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SCHEDULE 14A
(Rule 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934
Filed BY Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11 or (S)240.14a-12
BUILDING ONE SERVICES CORPORATION
(Name of Registrant As Specified In Charter)
SAME
(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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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on July 8, 1999
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Building One
Services Corporation, a Delaware corporation (the "Company"), will be held in
the Hall of Flags at the United States Chamber of Commerce, 1615 H Street, N.W.,
Washington, DC 20062 at 10:00 a.m. on Thursday, July 8, 1999, for the following
purposes:
1. To elect ten directors of the Company to hold office until the next
succeeding annual meeting of stockholders after their election and until their
respective successors shall have been elected and qualified.
2. To consider and act upon a proposal by the Board of Directors of the
Company (the "Board") to amend Articles Four, Five and Six of the Company's
Restated Certificate of Incorporation (the "Certificate of Incorporation") (a)
to provide that the holders of the Company's 7 1/2% convertible junior
subordinated debentures (the "Debentures") shall have the right (i) to vote on
an as converted basis on all of the matters submitted to the Company's holders
of shares of common stock and any other class of voting stock as a single class,
(ii) to elect, as a separate class, three directors to the Board (or, if the
Board consists of more than ten members, no less than 30% of the total number of
directors on the Board), (iii) to elect, as a separate class, a majority of the
Board if the Company materially and intentionally breaches its agreements with
the holders of the Debentures or there is a payment default or any other default
giving rise to a right to acceleration under the terms of the Debentures and
(iv) to consent to any amendment or repeal by the Company of any provisions of
the Certificate of Incorporation that is adverse to the holders of the
Debentures and (b) to eliminate the provisions of Article Four that relate to
the shares of convertible non-voting common stock, par value $0.001 per share,
because those shares have not been outstanding since their automatic conversion
into shares of common stock, and to consider and act upon a proposal by the
Board to restate the Certificate of Incorporation to reflect the foregoing
amendments.
3. To amend the Certificate of Incorporation to add a new Article Nine to
provide for stockholder action by unanimous written consent and to restate the
Certificate of Incorporation to reflect the foregoing amendment.
4. To amend Article Four of the Certificate of Incorporation to authorize
11,000,000 shares of series preferred stock, par value $0.001 per share, and to
restate the Certificate of Incorporation to reflect the foregoing amendment.
5. To consider and act upon a proposal by the Board to approve and adopt the
Company's 1999 Long-Term Incentive Plan providing for equity-based awards with
respect to no more than 1,500,000 shares of common stock.
6. To consider and act upon a proposal by the Board to approve and adopt the
Company's 1999 Stock Performance Incentive Plan.
7. To ratify the appointment of PricewaterhouseCoopers LLP as the Company's
independent accountants to audit the Company's consolidated financial statements
for the fiscal year ending December 31, 1999.
8. To transact such other business as may properly be brought before the
meeting or any adjournment thereof.
The close of business on June 1, 1999 has been fixed as the record date for
determining the stockholders entitled to notice of and to vote at the Annual
Meeting. All holders of record of common stock of the Company on that date are
entitled to vote at the Annual Meeting.
By Order of the Board of Directors,
Washington, D.C. F. Traynor Beck
June 8, 1999 Secretary
It is important that your shares be represented at the meeting regardless of the
number of shares you hold. Please complete, sign and mail the enclosed proxy in
the accompanying envelope even if you intend to be
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present at the meeting. Returning the proxy will not limit your right to vote in
person or to attend the Annual Meeting, but will ensure your representation if
you cannot attend. If you hold shares in more than one name, or if your stock is
registered in more than one way, you may receive more than one copy of the proxy
materials. If so, please sign and return each of the proxy cards that you
receive so that all of your shares may be voted. The proxy is revocable at any
time prior to its use.
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[LOGO OF BUILDING ONE APPEARS HERE]
BUILDING ONE SERVICES CORPORATION
800 Connecticut Avenue, N.W.
Suite 1111
Washington, D.C. 20006
(202) 261-6000
June 8, 1999
PROXY STATEMENT
This Proxy Statement and the accompanying proxy card are being furnished in
connection with the solicitation of proxies by the Board of Directors (the
"Board") of Building One Services Corporation (the "Company") for the Annual
Meeting of Stockholders of the Company to be held on July 8, 1999.
Stockholders of record at the close of business on June 1, 1999 (the
"Record Date") will be entitled to vote at the meeting and will receive a copy
of this Proxy Statement, which furnishes information relating to the business to
be transacted at the meeting. On the Record Date, there were issued and
outstanding [ ] shares of the Company's common stock, par value $.001
per share (the "Common Stock"). There are no other outstanding classes of voting
securities of the Company. Each holder of a share of Common Stock is entitled to
one vote per share on each matter presented at the meeting. This Proxy Statement
and the enclosed proxy card are being mailed to stockholders entitled to vote at
the Annual Meeting on or about June 8, 1999.
A proxy card is enclosed for your use. THE BOARD OF DIRECTORS REQUESTS THAT
YOU SIGN, DATE AND RETURN THE PROXY CARD IN THE ACCOMPANYING ENVELOPE, which
requires no postage if mailed in the United States.
If no instructions are specified on the proxy card, shares represented thereby
will be voted:
(i) for the election of the ten nominees for directors of the Company
listed herein;
(ii) for the adoption of amendments to Articles Four, Five and Six of the
Company's Restated Certificate of Incorporation (the "Certificate of
Incorporation") (a) to provide that the holders of the Company's 7 1/2%
convertible junior subordinated debentures (the "Debentures") shall have
the right (i) to vote on an as converted basis on all of the matters
submitted to the Company's holders of shares of Common Stock and any other
class of voting stock as a single class, (ii) to elect, as a separate
class, three directors to the Board (or, if the Board consists of more than
ten members, no less than 30% of the total number of directors on the
Board), (iii) to elect, as a separate class, a majority of the Board if the
Company materially and intentionally breaches its agreements with the
holders of the Debentures or there is a payment default or any other
default giving rise to acceleration under the terms of the Debentures and
(iv) to consent to any amendment or repeal by the Company of any provisions
of the Certificate of Incorporation that is adverse to the holders of the
Debentures and (b) to eliminate the provisions of Article Four that relate
to the shares of convertible non-voting common stock, par value $0.001 per
share, because those shares have not been outstanding since their automatic
conversion into shares of Common Stock,and for the restatement of the
Certificate of Incorporation to reflect the above amendments;
(iii) for the adoption of an amendment to the Certificate of Incorporation
to add a new Article Nine to provide for stockholder action by unanimous
written consent and for the restatement of the Certificate of Incorporation
to reflect the foregoing amendment.
<PAGE>
(iv) for the adoption of an amendment to Article Four of the Certificate of
Incorporation to authorize shares of series preferred stock, par value $0.001
per share (the "Preferred Stock"), and to restate the Certificate of
Incorporation to reflect the foregoing amendment;
(v) for the adoption of the Company's 1999 Long-Term Incentive Plan (the
"1999 Plan");
(vi) for the adoption of the Company's 1999 Stock Performance Incentive Plan
(the "Performance Plan"); and
(vii) for the ratification of the appointment of PricewaterhouseCoopers LLP
as the Company's independent accountants to audit the Company's consolidated
financial statements for the year ending December 31, 1999.
The Board does not know of any other matters to be presented to the
stockholders at the Annual Meeting. If any other matters properly come before
the Annual Meeting, including any matters raised by a stockholder at the Annual
Meeting, the proxies will be voted on any such matters presented to the
stockholders in the discretion of the proxy holders.
Any stockholder who has given a proxy may revoke the proxy by executing a
proxy card bearing a later date or by delivering written notice of revocation of
the proxy to the Secretary of the Company at the Company's executive offices at
any time prior to the meeting or any postponement or adjournment thereof. Prior
to exercise thereof with respect to any matter submitted to a vote of the
stockholders, any stockholder who attends in person the Annual Meeting or any
postponement or adjournment thereof may revoke any proxy previously given and
vote by ballot.
The presence of the holders of a majority of the issued and outstanding shares
of Common Stock in person or represented by duly executed proxies at the Annual
Meeting and entitled to vote on the subject matter is necessary to constitute a
quorum for the transaction of business at the Annual Meeting. Abstentions will
be counted for purposes of determining the existence of a quorum at the Annual
Meeting. If there are not sufficient shares represented in person or by proxy
at the meeting to constitute a quorum, the meeting may be postponed or adjourned
in order to permit further solicitation of proxies by the Company. Proxies
given pursuant to this solicitation and not revoked will be voted at any
postponement or adjournment of the Annual Meeting in the manner described above.
The affirmative vote of the holders of a plurality of the shares of Common
Stock present in person or represented by duly executed proxies at the Annual
Meeting and entitled to vote on the subject matter is required for the election
of directors. Cumulative voting for the election of directors is not permitted.
The affirmative vote of the holders of a majority of the outstanding shares of
Common Stock is required to approve the amendments and restatement of the
Certificate of Incorporation. The approval of all of the other matters will
require the affirmative vote of the holders of a majority of the shares present
in person or represented by duly executed proxies at the Annual Meeting and
entitled to vote on the subject matter.
Shares represented by proxies that are marked "Withhold Authority" with regard
to the election of directors will have no effect on the outcome of the matter.
Shares represented by proxies that are marked "Abstain" with regard to matters
other than the election of directors will be treated as shares present and
entitled to vote at the Annual Meeting, but will not be counted as votes cast
for a proposal. Accordingly, an abstention will have the effect of a vote
"against" a proposal. In addition, where brokers are prohibited from exercising
discretionary authority for beneficial owners who have not provided voting
instructions (commonly referred to as "broker non-votes"), those shares will
have no effect on the outcome of the election of directors or on proposals
requiring the affirmative vote of a majority of the shares present in person or
represented by duly executed proxies at the Annual Meeting and entitled to vote
on the subject matter, and will have the effect of a vote "against" matters
requiring the affirmative vote of a majority of the outstanding shares of Common
Stock.
The expense of preparing, printing and mailing proxy solicitation materials
will be borne by the Company. The Company has engaged MacKenzie Partners, Inc.
to assist in the distribution of proxy materials and the solicitation of proxies
at a cost of approximately $5,000 plus out-of-pocket expenses. In addition,
certain directors, officers, representatives and employees of the Company may
solicit proxies by telephone and personal interview. Such individuals will not
receive additional compensation from the Company for solicitation of proxies,
but they may be
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reimbursed for reasonable out-of-pocket expenses in connection with such
solicitation. Banks, brokers and other custodians, nominees and fiduciaries also
will be reimbursed by the Company for their reasonable expenses for sending
proxy solicitation materials to the beneficial owners of Common Stock.
The Company's Annual Report to Stockholders for the fiscal year ended December
31, 1998, including consolidated financial statements, is being mailed to all
stockholders entitled to vote at the Annual Meeting together with this Proxy
Statement. The Annual Report does not constitute a part of the proxy
solicitation materials.
PROPOSAL 1
ELECTION OF DIRECTORS
Effective on April 30, 1999, the Board fixed the number of directors of the
Company at ten. Also effective on April 30, 1999, David Ledecky and Thomas D.
Heule resigned as directors of the Company and, pursuant to the Company's
agreements with Boss Investment LLC, an affiliate of the private investment firm
of Apollo Management, L.P., relating to Boss Investment's acquisition of an
aggregate of $100 million principal amount of the Debentures, the Board elected
Andrew Africk, Michael Gross and Brooks Newmark as directors of the Company.
Boss Invesment acquired the Debentures on April 30, 1999.
The Board has nominated the ten persons named below to serve as directors
until the next succeeding annual meeting of stockholders and the election and
qualification of their respective successors or until their earlier resignation
or removal. The Board's nomination of Messrs. Africk, Gross and Newmark for
election as directors at this Annual Meeting implements the Company's agreement
with Boss Investment that it would nominate and otherwise support for election
at the 1999 Annual Meeting three persons who Boss Investment designated for
election to the Board.
Each of the ten nominees for election to the Board is presently a member of
the Board and each has consented to serve as a director if elected. If any of
the nominees other than Boss Investment's designees should be unavailable to
serve for any reason (which is not anticipated), the Board may (i) designate a
substitute nominee or nominees, in which case the persons named on the enclosed
proxy card will vote all valid proxies for the election of such substitute
nominee or nominees; (ii) allow the vacancy or vacancies to remain open until a
suitable candidate or candidates are located; or (iii) by resolution, provide
for fewer directors. Pursuant to the Company's agreement with Boss Investment,
if any of the designees of Boss Investment should be unavailable to serve, the
Board will designate a substitute nominee or nominees of Boss Investment and the
persons named on the enclosed proxy card will vote all valid proxies for the
election of such substitute nominee or nominees. Proxies for this Annual Meeting
may not be voted FOR more than ten nominees.
Nominees For Election At This Annual Meeting
Andrew Africk Andrew Africk has served as a director of the Company
Age 32 since April 30, 1999. Mr. Africk, for more than five
years, has been a principal of Apollo Advisors, L.P.
(which, together with its affiliates, acts as the
managing general partner of several private securities
investment funds) and of Lion Advisors, L.P. (a
financial advisor to, and representative of
institutional investors with respect to, securities
investments). Mr. Africk is also a director of
Continental Graphics Holdings, Inc. Mr. Africk is a
director designee of Boss Investment LLC pursuant to
an agreement between the Company and Boss Investment.
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<TABLE>
<S> <C>
Mary K. Bush Mary K. Bush has been a director of the Company since September 15, 1998. Ms. Bush has
Age 50 served as the President of Bush & Company, an international financial consulting firm,
since 1991. Prior to founding Bush & Company, she served from 1989 to 1991 as Managing
Director of the U.S. Federal Housing Finance Board. Prior to that, she was Vice
President--International Finance at the Federal National Mortgage Association (Fannie
Mae). From 1984 to 1988, she served as U.S. Alternate Executive Director of the
International Monetary Fund. Ms. Bush serves on a number of boards of directors and
advisory boards, including Texaco, Inc., Mortgage Guaranty Insurance Corporation, a
number of Pioneer mutual funds, Novecon Management Company, Washington Mutual Investors
Fund, March of Dimes, Hoover Institution, Wilberforce University, the Folger
Shakespeare Library, Project 2000, Inc. and the Bretton Woods Committee.
Vincent Eades Vincent W. Eades has been a director of the Company since November 25, 1997. Since May
Age 38 20, 1998, Mr. Eades has served as the Chairman and Chief Executive Officer of Powerride
Motorsports, Inc., a company seeking to consolidate the motorcycle and leisure sports
dealership industry. Between May 1995 and May 20, 1998, he served as the Senior Vice
President of Sales and Marketing for Starbucks Coffee Co., Inc. From November 1985
through May 1995, Mr. Eades was employed by Hallmark Cards, Inc., most recently as a
General Manager. Additionally, he serves as a director of USA Floral Products, Inc.
and UniCapital Corporation.
Michael Gross Michael Gross has served as a director of the Company since April 30, 1999. Mr. Gross
Age 37 is one of the founding principals of Apollo Advisors, L.P. and of Lion Advisors, L.P.
Mr. Gross is also a director of Alliance Imaging, Inc., Allied Waste Industries, Inc.,
Breuners Home Furnishings, Inc., Converse, Inc., Florsheim Group, Inc., United Rentals,
Inc., Saks Incorporated and SMT Health Services Inc. Mr. Gross is a director designee
of Boss Investment LLC pursuant to an agreement between the Company and Boss Investment.
Joseph M. Ivey Joseph M. Ivey has served as the Company's President and Chief Executive Officer since
Age 40 February 25, 1999 and has served as a director of the Company since October 8, 1998.
From September 2, 1998 to February 25, 1999, Mr. Ivey served as the President of the
Building One Mechanical Group. Mr. Ivey has also served, since October 1990, as the
Chairman and Chief Executive Officer of Ivey Mechanical Company, Inc., a mechanical
services company that the Company acquired on September 2, 1998. Mr. Ivey also serves
as a director of 1st M&F Corp. Mr. Ivey is a graduate of, and serves as a trustee of,
Freed-Hardeman University.
Jonathan J. Ledecky Jonathan J. Ledecky founded the Company in February 1997 and serves as its Chairman of
Age 41 the Board. He served as the Company's Chief Executive Officer from November 25, 1997
through February 25, 1999. In October 1994, Jonathan J. Ledecky founded U.S. Office
Products Company, a company that provides office products, office furniture and office
coffee and beverage services, and served as its Chairman of the Board until June 10,
1998 and as its Chief Executive Officer until November 5, 1997. Jonathan J. Ledecky
currently serves as a director of U.S.A. Floral Products, Inc., UniCapital Corporation,
Aztec Technology Partners, Inc., School Specialty, Inc., Workflow Management, Inc., the
Ledecky Foundation, Navigant International, Inc. and MicroStrategy Incorporated. He is
also a general partner of Ironbound Partners, LLC, a private investment management
firm, and a director of the United States Chamber of Commerce. Jonathan J. Ledecky is
a graduate of Harvard College and Harvard Business School.
William P. Love, Jr. William P. Love, Jr. currently serves as the President of the Building One Mechanical
Age 39 and Electrical Group and and has been a director of the Company since March 11, 1998.
From September 1990 to March 11, 1998, Mr. Love served as the President and Chief
Executive Officer of SKC Electric, Inc., an electrical installation and maintenance
</TABLE>
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<TABLE>
<S> <C>
services company that Mr. Love founded and that has been a wholly owned subsidiary of
the Company since its acquisition by the Company on March 11, 1998. Mr. Love is the
director designee of the initial companies in the electrical group that the Company
acquired on March 11, 1998 pursuant to the agreements between the Company and each
company within such group.
