<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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 (S) 240.14a-11(c) or (S) 240.14a-12
Worldport Communications, Inc.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(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.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
WORLDPORT COMMUNICATIONS, INC.
975 Weiland Road Buffalo Grove, Illinois 60089
June 23, 2000
Notice of Annual Stockholders Meeting:
You are hereby notified that the 2000 Annual Meeting of Stockholders (the
"Meeting") of WorldPort Communications, Inc. (the "Company") will be held at
the Marriott's Lincolnshire Resort located at Ten Marriott Drive,
Lincolnshire, Illinois at 10:00 a.m. local time, on July 21, 2000, for the
following purposes:
1. To elect four directors to hold office until the 2001 Annual Meeting;
2. To approve the Company's 2000 Long-Term Stock Incentive Plan;
3. To approve an increase in the number of authorized shares of the
Company's Common Stock from 65,000,000 to 200,000,000 and to amend the
Company's Certificate of Incorporation accordingly;
4. To ratify the selection of Arthur Andersen LLP as the Company's
independent accountants for the year ending December 31, 2000; and
5. To transact such other business as may properly come before the
Meeting or any adjournment thereof.
Each of these proposals is described in greater detail in the enclosed
Proxy Statement. The Board of Directors has fixed the close of business on May
30, 2000 as the record date for the determination of stockholders entitled to
notice of and to vote at the Meeting.
You are invited to attend the Meeting in person. Whether or not you expect
to be present in person at the Meeting, please vote, sign and date the
enclosed proxy and return it in the envelope provided.
By Order of the Board of Directors
Michael E. Heisley, Sr.
Chief Executive Officer
<PAGE>
WORLDPORT COMMUNICATIONS, INC.
975 Weiland Road
Buffalo Grove, Illinois 60089
2000 ANNUAL MEETING OF STOCKHOLDERS
July 21, 2000
----------------
PROXY STATEMENT
----------------
This Proxy Statement and the accompanying proxy are furnished to
stockholders of WorldPort Communications, Inc. (the "Company") in connection
with the solicitation of proxies by the Company's Board of Directors for use
at the 2000 Annual Meeting of Stockholders (the "Meeting") to be held at the
Marriott's Lincolnshire Resort located at Ten Marriott Drive, Lincolnshire,
Illinois at 10:00 a.m. local time, on July 21, 2000, for the purposes set
forth in the accompanying Notice of Meeting. This Proxy Statement, the form of
proxy included herewith, and the Company's 1999 Annual Report to Stockholders
are first being mailed to stockholders on or about June 27, 2000.
Stockholders of record at the close of business on May 30, 2000 (the
"Record Date") are entitled to notice of and to vote at the Meeting. On such
date there were outstanding:
. 30,696,095 shares of the Company's Common Stock, par value $0.0001 per
share (the "Common Stock");
. 965,642 shares of the Company's Series B Convertible Preferred Stock, par
value $0.0001 per share (the "Series B Preferred Stock");
. 1,416,030 shares of the Company's Series C Convertible Preferred Stock,
par value $0.0001 per share (the "Series C Preferred Stock");
. 316,921 shares of the Company's Series D Convertible Preferred Stock, par
value $0.0001 per share (the "Series D Preferred Stock"); and
. 141,603 shares of the Company's Series E Convertible Preferred Stock, par
value $0.0001 per share (the "Series E Preferred Stock").
The presence, in person or by proxy, of the holders of securities
outstanding and entitled to cast a majority of the votes at the Meeting is
necessary to constitute a quorum. In deciding all questions, each holder of
Common Stock shall be entitled to one vote, in person or by proxy, for each
share held on the Record Date. All holders of Series B Preferred Stock vote as
a single class with the Common Stock with each share of Series B Preferred
Stock entitled to 40 votes. All holders of Series C Preferred Stock vote as a
single class with the Common Stock with each share of Series C Preferred Stock
entitled to 40 votes. All holders of Series D Preferred Stock vote as a single
class with the Common Stock with each share of Series D Preferred Stock
entitled to one vote. All holders of Series E Preferred Stock vote as a single
class with the Common Stock with each share of Series E Preferred Stock
entitled to 10.865 votes.
The information contained in this Proxy Statement relating to the
occupations and security holdings of directors, director nominees, and
officers of the Company and their transactions with the Company is based upon
information received from each individual as of May 30, 2000.
<PAGE>
VOTING RIGHTS AND SOLICITATION OF PROXIES
All expenses incurred in the solicitation of proxies will be borne by the
Company. In addition to the use of the mails, proxies may be solicited on
behalf of the Company by directors, officers and employees of the Company.
Following the original mailing of the proxies and other soliciting materials,
employees of the Company will request brokers, custodians, nominees and other
record holders to forward copies of the proxy and other soliciting materials
to persons for whom they hold shares of Common Stock and to request authority
for the exercise of proxies. In such cases, the Company, upon the request of
the record holders, will reimburse such holders for their reasonable expenses.
Votes cast by proxy or in person at the Meeting will be tabulated by the
election inspector appointed for the Meeting who will determine whether or not
a quorum is present. The election inspector will treat abstentions and broker
non-votes (i.e. where the broker does not have discretionary authority to vote
the shares) as shares that are present and entitled to vote for purposes of
determining the presence of a quorum. For purposes of determining the approval
of any matter submitted to the stockholders for a vote, abstentions shall be
treated as votes against the proposal and broker non-votes shall be treated as
votes against the increase in the number of authorized shares of Common Stock
and shall otherwise have no effect. If a broker indicates on the proxy that it
does not have discretionary authority as to certain shares to vote on a
particular matter, those shares will not be considered as present and entitled
to vote with respect to that matter.
A properly executed proxy will be voted in the manner directed by the
stockholder submitting the proxy. If no direction is made, such proxy will be
voted FOR the election of all four director nominees named under the caption
"Election of Directors", FOR the approval of the 2000 Long-Term Stock
Incentive Plan, FOR the approval of the amendment to the Company's Certificate
of Incorporation to increase the number of authorized shares of Common Stock
from 65,000,000 to 200,000,000 shares, and FOR the ratification of the
selection of Arthur Andersen LLP as independent accountants for the year
ending December 31, 2000. A proxy may be revoked by the stockholder at any
time prior to the voting thereof by notice in writing to the Chief Executive
Officer of the Company. A proxy will also be revoked if the stockholder
attends the meeting in person and votes. A later dated proxy will revoke a
prior dated proxy.
The Company has received irrevocable proxies from certain of the Company's
stockholders that by their terms enable it to vote such stockholders' shares
of Series B Preferred Stock in favor of the following proposals:
. to approve the Company's 2000 Long-Term Stock Incentive Plan; and
. to increase the number of authorized shares of Common Stock from
65,000,000 to 200,000,000 shares and to amend the Company's Certificate
of Incorporation accordingly.
Such shares, together with the shares controlled by the Company's officers
and directors, represent approximately 95 million votes, or approximately 74%
of the total outstanding voting power of the Company, which is sufficient to
approve the Company's Long-Term Stock Incentive Plan, and assuming the
affirmative vote of the holders of a majority of the outstanding Common Stock
voting separately as a class, is sufficient to approve the increase in the
number of authorized shares of Common Stock and to amend the Certificate of
Incorporation accordingly. Without these proxies, the shares controlled by the
Company's officers and directors represent approximately 59 million votes, or
approximately 46% of the total outstanding voting power of the Company. The
stockholders who granted such proxies have sent a letter to the Company
purporting to revoke these irrevocable proxies. While the Company does not
believe that such stockholders have the right to revoke these proxies, the
Company does not currently intend to vote such proxies (but reserves the right
to do so if it so chooses).
As of the date of this Proxy Statement, the Board of Directors knows of no
other business that will be presented for consideration at the Meeting. If
other proper matters are presented to the Meeting, however, it is the
intention of the proxy holders named in the enclosed form of proxy to take
such actions as shall be in accordance with their best judgment.
2
<PAGE>
HOLDINGS OF STOCKHOLDERS, DIRECTORS AND EXECUTIVE OFFICERS
Common Stock
The following table sets forth certain information as of May 30, 2000
(except as otherwise indicated) regarding the beneficial ownership of the
Common Stock by (i) all individuals known to beneficially own 5% or more of
the outstanding Common Stock, (ii) each of the Named Executive Officers (as
defined below under Executive Compensation), directors and nominees for
director and (iii) all of the Company's executive officers and directors as a
group, in each case to the best of the Company's knowledge. Except as
otherwise indicated, the Company believes that the beneficial owners of such
securities listed below have sole investment and voting power with respect to
such shares. Unless otherwise indicated, the address of the officers listed in
the table below is that of the Company's principal offices located at 975
Weiland Road, Buffalo Grove, Illinois 60089.
<TABLE>
<CAPTION>
Number of
Shares
Beneficially Percent
Name of Beneficial Owner Owned (1) of Class (2)
------------------------ ------------ ------------
<S> <C> <C>
The Heico Companies, LLC(3)..................... 21,414,924 41.4%
Michael E. Heisley, Sr.(4)...................... 21,414,924 41.4%
+Paul A. Moore(5)............................... 5,290,276 15.1%
Anderlit, Ltd.(6)............................... 2,985,076 9.1%
+Phillip S. Magiera(7).......................... 1,678,246 5.2%
J O Hambro Capital Management Limited(8)........ 1,550,000 4.8%
+Daniel Lazarek(9).............................. 305,000 *
David Hickey(10)................................ 225,625 *
Peter A. Howley(11)............................. 164,628 *
+Carl J. Grivner(12)............................ 103,122 *
+Stephen Courter(13)............................ 80,000 *
Stanley H. Meadows.............................. 64,584 *
John T. Hanson(14).............................. 90,625 *
+Donald C. Hilbert, Jr.(15)..................... 13,333 *
Andrew Sage..................................... -- --
Kathleen A. Cote(16)............................ -- --
Executive officers and directors as a group
(seven people) (17)(18)........................ 22,001,011 42.1%
</TABLE>
--------
*Less than 1%.
+No longer in the employment of the Company.
(1) With respect to any particular individual or group, the number of shares
of Common Stock beneficially owned by such individual or group includes
the number of shares of Common Stock issuable upon the conversion of
convertible securities or the exercise of options owned by such
individual or group, in each case if such securities are convertible or
exercisable within 60 days of May 30, 2000.
(2) Based on 30,696,095 shares of Common Stock outstanding as of May 30,
2000.
(3) Includes (i) 15,385,165 shares of Common Stock issuable upon conversion
of 1,416,030 shares of Series C Preferred Stock, (ii) 1,538,517 shares of
Common Stock issuable upon conversion of 141,603 shares of Series E
Preferred Stock, (iii) 3,750,001 shares of Common Stock issuable upon
conversion of 424,809 shares of Series F Preferred Stock issuable upon
exercise of an option and (iv) 416,240 shares of Common Stock issuable
upon exercise of a warrant. The address of this stockholder is 5600 Three
First National Plaza, Chicago, Illinois 60602.
(4) Represents all shares beneficially owned by The Heico Companies, LLC
("Heico"), an entity which Mr. Heisley controls. Mr. Heisley's address is
c/o Heico, 5600 Three First National Plaza, Chicago, Illinois 60602.
3
<PAGE>
(5) Includes (i) 1,000,000 shares of Common Stock owned by Anderlit, Ltd.
("Anderlit"), and 1,985,076 shares of Common Stock issuable upon
conversion of 496,269 shares of Series B Preferred Stock owned by
Anderlit, (ii) 312,000 shares of Common Stock and all other shares owned
by Maroon Bells Capital Partners, Inc. ("MBCP") over which Mr. Moore
shares voting and investment powers (which consists of 84,540 shares of
Common Stock issuable upon conversion of 21,135 shares of Series B
Preferred Stock and 316,921 shares of Common Stock issuable upon
conversion of 316,921 shares of Series D Preferred Stock), (iii) 19,072
shares of Common Stock issuable upon conversion of 4,768 shares of Series
B Preferred Stock owned by Moore Investments, (iv) 500,000 shares of
Common Stock issuable upon conversion of 125,000 shares of Series B
Preferred Stock owned by Mr. Moore and (v) 580,000 shares of Common Stock
which may be acquired pursuant to options held by Mr. Moore. Mr. Moore
holds an irrevocable proxy to vote all shares owned by Anderlit. Mr. Moore
is a principal of MBCP and the controlling stockholder of Moore
Investments. Does not take into account irrevocable proxies granted to the
Company by Anderlit, MBCP and Mr. Moore with respect to shares of Series B
Preferred Stock. See "Voting Rights and Solicitation of Proxies". Mr.
Moore resigned as Chief Executive Officer and director of the Company in
July 1999. The stockholder's address is c/o Anderlit, Palm Chambers No. 3,
P.O. Box 3152, Road Town, Tortola, British Virgin Islands.
(6) Includes 1,985,076 shares of Common Stock issuable upon conversion of
496,269 shares of Series B Preferred Stock. Does not take into account
irrevocable proxies granted to the Company by Anderlit, MBCP and Mr. Moore
with respect to shares of Series B Preferred Stock. See "Voting Rights and
Solicitation of Proxies". The stockholder's address is Palm Chambers No.
3, P.O. Box 3152, Road Town, Tortola, British Virgin Islands.
(7) Includes (i) 500,000 shares of Common Stock issuable upon conversion of
125,000 shares of Series B Preferred Stock, (ii) 405,000 shares of Common
Stock which may be acquired pursuant to options and (iii) 425,000 shares
of Common Stock owned by Mr. Magiera's children. Does not take into
account irrevocable proxies granted to the Company by Anderlit, MBCP and
Mr. Moore with respect to shares of Series B Preferred Stock. See "Voting
Rights and Solicitation of Proxies." The stockholder's address is 1
Colonial Road, Dover, Massachusettes 02030.
