SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] 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-11(c) or Rule 14a-12
MICROAGE, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
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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):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] 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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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MICROAGE, INC.
2400 SOUTH MICROAGE WAY
TEMPE, AZ 85282-1896
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 28, 2000
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of MicroAge,
Inc., a Delaware corporation (the "Company"), will be held at the Fiesta Inn,
2100 S. Priest Drive, Tempe, AZ 85282, on Tuesday, March 28, 2000, at 4:00 p.m.,
Arizona time, for the following purposes:
1. to elect two Class II Directors to serve until the 2003 Annual Meeting
of Stockholders or until their successors are elected and qualified;
and
2. to transact such other business as may properly come before the
meeting.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on February 3, 2000
are entitled to notice of and to vote at the meeting. A complete list of the
stockholders entitled to vote at the meeting will be open for examination by any
stockholder, for any purposes germane to the meeting, at the offices of the
Company, at 2400 South MicroAge Way, Tempe, AZ 85282-1896, during normal
business hours commencing March 15, 2000.
YOUR VOTE IS IMPORTANT!
By order of the Board of Directors,
James H. Domaz
Secretary
Tempe, AZ
February 23, 2000
<PAGE>
TABLE OF CONTENTS
PROXY STATEMENT 1
ELECTION OF DIRECTORS 2
NOMINEES 2
DIRECTORS CONTINUING IN OFFICE 3
SECURITY OWNERSHIP OF MANAGEMENT AT DECEMBER 31, 1999 4
OTHER INFORMATION REGARDING THE BOARD OF DIRECTORS 5
PRINCIPAL STOCKHOLDERS 7
EXECUTIVE COMPENSATION 8
SUMMARY COMPENSATION TABLE 8
OPTION/SAR GRANTS IN LAST FISCAL YEAR 10
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES 11
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN PENSION BENEFITS 12
EMPLOYMENT CONTRACTS AND RELATED MATTERS 13
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION 14
STOCK PERFORMANCE GRAPH 17
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 18
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE REQUIREMENTS 18
AUDITORS 18
STOCKHOLDER NOMINATIONS AND PROPOSALS 18
<PAGE>
MICROAGE, INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 28, 2000
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of MicroAge, Inc., a Delaware
corporation (the "Company"), for use at the Annual Meeting of Stockholders to be
held on Tuesday, March 28, 2000, at 4:00 p.m., Arizona time (the "2000 Annual
Meeting"), and at any adjournment or adjournments thereof. Only stockholders of
record at the close of business on February 3, 2000 (the "Record Date") will be
entitled to notice of and to vote at the meeting. On the Record Date, the
Company had outstanding 21,727,611 shares of Common Stock, par value $.01 per
share ("Common Stock"). There are no other voting securities outstanding.
Each stockholder is entitled to one vote per share for the election of
directors as well as on all other matters that may be properly brought before
the meeting. If the accompanying proxy is signed and returned, the shares
represented thereby will be voted in accordance with any directions on the
proxy. If a proxy does not specify how the shares represented thereby are to be
voted in connection with the election of the director nominees, it is intended
that it will be voted for the director nominees named herein. A stockholder may
revoke the proxy at any time prior to the voting thereof by giving due notice of
such revocation to the Company, by executing and duly delivering a subsequent
proxy, or by attending the 2000 Annual Meeting and voting in person. This Proxy
Statement and the enclosed proxy are first being mailed to stockholders on or
about February 23, 2000.
The presence in person or by proxy of holders of a majority of the
outstanding shares of Common Stock entitled to vote will constitute a quorum for
the transaction of business at the 2000 Annual Meeting. If a quorum is present,
a plurality of the votes cast at the 2000 Annual Meeting is required for the
election of directors. Each other matter being submitted to the stockholders for
approval requires the affirmative vote of a majority of the aggregate number of
shares present at the 2000 Annual Meeting and entitled to vote on that matter.
Abstentions are counted as "shares present" for purposes of determining the
presence of a quorum on any matter and will not affect the outcome of the vote
on such matter. Broker non-votes with respect to any matter are not considered
"shares present" and will not affect the outcome of the vote on such matter.
In addition to the use of the mails, proxies may be solicited by directors,
officers, or regular associates (employees) of the Company in person, by
telegraph, telecopy, telephone, or other electronic means, including e-mail. The
Company has retained American Stock Transfer and Trust Company to assist in the
distribution of proxy solicitation materials and the solicitation of proxies for
an anticipated fee of $6,000. The Company will pay all expenses of the
solicitation.
As of the date of this Proxy Statement, the Company knows of no matters to
be brought before the meeting other than those referred to in the accompanying
notice of annual meeting. If, however, any other matters properly come before
the meeting, it is intended that proxies in the accompanying form will be voted
thereon in accordance with the judgment of the persons voting such proxies.
1
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PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Restated Certificate of Incorporation provides for the
division of the Board of Directors into three classes: Class I, Class II, and
Class III. Each director is elected for three years and the terms are staggered
so that only one class is elected by the stockholders annually. At the 2000
Annual Meeting, two Class II directors will be elected to serve until the 2003
Annual Meeting of Stockholders or until their successors are duly elected and
qualified.
It is the intention of those persons named in the accompanying form of
proxy or their substitutes to vote for the election of the nominees listed below
unless instructed to the contrary. However, if any nominee named herein at the
time of the election becomes unavailable to serve (which is not anticipated)
and, as a consequence, other nominees are designated, the persons named in the
proxy or their substitutes will have the discretion or authority to vote or
refrain from voting in accordance with their judgment with respect to the other
nominees.
