<PAGE>
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
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
- -------------------------------------------------------------------------------
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, For Use of the Commission
/X/ Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
Aztec Technology Partners, Inc.
(Name of Registrant as Specified In Its Charter)
------------------------------------
(Name of Person(s) Filing Proxy Statement if Other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(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 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement no.:
3) Filing Party:
4) Date Filed:
- -------------------------------------------------------------------------------
<PAGE>
<TABLE>
<S> <C>
50 Braintree Hill Office
Park,
Suite 220
Braintree, Massachusetts
02184
[LOGO] August 21, 1998
</TABLE>
Dear Stockholder:
It is my pleasure to invite you to the first annual meeting of stockholders
of Aztec Technology Partners, Inc. The 1998 Annual Meeting will be held on
Friday, September 25, 1998 at 10:00 a.m., local time, at the offices of Hale and
Dorr LLP, 60 State Street, Boston, Massachusetts 02109. At the meeting,
stockholders will be asked to elect one Class I Director, ratify the Company's
1998 Employee Stock Purchase Plan and ratify the Company's selection of
independent accountants.
As you are aware, on June 10, 1998, we completed our spin-off from U.S.
Office Products Company ("U.S. Office Products") and our common stock began
trading on the Nasdaq National Market under the symbol "AZTC." Since the
spin-off we have achieved some significant accomplishments, including the
acquisition of PCM, Inc. a provider of enterprise design and implementation
services for $54 million and the signing of a new $140 million acquisition
credit facility with BankBoston, N.A.
Your vote is important. To ensure that your shares will be represented at
the meeting, please complete, sign, date and mail your proxy card to American
Stock Transfer & Trust Company in the enclosed postage-paid envelope. If your
shares are held in the name of a broker, bank or other holder of record, you
will receive instructions from the holder of record which you must follow in
order for your shares to be voted. If you plan to attend the meeting, please
mark the appropriate box on the enclosed proxy card.
We look forward to seeing you at the meeting.
Sincerely,
[SIGNATURE]
James E. Claypoole
Chairman and Chief Executive Officer
<PAGE>
AZTEC TECHNOLOGY PARTNERS, INC.
50 BRAINTREE HILL OFFICE PARK, SUITE 220
BRAINTREE, MASSACHUSETTS 02184
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 25, 1998
The Annual Meeting of Stockholders of Aztec Technology Partners, Inc.
("Aztec" or the "Company") will be held on Friday, September 25, 1998 at the
offices of Hale and Dorr LLP, 60 State Street, Boston, Massachusetts 02109 at
10:00 a.m., local time, to consider and act upon the following matters:
1. To elect one Class I Director to serve until the 2001 Annual Meeting.
2. To ratify the adoption of the Company's 1998 Employee Stock Purchase
Plan.
3. To ratify the selection of PricewaterhouseCoopers LLP by the Board of
Directors as the Company's independent accountants for the current fiscal
year.
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Stockholders of record at the close of business on August 14, 1998 will be
entitled to notice of and to vote at the meeting or any adjournments thereof.
The stock transfer books of the Company will remain open.
A copy of the Company's Annual Report on Form 10-K for the year ended April
25, 1998, which contains financial statements and other information of interest
to stockholders, accompanies this Notice and the enclosed Proxy Statement.
All stockholders are cordially invited to attend the meeting.
By Order of the Board of Directors,
[SIGNATURE]
Douglas R. Johnson
SECRETARY
Braintree, Massachusetts
August 21, 1998
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER
TO ENSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF THE PROXY
IS MAILED IN THE UNITED STATES.
<PAGE>
AZTEC TECHNOLOGY PARTNERS, INC.
50 BRAINTREE HILL OFFICE PARK, SUITE 220
BRAINTREE, MASSACHUSETTS 02184
PROXY STATEMENT FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 25, 1998
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of the Company for use at the Annual Meeting
of Stockholders to be held on September 25, 1998 at 10:00 a.m. at the offices of
Hale and Dorr LLP, 60 State Street, Boston, Massachusetts 02109 and at any
adjournments of that meeting (the "Annual Meeting"). All proxies will be voted
in accordance with the stockholders' instructions, and if no choice is
specified, the proxies will be voted in favor of the matters set forth in the
accompanying Notice of Meeting. Any proxy may be revoked by a stockholder at any
time before its exercise by delivery of written revocation or a subsequently
dated proxy to the Secretary of the Company or by voting in person at the Annual
Meeting. Attendance at the Annual Meeting will not itself be deemed to revoke a
proxy unless the stockholder gives affirmative notice at the Annual Meeting that
the stockholder intends to revoke the proxy and vote in person.
The Notice of Meeting, this Proxy Statement, the enclosed Proxy and the
Company's Annual Report on Form 10-K for the year ended April 25, 1998 are being
mailed to stockholders beginning on or about August 21, 1998. The Company will,
upon written request of any stockholder, furnish, for an appropriate processing
fee, the exhibits to the Annual Report on Form 10-K. Please address all such
requests to the Company, attention Douglas R. Johnson, Executive Vice President,
Chief Financial Officer, Treasurer and Secretary, 50 Braintree Hill Office Park,
Suite 220, Braintree, MA 02184.
VOTING SECURITIES AND VOTES REQUIRED
At the close of business on August 14, 1998, the record date for the
determination of stockholders entitled to vote at the Annual Meeting, there were
outstanding and entitled to vote an aggregate of 21,962,016 shares of common
stock, $0.001 par value per share, of the Company (the "Common Stock").
Stockholders are entitled to one vote per share.
The presence or representation of holders of a majority of the number of
shares of the capital stock of the Company issued, outstanding and entitled to
vote at the Annual Meeting constitutes a quorum for the transaction of business
at the Annual Meeting. Shares of Common Stock present in person or represented
by proxy (including shares which abstain or do not vote with respect to one or
more matters) will be counted for purposes of determining whether a quorum is
present.
The affirmative vote of the holders of a plurality of the votes cast by the
stockholders entitled to vote at the Annual Meeting is required for the election
of directors. The affirmative vote of the holders of the majority of the shares
present or represented and voting is required to ratify the adoption of the 1998
Employee Stock Purchase Plan and to ratify the selection of
PricewaterhouseCoopers LLP as the Company's independent accountants for the
current fiscal year.
Shares which abstain from voting as to a particular matter, and shares held
in "street name" by brokers or nominees who indicate on their proxies that they
do not have discretionary authority to vote such shares as to a particular
matter, will not be counted as votes in favor of such matter and will also not
be counted as shares voting on such matter. Accordingly, abstentions and broker
non-votes will have no effect on the outcome of voting on the matters to be
voted on at the meeting.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of July 31, 1998 with
respect to the beneficial ownership of the Company's Common Stock by (i) each
person known by the Company to beneficially own more than 5% of the outstanding
shares of Common Stock, (ii) each director and each person nominated to become a
director of the Company, (iii) each executive officer of the Company named in
the Summary Compensation Table set forth under the caption "Executive
Compensation" below and (iv) all directors and executive officers of the Company
as a group. Unless otherwise indicated, the business address of each of the
following is 50 Braintree Hill Office Park, Suite 220, Braintree, Massachusetts
02184:
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF PERCENT OF
AZTEC AZTEC
COMMON STOCK COMMON
BENEFICIALLY STOCK
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED(1) OUTSTANDING(2)
- ----------------------------------------------------------------------- -------------- ---------------
<S> <C> <C>
OFFICERS AND DIRECTORS:
James E. Claypoole (3)................................................. 1,202,249 5.22%
Douglas R. Johnson..................................................... -- --
Ira Cohen.............................................................. -- --
Elizabeth M. Claypoole(4).............................................. 4,973 *
Lawrence M. Howell (5).................................................
Howell Capital 43,333 *
177 Stuart Street, Suite 700
San Francisco, CA 94105-1206
Jonathan J. Ledecky (6)................................................
Consolidated Capital Corporation
800 Connecticut Avenue, NW 2,146,125 9.09%
Suite 1111
Washington, DC 20006
Clifford Mitman, Jr (7)................................................
Mitman Associates 33,333 *
P.O. Box 543
Cohasset, MA 02025
Benjamin Tandowski.....................................................
383 Nordhoff Place, 11,402 *
Suite 100
Englewood, NJ 07631-4622
All executive officers and directors as a group (seven persons)(8)..... 3,426,442 13.85%
5% Stockholders:.......................................................
The Baupost Group, L.L.C(9)............................................
44 Brattle Street, 2,405,150 10.95%
5th Floor
Cambridge, Massachusetts 02138
</TABLE>
- ------------------------
* Less than 1%.
(1) The number of shares beneficially owned by each stockholder is determined
under rules promulgated by the Securities and Exchange Commission, and the
information is not necessarily indicative of beneficial ownership for any
other purpose. Under such rules, beneficial ownership includes any shares as
to which the individual has sole or shared voting power or investment power
and also any shares which the individual has the right to acquire within 60
days of July 31, 1998 through the exercise of any stock option, warrant or
other right. The inclusion herein of such shares, however, does not
constitute an admission that the named stockholder is a direct or indirect
beneficial owner of such shares. Unless otherwise indicated each person or
entity listed above has sole voting and investment power with respect to the
shares listed.
