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DRAFT: APRIL 22, 2000
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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 Rule 14a-11(c) or Rule
14a-12
iGate Capital Corporation
(Name of Registrant as Specified In Its Charter)
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:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials:
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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iGate Capital Corporation
1004 McKee Road
Oakdale, Pennsylvania 15071
Telephone: (412) 787-2100
May 15, 2000
Dear iGate Capital Shareholder:
You are cordially invited to attend our 2000 Annual Meeting of Shareholders
to be held on Monday, June 5, 2000, at 8:00 a.m., local time, at the corporate
offices of iGate Capital Corporation, 1004 McKee Road, Oakdale, Pennsylvania
15071.
The Annual Meeting will begin with a report on Company operations, followed
by discussion and voting on the matters described in the accompanying Notice
of Annual Meeting and Proxy Statement.
Please read the accompanying Notice of Annual Meeting and Proxy Statement
carefully. Whether or not you plan to attend, you can ensure that your shares
are represented at the Annual Meeting by promptly completing, signing, dating
and returning the enclosed proxy card in the envelope provided.
Sincerely,
/s/ SUNIL WADHWANI
Sunil Wadhwani
Co-Chairman of the Board and
Chief Executive Officer
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iGATE CAPITAL CORPORATION
1004 McKee Road
Oakdale, Pennsylvania 15071
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on June 5, 2000
----------------
The Annual Meeting of Shareholders of iGate Capital Corporation (the
"Company") will be held at the Company's corporate offices at 1004 McKee Road,
Oakdale, Pennsylvania on Monday, June 5, 2000, at 8:00 a.m., to consider and
act upon the following matters:
1. The election of two (2) persons as Class A Directors;
2. To consider and approve the adoption of the Company's Amended and
Restated Stock Incentive Plan;
3. To consider and approve the adoption of the Company's Second Amended and
Restated Articles of Incorporation;
4. To ratify the selection of Arthur Andersen LLP as the Company's
independent accountants for the fiscal year ending December 31, 2000;
and
5. To act upon such other matters as may properly come before the meeting
or any adjournments or postponements thereof.
The Board of Directors has established the close of business on April 20,
2000, as the record date for the determination of the shareholders entitled to
notice of and to vote at the Annual Meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, DATE
AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE TO ASSURE REPRESENTATION OF YOUR SHARES AT THE MEETING. NO POSTAGE IS
NECESSARY IF MAILED IN THE UNITED STATES.
Your proxy may be revoked at any time prior to the Annual Meeting. If you
decide to attend the Annual Meeting and wish to change your proxy vote, you
may do so automatically by voting in person at the Annual Meeting.
By Order of the Board of Directors
/s/ BRUCE HANEY
Bruce Haney
Managing Director, Chief Financial
Officer, Treasurer and Secretary
Oakdale, PA
May 15, 2000
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TABLE OF CONTENTS
<TABLE>
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PURPOSE OF MEETING......................................................... 1
VOTING RIGHTS AND SOLICITATION............................................. 1
Voting..................................................................... 1
Proxies.................................................................... 1
Solicitation of Proxies.................................................... 2
PROPOSAL NO. 1--ELECTION OF DIRECTORS...................................... 2
General.................................................................... 2
Business Experience of Directors........................................... 2
Board Committees and Meetings.............................................. 3
Director Compensation...................................................... 4
Recommendation of the Board of Directors................................... 4
PROPOSAL NO. 2--APPROVAL OF AMENDMENT AND RESTATEMENT OF THE SECOND AMENDED
AND RESTATED 1996 STOCK INCENTIVE PLAN.................................... 4
General.................................................................... 4
Purpose and Effect of the Amended Plan..................................... 5
Description of the Amended Plan............................................ 5
Votes Required............................................................. 9
Recommendation of the Board of Directors................................... 9
PROPOSAL NO. 3--APPROVAL OF AMENDMENT AND RESTATEMENT OF THE AMENDED AND
RESTATED ARTICLES OF INCORPORATION........................................ 9
General.................................................................... 9
Purpose and Effect of Amendments........................................... 9
Description of the Amended Articles........................................ 10
Votes Required............................................................. 10
Recommendation of the Board of Directors................................... 10
PROPOSAL NO. 4--RATIFICATION OF INDEPENDENT ACCOUNTANTS.................... 10
Recommendation of the Board of Directors................................... 11
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT................ 12
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.................... 12
EXECUTIVE OFFICERS AND EXECUTIVE COMPENSATION.............................. 13
Executive Officers......................................................... 13
Summary Compensation Table................................................. 15
Option Grants During 1999.................................................. 16
Option Exercises During 1999 and Year End Option Values.................... 16
Employment Agreements...................................................... 17
Compensation Committee Interlocks and Insider Participation................ 17
Report of the Compensation Committee on Executive Compensation............. 18
STOCK PERFORMANCE CHART.................................................... 20
CERTAIN RELATED PARTY TRANSACTIONS......................................... 20
SUBMISSION OF SHAREHOLDER PROPOSALS TO BE INCLUDED IN 2001 PROXY STATEMENT. 21
FORM 10-K.................................................................. 22
OTHER MATTERS.............................................................. 22
</TABLE>
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iGATE CAPITAL CORPORATION
1004 McKee Road
Oakdale, Pennsylvania 15071
----------------
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
to be held on June 5, 2000
----------------
This Proxy Statement is being furnished to the holders of the common stock,
par value $.01 per share (the "Common Stock"), of iGate Capital Corporation, a
Pennsylvania corporation, in connection with the solicitation by the Board of
Directors of the Company (the "Board of Directors" or the "Board") of proxies
to be voted at the annual meeting of shareholders (the "Annual Meeting")
scheduled to be held on Monday, June 5, 2000 at 8:00 a.m., at the Company's
corporate offices at 1004 McKee Road, Oakdale, Pennsylvania, or at any
adjournment or postponement thereof. This Proxy Statement is being mailed to
shareholders on or about May , 2000. As used in this Proxy Statement, the
terms "iGate" and "the Company" refer to iGate Capital Corporation and its
subsidiaries, unless the context otherwise requires.
PURPOSE OF MEETING
The specific proposals to be considered and acted upon at the Annual Meeting
are summarized in the accompanying Notice of Annual Meeting of Shareholders.
Each proposal is described in more detail in this Proxy Statement.
VOTING RIGHTS AND SOLICITATION
VOTING
Only holders of record of the Common Stock as of the close of business on
April 20, 2000 (the "Record Date") are entitled to notice of and to vote at
the Annual Meeting and any adjournment or postponement thereof. On the Record
Date, there were 49,469,167 shares of Common Stock outstanding.
The presence in person or by proxy of the holders of a majority of the
shares of Common Stock outstanding is required to constitute a quorum for the
transaction of business at the Annual Meeting. The holders of Common Stock
have one vote for each share held by them as of the Record Date. In the
election of directors, the duly nominated candidates receiving the highest
number of votes will be elected as directors. Shareholders may not cumulate
votes in the election of directors. Adoption and approval of each of the
Amended and Restated Stock Incentive Plan and the Second Amended and Restated
Articles of Incorporation, and ratification of the independent accountants for
the fiscal year ending December 31, 2000, requires the affirmative vote of a
majority of the votes cast by holders of shares of the Company's Common Stock
entitled to vote at the Annual Meeting.
PROXIES
All shares of Common Stock represented by proxies that are properly signed,
completed and returned to the Secretary of the Company at or prior to the
Annual Meeting will be voted as specified in the proxy. If a proxy is signed
and returned but does not provide instructions as to the shareholder's vote,
the shares will be voted FOR the election of the Board's nominees to the Board
of Directors and each of the matters submitted by the Board of Directors for
vote by the shareholders. We are not aware of any business for consideration
at the Annual
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Meeting other than as described in this Proxy Statement; however, if matters
are properly brought before the Annual Meeting or any adjournment or
postponement thereof, then the persons appointed as proxies will have the
discretion to vote or act thereon according to their best judgment. A
shareholder giving a proxy has the power to revoke it any time prior to its
exercise by delivering to the Secretary of the Company a written revocation or
a duly executed proxy bearing a later date (although no revocation shall be
effective until notice thereof has been given to the Secretary of the
Company), or by attendance at the meeting and voting his or her shares in
person.
Under Pennsylvania law, proxies marked ABSTAIN are not considered to be cast
votes and thus, although they will count for purposes of determining whether
there is a quorum and for purposes of determining the voting power and number
of shares entitled to vote at the Annual Meeting, such abstentions will have
no effect on the approval of any matter to come before the meeting. Broker
non-votes will be counted for purposes of determining whether there is a
quorum at the Annual Meeting, but will have no effect on the approval of any
matter to come before the meeting.
SOLICITATION OF PROXIES
All costs of solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, the Company's directors, officers and
regular employees, without additional remuneration, may solicit proxies by
telephone, telegraph and personal interviews. Copies of solicitation material
will be furnished to brokerage houses, fiduciaries and custodians holding
shares in their names that are beneficially owned by others so that they may
forward this solicitation material to such beneficial owners, and the Company
will reimburse them for reasonable out-of-pocket expenses in connection with
the distribution of proxy solicitation material.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
GENERAL
The Company's Amended and Restated Articles of Incorporation currently
provide that the number of directors constituting the Board shall be five (5).
The Company's Board of Directors is divided into three (3) classes, with each
class to be nearly equal in number and the classes to be elected for staggered
terms of three (3) years as follows: two (2) Class A directors whose terms
expire in 2000; two Class B directors whose terms expire in 2001; and one (1)
Class C director whose term expires in 2002. Therefore, two (2) directors are
being elected to Class A at the Annual Meeting for a three-year term that will
expire in the year 2003.
The names of the persons who are nominees for Class A directors are Michel
Berty and J. Gordon Garrett, who presently serve as Class A directors. The
persons appointed as proxies intend to vote the shares represented by them at
the Annual Meeting for the election of Messrs. Berty and Garrett as Class A
directors. The Board of Directors knows of no reason why either Mr. Berty or
Mr. Garrett would be unable to serve as a director. If at the time of the
Annual Meeting either Mr. Berty or Mr. Garrett is unable or unwilling to serve
as a Class A director, the persons appointed as proxies intend to vote for any
substitute as may be nominated by the Board of Directors. Mr. Berty has
indicated to the Board of Directors that, at this time, he does not plan to
serve as a director for the full three years of the term. If and when Mr.
Berty should resign as a director, the Board may elect another Class A
director to fill the resulting vacancy.
BUSINESS EXPERIENCE OF DIRECTORS
Nominees for Directors in Class A
Michel Berty, age 60, was appointed as a director of the Company effective
immediately after the Company's initial public offering in December 1996, and
was elected as a Class A director by the shareholders in 1997 to serve a three
year term expiring in 2000. Mr. Berty served in various executive and
management
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positions with the Cap Gemini Group, a provider of management consulting and
information technology services, from 1972 through April 1997, and most
recently, from 1992 through April 1997, as Chairman and Chief Executive
Officer of the U.S. subsidiary of Cap Gemini. Mr. Berty serves as a member of
the board of directors of DataRaid, Elligent Consulting, Level 8 Systems,
Merant, Netgain, Sapiens International and Tek21. He is also the President of
PAC U.S., the U.S. subsidiary of PAC, a foreign information technology
strategy consulting firm.
J. Gordon Garrett, age 60, was appointed as a director of the Company
effective immediately after the Company's initial public offering in December
1996, and was elected as a Class A director by the shareholders in 1997 to
serve a three year term expiring in 2000. From 1996 to 2000, Mr. Garrett was
Senior Vice President of Ricoh Corp. located in Caldwell, New Jersey, a
manufacturer and distributor of digital imaging systems, printers, cameras and
related supplies, and Chief Executive Officer of Ricoh Canada. From 1991 to
1995, Mr. Garrett was Chairman of the Board, Chief Executive Officer &
President of Information Systems Management Corporation. He held the position
of President of Gestetner USA from 1989 to 1991.
Director in Class C Whose Term Expires in 2002
Sunil Wadhwani, age 47, has served as Co-Chairman and Chief Executive
Officer of the Company since October 1996, and as a director since 1986. He
was elected as a Class C director by the shareholders in 1999 to serve a three
year term expiring in 2002. From 1986 through September 1996, he served as
Chairman of the Company and held several other offices, including Vice
President, Secretary and Treasurer. From 1981 to 1986, Mr. Wadhwani served as
President of Uro-Valve, Inc., a start-up manufacturer of specialized medical
devices that he founded in 1981. Prior to 1981, Mr. Wadhwani worked as a
management consultant assisting companies in strategic planning, operations,
marketing and sales.
Directors in Class B Whose Terms Expire in 2001
Ashok Trivedi, age 51, has served as Co-Chairman and President of the
Company since October 1996, and as a director since 1988. He was elected as a
Class B director by the shareholders in 1998 to serve a three year term
expiring in 2001. From 1988 through September 1996, Mr. Trivedi served as
President of the Company and held other offices, including Secretary and
Treasurer. From 1976 to 1988, he held various marketing and management
positions with Unisys Corporation.
Ed Yourdon, age 56, was appointed as a director of the Company effective
immediately after the Company's initial public offering in December 1996, and
was elected as a Class B director by the shareholders in 1998 to serve a three
year term expiring in 2001. Mr. Yourdon has served as a consultant to the
information technology industry for the past thirty-five years, most currently
focusing on the Internet, business re-engineering, object technology and the
design of Internet/intranet software applications.
BOARD COMMITTEES AND MEETINGS
During 1999, the Board of Directors met four times with all directors in
attendance at each meeting. The Board of Directors has established three
standing committees: an Audit Committee, a Compensation Committee and an
Executive Committee. The Company does not have a standing nominating
committee.
Audit Committee
The Board has an Audit Committee currently consisting of Messrs. Garrett,
Berty and Wadhwani, a majority of whom are independent directors. The Audit
Committee's duties include recommending to the Board of Directors the firm of
independent accountants to audit the Company's financial statements, reviewing
the scope and results of the independent auditors' activities and the fees
proposed and charged therefor, reviewing the adequacy of internal controls,
reviewing the scope and results of internal audit activities, and reporting
the results of the committee's activities to the full Board. During 1999, the
Audit Committee met two times with all committee members in attendance at each
meeting.
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Compensation Committee
The Board has a Compensation Committee currently consisting of Messrs.
Garrett and Berty, both of whom are independent directors. The Compensation
Committee is responsible for reviewing and approving matters involving the
compensation of directors and executive officers of the Company, periodically
reviewing management development plans, administering the incentive
compensation plans and making recommendations to the full Board on these
matters. During 1999, the Compensation Committee, which consisted of Messrs.
Berty, Garrett and Trivedi, met two times with all committee members in
attendance at each meeting.
Executive Committee
The Board has an Executive Committee currently consisting of Messrs.
Wadhwani and Trivedi, which exercises the full power of the Board of Directors
between meetings of the Board, provided, however, that the Executive Committee
does not have power or authority to: (i) approve any fundamental change that
requires shareholder approval; (ii) create or fill vacancies on the Board of
Directors; (iii) adopt, amend or repeal the Bylaws; (iv) take any action with
respect to the compensation of executive officers; (v) take any other action
committed by resolution of the Board of Directors to another committee of the
Board of Directors; (vi) authorize the issuance of any shares of the Company's
stock; or (vii) authorize any distributions with respect to the Company's
outstanding shares. The Executive Committee did not meet during 1999.
