<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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
INFONET SERVICES CORPORATION
(Name of Registrant as Specified in its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee:
[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:
<PAGE>
[LOGO OF INFONET]
INFONET SERVICES CORPORATION
July 27, 2000
Dear Stockholder:
You are cordially invited to attend the 2000 annual meeting of stockholders
of Infonet Services Corporation to be held on September 11, 2000 at 10:00 a.m.,
local time, at the Hilton Los Angeles Airport, 5711 West Century Blvd., Los
Angeles, California 90045-5631.
Information about the meeting and the various matters on which the
stockholders will act is included in the Notice of Annual Meeting of
Stockholders and Proxy Statement that follows. Also included is a Proxy Card
and postage paid return envelope.
It is important that your shares be represented at the meeting. Whether or
not you plan to attend, we hope that you will complete and return your Proxy
Card in the enclosed envelope as promptly as possible. If you attend the annual
meeting, you may, if you wish, withdraw your proxy and vote in person.
Sincerely,
/s/ JOSE A. COLLAZO
JOSE A. COLLAZO
Chairman of the Board and President
<PAGE>
INFONET SERVICES CORPORATION
2160 East Grand Avenue
El Segundo, California 90245-1022
---------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held September 11, 2000
---------------
Infonet Services Corporation: To the stockholders
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders, or the
Annual Meeting, of Infonet Services Corporation, a Delaware corporation, will
be held at the Hilton Los Angeles Airport, 5711 West Century Blvd., Los
Angeles, California 90045-5631, on September 11, 2000, at 10:00 a.m., local
time, for the following purposes:
1. To elect nine directors to serve until the annual meeting of
stockholders in the year 2001 and until their successors are duly elected
and qualified;
2. To consider and act upon the adoption of the Infonet Services
Corporation 2000 Omnibus Stock Plan;
3. To consider and act upon the adoption of the Infonet Services
Corporation 2000 Employee Stock Purchase Plan;
4. To ratify the appointment of the independent auditor; and
5. To transact such other business as may properly come before the
meeting or any adjournment(s) or postponement(s) of the meeting.
Following the Annual Meeting, management will report on the current
activities of Infonet and comment on its future plans. A discussion period is
planned so that stockholders will have an opportunity to ask questions and
make appropriate comments.
The Board of Directors has fixed the close of business on July 21, 2000 as
the record date, referred to as the Record Date, for determining the
stockholders entitled to receive notice of and to vote at the Annual Meeting
or any adjournment or postponement of the meeting. A list of stockholders will
be available for inspection at the offices of Infonet at 2160 East Grand
Avenue, El Segundo, California 90245-1022, at least ten days prior to the
Annual Meeting.
Stockholders are cordially invited to attend the Annual Meeting in person.
If you plan to be present, please notify the undersigned so that
identification can be prepared for you. Whether or not you plan to attend the
Annual Meeting, please execute, date and return promptly the enclosed proxy. A
return envelope is enclosed for your convenience and requires no postage for
mailing in the United States. If you are present at the Annual Meeting you
may, if you wish, withdraw your proxy and vote in person. Thank you for your
interest and consideration.
By Order of the Board of Directors,
/s/ ERNEST U. GAMBARO
Ernest U. Gambaro
Senior Vice President, General Counsel
and Secretary
El Segundo, California
July 27, 2000
YOUR VOTE IS IMPORTANT. ACCORDINGLY, YOU ARE URGED TO COMPLETE, SIGN,
DATE AND RETURN THE ACCOMPANYING PROXY CARD WHETHER OR NOT YOU PLAN TO
ATTEND THE ANNUAL MEETING.
<PAGE>
[LOGO OF INFONET]
2160 East Grand Avenue
El Segundo, CA 90245
----------------
PROXY STATEMENT
----------------
FOR ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 11, 2000
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Infonet Services Corporation, a Delaware
corporation, of proxies from the holders of our issued and outstanding Class B
common shares of stock, $.01 par value per share (together with our Class A
common shares, the Common Shares), to be exercised at the Annual Meeting of
Stockholders, or the Annual Meeting, to be held on September 11, 2000 at the
Hilton Los Angeles Airport, 5711 West Century Blvd., Los Angeles, California
90045-5631 at 10:00 a.m., local time, and at any adjournment or postponement
of the meeting for the purposes set forth in the accompanying Notice of Annual
Meeting. The terms "Infonet", "us", "we" and "our" as used in this statement
refer to Infonet Services Corporation.
This Proxy Statement and enclosed form of proxy are first being mailed to
our stockholders on or about August 8, 2000.
At the Annual Meeting, our stockholders will be asked to consider and vote
upon the following proposals:
1. The election of nine directors to serve until the annual meeting of
stockholders to be held in the year 2001 and until their successors are
duly elected and qualified;
2. The adoption of the Infonet Services Corporation 2000 Omnibus Stock
Plan;
3. The adoption of the Infonet Services Corporation 2000 Employee Stock
Purchase Plan;
4. The ratification of the independent auditor; and
5. Any other business that properly comes before the Annual Meeting.
Only the holders of record of our Common Shares at the close of business on
July 21, 2000, or the Record Date, are entitled to notice of and to vote at
the Annual Meeting. Each Class B common share is entitled to one vote on all
matters, whereas each Class A common share is entitled to ten votes on all
matters except for the election of the Class B common share directors, in
which they do not vote. As of the Record Date, 470.0 million of our Common
Shares were outstanding, 167.4 million of our Class A common shares and
302.6 million of our Class B common shares. A majority of the Common Shares
outstanding must be represented at the Annual Meeting in person or by proxy to
constitute a quorum for the transaction of business at the Annual Meeting.
Abstentions and broker non-votes will count toward the presence of a quorum.
In order to be elected as a director, a nominee must receive a plurality of
all eligible votes cast at the Annual Meeting at which a quorum is present.
For purposes of calculating votes cast in the election of directors,
abstentions will not be counted as votes cast and will have no effect on the
result of the vote on this proposal. The affirmative vote of the holders
entitled to cast a majority of the votes represented by shares present in
person or by proxy and entitled to vote at the meeting is required for
approval of the proposed 2000 Omnibus Stock Plan, or Omnibus Plan; the 2000
Employee Stock Purchase Plan, or Purchase Plan; and the ratification of
independent auditor. For purposes of the votes on these items, abstentions
will have the same effect as votes against the proposed Omnibus Plan, Purchase
Plan and independent auditors.
<PAGE>
Broker non-votes will not be counted as shares entitled to vote on the plan
matters and will have no effect on the result of the votes on the Omnibus Plan
and Purchase Plan.
The Common Shares represented by all properly executed proxies returned to
us will be voted at the Annual Meeting as indicated or, if no instruction is
given, FOR the nominees for director, the Omnibus Plan, the Purchase Plan and
the independent auditors. As to any other business which properly comes before
the Annual Meeting, all properly executed proxies will be voted by the persons
named therein in accordance with their discretion. We do not presently know of
any other business which may properly come before the Annual Meeting. Any
person giving a proxy has the right to revoke it at any time before it is
exercised (a) by filing with the Secretary of Infonet a duly signed revocation
or a proxy bearing a later date or (b) by electing to vote in person at the
Annual Meeting. Mere attendance at the Annual Meeting will not revoke a proxy.
If the Annual Meeting is postponed or adjourned for any reason, at any
subsequent reconvening of the Annual Meeting all proxies will be voted in the
same manner as such proxies would have been voted at the original convening of
the Annual Meeting (except for any proxies that were theretofore effectively
revoked or withdrawn).
We will bear the cost of soliciting proxies from our stockholders. We have
retained Georgeson Shareholder Communications Inc. to assist us in the
solicitation at a cost of $10,000 plus reasonable expenses. In addition to
solicitation by mail, our directors, officers and employees may solicit proxies
by telephone, telegram or otherwise. Such directors, officers and employees of
Infonet will not be additionally compensated for such solicitation, but may be
reimbursed for out-of-pocket expenses incurred in connection with the
solicitation. Brokerage firms, fiduciaries and other custodians who forward
soliciting material to the beneficial owners of Common Shares held of record by
them will be reimbursed for their reasonable expenses incurred in forwarding
such material.
Our Class B common shares are traded on the New York Stock Exchange, Inc.,
or NYSE, and the Frankfurt Stock Exchange under the ticker symbol "IN." On July
21, 2000, the last reported sale price for our Class B common shares on the
NYSE was $15.56 per share.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT. IF ANY
REPRESENTATION OR INFORMATION IS GIVEN OR MADE, YOU MUST NOT RELY ON THAT
INFORMATION AS HAVING BEEN AUTHORIZED BY US AND THE DELIVERY OF THIS PROXY
STATEMENT SHALL, UNDER NO CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF INFONET SINCE THE DATE HEREOF.
----------------
The date of this proxy statement is July 27, 2000.
2
<PAGE>
PROPOSAL 1: ELECTION OF DIRECTORS
Members of our Board of Directors, or Board, currently hold office and serve
until our next annual meeting of stockholders, or until their respective
successors have been elected. Our Board is currently comprised of nine
directors. At each annual meeting of stockholders, the successors to directors
whose term will then expire are elected to serve until the next annual meeting
of stockholders. In addition, our restated certificate of incorporation
provides that the authorized number of directors will be between seven and
twelve, with the exact number to be determined by a majority of our Board. Our
restated certificate of incorporation also reserves two independent directors
for election by the Class B common shares voting alone. For purposes of this
provision, Messrs. Hartman and O'Rourke have been nominated for election to the
Board. Our directors may be removed, with or without cause, by the affirmative
vote of the holders of two-thirds of the shares entitled to vote at an election
of directors. There are no family relationships among any of our directors and
executive officers.
Except where otherwise instructed, proxies solicited by this Proxy Statement
will be voted FOR the election of the Board's nominees listed below.
Each nominee has consented to be named in this Proxy Statement and to serve
as a director if elected. The information below relating to the nominees for
election as director has been furnished to us by the respective individuals.
Nominees for Director
<TABLE>
<CAPTION>
Name Age Title
---- --- -----
<S> <C> <C>
Jose A. Collazo......... 56 President, Chief Executive Officer, Chairman of the Board of Directors,
Common Shares nominee
Douglas C. Campbell..... 61 Director, Common Shares nominee
Eric M. de Jong......... 51 Director, Common Shares nominee
Morgan Ekberg........... 54 Director, Common Shares nominee
Timothy P. Hartman...... 61 Director, Class B common shares nominee
Heinz Karrer............ 41 Director, Common Shares nominee
Masao Kojima............ 52 Director, Common Shares nominee
Matthew J. O'Rourke..... 52 Director, Class B common shares nominee
Rafael Sagrario......... 56 Director, Common Shares nominee
</TABLE>
Jose A. Collazo has served as our President, Chief Executive Officer and
Chairman of the Board since our founding in 1988. From 1967 to 1988, Mr.
Collazo held several management positions at Computer Sciences Corporation, or
CSC, including President of the International Division and head of global
network services. Mr. Collazo is on the Pepperdine University Board of Regents.
Douglas Campbell has been a member of our Board since 1999. He is currently
the Group Managing Director--Wholesale & International of Telstra Corporation,
an Australian telecommunications company, a position he has held since 1998.
From 1993 to 1998, he served as Group Managing Director--Network & Technology
of Telstra.
Eric M. de Jong has been a member of our Board since 1999. Since 1996, he
has served as the Director--Partnership Management of KPN International, a
Dutch telecommunications company. Prior to this time, he was Director of
Strategy and a Project Director of KPN in charge of the telecommunications
development of the Amsterdam airport area.
Morgan Ekberg has been a member of our Board since 1997. He is currently an
Executive Vice President and Head of Asia, Africa and Latin America with Telia
AB, a Swedish telecommunications company. Also during 1999, he served as
Executive Vice President and Head of Business Area Systems and Solutions with
Telia AB and Deputy Head of and Chief Operating Officer of Telia Business
Solutions. From 1995 through 1998, Mr. Ekberg served as Deputy Head of and
Chief Operating Officer of Telia Telecom AB and prior to 1995 he was the Head
of Telecom Services Division with Telia, which was Swedish Telecom.
3
<PAGE>
Timothy Hartman has been a member of our Board since April, 2000. He was
Chairman of NationsBank of Texas until his retirement in June 1996, and also
was a director and Vice Chairman of its parent corporation until he retired in
1994. Before joining the NationsBank organization in 1982, Mr. Hartman was the
Chief Financial Officer of Baldwin-United Corporation, a diversified financial
services company, with which he was associated from 1963 through 1981. Mr.
Hartman is also a member of the Board of Directors Sensormatic Electronics
Corporation, a designer, manufacturer and marketer of electronic security,
sensing and tracking systems.
Heinz Karrer is the head of Marketing, Sales & Solutions at Swisscom AG, a
position he has held since 1997. Before assuming his current position Mr.
Karrer was Chief Executive of Ringier Switzerland and a member of the
Management Board of Ringier AG, from 1996 to 1997 and previously he served as
Head of Newspapers Division at Ringier European, from 1995 to 1996. Mr. Karrer
is currently a director of debitel Ltd., a telecommunications provider.
Masao Kojima has been a member of our Board since 1998. He is currently a
Senior Deputy Director, Network Business Department, of KDD Corporation, a
Japanese telecommunications company, a position he has held since 1999. From
1997 to 1999, Mr. Kojima served as Deputy Director, Telecommunications Business
Department, of KDD. From 1996 to 1997, Mr. Kojima served as General Manager,
Network Division of KDD. From 1995 to 1996, Mr. Kojima served as Deputy
Director, Network System Development Department of KDD. From 1993 to 1995, Mr.
Kojima served as Manager, Network Quality, Network Operations & Administration
Department, of KDD.
Matthew O'Rourke has been a member of our Board since April, 2000. He was a
partner with the accounting firm Price Waterhouse LLP from 1972 until his
retirement in June 1996. Prior to his retirement, he served as Managing Partner
at Price Waterhouse's New York National Office from 1994 to 1996 and as
Managing Partner for Northern California from 1988 to 1994. Since his
retirement, Mr. O'Rourke has been engaged as an independent business
consultant. Mr. O'Rourke is also member of the Board of Directors of Read-Rite
Corporation, a supplier of magnetic recording heads for the hard disk drive
market and LSI Logic Corporation, a semi-conductor products and storage systems
designer and manufacturer.
Rafael Sagrario has been a member of our Board since January 1999. He is
currently the Operations General Manager of Telefonica Data, a Spanish
telecommunications company. From 1995 to 1997, he served as the President of
Telefonica Transmision de Datos. From 1998 to February 1999, he served as Sole
Administrator of Telefonica Transmision de Datos.
Vote Required and Board Recommendation
Common Shares nominees. The Common Shares directors will be elected by a
favorable vote of a plurality of all Common Share votes cast at a meeting at
which a quorum is present. For purposes of the election of the Common Shares
directors, abstentions will count toward calculation of a quorum but will not
be counted as votes cast and will have no effect on the results of the vote.
Unless instructed to the contrary, the shares represented by the proxies will
be voted FOR the election of the Common Share nominees named above.
Class B common share nominees. The Class B common share directors will be
elected by a favorable vote of a plurality of all Class B common share votes
cast at a meeting at which a quorum is present. For purposes of the election of
the Class B common shares directors, abstentions will count toward calculation
of a quorum but will not be counted as votes cast and will have no effect on
the results of the vote. Unless instructed to the contrary, the shares
represented by the proxies will be voted FOR the election of the Class B common
share nominees named above.
The Board unanimously recommends a vote "FOR" the election of each of the
director nominees to serve until the annual meeting of stockholders to be held
in the year 2001 and until their successors are duly elected and qualified.
4
<PAGE>
BOARD OF DIRECTORS, MEETINGS AND ATTENDANCE
Our Board held seven meetings during our last full fiscal year. All
directors attended at least 75% of the aggregate of (i) the total number of
meetings of the Board while they were on the Board and (ii) the total number of
meetings of the Committees of the Board on which such directors served.
Committees of the Board of Directors
The Audit and Finance Committee of our Board was established in 1988 and
reviews, acts on and reports to our Board with respect to various auditing and
accounting matters, including the recommendation of our independent auditors,
the scope of the annual audits, fees to be paid to the independent auditors,
the performance of our independent auditors and our accounting practices. The
members of the Audit and Finance Committee are Messrs. de Jong, Kojima and
O'Rourke. All members of the Audit and Finance Committee are confirmed
independent according to the Rules of the NYSE. The Audit and Finance Committee
met four times during the year ended March 31, 2000.
The Compensation Committee of our Board was established in 1988 and
determines the salaries, benefits and stock option grants for our employees,
consultants and directors. The members of the Compensation Committee are
Messrs. Hartman, Ekberg and Nancoz. The Compensation Committee met four times
during the year ended March 31, 2000.
The Quality Assurance Committee of our Board was established in 1994 and
reviews, acts on and reports to our board of directors with respect to the
operation of our systems and the provision of services to our clients. The
members of the Quality Assurance Committee are Messrs. Campbell and Sagrario.
The Quality Assurance Committee met four times during the year ended March 31,
2000.
Audit and Finance Committee Charter
The following shall be the principal recurring processes of the Audit and
Finance Committee in carrying out its oversight responsibilities. The processes
are set forth as a guide with the understanding that the Audit and Finance
Committee may supplement them as appropriate.
Purpose
The purpose of the Audit and Finance Committee (the "Committee") is to
provide assistance to the Board of Infonet Services Corporation (the "Company")
in fulfilling the Board's oversight responsibilities regarding the Company's
accounting and system of internal controls, the quality and integrity of the
Company's financial reports and the independence and performance of the
Company's outside auditor. In so doing, the Committee should endeavor to
maintain free and open means of communication between the members of the
Committee, other members of the Committee, other members of the Board, the
outside auditor and the financial management of the Company.
Membership
The Committee shall consist of at least three members of the Board. The
members shall be appointed by action of the Board and shall serve at the
discretion of the Board. Each Committee member shall be "financially literate"
as determined by the Board in its business judgment and shall satisfy the
"independence" requirements of the New York Stock Exchange. At least one member
of the Committee shall have "accounting or related financial management
expertise," as determined by the Board in its business judgment.
Committee Organization and Procedures
1. The members of the Committee shall appoint a Chair of the Committee by
majority vote. The Chair (or in his or her absence, a member designated by the
Chair) shall preside at all meetings of the Committee.
5
<PAGE>
2. The Committee shall have the authority to establish its own rules and
procedures consistent with the bylaws of the Company for notice and conduct of
its meetings, should the Committee, in its discretion, deem it desirable to do
so.
3. The Committee shall meet at least four times in each fiscal year, and
more frequently as the Committee in its discretion deems desirable. A Committee
member shall not vote on any matter in which he or she is not independent.
4. The Committee may, in its discretion, include in its meetings members of
the Company's financial management, representatives of the outside auditor, the
senior internal audit manager and other financial personnel employed or
retained by the Company. The Committee may meet with the outside auditor or the
senior internal audit manager in separate executive sessions to discuss any
matters that the Committee believes should be addressed privately, without
management's presence. The Committee may likewise meet privately with
management, as it deems appropriate.
5. The Committee may, in its discretion, utilize the services of the
Company's regular corporate legal counsel with respect to legal matters or, at
its discretion, retain other legal counsel if it determines that such counsel
is necessary or appropriate under the circumstances.
6. The Committee may, in its discretion, conduct or authorize
investigations into matters within the Committee's scope of responsibilities.
The Committee is authorized to retain independent accountants or others it
needs to assist in an investigation.
Responsibilities
Outside Auditor
7. The outside auditor shall be ultimately accountable to the Committee and
the Board in connection with the audit of the Company's annual financial
statements and related services. In this regard, the Committee shall select and
periodically evaluate the performance of the outside auditor and, if necessary,
recommend that the Board replace the outside auditor. As appropriate, the
Committee shall recommend to the Board the nomination of the outside auditor
for stockholder approval at any meeting of stockholders.
8. The Committee shall approve the fees to be paid to the outside auditor
and any other terms of the engagement of the outside auditor.
9. The Committee shall receive from the outside auditor, at least annually,
a written statement delineating all relationships between the outside auditor
and the Company, consistent with Independence Standards Board Standard 1. The
Committee shall actively engage in a dialogue with the outside auditor with
respect to any disclosed relationships or services that, in the view of the
Committee, may impact the objectivity and independence of the outside auditor.
If the Committee determines that further inquiry is advisable, the Committee
shall recommend that the Board take any appropriate action in response to the
outside auditor's report to satisfy itself of the auditor's independence.
Annual Audit
10. The Committee shall meet with the outside auditor and management of the
Company in connection with each annual audit to discuss the scope of the audit
and the procedures to be followed.
11. The Committee shall meet with the outside auditor and management prior
to the public release of the financial results of operations for the year under
audit and discuss with the outside auditor any matters within the scope of the
pending audit that have not yet been completed.
12. The Committee shall review and discuss the audited financial statements
with the management of the Company.
6
<PAGE>
13. The Committee shall review and discuss with the outside auditor at the
completion of the annual audit: (i) the financial statements, including
footnotes, (ii) the outside auditors' report thereon, (iii) any significant
changes to the outside auditors' audit plan and, as may be appropriate to the
Company's operation, (iv) changes in the Company's significant accounting
policies; (v) the methods used to account for any significant unusual
transactions reflected in the audited financial statements; (vi) the effect of
significant accounting policies in any controversial or emerging areas for
which there is a lack of authoritative guidance or a consensus to be followed
by the outside auditor; (vii) the process used by management in formulating
particularly sensitive accounting estimates and the basis for the auditor's
conclusions regarding the reasonableness of those estimates; and (viii) any
disagreements with management over the application of accounting principles,
the basis for management's accounting estimates or the disclosures in the
financial statements.
14. The Committee shall, based on the review and discussions in paragraphs
12 and 13 above, and based on the disclosures received from the outside auditor
regarding its independence and discussions with the auditor regarding such
independence in paragraph 9 above, recommend to the Board whether the audited
financial statements should be included in the Company's Annual Report on Form
10-K for the fiscal year subject to the audit.
Quarterly Review
15. The outside auditor is required to review the interim financial
statements to be included in any Form 10-Q of the Company using professional
standards and procedures for conducting such reviews, as established by
generally accepted auditing standards as modified or supplemented by the
Securities and Exchange Commission, prior to the filing of the Form 10-Q. The
Committee shall discuss with management and the outside auditor in person, at a
meeting, or by conference telephone call, the results of the quarterly review
including such matters as significant adjustments, management judgments,
accounting estimates, significant new accounting policies and disagreements
with management. The Chair (or another member of the Audit Committee) may
represent the entire Committee for purposes of this discussion.
