive compensation and management development committee regarding salary
increases for key executives.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report is provided by the compensation committee of MicroTel's
board of directors to assist stockholders in understanding MicroTel's
objectives, policies and procedures in establishing its executive compensation
structure and system. The compensation committee is responsible for reviewing
and approving base salaries, bonuses and incentive awards for all executive
officers, reviewing and establishing the base salary, bonuses and incentive
awards for the chief executive officer, and reviewing, approving and
recommending to the board of directors the content, terms and conditions of all
employee compensation and benefit plans, or changes to those plans.
The compensation philosophy and policy of MicroTel is based upon four
central objectives:
13
o To provide an executive compensation structure and system that 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.
o To attract, retain and motivate qualified executives within this
structure, and reward them for outstanding
performance-to-objectives and business results through financial
and other appropriate management incentives.
o To align MicroTel's financial results and the compensation paid to
our executive officers with the enhancement of stockholder value.
o To structure MicroTel'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 stockholder value, and to maintain an
appropriate balance between short- and long-range performance
objectives over time.
MicroTel's compensation programs consist of base salary, an annual
incentive bonus, and the award of stock options and other equity-based
incentives. Base salary is targeted to recognize each executive officer's unique
value and historical contributions to the success of MicroTel in light of
industry salary norms. The compensation committee reviews the compensation of
the chief executive officer, and with the chief executive officer, the base
compensation of all other executive officers, on an annual basis to assure that
a competitive position is maintained.
Any annual incentive bonus is based upon a comparison of actual
performance against pre-established quantitative and qualitative performance
objectives derived from MicroTel's business plan and operating budgets, which
may include company, operating subsidiary/division and individual components.
To further align the financial interests of our executive officers with
those of MicroTel and its stockholders, our long-range executive incentive
programs are primarily equity-based and provide the opportunity for our
executive officers to earn stock options and consequently benefit, along with
all stockholders, from performance-driven increases in share value. The
compensation committee and/or the board of directors act as the manager of our
option plans and perform functions that include selecting option recipients,
determining the timing of option grant and whether options are incentive or
non-qualified, and assigning the number of shares subject to each option, fixing
the time and manner in which options are exercisable, setting option exercise
prices and vesting and expiration dates, and from time to time adopting rules
and regulations for carrying out the purposes of our plans.
MicroTel also maintains other executive benefits that we consider
necessary in order to offer fully competitive opportunities to its executive
officers. These include, without limitation, 401(k) retirement savings plans,
car allowances and employment agreements. The compensation committee continues
to monitor and evaluate MicroTel's executive compensation system and its
application throughout MicroTel's organization to assure that it continues to
reflect MicroTel's compensation philosophy and objectives.
MicroTel's employment contract with Carmine T. Oliva, Chairman and
Chief Executive Officer, was renegotiated as of January 1, 2001. The agreement
is based upon a five-year commitment, with three successive two-year automatic
renewals, predicated upon a mutual agreement between MicroTel and Mr. Oliva at
those times. Mr. Oliva's base salary is targeted to fairly recognize his unique
leadership skills and management responsibilities compared to similarly
positioned executives in the industry and general marketplace. The criteria for
measurement include data available from objective, professionally-conducted
market studies, integrated with additional competitive intelligence secured from
a range of industry and general market sources.
14
On July 1, 2003, the compensation committee awarded Mr. Oliva the first
$25,000 of a total $50,000 increase in salary based on his performance and
leadership in leading MicroTel to profitability after the impact of the
telecommunications downturn. The compensation committee made effective the
second $25,000 increase as of January 1, 2004 based on MicroTel having met
certain profitability goals.
In order to assure strength and continuity in two critical executive
positions other than MicroTel's chief executive officer position, the employment
contract of Graham Jefferies, Executive Vice President and Chief Operating
Officer, was renegotiated, and an initial contract was awarded to Randolph
Foote, Senior Vice President and Chief Financial Officer. Both contracts became
effective on July 2, 2001, and are based upon a three-year commitment with two
successive one-year renewals, predicated upon mutual agreements between MicroTel
and the individual executives at those times.
Respectfully submitted,
Compensation Committee
MicroTel International Inc.
Robert B. Runyon, Chairman
Laurence P. Finnegan, Jr., Member
CODE OF ETHICS
Our board of directors has adopted a Code of Business Conduct and
Ethics that applies to all of our directors, officers and employees and an
additional Code of Business Ethics that applies to our Chief Executive Officer
and Senior Financial Officers. We have filed these codes as exhibits to our
annual report on Form 10-K for the year ended December 31, 2003.
We intend to satisfy the disclosure requirement under Item 10 of Form
8-K relating to amendments to or waivers from provision of these codes that
relate to one or more of the items set forth in Item 406(b) of Regulation S-K,
by describing on our Internet website, located at www.microtelinternational.com,
within five business days following the date of a waiver or a substantive
amendment, the date of the waiver or amendment, the nature of the amendment or
waiver, and the name of the person to whom the waiver was granted.
Information on our Internet website is not, and shall not be deemed to
be, a part of this document or incorporated into any other filings we make with
the Securities and Exchange Commission.
15
AUDIT COMMITTEE REPORT
The audit committee of the board of directors of MicroTel International
Inc. discussed with MicroTel's independent auditors all matters required to be
discussed by generally accepted auditing standards, including those described in
Statement on Auditing Standards No. 61, as amended, "Communication with Audit
Committees." Prior to the inclusion and filing with the Securities and Exchange
Commission of the audited consolidated financial statements in MicroTel's Annual
Report on Form 10-K for the year ended December 31, 2001, the audit committee
discussed with management and reviewed MicroTel's audited consolidated financial
statements. In addition, the audit committee obtained from the independent
auditors a formal written statement describing all relationships between the
auditors and MicroTel that might bear on the auditors' independence consistent
with Independence Standards Board Standard No. 1, "Independent Discussions with
Audit Committees," and discussed with the auditors any relationships that may
impact their objectivity and independence and satisfied itself as to the
auditors' independence. Prior to the filing of the Form 10-K with the Securities
and Exchange Commission, and based on the review and discussions referenced
above, the audit committee recommended to the board of directors that the
audited consolidated financial statements be included in the Form 10-K. The
audit committee also recommended reappointment, subject to stockholder approval,
of the independent auditors, and the board of directors concurred in such
recommendation.
Respectfully submitted,
Audit Committee
MicroTel International Inc.
Laurence P. Finnegan, Jr.
CHANGE IN INDEPENDENT PUBLIC ACCOUNTANTS
On September 24, 2002, we notified BDO Seidman, LLP, the independent
public accounting firm that was then engaged as our principal accountant to
audit our financial statements, that we intended to engage new independent
public accountants and thereby were terminating our relationship with BDO
Seidman. On October 1, 2002, we engaged Grant Thornton LLP as our new
independent public accountants.
The audit reports of BDO Seidman, LLP on our consolidated financial
statements and consolidated financial statement schedules as of and for the
years ended December 31, 2001 and 2000 did not contain any adverse opinion or
disclaimer of opinion, nor were they qualified or modified as to uncertainty,
audit scope, or accounting principles.
Our decision to change accountants was approved by our audit committee
and board of directors. In connection with the audits of the years ended
December 31, 2001 and 2000, and during the subsequent interim period through
September 24, 2002, there were no disagreements with BDO Seidman, LLP on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedures which disagreements, if not resolved to BDO
Seidman, LLP's satisfaction, would have caused BDO Seidman, LLP to make
reference to the subject matter of the disagreement in connection with its
opinion. In addition, there were no reportable events as described in Item
304(a)(1)(v) of Regulation S-K under the Securities Act of 1933.
We had not consulted with Grant Thornton in the past regarding the
application of accounting principles to a specified transaction or the type of
audit opinion that might be rendered on our financial statements or as to any
disagreement or reportable event as described in Item 304(a)(1)(iv) and Item
304(a)(1)(v).
16
INDEPENDENT PUBLIC ACCOUNTANT FEES AND SERVICES
We anticipate that a representative of Grant Thornton LLP, our
independent public accountants for 2003 and for the current year, will be
present at our 2004 annual meeting, will have an opportunity to make a statement
if he or she desires to do so, and will be available to respond to appropriate
questions.
The following table sets forth the aggregate fees billed to us by Grant
Thornton LLP for professional services rendered for the years ended December 31,
2003 and 2002 and our predecessor principal independent public accountants for
the year ended December 31, 2002:
Fee Category 2003 2002
------------ ---- ----
Audit Fees $177,000 $286,000
Tax Fees 57,000 63,000
All Other Fees 5,000 4,000
------- -------
Total $239,000 $353,000
AUDIT FEES. Consists of fees billed for professional services rendered
for the audit of MicroTel's consolidated financial statements and review of the
interim consolidated financial statements included in quarterly reports and
services that are normally provided by Grant Thornton LLP in connection with
statutory and regulatory filings or engagements.
TAX FEES. Consists of fees billed for professional services for tax
compliance, tax advice and tax planning. These services include assistance
regarding federal, state and international tax compliance, tax audit defense,
customs and duties, mergers and acquisitions, and international tax planning.
ALL OTHER FEES. Consists of fees for products and services other than
the services reported above. In fiscal 2003, these services include assistance
regarding the change in the name of CXR, SA to CXR-AJ and other miscellaneous
services. In fiscal 2002, these services included filing reports regarding the
change of the official address of CXR-AJ and other miscellaneous services.
POLICY ON AUDIT COMMITTEE PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES OF
INDEPENDENT PUBLIC ACCOUNTANTS
Our audit committee pre-approves all services provided by Grant
Thornton LLP.
17
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.), the
Nasdaq Electronic Components Index and the Nasdaq Telecommunications Index,
assuming reinvestment of dividends for the period beginning December 31, 1998
and ending December 31, 2003. This graph assumes that the value of the
investment in our common stock and each of the comparison groups was $100 on
December 31, 1998.
[graph of CUMULATIVE TOTAL RETURN here]
Cumulative Total Return
------------------------------------------------------------------------
12/98 12/99 12/00 12/01 12/02 12/03
------------------------------------------------------------------------
MICROTEL INTERNATIONAL INC. 100.00 66.75 45.72 47.24 30.48 171.44
NASDAQ STOCK MARKET (U.S.) 100.00 186.20 126.78 96.96 68.65 108.18
NASDAQ ELECTRONIC COMPONENTS 100.00 173.01 134.65 106.27 51.78 100.77
NASDAQ TELECOMMUNICATIONS 100.00 246.46 111.68 70.94 47.81 84.77
18
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
BENEFICIAL OWNERSHIP TABLE
As of September 10, 2004, a total of 24,695,548 shares of our common
stock were outstanding. The following table sets forth information as of that
date regarding the beneficial ownership of our common stock by:
o each person known by us to own beneficially more than five
percent, in the aggregate, of the outstanding shares of our common
stock as of the date of the table;
o each of our directors and director nominee;
o each named executive officer listed in the Summary Compensation
Table contained elsewhere in this proxy statement; and
o all of our directors, director nominee and executive officers as a
group.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Except as indicated in the footnotes to the
table, we believe each stockholder possesses sole voting and investment power
with respect to all of the shares of common stock owned by that stockholder,
subject to community property laws where applicable.
In computing the number of shares beneficially owned by a stockholder
and the percentage ownership of that stockholder, shares of common stock subject
to options or warrants held by that person that are currently exercisable or
convertible or are exercisable or convertible within 60 days after the date of
the table are deemed outstanding. Those shares, however, are not deemed
outstanding for the purpose of computing the percentage ownership of any other
person or group. The address of each person in this table is c/o MicroTel
International Inc., 9485 Haven Avenue, Suite 100, Rancho Cucamonga, CA 91730.
Messrs. Oliva, Jefferies and Foote are executive officers of MicroTel. Messrs.
Oliva, Runyon, Finnegan and Baskin are directors of MicroTel.
AMOUNT AND NATURE
NAME AND ADDRESS OF BENEFICIAL PERCENT
OF BENEFICIAL OWNER TITLE OF CLASS OWNERSHIP OF CLASS OF CLASS
------------------- -------------- ------------------ --------
Carmine T. Oliva............................ Common 1,437,738(1) 5.76%
Robert B. Runyon............................ Common 389,206(2) 1.56%
Laurence P. Finnegan, Jr.................... Common 253,231(3) 1.02%
Otis W. Baskin.............................. Common -- --
Graham T. Jefferies......................... Common 183,563(4) *
Randolph D. Foote........................... Common 90,000(5) *
All executive officers and directors
as a group (6 persons)................... Common 2,353,938(6) 9.17%
---------------
* Less than 1.00%
(1) Includes 81,889 shares of common stock held individually by Mr. Oliva's
spouse, and 283,633 shares of common stock underlying options.
19
(2) Includes 209,060 shares of common stock underlying options.
(3) Includes 209,060 shares of common stock underlying options.
(4) Includes 180,287 shares of common stock underlying options.
(5) Includes 85,000 shares of common stock underlying options.
(6) Includes 967,040 shares of common stock underlying options and 81,889
shares of common stock held individually by Mr. Oliva's wife.
EQUITY COMPENSATION PLAN INFORMATION
The following table gives information about our common stock that may
be issued upon the exercise of options, warrants and rights under all of our
existing equity compensation plans as of December 31, 2003.
NUMBER OF SECURITIES
REMAINING AVAILABLE FOR
NUMBER OF SECURITIES TO WEIGHTED-AVERAGE FUTURE ISSUANCE UNDER
BE ISSUED UPON EXERCISE EXERCISE PRICE EQUITY COMPENSATION
OF OUTSTANDING OF OUTSTANDING OPTIONS, PLANS (EXCLUDING
OPTIONS, WARRANTS WARRANTS SECURITIES REFLECTED
Plan category AND RIGHTS AND RIGHTS IN COLUMN (a))
------------- ------------------------- ----------------------- ----------------------
(a) (b) (c)
Equity compensation plans approved
by security holders 1,728,558(1) $0.96 1,481,000(2)
Equity compensation plans not
approved by security holders 652,500(3) $0.86 --
---------- --------------
Total 2,381,058 1,481,000
-----------
(1) Represents shares of common stock underlying options that are outstanding
under our 1993 Stock Option Plan, our Employee Stock and Stock Option Plan,
our 1997 Stock Incentive Plan and our Amended and Restated 2000 Stock
Option Plan. The material features of these plans are described in Note 8
to our consolidated financial statements for the years ended December 31,
2003, 2002 and 2001.
(2) Represents shares of common stock available for issuance under options that
may be issued under our Amended and Restated 2000 Stock Option Plan.
(3) Represents shares of common stock underlying warrants that are described in
Note 8 to our consolidated financial statements for the years ended
December 31, 2003, 2002 and 2001.
20
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We are or have been a party to employment and compensation arrangements
with related parties, as more particularly described above under the headings
"Compensation of Executive Officers," "Employment Contracts and Termination of
Employment and Change-in-Control Arrangements" and "Compensation of Directors."
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended
("Exchange Act"), requires our executive officers and directors, and persons who
beneficially own more than 10% of a registered class of our common stock, to
file initial reports of ownership and reports of changes in ownership with the
Securities and Exchange Commission. These officers, directors and stockholders
are required by Securities and Exchange Commission regulations to furnish
MicroTel with copies of all reports that they file.
Based solely upon a review of copies of the reports furnished to us
during the year ended December 31, 2003 and thereafter, or any written
representations received by us from directors, officers and beneficial owners of
more than 10% of our common stock ("reporting persons") that no other reports
were required, we believe that, during 2003, all Section 16(a) filing
requirements applicable to our reporting persons were met.
