<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
/X/ Definitive Proxy Statement Commission Only (as permitted
/ / Definitive Additional Materials by Rule 14a-6(e)(2))
/ / Soliciting Material Pursuant to
Rule 14a-12
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: N/A
2) Aggregate number of securities to which transaction applies: N/A
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): N/A
4) Proposed maximum aggregate value of transaction:
5) Total fee paid: N/A
/ / 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>
[AXTEC TECHNOLOGY PARTNERS, INC. LOGO]
50 Braintree Hill Office Park
Braintree, Massachusetts 02184
November 15, 2000
Dear Stockholder:
It is my pleasure to invite you to the 2000 Annual Meeting of Stockholders
of Aztec Technology Partners, Inc. The 2000 Annual Meeting will be held on
December 12, 2000 at 10:00 a.m., local time, at the offices of Hale and Dorr
LLP, 60 State Street, Boston, Massachusetts. At the meeting, stockholders will
be asked to (a) elect two Class III Directors for a three year term and two
Class I Directors for the remaining one year of the three year term, (b) amend
the 1998 Non-Employee Director Stock Option Plan, and (c) ratify the Company's
selection of independent accountants.
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,
[/S/ CLIFFORD MITMAN, JR.]
Clifford Mitman, Jr.
Chairman of the Board of Directors
<PAGE>
AZTEC TECHNOLOGY PARTNERS, INC.
50 BRAINTREE HILL OFFICE PARK
BRAINTREE, MASSACHUSETTS 02184
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 12, 2000
The Annual Meeting of Stockholders of Aztec Technology Partners, Inc.
("Aztec" or the "Company") will be held on December 12, 2000 at the offices of
Hale and Dorr LLP, 60 State Street, Boston, Massachusetts, at 10:00 a.m., local
time, to consider and act upon the following matters:
1. To elect two Class III Directors to serve until the 2003 Annual Meeting and
to elect two Class I directors to serve the remaining one year of the Class
I term until the 2001 Annual Meeting.
2. To approve an amendment to the Company's 1998 Non-Employee Director Stock
Option Plan, as amended, to increase the number of shares of Common Stock
authorized for issuance thereunder from 300,000 to 700,000 shares.
3. To ratify the selection of the firm of PricewaterhouseCoopers LLP 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 October 31, 2000 will be
entitled to notice of and to vote at the meeting or any adjournment thereof. The
stock transfer books of the Company will remain open and may be examined at the
offices of the Company, 50 Braintree Hill Office Park, Suite 220, Braintree,
Massachusetts. Stockholders wishing to examine the stock transfer books should
contact T. Kenwood Mullare, Esq., General Counsel, at (781) 849-1702.
A copy of the Company's Annual Report to Stockholders for the year ended
December 31, 1999, containing the Company's Annual Report without exhibits on
Form 10-K/A for that year, a copy of the Company's Quarterly Report on Form 10-Q
for the period ended September 30, 2000 and other information of interest to
stockholders, accompany this Notice.
All stockholders are cordially invited to attend the meeting.
By Order of the Board of Directors,
[/S/ T. KENWOOD MULLARE]
T. Kenwood Mullare, Esq.
SECRETARY
Braintree, Massachusetts
November 15, 2000
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
BRAINTREE, MASSACHUSETTS 02184
PROXY STATEMENT FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 12, 2000
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 December 12, 2000 at 10:00 a.m., local time, at
the law offices of Hale and Dorr LLP, 60 State Street, Boston, Massachusetts,
and at any adjournment 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, the
Company's Annual Report to Stockholders for the year ended December 31, 1999 and
the Company's Quarterly Report on Form 10-Q for the period ended September 30,
2000 are being mailed to stockholders beginning on or about November 15, 2000.
VOTING SECURITIES AND VOTES REQUIRED
At the close of business on October 31, 2000, 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 22,981,302 shares of Common
Stock of the Company. 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 stock present
or represented and voting at the Annual Meeting is required to ratify the
amendment to the 1998 Non-Employee Director Stock Option Plan.
- The affirmative vote of the holders of the majority of the stock present
or represented and voting at the Annual Meeting is required to ratify the
selection of the firm 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 any matter which
requires the affirmative vote of the majority of the
<PAGE>
shares present or represented and voting on such matter, and will be counted as
a vote against any matter which requires the affirmative vote of the holders of
a majority of the outstanding shares of Common Stock.
The Board of Directors recommends a vote in favor of each proposal.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of October 31, 2000,
on which 22,981,302 shares of Common Stock were outstanding, 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) the directors and nominees for director of the Company, (iii) the
Company's President, the next two most highly compensated executive officers of
Aztec who earned in excess of $100,000, plus one person (James E. Claypoole) who
would have been included among the most highly compensated executive officers if
he had been serving as such on December 31, 1999 (the "Named Executive
Officers"), and (iv) all executive officers, directors and nominees for director
of the Company as a group. Unless otherwise indicated, the business address of
each of the following is 50 Braintree Hill Office Park, Braintree,
Massachusetts 02184:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL
OWNERSHIP(1)
-----------------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OF SHARES PERCENT OF CLASS
------------------------------------ ---------------- ----------------
<S> <C> <C>
5% STOCKHOLDERS:
Wanger Asset Management, L.P. (2)......................... 3,470,000 15.10%
227 West Monroe Street, Suite 3000
Chicago, IL 60606
DIRECTORS:
Robert F. Burlinson (3)................................... 30,000 *
Ira Cohen (4)............................................. 132,927 *
Joseph L. Gagnon (5)...................................... 30,000 *
Leon Kopyt (6)............................................ 30,000 *
Clifford Mitman, Jr. (7).................................. 385,000 1.65
Benjamin Tandowski (8).................................... 98,902 *
OTHER EXECUTIVE OFFICERS:
James E. Claypoole (9).................................... 773,602 3.28
Ross J. Weintraub (10).................................... 69,250 *
All executive officers, directors and nominees for
director as a group (eight persons) (11)................ 1,549,681 6.37%
</TABLE>
------------------------
* Less than 1%.
(1) The number of shares beneficially owned by each stockholder, director and
executive officer 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 after October 31, 2000 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
2
<PAGE>
direct or indirect beneficial owner of such shares. Unless otherwise
indicated, each person or entity listed above has sole voting and
investment power (or shares such power with his or her spouse) with respect
to all shares of capital stock listed as owned by such person or entity.
(2) Information is based solely on a Schedule 13G/A filed with the Securities
and Exchange Commission on February 11, 2000, by Wanger Asset Management,
L.P. ("Wanger Asset"). Wanger Asset is a registered investment advisor. The
number of shares beneficially owned by this entity includes those purchased
on behalf of discretionary clients of Wanger Asset. Wanger Asset reported
that it has shared power to vote or direct the vote all of its shares.
(3) Consists of 30,000 shares subject to options exercisable within 60 days
after October 31, 2000. Mr. Burlinson's ability to exercise his option to
purchase these shares is subject to stockholder approval of the amendment
to the 1998 Non-Employee Director Plan increasing the number of shares
available for grant thereunder (See "PROPOSAL 2" below).
(4) Includes 128,843 shares subject to options exercisable within 60 days of
October 31, 2000.
(5) Consists of 30,000 shares subject to options exercisable within 60 days
after October 31, 2000. Mr. Gagnon's ability to exercise his option to
purchase these shares is subject to stockholder approval of the amendment
to the 1998 Non-Employee Director Plan increasing the number of shares
available for grant thereunder (See "PROPOSAL 2" below).
(6) Consists of 30,000 shares subject to options exercisable within 60 days
after October 31, 2000. Mr. Kopyt's ability to exercise his option to
purchase these shares is subject to stockholder approval of the amendment
to the 1998 Non-Employee Director Plan increasing the number of shares
available for grant thereunder (See "PROPOSAL 2" below).