Internal Controls
16. The Committee shall discuss with the outside auditor and the senior
internal audit manager, at least annually, the adequacy and effectiveness of
the accounting and financial controls of the Company, and consider any
recommendations for improvement of such internal control procedures.
17. The Committee shall discuss with the outside auditor and with management
any management letter provided by the outside auditor and any other significant
matters brought to the attention of the Committee by the outside auditor as a
result of its annual audit. The Committee should allow management adequate time
to consider any such matters raised by the outside auditor.
Internal Audit
18. The Committee shall discuss at least annually with the senior internal
audit manager the activities and organizational structure of the Company's
internal audit function and the qualifications of the primary personnel
performing such function.
19. Management shall furnish to the Committee a copy of each audit report
prepared by the senior internal audit manager of the Company.
20. The Committee shall, at its discretion, meet with the senior internal
audit manager to discuss any reports prepared by him or her or any other
matters brought to the attention of the Committee by the senior internal
auditor manager.
21. The senior internal audit manager shall be granted unfettered access to
the Committee.
7
<PAGE>
Other Responsibilities
22. The Committee shall review and reassess the Committee's charter at least
annually and submit any recommended changes to the Board for its consideration.
23. Beginning in the year 2001, the Committee shall provide the report for
inclusion in the Company's Annual Proxy Statement required by Item 306 of
Regulation S-K of the Securities and Exchange Commission.
24. The Committee, through its Chair, shall report periodically, as deemed
necessary or desirable by the Committee, but at least annually, to the full
Board regarding the Committee's actions and recommendations, if any.
This charter governs the operations of the Audit and Finance Committee and
it was approved by the board of directors as of June 8, 2000. The Audit and
Finance Committee will review and reassess the charter at least annually.
Compensation of Directors
Non-employee directors will receive an annual retainer of $30,000 and $1,000
per Board meeting. Non-employee directors who are members of Board committees
also will receive $3,000 for acting as committee chairman and $1,000 per
committee meeting. All directors are reimbursed for their out-of-pocket
expenses in serving on the Board or any committee thereof. In addition, we
provided our non-employee directors with stock options under our 1999 Stock
Option Plan. Each option granted to a non-employee director under our 1999
Stock Option Plan vests equally over a three year period regardless of years of
service. Each year non-employee directors will receive 15,000 options under the
Omnibus Plan, which will vest immediately.
<TABLE>
<CAPTION>
Number of Common Shares
underlying options
granted(#) Exercise
------------------------- Price Expiration
Name Exercisable Unexercisable Per Share Date
---- ----------- ------------- --------- ----------
<S> <C> <C> <C> <C>
Douglas Campbell............. -- 59,800 22.55(1) 12/15/09
Eric M. de Jong.............. -- 59,800 22.55(1) 12/15/09
Morgan Ekberg................ -- 59,800 22.55(1) 12/15/09
Timothy Hartman.............. -- 60,000 13.75 4/27/10
Masao Kojima................. -- 59,800 22.55(1) 12/15/09
Joseph Nancoz................ -- 59,800 22.55(1) 12/15/09
Mattew O'Rourke.............. -- 60,000 13.75 4/27/10
Rafael Sagrario.............. -- 59,800 22.55(1) 12/15/09
</TABLE>
--------
(1) The option exercise price per share is a weighted average, which reflects
the fact that 50% of the options have an exercise price of $21.00 (the
initial public offering price), 25% have an exercise price of $23.10 and
25% have an exercise price of $25.10.
8
<PAGE>
EXECUTIVE OFFICERS
The following is a biographical summary of the experience of our executive
and senior officers. Biographical information with respect to Mr. Collazo is
set forth above under Nominees for Directors.
Dr. Ernest U. Gambaro, 62, is a Senior Vice President and has served as our
General Counsel and Secretary since our founding in 1988. From 1980 to 1988,
Dr. Gambaro was Assistant General Counsel of CSC. Dr. Gambaro also is a
director of STM Wireless, Inc., a satellite networking equipment and services
company.
Akbar H. Firdosy, 53, has served as our Vice President and Chief Financial
Officer since 1995. From 1988 to 1995, Mr. Firdosy served as our Controller.
Mr. Firdosy has been with us since our founding in 1988.
John C. Hoffman, 53, has served as our Executive Vice President
Communications Sales & Service since 1991. Mr. Hoffman also serves as president
of our wholly owned subsidiary, ESG Communications Inc. Mr. Hoffman has been
with us since our founding in 1988 and from 1983 to 1988 held several positions
at CSC.
Michael J. Timmins, 48, has served as our Executive Vice President of Global
Business Development since 1995. From 1993 to 1995, he served as our Vice
President of Global Business Development. Mr. Timmins has been with us since
our founding in 1988.
Thomas E. Whidden, 54, has served as our Vice President of Marketing since
December 1997. From July 1994 to December 1997 he served as our President of
International Sales. Prior to that time, he held various positions in our
European operations and Network Services.
John M. Williams, 52, has served as our Vice President of Network Services
since 1999. From 1992 to 1998, Mr. Williams was our Director of Network
Operations, the Vice President of Services Integration and Management for our
subsidiary, Government Systems, Inc., and from 1998 to 1999 was Senior Vice
President of the Communication Systems Division of our country representative,
CACI, Inc.
9
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information with respect to the compensation
we paid for services rendered during the fiscal years ended March 31, 2000,
1999 and 1998 to our Chief Executive Officer and to our four other most highly
compensated executive officers, the Named Executive Officers.
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation Awards
------------------------------------ -----------------------------
All Other Options Restricted LTIP
Name and Title Year Salary Bonus Compensation(1)(2) Granted(#) Stock Payouts
-------------- ---- -------- -------- ------------------ ---------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Jose A. Collazo......... 2000 $368,158 $643,090 $3,673,972 5,083,000 -- --
Chairman of the Board, 1999 353,998 297,358 378,710 -- -- --
President and Chief 1998 318,740 258,937 409,101 -- -- --
Executive Officer
Ernest U. Gambaro....... 2000 207,190 295,100 1,156,453 837,200 -- --
Senior Vice President, 1999 199,222 167,346 188,813 -- -- --
General Counsel and 1998 178,324 149,960 220,132 -- -- --
Secretary
Akbar H. Firdosy........ 2000 206,969 261,134 -- 837,200 -- --
Vice President and 1999 162,048 136,120 -- 269,100 -- --
Chief Financial Officer 1998 150,202 122,021 153,073 -- -- --
John C. Hoffman......... 2000 207,846 395,452 82,594 837,200 -- --
Executive Vice 1999 194,365 147,450 75,486 -- -- --
President of 1998 190,366 135,675 65,710 -- -- --
Communications Sales
and Service
Michael J. Timmins...... 2000 143,240 206,902 68,020 837,200 -- --
Executive Vice 1999 127,957 252,878 58,831 -- -- --
President of Global 1998 116,653 231,581 51,212 -- -- --
Business Development
</TABLE>
-------
(1) All other compensation includes imputed income in connection with payments
under auto allowances, financial planning services, club expenses, life
insurance and executive retirement plan values for the Named Executive
Officer.
(2) Other compensation for Messrs. Collazo, Gambaro, Hoffman and Timmins
includes Phantom Stock Incentive Plan payments of $305,033; $82,564;
$77,358; and $60,290 respectively, as well as Supplemental Executive
Retirement Plan imputed income that came to $3,353,187 and $1,058,401 for
Messrs. Collazo and Gambaro.
Option Grants in Last Fiscal Year
The following table presents information relating to options granted to
purchase our Class B common shares to the Named Executive Officers during the
year ended March 31, 2000.
<TABLE>
<CAPTION>
Individual Grants
---------------------------------------------
Number of Potential Realizable
Class B Value at
common Percent of Assumed Annual Rates of
shares Total Options Share Price Appreciation
Underlying Granted to Exercise For Option Term(3)
Options Employees in Price Per Expiration ------------------------
Name Granted(1) Fiscal Year Share(2) Date 5% 10%
---- ---------- ------------- --------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Jose A. Collazo......... 5,083,000 60 22.55 12/15/09 $79,174,116 $205,202,063
Ernest U. Gambaro....... 837,200 10 22.55 12/15/09 $13,040,443 $ 33,797,987
Akbar H. Firdosy........ 837,200 10 22.55 12/15/09 $13,040,443 $ 33,797,987
John C. Hoffman......... 837,200 10 22.55 12/15/09 $13,040,443 $ 33,797,987
Michael J. Timmins...... 837,200 10 22.55 12/15/09 $13,040,443 $ 33,797,987
</TABLE>
-------
(1) These options were granted December 15, 1999. All such options vest ratably
over five years. Options are granted for a term of ten years, subject to
earlier termination in certain events related to termination of employment.
10
<PAGE>
(2) The option exercise price per share is a weighted average, which reflects
the fact that 50% of the options have an exercise price of $21.00 (the
initial public offering price), 25% have an exercise price of $23.10 and
25% have an exercise price of $25.10.
(3) Assumed annual rates of stock price appreciation for illustrative purposes
only. Actual stock prices will vary from time to time based upon market
factors and our financial performance. We cannot assure you that these
appreciation rates will be achieved.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The following table sets forth certain information concerning exercised and
unexercised options held by the Named Executive Officers during the year ended
March 31, 2000.
<TABLE>
<CAPTION>
Number of Value of Unexercised
Securities Underlying In- the-Money
Option At Options at
March 31, 2000 March 31, 2000(1)
------------------------- -------------------------
Shares
Acquired on Value
Name Exercise (#) Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jose A. Collazo......... -- -- -- 5,083,000 $ -- $ 406,640
Ernest U. Gambaro....... -- -- -- 837,200 -- 66,976
Akbar H. Firdosy........ 53,820 $978,000 -- 1,052,480 -- 4,757,927
John C. Hoffman......... -- -- -- 837,200 -- 66,976
Michael J. Timmins...... -- -- -- 837,200 -- 66,976
</TABLE>
--------
(1) Market value of underlying shares of Class B common shares on March 31,
2000 minus the exercise price. The closing price on the NYSE as of March
31, 2000 was $22.63.
Pension Plan
Our pension plan is a contributory defined pension plan in which
substantially all of our domestic employees are eligible to participate. The
pension benefits received by a retiring employee are calculated by multiplying
the employee's total eligible compensation by 2.25%. Eligible compensation
consists of base compensation plus nondiscretionary bonuses and commissions.
Compensation deferred under the Infonet Deferred Income Plan, income related to
the 1998 Stock Option Plan, reimbursements, fringe benefits or other forms of
special pay are not eligible compensation.
As of March 31, 2000, Jose A. Collazo, Ernest U. Gambaro, Akbar H. Firdosy,
John C. Hoffman and Michael J. Timmins, upon retirement at age 65, would be
entitled to annual retirement benefits of $50,307, $50,033, $19,626, $22,529,
and $21,841.
Employment and Other Agreements
We have entered into employment agreements with Mr. Collazo, Mr. Firdosy and
Dr. Gambaro. These agreements became effective January 1, 2000 and have three
year terms which automatically renew in two year increments unless notice is
given not later than 24 months prior to the expiration date of each term. The
salary to be received by each of Messrs. Collazo and Firdosy and Dr. Gambaro is
his base salary in effect as of January 1, 2000 and will be reviewed annually
in accord with our salary review policies. Each will be eligible to participate
in all benefit programs we offer.
Each of the employment agreements may be terminated by us or the respective
executive without further obligation on the part of either party if we
terminate the executive for cause or if the executive resigns for other than
good reason, as those terms are defined in the agreements.
11
<PAGE>
If any of Messrs. Collazo or Firdosy or Dr. Gambaro is terminated without
cause or resigns for good reason, then he would:
. be entitled to receive, for a period of two years or until the expiration
of his term of employment, whichever is longer, separation payments equal
to his average total cash compensation received during the 12 month
period immediately preceding the termination or resignation date and his
benefits,
. be entitled to accrue benefits during the severance period; and
. be subject to a limited non-compete clause for the term of the severance
period.
In the event of a change of control, Messrs. Collazo and Firdosy and Dr.
Gambaro would have identical rights to the ones described in the first two
bullet points above.
All of our other executive officers are appointed annually and serve at the
discretion of the board of directors.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Compensation Philosophy
Infonet's compensation philosophy is to relate the compensation of Infonet's
executive officers to measures of company performance that contribute to
increased value for Infonet's stockholders. To assure that compensation
policies are appropriately aligned with the value Infonet creates for
stockholders, Infonet's compensation philosophy for executive officers takes
into account the following goals:
. enhancing stockholder value;
. representing a competitive and performance-oriented environment that
motivates executive officers to achieve a high level of individual,
business unit and corporate results in the business environment in which
they operate;
. relating incentive-based compensation to the performance of each
executive officer, as measured by financial and strategic performance
goals; and
. enabling Infonet to attract and retain top quality management.
The Compensation Committee of the Board, which we will refer to as the
Compensation Committee, periodically reviews the components of compensation for
Infonet's executive officers on the basis of this philosophy and periodically
evaluates the competitiveness of its executive officer compensation program
relative to comparable companies. When the Compensation Committee determines
that executive officer compensation adjustments or incentive awards are
necessary or appropriate, it makes such modifications as it deems appropriate.
Executive Compensation Components
The major components of compensation for executive officers are base salary,
annual incentive awards and stock option grants. Each component of the total
executive officer compensation package emphasizes a different aspect of our
compensation philosophy.
12
<PAGE>
Base Salary. Base salaries for executive officers are initially set upon
hiring by the Board upon the Compensation Committee's recommendation based on
recruiting requirements (i.e., market demand), competitive pay practices,
individual experience and breadth of knowledge, internal equity considerations
and other objective and subjective factors. Increases to base salary are also
determined by the Compensation Committee, as applicable. Increases are
determined primarily on an evaluation of competitive data, the individual's
performance and contribution to Infonet, and Infonet's overall performance.
Base salaries are periodically reviewed by the Compensation Committee.
Annual Incentive Awards. Infonet relies to a large degree on annual
incentive compensation to attract, retain and reward executives of outstanding
abilities and to motivate them to perform to the full extent of their
abilities. Target awards for executive officers, including the CEO, are
determined on the basis of competitive incentive award levels, level of
responsibility, ability to influence financial results and strategic
performance goals on a corporate or business unit level and, on occasion,
subjective factors. Target annual incentive awards for executive officers are
determined by the Compensation Committee.
Stock Option Grants. The only current long-term incentive opportunity for
executive officers is the award of stock option grants under the 1999 Infonet
Services Corporation Stock Incentive Plan, and other stock plans which may be
approved by the Board and the stockholders. In contrast to incentive awards
that are paid for prior year accomplishments, stock option grants represent
incentives tied to future stock appreciation. They are intended to provide
executive officers with a direct incentive to enhance stockholder value.
Options generally vest over a five-year period with a maximum term of ten
years. Option grants are awarded at the discretion of the Compensation
Committee primarily based on an evaluation of competitive data and the
anticipated contribution that the executive officer will make to Infonet.
Supplemental Executive Retirement Plan. Infonet has a Supplemental Executive
Retirement Plan, or SERP, which is a non-qualified, non-contributory pension
plan. The SERP is a defined benefit retirement plan for specified key officers
and executives and provides for benefits based on years of service, the age of
the participant, and the participant's average compensation during his or her
final period of employment under the SERP.
The Compensation Committee conducts annually a full review of Infonet's
performance and its executive officers in assessing compensation levels. The
Compensation Committee considers various qualitative and quantitative
indicators of both Infonet and the individual performance of its executive
officers. This review evaluates Infonet's performance both on a short- and
long-term basis. The Compensation Committee may consider quantitative measures
such as revenue growth, growth in EBITDA and other measures of profitability.
The Compensation Committee may also consider qualitative measures such as
leadership, experience, strategic direction and overall contribution to
Infonet. In addition, the Compensation Committee evaluates compensation in
light of the compensation practices of other companies in the
telecommunications industry and peer group companies as may be determined by
the Compensation Committee. These companies are used as a reference standard
for establishing levels of base salary, incentive awards and stock options. For
Fiscal 2000, executive officer compensation was targeted at slightly below the
50th percentile relative to peer group companies in the telecommunications
industry.
Section 162(m) of the Internal Revenue Code of 1986 limits the deductibility
of certain annual compensation payments in excess of $1 million to a company's
executive officers. It is the objective of the Compensation Committee to
administer compensation plans in compliance with the provisions of Section
162(m) where feasible and where consistent with Infonet's compensation
philosophy as stated above. Infonet already has in place a stock incentive plan
pursuant to which stock-based incentives may be awarded in compliance with
Section 162(m).
2000 Executive Compensation Review
Based on the factors set forth above, the Compensation Committee recommended
that the Board approve salary increases and Fiscal 2000 incentive awards for
all executive officers. In determining salary increases and
13
<PAGE>
Fiscal 2000 incentive awards for officers of Infonet, the Compensation
Committee reviewed the performance of Infonet against its goals. Among other
criteria reviewed by the Compensation Committee, annual revenue during Fiscal
2000 increased from $303 million to $480 million.
THE COMPENSATION COMMITTEE,
Timothy Hartman, Chairman
Morgan Ekberg
Joseph Nancoz
Date: July 27, 2000
The above report of the Compensation Committee will not be deemed to be
incorporated by reference into any filing by the Company under the Securities
Act of 1933 or the Securities Exchange Act of 1934, except to the extent that
the Company specifically incorporates the same by reference.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mssrs. Ekberg and Nancoz each served on the Compensation Committee during
the year ended March 31, 2000. None of Messrs. Ekberg or Nancoz have been an
officer or employee of Infonet and none serves as a member of the board of
directors or the compensation committee of any entity that has one or more
executive officers serving as a member of our board of directors or
compensation committee. None of the members of the Compensation Committee have
any financial relationship with Infonet except as disclosed herein.
CERTAIN TRANSACTIONS
Stockholders Agreement
Immediately prior to the consummation of our initial public offering, we
entered into a stockholders agreement with all of our Class A stockholders.
This stockholders agreement provides that each Class A stockholder holding at
least 14.95 million shares of our Class A common stock will have the right to
designate one of our directors, and each Class A stockholder agreed to vote all
of its shares of common stock in favor of the directors designated by the other
Class A stockholders and for our president as a director. Accordingly, seven of
the nine directors on our board will be appointed by our Class A stockholders.
Each Class A stockholder has a right of first refusal to acquire any Class A
common stock proposed to be sold or otherwise transferred by another Class A
stockholder. We have agreed in the stockholders agreement to include, at the
request of any Class A stockholder, shares of that Class A stockholder in a
registered offering of stock by us or another Class A common stockholder
through provisions commonly referred to as piggyback registrations and, subject
to limitations, to undertake up to two registered offerings of Class B common
shares upon demand by each Class A stockholder up to a maximum of two per year
but only one in the first year following our initial public offering, which
occurred on December 16, 1999. Each Class A stockholder agreed to maintain a
country representative to support our marketing efforts and our clients in that
stockholder's home country.
Commercial Contracts with Related Parties
Some of our country representatives are related parties where either (1) we
hold more than twenty but less than fifty percent ownership interest or (2) a
country representative is owned, directly or indirectly, by one of our
stockholders. In each such case, our agreement with the related party acting as
our country representative is our standard service agreement. Each service
agreement has a term of four or five years, and gives the country
representative the right to sell our services and use our trademarks, marketing
and operating documentation and our training materials and services. In the
agreements, we receive the right to set revenue targets, terminate the
agreement if the revenue targets are not met, jointly determine staffing of the
country office with the country representative and appoint members of the
country representative's advisory review board. The agreements outline monthly
fees the country representatives pay us for access to our network and the fees
we pay the
14
<PAGE>
country representatives for the service and customer support. Additionally, we
have alternate sales channel agreements with some of our stockholders that
allow these stockholders to resell our services under their brand names or to
package them with other services they provide to their customers. These
alternate sales channel agreements are generally under the same terms as
alternate sales channel agreements we enter into with other communications
providers. For the year ended March 31, 2000, $194.7 million of total revenues
were generated by all of these related parties and $131.2 million of total
country representative compensation resulted from related parties acting as our
country representatives.
From time to time we lease transmission capacity from our stockholders where
they are existing local carriers. These leases are short term and at tariff
rates in regulated markets and at standard market rates in unregulated markets.
Recent Contracts with our Stockholders
In our ongoing efforts to sell our services to multinational corporations,
on September 30, 1999, we entered into agreements with AUCS Communications
Services N.V., Unisource, the owner of AUCS, and the three companies that own
Unisource, KPN Telecom B.V., Swisscom AG and Telia AB, three of our largest
stockholders.
Our agreements with KPN, Swisscom and Telia give us access to approximately
1,077 multinational corporate clients that were being serviced by AUCS as well
as additional multinational clients to which KPN, Swisscom and Telia may
provide services in the future. These agreements will increase the number of
multinational corporate clients to which we may offer our services.
We have assumed the obligation to provide the multinational clients with the
services currently provided to them by AUCS under the terms of an agreement
that assigns existing distribution agreements to us. We also intend to migrate
these multinational clients to our services as a supplement or replacement for
services previously provided by AUCS and over time as new services provided by
Infonet predominate. We expect that this will result in normal and transparent
migration of the multinational clients onto The World Network, our network
platform. During the transition period, we will continue to use the existing
AUCS platform to deliver all or some of the services provided to the
multinational clients, which for convenience we refer to as the AUCS services.
We obtain the AUCS services provided to the multinational clients under the
terms of a services agreement with AUCS, which is based on our standard
services agreement. The pricing of the AUCS services provides us with an
agreed-upon approximately 20% gross margin on the provision of these services.
The services agreement is terminable upon 180 days' notice by any party.
We also entered into a call option for the underlying tangible assets of
AUCS. Until September 2002, the option allows us to purchase any and all of the
AUCS tangible assets at fair market value not to exceed $130 million. The call
right allows us to purchase the assets of AUCS so that we can continue to offer
the AUCS services to our clients if the services agreement is terminated. The
call option may be subject to regulatory approval and is conditioned upon AUCS'
ability to continue to fulfill its contractual obligations to third parties.
Loans to our Senior Management
In connection with our 1998 Stock Purchase Plan, several members of our
management team borrowed the purchase price for their stock pursuant to terms
of the plan. Persons borrowing from us entered into loan, pledge and security
agreements. In addition, the loan is full recourse to the borrower. Each loan
is at an annual interest rate of five percent. The amounts loaned to each
officer were: Jose A. Collazo, $3,325,000; Ernest U. Gambaro, $1,400,000; Akbar
H. Firdosy, $450,000; John C. Hoffman, $750,000; Michael J. Timmins, $750,000;
Thomas E. Whidden, $475,000; and John M. Williams, $75,000.
