-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M7rfnBwnH3R/5ij4NRmPurrPpW9DnHjiNQplbYKNzgmZQvIYvAdpDiMD3ViUncQX 6oEhw91+lXRTJYfIUzCD3w== 0001019687-01-500775.txt : 20020425 0001019687-01-500775.hdr.sgml : 20020425 ACCESSION NUMBER: 0001019687-01-500775 CONFORMED SUBMISSION TYPE: POS EX PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20010831 DATE AS OF CHANGE: 20020408 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MICROTEL INTERNATIONAL INC CENTRAL INDEX KEY: 0000854852 STANDARD INDUSTRIAL CLASSIFICATION: INSTRUMENTS FOR MEAS & TESTING OF ELECTRICITY & ELEC SIGNALS [3825] IRS NUMBER: 770226211 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: POS EX SEC ACT: 1933 Act SEC FILE NUMBER: 333-63024 FILM NUMBER: 01729824 BUSINESS ADDRESS: STREET 1: 9485 HAVEN AVENUE STREET 2: STE 100 CITY: ONTARIO STATE: CA ZIP: 91730 BUSINESS PHONE: 9099879220 MAIL ADDRESS: STREET 1: 9485 HAVEN AVENUE STREET 2: STE 100 CITY: ONTARIO STATE: CA ZIP: 91730 FORMER COMPANY: FORMER CONFORMED NAME: CXR CORP DATE OF NAME CHANGE: 19920703 POS AM 1 microtel_posam-083001.txt AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 31, 2001 REGISTRATION NO. 333-63024 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------- POST-EFFECTIVE AMENDMENT NO. 1 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ---------------- MICROTEL INTERNATIONAL, INC. (Exact name of registrant as specified in its charter)
DELAWARE 3825 77-0226211 (State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Code Number) Identification No.)
9485 HAVEN AVENUE, SUITE 100 RANCHO CUCAMONGA, CA 91730 (909) 987-9220 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) CARMINE T. OLIVA, PRESIDENT AND CHIEF EXECUTIVE OFFICER MICROTEL INTERNATIONAL, INC. 9485 HAVEN AVENUE, SUITE 100 RANCHO CUCAMONGA, CA 91730 (909) 987-9220 (Name, address, including zip code, and telephone number, including area code, of agent for service) COPIES TO: LARRY A. CERUTTI, ESQ. CRISTY LOMENZO PARKER, ESQ. RUTAN & TUCKER, LLP 611 ANTON BOULEVARD, 14TH FLOOR COSTA MESA, CALIFORNIA 92626 (714) 641-5100 APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after this registration statement becomes effective. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: |X| If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: |__| If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: |__| If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: |X| REGISTRATION STATEMENT NO. 333-63024 If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box: |__| Pursuant to Rule 429, this registration statement contains a combined prospectus that covers 2,050,750 shares of common stock registered on the Registrant's Registration Statement No. 333-64695 and 719,805 shares of common stock registered on the Registrant's Registration Statement No. 333-41580, in addition to the 1,750,000 shares of common stock being registered hereunder. AMENDMENT PURPOSE This Post-Effective Amendment No. 1 is being filed pursuant to Rule 462(d) solely for the purpose of updating the exhibit index contained in Item 16 of Part II of this Registration Statement on Form S-1. PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) EXHIBITS EXHIBIT NUMBER DESCRIPTION ------ ----------- 2.1 Merger Agreement dated December 31, 1996 between XET Corporation, XET Acquisition, Inc. and the Registrant (1) 2.2 Share Exchange Agreement among CXR Telcom Corporation, the Registrant and Eric P. Bergstrom, Steve T. Robbins and Mike B. Peterson, dated October 17, 1997 (2) 2.3 Indemnity Escrow Agreement among CXR Telcom Corporation, the Registrant, Eric P. Bergstrom, Steve T. Robbins and Mike B. Peterson and Gallagher, Briody & Butler, dated October 17, 1997 (2) 2.4 Form of Contingent Stock Agreement among CXR Telcom Corporation, the Registrant, Critical Communications Incorporated, Mike B. Peterson, Eric P. Bergstrom and Steve T. Robbins, dated October 17, 1997 (2) 2.5 Form of Severance Agreement among CXR Telcom Corporation, Critical Communications Incorporated, Mike B. Peterson, Eric P. Bergstrom and Steve T. Robbins, dated October 17, 1997 (2) 2.6 Asset Purchase Agreement dated January 9, 1998 among Arnold Circuits, Inc, BNZ Incorporated, Robert Bertrand, XCEL Arnold Circuits, Inc., XET Corporation and Mantalica & Treadwell (2) 2.7 Addendum No. 1 to Asset Purchase Agreement, among Arnold Circuits, Inc, BNZ Incorporated, Robert Bertrand, XCEL Arnold Circuits, Inc., XET Corporation and Mantalica & Treadwell, dated March 31, 1998 (2) 2.8 Bill of Sale and Assignment and Assumption Agreement between XCEL Arnold Circuits, Inc. and Arnold Circuits, Inc., dated March 31, 1998 (2) 2.9 Guaranty of Robert Bertrand in favor of XCEL Arnold Circuits, Inc., dated March 31, 1998 (2) 2.10 Warrant to Purchase Common Stock of the Registrant issued to BNZ Incorporated (2) 2.11 Guaranty of BNZ Incorporated in favor of XCEL Arnold Circuits, Inc., dated March 31, 1998 (2) 2.12 Pledge and Escrow Agreement between BNZ Incorporated and XCEL Arnold Circuits, Inc., dated March 31, 1998 (2) -2- EXHIBIT NUMBER DESCRIPTION ------ ----------- 2.13 Promissory Note between Arnold Circuits, Inc. and XCEL Arnold Circuits, Inc. dated March 31, 1998 (2) 2.14 Promissory Note between XET Corporation and Arnold Circuits, Inc. dated March 31, 1998 (2) 2.15 Security Agreement between Arnold Circuits, Inc and XCEL Arnold Circuits, Inc. dated March 31, 1998 (2) 2.16 Joint Marketing and Supply Agreement between Arnold Circuits, Inc and XCEL Etch Tek, dated March 31, 1998 (2) 2.17 Letter agreement dated October 19, 1998 between the Registrant and Digital Transmission Systems, Inc. (15) 2.18 Asset Purchase Agreement between HyComp, Inc. and HyComp Acquisition Corp., c/o SatCon Technology Corporation, dated March 31, 1999 (3) 2.19 Share Purchase Agreement dated December 29, 1999 between the Registrant and Wi-Lan Inc. (15) 2.20 Share Purchase Agreement dated April 17, 2000 between XCEL Power Systems Limited and the stockholders of The Belix Company Limited (4) 2.21 Asset Purchase Agreement effective September 1, 2000 by and among the Registrant, CXR Telcom Corporation and T-Com, LLC (5) 2.22 Bill of Sale and Assignment and Assumption Agreement dated as of September 22, 2000 between T-Com, LLC and CXR Telcom Corporation (5) 2.23 Letter agreement dated October 2, 2000 among the Registrant, CXR Telcom Corporation and T-Com, LLC relating to Asset Purchase Agreement by and among the same parties (5) 2.24 Asset Purchase Agreement dated as of November 15, 2000 by and among XET Corporation, the Registrant, Bryan Fuller, Tama-Lee Mapalo and Etch-Tek Electronics Corporation (6) 2.25 Asset Purchase Agreement dated as of July 31, 1995 by and among BNZ Incorporated, Robert Bertrand, and XCEL Arnold Circuits, Inc. (16) 3.1 Certificate of Incorporation of the Registrant, as filed with the Delaware Secretary of State on July 14, 1989 (15) 3.2 Certificate of Amendment of Certificate of Incorporation of the Registrant, as filed with the Delaware Secretary of State on October 12, 1989 (15) 3.3 Certificate of Amendment of Certificate of Incorporation of the Registrant, as filed with the Delaware Secretary of State on October 16, 1991 (15) -3- EXHIBIT NUMBER DESCRIPTION ------ ----------- 3.4 Certificate of Amendment of Certificate of Incorporation of the Registrant, as filed with the Delaware Secretary of State on April 19, 1994 (15) 3.5 Certificate of Amendment of Certificate of Incorporation of the Registrant, as filed with the Delaware Secretary of State on March 6, 1995 (15) 3.6 Certificate of Amendment of Certificate of Incorporation of the Registrant, as filed with the Delaware Secretary of State on August 28, 1996 (15) 3.7 Certificate of Designations, Preferences and Rights of Preferred Stock of the Registrant, as filed with the Delaware Secretary of State on May 20, 1998 (15) 3.8 Amended Certificate of Designations, Preferences and Rights of Preferred Stock of the Registrant, as filed with the Delaware Secretary of State on July 1, 1998 (15) 3.9 Certificate of Correction of Amended Certificate of Designations, Preferences and Rights of Preferred Stock as filed with the Delaware Secretary of State on November 20, 2000 (15) 3.10 Second Amended and Restated Certificate of Designations, Preferences and Rights of Preferred Stock as filed with the Delaware Secretary of State on December 28, 1999 (7) 3.11 Certificate of Correction of Second Amended Certificate of Designations, Preferences and Rights of Preferred Stock as filed with the Delaware Secretary of State on November 21, 2000 (15) 3.12 Certificate of Designations, Preferences and Rights of Series B Preferred Stock of the Registrant as filed with the Delaware Secretary of State on September 19, 2000 (5) 3.13 Bylaws of the Registrant (15) 3.14 Certificate of Amendment of Certificate of Incorporation of the Registrant as filed with the Delaware Secretary of State on January 22, 2001 (16) 3.15 Certificate of Amendment of Certificate of Designation of the Registrant as filed with the Delaware Secretary of State on January 22, 2001 (16) 3.16 Amendments to Bylaws effective as of June 1, 2001 (18) 4.1 Asset Purchase Agreement effective September 1, 2000 by and among the Registrant, CXR Telcom Corporation and T-Com, LLC (5) 4.2 Bill of Sale and Assignment and Assumption Agreement dated as of September 22, 2000 between T-Com, LLC and CXR Telcom Corporation (5) 4.3 Letter agreement dated October 2, 2000 among the Registrant, CXR Telcom Corporation and T-Com, LLC relating to Asset Purchase Agreement by and among the same parties (5) -4- EXHIBIT NUMBER DESCRIPTION ------ ----------- 4.4 Warrants to Purchase Common Stock dated September 22, 2000 issued by the Registrant in favor of T-Com, LLC (18) 4.5 Certificate of Designations, Preferences and Rights of Series B Preferred Stock of the Registrant as filed with the Delaware Secretary of State on September 19, 2000 (5) 5.1 Opinion of Rutan & Tucker, LLP (18) 10.1 1993 Stock Option Plan (15) (#) 10.2 Employee Stock and Stock Option Plan (9) (#) 10.3 1997 Stock Incentive Plan (10) (#) 10.4 Amended and Restated 2000 Stock Option Plan (#) 10.5 Employment Agreement dated October 15, 1997 between the Registrant and Carmine T. Oliva (15) (#) 10.6 Employment Agreement dated May 1, 1998 between the Registrant and Graham Jefferies (15) (#) 10.7 Credit and Security Agreement dated as of August 16, 2000 by and among XET Corporation, CXR Telcom Corporation and Wells Fargo Business Credit, Inc. (5) 10.8 Revolving Note dated August 16, 2000 in the principal sum of $3,000,000 made by CXR Telcom Corporation and XET Corporation in favor of Wells Fargo Business Credit, Inc. (5) 10.9 Term Note dated August 16, 2000 in the principal sum of $646,765 made by XET Corporation in favor of Wells Fargo Business Credit, Inc. (5) 10.10 Term Note dated August 16, 2000 in the principal sum of $40,235 made by CXR Telcom Corporation in favor of Wells Fargo Business Credit, Inc. (5) 10.11 Guarantee dated August 16, 2000 made by Carmine T. Oliva in favor of Wells Fargo Business Credit, Inc. (5) 10.12 Waiver of Interest dated August 16, 2000 made by Georgeann Oliva in favor of Wells Fargo Business Credit, Inc. (5) 10.13 Guarantee dated August 16, 2000 made by the Registrant in favor of Wells Fargo Business Credit, Inc. (5) 10.14 Guarantor Security Agreement dated August 16, 2000 made by the Registrant in favor of Wells Fargo Business Credit, Inc. (5) -5- EXHIBIT NUMBER DESCRIPTION ------ ----------- 10.15 Loan and Security Agreement between Congress Financial Corporation (Western) and the Registrant, XET Corporation, CXR Telcom Corporation and HyComp, Inc. dated June 23, 1998 (8) 10.16 Security Agreement between Congress Financial Corporation (Western) and XET Corporation dated June 23, 1998 (8) 10.17 Lease agreement between the Registrant and Property Reserve Inc. dated September 16, 1999 (12) 10.18 Lease agreement between XET, Inc. and Rancho Cucamonga Development dated August 30, 1999 (12) 10.19 Lease Agreement between SCI Limited Partnership-I and CXR Telcom Corporation, dated July 28, 1997 (13) 10.20 Lease agreement between XET Corporation and P&S Development (14) 10.21 General Partnership Agreement between XET Corporation and P&S Development (14) 10.22 Lease Agreement between XCEL Arnold