(7) Consists of 385,000 shares subject to options exercisable within 60 days
after October 31, 2000.
(8) Dr. Tandowski serves as the President of Blueflame Inc., a wholly-owned
subsidiary of the Company. Includes 87,500 shares subject to options
exercisable within 60 days after October 31, 2000.
(9) Mr. Claypoole retired as an officer of the Company in September 1999 and
resigned from his position as a director of the Company in September 2000.
Includes 572,185 shares subject to options exercisable within 60 days after
October 31, 2000. Mr. Claypoole's address is 800 Hingham Street, Suite
1055, Rockland, MA 02370.
(10) Consists of 69,250 shares subject to options exercisable within 60 days
after October 31, 2000.
(11) Consists of 1,332,778 shares subject to options exercisable within 60 days
after October 31, 2000. The number of shares beneficially owned by all
executive officers, directors and nominees for director includes shares
beneficially owned by Mr. Claypoole, who was an executive officer and
director during 1999, but has subsequently resigned from both positions.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING REQUIREMENTS
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 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.
Based solely upon a review of reports submitted, and representations made to
the Company, to the Company's knowledge, its directors and executive officers
timely filed all required forms under Section 16(a) of the Securities Exchange
Act during 1999, except that Mr. Mitman, Mr. Claypoole and Dr. Tandowski each
inadvertently filed one form late covering the receipt of options to purchase
the Company's stock.
3
<PAGE>
PROPOSAL 1--ELECTION OF DIRECTORS
The Company has a classified Board of Directors (the "Board") which consists
of two Class I directors, two Class II directors and two Class III directors.
The Class I, Class II and Class III directors will serve until the Annual
Meetings of Stockholders to be held in 2001, 2002 and 2003, respectively, and
until their respective successors are elected and qualified. At each annual
meeting of stockholders, directors are elected for a full three-year term to
succeed those directors whose terms are expiring.
Unless the proxy is marked otherwise, the persons named in the enclosed
proxy will vote to elect, as Class III directors, Joseph Gagnon and Ira Cohen.
Messrs. Gagnon and Cohen are currently Class III directors, having been elected
in August 2000 and November 2000, respectively, by the Board. James E. Claypoole
and Lawrence M. Howell formerly served as a Class III directors, before
resigning in September 2000 and October 2000, respectively. Messrs. Gagnon and
Cohen have each been nominated for re-election as a director, and if re-elected,
would hold office until the 2003 Annual Meeting of Stockholders and until his
successor is elected and qualified.
Unless the proxy is marked otherwise, the persons named in the enclosed
proxy will vote to elect, as Class I directors, Leon Kopyt and Robert Burlinson.
Mr. Kopyt and Mr. Burlinson are currently serving as Class I directors, having
been elected as new Class I directors in March and July 2000, respectively.
Jonathan Ledecky formerly served as a Class I director, until his resignation in
August 2000. Mr. Kopyt and Mr. Burlinson have each been nominated for
re-election as a director, and if re-elected, would hold office until the 2001
Annual Meeting of Stockholders and until his successor is elected and qualified.
Each of the nominees has indicated his willingness to serve, if elected;
however, if any nominee should be unable to serve, the person acting under the
proxy may vote the proxy for a substitute nominee. The Board has no reason to
believe that any of the nominees will be unable to serve if elected.
For each member of the Board whose term of office as a director continues
after the Meeting, including those who are nominees for election as Class III
and Class I directors, there follows information given by each concerning his
principal occupation and business experience for at least the past five years,
the names of other publicly held companies for which he serves as a director,
his age and length of service as a director of the Company. There are no
familial relationships among any of the directors, nominees for director and
executive officers of the Company
NOMINEES FOR TERMS EXPIRING IN 2003 (CLASS III DIRECTORS)
JOSEPH L. GAGNON, 40, has served as a director of Aztec since August 2000.
Mr. Gagnon has served as Senior Vice President eStrategy of Mainspring, Inc.
since October 1999. From 1996 to October 1999, Mr. Gagnon was a partner at Ernst
& Young in New York where he provided technology consulting services. Prior to
becoming a partner, Mr. Gagnon held the positions of Senior Manager and Manager
with Ernst & Young, from 1989 until 1996. Mr. Gagnon received his bachelor of
arts in economics from Fordham University.
IRA COHEN, 46, has served as a director of Aztec since November 2000 and has
served as President of Aztec since September 1999 and as Chief Operating Officer
of Aztec since June 1998. From 1996 to April 1998, Mr. Cohen worked as an
independent consultant, and from September 1996 to June 1997 as the Chief
Operating Officer of DataTrend, Inc., a computer remanufacturing company. In
1993, Mr. Cohen was employed by CIC Systems as Chief Operating Officer of its
Copley Division where he continued to work through 1996. 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., which he sold in 1993.
4
<PAGE>
NOMINEES FOR TERMS EXPIRING IN 2001 (CLASS I DIRECTORS)
LEON KOPYT, 55, has served as a director of Aztec since March 2000.
Mr. Kopyt has held the positions of Chairman of the Board of Directors,
President and Chief Executive Officer of RCM Technologies, Inc., a provider of
business, technology and resource management solutions to information technology
and professional engineering customers since 1991. Prior to his association with
RCM Technologies, Inc. Mr. Kopyt was the President and CEO of a European-based
industrial corporation which designed and manufactured a broad range of
transportation and defense products.
ROBERT BURLINSON, 61, is a private investor and financial consultant, has
served as a director of Aztec since July 2000 and currently serves as the
Chairman of the Executive Committee of the Board. Mr. Burlinson was the
Executive Vice President and Chief Financial Officer of Audio Visual Services
Corporation, formerly Caribiner International, Inc., an international provider
of corporate meetings and business communications services, from June 1998 to
July 2000. From September 1996 until June 1998, Mr. Burlinson served as Vice
President, Treasurer and Principal Financial Officer of Handy & Harman, a
manufacturer providing engineering products, system components and precious
metal fabrication. From October 1986 until September 1996, Mr. Burlinson served
as Senior Vice President and Chief Financial Officer and was a director of
National Guardian Corp., a security services company. Mr. Burlinson received a
Masters of Business Administration degree from the Stern School of New York
University and holds a Bachelor of Arts degree in economics from Fordham
University. Mr. Burlinson is a certified public accountant.
DIRECTORS WHOSE TERMS EXPIRE IN 2002 (CLASS II DIRECTORS)
CLIFFORD MITMAN, JR., 62, has served as a director of Aztec since May 1998
and currently serves as Chairman of the Board and of the Audit, Compensation and
Special Committees of the Board. Mr. Mitman has been President of Mitman
Associates, a firm that provides executive compensation and organization
planning consulting services to a wide range of companies since October 1991.
Prior to October 1991, 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, 53, has served as a director of Aztec since May 1998.
From 1985 to the present, Dr. Tandowski has served as President of Blueflame, a
provider of comprehensive enterprise solutions and a wholly-owned subsidiary of
Aztec. Dr. Tandowski founded Blueflame in 1985. From January 1999 to March 2000,
Dr. Tandowski served as the Chief Technology Officer of Aztec prior to resigning
to focus his efforts on Blueflame. Previously, Dr. Tandowski was employed by
Exxon Research and the Chemical and Plastics Division of Union Carbide, both
diversified chemical companies where he managed the implementation of large
databases and developed computing facilities for research. Dr. Tandowski holds a
Ph.D. in mechanical engineering from the City University of New York, where he
was a National Science Fellow.
See "Security Ownership of Certain Beneficial Owners and Management" above
for a summary of the shares of Common Stock owned by each of the directors and
director nominees.