(8) Pursuant to a Schedule 13G filed on May 26, 2000 by (i) J O Hambro Capital
Management (Holdings) Limited ("Holdings"), (ii) J O Hambro Capital
Management Limited ("J O Hambro Capital Management"), (iii) Christopher
Harwood Bernard Mills, (iv) American Opportunity Trust plc ("American
Opportunity Trust"), (v) Oryx International Growth Fund Limited ("Oryx"),
(vi) Consulta (Channel Islands) Limited ("Consulta") and (vii) The Trident
North Atlantic Fund ("Trident North Atlantic"), as of May 1, 2000, such
persons/entities beneficially owned the following shares of Common Stock
pursuant to shared investment and voting power: 1,550,000 shares (5.4%),
1,550,000 shares (5.4%), 1,500,000 shares (5.4%), 500,000 shares (1.7%),
350,000 shares (1.2%), 350,000 shares (1.2%) and 200,000 shares (0.7%),
respectively. The address of Holdings, J O Hambro Capital Management,
Christopher Harwood Bernard Mills and American Opportunity Trust is 10
Park Place, London SW1A 1LP England. The address of Oryx and Consulta is
Bermuda House, St. Julian's Avenue, St. Peter Port, Guernsey. The address
of Trident North Atlantic is P.O. Box 309 Ugland House, George Town, Grand
Cayman, Cayman Islands. Holdings is the ultimate holding company for J O
Hambro Capital Management. J O Hambro Capital Management serves as co-
investment advisor to American Opportunity Trust (a publicly-held
investment trust company) and as investment advisor to Oryx (a closed-end
investment company) and investment advisor to Trident North Atlantic Fund
(a publicly-held regulated Mutual Fund). Christopher Harwood Bernard Mills
is a director of J O Hambro Capital Management, Oryx and Trident North
Atlantic Fund, and is co-investment advisor to American Opportunity Trust.
Consulta serves as investment manager to Oryx.
(9) Includes 275,000 shares of Common Stock issuable upon the exercise of
options.
(10) Includes 215,625 shares of Common Stock issuable upon the exercise of
options.
(11) Represents 90,000 shares of Common Stock issuable upon the exercise of
options and 74,628 shares of Common Stock issuable upon conversion of
18,657 shares of Series B Preferred Stock.
4
<PAGE>
(12) Represents shares of Common Stock issuable upon the exercise of options.
(13) Includes 50,000 shares of Common Stock issuable upon the exercise of
options.
(14) Represents shares of Common Stock issuable upon the exercise of options.
(15) Represents shares of Common Stock issuable upon the exercise of options.
(16) Ms. Cote is a director nominee.
(17) Includes (i) 21,489,552 shares of Common Stock issuable upon the
conversion of convertible securities and (ii) 853,115 shares of Common
Stock issuable upon the exercise of options or warrants.
(18) Does not include Messrs. Moore, Grivner, Magiera, Lazarek, Courter, or
Hilbert, each of whom were no longer in the employment of the Company as
of May 30, 2000.
Preferred Stock
Series B Preferred Stock
The Series B Preferred Stock votes as a single class with the Common Stock,
with each share entitled to 40 votes. The Series B Preferred Stock is
convertible on a 1:4 basis into Common Stock and is subject to mandatory
conversion upon the date on which 70% of the Series B Preferred Stock has been
converted. The conversion price of the Series B Preferred Stock is $1.34, as
adjusted from time to time.
Series C Preferred Stock
The Series C Preferred Stock votes as a single class with the Common Stock,
with each share entitled to 40 votes. The Series C Preferred Stock is
convertible on a 1:10.865 basis into Common Stock and is subject to mandatory
conversion upon the date on which 70% of the Series C Preferred Stock has been
converted. The conversion price of the Series C Preferred Stock is $3.25, as
adjusted from time to time.
Series D Preferred Stock
The Series D Preferred Stock votes as a single class with the Common Stock,
with each share entitled to one vote. The Series D Preferred Stock is
convertible on a 1:1 basis into Common Stock and is subject to mandatory
conversion upon the date on which 221,845 shares of the Series D Preferred
Stock have been converted. The conversion price of the Series D Preferred Stock
is $3.25 per share, as adjusted from time to time.
Series E Preferred Stock
The Series E Preferred Stock votes as a single class with the Common Stock,
with each share entitled to 10.865 votes. The Series E Preferred Stock is
convertible on a 1:10.865 basis into Common Stock and is subject to mandatory
conversion upon the date on which 70% of the Series E Preferred Stock has been
converted. The conversion price of the Series E Preferred Stock is $3.25, as
adjusted from time to time.
Series F Preferred Stock
The Series F Preferred Stock votes as a single class with the Common Stock,
with each share entitled to 8.8275 votes. The Series F Preferred Stock is
convertible on a 1:8.8275 basis into Common Stock and is subject to mandatory
conversion upon the date on which 70% of the Series F Preferred Stock has been
converted. The conversion price of the Series F Preferred Stock is $4.00, as
adjusted from time to time. Heico holds an option to acquire 424,809 shares of
Series F Preferred Stock for an aggregate amount of $15,000,000. As of May 30,
2000, no shares of Series F Preferred Stock were outstanding.
5
<PAGE>
Series B, C, D, E and F Preferred Stock
The following table sets forth certain information as of May 30, 2000
(except as otherwise indicated) regarding the beneficial ownership of Series
B, C, D, E and F Preferred Stock by (i) all individuals known to beneficially
own 5% or more of the outstanding shares of such class of security, (ii) each
of the Named Executive Officers (as defined below under Executive
Compensation), directors and nominees for director and (iii) all of the
Company's executive officers and directors as a group, in each case to the
best of the Company's knowledge. Except as otherwise indicated, the Company
believes that the beneficial owners of such securities listed below have sole
investment and voting power with respect to such shares. Unless otherwise
indicated, the address of the officers listed in the tables below is that of
the Company's principal offices located at 975 Weiland Road, Buffalo Grove,
Illinois 60089.
<TABLE>
<CAPTION>
Number and Number and Number and Number and Number and
Percentage Percentage Percentage Percentage Percentage
of Series B of Series C of Series D of Series E of Series F
Beneficially Beneficially Beneficially Beneficially Beneficially
Name of Beneficial Owner Owned (1) Owned (2) Owned (3) Owned (4) Owned (5)
------------------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
+Carl J. Grivner........ -- -- -- -- --
-- -- -- -- --
+Paul A. Moore (6)...... 647,172 -- 316,921 -- --
(67.0%) -- (100%) -- --
Anderlit, Ltd (7)....... 496,269 -- -- -- --
(51.4%) -- -- -- --
Maroon Bells Capital -- -- 316,921 -- --
Partners, Inc. (8)..... -- -- (100%) -- --
Theodore Swindells (9).. 131,790 -- 316,921 -- --
(13.7%) -- (100%) -- --
+Phillip S. Magiera
(10)................... 125,000 -- -- -- --
(12.9%) -- -- -- --
Peter A. Howley......... 18,657 -- -- -- --
(1.9%) -- -- -- --
The Heico Companies,
LLC.................... -- 1,416,030 -- 141,603 424,809
-- (100%) -- (100%) (100%)
Michael E. Heisley, Sr.
(11)................... -- 1,416,030 -- 141,603 424,809
-- (100%) -- (100%) (100%)
Stanley H. Meadows...... -- -- -- -- --
-- -- -- -- --
Andrew G. C. Sage, II... -- -- -- -- --
-- -- -- -- --
Kathleen A. Cote........ -- -- -- -- --
-- -- -- -- --
John T. Hanson.......... -- -- -- -- --
-- -- -- -- --
David Hickey............ -- -- -- -- --
-- -- -- -- --
+Stephen Courter........ -- -- -- -- --
-- -- -- -- --
+Donald C. Hilbert...... -- -- -- -- --
-- -- -- -- --
+Daniel Lazarek......... -- -- -- -- --
-- -- -- -- --
Executive officers and
directors as
a group (seven 18,657 1,416,030 -- 141,603 424,809
people)(12)............ (1.9%) (100%) -- (100%) (100%)
</TABLE>
6
<PAGE>
--------
+No longer in the employment of the Company.
(1) Based on 965,642 shares of Series B Preferred Stock outstanding as of May
30, 2000.
(2) Based on 1,416,030 shares of Series C Preferred Stock outstanding as of
May 30, 2000.
(3) Based on 316,921 shares of Series D Preferred Stock outstanding as of May
30, 2000.
(4) Based on 131,603 shares of Series E Preferred Stock outstanding as of May
30, 2000.
(5) Heico holds an option to acquire 424,809 shares of Series F Preferred
Stock for an aggregate purchase price of $15,000,000, which option is
exercisable at any time until July 15, 2002. No shares of Series F
Preferred Stock were outstanding as of May 30, 2000.
(6) Includes (i) 496,269 shares of Series B Preferred Stock owned by Anderlit,
(ii) 21,135 shares of Series B Preferred Stock owned by MBCP and (iii)
4,768 shares of Series B Preferred Stock held in the name of Moore
Investments. Mr. Moore holds an irrevocable proxy to vote all of the
shares owned by Anderlit. Mr. Moore has shared voting and investment
powers over all of the shares owned by MBCP. Mr. Moore is the controlling
stockholder of Moore Investments. Does not take into account irrevocable
proxies granted to the Company by Anderlit, MBCP and Mr. Moore with
respect to shares of Series B Preferred Stock. See "Voting Rights and
Solicitation of Proxies". Mr. Moore resigned as Chief Executive Officer
and as a director of the Company in July 1999.
(7) Does not take into account irrevocable proxies granted to the Company by
Anderlit, MBCP and Mr. Moore with respect to shares of Series B Preferred
Stock. See "Voting Rights and Solicitation of Proxies".
(8) Does not take into account irrevocable proxies granted to the Company by
Anderlit, MBCP and Mr. Moore with respect to shares of Series B Preferred
Stock. See "Voting Rights and Solicitation of Proxies." The address of
this stockholder is 100 California Street, Suite 1160, San Francisco,
California 94111.
(9) Includes shares owned by MBCP over which Mr. Swindells has shared voting
and investment powers. Does not take into account irrevocable proxies
granted to the Company by Anderlit, MBCP and Mr. Moore with respect to
shares of Series B Preferred Stock. See "Voting Rights and Solicitation of
Proxies."
(10) Does not take into account irrevocable proxies granted to the Company by
Anderlit, MBCP and Mr. Moore with respect to shares of Series B Preferred
Stock. See "Voting Rights and Solicitation of Proxies."
(11) Represents shares owned by Heico, an entity which Mr. Heisley controls.
(12) Does not include Messrs. Grivner, Magiera, Lazarek, Courter, or Hilbert,
each of whom were no longer in the employment of the Company as of May
30, 2000.
PROPOSAL NO. 1: ELECTION OF DIRECTORS
The Bylaws of the Company provide that each director serves for a term of
one year from the date of election and until such director's successor has
been duly elected and qualified. Four directors are to be elected by a
majority of the stockholder votes cast at the Meeting to serve until the
Company's 2001 Annual Meeting of Stockholders and until their successors are
elected and qualified. Michael E. Heisley, Sr., Stanley H. Meadows, Andrew
Sage, II and Kathleen A. Cote are the nominees for director. Mr. Howley (a
director of the Company since 1997) has notified the Company of his intention
to retire from the Board of Directors at the 2000 Annual Meeting. The Bylaws
of the Company provide for a Board of Directors consisting of three to nine
members, to be determined by the Board of Directors. The Board of Directors
has set the number of directors at four.
The enclosed proxy cannot be voted for a greater number of persons than the
four nominees named in this Proxy Statement.
Information about the nominees for director is set forth in the following
paragraphs.
7
<PAGE>
NOMINEES
MICHAEL E. HEISLEY, SR. Director since 1998
Michael E. Heisley, Sr., 63, has been a member of the Board of Directors since
December, 1998. Mr. Heisley has been the Manager, President and Chief
Executive Officer of Heico, a holding company in Chicago, Illinois which
acquires or invests in and operates a diverse group of businesses, since its
formation in 1988 and also serves as the Chief Executive Officer of various of
Heico's subsidiaries. Mr. Heisley is a director of Robertson-Ceco Corporation,
a metal buildings manufacturing company, Tom's Foods Inc. and nutrisystem.com,
Inc. Mr. Heisley received a bachelor's degree in business administration from
Georgetown University.
STANLEY H. MEADOWS Director since 1998
Stanley H. Meadows, 55, has been a member of the Board of Directors since
December 1998. Mr. Meadows has been General Counsel of Heico since February
1998 and is a partner at the law firm of McDermott, Will & Emery, where he has
practiced since 1970. Mr. Meadows is a director of Robertson-Ceco Corporation,
a metal buildings manufacturing company, and Tom's Foods, Inc. Mr. Meadows
received a bachelor of science degree from the University of Illinois and a
law degree from the University of Chicago.
ANDREW G. C. SAGE II Director since 1999
Andrew G. C. Sage II, 74, has been a member of the Board of Directors since
April 1999. Mr. Sage has served as President of Sage Capital Corporation, a
general business and financial management corporation specializing in business
restructuring and problem solving, since 1993 and was the President and Chief
Executive Officer of Robertson-Ceco Corporation, a metal buildings
manufacturing company, from November 1992 to December 1993. Mr. Sage held
various positions with Shearson Lehman Brothers, Inc. and its predecessors,
Lehman Brothers and Lehman Brothers Kuhn Loeb, Inc., since joining the
investment bank in 1948, including General Partner from 1960-1970, President
from 1970-1973, Vice Chairman from 1973-1977, Managing Director from 1977-
1987, and Senior Consultant from 1987-1990. Since 1990, Mr. Sage has been a
consultant in general business and financial management. Mr. Sage is a
director of American Superconductor Corporation and Tom's Foods, Inc. and is
currently the Chairman of the Board of Robertson-Ceco Corporation.
KATHLEEN A. COTE Nominee
Kathleen A. Cote, 51, is a nominee for the Board of Directors. Since September
1998, Ms. Cote has been President of Seagrass Partners, a consulting firm.
From 1996 to 1998, Ms. Cote served as President and Chief Executive Officer of
Computervision Corporation, an international supplier of product development
and data management software, where she also served as President and Chief
Operating Officer. From 1995 to 1996, Ms. Cote served as President and General
Manager of PrimeService, a division of Prime Computer, the predecessor to
Computervision Corporation. Ms. Cote is a director of MediaOne Group and Vtel,
Inc.
Election of a director requires the affirmative vote of the holders of a
majority of the voting power present in person or by proxy at the Meeting.