Circuits, Inc. and RKR Associates (14) 10.23 Letter dated January 26, 2001 from Wells Fargo Business Credit, Inc. confirming the release of Guarantee dated August 16, 2000 (16) 10.24 Employment Agreement dated as of January 1, 2001 between the Registrant and Carmine T. Oliva (#) (16) 10.25 Employment Agreement dated as of July 2, 2001 between the Registrant and Randolph D. Foote (#) 10.26 Employment Agreement dated as of January 1, 2001 between the Registrant and Graham Jefferies (#) 21.1 Subsidiaries of the Registrant (15) 23.1 Consent of BDO Seidman, LLP, Independent Certified Public Accountants (18) 23.2 Consent of Ireland San Filippo, LLP, Independent Certified Public Accountants (18) 23.3 Consent of Rutan & Tucker, LLP (18) 24.1 Power of Attorney (18) -6- - - --------------- (#) Management contract or compensatory plan, contract or arrangement required to be filed as an exhibit. (1) Incorporated by reference to the Registrant's current report on Form 8-K for January 6, 1997 filed January 21, 1997 (File No. 1-10346) (2) Incorporated by reference to the Registrant's annual report on Form 10-K for the year ended December 31, 1997 (File No. 1-10346) (3) Incorporated by reference to the Registrant's interim report on Form 10-Q for the three months ended March 31, 1999 (File No. 1-10346) (4) Incorporated by reference to the Registrant's quarterly report on Form 10-Q for the quarter ended June 30, 2000 (File No. 1-10346) (5) Incorporated by reference to the Registrant's quarterly report on Form 10-Q for the quarter ended September 30, 2000 (File No. 1-10346) (6) Incorporated by reference to the Registrant's current report on Form 8-K for November 15, 2000 (File No. 1-10346) (7) Incorporated by reference to the Registrant's annual report on Form 10-K for the year ended December 31, 1999 (File No. 1-10346) (8) Incorporated by reference to the Registrant's interim report on Form 10-Q for the six months ended June 30, 1998 (File No. 1-10346) (9) Incorporated by reference to the Registrant's registration statement on Form S-8 (Registration Statement No. 333-12567) (10) Incorporated by reference to the Registrant's definitive proxy statement for the annual meeting of stockholders to be held June 11, 1998 (File No. 1-10346) (11) Incorporated by reference to the Registrant's definitive proxy statement for the special meeting of stockholders to be held January 16, 2001 (File No. 1-10346) (12) Incorporated by reference to the Registrant's interim report on Form 10-Q for the nine months ended September 30, 1999 (File No. 1-10346) (13) Incorporated by reference to the Registrant's registration statement on Form S-8 (Registration Statement No. 333-29925) (14) Incorporated by reference to the Registrant's annual report on Form 10-K/A for the year ended December 31, 1996 (File No. 1-10346) (15) Incorporated by reference to Amendment No. 1 to Registrant's registration statement on Form S-1 (Registration Statement No. 333-41580) (16) Incorporated by reference to the Registrant's annual report on Form 10-K for the year ended December 31, 2000 (File No. 1-10346) (17) Incorporated by reference to Amendment No. 2 to Registrant's registration statement on Form S-1 (Registration Statement No. 333-41580) (18) Incorporated by reference to the initial filing of Registrant's registration statement on Form S-1 (Registration Statement No. 333-63024) -7- SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Post-Effective Amendment No. 1 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Rancho Cucamonga, State of California, on August 27, 2001. MICROTEL INTERNATIONAL, INC. By: /S/ CARMINE T. OLIVA ----------------------------------------------------- Carmine T. Oliva, Chairman of the Board of Directors, President and Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /S/ CARMINE T. OLIVA Chairman of the Board of Directors, August 27, 2001 - - ----------------------------- President, Chief Executive Officer Carmine T. Oliva (Principal Executive Officer and Director) /S/ RANDOLPH D. FOOTE Chief Financial Officer August 27, 2001 - - ----------------------------- (Principal Accounting and Financial Randolph D. Foote Officer) * Director August 27, 2001 - - ----------------------------- Laurence P. Finnegan, Jr. * Director August 27, 2001 - - ------------------------------ Robert B. Runyon * By: /S/ CARMINE T. OLIVA ------------------------ Carmine T. Oliva, Attorney-in-Fact
-8- EXHIBITS EXHIBIT NO. DESCRIPTION --- ----------- 10.4 Amended and Restated 2000 Stock Option Plan (#) 10.25 Employment Agreement dated as of July 2, 2001 between the Registrant and Randolph D. Foote (#) 10.26 Employment Agreement dated as of January 1, 2001 between the Registrant and Graham Jefferies (#) -9- EX-10.4 3 microtel_ex10-4.txt AMENDED AND RESTATED 2000 STOCK OPTION PLAN EXHIBIT 10.4 MICROTEL INTERNATIONAL, INC. AMENDED AND RESTATED 2000 STOCK OPTION PLAN 1. PURPOSE OF THE PLAN. The purpose of this Amended and Restated 2000 Stock Option Plan (the "Plan") of MicroTel International, Inc., a Delaware corporation (the "Company"), is to provide the Company with a means of attracting and retaining the services of highly motivated and qualified directors and key personnel. The Plan is intended to advance the interests of the Company by affording to directors and key employees, upon whose skill, judgment, initiative and efforts the Company is largely dependent for the successful conduct of its business, an opportunity for investment in the Company and the incentives inherent in stock ownership in the Company. In addition, the Plan contemplates the opportunity for investment in the Company by consultants that do business with the Company. For purposes of this Plan, the term Company shall include subsidiaries, if any, of the Company. 2. LEGAL COMPLIANCE. It is the intent of the Plan that all options granted under it ("Options") shall be either "Incentive Stock Options" ("ISOs"), as such term is defined in Section 422 of the Internal Revenue Code of 1986, as amended ("Code"), or non-qualified stock options ("NQOs"); provided, however, that ISOs shall be granted only to employees of the Company. An Option shall be identified as an ISO or an NQO in writing in the document or documents evidencing the grant of the Option. All Options that are not so identified as ISOs are intended to be NQOs. In addition, the Plan provides for the grant of NQOs to consultants that do business with the Company. It is the further intent of the Plan that it conform in all respects with the requirements of Rule 16b-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended ("Rule 16b-3"). To the extent that any aspect of the Plan or its administration shall at any time be viewed as inconsistent with the requirements of Rule 16b-3 or, in connection with ISOs, the Code, such aspect shall be deemed to be modified, deleted or otherwise changed as necessary to ensure continued compliance with such provisions. 3. ADMINISTRATION OF THE PLAN. 3.1 PLAN COMMITTEE. The Plan shall be administered by the Company's Executive Compensation and Management Development Committee ("Committee"), whose members shall be appointed from time to time by the Board of Directors of the Company ("Board") and shall be directors of the Company. Notwithstanding the foregoing, the Board may act as the Committee and administer the Plan at any time or from time to time. 3.2 GRANTS OF OPTIONS BY THE COMMITTEE. In accordance with the provisions of the Plan, the Committee, by resolution, shall select those eligible persons to whom Options shall be granted ("Optionees"); shall determine the time or times at which each Option shall be granted, whether an Option is an ISO or an NQO and the number of shares to be subject to each Option; and shall fix the time and manner in which the Option may be exercised, the Option exercise price, and the Option period. The Committee shall determine the form of option agreement to evidence the foregoing terms and conditions of each Option, which need not be identical, in the form provided for in SECTION 7. Such option agreement may include such other provisions as the Committee may deem necessary or desirable consistent with the Plan, the Code and Rule 16b-3. 3.3 COMMITTEE PROCEDURES. The Committee from time to time may adopt such rules and regulations for carrying out the purposes of the Plan as it may deem proper and in the best interests of the Company. The Committee shall keep minutes of its meetings and records of its actions. A majority of the members of the Committee shall constitute a quorum for the transaction of any business by the Committee. The Committee may act at any time by an affirmative vote of a majority of those members voting. Such vote may be taken at a meeting (which may be conducted in person or by any telecommunication medium) or by written consent of Committee members without a meeting. 3.4 FINALITY OF COMMITTEE ACTION. The Committee shall resolve all questions arising under the Plan and option agreements entered into pursuant to the Plan. Each determination, interpretation, or other action made or taken by the Committee shall be final and conclusive and binding on all persons, including, without limitation, the Company, its stockholders, the Committee and each of the members of the Committee, and the directors, officers and employees of the Company, including Optionees and their respective successors in interest. 3.5 NON-LIABILITY OF COMMITTEE MEMBERS. No Committee member shall be liable for any action or determination made by him or her in good faith with respect to the Plan or any Option granted under it. 4. BOARD POWER TO AMEND, SUSPEND, OR TERMINATE THE PLAN. The Board may, from time to time, make such changes in or additions to the Plan as it may deem proper and in the best interests of the Company and its stockholders. The Board may also suspend or terminate the Plan at any time, without notice, and in its sole discretion. Notwithstanding the foregoing, no such change, addition, suspension, or termination by the Board shall (i) materially impair any option previously granted under the Plan without the express written consent of the optionee; or (ii) materially increase the number of shares subject to the Plan, materially increase the benefits accruing to optionees under the Plan, materially modify the requirements as to eligibility to participate in the Plan or alter the method of determining the option exercise price described in SECTION 8, without stockholder approval. 5. SHARES SUBJECT TO THE PLAN. For purposes of the Plan, the Committee is authorized to grant Options for up to 2,000,000 shares of the Company's common stock ("Common Stock"), or the number and kind of shares of stock or other securities which, in accordance with SECTION 13, shall be substituted for such shares of Common Stock or to which such shares shall be adjusted. The Committee is authorized to grant Options under the Plan with respect to such shares. Any or all unsold shares subject to an Option which for any reason expires or otherwise terminates (excluding shares returned to the Company in payment of the exercise price for additional shares) may again be made subject to grant under the Plan. -2- 6. OPTIONEES. Options shall be granted only to officers, directors or key employees of the Company or consultants that do business with the Company designated by the Committee from time to time as Optionees. Any Optionee may hold more than one option to purchase Common Stock, whether such option is an Option held pursuant to the Plan or otherwise. An Optionee who is an employee of the Company ("Employee Optionee") and who holds an Option must remain a continuous full or part-time employee of the Company from the time of grant of the Option to him until the time of its exercise, except as provided in SECTION 10.3. 