LEGAL PROCEEDINGS FOR THE YEAR ENDED DECEMBER 31, 1999
On March 3, 1999, a lawsuit was filed against the Company, along with USOP
and Jonathan Ledecky, a director of Aztec until August 2000, by Philip Arturi, a
former President of PNS, and Bruce Torello, a former PNS employee. Arturi and
Torello claim a total of $2 million in damages in connection with the sale of
their company to USOP in September, 1997. (PNS was one of the business units
that was spun off from USOP as part of Aztec in June 1998 and was a wholly-owned
subsidiary of USOP prior to the spin-off.)
5
<PAGE>
The plaintiffs claim that USOP failed to disclose certain material facts during
USOP's acquisition of the business and that they were given assurances that they
would be compensated for damages from the drop in the value of the USOP stock
received in consideration for the sale of the Company. Some or all of the claims
may be subject to indemnification by the Company and the other spin-off
companies under the terms of the distribution agreement that was executed in
connection with USOP's strategic restructuring plan. It is also possible that
the Company could seek indemnity from USOP for these claims.
In connection with the acquisition of Aztec International, a lawsuit was
filed in the United States District Court for the District of Delaware in
February 1999 against USOP, and James Claypoole and Jonathan Ledecky, both now
former directors of Aztec, as employees of USOP, by Jack Meehan, Fran Meehan,
Christopher Meehan, Beth Meehan, Gordon Tingets, Les Asher, Michael Dickens, and
William Durniak. A number of the plaintiffs are officers and directors of Aztec
International. Messrs. Claypoole and Ledecky were directors of Aztec until
September 2000 and August 2000, respectively. The lawsuit alleges that USOP (and
Claypoole and Ledecky as its employees) failed to disclose certain material
facts during USOP's acquisition of the business. The lawsuit further alleges
that the plaintiffs were given assurances that they would be compensated for
damages resulting from a drop in the value of the USOP stock that they received
in connection with the sale. The plaintiffs claim damages of $9.5 million. Some
or all of the claims may be subject to indemnification by the Company and the
other spin-off companies under the terms of the distribution agreement that was
executed in connection with USOP's strategic restructuring plan.
The Multidistrict Litigation Panel consolidated both cases, as well as many
other cases pending against USOP, for pre-trial purposes in the United States
District Court for the District of Columbia. The cases have been
administratively closed pending referral to mediation. Prior to that action, all
of the defendants in both cases moved to have them dismissed. No action has been
taken on those motions.
BOARD AND COMMITTEE MEETINGS
The Board met 11 times (including by telephone conference) during 1999. All
directors attended at least 75% of the meetings of the Board and of the
committees on which they served.
The Board has a Compensation Committee, which has the authority and
responsibility to establish the compensation of, and compensation policies
applicable to, the Company's senior officers and administers certain of the
Company's stock benefit plans. The Compensation Committee held four meetings
during 1999. The current members of the Compensation Committee are
Messrs. Mitman and Kopyt.
The Board has an Audit Committee, which reviews and evaluates audit
procedures and the results and scope of the audit and other services provided by
the Company's independent public accountants. The Audit Committee held eight
meetings during 1999. The current members of the Audit Committee are
Messrs. Mitman, Gagnon and Burlinson.
The Board established an Executive Committee in September 2000, which has
the authority to take all actions of the Board as may be permitted under
Delaware Law with respect to the management of the business and affairs of the
Company, other than altering the Company's bylaws. The current members of the
Executive Committee are Messrs. Burlinson and Mitman.
COMPENSATION OF DIRECTORS
All directors are reimbursed by the Company for expenses incurred in
connection with their attendance at Board meetings and committee meetings. Each
non-employee director is paid $1,500 as a quarterly retainer, $500 for
participating in a telephonic Board meeting or committee meeting, and $1,000 for
attendance at each in person Board meeting or committee meeting.
6
<PAGE>
Mr. Mitman received options to purchase 250,000 shares of Common Stock as
consideration for his service as Chairman of the Board.
Mr. Mitman received a one-time grant of an option to purchase 50,000 shares
of Common Stock for his appointment as a member of the Executive Committee.
Mr. Burlinson is paid $20,000 per month for his service as Chairman of the
Executive Committee for a period of six months. At the end of the six month
period, the Board of Directors will review the continued need for an Executive
Committee and the compensation provided to its members.
Non-employee directors of the Company receive stock options under the
Company's Amended and Restated 1998 Non-Employee Director Stock Option Plan (the
"Director Plan"). The Director Plan is administered by the Board. The Director
Plan provides that each non-employee director is automatically granted (i) an
option to purchase 30,000 shares of Common Stock upon his or her initial
election to the Board; (ii) an option to purchase 15,000 shares of Common Stock
on the date of each annual meeting of stockholders, provided that he or she is
serving as a director immediately following such annual meeting; (iii) an option
to purchase 10,000 shares of Common Stock upon initial appointment as
chairperson of a committee of the Board; and (iv) an option to purchase 10,000
shares of Common Stock on the date of each annual meeting of stockholders if
serving as a chairperson of a committee of the Board, provided that he or she
will continue to serve as chairperson immediately following such annual meeting.
Pursuant to the Director Plan, (i) on June 2, 1999 after the 1999 Annual
Meeting of Stockholders, the Company granted options to purchase 30,000 shares
of Common Stock to Mr. Howell, at an exercise price of $2.375, for his service
as a director and as chairman of committees of the Board and options to purchase
25,000 shares of Common Stock to Mr. Mitman, at an exercise price of $2.375, for
his service as a director and as chairman of committees of the Board; (ii) on
December 9, 1999, the Company granted options to purchase 15,000 shares of
Common Stock to Mr. Mitman, at an exercise price of $4.00 per share, for his
appointment as chairman of committees of the Board; (iii) on March 2, 2000, the
Company granted options to purchase 15,000 shares of Common Stock to Mr. Kopyt,
at an exercise price of $8.75 per share, for his election to the Board; (iv) on
June 29, 2000, the Company granted options to purchase an additional 15,000
shares of Common Stock to Mr. Kopyt, at an exercise price of $2.0625, due to the
increase in the number of shares for which options are granted for election to
the Board under the Director Plan from 15,000 to 30,000; (v) on July 10, 2000,
the Company granted options to purchase 30,000 shares of Common Stock to
Mr. Burlinson, at an exercise price of $2.1875 per share, for his election to
the Board; and (vi) on August 2, 2000, the Company granted options to purchase
30,000 shares of Common Stock to Mr. Gagnon, at an exercise price of $1.875 per
share, for his election to the Board. On December 12, 2000, the Company, at its
Annual Meeting, will grant to each of Messrs. Mitman, Kopyt, Burlinson and
Gagnon options to purchase 15,000 shares of Common Stock for their continued
service as directors or re-election to the Board and options to purchase 30,000
shares of Common Stock to Mr. Mitman for his service as chairman of committees
of the Board.
As of March 2, 2000, no shares were available under the Director Plan for
the automatic option grants made to non-employee directors. Since such date,
options to purchase shares of Common Stock have been granted to each of
Messrs. Burlinson, Gagnon and Kopyt, but remain subject to stockholder approval
of an increase in the number of shares authorized for grant under the Director
Plan. The Board has approved an increase in the number of shares available under
the plan from 300,000 to 700,000, and, if the amendment (discussed below) is
approved by the stockholders, shares of Common Stock will be available to
fulfill these grants, as well as the grants to be made with respect to the
Annual Meeting.