NOMINEES FOR ELECTION AS CLASS II DIRECTORS
(TERM TO EXPIRE AT 2003 ANNUAL MEETING)
JEFFREY D. MCKEEVER, 57, has served as Chief Executive Officer of the
Company since February 1987 and as Chairman of the Board since October 1991. He
co-founded the Company in August 1976 and has served as a director of the
Company since October 1976. He also served as President from June 1995 to
January 1996, January 1993 to February 1993, and February 1987 to October 1991,
Chairman of the Board and Secretary from October 1976 to February 1987, and as
Treasurer from October 1976 to February 1983 and from February 1987 to December
1988. Pursuant to his employment agreement, the Company has agreed to have the
Board of Directors nominate Mr. McKeever for election to the Board of Directors
of the Company as long as he owns at least 80,000 shares of Common Stock. See
"Employment Contracts and Related Matters" for additional information regarding
Mr. McKeever's employment agreement.
STEVEN G. MIHAYLO, 56, was elected a director of the Company in 1988. Since
1969, Mr. Mihaylo has served as Chief Executive Officer and since 1983 as
Chairman of the Board of Inter-Tel, Incorporated, a publicly-held company that
designs, manufactures, and services digital and analog telephone systems and
voice processing systems, and provides long distance services.
2
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DIRECTORS CONTINUING IN OFFICE
CLASS III DIRECTORS
(TERM TO EXPIRE AT 2001 ANNUAL MEETING)
CYRUS F. FREIDHEIM, JR., 64, was elected a director of the Company
effective January 29, 1998. Since 1990, Mr. Freidheim has served as Vice
Chairman of Booz, Allen & Hamilton, Inc., an international management and
technology consulting firm. Mr. Freidheim is also a director of Household
International, Inc. and Security Capital Group.
ROY A. HERBERGER, JR., 57, was elected a director of the Company effective
January 18, 1996. Since 1989, Mr. Herberger has served as President of
Thunderbird, the American Graduate School of International Management. Mr.
Herberger is also a director of Pinnacle West Capital Corporation.
CLASS I DIRECTORS
(TERM TO EXPIRE AT 2002 ANNUAL MEETING)
LYNDA M. APPLEGATE, 50, was elected a director of the Company effective
January 18, 1996. Since 1986, Ms. Applegate has served as a Professor at the
Harvard Business School.
WILLIAM H. MALLENDER, 64, was elected a director of the Company in 1987.
Mr. Mallender is Chairman of the Board of the IAP Aerospace Group, Inc. of
Hartford, CT, and IAP Aircraft, Ltd. of London, England, and Vice Chairman of
Alpha Engineering Associates, Inc. of Long Beach, CA. From 1983 until June 1997,
Mr. Mallender served as Chairman of the Board and Chief Executive Officer of
Talley Industries, Inc.
DIANNE C. WALKER, 43, was elected a director of the Company effective April
3, 1998. She is an independent consultant on electric utility mergers and
acquisitions and asset purchase transactions. Ms. Walker served as an electric
energy consultant for Bear Stearns and Kidder Peabody from January 1990 to
December 1994. Ms. Walker is also a director of Arizona Public Service Company,
Comdial Corporation, and Microtest, Inc.
3
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SECURITY OWNERSHIP OF MANAGEMENT AT DECEMBER 31, 1999
NUMBER OF SHARES PERCENTAGE OF
OF COMMON STOCK COMMON STOCK
BENEFICIALLY BENEFICIALLY
NAME OWNED (1) OWNED
- ---- --------- -----
Lynda M. Applegate 6,517 (2)
James R. Daniel 155,904 (2)
Cyrus F. Freidheim, Jr. 8,850 (2)
Alan P. Hald 169,393(3) (2)
Roy A. Herberger, Jr. 7,017 (2)
Christopher J. Koziol 118,447 (2)
William H. Mallender 16,017(4) (2)
James G. Manton 47,419 (2)
Jeffrey D. McKeever 721,627(4) 3.4%
Steven G. Mihaylo 14,517 (2)
Robert G. O'Malley 61,787(3) (2)
Dianne C. Walker 5,184 (2)
All executive officers and directors
as a group (17 persons) (5) 1,472,316 6.8%
- ----------
(1) Includes shares, if any, held by spouse; held in joint tenancy with spouse;
held by or for the benefit of the listed individual (or group member) or
one or more members of his immediate family; with respect to which the
listed individual (or group member) has or shares voting or investment
powers (including shares allocated to the listed individual's (or group
member's) account under the MicroAge, Inc. Retirement Savings Plan);
subject to stock options that were exercisable on December 31, 1999 or
within 60 days thereafter, or in which the listed individual (or group
member) otherwise has a beneficial interest. At December 31, 1999, all
directors and executive officers as a group owned beneficially an aggregate
of 1,472,316 shares (6.8%), of which 879,381 shares, including 2,517 shares
for Ms. Applegate, 110,269 shares for Mr. Daniel, 3,350 shares for Mr.
Freidheim, 122,679 shares for Mr. Hald, 2,517 shares for Mr. Herberger,
99,068 shares for Mr. Koziol, 3,517 shares for Mr. Mallender, 47,419 shares
for Mr. Manton, 353,100 shares for Mr. McKeever, 3,517 shares for Mr.
Mihaylo, 55,000 shares for Mr. O'Malley, and 1,184 shares for Ms. Walker
are subject to stock options granted by the Company that were exercisable
on December 31, 1999 or within 60 days thereafter.
(2) Common Stock beneficially owned does not exceed one percent (1%) of the
outstanding Common Stock at December 31, 1999.
(3) Messrs. Hald and O'Malley's beneficial ownership figures are stated as of
the date of their last day of employment with the Company, November 1, 1999
and June 30, 1999, respectively.
(4) Mr. McKeever disclaims beneficial ownership in 11,925 of these shares held
by family members. Mr. Mallender disclaims beneficial ownership in 1,000 of
these shares held by his spouse.
(5) Includes Messrs. Daniel, Hald, Manton, and O'Malley, each of whom is no
longer employed by the Company.