2
<PAGE>
(2) Number of shares of Common Stock deemed outstanding includes 21,962,016
shares issued and outstanding as of July 31, 1998, plus any shares subject
to options held by the referenced beneficial owner that such owner has the
right to acquire within 60 days of such date.
(3) Includes 1,049,672 shares subject to options exercisable within 60 days of
July 31, 1998.
(4) Includes 4,785 shares subject to options exercisable within 60 days of July
31, 1998. As of the end of fiscal year 1998, Ms. Claypoole was no longer an
executive officer of Aztec. Ms. Claypoole is currently employed by Aztec in
a non-executive officer capacity.
(5) Includes 33,333 shares subject to options exercisable within 60 days of July
31, 1998.
(6) Includes 1,660,500 shares subject to options exercisable within 60 days of
July 31, 1998.
(7) Includes 33,333 shares subject to options exercisable within 60 days of July
31, 1998.
(8) Includes 2,776,838 shares subject to options exercisable within 60 days of
July 31, 1998. The total number of shares of Aztec Common Stock beneficially
owned by executive officers and directors as a group excludes shares held by
Ms. Claypoole.
(9) Information is as of July 31, 1998 and is based on a Schedule 13G filed with
the Securities and Exchange Commission by The Baupost Group, L.L.C. (the
"Baupost Group"). The Baupost Group is a registered investment advisor. The
number of shares beneficially owned by this entity includes those purchased
on behalf of a registered investment company and various limited
partnerships. The Baupost Group reported that it has the sole power to vote
or direct the vote of all 2,405,150 shares.
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, executive officers and
holders of more than 10% of the Company's Common Stock ("Reporting Persons") to
file with the Securities and Exchange Commission initial reports of ownership
and reports of changes in ownership of Common Stock and other equity securities
of the Company. During fiscal 1998, the Company was not subject to such
reporting requirements.
PROPOSAL 1--ELECTION OF DIRECTORS
Pursuant to the Company's Amended and Restated Certificate of Incorporation
and Amended and Restated By-laws, the Company has a classified Board of
Directors consisting of one Class I Director, two Class II Directors and two
Class III Directors. The Class I, Class II and Class III Directors will serve
until the annual meeting of stockholders to be held in 1998, 1999, and 2000,
respectively, and until their respective successors are elected and qualified.
Mr. Ledecky presently serves as a Class I Director. Messrs. Mitman and Tandowski
presently serve as Class II Directors. Messrs. Howell and Claypoole presently
serve as Class III Directors. At each annual meeting of stockholders, directors
are elected for a term of three years to succeed those whose terms are expiring.
The Board of Directors has nominated Mr. Ledecky for re-election as a Class I
Director. THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THIS
PROPOSAL.
The person(s) named in the enclosed proxy will vote to elect Mr. Ledecky as
a Class I Director, unless the proxy is marked otherwise.
The Class I Director will be elected to hold office until the 2001 Annual
Meeting and until his successor is elected and qualified. The nominee has
indicated his willingness to serve, if elected; however, if the nominee should
be unable to serve, the person acting under the proxy may vote the proxy for a
substitute nominee. The Board of Directors has no reason to believe that the
nominee will be unable to serve if elected.
Following is certain information concerning each director, including his
principal occupation and business experience for the past five years, the names
of other publicly held companies of which such person serves as a director and
such person's age and length of service.
3
<PAGE>
NOMINEE FOR TERM EXPIRING IN 1998 (CLASS I DIRECTOR)
JONATHAN J. LEDECKY, age 40, has served as a Director of Aztec since May
1998 and currently serves as an employee of Aztec and other companies which,
like Aztec, were spun-off from U.S. Office Products, Inc. ("U.S. Office
Products") in June 1998. Since June 1998, Mr. Ledecky has served as a member of
the Board of Directors of each of the companies spun-off from U.S. Office
Products which companies include, Workflow Management, Inc., Navigant
International, Inc. and School Specialty, Inc. Mr. Ledecky founded U.S. Office
Products, a diversified provider of office products and service, in October
1994, and served as Chairman of the Board until June 1998 and as its Chief
Executive Officer until November 1997. Mr. Ledecky founded Consolidation Capital
Corporation, an investment management company, in February 1997 and currently
serves as its Chairman of the Board and Chief Executive Officer. Mr. Ledecky has
also since April 1997 served as non-executive Chairman of the Board of USA
Floral Products, Inc., an importer and wholesaler of floral products, and since
October 1997 as director of UniCapital Corporation, an investment management
company. Since June 1998, Mr. Ledecky has also served on the Board of Directors
of Microstrategy Corporation, a decision support software company. Mr. Ledecky
served from 1989 to 1991 as the President of The Legacy Fund, Inc., and from
1991 to September 1994 as President and Chief Executive Officer of Legacy Dealer
Capital Fund, Inc., both wholly owned subsidiaries of Steelcase Inc., a
manufacturer of office furniture products. Prior to Mr. Ledecky's tenure at The
Legacy Fund, Inc., he was a partner at Adler and Company and Senior Vice
President at Allied Capital Corporation, both investment management companies.
DIRECTORS WHOSE TERM EXPIRES IN 1999 (CLASS II DIRECTORS)
CLIFFORD MITMAN, JR., age 59, has served as a Director of Aztec since May
1998. For the past six years, Mr. Mitman has been President of Mitman
Associates, a firm that provides executive compensation and organization
consulting services to a wide range of companies. Prior to 1992, Mr. Mitman was
a Vice President and Senior Consultant with the firms of Towers, Perrin and The
Wyatt Company, both management consulting firms. Mr. Mitman graduated from Yale
University and the Wharton School of Business.
BENJAMIN TANDOWSKI, age 50, has served as a Director of Aztec since May
1998. Mr. Tandowski has since 1985 served, and continues to serve, as President
of Professional Computer Solutions, a provider of comprehensive enterprise
solutions and an operating company of Aztec, which Mr. Tandowski founded in
1985. Previously, Mr. Tandowski was employed by Exxon Research and the Chemical
and Plastics Division of Union Carbide, both diversified chemical companies. Mr.
Tandowski holds a Ph.D. in mechanical engineering from the City University of
New York, where he was a National Science Fellow.
DIRECTORS WHOSE TERM EXPIRES IN 2000 (CLASS III DIRECTORS)
JAMES E. CLAYPOOLE, age 64, has served as Chief Executive Officer and
Director of Aztec since February 1998, as Chairman since June 1998 and as
President since July 1998. Mr. Claypoole founded and served as President of Bay
State Computer Group, an enterprise design and implementation company and an
operating company of Aztec, from 1984 to May 1998 and as Chairman of U.S. Office
Products' Technology Solutions division from October 1996 to June 1998. For the
past 15 years, Mr. Claypoole has served as a member of the board of directors of
the Digital Dealers Association, and was its President from 1992 to 1994. Mr.
Claypoole was Chairman of the Digital Dealers Association in 1995, and has
served on a variety of manufacturers' councils.
LAWRENCE M. HOWELL, age 53, has served as Director of Aztec since May 1998.
Since January 1996, Mr. Howell has been Managing Partner of Howell Capital, an
investment banking advisory firm. From January 1993 to January 1996, Mr. Howell
was employed by Morgan Stanley & Co. Incorporated, an investment banking firm,
where he served as Managing Director and as Advisory Director. From May 1970
4
<PAGE>
to January 1993, Mr. Howell was employed in the investment banking division of
Goldman Sachs & Co. Mr. Howell holds a Bachelor of Business Administration from
the University of Texas and a master of Business Administration from Southern
Methodist University. Mr. Howell is a Director of ULTRADATA Corporation, an
information management software company serving the financial institution
industry.
OFFICERS
In addition to those noted above, the following individuals are officers of
Aztec:
<TABLE>
<CAPTION>
NAME AGE POSITION
- -------------------------------- --- ----------------------------------------------------------------
<S> <C> <C>
Douglas R. Johnson.............. 45 Executive Vice President, Chief Financial Officer,
Treasurer and Secretary*
Ira Cohen....................... 44 Chief Operating Officer*
Phillip Arturi.................. 40 President of Professional Network Services
Richard G. Erickson............. 36 President of Digital Network Associates
Thomas J. Foley................. 43 President of Bay State Computer Group
Larry Glaser.................... 38 President of Fortran Corp.
Kelby Knoedler.................. 47 President of Entra Computer Corp.