7
<PAGE>
COMPENSATION OF OFFICERS AND DIRECTORS FOR THE YEAR ENDED DECEMBER 31, 1999
EXECUTIVE COMPENSATION
The following table sets forth information with respect to the compensation
paid to the Named Executive Officers by Aztec for services rendered during the
fiscal year ended December 31, 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
NAME AND PRINCIPAL ANNUAL -------------
POSITION COMPENSATION(1) SECURITIES
------------------ -------------------- OTHER ANNUAL UNDERLYING
OPTIONS YEAR SALARY($) BONUS($) COMPENSATION STOCK OPTIONS
------- -------- --------- -------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Ira Cohen ................................ 1999 $200,000 None None 220,000
President and Chief Operating Officer 1998 $138,462 $ 10,000 None 78,150
Ross J. Weintraub (2) .................... 1999 $139,700 None None 202,000
Chief Financial Officer
Benjamin Tandowski ....................... 1999 $300,385 None None 100,000
President of Blueflame 1998 $259,615 $ 50,000 None 75,000
James E. Claypoole ....................... 1999 $375,120 $187,500(3) None 5,000
Former Chief Executive Officer and 1998 $243,308 $ 60,000 $125,834 572,185
President, Former Director
</TABLE>
------------------------
(1) In accordance with the rules of the Securities and Exchange Commission,
other compensation in the form of perquisites and other personal benefits
has been omitted because such perquisites and other personal benefits
constituted less than the lesser of $50,000 or ten percent of the total
annual salary and bonus for the Named Executive Officers for the year
reflected above.
(2) Mr. Weintraub began his employment with the Company on February 24, 1999.
(3) On September 30, 1999, the Company entered into an agreement with regard to
the terms of Mr. Claypoole's retirement. The dollar amount listed in bonus
was paid in connection with his retirement agreement.
8
<PAGE>
STOCK OPTION GRANTS
The following table sets forth certain information regarding options granted
to the Named Executive Officers during the fiscal year ended December 31, 1999.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTION REALIZABLE
----------------------------------------------------- VALUE AT ASSUMED
NUMBER OF PERCENT OF TOTAL ANNUAL RATES OF STOCK
SHARES OPTIONS OPTION PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION OPTION TERMS(3)
OPTIONS EMPLOYEES IN PRICE EXPIRATION -----------------------
NAME GRANTED(1) FISCAL YEAR(2) ($/SH) DATE 5% 10%
---- ---------- ---------------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Ira Cohen..................... 120,000 5.15% $1.875 8/16/09 $141,501 $358,592
100,000 4.30% 4.50 12/13/09 283,003 717,184
Ross Weintraub................ 7,000 * 4.50 2/25/09 19,810 50,202
120,000 5.15% 1.875 8/16/09 124,049 305,538
75,000 3.22% 4.50 12/13/09 212,251 537,888
Benjamin Tandowski............ 100,000 4.30% 4.50 12/13/09 283,003 717,184
James E. Claypoole............ 5,000 * 4.00 12/09/09 12,578 31,875
</TABLE>
------------------------
(1) Represents options granted pursuant to the Company's 1998 Stock Incentive
Plan.
(2) Calculated based on the total number of options, 2,328,000, granted during
the year ended December 31, 1999.
(3) Potential realizable value is based on an assumption that the market price
of the stock will appreciate at the stated rate, compounded annually, from
the date of grant until the end of the term. These values are calculated
based on rules promulgated by the Securities and Exchange Commission and do
not reflect the Company's estimate or projection of future stock prices.
Actual gains, if any, on stock option exercises will depend on the future
performance of the Company's Common Stock, the optionholder's continued
employment through the option period and the date on which the options are
exercised.
FISCAL YEAR-END OPTION VALUE TABLE
The following table summarizes certain information regarding the stock
options exercised during 1999 and unexercised stock options held as of December
31, 1999 by each of the Named Executive Officers.
9
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT FISCAL IN-THE-MONEY OPTIONS
YEAR-END(#) AT FISCAL YEAR END($)(1)
SHARES ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------------ ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ira Cohen................... None 0 19,536 278,614 $ 11,551 $362,856
Ross J. Weintraub........... None 0 None 202,000 N/A $327,626
Benjamin Tandowski.......... None 0 18,750 156,250 $ 32,803 $104,659
James E. Claypoole.......... None 0 577,185 None $335,355 N/A
</TABLE>
------------------------
(1) Value based upon the last sales price per share ($4.56) on the Company's
Common Stock on December 31, 1999, as reported on the Nasdaq SmallCap
Market, less the exercise price.
10
<PAGE>
EMPLOYMENT CONTRACTS FOR THE YEAR ENDED DECEMBER 31, 1999
Aztec entered into an employment agreement with Mr. Cohen, effective as of
June 1, 1999, for a one-year term as the Company's Chief Operating Officer. The
agreement automatically renews for an additional one year term unless either
party gives 90 days notice of termination. Pursuant to the agreement, Mr. Cohen
is entitled to receive a base salary of $200,000, with the potential for a cash
bonus of up to 50% of Mr. Cohen's annual base salary. Aztec may terminate
Mr. Cohen with or without cause. Termination without cause entitles Mr. Cohen to
(i) a pro rata portion of the "Severance Bonus Amount" (based on the number of
days between the first day of the then current fiscal year and the date
termination is effective), (ii) his annual base salary, and (iii) the
continuation of his health benefits for a period of one year. The "Severance
Bonus Amount" for a fiscal year equals the average amount of the bonuses paid to
Mr. Cohen for the fiscal years proceeding such fiscal year. In the event that
his employment is terminated within 24 months following a change in control in
the Company, Mr. Cohen is entitled to a lump sum payment in an amount equal to
his annual base salary at the time of the termination plus the above-described
Severance Bonus Amount. In addition to these severance payments, the
Compensation Committee determined on November 9, 1999 that Mr. Cohen would
receive a lump sum payment of $100,000 in cash, within 30 days after the last
sale of the Company's non-core subsidiaries. The Committee determined on October
13, 1999 that Mr. Cohen would receive a lump sum payment of $150,000 in cash
within 30 days after the Company is sold as a whole. Mr. Cohen is entitled to
these payments only if he remains employed at the time the respective
transactions are consummated and he is in compliance with his employment
agreement.
In June 1998, Aztec entered into an employment agreement with
Mr. Claypoole, as the Company's President and Chief Executive Officer. In
September 1999, Mr. Claypoole retired from these positions with the Company. In
connection with his retirement, Aztec entered into an agreement with
Mr. Claypoole, dated September 30, 1999, wherein the Company agreed to fulfill
its obligations under the June 1998 employment agreement. These obligations
included the payment of a severance bonus of $187,500, the payment of his base
salary through June 10, 2002, and the continuation of his benefits until the
earlier of his reemployment or June 10, 2002. In addition, Mr. Claypoole's
options in Aztec stock became fully exercisable on the date of his separation
from the Company.
Aztec entered into an employment agreement with Mr. Weintraub, effective
June 1, 1999, for a one year term as the Company's Vice President of Finance,
Corporate Controller and Interim Chief Financial Officer. The agreement
automatically renews for an additional one year term unless either party gives
90 days notice of termination. Pursuant to the agreement, Mr. Weintraub is
entitled to receive a base salary of $160,000 per year, with the potential for a
cash bonus of up to 25% of his annual base salary. Aztec may terminate
Mr. Weintraub with or without cause. Termination without cause entitles
Mr. Weintraub to a pro rata portion of the "Severance Bonus Amount" (based on
the number of days between the first day of the then current fiscal year and the
date termination is effective), (ii) his annual base salary, and (iii) the
continuation of his health benefits for a period of one year. The "Severance
Bonus Amount" for a fiscal year equals the average amount of the bonuses paid to
Mr. Weintraub for the fiscal years proceeding such fiscal year. In the event
that his employment is terminated within 24 months following a change in control
in the Company, Mr. Weintraub is entitled to a lump sum payment in an amount
equal to his annual base salary at the time of the termination plus the
above-described Severance Bonus Amount. In addition to these severance payments,
the Compensation Committee determined on November 9, 1999 that Mr. Weintraub
would receive a lump sum payment of $100,000 in cash, within 30 days after the
last sale of Company's non-core subsidiaries. The Committee determined on
October 13, 1999 that Mr. Weintraub would receive a lump sum payment of $150,000
in cash within 30 days after the Company is sold as a
11
<PAGE>
whole. Mr. Weintraub is entitled to these payments only if he remains employed
at the time the respective transactions are consummated and he is in compliance
with his employment agreement.