The Board of Directors unanimously recommends a vote FOR each of the
nominees.
BOARD AND COMMITTEE MEETINGS
The Board of Directors has established three standing committees: the Audit
Committee, the Compensation Committee and the Executive Committee. The Company
does not have a nominating committee. The Audit Committee selects the
Company's auditors and oversees the review and auditing of its financial
performance. The Compensation Committee reviews the compensation the Company
pays to its key executives to ensure that such compensation is appropriate
given such executive's duties, responsibilities and contributions to the
Company and administers the Company's current Long-Term Incentive Plan and,
subject to stockholder approval thereof, will administer the 2000 Long-Term
Stock Incentive Plan. The Executive Committee was formed in
8
<PAGE>
March, 2000 and has the authority to take all actions which the Board of
Directors as a whole would be able to take, except as limited by applicable
law. During part of 1999, the Company's former directors, Messrs. Robert L.
McCann, Larry Gies and Phillip S. Magiera served as the Audit Committee.
Currently, Messrs. Heisley, Meadows and Sage comprise the Audit Committee.
Messrs. Sage and Howley currently comprise the Compensation Committee. Messrs.
Heisley, Meadows and Sage currently comprise the Executive Committee. During
fiscal 1999, the Audit Committee and Compensation Committee did not meet.
The Board of Directors held 13 meetings during fiscal 1999. Each director
attended more than 75% of the Board of Directors meetings that he was eligible
to attend.
DIRECTORS' COMPENSATION
In 1999, each member of the Board of Directors served without compensation.
The Directors are entitled to reimbursement by the Company for their
reasonable expenses incurred in acting as Directors.
Subject to stockholder approval of the 2000 Long-Term Stock Incentive Plan,
each non-employee director will receive options under such plan to acquire
100,000 shares of Common Stock following the Meeting, which options will vest
over a period of four years. See Proposal No. 2 for a more detailed
description of these options.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors and officers, and persons who beneficially
own more than 10% of Common Stock, to file with the Securities and Exchange
Commission ("SEC") reports of beneficial ownership and changes in beneficial
ownership of Common Stock and other equity securities of the Company.
Officers, directors and greater than 10% stockholders are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on the review of the copies of such reports furnished to the
Company or written representations that no other reports were required, the
Company believes that during the 1999 fiscal year all filing requirements
applicable to its officers, directors and greater than 10% beneficial owners
were complied with, except as follows: (1) A Form 3 and a Form 5 relating to a
grant of stock options were inadvertently filed late on Mr. Grivner's behalf,
(2) a Form 3 and a Form 5 relating to a grant of stock options were
inadvertently filed late on John T. Hanson's behalf, (3) a Form 3 and a Form 4
relating to three transactions were inadvertently filed late on Heico's
behalf, (4) a Form 4 relating to two transactions was not filed on Heico's
behalf, (5) all forms relating to such transactions for Heico were also
inadvertently filed late on behalf of Mr. Heisley who must report Heico's
transactions due to his beneficial ownership of Heico's shares, (6) a Form 3
was inadvertently filed late on Mr. Meadows' behalf, (7) a Form 3 was
inadvertently filed late on Mr. Sage's behalf, (8) a Form 3 and a Form 4
reporting a single transaction were inadvertently filed late on behalf of one
of the Company's former directors, Emily Heisley Stoeckel, (9) a Form 3 and a
Form 4 reporting a single transaction were inadvertently filed late on Stephen
Courter's behalf, (10) a Form 3 was inadvertently filed late on behalf of one
of the Company's former directors, Larry Geis, and (11) a Form 4 reporting a
single transaction was inadvertently filed late on Donald C. Hilbert, Jr.'s
behalf.
9
<PAGE>
EXECUTIVE COMPENSATION
The following summary compensation table sets forth information concerning
cash and non-cash compensation for services rendered during the fiscal years
ended December 31, 1999, 1998 and 1997 to (a) the two persons who served as
Chief Executive Officer of the Company during 1999, (b) the four highest paid
executive officers who were executive officers as of December 31, 1999 and (c)
certain other executive officers who would have been among the four highest
paid executive officers if they had been executive officers of the Company as
of December 31, 1999 (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
---------------------------------- ----------------------
Securities
Name and Restricted Underlying
Principal Stock Options/
Position Year Salary Bonus Other Award(s) SARs
--------- ---- -------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
+Carl J. Grivner(1)..... 1999 $259,690 $250,000 $100,000(2) -- 825,000(3)
Former Chairman of the
Board, 1998 -- -- -- -- --
Chief Executive Officer
and 1997 -- -- -- -- --
President
John T. Hanson(4)....... 1999 $108,537 $112,500 -- -- 150,000
Chief Financial Officer 1998 -- -- -- -- --
1997 -- -- -- -- --
David Hickey(5)......... 1999 $154,708 $ 95,416 $ 24,753(6) 10,000(7) --
Vice President-- 1998 $ 33,632 $ 21,020 $ 6,279 -- 225,000
Corporate Development 1997 -- -- -- -- --
+Stephen Courter(8)..... 1999 $157,103 -- $ 60,000(9) 30,000(7) --
Former Regional Vice 1998 $ 69,231 $ 43,750 $ 20,068(10) -- 150,000(11)
President--Europe 1997 -- -- -- -- --
+Paul A. Moore(12)...... 1999 $300,000(13) $150,000(13) $ 63,482(14) -- --
Former Chief Executive
Officer 1998 $300,000 $150,000 -- -- 580,000
1997 -- -- -- -- --
+Daniel G. Lazarek(15).. 1999 $238,553 $ 50,000 -- 30,000(7) --
Former Vice President
of 1998 $165,000 $ 83,625 $ 30,700(16) -- 500,000(17)
Global Sales and
Marketing 1997 -- -- -- -- --
+Phillip S. Magiera(18). 1999 $167,871 -- -- -- --
Former Chief Financial 1998 $240,000 $120,000 -- -- 325,000
Officer 1997 -- -- -- -- 80,000
+Donald C. Hilbert,
Jr.(19)................ 1999 $132,592 -- -- -- --
Former Controller 1998 $ 58,462 $ 21,433 -- -- 40,000(20)
1997 -- -- -- -- --
</TABLE>
--------
+No longer in the employment of the Company
(1) Mr. Grivner served as Chairman, Chief Executive Officer and President of
the Company from June 1999 to April 2000.
(2) Represents moving expenses paid to Mr. Grivner.
(3) Options to acquire 653,130 shares of Common Stock were cancelled upon Mr.
Grivner's resignation effective April 2000.
(4) Mr. Hanson joined the Company in July 1999.
10
<PAGE>
(5) Mr. Hickey joined the Company in September 1998.
(6) Represents pension plan donations made by the Company for Mr. Hickey's
benefit.
(7) Represents restricted stock awards which were granted in 1999.
(8) Mr. Courter was employed by the Company from July 1998 to January 2000.
(9) Represents a cost of living differential paid to Mr. Courter.
(10) Consists of a cost of living differential ($20,000) and group term life
policy earnings ($68) paid to Mr. Courter.
(11) Options to acquire 100,000 shares of Common Stock were cancelled upon
termination of Mr. Courter's employment.
(12) Mr. Moore resigned as Chief Executive Officer and director effective July
15, 1999.
(13) Mr. Moore's salary includes $150,000 paid pursuant to, and his bonus was
paid under, a Settlement Agreement dated July 15, 1999.
(14) Consists of medical and disability insurance benefits paid by the Company
and reimbursements of administrative expenses paid to Mr. Moore pursuant
to the Settlement Agreement.
(15) Mr. Lazarek was employed by the Company from March 1998 to September 1999.
(16) Consists of moving expenses paid to Mr. Lazarek ($27,500) and a car
allowance ($3,200).
(17) Options to acquire 150,000 shares of Common Stock were cancelled upon
termination of Mr. Lazarek's employment.
(18) Mr. Magiera was employed by the Company from January 1998 to September
1999.
(19) Mr. Hilbert was employed by the Company from June 1998 to March 2000.
(20) Options to acquire 26,667 shares of Common Stock were cancelled upon
termination of Mr. Hilbert's employment.
EMPLOYMENT AGREEMENTS
Carl J. Grivner
In June 1999, the Company entered into a three-year employment agreement
with Mr. Grivner whereby Mr. Grivner agreed to serve as Chief Executive Officer
of the Company. Pursuant to the terms of his employment agreement, Mr. Grivner
was entitled to a base salary of $500,000 per year, and a minimum annual cash
bonus of $350,000. In addition, pursuant to his employment agreement, Mr.
Grivner was awarded options under the Company's Long-Term Incentive Plan to
acquire 825,000 shares of Common Stock.
In the first quarter of 2000, Mr. Grivner agreed with the Board of Directors
that, in light of the start-up nature of the Company at such time, Mr.
Grivner's base salary should be decreased to $300,000 per year and Mr.
Grivner's annual bonus would be reduced to a minimum of $150,000. In connection
with this reduction in cash compensation, subject to stockholder approval of
the 2000 Long-Term Stock Incentive Plan, Mr. Grivner was awarded additional
options to acquire 2,175,000 shares of Common Stock under the 2000 Long-Term
Stock Incentive Plan described under Proposal No. 2 below.
In April 2000, Mr. Grivner resigned as Chairman of the Board, President and
Chief Executive Officer. Michael E. Heisley, Sr., a director of the Company,
assumed the post of Chairman of the Board, President and Chief Executive
Officer at that time. Pursuant to a Settlement Agreement entered into between
Mr. Grivner and the Company, the parties agreed, among other things, that (i)
the Company would pay Mr. Grivner a lump sum payment of $500,000; (ii) Mr.
Grivner would be entitled to retain vested options to purchase up to 103,122
shares of Common Stock and his other options would be forfeited; and (iii) Mr.
Grivner would not, prior until April 24, 2001, directly or indirectly solicit
any officers or employees of the Company or any of its affiliates for
employment or other retention without the prior written consent of the Company.
The Settlement Agreement additionally provides for a noncompetition agreement
by Mr. Grivner until April 24, 2001, mutual releases by
11
<PAGE>
Mr. Grivner and the Company, and indemnification and insurance by the Company
with respect to certain matters in connection with Mr. Grivner's service with
the Company.
John T. Hanson
In May 1999, the Company entered into an employment agreement with Mr.
Hanson whereby he agreed to serve as Chief Financial Officer of the Company. In
accordance with the terms of the employment agreement, Mr. Hanson earns a base
salary of $235,000 per year and is eligible to receive an annual bonus (he was
entitled to a guaranteed annual bonus of $90,000 for 1999). In 1999, in
accordance with his employment agreement, Mr. Hanson received options to
acquire 150,000 shares of Common Stock under the Company's Long-Term Incentive
Plan which vest in increments of one-third over a three year period beginning
June 29, 2000, unless vesting is accelerated as a result of a change in control
of the Company. Mr. Hanson's employment agreement provides that, in the event
Mr. Hanson's employment is involuntarily terminated as a result of a change of
control of the Company, he will be entitled to a severance payment equal to one
year of his base salary.
David Hickey
In September 1998, the Company entered into an employment agreement with Mr.
Hickey whereby Mr. Hickey currently serves as Vice President--Corporate
Development. Pursuant to his employment agreement, in 1998 and 1999 Mr. Hickey
earned annual base salaries of NLG 300,000 and NLG 400,000 (approximately
$130,260 and $173,680, assuming an exchange rate of NLG 1=$0.4342),
respectively. Mr. Hickey receives a monthly expense allowance of NLG 500 ($224)
and the Company reimburses him for the cost of leasing a car, not exceeding NLG
2,800 per month ($1,256).
Paul A. Moore
In January 1998, the Company entered into a two-year employment agreement
with Mr. Moore whereby Mr. Moore agreed to serve as an executive of the
Company. Pursuant to the terms of his employment agreement, as amended, Mr.
Moore earned a base salary of $300,000 during each year of his employment
agreement. Mr. Moore was also eligible to earn an annual bonus of up to 50% of
his base salary based on criteria to be established by the Board of Directors.
In July 1999, Mr. Moore resigned his position as an employee, officer and
director of the Company and its subsidiaries. Mr. Moore entered into an
agreement with the Company that terminated the employment agreement described
above. Pursuant to this termination agreement, the Company agreed to pay Mr.
Moore as follows:
. in 1999, $300,000 ($150,000 of which represents salary and $150,000 of
which represents bonus payable in six monthly installments);
. in 2000, $450,000 payable in eleven equal monthly installments of $25,000
commencing on January 31, 2000 and a final installment of $175,000 on
January 2, 2001;
. no more than $135,000 for office rent and secretarial services through
December 31, 2000;
. medical and disability insurance benefits through July 2000; and
. $15,000 in legal expenses incurred by Mr. Moore relating to the
negotiation of the termination agreement.
Stephen R. Courter
In June 1998, Mr. Courter agreed to serve as the Company's Managing
Director--Finance pursuant to an employment agreement. On January 14, 2000, Mr.
Courter's employment was terminated and Mr. Courter became employed by a
subsidiary of Energis plc ("Energis") as part of the sale of the EnerTel assets
by the Company to Energis. Mr. Courter's base salary pursuant to the letter
agreement, as amended, was $172,500 and Mr. Courter was compensated for the
cost of living differential at a rate of $5,000 per month. Mr. Courter was also
eligible to receive a bonus equal to 50% of his base pay. Pursuant to his
employment agreement, Mr. Courter
12
<PAGE>
was granted an option to acquire 150,000 shares of Common Stock, of which
options to acquire 100,000 shares were cancelled when his employment was
terminated in January 2000.
Phillip Magiera
In January 1998, the Company entered into a two-year employment agreement
with Mr. Phillip S. Magiera whereby Mr. Magiera agreed to serve as an executive
of the Company. Pursuant to the terms of his employment agreement, Mr. Magiera
earned a base salary of $240,000 during each year of his employment agreement.
Mr. Magiera was also eligible to earn an annual bonus of up to 50% of his base
salary based on criteria to be established by the Board of Directors.
In September 1999, Mr. Magiera resigned his position as an employee, officer
and director of the Company and its subsidiaries.
Daniel G. Lazarek
In March 1998, the Company entered into an employment agreement with Mr.
