As filed with the Securities and Exchange Commission on October 28, 1997
Registration No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ADVANTAGE LEARNING SYSTEMS, INC.
(Exact Name of Registrant as Specified in its Charter)
Wisconsin 39-1559474
(State of (I.R.S. Employer
Incorporation) Identification
Number)
2911 Peach Street, Wisconsin Rapids, Wisconsin 54495-8036
(Address of Principal Executive Offices) (Zip Code)
ADVANTAGE LEARNING SYSTEMS, INC. 1997 STOCK INCENTIVE
PLAN
Michael H. Baum, Chief Executive Officer
Advantage Learning Systems, Inc.
2911 Peach Street
Wisconsin Rapids, Wisconsin 54495-8036
(Name and Address of Agent for Service)
(715) 424-3636
(Telephone Number, including area code, of Agent for
Service)
Copy to:
Randall J. Erickson
Godfrey & Kahn, S.C.
780 North Water Street
Milwaukee, Wisconsin 53202-3590
(414) 273-3500
CALCULATION OF REGISTRATION FEE
Title of Amount Proposed Proposed Amount of
securities to be maximum maximum registration
to be registered offering price aggregate fee(1)
registered per share(1) offering price(1)
Common
Stock, 1,500,000 $26.1875 $39,281,250 $11,903.41
$0.01 par
value
(1) The registration fee was calculated pursuant to
Rule 457(c) and Rule 457(h)(1) under the Securities Act
of 1933, as amended. The registration fee is based on
the average of the high and low price of a share of
Advantage Learning Systems, Inc. common stock on
October 23, 1997 on the Nasdaq National Market, as
reported in the Midwest Edition of The Wall Street
Journal on October 24, 1997.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents are incorporated by
reference in this Registration Statement:
(a) The Registrant's latest prospectus filed
pursuant to Rule 424(b) under the Securities
Act of 1933, as amended (the "Securities Act");
and
(b) The description of the Registrant's Common
Stock contained in the Registrant's
Registration Statement filed pursuant to
Section 12 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and any
amendment or report filed for the purpose of
updating such description.
All documents subsequently filed by the Registrant
pursuant to Sections 13(a), 13(c), 14 and 15(d) of
the Exchange Act prior to the filing of a post-
effective amendment which indicates that all
shares offered have been sold or which deregisters
all securities then remaining unsold, shall be
deemed incorporated by reference in this
Registration Statement and to be part hereof from
the date of filing such documents.
Item 6. Indemnification of Directors and Officers.
Section 180.0851 of the Wisconsin Business
Corporation Law (the "WBCL") requires a
corporation to indemnify a director or officer, to
the extent such person is successful on the merits
or otherwise in the defense of a proceeding, for
all reasonable expenses incurred in the
proceeding, if such person was a party to such
proceeding because he or she was a director or
officer of the corporation. In cases where a
director or officer is not successful on the
merits or otherwise in the defense of a
proceeding, a corporation is required to indemnify
a director or officer against liability incurred
by the director or officer in a proceeding if such
person was a party to such proceeding because he
or she is a director or officer of the corporation
unless it is determined that he or she breached or
failed to perform a duty owed to the corporation
and such breach or failure to perform constitutes:
(i) a willful failure to deal fairly with the
corporation or its shareholders in connection with
a matter in which the director or officer has a
material conflict of interest; (ii) a violation of
criminal law, unless the director or officer had
reasonable cause to believe his or her conduct was
lawful or no reasonable cause to believe his or
her conduct was unlawful; (iii) a transaction from
which the director or officer derived an improper
personal profit; or (iv) willful misconduct.
Section 180.0858 of the WBCL provides that
subject to certain limitations, the mandatory
indemnification provisions do not preclude any
additional right to indemnification or allowance
of expenses that a director or officer may have
under a corporation's articles of incorporation or
by-laws, a written agreement between the director
or officer and the corporation or a resolution of
the board of directors or the shareholders.