James Mahon..................... 50 President of Mahon Communications Corporation
Robert McClory.................. 53 President of Compel Corporation
Jack Meehan..................... 48 President of Aztec International
Darren Metz..................... 35 President of Office Equipment Service
</TABLE>
- ------------------------
* Executive Officer
DOUGLAS R. JOHNSON has served as Chief Financial Officer, Treasurer and
Secretary of Aztec since April 1998 and as Executive Vice President of Aztec
since June 1998. Prior to coming to Aztec, Mr. Johnson held the position of Vice
President and Chief Financial Officer of Clam Associates Incorporated during
1997. Mr. Johnson was Executive Vice president and Chief Financial Officer of
Discreet Logic Incorporated from 1995 to 1996. He also held the position of Vice
President of Finance and Administration and Chief Financial Officer of Fusion
Systems Corporation from 1993 to 1995. From 1990 to 1993, Mr. Johnson was Chief
Financial Officer and Treasurer of Excalibur Technology Corporation. From 1981
to 1990, Mr. Johnson held various financial management positions at the Marriott
Corporation, serving finally as Vice President of Finance in that company's
services group. Mr. Johnson is a Certified Public Accountant.
IRA COHEN has served as Chief Operating Officer of Aztec since March 1998.
Since 1996, Mr. Cohen had worked as an independent consultant. Mr. Cohen founded
Copley Management Associates, a technology management consulting company, in
1979. In 1984, Mr. Cohen merged Copley Management Associates with DataTrend to
form Copley Systems, Inc. In 1993, after selling Copley Systems, Inc. (which had
grown from $2 million in annual revenue to $104 million in annual revenue over
the preceding nine years), Mr. Cohen was employed by CIC Systems as Chief
Operating Officer of its Copley Division from 1993 through 1996. Mr. Cohen's
non-compete agreement with CIC Systems has expired.
PHILLIP ARTURI, has 17 years of experience in LAN/WAN infrastructure design,
application engineering, and systems integration. Prior to establishing
Professional Network Services in 1989, Mr. Arturi implemented distributed
processing solutions at GTE, and served Caldor as MIS manager.
RICHARD G. ERICKSON, has been a principal of Digital Network Associates
since 1986 and has over 15 years of computer systems integration experience. He
holds a B.S. in mechanical engineering from Villanova University. Prior to
joining Digital Network Associates, Mr. Erickson held positions at Banyan
Systems and Novell.
5
<PAGE>
THOMAS J. FOLEY, has 19 years of Network Systems/Applications experience.
Mr. Foley has been employed by Bay State since 1985. Prior to his years at Bay
State, Mr. Foley was employed by a Boston computer company for six years. Mr.
Foley holds a B.S. from Suffolk University, and has taken extensive graduate
business courses.
LARRY GLASER, established Fortran in the late 1970s as a service and repair
organization for telecommunications equipment. He has been President of Fortran
since that date.
KELBY KNOEDLER, established Entra in 1984 after selling his ownership
interest in CADO Business Systems of Ohio, which he founded in 1978. Since 1984,
he has been the General Manager and President of Entra. He was previously
employed with Burroughs Corporation.
JAMES MAHON, has over 26 years of diverse experience in the communications
industry. Mr. Mahon was a founder and past president of Computer Telephone
Corporation, which went public in 1985. Mr. Mahon, who has also held
corporate-level positions at Rolm and Executone, joined Mahon in 1989 and has
been President of Mahon since that date.
ROBERT M. MCCLORY, founded Compel in 1972 and has been its President since
that date. From 1972 to 1979, he was General Manager of Parsons Electric
Company, a general contractor in Los Angeles, California. He is a Registered
Communications Distribution Designer.
JACK MEEHAN, founded Aztec International in 1984 and has been its President
and Chief Executive Officer since that date. Previously, Mr. Meehan was employed
by New York Telephone Company and by Tie/communications.
DARREN METZ, has been the President of Office Equipment Service since 1986.
He holds a B.A. in computer science from the University of Tennessee, and an
M.B.A. from the University of Memphis.
BOARD OF DIRECTORS AND COMMITTEES MEETINGS
The Board of Directors has a standing Audit Committee which is charged with
reviewing Aztec's annual audit, meeting with Aztec's independent accountants to
review Aztec's internal control and financial management practices, and
providing the opportunity for direct contact between the Company's independent
accountants and the Board of Directors. The Audit Committee was formed in June
1998, and therefore did not meet during fiscal 1998. Messrs. Howell and Mitman
are members of the Audit Committee. Mr. Howell is the Chairman of the Audit
Committee.
The Board of Directors has a standing Compensation Committee, which is
charged with making recommendations to the Board of Directors regarding
compensation of Aztec's executive officers, and administering the Company's
stock option plans and its stock purchase plan. The Compensation Committee was
formed in June 1998, and therefore did not meet during fiscal 1998. Messrs.
Howell, Mitman and Tandowski are members of the Compensation Committee. Mr.
Mitman is the Chairman of the Compensation Committee.
During fiscal 1998, the Board of Directors, which consisted solely of Mr.
Claypoole, held four meetings (including consents in lieu of a meeting). There
are no arrangements or understandings between any director or officer and any
other person pursuant to which such officer or director is to be selected as a
director or officer.
DIRECTOR COMPENSATION
The Aztec Board compensates non-employee directors $1,500 for attendance at
quarterly Board meetings, $500 for participating in a telephonic Board meeting
or committee meeting, and $1,000 for attendance at each off-site Board meeting
(other than a quarterly meeting) or committee meeting. The Company also
reimburses Director's travel expenses incurred in connection with off-site
meetings of the Board of Directors or any committee thereof.
6
<PAGE>
In addition, non-employee directors receive stock options under the
Company's 1998 Initial Non-Employee Director Stock Option Plan (the "Director
Plan"). The Director Plan provides for the grant of options to purchase a
maximum of 300,000 shares of Common Stock. The Director Plan is administered by
the Board of Directors. The Director Plan provides that each non-employee
director will receive an automatic grant of an option to purchase 25,000 shares
of Common Stock upon initial election to the Board of Directors (vesting upon
the date of grant). In addition, an option to purchase 10,000 shares of Common
Stock will be granted to each incumbent non-employee director on the date of
each annual meeting of stockholders beginning with the 1998 annual meeting
(vesting in three equal annual installments beginning on the date of grant). An
option to purchase 5,000 shares of Common Stock will also be granted to each
non-employee director who is the chairperson of a committee of the Board of
Directors upon initial appointment to such position and for each full year of
service thereafter (vesting in three equal annual installments beginning on the
date of grant, except for the initial grant, which shall vest in full upon the
date of grant). Options granted under the Directors' Plan expire ten years from
the date of grant. The option price for options granted under the Directors'
Plan is equal to the fair market value of a share of Common Stock as of the date
of grant. The Company has reserved a total of 300,000 shares of Common Stock for
issuance under the Director's Plan, 240,000 of which are currently available for
future grant. On June 10, 1998, the Company granted 30,000 options each to Mr.
Howell and to Mr. Mitman, for an exercise price of $9.875, which options vested
immediately and are subject to one year resale restrictions. On September 25,
1998, the Company at its Annual Meeting will grant to each Mr. Howell and to Mr.
Mitman options to purchase 10,000 shares of Aztec Common Stock at an exercise
price per share which shall equal the last reported sale price per share of the
Aztec Common Stock on the Nasdaq National Market on such date.
EXECUTIVE COMPENSATION
The following table sets forth information with respect to the compensation
paid by Aztec for services rendered during the year ended April 25, 1998 to the
Chief Executive Officer and the other highly compensated executive officers of
Aztec (the "Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL -----------------------------
COMPENSATION SECURITIES
FISCAL -------------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION
- --------------------------------------------- ------- --------------- -------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
James E. Claypoole........................... 1998 $ 307,500(1) $ 50,000 45,000(2) $54,360(3)
Chairman and
Chief Executive Officer
Ira Cohen.................................... 1998 (4) -- -- --
Chief Operating Officer
Douglas Johnson.............................. 1998 (5) -- -- --
Executive Vice President and
Chief Financial Officer
Elizabeth M. Claypoole (6)................... 1998 $ 160,000 -- 6,000(7) --
Former Vice President,
Treasurer, and Secretary
</TABLE>
- ------------------------
(1) Mr. Claypoole's annual salary was increased from $300,000 to $315,000 in
November 1997. In June 1998, Mr. annual Claypoole's salary was further
increased to $375,000.
7
<PAGE>
(2) On April 28, 1997, U.S. Office Products granted Mr. Claypoole options to
acquire 45,000 shares of U.S. Office Products common stock. The remaining
options held by Mr. Claypoole are expected to be replaced with options to
acquire shares of Aztec Common Stock. See footnote (2) in "Option Grants in
Last Fiscal Year."
(3) Consists of life insurance premiums of $42,360 paid by Bay State, on life
insurance policies for which Mr. Claypoole's estate is the beneficiary and
payment of automobile expenses of $12,000.
(4) Mr. Cohen was hired on March 2, 1998. Mr. Cohen's salary is expected to be
$200,000 during his first year with Aztec.
(5) Mr. Johnson was hired on March 31, 1998. His salary is expected to be
$175,000 during his first year with Aztec.
(6) As of the end of fiscal year 1998, Ms. Claypoole was no longer an executive
officer of Aztec. Ms. Claypoole is currently employed by Aztec in a
non-executive officer capacity.
