<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Illuminet Holdings, Inc.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box)
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction
applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
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<PAGE> 2
[ILLUMINET LOGO]
April 7, 2000
Dear Stockholder:
We cordially invite you to attend our 2000 Annual Meeting of Stockholders,
which will be held on Friday, May 5, 2000 at 10:00 a.m., CDT, at Illuminet's
facility at 7400 West 129th Street, Overland Park, Kansas 66213-2633. You will
find a map with directions to the meeting on the outside back cover of the Proxy
Statement.
Details of the business to be conducted at the Annual Meeting are given in
the attached Notice of Annual Meeting and Proxy Statement.
Your vote is important regardless of the number of shares you own.
Accordingly, we urge you to complete, sign, date and return your proxy card
promptly in the enclosed postage-paid envelope. The fact that you have returned
your proxy in advance will assure representation of your shares but will in no
way affect your right to vote in person should you attend the meeting.
We look forward to seeing you at the Annual Meeting.
Very truly yours,
/s/ Roger H. Moore
Roger H. Moore
President & CEO
YOUR VOTE IS IMPORTANT
In order to assure representation of your shares at the meeting, please
complete, sign, and date the enclosed proxy card as promptly as possible and
return it in the enclosed postage-paid envelope. Any stockholder attending the
Annual Meeting may personally vote on all matters that are considered, in which
event the signed and mailed proxy will be revoked.
<PAGE> 3
ILLUMINET HOLDINGS, INC.
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
------------------------
MAY 5, 2000
To the Stockholders of Illuminet Holdings, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders ("Annual
Meeting") of Illuminet Holdings, Inc., a Delaware Corporation ("Company"), will
be held on May 5, 2000 at 10:00 a.m., CDT, at the Company's office at 7400 West
129th Street, Overland Park, Kansas 66213-2633 for the following purposes:
<TABLE>
<C> <S>
I. To elect two directors;
II. To approve the Company's Employee Stock Purchase Plan; and
III. To transact such other business as may properly come before
the meeting or any adjournment or postponement thereof.
</TABLE>
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
THE BOARD OF DIRECTORS RECOMMENDS A "YES" VOTE ON ALL PROPOSALS.
The Board of Directors has fixed the close of business on March 24, 2000 as
the record date for the determination of stockholders entitled to notice of and
to vote at this Annual Meeting and at any adjournment or postponement thereof.
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. WHETHER OR
NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN THE
ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR REPRESENTATION AT
THE MEETING. A POSTAGE-PAID ENVELOPE IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU
HAVE GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING.
By Order of the Board of Directors
/s/ Daniel E. Weiss
Daniel E. Weiss
Secretary
Olympia, Washington
April 7, 2000
<PAGE> 4
ILLUMINET HOLDINGS, INC.
------------------------
PROXY STATEMENT
------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
This Proxy Statement is being furnished in connection with the solicitation
of proxies by the Board of Directors of Illuminet Holdings, Inc., a Delaware
corporation ("Company"), for use at the Annual Meeting of Stockholders of the
Company ("Annual Meeting") scheduled to be held Friday, May 5, 2000 at 10:00
a.m. CDT, at the Company's offices at 7400 West 129th Street, Overland Park,
Kansas 66213-2633, and any adjournment or postponement thereof. This proxy
statement and the enclosed proxy card were first sent to all stockholders of the
Company entitled to vote on April 7, 2000.
VOTING RIGHTS AND OUTSTANDING SHARES
Only stockholders of record at the close of business on March 24, 2000 will
be entitled to vote at the Annual Meeting. At the close of business on March 24,
2000, there were 4,485,000 outstanding shares of the Company's common stock, par
value $.01 per share ("Common Stock") and 6,344,134 outstanding shares of the
Company's Class A common stock, par value $.01 per share ("Class A Common
Stock"). Each share of Common Stock outstanding on the record date is entitled
to one vote. Each share of Class A Common Stock outstanding on the record date
is entitled to four votes. Shares of Common Stock and shares of Class A Common
Stock vote together as one group. Approval of Proposal II requires the
affirmative vote of a majority of the shares of Common Stock and Class A Common
Stock, voting as one group, represented in person or by proxy at the meeting.
Thus abstentions and broker non-votes (i.e. shares present in person or by proxy
but for which no voting authority has been given by the beneficial holder) will
count as votes against Proposal II. Because directors are elected by a plurality
of the votes cast, abstentions and broker non-votes will not affect the outcome
of the election of directors.
On March 24, 2000, the closing sale price reported on The Nasdaq Stock
Market for a share of Common Stock was $66.94. The shares of Class A Common
Stock are not publicly traded.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by (i) filing
with the Company, at or before the taking of the vote at the Annual Meeting, a
written notice of revocation bearing a later date than the proxy, (ii) duly
executing a subsequent proxy relating to the same shares and delivering it to
the Company before the Annual Meeting, or (iii) attending the Annual Meeting and
voting in person (although attendance at the Annual Meeting will not in and of
itself constitute a revocation of a proxy). Any written notice of revocation or
subsequent proxy should be sent so as to be delivered, at or before the taking
of the vote at the Annual Meeting, to the Company's Secretary, addressed as
follows: Attention: Daniel E. Weiss, Secretary, Illuminet Holdings, Inc., P.O.
Box 2909, Olympia, WA 98507.
SOLICITATION
The Company will bear all expenses of this solicitation, including the cost
of preparing and mailing this proxy statement. In addition to solicitation by
use of mails, proxies may be solicited by directors, officers and employees of
the Company in person or by telephone, telegram or other means of communication.
Such directors, officers and employees will not be additionally compensated, but
may be reimbursed for out-of-pocket expenses in connection with such
solicitation.
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STOCKHOLDER PROPOSALS
Pursuant to the regulations of the Securities and Exchange Commission
("SEC"), if a stockholder has a proposal to be considered at the Company's 2001
Annual Meeting of Stockholders, the proposal must be received by the Company no
later than February 20, 2001. If the stockholder proposal is sought to be
included in the Company's proxy statement and proxy relating to that meeting,
the proposal must comply with SEC rules and be received by the Company no later
than December 7, 2000.
CERTAIN INFORMATION CONCERNING THE BOARD OF DIRECTORS
The Board of Directors is classified into three classes, each holding three
year terms (designated Class I, II, and III). There are currently three
directors in Class I, with terms expiring at the 2000 Annual Meeting, three
directors in Class II, with terms expiring at the 2001 Annual Meeting, and four
directors in Class III, with terms expiring at the 2002 Annual Meeting. Mr.
Kenneth Lein and Mr. G. I. Ross, two of the directors who are currently in Class
I, the Class up for nomination, are retiring and will no longer serve on the
Board of Directors. The Board of Directors has determined to reduce the number
of directors to eight, effective with this Annual Meeting. Accordingly, in order
to make the number of directors in each class as nearly equal as possible, as
required by Delaware law, Mr. Judy is being removed from Class III, and is being
renominated as a member of Class I, to be elected at this Annual Meeting. The
following information is furnished for each of the two persons being nominated
for election as a Class I director to a new three-year term ("Nominee") and for
each person who is continuing as a Class II or Class III director of the Company
("Incumbent").
The directors of the Company are as follows:
MR. ROGER H. MOORE, age 58, (Nominee -- Class I term expiring in 2003) has
been President and Chief Executive Officer since December 1995 and a member of
the Board of Directors since July 1998. Prior to that, Mr. Moore served as vice
president of major accounts of Northern Telecom from 1994 to 1995. He was
president of Northern Telecom Japan from 1991 to 1994, and from 1989 to 1991, he
was vice president of Northern Telecom's Western Region. Mr. Moore held other
senior positions with Northern Telecom since joining that company in 1985. Prior
to joining Northern Telecom, Mr. Moore was the president of AT&T Canada from
1982 to 1985. He has over 30 years of experience in the telecommunications and
business systems industry. Mr. Moore is a director of Tut Systems, Inc. and The
Center for Telecommunications Management at the University of Southern
California.
MR. AUBREY E. JUDY, age 62, (Nominee -- Class I term expiring in 2003) has
been a director since April 1982 and is Chairman of the Nominating Committee.