4
<PAGE>
OTHER INFORMATION REGARDING THE BOARD OF DIRECTORS
BOARD OF DIRECTORS' MEETINGS, AUDIT, COMPENSATION, AND CORPORATE GOVERNANCE
COMMITTEES. The Company's Board of Directors met in person or acted by written
consent fifteen times during the fiscal year ended October 31, 1999 ("fiscal
year 1999"). The Board of Directors maintains a standing Audit Committee,
Compensation Committee, and Corporate Governance Committee. Directors who are
not officers or associates (employees) of the Company receive an $18,000 annual
retainer fee and $1,500 for attendance at regular Board meetings, $1,000 for
attendance at special Board meetings, and $1,000 for attendance at meetings of
committees of which they are members. Each Committee Chairperson receives an
additional annual retainer fee of $3,000. Mr. Mallender, as lead director of the
Company, receives an additional annual retainer fee of $3,000. Directors are
reimbursed for reasonable travel expenses incurred to attend Board or Committee
meetings.
The Audit Committee is responsible for recommending the appointment of the
Company's independent accountants to the full Board and for reviewing and
evaluating the Company's accounting principles, its system of internal
accounting controls, and its Code of Conduct. The Audit Committee met two times
during fiscal year 1999, and consisted of Messrs. Mihaylo (Chairman) and
Freidheim and Mss. Applegate and Walker.
The Compensation Committee acts on matters relating to the compensation of
directors, senior management, and key associates (employees) of the Company,
including the granting of stock options and the approval of employment
agreements. The Compensation Committee met in person or acted by written consent
ten times during fiscal year 1999, and consisted of Messrs. Mallender
(Chairman), Herberger, and Freidheim and Ms. Applegate.
The Corporate Governance Committee is responsible for making
recommendations to the full Board of Directors with respect to director
nominees, officer appointments, and Board Committee members, and is responsible
for reviewing labor relations matters. The Corporate Governance Committee met
two times during fiscal year 1999, and consisted of Messrs. Herberger
(Chairman), Mallender, and Mihaylo and Ms. Walker.
During fiscal year 1999, each Board member attended 75% or more of the
aggregate of the meetings of the Board and of the committees on which he or she
served.
1995 DIRECTOR INCENTIVE PLAN. Under the Company's 1995 Director Incentive
Plan, as amended (the "Director Plan"), on November 1 of each year, beginning in
1998 and ending in 2004, each person serving as a director of the Company who is
not also an associate (employee) of the Company is automatically granted (i)
1,000 shares of Common Stock, subject to certain restrictions as described below
("Director Restricted Stock"), and (ii) options to purchase 2,500 shares of
Common Stock ("Director Options"). The Director Plan also provides that on the
date of the first Board meeting at which a non-employee director first serves on
the Company's Board of Directors that person will automatically be granted 1,000
shares of Director Restricted Stock and 2,500 Director Options. Non-vested
Director Restricted Stock continues to vest for up to three years and Director
Options continue to vest following the cessation of an individual's service as a
director. The Company's Board of Directors or a committee of the Board may grant
Director Options and Director Restricted Stock at its discretion. Messrs.
Freidheim, Herberger, Mallender and Mihaylo and Mss. Applegate and Walker were
each granted 1,000 shares of Director Restricted Stock and 2,500 Director
Options effective November 1, 1999.
The restrictions on the Director Restricted Stock will lapse on the later
of (i) the date the director owns (for one year) shares of Common Stock, but the
restrictions will lapse on one share of Director Restricted Stock for each two
5
<PAGE>
shares of unrestricted stock the director owns; and (ii) the date the shares of
Director Restricted Stock "vest." The Director Restricted Stock has two vesting
hurdles. First, the Director Restricted Stock vests in one-third increments over
the three years following the date of grant. Second, the Director Restricted
Stock vests in one-third increments following the date of grant only if the
Common Stock trades above certain specified prices after the first vesting
hurdle occurs. In the case of the Director Restricted Stock granted on November
1, 1999, the Common Stock must trade at or above (i) $2.68 on or after November
1, 2000; (ii) $2.95 on or after November 1, 2001; and (iii) $3.25 on or after
November 1, 2002.
The exercise price of the Director Options is the fair market value of the
Common Stock on the relevant grant date (i.e., each November 1). In the case of
the Director Options granted on November 1, 1999, the exercise price is $2.4375
per share. Each Director Option has two vesting hurdles. First, the Director
Options vest in one-third increments over the three-year period following the
date of grant. Second, the Director Options vest in one-third increments over
the three years following the date of grant only if the Common Stock trades at
or above certain specified prices after the first vesting hurdle occurs. In the
case of the Director Options granted on November 1, 1999, the Common Stock must
trade at or above (i) $2.68 on or after November 1, 2000; (ii) $2.95 on or after
November 1, 2001; and (iii) $3.25 on or after November 1, 2002.
1999 DIRECTORS' FEE WAIVERS. Each person serving as a director of the
Company who is not also an associate (employee) of the Company was eligible to
waive fees otherwise payable in fiscal 1999 in exchange for options to purchase
MicroAge Common Stock at an exercise price of $5.875 per share, with such
options vesting in one-third increments over three years, commencing May 1,
2000. The directors participating, amounts waived, and number of options granted
are as follows: Ms. Applegate ($31,000/21,107); Mr. Freidheim ($31,000/21,107);
Mr. Herberger ($10,000/6,809); Mr. Mallender ($30,000/20,426); Mr. Mihaylo
($17,000/11,575); and Ms. Walker ($10,000/6,809).