We have loaned $100,000 to John C. Hoffman in connection with Mr. Hoffman's
purchase of a club membership which he uses for business-related facilities and
entertainment. Mr. Hoffman has executed a promissory note for the full amount
of the loan. The note is payable on demand and is secured by some of
Mr. Hoffman's assets.
15
<PAGE>
Performance Graph
As a part of the rules of the Securities and Exchange Commission concerning
executive compensation disclosure, we are obligated to provide a chart
comparing the yearly percentage change in the cumulative total stockholder
return on our Class B common shares over a five year period. However, since our
Class B common shares have been publicly traded only since December 16, 1999,
this information is provided from that date through March 31, 2000.
The following line graph compares the change in our cumulative stockholder
return on our Class B common shares to the cumulative total return of the
Standard & Poor's 500 Stock Index ("S&P 500 Index") and Equant N.V., our most
comparable peer issuer, from December 16, 1999, the effective date of our
initial public offering, to March 31, 2000. The graph assumes the investment of
$100 in Infonet and each of the S&P 500 and Equant on December 16, 1999 and as
required by the Commission, the reinvestment of all distributions. The return
shown on the graph is not necessarily indicative of future performance.
[PERFORMANCE GRAPH APPEARS HERE]
Infonet Services S&P 500 Equant
---------------- ------- ------
12/31/1999 100 100 100
12/16/1999 98.35 103.6 114.94
01/31/2000 105.84 98.3 106.16
02/29/2000 105.13 96.3 114.69
03/31/2000 85 105.6 87.29
16
<PAGE>
PRINCIPAL AND MANAGEMENT STOCKHOLDERS
The following table sets forth information as of July 21, 2000 with respect
to the beneficial ownership of our Common Shares by (1) each person (or group
of affiliated persons) known by us to beneficially own 5% or more of our Common
Shares, (2) each of our directors and Named Executive Officers and (3) all of
our directors and executive officers as a group. Unless otherwise set forth
herein, the street address of the named beneficial owner is 2160 East Grand
Avenue, El Segundo, California 90245-1022.
<TABLE>
<CAPTION>
Shares of Class A and
Class B common
shares(1)
Shares of Class A Shares of Class B -----------------------
Common Stock Common Stock Percent of
----------------- ----------------- Total
Beneficial Owner Number Number Number Voting Power
---------------- ----------------- ----------------- ---------- ------------
<S> <C> <C> <C> <C>
KDD Corporation......... 21,346,108 26,543,454 47,889,562 12.14
KDD Bldg. P.O. No. 1
3-2, Nishishinjuku 2
Chome
Shinjuku-Ku, Tokyo 163
Japan
KPN Telecom B.V......... 28,918,283 54,386,078 83,304,361 17.38
Telecomplein 5
2516 CK The Hague
The Netherlands
Swisscom AG............. 28,918,283 54,386,078 83,304,361 17.38
Alte Tiefenaustrasse 6
CH-3048 Worblaufen
Switzerland
Telefonica International
Holding B.V............ 28,918,283 38,439,411 67,357,694 16.58
Beatriz de Bobadilla,
18
28040 Madrid, Spain
Telia AB................ 34,449,783 59,917,578 94,367,361 20.46
Vitsandsgatan 9, House
D
S-123 86 Farsta, Sweden
Telstra Corporation
Limited................ 24,852,618 -- 24,852,618 12.57
Level 14
231 Elizabeth Street
Sydney NSW 2000
Australia
Jose A. Collazo......... -- 3,981,300 3,981,300 *
Ernest U. Gambaro....... -- 1,674,400 1,674,400 *
Akbar H. Firdosy........ -- 592,020 592,020 *
John C. Hoffman......... -- 897,000 897,000 *
Michael J. Timmins...... -- 897,000 897,000 *
Thomas G. Whidden....... -- 569,900 569,900 *
John M. Williams........ -- 99,700 99,700 *
Douglas Campbell........ -- -- -- *
Eric M. de Jong......... -- 600 600 *
Morgan Ekberg........... -- 1,250 1,250 *
Masao Kojima............ -- -- -- *
Joseph Nancoz........... -- -- -- *
Rafael Sagrario......... -- 12,000 12,000 *
Timothy Hartman......... -- -- -- *
Mathew O'Rourke......... -- -- -- *
All directors and
executive officers as a
group (13 persons)..... -- 8,725,170 8,725,170 *
</TABLE>
17
<PAGE>
--------
* Less than 1% of total.
(1) Gives effect to stock issuable within 60 days of the date of this proxy
upon the exercise of all options and other rights beneficially owned by the
indicated stockholders on that date. Beneficial ownership is determined in
accordance with the rules of the Securities and Exchange Commission, or
SEC, and includes voting and investment power with respect to shares.
Unless otherwise indicated, the persons named in the table have sole voting
and sole investment control with respect to all shares beneficially owned.
COMPLIANCE WITH FEDERAL SECURITIES LAWS
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
our officers and directors, and persons who own more than ten percent of a
registered class of our equity securities (collectively, "Insiders"), to file
with the Securities and Exchange Commission initial reports of ownership and
reports of changes in ownership of our Common Shares and other equity
securities of Infonet. Insiders are required by regulation of the Commission to
furnish us with copies of all Section 16(a) forms they file.
To our knowledge, based solely on review of the copies of such reports
furnished to us or written representations that no other reports were required,
during the year ended March 31, 2000, all Insiders complied with all Section
16(a) filing requirements applicable to them except for Mr. de Jong who has
since become current on his required filings.
PROPOSAL 2: ADOPTION OF THE INFONET SERVICES CORPORATION 2000
OMNIBUS STOCK PLAN
The Board has unanimously approved the adoption of the 2000 Omnibus Stock
Plan. Subject to stockholder approval, the Omnibus Plan provides for non-
employee directors, selected employees and consultants to have an opportunity
to acquire a proprietary interest in Infonet.
The summary of the provisions of the Omnibus Plan which follows is not
intended to be complete, and reference should be made to the full text of the
Omnibus Plan attached hereto as Exhibit A for complete statements of the terms
and provisions.
Background and General Nature and Purpose of The Omnibus Plan
The Omnibus Plan was unanimously adopted by the Board. The principal
purposes of the Omnibus Plan are to provide performance incentives and a
proprietary interest in Infonet for non-employee directors, selected employees
and our consultants through the grant or issuance of options, restricted stock
and performance awards, dividend equivalents, deferred stock and stock
payments, thereby stimulating their personal and active interest in our
development and financial success, further aligning their interests with the
interests of the stockholders and inducing them to remain in our employ.
The shares of stock subject to options, awards of restricted stock,
performance awards, dividend equivalents, awards of deferred stock and stock
payments will initially be 6,000,000 Class B common shares. The Omnibus Plan
limits the number of shares subject to awards that any employee may receive in
any year under the Omnibus Plan to 800,000.
The Omnibus Plan provides for appropriate adjustments in the number and kind
of shares subject to the Omnibus Plan and to outstanding grants under the
Omnibus Plan in the event of a stock split, stock dividend or certain other
types of recapitalizations.
If any portion of a stock option or other award terminates or lapses
unexercised, or is canceled upon the grant of a new option or other award
(which may be at a higher or lower exercise price than the option or other
18
<PAGE>
award so canceled), the shares which were subject to the unexercised portion of
the option or other award may again be optioned, granted or awarded under the
Omnibus Plan.
The Omnibus Plan is not subject to the provisions of the Employee Retirement
Income Security Act of 1974, as amended, and is not a qualified plan under
Section 401(a) of the Internal Revenue Code of 1986, as amended. Proceeds
received by us from the sale of Class B common shares pursuant to the Omnibus
Plan will be used for general corporate purposes.
Administration
The Omnibus Plan is administered by the Compensation Committee of the Board,
consisting solely of two or more directors. The Compensation Committee is
authorized to select from among the non-employee directors, employees and
consultants the individuals to whom options, restricted stock and other awards
are to be granted and to determine the number of shares to be subject to and
the terms and conditions of the options, restricted stock or other awards,
consistent with the Omnibus Plan. The Compensation Committee is also authorized
to adopt, amend and rescind rules relating to the administration of the Omnibus
Plan.
Payment for Shares
The exercise or purchase price for all options, restricted stock and other
rights to acquire Class B common shares, together with any applicable tax
required to be withheld, must be paid in full in cash at the time of exercise
or purchase but may, with the approval of the Compensation Committee, be paid
in whole or in part in Class B common shares owned by the option holder (or
issuable upon exercise of the option) having a fair market value on the date of
exercise equal to the aggregate exercise price of the shares to be purchased.
The Compensation Committee may also authorize other lawful consideration to be
applied to the payment of the exercise or purchase price of an award.
Amendment and Termination
Amendments of the Omnibus Plan to increase the number of shares as to which
options, restricted stock and other awards may be granted, an increase in the
maximum number that may be granted to any employee, a decrease in the minimum
option exercise price, a change in the class of eligible persons or an
extension of the Omnibus Plan's duration (except for adjustments resulting from
stock splits and the like) will require the approval of our stockholders within
twelve months before or after the amendment by the Board, if such stockholder
approval is necessary to satisfy applicable laws, regulations or rules. In all
other respects the Omnibus Plan can be amended, modified, suspended or
terminated by the Board alone. Amendments of the Omnibus Plan will not, without
the consent of the participant, affect a participant's rights under an option,
restricted stock or other award previously granted, unless the award itself
otherwise expressly so provides. The Omnibus Plan will terminate after ten
years from the date adopted by the Board or the date approved by the
stockholders, whichever is sooner. The Compensation Committee may amend
outstanding awards. The holder of an award must consent to any amendment of the
Omnibus Plan or such holder's award that would impair such holder's previously
accrued rights.
Eligibility
Any select employee of Infonet and of any corporation that is an "Affiliate"
or "Subsidiary" (as those terms are defined in the Omnibus Plan), including the
Chairman of the Board and our officers other than the Chairman of the Board, is
eligible to receive options, restricted stock and other awards under the
Omnibus Plan. Non-employee directors, consultants and other independent
contractors maintaining a significant business relationship with Infonet, an
Affiliate or a Partnership Subsidiary are eligible to receive non-qualified
stock options, restricted stock and other awards under the Omnibus Plan.
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Awards Under The Omnibus Plan
The Omnibus Plan provides that the Compensation Committee may grant or issue
stock options, restricted stock, deferred stock, dividend equivalents,
performance awards, stock payments or any combination thereof. Each grant or
issuance will be set forth in a separate agreement with the person receiving
the award and will indicate the type, terms and conditions of the award.
Incentive stock options, or ISOs, will be designed to comply with the
provisions of the Internal Revenue Code of 1986, as amended, or the Code, and
will be subject to restrictions contained in the Code, including the
requirement that the exercise price be equal to at least 100% of the fair
market value of the Class B common shares on the grant date and that the term
be limited to 10 years, but may be subsequently modified so as to be
disqualified from treatment as an incentive stock option. Incentive stock
options may not be granted to persons that are not our employees.
Nonqualified stock options, or NQSOs, will provide for the right to purchase
Class B common shares at a specified price and usually will become exercisable
(in the discretion of the Compensation Committee) in one or more installments
after the grant date. NQSOs expire not later than 10 years after the date the
options are granted.
Restricted stock may be sold to participants at various prices (but not
below par value) and made subject to restrictions specified by the Compensation
Committee. Restricted stock may be repurchased by us at the original purchase
price upon a participant's termination of employment, directorship or
consultancy. Purchasers of restricted stock, unlike recipients of options, may
have voting rights and will receive dividends prior to the time when the
restrictions lapse.
Deferred stock may be awarded to participants, typically without payment of
consideration, but subject to vesting conditions based upon a vesting schedule
or performance criteria established by the Compensation Committee. Unlike
restricted stock, deferred stock will not be issued until the deferred stock
award has vested, and recipients of deferred stock generally will have no
voting or dividend rights prior to the time the vesting conditions are
satisfied.
Miscellaneous Provisions
The terms of options and other rights to acquire Class B common shares
granted under the Omnibus Plan may provide for termination of the options or
other rights upon our dissolution or liquidation or a "Change in Control" (as
that term is defined in the Omnibus Plan); but in that event the Compensation
Committee may also give the option holder or other grantee the right to
exercise the outstanding options or rights in full during some period prior to
the Change in Control, even though the options or rights have not yet become
fully exercisable, the right to convert an award into securities of the
acquiror or successor corporation or transfer the award into the right to
receive cash or Class B common shares.
The Omnibus Plan allows that we may make loans to key employees in
connection with their exercise of options, purchase of shares or realization of
the benefits of other awards granted under the Omnibus Plan. The terms and
conditions of the loans, if any are made, are to be set by the Compensation
Committee.
In consideration of the granting of a stock option, dividend equivalent,
performance award, stock payment, or right to receive restricted or deferred
stock, we may require the employee or consultant to agree in the written
agreement embodying the award to remain in the employ of, or to continue as a
consultant for, Infonet, a Subsidiary or an Affiliate for at least one year
after the award is granted.
The dates on which options or other awards under the Omnibus Plan first
become exercisable and on which they expire will be set forth in individual
stock options or other agreements setting forth the terms of the awards. The
agreements generally will provide that options and other awards expire on or
soon after the termination of the individual's status as an employee or
consultant, although the Compensation Committee may
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<PAGE>
provide that options and other awards continue to be exercisable following a
termination without cause, or following a Change in Control, or because of the
individual's retirement, death, disability or otherwise. Similarly, restricted
stock granted under the Omnibus Plan that has not vested generally will be
subject to repurchase by Infonet in the event of the participant's termination
of employment, directorship or consultancy.
Options, unvested restricted stock and other rights to acquire Class B
common shares under the Omnibus Plan may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by will or the
laws of descent and distribution, unless permitted by the Compensation
Committee with respect to awards under the Omnibus Plan other than ISOs.
However, a participant may designate one or more beneficiaries to exercise or
receive the participant's awards following his or her death. Vested shares
underlying an award under the Omnibus Plan may be transferred after exercise of
the award, if applicable.
The Company will be entitled to require participants to discharge
withholding tax obligations in connection with the issuance, vesting or
exercise of any option or other right granted under the Omnibus Plan. Shares
held by or to be issued to a participant may also be used to discharge tax
withholding obligations related to the issuance, vesting or exercise of options
or other rights or the receipt of other awards, subject to the discretion of
the Compensation Committee to disapprove that use.
Federal Income Tax Consequences Associated with The Omnibus Plan
The tax consequences of the Omnibus Plan under current federal law are
summarized in the following discussion which deals with the general tax
principles applicable to the Omnibus Plan, and is intended for general
information only. In addition, the tax consequences described below are subject
to the limitation of the 1993 Omnibus Budget Reconciliation Act ("OBRA"), as
discussed in further detail below. State and local income taxes are not
discussed, and may vary depending on individual circumstances and from locality
to locality.
Nonqualified Stock Options. For federal income tax purposes, the recipient
of NQSOs granted under the Omnibus Plan will not have taxable income upon the
grant of the option, nor will Infonet then be entitled to any deduction.
Generally, upon exercise of NQSOs the optionee will realize ordinary income,
and we will be entitled to a deduction, in an amount equal to the difference
between the option exercise price and the fair market value of the shares at
the date of exercise. An optionee's basis for the shares for purposes of
determining his or her gain or loss on his subsequent disposition of the shares
generally will be the fair market value of the stock on the date of exercise of
the NQSO.
Incentive Stock Options. There is no taxable income to an employee when an
ISO is granted to him or her or when that option is exercised; however, the
amount by which the fair market value of the shares at the time of exercise
exceeds the option price will be an "item of adjustment" for purposes of
alternative minimum tax. Gain realized by an optionee upon sale of shares
issued on exercise of an ISO is taxable at capital gains rates, and no tax
deduction is available to us, unless the optionee disposes of the shares within
two years after the date of grant of the option or within one year of the date
the shares were transferred to the optionee. In such event the difference
between the option exercise price and the fair market value of the shares on
the date of the option's exercise will be taxed as ordinary income; the balance
of the gain, if any, will be taxed as capital gain. We will be entitled to a
deduction with regard to an ISO only to the extent the employee has ordinary
income. An ISO exercised more than three months after an optionee's retirement
from employment, other than by reason of death or disability, will be taxed as
an NQSO, with the optionee deemed to have received income upon such exercise
taxable at ordinary income rates. We will be entitled to a tax deduction equal
to the ordinary income, if any, realized by the optionee.
Restricted Stock and Deferred Stock. A participant to whom restricted or
deferred stock is issued will not have taxable income upon issuance and we will
not then be entitled to a deduction, unless in the case of restricted stock an
election is made under Section 83(b) of the Code. However, when restrictions on
shares of restricted stock lapse, such that the shares are no longer subject to
repurchase by us, the participant will realize ordinary income and we will be
entitled to a deduction in an amount equal to the fair market value of the
shares at the date such restrictions lapse, less the purchase price therefor.
Similarly, when deferred stock vests
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<PAGE>
and is issued to the participant, the participant will realize ordinary income
and we will be entitled to a deduction in an amount equal to the fair market
value of the shares at the date of issuance. If an election is made under
Section 83(b) with respect to restricted stock, the employee will realize
ordinary income at the date of issuance equal to the difference between the
fair market value of the shares at that date less the purchase price therefor
and we will be entitled to a deduction in the same amount. The Code does not
permit a Section 83(b) election to be made with respect to deferred stock.
Dividend Equivalents. A recipient of a dividend equivalent award will not
realize taxable income at the time of grant, and we will not be entitled to a
deduction at that time. When a dividend equivalent is paid, the participant
will recognize ordinary income, and we will be entitled to a corresponding
deduction.
Performance Awards. A participant who has been granted a performance award
will not realize taxable income at the time of grant, and we will not be
entitled to a deduction at that time. When an award is paid, whether in cash or
Class B common shares, the participant will have ordinary income, and we will
be entitled to a corresponding deduction.
Stock Payments. A participant who receives a stock payment in lieu of a cash
payment that would otherwise have been made will be taxed as if the cash
payment has been received, and we will have a deduction in the same amount.
Deferred Compensation. Participants who defer compensation generally will
recognize no income, gain or loss for federal income tax purposes when NQSOs
are granted in lieu of amounts otherwise payable, and we will not be entitled
to a deduction at that time. When and to the extent options are exercised, the
ordinary rules regarding nonqualified stock options outlined above will apply.
Effect of 1993 Omnibus Budget Reconciliation Act on the Omnibus Plan. Under
OBRA, which became law in August 1993, income tax deductions of publicly-traded
companies may be limited to the extent total compensation (including base
salary, annual bonus, stock option exercises and non-qualified benefits paid in
1996 and thereafter) for certain executive officers exceeds $1 million (less
the amount of any "excess parachute payments" as defined in Section 280G of the
Code) in any one year. However, under OBRA, the deduction limit does not apply
to certain "performance-based" compensation established by an independent
compensation committee which is adequately disclosed to, and approved by,
stockholders. In particular, stock options will satisfy the performance-based
exception if the awards are made by a qualifying compensation committee, the
plan sets the maximum number of shares that can be granted to any particular
employee within a specified period and the compensation is based solely on an
increase in the stock price after the grant date (i.e., the option exercise
price is equal to or greater than the fair market value of the stock subject to
the award on the grant date).
It is our policy generally to design our compensation programs to conform
with the OBRA legislation and related regulations so that total compensation
paid to any employee will not exceed $1 million in any one year, except for
compensation payments in excess of $1 million which qualify as "performance-
based." Options granted under the Omnibus Plan are intended to satisfy other
requirements of the performance-based compensation exclusion under OBRA,
including option pricing requirements and requirements governing the
administration of the Omnibus Plan, so that the deductibility of compensation
with regard to such options granted paid to top executives thereunder is not
expected to be disallowed. Other types of awards under the Omnibus Plan are not
intended to qualify as performance-based compensation within the OBRA
legislation.
Vote Required and Board Recommendation
The affirmative vote of the holders entitled to cast a majority of the votes
represented by the Common Shares present in person or by proxy and entitled to
vote at the meeting is required for approval of the proposed Omnibus Plan. For
purposes of the vote on the proposed Omnibus Plan, abstentions will have the
same effect as votes against the proposed Omnibus Plan and broker non-votes
will not be counted as shares entitled to vote on the matter and will have no
effect on the result of the vote.
The Board unanimously recommends a vote "FOR" adoption of the Omnibus Plan.
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PROPOSAL 3: TO APPROVE INFONET'S 2000 EMPLOYEE STOCK PURCHASE PLAN
Because our success is dependent upon the interest and special efforts of
our employees, we would like to provide such employees with additional
incentives to promote our overall financial objectives and long-term growth in
our stockholders' equity. We believe that our employees will be encouraged to
continue their employment and make special efforts on our behalf if they own an
equity stake in Infonet. Therefore, our Board adopted, subject to stockholder
approval, the Infonet Services Corporation 2000 Employee Stock Purchase Plan,
or Purchase Plan, to provide our employees with the opportunity to acquire an
ownership interest in Infonet through the purchase of shares of our Class B
common shares.
The Purchase Plan, if approved by our stockholders, will provide a total of
2,000,000 shares of our Class B common shares, $.01 par value per share, for
purchase by our employees, subject to adjustment for certain changes in our
capital described below. We intend for the Purchase Plan to qualify as an
"employee stock purchase plan" under section 423 of the Internal Revenue Code
so that our employees may enjoy certain tax advantages as described below.
The Purchase Plan is effective, but conditioned on stockholder approval at
the Annual Meeting. We recommend a vote FOR the approval of the Purchase Plan.
This proposal summarizes the essential features of the Purchase Plan. You
should read the Purchase Plan for a comprehensive statement of its legal terms
and conditions. The full text of the Purchase Plan appears in Exhibit B to this
proxy statement.
Administration
Our Board will select at least three of its members to serve on the
Compensation Committee which will administer the Purchase Plan. Subject to
limitations of applicable laws or rules, the Board may exercise the powers of
the Compensation Committee, and, if no such committee exists, the Board of
Directors will perform all the functions of the Compensation Committee. All
decisions and actions of the Compensation Committee will be final and
conclusive. Subject to limitations of applicable laws or rules, the
Compensation Committee may delegate its administrative responsibilities and
powers under the Purchase Plan.