Unless otherwise provided in the articles of
incorporation or by-laws, or by written agreement
between the director or officer and the
corporation, an officer or director seeking
indemnification is entitled to indemnification if
approved in any of the following manners as
specified in Section 180.0855 of the WBCL: (i) by
majority vote of a disinterested quorum of the
board of directors, or if such disinterested
quorum cannot be obtained, by a majority vote of a
committee of two or more disinterested directors;
(ii) by independent legal counsel chosen by a
quorum of disinterested directors or its committee
(or if unable to obtain such a quorum or
committee, by a majority vote of the full board of
directors); (iii) by a panel of three arbitrators
(one of which is chosen by a quorum of
disinterested directors); (iv) by the vote of the
shareholders; (v) by a court; or (vi) by any other
method permitted in Section 180.0858 of the WBCL.
<PAGE>
Reasonable expenses incurred by a director or
officer who is a party to a proceeding may be
reimbursed by a corporation, pursuant to Section
180.0853 of the WBCL, at such time as the director
or officer furnishes to the corporation written
affirmation of his or her good faith that he or
she has not breached or failed to perform his or
her duties; and written confirmation to repay any
amounts advanced if it is determined that
indemnification by the corporation is not
required.
Section 180.0859 of the WBCL provides that it
is the public policy of the State of Wisconsin to
require or permit indemnification, allowance of
expenses and insurance to the extent required or
permitted under Sections 180.0850 to 180.0858 of
the WBCL for any liability incurred in connection
with any proceeding involving a federal or state
statute, rule or regulation regulating the offer,
sale or purchase of securities.
As permitted by Section 180.0858, the
Registrant has adopted indemnification provisions
in its by-laws which closely track the statutory
indemnification provisions with certain
exceptions. In particular, Section 7.1 of the
Registrant's by-laws, among other items, provides
that (i) an individual shall be indemnified unless
it is proven by a final judicial adjudication that
indemnification is prohibited and (ii) payment or
reimbursement of expenses, subject to certain
limitations, will be mandatory rather than
permissive. The Registrant has purchased
directors' and officers' liability insurance which
insures the Registrant's officers and directors
against certain liabilities which may arise under
the Securities Act.
Item 8. Exhibits.
4 Advantage Learning Systems, Inc. 1997 Stock
Incentive Plan (as amended and restated).
5 Opinion of Godfrey & Kahn, S.C. regarding legality
of the Common Stock being registered.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Godfrey & Kahn, S.C., included in
Exhibit 5.
24 Powers of Attorney (included in the signature page
of this Registration Statement).
Item 9. Undertakings.*
The Registrant hereby undertakes:
(a) (1) To file, during any period in which offers or
sales are being made, a post-effective amendment
to this Registration Statement to include any
material information with respect to the plan of
distribution not previously disclosed in the
Registration Statement or any material change to
such information in the Registration Statement.
(2) That, for the purpose of determining any
liability under the Securities Act, each such post-
effective amendment shall be deemed to be a new
registration statement relating to the securities
offered therein, and the offering of such
securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities
being registered which remain unsold at the
termination of the offering.
(b) (4) That, for purposes of determining any
liability under the Securities Act, each filing of
the Registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Exchange Act (and,
where applicable, each filing of an employee
benefit plan's annual report pursuant to Section
15(d) of the Exchange Act) that is incorporated by
reference in the Registration Statement shall be
deemed to be a new registration statement relating
to the securities offered therein, and the
offering of such securities at that time shall be
deemed to be the initial bona fide offering
thereof.
<PAGE>
(h) (5) Insofar as indemnification for liabilities
arising under the Securities Act may be permitted
to directors, officers and controlling persons of
the Registrant pursuant to the provisions of Item
6 of this Registration Statement, or otherwise,
the Registrant has been advised that in the
opinion of the Securities and Exchange Commission
such indemnification is against public policy as
expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for
indemnification against such liabilities (other
than the payment by the Registrant of expenses
incurred or paid by a director, officer or
controlling person of the Registrant in the
successful defense of any action, suit or
proceeding) is asserted by such director, officer
or controlling person in connection with the
securities being registered, the Registrant will,
unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the
question whether such indemnification by it is
against public policy as expressed in the
Securities Act and will be governed by the final
adjudication of such issue.
____________________
*Paragraphs correspond to Item 512 of Regulation S-K.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act
of 1933, as amended, the Registrant certifies that it
has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-8 and has duly
caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized,
in the City of Wisconsin Rapids, State of Wisconsin, on
October 27, 1997.
ADVANTAGE LEARNING
SYSTEMS, INC.
