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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (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 Rule 14a-11(c) or Rule 14a-12
BRIGHT HORIZONS FAMILY SOLUTIONS, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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BRIGHT HORIZONS FAMILY SOLUTIONS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 23, 2001
--------------------
The 2001 annual meeting of stockholders of Bright Horizons Family
Solutions, Inc. will be held at 10:00 a.m., local time, on Wednesday, May 23,
2001, at our corporate offices, 200 Talcott Avenue South, Watertown,
Massachusetts. At the meeting, stockholders will act on the following proposals:
1. Election of four directors, each for a term of three years;
2. Approval of an amendment to our 1998 Stock Incentive Plan to
increase the number of shares reserved for issuance thereunder
by an additional 750,000 shares; and
3. Any other matters that may properly come before the meeting.
Stockholders of record at the close of business on April 2, 2001 are
entitled to vote at the meeting or any postponement or adjournment.
Your vote is important. Please COMPLETE, DATE, SIGN AND RETURN THE
ENCLOSED PROXY, in order that as many shares as possible will be represented.
By order of the Board of Directors,
/s/ Stephen I. Dreier
Chief Administrative Officer and
Secretary
Watertown, Massachusetts
April 20, 2001
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TABLE OF CONTENTS
ABOUT THE MEETING................................................................................................ 1
What is the purpose of the annual meeting?............................................................ 1
Who is entitled to vote?.............................................................................. 1
What constitutes a quorum?............................................................................ 1
How do I vote?........................................................................................ 1
Can I change my vote after I return my proxy card?.................................................... 2
What are the Board's recommendations?................................................................. 2
What vote is required to approve each item?........................................................... 2
How do I vote my shares if they are held in the name of my broker (street name)?...................... 2
STOCK OWNERSHIP.................................................................................................. 3
Who are the largest owners of our stock?.............................................................. 3
How much stock do our directors and executive officers own?........................................... 4
PROPOSAL 1--ELECTION OF DIRECTORS................................................................................ 6
Directors Standing for Election....................................................................... 6
Directors Continuing in Office........................................................................ 7
How are directors compensated?........................................................................ 9
How often did the Board meet during 2000?............................................................. 9
What committees has the Board established?............................................................ 9
Report of the Audit Committee......................................................................... 10
Executive Compensation................................................................................ 11
Employment Agreements................................................................................. 13
Severance Agreements.................................................................................. 13
Report of the Compensation Committee on Executive Compensation........................................ 14
Performance Graph..................................................................................... 17
Compensation Committee Interlocks and Insider Participation........................................... 18
Certain Relationships and Related Transactions........................................................ 18
PROPOSAL 2--APPROVAL OF AMENDMENT TO OUR 1998 STOCK INCENTIVE PLAN............................................... 18
The Proposed Amendment................................................................................ 18
Summary of the Material Provisions of the Plan........................................................ 19
Options Granted Under the Plan........................................................................ 21
Certain U.S. Federal Income Tax Consequences.......................................................... 21
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.......................................................... 23
INDEPENDENT PUBLIC ACCOUNTANTS................................................................................... 23
Fees Billed to the Company by Arthur Andersen LLP During 2000......................................... 23
ADDITIONAL INFORMATION........................................................................................... 23
APPENDIX A CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
APPENDIX B THIRD AMENDMENT TO THE 1998 STOCK INCENTIVE PLAN
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BRIGHT HORIZONS FAMILY SOLUTIONS, INC.
200 TALCOTT AVENUE SOUTH
WATERTOWN, MASSACHUSETTS 02472
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PROXY STATEMENT
--------------------
The Board of Directors is soliciting proxies to be used at the 2001
annual meeting. This proxy statement and the enclosed proxy will be mailed to
stockholders on or about April 20, 2001.
The Company was incorporated in Delaware in April 1998. On July 24,
1998, two publicly traded companies, CorporateFamily Solutions, Inc. and Bright
Horizons, Inc., were merged into two wholly owned subsidiaries of the Company.
Pursuant to the merger, each share of common stock of CorporateFamily Solutions
was exchanged for one share of the Company's common stock, and each share of
common stock of Bright Horizons was exchanged for 1.15022 shares of the
Company's common stock. The Company also assumed all outstanding options to
purchase CorporateFamily Solutions and Bright Horizons common stock. Unless the
context otherwise requires, references in this proxy statement to the Company
for periods prior to July 24, 1998 refer to one or both of the Company's
predecessors, CorporateFamily Solutions and Bright Horizons, as appropriate. All
references to "we", "us", and "our" refer to the Company.
ABOUT THE MEETING
WHAT IS THE PURPOSE OF THE ANNUAL MEETING?
At our annual meeting, stockholders will act upon the proposals
outlined in the accompanying notice of meeting. In addition, our management will
report on our performance during fiscal 2000 and respond to questions from
stockholders.
WHO IS ENTITLED TO VOTE?
Only stockholders of record at the close of business on the record
date, April 2, 2001, are entitled to receive notice of the annual meeting, and
to vote the shares of common stock that they held on that date at the meeting,
or any postponement or adjournment of the meeting. Each outstanding share
entitles its holder to cast one vote on each matter to be voted upon.
WHAT CONSTITUTES A QUORUM?
The presence at the meeting, in person or by proxy, of the holders of a
majority of the shares of common stock outstanding on the record date will
constitute a quorum, permitting the meeting to conduct its business. As of the
record date, 12,603,767 shares of our common stock were outstanding. Proxies
received but marked as abstentions and broker non-votes will be included in the
calculation of the number of shares considered to be present at the meeting.
HOW DO I VOTE?
If you complete and properly sign the accompanying proxy card and
return the card to us, it will be voted as you direct. If you are a registered
stockholder and attend the meeting, you may deliver your completed proxy card in
person. "Street name" stockholders who wish to vote at the meeting will need to
obtain a proxy form from the institution that holds their shares.
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CAN I CHANGE MY VOTE AFTER I RETURN MY PROXY CARD?
Yes. You can revoke your proxy at any time before it is exercised in
any of three ways:
- by submitting written notice of revocation to the Secretary;
- by submitting another proxy that is later dated and properly signed;
or
- by voting in person at the meeting.
WHAT ARE THE BOARD'S RECOMMENDATIONS?
Unless you give other instructions on your proxy card, the persons
named as proxies on the proxy card will vote in accordance with the
recommendations of the Board of Directors. The Board recommends a vote:
- for election of each of the nominated directors (see page 6); and
- for approval of the amendment to our 1998 Stock Incentive Plan (see
page 18).
With respect to any other proposal that properly comes before the
meeting, the proxies will vote as recommended by the Board of Directors or, if
no recommendation is given, in their own discretion.
WHAT VOTE IS REQUIRED TO APPROVE EACH ITEM?
ELECTION OF DIRECTORS. The affirmative vote of a plurality of the votes
cast by the stockholders entitled to vote at the meeting is required for the
election of directors. A properly executed proxy marked "WITHHOLD AUTHORITY"
with respect to the election of one or more directors will not be voted with
respect to the director or directors indicated, although it will be counted for
purposes of determining whether there is a quorum. Therefore, so long as a
quorum is present, withholding authority will have no effect on whether one or
more directors is elected.
APPROVAL OF THE AMENDMENT TO OUR 1998 STOCK INCENTIVE PLAN; OTHER
PROPOSALS. The amendment to our 1998 Stock Incentive Plan and any other
proposal, other than the election of directors, that properly comes before the
meeting will be approved if a majority of the shares represented and voting on
the proposal vote in favor of the proposal. A properly executed proxy marked
"ABSTAIN" with respect to any such proposal will not be voted, although it will
be counted for purposes of determining whether there is a quorum. Accordingly,
an abstention will have the effect of a negative vote.
HOW DO I VOTE MY SHARES IF THEY ARE HELD IN THE NAME OF MY BROKER (STREET NAME)?
If your shares are held by your broker, often referred to as in "street
name," you should receive a form from your broker seeking instruction as to how
your shares should be voted. If you do not issue instructions to your broker,
your broker may vote your shares at its discretion on your behalf. However, if
you hold your shares in "street name" through a broker or other nominee, your
broker or nominee may or may not be permitted to exercise voting discretion with
respect to the approval of the amendment to the 1998 Stock Incentive Plan or
other proposals to be voted on. A broker holding shares registered in a street
name is permitted to vote, in the broker's discretion, on routine matters
without receiving instructions from the client, but is not permitted to vote
without instructions on non-routine matters. A broker non-vote occurs when the
broker returns a proxy card without a vote (the "non-vote") on the non-routine
matter. Shares represented by the broker non-votes will not be counted as votes
for or against any proposal, but they will be counted in determining whether
there is a quorum for purposes of each proposal.
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STOCK OWNERSHIP
WHO ARE THE LARGEST OWNERS OF OUR STOCK?
The following table shows those stockholders who beneficially own more
than 5% of our common stock.
AGGREGATE NUMBER OF PERCENT OF
SHARES BENEFICIALLY SHARES
NAME OWNED OUTSTANDING (1)
John McStay Investment Counsel, L.P.(2).............. 1,664,500 13.21%
Wellington Management Company, LLP(3)................ 1,352,200 10.73%
Delaware Management Holdings(4)...................... 1,202,832 9.54%
The Hartford Mutual Funds, Inc.(5)................... 828,200 6.57%
Frontier Capital Management Co., LLC(6).............. 704,650 5.59%
(1) Based on the number of shares outstanding at April 2, 2001.
(2) This information is based upon a Schedule 13F filed by American
International Group, Inc. on February 14, 2001 for the period ending
December 31, 2000, on behalf of itself, AIG Global Investment Group,
Inc., and John McStay Investment Counsel, L.P. John McStay Investment
Counsel, L.P. is an investment advisor registered under Section 203 of
the Investment Advisors Act of 1940. American International Group, Inc.
and John McStay Investment Counsel, L.P. report shared voting power as
to 1,663,100 shares, no voting power as to 1,400 shares, and shared
dispositive power as to 1,664,500 shares of our common stock. The
principal address of John McStay Investment Counsel, L.P. is 5949
Sherry Lane, Suite 1600, Dallas, Texas 75225 and the principal address
of American International Group, Inc. is 70 Pine Street, New York, New
York 10270.
(3) This information is based upon a Schedule 13G/A filed on February 13,
2001. Wellington Management Company, LLP is an investment advisor
registered under Section 203 of the Investment Advisors Act of 1940 and
reports shared voting power as to 1,164,700 shares and shared
dispositive power as to 1,352,200 shares of our common stock. Its
principal address is 75 State Street, Boston, Massachusetts 02109.
(4) This information is based upon a Schedule 13G/A filed on March 7, 2001.
Delaware Management Holdings is a parent holding company or control
person in accordance with Rule 13d-1(b)(l)(ii)(G) of the Securities
Exchange Act of 1934 and reports sole voting power as to 1,192,468
shares, sole dispositive power as to 1,197,932 shares, and shared
dispositive power as to 4,900 shares. Its principal address is 2005
Market Street, Philadelphia, Pennsylvania 19103.
(5) This information is based upon a Schedule 13G/A filed on February 14,
2001 by The Hartford Mutual Funds, Inc., on behalf of The Hartford
Capital Appreciation Fund. The Hartford Mutual Funds, Inc. is an
investment company registered under Section 8 of the Investment Company
Act of 1940 and reports shared voting power as to 828,200 shares and
shared dispositive power as to 828,200 shares of our common stock. Its
principal address is 200 Hopmeadow Street, Simsbury, Connecticut 06089.
(6) This information is based upon a Schedule 13G filed by Frontier Capital
Management Co., LLC on February 14, 2001. Frontier Capital Management
Co., LLC is an investment advisor registered under Section 203 of the
Investment Advisors Act of 1940 and reports sole voting power and sole
dispositive power as to 704,650 shares of our common stock. Its
principal address is 99 Summer Street, Boston, Massachusetts 02110.
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HOW MUCH STOCK DO OUR DIRECTORS AND EXECUTIVE OFFICERS OWN?
The following table shows the amount of our common stock beneficially
owned (unless otherwise indicated) by our directors, our executive officers
named in the Summary Compensation Table below and our directors and executive
officers as a group. Except as otherwise indicated, all information is as of the
record date, April 2, 2001.
AGGREGATE NUMBER OF RIGHT TO
OUTSTANDING SHARES ACQUIRE WITHIN PERCENT OF SHARES
NAME BENEFICIALLY OWNED(1) 60 DAYS(2) OUTSTANDING(3)
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Roger H. Brown........................................... 314,437 260,186 4.47%
Linda A. Mason........................................... 314,437 260,186 4.47%
Robert D. Lurie.......................................... 391,151(4) 1,333 3.11%
Marguerite W. Sallee..................................... 75,536(5) 78,584 1.22%
E. Townes Duncan......................................... 146,904 6,617 1.22%
Mary Ann Tocio........................................... 10,000 91,238 *
Stephen I. Dreier........................................ 38,705 43,073 *
David H. Lissy........................................... 0 55,342 *
Elizabeth J. Boland...................................... 11,930 16,989 *
William H. Donaldson..................................... 1,000 33,421 *
Joshua Bekenstein........................................ 10,406 4,667 *
Sara Lawrence-Lightfoot.................................. 0 14,251 *
Fred K. Foulkes.......................................... 9,201 1,333 *
JoAnne Brandes........................................... 0 5,067 *
Ian M. Rolland........................................... 1,000 4,667 *
Directors and executive officers as a group (15 persons). 1,010,270 616,768 12.31%
* Represents less than 1% of our outstanding common stock
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(1) The number of shares shown includes shares that are individually or
jointly owned, as well as shares over which the individual has either
sole or shared investment or voting authority. Certain of our directors
and executive officers disclaim beneficial ownership of some of the
shares included in the table, as follows:
- Mr. Brown - 188,712 shares held by Mr. Brown and Linda A.
Mason, his wife, as co-trustees of the Roger H. Brown, Jr.
Trust, 125,725 shares held by Ms. Mason and Mr. Brown, as
co-trustees of the Linda A. Mason Trust. North American
Management Corp., the investment advisor of the Roger H.
Brown, Jr. Trust and Linda A. Mason Trust, has discretionary
authority to dispose of the shares held in the trusts.
- Ms. Mason - 125,725 shares held by Ms. Mason and Roger H.
Brown, her husband, as co-trustees of the Linda A. Mason
Trust, 188,712 shares held by Mr. Brown and Ms. Mason as
co-trustees of the Roger H. Brown, Jr. Trust. North American
Management Corp., the investment advisor of the Roger H.
Brown, Jr. Trust and Linda A. Mason Trust, has discretionary
authority to dispose of the shares held in the trusts.
- Mr. Lurie - 1,651 shares held by Jane Kyle-Lurie, his wife.
- Mr. Duncan - 123,794 shares held by Solidus Company, of which
Mr. Duncan is the president and a significant interest holder;
16,000 shares held by Solidus Partners, LP, of which Solidus
Company is the General Partner (Mr. Duncan disclaims
beneficial ownership of these shares, except to the extent of
his pecuniary interest in Solidus Company); 500 shares held by
his children; 100 shares held by his wife; 3,000 shares held
in accounts for the benefit of Mr. Duncan's mother; and 456
shares held in several trusts of which his wife is trustee
(Mr. Duncan disclaims beneficial ownership of these shares).