Starting in 1964, Mr. Judy was employed with Farmers Telephone Cooperative,
Inc., an independent telephone company in Kingstree, South Carolina. He served
as its executive vice president from 1981 until his retirement in December 1993.
Mr. Judy served on the National Telephone Cooperative Association board of
directors from 1976 to 1982 and from 1985 to 1992, holding the offices of
secretary, vice president and president.
MR. THEODORE D. BERNS, age 50, (Incumbent -- Class III term expiring in
2002) has been a director since October 1991. From 1996 until his retirement in
January 1999, Mr. Berns served as chief executive officer of Integra Telecom, a
competitive local exchange carrier located in Portland, Oregon. From 1993 to
1995, Mr. Berns served as director, president and chief executive officer of
AdVal Communications, Inc., a provider of value-added facsimile services located
in Vancouver, Washington. From 1986 to 1993, Mr. Berns was employed by Pacific
Telecom, Inc., a telecommunications holding company located in Vancouver,
Washington. Mr. Berns held several positions with Pacific Telecom, including
vice president, secretary and president/chief operating officer. In addition,
Mr. Berns is a former director of the United States Telephone Association.
MR. EUGENE L. COLE, age 64, (Incumbent -- Class II term expiring in 2001)
has been a director since 1981. Mr. Cole worked at Canby Telephone Association,
Canby, Oregon, where in 1968, he was named general manager and in 1986 became
president. From 1998 to present, Mr. Cole has been president of US Telecom West,
a telecommunications company located in Canby, Oregon. From 1986 until 1994, and
again from 1995 to 1998, Mr. Cole served as president of CTA Service Corp., a
non-regulated telecommunications
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service provider located in Canby, Oregon, and North Willamette Telecom, a cable
company located in Canby, Oregon.
MR. RICHARD A. LUMPKIN, age 65, (Incumbent -- Class III term expiring in
2002) has been a director since January 1989 and currently serves as Chairman of
the Board of Directors and Chairman of the Executive Committee. Since 1957, Mr.
Lumpkin has been employed by Consolidated Communication Inc. and its affiliates.
In September 1997, Consolidated was merged into McLeodUSA Incorporated and Mr.
Lumpkin became vice chairman and a director of McLeodUSA. He remains chairman,
president and chief executive officer of Illinois Consolidated Telephone
Company, a local exchange carrier located in Mattoon, Illinois. Mr. Lumpkin is
currently a director of First Mid-Illinois Bancshares and First Mid-Illinois
Bank and Trust in Mattoon, Illinois, and Ameren Corporation, a public utility in
St. Louis, Missouri. Mr. Lumpkin is also a former director and past president of
the Illinois Telephone Association and United States Telephone Association.
MR. JAMES S. QUARFORTH, age 45, (Incumbent -- Class II term expiring in
2001) has been a director since January 1989 and is Chairman of the Personnel
Committee. Mr. Quarforth has been chief executive officer and a director of CFW
Communications Company, an integrated communications company in Waynesboro,
Virginia, since 1991. Mr. Quarforth is also a director of Listing Services
Solutions, Inc., and Virginia Financial Corporation. Mr. Quarforth is also
chairman of the Virginia PCS Alliance, L.C. and West Virginia PCS Alliance L.C.
and a past director and president of the Virginia Telecommunications Industry
Association.
MR. JAMES W. STRAND, age 53, (Incumbent -- Class II term expiring in 2001)
has been a director since May 1992. From 1990 to July 1999, Mr. Strand was
president of the Diversified Operations division of and a director of Aliant
Communications, Inc., a telecommunications company located in Lincoln, Nebraska.
Since July 1999, Mr. Strand has been the Nebraska/Kansas/Iowa market area
president for AllTel Corporation, a telecommunications and computer services
company headquartered in Little Rock, Arkansas. Mr. Strand served on the board
of directors of the Cellular Telecommunications Industry Association and its
executive committee from 1995 to 1999.
MR. GREGORY J. WILKINSON, age 49, (Incumbent -- Class III term expiring in
2002) has been a director since February 1986 and currently serves as Vice
Chairman of the Board of Directors and Chairman of the Audit/Finance Committee.
Mr. Wilkinson has been associated with Telephone & Data Systems, Inc. ("TDS"), a
communications holding company in various capacities since 1972. Since November
1999 he has held the position of vice president and corporate secretary for TDS
and all major subsidiaries. From 1992 to November 1999 he was vice president and
controller of TDS.
The Board has four standing committees: the Executive Committee, the
Nominating Committee, the Personnel Committee, and the Audit/Finance Committee.
The Executive Committee oversees Board governance, and the committee's members
are Messrs. Lumpkin, Wilkinson, Judy and Moore. The Nominating Committee selects
nominees for election as directors and recommends directors to serve as Chairman
and Vice Chairman of the Board, and the committee's members are Messrs. Lumpkin,
Wilkinson, and Judy. The Personnel Committee establishes policies for
compensation and the reimbursement of expenses to Board members for service on
the Board and its committees and also establishes policies regarding the
compensation and benefit plans for executive officers and other key employees,
and the committee's members are Messrs. Berns, Cole and Quarforth. The
Audit/Finance Committee appoints and communicates with the independent auditors
of the Company, reviews the Company's accounting practices, internal accounting
controls and financial results and reviews and recommends major financial
decisions of the Company, and the committee's members are Messrs. Wilkinson and
Strand.
During fiscal year 1999, the Board of Directors held thirteen meetings
(including four regular meetings), the Audit/Finance Committee held four
meetings, the Executive Committee held four meetings, the Nominating Committee
did not hold any meetings, and the Personnel Committee held four meetings.
During fiscal year 1999, each director attended more than 75% of the Board
meetings and the meetings of the committees on which each director served.
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Each outside director receives a retainer of $1,000 per month, except for
the Chairman of the Board, who receives a retainer of $1,250 per month.
Additionally, each director receives an annual grant of $15,000 worth of options
to acquire Common Stock ("Annual Options"). Annual Options have an exercise
price equal to the closing price of Common Stock on the date of grant and vest
ratably in monthly increments from the grant date through the month of the next
annual meeting and expire ten years after the date of grant. The number of
Annual Options is determined by dividing $15,000 by 1/3 of the closing stock
price of the Common Stock on the date of grant. Each outside director also
receives a fee of $1,000 per Board meeting and $500 per Committee meeting
attended in person, not to exceed $1,500 per day, and $200 per teleconferenced
meeting, except for the Chairman of the Board, who receives $1,250 per Board
meeting and $500 per Committee meeting attended in person, not to exceed $1,750
per day. All directors are reimbursed for out-of-pocket expenses incurred in
connection with attendance at meetings of the Board of Directors and meetings of
committees of the Board of Directors. Payment of monthly fees is made in the
form of cash or options to acquire Common Stock ("Retainer Options"), at the
election of the outside director. The Retainer Options have an exercise price
equal to the closing price of Common Stock on the date of grant and vest ratably
in monthly increments from the grant date through the month of the next annual
meeting and expire ten years after the date of grant. If a director elects to
receive Retainer Options, he must do so prior to January 1 of the year in
question and the option exercise price is set by the Board of Directors at that
time. To determine the number of shares subject to a Retainer Option, the annual
amount of retainer fees is divided by 1/3 of the closing stock price of the
Common Stock on the date of grant.
CERTAIN INFORMATION CONCERNING EXECUTIVE OFFICERS
In addition to Mr. Moore, the following are executive officers of the
Company.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Bruce E. Johnson.......... 51 Vice President -- Operations and Engineering
F. Terry Kremian.......... 52 Executive Vice President and Chief Operating Officer
David J. Nicol............ 54 Vice President -- Product Management and Development
Daniel E. Weiss........... 52 Vice President -- Finance, Secretary and Treasurer
</TABLE>
MR. JOHNSON has been Vice President -- Operations and Engineering since
February 1996. Prior to that, he served as Independent Telecommunications
Network's vice president -- operations and engineering from 1992 to 1996. Prior
to joining Independent Telecommunications Network, Mr. Johnson was responsible
for implementing NYNEX Corporation's SS7 network. While at NYNEX, Mr. Johnson
was responsible for deploying one of the first industry intelligent networks and
played an active role in providing SS7 performance data to the FCC for its
toll-free database mandate.