Aztec entered into an employment agreement with Mr. Ledecky, effective from
June 10, 1998 until June 30, 2000. Under the employment agreement, Mr. Ledecky
reported to the Board of Directors and senior management of Aztec. In such
capacity, Mr. Ledecky provided acquisition negotiation services and strategic
business advice. Aztec could require Mr. Ledecky's performance of such services,
consistent with his other contractual obligations to other companies. Under the
employment agreement Mr. Ledecky's base annual salary was set at $48,000 and he
was granted a stock option to purchase 1,660,500 shares of Aztec Common Stock at
an exercise price of $9.875. On December 14, 1998, Mr. Ledecky, as part of the
Company's option exchange program, exchanged the options granted to him under
his employment agreement. Mr. Ledecky exchanged his option to purchase 1,660,500
shares of Aztec Common Stock for an option to purchase 865,121 shares of Aztec
Common Stock at an exercise price per share of $3.96875. Mr. Ledecky's options
are fully vested. Mr. Ledecky also entered into an agreement with U.S. Office
Products, effective June 10, 1998, which governed his continuing obligations to
U.S. Office Products and portions of which were incorporated in his employment
agreement with Aztec (the "Services Agreement"). Specifically, his employment
agreement provided that Aztec could terminate Mr. Ledecky's employment only for
"cause" as "cause" is defined in the Services Agreement. In addition, under
Mr. Ledecky's employment agreement with Aztec, he was subject to the
noncompetition and nonsolicitation provisions of the Services Agreement.
Blueflame Inc., a wholly owned subsidiary of Aztec, entered into an
employment agreement with Benjamin Tandowski, effective April 26, 1997. Pursuant
to this agreement, Dr. Tandowski serves as president of Blueflame at a base
annual salary of $300,385. Blueflame may terminate Dr. Tandowski with or without
cause. Termination without cause entitles Dr. Tandowski to the base salary in
effect at the date of termination for the longer of (i) three months from the
date of termination, or (ii) whatever time period remains under the term of his
employment agreement. Dr. Tandowski's employment agreement with Blueflame
contains noncompetition and confidentiality provisions. Unless extended by the
parties, the contract terminates on December 31, 2000.
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
OVERVIEW AND PHILOSOPHY
The Company's Compensation Committee is responsible for establishing the
compensation of, and the compensation policies with respect to, the Company's
senior officers, and administering the Company's stock benefit plans. From
January through November of 1999, the Compensation Committee consisted of
Messrs. Mitman and Mr. Howell and, during December 1999, the Compensation
Committee consisted of Messrs. Mitman and Claypoole. The objectives of the
Company's executive compensation program are to:
- Attract and retain key executives critical to the long-term success of the
Company;
- Align the interests of the executive officers with the interests of
stockholders and the success of the Company; and
- Recognize and reward individual performance and responsibility.
12
<PAGE>
The Company's compensation polices are significantly influenced by the fact
that the Company operates in the area of information technology, one of the
fastest growing business sectors and one in which the competition for qualified
employees is the most intense. Compensation in the information technology
industry is heavily weighted in favor of stock options.
COMPENSATION PROGRAMS
The Company's executive compensation program consists of base salary,
short-term incentive compensation in the form of cash bonuses, as provided by
the Company's Executive Bonus Program, and long-term incentive compensation in
the form of stock options, as provided by the Company's 1998 Stock Incentive
Plan. Executive officers also participate in benefit programs that are generally
available to the Company's employees, including medical benefits, the 401(k)
Plan and the 1998 Employee Stock Purchase Plan.
COMPENSATION POLICIES FOR EXECUTIVE OFFICERS
For 1999, compensation for the executive officers was set within the range
of compensation for executives with comparable qualifications, experience and
responsibilities at other companies in the same or similar businesses, based on
the determination of management and approved by the Compensation Committee. In
addition, base compensation for each executive officer was determined on a case
by case basis in view of each individual's contribution to the Company as a
whole, including the ability to motivate others, develop the necessary skills to
grow as the Company matures, recognize and pursue new business opportunities and
initiate programs to enhance the Company's growth and success.
SHORT TERM EXECUTIVE COMPENSATION--EXECUTIVE BONUS PLAN.
An executive cash bonus plan (the "Plan") was established in February 1999.
Prior to that date, the Company had no formal bonus program. Under the terms of
the Plan, executive officers could receive payments in addition to their base
salaries. The amount of the bonuses depend on two factors: the degree to which
the Company achieves its fiscal budget for the year and the extent to which the
executive discharges assignments and achieves individual goals assigned to that
executive during the year. No bonuses are paid if the pre-tax income from the
current fiscal year is less than the level from the prior year. During 1999, the
Company did not award a bonus to any executive officer, except the bonus awarded
to Mr. Claypoole pursuant to his retirement agreement with the Company.
LONG TERM INCENTIVE COMPENSATION--1998 STOCK INCENTIVE PLAN
Long-term incentives for executive officers are provided through stock
options. The objectives of the program are to align executive and stockholder
long-term interests by creating a strong and direct link between executive
compensation and stockholder return, and to enable executives to develop and
maintain a significant, long-term stock ownership position in the Company's
Common Stock. Stock options are granted at an option price equal to the fair
market value of the Company's Common Stock on the date of grant and will only
have value if the Company's stock price increases. In selecting executives
eligible to receive option grants and determining the amount and frequency of
such grants, the Company evaluates a variety of factors, including (i) the job
level of the executive, (ii) option grants awarded by competitors to executives
at a comparable job level and (iii) past, current and prospective service to the
Company rendered, or to be rendered, by the executive. During 1999, the Company
granted options to purchase an
13
<PAGE>
aggregate of 522,000 shares of Common Stock to executive officers of the
Company, consisting of 220,000 options to Mr. Cohen, 100,000 options to Dr.
Tandowski, and 202,000 options to Mr. Weintraub.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)
Section 162(m) of the Internal Revenue Code of 1986, as amended, generally
disallows a federal income tax deduction to public companies for compensation in
excess of $1 million paid to a corporation's chief executive officer or any of
its four other most highly compensated executive officers. Qualifying
performance-based compensation will not be subject to the deduction limit if
certain requirements are met. The Compensation Committee periodically reviews
the potential consequences of Section 162(m) and may structure the
performance-based portion of its executive compensation to comply with certain
exemptions to Section 162(m). However, the Compensation Committee reserves the
right to use its judgment to authorize compensation payments that do not comply
with the exemptions to Section 162(m) when the Compensation Committee believes
such payments are appropriate and in the best interests of the stockholders,
after taking into account changing business conditions or the officers'
performance.
1999 Compensation Committee
James E. Claypoole, Chairman
Clifford Mitman, Jr.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
From January through November of 1999, the members of the Compensation
Committee were Messrs. Howell and Mitman and, during December 1999, the members
of the Compensation Committee were Messrs. Claypoole and Mitman. Mr. Claypoole
resigned as an officer of the Company in September 1999 and resigned from his
position as a director in September 2000 and no longer serves as a member of the
Compensation Committee. No executive officer of the Company has served as a
director or member of the Compensation Committee (or other committee serving an
equivalent function) of any other entity, one of whose executive officers served
as a director of or member of the Compensation Committee of the Company.