(7) On April 28, 1997, U.S. Office Products granted Ms. Claypoole options to
acquire 6,000 shares of U.S. Office Products common stock. The remaining
options held by Ms. Claypoole are expected to be replaced with options to
acquire shares of Aztec Common Stock. See footnote (3) in "Option Grants in
Last Fiscal Year."
STOCK OPTION GRANTS
The following table sets forth certain information regarding options granted
to the Named Officers during the year ended April 25, 1998. All options were
granted by U.S. Office Products as options to acquire U.S. Office Products
common stock prior to the spin-off of Aztec by U.S. Office Products consummated
in June 1998 (the "Spin-off"). It is expected that, pursuant to the terms of the
Spin-off, all vested and unvested options to acquire shares of U.S. Office
Products common stock that were held by Aztec employees on June 10, 1998 and
that are not exercised by September 8, 1998, will be replaced with options to
acquire shares of Aztec Common Stock on September 8, 1998 according to the
formulas set forth below.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
NUMBER OF RATES OF
SECURITIES STOCK PRICE APPRECIATION
UNDERLYING FOR
OPTIONS PERCENT OF TOTAL OPTION TERM (6)
GRANTED OPTIONS GRANTED EXERCISE EXPIRATION ------------------------
NAME (1) IN FISCAL YEAR (4) PRICE (5) DATE 5%($) 10%($)
- ----------------------------- ----------- ------------------- ----------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
James E. Claypoole........... 45,000(2) 10.4% $ 15.17 4/28/07 $ 429,315 $ 1,087,968
Elizabeth M. Claypoole....... 6,000(3) 1.4% $ 15.17 4/28/07 $ 57,242 $ 145,062
</TABLE>
- ------------------------
(1) The options granted are non-qualified stock options which are exercisable at
the exercise price of $15.17 beginning one year from the date of grant in
cumulative yearly amounts of 25% of the shares and which expire April 28,
2007.
(2) On April 28, 1997, U.S. Office Products granted to Mr. Claypoole options to
acquire 45,000 shares of U.S. Office Products common stock, of which options
to acquire 34,544 shares remain outstanding as of July 31, 1998. It is
expected that by September 8, 1998, pursuant to the terms of the Spin-off,
Mr. Claypoole's remaining options to acquire 34,544 shares of U.S. Office
Products common stock will be
8
<PAGE>
replaced with options to acquire 48,974 shares of Aztec Common Stock,
pursuant to the following formula:
<TABLE>
<C> <C> <S>
Option Shares (New) = Option Shares Trading Price of U.S. Office Products Common Stock Pre-Spin-off
(Old) X $9.875*
</TABLE>
- ------------------------
* $9.875 represents the average trading price on the Nasdaq National Market of
the Aztec Common Stock on June 11, 1998.
The foregoing formula adjustment is intended to preserve for the holders of
the U.S. Office Product options the intrinsic value per option, measured as
the difference between the market value of one share of U.S. Office Products
common stock at the time of the Spin-off and the exercise price of such
option. The intrinsic value of the adjusted Aztec options will be no greater
than the intrinsic value of the U.S. Office Products options immediately
before the Spin-off, and the ratio of exercise price to market price will be
not less than the ratio immediately before the Spin-off.
(3) On April 28, 1997, U.S. Office Products granted to Ms. Claypoole options to
acquire 6,000 shares of U.S. Office Products common stock, of which options
to acquire 4,500 shares remain outstanding as of July 31, 1998. It is
expected that by September 8, 1998, pursuant to the terms of the Spin-off,
Ms. Claypoole's remaining options to acquire 4,500 shares of U.S. Office
Products common stock will be replaced with options to acquire 6,380 shares
of Aztec Common Stock. The number of U.S. Office Products options will be
adjusted using the formula in footnote (2) above.
(4) Total Options granted means all options by U.S. Office Products granted to
employees of Aztec during fiscal 1998.
(5) The exercise price of the U.S. Office Products options granted to Mr.
Claypoole and Ms. Claypoole is $15.17 per share. Upon the replacement of the
U.S. Office Products options for Aztec options, the exercise price of the
new Aztec options will be adjusted by applying the following formula:
<TABLE>
<S> <C> <C>
Exercise Price (New) = Exercise Price $9.875*
(Old) X Trading Price of U.S. Office Products Common Stock Pre-Spin-off
</TABLE>
- ------------------------
* 9.875 represents the average trading price on the Nasdaq National Market of
the Aztec Common Stock on
June 11, 1998.
The foregoing formula adjustment is intended to preserve for the holders of
the U.S. Office Product options the intrinsic value per option, measured as
the difference between the market value of one share of U.S. Office Products
Common Stock at the time of the Spin-off and the exercise price of such
option. The intrinsic value of the adjusted Aztec options will be no greater
than the intrinsic value of the U.S. Office Products options immediately
before the Spin-off, and the ratio of exercise price to market price will be
not less than the ratio immediately before the Spin-off.
(6) The dollar amounts under these columns are the results of calculations at
assumed annual rates of stock appreciation of 5% and 10%. These assumed
rates of growth were selected by the SEC for illustration purposes only.
They are not intended to forecast possible future appreciation, if any, of
stock prices. No gain to the optionees is possible without an increase in
stock prices, which will benefit all stockholders.
OPTION EXERCISE AND YEAR-END OPTION TABLE
The following table sets forth certain information regarding exercisable and
unexercisable options held by the Named Officers at April 25, 1998. As described
above, all options were granted by U.S. Office Products as options to acquire
U.S. Office Products common stock. It is expected that, pursuant to the terms of
the Spin-off, all vested and unvested options to acquire shares of U.S. Office
Products common stock that were held by Aztec employees on June 10, 1998 and
that are not exercised by September 8, 1998,
9
<PAGE>
will be replaced with options to acquire shares of Aztec Common Stock on
September 8, 1998 according to the formulas set forth above.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-
OPTIONS HELD AT APRIL 25, MONEY OPTIONS AT FISCAL
1998 YEAR END ($)
---------------------------- --------------------------
<S> <C> <C> <C> <C>
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------------------- ------------- ------------- ----------- -------------
James E. Claypoole............................... -- 45,000(2) $ 76,725(4)
Elizabeth M. Claypoole........................... 1,875(1) 11,625(3) -- $ 10,230(5)
</TABLE>
- ------------------------
(1) Represents the vested portion of options to purchase U.S. Office Products
common stock held by Ms. Claypoole on April 25, 1998. As of July 31, 1998,
Ms. Claypoole held vested options to purchase 3,375 shares of U.S. Office
Products common stock. Pursuant to the terms of the Spin-off, it is expected
that such options to acquire 3,375 shares of U.S. Office Products common
stock will be exchanged with options to acquire 4,785 shares of Aztec Common
Stock. See footnote (2) in "Option Grants in Last Fiscal Year" for the
formula to adjust the number of U.S. Office Products options.
(2) See footnote (2) in "Option Grants in Last Fiscal Year."
(3) Represents the unvested portion of options to purchase U.S. Office Products
common stock held by Ms. Claypoole on April 25, 1998. As of July 31, 1998,
Ms. Claypoole held unvested options to purchase 6,989 shares of U.S. Office
Products common stock. Pursuant to the terms of the Spin-off, it is expected
that such options to acquire shares of U.S. Office Products common stock
will be exchanged with options to acquire 9,909 shares of Aztec Common
Stock. See footnote (2) in "Option Grants in Last Fiscal Year" for formula
to adjust the number of U.S. Office Products options.
(4) The value of the unexercisable options held by Mr. Claypoole as of April 24,
1998, the last day of trading prior to fiscal 1998 year end, was equal to
$1.705 per share, this being the difference between the exercise price,
$15.17 per share, of his options to purchase 45,000 shares of U.S. Office
Products common stock and $16.875 per share, the fair market value of the
U.S. Office Products common stock as of that date.
(5) The value of the unexercisable options held by Ms. Claypoole as of April 24,
1998, the last day of trading prior to fiscal 1998 year end, was equal to
$1.705 per share, this being the difference between the exercise price,
$15.17 per share, of her options to purchase 6,000 shares of U.S. Office
Products common stock and $16.875 per share, the fair market value of the
U.S. Office Products common stock as of that date. On April 24, 1998, the
last day of trading prior to fiscal 1998 year end, the exercise price,
$17.83 per share, of those options to purchase 7,500 shares of U.S. Office
Products common stock, granted on November 8, 1996 to Ms. Claypoole,
exceeded $16.875 per share, the fair market value of the U.S. Office
Products Common Stock as of that date.
EMPLOYMENT ARRANGEMENTS
In June 1998, Aztec entered into an employment agreement with James E.
Claypoole, as the Company's Chief Executive Officer. The employment agreement
provides for an initial three-year term. Pursuant to the agreement, Mr.