In addition to its other powers under the Purchase Plan described in this
summary, and subject to the express provisions of the Purchase Plan, the
Compensation Committee will have discretionary authority under the Purchase
Plan to:
. interpret the Purchase Plan and option agreements,
. determine eligibility to participate in the Purchase Plan,
. adjudicate and determine all disputes arising under or in connection with
the Purchase Plan,
. impose restrictions on ownership and transferability of the shares of our
Class B common shares underlying options granted under the Purchase Plan,
. establish procedures for carrying out the Purchase Plan, and
. make all other determinations deemed necessary or advisable for
administering the Purchase Plan.
Currently, the Compensation Committee consists of Messrs. Hartman, Ekberg
and Nancoz, each of whom is a director of Infonet, but not an employee of
Infonet.
Eligibility
All full-time and part-time employees of Infonet (and any subsidiaries of
Infonet designated by the Board) will be eligible to participate in the
Purchase Plan, except:
an employee may not be granted an option under the Purchase Plan if:
. immediately after the grant of such option, the employee would own 5
percent or more of the vote or value of all classes of our stock or the
stock of any of our subsidiaries, or
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. such option would permit the employee to purchase more than $25,000 of
our Class B common shares (using the fair market value of our stock at
the time the option is granted) under the Purchase Plan (and any other
employee stock purchase plan of us or our subsidiaries) per calendar year
when the option is outstanding;
and the Compensation Committee may, in its discretion, exclude from
participation in the Purchase Plan employees who:
(1) customarily work 20 or fewer hours per week,
(2) customarily work 5 or fewer months per calendar year, or
(3) are highly compensated employees (within the meaning of Section 414(q)
of the Internal Revenue Code).
As of the effective date of the Purchase Plan (and until the Compensation
Committee determines otherwise), employees described in the categories (1) and
(2) above will be ineligible to participate in the Purchase Plan.
As of April 18, 2000, approximately 625 employees would be eligible to
participate in the Purchase Plan. No determination can be made at this time as
to the number or identity of our employees who will participate in the Purchase
Plan, or the amount of our Class B common shares that will be purchased under
the Purchase Plan, since such participation and amounts will be determined
within the sole discretion of the employees who are eligible to participate in
the Purchase Plan as described below.
Terms of Options
Options and Offering Periods. An option granted to an eligible employee
under the Purchase Plan will allow the employee to use payroll deductions
accumulated during successive six-month offering periods to purchase our Class
B common shares at the end of each offering period. The option price of the
shares is the lesser of 85 percent of our Class B common shares's fair market
value (as defined in the Purchase Plan) on the first day of the offering period
or the last day of the offering period. On July 21, 2000, the fair market value
of a share of our Class B common shares was $15.56. If the Purchase Plan is
approved by our stockholders, the first offering period is scheduled to begin
in August, 2000, and end on the last trading date on or before December 31,
2000. Thereafter, the 6-month offering periods will begin on the first trading
date on or after January 1 and July 1 and end on the last trading date on or
before June 30 and December 31, respectively, of each calendar year, while the
Purchase Plan is in effect. The Compensation Committee may change the
commencement and duration of offering periods under the Purchase Plan. Our
Board may terminate a pending offering period, in which case payroll deductions
that have accumulated in participants' accounts will be used to exercise
outstanding options or returned to the appropriate participants, as determined
by the Board, in its discretion.
Participation. Each eligible employee will decide for himself or herself
whether to participate or not participate in the Purchase Plan during each
offering period. An eligible employee may elect to enroll in the Purchase Plan
by filing an agreement with us before the first day of the applicable offering
period.
Payroll Deductions. A participant's agreement must specify the percentage,
from 1 to 10 percent, to be deducted from his or her Compensation (as defined
in the Purchase Plan) on each payroll date during the offering period. Payroll
deductions will be credited to a bookkeeping account in the participant's name.
We will not set aside any assets with respect to such participant accounts, and
such accounts will not bear interest unless the Purchase Plan is not approved
by our stockholders, in which case we will refund any accumulated payroll
deductions with interest at 5% per annum through the date of the refund. A
participant may decrease his or her contribution rate no more than once each
offering period. The Compensation Committee may limit the number of
participants who change their contribution rates during any offering period and
may, subject to
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certain limitations in the Purchase Plan, decrease the contribution rate of any
participants. Except in the event of a Change in Control (as defined in the
Purchase Plan) of Infonet, participants are not permitted to make contributions
to their accounts under the Purchase Plan otherwise than through payroll
deductions as described above.
Exercise of Option. Unless a participant provides us with written notice or
withdraws from the Purchase Plan, his or her option will be automatically
exercised on the last day of the offering period to purchase the maximum number
of full shares of our Class B common shares that can be purchased at the
applicable option price using the accumulated payroll deductions in the
participant's account. However, a participant cannot purchase in a single
offering period more than the number of shares determined using the following
formula set forth in the Purchase Plan based on the participant's compensation
(as defined in the Purchase Plan) for the payroll period immediately prior to
the option grant and the fair market value of our Class B common shares on the
date of such grant:
<TABLE>
<S> <C> <C>
Number of payroll
10% of compensation periods in offering
for payroll period x period
-----------------------------------------------------------------------------------
85% of the grant date fair market value of a share of our Class B common
shares
</TABLE>
Any excess payroll deductions remaining in a participant's account after
exercise of his or her option will be returned to the participant, without
interest, and may not be used to exercise options granted under the Purchase
Plan in any subsequent offering period (except for any excess funds
attributable to the inability to purchase a fractional share, which will be
retained in the participant's account for a subsequent offering period or may
be withdrawn by the participant).
Withdrawal/Termination of Employment. A participant may withdraw from the
Purchase Plan at any time, receiving payment of his or her accumulated payroll
deductions and ceasing further payroll deductions, by providing us with written
notice to withdraw. If a participant terminates employment with us and our
subsidiaries, such participant will be considered to have withdrawn from the
Purchase Plan. A leave of absence in excess of 90 days without a guaranteed
right to reemployment will be considered a termination of employment for
purposes of the Purchase Plan. When a participant withdraws from the Purchase
Plan, his or her unexercised options will automatically terminate, and we will
return to the participant all accumulated payroll deductions in his or her
account.
Transferability of Options. No one other than the participant who receives
an option under the Purchase Plan will be permitted to exercise such option
during such participant's lifetime. Participants will not be entitled to
transfer, assign or otherwise dispose of their payroll deductions or rights to
exercise options or receive Class B common shares under the Purchase Plan,
except, in the event of a participant's death, by will, the laws of descent and
distribution or to the deceased participant's designated beneficiary.
Changes in Capital
In the event of certain changes in our outstanding Class B common shares or
capital structure, such as a stock dividend, stock split, recapitalization,
reorganization, merger, consolidation, or corporate separation or division, or
change in the number of shares of our capital stock effected without receipt of
full consideration, the Compensation Committee in this Proposal will, in its
discretion, make appropriate adjustments or substitutions with respect to the
following to reflect equitably the effects of such changes to participants in
the Purchase Plan:
. the number, class and kind of shares available under the Purchase Plan,
. the number, class and kind of shares covered by outstanding options,
. the maximum number of shares that a participant may purchase during an
offering period,
. the option prices of outstanding options, and
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<PAGE>
. any other necessary characteristics or terms of the Purchase Plan or the
options.
If a Change in Control of Infonet occurs, the Purchase Plan gives the
Compensation Committee discretion to:
. terminate the pending offering period and permit each participant to make
a one-time cash contribution equal to the amount that the Compensation
Committee determines such participant would have contributed under the
Purchase Plan through payroll deductions until the otherwise scheduled
end of the pending offering period and use the accumulated payroll
deductions to exercise outstanding options; or
. terminate each participant's options in exchange for a cash payment equal
to (a) the balance of the participant's account under the Purchase Plan
plus (b) the highest value of the consideration received for a share of
our Class B common shares in the change in control transaction (or, if
greater, the highest fair market value of a share of our Class B common
shares during the 30 consecutive trading days prior to the closing or
expiration date of the change in control transaction), less the option
price of the participant's option (determined as if the option were
exercised on the closing or expiration date of the change in control
transaction), multiplied by the number of full shares of our Class B
common shares that the participant could have purchased immediately prior
to the change in control with the then outstanding balance of the
participant's account under the Purchase Plan.
Tax Withholding Obligations
If any taxes are required to be withheld when a participant exercises his or
her option, or when shares are issued under the Purchase Plan or disposed of by
a participant, we may, as a condition to delivery of stock certificates under
the Purchase Plan, require that the participant remit to us the amount
necessary to satisfy such taxes, or we may make other arrangements, including
withholding from the participant's compensation or other amounts due to such
participant, to satisfy such taxes.
Amendment and Termination of the Purchase Plan
Our Board may terminate, discontinue, amend or suspend the Purchase Plan at
any time. However, without approval of the shareholders, the Board may not:
. increase the maximum number of shares that we may issue under the
Purchase Plan, or that a participant may purchase in any offering period
(except as described above);
. change the class of employees eligible to receive options under the
Purchase Plan (except for the designation of any subsidiaries whose
employees will be eligible to participate in the Purchase Plan); or
. change the formula by which the option price is determined under the
Purchase Plan.
Except for an amendment or termination described under Changes in Capital
above, or in the last sentence of the portion of this summary under Terms of
Options--Options and Offering Periods, above, no amendment or termination of
the Purchase Plan may materially adversely affect the existing rights of any
participant under his or her option without such participant's consent.
Certain Federal Income Tax Consequences
The following is a brief summary of certain significant United States
Federal income tax consequences under the Internal Revenue Code, as in effect
on the date of this summary, applicable to Infonet and employees in connection
with participation and purchase of shares of our Class B common shares under
the Purchase Plan. This summary is not intended to be exhaustive, and among
other things, does not describe state, local or foreign tax consequences, or
the effect of gift, estate or inheritance taxes. References to "Infonet" and
"us" in this summary of tax consequences include any subsidiary of Infonet
Services Corporation that employs an employee who participates in the Purchase
Plan, as the case may be.
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An employee will not recognize any taxable income upon an election to
participate in the Purchase Plan and receipt of an option to purchase stock
under the Purchase Plan. The amounts deducted from the salary of an employee
who participates in the Purchase Plan will constitute ordinary income taxable
to the employee. The Purchase Plan is intended to qualify for the favorable
income tax consequences of Section 423 of the Internal Revenue Code. As such,
no income tax consequences will arise for an employee when shares of our Class
B common shares are purchased by exercising such employee's option under the
Purchase Plan. The employee receives a tax basis in the shares purchased equal
to his or her payroll deductions used to exercise the option.
If such an employee does not dispose of the shares purchased upon exercise
of his or her option under the Purchase Plan until at least two years after the
grant date of the employee's option (i.e., the first day of the offering
period) and one year after the date of such purchase, and if such employee
remains an employee of Infonet at all times from the grant date of such option
to the day three months before such exercise, or if the employee dies while
owning such shares, the employee will recognize taxable ordinary income upon
disposition of such shares, or death, equal to the lesser of the excess of the
fair market value of the shares when the option was granted (i.e., the first
day of the offering period) over the purchase price paid for such shares or the
excess of the fair market value of such shares at the time of such disposition
or death over the purchase price paid for the shares. We will not be entitled
to a tax deduction with respect to any such disposition. Any such ordinary
income recognized by an employee upon disposition of his or her shares will
increase the employee's basis in such shares, for purposes of computing capital
gain thereon. Any proceeds received for the shares in excess of such adjusted
basis will be taxable as capital gain. If an employee sells such shares for
less than the purchase price paid, he or she will recognize no such ordinary
income, and such employee will have a capital loss equal to the difference
between the sale price and the purchase price previously paid.
If an employee disposes of shares purchased under the Purchase Plan before
meeting the requisite holding periods described in the preceding paragraph,
that employee will be required to report taxable ordinary income at the time of
such disposition to the extent of the difference between the fair market value
of such shares on the date of purchase and the purchase price paid. We will
generally be allowed a tax deduction equal to the amount of such ordinary
income so reported by such employee. The basis of an employee in such shares
acquired under the Purchase Plan will be increased by such amount reported as
ordinary income by such employee upon disposition of such shares. Any proceeds
received for the shares in excess of such employee's adjusted basis will be
taxable as capital gain; if such adjusted basis exceeds the amount received for
such shares, such excess will be a capital loss.
Vote Required and Board Recommendation
The affirmative vote of the holders entitled to cast a majority of the votes
represented by the Common Shares present in person or by proxy and entitled to
vote at the meeting is required for approval of the proposed Purchase Plan. For
purposes of the vote on the proposed Purchase Plan, abstentions will have the
same effect as votes against the proposed Purchase Plan and broker non-votes
will not be counted as shares entitled to vote on the matter and will have no
effect on the result of the vote.
The Board unanimously recommends a vote "FOR" adoption of the Purchase Plan.
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<PAGE>
PROPOSAL 4: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITOR
Subject to shareholder ratification, the Board, acting upon the
recommendation of the Audit and Finance Committee, has reappointed the firm of
Deloitte & Touche LLP, certified public accountants, as independent auditor to
examine the financial statements of Infonet for the fiscal year 2001. The Board
has been advised that Deloitte & Touche LLP is independent with regard to
Infonet within the meaning of the Securities Act and the applicable published
rules and regulations thereunder. Infonet will continue to reserve the right to
change its independent auditor if deemed appropriate.
Vote Required and Board Recommendation
The affirmative vote of the holders entitled to cast a majority of the votes
represented by the Common Shares present in person or by proxy and entitled to
vote at the meeting is required for the ratification. For purposes of the vote
on this matter, abstentions will have the same effect as votes against the
ratification. If this appointment is not ratified by the stockholders, the
Audit and Finance Committee may reconsider its recommendation.
The Board unanimously recommends a vote "FOR" ratification.
One or more representatives of Deloitte &Touche LLP are expected to be at
the Annual Meeting. They will have an opportunity to make a statement and will
be available to respond to appropriate questions.
STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
In order for stockholder proposals otherwise satisfying the eligibility
requirements of SEC Rule 14a-8 to be considered for inclusion in our Proxy
Statement, they must be received by us at our principal office in El Segundo,
California, on or before March 27, 2001.
YOUR PROXY IS IMPORTANT
WHETHER YOU OWN FEW OR MANY SHARES
Please date, sign and mail the enclosed Proxy Card today.
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THE INFONET SERVICES CORPORATION
2000 OMNIBUS STOCK PLAN
<PAGE>
THE INFONET SERVICES CORPORATION
2000 OMNIBUS STOCK PLAN
Infonet Services Corporation, a California corporation (the "Company"), has
adopted The Infonet Services Corporation 2000 Omnibus Stock Plan (the "Plan"),
effective April 18, 2000 for the benefit of eligible employees, consultants,
and non-employee directors of the Company and any Subsidiaries and Affiliates
(as defined below).
ARTICLE I
GENERAL PROVISIONS AND DEFINITIONS
Purpose. The purpose of the Plan is to provide a method whereby non-
employee directors and selected employees and consultants of Infonet Services
Corporation and Affiliates and Subsidiaries will have an opportunity to
acquire a proprietary interest in the Company through the purchase of shares
of common stock of the Company. The Plan is also established to help promote
the overall financial objectives of the Company's stockholders by promoting
those individuals participating in the Plan to achieve long-term growth in
stockholder equity.
Structure of the Plan. The Plan shall be divided into five separate equity
programs:
A. Discretionary Option Grant Program under Article IV;
B. Restricted Stock Award Program under Article VIII;
C. Performance Award Program under Article IX; and
D. Automatic Option Grant Program for non-employee directors under Article
V.
Definitions.
1.1. General. Wherever the following terms are used in the Plan they shall
have the meanings specified below, unless the context clearly indicates
otherwise.
1.2. Affiliate shall mean any entity other than the Company and its
Subsidiaries that is designated by the Committee as a participating employer
under the Plan, provided that the Company directly or indirectly owns at least
twenty percent (20%) of the combined voting power of all classes of stock of
any such entity or at least twenty percent (20%) of the ownership interest in
such entity.
1.3. Award shall mean an Option, a Common Stock award, a Restricted Stock
award, a Performance Award, a Dividend Equivalent award, a Deferred Stock
award or a Stock Payment award which may be awarded, or granted under the
Plan.
1.4. Award Agreement shall mean a written agreement executed by an
authorized officer of the Company and the Holder which shall contain such
terms and conditions with respect to an Award as the Committee shall
determine, consistent with the Plan.
1.5. Award Limit shall mean 800,000 shares of Common Stock, as adjusted
pursuant to Section 11.3(a).
1.6. Beneficial Ownership (including correlative terms) shall have the
meaning given such term in Rule 13d-3 promulgated under the Exchange Act.
1.7. Board shall mean the Board of Directors of the Company.
1.8. Business Criteria shall mean any of the following business criteria
with respect to the Company or any Subsidiary or Affiliate, as determined by
the Committee: EBITDA, revenue, earnings per share.
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1.9. Cause shall mean any commission of acts of dishonesty, disloyalty, or
acts substantially detrimental to the welfare of the Company or any Affiliate
or Subsidiary, as determined by the Committee.
1.10. Change in Control shall mean the occurrence of any of the following:
(a) an acquisition in one transaction or a series of related
transactions (other than directly from the Company or pursuant to awards
granted under the Plan or compensatory options or other similar awards
granted by the Company) of any Voting Securities by any Person, immediately
after which such Person has Beneficial Ownership of fifty percent (50%) or
more of the combined voting power of the Company's then outstanding Voting
Securities; provided, however, in determining whether a Change in Control
has occurred pursuant to this Section 1.10(a), Voting Securities which are
acquired in a Non-Control Acquisition shall not constitute an acquisition
that would cause a Change in Control;
(b) the individuals who, immediately prior to the Effective Date, are
members of the Board (the "Incumbent Board"), cease for any reason to
constitute at least a majority of the members of the Board; provided,
however, that if the election, or nomination for election, by the Company's
common stockholders, of any new director was approved by a vote of at least
a majority of the Incumbent Board, such new director shall, for purposes of
the Plan, be considered as a member of the Incumbent Board; provided
further, however, that no individual shall be considered a member of the
Incumbent Board if such individual initially assumed office as a result of
either an actual or threatened "Election Contest" (as described in Rule
14a-11 promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than
the Board (a "Proxy Contest") including by reason of any agreement intended
to avoid or settle any Election Contest or Proxy Contest; or
(c) the consummation of
(1) a merger, consolidation or reorganization involving the Company
unless:
(A) the stockholders of the Company, immediately before such
merger, consolidation or reorganization, own, directly or
indirectly, immediately following such merger, consolidation or
reorganization, more than fifty percent (50%) of the combined voting
power of the outstanding voting securities of the corporation
resulting from such merger or consolidation or reorganization (the
"Surviving Corporation") in substantially the same proportion as
their ownership of the Voting Securities immediately before such
merger, consolidation or reorganization,
(B) the individuals who were members of the Incumbent Board
immediately prior to the execution of the agreement providing for
such merger, consolidation or reorganization constitute at least a
majority of the members of the board of directors of the Surviving
Corporation, or a corporation Beneficially Owning, directly or
indirectly, a majority of the voting securities of the Surviving
Corporation, and
(C) no Person, other than (i) the Company, (ii) any Related
Entity (as defined in Section 1.26), (iii) any employee benefit plan
(or any trust forming a part thereof) that, immediately prior to
such merger, consolidation or reorganization, was maintained by the
Company, the Surviving Corporation, or any Related Entity or (iv)
any Person who, together with its Affiliates, immediately prior to
such merger, consolidation or reorganization had Beneficial
Ownership of fifty percent (50%) or more of the then outstanding
Voting Securities, owns, together with its Affiliates, Beneficial
Ownership of fifty percent (50%) or more of the combined voting
power of the Surviving Corporation's then outstanding voting
securities
(a transaction described in clauses (A) through (C) above is referred
to herein as a "Non-Control Transaction");
(2) a complete liquidation or dissolution of the Company; or
(3) an agreement for the sale or other disposition of all or
substantially all of the assets or business of the Company to any
Person (other than a transfer to a Related Entity or the distribution
to the Company's stockholders of the stock of a Related Entity or any
other assets).
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Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because any Person (the "Subject Person") acquired Beneficial Ownership
of fifty percent (50%) or more of the combined voting power of the then
outstanding Voting Securities as a result of the acquisition of Voting
Securities by the Company which, by reducing the number of Voting Securities
then outstanding, increases the proportional number of shares Beneficially
Owned by the Subject Persons, provided that if a Change in Control would occur
(but for the operation of this sentence) as a result of the acquisition of
Voting Securities by the Company, and (1) before such share acquisition by the
Company, the Subject Person becomes the Beneficial Owner of any new or
additional Voting Securities in a related transaction or (2) after such share
acquisition by the Company, the Subject Person becomes the Beneficial Owner of
any new or additional Voting Securities which in either case increases the
percentage of the then outstanding Voting Securities Beneficially Owned by the
Subject Person, then a Change in Control shall be deemed to occur. Solely for
purposes of this Section 1.10, "Affiliate" shall mean, with respect to any
Person, any other Person that, directly or indirectly, controls, is controlled
by, or is under common control with, such Person. Any "Relative" (for this
purpose, "Relative" means a spouse, child, parent, parent of spouse, sibling or
grandchild) of an individual shall be deemed to be an Affiliate of such
individual for this purpose. Neither the Company nor any Person controlled by
the Company shall be deemed to be an Affiliate of any holder of Common Stock.
1.11. Code shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the rules and regulations promulgated thereunder.
1.12. Committee shall mean the Plan Committee of the Board as described in
Article X.
1.13. Common Stock shall mean shares of the Class B common stock, $.01 par
value per share, of the Company or the common stock of any successor to the
Company, which is designated for the purposes of the Plan.
1.14. Consultant shall mean an independent contractor who performs services
for the Company or a Subsidiary or Affiliate in a capacity other than as an
Employee or Director.
1.15. Deferred Stock shall mean a conditional right to receive Common Stock
(or a cash payment in lieu thereof) that is not to be distributed to the Holder
thereof until the end of a specified deferral period, awarded under Article IX.
1.16. Director shall mean a member of the Board who is not otherwise an
employee of the Company, a Subsidiary or an Affiliate.