Brooks Newmark Brooks Newmark has served as a director of the Company since April 30, 1999. Mr.
Age 41 Newmark is a principal of Apollo Advisors, L.P. Mr. Newmark has been associated with
Apollo for more than five years and is Vice President of Apollo Management (U.K.)
L.L.C. Mr. Newmark is a director designee of Boss Investment LLC pursuant to an
agreement between the Company and Boss Investment.
W. Russell Ramsey W. Russell Ramsey has been a director of the Company since November 25, 1997. Mr.
Age 38 Ramsey is President, co-founder and a director of Friedman, Billings, Ramsey Group,
Inc., a holding company engaged in brokerage, investment banking, corporate finance and
asset management activities in the Washington, DC area. He has served as President of
Friedman, Billings, Ramsey Group, Inc. and its predecessors since co-founding the
company in 1989. Mr. Ramsey holds a B.A. from the George Washington University and,
pursuant to an agreement with the Company, is a director designee of Friedman,
Billings, Ramsey & Co., Inc., a wholly owned indirect subsidiary of Friedman, Billings,
Ramsey Group, Inc.
M. Jude Reyes M. Jude Reyes has been a director of the Company since November 25, 1997. Mr. Reyes
Age 42 has served as Chairman and President of Premium Distributors of Virginia, L.L.C., a
beverage distributor, since 1992. Between 1989 and 1992, Mr. Reyes served as President
and Chairman of Harbor Distributing Company in Los Angeles, California. He is also a
director and investor in three other beverage distributors and two wholesale food
service distributors. Mr. Reyes is a director designee of Friedman, Billings, Ramsey &
Co., Inc. pursuant to an agreement with the Company.
</TABLE>
Vote Required For Approval
The vote of the holders of a plurality of the shares of Common Stock present
in person or represented by duly executed proxies at the Annual Meeting and
entitled to vote is necessary for the election of a nominee as a director of the
Company.
The Board of Directors unanimously recommends that stockholders vote for thE
election of the ten persons nominated to serve as directors.
Board Organization and Meetings
The Board held nine meetings during the year ended December 31, 1998. In
addition, the Board acted by unanimous consent on a number of occasions. During
the year, no member of the Board attended fewer than 75% of the total number of
meetings of the Board and all committees of the Board on which he or she served.
The Board has established an Audit Committee, a Compensation Committee and a
Nominating Committee.
The responsibilities of the Audit Committee include recommending to the Board
the independent public accountants to be selected to conduct the annual audit of
the books and records of the Company, reviewing the proposed scope of such audit
and approving the audit fees to be paid, reviewing accounting and financial
controls of the Company with the independent public accountants and the
Company's financial and accounting staff and reviewing and approving
transactions between the Company and its directors, officers and affiliates.
Messrs. Eades, Ramsey, Reyes, Africk and Newmark currently serve as the members
of the Audit Committee. The Audit
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Committee held two meetings (including telephonic meetings) and acted by
unanimous consent on several occasions in fiscal 1998.
The Compensation Committee reviews the Company's compensation plans to ensure
that they meet corporate objectives. In addition, the responsibilities of the
Compensation Committee also include administering the Building One Services
Corporation 1997 Long-Term Incentive Plan (the "1997 Plan"), the Building One
Services Corporation 1998 Long-Term Incentive Plan (the "1998 Plan") and the
Building One Services Corporation Section 162(m) Bonus Plan (the "Bonus Plan"),
including selecting the officers and salaried employees to whom awards will be
granted. The Compensation Committee will also be responsible for administering
the 1999 Plan and the Performance Plan, if they are approved by the stockholders
at the Annual Meeting. Messrs. Eades, Reyes, Africk and Newmark, independent
directors of the Company, currently serve as the members of the Compensation
Committee. The Compensation Committee acted one time by unanimous consent in
fiscal 1998.
The Nominating Committee recommends to the Board the slate of directors to be
elected by the stockholders, any directors to be elected by the Board to fill
vacancies and the directors to be selected for membership to the various Board
committees. Jonathan J. Ledecky, Joseph M. Ivey, F. Traynor Beck, Mary K. Bush
and M. Jude Reyes currently serve as the members of the Nominating Committee.
DIRECTOR COMPENSATION
Directors who are not receiving compensation as officers, employees or
consultants of the Company are entitled to receive an annual retainer fee of
$25,000. In addition, pursuant to the Building One Services Corporation 1997
Non-Employee Directors' Stock Plan, each non-employee director receives an
automatic initial grant of option to purchase 20,000 shares of Common Stock on
the date of such person's initial election to the Board of Directors.
Thereafter, each director receives an automatic annual grant of an option to
purchase 5,000 shares. Each such option has and will have an exercise price
equal to the fair market value of a share of Common Stock on the date of grant.
In connection with the negotiation of the Company's agreement with Boss
Investment, Messrs. Eades, Reyes and Heule, members of the Special Committee to
the Board, received $19,500 each.
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PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of our Common Stock as of May 14, 1999 by:
. each person (or group of affiliated persons) the Company knows to be the
beneficial owner of more than five percent of the outstanding shares of
Common Stock;
. each director;
. each executive officer named in the Summary Compensation Table; and
. all of the Company's current directors and executive officers as a group.
Each of these stockholders possesses sole voting and investment power with
respect to the shares listed, unless otherwise noted.
<TABLE>
<CAPTION>
Amount and Percentage
Nature of of Common
Beneficial Stock
Name and Address of Beneficial Owner Ownership Owned
--------------------------------------------- ----------- -----
<S> <C> <C>
Directors and Executive Officers:
Jonathan J. Ledecky......................................................... 2,983,559(1) 12.6%
David Ledecky............................................................... -- --
F. Traynor Beck............................................................. 166,729(2) *
Timothy C. Clayton.......................................................... 252,000(3) 1.2%
Joseph M. Ivey.............................................................. 675,985(4) 3.0%
Andrew Africk............................................................... --(5) --
Mary K. Bush................................................................ -- --
Vincent W. Eades............................................................ 19,527(6) *
Michael Gross............................................................... --(5) --
William P. Love, Jr......................................................... 212,991(7) *
Brooks Newmark.............................................................. --(5) --
W. Russell Ramsey........................................................... 1,352,393(8) 5.9%
M. Jude Reyes............................................................... 15,738(9) *
All current directors and executive
officers as a group (13 persons) 5,678,922 22.4%
Holders of 5% or more of the Company's Common Stock:
Boss Investment LLC......................................................... 4,444,444(10) 17.0%
</TABLE>
_________________________
*Less than one percent
(1) This includes 1,950,000 shares underlying a warrant issued to Jonathan J.
Ledecky in connection with the Company's initial public offering. The
Company has agreed that, at Jonathan J. Ledecky's request, it will file a
registration statement under the Securities Act of 1933, as amended, for an
offering of the shares underlying the warrant during a ten-year period
beginning on November 25, 1997. In addition, the Company has agreed to
give Jonathan J. Ledecky the right to request that it include the shares
underlying the warrant on a registration statement filed by the Company
during a twelve-year period beginning on November 25, 1997. Mr. Ledecky's
address is: c/o Building One Services Corporation, 800 Connecticut Ave.,
N.W., Suite 1111 Washington, DC 20006.
(2) This figure reflects shares which may be acquired upon the exercise of
options that are exercisable.
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(3) This figure includes 250,000 shares which may be acquired upon the exercise
of options that are exercisable.
(4) This figure includes 300,000 shares held in the Joseph M. Ivey, Jr. Annuity
Trust, of which Mr. Ivey is the trustee, 125,000 shares which may be
acquired upon the exercise of options that are exercisable and 173,547
shares held by Ivey National Corporation (the principal stockholder of
which is Mr. Ivey's father), of which Mr. Ivey disclaims beneficial
ownership beyond his pecuniary interest.
(5) Beneficial ownership is disclaimed as to the shares of Common Stock
beneficially owned by Boss Investment. The director is a principal of
Apollo Advisors, L.P., an affiliate of Boss Investment. See note (10)
below.
(6) This figure represents shares which may be acquired upon the exercise of
options that are exercisable.
(7) This figure includes 72,465 shares owned by Mr. Love's wife and 1,200
shares owned by trusts established for the benefit of his children. Mr.
Love serves as one of four trustees of the SKC Electric, Inc. Profit
Sharing Plan. The number of shares shown as beneficially owned by Mr. Love
excludes shares that may be deemed to be beneficially owned by that plan.
(8) This figure includes 7,632 shares which may be acquired upon the exercise
of options that are exercisable, 202,604 shares owned by FBR Asset
Investment Corporation, of which Mr. Ramsey is an officer, director and
indirect shareholder, and 1,130,000 shares underlying a warrant owned by
Friedman, Billings, Ramsey & Co., Inc., of which Mr. Ramsey is an officer,
director and shareholder. In addition, the Company has agreed to give
Friedman, Billings, Ramsey & Co., Inc. the right to request that it include
the shares underlying the warrant on a registration statement filed by the
Company with the Securities and Exchange Commission during a twelve-year
period beginning on November 25, 1997.
(9) This figure includes 7,632 shares which may be acquired upon the exercise
of options that are exercisable.
(10) Boss Investment will be dissolved and will distribute the Debentures to its
members, resulting in direct beneficial ownership by Apollo Investment Fund
IV, L.P. of $94.9 million of Debentures, which are currently convertible
into 4,218,222 shares, and Apollo Overseas Partners IV, L.P. of $5.1
million of Debentures, which are currently convertible into 226,222 shares.
The general partner of these entities, Apollo Advisors IV, L.P., is
affiliated with Apollo Management, L.P.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table provides certain summary information concerning the
cash and non-cash compensation earned by or awarded to the persons who were the
Company's executive officers during 1998. The Company's predecessor was
organized in February 1997, with David Ledecky as its sole employee. The Company
employed the remaining executive officers listed in the table as of November 25,
1997.
8
<PAGE>
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation
---------------------------------------------
Long-Term
Compensation
Awards
Annual Securities
Compensation Underlying
Fiscal Salary Options/SARS All Other
Name and Principal Position Year ($) (1) Bonus (#) (2) Compensation
- --------------------------- ------- -------- --------- ------- ---------------
<S> <C> <C> <C> <C> <C>
Jonathan J. Ledecky......................... 1998 $750,000 $ 42,500 -- --
Chief Executive Officer and 1997 125,000 -- -- --
Chairman of the Board(3)
Timothy C. Clayton.......................... 1998 $300,000 175,000 -- $110,295(4)
Executive Vice President, 1997 223,000 -- 500,000 25,000
Chief Financial Officer and Treasurer
F. Traynor Beck............................. 1998 $300,000 175,000 -- 4,800(5)
Executive Vice President, 1997 223,000 -- 500,000 --
General Counsel and Secretary
David Ledecky............................... 1998 $300,000 100,000 -- 4,800(5)
Executive Vice President and 1997 327,994(7) -- 500,000 --
Chief Administrative Officer, Director (6)
</TABLE>
________________________
(1) The 1997 figures include bonus payments of $200,000 for Mr. Timothy C.
Clayton, F. Traynor Beck and David Ledecky, which were guaranteed for the
first year of employment pursuant to their employment agreements, declared
in December 1997 and paid in January 1998.
(2) Represents options granted in 1997 with respect to Common Stock, each option
to vest ratably on November 25, 1998, 1999, 2000 and 2001, unless
accelerated under certain conditions. The vesting of the options was
accelerated in connection with the Company's recent tender offer. To the
extent that the Company did not acquire 50% of the shares underlying an
option in the tender offer, such option is now immediately exercisable with
respect to those shares and will be exercisable with respect to up to
125,000 shares beginning on November 25, 2000 and with respect to the
remaining 125,000 Shares beginning on November 25, 2001.
(3) On February 25, 1999, the Company appointed Joseph M. Ivey as President and
Chief Executive Officer. Jonathan J. Ledecky currently serves as Chairman
of the Board.
(4) Represents a $4,800 contribution to Timothy C. Clayton's 401(k) plan and
$105,495, the discounted value of the benefit to Mr. Clayton of the premium
paid by the Company during 1998 for a split-dollar insurance policy under
which the Company is entitled to a refund of the premiums paid by it to the
insurer at the time Mr. Clayton becomes the owner of the policy at the
earlier of the end of 22 years or death.
(5) Represents the Company's matching contribution to F. Traynor Beck's 401(k)
plan.
(6) On April 30, 1999, David Ledecky was terminated without cause as an
Executive Vice President and Chief Administrative Officer and resigned from
the Board of Directors.
(7) Includes payments made to David Ledecky by the Company's predecessor.
9
<PAGE>
Employment Agreements
Jonathan J. Ledecky. On November 25, 1997, the Company entered into an
employment agreement with Jonathan J. Ledecky. The agreement has a one-year
term which was automatically renewed for a successive one-year term pursuant to
its terms and is automatically renewable for successive one-year terms unless
either Jonathan J. Ledecky or the Company gives notice of non-renewal at least
90 days prior to the end of the term. Non-renewal of the contract is the
equivalent of termination without "cause" (as defined in the employment
agreement). The agreement provides for an annual salary of $750,000 and a
discretionary bonus in an amount equal to up to 100% of his base salary. If the
Company terminates the agreement other than for "cause" (as defined in the
employment agreement), Jonathan J. Ledecky is entitled to receive an amount
equal to twice his base salary plus an amount equal to the bonus he received in
the prior year. The agreement prohibits Jonathan J. Ledecky from competing with
the Company during the term of his employment and for a period of one year
thereafter. The agreement also provides for certain executive perquisites.
Joseph M. Ivey. Effective February 25, 1999, the Company entered into an
employment agreement with Joseph M. Ivey, the Company's President and Chief
Executive Officer and a Company director. The agreement has a two-year term and
is automatically renewable on the same terms for one-year terms thereafter,
unless either the Company or Mr. Ivey give notice of non-renewal at least six
months prior to the end of the term. According to the terms of the agreement,
Mr. Ivey is obligated to devote his full business time, attention and efforts to
his duties as President and Chief Executive Officer. The agreement provides for
an annual salary of $400,000 and a discretionary bonus in an amount equal to up
to 150% of his base salary. Pursuant to the agreement, Mr. Ivey received a
grant of an option to purchase 250,000 shares of Common Stock. The employment
agreement provides that the option vests ratably on the first, second, third and
fourth anniversaries of the date of the grant, unless accelerated upon a "change
in control" (as defined in the 1998 Long-Term Inventive Plan) or upon
termination of Mr. Ivey without "cause" (as defined in the employment
agreement). The vesting of the option was accelerated in connection with the
Company's recent tender offer. Mr. Ivey's option is now exercisable with
respect to 125,000 shares and will be exercisable with respect to 62,500 shares
beginning on November 25, 2000 and with respect to an additional 62,500 shares
beginning on November 25, 2001. If the Company terminates the agreement other
than for "cause," Mr. Ivey will be entitled to receive an amount equal to twice
his base salary plus the amount of bonus he received in the prior year and to
participate in pension, insurance and other benefit programs on terms which are
identical to those of our other senior executive officers. Mr. Ivey's
employment agreement prohibits him from competing with the Company during the
term of his employment and, depending on the nature of his termination, for a
period of up to two years thereafter. The agreement also provides for certain
executive perquisites.
F. Traynor Beck, Timothy C. Clayton and David Ledecky. On November 25, 1997,
the Company entered into employment agreements with F. Traynor Beck, Timothy C.
Clayton and David Ledecky, the terms of which are substantially identical. Each
of the agreements has a two-year term and is automatically renewable for one-
year terms thereafter, unless either the employee or the Company give notice of
non-renewal at least six months prior to the end of the term. According to the
terms of the agreements, each is obligated to devote his full business time,
attention and efforts to his duties under the agreement. Each of the agreements
provides for an annual salary of $300,000, a guaranteed bonus of $200,000 for
the first year of the term and a discretionary bonus in an amount equal to up to
100% of his base salary for each year thereafter. On November 25, 1997, each of
these executive officers received a grant of an option to purchase 500,000
shares of Common Stock at an exercise price equal to the Company's initial
public offering price per share ($20.00). The employment agreements provide
that the options vests ratably on the first, second, third and fourth
anniversaries of the date of grant, unless accelerated upon a "change in
control" (as defined in the employment agreement) or upon the termination of
the employee without "cause" (as defined in the employment agreement). The
vesting of the options was accelerated in connection with the Company's recent
tender offer. To the extent that the Company did not acquire 50% of the shares
underlying each such option in the tender offer, such option, except as
discussed below, is now exercisable with respect to those shares and will be
exercisable with respect to up to 125,000 shares beginning on November 25, 2000
and with respect to the remaining 125,000 shares beginning on November 25, 2001.
If the Company terminates the agreement other than for "cause," the executive
officer will be entitled to receive an amount equal to twice his base salary
plus the amount of the bonus he received in the prior year. The agreements
generally prohibit the executive officer from competing with the Company during
the term of his employment and for a period of one year thereafter. The
agreements also provide for certain executive benefits and perquisites. The
salaries for Messrs. Beck and Clayton were increased to $330,000 in March 1999.
The Company has entered into an agreement with David Ledecky relating to the
termination without cause of his employment as Executive Vice President and
Chief Administrative Officer of the Company and his resignation as a director of
the Company effective on April 30, 1999. The Company paid David Ledecky an
amount in accordance with the termination without cause provisions of his
employment agreement. In addition, in exchange for his waiver of certain
contractual rights, his agreement to accept certain continuing obligations and
the forfeiture and cancellation
10
<PAGE>
of all of David Ledecky's remaining options, the Company paid David Ledecky
$306,512.50 pursuant to the terms of the termination agreement.