21
PROPOSAL 1
ELECTION OF CLASS II DIRECTOR
Our bylaws provide that our board of directors shall consist of at
least four directors. Our board is divided into three classes of directors:
Class I, Class II and Class III. The term of office of each class of directors
is three years, with one class expiring each year at our annual meeting of
stockholders.
Our current board consists of one Class I director, Otis W. Baskin,
whose term expires at our 2006 annual meeting, one Class II director, Laurence
P. Finnegan, whose term expires at our 2004 annual meeting and who is named as a
nominee for election to serve a three-year term expiring at our 2007 annual
meeting or until he is succeeded by another qualified director who has been duly
elected, and two Class III directors, Carmine T. Oliva and Robert B. Runyon,
whose terms expire at our 2005 annual meeting. We have no vacancies on our
board.
The proxy holders intend to vote all proxies received by them in favor
of the election of Mr. Finnegan unless instructions to the contrary are marked
on the proxy card. If Mr. Finnegan is unable or declines to serve as a director
at the time of the annual meeting, an event not now anticipated, the proxies
will be voted for any nominee designated by our present board. However, the
proxy holders may not vote proxies for a greater number of persons than the
number of nominees named on the proxy card.
REQUIRED VOTE OF STOCKHOLDERS AND BOARD RECOMMENDATION
Directors are elected by a plurality vote of shares present in person
or represented by proxy at the meeting. This means that the director nominee
with the most votes for a particular slot on the board is elected for that slot.
In an uncontested election for directors, the plurality requirement is not a
factor.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION
OF LAURENCE P. FINNEGAN, JR. AS A CLASS II DIRECTOR.
22
PROPOSAL 2
APPROVAL OF AMENDMENT TO OUR CERTIFICATE OF INCORPORATION
IN ORDER TO INCREASE OUR AUTHORIZED COMMON STOCK
FROM 50,000,000 SHARES TO 150,000,000 SHARES
AND MAKE CLARIFYING CHANGES
Our board of directors has adopted by unanimous written consent a
proposed amendment to our existing certificate of incorporation ("existing
certificate") that would increase our authorized capital and make certain other
clarifying changes by replacing Article Fourth of our existing certificate,
which article is attached to this proxy statement as APPENDIX E, with Article IV
that is contained in our proposed amended and restated certificate of
incorporation ("amended certificate") that is attached to this proxy statement
as APPENDIX D.
Article Fourth of our existing certificate provides for 50,000,000
shares of common stock, 1/3 cent par value per share, and 10,000,000 shares of
preferred stock, $0.01 par value per share. Of the 10,000,000 shares of
authorized preferred stock, our board of directors designated by separate
certificates of designation 200 shares as Series A Preferred Stock and 150,000
shares as Series B Preferred Stock, and the remainder are undesignated preferred
shares that may be issued in one or more series as designated from time to time
by our board of directors.
As of September 15, 2004, we had outstanding 24,695,548 shares of
common stock and had reserved for issuance an additional 2,921,756 shares of
common stock to cover the exercise of options to purchase up to 2,151,256 shares
of common stock and warrants to purchase up to 770,500 shares of common stock,
and we had no shares of preferred stock outstanding. Also as of that date, we
had available for issuance an additional 22,382,696 shares of common stock and
10,000,000 shares of designated and undesignated preferred stock. The proposed
amendment would increase our authorized number of shares of common stock from
50,000,000 to 150,000,000. Accordingly, if this proposed amendment had been
effective as of September 15, 2004, we would have had available for issuance
122,382,696 shares of common stock plus 10,000,000 shares of designated and
undesignated preferred stock.
The additional authorized shares of common stock that would become
available if this proposed amendment is approved by our stockholders and filed
with the Delaware Secretary of State may be issued from time to time as our
board of directors may determine, without prior notice to or further action of
our stockholders. The issuance of any or all of these additional authorized
shares of common stock from time to time would cause dilution to the voting
rights and earnings per share of our outstanding shares of common stock.
However, we believe that approval of the proposed increase is in the best
interests of our company and our stockholders because the increase would make
additional shares of common stock available for acquisitions or financings that
could be used to enhance our business and results of operations. Additional
shares would also be available for present and future benefit programs designed
to attract, motivate and retain talented employees and directors, and for other
corporate purposes.
Although we have no definitive plans to utilize such shares to entrench
present management, we may, in the future, be able to use the additional
authorized shares of common stock as a defensive tactic against hostile takeover
attempts by issuing additional shares under a stockholder rights plan, in a
private placement or other transaction that causes substantial dilution to a
person or group that attempts to acquire control of our company through a merger
or tender offer on terms or in a manner not approved by our board of directors,
whether or not our stockholders view the change in control, merger or tender
offer as favorable. The authorization of such additional shares of common stock
will have no current anti-takeover effect, because no hostile takeover attempts
are, to our management's knowledge, currently threatened.
We have a number of anti-takeover defenses. For example, we have a
classified board that consists of three classes with staggered three-year terms.
This arrangement is intended to slow a change in control of our board of
directors by limiting the number of directors that are elected annually. Also,
consistent with the Delaware General Corporation Law ("DGCL"), we do not have
cumulative voting provisions in either our bylaws or certificate of
incorporation.
Also, we have provisions in our bylaws and certificate of incorporation
that prohibit the removal of directors without cause. Our amended bylaws
provides that a removal may only be accomplished by the affirmative vote, at a
special meeting of stockholders called for that purpose, of the holders of at
least a majority of the outstanding shares entitled to vote at an election for
directors. Under our amended bylaws, special meetings of stockholders may be
called by our board of directors, chairman of the board, chief executive officer
or president (in the absence of a chief executive officer), and shall be called
by our secretary at the request in writing by holders of not less than 10% of
the total voting power of all of our outstanding securities then entitled to
vote. Article Eighth of our existing certificate and Article VIII of the amended
23
certificate both provide that any director, or the entire board of directors,
may be removed at any time, but only for cause, and that the provisions of
Article Eighth and Article VIII may not be repealed or amended in any respect,
unless the amendment or repeal is approved by the affirmative vote of the
holders of not less than 67% of the outstanding shares of our common stock. This
percentage vote requirement exceeds the general DGCL requirement that a majority
of the outstanding shares of our common stock must vote in favor of an amendment
to our certificate of incorporation, making it more difficult for our
stockholders to amend or repeal this provision.
In addition, our board of directors has the authority to issue up to
10,000,000 shares of preferred stock and to fix the rights, preferences,
privileges and restrictions, including voting rights of those shares, without
any further vote or action by our stockholders. The rights of the holders of our
common stock are subject to and may be adversely affected by the rights of the
holders of any preferred stock that we may issue in the future. The issuance of
preferred stock, while providing desired flexibility in connection with possible
acquisitions and other corporate purposes, could have the effect of making it
more difficult for a third party to acquire a majority of our outstanding voting
stock, which would delay, defer or prevent a change in control of our company.
Furthermore, preferred stock may have other rights, including economic rights
senior to common stock.
Also, Section 203 of the DGCL prohibits us from engaging in business
combinations with interested stockholders, as defined by statute. These
provisions may have the effect of delaying or preventing a change in control of
our company without action by our stockholders, even if a change in control
would be beneficial to our stockholders.
Article IV of the amended certificate contains a description of the
attributes of our common stock. There is not a similar description in our
existing certificate. Stockholders do not currently possess, nor upon the
approval of the proposed amendment 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.
In light of the above, Article IV of the amended certificate provides
for authorized capital of 150,000,000 shares of common stock, $0.0033 par value
per share, and 10,000,000 shares of preferred stock, $0.01 par value per share,
that may be issued in one or more series as designated from time to time by our
board of directors. Article IV of the amended certificate reflects our desire to
express the par value of our common stock as a decimal rather than as a
fraction.
REQUIRED VOTE OF STOCKHOLDERS AND BOARD RECOMMENDATION
Approval of this proposal requires the affirmative vote of the majority
of outstanding shares of our common stock as of the record date. If the required
votes for this proposal and for proposal 4 are obtained, then this proposal may
be effected by filing the amended certificate as described in proposal 4. If
approval for this proposal is obtained but the required vote for proposal 4 is
not obtained, then our board of directors will have the authority to authorize
our management to file an amendment to our existing certificate in order to
substitute Article IV of the amended certificate into our existing certificate
in place of Article Fourth of our existing certificate. However, our board of
directors has reserved the right to abandon this proposed amendment at any time
prior to the effectiveness of the filing of the amendment with the Delaware
Secretary of State, notwithstanding authorization of this proposed amendment by
our stockholders.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
24
PROPOSAL 3
APPROVAL OF AMENDMENT TO OUR CERTIFICATE OF INCORPORATION
IN ORDER TO CLARIFY THE MECHANICS OF OUR CLASSIFIED BOARD
Our board of directors has adopted by unanimous written consent a
proposed amendment to our existing certificate that would clarify the mechanics
of our classified board by replacing Article Eighth of our existing certificate,
which article is attached to this proxy statement as APPENDIX F, with Article
VIII, which is contained in our proposed amended certificate that is attached to
this proxy statement as APPENDIX D.
Both Article Eighth of our existing certificate and Article VIII of the
amended certificate provide for a classified board of directors that is divided
into three classes, with each class serving a staggered three-year term.
Consistent with our current practice, the amended certificate designates the
classes as Class I, Class II and Class III, and provides that the authorized
number of directors shall be set solely by resolution of the board of directors
and that directors shall be assigned to each class in accordance with
resolutions adopted by our board of directors.
Consistent with the DGCL, the amended certificate also provides that no
decrease in the number of directors constituting our board of directors will
shorten the term of any incumbent director and that the manner by which a
director may be removed from office shall be as provided in our bylaws.
Article Eighth of the existing certificate and Article VIII of the
amended certificate both provide that any director, or the entire board of
directors, may be removed at any time, but only for cause, and that the
provisions of Article Eighth and Article VIII may not be repealed or amended in
any respect, unless the amendment or repeal is approved by the affirmative vote
of the holders of not less than 67% of the outstanding shares of our common
stock.
REQUIRED VOTE OF STOCKHOLDERS AND BOARD RECOMMENDATION
Approval of this proposal requires the affirmative vote of holders of
not less than 67% of the outstanding shares of our common stock as of the record
date. If the required votes for this proposal and for proposal 4 are obtained,
then this proposal may be effected by filing the amended certificate as
described in proposal 4. If the required vote for this proposal is obtained but
the required vote for proposal 4 is not obtained, then our board of directors
will have the authority to authorize our management to file an amendment to our
existing certificate in order to substitute Article VIII of the amended
certificate into our existing certificate in place of Article Eighth of our
existing certificate. However, our board of directors has reserved the right to
abandon this proposed amendment at any time prior to the effectiveness of the
filing of the amendment with the Delaware Secretary of State, notwithstanding
authorization of this proposed amendment by our stockholders.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
25
PROPOSAL 4
AMENDMENT AND RESTATEMENT OF CERTIFICATE OF INCORPORATION
IN ORDER TO MODERNIZE AND CONFORM OUR CERTIFICATE OF INCORPORATION
TO CURRENT DELAWARE CORPORATE LAW AND PRACTICES
Our board of directors has adopted by unanimous written consent the
amended certificate, which is designed to reflect our current corporate name and
registered office in the State of Delaware, to make various wording changes to
modernize the provisions of our existing certificate in accordance with current
Delaware corporate law and practices and, if proposals 2 and 3 are approved, to
effectuate those proposals. The amended certificate contains various substantive
differences described generally below. We encourage stockholders to review the
complete terms of the amended certificate, which is attached to this proxy
statement as APPENDIX D.
ADVANCE NOTICE OF NEW BUSINESS AND STOCKHOLDER NOMINATIONS. Article XII
of the amended certificate provides that advance notice of new business and
stockholder nominations for the election of directors shall be given in the
manner and to the extent provided in the bylaws of the corporation. The existing
certificate does not address these matters. We have addressed these matters in
the amended and restated bylaws that are the subject of Proposal 5.
INDEMNIFICATION OF DIRECTORS AND OFFICERS. Article VI of the amended
certificate provides that we shall indemnify, to the fullest extent permitted by
law, any person in connection with any action, suit or proceeding to which they
are made or are threatened to be made by reason of the fact that such person is
or was a director or officer of our company or is or was serving at our request
as a director or officer of another entity. There is no similar provision in the
existing certificate. However, this proposed provision is typical of Delaware
corporations that have modernized certificates of incorporation and is
consistent with powers granted to us under Section 145 of the DGCL and with
obligations imposed upon us by our previous bylaws and amended bylaws, as
described in proposal 3.
PERSONAL LIABILITY OF DIRECTORS. Both the existing certificate and the
amended certificate provide for limitation of a director's personal liability to
us or our stockholders for monetary damages for breach of fiduciary duty, to the
fullest extent permitted by the DGCL from time to time. The amended certificate
adds a typical proviso indicating that in no event will the personal liability
of any of our directors for monetary damages be limited for any breach of
loyalty, for any acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law, for any transaction from which the
director derived an improper personal benefit, or for unlawful payment of
dividends or unlawful stock purchase or redemption as provided in Section 174 of
the DGCL.
DURATION OF EXISTENCE AND LOCATION OF STOCKHOLDER MEETINGS AND
CORPORATE BOOKS. The amended certificate contains typical provisions that
provide that we have a perpetual existence, that meetings of our stockholders
may be held within or without the State of Delaware, as our bylaws may provide,
and that our books may be kept outside the State of Delaware at places
designated by our board of directors or bylaws. The existing certificate was
silent on these matters.
CLASSIFICATION OF OUR BOARD. As described in proposal 3 above, Article
VIII of the amended certificate clarifies the mechanics of our classified board.
If proposal 3 is not approved, then we would need to revise any amended
certificate that we file in Delaware to retain the provisions of Article Eighth
of the existing certificate.
AUTHORIZED CAPITAL. As described in proposal 2 above, Article IV of the
amended certificate increases and revises the terms of our authorized capital.
If proposal 2 is not approved, then we would need to revise any amended
certificate that we file in Delaware to retain the provisions of Article Fourth
of the existing certificate.
As described in proposal 2 above, our authorized capital currently
includes 10,000,000 shares of designated and undesignated preferred stock. The
designated shares include 200 shares of Series A Preferred Stock and 150,000
shares of Series B Preferred Stock. All previously outstanding shares of Series
A Preferred Stock and Series B Preferred Stock have either been converted into
shares of our common stock or redeemed, and therefore were restored to their
status as authorized but unissued shares of those respective classes of
preferred stock. We do not intend to issue additional shares of preferred stock
with rights, preferences and privileges similar to the Series A Preferred Stock
or Series B Preferred Stock. Accordingly, if proposal 4 is approved and we file
the amended certificate as currently planned, the filing of the amended
certificate would eliminate the certificates of designation relating to our
Series A Preferred Stock and Series B Preferred Stock, leaving us with
10,000,000 authorized shares of undesignated preferred stock. If proposal 4 is
not approved or our board of directors chooses not to file the amended
certificate, then the certificates of designation will remain in place
26
until our board of directors authorizes the filing in Delaware of a certificate
of elimination or a restated certificate of incorporation that is amended, if at
all, only to the extent we have obtained stockholder approval pursuant to
proposals 2 and/or 3. Neither of these methods of eliminating the certificates
of designation would require further stockholder approval.