DIRECTOR COMPENSATION
Directors who are not executive officers of the Company are paid an annual
retainer of $20,000, and all directors are reimbursed for travel expenses
incurred in connection with attending Board and committee meetings. Directors
are not entitled to additional fees for serving on committees of the Board of
Directors. Pursuant to the terms of the Company's Second Amended and Restated
1996 Stock Incentive Plan, each of Messrs. Berty, Garrett and Yourdon, the
non-employee directors of the Company, were granted (i) options to purchase
30,000 shares of Common Stock in December of 1996 (the "1996 Options") and
(ii) options to purchase 15,000 shares of Common Stock in September of 1999
(the "1999 Options"). The options vest in equal annual installments over three
years and expire ten years after grant, subject to earlier termination if the
optionee ceases to serve as a director prior to vesting. All of the 1996
Options had vested as of December 16, 1999. The first of three annual
installments of the 1999 Options will qualify for vesting as of September 13,
2000. The exercise price for the 1996 Options was $7.50 per share, which was
the price per share for the Common Stock in the Company's initial public
offering as adjusted pursuant to a subsequent two-for-one stock split. The
exercise price for the 1999 Options is $14.31.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors unanimously recommends that the shareholders vote FOR
the nominees listed herein.
PROPOSAL NO. 2
APPROVAL OF AMENDMENT AND RESTATEMENT OF THE SECOND AMENDED AND RESTATED 1996
STOCK INCENTIVE PLAN
GENERAL
On April 6, 2000 the Board of Directors unanimously approved the amendment
and restatement of the Company's Second Amended and Restated 1996 Stock
Incentive Plan (the "1996 Plan"), and the Board has directed that the same be
submitted to the shareholders for approval at the Annual Meeting. If approved,
the amended and restated 1996 Plan will be called the iGate Capital
Corporation Amended and Restated Stock Incentive Plan (the "Amended Plan").
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PURPOSE AND EFFECT OF THE AMENDED PLAN
The Amended Plan will reflect changes as to the number of shares of Common
Stock available for issuance pursuant to the Amended Plan, the number of
shares of Common Stock with respect to which stock options may be granted to
any one individual during a calendar year, and the definition of and
consequences of a change of control of the Company. The Amended Plan will
increase the number of shares of Common Stock available for issuance to assure
that a sufficient reserve of Common Stock is available under the Amended Plan
to attract and retain the services of key employees essential to the Company's
long-term growth and success, including individuals who enter the Company's
service through acquisitions or other business combinations.
The Amended Plan's increase in the number of shares with respect to which
options may be granted to any one individual participant during any one
calendar year period will better enable the Company to compete effectively in
the attraction and retention of key employees essential to the Company's long-
term growth and success.
The Amended Plan's definition of the events that shall constitute a change
of control and provision under certain specified circumstances for accelerated
vesting of options and stock appreciation rights ("SARs"), and accelerated
release of restrictions on restricted stock awards, upon the occurrence of a
change of control is intended (i) to more clearly define the circumstances
which shall constitute a change in control and the consequences of the
occurrence thereof on awards issued and outstanding under the 1996 Plan and to
be issued pursuant the Amended Plan and (ii) to enhance the value to
participants of awards issued pursuant to the 1996 Plan and to be issued
pursuant to the Amended Plan so as to permit the Company to provide incentives
comparable to those offered by other entities competing for the same pool of
employees and thereby compete more effectively in the attraction and retention
of employees.
Following is a summary of the principal features of the Amended Plan.
DESCRIPTION OF THE AMENDED PLAN
All share numbers referred to herein reflect the Company's two-for-one stock
split in April 1998.
Purposes. The primary purposes of the Amended Plan are to promote the long-
term success of the Company and its shareholders by strengthening the
Company's ability to attract and retain highly competent directors, employees
and consultants and to provide a means to encourage stock ownership and
proprietary interest in the Company. Grants of awards under the Amended Plan
are consistent with the Company's goal of providing total employee
compensation that is competitive in the marketplace, recognizing meaningful
differences in individual performance, fostering teamwork and offering the
opportunity to earn above-average rewards when merited by individual and
Company performance.
Eligibility. Directors, officers, employees and consultants of the Company
and its subsidiaries who, in the opinion of the Plan Administrator, are mainly
responsible for the continued growth and development and future financial
success of the Company shall be eligible to participate in the Plan. The
number of shares of Common Stock which may be issued pursuant to the Amended
Plan will be 10,000,000 shares, with an automatic increase on the first day of
each fiscal year beginning on or after January 1, 2001 and ending on or before
December 31, 2006, equal to the lesser of (A) 2,000,000 shares, (13) three
percent of the shares of Common Stock of the Company outstanding on the last
day of the immediately preceding fiscal year or (C) such lesser number of
shares as is determined by the Board of Directors. The aggregate number of
shares of Common Stock that may be covered by stock option awards granted to
any single individual under the Amended Plan may not exceed 500,000 shares per
calendar year.
Types of Awards. Under the Amended Plan, participants may receive stock
options, SARs, stock awards, performance share awards and restricted stock
awards, as discussed in greater detail below. The Plan Administrator will
determine the type or types of awards to be made to each participant. Awards
may be granted
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singly, in combination or in tandem. "Fair Market Value" for all awards
granted under the Amended Plan is defined generally as the closing price of a
share of Common Stock on the date of grant as reported on the Nasdaq National
Market.
Administration. The Compensation Committee of the Board of Directors
currently serves as the Plan Administrator, which has full and exclusive power
to administer and interpret the Amended Plan and its provisions. This power
includes, but is not limited to, selecting award recipients, establishing all
award terms and conditions, adopting procedures and regulations governing
awards and making all other determinations necessary or advisable for the
administration of the Amended Plan. All decisions made by the Plan
Administrator are final and binding on all persons affected by such decisions.
Stock Options. A stock option represents a right to purchase a specified
number of shares of Common Stock during a specified period as determined by
the Plan Administrator. The purchase price per share for each stock option
shall be determined by the Plan Administrator, provided, however, that such
price shall not, in the case of an Incentive Stock Option ("ISO"), be less
than 100% of the Fair Market Value of a share of Common Stock on the date of
grant, subject to certain exceptions. A stock option may be in the form of an
ISO which complies with Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), or a non-qualified stock option. The shares covered by a
stock option may be purchased by (i) cash payment (ii) tendering shares of
Common Stock, (iii) third-party cashless exercise transactions or (iv) any
combination of these methods. The term of any ISO shall not exceed ten years
from the date of grant.
SARs. An SAR generally represents a right to receive payment, in cash and/or
shares of Common Stock, equal to the excess of the Fair Market Value of a
specified number of shares of Common Stock on the date the SAR is exercised
over the Fair Market Value of such shares on the date the SAR was granted, as
set forth in the applicable award agreement.
Stock Awards. The Plan Administrator may, in its sole discretion, grant or
sell a stock award to any officer, employee or consultant of the Company or
its subsidiaries, pursuant to which such individual may receive shares of
Common Stock free of any vesting restrictions. Stock awards may be granted or
sold in respect of past services or other valid consideration, or in lieu of
any cash compensation due to such individual.
Performance Share Awards. Independent of or in connection with the granting
of any other award under the Amended Plan, the Plan Administrator may, in its
sole discretion, grant performance share awards to any officer, employee or
consultant of the Company or its subsidiaries. A performance share award is an
award entitling the recipient to acquire shares of Common Stock upon the
attainment of specialized performance goals, which shall be determined by the
Plan Administrator.
Restricted Stock Awards. Restricted stock awards entitle the participant to
acquire shares subject to such restrictions, conditions and vesting schedules
as the Plan Administrator may determine.
Changes in Capitalization. If, through or as a result of any reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other similar transaction, the outstanding shares of Common Stock are
increased or decreased or are exchanged for a different number or kind of
shares or other securities of the Company, or additional shares or new or
different shares or other securities of the Company or other non-cash assets
are distributed with respect to such shares of common Stock or other
securities, adjustments shall be made with respect to (i) the aggregate number
of shares of Common Stock that may be issued under the Amended Plan, (ii) each
outstanding award made under the Amended Plan, and (iii) the exercise price
per share for any outstanding stock options, SARs or similar awards under the
Amended Plan.
Change of Control. In the event of a "change of control" (as defined below),
(i) all outstanding options and SARs that are not exercisable as of the
effective date of the change of control and that are not assumed by any
acquiring corporation or its parent or that are not replaced with a comparable
option or equity equivalent instrument shall automatically accelerate and
become exercisable immediately prior to the effective date of the
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change of control and (ii) all restrictions and conditions on any shares of
restricted stock that are not converted to a comparable restricted grant of
capital stock or equity equivalent instrument shall lapse upon the effective
date of the change of control. In addition to the foregoing, the Board of
Directors will have the discretion to require all holders of options and SARs
that are exercisable immediately prior to the change of control (including
those options and SARs that will become exercisable as a consequence of
acceleration triggered by the change of control) to surrender them in exchange
for payment by the Company in cash or in Common Stock, at the discretion of
the Board, of an amount equal to the amount, if any, by which the per-share
value of the Common Stock subject to unexercised options or SARs (determined
by the Board in good faith, based on the applicable price in the transaction
giving rise to the change of control, and such other consideration as the
Board deems appropriate) exceeds the exercise price of those options or SARs.
Awards granted prior to the effective date of the Amended Plan, as well as
awards granted after such effective date, shall be subject to these revised
provisions governing the consequences of a change of control.
For purposes of the foregoing, "change of control" shall mean the occurrence
of any of the following events:
(a) The acquisition, other than from the Company, by any individual,
entity or group (within the meaning of Section 13(d) (3) or 14(d) (2) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a
"Person") (other then the Company, a subsidiary or any of their respective
benefit plans or affiliates (within the meaning of Rule 144 under the
Securities Act of 1933, as amended)) of beneficial ownership (within the
meaning of Rule l3d-3 promulgated under the Exchange Act) of 30% or more of
either (i) the then outstanding shares of Common Stock (the "Outstanding
Stock") or (ii) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the "Company Voting Securities"); or
(b) Individuals who, as of the effective date the Amended Plan,
constitute the Board of Directors (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board of Directors,
provided that any individual becoming a director subsequent to the
effective date of the Amended Plan whose election or nomination for
election by the Company's shareholders was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial
assumption of office is in connection with an actual or threatened election
contest relating to the election of the directors of the Company (as such
terms are used in Rule l4a-11 of Regulation 14A promulgated under the
Exchange Act); or
(c) Approval by the shareholders of the Company of a reorganization,
merger or consolidation or similar form of corporate transaction, involving
the Company or any of its subsidiaries (a "Business Combination"), in each
case, with respect to which all or substantially all of the individuals and
entities who were the respective beneficial owners of the Outstanding Stock
and Company Voting Securities immediately prior to such Business
Combination do not, immediately following such Business Combination,
beneficially own, directly or indirectly, more than 50% of, respectively,
the then outstanding shares of common stock and the combined voting power
of the then outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation resulting
from such Business Combination in substantially the same proportion as
their ownership immediately prior to such Business Combination of the
Outstanding Stock and Company Voting Securities, as the case may be; or
(d) (A) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company or (B) sale or other disposition
of all or substantially all of the assets of the Company other than to a
corporation with respect to which, following such sale or disposition, more
than 50% of, respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors is then owned
beneficially, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of
the Outstanding Stock and Company Voting Securities immediately prior to
such sale or disposition in substantially the same proportion as their
ownership of the Outstanding Stock and Company Voting Securities, as the
case may be, immediately prior to such sale or disposition.
7
<PAGE>
Tax Withholding. Whenever shares are to be issued or cash is to be paid
under the Amended Plan, the Company shall have the right to require the
participant to remit to the Company an amount sufficient to satisfy federal,
state and local tax withholding requirements. Such withholding requirements
may be paid (i) in cash; (ii) in the discretion of the Plan Administrator,
through the delivery to the Company of previously-owned shares of Common Stock
having an aggregate Fair Market Value equal to the tax obligation provided
that the previously owned shares delivered in satisfaction of the withholding
obligations must have been held by the participant for at least six (6)
months; or (iii) in the discretion of the Plan Administrator, through a
combination of the procedures set forth in the foregoing subsections (i) and
(ii).
Federal Income Tax Consequences. In general, under the Code as presently in
effect, a participant will not be deemed to receive any income for federal
income tax purposes at the time an option or SAR is granted or a restricted
stock award or other non-vested share award is made, nor will the Company be
entitled to a tax deduction at that time. A participant will recognize
ordinary income and the Company will be entitled to a corresponding tax
deduction at the time a stock award is granted. When any part of an option or
SAR is exercised, when restrictions on restricted stock lapse (or performance
goals are attained for performance share awards) or when an unrestricted stock
award is made, the federal income tax consequences may be summarized as
follows:
(a) In the case of an exercise of a non-qualified stock option or a SAR
the participant will recognize ordinary income in an amount equal to the
difference between the option price and the Fair Market Value of the Common
Stock on the exercise date.
(b) In the case of performance share awards or restricted stock awards,
the immediate federal income tax effect for the recipient will depend on
the nature of the restrictions. Generally, the value of the Common Stock
will not be taxable to the recipient as ordinary income until the year in
which his or her interest in the stock is freely transferable or is no
longer subject to a substantial risk of forfeiture. However, the recipient
may elect to recognize income when the stock is received, rather than when
his or her interest in the stock is freely transferable or is no longer
subject to a substantial risk of forfeiture. If the recipient makes this
election, the amount taxed to the recipient, as ordinary income is
determined as of the date of receipt of the restricted stock. Unrestricted
stock awards will generally be taxable as ordinary income to the recipient
upon receipt.
(c) In the case of an ISO, there is no tax liability at the time of
exercise. However, the excess of the Fair Market Value of the Common Stock
on the exercise date over the option price is included in the participant's
income for purposes of the alternative minimum tax. If no disposition of
the ISO stock is made before the later of one year from the date of
exercise or two years from the date the ISO is granted, the participant
will realize a long-term capital gain or loss upon a sale of the stock; if
the stock is not held for the required period, ordinary income tax
treatment will generally apply to the amount of any gain at sale or
exercise, whichever is less, and the balance of any gain or loss will be
treated as capital gain or loss (long-term or short-term, depending on
whether the shares have been held for more than one year).
(d) Upon the exercise of a non-qualified stock option or SAR, or the
vesting of a performance share award or a restricted stock award, and the
recognition of income upon the vesting of a performance share award or a
restricted stock award, the Company will generally be allowed an income tax
deduction equal to the ordinary income recognized by the employee. The
Company does not receive an income tax deduction as a result of the
exercise of an ISO, provided that the ISO stock is held for the required
period as described above. If the ISO stock is not held for such required
period and ordinary income tax treatment is applied to the amount of any
gain at sale or exercise by the recipient, the Company will generally
receive an income tax deduction for a corresponding amount.
The foregoing is only a summary of the effect of federal income taxation
upon award recipients and the Company with respect to the grant and exercise
of awards under the Amended Plan. It does not purport to be complete, and does
not discuss the tax consequences of the employee's death or the provisions of
the income tax laws of any municipality, state or foreign country in which the
employee may reside.