William P. Love, Jr. On March 11, 1998, the Company entered into an
employment agreement with William P. Love, Jr., who is a director of the Company
and, as of February 25, 1999, became the President of the Building One
Mechanical and Electrical Group. The agreement has a two-year term and may be
extended according to terms upon which the Company and Mr. Love mutually agree.
The agreement provides for an annual salary of $200,000 (which was increased to
$300,000 upon Mr. Love becoming President of the Building One Mechanical and
Electrical Group) and a performance-based incentive bonus. This bonus is payable
in cash, stock options or other non-cash awards. The compensation committee of
the Board determines the form of the bonus each year during the term of the
agreement, beginning on January 1, 1999. If the Company terminates the agreement
other than for "cause" (as defined in the employment agreement), Mr. Love will
receive his base salary and group health benefits in effect at that time for
either one year from the date of termination; or the remaining length of time
under the term of the agreement, whichever is longer. Mr. Love's employment
agreement also prohibits him from competing with the Company during the term of
his employment and, depending on the nature of his termination of employment,
for a period of up to two years from the date of termination.
Year-End Values of Options
The following table sets forth certain information concerning the exercise and
year-end values of options relating to the Company's executive officers for
1998.
Aggregated Option/SARs Exercised in 1998 and Option/SAR Values
at end of 1998
<TABLE>
<CAPTION>
Number of Securities
Underlying
Unexercised Value of Unexercised
Shares Options/SARs In-the-money Options/
Acquired on Value at End of 1998 SARs at End of
Exercise Realized (Exercisable/ 1998 (Exercisable/
Name (# of shares) ($)(1) Unexercisable)(#) Unexercisable)($)(2)
---------------------- ------------ ------ ----------------- --------------------
<S> <C> <C> <C> <C>
Jonathan J. Ledecky . -- -- -- --
Timothy C. Clayton . -- -- 125,000/375,000 $109,375/$328,125
F. Traynor Beck....... -- -- 125,000/375,000 109,375/328,125
David Ledecky......... -- -- 125,000/375,000 109,375/328,125
</TABLE>
______________
(1) The "value realized" represents the difference between the base (or
exercise) price of the option shares and the market price of the option
shares on the date the option was exercised. The value realized was
determined without considering any taxes which may have been owned.
11
<PAGE>
(2) "In-the-money" options are options whose base (or exercise) price was less
than the market price of our common stock at December 31, 1998. The value of
such options is calculated assuming a stock price of $20 7/8, which was the
closing price of the Common Stock on the Nasdaq Stock Market on December 31,
1998.
Compensation Committee Report on Executive Compensation
During 1998, the Compensation Committee of the Board was composed of two
independent, non-employee directors. They have served as members of the Board
since November 25, 1997, the effective date of the registration statement for
the Company's initial public offering (the "Effective Date"). Accordingly, the
Compensation Committee did not negotiate or approve the terms of the employment
agreements that the Company entered into with its executive officers effective
upon the Effective Date. Nor did the members of the Compensation Committee
approve the employee benefit plans that the Company adopted and its sole
stockholder approved prior to the Effective Date.
Set forth below is the Compensation Committee's report on executive
compensation.
Notwithstanding anything to the contrary, the following report of the
Compensation Committee and the Stock Performance Graph shall not be deemed
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filing under the Securities Act of 1933, as
amended, or under the Securities Exchange Act of 1934, as amended, except to the
extent that the Company specifically incorporates this information by reference,
and shall not otherwise be deemed filed under such Acts.
Compensation Committee Report on Executive Compensation
Shortly after the Company became a publicly-held corporation in December
1997 (the "Effective Time"), the Compensation Committee (the "Committee")
reviewed the compensation and benefits provided to the Company's executive
officers. Based upon that review, the Committee concluded that the Company's
compensation program was designed in an appropriate manner to attract, retain
and reward executive officers in a manner that is consistent with the long-term
interests of stockholders.
The key components of the Company's executive compensation program consist
of salary amounts, annual incentive bonuses and stock options. The Committee is
responsible for approving any changes to the benefits provided to the Company's
executive officers in their employment agreements and awarding bonuses for the
1998 fiscal year. In addition, the Committee is responsible for administering
the Company's 1997 Long-Term Incentive Plan (the "1997 Plan") and the Company's
1998 Long-Term Incentive Plan (the "1998 Plan") and will be responsible for
administering the Company's 1999 Long-Term Incentive Plan (the "1999 Plan") and
the Company's 1999 Stock Performance Incentive Plan (the "Performance Plan"), if
they are adopted by the stockholders. The Committee decides whether to grant
stock options to the executive officers and makes recommendations to the Board
with respect to the adoption of additional incentive plans. The Committee
recommended that the Board propose the adoption of the 1999 Plan and the
Performance Plan. The Committee recommended the adoption of the 1999 Plan
because there are not enough shares available for issuance under the 1998 Plan
as a result of the significantly lower number of the Company's shares of Common
Stock outstanding after the completion of the Company's offer to buy 25.5
million shares of Common Stock in its issuer tender offer. The Committee
recommended the adoption of the Performance Plan in order for the Committee to
award to members of the Company's senior management, including executive
officers, shares of Common Stock at such time as the market price of the
Company's shares of Common Stock reaches certain specified levels and to
restrict the transfer of such shares for a period of four years after the date
of the award and to impose other conditions on such awards in its discretion.
The employment agreements that the Company entered into at the Effective
Time with the executive officers provide for specified salary amounts and, in
the case of each of the executive officers other than Jonathan J. Ledecky, a
guaranteed bonus for the first year of the term of such executive officer's
employment agreement. Shortly after the Effective Date, the Committee decided to
pay the guaranteed bonuses to such Executive Officers
12
<PAGE>
for the first year of their employment agreements in view of the success of the
initial public offering and in order to recognize such obligations on a current
basis. The employment agreements provide for discretionary bonuses to such
executive officers for years after the first year of the term of the employment
agreement in amounts equal to up to 100% of their base salary amounts. The
employment agreements further state that it is contemplated that such bonuses
will be at least equal to the guaranteed bonus for the first year of the term of
the employment agreement. The Committee awarded to the executive officers other
than Jonathan J. Ledecky bonuses for the 1998 fiscal year (in addition to the
guaranteed bonuses for 1998 that they received in 1997) based upon its
evaluation of various factors including overall Company results, the executive
officer's individual performance and various intangible factors.
The employment agreement that the Company entered into with Jonathan J.
Ledecky, the Company's Chief Executive Officer during 1998, provides for a
discretionary bonus in an amount equal to up to 100% of the employee's base
salary. In early 1998, the Committee designated performance goals under the
Bonus Plan which would determine whether Jonathan J. Ledecky would receive a
bonus. The Committee awarded Jonathan J. Ledecky a bonus for 1998 based upon
that previously determined earnings per share and revenue-based formula
performance goal.
The employment agreements with each of the executive officers other than
Jonathan J. Ledecky provided for grants of options for 500,000 shares to each of
such executive officers on the Effective Date. The Committee did not grant
additional options to such executive officers and did not grant any options to
Jonathan J. Ledecky, the Chief Executive Officer during 1998.
The Company entered into an employment agreement with Joseph M. Ivey in
connection with his appointment as the Company's Chief Executive Officer on
February 25, 1999. Unlike the other employment agreements that the Company has
entered into, Mr. Ivey's employment agreement provides for a bonus in an amount
equal to up to 150% of Mr. Ivey's base salary. The Committee determined that a
higher maximum possible bonus was appropriate for the new Chief Executive
Officer.
Compensation Committee:
M. Jude Reyes
Vincent W. Eades
Stock Performance Graph
The following performance graph compares the Company's cumulative total
stockholder return on its Common Stock with the cumulative total return of (i)
the Russell 2000 Index and (ii) a peer group stock index. The cumulative total
return computations set forth in the Performance Graph assume the investment of
$100 in the Company's Common Stock on November 26, 1997 and the reinvestment of
dividends.
Comparison of Cumulative Total Return Among
Building One Services Corp., Russell 2000 Index and Peer Group Index
<TABLE>
<CAPTION>
Fiscal year ending
------------------
<S> <C> <C> <C>
Company/Index 11/26/97 12/31/97 12/31/98
Building One Services Corp. 100.00 100.62 103.41
Russell 2000 Index 100.00 101.75 98.9
Peer Group Index 100.00 118.23 119.41
</TABLE>
_____________
* Assumes $100 invested on November 26, 1997; assumes dividend reinvested;
fiscal year ending December 31, 1998.
The companies that comprise the peer group are BHI Corporation, Comfort
Systems USA, Inc., Group Maintenance America Corp. and Integrated Electrical
Services (which became a public company on January 27, 1998).
13
<PAGE>
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Company's directors, executive officers and persons holding more than 10% of the
Company's outstanding Common Stock to file with the Securities and Exchange
Commission initial reports of ownership, reports of changes in ownership and
annual reports of ownership of Common Stock and other equity securities of the
Company. Specific due dates for these reports have been established and the
Company is required to report herein any failure to file by these dates in
fiscal 1998. On October 5, 1998 a Form 3 for Mary K. Bush was filed by counsel
for the Company with the Securities and Exchange Commission in a timely fashion.
This Form 3 was later rejected by the SEC for illegibility. The Form 3 was
successfully re-filed and accepted by the SEC on December 2, 1998 but, pursuant
to the rules and regulations of the SEC, was deemed to be filed late.
CERTAIN TRANSACTIONS
Set forth below is a description of certain transactions and relationships
between the Company and certain persons who are officers, directors and
principal stockholders of the Company.
Jonathan Ledecky, the Company's Chairman of the Board and founder, is the
brother of David Ledecky, the Company's former Executive Vice President, Chief
Administrative Officer and a former director of the Company.
Joseph M. Ivey, our President and Chief Executive Officer and a director, is
an officer and stockholder of two corporations which lease real proerty and an
airplane to Ivey Mechanical Company, one of the Company's mechanical
subsidiaries. The leases provide for lease payments in the aggregate amount of
$8,200 per month, or $98,400 annually. In addition, the Company pays a fee
based upon the use of the airplane. In 1998, the Company paid $43,120 in usage
fees for the airplane.
W. Russell Ramsey, a director of the Company, is President and a principal
stockholder of Friedman, Billings, Ramsey Group, Inc. Friedman, Billings,
Ramsey & Co., Inc., a wholly owned indirect subsidiary of Friedman, Billings,
Ramsey Group, Inc., rendered investment banking services to the Company in
connection with the Company's initial public offering. In 1998, Friedman,
Billings, Ramsy & Co., Inc. acted as a financial advisor to the Company in
connection with the Company's consideration of various strategic alternatives
which ultimately led to the Company's recently completed issuer tender offer.
Friedman, Billings, Ramsey & Co., Inc. received a fee of $3.5 million in
connection with the tender offer.
On March 11, 1998, the Company completed the acquisition of SKC. SKC leases
office, warehouse and storage space from SKC Properties, L.L.C., a principal
member of which is William P. Love, Jr. Mr. Love is one of the former owners of
SKC, a director of the Company and the President of the Building One Mechanical
and Electrical Group. The lease provides for lease payments in the amount of
$8,095 per month, or $97,140 annually.
Effective April 30, 1999, Messrs. Africk, Gross and Newmark were appointed to
the Board pursuant to the agreements that the Company entered into with
Boss Investment. Boss Investment received fees of $2.5 million in connection
with its agreement to acquire an aggregate principal amount of $100 million of
the Debentures. In addition, Boss Investment was reimbursed for its fees and
expenses incurred in connection with its transaction with the Company.
PROPOSAL 2
APPROVAL OF AMENDMENT TO CERTIFICATE OF INCORPORATION TO PROVIDE FOR CERTAIN
VOTING RIGHTS FOR THE HOLDERS OF THE COMPANY'S DEBENTURES AND
TO CLARIFY AND ELIMINATE CERTAIN PROVISIONS
The Board has approved a proposal to amend Articles Four, Five and Six of the
Certificate of Incorporation (a) to provide that the holders of the Company's
Debentures shall have the right (i) to vote on an as converted basis on all of
the matters submitted to the Company's holders of shares of Common Stock and an
other class of voting stock as a single class, (ii) to elect, as a separate
class, three directors to the Board (or, if the Board consists of more than
14
<PAGE>
ten members, no less than 30% of the total number of directors on the Board),
(iii) to elect, as a separate class, a majority of the Board if the Company
materially and intentionally breaches its agreements with the holders of the
Debentures or there is a payment default or any other default giving rise to a
right to acceleration under the terms of the Debentures and (iv) to consent to
any amendment or repeal by the Company of any provisions of the Certificate of
Incorporation that is adverse to the holders of the Debentures and (b) to
eliminate the provisions of Article Four that relate to the shares of
convertible non-voting common stock, par value $0.001 per share, because those
shares have not been outstanding since their automatic conversion into shares of
Common Stock and the Board has approved a proposal to restate the Certificate of
Incorporation to reflect the foregoing amendments. Attached as Exhibit A hereto
is a copy of the Certificate of Incorporation, marked to show the changes being
proposed for adoption at this meeting.
The Board of Directors is proposing the amendments relating to the voting
rights of the holders of the Debentures and the clarifying changes relating to
dividends and liquidation rights in order to comply with the Company's
agreements with Boss Investment relating to its acquisition of an aggregate of
$100 million principal amount of the Company's Debentures. On March 22, 1999
the Company entered into a Securities Purchase Agreement and an Investors'
Rights Agreement with Boss Investment. Pursuant to the Securities Purchase
Agreement, on April 30, 1999 Boss Investment acquired the Debentures. Pursuant
to the Investors' Rights Agreement, the Company agreed to, among other things,
submit for stockholder approval by July 25, 1999 amendments to the Certificate
of Incorporation which (a) provide to the holders of the Debentures the right to
vote on an as converted basis with the holders of shares of Common Stock and any
other voting stock, to elect as a class three directors (or if the Board has
more than ten directors, no less than 30% of the Board), to elect, as a separate
class, a majority of the Board if the Company materially and intentionally
breaches its agreements with the holders of the Debentures or there is a payment
default or any other default giving rise to a right to acceleration under the
terms of the Debentures and, provide to the holder of the Debentures the right
to consent to any amendment or repeal by the Company of any provisions of the
Certificate of Incorporation that is adverse to the holders of the Debentures
and (b) provide for stockholder action by unanimous written consent. (See
Proposal 3 relating to stockholder action by unanimous written consent.) In the
event that stockholder approval of the amendments is not obtained by the Company
by July 25, 1999, the interest rate on the Debentures will increase from 7 1/2%
to 12 1/2% per annum until such approval is obtained. In addition, if approval
is not obtained by October 24, 1999, the conversion price will be permanently
reduced by $1.00 and will be further permanently reduced by $1.00 every 90 days
thereafter if stockholder approval of the amendment is not obtained during such
90 day period, subject to a maximum reduction of the conversion price of $4.00.
The Debentures are convertible at an initial conversion price of $22.50 per
$1,000 principal amount. In addition to the possible reduction of the
conversion price if stockholder approval of the amendments to the Certificate of
Incorporation is not obtained by October 24, 1999, the conversion price is
subject to customary antidilution adjustments. Upon conversion of the
Debentures, a holder will receive a number of shares of Common Stock equal to
the principal amount of the Debentures being converted plus accrued interest
thereon divided by the conversion price then in effect. (If the Debentures are
converted prior to the fifth anniversary of their issuance, the number of shares
of Common Stock issuable on conversion will also give effect to the amount of
interest that would have been paid on the convertible subordinated notes through
the fifth anniversary subject to a maximum of 30 months of additional interest
unless such conversion is in connection with a change of control of the
Company.)
Through the fifth anniversary of their issuance, interest is payable in
additional Debentures or, at the option of the Company, in cash, except that
from and after the third anniversary through the fifth anniversary, interest
will be paid in cash if requested by a majority of the holders of the
Debentures. Thereafter, interest is payable only in cash. The terms of the
Company's credit facility and the senior subordinated notes that it issued in
connection with the financing for its recently completed tender offer restrict
the payment of interest on the Debentures in cash under certain circumstances.
If the proposed amendments to Article Four of the Certificate of Incorporation
are adopted, the holders of the Debentures will be entitled to vote on all
matters submitted to the stockholders for approval together with the holders of
shares of Common Stock and any other voting stock and will be entitled to cast
the number of votes that they would be entitled to cast if they converted the
Debentures into shares of Common Stock. Based upon a conversion price of $22.50
per share and assuming all of the interest on the Debentures is paid in cash,
Boss
15
<PAGE>
Investment would have the right to cast 4,444,444 votes, or votes equivalent to
approximately 17% of the outstanding shares of Common Stock.
In addition, if the proposed amendments to Article Four are adopted, the
holders of the Debentures will be entitled to elect as a class three of the
Company's directors (or at least 30% of the number of directors if the number of
directors is more than ten). In addition, amended Article Four will entitle the
holders of the Debentures to elect, as a separate class, a majority of the Board
in the event of (i) a payment default, or any other default giving rise to a
right to accelerate, under any indetedness of the Company and (ii) any material,
intentional breach by the Company of the agreements relating to the investment
by Boss Investment. The right of the holders of the Debentures to exercise this
right will be subject to certain notice and cure periods.
In the Investors' Rights Agreement, the Company agreed to cause Messrs.