REQUIRED VOTE OF STOCKHOLDERS AND BOARD RECOMMENDATION
Approval of this proposal requires the affirmative vote of the majority
of outstanding shares of our common stock as of the record date. If proposals 2,
3 and 4 are approved, then our board of directors will have the authority to
authorize the filing of the amended certificate in the form attached to this
proxy statement as APPENDIX D. If this proposal is approved but either
proposal 2 or proposal 3 is not approved, then any amended certificate we file
will need to be revised to include the terms of Article Fourth and/or Article
Eighth of the existing certificate, as described above. Our board of directors
has reserved the right to abandon this proposed amendment and restatement at
any time prior to the effectiveness of the filing of the amended certificate
with the Delaware Secretary of State, notwithstanding authorization of this
proposed amendment and restatement by our stockholders.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
27
PROPOSAL 5
RATIFICATION OF AMENDMENT AND RESTATEMENT OF BYLAWS
Our board of directors adopted the Amended and Restated Bylaws
("amended bylaws") attached to this proxy statement as APPENDIX G as part of an
amendment and complete restatement of our previously existing bylaws ("previous
bylaws"). By deleting ineffective and unnecessary provisions and adding some
additional provisions that our board of directors deems desirable and in our
company's best interests, the amended bylaws update our previous bylaws to be
consistent with current Delaware law and practices typical of modern Delaware
corporations. Key substantive differences between the amended bylaws and the
previous bylaws are described generally below. We encourage stockholders to
review the complete terms of the amended bylaws.
MEETINGS BY USE OF REMOTE COMMUNICATION. Section 2.1 of the amended
bylaws includes a provision authorizing us to hold meetings of our stockholders
either at a place specified by our board of directors, as was permitted under
our previous bylaws, or by means of remote communications, as permitted by
Section 211(a)(2) of the DGCL.
RIGHT TO CALL SPECIAL MEETINGS OF STOCKHOLDERS. Section 2.3 of the
amended bylaws provides that special meetings of stockholders may be called by
our board of directors, chairman of the board, chief executive officer or
president (in the absence of a chief executive officer), and shall be called by
our secretary at the request in writing by holders of not less than 10% of the
total voting power of all of our outstanding securities then entitled to vote.
The previous bylaws did not expressly authorize the chairman of the board or
chief executive officer to call special meetings of stockholders.
NOTICES BY ELECTRONIC TRANSMISSION. Article IX of the amended bylaws
provides that any notice to stockholders given by us under any provision of the
DGCL, our certificate of incorporation or the amended bylaws shall be effective
if given by a form of electronic transmission consented to by the stockholder to
whom the notice is given. Various provisions of the amended bylaws, such as
Sections 2.5 and 3.7 (relating to notice of stockholder and board meetings,
respectively), Sections 2.9 and 3.9 (relating to stockholder and director
waivers of notice, respectively), Section 3.3 (relating to form and use of
ballots), Section 3.4 (relating to director resignations), and Section 3.10
(relating to board action by written consent), permit use of electronic
transmissions. The previous bylaws did not address electronic transmissions of
notices, waivers, ballots and consents.
ADJOURNMENT OF STOCKHOLDERS' MEETING. Section 2.6 of the amended bylaws
provides that stockholders' meetings at which a quorum is not present may be
adjourned either by the chairperson of the meeting or by the holders of a
majority of the shares represented in person or by proxy at the meeting. The
previous bylaws did not provide for adjournment by the chairperson.
AUTHORIZED NUMBER OF DIRECTORS. Section 3.2 of the amended bylaws
provides that the authorized number of directors shall be four until changed by
resolution of our board of directors. Section 15 of the previous bylaws
contained a similar provision, except that Section 15 also provided that the
authorized number of directors could not be reduced below four without the vote
or written consent of stockholders holding 80% of the voting power of our
company.
FILLING OF VACANCIES ON THE BOARD. Section 3.4 of the amended bylaws
provides that any vacancies on the board of directors resulting from death,
resignation, disqualification, removal, newly created directorships or other
causes shall, except as otherwise provided by the DGCL or by the certificate of
incorporation, be filled only by the affirmative vote of a majority of the
remaining directors then in office, even though less than a quorum of the board
of directors, or by a sole remaining director, and not by the stockholders. This
provision is consistent with our amended certificate. In contrast, Section 17 of
the previous bylaws provided the board of directors with the power to fill
vacancies but did not prohibit stockholders from filling vacancies.
28
NOTICE OF BOARD MEETINGS. Section 3.6 of the amended bylaws provides
that regular meetings of the board of directors may be held without notice at
such time and at such place as shall from time to time be determined by
resolution of the board of the directors. In contrast, the previous bylaws
required that written notice of regular meetings be provided to members of the
board of directors.
Section 3.7 of the amended bylaws provides that notices of board of
directors meetings must be delivered or sent at least 24 hours before the time
of holding of the meeting, if delivered by hand, courier or telephone or sent by
electronic mail or facsimile, and at least four days before the time of holding
of the meeting if deposited in the United States mail. The previous bylaws
provided that written notice of the time and place of all regular and special
meetings of the board of directors had to be delivered personally to each
director, or sent to each director by mail or other form of written
communication, at least one day before the date of the meeting.
RIGHT TO CALL SPECIAL MEETINGS OF THE BOARD. Section 3.7 of the amended
bylaws provides that special meetings of the board of directors may be called by
our chairman of the board, chief executive officer, president or secretary, or
by any two directors. In contrast, the previous bylaws required that special
meetings of the board of directors be called by our president or by a majority
of the board of directors.
APPROVAL OF LOANS TO OFFICERS AND EMPLOYEES. Section 3.12 of the
amended bylaws provides that we may lend money to, or guarantee any obligation
of, or otherwise assist any officer or employee of ours or our subsidiaries
whenever the board of directors determines that such an arrangement may
reasonably be expected to benefit us and is not prohibited by applicable laws,
rules or regulations. There was no similar provision in the previous bylaws.
DUTIES OF OFFICERS. Article V of the amended bylaws provides modernized
descriptions of the duties of our officers and also includes descriptions of
duties of our chief executive officer and chief financial officer. The previous
bylaws did not include descriptions of duties of our chief executive officer and
chief financial officer.
INDEMNIFICATION OF DIRECTORS AND OFFICERS. Article VI of the amended
bylaws provides, and Article XI of the previous bylaws provided, that we had
rights and/or obligations to indemnify our directors, officers, employees and
agents in connection with certain actions, suits or proceedings ("proceedings")
and to pay their expenses in advance of the final disposition of the
proceedings, to the extent permitted by the DGCL. However, these Articles
differ as to whether indemnification and advancement of expenses is required
or rather is merely permitted.
Article VI of the amended bylaws provides that to the fullest extent
and in the manner permitted by the DGCL as it exists from time to time, we must
indemnify our directors and officers who are involved in a proceeding by reason
of the fact that they were serving as a director, officer, employee or agent of
us or, at our request, of another entity or enterprise, and that we must pay
their expenses in advance of the final disposition of the proceeding. Article VI
also provides that we may provide indemnification to employees and agents who
are not directors or officers and that we may pay their expenses in advance of
the final disposition. In contrast, Article XI of the previous bylaws required
us to provide indemnification to directors, officers, employees or agents and
permitted us to pay their expenses in advance of the final disposition.
PARTLY PAID SHARES. Section 8.3 of the amended bylaws provides that we
may issue the whole or any part of its shares as partly paid and subject to call
for the remainder of the consideration to be paid for those shares, and that
dividends declared upon partly paid shares shall be paid only upon the basis of
the percentage of the consideration actually paid for those shares. The previous
bylaws did not address this matter.
STOCKHOLDER PROPOSALS. Section 2.14 of the amended bylaws contains
provisions governing submission by stockholders of nominations or business
proposals to be brought before a meeting of our stockholders without including
the nominee or business proposal in our proxy materials. As described in this
proxy statement under the heading "Stockholder Proposals," stockholders must
provide us with certain information described in Section 2.14 within the
timeframes
29
prescribed by that Section. Otherwise, the chairperson of the meeting
may prohibit the stockholder from proposing the nominee or business at the
meeting of stockholders. The previous bylaws did not address these matters.
These advance notice provisions may be viewed as friendly to incumbent directors
because they prevent stockholders from presenting new nominees or business
proposals at or near the time of a meeting of stockholders.
REQUIRED VOTE OF STOCKHOLDERS AND BOARD RECOMMENDATION
Although stockholder ratification is not required, our board of
directors has directed that this amendment and restatement of our bylaws be
submitted to our stockholders for ratification at our 2004 annual meeting. The
affirmative vote of a majority of the shares of our common stock entitled to
vote at and present in person or represented by proxy at the meeting will
constitute stockholder ratification of the amendment and restatement.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
30
PROPOSAL 6
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
Our audit committee has selected Grant Thornton LLP, independent public
accountants, to audit our consolidated financial statements for 2004, and our
board of directors has concurred in this selection. Additional information
regarding our relationship with our independent public accountants is contained
in this proxy statement under the headings "Audit Committee Report," "Change in
Independent Public Accountants," "Independent Public Accountant Fees and
Services," and "Policy on Audit Committee Pre-Approval of Audit and Non-Audit
Services of Independent Public Accountants."
REQUIRED VOTE OF STOCKHOLDERS AND BOARD RECOMMENDATION
Although stockholder ratification is not required, our board of
directors has directed that this selection be submitted to our stockholders for
ratification at our 2004 annual meeting. The affirmative vote of a majority of
the shares of our common stock entitled to vote at and present in person or
represented by proxy at the meeting will constitute stockholder ratification of
the selection. If stockholder approval of this proposal is not obtained, our
audit committee and board of directors may reconsider our appointment of Grant
Thornton LLP as our independent public accountants.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
31
OTHER MATTERS
The board knows of no matter to come before the annual meeting other
than as specified in this proxy statement. If other business should, however, be
properly brought before the meeting, the persons voting the proxies will vote
them in accordance with their best judgment.
STOCKHOLDER PROPOSALS
Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934,
proposals by stockholders that are intended for inclusion in our proxy
statement and proxy card and to be presented at our next annual meeting must be
received by us no later than 120 calendar days in advance of the one-year
anniversary of the date of this proxy statement in order to be considered for
inclusion in our proxy materials relating to the next annual meeting. Such
proposals shall be addressed to our secretary at our corporate headquarters
and may be included in next year's annual meeting proxy materials if they comply
with rules and regulations of the Securities and Exchange Commission governing
stockholder proposals.
Proposals by stockholders that are not intended for inclusion in our
proxy materials may be made by any stockholder who timely and completely
complies with the notice procedures contained in our bylaws, was a stockholder
of record at the time of giving of notice and is entitled to vote at the
meeting, so long as the proposal is a proper matter for stockholder action and
the stockholder otherwise complies with the provisions of our bylaws and
applicable law. However, stockholder nominations of persons for election to our
board of directors at a special meeting may only be made if our board of
directors has determined that directors are to be elected at the special
meeting. To be timely, a stockholder's notice regarding a proposal not intended
for inclusion in our proxy materials must be delivered to our secretary at our
corporate headquarters not later than:
o In the case of an annual meeting, the close of business on the
45th day before the first anniversary of the date on which we
first mailed our proxy materials for the prior year's annual
meeting of stockholders. However, if the date of the meeting
has changed more than 30 days from the date of the prior year's
meeting, then in order for the stockholder's notice to be timely
it must be delivered to our secretary a reasonable time before
we mail our proxy materials for the current year's meeting. For
purposes of the preceding sentence, a "reasonable time" coincides
with any adjusted deadline we publicly announce.
o In the case of a special meeting, the close of business on the
7th day following the day on which we first publicly announce the
date of the special meeting.
Except as otherwise provided by law, if the chairperson of the meeting
determines that a nomination or any business proposed to be brought before a
meeting was not made or proposed in accordance with the procedures set forth in
our bylaws and summarized above, the chairperson may prohibit the nomination or
proposal from being presented at the meeting.
AVAILABLE INFORMATION
We are subject to the informational requirements of the Exchange Act.
In accordance with that act, we file reports, proxy statements and other
information with the Securities and Exchange Commission. These materials can be
inspected and copied at the Public Reference Room maintained by the Securities
and Exchange Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. The
public may obtain information on the operation of the Public Reference Room by
calling the Securities and Exchange Commission at 1-800-SEC-0330. Copies of
these materials can also be obtained from the Securities and Exchange Commission
at prescribed rates by writing to the Public Reference Section of the Securities
and Exchange Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Our
common stock trades on the OTC Bulletin Board under the symbol "MCTL."
32
ANNUAL REPORT
A copy of our annual report for the year ended December 31, 2003
accompanies this proxy statement. The annual report is not incorporated by
reference into this proxy statement and is not deemed to be a part of this
proxy solicitation material.
Copies of our annual report on Form 10-K (without exhibits) will be
furnished by first class mail, without charge to any person from whom the
accompanying proxy is solicited upon written or oral request to MicroTel
International Inc., 9485 Haven Avenue, Suite 100, Rancho Cucamonga, California
91730, Attention: Chief Financial Officer. If exhibit copies are requested, a
copying charge of $0.20 per page will be made. In addition, all of our public
filings, including our annual report, can be found free of charge on the
worldwide web at http://www.sec.gov.
ALL STOCKHOLDERS ARE URGED TO COMPLETE, SIGN AND RETURN PROMPTLY THE
ACCOMPANYING PROXY CARD IN THE ENCLOSED ENVELOPE.
33
APPENDIX A
March 22, 2004
AMENDED AND RESTATED
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
OF
MICROTEL INTERNATIONAL INC.
PURPOSE AND SCOPE
The primary function of the Audit Committee (the "Committee") of the
Board of Directors (the "Board") of MicroTel International, Inc. (the "Company")
is to (a) assist the Board in fulfilling its responsibilities by reviewing: (i)
the financial reports provided by the Company to the Securities and Exchange
Commission ("SEC"), the Company's shareholders or to the general public, and
(ii) the Company's internal financial and accounting controls, (b) oversee the
appointment, compensation, retention and oversight of the work performed by any
independent public accountants engaged by the Company and (c) recommend,
establish and monitor procedures designed to improve the quality and reliability
of the disclosure of the Company's financial condition and results of
operations.
COMPOSITION
The Committee shall be comprised of a minimum of one director as
appointed by the Board of Directors, who shall meet the independence, audit
committee composition requirements promulgated by the SEC, the National
Association of Securities Dealers, any exchange upon which securities of the
Company are traded, or any governmental or regulatory body exercising authority
over the Company (each a "Regulatory Body" and collectively, the "Regulatory
Bodies"), as in effect from time to time, and each member of the Committee shall
be free from any relationship that, in the opinion of the Board of Directors,
would interfere with the exercise of his or her independent judgment as a member
of the Committee.
At the time of his or her appointment to the Committee, each member of
the Committee shall be able to read and understand fundamental financial
statements, including a balance sheet, cash flow statement and income statement.
At least one member of the Committee shall have employment experience in finance
or accounting, requisite professional certification in accounting, or other
comparable experience or background which results in the individual's financial
sophistication, including being or having been a chief executive officer, chief
financial officer or other senior officer with financial oversight
responsibilities. Further, at least one member of the Committee shall qualify as
an "audit committee financial expert" as such term is defined by Item 401(h) of
Regulation S-K of the Securities Act of 1933, as amended.
The members of the Committee shall be elected by the Board of Directors
at the meeting of the Board of Directors following each annual meeting of
stockholders and shall serve until their successors shall be duly elected and
qualified or until their earlier resignation or removal. Unless a Chair is
elected by the full Board of Directors, the members of the Committee may
designate a Chair by majority vote of the full Committee membership.
A-1
RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties, the Committee shall carry
out the following specific activities:
A. DOCUMENT REVIEW
1. Review and reassess the adequacy of this Charter
periodically as conditions dictate, but at least annually, and
recommend any proposed changes to the Board of Directors for approval.