Claypoole is entitled to receive a base annual salary of $375,000, with an
annual bonus of up to that amount if certain objectives are realized. Aztec may
terminate Mr. Claypoole's employment for "cause" (as "cause" is defined
therein). If Mr. Claypoole is terminated by the Company without "cause," the
Company must pay a pro rata portion of Mr. Claypoole's "Severance Bonus Amount"
10
<PAGE>
plus an amount equal to his annual base salary through June 10, 2002. Under the
employment agreement, "Severance Bonus Amount" for a fiscal year equals the
average bonuses paid to Mr. Claypoole for the fiscal years preceding such fiscal
year or $187,500, whichever is greater. Under the employment agreement, Mr.
Claypoole was also granted a stock option to purchase 1,033,723 shares of
Aztec's Common Stock at the exercise price of $9.875. Mr. Claypoole's option is
fully vested but not exercisable until June 10, 1999.
On March 2, 1998, Aztec hired Ira Cohen as its Chief Operating Officer.
Aztec expects to enter into an employment agreement with Mr. Cohen in September
1998. While the terms of this new agreement are subject to negotiation and no
binding agreement has yet been reached, it is anticipated that the agreement
will be for a three-year term and provide for a base salary of $200,000.
On March 31, 1998, Aztec hired Douglas R. Johnson as its Executive Vice
President and Chief Financial Officer. Aztec expects to enter into an employment
agreement with Mr. Johnson in September 1998. While the terms of this new
agreement are subject to negotiation and no binding agreement has yet been
reached, it is anticipated that the agreement will be for a three-year term. and
provide for a base salary of $175,000.
AZTEC ENTERED INTO AN EMPLOYMENT AGREEMENT WITH MR. Ledecky, effective as
of June 10, 1998. Under the employment agreement, Mr. Ledecky reports to the
Board of Directors and senior management of Aztec. In such capacity, Mr. Ledecky
provides high-level acquisition negotiation services and strategic business
advice. Aztec can require Mr. Ledecky's performance of such services, consistent
with his other contractual obligations to Consolidation Capital Corporation,
U.S. Office Products and other companies. Mr. Ledecky has a base annual salary
of $48,000 and was granted a stock option to purchase 1,660,500 shares of
Aztec's Common Stock at an exercise price of $9.875. Mr. Ledecky's option is
fully vested but not exercisable until June 10, 1999. Mr. Ledecky's option is
exercisable immediately if he dies before the option expires or, if Aztec
accelerates the exercise schedule of options for substantially all management
option holders. Mr. Ledecky also entered into an agreement with U.S. Office
Products, effective June 10, 1998, which governs his continuing obligations to
U.S. Office Products and portions of which were incorporated in his employment
agreement with Aztec (the "Services Agreement"). Specifically, under his
employment agreement, Aztec may terminate Mr. Ledecky's employment only for
"cause" as "cause" is defined in the Services Agreement to consist of (i) his
conviction of or guilty or nolo contendere plea to a felony demonstrably and
materially injurious to Aztec or (ii) his violation of any noncompetition
provisions. In addition, under Mr. Ledecky's employment agreement with Aztec he
is subject to the noncompetition and nonsolicitation provisions of the Services
Agreement. Thus, until the later of one year after Mr. Ledecky leaves Aztec's
employ or June 10, 2000 he may not, among other things, invest in or work for or
on behalf of any business selling any products or services in direct competition
with Aztec, within 100 miles of Aztec's office. However, Mr. Ledecky may serve
in a policy making role at certain enumerated businesses.
COMPARATIVE STOCK PERFORMANCE
The Company's Common Stock began trading on the Nasdaq National Market on
June 10, 1998 upon the consummation of the Spin-off. Prior to that time, the
Company was a wholly owned subsidiary of U.S. Office Products. Accordingly, no
trading in the Company's Stock occurred during the fiscal year ended April 25,
1998.
11
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Company's Board of Directors (the
"Compensation Committee") is responsible for recommending compensation policies
with respect to the Company's executive officers, and for making decisions about
awards under certain of the Company's stock-based compensation plans.
The Compensation Committee was formed in June 1998, and therefore the
Compensation Committee has no activity to report in fiscal 1998. During fiscal
1999, the Compensation Committee intends to adopt an executive compensation
program setting forth Aztec's compensation policies and objectives.
Compensation Committee
Clifford Mitman, Jr., Chairman
Lawrence M. Howell
Benjamin Tandowski
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee was not formed until after fiscal year end. The
Compensation Committee in fiscal 1999 will consist of Mr. Mitman, Mr. Howell and
Mr. Tandowski.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On October 15, 1996, U.S. Office Products acquired Bay State, which is now a
wholly-owned subsidiary of Aztec, from James E. Claypoole, Bay State's then
Chief Executive Officer and President, and Thomas J. Foley, Executive Vice
President of Bay State, for 906,576 shares of U.S. Office Products Common Stock
valued at $20.74 per share, which consideration was determined by an arms length
negotiation. In connection with the acquisition, Bay State also entered into an
employment agreement with Mr. Claypoole at a minimum annual base salary of
$300,000 and an employment agreement with Elizabeth M. Claypoole, Bay State's
then Vice President and Chief Financial Officer, at a minimum annual base salary
of $140,000.
Aztec entered into an employment agreement with Mr. Ledecky, effective as of
June 10, 1998. See "Employment Arrangements."
PROPOSAL 2--RATIFICATION OF THE 1998 EMPLOYEE STOCK PURCHASE PLAN
On June 7, 1998, the Company's Board of Directors adopted, subject to
stockholder approval, the Company's 1998 Employee Stock Purchase Plan (the
"Purchase Plan"). The purpose of the Purchase Plan is to provide eligible
employees of the Company and its subsidiaries with an opportunity to acquire a
proprietary interest in the Company through the purchase of shares of Common
Stock at a discounted price. The Board of Directors believes that the future
success of Aztec depends, in large part, upon the ability of Aztec to maintain a
competitive position in attracting, retaining and motivating employees and that
the Purchase Plan will help Aztec to attract, retain and motivate employees.
Accordingly, the Board of Directors believes that the adoption of the Purchase
Plan is in the best interest of Aztec and its stockholders, and recommends a
vote FOR this proposal.
SUMMARY OF THE PLAN
The following is a brief summary of the material terms of the Purchase Plan.
This summary is qualified in its entirety by reference to the Purchase Plan, a
copy of which may be obtained from the Secretary of the Company.
12
<PAGE>
GENERAL
The Purchase Plan permits employees of the Company and its subsidiaries to
purchase shares of Common Stock from the Company at a discounted price through a
series of offerings (each an "Offering" and collectively, the "Offerings"). Each
employee who elects to participate in an Offering is deemed to be granted an
option (an "Option") to purchase up to the number of shares of Common Stock
determined by the formula described below under the subheading "Purchase of
Shares." During each Offering, participants accrue funds in an account through
payroll deductions. At the end of such Offering, the funds in this account are
applied to the purchase of Common Stock, up to the maximum number of shares for
which the Option was granted, at a 15% discount from the lower of the closing
price of the Common Stock on (i) the first business day of such Offering, or
(ii) the last business day of such Offering (the "Exercise Date").
NUMBER OF SHARES
A maximum of 1,000,000 shares of Common Stock are issuable to employees of
the Company and its subsidiaries under the Purchase Plan. The Purchase Plan
contains provisions relating to adjustments to be made in the event of stock
splits and other similar events.
ADMINISTRATION
The Plan is administered by the Compensation Committee. The Committee has
authority to make rules and regulations for the administration of the Purchase
Plan and its interpretation and decisions with regard thereto are final and
conclusive.
ELIGIBILITY
All employees of the Company, including directors who are employees, and all
employees of any subsidiary of the Company, are eligible to participate in the
Purchase Plan provided that: (a) they are regularly employed by the Company or a
subsidiary for more than 20 hours a week and for more than 10 months in a
calendar year; (b) they have been employed by the Company or a subsidiary for at
least 30 days prior to enrolling in the Purchase Plan; and (c) they are
employees of the Company or a subsidiary on the first day of the applicable
6-month period (the "Plan Period"). No employee may be granted an Option under
the Purchase Plan if such employee, immediately after the Option is granted,
owns 5% or more of the total combined voting power or value of the stock of the
Company or any subsidiary. In addition, no participant may be granted an Option
which permits his or her rights to purchase Common Stock under the Plan and any
other stock purchase plan of the Company and its subsidiaries, to accrue at a
rate which exceeds $25,000 of the fair market value of such Common Stock
(determined at the Offering Commencement Date of the Plan Period, as such terms
are defined below) for each calendar year in which the Option is outstanding at
any time. As of July 31, 1998, approximately 1,000 persons were eligible to
participate in the Purchase Plan.
OFFERINGS
Offerings under the Purchase Plan will generally begin each July 1 and
January 1, or the first business day thereafter (the "Offering Commencement
Dates"). Each Offering Commencement Date will begin a Plan Period during which
payroll deductions will be made and held for the purchase of Common Stock at the
end of the Plan Period. The initial Plan Period will begin on October 1, 1998
and end on December 31, 1998. If the Purchase Plan is not approved at the
meeting, the current offering will be terminated, and all funds returned to
employees. The Committee may, at its discretion, choose a different Plan Period
of twelve months or less for subsequent Offerings.