Africk, Gross and Newmark to be added to the Board effective at the time that
Boss Investment acquired the Debentures. Messrs. Africk, Gross and Newmark are
currently directors and nominees for election to the Board. In addition, the
Company agreed to nominate and otherwise support for election to the Board at
the 1999 Annual Meeting three designees of Boss Investment and to either
nominate at the 1999 Annual Meeting the persons serving on the Board immediately
following the sale of the Debentures or, if any of such persons have resigned or
otherwise cannot or will not serve on the Board following the 1999 Annual
Meeting, such other persons as are mutually acceptable to the Company and Boss
Investment.
In addition, the Company agreed that, if the holders of the Debentures cannot
elect three persons to the Board for any reason (whether because (i) the
stockholders do not adopt the amendments to the Certificate of Incorporation or
the amendments are not otherwise effective, (ii) no Debentures remain
outstanding or (iii) otherwise), it will deliver a notice to Boss Investment not
more than 40 and no less than ten days prior to the mailing of the Company's
proxy materials relating to an election of directors informing Boss Investment
of the earliest date that the Company may mail proxy materials in connection
with any election of directors. If Boss Investment owns at least 1,481,479
shares of Common Stock, the Company will nominate for election as directors
three persons designated for election by Boss Investment and support in good
faith the election of such persons to the Board. If such nominees are not
elected to the Board, the Company has agreed to provide to Boss Investment the
right to designate one representative to serve as an observer at each meeting of
the Board and each committee thereof. The Company has agreed to reimburse such
representative for all expenses incurred to attend any meeting and to provide to
such representative copies of all materials distributed to the Board.
The Company has also agreed to amend its by-laws if the stockholders adopt the
amendments to the Certificate of Incorporation relating to the voting rights of
the holders of Debentures. These amendments will provide for the rights of Boss
Investment to designate nominees for election as directors, to designate persons
to fill vacancies on the Board, to include directors designated by Boss
Investment on the Board's committees, to limit the size of the Board to ten
persons unless it provides to the holders of the Debentures the right to elect
at least 30% of the total number of directors and to provide that meetings of
the Board or any committee thereof may be conducted by teleconference.
Pursuant to the Investors' Rights Agreement, the Company has agreed to obtain
the prior consent of Boss Investment prior to certain significant corporate
actions as long as Boss Investment owns 50% of the outstanding Debentures. The
significant corporate actions requiring such consent are:
. mergers of the Company unless in connection with a "permitted
acquisition;"
. a recapitalization, liquidation or reorganizaion of the Company's
business or a material change in the Company's business;
. acquisitions or dispositions having an aggregate value in excess of $100
million;
. dividends;
. acquisitions of capital stock or indebtedness junior to the Debentures;
. the hiring, firing or amendment of the employment terms of the Company's
Chief Executive Officer;
. any increase in the size of the Board of Directors above ten directors
unless designees of Boss Investment continue to comprise at least 30% of
the Board;
. transactions with affiliates not in the ordinary course of business; and
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<PAGE>
. any agreement that would restrict the Company's ability to honor the
rights of the holders of the Debentures.
As noted above, the Board is also proposing amendments to the Certificate of
Incorporation to eliminate the provisions of Article Four that relate to the
shares of convertible non-voting common stock, par value $0.001 per share. The
Board is proposing the amendments relating to the convertible non-voting common
stock because those provisions are no longer necessary since that stock is no
longer outstanding.
Finally, the Board is proposing to restate the Certificate of Incorporation to
reflect the foregoing amendments to facilitate the understanding of the
Company's amended Certificate of Incorporation.
Vote Required for Approval
The affirmative vote of the holders of a majority of the Company's outstanding
shares of Common Stock is necessary for the approval of the amendment to and
related restatement of the Certificate of Incorporation.
The Board of Directors unanimously recommends that stockholders vote FOR the
adoption of the amendment to Articles Four, Five and Six and the restatement of
the Certificate of Incorporation.
PROPOSAL 3
APPROVAL OF AMENDMENT TO CERTIFICATE OF INCORPORATION TO PROVIDE FOR STOCKHOLDER
ACTION BY UNANIMOUS WRITTEN CONSENT
The Board proposes amending the Certificate of Incorporation to add Article
Nine, which would require unanimous written consent if stockholder approval of a
matter is solicited by written consent rather than at a meeting of stockholders.
Proposed Article Nine is included in Exhibit A to this Proxy Statement. The
Board has directed the appropriate officers of the Company to amend and restate
the Certificate of Incorporation if and when stockholders approve the addition
of Article Nine to the Charter. Upon obtaining approval of the majority of the
outstanding shares of Common Stock entitled to vote, the Company's by-laws will
be amended and restated to conform to the amended and restated Certificate of
Incorporation.
A requirement that stockholder action in writing be given by all of the
stockholders makes it impractical for stockholders to act by written consent.
This means that if an acquiror wanted to attempt to take over the Company,
action by written consent would be difficult for the acquiror to achieve.
Therefore, adoption of this amendment will prevent the would-be acquiror from
avoiding a stockholder meeting on the takeover proposal. The need to hold a
meeting provides the Board with additional time to consider the takeover
proposal and, as appropriate, negotiate with the would-be acquiror. The Board
proposes the amendment relating to stockholder action by unanimous written
consent in connection with the Company's agreements with Boss Investment
relating to its acquisition of an aggregate principal amount of $100 million of
the Company's Debentures. The proposed amendment also reflects the
determination of the Board that the Company should continue to be in a position
to pursue its long-term goals and objectives without distraction by the threat
of a hostile takeover attempt.
The Company is not aware of any existing or planned effort on the part of any
party to accumulate material amounts of the Company's Common Stock, or to
acquire control of the Company by means of a merger, tender offer, solicitation
in opposition to management or otherwise, or to change the Company's management.
There have been no offers to acquire the Common Stock or assets of the Company.
The Company, however, is aware that a number of unsolicited acquisition
proposals in connection with takeover activities have employed, or have sought
to employ, tactics which are designed to force a response by the target company
through threats or attempts to secure action without a meeting and without
affording a reasonable opportunity for the boards of directors of such companies
to consider whether such proposals are in the best interests of its
stockholders.
Vote Required for Approval
The affirmative vote of the holders of a majority of the Company's outstanding
shares of Common Stock is necessary for the approval of the amendment to and
related restatement of the Certificate of Incorporation.
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<PAGE>
The Board of Directors unanimously recommends that stockholders vote FOR
the adoption of the Article Nine and the restatement of the Certificate of
Incorporation.
PROPOSAL 4
APPROVAL OF AMENDMENT TO CERTIFICATE OF INCORPORATION TO PROVIDE FOR
11,000,000 SHARES OF SERIES PREFERRED STOCK
The Board proposes amending Article Four of the Certificate of Incorporation
to authorize the issuance of 11,000,000 shares of series preferred stock, par
value $0.001 per share. A copy of the proposed Article Four, marked to show
this and other proposed changes, is set forth in Exhibit A to this Proxy
Statement. Upon obtaining approval of the majority of the outstanding shares of
Common Stock entitled to vote, the Company's by-laws will be amended and
restated to conform to the amended and restated Certificate of Incorporation.
The proposed amendment will authorize the Board to create one or more series
of preferred stock, to fix the authorized number of shares of any series, and to
fix the terms of any series, including the following:
. designation (naming) of the series;
. the terms upon which shares will be entitled to dividends;
. the rights of holders of the series in the event of our company's
liquidation, dissolution or winding up;
. the rights of the Company, if any, to buy back (redeem) shares;
. the terms of any obligation of the Company to purchase; redeem or retire
share or maintain a fund for such purposes;
. the voting rights, if any, of the shares of the series; and
. the right, if any, to exchange or convert the shares of such series into
shares of another series of preferred stock or any other class of stock.
The issuance of preferred stock may adversely affect the voting and dividend
rights, rights upon liquidation and other rights of the holders of Common Stock.
In addition, the issuance of preferred stock could be used in the future, under
certain circumstances, as a method of discouraging, delaying, or preventing a
change in control of the Company. Although at this time the Company has no
plans to issue any shares of preferred stock, there can be no assurance that it
will not do so in the future. This provision, as well as the investment in the
Company of Boss Investment, is expected to have an anti-takeover effect,
including possibly discouraging takeover attempts that might result in a premium
over the market price for the shares of the Company's Common Stock.
Vote Required for Approval
The affirmative vote of the holders of a majority of the Company's outstanding
shares of Common Stock is necessary for the approval of the amendment to and
related restatement of the Certificate of Incorporation.
The Board of Directors unanimously recommends that stockholders vote FOR
the adoption of the amendment to Article Four and the restatement of the
Certificate of Incorporation.
PROPOSAL 5
APPROVAL OF
1999 LONG-TERM INCENTIVE PLAN
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The Board has adopted the 1999 Long-Term Incentive Plan (the "1999 Plan").
The 1999 Plan is intended to supplement the Company's 1998 Long-Term Incentive
Plan (the "1998 Plan"). The 1999 Plan is substantially identical to the 1998
Plan, except that the number of shares of Common Stock that may be subject to
outstanding awards is 1,500,000 shares, whereas the 1998 Plan provides for the
award of a maximum number of shares of Common Stock equivalent to 14% of the
total number of shares of Common Stock outstanding. The 1999 Plan will not be
effective unless and until stockholder approval is obtained. The 1998 Plan will
remain in effect regardless of whether the 1999 Plan is adopted. Any
outstanding awards made under the 1998 Plan or its predecessor plan, the
Company's 1997 Long-Term Incentive Plan (the "1997 Plan"), will remain subject
to the terms of the respective plan. As a result of the number of outstanding
shares of Common Stock remaining after the recent completion of the Company's
tender offer, no more shares of Common Stock are currently available for award
under the 1998 Plan. As of May 13, 1999, stock options for a total of 3,463,678
shares are outstanding under the 1998 Plan or the 1997 Plan. As of June _____,
1999, the Company had ________ shares of Common Stock outstanding.
The purpose of the 1999 Plan is to provide officers, key employees and
consultants of the Company and its subsidiaries with additional incentives by
increasing their ownership interests in the Company.
Description of the 1999 Plan
The 1999 Plan is set forth as Exhibit C to this Proxy Statement, and the
description of the 1999 Plan contained herein is qualified in its entirety by
reference to Exhibit B.
Awards under the 1999 Plan may be granted by the Compensation Committee of the
Board of Directors and may include: (i) options to purchase shares of Common
Stock, including incentive stock options ("ISOs"), non-qualified stock options
or both, which options may contain automatic reload features; (ii) stock
appreciation rights ("SARs"), whether in conjunction with the grant of stock
options or independent of such grant, or stock appreciation rights that are only
exercisable in the event of a change in control of the Company or upon other
events; (iii) restricted stock, consisting of shares that are subject to
forfeiture based on the failure to satisfy employment-related restrictions; (iv)
deferred stock, representing the right to receive shares of stock in the future;
(v) bonus stock and awards in lieu of cash compensation; (vi) dividend
equivalents, consisting of a right to receive cash, other awards, or other
property equal in value to dividends paid with respect to a specified number of
shares of Common Stock, or other periodic payments; or (vii) other awards not
otherwise provided for, the value of which are based in whole or in part upon
the value of the Common Stock. All outstanding awards under the 1999 Plan will
generally become fully exercisable or vested in connection with a "change of
control" of the Company. Awards granted under the 1999 Plan are generally not
assignable or transferable except by the laws of descent and distribution.
The flexible terms of the 1999 Plan are intended to, among other things,
permit the Compensation Committee to impose performance conditions with respect
to any award, thereby requiring forfeiture of all or part of any award if
performance objectives are not met, or linking the time of exercisability or
settlement of an award to the achievement of performance conditions. For awards
intended to qualify as "performance-based compensation" within the meaning of
Section 162(m) of the Internal Revenue Code, such performance objectives will be
based solely on (i) annual return on capital, (ii) annual earnings or earnings
per share, (iii) annual cash flow provided by operations, (iv) changes in annual
revenues, and/or (v) strategic business criteria, consisting of one or more
objectives based on meeting specified revenue, market penetration, geographic
business expansion goals, cost targets, and goals relating to acquisitions or
divestitures.
The Compensation Committee of the Board of Directors, which will administer
the 1999 Plan, will have the authority, among other things, to: (i) select the
officers and other key employees and consultants entitled to receive awards
under the 1999 Plan; (ii) determine the form of awards, or combinations thereof,
and whether such awards are to operate on a tandem basis or in conjunction with
other awards; (iii) determine the number of shares of Common Stock or units or
rights covered by an award; and (iv) determine the terms and conditions of any
awards granted under the 1999 Plan, including any restrictions or limitations on
transfer, any vesting schedules or the acceleration thereof and any forfeiture
provision or waiver thereof. The exercise price at which shares of Common Stock
may be purchased pursuant to the grant of stock options under the 1999 Plan is
to be determined by the Compensation Committee at the time of grant in its
discretion. The Compensation Committee will have the
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<PAGE>
discretion to set an exercise price that is below the fair market value of the
shares of Common Stock covered by such grant at the time of grant.
The maximum number of shares of Common Stock that may be issued pursuant to
awards granted under the 1999 Plan may not exceed 1,500,000. In addition, no
individual may receive awards in any one calendar year relating to more than
250,000 shares of Common Stock.
The 1999 Plan may be amended, altered, suspended, discontinued, or terminated
by the Board of Directors without stockholder approval unless such approval is
required by law or regulation or under the rules of any stock exchange or
automated quotation system on which the Common Stock is then listed or quoted.
Thus, stockholder approval will not necessarily be required for amendments which
might increase the cost of the plan or broaden eligibility. Stockholder
approval will not be deemed to be required under laws or regulations that
condition favorable tax treatment on such approval, although the Board may, in
its discretion, seek stockholder approval in any circumstances in which it deems
such approval advisable.
Federal Tax Consequences
The following is a brief description of the federal income tax consequences
generally arising with respect to awards that may be granted under the 1999
Plan. This discussion is intended for the information of stockholders
considering how to vote at the Annual Meeting and not as tax guidance to
individuals who participate in the 1999 Plan.
The grant of an option or SAR (including a stock-based award in the nature of
a purchase right) will create no tax consequences for the grantee or the
Company. A grantee will not have taxable income upon exercising an ISO (except
that the alternative minimum tax may apply) and the Company will receive no
deduction at that time. Upon exercising an option other than an ISO (including a
stock-based award in the nature of a purchase right), the participant must
generally recognize ordinary income equal to the difference between the exercise
price and fair market value of the freely transferable and nonforfeitable stock
received. In each case, the Company will generally be entitled to a deduction
equal to the amount recognized as ordinary income by the participant.
A participant's disposition of shares acquired upon the exercise of an option,
SAR or other stock-based award in the nature of a purchase right generally will
result in short-term capital gain or loss measured by the difference between the
sale price and the participant's tax basis in such shares (or the exercise price
of the option in the case of shares acquired by exercise of an ISO and held for
the applicable ISO holding periods). Generally, there will be no tax
consequences to the Company in connection with a disposition of shares acquired
upon exercise of an option or other award, except that the Company will
generally be entitled to a deduction (and the participant will recognize
ordinary taxable income) if shares acquired upon exercise of an ISO are disposed
of before the applicable ISO holding periods have been satisfied.
With respect to awards granted under the 1999 Plan that may be settled either
in cash or in stock or other property that is either not restricted as to
transferability or not subject to a substantial risk of forfeiture, the
participant must generally recognize ordinary income equal to the cash or the
fair market value of stock or other property received. The Company will
generally be entitled to a deduction for the same amount. With respect to
awards involving stock or other property that is restricted as to
transferability and subject to a substantial risk of forfeiture, the participant
must generally recognize ordinary income equal to the fair market value of the
shares or other property received at the first time the shares or other property
become transferable or not subject to a substantial risk of forfeiture,
whichever occurs earlier. The Company will generally be entitled to a deduction
in an amount equal to the ordinary income recognized by the participant. A
participant may elect to be taxed at the time of receipt of shares or other
property rather than upon lapse of restrictions on transferability or
substantial risk of forfeiture, but if the participant subsequently forfeits
such shares or property he would not be entitled to any tax deduction, including
a capital loss, for the value of the shares or property on which he previously
paid tax. Such election must be made and filed with the Internal Revenue
Service within thirty days of the receipt of the shares or other property.
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<PAGE>
Section 162(m) of the Internal Revenue Code generally disallows a public
company's tax deduction for compensation to the chief executive officer and the
four other most highly compensated executive officers in excess of $1 million.
Compensation that qualifies as "performance-based compensation" is excluded from
the $1 million deductibility cap, and therefore remains fully deductible by the
company that pays it. Assuming the 1999 Plan is approved at the Annual Meeting,
the Company believes that options granted with an exercise price at least equal
to 100% of the fair market value of the underlying stock at the date of grant,
and other awards the settlement of which is conditioned upon achievement of
performance goals (based on performance criteria described above), will qualify
as such "performance-based compensation," although other awards under the 1999
Plan may not so qualify.
No awards have been granted pursuant to the 1999 Plan. Awards that may in the
future be received by or allocated to the chief executive officer, the four
other most highly compensated executive officers, or to such other groups of
persons, cannot be determined at this time.
Vote Required for Approval
The affirmative vote of the holders of a majority of the shares of Common
Stock present in person or represented by duly executed proxies at the Annual
Meeting and entitled to vote is required to approve the adoption of the 1999
Plan.
The Board of Directors unanimously recommends that stockholders vote "FOR" the
approval of the adoption of the Company's 1999 Long-Term Incentive Plan.
