SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, For Use of the Commission Only
(as permitted by Rule 14a-6(e) (2))
ALPHANET SOLUTIONS, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11.
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] 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:
<PAGE>
ALPHANET SOLUTIONS, INC.
7 RIDGEDALE AVENUE
CEDAR KNOLLS, NEW JERSEY 07927
May 8, 1998
To Our Shareholders:
You are most cordially invited to attend the 1998 Annual Meeting of
Shareholders of AlphaNet Solutions, Inc. at 9:00 A.M., local time, on Friday,
May 29, 1998 at the offices of the Company, 7 Ridgedale Avenue, Cedar Knolls,
New Jersey.
The Notice of Meeting and Proxy Statement on the following pages describe
the matters to be presented to the meeting.
It is important that your shares be represented at this meeting to ensure
the presence of a quorum. Whether or not you plan to attend the meeting, we
hope that you will have your shares represented by signing, dating and
returning your proxy in the enclosed envelope, which requires no postage if
mailed in the United States, AS SOON AS POSSIBLE. Your shares will be voted in
accordance with the instructions you have given in your proxy.
Thank you for your continued support.
Sincerely,
Stan Gang
CHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
<PAGE>
ALPHANET SOLUTIONS, INC.
7 RIDGEDALE AVENUE
CEDAR KNOLLS, NEW JERSEY 07927
-------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 29, 1998
-------------------------------
The Annual Meeting of Shareholders (the "Meeting") of AlphaNet Solutions,
Inc., a New Jersey corporation (the "Company"), will be held at the offices of
the Company, 7 Ridgedale Avenue, Cedar Knolls, New Jersey, on Friday, May 29,
1998, at 9:00 A.M., local time, for the following purposes:
(1) To elect five directors to serve until the next Annual Meeting of
Shareholders and until their respective successors shall have been duly
elected and qualified;
(2) To approve a proposal to adopt the Employee Stock Purchase Plan;
(3) To ratify the appointment of Price Waterhouse LLP as independent
accountants for the year ending December 31, 1998; and
(4) To transact such other business as may properly come before the Meeting
or any adjournment or adjournments thereof.
Holders of Common Stock of record at the close of business on April 3,
1998 are entitled to notice of and to vote at the Meeting, or any adjournment
or adjournments thereof. A complete list of such shareholders will be open to
the examination of any shareholder at the Meeting. The Meeting may be adjourned
from time to time without notice other than by announcement at the Meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER
OF SHARES YOU MAY HOLD. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN
PERSON, PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND MAIL IT
PROMPTLY IN THE ENCLOSED RETURN ENVELOPE. THE PROMPT RETURN OF PROXIES WILL
ENSURE A QUORUM AND SAVE THE COMPANY THE EXPENSE OF FURTHER SOLICITATION. EACH
PROXY GRANTED MAY BE REVOKED BY THE SHAREHOLDER APPOINTING SUCH PROXY AT ANY
TIME BEFORE IT IS VOTED. IF YOU RECEIVE MORE THAN ONE PROXY CARD BECAUSE YOUR
SHARES ARE REGISTERED IN DIFFERENT NAMES OR ADDRESSES, EACH SUCH PROXY CARD
SHOULD BE SIGNED AND RETURNED TO ENSURE THAT ALL OF YOUR SHARES WILL BE VOTED.
By Order of the Board of Directors
Gary T. Gann
SECRETARY
Cedar Knolls, New Jersey
May 8, 1998
THE COMPANY'S 1997 ANNUAL REPORT ACCOMPANIES THE PROXY STATEMENT.
<PAGE>
ALPHANET SOLUTIONS, INC.
7 RIDGEDALE AVENUE
CEDAR KNOLLS, NEW JERSEY 07927
-------------------------------
P R O X Y S T A T E M E N T
-------------------------------
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of AlphaNet Solutions, Inc. (the "Company") of proxies
to be voted at the Annual Meeting of Shareholders of the Company to be held on
Friday, May 29, 1998 (the "Meeting"), at the offices of the Company, 7
Ridgedale Avenue, Cedar Knolls, New Jersey at 9:00 A.M., local time, and at any
adjournment or adjournments thereof. Holders of record of Common Stock, $.01
par value ("Common Stock"), as of the close of business on April 3, 1998, will
be entitled to notice of and to vote at the Meeting and any adjournment or
adjournments thereof. As of that date, there were 6,269,230 shares of Common
Stock issued and outstanding and entitled to vote. Each share of Common Stock
is entitled to one vote on any matter presented at the Meeting.
If proxies in the accompanying form are properly executed and returned,
the shares of Common Stock represented thereby will be voted in the manner
specified therein. If not otherwise specified, the shares of Common Stock
represented by the proxies will be voted (i) FOR the election of the five
nominees named below, (ii) FOR the approval of the proposal to adopt the
Employee Stock Purchase Plan (the "Purchase Plan"), (iii) FOR the ratification
of the appointment of Price Waterhouse LLP as independent accountants for the
year ending December 31, 1998, and (iv) in the discretion of the persons named
in the enclosed form of proxy, on any other proposals which may properly come
before the Meeting or any adjournment or adjournments thereof. Any shareholder
who has submitted a proxy may revoke it at any time before it is voted, by
written notice addressed to and received by the Secretary of the Company, by
submitting a duly executed proxy bearing a later date or by electing to vote in
person at the Meeting. The mere presence at the Meeting of the person
appointing a proxy does not, however, revoke the appointment.
The presence, in person or by proxy, of holders of shares of Common Stock
having a majority of the votes entitled to be cast at the Meeting shall
constitute a quorum. The affirmative vote by the holders of a plurality of the
shares of Common Stock represented at the Meeting is required for the election
of Directors, provided a quorum is present in person or by proxy. All actions
proposed herein other than the election of Directors may be taken upon the
affirmative vote of shareholders possessing a majority of the shares of Common
Stock represented at the Meeting, provided a quorum is present in person or by
proxy.
Abstentions are included in the shares present at the Meeting for purposes
of determining whether a quorum is present, and are counted as a vote against
for purposes of determining whether a proposal is approved. Broker non-votes
(when shares are represented at the Meeting by a proxy specifically conferring
only limited authority to vote on certain matters and no authority to vote on
other matters) are included in the determination of the number of shares
represented at the Meeting for purposes of determining whether a quorum is
present but are not counted for purposes of determining whether a proposal has
been approved and thus have no effect on the outcome.
This Proxy Statement, together with the related proxy card, is being
mailed to the shareholders of the Company on or about May 8, 1998. The Annual
Report to Shareholders of the Company for the year ended December 31, 1997,
including financial statements (the "Annual Report"), is being mailed together
with this Proxy Statement to all shareholders of record as of April 3, 1998. In
addition, the Company has provided brokers, dealers, banks, voting trustees and
their nominees, at the Company's expense, with additional copies of the Annual
Report so that such record holders could supply such materials to beneficial
owners as of April 3, 1998.
<PAGE>
ELECTION OF DIRECTORS
At the Meeting, five Directors are to be elected (which number shall
constitute the entire Board of Directors of the Company) to hold office until
the next Annual Meeting of Shareholders and until their successors are duly
elected and qualified.
It is the intention of the persons named in the enclosed form of proxy to
vote the shares of Common Stock represented thereby, unless otherwise specified
in the proxy, for the election as Directors of the persons whose biographies
appear below. In the event any of the nominees should become unavailable or
unable to serve as a Director, it is intended that votes will be cast for a
substitute nominee designated by the Board of Directors. The Board of Directors
has no reason to believe that the nominees named will be unable to serve if
elected. Each of the nominees has consented to being named in this Proxy
Statement and to serve if elected.
The current members of the Board of Directors are as follows:
<TABLE>
<CAPTION>
SERVED AS A
NAME AGE DIRECTOR SINCE POSITIONS WITH THE COMPANY
- ------------------ ----- ---------------- -------------------------------------
<S> <C> <C> <C>
Stan Gang 63 1984 Chairman of the Board, President and
Chief Executive Officer
Michael Gang 31 1995 Director
Michael R. Bruce 59 1995 Director
David J. Sorin 40 1996 Director
Susan H. Wolford 42 1996 Director
</TABLE>
The following information, which has been provided by the nominees, sets
forth for each of the nominees for election to the Board of Directors, his/her
name, age and principal occupation or employment during the past five years,
the name of the corporation or other organization, if any, in which such
occupation or employment is or was carried on and the period during which such
person has served as a director of the Company.
1998 NOMINEES:
STAN GANG, 63, founded the Company and has served as Chairman of the
Board, President and Chief Executive Officer of the Company since 1984. Mr.
Gang has nearly 40 years of experience in the computer sales and services
industry. Prior to joining the Company, Mr. Gang was employed by IBM
Corporation for 10 years in technical capacities, by MAI Equipment Corporation
for five years and Memorex Telex Corporation for 13 years in various management
capacities.
MICHAEL GANG, 31, joined the Company in April 1989 as Corporate Account
Manager and has been a Director of the Company since September 1995. From
September 1995 through October 1997 he served as Secretary of the Company. For
more information see "Certain Relationships and Related Transactions".
MICHAEL R. BRUCE, 59, has been a Director of the Company since September
1995. Since 1993, Mr. Bruce has been a business consultant to several
information technology companies. Until July 1993, Mr. Bruce was president and
chief executive officer of Systems Industries, a storage systems company
specializing in open systems and DEC attachments. Prior to that, Mr. Bruce was
chief operating officer of Sequoia Systems, Inc., a company specializing in
fault tolerant on-line transaction processing systems. Earlier in his career,
Mr. Bruce served IBM for 29 years in various executive and management
positions.
RICHARD S. MILLER, 39, has been Vice President Global Services with AT&T's
Business Markets Division since September 1995. Prior to joining AT&T, Mr.
Miller served Unisys Corporation from 1980 to September 1995 in varying
management roles and responsibilities, most recently as Vice President and
General Manager of US/Canada, Communications Services and Solutions Division,
where he helped grow its consulting services organization. Mr. Miller does not
currently serve on the Company's Board of Directors.
2
<PAGE>
SUSAN H. WOLFORD, 42, has been a Director of the Company since May 1996.