By:/s/ Michael H. Baum
-----------------------
Michael H. Baum
Chief Executive
Officer
Pursuant to the requirements of the Securities Act
of 1933, this Registration Statement has been signed by
the following persons in the capacities and on the
dates indicated. Each person whose signature to this
Registration Statement appears below hereby constitutes
and appoints Michael H. Baum and John R. Hickey, and
each of them, as his or her true and lawful attorney-in-
fact and agent, with full power of substitution, to
sign on his or her behalf individually and in the
capacity stated below and to perform any acts necessary
to be done in order to file all amendments and post-
effective amendments to this Registration Statement,
and any and all instruments or documents filed as part
of or in connection with this Registration Statement or
the amendments thereto and each of the undersigned does
hereby ratify and confirm all that said attorney-in-
fact and agent, or his substitutes, shall do or cause
to be done by virtue hereof.
/s/ Judith A. Paul Date: October 27, 1997
- -----------------------
Judith A. Paul
Chairman of the Board
/s/ Terrance D. Paul Date: October 27, 1997
- -----------------------
Terrance D. Paul
Vice Chairman of the Board
/s/ Michael H. Baum Date: October 27, 1997
- ------------------------
Michael H. Baum
Chief Executive Officer
and a Director
(Principal Executive Officer)
/s/ John R. Hickey Date: October 27, 1997
- -------------------------
John R. Hickey
President and a Director
/s/ Richard W. Fickey Date: October 27, 1997
- ------------------------
Richard W. Fickey
Secretary and Vice President,
Finance and Administration
(Principal Financial and
Accounting Officer)
/s/ Timothy P. Welch Date: October 27, 1997
- ------------------------
Timothy P. Welch
Director
/s/ Perry S. Akins Date: October 27, 1997
- ------------------------
Perry S. Akins
Director
/s/ John H. Grunewald Date: October 27, 1997
- ------------------------
John H. Grunewald
Director
<PAGE>
EXHIBIT INDEX
Exhibits
4 Advantage Learning Systems, Inc. 1997 Stock
Incentive Plan (as amended and restated).
5 Opinion of Godfrey & Kahn, S.C. regarding legality
of the Common Stock being registered.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Godfrey & Kahn, S.C., included in
Exhibit 5.
24 Powers of Attorney (included in the signature page
of this Registration Statement).
ADVANTAGE LEARNING SYSTEMS, INC.
1997 STOCK INCENTIVE PLAN
(as amended and restated on October 23, 1997)
1. Objectives. The Advantage Learning
Systems, Inc. 1997 Stock Incentive Plan is designed to
attract and retain certain selected officers and key
employees and non-employee directors and consultants
whose skills and talents are important to the Company's
operations, and reward them for making major
contributions to the success of the Company. These
objectives are accomplished by making awards under the
Plan, thereby providing Participants with a proprietary
interest in the growth and performance of the Company.
2. Definitions.
(a) "Award" shall mean the grant of any
form of stock option, stock appreciation right, or
stock award, whether granted singly, in
combination or in tandem, to a Plan Participant
pursuant to such terms, conditions, performance
requirements, and limitations as the Board or
Committee may establish in order to fulfill the
objectives of the Plan.
(b) "Award Agreement" shall mean an
agreement between the Company and a Participant
that sets forth the terms, conditions, performance
requirements, and limitations applicable to an
Award.
(c) "Board" shall mean the Board of
Directors of Advantage Learning Systems, Inc.
(d) "Cause" shall mean termination of a
Participant's employment with the Company for (i)
any failure of the Participant to substantially
perform his duties with the Company (other than by
reason of illness) which occurs after the Company
has delivered to the Participant a demand
for performance which specifically identifies the
manner in which the Company believes the
Participant has failed to perform his duties, (ii)
the commission by the Participant of any act of
dishonesty or disloyalty involving the Company or
its business, or (iii) the conviction of the
Participant of a felony or misdemeanor which, in
the reasonable judgment of the Committee, is
substantially related to the employee's position
with the Company.