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(2) Reflects the number of shares that could be purchased upon exercise of
options available at April 2, 2001 or within 60 days thereafter under
our stock incentive plans. Certain of our directors and executive
officers disclaim beneficial ownership of shares purchasable upon
exercise of options included in the table, as follows:
- Mr. Brown - 83,039 shares issuable upon exercise of options
held by Linda A. Mason, his wife.
- Ms. Mason - 177,147 shares issuable upon exercise of options
held by Roger H. Brown, her husband.
(3) Based on the number of shares outstanding at, or that could be
purchased upon exercise of options within 60 days of, April 2, 2001.
(4) Includes 100,000 shares subject to a forward sale agreement.
(5) Includes 50,000 shares subject to a zero-cost collar arrangement
pursuant to which Ms. Sallee wrote a covered call option and purchased
a put option. Only one of the options can be in the money on the
expiration date, June 13, 2003, at which time the in-the-money option
will be exercised (and settled in cash), and the other option will
expire. If neither option is in the money on the expiration date, both
options will expire.
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PROPOSAL 1--ELECTION OF DIRECTORS
DIRECTORS STANDING FOR ELECTION
Our Board of Directors is divided into three classes (Class I, Class II
and Class III). At each annual meeting of stockholders, directors constituting
one class are elected for a three-year term. Our Certificate of Incorporation
provides that each class shall consist, as nearly as possible, of one-third of
the total number of directors constituting the entire Board of Directors. The
current Board of Directors is comprised of eleven members, four of whom will be
elected at the annual meeting. The Board of Directors has nominated and
recommends to the stockholders William H. Donaldson, Fred K. Foulkes, Linda A.
Mason, and Ian M. Rolland, each of whom is an incumbent Class III director, for
election as Class III directors to serve until the annual meeting of
stockholders in 2004 and until such time as their respective successors are duly
elected and qualified.
If any of the nominees should become unable to accept election, the
persons named as proxies on the proxy card may vote for such other person or
persons as may be designated by the Board of Directors. Management has no reason
to believe that any of the nominees named above will be unable to serve. Certain
information with respect to the nominees for election as Class III directors and
with respect to Class I and Class II directors (who are not nominees for
election at the annual meeting) is set forth below.
CLASS III DIRECTORS
(TO BE ELECTED; TERMS EXPIRE IN 2004)
William H. Donaldson Age 69
William H. Donaldson has served as a director of the Company since the merger.
From January 1998 until the merger, Mr. Donaldson served as a director of Bright
Horizons. In February 2000, Mr. Donaldson became the Chairman, President and
Chief Executive Officer of Aetna, Inc., one of the nation's largest health
benefits, insurance and financial services companies, and since January 2001,
has served as Chairman of Aetna, Inc. Mr. Donaldson served as senior advisor to
Donaldson, Lufkin & Jenrette, Inc., the investment banking firm he co-founded in
1959, from 1995 until his employment by Aetna in February 2000. He served as
Chairman and Chief Executive Officer of Donaldson, Lufkin & Jenrette, Inc. until
1973, when he became Undersecretary of State under Dr. Henry Kissinger and later
counsel to Vice President Nelson Rockefeller. Mr. Donaldson served as Chairman
and Chief Executive Officer of the New York Stock Exchange from 1990 until 1995.
He was the founding dean of the Yale University School of Management and held
the tenured chair as the William S. Beinecke Professor of Management Studies. In
addition to serving on the board of directors of Aetna, Inc., Mr. Donaldson
serves on the board of Mail.com, Inc., a global provider of e-mail services. He
also serves as Chairman of the Carnegie Endowment for International Peace and is
a trustee of the Lincoln Center for the Performing Arts, the New York Police
Foundation, the Marine Corps University Foundation, the Aspen Institute and the
Foreign Policy Association. He is also Chairman of the Advisory Board of the
Yale University School of Management.
Fred K. Foulkes Age 59
Professor Fred K. Foulkes has served as a director of the Company since the
merger. Mr. Foulkes has been the Director of the Human Resources Policy
Institute for Boston University School of Management since 1981 and has taught
courses in human resource management and strategic management at Boston
University since 1980. From 1968 to 1980, Professor Foulkes was a member of the
Harvard Business School faculty. His principal publications include Personnel
Policies in Large Nonunion Companies and Executive Compensation: A Strategic
Guide for the 1990's. Professor Foulkes is a recipient of the Employment
Management Association Award and the Fellow Award, the National Academy of Human
Resources award of distinction for outstanding achievement in the human resource
profession.
Linda A. Mason Age 46
Linda A. Mason has served as a director of the Company since the merger. Ms.
Mason also served as Chairman of the Board from the merger until May 1999 when
she became Co-Chairman of the Board. Ms. Mason co-founded Bright Horizons and
served as a director and President of Bright Horizons from its inception in 1986
until the merger. From its inception until September 1994, Ms. Mason also acted
as Bright Horizons' Treasurer. Prior to founding Bright Horizons, Ms. Mason was
co-director of the Save the Children relief and development effort in Sudan and
worked as a program officer with CARE in Thailand. Prior to 1986, Ms. Mason
worked as a management consultant with Booz, Allen and Hamilton. Ms. Mason also
is a director of The Horizons Initiative, a non-profit organization that
provides support for homeless children and their families, and the Globe
Newspaper Company, a subsidiary of The New York Times Company which owns and
publishes The Boston Globe, is a Fellow of the Yale Corporation and serves on
the Advisory Board of the Yale University School of Management. Ms. Mason is the
wife of Roger H. Brown.
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Ian M. Rolland Age 67
Ian M. Rolland has served as a director of the Company since September 1998. Mr.
Rolland was Chairman and Chief Executive Officer of Lincoln National
Corporation, a provider of life insurance and annuities, property-casualty
insurance and related services through its subsidiary companies, from 1992 until
July 1998 and President and Chief Executive Officer from 1977 to 1992. Mr.
Rolland is a director of NiSource Inc., a holding company for various utility
companies, and is a member of the Board of Advisors of CID Ventures, a venture
capital fund.
THE BOARD OF DIRECTORS RECOMMENDS THAT
STOCKHOLDERS VOTE "FOR" THESE NOMINEES.
DIRECTORS CONTINUING IN OFFICE
CLASS I DIRECTORS
(TERMS EXPIRE IN 2002)
JoAnne Brandes Age 47
JoAnne Brandes has served as a director of the Company since the merger. From
December 1995 until the merger, Ms. Brandes served as a director of
CorporateFamily Solutions. Ms. Brandes has served as Senior Vice President,
General Counsel and Secretary for S.C. Johnson Commercial Markets, Inc., a
manufacturer and marketer of cleaning and sanitation products and services since
October 1997. From October 1996 to October 1997, Ms. Brandes served as Vice
President and General Counsel for S.C. Johnson Commercial Markets, Inc. From May
1992 to October 1996, Ms. Brandes served as Vice President of Corporate
Communication Worldwide for S.C. Johnson & Son, Inc., a manufacturer of cleaning
and personal care products. Prior thereto, Mr. Brandes served as Senior Legal
Counsel to S.C. Johnson & Son, Inc. from 1981 to 1992. Ms. Brandes serves as a
director of Alternative Resources Corporation, a temporary technical staffing
company, a director of JohnsonFamily Funds, Inc., a mutual fund, a Regent in the
University of Wisconsin System Board of Regents, Director of Child Care Action
Campaign, a not-for-profit organization which promotes quality child care, and a
member of the State of Wisconsin's Governor's Child Care Council.
Joshua Bekenstein Age 42
Joshua Bekenstein has served as a director of the Company since the merger. From
1986 until the merger, Mr. Bekenstein served as a director of Bright Horizons.
Since 1993, Mr. Bekenstein has been a Managing Director of Bain Capital, Inc.
and has been a general partner of Bain Venture Capital since its inception in
1987. Mr. Bekenstein serves as a director of Waters Corporation, a manufacturer
and distributor of high performance liquid chromatography instruments, Sealy
Corporation, the largest conventional bedding manufacturer in North America, and
The Horizons Initiative.
Roger H. Brown Age 44
Roger H. Brown has served as a director of the Company since the merger and has
also served as Chief Executive Officer of the Company since May 1999. Mr Brown
was President of the Company from the merger until June 2000. Mr. Brown
co-founded Bright Horizons and served as Chairman and Chief Executive Officer of
Bright Horizons from its inception in 1986 until the merger. Prior to 1986, he
worked as a management consultant for Bain & Company, Inc. Mr. Brown currently
serves as a director of The Horizons Initiative and Stand for Children, a
non-profit organization dedicated to improving the quality of life for children.
He is also the Chairman of the commission to reinvent the National Association
for the Education of Young Children's (NAEYC) accreditation process. Mr. Brown
is the husband of Linda A. Mason.
Robert D. Lurie Age 55
Robert D. Lurie has served as a director of the Company since the merger. Prior
to the merger, Mr. Lurie served as a director and Chairman of CorporateFamily
Solutions since December 1995 and as Director of Research and Development since
January 1998. He was President of The Resource Group, a division of
CorporateFamily Solutions focused on providing consulting and resource support
to work/life center operations, from October 1995 to December 1997. From 1984 to
1995, Mr. Lurie served as President and Chief Executive Officer of Resources for
Child Care Management, Inc., which was acquired by CorporateFamily Solutions in
October 1995.
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CLASS II DIRECTORS
(TERMS EXPIRE IN 2003)
E. Townes Duncan Age 47
E. Townes Duncan has served as a director of the Company since the merger. From
April 1988 until the merger, Mr. Duncan served as a director of CorporateFamily
Solutions. Mr. Duncan has served as the President of Solidus Company, a private
investment firm, since January 1997. Mr. Duncan was a director of Comptronix
Corporation, a provider of electronics contract manufacturing services, and
served as Chairman of the Board and Chief Executive Officer of Comptronix
Corporation from November 1993 to May 1997. Comptronix Corporation filed a
petition for Chapter 11 protection on August 9, 1996. From 1985 to November
1993, Mr. Duncan was a Vice President and principal of Massey Burch Investment
Group, Inc., a venture capital corporation. Mr. Duncan is a director of J.
Alexander's Corporation, an owner and operator of restaurants.
Sara Lawrence-Lightfoot Age 56
Dr. Sara Lawrence-Lightfoot has served as a director of the Company since the
merger. From 1993 until the merger, Dr. Lawrence-Lightfoot served as a director
of Bright Horizons. Since 1972, Dr. Lawrence-Lightfoot has been a professor of
education at Harvard University. In addition to serving as a director of Bright
Horizons, Dr. Lawrence-Lightfoot is also a director of the Globe Newspaper
Company, a subsidiary of The New York Times Company which owns and publishes The
Boston Globe. Dr. Lawrence-Lightfoot has received honorary degrees from 16
universities and colleges including Bank Street College and Wheelock College,
two of the nation's foremost schools of early childhood education.
Marguerite W. Sallee Age 55
Marguerite W. Sallee has served as a director of the Company since the merger
and also served as Chief Executive Officer of the Company from the merger until
May 1999 when she became Co-Chairman of the Board of the Company. In July 1999,
Ms. Sallee co-founded and became the Chief Executive Officer and a director of
Frontline Group, Inc., a corporate training company. Ms. Sallee was a founder of
CorporateFamily Solutions and served as President, Chief Executive Officer and a
director of CorporateFamily Solutions from February 1987 until the merger. Prior
thereto, Ms. Sallee served as Commissioner of Human Services in former Tennessee
Governor Lamar Alexander's cabinet. She is a director of both Saks Incorporated,
an owner and operator of department stores, and BarPoint.com, Inc., a provider
of online and wireless product information and shopping services, and is a
former Chairman of the Nashville Area Chamber of Commerce. In addition, Ms.
Sallee is a delegate to the Presidential Summit for Children.
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HOW ARE DIRECTORS COMPENSATED?
BASE COMPENSATION. Each non-employee director receives $2,000 for each
regularly scheduled Board meeting attended in person or by conference call, and
$500 for each specially scheduled meeting attended in person or by conference
call. Each non-employee director that is a member of the Audit Committee,
Compensation Committee or Nominating Committee also receives $500 for each
committee meeting attended. Directors who are also our employees receive no
additional compensation for service as directors.
OPTIONS. On the date of each annual meeting of stockholders, each
non-employee director will be granted an option to purchase 1,000 shares of our
common stock, so long as he or she has missed no more than one of the regular
meetings of the Board of Directors in the previous year. The exercise price of
the options will be the closing market price of our common stock on the date of
grant. The options shall vest in one-third increments with one-third vesting
equally on the first, second and third anniversary dates of the initial grant,
so long as the non-employee director continues to serve as one of our directors.
HOW OFTEN DID THE BOARD MEET DURING 2000?
During 2000, the Board of Directors met four times. Each director
attended more than 75% of the total number of meetings of the Board and
committees on which he or she served, except JoAnne Brandes, who attended three
of the four director meetings and one of the two Audit Committee meetings.
WHAT COMMITTEES HAS THE BOARD ESTABLISHED?
The Board of Directors has standing Audit, Compensation and Nominating
Committees.
AUDIT COMMITTEE. The Audit Committee is responsible for making
recommendations to the Board of Directors concerning our financial statements
and the appointment of independent accountants, reviewing significant audit and
accounting policies and practices, meeting with our independent accountants
concerning, among other things, the scope of audits and reports, and reviewing
the performance of the overall accounting and financial controls of the Company.
The members of the Audit Committee are Ian M. Rolland (chair), JoAnne Brandes
and E. Townes Duncan. The Audit Committee met two times in 2000.
COMPENSATION COMMITTEE. The Compensation Committee is charged with
reviewing and approving salaries, bonuses, and other compensation and benefits
of executive officers, advising management regarding benefits and other terms
and conditions of compensation, and administering our employee stock incentive
plan. The members of the Compensation Committee are E. Townes Duncan (chair),
Fred K. Foulkes and Joshua Bekenstein. The Compensation Committee met two times
in 2000.
NOMINATING COMMITTEE. The Nominating Committee is responsible for
developing general criteria concerning the qualifications and selection of Board
members and recommending candidates for such positions to the Board of
Directors. The Nominating Committee considers director nominees from
stockholders for election at each annual meeting of stockholders if a written
nomination is received by our Secretary not later than the close of business on
the 90th day nor earlier than the close of business on the 120th day prior to
the first anniversary of the preceding year's annual meeting (nomination
procedures are discussed in greater detail in our bylaws which will be provided
upon written request). The members of the Nominating Committee are Dr. Sara
Lawrence-Lightfoot (chair), William H. Donaldson and Fred K. Foulkes. The
Nominating Committee met one time in 2000.
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REPORT OF THE AUDIT COMMITTEE
The audit committee of the board of directors is composed of three
directors who are independent directors as defined under the applicable rules of
the National Association of Securities Dealers. The audit committee operates
under a written charter, a copy of which is included as Appendix A to this proxy
statement. The audit committee oversees the Company's financial reporting
process on behalf of the board of directors. Management has the primary
responsibility for the financial statements and the reporting process. The
Company's independent auditors are responsible for expressing an opinion on the
conformity of our audited financial statements to generally accepted accounting
principles.