7. GRANTS OF OPTIONS. The Committee shall have the sole discretion to grant Options under the Plan and to determine whether any Option shall be an ISO or an NQO. The terms and conditions of Options granted under the Plan may differ from one another as the Committee, in its absolute discretion, shall determine as long as all Options granted under the Plan satisfy the requirements of the Plan. Upon determination by the Committee that an Option is to be granted to an Optionee, a written option agreement evidencing such Option shall be given to the Optionee, specifying the number of shares subject to the Option, the Option exercise price, whether the Option is an ISO or an NQO, and the other individual terms and conditions of such Option. Such option agreement may incorporate generally applicable provisions from the Plan, a copy of which shall be provided to all Optionees at the time of their initial grants under the Plan. The Option shall be deemed granted as of the date specified in the grant resolution of the Committee, and the option agreement shall be dated as of the date specified in such resolution. Notwithstanding the foregoing, unless the Committee consists solely of non-employee directors, any Option granted to an executive officer, director or 10% beneficial owner for purposes of Section 16 of the Securities Exchange Act of 1934, as amended ("Section 16 of the 1934 Act"), shall either be (a) conditioned upon the Optionee's agreement not to sell the shares of Common Stock underlying the Option for at least six months after the date of grant or (b) approved by the entire Board or by the stockholders of the Company. 8. OPTION EXERCISE PRICE. The price per share to be paid by the Optionee at the time an ISO is exercised shall not be less than 100% of the Fair Market Value (as hereinafter defined) of one share of the optioned Common Stock on the date on which the Option is granted. No ISO may be granted under the Plan to any person who, at the time of such grant, owns (within the meaning of Section 424(d) of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of any parent thereof, unless the exercise price of such ISO is at least equal to 110% of Fair Market Value on the date of grant. The price per share to be paid by the Optionee at the time an NQO is exercised shall not be less than 85% of the Fair Market Value on the date on which the NQO is granted, as determined by the Committee. For purposes of the Plan, the "Fair Market Value" of a share of the Company's Common Stock as of a given date shall be: (i) the closing price of a share of the Company's Common Stock on the principal exchange on which shares of the Company's Common Stock are then trading, if any, on the day immediately preceding such date, or, if shares were not traded on such date, then on the next preceding trading day during which a sale occurred; or (ii) if the Company's Common Stock is not traded on an exchange but is quoted on Nasdaq or a successor quotation system, (1) the last sales price (if the Common Stock is then listed as a National Market Issue under the Nasdaq National Market System or the Over-the-Counter Bulletin Board system) or (2) the closing representative bid price (in all other cases) for the Common Stock on the day immediately preceding such date as reported by Nasdaq or such successor quotation system; or (iii) if the Company's Common Stock is not publicly traded on an exchange and not quoted on Nasdaq or a successor quotation system, the closing bid price for the Common Stock on such date as determined in good faith by the Committee; or (iv) if the Company's Common Stock is not publicly traded, the fair market value established by the Committee acting in good faith. In addition, with respect to any ISO, the Fair Market Value on any given date shall be determined in a manner consistent with any regulations issued by the Secretary of the Treasury for the purpose of determining fair market value of securities subject to an ISO plan under the Code. -3- 9. CEILING OF ISO GRANTS. The aggregate Fair Market Value (determined at the time any ISO is granted) of the Common Stock with respect to which an Optionee's ISOs, together with incentive stock options granted under any other plan of the Company and any parent, are exercisable for the first time by such Optionee during any calendar year shall not exceed $100,000. If an Optionee holds such incentive stock options that become first exercisable (including as a result of acceleration of exercisability under the Plan) in any one year for shares having a Fair Market Value at the date of grant in excess of $100,000, then the most recently granted of such ISOs, to the extent that they are exercisable for shares having an aggregate Fair Market Value in excess of such limit, shall be deemed to be NQOs. 10. DURATION, EXERCISABILITY, AND TERMINATION OF OPTIONS. 10.1 OPTION PERIOD. The option period shall be determined by the Committee with respect to each Option granted. In no event, however, may the option period exceed ten years from the date on which the Option is granted, or five years in the case of a grant of an ISO to an Optionee who is a 10% stockholder at the date on which the Option is granted as described in SECTION 8. 10.2 EXERCISABILITY OF OPTIONS. Each Option shall be exercisable in whole or in consecutive installments, cumulative or otherwise, during its term as determined in the discretion of the Committee; provided, however, that each Option granted to an Optionee who is not an officer, director or consultant of the Company or a Company affiliate shall provide for the right to exercise at the rate of at least 20% per year over five years from the date the Option is granted, subject to reasonable conditions such as continued employment. 10.3 TERMINATION OF OPTIONS DUE TO TERMINATION OF EMPLOYMENT, DISABILITY, OR DEATH OF OPTIONEE; TERMINATION FOR "CAUSE", OR RESIGNATION IN VIOLATION OF AN EMPLOYMENT AGREEMENT. All Options granted under the Plan to any Employee Optionee shall terminate and may no longer be exercised if the Employee Optionee ceases, at any time during the period between the grant of the Option and its exercise, to be an employee of the Company; provided, however, that the Committee may alter the termination date of the Option if the Optionee transfers to an affiliate of the Company. Notwithstanding the foregoing, (i) if the Employee Optionee's employment with the Company shall have terminated for any reason (other than involuntary dismissal for "cause" or voluntary resignation in violation of any agreement to remain in the employ of the Company, including, without limitation, any such agreement pursuant to SECTION 15), he may, at any time before the expiration of three months after such termination or before expiration of the Option, whichever shall first occur, exercise the Option (to the extent that the Option was exercisable by him on the date of the termination of his employment); (ii) if the Employee Optionee's employment shall have terminated due to disability (as defined in Section 22(e)(3) of the Code and subject to such proof of disability as the Committee may require), such Option -4- may be exercised by the Employee Optionee (or by his guardian(s), or conservator(s), or other legal representative(s)) before the expiration of twelve months after such termination or before expiration of the Option, whichever shall first occur (to the extent that the Option was exercisable by him on the date of the termination of his employment); (iii) in the event of the death of the Employee Optionee, an Option exercisable by him at the date of his death shall be exercisable by his legal representative(s), legatee(s), or heir(s), or by his beneficiary or beneficiaries so designated by him, as the case may be, within twelve (12) months after his death or before the expiration of the Option, whichever shall first occur (to the extent that the Option was exercisable by him on the date of his death); and (iv) if the Employee Optionee's employment is terminated for "cause" or in violation of any agreement to remain in the employ of the Company, including, without limitation, any such agreement pursuant to Section 14, his Option shall terminate immediately upon termination of employment, and such Option shall be deemed to have been forfeited by the Optionee. For purposes of the Plan, "cause" may include, without limitation, any illegal or improper conduct (1) which injures or impairs the reputation, goodwill, or business of the Company; or (2) which involves the misappropriation of funds of the Company, or the misuse of data, information, or documents acquired in connection with employment by the Company that results in material harm to the Company. A termination for cause may also include any resignation in anticipation of discharge for cause or resignation accepted by the Company in lieu of a formal discharge for cause. 11. MANNER OF OPTION EXERCISE; RIGHTS AND OBLIGATIONS OF OPTIONEES. 11.1 WRITTEN NOTICE OF EXERCISE. An Optionee may elect to exercise an Option in whole or in part, from time to time, subject to the terms and conditions contained in the Plan and in the agreement evidencing such Option, by giving written notice of exercise to the Company at its principal executive office. 11.2 CASH PAYMENT FOR OPTIONED SHARES. If an Option is exercised for cash, such notice shall be accompanied by a cashier's or personal check, or money order, made payable to the Company for the full exercise price of the shares purchased. 11.3 STOCK SWAP FEATURE. At the time of the Option exercise, and subject to the discretion of the Committee to accept payment in cash only, the Optionee may determine whether the total purchase price of the shares to be purchased shall be paid solely in cash or by transfer from the Optionee to the Company of previously acquired shares of Common Stock, or by a combination thereof. If the Optionee elects to pay the total purchase price in whole or in part with previously acquired shares of Common Stock, the value of such shares shall be equal to their Fair Market Value on the date of exercise, determined by the Committee in the same manner used for determining Fair Market Value at the time of grant for purposes of SECTION 8. 11.4 INVESTMENT REPRESENTATION FOR NON-REGISTERED SHARES AND LEGALITY OF ISSUANCE. The receipt of shares of Common Stock upon the exercise of an Option shall be conditioned upon the Optionee (or any other person who exercises the Option on his or her behalf as permitted by SECTION 10.3) providing to the Committee a written representation that, at the time of such exercise, it is the intent of such person(s) to acquire the shares for investment only and not with a view toward distribution. The certificate for unregistered shares issued for investment shall be restricted by the Company as to transfer unless the Company receives an opinion of counsel satisfactory to the Company to the effect that such restriction is not necessary under then pertaining law. The providing of such representation and such restrictions on -5- transfer shall not, however, be required upon any person's receipt of shares of Common Stock under the Plan in the event that, at the time of grant of the Option relating to such receipt or upon such receipt, whichever is the appropriate measure under applicable federal or state securities laws, the shares subject to the Option shall be (i) covered by an effective and current registration statement under the Securities Act of 1933, as amended, and (ii) either qualified or exempt from qualification under applicable state securities laws. The Company shall, however, under no circumstances be required to sell or issue any shares under the Plan if, in the opinion of the Committee, (i) the issuance of such shares would constitute a violation by the Optionee or the Company of any applicable law or regulation of any governmental authority, or (ii) the consent or approval of any governmental body is necessary or desirable as a condition of, or in connection with, the issuance of such shares. 11.5 STOCKHOLDER RIGHTS OF OPTIONEE. Upon exercise, the Optionee (or any other person who exercises the Option on his behalf as permitted by SECTION 10.3) shall be recorded on the books of the Company as the owner of the shares, and the Company shall deliver to such record owner one or more duly issued stock certificates evidencing such ownership. No person shall have any rights as a stockholder with respect to any shares of Common Stock covered by an Option granted pursuant to the Plan until such person shall have become the holder of record of such shares. Except as provided in SECTION 13, no adjustments shall be made for cash dividends or other distributions or other rights as to which there is a record date preceding the date such person becomes the holder of record of such shares. 