(e) "Change in Control" shall mean any
of the following events:
i) the acquisition by an individual,
entity or group (within the meaning of Section
13(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act") (a "Person") of
beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20%
or more of either (a) the then outstanding shares
of common stock of the Company (the "Outstanding
Company Common Stock") or (b) the combined voting
power of the then outstanding voting securities of
the Company entitled to vote generally in the
election of directors (the "Outstanding Company
Voting Securities"); provided, however, that for
purposes of this subsection (i), the following
acquisitions shall not constitute a Change of
Control: (a) any acquisition directly from the
Company, (b) any acquisition by the Company, (c)
any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the
Company, (d) any acquisition by any corporation
pursuant to a transaction which complies with
clauses (a), (b) and (c) of subsection (iii) of
this Section 2(e) or (e) any acquisition by a
"related person" as defined below; or
ii) individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease
for any reason to constitute at least a majority
of the Board; provided, however, that any
individual becoming a director subsequent to the
date hereof whose election, or nomination for
election by the Company's shareholders, was
approved by a vote of at least a majority of the
directors then constituting the Incumbent Board
shall be considered as though such individual were
a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose
initial assumption of office occurs as a result of
an actual or threatened election contest with
respect to the election or removal of directors or
other actual or threatened solicitation of proxies
or consents by or on behalf of a person other than
the Board; or
iii) consummation of a reorganization,
merger or consolidation or sale or other
disposition of all or substantially all of the
assets of the Company for which approval of the
shareholders of the Company is required (a
"Business Combination"), in each case, unless,
immediately following such Business Combination,
(a) all or substantially all of the individuals
and entities who were the beneficial owners,
respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination
beneficially own, directly or indirectly, more
than 60% of, respectively, the then outstanding
shares of common stock and the combined voting
power of the then outstanding voting securities
entitled to vote generally in the election of
directors, as the case may be, of the corporation
resulting from such Business Combination
(including, without limitation, a corporation
which as a result of such transaction owns the
Company or all or substantially all of the
Company's assets either directly or through one or
more subsidiaries) in substantially the same
proportions as their ownership, immediately prior
to such Business Combination of the Outstanding
Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (b) no
Person (excluding any employee benefit plan (or
related trust) of the Company or such corporation
resulting from such Business Combination or a
related person, as defined below) beneficially
owns, directly or indirectly, 20% or more of,
respectively, the then outstanding Common Stock of
the Corporation resulting from such Business
Combination or the combined voting power of the
then outstanding voting securities of such
corporation except to the extent that such
ownership existed prior to the Business
Combination and (c) at least a majority of the
members of the Board of Directors of the
corporation resulting from such Business
Combination were members of the Incumbent Board at
the time of the execution of he initial agreement,
or of the action of the Board, providing for such
Business Combination; or
iv) approval by the shareholders of the
Company of a complete liquidation or dissolution
of the Company.
For the purposes hereof, a "related person" shall
mean any one or more members of a group consisting
of (a) Terrence and Judith Paul, their issue
and/or spouses of their issue; (b) a trust or
estate of which one or more persons described in
(a) are beneficiaries; (c) a corporation or other
entity in which any one or more persons, trusts or
estates described in (a) and/or (b) own a majority
of the profits of such entity; or (d) any
corporation or other entity which is controlled by
any corporation or other entity described in (c),
above.
(f) "Common Stock" or "stock" shall
mean the authorized and issued or unissued $0.01
par value common stock of the Company.
(g) "Code" shall mean the Internal
Revenue Code of 1986, as amended from time to
time.
(h) "Committee" shall mean the
Compensation Committee of the Board of Directors
of Advantage Learning Systems Inc. The Committee
shall be comprised of at least two non-employee
directors, all of whom are "disinterested" within
the meaning of Rule 16b-3 promulgated under the
Exchange Act and "outside directors" within the
meaning of Section 162(m) of the Code.
(i) "Company" shall mean Advantage
Learning Systems, Inc. and its subsidiaries
including subsidiaries of subsidiaries and
partnerships and other business ventures in which
Advantage Learning Systems Inc. has a significant
equity interest, as determined in the sole
discretion of the Committee.
(j) "Fair Market Value" shall mean the
closing sale price of Common Stock on the NASDAQ
National Market System as reported in the Midwest
Edition of the Wall Street Journal for the date in
question, provided that, if no sales of Common
Stock were made on said exchange on that date,
"Fair Market Value" shall mean the closing sale
price of Common Stock as reported for the most
recent preceding day on which sales of Common
Stock were made on exchange, or, failing any such
sales, such other market price as the Board or the
Committee may determine in conformity with
pertinent law and regulations of the Treasury
Department.