In this context, the audit committee has reviewed and discussed with
management and the independent auditors the audited financial statements and the
Company's interim financial results included in the Company's quarterly reports
filed with the Securities and Exchange Commission on Form 10-Q in advance of the
filings of the Form 10-Q. The audit committee has discussed with the independent
auditors the matters required to be discussed by Statement on Auditing Standards
No. 61 (Communication with Audit Committees). In addition, the audit committee
has received from the independent auditors the written disclosures required by
Independence Standards Board Standard No. 1 (Independence Discussions with Audit
Committees) and has discussed with them their independence from the Company and
its management. The audit committee has considered whether the independent
auditors provision of information technology and other non-audit services to the
Company is compatible with maintaining the auditor's independence.
In reliance on the reviews and discussions referred to above, the audit
committee recommended to the board of directors, and the board has approved,
that the audited financial statements be included in our Annual Report on Form
10-K for the year ended December 31, 2000, for filing with the Securities and
Exchange Commission.
Ian M. Rolland, Chairman
JoAnne Brandes
E. Townes Duncan
The foregoing report of the audit committee shall not be deemed
incorporated by reference by any general statement incorporating by reference
the Proxy Statement into any filing under the Securities Act of 1933 or the
Securities Exchange Act of 1934, except to the extent that we specifically
incorporate this information by reference, and shall not otherwise be deemed
filed under such acts.
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning total
compensation earned or paid to our Chief Executive Officer and certain other
executive officers of the Company (the "named executive officers") for services
rendered to the Company, or to one of its predecessors prior to the merger.
LONG - TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------ ------------
NUMBER OF
SECURITIES ALL OTHER
FISCAL SALARY UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($)(1) BONUS($) OPTIONS ($)(2)
------------------------------------- ------- ---------- ----------- ------------ ------------
Roger H. Brown..................... 2000 214,000 125,000 24,000 2,625
Chief Executive Officer 1999 175,000 110,000 12,000 2,469
1998 175,000 72,500 25,000 2,500
Mary Ann Tocio..................... 2000 178,000 55,000 34,000 9,825
President and 1999 168,000 47,500 8,000 9,289
Chief Operating Officer 1998 159,231 45,000 27,000 9,075
Stephen I. Dreier.................. 2000 163,000 38,000 4,000 2,435
Chief Administrative Officer 1999 157,000 32,000 4,000 2,149
and Secretary 1998 148,923 30,000 18,000 2,013
David H. Lissy..................... 2000 178,000 81,000 34,000 2,500
Chief Development Officer 1999 163,000 73,500 8,000 2,254
1998 153,333 81,333 25,000 --
Elizabeth J. Boland................ 2000 140,000 37,800 4,000 2,129
Chief Financial Officer and 1999 123,000 33,000 4,000 1,656
Treasurer 1998 112,000 29,333 18,000 --
(1) Includes amounts deferred by the employee under our 401(k) plan.
(2) Consists of Company matching contributions to the employee's 401(k)
plan account and, in the case of Ms. Tocio, contributions made by the
Company as a car allowance.
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OPTION GRANTS FOR FISCAL 2000
The table below sets forth the following information with respect to option
grants to the named executive officers during 2000 under our 1998 Stock
Incentive Plan:
- the number of shares of common stock underlying options
granted during the year;
- the percentage that such options represent of all options
granted to employees during the year;
- the exercise price;
- the expiration date; and
- the potential realizable value of the options assuming both a
5% and 10% annual return on the underlying common stock from
the date of grant of each option to the end of each option
term.
INDIVIDUAL GRANTS
------------------------------------------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL POTENTIAL REALIZABLE
UNDERLYING OPTIONS VALUE AT ASSUMED ANNUAL
OPTIONS GRANTED TO EXERCISE RATES OF STOCK
GRANTED(#) EMPLOYEES PRICE EXPIRATION APPRECIATION FOR OPTION
NAME (1) IN 2000(%) ($/SHARE) DATE TERMS
--------------------------- ------------- ------------- ---------- ----------- ----------- -----------
5% ($) 10% ($)
------------ -----------
Roger H. Brown............ 24,000 (1) 7.48% 17.250 3/7/10 260,362 659,809
Mary Ann Tocio............ 4,000 (1) 1.25% 17.250 3/7/10 43,394 109,968
30,000 (2) 9.35% 16.625 6/1/10 313,661 794,879
Stephen I. Dreier......... 4,000 (1) 1.25% 17.250 3/7/10 43,394 109,968
David H. Lissy............ 4,000 (1) 1.25% 17.250 3/7/10 43,394 109,968
30,000 (2) 9.35% 16.625 6/1/10 313,661 794,879
Elizabeth J. Boland....... 4,000 (1) 1.25% 17.250 3/7/10 43,394 109,968
--------------------------------------------------------------------------------------------------------------------------
(1) Options will vest annually over five years in one-fifth increments
beginning January 1, 2001.
(2) Options will vest annually over five years in one-fifth increments
beginning June 1, 2001.
OPTION EXERCISES AND VALUES FOR FISCAL 2000
The table below sets forth the following information with respect to
option exercises during 2000 by each of the named executive officers and the
status of their options at December 31, 2000:
- the number of shares of common stock acquired upon exercise of
options during 2000;
- the aggregate dollar value realized upon the exercise of such
options;
- the total number of shares of common stock underlying
exercisable and non-exercisable stock options held at December
31, 2000; and
- the aggregate dollar value of in-the-money exercisable options
at December 31, 2000.
-------------------------------------------------------------------------------------------------------------------------
NUMBER OF NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT IN-THE-MONEY OPTIONS AT
ACQUIRED UPON DECEMBER 31, 2000(#) DECEMBER 31, 2000($)(1)
EXERCISE OF VALUE REALIZED ---------------------------- ------------------------------
NAME OPTIONS(#) UPON EXERCISE($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------------------ --------------- ----------------- ------------- -------------- ------------- --------------
Roger H. Brown 22,487 261,603 168,947 48,600 3,078,149 428,475
Mary Ann Tocio 26,000 416,396 81,438 56,600 1,443,049 508,325
Stephen I. Dreier -- -- 53,923 18,000 969,688 148,650
David H. Lissy 18,000 314,296 43,442 55,400 670,293 402,200
Elizabeth J. Boland 1,680 29,072 14,389 18,000 177,301 148,650
-------------------------------------------------------------------------------------------------------------------------
(1) The aggregate dollar value of the options held at year-end are
calculated as the difference between the fair market value of the
common stock ($26.125 as reported on The Nasdaq National Market on
December 31, 2000) and the respective exercise prices of the stock
options.
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EMPLOYMENT AGREEMENTS
We currently have an employment agreement with Roger H. Brown. The
terms and conditions of the employment agreement are summarized below:
COMPENSATION
- The employment agreement provides a base annual salary for Mr.
Brown in the amount of $200,000, subject to increase by the
Board. For fiscal 2000, the Board increased Mr. Brown's base
salary to $214,000. The agreement has a term that lasts until
January 24, 2003.
- Mr. Brown is also eligible to receive certain benefits and
incentive bonus compensation including cash bonuses and
stock-based awards.
TERMINATION AND RESIGNATION
- The employment agreement may be terminated by us or the
employee may resign at any time.
- If we terminate the employee's employment for "cause" (as
defined in the employment agreement) or the employee resigns
for any reason other than for "good reason" (as defined in the
employment agreement), the employee will receive all accrued
salary and benefits due as of the date of termination or
resignation.
- If the employee dies or becomes disabled, the employee will
receive all accrued salary, benefits and incentive bonus
compensation as of the date of death or disability.
- If we terminate the employee's employment without "cause" or
the employee resigns for "good reason", the employee will
receive a lump sum payment of (i) 2.99 times his base salary,
plus (ii) all accrued benefits and incentive bonus
compensation.
RESTRICTIVE COVENANTS
- Among other things, the employment agreement prohibits the
employee from competing against us, divulging any of our trade
secrets or other confidential information, hiring away any of
our employees and taking any property (memoranda, notes,
lists, records, etc.) relating to our business made or
compiled by, or made available to, the employee during the
term of his employment.
- These restrictive covenants will apply for 24 months following
the employee's termination or resignation from the Company.
In addition to the above agreement, we have an agreement with
Marguerite W. Sallee pursuant to which we have agreed, for the period beginning
on January 1, 2000 and ending December 31, 2005, to nominate Ms. Sallee to serve
on our Board of Directors as Co-Chairman of the Board, and Ms. Sallee has agreed
to serve as a consultant to us to the extent and on the terms and conditions
that may be mutually agreed upon by us and Ms. Sallee. During the twenty-four
month period after Ms. Sallee ceases to serve on our Board of Directors, her
agreement prohibits her from competing against us, divulging any of our trade
secrets or other confidential information, hiring away any of our employees and
taking any property (memoranda, notes, lists, records, etc.) relating to our
business made or compiled by, or made available to, Ms. Sallee during the term
of her previous employment with us and/or the term of her service to the Board.
SEVERANCE AGREEMENTS
We have severance agreements with Stephen I. Dreier, David H. Lissy,
Elizabeth J. Boland, and Mary Ann Tocio which provide the following benefits to
them if their employment is terminated within twenty-four (24) months following
a "change of control" (as defined below) for any reason other than for "cause"
(as defined in the severance agreements), death or disability or if they
terminate their own employment for "good reason" (as defined in the severance
agreements):
- Accrued and unpaid base salary as of the date of termination
plus a prorated portion of any bonus payable for the fiscal
year in which the termination occurs;
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- For a period of twenty-four months or until the employee
secures other employment (whichever is less), monthly
severance pay equal to 1/24 (1/26 in the case of Ms. Tocio) of
the employee's total salary and cash bonus for the employee's
last two years of employment with the Company;
- For a period of twenty-four months or until the employee
becomes eligible for participation in a group health plan of
another employer (whichever is less), payment by the Company
of the employee's and the employee's dependents' premiums for
continuation of health insurance coverage or participation in
a substantially similar health plan; and
- Automatic vesting of the employee's stock options immediately
prior to the change in control, notwithstanding any provision
of our stock option plan or any option agreements.
A "change in control" will be deemed to have occurred if:
- Any person becomes the beneficial owner of 50% of the voting
power of our outstanding securities;
- The Company is a party to a merger, consolidation, sale of
assets or other reorganization, or a proxy contest, pursuant
to which the Board members in office prior to the transaction
constitute less than a majority of the Board thereafter; or
- Certain changes to the composition of the board occur, as
more particularly described in the severance agreements.
In addition, the severance agreements prohibit each employee from
competing against us during the period in which the employee is receiving
severance benefits and divulging any of our trade secrets or other confidential
information.
Ms. Tocio's severance agreement also provides that she will receive the
same benefits set forth above if she is terminated without cause or if she
terminates her employment for good reason, without a change in control of the
Company.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Decisions concerning the compensation of our executive officers are
made by the Compensation Committee of the Board of Directors. Each member of the
Compensation Committee is a non-employee director. The Compensation Committee
has the responsibility for reviewing and approving salaries, bonuses, and other
compensation and benefits of executive officers, advising management regarding
benefits and other terms and conditions of compensation, and administering our
stock incentive plans.
WHAT IS THE COMPANY'S PHILOSOPHY AND WHAT ARE ITS POLICIES FOR EXECUTIVE OFFICER
COMPENSATION?
The Compensation Committee believes that the primary objectives of the
Company's executive compensation policy should be:
- to attract and retain talented executives by providing a
compensation program that is competitive with the compensation
provided to executives at companies of comparable size and
position in service businesses, while maintaining compensation
within levels that are consistent with the Company's business
plan, financial objectives and operating performance;
- to provide appropriate incentives for executives to work
towards the achievement of the annual performance goals
established by the Company; and
- to more closely align the interests of its executives with
those of stockholders by providing long-term incentive
compensation in the form of stock option awards and other
equity-based, long-term incentive compensation.
The Compensation Committee believes that the Company's executive
compensation policies should be reviewed during the first half of the fiscal
year after the financial results of the prior fiscal year become available. The
policies should be reviewed in light of their consistency with the Company's
financial performance, its operating plan
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and its position within the child care and education industry, as well as the
compensation policies of similar companies in the child care and education
business and other service businesses. The compensation of individual executive
officers is then reviewed annually by the Compensation Committee in light of its
executive compensation policies for that year.
In setting and reviewing compensation for the executive officers, the
Compensation Committee considers a number of different factors designed to
assure that compensation levels are properly aligned with the Company's business
strategy, corporate culture and operating performance. Among the factors
considered are the following:
- Comparability--The Compensation Committee considers the
compensation packages of similarly situated executives at
companies deemed to be most comparable to the Company. The
objective is to maintain competitiveness in the marketplace in
order to attract and retain the highest quality executives.
This is a principal factor in setting base levels of
compensation.
- Pay for Performance--The Compensation Committee believes that
compensation should be in part directly linked to operating
performance. To achieve this link with regard to short-term
performance, the Compensation Committee has relied on cash
bonuses which have been determined on the basis of certain
objective and subjective factors after receiving the
recommendations of senior management.
- Equity Ownership--The Compensation Committee believes that an
integral part of the executive compensation program at the
Company is equity-based compensation plans which encourage and
create ownership of the Company's stock by its executives,
thereby more closely aligning executives' long-term interests
with those of the stockholders. These long-term incentive
programs are principally reflected in the Company's
stock-based incentive plans. The Compensation Committee
believes that significant stock ownership is a major incentive
in building stockholder value and reviews awards of
equity-based incentives with that goal in mind.
- Qualitative Factors--The Compensation Committee believes that
in addition to corporate performance and specific division
performance, it is appropriate to consider in setting and
reviewing executive compensation the personal contributions
that a particular individual may make to the success of the
corporate enterprise. Such qualitative factors as leadership
skills, planning initiatives, development skills, public
affairs and civic involvement have been deemed to be important
qualitative factors to take into account in considering levels
of compensation.
HOW WAS BASE COMPENSATION DETERMINED IN 2000?
Certain of the Company's executive officers, including the Chief
Executive Officer, are parties to employment agreements. In several instances,
base compensation for executive officers subject to employment agreements varied
from the terms of such agreements. The base compensation for 2000 for Mr. Brown,
the Chief Executive Officer, was increased to a level higher than that required
pursuant to his employment agreement based upon the factors described below
which affected the determination of base compensation of the Company's executive
officers who do not have employment agreements with the Company. Ms. Tocio's
employment agreement expired in July 2000. Ms. Tocio's base compensation was
increased to a level higher than that required pursuant to her employment
agreement based upon the factors described below which affected the
determination of base compensation of the Company's executive officers who do
not have employment agreements with the Company.
For the remaining executive officers who do not have employment
agreements with us, the Compensation Committee subjectively determined base
compensation on the basis of discussions with the Chief Executive Officer, a
review of the base compensation of executive officers of comparable companies,
its experience with the Company and in business generally, and what it viewed to
be the appropriate levels of base compensation after taking into consideration
the contributions of each executive officer.
HOW WAS INCENTIVE COMPENSATION DETERMINED IN 2000?
Annual Incentive Compensation. For 2000, the Compensation Committee
reviewed the Company's executive officer performance in terms of achieving
pre-tax profitability targets, the successful integration of the Company
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following the merger and each executive officer's contribution to the
achievement of these objectives. Based on its review of the performance goals
and on subjective factors taken into consideration, the Compensation Committee
approved incentive payments aggregating $376,800 for 2000, including $125,000
for the Chief Executive Officer. No factors in addition to the ones discussed
above were considered in setting the incentive compensation of the Chief
Executive Officer.