13
<PAGE>
DEDUCTIONS
A participant may authorize payroll deductions up to a maximum of 15% of his
or her compensation during the Plan Period.
PURCHASE OF SHARES
On each Offering Commencement Date, the Company grants each participant in
the Purchase Plan an Option to purchase on the Exercise Date such number of
whole shares of Common Stock of the Company as does not exceed the number of
shares determined by dividing (a) the product of $2,083 and the number of whole
months in such Plan Period, by (b) the closing price (as defined below) on the
Offering Commencement Date of such Plan Period or such other number as may be
determined by the Board prior to the Offering Commencement Date. The Option
Price for each share purchased will be 85% of the closing price of the Common
Stock on (i) the first business day of such Plan Period, or (ii) the Exercise
Date, whichever closing price shall be less. As of August 19, 1998, the closing
sale price of the Common Stock, as reported on the Nasdaq National Market, was
$7.25 per share. If the Company receives requests from employees to purchase
more than the number of shares available during any Offering, the available
shares will be allocated on a pro rata basis to subscribing employees.
MERGER
If the Company shall at any time merge or consolidate with another
corporation and the holders of the capital stock of the Company immediately
prior to such merger or consolidation continue to hold at least 50% by voting
power of the capital stock of the surviving corporation ("Continuity of
Control"), the holder of each Option then outstanding will thereafter be
entitled to receive at the next Exercise Date upon the exercise of such Option
for each share as to which such Option shall be exercised the securities or
property which a holder of one share of the Common Stock was entitled to upon
and at the time of such event, and the Board or the Committee shall take such
steps in connection with such event or consolidation as shall deem necessary to
assure that the adjustment provisions described herein shall thereafter continue
to be applicable.
In the event of a merger or consolidation of the Company with or into
another corporation which does not involve Continuity of Control, or of a sale
of all or substantially all of the assets of the Company while unexercised
Options remain outstanding under the Plan, (a) subject to the provisions of
clauses (b) and (c), after the effective date of such transaction, each holder
of an outstanding Option shall be entitled, upon exercise of such Option, to
receive in lieu of shares of Common Stock, shares of such stock or other
securities as the holders of shares of Common Stock received pursuant to the
terms of such transaction; or (b) all outstanding Options may be cancelled by
the Board or the Committee as of a date prior to the effective date of any such
transaction and all payroll deductions shall be paid out to the participants; or
(c) all outstanding Options may be cancelled by the Board or the Committee as of
the effective date of any such transaction, provided that notice of such
cancellation shall be given to each holder of an Option, and each holder of an
Option shall have the right to exercise such Option in full based on payroll
deductions then credited to his or her account as of a date determined by the
Board or the Committee, which date shall not be less than seven days preceding
the effective date of such transaction.
AMENDMENT AND TERMINATION
The Board may terminate or amend the Plan in any respect, except that (a) if
the approval of any such amendment by the stockholders of the Company is
required by the Internal Revenue Code of 1986, as amended (the "Code") Section
423 or by Rule 16b-3 under the Exchange Act, such amendment shall not be
effected without such approval, and (b) in no event may any amendment be made
which would cause the Plan to fail to comply with Section 16 of the Exchange Act
and the rules promulgated thereunder, as in effect from time to time, or Code
Section 423.
14
<PAGE>
NEW PLAN BENEFITS
Because participation in the Purchase Plan is voluntary and participants may
withdraw from the Purchase Plan at any time during an offering period without
penalty, the benefits to be received by any particular person or group are not
determinable by the Company at this time. Since the Purchase Plan has not yet
been implemented, no employees, directors or executive officers have elected to
participate in the first offering under the Purchase Plan, no Options have been
granted and the benefits to be received by any particular individual are not
determinable by the Company at this time.
FEDERAL INCOME TAX CONSEQUENCES
The Plan is intended to qualify as an "Employee Stock Purchase Plan" within
the meaning of Code Section 423. The Plan is not a qualified plan under Code
Section 401(a).
TAX CONSEQUENCES TO PARTICIPANTS
In general, a participant will not recognize taxable income upon enrolling
in the Purchase Plan or upon purchasing shares of Common Stock at the end of an
Offering. Instead, if a participant sells Common Stock acquired under the
Purchase Plan at a sale price that exceeds the price at which the participant
purchased the Common Stock, then the participant will recognize taxable income
in an amount equal to the excess of the sale price of the Common Stock over the
price at which the participant purchased the Common Stock. A portion of that
taxable income will be ordinary income, and a portion may be capital gain.
If the participant sells the Common Stock more than one year after acquiring
it and more than two years after the date on which the Offering commenced (the
"Grant Date"), then the participant will be taxed as follows. If the sale price
of the Common Stock is higher than the price at which the participant purchased
the Common Stock, then the participant will recognize ordinary compensation
income in an amount equal to the lesser of: (i) fifteen percent of the fair
market value of the Common Stock on the Grant Date; and (ii) the excess of the
sale price of the Common Stock over the price at which the participant purchased
the Common Stock. Any further income will be long-term capital gain. If the sale
price of the Common Stock is less than the price at which the participant
purchased the Common Stock, then the participant will recognize long-term
capital loss in an amount equal to the excess of the price at which the
participant purchased the Common Stock over the sale price of the Common Stock.
If the participant sells the Common Stock within one year after acquiring it
or within two years after the Grant Date (a "Disqualifying Disposition"), then
the participant will recognize ordinary compensation income in an amount equal
to the excess of the fair market value of the Common Stock on the date that it
was purchased over the price at which the participant purchased the Common
Stock. The participant will also recognize capital gain in an amount equal to
the excess of the sale price of the Common Stock over the fair market value of
the Common Stock on the date that it was purchased, or capital loss in an amount
equal to the excess of the fair market value of the Common Stock on the date
that it was purchased over the sale price of the Common Stock. This capital gain
or loss will be a long-term capital gain or loss if the participant has held the
Common Stock for more than one year prior to the date of the sale and will be a
short-term capital gain or loss if the participant has held the Common Stock for
a shorter period.
TAX CONSEQUENCES TO THE COMPANY
The offering of Common Stock under the Purchase Plan will have no tax
consequences to the Company. Moreover, in general, neither the purchase nor the
sale of Common Stock acquired under the Purchase Plan will have any tax
consequences to the Company except that the Company will be entitled to a
business-expense deduction with respect to any ordinary compensation income
recognized by a participant upon making a Disqualifying Disposition. Any such
deduction will be subject to the limitations of Code Section 162(m).
15
<PAGE>
PROPOSAL 3--RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected the firm of PricewaterhouseCoopers LLP
as the Company's independent accountants for the current fiscal year.
PricewaterhouseCoopers LLP is the Company's current independent accountants.
Although stockholder ratification of the Board of Directors' selection of
PricewaterhouseCoopers LLP is not required by law, the Board of Directors
believes that it is advisable to give stockholders the opportunity to ratify
this selection. If this proposal is not approved at the Annual Meeting, the
Board of Directors will reconsider its selection of PricewaterhouseCoopers LLP.
Representatives of PricewaterhouseCoopers LLP are expected to be present at
the Annual Meeting. They will have the opportunity to make a statement if they
desire to do so and will also be available to respond to appropriate questions
from stockholders.
THE BOARD OF DIRECTORS BELIEVES THAT THE SELECTION OF PRICEWATERHOUSECOOPERS
LLP AS ITS INDEPENDENT ACCOUNTANT IS IN THE BEST INTEREST OF AZTEC AND ITS
STOCKHOLDERS, AND RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THIS PROPOSAL.
PROPOSAL 4--OTHER MATTERS
Management does not know of any other matters which may come before the
Annual Meeting. However, if any other matters are properly presented to the
Annual Meeting, it is the intention of the persons named in the accompanying
proxy to vote, or otherwise act, in accordance with their judgment on such
matters.
ADDITIONAL INFORMATION
SOLICITATION COSTS
All costs of solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, the Company's directors, officers and regular
employees, without additional remuneration, may solicit proxies by telephone,
telegraph and personal interviews, and the Company reserves the right to retain
outside agencies for the purpose of soliciting proxies. Brokers, custodians and
fiduciaries will be requested to forward proxy soliciting material to the owners
of shares held in their names and the Company will reimburse them for out-
of-pocket expenses incurred on behalf of the Company.
STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Proposals of stockholders submitted pursuant to Rule 14a-8 under the
Exchange Act intended to be presented at the 1999 Annual Meeting of Stockholders
must be received by the Secretary of the Company at the Company's principal
office in Braintree, Massachusetts not later than February 26, 1999 for
inclusion in the proxy statement for that meeting.