8
<PAGE>
Interested Directors. Because members of the Board of Directors are eligible
to receive awards under the Amended Plan (some are also eligible to receive
awards in their capacities as executive officers of the Company), each of them
has a personal interest in the approval of the Amended Plan.
A copy of the proposed form of the Amended Plan is attached hereto as
Appendix A.
VOTES REQUIRED
The affirmative vote of a majority of the votes cast by holders of shares of
the Company's Common Stock entitled to vote at the Annual Meeting is required
for the approval of the Amended Plan at the Annual Meeting. If such
shareholder approval is not obtained, the 1996 Plan will continue in effect.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends that the shareholders vote FOR approval of
the Amended Plan.
PROPOSAL NO. 3
APPROVAL OF AMENDMENT AND RESTATEMENT OF
AMENDED AND RESTATED ARTICLES OF INCORPORATION
GENERAL
On April 6, 2000 the Board of Directors unanimously approved the amendment
and restatement of the Company's Amended and Restated Articles of
Incorporation (the "Articles") (i) to provide that the number of members of
the Board of Directors shall be determined from time to time by the Board of
Directors, provided that the number of such members shall not be less than
three or greater than nine, (ii) to provide that a majority of the directors
of the Company then serving shall constitute a quorum for the transaction of
business and that actions of a majority of the directors then serving shall be
the actions of the Board of Directors, and (iii) to clarify certain provisions
without substantive modification. The Board has directed that the proposed
amended and restated Articles (the "Amended Articles") be submitted to the
shareholders for approval at the Annual Meeting. If this proposal is approved,
the Company intends to file promptly the Amended Articles with the
Pennsylvania Secretary of State, upon which filing the Amended Articles will
become effective.
The Articles currently provide that (i) the number of members of the Board
of Directors shall be five and (ii) eighty percent of the directors then
serving shall constitute a quorum for the transaction of business and that any
action of the Board of Directors shall require the affirmative vote of eighty
percent of the directors then serving.
PURPOSE AND EFFECT OF AMENDMENTS
The provision of the Amended Articles governing the number of members of the
Board of Directors will provide more flexibility with respect to determining
the number of directors on the Board. With the ability to fix the number of
directors at a number other than five, the Company may have an enhanced
ability to attract directors from outside the Company whose skills and
experience will benefit the Company and the conduct and operations of the
Board, without subjecting the Company or its shareholders to the additional
expense and effort required to amend the Articles each time the Company wishes
to change the number of directors.
The provision of the Amended Articles governing the number of directors
required to constitute a quorum is consistent with applicable law.
9
<PAGE>
DESCRIPTION OF THE AMENDED ARTICLES
If the Amended Articles are approved, Section 6.1 of the Articles would be
amended and restated in its entirety as follows:
6.1 Number, Election, etc.
The Board of Directors shall be comprised as follows:
(a) Number. The Board of Directors shall have such number of members as
determined from time to time by the Board of Directors; provided that the
number of such members shall in no case be less than three or greater than
nine.
(b) Classes, Election and Terms. The directors elected by the holders of
voting stock shall be classified in respect to the time for which they
shall severally serve on the Board of Directors by dividing them into three
classes, each of whose members shall serve for staggered three-year terms.
At each annual meeting of the shareholders, the holders of outstanding
shares of the Corporation entitled to vote shall elect directors of the
class whose term then expires, to serve until the third succeeding annual
meeting. Except as otherwise provided in these Articles, each director
shall serve for the term for which elected and until his or her successor
shall be elected and shall qualify.
(c) Quorum and Board Action. Notwithstanding any provision of law or any
bylaw to the contrary, a majority of the directors then serving shall
constitute a quorum for the transaction of business, and the actions of a
majority of the directors then serving shall be the actions of the Board of
Directors.
(d) Removal of Directors. Notwithstanding any provision of law or any bylaw
to the contrary, a director or directors may be removed from the Board of
Directors at any time without cause by the affirmative vote of holders of
at least 66 2/3% of the outstanding shares of the Corporation entitled to
vote, voting together as a single class.
(e) Vacancies. Vacancies on the Board of Directors shall be filled only by
a majority vote of the remaining directors. All such directors elected to
fill vacancies shall serve on the Board for a term expiring at the annual
meeting of shareholders at which the term of the class to which they have
been elected expires. No decrease in the number of directors constituting
the Board of Directors shall shorten the term of any incumbent director.
A copy of the proposed form of the Amended Articles is attached hereto as
Appendix B.
VOTES REQUIRED
The affirmative vote of a majority of the votes cast by holders of shares of
the Company's Common Stock entitled to vote at the Annual Meeting is required
for approval of the Amended Articles at the Annual Meeting.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors unanimously recommends that the shareholders vote FOR
approval of the Amended Articles.
PROPOSAL NO. 4
RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed Arthur Andersen LLP, certified public
accountants, as the Company's independent accountants for the fiscal year
ending December 31, 2000. The affirmative vote of a majority of the votes cast
by holders of shares of the Company's Common Stock entitled to vote at the
Annual Meeting is required to ratify the selection of Arthur Andersen LLP as
the Company's independent accountants. Although shareholder approval is not
required, the Board desires to obtain shareholder ratification of this
appointment.
10
<PAGE>
In the event the shareholders fail to ratify the appointment, the Board of
Directors will reconsider its selection. Even if the selection is ratified,
the Board of Directors, in its discretion, may direct the appointment of a
different independent accounting firm at any time during the year if the Board
of Directors determines that such a change would be in the Company's and its
shareholders' best interest.
Representatives of Arthur Andersen LLP will be present at the Annual
Meeting, will have the opportunity to make a statement if they desire to do
so, and will be available to respond to appropriate questions.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors unanimously recommends that the shareholders vote FOR
the ratification of the selection of Arthur Andersen LLP to serve as the
Company's independent accountants for the fiscal year ending December 31,
2000.
11
<PAGE>
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of February 29, 2000 of: (i) each
person known by the Company to own beneficially more than 5% of the
outstanding shares of Common Stock; (ii) each executive officer named in the
Summary Compensation Table under the caption "Executive Compensation"; and
(iii) all directors and executive officers of the Company as a group. As of
February 29, 2000, there were 50,688,015 shares of Common Stock outstanding.
Except as noted all persons listed below have sole voting and investment power
with respect to their shares of Common Stock, subject to community property
laws where applicable.
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Ownership
--------------------------
Percentage of
Shares of Common Stock
Name and Address of Beneficial Owner Common Stock Outstanding
- ------------------------------------ ------------ -------------
<S> <C> <C>
Sunil Wadhwani (1)(2)............................................... 14,880,000 30.0%
Ramesh Thadani, as co-trustee of a Wadhwani family trust (2)(3)..... 2,398,315 4.8
Ashok Trivedi (2)(4)................................................ 14,880,000 30.0
Arun Nayar, as co-trustee of certain Trivedi family trusts (2)(5)... 4,370,597 8.8
Mohan Phanse, as co-trustee of certain Trivedi family trusts (2)(5). 2,395,034 4.8
Michel Berty........................................................ 20,000 *
J. Gordon Garrett................................................... 35,600 *
Ed Yourdon.......................................................... 30,000 *
Steven Shangold (6)................................................. 111,668 *
Lisa Kustra......................................................... 0 *
Ajmal Noorani....................................................... 35,000 *
All directors and executive officers as a group 13 persons (7)...... 30,347,268 61.3
</TABLE>
- --------
* Less than 1%
(1) Includes 4,372,261 shares held by three family trusts, for which Mr.
Wadhwani is a co-trustee with sole investment power and no voting power
over such shares.
(2) The address of Messrs. Wadhwani, Trivedi, Thadani, Nayar and Phanse is
c/o iGate Capital Corporation, 1004 McKee Road, Oakdale, Pennsylvania
15071.
(3) Mr. Thadani is a co-trustee of two of the Wadhwani family trusts referred
to in note 1, above, with no investment power and sole voting power over
such shares.
(4) Includes 4,370,597 shares held by three family trusts, for which Mr.
Trivedi is a co-trustee with sole investment power and no voting power
over such shares.
(5) Mr. Nayar is co-trustee of the three Trivedi family trusts and Mr. Phanse
is co-trustee of two of the Trivedi family trusts, in each case, referred
to in note 4 above, with no investment power and shared voting power over
such shares.
(6) Includes 10,000 shares of Common Stock underlying options which are
exercisable on or before February 29, 2000 or within 60 days after such
date.
(7) Includes 40,000 shares of Common Stock underlying options which are
exercisable on or before February 29, 2000 or within 60 days after such
date.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers, and
persons who own more than 10 percent of a registered class of the Company's
equity securities, to file reports of ownership and change in ownership with
the Securities and Exchange Commission and NASDAQ. Directors, executive
officers and other 10 percent shareholders are required by SEC regulations to
furnish the Company with copies of all Section 16(a) reports that they file.
12
<PAGE>
Based solely on its review of the copies of such reports, and written
representations from the reporting persons, the Company believes that during
1999, all filing requirements under Section 16(a) applicable to its directors
and executive officers were met.
EXECUTIVE OFFICERS AND EXECUTIVE COMPENSATION
EXECUTIVE OFFICERS
In addition to Messrs. Wadhwani and Trivedi, whose positions and background
are discussed above, the following persons served in 1999 or serve as of the
date hereof as executive officers of the Company:
Murali Balasubamanyam, age 44, was appointed Director of the Scott Systems
division of Mascot Systems, a wholly owned subsidiary of the Company, on
January 8, 2000. He served as Director of Scott Systems, which was a wholly
owned subsidiary of the Company, from July 1998 until substantially all of the
assets of Scott Systems were sold to Mascot Systems effective January 8, 2000.
From October 1995 to June 1998, he served as the Company's Vice President--
Human Resources and from September 1994 to September 1995, he served as the
Company's Director--Human Resources. Prior to joining the Company, he served
as Deputy General Manager (Human Resources) with HCL Group of Companies, a
provider of marketing services in the Asia/Pacific region, from November 1992
to September 1994. Mr. Balasubamanyam earned a Bachelor's degree in Business
Administration from Madurai University. As a result of the sale of the assets
of Scott Systems and the reorganization of the Company effected in 2000, Mr.
Balasubamanyam is no longer an executive officer of the Company.
Bruce Haney, age 44, was appointed Managing Director and Chief Financial
Officer of the Company on March 1, 2000. Mr. Haney served as Chief Financial
Officer of FORE Systems, Inc., a provider of high performance local area
network products, from June 1998 through December 1999, and from June 1986 to
June 1998 he served as President and Co-Founder of the Gustine Company. Mr.
Haney worked for Arthur Andersen LLP for six years, most recently as a tax
manager, prior to his founding of the Gustine Company. Mr. Haney serves on the
Board of Directors of Infosage, Inc., and CTR Systems, Inc. He has a Master's
degree in Taxation from DePaul University and a Bachelor's degree in Economics
from the University of Pennsylvania's Wharton School and is a certified public
accountant in the State of Pennsylvania.
Lisa Kustra, age 40, was appointed Chief Executive Officer of eJIVA Inc., on
September 15, 1999. eJIVA Inc. is a majority owned operating subsidiary of
iGate Capital Corporation. Ms. Kustra served as Senior Vice President--
Enterprise Package Solutions Division of the Company from August 1998 through
September 15, 1999. From September 1997 to July 1998, she served as the Vice
President--Enterprise Package Solutions Division and from January 1996 to
August 1997, she served as the Director of the Company's Enterprise Package
Solutions Division. From August 1992 to December 1995, Ms. Kustra held various
managerial positions with the Company including National Sales Manager--
Strategic Alliance Division. Ms. Kustra earned Bachelors' degrees in Business
Management and Psychology from the University of Pittsburgh. As a result of
her appointment as Chief Executive Officer of eJIVA, Inc. and the
reorganization of the Company in 2000, Ms. Kustra is no longer an executive
officer of the Company.
Jeffrey McCandless, age 41, served as Vice President--Finance and Chief
Financial Officer of the Company from November 1997 until his resignation from
the Company effective March 17, 2000. Prior to joining the Company, he was
employed by Winner International, a manufacturer of anti-theft and other
security products, as Chief Financial Officer from November 1991 through
October 1997. Mr. McCandless is a certified public accountant with over 19
years of financial and operational experience. Mr. McCandless earned a
Bachelor's degree in Business Administration from Westminster College.
Ajmal Noorani, age 38, was appointed Chief Executive Officer of Ex-tra-Net
Applications on January 18, 2000. Ex-tra-Net Applications is a majority owned
operating subsidiary of iGate Capital Corporation. Mr.
13
<PAGE>
Noorani served as Vice President--E-Business Solutions Division of the Company
from March 1999 through January 18, 2000. From June 1996 to February 1999 he
was the Company's Vice President--International
Operations. From June 1994 to May 1996, he was employed by Mellon Bank as an
Assistant Vice President--Corporate Finance. From 1990 to May 1994, Mr.
Noorani held a number of positions with the Company, including Director--
Government Division. Mr. Noorani earned a Master's degree in Industrial
Administration from Carnegie- Mellon University and a Bachelor's degree in
Engineering from Maharaja Sayajrao University. As a result of his appointment
as Chief Executive Officer of Ex-tra-Net Applications and the reorganization
of the Company in 2000, Mr. Noorani is no longer an executive officer of the
Company.
Sushma Rajagopalan, age 36, served as Vice President--Enterprise Network
Solutions of the Company from June 1999 until April 1, 2000, when she became
President of Enterprise Network Solutions, Inc., a wholly owned subsidiary of
the Company formed for the purpose of entering into a joint venture with
Planning Technologies, Inc. ("PTI"). Enterprise Network Solutions was merged
with and into PTI in conjunction with the joint venture, and Ms. Rajagopalan
is currently the President of Operations of PTI. From October 1995 to June
1999, she served as Vice President--Global Resourcing and Recruiting of the
Company. From June 1993 to October 1995, she served as the Company's
Director--Federal Division, and between November 1992 and June 1993, she held
various managerial positions with the Company. Ms. Rajagopalan earned a
Master's degree in Personnel Management from the Tata Institute of Social
Sciences. As a result of the merger of Enterprise Network Solutions Inc. with
and into PTI, Ms. Rajagopalan is no longer an executive officer of the
Company.
Steven Shangold, age 39, was appointed Chief Executive Officer of Emplifi
Inc. on April 6, 2000. Emplifi Inc. is a wholly owned operating subsidiary of
iGate Capital Corporation. Mr. Shangold served as Senior Vice President--U. S.
Client Services of the Company from August 1998 through April 6, 2000. From
September 1995 through July 1998, he served as the Company's Vice President of
U.S. Sales and Marketing. From February 1992 through September 1995, he served
as the Company's Sales Director--Commercial Division. Mr. Shangold earned a
Bachelor's degree in Management from Syracuse University and a Bachelor's
degree in Advertising from the S.I. Newhouse School.