Long-Term Incentive Compensation. The Compensation Committee believes
the Company as a part of its regular executive compensation policies should
grant awards of long-term, equity-based incentives to executive officers as part
of the compensation package that is reviewed annually for each executive
officer. In making these awards, the Compensation Committee establishes
guidelines at the time of the annual review and takes into account the
recommendations of the Chief Executive Officer and the President prior to
approving awards of long-term, equity-based incentive compensation to the other
executive officers.
During 2000, the Compensation Committee reviewed the amount of stock
option holdings by the Company's executive officers and the terms of these
options. Based on the Compensation Committee's desire to encourage and create
ownership of the Company's common stock by its executive officers and to use
equity-based incentives as a retention tool, the Compensation Committee
determined to grant stock options to purchase an aggregate of 104,000 shares of
common stock with an exercise price based on the fair market value of the common
stock on the date of the grant to the executive officers, including option
grants to purchase an aggregate of 24,000 shares of common stock to the Chief
Executive Officer. These options generally vest annually over five years in
one-fifth increments. See "Option Grants for 2000."
HOW IS THE COMPANY ADDRESSING INTERNAL REVENUE CODE LIMITS ON DEDUCTIBILITY OF
COMPENSATION?
Section 162(m) of the Internal Revenue Code of 1986, enacted as part of
the Omnibus Budget Reconciliation Act in 1993, generally disallows a tax
deduction to public companies for compensation over $1,000,000 paid to the
Company's Chief Executive Officer and four other most highly compensated
executive officers. Compensation paid to these officers in excess of $1,000,000
that is not performance-based cannot be claimed by the Company as a tax
deduction. The Compensation Committee believes it is appropriate to take into
account the $1,000,000 limit on the deductibility of executive compensation and
to seek to qualify executive compensation awards as performance-based
compensation excluded from the $1,000,000 limit. Stock options and other
equity-based incentives granted under the Company's stock incentive plans
qualify as performance-based compensation. None of the executive officers
received compensation in 2000 that would exceed the $1,000,000 limit on
deductibility. The Committee has not determined whether it will approve any
compensation arrangements that will cause the $1,000,000 limit to be exceeded in
the future.
E. Townes Duncan, Chairman
Joshua Bekenstein
Fred K. Foulkes
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PERFORMANCE GRAPH
The following graph compares our cumulative total stockholder return on
our common stock from July 27, 1998 (when our common stock commenced public
trading following the merger) through December 31, 2000 with the cumulative
total return of the following:
- the Russell 2000 Index; and
- a peer group that we selected in good faith, consisting of us
and three other companies in our industry: Childtime Learning
Centers, Inc., New Horizon Kids Quest, Inc. and Nobel Learning
Communities, Inc. (the "Peer Group").
The graph assumes that $100 was invested on July 27, 1998 in our common
stock and the index and peer group noted above, and that all dividends, if any,
were reinvested. No dividends have been declared or paid on our common stock
since July 27, 1998.
------------------------------------------------------------------------------------------------
TOTAL RETURN ANALYSIS
7/27/1998 12/31/1998 12/31/1999 12/29/2000
------------------------------------------------------------------------------------------------
Bright Horizons $100.00 $111.63 $ 77.52 $108.01
------------------------------------------------------------------------------------------------
Peer Group $100.00 $100.01 $ 85.97 $108.35
------------------------------------------------------------------------------------------------
Russell 2000 $100.00 $ 98.02 $118.95 $113.95
------------------------------------------------------------------------------------------------
Source: Carl Thompson Associates. Data from BRIDGE Information Systems, Inc.
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 2000, the Compensation Committee of the Board of
Directors was composed of E. Townes Duncan, Fred K. Foulkes and Joshua
Bekenstein. None of these persons has at any time been an officer or employee of
the Company or any of its subsidiaries. In addition, there are no relationships
among the Company's executive officers, members of the Compensation Committee or
entities whose executives serve on the Board of Directors or the Compensation
Committee that require disclosure under applicable SEC regulations.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We have an agreement with S.C. Johnson & Son, Inc. to operate and
manage a family center for its employees. During 2000, we received management
fees and operating subsidies of $295,000 from S.C. Johnson & Son, Inc. JoAnne
Brandes, a member of our Board of Directors, is Senior Vice President, General
Counsel and Secretary for S.C. Johnson Commercial Markets, Inc., an affiliate of
S.C. Johnson & Son, Inc.
PROPOSAL 2--APPROVAL OF AMENDMENT TO OUR 1998 STOCK INCENTIVE PLAN
Our 1998 Stock Incentive Plan was originally adopted by our Board of
Directors on June 16, 1998 and approved by our two stockholders at the time,
CorporateFamily Solutions and Bright Horizons, on July 8, 1998, prior to the
merger. On September 18, 1998, the plan was amended by our Board of Directors.
At our 1999 Annual Meeting of Stockholders, held on May 20, 1999, our
stockholders approved the plan, as amended by the First Amendment to the plan.
On April 16, 2001, the Board adopted the Second Amendment to the Plan.
The Board of Directors has approved and recommends that the
stockholders approve a third amendment to our 1998 Stock Incentive Plan, as
amended, to increase the number of shares of common stock reserved for issuance
pursuant to the exercise of options granted under the plan and shares of
restricted stock issuable under the plan from a maximum of 1,500,000 shares to
2,250,000 shares. A copy of the proposed amendment is attached as Appendix B to
this proxy statement. In addition, the major features of the plan, as amended,
are summarized below.
THE PROPOSED AMENDMENT
As of the record date, options to purchase 953,265 shares of our common
stock were outstanding under the plan, options to purchase 94,699 shares had
been exercised, no restricted shares had been issued and 452,036 shares remained
available for the grant of options or other awards under the plan. The proposed
amendment would increase to 2,250,000 the number of shares of our common stock
reserved for issuance pursuant to awards granted or to be granted under the
plan. If the proposed amendment is approved, Paragraph (a) of Section 3 of the
plan would be deleted and replaced with the following:
"(a) As of the Effective Date, the aggregate number of shares
of Common Stock that may be issued under the Plan shall be 2,250,000
shares. Of the total number of shares that may be issued under the
Plan, an aggregate of 100,000 shares shall be reserved for issuance
under Section 8 hereof, subject to increases at the discretion of the
Board. The shares of Common Stock issuable under the Plan may consist,
in whole or in part, of authorized and unissued shares or treasury
shares. No officer of the Company or other person whose compensation
may be subject to the limitations on deductibility under Section 162(m)
of the Code shall be eligible to receive awards pursuant to this Plan
relating to in excess of 200,000 shares of Common Stock in any fiscal
year (the "Section 162(m) Maximum")."
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The Board of Directors believes that it is in our best interests and
the best interests of our stockholders to approve the amendment to allow us to
continue to grant options and other awards under the plan to secure the benefits
of the additional incentive inherent in the ownership of our common stock by our
key employees, to help secure and retain the services of our key employees and
to have a sufficient number of shares of common stock available for awards of
restricted stock to our non-employee directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE THIRD
AMENDMENT TO THE 1998 STOCK INCENTIVE PLAN, AS AMENDED.
SUMMARY OF THE MATERIAL PROVISIONS OF THE PLAN, AS AMENDED
The following is a summary of the material provisions of the 1998 Stock
Incentive Plan, in effect and as proposed to be amended, and is qualified in its
entirety by reference to Appendix B and the plan, as amended by the First and
Second Amendments to the plan, copies of which may be obtained by contacting
Stephen I. Dreier, Secretary, Bright Horizons Family Solutions, Inc., 200
Talcott Avenue South, Watertown, Massachusetts 02472 (617-673-8000).
GENERALLY. Under the 1998 Stock Incentive Plan, the Compensation
Committee of our Board of Directors has the authority to grant to officers,
other key employees, outside directors (directors who are not our officers or
employees) and consultants to the Company the following types of awards: (1)
stock options; (2) restricted stock; and/or (3) other stock-based awards.
Currently, the aggregate number of shares of common stock that may be
issued under the plan is 1,500,000 shares. The amendment proposes to increase
the aggregate number of shares that may be issued under the plan to 2,250,000
shares. Of the authorized number of shares that may be issued under the plan,
only 100,000 shares may be issued pursuant to the exercise of options granted to
outside directors. The maximum number of shares of common stock for which awards
may be made under the plan to any officer of the Company or other person whose
compensation may be subject to the limitations on deductibility under Section
162(m) of the Internal Revenue Code is 200,000 during any single fiscal year.
Any shares as to which an option or other award expires, lapses
unexpired, or is forfeited, terminated, or canceled may become subject to a new
option or other award. The plan will terminate on, and no award may be granted
later than, July 26, 2008, but the exercise date of awards granted prior to such
tenth anniversary may extend beyond such date.
AUTOMATIC GRANTS TO OUTSIDE DIRECTORS. The plan also provides for
automatic grants of non-qualified stock options to our outside directors.
Options to purchase 5,000 shares of common stock were automatically granted to
each person serving as an outside director at the first board meeting after the
adoption of the plan. Additionally, each director who is first elected to our
Board of Directors will automatically receive an option to purchase 5,000 shares
of common stock. On the date of each annual meeting of stockholders, each
outside director will receive an option to purchase 1,000 shares of common
stock, so long as the director did not miss more than one board meeting in the
preceding twelve months.
All options automatically granted to an outside director will enable
the optionee to purchase shares of common stock at the fair market value of the
common stock on the date of grant. Outside directors will not be able to
transfer or assign their options without the prior written consent of our Board
of Directors other than (i) transfers by the optionee to a member of his or her
immediate family or a trust for the benefit of the optionee or a member of his
or her immediate family or (ii) transfers by will or by the laws of descent and
distribution. Options automatically granted to outside directors will have a
term of ten years from the date of grant. The exercise price may be paid in
cash, shares of common stock, or a combination thereof.
STOCK OPTIONS. Incentive stock options and non-qualified stock options
may be granted for such number of shares as the Compensation Committee may
determine and may be granted alone, in addition to, or in tandem with other
awards under the plan or cash awards outside the plan. A stock option will be
exercisable at such times and subject to such terms and conditions as the
Compensation Committee will determine. The term may not be more than ten years
after the date of grant (five years in the case of incentive stock options for
certain 10% stockholders). The option price for an incentive stock option will
not be less than 100% (110% in the case of certain 10% stockholders) of the fair
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market value of common stock as of the date of grant and for any non-qualified
stock option will not be less than 50% of the fair market value as of the date
of grant. Incentive stock options granted under the plan may not be transferred
or assigned other than by will or by the laws of descent and distribution.
Non-qualified stock options may not be transferred or assigned without the prior
written consent of the Compensation Committee other than (i) transfers by the
optionee to a member of his or her immediate family or a trust for the benefit
of the optionee or a member of his or her immediate family or (ii) transfers by
will or by the laws of descent and distribution.
RESTRICTED STOCK. Restricted stock awards may be granted alone, in
addition to, or in tandem with other awards under the plan or cash awards made
outside the plan. The provisions attendant to a grant of restricted stock may
vary from participant to participant. In making an award of restricted stock,
the Compensation Committee will determine the periods during which the
restricted stock is subject to forfeiture and may provide such other awards
designed to guarantee a minimum value for such stock. The Compensation Committee
may also impose such other conditions and restrictions on the shares of
restricted stock as it deems appropriate, including the attainment of specified
performance goals or such other factors as the Compensation Committee may
determine. The Compensation Committee may provide that such restrictions will
lapse with respect to specified percentages of the awarded shares of restricted
stock on successive future dates. During the restriction period, the employee or
consultant may not sell, transfer, pledge, or assign the restricted stock, but
will be entitled to vote the restricted stock and to receive, at the election of
the Compensation Committee, cash or deferred dividends.
OTHER STOCK-BASED AWARDS. The Compensation Committee also may grant
other types of awards, such as performance shares, convertible preferred stock,
convertible debentures, exchangeable securities and common stock awards or
options valued by reference to earnings by share or performance of our
subsidiaries. These awards may be granted alone, in addition to, or in tandem
with, stock options, restricted stock, or cash awards outside of the plan.
Awards will be made upon such terms and conditions as the Compensation Committee
may determine.
EFFECTS OF A CHANGE IN CONTROL. If there is a change of control or a
potential change of control of the Company, any stock options granted on or
prior to April 16, 2001, that are not then exercisable, will become fully
exercisable and vested and the restrictions and deferral limitations applicable
to restricted stock and other stock-based awards may lapse and such shares and
awards will be deemed fully vested. For purposes of the plan, a change of
control is defined generally to include:
- any person or entity, other than the Company or a wholly-owned
subsidiary of the Company, becoming the beneficial owner of
the Company's securities having 35% or more of the combined
voting power of the then outstanding securities that may be
cast for the election of directors;
- in connection with a cash tender, exchange offer, merger, or
other business combination, sale of assets, or contested
election, less than 40% of the combined voting power of our
then outstanding securities entitled to vote generally in the
election of directors being held in the aggregate by the
holders of our securities entitled to vote generally in our
election of directors immediately prior to such transaction;
and
- during any period of two consecutive years, individuals who at
the beginning of any such period constitute the Board of
Directors ceasing to constitute at least a majority thereof,
unless the election of each director first elected during such
period was approved by a vote of at least two-thirds of our
directors then still in office who were our directors at the
beginning of any such period.
Stock options, restricted stock, and other stock-based awards that were
granted on or prior to April 16, 2001, will, unless otherwise determined by the
Compensation Committee in its sole discretion, be cashed out on the basis of the
change in control price (as defined in the plan and as described below). The
change of control price will be the highest price per share paid in any
transaction reported on The Nasdaq National Market or paid or offered to be paid
in any bona fide transaction relating to a change in control or potential change
in control at any time during the immediately preceding 60-day period, as
determined by the Compensation Committee.
AMENDMENTS AND TERMINATION. Our Board of Directors may amend, alter, or
discontinue the plan, provided that no amendment may be made that would impair
the rights of an optionee or participant under an award made under the plan
without the participant's consent.
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OPTIONS GRANTED UNDER THE PLAN
Because awards under the plan are at the discretion of the Compensation
Committee, the benefits that will be awarded under the plan to persons other
than outside directors are not currently determinable. The following table shows
as to each of the named executive officers, as to all of our executive officers
as a group, as to all outside directors as a group, and as to all other
employees as a group, the aggregate number of shares of common stock subject to
options granted under the plan that were granted in fiscal 2000, excluding
options that have been canceled or forfeited unexercised, and the weighted
average per share exercise price. As of April 2, 2001, the market value of a
share of common stock based on the closing price for such stock on The Nasdaq
National Market was $23.00.