Ms. Wolford currently is Managing Director with First Union Capital Markets a
position she has held since August 1997. Prior to joining First Union Capital
Markets, Ms. Wolford served as Managing Director with Parker/Hunter
Incorporated from 1995 to August 1997. Prior to joining Parker/Hunter
Incorporated in 1995, Ms. Wolford was a Managing Director with PNC Securities
Corp. from 1992 to 1995.
David J. Sorin, Esq. has advised the Company that he will not stand for
re-election to the Board of Directors. Mr. Sorin's term expires at the
conclusion of the Meeting and upon the election of his successor.
All Directors hold office until the next annual meeting of shareholders
and until their successors are duly elected and qualified. Other than Stan Gang
and Michael Gang, who are father and son, there are no family relationships
among any of the Directors and executive officers of the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR EACH OF THE
NOMINEES FOR THE BOARD OF DIRECTORS.
COMMITTEES AND MEETINGS OF THE BOARD
The Board of Directors has a Compensation Committee, which approves
salaries and certain incentive compensation for management and key employees of
the Company and which will administer the Purchase Plan; an Audit Committee,
which reviews the results and scope of the audit and other services provided by
the Company's independent accountants; and an Option Committee, which
administers the Company's 1995 Stock Plan. The Compensation Committee currently
consists of Stan Gang, Mr. Bruce and Ms. Wolford. The Compensation Committee
held one meeting during 1997. The Audit Committee currently consists of Stan
Gang, Messrs. Bruce and Sorin and Ms. Wolford. The Audit Committee held one
meeting during 1997. The Option Committee currently consists of Messrs. Bruce
and Sorin and Ms. Wolford. The Option Committee held one meeting during 1997.
There were nine meetings of the Board of Directors during 1997. Each incumbent
Director attended at least 80% of the aggregate of all meetings of the Board of
Directors held during the period in which he or she served as a Director and
the total number of meetings held by all committees on which he or she served
during the period, if applicable.
COMPENSATION OF DIRECTORS
Each of the Company's non-employee Directors receives compensation of
$1,000 per meeting for each regularly scheduled meeting in which he or she
participates. In addition, each of the non-employee members of the Board who
serve on the Audit, Option and/or Compensation Committee of the Board receives
a $500 fee per meeting for each regularly-scheduled Committee meeting in which
such Committee member participates, as long as such Committee meeting or
meetings is or are held on a day or days other than the day of a
regularly-scheduled Board meeting. Pursuant to these arrangements, Messrs.
Sorin and Bruce and Ms. Wolford, each a current Director, each received $4,000
in 1997. The Company also provides reimbursement to Directors for reasonable
and necessary expenses incurred in connection with attendance at meetings of
the Board of Directors or its Committees. Non-Employee Directors also receive
stock options pursuant to the Company's 1995 Non-Employee Director Stock Option
Plan (the "Non-Employee Director Plan") and Directors who are also employees
are eligible to participate in the Company's 1995 Stock Plan (the "Plan"). See
"Executive Compensation--1995 Stock Plan."
On August 25, 1995, the Board of Directors and shareholders adopted the
Company's Non-Employee Director Plan, effective September 1, 1995. The
Non-Employee Director Plan provides for the grant of options to purchase a
maximum of 100,000 shares of Common Stock of the Company to non-employee
Directors of the Company. The Non-Employee Director Plan is administered by the
Board of Directors. As of February 27, 1998, options to purchase an aggregate
of 60,000 shares of Common Stock had been granted in accordance with the terms
of such plan.
3
<PAGE>
Each person who was a Director of the Company on the effective date of the
Company's initial public offering or became or becomes a Director of the
Company thereafter, and who is not also an employee or officer of the Company
was or shall be granted, on the effective date of such offering or the date on
which he or she became or becomes a Director, whichever is later, an option to
purchase 20,000 shares of Common Stock, at an exercise price per share equal to
the then fair market value of the shares. All options become exercisable in
five equal annual installments commencing one year after the date of grant
provided that the optionee then remains a Director at the time of vesting of
the installments. Each annual vesting installment of options will be reduced
proportionately based on the optionee's actual attendance at Board of
Directors' meetings if the optionee fails to attend at least 80% of such
meetings held in any calendar year. The term of each option will be for a
period of ten years from the date of grant, unless sooner terminated in
accordance with the Non-Employee Director Plan. Options may not be assigned or
transferred except by will or by the laws of descent and distribution, or
pursuant to domestic relations order, and are exercisable to the extent vested
at any time prior to the scheduled expiration date of the option. The
Non-Employee Director Plan terminates on the earlier of August 31, 2005 or at
such time as all shares of Common Stock currently or hereafter reserved for
issuance shall have been issued.
EXECUTIVE OFFICERS
The following table identifies the current executive officers of the Company:
<TABLE>
<CAPTION>
NAME AGE CAPACITIES IN WHICH SERVED IN CURRENT POSITION SINCE
- ------------------- ----- ----------------------------------------------- --------------------------
<S> <C> <C> <C>
Stan Gang 63 Chairman of the Board, President and June 1984
Chief Executive Officer
John Centinaro 42 Senior Vice President--Operations August 1997
Robert G. Petoia. 42 Vice President, Chief Financial Officer January 1998
and Treasurer
Gary T. Gann 50 Vice President, General Counsel October 1997
and Secretary
Dennis Samuelson 41 Senior Vice President--Education November 1997
and IT Staffing Services
John Crescenzo 49 Vice President--Customer Technology Services February 1997
Lawrence Mahon 35 Vice President--National Accounts May 1996
Philip M. Pfau 43 Vice President--Operations and Administration May 1996
</TABLE>
JOHN CENTINARO joined the Company in February 1992 and currently serves as
Senior Vice President--Operations. Prior to joining the Company, from 1978 to
1992, Mr. Centinaro served as Regional Business Operations Manager and National
Account Service Manager with Memorex Telex Corporation. Mr. Centinaro is a
member of the Association for Field Service Management.
ROBERT G. PETOIA joined the Company in January 1998 and currently serves
as Vice President, Chief Financial Officer and Treasurer. Prior to joining the
Company, from 1992 to 1997, Mr. Petoia served as Executive Vice President-Chief
Financial Officer for Saybolt, Inc., the U.S. operating company of The Saybolt
Group, an international service organization. From 1987 to 1992, Mr. Petoia
served in various management capacities for certain companies within The
Saybolt Group. Prior to that, from 1981 to 1987, Mr. Petoia served in the
accounting firm of Arthur Andersen L.L.P. Mr. Petoia is a Certified Public
Accountant.
GARY T. GANN, ESQ. joined the Company in October 1997 and currently serves
as Vice President, General Counsel and Secretary. Prior to joining the Company,
from 1989 to 1997 Mr. Gann served as General Counsel for New Horizons
Worldwide, Inc. Mr. Gann is a New Jersey licensed attorney.
DENNIS SAMUELSON joined the Company in October 1989 and currently serves
as Senior Vice President--Education and IT Staffing Services. Prior to joining
the Company, Mr. Samuelson held
4
<PAGE>
various staff management positions with AT&T and was Manager of the AT&T
Information Center which provided programming and support to AT&T's General
Business Systems division. Mr. Samuelson is a former member of the Novell
Advisory Board and a current member of the Certification Advisory Board of
Sylvan Prometric. In addition, he is a former President and currently is a
member of the Board of Directors of the Information Technology Training
Association.
JOHN CRESCENZO joined the Company in September 1991 and currently serves
as Vice President--
Customer Technology Services. Prior to joining the Company, Mr. Crescenzo
served in various executive management capacities with Memorex Telex
Corporation for nearly twenty years working in mainframe, communication and
microcomputer services.
LAWRENCE MAHON joined the Company in July 1985 and currently serves as
Vice President-- National Accounts. Prior to joining the Company, he held
various positions with a Computerland franchisee.
PHILIP M. PFAU joined the Company in February 1994 and currently serves as
Vice President-- Operations and Administration. Prior to that, he acted as an
independent consultant for the Company from September 1993 to February 1994.
Prior to joining the Company, Mr. Pfau held various financial positions with
the Customer Service Division of TRW, Inc., including Controller from January
1988 to August 1993 and Financial Planning Manager from January 1986 until
December 1987. Mr. Pfau is a Certified Public Accountant.
Executive officers of the Company are elected annually by the Board of
Directors and serve until their successors are duly elected and qualified.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's Directors, officers and shareholders
who beneficially own more than 10% of any class of equity securities of the
Company registered pursuant to Section 12 of the Exchange Act (the "Reporting
Persons") to file initial reports of ownership and reports of changes in
ownership with respect to the Company's equity securities with the Securities
and Exchange Commission (the "SEC"). All Reporting Persons are required by SEC
regulation to furnish the Company with copies of all reports that such
Reporting Persons file with the SEC pursuant to Section 16(a).
Based solely on the Company's review of the copies of such forms received
by the Company and upon written representations of the Company's Reporting
Persons received by the Company, the Company believes that, subsequent to year
end, each of Bruce Flitcroft, the Company's former Vice President-- Network
Consulting Services, and Michael R. Bruce, a director of the Company, did not
report one 1998 Form 4 transaction. In particular, the Company believes that
Mr. Flitcroft failed to report the exercise of 10,000 options on March 13, 1998
at an exercise price of $9.00 per share and the subsequent sale of the
underlying shares. In addition, Mr. Bruce failed to report on a Form 4 his
acquisition in January 1998 of 681 shares indirectly acquired by him as a
result of his marriage. Mr. Bruce intends to report such transaction on a Form
4 to be filed in May 1998 with the SEC.