(k) "Participant" shall mean a current
or prospective employee, non-employee director or
consultant of the Company to whom an Award has
been made under the Plan.
(l) "Plan" shall mean the Advantage
Learning Systems, Inc. 1997 Stock Incentive Plan.
(m) "Retirement" shall mean termination
of employment with the Company or service as a
member of the Board after the attainment of age 62
with at least ten years of service with the
Company or the Board.
3. Eligibility. Current and prospective
employees, non-employee directors and consultants of
the Company eligible for an Award under the Plan are
those who hold, or will hold, positions of
responsibility and whose performance, in the judgment
of the Board, the Committee or the management of the
Company, can have a significant effect on the success
of the Company.
4. Common Stock Available for Awards. The
number of shares that may be issued under the Plan for
Awards granted wholly or partly in stock during the
term of the Plan is 1,500,000, subject to adjustment as
provided in Section 14 hereof, provided that not more
than 750,000 shares may be subject to incentive stock
options. Included in this share limit are Awards
denominated in units of stock that may be redeemed or
exercised for cash as well as for stock. The Company
shall take whatever actions are necessary to file
required documents with the U.S. Securities and
Exchange Commission and any other appropriate
governmental authorities and stock exchanges to make
shares of Common Stock available for issuance pursuant
to Awards. Common Stock related to Awards that are
forfeited, terminated, expire unexercised, settled in
cash in lieu of stock or in such manner that all or
some of the shares covered by an Award are not issued
to a Participant, shall immediately become available
for Awards. No employee shall be eligible to receive
Awards aggregating more than 750,000 shares of Common
Stock reserved under the Plan during the term of the
Plan, subject to adjustment as provided in Section 14
hereof.
5. Administration. The Plan shall be
administered by the Board prior to the initial public
offering of the Common Stock (the "IPO"), and after the
IPO by the Committee, which shall respectively have
full and exclusive power to interpret the Plan, to
determine which current and prospective employees, non-
employee directors and consultants are Plan
Participants, to grant waivers of Award restrictions,
and to adopt such rules, regulations and guidelines for
carrying out the Plan as it may deem necessary or
proper, all of which powers shall be executed in the
best interests of the Company and in keeping with the
objectives of the Plan. These powers include the
adoption of modifications, amendments, procedures,
subplans and the like as are necessary to comply with
provisions of the laws and regulations of the countries
in which the Company operates in order to assure the
viability of Awards granted under the Plan and to
enable Participants regardless of where employed to
receive advantages and benefits under the Plan and such
laws and regulations. Notwithstanding the foregoing,
any Award made to a non-employee director must be
approved by the Board.
6. Delegation of Authority. The Committee
may delegate to the chief executive officer and to
other senior officers of the Company its duties under
the Plan pursuant to such conditions or limitations as
the Committee may establish.
7. Awards. The Committee shall determine
the type or types of Award(s) to be made to each
Participant and shall set forth in the related Award
Agreement the terms, conditions, performance
requirements, and limitations applicable to each Award
including, but not limited to, continuous service with
the Company, achievement of specific business
objectives, increases in specified indices, attaining
growth rates, and other comparable measurements of
Company performance. Awards may include, but are not
limited to, those listed in this Section 7. Awards may
be granted singly, in combination or in tandem. Awards
may also be made in combination or in tandem with, in
replacement of, or as alternatives to, grants or rights
under any other employee plan of the Company, including
the plan of any acquired entity. In all events, upon
the occurrence of a Change in Control, all Awards will
become fully vested and immediately exercisable.
(a) Stock Option. A grant of a right
to purchase a specified number of shares of Common
Stock the purchase price of which shall be not
less than 100% of Fair Market Value on the date of
grant, as determined by the Committee. A stock
option may be in the form of a nonqualified stock
option or an incentive stock option ("ISO"). An
ISO, in addition to being subject to applicable
terms, conditions and limitations established by
the Committee, complies with Section 422 of the
Code which, among other limitations, provides that
the aggregate Fair Market Value (determined at the
time the option is granted) of Common Stock for
which ISOs are exercisable for the first time by a
Participant during any calendar year shall not
exceed $100,000; that ISOs shall be priced at not
less than 100% of the Fair Market Value on the
date of the grant (110% in the case of a
Participant who is a 10% shareholder of the
Company within the meaning of Section 422 of the
Code); and that ISOs shall be exercisable for a
period of not more than ten years (five years in
the case of a Participant who is a 10% shareholder
of the Company).