6
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of Common Stock by each person who is known to the Company
to own beneficially more than 5% of the outstanding Common Stock:
NUMBER OF SHARES PERCENTAGE OF
OF COMMON STOCK COMMON STOCK
NAME AND ADDRESS BENEFICIALLY BENEFICIALLY
OF BENEFICIAL OWNER OWNED (1) OWNED (2)
- ------------------- --------- ---------
Dimensional Fund Advisors Inc. (3) 1,412,600 6.78%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Thomson Horstmann & Bryant, Inc. (4) 1,197,500 5.75%
Park 80 West, Plaza Two
Saddle Brook, NJ 07663
- ----------
(1) The beneficial ownership information regarding: (i) Dimensional Fund
Advisors Inc. is as of February 3, 2000 and (ii) Thomson Horstmann &
Bryant, Inc. is as of January 25, 1999. For certain additional information
with respect to beneficial ownership of the Common Stock, see "Security
Ownership of Management at December 31, 1999," "Executive Compensation,"
and "Certain Relationships and Related Transactions."
(2) The percentage of Common Stock beneficially owned is based on the number of
shares of Common Stock outstanding on December 31, 1999.
(3) Dimensional Fund Advisors Inc. is an investment advisor registered under
Section 203 of the Investment Advisors Act of 1940. Dimensional Fund
Advisors Inc. has sole dispositive power with respect to 1,412,600 shares
and sole voting power with respect to 1,412,600 shares. The information
contained in this section was obtained from a Schedule 13G dated February
4, 2000 filed by Dimensional Fund Advisors Inc. with the SEC. The Company
makes no representation as to the accuracy or completeness of the
information reported.
(4) Thomson Horstmann & Bryant, Inc. is an investment advisor registered under
Section 203 of the Investment Advisors Act of 1940. Thomson Horstmann &
Bryant, Inc. has sole dispositive power with respect to 1,197,500 shares,
sole voting power with respect to 751,900 shares, and shared voting power
with respect to 19,800 shares. The information contained in this section
was obtained from a Schedule 13G dated January 25, 1999, filed by Thomson
Horstmann & Bryant, Inc. with the SEC. The Company makes no representation
as to the accuracy or completeness of the information reported.
7
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EXECUTIVE COMPENSATION
The following table sets forth for the fiscal years ended October 31, 1999,
November 1, 1998, and November 2, 1997, compensation awarded to or paid by the
Company and its subsidiaries to the Company's Chief Executive Officer and its
four most highly compensated executive officers at October 31, 1999, and one
former executive officer who departed from the Company during fiscal year 1999
(the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------ ---------------------- ----------------------
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
SALARY BONUS COMPENSATION AWARD(S) OPTIONS/SARS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($)(1) ($)(1) ($) ($) (2) ($) ($) (3)
- --------------------------- ---- ------ ------ --- --- --- --- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James R. Daniel (4)
Executive Vice President 1999 236,000 18,010 0 0 117,873 0 31,595
Chief Financial 1998 340,008 18,010 0 0 100,000 0 33,572
Officer and Treasurer 1997 322,833 196,399 0 0 10,000 0 23,667
Alan P. Hald (4) 1999 325,008 13,831 0 0 0 0 1,304,578(5)
Secretary 1998 325,008 13,831 0 0 0 0 67,336
1997 318,500 105,880 0 0 5,000 0 73,454
Christopher J. Koziol (6) 1999 270,000 4,018 0 0 140,851 0 21,752
Executive Vice President; 1998 262,506 120,000 0 0 125,000 0 25,188
President, MicroAge 1997 208,833 159,200 0 0 10,000 0 20,747
Technology Services, L.L.C.
James G. Manton (4) 1999 283,092 43,750 0 0 118,043 0 14,392
President and Secretary, 1998 226,250 80,166 0 0 40,000 0 11,176
Pinacor, Inc. 1997 192,500 60,250 0 0 0 0 6,770
Jeffrey D. McKeever 1999 573,470 36,403 0 0 190,639 0 106,301
Chairman of the Board and 1998 650,000 36,403 0 0 369,000(7) 0 96,123
Chief Executive Officer 1997 587,500 371,321 0 0 0 0 93,310
Robert G. O'Malley (4) 1999 246,923 117,385 0 0 42,681 0 114,693
Former Chief Executive 1998 330,000 111,652 0 0 10,000 0 27,278
Officer, Pinacor, Inc. 1997 300,000 129,021 0 0 155,035 0 24,127
</TABLE>
- ----------
(1) See footnote 2 below for a discussion of (a) the MicroAge, Inc. 1999
Management Equity Program (the "1999 MEP"), under which each of the Named
Executive Officers (other than Mr. Hald) received option grants by agreeing
to reduce his compensation, (b) the MicroAge, Inc. 1997 Management Equity
Program (the "1997 MEP"), under which each of Mr. O'Malley and Mr. Manton
received options by agreeing to reduce his compensation, and (c) the
MicroAge, Inc. 1994 Management Equity Program (the "1994 MEP"), under which
each of the Named Executive Officers (other than Messrs. Manton and
O'Malley) received option grants by agreeing to reduce his compensation.
(2) Under the 1994 MEP, the 1997 MEP, and the 1999 MEP, executive officers
elected to restructure their compensation packages by reducing their salary
and bonus for a period of one to four years in exchange for option grants.
8
<PAGE>
Under the 1994 MEP, options were granted in 1994 and, thus, do not appear
in the above chart. Mr. O'Malley and Mr. Manton were the only Named
Executive Officer participating in the 1997 MEP. The total number of 1997
MEP options granted to each of Mr. O'Malley and Mr. Manton under the 1997
MEP was as follows: Mr O'Malley (135,035); Mr. Manton (59,574). The total
number of 1999 options granted to each of the Named Executive Officers
(other than Mr. Hald) under the 1999 MEP was as follows: Mr. Daniel
(57,873); Mr. Koziol (40,851); Mr. Manton (18,043); Mr. McKeever (110,639);
Mr. O'Malley (32,681).
During the 1997 fiscal year, the 1994 MEP and 1997 MEP compensation
reductions for each of the Named Executive Officers were as follows: Mr.
McKeever ($12,500 salary reduction); Mr. Hald ($6,500 salary reduction);
Mr. Daniel ($2,167 salary reduction); Mr. Koziol ($1,167 salary reduction);
Mr. Manton ($12,500 salary reduction and $37,500 bonus reduction) and Mr.