Michael Zugay, age 48, was appointed Managing Director--Mergers and
Acquisitions on April 6, 2000. He served as Vice President--Corporate
Development of the Company from November 1997 until his appointment as
Managing Director. From March 1995 through October 1997, he served as the
Company's Vice President--Finance. From March 1994 to March 1995, he served as
an independent consultant to the steel industry. From 1990 through February
1994, he served as President and CEO of Bliss-Salem, Inc., a provider of
products to the steel industry. Mr. Zugay is a certified public accountant
with over 26 years of financial and operational experience. Mr. Zugay earned a
Bachelor's degree in Business Management from Indiana University of
Pennsylvania. As a result of his appointment as Managing Director--Mergers and
Acquisitions and the reorganization of the Company in 2000, Mr. Zugay is no
longer an executive officer of the Company.
The Company's executive officers are appointed and serve as such at the
discretion of the Board of Directors. Each executive officer is a full-time
employee of the Company. There are no family relationships between any
directors or executive officers of the Company.
14
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth certain information with respect to the
annual and long-term compensation of the Company's Chief Executive Officer and
each of the four other most highly compensated individuals who were executive
officers of the Company at the end of 1999, (such executive officers are
sometimes collectively referred to herein as the "Named Executive Officers").
The information in this table is presented for the three years ended December
31, 1999, 1998 and 1997, respectively.
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation Awards
--------------------------------- -----------------------
Restricted Securities
Other Annual Stock Underlying All Other
Name and Principal Salary Bonus Compensation Awards Options/SARs Compensation
Position Year ($) ($)(1) ($)(2)(3) ($) (#) ($)
- ------------------ ---- ------- ------- ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Sunil Wadhwani 1999 292,000 218,000 17,416 -- -- --
Co-Chairman and Chief 1998 303,846 288,879 20,540 -- -- --
Executive Officer 1997 300,000 158,473 20,334 -- -- --
Ashok Trivedi 1999 292,000 218,000 17,859 -- -- --
Co-Chairman 1998 303,846 288,879 20,414 -- -- --
and President 1997 300,000 158,473 20,306 -- -- --
Steven Shangold (4) 1999 226,000 201,000 -- -- -- --
Senior Vice President-- 1998 219,871 206,577 -- -- 150,000 --
U.S. Client Services 1997 150,000 186,365 -- -- -- --
Lisa Kustra (5) 1999 217,000 176,400 2,668 -- -- --
Senior Vice President-- 1998 164,564 210,708 -- -- 90,000 --
Enterprise Package 1997 80,000 170,240 -- -- -- --
Solutions Division;
Chief Executive
Officer--eJiva, Inc.
Ajmal Noorani (6) 1999 183,000 145,184 -- -- -- --
Vice President--E-
Business 1998 179,808 105,421 -- -- -- --
Solutions Division 1997 150,000 73,672 -- -- -- --
</TABLE>
- --------
(1) Bonuses were paid in 1999, 1998 and 1997 for performance in 1998, 1997
and 1996, respectively.
(2) In accordance with the rules of the Securities and Exchange Commission,
other compensation in the form of perquisites and other personal benefits
has been omitted when such perquisites and other personal benefits
constituted less than 10% of the total annual salary and bonus for each
of the named executive officers for such year.
(3) During 1999, 1998 and 1997, the Company leased automobiles for Messrs.
Wadhwani and Trivedi. The incremental costs to the Company in 1999, 1998
and 1997 for the automobiles leased was $17,417, $20,540 and $20,334,
respectively for Mr. Wadhwani and $17,859, $20,414 and $20,306,
respectively for Mr. Trivedi. Ms. Kustra received a car allowance for a
portion of 1999.
(4) On April 6, 2000, Steven Shangold was appointed Chief Executive Officer
of Emplifi Inc., a wholly owned operating subsidiary of iGate Capital
Corporation.
(5) On September 15, 1999, Lisa Kustra was appointed Chief Executive Officer
of eJIVA Inc., a majority owned operating subsidiary of iGate Capital
Corporation.
(6) On January 18, 2000, Ajmal Noorani was appointed Chief Executive Officer
of Ex-tra-Net Applications, a majority owned operating subsidiary of
iGate Capital Corporation.
15
<PAGE>
OPTION GRANTS DURING 1999
The following table sets forth the number of shares of the Company's Common
Stock underlying options granted, the exercise price per share and the
expiration date of all options granted to each of the Named Executive Officers
during 1999.
<TABLE>
<CAPTION>
Individual Grants
---------------------------------------------------------------
Number of Percent of Total
Securities Options/SARs Exercise or
Underlying Granted to Base Price Grant Date
Options/SARs Employees in Per Share Expiration Value
Executor Officer Granted (1) Fiscal Year ($) Date ($) (2)
- ---------------- ------------ ---------------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Sunil Wadhwani.......... -- -- -- -- --
Ashok Trivedi........... -- -- -- -- --
Steven Shangold......... 35,000 1.3% 11.75 10/12/2009 268,849
Lisa Kustra............. -- -- -- -- --
Ajmal Noorani........... 20,000 0.8% 28.63 1/1/2009 374,262
15,000 0.6% 11.75 10/12/2009 115,221
</TABLE>
- --------
(1) The options granted during 1999 vest as follows: (i) of the 35,000
options awarded to Mr. Shangold on October 13, 1999, 11,664 vest on
October 13, 2000; and 5,834 vest on each of March 13, 2001,
October 13, 2001, March 13, 2002, and October 13, 2002, respectively;
(ii) the 20,000 options awarded to Mr. Noorani on January 1, 1999 vest in
equal annual installments over four years, commencing on July 1, 1999;
(iii) of the 15,000 options awarded to Mr. Noorani on October 13, 1999,
5,000 shares vest on October 13, 2000, and 2,500 vest on each of March
13, 2001, October 13, 2001, March 13, 2001, and October 13, 2002,
respectively.
(2) The fair market value of each option granted is estimated on the date of
grant using the Black-Scholes option pricing model with the following
weighted average assumptions for grants in 1999: (i) risk free interest
rate of 6.5%; (ii) expected dividend yield of 0.0%; (iii) expected life
of options of five (5) years; and (iv) an expected volatility rate of
73.9%.
OPTION EXERCISES DURING 1999 AND YEAR END OPTION VALUES
The following table sets forth the aggregate dollar value of all options
exercised and the total number of unexercised options held, on December 31,
1999, by each of the Named Executive Officers:
<TABLE>
<CAPTION>
Number of Securities Value of In-The-Money
Underlying Options/SARs Options/SARs
Shares Acquired Value at Fiscal Year End (#) at Fiscal Year End ($)
Executive Officer on Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable(1)
- ----------------- --------------- ------------ ------------------------- ----------------------------
<S> <C> <C> <C> <C>
Sunil Wadhwani.......... -- -- --/-- --/--
Ashok Trivedi........... -- -- --/-- --/--
Steven Shangold......... -- -- 101,666/133,334 $809,014/$1,374,037
Lisa Kustra............. -- -- 73,333/63,333 $892,690/$589,870
Ajmal Noorani........... 10,000 $124,690 35,000/70,000 $517,500/$885,000
</TABLE>
- --------
(1) The closing price for the Company's Common Stock as reported by THE
NASDAQ NATIONAL MARKET tier of THE NASDAQ STOCK MARKET on December 31,
1999 was $24.75. Value is calculated on the basis of the difference
between the option exercise price and $24.75, multiplied by the number of
shares of Common Stock underlying the option.
16
<PAGE>
EMPLOYMENT AGREEMENTS
The Company and each of Messrs. Wadhwani and Trivedi are parties to
substantially identical employment agreements ("Executive Employment
Agreements") that were negotiated at arms-length and entered into prior to the
Company's initial public offering and became effective upon consummation of
the offering. Each Executive Employment Agreement is in effect for a rolling
two-year term that is automatically restarted at the conclusion of each month
during which neither party gives notice of his or its intention to terminate
the agreement. Once either the executive or the Company gives such termination
notice to the other party, the term of such Executive Employment Agreement
will terminate on the date that is two years after the last day of the month
in which such written notice is received. Each Executive Employment Agreement
provides for a base salary of $300,000 (subject to increase at the discretion
of the Board of Directors) and the right to receive an annual discretionary
performance bonus of not less than $200,000 upon approval by the Board of
Directors. Each Executive Employment Agreement provides that upon termination
of employment other than as a result of death, retirement or termination by
the Company for cause or disability (as such terms are defined in the
agreements), the Company shall pay the executive (i) a lump sum severance
payment equal to the amount, discounted to present value, the executive would
have been paid, based upon his base salary at the time of termination, if such
executive had remained an employee for the remaining term of his respective
Executive Employment Agreement, (ii) shares of Common Stock having a value
equal to the value of the executive's vested and unvested stock options and
stock appreciation rights, and (iii) health insurance for the executive for
the remainder of his life at the level in effect for such executive
immediately prior to the termination of his employment. In the event the
executive is terminated due to a disability (as defined in the Executive
Employment Agreement), the Company will pay the executive's base salary for
three years, reduced by any benefits to which the executive may be entitled
under any Company-sponsored disability income or income protection plan,
policy or arrangement, and, for each of the three years after the date of his
termination, an amount equal to the highest annual bonus that he received in
the three years prior to his termination, payable each year in a lump sum. In
the event that the employment of an executive is terminated as a result of
such executive's death, the Company will pay to the executive's legal
representatives (x) a one-time payment of $100,000, (y) the executive's then
current base salary for a twelve (12) month period, and (z) any benefits to
which the executive's legal representatives are entitled under any of the
Company's insurance policies or benefit plans or programs. In addition, the
Company will arrange to provide the executive's surviving spouse and eligible
dependents with health and accident insurance benefits substantially similar
to those that the executive was receiving immediately prior to his death.
Under the Executive Employment Agreements, the Company agrees to indemnify the
executives to the full extent not prohibited by law for liabilities they incur
in their capacity as directors, officers or controlling persons of the
Company. Under the Executive Employment Agreements, the executives agree to a
noncompetition covenant during the term of the agreement and for one year
after the termination of their employment for cause and to nonsolicitation and
nondisclosure covenants during the term of the agreement and for one year
after the termination of their employment for any reason.
The other Named Executive Officers are parties to employment agreements that
outline their responsibilities and provide generally for base salary plus
annual incentive bonuses. Under the agreements, the Named Executive Officers
are entitled to three months' salary continuation if they are terminated by
the Company without cause generally, and to six months' salary continuation if
they are terminated by the Company without cause during the 90 days following
the sale of the Company to a third party. The employment agreements also
contain confidentiality provisions and noncompetition and nonsolicitation
covenants.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the year ended December 31, 1999 the Compensation Committee consisted
of Messrs. Berty, Garrett and Trivedi. Mr. Trivedi served as a director and as
Co-Chairman and President of the Company, and he is the co-owner of certain
properties located in India that are leased to a subsidiary of the Company.
These relationships are described in more detail below.
17
<PAGE>
Mascot Systems, a wholly owned subsidiary of the Company, leases office
space located in Bangalore and Chennai, India that is owned in part by Mr.
Trivedi. Specifically, Mascot System leases approximately 4,500 square feet in
an office building located in Bangalore. The acquisition of the real estate
and the construction of this office building (but not the buildout of office
space) were financed entirely by Messrs. Trivedi and Wadhwani out of their
personal funds. The lease has a ten-year term expiring in February 2008, with
a rent revision clause every March, and the rent is approximately $29,000 per
year. Mascot Systems also leases a 32,000-square-foot office building located
in Bangalore that is owned in part by Mr. Trivedi. This lease has a ten-year
term expiring in October 2006, and the rent is approximately $95,000 per year.
Mascot Systems also rents office space in Chennai that is owned in part by Mr.
Trivedi for The Offshore Development Center. The lease agreement is in effect
for a ten-year period beginning March 1998 and expiring February 2008, and the
annual rent is $449,000. The rental agreement may be revised each March.
Mascot Systems has also rented approximately 9,000 square feet of additional
space owned that is owned in part by Mr. Trivedi for its facilities located in
Bangalore and Chennai for which rent in the amount of $5,500 was paid during
1999.
On January 8, 2000, substantially all the assets of Scott Systems, a wholly
owned subsidiary of the Company, were sold to Mascot Systems. Scott Systems
was party to three leases for office space owned in part by Mr. Trivedi, and
those leases were assigned to Mascot Systems in conjunction with the sale. One
lease, for training facilities, covers approximately 2,100 square feet of
office space on one floor of an office building located in Mumbai (Bombay,
India). The lease expires in March 2003, and the aggregate rent is
approximately $20,000 per year. Mascot Systems also leases approximately 900
square feet on another floor in the same office building. This lease has a
term that expires in August 2007, and the rent is $6,000 per year. Mascot
Systems also leases a portion of a facility in Pune, India that is owned in
part by Mr. Trivedi. This lease covers 7,500 square feet and expires in August
2007. This rent is approximately $18,000 per year.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
INTRODUCTION
The Compensation Committee is responsible for reviewing and approving
matters involving the compensation of directors and executive officers of the
Company, periodically reviewing management development plans and making
recommendations to the full Board on these matters as well as matters
involving the Company's 1996 Second Amended and Restated Stock Incentive Plan.
The Compensation Committee met two times during fiscal 1999 to carry out the
aforementioned duties.
CO-CHAIRMEN COMPENSATION
Each of Messrs. Wadhwani and Trivedi is party to an employment agreement
that provides for a minimum base salary of $300,000 and an annual
discretionary performance bonus of not less than $200,000 upon approval by the
Board of Directors. The full Board of Directors, rather than the Compensation
Committee, determines the compensation for Messrs. Wadhwani and Trivedi.
Because both of these individuals own a significant amount of Company Common
Stock, the Board of Directors believes that their interests are aligned with
those of the other shareholders of the Company, and that their base salaries
and bonuses are modest compared with senior executives of comparable
companies. Each received a base salary of $292,000 in 1999. Each of Messrs.
Wadhwani and Trivedi also received a bonus of $218,000 based on the Board of
Directors' determination that each of them had achieved superior performance
objectives as well as on the overall performance of the Company.
COMPENSATION PHILOSOPHY
The Compensation Committee has adopted a compensation philosophy with
respect to the executive officers of the Company that is intended to align
compensation with the Company's overall business strategy. The philosophy
guiding the executive compensation program is designed to link executive
compensation to
18
<PAGE>
shareholder value in order to attract, retain and motivate high quality
employees capable of maximizing shareholder value. The goals are:
. To compensate executive employees in a manner that aligns the employees'
interests with the interests of the shareholders;
. To reward executives for successful long-term strategic management;
. To recognize outstanding performance; and
. To attract and retain highly qualified and motivated executives.
The strategy established by the Compensation Committee with respect to
executive compensation includes maintaining base salaries for executives and
providing bonuses which, when combined with base salary amounts, give the
Company's executives the potential to earn in excess of competitive industry
compensation if certain subjective and objective performance goals for the
Company are achieved.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION EXPENSES
In general, under Section 162(m) of the Internal Revenue Code of 1986, as
amended, the Company cannot deduct, for federal income tax purposes,
compensation in excess of $1,000,000, paid to any Named Executive Officer,
except to the extent such excess constitutes performance-based compensation.
The Company did not pay compensation in excess of $1,000,000 to any Named
Executive Officer in 1999.