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NUMBER OF STOCK AVERAGE EXERCISE
NAME OPTIONS GRANTED(#) PRICE PER SHARE($)
-------------------------------------------------------------------- ------------------- -------------------
Roger H. Brown, Chief Executive Officer............................ 24,000 $ 17.25
Mary Ann Tocio, President and Chief Operating Officer.............. 34,000 $ 16.70
Stephen I. Dreier, Chief Administrative Officer and Secretary...... 4,000 $ 17.25
David H. Lissy, Chief Development Officer.......................... 34,000 $ 16.70
Elizabeth J. Boland, Chief Financial Officer....................... 4,000 $ 17.25
All executive officers as a group (6 persons)...................... 104,000 $ 16.89
Current outside directors (8 persons).............................. 8,000 $ 16.50
All other employees as a group..................................... 212,826 $ 17.47
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CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of certain U.S. Federal income tax
aspects of options awarded under the plan based upon the federal income tax laws
in effect on the date hereof. This summary is not intended to be exhaustive and
the exact tax consequences to any grantee will depend upon his or her particular
circumstances and other facts. The plan participants must consult their tax
advisors with respect to any state, local, and foreign tax considerations or
particular federal tax implications of options granted under the plan.
INCENTIVE STOCK OPTIONS. Neither the grant nor the exercise of an
incentive stock option will result in taxable income to the employee. The tax
treatment of the subsequent sale of shares of common stock acquired upon
exercise of an incentive stock option depends on whether the holding period
requirement is satisfied. The holding period is met if the disposition of stock
by the employee occurs (i) at least two years after the date of grant of the
option; (ii) at least one year after the date the shares were transferred to the
employee; and (iii) while the employee remains employed by us or not more than
three months after his or her termination of employment (or not more than one
year in the case of a disabled employee). In the case of a deceased employee,
the incentive stock option may be exercised by the deceased employee's legal
representative or heir provided the option was an incentive stock option in the
hands of the deceased employee and the deceased employee was employed by us at
any point during the three months prior to his or her death. However, the plan
limits the right of the legal representative of any deceased employee to
exercise an option to one year following death. If the holding period
requirement is satisfied, the excess of the amount realized upon sale of the
shares of common stock acquired upon the exercise of the incentive stock option
over the price paid for these shares will be treated as a capital gain. If the
employee disposes of the common stock acquired upon the exercise of the
incentive stock option before the holding period requirement is met (a
"disqualifying disposition"), the excess of the fair market value of the shares
on the date of exercise or, if less, the fair market value on the date of
disposition, over the exercise price will be taxable as ordinary compensation
income to the employee at the time of disposition, and we will be entitled to a
corresponding compensation deduction. The balance of the gain, if any, will be a
capital gain for the employee. Any capital gain recognized by the employee will
be a long-term capital gain if the employee's holding period for the shares of
common stock at the time of disposition is more than one year; otherwise it will
be short-term.
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Although the exercise of an incentive stock option will not result in
taxable income to the employee, the excess of the fair market value of the
common stock on the date of exercise over the exercise price will be included in
the employee's "alternative minimum taxable income" under the Internal Revenue
Code. This inclusion might subject the employee to, or increase his or her
liability for, the alternative minimum tax under Section 55 of the Internal
Revenue Code.
NONQUALIFIED STOCK OPTIONS. There will be no federal income tax
consequences to us or to the grantee upon the grant of non-qualified stock
options under the plan. However, upon the exercise of a non-qualified stock
option under the plan, the grantee will recognize ordinary compensation income
for federal income tax purposes in an amount equal to the excess of the fair
market value of the shares of common stock purchased over the exercise price. We
will generally be entitled to a tax deduction at such time and in the same
amount that the employee realizes ordinary income. If the shares of common stock
so acquired are later sold or exchanged, the difference between the amount
realized from such sale or exchange and the fair market value of such stock on
the date of exercise of the option is generally taxable as long-term or
short-term capital gain or loss depending upon the length of time the common
stock has been held after such date.
EXERCISE WITH SHARES. A grantee who pays the exercise price upon
exercise of an incentive stock option or non-qualified stock option, in whole or
in part, by delivering shares of common stock already owned by him or her will
realize no gain or loss for federal income tax purposes on the shares
surrendered, but otherwise will be taxed according to the rules described above.
Shares of common stock acquired upon exercise that are equal in number to the
shares surrendered will have a tax basis equal to the tax basis of the shares
surrendered, and (except as noted below with respect to disqualifying
dispositions) the holding period of such shares will include the holding period
of shares surrendered. In the case of a non-qualified stock option, the basis of
additional shares received upon exercise of the non-qualified stock option will
be equal to the fair market value of such shares on the date of exercise, and
the holding period for such additional shares will commence on the date the
option is exercised. In the case of an incentive stock option, the tax basis of
the additional shares received will be zero, and the holding period of such
shares will commence on the date of the exchange. If any of the shares received
upon exercise of the incentive stock option are disposed of within two years of
the date of the grant of the incentive stock option or within one year after
exercise, the shares with the lowest basis (i.e., zero basis) will be deemed to
be disposed of first, and such disposition will be a disqualifying disposition
giving rise to ordinary income as previously discussed above.
RESTRICTED STOCK. A participant receiving restricted stock generally
will recognize ordinary income in the amount of the fair market value of the
restricted stock at the time the stock is no longer subject to forfeiture, less
the consideration paid for the stock. However, a participant may elect, under
Section 83(b) of the Internal Revenue Code within 30 days of the grant of the
stock, to recognize taxable ordinary income on the date of grant equal to the
excess of the fair market value of the shares of restricted stock (determined
without regard to the restrictions) over the purchase price of the restricted
stock. Thereafter, if the shares are forfeited, the participant will be entitled
to a deduction, refund or loss, for tax purposes in an amount equal to only the
purchase price of the forfeited shares regardless of whether she or he made a
Section 83(b) election. The holding period to determine whether the participant
has long-term or short-term capital gain or loss upon disposition of the shares
generally begins when the restriction period expires and the tax basis for such
shares will generally be based on the fair market value of such shares on such
date. If the participant makes an election under Section 83(b), however, the
holding period will commence on the date of grant, the tax basis will be equal
to the fair market value of the shares on that date (determined without regard
to restrictions), and we generally will be entitled to a deduction equal to the
amount that is taxable as ordinary income to the participant in the year with
respect to which the election is effective that such income is taxable.
DIVIDENDS AND DIVIDEND EQUIVALENTS. Dividends paid on restricted stock
generally will be treated as compensation that is taxable as ordinary income to
the participant and will be deductible by us. If the participant makes a Section
83(b) election, however, the dividends will be taxable as ordinary income to the
participant but will not be deductible by us.
OTHER STOCK-BASED AWARDS. The federal income tax treatment of other
stock-based awards will depend on the nature of any such award and the
restrictions applicable to such award. Such an award may, depending on the
conditions applicable to the award, be taxable as an option, an award of
restricted stock, or in a manner not described herein.
The plan is not intended to be a "qualified plan" under Section 401(a)
of the Internal Revenue Code.
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The federal securities laws require our directors and executive
officers, and persons who own more than 10% of our capital stock, to file
initial reports of ownership and reports of changes in ownership of any of our
securities with the Securities and Exchange Commission, The Nasdaq National
Market and the Company.
Based solely upon a review of filings with the Securities and Exchange
Commission and written representations that no other reports were required, we
believe that all of our directors and executive officers complied during 2000
with their reporting requirements, with the exception of the following: an
amended filing on Form 3 made by David H. Lissy in May 2000 relating to him
becoming a Section 16 officer in May 1999; a late filing made by Mary Ann Tocio
in January 2001 relating to two transactions in November 2000; a late filing
made by JoAnne Brandes in November 2000 relating to transactions in August 2000;
an amended filing made by Robert D. Lurie in December 2000 relating to a
transaction in December 1999; late filings on Form 5 made in March 2001 by Roger
H. Brown, Linda A. Mason, Mary Ann Tocio, Stephen I. Dreier and Elizabeth J.
Boland to report options granted in March and June 2000 and to report option
exercises in August and November (Roger H. Brown and Linda A. Mason only); and
late filings on Form 5 made in March 2001 by each of our directors to report
options granted in May 2000.
INDEPENDENT PUBLIC ACCOUNTANTS
We have appointed Arthur Andersen LLP as our independent public
accountants for 2001. Arthur Andersen LLP has audited our accounts since the
merger and served as independent public accountants to CorporateFamily Solutions
since 1994. A representative of Arthur Andersen LLP is expected to be present at
the annual meeting to respond to appropriate questions and to make such
statements as they may desire.
FEES BILLED TO THE COMPANY BY ARTHUR ANDERSEN LLP DURING 2000
Audit Fees. The aggregate fees billed for professional services
rendered by Arthur Andersen LLP for the audit of our annual financial statements
for the year ended December 31, 2000 and the reviews of financial statements
included in our Quarterly Reports on Form 10-Q filed with the Securities and
Exchange Commission during 2000 were $118,620.
Financial Information Systems Design and Implementation Fees. Arthur
Andersen LLP performed no services and therefore billed no fees relating to
operating or supervising the operation of our information systems or local area
network or for designing or implementing our financial information management
systems during 2000.
All Other Fees. The aggregate fees billed for all other services
rendered to the Company by Arthur Andersen LLP in 2000, including tax related
services, totaled $48,813.
The audit committee of the board of directors has considered whether
the provision of non-audit services by Arthur Andersen LLP is compatible with
maintaining the auditor's independence.
ADDITIONAL INFORMATION
STOCKHOLDER PROPOSALS FOR THE 2002 ANNUAL MEETING. Pursuant to Rule
14a-8(e) of the Securities Exchange Act of 1934, stockholder proposals submitted
in accordance with applicable rules and regulations for presentation at our next
annual meeting and received at our executive offices no later than December 21,
2001 will be considered for inclusion in our proxy statement and form of proxy
relating to such annual meeting.
For other stockholder proposals to be timely (but not considered for
inclusion in our proxy statement), a stockholder's notice must be received at
our executive offices not later than the close of business on February 22, 2002
nor earlier than the close of business on January 23, 2002 and should otherwise
comply with the advance notice provisions of our bylaws. For proposals that are
not timely filed, we retain discretion to vote proxies that we receive. For
proposals that are timely filed, we retain discretion to vote proxies that we
receive provided (1) we include in our proxy statement advice on the nature of
the proposal and how we intend to exercise our voting discretion and (2) the
proponent does not issue a proxy statement.
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PROXY SOLICITATION COSTS. The proxies being solicited hereby are being
solicited by the Company. We will bear the cost of soliciting proxies in the
enclosed form. Our officers and regular employees may, but without compensation
other than their regular compensation, solicit proxies by further mailing or
personal conversations, or by telephone, telex, facsimile or electronic means.
We will, upon request, reimburse brokerage firms and others for their reasonable
expenses in forwarding solicitation material to the beneficial owners of stock.
FINANCIAL STATEMENTS AVAILABLE. A copy of our 2000 Annual Report to
Stockholders containing audited financial statements accompanies this Proxy
Statement. The 2000 Annual Report does not constitute a part of the proxy
solicitation material.
Upon written request to our Chief Financial Officer, Bright Horizons
Family Solutions, Inc., 200 Talcott Avenue South, Watertown, Massachusetts
02472, the Company will provide, without charge, copies of our annual report
filed with the Securities and Exchange Commission on Form 10-K.
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28
Appendix A
CHARTER
OF
AUDIT COMMITTEE
OF
BRIGHT HORIZONS FAMILY SOLUTIONS, INC.
The Audit Committee (the "Committee") is appointed by the Board of
Directors (the "Board") to assist the Board in monitoring on a periodic basis
the processes used by the Company to produce financial statements, the Company's
systems of internal accounting and financial controls, and the independence of
the Company's outside auditors.
In discharging its responsibilities, the Committee is empowered to
investigate any matter with full access to all books, records, facilities and
personnel of the Company and the power to retain outside counsel, auditors or
other experts or consultants for this purpose. The Committee shall make regular
reports to the Board.
The Committee shall review and reassess the adequacy of this Charter on
an annual basis and submit it annually to the Board for approval.
The Committee shall be comprised of not less than three members of the
Board, and the Committee's composition and experience will meet the applicable
listing standards of the NASD.
Accordingly, all of the members will be directors:
1. Who have no relationship to the Company that may interfere
with the exercise of their independent judgment in carrying out the
responsibilities of a director (unless as to one non-independent member the
Board under exceptional and limited circumstances determines that membership is
required by the best interests of the Company and its shareholders); and
2. Who are financially literate (as defined in the NASD listing
standard) or who become financially literate within a reasonable period of time
after appointment to the Committee. In addition, at least one member of the
Committee will have sufficient experience or background which results in
financial sophistication (as defined in the NASD listing standard).
The Committee's monitoring responsibility recognizes that the Company's
management is responsible for preparing the Company's financial statements in
accordance with generally accepted accounting principles and that the outside
auditors are responsible for auditing those financial statements. Additionally,
the Committee recognizes that the Company's financial management, as well as its
outside auditors, have more time, knowledge and more detailed information on the
Company and its financial reports than do Committee members; consequently, in
carrying out its responsibilities, the Committee is not providing any expert or
special assurance as to the Company's financial statements and is not conducting
an audit or investigation of the financial statements or determining that the
Company's financial statements are true and complete or are in accordance with
generally accepted accounting principles.
The following functions shall be the common recurring activities of the
Committee in carrying out its monitoring responsibilities. These functions are
set forth as a guide with the understanding that the Committee may diverge from
this guide as it deems appropriate given the circumstances.
I. The Committee shall review with management and the outside auditors the
annual audited financial statements to be included in the Company's
Annual Report on Form 10-K (or the Annual Report to Shareholders if
distributed prior to the filing of Form 10-K) and review and consider
with the outside auditors the matters required to be discussed by
Statements of Auditing Standards ("SAS") No. 61 and No. 90.
II. As a whole, or through the Committee chair, the Committee shall review
with the outside auditors the Company's interim financial results to be
included in the Company's quarterly reports to be filed with Securities
and Exchange Commission on Form 10-Q and the matters required to be
discussed by SAS No. 61 and No. 90; this review will occur prior to the
Company's filing of the Form 10-Q.
29
III. The Committee shall discuss with management and the outside auditors
the quality and adequacy of the Company's internal controls that could
significantly affect the Company's financial statements.
IV. The Committee shall:
- request from the outside auditors annually a formal written
statement delineating all relationships between the outside
auditors and the Company that may impact the objectivity and
independence of the outside auditors, consistent with
Independence Standards Board Standard Number 1;
- discuss with the outside auditors in an active dialogue any
such disclosed relationships and their impact on the outside
auditors' independence;
- consider whether the provision of any non-audit services
discussed by the outside auditors is compatible with
maintaining the auditors' independence; and
- if determined appropriate by the Committee, recommend that the
Board take appropriate action in response to the outside
auditor's report to ensure the outside auditor's independence.
V. The Committee, subject to any action that may be taken by the Board,
shall have the ultimate authority and responsibility to select (or
nominate for shareholder approval), evaluate and, where appropriate,
replace the outside auditors, and the outside auditors are ultimately
accountable to the Board and the Committee.
VI. The committee shall review annually and submit for inclusion in the
Company's annual meeting proxy statement an Audit Committee Report
setting forth the information required by the proxy rules of the
Securities and Exchange Commission, including the fact that the
Committee has discussed with the outside auditors matters relating to
their independence and matters relating to SAS No. 61 and No. 90 and
the fact that the Committee has recommended to the Board that the
audited financial statements be included in the Company's Form 10-K.
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Appendix B
THIRD AMENDMENT TO
BRIGHT HORIZONS FAMILY SOLUTIONS, INC.