MR. KREMIAN has been Executive Vice President and Chief Operating Officer
since September 1998. Prior to that, Mr. Kremian was Vice President -- Marketing
and Sales from November 1997. He joined Illuminet from MCI where he was employed
since 1982, most recently as director of Carrier Sales, National Accounts.
MR. NICOL has been Vice President -- Product Management and Development
since February 1996. Prior to that, he served as Independent Telecommunications
Network's vice president, planning and administration since 1994. All of his
30-year career has been in technology industry sectors, the last 15 directly in
telecommunications, including six years at Sprint in various officer positions.
MR. WEISS has been Chief Financial Officer since February 1996 and
Secretary and Treasurer since April 1996. Mr. Weiss also serves as the Vice
President -- Finance for Illuminet, Inc. as well as its Secretary and Treasurer.
Prior to that, Mr. Weiss served as vice president -- finance, treasurer and
assistant treasurer for Illuminet Holdings, Inc.'s predecessor companies since
1979.
SECURITY OWNERSHIP OF OFFICERS, DIRECTORS AND CERTAIN BENEFICIAL OWNERS
The following table lists information with respect to the beneficial
ownership of our Common Stock as of March 15, 2000 by: (i) each person known by
us to beneficially own more than 5% of our outstanding
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Common Stock, (ii) each of our directors, (iii) the named executive officers,
and (iv) all of our executive officers and directors as a group. Unless
otherwise indicated, the person or persons named have sole voting and investment
power and that person's address is c/o Illuminet, 4501 Intelco Loop, S.E.,
Lacey, Washington 98503. In determining the number and percentage of shares
beneficially owned by each person, shares that may be acquired by that person
under options exercisable within 60 days of March 15, 2000 are deemed
beneficially owned by that person and are deemed outstanding for purposes of
determining the total number of outstanding shares for that person and are not
deemed outstanding for that purpose for all other stockholders. The table
assumes the conversion, which will occur on April 5, 2000, of each share of our
Class A Common Stock into four shares of Common Stock.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
--------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT
------------------------------------ ------------ ----------
<S> <C> <C>
Spectrum Equity Investors................................... 3,682,340 12.3%
333 Middlefield Road
Suite 200
Menlo Park, CA 94025
Telephone & Data Systems, Inc. ............................. 2,486,224 8.3%
Suite 4000
30 N. LaSalle St
Chicago, IL 60602
CenturyTel, Inc............................................. 1,884,916 6.3%
P.O. Box 4065
100 Century Park Drive
Monroe, LA 71211-4065
Theodore D. Berns(1)........................................ 65,610 *
Eugene L. Cole(2)........................................... 52,324 *
Aubrey E. Judy(3)........................................... 52,622 *
Richard A. Lumpkin(4)....................................... 1,114,346 3.7%
James S. Quarforth(5)....................................... 762,763 2.6%
James W. Strand(6).......................................... 926,975 3.1%
Gregory J. Wilkinson(7)..................................... 2,539,803 8.5%
Roger H. Moore(8)........................................... 832,500 2.7%
Daniel E. Weiss(9).......................................... 51,000 *
F. Terry Kremian(10)........................................ 50,500 *
David J. Nicol(11).......................................... 55,384 *
Bruce E. Johnson(12)........................................ 69,156 *
Executive officers and directors as a group (12 persons).... 6,572,983 21.1%
</TABLE>
- ---------------
* Less than 1%
(1) Includes 49,142 shares issuable under options exercisable within 60 days
after March 15, 2000.
(2) Includes 49,030 shares issuable under options exercisable within 60 days
after March 15, 2000.
(3) Includes 46,678 shares issuable under options exercisable within 60 days
after March 15, 2000.
(4) As a director of McLeodUSA, Mr. Lumpkin may be deemed the beneficial owner
of the 667,976 shares of Common Stock owned by Consolidated Communications,
a wholly owned subsidiary of McLeodUSA. As a voting member of SKL
Investment Group, LLC, Mr. Lumpkin may be deemed the beneficial owner of
437,584 shares of Common Stock owned by SKL. The figures in the table for
Mr. Lumpkin also include 8,786 shares issuable under options exercisable
within 60 days after March 15, 2000.
(5) As an executive officer of CFW Communications Company, Inc., Mr. Quarforth
may be deemed the beneficial owner of the 698,868 shares of Common Stock
owned by CFW. The figures in the table for Mr. Quarforth also include
48,789 shares issuable under options exercisable within 60 days after March
15, 2000.
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<PAGE> 9
(6) As a director and executive officer of Alltel Corporation, Mr. Strand may
be deemed the beneficial owner of the 869,256 shares of Common Stock owned
by Alltel. The figures in the table for Mr. Strand also include 47,447
shares issuable under options exercisable within 60 days after March 15,
2000.
(7) As an executive officer of Telephone & Data Systems, Inc., Mr. Wilkinson
may be deemed the beneficial owner of the 2,486,224 shares of Common Stock
beneficially owned by TDS. The figures in the table for Mr. Wilkinson also
include 49,591 shares issuable under options exercisable within 60 days
after March 15, 2000.
(8) Includes 832,000 shares issuable under options exercisable within 60 days
after March 15, 2000.
(9) Includes 50,600 shares issuable under options exercisable within 60 days
after March 15, 2000.
(10) Includes 50,000 shares issuable under options exercisable within 60 days
after March 15, 2000.
(11) Includes 51,000 shares issuable under options exercisable within 60 days
after March 15, 2000.
(12) Includes 48,000 shares issuable under options exercisable within 60 days
after March 15, 2000.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10% of the Common Stock,
to file certain reports of ownership and changes in ownership with the SEC.
Officers, directors and persons owning beneficially greater than 10% of the
Company's Common Stock are required by SEC regulation to furnish the Company
with copies of all such reports.
Based solely on its review of the copies of such reports received by the
Company, or written representations from certain reporting persons, the Company
believes that all filing requirements applicable to its officers, directors, and
greater than 10% beneficial owners were complied with during the fiscal year
ended December 31, 1999, with the following exceptions: (1) Messrs. Ross, Strand
and Wilkinson filed an amended Form 3 to correctly report their initial
statement of beneficial ownership of securities of the Company; and (2) Messrs.
Berns, Cole, Lumpkin, Quarforth, Ross, Strand and Wilkinson each filed a late
Form 4 reporting a single grant of options to purchase Common Stock of the
Company.
PROPOSAL I
ELECTION OF DIRECTORS
The Board of Directors of the Company recommends that the stockholders
elect the following nominees for directors. Shares of Common Stock and Class A
Common Stock represented by executed proxies will be voted, if authority to do
so is not withheld, for the election of the nominees named below. If any of the
nominees for directors should become unavailable for election, it is intended
that the shares represented by the proxy be voted for such substitute nominee or
nominees as may be nominated by the Board of Directors. Additional information
concerning the following nominees is set forth in "Certain Information
Concerning the Board of Directors."
The Company has a classified Board of Directors so that each director
serves a three-year term. If elected, each of the below nominees would serve
until the 2003 Annual Meeting and until his or her successor is elected and
qualified or until his or her death, resignation or removal.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE CURRENT POSITION WITH THE COMPANY SINCE
---- --- --------------------------------- --------
<S> <C> <C> <C>
Roger H. Moore................... 58 President, Chief Executive Officer and Director 1998
Aubrey E. Judy................... 62 Director 1982
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF EACH NAMED NOMINEE.
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PROPOSAL II
APPROVAL OF EMPLOYEE STOCK PURCHASE PLAN
INTRODUCTION
The Company has established an Employee Stock Purchase Plan ("Plan") in
order to encourage ownership of its Common Stock by its employees. The Plan
provides a convenient means for employees to make regular and systematic
purchases of the Company's Common Stock on an advantageous basis, which thereby
increases the employees' interest in the Company's success. Eligible employees
who became participants as of the effective date of the Plan and who remain
participants can purchase shares of Common Stock of the Company for an amount
equal to 85% of the lower of the initial public offering price or the closing
price of the Common Stock on the last day of each period ("Option Period") that
the Plan is in effect. Each Option Period lasts six, twelve, eighteen and
twenty-four months, depending upon when the employee enters the Plan. All other
employees can purchase shares for an amount equal to 85% of the lower of (i) the
greater of 85% of the initial public offering price or 85% of the closing price
on the day the employee enters the Plan, or (ii) 85% of the closing price on the
last business day of the Option Period. The Plan is intended to constitute an
"employee stock purchase plan" within the meaning of Section 423(b) of the
Internal Revenue Code of 1986, as amended. The Plan will terminate in two years.