5
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY OF COMPENSATION
The following table sets forth information concerning compensation for
services in all capacities awarded to, earned by or paid to (i) the Company's
Chief Executive Officer, (ii) the four most highly compensated executive
officers of the Company whose aggregate cash compensation exceeded $100,000 and
who were serving as executive officers at the end of 1997, and (iii) one
additional individual who would have fallen into category (ii) but for the fact
the individual was not serving as an executive officer at the end of 1997
(collectively, the "Named Executives") during the years ended December 31,
1997, 1996 and 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
---------------
ANNUAL COMPENSATION AWARDS
---------------------------------------------- ---------------
OTHER
ANNUAL SECURITIES ALL OTHER
NAME AND COMPENSATION(1) UNDERLYING COMPENSATION(2)
PRINCIPAL POSITION(A) YEAR(B) SALARY($)(C) BONUS($)(D) ($)(E) OPTIONS(#)(G) ($)(I)
- ------------------------------ --------- -------------- ------------- ----------------- --------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Stan Gang 1997 250,000 -- -- -- 3,000
President and Chief 1996 250,000 -- -- -- 3,000
Executive Officer 1995 212,512 -- -- -- 1,870
Sophien Bennaceur 1997 134,278 -- -- 20,000 103,356(3)
Executive Vice President 1996 42,435 -- -- 30,000 --
and Chief Operating Officer 1995 -- -- -- -- --
Gary S. Finkel(4) 1997 140,000 -- -- 11,500 2,954
Vice President, Chief 1996 125,000 15,000 -- 3,500 1,677
Financial Officer and 1995 21,795 -- -- 10,000 --
Treasurer
Bruce Flitcroft(5) 1997 200,000 50,000 -- 20,000 3,000
Vice President--Network 1996 162,000 85,000 -- 10,000 3,000
Consulting Services 1995 162,375 35,000 -- 20,000 3,000
Lawrence Mahon 1997 155,000 10,000 -- 5,000 --
Vice President-- 1996 155,000 -- -- 2,500 --
National Accounts 1995 155,000 -- -- 12,500 --
Dennis Samuelson 1997 150,000 40,000 -- 7,500(6) 3,000
Senior Vice President-- 1996 150,000 -- -- 2,500(7) 3,000
Education and IT 1995 86,250 88,750 -- 20,000 3,000
Staffing Services
</TABLE>
- ----------------
(1) The costs of certain benefits are not included because they did not exceed,
in the case of each Named Executive, the lesser of $50,000 or 10% of the
total annual salary and bonus as reported above.
(2) Unless otherwise indicated, represents 401(k) contributions made by the
Company on behalf of the Named Executive.
(3) Mr. Bennaceur's employment with the Company ended July 30, 1997. Includes
separation benefits and forgiveness of certain indebtedness due the
Company in the aggregate amount of $101,039.
(4) Mr. Finkel's employment with the Company ended in January 1998. Mr. Petoia
became Vice President, Chief Financial Officer and Treasurer of the
Company on January 14, 1998. His annual base salary is $140,000.
(5) Mr. Flitcroft's employment with the Company ended in February 1998.
(6) Excludes 1,000 shares subject to options granted in September 1997, to
Virginia R. Samuelson, an employee of the Company and the wife of Dennis
Samuelson.
(7) Excludes 800 shares subject to options granted in September 1996, to
Virginia R. Samuelson, an employee of the Company and the wife of Dennis
Samuelson.
6
<PAGE>
STOCK OPTION GRANTS IN 1997
The following table sets forth information concerning individual grants of
stock options made pursuant to the Company's Plan during 1997 to each of the
Named Executives. The Company has never granted any stock appreciation rights.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------------
POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
NUMBER OF TOTAL OPTIONS ANNUAL RATES OF
SECURITIES GRANTED TO STOCK PRICE APPRECIATION
UNDERLYING EMPLOYEES EXERCISE OR FOR OPTION TERM(2)
OPTIONS IN FISCAL BASE PRICE EXPIRATION ------------------------------
NAME(A) GRANTED(1)(#)(B) YEAR(C) ($/SH)(D) DATE(E) 5%($)(F) 10%($)(G)
- ------------------------------ ------------------ -------------- ------------ ----------- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Stan Gang .................... -- -- $ -- -- $ -- $ --
Sophien Bennaceur(3) ......... 20,000 9.8% 15.25 2/10/07 191,813 486,091
Gary S. Finkel ............... 11,500 5.7% 13.563 9/15/07 98,092 248,583
Bruce Flitcroft .............. 20,000 9.8% 15.25 2/10/07 191,813 486,091
Lawrence Mahon ............... 5,000 2.5% 13.563 9/15/07 42,648 108,080
Dennis Samuelson ............. 7,500(4) 3.7% 13.563 9/15/07 63,973 162,119
</TABLE>
- ----------------
(1) Options are granted pursuant to and in accordance with the Plan. See
"--1995 Stock Plan."
(2) Represents the difference between (i) the market value of the Common Stock
for which the option may be exercised, assuming that the market value of
the Common Stock on the date of grant appreciates in value to the end of
the ten-year option term at rates of 5% and 10% per annum, respectively,
and (ii) the exercise price of the option. Based on the grant date of the
options, the fair market value of the Company's underlying Common Stock
was $15.25 and $13.563 per share on February 11, 1997 and September 15,
1997, respectively.
(3) No options were vested at the time Mr. Bennaceur ended his employment with
the Company. Such options have terminated.
(4) Excludes 1,000 shares subject to options granted in September 1997, to
Virginia R. Samuelson, an employee of the Company and the wife of Dennis
Samuelson.
1995 STOCK PLAN
The Plan was adopted by the Board of Directors and approved by the
shareholders of the Company on August 25, 1995. A total of 716,690 shares of
Common Stock currently are reserved for issuance upon exercise of options
granted or to be granted under the Plan. The Plan is administered by the Option
Committee of the Board of Directors of the Company. Subject to the provisions
of the Plan, the administrator of the Plan has the discretion to determine the
optionees, the type of options to be granted (incentive stock options ("ISOs")
or non-qualified stock options ("NQSOs")), the vesting provisions and the terms
of the option grants. The exercise price of an ISO may not be less than the
fair market value per share of the Common Stock on the date of grant. The
exercise price of a NQSO may not be less than 85% of the fair market value per
share of the Common Stock on the date of grant. In the case of an optionee who
beneficially owns 10% or more of the outstanding capital stock of the Company,
the exercise price of an option may not be less than 110% of the fair market
value per share on the date of grant. The options terminate not more than ten
years from the date of grant, subject to earlier termination on the optionee's
death, disability or termination of employment with the Company. Options are
not assignable or otherwise transferable except by will or the laws of descent
and distribution. The options become exercisable in five equal annual
installments commencing one year after the date of grant provided that the
optionee then remains an employee at the time of vesting of the installments.
7
<PAGE>
AGGREGATED OPTION EXERCISES IN 1997 AND YEAR-END OPTION VALUES
The following table sets forth information concerning each exercise of
options during 1997 by each of the Named Executives and the year-end number and
value of unexercised in-the-money options held by each of the Named Executives.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
ACQUIRED VALUE FISCAL YEAR-END(#) AT FISCAL YEAR-END($)
ON EXERCISE REALIZED ---------------------------------- ----------------------------------
NAME(A) (#)(B) ($)(C) EXERCISABLE UNEXERCISABLE(D) EXERCISABLE UNEXERCISABLE(E)(1)
- -------------------------- ------------- --------- --------------- ------------------ ------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Stan Gang ................ -- -- -- -- $ -- --
Sophien Bennaceur(2) ..... -- -- -- -- -- --
Gary S. Finkel ........... -- -- 4,700(3) 20,300 11,750 22,000
Bruce Flitcroft .......... -- -- 10,000(4) 40,000 25,000 50,000
Lawrence Mahon ........... -- -- 3,000 14,500 7,500 23,750
Dennis Samuelson ......... -- -- 8,500 21,500(5) 21,250 35,000
</TABLE>
- ----------------
(1) Based on a year-end fair market value of the underlying securities equal to
$11.50 per share.
(2) No options were vested at the time Mr. Bennaceur ended his employment with
the Company. Such options have terminated.
(3) On April 13, 1998, Mr. Finkel exercised such options at an exercise price
of $9.00 per share.
(4) On March 13, 1998, Mr. Flitcroft exercised such options at an exercise
price of $9.00 per share.
(5) Excludes 1,800 shares subject to options granted to Virginia R. Samuelson,
an employee of the Company and the wife of Dennis Samuelson.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
The following executive officers of the Company entered into three-year
employment agreements with the Company, each commencing October 1, 1995. Under
the terms of their respective agreements, Messrs. Gang, Centinaro, Crescenzo,
Mahon, Pfau and Samuelson currently are entitled to an annual base salary of
$250,000, $140,000, $135,000, $155,000, $100,000 and $150,000, respectively,
and bonuses, the amounts and payment of which are within the discretion of the
Board of Directors or the Compensation Committee thereof.
The above-described agreements require each executive to maintain the
confidentiality of Company information and assign inventions to the Company. In
addition, each of such executive officers has agreed that during the term of
his respective agreement and thereafter for a period of up to 18 months,
provided that such executive officer is being compensated at one-half of his
annual base salary under such agreement, such person will not compete with the
Company by engaging in any capacity in any business which is competitive with
the business of the Company.
In addition to the foregoing employment contracts, the Company has
executed indemnification agreements with each of its executive officers and
Directors pursuant to which the Company has agreed to indemnify such parties to
the full extent permitted by law, subject to certain exceptions, if such party
becomes subject to an action because such party is a Director, officer,
employee, agent or fiduciary of the Company. The Company has not entered into
any change-in-control arrangements.
Commencing October 1, 1995, Mr. Flitcroft entered into a three-year
employment agreement with the Company. Under the terms of his employment
agreement for 1997, he was entitled to an annual base salary of $200,000 and a
bonus, the amounts and payments of which were within the discretion of the
Board of Directors or the Compensation Committee thereof. In February 1998, Mr.
Flitcroft ended his employment with the Company. Certain provisions of the
employment agreement include maintaining the confidentiality of Company
information, and assignment of inventions to the Company. In addition, such
agreement includes non-solicitation of Company employees and non-competition
with
8
<PAGE>
the Company for a period of up to 18 months provided that he is being
compensated at one-half of his current annual base salary. The Company notified
Mr. Flitcroft that it required his compliance with the non-solicitation and
non-competition provisions of his employment agreement.