Respectively submitted,
The 1999 Compensation Committee
Michel Berty
J. Gordon Garrett
Ashok Trivedi
19
<PAGE>
STOCK PERFORMANCE CHART
The following graph shows a comparison of the cumulative total return on the
Company's Common Stock during the period commencing on December 16, 1996, the
date of the Company's initial public offering and ended December 31, 1999, with
the cumulative total return during such period for (i) the Standard and Poor's
500 Composite Index ("S & P 500") and (ii) a peer group index* selected by the
Company's management which includes seven public companies within the Company's
industry. The comparison assumes $100 was invested on December 16, 1996 in the
Company's stock and in each of the foregoing indices and assumes reinvestment
of dividends, if any.
[GRAPH APPEARS HERE]
12/16/96 12/31/97 12/31/98 12/31/99
iGate Capital Corporation 100 212 382 330
S&P 500 100 135 171 204
Peer Group 100 172 139 169
The Common Stock is currently traded on the NASDAQ NATIONAL MARKET tier of
THE NASDAQ STOCK MARKET under the SYMBOL "IGTE".
- --------
* The peer group index reflects the stock performance of the following
information technology companies: Cambridge Technology Partners, Inc.,
CIBER, Inc., Computer Horizons Corp., Computer Management Sciences, Inc.,
Keane, Inc., Technology Solutions Company and Whittman-Hart, Inc.
CERTAIN RELATED PARTY TRANSACTIONS
Mascot Systems, a wholly owned subsidiary of the Company, leases office space
located in Bangalore and Chennai, India from the controlling shareholders
Messrs. Wadhwani and Trivedi. Specifically, Mascot System leases approximately
4,500 square feet in an office building located in Bangalore. The acquisition
of the real estate and the construction of this office building (but not the
buildout of office space) were financed entirely by Messrs. Wadhwani and
Trivedi out of personal funds. The lease has a ten-year term expiring in
February 2008, with a rent revision clause every March, and the rent is
approximately $29,000 per year. Mascot Systems also leases a 32,500-square-foot
office building located in Bangalore owned by Messrs. Wadhwani and Trivedi.
This lease has a ten-year term expiring in October 2006, and the rent is
approximately $95,000 per year. Mascot Systems also rents office space in
Chennai from Messrs. Wadhwani and Trivedi for The Offshore Development
20
<PAGE>
Center. The lease agreement is in effect for a ten-year period beginning March
1998 and expiring February 2008, and the annual rent is $449,000. The rental
agreement may be revised each March. Mascot Systems has also rented
approximately 9,000 square feet of additional space for its facilities located
in Bangalore and Chennai from Messrs. Wadhwani and Trivedi for which rent in
the amount of $5,500 was paid during 1999.
On January 8, 2000, substantially all of the assets of Scott Systems, a
wholly owned subsidiary of the Company, were sold to Mascot Systems. Scott
Systems was party to three leases for office space owned by Messrs. Wadhwani
and Trivedi and those leases were assigned to Mascot Systems in conjunction
with the sale. One lease, for training facilities, covers approximately 2,100
square feet of office space on one floor of an office building located in
Mumbai (Bombay, India). The lease expires in March 2003, and the aggregate
rent is approximately $20,000 per year. Mascot Systems also leases
approximately 900 square feet on another floor in the same office building.
This lease has a term that expires in August 2007, and the rent is $6,000 per
year. Mascot Systems also leases a portion of a facility in Pune, India from
Messrs. Wadhwani and Trivedi. This lease covers 7,500 square feet and expires
in August 2007. The rent is approximately $18,000 per year.
Ajmal Noorani, Chief Executive Officer of Ex-tra-Net Applications,
participates as a limited partner in iGate Ventures I L.P. (the "Fund"), a
venture fund in which the Company has a majority ownership interest. Pursuant
to the Fund's limited partnership agreement, he is entitled to allocated
earnings and profits of the Fund based upon his percentage ownership. In
addition, Mr. Noorani is subject to a capital call in the amount of $60,000,
the proceeds of which will be used for the Fund's investment objectives. As of
the date hereof, the Fund has not made a capital call to its limited partners.
SUBMISSION OF SHAREHOLDER PROPOSALS TO BE INCLUDED IN 2001 PROXY STATEMENT
Proposals of shareholders intended to be presented at the 2001 Annual
Meeting of Shareholders must be received by the Company at its principal
office in Oakdale, Pennsylvania not later than January 6, 2001 and must
otherwise comply with the requirements of Rule 14a-8 under the Exchange Act
for inclusion in the Proxy Statement for that meeting.
The Company's Bylaws provide that advance written notice of shareholder-
proposed business to be brought before an annual meeting of shareholders must
be given to the Secretary of the Company not less than 120 days in advance of
the meeting at which the business is proposed to be transacted; provided,
however, that in the event that less than 130 days' notice or prior public
disclosure of the date of the annual meeting is given, notice from the
shareholder of business to be transacted must be received not later than the
tenth day following the date on which notice of the date of the annual meeting
was mailed or public disclosure was made, whichever first occurred.
The Company's Bylaws also provide that a shareholder may request that
persons be nominated for election as directors by submitting written notice
thereof, together with the written consent of the persons proposed to be
nominated, to the Secretary of the Company not less than 120 days prior to the
date of the annual meeting; provided, however, that in the event that less
than 130 days' notice or prior public disclosure of the date of the annual
meeting is given, notice from the shareholder of the nomination must be
received not later than the tenth day following the date on which such notice
of the date of the annual meeting was mailed or public disclosure was made,
whichever first occurred. To be in proper form, the notice of nomination must
set forth the names and addresses of the shareholder proposing the nomination
and each proposed nominee, a representation that the shareholder is a holder
of record of stock of the Company entitled to vote at such meeting and that
the shareholder intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice, a description of all
arrangements or understandings between the shareholder and each nominee and
such other information regarding each proposed nominee as would be required to
be included in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission had the nominee been nominated by the Board
of Directors.
21
<PAGE>
FORM 10-K
A copy of the Company's Annual Report to Shareholders for the year ended
December 31, 1999 is being provided with this Proxy Statement. Shareholders
may obtain a copy (without exhibits) of the Company's Annual Report on Form
10-K for the year ended December 31, 1999 as filed with the Securities and
Exchange Commission without charge by writing to: Beth Mittleman, Director--
Investor Relations, iGate Capital Corporation, 1004 McKee Road, Oakdale,
Pennsylvania 15071. Exhibits will be provided upon request and payment of an
appropriate processing fee.
OTHER MATTERS
The Board of Directors does not know of any other matters which may come
before the meeting. However, if any other matters are properly presented to
the meeting, it is the intention of the persons named in the accompanying
proxy to vote, or otherwise act, in accordance with their judgment on such
matters.
By Order of the Board of Directors
/s/ BRUCE HANEY
Bruce Haney
Managing Director, Chief Financial
Officer, Treasurer and Secretary
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE URGED TO
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ACCOMPANYING
ENVELOPE. YOUR PROMPT RESPONSE WILL GREATLY FACILITATE ARRANGEMENTS FOR THE
MEETING. WE APPRECIATE YOUR COOPERATION.
22
<PAGE>
iGATE CAPITAL CORPORATION
This Proxy is Solicited on Behalf of the Board of Directors
The signer hereto appoints Sunil Wadhwani and Ashok Trivedi, and
each of them, acting singly, proxies of the signer with power to appoint a
substitute and hereby authorizes them to represent and to vote all shares of
Common Stock of iGate Capital Corporation (the "Company") held of record by the
signer on April 20, 2000 at the Annual Meeting of Shareholders of the
Company to be held on June 5, 2000 and at any adjournment or postponement
thereof, and to vote as directed on the reverse side of this form and, in their
discretion, upon such other matters not specified as may properly come before
said meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION
OF THE BOARD'S NOMINEES TO THE BOARD OF DIRECTORS AND EACH OF THE MATTERS
SUBMITTED BY THE BOARD FOR VOTE BY THE SHAREHOLDERS AND, IN THEIR DISCRETION,
THE PROXIES WILL BE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY POSTPONEMENT OR ADJOURNMENT
THEREOF.
(IMPORTANT--TO BE SIGNED AND DATED ON REVERSE SIDE)
/\ FOLD AND DETACH HERE /\
<PAGE>
Please mark
your votes as [X]
indicated in
this example
1. The election of two (2) persons as Class A Directors;
NOMINEES: Michael Berty, J. Gordon Garrett.
WITHHOLD
FOR AUTHORITY
all nominees to vote for all
listed nominees listed
[_] [_]
Instruction: To withhold authority to vote for one of the nominees, write
that nominee's name on the line below.
------------------------------------------------
2. To consider and approve the adoption of the Company's Amended and Restated
Stock Incentive Plan;
FOR AGAINST ABSTAIN
[_] [_] [_]
3. To consider and approve the adoption of the Company's Second Amended and
Restated Articles of Incorporation;
FOR AGAINST ABSTAIN
[_] [_] [_]
4. To ratify the selection of Arthur Andersen LLP as the Company's independent
accountants for the fiscal year ending December 31, 2000; and
FOR AGAINST ABSTAIN
[_] [_] [_]
5. To act upon such other matters as may properly come before the Annual Meeting
or any adjournment or postponement thereof.
FOR AGAINST ABSTAIN
[_] [_] [_]
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
and Proxy Statement.
PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.
NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
NOTE: Please sign name(s) exactly as printed hereon. Joint owners should
each sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such. If the signer is a corporation or
partnership, please sign the full corporate or partnership name and indicate
title as duly authorized officer or partner.
- -------------------------------------------------------------------------
Signature
DATE , 2000.
--------------------------------------------------------------
* FOLD AND DETACH HERE *
<PAGE>
Exhibit 3(i)
SECOND AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
iGATE CAPITAL CORPORATION
-------------------------
1. Name.
----
The name of the corporation shall be iGate Capital Corporation (herein
called the "Corporation").
2. Registered Office.
-----------------
The location and post office address of the Corporation's registered office
in the Commonwealth of Pennsylvania is 1004 McKee Road, Oakdale, Pennsylvania
15701.
3. Purpose and Powers.
------------------
The Corporation was incorporated under the Business Corporation Law of 1933
and is currently subject to the Business Corporation Law of 1988, as amended
(hereinafter, the "BCL"), and shall have unlimited power to engage in and to do
any lawful act concerning any or all lawful business for which corporations may
be incorporated under the BCL.
4. Term of Existence.
-----------------
The term for which the Corporation shall exist is perpetual.
5. Capital Stock.
-------------
5.1 Authorized Shares.
-----------------
The Corporation is authorized to issue two classes of shares designated
Common Stock and Preferred Stock, respectively. The aggregate number of shares
which the Corporation shall have authority to issue is:
(a) 100,000,000 shares of Common Stock, $.01 par value;
(b) 1 share of Series A Preferred Stock, without par value; and
(c) 19,999,999 shares of additional Preferred Stock, without par value.
<PAGE>
5.2 Preferred Stock.
---------------
The Board of Directors is authorized, from time to time, to divide the
Preferred Stock into series and, as to each series, to determine the designation
and number of shares of such series and the voting rights, preferences,
limitations and special rights, if any, of the shares of such series. Such
divisions and determinations shall be set forth in these Second Amended and
Restated Articles of Incorporation, as they may be amended from time to time
("Articles"), adopted by the Board of Directors.
The following is a statement of the designations, preferences, voting
rights, limitations and special rights in respect of the Series A Preferred
Stock.
NO DIVIDENDS. The holder of Series A Preferred Stock shall not be entitled
to receive any dividends declared and paid by the Corporation.
VOTING RIGHTS. Except as otherwise required by law or these Articles, (i)
the holder of record of the share of Series A Preferred Stock shall have a
number of votes equal to the number of outstanding Non-Voting Exchangeable
Shares ("Exchangeable Shares") of Quantum Information Resources Limited, a
Canadian corporation ("Quantum"), from time to time which are not owned by the
Corporation, any of its subsidiaries or any person directly or indirectly
controlled by or under common control of the Corporation, in each case for the
election of directors and on all matters submitted to a vote of the shareholders
of the Corporation, and (ii) in respect of all matters concerning the voting
shares, the Series A Preferred Stock and the Common Stock of the Corporation
shall vote as a single class.
LIQUIDATION PREFERENCE. Upon any liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, and subject to any prior
rights of holders of shares of Preferred Stock ranking senior to the Series A
Preferred Stock, the holder of the share of Series A Preferred Stock shall be
paid an amount equal to $1.00, together with payment to any class of stock
ranking on liquidation junior to the Series A Preferred Stock (such amount
payable with respect to the Series A Preferred Stock being referred to as the
"Series A Preferred Liquidation Preference Payment").
RANKING. The Series A Preferred Stock shall rank junior in all respects to
any other series of Preferred Stock now or hereafter issued by the Corporation.
OTHER PROVISIONS. (a) Pursuant to the terms of that certain Combination
and Exchange Agreement, dated as of June 1, 1998, as amended (the "Purchase
Agreement"), among the Corporation and Quantum, Quantum Management Investments
Limited, Lyon Gould, King Moore Consultants Limited, King Moore, 412977 Ontario
Limited and Hilary Bruun, the one share of Series A Preferred Stock is being
issued to the trustee (the "Trustee") under the Trust Agreement, dated as of
June 1, 1998 by and between the parties to the Purchase Agreement and the
Trustee. (b) The holder of the share of Series A Preferred Stock is entitled to
exercise the voting rights attendant thereto in such manner as such holder
desires. (c) At such time as the Series A Preferred Stock has no votes attached
to it because there are no Exchangeable Shares of
2
<PAGE>
Quantum outstanding which are not owned by the Corporation or any of its
subsidiaries, the Series A Preferred Stock shall be cancelled.
5.3 Common Stock.
------------
Except for and subject to those rights expressly granted to holders of the
Preferred Stock, or any series thereof, by one or more amendments to these
Articles adopted by the Board of Directors, and except as provided by the laws
of the Commonwealth of Pennsylvania, holders of the Common Stock shall have
exclusively all other rights of shareholders. All shares of Common Stock issued
or to be issued shall be alike in every particular.
5.4 Uncertificated Shares.
---------------------
The Corporation may utilize uncertificated shares of Common Stock and
Preferred Stock to represent stock interests of its shareholders.
Notwithstanding any provision of law or any bylaw to the contrary, the rights
and obligations of the holders of shares represented by certificates and the
rights and obligations of the holders of uncertificated shares of the same class
and series shall be identical.
5.5 Cumulative Voting.
-----------------
The holders of the outstanding shares of the Corporation entitled to vote
shall not be entitled to cumulate their votes in the election of directors.
6. Board of Directors.
------------------
6.1 Number, Election, etc.
----------------------
The Board of Directors shall be comprised as follows:
(a) Number.
------
The Board of Directors shall have such number of members as determined from
time to time by the Board of Directors; provided that the number of such members
shall in no case be less than three or greater than nine.
(b) Classes, Election and Terms.
---------------------------
The directors elected by the holders of voting stock shall be classified in
respect to the time for which they shall severally serve on the Board of
Directors by dividing them into three classes, each of whose members shall serve
for staggered three-year terms. At each annual meeting of the shareholders, the
holders of outstanding shares of the Corporation entitled to vote shall elect
directors of the class whose term then expires, to serve until the third
succeeding annual meeting. Except as otherwise provided in these Articles, each
director shall serve for the term for which elected and until his or her
successor shall be elected and shall qualify.
3
<PAGE>
(c) Quorum and Board Action.