Lazarek whereby Mr. Lazarek agreed to serve as the Company's Vice President of
Global Sales and Marketing. Pursuant to the terms of his employment agreement,
Mr. Lazarek earned a base salary of at least $150,000 per year and was eligible
to earn performance incentive bonuses up to 50% of his base salary based on
criteria to be established by the Company's President.
In September 1999, Mr. Lazarek resigned his position as an employee, officer
and director of the Company and its subsidiaries. The Company paid Mr. Lazarek
severance in the amount of $6,346.
LONG-TERM INCENTIVE PLAN
The Company's Amended and Restated Long-Term Incentive Plan was adopted in
1996 to promote the Company's success and enhance stockholder value by (i)
linking the personal interests of the Company's directors, key employees and
consultants to those of the stockholders, (ii) providing directors and
employees with an incentive for outstanding performance and (iii) providing
flexibility in the Company's ability to attract and retain the services of its
directors, employees and contractors.
The Long-Term Incentive Plan is administered by the Compensation Committee,
whose members must qualify as non-employee directors within the meaning of the
SEC's regulations. The Compensation Committee is authorized to determine, among
other things, the individuals to whom, and the times at which, options and
other benefits are to be granted, the number of shares subject to each option,
the applicable vesting schedule and the exercise price. The Long-Term Incentive
Plan provides that, upon a Change of Control (as defined in the Long-Term
Incentive Plan), all outstanding options and other awards in the nature of
rights that may be exercised pursuant to the Long-Term Incentive Plan shall
become fully exercisable and all restrictions on all awards granted thereunder
shall lapse.
The Board of Directors has the power to amend the Long-Term Incentive Plan
from time to time. Stockholder approval of an amendment is only required to the
extent that it is required by law or regulatory authority.
As of December 31, 1999, options to acquire a total of 4,462,635 shares of
Common Stock were outstanding under the Long-Term Incentive Plan (of which
4,278,819 were vested) with exercise prices ranging from $0.75 to $14.19 per
share.
13
<PAGE>
OPTIONS
The following table sets forth certain information with respect to each
Named Executive Officer concerning individual grants of options to purchase
Common Stock made during the year ended December 31, 1999 under the Long-Term
Incentive Plan:
Option Grants in Last Fiscal Year
Individual Grants
<TABLE>
<CAPTION>
Potential Realized
%of Total Value at Assumed
Number of Options Annual Rates of Stock Price
Shares Granted to Appreciation for Option
Underlying Employees Exercise or Term(3)
Options in Fiscal Base Price Expiration ---------------------------
Name Granted Year(1) Per Share Date(2) 5% 10%
---- ---------- ---------- ----------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
+Carl J. Grivner........ 825,000(4) 55.4% $ 8.10 5/28/09 $ 4,525,109 $ 11,163,745
Former Chairman of the
Board,
Chief Executive Officer
and
President
John T. Hanson.......... 150,000(5) 10.1% $ 3.56 6/29/09 $ 489,760 $ 1,096,167
Chief Financial Officer
</TABLE>
--------
+No longer in the employment of the Company
(1) Based on an aggregate of 1,489,000 options granted to employees, including
the Named Executive Officers, in 1999.
(2) The term of all options is ten years.
(3) The potential realizable value is calculated based on the term of the
option at its time of grant (ten years). It is calculated by assuming that
the stock price on the date of grant appreciates at the indicated annual
rate compounded for the entire term of the option and that the option is
exercised and sold on the last day of its term for the appreciated stock
price. The assumed annual rates of stock price appreciation of 5% and 10%
are set by rules promulgated by the SEC and are not intended as a forecast
of possible future appreciation in stock prices.
(4) Options to acquire 653,130 shares of common stock were cancelled upon Mr.
Grivner's resignation effective April 2000.
(5) One-third of these options vest on each of the first, second and third
anniversaries of the date of grant (June 29, 1999).
14
<PAGE>
Option Exercises and Fiscal Year-End Values
The following table sets forth certain information with respect to each
Named Executive Officer concerning the exercise of options to purchase common
stock during the fiscal year ended December 31, 1999, as well as unexercised
options to purchase common stock held as of the end of such fiscal year.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year End Option Values
<TABLE>
<CAPTION>
Number of Securities
Underlying Value of Unexercised
Shares Unexercised Options at In-the-Money Options
Acquired December 31, 1999 December 31, 1999(1)
on Value ------------------------- -------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- -------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
+Carl J. Grivner........ -- -- 103,122 721,878(2) $ 0 $ 0
Former Chairman of the
Board, Chief Executive
Officer and President
John T. Hanson.......... -- -- -- 150,000 -- $ 0
Chief Financial Officer
David Hickey............ -- -- 175,000 50,000 $ 0 $ 0
Vice President--
Corporate Development
+Stephen Courter........ -- -- 50,000 100,000(3) $ 0 $ 0
Former Regional Vice
President--Europe
+Paul A. Moore.......... 250,000(4) $2,000,000 520,000 -- $ 0 $ 0
Former Chief Executive
Officer
+Phillip S. Magiera..... -- -- 405,000 -- $106,400 --
Former Chief Financial
Officer
+Daniel G. Lazarek...... 75,000 $ 103,111 275,000 -- (5) $ 0 $ 0
Former Vice President
of Global Sales and
Marketing
+Donald C. Hilbert, Jr.. -- -- 13,000 26,227(6) $ 0 $ 0
Former Controller
</TABLE>
--------
+No longer in the employment of the Company
(1) Value is calculated in accordance with the rules of the SEC by subtracting
the exercise price per share for each option from the fair market value of
the underlying Common Stock as of December 31, 1999 and multiplying that
difference by the number of shares of Common Stock subject to the option.
The fair market value of one share of Common Stock as of December 31, 1999
was $2.08 per share.
(2) Options to acquire 653,130 shares of Common Stock were cancelled upon Mr.
Grivner's resignation effective April 2000.
(3) Options to acquire 100,000 shares of Common Stock were cancelled upon
termination of Mr. Courter's employment effective January 2000.
(4) Represents options held and exercised by MBCP, an entity over which Mr.
Moore shares voting and investment powers.
(5) Options to acquire 150,000 shares of Common Stock were cancelled upon
termination of Mr. Lazarek's employment effective September 1999.
(6) Options to acquire 26,667 shares of Common Stock were cancelled upon
termination of Mr. Hilbert's employment effective March 2000.
15
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
This Report of the Compensation Committee shall not be deemed incorporated
by reference by any general statement incorporating this Proxy Statement into
any filing under the Securities Act of 1933 ("Securities Act") or under the
Exchange Act, except to the extent that the Company specifically incorporates
the information contained herein by reference, and shall not otherwise be
deemed filed under those Acts.
The Compensation Committee is responsible for determining the compensation
policies for the executive officers of the Company. It also administers the
Long-Term Incentive Plan and will administer the 2000 Long-Term Stock Incentive
Plan described under Proposal No. 2 below, if that plan is approved by the
stockholders.
Compensation Philosophy
The Company intends to enter a highly competitive and dynamic industry. The
Company's success in such an environment will depend, in large part, on its
ability to attract and retain talented executives. The Company must provide
executives with long- and short-term incentives to maximize corporate
performance and reward successful performance. As a result, the Compensation
Committee's compensation policies are designed to:
. provide a competitive level of compensation to attract and retain
talented management;
. reward achievements in corporate performance;
. recognize individual initiative and performance; and
. align the interests of executives with those of the stockholders in order
to maximize stockholder value.
The Compensation Committee's goal is to provide a competitive compensation
package based on a review of publicly available information about the
compensation paid to similarly situated executives. The Compensation Committee
believes that a substantial portion of compensation should be tied to the
attainment of long- and short-term objectives.
To achieve these compensation objectives, the Compensation Committee has
developed a compensation philosophy for executive officers consisting of base
salary, an annual bonus and awards of stock options.
Base Salary
The salary levels of the Company's executive officers are set out in
employment agreements with the officers and were determined following
consultation with independent consultants and outside advisors after
considering the executive compensation policies described above. In 2000, it
was determined in consultation with Mr. Grivner that Mr. Grivner's salary
should be reduced from $500,000 to $300,000 to reflect the start-up nature of
the Company's business at that time. Further, it was determined that additional
stock options should be awarded to Messrs. Grivner, Hanson and Hickey to align
their compensation with the industry's focus on incentive-based compensation.
See previous discussion under "Employment Agreements."
Bonus
The Compensation Committee believes that a significant portion of the
compensation of its executive officers, including its Chief Executive Officer,
should be in the form of an incentive bonus for achieving certain targets. Mr.
Grivner's employment agreement had guaranteed him a minimum annual bonus of
$350,000. In keeping with the Company's goals of rewarding achievements in
corporate performance and recognizing individual initiative and performance, in
early 2000, the Board of Directors awarded Messrs. Grivner and Hanson special
bonuses in the amounts of $250,000 and $112,500, respectively, in connection
with their efforts relating to the sale of substantially all of the assets of
the Company to Energis.
16
<PAGE>
Stock Options
The Compensation Committee believes that stock options provide a valuable
tool for aligning the interests of management with stockholders and focusing
management's attention on the long-term growth of the Company. The Compensation
Committee expects to continue granting options.
In 1999, the Compensation Committee granted options to purchase 825,000
shares of Common Stock to Mr. Grivner and options to purchase 150,000 shares of
Common Stock to Mr. Hanson. In early 2000, the Board of Directors approved the
2000 Long-Term Stock Incentive Plan and its submission to the stockholders to
enable the Compensation Committee to continue to use stock options to provide
incentives to management.
Policy on Deductibility of Compensation
Section 162(m) of the Internal Revenue Code of 1986, as amended, prohibits
the Company from deducting more than $1 million in compensation paid to certain
executive officers in a single year. An exception to the $1 million limit is
provided for "performance-based compensation" that meets certain requirements,
including approval by the stockholders. Certain options granted under the
Company's incentive compensation plans may qualify as "performance-based
compensation" and will be excluded in calculating the $1 million limit under
Section 162(m). Options and other awards that do not qualify as "performanced-
based compensation" will not be excluded in calculating the $1 million limit
under Section 162(m).
Submitted by the Compensation Committee
Peter A. Howley Andrew G. C. Sage, II
17
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
This Stock Price Performance Graph shall not be deemed incorporated by
reference by any general statement incorporating this Proxy Statement into any
filing under the Securities Act or under the Exchange Act, except to the extent
that the Company specifically incorporates the information contained herein by
reference, and shall not otherwise be deemed filed under those Acts.
Comparison of Five Year Cumulative Total Return Among
WorldPort Communications, Inc.,
Nasdaq Composite Index and Russell 2000 Index
The following graph compares total stockholder return on the Common Stock to
two indices: the NASDAQ Composite Index and the Russell 2000 Index. The graph
assumes $100 was invested in the Common Stock on June 17, 1997 (the first day
of trading of the Common Stock) and in each of the foregoing indices, and
assumes reinvestment of dividends.
[GRAPH]
<TABLE> ---------------------------------------------------------
<CAPTION>
6/17/97 12/31/97 12/31/98 12/31/99
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
WorldPort Communications, Inc. . $100.00 $362.50 $484.38 $103.91
---------------------------------------------------------------------------------------------
Russell 2000 Index . $100.00 $111.02 $107.90 $129.04
---------------------------------------------------------------------------------------------
Nasdaq Composite Index s $100.00 $109.01 $150.71 $277.75
</TABLE>
--------------------------------------------------------------------------------
18
<PAGE>
CERTAIN TRANSACTIONS
Heico Equity Investment
On January 25, 1999, Heico completed a $40 million equity investment in the
Company pursuant to the Series C Preferred Stock Purchase Agreement (the
"Series C Purchase Agreement"), dated as of December 31, 1998, between the
Company and Heico. Pursuant to the Series C Purchase Agreement, Heico acquired
an aggregate of 1,132,824 shares of Series C Preferred Stock for an aggregate
purchase price of $40 million. In this transaction, Heico also received an
option (the "Series C Option") to acquire up to 283,206 additional shares of
Series C Preferred Stock at an aggregate exercise price of $10 million and
certain additional rights including, with respect to the Common Stock issued
upon conversion of the Series C Preferred Stock, certain demand and piggyback
registration rights.
Pursuant to the Series C Purchase Agreement, on December 31, 1998, the
Company increased the size of its Board of Directors to eight members and
appointed four individuals designated by Heico to serve as directors. The
Company also agreed to cause Heico's designees to comprise at least one-half
of the boards of directors of each of its subsidiaries. In addition, the
Company amended its Bylaws to provide that at least one of Heico's designees
and (except in the limited situation regarding certain proposed refinancings
of the Company's outstanding credit facility) one of the directors who was not
designated by Heico, must approve any action presented for approval by the
Board of Directors in order for such to be properly approved by the Board of
Directors. As of May 30, 2000, as a result of four previous resignations, the
Board of Directors consisted of four directors, three of whom were designated
by Heico.
On July 15, 1999, Heico completed an additional $15 million equity
investment in the Company through (i) the exercise of the Series C Option to
purchase 283,206 additional shares of Series C Preferred Stock for an
aggregate purchase price of $10 million and (ii) the purchase of 141,603
shares of the newly-created Series E Preferred Stock for an aggregate purchase
price of $5 million. In connection with this investment, the Company granted
Heico a three-year option (the "Series F Option") to purchase 424,809 shares
of the newly-created Series F Preferred Stock at an aggregate exercise price
of $15 million.
As a result of Heico's exercise of the Series C Option, Heico owns
1,416,030 shares of Series C Preferred Stock, representing all of the issued
and outstanding shares of Series C Preferred Stock. Heico is entitled to 40
votes per share of Series C Preferred Stock and is entitled to vote on all
matters submitted to a vote of the stockholders of the Company, voting
together with the holders of Common Stock as a single class. At Heico's
option, it may convert the Series C Preferred Stock into Common Stock at a
conversion price of $3.25 per share of Common Stock (i.e., 10.865 shares of
Common Stock for each share of Series C Preferred Stock).