(b) Stock Appreciation Right. A right
to receive a payment, in cash and/or Common Stock,
equal to the excess of the Fair Market Value of a
specified number of shares of Common Stock on the
date the stock appreciation right ("SAR") is
exercised over the Fair Market Value on the date
of grant of the SAR as set forth in the applicable
Award Agreement.
(c) Stock Award. An Award made in
stock or denominated in units of stock. Such
Awards may be based on Fair Market Value or other
specified valuation with the eventual payment
amount subject to future service and such other
restrictions and conditions as may be established
by the Committee and as set forth in the Award
Agreement.
8. Payment of Awards. Payment of Awards may
be made in the form of cash, stock or combinations
thereof and may include such restrictions as the
Committee shall determine, including in the case of
stock, restrictions on transfer and forfeiture
provisions. When transfer of stock is so restricted or
subject to forfeiture provisions, it is referred to as
"Restricted Stock." The Committee may permit selected
Participants to elect to defer payments of some or all
types of Awards in accordance with procedures
established by the Committee which are intended to
permit such deferrals to comply with applicable
requirements of the Code including, at the choice of
Participants, the capability to make further deferrals
for payment after retirement. Dividends or dividend
equivalent rights may be extended to and made part of
any Award denominated in stock or units of stock,
subject to such terms, conditions and restrictions as
the Committee may establish. The Committee may also
establish rules and procedures for the crediting of
interest on deferred cash payments and dividend
equivalents for deferred payments denominated in stock
or units of stock.
9. Stock Option Exercise. The price at
which shares of Common Stock may be purchased under a
Stock Option shall be paid in full at the time of the
exercise in cash or, if permitted by the Committee, by
means of tendering Common Stock, either directly or by
attestation, valued at Fair Market Value on the date of
exercise, or any combination thereof.
10. Tax Withholding. The Company shall have
the right to deduct applicable taxes from any Award
payment and withhold, at the time of delivery or
vesting of shares under the Plan, an appropriate number
of shares for payment of taxes required by law or to
take such other action as may be necessary in the
opinion of the Company to satisfy all obligations for
withholding of such taxes. The Company may defer
making delivery with respect to cash and/or Common
Stock obtained pursuant to an Award hereunder until
arrangements satisfactory to it have been made with
respect to any such withholding obligation. If Common
Stock is used to satisfy tax withholding, such stock
shall be valued based on the Fair Market Value when the
tax withholding is required to be made.
11. Amendment, Modification, Suspension or
Discontinuance of the Plan. The Board may terminate
the Plan or make such modifications or amendments
thereto as it shall deem advisable in order to conform
to any law or regulation applicable thereto; provided,
however, that the Board may not, unless otherwise
permitted under applicable law, without further
approval of the shareholders of the Company, adopt any
amendment to the Plan which would cause the Plan to no
longer comply with Section 162(m) of the Code, or any
successor provision or other regulatory requirements.
No such termination, modification or amendment of the
Plan may, without the consent of a Participant,
adversely affect the rights of such Participant under
an outstanding Award then held by the Participant.
12. Termination of Employment. If the
employment of a Participant terminates, or a non-
employee director no longer serves on the Board, other
than pursuant to paragraphs (a) through (c) of this
Section 12, all unexercised, deferred and unpaid Awards
shall terminate 90 days after such termination of
employment or service, unless the Award Agreement
provides otherwise, and during such 90-day period shall
be exercisable only to the extent provided in the Award
Agreement. Notwithstanding the foregoing, if a
Participant's employment is terminated for Cause, to
the extent the Award is not effectively exercised or
has not vested prior to such termination, it shall
lapse or be forfeited to the Company immediately upon
termination. In all events, an Award will not be
exercisable after the end of its term as set forth in
the Award Agreement.
(a) Retirement. When a Participant's
employment or service terminates as a result of
Retirement, or early retirement with the consent
of the Committee, the Committee (in the form of an
Award Agreement or otherwise) may permit Awards to
continue in effect beyond the date of Retirement,
or early retirement, and/or the exercisability and
vesting of any Award may be accelerated.