-----------------------
Notwithstanding any provision of law or any bylaw to the contrary, a
majority of the directors then serving shall constitute a quorum for the
transaction of business, and the actions of a majority of the directors then
serving shall be the actions of the Board of Directors.
(d) Removal of Directors.
--------------------
Notwithstanding any provision of law or any bylaw to the contrary, a
director or directors may be removed from the Board of Directors at any time
without cause by the affirmative vote of holders of at least 66 2/3% of the
outstanding shares of the Corporation entitled to vote, voting together as a
single class.
(e) Vacancies.
---------
Vacancies on the Board of Directors shall be filled only by a majority vote
of the remaining directors. All such directors elected to fill vacancies shall
serve on the Board for a term expiring at the annual meeting of shareholders at
which the term of the class to which they have been elected expires. No
decrease in the number of directors constituting the Board of Directors shall
shorten the term of any incumbent director.
7. Shareholders Meetings.
---------------------
7.1 Nominations of Director Candidates.
----------------------------------
Nominations for the election of directors may be made only by the Board of
Directors or a committee appointed by the Board of Directors, or by any record
holder of stock entitled to vote in the election of the directors; provided,
however, that a nomination may be made by a shareholder only if written notice
of such nomination has been received by the Secretary of the Corporation not
later than 120 days in advance of the meeting at which the election is to be
held; provided further, however, that in the event that less than 130 days'
notice or prior public disclosure of the date of the annual meeting is given,
notice from the shareholder to be timely must be received not later than the
tenth day following the date on which such notice of the date of the annual
meeting was mailed or such public disclosure was made, whichever first occurred.
Each such notice shall set forth: (a) the name and address of the shareholder
who intends to make the nomination, and of the person or persons to be
nominated; (b) a representation that the shareholder is a holder of record of
stock of the Corporation entitled to vote at such meeting and intends to appear
in person or by proxy at the meeting to nominate the person or persons specified
in the notice; (c) a description of all arrangements or understandings between
the shareholder and each nominee and any other person or persons (naming such
person or persons) pursuant to which the nomination or nominations are to be
made by the shareholder; (d) such other information regarding each nominee
proposed by such shareholder as would be required to be included in a proxy
statement filed pursuant to the proxy rules of the Securities and Exchange
Commission, had the nominee been nominated by the Board of Directors; and (e)
4
<PAGE>
the consent of each nominee to serve as a director of the Corporation if so
elected. If the Corporation receives notice from a shareholder pursuant to this
Article 7.1 and such notice, in the judgment of the Board of Directors, fails to
comply with the requirements set forth in this Article 7.1 in any respect, the
Corporation shall notify the shareholder of the deficiencies with such notice
within ten days of the Corporation's receipt of such notice. Commencing on the
day of receipt of the deficiency notification from the Corporation, the
shareholder shall have ten days to cure all deficiencies and provide the
Corporation with notice which conforms to the requirements of this Article 7.1.
A shareholder shall be entitled to re-submit a notice as provided in this
Article 7.1 only once for each annual meeting of the shareholders. Only
candidates who have been nominated in accordance with this Article 7.1 shall be
eligible for election by the shareholders as directors of the Corporation.
7.2 Business to be Transacted.
-------------------------
At any annual meeting or special meeting of shareholders, only such
business as is properly brought before the meeting in accordance with this
Article 7.2 may be transacted. To be properly brought before any meeting, any
proposed business must be either (i) specified in the notice of the meeting (or
any supplement thereto) given by or at the direction of the Board of Directors,
(ii) otherwise properly brought before the meeting by or at the direction of the
Board of Directors, or (iii) if brought before the meeting by a shareholder,
then (x) the shareholder must have been a shareholder of record on the record
date for the determination of shareholders entitled to vote at the annual
meeting, and (y) only if written notice of such proposed business has been
received by the Secretary of the Corporation not later than 120 days in advance
of the meeting at which the business is proposed to be transacted; provided,
however, that in the event that less than 130 days' notice or prior public
disclosure of the date of the annual meeting is given, notice from the
shareholder to be timely must be received not later than the tenth day following
the date on which such notice of the date of the annual meeting was mailed or
such public disclosure was made, whichever first occurred. There will be no
opportunity to cure any deficiencies within any notice given pursuant to this
Article 7.2.
7.3 Vote Required for Fundamental Changes.
-------------------------------------
In addition to any vote required by law, the affirmative vote of holders of
at least 66 2/3% of the votes cast by shareholders eligible to vote thereon,
voting together as a single class, shall be necessary to approve any action for
which shareholder approval is required under Subchapters B, C, D, E and F of
Chapter 19 (Fundamental Changes) of the BCL (the "Fundamental Change"), and any
successor provisions thereto; provided, however, that the additional affirmative
vote required by this Article 7.3 shall not apply to any Fundamental Change if
such Fundamental Change is approved, recommended and submitted to the
shareholders for their consideration by the unanimous vote of the directors of
the Corporation then serving.
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7.4 Partial Written Consents.
------------------------
Any action required or permitted to be taken at a meeting of the
shareholders, or of a class of shareholders, may be taken without a meeting upon
the written consent of shareholders who would have been entitled to cast the
minimum number of votes that would be necessary to authorize the action at a
meeting at which all shareholders entitled to vote thereon were present and
voting. The consents shall be filed with the secretary of the Corporation. The
action shall become effective immediately upon its authorization, or at such
later time as shall be specified in said written consent, but prompt notice of
the action shall be given to those shareholders entitled to vote thereon who
have not consented thereto.
8. Inapplicability of Certain Provisions.
-------------------------------------
Notwithstanding any law or bylaw of the Corporation to the contrary, the
provisions of Subchapters E, F, G and H of Chapter 25 (Registered Corporations)
of the BCL, and any successors thereto, shall not be applicable to the
Corporation.
9. Personal Liability of Directors.
-------------------------------
9.1 Personal Liability of Directors; Indemnification.
------------------------------------------------
A director of the Corporation shall not be personally liable for monetary
damages for any action taken, or any failure to take any action, unless the
director has breached or failed to perform the duties of his or her office under
Subchapter B of Chapter 17 of the BCL and such breach or failure to perform
constitutes self-dealing, willful misconduct or recklessness; provided, however,
that the foregoing provision shall not eliminate or limit (i) the responsibility
or liability of a director pursuant to any criminal statute or (ii) the
liability of a director for the payment of taxes pursuant to local, state or
federal law. Any repeal, modification or adoption of any provision inconsistent
with Article 9.1 shall be prospective only, and neither the repeal or
modification of this provision nor the adoption of any provision inconsistent
with this provision shall adversely affect any limitation on the personal
liability of a director of the Corporation existing at the time of such repeal
or modification or the adoption of such inconsistent provision.
9.2 Indemnification of Directors and Officers.
-----------------------------------------
(a) The Corporation shall indemnify and hold harmless, to the full extent
permitted by law, each person who was or is made a party or is threatened to be
made a party to or is otherwise involved in (as a witness or otherwise) any
threatened, pending or completed action, suit, or proceeding, whether civil,
criminal, administrative or investigative and whether or not by or in the right
of the Corporation or otherwise (hereinafter, a "proceeding"), by reason of the
fact that he or she, or a person of whom he or she is the heir, executor or
administrator, is or was a director or executive officer of the Corporation or
is or was serving at the request of the Corporation as a director, officer or
trustee of another corporation or of a partnership, joint venture, trust or
other enterprise (including without limitation service with respect to employee
benefit plans), or where the basis of such proceeding is any alleged action or
failure to take any action by such person while acting in an official capacity
as a director or executive officer of the Corporation, or in any other capacity
on behalf of the Corporation while such person is or was serving as a director
or executive officer of the Corporation, against all expenses, liability and
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loss, including but not limited to attorneys' fees, judgments, fines, excise
taxes or penalties and amounts paid or to be paid in settlement (whether with or
without court approval), actually and reasonably incurred or paid by such person
in connection therewith.
(b) Notwithstanding the foregoing clause (a), except as provided in Article
9.3 below, the Corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person only if such proceeding (or part thereof) was authorized by the
Board of Directors of the Corporation.
(c) Subject to the limitation set forth in the foregoing clause (b)
concerning proceedings initiated by the person seeking indemnification, the
right to indemnification conferred in this Article 9.2 shall be a contract right
and shall include the right to be paid by the Corporation the expenses incurred
in defending any such proceeding (or part thereof) or in enforcing his or her
rights under this Article 9.2 in advance of the final disposition thereof
promptly after receipt by the Corporation of a request therefor stating in
reasonable detail the expenses incurred; provided, however, that to the extent
required by law, the payment of such expenses incurred by a director or
executive officer of the Corporation in advance of the final disposition of a
proceeding shall be made only upon receipt of an undertaking, by or on behalf of
such person, to repay all amounts so advanced if and to the extent it shall
ultimately be determined by a court that he or she is not entitled to be
indemnified by the Corporation under this Article 9.2 or otherwise.
(d) The right to indemnification and advancement of expenses provided
herein shall continue as to a person who has ceased to be a director or
executive officer of the Corporation or to serve in any of the other capacities
described herein, and shall inure to the benefit of the heirs, executors and
administrators of such person.
9.3 Payment of Indemnification.
--------------------------
If a claim for indemnification under Article 9.2 hereof is not paid in full
by the Corporation within thirty (30) days after a written claim therefor has
been received by the Corporation, the claimant may, at any time thereafter,
bring suit against the Corporation to recover the unpaid amount of the claim
and, if successful in whole or in part on the merits or otherwise in
establishing his or her right to indemnification or to the advancement of
expenses, the claimant shall be entitled to be paid also the expense of
prosecuting such claim.
9.4 Non-Exclusivity of Rights.
-------------------------
The right to indemnification and the payment of expenses incurred in
defending a proceeding in advance of a final disposition conferred in Article
9.2 and the right to payment of expenses conferred in Article 9.3 shall not be
deemed exclusive of any other rights to which those seeking indemnification or
advancement of expenses hereunder may be entitled under any bylaw, agreement,
vote of shareholders, vote of directors or otherwise, both as to actions in his
or her official capacity and as to actions in any other capacity while holding
that office, the Corporation having the express authority to enter into such
agreements or arrangements as the Board of Directors deems appropriate for the
indemnification of and advancement of expenses to
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present or future directors and officers as well as employees, representatives
or agents of the Corporation in connection with their status with or services to
or on behalf of the Corporation or any other corporation, partnership, joint
venture, trust or other enterprise, including any employee benefit plan, for
which such person is serving at the request of the Corporation.
9.5 Funding.
-------
The Corporation may create a fund of any nature, which may, but need not
be, under the control of a trustee, or otherwise secure or insure in any manner
its indemnification obligations, including its obligation to advance expenses,
whether arising under or pursuant to this Article 9 or otherwise.
9.6 Insurance.
---------
The Corporation may purchase and maintain insurance on behalf of any person
who is or was a director or officer or representative of the Corporation, or is
or was serving at the request of the Corporation as a representative of another
corporation, partnership, joint venture, trust or other enterprise, against any
liability asserted against such person and incurred by such person in any such
capacity, or arising out of his or her status as such, whether or not the
Corporation has the power to indemnify such person against such liability under
the laws of Pennsylvania or any other state.
9.7 Modification or Repeal.
----------------------
Neither the modification, amendment, alteration or repeal of this Article 9
or any of its provisions nor the adoption of any provision inconsistent with
this Article 9 or any of its provisions shall adversely affect the rights of any
person to indemnification and advancement of expenses existing at the time of
such modification, amendment, alteration or repeal or the adoption of such
inconsistent provision.
10. Bylaw Amendments.
----------------
The Board of Directors may adopt, amend or repeal the Bylaws with respect
to those matters which under the BCL are not reserved exclusively to the
shareholders. No Bylaw may be adopted, amended or repealed by the shareholders
unless, in addition to any other vote required by law, these Articles or
otherwise, such action is approved by the vote of holders of at least 66 2/3% of
the votes cast by shareholders eligible to vote thereon, voting together as a
single class; provided, however, that the additional affirmative vote required
by this Article shall not apply to any shareholder adoption, amendment or repeal
of any Bylaw provision if such action is approved, recommended and submitted to
the shareholders for their consideration by the unanimous vote of the directors
of the Corporation then serving.
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11. Reservation of Right to Amend Articles.
--------------------------------------
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in these Articles in the manner now or hereafter prescribed
by law and these Articles, and all rights conferred upon shareholders herein are
granted subject to this reservation.
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Exhibit 4
iGate Capital Corporation
AMENDED AND RESTATED STOCK INCENTIVE PLAN
Section 1. General Purpose of the Plan; Definitions. The name of this
plan is the iGate Capital Corporation Amended and Restated Stock Incentive Plan
(formerly the Mastech Corporation Second Amended and Restated 1996 Stock
Incentive Plan) (the "Plan"). The purpose of the Plan is to encourage and enable
the officers, employees, directors and consultants of iGate Capital Corporation
(the "Company") and its Subsidiaries upon whose judgment, initiative and efforts
the Company largely depends for the successful conduct of its business to
acquire a proprietary interest in the Company. It is anticipated that providing
such persons with a direct stake in the Company's welfare will assure a closer
identification of their interests with those of the Company, thereby stimulating
their efforts on the Company's behalf and strengthening their desire to remain
with the Company. Except as otherwise specifically provided herein, the Plan as
amended and restated generally applies to Awards granted prior to, as well as
Awards granted on or after, the Restated Effective Date.
The following terms shall be defined as set forth below:
"Act" means the Securities Exchange Act of 1934, as amended.
"Award" or "Awards," except where referring to a particular category of
grant under the Plan, shall include Incentive Stock Options, Non-Qualified Stock
Options, Restricted Stock Awards, Stock Awards, Performance Share Awards and
Stock Appreciation Rights.
"Board" means the Board of Directors of the Company.
"Change of Control" shall have the meaning assigned to that term in Section
15.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor Code, and related rules, regulations and interpretations.
"Effective Date" means November 4, 1996, the date on which the Plan was
originally approved by the Company's stockholders.
"Fair Market Value" of the Stock on any given date means (i) if the Stock
is admitted to quotation on the National Association of Securities Dealers
Automated Quotation System ("NASDAQ"), the Fair Market Value on any given date
shall be the average of the highest bid and lowest asked prices of the Stock
reported for such date or, if no bid and asked prices were reported for such
date, for the last day preceding such date for which such prices were reported,
or (ii) if the Stock is admitted to trading on a United States securities
exchange or the NASDAQ National Market System, the Fair Market Value on any date
shall be the closing price reported for the Stock on such
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exchange or system for such date or, if no sales were reported for such date,
for the last day preceding such date for which a sale was reported; (iii)
notwithstanding the foregoing, the Fair Market Value of the Stock on the
effective date of the Initial Public Offering shall be the offering price to the
public of the Stock on such date; and (iv) if the Fair Market Value cannot be
determined on the basis previously set forth in this definition on the date that
Fair Market Value is to be determined, the Board shall in good faith determine
the Fair Market Value of the Stock on such date.
"Incentive Stock Option" means any Stock Option designated and qualified as
an "incentive stock option" as defined in Section 422 of the Code.
"Independent Director" means a member of the Board who is not an employee
or officer of the Company or any Subsidiary.