O'Malley ($40,000 salary reduction and $70,000 bonus reduction). During the
1998 fiscal year, the 1997 MEP compensation reduction for Mr. O'Malley
consisted of $40,000 in salary and $70,000 in bonus. During the 1999 fiscal
year, the 1997 MEP and 1999 MEP compensation reductions for each of the
Named Executive Officers (other than Mr. Hald) were as follows: Mr. Daniel
($42,500 salary reduction); Mr. Koziol ($30,000 salary reduction); Mr.
Manton ($19,500 salary reduction and $43,750 bonus reduction); Mr. McKeever
($76,530 salary reduction); Mr. O'Malley ($34,667 salary reduction and
$53,333 bonus reduction).
(3) The 1999 amounts include, as to each named individual, the following
amounts for the indicated purposes: Mr. Daniel (life insurance premiums:
$13,925; the Company's contribution to the MicroAge, Inc. Executive
Supplemental Savings Plan (the "ESSP"): $7,690; and the above-market
interest credited to the Named Executive Officer's account under the ESSP
(the "Interest"): $9,980); Mr. Koziol (life insurance premiums: $12,054;
ESSP contribution: $9,285; and Interest as defined above: $413); Mr. Manton
(life insurance premiums: $8,394; ESSP contribution: $5,571; and Interest
as defined above: $427); Mr. McKeever (life insurance premiums: $88,289;
ESSP contribution: $9,344; and Interest as defined above: $8,668); Mr.
O'Malley (life insurance premiums: $14,007; cash surrender value of
insurance policies: $60,722; Interest as defined above: $2,810; and accrued
vacation pay: $37,154).
(4) Mr. Daniel is no longer employed with the Company, effective as of February
15, 2000. Mr. Hald is no longer employed with the Company, effective as of
November 1, 1999. Mr. Manton is no longer employed with the Company,
effective as of February 15, 2000. Mr. O'Malley is no longer employed with
the Company, effective as of June 30, 1999.
(5) All Other Compensation for Mr. Hald consisted of the following: life
insurance premiums: $58,263; ESSP contribution: $4,063; and severance
payment of $1,242,252, which consisted of three times his base salary
immediately prior to termination, his average annual bonus paid to him for
the three prior fiscal years, and accrued vacation pay.
(6) Mr. Koziol was elected President and Chief Operating Officer of the
Company, effective February 15, 2000.
(7) In addition to the options to purchase Company Common Stock granted to Mr.
McKeever during fiscal year 1998, Mr. McKeever was also granted an option
to purchase sixty (60) shares of common stock of Pinacor, Inc., a
wholly-owned subsidiary of the Company ("Pinacor"), representing six
percent (6%) of Pinacor's outstanding common stock as of May 2, 1998, at an
exercise price of $150,000 per share (the "Pinacor Option"). The Pinacor
Option was subsequently canceled with the consent of Mr. McKeever.
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<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning grants of stock
options to the named executive officers of the Company during the fiscal year
ended October 31, 1999:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------
PERCENT OF POTENTIAL REALIZABLE
NUMBER OF TOTAL VALUE AT ASSUMED ANNUAL
SECURITIES OPTIONS/SARS RATE OF STOCK APPRECIATION
UNDERLYING GRANTED TO FOR OPTION TERM
OPTIONS/ ASSOCIATES IN EXERCISE PRICE EXPIRATION --------------------------
NAME SARS GRANTED FISCAL YEAR (PER SHARE) DATE 5% 10%
- ---- ------------ ----------- ----------- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
James R. Daniel 10,000 0.76% $16.56 01/28/09 104,300 263,800
50,000 3.78% $5.44 04/01/09 171,500 433,500
57,873 4.38% $5.875 04/23/09 213,841 542,559
Alan P. Hald 0 -- -- -- -- --
Christopher J.Koziol 50,000 3.78% $16.56 01/28/09 521,500 1,319,000
50,000 3.78% $5.44 04/01/09 171,500 433,500
40,851 3.09% $5.875 04/23/09 150,944 382,978
James G. Manton 50,000 3.78% $16.56 01/28/09 521,500 1,319,000
50,000 3.78% $5.44 04/01/09 171,500 433,500
18,043 1.36% $5.875 04/23/09 66,669 169,153
Jeffrey D. McKeever 80,000 6.05% $5.44 04/01/09 274,400 693,600
110,639 8.37% $5.875 04/23/09 408,811 1,037,241
Robert G. O'Malley 10,000 0.76% $16.56 01/28/09 104,300 263,800
32,681 2.47% $5.875 04/23/09 120,756 306,384
Total 610,087
</TABLE>
10
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
The following table sets forth information concerning option exercises by
the Named Executive Officers of the Company during the fiscal year ended October
31, 1999 and the value of such officers' unexercised options at October 31,
1999. There were no outstanding SARs as of October 31, 1999.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY OPTIONS/
SHARES FISCAL YEAR-END SARS AT FISCAL YEAR-END ($)
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James R. Daniel 0 0 83,330 215,281 0 0
Alan P. Hald 0 0 91,760 48,878 0 0
Christopher J. Koziol 0 0 77,649 269,394 0 0
James G. Manton 0 0 37,419 266,198 0 0
Jeffrey D. McKeever 0 0 296,409 569,841 0 0
Robert G. O'Malley 0 0 55,000 140,482 0 0
</TABLE>
11
<PAGE>
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN PENSION BENEFITS
PENSION TABLE YEARS
OF BENEFIT ACCRUAL SERVICE
------------------------------
FINAL AVERAGE PAY 5 10 15
- ----------------- -------- -------- --------
$250,000 $ 57,609 $115,218 $172,844
$300,000 $ 70,108 $140,215 $210,344
$350,000 $ 82,606 $165,213 $247,844
$400,000 $ 95,105 $190,210 $285,344
$450,000 $107,604 $215,208 $322,844
$500,000 $120,103 $240,205 $360,344
$550,000 $132,602 $265,202 $397,844
$600,000 $145,101 $290,199 $435,344
$650,000 $157,600 $315,196 $472,844
$700,000 $170,099 $340,193 $510,344
The Company maintains a non-qualified deferred compensation plan for
executives who are selected for participation by the Board and who have attained
age 50 and completed 10 years of service with the Company. This plan, which is
known as the "Supplemental Executive Retirement Plan" or "SERP," provides a
benefit to a participant upon retirement or termination of employment. The
annual benefit, payable in the form of a life annuity, equals 75% of the average
of the participant's compensation for the highest five calendar years out of the
fifteen calendar years preceding retirement or termination, reduced by the
participant's "Other Benefits." The "Other Benefits" are the participant's
annual Social Security benefit (based on the participant's compensation at the
time of termination of employment) and an annuity that is actuarially equivalent
to the sum of the participant's employer contribution accounts in the 401(k)
Plan and the MicroAge, Inc. Executive Supplemental Savings Plan ("ESSP"). The
annual benefit payable under the SERP is reduced proportionately if the
participant terminates employment with less than 15 years of "Benefit Accrual
Service" (service after age 50). Compensation, for purposes of calculating the
annual benefit is generally defined as amounts considered to be "wages" under
Internal Revenue Code (the "Code") Section 3401(a), salaries or bonuses deferred
under any Company deferred compensation plan, and any participant contribution
to the 401(k) plan, but excluding a certain Warrant Restitution and Founder's
Bonus paid to Mr. McKeever.