1.17. Disability shall have the same definition as is provided in the
Company's employee benefit plans intended to satisfy the requirements of
Section 401(a) of the Code. In the absence of such benefit plans, Disability
shall mean a mental or physical injury or illness that entitles the individual
to receive benefits under any long-term disability plan of the Company or a
Subsidiary of the Company, or if the individual is not covered by such a long-
term disability plan, a mental or physical injury or illness that renders the
individual totally and permanently incapable of performing his duties for the
Company, a Subsidiary or an Affiliate. Notwithstanding the foregoing, a
Disability shall not qualify under this Plan if it is the result of: (i)
willfully self-inflicted injury or willfully self-induced sickness; or (ii) an
injury or disease contracted, suffered, or incurred while participating in a
criminal offense. The determination of a Disability shall be made by the
Committee in its sole discretion. The determination of Disability for purposes
of this Plan shall not be construed to be an admission of disability for any
other purpose.
1.18. Dividend Equivalent shall mean a right to receive the equivalent value
(in cash or Common Stock) of any dividends paid on specified shares of Common
Stock in accordance with Section 7.4 and/or Article IX.
1.19. Effective Date shall mean April 18, 2000.
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1.20. Employee shall mean any officer or other employee (as defined in
accordance with Section 3401(c) of the Code) of the Company or of any entity
that is a Subsidiary or an Affiliate, as the context may require.
1.21. Exchange Act shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
1.22. Fair Market Value of a share of Common Stock as of a given date shall
mean the closing sales price per share of the Common Stock (or the closing bid
price, if no such sales were reported) on the New York Stock Exchange, or such
other established stock exchange or national market system on which the Common
Stock is listed or traded, as reported in The Wall Street Journal (or, if not
so reported, in such other nationally recognized reporting source as the
Committee shall select) for the last Trading Day prior to such date. In the
event that the foregoing valuation method is not practicable, the Fair Market
Value of a share of Common Stock as of a given date shall be determined by such
other reasonable valuation method as the Committee shall, in its discretion,
select and apply in good faith as of such date, subject to Section 422(c)(7) of
the Code. The foregoing to the contrary notwithstanding, the Fair Market Value
of a share of Common Stock as of the Effective Date shall be the offering price
of the Common Stock in the initial public offering of capital stock of the
Company (or, if the class of shares of capital stock of the Company sold in
such initial public offering is not Common Stock, the price of the Common Stock
determined by the Board based on the price of such class of shares of the
Company sold in such initial public offering).
1.23. Holder shall mean any Employee, Consultant, or Director who has been
granted an Award.
1.24. Incentive Stock Option shall mean an Option which conforms to the
applicable provisions of Section 422 of the Code and which is designated as an
incentive stock option by the Committee.
1.25. IPO Date shall mean December 16, 1999, the date of the initial public
offering of the Common Stock.
1.26. Non-Control Acquisition shall mean an acquisition by (1) an employee
benefit plan (or a trust forming a part thereof) maintained by (x) the Company
or (y) any corporation or other Person of which a majority of its voting power
or its voting equity securities or equity interest is owned, directly or
indirectly, by the Company (a "Related Entity"), (2) the Company or any Related
Entity, or (3) any Person in connection with a Non-Control Transaction.
1.27. Non-Qualified Stock Option shall mean an Option that is not designated
as an Incentive Stock Option by the Committee.
1.28. Option shall mean a right to purchase Common Stock in accordance with
the applicable Award Agreement granted to an Optionee under Article IV or V. An
Option granted under the Plan shall be either a Non-Qualified Stock Option or
an Incentive Stock Option, as determined by the Committee.
1.29. Optionee shall mean an Employee, Consultant, or Director granted an
Option under the Plan.
1.30. Performance Award shall mean a cash bonus, stock bonus, or other
performance or incentive award that is paid in cash, Common Stock, or a
combination of both, that is granted to a Holder under Article IX.
1.31. Person shall mean "person" as such term is used for purposes of
Section 13(d) or 14(d) of the Exchange Act, including, without limitation, any
individual, corporation, limited liability company, partnership, trust,
unincorporated organization, government or any agency or political subdivision
thereof, or any other entity or any group of Persons.
1.32. Plan shall mean The Infonet Services Corporation 2000 Omnibus Stock
Plan.
1.33. Restricted Stock shall mean Common Stock awarded under Article VIII.
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1.34. Retirement shall mean either (a) retirement in accordance with the
Company's employee benefit plans intended to satisfy the requirements of
Section 401(a) of the Code entitling the participant to a full pension, or (b)
retirement as determined with the consent of the Committee.
1.35. Rule 16b-3 shall mean that certain Rule 16b-3 under the Exchange Act,
as such Rule may be amended from time to time.
1.36. Securities Act shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
1.37. Stock Payment shall mean (i) a payment in the form of shares of Common
Stock, or (ii) an option or other right to purchase shares of Common Stock
awarded under Article IX as part of a deferred compensation arrangement, made
in lieu of all or any portion of the compensation, including, without
limitation, salary, bonuses and commissions, that would otherwise become
payable to an Employee, Consultant or Director in cash.
1.38. Subsidiary shall mean any present or future corporation (other than
the Company) in an unbroken chain of corporations beginning with the Company if
each of the corporations other than the last corporation in the unbroken chain
then owns stock possessing fifty percent (50%) or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.
1.39. Termination shall mean the time when an Employee, Consultant, or
Director ceases the performance of services for the Company, any Affiliate or
Subsidiary for any reason, with or without Cause, including, but not limited
to, a termination by resignation, discharge, death, Disability or Retirement,
but excluding (i) a termination where there is a simultaneous reemployment or
continuing employment of a Holder by the Company, Affiliate or any Subsidiary,
(ii) at the discretion of the Committee, a termination that results in a
temporary severance, (iii) at the discretion of the Committee, a termination
that is followed by the simultaneous establishment of a consulting relationship
by the Company, Affiliate or Subsidiary with the former Employee or Director,
and (iv) at the discretion of the Committee, a termination that is immediately
followed by the Holder's service as a Director.
The Committee, in its absolute discretion, shall determine the effect of
all matters and questions relating to Termination, including, but not
limited to, questions of whether a Termination resulted from a discharge
for Cause, and all questions of whether a particular leave of absence
constitutes a Termination; provided, however, that, with respect to
Incentive Stock Options, unless otherwise determined by the Committee in
its discretion, a leave of absence, change in status from an Employee to a
Consultant or other change in the employee-employer relationship shall
constitute a Termination if, and to the extent that, such leave of absence,
change in status or other change interrupts employment for purposes of
Section 422(a)(2) of the Code and the then applicable regulations and
revenue rulings under that Code Section. Notwithstanding any other
provision of the Plan, the Company, Affiliate or any Subsidiary has an
absolute and unrestricted right to terminate an Employee's employment at
any time for any reason whatsoever, with or without Cause, except to the
extent expressly provided otherwise in writing.
1.40. Trading Day shall mean a day on which national stock exchanges are
open for trading.
1.41. Voting Securities shall mean all outstanding voting securities of the
Company entitled to vote generally in the election of the Board.
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ARTICLE II
SHARES SUBJECT TO PLAN
2.1. Shares Subject to Plan.
(a) The shares of stock subject to Awards shall be shares of Common
Stock. The aggregate number of such shares that may be issued upon exercise
of Options or with respect to other Awards shall not exceed 6,000,000
shares of Common Stock. The shares of Common Stock issuable upon exercise
of Options or with respect to other Awards may be either previously
authorized but unissued shares or treasury shares.
(b) The maximum number of shares that may be subject to all Awards
granted under the Plan to any Employee in any calendar year shall not
exceed the Award Limit, before any adjustments described in Section 2.2
(regardless of when such shares are deliverable). To the extent required by
Section 162(m) of the Code, shares of Common Stock subject to Options which
are canceled shall continue to be counted against such maximum number of
shares, and, if, after the grant of an Option, the exercise or purchase
price of shares subject to such Option is reduced and the transaction is
treated as a cancellation of the Option and a grant of a new Option, both
the Option deemed to be canceled and the Option deemed to be granted shall
be counted against such maximum number of shares.
2.2. Add-Back of Options and Other Rights. If any shares of Common Stock
that have been covered by an outstanding Option cease to be subject to such
Option prior to the purchase of such shares upon the exercise of such Option,
or if any shares of Common Stock that are subject to any award of Restricted
Stock or other Awards granted under the Plan are forfeited prior to the payment
of any dividends, if applicable, with respect to such shares of Common Stock,
or any such Award otherwise terminates without payment being made to the Holder
in the form of Common Stock or otherwise, such shares shall again be available
for distribution in connection with future Awards under the Plan, subject to
the limitations of Section 2.1.
Shares of Common Stock that are delivered by the Holder or withheld by the
Company upon the exercise of any Award under the Plan in payment of the
purchase price thereof, as defined under Section 6.1, or tax withholding
thereon, may again be awarded hereunder, subject to the limitations of
Section 2.1. If any share of Restricted Stock is forfeited by the Holder or
repurchased by the Company pursuant to Section 8.5, such share may again be
awarded hereunder, subject to the limitations of Section 2.1.
Notwithstanding the foregoing provisions of this Section 2.2, no shares of
Common Stock previously covered by an Award may again be awarded as an
Incentive Stock Option if such action would cause such Incentive Stock
Option to fail to meet the requirements of Section 422 of the Code.
ARTICLE III
GRANTING OF AWARDS
3.1. Award Agreement. Each Award shall be evidenced by an Award Agreement.
Award Agreements evidencing Awards intended to qualify as performance-based
compensation as described under Section 162(m)(4)(C) of the Code shall contain
such terms and conditions as may be necessary to meet the applicable provisions
of Section 162(m) of the Code. Award Agreements evidencing Incentive Stock
Options shall be so designated and shall contain such terms and conditions as
may be necessary to meet the applicable provisions of Section 422 of the Code.
3.2. Consideration. In consideration of the granting of an Award under the
Plan, the Award Agreement may provide that the Company may require the Holder
to remain in the employ of, or in service with, the Company, Affiliate or any
Subsidiary for a period of at least one year (or such shorter period, if any,
as may be fixed in the Award Agreement or by action of the Committee following
grant of the Award) after the Award is granted.
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3.3. Award Agreements Under Which Common Stock is Issuable. The terms and
conditions of each Award shall be set forth in the Award Agreement. The
individual terms, conditions, restrictions, and limitations contained in any
Award Agreements (and any modifications to such Award Agreements that may be
made from time to time) shall be in the sole discretion of the Committee,
subject only to the requirements of the Plan.
3.4. At-Will Employment and Service. Nothing in the Plan or Award
Agreements shall create a right on behalf of any Employee or Consultant, to
continuation of employment by, or service with, the Company, Affiliate or any
Subsidiary, or as a Director for the Company, Affiliate or any Subsidiary.
Further, nothing in the Plan or Award Agreements shall be deemed to interfere
in any way with the Company's employment at will (or service at will, as the
case may be) relationship with any Employee or Consultant, and/or interfere in
any way with the Company's or a Subsidiary's or Affiliate's right to terminate
its relationship with, or discharge, a Holder at any time or for any or no
reason, except to the extent provided otherwise in any separate written
agreement between the Holder and the Company or such Affiliate or Subsidiary.
ARTICLE IV
DISCRETIONARY OPTION GRANT PROGRAM
GRANTING OF OPTIONS TO
EMPLOYEES AND CONSULTANTS
4.1. Eligibility. Any Employee or Consultant shall be eligible to be
selected by the Committee pursuant to Section 4.2(a)(i) to be granted an
Option. Options may be granted alone, in addition to, or in tandem with other
Awards under the Plan. Any Option granted under the Plan shall be in such form
as the Committee may from time to time approve.
4.2. Granting of Options to Employees and Consultants.
(a) The Committee shall, from time to time, in its discretion and
subject to the applicable limitations of the Plan:
(i) Determine which Employees and Consultants (including Employees
and Consultants who have previously received Awards under the Plan) in
the Committee's opinion should be granted Options;
(ii) Subject to Section 2.1(b), determine the number of shares to be
subject to each Option;
(iii) Determine whether an Option is to be an Incentive Stock Option
or a Non-Qualified Stock Option; provided that no Incentive Stock
Option shall be granted to any individual otherwise eligible to
participate in the Plan who is not an Employee of the Company or a
Subsidiary on the date of granting of such Option;
(iv) Determine whether Options are to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code;
(v) Determine the terms and conditions of Options, consistent with
the Plan, including, but not limited to, the price per share,
restrictions or limitations on exercise, vesting, acceleration or
waiver of forfeiture restrictions regarding any Option, and to amend or
waive any such terms and conditions;
(vi) Determine whether and in what circumstances an Option may be
settled in cash or Restricted Stock under Article VIII in lieu of
Common Stock; and
(vii) Determine whether, to what extent, and under what
circumstances Options and/or other Awards under the Plan are to be, and
operate, in tandem.
(b) Upon the selection of an Employee or Consultant to be granted an
Option, the Committee shall instruct the Secretary of the Company to issue
the Option and may impose such conditions on the grant of the Option as it
deems appropriate.
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(c) Any Incentive Stock Option granted under the Plan may be modified by
the Committee, with the consent of the Optionee, to disqualify such Option
from treatment as an incentive stock option under Section 422 of the Code.
4.3. Remaining Terms. The remaining terms of each option granted under the
Discretionary Option Grant Program shall be in accordance with Articles VI and
VII. To the extent that any Option does not qualify as an Incentive Stock
Option (whether because of its provisions or the time or manner of its exercise
or otherwise), such Option, or the portion thereof that does not so qualify,
shall constitute a separate Non-Qualified Stock Option.
4.4. Options in Lieu Of Cash Compensation. Options may be granted under the
Plan to Employees and Consultants in lieu of cash bonuses that would otherwise
be payable to such Employees and Consultants, pursuant to such written policies
that may be adopted by the Committee from time to time.
4.5. Substitute Options. In the event that a transaction described in
Section 424(a) of the Code involving the Company or a Subsidiary is
consummated, such as the acquisition of property or stock from an unrelated
corporation, individuals who become eligible to participate in the Plan in
connection with such transaction, as determined by the Committee, may be
granted Options in substitution for stock options granted by another
corporation that is a party to such transaction. If such substitute Options are
granted, the Committee, in its discretion and consistent with Section 424(a) of
the Code, if applicable, and the terms of the Plan, though notwithstanding
Section 6.1, shall determine the Option exercise price and other terms and
conditions of such substitute Options.
ARTICLE V
AUTOMATIC OPTION GRANT PROGRAM
GRANTING OF OPTIONS TO DIRECTORS
5.1 Eligibility. The individuals who shall be eligible to participate in the
Automatic Option Grant Program shall be limited to (i) those individuals who
first become Directors after the IPO Date, whether through appointment by the
Board or election by the Company's shareholders, and (ii) those individuals who
continue to serve as Directors at one or more annual meetings of the Company's
shareholders held after the IPO Date.
5.2 Granting of Options to Directors. Option grants shall be made on the
dates specified below:
(a) Initial Grants. Each individual who is first elected or appointed as
a Director at any time after the IPO Date shall be granted, on the date of
such initial election or appointment, one (1) Non-Qualified Stock Option to
purchase the number of shares of Common Stock determined by the Committee
in its discretion.
(b) Annual Grant. On the date of each annual meeting of the Company's
shareholders, beginning with the 2001 annual shareholders meeting, each
individual who continues to serve as a Director following such annual
meeting, whether or not that individual is standing for re-election to the
Board at that particular annual meeting, shall automatically be granted a
Non-Qualified Stock Option to purchase 15,000 shares of Common Stock. There
shall be no limit on the number of Annual Grants any one Director may
receive over his period of Board service, and Directors who have previously
been in the employ of the Company or any Subsidiary or Affiliate shall be
eligible to receive one or more such Annual Grants over their period of
continued Board service, subject in any case to Section 2.1(a).
5.3 Remaining Terms and Provisions. The remaining terms and provisions of
each Option granted under the Automatic Option Grant Program shall be in
accordance with Articles VI and VII.
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ARTICLE VI
TERMS OF OPTIONS
6.1. Exercise Price. The price per share of the shares subject to each
Option granted to Employees, Consultants and Directors shall be determined by
the Committee and set forth in the Award Agreement; however, (i) such price
shall be no less than the par value of a share of Common Stock, unless
otherwise permitted by applicable law, and (ii) in the case of Incentive Stock
Options such price shall not be less than 100% of the Fair Market Value of a
share of Common Stock on the date the Option is granted (or the date the Option
is modified, extended or renewed for purposes of Section 424(h) of the Code);
and (iii) in the case of Incentive Stock Options granted to an individual then
owning (within the meaning of Section 424(d) of the Code) more than 10% of the
total combined voting power of all classes of stock of the Company or any
Subsidiary or parent corporation of the Company (within the meaning of Section
424(e) of the Code), such price shall not be less than 110% of the Fair Market
Value of a share of Common Stock on the date the Option is granted (or the date
the Option is modified, extended or renewed for purposes of Section 424(h) of
the Code).
6.2. Option Term. The term of an Option granted to an Employee, Consultant
or Director shall be set by the Committee in its discretion. However, in the
case of Incentive Stock Options, the term shall not be more than ten (10) years
from the date the Incentive Stock Option is granted, or five (5) years from
such date if the Incentive Stock Option is granted to an individual then owning
(within the meaning of Section 424(d) of the Code) more than 10% of the total
combined voting power of all classes of stock of the Company or any Subsidiary
or parent corporation of the Company (within the meaning of Section 424(e) of
the Code). Except as limited by requirements of Section 422 of the Code and
regulations and rulings thereunder applicable to Incentive Stock Options, the
Committee may extend the term of any outstanding Option in connection with any
Termination of the Optionee, or amend any other term or condition of such
Option relating to such Termination.
6.3. Option Vesting.
(a) Each Option shall be exercisable in whole or in such installments,
at such times, during such periods, and under such conditions, as the
Committee shall determine, in accordance with the Plan, at the time such
Option is granted, and set forth in the applicable Award Agreement. The
Committee may determine that an Option may not be exercised in whole or in
part for a specified period after it is granted. No portion of an Option
granted to an Employee, Consultant, or Director that is not exercisable at
Termination of such Holder shall thereafter become exercisable, except as
may be otherwise provided by the Committee either in the Award Agreement or
by action of the Committee following the grant of the Option. The Committee
may, at its discretion, provide for an acceleration of an Optionee's right
to exercise his Option subsequent to his Termination without Cause or
because of the Optionee's Retirement, death or Disability, or otherwise. In
addition, at any time after grant of an Option, the Committee may, in its
discretion, accelerate the period during which an Option granted to an
Employee, Consultant, or Director becomes exercisable.
(b) To the extent that the aggregate Fair Market Value of Common Stock
with respect to which "incentive stock options" (within the meaning of
Section 422 of the Code, but without regard to Section 422(d) of the Code)
are exercisable for the first time by an Optionee during any calendar year
(under the Plan and all other incentive stock option plans of the Company
and any Subsidiary or parent corporation of the Company (within the meaning
of Section 424(e) of the Code)) exceeds $100,000, such Options shall be
treated as Non-Qualified Stock Options to the extent required by Section
422 of the Code. The rule set forth in the preceding sentence shall be
applied by taking Options into account in the order in which they were
granted. For purposes of this Section 6.3(b), the Fair Market Value of
Common Stock shall be determined as of the time the Option with respect to
such stock is granted.
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ARTICLE VII
EXERCISE OF OPTIONS
7.1. Partial Exercise. An exercisable Option may be exercised in whole or in
part. However, an Option shall not be exercisable with respect to fractional
shares and the Committee may require that, by the terms of the Option, a
partial exercise be with respect to a minimum number of shares.
7.2. Manner of Exercise. All or a portion of an Optionee's exercisable
Option shall be deemed exercised upon delivery of all of the following to the
Secretary of the Company or the Secretary's office:
(a) a written notice, signed by the Optionee or other person then
entitled to exercise the Option, stating that the Option is exercised and
specifying the number of shares of Common Stock to be purchased, and
otherwise in compliance with the applicable rules established by the
Committee;
(b) such representations and documents as the Committee, in its
discretion, deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act and any other Federal or state
securities laws or regulations (the Committee may, in its absolute
discretion, also take whatever additional actions it deems appropriate to
effect such compliance including, without limitation, placing legends on
share certificates and issuing stop-transfer notices to agents, and
registrars);
(c) in the event that the Option shall be exercised pursuant to Section
11.1 by any person or persons other than the Optionee, appropriate proof of
the right of such person or persons to exercise the Option;
(d) full cash payment to the Secretary of the Company for the aggregate
purchase price of the shares of Common Stock with respect to which such
Option is exercised; however, the Committee may in its discretion, as set
forth in the applicable Award Agreement, subject to such terms, conditions
and limitations as the Committee may prescribe, allow payment through: (i)
the delivery of shares of the Common Stock which have been owned by the
Optionee or by the Optionee and his spouse jointly for at least six months,
duly endorsed for transfer to the Company with a Fair Market Value on the
date of delivery equal to such purchase price; (ii) the delivery of a full
recourse promissory note that complies with the provisions of Section
8.2(b) in the principal amount of such purchase price; (iii) a "cashless
exercise" program established by the Committee; (iv) any other
consideration approved by the Committee and permitted by applicable law; or
(v) any combination of the foregoing forms of consideration with an
aggregate Fair Market Value equal to such purchase price;
(e) payment in full of any applicable taxes in accordance with Section
11.4; and
(f) any other documentation required by the Committee and the Award
Agreement is executed as required by the Committee.
7.3. Rights as Stockholders/Dividend Equivalents. An Optionee shall not be,
nor have any of the rights or privileges of, stockholders of the Company
(including, without limitation, voting or dividend rights) with respect to any
shares of Common Stock covered by his Option unless and until the Optionee
properly exercised such Option in accordance with Section 7.2, and the other
terms and conditions of the Plan, including, without limitation, the applicable
conditions of Sections 11.6 and 11.9, and the applicable Award Agreement have
been satisfied. Notwithstanding the foregoing, any Optionee selected by the
Committee may be granted Dividend Equivalents, in accordance with Article IX,
based on any dividends declared with respect to the number shares of Common
Stock that may be purchased under such Option, to be credited as of dividend
payment dates, during the period between the date such Option is granted, and
the date such Option is exercised, vests or expires, as determined by the
Committee.
7.4. Ownership and Transfer Restrictions. The Committee, in its discretion,
may impose such restrictions on the ownership and transferability of the Common
Stock purchasable upon the exercise of an Option as it deems appropriate. Any
such restriction shall be set forth in the respective Award Agreement and may
be referred to on the certificates evidencing such shares. The Committee may
require an Optionee to give
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the Company prompt notice of any disposition of shares of Common Stock acquired
by exercise of an Incentive Stock Option within (i) two years from the date of
granting (including the date the Option is modified, extended or renewed for
purposes of section 424(h) of the Code) such Option to such Optionee or (ii)
one year after the transfer of such shares to such Optionee. The Committee may
direct that the certificates evidencing shares acquired by exercise of any such
Option refer to such requirement to give prompt notice of disposition.