1998 STOCK INCENTIVE PLAN
This Third Amendment (this "Amendment") to the 1998 Stock Incentive
Plan (the "Plan") is hereby established by Bright Horizons Family Solutions,
Inc., a Delaware corporation (the "Company"), and adopted by its Board of
Directors as of the 28th day of March, 2001 (the "Effective Date").
RECITALS
A. The Board of Directors of the Company (the "Board") previously
approved, and the shareholders of the Company previously approved and adopted,
the Plan.
B. The Board has deemed that it is in the best interests of the
Company to amend the Plan.
AMENDMENT
Paragraph (a) of Section 3 of the plan is hereby deleted and replaced
with the following:
"(a) As of the Effective Date, the aggregate number of
shares of Common Stock that may be issued under the Plan shall be
2,250,000 shares. Of the total number of shares that may be issued
under the Plan, an aggregate of 100,000 shares shall be reserved for
issuance under Section 8 hereof, subject to increases at the discretion
of the Board. The shares of Common Stock issuable under the Plan may
consist, in whole or in part, of authorized and unissued shares or
treasury shares. No officer of the Company or other person whose
compensation may be subject to the limitations on deductibility under
Section 162(m) of the Code shall be eligible to receive awards pursuant
to this Plan relating to in excess of 200,000 shares of Common Stock in
any fiscal year (the "Section 162(m) Maximum")."
Date approved by the Board: March 28, 2001
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APPENDIX C
[amended, as proposed, and restated
electronically for SEC filings purposes only]
BRIGHT HORIZONS FAMILY SOLUTIONS, INC.
1998 STOCK INCENTIVE PLAN
SECTION 1. PURPOSE; DEFINITIONS.
The purpose of the Bright Horizons Family Solutions, Inc. 1998 Stock
Incentive Plan (the "Plan") is to enable Bright Horizons Family Solutions, Inc.
(the "Company") to attract, retain and reward key employees of and consultants
to the Company and its Subsidiaries and Affiliates, and directors who are not
also employees of the Company, and to strengthen the mutuality of interests
between such key employees, consultants, and directors by awarding such key
employees, consultants, and directors performance-based stock incentives and/or
other equity interests or equity-based incentives in the Company, as well as
performance-based incentives payable in cash. The creation of the Plan shall not
diminish or prejudice other compensation programs approved from time to time by
the Board.
For purposes of the Plan, the following terms shall be defined as set
forth below:
A. "Affiliate" means any entity other than the Company and its
Subsidiaries that is designated by the Board as a participating employer under
the Plan, provided that the Company directly or indirectly owns at least 20% of
the combined voting power of all classes of stock of such entity or at least 20%
of the ownership interests in such entity.
B. "Board" means the Board of Directors of the Company.
C. "Cause" has the meaning provided in Section 5(j) of the Plan.
D. "Change in Control" has the meaning provided in Section 9(b) of the
Plan.
E. "Change in Control Price" has the meaning provided in Section 9(d)
of the Plan.
F. "Common Stock" means the Company's Common Stock, par value $.01 per
share.
G. "Code" means the Internal Revenue Code of 1986, as amended from time
to time, and any successor thereto.
H. "Committee" means the Committee referred to in Section 2 of the
Plan.
I. "Company" means Bright Horizons Family Solutions, Inc., a
corporation organized under the laws of the State of Delaware or any successor
corporation.
J. "Disability" means disability as determined under the Company's
Group Long Term Disability Insurance Plan.
K. "Early Retirement" means retirement, for purposes of this Plan with
the express consent of the Company at or before the time of such retirement,
from active employment with the Company and any Subsidiary or Affiliate prior to
age 65, in accordance with any applicable early retirement policy of the Company
then in effect or as may be approved by the Committee.
L. "Effective Date" has the meaning provided in Section 13 of the Plan.
M. "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor thereto.
N. "Fair Market Value" means with respect to the Common Stock, as of
any given date or dates, unless otherwise determined by the Committee in good
faith, the reported closing price of a share of Common Stock on the
NASDAQ-National Market or such other market or exchange as is the principal
trading market for the Common Stock,
32
or, if no such sale of a share of Common Stock is reported on the
NASDAQ-National Market or other exchange or principal trading market on such
date, the fair market value of a share of Common Stock as determined by the
Committee in good faith.
O. "Incentive Stock Option" means any Stock Option intended to be and
designated as an "Incentive Stock Option" within the meaning of Section 422 of
the Code.
P. "Immediate Family" means any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, and shall include
adoptive relationships.
Q. "Non-Employee Director" means a member of the Board who is a
Non-Employee Director within the meaning of Rule 16b-3(b)(3) promulgated under
the Exchange Act and an outside director within the meaning of Treasury
Regulation Sec. 162-27(e)(3) promulgated under the Code.
R. "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
S. "Normal Retirement" means retirement from active employment with the
Company and any Subsidiary or Affiliate on or after age 65.
T. "Other Stock-Based Award" means an award under Section 7 below that
is valued in whole or in part by reference to, or is otherwise based on, the
Common Stock.
U. "Outside Director" means a member of the Board who is not an officer
or employee of the Company or any Subsidiary or Affiliate of the Company.
V. "Outside Director Option" means an award to an Outside Director
under Section 8 below.
W. "Plan" means this Bright Horizons Family Solutions, Inc. 1998 Stock
Incentive Plan, as amended from time to time.
X. "Restricted Stock" means an award of shares of Common Stock that is
subject to restrictions under Section 6 of the Plan.
Y. "Restriction Period" has the meaning provided in Section 6 of the
Plan.
Z. "Retirement" means Normal or Early Retirement.
AA. "Section 162(m) Maximum" has the meaning provided in Section 3(a)
hereof.
BB. "Stock Option" or "Option" means any option to purchase shares of
Common Stock (including Restricted Stock, if the Committee so determines)
granted pursuant to Section 5 below.
CC. "Subsidiary" means any company (other than the Company) in an
unbroken chain of companies beginning with the Company if each of the companies
(other than the last company in the unbroken chain) owns stock possessing 50% or
more of the total combined voting power of all classes of stock in one of the
other companies in the chain.
SECTION 2. ADMINISTRATION.
The Plan shall be administered by a Committee of not less than two
Non-Employee Directors, who shall be appointed by the Board and who shall serve
at the pleasure of the Board. The functions of the Committee specified in the
Plan may be exercised by an existing Committee of the Board composed exclusively
of Non-Employee Directors. The initial Committee shall be the Compensation
Committee of the Board. In the event there are not at least two Non-Employee
Directors on the Board, the Plan shall be administered by the Board and all
references herein to the Committee shall refer to the Board.
33
The Committee shall have authority to grant, pursuant to the terms of
the Plan, to officers, other key employees, Outside Directors and consultants
eligible under Section 4: (i) Stock Options,(ii) Restricted Stock, and/or (iii)
Other Stock-Based Awards; provided, however, that the power to grant and
establish the terms and conditions of awards to Outside Directors under the Plan
other than pursuant to Section 8 shall be reserved to the Board.
In particular, the Committee, or the Board, as the case may be, shall
have the authority, consistent with the terms of the Plan:
(a) to select the officers, key employees and Outside
Directors of and consultants to the Company and its Subsidiaries and
Affiliates to whom Stock Options, Restricted Stock, and/or Other
Stock-Based Awards may from time to time be granted hereunder;
(b) to determine whether and to what extent Stock Options,
Restricted Stock, and/or Other Stock-Based Awards, or any combination
thereof, are to be granted hereunder to one or more eligible persons;
(c) to determine the number of shares to be covered by each
such award granted hereunder;
(d) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder (including,
but not limited to, the share price and any restriction or limitation,
or any vesting acceleration or waiver of forfeiture restrictions
regarding any Stock Option or other award and/or the shares of Common
Stock relating thereto, based in each case on such factors as the
Committee shall determine, in its sole discretion); and to amend or
waive any such terms and conditions to the extent permitted by Section
10 hereof;
(e) to determine whether and under what circumstances a Stock
Option may be settled in cash or Restricted Stock under Section 5(k) or
(l), as applicable, instead of Common Stock;
(f) to determine whether, to what extent, and under what
circumstances Option grants and/or other awards under the Plan are to
be made, and operate, on a tandem basis vis-a-vis other awards under
the Plan and/or cash awards made outside of the Plan, or on an additive
basis;
(g) to determine whether, to what extent, and under what
circumstances shares of Common Stock and other amounts payable with
respect to an award under this Plan shall be deferred either
automatically or at the election of the participant (including
providing for and determining the amount (if any) of any deemed
earnings on any deferred amount during any deferral period);
(h) to determine whether to require payment of tax withholding
requirements in shares of Common Stock subject to the award; and
(i) to impose any holding period required to satisfy Section
16 under the Exchange Act.
The Committee shall have the authority to adopt, alter, and repeal such
rules, guidelines, and practices governing the Plan as it shall, from time to
time, deem advisable; to interpret the terms and provisions of the Plan and any
award issued under the Plan (and any agreements relating thereto); and to
otherwise supervise the administration of the Plan.
All decisions made by the Committee pursuant to the provisions of the
Plan shall be made in the Committee's sole discretion and shall be final and
binding on all persons, including the Company and Plan participants.
SECTION 3. SHARES OF COMMON STOCK SUBJECT TO PLAN.
(a) As of the Effective Date, the aggregate number of shares of Common
Stock that may be issued under the Plan shall be 2,250,000 shares. Of the total
number of shares that may be issued under the Plan, an aggregate of 100,000
shares shall be reserved for issuance under Section 8 hereof, subject to
increases at the discretion of the Board. The shares of Common Stock issuable
under the Plan may consist, in whole or in part, of authorized and unissued
shares or treasury shares. No officer of the Company or other person whose
compensation may be subject to the limitations on
34
deductibility under Section 162(m) of the Code shall be eligible to receive
awards pursuant to this Plan relating to in excess of 200,000 shares of Common
Stock in any fiscal year (the "Section 162(m) Maximum").
(b) If any shares of Common Stock that have been optioned cease to be
subject to a Stock Option, or if any shares of Common Stock that are subject to
any Restricted Stock or Other Stock-Based Award granted hereunder are forfeited
prior to the payment of any dividends, if applicable, with respect to such
shares of Common Stock, or any such award otherwise terminates without a payment
being made to the participant in the form of Common Stock, such shares shall
again be available for distribution in connection with future awards under the
Plan.
(c) In the event of any merger, reorganization, consolidation,
recapitalization, extraordinary cash dividend, stock dividend, stock split or
other change in corporate structure affecting the Common Stock, an appropriate
substitution or adjustment shall be made in the maximum number of shares that
may be awarded under the Plan, in the number and option price of shares subject
to outstanding Options granted under the Plan, in the number of shares
underlying Outside Director Options to be granted under Section 8 hereof, the
Section 162(m) Maximum and in the number of shares subject to other outstanding
awards granted under the Plan as may be determined to be appropriate by the
Committee, in its sole discretion, provided that the number of shares subject to
any award shall always be a whole number.
SECTION 4. ELIGIBILITY.
Officers, other key employees and Outside Directors of and consultants
to the Company and its Subsidiaries and Affiliates who are responsible for or
contribute to the management, growth and/or profitability of the business of the
Company and/or its Subsidiaries and Affiliates are eligible to be granted awards
under the Plan. Outside Directors are eligible to receive awards pursuant to
Section 8 and as otherwise determined by the Board.
SECTION 5. STOCK OPTIONS.
Stock Options may be granted alone, in addition to, or in tandem with
other awards granted under the Plan and/or cash awards made outside of the Plan.
Any Stock Option granted under the Plan shall be in such form as the Committee
may from time to time approve.
Stock Options granted under the Plan may be of two types: (i) Incentive
Stock Options and (ii) Non-Qualified Stock Options. Incentive Stock Options may
be granted only to individuals who are employees of the Company or any
Subsidiary of the Company.
Subject to the foregoing, the Committee shall have the authority to
grant to any optionee Incentive Stock Options, Non-Qualified Stock Options, or
both types of Stock Options.
Options granted to officers, key employees, Outside Directors and
consultants under the Plan shall be subject to the following terms and
conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable.
(a) Option Price. The option price per share of Common Stock
purchasable under a Stock Option shall be determined by the Committee
at the time of grant but shall be not less than 100% (or, in the case
of any employee who owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or of any
of its Subsidiaries, not less than 110%) of the Fair Market Value of
the Common Stock at grant, in the case of Incentive Stock Options, and
not less than 50% of the Fair Market Value of the Common Stock at
grant, in the case of Non-Qualified Stock Options.
(b) Option Term. The term of each Stock Option shall be fixed
by the Committee, but no Stock Option shall be exercisable more than
ten years (or, in the case of an employee who owns stock possessing
more than 10% of the total combined voting power of all classes of
stock of the Company or any of its Subsidiaries or parent companies,
more than five years) after the date the Option is granted.
(c) Exercisability. Stock Options shall be exercisable at such
time or times and subject to such terms and conditions as shall be
determined by the Committee at or after grant; provided, however, that
except
35
as provided in Section 5(f) and (g), Section 8 and Section 9, unless
otherwise determined by the Committee at or after grant, no Stock
Option shall be exercisable prior to the first anniversary date of the
granting of the Option. The Committee may provide that a Stock Option
shall vest over a period of future service at a rate specified at the
time of grant, or that the Stock Option is exercisable only in
installments. If the Committee provides, in its sole discretion, that
any Stock Option is exercisable only in installments, the Committee may
waive such installment exercise provisions at any time at or after
grant, in whole or in part, based on such factors as the Committee
shall determine in its sole discretion.
(d) Method of Exercise. Subject to whatever installment
exercise restrictions apply under Section 5(c), Stock Options may be
exercised in whole or in part at any time during the option period, by
giving written notice of exercise to the Company specifying the number
of shares to be purchased. Such notice shall be accompanied by payment
in full of the purchase price, either by check, note, or such other
instrument as the Committee may accept. As determined by the Committee,
in its sole discretion, at or (except in the case of an Incentive Stock
Option) after grant, payment in full or in part may also be made in the
form of shares of Common Stock already owned by the optionee and held
by the optionee for at least six months or, in the case of a
Non-Qualified Stock Option, shares of Restricted Stock or shares
subject to such Option or another award hereunder (in each case valued
at the Fair Market Value of the Common Stock on the date the Option is
exercised). If payment of the exercise price is made in part or in full
with Common Stock, the Committee may award to the employee a new Stock
Option to replace the Common Stock which was surrendered. If payment of
the option exercise price of a Non-Qualified Stock Option is made in
whole or in part in the form of Restricted Stock, such Restricted Stock
(and any replacement shares relating thereto) shall remain (or be)
restricted in accordance with the original terms of the Restricted
Stock award in question, and any additional Common Stock received upon
the exercise shall be subject to the same forfeiture restrictions,
unless otherwise determined by the Committee, in its sole discretion,
at or after grant. No shares of Common Stock shall be issued until full
payment therefor has been made. An optionee shall generally have the
rights to dividends or other rights of a shareholder with respect to
shares subject to the Option when the optionee has given written notice
of exercise, has paid in full for such shares, and, if requested, has
given the representation described in Section 12(a).
(e) Transferability of Options. Except as provided by the
Committee, no Non-Qualified Stock Option shall be transferable by the
optionee other than (i) transfers by the Optionee to a member of his or
her Immediate Family or a trust for the benefit of the optionee or a
member of his or her Immediate Family, or (ii) transfers by will or by
the laws of descent and distribution. No Incentive Stock Option shall
be transferable by the optionee otherwise than by will or by the laws
of descent and distribution and all Incentive Stock Options shall be
exercisable, during the optionee's lifetime, only by the optionee.