The Plan is attached in Appendix A hereto.
SHARES SUBJECT TO THE PURCHASE PLAN
An aggregate of 700,000 shares of Common Stock shall be available for
purchase under the Plan. However, such amount shall be subject to adjustment.
Common Stock available for purchase under the Plan shall be either authorized
but unissued shares or reacquired shares purchased on the open market.
ADMINISTRATION
A committee ("Committee") of persons appointed by the Board of Directors
shall have the authority and responsibility for the administration of the Plan.
The Board of Directors may from time to time appoint and dismiss members of the
Committee. The Committee may adopt rules and regulations for the administration
of the Plan, and the Committee shall have full power and authority to construe
and interpret the Plan. A majority of the members of the Committee shall
constitute a quorum and the acts of a majority of the members present at a
meeting or the consent in writing signed by all members of the Committee shall
be final, conclusive and binding upon all parties. The Board of Directors may
correct any defect or any omission or reconcile any inconsistency in the Plan.
The expenses of administrating the Plan shall be paid for by the Company.
ELIGIBLE EMPLOYEES
All employees of the Company are eligible to participate in the Plan if:
(i) they are an employee of the Company regularly scheduled to work 20 hours or
more per week, and (ii) they have been employed by the Company immediately
preceding the first day of the start of an Option Period. The Company estimates
that approximately 350 employees will be eligible to participate in the Plan.
PURCHASE OF STOCK
As of the last day of each Option Period, the amount of employee
contributions during such Option Period for each person who remains an employee
on such date shall be used to purchase from the Company full shares of Common
Stock. No fractional shares of Common Stock shall be purchased. Any employee
contributions remaining attributable to fractional shares shall be applied to
Common Stock during the next Option Period, and at the conclusion of the final
Option Period, shall be refunded to the employee. Upon the purchase of shares of
Common Stock under the Plan, if requested by the employee, the brokerage firm
appointed by the Company to administer and maintain the records for the Plan
shall issue a stock certificate for such whole shares with a restrictive legend,
if applicable.
7
<PAGE> 11
AMENDMENTS AND TERMINATION
The Board of Directors may amend the Plan at any time and in such manner as
it deems appropriate; provided, that no such amendment shall, without the
approval of the stockholders of the Company, increase the number of shares of
Common Stock available for purchase under the Plan.
The Plan may be terminated by the Board of Directors at any time, in its
entirety or as to any group of employees.
NONTRANSFERABILITY
Any rights to purchase stock under the Plan ("Purchase Rights") granted to
an employee are not transferable, and may be exercised during the employee's
lifetime only by such employee. Any attempt to assign, transfer, pledge,
hypothecate or otherwise dispose any Purchase Rights contrary to the provisions
of the Plan shall be null and void.
FEDERAL INCOME TAX CONSEQUENCES
Employees who participate in the Plan will not be taxed as a result of such
participation until the time of the disposition of the shares of Common Stock
purchased under the Plan or the death of the employee. If an employee who
participates in the Plan holds his or her shares of Common Stock for at least
two years following the first day of the Option Period and one year from the
date of purchase ("Holding Period"), then the amount of the fair market value of
the shares on the first day of the Option Period greater than the purchase price
(determined as of the first day of the Option Period) shall be taxed as ordinary
income, and any remaining gain shall be taxed as a capital gain. If an employee
holds his or her shares of Common Stock for less than the Holding Period (a
"Disqualifying Disposition"), then the excess of the fair market value on the
date of purchase over the purchase price (determined as of the first day of the
Option Period) shall be taxed as ordinary income, and any remaining gain shall
be taxed as a capital gain. If there is a Disqualifying Disposition, then the
Company will be entitled to a deduction equal to the amount taxed as ordinary
income and the Company may also be obligated to withhold applicable Federal,
State and local government taxes.
REQUIRED APPROVAL
A majority of the shares of Common Stock and Class A Common Stock, voting
together as a group, represented and entitled to vote at the Annual Meeting must
vote for the approval of the Plan for it to be approved. Unless marked to the
contrary, all proxies will be voted for the approval of the Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE EMPLOYEE STOCK
PURCHASE PLAN.
EXECUTIVE COMPENSATION
PERSONNEL COMMITTEE REPORT
This report discusses the manner in which base salaries and incentive
compensation for Roger H. Moore, the Company's Chief Executive Officer ("CEO"),
and the other executives named in the Summary Compensation Table ("Named
Executives") were determined for the 1999 fiscal year.
The Company believes that its growth and success have been and will
continue to be dependent in part on its ability to attract and retain highly
qualified senior management. As a result, the Company established executive
compensation levels for 1999 that it believes are competitive with those of
similar sized technology and telecommunications companies and that are focused
on the Company's operating performance. The Company's executive compensation
arrangements consist of three primary parts: base salary, Company and individual
performance-based bonus payments, and stock options. The Committee believes that
these components are appropriate ways to provide the Company's executives
financial security and to motivate them to increase profitability both in the
near-term and over time. The Company had written employment
8
<PAGE> 12
agreements in effect throughout 1999 with Messrs. Moore, Kremian, Nicol and
Johnson. The Company's executive employment agreements address only first-year
base salary levels and, therefore, did not determine 1999 compensation levels.
Base salary, bonus, stock option and performance share levels are left to the
discretion of the Committee each year.
In setting compensation levels for 1999, the Committee compared the base
salaries, incentives and total cash compensation paid to the Company's
executives with those paid to executives of companies participating in the
Radford Benchmark Salary Survey, 1998 Report. This study of 510 companies,
principally in the technology and telecommunications industries, allows
comparison on the basis of industry, size (by revenues and by number of
employees) and region. The Committee believes that the participants in the
Radford Survey are appropriate comparisons. In addition, the Committee members
have significant personal experience as executives in the telecommunications
industry and are familiar with competitive compensation levels.
Based on its review of the Radford Survey and their own personal
experiences, the Committee set the base salary increases described below, which
were targeted at the 50th percentile of the comparative market.
BASE SALARY
In determining the 1999 base salaries for the CEO and Named Executives, the
Committee considered several criteria, including compensation levels at
comparable companies. These criteria were not weighted by any predetermined
formula, but rather, were considered in light of the overall achievement of the
Company's goals and of general industry and economic factors. The significance
of any particular criterion varied depending upon the particular position or
area of responsibility of the executive in question. Mr. Moore received an
increase of $16,000, or 6.7% in his base salary in 1999 over his 1998 base
salary of $240,000. Mr. Moore's base salary at the end of 1999 was approximately
at the 50th percentile of the surveyed market data.
It is the policy of the Company to review executive base salaries in
relation to comparable positions in comparable telecommunications companies. The
Committee believes that base salaries should remain competitive with those in
the industry taking into account the total compensation package of base salary
and incentives.
ANNUAL CASH INCENTIVE COMPENSATION
The Committee believes that a significant part of cash compensation for the
CEO and other senior executives should be based on the achievement of operating
and financial goals. The Company uses a combination of cash bonuses and stock
options as incentives for its executives and other employees. The short term
incentive plan pays cash bonuses and was targeted to provide award opportunities
approximately equal to the 50th percentile of total annual cash compensation for
comparable positions at comparable companies. Under the cash bonus plan, the
Committee established operating and financial goals for the Company and for the
individual executive. Bonus amounts are calculated based on three factors: the
level of achievement of the Company-level goals, the level of achievement of the
individual-level goals, and the weight assigned to each goal. The bonuses earned
by the CEO and the Named Executives resulting from the cash bonus plan goal
achievement levels in 1999 are shown in the Summary Compensation Table.