Effective November 1, 1995, the Company and Mr. Finkel executed a
three-year employment agreement pursuant to which Mr. Finkel was entitled to an
annual base salary for 1997 of $140,000 and a bonus, the amounts and payments
of which were within the discretion of the Board of Directors or the
Compensation Committee thereof. In January 1998 Mr. Finkel's employment with
the Company ended. The Company entered into a separation agreement with Mr.
Finkel, the provisions of which include maintaining the confidentiality of
Company information, assignment of inventions to the Company, mutual releases
and covenants not to sue, and a one year restrictive covenant against
solicitation of Company employees and competition with the Company. Mr.
Finkel's compensation in 1998 includes separation benefits of $36,615.
Effective October 14, 1996, the Company and Mr. Bennaceur executed a
one-year employment agreement, terminable at will by either party, pursuant to
which Mr. Bennaceur was entitled to an annual base salary of $225,000 and a
bonus, the amounts and payments of which were within the discretion of the
Board of Directors or the Compensation Committee thereof. On July 30, 1997 Mr.
Bennaceur's employment with the Company ended. The Company entered into a
separation agreement with Mr. Bennaceur, the provisions of which include
maintaining the confidentiality of Company information, assignment of
inventions to the Company, mutual releases and covenants not to sue, and an 18
month restrictive covenant against solicitation of Company employees and
competition with the Company. Mr. Bennaceur's 1997 compensation includes
separation benefits of $101,039. For further discussion of Mr. Bennaceur's
compensation see note (1) of "EXECUTIVE COMPENSATION--Summary of Compensation".
Substantially all of the Company's employees have executed an invention
assignment and confidentiality agreement pursuant to which the employee agrees
to keep confidential all proprietary information of the Company and to assign
to the Company all rights in any proprietary information or inventions made or
contributed by the employee during his or her employment. In addition, the
Company requires that all new employees execute such agreement as a condition
of employment by the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is comprised of Stan Gang, Michael R. Bruce and
Susan H. Wolford. The Option Committee is comprised of Messrs. Bruce and Sorin
and Ms. Wolford. There are no Compensation Committee or Option Committee
interlocks between the Company and any other entities involving the Company's
executive officers and Board of Directors who serve as executive officers of
such entities.
In 1996, Mr. Gang agreed to indemnify the Company for any and all losses
which the Company may sustain, up to $1.0 million arising from or relating to
the alleged wrongful conduct of two of its former employees and the current
employer of such former employees (the "Defendants"), and to date has paid
$675,000 of his personal funds to the Company in connection with an
indemnification arrangement with the Company. Pursuant to the terms of the
agreement between the Company and Mr. Gang, the Company shall reimburse Mr.
Gang in the event and to the extent that the Company is awarded and collects
damages from the Defendants, receives sums as a result of a settlement between
the Company and the Defendants, or receives proceeds under an insurance policy.
Ms. Wolford has been Managing Director of First Union Capital Markets
since August 1997. First Union Capital Markets serves as the Company's
financial advisor. In addition, on June 30, 1997 an affiliate of First Union
Capital Markets, First Union National Bank ("Bank"), executed a Loan and
Security Agreement ("Loan") whereby the Bank expanded the Company's credit
facility to enable the Company to borrow, based upon eligible accounts
receivable, up to $15.0 million for short-term working
9
<PAGE>
capital purposes. Under such facility the Company may borrow, subject to
certain post-closing conditions and covenants by the Company, (i) for working
capital purposes and (ii) for acquisitions. The Company entered into the Loan
with the Bank prior to Ms. Wolford's employment with First Union Capital
Markets.
Prior to serving as Managing Director for First Union Capital Markets,
Susan H. Wolford had been a Managing Director of Parker/Hunter Incorporated
from 1995 to August 1997. Parker/Hunter Incorporated acted as one of the
representatives of the underwriters in the Company's initial public offering
consummated in March and April 1996, prior to Ms. Wolford's election to the
Board of Directors of the Company in May 1996, and the follow-on offering in
June 1997. As compensation for services of the underwriters in the initial
public offering (March/April 1996) and the follow-on offering (June 1997), the
underwriters received a 7% and a 6% underwriting discount, respectively.
David J. Sorin has been the Partner-in-Charge of the Princeton, New Jersey
office of the law firm Buchanan Ingersoll, P.C. since 1993. Buchanan Ingersoll,
P.C. has been counsel to the Company since 1995.
10
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on
the Company's Common Stock with the cumulative total return on the Nasdaq
Composite Index and the Peer Group Index (capitalization weighted) for the
period beginning on the date on which the SEC declared effective the Company's
Form 8-A Registration Statement pursuant to Section 12 of the Exchange Act and
ending on the last day of the Company's last completed fiscal year. The stock
performance shown on the graph below is not indicative of future price
performance.
COMPARISON OF CUMULATIVE TOTAL RETURN(1)(2)
AMONG THE COMPANY, THE NASDAQ COMPOSITE INDEX
AND THE PEER GROUP INDEX(3)
(CAPITALIZATION WEIGHTED)
[PERFORMANCE GRAPH OMITTED]
<TABLE>
<CAPTION>
3/21/96 12/31/96 12/31/97
--------- ---------- ---------
<S> <C> <C> <C>
AlphaNet Solutions, Inc. ............................ 100.0 148.0 106.4
Nasdaq Composite Index .............................. 100.0 115.6 141.4
Peer Group Index (Capitalization Weighted) .......... 100.0 159.3 106.2
</TABLE>
- ----------------
(1) Graph assumes $100 invested on March 21, 1996 in the Company's Common
Stock, the Nasdaq Composite Index and the Peer Group Index (capitalization
weighted).
(2) Cumulative total return assumes reinvestment of dividends.
(3) The Company has constructed a Peer Group Index consisting of other computer
equipment resellers that also provide information technology consulting
services to their clients, including Compucom Systems, Inc., Dataflex
Corporation, DataTec Systems, Inc. (f/k/a Glasgal Communications, Inc.),
Government Technology Services, Inc., Micros-to-Mainframes, Inc., Pomeroy
Computer Resources, Inc., Transnet Corporation and Vanstar Corporation.
The Company believes that these companies most closely resemble the
Company's business mix and that their performance is representative of the
industry.
11
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee has furnished the following report:
The Company's executive compensation policy is designed to attract and
retain highly qualified individuals for its executive positions and to provide
incentives for such executives to achieve maximum Company performance by
aligning the executives' interest with that of shareholders by basing a portion
of compensation on corporate performance.
Certain executive officers have executed employment agreements, which
establishes salaries and other terms of employment. The Compensation and Option
Committee, however, generally review and determine base salary levels for
executive officers of the Company at or about the start of the fiscal year and
determine actual bonuses after the end of the fiscal year based upon Company
and individual performance. For further information on such employment
agreements see "Executive Compensation--Employment Contracts, Termination of
Employment and Change in Control Arrangements".
The Company's executive officer compensation program is comprised of base
salary, discretionary annual cash bonuses, stock options, auto allowance, and
various other benefits, including medical insurance and a 401(k) Plan, which
medical insurance and 401(k) Plan are generally available to all employees of
the Company.
Salaries, whether established pursuant to contract or otherwise, are
established in accordance with industry standards through review of publicly
available information concerning the compensation of officers of comparable
companies. Consideration is also given to relative responsibility, seniority,
individual experience and performance. Salary increases are generally made
based on increases in the industry for similar companies with similar
performance profiles and/or attainment of certain division or Company goals.
Senior executives and key managers who have a direct and measurable
ability to impact the Company's financial results are eligible to participate,
subject to approval by the Compensation Committee, in the Company's Executive
Variable Incentive Plan. The purpose of the plan is to motivate senior
executives through variable compensation toward the attainment of corporate and
individual goals. Each participant is assigned an incentive target expressed as
a percentage of his /her base salary. The incentive target is not based upon a
rigid mathematical formula, however, the target incentive is based on two
independent categories: corporate earnings per share, and individual
performance objectives. Each category is equally weighted. Final evaluation of
individual performance and the specific incentive recommendations are subject
to management discretion.
The stock option program is designed to relate executives' and certain
middle managers' long-term interests to shareholders' long-term interests. In
general, stock option awards are granted on an annual basis if warranted by the
Company's growth and profitability. Stock options are awarded on the basis of
individual performance and/or the achievement of internal strategic objectives.
Certain stock options are subject to forfeiture in the event certain
performance goals are not met.
Based on review of available information, the Committee believes that the
current Chief Executive Officer's total annual compensation is reasonable and
appropriate given the size, complexity and historical performance of the
Company's business, the Company's position as compared to its peers in the
industry, and the specific challenges faced by the Company during the year,
such as the completion of the Company's follow-on public offering, the
acquisition of certain of the assets, liabilities and business of the Lande
Group, Inc., changes in the market for computer products and services and other
industry factors. No specific weight was assigned to any of the criteria
relative to the Chief Executive Officer's compensation.
Compensation Committee Members
Stan Gang
Michael R. Bruce
Susan H. Wolford
12
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
There are, as of February 27, 1998, approximately 155 holders of record
and approximately 4,300 beneficial owners of the Company's Common Stock. The
following table sets forth certain information, as of February 27, 1998, with
respect to holdings of the Company's Common Stock by (i) each person known by
the Company to beneficially own more than 5% of the total number of shares of
Common Stock outstanding as of such date, (ii) each of the Company's Directors,
nominees, and Named Executives, and (iii) all Directors and executive officers
as a group.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF
OF BENEFICIAL OWNER(1) BENEFICIAL OWNERSHIP(1) PERCENT OF CLASS(2)
- ------------------------------------------- ------------------------- --------------------
<S> <C> <C>
(i) Certain Beneficial Owners:
Stan Gang(3) .............................. 1,915,000 30.6
7 Ridgedale Avenue
Cedar Knolls, NJ 07927
Lord, Abbett & Co.(4) ..................... 456,500 7.3
767 Fifth Avenue
New York, NY 10153
(ii) Directors, nominees, and
Named Executives who are
not set forth above:
Sophien Bennaceur ......................... -- *
Gary S. Finkel(5) ......................... 4,700 *
Lawrence Mahon(6) ......................... 3,000 *
Bruce Flitcroft(7) ........................ 17,075 *
Dennis Samuelson(8) ....................... 8,860 *
Michael Gang(9) ........................... 6,000 *
Michael R. Bruce(10) ...................... 10,681 *
David J. Sorin, Esq.(11) .................. 4,000 *
Susan H. Wolford(12) ...................... 4,400 *
Richard S. Miller ......................... -- *
(iii) All Directors and executive officers
as a group (12 persons)(3)(13) ......... 1,966,941 31.2
</TABLE>
- ----------------
* Less than one percent.