11.6 HOLDING PERIODS FOR TAX PURPOSES. The Plan does not provide that an Optionee must hold shares of Common Stock acquired under the Plan for any minimum period of time. Optionees are urged to consult with their own tax advisors with respect to the tax consequences to them of their individual participation in the Plan. 12. SUCCESSIVE GRANTS. Successive grants of Options may be made to any Optionee under the Plan. 13. ADJUSTMENTS. (a) If the outstanding Common Stock shall be hereafter increased or decreased, or changed into or exchanged for a different number or kind of shares or other securities of the Company or of another corporation, by reason of a recapitalization, reclassification, reorganization, merger, consolidation, share exchange, or other business combination in which the Company is the surviving parent corporation, stock split-up, combination of shares, or dividend or other distribution payable in capital stock or rights to acquire capital stock, appropriate adjustment shall be made by the Committee in the number and kind of shares for which options may be granted under the Plan. In addition, the Committee shall make appropriate adjustment in the number and kind of shares as to which outstanding and unexercised options shall be exercisable, to the end that the proportionate interest of the holder of the option shall, to the extent practicable, be maintained as before the occurrence of such event. Such adjustment in outstanding options shall be made without change in the total price applicable to the unexercised portion of the option but with a corresponding adjustment in the exercise price per share. -6- (b) In the event of the dissolution or liquidation of the Company, any outstanding and unexercised options shall terminate as of a future date to be fixed by the Committee. (c) In the event of a Reorganization (as hereinafter defined), then, (i) If there is no plan or agreement with respect to the Reorganization ("Reorganization Agreement"), or if the Reorganization Agreement does not specifically provide for the adjustment, change, conversion, or exchange of the outstanding and unexercised options for cash or other property or securities of another corporation, then any outstanding and unexercised options shall terminate as of a future date to be fixed by the Committee; or (ii) If there is a Reorganization Agreement, and the Reorganization Agreement specifically provides for the adjustment, change, conversion, or exchange of the outstanding and unexercised options for cash or other property or securities of another corporation, then the Committee shall adjust the shares under such outstanding and unexercised options, and shall adjust the shares remaining under the Plan which are then available for the issuance of options under the Plan if the Reorganization Agreement makes specific provisions therefor, in a manner not inconsistent with the provisions of the Reorganization Agreement for the adjustment, change, conversion, or exchange of such options and shares. (d) The term "Reorganization" as used in this SECTION 13 shall mean any reorganization, merger, consolidation, share exchange, or other business combination pursuant to which the Company is not the surviving parent corporation after the effective date of the Reorganization, or any sale or lease of all or substantially all of the assets of the Company. Nothing herein shall require the Company to adopt a Reorganization Agreement, or to make provision for the adjustment, change, conversion, or exchange of any options, or the shares subject thereto, in any Reorganization Agreement which it does adopt. (e) The Committee shall provide to each optionee then holding an outstanding and unexercised option not less than 30 calendar days' advanced written notice of any date fixed by the Committee pursuant to this SECTION 13 and of the terms of any Reorganization Agreement providing for the adjustment, change, conversion, or exchange of outstanding and unexercised options. Except as the Committee may otherwise provide, each optionee shall have the right during such period to exercise his option only to the extent that the option was exercisable on the date such notice was provided to the optionee. Any adjustment to any outstanding ISO pursuant to this SECTION 13, if made by reason of a transaction described in Section 424(a) of the Code, shall be made so as to conform to the requirements of that Section and the regulations thereunder. If any other transaction described in Section 424(a) of the Code affects the Common Stock subject to any unexercised ISO theretofore granted under the Plan (hereinafter for purposes of this SECTION 13 referred to as the "old option"), the Board of Directors of the Company or of any surviving or acquiring corporation may take such action as it deems appropriate, in conformity with the requirements of that Code Section and the regulations thereunder, to substitute a new option for the old option, in order to make the new option, as nearly as may be practicable, equivalent to the old option, or to assume the old option. -7- (f) No modification, extension, renewal, or other change in any option granted under the Plan may be made, after the grant of such option, without the optionee's consent, unless the same is permitted by the provisions of the Plan and the option agreement. In the case of an ISO, optionees are hereby advised that certain changes may disqualify the ISO from being considered as such under Section 422 of the Code, or constitute a modification, extension, or renewal of the ISO under Section 424(h) of the Code. (g) All adjustments and determinations under this SECTION 13 shall be made by the Committee in good faith in its sole discretion. 14. CONTINUED EMPLOYMENT. As determined in the sole discretion of the Committee at the time of grant and if so stated in a writing signed by the Company, each Option may have as a condition the requirement of an Employee Optionee to remain in the employ of the Company, or of its affiliates, and to render to it his or her exclusive service, at such compensation as may be determined from time to time by it, for a period not to exceed the term of the Option, except for earlier termination of employment by or with the express written consent of the Company or on account of disability or death. The failure of any Employee Optionee to abide by such agreement as to any Option under the Plan may result in the termination of all of his or her then outstanding Options granted pursuant to the Plan. Neither the creation of the Plan nor the granting of Option(s) under it shall be deemed to create a right in an Employee Optionee to continued employment with the Company, and each such Employee Optionee shall be and shall remain subject to discharge by the Company as though the Plan had never come into existence. 15. TAX WITHHOLDING. The exercise of any Option granted under the Plan is subject to the condition that if at any time the Company shall determine, in its discretion, that the satisfaction of withholding tax or other withholding liabilities under any federal, state or local law is necessary or desirable as a condition of, or in connection with, such exercise or a later lapsing of time or restrictions on or disposition of the shares of Common Stock received upon such exercise, then in such event, the exercise of the Option shall not be effective unless such withholding shall have been effected or obtained in a manner acceptable to the Company. When an Optionee is required to pay to the Company an amount required to be withheld under applicable income tax laws in connection with the exercise of any Option, the Optionee may, subject to the approval of the Committee, which approval shall not have been disapproved at any time after the election is made, satisfy the obligation, in whole or in part, by electing to have the Company withhold shares of Common Stock having a value equal to the amount required to be withheld. The value of the Common Stock withheld pursuant to the election shall be determined by the Committee, in accordance with the criteria set forth in SECTION 8, with reference to the date the amount of tax to be withheld is determined. The Optionee shall pay to the Company in cash any amount required to be withheld that would otherwise result in the withholding of a fractional share. The election by an Optionee who is an officer of the Company within the meaning of Section 16 of the 1934 Act, to be effective, must meet all of the requirements of Section 16 of the 1934 Act. -8- 16. TERM OF PLAN. 16.1 EFFECTIVE DATE. Subject to stockholder approval, the Plan as initially adopted by the Board was to become effective as of November 14, 2000. Stockholder approval of the Plan was obtained at a special meeting of stockholders held on January 16, 2001. The Board amended and restated the Plan by unanimous written consent dated effective as of August 3, 2001. Under SECTION 4 of the Plan and applicable law, stockholder approval for the amendment and restatement was not required. 16.2 TERMINATION DATE. Except as to options granted and outstanding under the Plan prior to such time, the Plan shall terminate at midnight on November 14, 2010, and no Option shall be granted after that time. Options then outstanding may continue to be exercised in accordance with their terms. The Plan may be suspended or terminated at any earlier time by the Board within the limitations set forth in SECTION 4. 17. NON-EXCLUSIVITY OF THE PLAN. Nothing contained in the Plan is intended to amend, modify, or rescind any previously approved compensation plans, programs or options entered into by the Company. This Plan shall be construed to be in addition to and independent of any and all such other arrangements. Neither the adoption of the Plan by the Board nor the submission of the Plan to the stockholders of the Company for approval shall be construed as creating any limitations on the power or authority of the Board to adopt, with or without stockholder approval, such additional or other compensation arrangements as the Board may from time to time deem desirable. 18. GOVERNING LAW. The Plan and all rights and obligations under it shall be construed and enforced in accordance with the laws of the State of Delaware. 19. INFORMATION TO OPTIONEES. Optionees under the Plan who do not otherwise have access to financial statements of the Company will receive the Company's financial statements at least annually. 20. TRANSFERABILITY OF OPTIONS. Options granted under the Plan are nontransferable other than by will, by the laws of descent and distribution, by instrument to an inter vivos or testamentary trust in which the Options are to be passed to beneficiaries upon the death of the trustor (settlor), or by gift to immediate family. The term "immediate family" means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law, and also includes adoptive relationships. -9- EX-10.25 4 microtel_ex10-25.txt EMPLOYMENT AGREEMENT EXHIBIT 10.25 MICROTEL INTERNATIONAL, INC. EMPLOYMENT AGREEMENT -------------------- This agreement is made as of this 2nd day of July, 2001, by and between Microtel International, Inc., a Delaware corporation with offices at 9485 Haven Avenue, Suite 100, Rancho Cucamonga, California, 91730, (the "Employer" or the "Company"), and Randolph D. Foote, who resides at 5675 Via Mariposa, Yorba Linda, California, 92887, (the "Employee"). WITNESSETH ---------- WHEREAS, the Employee desires to be employed by the Employer, and the Employer desires to employ the Employee upon the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the foregoing and of the mutual promises, covenants and agreements hereinafter contained the parties hereto agree as follows: I. EMPLOYMENT 1.1 EMPLOYMENT. Subject to the provisions for termination as hereinafter provided, the terms of this agreement shall begin on the date first written above and shall terminate on July 1, 2004, (the "Employment Period"). 