EQUITY COMPENSATION
The Committee believes that stock option grants are important elements of
the Company's executive compensation program and will continue to be used to
attract, motivate and retain experienced, qualified members of management. Stock
options awarded under the 1997 Equity Incentive Plan are granted at 100% of fair
market value on date of grant, and can be exercised (following a required
holding period) at any time over a 10-year period. The stock options granted Mr.
Moore and the other Named Executives are shown in the Summary Compensation
Table.
9
<PAGE> 13
OTHER INFORMATION
Section 162(m) of the Internal Revenue Code places an annual limitation of
$1,000,000 on the compensation of certain executive officers of publicly held
corporations that can be deducted for federal income tax purposes unless such
compensation is based on performance. No executive of the Company received
annual compensation in excess of $1,000,000 in 1999 and none is anticipated to
receive in excess of $1,000,000 in 2000.
PERSONNEL COMMITTEE
James S. Quarforth
Theodore D. Berns
Eugene L. Cole
PERSONNEL COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Personnel Committee consists entirely of individuals who are neither
officers nor employees of the Company.
SUMMARY COMPENSATION TABLE
The following table sets forth information for the last three years ended
December 31, 1999 regarding the compensation received by our chief executive
officer and each of our four other most highly compensated executive officers
whose salaries and bonuses for such year were in excess of $100,000 on an
annualized basis (we refer to these individuals as the named executive officers)
for the year ended December 31, 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
-------------------
ANNUAL COMPENSATION SECURITIES
------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION
--------------------------- ---- -------- -------- ------------------- ------------
<S> <C> <C> <C> <C> <C>
Roger H. Moore...................... 1999 $256,000 $128,000 200 $63,532(1)
President and Chief 1998 229,774 120,000 -- 33,938(2)
Executive Officer 1997 225,000 112,500 1,040,000 48,993(3)
F. Terry Kremian.................... 1999 175,008 83,129 88,200 45,946(4)
Executive Vice 1998 160,008 42,881 40,000 7,250(5)
President and Chief Operating
Officer 1997(6) 20,915 25,000 80,000 --
Daniel E. Weiss..................... 1999 132,300 50,274 52,200 30,992(7)
Chief Financial 1998 126,000 31,828 44,000 17,270(8)
Officer, Secretary and Treasurer 1997 112,824 42,196 80,000 19,367(9)
Bruce E. Johnson.................... 1999 148,728 55,624 48,200 35,499(10)
Vice President -- 1998 143,004 36,123 32,000 20,308(11)
Operations and Engineering 1997 131,700 47,412 80,000 23,231(12)
David J. Nicol...................... 1999 150,156 56,158 48,200 35,869(13)
Vice President -- 1998 143,004 36,123 44,000 20,308(14)
Product Management and 1997 132,036 47,533 80,000 23,300(15)
Development
</TABLE>
- ---------------
(1) Represents $1,572 in 401(k) matching contributions and $25,126 in
profit-sharing contributions made to our profit-sharing plan, and $36,834
in compensation for 401(k) matching contributions and profit sharing
contributions due to Mr. Moore in excess of amounts allowable under the
Internal Revenue Code.
(2) Represents $7,316 in 401(k) matching contributions and $14,821 in
profit-sharing contributions made to our profit-sharing plan, and $11,801
in compensation for 401(k) matching contributions and profit
10
<PAGE> 14
sharing contributions due to Mr. Moore in excess of amounts allowable under
the Internal Revenue Code.
(3) Represents $8,000 in 401(k) matching contributions and $21,024 in
profit-sharing contributions made to our profit-sharing plan, and $19,969
in compensation for 401(k) matching contributions and profit sharing
contributions due to Mr. Moore in excess of amounts allowable under the
Internal Revenue Code.
(4) Represents $2,717 in 401(k) matching contributions and $25,126 in
profit-sharing contributions made to our profit-sharing plan, and $18,103
in compensation for 401(k) matching contributions and profit sharing
contributions due to Mr. Kremian in excess of amounts allowable under the
Internal Revenue Code.
(5) Represents $7,250 in 401(k) matching contributions.
(6) Mr. Kremian was hired effective November 10, 1997.
(7) Represents $7,765 in 401(k) matching contributions and $20,059 in
profit-sharing contributions made to our profit-sharing plan, and $3,168 in
compensation for 401(k) matching contributions due to Mr. Weiss in excess
of amounts allowable under the Internal Revenue Code.
(8) Represents $6,300 in 401(k) matching contributions and $10,970 in
profit-sharing contributions.
(9) Represents $5,641 in 401(k) matching contributions and $13,726 in
profit-sharing contributions.
(10) Represents $5,368 in 401(k) matching contributions and $23,064 in
profit-sharing contributions made to our profit-sharing plan, and $7,067 in
compensation for 401(k) matching contributions due to Mr. Johnson in excess
of amounts allowable under the Internal Revenue Code.
(11) Represents $7,150 in 401(k) matching contributions and $13,158 in
profit-sharing contributions.
(12) Represents $6,585 in 401(k) matching contributions and $16,646 in
profit-sharing contributions.
(13) Represents $5,159 in 401(k) matching contributions and $23,325 in
profit-sharing contributions made to our profit-sharing plan, and $7,385 in
compensation for 401(k) matching contributions due to Mr. Nicol in excess
of amounts allowable under the Internal Revenue Code.
(14) Represents $7,150 in 401(k) matching contributions and $13,158 in
profit-sharing contributions.
(15) Represents $6,602 in 401(k) matching contributions and $16,698 in
profit-sharing contributions.
EMPLOYMENT AGREEMENTS
We have employment agreements with Messrs. Nicol and Johnson that renew
annually on their anniversary date and may be terminated by either party on 90
days' notice prior to the end of an annual term. We may terminate for cause at
any time. The agreements provide for initial annual base compensation of
$110,000 and $108,000, respectively. The annual base compensation has been
subsequently adjusted by the board of directors to $150,156 for Mr. Nicol and
$148,728 for Mr. Johnson for the year ended December 31, 1999. The agreements
provide for the opportunity to earn bonuses under established incentive plans.
In addition, Mr. Johnson's agreement provides for an annual bonus, the amount of
which must be approved by the board of directors. Each agreement provides that,
if the executive officer is terminated by us for other than cause, the executive
officer will be entitled to receive a severance payment in a lump sum amount
equal to 12 months of the executive officer's then base compensation. Mr. Moore
and Mr. Kremian each have severance agreements with us. A letter employment
agreement with Mr. Moore provides that if he is terminated without cause or he
elects to resign as a result of a subsequent change of control, he receives a
lump sum severance payment equal to his then annual base salary. A letter
employment agreement with Mr. Kremian provides for an initial base salary of
$145,000 and an annual bonus based under an incentive plan. The annual base
compensation for Mr. Kremian has been subsequently adjusted by the board of
directors to $175,008 for the year ended December 31, 1999.
11
<PAGE> 15
STOCK OPTIONS AWARDED IN 1999
The following table lists options granted during 1999 to the named
executive officers. All of the options were awarded under the Company's 1997
Equity Incentive Plan. Options are generally exercisable ratably over four years
and expire ten years from the date of grant. We computed potential realizable
values by first multiplying the number of shares of Common Stock subject to a
given option by the option exercise price to determine the initial aggregate
stock value. We then assumed that the initial aggregate stock value compounds at
an annual 5% or 10% rate shown in the table for the entire ten-year term of the
option to determine the final aggregate stock value. Finally, we subtracted from
the final aggregate stock value the initial aggregate stock value to determine
the potential realizable value. The 5% and 10% assumed annual rates of stock
appreciation are mandated by the rules of the SEC and do not reflect our
estimate or projection of future stock price growth. Actual gains, if any, on
stock option exercises depend upon the actual future price of Common Stock and
the continued employment of the option holders throughout the vesting period.
Accordingly, the potential realizable values listed in this table may not be
achieved.