The 141,603 shares of Series E Preferred Stock were purchased by Heico
pursuant to a Series E Preferred Stock Purchase Agreement, dated as of July
15, 1999, between the Company and Heico. Such shares represent all of the
issued and outstanding shares of Series E Preferred Stock. As a holder of
Series E Preferred Stock, Heico is entitled to that number of votes as is
equal to the number of shares of Common Stock into which the Series E
Preferred Stock could be converted and is entitled to vote on all matters
submitted to a vote of the stockholders of the Company, voting together with
the holders of Common Stock as a single class. At Heico's option, it may
convert the Series E Preferred Stock into Common Stock at a conversion price
of $3.25 per share of Common Stock (i.e., 10.865 shares of Common Stock for
each share of Series E Preferred Stock).
Upon the exercise of the Series F Option, as a holder of Series F Preferred
Stock, Heico will be entitled to that number of votes as is equal to the
number of shares of Common Stock into which the Series F Preferred Stock could
be converted and will be entitled to vote on all matters submitted to a vote
of the stockholders of the Company, voting together with the holders of Common
Stock as a single class. At Heico's option, following its acquisition of
Series F Preferred Stock, it may convert the Series F Preferred Stock into
Common Stock at a conversion price of $4.00 per share of Common Stock (i.e.,
8.8275 shares of Common Stock for each share of Series F Preferred Stock).
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<PAGE>
In June 1999, Heico agreed to provide a bond to support a bid by the Company
to acquire a telecommunications company in Europe. In consideration of the
bond, the Company issued to Heico 25,000 shares of Common Stock at a purchase
price of $0.01 per share. The bond provided by Heico was returned when the
Company's bid was unsuccessful.
In November 1999, Heico purchased a participating interest in the Company's
interim loan in the amount of approximately $18.6 million in principal plus
accrued interest thereon. In connection with Heico's participation in the
interim loan, Heico was granted warrants to purchase 416,240 shares of Common
Stock for $.01 per share at any time until June 2008. The interium loan was
repaid in full in January 2000.
In December 1999, the Company executed a note in favor of Heico in the
aggregate principal amount of $2 million. The note accrued interest at a rate
of 14% per annum. Heico has elected to convert the note into 1,000 shares of a
newly-created series of convertible preferred stock of WorldPort. The preferred
stock will be convertible into an aggregate of 1,000 shares of Common Stock and
will have voting rights on an as converted basis. The proceeds of this loan
were primarily used by the Company as working capital and for general corporate
purposes pending the receipt of the proceeds from the Energis transactions
described below. The Company expects to finalize the conversion of this note by
the end of the second quarter of fiscal 2000.
Interests of Heico in Energis Transaction
Heico owned 15% of the outstanding capital stock of WorldPort Communications
Europe Holding B.V. ("WCEH"), which was sold to Energis as part of the
Company's sale of substantially all of its assets to Energis (the "Sale").
Simultaneously with the execution of the agreements relating to the Sale (the
"Sale Agreements"), on November 11, 1999, Heico entered into an agreement with
Energis to sell its 15% interest in WCEH for $64.6 million in cash and Energis'
agreement to repay to Heico a loan and accrued interest thereon in the
aggregate amount of $12.2 million as of September 30, 1999. This transaction
was completed contemporaneously with the Sale. Additionally, Heico holds
approximately $620,000 of accounts receivable of the wholly-owned subsidiary of
WCEH.
In addition, as noted above, Heico was one of the lenders participating in
the Company's interim loan. Heico received approximately $18.6 million in
principal plus accrued interest thereon pursuant to the Sale Agreements upon
consummation of the Sale when the interim loan was paid in full. In connection
with Heico's participation in the interim loan, Heico was granted warrants to
purchase 416,240 shares of Common Stock for $.01 per share. The warrants expire
in June 2008.
In connection with the service of its designees on the Board of Directors,
Heico has incurred various expenses which are reimbursable by the Company.
Heico will be reimbursed for these expenses from the proceeds received by the
Company from the Sale.
Other Transactions
Stanley H. Meadows, one of the Company's directors, is a partner of
McDermott, Will & Emery, a law firm which provided the Company with legal
services during 1999.
In June 1999, in connection with Mr. Grivner's relocation to Chicago to
begin his employment as the Company's Chief Executive Officer, Heico purchased
his house in Virginia from Mr. Grivner for $2.1 million. Heico borrowed the
funds necessary to purchase the house under its revolving line of credit. After
the purchase, Heico listed the house for sale and paid for the upkeep of the
property.
In March 2000, the Company agreed to purchase Mr. Grivner's house from Heico
for approximately $2.2 million representing the purchase price paid by Heico,
the interest paid by Heico under its revolving line of credit for the funds
used to purchase the house and the cost of maintaining the property during the
time the house has been held by Heico. The Company expects to complete this
transaction in June 2000 and intends to sell the house as soon as possible.
20
<PAGE>
PROPOSAL NO. 2: APPROVAL OF THE COMPANY'S 2000 LONG-TERM STOCK INCENTIVE PLAN
General
The Company believes that its success in its new line of business depends
significantly upon being able to attract and retain officers and key
employees. The Company further believes that these individuals are best
motivated to put forth maximum effort on behalf of the Company if they own an
equity interest in the Company. In accordance with this philosophy, the Board
of Directors has adopted the 2000 Long-Term Stock Incentive Plan (the "2000
Plan") and has directed that it be submitted for approval by the stockholders
at the Meeting. The primary features of the 2000 Plan are summarized below. A
copy of the 2000 Plan is attached as Exhibit A and should be referred to for a
complete statement of its terms.
The Company's directors, officers, other employees and any key consultant
or other person providing key services to the Company or one of its
subsidiaries will be eligible to receive awards under the plan when designated
by the Compensation Committee (or subcommittee) of the Board of Directors.
Currently, approximately 12 persons consisting of four directors, three
officers and five key employees of the Company and its subsidiaries are
expected to participate in the plan. Awards under the plan may be granted in
any one or a combination of the following forms:
. incentive and non-qualified stock options;
. restricted stock;
. other stock-based awards; and
. cash awards.
Purposes of the Proposal
The Company is committed to creating and maintaining a compensation system
based to a significant extent on grants of equity-based incentive awards. The
Company believes that providing personnel with a proprietary interest in the
growth and performance of the Company is crucial to stimulating individual
performance while at the same time enhancing stockholder value. As only
1,939,448 shares remain available for grant under the Long-Term Incentive
Plan, and because the Company believes that the terms of the 2000 Plan better
reflect the standards of the Company's new industry, the Company believes that
it is important that the 2000 Plan be established to allow the Company to
accomplish its goals.
Terms of the 2000 Plan
Shares Issuable through the Plan
The total number of shares of Common Stock with respect to which awards may
be granted under the 2000 Plan is limited to 15,000,000 shares, representing
approximately 32.8% of the outstanding Common Stock (including preferred stock
on an as-converted basis) as of the Record Date. In addition, commencing
January 1, 2001, and on each January 1st until January 1, 2007, the number of
shares with respect to which awards may be granted under the 2000 Plan shall
be increased by the number of whole shares of Common Stock as is equal to one
percent of the number of shares of Common Stock issued and outstanding on each
such January 1st. No more than 5,000,000 of such shares may be issued as
incentive stock options.
The Company has granted options to acquire 4,884,493 shares of Common Stock
under the 2000 Plan, subject to stockholder approval. If the 2000 Plan is
approved by the stockholders, options to acquire 9,347,128 shares of Common
Stock, or 21.8% of the outstanding Common Stock (including preferred stock on
an as-converted basis), will be outstanding under both plans. The Company will
also have available for future grants 1,939,448 shares of Common Stock under
the Long-Term Incentive Plan and 10,115,507 shares under the 2000 Plan.
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<PAGE>
Limitations and Adjustments to Shares Issuable Through the 2000 Plan
Awards relating to no more than 2,500,000 shares of Common Stock may be
granted as options or SARs to a single participant in one calendar year. No
more than 250,000 shares of Common Stock may be granted as options, SARs or
restricted stock to any non-employee director in any calendar year. If
permitted by the Compensation Committee, any award may be settled in cash
rather than Common Stock.
For purposes of determining the maximum number of shares of Common Stock
available for delivery under the plan, shares of Common Stock that are not
delivered because an award is forfeited or cancelled and shares of Common
Stock that are not delivered to a participant because the award is settled in
cash, will not be deemed to have been delivered under the plan.
In the event of any recapitalization, stock dividend, stock split,
combination of shares or other change in the Common Stock, appropriate
adjustments may be made to all of the share limitations provided in the 2000
Plan, including shares subject to outstanding awards, and the terms (either
number of shares and/or price) of any outstanding award will be adjusted to
the extent appropriate to provide participants with substantially the same
relative rights before and after the occurrence of such an event.
On June 23, 2000, the closing sale price of a share of Common Stock, as
reported on the Nasdaq OTC Bulletin Board, was $2.625.
Administration of the 2000 Plan
The 2000 Plan provides for a committee of the Board of Directors to
administer the plan, and the Board of Directors has designated the
Compensation Committee to serve that purpose. The Compensation Committee has
authority to:
. make awards under the plan;
. establish any rules or regulations relating to the plan that it
determines to be appropriate;
. delegate its authority as appropriate; and
. make any other determinations that it believes necessary or advisable for
the proper administration of the plan.
The terms and conditions of any award under the plan shall be subject to
the ratification and approval of the Board of Directors.
Amendments to the 2000 Plan
The Board of Directors may amend or discontinue the 2000 Plan at any time.
However, stockholder approval of an amendment will be necessary if required by
federal or state law or regulation or the rules of any stock exchange or
automated quotation system on which the Common Stock may be listed or quoted.
No amendment or discontinuance of the 2000 Plan may change or impair any
previously granted award without the consent of the recipient.
Types of Awards
The Compensation Committee may grant non-qualified or incentive stock
options, restricted stock, and other stock-based awards, each of which is
described further below.
Stock Options. The Compensation Committee may grant non-qualified stock
options or incentive stock options to purchase shares of Common Stock. The
Compensation Committee will determine the number of shares covered by and the
exercise price of each option. The option exercise price may not be less than
the fair market value of the Common Stock on the date of grant, except in the
case of an option granted in substitution for an award of another company in
an acquisition transaction. The term of the options, and the time or times
that the options become exercisable, will also be determined by the
Compensation Committee; however, the term of an
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<PAGE>
incentive stock option may not exceed 10 years. The Compensation Committee may
also approve the purchase by the Company of an unexercised stock option from an
optionee by mutual agreement for the difference between the exercise price and
the fair market value of the shares covered by the option.
The option exercise price may be paid in cash, by check, in shares of Common
Stock that (unless otherwise permitted by the Compensation Committee) have been
held for at least six months or, if permitted by the Compensation Committee, in
exchange for other property or through a broker-assisted "cashless" exercise
arrangement.
Incentive stock options will be subject to certain additional requirements
necessary in order to qualify for favorable tax treatment under Section 422 of
the Internal Revenue Code.
Restricted Stock. The Compensation Committee may grant to eligible
participants shares of Common Stock ("Restricted Stock") subject to
restrictions regarding the sale, pledge or other transfer of such shares by the
participant for a specified period. All shares of Restricted Stock will be
subject to such restrictions as the Compensation Committee may designate in an
agreement with the participant. The agreement may specify that the shares of
Restricted Stock are required to be forfeited or resold to the Company in the
event of termination of employment or in the event specified performance goals
or targets are not met. Unless otherwise provided in the restricted stock
agreement, the Compensation Committee may at any time declare the restricted
period terminated and permit the sale or transfer of Restricted Stock. Subject
to the restrictions provided in the restricted stock agreement and the plan, a
participant receiving Restricted Stock will have all of the rights of a
stockholder.
Restricted Stock intended to qualify as performance-based compensation must
meet the additional requirements imposed by Section 162(m) of the Internal
Revenue Code.
Other Stock-Based Awards. The Compensation Committee is authorized to grant
other stock-based awards, including performance units, stock appreciation
rights, and bonus stock and awards in lieu of cash obligations, the value of
which would be based in whole or in part on the value of shares of Common
Stock. Other stock-based awards may be awards of shares of Common Stock or may
be denominated or payable in, valued in whole or in part by reference to, or
otherwise based on or related to, shares of Common Stock. The Compensation
Committee determines the terms and conditions of any such stock-based awards
and may provide that these awards are payable in whole or in part in cash.
Other stock-based awards intended to qualify as performance-based compensation
must meet additional requirements imposed by Section 162(m) of the Internal
Revenue Code.
Change of Control
In the event of a Change of Control (as defined in the plan) of the Company,
all outstanding awards granted under the 2000 Plan (including performance-based
awards) may automatically become fully exercisable, all restrictions or
limitations on any awards may lapse and all performance criteria and other
conditions relating to the payment of awards may be deemed to be achieved or
waived as provided in the award agreements.
Transferability of Awards
The awards made under the 2000 Plan may not be transferred except:
by will;
by the laws of descent and distribution; or
in the case of awards other than incentive stock options granted without
consideration, to such persons as may be permitted by the Compensation
Committee.
Payment Of Withholding Taxes
The Company may withhold from any payments or stock issuances under the 2000
Plan or from payroll, or collect as a condition of payment, any taxes required
by law to be withheld.
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<PAGE>
Federal Income Tax Consequences of Stock Options
The following is a brief summary of the federal income tax consequences of
awards made under the 2000 Plan based upon the Federal income tax laws in
effect on the date hereof. This summary is not intended to be exhaustive, and
does not describe state or local tax consequences.
Incentive Stock Options. No taxable income is realized by the participant
upon the grant or exercise of an incentive stock option. If a participant does
not sell the stock received upon the exercise of an incentive stock option
("ISO Shares") until the later of (a) two years from the date of grant and (b)
within one year from the date of exercise, when the shares are sold any gain
(loss) realized will be long-term capital gain (loss). In such circumstances,
no deduction will be allowed to the Company for Federal income tax purposes.
If ISO Shares are disposed of prior to the expiration of the holding
periods described above, the participant generally will realize ordinary
income at that time equal to the excess, if any, of the fair market value of
the shares at exercise (or, if less, the amount realized on the disposition of
the shares) over the price paid for such ISO Shares. The Company will be
entitled to deduct any such recognized amount. Any further gain or loss
realized by the participant will be taxed as short-term or long-term capital
gain or loss. Subject to certain exceptions for disability or death, if an
incentive stock option is exercised more than three months following the
termination of the participant's employment, the option will generally be
taxed as a non-qualified stock option.