STOCK PERFORMANCE GRAPH
COMPARATIVE STOCK PERFORMANCE
The following graph compares the cumulative total stockholder return on the
Common Stock of the Company from June 11, 1998 through December 31, 1999, with
the cumulative total return on (i) the Russell 3000 Index and (ii) a Line-of
Business Index consisting of companies in Aztec's Standard Industrial
Classification (SIC) code number 7373--Computer Integrated System Design. The
comparison assumes
14
<PAGE>
the investment of $100 on June 11, 1998 in the Company's Common Stock and in
each of the indices and, in each case, assumes reinvestment of all dividends.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
6/11/98 6/30/98 9/30/98 12/31/98 3/31/99 6/30/99 9/30/99 12/31/99
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AZTEC TECHNOLOGY PARTNERS, INC. 100 77.27 54.48 36.76 16.81 19.04 17.42 46.18
SIC CODE INDEX 100 115.92 111.39 187.69 263.77 251.09 256.11 412.13
RUSSELL 3000 INDEX 100 103.38 91.82 111.21 114.6 123.06 114.58 132.74
</TABLE>
DOLLARS
CERTAIN TRANSACTIONS FOR FISCAL YEAR ENDED DECEMBER 31, 1999
In January 2000, Blueflame entered into an agreement with Howell Capital for
consulting services in the planning and execution of any public sale of equity
or debt securities of Blueflame through an initial public offering ("IPO") and
subsequent spin-off, or the sale of all or part of Blueflame to a third party.
The agreement provides that Howell Capital is entitled to receive a fee in the
form of an option to purchase a number of shares of Blueflame's common stock
which would be calculated as .5% of Blueflame's total enterprise value at the
time of a transaction or IPO, or such earlier time when a mutual determination
of the enterprise value can be made. The option would fully vest at the time
such transaction or IPO is consummated. Mr. Howell is the Managing Partner of
Howell Capital and was a member of the Board of Directors of Aztec until his
resignation in September 2000.
15
<PAGE>
PROPOSAL 2--AMENDMENT TO THE 1998 NON-EMPLOYEE
DIRECTOR STOCK OPTION PLAN
On September 28, 2000, the Board adopted resolutions, subject to stockholder
approval, to approve an amendment (the "Director Plan Amendment") to the 1998
Non-Employee Director Stock Option Plan to increase the number of shares of
Common Stock authorized for issuance thereunder from 300,000 to 700,000 shares.
The Board has adopted the Director Plan Amendment to ensure that the Company
will be able to attract and retain the highest caliber of directors to serve on
its Board. As of March 2, 2000, no shares of Common Stock were available for
issuance under the Director Plan.
Under the terms of the Director Plan, options to purchase shares of Common
Stock have been granted, subject to the approval of the stockholders of the
increase in the number of authorized shares available, to each of Messrs.
Burlinson, Gagnon and Kopyt. If the Director Plan Amendment is approved by the
stockholders, shares of Common Stock will be available to fulfill these grants.
SUMMARY OF THE DIRECTOR PLAN
The following is a summary of the material provisions of the Director Plan.
The Director Plan provides for the grant of nonstatutory stock options to
purchase shares of Common Stock to directors of the Company who are not
employees of the Company or any subsidiary of the Company. Currently, under the
Director Plan each eligible director is entitled to receive (i) an option to
purchase 30,000 shares of Common Stock upon his or her initial election to the
Board; (ii) an option to purchase 15,000 shares of Common Stock on the date of
each annual meeting of stockholders, provided that he or she is serving as a
director immediately following such annual meeting; (iii) an option to purchase
10,000 shares of Common Stock upon initial appointment as chairperson of a
committee of the Board; and (iv) an option to purchase 10,000 shares of Common
Stock on the date of each annual meeting of stockholders if serving as a
chairperson of a committee of the Board, provided that he or she will continue
to serve as chairperson immediately following such annual meeting.
All options granted under the Director Plan vest in full immediately upon
the date of grant. The exercise price of options granted under the Director Plan
will equal the last reported sales price per share of the Common Stock on the
Nasdaq SmallCap Market (or such other nationally recognized exchange or trading
system if the Common Stock is no longer traded on the Nasdaq SmallCap Market) on
the date of grant.
Except as otherwise provided by the Board, options granted under the
Director Plan generally are transferable by the optionee. In the event an
optionee ceases to serve as a director, each option may be exercised by the
optionee at any time within 90 days after the optionee ceases to serve as a
director; provided, however, that in the event that the optionee ceases to serve
as a director due to his death or disability, then the optionee, or his or her
administrator, executor or heirs may exercise the exercisable portion of the
option for up to 180 days following the date the optionee ceased to serve as a
director. No option is exercisable after the expiration of ten years from the
date of grant.
The Director Plan is administered by the Board. Grants of stock options
under the Director Plan and the amount and nature of the awards to be granted
shall be automatic in accordance with the provisions of the Director Plan.
However, all questions concerning interpretation of the Director Plan or any
options
16
<PAGE>
granted thereunder shall be resolved by the Board. The Board is required to make
appropriate adjustments in connection with the Director Plan and any outstanding
grants to reflect stock dividends, stock splits and certain other events,
including mergers. Subject to the provisions of the Director Plan, the Board may
modify or amend outstanding options, and may amend, suspend, terminate or
discontinue the Director Plan.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the United States federal income tax
consequences that generally will arise with respect to options granted under the
Director Plan and with respect to the sale of Common Stock acquired under the
Director Plan.
A participant will not recognize taxable income upon the grant of an option
under the Director Plan. Nevertheless, a participant generally will recognize
ordinary compensation income upon the exercise of the option in an amount equal
to the excess of the fair market value of the Common Stock acquired through the
exercise of the option (the "Option Stock") on the exercise date over the
exercise price.
A participant will have a tax basis for any Option Stock equal to the
exercise price plus any income recognized with respect to the option. Upon
selling Option Stock, a participant generally will recognize capital gain or
loss in an amount equal to the difference between the sale price of the Option
Stock and the participant's tax basis in the Option Stock. This capital gain or
loss will be a long-term capital gain or loss if the participant has held the
Option 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 Option Stock for
a shorter period.
The grant of a stock option under the Director Plan will have no tax
consequences to the Company. The Company generally will be entitled to a
business-expense deduction, however, with respect to any ordinary compensation
income recognized by a participant under the Director Plan.
THE BOARD OF DIRECTORS BELIEVES THAT THE APPROVAL OF THE NON-EMPLOYEE
DIRECTOR STOCK OPTION PLAN AMENDMENT IS IN THE BEST INTERESTS OF AZTEC AND ITS
STOCKHOLDERS AND RECOMMENDS A VOTE IN FAVOR OF THIS PROPOSAL.
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's selection of
PricewaterhouseCoopers LLP is not required by law, the Board 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 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 THE FIRM OF
PRICEWATERHOUSECOOPERS LLP AS ITS INDEPENDENT ACCOUNTANTS IS IN THE BEST
INTEREST OF AZTEC AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE IN FAVOR OF THIS
PROPOSAL.
17
<PAGE>
OTHER MATTERS
The Board of Directors knows of no other business which will be presented
for consideration at the Annual Meeting other than that described above.
However, if any other business should come before the Annual Meeting, it is the
intention of the persons named in the accompanying proxy to vote, or otherwise
act, in accordance with their best 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. 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 also reimburse them for out-of-pocket expenses
incurred on behalf of the Company. In addition, D.F. King & Co., Inc. has been
engaged to solicit proxies on behalf of the Board at an estimated cost of $5,000
as well as reimbursement for any additional reasonable expenses.
STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Any proposal that a stockholder of the Company wishes to be considered for
inclusion in the Company's proxy statement and proxy for the 2001 Annual Meeting
of Stockholders (the "2001 Annual Meeting") must be submitted to the Secretary
of the Company at the Company's principal office in Braintree, Massachusetts not
later than July 16, 2001.
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 Assistant Secretary of the Company
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 2001 Annual Meeting is given to stockholders, such nomination
or notice of other business shall have been mailed or delivered to the Secretary
of the Company 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.
If a stockholder fails to provide timely notice of a proposal to be
presented at the 2001 Annual Meeting, the proxies designated by the Board of
Directors of the Company will have discretionary authority to vote on any such
proposal.
18
<PAGE>
The Company has not yet determined the date of its 2001 Annual Meeting.
By Order of the Board of Directors,
[/S/ T. KENWOOD MULLARE]
T. Kenwood Mullare
SECRETARY
November 15, 2000
THE BOARD OF DIRECTORS HOPES THAT STOCKHOLDERS WILL ATTEND THE ANNUAL
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 ANNUAL MEETING MAY VOTE THEIR SHARES PERSONALLY EVEN
THOUGH THEY HAVE SENT IN THEIR PROXIES.
19
<PAGE>
AZTEC TECHNOLOGY PARTNERS, INC.
AMENDED AND RESTATED
1998 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
1. PURPOSE.
The purpose of this 1998 Non-Employee Director Stock Option Plan (the
"Plan") of Aztec Technology Partners, Inc. (the "Company") is to encourage
ownership in the Company by non-employee directors of the Company (the
"Directors"), whose continued services are considered essential to the Company's
future progress and to provide them with a further incentive to remain as
Directors.
2. ADMINISTRATION.
The Board of Directors of the Company (the "Board of Directors") shall
supervise and administer the Plan. Grants of stock options under the Plan and
the amount and nature of the awards to be granted shall be automatic in
accordance with Section 5. However, all questions concerning interpretation of
the Plan or any options granted under it shall be resolved by the Board of
Directors and such resolution shall be final and binding upon all persons having
an interest in the Plan. The Board of Directors may, to the full extent
permitted by or consistent with applicable laws or regulations, delegate any or
all of its powers under the Plan to a committee appointed by the Board of
Directors, and if a committee is so appointed, all references to the Board of
Directors in the Plan shall mean and relate to such committee.
3. PARTICIPATION IN THE PLAN.
The Directors shall be eligible to receive options under the Plan.
4. STOCK SUBJECT TO THE PLAN.
(a) The maximum number of shares of the Company's common stock,
par value $0.001 per share ("Common Stock"), which may be issued under the Plan
shall be seven hundred thousand (700,000) shares, subject to adjustment as
provided in Section 7.
(b) If any outstanding option under the Plan for any reason
expires or is terminated without having been exercised in full, the shares
covered by the unexercised portion of such option shall again become available
for issuance pursuant to the Plan.
(c) All options granted under the Plan shall be non-statutory
options not entitled to special tax treatment under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").
(d) Shares issued under the Plan may consist in whole or in part
of authorized but unissued shares or treasury shares.
5. TERMS, CONDITIONS AND FORM OF OPTIONS.
<PAGE>
Each option granted under the Plan shall be evidenced by a written
agreement in such form as the Board of Directors shall from time to time
approve, which agreements shall comply with and be subject to the following
terms and conditions:
(a) OPTION GRANT DATES. Options shall automatically be granted to
the Directors as follows:
(i) each Director shall be granted an option to
purchase 30,000 shares of Common Stock in respect of his or her initial election
to the Board of Directors;
(ii) each Director shall be granted an option to
purchase 15,000 shares of Common Stock on the date of each Annual Meeting of
Stockholders of the Company, provided that he or she is serving as a Director
immediately following such annual meeting;
(iii) each Director who serves as chairperson of a
committee of the Board of Directors shall be granted an option to purchase
10,000 shares of Common Stock in respect of his or her initial election as
chairperson of such committee; and,
(iv) each Director who serves as chairperson of a
committee of the Board of Directors shall be granted an option to purchase
10,000 shares of Common Stock in respect of service as chairperson of such
committee on the date of each Annual Meeting of Stockholders of the Company,
provided that he or she is serving as chairperson of that committee of the Board
of Directors immediately following such annual meeting.
(b) OPTION EXERCISE PRICE. The option exercise price per share
for each option granted under the Plan shall be (x) the last reported sales
price per share of the Common Stock on The Nasdaq Stock Market (or if the Common
Stock is traded on a national securities exchange on the date of grant, the
reported closing sales price per share of the Common Stock on such exchange) on
the day prior to the date of grant (or if no such price is reported on such date
such price as reported on the nearest preceding day), or (y) if the Common Stock
is not traded on The Nasdaq Stock Market or a national securities exchange, the
option exercise price for each such option shall be the fair market value per
share of the Common Stock on the date of grant as most recently determined by
the Board of Directors.
(c) TRANSFERABILITY OF OPTIONS. Except as the Board of Directors
may otherwise determine or provide in an option granted under the Plan, any
option granted under the Plan to an optionee shall be transferable by the
optionee to any transferee, and shall be exercisable during the optionee's
lifetime by the optionee or any authorized transferee or such optionee's or
authorized transferee's guardian or legal representative. References to an
optionee, to the extent relevant in the context, shall include references to
authorized transferees.
(d) VESTING PERIOD.
(i) GENERAL. Each option granted under the Plan shall
be fully vested and exercisable on the option grant date.
(ii) ACCELERATION UPON CHANGE IN CONTROL. To the extent
an option is not fully vested and exercisable on the option grant date it shall
immediately become exercisable in full in the event a Change in Control (as
defined in Section 8) of the Company occurs.
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<PAGE>
(e) TERMINATION. Each unexercised option shall terminate, and
may no longer be exercised, on the earlier of the (i) the date ten years after
the grant date of such option, or (ii) the date 90 days after the optionee
ceases to serve as a Director; provided that, in the event an optionee ceases to
serve as a Director due to his or her death or disability (within the meaning of
Section 22(e)(3) of the Code or any successor provision), then the exercisable
portion of the option may be exercised, within the period of 180 days following
the date the optionee ceases to serve as a Director (but in no event later than
ten years after the option grant date), by the optionee or by the person to whom
the option is transferred in accordance with the terms of this Plan and the
applicable option agreement, or by written notice pursuant to Section 5(g).
(f) EXERCISE PROCEDURE. An option may be exercised only by
written notice to the Company at its principal office accompanied by (i) payment
in cash or by certified or bank check of the full consideration for the shares
as to which they are exercised, (ii) delivery of outstanding shares of Common
Stock (which, in the case of shares acquired from the Company, have been
outstanding for at least six months) having a fair market value on the last
business day preceding the date of exercise equal to the option exercise price,
or (iii) an irrevocable undertaking by a broker (who is a member of the New York
Stock Exchange) to deliver promptly to the Company sufficient funds to pay the
exercise price or delivery of irrevocable instructions to a broker (who is a
member of the New York Stock Exchange) to deliver promptly to the Company cash
or a check sufficient to pay the exercise price.
(g) EXERCISE BY REPRESENTATIVE FOLLOWING DEATH OF DIRECTOR. An
optionee, by written notice to the Company, may designate one or more persons
(and from time to time change such designation), including his or her legal
representative, who, by reason of the optionee's death, shall acquire the right
to exercise all or a portion of the option. If the person or persons so
designated wish to exercise any portion of the option, they must do so within
the term of the option as provided herein. Any exercise by a representative
shall be subject to the provisions of the Plan.
