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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
U.S. Office Products Company
- --------------------------------------------------------------------------------
(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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
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[LOGO]
1440 NEW YORK AVENUE, N.W., SUITE 310
WASHINGTON, D.C. 20005
(202) 628-9500
July , 1996
To the Stockholders of U.S. Office Products Company:
The Annual Meeting of Stockholders of U.S. Office Products Company (the
"Company") will be held on Tuesday, August 20, 1996, at 10:00 a.m. in the
Crystal Room of the Willard Intercontinental Hotel located at 1401 Pennsylvania
Avenue, N.W., Washington, D.C. 20005.
Details of the business to be conducted at the Annual Meeting are provided
in the enclosed Notice of Annual Meeting of Stockholders and Proxy Statement.
The Company's 1996 Annual Report, which is not a part of the proxy statement, is
also enclosed and provides additional information regarding the financial
results of the Company during the fiscal year ended April 30, 1996.
In addition to voting on the election of directors, we are recommending that
you approve an amendment to our certificate of incorporation to increase our
authorized capital, as well as certain amendments and additions to the Company's
equity-based, incentive compensation arrangements. As explained in the Proxy
Statement, the increase in the number of authorized shares is being recommended
to permit the Board of Directors, if it deems appropriate in the future, to
declare stock splits, as well as to enable the Company to continue using its
shares of Common Stock for acquisitions, long-term incentive compensation, and
capital raising. Amendments and additions to the Company's incentive
compensation arrangements are being recommended consistent with the Company's
overall philosophy that stock options and other long-term, equity-based
incentives are the form of compensation that best aligns the interests of the
Company's managers and employees with the interests of its stockholders. The
Company believes that stock options provide directors, officers and other
employees with the most meaningful long-term incentive to pursue the enhancement
of stockholder value. In addition, the Company has used, and wants to continue
to use, stock options as a unique strategic advantage in attracting acquisition
candidates in the increasingly competitive market for office products
businesses.
On behalf of the Board of Directors and employees of the Company, I
cordially invite all stockholders to attend the Annual Meeting. If you are
unable to attend in person, please sign and promptly return the enclosed proxy
card in the enclosed prepaid return envelope. Your shares will be voted at the
Annual Meeting in accordance with your proxy.
Sincerely,
Jonathan J. Ledecky
CHAIRMAN OF THE BOARD OF DIRECTORS
<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 20, 1996
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of U.S.
Office Products Company, a Delaware corporation (the "Company"), will be held in
the Crystal Room of the Willard Intercontinental Hotel, 1401 Pennsylvania
Avenue, N.W., Washington, D.C. 20005, at 10:00 a.m. on Tuesday August 20, 1996,
for the following purposes:
1. To elect 13 directors of the Company to hold office until the next
succeeding annual meeting of stockholders after their election and until
their respective successors shall have been elected and qualified.
2. To consider and act upon a proposal of the Board of Directors of the
Company to (i) approve and adopt an amendment to Article Four of the
Company's Restated Certificate of Incorporation (the "Certificate of
Incorporation") to increase the number of shares of the Company's Common
Stock, par value $.001 per share (the "Common Stock"), authorized for
issuance from 100,000,000 shares to 500,000,000 shares, with a conforming
increase in the number of shares of all classes of stock the Company has
authority to issue from 100,500,000 shares to 500,500,000 shares and (ii) to
restate the Certificate of Incorporation to reflect the foregoing amendment.
3. To consider and act upon a proposal by the Board of Directors of the
Company to approve and adopt an amendment to the U.S. Office Products
Company Amended and Restated 1994 Long-Term Incentive Plan to (i) increase
the annual per-employee limitation on the number of shares of Common Stock
relating to option grants and other awards from 250,000 to 750,000, (ii)
eliminate the requirement that the option price for stock options must be at
least equal to the fair market value of the Common Stock on the date of
grant, and (iii) increase the limitation on the number of shares of Common
Stock that may be subject to outstanding awards from 15% to 20% of total
outstanding shares.
4. To consider and act upon a proposal by the Board of Directors of the
Company to adopt the U.S. Office Products Company 1996 Executive Deferred
Compensation Plan.
5. To consider and act upon a proposal by the Board of Directors of the
Company to adopt the U.S. Office Products Company 1996 Non-Employee
Directors' Stock Plan.
6. To consider and act upon a proposal by the Board of Directors of the
Company to an amendment to the U.S. Office Products Company Employee Stock
Purchase Plan to increase the number of shares of Common Stock available for
issuance under the plan from 500,000 to 1,000,000.
7. To ratify the selection of Price Waterhouse LLP as the Company's
independent accountants to audit the Company's consolidated financial
statements for the year ending April 30, 1997.
8. To transact such other business as may properly be brought before
the meeting or any adjournment thereof.
The close of business on July 18, 1996 has been fixed as the record date for
determining the stockholders entitled to notice and to vote at the Annual
Meeting. All holders of record of common stock of the Company at that date are
entitled to vote at the Annual Meeting.
By Order of the Board of Directors,
Martin S. Pinson
SECRETARY
Washington, D.C.
July , 1996
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING REGARDLESS OF THE
NUMBER OF SHARES YOU HOLD. PLEASE COMPLETE, SIGN AND MAIL THE ENCLOSED PROXY IN
THE ACCOMPANYING ENVELOPE EVEN IF YOU INTEND TO BE PRESENT AT THE MEETING.
RETURNING THE PROXY WILL NOT LIMIT YOUR RIGHT TO VOTE IN PERSON OR TO ATTEND THE
ANNUAL MEETING, BUT WILL ENSURE YOUR REPRESENTATION IF YOU CANNOT ATTEND. IF YOU
HOLD SHARES IN MORE THAN ONE NAME, OR IF YOUR STOCK IS REGISTERED IN MORE THAN
ONE WAY, YOU MAY RECEIVE MORE THAN ONE COPY OF THE PROXY MATERIAL. IF SO, PLEASE
SIGN AND RETURN EACH OF THE PROXY CARDS THAT YOU RECEIVE SO THAT ALL OF YOUR
SHARES MAY BE VOTED. THE PROXY IS REVOCABLE AT ANY TIME PRIOR TO ITS USE.
<PAGE>
[LOGO]
1440 NEW YORK AVENUE, N.W., SUITE 310
WASHINGTON, D.C. 20005
(202) 628-9500
July , 1996
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of U.S. Office Products Company (the
"Company") for the Annual Meeting of Stockholders of the Company to be held on
August 20, 1996. Stockholders of record at the close of business on July 18,
1996 (the "Record Date") will be entitled to vote at the meeting and will
receive a copy of this Proxy Statement, which furnishes information relating to
the business to be transacted at the meeting. On the Record Date, there were
issued and outstanding shares of the Company's common stock, par value
$.001 per share (the "Common Stock"), and no shares of the Company's preferred
stock, par value $.001 per share (the "Preferred Stock"). There are no other
outstanding classes of voting securities of the Company. Each holder of a share
of Common Stock is entitled to one (1) vote per share on each matter presented
at the meeting. This Proxy Statement and the enclosed proxy card are being
mailed to stockholders entitled to vote at the Annual Meeting on or about July
, 1996.
A proxy is enclosed for your use. YOU ARE REQUESTED ON BEHALF OF THE BOARD
OF DIRECTORS TO SIGN, DATE AND RETURN THE PROXY IN THE ACCOMPANYING ENVELOPE,
which requires no postage if mailed in the United States.
If no instructions are specified on the proxy, shares represented thereby
will be voted:
(i) for the election of the 13 nominees for directors of the Company listed
herein;
(ii) in favor of the adoption of the amendment to Article Four of the
Company's Restated Certificate of Incorporation (the "Certificate of
Incorporation") increasing the number of shares of Common Stock
authorized for issuance and the restatement of the Certificate of
Incorporation;
(iii) in favor of the adoption of an amendment to the U.S. Office Products
Company Amended and Restated 1994 Long-Term Incentive Plan (the
"Incentive Plan") increasing the annual per-employee limitation on the
number of shares of Common Stock relating to option grants and other
awards from 250,000 to 750,000, eliminating the requirement that the
option price for stock options must be at least equal to the fair
market value of the Common Stock on the date of grant and increasing
the limitation on the number of shares of Common Stock that may be
subject to outstanding awards from 15% to 20% of the total number of
outstanding shares;
(iv) in favor of the adoption of the U.S. Office Products Company 1996
Executive Deferred Compensation Plan (the "Deferral Plan");
(v) in favor of the adoption of the U.S. Office Products Company 1996
Non-Employee Directors' Stock Plan (the "Directors' Plan");
(vi) in favor of the adoption of an amendment to the U.S. Office Products
Company Employee Stock Purchase Plan (the "Stock Purchase Plan")
increasing the number of shares of Common Stock available under the
Stock Purchase Plan from 500,000 to 1,000,000; and
(vii) in favor of the ratification of the appointment of Price Waterhouse LLP
as the Company's independent accountants for the fiscal year ending
April 30, 1997.
Any stockholder who has given a proxy may revoke the proxy by executing a
proxy bearing a later date or by delivering written notice of revocation of the
proxy to the Secretary of the Company at the Company's executive offices at any
time prior to the meeting or any postponement or adjournment
<PAGE>
thereof. Prior to exercise thereof with respect to any matter submitted to a
vote of the stockholders, any stockholder who attends in person the Annual
Meeting or any postponement or adjournment thereof may revoke any proxy
previously given and vote by ballot.
The presence of the holders of a majority of the issued and outstanding
shares of Common Stock entitled to vote at the Annual Meeting, either in person
or represented by properly executed proxies, is necessary to constitute a quorum
for the transaction of business at the Annual Meeting. Abstentions and broker
"non-votes" (which result when a broker holding shares for a beneficial owner
has not received timely voting instructions on certain matters from such
beneficial owner) will be counted for purposes of determining the existence of a
quorum at the Annual Meeting. If there are not sufficient shares represented in
person or by proxy at the meeting to constitute a quorum, the meeting may be
postponed or adjourned in order to permit further solicitation of proxies by the
Company. Proxies given pursuant to this solicitation and not revoked will be
voted at any postponement or adjournment of the Annual Meeting in the manner
described above.
The election of directors will be determined by a plurality of the votes
cast by holders of shares of Common Stock; the approval of the amendment and
restatement of the Certificate of Incorporation will require the affirmative
vote of a majority of the Company's outstanding shares of Common Stock; and the
approval of all other matters will require the affirmative vote of holders of a
majority of the shares present in person or represented by duly executed proxies
at the Annual Meeting and entitled to vote on the subject matter. Cumulative
voting for the election of directors is not permitted. Shares represented by
proxies which are marked "WITHHELD" with regard to the election of directors
will be excluded entirely from the vote and will have no effect. Abstentions
will be treated as shares present and entitled to vote. Shares relating to any
proxy as to which a broker non-vote is indicated will not be considered present
and entitled to vote with respect to any matter as to which the broker has
indicated on the proxy that the broker does not have discretionary authority to
vote the shares. Accordingly, any shares that are present at the Annual Meeting
for quorum purposes, which are not voted for a particular nominee for director
will not prevent the election of such nominee if other stockholders vote for
such nominee; an abstention on any other proposal, however, will operate as a
vote "against" such proposal. Broker non-votes will have no effect on the
outcome of the vote on any proposals.
The expense of preparing, printing and mailing proxy solicitation materials
will be borne by the Company. The Company has engaged MacKenzie Partners, Inc.
to assist in the distribution of proxy materials and the solicitation of proxies
at a cost of approximately $[6,500] plus out of pocket expenses. In addition,
certain directors, officers, representatives and employees of the Company may
solicit proxies by telephone and personal interview. Such individuals will not
receive additional compensation from the Company for solicitation of proxies,
but may be reimbursed for reasonable out-of-pocket expenses in connection with
such solicitation. Banks, brokers and other custodians, nominees and fiduciaries
also will be reimbursed by the Company for their reasonable expenses for sending
proxy solicitation materials to the beneficial owners of Common Stock.
The Company's Annual Report to Stockholders for the year ended April 30,
1996, including consolidated financial statements, is being mailed to all
stockholders entitled to vote at the Annual Meeting. The Annual Report does not
constitute a part of the proxy solicitation material.
2
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors has fixed the number of directors of the Company at
13. The Board of Directors has nominated the 13 persons named below to serve as
directors until the next Annual Meeting of Stockholders or until their earlier
resignation or removal. Each of the 13 nominees is presently a member of the
Board of Directors of the Company and has consented to serve another term as a
director if re-elected. As of June 20, 1996, Thomas E. Williams resigned as a
Director of the Company. If any of the nominees should be unavailable to serve
for any reason (which is not anticipated), the Board of Directors may (i)
designate a substitute nominee or nominees, in which case the persons named on
the enclosed proxy will vote all valid proxies for the election of such
substitute nominee or nominees, (ii) allow the vacancy or vacancies to remain
open until a suitable candidate or candidates are located, or (iii) by
resolution, provide for fewer directors. Proxies for this Annual Meeting may not
be voted FOR more than 13 nominees.
NOMINEES FOR ELECTION AT THIS ANNUAL MEETING
JONATHAN J. LEDECKY Mr. Ledecky founded U.S. Office Products Company in
AGE 38 October 1994 and has served since that time as its
Chairman and Chief Executive Officer. Prior to
founding the Company, Mr. Ledecky was the President
of The Legacy Fund, Inc. from 1989 to 1994, and,
from 1991 to September 1994, he was President and
Chief Executive Officer of Legacy Dealer Capital
Fund, Inc., a wholly owned subsidiary of Steelcase
Inc., the nation's largest manufacturer of office
furniture products. Mr. Ledecky served on the Board
of Directors of General Office Products Company
("GOP"), a wholly owned subsidiary of the Company,
from July 1993 through September 1994, and from
November 1994 to the present. Mr. Ledecky is a
graduate of Harvard College and Harvard Business
School.
JACK L. BECKER, JR. Mr. Becker has been a director of the Company since
AGE 46 February 1995, and he has served since May 1992 as
the President of Dameron-Pierson Company, Limited
("Dameron-Pierson"), a wholly owned subsidiary of
the Company. From 1989 to April 1992, Mr. Becker was
Executive Vice President of Dameron-Pierson with
responsibility for sales and office furniture
operations. Mr. Becker received a bachelor's degree
in management from the University of New Orleans.
JOHN K. BURGESS Mr. Burgess has been a director of the Company since
AGE 41 February 1995, and he presently is the President of
Burgess, Anderson & Tate, Inc. ("BAT"), a wholly
owned subsidiary of the Company. Prior to joining
the Company, Mr. Burgess served from April 1993
through February 1995 as the Chief Operating Officer
of BAT, and from April 1990 through March 1993, as
Vice President, Sales and Marketing for BAT. Prior
to April 1990, Mr. Burgess held a variety of
positions at BAT. He received a bachelor's degree in
business management from Florida Southern College.
3
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<TABLE>
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DAVID C. COPENHAVER Mr. Copenhaver has been a director of the Company
AGE 33 since September 1995, and has been the Senior Vice
President of The Smith-Wilson, Co. ("Smith-Wilson"),
a wholly owned subsidiary of the Company, since
January 1990 and President of Copenhaver Holdings,
Incorporated since May 1989. Mr. Copenhaver received
both an undergraduate degree and an M.B.A. from the
University of Virginia. Mr. Copenhaver is the
brother of Preston S. Copenhaver, III, the President
of Smith-Wilson.
TIMOTHY J. FLYNN Mr. Flynn has served as a director and as President
AGE 42 and Chief Operating Officer of the Company since
February 1995. From 1986 through its acquisition by
the Company in February 1995, he served in a variety
of positions at Andrews Office Supply and Equipment
Company ("Andrews"), including President, Executive
Vice President and Chief Operating Officer. Mr.
Flynn is a former member of the board of directors
of the National Purchasing Association, an
association of office products companies, and the
former Vice Chairman of the Commercial Dealer
Division of the Business Products International
Association (formerly known as the National Office
Products Association ("NOPA")). Mr. Flynn received
both an undergraduate degree and Masters in
Administration from the University of Maryland.
DAVID C. GEZON Mr. Gezon has been a director of the Company since
AGE 44 July 1995, and he is the President of the C.W. Mills
Acquisition Corp. d/b/a C.W. Mills Paper Company
("C.W. Mills"), a wholly owned subsidiary of the
Company. Mr. Gezon has worked for C.W. Mills since
1970 and has served as its President since 1992. Mr.
Gezon received an undergraduate degree from Calvin
College and an MBA from Western Michigan University.
MILTON H. KUYERS Mr. Kuyers has been a director of the Company since
AGE 59 April 1995. He is a part owner and executive officer
of a number of privately held companies, including:
Zero Zone Refrigeration Manufacturing Co., a
manufacturer of commercial refrigeration units;
Desert Air Corp., a manufacturer of commercial
dehumidification equipment; Northwest Coatings,
Inc., a manufacturer of coating products; Grayline,
Inc., a manufacturer of tubing used in the appli-
ance and electrical industries; Barch
Communications, Inc., a distributor of business
telephone systems and cellular telephones; and
Faustel, Inc., a manufacturer of custom coating
equipment. From 1984 to 1993, Mr. Kuyers served as
the President of Star Sprinkler Corp., a
manufacturer of sprinkler heads for fire protection
systems. Mr. Kuyers serves on the board of directors
of Medical Advances, Inc., a manufacturer of parts
for medical diagnostic applications. Prior to its
acquisition by the Company, Mr. Kuyers also served
as a director of The H.H. West Company. Mr. Kuyers
holds an undergraduate degree in business
administration and an MBA from the University of
Michigan.
</TABLE>
4
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<TABLE>
<S> <C>
ALLON H. LEFEVER Mr. Lefever has served as a director of the Company
AGE 49 since February 1995. He has been Vice President of
the Affiliated Companies for High Industries, Inc.
since April 1988. From 1988 until its acquisition by
the Company in February 1995, Mr. Lefever served as
the Chairman of the Board and Chief Executive
Officer of The Office Works, Inc. ("Office Works"),
and currently serves on the boards of directors of
several private companies. In addition, he is a
director of the Lancaster Chamber of Commerce and
serves on the Business Advisory Board of
Millersville State University. Mr. Lefever received
his undergraduate degree from Millersville State
University and a Masters in Economics from
Pennsylvania State University.
EDWARD J. MATHIAS Mr. Mathias has been a director of the Company since
AGE 54 February 1995. Currently, Mr. Mathias is a Managing
Director of The Carlyle Group, a merchant bank based
in Washington, D.C. From 1971 through 1993, Mr.
Mathias was employed by T. Rowe Price Associates,
Inc., a major investment management organization,
most recently as a Managing Director. While at T.
Rowe Price, Mr. Mathias served as Chairman of
various equity mutual funds, including the New
Horizons Fund from 1982 through 1993. Mr. Mathias
also served as a member of the Board of Directors of
T. Rowe Price and was a member of its management
committee. He is the Chairman of the Board of
Visitors at American University's Kogod School of
Business Administration and serves on the board of
overseers at The University of Pennsylvania's School
of Arts and Sciences. Mr. Mathias presently serves
on the board of directors of Sirrom Capital
Corporation, a publicly traded small business
investment company. He is also a member of the
boards of directors of several private companies.
Mr. Mathias holds an undergraduate degree from The
University of Pennsylvania and an MBA from Harvard
Business School.
CLIFTON B. PHILLIPS Mr. Phillips has been a director of the Company
AGE 37 since August 1995. From 1993 until its acquisition
by the Company, Mr. Phillips served as President of
Mills Morris Arrow, Inc. ("Mills Morris Arrow"),
and, for over four years prior to holding such
position, Mr. Phillips held a variety of positions
with Mills Morris Arrow. Mr. Phillips received his
undergraduate degree from Columbia University and an
MBA from The Wharton School.
JOHN A. QUELCH Dr. Quelch has served as a director of the Company
AGE 44 since February 1995. Dr. Quelch is the Sebastian S.
Kresge Professor of Marketing at the Harvard
Business School, and he is the author of 12 books on
marketing and is widely published in leading
American business publications. Dr. Quelch serves on
the boards of directors of Reebok International
Ltd., a worldwide manufacturer and distributor of
athletic footwear and apparel, and WPP Group plc, a
marketing services company that includes Ogilvy &
Mather, J. Walter Thompson and Hill & Knowlton. Dr.
Quelch received an undergraduate degree from Oxford
University in England, an MBA from the University of
Pennsylvania, and MS and Doctor of Business
Administration degrees from Harvard University.
</TABLE>
5
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<TABLE>
<S> <C>
THOMAS J. REASER Mr. Reaser has been a director and an Executive Vice
AGE 48 President of the Company since February 1995, and,
since July 1993, has been the President of GOP. For
more than five years prior to July 1993, he held a
variety of positions at GOP, including Vice
President, Sales and Marketing. Mr. Reaser is a past
governor of NOPA and currently serves as the
President and a director of American Office Products
Distributors, a national trade organization of
office products companies.
MARK A. SORGENFREI Mr. Sorgenfrei has been a director of the Company
AGE 44 since August 1995. Between November 1994 and October
1995, Mr. Sorgenfrei was the President and Chief
Operating Officer of the MISSCO Corporation of
Jackson ("MISSCO"), which sold certain of its assets
to OSCO Acquisition Corp. ("OSCO"), a wholly owned
subsidiary of the Company in October 1995. Mr.
Sorgenfrei was the corporate controller and Chief
Financial Officer of MISSCO from 1984 to November
1994. He is a certified public accountant and
received his undergraduate degree from Millsaps
College in Jackson, Mississippi.
</TABLE>
VOTE REQUIRED FOR APPROVAL
The vote of a plurality of holders of the outstanding shares of Common Stock
present in person or represented by duly executed proxies at the Annual Meeting
is necessary for the election of a nominee as a director of the Company.
Accordingly, the 13 director nominees receiving the greatest number of votes
cast will be elected, regardless of the number of votes withheld for the
election of such director nominees. Shares represented by an executed proxy in
the form enclosed will, unless otherwise directed, be voted for the election of
the 13 persons nominated to serve as directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
ELECTION OF THE 13 PERSONS NOMINATED TO SERVE AS DIRECTORS.
BOARD ORGANIZATION AND MEETINGS
During the Company's fiscal year ended April 30, 1996, the Board of
Directors held four meetings and acted more than ten times by unanimous consent.
No member of the Board of Directors attended fewer than 75% of the total number
of meetings of the Board of Directors and all committees of the board on which
he served.
The Board of Directors has the following committees:
EXECUTIVE COMMITTEE. The Executive Committee consists of Jonathan J.
Ledecky, Timothy J. Flynn, Edward J. Mathias and Clifton B. Phillips. The
Executive Committee has the authority to exercise the powers of the Board of
Directors between the meetings of the Board, including the authority to issue
shares and such other authority as is delegated to it from time to time by the
full Board of Directors. During the 1996 fiscal year, the Executive Committee
met five times.
AUDIT COMMITTEE. The Audit Committee consists of Allon H. Lefever, John A.
Quelch and Milton H. Kuyers. The Audit Committee: (i) makes recommendations to
the Board of Directors with respect to the independent auditors who conduct the
annual examination of the Company's accounts; (ii) reviews the scope of the
annual audit and meets periodically with the Company's independent auditors to
review their findings and recommendations; (iii) reviews quarterly financial
information and earnings releases prior to dissemination to the public; (iv)
approves major accounting policies or changes thereto; and (v) periodically
reviews principal internal controls to assure that the Company is maintaining a
sound and modern system of financial controls. During the 1996 fiscal year, the
Audit Committee met three times.
6
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COMPENSATION COMMITTEE. The Compensation Committee consists of Edward J.
Mathias and John A. Quelch. The Compensation Committee periodically determines
the amount and form of compensation and benefits payable to all principal
officers and certain other management personnel. This committee also administers
the Incentive Plan. During the 1996 fiscal year, the Compensation Committee held
three meetings.
DIRECTORS' REMUNERATION
During the fiscal year ended April 30, 1996, fees for all directors
aggregated $30,000, including amounts paid for committee participation.
Beginning May 1, 1996, non-employee directors of the Company receive an annual
retainer of $25,000 and are reimbursed for all expenses relating to attendance
at meetings. Previously, the annual retainer for non-employee directors was
$10,000. In addition, each non-employee director who agreed to serve as such
prior to the consummation of the Company's initial public offering of its Common
Stock in February 1995 (Messrs. Lefever, Mathias and Quelch) received options to
acquire 15,000 shares of Common Stock, exercisable in three equal installments,
commencing on the date of the grant and on each anniversary thereof, at an
exercise price per share of $8.00. Under the Directors' Plan, if approved at the
Annual Meeting, non-employee directors will receive options to acquire 21,000
shares of Common Stock upon their initial election as a member of the Board of
Directors and in each subsequent year that they are re-elected, if any, will
receive options to acquire 6,000 shares. Upon the adoption of the Directors'
Plan, all four of the non-employee nominees who served as directors during the
1996 fiscal year, will, for the 1997 fiscal year only receive 6,000 additional
options (for a total of 27,000 options). Directors who are employees of the
Company do not receive additional compensation for serving as directors. No
non-employee member of the Board of Directors was paid compensation during the
1996 fiscal year for his service as a director of the Company other than
pursuant to the standard compensation arrangement described above. Messrs.
Burgess, Copenhaver, Gezon and Sorgenfrei receive compensation for their
services as employees of the Company pursuant to employment agreements providing
for annual base salary amounts of $93,000, $85,000, $113,000 and $150,000,
respectively.
7
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STOCK OWNERSHIP
The following table sets forth, as of July 10, 1996, information with
respect to beneficial ownership of the Company's Common Stock by (i) each
director and nominee as director, (ii) each executive officer, (iii) the
executive officers and directors as a group, and (iv) each person known to the
Company who beneficially owns 5% or more of the outstanding shares of the Common
Stock. Unless otherwise indicated, each of the stockholders has sole voting and
investment power with respect to the shares beneficially owned.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT
- ------------------------------------------------------------ --------- -------
<S> <C> <C>
EXECUTIVE OFFICERS AND DIRECTORS
Jonathan J. Ledecky (1)..................................... 1,693,750 4.9%
Clifton B. Phillips......................................... 1,245,857 3.6%
Timothy J. Flynn (2)........................................ 489,432 1.4%
Thomas J. Reaser (3)........................................ 237,982 *
Edward J. Mathias (4)....................................... 191,250 *
David C. Copenhaver......................................... 117,149 *
David C. Gezon.............................................. 115,820 *
Martin S. Pinson (5)........................................ 119,193 *
Milton H. Kuyers............................................ 109,721 *
Jack L. Becker, Jr. (6)..................................... 30,398 *
John K. Burgess (6)......................................... 28,396 *
Donald H. Platt (6)......................................... 25,693 *
Allon H. Lefever (7)........................................ 27,900 *
John A. Quelch (7).......................................... 10,000 *
Mark A. Sorgenfrei.......................................... 0 0
Mark D. Director............................................ 0 0
All executive officers and directors as a group (16)
persons..................................................... 4,442,541 12.9%
5% STOCKHOLDERS
Pilgrim Baxter & Associates (8)............................. 2,426,000 7.0%
1255 Drummers Lane, Suite 300
Wayne, PA 19087-1950
Eric Watson (9)............................................. 2,200,145 6.4%
c/o Blue Star Group Limited
Level 22, Coopers & Lybrand Building
23-19 Albert Street
P.O. Box 1335
Auckland, New Zealand
Putnam Investment Management (10)........................... 2,001,100 5.8%
One Post Office Square
Boston, MA 02109-2137
</TABLE>
- ------------------------------
* Less than 1%.
(1) Includes 75,000 shares which may be acquired upon the exercise of options
exercisable within 60 days.
(2) Includes 43,750 shares which may be acquired upon the exercise of options
exercisable within 60 days.
(3) Includes 12,500 shares which may be acquired upon the exercise of options
exercisable within 60 days.
(4) Includes 10,000 shares which may be acquired upon the exercise of options
exercisable within 60 days and 50,000 shares owned by Mr. Mathias' wife.
(5) Includes 100,000 shares owned by the Pinson and Associates Profit Sharing
Plan of which Mr. Pinson is the trustee and beneficiary, and 18,750 shares
which may be acquired by Mr. Pinson upon the exercise of options exercisable
within 60 days.
(6) Includes 25,000 shares which may be acquired upon the exercise of options
exercisable within 60 days.
(7) Includes 10,000 Shares which may be acquired upon the exercise of options
exercisable within 60 days.
(8) Reporting person claims shared voting power with respect to all of the
shares.
(9) Mr. Watson is the President of the Company's International Division and
Chief Executive Officer of Blue Star Group Limited, a wholly owned
subsidiary of the Company.
(10) Reporting person claims sole voting power with respect to 71,600 shares, no
voting power with respect to 1,929,500 shares and shared (investment) power
with respect to all of the shares.
8
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table provides, for the periods indicated, certain summary
information concerning the cash and non-cash compensation earned by or awarded
to (i) the Company's Chief Executive Officer and (ii) each of the Company's
other executive officers during or at the end of the Company's 1996 fiscal year
(collectively, the "named executive officers"). The Company was organized in
October 1994 and did not conduct any operations prior to February 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
-------------------------------------------------- --------------------
OTHER SECURITIES
ANNUAL UNDERLYING
FISCAL SALARY COMPENSATION OPTIONS/
NAME AND PRINCIPAL POSITION YEAR (1) BONUS (2) (3) SARS (#) (4)
- ------------------------------------------------- --------- ----------- ----------- ------------- --------------------
<S> <C> <C> <C> <C> <C>
Jonathan J. Ledecky 1996 $ 250,000 -- -- 500,000
Chief Executive Officer and 1995 145,833 -- -- 100,000
Chairman of the Board
Timothy J. Flynn 1996 250,000 $ 75,000 -- 310,000
President and Chief Operating Officer 1995 45,912 -- -- 25,000
Donald H. Platt 1996 150,000 125,000 $ 45,300 250,000
Senior Vice President -- Chief 1995 -- -- -- --
Financial Officer
Martin S. Pinson 1996 150,000 25,000 -- 100,000
Executive Vice President and Secretary 1995 57,757 -- -- 25,000
Mark D. Director 1996 38,061 75,000 -- 100,000
Executive Vice President, General Counsel 1995 -- -- -- --
and Assistant Secretary
Thomas J. Reaser 1996 150,000 -- -- 25,000
Executive Vice President 1995 23,958 -- -- 25,000
</TABLE>
- ------------------------
(1) The salary for Mr. Director for fiscal 1996 represents less than one full
year's compensation as he commenced employment with the Company during
fiscal 1996. Each salary shown for fiscal 1995 represents less than one full
year's compensation. No compensation was paid to any named executive officer
prior to February 23, 1995. With respect to Messrs. Ledecky and Pinson, the
salary listed for fiscal 1995 includes $99,921 and $30,000, respectively,
for services rendered prior to the commencement of operations by the
Company.
(2) In addition to bonuses related to 1996, the Company granted options in
fiscal 1997 as bonuses for fiscal 1996 to Messrs. Flynn, Platt, Pinson,
Director and Reaser to purchase 75,000, 75,000, 25,000, 75,000 and 25,000
shares of Common Stock, respectively, at an exercise price of $38.00 per
share.
(3) Includes $5,300 of automobile related expenses and $40,000 in moving related
expenses.
(4) Represents options granted during fiscal 1996 with respect to the stated
number of shares of Common Stock.
EMPLOYMENT AGREEMENTS
Each named executive officer has entered into an employment agreement with
the Company. Pursuant to such employment agreements, the named executive
officers receives an annual base
9
<PAGE>
salary (which is reviewed and subject to upward adjustment by the Compensation
Committee of the Board of Directors on an annual basis). In addition, each such
officer is eligible to earn additional year-end bonus compensation in an amount
up to 100% of such employee's base salary, payable out of a bonus pool
determined by the Compensation Committee of the Board of Directors. Bonuses are
determined by measuring such officer's performance and the Company's overall
performance against target performance levels, typically based on the following
criteria: (i) the Company's overall profit; (ii) the Company's internal revenue
growth; and (iii) the Company's revenue growth due to acquisitions. Each
employment agreement is for an initial term of four years and automatically
renews at the end of the second year and each succeeding year for an additional
year, such that the term of such agreements is at all times at more than two
years, unless terminated or not renewed by the Company or the employee.
Each of the employment agreements provides that, in the event of a
termination of employment by the Company without cause, such employee shall be
entitled to receive from the Company such employee's then current salary for
whatever period is remaining under the term of the agreement. In the event of a
change in control of the Company (involving a change in the ownership of a
majority of the voting stock of the Company, a change in the majority of the
Board of Directors without approval of the current Board, a merger,
consolidation, recapitalization, reorganization or reverse stock split in which
the stockholders of the Company prior to such transaction do not continue to own
at least 75% of the stock of the Company following such transaction or the
approval by the stockholders of a plan of complete liquidation or disposition of
more than 50% of the Company's assets), the employee may elect to terminate his
employment and shall be entitled to receive his base salary at the rate then in
effect for the remaining term of the agreement or two years, whichever is
greater.
Each employment agreement contains a covenant not to compete with the
Company for a period equal to the longer of: (i) two years immediately following
the termination of employment; or (ii) in the case of a termination without
cause pursuant to which such employee is entitled to continue to receive his
base salary, for so long as the Company continues to pay such salary. Applicable
law may reduce the scope of the covenant not to compete. In the event that the
term of any such covenant is reduced in accordance with applicable law, the
compensation to which such employee is entitled shall be paid to the employee
only for such reduced period of time as the employee is so prohibited from
competing or is not so competing.
10
<PAGE>
OPTION GRANTS IN FISCAL 1996
The following tables set forth certain information concerning the grant and
exercise of options to purchase Common Stock of the Company during the last
completed fiscal year to each of the named executive officers. All of such
options vest in four equal annual installments, commencing on the first
anniversary of the date of grant.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT ASSUMED
PERCENT OF ANNUAL RATES OF STOCK PRICE
TOTAL APPRECIATION
OPTIONS OPTIONS GRANTED FOR OPTION TERM (2)
GRANTED TO EMPLOYEES IN EXERCISE EXPIRATION -------------------------------------
NAME (1) FISCAL YEAR PRICE DATE 0% 5% 10%
- --------------------------------- --------- --------------- -------- --------------- ------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Jonathan J. Ledecky.............. 100,000 3.6% $12.50 6/12/2005 $ -- $ 786,118(3) $1,992,178(3)
150,000 5.4% $14.25 10/12/2005 -- 1,344,262(3) 3,406,625
250,000 9.0% $23.75 2/06/2006 -- 3,734,062 9,462,846
Timothy J. Flynn................. 75,000 2.7% $12.50 6/12/2005 -- 589,589(3) 1,494,134(3)
115,000 4.2% $14.25 10/12/2005 -- 1,030,601 2,611,745
120,000 4.3% $23.75 2/06/2006 -- 1,792,350 4,542,166
Donald H. Platt.................. 100,000 3.6% $12.53 5/01/2005 -- 788,084(3) 1,997,159(3)
75,000 2.7% $14.25 10/12/2005 -- 672,131(3) 1,703,312
75,000 2.7% $23.75 2/06/2006 -- 1,120,219 2,838,854
Martin S. Pinson................. 25,000 0.9% $12.50 6/12/2005 -- 196,530(3) 498,045(3)
50,000 1.8% $14.25 10/12/2005 -- 448,087(3) 1,135,542
25,000 0.9% $23.75 2/06/2006 -- 373,406 946,285
Mark D. Director................. 100,000 3.6% $16.31 12/05/2005 -- 1,025,884(3) 2,599,792
Thomas J. Reaser................. 25,000 0.9% $12.50 6/12/2005 -- 196,530(3) 498,045(3)
All Optionees.................... 2,764,591 100.0% $18.83 Various -- 32,738,524 82,965,847
</TABLE>
- ------------------------------
(1) The options granted are non-qualified stock options, which are exercisable
at the market price on the date of grant beginning one year from the date of
grant in cumulative yearly amounts of 25% of the shares and expire ten years
from the date of grant. The options become fully exercisable upon a change
in control, as defined in the Incentive Plan.
(2) The dollar amounts under these columns are the results of calculations at
assumed annual rates of stock price appreciation of zero percent (0%), five
percent (5%) and ten percent (10%). These assumed rates of growth were
selected by the Securities and Exchange Commission for illustration purposes
only. They are not intended to forecast possible future appreciation, if
any, of the Company's stock price. No gain to the optionees is possible
without an increase in stock prices, which will benefit all stockholders. A
zero percent (0%) gain in stock price will result in a zero percent (0)%
benefit to optionees.
(3) The price per share of the Company's Common Stock at April 30, 1996 was
$36.00, which exceeds the projected price at the assumed annual rate of
growth used to calculate the potential realizable value.
OPTION EXERCISES IN FISCAL 1996 AND VALUE OF OPTIONS AT APRIL 30, 1996
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-
OPTIONS HELD AT FISCAL MONEY (3) OPTIONS AT FISCAL
SHARES ACQUIRED YEAR END (#) YEAR END ($)(4)
ON EXERCISE VALUE --------------------------- ---------------------------
NAME (#)(1) REALIZED ($)(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------------- --------------- --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jonathan J. Ledecky................ -- -- 25,000 575,000 $700,000 $ 10,775,000
Timothy J. Flynn................... -- -- 6,250 328,750 175,000 6,258,750
Donald H. Platt.................... -- -- -- 250,000 -- 4,897,000
Martin S. Pinson................... -- -- 6,250 118,750 175,000 2,506,250
Mark D. Director................... -- -- -- 100,000 -- 1,968,750
Thomas J. Reaser................... -- -- 6,250 43,750 175,000 1,112,500
</TABLE>
- ------------------------------
(1) Represents the number of shares received upon exercise or, if no shares
were received, the number of shares with respect to which the options were
exercised.
(2) The value of exercised options represents the difference between the
exercise price of such options and the closing market price of the
Company's Common Stock on the date of exercise.
(3) Options are "in-the-money" if the closing market price of the Company's
Common Stock exceeds the exercise price of the options.
(4) The value of unexercised options represents the difference between the
exercise price of such options and $36.00, the closing market price of the
Company's Common Stock at April 30, 1996.
11
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares, from February 15, 1995, the date that the
Company's common stock began trading on The Nasdaq Stock Market following its
initial public offering, through the end of the Company's 1996 fiscal year, the
percentage change in the Company's Common Stock to the cumulative total return
of the NASDAQ Composite Index and a selected group of issuers consisting of the
following office products companies: Boise Cascade Office Products, BT Office
Products, Corporate Express, Office Depot, and Staples. The graph plots the
growth in value of an initial $100 investment over the indicated time period,
assuming the reinvestment of dividends.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
U.S. OFFICE PRODUCTS NASDAQ INDUSTRY COMPARABLES INDEX*
<S> <C> <C> <C>
2/15/95 100.00 100.00 100.00
2/16/95 100.00 99.71 99.18
2/17/95 100.00 98.91 98.46
2/21/95 100.00 98.62 96.78
2/22/95 102.38 99.03 95.71
2/23/95 105.95 99.46 96.89
2/24/95 108.33 99.43 95.67
2/27/95 107.74 98.60 93.71
2/28/95 107.14 99.76 93.84
3/01/95 107.14 99.53 96.78
3/02/95 104.76 99.75 96.56
3/03/95 103.57 100.40 97.56
3/06/95 104.76 100.27 97.84
3/07/95 97.62 99.46 97.38
3/08/95 96.43 100.02 97.51
3/09/95 95.24 100.08 97.44
3/10/95 95.24 100.83 97.13
3/13/95 95.24 100.84 97.04
3/14/95 101.19 101.58 97.64
3/15/95 111.90 101.48 100.13
3/16/95 119.05 101.72 101.65
3/17/95 121.43 101.60 101.82
3/20/95 121.43 101.87 100.75
3/21/95 117.86 101.78 101.61
3/22/95 116.67 101.69 102.21
3/23/95 122.62 101.98 102.04
3/24/95 128.57 102.89 102.60
3/27/95 133.33 103.39 103.66
3/28/95 139.29 103.83 102.39
3/29/95 141.67 102.96 101.12
3/30/95 138.10 102.67 100.38
3/31/95 136.90 102.71 100.04
4/03/95 136.90 102.82 100.53
4/04/95 139.29 102.27 100.31
4/05/95 142.86 102.60 101.59
4/06/95 140.48 102.28 100.28
4/07/95 138.10 102.40 100.28
4/10/95 138.10 103.22 99.48
4/11/95 138.10 103.67 96.62
4/12/95 136.90 104.14 97.27
4/13/95 130.95 104.65 98.67
4/17/95 130.95 104.42 99.15
4/18/95 130.95 103.78 97.50
4/19/95 128.57 102.63 96.31
4/20/95 128.57 102.94 96.08
4/21/95 130.95 103.50 96.61
4/24/95 128.57 104.18 94.99
4/25/95 125.00 104.48 91.67
4/26/95 125.00 105.19 93.38
4/27/95 122.62 105.70 94.09
4/28/95 120.24 106.08 94.57
5/01/95 119.34 105.78 93.75
5/02/95 119.65 105.80 93.29
5/03/95 120.24 106.87 96.26
5/04/95 121.43 106.43 95.03
5/05/95 120.24 106.02 95.60
5/08/95 121.43 106.74 96.12
5/09/95 120.24 106.60 96.45
5/10/95 121.43 106.53 95.51
5/11/95 122.03 107.31 95.72
5/12/95 123.81 107.96 97.98
5/15/95 121.43 108.48 99.75
5/16/95 122.62 109.13 101.46
5/17/95 123.81 109.59 104.30
5/18/95 120.24 108.60 103.70
5/19/95 120.24 108.66 102.96
5/22/95 113.10 109.50 103.56
5/23/95 109.52 110.56 104.11
5/24/95 109.52 110.35 103.79
5/25/95 103.57 110.27 103.05
5/26/95 101.19 109.58 101.38
5/30/95 104.76 107.93 101.36
5/31/95 105.95 108.67 101.82
6/01/95 104.76 109.20 102.83
6/02/95 116.67 109.72 103.11
6/05/95 119.05 110.96 104.90
6/06/95 120.24 110.53 104.28
6/07/95 119.05 110.80 106.78
6/08/95 119.05 111.37 107.16
6/09/95 121.43 111.15 107.11
6/12/95 119.05 111.61 108.94
6/13/95 126.19 112.39 111.51
6/14/95 125.00 112.58 110.87
6/15/95 120.24 113.45 113.75
6/16/95 119.05 114.21 114.50
6/19/95 117.86 115.89 118.31
6/20/95 120.24 116.87 116.84
6/21/95 117.86 116.79 115.87
6/22/95 120.24 118.16 116.28
6/23/95 120.24 118.00 111.86
6/26/95 116.67 116.51 107.10
6/27/95 114.29 115.58 108.59
6/28/95 110.12 115.70 111.14
6/29/95 107.44 116.49 111.98
6/30/95 114.29 117.32 111.65
7/03/95 114.29 117.46 112.20
7/05/95 119.05 118.37 112.74
7/06/95 123.81 119.77 112.99
7/07/95 134.52 121.89 114.54
7/10/95 129.76 122.75 116.87
7/11/95 130.95 121.94 115.97
7/12/95 128.57 124.26 117.54
7/13/95 129.76 124.95 117.05
7/14/95 129.76 125.60 117.32
7/17/95 126.19 126.43 120.80
7/18/95 122.62 124.24 118.59
7/19/95 114.29 119.76 118.59
7/20/95 121.43 120.73 118.92
7/21/95 120.24 120.88 119.75
7/24/95 122.62 122.99 119.89
7/25/95 122.03 124.90 123.56
7/26/95 129.76 125.71 126.20
7/27/95 138.10 127.03 133.60
7/28/95 148.81 126.35 132.00
7/31/95 146.43 125.84 129.05
8/01/95 139.29 124.57 125.57
8/02/95 135.71 123.64 125.04
8/03/95 135.71 123.51 125.24
8/04/95 134.52 124.57 125.39
8/07/95 136.90 125.09 123.92
8/08/95 144.05 125.32 124.30
8/09/95 145.24 126.33 126.38
8/10/95 144.05 125.76 129.04
8/11/95 142.86 126.20 127.92
8/14/95 148.81 127.25 129.74
8/15/95 148.81 127.24 127.17
8/16/95 147.62 128.92 133.90
8/17/95 151.19 129.36 134.48
8/18/95 164.29 129.62 133.26
8/21/95 164.29 128.16 132.90
8/22/95 163.10 128.87 132.60
8/23/95 158.33 129.23 134.20
8/24/95 158.33 128.32 134.79
8/25/95 158.33 128.20 133.81
8/28/95 158.33 126.71 131.29
8/29/95 157.14 126.14 130.54
8/30/95 161.31 127.27 132.21
8/31/95 164.29 128.21 136.04
9/01/95 161.90 128.13 135.64
9/05/95 163.10 130.63 136.97
9/06/95 160.71 131.25 139.34
9/07/95 163.10 132.11 142.50
9/08/95 163.10 133.23 143.70
9/11/95 160.71 134.05 142.03
9/12/95 155.95 133.86 140.08
9/13/95 155.95 134.16 140.96
9/14/95 154.76 134.10 140.74
9/15/95 142.86 132.11 139.89
9/18/95 139.29 131.99 138.69
9/19/95 140.48 133.27 139.32
9/20/95 141.67 133.87 142.15
9/21/95 146.43 133.04 138.47
9/22/95 148.81 132.40 137.25
9/25/95 147.62 131.49 135.24
9/26/95 148.81 130.47 134.41
9/27/95 146.43 129.02 135.41
9/28/95 145.24 131.60 139.66
9/29/95 144.05 131.16 138.70
10/02/95 142.27 129.15 136.02
10/03/95 132.14 128.26 134.03
10/04/95 133.33 125.97 132.51
10/05/95 134.52 127.47 133.83
10/06/95 139.29 127.20 134.19
10/09/95 132.14 123.77 129.60
10/10/95 130.95 123.61 129.45
10/11/95 132.14 125.88 131.73
10/12/95 135.71 127.65 133.92
10/13/95 139.29 128.00 139.69
10/16/95 140.48 127.97 141.53
10/17/95 142.27 130.14 137.19
10/18/95 134.52 131.39 137.82
10/19/95 134.52 131.59 135.79
10/20/95 147.62 130.66 135.71
10/23/95 150.00 130.33 130.75
10/24/95 151.19 130.62 132.86
10/25/95 154.76 129.01 130.50
10/26/95 157.14 127.89 127.29
10/27/95 157.14 128.90 130.17
10/30/95 161.90 130.68 136.45
10/31/95 163.10 130.22 138.24
11/01/95 161.90 130.78 140.00
11/02/95 163.10 132.89 140.48
11/03/95 161.90 133.94 137.87
11/06/95 163.10 133.50 138.09
11/07/95 161.90 131.20 132.72
11/08/95 163.10 131.71 139.81
11/09/95 163.10 133.93 141.54
11/10/95 163.10 133.71 143.49
11/13/95 163.10 133.03 143.26
11/14/95 164.29 130.79 139.53
11/15/95 161.90 130.95 137.55
11/16/95 161.90 131.28 139.54
11/17/95 158.33 131.35 141.38
11/20/95 158.33 129.39 140.96
11/21/95 159.52 128.83 140.28
11/22/95 158.33 128.36 137.86
11/24/95 157.14 129.48 138.05
11/27/95 155.95 129.37 135.80
11/28/95 155.95 131.98 130.37
11/29/95 157.14 132.92 130.17
11/30/95 159.52 133.13 129.01
12/01/95 158.33 132.64 125.63
12/04/95 157.14 134.46 126.90
12/05/95 155.36 133.97 128.70
12/06/95 166.67 133.45 128.60
12/07/95 182.14 132.37 126.00
12/08/95 210.71 133.53 126.31
12/11/95 210.71 133.42 126.72
12/12/95 229.76 132.23 122.11
12/13/95 227.98 132.79 120.44
12/14/95 229.76 130.49 117.13
12/15/95 219.05 129.52 115.07
12/18/95 198.81 126.01 111.33
12/19/95 202.38 129.01 114.29
12/20/95 219.05 128.86 114.56
12/21/95 217.86 130.79 118.33
12/22/95 215.48 131.58 119.22
12/26/95 209.52 131.89 120.30
12/27/95 209.52 131.74 122.86
12/28/95 210.71 130.99 123.16
12/29/95 216.67 132.24 124.44
1/02/96 217.86 133.06 122.07
1/03/96 219.05 131.50 122.21
1/04/96 217.86 129.43 118.46
1/05/96 220.24 129.89 118.94
1/08/96 221.43 129.76 117.59
1/09/96 211.90 125.54 112.12
1/10/96 197.62 124.46 110.77
1/11/96 222.62 127.08 114.28
1/12/96 248.81 126.72 112.56
1/15/96 226.19 124.25 111.08
1/16/96 227.38 125.17 109.70
1/17/96 236.90 125.47 110.57
1/18/96 233.33 126.60 113.12
1/19/96 233.33 128.01 113.03
1/22/96 240.48 129.39 115.97
1/23/96 232.14 129.21 119.30
1/24/96 223.81 131.15 124.24
1/25/96 220.24 130.21 123.22
1/26/96 220.24 130.83 123.08
1/29/96 216.67 131.03 122.73
1/30/96 213.10 132.13 123.98
1/31/96 223.81 133.20 123.19
2/01/96 227.98 134.42 127.88
2/02/96 220.24 134.75 130.10
2/05/96 226.19 136.16 128.81
2/06/96 226.19 136.88 129.34
2/07/96 250.00 136.35 129.51
2/08/96 267.86 137.40 130.19
2/09/96 266.67 137.58 132.79
2/12/96 264.29 137.67 129.68
2/13/96 257.14 136.65 127.97
2/14/96 257.14 136.75 126.17
2/15/96 264.29 137.07 127.96
2/16/96 265.48 137.09 128.00
2/20/96 261.90 136.15 125.53
2/21/96 261.90 137.86 127.49
2/22/96 276.19 140.41 131.16
2/23/96 269.05 140.49 133.99
2/26/96 270.24 139.90 135.14
2/27/96 266.67 139.03 135.45
2/28/96 271.43 139.20 136.65
2/29/96 288.10 138.26 135.76
3/01/96 276.19 136.51 136.95
3/04/96 281.55 136.35 139.88
3/05/96 294.05 137.85 142.62
3/06/96 289.29 137.23 146.11
3/07/96 285.71 137.39 145.71
3/08/96 275.00 133.70 141.75
3/11/96 282.14 135.80 146.13
3/12/96 276.19 134.87 146.28
3/13/96 286.90 136.83 151.49
3/14/96 300.00 137.13 145.97
3/15/96 297.62 138.20 144.31
3/18/96 292.86 140.07 148.86
3/19/96 302.38 139.83 150.15
3/20/96 295.24 138.48 148.89
3/21/96 294.05 138.23 148.82
3/22/96 295.24 138.53 148.03
3/25/96 296.43 136.63 148.42
3/26/96 305.95 136.79 149.61
3/27/96 300.00 137.49 150.18
3/28/96 298.81 137.61 150.66
3/29/96 295.24 138.43 145.04
4/01/96 296.43 139.08 144.62
4/02/96 308.33 139.67 143.60
4/03/96 304.76 140.25 142.26
4/04/96 302.38 140.54 144.01
4/08/96 302.38 138.97 144.81
4/09/96 307.14 139.41 146.90
4/10/96 295.24 138.92 147.75
4/11/96 314.29 137.90 147.84
4/12/96 330.95 138.37 148.94
4/15/96 338.10 139.57 150.66
4/16/96 345.24 141.39 152.94
4/17/96 350.00 140.88 150.75
4/18/96 352.38 142.82 150.03
4/19/96 352.38 143.12 152.13
4/22/96 352.38 144.98 156.82
4/23/96 352.38 146.65 159.61
4/24/96 353.57 147.91 159.58
4/25/96 352.38 148.83 157.21
4/26/96 370.24 149.18 157.49
4/29/96 361.90 149.34 156.50
4/30/96 342.86 149.63 157.09
* Industry Comparables Index includes: Boise Cascade Office Prod-
ucts,
BT Office Products, Corporate Express, Office Depot, and Staples.
</TABLE>
The performance of the Company's Common Stock reflected above is not
necessarily indicative of future performance of the Common Stock. The
performance graph which appears above shall not be deemed incorporated by
reference by any general statement incorporating this Proxy Statement by
reference into any filing under the Securities Act of 1933, as amended, or under
the Securities Exchange Act of 1934, as amended, and shall not be deemed filed
under either of such acts, except to the extent that the Company specifically
incorporates this information by reference.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Company's Board of Directors is composed
of two independent, non-employee directors. The Compensation Committee reports
as follows.
GENERAL. The Compensation Committee of the Company's Board of Directors
(the "Committee") is responsible for approving and reviewing with the Board of
Directors the compensation of the Company's executive officers and certain other
management personnel, including compensation awarded in the form of bonuses and
equity-based awards. In this role, the Committee administers the Company's
Amended and Restated 1994 Long-Term Incentive Compensation Plan (the "Incentive
Plan") under which options and other equity-based awards can be made.
12
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The Committee believes that compensation must be competitive, but that it
should be directly and materially linked to the Company's performance. The
compensation program is designed to attract and retain executive talent, to
motivate executives to maximize operating performance, to provide an opportunity
to measure performance on an individual basis, as well as on an overall
Company-wide basis, and to link executive and stockholder interests through the
grant of stock options and other equity-based compensation.
The key components of the Company's executive compensation program consist
of salary, annual incentive bonuses and stock options. The Committee's policy
with respect to each of these elements, including the basis of the compensation
awarded to Mr. Ledecky, the Company's Chief Executive Officer ("CEO"), is
discussed below. Through these programs, a very significant portion of the
Company's executive compensation is linked to performance and the alignment of
executive interests with those of stockholders. The long-term compensation of
the Company's executive officers consists of stock options. The short-term
compensation consists of base salary and a bonus that may be in an amount equal
to up to 100% of each executive officer's base salary.
Since the Company's inception, the Committee has tended to keep executive
salaries relatively low, has paid only modest cash bonuses, and has emphasized
long-term compensation through the grant of stock options for significant
numbers of shares of Common Stock with four-year vesting requirements. In the
judgment of the Committee, this approach to compensation tends to align the
interests of management most closely with those of the Company's stockholders.
BASE SALARY. The Committee established base salary levels for the Company's
executive officers shortly after the Company's initial public offering. It
evaluated competitive market pay rates, each executive's role or expected role
in the Company, and each executive's performance over time, including, where
relevant, the executive's performance prior to joining the Company, in
establishing such salary levels. The Committee adopted a two-tiered compensation
structure to promote teamwork among the executive officers. The base salary
amounts of the Company's two most senior executive officers, the CEO and the
President, were set at one level, and the base salary amounts for other
executive officers were set at a second, lower level.
The Committee did not increase such base salary levels for the 1996 fiscal
year because the fiscal year began less than two months after the initial public
offering. The Committee established base salary levels for executive officers
hired during the 1996 fiscal year based upon the same approach to compensation
established at the time of the initial public offering.
In view of the Company's growth since the initial public offering, its
position in the industry at the end of the 1996 fiscal year, resulting from its
aggressive acquisition program during the 1996 fiscal year, and the significant
enhancement of shareholder value, reflected in the increase in the price of the
Company's Common Stock from February 1995 to April 30, 1996, the Committee
re-evaluated base salary levels. With the assistance of an independent
compensation consultant and based upon compensation levels paid by the Company's
major competitors (including all of the companies included in the peer group
reflected in the Stock Performance Graph), the Committee determined to eliminate
the two-tiered structure and establish base salary amounts for individual
executive officers. As a result of this analysis, the Committee generally
increased the base salaries of executive officers for the 1997 fiscal year to
levels that are more competitive with the average salaries being paid to
executive officers by the Company's competitors, which did not exceed in any
case 33% of the executive officer's 1996 base salary. The increases take into
account the conclusion of the independent compensation consultant that the cash
compensation amounts paid to the executive officers for 1996 were significantly
below industry standards. In addition, in the judgment of the Committee, a
salary adjustment was necessary to retain key executives and enable the Company
to attract additional, talented executives to help manage the Company's rapid
growth.
ANNUAL INCENTIVE BONUS. The Committee intends to determine at the end of
each fiscal year whether to award incentive bonuses to executive officers, based
on pre-determined performance objectives and recommendations made by the
Company. Officers are eligible to earn up to 100% of base
13
<PAGE>
salary levels for performance that exceeds target levels established at the
beginning of each fiscal year. Bonuses are payable out of a bonus pool
determined by the Board of Directors or the Compensation Committee. Bonuses are
determined by measuring such officer's performance and the Company's overall
performance against target performance levels, typically based on the following
criteria: (i) the Company's overall profit; (ii) the Company's internal revenue
growth; and (iii) the Company's revenue growth due to acquisitions.
For the 1996 fiscal year, the Committee awarded cash bonuses to certain of
the executive officers in an aggregate amount equal to significantly less than
100% of such persons' base salary amounts, despite the Company's positive
performance and substantial growth. Bonuses were awarded, based upon the
recommendation of the Company's CEO, consistent with the Committee's overall
desire to emphasize long-term incentives through the grant of substantial stock
options.
LONG-TERM INCENTIVE PLAN. Prior to the completion of the Company's initial
public offering of its Common Stock in February 1995, the Company's Board of
Directors and stockholders adopted the Incentive Plan to provide directors,
officers and key employees and consultants with additional incentives by
increasing their ownership interests in the Company and thereby to focus their
efforts on the long-term goals of the Company and the maximization of the total
return to stockholders.
Under the Incentive Plan, the Committee can award (i) stock options,
including incentive stock options, non-qualified stock options or both, which
options may contain automatic reload features; (ii) stock appreciation rights
("SARs"), whether in conjunction with the grant of stock options or independent
of such grants, or SARs that are only exercisable in the event of a change in
control of the Company or upon other events; (iii) performance awards,
consisting of a right to receive cash in an amount determined with reference to
the value of the Common Stock, a fixed dollar amount payable in cash, or a
combination of both; (iv) dividend equivalents, consisting of a right to receive
cash, other awards, or other property equal in value to dividends paid with
respect to a specified number of shares of Common Stock, or other periodic
payments; or (v) other awards not otherwise provided for, the value of which are
based in whole or in part upon the value of the Common Stock. Thus far, the
Committee has granted only non-qualified stock options under the Incentive Plan.
The Committee believes that aligning management's interest with those of
stockholders is an important element of the Company's executive compensation
plan. Stock options align the interests of employees and stockholders by
providing value to the executive through stock price appreciation only. The
stock options granted during the 1996 fiscal year have ten-year terms and are
exercisable at the fair market value of the Company's stock on the date of grant
beginning one year from the date of grant in cumulative yearly amounts of 25% of
the shares. The Committee granted options to purchase 1,285,000 shares of Common
Stock to executive officers for the 1996 fiscal year, including options granted
in lieu of higher cash bonuses. The Committee believes that such grants are
appropriate in light of the relatively low salaries and cash bonuses (as
compared to those received by executive officers of the Company's industry
competitors) paid to the Company's executive officers during a year when the
Company grew rapidly and the price of its stock increased at a much faster rate
than industry competitors' and the Nasdaq market in general.
Future awards of stock options to persons other than the Company's CEO will
be made periodically at the discretion of the Compensation Committee, based upon
recommendations of the Company's CEO. The Compensation Committee alone, or in
consultation with other directors (excluding the CEO), will continue to
determine any option awards to the CEO. The size of such grants, in general,
will be evaluated by regularly assessing competitive market practices, the
individual's position and level of responsibility within the Company, and the
overall performance of the Company, including its historic financial success and
its future prospects. Grants also will take into account the differential
between the levels of cash compensation paid by the Company, as compared to
those of the Company's industry competitors. The Company believes that stock
options are the single most
14
<PAGE>
important element in providing an incentive for performance of management, both
at the Company level and at its subsidiaries, and intends to continue to plan to
award significant numbers of stock options to officers and key employees.
The Committee intends, to the extent possible, that options and other
equity-based awards granted to executive officers under the Incentive Plan be
deductible for federal tax purposes. Stock option awards granted under the
Incentive Plan are deductible in accordance with Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Internal Revenue Code").
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER. The Compensation Committee
considers several factors in establishing the Chief Executive Officer's
compensation package, including market pay practices, performance level,
experience, contributions toward achievement of strategic goals and the overall
financial and operating success of the Company. As discussed above, the
Committee did not change Mr. Ledecky's base salary level for the Company's 1996
fiscal year because of the Company's recent formation. During the 1996 fiscal
year, however, the Committee concluded that a significant change to Mr.
Ledecky's overall compensation was both appropriate and necessary, in light of a
variety of factors, including, primarily, the extent to which Mr. Ledecky's
compensation was significantly lower than that received by the chief executives
of the Company's competitors and the critical role Mr. Ledecky plays in leading
the Company's rapid growth. An independent compensation consultant confirmed
that Mr. Ledecky's overall compensation was lower than the compensation that the
Company's competitors pay to their chief executives, even though the Company's
stock price increased during fiscal 1996 at a much faster rate than did the
price of its competitors' stock. The Committee also considered that Mr.
Ledecky's leadership, background and skills has enabled the Company to pursue a
very aggressive acquisition program without having to retain and pay substantial
transaction fees to outside investment bankers or brokers.
In light of the foregoing, Mr. Ledecky's expected ongoing contributions to
the Company and to stockholder value, the Committee's assessment of the level of
compensation that Mr. Ledecky could command in the open market, and the
Committee's desire to encourage Mr. Ledecky's continued performance, the
Committee decided to make a substantial prospective change in Mr. Ledecky's
compensation. The Committee chose not to award Mr. Ledecky a cash bonus for
fiscal 1996, but rather to increase his base salary for fiscal 1997 to $950,000,
a level that is closer to amounts paid by the Company's competitors to their
chief executives, and to consider, in the future, incentive cash bonuses and
additional stock awards to compensate him. Mr. Ledecky was not awarded stock
options as a year-end bonus for fiscal 1996 because he previously had received
total options for 250,000 shares during the 1996 calendar year, which is the
limit on the calendar year grants to any one individual under the terms of the
Incentive Plan. If the amendment to this limitation in the Incentive Plan is
approved, the Committee will consider the grant of additional options to Mr.
Ledecky during the current calendar year.
COMPENSATION COMMITTEE:
Edward J. Mathias
John A. Quelch
15
<PAGE>
PROPOSAL 2
ADOPTION OF AMENDMENT TO THE COMPANY'S
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
The Board of Directors has approved and recommends to the stockholders a
proposal (i) to adopt an amendment to Article Four of the Company's Restated
Certificate of Incorporation (the "Certificate of Incorporation") to increase
the number of shares of Common Stock authorized for issuance from 100,000,000
shares to 500,000,000 shares, with a conforming increase in the number of shares
of all classes of stock the Company has authority to issue from 100,500,000
shares to 500,500,000 shares and (ii) to restate the Certificate of
Incorporation to reflect the foregoing amendment.
The Board of Directors recommends your approval of the following Resolution:
RESOLVED, that the first paragraph of Article Four of the
Certificate of Incorporation be amended to read:
The total number of shares of all classes of stock which the
Corporation shall have authority to issue is Five Hundred Million
Five Hundred Thousand (500,500,000) shares, of which Five Hundred
Thousand (500,000) shares, designated as Preferred Stock, shall
have a par value of One Tenth of One Cent ($.001) per share (the
"Preferred Stock"), and Five Hundred Million (500,000,000) shares,
designated as Common Stock, shall have a par value of One Tenth of
One Cent ($.001) per share (the "Common Stock").
PURPOSE OF INCREASING THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
The proposed amendment would increase the number of shares of Common Stock
which the Company is authorized to issue from 100,000,000 to 500,000,000. As of
the Record Date, the Company had shares of Common Stock and no shares of
Preferred Stock outstanding. In addition, as of the Record Date, the Company had
shares reserved for issuance upon exercise of outstanding convertible
subordinated notes, shares reserved for issuance under the Company's
acquisition shelf registration statement (of which over ten million shares are
expected to be issued during the next three months as consideration for
companies that the Company expects to acquire), 6,500,000 shares reserved for
issuance under the Incentive Plan (including upon exercise of outstanding stock
options exercisable for shares), shares reserved for issuance in
connection with previously consummated acquisitions and 500,000 shares reserved
for issuance under the Company's Stock Purchase Plan (of which shares were
reserved for employee purchases made as of June 30, 1996). If the stockholders
approve the proposals to amend the Incentive Plan and adopt the Deferral Plan
and the Directors' Plan, shares will be reserved for issuance under those
plans. If the Deferral Plan and the Directors' Plan are adopted, the Company
will have approximately shares available for issuance.
The additional 400,000,000 shares would be a part of the existing class of
Common Stock and, if and when issued, would have the same rights and privileges
as the shares of Common Stock presently issued and outstanding. The holders of
Common Stock of the Company are not entitled to preemptive rights or cumulative
voting. Holders of the Common Stock are entitled to one vote per share on all
matters voted on by stockholders, including the proposed amendment and
restatement of the Certificate of Incorporation.
The Board of Directors recommends the increase in the number of authorized
shares of Common Stock so that the Board has the flexibility in the future, if
it determines that such action is appropriate in light of market conditions, to
declare stock splits in the form of stock dividends in the future. At present,
the number of the Company's authorized shares severely limits the Board's
ability to declare a stock split, except on very limited bases (such as a
5-for-4 split). The Board believes that a high market price for its Common Stock
may reduce the liquidity of the Common Stock. Therefore, the Board may want to
declare stock splits in the future. The Board has not determined to declare a
stock
16
<PAGE>
split at this time but may do so in the future if it concludes that a stock
split would be in the best interests of the Company and its stockholders. The
market price of the Company's stock on July , 1996 was $ .
The Board also believes that the increase in the authorized shares of Common
Stock is necessary and appropriate because it will enable the Company to
continue to use shares of Common Stock as consideration for acquisitions, for
compensation purposes and for capital raising.
In the opinion of the Board of Directors, having a substantial number of
shares of Common Stock available for future issuance upon action by the Board of
Directors gives the Company greater flexibility in meeting future needs for
stock issuances. Accordingly, the Board of Directors has determined that it is
in the best interests of the Company and its stockholders that the Company's
Certificate of Incorporation be amended to increase the number of authorized
shares.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of a majority of the outstanding shares of Common Stock
is required to approve the adoption of the amendment to Article Four and the
restatement of the Company's Certificate of Incorporation.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
APPROVAL OF THE AMENDMENT TO ARTICLE FOUR AND THE RESTATEMENT OF THE COMPANY'S
CERTIFICATE OF INCORPORATION.
17
<PAGE>
PROPOSAL 3
ADOPTION OF AMENDMENT NO. 2 TO
THE 1994 LONG-TERM INCENTIVE PLAN
The Board of Directors has approved and recommends to the stockholders the
adoption of an amendment to the 1994 Long-Term Incentive Plan (the "Incentive
Plan") which (i) increases the limitation on the number of shares of Common
Stock that may be subject to outstanding awards from 15% to 20% of the total
number of shares of Common Stock outstanding, (ii) increases the annual
(calendar year) per-employee limitation on the number of shares relating to
option grants and other awards from 250,000 to 750,000, and (iii) eliminates the
requirement that the option price for stock options must be at least equal to
the fair market value of the Common Stock on the date of grant. The amendment
will not be effective unless and until stockholder approval is obtained.
In the Board's judgment, the Incentive Plan provides one of the Company's
most important competitive advantages in its acquisition program, as well as a
critical long-term incentive for a broad range of employees. The Company
believes that the Company's policy of granting stock options to a broad base of
employees has provided it with a critical advantage in attracting acquisition
candidates as the market for acquiring office products companies has become
increasingly competitive. The Company does not believe that its major
competitors offer any similar long-term, equity based incentives to a broad
range of employees.
During fiscal 1996, options for a total of 1,479,597 shares of Common Stock
were granted to a total of 774 employees of the Company (other than the
Company's executive officers). A significant portion of these stock option
awards were made to a wide range of non-owner employees of newly acquired
companies. In addition, during fiscal 1996, the Compensation Committee of the
Board of Directors authorized the issuance of stock options for an additional
450,611 shares, to be awarded to employees of newly acquired companies within a
year of the completion of their acquisitions by the Company. Because these stock
options have a ten-year term and vest at a rate of 25% per year after grant, the
Incentive Plan permits the Company to provide its employees at all levels with a
strong incentive to seek increased stockholder value over the long term.
The purpose of these amendments is to provide the Compensation Committee
with maximum flexibility to award long-term, equity-based incentives to a wide
range of employees. It is expected that such flexibility will be critical both
as a part of the Company's ongoing acquisition plan (as a unique attraction that
the Company can offer as an acquiror) and as a part of its policy to encourage
employees at all levels to focus on the long-term growth of stockholder value.
The Board believes that this flexibility in awarding long-term compensation
is important for several reasons. First, it allows for greater use of
equity-based incentives, as opposed to current cash compensation, for managers
and other employees, which, in the Board's judgment, promotes a better alignment
of the interests of managers and stockholders and also encourages key managers
to remain with the Company over an extended period. Second, by increasing the
number of shares that may be awarded under the Incentive Plan, the Board of
Directors seeks to ensure that long-term incentives can continue to be awarded
to a broad range of employees and will remain available for ongoing, strategic
use as an attractive component of the Company's acquisition program. Third, the
Board believes that added flexibility under the Incentive Plan may be necessary
to attract additional senior executives as the Company grows. Fourth, upon
occasion in connection with a major acquisition, management of the Company
believes that it may be able to offer substantial option grants to reduce the
up-front price paid by the Company for the acquired business and/or to encourage
the owners of businesses being acquired to remain employed by the Company for an
extended period of time (where such owners are deemed to be particularly
valuable employees). The Board of Directors expects that annual option grants
for in excess of 250,000 shares or at exercise prices below the market price
will be made only rarely, when special circumstances warrant or demand unique
compensation arrangements, such as in connection with a major acquisition.
18
<PAGE>
DESCRIPTION OF THE INCENTIVE PLAN
The Incentive Plan, as amended and restated, is set forth as Exhibit A to
this Proxy Statement, and the description of the Incentive Plan contained herein
is qualified in its entirety by reference to Exhibit A.
In October 1994, the Board of Directors and the Company's stockholders
approved the Incentive Plan. In 1995, the Board adopted, and the Company's
stockholders approved, Amendment No. 1 to the Incentive Plan. The purpose of the
Incentive Plan is to provide officers, key employees and consultants of the
Company and its subsidiaries with additional incentives by increasing their
ownership interests in the Company. Awards may be granted by the Compensation
Committee of the Board of Directors and may include: (i) options to purchase
shares of Common Stock, including incentive stock options ("ISOs"),
non-qualified stock options or both, which options may contain automatic reload
features; (ii) stock appreciation rights ("SARs"), whether in conjunction with
the grant of stock options or independent of such grant, or stock appreciation
rights that are only exercisable in the event of a change in control of the
Company or upon other events; (iii) performance awards, consisting of a right to
receive either cash in an amount determined with reference to the value of the
Common stock or a fixed dollar amount payable in cash, or a combination of both;
(iv) dividend equivalents, consisting of a right to receive cash, other awards,
or other property equal in value to dividends paid with respect to a specified
number of shares of Common Stock, or other periodic payments; or (v) other
awards not otherwise provided for, the value of which are based in whole or in
part upon the value of the Common Stock. The flexible terms of the Incentive
Plan are intended to, among other things, permit the Compensation Committee to
impose performance conditions with respect to any award, thereby requiring
forfeiture of all or a part of any award if performance objectives are not met,
or linking the time of exercisability or settlement of an award to the
achievement of performance conditions. Awards granted under the Incentive Plan
are not assignable or transferable except by the laws of the descent and
distribution.
The Compensation Committee of the Board of Directors, which administers the
Incentive Plan, has the authority, among other things, to: (i) select the
officers and other key employees and consultants entitled to receive awards
under the Incentive Plan; (ii) determine the form of awards, or combinations
thereof, and whether such awards are to operate on a tandem basis or in
conjunction with other awards; (iii) determine the number of shares of Common
Stock or units or rights covered by an award; and (iv) determine the terms and
conditions of any awards granted under the Incentive Plan, including, any
restrictions or limitations on transfer, any vesting schedules or the
acceleration thereof and any forfeiture provisions or waivers thereof. The
exercise price at which shares of Common Stock may be purchased pursuant to the
grant of stock options under the Incentive Plan is required to be determined by
the Compensation Committee at the time of grant in its discretion, which
discretion includes, subject to the approval of Amendment No. 2 to the Incentive
Plan ("Amendment No. 2"), the ability to set an exercise price that is below the
fair market value of the shares of Common Stock covered by such grant at the
time of grant.
Subject to the approval of Amendment No. 2, the maximum number of shares of
Common Stock that may be subject to outstanding awards, determined immediately
after the grant of any award, will be equal to 20% of the aggregate number of
shares of the Company's Common Stock outstanding at such time. In addition,
subject to the approval of Amendment No. 2, no individual may receive awards in
any one calendar year relating to more than 1,000,000 shares of Common Stock.
The Incentive Plan may be amended, altered, suspended, discontinued, or
terminated by the Board of Directors without stockholder approval unless such
approval is required by law or regulation or under the rules of any stock
exchange or automated quotation system on which the Common Stock is then listed
or quoted. Thus, stockholder approval will not necessarily be required for
amendments which might increase the cost of the plan or broaden eligibility.
Stockholder approval will not be
19
<PAGE>
deemed to be required under laws or regulations that condition favorable
treatment of participants on such approval, although the Board of Directors may,
in its discretion, seek stockholder approval in any circumstance in which it
deems such approval advisable.
FEDERAL TAX CONSEQUENCES
The following is a brief description of the federal income tax consequences
generally arising with respect to awards that may be granted under the Incentive
Plan. This discussion is intended for the information of stockholders
considering how to vote at the Annual Meeting and not as tax guidance to
individuals who participate in the Incentive Plan.
The grant of an option or SAR (including a stock-based award in the nature
of a purchase right) will create no tax consequences for the grantee or the
Company. A grantee will not have taxable income upon exercising an ISO (except
that the alternative minimum tax may apply) and the Company will receive no
deduction at that time. Upon exercising an option other than an ISO (including a
stock-based award in the nature of a purchase right), the participant must
generally recognize ordinary income equal to the difference between the exercise
price and fair market value of the freely transferable and nonforfeitable stock
received. In each case, the Company will be entitled to a deduction equal to the
among recognized as ordinary income by the participant.
A participant's disposition of shares acquired upon the exercise of an
option, SAR or other stock-based award in the nature of a purchase right
generally will result in short-term capital gain or loss measured by the
difference between the sale price and the participant's tax basis in such shares
(or the exercise price of the option in the case of shares acquired by exercise
of an ISO and held for the applicable ISO holding periods). Generally, there
will be no tax consequences to the Company in connection with a disposition of
shares acquired under an option or other award, except that the Company will be
entitled to a deduction (and the participant will recognize ordinary taxable
income) if shares acquired upon exercise of an ISO are disposed of before the
applicable ISO holding periods have been satisfied.
With respect to awards granted under the Incentive Plan that may be settled
either in cash or in stock or other property that is either not restricted as to
transferability or not subject to a substantial risk of forfeiture, the
participant must generally recognize ordinary income equal to the cash or the
fair market value of stock or other property received. The Company will be
entitled to a deduction for the same amount. With respect to awards involving
stock or other property that is restricted as to transferability and subject to
a substantial risk of forfeiture, the participant must generally recognize
ordinary income equal to the fair market value of the shares or other property
received at the first time the shares or other property become transferable or
not subject to a substantial risk of forfeiture, whichever occurs earlier. The
Company will be entitled to a deduction in an amount equal to the ordinary
income recognized by the participant. A participant may elect to be taxed at the
time of receipt of shares or other property rather than upon lapse of
restrictions on transferability or the substantial risk of forfeiture, but if
the participant subsequently forfeits such shares or property he would not be
entitled to any tax deduction, including a capital loss, for the value of the
shares or property he would not be entitled to any tax deduction, including a
capital loss, for the value of the shares or property on which he previously
paid tax. Such election must be made and filed with the Internal Revenue Service
within thirty days of the receipt of the shares or other property.
Different tax rules may apply with respect to participants who are subject
to Section 16 of the Exchange Act when they acquire stock in a transaction
deemed to be a nonexempt purchase under the statute, upon exercise of a
derivative security within six months after the exempt grant of such derivative
security under the Incentive Plan or in other kinds of transactions under the
Incentive Plan (such as payment of the exercise price of an option by surrender
of previously acquired common stock).
Section 162(m) of the Internal Revenue Code generally disallows a public
company's tax deduction for compensation to the chief executive office and the
four other most highly compensated
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executive officers in excess of $1 million. Compensation that qualifies as
"performance-based compensation" is excluded from the $1 million deductibility
cap, and therefore remains fully deductible by the company that pays it. The
Company intends that options granted with an exercise price at least equal to
100% of fair market value of the underlying stock at the date of grant, and
other awards the settlement of which is conditioned upon achievement of
performance goals (based on performance criteria described above), will qualify
as such "performance-based compensation," although other awards under the
Incentive Plan may not so qualify.
No awards have been granted pursuant to Amendment No. 2 to the Incentive
Plan. Future awards that may in the future be received by or allocated to the
named executive officers, or to such other groups of persons, cannot be
determined at this time.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of a majority of the outstanding shares of Common Stock
present in person or represented by proxy at the Annual Meeting and entitled to
vote is required to approve the adoption of Amendment No. 2 to the Incentive
Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
ADOPTION OF AMENDMENT NO. 2 TO THE COMPANY'S LONG-TERM INCENTIVE PLAN.
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PROPOSAL 4
APPROVAL OF THE EXECUTIVE DEFERRED COMPENSATION PLAN
The Board of Directors has approved and recommends to the stockholders a
proposal to approve and ratify the adoption of the Executive Deferred
Compensation Plan (the "Deferral Plan"). The Deferral Plan is intended to permit
key employees of the Company and its subsidiaries to convert a portion of their
cash salaries and/or bonuses into shares of Common Stock (or stock options), as
well as to provide them with a tax benefit by allowing them to defer receipt of
their compensation. The Board believes that the Deferral Plan will enhance its
ability to retain and recruit key employees without increasing costs to the
Company. The Board also considers the Deferral Plan to be a desirable complement
to the Company's general goal of encouraging employees to be compensated through
long-term, equity based incentives that tend to align the interests of the
Company's employees and its stockholders.
DESCRIPTION OF THE PLAN
The following summary of the material terms of the Deferral Plan is
qualified in its entirety by reference to the full text of the Deferral Plan,
attached hereto as Exhibit B.
The Deferral Plan will be administered by the Board of Directors of the
Company (or a committee thereof). The Deferral Plan will enable key employees of
the Company or its subsidiaries who are selected for participation thereunder to
elect to defer receipt of all or some portion of their salary or bonus. The
Board may permit or require that some or all of the deferred amounts be
converted to Common Stock, deferred stock, stock options, or some other
equity-based instrument.
To the extent the deferred amount is not converted into an equity-based
instrument, it will be credited to a bookkeeping account, which account will be
credited with earnings by reference to a notional investment or investments as
determined by the Board, or, if permitted by the Board, as determined by plan
participants. The Board may permit such deferrals to be deposited in trust, in
which case amounts credited will be determined by reference to actual
investments of the trust. In any case, the deferred amounts, and earnings
credited thereto (whether or not deposited in trust), will generally remain
subject to the claims of the Company's creditors.
To the extent deferred amounts are to be converted into equity-based awards,
the Board will have the discretion to determine the form and amount of the
award, although it is anticipated that such awards will be granted in a form and
amount that approximate the value of the amount deferred. The award may take the
form of any equity-based instrument that is permitted to be issued under the
Incentive Plan, including, but not limited to, deferred stock and stock options.
Awards issued in connection with the deferral of compensation will generally be
non-forfeitable.
If approved, a total of 4,000,000 shares of Common Stock will be reserved
and available for issuance under the Deferral Plan. Such shares may be
authorized and unissued shares or treasury shares. If any award expires without
having been exercised in full, the shares subject to the unexercised portion of
the award will again be available for issuance under the Deferral Plan. The
aggregate number and kind of shares issuable under the Deferral Plan and the
number and kind of shares subject to outstanding awards and the exercise price
thereof will be appropriately adjusted by the Board in the event of a
recapitalization, reorganization, merger, consolidation, spin-off, combination,
repurchase, exchange of shares or other securities of the Company, stock split
or reverse split, stock dividend, certain other extraordinary dividends,
liquidation, dissolution, or other similar corporate transaction or event
affecting Common Stock, in order to prevent dilution or enlargement of rights
under the Deferral Plan.
The Deferral Plan may be amended, altered, suspended, discontinued, or
terminated by the Board of Directors without further stockholder approval,
unless such approval is required by law or regulation or under the rules of the
stock exchange or automated quotation system on which the Common
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Stock is then listed or quoted. Thus, stockholder approval will not necessarily
be required for amendments which might increase the cost of the plan or broaden
eligibility. Stockholder approval will not be deemed to be required under laws
or regulations that condition favorable treatment of participants on such
approval, although the Board of Directors may, in its discretion, seek
stockholder approval in any circumstance in which it deems such approval
advisable.
The Deferral Plan will become effective upon its approval by stockholders.
Unless earlier terminated by the Board, the Deferral Plan will terminate when no
shares remain available under the Deferral Plan and the Company and participants
have no further rights and obligations under the Deferral Plan.
It is not possible at present to predict the number of shares that will be
issuable under the Deferral Plan to key employees in connection with the
conversion of their cash compensation.
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief description of the federal income tax consequences
generally arising with respect to options that may be granted and acquisitions
of stock or deferred stock in lieu of fees under the Deferral Plan. This
discussion is intended for the information of stockholders considering how to
vote at the Annual Meeting and not as tax guidance to employees who participate
in the Deferral Plan.
If a key employee elects to defer any portion of his or her cash
compensation, he or she will not recognize ordinary income at the date the
compensation would otherwise have been paid or as a result of the crediting of
earnings on deferred amounts or the conversion of such amounts into an equity-
based award. With respect to amounts not converted to an equity-based award,
such amounts will be taxable as ordinary income upon distribution of such
amounts to the key employee. With respect to amounts that are so converted, the
tax consequences will depend upon the type of award. These tax consequences are
described above under the discussion of the Proposal 3 relating to the Incentive
Plan. Subject to Section 162(m) of the Internal Revenue Code, the Company is
generally entitled to a tax deduction at such time and in such amount that
corresponds to the employee's inclusion of ordinary income.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of a majority of the outstanding shares of Common Stock
present in person or represented by proxy at the Annual Meeting and entitled to
vote is required to approve the adoption of the Deferral Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
ADOPTION OF THE DEFERRAL PLAN.
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PROPOSAL 5
APPROVAL OF THE 1996 NON-EMPLOYEE DIRECTORS' STOCK PLAN
The Board of Directors has approved and recommends to the stockholders a
proposal to approve and ratify the adoption of the 1996 Non-Employee Directors'
Stock Plan (the "Directors' Plan"). The Directors' Plan is intended to promote
ownership by non-employee Directors of a greater proprietary interest in the
Company, thereby aligning such Directors' interests more closely with the
interests of stockholders of the Company, and to assist the Company in
attracting and retaining highly qualified persons to serve as non-employee
Directors. The Directors' Plan will not be effective unless or until stockholder
approval is obtained.
Non-employee Directors are not eligible to receive awards under the
Incentive Plan. The Board of Directors has determined that it would be in the
best interests of the Company to grant stock options on a discretionary basis to
non-employee Directors. In addition, the Board concluded that non-employee
Directors who might desire to increase their proprietary interest in the Company
should be permitted to elect to receive cash fees in the form of Common Stock.
The Board therefore adopted the Directors' Plan to provide for such
discretionary option grants and elective acquisitions of Common Stock (including
deferred stock, as described below).
DESCRIPTION OF THE PLAN
The following summary of the material terms of the Directors' Plan is
qualified in its entirety by reference to the full text of the Directors' Plan,
attached hereto as Exhibit C.
The Directors' Plan generally provides for an initial grant to each person
who becomes a Director and who is not an employee of the Company or any
subsidiary of a stock option to purchase 21,000 shares of Common Stock, and in
each subsequent year that he is re-elected, if any, an annual grant with respect
to 6,000 shares of Common Stock. This year only, each non-employee who served as
a director on the day before the Annual Meeting, and who is elected at the
Annual Meeting to continue to serve as a director, shall be granted, on the date
of the Annual Meeting, a stock option to purchase an additional 6,000 shares of
Common Stock (for a total of 27,000 options).
Stock options granted under the Directors' Plan are non-qualified stock
options having an exercise price equal to 100% of the fair market value of the
Common Stock at the date of grant. Directors are not required to pay any cash
consideration at the time of grant of options. A Director may pay the exercise
price of an option in cash or by surrendering previously acquired shares of
Common Stock.
Stock options granted under the Directors' Plan become exercisable as to 50%
of the shares of Common Stock subject to such option on each six-month
anniversary of the date of grant, although a Directors' option will become
immediately exercisable if the optionee ceases serving as a Director due to
death or upon a Change in Control, as defined in the Directors' Plan. Such
options will expire at the earlier of (i) ten years after the date of grant, or
(ii) one year after the optionee ceases serving as a Director; PROVIDED,
HOWEVER, that a Director's option may be exercised after the Director ceases to
serve as a director for any reason only to the extent that the option was
exercisable at the date he or she ceased to be a director. Unless otherwise
determined by the Board, options generally are not transferable by the optionee
otherwise than by will or by the laws of descent and distribution or to a
designated beneficiary in the event of death, and are exercisable during the
Director's lifetime only by the Director.
The Directors' Plan also will permit a non-employee Director to elect to
receive fees otherwise payable in cash in the form of Common Stock, or defer
receipt of such fees in the form of "deferred stock." The Director may make such
election for up to 100% of the fees otherwise payable to him or her, including
annual retainer fees, fees for service on a Board committee, and fees for
service as chairman of a Board committee. If a Director elects to receive fees
in the form of Common Stock, the Company will issue to the Director or to an
account designated by the Director a number of shares
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having an aggregate fair market value equal to the fees (or as nearly as
possible equal to the fees) that would have been payable at that date but for
the Director's election to receive shares instead. If a Director elects to
receive fees in the form of deferred stock, the Company will credit a deferral
account established for the Director with a number of shares of deferred stock
equal to the number of shares (including fractional shares) having an aggregate
fair market value at that date equal to the fees that otherwise would have been
payable at such date but for Director's election to receive deferred stock
instead. When, as, and if dividends are declared and paid on Common Stock,
dividend equivalents will be credited on deferred stock then credited to a
Director's account, which amounts generally will be deemed to be reinvested in
additional deferred stock. A Director's deferred stock account will be settled,
at such time or times as may be elected by the Director in his or her original
deferral election form, by delivering one share of Common Stock for each share
of deferred stock then credited to the account and subject to such settlement,
together with cash in lieu of any fractional share. Shares of Common Stock and
deferred stock acquired under the Directors' Plan will be non-forfeitable.
A total of 750,000 shares of Common Stock will be reserved and available for
issuance under the Directors' Plan if it is approved. Such shares may be
authorized and unissued shares or treasury shares. If any stock option expires
without having been exercised in full, the shares subject to the unexercised
portion of the option will again be available for issuance under the Directors'
Plan. The aggregate number and kind of shares issuable under the Directors'
Plan, the number and kind of shares subject to outstanding options and the
exercise price thereof, and the number and kind of shares to be issued in
settlement of deferred stock will be appropriately adjusted by the Board in the
event of a recapitalization, reorganization, merger, consolidation, spin-off,
combination, repurchase, exchange of shares or other securities of the Company,
stock split or reverse split, stock dividend, certain other extraordinary
dividends, liquidation, dissolution, or other similar corporate transaction or
event affecting Common Stock, in order to prevent dilution or enlargement of
Directors' rights under the Directors' Plan.
The Directors' Plan will be administered by the Board of Directors, provided
that any action by the Board will be taken only if approved by vote of a
majority of the Directors who are not then eligible to participate in the
Directors' Plan. The Directors' Plan may be amended, altered, suspended,
discontinued, or terminated by the Board without further stockholder approval,
unless such approval is required by law or regulation or under the rules of the
stock exchange or automated quotation system on which the Common Stock is then
listed or quoted or the Board, in its discretion, determines to seek stockholder
approval in any circumstance in which it deems such approval advisable. Thus,
stockholder approval will not necessarily be required for amendments which might
increase the cost of the plan or broaden eligibility.
The Directors' Plan will become effective upon its approval by stockholders.
Unless earlier terminated by the Board, the Directors' Plan will terminate when
no shares remain available under the Directors' Plan and the Company and
Directors have no further rights and obligations under the Directors' Plan.
The following table sets forth the number of options that are to be granted
on the date of the Annual Meeting to non-employee Directors as a group under the
Directors' Plan assuming all nominees for election are in fact elected. It is
not possible at present to predict the number of shares that will be issuable
under the Directors' Plan to non-employee directors as Common Stock or in
connection with deferred stock in lieu of fees.
NEW PLAN BENEFITS
NON-EMPLOYEE DIRECTORS' STOCK PLAN
<TABLE>
<CAPTION>
NAME AND POSITION NUMBER OF OPTIONS
- -------------------------------------------------------------------------- ------------------
<S> <C>
Non-employee directors as a group (4 persons)............................. 108,000
</TABLE>
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<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief description of the federal income tax consequences
generally arising with respect to options that may be granted and acquisitions
of stock or deferred stock in lieu of fees under the Directors' Plan. This
discussion is intended for the information of stockholders considering how to
vote at the Annual Meeting and not as tax guidance to Directors who participate
in the Directors' Plan.
The grant of an option will create no tax consequences for the optionee or
the Company. Upon exercise of an option, the optionee must generally recognize
ordinary income equal to the fair market value of the Common Stock acquired on
the date of exercise minus the exercise price, and the Company will be entitled
to a deduction equal to the amount recognized as ordinary income by the
optionee. A disposition of shares acquired upon the exercise of an option
generally will result in short-term or long-term capital gain or loss measured
by the difference between the sale price and the participant's tax basis (i.e.,
the exercise price plus the amount recognized as ordinary income) in such
shares. Generally, there will be no tax consequences to the Company in
connection with a disposition of option shares.
If a Director acquires Common Stock in lieu of cash fees, he or she will
recognize ordinary income equal to the fair market value of the Common Stock
acquired on the date of acquisition. If a Director acquires deferred stock in
lieu of cash fees, he or she will not recognize ordinary income at the date the
fees would otherwise have been paid or as a result of the crediting of deferred
stock to his or her account (including upon deemed reinvestment of dividend
equivalents). The Director will, however, at the date of settlement of the
deferred stock by issuance of Common Stock to the Director, recognize ordinary
income equal to the fair market value of the Common Stock acquired at that date.
The Company is generally entitled to a tax deduction at such time and in such
amount that corresponds to the Director's inclusion of ordinary income.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of a majority of the outstanding shares of Common Stock
present in person or represented by proxy at the Annual Meeting and entitled to
vote is required to approve the adoption of the Directors' Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
ADOPTION OF THE DIRECTORS' PLAN.
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PROPOSAL 6
ADOPTION OF AMENDMENT NO. 2 TO
THE EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors has approved and recommends to the stockholders the
adoption of an amendment to the U.S. Office Products Company 1994 Employee Stock
Purchase Plan (the "Stock Purchase Plan") which increases the limitation on the
number of shares of Common Stock available for issuance under the Stock Purchase
Plan from 500,000 to 1,000,000. The amendment will not be effective unless or
until stockholder approval is obtained. Given the rapid growth of the Company
and its subsidiaries, and the consequent expansion of the employee workforce,
the Board determined that the number of shares of Common Stock currently
available for issuance under the Stock Purchase Plan would soon be insufficient.
The Board considers the Stock Purchase Plan, like the Incentive Plan, to be an
important attraction for prospective employees as the Company competes for
acquisitions in the office products business. Since November 1, 1995, when the
Stock Purchase Plan was implemented, through April 30, 1996, a total of 882 of
the Company's employees participated in the Stock Purchase Plan and have
acquired a total of 68,645 shares of Common Stock.
DESCRIPTION OF THE STOCK PURCHASE PLAN
The Stock Purchase Plan, as amended and restated, is set forth as Exhibit D
to this Proxy Statement, and the description of the Stock Purchase Plan
contained herein is qualified in its entirety by reference to Exhibit D.
Effective November 1, 1995, the Board of Directors and the Company's
stockholders approved the Stock Purchase Plan. In 1996, the Board adopted
Amendment No. 1 to the Stock Purchase Plan. The purpose of the Plan is to
encourage employee participation in the ownership of the Company by offering
eligible employees of the Company and its subsidiaries an opportunity to
purchase Common Stock of the Company at a discount through payroll deductions.
The Board of Directors believes that employee participation in ownership is to
the combined benefit of the employees, the Company, its subsidiaries and the
Company's stockholders. Accordingly, the Board of Directors has unanimously
adopted, and proposes that the stockholders approve, the Stock Purchase Plan.
The Stock Purchase Plan will not be effective unless stockholder approval is
obtained.
Under the Stock Purchase Plan, eligible employees of the Company and its
subsidiaries may participate by electing to have payroll deductions made in an
amount of not less than 1% nor more than 10% of the employee's compensation,
provided that the Market Value (as defined in the Stock Purchase Plan) of Common
Stock (determined at the beginning of each Purchase Period) purchased in any
year may not exceed $25,000. All permanent employees will be eligible to
participate upon completion of 90 days of continuing employment. However, any
beneficial owner of 5% or more of the Common Stock shall not be eligible to
participate.
Eligible employees may elect to participate by delivering a completed
purchase agreement prior to the beginning of a fiscal year quarter, referred to
in the Stock Purchase Plan as a "Purchase Period". At the end of each Purchase
Period, each participant's payroll deductions are applied to acquire Common
Stock at a price equal to 85% of the Market Value (as defined in the Stock
Purchase Plan) of the Common Stock on either the first day or the last day of
the Purchase Period, whichever is lower. Shares purchased under the Stock
Purchase Plan may not be sold or otherwise disposed of for a period of one year
from the last day of the Purchase Period (the "Exercise Date").
Employees may voluntarily withdraw from participation in the Stock Purchase
Plan by notifying the Company at such time in advance as the committee
designated to administer the Stock Purchase Plan shall determine. An employee's
participation shall cease upon termination of employment for any reason, or
otherwise if such employee no longer qualifies as an eligible employee. Upon any
withdrawal from participation, all payroll deductions not applied to purchase
Common Stock will be returned to the employee.
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<PAGE>
Subject to the approval of Amendment No. 2 to the Stock Purchase Plan, the
number of shares of Common Stock reserved for purchase under the Stock Purchase
Plan is 1,000,000. Except pursuant to an adjustment as a result of a change in
the Company's capital structure, the number of shares of Common Stock reserved
for purchase under the Stock Purchase Plan will not be decreased as a result of
a decrease in the number of shares outstanding. Such reserved shares may be made
available by the Company from either authorized and unissued shares or treasury
shares.
The Stock Purchase Plan may be amended, altered, suspended, discontinued, or
terminated by the Board of Directors without further stockholder approval,
unless such approval is required by law or regulation or under the rules of the
stock exchange or automated quotation system on which the Common Stock is then
listed or quoted. Thus, stockholder approval will not necessarily be required
for amendments which might increase the cost of the plan or broaden eligibility.
Stockholder approval will not be deemed to be required under laws or regulations
that condition favorable treatment of participants on such approval, although
the Board of Directors may, in its discretion, seek stockholder approval in any
circumstance in which it deems such approval advisable.
FEDERAL INCOME TAX CONSIDERATIONS
The Stock Purchase Plan is intended to qualify as an "employee stock
purchase plan" within the meaning of Section 423 of the Internal Revenue Code,
and it is intended to comply with the provisions of Sections 421 and 424 of the
Internal Revenue Code as well.
Under the Internal Revenue Code as currently in effect, there are no federal
income tax consequences in connection with the acquisition of Common Stock
pursuant to the Stock Purchase Plan until the year in which the participant
sells or otherwise disposes of the shares, or, if earlier, the year in which the
participant dies. However, social security (FICA) taxes are applicable on each
Exercise Date to the amount of that the purchase price is discounted from the
fair market value of the shares. If the shares are sold or otherwise disposed of
prior to a participant's death, then the income tax consequences will depend
upon whether or not the shares are sold within two years after the applicable
Offering Date.
If the shares are sold or disposed of more than two years after the
applicable Offering Date, then the participant will recognize ordinary income in
an amount equal to the lesser of (I) 15% of the fair market value of the shares
on the applicable Offering Date, or (ii) the amount by which the fair market
value of the shares at the time of such sale or disposition exceeds the amount
paid for the shares, and the Company will not be entitled to any income tax
deduction. If the shares are sold or otherwise disposed of within two years
after the applicable Offering Date, a participant will generally recognize
ordinary income in the amount by which the fair market value of the shares on
the applicable Exercise Date exceeds the amount paid for the shares, and the
Company will be entitled to a corresponding income tax deduction.
In either case, the participant may also have a capital gain or loss
(long-term or short-term depending upon the length of time the shares were held)
in an amount equal to the difference between the amount realized upon the sale
and the participant's adjusted tax basis in the shares (the amount paid for the
shares plus the amount of ordinary income which the participant must recognize
at the time of the sale).
In the event of the death of a participant prior to a sale or other
disposition of the shares (whether or not within two years after the applicable
Offering Date), a participant will be subject to ordinary income tax in an
amount equal to the lesser of (i) 15% of the fair market value of the shares on
the applicable Offering Date, or (ii) the amount, if any, by which the fair
market value of the shares as of the date of death exceeds the amount actually
paid for the shares.
No awards have been granted pursuant to Amendment No. 2 to the Stock
Purchase Plan. Future awards that may in the future be received by or allocated
to the named executive officers, or to such other groups of persons, cannot be
determined at this time.
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<PAGE>
VOTE REQUIRED FOR APPROVAL
The affirmative vote of a majority of the outstanding shares of Common Stock
present in person or represented by proxy at the Annual Meeting and entitled to
vote is required to approve the adoption of amendment to the Stock Purchase
Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
ADOPTION OF AMENDMENT NO. 2 TO THE COMPANY'S EMPLOYEE STOCK PURCHASE PLAN.
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PROPOSAL 7
APPOINTMENT OF INDEPENDENT AUDITORS
Upon recommendation of the Audit Committee of the Board of Directors, and
subject to ratification by the stockholders, the Board of Directors has
appointed Price Waterhouse LLP as independent public accountants to examine the
Company's consolidated financial statements for the fiscal year ending April 30,
1997. Price Waterhouse LLP has served as the Company's independent accountants
since its formation in October 1994. Representatives of Price Waterhouse LLP are
expected to be present at the Annual Meeting and will have the opportunity to
make a statement, if they so desire, and to respond to appropriate questions
from those attending the meeting.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of a majority of the outstanding shares of Common Stock
present in person or represented by Proxy at the Annual Meeting and entitled to
vote is required to ratify the appointment of the Company's independent
accountants.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF PRICE WATERHOUSE LLP AS INDEPENDENT
ACCOUNTANTS TO EXAMINE THE COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE
1997 FISCAL YEAR.
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<PAGE>
CERTAIN TRANSACTIONS
In connection with the acquisition by the Company of businesses, the Company
may issue shares of Common Stock to persons who become Directors, executive
officers or holders of 5% of the Common Stock of the Company. During the 1996
fiscal year, the Company issued shares of Common Stock as consideration for
shares of the businesses sold to the Company by the following persons who became
directors of the Company: Mr. Copenhaver -- 116,906 shares; Mr. Gezon -- 119,512
shares; and Mr. Phillips -- 1,333,857 shares. In addition, in February and June
1996, the Company issued an aggregate of 2,200,145 shares of Common Stock
(equivalent to [6.4]% of the outstanding shares as of the Record Date) to Eric
Watson, who is the president of the Company's international division, as
consideration for his interests in Blue Star Group Limited ("Blue Star"). The
Company acquired 51% of the shares of stock of Blue Star in February 1996 for
$10 million in cash and 1,212,121 shares of Common Stock with a market value of
$20 million and acquired the remaining 49% of the shares of stock of Blue Star
in June 1996 in exchange for 1,052,632 shares of Common Stock.
The Company leases office, warehouse and retail store space from two
partnerships, a principal partner of which is Mr. Kuyers, a director of the
Company. The Company believes that such leases are on terms not less favorable
than would be obtainable in an arm's-length transaction from an unaffiliated
third party. The amounts paid to these partnerships by The H.H. West Company, a
wholly owned subsidiary of the Company, for the fiscal 1996 was approximately
$406,900, and, pursuant to the terms of the lease agreement, will increase by
five percent (5%) for fiscal 1997.
Mr. Phillips entered into an employment agreement with the Company on August
2, 1995 pursuant to which he is paid $24,000 per year for consulting services
rendered to the Company in connection with acquisitions and the operations of
Mills Morris Arrow, Inc., a wholly owned subsidiary of the Company.
SUBMISSION OF STOCKHOLDER PROPOSALS
Any proposal to be presented by a stockholder at the Company's 1996 Annual
Meeting of Stockholders must be received by the Company no later than May 10,
1997, so that it may be considered by the Company for inclusion in its proxy
statement and form of proxy relating to that meeting.
OTHER MATTERS
The Board of Directors knows of no matters that are expected to be presented
for consideration at the Annual Meeting other than those described in this proxy
statement. Should any other matter properly come before the Annual Meeting,
however, the persons named in the form of proxy accompanying this proxy
statement will vote all shares represented by proxies in accordance with their
best judgment on such matters.
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EXHIBIT A
U.S. OFFICE PRODUCTS COMPANY
AMENDED AND RESTATED
1994 LONG-TERM INCENTIVE PLAN
1. PURPOSE. The purpose of this 1994 Long-Term Incentive Plan (the "Plan")
of U.S. Office Products Company, a Delaware corporation (the "Company"), is to
advance the interests of the Company and its stockholders by providing a means
to attract, retain, and reward directors, officers and other key employees and
consultants of the Company and its subsidiaries (including consultants providing
services of substantial value) and to enable such persons to acquire or increase
a proprietary interest in the Company, thereby promoting a closer identity of
interests between such persons and the Company's stockholders.
2. DEFINITIONS. The definitions of awards under the Plan, including
Options, SARs (including Limited SARs), Restricted Stock, Deferred Stock, Stock
granted as a bonus or in lieu of other awards, Dividend Equivalents, and Other
Stock-Based Awards, are set forth in Section 6 of the Plan. Such awards,
together with any other right or interest granted to a Participant under the
Plan, are termed "Awards." For purposes of the Plan, the following additional
terms shall be defined as set forth below:
(a) "AWARD AGREEMENT" means any written agreement, contract, or other
instrument or document evidencing an Award.
(b) "BENEFICIARY" shall mean the person, persons, trust, or trusts which
have been designated by a Participant in his or her most recent written
beneficiary designation filed with the Committee to receive the benefits
specified under this Plan upon such Participant's death or, if there is no
designated Beneficiary or surviving designated Beneficiary, then the person,
persons, trust, or trusts entitled by will or the laws of descent and
distribution to receive such benefits.
(c) "BOARD" means the Board of Directors of the Company.
(d) A "CHANGE IN CONTROL" shall be deemed to have occurred if:
(i) any person, other than the Company or an employee benefit plan of
the Company, acquires directly or indirectly the Beneficial Ownership (as
defined in Section 13(d) of the Securities Exchange Act of 1934, as
amended) of any voting security of the Company and immediately after such
acquisition such Person is, directly or indirectly, the Beneficial Owner
of voting securities representing 50% or more of the total voting power
of all of the then-outstanding voting securities of the Company;
(ii) the individuals (A) who, as of the closing date of the Company's
initial public offering, constitute the Board of Directors of the Company
(the "Original Directors") or (B) who thereafter are elected to the Board
of Directors of the Company and whose election, or nomination for
election, to the Board of Directors of the Company was approved by a vote
of at least two-thirds (2/3) of the Original Directors then still in
office (such directors becoming "Additional Original Directors"
immediately following their election) or (C) who are elected to the Board
of Directors of the Company and whose election, or nomination for
election, to the Board of Directors of the Company was approved by a vote
of at least two-thirds (2/3) of the Original Directors and Additional
Original Directors then still in office (such directors also becoming
"Additional Original Directors" immediately following their election)
(such individuals being the "Continuing Directors"), cease for any reason
to constitute a majority of the members of the Board of Directors of the
Company;
(iii) the stockholders of the Company shall approve a merger,
consolidation, recapitalization, or reorganization of the Company, a
reverse stock split of outstanding voting securities, or consummation of
any such transaction if stockholder approval is not sought or obtained,
other than any such transaction which would result in at least 75% of the
total voting power represented by the voting securities of the surviving
entity outstanding immediately after such transaction being Beneficially
Owned by at least 75% of the holders of outstanding
<PAGE>
voting securities of the Company immediately prior to the transaction,
with the voting power of each such continuing holder relative to other
such continuing holders not substantially altered in the transaction; or
(iv) the stockholders of the Company shall approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by
the Company of all or a substantial portion of the Company's assets
(i.e., 50% or more of the total assets of the Company).
(e) "CODE" means the Internal Revenue Code of 1986, as amended from time
to time. References to any provision of the Code shall be deemed to include
regulations thereunder and successor provisions and regulations thereto.
(f) "COMMITTEE" means the Compensation Committee of the Board, or such
other Board committee as may be designated by the Board to administer the
Plan; PROVIDED, HOWEVER, that to the extent necessary to comply with Rule
16b-3, the Committee shall consist of two or more directors, each of whom is
a "disinterested person" within the meaning of Rule 16b-3.
(g) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time. References to any provision of the Exchange Act shall be
deemed to include rules thereunder and successor provisions and rules
thereto.
(h) "FAIR MARKET VALUE" means, with respect to Stock, Awards, or other
property, the fair market value of such Stock, Awards, or other property
determined by such methods or procedures as shall be established from time
to time by the Committee, provided, however, that (i) if the Stock is listed
on a national securities exchange or quoted in an interdealer quotation
system, the Fair Market Value of such Stock on a given date shall be based
upon the last sales price or, if unavailable, the average of the closing bid
and asked prices per share of the Stock on such date (or, if there was no
trading or quotation in the Stock on such date, on the next preceding date
on which there was trading or quotation) as provided by one of such
organizations, (ii) the "fair market value" of Stock on the date on which
shares of Stock are first issued and sold pursuant to a registration
statement filed with and declared effective by the Securities and Exchange
Commission shall be the Initial Public Offering price of the shares so
issued and sold, as set forth in the first final prospectus used in such
offering and (iii) the "fair market value" of Stock prior to the date of the
Initial Public Offering shall be as determined by the Board of Directors.
(i) "INITIAL PUBLIC OFFERING" shall mean an initial public offering of
shares of Stock in a firm commitment underwriting registered with the
Securities and Exchange Commission in compliance with the provisions of the
1933 Act.
(j) "ISO" means any Option intended to be and designated as an
incentive stock option within the meaning of Section 422 of the Code.
(k) "NON-EMPLOYEE DIRECTOR" shall mean a member of the Board who is not
otherwise an employee of the Company or any subsidiary.
(l) "PARTICIPANT" means a person who, at a time when eligible under
Section 5 hereof, has been granted an Award under the Plan.
(m) "RULE 16B-3" means Rule 16b-3, as from time to time in effect and
applicable to the Plan and Participants, promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act.
(n) "STOCK" means the Common Stock, $.01 par value, of the Company and
such other securities as may be substituted for Stock or such other
securities pursuant to Section 4.
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3. ADMINISTRATION.
(a) AUTHORITY OF THE COMMITTEE. The Plan shall be administered by the
Committee. The Committee shall have full and final authority to take the
following actions, in each case subject to and consistent with the
provisions of the Plan:
(i) to select Participants to whom Awards may be granted;
(ii) to determine the type or types of Awards to be granted to each
Participant;
(iii) to determine the number of Awards to be granted, the number of
shares of Stock to which an Award will relate, the terms and conditions
of any Award granted under the Plan (including, but not limited to, any
exercise price, grant price, or purchase price, any restriction or
condition, any schedule for lapse of restrictions or conditions relating
to transferability or forfeiture, exercisability, or settlement of an
Award, and waivers or accelerations thereof, and waivers of or
modifications to performance conditions relating to an Award, based in
each case on such considerations as the Committee shall determine), and
all other matters to be determined in connection with an Award;
(iv) to determine whether, to what extent, and under what
circumstances an Award may be settled, or the exercise price of an Award
may be paid, in cash, Stock, other Awards, or other property, or an Award
may be cancelled, forfeited, or surrendered;
(v) to determine whether, to what extent, and under what
circumstances cash, Stock, other Awards, or other property payable with
respect to an Award will be deferred either automatically, at the
election of the Committee, or at the election of the Participant;
(vi) to prescribe the form of each Award Agreement, which need not be
identical for each Participant;
(vii) to adopt, amend, suspend, waive, and rescind such rules and
regulations and appoint such agents as the Committee may deem necessary
or advisable to administer the Plan;
(viii) to correct any defect or supply any omission or reconcile any
inconsistency in the Plan and to construe and interpret the Plan and any
Award, rules and regulations, Award Agreement, or other instrument
hereunder; and
(ix) to make all other decisions and determinations as may be required
under the terms of the Plan or as the Committee may deem necessary or
advisable for the administration of the Plan.
(b) MANNER OF EXERCISE OF COMMITTEE AUTHORITY. Unless authority is
specifically reserved to the Board under the terms of the Plan, the
Company's Certificate of Incorporation or Bylaws, or applicable law, the
Committee shall have sole discretion in exercising authority under the Plan.
Any action of the Committee with respect to the Plan shall be final,
conclusive, and binding on all persons, including the Company, subsidiaries
of the Company, Participants, any person claiming any rights under the Plan
from or through any Participant, and stockholders. The express grant of any
specific power to the Committee, and the taking of any action by the
Committee, shall not be construed as limiting any power or authority of the
Committee. The Committee may delegate to officers or managers of the Company
or any subsidiary of the Company the authority, subject to such terms as the
Committee shall determine, to perform administrative functions and, with
respect to Participants not subject to Section 16 of the Exchange Act, to
perform such other functions as the Committee may determine, to the extent
permitted under Rule 16b-3, if applicable, and other applicable law.
(c) LIMITATION OF LIABILITY. Each member of the Committee shall be
entitled to, in good faith, rely or act upon any report or other information
furnished to him by any officer or other employee of the Company or any
subsidiary, the Company's independent certified public accountants, or any
executive compensation consultant, legal counsel, or other professional
retained by
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<PAGE>
the Company to assist in the administration of the Plan. No member of the
Committee, nor any officer or employee of the Company acting on behalf of
the Committee, shall be personally liable for any action, determination, or
interpretation taken or made in good faith with respect to the Plan, and all
members of the Committee and any officer or employee of the Company acting
on their behalf shall, to the extent permitted by law, be fully indemnified
and protected by the Company with respect to any such action, determination,
or interpretation.
4. STOCK SUBJECT TO PLAN.
(a) AMOUNT OF STOCK RESERVED. The total amount of Stock that may be
subject to outstanding Awards, determined immediately after the grant of any
Award, shall not exceed the greater of 855,000 shares or 20% percent of the
total number of shares of Stock outstanding. Notwithstanding the foregoing,
the number of shares that may be delivered upon exercise of ISOs shall not
exceed 855,000 under the Plan, and the number of shares that may be
delivered as Restricted Stock and Deferred Stock (other than pursuant to an
Award granted under Section 7(f)) shall not in the aggregate exceed 855,000
under the Plan, provided, however, that shares subject to ISOs, Restricted
Stock or Deferred Stock Awards shall not be deemed delivered if such Awards
are forfeited, expire or otherwise terminate without delivery of shares to
the Participant. If an Award valued by reference to Stock may only be
settled in cash, the number of shares to which such Award relates shall be
deemed to be Stock subject to such Award for purposes of this Section 4(a).
Any shares of Stock delivered pursuant to an Award may consist, in whole or
in part, of authorized and unissued shares or treasury shares.
(b) ANNUAL PER-PARTICIPANT LIMITATIONS. During any calendar year, no
Participant may be granted Options and other Awards under the Plan that may
be settled by delivery of more than 750,000 shares of Stock. In addition,
with respect to Awards that may be settled in cash, no Participant may be
paid during any calendar year cash amounts relating to such Awards that
exceed the greater of the Fair Market Value of the number of shares of Stock
set forth in the preceding sentence at the date of grant or the date of
settlement of Award. This provision sets forth two separate limitations, so
that awards that may be settled solely by delivery of Stock will not operate
to reduce the amount of cash-only Awards, and vice versa; nevertheless,
Awards that may be settled in Stock or cash must not exceed either
limitation.
(c) ADJUSTMENTS. In the event of any dividend or other distribution
(whether in the form of cash, Stock, or other property), recapitalization,
forward or reverse split, reorganization, merger, consolidation, spin-off,
combination, repurchase, or share exchange, or other similar corporate
transaction or event, affects the Stock such that an adjustment is
appropriate in order to prevent dilution or enlargement of the rights of
Participants under the Plan, then the Committee shall, in such manner as it
may deem equitable, adjust any or all of (i) the number and kind of shares
of Stock deemed to be available thereafter for grants of Awards under
Section 4(a) (including with respect to the limitations relating to ISOs and
to Restricted and Deferred Stock), (ii) the number and kind of shares of
Stock that may be delivered or deliverable in respect of outstanding Awards,
(iii) the number of shares with respect to which Awards may be granted to a
given Participant in the specified period as set forth in Section 4(b), and
(iv) the exercise price, grant price, or purchase price relating to any
Award (or, if deemed appropriate, the Committee may make provision for a
cash payment with respect to any outstanding Award). In addition, the
Committee is authorized to make adjustments in the terms and conditions of,
and the criteria included in, Awards (including, without limitation, cash
payments in exchange for an Award or substitution of Awards using stock of a
successor or other entity) in recognition of unusual or nonrecurring events
(including, without limitation, events described in the preceding sentence)
affecting the Company or any subsidiary or the financial statements of the
Company or any subsidiary, or in response to changes in applicable laws,
regulations, or accounting principles. The foregoing notwithstanding, no
adjustments shall be authorized under this Section 4(c) with respect to ISOs
or SARs in tandem therewith to the extent that such authority would cause
the Plan to violate Section 422(b)(1) of the Code, and no such adjustment
shall be authorized with respect to Options or
4
<PAGE>
other Awards granted in accordance with Section 7(f) hereof to the extent
that such authority would cause such Options or other Awards to fail to
qualify as "performance-based compensation" under Section 162(m)(4)(C) of
the Code and regulations thereunder (including Proposed Regulation
1.162-27(e)(2)).
5. ELIGIBILITY. Executive officers and other key employees of the Company
and its subsidiaries, including any director or officer who is also such an
employee, and persons who provide consulting or other services to the Company
deemed by the Committee to be of substantial value to the Company, are eligible
to be granted Awards under the Plan. In addition, a person who has been offered
employment by the Company or its subsidiaries is eligible to be granted an Award
under the Plan, provided that such Award shall be cancelled if such person fails
to commence such employment, and no payment of value may be made in connection
with such Award until such person has commenced such employment. The foregoing
notwithstanding, Non-Employee Directors who are members of the Committee shall
not be eligible to be granted Awards under the Plan.
6. SPECIFIC TERMS OF AWARDS.
(a) GENERAL. Awards may be granted on the terms and conditions set
forth in this Section 6. In addition, the Committee may impose on any Award
or the exercise thereof, at the date of grant or thereafter (subject to
Section 8(e)), such additional terms and conditions, not inconsistent with
the provisions of the Plan, as the Committee shall determine, including
terms requiring forfeiture of Awards in the event of termination of
employment or service of the Participant. Except as provided in Sections
6(f), 6(h), or 7(a), or to the extent required to comply with requirements
of the Delaware General Corporation Law that lawful consideration be paid
for Stock, only services may be required as consideration for the grant (but
not the exercise) of any Award.
5
<PAGE>
(b) OPTIONS. The Committee is authorized to grant Options to
Participants (including "reload" options automatically granted to offset
specified exercises of options) on the following terms and conditions:
(i) EXERCISE PRICE. The exercise price per share of Stock
purchasable under an Option shall be determined by the Committee.
(ii) TIME AND METHOD OF EXERCISE. The Committee shall determine
the time or times at which an Option may be exercised in whole or in
part, the methods by which such exercise price may be paid or deemed to
be paid, the form of such payment, including, without limitation, cash,
Stock, other Awards or awards granted under other Company plans, or other
property (including notes or other contractual obligations of
Participants to make payment on a deferred basis, such as through
"cashless exercise" arrangements, to the extent permitted by applicable
law), and the methods by which Stock will be delivered or deemed to be
delivered to Participants.
(iii) ISOS. The terms of any ISO granted under the Plan shall
comply in all respects with the provisions of Section 422 of the Code,
including but not limited to the requirement that no ISO shall be granted
more than ten years after the effective date of the Plan. Anything in the
Plan to the contrary notwithstanding, no term of the Plan relating to
ISOs shall be interpreted, amended, or altered, nor shall any discretion
or authority granted under the Plan be exercised, so as to disqualify
either the Plan or any ISO under Section 422 of the Code.
(iv) TERMINATION OF EMPLOYMENT. Unless otherwise determined by the
Committee, upon termination of a Participant's employment with the
Company and its subsidiaries, such Participant may exercise any Options
during the three month period following such termination of employment,
but only to the extent such Option was exercisable immediately prior to
such termination of employment. Notwithstanding the foregoing, if the
Committee determines that such termination is for cause, all Options held
by the Participant shall immediately terminate.