Non-Statutory Stock Options. No income is realized by the participant at
the time a non-statutory stock option is granted. Generally upon exercise of
non-statutory stock options, the participant will realize ordinary income in
an amount equal to the difference between the price paid for the shares and
the fair market value of the shares on the date of exercise. The Company will
be entitled to a tax deduction in the same amount. Any appreciation (or
depreciation) after date of exercise will be either short-term or long-term
capital gain or loss, depending upon the length of time that the participant
has held the shares.
Awards To Be Granted
The Compensation Committee has approved the grant of ten-year non-qualified
stock options to purchase a total of 4,884,493 shares of Common Stock under
the 2000 Plan, to the persons and groups described in the table below. All of
these options will vest quarterly in one-sixteenth increments over a period of
four years from the date of grant.
New Plan Benefits under the 2000 Plan
<TABLE>
<CAPTION>
Number of Option Date of
Name and Position Options Price Grant
----------------- --------- ------- -------
<S> <C> <C> <C>
Employees
+Carl J. Grivner (1)..... 2,175,000 $2.6934 2/10/00
Former Chief Executive
Officer
John T. Hanson........... 650,000 $2.6934 2/11/00
Chief Financial Officer
David Hickey............. 650,000 $2.6934 2/11/00
Vice President--
Corporate Development
James Martin............. 650,000 $2.6934 2/11/00
Chief Technology Officer
Executive Group.......... 3,225,000 $2.6934 (2)
Non-Executive Officer
Employee Group.......... 759,493 (3) (3)
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Number of Option Date of
Name and Position Options Price Grant
----------------- --------- ------ -------
<S> <C> <C> <C>
Non-employees
Michael E. Heisley, Sr....................... 100,000 (4) (5)
Director
Stanley H. Meadows........................... 100,000 (4) (5)
Director
Andrew G. C. Sage, II........................ 100,000 (4) (5)
Director
Kathleen A. Cote............................. 100,000 (4) (5)
Director
Non-Executive Director Group................. 400,000 (4) (5)
</TABLE>
--------
+No longer in the employment of the Company.
(1) Mr. Grivner's options were forfeited upon his resignation in April 2000.
(2) The date of grant of these options varies by executive.
(3) The exercise price and date of grant of these options varies by employee.
(4) The exercise price of these options will be the fair market value of the
Common Stock on the date of grant.
(5) The date of grant of these options will be determined subsequent to
stockholder approval of the 2000 Plan.
Vote Required
The affirmative vote of the holders of a majority of the voting power
present in person or by proxy at the Meeting is required for approval of the
2000 Plan.
The Board of Directors unanimously recommends that stockholders vote FOR
the proposal to approve the 2000 Plan.
PROPOSAL NO. 3: APPROVAL OF AN AMENDMENT TO CERTIFICATE OF INCORPORATION TO
INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK OF THE COMPANY
The Certificate of Incorporation currently authorizes the issuance of
65,000,000 shares of Common Stock. The Board of Directors has approved an
amendment to increase the number of authorized shares of Common Stock to
200,000,000 shares. The number of authorized shares of each series of
Preferred Stock will remain unchanged.
Specifically, Article Four, Paragraph A of the Certificate of Incorporation
will be amended and restated in its entirety as follows:
"A. Common Stock. Two Hundred Million (200,000,000) shares of Common
Stock, par value $.0001 per share, to be issued as and when the Board of
Directors shall determine."
In all other respects, the terms and provisions of the Certificate of
Incorporation will remain unaltered.
As of March 22, 2000, approximately 28,737,589 of the Company's 65,000,000
currently authorized shares of Common Stock were issued and outstanding. Of
the remaining authorized shares of Common Stock, approximately 6,402,083 were
reserved for issuance in connection with the Company's benefit plans,
21,103,171 were reserved for issuance upon conversion of the Company's issued
and outstanding Preferred Stock and 4,069,904 were reserved for issuance in
connection with warrants previously issued to lenders under the Company's
prior interim loan facility.
Upon approval by the stockholders and the effectiveness of the filing of
the proposed amendment, the additional shares of Common Stock would be
authorized, but unissued and unreserved and could be issued for various
general corporate purposes including, among other things, stock splits, stock
dividends, benefit plans
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<PAGE>
(including the 2000 Plan described under Proposal No. 2 above), financing
transactions or acquisitions. It should be noted that approval of the
amendment is necessary in order for the full 15,000,000 shares to be issued
under the 2000 Plan. The Board of Directors believes that the additional
authorized Common Stock would give the Company greater flexibility by allowing
the Company to issue shares of Common Stock for these and other purposes
without the expense and delay of a stockholders meeting to authorize
additional shares if and when the need arises. However, the issuance of the
additional shares of Common Stock may have a dilutive effect on the Company's
earnings per share and the percentage voting power of a stockholder that does
not purchase additional shares of Common Stock.
The Board of Directors is not proposing the increase in the authorized
number of shares of Common Stock with the intention of using the shares for
anti-takeover purposes. However, it is possible that the issuance of
additional shares of Common Stock authorized by the proposed amendment may
render more difficult or discourage a merger, tender offer or proxy contest
involving the Company, the assumption of control of the Company by the holder
of a large block of the Common Stock or the removal of incumbent management.
For example, the issuance of additional shares of Common Stock could
discourage a potential acquiror by:
. increasing the number of shares of Common Stock necessary to gain control
of the Company;
. permitting the Company, through the public or private issuance of shares
of Common Stock, to dilute the stock ownership of a potential acquiror;
or
. permitting the Company to privately place shares of Common Stock with
purchasers who side with the Board of Directors in opposing a takeover
bid .
Except for the proposed 2000 Plan and the grants contemplated thereunder
described under Proposal No. 2 above, the option to acquire Series F Preferred
Stock held by Heico, and the convertible note issued to Heico, the Company
does not have any current plans, agreements or understandings under which any
of the additional shares of Common Stock to be authorized would be issued.
If this Proposal No. 3 is approved by the stockholders, the increase in the
number of authorized shares of Common Stock will become effective upon filing
of a certificate of amendment to the Certificate of Incorporation with the
Secretary of State of the State of Delaware. It is anticipated that the
officers of the Company will promptly make appropriate filings in the State of
Delaware and take any other actions necessary to implement the amendment.
However, if in the judgment of the Board of Directors, any circumstances exist
that would make consummation of the increase in the number of authorized
shares of Common Stock inadvisable, then, in accordance with Delaware law and
notwithstanding the approval of the stockholders of the proposed amendment,
the Board of Directors may abandon the increase, either before or after
approval by the stockholders, at any time prior to the effectiveness of the
filing of the certificate of amendment.
The Company's stockholders will have no dissenters' rights with respect to
the proposed amendment and will have no preemptive rights in connection with
the issuance of any new shares of Common Stock.
Approval of this proposal requires (i) the affirmative vote of the holders
of a majority of the outstanding voting stock of the Company and (ii) the
affirmative vote of the holders of a majority of the outstanding Common Stock
voting separately as a class.
The Board of Directors unanimously recommends that the stockholders vote
FOR the proposal to amend the Certificate of Incorporation to increase the
number of authorized shares of Common Stock from 65,000,000 to 200,000,000.
PROPOSAL NO. 4: RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Arthur Andersen LLP has audited the books and records of the
Company since its inception and the Board of Directors will recommend at the
Meeting that the stockholders ratify the selection of Arthur Andersen LLP to
audit the accounts of the Company for the current fiscal year. Representatives
of that firm are
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<PAGE>
expected to be present at the Meeting with the opportunity to make a statement
if they desire to do so and are expected to be available to respond to
appropriate questions.
The affirmative vote of the holders of a majority of the voting power
present in person or by proxy at the Meeting is required for approval of this
proposal.
The Board of Directors unanimously recommends a vote FOR the proposal to
ratify the selection of Arthur Andersen LLP.
STOCKHOLDERS' PROPOSALS FOR THE 2001 ANNUAL MEETING
Proposals of stockholders intended to be presented at the Company's 2001
Annual Meeting of Stockholders under SEC Rule 14a-8 must be received by the
Secretary of the Company at the Company's principal executive offices for
inclusion in the Company's Proxy Statement and form of proxy relating to that
meeting no later than December 31, 2000.
Notice of stockholder matters intended to be submitted at the 2001 Annual
Meeting outside the processes of Rule 14a-8 will be considered untimely for
purposes of SEC Rule 14a-4 if not received by the Company at the Company's
principal executive offices a reasonable time before the Company mails its
proxy materials for its annual meeting. Since the Company expects to mail its
proxy materials in late April, 2001, the Company intends to take the position
that notice of such matters is untimely if not received by March 1, 2001. The
discretionary authority described in the last sentence of this proxy statement
will be conferred with respect to any such untimely matters.
In addition, under the Company's Bylaws, a matter submitted by a
stockholder at the 2001 Annual Meeting will not be considered unless the
stockholder has given notice in writing to the Secretary of the Company which
is received not later than the close of business on the tenth day following
the day on which notice of the 2001 Annual Meeting was mailed or public
disclosure of the date of the meeting is made, whichever first occurs. The
form of the notice must comply with the requirements of the Bylaws.
OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors knows of no
other business that will be presented for consideration at the Meeting. If
other proper matters are presented at the Meeting, however, it is the
intention of the proxy holders named in the enclosed form of proxy to take
such actions as shall be in accordance with their best judgment.
By Order of the Board of Directors
Michael E. Heisley, Sr.
Chief Executive Officer
Dated: June 23, 2000
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<PAGE>
EXHIBIT A
WORLDPORT COMMUNICATIONS, INC.
2000 LONG-TERM STOCK INCENTIVE PLAN
SECTION 1. Purpose of the Plan
The purpose of the WorldPort Communications, Inc. 2000 Long-Term Stock
Incentive Plan (the "Plan") is to promote the success, and enhance the value,
of WorldPort Communications, Inc. (the "Company") by linking the personal
interests of its directors, officers, employees and key consultants to those
of Company shareholders and by providing such individuals with an incentive
for outstanding performance. The Plan is further intended to provide
flexibility to the Company in its ability to motivate, attract, and retain the
services of individuals upon whose judgment, interest, and special effort the
successful conduct of the Company's operation is largely dependent.
SECTION 2. Definitions
For purposes of the Plan, the following terms shall have the meanings as
set forth below:
(a) "Award" means any Option, SAR (including a Limited SAR), Restricted
Stock, Performance Units, Stock granted as a bonus or in lieu of other
awards, other Stock-Based Award or other cash payments granted to a
Participant under the Plan.
(b) "Award Agreement" shall mean the written agreement, instrument or
document evidencing an Award.
(c) "Change of Control" means and includes each of the following:
(i) the acquisition, in one or more transactions, of beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act) by
any person or entity or any group of persons or entities who constitute
a group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) (collectively, a "Person"), other than a trustee or other
fiduciary holding securities under an employee benefit plan of the
Company or a Subsidiary, of any securities of the Company such that, as
a result of such acquisition, such Person (other than a Person covered
under paragraph (c)(iv) below) beneficially owns (within the meaning of
Rule 13d-3 under the Exchange Act), directly or indirectly, voting
securities of the Company representing more than 50% of the total
voting power of the Company's then outstanding voting securities
entitled to vote on a regular basis for a majority of the members of
the Board of Directors of the Company; provided that for this purpose,
a Change in Control will not be deemed to have occurred if the
acquisition does not result, directly or indirectly, in a change in the
composition of the Board of Directors of the Company such that a
majority of the members of the Board of Directors of the Company are
not Continuing Directors;
(ii) the merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in
(x) the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) at
least 50% of the total voting power represented by the voting
securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation (including, without
limitation, an entity that as a result of that transaction owns the
Company or all or substantially all of the Company's assets either
directly or through one or more subsidiaries) in substantially the same
proportions relative to each other as their ownership, immediately
prior to that merger or consolidation, of the voting securities of the
Company, (y) no person (other than the Company, that entity resulting
from that merger or consolidation, or any employee benefit plan (or
related trust) sponsored or maintained by the Company, any Subsidiary
80% or more of whose outstanding voting stock is directly or indirectly
beneficially owned by the Company or that entity resulting from that
merger or consolidation) beneficially owning, directly or indirectly,
30% or more of the then outstanding shares of common stock of the
entity resulting from that merger
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or consolidation or the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of
directors of that entity, and (z) at least a majority of the members of
the Board of Directors of the entity resulting from that merger or
consolidation being Continuing Directors;
(iii) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition
by the Company of (in one or more transactions) all or substantially
all of the Company's assets; or
(iv) with respect to a Person who beneficially owns, as of the
date this Plan is adopted by the Company shareholders, directly or
indirectly, more than 25% of the total voting power of the Company's
then outstanding voting securities entitled to vote on a regular basis
for a majority of the members of the Board of Directors of the Company,
the consummation by such Person of a transaction which results in the
Company no longer having any securities registered pursuant to Section
12 of the Exchange Act.
(d) "Exchange Act" means the Securities Exchange Act of 1934, including
amendments or successor statutes or similar intent.
(e) "Code" means the Internal Revenue Code of 1986, as amended from time
to time.
(f) A "Continuing Director" means, as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of
such Board on January 1, 2000, or (ii) was nominated for election or
elected to such Board with the affirmative vote of at least two-thirds (
2/3) of the Continuing Directors who were members of such Board at the time
of such nomination or election (either by a specific vote or by approval of
the proxy statement of the Company in which that person is named as a
nominee for director, without objection to that nomination), but excluding,
for that purpose, any individual whose initial assumption of office occurs
as a result of an actual or threatened election contest (within the meaning
of Rule 14a-11 of the Exchange Act) with respect to the election or removal
of directors or other actual or threatened solicitation or proxies or
consents by or on behalf of a person other than the Board of Directors.