(1) Except as set forth in the footnotes to this table and subject to
applicable community property law, the persons named in the table have
sole voting and sole investment power with respect to all shares of Common
Stock shown as beneficially owned by such shareholder.
(2) Applicable ownership percentage is based on 6,259,130 shares of Common
Stock outstanding on February 27, 1998 plus presently exercisable stock
options held by each such holder which will become exercisable within 60
days after February 27, 1998.
(3) Does not include 135,000 shares of Common Stock owned by The Gang Annuity
Trust dated January 3, 1994. Mr. Gang expressly disclaims beneficial
ownership of such shares.
(4) Information given is based upon a Schedule 13G filed with the Securities
and Exchange Commission on February 13, 1998.
(5) Represents 4,700 shares of Common Stock underlying options which are
exercisable as of February 27, 1998 or within 60 days after such date. On
April 13, 1998, Mr. Finkel exercised such options at an exercise price
of $9.00 per share. Excludes 20,300 shares underlying options which become
exercisable over time after such period, such options have terminated.
(6) Represents 3,000 shares of Common Stock underlying options which are
exercisable as of February 27, 1998 or within 60 days after such date.
Excludes 14,500 shares underlying options which become exercisable over
time after such period.
(7) Represents 14,000 shares of Common Stock underlying options which are
exercisable as of February 27, 1998 or within 60 days after such date,
1,230 shares owned by Mr. Flitcroft and 1,845 shares held by his wife as a
custodian for minor children. On March 13, 1998, Mr. Flitcroft exercised
10,000 options at an exercise price of $9.00 per share. Excludes 36,000
shares underlying options which become exercisable over time after such
period.
13
<PAGE>
(8) Represents 8,500 shares of Common Stock underlying options which are
exercisable as of February 27, 1998 or within 60 days after such date
200 shares held as a custodian for minor children and 160 shares of Common
Stock underlying options which are exercisable as of February 27, 1998 or
within 60 days after such date owned by his wife, an employee of the
Company. Excludes 21,500 shares underlying options which become
exercisable over time after such period and 1,640 shares underlying
options which become exercisable over time after such period owned by his
wife, an employee of the Company.
(9) Represents 6,000 shares of Common Stock underlying options which are
exercisable as of February 27, 1998 or within 60 days after such date.
Excludes 9,000 shares underlying options which become exercisable over
time after such period. In addition, excludes 135,000 shares owned by The
Gang Annuity Trust. Mr. Gang expressly disclaims beneficial ownership of
such shares.
(10) Represents 8,000 shares of Common Stock underlying options which are
exercisable as of February 27, 1998 or within 60 days after such date,
2,000 shares owned by Mr. Bruce and 681 shares owned by his wife in a
retirement account. Excludes 12,000 shares underlying options which become
exercisable over time after such period.
(11) Represents 4,000 shares of Common Stock underlying options which are
exercisable as of February 27, 1998 or within 60 days after such date.
Excludes 16,000 shares underlying options which become exercisable over
time after such period.
(12) Represents 4,000 shares of Common Stock underlying options which are
exercisable as of February 27, 1998 or within 60 days after such date, 200
shares owned by Ms. Wolford and 200 shares owned as custodian for a minor
child. Excludes 16,000 shares underlying options which become exercisable
over time after such period.
(13) Includes 15,000 shares of Common Stock underlying options granted to
executive officers of the Company not individually listed on the table
which are exercisable as of February 27, 1998 or within 60 days after such
date and includes an aggregate of 33,660 shares of Common Stock underlying
options granted to individuals listed above which are exercisable as of
February 27, 1998 or within 60 days after such date. Excludes 169,140
shares underlying options granted to executive officers and Directors
which become exercisable over time after such period.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In 1997, the Company paid, as compensation for services rendered to the
Company and for sales generated, an aggregate of $778,000 to Michael Gang, the
son of Stan Gang, the Company's Chairman of the Board, President, and Chief
Executive Officer. Michael Gang serves as a salesperson for the Company.
Michael Gang has served as a Director of the Company since September 1995 and
as Secretary from September 1995 to October 1997.
For transactions involving Stan Gang, David J. Sorin and Susan H. Wolford,
each a Director of the Company, see "Executive Compensation--Compensation
Committee Interlocks and Insider Participation."
In 1995, the Board of Directors of the Company adopted a policy requiring
that any future transactions between the Company and its officers, Directors,
principal shareholders and their affiliates be on terms no less favorable to
the Company than could be obtained from unrelated third parties and that any
such transactions be approved by a majority of the disinterested members of the
Company's Board of Directors.
14
<PAGE>
PROPOSAL TO APPROVE THE EMPLOYEE STOCK PURCHASE PLAN
GENERAL
The Board of Directors has adopted, and is submitting to shareholders for
approval, the Purchase Plan. The purpose of the Purchase Plan is to provide a
further incentive for employees to promote the best interests of the Company
and to encourage stock ownership by employees in order to participate in the
Company's potential economic progress. The Purchase Plan provides these
opportunities through payroll savings, an attractive purchase price and
favorable income tax consequences. Substantially all employees of the Company
and its subsidiary are eligible to participate in the Purchase Plan. A total of
500,000 shares will be made available for issuance and purchase pursuant to the
Purchase Plan.
The Purchase Plan is intended to form part of an overall compensation
structure for the Company, in conjunction with the Company's stock option
plans, to provide an additional source for employees to share in the Company's
prospects for equity growth. The Board of Directors believes that a broad-based
plan, such as the Purchase Plan, serves as an important element in promoting
equity ownership among employees generally. At March 31, 1998, the Company had
approximately 765 full-time employees.
In general, the Purchase Plan provides for eligible employees to designate
in advance of specified purchase periods (which are currently semi-annual) a
percentage of compensation (up to 10%) to be withheld from their pay and
applied toward the purchase of such number of whole shares of Common Stock as
can be purchased at a price of 85% of the lesser of the stock's trading price
at the beginning or the end of each such six month period. No employee can
purchase more than $25,000 worth of stock annually and no stock can be
purchased by any person which would result in the purchaser owning five percent
or more of the total combined voting power or value of all classes of stock of
the Company.
The Purchase Plan is intended to satisfy the requirements of Section
423(b) of the Code which requires that it be approved by shareholders within
one year of the earlier of its adoption by the Board of Directors or the
Purchase Plan's effective date. The Purchase Plan was adopted by the Board of
Directors on December 31, 1997. In addition, the Purchase Plan is intended to
comply with certain requirements of Rule 16b-3 under the Exchange Act. Messrs.
Gang, Bruce and Wolford, serve on the committee which administers the Purchase
Plan.
The term of the Purchase Plan will extend through December 31, 2002,
unless terminated earlier by the Board of Directors. The Board of Directors
generally has the right to amend or terminate the Purchase Plan without the
consent of participants or shareholders, subject to certain exceptions.
Each person employed by the Company (except short-term, part-time, or
seasonal employees) is eligible to participate in the Purchase Plan (an
"Eligible Employee"), provided he or she is not, as of the day preceding the
first day of the Purchase Period (as defined below), deemed, for purposes of
Section 423(b)(3) of the Code, to own stock possessing 5% or more of the total
combined voting power or value of all classes of stock of the Company.
Under the Purchase Plan, a separate option to purchase shares of Common
Stock will be granted to each Eligible Employee as of the first day of each
Purchase Period as defined below. The option grant applies automatically to all
Eligible Employees, but to participate in the Purchase Plan, further action is
required as explained below. A Purchase Period will be a period of six or
twelve months (as elected in advance by the committee administering the
Purchase Plan), during which time payroll deductions will be made to fund the
purchase of shares subject to option (the "Purchase Period"). The maximum
number of shares an Eligible Employee is eligible to purchase for any Purchase
Period is $25,000 ($12,500 for a six-month Purchase Period) divided by 100% of
the fair market value of a share of Common Stock on the first day of each
applicable Purchase Period. If, as of the first day of each such Purchase
Period, an Eligible Employee would be deemed for purposes of Section 423(b)(3)
of the Code to own stock of the Company (including any number of shares which
such person is entitled to purchase under the Purchase Plan) possessing 5% or
more of the total combined voting power or value of all
15
<PAGE>
classes of stock of the Company, the maximum number of shares such person will
be entitled to purchase pursuant to the Purchase Plan will be reduced. Options
granted to Eligible Employees who fail to authorize payroll deductions will
automatically lapse.
The purchase price per share of the Common Stock sold under the Purchase
Plan for any Purchase Period will be equal to the lesser of (a) 85% of the
"fair market value" of a share of Common Stock on the first day of such
Purchase Period, or (b) 85% of the "fair market value" of a share of Common
Stock on the last day of such Purchase Period (the "Exercise Date"). The fair
market value will be deemed to be the average of the closing bid and asked
prices of the Common Stock reported by Nasdaq, or as the case may be, the last
reported sales price of the Common Stock on such date as reported by the Nasdaq
National Market or the national securities exchange on which such stock is
listed and traded, or in each such case where there is no trading on such date,
on the previous date on which there is such trading.
In order to purchase shares pursuant to an option, an Eligible Employee
must sign a stock purchase agreement (the "Stock Purchase Agreement") and
properly return it as instructed in advance of the first day of each Purchase
Period. By doing so, the employee becomes a participant (each a "Participant")
in the Purchase Plan. Under the Stock Purchase Agreement, each Eligible
Employee who elects to participate in the Purchase Plan must authorize
contributions to the Purchase Plan through regular payroll deductions,
effective as of the first day of the relevant Purchase Period. A Participant
may authorize payroll deductions from his or her taxable cash W-2 compensation,
as defined in the Purchase Plan ("W-2 Compensation"), for each payroll period,
of a specified percentage of such compensation, not less than 1% and not more
than 10%, in multiples of 1%. The amount of payroll deduction must be
established at the beginning of a Purchase Period and may not be altered,
except for complete discontinuance. The payroll deduction authorized by a
Participant will be credited to an individual account maintained for the
Participant under the Purchase Plan (an "Account").