2. Review with representatives of management and
representatives of the independent accounting firm the Company's
audited annual financial statements prior to their filing as part of
the Annual Report on Form 10-K. After such review and discussion, the
Committee shall recommend to the Board of Directors whether such
audited financial statements should be published in the Company's
annual report on Form 10-K. The Committee shall also review the
Company's quarterly financial statements prior to their inclusion in
the Company's quarterly SEC filings on Form 10-Q.
3. Take steps designed to insure that the independent
accounting firm reviews the Company's interim financial statements
prior to their inclusion in the Company's quarterly reports on Form
10-Q.
B. INDEPENDENT ACCOUNTING FIRM
1. The Committee shall be directly responsible for the
appointment, compensation, retention and oversight of the work of any
independent accounting firm engaged by the Company for the purpose of
preparing or issuing an audit report or related work. The Committee
shall have the ultimate authority and responsibility to appoint,
evaluate and, when warranted, replace such independent accounting firm
(or to recommend such replacement for shareholder ratification in any
proxy statement).
2. Resolve any disagreements between management and the
independent accounting firm as to financial reporting matters.
3. Instruct the independent accounting firm that it should
report directly to the Committee on matters pertaining to the work
performed during its engagement and on matters required by applicable
Regulatory Body rules and regulations.
4. On an annual basis, receive from the independent accounting
firm a formal written statement identifying all relationships between
the independent accounting firm and the Company consistent with
Independence Standards Board Standard 1. The Committee shall actively
engage in a dialogue with the independent accounting firm as to any
disclosed relationships or services that may impact its independence.
The Committee shall take appropriate action to oversee the independence
of the independent accounting firm.
5. On an annual basis, discuss with representatives of the
independent accounting firm the matters required to be discussed by
Statement on Auditing Standards 61, as it may be modified or
supplemented.
A-2
6. Meet with the independent accounting firm prior to the
audit to review the planning and staffing of the audit and consider
whether or not to approve the auditing services proposed to be
provided.
7. Evaluate the performance of the independent accounting firm
and consider the discharge of the independent accounting firm when
circumstances warrant. The independent accounting firm shall be
ultimately accountable to the Board of Directors and the Committee.
8. Consider in advance whether or not to approve any non-audit
services to be performed by the independent accounting firm required to
be approved by the Committee pursuant to the rules and regulations of
any applicable Regulatory Body.
9. The Committee shall have the authority to oversee and
determine the compensation of any independent accounting firm engaged
by the Company.
10. Ensure the rotation of the audit partners as required by
Section 10A(j) of the Securities Exchange Act of 1934, as amended, and
consider whether, in order to assure continuing auditor independence,
it is appropriate to adopt a policy of rotating the independent
auditing firm on a regular basis.
11. Recommend to the Board of Directors policies for the
Company's hiring of employees or former employees of the independent
auditor consistent with Section 10A(l) of the Securities Exchange Act
of 1934.
C. FINANCIAL REPORTING PROCESSES
1. In consultation with the independent accounting firm and
management, review annually the adequacy of the Company's internal
financial and accounting controls.
2. Review disclosures made to the Committee by the Company's
chief executive officer and chief financial officer in connection with
their certifications of the Company's reports on Form 10-K and Form
10-Q, including disclosures concerning (a) evaluations of the design
and operation of the Company's internal financial and accounting
controls, (b) any significant deficiencies discovered in the design and
operation of the Company's internal controls which could adversely
affect the Company's ability to record, process, summarize, and report
financial data, and (c) any fraud, whether or not material, that
involves management or other employees who have a significant role in
the Company's internal controls. The Committee shall direct the actions
to be taken and/or make recommendations to the Board of Directors of
actions to be taken to the extent such disclosures indicate the finding
of any significant deficiencies in internal controls or fraud.
3. Regularly review the Company's critical accounting policies
and accounting estimates resulting from the application of these
policies and inquire at least annually of both the Company's internal
auditors and the independent accounting firm as to whether either has
any concerns relative to the quality or aggressiveness of management's
accounting policies.
A-3
D. COMPLIANCE
1. Obtain from the independent auditor assurance that Section
10A(b) of the Securities Exchange Act of 1934, as amended, has not been
implicated.
2. Obtain reports from management and the independent auditor
that the Company and its subsidiaries and affiliated entities are in
conformity with applicable legal requirements and the Company's Code of
Business Conduct and Ethics.
3. To the extent deemed necessary by the Committee, it shall
have the authority to engage outside counsel, independent accounting
consultants and/or other experts at the Company's expense to review any
matter under its responsibility.
4. Establish written procedures for (a) the receipt,
retention, and treatment of complaints received by the Company
regarding accounting, internal accounting controls, or auditing
matters; and (b) the confidential, anonymous submission by employees of
the Company of concerns regarding questionable accounting or auditing
matters.
5. Investigate any allegations that any officer or director of
the Company, or any other person acting under the direction of any such
person, took any action to fraudulently influence, coerce, manipulate,
or mislead any independent public or certified accountant engaged in
the performance of an audit of the financial statements of the Company
for the purpose of rendering such financial statements materially
misleading and, if such allegations prove to be correct, take or
recommend to the Board of Directors appropriate disciplinary action.
6. Discuss with the Company's legal counsel matters that may
have a material impact on the financial statements or the compliance
policies.
7. Review and approve in advance any proposed related party
transactions.
E. REPORTING
1. Prepare, in accordance with the rules of the SEC as
modified or supplemented from time to time, a written report of the
audit committee to be included in the Company's annual proxy statement
for each annual meeting of stockholders.
2. To the extent required by any Regulatory Body, instruct the
Company's management to disclose in its Form 10-K and Form 10-Q's the
approval by the Committee of any nonaudit services performed by the
independent accounting firm, and review the substance of any such
disclosure.
While the Audit Committee has the responsibilities and powers set forth
in this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Company's financial statements are complete and
accurate and are in accordance with generally accepted accounting principles.
A-4
APPENDIX B
March 22, 2004
CHARTER OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
OF
MICROTEL INTERNATIONAL INC.
PURPOSE
The purpose of the Compensation Committee of MicroTel International
Inc. (the "Company") established pursuant to this charter is to (i) act as
Administrator of the Company's various Stock Option Plans (collectively, the
"Plans") as described in each of the Plans, (ii) review forms of compensation to
be provided to the officers and employees of the Company, including stock
compensation, (iii) grant options to purchase common stock of the Company to
employees and executive officers of the Company and (iv) review and make
recommendations to the Board of Directors regarding all forms of compensation to
be provided to the directors of the Company, including stock compensation. The
Compensation Committee has the authority to undertake the specific duties and
responsibilities listed below and will have the authority to undertake such
other specific duties as the Board of Directors from time to time prescribes.
MEMBERSHIP
The Compensation Committee shall consist of a minimum of two (2)
"non-employee directors" of the Company as such term is defined in Rule
16b-3(b)(3)(i) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). The members of the Compensation Committee will be outside directors
within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as
amended. The members of the Compensation Committee are appointed by and serve at
the discretion of the Board of Directors.
RESPONSIBILITIES
The responsibilities of the Compensation Committee are set forth below:
o The Compensation Committee shall review and make recommendations
to the Board of Directors regarding the compensation policy for
executive officers and directors of the Company, and such other
officers of the Company as directed by the Board of Directors.
o The Compensation Committee shall review and approve the Company's
compensation policy regarding all forms of compensation
(including, to the extent relevant, all "plan" compensation, as
such term is defined in Item 402(a)(7) of Regulation S-K
promulgated by the Securities and Exchange Commission, and all
non-plan compensation) to be provided to the officers and
employees of the Company.
o The Compensation Committee shall review recommendations from the
Chief Executive Officer of the Company regarding all forms of
compensation (including, to the extent relevant, all "plan"
compensation, as such term is defined in Item 402(a)(7) of
Regulation S-K promulgated by the Securities and Exchange
Commission, and all non-plan compensation) to be provided to the
non-employee directors of the Company.
B-1
o The Compensation Committee shall review and make recommendations
to the Board of Directors regarding general compensation goals and
guidelines for the Company's employees and officers and the
criteria by which bonuses to the Company's employees and officers
are determined.
o The Compensation Committee shall review recommendations from the
Chief Executive Officer of the Company regarding all bonus and
stock compensation to all employees of the Company.
o The Compensation Committee shall act as Administrator (as
described in each of the Plans) of the Plans within the authority
delegated by the Board of Directors. In its administration of the
Plans, the Compensation Committee may, (i) grant stock options to
individuals eligible for such grants (including grants to
individuals subject to Section 16 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act") in compliance with Rule
16b-3 thereunder) and (ii) amend such stock options.
o The Compensation Committee shall review and make recommendations
to the Board of Directors with respect to amendments to the Plans
and changes in the number of shares reserved for issuance
thereunder.
o The Compensation Committee shall review and make recommendations
to the Board of Directors regarding other plans that are proposed
for adoption or adopted by the Company for the provision of
compensation to employees of, directors of and consultants to the
Company.
o The Compensation Committee shall prepare a report (to be included
in the Company's proxy statement) that describes: (a) the criteria
on which compensation paid to the Chief Executive Officer for the
last completed fiscal year is based; (b) the relationship of such
compensation to the Company's performance; and (c) the
Compensation Committee's executive compensation policies
applicable to executive officers.
o The Compensation Committee shall review and reassess the adequacy
of this Charter annually and recommend any proposed charges to the
Board of Directors for approval.
MEETINGS
It is anticipated that the Compensation Committee will meet at least
twice each year. However, the Compensation Committee may establish its own
schedule, which it will provide to the Board of Directors in advance. At a
minimum of one of such meetings annually, the Compensation Committee will
consider stock plans, performance goals and incentive awards, and the overall
coverage and composition of the compensation package.
MINUTES
The Compensation Committee will maintain written minutes of its
meetings, which minutes will be filed with the minutes of the meetings of the
Board of Directors.
B-2
REPORTS
The Compensation Committee will provide written reports to the Board of
Directors of the Company regarding recommendations of the Compensation Committee
submitted to the Board of Directors for action, and copies of the written
minutes of its meetings.
B-3
APPENDIX C
March 22, 2004
CHARTER OF THE
NOMINATING COMMITTEE
OF THE BOARD OF DIRECTORS
OF
MICROTEL INTERNATIONAL INC.
PURPOSE
The purpose of the Nominating Committee of the Board of Directors of
MicroTel International Inc. (the "Company") is to ensure that the Board of
Directors is properly constituted to meet its fiduciary obligations to
stockholders and the Company and that the Company has and follows appropriate
governance standards. To carry out this purpose, the Nominating Committee shall:
(1) assist the Board of Directors by identifying prospective director nominees
and to recommend to the Board of Director nominees for the next annual meeting
of stockholders; (2) develop and recommend to the Board of Directors the
governance principles applicable to the Company; (3) oversee the evaluation of
the Board of Directors and management; and (4) recommend to the Board of
Directors nominees for each committee.
COMMITTEE MEMBERSHIP AND ORGANIZATION
o The Nominating Committee shall be comprised of no fewer than two
(2) members.
o The members of the Nominating Committee shall meet the
independence requirements of the National Association of
Securities Dealers.
o The members of the Nominating Committee shall be appointed and
replaced by the Board of Directors.
COMMITTEE RESPONSIBILITIES AND AUTHORITY
o Evaluate the current composition, organization and governance of
the Board of Directors and its committees, determine future
requirements and make recommendations to the Board of Directors
for approval.
o Determine on an annual basis desired Board of Director
qualifications, expertise and characteristics and conduct searches
for potential Board of Director members with corresponding
attributes. Evaluate and propose nominees for election to the
Board of Directors. In performing these tasks the Nominating
Committee shall have the sole authority to retain and terminate
any search firm to be used to identify director candidates.
o Oversee the Board of Directors performance evaluation process
including conducting surveys of director observations, suggestions
and preferences.
o Form and delegate authority to subcommittees when appropriate.
C-1
o Evaluate and make recommendations to the Board of Directors
concerning the appointment of directors to Board of Directors
committees, the selection of Board of Directors committee chairs,
and proposal of the Board of Directors slate for election.
o Consider shareholder nominees for election to the Board of
Directors.
o Evaluate and recommend termination of membership of individual
directors in accordance with the Board of Director's governance
principles, for cause or for other appropriate reasons.
o Conduct an annual review on succession planning, report its
findings and recommendations to the Board of Directors, and work
with the Board of Directors in evaluating potential successors to
executive management positions.
o Coordinate and approve Board of Directors and committee meeting
schedules.
o Make regular reports to the Board of Directors.
o Review and re-examine this Charter annually and make
recommendations to the Board Directors for any proposed changes.
o Annually review and evaluate its own performance.
o In performing its responsibilities, the Nominating Committee shall
have the authority to obtain advice, reports or opinions from
internal or external counsel and expert advisors.
C-2
APPENDIX D
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
MICROTEL INTERNATIONAL INC.
A DELAWARE CORPORATION
The undersigned, Randolph D. Foote, hereby certifies that:
ONE: He is the duly elected and acting Chief Financial Officer and
Secretary of MICROTEL INTERNATIONAL INC. (hereinafter, the "corporation").
TWO: The corporation's present name is MICROTEL INTERNATIONAL INC. The
name under which the original certificate of incorporation of the corporation
was filed with the Secretary of State of Delaware on July 14, 1989 is CXR CORP.
THREE: This Amended and Restated Certificate of Incorporation has been
duly adopted in accordance with the provisions of Sections 245 and 242 of the
General Corporation Law of the State of Delaware by the directors and
stockholders of the corporation.
FIVE: The certificate of incorporation of the corporation shall be
amended and restated to read in full as follows:
ARTICLE I
The name of the corporation is MICROTEL INTERNATIONAL INC.
ARTICLE II
The address of the corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle, State of Delaware. The name of the registered
agent of the corporation at such location is The Corporation Trust Company.
ARTICLE III
The nature of the business or purposes to be conducted or promoted by
the corporation is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of the State of
Delaware.
ARTICLE IV
The corporation is authorized to issue one class of capital stock to be
designated "Common Stock" and another class of capital stock to be designated
"Preferred Stock." The total number of shares of Common Stock that the
corporation is authorized to issue is one hundred fifty million (150,000,000),
with a par value of $.0033 per share. The total number of shares of Preferred
Stock that the corporation is authorized to issue is ten million (10,000,000),
with a par value of $.01 per share.
D-1
Except as otherwise provided by law, the shares of stock of the
corporation, regardless of class, may be issued by the corporation from time to
time in such amounts, for such consideration and for such corporate purposes as
the board of directors may from time to time determine. A description of the
different classes and series of the corporation's capital stock and a statement
of the designations and the relative rights, preferences and limitations of the
shares of each class and series of capital stock are as follows:
COMMON STOCK. Except as otherwise provided by the General Corporation
Law of the State of Delaware or in this Article IV (or in any certificate of
designation establishing a series of Preferred Stock), the holders of Common
Stock shall exclusively posses all voting power of the corporation. Each share
of Common Stock shall be equal in all respects to every other share of Common
Stock. Each holder of record of issued and outstanding Common Stock shall be
entitled to one (1) vote on all matters for each share so held. Subject to the
rights and preferences, if any, of the holders of Preferred Stock, each issued
and outstanding share of Common Stock shall entitle the record holder thereof to
receive dividends and distributions out of funds legally available therefor,
when, as and if declared by the board of directors, in such amounts and at such
times, if any, as the board of directors shall determine, ratably in proportion
to the number of shares of Common Stock held by each such record holder. Upon
any voluntary or involuntary liquidation, dissolution or winding up of the
corporation, after there shall have been paid to or set aside for the holders of
any class of capital stock having preference over the Common Stock in such
circumstances the full preferential amounts to which they are respectively
entitled, the holders of the Common Stock, and of any class or series of capital
stock entitled to participate in whole or in part therewith as to the
distribution of assets, shall be entitled, after payment or provision for the
payment of all debts and liabilities of the corporation, to receive the
remaining assets of the corporation available for distribution, in cash or in
kind, ratably in proportion to the number of shares of Common Stock held by each
such holder.