"Initial Public Offering" means the Company's first underwritten public
offering pursuant to an effective registration statement under the Securities
Act of 1933, as amended, covering the offer and sale of Stock to the public.
"Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
"Option" or "Stock Option" means any Option to purchase shares of Stock
granted pursuant to Section 6.
"Performance Share Award" means any Award granted pursuant to Section 12.
"Restated Effective Date" means April 6, 2000, the effective date of the
Plan as amended and restated herein.
"Restricted Stock Award" means any Award granted pursuant to Section 10.
"Stock" means the Common Stock, par value $.01 per share, of the Company,
subject to adjustments pursuant to Section 14.
"Stock Appreciation Right" or "SAR" means any Award granted pursuant to
Section 7.
"Stock Award" means any Award granted pursuant to Section 11.
"Subsidiary" means any corporation or other entity (other than the Company)
in any unbroken chain of corporations or other entities, beginning with the
Company, if each of the corporations or entities (other than the last
corporation or entity in the unbroken chain) owns stock or other interests
possessing 50% or more of the economic interest or the total combined voting
power of all classes of stock or other interests in one of the other
corporations or entities in the chain.
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<PAGE>
Section 2. Administration. The Plan shall be administered by the full
Board of Directors of the Company or a committee of such Board of Directors
comprised of two or more "Non-Employee Directors" within the meaning of Rule
16b-3(a)(3) promulgated under the Act (the "Plan Administrator"). Subject to the
provisions of the Plan, the Plan Administrator is authorized to:
(a) construe the Plan and any Award under the Plan;
(b) select the directors, officers, employees and consultants of the
Company and its Subsidiaries to whom Awards may be granted;
(c) determine the number of shares of Stock to be covered by any
Award;
(d) determine and modify from time to time the terms and
conditions, including restrictions, of any Award and to approve
the form of written instrument evidencing Awards;
(e) accelerate at any time the exercisability or vesting of all or
any portion of any Award and/or to include provisions in awards
providing for such acceleration;
(f) impose limitations on Awards, including limitations on transfer
and repurchase provisions;
(g) extend the exercise period within which Stock Options may be
exercised; and
(h) determine at any time whether, to what extent, and under what
circumstances Stock and other amounts payable with respect to an
Award shall be deferred either automatically or at the election
of the participant and whether and to what extent the Company
shall pay or credit amounts constituting interest (at rates
determined by the Plan Administrator) or dividends or deemed
dividends on such deferrals.
The determination of the Plan Administrator on any such matters shall be
conclusive.
Section 3. Delegation of Authority to Grant Awards. The Plan Administrator,
in its discretion, may delegate to the Co-Chairmen of the Company all or part of
the Plan Administrator's authority and duties with respect to granting Awards to
individuals who are not subject, by reason of their position with the Company or
its Subsidiaries, to the reporting provisions of Section 16 of the Act and who
are not expected to be "covered employees" of the Company or its Subsidiaries
within the meaning of Section 162(m) of the Code. The Plan Administrator may
revoke or amend the terms of such a delegation at
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<PAGE>
any time, but such revocation shall not invalidate prior actions of the Co-
Chairmen that were consistent with the terms of the Plan.
Section 4. Eligibility. Directors, officers, employees and consultants of
the Company or its Subsidiaries who, in the opinion of the Plan Administrator,
are primarily responsible for the continued growth and development and future
financial success of the business shall be eligible to participate in the Plan.
In addition, Independent Directors are eligible to receive an automatic grant of
Stock Options pursuant to Section 9 hereof.
Section 5. Shares Subject to the Plan. The number of shares of Stock which
may be issued pursuant to the Plan shall be 10,000,000 shares, plus an automatic
annual increase on the first day of each fiscal year of the Company beginning on
or after January 1, 2001 and ending on or before December 31, 2006 equal to the
lesser of (i) 2,000,000 shares, (ii) 3% of the shares outstanding on the last
day of the immediately preceding fiscal year, or (iii) such lesser number of
shares as is determined by the Board. For purposes of the foregoing limitation,
the shares of Stock underlying any Awards which are forfeited, canceled,
reacquired by the Company, satisfied without the issuance of Stock or otherwise
terminated (other than by exercise) shall be added back to the number of shares
of Stock available for issuance under the Plan. Notwithstanding the foregoing,
Stock Options with respect to no more than 500,000 shares of Stock may be
granted to any one individual participant during any one calendar year period.
To the extent that an SAR is granted in conjunction with an Option, the shares
covered by such SAR and Option shall be counted only once. Common Stock to be
issued under the Plan may be either authorized and unissued shares or shares
held in treasury by the Company.
Section 6. Stock Options. Options granted pursuant to the Plan may be either
Incentive Stock Options or Non-Qualified Stock Options. Incentive Stock Options
and Non-Qualified Stock Options shall be granted separately hereunder. The Plan
Administrator shall determine whether and to what extent Options shall be
granted under the Plan and whether such Options granted shall be Incentive Stock
Options or Non-Qualified Stock Options; provided, however, that: (a) Incentive
Stock Options may be granted only to employees of the Company or any Subsidiary
that is a "subsidiary corporation" within the meaning of Section 424(f) of the
Code; and (b) no Incentive Stock Option may be granted following the tenth
anniversary of the Effective Date. The provisions of the Plan and any Option
agreement pursuant to which Incentive Stock Options shall be issued shall be
construed in a manner consistent with Section 422 of the Code (or any successor
provision) and rules and regulations promulgated thereunder.
Section 7. Stock Appreciation Rights. The Plan Administrator may, from time
to time, subject to the provisions of the Plan, grant SARs to eligible
participants. Such SARs may be granted (i) alone, (ii) simultaneously with the
grant of an Option (either an Incentive Stock Option or Non-Qualified Stock
Option) and in conjunction therewith or in the alternative thereto or (iii)
subsequent to the grant of a Non-Qualified Stock Option and in conjunction
therewith or in the alternative thereto.
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(a) An SAR shall entitle the holder upon exercise thereof to receive from
the Company, upon a written request filed with the Secretary of the
Company at its principal offices (the "Request"), (i) a number of
shares of Stock (with or without restrictions as to substantial risk
of forfeiture and transferability, as determined by the Plan
Administrator in its sole discretion), (ii) an amount of cash, or
(iii) any combination of shares of Stock and cash, as specified in the
Request (but subject to the approval of the Plan Administrator in its
sole discretion, at any time up to and including the time of payment,
as to the making of any cash payment), having an aggregate Fair Market
Value equal to the product of (i) the excess of the Fair Market Value,
on the day of such Request, of one share of Stock over the exercise
price per share specified in such SAR or its related Option,
multiplied by (ii) the number of shares of Stock for which such SAR
shall be exercised.
(b) The exercise price of an SAR granted alone shall be determined by the
Plan Administrator, but may not be less than the Fair Market Value of
the underlying Stock on the date of grant. An SAR granted
simultaneously with or subsequent to the grant of an Option and in
conjunction therewith or in the alternative thereto shall have the
same exercise price as the related Option, shall be transferable only
upon the same terms and conditions as the related Option, and shall be
exercisable only to the same extent as the related Option; provided,
--------
however, that an SAR, by its terms, shall be exercisable only when the
-------
Fair Market Value of the Stock subject to the SAR and related Option
exceeds the exercise price thereof.
(c) Upon exercise of an SAR granted simultaneously with or subsequent to
an Option and in the alternative thereto, the number of
shares of Stock for which the related Option shall be exercisable
shall be reduced by the number of shares of Stock for which the SAR
shall have been exercised. The number of shares of Stock for which an
SAR shall be exercisable shall be reduced upon any exercise of a
related Option by the number of shares of Stock for which such Option
shall have been exercised.
(d) Any SAR shall be exercisable upon such additional terms and conditions
as may be prescribed by the Plan Administrator.
Section 8. Terms of Options and SARs. Each Option or SAR granted under the
Plan shall be evidenced by an agreement between the Company and the person to
whom such Option or SAR is granted and shall be subject to the following terms
and conditions:
(a) Subject to adjustment as provided in Section 14 of this Plan, the
price at which each share covered by an Option may be purchased shall
be determined in each case by the Plan Administrator; provided,
however, that such price shall not, in the case of an Incentive Stock
Option, be less
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than the Fair Market Value of the underlying Stock at the time the
Option is granted. If an optionee owns (or is deemed to own under
applicable provisions of the Code and rules and regulations
promulgated thereunder) more than ten percent (10%) of the combined
voting power of all classes of the stock of the Company and an Option
granted to such optionee is intended to qualify as an Incentive Stock
Option, the Option price shall be no less than 110% of the Fair Market
Value of the Common Stock covered by the Option on the date the Option
is granted.
(b) The aggregate Fair Market Value of shares of Stock with respect to
which Incentive Stock Options are first exercisable by the
optionee in any calendar year (under all plans of the Company) shall
not exceed the limitations, if any, imposed by Section 422(d) of the
Code (or any successor provision). If any Option designated as an
Incentive Stock Option, either alone or in conjunction with any other
Option or Options, exceeds the foregoing limitation, the portion of
such Option in excess of such limitation shall automatically be
reclassified (in whole share increments and without fractional share
portions) as a Non-Qualified Stock Option, with later granted Options
being so reclassified first.
(c) Neither an Option nor an SAR shall be transferable by the participant
otherwise than by will or by the laws of descent and distribution or
pursuant to a domestic relations order. After the death of the
participant, the Option or SAR may be transferred to the Company upon
such terms and conditions, if any, as the Plan Administrator and the
personal representative or other person entitled to exercise the
Option or SAR may agree within the period specified in subsection
8(d)(iii) hereof.
(d) An Option or SAR may be exercised in whole at any time, or in part
from time to time, within such period or periods (not to exceed ten
years from the granting of the Option in the case of an Incentive
Stock Option) as may be determined by the Plan Administrator and set
forth in the agreement (such period or periods being hereinafter
referred to as the "Option Period"), provided that, unless the
agreement provides otherwise:
(i) If a participant who is an employee of the Company shall cease to
be employed by the Company, all Options and SARs which the
employee is then entitled to exercise may be exercised only
within three months after the termination of employment and
within the Option Period or, if such termination was due to
disability or retirement (as hereinafter defined), within one
year after termination of employment and within the Option
Period. Notwithstanding the foregoing: (a) In the event that any
termination of employment shall be for Cause (as defined herein)
or the participant becomes an officer or director of, a
consultant to or employed by a Competing Business (as defined
herein), during
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the Option Period, then any and all Options and SARs held by such
participant shall forthwith terminate; and (b) the Plan
Administrator may, in its sole discretion, extend the Option
Period of any Option or SAR for up to three years from the date
of termination of employment regardless of the original Option
Period. For purposes of the Plan, retirement shall mean the
termination of employment with the Company, other than for Cause,
at any time after age 65.
For purposes of this Plan, the term "Cause" shall mean (a) with
respect to an individual who is party to a written agreement with
the Company which contains a definition of "cause" or "for cause"
or words of similar import for purposes of termination of
employment thereunder by the Company, "cause" or "for cause" as
defined in such agreement; (b) in all other cases (i) the willful
commission by an employee of a criminal or other act that causes
substantial economic damage to the Company or substantial injury
to the business reputation of the Company; (ii) commission of an
act of fraud in the performance of such person's duties to or on
behalf of the Company; or (iii) the continuing willful failure of
a person to perform the duties of such person to the Company
(other than a failure to perform duties resulting from such
person's incapacity due to illness) after written notice thereof
(specifying the particulars thereof in reasonable detail) and a
reasonable opportunity to cure such failure are given to the
person by the Board of Directors of the Company or the Plan
Administrator. For purposes of the Plan, no act, or failure to
act, on the part of any person shall be considered "willful"
unless done or omitted to be done by the person other than in
good faith and without reasonable belief that the person's action
or omission was in the best interest of the Company.
For purposes of this Plan, the term "Competing Business" shall
mean: any person, corporation or other entity engaged in the
business of (a) providing information technology services or (b)
selling or attempting to sell any product or service which is the
same as or similar to products or services sold by the Company
within the last year prior to termination of such person's
employment, consultant relationship or directorship, as the case
may be, hereunder.
(ii) If a participant who is a director of the Company shall cease to
serve as a director of the Company, any Options or SARs then
exercisable by such director may be exercised only within three
months after the cessation of service and within the Option
Period unless such cessation was due to disability, in which case
such
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optionee may exercise such Option or SAR within one year after
cessation of service and within the Option Period.
Notwithstanding the foregoing: (a) if any cessation of service as
a director was the result of removal for Cause or the participant
becomes an officer or director of, a consultant to or employed by
a Competing Business during the Option Period, any Options and
SARs held by such participant shall forthwith terminate; and (b)
the Plan Administrator may in its sole discretion extend the
Option Period of any Option or SAR for up to three years from the
date of cessation of service regardless of the original Option
Period;
(iii) If the participant shall die during the Option Period, any
Options or SARs then exercisable may be exercised only within one
year after the participant's death and within the Option Period
and only by the participant's personal representative or persons
entitled thereto under the participant's will or the laws of
descent and distribution;
(iv) The Option or SAR may not be exercised for more shares (subject
to adjustment as provided in Section 14) after the termination of
the participant's employment, cessation of service as a director
or the participant's death, as the case may be, than the
participant was entitled to purchase thereunder at the time of
the termination of the participant's employment or the
participant's death; and
(v) If a participant owns (or is deemed to own under applicable
provisions of the Code and regulations promulgated thereunder)
more than 10% of the combined voting power of all classes of
stock of the Company (or any parent or subsidiary corporation of
the Company) and an Option granted to such participant is
intended to qualify as an Incentive Stock Option, the Option by
its terms may not be exercisable after the expiration of five
years from the date such Option is granted.
(e) The Option exercise price of each share purchased pursuant to an
Option shall be paid in full at the time of each exercise (the
"Payment Date") of the Option (i) in cash; (ii) by delivering to the
Company a notice of exercise with an irrevocable direction to a
broker-dealer registered under the Act to sell a sufficient portion of
the shares and deliver the sale proceeds directly to the Company to
pay the exercise price; (iii) in the discretion of the Plan
Administrator, through the delivery to the Company of previously-owned
shares of Common Stock having an aggregate Fair Market Value equal to
the Option exercise price of the shares being purchased pursuant to
the exercise of the Option; provided, however, that shares of Common
Stock delivered in payment of the Option price must have been held by
the participant for at least six (6) months in order to be utilized to
pay the Option price; (iv) in the discretion of the Plan
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Administrator, through an election to have shares of Common Stock
otherwise issuable to the optionee withheld to pay the exercise price
of such Option; or (v) in the discretion of the Plan Administrator,
through any combination of the payment procedures set forth in
subsections (i)-(iv) of this Section 8(e).
(f) The Plan Administrator, in its discretion, may authorize "stock
retention Options" which provide, upon the exercise of an Option
previously granted under this Plan (a "prior Option"), using
previously owned shares, for the automatic issuance of a new Option
under this Plan with an exercise price equal to the current Fair
Market Value and for up to the number of shares equal to the number of
previously-owned shares delivered in payment of the exercise price of
the prior Option. Such stock retention Option shall have the same
Option Period as the prior Option.
(g) Nothing contained in the Plan nor in any Award agreement shall confer
upon any participant any right with respect to the continuance of
employment by the Company nor interfere in any way with the right of
the Company to terminate his employment or change his compensation at
any time.