In addition, the Company's Amended and Restated By-laws require that the
Company be given advance notice of stockholder nominations for election to the
Company's Board of Directors and of other business which stockholders wish to
present for action at an annual meeting of stockholders (other than matters
included in the Company's proxy statement in accordance with Rule 14a-8). The
required notice must be made in writing delivered or mailed by first class
United States mail, postage prepaid, to the Secretary and received not less than
60 days nor more than 90 days prior to such meeting; provided, however, that if
less than 70 days' notice or prior public disclosure of the date of the 1999
Annual Meeting is given to stockholders, such nomination shall have been mailed
or delivered to the Secretary not later than the close of business on the 10th
day following the date on which the notice of meeting was mailed or such public
disclosure was made, whichever occurs first. The Company has not yet determined
the date of its 1999 Annual Meeting.
16
<PAGE>
By Order of the Board of Directors,
[LOGO]
Douglas R. Johnson
SECRETARY
August 21, 1998
THE BOARD OF DIRECTORS HOPES THAT STOCKHOLDERS WILL ATTEND THE MEETING.
WHETHER OR NOT STOCKHOLDERS PLAN TO ATTEND, STOCKHOLDERS ARE URGED TO COMPLETE,
DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE.
STOCKHOLDERS WHO ATTEND THE MEETING MAY VOTE THEIR SHARES PERSONALLY EVEN THOUGH
THEY HAVE SENT IN THEIR PROXIES.
17
<PAGE>
AZTEC Technology
Please Detach and Mail in the Envelope Provided
A /X/ Please mark your
votes as in this
example
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
FOR WITHHELD FOR AGAINST ABSTAIN
1. To elect the / / / / 2. To ratify the adoption of the / / / / / /
nominee at right Nominee: Company's 1998 Employee Stock
as Class I Jonathan J. Ledecky Purchase Plan
Director until the 2001 Annual Meeting
3. To ratify the selection of / / / / / /
PricewaterhouseCoopers LLP
as the Company's independent
accountant for the ensuing
year.
This proxy, when properly executed, will be voted in the
manner directed by the undersigned. If no direction is given
with respect to any election to office or proposal specified
above, this proxy will be voted for such election to office or
proposal.
Please mark this box if you will be attending the / /
meeting and return the proxy card promptly using
the enclosed envelope.
Please mark this box if address change and note / /
at left.
</TABLE>
SIGNATURE(S) DATE , 1998
----------------- -------------------- ---------------
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign personally. When signing as attorney, executor, administrator,
trustee or guardian, indicate full title as such.
<PAGE>
AZTEC TECHNOLOGY PARTNERS, INC.
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
The undersigned hereby appoints James E. Claypoole, Douglas R. Johnson,
Alexander A. Bernhard, or any of them with full power of substitution,
proxies to vote at the Annual Meeting of Stockholders of Aztec Technology
Partners, Inc. (the "Company") to be held on September 25, 1998 at 10:00
a.m., local time, at the offices of Hale and Dorr LLP, 60 State Street,
Boston, Massachusetts 02109, and at any adjournment or adjournments thereof,
hereby revoking any proxies heretofore given, to vote all shares of common
stock of the Company held or owned by the undersigned as directed on the
reverse, and in their discretion upon such other matters as may come before
the meeting.
(To be Signed on Reverse Side) SEE REVERSE
SIDE
<PAGE>
AZTEC TECHNOLOGY PARTNERS, INC.
1998 EMPLOYEE STOCK PURCHASE PLAN
JUNE 7, 1998
The purpose of this Plan is to provide eligible employees of Aztec Consulting
Partners, Inc. (the "Company") and certain of its subsidiaries with
opportunities to purchase shares of the Company's common stock, $0.001 par value
(the "Common Stock"), commencing on June 7, 1998. One Million (1,000,000) shares
of Common Stock in the aggregate have been approved for this purpose.
1. ADMINISTRATION. The Plan will be administered by the Company's Board of
Directors (the "Board") or by a Committee appointed by the Board (the
"Committee"). The Board or the Committee has 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.
2. ELIGIBILITY. Participation in the Plan will neither be permitted nor
denied contrary to the requirements of Section 423 of the Internal Revenue Code
of 1986, as amended (the "Code"), and regulations promulgated thereunder. All
employees of the Company, including Directors who are employees, and all
employees of any subsidiary of the Company (as defined in Section 424(f) of the
Code) designated by the Board or the Committee from time to time (a "Designated
Subsidiary"), other than employees of the Company or any Designated Subsidiary
who are "highly compensated" within the meaning of Section 414(q) of the Code,
are eligible to participate in any one or more of the offerings of Options (as
defined in Section 9) to purchase Common Stock under the Plan provided that:
(a) they are regularly employed by the Company or a Designated
Subsidiary for more than twenty (20) hours a week and for more than ten (10)
months in a calendar year; and
(b) they have been employed by the Company or a Designated Subsidiary
for at least 30 days prior to enrolling in the Plan; and
(c) they are employees of the Company or a Designated Subsidiary on the
first day of the applicable Plan Period (as defined below).
No employee may be granted an option hereunder if such employee, immediately
after the option is granted, owns 5% or more of the total combined voting power
or value of the stock of the Company or any subsidiary. For purposes of the
preceding sentence, the attribution rules of Section 424(d) of the Code shall
apply in determining the stock ownership of an employee, and all stock which the
employee has a contractual right to purchase shall be treated as stock owned by
the employee.
3. OFFERINGS. The Company will make one or more offerings ("Offerings") to
employees to purchase stock under this Plan. Offerings will begin each July 1
and January 1, or the first business day thereafter (the "Offering Commencement
Dates"). Each Offering Commencement Date will begin a 6-month period (a "Plan
Period") during which payroll deductions will be made and held for the purchase
of Common Stock at the end of the Plan Period. Notwithstanding the foregoing,
the initial Offering Commencement Date shall be October 1, 1998, and the initial
Plan Period shall end on December 31, 1998. The Board or the Committee may, at
its discretion, choose a different Plan Period of twelve (12) months or less for
subsequent Offerings.
4. PARTICIPATION. An employee eligible on the Offering Commencement Date
of any Offering may participate in such Offering by completing and forwarding a
payroll deduction authorization form to the employee's appropriate payroll
office at least 7 days prior to the applicable Offering Commencement Date. The
form will authorize a regular payroll deduction from the Compensation received
by the employee during the Plan Period. Unless an employee files a new form or
withdraws from the Plan, his deductions and purchases will continue at the same
rate for future Offerings under the Plan as long as the
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<PAGE>
AZTEC TECHNOLOGY PARTNERS, INC.
1998 EMPLOYEE STOCK PURCHASE PLAN
JUNE 7, 1998
Plan remains in effect. The term "Compensation" means the amount of money
reportable on the employee's Federal Income Tax Withholding Statement.
5. DEDUCTIONS. The Company will maintain payroll deduction accounts for
all participating employees. With respect to any Offering made under this Plan,
an employee may authorize a payroll deduction in any dollar amount up to a
maximum of 15% of the Compensation he or she receives during the Plan Period or
such shorter period during which deductions from payroll are made.
No employee may be granted an Option (as defined in Section 9) which permits
his rights to purchase Common Stock under this Plan and any other stock purchase
plan of the Company and its subsidiaries, to accrue at a rate which exceeds
$25,000 of the fair market value of such Common Stock (determined at the
Offering Commencement Date of the Plan Period) for each calendar year in which
the Option is outstanding at any time.
6. DEDUCTION CHANGES. An employee may decrease or discontinue his payroll
deduction once during any Plan Period, by filing a new payroll deduction
authorization form. However, an employee may not increase his payroll deduction
during a Plan Period. If an employee elects to discontinue his payroll
deductions during a Plan Period, but does not elect to withdraw his funds
pursuant to Section 8 hereof, funds deducted prior to his election to
discontinue will be applied to the purchase of Common Stock on the Exercise Date
(as defined below).
7. INTEREST. Interest will not be paid on any employee accounts, except to
the extent that the Board or the Committee, in its sole discretion, elects to
credit employee accounts with interest at such per annum rate as it may from
time to time determine.
8. WITHDRAWAL OF FUNDS. An employee may at any time prior to the close of
business on the last business day in a Plan Period and for any reason
permanently draw out the balance accumulated in the employee's account and
thereby withdraw from participation in an Offering. Partial withdrawals are not
permitted. The employee may not begin participation again during the remainder
of the Plan Period. The employee may participate in any subsequent Offering in
accordance with terms and conditions established by the Board or the Committee,
except that employees who are also directors or officers of the Company within
the meaning of Section 16 of the Securities Exchange Act of 1934 (the "Exchange
Act") and the rules promulgated there under may not participate again for a
period of at least six months as provided in Rule 16b-3(d)(2)(i) or any
successor provision.
9. PURCHASE OF SHARES. On the Offering Commencement Date of each Plan
Period, the Company will grant to each eligible employee who is then a
participant in the Plan an option ("Option") to purchase on the last business
day of such Plan Period (the "Exercise Date"), at the Option Price hereinafter
provided for, the largest number of whole shares of Common Stock of the Company
as does not exceed the number of shares determined by dividing (a) the product
of $2,083 and the number of whole months in such Plan Period, by (b) the closing
price (as defined below) on the Offering Commencement Date of such Plan Period
or such other number as may be determined by the Board prior to the Offering
Commencement Date.