(g) "Fair Market Value" means, with respect to Stock, Awards, or other
property, the fair market value of such Stock, Awards, or other property
determined by such methods or procedures as shall be established from time
to time by the Committee in good faith and in accordance with applicable
law. Unless otherwise determined by the Committee, the Fair Market Value of
Stock shall mean the closing sales price of Stock on the relevant date as
reported on the stock exchange or market on which the Stock is primarily
traded, or if no sale is made on such date, then the Fair Market Value is
the weighted average of the mean of the closing sales prices of the Stock
on the next preceding day and the next succeeding day on which such sales
were made, as reported on the stock exchange or market on which the Stock
is primarily traded.
(h) "ISO" means any Option designated as an "incentive stock option"
within the meaning of Section 422 of the Code.
(i) "Limited SAR" means an SAR exercisable only for cash upon a Change
of Control or other event, as specified by the Committee.
(j) "Option" means a right granted to a Participant pursuant to Section
6(b) to purchase Stock at a specified price during specified time periods.
An Option may be either an ISO or a nonstatutory Option (an Option not
designated as an ISO).
(k) "Performance Unit" means a right granted to a Participant pursuant
to Section 6(c) to receive a payment in cash equal to the increase in the
book value of the Company during specified time periods if specified
performance goals are met.
(l) "Restricted Stock" means Stock awarded to a Participant pursuant to
Section 6(d) that may be subject to certain restrictions and to a risk of
forfeiture.
(m) "Stock" means the common stock, $.0001 par value per share, of the
Company.
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(n) "Stock-Based Award" means a right that may be denominated or payable
in, or valued in whole or in part by reference to the market value of,
Stock, including, but not limited to, any Option, SAR (including a Limited
SAR), Restricted Stock, Stock granted as a bonus or Awards in lieu of cash
obligations.
(o) "SAR" or "Stock Appreciation Right" means the right granted to a
Participant pursuant to Section 6(e) to be paid an amount measured by the
appreciation in the Fair Market Value of Stock from the date of grant to
the date of exercise of the right, with payment to be made in cash, Stock
or as specified in the Award, as determined by the Committee.
(p) "Subsidiary" shall mean any corporation, during any period in which
it is a "subsidiary corporation" (as that term is defined in Section 424(f)
of the Code) with respect to the Company.
SECTION 3. Administration of the Plan
The Plan shall be administered by a committee of the Board of Directors of
the Company consisting of two or more directors appointed, from time to time,
by the Board or, at the discretion of the Board from time to time, the Plan
may be administered by the Board (the "Committee"). Any action of the
Committee in administering the Plan shall be final, conclusive and binding on
all persons, including the Company, its Subsidiaries, employees, Participants,
persons claiming rights from or through Participants and shareholders of the
Company; provided that the terms and conditions of any Award under the Plan
shall be subject to the ratification and approval by the Board of Directors of
the Company.
Subject to the provisions of the Plan (including the provisions of the
preceding paragraph), the Committee shall have full and final authority in its
discretion (a) to select the persons from among those eligible under Section 4
to participate in the Plan ("Participants") who will receive Awards pursuant
to the Plan; (b) to determine the type or types of Awards to be granted to
each Participant; (c) to determine the number of shares of Stock to which an
Award will relate, the terms and conditions of any Award granted under the
Plan (including, but not limited to, restrictions as to transferability or
forfeiture, exercisability or settlement of an Award and waivers or
accelerations thereof, and waivers of or modifications to performance
conditions relating to an Award, based in each case on such considerations as
the Committee shall determine) and all other matters to be determined in
connection with an Award; (d) to determine whether, to what extent, and under
what circumstances an Award may be settled, or the exercise price of an Award
may be paid, in cash, Stock, other Awards or other property, or an Award may
be canceled, forfeited, or surrendered; (e) to determine whether, and to
certify that, performance goals to which the settlement of an Award is subject
are satisfied; (f) to correct any defect or supply any omission or reconcile
any inconsistency in the Plan, and to adopt, amend and rescind such rules and
regulations as, in its opinion, may be advisable in the administration of the
Plan; and (g) to make all other determinations as it may deem necessary or
advisable for the administration of the Plan. The Committee may delegate to
officers of the Company or any Subsidiary the authority, subject to such terms
as the Committee shall determine, to perform administrative functions and to
perform such other functions as the Committee may determine, to the extent
permitted under Rule 16b-3 under the Exchange Act, Section 162(m) of the Code
and applicable law.
SECTION 4. Participation in the Plan
Participants in the Plan shall be selected by the Committee from among the
employees of the Company and its Subsidiaries, any consultant or other person
providing key services to the Company or a Subsidiary, and any member of the
Board of Directors of the Company or a Subsidiary; provided, however, that
only persons who are key employees of the Company or any Subsidiary may be
granted Options which are intended to constitute ISOs.
SECTION 5. Plan Limitations; Shares Subject to the Plan
(a) Subject to the provisions of Section 8(a) hereof, the aggregate number
of shares of Stock available for issuance as Awards under the Plan shall not
exceed 15,000,000 shares of Stock plus, commencing on January 1, 2001, and on
each January 1 thereafter ending with January 1, 2007, the number of shares of
Stock shall be increased by the number of whole shares of Stock as is equal to
1% of the number of shares of Stock issued and outstanding on each such
January 1.
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(b) Notwithstanding anything in the Plan to the contrary (subject to
adjustment as provided in Section 8(a) of the Plan), the aggregate number of
shares (i) available for issuance as Awards constituting ISOs shall not exceed
5,000,000 shares of Stock; (ii) that may be covered by Awards granted to any
one individual during any calendar year as Options and SARs shall be
2,500,000; or (iii) that may be covered by Awards granted to any non-employee
director in any calendar year as an Option, SAR, and Restricted Stock shall be
250,000 shares of Stock.
(c) No Award may be granted if the number of shares to which such Award
relates, when added to the number of shares previously issued under the Plan
and the number of shares which may then be acquired pursuant to other
outstanding, unexercised Awards, exceeds the number of shares available for
issuance pursuant to the Plan. If any shares subject to an Award are forfeited
or such Award is settled in cash or otherwise terminates for any reason
whatsoever without an actual distribution of shares to the Participant, any
shares counted against the number of shares available for issuance pursuant to
the Plan with respect to such Award shall, to the extent of any such
forfeiture, settlement, or termination, again be available for Awards under
the Plan; provided, however, that the Committee may adopt procedures for the
counting of shares relating to any Award to ensure appropriate counting, avoid
double counting, and provide for adjustments in any case in which the number
of shares actually distributed differs from the number of shares previously
counted in connection with such Award.
SECTION 6. Awards
(a) General. Subject to Section 3, Awards may be granted on the terms and
conditions set forth in this Section 6. In addition, the Committee may impose
on any Award or the exercise thereof, at the date of grant or thereafter
(subject to Section 8(a)), such additional terms and conditions, not
inconsistent with the provisions of the Plan, as the Committee shall
determine, including terms requiring forfeiture of Awards in the event of
termination of employment by the Participant; provided, however, that the
Committee shall retain full power to accelerate or waive any such additional
term or condition as it may have previously imposed. All Awards shall be
evidenced by an Award Agreement.
(b) Options. Subject to Section 3, the Committee may grant Options to
Participants on the following terms and conditions:
(i) Exercise Price. The exercise price of each Option shall be
determined by the Committee at the time the Option is granted, but (except
as provided in Section 7(a)) the exercise price of any Option shall not be
less than the Fair Market Value of the shares covered thereby at the time
the Option is granted.
(ii) Time and Method of Exercise. The Committee shall determine the time
or times at which an Option may be exercised in whole or in part, whether
the exercise price shall be paid in cash or by the surrender at Fair Market
Value of Stock, or by any combination of cash and shares of Stock,
including, without limitation, cash, Stock, other Awards, or other property
(including notes or other contractual obligations of Participants to make
payment on a deferred basis, such as through "cashless exercise"
arrangements, to the extent permitted by applicable law), and the methods
by which Stock will be delivered or deemed to be delivered to Participants.
(iii) Incentive Stock Options. The terms of any Option granted under the
Plan as an ISO shall comply in all respects with the provisions of Section
422 of the Code, including, but not limited to, the requirement that no ISO
shall be granted more than ten years after the effective date of the Plan.
(c) Performance Units. Subject to Section 3, the Committee is authorized to
grant Performance Units to Participants on the following terms and conditions:
(i) Performance Criteria and Period. At the time it makes an award of
Performance Units, the Committee shall establish both the performance goal
or goals and the performance period or periods applicable to the
Performance Units so awarded. A performance goal shall be a goal, expressed
in terms of growth in book value, earnings per share, return on equity or
any other financial or other measurement
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deemed appropriate by the Committee, or may relate to the results of
operations or other measurable progress of either the Company as a whole or
the Participant's Subsidiary, division or department. The performance
period will be the period of time over which one or more of the performance
goals must be achieved, which may be of such length as the Committee, in
its discretion, shall select. Neither the performance goals nor the
performance periods need be identical for all Performance Units awarded at
any time or from time to time. The Committee shall have the authority, in
its discretion, to accelerate the time at which any performance period will
expire or waive or modify the performance goals of any Participant or
Participants. The Committee may also make such adjustments, to the extent
it deems appropriate, to the performance goals for any Performance Units
awarded to compensate for, or to reflect, any material changes which may
have occurred in accounting practices, tax laws, other laws or regulations,
the financial structure of the Company, acquisitions or dispositions of
business or Subsidiaries or any unusual circumstances outside of
management's control which, in the sole judgment of the Committee, alters
or affects the computation of such performance goals or the performance of
the Company or any relevant Subsidiary, division or department.
(ii) Value of Performance Units. The value of each Performance Unit at
any time shall equal the book value per share of the Stock, as such value
appears on the consolidated balance sheet of the Company as of the end of
the fiscal quarter immediately preceding the date of valuation.
(d) Restricted Stock. Subject to Section 3, the Committee is authorized to
grant Restricted Stock to Participants on the following terms and conditions:
(i) Restricted Period. Restricted Stock awarded to a Participant shall
be subject to such restrictions on transferability and other restrictions
for such periods as shall be established by the Committee, in its
discretion, at the time of such Award, which restrictions may lapse
separately or in combination at such times, under such circumstances, or
otherwise, as the Committee may determine.
(ii) Forfeiture. Restricted Stock shall be forfeitable to the Company
upon termination of employment during the applicable restricted periods.
The Committee, in its discretion, whether in an Award Agreement or anytime
after an Award is made, may accelerate the time at which restrictions or
forfeiture conditions will lapse or remove any such restrictions, including
upon death, disability or retirement, whenever the Committee determines
that such action is in the best interests of the Company.
(iii) Certificates for Stock. Restricted Stock granted under the Plan
may be evidenced in such manner as the Committee shall determine. If
certificates representing Restricted Stock are registered in the name of
the Participant, such certificates may bear an appropriate legend referring
to the terms, conditions and restrictions applicable to such Restricted
Stock.
(iv) Rights as a Shareholder. Subject to the terms and conditions of
the Award Agreement, the Participant shall have all the rights of a
shareholder with respect to shares of Restricted Stock awarded to him or
her, including, without limitation, the right to vote such shares and the
right to receive all dividends or other distributions made with respect to
such shares. If any such dividends or distributions are paid in Stock, the
Stock shall be subject to restrictions and a risk of forfeiture to the same
extent as the Restricted Stock with respect to which the Stock has been
distributed.
(e) Stock Appreciation Rights. Subject to Section 3, the Committee is
authorized to grant SARs to Participants on the following terms and
conditions:
(i) Right to Payment. An SAR shall confer on the Participant to whom it
is granted a right to receive, upon exercise thereof, the excess of (x) the
Fair Market Value of one share of Stock on the date of exercise over (y)
the grant price of the SAR as determined by the Committee as of the date of
grant of the SAR, which grant price (except as provided in Section 7(a))
shall not be less than the Fair Market Value of one share of Stock on the
date of grant.
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(ii) Other Terms. The Committee shall determine the time or times at
which an SAR may be exercised in whole or in part, the method of exercise,
method of settlement, form of consideration payable in settlement, method
by which Stock will be delivered or deemed to be delivered to Participants,
whether or not an SAR shall be in tandem with any other Award, and any
other terms and conditions of any SAR. Limited SARs may be granted on such
terms, not inconsistent with this Section 6(e), as the Committee may
determine. Limited SARs may be either freestanding or in tandem with other
Awards.
(f) Bonus Stock and Awards in Lieu of Cash Obligations. Subject to Section
3, the Committee is authorized to grant Stock as a bonus, or to grant Stock or
other Awards in lieu of Company or Subsidiary obligations to pay cash or
deliver other property under other plans or compensatory arrangements;
provided that, in the case of Participants subject to Section 16 of the
Exchange Act, such cash amounts are determined under such other plans in a
manner that complies with applicable requirements of Rule 16b-3 under the
Exchange Act so that the acquisition of Stock or Awards hereunder shall be
exempt from Section 16(b) liability. Subject to Section 3, Stock or Awards
granted hereunder shall be subject to such other terms as shall be determined
by the Committee.
(g) Other Stock-Based Awards. Subject to Section 3, the Committee is
authorized, subject to limitations under applicable law, to grant to
Participants such other Stock-Based Awards in addition to those provided in
Sections 6(b), (d) and (e) hereof, as deemed by the Committee to be consistent
with the purposes of the Plan. Subject to Section 3, the Committee shall
determine the terms and conditions of such Awards. Stock delivered pursuant to
an Award in the nature of a purchase right granted under this Section 6(g)
shall be purchased for such consideration and paid for at such times, by such
methods, and in such forms, including, without limitation, cash, Stock, other
Awards, or other property, as the Committee shall determine.
(h) Cash Payments. Subject to Section 3, the Committee is authorized,
subject to limitations under applicable law, to grant to Participants cash
payments, whether awarded separately or as a supplement to any Stock-Based
Award. Subject to Section 3, the Committee shall determine the terms and
conditions of such Awards.
(i) Dividends and Dividend Equivalents. An Award (including without
limitation an Option or SAR Award) may provide the Participant with the right
to receive dividend payments or dividend equivalent payments with respect to
Stock subject to the Award (both before and after the Stock subject to the
Award is earned, vested, or acquired), which payments may be either made
currently or credited to an account for the Participant, and may be settled in
cash or Stock as determined by the Committee. Any such settlements, and any
such crediting of dividends or dividend equivalents or reinvestment in shares
of Stock, may be subject to such conditions, restrictions and contingencies as
the Committee shall establish, including the reinvestment of such credited
amounts in Stock equivalents.