PREFERRED STOCK. The board of directors is authorized by resolution or
resolutions, from time to time adopted, to provide for the issuance of Preferred
Stock in one or more series and to fix and state the voting powers,
designations, preferences and relative participating, optional or other special
rights of the shares of each series and the qualifications, limitations and
restrictions thereof, including, but not limited to, determination of one or
more of the following:
(i) the distinctive designations of each such series and the number of
shares which shall constitute such series, which number may be increased (except
where otherwise provided by the board of directors in creating such series) or
decreased (but not below the number of shares thereof then outstanding) from
time to time by the board of directors;
(ii) the annual rate or amount of dividends payable on shares of such
series, whether such dividends shall be cumulative or non-cumulative, the
conditions upon which and the dates when such dividends shall be payable, the
date from which dividends on cumulative series shall accrue and be cumulative on
all shares of such series issued prior to the payment date for the first
dividend of such series, the relative rights of priority, if any, of payment of
dividends on the shares of that series, and the participating or other special
rights, if any, with respect to such dividends;
(iii) whether such series will have any voting rights in addition to
those prescribed by law and, if so, the terms and conditions of the exercise of
such voting rights;
(iv) whether the shares of such series will be redeemable or callable
and, if so, the prices at which, and the terms and conditions on which, such
shares may be redeemed or called, which prices may vary under different
conditions and at different redemption or call dates;
D-2
(v) the amount or amounts payable upon the shares of such series in the
event of voluntary or involuntary liquidation, dissolution or winding up of the
corporation, and the relative rights of priority, if any, of payment of shares
of such series;
(vi) whether the shares of such series shall be entitled to the benefit
of a sinking or retirement fund to be applied to the purchase or redemption of
such shares, and if so entitled, the amount of such fund and the manner of its
application, including the price or prices at which such shares may be redeemed
or purchased through the application of such fund;
(vii) whether the shares of such series shall be convertible into, or
exchangeable for, shares of any other class or classes or of any other series of
the same or any other class or classes of capital stock of the corporation, and
if so convertible or exchangeable, the conversion price or prices, or the rate
or rates of exchange, and the adjustments thereof, if any, at which such
conversion or exchange may be made, and any other terms of such conversion or
exchange;
(viii) whether the shares of such series that are redeemed or converted
shall have the status of authorized but unissued shares of Preferred Stock and
whether such shares may be reissued as shares of the same or any other series of
stock;
(ix) the conditions and restrictions, if any, on the payment of
dividends or on the making of other distributions on, or the purchase,
redemption or other acquisition by the corporation, or any subsidiary thereof,
of, the Common Stock or any other class (or other series of the same class)
ranking junior to the shares of such series as to dividends or upon liquidation,
dissolution or winding up of the corporation; and
(x) the conditions and restrictions, if any, on the creation of
indebtedness of the corporation, or any subsidiary thereof, or on the issue of
any additional stock ranking on parity with or prior to the shares of such
series as to dividends or upon liquidation, dissolution or winding up of the
corporation.
All shares within each series of Preferred Stock shall be alike in
every particular, except with respect to the dates from which dividends, if any,
shall commence to accrue.
ARTICLE V
The corporation reserves the right to amend, alter, change or repeal
any provision contained in this certificate of incorporation, and to merge, sell
its assets and take other corporate action to the extent and in the manner now
or hereafter permitted or prescribed by law, and all rights conferred upon the
stockholders herein are granted pursuant to this reservation.
ARTICLE VI
The corporation shall, to the fullest extent to which it is empowered
to do so and under the circumstances permitted by the General Corporation Law of
the State of Delaware or any other applicable laws, as they may from time to
time be in effect, indemnify any person who was made or is threatened to be made
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that he is or was a director or officer of the corporation, or is or was serving
at the specific request of the corporation as a director or officer of another
corporation, partnership, joint venture, trust or other enterprise (including,
without limitation, any employee benefit plan), against all expenses (including
attorneys' fees), judgments, fines and amounts incurred by him or her in
connection with such action, suit or proceeding, and may take such steps as may
be deemed appropriate by the board of directors, including purchasing and
maintain insurance, entering into contracts (including, without limitation,
contracts of indemnification between the corporation and its directors and
officers), creating a trust fund, granting security interests or using other
means (including, without limitation, a letter of credit) to ensure the payment
of such amounts as may be necessary to effect such indemnification.
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ARTICLE VII
To the fullest extent permitted by the General Corporation Law of the
State of Delaware as the same exists or as it may hereafter by amended, a
director of the corporation shall not be personally liable to the corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director; provided, that in no event will the liability of any director of this
corporation be eliminated or otherwise limited (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders; (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; (iii) under Section 174 of the General Corporation Law
of the State of Delaware; or (iv) for any transaction from which the director
derived any improper personal benefit. If the General Corporation Law of the
State of Delaware is amended to authorize corporate action further eliminating
or limiting the personal liability of directors, then the liability of a
director of the corporation shall be eliminated or limited to the fullest extent
permitted by the General Corporation Law of the State of Delaware, as so
amended.
Any repeal or modification of the foregoing paragraph, or the adoption
of any provision of this certificate of incorporation inconsistent with the
foregoing paragraph, shall not eliminate, reduce or otherwise adversely affect
any right or protection of a director of the corporation existing at the time of
such repeal or modification in respect of any matter occurring, or any cause of
action, suit or proceeding that, but for the foregoing paragraph, would accrue
or arise, prior to such repeal, modification or adoption of an inconsistent
provision.
ARTICLE VIII
The number of directors that constitute the whole board of directors
shall be fixed exclusively by one or more resolutions adopted from time to time
by the board of directors in accordance with the bylaws of the corporation. The
board of directors shall be divided into three classes designated as Class I,
Class II and Class III, respectively, which classes shall be as nearly equal in
number as the then total number of directors constituting the entire board of
directors permits. Directors shall be assigned to each class in accordance with
a resolution or resolutions adopted by the board of directors.
At the 2005 annual meeting of stockholders, the term of office of the
Class III directors shall expire and Class III directors shall be elected for a
full term of three years. At the 2006 annual meeting of stockholders, the term
of office of the Class I directors shall expire and Class I directors shall be
elected for a full term of three years. At the 2007 annual meeting of
stockholders, the term of office of the Class II directors shall expire and
Class II directors shall be elected for a full term of three years. At each
succeeding annual meeting of stockholders, directors shall be elected for a full
term of three years to succeed the directors of the class whose terms expire at
such annual meeting.
Except as otherwise required by the General Corporation Law of the
State of Delaware, (i) newly created directorships resulting from any increase
in the number of directors and any vacancies on the board of directors resulting
from death, resignation, disqualification, removal or other cause may be filled
only by the affirmative vote of a majority of the remaining directors then in
office, even though less than a quorum of the board of directors, or by a sole
remaining director; (ii) any director elected in accordance with the preceding
clause (i) shall hold office for the remainder of the full term of the class of
directors in which the new directorship was created or the vacancy occurred and
until such director's successor shall have been elected and qualified; and (iii)
no decrease in the number of directors constituting the board of directors shall
shorten the term of any incumbent director.
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The manner by which a director of the corporation may be removed from
office shall be as provided in the bylaws of the corporation. Notwithstanding
any other provisions of this certificate of incorporation or the bylaws of the
corporation (and notwithstanding the fact that some lesser percentage may be
specified by law, this certificate of incorporation or the bylaws of the
corporation), any director, or the entire board of directors of the corporation,
may be removed at any time, but only for cause.
The provisions set forth in this Article VIII may not be repealed or
amended in any respect, unless such action is approved by the affirmative vote
of the holders of not less than sixty-seven percent (67%) of the outstanding
shares of Common Stock of the corporation.
ARTICLE IX
Any action required or permitted to be taken by the stockholders of the
corporation must be effected at a duly called annual or special meeting of such
holders and may not be effected by a consent in writing by any such holders.
This Article IX may not be repealed or amended in any respect, unless such
action is approved by the affirmative vote of the holders of not less than
sixty-seven percent (67%) of the outstanding shares of Common Stock of the
corporation.
ARTICLE X
The corporation is to have perpetual existence.
ARTICLE XI
Meetings of the stockholders of the corporation may be held within or
without the State of Delaware, as the bylaws may provide. The books of the
corporation may be kept (subject to any provision contained in the bylaws)
outside the State of Delaware at such place or places as may be designated from
time to time by the board of directors or in the bylaws of the corporation.
ARTICLE XII
In furtherance and not in limitation of the powers conferred by
statute, the board of directors is expressly authorized to make, alter, amend or
repeal the bylaws of the corporation unless and to the extent the General
Corporation Law of the State of Delaware shall provide otherwise.
Advance notice of new business and stockholder nominations for the
election of directors shall be given in the manner and to the extent provided in
the bylaws of the corporation. Elections of directors need not be by written
ballot unless the bylaws of the corporation shall so provide.
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IN WITNESS WHEREOF, the undersigned has executed this Amended and
Restated Certificate of Incorporation on this _____ day of October, 2004.
MICROTEL INTERNATIONAL INC.
By:
------------------------------------------
Randolph D. Foote, Chief Financial Officer
and Secretary
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APPENDIX E
ARTICLE FOURTH OF EXISTING CERTIFICATE OF INCORPORATION
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 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;
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(viii) Any other preferences, privileges and powers, and
relative participating, optional or other special rights,
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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APPENDIX F
ARTICLE EIGHTH OF EXISTING CERTIFICATE OF INCORPORATION
EIGHTH: (a) Classification of Board of Directors. The Board of
Directors shall be divided into three classes, as nearly equal in number as the
then total number of directors constituting the entire Board of Directors
permits with the term of office of one class expiring each year. At the annual
meeting of stockholders in 1990 directors of the first class shall elected to
hold office for a term expiring at the next succeeding annual meeting, directors
of the second class shall be elected to hold office for a term expiring at the
second succeeding annual meeting and directors of the third class shall be
elected to hold office for a term expiring at the third succeeding annual
meeting. Any vacancies in the Board of Directors for any reason, and any
directorships resulting from any increase in the number of directors, may be
filled only by the Board of Directors, acting by a majority of the directors
then in office, although less than a quorum, and any directors so chosen shall
hold office until the next election of the class for which such directors shall
have been chosen and until their successors shall be elected and qualified.
(b) Removal for Cause. Notwithstanding any other provisions of this
Certificate of Incorporation or the Bylaws of the Corporation (and
notwithstanding the fact that some lesser percentage may be specified by law,
this Certificate of Incorporation or the Bylaws of the Corporation), any
director, or the entire Board of Directors of the Corporation may be removed at
any time, but only for cause.
(c) Amendment or Repeal. The provisions set forth in this Article
Eighth may not be repealed or amended in any respect, unless such action is
approved by the affirmative vote of the holders of not less than 67 percent of
the outstanding shares of Common Stock of the Corporation.
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APPENDIX G
AMENDED AND RESTATED BYLAWS
OF
MICROTEL INTERNATIONAL INC.
a Delaware corporation
PREAMBLE
These bylaws are subject to, and governed by, the General Corporation
Law of the State of Delaware (the "Delaware General Corporation Law") and the
certificate of incorporation, as it may be amended from time to time, of
MICROTEL INTERNATIONAL INC., a Delaware corporation (the "Corporation"). In the
event of a direct conflict between the provisions of these bylaws and the
mandatory provisions of the Delaware General Corporation Law or the provisions
of the certificate of incorporation, such provisions of the Delaware General
Corporation Law or the certificate of incorporation of the Corporation, as the
case may be, will be controlling.
ARTICLE I
CORPORATE OFFICES
1.1 REGISTERED OFFICE
The registered office of the Corporation shall be at Corporation Trust
Center, 1209 Orange Street, in the City of Wilmington, County of New Castle,
State of Delaware. The name of the registered agent of the Corporation at such
location is The Corporation Trust Company. The registered office of the
Corporation may be changed from time to time by the board of directors in the
manner provided by law and need not be identical to the principal place of
business of the Corporation.
1.2 OTHER OFFICES
The Corporation may also maintain or establish an office or offices at
such other place or places, within or without the State of Delaware, as the
board of directors may from time to time determine by resolution.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1 PLACE OF MEETINGS
Meetings of stockholders shall be held at any place, within or outside
the State of Delaware, designated by the board of directors. The board of
directors may, in its sole discretion, determine that a meeting of stockholders
shall not be held at any place, but may instead be held solely by means of
remote communication as authorized by Section 211(a)(2) of the Delaware General
Corporation Law. In the absence of any such designation, meetings of
stockholders shall be held at the principal office of the Corporation.
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2.2 ANNUAL MEETING
The annual meeting of the stockholders shall be held each year at such
place within or without the State of Delaware and on a date and at a time as may
be designated from time to time by the board of directors, for the purpose of
electing directors and for the transaction of any and all such other business as
may properly be brought before the meeting. Any and all business of any nature
or character whatsoever may be transacted, and action may be taken thereon, at
any annual meeting, except as otherwise provided by law or by these bylaws.
2.3 SPECIAL MEETING
Special meetings of the stockholders for any purpose or purposes,
unless otherwise prescribed by law, may be called by the board of directors, the
chairman of the board, the chief executive officer or president (in the absence
of a chief executive officer), and shall be called by the secretary of the
Corporation at the request in writing by holders of not less than 10% of the
total voting power of all outstanding securities of the Corporation then
entitled to vote. Each special meeting of stockholders shall be held,
respectively, at any place within or without the State of Delaware as determined
by the board of directors, or as designated in a waiver of notice signed by all
of the stockholders then entitled to vote.
If a special meeting is called by any person or persons other than the
board of directors, the chairman of the board, the chief executive officer or
the president, then the request shall be in writing, specifying the time of such
meeting and the general nature of the business proposed to be transacted, and
shall be delivered personally or sent by registered mail or by telegraphic or
other facsimile transmission to the secretary of the Corporation. The secretary
shall cause notice to be promptly given to the stockholders entitled to vote, in
accordance with the provisions of Sections 2.4 and 2.5 of these bylaws, that a
meeting will be held at the time requested by the person or persons calling the
meeting. No business may be transacted as such special meeting other than the
business specified in such notice to stockholders. Nothing contained in this
paragraph of this Section 2.3 shall be construed as limiting, fixing or
affecting the time when a meeting of stockholders called by action of the board
of directors may be held.
2.4 NOTICE OF MEETINGS OF STOCKHOLDERS
All notices of meetings with stockholders shall be in writing and shall
be sent or otherwise given in accordance with Section 2.5 or Article IX of
these bylaws not less than ten (10) nor more than sixty (60) days before the
date of the meeting to each stockholder entitled to vote at such meeting. The
notice shall specify the place, date, and hour of the meeting, the means of
remote communication, if any, by which stockholders and proxy holders may be
deemed to be present in person and vote at such meeting, and, in the case of a
special meeting, the purpose or purposes for which the meeting is called.
2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE
Written notice of any meeting of stockholders, if mailed, is given when
deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the Corporation or,
if electronically transmitted, as provided in Article IX of these bylaws. An
affidavit of the secretary or an assistant secretary or of the transfer agent of
the Corporation that the notice has been given shall, in the absence of fraud,
be prima facie evidence of the facts stated therein.