PROPOSAL 6
APPROVAL OF THE 1999 STOCK PERFORMANCE INCENTIVE PLAN
The Board has adopted the 1999 Stock Performance Incentive Plan (the
"Performance Plan") in order to motivate selected officers and key employees of
the Company and its subsidiaries to achieve significant levels of appreciation
in the Company's stock price. The Performance Plan is set forth in Exhibit C to
this Proxy Statement and the description of the Performance Plan contained
herein is qualified in its entirety by reference to Exhibit C. Under the
Performance Plan, the Compensation Committee will have the authority to award up
to a maximum of 1,500,000 shares of Common Stock based upon attainment of the
following stock price levels (which levels must be maintained for a period of at
least 20 out of 30 consecutive trading days):
<TABLE>
<CAPTION>
Stock Price Cumulative Number of Shares that may be Awarded
----------- -----------------------------------------------
<S> <C>
$40.00 300,000
$55.00 800,000
$70.00 1,500,000
</TABLE>
The Compensation Committee will have the authority to make adjustments in the
stock price targets and number of shares set forth above in the event of certain
event or transactions affecting the Company's capital structure. In addition,
in the event of a change of control of the Company (as defined in the
Performance Plan), the Compensation Committee may grant any or all of the
1,500,000 shares without regard to achievement of the stock price targets.
The Compensation Committee shall administer and make all determinations under
the Performance Plan, including (i) the officers and key employees who are to
eligible to receive awards of Common Stock under the Performance Plan, (ii) the
number of shares of Common Stock to be awarded to any officer or key employee
based on such criteria as the Compensation Committee may establish; provided,
--------
however, that no individual may receive in any one calendar year an award of
- -------
more than 250,000 shares of Common Stock, (iii) whether to condition the
delivery of shares of Common Stock on satisfaction of other requirements or
performance objectives (in addition to the achievement of the stock price levels
set forth above), and (iv) whether to defer delivery of shares of Common Stock
that otherwise have been earned under the Performance Plan. For awards intended
to qualify as "performance-based compensation" within the meaning of Section
162(m) of the Internal Revenue Code, performance objectives (in addition to the
achievement of the stock price levels set forth above) shall be based
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<PAGE>
solely on (i) annual return on capital, (ii) annual earnings or earnings per
share, (iii) annual cash flow provided by operations, (iv) changes in annual
revenues, (v) stock price and/or (vi) strategic business criteria, consisting of
one or more objectives based on meeting specified revenue, market penetration,
geographic business expansion goals, cost targets, and goals relating to
acquisitions or divestitures.
The Performance Plan may be amended, altered, suspended, discontinued, or
terminated by the Board without stockholder approval unless such approval is
required by law or regulation or under the rules of any stock exchange or
automated quotation system on which the Common Stock is then listed or quoted.
Thus, stockholder approval will not necessarily be required for amendments which
might increase the cost of the plan or broaden eligibility. Stockholder
approval will not be deemed to be required under laws or regulations that
condition favorable tax treatment on such approval, although the Board may, in
its discretion, seek stockholder approval in any circumstances in which it deems
such approval advisable.
Federal Tax Consequences
For federal income tax purposes, awards of shares will generally be taxable to
the employee when received based on the value of the shares at such time, and
the Company will generally be entitled to a corresponding tax deduction.
However, the Company's deduction may be limited by operation of Section 162(m)
of the Internal Revenue Code, which generally disallows a public company's tax
deduction for compensation to the chief executive officer and the four other
most highly compensated executive officers in excess of $1 million.
Compensation that qualifies as "performance-based compensation" is excluded from
the $1 million deductibility cap, and therefore remains fully deductible by the
company that pays it. Awards of shares of Common Stock under the Performance
Plan may not in all cases qualify as "performance-based compensation."
No awards have been granted pursuant to the Performance Plan. Awards that may
in the future be received by or allocated to the chief executive officer, the
four other most highly compensated executive officers, or to such other groups
of persons, cannot be determined at this time.
Vote Required For Approval
The affirmative vote of the holders of a majority of the shares of Common
Stock present in person or represented by duly executed proxies at the Annual
Meeting and entitled to vote is required to approve the adoption of the
Performance Plan.
The Board of Directors unanimously recommends that stockholders vote FOR for
the approval of the adoption of the Company's 1999 Stock Performance Incentive
Plan.
PROPOSAL 7
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Upon recommendation of the Audit Committee of the Board, and subject to
ratification by the stockholders, the Board has appointed PricewaterhouseCoopers
LLP as the Company's independent public accountants to examine the Company's
consolidated financial statements for the fiscal year ending December 31, 1999.
PricewaterhouseCoopers LLP has served as the Company's independent accountants
since its formation in 1997. Representatives of PricewaterhouseCoopers LLP are
expected to be present at the Annual Meeting and will have the opportunity to
make a statement, if they so desire, and to respond to appropriate questions
from those attending the meeting.
Vote Required For Approval
The affirmative vote of the holders of a majority of the shares of Common
Stock present in person or represented by proxy at the Annual Meeting and
entitled to vote is required to ratify the appointment of the Company's
independent accountants.
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<PAGE>
The Board of Directors unanimously recommends that stockholders vote FOR the
ratification of the appointment of PricewaterhouseCoopers LLP as independent
accountants to examine the Company's consolidated financial statements for the
1999 fiscal year.
DEADLINES FOR 2000 ANNUAL MEETING
Any stockholder proposal submitted to the Company pursuant to Securities and
Exchange Commission Rule 14a-8 for inclusion in the Company's Proxy Statement
and proxy card relating to the Company's 2000 Annual Meeting of Stockholders
must be received by the Company no later than [___________]. If the Company
does not receive notice of any non-Rule 14a-8 matter that a stockholder wishes
to raise at the 1999 Annual Meeting of Stockholders by [____________], the
Company will retain discretionary authority to vote proxies on such matters if
they are raised at the 2000 Annual Meeting of Stockholders.
OTHER MATTERS
The Board knows of no matters that are expected to be presented for
consideration at the Annual Meeting other than those described in this Proxy
Statement. Should any other matter properly come before the Annual Meeting,
however, the persons named in the proxy card accompanying this Proxy Statement
will vote all shares represented by proxies in accordance with their best
judgment on such matters.
You are urged to sign and return your proxy promptly to make certain your
shares will be voted at the Annual Meeting. For your convenience, a return
envelope is enclosed requiring no additional postage if mailed in the United
States.
By Order of the Board of Directors
F. Traynor Beck
Secretary
June 8, 1999
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EXHIBIT A
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF
BUILDING ONE SERVICES CORPORATION
BUILDING ONE SERVICES CORPORATION, a corporation organized and
existing under the General Corporation Law of the State of Delaware does hereby
certify as follows:
1. The name of the corporation is Building One Services
Corporation. The name of the corporation was initially Consolidation Capital
Corporation and the date of filing of its Certificate of Incorporation with the
Secretary of State was September 15, 1997, as amended on September 16, 1998.
2. This Amended and Restated Certificate of Incorporation
restates, integrates, and further amends the Certificate of Incorporation of
this corporation to read in its entirety as follows:
ARTICLE ONE
NAME
The name of the Corporation is Building One Services
Corporation (the "Corporation").
ARTICLE TWO
REGISTERED OFFICE
The address of the registered office of the Corporation in the
State of Delaware is 1209 Orange Street, in the City of Wilmington, County of
New Castle, 19801, and the name of the registered agent at such address is The
Corporation Trust Company.
ARTICLE THREE
PURPOSES
The nature of the business or purposes of the Corporation is
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware, and by such
statement all lawful acts and activities shall be within the purposes of the
Corporation, except for express limitations, if any. The Corporation shall
possess and exercise all the powers and privileges granted by the General
Corporation Law of the State of Delaware, by any other law or by this
Certificate, together with any powers incidental thereto as far as such powers
and privileges are necessary or convenient to the conduct, promotion, or
attainment of the purposes of the Corporation.
ARTICLE FOUR
CAPITAL STOCK AND DEBENTURES
A. AUTHORIZED SHARES. The total number of shares of capital stock
which the Corporation shall have authority to issue is 261,000,000
shares, consisting of:
(a) 250,000,000 shares of Common Stock, par value $0.001
per share (the "Common Shares"); and
(b) 11,000,000 shares of Preferred Stock, par value
[$0.001] per share (the "Preferred Shares").
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<PAGE>
4.2 SUBORDINATED DEBENTURES. The Corporation has issued 7 1/2% Convertible
Subordinated Pay in Kind Debentures Due 2012 (the "Debentures").
4.3 DESIGNATIONS, PREFERENCES, ETC. OF THE COMMON STOCK, THE DEBENTURES AND
THE PREFERRED SHARES. The designations, preferences, powers, qualifications and
special or relative rights and privileges of the Common Stock, the Debentures,
and the Preferred Shares are as follows:
(a) DIVIDENDS. When, as, and if dividends are declared by the
Corporation's Board of Directors, whether payable in cash, property or
securities of the Corporation, the holders of shares of Common Stock shall be
entitled to share equally in and to receive such dividends, in accordance with
the number of Common Shares held by each such holder.
(i) Dividends payable under this Paragraph 4.3(a) shall be
paid to the holders of record of shares of the outstanding Common Stock
as their names shall appear on the stock register of the Corporation on
the record date fixed by the Board of Directors in advance of
declaration and payment of each dividend.
(ii) Notwithstanding anything contained herein to the
contrary, no dividends on shares of Common Stock shall be declared by
the Corporation's Board of Directors or paid or set apart for payment
by the Corporation at any time that such declaration, payment, or
setting apart is prohibited by applicable law.
(b) LIQUIDATION RIGHTS. Upon any voluntary or involuntary
liquidation, dissolution, or winding-up of the affairs of the Corporation, the
holders of shares of Common Stock shall be entitled to share ratably, in
accordance with the number of shares of Common Stock held by each such holder,
in all remaining assets of the Corporation available for distribution among the
holders of shares of Common Stock, whether such assets are capital, surplus or
earnings. For the purposes of this Paragraph 4.3(b), neither the consolidation
or merger of the Corporation with or into any other corporation or corporations
in which the stockholders of the Corporation receive capital stock and/or other
securities (including debt securities) of the acquiring or merged corporation
(or of the direct or indirect parent corporation of the acquiring or merged
corporation), nor the sale, lease, or transfer by the Corporation of all or any
part of its assets, nor the reduction of the capital stock of the Corporation,
shall be deemed to be a voluntary or involuntary liquidation, dissolution, or
winding up of the Corporation as those terms are used in this Paragraph 4.3(b).
(c) VOTING RIGHTS. All rights to vote and all voting power shall
be vested exclusively in the holders of shares of Common Stock and the holders
of the Debentures. to vote and all voting power shall be vested in the holders
of shares of Common Stock In accordance with Section 221 of the General
Corporation Law of the State of Delaware, each Debenture shall entitle the
holder thereof to notice of and to vote, in person or by proxy, at any special
or annual meeting of stockholders, on all matters submitted to holders of shares
of Common Stock and any other series or class of voting stock voting together as
a single class with all other shares entitled to vote thereon. With respect to
any such vote, (i) each Debenture shall entitle the holder thereof to cast that
number of whole votes (and fractions thereof) per $1,000 outstanding principal
amount as is equal to the number of votes that such holder would be entitled to
cast had such holder converted its Debentures into shares of Common Stock as of
the record date for determining the stockholders of the Corporation eligible to
vote on any such matters and (ii) each holder of shares of Common Stock shall be
entitled to one vote for each share held by such holder.
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<PAGE>
(d) NO PREEMPTIVE OR SUBSCRIPTION RIGHTS. Except as agreed to
and set forth in any agreement between the Corporation and a holder of shares of
Common Stock, no holder of shares of Common Stock shall be entitled to
preemptive or subscription rights.
In addition, the Debentures shall have such powers, preferences,
rights, terms and privileges as are set forth in the Indenture dated as of April
30, 1999 between the Corporation and United States Trust Company of New York, as
trustee, as such Indenture may be amended, supplemented or restated from time to
time.
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<PAGE>
(e) AUTHORITY TO CREATE SERIES OF PREFERRED SHARES. The Board of
Directors of the Corporation is hereby expressly granted authority, to the full
extent now or hereafter permitted herein and by the laws of the State of
Delaware, at any time or from time to time, by resolution or resolutions, to
create one or more series of the Preferred Shares, to fix the authorized number
of shares of any series (which number of shares may vary as between series and
be changed from time to time by like action), and to fix the terms of such
series, including but not limited to, the following:
(i) the designation of such series, which may be by
distinguishing number, letter, or title;
(ii) the rate or rates at which shares of such series shall
be entitled to receive dividends, the periods in respect of which
dividends are payable, the conditions upon, and times of payment
of, such dividends, the relationship and preference, if any, of
such dividends to dividends payable on any other class or classes
or any other series of stock, whether such dividends shall be
cumulative and, if cumulative, the date or dates from which such
dividends shall accumulate, and the other terms and conditions
applicable to dividends upon shares of such series;
(iii) the rights of the holders of the shares of such series
in case the Corporation be liquidated, dissolved, or wound up
(which may vary depending upon the time, manner, or voluntary or
involuntary nature or other circumstances of such liquidation,
dissolution, or winding up) and the relationship and preference,
if any, of such rights to rights of holders of shares of stock of
any other class or classes or any other series of stock;
(ix) the right, if any, to redeem shares of such series at
the option of the Corporation, including any limitation of such
right, and the amount or amounts to be payable in respect of the
shares of such series in case of such redemption, and the manner,
effect, and other terms and conditions of any such redemption
thereof;
(x) the obligation, if any, of the Corporation to
purchase, redeem, or retire shares of such series and/or to
maintain a fund for such purpose, and the amount or amounts to be
payable from time to time for such purpose or into such fund, or
the number of shares to be purchased, redeemed or retired, the
per share purchase price or prices, and the other terms and
conditions of any such obligation or obligations;
(xi) the voting rights, if any, full, special, or limited,
to be given the shares of such series, including without limiting
the generality of the foregoing, the right, if any, as a series
or in conjunction with other series or classes, to elect one or
more members of the Board of Directors either generally or at
certain times or under certain circumstances, and restrictions,
if any, on particular corporate acts without a specified vote or
consent of holders of such shares (such as, among others,
restrictions on modifying the terms of such series or of the
Preferred Shares, restricting the permissible terms of other
series or the permissible variations between series of the
Preferred Shares, authorizing or issuing additional shares of the
Preferred Shares, creating debt, or creating any class of stock
ranking prior to or on a parity with the Preferred Shares or any
series thereof as to dividends, or assets remaining for
distribution to the stockholders in the event of the liquidation,
dissolution, or winding up of the Corporation);
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(xii) the right, if any, to exchange or convert the shares
of such series into shares of any other series of the Preferred Shares
or into shares of any other class of stock of the Corporation, and the
rate or basis, time, manner, terms, and conditions of exchange or
conversion or the method by which the same shall be determined; and
(xiii) the other special rights, if any, and the
qualifications, limitations, or restrictions thereof, of the shares of
such series.
The Board of Directors shall fix the terms of each such series by
resolution or resolutions adopted at any time prior to the issuance of the
shares thereof, and the terms of each such series may, subject only to
restrictions, if any, imposed by this Amended and Restated Certificate of
Incorporation or by applicable law, vary from the terms of other series to the
extent determined by the Board of Directors from time to time and provided in
the resolution or resolutions fixing the terms of the respective series of the
Preferred Shares.
Shares of any series of the Preferred Shares, whether provided for
herein or by resolution or resolutions of the Board of Directors, which have
been redeemed (whether through the operation of a sinking fund or otherwise) or
which, if convertible or exchangeable, have been converted into or exchanged for
shares of stock of any other class or classes, or which have been purchased or
otherwise acquired by the Corporation, shall have the status of authorized and
unissued shares of the Preferred Shares of the same series and may be reissued
as a part of the series of which they were originally a part or may be
reclassified and reissued as part of a new series of the Preferred Shares to be
created by resolution or resolutions of the Board of Directors or as part of any
other series of the Preferred Shares, all subject to the conditions or
restrictions on issuance set forth herein or in the resolution or resolutions
adopted by the Board of Directors providing for the issue of any series of the
Preferred Shares.
ARTICLE FIVE
MANAGEMENT OF THE CORPORATION
The following provisions relate to the management of the business and
the conduct of the affairs of the Corporation and are inserted for the purpose
of creating, defining, limiting, and regulating the powers of the Corporation
and its directors and stockholders:
(a) The business and affairs of the Corporation shall be
managed by and under the direction of the Board of Directors;
(b) The number of directors shall be as provided in the
Corporation's Bylaws;
(c) The holders of the Debentures, voting as a separate
class, shall be entitled to elect three (3) directors to the Board of Directors
of the Corporation (or if the Board of Directors of the Company shall consist of
more than 10 persons, no less than 30% of the total number of directors on the
Board);
(d) In any election of directors by the holders of the
Debentures pursuant to paragraph (c) of ARTICLE FIVE, the Corporation shall take
all actions necessary to effectuate the terms and provisions of such paragraph.