7.5. Exercise Upon Termination. An Option may be exercised only if at all
times during the period beginning with the date of granting of such Option and
ending on the date of such exercise the Optionee is an Employee, Consultant or
Director and shall terminate upon a Termination of the Optionee.
Notwithstanding the immediately foregoing sentence, an Option may be exercised
following Termination as provided below in this Section 7.5, unless otherwise
provided in the Award Agreement.
(a) In the event an Optionee ceases to be an Employee, Director, or
Consultant because of Retirement, the Optionee shall have the right to
exercise his Option at any time within three (3) months after Retirement.
(b) In the event an Optionee ceases to be an Employee, Director or
Consultant due to Disability, the Option held by the Optionee may be
exercised at any time within one (1) year after such Termination.
(c) In the event an Optionee ceases to be an Employee, Director or
Consultant due to Termination for Cause, all Options, whether or not then
vested or exercisable, held by such Optionee shall automatically terminate
immediately and become void and of no effect.
(d) In the event an Optionee's employment with or rendering of services
as a Director or Consultant to the Company or any Affiliate or Subsidiary
ceases for other than those described in subsections (a), (b) or (c)
immediately above, his Option shall terminate and become void and of no
effect on the 30th day following such Termination.
(e) In the event an Optionee dies either while an Employee, Director or
Consultant or after Termination under circumstances described in
subsections (a), (b) or (d) immediately above within the three-month, one-
year or 30-day period described therein (or shorter period, if applicable),
any Options held by such Optionee may be exercised at any time within one
(1) year after the Optionee's death by the Optionee's beneficiary or the
executors or administrators of the Optionee's estate or by any person or
persons who shall have acquired the Option directly from the Optionee by
bequest or inheritance, in accordance with Section 11.1.
Subsections (a), (b), (d) and (e) of this Section 7.5 shall be subject to
the condition that in no event may an Option be exercised after the expiration
date of such Option specified in the applicable Award Agreement.
ARTICLE VIII
AWARDS OF COMMON STOCK AND RESTRICTED STOCK
8.1. Eligibility. Subject to Section 2.1(b), Common Stock or Restricted
Stock may be awarded to any Employee, Consultant, or Director who the Committee
determines should receive such an Award.
8.2. Award of Common Stock or Restricted Stock
(a) The Committee may from time to time, in its discretion, consistent
with the Plan determine:
(i) which Employees, Consultants, and Directors (including
Employees, Consultants, and Directors who have previously received
other Awards under the Plan) should be awarded Common Stock or
Restricted Stock;
(ii) the specific performance goals or other vesting provisions
described in Section 8.4 and other terms and conditions that shall
apply to each Award of Restricted Stock or Common Stock;
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(iii) the form of the Award Agreement and/or any other agreements
under which the sale or transfer of, or other rights to, the Common
Stock or Restricted Stock may be restricted; and
(iv) whether shares of Common Stock or Restricted Stock may be
issued alone, in addition to, or in tandem with, other Awards granted
under the Plan.
(b) The Committee shall establish the purchase price, if any, and form
of payment, to be paid by an Employee, Director or Consultant in exchange
for his Award of Common Stock or Restricted Stock; provided, however, that
such purchase price shall be no less than the par value of the Common Stock
to be purchased unless otherwise determined by the Committee, if not
inconsistent with applicable law. In all cases legal consideration, which
may include the performance of services (other than future services), shall
be required for each issuance of Common Stock and Restricted Stock. Such
legal consideration may include a full recourse promissory note bearing
interest (at no less than such rate as shall then preclude the imputation
of interest under the Code) and payable upon such terms as may be
prescribed by the Committee. The Committee shall prescribe the form of such
note. The Committee shall have the authority to permit or require a Holder
to secure any such promissory note with shares of Common Stock or with
other collateral, as acceptable to the Committee. Unless otherwise provided
by the Committee, if the Company is at any time subject to the regulations
promulgated by the Board of Governors of the Federal Reserve System or any
other governmental entity affecting the extension of credit in connection
with the Company's securities, any such promissory note shall comply with
such regulations, and the Committee may require the obligor to pay unpaid
principal and any accrued interest on such promissory note to the extent
necessary to comply with such regulations. The Committee may require a
Holder to substitute for Common Stock other collateral for any such loan or
extension of credit which is acceptable to the Committee. In no case may
legal consideration received by the Company for any Award include a
promissory note or a loan by the Company to the extent such loan or other
extension of credit is prohibited by applicable law or regulation or
contravenes any of the Company's contractual arrangements.
(c) Upon the selection of an Employee, Consultant, or Director to be
granted an Award of Common Stock or Restricted Stock, the Committee shall
instruct the Secretary of the Company to issue such Common Stock or
Restricted Stock. Each Holder receiving a Common Stock or Restricted Stock
Award shall be issued a stock certificate evidencing such shares registered
in the name of such Holder. The foregoing to the contrary notwithstanding,
the Committee may, in its discretion, provide that a Holder's ownership of
Restricted Stock prior to lapse of the restrictions set forth in the Award
Agreement shall, in lieu of certificates, be evidenced by a "book entry"
(i.e., a computerized or manual entry) in the records of the Company or its
designated agent in the name of such Holder. Such records of the Company or
such agent shall, absent manifest error, be binding on all Holders of
Restricted Stock. The holding of shares of Restricted Stock by the Company
or its agent, in accordance with Section 8.7, or the use of book entries to
evidence the ownership of shares of Restricted Stock, in accordance with
this paragraph (c) of Section 8.2, shall not affect the rights of Holders
as owners of their shares of Restricted Stock, nor affect the restrictions
applicable to such shares under the Award Agreement or the Plan.
(d) The provisions of the Common Stock or Restricted Stock Award need
not be the same with respect to each Holder. In addition, any Common Stock
or Restricted Stock Award must be accepted by the Holder within a period of
sixty (60) days (or a shorter period as determined by the Committee at
grant) after the Award date, by executing the Common Stock or Restricted
Stock Award Agreement and paying the applicable purchase price.
8.3. Rights as Stockholders. A Holder of shares of Restricted Stock shall
have, unless otherwise provided by the Committee, all the rights of a
stockholder with respect to such shares, including the right to receive all
dividends and other distributions paid or made with respect to such shares,
subject to Section 8.4 and the restrictions in his Award Agreement. In the
event of any adjustment as provided in Section 12.3 or any stock or securities
are received as a dividend on shares of Restricted Stock, any new or additional
shares or securities received by the Holder of such Restricted Stock shall be
subject to the same terms and restrictions as relate to the original shares of
Restricted Stock.
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8.4. Restriction. All shares of Common Stock and Restricted Stock issued
under the Plan shall be subject to such restrictions as the Committee shall
provide and set forth in the applicable Award Agreement, which restrictions may
include, without limitation, restrictions concerning voting rights and
transferability and restrictions, including a risk of forfeiture, based on
duration of employment with the Company or any Subsidiary or Affiliate, or pre-
established performance goals based on Business Criteria or individual
performance. Such Common Stock or Restricted Stock may not be transferred,
sold, assigned or encumbered until all such restrictions terminate or expire. A
Holder's rights in his unvested shares of Common Stock or Restricted Stock
shall lapse upon Termination or other failure to satisfy any vesting conditions
set forth in the applicable Award Agreement and such shares shall be forfeited
and revert to the Company, subject to Section 8.5 if consideration was paid by
such Holder upon issuance of such shares. The Committee may, however, in its
discretion, provide (either by the terms of the applicable Award Agreement or
otherwise) that such rights shall not lapse, in whole or in part, in the event
of a Termination without Cause or due to the Holder's Retirement, death or
Disability or in the event of a Change in Control or, in cases of special
circumstances, where the Committee determines in its discretion that forfeiture
of all or any part of a Holder's shares of Restricted Stock or Common Stock
would not be in the best interests of the Company. Upon expiration or
termination of the restrictions applicable to a Holder's shares of Restricted
Stock, pursuant to the applicable Award Agreement and the Plan, the Company
shall, subject to Sections 8.8, 12.6 and 12.9, then deliver certificates
evidencing such shares to such Holder.
8.5. Repurchase of Restricted Stock. The Committee may provide in the terms
of each individual Award Agreement that the Company or its designee shall have
the right to repurchase from a Holder the Common Stock or Restricted Stock then
subject to restrictions under his Award Agreement immediately upon a
Termination or other failure to satisfy any vesting conditions set forth in the
applicable Award Agreement, at a price per share or by such formula as set
forth in the Award Agreement or to be determined in good faith by the Committee
at the time of the repurchase.
8.6. Required Agreements. At the Committee's discretion, as a condition to
the receipt of Common Stock or Restricted Stock, the Holder may be required to
enter into agreements under which the sale or transfer of the Common Stock
issuable under the Award is restricted. Such agreements shall be in such form
as determined by the Committee.
8.7. Escrow. The Committee may require a Holder who receives a certificate
or certificates evidencing a Restricted Stock Award to immediately deposit such
certificate or certificates, together with a stock power or other appropriate
instrument of transfer endorsed in blank by the recipient, with the Company or
its agent. Unvested shares covered by such a Restricted Stock Award may, in the
Committee's discretion, be held in escrow by the Company or its agent until the
Holder's interest in such shares vests or other restrictions and conditions
lapse.
8.8. Legend. Shares of Common Stock or Restricted Stock awarded under the
Plan, including shares as to which the applicable restrictions have lapsed,
shall be subject to such other transfer restrictions and/or legending
requirements that are imposed by the Committee and may be specified in the
applicable Award Agreement.
8.9. Section 83(b) Election. If a Holder of Restricted Stock makes an
election under Section 83 (b) of the Code, or any successor section thereto, to
be taxed with respect to the Restricted Stock as of the date of transfer of the
Restricted Stock rather than as of the date or dates upon which such Holder
would otherwise be taxable under Section 83(a) of the Code, such Holder shall
deliver a copy of such election to the Company immediately after filing such
election with the Internal Revenue Service. Such election shall be in the sole
discretion of any such Holder. None of the Company, any Affiliate nor any
Subsidiary shall have any liability or responsibility relating to or arising
out of the filing or not filing of any such election or any defects in its
construction.
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8.10. Performance-based compensation. Notwithstanding any other provision of
the Plan to the contrary, to the extent that vesting of any Restricted Stock
Award is based on the achievement of pre-established performance goals based on
Business Criteria, the restrictions applicable to such Restricted Stock shall
not lapse unless and until the Committee certifies in writing that the
applicable performance goals and any other material terms were in fact
satisfied, except as otherwise provided by the Committee in accordance with the
Plan in the case of Termination of the Holder due to death or Disability or in
the event of a Change in Control.
ARTICLE IX
PERFORMANCE AWARDS, DIVIDEND EQUIVALENTS,
DEFERRED STOCK, STOCK PAYMENTS
9.1. Eligibility. Subject to Section 2.1(b), one or more Performance
Awards, Dividend Equivalents, awards of Deferred Stock and/or Stock Payments
may be granted to any Employee or any Consultant or Director whom the Committee
determines should receive such an Award.
9.2. Performance Awards. The value of Performance Awards may be based on the
achievement of any one or more pre-established performance goals based on
Business Criteria or other conditions determined appropriate by the Committee,
in each case as of a specified date or dates or over any period or periods
determined by the Committee. In making such determinations, the Committee shall
consider (among such other factors as it deems relevant in light of the
specific type of Award) the contributions, responsibilities and other
compensation of the particular Employee, Consultant or Director. The other
terms and conditions of Performance Awards shall be determined by the Committee
in accordance with the Plan.
9.3. Dividend Equivalents. Any Employee, Consultant or Director selected by
the Committee may be granted Dividend Equivalents based on any dividends
declared on a specified number of shares of Common Stock, to be credited as of
dividend payment dates, during the period between the date an Option, Deferred
Stock Award or Performance Award is granted and the date such Option, Deferred
Stock or Performance Award is exercised, vests or expires, as determined by the
Committee. Such Dividend Equivalents shall be converted to cash or additional
shares of Common Stock by such formula and at such time and subject to such
limitations, and distributed, and be subject to such other terms and conditions
as may be determined by the Committee in accordance with the Plan.
9.4. Stock Payments. Any Employee, Consultant, or Director selected by the
Committee may receive Stock Payments in any manner determined by the Committee
in accordance with the Plan. Stock Payments may be based on the achievement of
any one or more pre-established performance goals based on Business Criteria or
other conditions determined appropriate by the Committee, in each case as of
the date such Stock Payment is made or as of any other date or over any period
or periods determined by the Committee.
9.5. Deferred Stock. Any Employee, Consultant, or Director selected by the
Committee may be granted an Award of Deferred Stock in any manner determined
from time to time by the Committee in accordance with the Plan. The number of
shares of Common Stock covered by, and the deferral period of, any Deferred
Stock Award shall be determined by the Committee. Common Stock underlying a
Deferred Stock Award will be subject to forfeiture, and will not be issued,
unless and to the extent that the applicable deferral period has ended and the
Deferred Stock has vested. Vesting and payment of Deferred Stock shall be based
on the achievement of any one or more pre-established performance goals based
on Business Criteria or other conditions determined appropriate by the
Committee, in each case as of a specified date or dates or over any period or
periods determined by the Committee. Unless otherwise provided by the
Committee, a Holder of Deferred Stock shall have no rights of a stockholder
with respect to any shares of Common Stock underlying his Deferred Stock Award
until any such shares have been issued to such Holder.
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9.6. Term. The term of a Performance Award, Dividend Equivalent Award,
Awards of Deferred Stock and/or Stock Payment shall be determined by the
Committee, in its discretion, and set forth in the Award Agreement.
9.7. Purchase Price. The Committee may, in its discretion, establish and
state in the applicable Award Agreement the purchase price, if any, of a
Performance Award, shares of Deferred Stock, or shares received as a Stock
Payment, provided that any such Award must have a purchase price per share at
least equal to the par value of a share of Common Stock to the extent required
by applicable law.
9.8. Exercise and Payment Upon Termination or in the event of a Change in
Control. A Performance Award, Dividend Equivalent, award of Deferred Stock
and/or Stock Payment may be exercised or paid only if at all times during the
period beginning with the date of granting of any such Award and ending on the
date of such exercise or payment the Holder is an Employee, Consultant, or
Director, as the case may be, provided that the Committee in its discretion may
provide that any such Award may be exercised or paid following a Termination of
the Holder thereof without Cause or due to the Holder's Retirement, death or
Disability, in the event of a Change in Control, or, in cases of special
circumstances, the Committee determines in its discretion that forfeiture of
all or any part of any such Award would not be in the best interests of the
Company.
9.9. Other Terms. The Committee shall determine and set forth in the
applicable Award Agreement the terms and conditions of any Performance Award,
Dividend Equivalent, Stock Payment and Deferred Stock Award, which shall be in
accordance with this Article IX and the remaining terms and conditions of the
Plan. Notwithstanding any other provision of the Plan to the contrary, to the
extent that the vesting or payment of any Performance Award, Stock Payment or
Deferred Stock Award is based on the achievement of pre-established performance
goals based on Business Criteria, payment of compensation in respect of any
such Award shall not be made unless and until the Committee certifies in
writing that the applicable performance goals and any other material terms were
in fact satisfied, except as otherwise provided by the Committee in accordance
with the Plan in the case of Termination of the Holder due to death or
Disability or in the event of a Change in Control.
9.10. Manner of Payment. Payment of any amount in respect of a Performance
Award, Dividend Equivalent, award of Deferred Stock and/or Stock Payment may be
made in cash, in Common Stock (based on its Fair Market Value as of the date
the Award is exercised or paid, rounded down to the nearest whole number of
shares of Common Stock, with any fractional shares paid in cash) or a
combination of both as determined by the Committee. To the extent any payment
under this Article IX is effected in Common Stock, it shall be made subject to
satisfaction of all applicable provisions of Sections 11.6 and 11.9.
ARTICLE X
ADMINISTRATION
10.1. Committee. The Plan shall be administered by a committee that is
composed of members of the Board and who are appointed by the Board. The
Committee shall consist of no fewer than two (2) members. Notwithstanding the
foregoing, the Board, in its absolute discretion, may at any time and from time
to time exercise any and all rights, duties and responsibilities of the
Committee under the Plan, including, but not limited to, establishing
procedures to be followed by the Committee, except with respect to any matters
which under any applicable law, regulation or rule are required to be
determined in the sole discretion of the Committee. If and to the extent that
no Committee exists which has the authority to administer the Plan, the
functions of the Committee shall be exercised by the Board.
10.2. Authority of the Committee. The Committee shall have all authority
that may be necessary or helpful to enable it to discharge its responsibilities
with respect to the Plan. Without limiting the generality of the foregoing
sentence or Section 10.1, or the other authorities specifically vested in the
Committee pursuant to the other provisions of the Plan, the Committee shall
have full and exclusive discretionary authority, subject to
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the express provisions of the Plan, to determine eligibility for participation
in the Plan; interpret and construe any and all terms and provisions of the
Plan and any Awards and Award Agreements; adopt, alter and repeal rules,
guidelines, practices and regulations for administering and governing the Plan;
adjudicate and determine all disputes arising under or in connection with the
Plan; permit the transfer of an Award to, or the exercise of an Award by, one
other than the Holder who received the grant of such Award (other than any such
transfer or exercise that would cause any Incentive Stock Option to fail to
qualify as an "incentive stock option" under Section 422 of the Code, unless
the Committee determines otherwise); establish and administer any performance
goals in connection with any Awards, including the Business Criteria on which
such performance goals are based and the applicable measurement dates or
periods, and certify whether, and to what extent, any such performance goals
have been met; and otherwise supervise administration of the Plan and to make
all other determinations necessary or advisable for such administration of the
Plan. Decisions, actions and determinations by the Committee with respect to
the Plan or any Award Agreement shall be final, conclusive and binding on all
parties. Except to the extent prohibited by applicable law or the rules of a
stock exchange, the Committee may, in its discretion, from time to time,
delegate all or any part of its responsibilities and powers under the Plan to
any member or members of the management of the Company, and revoke any such
delegation. Awards need not be the same with respect to each Holder. Any
interpretations and rules issued by the Committee with respect to Incentive
Stock Options shall be consistent with the provisions of Section 422 of the
Code.
10.3. Appointment. The Board may from time to time appoint members to the
Committee in substitution for or in addition to members previously appointed
and may fill vacancies caused on the Committee. The Committee may select one
member as its Chair and shall hold its meetings at such times and places as it
shall deem advisable. It may also hold telephonic meetings. A majority of its
members shall constitute a quorum. All determinations of the Committee shall be
made by a majority of its members. The Committee may correct any defect or
omission or reconcile any inconsistency in the Plan or any Award Agreement in
the manner and to the extent that the Committee determines to be desirable. Any
decision or determination reduced to writing and signed by a majority of the
members of the Committee shall be as fully effective as if it had been made by
a majority vote at a meeting duly called and held. The Committee may appoint a
secretary and shall make such rules and regulations for the conduct of its
business as it shall deem advisable.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1. Transfer. Except as otherwise provided by this Section 11.1, or by the
Committee, an Award shall by its terms be personal and may not be sold,
pledged, assigned, transferred, encumbered or otherwise alienated or
hypothecated in any manner other than by will or the laws of descent and
distribution, except in the case of any awards of Restricted Stock or Common
Stock Awards that, by their terms, are fully vested. During the lifetime of the
Holder, only he may exercise an Option (or, if applicable, other Award), or any
portion thereof, granted to him under the Plan. An Award Agreement may permit
the exercise and payment of a Holder's Option (or other Award, if applicable)
after his death by or to the beneficiary most recently named by such Holder in
a written designation thereof filed with the Company, or, in lieu of any such
surviving beneficiary, as designated by the Holder by will or by the laws of
descent and distribution. In the event any Award is exercised by, or to be paid
to, the executors, administrators, heirs or distributees of the estate of a
deceased Holder, or such a Holder's beneficiary, or the transferee of an Award,
in any such case pursuant to the terms and conditions of the Plan and the
applicable Award Agreement and in accordance with such terms and conditions as
may be specified from time to time by the Committee, the Company shall be under
no obligation to issue Common Stock, or make any payment, thereunder unless and
until the Committee is satisfied that the person or persons exercising such
Award, or to receive such payment, is the duly appointed legal representative
of the deceased Holder's estate or the proper legatee or distributee thereof or
the named beneficiary of such Holder, or the valid transferee of such Holder,
as applicable.
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11.2. Amendment, Suspension or Termination of the Plan. Except as otherwise
provided in this Section 11.2, the Plan may be wholly or partially amended or
otherwise modified, suspended or terminated at any time or from time to time,
with or without prior notice, by the Board; provided, however, no such
amendment, modification, suspension or termination shall be made which would
impair the previously accrued rights of any Holder of an Award theretofore
granted without his written consent, or which, without obtaining approval of
the Company's stockholders given within twelve months before or after such
action by the Board (where such approval is necessary to satisfy (i) any
requirements under the Code relating to Incentive Stock Options or for
exemption from Section 162(m) of the Code or (ii) any applicable law,
regulation or rule), would
(a) except as is provided in Section 11.3, increase the limits in
Section 2.1 on the maximum number of shares which may be issued under the
Plan or which may be subject to Awards granted to any Employee;
(b) except as is provided in Section 11.3, decrease the minimum option
exercise price requirements of Section 6.1;
(c) change the class of persons eligible to receive Awards under the
Plan; or
(d) extend the duration of the Plan during which Incentive Stock Options
may be granted under the Plan or the period during which Incentive Stock
Options may be exercised under Section 6.2.
No termination of the Plan shall affect the previously accrued rights of any
Holder under the Plan and all Awards previously granted under the Plan shall
continue in force and in operation after the termination of the Plan, except as
they may be otherwise terminated in accordance with the terms of the Plan or
the Award Agreement. No Awards may be granted or awarded during any period of
suspension or after termination of the Plan (however Awards theretofore granted
may extend beyond any such termination), and in no event may any Incentive
Stock Option be granted under the Plan after the first to occur of the
following events:
(1) the expiration of ten (10) years from the date the Plan is adopted
by the Board; and
(2) the expiration of ten (10) years from the date the Plan is approved
by the Company's stockholders.
The Committee may amend the terms of any Award theretofore granted, including
any Award Agreement, retroactively or prospectively, but no such amendment
shall materially impair the previously accrued rights of any Holder without his
written consent.
11.3. Changes in Common Stock or Assets of the Company, Acquisition or
Liquidation of the Company, Change in Control and other Corporate Events.