6. LIMITATION OF RIGHTS.
(a) NO RIGHT TO CONTINUE AS A DIRECTOR. Neither the Plan, nor
the granting of an option nor any other action taken pursuant to the Plan, shall
constitute or be evidence of any agreement or understanding, express or implied,
that the Company will retain the optionee as a Director for any period of time.
(b) NO STOCKHOLDERS' RIGHTS FOR OPTIONS. An optionee shall have
no rights as a stockholder with respect to the shares covered by his or her
option until the date of the issuance to him or her of a stock certificate
therefor, and no adjustment will be made for dividends or other rights (except
as provided in Section 7) for which the record date is prior to the date such
certificate is issued.
(c) COMPLIANCE WITH SECURITIES LAWS. Each option shall be
subject to the requirement that if, at any time, counsel to the Company shall
determine that the listing, registration or qualification of the shares subject
to such option upon any securities exchange or under any state or federal law,
or the consent or approval of any governmental or regulatory body, or the
disclosure of non-public information or the satisfaction of any other condition
-3-
<PAGE>
is necessary as a condition of, or in connection with, the issuance or purchase
of shares thereunder, such option may not be exercised, in whole or in part,
unless such listing, registration, qualification, consent or approval, or
satisfaction of such condition shall have been effected or obtained on
conditions acceptable to the Board of Directors. Nothing herein shall be deemed
to require the Company to apply for or to obtain such listing, registration or
qualification, or to satisfy such condition.
7. ADJUSTMENT PROVISIONS FOR MERGERS, RECAPITALIZATIONS AND RELATED
TRANSACTIONS.
If, through or as a result of any merger, consolidation, reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split, or other similar transaction, (i) the outstanding shares of Common Stock
are exchanged for a different number or kind of securities of the Company or of
another entity, or (ii) additional shares or new or different shares or other
securities of the Company or of another entity are distributed with respect to
such shares of Common Stock, the Board of Directors shall make an appropriate
and proportionate adjustment in (x) the maximum number and kind of shares
reserved for issuance under the Plan, (y) the number and kind of shares or other
securities subject to then outstanding options under the Plan, and (z) the price
for each share subject to any then outstanding options under the Plan (without
changing the aggregate purchase price for such options), to the end that each
option shall be exercisable, for the same aggregate exercise price, for such
securities as such option holder would have held immediately following such
event if he had exercised such option immediately prior to such event. No
fractional shares will be issued under the Plan on account of any such
adjustments.
8. CHANGE IN CONTROL.
For purposes of the Plan, a "Change in Control" shall be deemed to have occurred
only if any of the following events occurs: (i) the acquisition by an
individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a
"Person") of beneficial ownership of any capital stock of the Company if, after
such acquisition, such Person beneficially owns (within the meaning of Rule
13d-3 promulgated under the Exchange Act) 30% or more of either (x) the
then-outstanding shares of Common Stock (the "Outstanding Company Common
Stock"), or (y) the combined voting power of the then-outstanding securities of
the Company entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); PROVIDED, HOWEVER, that for purposes
of this subsection (i), the following acquisitions shall not constitute a Change
in Control Event: (A) any acquisition directly from the Company (excluding an
acquisition pursuant to the exercise, conversion or exchange of any security
exercisable for, convertible into or exchangeable for common stock or voting
securities of the Company, unless the Person exercising, converting or
exchanging such security acquired such security directly from the Company or an
underwriter or agent of the Company), (B) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company, or (C) any acquisition by any corporation
pursuant to a Business Combination (as defined below) which complies with
clauses (x) and (y) of subsection (iii) of this definition; or (ii) such time as
the Continuing Directors (as defined below) do not constitute a majority of the
Board (or, if applicable, the Board of Directors of a successor corporation to
the Company), where the term "Continuing Director" means at any date a member of
the Board (x)
-4-
<PAGE>
who was a member of the Board on the date of the initial adoption of this
Plan by the Board, or (y) who was nominated or elected subsequent to
such date by at least a majority of the directors who were Continuing Directors
at the time of such nomination or election or whose election to the Board was
recommended or endorsed by at least a majority of the directors who were
Continuing Directors at the time of such nomination or election; PROVIDED,
HOWEVER, that there shall be excluded from this clause (y) any individual whose
initial assumption of office occurred as a result of an actual or threatened
election contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents, by or on behalf of a
person other than the Board; or (iii) the consummation of a merger,
consolidation, reorganization or statutory share exchange involving the Company
or a sale or other disposition of all or substantially all of the assets of the
Company (a "Business Combination"), unless, immediately following such Business
Combination, each of the following two conditions is satisfied: (x) all or
substantially all of the individuals and entities who were the beneficial owners
of the Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 50% of the then- outstanding shares of common
stock and the combined voting power of the then-outstanding securities entitled
to vote generally in the election of directors, respectively, of the resulting
or acquiring corporation in such Business Combination (which shall include,
without limitation, a corporation which as a result of such transaction owns the
Company or substantially all of the Company's assets either directly or through
one or more subsidiaries) (such resulting or acquiring corporation is referred
to herein as the "Acquiring Corporation") in substantially the same proportions
as their ownership of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, respectively, immediately prior to such Business
Combination, and (y) no Person (excluding the Acquiring Corporation or any
employee benefit plan (or related trust) maintained or sponsored by the Company
or by the Acquiring Corporation) beneficially owns, directly or indirectly, 50%
or more of the then-outstanding shares of common stock of the Acquiring
Corporation, or of the combined voting power of the then-outstanding securities
of such corporation entitled to vote generally in the election of directors
(except to the extent that such ownership existed prior to the Business
Combination).
9. TERMINATION AND AMENDMENT OF THE PLAN.
The Board of Directors may suspend or terminate the Plan or amend it in any
respect whatsoever.
10. NOTICE.
Any written notice to the Company required by any of the provisions of the Plan
shall be addressed to the Treasurer of the Company and shall become effective
when it is received.
11. GOVERNING LAW.
The Plan and all determinations made and actions taken pursuant hereto shall be
governed by the internal laws of the State of Delaware (without regard to any
applicable conflicts of laws or principles).
12. EFFECTIVE DATE.
-5-
<PAGE>
The Plan, as amended, shall become effective on April 20, 1999.
Adopted by the Board of Directors on
April 20, 1999.
-6-
<PAGE>
AZTEC TECHNOLOGY PARTNERS, INC.
50 Braintree Hill Office Park
Braintree, MA 02184
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby appoints Ira Cohen, Ross J. Weintraub, 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 December 12, 2000 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.
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.
(To be Signed on Reverse Side)
SEE REVERSE SIDE
<PAGE>
Please Detach and Mail in the Envelope
Provided
/X/ Please mark your votes as in this
example
WITHOLD
AUTHORITY
TO VOTE
FOR ALL
FOR NOMINEES
1. To elect the / / / / FOR AGAINST ABSTAIN
nominees at right as Nominees: 2. Approve / / / / / /
Class I and Class amendment
III Directors Class I: to the 1998 Non-Employee Director
(except as marked Robert F. Burlinson Stock Option Plan.
below) Leon Kopyt
FOR AGAINST ABSTAIN
Class III:
Joseph L. Gagnon / / / / / /
Ira Cohen
3. To ratify the
FOR ALL NOMINEES EXCEPT FOR THE selection of
FOLLOWING: (TO WITHHOLD PricewaterhouseCoopers LLP as the
AUTHORITY TO VOTE FOR ONE OR Company's independent accountant
MORE NOMINEES, WRITE THE for the current fiscal year.
NOMINEES NAME BELOW):
-----------------------------------------
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.
Signature____________ Date ______, 2000 Signature ____________ Date ______, 2000
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.