The special and exclusive voting rights of the holders of the Debentures, voting
separately as one class, contained in paragraph (c) of ARTICLE FIVE may be
exercised either at a special meeting of the holders of the Debentures called as
provided below, or at any annual or special meeting of the stockholders of the
Corporation, or by written consent of such holders in lieu of a meeting. The
directors to be elected pursuant to paragraph (c) of ARTICLE FIVE shall serve
for terms extending from the date of their election and qualification until
their successors shall have been elected and qualified;
(e) If at any time any directorship to be filled by the
holders of the Debentures pursuant to paragraph (c) of ARTICLE FIVE has been
vacant for a period of 10 days, the Secretary of the Corporation shall, upon the
written request of any holder of Debentures, call a special meeting of the
holders of the Debentures for the purpose of electing a director or directors to
fill such vacancy or vacancies. Such meeting shall be held at the earliest
practicable date, and at such place, as is specified in or determined in
accordance with the By-laws of the Corporation. If such meeting shall not be
called by the Secretary of the Corporation within 10 days after personal
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service of such written request on him or her, then any holder of Debentures may
designate in writing one of their members to call such meeting at the expense of
the Corporation, and such meeting may be called by such person so designated
upon the notice required for annual meetings of shareholders and shall be held
at such place as specified in such notice;
(f) At any meeting held for the purpose of electing
directors as provided in paragraph (c) of ARTICLE FIVE, the presence, in person
or by proxy, of the holders of record of Debentures representing at least a
majority of the voting power of the Debentures then outstanding (such voting
power determined in accordance with Section 4.3(c) of ARTICLE FOUR) shall be
required to constitute a quorum of the Debentures for such election. A vacancy
in the directorships to be elected by the holders of the Debentures pursuant to
paragraph (c) of ARTICLE FIVE may be filled only by vote or written consent in
lieu of a meeting of the holders of a majority of the voting power of the
Debentures;
(g) If a Trigger Event (as such term is defined in the
Investors' Rights Agreement, dated as of March 22, 1999, as amended as of April
6, 1999, by and among the Corporation and certain of its investors as such
agreement may be amended, supplemented or restated from time to time) shall
occur, the holders of the Debentures, voting as a separate class, shall be
entitled to elect a majority of the Board of Directors of the Corporation and
the Corporation shall take all actions necessary or desirable to effectuate the
terms and provisions of this paragraph (g) of ARTICLE FIVE, including, without
limitation, increasing the size of the Board of Directors of the Corporation;
(h) The Board of Directors shall have the power to make,
alter, amend, or repeal the Bylaws of the Corporation, except to the extent that
the Bylaws otherwise provide;
(i) All corporate powers and authority of the Corporation
(except as at the time otherwise provided by statute, by this Amended and
Restated Certificate of Incorporation, or by the Bylaws) shall be vested in and
exercised by the Board of Directors; and
(j) The stockholders and directors shall have the power, if
the Bylaws so provide, to hold their respective meetings within or without the
State of Delaware and may (except as otherwise required by statute) keep the
Corporation's books outside the State of Delaware, at such places as from time
to time may be designated by the Bylaws or the Board of Directors.
ARTICLE SIX
AMENDMENTS
The Corporation reserves the right to amend or repeal any provisions
contained in this Amended and Restated Certificate of Incorporation from the
time and at any time in the manner now or hereafter prescribed in this Amended
and Restated Certificate of Incorporation and by the laws of the State of
Delaware, and all rights herein conferred upon stockholders are granted subject
to such reservation; provided, however, that without the prior consent of
holders of a majority of the outstanding principal amount of the Debentures, the
Corporation may not amend or repeal any provisions of this Amended and Restated
Certificate of Incorporation, whether by merger, consolidation, combination,
reclassification or otherwise, in any manner adverse to the holders of the
Debentures.
ARTICLE SEVEN
INDEMNIFICATION
The Corporation shall, to the extent required, and may, to the extent
permitted, by Section 145 of the General Corporation Law of Delaware, as the
same may be amended from time to time, indemnify and reimburse all persons whom
it may indemnify and reimburse pursuant thereto.
ARTICLE EIGHT
LIMITATION OF LIABILITY OF DIRECTORS
A director of this Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director; provided, that nothing contained in this ARTICLE
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EIGHT shall eliminate or limit the liability of a director (a) for any breach of
the director's duty of loyalty to the corporation or its stockholders, (b) for
acts or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law, (c) under Section 174 of the General Corporation Law
of the State of Delaware, or (d) for any transaction from which the director
derived an improper personal benefit. If the Delaware General Corporation Law is
hereafter amended to authorize the further elimination or limitation of the
liability of a director, then the liability of a director of the Corporation
shall be eliminated or limited to the fullest extent permitted by the Delaware
General Corporation Law, as so amended. The provisions of this ARTICLE EIGHT
shall not be deemed to limit or preclude indemnification of a director by the
Corporation for any liability of a director that has not been eliminated by the
provisions of this ARTICLE EIGHT.
ARTICLE NINE
WRITTEN CONSENT OF STOCKHOLDERS
Except as otherwise provided in this Amended and Restated Certificate
of Incorporation, no action required or permitted to be taken at any annual or
special meeting of both the stockholders of the Corporation and the holders of
the Debentures may be taken without a meeting except by the unanimous written
consent of both the stockholders and the holders of the Debentures entitled to
vote thereon.
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BUILDING ONE SERVICES CORPORATION
1999 LONG-TERM INCENTIVE PLAN
Exhibit B
1. Purpose. The purpose of this 1999 Long-Term Incentive Plan (the "Plan")
of Building One Services Corporation, a Delaware corporation (the "Company"), is
to advance the interests of the Company and its stockholders by providing a
means to attract, retain and reward directors, officers and other key employees
and consultants of and service providers to the Company and its subsidiaries and
to enable such persons to acquire or increase a proprietary interest in the
Company, thereby promoting a closer identity of interests between such persons
and the Company's stockholders.
2. Definitions. The definitions of awards under the Plan, including
Options, SARs (including Limited SARs), Restricted Stock, Deferred Stock, Stock
granted as a bonus or in lieu of other awards, Dividend Equivalents and Other
Stock-Based Awards are set forth in Section 6 of the Plan. Such awards, together
with any other right or interest granted to a Participant under the Plan, are
termed "Awards." For purposes of the Plan, the following additional terms shall
be defined as set forth below:
(a) "Award Agreement" means any written agreement, contract, notice or other
instrument or document evidencing an Award.
(b) "Beneficiary" shall mean the person, persons, trust or trusts which have
been designated by a Participant in his or her most recent written beneficiary
designation filed with the Committee to receive the benefits specified under the
Plan upon such Participant's death or, if there is no designated Beneficiary or
surviving designated Beneficiary, then the person, persons, trust or trusts
entitled by will or the laws of descent and distribution to receive such
benefits.
(c) "Board" means the Board of Directors of the Company.
(d) A "Change in Control" shall be deemed to have occurred upon:
(i) the date of the acquisition by any "person" (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act), excluding
the Company or any of its subsidiaries or affiliates or any employee
benefit plan sponsored by any of the foregoing, of beneficial ownership
(within the meaning of Rule 13d-3 under the Exchange Act) of 50% or more
of either (x) the then outstanding shares of common stock of the Company
or (y) the then outstanding voting securities entitled to vote generally
in the election of directors; or
(ii) the date the individuals who constitute the Board as of the
effective date of the Plan (the "Incumbent Board") cease for any reason
to constitute at least a majority of the members of the Board, provided
that any individual becoming a director subsequent to the effective date
of this Agreement whose election, or nomination for election by the
Company's stockholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board (other than any
individual whose nomination for election to Board membership was not
endorsed by the Company's management prior to, or at the time of, such
individual's initial nomination for election) shall be, for purposes of
this Agreement, considered as though such person were a member of the
Incumbent Board; or
(iii) the consummation of a merger, consolidation,
recapitalization, reorganization, sale or disposition of all or a
substantial portion of the Company's assets, a reverse stock split of
outstanding voting securities, the issuance of shares of stock of the
Company in connection with the acquisition of the stock or assets of
another entity, provided, however, that a Change in Control shall not
occur under this clause (iii) if consummation of the transaction would
result in at least 70% of the total voting power represented by the
voting securities of the Company (or, if not the Company, the entity that
succeeds to all or substantially all of the Company's business)
outstanding immediately after such transaction being beneficially owned
(within the meaning of Rule 13d-3 promulgated pursuant to the Exchange
Act) by at
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least 75% of the holders of outstanding voting securities of the
Company immediately prior to the transaction, with the voting power of
each such continuing holder relative to other such continuing holders
not substantially altered in the transaction.
(e) "Code" means the Internal Revenue Code of 1986, as amended from time
to time. References to any provision of the Code shall be deemed to include
regulations thereunder and successor provisions and regulations thereto.
(f) "Committee" means the committee appointed by the Board to administer
the Plan, or if no committee is appointed, the Board.
(g) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time. References to any provision of the Exchange Act shall be
deemed to include rules thereunder and successor provisions and rules thereto.
(h) "Fair Market Value" means, with respect to Stock, Awards, or other
property, the fair market value of such Stock, Awards, or other property
determined by such methods or procedures as shall be established from time to
time by the Committee, provided, however, that if the Stock is listed on a
national securities exchange or quoted in an interdealer quotation system, the
Fair Market Value of such Stock on a given date shall be based upon the last
sales price or, if unavailable, the average of the closing bid and asked prices
per share of the Stock on such date (or, if there was no trading or quotation in
the Stock on such date, on the next preceding date on which there was trading or
quotation) as provided by one of such organizations.
(i) "ISO" means any Option intended to be and designated as an incentive
stock option within the meaning of Section 422 of the Code.
(j) "Participant" means a person who, at a time when eligible under
Section 5 hereof, has been granted an Award under the Plan.
(k) "Rule 16b-3" means Rule 16b-3, as from time to time in effect and
applicable to the Plan and Participants, promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act.
(l) "Stock" means the Common Stock, par value $.001, of the Company and
such other securities as may be substituted for Stock or such other securities
pursuant to Section 4.
3. Administration.
(a) Authority of the Committee. The Plan shall be administered by the
Committee. The Committee shall have full and final authority to take the
following actions, in each case subject to and consistent with the provisions of
the Plan:
(i) to select persons to whom Awards may be granted;
(ii) to determine the type or types of Awards to be granted to
each such person;
(iii) to determine the number of Awards to be granted, the number
of shares of Stock to which an Award will relate, the terms and
conditions of any Award granted under the Plan (including, but not
limited to, any exercise price, grant price or purchase price, any
restriction or condition, any schedule for lapse of restrictions or
conditions relating to transferability or forfeiture, exercisability
or settlement of an Award, and waivers or accelerations thereof,
performance conditions relating to an Award (including performance
conditions relating to Awards not intended to be governed by Section
7(f) and waivers and modifications thereof), based in each case on
such considerations as the Committee shall determine), and all other
matters to be determined in connection with an Award;
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(iv) to determine whether, to what extent and under what
circumstances an Award may be settled, or the exercise price of an Award
may be paid, in cash, Stock, other Awards, or other property, or an Award
may be canceled, forfeited, or surrendered;
(v) to determine whether, to what extent and under what
circumstances cash, Stock, other Awards or other property payable with
respect to an Award will be deferred either automatically, at the election
of the Committee or at the election of the Participant;
(vi) to prescribe the form of each Award Agreement, which need not
be identical for each Participant;
(vii) to adopt, amend, suspend, waive and rescind such rules and
regulations and appoint such agents as the Committee may deem necessary or
advisable to administer the Plan;
(viii) to correct any defect or supply any omission or reconcile any
inconsistency in the Plan and to construe and interpret the Plan and any
Award, rules and regulations, Award Agreement or other instrument
hereunder; and
(ix) to make all other decisions and determinations as may be
required under the terms of the Plan or as the Committee may deem necessary
or advisable for the administration of the Plan.
Other provisions of the Plan notwithstanding, the Board may perform any function
of the Committee under the Plan, including without limitation for the purpose of
ensuring that transactions under the Plan by Participants who are then subject
to Section 16 of the Exchange Act in respect of the Company are exempt under
Rule 16b-3. In any case in which the Board is performing a function of the
Committee under the Plan, each reference to the Committee herein shall be deemed
to refer to the Board.
(b) Manner of Exercise of Committee Authority. Any action of the
Committee with respect to the Plan shall be final, conclusive and binding on all
persons, including the Company, subsidiaries of the Company, Participants, any
person claiming any rights under the Plan from or through any Participant and
stockholders, except to the extent the Committee may subsequently modify, or
take further action not consistent with, its prior action. If not specified in
the Plan, the time at which the Committee must or may make any determination
shall be determined by the Committee, and any such determination may thereafter
by modified by the Committee (subject to Section 8(e)). The express grant of any
specific power to the Committee, and the taking of any action by the Committee,
shall not be construed as limiting any power or authority of the Committee.
Except as provided under Section 7(f), the Committee may delegate to officers or
managers of the Company or any subsidiary of the Company the authority, subject
to such terms as the Committee shall determine, to perform such functions as the
Committee may determine, to the extent permitted under applicable law.
(c) Limitation of Liability. Each member of the Committee shall be
entitled to, in good faith, rely or act upon any report or other information
furnished to him by any officer or other employee of the Company or any
subsidiary, the Company's independent certified public accountants or any
executive compensation consultant, legal counsel or other professional retained
by the Company to assist in the administration of the Plan. No member of the
Committee, nor any officer or employee of the Company acting on behalf of the
Committee, shall be personally liable for any action, determination or
interpretation taken or made in good faith with respect to the Plan, and all
members of the Committee and any officer or employee of the Company acting on
its behalf shall, to the extent permitted by law, be fully indemnified and
protected by the Company with respect to any such action, determination or
interpretation.
4. Stock Subject to Plan.
(a) Amount of Stock Reserved. The total number of shares of Stock that
may be delivered upon exercise or settlement of Awards granted under the Plan
may not exceed 1,500,000, provided, however, that shares subject to Awards shall
not be deemed delivered if such Awards are forfeited, expire or otherwise
terminate without delivery of shares to the Participant. If an Award valued by
reference to Stock may only be settled in cash, the number of shares to which
such Award relates shall be deemed to be Stock subject to such Award for
purposes of this Section
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4(a). Any shares of Stock delivered pursuant to an Award may consist, in whole
or in part, of authorized and unissued shares, treasury shares or shares
acquired in the market for a Participant's Account.
(b) Annual Per-Participant Limitations. During any calendar year, no
Participant may be granted Awards that may be settled by delivery of more than
250,000 shares of Stock, subject to adjustment as provided in Section 4(c). In
addition, with respect to Awards that may be settled in cash (in whole or in
part), no Participant may be paid during any calendar year cash amounts relating
to such Awards that exceed the greater of the Fair Market Value of the number of
shares of Stock set forth in the preceding sentence at the date of grant or the
date of settlement of the Award. This provision sets forth two separate
limitations, so that Awards that may be settled solely by delivery of Stock will
not operate to reduce the amount of cash-only Awards, and vice versa;
nevertheless, Awards that may be settled in Stock or cash must not exceed either
limitation.
(c) Adjustments. In the event that the Committee shall determine that
any recapitalization, forward or reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase or exchange of Stock or other
securities, Stock dividend or other special, large and non-recurring dividend or
distribution (whether in the form of cash, securities or other property),
liquidation, dissolution, or other similar corporate transaction or event,
affects the Stock such that an adjustment is appropriate in order to prevent
dilution or enlargement of the rights of Participants under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust any or all of
(i) the number and kind of shares of Stock reserved and available for Awards
under Section 4(a), including shares reserved for ISOs, (ii) the number and kind
of shares of Stock specified in the annual per-participant limitations under
Section 4(b), (iii) the number and kind of shares of outstanding Restricted
Stock or other outstanding Award in connection with which shares have been
issued, (iv) the number and kind of shares that may be issued in respect of
other outstanding Awards and (v) the exercise price, grant price or purchase
price relating to any Award. (or, if deemed appropriate, the Committee may make
provision for a cash payment with respect to any outstanding Award). In
addition, the Committee is authorized to make adjustments in the terms and
conditions of, and the criteria included in, Awards (including, without
limitation, cancellation of unexercised or outstanding Awards, or substitution
of Awards using stock of a successor or other entity) in recognition of unusual
or nonrecurring events (including, without limitation, events described in the
preceding sentence and events constituting a Change in Control) affecting the
Company or any subsidiary or the financial statements of the Company or any
subsidiary, or in response to changes in applicable laws, regulations, or
accounting principles.
5. Eligibility. Executive officers and other employees of the Company
and its subsidiaries, including any officer or member of the Board who is also
such an employee, and persons who provide consulting or other services to the
Company deemed by the Committee to be of substantial value to the Company, are
eligible to be granted Awards under the Plan. In addition, persons who have been
offered employment by the Company or its subsidiaries, and persons employed by
an entity that the Committee reasonably expects to become a subsidiary of the
Company, are eligible to be granted an Award under the Plan.
6. Specific Terms of Awards.
(a) General. Awards may be granted on the terms and conditions set forth in
this Section 6. In addition, the Committee may impose on any Award or the
exercise thereof such additional terms and conditions, not inconsistent with the
provisions of the Plan, as the Committee shall determine, including terms
requiring forfeiture of Awards in the event of termination of employment or
service of the Participant. Except as provided in Section 6(f), 6(h), or 7(a),
or to the extent required to comply with requirements of applicable law, only
services may be required as consideration for the grant (but not the exercise)
of any Award.
(b) Options. The Committee is authorized to grant Options (including
"reload" options automatically granted to offset specified exercises of Options)
on the following terms and conditions ("Options"):
(i) Exercise Price. The exercise price per share of Stock
purchasable under an Option shall be determined by the Committee.