Once calculated, the annual benefits are paid in the form of an actuarially
equivalent lump sum. No benefits will be paid under the SERP if a participant
dies prior to his retirement or other termination from employment.
The table above shows estimated annual benefit payments on a life-annuity
basis. The estimated annual benefit payments included in the table reflect an
offset for the estimated Social Security benefit payments, but the table does
not reflect an offset for the value of the participant's 401(k) or ESSP employer
account balances.
Mr. McKeever currently is the only participant in the SERP. Mr. McKeever
has seven years of Benefit Accrual Service and is expected to have 15 years of
Benefit Accrual Service at normal retirement at age 65. A separate trust has
been established and funded that will serve as the funding vehicle for the
benefits due to Mr. McKeever. The trust assets are available to pay the claims
12
<PAGE>
of Company creditors in certain instances. Initially, the only assets of the
trusts will be the Company's interests under various life insurance policies on
the life of Mr. McKeever. The imputed income for the death coverage under some
of these policies is included in the insurance premiums paid on behalf of Mr.
McKeever and referenced in footnote 3 to the Summary Compensation Table.
Mr. Hald was a participant in the SERP when he was employed with the
Company. Mr. Hald will receive a lump sum payment in the amount of $594,863
during fiscal year 2000 for his SERP lump sum payment in connection with his
separation from the Company.
EMPLOYMENT CONTRACTS AND RELATED MATTERS
Messrs. McKeever and Koziol are each employed pursuant to an employment
agreement with the Company for a period of three years for Mr. McKeever and two
years for Mr. Koziol. Each agreement is terminable by either party at any time
and provides for an automatic renewal of the agreement unless otherwise
terminated so that the remaining term of the agreement is always the length of
each of the named officer's original term described immediately above. Each
agreement includes restrictions and noncompetition covenants during the term of
the agreement and for a period of 24 months after termination of employment.
Upon the Company's termination of the executive's employment without cause
following a change of control or, under certain circumstances, upon the
executive's termination of employment following a change of control, the Company
must pay a lump sum severance pay benefit up to, for Mr. McKeever: three times
(i) his base salary for the prior fiscal year and (ii) his incentive bonus for
the prior fiscal year and for Mr. Koziol: two times (i) his base salary for the
prior fiscal year and (ii) the average of his incentive bonuses for the two
prior fiscal years. Upon the Company's termination of the executive's employment
without cause prior to a change of control or, under certain circumstances, upon
the executive's termination of employment prior to a change of control, the
Company must pay a severance pay benefit equal to, for Mr. McKeever: three times
(i) his base salary in effect immediately prior to termination and (ii) the
average of his incentive bonuses for the three prior fiscal years and for Mr.
Koziol: two times (i) his base salary in effect immediately prior to termination
and (ii) the average of his incentive bonuses for the two prior fiscal years.
In addition, the Company may elect, during the term of the noncompetition
covenant, to pay supplementary severance pay to Mr. McKeever in an amount equal
to his monthly pay. Also, upon termination of Mr. McKeever's employment for
specified circumstances, including a material change in the employment
relationship, a change in control of the Company, or termination by the Company
without cause, Mr. McKeever has certain additional rights including the
following: (i) the right to sell to the Company all Common Stock beneficially
owned by him as of his termination date, at the fair market value of the Common
Stock on the termination date, subject to certain limitations; and (ii) should
he hold any stock options which have not vested, receive, as additional
severance pay, a lump sum payment in an amount equal to the excess, if any, of
the fair market value of the shares subject to outstanding stock options over
the exercise price specified in all non-vested stock options, subject to certain
limitations.
Mr. O'Malley was employed as Chief Executive Officer of Pinacor, Inc.
pursuant to an employment agreement, until June 30, 1999. Upon the cessation of
his employment, Mr. O'Malley received $37,154 in accrued vacation pay under the
terms of his employment agreement. Mr. O'Malley also received his split-dollar
insurance policies, with a cash surrender value of $60,722. Mr. O'Malley elected
to receive a lump sum distribution in the amount of $110,371 under the ESSP,
which was paid to him on January 15, 2000. Mr. O'Malley has continuing
obligations under his employment agreement, including a noncompetition covenant
until June 30, 2001.
13
<PAGE>
Mr. Hald was employed by the Company at the end of the 1999 fiscal year
under an employment agreement, but is no longer employed by the Company,
effective November 1, 1999. Under the terms of his employment agreement, Mr.
Hald received a lump sum payment in the amount of $1,066,002, which is equal to
three times the sum of (i) his base salary in effect immediately prior to his
cessation of employment, plus (ii) the average of the annual bonuses paid to him
for the three fiscal years immediately preceding fiscal year 2000. In addition,
Mr. Hald received $176,250 in accrued vacation pay.
The Company and Mr. Hald each have continuing rights and obligations under
Mr. Hald's employment agreement. The Company will continue to contribute to his
medical and dental insurance premiums, continue to pay Mr. Hald's fixed bonus,
and continue to make premium payments on his split-dollar insurance policies.
Each of these obligations will continue until the first to occur of Mr. Hald
obtaining alternative employment or November 1, 2001. The Company has agreed to
provide Mr. Hald with a lump sum distribution under the SERP in the amount of
$594,863. Mr. Hald elected to receive a lump sum distribution in the amount of
$56,129, which was paid to him on January 12, 2000. Mr. Hald's noncompetition
covenant under his employment agreement will continue until November 1, 2001.
Under certain circumstances, if the Company defaults in certain of its
obligations to Mr. Hald, the Company will transfer Mr. Hald's split-dollar
policies to him and will release him from the noncompetition covenant and from
the obligation to reimburse the Company for the split-dollar premiums.
Mr. Daniel was employed by the Company at the end of the 1999 fiscal year
under an employment agreement, but is no longer employed by the Company,
effective February 15, 2000. Mr. Daniel may elect to receive a lump sum
distribution under the ESSP. Mr. Daniel has continuing obligations under his
employment agreement, including a noncompetition covenant until February 15,
2002.
Mr. Manton was employed by Pinacor, Inc. at the end of the 1999 fiscal year
under an employment agreement, but is no longer employed by Pinacor, Inc.,
effective February 15, 2000. Mr. Manton may elect to receive a lump sum
distribution under the ESSP. Mr. Manton has continuing obligations under his
employment agreement, including a noncompetition covenant until February 15,
2002.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Company's Executive Compensation program is administered by the
Compensation Committee of the Board of Directors. The members of the
Compensation Committee are not employees of the Company. The Compensation
Committee determines the compensation of the Company's executive officers,
approves any employment agreements with the Company's officers, and administers
the Company's stock option plans and certain of the Company's other benefit
plans.
14
<PAGE>
EXECUTIVE COMPENSATION POLICIES
OVERVIEW. Incentive compensation arrangements are the cornerstone of the
Compensation Committee's executive compensation policies. These incentive
compensation arrangements reward those executive officers who achieve individual
and Company objectives that increase stockholder value.
The Company's executive compensation package consists of three components:
base salary and related benefits; annual cash bonus incentives; and stock-based
compensation incentives. The Compensation Committee reviews each of these
components and develops an incentive compensation package for each of the
Company's executive officers based, in part, upon the recommendations of senior
management and, in part, upon the Compensation Committee's assessment of each
executive officer's contribution to the Company. In addition, from time to time,
the Compensation Committee reviews competitive information. The Compensation
Committee strives to develop individual compensation packages for the Company's
executive officers that will encourage superior individual and Company-wide
performance, serve to retain those executive officers that perform well, and
lead to increased stockholder value. Each component of the Company's executive
compensation package is discussed in detail below.
BASE SALARY AND BENEFITS. The first component of the Company's executive
compensation package is base salary and related benefits. Each executive officer
receives a base salary and benefits based on his or her responsibilities and
performance. The Compensation Committee reviews each executive officer's base
salary and benefits on at least an annual basis.
ANNUAL INCENTIVE BONUS. The second component of the Company's executive
compensation package is an annual incentive bonus. With the exception of Messrs.
Manton and O'Malley, none of the Company's executive officers received bonuses
for fiscal year 1999. In light of Messrs. Manton and O'Malley's contributions to
Pinacor's fiscal year 1999 financial results and based on a formula tied to
Pinacor's earnings, the Compensation Committee awarded Messrs. Manton and
O'Malley cash incentive bonuses of $62,776 and $113,333, respectively. In
addition, Messrs. Daniel, Hald, Koziol, McKeever, and O'Malley each received
fixed bonuses of $18,010, $13,831, $4,018, $36,403, and $4,052, respectively,
pursuant to their employment agreements, as reflected in the "Summary
Compensation Table" on page 8.
STOCK-BASED COMPENSATION INCENTIVES. The third component of the Company's
executive compensation package is stock-based compensation incentives,
traditionally stock options. This compensation component is an important
incentive tool designed to more closely align the interests of the executive
officers of the Company with the long-term interests of the Company's
stockholders and to encourage its executive officers to remain with the Company.
The Compensation Committee traditionally grants options to the Company's
executive officers and key associates (employees) on an annual basis. In
selecting recipients and the size of option grants during fiscal year 1999, the
Compensation Committee considered the recommendations of the Company's Chief
Executive Officer and Chairman of the Board, Jeffrey D. McKeever; the other
components of the recipients' compensation packages; the recipients'
responsibilities and performance; the Company's performance during the preceding
fiscal year; and prior option grants. The Compensation Committee gave a great
deal of weight to Mr. McKeever's recommendations. Mr. McKeever did not make
recommendations with respect to his own stock option grants.
15
<PAGE>
COMPENSATION OF CHIEF EXECUTIVE OFFICER
In fiscal year 1999, the Chief Executive Officer of the Company, Jeffrey D.
McKeever, was compensated pursuant to an employment agreement. Under the
agreement, Mr. McKeever receives a base salary of $650,000 plus a fixed cash
bonus of $36,403. Mr. McKeever waived $76,530 of salary in fiscal year 1999 in
exchange for option grants as described in footnote 2 to the "Summary
Compensation Table." The Compensation Committee did not increase Mr. McKeever's
base salary during fiscal year 1999, nor did Mr. McKeever receive an incentive
bonus during fiscal year 1999.
Consistent with the Compensation Committee's determination to provide
incentives to maximize stockholder value, the Compensation Committee approved
the option grants to Mr. McKeever described in "Options/SAR Grants In Last
Fiscal Year" Table.
SECTION 162(M) OF THE INTERNAL REVENUE CODE
Section 162(m) of the Code, adopted as part of the Revenue Reconciliation
Act of 1993, generally limits to $1 million the deduction that can be claimed by
any publicly-held corporation for compensation paid to any "covered employee" in
any taxable year. The term "covered employee" for this purpose is defined
generally as the chief executive officer and the four other highest paid
employees of the corporation. Performance-based compensation is outside the
scope of the $1 million limitation and, hence, generally can be deducted by a
publicly-held corporation without regard to amount; provided that, among other
requirements, such compensation is approved by stockholders.
It is the general policy of the Company to make a reasonable effort to
satisfy the requirements of Section 162(m) in order to secure the maximum
possible deductions. At the same time, the Company recognizes that it must
appropriately compensate its key executives in order to enhance stockholder
value. On occasion, certain considerations may necessitate the implementation of
a compensation program pursuant to which some or all of the compensation paid
will not be deductible.
WILLIAM H. MALLENDER, CHAIRMAN
LYNDA M. APPLEGATE
CYRUS F. FREIDHEIM, JR.
ROY A. HERBERGER, JR.
16
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares the total cumulative stockholder return on the
Company's Common Stock for the period October 30, 1994 through October 31, 1999
with the cumulative total return on the (a) Nasdaq Index, (b) a peer group
consisting of CompuCom Systems, Inc., Inacom Corp., Ingram Micro, Inc., Merisel,
Inc., and Tech Data Corporation, and (c) the Standard & Poor's MidCap Index
(which includes 400 companies with a total capitalization of $922 billion). The
Company believes that the Standard & Poor's MidCap Index is no longer an
adequate comparison. Accordingly, the Company has elected to compare its total
cumulative stockholder return with that of an industry peer group. The Company
has included the Standard & Poor's MidCap Index as required by SEC rules. The
comparison assumes that $100 was invested on October 30, 1994 in the Company's
Common Stock and in each of the comparison indices.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG MICROAGE, INC., THE NASDAQ STOCK MARKET (U.S.) INDEX,
THE S & P MIDCAP 400 INDEX AND A PEER GROUP.
CUMULATIVE TOTAL RETURNS
----------------------------------------------------------
10/30/94 10/29/95 11/3/96 11/2/97 11/1/98 10/31/99
-------- -------- ------- ------- ------- --------
MICROAGE, INC. 100.00 69.15 164.89 187.23 121.28 19.15
PEER GROUP 100.00 78.98 142.51 196.96 187.96 71.24
NASDAQ STOCK MARKET
(U.S.) 100.00 134.65 158.93 209.16 234.09 390.84
S & P MIDCAP 400 100.00 121.21 142.23 188.70 193.45 234.20
- ----------
* $100 INVESTED ON 10/30/94 IN STOCK OR ON 10/31/94 IN INDEX - INCLUDING
REINVESTMENT OF DIVIDENDS.
17
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has entered into employment agreements with Messrs. Koziol and
McKeever. See "Executive Compensation -- Employment Contracts and Related
Matters." In addition, in August 1999, the Company loaned the principal sum of
$160,000 to Mr. Koziol, the Company's President and Chief Operating Officer.
Such loan bears interest at the rate of 8% per year, is due and payable on
February 10, 2001, and is secured by a Deed of Trust on Mr. Koziol's personal
residence.
On February 14, 2000, MicroAge Computer Centers, Inc. sold to Inter-Tel,
Incorporated a used aircraft for $1.2 million. Steven G. Mihaylo, a director of
the Company, is the Chief Executive Officer and Chairman of the Board of
Inter-Tel, Incorporated. The price of the aircraft was determined through
negotiations with an unaffiliated third party.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and officers, and persons who own more than 10% of a
registered class of the Company's equity securities, to file reports of
ownership and changes of ownership with the SEC. Based solely on its review of
the copies of such forms received by it, the Company believes that during fiscal
year 1999 all filing requirements applicable to its directors, officers, and
greater than 10% beneficial owners were complied with.
AUDITORS
The Board of Directors has appointed PricewaterhouseCoopers LLP to audit
the consolidated financial statements of the Company for the fiscal year ending
October 29, 2000. Representatives of PricewaterhouseCoopers LLP are expected to
be present at the meeting and will be available to respond to appropriate
questions and may make a statement if they so desire.
STOCKHOLDER NOMINATIONS AND PROPOSALS
The Company's By-Laws require that there be furnished to the Company
written notice with respect to the nomination of a person for election as a
director (other than a person nominated at the direction of the Board of
Directors), as well as the submission of a proposal (other than a proposal
submitted at the direction of the Board of Directors), at a meeting of
stockholders. In order for any such nomination or submission to be proper, the
notice must contain certain information concerning the nominating or proposing
stockholder, and the nominee or the proposal, as the case may be, and must be
furnished to the Company generally not less than 60 nor more than 90 days prior
to the first anniversary date of the preceding year's annual meeting. To
properly bring a director nomination or other matter before the 2001 Annual
Meeting of Stockholders, the nomination or proposal must be received by January
26, 2001. A copy of the applicable By-Law provision may be obtained, without
charge, upon written request to the Secretary of the Company at its principal
executive offices in Tempe, AZ.
In addition to the foregoing, in accordance with the rules of the SEC, any
proposal that a stockholder intends to present at the 2001 Annual Meeting of
Stockholders must be received by the Company by October 26, 2000 to be eligible
for inclusion in the proxy statement and proxy form relating to such meeting.
18