For any particular Purchase Period, the committee administering the
Purchase Plan may elect, in advance, a trust administration option whereby the
amounts of payroll deductions taken for Participants will be deposited
regularly in a trust established by the Company with an institutional trustee
for the benefit of Participants (the "Trust Administration Option"). Unless
withdrawn earlier, the funds held for the respective Participants (together
with applicable earnings) will be applied by the trustee on the Exercise Date
to purchase shares of Common Stock for each such Participant in accordance with
the Purchase Plan. The Company will pay all the expenses of trust establishment
and administration, but will not have a lien over, or reversionary interest in,
the trust assets. The Company may only use trust account assets to purchase
shares pursuant to the Purchase Plan, pay any administrative charges under the
Trust Administration Option or for withdrawal by or return to Participants.
Withdrawals by Participants during a Purchase Period while the Trust
Administration Option is in effect will entitle the withdrawing Participants to
their respective shares of earnings by the trust on their accumulated payroll
deductions.
Shares of Common Stock acquired pursuant to the Purchase Plan and funded
pursuant to payroll deductions as provided in the Stock Purchase Agreement are
to be offered and sold to Eligible Employees solely pursuant to an effective
Registration Statement filed under the Securities Act of 1933, as amended.
If there is credited to the Account of a Participant as of any Exercise
Date an amount at least equal to the purchase price determined under the
Purchase Plan of one share of Common Stock for the current Purchase Period, the
Participant will purchase, and the Company will sell, at such price the largest
number of whole shares of Common Stock which can be purchased with the amount
credited to his or her Account. In no event will fractional shares be issued.
Any balance remaining in a Participant's Account at the end of a Purchase
Period (not in excess of the purchase price of one share of Common Stock) will
be carried forward into a Participant's Account for the following Purchase
Period.
No Participant may, in any calendar year, purchase such number of shares
under the Purchase Plan which, when aggregated with all other shares of stock
of the Company which he or she may be entitled
16
<PAGE>
to purchase under any other employee stock purchase plan of the Company which
meets the requirements of Section 423(b) of the Code, exceeds $25,000 in fair
market value. Although the exclusive method for purchasing shares under the
Purchase Plan is through payroll deductions whose maximum limit is 10% of W-2
Compensation, the maximum payroll deduction permitted for an Eligible Employee
for any Purchase Period shall be no greater than $15,000 ($7,500 for a Purchase
Period of six months).
If, as of the Exercise Date in any Purchase Period, the aggregate funds
available for the purchase of shares of Common Stock would result in a purchase
of shares in excess of the maximum number of shares then available for purchase
under the Purchase Plan, the number of shares which would otherwise be
purchased by each Participant on the Exercise Date will be reduced by a factor
relative to the payroll deduction accumulation for each Participant.
INCOME TAX CONSEQUENCES
Options issued under the Purchase Plan are intended to be options issued
pursuant to an "Employee Stock Purchase Plan" within the meaning of Section 423
of the Code. Accordingly, if a Participant exercises an option and disposes of
the shares after the later of (i) two years from the date the option is granted
or (ii) one year from the date the shares are issued (the "Holding Period"),
and remains an employee at all times during the period beginning with the date
the option is granted and ending three months before the date it is exercised,
he or she will be entitled for Federal income tax purposes to special tax
treatment. Under such circumstances, any gain realized upon disposition of the
shares will be treated as ordinary income to the extent of the lesser of (i)
15% of the fair market value of the shares on the date the option was granted,
or (ii) the amount by which the fair market value of the shares on the date of
disposition exceeded the option price. The taxation of any further gain depends
on the date the shares are sold and the period such shares were held by the
Participant.
With respect to sales after July 28, 1997, if the shares were held at
least 18 months as of the sale date, the gain is taxable as long-term capital
gain at a maximum rate of 20%. If, however, the sale occurs on or after July
28, 1997 and the shares were held at least one year (so as to satisfy the
Holding Period) but less than 18 months, the gain is taxable as a "mid-term
gain" at a maximum rate of 28%.
A maximum capital gains rate of 18% will apply to certain sales after
December 31, 2000 of shares acquired under the Purchase Plan if such shares
have been held for at least five years.
The Company will not be entitled to any tax deduction for Federal income
tax purposes with respect to shares so acquired and disposed of by a
Participant.
The Purchase Plan does not contain any provisions requiring a Participant
to hold the optioned stock for any period after exercise of the option, nor to
acquire such stock for investment purposes. However, unless a Participant holds
the stock for more than two years after the option is granted and one year
after the stock is issued, he or she will not be entitled to favorable capital
gain treatment for Federal income tax purposes on any increase in fair market
value of the stock between the date the option was granted and the date the
option was exercised. If the Participant disposes of the stock within such
one-year period or such two-year period, any excess of the fair market value on
the date of exercise over the option price is taxable as ordinary income to him
or her and is deductible by the Company for Federal income tax purposes.
The number of shares of Common Stock which can be purchased pursuant to
options under the Purchase Plan are subject to adjustment in the event of
certain recapitalizations of the Company. Participants' rights to purchase
stock pursuant to the Purchase Plan are not transferable. Generally, the
Company's Board of Directors, without the consent of Participants, can
terminate or amend the Purchase Plan, except that no such action can adversely
affect options previously granted and, without shareholder approval, the Board
may not: (i) increase the total amount of Common Stock allocated to the
Purchase Plan (except for permitted capital adjustments); (ii) change the class
of Eligible Employees; (iii) decrease the minimum purchase price; (iv) extend a
Purchase Period; or (v) extend the term of the Purchase Plan.
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Shareholders are being asked to consider and vote upon a proposal to adopt
the Purchase Plan. The Board of Directors believes that the Purchase Plan
provides an important inducement to encourage investment in the Common Stock of
the Company by its employees. The Board of Directors believes that the Purchase
Plan provides employees with an opportunity to invest in the Company through
payroll savings, an attractive purchase price and favorable income tax
consequences.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE PURCHASE
PLAN.
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company has, subject to shareholder
approval, retained Price Waterhouse LLP as independent accountants of the
Company for the year ending December 31, 1998. Price Waterhouse LLP also served
as independent accountants of the Company for 1997. Neither the accounting firm
nor any of its members has any direct or indirect financial interest in or any
connection with the Company in any capacity other than as independent
accountants.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF PRICE WATERHOUSE LLP AS THE INDEPENDENT ACCOUNTANTS OF THE
COMPANY FOR THE YEAR ENDING DECEMBER 31, 1998.
One or more representatives of Price Waterhouse LLP is expected to attend
the Meeting and to have an opportunity to make a statement and/or respond to
appropriate questions from shareholders.
SHAREHOLDERS' PROPOSALS
Shareholders who wish to submit proposals for inclusion in the Company's
proxy statement and form of proxy relating to the 1999 Annual Meeting of
Shareholders must advise the Secretary of the Company of such proposals in
writing by January 8, 1999.
OTHER MATTERS
The Board of Directors is not aware of any matter to be presented for
action at the Meeting other than the matters referred to above and does not
intend to bring any other matters before the Meeting. However, if other matters
should come before the Meeting, it is intended that holders of the proxies will
vote thereon in their discretion.
GENERAL
The accompanying proxy is solicited by and on behalf of the Board of
Directors of the Company, whose notice of meeting is attached to this Proxy
Statement, and the entire cost of such solicitation will be borne directly by
the Company.
In addition to the use of the mails, proxies may be solicited by personal
interview, telephone and telegram by Directors, officers and other employees of
the Company who will not be specially compensated for these services. The
Company will also request that brokers, nominees, custodians and other
fiduciaries forward soliciting materials to the beneficial owners of shares
held of record by such brokers, nominees, custodians and other fiduciaries. The
Company will reimburse such persons for their reasonable expenses in connection
therewith.
Certain information contained in this Proxy Statement relating to the
occupations and security holdings of Directors and officers of the Company is
based upon information received from the individual Directors and officers.
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ALPHANET SOLUTIONS, INC. WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS
REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1997, INCLUDING FINANCIAL
STATEMENTS AND SCHEDULES THERETO BUT NOT INCLUDING EXHIBITS, TO EACH OF ITS
SHAREHOLDERS OF RECORD ON APRIL 3, 1998, AND TO EACH BENEFICIAL SHAREHOLDER ON
THAT DATE UPON WRITTEN REQUEST MADE TO GARY T. GANN, SECRETARY OF ALPHANET
SOLUTIONS, INC., 7 RIDGEDALE AVENUE, CEDAR KNOLLS, NJ 07927, TELEPHONE NO.
(973) 267-0088. A REASONABLE FEE WILL BE CHARGED FOR COPIES OF REQUESTED
EXHIBITS.
PLEASE DATE, SIGN AND RETURN THE PROXY CARD AT YOUR EARLIEST CONVENIENCE
IN THE ENCLOSED RETURN ENVELOPE. A PROMPT RETURN OF YOUR PROXY CARD WILL BE
APPRECIATED AS IT WILL SAVE THE EXPENSE OF FURTHER MAILINGS.
By Order of the Board of Directors
Gary T. Gann
SECRETARY
Cedar Knolls, New Jersey
May 8, 1998
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APPENDIX A
ALPHANET SOLUTIONS, INC.
EMPLOYEE STOCK PURCHASE PLAN
I. DEFINITIONS
ACCOUNT means the Employee Stock Purchase Plan Account established for a
Participant under Section IX hereunder.
BOARD OF DIRECTORS shall mean the Board of Directors of the Company.
CODE shall mean the Internal Revenue Code of 1986, as amended.
COMMITTEE shall mean the Stock Purchase Plan Committee appointed and
acting in accordance with the terms of the Plan.
COMMON STOCK shall mean shares of the Company's Common Stock, par value
$.01 per share, and any security into which such stock shall be converted or
shall become by reason of changes in its nature such as by way of
recapitalization, reclassification, changes in par value, merger, consolidation
or similar transaction.