(a) Subject to any required action by the shareholders of the Company,
upon changes in the outstanding Common Stock by reason of a stock split,
reverse stock split, stock dividend, combination or exchange of shares,
merger, recapitalization, consolidation, corporate separation or division
of the Company (including, but not limited to, a split-up, spin-off, split-
off or distribution to Company shareholders other than a normal cash
dividend), reorganization, reclassification, or increase or decrease in the
number of shares of capital stock of the Company effected without receipt
of full consideration therefor; liquidation, dissolution, or sale,
transfer, exchange or other disposition of all or substantially all of the
assets of the Company or other similar corporate transaction or event, then
the Committee shall appropriately adjust, in its discretion, any or all of
the following to prevent dilution or enlargement of the
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benefits or potential benefits intended to be made available under the Plan
or with respect to an Award or to otherwise reflect any such change:
(i) the aggregate number, class and kind of shares of Common Stock
(or other securities or property) with respect to which Awards may be
granted or awarded (including, but not limited to, adjustments of the
limitations in Section 2.1(a) and (b));
(ii) the number, class and kind of shares of Common Stock (or other
securities or property) subject to outstanding Options, Performance
Awards, Dividend Equivalents, or Stock Payments, and the number and
kind of shares of outstanding Restricted Stock or Deferred Stock
Awards; and
(iii) the grant or purchase price with respect to any Award.
Any fractional shares resulting from any such adjustment shall be
eliminated by rounding to the next lower number of shares with appropriate
payment for such fractional shares as shall be reasonably determined by the
Committee. Notice of any such adjustment shall be given by the Committee to
each Holder whose Award has been adjusted and such adjustment, whether or
not such notice has been given, shall be effective and binding for all
purposes of the Plan.
(b) In the event of any Change in Control, the Committee may, in its
discretion, and on such terms and conditions as it deems appropriate, take
any one or more of the following actions, either by the terms of the Award
Agreement applicable to any Award or by a resolution adopted prior to the
occurrence of the Change in Control:
(i) to provide that any outstanding Award shall be exercisable as to
all or any part of the shares covered thereby, notwithstanding anything
to the contrary in Section 6.3 or the provisions of such Award;
(ii) to provide that the restrictions imposed under an Award
Agreement upon some or all shares of any outstanding Restricted Stock
or Deferred Stock Award may be terminated, and, in the case of
Restricted Stock, some or all shares of such Restricted Stock may cease
to be subject to repurchase under Section 8.5 or forfeiture under
Section 8.4;
(iii) to provide that any outstanding Award shall be adjusted by
substituting for Common Stock subject to such Award stock or other
securities of the surviving corporation or any successor corporation to
the Company, or a parent or subsidiary thereof, or that may be issuable
by another corporation that is a party to the transaction resulting in
the Change in Control, whether or not such stock or other securities
are publicly traded, in which event the aggregate exercise price (as
applicable) shall remain the same and the amount of shares or other
securities subject to the Award shall be the amount of shares or other
securities which could have been purchased on the closing date or
expiration date of such transaction with the proceeds which would have
been received by the Holder if such Award had been exercised, or had
become vested, in full (or with respect to a portion of such Award, as
determined by the Committee, in its discretion) prior to such
transaction or expiration date and the Holder exchanged all of such
shares in the transaction; or
(iv) to provide that any outstanding Award shall be converted into a
right to receive cash or Common Stock on or following the closing date
or expiration date of the transaction resulting in the Change in
Control in an amount equal to the highest value of the consideration to
be received in connection with such transaction for one share of Common
Stock, or, if higher, the highest Fair Market Value of the Common Stock
during the thirty (30) consecutive business days immediately prior to
the closing date or expiration date of such transaction, less the per
share exercise or purchase price of such Award (if any), multiplied by
the number of shares of Common Stock subject to such Award, or a
portion thereof.
(c) The Committee may, in its discretion, provide that an Award cannot
be exercised or paid after a Change in Control, to the extent that such
Award becomes subject to any acceleration, adjustment or conversion in
accordance with paragraph (b) of this Section 11.3.
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INFONET SERVICES CORPORATION
2000 EMPLOYEE STOCK PURCHASE PLAN
<PAGE>
INFONET SERVICES CORPORATION
2000 EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I
ESTABLISHMENT
1.01 Purpose
The Infonet Services Corporation 2000 Employee Stock Purchase Plan (the
"Plan") is hereby established by Infonet Services Corporation (the "Company"),
the purpose of which is to provide a method whereby employees of the Company or
any Designated Subsidiary (as defined herein), will have an opportunity to
acquire a proprietary interest in the Company through the purchase of shares of
Common Stock. The Plan is also established to help promote the overall
financial objectives of the Company's stockholders by promoting those persons
participating in the Plan to achieve long-term growth in stockholder equity.
The Plan is intended to qualify as an "employee stock purchase plan" under
Section 423 of the Internal Revenue Code of 1986, as amended (the "Code"). The
provisions of the Plan shall be construed so as to extend and limit
participation in a manner consistent with the requirements of that Section of
the Code and the underlying Income Tax Regulations ("Regs").
ARTICLE II
DEFINITIONS
The following words and phrases, as used herein, shall have the meanings
indicated unless the context clearly indicates to the contrary:
2.01 Account shall mean the bookkeeping account established on behalf of a
Participant to which is credited all contributions paid for the purpose of
purchasing Common Stock under the Plan, and to which shall be charged all
purchases of Common Stock, or withdrawals, pursuant to the Plan. Such Account
shall remain unfunded as described in Section 8.11 of the Plan.
2.02 Affiliate shall mean, with respect to any Person, any other Person
that, directly or indirectly, controls, is controlled by, or is under common
control with, such Person. Any "Relative" (for this purpose, "Relative" means a
spouse, child, parent, parent of spouse, sibling or grandchild) of an
individual shall be deemed to be an Affiliate of such individual for this
purpose. Neither the Company nor any Person controlled by the Company shall be
deemed to be an Affiliate of any holder of Common Stock.
2.03 Agreement shall mean, either individually or collectively, any
subscription, enrollment and/or withholding agreement, in the form prescribed
by the Committee, entered into pursuant to the Plan between the Company or a
Designated Subsidiary and a Participant. Such Agreement shall be an
authorization for the Company or a Designated Subsidiary to withhold amounts
from such Participant's Compensation, at the Contribution Rate specified in the
Agreement, to be applied to purchase Common Stock.
2.04 Beneficial Ownership (including correlative terms) shall have the
meaning given such term in Rule 13d-3 promulgated under the Exchange Act.
2.05 Beneficiary shall mean the individual specified by a Participant in his
or her most recent written designation that is filed with the Committee to
receive any benefits under the Plan in the event of such Participant's death,
in accordance with Section 8.01.
2.06 Board shall mean the Board of Directors of the Company
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2.07 Change in Control shall mean the occurrence of any of the following:
(a) an acquisition in one transaction or a series of related
transactions (other than directly from the Company or pursuant to awards
granted under the Plan or compensatory options or other similar awards
granted by the Company) of any Voting Securities by any Person, immediately
after which such Person has Beneficial Ownership of fifty percent (50%) or
more of the combined voting power of the Company's then outstanding Voting
Securities; provided, however, in determining whether a Change in Control
has occurred pursuant to this Section 2.07(a), Voting Securities which are
acquired in a Non-Control Acquisition shall not constitute an acquisition
that would cause a Change in Control;
(b) the individuals who, immediately prior to the Effective Date, are
members of the Board (the "Incumbent Board"), cease for any reason to
constitute at least a majority of the members of the Board; provided,
however, that if the election, or nomination for election, by the Company's
common stockholders, of any new director was approved by a vote of at least
a majority of the Incumbent Board, such new director shall, for purposes of
the Plan, be considered as a member of the Incumbent Board; provided
further, however, that no individual shall be considered a member of the
Incumbent Board if such individual initially assumed office as a result of
either an actual or threatened "Election Contest" (as described in Rule
14a-11 promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than
the Board (a "Proxy Contest") including by reason of any agreement intended
to avoid or settle any Election Contest or Proxy Contest; or
(c) the consummation of:
(1) a merger, consolidation or reorganization involving the Company
unless:
(A) the stockholders of the Company, immediately before such
merger, consolidation or reorganization, own, directly or
indirectly, immediately following such merger, consolidation or
reorganization, more than fifty percent (50%) of the combined voting
power of the outstanding voting securities of the corporation
resulting from such merger or consolidation or reorganization (the
"Surviving Corporation") in substantially the same proportion as
their ownership of the Voting Securities immediately before such
merger, consolidation or reorganization,
(B) the individuals who were members of the Incumbent Board
immediately prior to the execution of the agreement providing for
such merger, consolidation or reorganization constitute at least a
majority of the members of the board of directors of the Surviving
Corporation, or a corporation Beneficially Owning, directly or
indirectly, a majority of the voting securities of the Surviving
Corporation, and
(C) no Person, other than (i) the Company, (ii) any Related
Entity (as defined in Section 2.20), (iii) any employee benefit plan
(or any trust forming a part thereof) that, immediately prior to
such merger, consolidation or reorganization, was maintained by the
Company, the Surviving Corporation, or any Related Entity or (iv)
any Person who, together with its Affiliates, immediately prior to
such merger, consolidation or reorganization had Beneficial
Ownership of fifty percent (50%) or more of the then outstanding
Voting Securities, owns, together with its Affiliates, Beneficial
Ownership of fifty percent (50%) or more of the combined voting
power of the Surviving Corporation's then outstanding voting
securities
(a transaction described in clauses (A) through (C) above is
referred to herein as a "Non-Control Transaction");
(2) a complete liquidation or dissolution of the Company; or
(3) an agreement for the sale or other disposition of all or
substantially all of the assets or business of the Company to any
Person (other than a transfer to a Related Entity or the distribution
to the Company's stockholders of the stock of a Related Entity or any
other assets).
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Notwithstanding the foregoing, a Change in Control shall not be deemed to
occur solely because any Person (the "Subject Person") acquired Beneficial
Ownership of fifty percent (50%) or more of the combined voting power of the
then outstanding Voting Securities as a result of the acquisition of Voting
Securities by the Company which, by reducing the number of Voting Securities
then outstanding, increases the proportional number of shares Beneficially
Owned by the Subject Persons, provided that if a Change in Control would occur
(but for the operation of this sentence) as a result of the acquisition of
Voting Securities by the Company, and (1) before such share acquisition by the
Company the Subject Person becomes the Beneficial Owner of any new or
additional Voting Securities in a related transaction or (2) after such share
acquisition by the Company the Subject Person becomes the Beneficial Owner of
any new or additional Voting Securities which in either case increases the
percentage of the then outstanding Voting Securities Beneficially Owned by the
Subject Person, then a Change in Control shall be deemed to occur.
2.08 Commission shall mean the Securities and Exchange Commission or any
successor entity or agency.
2.09 Committee shall mean the Plan Committee of the Board as described in
Article VII.
2.10 Compensation shall mean, for the relevant period, (a) the total
compensation paid in cash to a Participant by the Company and/or a Designated
Subsidiary, including salaries, wages, commissions, overtime pay, shift
premiums, bonuses, and incentive compensation, plus (b) any pre-tax
contributions made by a Participant under Section 401(k) or 125 of the Code.
Compensation shall exclude non-cash items, moving or relocation allowances,
geographic hardship pay, car allowances, tuition reimbursements, imputed
income attributable to cars or life insurance, severance or notice pay, fringe
benefits, contributions (except as provided in clause (b) of the immediately
preceding sentence) or benefits received under employee benefit or deferred
compensation plans or arrangements, income attributable to stock options and
similar items.
2.11 Common Stock shall mean shares of Class B common stock, $.01 par value
per share, of the Company or the common stock of any successor to the Company,
which is designated for the purposes of the Plan.
2.12 Contribution Rate shall be that rate of contribution of Compensation
to the Plan stated in the Agreement, subject to determination in accordance
with Article IV.
2.13 Designated Subsidiary shall mean any Subsidiary that has been
designated by the Board from time to time in its sole discretion as eligible
to participate in the Plan.
2.14 Effective Date shall mean the date on which the initial registered
public offering of Common Stock (or any class of the Company's stock into
which Common Stock may be converted upon any public offering) is declared
effective under the Securities Act.
2.15 Eligible Employee shall mean any individual who is employed on a full-
time or part-time basis by the Company or a Designated Subsidiary on an
Enrollment Date, except that the Committee in its sole discretion may exclude:
(i) employees whose customary employment is not more than 20 hours per
week;
(ii) employees whose customary employment is for not more than five
months in any calendar year; and
(iii) employees who are considered to be a highly compensated employee
of the Company or Designated Subsidiary within the meaning of Section
414(q) of the Code.
As of the Effective Date, and unless and until the Committee determines
otherwise, only those employees described in Section 2.15(i) and (ii) are
excluded from the class of Eligible Employees.
2.16 Enrollment Date shall mean the first day of each Offering Period.
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2.17 Exchange Act means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated by the Commission thereunder.
2.18 Exercise Date shall mean the last day of each Offering Period.
2.19 Fair Market Value of a share of Common Stock as of a given date shall
mean the closing sales price per share of the Common Stock (or the closing bid
price, if no such sales were reported) on the New York Stock Exchange, or such
other established stock exchange or national market system on which the Common
Stock is listed or traded, as reported in The Wall Street Journal (or, if not
so reported, in such other nationally recognized reporting source as the
Committee shall select) for the last Trading Day prior to such date. In the
event that the foregoing valuation method is not practicable, the Fair Market
Value of a share of Common Stock as of a given date shall be determined by such
other reasonable valuation method as the Committee shall, in its discretion,
select and apply in good faith as of such date, subject to Section 422(c)(7) of
the Code. The foregoing to the contrary notwithstanding, the Fair Market Value
of a share of Common Stock as of the Effective Date shall be the offering price
of the Common Stock in the initial public offering of capital stock of the
Company (or, if the class of shares of capital stock of the Company sold in
such initial public offering is not Common Stock, the price of the Common Stock
determined by the Board based on the price of such class of shares of the
Company sold in such initial public offering).
2.20 Non-Control Acquisition shall mean an acquisition by (1) an employee
benefit plan (or a trust forming a part thereof) maintained by (x) the Company
or (y) any corporation or other Person of which a majority of its voting power
or its voting equity securities or equity interest is owned, directly or
indirectly, by the Company (a "Related Entity"), (2) the Company or any Related
Entity, or (3) any Person in connection with a Non-Control Transaction.
2.21 Offering Period shall mean a period as determined by the Committee
during which a Participant's Option may be exercised and the accumulated value
of the Participant's Account may be applied to purchase Common Stock. Unless
otherwise specified by the Committee, the initial Offering Period will begin on
the Effective Date and end on the last Trading Day on or before December 31st
of the same calendar year. Thereafter, each successive Offering Period shall
consist of two six-month periods commencing on the first Trading Day on or
after January 1st and July 1st of each calendar year and ending on the last
Trading Day on or before June 30th and December 31st, respectively, of such
year. The duration of Offering Periods may be changed by the Committee or the
Board pursuant to Section 3.06 or 5.04.
2.22 Option shall mean the right to purchase the number of shares of Common
Stock specified in accordance with the Plan at a price and for a term fixed in
accordance with the Plan, and subject to such other limitations and
restrictions as may be imposed by the Plan or the Committee in accordance with
the Plan.
2.23 Option Price shall mean an amount equal to 85% of the Fair Market Value
of a share of Common Stock on the Enrollment Date or Exercise Date, whichever
is lower.
2.24 Participant shall mean an Eligible Employee who satisfies the
eligibility conditions of Article III, and to whom an Option has been granted
by the Committee under the Plan.
2.25 Person shall mean "person" as such term is used for purposes of Section
13(d) or 14(d) of the Exchange Act, including, without limitation, any
individual, corporation, limited liability company, partnership, trust,
unincorporated organization, government or any agency or political subdivision
thereof, or any other entity or any group of Persons.
2.26 Plan Year shall mean the period of twelve (12) or fewer consecutive
months commencing on the Effective Date and ending on December 31st of the same
calendar year, and the twelve (12) consecutive month period ending the last day
of each December of each calendar year thereafter. The Committee may at any
time designate another period as the Plan Year.
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2.27 Reserves shall mean the number of shares of Common Stock covered by
each Option under the Plan that have not yet been exercised and the number of
shares of Common Stock that have been authorized for issuance under the Plan
but not yet placed under an Option.
2.28 Securities Act shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated by the Commission thereunder.
2.29 Subsidiary shall mean any present or future corporation, domestic or
foreign, which is or would be a "subsidiary corporation," as defined under
Section 424(f) of the Code, of the Company.
2.30 Trading Day shall mean a day on which national stock exchanges are open
for trading.
2.31 Voting Securities shall mean all outstanding voting securities of the
Company entitled to vote generally in the election of the Board.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.01 Initial Eligibility
Any individual who is otherwise an Eligible Employee and who is employed
with the Company or a Designated Subsidiary on the Effective Date or becomes
employed with the Company or a Designated Subsidiary after the Effective Date
and is otherwise an Eligible Employee, may participate in the Plan immediately
beginning with the first Offering Period that occurs concurrent with or next
following either the Effective Date or that individual's initial date of such
employment.
3.02 Leave of Absence
For purposes of the Plan, an individual's employment relationship is still
considered to be continuing intact while such individual is on sick leave, or
other leave of absence approved by the Committee or the Company's Human
Resources Department; provided, however, that if the period of leave of absence
exceeds ninety (90) days and the individual's right to reemployment is not
guaranteed either by statute or by contract, the employment relationship shall
be deemed to have terminated on the ninety-first (91st) day of such leave.
3.03 Eligibility Restrictions
Notwithstanding any provisions of the Plan to the contrary, no employee of
the Company or a Designated Subsidiary shall be granted an Option under the
Plan:
(a) if, immediately after the Option is granted, applying the rules
under Section 424(d) of the Code to determine Common Stock ownership, such
employee would own, immediately after the Option is granted, five percent
(5%) or more of the total combined voting power or value of all classes of
stock of the Company or any Subsidiary; or
(b) which permits such employee's rights to purchase stock under the
Plan and any other employee stock purchase plans of the Company or any
Subsidiary to accrue at a rate that exceeds $25,000 (or such other amount
as may be adjusted from time to time under applicable provisions of the
Code or Regs) in Fair Market Value of Common Stock (determined at the time
such Option is granted) for each calendar year in which such Option is
outstanding.
3.04 Participation
(a) An Eligible Employee may commence participation by completing an
Agreement authorizing payroll deductions and filing it with the payroll office
of the Company prior to the applicable Enrollment Date. Such an Eligible
Employee is referred to as a Participant.
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(b) Any payroll deductions for a Participant shall commence on the first
payroll date following the Enrollment Date and shall end on the last payroll
date in the Offering Period to which such authorization is applicable, unless
sooner terminated by the Participant as provided in Article VI.
3.05 Option Grant
On the Enrollment Date of each Offering Period, each Participant
participating in the Offering Period shall be granted an Option to purchase on
the Exercise Date of such Offering Period (at the appropriate Option Price) up
to a number of shares of Common Stock as determined by dividing the particular
Participant's payroll deductions that have accumulated prior to such Exercise
Date and retained in such Participant's Account as of that Exercise Date by the
appropriate Option Price. Such purchase of shares of Common Stock shall be
subject to the limitations under Sections 3.03 and 3.09. Exercise of the Option
shall occur as provided in Section 3.07, unless the Participant has withdrawn
as provided in Article VI. The Option shall expire on the last day of the
Offering Period. The Committee may determine that there shall be no Options
granted under the Plan for any particular Plan Year.
3.06 Offering Period
The Plan shall be implemented by consecutive Offering Periods of Common
Stock. Each Agreement shall specify the Offering Period for which the Option is
granted, which shall be determined by the Committee in accordance with the
Plan. The Committee shall have the authority to change the duration of Offering
Periods, including the commencement dates thereof, with respect to future
offerings without approval of the Company's stockholders. Under such
circumstances, any change to the Offering Periods shall be announced at least
ten (10) days prior to the scheduled beginning of the initial Offering Period
to be affected. In no event, however, shall an Offering Period extend beyond
the period permitted under Section 423(b)(7) of the Code.
3.07 Exercise of Option
Unless a Participant provides written notice to the Company, or withdraws
from the Plan as provided in Article VI, his Option for the purchase of shares
shall be exercised automatically on the Exercise Date, and the maximum number
of full shares subject to the Option shall be purchased for such Participant at
the applicable Option Price, using the accumulated payroll deductions in his
Account, subject to the limitations under Sections 3.03 and 3.09. No fractional
shares shall be purchased. Any payroll deductions accumulated in an Account
that are not sufficient to purchase a full share of Common Stock shall be
retained in the Account for the subsequent Offering Period, subject to earlier
withdrawal by the Participant as provided in Article VI. Any other monies
remaining in a Participant's Account after the Exercise Date shall be returned
to the Participant or his Beneficiary in cash, without interest. During a
Participant's lifetime, such Participant's Option is exercisable only by such
Participant.
3.08 Delivery of Stock
(a) As promptly as practical after each Exercise Date on which a purchase of
Common Stock occurs, the Company shall arrange the delivery to each
Participant, or his Beneficiary, of a certificate representing the shares of
Common Stock purchased upon exercise of such Participant's Option, except that
the Committee may determine that such shares shall be held for each
Participant's benefit by a broker designated by the Committee unless the
Participant has delivered to the Committee a written election that certificates
representing such shares be issued to him. Shares of Common Stock issued upon
exercise of an Option and delivered to or for the benefit of a Participant or
Beneficiary will be registered in the name of such Participant or Beneficiary,
as the case may be.
(b) The Committee may require a Participant or his Beneficiary to give
prompt written notice to the Company concerning any disposition of shares of
Common Stock received upon the exercise of such Participant's Option within:
(i) two (2) years from the date of granting of such Option to such Participant,
(ii) one (1) year from the transfer of such shares of Common Stock to such
Participant, or (iii) such other period as the Committee may from time to time
determine.
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3.09 Maximum Number of Shares
In no event shall the number of shares of Common Stock that a Participant
may purchase during any one Offering Period exceed the number of shares
determined by (a) multiplying ten percent (10%) of the amount of the
Participant's Compensation for the payroll period immediately preceding the
date he is first granted an Option for such Offering Period by the number of
payroll periods from such date to the end of such Offering Period, and (b)
dividing that product by 85% of the Fair Market Value of a share of Common
Stock on such date.