OPTION GRANTS IN 1999
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED ANNUAL
TOTAL RATES OF STOCK PRICE
NUMBER OF OPTIONS APPRECIATION FOR
SHARES GRANTED TO EXERCISE OPTION TERM
UNDERLYING EMPLOYEES IN PRICE EXPIRATION --------------------------
NAME OPTIONS 1999 ($/SHARE) DATE 5% 10%
---- ---------- ------------ --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Roger H. Moore........... 200 0.03% $19.00 10/7/2009 $ 2,390 $ 6,056
F. Terry Kremian......... 88,000 12.47 8.00 8/20/2009 1,374,470 2,605,615
200 0.03 19.00 10/7/2009 2,390 6,056
Daniel E. Weiss.......... 52,000 7.37 8.00 8/20/2009 812,186 1,539,682
200 0.03 19.00 10/7/2009 2,390 6,056
Bruce E. Johnson......... 48,000 6.8 8.00 8/20/2009 749,711 1,421,245
200 0.03 19.00 10/7/2009 2,390 6,056
David J. Nicol........... 48,000 6.8 8.00 8/20/2009 749,711 1,421,245
200 0.03 19.00 10/7/2009 2,390 6,056
</TABLE>
AGGREGATE OPTION EXERCISES DURING 1999 AND OPTION VALUES AS OF DECEMBER 31, 1999
The following table provides information on option exercises in 1999 by the
named executive officers and the value of those officers' unexercised options as
of December 31, 1999.
To calculate value of unexercised in-the-money options at fiscal year end,
we used the market value of the underlying stock as of December 31, 1999 of
$55.00 per share minus the per share exercise price, multiplied by the number of
shares issuable upon exercise.
AGGREGATED OPTION EXERCISES IN
1999 AND 1999 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
ACQUIRED YEAR-END AT FISCAL YEAR-END
ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Roger H. Moore................ -- -- 832,000 208,200 $43,798,560 $10,956,840
F. Terry Kremian.............. -- -- 50,000 158,200 2,620,200 7,779,800
Daniel E. Weiss............... -- -- 50,600 125,200 2,649,900 6,240,260
Bruce E. Johnson.............. -- -- 48,000 112,200 2,518,560 5,594,880
David J. Nicol................ -- -- 51,000 121,200 2,671,020 6,052,260
</TABLE>
12
<PAGE> 16
PERFORMANCE GRAPH
The graph below compares cumulative total stockholder return on the Common
Stock during the period from October 8, 1999 (the date on which the Common Stock
commenced trading) through December 31, 1999 with the cumulative total return
over the same period of (i) the Russell Midcap(R) Index and (ii) the combined
NASDAQ Standard Industrial Classification ("SIC") Code Indexes for Telephone
Communications, Radiotelephonic Communication and Telephone Communication Except
Radio Services which includes approximately 250 telecommunications companies.
This graph assumes the investment of $100 at the close of trading on
October 8, 1999 in the Common Stock, the Russell Midcap(R) Index and the
combined NASDAQ SIC Code Indexes and assumes reinvestment of dividends.
Measurement points are at October 8, 1999, October 29, 1999, November 30, 1999
and December 31, 1999.
COMPARISON OF CUMULATIVE TOTAL RETURN OF
ILLUMINET HOLDINGS, INC. COMPARED WITH THE RUSSELL MIDCAP(R) INDEX
AND THE NASDAQ SIC CODE INDEX
[GRAPHIC OF CHART]
<TABLE>
<CAPTION>
NASDAQ
ILLUMINET HOLDINGS, INC. RUSSELL MIDCAP INDEX TELECOMMUNICATIONS INDEX
------------------------ -------------------- ------------------------
<S> <C> <C> <C>
10/8/99 100.00 100.00 100.00
10/29/99 163.16 104.64 108.44
11/30/99 184.65 107.49 109.83
12/31/99 192.98 116.78 121.40
</TABLE>
CERTAIN TRANSACTIONS
The Company did not have any related party transactions in 1999.
13
<PAGE> 17
INDEPENDENT AUDITORS
Ernst & Young was the Company's independent auditors for the year ending
December 31, 1999. The Board of Directors and the Company are currently
evaluating who will be the Company's accountant for the year ending December 31,
2000. Representatives of Ernst & Young are expected to be present at the Annual
Meeting. Such representatives will not have the opportunity to make a statement
at the Annual Meeting. Such representatives will be available to respond to
appropriate questions.
OTHER MATTERS
No other matters are intended to be brought before the meeting by the
Company, nor does the Company know of any matters to be brought before the
meeting by others. If, however, any other matter properly comes before the
meeting, the persons named in the proxy will vote the shares represented thereby
in accordance with their judgment.
By order of the Board of Directors
/s/ Daniel E. Weiss
Daniel E. Weiss
Secretary/Treasurer
ALL STOCKHOLDERS ARE URGED TO SIGN, DATE AND MAIL THEIR PROXIES PROMPTLY.
Olympia, Washington
April 7, 2000
14
<PAGE> 18
APPENDIX A
ILLUMINET HOLDINGS, INC.
1999 EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I
PURPOSES
Illuminet Holdings, Inc. has established the Plan set forth herein in order
to encourage ownership of its Common Stock by its employees and employees of its
Affiliates, by providing them a convenient means for regular and systematic
purchases on an advantageous basis, thereby increasing their interest in the
Company's success. The Plan is intended to constitute an "employee stock
purchase plan" within the meaning of Section 423(b) of the Internal Revenue Code
of 1986, as amended.
ARTICLE II
DEFINITIONS
"Affiliate" means a subsidiary of the Company (including corporations
becoming subsidiaries subsequent to the adoption of the Plan) within the meaning
of Section 424(f) of the Code that has been designated by the Committee as an
Affiliate for purposes of the Plan.
"Board" means the Company's Board of Directors.
"Code" means the Internal Revenue Code of 1986, as amended, and regulations
thereunder.
"Committee" means the Committee appointed by the Board pursuant to Article
VIII hereof.
"Company" means Illuminet Holdings, Inc.
"Effective Date" shall mean October 7, 1999.
"Employee" means a person employed by an Employer.
"Employee Contributions" means contributions in the form of payroll
deductions for payment for stock to be purchased by that Employee as provided by
Section 5.1 hereof.
"Employer" means the Company and any Affiliate that is designated by the
Committee as an employer for purposes of this Plan.
"Option" means a right to purchase Stock granted under Section 4.1.
"Option Period" means the period beginning on the Effective Date and ending
April 6, 2000, the period beginning on the Effective Date and ending October 6,
2000, the period beginning on the Effective Date and ending April 6, 2001, and
the period beginning on the Effective Date and ending October 6, 2001; provided,
however, that for any Employee who does not elect to participate in the Plan as
of the Effective Date or who withdraws from the Plan, and who subsequently
elects to participate in the Plan, the term "Option Period" shall mean each
period beginning on the next succeeding six-month anniversary of the Effective
Date and ending on the remaining ending dates of the Option Periods set out
above. If the date on which an Option Period would otherwise end is not a
business day, then the Option Period shall end on the last business day
immediately prior thereto.
"Plan" means the Illuminet Holdings, Inc. 1999 Employee Stock Purchase Plan
set forth herein, as amended from time to time.
"Plan Agent" means the brokerage firm which has been appointed Plan Agent
by the Company to administer and maintain the records for the Plan or such other
Plan Agent who is appointed to act in such capacity by the Committee set forth
in Article VIII hereof.
"Stock" means the Common Stock of the Company.
A-1
<PAGE> 19
ARTICLE III
ELIGIBILITY
An Employee shall be eligible for an Option if he is an Employee of an
Employer regularly scheduled to work 20 hours or more per week, and if he has
been employed by the Employer immediately preceding the first day of the Option
Period. For purposes of determining an Employee's period of employment with the
Employer, such period of employment shall include an Employee's employment with
any business entity, the assets, business or stock of which has been acquired,
in whole or in part, by the Employer through purchase, merger or otherwise. In
addition, an Employee of an Affiliate shall be deemed to have been employed with
an Employer as of the first day of his employment with such Affiliate prior to
its date of affiliation with the Company.