(ii) Time and Method of Exercise. The Committee shall determine
the time or times at which an Option may be exercised in whole or in part,
the methods by which such exercise price may be paid or deemed to be paid,
the form of such payment, including, without limitation, cash, Stock, other
Awards or
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awards granted under other Company plans or other property (including notes
or other contractual obligations of Participants to make payment on a
deferred basis, such as through "cashless exercise" arrangements, to the
extent permitted by applicable law), and the methods by which Stock will be
delivered or deemed to be delivered to Participants.
(iii) ISOs. The terms of any ISO granted under the Plan shall comply
in all respects with the provisions of Section 422 of the Code, including
but not limited to the requirement that no ISO shall be granted with an
exercise price less than 100% (110% for an individual described in Section
422(b)(6) of the Code) of the Fair Market Value of a share of Stock on the
date of grant and granted no more than ten years after the effective date
of the Plan. Anything in the Plan to the contrary notwithstanding, no term
of the Plan relating to ISOs shall be interpreted, amended, or altered, nor
shall any discretion or authority granted under the Plan be exercised, so
as to disqualify either the Plan or any ISO under Section 422 of the Code,
unless requested by the affected Participant.
(iv) Termination of Employment. Unless otherwise determined by the
Committee, upon termination of a Participant's employment with the Company
and its subsidiaries, such Participant may exercise any Options during the
three-month period following such termination of employment, but only to
the extent such Option was exercisable as of such termination of
employment. Notwithstanding the foregoing, if the Committee determines that
such termination is for cause, all Options held by the Participant shall
terminate as of the termination of employment.
(c) Stock Appreciation Rights. The Committee is authorized to grant SARs on
the following terms and conditions ("SARs"):
(i) Right to Payment. An SAR shall confer on the Participant to
whom it is granted a right to receive, upon exercise thereof, the excess of
(A) the Fair Market Value of one share of Stock on the date of exercise
(or, if the Committee shall so determine in the case of any such right
other than one related to an ISO, the Fair Market Value of one share at any
time during a specified period before or after the date of exercise), over
(B) the grant price of the SAR as determined by the Committee as of the
date of grant of the SAR, which, except as provided in Section 7(a), shall
be not less than the Fair Market Value of one share of Stock on the date of
grant.
(ii) Other Terms. The Committee shall determine the time or times at
which an SAR may be exercised in whole or in part, the method of exercise,
method of settlement, form of consideration payable in settlement, method
by which Stock will be delivered or deemed to be delivered to Participants,
whether or not an SAR shall be in tandem with any other Award, and any
other terms and conditions of any SAR. Limited SARs that may only be
exercised upon the occurrence of a Change in Control may be granted on such
terms, not inconsistent with this Section 6(c), as the Committee may
determine. Limited SARs may be either freestanding or in tandem with other
Awards.
(d) Restricted Stock. The Committee is authorized to grant Restricted Stock
on the following terms and conditions ("Restricted Stock"):
(i) Grant and Restrictions. Restricted Stock shall be subject to
such restrictions on transferability and other restrictions, if any, as the
Committee may impose, which restrictions may lapse separately or in
combination at such times, under such circumstances, in such installments,
or otherwise, as the Committee may determine. Except to the extent
restricted under the terms of the Plan and any Award Agreement relating to
the Restricted Stock, a Participant granted Restricted Stock shall have all
of the rights of a stockholder including, without limitation, the right to
vote Restricted Stock or the right to receive dividends thereon.
(ii) Forfeiture. Except as otherwise determined by the Committee,
upon termination of employment or service (as determined under criteria
established by the Committee) during the applicable restriction period,
Restricted Stock that is at that time subject to restrictions shall be
forfeited and reacquired by the Company; provided, however, that the
Committee may provide, by rule or regulation or in any Award Agreement, or
may determine in any individual case, that restrictions or forfeiture
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conditions relating to Restricted Stock will be waived in whole or in part
in the event of termination resulting from specified causes.
(iii) Certificates for Stock. Restricted Stock granted under the Plan
may be evidenced in such manner as the Committee shall determine. If
certificates representing Restricted Stock are registered in the name of
the Participant, such certificates may bear an appropriate legend referring
to the terms, conditions, and restrictions applicable to such Restricted
Stock, the Company may retain physical possession of the certificate, and
the Participant shall have delivered a stock power to the Company, endorsed
in blank, relating to the Restricted Stock.
(iv) Dividends. Dividends paid on Restricted Stock shall be either
paid at the dividend payment date in cash or in shares of unrestricted
Stock having a Fair Market Value equal to the amount of such dividends, or
the payment of such dividends shall be deferred and/or the amount or value
thereof automatically reinvested in additional Restricted Stock, other
Awards, or other investment vehicles, as the Committee shall determine or
permit the Participant to elect. Stock distributed in connection with a
Stock split or Stock dividend, and other property distributed as a
dividend, shall be subject to restrictions and a risk of forfeiture to the
same extent as the Restricted Stock with respect to which such Stock or
other property has been distributed, unless otherwise determined by the
Committee.
(e) Deferred Stock. The Committee is authorized to grant Deferred Stock
subject to the following terms and conditions ("Deferred Stock"):
(i) Award and Restrictions. Delivery of Stock will occur upon
expiration of the deferral period specified for an Award of Deferred Stock
by the Committee (or, if permitted by the Committee, as elected by the
Participant). In addition, Deferred Stock shall be subject to such
restrictions as the Committee may impose, if any, which restrictions may
lapse at the expiration of the deferral period or at earlier specified
times, separately or in combination, in installments or otherwise, as the
Committee may determine.
(ii) Forfeiture. Except as otherwise determined by the Committee,
upon termination of employment or service (as determined under criteria
established by the Committee) during the applicable deferral period or
portion thereof to which forfeiture conditions apply (as provided in the
Award Agreement evidencing the Deferred Stock), all Deferred Stock that is
at that time subject to such forfeiture conditions shall be forfeited;
provided, however, that the Committee may provide, by rule or regulation or
in any Award Agreement, or may determine in any individual case, that
restrictions or forfeiture conditions relating to Deferred Stock will be
waived in whole or in part in the event of termination resulting from
specified causes.
(f) Bonus Stock and Awards in Lieu of Cash Obligations. The Committee is
authorized to grant Stock as a bonus, or to grant Stock or other Awards in lieu
of Company obligations to pay cash under other plans or compensatory
arrangements.
(g) Dividend Equivalents. The Committee is authorized to grant Dividend
Equivalents entitling the Participant to receive cash, Stock, other Awards or
other property equal in value to dividends paid with respect to a specified
number of shares of Stock ("Dividend Equivalents"). Dividend Equivalents may be
awarded on a free-standing basis or in connection with another Award. The
Committee may provide that Dividend Equivalents shall be paid or distributed
when accrued or shall be deemed to have been reinvested in additional Stock,
Awards or other investment vehicles, and subject to such restrictions on
transferability and risks of forfeiture, as the Committee may specify.
(h) Other Stock-Based Awards. The Committee is authorized, subject to
limitations under applicable law, to grant such other Awards that may be
denominated or payable in, valued in whole or in part by reference to, or
otherwise based on, or related to, Stock and factors that may influence the
value of Stock, as deemed by the Committee to be consistent with the purposes of
the Plan, including, without limitation, convertible or exchangeable debt
securities, other rights convertible or exchangeable into Stock, purchase rights
for Stock, Awards with value and payment contingent upon performance of the
Company or any other factors designated by the Committee and Awards valued by
reference to the book value of Stock or the value of securities of or the
performance of specified
36
<PAGE>
subsidiaries ("Other Stock Based Awards"). The Committee shall determine the
terms and conditions of such Awards. Stock issued pursuant to an Award in the
nature of a purchase right granted under this Section 6(h) shall be purchased
for such consideration, paid for at such times, by such methods, and in such
forms, including, without limitation, cash, Stock, other Awards, or other
property, as the Committee shall determine. Cash awards, as an element of or
supplement to any other Award under the Plan, may be granted pursuant to this
Section 6(h).
7. Certain Provisions Applicable to Awards.
(a) Stand-Alone, Additional, Tandem, and Substitute Awards. Awards
granted under the Plan may, in the discretion of the Committee, be granted
either alone or in addition to, in tandem with or in substitution for any other
Award granted under the Plan or any award granted under any other plan of the
Company, any subsidiary or any business entity to be acquired by the Company or
a subsidiary, or any other right of a Participant to receive payment from the
Company or any subsidiary. Awards granted in addition to or in tandem with other
Awards or awards may be granted either as of the same time as or a different
time from the grant of such other Awards or awards.
(b) Term of Awards. The term of each Award shall be for such period as
may be determined by the Committee; provided, however, that in no event shall
the term of any ISO or an SAR granted in tandem therewith exceed a period of ten
years from the date of its grant (or such shorter period as may be applicable
under Section 422 of the Code).
(c) Form of Payment Under Awards. Subject to the terms of the Plan and
any applicable Award Agreement, payments to be made by the Company or a
subsidiary upon the grant, exercise or settlement of an Award may be made in
such forms as the Committee shall determine, including, without limitation,
cash, Stock, other Awards or other property, and may be made in a single payment
or transfer, in installments or on a deferred basis. Such payments may include,
without limitation, provisions for the payment or crediting of reasonable
interest on installment or deferred payments or the grant or crediting of
Dividend Equivalents in respect of installment or deferred payments denominated
in Stock.
(d) Rule 16b-3 Compliance.
(i) Six-Month Holding Period. Unless a Participant could otherwise
dispose of equity securities, including derivative securities,
acquired under the Plan without incurring liability under Section
16(b) of the Exchange Act, equity securities acquired under the
Plan must be held for a period of six months following the date
of such acquisition, provided that this condition shall be
satisfied with respect to a derivative security if at least six
months elapse from the date of acquisition of the derivative
security to the date of disposition of the derivative security
(other than upon exercise or conversion) or its underlying equity
security.
(ii) Other Compliance Provisions. With respect to a Participant who is
then subject to Section 16 of the Exchange Act in respect of the
Company, the Committee shall implement transactions under the
Plan and administer the Plan in a manner that will ensure that
each transaction by such a Participant is exempt from liability
under Rule 16b-3, except that such a Participant may be permitted
to engage in a non-exempt transaction under the Plan if written
notice has been given to the Participant regarding the non-exempt
nature of such transaction. The Committee may authorize the
Company to repurchase any Award or shares of Stock resulting from
any Award in order to prevent a Participant who is subject to
Section 16 of the Exchange Act from incurring liability under
Section 16(b). Unless otherwise specified by the Participant,
equity securities, including derivative securities, acquired
under the Plan which are disposed of by a Participant shall be
deemed to be disposed of in the order acquired by the
Participant.
(e) Loan Provisions. With the consent of the Committee, and subject at
all times to, and only to the extent, if any, permitted under and in accordance
with, laws and regulations and other binding obligations or provisions
applicable to the Company, the Company may make, guarantee or arrange for a loan
or loans to a Participant with respect to the exercise of any Option or other
payment in connection with any Award, including the payment by a Participant of
any or all federal, state or local income or other taxes due in connection with
any Award. Subject to such limitations, the Committee shall have full authority
to decide whether to make a loan or loans hereunder and to
37
<PAGE>
determine the amount, terms and provisions of any such loan or loans, including
the interest rate to be charged in respect of any such loan or loans, whether
the loan or loans are to be with or without recourse against the borrower, the
terms on which the loan is to be repaid and conditions, if any, under which the
loan or loans may be forgiven.
(f) Performance-Based Awards. The Committee may, in its discretion,
designate any Award the exercisability or settlement of which is subject to the
achievement of performance conditions as a performance-based Award subject to
this Section 7(f), in order to qualify such Award as "qualified performance-
based compensation" within the meaning of Code Section 162(m) and regulations
thereunder. The performance objectives for an Award subject to this Section 7(f)
shall consist of one or more business criteria and a targeted level or levels of
performance with respect to such criteria, as specified by the Committee but
subject to this Section 7(f). Performance objectives shall be objective and
shall otherwise meet the requirements of Section 162(m)(4)(C) of the Code.
Business criteria used by the Committee in establishing performance objectives
for Awards subject to this Section 7(f) shall be selected from among the
following:
(1) Annual return on capital;
(2) Annual earnings or earnings per share;
(3) Annual cash flow provided by operations;
(4) Changes in annual revenues; and/or
(5) Strategic business criteria, consisting of one or more objectives
based on meeting specified revenue, market penetration, geographic
business expansion goals, cost targets, and goals relating to
acquisitions or divestitures.
The levels of performance required with respect to such business criteria
may be expressed in absolute or relative levels. Achievement of performance
objectives with respect to such Awards shall be measured over a period of not
less than one year nor more than five years, as the Committee may specify.
Performance objectives may differ for such Awards to different Participants. The
Committee shall specify the weighting to be given to each performance objective
for purposes of determining the final amount payable with respect to any such
Award. The Committee may, in its discretion, reduce the amount of a payout
otherwise to be made in connection with an Award subject to this Section 7(f),
but may not exercise discretion to increase such amount, and the Committee may
consider other performance criteria in exercising such discretion. All
determinations by the Committee as to the achievement of performance objectives
shall be in writing. The Committee may not delegate any responsibility with
respect to an Award subject to this Section 7(f).
(g) Acceleration upon a Change of Control. Notwithstanding anything
contained herein to the contrary, all conditions and/or restrictions relating to
the continued performance of services and/or the achievement of performance
objectives with respect to the exercisability or full enjoyment of an Award
shall lapse immediately prior to a Change in Control, provided, however, that
such lapse shall not occur if (i) it is intended that the transaction
constituting such Change in Control be accounted for as a pooling of interests
under Accounting Principles Board Option No. 16 (or any successor thereto), and
operation of this Section 7(g) would otherwise violate Paragraph 47(c) thereof,
or (ii) the Committee, in its discretion, determines that such lapse shall not
occur, provided, further, that the Committee shall not have the discretion
granted in clause (ii) if it is intended that the transaction constituting such
Change in Control be accounted for as a pooling of interests under Accounting
Principles Board Option No. 16 (or any successor thereto), and such discretion
would otherwise violate Paragraph 47(c) thereof.
8. General Provisions.
(a) Compliance With Laws and Obligations. The Company shall not be
obligated to issue or deliver Stock in connection with any Award or take any
other action under the Plan in a transaction subject to the requirements of any
applicable securities law, any requirement under any listing agreement between
the Company and any national securities exchange or automated quotation system
or any other law, regulation or contractual obligation of the Company until the
Company is satisfied that such laws, regulations, and other obligations of the
Company have
38
<PAGE>
been complied with in full. Certificates representing shares of Stock issued
under the Plan will be subject to such stop-transfer orders and other
restrictions as may be applicable under such laws, regulations and other
obligations of the Company, including any requirement that a legend or legends
be placed thereon.
(b) Limitations on Transferability. Awards and other rights under the
Plan will not be transferable by a Participant except by will or the laws of
descent and distribution or to a Beneficiary in the event of the Participant's
death, shall not be pledged, mortgaged, hypothecated or otherwise encumbered, or
otherwise subject to the claims of creditors, and, in the case of ISOs and SARs
in tandem therewith, shall be exercisable during the lifetime of a Participant
only by such Participant or his guardian or legal representative; provided,
however, that such Awards and other rights (other than ISOs and SARs in tandem
therewith) may be transferred to one or more transferees during the lifetime of
the Participant to the extent and on such terms as then may be permitted by the
Committee.
(c) No Right to Continued Employment or Service. Neither the Plan nor
any action taken hereunder shall be construed as giving any employee or other
person the right to be retained in the employ or service of the Company or any
of its subsidiaries, nor shall it interfere in any way with the right of the
Company or any of its subsidiaries to terminate any employee's employment or
other person's service at any time.
(d) Taxes. The Company and any subsidiary is authorized to withhold from
any Award granted or to be settled, any delivery of Stock in connection with an
Award, any other payment relating to an Award or any payroll or other payment to
a Participant amounts of withholding and other taxes due or potentially payable
in connection with any transaction involving an Award, and to take such other
action as the Committee may deem advisable to enable the Company and
Participants to satisfy obligations for the payment of withholding taxes and
other tax obligations relating to any Award. This authority shall include
authority to withhold or receive Stock or other property and to make cash
payments in respect thereof in satisfaction of a Participant's tax obligations.
(e) Changes to the Plan and Awards. The Board may amend, alter, suspend,
discontinue or terminate the Plan or the Committee's authority to grant Awards
under the Plan without the consent of stockholders or Participants, except that
any such action shall be subject to the approval of the Company's stockholders
at or before the next annual meeting of stockholders for which the record date
is after such Board action if such stockholder approval is required by any
federal or state law or regulation or the rules of any stock exchange or
automated quotation system on which the Stock may then be listed or quoted, and
the Board may otherwise, in its discretion, determine to submit other such
changes to the Plan to stockholders for approval; provided, however, that,
without the consent of an affected Participant, no such action may materially
impair the rights of such Participant under any Award theretofore granted to him
(as such rights are set forth in the Plan and the Award Agreement). The
Committee may waive any conditions or rights under, or amend, alter, suspend,
discontinue, or terminate, any Award theretofore granted and any Award Agreement
relating thereto; provided, however, that, without the consent of an affected
Participant, no such action may materially impair the rights of such Participant
under such Award (as such rights are set forth in the Plan and the Award
Agreement) except to the extent necessary for a business combination in which
the Company is a party to be accounted for under the pooling-of-interests method
of accounting.