1.2 RENEWAL. Subject to the provisions for termination as hereinafter provided, this agreement shall be automatically renewed for two (2) successive one (1) year terms commencing on July 2, 2004, (the "Renewal Periods") unless, during the following periods, either party to this Agreement shall notify the other party in writing of its desire not to renew this Agreement; provided, however, any action required to be taken with respect to this Employment Agreement by the Employer shall only be taken after the Executive Compensation and Management Development Committee of the Board of Directors of the Employer approves such action. The required notice periods in order to prevent an automatic renewal of this Agreement shall be as follows: Period During Which Notice Of Non-Renewal Must Be Given Renewal Period - - ------------------------- -------------- 5/2/03 to 7/2/03 7/2/04 to 7/2/05 5/2/04 to 7/2/04 7/2/05 to 7/2/06 1.3 DUTIES. Subject to Section 1.4, the Employee hereby promises to perform and discharge well and favorably the duties of Senior Vice President and Chief Financial Officer and to perform services in such additional capacities as may be directed by the Chairman and Chief Executive Officer, and concurred in by the Company's Board of Directors (the "Board") in accordance herewith. As Chief Financial Officer, the Employee's duties shall consist of the usual and customary duties of his position and he shall be subject to the direction and control of the Chairman and Chief Executive Officer and shall at all times have the authority as shall reasonably be required to enable him to discharge such duties in an efficient manner. 1.4 REDESIGNATION. The Chairman and Chief Executive Officer may, in his discretion, with the concurrence of the Board, elect or appoint the Employee to offices or positions other than, or in addition to, Chief Financial Officer (hereinafter the "Redesignation") by providing the Employee with prompt written notice of the Redesignation. If any Redesignation and related addition to and/or reduction of Employee's duties results in a substantial net change in the scope of the Employee's responsibilities, the Employee may elect, in his sole discretion, not to accept such Redesignation and to resign upon providing written notice of his resignation to the Employer not less than thirty (30) days after the Employee has been provided with written notice of the Redesignation. In such event, if such Redesignation occurs during the Employment Period, the Employer shall pay the Employee his annual salary, as provided herein, for one (1) year following the effective date of such resignation or until July 1, 2004, whichever is the longer period. In the event that the Redesignation shall occur at any time after the Employment Period, and during one of the Renewal Periods, the Employer shall pay the Employee his annual salary, as provided herein, for one (1) year following the effective date of such resignation. All sums owing hereunder in the event of a Redesignation and a subsequent resignation by the Employee shall be due and payable within thirty (30) days of the effective date of such resignation. 1.5 OTHER BUSINESS ACTIVITIES. The Employee shall devote his full time, attention and energies to the business of the Company and shall not, so long as he remains in the employ of the Company, be engaged in any other employment or business of substantial nature, whether or not such business activity is pursued for gain and profit, without the written consent of the Company. Nothing contained herein, however, shall be construed as preventing the Employee from (i) making passive investments of his assets in such form or manner as he desires, providing such investments: (a) do not require the Employee to render services in the operations or affairs of the firms, corporations or other entities in which such investments are made, and (b) are not made in any business directly or indirectly competing with the Employer or its subsidiaries or affiliated corporations, if any, unless the stock of such company is listed on a national stock exchange and the Employee owns less than three percent (3%) of the outstanding voting securities, or (ii) becoming a member of the Board of Directors of any other corporation that the Employee desires, provided that the corporation upon whose Board the Employee is a member of is not, in the sole discretion of the Employer's Board of Directors, in competition with the business of the Employer. The Company shall provide the Employee with adequate office and support staff to accomplish the objectives for which he is employed and in order to perform the duties as set forth herein. -2- II. COMPENSATION 2.1 ANNUAL SALARY. The Employer shall pay to the Employee in compensation for Employee's services hereunder, a base salary at an annual rate of $130,000, payable in equal periodic installments in accordance with the customary payroll policy of the Employer. The Employee shall also be eligible to receive merit or promotional increases in accordance with the Employer's annual review, or other general review of its officer compensation. 2.2 EXPENSES. The Employer agrees to reimburse the Employee against his receipts for all reasonable business expenses incurred by him during the Employment Period or Renewal Periods in connection with the performances of his services hereunder. 2.3 BONUSES. The Employer agrees that the Employee will be entitled to participate in any bonus or similar plan approved by the Employer's Board of Directors. 2.4 STOCK OPTIONS AND OTHER INCENTIVE PLANS. The Employee shall continue to be eligible to participate in any Incentive Stock Option or Non-Qualified Stock Option Plan or other incentive plans duly approved by the Board of Directors for implementation within the Company. 2.5 ADDITIONAL BENEFITS. The Employee shall be entitled to the customary and usual medical, insurance, fringe and other benefits made available to the Employer's employees generally. III. TERMINATION 3.1 TERMINATION DUE TO DEATH. If during the Employment Period or Renewals thereof, Employee shall die, this Agreement shall terminate, except that the compensation or other amounts payable hereunder, to or for the benefit of Employee shall be paid for one (1) year following the death of the Employee to such person or persons as Employee may designate by notice to the Employer from time to time or, in the absence of such designation, to his legal representatives. 3.2 TERMINATION DUE TO DISABILITY. If during the Employment Period, or Renewals thereof, Employee shall become physically or mentally disabled, whether totally or partially, so that he is unable substantially to perform his services hereunder (i) for a period of 180 consecutive days, or (ii) for shorter periods aggregating 180 days during any period of eighteen consecutive months, the Employer may at any time after the last day of the 180 consecutive days of disability or the day on which the shorter periods of disability shall have equalled an aggregate of 180 days, by 10 days written notice to Employee (but before Employee has recovered from such disability), terminate this Agreement. Notwithstanding such disability, the Employer shall continue to pay Employee compensation or other amounts payable hereunder, to or for the benefit of Employee up to and including the date one (1) year after the effective date of such termination. -3- 3.3 TERMINATION FOR CAUSE. The Employer may at any time during the Employment Period and any Renewals thereof, by notice, terminate this Agreement and discharge the Employee for cause, whereupon the Employer's obligation to pay any compensation, severance allowance, or other amounts payable hereunder to or for the benefit of Employee shall terminate on the date of such discharge, notwithstanding anything herein contained to the contrary. As used herein, the term "for cause" shall be deemed to mean and include chronic alcoholism; drug addiction; misappropriation of any money or other assets or properties of the Employer or its subsidiaries; wilful violation of specific and lawful written directions from his superior or from the Board of Directors of the Employer; failure or refusal to perform the services required of Employee under this Agreement; wilful disclosure of trade secrets or other confidential information resulting in substantial detriment to the Company as documented by the Employer under oath or affirmation; conviction in a court of competent jurisdiction of any crime involving the funds or assets of the Company including, but not limited to, embezzlement and larceny; any civil or criminal conduct or personal misbehavior which is detrimental to the image, reputation, welfare or security of the Employer where such misconduct or misbehavior and judgment have been documented by the Employer under oath or affirmation; and any other acts or omissions that constitute grounds for cause under the laws of the States of Delaware, California, or Illinois, or such other States wherein the Company may have operations. 3.4 TERMINATION WITHOUT CAUSE. The Employer may terminate this Agreement without cause at any time upon sixty (60) days written notice to the Employee. In the event the Employer does terminate this Agreement without it being "for cause", the Employee, if requested in writing by the Employer, shall continue to render services at full compensation until the effective date of such termination. Thereafter, during the Employment Period, Employee shall be paid his annual salary for one (1) year following the effective date of such termination, or until July 2, 2004, whichever is the longer period. In the event such termination pursuant to this Section 3.4 occurs during any of the Renewal Periods, the Employee shall be paid his Annual Salary through the expiration of the particular Renewal Term to which the Company is obligated under Section 1.2, as well as all other amounts payable hereunder. Termination "without cause" shall include the ceasing of operations due to bankruptcy and/or the general inability of the Employer to meet the Employer's obligations as they become due. 3.5 TERMINATION WITHOUT CAUSE FOLLOWING A CHANGE IN CONTROL. This Agreement may be terminated by Employer, or successor to Employer, upon thirty (30) days written notice to Employee upon the happening of any of the following events: a. Sale by Employer of substantially all of its assets; b. Sale, exchange or other disposition of two-thirds or more of the outstanding capital stock of the Employer; -4- c. Merger or reorganization in which shareholders of the Employer immediately prior to such merger or reorganization receive less than fifty percent (50%) of the outstanding voting shares of the successor corporation. In the event that the Employee's employment is terminated without cause within two years following a change of control, the Employer or successor to Employer shall: a. Pay to Employee, in a lump sum within thirty (30) days from date of termination, or, at Employee's election, in installments, the Employee's Annual Salary and all other amounts payable hereunder for one and one-half (1-1/2) years following the effective date of such termination or until July 2, 2004, whichever is the longer period. b. In the event such termination occurs during any of the Renewal Periods, pay to Employee his Annual Salary to the expiration of that particular Renewal Period, his Annual Salary for a period of one year following the end of such Renewal Period, plus all other amounts payable hereunder. c. Pay to Employee the average of the Annual Executive Bonuses awarded to him in the three years preceding his termination over the same time span and under the same conditions as Annual Salary. d. Pay to Employee any Executive Bonus awarded but not yet paid. e. Continue Employee's coverage in all benefit programs in which he was participating on the date of his termination of employment until the earlier of (1) the end of the Employment Period or Renewal Period, or (2) the date he receives equivalent coverage and benefits under a subsequent employer. IV. COVENANTS NOT TO COMPETE 4.1 The Employee agrees that (i) during the Employment Period and any Renewals thereof, or in the event of a termination pursuant to Section 3.3 and, thereafter for a period of one (1) year or (ii) in the event of a termination pursuant to Sections 3.4 or 3.5 and for the period from the effective date of such