(f) Termination by Death. Subject to Section 5(j), if an
optionee's employment by the Company and any Subsidiary or (except in
the case of an Incentive Stock Option) Affiliate terminates by reason
of death, any Stock Option held by such optionee may thereafter be
exercised, to the extent such option was exercisable at the time of
death or (except in the case of an Incentive Stock Option) on such
accelerated basis as the Committee may determine at or after grant (or
except in the case of an Incentive Stock Option, as may be determined
in accordance with procedures established by the Committee) by the
legal representative of the estate or by the legatee of the optionee
under the will of the optionee, for a period of one year (or such other
period as the Committee may specify at or after grant) from the date of
such death or until the expiration of the stated term of such Stock
Option, whichever period is the shorter.
(g) Termination by Reason of Disability. Subject to Section
5(j), if an optionee's employment by the Company and any Subsidiary or
(except in the case of an Incentive Stock Option) Affiliate terminates
by reason of Disability, any Stock Option held by such optionee may
thereafter be exercised by the optionee, to the extent it was
exercisable at the time of termination or (except in the case of an
Incentive Stock Option) on such accelerated basis as the Committee may
determine at or after grant (or, except in the case of an Incentive
Stock Option, as may be determined in accordance with procedures
established by the Committee), for a period of (i) two years (or such
other period as the Committee may specify at or after grant) from the
date of such termination of employment or until the expiration of the
stated term of such Stock Option, whichever period is the shorter, in
the case of a Non-Qualified Stock Option and (ii) one year from the
date of termination of employment or until the expiration of the stated
term of such Stock Option, whichever period is shorter, in the case of
an Incentive Stock Option; provided however, that, if the optionee dies
within the period specified in (i) above (or other such period as the
committee shall specify at or after grant), any unexercised
Non-Qualified Stock Option held by
36
such optionee shall thereafter be exercisable to the extent to which it
was exercisable at the time of death for a period of twelve months from
the date of such death or until the expiration of the stated term of
such Stock Option, whichever period is shorter. In the event of
termination of employment by reason of Disability, if an Incentive
Stock Option is exercised after the expiration of the exercise period
applicable to Incentive Stock Options, but before the expiration of any
period that would apply if such Stock Option were a Non-Qualified Stock
Option, such Stock Option will thereafter be treated as a Non-Qualified
Stock Option.
(h) Termination by Reason of Retirement. Subject to Section
5(j), if an optionee's employment by the Company and any Subsidiary or
(except in the case of an Incentive Stock Option) Affiliate terminates
by reason of Normal or Early Retirement, any Stock Option held by such
optionee may thereafter be exercised by the optionee, to the extent it
was exercisable at the time of such Retirement or (except in the case
of an Incentive Stock Option) on such accelerated basis as the
Committee may determine at or after grant (or, except in the case of an
Incentive Stock Option, as may be determined in accordance with
procedures established by the Committee), for a period of (i) one year
(or such other period as the Committee may specify at or after grant)
from the date of such termination of employment or the expiration of
the stated term of such Stock Option, whichever period is the shorter,
in the case of a Non-Qualified Stock Option and (ii) three months from
the date of such termination of employment or the expiration of the
stated term of such Stock Option, whichever period is the shorter, in
the event of an Incentive Stock Option; provided however, that, if the
optionee dies within the period specified in (i) above (or other such
period as the Committee shall specify at or after grant), any
unexercised Non-Qualified Stock Option held by such optionee shall
thereafter be exercisable to the extent to which it was exercisable at
the time of death for a period of twelve months from the date of such
death or until the expiration of the stated term of such Stock Option,
whichever period is shorter. In the event of termination of employment
by reason of Retirement, if an Incentive Stock Option is exercised
after the expiration of the exercise period applicable to Incentive
Stock Options, but before the expiration of the period that would apply
if such Stock Option were a Non-Qualified Stock Option, the option will
thereafter be treated as a Non-Qualified Stock Option.
(i) Other Termination. Subject to Section 5(j), unless
otherwise determined by the Committee (or pursuant to procedures
established by the Committee) at or (except in the case of an Incentive
Stock Option) after grant, (a) if an optionee's employment by the
Company and any Subsidiary or (except in the case of an Incentive Stock
Option) Affiliate is involuntarily terminated for any reason other than
death, Disability or Normal or Early Retirement, or (b) if an optionee
voluntarily terminates employment (except for Disability, Normal or
Early Retirement) with the Company and any Subsidiary or (except in the
case of an Incentive Stock Option) Affiliate, the Stock Option shall
thereupon terminate, except that such Stock Option may be exercised, to
the extent otherwise then exercisable, for the lesser of three months
or the balance of such Stock Option's term, but with respect to an
involuntary termination, only if the involuntary termination is without
Cause. For purposes of this Plan, "Cause" means (i) a felony conviction
of a participant or the failure of a participant to contest prosecution
for a felony, or (ii) a participant's willful misconduct or dishonesty,
which is directly and materially harmful to the business or reputation
of the Company or any Subsidiary or Affiliate.
(j) Incentive Stock Options. Anything in the Plan to the
contrary notwithstanding, no term of this Plan relating to Incentive
Stock Options shall be interpreted, amended, or altered, nor shall any
discretion or authority granted under the Plan be so exercised, so as
to disqualify the Plan under Section 422 of the Code, or, without the
consent of the optionee(s) affected, to disqualify any Incentive Stock
Option under such Section 422. No Incentive Stock Option shall be
granted to any participant under the Plan if such grant would cause the
aggregate Fair Market Value (as of the date the Incentive Stock Option
is granted) of the Common Stock with respect to which all Incentive
Stock Options are exercisable for the first time by such participant
during any calendar year (under all such plans of the Company and any
Subsidiary) to exceed $100,000. To the extent permitted under Section
422 of the Code or the applicable regulations thereunder or any
applicable Internal Revenue Service pronouncement:
(i) if (x) a participant's employment is
terminated by reason of death, Disability, or
Retirement and (y) the portion of any Incentive Stock
Option that is otherwise exercisable during the
post-termination period specified under Section 5(f),
(g) or (h), applied without regard to the $100,000
limitation contained in Section 422(d) of the Code,
is greater than the portion of such Option that is
immediately exercisable as an "Incentive Stock
Option"
37
during such post-termination period under Section
422, such excess shall be treated as a Non-Qualified
Stock Option; and
(ii) if the exercise of an Incentive Stock
Option is accelerated by reason of a Change in
Control, any portion of such Option that is not
exercisable as an Incentive Stock Option by reason of
the $100,000 limitation contained in Section 422(d)
of the Code shall be treated as a Non-Qualified Stock
Option.
(k) Buyout Provisions. The Committee may at any time offer to
buy out for a payment in cash, Common Stock, or Restricted Stock an
Option previously granted, based on such terms and conditions as the
Committee shall establish and communicate to the optionee at the time
that such offer is made.
(l) Settlement Provisions. If the option agreement so provides
at grant or (except in the case of an Incentive Stock Option) is
amended after grant and prior to exercise to so provide (with the
optionee's consent), the Committee may require that all or part of the
shares to be issued with respect to the spread value of an exercised
Option take the form of Restricted Stock, which shall be valued on the
date of exercise on the basis of the Fair Market Value (as determined
by the Committee) of such Restricted Stock determined without regards
to the forfeiture restrictions involved.
(m) Termination of Consultant. The Committee shall have
discretion in determining when a termination under Sections 5(f), (g),
(h) or (i) above shall occur with respect to a consultant's
relationship with the Company.
SECTION 6. RESTRICTED STOCK.
(a) Administration. Shares of Restricted Stock may be issued
either alone, in addition to, or in tandem with other awards granted
under the Plan and/or cash awards made outside the Plan. The Committee
shall determine the eligible persons to whom, and the time or times at
which, grants of Restricted Stock will be made, the number of shares of
Restricted Stock to be awarded to any person, the price (if any) to be
paid by the recipient of Restricted Stock (subject to Section 6(b)),
the time or times within which such awards may be subject to
forfeiture, and the other terms, restrictions and conditions of the
awards in addition to those set forth in Section 6(c). The Committee
may condition the grant of Restricted Stock upon the attainment of
specified performance goals or such other factors as the Committee may
determine, in its sole discretion. The provisions of Restricted Stock
awards need not be the same with respect to each recipient.
(b) Awards and Certificates. The prospective recipient of a
Restricted Stock award shall not have any rights with respect to such
award, unless and until such recipient has executed an agreement
evidencing the award and has delivered a fully executed copy thereof to
the Company, and has otherwise complied with the applicable terms and
conditions of such award.
(i) The purchase price for shares of Restricted Stock
shall be established by the Committee and may be zero.
(ii) Awards of Restricted Stock must be accepted
within a period of 60 days (or such shorter period as the
Committee may specify at grant) after the award date, by
executing a Restricted Stock Award Agreement and paying
whatever price (if any) is required under Section 6(b)(i).
(iii) Each participant receiving a Restricted Stock
award shall be issued a stock certificate in respect of such
shares of Restricted Stock. Such certificate shall be
registered in the name of such participant, and shall bear an
appropriate legend referring to the terms, conditions, and
restrictions applicable to such award.
(iv) The Committee shall require that the stock
certificates evidencing such shares be held in custody by the
Company until the restrictions thereon shall have lapsed, and
that, as a condition of any Restricted Stock award, the
participant shall have delivered a stock power, endorsed in
blank, relating to the shares of Common Stock covered by such
award.
38
(c) Restrictions and Conditions. The shares of Restricted
Stock awarded pursuant to this Section 6 shall be subject to the
following restrictions and conditions:
(i) In accordance with the provisions of this Plan
and the award agreement, during a period set by the Committee
commencing with the date of such award (the "Restriction
Period"), the participant shall not be permitted to sell,
transfer, pledge, assign, or otherwise encumber shares of
Restricted Stock awarded under the Plan. Within these limits,
the Committee, in its sole discretion, may provide for the
lapse of such restrictions in installments and may accelerate
or waive such restrictions, in whole or in part, based on
service, performance, such other factors or criteria as the
Committee may determine in its sole discretion.
(ii) Except as provided in this paragraph (ii) and
Section 6(c)(i), the participant shall have, with respect to
the shares of Restricted Stock, all of the rights of a
shareholder of the Company, including the right to vote the
shares, and the right to receive any cash dividends. The
Committee, in its sole discretion, as determined at the time
of award, may permit or require the payment of cash dividends
to be deferred and, if the Committee so determines,
reinvested, subject to Section 12(e), in additional Restricted
Stock to the extent shares are available under Section 3, or
otherwise reinvested. Pursuant to Section 3 above, stock
dividends issued with respect to Restricted Stock shall be
treated as additional shares of Restricted Stock that are
subject to the same restrictions and other terms and
conditions that apply to the shares with respect to which such
dividends are issued. If the Committee so determines, the
award agreement may also impose restrictions on the right to
vote and the right to receive dividends.
(iii) Subject to the applicable provisions of the
award agreement and this Section 6, upon termination of a
participant's employment with the Company and any Subsidiary
or Affiliate for any reason during the Restriction Period, all
shares still subject to restriction will vest, or be
forfeited, in accordance with the terms and conditions
established by the Committee at or after grant.
(iv) If and when the Restriction Period expires
without a prior forfeiture of the Restricted Stock subject to
such Restriction Period, certificates for an appropriate
number of unrestricted shares shall be delivered to the
participant promptly.
(d) Minimum Value Provisions. In order to better ensure that
award payments actually reflect the performance of the Company and
service of the participant, the Committee may provide, in its sole
discretion, for a tandem performance-based or other award designed to
guarantee a minimum value, payable in cash or Common Stock to the
recipient of a restricted stock award, subject to such performance,
future service, deferral, and other terms and conditions as may be
specified by the Committee.
SECTION 7. OTHER STOCK-BASED AWARDS.
(a) Administration. Other Stock-Based Awards, including,
without limitation, performance shares, convertible preferred stock,
convertible debentures, exchangeable securities and Common Stock awards
or options valued by reference to earnings per share or Subsidiary
performance, may be granted either alone, in addition to, or in tandem
with Stock Options, or Restricted Stock granted under the Plan and cash
awards made outside of the Plan; provided that no such Other
Stock-Based Awards may be granted in tandem with Incentive Stock
Options if that would cause such Stock Options not to qualify as
Incentive Stock Options pursuant to Section 422 of the Code. Subject to
the provisions of the Plan, the Committee shall have authority to
determine the persons to whom and the time or times at which such
awards shall be made, the number of shares of Common Stock to be
awarded pursuant to such awards, and all other conditions of the
awards. The Committee may also provide for the grant of Common Stock
upon the completion of a specified performance period. The provisions
of Other Stock-Based Awards need not be the same with respect to each
recipient.
(b) Terms and Conditions. Other Stock-Based Awards made
pursuant to this Section 8 shall be subject to the following terms and
conditions:
39
(i) Shares subject to awards under this Section 7 and
the award agreement referred to in Section 7(b)(v) below, may
not be sold, assigned, transferred, pledged, or otherwise
encumbered prior to the date on which the shares are issued,
or, if later, the date on which any applicable restriction,
performance, or deferral period lapses.
(ii) Subject to the provisions of this Plan and the
award agreement and unless otherwise determined by the
Committee at grant, the recipient of an award under this
Section 7 shall be entitled to receive, currently or on a
deferred basis, interest or dividends or interest or dividend
equivalents with respect to the number of shares covered by
the award, as determined at the time of the award by the
Committee, in its sole discretion, and the Committee may
provide that such amounts (if any) shall be deemed to have
been reinvested in additional shares of Common Stock or
otherwise reinvested.
(iii) Any award under Section 7 and any shares of
Common Stock covered by any such award shall vest or be
forfeited to the extent so provided in the award agreement, as
determined by the Committee in its sole discretion.
(iv) In the event of the participant's Retirement,
Disability, or death, or in cases of special circumstances,
the Committee may, in its sole discretion, waive in whole or
in part any or all of the remaining limitations imposed
hereunder (if any) with respect to any or all of an award
under this Section 7.
(v) Each award under this Section 7 shall be
confirmed by, and subject to the terms of, an agreement or
other instrument by the Company and the participant.
(vi) Common Stock (including securities convertible
into Common Stock) issued on a bonus basis under this Section
7 may be issued for no cash consideration. Common Stock
(including securities convertible into Common Stock) purchased
pursuant to a purchase right awarded under this Section 7
shall be priced at least 85% of the Fair Market Value of the
Common Stock on the date of grant.
SECTION 8. AWARDS TO OUTSIDE DIRECTORS.
(a) The provisions of this Section 8 shall apply only to
awards to Outside Directors in accordance with this Section 8. The
Committee shall have no authority to determine the timing of or the
terms or conditions of any award under this Section 8.