(b) Resignation in the Best Interests
of the Company. When a Participant resigns from
the Company or the Board and, in the judgment of
the chief executive officer or other senior
officer designated by the Committee, the
acceleration and/or continuation of outstanding
Awards would be in the best interests of the
Company, the Committee may (i) authorize, where
appropriate, the acceleration and/or continuation
of all or any part of Awards granted prior to such
termination and (ii) permit the exercise, vesting
and payment of such Awards for such period as may
be set forth in the applicable Award Agreement.
(c) Death or Disability of a
Participant.
(i) In the event of a
Participant's death, the Participant's estate
or beneficiaries shall have a period
specified in the Award Agreement within which
to receive or exercise any outstanding Award
held by the Participant under such terms, and
to the extent, as may be specified in the
applicable Award Agreement. Rights to any
such outstanding Awards shall pass by will or
the laws of descent and distribution in the
following order: (a) to beneficiaries so
designated by the Participant; if none, then
(b) to a legal representative of the
Participant; if none, then (c) to the persons
entitled thereto as determined by a court of
competent jurisdiction. Subject to
subparagraph (iii) below, Awards so passing
shall be exercised or paid out at such times
and in such manner as if the Participant were
living.
(ii) In the event a
Participant is deemed by the Company to be
disabled within the meaning of Section
22(e)(3) of the Code, the Award shall be
exercisable for the period, and to the
extent, specified in the Award Agreement.
Awards and rights to any such Awards may be
paid to or exercised by the Participant, if
legally competent, or a legally designated
guardian or representative if the Participant
is legally incompetent by virtue of such
disability.
(iii) After the death or
disability of a Participant, the Committee
may in its sole discretion at any time (1)
terminate restrictions in Award Agreements;
(2) accelerate any or all installments and
rights; and (3) instruct the Company to pay
the total of any accelerated payments in a
lump sum to the Participant, the
Participant's estate, beneficiaries or
representative, notwithstanding that, in the
absence of such termination of restrictions
or acceleration of payments, any or all of
the payments due under the Awards might
ultimately have become payable to other
beneficiaries.
(iv) In the event of
uncertainty as to interpretation of or
controversies concerning this paragraph (c)
of Section 12, the Committee's determinations
shall be binding and conclusive.
(d) No Employment Rights. The Plan
shall not confer upon any Participant any right
with respect to continuation of employment by the
Company or service on the Board, nor shall it
interfere in any way with the right of the Company
to terminate any Participant's employment or
service on the Board at any time.
13. Nonassignability. Except as provided in
subsection (c) of Section 12 and this Section 13, no
Award or any other benefit under the Plan shall be
assignable or transferable, or payable to or
exercisable by anyone other than the Participant to
whom it was granted. Notwithstanding the foregoing,
the Committee (in the form of an Award Agreement or
otherwise) may permit Awards to be transferred to
members of the Participant's immediate family, to
trusts for the benefit of the Participant and/or such
immediate family members, and to partnerships or other
entities in which the Participant and/or such immediate
family members own all the equity interests. For
purposes of the preceding sentence, "immediate family"
shall mean a Participant's spouse, issue, and spouses
of his issue.
14. Adjustments. In the event of any change
in the outstanding Common Stock of the Company by
reason of a stock split, stock dividend, combination or
reclassification of shares, recapitalization, merger,
or similar event, the Committee may adjust
proportionally (a) the number of shares of Common Stock
(i) reserved under the Plan, (ii) available for ISOs,
(iii) for which Awards may be granted to an individual
Participant, and (iv) covered by outstanding Awards
denominated in stock or units of stock; (b) the stock
prices related to outstanding Awards; and (c) the
appropriate Fair Market Value and other price
determinations for such Awards. In the event of any
other change affecting the Common Stock or any
distribution (other than normal cash dividends) to
holders of Common Stock, such adjustments as may be
deemed equitable by the Committee, including
adjustments to avoid fractional shares, shall be made
to give proper effect to such event. In the event of a
corporate merger, consolidation, acquisition of
property or stock, separation, reorganization or
liquidation, the Committee shall be authorized to issue
or assume Stock Options, whether or not in a
transaction to which Section 424(a) of the Code
applies, by means of substitution of new Stock Options
for previously issued Stock Options or an assumption of
previously issued Stock Options.
15. Notice. Any notice to the Company
required by any of the provisions of the Plan shall be
addressed to the chief human resources officer or to
the chief executive officer of the Company in writing,
and shall become effective when it is received by the
office of either of them.