ARTICLE IV
GRANTING OF OPTIONS
4.1 Option Periods
On the first day of each Option Period, each Employee who is eligible for
an Option under Article III shall be granted an Option to purchase Stock from
the Company on the last day of each Option Period, by authorizing Employee
Contributions under Article V. Notwithstanding the foregoing, no Employee shall
be eligible for an Option under Article III if such Employee, immediately after
the Option is granted, shall own 5% or more of the total combined voting power
or value of all classes of stock of the Company or of any of its Affiliates,
treating the maximum amount of stock available to him under the Plan for such
Option Period and shares subject to any other option as owned by him and
treating as owned by him shares owned by others to the extent provided in
Section 424(d) of the Code. Any Options granted in an Option Period which are
not exercised on the last day of the last Option Period shall expire as of the
end of the last Option Period.
4.2 Amount of Stock Available
An aggregate of 700,000 shares of Stock shall be available for purchase
under the Plan, subject to adjustment under Section 4.7. To the extent Options
expire unexercised, the Stock subject to such Options shall become available for
subsequent grant. Stock available for purchase under the Plan shall be
authorized but unissued shares or reacquired shares purchased on the open
market.
4.3 Exercise Price
For each Option granted on the Effective Date, the purchase price per share
shall be 85% of its IPO Price or 85% of its fair market value on the last day of
the Option Period, whichever is lower, subject to adjustment under Section 4.7.
For each Option granted subsequent to the Effective Date, the purchase price per
share shall be the lesser of (i) the greater of 85% of the IPO Price or 85% of
its fair market value on the first day of the Option Period or (ii) 85% of the
fair market value on the last day of the Option Period. IPO Price means the
price at which stock is initially offered to the public on the Effective Date.
Fair market value on any day means the closing price on the National Association
of Securities Dealers Automated Quotation National Market System (the
"NASDAQ-NMS") on such day or, if not traded on such day, on the last preceding
day on which the stock was traded, or, if not traded on the NASDAQ-NMS on such
exchange or market as the Stock from time to time may be traded if such market
or exchange is designated by the Committee as controlling for purposes of the
Plan.
4.4 Nontransferability
Options granted to an Employee are not transferable, and may be exercised
during the Employee's lifetime only by him. Any attempt of assignment, transfer,
pledge, hypothecation or other disposition of any Option contrary to the
provisions of this Plan, and the levy and attachment or any similar proceedings
upon any Option, shall be null and void.
A-2
<PAGE> 20
4.5 Board and Stockholder Approval
The Plan was approved by the Board on October 4, 1999. If the Plan is not
approved by the Company's stockholders prior to October 4, 2000, the Plan shall
be null and void.
4.6 Limits on Stock Purchase
Notwithstanding any other provision of this Plan, no Employee may purchase
in any calendar year more than the number of shares equal to 15% of his annual
cash compensation divided by 85% of the purchase price of the Stock, both
determined on the first day of an Option Period. In addition, no Employee may be
granted an Option which permits him to purchase during a calendar year under the
Plan and any other employee stock purchase plan, within the meaning of Section
423 of the Code, shares of the Company and its Affiliates having an aggregate
fair market value, determined at the time such Option is granted, of more than
$25,000.
4.7 Adjustment of Amount of Stock
In the event of change in the number of shares of Stock outstanding by
reason of a Stock dividend, Stock split or other recapitalization, or by reason
of a merger or consolidation or otherwise, the number of shares of Stock
available under this Plan, and the fair market value of such shares at the
beginning of the Option Period during which such change occurs, shall be
adjusted in such manner as the Committee, in its discretion, deems equitable and
appropriate.
ARTICLE V
PAYMENT FOR STOCK
5.1 Employee Contributions
Each Employee may exercise Options granted to him under Section 4.1 by
authorizing Employee Contributions in accordance with instruction from his
Employer. The actual exercise of the Options shall occur on the last day of the
Option Period. Employee Contributions may be authorized beginning with the first
paycheck issued after the end of the enrollment period for an Option Period in
amounts up to 15%, with a minimum of 1%, of an Employee's cash compensation
(before any other voluntary or required withholdings) paid by the Employer. To
the extent that an Employee's cash compensation, after other voluntary and
required withholdings, is not sufficient to cover the Employee Contributions
elected under this Plan, the Employee Contributions under this Plan shall be
reduced. Total deductions may not exceed $25,000 for any calendar year. An
authorization for Employee Contributions hereunder shall remain in effect until
changed under Section 5.3.
5.2 Purchase of Stock
As of the last day of each Option Period the amount of Employee
Contributions during such Option Period for each person who remains an Employee
on such date shall be used to purchase from the Company full shares of Stock,
but no fractional shares shall be purchased. Any Employee contributions
remaining attributable to fractional shares shall be applied to purchase Stock
during the next Option Period, and at the conclusion of the final Option Period
shall be refunded to Employees. Upon the purchase of shares of Stock under an
Option, if requested by the Employee, the Plan Agent shall issue a stock
certificate for such whole shares with a restrictive legend, if applicable.
5.3 Discontinuance or Change
An Employee may discontinue Employee Contributions authorized under Section
5.1 at any time, or change the rate of payroll deductions to any other permitted
rate as of any six-month anniversary of the Effective Date, within the time
prescribed in rules and regulations adopted under Article VIII in accordance
with instructions from his Employer. Once discontinued hereunder, Employee
Contributions may not be made again until the next succeeding Option Period.
A-3
<PAGE> 21
5.4 Refund of Contributions
If during an Option Period an Employee for whom contributions are being
made under Section 5.1 becomes ineligible to have Stock purchased for him under
Section 5.2, or discontinues his contributions under Section 5.3, his Employee
Contributions during such Option Period shall, at his election, either (a) be
returned without interest to him within 30 days of the date on which the Company
first learns of the Employee's ineligibility or date on which the Employee
informs the Company that he wishes to discontinue contributions, or (b) used to
purchase as many shares as possible at the end of the current Option Period. If
the aggregate amount of Employee Contributions under Section 5.1 during any
Option Period exceeds the purchase price of Stock available under the Plan, the
available Stock shall be allocated to Employees in proportion to the respective
maximum number of shares that can be purchased during the Option Period, and
amounts not used to purchase Stock shall be returned without interest to the
respective Employees as soon as practicable. Any Employee Contributions in
excess of the limits in Section 4.6 shall be returned without interest to an
Employee within 30 days of the date on which the Company first learns of the
existence of any excess contributions.
5.5 Rights of Employees
An Employee shall have no right, title or interest in any Stock subject to
an Option, including no right to receive dividends, until such Stock has been
purchased for him and credited to his account or issued to him.
5.6 Requirements of Securities Laws
No shares of Stock may be issued under any Option until all requirements of
applicable federal, state or other securities laws, and of any securities
exchange or market upon which Stock may be listed, with respect to the purchase,
sale and issuance of the Stock shall have been satisfied. If any action must be
taken because of such requirements, then the purchase, sale and issuance of the
shares shall be postponed until such action can reasonably be taken.
ARTICLE VI
APPLICABLE LAW
Options granted under this Plan shall be construed and shall take effect in
accordance with the laws of the State of Delaware.
ARTICLE VII
AMENDMENT; TERMINATION
7.1 Amendment
The Board may amend this Plan at any time in such manner and to such extent
as it deems appropriate; provided, that no such amendment shall, without
approval of the stockholders of the Company, increase the number of shares of
Stock available for purchase under the Plan, except as provided in Section 4.7.
7.2 Termination
This Plan may be terminated by the Board at any time, in its entirety or as
to any group of Employees. If the Plan is terminated by the Board under this
Article VII on or prior to the last day of the Option Period during which the
Plan is terminated, then, notwithstanding the foregoing, no Stock shall be
purchased as of the last day of such Option Period and each Employee's Employee
Contributions during such Option Period shall be returned without interest to
him within 30 days.
A-4
<PAGE> 22
ARTICLE VIII
ADMINISTRATION
A Committee of persons appointed by the Board of Directors shall have the
authority and responsibility for administration of the Plan. The Board may from
time to time appoint or dismiss members of the Committee. The Board may
prescribe, amend and rescind, and the Committee may adopt, rules and regulations
for administration of the Plan, and the Committee shall have full power and
authority to construe and interpret the Plan. A majority of the members of the
Committee shall constitute a quorum and the acts of a majority of the members
present at a meeting or the consent in writing signed by all members of the
Committee shall be the acts of the Committee and shall be final, conclusive and
binding upon all parties, including the Company, its Affiliates, the
stockholders, the Employees and all persons or entities claiming by or through
the Employees. The Board may correct any defect or any omission or reconcile any
inconsistency in the Plan or in any Option granted hereunder in the manner and
to the extent it shall deem desirable. The expenses of the Plan shall be paid
for by the Company.