The purchase price for each share purchased will be 85% of the closing price
of the Common Stock on (i) the first business day of such Plan Period or (ii)
the Exercise Date, whichever closing price shall be less. Such closing price
shall be (a) the closing price on any national securities exchange on which the
Common Stock is listed, (b) the closing price of the Common Stock on the Nasdaq
National Market or (c) the average of the closing bid and asked prices in the
over-the-counter-market, whichever is applicable, as published in THE WALL
STREET JOURNAL. If no sales of Common Stock were made on such a day, the price
of
A-2
<PAGE>
AZTEC TECHNOLOGY PARTNERS, INC.
1998 EMPLOYEE STOCK PURCHASE PLAN
JUNE 7, 1998
the Common Stock for purposes of clauses (a) and (b) above shall be the reported
price for the next preceding day on which sales were made.
Each employee who continues to be a participant in the Plan on the Exercise
Date shall be deemed to have exercised his Option at the Option Price on such
date and shall be deemed to have purchased from the Company the number of full
shares of Common Stock reserved for the purpose of the Plan that his accumulated
payroll deductions on such date will pay for pursuant to the formula set forth
above (but not in excess of the maximum number determined in the manner set
forth above).
Any balance remaining in an employee's payroll deduction account at the end
of a Plan Period will be automatically refunded to the employee, except that any
balance which is less than the purchase price of one share of Common Stock will
be carried forward into the employee's payroll deduction account for the
following Offering, unless the employee elects not to participate in the
following Offering under the Plan, in which case the balance in the employee's
account shall be refunded.
10. ISSUANCE OF CERTIFICATES. Certificates representing shares of Common
Stock purchased under the Plan may be issued only in the name of the employee,
in the name of the employee and another person of legal age as joint tenants
with rights of survivorship, or (in the Company's sole discretion) in the street
name of a brokerage firm, bank or other nominee holder designated by the
employee.
11. RIGHTS ON RETIREMENT, DEATH OR TERMINATION OF EMPLOYMENT. In the event
of a participating employee's termination of employment prior to the last
business day of a Plan Period, no payroll deduction shall be taken from any pay
due and owing to an employee and the balance in the employee's account shall be
paid to the employee or, in the event of the employee's death, (a) to a
beneficiary previously designated in a revocable notice signed by the employee
(with any spousal consent required under state law), or (b) in the absence of
such a designated beneficiary, to the executor or administrator of the
employee's estate, or (c) if no such executor or administrator has been
appointed to the knowledge of the Company, to such other person(s) as the
Company may, in its discretion, designate. If, prior to the last business day of
the Plan Period, the Designated Subsidiary by which an employee is employed
shall cease to be a subsidiary of the Company, or if the employee is transferred
to a subsidiary of the Company that is not a Designated Subsidiary, the employee
shall be deemed to have terminated employment for the purposes of this Plan.
12. OPTIONEES NOT STOCKHOLDERS. No employee shall have any rights as a
stockholder with respect to any shares of Common Stock to be distributed with
respect to an Option until becoming the record holder of such shares.
Notwithstanding the foregoing, in the event that the Company effects a split of
its Common Stock by means of a stock dividend and the exercise price of and the
number of shares subject to such Option are adjusted as of the date of the
distribution of the dividend (rather than as of the record date for such
dividend), then an optionee who is deemed to have exercised an option between
the record date and the distribution date for such stock dividend shall be
entitled to receive, on the distribution date, the stock dividend with respect
to the shares of Common Stock acquired under such Option exercise,
notwithstanding the fact that such shares were not outstanding as of the close
of business on the record date for such stock dividend.
13. RIGHTS NOT TRANSFERABLE. Rights under this Plan are not transferable
by a participating employee other than by will or the laws of descent and
distribution, and are exercisable during the employee's lifetime only by the
employee.
14. APPLICATION OF FUNDS. All funds received or held by the Company under
this Plan may be combined with other corporate funds and may be used for any
corporate purpose.
A-3
<PAGE>
AZTEC TECHNOLOGY PARTNERS, INC.
1998 EMPLOYEE STOCK PURCHASE PLAN
JUNE 7, 1998
15. ADJUSTMENT IN CASE OF CHANGES AFFECTING COMMON STOCK. In the event of
a subdivision of outstanding shares of Common Stock, or the payment of a
dividend in Common Stock, the number of shares approved for this Plan, and the
share limitation set forth in Section 9, shall be increased proportionately, and
such other adjustment shall be made as may be deemed equitable by the Board or
the Committee. In the event of any other change affecting the Common Stock, such
adjustment shall be made as may be deemed equitable by the Board or the
Committee to give proper effect to such event.
16. MERGER. If the Company shall at any time merge or consolidate with
another corporation and the holders of the capital stock of the Company
immediately prior to such merger or consolidation continue to hold at least 50%
by voting power of the capital stock of the surviving corporation ("Continuity
of Control"), the holder of each Option then outstanding will thereafter be
entitled to receive at the next Exercise Date upon the exercise of such Option
for each share as to which such Option shall be exercised the securities or
property which a holder of one share of the Common Stock was entitled to upon
and at the time of such merger, and the Committee shall take such steps in
connection with such merger as the Committee shall deem necessary to assure that
the provisions of Paragraph 15 shall thereafter be applicable, as nearly as
reasonably may be, in relation to the said securities or property as to which
such holder of such Option might thereafter be entitled to receive thereunder.
In the event of a merger or consolidation of the Company with or into
another corporation which does not involve Continuity of Control, or of a sale
of all or substantially all of the assets of the Company while unexercised
Options remain outstanding under the Plan, (a) subject to the provisions of
clauses (b) and (c), after the effective date of such transaction, each holder
of an outstanding Option shall be entitled, upon exercise of such Option, to
receive in lieu of shares of Common Stock, shares of such stock or other
securities as the holders of shares of Common Stock received pursuant to the
terms of such transaction; or (b) all outstanding Options may be cancelled by
the Board or the Committee as of a date prior to the effective date of any such
transaction and all payroll deductions shall be paid out to the participating
employees; or (c) all outstanding Options may be cancelled by the Board or the
Committee as of the effective date of any such transaction, provided that notice
of such cancellation shall be given to each holder of an Option, and each holder
of an Option shall have the right to exercise such Option in full based on
payroll deductions then credited to his account as of a date determined by the
Board or the Committee, which date shall not be less than seven (7) days
preceding the effective date of such transaction.
17. AMENDMENT OF THE PLAN. The Board may at any time, and from time to
time, amend this Plan in any respect, except that (a) if the approval of any
such amendment by the shareholders of the Company is required by Section 423 of
the Code or by Rule 16b-3 under the Exchange Act, such amendment shall not be
effected without such approval, and (b) in no event may any amendment be made
which would cause the Plan to fail to comply with Section 16 of the Exchange Act
and the rules promulgated thereunder, as in effect from time to time, or Section
423 of the Code.
18. INSUFFICIENT SHARES. In the event that the total number of shares of
Common Stock specified in elections to be purchased under any Offering plus the
number of shares purchased under previous Offerings under this Plan exceeds the
maximum number of shares issuable under this Plan, the Board or the Committee
will allot the shares then available on a pro rata basis.
19. TERMINATION OF THE PLAN. This Plan may be terminated at any time by
the Board. Upon termination of this Plan all amounts in the accounts of
participating employees shall be promptly refunded.
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<PAGE>
AZTEC TECHNOLOGY PARTNERS, INC.
1998 EMPLOYEE STOCK PURCHASE PLAN
JUNE 7, 1998
20. GOVERNMENTAL REGULATIONS. The Company's obligation to sell and deliver
Common Stock under this Plan is subject to listing on a national stock exchange
or quotation on the Nasdaq National Market and the approval of all governmental
authorities required in connection with the authorization, issuance or sale of
such stock.
The Plan shall be governed by Delaware law except to the extent that such
law is preempted by federal law.
The Plan is intended to comply with the provisions of Rule 16b-3 promulgated
under the Securities Exchange Act of 1934. Any provision inconsistent with such
Rule shall to that extent be inoperative and shall not affect the validity of
the Plan.
21. ISSUANCE OF SHARES. Shares may be issued upon exercise of an Option
from authorized but unissued Common Stock, from shares held in the treasury of
the Company, or from any other proper source.
22. NOTIFICATION UPON SALE OF SHARES. Each employee agrees, by entering
the Plan, to promptly give the Company notice of any disposition of shares
purchased under the Plan where such disposition occurs within two years after
the date of grant of the Option pursuant to which such shares were purchased.
23. EFFECTIVE DATE AND APPROVAL OF SHAREHOLDERS. The Plan shall take
effect on June 7, 1998 subject to approval by the shareholders of the Company as
required by Rule 16b-3 under the Exchange Act and by Section 423 of the Code,
which approval must occur within twelve months of the adoption of the Plan by
the Board.
Adopted by the Board of Directors
on June 7, 1998
Approved by the stockholders
on , 1998
A-5