termination until the expiration of a period of twelve months following his resignation upon Redesignation for the Interim Period as defined in Section 1.4, he will not act as a principal, agent, employee, employer, consultant, control person, stockholder, director or co-partner of any person, firm, business entity other than the Employer, or in any individual representative capacity whatsoever, directly or indirectly, without the express consent of the Employer: (a) engage or participate or be employed in any business whose products or services are competitive with those of the Employer in the world; provided, however, that the ownership by the Employee of not more than three percent (3%) of a corporation or similar business venture shall not be deemed to be a violation of this covenant as long as the Employee does not become a controlling person or actively involved in the management of such corporation or business venture; -5- (b) approach, solicit business from, or otherwise do business or deal with any customer of the Employer in connection with any product or service competitive with any provided by the Employer; provided, however, the Employee may approach, solicit business from, or otherwise do business or deal with any subsidiary or division of any customer of the Employer provided that such customer's division or subsidiary does not provide a product or service competitive with any provided by the Employer; (c) approach, counsel, solicit, assist to solicit or attempt to induce any person who is then in the employ of the Employer, its affiliates or subsidiaries to leave the employ of the Employer, or employ, or attempt to employ on behalf of any person or entity any such person or persons who at any time during the preceding six months was in the employ of the Employer; (d) aid or counsel any other person, firm, corporation or business entity to do any of the above. For purposes of this Section 4.1, the term "customer" shall mean (i) any person or entity who was a customer of the Employer at any time during the last two months of the Employee's employment by the Employer; (ii) any prospective customer to whom the Employer had made a presentation, or similar offering of product(s) during the last year of the Employee's employment by the Employer. The Employee acknowledges (i) that his position with the Employer requires performance of services which are special, unique, extraordinary and intellectual in character and places him in a position of confidence and trust with the customers and employees of the Employer, through which, among other things, he shall obtain knowledge of such organization's "technical information" and "know how" and become acquainted with their customers, in which matters such organizations have substantial proprietary interests, (ii) that the restrictive covenants set forth above are necessary in order to protect and maintain such proprietary interests and other legitimate business interests of the Company, and (iii) that the Employer would not have entered into this agreement unless such covenants were included herein. The Employee also acknowledges that the business of the Employer presently extends throughout the world, that he has personally supervised or engaged in such business on behalf of the Employer, or will do so pursuant to the terms of this Agreement, and, accordingly, it is reasonable that the restrictive covenants set forth above are not more limited as to geographic area than is set forth therein. The Employee also represents to the Employer that the enforcement of such covenants will not prevent the Employee from earning a livelihood. If any of the provisions of this Section, or any part thereof, is hereinafter construed to be invalid or unenforceable, the same shall not affect the remainder of such provision or provisions, which shall be given full effect, without regard to the invalid portions. If any of the provisions of this Section, or any part thereof, is held to be unenforceable because of the duration of such provision, the area covered thereby or the type of conduct restricted therein, the parties agree that the court making such determination shall have the power to modify the duration, geographic area and/or other terms of such provision and, as so modified, said provision shall then be enforceable. -6- In the event that the courts of any one or more jurisdictions shall hold such provisions wholly or partially unenforceable by reason of the scope thereof or otherwise, it is the intention of the parties hereto that such determination not bar or in any way affect the Employer's right to the relief provided for herein in the courts of any other jurisdictions as to breaches or threatened breaches of such provisions in such other jurisdictions, the above provisions as they relate to each jurisdiction being, for this purpose, severable into diverse and independent covenants. V. CONFIDENTIAL INFORMATION 5.1 DISCLOSURE OF INFORMATION. The Employee recognizes and acknowledges that the financial information, trade secrets, technical information, and confidential or proprietary information of the Employer, including such information as may exist from time to time, and information as to the identity of customers or prospective customers of the Employer and other similar items, are valuable, special and unique assets of the Employer's business, access to and knowledge of which are essential to the performance of the duties of the Employee hereunder. The Employee will not, during or after the term hereof, in whole or in part, disclose such secrets or confidential, technical or proprietary information to any person, firm, corporation, association or other entity for any reason or purpose whatsoever, nor shall the Employee make use of any such property or information for his own purpose or for the benefit of any person, firm, corporation or other entity (except the Employer) under any circumstances, during or after the term hereof, provided that after the term hereof these restrictions shall not apply to such secrets or information which are then in the public domain (provided that the Employee was not responsible, directly or indirectly, for such secrets or information entering the public domain without the consent of the Employer). 5.2 OWNERSHIP OF INVENTIONS. All of the Employee's right, title and interest in all developments or improvements devised or conceived by the Employee, alone or with others, during his working hours, as well as in all developments or improvements devised or conceived by the Employee, alone or with others, which relate to any business in which the Employer is then engaged or contemplating engaging in, regardless of when devised or conceived, is the exclusive property of the Employer. The Employee shall promptly disclose all such developments and improvements to the Employer. The Employee shall not use or disclose any such developments or improvements, other than in furtherance of the Employer's business, without the Employer's prior written consent. 5.3 RETURN MEMORANDA. Employee hereby agrees to deliver promptly to the Employer on termination of his employment, or at any other time the Employer may so request, all memoranda, notes, records, reports, manuals, drawings and other documents (and all copies thereof) relating to the Employer's business and all property associated therewith, which he may then possess or have under his control. -7- VI. INJUNCTIVE RELIEF 6.1 The Employee acknowledges that the remedy at law for any breach or threatened breach of Articles IV and V hereof by the Employee will be inadequate, and that, accordingly, the Employer shall, in addition to all other available remedies (including without limitation , seeking such damages as it can be shown it has sustained by reason of such breach), be entitled to injunctive relief without being required to post bond or other security, and without having to prove the inadequacy of the available remedies at law. The Employee agrees not to plead or defend on grounds of adequate remedy at law or any similar defense in any action by the Employer against him, or injunctive relief, or for specific performance of any of his obligations pursuant to Articles IV and V hereof. Nothing herein shall be construed as prohibiting the Employer from pursuing any other remedies for such breach or threatened breach. VII. MISCELLANEOUS PROVISIONS 7.1 NOTICES AND COMMUNICATIONS. All notices and communications hereunder shall be in writing and shall be hand-delivered or sent postage prepaid by registered or certified mail, return receipt requested, to the address first above written or to such other address of which notice shall have been given in the manner herein provided. 7.2 ENTIRE AGREEMENT. All prior or contemporaneous agreements and understandings between the parties with respect to the subject matter of this Agreement are superseded by this Agreement, and this Agreement constitutes the entire understanding between the parties. This Agreement may not be modified, amended, changed or discharged except by a writing signed by both parties hereto, and then only to the extent therein set forth. 7.3 ASSIGNMENT. This Agreement may be assigned by the Employer and shall be binding upon and inure to the benefit of the Employer's assigns and successors. The services to be performed by the Employee pursuant to this Agreement may not be assigned by the Employee. 7.4 WAIVER. No waiver of any breach of this Agreement or of any objection to any act or omission connected herewith shall be implied or claimed by any party, or be deemed to constitute a consent to any continuation of such breach, act or omission, unless in a writing signed by the party against whom enforcement of such waiver or consent is sought, and then only to the extent therein set forth. 7.5 INDEMNIFICATION. The Employer will indemnify Employee, to the maximum extent permitted by applicable law and the By-laws of the Company, against all costs, charges and expenses incurred or sustained by him in connection with any action, suit or other reason of his being an officer, director or employee of the Employer or any subsidiary or affiliate thereof. -8- 7.6 SECTION HEADINGS. The Section headings of this Agreement are solely for the purpose of convenience and shall neither be deemed a part of this Agreement nor used in any interpretation thereof. 7.7 GOVERNING LAW. This Agreement and the relationship of the parties shall be governed by, and construed in accordance with, the laws of the state of Delaware, or until such time as the Company's state of incorporation may be changed to another state within the United States, at which point the relationship of the parties would then be governed by, and construed in accordance with, the laws of the new state of incorporation. IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement as of the day and year first above written. MICROTEL INTERNATIONAL, INC. dated: 7/02/01 By: /s/ Carmine T. Oliva ------------------------------------------ Carmine T. Oliva, Chairman, President and Chief Executive Officer dated: 6/19/01 By: /s/ Robert B. Runyon ------------------------------------------ Robert B. Runyon, Chairman, Executive Compensation and Management Develop- ment Committee, Board of Directors dated: 7/02/01 By: /s/ Randolph D. Foote ------------------------------------------ Randolph D. Foote, Employee -9- EX-10.26 5 microtel_ex10-26.txt EMPLOYMENT AGREEMENT EXHIBIT 10.26 MICROTEL INTERNATIONAL, INC. EMPLOYMENT AGREEMENT -------------------- This agreement is made as of this 2nd day of July, 2001, by and between Microtel International, Inc., a Delaware corporation with offices at 9485 Haven Avenue, Rancho Cucamonga, California, 91739, (the "Employer" or the "Company"), and Graham Jefferies, who resides at 7 Shepherds Close, Fen Ditton, Cambs, CB5 8XJ, United Kingdom, (the "Employee"). WITNESSETH ---------- WHEREAS, the Employee desires to be employed by the Employer, and the Employer desires to employ the Employee upon the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the foregoing and of the mutual promises, covenants and agreements hereinafter contained the parties hereto agree as follows: I. EMPLOYMENT 1.1 EMPLOYMENT. Subject to the provisions for termination as hereinafter provided, the terms of this agreement shall begin on the date first written above and shall terminate on July 1, 2004 (the "Employment Period"). 1.2 RENEWAL. Subject to the provisions for termination as hereinafter provided, this agreement shall be automatically renewed for two (2) successive one (1) year terms commencing on July 2, 2004, (the "Renewal Periods") unless, during the following periods, either party to this Agreement shall notify the other party in writing of its desire not to renew this Agreement; provided, however, any action required to be taken with respect to this Employment Agreement by the Employer shall only be taken after the Executive Compensation and Management Development Committee of the Board of Directors of the Employer approves such action. The required notice periods in order to prevent an automatic renewal of this Agreement shall be as follows: Period During Which Notice Of Non-Renewal Must Be Given Renewal Period - - ------------------------- -------------- 5/2/03 to 7/2/03 7/2/04 to 7/2/05 5/2/04 to 7/2/04 7/2/05 to 7/2/06 1.3 DUTIES. Subject to Section 1.4, the Employee hereby promises to perform and discharge well and favorably the duties of Executive Vice President and Chief Operating Officer, Telecom Group, and, concurrently, Managing Director of XCEL Corporation, Ltd., headquartered in the United Kingdom; and to perform services in such additional capacities as may be directed by the Chairman and Chief Executive Officer, MicroTel International, Inc., and concurred in by the Company's Board of Directors (the "Board") in accordance herewith. As Executive Vice President and Managing Director, the Employee's duties shall consist of the usual and customary duties of his position and he shall be subject to the direction and control of the Chairman and Chief Executive Officer, and shall at all times have the authority as shall reasonably be required to enable him to discharge such duties in an efficient manner. 1.4 REDESIGNATION. The Chairman and Chief Executive Officer may, in his discretion, with the concurrence of the Board, elect or appoint the Employee to offices or positions other than, or in addition to, Managing Director (hereinafter the "Redesignation") by providing the Employee with prompt written notice of the Redesignation. If any Redesignation and related addition to and/or reduction of Employee's duties results in a substantial net change in the scope of the Employee's responsibilities, the Employee may elect, in his sole discretion, not to accept such Redesignation and to resign upon providing written notice of his resignation to the Employer not less than thirty (30) days after the Employee has been provided with written notice of the Redesignation. In such event, if such Redesignation occurs during the Employment Period, the Employer shall pay the Employee his annual salary, as provided herein, for one (1) year following the effective date of such resignation or until July 1, 2004, whichever is the longer period. In the event that the Redesignation shall occur at any time after the Employment Period, and during one of the Renewal Periods, the Employer shall pay the Employee his annual salary, as provided herein, for one (1) year following the effective date of such resignation. All sums owing hereunder in the event of a Redesignation and a subsequent resignation by the Employee shall be due and payable within thirty (30) days of the effective date of such resignation. 1.5 OTHER BUSINESS ACTIVITIES. The Employee shall devote his full time, attention and energies to the business of the Company and shall not, so long as he remains in the employ of the Company, be engaged in any other employment or business of substantial nature, whether or not such business activity is pursued for gain and profit, without the written consent of the Company. Nothing contained herein, however, shall be construed as preventing the Employee from (i) making passive investments of his assets in such form or manner as he desires, providing such investments: (a) do not require the Employee to render services in the operations or affairs of the firms, corporations or other entities in which such investments are made, and (b) are not made in any business directly or indirectly competing with the Employer or its subsidiaries or affiliated corporations, if any, unless the stock of such company is listed on a national stock exchange and the Employee owns less than three percent (3%) of the outstanding voting securities, or (ii) becoming a member of the Board of Directors of any other corporation that the Employee desires, provided that the corporation upon whose Board the Employee is a member of is not, in the sole discretion of the Employer's Board of Directors, in competition with the business of the Employer. The Company shall provide the Employee with adequate office and support staff to accomplish the objectives for which he is employed and in order to perform the duties as set forth herein. -2- II. COMPENSATION 2.1 ANNUAL SALARY. The Employer shall pay to the Employee in compensation for Employee's services hereunder, a base salary at an annual rate of 100,000 English pounds in equal periodic installments in accordance with the customary payroll policy of the Employer. The Employee shall also be eligible to receive merit or promotional increases in accordance with the Employer's annual review, or other general review of its officer compensation. 2.2 EXPENSES. The Employer agrees to reimburse the Employee against his receipts for all reasonable business expenses incurred by him during the Employment Period or Renewal Periods in connection with the performances of his services hereunder. 2.3 BONUSES. The Employer agrees that the Employee will be entitled to participate in any bonus or similar plan approved by the Employer's Board of Directors. 2.4 STOCK OPTIONS AND OTHER INCENTIVE PLANS. The Employee shall continue to be eligible to participate in any Incentive Stock Option or Non-Qualified Stock Option Plan or other incentive plans duly approved by the Board of Directors for implementation within the Company. 2.5 ADDITIONAL BENEFITS. The Employee shall be entitled to the customary and usual pension, vacation, life and medical insurance (including Permanent Health Insurance - PHI) car benefits and other fringe benefits made available to the Employer's employees generally, and specifically within the United Kingdom. III. TERMINATION 3.1 TERMINATION DUE TO DEATH. If during the Employment Period or Renewals thereof, Employee shall die, this Agreement shall terminate, except that the compensation or other amounts payable hereunder, to or for the benefit of Employee shall be paid for one (1) year following the death of the Employee to such person or persons as Employee may designate by notice to the Employer from time to time or, in the absence of such designation, to his legal representatives. 3.2 TERMINATION DUE TO DISABILITY. If during the Employment Period, or Renewals thereof, Employee shall become physically or mentally disabled, whether totally or partially, so that he is unable substantially to perform his services hereunder (i) for a period of 180 consecutive days, or (ii) for shorter periods aggregating 180 days during any period of eighteen consecutive months, the Employer may at any time after the last day of the 180 consecutive days of disability or the day on which the shorter periods of disability shall have equalled an aggregate of 180 days, by 10 days written notice to Employee (but before Employee has recovered from such disability), terminate this Agreement. However, after the six month disability entitlement period has passed, Employee will continue to receive any benefits due under the local PHI scheme, as defined and regulated by that scheme. Notwithstanding such disability, the Employer shall continue to pay Employee compensation or other amounts payable hereunder, to or for the benefit of Employee up to and including the date one (1) year after the effective date of such termination. -3- 3.3 TERMINATION FOR CAUSE. The Employer may at any time during the Employment Period and any Renewals thereof, by notice, terminate this Agreement and discharge the Employee for cause, whereupon the Employer's obligation to pay any compensation, severance allowance, or other amounts payable hereunder to or for the benefit of Employee shall terminate on the date of such discharge, notwithstanding anything herein contained to the contrary. As used herein, the term "for cause" shall be deemed to mean and include chronic alcoholism; drug addiction; misappropriation of any money or other assets or properties of the Employer or its subsidiaries; wilful violation of specific and lawful written directions from his superiors or from the Board of Directors of the Employer; failure or refusal to perform the services required of Employee under this Agreement; wilful disclosure of trade secrets or other confidential information resulting in substantial detriment to the Company as documented by the Employer under oath or affirmation; conviction in a court of competent jurisdiction of any crime involving the funds or assets of the Company including, but not limited to, embezzlement and larceny; any civil or criminal conduct or personal misbehavior which is detrimental to the image, reputation, welfare or security of the Employer where such misconduct or misbehavior and judgment have been documented by the Employer under oath or affirmation; and any other acts or omissions that constitute grounds for cause under the laws of the States of Delaware, California, or Illinois, or such other States wherein the Company may have operations. 3.4 TERMINATION WITHOUT CAUSE. The Employer may terminate this Agreement without cause at any time upon sixty (60) days written notice to the Employee. In the event the Employer does terminate this Agreement without it being "for cause", the Employee, if requested in writing by the Employer, shall continue to render services at full compensation until the effective date of such termination. Thereafter, during the Employment Period, Employee shall be paid his annual salary for one (1) year following the effective date of such termination, or until July 2, 2004, whichever is the longer period. In the event such termination pursuant to this Section 3.4 occurs during any of the Renewal Periods, the Employee shall be paid his Annual Salary through the expiration of the particular Renewal Term to which the Company is obligated under Section 1.2, plus one year, as well as all other amounts payable hereunder. Termination "without cause" shall include the ceasing of operations due to bankruptcy and/or the general inability of the Employer to meet the Employer's obligations as they become due. 3.5 TERMINATION WITHOUT CAUSE FOLLOWING A CHANGE IN CONTROL. This Agreement may be terminated by Employer, or successor to Employer, upon thirty (30) days written notice to Employee upon the happening of any of the following events: a. Sale by Employer of substantially all of its assets; -4- b. Sale, exchange or other disposition of two-thirds or more of the outstanding capital stock of the Employer; c. Merger or reorganization in which shareholders of the Employer immediately prior to such merger or reorganization receive less than fifty percent (50%) of the outstanding voting shares of the successor corporation. In the event that the Employee's employment is terminated without cause within two years following a change of control, the Employer or successor to Employer shall: a. Pay to Employee, in a lump sum within thirty (30) days from date of termination, or, at Employee's election, in installments, the Employee's Annual Salary and all other amounts payable hereunder for one and one-half (1-1/2) years following the effective date of such termination or until July 2, 2004, whichever is the longer period. b. In the event such termination occurs during any of the Renewal Periods, pay to Employee his Annual Salary to the expiration of that particular Renewal Period, his Annual Salary for a period of one year following the end of such Renewal Period, plus all other amounts payable hereunder. c. Pay to Employee the average of the Annual Executive Bonuses