(b) Each Outside Director who is serving on the Board of
Directors on the date of the first meeting of the Board of Directors on
or after the Effective Date of this Plan or who is first elected to the
Board of Directors thereafter, will receive an automatic grant of a
non-qualified stock option to purchase 5,000 shares of Common Stock on
the earlier of the date of the first meeting of the Board of Directors
after the Effective Date of this Plan or the date of election. On the
date of each Annual Meeting of Stockholders of the Company, each
Outside Director will receive an automatic grant of a non-qualified
stock option to purchase 1,000 shares of Common Stock, but only if such
Outside Director failed to attend no more than one regularly scheduled
meeting of the Board of Directors in the preceding twelve (12) months.
The exercise price of each option granted pursuant to this Section 8(b)
shall equal the Fair Market Value of such Common Stock on the date of
grant.
(c) Each Outside Director Option shall vest and become
exercisable with respect to one-third of such shares on the first
anniversary of the date of grant, with respect to one-third on the
second anniversary of the date of grant, and with respect to one-third
on the third anniversary of the date of grant. Each Outside Director
Option shall expire, if unexercised, on the tenth anniversary of the
date of grant. The exercise price may be paid in cash or in shares of
Common Stock, including shares of Common Stock subject to the Outside
Director Option.
(d) Outside Director Options shall not be transferable without
the prior written consent of the Board other than (i) transfers by the
optionee to a member of his or her Immediate Family or a trust for the
40
benefit of optionee or a member of his or her Immediate Family, or (ii)
transfers by will or by the laws of descent and distribution.
(e) Grantees of Outside Director Options shall enter into a
stock option agreement with the Company setting forth the exercise
price and other terms as provided herein.
(f) The termination of Outside Director Options shall be
governed by the provisions of Sections 5(f), 5(h) and 5(i) hereof as if
Outside Directors were employees of the Company, except that any
determination to accelerate the vesting of an Outside Director Option
will be made by the Board and not by the Committee.
(g) Outside Director Options shall be subject to Section 9.
The number of shares and the exercise price per share of each Outside
Director Option shall be adjusted automatically in the same manner as
the number of shares and the exercise price for Stock Options under
Section 3 hereof at any time that Stock Options are adjusted as
provided in Section 3.
(h) Any applicable withholding taxes shall be paid in shares
of Common Stock subject to the Outside Director Option valued as the
Fair Market Value of such shares unless the Company agrees to accept a
payment in cash in the amount of such withholding taxes.
SECTION 9. CHANGE IN CONTROL PROVISIONS.
(a) Impact of Event. In the event of:
(1) a "Change in Control" as defined in Section 9(b);
or
(2) a "Potential Change in Control" as defined in
Section 9(c), but only if and to the extent so determined by
the Committee or the Board at or after grant (subject to any
right of approval expressly reserved by the Committee or the
Board at the time of such determination),
(i) Subject to the limitations set forth below in
this Section 9(a), the following acceleration provisions shall
apply to Stock Options, Restricted Stock, Outside Director
Options, and Other Stock-Based Awards granted on or prior to
April 16, 2001:
(a) Any Stock Option or Outside Director
Option awarded under the Plan not previously
exercisable and vested shall become fully exercisable
and vested.
(b) The restrictions applicable to any
Restricted Stock and Other Stock-Based Awards, in
each case to the extent not already vested under the
Plan, shall lapse and such shares and awards shall be
deemed fully vested.
(ii) The acceleration provisions set forth in
Section 9(a)(i) above shall not apply, unless otherwise
determined by the Board or the Committee, to Stock Options,
Restricted Stock, Outside Director Options, or Other
Stock-Based Awards granted after April 16, 2001.
(iii) Subject to the limitations set forth below in
this Section 9(a), the value of all outstanding Stock Options,
Restricted Stock, Outside Director Options and Other
Stock-Based Awards, in each case to the extent vested, shall,
unless otherwise determined by the Board or by the Committee
in its sole discretion prior to any Change in Control, be
cashed out on the basis of the "Change in Control Price" as
defined in Section 9(d) as of the date such Change in Control
or such Potential Change in Control is determined to have
occurred or such other date as the Board or Committee may
determine prior to the Change in Control; provided, however,
that this section (a)(ii) shall have no effect if its effect
would preclude the pooling method of accounting for the
specific transaction that resulted in a Change in Control (if
the pooling method of accounting is proposed for such
transaction).
(iv) The Board or the Committee may impose
additional conditions on the acceleration or valuation of any
award in the award agreement.
(b) Definition of Change in Control. For purposes of Section
9(a), a "Change in Control" means the happening of any of the
following:
41
(i) any person or entity, including a "group" as
defined in Section 13(d)(3) of the Exchange Act, other than
the Company or a wholly-owned subsidiary thereof or any
employee benefit plan of the Company or any of its
Subsidiaries, becomes the beneficial owner of the Company's
securities having 35% or more of the combined voting power of
the then outstanding securities of the Company that may be
cast for the election of directors of the Company (other than
as a result of an issuance of securities initiated by the
Company in the ordinary course of business); or
(ii) as the result of, or in connection with, any
cash tender or exchange offer, merger or other business
combination, sales of assets or contested election, or any
combination of the foregoing transactions, less than
40% of the combined voting power of the then outstanding
securities of the Company or any successor Company or entity
entitled to vote generally in the election of the directors of
the Company or such other company or entity after such
transaction are held in the aggregate by the holders of the
Company's securities entitled to vote generally in the
election of directors of the Company immediately prior to such
transaction; or
(iii) during any period of two consecutive years,
individuals who at the beginning of any such period constitute
the Board cease for any reason to constitute at least a
majority thereof, unless the election, or the nomination for
election by the Company's stockholders, of each director of
the Company first elected during such period was approved by a
vote of at least two-thirds of the directors of the Company
then still in office who were directors of the Company at the
beginning of any such period.
(c) Definition of Potential Change in Control. For purposes of
Section 9(a), a "Potential Change in Control" means the happening of
any one of the following:
(i) The approval by stockholders of an agreement by
the Company, the consummation of which would result in a
Change in Control of the Company as defined in Section 9(b);
or
(ii) The acquisition of beneficial ownership,
directly or indirectly, by any entity, person or group (other
than the Company or a Subsidiary or any Company employee
benefit plan (including any trustee of such plan acting as
such trustee)) of securities of the Company representing 5% or
more of the combined voting power of the Company's outstanding
securities and the adoption by the Committee of a resolution
to the effect that a Potential Change in Control of the
Company has occurred for purposes of this Plan.
(d) Change in Control Price. For purposes of this Section 9,
"Change in Control Price" means the highest price per share paid in any
transaction reported on the NASDAQ-National Market or such other
exchange or market as is the principal trading market for the Common
Stock, or paid or offered in any bona fide transaction related to a
Potential or actual Change in Control of the Company at any time during
the 60 day period immediately preceding the occurrence of the Change in
Control (or, where applicable, the occurrence of the Potential Change
in Control event), in each case as determined by the Committee except
that, in the case of Incentive Stock Options, such price shall be based
only on transactions reported for the date on which a cash out occurs
under Section 9(a)(ii).
SECTION 10. AMENDMENTS AND TERMINATION.
The Board may at any time amend, alter or discontinue the Plan;
provided, however, that, without the approval of the Company's stockholders, no
amendment or alteration may be made which would (a) except as a result of the
provisions of Section 3(c) of the Plan, increase the maximum number of shares
that may be issued under the Plan or increase the Section 162(m) Maximum, (b)
change the provisions governing Incentive Stock Options except as required or
permitted under the provisions governing incentive stock options under the Code,
or (c) make any change for which applicable law or regulatory authority
(including the regulatory authority of the NYSE or any other market or exchange
on which the Common Stock is traded) would require shareholder approval or for
which shareholder approval would be required to secure full deductibility of
compensation received under the Plan under Section 162(m) of the Code. No
amendment, alteration, or discontinuation shall be made which would impair the
rights of an optionee or participant
42
under a Stock Option, Restricted Stock, Other Stock-Based Award or Outside
Director Option theretofore granted, without the participant's consent.
The Committee may amend the terms of any Stock Option or other award
theretofore granted, prospectively or retroactively, but, subject to Section 3
above, no such amendment shall impair the rights of any holder without the
holder's consent. The Committee may also substitute new Stock Options for
previously granted Stock Options (on a one for one or other basis), including
previously granted Stock Options having higher option exercise prices. Solely
for purposes of computing the Section 162(m) Maximum, if any Stock Options or
other awards previously granted to a participant are canceled and new Stock
Options or other awards having a lower exercise price or other more favorable
terms for the participant are substituted in their place, both the initial Stock
Options or other awards and the replacement Stock Options or other awards will
be deemed to be outstanding (although the canceled Stock Options or other awards
will not be exercisable or deemed outstanding for any other purposes).
SECTION 11. UNFUNDED STATUS OF PLAN.
The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a
participant or optionee by the Company, nothing contained herein shall give any
such participant or optionee any rights that are greater than those of a general
creditor of the Company. In its sole discretion, the Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Common Stock or payments in lieu of or with respect to
awards hereunder; provided, however, that, unless the Committee otherwise
determines with the consent of the affected participant, the existence of such
trusts or other arrangements is consistent with the "unfunded" status of the
Plan.
SECTION 12. GENERAL PROVISIONS.
(a) The Committee may require each person purchasing shares
pursuant to a Stock Option or other award under the Plan to represent
to and agree with the Company in writing that the optionee or
participant is acquiring the shares without a view to distribution
thereof. The certificates for such shares may include any legend which
the Committee deems appropriate to reflect any restrictions on
transfer. All certificates for shares of Common Stock or other
securities delivered under the Plan shall be subject to such
stock-transfer orders and other restrictions as the Committee may deem
advisable under the rules, regulations, and other requirements of the
Commission, any stock exchange upon which the Common Stock is then
listed, and any applicable Federal or state securities law, and the
Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.
(b) Nothing contained in this Plan shall prevent the Board
from adopting other or additional compensation arrangements, subject to
shareholder approval if such approval is required; and such
arrangements may be either generally applicable or applicable only in
specific cases.
(c) The adoption of the Plan shall not confer upon any
employee of the Company or any Subsidiary or Affiliate any right to
continued employment with the Company or a Subsidiary or Affiliate, as
the case may be, nor shall it interfere in any way with the right of
the Company or a Subsidiary or Affiliate to terminate the employment of
any of its employees at any time.
(d) No later than the date as of which an amount first becomes
includible in the gross income of the participant for Federal income
tax purposes with respect to any award under the Plan, the participant
shall pay to the Company, or make arrangements satisfactory to the
Committee regarding the payment of, any Federal, state, or local taxes
of any kind required by law to be withheld with respect to such amount.
The Committee may require withholding obligations to be settled with
Common Stock, including Common Stock that is part of the award that
gives rise to the withholding requirement. The obligations of the
Company under the Plan shall be conditional on such payment or
arrangements and the Company and its Subsidiaries or Affiliates shall,
to the extent permitted by law, have the right to deduct any such taxes
from any payment of any kind otherwise due to the participant.
43
(e) The actual or deemed reinvestment of dividends or dividend
equivalents in additional Restricted Stock (or other types of Plan
awards) at the time of any dividend payment shall only be permissible
if sufficient shares of Common Stock are available under Section 3 for
such reinvestment (taking into account then outstanding Stock Options
and other Plan awards).
(f) The Plan and all awards made and actions taken thereunder
shall be governed by and construed in accordance with the laws of the
State of Tennessee.
(g) The members of the Committee and the Board shall not be
liable to any employee or other person with respect to any
determination made hereunder in a manner that is not inconsistent with
their legal obligations as members of the Board. In addition to such
other rights of indemnification as they may have as directors or as
members of the Committee, the members of the Committee shall be
indemnified by the Company against the reasonable expenses, including
attorneys' fees actually and necessarily incurred in connection with
the defense of any action, suit or proceeding, or in connection with
any appeal therein, to which they or any of them may be a party by
reason of any action taken or failure to act under or in connection
with the Plan or any option granted thereunder, and against all amounts
paid by them in settlement thereof (provided such settlement is
approved by independent legal counsel selected by the Company) or paid
by them in satisfaction of a judgment in any such action, suit or
proceeding, except in relation to matters as to which it shall be
adjudged in such action, suit or proceeding that such Committee member
is liable for negligence or misconduct in the performance of his
duties; provided that within 60 days after institution of any such
action, suit or proceeding, the Committee member shall in writing offer
the Company the opportunity, at its own expense, to handle and defend
the same.
(h) In addition to any other restrictions on transfer that may
be applicable under the terms of this Plan or the applicable award
agreement, no Stock Option, Restricted Stock award, or Other
Stock-Based Award or other right issued under this Plan is transferable
by the participant without the prior written consent of the Committee,
or, in the case of an Outside Director, the Board, other than (i)
transfers by an optionee to a member of his or her Immediate Family or
a trust for the benefit of the optionee or a member of his or her
Immediate Family or (ii) transfers by will or by the laws of descent
and distribution. The designation of a beneficiary will not constitute
a transfer.
(i) The Committee may, at or after grant, condition the
receipt of any payment in respect of any award or the transfer of any
shares subject to an award on the satisfaction of a six-month holding
period, if such holding period is required for compliance with Section
16 under the Exchange Act.
SECTION 13. EFFECTIVE DATE OF PLAN.
The Plan shall be effective as of July 27, 1998.
SECTION 14. TERM OF PLAN.
No Stock Option, Restricted Stock award, Other Stock-Based Award or
Outside Director Option award shall be granted pursuant to the Plan on or after
the tenth anniversary of the Effective Date of the Plan, but awards granted
prior to such tenth anniversary may be extended beyond that date.
44
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
BRIGHT HORIZONS FAMILY SOLUTIONS, INC.
ANNUAL MEETING OF STOCKHOLDERS
Wednesday, May 23, 2001
10:00 a.m. local time
PROXY
The undersigned hereby appoints Roger H. Brown and Elizabeth J. Boland,
or either of them, with full power of substitution, as proxies, and hereby
authorizes them to represent and to vote, as designated, all of the shares of
voting stock of Bright Horizons Family Solutions, Inc. held by the undersigned
on April 2, 2001, at the Annual Meeting of Stockholders to be held at the
Company's corporate offices, 200 Talcott Avenue South. Watertown, Massachusetts,
on Wednesday, May 23, 2001 at 10:00 a.m., local time, and any adjournment(s)
thereof.
1. ELECTION OF CLASS III (2004) DIRECTORS:
01 William H. Donaldson 03 Linda A. Mason [ ] Vote FOR all nominees [ ] Vote WITHHELD
02 Fred K. Foulkes 04 Ian M. Rolland (except as marked) from all nominees
(Instructions: To withhold authority to vote for --------------------
any indicated nominee, write the number(s) of the | |
nominee(s) in the box provided to the right.) --------------------
2. APPROVAL OF AMENDMENT TO THE 1998 STOCK INCENTIVE PLAN:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the proxies are authorized to vote upon such business
as may properly come before this meeting.
YOUR SHARES WILL BE VOTED IN ACCORDANCE WITH YOUR INSTRUCTIONS. IF NO CHOICE IS
SPECIFIED, YOUR SHARES WILL BE VOTED FOR APPROVAL OF ALL OF THE PROPOSALS SET
FORTH ABOVE.
Address change? Mark box [ ] Date:
Indicate changes below: -----------------------------------
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| |
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Signature(s) in Box
Please sign exactly as name appears on
your stock certificates. Each joint owner
must sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give full title as
such. If a corporation, please sign in
full corporate name as authorized. If a
partnership, please sign in partnership
name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY.