As Filed with the Securities and Exchange Commission on May 1, 1997
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
Under the
SECURITIES ACT OF 1933
BROOKS FIBER PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or Other Jurisdiction of Incorporation or Organization)
43-1656187
(I.R.S. Employer Identification No.)
425 Woods Mill Road South, Suite 300
Town & Country, Missouri 63017
(314) 878-1616
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
BROOKS FIBER PROPERTIES, INC. 1997 STOCK INCENTIVE PLAN
(Full Title of the Plans)
David L. Solomon
Executive Vice President and Chief Financial Officer
Brooks Fiber Properties, Inc.
425 Woods Mill Road South, Suite 300
Town & Country, Missouri 63017
(314) 878-1616
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies of all correspondence to
John P. Denneen, Esq.
Bryan Cave LLP
One Metropolitan Square
211 North Broadway, Suite 3600
St. Louis, Missouri 63102-2750
(314) 259-2000
--------------------------
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
=================================================================================================================
Proposed Maximum Proposed Maximum Amount of
Title of Securities Amount to be Offering Price Aggregate Registration
to be Registered Registered Per Share(1) Offering Price(1) Fee(1)
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par
value per share, and 3,000,000 Shares(2) $18.50 $55,500,000 $16,819.00
related Preferred Stock
Purchase Rights
==================================================================================================================
<FN>
(1) Computed pursuant to Rule 457(h) solely for the purpose of determining the
registration fee.
(2) This Registration Statement also covers such additional shares of Common
Stock as may be issuable pursuant to antidilution provisions.
</TABLE>
<PAGE>
PART II
INFORMATION REQUIRED IN THE
REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed by the Registrant with the Securities and
Exchange Commission pursuant to the Securities and Exchange Act of 1934, as
amended (the "Exchange Act"), are incorporated by reference into this
Registration Statement:
(a) The Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, as amended by Amendment No. 1 on Form 10-K/A filed
on March 31, 1997;
(b) (1) The Registrant's Current Report on Form 8-K dated March 3, 1997
(date of earliest event reported);
(2) The Registrant's Current Report on Form 8-K dated March 28, 1997
(date of earliest event reported);
(3) The Registrant's Current Report on Form 8-K dated March 31, 1997
(date of earliest event reported); and
(c) The description of the Registrant's Common Stock, par value $.01 per
share (the "Common Stock"), and related Preferred Stock Purchase
Rights contained in Amendment No. 2 to the Registrant's Registration
Statement on Form 8-A/A filed on April 30, 1997 under the Exchange
Act.
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold, shall be deemed
to be incorporated by reference in this Registration Statement and to be a part
hereof from the date of filing of such documents. Any statement contained herein
or in a document incorporated or deemed to be incorporated herein by reference
shall be deemed to be modified or superseded for purposes of this Registration
Statement to the extent that a statement contained in any other subsequently
filed document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement.
ITEM 4. DESCRIPTION OF SECURITIES.
The description of the Common Stock, and related Preferred Stock Purchase
Rights, contained in Item 1 of Amendment No. 2 to the Registrant's Registration
Statement on Form 8-A/A filed on April 30, 1997 under the Exchange Act is
incorporated herein by reference. The securities are registered under Section
12(g) of the Exchange Act.
ITEM 5. INTEREST OF NAMED EXPERTS AND COUNSEL.
The validity of the issuance of the shares of the Common Stock registered
hereunder has been passed upon by Bryan Cave LLP, St. Louis, Missouri. John P.
Denneen, Esq., a member of Bryan Cave LLP, is Secretary of the Registrant and
its subsidiaries. Mr. Denneen and two other members of Bryan Cave LLP own an
aggregate of 52,426 shares of Common Stock, and one of such members owns an
option to purchase 22,220 shares of Common Stock at $11.35 per share.
II-1
<PAGE>
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The following is a summary of Section 145 of the General Corporation Law of
the State of Delaware (the "DGCL").
Subject to restrictions contained in the DGCL, a corporation may indemnify
any person, who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorney's
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred in connection therewith if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation, and, in connection with any criminal action or
proceeding, had no reasonable cause to believe that such person's conduct was
unlawful. A person who is successful on the merits or otherwise in any suit or
matter covered by the indemnification statute, shall be indemnified and
indemnification is otherwise authorized upon a determination that the person to
be indemnified has met the applicable standard of conduct required. Such
determination shall be made by a majority vote of the board of directors who
were not parties to such action, suit or proceeding, even though less than a
quorum, or if there are no such directors, or if such directors so direct, by
special independent counsel in a written opinion, or by the shareholders.
Expenses incurred in defense may be paid in advance upon receipt by the
corporation of a written undertaking by or on behalf of the recipient to repay
such amount if it is ultimately determined that the recipient is not entitled to
indemnification under the statute. The indemnification provided by statute is
not exclusive of any other rights to which those seeking indemnification may be
entitled under any by-law, agreement, vote of shareholders or disinterested
directors or otherwise, and shall inure to the benefit of the heirs, executors
and administrators of such person. Insurance may be purchased on behalf of any
person entitled to indemnification by the corporation against any liability
asserted against him or her and incurred in an official capacity regardless of
whether the person could be indemnified under the statute. References to the
corporation include all constituent corporations absorbed in a consolidation or
merger as well as the resulting corporation, and anyone seeking indemnification
by virtue of acting in some capacity with a constituent corporation would stand
in the same position as if such person had served the resulting or surviving
corporation in the same capacity.
The Second Restated Certificate of Incorporation and the By-Laws of the
Company provide for indemnification of directors and officers of the Company to
the maximum extent permitted by the DGCL.
The directors and officers of the Company are insured under a policy of
directors' and officers' liability insurance.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
II-2
<PAGE>
ITEM 8. EXHIBITS.
Reference is made to the Exhibit Index filed herewith.
ITEM 9. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the registration statement is on Form S-3 or Form S-8,
and the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in
the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
II-3
<PAGE>
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers, and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Town & Country, Missouri on April 29, 1997.
BROOKS FIBER PROPERTIES, INC.
By: James C. Allen
-----------------------------------------
James C. Allen
Vice Chairman and Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby severally constitutes and
appoints James C. Allen and David L. Solomon his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for such person and in such person's name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement on Form S-8, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute may lawfully do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signatures Title Date
- --------------------------------------------------------------------------------
Robert A. Brooks Director (Chairman of the Board) April 29, 1997
- --------------------------
Robert A. Brooks
James C. Allen Vice Chairman, Chief Executive April 29, 1997
- -------------------------- Officer and Director
James C. Allen
D. Craig Young President and Director (Chief April 29, 1997
- -------------------------- Operating Officer)
D. Craig Young
David L. Solomon Executive Vice President and April 29, 1997
- -------------------------- Chief Financial Officer
David L. Solomon (Principal Financial and
Accounting Officer)
Robert F. Benbow Director April 29, 1997
- --------------------------
Robert F. Benbow
William J. Bresnan Director April 29, 1997
- --------------------------
William J. Bresnan
Jonathan M. Nelson Director April 29, 1997
- --------------------------
Jonathan M. Nelson
G. Jackson Tankersley, Jr. Director April 29, 1997
- --------------------------
G. Jackson Tankersley, Jr.
Ronald H. Vander Pol Director April 29, 1997
- --------------------------
Ronald H. Vander Pol
Carol deB. Whitaker Director April 29, 1997
- --------------------------
Carol deB. Whitaker
II-5
<PAGE>
BROOKS FIBER PROPERTIES, INC.
EXHIBIT INDEX
Exhibit
Number Description
- ------- ---------------------------------------------------------------------
4.1 Second Restated Certificate of Incorporation of the Registrant
(incorporated herein by reference to Exhibit 1 to Amendment
No. 2 to the Registrant's Registration Statement on Form 8-A/A
filed with the Commission on April 30, 1997 (the "Form
8-A/A"))
4.2 By-laws of the Registrant, as amended on April 29, 1997
(incorporated herein by reference to Exhibit 2 to the Form
8-A/A)
4.3 Form of Specimen Certificate of Common Stock of the Registrant
(incorporated herein by reference to Exhibit 4.1 to the Registrant's
Registration Statement on Form S-1 (No. 333-1924)filed with the
Commission on March 4, 1996 (the "IPO Form S-1"))
4.4 Rights Agreement dated February 29, 1996 between the Registrant
and The Boatmen's Trust Company, as Rights Agent (incorporated herein
by reference to Exhibit 4.2 to the IPO Form S-1)
4.5 Amended and Restated Stockholders' Agreement dated as of June 15,
1995 (incorporated herein by reference to Exhibit 4.3 to the IPO Form
S-1)
4.6 Amended and Restated Registration Rights Agreement dated as
of June 15, 1995 (incorporated herein by reference to Exhibit 4.4
to the IPO Form S-1)
4.7 Brooks Fiber Properties, Inc. 1997 Stock Incentive Plan
4.8 Indenture dated as of February 26, 1996 between the Registrant
and The Bank of New York, as Trustee (incorporated herein by
reference to Exhibit 4.6 to the IPO Form S-1)
4.9 Indenture dated as of November 7, 1996 between the Registrant
and The Bank of New York, as Trustee (incorporated herein by
reference to Exhibit 4.6 to the Registrant's Registration Statement
on Form S-1 (File No. 333-16495) filed with the Commission on
November 20, 1996)
4.10 Amended and Restated Loan and Security Agreement dated as of
October 1, 1996 among AT&T Credit Corporation, the Registrant
and certain subsidiaries of the Registrant (incorporated
herein by reference to Exhibit 4.8 to the Registrant's
Registration Statement on Form S-4 (File No. 333-18503) filed
with the Commission on December 20, 1996)
4.11 The Registrant has not filed certain instruments with respect
to long-term debt since the total amount of securities
authorized thereunder does not exceed 10% of the total assets
of the Registrant and its subsidiaries on a consolidated
basis. The Registrant agrees to furnish a copy of any such
agreement to the Commission upon request.
5.1 Opinion of Bryan Cave LLP regarding the validity of the Common
Stock
23.1 Consent of KPMG Peat Marwick LLP
23.3 Consent of Bryan Cave LLP (included in Exhibit 5.1)
24.1 Power of Attorney (included in Signature Page)
II-6
BROOKS FIBER PROPERTIES, INC. 1997 STOCK INCENTIVE PLAN
SECTION 1
Statement of Purpose
1.1. The Brooks Fiber Properties, Inc. 1997 Stock Incentive Plan (the "Plan")
has been established by Brooks Fiber Properties, Inc. (the "Company") to:
(a) attract and retain executive, managerial and other salaried
employees;
(b) motivate participating employees, by means of appropriate
incentives, to achieve long-range goals;
(c) provide incentive compensation opportunities that are competitive
with those of other major corporations; and
(d) further identify a Participant's interests with those of the
Company's other stockholders through compensation that is based on the
Company's common stock; and thereby promote the long-term financial
interest of the Company and its Related Companies, including the growth in
value of the Company's equity and enhancement of long-term stockholder
return.
SECTION 2
Definitions
2.1. Unless the context indicates otherwise, the following terms shall have the
meaning set forth below:
(a) Award. The term "Award" shall mean any award or benefit granted to
any Participant under the Plan, including, without limitation, the grant of
Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock
Units, Performance Stock, Performance Units, Merit Awards, Phantom Stock
Awards and Stock acquired through purchase under Section 12.
(b) Board. The term "Board" shall mean the Board of Directors of the
Company.
(c) Cause. The term "Cause" shall mean (a) the willful and continued
failure by the Participant to substantially perform his or her duties with
the Company (other than any such failure resulting from his or her
incapacity due to physical or mental illness), or (b) the willful engaging
by the Participant in conduct which is demonstrably and materially
injurious to the Company, monetarily or otherwise. For purposes of this
definition, no act, or failure to act, shall be deemed "willful" unless
done, or omitted to be done, by the Participant not in good faith and
without reasonable belief that his or her action or omission was in the
best interest of the Company.
<PAGE>
(d) Change in Control. A "Change in Control" shall be deemed to have
occurred if:
(1) any "person" as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") (other than the Company, any subsidiary
of the Company, or any trustee or other fiduciary holding
securities under an employee benefit plan of the Company or
any subsidiary of the Company), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the
Company representing 20% or more of the combined voting
power of the Company's then outstanding securities in any
transaction or series of transactions not approved in
advance by a vote of at least two-thirds (2/3) of the Board;
or
(2) during any period of three consecutive years (not including
any period prior to the effective date of this Plan),
individuals who at the beginning of such period constitute
the Board, and any new director (other than a director
designated by a person who has entered into an agreement
with the Company to effect a transaction described in clause
(1), (3), (4) or (5) of this definition) whose election by
the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election
or nomination for election was previously so approved, cease
for any reason to constitute at least a majority thereof; or
(3) the stockholders of the Company approve a merger or
consolidation of the Company with any other company other
than (i) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving entity) more than 65% of the combined voting
power of the voting securities of the Company (or such
surviving entity) outstanding immediately after such merger
or consolidation, or (ii) a merger or consolidation effected
to implement a recapitalization of the Company (or similar
transaction) in which no "person" (as hereinabove defined)
acquires more than 20% of the combined voting power of the
Company's then outstanding securities; or
(4) the stockholders of the Company adopt a plan of complete
liquidation of the Company or approve an agreement for the
sale or disposition by the Company of all or substantially
all of the Company's assets. For purposes of this clause
(4), the term "the sale or disposition by the Company of all
or substantially all of the Company's assets" shall mean a
sale or other disposition transaction or series of related
transactions involving assets of the Company or of any
direct or indirect subsidiary of the Company (including the
stock of any direct or indirect subsidiary of the Company)
in which the value of the assets or stock being sold or
otherwise disposed of (as measured by the purchase price
being paid therefor or by such other method as the Board
determines is appropriate in a case where there is no
readily ascertainable purchase price) constitutes more than
two-thirds of the fair market value of the Company (as
hereinafter defined). For purposes of the preceding
sentence, the "fair market value of the Company" shall be
the aggregate market value of the outstanding shares of
2
<PAGE>
Stock (on a fully diluted basis) plus the aggregate market
value of the Company's other outstanding equity securities.
The aggregate market value of the shares of Stock (on a
fully diluted basis) outstanding on the date of the
execution and delivery of a definitive agreement with
respect to the transaction or series of related transactions
(the "Transaction Date") shall be determined by the average
closing price of the shares of Stock for the ten trading
days immediately preceding the Transaction Date. The
aggregate market value of any other equity securities of the
Company shall be determined in a manner similar to that
prescribed in the immediately preceding sentence for
determining the aggregate market value of the shares of
Stock or by such other method as the Board shall determine
is appropriate; or
(5) any other event determined by a vote of at least two-thirds
(2/3) of the Board to constitute a "Change of Control."
(e) Code. The term "Code" means the Internal Revenue Code of 1986, as
amended. A reference to any provision of the Code shall include reference
to any successor provision of the Code.
(f) Committee. The term "Committee" means the Compensation Committee
of the Board, selected in accordance with the provisions of Subsection 4.2.
(g) Date of Termination. A Participant's "Date of Termination" shall
be the date on which his or her employment with all Employers and Related
Companies terminates for any reason; provided that a Date of Termination
shall not be deemed to occur by reason of a transfer of the Participant
between the Company and a Related Company (including Employers) or between
two Related Companies (including Employers); and further provided that a
Participant's employment shall not be considered terminated while the
Participant is on a leave of absence from an Employer or a Related Company
approved by the Participant's Employer.
3
<PAGE>
(h) Disability. Except as otherwise provided by the Committee, a
Participant shall be considered to have a "Disability" during the period in
which he or she is unable, by reason of a medically determinable physical
or mental impairment, to carry out his or her duties with an Employer,
which condition, in the discretion of the Committee, is expected to have a
duration of not less than 120 days.
(i) Employee. The term "Employee" shall mean any officer of the
Company or any other person with an employment relationship with the
Company or a Related Company.
(j) Employer. The Company and each Related Company which, with the
consent of the Company, participates in the Plan for the benefit of its
eligible Employees are referred to collectively as the "Employers" and
individually as an "Employer".
(k) Fair Market Value. The "Fair Market Value" of the Stock on any
given date shall be the mean between the closing price per share of Stock
on the NASDAQ National market on such date (or if no sales of Stock were
made on such date, the closing price on the NASDAQ National Market on the
next preceding date on which sales were made on such market), or the price
of shares of Stock as determined by such other valuation method as may be
determined in good faith by the Committee.
(l) Immediate Family. With respect to a particular Participant, the
term "Immediate Family" shall mean the Participant's spouse, children,
stepchildren, adoptive relationships, sisters, brothers and grandchildren.
(m) Incentive Stock Option. The term "Incentive Stock Option" shall
mean any Incentive Stock Option granted pursuant to Section 6 of the Plan.
(n) Merit Award. The term "Merit Award" shall mean any Merit Award
granted pursuant to Section 13 of the Plan.
(o) Non-Qualified Stock Option. The term "Non-qualified Stock Option"
shall mean any Non-Qualified Stock Option granted pursuant to Section 6 of
the Plan.
(p) Option. The term "Option" shall mean any Incentive Stock Option or
Non-Qualified Stock Option granted under the Plan.
(q) Participant. The term "Participant" means an Employee who has been
granted an award under the Plan.
(r) Performance-Based Compensation. The term "Performance-Based
Compensation" shall have the meaning ascribed to it in Section 162(m)(4)(C)
of the Code.
(s) Performance Period. The term "Performance Period" shall mean the
period over which applicable performance is to be measured.
(t) Performance Stock. The term "Performance Stock" shall have the
meaning ascribed to it in Section 10 of the Plan.
4
<PAGE>
(u) Performance Units. The term "Performance Units" shall have the
meaning ascribed to it in Section 11 of the Plan.
(v) Phantom Stock Award. The term "Phantom Stock Award" shall mean any
Phantom Stock Award granted pursuant to Section 14 of the Plan.
(w) Qualified Retirement Plan. The term "Qualified Retirement Plan"
means any plan of the Company or a Related Company that is intended to be
qualified under Section 401(a) of the Code.
(x) Related Companies. The term "Related Companies' means any company
during any period in which it is a "subsidiary corporation" of the Company
(as that term is defined in Code Section 424(f)).
(y) Restricted Period. The term "Restricted Period" shall mean the
period of time for which shares of Restricted Stock or Restricted Stock
Units are subject to forfeiture pursuant to the Plan or during which
Options and Stock Appreciation Rights are not exercisable.
(z) Restricted Stock. The term "Restricted Stock" shall have the
meaning ascribed to it in Section 8 of the Plan.
(aa) Restricted Stock Units. The term "Restricted Stock Units" shall
have the meaning ascribed to it in Section 9 of the Plan.
(bb) Retirement. "Retirement" of a Participant shall mean the
occurrence of a Participant's Date of Termination under circumstances that
constitute such participant's retirement at normal retirement age under the
terms of the Qualified Retirement Plan of an Employer or Related Company
that is extended to the Participant immediately prior to the Participant's
Date of Termination or, if no such plan is extended to the Participant on
his or her Date of Termination, under the terms of any applicable
retirement policy of the Participant's Employer.
(cc) SEC. "SEC" means the Securities and Exchange Commission.
(dd) Stock. The term "Stock" shall mean shares of common stock, $.01
par value per share, of the Company.
(ee) Stock Appreciation Rights. The term "Stock Appreciation Rights"
shall mean any Stock Appreciation Right granted pursuant to Section 7 of
the Plan.
5
<PAGE>
SECTION 3
Eligibility
3.1. Subject to the discretion of the Committee and the terms and conditions of
the Plan, the Committee shall determine and designate from time to time, from
among the salaried, full-time officers and Employees of the Employers those
Employees who will be granted one or more Awards under the Plan.
SECTION 4
Operation and Administration
4.1. Subject to the approval of the stockholders of the Company at the Company's
1997 Annual Meeting of Stockholders, the Plan shall be effective April 29, 1997
("Effective Date"), provided, however, that any awards made under the Plan prior
to approval by the stockholders of the Company, shall be contingent upon such
approval. The Plan shall be unlimited in duration and remain in effect until
termination by the Board; provided however, that no Incentive Stock Option may
be granted under the Plan after April 29, 2002.
4.2. The Plan shall be administered by the Committee which shall be selected by
the Board, shall consist of members of the Board who are not Employees and are
not eligible to participate in the Plan, other than pursuant to Section 21
hereof, and shall consist of not less than two members of the Board. The
authority to manage and control the operation and administration of the Plan
shall be vested in the Committee, subject to the following:
(a) Subject to the provisions of the Plan, the Committee will have the
authority and discretion to select Employees to receive Awards, to
determine the time or times of receipt and to determine the types of
Awards and the number of shares covered by the Awards, to establish the
terms, conditions, performance criteria, restrictions, and other
provisions of such Awards. In making such Award determinations, the
Committee may take into account the nature of services rendered by the
respective Employee, his or her present and potential contribution to
the Company's success and such other factors as the Committee deems
relevant.
(b) Subject to the provisions of the Plan, the Committee will have the
authority and discretion to determine the extent to which Awards under
the Plan will be structured to conform to the requirements applicable
to Performance-Based Compensation as described in Code Section 162(m),
and to take such action, establish such procedures, and impose such
restrictions at the time such awards are granted as the Committee
determines to be necessary or appropriate to conform to such
requirements.
(c) The Committee will have the authority and discretion to interpret
the Plan and the Awards granted under the Plan, to establish, amend and
rescind any rules and regulations relating to the Plan, to determine
the terms and provisions of any agreements made pursuant to the Plan,
to make all other determinations that it deems necessary or advisable
for the administration of the Plan and to correct any defect or supply
any omission or reconcile any inconsistency in the Plan or in any Award
in the manner and to the extent the Committee deems necessary or
advisable to carry it into effect.
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(d) Any interpretation of the Plan by the Committee and any decision
made by it under the Plan shall be final and binding on all persons.
The express grant in the Plan of any specific power to the Committee
shall not be construed as limiting any power or authority of the
Committee. Provided, however, that except as otherwise permitted under
Treasury Regulation 1.162-27(e)(2)(iii)(C), the Committee may not
increase any Award once made if payment under such Award is intended to
constitute Performance-Based Compensation.
(e) The Committee may only act by a majority of its members. Any
determination of the Committee may be made without a meeting by the
unanimous written consent of its members. In addition, the Committee
may authorize one or more of its members or any officer of an Employer
to execute and deliver documents and perform other administrative acts
pursuant to the Plan.
(f) No member or authorized delegate of the Committee shall be liable
to any person for any action taken or omitted in connection with the
administration of the Plan unless attributable to his or her own fraud
or willful misconduct. The Committee, the individual members thereof,
and persons acting as the authorized delegates of the Committee under
the Plan, shall be indemnified by the Employers against any and all
liabilities, losses, costs and expenses (including legal fees and
expenses) of whatsoever kind and nature which may be imposed on,
incurred by, or asserted against, the Committee or its members or
authorized delegates by reason of the performance of any action
pursuant to the Plan if the Committee or its members or authorized
delegates did not act dishonestly or in willful violation of the law or
regulation under which such liability, loss, cost or expense arises.
This indemnification shall not duplicate but may supplement any
coverage available under any applicable insurance policy.
4.3 Notwithstanding any other provision of the Plan to the contrary, no
Participant shall receive any Award of an Option or a Stock Appreciation Right
under the Plan to the extent that the sum of (a) the number of shares of Stock
subject to such Stock Option, and (b) the number of shares of Stock subject to
all other prior Awards of Options and Stock Appreciation Rights under the Plan
during the three-year period ending on the date of the Award, would exceed the
Participant's Individual Limit under the Plan. Subject to the provisions of
Section 16, a Participant's "Individual Limit" shall be 1,000,000 shares during
any three consecutive calendar years. In addition, the maximum number of shares
with respect to which any Participant may receive Awards during any three
consecutive calendar years is 1,000,000. The maximum amount of cash that may be
paid out with respect to Awards to any individual during any three consecutive
calendar years is $3,000,000.
4.4. To the extent that the Committee determines that it is necessary or
desirable to conform any Awards under the Plan with the requirements applicable
to "Performance-Based Compensation", as that term is used in Code Section
162(m)(4)(C), it may, at or prior to the time an Award is granted, take such
steps and impose such restrictions with respect to such Award as it determines
to be necessary to satisfy such requirements. To the extent that it is necessary
to establish performance goals for a particular Performance Period, those goals
will be based on one or more of the following business criteria: revenues,
EBITDA, net income, earnings per share, debt reduction, return on investment,
operating ratio, cash flow, return on assets, stockholders return, and return on
equity. If the Committee establishes performance goals for a Performance Period
relating to one or more of these business criteria, the Committee may determine
to approve a payment from that particular Performance Period upon attainment of
the performance goal relating to any one or more of such criteria.
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SECTION 5
Shares Available Under the Plan
5.1. The shares of Stock with respect to which Awards may be made under the Plan
shall be shares of currently authorized but unissued or treasury shares acquired
by the Company, including shares purchased in the open market or in private
transactions. Subject to the provisions of Section 16, the total number of
shares of Stock available for grant of Awards shall not exceed 3,000,000 shares
of Stock, not more than fifty percent of which may be in the form of Restricted
Stock and Performance Shares. Except as otherwise provided herein, if any Award
shall expire or terminate for any reason without having been exercised in full,
the unissued shares of Stock subject thereto (whether or not cash or other
consideration is paid in respect of such Award) shall again be available for the
purposes of the Plan. Any shares of Stock which are used as full or partial
payment to the Company upon exercise of an Award shall be available for purposes
of the Plan.
SECTION 6
Options
6.1. The grant of an "Option" under this Section 6 entitles the Participant to
purchase shares of Stock at a price fixed at the time the Option is granted, or
at a price determined under a method established at the time the Option is
granted, subject to the terms of this Section 6. Options granted under this
Section 6 may be either Incentive Stock Options or Non-Qualified Stock Options,
and subject to Subsection 6.6 and Sections 15 and 20, shall not be exercisable
for at least six months from the date of grant, as determined in the discretion
of the Committee. An "Incentive Stock Option" is an Option that is intended to
satisfy the requirements applicable to an "incentive stock option" described in
section 422(b) of the Code. A "Non-Qualified Option" is an Option that is not
intended to be an "incentive stock option" as that term is described in section
422(b) of the Code.
6.2. The Committee shall designate the Participants to whom Options are to be
granted under this Section 6 and shall determine the number of shares of Stock
to be subject to each such Option. To the extent that the aggregate fair market
value of Stock with respect to which Incentive Stock Options are exercisable for
the first time by any individual during any calendar year (under all plans of
the Company and all Related Companies) exceeds $100,000, such Options shall be
treated as Non-Qualified Stock Options, to the extent required by Section 422 of
the Code.
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6.3. The determination and payment of the purchase price of a share of Stock
under each Option granted under this Section shall be subject to the following
terms of this Subsection 6.3:
(a) The purchase price shall be established by the Committee or shall
be determined by a method established by the Committee at the time the
Option is granted; provided, however, that in no event shall the price
per share be less than the Fair Market Value per share on the date of
the grant or, if earlier, the day on which the Participant granted the
Option is hired, promoted or other such singular event has occurred,
provided the date of grant shall not be more than 90 days following
such date;
(b) The full purchase price of each share of Stock purchased upon the
exercise of any Option shall be paid at the time of such exercise and,
as soon as practicable thereafter, a certificate representing the
shares so purchased shall be delivered to the person entitled thereto;
and
(c) The purchase price shall be paid either in cash, in shares of Stock
(valued at Fair Market Value as of the day of exercise), through a
combination of cash and Stock or through such cashless exercise
arrangement as may be approved by the Committee and established by the
Company.
6.4. Except as otherwise expressly provided in the Plan, an Option granted under
this Section 6 shall be exercisable in accordance with the following terms of
this Subsection 6.4.
(a) The terms and conditions relating to exercise of an Option shall be
established by the Committee, and may include, without limitation,
conditions relating to completion of a specified period of service,
achievement of performance standards prior to exercise of the Option,
or achievement of Stock ownership objectives by the Participant. No
Option may be exercised by a Participant after the expiration date
applicable to that Option.
(b) The exercise of an Option will result in the surrender of the
corresponding rights under a tandem Stock Appreciation Right, if any.
6.5. The vesting and exercise periods of any Option shall be determined by the
Committee but the term of any Option shall not extend more than ten years after
the date of grant.
6.6. In the event the Participant exercises an Option under this Plan or a
predecessor plan of the Company or a Related Company and pays all or a portion
of the purchase price in Stock, in the manner permitted by Subsection 6.3, such
Participant, pursuant to the exercise of Committee discretion at the time the
Option is exercised or to the extent previously authorized by the Committee, may
be issued a new Option to purchase additional shares of Stock equal to the
number of shares of Stock surrendered to the Company in such payment. Such new
Option shall have an exercise price equal to the Fair Market Value per share on
the date such new Option is granted and may have vesting and expiration dates on
the same dates as the vesting and expiration dates of the original Option so
exercised by payment of the purchase price in shares of Stock.
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SECTION 7
Stock Appreciation Rights
7.1. Subject to the terms of this Section 7, a Stock Appreciation Right granted
under the Plan entitles the Participant to receive, in cash or Stock (as
determined in accordance with Subsection 7.4), value equal to all or a portion
of the excess of: (a) the Fair Market Value of a specified number of shares of
Stock at the time of exercise; over (b) a specified price which shall not be
less than (i) 100% of the Fair Market Value of the Stock at the time the Stock
Appreciation Right is granted, or, if earlier, the day on which the Participant
granted the Stock Appreciation Right is hired, promoted or other such singular
event has occurred, provided the date of grant shall not be more than 90 days
following such date, or, (ii) if granted in tandem with an Option, the exercise
price with respect to shares under the tandem Option.
7.2. Subject to the provisions of the Plan, the Committee shall designate the
Participants to whom Stock Appreciation Rights are to be granted under the Plan,
shall determine the exercise price or a method by which the price shall be
established with respect to each such Stock Appreciation Right, and shall
determine the number of shares of Stock on which each Stock Appreciation Right
is based. A Stock Appreciation Right may be granted in connection with all or
any portion of a previously or contemporaneously granted Option or not in
connection with an Option. If a Stock Appreciation Right is granted in
connection with an Option then, in the discretion of the Committee, the Stock
Appreciation Right may, but need not, be granted in tandem with the Option.
7.3.The exercise of Stock Appreciation Rights shall be subject to the following:
(a) If a Stock Appreciation Right is not in tandem with an Option, then
the Stock Appreciation Right shall be exercisable in accordance with
the terms established by the Committee in connection with such rights
but, subject to Sections 15 and 20, shall not be exercisable for six
months from the date of grant and the term of any Stock Appreciation
Right shall not extend more than ten years from the date of grant; and
may include, without limitation, conditions relating to completion of a
specified period of service, achievement of performance standards prior
to exercise of the Stock Appreciation Rights, or achievement of
objectives relating to Stock ownership by the Participant; and
(b) If a Stock Appreciation Right is in tandem with an Option, then the
Stock Appreciation Right shall be exercisable only at the time the
tandem Option is exercisable and the exercise of the Stock Appreciation
Right will result in the surrender of the corresponding rights under
the tandem Option.
7.4. Upon the exercise of a Stock Appreciation Right, the value to be
distributed to the Participant, in accordance with Subsection 7.1, shall be
distributed in shares of Stock (valued at their Fair Market Value at the time of
exercise), in cash, or in a combination of Stock or cash, in the discretion of
the Committee.
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7.5. The Committee may grant Limited Stock Appreciation Rights which entitle the
Participant to receive a cash payment in connection with a Change in Control.
Notwithstanding the foregoing provisions of this Section 7, a Limited Stock
Appreciation Right shall be subject to the following:
(a) A Limited Stock Appreciation Right may (but need not) be granted in
connection with all or any portion of a previously or contemporaneously
granted Option, and may be granted in tandem with an Option regardless
of whether the Option is in tandem with a Stock Appreciation Right;
(b) In the case of a Limited Stock Appreciation Right that is in tandem
with an Option, the payment amount shall be equal to the difference
between the exercise price per share of the Stock covered by the tandem
Option and the Fair Market Value of a share of Stock upon the date of
exercise;
(c) To the extent provided by the Committee, a Limited Stock
Appreciation Right may be automatically exercisable at a time
determined by the Committee, or it may be exercised by the Participant
during the period beginning not earlier than the date of a Change in
Control, and ending not later than ninety (90) days following the date
of the Change in Control, and may be exercisable regardless of whether
the Participant is then employed by an Employer or a Related Company;
and
(d) If the Limited Stock Appreciation Right is in tandem with an
Option, the exercise of the Limited Stock Appreciation Right shall
result in the cancellation of the tandem Option (and any Stock
Appreciation Right in tandem with such Option).
SECTION 8
Restricted Stock
8.1. Subject to the terms of this Section 8, Restricted Stock Awards under the
Plan are grants of Stock to Participants, the vesting of which is subject to
certain conditions established by the Committee, with some or all of those
conditions relating to events (such as continued employment or satisfaction of
performance criteria) occurring after the date of the grant of the Award,
provided, however, that to the extent that vesting of a Restricted Stock Award
is contingent on continued employment, the required employment period shall
generally not be less than one year following the grant of the Award unless such
grant is in substitution for an Award under this Plan or a predecessor plan of
the Company or a Related Company. To the extent, if any, required by the General
Corporation Law of the State of Delaware, a Participant's receipt of an Award of
newly issued shares of Restricted Stock shall be made subject to payment by the
Participant of an amount equal to the aggregate par value of such newly issued
shares of Stock.
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8.2. The Committee shall designate the Participants to whom Restricted Stock is
to be granted, and the number of shares of Stock that are subject to each such
Award. The Award of shares under this Section 8 may, but need not, be made in
conjunction with a cash-based incentive compensation program maintained by the
Company, and may, but need not, be in lieu of cash otherwise awardable under
such program.
8.3. Shares of Restricted Stock granted to Participants under the Plan shall be
subject to the following terms and conditions:
(a) Restricted Stock granted to Participants may not be sold, assigned,
transferred, pledged or otherwise encumbered during the Restricted
Period;
(b) The Participant as owner of such shares shall have all the rights
of a stockholder, including but not limited to the right to vote such
shares and, except as otherwise provided by the Committee or as
otherwise provided by the Plan, the right to receive all dividends and
other distributions paid on such shares;
(c) Each certificate issued in respect of shares of Restricted Stock
granted under the Plan shall be registered in the name of the
Participant but, at the discretion of the Committee, each such
certificate may be deposited with the Company with a stock power
endorsed in blank or in a bank designated by the Committee;
(d) The Committee may award Restricted Stock as Performance-Based
Compensation, which shall be Restricted Stock that becomes vested (or
for which vesting is accelerated) upon the achievement of performance
goals established by the Committee and the Committee may specify the
number of shares that will vest upon achievement of different levels of
performance; except as otherwise provided by the Committee, achievement
of maximum targets during the Performance Period shall result in the
Participant's receipt of the full amount of Restricted Stock comprising
such Performance-Based Compensation and, in the discretion of the
Committee, achievement of the minimum target but less than the maximum
target, the Committee may establish the Participant's right to a
portion of the Award; and
(e) Except as otherwise provided by the Committee, any Restricted Stock
which is not earned by the end of a Restricted Period or Performance
Period, as the case may be, shall be forfeited. If a Participant's Date
of Termination occurs prior to the end of a Restricted Period or
Performance Period, as the case may be, the Committee may determine, in
its sole discretion, that the Participant will be entitled to
settlement of all or any portion of the Restricted Stock as to which he
or she would otherwise be eligible, and may accelerate the
determination of the value and settlement of such Restricted Stock or
make such other adjustments as the Committee, in its sole discretion,
deems desirable. Subject to the limitations of the Plan and the Award
of Restricted Stock, upon the vesting of Restricted Stock, such
Restricted Stock will be transferred free of all restrictions to the
Participant (or his or her legal representative, beneficiary or heir).
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SECTION 9
Restricted Stock Units
9.1. Subject to the terms of this Section 9, a Restricted Stock Unit entitles a
Participant to receive shares or cash for the units at the end of a Restricted
Period to the extent provided by the Award with the vesting of such units to be
contingent upon such conditions as may be established by the Committee (such as
continued employment or satisfaction of performance criteria) occurring after
the date of grant of the Award, provided, however, that to the extent that the
vesting of a Restricted Stock Unit is contingent on continued employment, the
required employment period shall generally not be less than one year following
the date of grant of the Award unless such grant is in substitution for an Award
under this Plan or a predecessor plan of the Company or a Related Company. The
Award of Restricted Stock Units under this Section 9 may, but need not, be made
in conjunction with a cash-based incentive compensation program maintained by
the Company, and may, but need not, be in lieu of cash otherwise awardable under
such program.
9.2. The Committee shall designate the Participants to whom Restricted Stock
Units shall be granted and the number of units that are subject to each such
Award. During any period in which Restricted Stock Units are outstanding and
have not been settled in Stock, the Participant shall not have the rights of a
stockholder, but, in the discretion of the Committee, may be granted the right
to receive a payment from the Company in lieu of a dividend in an amount equal
to any cash dividends that might be paid during the Restricted Period.
9.3 Except as otherwise provided by the Committee, any Restricted Stock Unit
which is not earned by the end of a Restricted Period shall be forfeited. If a
Participant's Date of Termination occurs prior to the end of a Restricted
Period, the Committee, in its sole discretion, may determine that the
Participant will be entitled to settlement of all or any portion of the
Restricted Stock Units as to which he or she would otherwise be eligible, and
may accelerate the determination of the value and settlement of such Restricted
Stock Units or make such other adjustments as the Committee, in its sole
discretion, deems desirable.
SECTION 10
Performance Stock
10.1. Subject to the terms of this Section 10, an Award of Performance Stock
provides for the distribution of Stock to a Participant upon the achievement of
performance objectives established by the Committee.
10.2. The Committee shall designate the Participants to whom Awards of
Performance Stock are to be granted, and the number of shares of Stock that are
subject to each such Award. The Award of shares of Performance Stock under this
Section 10 may, but need not, be made in conjunction with a cash-based incentive
compensation program maintained by the Company, and may, but need not, be in
lieu of cash otherwise awardable under such program.
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10.3. Except as otherwise provided by the Committee, any Award of Performance
Stock which is not earned by the end of the Performance Period shall be
forfeited. If a Participant's Date of Termination occurs prior to the end of a
Performance Period, the Committee, in its sole discretion, may determine that
the Participant will be entitled to settlement of all or any portion of the
Performance Stock as to which he or she would otherwise be eligible, and may
accelerate the determination of the value and settlement of such Performance
Stock or make such other adjustments as the Committee, in its sole discretion,
deems desirable.
SECTION 11
Performance Units
11.1. Subject to the terms of this Section 11, the Award of Performance Units
under the Plan entitles the Participant to receive value for the units at the
end of a Performance Period to the extent provided under the Award. The number
of Performance Units earned, and value received from them, will be contingent on
the degree to which the performance measures established at the time of grant of
the Award are met.
11.2. The Committee shall designate the Participants to whom Performance Units
are to be granted, and the number of Performance Units to be subject to each
such Award.
11.3. For each Participant, the Committee will determine the value of
Performance Units, which may be stated either in cash or in units representing
shares of Stock; the performance measures used for determining whether the
Performance Units are earned; the Performance Period during which the
performance measures will apply; the relationship between the level of
achievement of the performance measures and the degree to which Performance
Units are earned; whether, during or after the Performance Period, any revision
to the performance measures or Performance Period should be made to reflect
significant events or changes that occur during the Performance Period; and the
number of earned Performance Units that will be settled in cash and/or shares of
Stock.
11.4. Settlement of Performance Units shall be subject to the following:
(a) The Committee will compare the actual performance to the
performance measures established for the Performance Period and
determine the number of Performance Units as to which settlement is to
be made, and the value of such Performance Units;
(b) Settlement of Performance Units earned shall be wholly in
cash, wholly in Stock or in a combination of the two, to be distributed
in a lump sum or installments, as determined by the Committee; and
(c) Shares of Stock distributed in settlement of Performance Units
shall be subject to such vesting requirements and other conditions, if
any, as the Committee shall determine, including, without limitation,
restrictions of the type that may be imposed with respect to Restricted
Stock under Section 8.
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11.5. Except as otherwise provided by the Committee, any Award of Performance
Units which is not earned by the end of the Performance Period shall be
forfeited. If a Participant's Date of Termination occurs prior to the end of a
Performance Period, the Committee, in its sole discretion, may determine that
the Participant will be entitled to settlement of all or any portion of the
Performance Units as to which he or she would otherwise be eligible, and may
accelerate the determination of the value and settlement of such Performance
Units or make such other adjustments as the Committee, in its sole discretion,
deems desirable.
SECTION 12
Stock Purchase Program
12.1. The Committee may, from time to time, establish one or more programs under
which Participants will be permitted to purchase shares of Stock under the Plan,
and shall designate the Participants eligible to participate under such Stock
purchase programs. The purchase price for shares of Stock available under such
programs, and other terms and conditions of such programs, shall be established
by the Committee. The purchase price may not be less than 75% of the Fair Market
Value of the Stock at the time of purchase (or, in the Committee's discretion,
the average Stock value over a period determined by the Committee), and further
provided that if newly issued shares of Stock are sold, the purchase price may
not be less than the aggregate par value of such newly issued shares of Stock.
12.2. The Committee may impose such restrictions with respect to shares
purchased under this Section 12, as the Committee, in its sole discretion,
determines to be appropriate. Such restrictions may include, without limitation,
restrictions of the type that may be imposed with respect to Restricted Stock
under Section 8.
SECTION 13
Merit Awards
13.1. The Committee may from time to time make an Award of Stock under the Plan
to selected Employees for such reasons and in such amounts as the Committee, in
its sole discretion, may determine. The consideration to be paid by an Employee
for any such Merit Award shall be fixed by the Committee from time to time, but,
if required by the General Corporation Law of the State of Delaware, it shall
not be less than the aggregate par value of the shares of Stock awarded to him
or her.
SECTION 14
Phantom Stock Awards
14.1. The Committee may make Phantom Stock Awards to selected Employees which
may be based solely on the value of the underlying shares of Stock, solely on
any earnings or appreciation thereon, or both. Subject to the provisions of the
Plan, the Committee shall have the sole and complete authority to determine the
number of hypothetical or target shares as to which each such Phantom Stock
Award is subject and to determine the terms and conditions of each such Phantom
Stock Award. There may be more than one Phantom Stock Award in existence at any
one time with respect to a selected Employee, and the terms and conditions of
each such Phantom Stock Award may differ from each other.
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14.2. The Committee shall establish vesting or performance measures for each
Phantom Stock Award on the basis of such criteria and to accomplish such
objectives as the Committee may from time to time, in its sole discretion,
determine. Such measures may be based on years of service or periods of
employment, or the achievement of individual or corporate performance
objectives, but shall, in each instance, be based upon one or more of the
business criteria set forth in Section 4.4. The vesting and performance measures
determined by the Committee shall be established at the time a Phantom Stock
Award is made. Phantom Stock Awards may not be sold, assigned, transferred,
pledged, or otherwise encumbered, except as provided in Section 17, during the
Performance Period.
14.3. The Committee shall determine, in its sole discretion, the manner of
payment, which may include cash or shares of Stock in such proportions as the
Committee shall determine.
14.4. Except as otherwise provided by the Committee, any Award of Phantom Stock
which is not earned by the end of the Performance Period shall be forfeited. If
a Participant's Date of Termination occurs prior to the end of a Performance
Period, the Committee, in its sole discretion, may determine that the
Participant will be entitled to settlement of all or a portion of the Phantom
Stock for which he or she would otherwise be eligible, and may accelerate the
determination of the value and settlement of Phantom Stock or make such other
adjustment as the Committee, in its sole discretion, deems desirable.
SECTION 15
Termination of Employment
15.1. If a Participant's employment is terminated by the Participant's Employer
for Cause or if the Participant's employment is terminated by the Participant
without the consent and approval of the Participant's Employer, all of the
Participant's unvested Awards shall be forfeited.
15.2. If a Participant's Date of Termination occurs by reason of death, all
Options and Stock Appreciation Rights outstanding immediately prior to the
Participant's Date of Termination shall immediately become exercisable and all
restrictions on any Awards outstanding immediately prior to the Participant's
Date of Termination shall lapse.
15.3. If a Participant's Date of Termination occurs by reason of Disability or
Retirement, or by reason of the Participant's employment being terminated by the
Participant's Employer for any reason other than Cause, or by the Participant
with the consent and approval of the Participant's Employer, the Restricted
Period shall lapse on a proportion of any Awards outstanding immediately prior
to the Participant's Date of Termination (except that, to the extent that an
Award of Restricted Stock, Restricted Stock Units, Performance Units,
Performance Stock and Phantom Stock is subject to a Performance Period, such
proportion of the Award shall remain subject to the same terms and conditions
for vesting as were in effect prior to the Date of Termination and shall be
determined at the end of the Performance Period). The proportion of an Award
upon which the Restricted Period shall lapse shall be a fraction, the
denominator of which is the total number of months of any Restricted Period
applicable to an Award and the numerator of which is the number of months of
such Restricted Period which elapsed prior to the Date of Termination.
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15.4. Stock Appreciation Rights and Non-Qualified Stock Options which are or
become exercisable by reason of death, Disability or Retirement or by reason of
the Participant's employment being terminated by the Participant's Employer for
reasons other than Cause or by the Participant with the consent and approval of
the Participant's Employer, shall expire on the expiration date set forth in the
Award or, if earlier:
(a) three years after the Date of Termination, if the Participant's
termination occurs because of death, Disability, or Retirement; and
(b) three months after the Date of Termination, if the Participant's
employment is terminated by the Participant's employer for reasons
other than Cause or by the Participant with the consent and approval of
the Participant's Employer.
Incentive Stock Options which are or become exercisable by reason of death,
Disability or Retirement shall expire on the expiration date set forth in the
Award or, if earlier, three months after the Date of Termination. Options and
Stock Appreciation Rights which are or become exercisable at the time of a
Participant's death may be exercised by the Participant's designated beneficiary
or, in the absence of such designation, by the person to whom the Participant's
rights will pass by will or the laws of descent and distribution.
15.5. Except to the extent the Company shall otherwise determine, if, as a
result of a sale or other transaction, a Participant's Employer ceases to be a
Related Company (and the Participant's Employer is or becomes an entity that is
separate from the Company), the occurrence of such transaction shall be treated
as the Participant's Date of Termination caused by the Participant's employment
being terminated by the Participant's Employer for a reason other than Cause.
15.6. Notwithstanding the foregoing provisions of this Section 15, the Committee
may, with respect to any Awards of a Participant (or portion thereof) that are
outstanding immediately prior to the Participant's Date of Termination,
determine that a Participant's Date of Termination will not result in forfeiture
or other termination of the Award.
SECTION 16
Adjustments to Shares
16.1. If the Company shall effect a reorganization, merger, or consolidation, or
similar event or effect any subdivision or consolidation of shares of Stock or
other capital readjustment, extraordinary cash dividend, payment of stock
dividend, stock split, spin-off, combination of shares or recapitalization or
other increase or reduction of the number of shares of Stock outstanding without
receiving compensation therefor in money, services or property, then the
Committee shall appropriately adjust (i) the number of shares of Stock available
under the Plan, (ii) the number of shares of Stock available under any
individual or other limitations under the Plan, (iii) the number of shares of
Stock subject to outstanding Awards and (iv) the per-share price under any
outstanding Award to the extent that the Participant is required to pay a
purchase price per share with respect to the Award. All share adjustments shall
be made to the nearest full share.
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16.2. If the Committee determines that an adjustment in accordance with the
provisions of Subsection 16.1 would not be fully consistent with the purposes of
the Plan or the purposes of the outstanding Awards under the Plan, the Committee
may make such other adjustments as the Committee deems equitable, if any, that
the Committee determines are consistent with the purposes of the Plan and/or the
affected Awards.
SECTION 17
Transferability and Deferral of Awards
17.1. Awards under the Plan are not transferable except by will or by the laws
of descent and distribution. To the extent that a Participant who receives an
Award under the Plan has the right to exercise such Award, the Award may be
exercised during the lifetime of the Participant only by the Participant.
Notwithstanding the foregoing provisions of this Section 17, the Committee may,
subject to any restrictions under applicable securities laws, permit Awards
under the Plan (other than an Incentive Stock Option) to be transferred by a
Participant for no consideration to or for the benefit of the Participant's
Immediate Family (including, without limitation, to a trust for the benefit of a
Participant's Immediate Family or to a Partnership comprised solely of members
of the Participant's Immediate Family), subject to such limits as the Committee
may establish, provided the transferee shall remain subject to all of the terms
and conditions applicable to such Award prior to such transfer.
17.2 The Committee may permit a Participant to elect to defer payment under a
Performance Unit or Phantom Stock Award under such terms and conditions as the
Committee, in its sole discretion, may determine; provided that any such
deferral election must be made prior to the time the Participant has become
entitled to payment under the Performance Unit or Phantom Stock Award.
SECTION 18
Award Agreement
18.1. Each Participant granted an Award pursuant to the Plan shall sign an Award
Agreement which signifies the offer of the Award by the Company and the
acceptance of the Award by the Participant in accordance with the terms of the
Award and the provisions of the Plan. Each Award Agreement shall reflect the
terms and conditions of the Award. Participation in the Plan shall confer no
rights to continued employment with an Employer nor shall it restrict the right
of an Employer to terminate a Participant's employment at any time.
18
<PAGE>
SECTION 19
Tax Withholding
19.1 All Awards and other payments under the Plan are subject to withholding of
all applicable taxes, which withholding obligations shall be satisfied (without
regard to whether the Participant has transferred an Award under the Plan) by a
cash remittance, or with the consent of the Committee, through the surrender of
shares of Stock which the Participant owns or to which the Participant is
otherwise entitled under the Plan pursuant to an irrevocable election submitted
by the Participant to the Company at the office designated for such purpose. The
number of shares of Stock needed to be submitted in payment of the taxes shall
be determined using the Fair Market Value as of the applicable tax date rounding
down to the nearest whole share.
SECTION 20
Change in Control
20.1. Subject to the provisions of Section 16 (relating to the adjustment of
shares of Stock), and except as otherwise provided in the Plan or the Agreement
reflecting the applicable Award, upon the occurrence of a Change in Control:
(a) All outstanding Options (regardless of whether in tandem with Stock
Appreciation Rights) shall become fully exercisable, except to the
extent that the right to exercise the Option is subject to any
restrictions established in connection with a Limited Stock
Appreciation Right that is in tandem with the Option;
(b) All outstanding Stock Appreciation Rights (regardless of whether in
tandem with Options) shall become fully exercisable, except that if
Stock Appreciation Rights are in tandem with an Option, and the Option
is in tandem with a Limited Stock Appreciation Right, the right to
exercise the Stock Appreciation Right shall be subject to any
restrictions established in connection with the Limited Stock
Appreciation Right;
(c) All shares of Stock subject to Awards shall become fully vested;
and
(d) Performance Units may be paid out in such manner and amounts as
determined by the Committee.
19
<PAGE>
SECTION 21
Stock Options for Outside Directors
21.1 Options may also be granted to members of the Board who are not employees
in such amounts and at such times as the Committee, in its discretion, may
determine. Each option granted under this Section 21 (i) shall have an exercise
price per share equal to 100% of the Fair Market Value per share of Stock on the
date of grant, (ii) shall be exercisable for 10 years from the date of grant but
shall lapse upon the optionee's termination of service as a member of the Board,
(iii) shall become exercisable with respect to 50% of the shares to which it
relates six months after the date of grant and with respect to the other 50% of
the shares to which it relates one year after the date of grant and (iv) shall
be exercised by cash, by tender of shares of Stock already owned by the optionee
having a Fair Market Value equal to the exercise price or a combination of cash
and Stock.
SECTION 22
Termination and Amendment
22.1 The Board may suspend, terminate, modify or amend the Plan, provided that
any amendment that would (a) increase the aggregate number of shares of Stock
which may be issued under the Plan, (b) materially increase the benefits
accruing to Participants under the Plan, or (c) materially modify the
requirements as to eligibility for participation in the Plan, shall be subject
to the approval of the Company's stockholders, except that any such increase or
modification that may result from adjustments authorized by Section 16 does not
require such approval. No suspension, termination, modification or amendment of
the Plan may terminate a Participant's existing Award or materially and
adversely affect a Participant's rights under such Award without the
Participant's consent.
20
EXHIBIT 5.1
[Bryan Cave Letterhead]
April 30, 1997
Board of Directors
Brooks Fiber Properties, Inc.
425 Woods Mill Road South, Suite 300
Town & Country, Missouri 63017
Gentlemen:
We have acted as special counsel to Brooks Fiber Properties, Inc., a
Delaware corporation (the "Company"), in connection with the filing of a
Registration Statement on Form S-8 ("Registration Statement") with the
Securities and Exchange Commission under the Securities Act of 1933, as amended
(the "Act"), covering the offering and sale of up to 3,000,000 shares of the
Company's Common Stock, par value $.01 per share (the "Common Stock"), and
related Preferred Stock Purchase Rights (the "Rights"), under the Company's 1997
Stock Incentive Plan (the "Plan"). The Rights, if and when they become
exercisable, would entitle the registered holders thereof (with certain
exceptions) to purchase from the Company one one-thousandth of a share of the
Company's Series A Junior Participating Preferred Stock, par value $.01 per
share ("Series A Preferred Stock"), at a price of $100.00 per one one-thousandth
of a share of Series A Preferred Stock, subject to adjustment. The Rights have
been authorized and distributed pursuant to the Rights Agreement dated as of
February 29, 1996 ("Rights Agreement") between the Company and The Boatmen's
Trust Company, as Rights Agent, to which Rights Agreement reference is made for
the terms and a description of the Rights.
In connection herewith, we have examined and relied without independent
investigation as to matters of fact upon such certificates of public officials,
such statements and certificates of officers of the Company and originals or
copies certified to our satisfaction of the Registration Statement, the Second
Restated Certificate of Incorporation and the By-laws of the Company,
proceedings of the Board of Directors of the Company and such other corporate
records, documents, certificates and instruments as we have deemed necessary or
appropriate in order to enable us to render the opinions expressed below. In
rendering this opinion, we have assumed the genuineness of all signatures on all
documents examined by us, the authenticity of all documents submitted to us as
originals and the conformity to authentic originals of all documents submitted
to us as certified or photostatted copies.
Based upon the foregoing and in reliance thereon, and subject to the
qualifications and limitations stated herein, we are of the opinion that:
(1) The Company is a corporation validly existing in good standing under
the laws of the State of Delaware;
(2) When,
(i) the Registration Statement shall have become effective under the
Act; and
<PAGE>
Board of Directors
Brooks Fiber Properties, Inc.
April 30, 1997
Page 2
(ii) the shares of Common Stock being offered and sold by the Company
pursuant to the Plan shall have been duly issued and sold in
accordance with the terms of the Plan;
then such shares of Common Stock will be legally issued, fully paid
and non-assessable; and
(3) The Company, as a Delaware corporation, has the authority to issue the
Rights without stockholder approval as a matter properly within the
business judgment of the Board of Directors of the Company, and,
assuming that such judgment has been exercised in good faith (which we
know of no reason to question), the Rights have been duly authorized
and validly issued.
The basis for our opinion in clause (3) above is described below.
The General Corporation Law of the State of Delaware (the "DGCL") expressly
authorizes a Delaware corporation, subject to any provisions in its certificate
of incorporation, to create and issue rights entitling the holders thereof to
purchase from the corporation any shares of its capital stock of any class or
classes (DGCL, Section 157). The Board of Directors of the Company may, by
resolution, determine the terms upon which, including the time or times at or
within which, and the price or prices at which, any such shares may be purchased
from the Company upon exercise of any of such rights. In the absence of actual
fraud in the transaction, the judgment of the directors as to the consideration
for the issuance of such rights and the sufficiency thereof shall be conclusive
(DGCL, Section 157). The DGCL does not require stockholder approval for the
issuance of rights.
The Company's Second Restated Certificate of Incorporation does not contain
any restriction or limitation on the authority of the Board of Directors of the
Company to authorize, or of the Company to issue rights. However, the Company
must have sufficient authorized but unissued shares available in the event that
the Rights are exercised. Based on the number of outstanding shares of Common
Stock on the date hereof, following the exercise of the Company's currently
outstanding warrants and options, the Company would have 36,504,066 shares of
Common Stock issued and outstanding, and 113,495,934 shares of Common Stock and
1,040,012 shares of Preferred Stock, par value $.01 per share (including 50,000
shares designated as Series A Preferred Stock), authorized but not outstanding.
Accordingly, following such exercises, the Company would have sufficient
authorized but not outstanding shares of Series A Preferred Stock to fulfill its
obligations in the event the Rights were then exercised. The Rights Agreement
contains provisions which obligate the Company to reserve sufficient shares of
Series A Preferred Stock to permit exercise in full of all outstanding Rights.
Delaware courts have, on a number of occasions, concluded that corporations
organized in Delaware are authorized to issue rights having terms and conditions
<PAGE>
Board of Directors
Brooks Fiber Properties, Inc.
April 30, 1997
Page 3
similar to those set out in the Rights Agreement. These cases have supported the
authority of the board of directors of a corporation to adopt rights plans and
issue the rights in the absence of any stockholder approval. See, e.g., Moran v.
Household International, Inc., 500 A.2d 1346 (Del. 1985) ("Household") (the
Delaware Supreme Court held that a Delaware corporation had sufficient authority
to adopt a flip-over rights plan under Delaware corporate law); Revlon, Inc. v.
MacAndrews & Forbes Holdings, Inc., 506 A.2d 173, 181 (Del. 1986) (the Delaware
Supreme Court spoke approvingly of a flip-in rights plan in dicta); American
Gen. Corp. v. Unitrin, Inc., C.A. Nos. 13656 and 13699, Del. Ch. LEXIS 187,
*26-7 (1994), rev'd on other grounds, 651 A.2d 1361 (Del. 1995) (Delaware
Chancery Court refused to enjoin a shareholder rights plan with flip-in and
flip-over provisions after determining the Delaware corporation's board adopted
the plan upon concluding in good faith that a bidder's cash offer for all shares
was inadequate); Tate & Lyle PLC v. Staley Continental Inc., CCH Fed. Sec. L.
Rep. 1988 Dec. &93.764 (Del. Ch. 1988) (Delaware Chancery Court refused to
enjoin shareholder rights plan with both flip-over and flip-in provisions and
refused to order redemption of rights under plan); BNS Inc. v Koppers Co., 683
F. Supp. 458 (D.C. Del. 1988) (U.S. District Court for the District of Delaware
refused to order directors of Delaware corporation to redeem rights under plan
that had both flip-in and flip-over rights); CRTF Corp. v. Federated Dept.
Stores, Inc., CCH Fed. Sec. L. Rep. 1988 Dec. &93.711 (S.D.N.Y. 1988) (U.S.
District Court for the Southern District of New York rejected a request for a
preliminary injunction based, inter alia, upon a challenge to the validity under
Delaware law of rights plan containing both flip-in and flip-over provisions and
refused to order board of directors to redeem rights); Moore Corp. v. Wallace
Computer Servs., 907 F. Supp 1545 (D. Del. 1995) (Delaware District Court held
that Board's decision not to redeem poison pill as part of a "just say no"
defense against hostile tender offer was a valid exercise of its business
judgment).
Some courts have granted injunctions requiring a board of directors to
redeem rights of the sort discussed in this letter. See, e.g., City Capital
Assocs. L.P. v. Interco Inc., 551 A. 2d 787 (Del. Ch. 1988); and Grand Met. PLC
v. The Pillsbury Co., CCH Fed. Sec. L. Rep. 1988-89 Dec. &94.104 (Del. Ch.
1988). However, we do not interpret these decisions as undermining the validity
of the rights there involved or the adoption or issuance thereof. Rather, these
cases relate to the propriety of a decision by a board of directors to leave
existing rights outstanding under certain circumstances after an acquisition
offer has been made.
<PAGE>
Board of Directors
Brooks Fiber Properties, Inc.
April 30, 1997
Page 4
Several courts in other jurisdictions have granted preliminary injunctions
against the implementation by certain corporations of various rights plans
because the court viewed the corporation laws under which those corporations
were formed as forbidding discrimination in rights between holders of shares of
the same series and class, and thus as precluding provisions such as flip-in
terms that may be characterized as discriminatory against certain holders.1/ The
Delaware Supreme Court held in the Household case, however, that discrimination
between shareholders, as opposed to discrimination between shares, was
permissible, and thus the flip-over rights plan in question was valid.
A number of cases have held that exercise by a board of directors of
authority such as the power to authorize and issue rights is governed by the
business judgment rule which provides that a court will not interfere with a
good faith decision by adequately informed disinterested directors which the
directors reasonably believe is in or not opposed to the best interests of the
corporation. See, e.g., Household. However, certain courts have held that the
traditional business judgment rule should be modified when a board of directors
adopts measures that could have an anti-takeover effect. These courts have
required that, before the business judgment rule is applied in a takeover
context, the directors must carry the burden of demonstrating that there was a
danger to corporate policy and effectiveness and that the action taken was
reasonable in relation to the threat imposed. See, e.g., Unocal Corp. v. Mesa
Petroleum Co., 493 A. 2d 946, 954 (Del. 1985) ("Unocal") and Household. If the
plaintiff can succeed in proving that the sole or primary purpose of the
anti-takeover measure was entrenchment of management, good faith is negated, and
the business judgment rule will not apply. The directors then must prove the
intrinsic fairness of the measure. See, e.g., Mills Acquisition Co. v.
Macmillan, Inc., 559 A.2d 1261, 1280 (Del. 1989) (finding a lack of candor in
communications during an auction process involving a management buyout group,
the court enjoined an asset lock-up agreement and stated "[w]hen faced with such
divided loyalties, directors have the burden of establishing the entire fairness
of the transaction to survive careful scrutiny by the courts.").
- --------
1/ Asarco Inc. v. Court, 611 F.Supp. 468 (D. N.J. 1985) (holding that New
Jersey corporate law proscribed discrimination between voting power within
a class of preferred stock); Amalgamated Sugar Co. v. NL Indus., Inc., 644
F.Supp. 1229 (S.D. N.Y. 1986) (holding that a rights plan with flip-in
provisions which operated to dilute the equity and voting power of
acquiring shareholder was ultra vires as a matter of New Jersey law since
the New Jersey Business Corporation Act did not allow discrimination among
shareholders of same class and series of stock); R.D. Smith & Co. v.
Preway, Inc., 644 F.Supp. 868 (W.D. Wis. 1986) (denying preliminary
injunction to party opposing rights plan despite probability that plan
would be held invalid under Wisconsin law because it discriminated by
according different voting powers to shareholders within the same class of
stock); Bank of New York Co. v. Irving Bank Corp., 536 N.Y.S.2d 923 (Sup.
Ct. N.Y. Co. 1988) (holding a flip-in provision to be a discrimination
between shareholders of the same class that was not permissible under the
New York Business Corporation Law). The state legislatures in these and
certain other states whose statutes have been similarly construed have
subsequently amended their statutes to explicitly authorize rights plans
with discriminatory provisions (see, e.g., N.J. Bus. Corp. Act ' 14A:7-7;
N.Y. Bus. Corp. Law '505(a)(2) and Wis. Bus. Corp. Law '180.0624).
<PAGE>
Board of Directors
Brooks Fiber Properties, Inc.
April 30, 1997
Page 5
In deciding whether to sustain anti-takeover measures adopted by a board of
directors, three elements recur in the case law. First, the board must be
reasonably diligent in the process by which it selects the anti-takeover
measure. Second, the measure adopted by the board must be a suitable response to
the threat posed. And finally, the board must carefully structure any rights
plan it may adopt in order to minimize potential abuses, particularly abuses in
the nature of actions which would prevent any takeover offer from succeeding.
In rendering the opinion expressed in clause (3) above, we have assumed
that the Company's Board of Directors, in considering and approving the
distribution of the Rights described herein, addressed matters responsive to the
requirements set out above. Nothing has come to our attention which would cause
us to question the good faith of the directors in approving the distribution of
the Rights or which would lead us to believe that we are not justified in
relying on the assumptions referred to above.
Taking the foregoing into account, it is our opinion that rights with terms
and conditions of the sort included in the Rights Agreement are valid under
Delaware law and may thus be lawfully authorized and issued by the Company. It
is also our opinion that approval of the Rights is a matter properly within the
business judgment of the Company's Board of Directors and, assuming that such
judgment has been exercised in good faith (which we know of no reason to
question), is thus consistent with the fiduciary obligations of the Board of
Directors to the Company and its stockholders.
This opinion is not rendered with respect to any laws other than the
General Corporation Law of the State of Delaware and the Act.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. We also consent to your filing copies of this opinion as
an exhibit to the Registration Statement with agencies of such states as you
deem necessary in the course of complying with the laws of such states regarding
the offering and sale of such shares of Common Stock.
In giving this consent, we do not admit that we are in the category of
persons whose consent is required under Section 7 of the Act or the rules and
regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
BRYAN CAVE LLP
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement
on Form S-8 and related Offering Circular pertaining to the Brooks Fiber
Properties, Inc. 1997 Stock Incentive Plan of our reports on the financial
statements of Brooks Fiber Properties, Inc. dated February 12, 1997, except for
Note 14 which is as of February 25, 1997, relating to the consolidated balance
sheets of Brooks Fiber Properties, Inc. and subsidiaries as of December 31, 1996
and 1995, and the related consolidated statements of operations, changes in
shareholders' equity, and cash flows for each of the years in the three-year
period ended December 31, 1996, and the related schedules, which reports appear
in the December 31, 1996 annual report on From 10-K of Brooks Fiber Properties,
Inc.
KPMG PEAT MARWICK LLP
St. Louis, Missouri
April 30, 1997