awarded to him in the three years preceding his termination over the same time span and under the same conditions as Annual Salary. d. Pay to Employee any Executive Bonus awarded but not yet paid. e. Continue Employee's coverage in all benefit programs in which he was participating on the date of his termination of employment until the earlier of (1) the end of the Employment Period or Renewal Period, or (2) the date he receives equivalent coverage and benefits under plans and programs of a subsequent employer. IV. COVENANTS NOT TO COMPETE 4.1 The Employee agrees that (i) during the Employment Period and any Renewals thereof, or in the event of a termination pursuant to Section 3.3 and, thereafter for a period of two (2) years or (ii) in the event of a termination pursuant to Sections 3.4 or 3.5 and for the period from the effective date of such termination until the expiration of a period of twelve months following his resignation upon Redesignation for the Interim Period as defined in Section 1.4, he will not act as a principal, agent, employee, employer, consultant, control person, stockholder, director or co-partner of any person, firm, business entity other than the Employer, or in any individual representative capacity whatsoever, directly or indirectly, without the express consent of the Employer: (a) engage or participate or be employed in any business whose products or services are competitive with those of the Employer in the world; provided, however, that the ownership by the Employee of not more than three percent (3%) of a corporation or similar business venture shall not be deemed to be a violation of this covenant as long as the Employee does not become a controlling person or actively involved in the management of such corporation or business venture; -5- (b) approach, solicit business from, or otherwise do business or deal with any customer of the Employer in connection with any product or service competitive with any provided by the Employer; provided, however, the Employee may approach, solicit business from, or otherwise do business or deal with any subsidiary or division of any customer of the Employer provided that such customer's division or subsidiary does not provide a product or service competitive with any provided by the Employer; (c) approach, counsel, solicit, assist to solicit or attempt to induce any person who is then in the employ of the Employer, its affiliates or subsidiaries to leave the employ of the Employer, or employ, or attempt to employ on behalf of any person or entity any such person or persons who at any time during the preceding six months was in the employ of the Employer; (d) aid or counsel any other person, firm, corporation or business entity to do any of the above. For purposes of this Section 4.1, the term "customer" shall mean (i) any person or entity who was a customer of the Employer at any time during the last two months of the Employee's employment by the Employer; (ii) any prospective customer to whom the Employer had made a presentation, or similar offering of product(s) during the last year of the Employee's employment by the Employer. The Employee acknowledges (i) that his position with the Employer requires performance of services which are special, unique, extraordinary and intellectual in character and places him in a position of confidence and trust with the customers and employees of the Employer, through which, among other things, he shall obtain knowledge of such organization's "technical information" and "know how" and become acquainted with their customers, in which matters such organizations have substantial proprietary interests, (ii) that the restrictive covenants set forth above are necessary in order to protect and maintain such proprietary interests and other legitimate business interests of the Company, and (iii) that the Employer would not have entered into this agreement unless such covenants were included herein. The Employee also acknowledges that the business of the Employer presently extends throughout the world, that he has personally supervised or engaged in such business on behalf of the Employer, or will do so pursuant to the terms of this Agreement, and, accordingly, it is reasonable that the restrictive covenants set forth above are not more limited as to geographic area than is set forth therein. The Employee also represents to the Employer that the enforcement of such covenants will not prevent the Employee from earning a livelihood. -6- If any of the provisions of this Section, or any part thereof, is hereinafter construed to be invalid or unenforceable, the same shall not affect the remainder of such provision or provisions, which shall be given full effect, without regard to the invalid portions. If any of the provisions of this Section, or any part thereof, is held to be unenforceable because of the duration of such provision, the area covered thereby or the type of conduct restricted therein, the parties agree that the court making such determination shall have the power to modify the duration, geographic area and/or other terms of such provision and, as so modified, said provision shall then be enforceable. In the event that the courts of any one or more jurisdictions shall hold such provisions wholly or partially unenforceable by reason of the scope thereof or otherwise, it is the intention of the parties hereto that such determination not bar or in any way affect the Employer's right to the relief provided for herein in the courts of any other jurisdictions as to breaches or threatened breaches of such provisions in such other jurisdictions, the above provisions as they relate to each jurisdiction being, for this purpose, severable into diverse and independent covenants. V. CONFIDENTIAL INFORMATION 5.1 DISCLOSURE OF INFORMATION. The Employee recognizes and acknowledges that the financial information, trade secrets, technical information, and confidential or proprietary information of the Employer, including such information as may exist from time to time, and information as to the identity of customers or prospective customers of the Employer and other similar items, are valuable, special and unique assets of the Employer's business, access to and knowledge of which are essential to the performance of the duties of the Employee hereunder. The Employee will not, during or after the term hereof, in whole or in part, disclose such secrets or confidential, technical or proprietary information to any person, firm, corporation, association or other entity for any reason or purpose whatsoever, nor shall the Employee make use of any such property or information for his own purpose or for the benefit of any person, firm, corporation or other entity (except the Employer) under any circumstances, during or after the term hereof, provided that after the term hereof these restrictions shall not apply to such secrets or information which are then in the public domain (provided that the Employee was not responsible, directly or indirectly, for such secrets or information entering the public domain without the consent of the Employer). 5.2 OWNERSHIP OF INVENTIONS. All of the Employee's right, title and interest in all developments or improvements devised or conceived by the Employee, alone or with others, during his working hours, as well as in all developments or improvements devised or conceived by the Employee, alone or with others, which relate to any business in which the Employer is then engaged or contemplating engaging in, regardless of when devised or conceived, is the exclusive property of the Employer. The Employee shall promptly disclose all such developments and improvements to the Employer. The Employee shall not use or disclose any such developments or improvements, other than in furtherance of the Employer's business, without the Employer's prior written consent 5.3 RETURN MEMORANDA. Employee hereby agrees to deliver promptly to the Employer on termination of his employment, or at any other time the Employer may so request, all memoranda, notes, records, reports, manuals, drawings and other documents (and all copies thereof) relating to the Employer's business and all property associated therewith, which he may then possess or have under his control. -7- VI. INJUNCTIVE RELIEF 6.1 The Employee acknowledges that the remedy at law for any breach or threatened breach of Articles IV and V hereof by the Employee will be inadequate, and that, accordingly, the Employer shall, in addition to all other available remedies (including without limitation , seeking such damages as it can be shown it has sustained by reason of such breach), be entitled to injunctive relief without being required to post bond or other security, and without having to prove the inadequacy of the available remedies at law. The Employee agrees not to plead or defend on grounds of adequate remedy at law or any similar defense in any action by the Employer against him, or injunctive relief, or for specific performance of any of his obligations pursuant to Articles IV and V hereof. Nothing herein shall be construed as prohibiting the Employer from pursuing any other remedies for such breach or threatened breach. VII. MISCELLANEOUS PROVISIONS 7.1 NOTICES AND COMMUNICATIONS. All notices and communications hereunder shall be in writing and shall be hand-delivered or sent postage prepaid by registered or certified mail, return receipt requested, to the address first above written or to such other address of which notice shall have been given in the manner herein provided. 7.2 ENTIRE AGREEMENT. All prior or contemporaneous agreements and understandings between the parties with respect to the subject matter of this Agreement are superseded by this Agreement, and this Agreement constitutes the entire understanding between the parties. This Agreement may not be modified, amended, changed or discharged except by a writing signed by both parties hereto, and then only to the extent therein set forth. 7.3 ASSIGNMENT. This Agreement may be assigned by the Employer and shall be binding upon and inure to the benefit of the Employer's assigns and successors. The services to be performed by the Employee pursuant to this Agreement may not be assigned by the Employee. 7.4 WAIVER. No waiver of any breach of this Agreement or of any objection to any act or omission connected herewith shall be implied or claimed by any party, or be deemed to constitute a consent to any continuation of such breach, act or omission, unless in writing signed by the party against whom enforcement of such waiver or consent is sought, and then only to the extent therein set forth. 7.5 INDEMNIFICATION. The Employer will indemnify Employee, to the maximum extent permitted by applicable law and the By-laws of the Company, against all costs, charges and expenses incurred or sustained by him in connection with any action, suit or other reason of his being an officer, director or employee of the Employer or any subsidiary or affiliate thereof. -8- 7.6 SECTION HEADINGS. The Section headings of this Agreement are solely for the purpose of convenience and shall neither be deemed a part of this Agreement nor used in any interpretation thereof. 7.7 GOVERNING LAW. This Agreement and the relationship of the parties shall be governed by, and construed in accordance with, the laws of the state of Delaware, or until such time as the Company's state of incorporation may be changed to another state within the United States, at which point the relationship of the parties would then be governed by, and construed in accordance with, the laws of the new state of incorporation. IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement as of the day and year first above written. MICROTEL INTERNATIONAL, INC. dated: 7/02/01 By: /s/ Carmine T. Oliva -------------------------------------- Carmine T. Oliva, Chairman, President and Chief Executive Officer dated: 6/19/01 By: /s/ Robert B. Runyon -------------------------------------- Robert B. Runyon, Chairman, Executive Compensation and Management Develop- ment Committee, Board of Directors dated: 7/28/01 By: /s/ Graham Jefferies -------------------------------------- Graham Jefferies, Employee -9- -----END PRIVACY-ENHANCED MESSAGE-----