ARTICLE IX
LIMITS ON SALE OF STOCK PURCHASED UNDER THE PLAN
The Plan is intended to provide shares of Common Stock for investment and
not for resale. The Company does not, however, intend to restrict or influence
any employee in the conduct of his or her own affairs. An employee may,
therefore, sell stock purchased under the Plan at any time the employee chooses,
subject to compliance with any applicable federal or state securities laws and
subject to any restrictions to ensure that tax withholding obligations are
satisfied. THE EMPLOYEE ASSUMES THE RISK OF ANY MARKET FLUCTUATIONS IN THE PRICE
OF THE STOCK.
ARTICLE X
APPLICATION OF FUNDS
The proceeds received by the Company from the sale of Stock pursuant to
Options granted under the Plan will be used for general corporate purposes.
ARTICLE XI
NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION
By electing to participate in the Plan, each Employee agrees to notify the
Company in writing immediately after the Employee transfers Stock acquired under
the Plan, if such transfer occurs within two years after the first business day
of the Option Period in which such Stock was acquired or within one year from
the date of purchase of the Stock. Each Employee further agrees to provide any
information about such a transfer as may be requested by the Company or any
subsidiary corporation in order to assist it in complying with the tax laws.
Such dispositions generally are treated as "disqualifying dispositions" under
Sections 421 and 424 of the Code, which have certain tax consequences to
participants and to the Company and its participating subsidiaries.
ARTICLE XII
WITHHOLDING OF ADDITIONAL INCOME TAXES
By electing to participate in the Plan, each Employee acknowledges that the
Company and its participating subsidiaries may be required to withhold taxes
with respect to the Employee's participation in the Plan, and each Employee
agrees that the Company and its participating subsidiaries may deduct additional
amounts from the Employee's compensation, when amounts are added to the
Employee's account, used to purchase Stock or refunded, in order to satisfy such
withholding obligations. Each Employee further
A-5
<PAGE> 23
acknowledges that when Stock is purchased under the Plan the Company and its
participating subsidiaries may be required to withhold taxes with respect to all
or a portion of the difference between the fair market value of the Common Stock
purchased and its purchase price, and each Employee agrees that such taxes may
be withheld from compensation otherwise payable to such Employee. It is intended
that tax withholding will be accomplished in such a manner that the full amount
of payroll deductions elected by the Employee under Article V will be used to
purchase Common Stock. However, if amounts sufficient to satisfy applicable tax
withholding obligations have not been withheld from compensation otherwise
payable to any Employee, then, notwithstanding any other provision of the Plan,
the Company may withhold such taxes from the Employee's accumulated payroll
deductions and apply the net amount to the purchase of Stock, unless the
Employee pays to the Company, prior to the exercise date, an amount sufficient
to satisfy such withholding obligations. Each Employee further acknowledges that
the Company and its participating subsidiaries may be required to withhold taxes
in connection with the disposition of stock acquired under the Plan and agrees
that the Company or any participating subsidiary may take whatever action it
considers appropriate to satisfy such withholding requirements, including
deducting from compensation otherwise payable to such Employee an amount
sufficient to satisfy such withholding requirements or conditioning any
disposition of Stock by the Employee upon the payment to the Company or such
subsidiary of an amount sufficient to satisfy such withholding requirements.
A-6
<PAGE> 24
DIRECTIONS TO ILLUMINET MEETING OF STOCKHOLDERS
ILLUMINET HOLDINGS, INC.
7400 WEST 129TH STREET
OVERLAND PARK, KS 66213-2633
(913) 814-6200
DIRECTIONS TO ILLUMINET FROM THE KCI AIRPORT
[ ] I-29 North to I-435
[ ] I-435 to US-69 South
[ ] US-69 South to 135th Street
[ ] Travel East on 135th Street to Metcalf
[ ] Turn left (North) at 135th and Metcalf
[ ] Turn left (West) onto 129th Street
[ ] Turn right (North) into our drive
[ ] It is a red brick building on your right.
[Graphic of Map]
<PAGE> 25
COMMON STOCK
PROXY
ILLUMINET HOLDINGS, INC.
P. O. BOX 2909
OLYMPIA, WA 98507
The undersigned hereby appoints Richard A. Lumpkin and Roger H. Moore, and
each of them proxies, with full power of substitution and revocation, to vote
the shares of stock of Illuminet Holdings, Inc. which the undersigned is
entitled to vote at the annual meeting of stockholders to be held in Overland
Park, Kansas at the Company's office at 7400 West 129th Street, Overland Park,
Kansas 66213-2633 on May 5, 2000 at 10:00 a.m. CDT, and at any adjournment
thereof, with all the powers the undersigned would possess if present.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ILLUMINET
HOLDINGS, INC.
Please mark your vote, sign, date and return promptly in the enclosed,
postage-paid envelope.
This proxy, when properly executed, will be voted as instructed herein by
the undersigned stockholder. If no instructions are given, this proxy will be
voted "FOR" the proposals herein and according to the discretion of the proxy
holders on any other matters that may properly come before the meeting.
A VOTE FOR PROPOSAL I AND II IS RECOMMENDED BY THE BOARD OF DIRECTORS.
I. To elect the following nominees for directors for a three year term
expiring at the 2003 Annual Meeting of Stockholders:
Roger H. Moore Aubrey E. Judy
<TABLE>
<S> <C>
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY
to vote for all nominees listed above
</TABLE>
[ ] FOR all nominees except __________________________
(please fill in name)
(CONTINUED ON REVERSE SIDE)
<PAGE> 26
(CONTINUED FROM REVERSE SIDE)
II. To approve the Employee Stock Purchase Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Please sign exactly as name appears on this proxy. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such. If
a corporation, please sign in full corporate name by an authorized officer. If a
partnership, please sign in partnership name by an authorized person.
---------------------------
Date
---------------------------
Name of Stockholder
---------------------------
Authorized Signature
---------------------------
Title of Authorized
Signature
<PAGE> 27
CLASS A COMMON STOCK
PROXY
ILLUMINET HOLDINGS, INC.
P. O. BOX 2909
OLYMPIA, WA 98507
The undersigned hereby appoints Richard A. Lumpkin and Roger H. Moore, and
each of them proxies, with full power of substitution and revocation, to vote
the shares of stock of Illuminet Holdings, Inc. which the undersigned is
entitled to vote at the annual meeting of stockholders to be held in Overland
Park, Kansas at the Company's office at 7400 West 129th Street, Overland Park,
Kansas 66213-2633 on May 5, 2000 at 10:00 a.m. CDT, and at any adjournment
thereof, with all the powers the undersigned would possess if present. Each
share of Class A Common Stock is entitled to four votes.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ILLUMINET
HOLDINGS, INC.
Please mark your vote, sign, date and return promptly in the enclosed
postage paid envelope.
This proxy, when properly executed, will be voted as instructed herein by
the undersigned stockholder. If no instructions are given, this proxy will be
voted "FOR" the proposals herein and according to the discretion of the proxy
holders on any other matters that may properly come before the meeting.
A VOTE FOR PROPOSAL I AND II IS RECOMMENDED BY THE BOARD OF DIRECTORS.
I. To elect the following nominees for directors for a three year term
expiring at the 2003 Annual Meeting of Stockholders:
Roger H. Moore Aubrey E. Judy
<TABLE>
<S> <C>
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY
to vote for all nominees listed above
</TABLE>
[ ] FOR all nominees except __________________________
(please fill in name)
(CONTINUED ON REVERSE SIDE)
<PAGE> 28
(CONTINUED FROM REVERSE SIDE)
II. To approve the Employee Stock Purchase Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Please sign exactly as name appears on this proxy. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such. If
a corporation, please sign in full corporate name by an authorized officer. If a
partnership, please sign in partnership name by an authorized person.
---------------------------
Date
---------------------------
Name of Stockholder
---------------------------
Authorized Signature
---------------------------
Title of Authorized
Signature