SECTION 7. Additional Provisions Applicable to Awards
(a) Stand-Alone, Additional, Tandem, and Substitute Awards. Awards granted
under the Plan may, in the discretion of the Committee, be granted either
alone or in addition to, in tandem with, or in substitution for, any other
Award granted under the Plan or any award granted under any other plan of the
Company or any Subsidiary, or any business entity acquired by the Company or
any Subsidiary, or any other right of a Participant to receive payment from
the Company or any Subsidiary. If an Award is granted in substitution for
another Award or award, the Committee shall require the surrender of such
other Award or award in consideration for the grant of the new Award. Awards
granted in addition to, or in tandem with other Awards or awards may be
granted either as of the same time as, or a different time from, the grant of
such other Awards or awards. The per share exercise price of any Option, grant
price of any SAR, or purchase price of any other Award conferring a right to
purchase Stock: (i) granted in substitution for an outstanding Award or award,
shall be not less than the lesser of (x) the Fair Market Value of a share of
Stock at the date such substitute Award is granted or (y) such Fair Market
Value at that date, reduced to reflect the Fair Market Value at that date of
the Award or award required to be surrendered by the Participant as a
condition to receipt of the substitute Award; or (ii) retroactively
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granted in tandem with an outstanding Award or award, shall not be less than
the lesser of the Fair Market Value of a share of Stock at the date of grant
of the later Award or at the date of grant of the earlier Award or award.
(b) Exchange and Buy Out Provisions. The Committee may at any time offer to
exchange or buy out any previously granted Award for a payment in cash, Stock,
other Awards (subject to Section 7(a)), or other property based on such terms
and conditions as the Committee shall determine and communicate to a
Participant at the time that such offer is made.
(c) Performance Conditions. The right of a Participant to exercise or
receive a grant or settlement of any Award, and the timing thereof, may be
subject to such performance conditions as may be specified by the Committee.
(d) Term of Awards. The term of each Award shall, except as provided
herein, be for such period as may be determined by the Committee; provided,
however, that in no event shall the term of any ISO, or any SAR granted in
tandem therewith, exceed a period of ten years from the date of its grant (or
such shorter period as may be applicable under Section 422 of the Code).
(e) Form of Payment. Subject to the terms of the Plan and any applicable
Award Agreement, payments or transfers to be made by the Company or a
Subsidiary upon the grant or exercise of an Award may be made in such forms as
the Committee shall determine, including, without limitation, cash, Stock,
other Awards, or other property (and may be made in a single payment or
transfer, in installments, or on a deferred basis), in each case determined in
accordance with rules adopted by, and at the discretion of, the Committee.
(Such payments may include, without limitation, provisions for the payment or
crediting of reasonable interest on installments or deferred payments.) The
Committee, in its discretion, may accelerate any payment or transfer upon a
change in control as defined by the Committee. The Committee may also
authorize payment upon the exercise of an Option by net issuance or other
cashless exercise methods.
(f) Awards to Comply with Section 162(m). The Committee may (but is not
required to) grant an Award pursuant to the Plan to any key employee which is
intended to qualify as "performance-based compensation" under Section 162(m)
of the Code (a "Performance-Based Award"). The right to receive a Performance-
Based Award, other than Options and SARs granted at not less than Fair Market
Value, shall be conditional upon the achievement of performance goals
established by the Committee in writing at the time such Performance-Based
Award is granted. Such performance goals, which may vary from Participant to
Participant and Performance-Based Award to Performance-Based Award, shall be
based upon the attainment by the Company or any Subsidiary, division or
department of specific amounts of, or increases in, one or more of the
following, any of which may be measured either in absolute terms or as
compared to another company or companies: revenues, earnings, cash flow, net
worth, book value, shareholders' equity, financial return ratios, market
performance or total shareholder return, and/or the completion of certain
business or capital transactions. Before any compensation pursuant to a
Performance-Based Award is paid, the Committee shall certify in writing that
the performance goals applicable to the Performance-Based Award were in fact
satisfied.
The maximum amount which may be granted as Performance-Based Awards to any
Participant in any calendar year shall not exceed (i) Stock-Based Awards for
2,500,000 shares of Stock (whether payable in cash or Stock), subject to
adjustment as provided in Section 8(a) hereof, (ii) 1,000,000 Performance
Units, and (iii) cash payments of $1,000,000.
(g) Change of Control. In the event of a Change of Control of the Company,
all Awards granted under the Plan (including Performance-Based Awards) that
are still outstanding and not yet vested or exercisable or which are subject
to restrictions, subject to such additional conditions (whether occurring at
the time of such Change in Control or thereafter) as the Committee shall
determine and as shall be set forth in the Award Agreement with the
Participant, may become immediately 100% vested in each Participant or may be
free of any restrictions, as of the first date that the definition of Change
of Control has been fulfilled, and shall be exercisable for such period (but
not in excess of the remaining duration of the Award) as is provided in such
Award Agreement.
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SECTION 8. Adjustments upon Changes in Capitalization; Acceleration in Certain
Events
(a) In the event that the Committee shall determine that any stock
dividend, recapitalization, forward split or reverse split, reorganization,
merger, consolidation, spin-off, combination, repurchase or share exchange, or
other similar corporate transaction or event, affects the Stock or the book
value of the Company such that an adjustment is appropriate in order to
prevent dilution or enlargement of the rights of Participants under the Plan,
then the Committee shall, in such manner as it may deem equitable, adjust any
or all of (i) the number and kind of shares of Stock which may thereafter be
issued in connection with Awards; (ii) the number and kind of shares of Stock
issuable in respect of outstanding Awards; (iii) the aggregate number and kind
of shares of Stock available under the Plan; (iv) the number of Performance
Units which may thereafter be granted and the book value of the Company with
respect to outstanding Performance Units; and (v) the exercise price, grant
price, or purchase price relating to any Award or, if deemed appropriate, make
provision for a cash payment with respect to any outstanding Award; provided,
however, in each case, that no adjustment shall be made which would cause the
Plan to violate Section 422(b)(1) of the Code with respect to ISOs or would
adversely affect the status of a Performance-Based Award as "performance-based
compensation" under Section 162(m) of the Code.
(b) In addition, the Committee is authorized to make adjustments in the
terms and conditions of, and the criteria included in, Awards in recognition
of unusual or nonrecurring events (including, without limitation, events
described in the preceding paragraph) affecting the Company or any Subsidiary,
or in response to changes in applicable laws, regulations, or accounting
principles. Notwithstanding the foregoing, no adjustment shall be made in any
outstanding Performance-Based Awards to the extent that such adjustment would
adversely affect the status of that Performance-Based Award as "performance-
based compensation" under Section 162(m) of the Code.
SECTION 9. General Provisions
(a) Changes to the Plan and Awards. The Board of Directors of the Company
may amend, alter, suspend, discontinue, or terminate the Plan or the
Committee's authority to grant Awards under the Plan without the consent of
the Company's shareholders or Participants, except that any such amendment,
alteration, suspension, discontinuation, or termination shall be subject to
the approval of the Company's shareholders within one year after such Board
action if such shareholder approval is required by any federal or state law or
regulation or the rules of any stock exchange or automated quotation system on
which the Stock may then be listed or quoted, and the Board may otherwise, in
its discretion, determine to submit other such changes to the Plan to the
shareholders for approval; provided, however, that without the consent of an
affected Participant, no amendment, alteration, suspension, discontinuation,
or termination of the Plan may materially and adversely affect the rights of
such Participant under any Award theretofore granted and any Award Agreement
relating thereto. The Committee may waive any conditions or rights under, or
amend, alter, suspend, discontinue, or terminate, any Award theretofore
granted and any Award Agreement relating thereto; provided, however, that
without the consent of an affected Participant, no such amendment, alteration,
suspension, discontinuation, or termination of any Award may materially and
adversely affect the rights of such Participant under such Award.
The foregoing notwithstanding, any performance condition specified in
connection with an Award shall not be deemed a fixed contractual term, but
shall remain subject to adjustment by the Committee, in its discretion at any
time in view of the Committee's assessment of the Company's strategy,
performance of comparable companies, and other circumstances, except to the
extent that any such adjustment to a performance condition would adversely
affect the status of a Performance-Based Award as "performance-based
compensation" under Section 162(m) of the Code.
(b) No Right to Award or Employment. No Participant or other person shall
have any claim or right to receive an Award under the Plan. Neither the Plan
nor any action taken hereunder shall be construed as giving any employee any
right to be retained in the employ of the Company or any Subsidiary.
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(c) Taxes. The Company or any Subsidiary is authorized to withhold from any
Award granted, any payment relating to an Award under the Plan, including from
a distribution of Stock or any payroll or other payment to a Participant
amounts of withholding and other taxes due in connection with any transaction
involving an Award, and to take such other action as the Committee may deem
advisable to enable the Company and Participants to satisfy obligations for
the payment of withholding taxes and other tax obligations relating to any
Award. This authority shall include authority to withhold or receive Stock or
other property and to make cash payments in respect thereof in satisfaction of
a Participant's tax obligations.
(d) Limits on Transferability; Beneficiaries. No Award or other right or
interest of a Participant under the Plan shall be pledged, encumbered, or
hypothecated to, or in favor of, or subject to any lien, obligation, or
liability of such Participants to, any party, other than the Company or any
Subsidiary, or assigned or transferred by such Participant otherwise than by
will or the laws of descent and distribution, and such Awards and rights shall
be exercisable during the lifetime of the Participant only by the Participant
or his or her guardian or legal representative. Notwithstanding the foregoing,
the Committee may, in its discretion, provide that Awards or other rights or
interests of a Participant granted pursuant to the Plan (other than an ISO) be
transferable, without consideration, to such persons as may be permitted by
the Committee. The Committee may attach to such transferability feature such
terms and conditions as it deems advisable. In addition, a Participant may, in
the manner established by the Committee, designate a beneficiary (which may be
a person or a trust) to exercise the rights of the Participant, and to receive
any distribution, with respect to any Award upon the death of the Participant.
A beneficiary, guardian, legal representative or other person claiming any
rights under the Plan from or through any Participant shall be subject to all
terms and conditions of the Plan and any Award Agreement applicable to such
Participant, except as otherwise determined by the Committee, and to any
additional restrictions deemed necessary or appropriate by the Committee.
(e) No Rights to Awards; No Shareholder Rights. No Participant shall have
any claim to be granted any Award under the Plan, and there is no obligation
for uniformity of treatment of Participants. No Award shall confer on any
Participant any of the rights of a shareholder of the Company unless and until
Stock is duly issued or transferred to the Participant in accordance with the
terms of the Award.
(f) Discretion. In exercising, or declining to exercise, any grant of
authority or discretion hereunder, the Committee may consider or ignore such
factors or circumstances and may accord such weight to such factors and
circumstances as the Committee alone and in its sole judgment deems
appropriate and without regard to the affect such exercise, or declining to
exercise such grant of authority or discretion, would have upon the affected
Participant, any other Participant, any employee, the Company, any Subsidiary,
any shareholder or any other person.
(g) Effective Date; Shareholder Approval. Subject to the approval of the
shareholders of the Company at the Company's 2000 annual meeting of its
shareholders, the Plan shall be effective as of March 15, 2000; provided,
however, that to the extent that Awards are granted under the Plan prior to
its approval by shareholders, the Awards shall be contingent on approval of
the Plan by the shareholders of the Company at such annual meeting.
A-9
<PAGE>
WORLDPORT COMMUNICATIONS, INC.
975 Weiland Road, Buffalo Grove, Illinois 60089
This Proxy is Being Solicited on Behalf of the Board of Directors
The undersigned stockholder(s) of WorldPort Communications, Inc., a
corporation under the laws of the State of Delaware, hereby appoints Michael E.
Heisley, Sr. and John T. Hanson, as my (our) proxies, each with the power to
appoint a substitute, and hereby authorizes them, and each of them
individually, to represent and to vote, as designated below, all of the shares
of WorldPort Communications, Inc., which the undersigned is or may be entitled
to vote at the Annual Meeting of Stockholders to be held at the Marriott's
Lincolnshire Resort located at Ten Marriott Drive, Lincolnshire, Illinois at
10:00 a.m. local time, on Friday, July 21, 2000, or any adjournment thereof.
The Board of Directors recommends a vote FOR the proposals below.
1. The election of four (4) Directors of the Company.
[_] FOR all nominees listed [_] WITHHOLD
(except those nominees whose AUTHORITY to
names have been stricken vote for all
pursuant to the instruction nominees
below) listed
Nominees: Michael E. Heisley, Sr., Stanley H. Meadows, Andrew G. C. Sage
II and Kathleen A. Cote
(INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name in the list above)
2. Approve the Company's 2000 Long-Term Stock Incentive Plan.
[_] FOR[_] AGAINST[_] ABSTAIN
3. Approve the increase in the number of authorized shares of the Company's
Common Stock from 65,000,000 shares to 200,000,000 shares and to amend
the Company's Certificate of Incorporation accordingly.
[_] FOR[_] AGAINST[_] ABSTAIN
4. Ratify the selection of Arthur Andersen LLP as the Company's independent
accountants for the year ending December 31, 2000.
[_] FOR[_] AGAINST[_] ABSTAIN
In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting. This proxy, when properly
executed, will be voted in the manner directed herein by the undersigned
stockholder.
If no direction is made, this proxy will be voted FOR Proposals 1, 2, 3 and
4.
Your signature on this proxy is
your acknowledgment of receipt of
the Notice of Meeting and Proxy
Statement, both dated June 23,
2000.
Signature(s): _______________ Date:
(Signature)
Signature(s): _______________ Date:
(Signature
if held
jointly)
NOTE: Please sign exactly as name
appears above. When shares are held
by joint tenants, both should sign.
When signing as attorney, executor,
administrator, trustee, or
guardian, please give title as
such. If stockholder is a
corporation, please sign in full
corporate name by President or
other authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY, USING THE ENCLOSED
ENVELOPE.