COMPANY shall mean AlphaNet Solutions, Inc., a New Jersey corporation.
When used in the Plan with reference to employment, Company shall include
Subsidiaries.
COMPENSATION shall mean the total taxable cash compensation paid to an
Eligible Employee by the Company, as reportable on IRS Form W-2.
EFFECTIVE DATE shall mean January 1, 1998.
ELIGIBLE EMPLOYEES shall mean only those persons who, as of the first day
of a Purchase Period, are Employees and who are not, as of the day preceding
the first day of the Purchase Period, deemed for purposes of Section 423(b)(3)
of the Code to own stock possessing 5% or more of the total combined voting
power or value of all classes of stock of the Company.
EMPLOYEES shall mean all persons who are employed by the Company as
common-law employees, excluding persons (i) whose customary employment is 20
hours or less per week, or (ii) whose customary employment is for not more
than five months in a calendar year.
EXCHANGE ACT shall mean the Securities Exchange Act of 1934, as amended.
EXERCISE DATE shall mean the last day of a Purchase Period.
FAIR MARKET VALUE shall mean as of any date: (i) the average of the
closing bid and asked prices on such date of the Common Stock as quoted by
Nasdaq; or (ii), as the case may be, the last reported sales price of the
Common Stock on such date as reported by the Nasdaq National Market or the
principal national securities exchange on which such stock is listed and
traded, or in each such case where there is no trading on such date, on the
first previous date on which there is such trading.
PARTICIPANT shall mean an Eligible Employee who elects to participate in
the Plan under Section VII hereunder.
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PLAN shall mean the AlphaNet Solutions, Inc. Employee Stock Purchase Plan,
as set forth herein and as amended from time to time.
PURCHASE PERIOD shall mean (a) for 1998, the period commencing on the
Effective Date and ending on June 30, 1998; and (b) thereafter, a period of six
calendar months or one calendar year, in each case as elected by the Committee
not less than 60 days in advance of the commencement of such period. A Purchase
Period shall begin on the first business day of, and end on the last business
day of, each such calendar period. In the absence of any such election,
Purchase Periods subsequent to the first period shall be for six months each.
The last Purchase Period under the Plan shall terminate on or before the date
of termination of the Plan provided in Section XXIII.
SUBSIDIARY shall mean any corporation which is a subsidiary of the Company
within the meaning of Section 425(f) of the Code.
TERMINATION OF SERVICE shall mean the earliest of the following events
with respect to a Participant: his retirement, death, quit, discharge or
permanent separation from service with the Company.
The masculine gender includes the feminine, the singular number includes
the plural and the plural number includes the singular unless the context
otherwise requires.
II. PURPOSE
It is the purpose of this Plan to provide a means whereby Eligible
Employees may purchase Common Stock through payroll deductions. It is intended
to provide a further incentive for Employees to promote the best interests of
the Company and to encourage stock ownership by Employees in order to
participate in the Company's economic progress.
It is the intention of the Company to have the Plan qualify as an
"employee stock purchase plan" within the meaning of Section 423 of the Code
and the provisions of the Plan shall be construed in a manner consistent with
the Code.
III. ADMINISTRATION
The Plan shall be administered by a Committee selected by the Board of
Directors from among its members, which shall consist of not less than two
members. The Committee shall have authority to make rules and regulations for
the administration of the Plan, and its interpretation and decisions with
regard thereto shall be final and conclusive. The Committee shall have all
necessary authority to communicate, from time to time, through the Company's
management, with Eligible Employees and Participants for purposes of
administering the Plan, and shall notify Eligible Employees promptly of its
election of the term of each forthcoming Purchase Period, if other than a six
months period, and of its election to utilize the Trust Administration Option
referred to in Section IX.
IV. SHARES
There shall be Five Hundred Thousand (500,000) shares of Common Stock
reserved for issuance to and purchase by Participants under the Plan, subject
to adjustment in accordance with Section XXI hereof. The shares of Common Stock
subject to the Plan shall be either shares of authorized but unissued Common
Stock or shares of Common Stock reacquired by the Company. Shares of Common
Stock involved in any unexercised portion of any terminated option may again be
subject to options to purchase granted under the Plan.
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V. PURCHASE PRICE
The purchase price per share of the shares of Common Stock sold to
Participants under this Plan for any Purchase Period shall be the lesser of (a)
85% of the Fair Market Value of a share of Common Stock on the first day of
such Purchase Period, or (b) 85% of the Fair Market Value of a share of Common
Stock on the Exercise Date of such Purchase Period.
VI. GRANT OF OPTION TO PURCHASE SHARES
Each Eligible Employee shall be granted an option effective on the first
day of each Purchase Period to purchase a number of full shares of Common Stock
(subject to adjustment as provided in Section XXI). The maximum number of
shares an Eligible Employee shall be eligible to purchase for any Purchase
Period is $25,000 ($12,500 for a Purchase Period of six months) divided by 100%
of the Fair Market Value of a share of Common Stock on the first day of the
Purchase Period.
Anything herein to the contrary notwithstanding, if, as of the first day
of a Purchase Period, any Eligible Employee entitled to purchase shares
hereunder would be deemed for the purposes of Section 423(b)(3) of the Code to
own stock (including any number of shares which such person would be entitled
to purchase hereunder) possessing 5% or more of the total combined voting power
or value of all classes of stock of the Company, the maximum number of shares
which such person shall be entitled to purchase pursuant to the Plan shall be
reduced to that number which when added to the number of shares of stock of the
Company which such person is so deemed to own (excluding any number of shares
which such person would be entitled to purchase hereunder), is one less than
such 5%.
VII. ELECTION TO PARTICIPATE
An Eligible Employee may elect to become a Participant in this Plan by
completing a "Stock Purchase Agreement" form prior to the first day of the
Purchase Period. In the Stock Purchase Agreement, the Eligible Employee shall
authorize regular payroll deductions from his Compensation subject to the
limitations in Section VIII below. Options granted to Eligible Employees who
fail to authorize payroll deductions will automatically lapse. If a
Participant's payroll deductions allow him to purchase fewer than the maximum
number of shares of Common Stock to which his option entitles him, the option
with respect to the shares which he does not purchase will lapse as of the last
day of the Purchase Period.
The execution and delivery of the Stock Purchase Agreement as between the
Participant and the Company shall be conditioned upon the compliance by the
Company at such time with Federal (and any applicable state) securities laws.
VIII. PAYROLL DEDUCTIONS
An Eligible Employee may authorize payroll deductions from his
Compensation for each payroll period of a specified percentage of such
Compensation, not less than 1% and not more than 10%, in multiples of 1%. The
maximum payroll deduction permitted for an Eligible Employee for any Purchase
Period shall be no greater than $15,000 ($7,500.00 for a Purchase Period of six
months).
The amount of payroll deduction shall be established at the beginning of a
Purchase Period and may not be altered, except for complete discontinuance
under Section XI, XIII or XIV hereunder.
IX. EMPLOYEE STOCK PURCHASE ACCOUNT
AND TRUST ADMINISTRATION OPTION
An Employee Stock Purchase Account will be established for each
Participant in the Plan. Payroll deductions made under Section VIII will be
credited to the individual Accounts. In the event the
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Committee determines with respect to any Purchase Period, not to utilize the
"Trust Administration Option" set forth in the next paragraph, no interest or
other earnings will be credited to a Participant's Account.
With respect to any one or more Purchase Periods, the Committee may elect
to utilize, in addition to the separate accounting for payroll deductions
provided in the Plan, the option to administer the funding of the Accounts
through a trust established pursuant to a trust agreement between the Company
and an institution exercising fiduciary powers (the "Trust Administration
Option") as hereinafter set forth in this paragraph. The Company shall provide
for the funding of each Account on a regular basis during each Purchase Period
reflecting payroll deductions of Participants and shall cause such sums to be
deposited within 15 days following such deductions in a trust account at such
institution and upon such terms as are established by the Committee. The trust
account assets shall be invested in shares of a tax-exempt money-market
registered investment company designated in the trust agreement, which
designation shall not be changed during the Purchase Period. Assets deposited
in the aforesaid trust account shall be commingled, but a separate accounting
shall be kept for each Participant's interest therein. Each Participant shall
be credited with his allocable share of the earnings of the trust account,
which credits shall be reflected in each Participant's Account balance
hereunder. At all times, the funds in such trust account shall be considered
the property of the respective Participants, and no part of the trust account
assets may at any time revert to, or be subject to any lien or claim of, the
Company; PROVIDED, HOWEVER, that such trust account assets may be used only for
the purchase of shares as provided in Section X hereof, or payment of any
administrative charges under the Trust Administration Option, or for withdrawal
by or return to Participants (or their beneficiaries) as provided in Sections
XI, XIII or XXIII hereof.
X. PURCHASE OF SHARES
If, as of any Exercise Date, there is credited to the Account of a
Participant an amount at least equal to the purchase price of one share of
Common Stock for the current Purchase Period, as determined in Section V, the
Participant shall buy and the Company shall sell at such price the largest
number of whole shares of Common Stock which can be purchased with the amount
in his Account.
Any balance remaining in a Participant's Account at the end of a Purchase
Period will be carried forward into the Participant's Account for the following
Purchase Period. In no event will the balance carried forward be equal to or
exceed the purchase price of one share of Common Stock as determined in Section
V above. Notwithstanding the foregoing provisions of this paragraph, if as of
any Exercise Date the provisions of Section XV are applicable to the Purchase
Period ending on such Exercise Date, and the Committee reduces the number of
shares which would otherwise be purchased by Participants on such Exercise
Date, the entire balance remaining credited to the Account of each Participant
after the purchase of the applicable number of shares of Common Stock on such
Exercise Date shall be refunded to each such Participant. Except with respect
to a Purchase Period for which the Trust Administration Option has been
elected, no refund of an Account balance made pursuant to the Plan shall
include any amount in respect of interest or other imputed earnings.