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2.6 QUORUM
The holders of a majority of the stock issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business, except where otherwise provided by statute, the certificate of
incorporation or these bylaws. Any shares, the voting of which at such meeting
has been enjoined, or which for any reason cannot be lawfully voted at such
meeting, shall not be counted to determine a quorum at such meeting. Any meeting
at which a quorum is present may continue to transact business until adjournment
notwithstanding the withdrawal of enough stockholders to leave less than a
quorum. Except as otherwise provided by law, the certificate of incorporation or
these bylaws, all action taken by holders of a majority of the voting power
represented at any meeting at which a quorum is present shall be valid and
binding upon the corporation.
2.7 ADJOURNED MEETING; NOTICE
If a quorum is not present or represented at any meeting of the
stockholders, then either (i) the chairperson of the meeting or (ii) the
stockholders holding a majority of the shares represented thereat in person or
by proxy shall have power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum is present or
represented. When a meeting is adjourned to another time or place, unless these
bylaws otherwise require, notice need not be given of the adjourned meeting if
the time, place if any thereof, and the means of remote communications if any by
which stockholders and proxy holders may be deemed to be present in person and
vote at such adjourned meeting are announced at the meeting at which the
adjournment is taken. At the adjourned meeting the Corporation may transact any
business that might have been transacted at the original meeting. If the
adjournment is for more than 30 days, or if after the adjournment a new record
date is fixed for the adjourned meeting, a notice of the adjourned meeting shall
be given to each stockholder of record entitled to vote at the meeting.
The chairperson of any meeting of stockholders shall determine the
order of business and the procedure at the meeting, including such regulation of
the manner of voting and the conduct of business.
2.8 VOTING
The stockholders entitled to vote at any meeting of stockholders shall
be determined in accordance with the provisions of Section 2.11 of these bylaws,
subject to the provisions of Section 217 of the Delaware General Corporation Law
(relating to voting rights of fiduciaries, pledgors and joint owners of stock)
and Section 218 of the Delaware General Corporation Law (relating to voting
trusts and other voting agreements).
Except as may be otherwise provided in the certificate of incorporation
or these bylaws, each stockholder shall be entitled to one vote for each share
of capital stock held by such stockholder.
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2.9 WAIVER OF NOTICE
Whenever notice is required to be given under any provision of the
Delaware General Corporation Law or of the certificate of incorporation or these
bylaws, a written waiver thereof, signed by the person entitled to notice, or a
waiver by electronic transmission by the person entitled to notice, whether
before or after the time of the event for which notice is to be given, shall be
deemed equivalent to notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting, except when the person attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders need be specified in any written
waiver of notice or any waiver by electronic transmission unless so required by
the certificate of incorporation or these bylaws.
2.10 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Unless otherwise provided in the certificate of incorporation, any
action required to be taken at any annual or special meeting of stockholders of
the Corporation, or any action which may be taken at any annual or special
meeting of such stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent or consents in writing, setting forth
the action so taken and bearing the dates of signature of the stockholders who
signed the consent or consents, shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted.
Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those stockholders who
have not consented in writing and who, if the action had been taken at a
meeting, would have been entitled to notice of the meeting if the record date
for such meeting had been the date that written consents signed by a sufficient
number of holders to take the action were delivered to the Corporation as
provided in Section 228 of the Delaware General Corporation Law. In the event
that the action which is consented to is such as would have required the filing
of a certificate under any provision of the Delaware General Corporation Law, if
such action had been voted on by stockholders at a meeting thereof, the
certificate filed under such provision shall state, in lieu of any statement
required by such provision concerning any vote of stockholders, that written
consent has been given in accordance with Section 228 of the Delaware General
Corporation Law. Any action taken pursuant to such written consent or consents
of the stockholders shall have the same force and effect as if taken by the
stockholders at a meeting thereof.
2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS
In order that the Corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof, or entitled to express consent to corporate action in writing without a
meeting, or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the board of directors may fix, in advance, a record date, which record
date shall not precede the date upon which the resolution fixing the record date
is adopted by the board of directors, and shall not be more than sixty (60) nor
less than ten (10) days before the date of such meeting, nor more than ten (10)
days after the date upon which the resolution fixing the record date for a
written consent is adopted by the board of directors, nor more than sixty (60)
days prior to any other action.
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If the board of directors does not so fix a record date:
(i) The record date for determining stockholders entitled to notice of
or to vote at a meeting of stockholders shall be at the close of business on the
day next preceding the day on which notice is given, or, if notice is waived, at
the close of business on the day next preceding the day on which the meeting is
held.
(ii) The record date for determining stockholders entitled to express
consent to corporate action in writing without a meeting, when no prior action
by the board of directors is necessary, shall be the day on which the first
written consent is delivered to the Corporation as provided in Section 213(b) of
the Delaware General Corporation Law.
(iii) The record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
2.12 PROXIES
Each stockholder entitled to vote at a meeting of stockholders or to
express consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for him by proxy authorized by an
instrument in writing or by a transmission permitted by law filed in accordance
with the procedure established for the meeting, but no such proxy shall be voted
or acted upon after three years from its date, unless the proxy provides for a
longer period. The revocability of a proxy that states on its face that it is
irrevocable shall be governed by the provisions of Section 212 of the Delaware
General Corporation Law.
2.13 LIST OF STOCKHOLDERS ENTITLED TO VOTE
The officer who has charge of the stock ledger of the Corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. The Corporation shall not
be required to include electronic mail addresses or other electronic contact
information on such list. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten (10) days prior to the meeting, either: (i)
on a reasonably accessible electronic network, provided that the information
required to gain access to such list is provided with the notice of the meeting;
or (ii) during ordinary business hours, at the Corporation's principal executive
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office; or (iii) if not so specified, at the place where the meeting is to be
held. In the event the Corporation determines to make the list available on an
electronic network, the Corporation may take reasonable steps to ensure that
such information is available only to stockholders of the Corporation. If the
meeting is to be held at a place, then the list shall be produced and kept at
the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present. If the meeting is to be held solely
by means of remote communication, then the list shall also be open to the
examination of any stockholder during the whole time of the meeting on a
reasonably accessible electronic network, and the information required to access
such list shall be provided with the notice of the meeting. Such list shall
presumptively determine the identity of the stockholders entitled to vote at the
meeting and the number of shares held by each of them.
2.14 NOMINATIONS AND PROPOSALS
Nominations of persons for election to the board of directors of the
Corporation and the proposal of business to be considered by the stockholders
may be made at any meeting of stockholders only (a) pursuant to the
Corporation's notice of meeting, (b) by or at the direction of the board of
directors or (c) by any stockholder of the Corporation who was a stockholder of
record at the time of giving of notice provided for in these bylaws, who is
entitled to vote at the meeting and who complies with the notice procedures set
forth in this Section 2.14; provided that stockholder nominations of persons for
election to the board of directors of the Corporation at a special meeting may
only be made if the board of directors has determined that directors are to be
elected at the special meeting.
For nominations or other business to be properly brought before a
meeting of stockholders by a stockholder pursuant to clause (c) of the preceding
sentence, the stockholder must have given timely notice thereof in writing to
the secretary of the Corporation and such other business must otherwise be a
proper matter for stockholder action. To be timely, a stockholder's notice must
be delivered to the secretary of the Corporation not later than: (A) in the case
of an annual meeting, the close of business on the forty-fifth (45th) day before
the first anniversary of the date on which the Corporation first mailed its
proxy materials for the prior year's annual meeting of stockholders; provided,
however, that if the date of the meeting has changed more than thirty (30) days
from the date of the prior year's meeting, then in order for the stockholder's
notice to be timely it must be delivered to the secretary of the Corporation a
reasonable time before the Corporation mails its proxy materials for the current
year's meeting; provided further, that for purposes of the preceding sentence, a
"reasonable time" shall conclusively be deemed to coincide with any adjusted
deadline publicly announced by the Corporation pursuant to Rule 14a-5(f) or
otherwise; and (B) in the case of a special meeting, the close of business on
the seventh (7th) day following the day on which public announcement is first
made of the date of the special meeting. In no event shall the public
announcement of an adjournment of a meeting of stockholders commence a new time
period for the giving of a stockholder's notice as described above.
Such stockholder's notice shall set forth (a) as to each person whom
the stockholder proposes to nominate for election or reelection as a director
all information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors in an election contest, or is
otherwise required, in each case pursuant to Regulation 14A under the Securities
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Exchange Act of 1934, as amended (or any successor thereto, "Exchange Act") and
Rule 14a-11 thereunder (or any successor thereto) (including such person's
written consent to being named in the proxy statement as a nominee and to
serving as a director if elected); (b) as to any other business that the
stockholder proposes to bring before the meeting, a brief description of the
business desired to be brought before the meeting, the reasons for conducting
such business at the meeting and any material interest in such business of such
stockholder and the beneficial owner, if any, on whose behalf the proposal is
made, the text of the proposal or business (including the text of any
resolutions proposed for consideration and in the event that such business
includes a proposal to amend the bylaws of the Corporation, the language of the
proposed amendment); and (c) as to the stockholder giving the notice and the
beneficial owner, if any, on whose behalf the nomination or proposal is made (i)
the name and address of such stockholder, as they appear on the Corporation's
books, and of such beneficial owner, (ii) the class and number of shares of the
Corporation that are owned beneficially and of record by such stockholder and
such beneficial owner, (iii) a representation that the stockholder is a holder
of record of stock of the Corporation entitled to vote at such meeting and
intends to appear in person or by proxy at the meeting to propose such business
or nomination, and (iv) a representation whether the stockholder or the
beneficial owner, if any, intends or is part of a group that intends (X) to
deliver a proxy statement and/or form of proxy to holders of at least the
percentage of the Corporation's outstanding capital stock required to approve or
adopt the proposal or elect the nominee and/or (Y) otherwise to solicit proxies
from stockholders in support of such proposal or nomination.
The Corporation may require any proposed nominee to furnish such other
information as it may reasonably require to determine the eligibility of such
proposed nominee to serve as a director of the Corporation. Notwithstanding any
provision of these bylaws to the contrary, no business shall be conducted at a
meeting of stockholders except in accordance with the procedures set forth in
this Section 2.14.
For purposes of this Section 2.14, "public announcement" shall include
disclosure in a press release reported by the Dow Jones News Service, Associated
Press, Reuters, Market Wire or comparable national news service or in a document
publicly filed by the Corporation with the Securities and Exchange Commission
pursuant to Section 13, 14 or 15(d) of the Exchange Act.
Notwithstanding the foregoing provisions of this Section 2.14, a
stockholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth in this Section 2.14. Nothing in this Section 2.14 shall be deemed to
affect any rights (1) of stockholders to request inclusion of proposals in the
Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act, if
applicable to the Corporation, or (2) of the holders of any series of preferred
stock to elect directors pursuant to any applicable provisions of the
certificate of incorporation.
Except as otherwise provided by law, the chairperson of the meeting
shall have the power and duty to determine whether a nomination or any business
proposed to be brought before the meeting was made or proposed, as the case may
be, in accordance with the procedures set forth in this Section 2.14 and, if any
proposed nomination or business was not made or proposed in compliance with this
Section 2.14, to declare that such nomination shall be disregarded or that such
proposed business shall not be transacted.
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ARTICLE III
DIRECTORS
3.1 POWERS
Subject to the provisions of the Delaware General Corporation Law and
any limitations in the certificate of incorporation or these bylaws relating to
action required to be approved by the stockholders or by the outstanding shares,
the business and affairs of the Corporation shall be managed and all corporate
powers shall be exercised by or under the direction of the board of directors.
3.2 NUMBER OF DIRECTORS
The authorized number of directors of the Corporation shall be four (4)
until changed by resolution of the board of directors. No reduction of the
authorized number of directors shall have the effect of removing any director
before that director's term of office expires.
3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS
The board of directors shall be divided into three classes designated
as Class I, Class II and Class III, respectively. Directors shall be assigned to
each class in accordance with a resolution or resolutions adopted by the board
of directors and shall be elected as described in the certificate of
incorporation.
All elections of directors shall be by written ballot, unless otherwise
provided in the certificate of incorporation. If authorized by the board of
directors, such requirement of a written ballot shall be satisfied by a ballot
submitted by electronic transmission, provided that any such electronic
transmission must be either set forth or be submitted with information from
which it can be determined that the electronic transmission was authorized by
the stockholder or proxy holder.
Notwithstanding the foregoing provisions of this Section 3.3, each
director shall serve until his or her successor is duly elected and qualified or
until his or her death, resignation or removal. No decrease in the number of
directors constituting the board of directors shall shorten the term of any
incumbent director.
3.4 RESIGNATION AND VACANCIES
Any director may resign at any time upon notice given in writing or by
electronic transmission to the secretary of the Corporation. When one or more
directors so resigns and the resignation is effective at a future date, a
majority of the directors then in office, including those who have so resigned,
shall have power to fill such vacancy or vacancies, the vote thereon to take
effect when such resignation or resignations shall become effective, and each
director so chosen shall hold office as provided in this Section in the filling
of other vacancies.
Any vacancies on the board of directors resulting from death,
resignation, disqualification, removal, newly created directorships or other
causes shall, except as otherwise provided by the Delaware General Corporation
Law or by the certificate of incorporation, be filled only by the affirmative
vote of a majority of the remaining directors then in office, even though less
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than a quorum of the board of directors, or by a sole remaining director, and
not by the stockholders. Whenever the holders of any class or classes of stock
or series thereof are entitled to elect one or more directors by the provisions
of the certificate of incorporation, vacancies and newly created directorships
of such class or classes or series may be filled by a majority of the directors
elected by such class or classes or series thereof then in office, or by a sole
remaining director so elected. Any director elected in accordance with the
preceding sentence shall hold office for the remainder of the full term of the
class of directors in which the new directorship was created or the vacancy
occurred and until such director's successor shall have been elected and
qualified.
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE
The board of directors of the Corporation may hold meetings, both
regular and special, either within or outside the State of Delaware.
Unless otherwise restricted by the certificate of incorporation or
these bylaws, members of the board of directors, or any committee designated by
the board of directors, may participate in a meeting of the board of directors,
or any committee, by means of conference telephone or other communications
equipment by means of which all persons participating in the meeting can hear
each other, and such participation in a meeting shall constitute presence in
person at the meeting.
3.6 REGULAR MEETINGS
Regular meetings of the board of directors may be held without notice
at such time and at such place as shall from time to time be determined by
resolution of the board.
3.7 SPECIAL MEETINGS; NOTICE
Special meetings of the board of directors may be called by the
chairman of the board or the chief executive officer or the president or the
secretary or by any two directors. Notice of the time and place of special
meetings shall be delivered either personally by hand, by courier or by
telephone, sent by United States first-class mail, postage prepaid, sent by
facsimile or sent by electronic mail, directed to each director at that
director's address, telephone number, facsimile number or electronic mail
address, as the case may be, as shown on the Corporation's records.
If the notice is (i) delivered personally by hand, by courier or by
telephone, (ii) sent by facsimile or (iii) sent by electronic mail, it shall be
delivered or sent at least twenty-four (24) hours before the time of the holding
of the meeting. If the notice is sent by United States mail, it shall be
deposited in the United States mail at least four (4) days before the time of
the holding of the meeting. Any oral notice may be communicated to the director.
The notice need not specify the place of the meeting (if the meeting is to be
held at the Corporation's principal executive office) nor the purpose of the
meeting. It shall not be necessary that the same method of giving notice be
employed in respect of all directors, but one permissible method may be employed
in respect of any one or more, and any other permissible method or methods may
be employed in respect of any other or others.