16. Unfunded Plan. The Plan shall be
unfunded. Although bookkeeping accounts may be
established with respect to Participants who are
entitled to cash, Common Stock or rights thereto under
the Plan, any such accounts shall be used merely as a
bookkeeping convenience. The Company shall not be
required to segregate any assets that may at any time
be represented by cash, Common Stock or rights thereto,
nor shall the Plan be construed as providing for such
segregation, nor shall the Company nor the Board nor
the Committee be deemed to be a trustee of any cash,
Common Stock or rights thereto to be granted under the
Plan. Any liability of the Company to any Participant
with respect to a grant of cash, Common Stock or rights
thereto under the Plan shall be based solely upon any
contractual obligations that may be created by the Plan
and any Award Agreement; no such obligation of the
Company shall be deemed to be secured by any pledge or
other encumbrance on any property of the Company.
Neither the Company nor the Board nor the Committee
shall be required to give any security or bond for the
performance of any obligation that may be created by
the Plan.
17. Governing Law. The Plan and all
determinations made and actions taken pursuant hereto,
to the extent not otherwise governed by the laws of the
United States, shall be governed by the laws of the
State of Wisconsin and construed accordingly.
18. Effective and Termination Dates. The
effective date of the Plan, as amended and restated, is
October 23, 1997. The Plan shall terminate on March
28, 2007 subject to earlier termination by the Board
pursuant to Section 11, after which no Awards may be
made under the Plan, but any such termination shall not
affect Awards then outstanding or the authority of the
Committee to continue to administer the Plan.
19. Other Benefit and Compensation Programs.
Payments and other benefits received by a Participant
pursuant to an Award shall not be deemed a part of such
Participant's regular, recurring compensation for
purposes of the termination, indemnity or severance pay
law of any country and shall not be included in, nor
have any effect on, the determination of benefits under
any other employee benefit plan, contract or similar
arrangement, unless the Committee expressly determines
otherwise.
Exhibit 5
GODFREY & KAHN, S.C.
780 North Water Street
Milwaukee, WI 53202-3590
Tel. (414) 273-3500
Fax (414) 273-5198
October 24, 1997
Advantage Learning Systems, Inc.
2911 Peach Street
Wisconsin Rapids, Wisconsin 54495-8036
Gentlemen:
We have acted as your counsel in connection with
the offer by Advantage Learning Systems, Inc., a
Wisconsin corporation (the "Company"), of up to
1,500,000 shares of common stock, $.01 par value (the
"Shares"). The Shares are reserved for issuance
pursuant to the Company's 1997 Stock Incentive Plan
(the "Plan"), as described in the Plan's Prospectus
(the "Prospectus"), including all amendments and
supplements thereto, which Prospectus relates to the
Company's Registration Statement on Form S-8, to be
filed with the Securities and Exchange Commission (the
"Registration Statement").
We have examined: (a) the Plan, the Prospectus and
the Registration Statement, (b) the Company's Amended
and Restated Articles of Incorporation and Amended and
Restated By-Laws, (c) certain resolutions of the
Company's Board of Directors and (d) such other
proceedings, documents and records as we have deemed
necessary to enable us to render this opinion.
Based upon the foregoing, we are of the opinion
that the Shares, upon issuance in accordance with the
terms of the Plan, will be duly authorized and validly
issued, fully paid and nonassessable except to the
extent provided in Section 180.0622(2)(b) of the
Wisconsin Statutes, or any successor provision, which
provides that shareholders of a corporation organized
under Chapter 180 of the Wisconsin Statutes may be
assessed up to the par value of their shares to satisfy
the obligations of such corporation to its employees
for services rendered, but not exceeding six months
service in the case of any individual employee (certain
Wisconsin courts have interpreted "par value" to mean
the full amount paid by the purchaser of shares upon
the issuance thereof).
We consent to the use of this opinion as an
exhibit to the Registration Statement. In giving this
consent, however, we do not admit that we are "experts"
within the meaning of Section 11 of the Securities Act
of 1933, as amended, or within the category of persons
whose consent is required by Section 7 of said Act.
Very truly yours,
/s/ Godfrey & Kahn, S.C.
GODFREY & KAHN, S.C.
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby
consent to the use of our report and to all references
to our Firm incorporated by reference in this
Registration Statement.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
October 24, 1997