Anything herein to the contrary notwithstanding, no Participant may, in
any calendar year, purchase a number of shares of Common Stock under this Plan
which, together with all other shares of stock of the Company and its
Subsidiaries which he may be entitled to purchase in such year under all other
employee stock purchase plans of the Company and its subsidiaries which meet
the requirements of Section 423(b) of the Code, have an aggregate Fair Market
Value (measured as of the first day of each applicable Purchase Period) in
excess of $25,000. The limitation described in the preceding sentence shall be
applied in a manner consistent with Section 423(b)(8) of the Code.
XI. WITHDRAWAL
A Participant may withdraw from the Plan at any time prior to the Exercise
Date of a Purchase Period by filing a notice of withdrawal. Upon a
Participant's withdrawal, the payroll deductions shall
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cease for the next payroll period and the entire amount credited to his Account
shall be refunded to him. Any Participant who withdraws from the Plan may again
become a Participant hereunder at the start of the next Purchase Period in
accordance with Section VII.
XII. ISSUANCE OF STOCK CERTIFICATES
The shares of Common Stock purchased by a Participant shall, for all
purposes, be deemed to have been issued and sold at the close of business on
the Exercise Date. Prior to that date, none of the rights or privileges of a
stockholder of the Company shall exist with respect to such shares. Stock
certificates shall be registered either in the Participant's name or jointly in
the names of the Participant and his spouse, as the Participant shall designate
in his Stock Purchase Agreement. Such designation may be changed at any time by
filing notice thereof. Certificates representing shares of purchased Common
Stock shall be delivered promptly to the Participant following issuance.
XIII. TERMINATION OF SERVICE
(a) Upon a Participant's Termination of Service for any reason other than
retirement or death, no payroll deduction may be made from any Compensation due
him as of the date of his Termination of Service and the entire balance
credited to his Account shall be automatically refunded to him.
(b) Upon a Participant's retirement from the Company after age 55, no
payroll deduction shall be made from any Compensation due him as of the date of
his retirement. Such a Participant may, prior to Retirement, elect:
(1) to have the entire amount credited to his Account as of the date of his
retirement refunded to him, or
(2) to have the entire amount credited to his Account held therein and
utilized to purchase shares on the Exercise Date as provided in Section
X.
(c) Upon the death of a Participant, no payroll deduction shall be made
from any Compensation due him at time of death, and the entire balance in the
deceased Participant's Account shall be paid to the Participant's designated
beneficiary, or otherwise to his estate.
XIV. TEMPORARY LAYOFF, AUTHORIZED LEAVE OF ABSENCE, DISABILITY
Payroll deductions shall cease during a period of absence without pay from
work due to a Participant's temporary layoff, authorized leave of absence,
disability or for any other reason.If such Participant shall return to active
service prior to the Exercise Date for the current Purchase Period, payroll
deductions shall be resumed in accordance with his prior authorization.
If the Participant shall not return to active service prior to the
Exercise Date for the current Purchase Period, the balance of his Stock
Purchase Account will be used to purchase shares on the Exercise Date as
provided in Section X, unless the Participant elects to withdraw from the Plan
in accordance with Section XI.
XV. PROCEDURE IF INSUFFICIENT SHARES AVAILABLE
In the event that on any Exercise Date the aggregate funds available for
the purchase of shares of Common Stock pursuant to Section X hereof would
result in purchases of shares in excess of the number of shares of Common Stock
then available for purchase under the Plan, the Committee shall
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proportionately reduce the number of shares which would otherwise be purchased
by each Participant on the Exercise Date in order to eliminate such excess, and
the provisions of the second paragraph of Section X shall apply.
XVI. RIGHTS NOT TRANSFERABLE
The right to purchase shares of Common Stock under this Plan is
exercisable only by the Participant during his lifetime and is not transferable
by him. If a Participant attempts to transfer his right to purchase shares
under the Plan, he shall be deemed to have requested withdrawal from the Plan
and the provisions of Section XI hereof shall apply with respect to such
Participant.
XVII. NO OBLIGATION TO EXERCISE OPTION
Granting of an option under this Plan shall impose no obligation on an
Eligible Employee to exercise such option.
XVIII. NO GUARANTEE OF CONTINUED EMPLOYMENT
Granting of an option under this Plan shall imply no right of continued
employment with the Company for any Eligible Employee.
XIX. NOTICE
Any notice which an Eligible Employee or Participant files pursuant to
this Plan shall be in writing and shall be delivered personally or by mail
addressed to the Committee, c/o Chief Executive Officer at 7 Ridgedale Avenue,
Cedar Knolls, New Jersey 07927, or such other person or location as may be
specified by the Committee.
XX. REPURCHASE OF STOCK
The Company shall not be required to repurchase from any Participant
shares of Common Stock acquired under this Plan.
XXI. ADJUSTMENT FOR RECAPITALIZATION, MERGER, ETC.
The aggregate number of shares of Common Stock which may be purchased
pursuant to options granted hereunder, the number of shares of Common Stock
covered by each outstanding option, and the purchase price thereof for each
such option shall be appropriately adjusted for any increase or decrease in the
number of outstanding shares of Common Stock resulting from a stock split or
other subdivision or consolidation of shares of Common Stock or for other
capital adjustments or payments of stock dividends or distributions or other
increases or decreases in the outstanding shares of Common Stock affected
without receipt of consideration of the Company.
Subject to any required action by the stockholders, if the Company shall
be the surviving corporation in any merger, reorganization or other business
combination, any option granted hereunder shall cover the securities or other
property to which a holder of the number of shares of Common Stock would have
been entitled pursuant to the terms of the merger. A dissolution or liquidation
of the
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Company or a merger or consolidation in which the Company is not the surviving
entity shall cause every option outstanding hereunder to terminate.
The foregoing adjustments and the manner of application of the foregoing
provisions shall be determined by the Committee in its sole discretion. Any
such adjustment shall provide for the elimination of any fractional share which
might otherwise become subject to an option.
XXII. AMENDMENT OF THE PLAN
The Board of Directors may, without the consent of the Participants, amend
the Plan at any time, provided that no such action shall adversely affect
options theretofore granted hereunder, and provided that no such action by the
Board of Directors, without approval of the Company's stockholders, may:
(a) increase the total number of shares of Common Stock which may be
purchased by all Participants, except as contemplated in Section XXI;
(b) change the class of Employees eligible to receive options under the
Plan;
(c) decrease the minimum purchase price under Section V;
(d) extend a Purchase Period hereunder; or
(e) extend the term of the Plan.
XXIII. TERM OF THE PLAN
This Plan shall become effective as of the Effective Date upon its
adoption by the Board of Directors, provided that it is approved at a duly-held
meeting of stockholders of the Company, by an affirmative majority of the total
votes present and voting thereat, within 12 months after the earlier of the
Effective Date or the date of adoption by the Board of Directors. If the Plan
is not so approved, no Common Stock shall be purchased under the Plan and the
balance of each Participant's Account shall be promptly returned to the
Participant. The Plan shall continue in effect through the December 31st
following the fourth anniversary of the Effective Date, unless terminated prior
thereto pursuant to Section XV or XXI hereof, or pursuant to the next
succeeding sentence. The Board of Directors shall have the right to terminate
the Plan at any time, effective as of the next succeeding Exercise Date. In the
event of the expiration of the Plan or its termination, outstanding options
shall not be affected, except to the extent provided in Section XV and any
remaining balance credited to the Account of each Participant as of the
applicable Exercise Date shall be refunded to each such Participant.
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ALPHANET SOLUTIONS, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE COMPANY FOR THE ANNUAL MEETING OF SHAREHOLDERS
The undersigned hereby constitutes and appoints Stan Gang and Robert G.
Petoia, and each of them, his or her true and lawful agent and proxy with full
power of substitution in each, to represent and to vote on behalf of the
undersigned all of the shares of Common Stock of AlphaNet Solutions, Inc. (the
"Company") which the undersigned is entitled to vote at the Annual Meeting of
Shareholders of the Company to be held at the Company's offices, 7 Ridgedale
Avenue, Cedar Knolls, New Jersey at 9:00 A.M., local time, on Friday, May 29,
1998 and at any adjournment or adjournments thereof, upon the following
proposals more fully described in the Notice of Annual Meeting of Shareholders
and Proxy Statement for the Meeting (receipt of which is hereby acknowledged).
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1, 2 AND 3.
SEE REVERSE
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE) SIDE
<PAGE>
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF SHAREHOLDERS
ALPHANET SOLUTIONS, INC.
MAY 29, 1998
PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED
<TABLE>
<S> <C>
A [X] PLEASE MARK YOUR
VOTE AS IN THIS
EXAMPLE
VOTE FOR all nominees
listed at right; except vote VOTE
withheld from the following WITHHELD
nominees (if any). from all nominees
1. ELECTION OF [ ] [ ] Nominees: STAN GANG
DIRECTORS MICHAEL GANG
MICHAEL R. BRUCE
To withhold authority for any individual nominee, write that SUSAN H. WOLFORD
nominee's name in the space provided below. RICHARD S. MILLER
_______________________________________________________________
FOR AGAINST ABSTAIN
2. APPROVAL OF PROPOSAL TO ADOPT THE [ ] [ ] [ ]
EMPLOYEE STOCK PURCHASE PLAN.
3. APPROVAL OF PROPOSAL TO RATIFY THE [ ] [ ] [ ]
APPOINTMENT OF PRICE WATERHOUSE
LLP AS THE INDEPENDENT ACCOUNTANTS
OF THE COMPANY FOR THE YEAR ENDING
DECEMBER 31, 1998.
4. In his discretion, the proxy is authorized to vote upon other matters as may
properly come before the Meeting.
I WILL [ ] WILL NOT [ ]
ATTEND THE MEETING
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY,
USING THE ENCLOSED ENVELOPE.
Signature of Shareholder______________________________ Signature of Shareholder ___________________________Dated:___________________
(if held jointly)
NOTE: THIS PROXY MUST BE SIGNED EXACTLY AS THE NAME APPEARS HEREON. WHEN SHARES ARE HELD BY JOINT TENANTS, BOTH SHOULD SIGN. IF THE
SIGNER IS A CORPORATION, PLEASE SIGN FULL CORPORATE NAME BY DULY AUTHORIZED OFFICER, GIVING FULL TITLE AS SUCH. IF SIGNER IS A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON.
</TABLE>