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3.8 QUORUM
At all meetings of the board of directors, a majority of the authorized
number of directors shall constitute a quorum for the transaction of business,
and the act of a majority of the directors present at any meeting at which there
is a quorum shall be the act of the board of directors, except as may be
otherwise specifically provided by statute or by the certificate of
incorporation. If a quorum is not present at any meeting of the board of
directors, then the directors present thereat may adjourn the meeting from time
to time, without notice other than announcement at the meeting, until a quorum
is present. A meeting at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors, if any action
taken is approved by at least a majority of the required quorum for that
meeting.
3.9 WAIVER OF NOTICE
Whenever notice is required to be given under any provision of the
Delaware General Corporation Law or of the certificate of incorporation or these
bylaws, a written waiver thereof, signed by the person entitled to notice, or a
waiver by electronic transmission by the person entitled to notice, whether
before or after the time of the event for which notice is to be given, shall be
deemed equivalent to notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting, except when the person attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders need be specified in any written
waiver of notice or any waiver by electronic transmission unless so required by
the certificate of incorporation or these bylaws.
3.10 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Unless otherwise restricted by the certificate of incorporation or
these bylaws, any action required or permitted to be taken at any meeting of the
board of directors, or of any committee thereof, may be taken without a meeting
if all members of the board or committee, as the case may be, consent thereto in
writing or by electronic transmission and the writing or writings or electronic
transmission or transmissions are filed with the minutes of proceedings of the
board or committee. Such filing shall be in paper form if the minutes are
maintained in paper form and shall be in electronic form if the minutes are
maintained in electronic form.
3.11 FEES AND COMPENSATION OF DIRECTORS
Unless otherwise restricted by the certificate of incorporation or
these bylaws, the board of directors shall have the authority to fix the
compensation of directors.
3.12 APPROVAL OF LOANS TO OFFICERS OR EMPLOYEES
The Corporation may lend money to, or guarantee any obligation of, or
otherwise assist any officer or other employee of the Corporation or of its
subsidiary, including any officer or employee who is a director of the
Corporation or its subsidiary, whenever, in the judgment of the directors, such
loan, guaranty or assistance may reasonably be expected to benefit the
Corporation and is not prohibited by applicable laws, rules or regulations. The
loan, guaranty or other assistance may be with or without interest and may be
unsecured, or secured in such manner as the board of directors shall approve,
including, without limitation, a pledge of shares of stock of the Corporation.
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3.13 REMOVAL OF DIRECTORS
Notwithstanding any other provisions of the Corporation's certificate
of incorporation, or these bylaws (and notwithstanding the fact that some lesser
percentage may be specified by the Delaware General Corporation Law, the
certificate of incorporation or these bylaws, any director, or the entire board
of directors of the Corporation may be removed at any time, but only for cause.
The removal shall be accomplished by the affirmative vote, at a special meeting
of stockholders called for that purpose in the manner provided in these bylaws,
of the holders of at least a majority of the outstanding shares entitled to vote
at an election for directors.
ARTICLE IV
COMMITTEES
4.1 COMMITTEES OF DIRECTORS
The board of directors may, by resolution passed by a majority of the
whole board, designate one or more committees, with each committee to consist of
one or more of the directors of the Corporation. The board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the board of
directors to act at the meeting in the place of any such absent or disqualified
member. Any such committee, to the extent provided in the resolution of the
board of directors or in the bylaws of the Corporation, shall have and may
exercise all the powers and authority of the board of directors in the
management of the business and affairs of the Corporation, and may authorize the
seal of the Corporation to be affixed to all papers that may require it; but no
such committee shall have the power or authority to (i) amend the certificate of
incorporation (except that a committee may, to the extent authorized in the
resolution or resolutions providing for the issuance of shares of stock adopted
by the board of directors as provided in Section 151(a) of the Delaware General
Corporation Law, fix any of the preferences or rights of such shares relating to
dividends, redemption, dissolution, any distribution of assets of the
Corporation or the conversion into, or the exchange of such shares for, shares
of any other class or classes or any other series of the same or any other class
or classes of stock of the Corporation), (ii) approve or adopt, or recommend to
the stockholders, any matter expressly required by the Delaware General
Corporation Law to be submitted to stockholders for approval, (iii) adopt, amend
or repeal any bylaw of the Corporation, or (iv) declare any dividend.
The board of directors may at any time increase or decrease the number
of members of a committee or terminate the existence of a committee. The board
of directors may at any time and for any reason remove any individual committee
member or fill any committee vacancy created by death, resignation, removal or
increase in the number of members of a committee.
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4.2 COMMITTEE MINUTES
Each committee shall keep regular minutes of its meetings and report
the same to the board of directors when required.
4.3 MEETINGS AND ACTION OF COMMITTEES
Meetings and actions of committees shall be governed by, and held and
taken in accordance with, the provisions of Article III of these bylaws, Section
3.5 (place of meetings and meetings by telephone), Section 3.6 (regular
meetings), Section 3.7 (special meetings and notice), Section 3.8 (quorum),
Section 3.9 (waiver of notice), Section 3.10 (adjournment and notice of
adjournment), and Section 3.11 (action without a meeting), with such changes in
the context of those bylaws as are necessary to substitute the committee and its
members for the board of directors and its members; provided, however, that the
time of regular meetings of committees and special meetings of committees may
also be called by resolution of the board of directors and that notice of
special meetings of committees shall also be given to all alternate members, who
shall have the right to attend all meetings of the committee. The board of
directors may adopt rules for the government of any committee not inconsistent
with the provisions of these bylaws.
4.4 ADVISORY COMMITTEES
The board of directors may, by resolution passed by a majority of the
whole board, designate one or more advisory committees, with each committee to
consist of one or more of the directors of the Corporation or any other such
persons as the board may appoint. The board may designate one or more persons as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of the committee. Members who are not board members shall
not have the responsibilities or obligations of board members nor be deemed
directors of the Corporation for any purpose.
ARTICLE V
OFFICERS
5.1 OFFICERS
The officers of the Corporation shall be a chief executive officer, a
secretary, and a chief financial officer. The Corporation may also have, at the
discretion of the board of directors, a chairman of the board, a vice chairman
of the board, a treasurer, one or more presidents, one or more vice presidents,
one or more assistant vice presidents, assistant secretaries, assistant
treasurers, and any such other officers as may be appointed in accordance with
the provisions of these bylaws. Any number of offices may be held by the same
person.
5.2 APPOINTMENT OF OFFICERS
The board of directors shall appoint the officers of the Corporation,
except such officers as may be appointed in accordance with the provisions of
Sections 5.3 or 5.5 of these bylaws, subject to the rights, if any, of an
officer under any contract of employment.
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5.3 SUBORDINATE OFFICERS
The board of directors may appoint, or empower the chief executive
officer or, in the absence of a chief executive officer, one or more presidents,
to appoint, such other officers and agents as the business of the Corporation
may require, each of whom shall hold office for such period, have such
authority, and perform such duties as are provided in these bylaws or as the
board of directors may from time to time determine.
5.4 REMOVAL AND RESIGNATION OF OFFICERS
Subject to the rights, if any, of an officer under any contract of
employment, any officer may be removed, either with or without cause, by an
affirmative vote of the majority of the board of directors at any regular or
special meeting of the board or, except in the case of an officer chosen by the
board, by any officer upon whom such power of removal may be conferred by the
board of directors.
Any officer may resign at any time by giving written notice to the
board of directors, president or secretary of the Corporation. Any resignation
shall take effect at the date of the receipt of that notice or at any later time
specified in that notice; and, unless otherwise specified in that notice, the
acceptance of the resignation shall not be necessary to make it effective. Any
resignation is without prejudice to the rights, if any, of the Corporation under
any contract to which the officer is a party.
5.5 VACANCIES IN OFFICES
Any vacancy occurring in any office of the Corporation shall be filled
by the board of directors or as provided in Section 5.2.
5.6 CHAIRMAN OF THE BOARD
The chairman of the board, if such an officer be elected, shall, if
present, preside at meetings of the board of directors and exercise and perform
such other powers and duties as may from time to time be assigned to him by the
board of directors or as may be prescribed by these bylaws. If there is no chief
executive officer or president, then the chairman of the board shall also be the
chief executive officer of the Corporation and shall have the powers and duties
prescribed in Section 5.7 of these bylaws.
5.7 CHIEF EXECUTIVE OFFICER
Subject to such supervisory powers, if any, as may be given by the
board of directors to the chairman of the board, if there be such an officer,
the chief executive officer of the Corporation shall, subject to the control of
the board of directors, have general supervision, direction, and control of the
business and affairs of the Corporation and shall report directly to the board
of directors. All other officers, officials, employees and agents shall report
directly or indirectly to the chief executive officer. The chief executive
officer shall see that all orders and resolutions of the board of directors are
carried into effect. He shall serve as the chairperson and preside at all
meetings of the stockholders and, in the absence or nonexistence of a chairman
of the board, at all meetings of the board of directors. He shall have the
general powers and duties of management usually vested in the chief executive
officer of a Corporation, and shall have such other powers and duties as may be
prescribed by the board of directors or these bylaws.
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5.8 PRESIDENT
The president may assume and perform the duties of the chief executive
officer in the absence or disability of the chief executive officer or whenever
the office of the chief executive officer is vacant. When acting as the chief
executive officer, a president shall have all the powers of, and be subject to
all the restrictions upon, the chief executive officer. The president of the
Corporation shall exercise and perform such powers and duties as may from time
to time be assigned to him by the board of directors, the chairman of the board,
the chief executive officer or as may be prescribed by these bylaws. The
president shall have authority to execute in the name of the Corporation bonds,
contracts, deeds, leases and other written instruments to be executed by the
Corporation. In the absence or nonexistence of the chairman of the board and
chief executive officer, he shall preside at all meetings of the stockholders
and, in the absence or nonexistence of a Chairman of the board of directors and
chief executive officer, at all meetings of the board of directors and shall
perform such other duties as the board of directors may from time to time
determine.
5.9 VICE PRESIDENTS
In the absence or disability of the chief executive officer and any
president, the vice presidents, if any, in order of their rank as fixed by the
board of directors or, if not ranked, a vice president designated by the board
of directors, shall perform all the duties of a president and when so acting
shall have all the powers of, and be subject to all the restrictions upon, a
president. The vice presidents shall have such other powers and perform such
other duties as from time to time may be prescribed for them respectively by the
board of directors, these bylaws, the chairman of the board, the chief executive
officer or, in the absence of a chief executive officer, one or more of the
presidents.
5.10 SECRETARY
The secretary shall keep or cause to be kept, at the principal
executive office of the Corporation or such other place as the board of
directors may direct, a book of minutes of all meetings and actions of
directors, committees of directors, and stockholders. The minutes shall show the
time and place of each meeting, whether regular or special (and, if special, how
authorized and the notice given), the names of those present at meetings of the
board of directors or committees, the number of shares present or represented at
meetings of stockholders, and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal
executive office of the Corporation or at the office of the Corporation's
transfer agent or registrar, as determined by resolution of the board of
directors, a share register, or a duplicate share register, showing the names of
all stockholders and their addresses, the number and classes of shares held by
each, the number and date of certificates evidencing such shares, and the number
and date of cancellation of every certificate surrendered for cancellation.
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The secretary shall give, or cause to be given, notice of all meetings
of the stockholders and of the board of directors required to be given by law or
by these bylaws. He or she shall keep the seal of the Corporation, if one be
adopted, in safe custody and shall have such other powers and perform such other
duties as may be prescribed by the board of directors or by these bylaws.
5.11 CHIEF FINANCIAL OFFICER
The chief financial officer shall keep and maintain, or cause to be
kept and maintained, adequate and correct books and records of accounts of the
properties and business transactions of the Corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital,
retained earnings, and shares. The books of account shall at all reasonable
times be open to inspection by any director.
The chief financial officer shall deposit all monies and other
valuables in the name and to the credit of the Corporation with such
depositories as the board of directors may designate. The chief financial
officer shall disburse the funds of the Corporation as may be ordered by the
board of directors, shall render to the chief executive officer or, in the
absence of a chief executive officer, any president and directors, whenever they
request it, an account of all his or her transactions as chief financial officer
and of the financial condition of the Corporation, and shall have such other
powers and perform such other duties as may be prescribed by the board of
directors or these bylaws. The chief financial officer may be the treasurer of
the Corporation.
5.12 TREASURER
The treasurer shall keep and maintain, or cause to be kept and
maintained, adequate and correct books and records of accounts of the properties
and business transactions of the Corporation, including accounts of its assets,
liabilities, receipts, disbursements, gains, losses, capital, retained earnings,
and shares. The books of account shall at all reasonable times be open to
inspection by any director.
The treasurer shall deposit all monies and other valuables in the name
and to the credit of the Corporation with such depositories as the board of
directors may designate. The treasurer shall disburse the funds of the
Corporation as may be ordered by the board of directors, shall render to the
chief executive officer or, in the absence of a chief executive officer, any
president and directors, whenever they request it, an account of all his or her
transactions as treasurer and of the financial condition of the Corporation, and
shall have such other powers and perform such other duties as may be prescribed
by the board of directors or these bylaws.
5.13 ASSISTANT SECRETARY
The assistant secretary, or, if there is more than one, the assistant
secretaries in the order determined by the stockholders or board of directors
(or if there be no such determination, then in the order of their election)
shall, in the absence of the secretary or in the event of his or her inability
or refusal to act, perform the duties and exercise the powers of the secretary
and shall perform such other duties and have such other powers as the board of
directors or the stockholders may from time to time prescribe.
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5.14 ASSISTANT TREASURER
The assistant treasurer, or, if there is more than one, the assistant
treasurers, in the order determined by the stockholders or board of directors
(or if there be no such determination, then in the order of their election),
shall, in the absence of the treasurer or in the event of his or her inability
or refusal to act, perform the duties and exercise the powers of the treasurer
and shall perform such other duties and have such other powers as the board of
directors or the stockholders may from time to time prescribe.
5.15 AUTHORITY AND DUTIES OF OFFICERS
In addition to the foregoing authority and duties, all officers of the
Corporation shall respectively have such authority and perform such duties in
the management of the business of the Corporation as may be designated from time
to time by the board of directors or the stockholders.
ARTICLE VI
INDEMNITY
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Corporation shall, to the fullest extent and in the manner
permitted by the Delaware General Corporation Law as it presently exists or may
hereafter be amended, indemnify and hold harmless each of its directors and
officers who was or is made or is threatened to be made a party or is otherwise
involved in any action, suit or proceeding, whether civil, criminal or
administrative or investigative (a "proceeding") by reason of the fact that he
or she, or a person for whom he or she is the legal representative, is or was a
director, officer, employee or agent of the Corporation or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, non-profit entity or
other enterprise, including service with respect to employee benefit plans,
against all liability and loss suffered and expenses reasonably incurred by such
person in connection with any such action, suit, or proceeding. The Corporation
shall be required to indemnify a person in connection with a proceeding
initiated by such person only if the proceeding was authorized by the board of
directors of the Corporation.
6.2 INDEMNIFICATION OF OTHERS
The Corporation shall have the power, to the fullest extent and in the
manner permitted by the Delaware General Corporation Law as it presently exists
or may hereafter be amended, to indemnify and hold harmless, each of its
employees and agents who was or is made or is threatened to be made a party or
is otherwise involved in any action, suit or proceeding, whether civil, criminal
or administrative or investigative (a "proceeding") by reason of the fact that
he or she, or a person for whom he or she is the legal representative, is or was
an employee or agent of the Corporation or is or was serving at the request of
the Corporation as an employee or agent of another corporation, partnership,
joint venture, trust, non-profit entity or other enterprise, including service
with respect to employee benefit plans, against all liability and loss suffered
and expenses reasonably incurred by such person in connection with any such
action, suit, or proceeding.