3.10 Withholding
At the time an Option is exercised, or at the time some or all of the Common
Stock that is issued under the Plan is disposed of, the Company may withhold
from any Compensation or other amount payable to the applicable Participant, or
require such Participant to remit to the Company (or make other arrangements
satisfactory to the Company, as determined in the Committee's discretion,
regarding payment to the Company of), the amount necessary for the Company to
satisfy any Federal, state or local taxes required by law to be withheld with
respect to the shares of Common Stock subject to such Option or disposed of, as
a condition to delivery of any certificate or certificates for any such shares
of Common Stock. Whenever under the Plan payments are to be made in cash, such
payments shall be made net of an amount sufficient to satisfy any Federal,
state or local tax or withholding obligations with respect to such payments.
ARTICLE IV
PAYROLL DEDUCTIONS
4.01 Contribution Rate
(a) At the time a Participant files an Agreement with the Committee or the
Company's Human Resources Department authorizing payroll deduction, he may
elect to have payroll deductions made on each payday during the Offering
Period, and such Contribution Rate shall be a minimum of one percent (1%) and a
maximum of ten percent (10%) of the Participant's Compensation in effect on
each payroll period during the Offering Period, unless the Committee determines
otherwise in a manner applicable uniformly to all Participants. The payroll
deductions shall only be made in whole percentages of the Participant's
Compensation. Participants may not make any separate cash payments outside
payroll deductions under the Plan except as otherwise provided in Section
5.04(d) in the event of a Change in Control.
(b) A Participant may discontinue his participation in the Plan as provided
in Article VI, or may elect to decrease the rate of his payroll deductions
during the Offering Period by filing a new Agreement with the Committee or the
Company's Human Resources Department that authorizes a change in his
Contribution Rate. Such election by the Participant to decrease his
Contribution Rate shall only be permitted once during each Offering Period. The
Committee may, in its discretion, in a fair and equitable manner, limit the
number of Participants who change their Contribution Rate during any Offering
Period. Any such change in Contribution Rate accepted by the Committee shall be
effective with the first full payroll period following ten (10) business days
after the receipt by the Committee or the Company's Human Resources Department
of the new Agreement authorizing the new Contribution Rate, unless the
Committee or the Company's Human Resources Department elects to process a
change in the Contribution Rate more quickly. A Participant's authorization to
change his Contribution Rate shall remain in effect for successive Offering
Periods unless terminated as provided in Article VI.
(c) Notwithstanding the foregoing provisions of this Section 4.01, the
Committee may decrease a Participant's Contribution Rate, but not below zero
percent, at any time during an Offering Period to the extent necessary to
comply with Section 423(b)(8) of the Code or Section 3.03 of the Plan. To the
extent necessary in such case, payroll deductions shall recommence at the rate
provided in such Participant's Agreement at the
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beginning of the first Offering Period that is scheduled to begin in the
following Plan Year, unless the Participant withdraws from the Plan in
accordance with Article VI.
4.02 Participant Account
All payroll deductions made for a Participant shall be credited to his
Account under the Plan.
4.03 Interest
No interest shall accrue on the payroll deductions of a Participant under
the Plan, except as otherwise provided by Section 8.10. In addition, no
interest shall be paid on any and all money that is distributed to a
Participant, or his Beneficiary, pursuant to the provisions of Sections 6.01
and/or 6.03.
ARTICLE V
STOCK
5.01 Shares Provided
(a) The maximum number of shares of Common Stock that may be issued under
the Plan shall be 2,000,000 shares. This number is subject to an adjustment
upon any changes in capitalization of the Company as provided in Section 5.04.
(b) The Committee may determine, in its sole discretion, to include in the
number of shares of Common Stock available under the Plan any shares of Common
Stock that cease to be subject to an Option or are forfeited or any shares
subject to an Option that terminates without issuance of shares of Common
Stock actually being made to the Participant.
(c) If the number of shares of Common Stock that Participants become
entitled to purchase under the Plan is greater than the shares of Common Stock
offered in a particular Offering Period or remaining available under the Plan,
the available shares of Common Stock shall be allocated by the Committee among
such Participants in such manner as the Committee determines is fair and
equitable.
5.02 Participant Interest
The Participant shall have no interest as a shareholder, including, without
limitation, voting or dividend rights, with respect to shares of Common Stock
covered by his Option until such Option has been exercised in accordance with
the Plan and his Agreement.
5.03 Restriction of Shares Upon Exercise
The Committee may, in its discretion, require as conditions to the exercise
of any Option that the shares of Common Stock reserved for issuance upon the
exercise of the Option shall have been duly listed upon a stock exchange, and
that either:
(a) a registration statement under the Securities Act with respect to
the shares shall be effective, or
(b) the Participant shall have represented at the time of purchase, in
form and substance satisfactory to the Company, that it is his intention to
purchase the shares for investment and not for resale or distribution.
5.04 Changes in Capital
(a) Subject to any required action by the shareholders of the Company, upon
changes in the outstanding Common Stock by reason of a stock split, reverse
stock split, stock dividend, combination or exchange of shares, merger,
recapitalization, consolidation, corporate separation or division of the
Company (including, but not limited to, a split-up, spin-off, split-off or
distribution to Company stockholders other than a normal cash
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dividend), reorganization, reclassification, or increase or decrease in the
number of shares of capital stock of the Company effected without receipt of
full consideration therefor, or any other similar change affecting the
Company's capital structure, the Committee shall make appropriate adjustments,
in its discretion, to, or substitute, as applicable, the number, class and kind
of shares of stock available for Options under the Plan, outstanding Options
and the Reserves, the maximum number of shares that a Participant may purchase
per Offering Period, the Option Prices of outstanding Options and any other
characteristics or terms of the Options or the Plan as the Committee shall
determine are necessary or appropriate to reflect equitably the effects of such
changes to the Participants; provided, however, that any fractional shares
resulting from any such adjustment shall be eliminated by rounding to the next
lower whole number of shares with appropriate payment for such fractional
shares as shall be reasonably determined by the Committee. Notice of any such
adjustment shall be given by the Committee to each Participant whose Option has
been adjusted and such adjustment, whether or not such notice has been given,
shall be effective and binding for all purposes of the Plan.
(b) The existence of the Plan and any Options granted hereunder shall not
affect in any way the right or power of the Board or the shareholders of the
Company to make or authorize any adjustment, recapitalization, reorganization
or other change in the Company's capital structure or its business, any merger
or consolidation of the Company or a Subsidiary, any issue of debt, preferred
or prior preference stock ahead of or affecting Common Stock, the authorization
or issuance of additional shares of Common Stock, the dissolution or
liquidation of the Company or any Subsidiary, any sale or transfer of all or
part of the Company's or a Subsidiary's assets or business or any other
corporate act or proceeding.
(c) The Board may at any time terminate an Offering Period then in progress
and provide, in its discretion, that Participants' then outstanding Account
balances shall be used to purchase shares pursuant to Article III or returned
to the applicable Participants.
(d) In the event of a Change in Control, the Committee may, in its
discretion:
(i) permit each Participant to make a single sum payment with
respect to his outstanding Option before the Exercise Date equal to the
amount the Participant would have contributed as determined by the
Committee for the payroll periods remaining until the Exercise Date,
and provide for termination of the Offering Period then in progress and
purchase of shares pursuant to Article III; or
(ii) provide for payment in cash to each Participant of the amount
standing to his Account plus an amount equal to the highest value of
the consideration to be received in connection with such transaction
for one share of Common Stock, or, if higher, the highest Fair Market
Value of the Common Stock during the 30 consecutive Trading Days
immediately prior to the closing date or expiration date of such
transaction, less the Option Price of the Participant's Option
(determined for all purposes of this Section 5.04(d)(ii) using such
closing or termination date as the Exercise Date in applying Section
2.23), multiplied by the number of full shares of Common Stock that
could have been purchased for such Participant immediately prior to the
Change in Control with the amount standing to his Account at the Option
Price, and that all Options so paid shall terminate.
ARTICLE VI
WITHDRAWAL
6.01 General
By written notice to the Committee, at any time prior to the last day of any
particular Offering Period, a Participant may elect to withdraw all of the
accumulated payroll deductions in his Account at such time. All of the
accumulated payroll deductions credited to such withdrawing Participant's
Account shall be paid to such Participant promptly after receipt of his written
notice of withdrawal. In addition, upon the Participant's written notice of
withdrawal, the Participant's Option for the Offering Period shall be
automatically terminated, and no further payroll deductions for the purchase of
shares on behalf of such Participant shall be made for such
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Offering Period. If a Participant withdraws from an Offering Period, payroll
deductions shall not resume at the beginning of the succeeding Offering Period
unless the Participant delivers to the Committee a new Agreement authorizing
payroll deductions.
6.02 Effect on Subsequent Participation
A Participant's withdrawal from an Offering Period shall not have any effect
upon his eligibility to participate in any similar plan that may hereafter be
adopted by the Company or a Subsidiary or in succeeding Offering Periods that
commence after the termination of the Offering Period from which the
Participant withdraws.
6.03 Termination of Employment
Upon termination of employment as an Eligible Employee, for any reason, a
Participant shall be deemed to have elected to withdraw from the Plan and the
payroll deductions credited to such Participant's Account during the Offering
Period but not yet used to exercise the Option shall be returned to such
Participant, or, in the case of a Participant's death, the payroll deductions
credited to such deceased Participant's Account shall be paid to his
Beneficiary or Beneficiaries, and the Participant's Option shall be
automatically terminated. A transfer of a Participant's employment between or
among the Company and any Designated Subsidiary or Designated Subsidiaries
shall not be treated as a termination of employment for purposes of the Plan.
ARTICLE VII
ADMINISTRATION
7.01 Generally
The Plan shall be administered by a committee the members of which are
appointed by the Board. The Committee shall consist of no fewer than three (3)
members. Notwithstanding the foregoing, the Board, in its absolute discretion,
may at any time and from time to time exercise any and all rights, duties and
responsibilities of the Committee under the Plan, including, but not limited
to, establishing procedures to be followed by the Committee, except with
respect to any matters which under any applicable law, regulation or rule are
required to be determined in the sole discretion of the Committee. If and to
the extent that no Committee exists which has the authority to administer the
Plan, the functions of the Committee shall be exercised by the Board. In
addition, the Board shall have discretionary authority to designate, from time
to time, without approval of the Company's stockholders, those Subsidiaries
that shall be Designated Subsidiaries, the employees of which are eligible to
participate in the Plan.
7.02 Authority of the Committee
The Committee shall have all authority that may be necessary or helpful to
enable it to discharge its responsibilities with respect to the Plan. Without
limiting the generality of the foregoing sentence or Section 7.01, subject to
the express provisions of the Plan, the Committee shall have full and exclusive
discretionary authority to interpret and construe any and all provisions of the
Plan and any Agreements, determine eligibility to participate in the Plan,
adopt rules and regulations for administering the Plan, adjudicate and
determine all disputes arising under or in connection with the Plan, determine
whether a particular item is included in "Compensation," and make all other
determinations deemed necessary or advisable for administering the Plan.
Decisions, actions and determinations by the Committee with respect to the Plan
or any Agreement shall be final, conclusive and binding on all parties. Except
to the extent prohibited by applicable law or the rules of a stock exchange,
the Committee may, in its discretion, from time to time, delegate all or any
part of its responsibilities and powers under the Plan to any member or members
of the management of the Company, and revoke any such delegation.
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7.03 Appointment
The Board may from time to time appoint members to the Committee in
substitution for or in addition to members previously appointed and may fill
vacancies, however caused, on the Committee. The Committee may select one
member as its Chair and shall hold its meetings at such times and places as it
shall deem advisable. It may also hold telephonic meetings. A majority of its
members shall constitute a quorum. All determinations of the Committee shall be
made by a majority of its members. The Committee may correct any defect or
omission or reconcile any inconsistency in the Plan or any Agreement in the
manner and to the extent the Committee determines to be desirable. Any decision
or determination reduced to writing and signed by a majority of the members of
the Committee shall be as fully effective as if it had been made by a majority
vote at a meeting duly called and held. The Committee may appoint a secretary
and shall make such rules and regulations for the conduct of its business as it
shall deem advisable.
ARTICLE VIII
MISCELLANEOUS
8.01 Designation of Beneficiary
(a) A Participant may file with the Committee a written designation of a
Beneficiary who is to receive any Common Stock and/or cash from the
Participant's Account in the event of such Participant's death subsequent to an
Exercise Date on which the Option is exercised but prior to delivery to such
Participant of such Common Stock and cash. Unless a Participant's written
Beneficiary designation states otherwise, the designated Beneficiary shall also
be entitled to receive any cash from the Participant's Account in the event of
such Participant's death prior to exercise of his Option.
(b) A Participant's designation of Beneficiary may be changed by the
Participant at any time by written notice to the Committee. In the event of the
death of a Participant and in the absence of a valid Beneficiary designation
under the Plan naming an individual who is living at the time of such
Participant's death, the Company shall deliver the shares and/or cash to which
the deceased Participant was entitled under the Plan to the executor or
administrator of the estate of such Participant. If no such executor or
administrator has been appointed as can be determined by the Committee, the
Company shall deliver such shares and/or cash to the spouse or to any one or
more dependents or relatives of the Participant, or if no spouse, dependent or
relative is known to the Company, then to such other person as the Committee
may designate. Any such delivery or payment shall be a complete discharge of
the obligations and liabilities of the Company, the Subsidiaries, the Committee
and the Board under the Plan.
8.02 Transferability
Neither payroll deductions credited to the Participant's Account nor any
rights with regard to the exercise of an Option or to receive Common Stock
under the Plan may be assigned, transferred, pledged, or otherwise disposed of
in any way other than by will, the laws of descent and distribution, or as
provided under Section 8.01. Any such attempt at assignment, transfer, pledge
or other disposition shall be without effect, except that the Company may treat
such act as an election to withdraw funds from an Offering Period in accordance
with Article VI.
8.03 Conditions Upon Issuance of Shares
(a) If at any time the Committee shall determine, in its discretion, that
the listing, registration and/or qualification of shares of Common Stock upon
any securities exchange or under any state or Federal law, or the consent or
approval of any governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the sale or purchase of shares of Common
Stock hereunder, no Option may be exercised or
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paid in whole or in part unless and until such listing, registration,
qualification, consent and/or approval shall have been effected or obtained, or
otherwise provided for, free of any conditions not acceptable to the Committee.
(b) If at any time counsel to the Company shall be of the opinion that any
sale or delivery of shares of Common Stock pursuant to an Option is or may be
in the circumstances unlawful, contravene the requirements of any stock
exchange, or result in the imposition of excise taxes on the Company or any
Subsidiary under the statutes, rules or regulations of any applicable
jurisdiction, the Company shall have no obligation to make such sale or
delivery, or to make any application or to effect or to maintain any
qualification or registration under the Securities Act, or otherwise with
respect to shares of Common Stock or Options and the right to exercise any
Option shall be suspended until, in the opinion of such counsel, such sale or
delivery shall be lawful or will not result in the imposition of excise taxes
on the Company or any Subsidiary.
(c) The Committee, in its absolute discretion, may impose such restrictions
on the ownership and transferability of the shares of Common Stock purchasable
or otherwise receivable by any person under any Option as it deems appropriate.
The certificates evidencing such shares may include any legend that the
Committee deems appropriate to reflect any such restrictions.
8.04 Participants Bound by Plan
By accepting any benefit under the Plan, each Participant and each person
claiming under or through such Participant shall be conclusively deemed to have
indicated their acceptance and ratification of, and consent to, all of the
terms and conditions of the Plan and any action taken under the Plan by the
Committee, the Company or the Board, in any case in accordance with the terms
and conditions of the Plan.
8.05 Use of Funds
All payroll deductions received or held by the Company under the Plan may be
used by the Company for any corporate purpose, and the Company shall not be
obligated to segregate such payroll deductions.
8.06 Amendment or Termination
The Board may terminate, discontinue, amend or suspend the Plan at any time,
with or without notice to Participants. No such termination or amendment of the
Plan may adversely affect the existing rights of any Participant with respect
to any outstanding Option previously granted to such Participant, without the
consent of such Participant, except for any amendment or termination permitted
by Section 5.04. In addition, no amendment of the Plan by the Board shall,
without the approval of the shareholders of the Company, (i) increase the
maximum number of shares that may be issued under the Plan or that any
Participant may purchase under the Plan in any Offering Period, except pursuant
to Section 5.04; (ii) change the class of employees eligible to receive Options
under the Plan, except as provided by the Board pursuant to the last sentence
of Section 7.01; (iii) change the formula by which the Option Price is
determined under the Plan; or (iv) permit members of the Board or members of
the Committee who are also employees of the Company or a Designated Subsidiary
to participate in the Plan.
8.07 No Employment Rights
The Plan does not, either directly or indirectly, create an independent
right for the benefit of any employee or class of employees to purchase any
shares of Common Stock under the Plan. In addition, the Plan does not create in
any employee or class of employees any right with respect to continuation of
employment by the Company or any Subsidiary, and the Plan shall not be deemed
to interfere in any way with the Company's or any Subsidiary's employment at
will relationship with the employee and/or interfere in any way with the
Company's or any Subsidiary's right to terminate, or otherwise modify, an
employee's employment at any time or for any or no reason.
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8.08 Indemnification
No current or previous member of the Board, or the Committee, nor any
officer or employee of the Company acting on behalf of the Board, or the
Committee, shall be personally liable for any action, determination, or
interpretation taken or made in good faith with respect to the Plan. All such
members of the Board or the Committee and each and every officer or employee of
the Company acting on their behalf shall, to the extent permitted by law, be
fully indemnified and protected by the Company in respect of any such action,
determination or interpretation of the Plan. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification
to which such individuals may be entitled under the Company's Certificate of
Incorporation, or Bylaws, as a matter of law or otherwise.
8.09 Construction of Plan
Whenever the context so requires, the masculine shall include the feminine
and neuter, and the singular shall also include the plural, and conversely. The
words "Article" and "Section" herein shall refer to provisions of the Plan,
unless expressly indicated otherwise.
8.10 Term of Plan
The Plan shall become effective on the Effective Date, being the effective
date of the Board's adoption of the Plan, subject to the approval by the
shareholders of the Company who are present and represented at a special or
annual meeting of the shareholders where a quorum is present that is held not
earlier than one (1) year before the Effective Date and not later than the end
of the first Offering Period. If the Plan is not so approved by the
shareholders, the Plan shall not become effective, the Plan shall terminate
immediately and all funds held in the Participants' Accounts shall be returned
to such Participants in cash, with interest at five percent (5%) per annum from
the date of transfer of such funds to such Accounts to the date of refund,
subject to Section 3.10.
8.11 Unfunded Status of Plan
The Plan shall be an unfunded plan. The Committee may authorize the creation
of trusts or other arrangements to meet the obligations created under the Plan
to deliver Common Stock or make payments, provided that the existence of such
trusts or other arrangements is consistent with the unfunded status of the
Plan.
8.12 Governing Law
The law of the State of California will govern all matters relating to the
Plan except to the extent such law is superseded by the laws of the United
States.
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PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Infonet Services Corporation, a Delaware
Corporation, hereby appoints Jose A. Collazo and Ernest U. Gambaro, and each or
either of them as proxies, with full power of substitution or resubstitution,
to represent the undersigned and to vote all shares of common stock of Infonet
Services Corporation which the undersigned is entitled to vote at the Annual
Meeting of Infonet Services Corporation to be held on September 11, 2000 and
any and all adjournments thereof in the manner specified.
IT IS IMPORTANT THAT THE PROXIES BE RETURNED PROMPTLY AND THAT YOUR SHARES
BE REPRESENTED. STOCKHOLDERS ARE URGED TO IMMEDIATELY MARK, DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED.
(Continued and to be dated and signed on the reverse side.)
Infonet Services
Corporation
DETACH PROXY CARD HERE
--------------------------------------------------------------------------------
PLEASE DETACH HERE
YOU MUST DETACH THIS PORTION OF THE PROXY CARD
BEFORE RETURNING IT IN THE ENCLOSED ENVELOPE
<PAGE>
Proposal 1. Election of Directors:
The Board of Directors recommends a vote FOR Election of Directors,
* FOR the nominees listed WITHHOLD AUTHORITY to vote ABSTAIN [_]
below. [_] for the nominees listed
below. [_]
COMMON SHARE NOMINEES, Jose A. Collazo, Douglas C. Campbell, Eric M. de
Jong, Morgan Ekberg, Heinz Karrer, Masao Kojima and Rafael Sagrario
CLASS B COMMON SHARE NOMINEES, Timothy P. Hartman and Matthew S. O'Rourke
* (INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEES,
STRIKE A LINE THROUGH THAT NOMINEE'S NAME ABOVE.)
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED, WILL BE
VOTED "FOR" THE NOMINEES LISTED ABOVE, PROPOSAL 2, PROPOSAL 3 AND PROPOSAL 4.
Should any other matters requiring the vote of the Stockholders arise, the
named proxies are authorized to vote the same in accordance with their best
judgement in the interest of Infonet. The Board of Directors is not aware of
any other matter which is to be presented for action at the meeting other than
the matters set forth herein.
Proposal 2: Adoption of The Proposal 3: Adoption of the
Infonet Services Corporation Infonet Services Corporation 2000
2000 Omnibus Stock Plan. The Employee Stock Purchase Plan. The
Board of Directors recommends a Board of Directors recommends a
vote FOR adoption of the Infonet vote FOR adoption of the Infonet
Services Corporation 2000 Services Corporation 2000 Employee
Omnibus Stock Plan. Stock Purchase Plan.
FOR [_] AGAINST [_] ABSTAIN [_] FOR [_] AGAINST [_] ABSTAIN [_]
--------------------------------------------------------------------------------
Proposal 4: Ratification of
Independent Auditor. The Board
of Directors recommends that you
vote FOR the ratification of the
independent auditor.
FOR [_] AGAINST [_] ABSTAIN [_]
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
CHANGE OF ADDRESS AND OR
COMMENTS MARK HERE [_]
Please sign exactly as
your name appears hereon.
When signing as attorney,
executor, administrator,
trustee, or other
representative please give
full title. If more than
one trustee, all should
sign. All joint owners
should sign. If a
corporation, please sign
in full corporate name by
President or other
authorized officer.
Date: _______________, 2000
___________________________
(Signature)
___________________________
(Signature if held
jointly)
VOTES MUST BE INDICATED
(x) IN BLACK OR BLUE INK.
(PLEASE SIGN, DATE AND RETURN THIS PROXY IN THE ENCLOSED POSTAGE
PREPAID ENVELOPE.)