(f) No Rights to Awards; No Stockholder Rights. No Participant or
employee shall have any claim to be granted any Award under the Plan, and there
is no obligation for uniformity of treatment of Participants and employees. No
Award shall confer on any Participant any of the rights of a stockholder of the
Company unless and until Stock is duly issued or transferred and delivered to
the Participant in accordance with the terms of the Award or, in the case of an
Option, the Option is duly exercised.
(g) Unfunded Status of Awards; Creation of Trusts. 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 pursuant to an Award,
nothing contained in the Plan or any Award shall give any such Participant any
rights that are greater than those of a general creditor of the Company;
provided, however, that the Committee may authorize the creation of trusts or
make other arrangements to meet the Company's obligations under the Plan to
deliver cash, Stock, other Awards, or other property pursuant to any Award,
which trusts or other arrangements shall be consistent with the "unfunded"
status of the Plan unless the Committee otherwise determines with the consent of
each affected Participant.
39
<PAGE>
(h) Nonexclusivity of the Plan. Neither the adoption of the Plan by the
Board nor its submission to the stockholders of the Company for approval shall
be construed as creating any limitations on the power of the Board to adopt such
other compensatory arrangements as it may deem desirable, including, without
limitation, the granting of stock options otherwise than under the Plan, and
such arrangements may be either applicable generally or only in specific cases.
(i) No Fractional Shares. No fractional shares of Stock shall be issued or
delivered pursuant to the Plan or any Award. The Committee shall determine
whether cash, other Awards, or other property shall be issued or paid in lieu of
such fractional shares or whether such fractional shares or any rights thereto
shall be forfeited or otherwise eliminated.
(j) Compliance with Code Section 162(m). It is the intent of the Company
that employee Options, SARs and other Awards designated as Awards subject to
Section 7(f) shall constitute "qualified performance-based compensation" within
the meaning of Code Section 162(m). Accordingly, if any provision of the Plan or
any Award Agreement relating to such an Award does not comply or is inconsistent
with the requirements of Code Section 162(m), such provision shall be construed
or deemed amended to the extent necessary to conform to such requirements, and
no provision shall be deemed to confer upon the Committee or any other person
discretion to increase the amount of compensation otherwise payable in
connection with any such Award upon attainment of the performance objectives.
(k) Governing Law. The validity, construction and effect of the Plan, any
rules and regulations relating to the Plan and any Award Agreement shall be
determined in accordance with the laws of the State of Delaware, without giving
effect to principles of conflicts of laws, and applicable federal law.
(l) Effective Date; Plan Termination. The Plan shall become effective as
of the date of its adoption by the Board and approval of the Company's
stockholders, and shall continue in effect until terminated by the Board.
40
<PAGE>
Exhibit C
Building One Services Corporation
1999 Stock Performance Incentive Plan
1. Purpose. The purpose of this 1999 Stock Performance Incentive Plan (the
-------
"Plan") of Building One Services Corporation, a Delaware corporation (the
"Company"), is to advance the interests of the Company and its stockholders by
providing officers and other key employees with a strong incentive to work
towards increasing the Company's stock price, thereby promoting a closer
identity of interests between such persons and the Company's stockholders.
2. Definitions.
-----------
(1) "Board" means the Board of Directors of the Company.
(2) "Change in Control" shall have the meaning ascribed thereto in the
Company's 1999 Long Term Incentive Plan.
(3) "Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute thereto.
(4) "Committee" means the Compensation Committee of the Board.
(5) "Share" means a share of the common stock, par value $.001, of the
Company and such other securities as may be substituted therefor pursuant to
Section 4.
(6) "Stock Price" on any particular date means the last sales price of a
Share on such date or, if unavailable, the average of the closing bid and asked
prices, as reported in The Wall Street Journal for the National Association of
-----------------------
Securities Dealers Automated Quotation National Market System ("NASDAQ") (or for
such other nationally recognized exchange or quotation system on which the
trading prices of the Shares are quoted) on the day immediately preceding such
date (or, if no shares were traded on NASDAQ or such other system on such date,
the next preceding day that shares were so traded) per Share on such date as
provided by one of such organizations.
3. Stock Awards.
------------
(a) Number of Shares Available for Issuance. The Compensation Committee
---------------------------------------
will have the authority to award up to a maximum of 1,500,000 Shares based upon
attainment of the following Stock Price levels (which levels must be maintained
for a period of at least 20 out of 30 consecutive trading days):
<TABLE>
<CAPTION>
Stock Price Cumulative Number of Shares that may be Awarded
---------------- -----------------------------------------------
<S> <C>
$40.00 300,000
$55.00 800,000
$70.00 1,500,000
</TABLE>
Notwithstanding the foregoing, in the event of a Change in Control of the
Company, all 1,500,000 Shares shall be available for issuance under the Plan
immediately prior to such Change in Control, without regard to satisfaction of
the foregoing Stock Price levels.
(b) Eligibility for Award. The Committee (or its designee) shall administer
---------------------
and make all determinations under the Plan, including, without limitation, (i)
the officers and key employees of the Company and its subsidiaries who are to
eligible to receive awards of Shares under the Plan, (ii) the number of Shares
to be awarded to any officer or key employee based on such criteria as the
Committee may establish; provided, however, that no individual may receive in
-------- -------
any one calendar year an award of more than 250,000 Shares, (iii) whether to
condition the delivery of Shares on satisfaction of other requirements (in
addition to the achievement of the Stock Price levels set forth above), and (iv)
whether to defer delivery of Shares that otherwise have been earned under the
Plan. Except as provided in Section 5, the Board may perform any function of
the Committee under the Plan, including, without limitation, for the purpose of
ensuring that transactions under the Plan by employees who are then
41
<PAGE>
subject to Section 16 of the Securities Exchange Act of 1934 are exempt under
Rule 16b-3 issued thereunder. In any case in which the Board is performing a
function of the Committee under the Plan, each reference to the Committee herein
shall be deemed to refer to the Board.
4. Adjustments. In the event that the Committee shall determine that any
-----------
recapitalization, forward or reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase or exchange of Shares or other
securities, stock dividend or other special, large and non-recurring dividend or
distribution (whether in the form of cash, securities or other property),
liquidation, dissolution, or other similar corporate transaction or event,
affects the Shares such that an adjustment is appropriate in order to fulfil the
intended purpose of the Plan, then the Committee shall, in such manner as it may
deem equitable, adjust any or all of (i) the number and kind of Shares reserved
and available for awards under Section 3(a), (ii) the Stock Price levels set
forth in Section 3(a), and (iii) the number and kind of Shares specified in the
annual per-employee limitation under Section 3(b).
5. Performance-Based Awards. The Committee may, in its discretion, condition
------------------------
the award of Shares under the Plan on the achievement of performance objectives
(in addition to satisfaction of the Stock Price levels set forth in Section
3(a)) in order to qualify such award as "qualified performance-based
compensation" within the meaning of Section 162(m) of the Code and regulations
thereunder. The performance objectives for an award subject to this Section 6
shall consist of one or more business criteria and a targeted level or levels of
performance with respect to such criteria, as specified by the Committee but
subject to this Section 5. Performance objectives shall be objective and shall
otherwise meet the requirements of Section 162(m)(4)(C) of the Code. Business
criteria used by the Committee in establishing performance objectives for awards
subject to this Section 5 shall be selected from among the following:
(a) Annual return on capital;
(b) Annual earnings or earnings per share;
(c) Annual cash flow provided by operations;
(d) Changes in annual revenues;
(e) Stock Price; and/or
(f) Strategic business criteria, consisting of one or more
objectives based on meeting specified revenue, market penetration,
geographic business expansion goals, cost targets, and goals
relating to acquisitions or divestitures.
The levels of performance required with respect to such business criteria may be
expressed in absolute or relative levels. [Achievement of performance objectives
with respect to such awards shall be measured over a period of not less than one
year nor more than five years, as the Committee may specify.] Performance
objectives may differ for such awards to different employees. The Committee
shall specify the weight to be given to each performance objective for purposes
of determining the final amount payable with respect to any such award. The
Committee may, in its discretion, reduce the amount of a payout otherwise to be
made in connection with an award subject to this Section 5, but may not exercise
discretion to increase such amount, and the Committee may consider other
performance criteria in exercising such discretion. All determinations by the
Committee as to the achievement of performance objectives shall be in writing.
The Committee may not delegate any responsibility with respect to an award
subject to this Section 5.
6. General Provisions.
------------------
(a) Compliance With Laws and Obligations. The Company shall not be obligated
to issue or deliver Shares in connection with any award or take any other action
under the Plan in a transaction subject to the requirements of any applicable
securities law, any requirement under any listing agreement between the Company
and any national securities exchange or automated quotation system or any other
law, regulation or contractual obligation of the Company until the Company is
satisfied that such laws, regulations, and other obligations of the Company have
been complied with in full. Certificates representing Shares issued under the
Plan will be subject to
42
<PAGE>
such stop-transfer orders and other restrictions as may be applicable under such
laws, regulations and other obligations of the Company, including any
requirement that a legend or legends be placed thereon.
(b) Limitations on Transferability. Unless otherwise determined by the
------------------------------
Committee, any right to receive Shares under the Plan will not be transferable
by an employee except by will or the laws of descent and distribution or to a
beneficiary in the event of the employee's death, shall not be pledged,
mortgaged, hypothecated or otherwise encumbered, or otherwise subject to the
claims of creditors.
(c) No Right to Continued Employment or Service. Neither the Plan nor any
-------------------------------------------
action taken hereunder shall be construed as giving any employee or other person
the right to be retained in the employ or service of the Company or any of its
subsidiaries, nor shall it interfere in any way with the right of the Company or
any of its subsidiaries to terminate any employee's employment or other person's
service at any time.
(d) Taxes. The Company is authorized to condition the delivery of any
-----
Shares under the Plan upon the employee's making a satisfactory provision to
enable the Company or any subsidiary to satisfy its tax withholding obligation
in connection with such delivery of Shares.
(e) Changes to the Plan and Awards. The Board may amend, alter, suspend,
------------------------------
discontinue or terminate the Plan or the Committee's authority to grant Shares
under the Plan without the consent of stockholders or employees, except that any
such action shall be subject to the approval of the Company's stockholders at or
before the next annual meeting of stockholders for which the record date is
after such Board action if such stockholder approval is required by any federal
or state law or regulation or the rules of any stock exchange or automated
quotation system on which the Shares may then be listed or quoted, and the Board
may otherwise, in its discretion, determine to submit other such changes to the
Plan to stockholders for approval.
(f) No Rights to Awards; No Stockholder Rights. No employee shall have
------------------------------------------
any claim to be granted any award under the Plan, and there is no obligation for
uniformity of treatment of employees. No award shall confer on any employee any
of the rights of a stockholder of the Company unless and until Shares are duly
issued or transferred and delivered to the employee in accordance with the terms
of the award.
(g) Unfunded Status of Awards; Creation of Trusts. The Plan is intended
---------------------------------------------
to constitute an "unfunded" plan for incentive and deferred compensation. With
respect to any payments not yet made to an employee pursuant to an award,
nothing contained in the Plan or any award shall give any such employee any
rights that are greater than those of a general creditor of the Company;
provided, however, that the Committee may authorize the creation of trusts or
- -------- -------
make other arrangements to meet the Company's obligations under the Plan to
deliver Shares, which trusts or other arrangements shall be consistent with the
"unfunded" status of the Plan unless the Committee otherwise determines.
(h) Nonexclusivity of the Plan. Neither the adoption of the Plan by the
--------------------------
Board nor its submission to the stockholders of the Company for approval shall
be construed as creating any limitations on the power of the Board to adopt such
other compensatory arrangements as it may deem desirable, including, without
limitation, the granting of stock options other than under the Plan, and such
arrangements that may be either applicable generally or only in specific cases.
(i) Governing Law. The validity, construction and effect of the Plan, any
-------------
rules and regulations relating to the Plan and awards granted hereunder shall be
determined in accordance with the laws of the State of Delaware, without giving
effect to principles of conflicts of laws, and applicable federal law.
(j) Effective Date; Plan Termination. The Plan shall become effective as
--------------------------------
of the date of its adoption by the Board and approval of the Company's
stockholders, and shall continue in effect until terminated by the Board.
43
<PAGE>
DETACH HERE
BUILDING ONE SERVICES CORPORATION
[COMPANY LOGO] COMMON STOCK PROXY CARD
This Proxy is Solicited on Behalf of the Board of Directors for the Annual
Meeting of Stockholders on July 8, 1999.
YOUR VOTE IS IMPORTANT! PLEASE SIGN AND DATE ON THE REVERSE SIDE OF THIS CARD.
The undersigned hereby appoints Joseph M. Ivey and F. Traynor Beck, and each of
them, proxies, with full power of substitution to appear on behalf of the
undersigned and to vote all shares of Common Stock of the undersigned at the
Annual Meeting of Stockholders to be held in the Hall of Flags at the United
States Chamber of Commerce located at 1615 H Street, N.W., Washington, D.C.
20062, on Thursday, July 8, 1999 at 10:00 a.m. local time, and at any
adjournment thereof, upon all subjects that may properly come before the
meeting, including the matter described in the proxy statement furnished
herewith, subject to any directions indicated on the reverse side of this card,
hereby revoking any and all proxies heretofore given.
The proxies will vote "FOR" the election of ten nominees as directors, "FOR" the
amendment to the Company's Restated Certificate of Incorporation (the
"Certificate of Incorporation") to amend Articles Four, Five and Six of the
Certificate of Incorporation to provide for certain voting rights for the
holders of the Company's 7 1/2% convertible junior subordinated debentures (the
"Debentures") and to clarify and eliminate certain provisions of the Certificate
of Incorporation, "FOR" the amendment of the Certificate of Incorporation to add
Article Nine to provide for stockholder action by unanimous written consent,
"FOR" the amendment of the Certificate of Incorporation to amend Article Four of
the Certificate of Incorporation to authorize 11,000,000 shares of series
preferred stock, "FOR" the approval and adoption of the 1999 Long-Term Incentive
Plan, "FOR" the approval and adoption of the 1999 Stock Performance Incentive
Plan and "FOR" the ratification of the appointment of PricewaterhouseCoopers,
LLP as the Company's independent accountants to audit the consolidated financial
statements of the Company for the fiscal year ending December 31, 1999 if the
applicable box is not marked, and at their discretion on any other matter that
may properly come before the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSALS.
1. Election of Andrew Africk, Mary K. Bush, Vincent Eades, Michael Gross,
Joseph M. Ivey, Jonathan J. Ledecky, William P. Love, Jr., Brooks Newmark,
W. Russell Ramsey, and M. Jude Reyes as directors. [_] FOR ALL NOMINEES
[_] WITHHELD FROM ALL NOMINEES
[_] _______________________________________
For all nominees except as noted above
2. Approval of amendment to the Certificate of Incorporation to Articles Four,
Five and Six of the Certificate of Incorporation to (a) to provide that the
holders of the Debentures shall have the right (i) to vote on an as
converted basis on all of the matters submitted to the Company's holders of
shares of common stock and any other class of stock voting as a single
class, (ii) to elect, as a separate class, three directors to the Board of
Directors (or, if the Board consists of more than ten members, no less than
30% of the total number of directors on the Board), (iii) to elect, as a
separate class, a majority of the Board of Directors if the Company
materially and intentionally breaches its agreements with the holders of
the Debentures or there is a payment default or any other default giving
rise to a right to acceleration under the terms of
<PAGE>
the Debentures and (iv) to consent to any amendment or repeal by the
Company of any provisions of the Certificate of Incorporation that are
adverse to the holders of the Debentures and (b) to eliminate the
provisions of Article Four that relate to the shares of Convertible Non-
Voting Common Stock, par value $0.001 per share, because those shares have
not been outstanding since their automatic conversion into shares of common
stock and to restate the Certificate of Incorporation to reflect the
foregoing amendments. [_] FOR [_] AGAINST [_] ABSTAIN
3. Approval of amendment to the Certificate of Incorporation to add new
Article Nine to provide for stockholder action by unanimous written consent
and to restate the Certificate of Incorporation to reflect the foregoing
amendment. [_] FOR [_] AGAINST [_] ABSTAIN
4. Approval of amendment to the Certificate of Incorporation to Article Four
to authorize 11,000,000 shares of series preferred stock, par value $0.001
per share, and to restate the Certificate of Incorporation to reflect the
foregoing amendment. [_] FOR [_] AGAINST [_] ABSTAIN
5. Approval of the adoption of the 1999 Long-Term Incentive Plan providing for
equity-based awards with respect to 1,500,000 shares of common stock.
[_] FOR [_] AGAINST [_] ABSTAIN
6. Approval of the adoption of the 1999 Stock Performance Incentive Plan.
[_] FOR [_] AGAINST [_] ABSTAIN
7. Ratification of the appointment of PricewaterhouseCoopers LLP as the
Company's independent accountants for the fiscal year ending December 31,
1999.
[_] FOR [_] AGAINST [_] ABSTAIN
Date: _______________________, 1999
__________________________________________
Signature
__________________________________________
Signature (if jointly held)
Please sign and return this Proxy Card so that
your shares can be represented at the meeting. If
signing for a corporation or partnership or as
agent, attorney or fiduciary, indicate the
capacity in which you are signing. If you vote by
ballot, such vote will supersede this proxy.
[ ] MARK HERE IF YOU PLAN TO ATTEND THE MEETING
[ ] MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT
PLEASE RETURN THIS CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE OR
OTHERWISE TO 156 FIFTH AVENUE, PENTHOUSE NO. 3, NEW YORK, NEW YORK 10010, SO
THAT YOUR SHARES CAN BE REPRESENTED AT THE MEETING.