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6.3 INSURANCE
The Corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the Corporation,
or is or was serving at the request of the Corporation or its subsidiaries as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under the provisions of the Delaware General Corporation Law.
6.4 EXPENSES
The Corporation shall pay the expenses incurred by any officer or
director of the Corporation, and may pay the expenses incurred by any employee
or agent of the Corporation, in defending any proceeding in advance of its final
disposition; provided, however, that the payment of expenses incurred by a
person in advance of the final disposition of the proceeding shall be made only
upon receipt of an undertaking by the person to repay all amounts advanced if it
should ultimately be determined that he is not entitled to be indemnified by the
Corporation under this Article VI or otherwise. Such expenses incurred by other
employees and agents described in Section 6.2 of this Article VI may be so paid
upon such terms and conditions, if any, as the board of directors deems
appropriate.
6.5 OTHER INDEMNIFICATION
The indemnification and advancement of expenses provided by, or granted
pursuant to, this Article VI shall not be deemed exclusive of any other rights
to which those seeking indemnification or advancement of expenses may be
entitled under any bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in such person's official capacity and
as to action in another capacity while holding such office. However, the
Corporation's obligation, if any, to indemnify a person who was or is serving at
its request as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, non-profit entity or other enterprise shall
be reduced by any amount such person may collect as indemnification from such
other corporation, partnership, joint venture, trust, non-profit entity or other
enterprise.
6.6 AMENDMENT OR REPEAL
Any repeal or modification of the foregoing provisions of this Article
VI shall not adversely affect any right or protection hereunder of any person in
respect of any act or omission occurring prior to the time of such repeal or
modification.
6.7 MERGER OR CONSOLIDATION
For purposes of this Article VI, references to "the Corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, non-profit entity or other enterprise, shall
stand in the same position under this Article VI with respect to the resulting
or surviving corporation as he would have with respect to such constituent
corporation if its separate existence had continued.
6.8 SEVERABILITY
The invalidity or unenforceability of any provision of this Article VI
shall not affect the validity or enforceability of the remaining provisions of
this Article VI.
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ARTICLE VII
RECORDS AND REPORTS
7.1 MAINTENANCE AND INSPECTION OF RECORDS
The Corporation shall, either at its principal executive office or at
such place or places as designated by the board of directors, keep a record of
its stockholders listing their names and addresses and the number and class of
shares held by each shareholder, a copy of these bylaws as amended to date,
accounting books, and other records.
Any stockholder of record, in person or by attorney or other agent,
shall, upon written demand under oath stating the purpose thereof, have the
right during the usual hours for business to inspect for any proper purpose the
Corporation's stock ledger, a list of its stockholders, and its other books and
records and to make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent is the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
such other writing that authorizes the attorney or other agent to so act on
behalf of the stockholder. The demand under oath shall be directed to the
Corporation at its registered office in Delaware or at its principal executive
office.
7.2 INSPECTION BY DIRECTORS
Any director shall have the right to examine the Corporation's stock
ledger, a list of its stockholders, and its other books and records for a
purpose reasonably related to his position as a director. The Court of Chancery
is hereby vested with the exclusive jurisdiction to determine whether a director
is entitled to the inspection sought. The Court of Chancery may summarily order
the Corporation to permit the director to inspect any and all books and records,
the stock ledger, and the stock list and to make copies or extracts therefrom.
The Court of Chancery may, in its discretion, prescribe any limitations or
conditions with reference to the inspection, or award such other and further
relief as the Court may deem just and proper.
7.3 REPRESENTATION OF SHARES OF OTHER CORPORATIONS
The chairman of the board, the chief executive officer, the chief
financial officer or any other person authorized by the board of directors or
the chief executive officer, is authorized to vote, represent, and exercise on
behalf of the Corporation all rights incident to any and all shares of any other
corporation or corporations standing in the name of the Corporation. The
authority granted herein may be exercised either by such person directly or by
any other person authorized to do so by proxy or power of attorney duly executed
by such person having the authority.
ARTICLE VIII
GENERAL MATTERS
8.1 CHECKS
From time to time, the board of directors shall determine by resolution
which person or persons may sign or endorse all checks, drafts, other orders for
payment of money, notes or other evidences of indebtedness that are issued in
the name of or payable to the Corporation, and only the persons so authorized
shall sign or endorse those instruments.
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8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS
The board of directors, except as otherwise provided in these bylaws,
may authorize any officer or officers, or agent or agents, to enter into any
contract or execute any instrument in the name of and on behalf of the
Corporation; such authority may be general or confined to specific instances.
Unless so authorized or ratified by the board of directors or within the agency
power of an officer, agent or employee, no officer, agent or employee shall have
any power or authority to bind the Corporation by any contract or engagement or
to pledge its credit or to render it liable for any purpose or for any amount.
8.3 STOCK CERTIFICATES; PARTLY PAID SHARES
The shares of the Corporation shall be represented by certificates,
provided that the board of directors of the Corporation may provide by
resolution or resolutions that some or all of any or all classes or series of
its stock shall be uncertificated shares. Any such resolution shall not apply to
shares represented by a certificate until such certificate is surrendered to the
Corporation. Notwithstanding the adoption of such a resolution by the board of
directors, every holder of stock represented by certificates and upon request
every holder of uncertificated shares shall be entitled to have a certificate
signed by, or in the name of the Corporation by the chairman or vice chairman of
the board of directors, or a president or vice president, and by the treasurer
or an assistant treasurer, or the secretary or an assistant secretary of the
Corporation representing the number of shares registered in certificate form.
Any or all of the signatures on the certificate may be a facsimile. In case any
officer, transfer agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate has ceased to be such officer, transfer agent
or registrar before such certificate is issued, it may be issued by the
Corporation with the same effect as if he were such officer, transfer agent or
registrar at the date of issue.
The Corporation may issue the whole or any part of its shares as partly
paid and subject to call for the remainder of the consideration to be paid
therefor. Upon the face or back of each stock certificate issued to represent
any such partly paid shares, upon the books and records of the Corporation in
the case of uncertificated partly paid shares, the total amount of the
consideration to be paid therefor and the amount paid thereon shall be stated.
Upon the declaration of any dividend on fully paid shares, the Corporation shall
declare a dividend upon partly paid shares of the same class, but only upon the
basis of the percentage of the consideration actually paid thereon.
8.4 SPECIAL DESIGNATION ON CERTIFICATES
If the Corporation is authorized to issue more than one class of stock
or more than one series of any class, then the powers, the designations, the
preferences, and the relative, participating, optional or other special rights
of each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate that the Corporation shall
issue to represent such class or series of stock; provided, however, that,
except as otherwise provided in Section 202 of the Delaware General Corporation
Law, in lieu of the foregoing requirements there may be set forth on the face or
back of the certificate that the Corporation shall issue to represent such class
or series of stock a statement that the Corporation will furnish without charge
to each stockholder who so requests the powers, the designations, the
preferences, and the relative, participating, optional or other special rights
of each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights.
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8.5 LOST CERTIFICATES
Except as provided in this Section 8.5, no new certificates for shares
shall be issued to replace a previously issued certificate unless the latter is
surrendered to the Corporation and canceled at the same time. The Corporation
may issue a new certificate of stock or uncertificated shares in the place of
any certificate theretofore issued by it, alleged to have been lost, stolen or
destroyed, and the Corporation may require the owner of the lost, stolen or
destroyed certificate, or his legal representative, to give the Corporation a
bond sufficient to indemnify it against any claim that may be made against it on
account of the alleged loss, theft or destruction of any such certificate or the
issuance of such new certificate or uncertificated shares.
8.6 CONSTRUCTION; DEFINITIONS
Unless the context requires otherwise, the general provisions, rules of
construction, and definitions in the Delaware General Corporation Law shall
govern the construction of these bylaws. Without limiting the generality of this
provision, the singular number includes the plural, the plural number includes
the singular, and the term "person" includes both a corporation and a natural
person.
8.7 DIVIDENDS
The directors of the Corporation, subject to any restrictions contained
in either the Delaware General Corporation Law or the certificate of
incorporation, may declare and pay dividends upon the shares of its capital
stock. Dividends may be paid in cash, in property, or in shares of the
Corporation's capital stock.
The directors of the Corporation may set apart out of any of the funds
of the Corporation available for dividends a reserve or reserves for any proper
purpose and may abolish any such reserve. Such purposes shall include but not be
limited to equalizing dividends, repairing or maintaining any property of the
Corporation, and meeting contingencies.
8.8 FISCAL YEAR
The fiscal year of the Corporation shall end on December 31 of each
year until changed by the board of directors.
8.9 SEAL
The Corporation may adopt a corporate seal, which shall be adopted and
which may be altered by the board of directors. The Corporation may use the
corporate seal by causing it or a facsimile thereof to be impressed or affixed
or in any other manner reproduced.
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8.10 TRANSFER OF STOCK
Upon surrender to the Corporation or the transfer agent of the
Corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the Corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate, and record the transaction in its books.
8.11 STOCK TRANSFER AGREEMENTS
The Corporation shall have power to enter into and perform any
agreement with any number of stockholders of any one or more classes of stock of
the Corporation to restrict the transfer of shares of stock of the Corporation
of any one or more classes owned by such stockholders in any manner not
prohibited by the Delaware General Corporation Law.
8.12 REGISTERED STOCKHOLDERS
The Corporation shall be entitled to recognize the exclusive right of a
person registered on its books as the owner of shares to receive dividends and
to vote as such owner, shall be entitled to hold liable for calls and
assessments the person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of another person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE IX
NOTICE BY ELECTRONIC TRANSMISSION
Without limiting the manner by which notice otherwise may be given
effectively to stockholders pursuant to the Delaware General Corporation Law,
the certificate of incorporation or these bylaws, any notice to stockholders
given by the Corporation under any provision of the Delaware General Corporation
Law, the certificate of incorporation or these bylaws shall be effective if
given by a form of electronic transmission consented to by the stockholder to
whom the notice is given. Any such consent shall be revocable by the stockholder
by written notice to the Corporation. Any such consent shall be deemed revoked
if: (i) the Corporation is unable to deliver by electronic transmission two
consecutive notices given by the Corporation in accordance with such consent;
and (ii) such inability becomes known to the secretary or an assistant secretary
of the Corporation or to the transfer agent, or other person responsible for the
giving of notice. However, the inadvertent failure to treat such inability as a
revocation shall not invalidate any meeting or other action.
Any notice given pursuant to the preceding paragraph shall be deemed
given: (i) if by facsimile telecommunication, when directed to a number at which
the stockholder has consent to receive notice; (ii) if by electronic mail, when
directed to an electronic mail address at which the stockholder has consented to
receive notice; (iii) if by a posting on an electronic network together with
separate notice to the stockholder of such specific posting, upon the later of
(A) such posting and (B) the giving of such separate notice; and (iv) if by any
other form of electronic transmission, when directed to the stockholder. An
affidavit of the secretary or an assistant secretary or of the transfer agent or
other agent of the Corporation that the notice has been given by a form of
electronic transmission shall, in the absence of fraud, be prima facie evidence
of the facts stated therein. Notice by a form of electronic transmission shall
not apply to Sections 164, 296, 311, 312 or 324 of the Delaware General
Corporation Law.
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An "electronic transmission" means any form of communication, not
directly involving the physical transmission of paper, that creates a record
that may be retained, retrieved, and reviewed by a recipient thereof, and that
may be directly reproduced in paper form by such a recipient through an
automated process.
ARTICLE X
AMENDMENTS
These bylaws may be amended, altered or repealed, and new bylaws may be
adopted, by the stockholders entitled to vote. However, the Corporation may, in
its certificate of incorporation, confer the power to adopt, amend, alter or
repeal bylaws upon the board of directors. The fact that such power has been so
conferred upon the directors shall not divest the stockholders of the power, nor
limit their power to adopt, amend, alter or repeal bylaws.
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CERTIFICATE OF SECRETARY
OF
MICROTEL INTERNATIONAL INC.,
(a Delaware corporation)
I hereby certify that I am the duly elected and acting secretary of
Microtel International Inc., a Delaware corporation, and that the foregoing
Amended and Restated Bylaws, comprising 23 pages, including this page,
constitute the Amended and Restated Bylaws of the Corporation as duly adopted by
the board of directors thereof by action taken without a meeting on September 1,
2004, and as ratified by a majority of the outstanding shares of common stock
represented in person or by proxy and entitled to vote at the Corporation's 2004
annual meeting of stockholders held on October 19, 2004.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this ____
day of October, 2004.
______________________________________
Randolph D. Foote, Secretary
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MICROTEL INTERNATIONAL INC.
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 19, 2004
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Carmine T. Oliva and Randolph D. Foote,
or either of them individually, as the attorney, agent and proxy holder of the
undersigned, 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 at the close of business on
September 10, 2004, at the 2004 annual meeting of stockholders to be held at the
Company's headquarters located at 9485 Haven Avenue, Suite 100, Rancho
Cucamonga, California 91730 on October 19, 2004, at 10:00 a.m. local time, and
at any and all adjournments and postponements thereof. The Company's board of
directors recommends a vote FOR each of the following proposals:
1. To elect Laurence P. Finnegan, Jr. as a Class II director.
[ ] FOR the nominee listed [ ] WITHHOLD AUTHORITY to vote
above. for the nominee listed above
2. To consider and vote upon a proposal to amend the Company's
certificate of incorporation in order to increase the Company's
authorized common stock from 50,000,000 shares to 150,000,000
shares and make clarifying changes.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To consider and vote upon a proposal to amend the Company's
certificate of incorporation in order to clarify the mechanics of
the Company's classified board.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To consider and vote upon a proposal to amend and restate the
Company's certificate of incorporation in order to modernize and
conform the Company's certificate of incorporation to current
Delaware corporate law and practices.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. To consider and vote upon a proposal to ratify the amendment
and restatement of the Company's bylaws.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6. To ratify the selection of the Company's independent public
accountants to audit the Company's consolidated financial
statements for 2004.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
7. In his discretion, the proxy holder is authorized to vote upon
such other business as may properly come before the meeting or any
adjournments and postponements thereof.
THIS PROXY CARD, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
CARD WILL BE VOTED FOR THE PROPOSALS INDICATED AND IN ACCORDANCE WITH THE
DISCRETION OF THE PROXY HOLDER ON ANY OTHER BUSINESS. ALL OTHER PROXIES
HERETOFORE GIVEN BY THE UNDERSIGNED IN CONNECTION WITH THE ACTIONS PROPOSED ON
THIS PROXY CARD ARE HEREBY EXPRESSLY REVOKED. THIS PROXY CARD MAY BE REVOKED AT
ANY TIME BEFORE IT IS VOTED BY WRITTEN NOTICE TO THE SECRETARY OF THE COMPANY,
BY ISSUANCE OF A SUBSEQUENT PROXY CARD OR BY VOTING AT THE ANNUAL MEETING IN
PERSON. HOWEVER, A STOCKHOLDER WHO HOLDS SHARES THROUGH A BROKER OR OTHER
NOMINEE MUST BRING A LEGAL PROXY TO THE MEETING IF THAT STOCKHOLDER DESIRES TO
VOTE AT THE MEETING.
Please mark, date, sign and return this proxy card promptly in the
enclosed envelope. When shares are held by joint tenants, both should sign. When
signing as attorney, 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:__________________________________
________________________________________
(Signature of Stockholder(s))
________________________________________
(Print Name(s) Here)
________________________________________
Number of Common Shares
[ ] PLEASE CHECK IF YOU ARE PLANNING
TO ATTEND THE ANNUAL MEETING.