(h) The Plan Administrator may include such other terms and conditions not
inconsistent with the foregoing as the Plan Administrator shall
approve. Without limiting the generality of the foregoing sentence,
the Plan Administrator shall be authorized to determine that Options
or SARs shall be exercisable in one or more installments during the
term of the Option, subject to the attainment of performance goals and
objectives, and the right to exercise may be cumulative as determined
by the Plan Administrator.
Section 9. Independent Director Options. Anything to the contrary
notwithstanding, each Independent Director who is first elected or appointed to
serve as a director commencing after the effective time of the Initial Public
Offering shall automatically be granted Non-Qualified Stock Options to purchase
30,000 shares of Stock. The Option exercise price for Options granted to
Independent Directors under the Plan will be equal to the Fair Market Value of
the Stock on the date of grant. Options granted to Independent Directors under
the foregoing provisions will be granted on the date that such Independent
Director is first elected or appointed to serve as a director and will vest in
equal annual installments over three years commencing on the anniversary of the
date of grant and will expire ten years after grant, subject to earlier
termination if the optionee ceases to serve as a director.
Section 10. Restricted Stock Awards.
(a) The Plan Administrator may grant Restricted Stock Awards to any
officer, employee or consultant of the Company and its
Subsidiaries. A Restricted
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Stock Award entitles the recipient to acquire shares of Stock subject
to such restrictions and conditions as the Plan Administrator may
determine at the time of grant ("Restricted Stock"). Conditions may be
based on continuing employment (or other business relationship) and/or
achievement of pre-established performance goals and objectives.
(b) Upon execution of a written instrument setting forth the Restricted
Stock Award and paying any applicable purchase price, a
participant shall have the rights of a shareholder with respect to the
Stock subject to the Restricted Stock Award, including, but not
limited to, the right to vote and receive dividends with respect
thereto; provided, however, that shares of Stock subject to Restricted
Stock Awards that have not vested shall be subject to the restrictions
on transferability described in Section 10(d) below. Unless the Plan
Administrator shall otherwise determine, certificates evidencing the
Restricted Stock shall remain in the possession of the Company until
such Restricted Stock is vested as provided in Section 10(c) below.
(c) The Plan Administrator at the time of grant shall specify the date or
dates and/or the attainment of pre-established performance goals,
objectives and other conditions on which Restricted Stock shall become
vested, subject to such further rights of the Company or its assigns
as may be specified in the instrument evidencing the Restricted Stock
Award.
(d) Unvested Restricted Stock may not be sold, assigned, transferred,
pledged or otherwise encumbered or disposed of except as specifically
provided herein or in the written instrument evidencing the Restricted
Stock Award.
Section 11. Stock Awards. The Plan Administrator may, in its sole
discretion, grant (or sell at a purchase price determined by the Plan
Administrator) a Stock Award to any officer, employee or consultant of the
Company or its Subsidiaries, pursuant to which such individual may receive
shares of Stock free of any vesting restrictions (a "Stock Award") under the
Plan. Stock Awards may be granted or sold as described in the preceding sentence
in respect of past services or other valid consideration, or in lieu of any cash
compensation due to such individual.
Section 12. Performance Share Awards. A Performance Share Award is an Award
entitling the recipient to acquire shares of Stock upon the attainment of
specified performance goals. The Plan Administrator may make Performance Share
Awards independent of or in connection with the granting of any other Award
under the Plan. Performance Share Awards may be granted under the Plan to any
officer, employee or consultant of the Company or its Subsidiaries, including
those who qualify for awards under other performance plans of the Company. The
Plan Administrator in its sole discretion shall determine whether and to whom
Performance Share Awards shall be made, the performance goals applicable under
each such Award, the periods during which performance is to be measured, and all
other limitations and conditions applicable
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to the awarded Performance Shares; provided, however, that the Plan
Administrator may rely on the performance goals and other standards applicable
to other performance plans of the Company in setting the standards for
Performance Share Awards under the Plan.
Section 13. Tax Withholding.
(a) Whenever shares are to be issued or cash is to be paid under the Plan,
the Company shall have the right to require the participant
to remit to the Company an amount sufficient to satisfy federal, state
and local tax withholding requirements prior to the delivery of any
certificate for shares or any proceeds; provided, however, that in the
case of a participant who receives an Award of shares under the Plan
which is not fully vested, the participant shall remit such amount on
the first business day following the Tax Date. The "Tax Date" for
purposes of this Section 13 shall be the date on which the amount of
tax to be withheld is determined. If a participant makes a
disposition of shares acquired upon the exercise of an Incentive Stock
Option within either two years after the Option was granted or one
year after its exercise by the participant, the participant shall
promptly notify the Company, and the Company shall have the right to
require the participant to pay to the Company an amount sufficient to
satisfy federal, state and local tax withholding requirements.
(b) A participant who is obligated to pay the Company an amount required
to be withheld under applicable tax withholding requirements may pay
such amount (i) in cash; (ii) in the discretion of the Plan
Administrator, through the delivery to the Company of previously-owned
shares of Common Stock having an aggregate Fair Market Value on the
Tax Date which does not exceed the amount of the tax required to be
withheld (based on the statutory minimum withholding rates for federal
and state tax purposes, including payroll taxes), provided that the
previously owned shares delivered in satisfaction of the withholding
obligations must have been held by the participant for at least six
(6) months; or (iii) in the discretion of the Plan Administrator,
through a combination of the procedures set forth in subsections (i)
and (ii) of this Section 13(b).
(c) A participant who is obligated to pay to the Company an amount
required to be withheld under applicable tax withholding requirements
in connection with either the exercise of a Non-Qualified Stock
Option, or the receipt of a Restricted Stock Award, Stock Award or
Performance Share Award under the Plan may, in the discretion of the
Plan Administrator, elect to satisfy this withholding obligation, in
whole or in part, by requesting that the Company withhold shares of
stock otherwise issuable to the participant having a Fair Market Value
on the Tax Date which does not exceed the amount of the tax required
to be withheld (based on the statutory minimum withholding rates for
federal and state tax purposes, including payroll taxes); provided,
however, that shares may
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be withheld by the Company only if such withheld shares have vested.
Any fractional amount shall be paid to the Company by the participant
in cash or shall be withheld from the participant's next regular
paycheck.
(d) An election by a participant to have shares of stock withheld to
satisfy federal, state and local tax withholding requirements pursuant
to Section 13(c) must be in writing and delivered to the Company prior
to the Tax Date.
Section 14. Adjustment of Number and Price of Shares.
Any other provision of the Plan notwithstanding:
(a) If, through or as a result of any reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split or
other similar transaction, the outstanding shares of Stock are
increased or decreased or are exchanged for a different number or kind
of shares or other securities of the Company, or additional shares or
new or different shares or other securities of the Company or other
noncash assets are distributed with respect to such shares of Stock or
other securities, the Plan Administrator shall make an appropriate or
proportionate adjustment in (i) the number of Stock Options that can
be granted to any one individual participant, (ii) the number and kind
of shares or other securities subject to any then outstanding Awards
under the Plan, and (iii) the price for each share subject to any then
outstanding Stock Options under the Plan, without changing the
aggregate exercise price (i.e., the exercise price multiplied by the
number of shares) as to which such Stock Options remain exercisable.
The adjustment by the Plan Administrator shall be final, binding and
conclusive.
(b) In the event that, by reason of a corporate merger, consolidation,
acquisition of property or stock, separation, reorganization or
liquidation, the Board of Directors shall authorize the issuance or
assumption of a stock Option or stock Options in a transaction to
which Section 424(a) of the Code applies, then, notwithstanding any
other provision of the Plan, the Plan Administrator may grant an
Option or Options upon such terms and conditions as it may deem
appropriate for the purpose of assumption of the old Option, or
substitution of a new Option for the old Option, in conformity with
the provisions of Code Section 424(a) and the rules and regulations
thereunder, as they may be amended from time to time.
(c) No adjustment or substitution provided for in this Section 14 shall
require the Company to issue or to sell a fractional share
under any stock Option agreement or share award agreement and the
total adjustment or substitution with respect to each stock Option and
share award agreement shall be limited accordingly.
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Section 15. Definition of Change of Control. For purposes of this Plan, a
"Change of Control" shall mean the occurrence of any of the following events:
(a) The acquisition, other than from the Company, by any individual,
entity or group (within the meaning of Section 13(d) (3) or 14(d) (2)
of the Act ) (a "Person") (other than the Company, a Subsidiary or any
of their respective benefit plans or affiliates (within the meaning of
Rule 144 under the Securities Act of 1933, as amended)) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Act)
of 30% or more of either (i) the then outstanding shares of Stock (the
"Outstanding Stock") or (ii) the combined voting power of the then
outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Company Voting
Securities"); or
(b) Individuals who, as of the Restated Effective Date, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board, provided that any individual becoming a
director subsequent to the Restated Effective Date whose election or
nomination for election by the Company's stockholders was approved by
a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any
such individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the election
of the Directors of the Company (as such terms are used in Rule 14a-ll
of Regulation 14A promulgated under the Act); or
(c) Approval by the stockholders of the Company of a reorganization,
merger or consolidation or similar form of corporate transaction,
involving the Company or any of its Subsidiaries (a "Business
Combination"), in each case, with respect to which all or
substantially all of the individuals and entities who were the
respective beneficial owners of the Outstanding Stock and Company
Voting Securities immediately prior to such Business Combination do
not, immediately following such Business Combination, beneficially
own, directly or indirectly, more than 50% of, respectively, the then
outstanding shares of common stock and the combined voting power of
the then outstanding voting securities entitled to vote generally in
the election of directors, as the case may be, of the corporation
resulting from such Business Combination in substantially the same
proportion as their ownership immediately prior to such Business
Combination of the Outstanding Stock and Company Voting Securities, as
the case may be; or
(d) (A) Approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company or (B) sale or other
disposition of all or substantially all of the assets of the Company
other than to a
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corporation with respect to which, following such sale or disposition,
more than 50% of, respectively, the then outstanding shares of common
stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors is
then owned beneficially, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Stock and Company
Voting Securities immediately prior to such sale or disposition in
substantially the same proportion as their ownership of the
Outstanding Stock and Company Voting Securities, as the case may be,
immediately prior to such sale or disposition.
Section 16. Consequences of a Change of Control.
(a) Upon a Change of Control, (i) each outstanding Option or SAR shall be
assumed by the Acquiring Corporation (as defined below) or parent
thereof or replaced with a comparable option or right to purchase or
to be awarded shares of the capital stock, or equity equivalent
instrument, of the Acquiring Corporation or parent thereof, or other
comparable rights (such assumed and comparable options and rights,
together, the "Replacement Options"), and (ii) each share of
Restricted Stock shall be converted to a comparable restricted grant
of capital stock, or equity equivalent instrument, of the Acquiring
Corporation or parent thereof or other comparable restricted property
(such assumed and comparable restricted grants, together, the
"Replacement Restricted Stock"); provided, however, that if the
Acquiring Corporation or parent thereof does not agree to grant
Replacement Options and Replacement Restricted Stock, then all
outstanding Options or SARs which have been granted under the Plan and
which are not exercisable as of the effective date of the Change of
Control shall automatically accelerate and become exercisable
immediately prior to the effective date of the Change of Control, and
all restrictions and conditions on any Restricted Stock shall lapse
upon the effective date of the Change of Control. The term "Acquiring
Corporation" means the surviving, continuing, successor or purchasing
corporation, as the case may be. The Board may determine in its
discretion (but shall not be obligated to do so) that in lieu of the
issuance of Replacement Options, all holders of outstanding Options
and SARs which are exercisable immediately prior to a Change of
Control (including those that become exercisable under this Section
16(a)) will be required to surrender them in exchange for a payment by
the Company, in cash or Common Stock as determined by the Board, of an
amount equal to the amount (if any) by which the per-share value of
Stock subject to unexercised Options or SARs (determined by the Board
in good faith, based on the applicable price in the transaction giving
rise to the Change of Control, and such other considerations as the
Board deems appropriate) exceeds the exercise price of those Options
or SARs (where Options and SARS are issued in tandem, such payment to
be made only with respect to a single underlying
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share of Stock upon surrender of each tandem pair of Options and
SARs), with such payment to take place as of the date of the Change of
Control or such other date as the Board may prescribe.
(b) Any Options or SARs that are not assumed or replaced by Replacement
Options, exercised or cashed out prior to or concurrent with a Change
of Control will terminate effective upon the Change of Control or at
such other time as the Board deems appropriate.
(c) Notwithstanding anything in the Plan to the contrary, in the event of
a Change of Control, no action described in the Plan shall be taken
(including, without limitation, actions described in subsections (a)
and (b) above) if such actions would make the Change of Control
ineligible for "pooling of interests" accounting treatment or would
make the Change of Control ineligible for desired tax treatment if, in
the absence of such actions, the Change of Control would qualify for
such treatment and the Company intends to use such treatment with
respect to such Change of Control.
Section 17. Amendment and Discontinuance. The Board of Directors may
alter, amend, suspend or discontinue the Plan, provided that no such action
shall deprive any person without such person's consent of any rights theretofore
granted pursuant hereto.
Section 18. Compliance with Governmental Regulations. Notwithstanding any
provision of the Plan or the terms of any agreement entered into pursuant to the
Plan, the Company shall not be required to issue any shares hereunder prior to
registration of the shares subject to the Plan under the Securities Act of 1933
or the Act, if such registration shall be necessary, or before compliance by the
Company or any participant with any other provisions of either of those acts or
of regulations or rulings of the Securities and Exchange Commission thereunder,
or before compliance with other federal and state laws and regulations and
rulings thereunder, including the rules of any applicable exchange or of the
NASDAQ National Market System. The Company shall use its best efforts to effect
such registrations and to comply with such laws, regulations and rulings
forthwith upon advice by its counsel that any such registration or compliance is
necessary.
Section 19. Compliance with Section 16. With respect to persons subject to
Section 16 of the Act by reason of their service with the Company or its
Subsidiaries, transactions under this Plan are intended to comply with all
applicable conditions of Rule 16b-3 (or any successor rule) and shall be
construed to the fullest extent possible in a manner consistent with this
intent. To the extent that any Award fails to so comply, it shall be deemed to
be modified to the extent permitted by law and to the extent deemed advisable by
the Plan Administrator in order to comply with Rule 16b-3.
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Section 20. Participation by Foreign Nationals. The Plan Administrator
may, in order to fulfill the purposes of the Plan and without amending the Plan,
determine the terms and conditions applicable to Awards to foreign nationals or
United States citizens employed abroad in a manner otherwise inconsistent with
the Plan if it deems such terms and conditions necessary in order to recognize
differences in local law or regulations, tax policies or customs.
Section 21. Restated Effective Date of Plan; Termination of Plan. The
Plan's Effective Date was November 4, 1996, the date of initial approval and
adoption of the Plan by requisite vote of the holders of the outstanding shares
of Stock. The Plan was thereafter amended and restated on each of June 1, 1998
and February 1, 1999. The Restated Effective Date is April 6, 2000. The Plan
shall terminate on November 3, 2006, unless it is earlier terminated by the
Board. Termination of the Plan shall not affect previous Awards under the Plan.
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