(c) STOCK APPRECIATION RIGHTS. The Committee is authorized to grant
SARs to Participants on the following terms and conditions:
(i) RIGHT TO PAYMENT. An SAR shall confer on the Participant to
whom it is granted a right to receive, upon exercise thereof, the excess
of (A) the Fair Market Value of one share of Stock on the date of
exercise (or, if the Committee shall so determine in the case of any such
right other than one related to an ISO, the Fair Market Value of one
share at any time during a specified period before or after the date of
exercise), over (B) the grant price of the SAR as determined by the
Committee as of the date of grant of the SAR, which, except as provided
in Section 7(a), shall be not less than the Fair Market Value of one
share of Stock on the date of grant.
(ii) OTHER TERMS. The Committee shall determine the time or times
at which an SAR may be exercised in whole or in part, the method of
exercise, method of settlement, form of consideration payable in
settlement, method by which Stock will be delivered or deemed to be
delivered to Participants, whether or not an SAR shall be in tandem with
any other Award, and any other terms and conditions of any SAR. Limited
SARs that may only be exercised upon the occurrence of a Change in
Control may be granted on such terms, not inconsistent with this Section
6(c), as the Committee may determine. Limited SARs may be either
freestanding or in tandem with other Awards.
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<PAGE>
(d) RESTRICTED STOCK. The Committee is authorized to grant Restricted
Stock to Participants on the following terms and conditions:
(i) GRANT AND RESTRICTIONS. Restricted Stock shall be subject to
such restrictions on transferability and other restrictions, if any, as
the Committee may impose, which restrictions may lapse separately or in
combination at such times, under such circumstances, in such
installments, or otherwise, as the Committee may determine. Except to the
extent restricted under the terms of the Plan and any Award Agreement
relating to the Restricted Stock, a Participant granted Restricted Stock
shall have all of the rights of a stockholder including, without
limitation, the right to vote Restricted Stock or the right to receive
dividends thereon.
(ii) FORFEITURE. Except as otherwise determined by the Committee,
upon termination of employment or service (as determined under criteria
established by the Committee) during the applicable restriction period,
Restricted Stock that is at that time subject to restrictions shall be
forfeited and reacquired by the Company; PROVIDED, HOWEVER, that the
Committee may provide, by rule or regulation or in any Award Agreement,
or may determine in any individual case, that restrictions or forfeiture
conditions relating to Restricted Stock will be waived in whole or in
part in the event of termination resulting from specified causes.
Notwithstanding anything contained herein to the contrary (other than
Section 7(g)), all Restricted Stock Awards, other than an Award granted
pursuant to Section 7(f), shall be forfeited upon a Participant's
termination of employment or other service with the Company and its
subsidiaries within three years of the date the award is granted,
provided, however, that the Committee may make exceptions in the event
such termination is by reason of the Participant's death or disability.
(iii) CERTIFICATES FOR STOCK. Restricted Stock granted under the
Plan may be evidenced in such manner as the Committee shall determine. If
certificates representing Restricted Stock are registered in the name of
the Participant, such certificates shall bear an appropriate legend
referring to the terms, conditions, and restrictions applicable to such
Restricted Stock, the Company shall retain physical possession of the
certificate, and the Participant shall have delivered a stock power to
the Company, endorsed in blank, relating to the Restricted Stock.
(iv) DIVIDENDS. Dividends paid on Restricted Stock shall be either
paid at the dividend payment date in cash or in shares of unrestricted
Stock having a Fair Market Value equal to the amount of such dividends,
or the payment of such dividends shall be deferred and/or the amount or
value thereof automatically reinvested in additional Restricted Stock,
other Awards, or other investment vehicles, as the Committee shall
determine or permit the Participant to elect. Stock distributed in
connection with a Stock split or Stock dividend, and other property
distributed as a dividend, shall be subject to restrictions and a risk of
forfeiture to the same extent as the Restricted Stock with respect to
which such Stock or other property has been distributed.
(e) DEFERRED STOCK. The Committee is authorized to grant Deferred
Stock to Participants, subject to the following terms and conditions:
(i) AWARD AND RESTRICTIONS. Delivery of Stock will occur upon
expiration of the deferral period specified for an Award of Deferred
Stock by the Committee (or, if permitted by the Committee, as elected by
the Participant). In addition, Deferred Stock shall be subject to such
restrictions as the Committee may impose, if any, which restrictions may
lapse at the expiration of the deferral period or at earlier specified
times, separately or in combination, in installments, or otherwise, as
the Committee may determine.
(ii) FORFEITURE. Except as otherwise determined by the Committee,
upon termination of employment or service (as determined under criteria
established by the Committee)
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<PAGE>
during the applicable deferral period or portion thereof to which
forfeiture conditions apply (as provided in the Award Agreement
evidencing the Deferred Stock), all Deferred Stock that is at that time
subject to deferral (other than a deferral at the election of the
Participant) shall be forfeited; PROVIDED, HOWEVER, that the Committee
may provide, by rule or regulation or in any Award Agreement, or may
determine in any individual case, that restrictions or forfeiture
conditions relating to Deferred Stock will be waived in whole or in part
in the event of termination resulting from specified causes.
Notwithstanding anything contained herein to the contrary (other than
Section 7(g)), all Deferred Stock Awards, other than an Award granted
pursuant to Section 7(f), shall be forfeited upon a Participant's
termination of employment or other service with the Company and its
subsidiaries within three years of the date the award is granted,
provided, however, that the Committee may make exceptions in the event
such termination is by reason of the Participant's death or disability.
(f) BONUS STOCK AND AWARDS IN LIEU OF CASH OBLIGATIONS. The Committee
is authorized to grant Stock as a bonus, or to grant Stock or other Awards
in lieu of Company obligations to pay cash under other plans or compensatory
arrangements, provided that, in the case of Participants subject to Section
16 of the Exchange Act, such cash amounts are determined under such other
plans in a manner that complies with applicable requirements of Rule 16b-3
so that the acquisition of Stock or Awards hereunder shall be exempt from
Section 16(b) liability. Stock or Awards granted hereunder shall be subject
to such other terms as shall be determined by the Committee.
(g) DIVIDEND EQUIVALENTS. The Committee is authorized to grant
Dividend Equivalents to a Participant, entitling the Participant to receive
cash, Stock, other Awards, or other property equal in value to dividends
paid with respect to a specified number of shares of Stock, or other
periodic payments. Dividend Equivalents may be awarded on a free-standing
basis or in connection with another Award. The Committee may provide that
Dividend Equivalents shall be paid or distributed when accrued or shall be
deemed to have been reinvested in additional Stock, Awards, or other
investment vehicles as the Committee may specify.
(h) OTHER STOCK-BASED AWARDS. The Committee is authorized, subject to
limitations under applicable law, to grant to Participants such other Awards
that may be denominated or payable in, valued in whole or in part by
reference to, or otherwise based on, or related to, Stock, as deemed by the
Committee to be consistent with the purposes of the Plan, including, without
limitation, convertible or exchangeable debt securities, other rights
convertible or exchangeable into Stock, purchase rights for Stock, Awards
with value and payment contingent upon performance of the Company or any
other factors designated by the Committee, and Awards valued by reference to
the book value of Stock or the value of securities of or the performance of
specified subsidiaries. The Committee shall determine the terms and
conditions of such Awards. Stock delivered pursuant to an Award in the
nature of a purchase right granted under this Section 6(h) shall be
purchased for such consideration, paid for at such times, by such methods,
and in such forms, including, without limitation, cash, Stock, other Awards,
or other property, as the Committee shall determine. Cash awards, as an
element of or supplement to any other Award under the Plan, shall also be
authorized pursuant to this Section 6(h).
7. CERTAIN PROVISIONS APPLICABLE TO AWARDS.
(a) STAND-ALONE, ADDITIONAL, TANDEM, AND SUBSTITUTE AWARDS. Awards
granted under the Plan may, in the discretion of the Committee, be granted
either alone or in addition to, in tandem with, or in substitution for, any
other Award granted under the Plan or any award granted under any other plan
of the Company, any subsidiary, or any business entity to be acquired by the
Company or a subsidiary, or any other right of a Participant to receive
payment from the Company or any subsidiary. Awards granted in addition to or
in tandem with other Awards or awards may be granted either as of the same
time as or a different time from the grant of such other Awards or awards.
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(b) TERM OF AWARDS. The term of each Award shall be for such period as
may be determined by the Committee; PROVIDED, HOWEVER, that in no event
shall the term of any ISO or an SAR granted in tandem therewith exceed a
period of ten years from the date of its grant (or such shorter period as
may be applicable under Section 422 of the Code).
(c) FORM OF PAYMENT UNDER AWARDS. Subject to the terms of the Plan and
any applicable Award Agreement, payments to be made by the Company or a
subsidiary upon the grant or exercise of an Award may be made in such forms
as the Committee shall determine, including, without limitation, cash,
Stock, other Awards, or other property, and may be made in a single payment
or transfer, in installments, or on a deferred basis. Such payments may
include, without limitation, provisions for the payment or crediting of
reasonable interest on installment or deferred payments or the grant or
crediting of Dividend Equivalents in respect of installment or deferred
payments denominated in Stock.
(d) RULE 16B-3 COMPLIANCE.
(i) SIX-MONTH HOLDING PERIOD. Unless a Participant could otherwise
exercise a derivative security or dispose of Stock delivered upon
exercise of a derivative security granted under the Plan without
incurring liability under Section 16(b) of the Exchange Act, (i) Stock
delivered under the Plan other than upon exercise or conversion of a
derivative security granted under the Plan shall be held for at least six
months from the date of acquisition, and (ii), with respect to a
derivative security granted under the Plan, at least six months shall
elapse from the date of acquisition of the derivative security to the
date of disposition of the derivative security (other than upon exercise
or conversion) or its underlying equity security.
(ii) NONTRANSFERABILITY. Awards which constitute derivative
securities (including any Option, SAR, Limited SAR, or similar right)
under the general definition set forth in Rule 16a-1(c)(3)(i) under the
Exchange Act shall not be transferable by a Participant except by will or
the laws of descent and distribution (or pursuant to a Beneficiary
designation) and, in the case of any Option or SAR, shall be exercisable
during the lifetime of a Participant only by such Participant or his
guardian or legal representative.
(iii) REFORMATION TO COMPLY WITH EXCHANGE ACT RULES. It is the
intent of the Company that this Plan comply in all respects with
applicable provisions of Rule 16b-3 or Rule 16a-1(c)(3) under the
Exchange Act in connection with any grant of Awards to or other
transaction by a Participant who is subject to Section 16 of the Exchange
Act (except for transactions exempted under alternative Exchange Act
Rules or acknowledged in writing to be non-exempt by such Participant).
Accordingly, if any provision of this Plan or any Award Agreement
relating to an Award does not comply with the requirements of Rule 16b-3
or Rule 16a-1(c)(3) as then applicable to any such transaction, such
provision will be construed or deemed amended to the extent necessary to
conform to the applicable requirements of Rule 16b-3 or Rule 16a-1(c)(3)
so that such Participant shall avoid liability under Section 16(b). In
addition, other provisions of the Plan notwithstanding, the exercise
price of any Award carrying a right to exercise granted to a Participant
subject to Section 16 of the Exchange Act shall be not less than 50% of
the Fair Market Value of Stock as of the date such Award is granted if
such pricing limitation is required under Rule 16b-3 at the time of such
grant.
(e) LOAN PROVISIONS. With the consent of the Committee, and subject at
all times to, and only to the extent, if any, and in accordance with, laws
and regulations and other binding obligations or provisions applicable to
the Company, the Company may make, guarantee, or arrange for a loan or loans
to a Participant with respect to the exercise of any Option or other payment
in connection with any Award, including the payment by a Participant of any
or all federal, state, or local income or other taxes due in connection with
any Award. Subject to such limitations, the Committee shall have full
authority to decide whether to make a loan or loans hereunder and to
determine the amount, terms, and provisions of any such loan or loans,
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including the interest rate to be charged in respect of any such loan or
loans, whether the loan or loans are to be with or without recourse against
the borrower, the terms on which the loan is to be repaid and conditions, if
any, under which the loan or loans may be forgiven.
(f) PERFORMANCE-BASED AWARDS TO "COVERED EMPLOYEES". Other provisions
of the Plan notwithstanding, the provisions of this Section 7(f) shall apply
to any Award the exercisability or settlement of which is subject to the
achievement of performance conditions (other than an Option or SAR granted
with an exercise or base price at least equal to 100% of Fair Market Value
of Stock on the date of grant) if such Award is granted to a person who, at
the time of grant, is a "covered employee." The definition of "covered
employee," and other terms used in this Section 7(f), shall be interpreted
in a manner consistent with Section 162(m) of the Code and regulations
thereunder (including Proposed Regulation 1.162-27). The performance
objectives for an Award subject to this Section 7(f) shall consist of one or
more business criteria and a targeted level or levels of performance with
respect to such criteria, as specified by the Committee but subject to this
Section 7(f). Performance objectives shall be objective and shall otherwise
meet the requirements of Section 162(m)(4)(C) of the Code and regulations
thereunder (including Proposed Regulation 1.162-27(e)(2)). The following
business criteria shall be used by the Committee in connection with a
performance objective:
(1) Annual earnings before payment of taxes and interest;
(2) Annual earnings per share; and/or
(3) Annual return on common equity.
Achievement of performance objectives shall be measured over a period of
one, two, three, or four years, as specified by the Committee. No business
criteria other than those named above may be used in establishing the
performance objective for an Award to a covered employee. For each such
Award relating to a covered employee, the Committee shall establish the
targeted level or levels of performance for each business criteria.
Performance objectives may differ for Awards under this Section 7(f) to
different covered employees. The Committee may determine that an Award under
this Section 7(f) shall be payable upon achievement of any one of the
performance objectives or may require that two or more of the performance
objectives must be achieved in order for an Award to be payable. The
Committee may, in its discretion, reduce the amount of a payout otherwise to
be made in connection with an Award under this Section 7(f), but may not
exercise discretion to increase such amount, and the Committee may consider
other performance criteria in exercising such discretion. All determinations
by the Committee as to the achievement of performance objectives shall be
made in writing. The Committee may not delegate any responsibility under
this Section 7(f).
(g) ACCELERATION UPON A CHANGE OF CONTROL. Notwithstanding anything
contained herein to the contrary, unless otherwise provided by the Committee
in an Award Agreement, all conditions and/or restrictions relating to the
continued performance of services and/or the achievement of performance
objectives with respect to the exercisability or full enjoyment of an Award
shall immediately lapse upon a Change in Control.
8. GENERAL PROVISIONS.
(a) COMPLIANCE WITH LEGAL AND EXCHANGE REQUIREMENTS. The Company shall
not be obligated to deliver Stock upon the exercise or settlement of any
Award or take other actions under the Plan until the Company shall have
determined that applicable federal and state laws, rules, and regulations
have been complied with and such approvals of any regulatory or governmental
agency have been obtained and contractual obligations to which the Award may
be subject have been satisfied. The Company, in its discretion, may postpone
the issuance or delivery of Stock under any Award until completion of such
stock exchange listing or registration or qualification of such Stock or
other required action under any federal or state law, rule, or regulation as
the
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Company may consider appropriate, and may require any Participant to make
such representations and furnish such information as it may consider
appropriate in connection with the issuance or delivery of Stock under the
Plan.
(b) NONTRANSFERABILITY. In addition to the restrictions on
transferability set forth in Section 7(d)(ii) (which apply to all
Participants whether or not they are otherwise subject to Section 16 under
the Exchange Act), Awards and other rights of Participants under the Plan
may not be transferred to third parties, pledged, mortgaged, hypothecated,
or otherwise encumbered, and shall not be subject to claims of creditors.
(c) NO RIGHT TO CONTINUED EMPLOYMENT OR SERVICE. Neither the Plan nor
any action taken hereunder shall be construed as giving any employee or
person providing consulting or other services the right to be retained in
the employ or service of the Company or any of its subsidiaries, nor shall
it interfere in any way with the right of the Company or any of its
subsidiaries to terminate any employee's employment or terminate any
contract with a person providing consulting or other services at any time.
(d) TAXES. The Company or any subsidiary is authorized to withhold
from any Award granted or to be settled, any payment relating to an Award
under the Plan, including from a distribution of Stock, or any payroll or
other payment to a Participant, amounts of withholding and other taxes due
or potentially payable in connection with any transaction involving an
Award, and to take such other action as the Committee may deem advisable to
enable the Company and Participants to satisfy obligations for the payment
of withholding taxes and other tax obligations relating to any Award. This
authority shall include authority to withhold or receive Stock or other
property and to make cash payments in respect thereof in satisfaction of a
Participant's tax obligations.
(e) CHANGES TO THE PLAN AND AWARDS. The Board may amend, alter,
suspend, discontinue, or terminate the Plan or the Committee's authority to
grant Awards under the Plan without the consent of stockholders or
Participants, except that any such action shall be subject to the approval
of the Company's stockholders at or before the next annual meeting of
stockholders for which the record date is after such Board action if such
stockholder approval is required by any federal or state law or regulation
or the rules of any stock exchange or automated quotation system on which
the Stock may then be listed or quoted, and the Board may otherwise, in its
discretion, determine to submit other such changes to the Plan to
stockholders for approval; PROVIDED, HOWEVER, that, without the consent of
an affected Participant, no such action may materially impair the rights of
such Participant under any Award theretofore granted to him. The Committee
may waive any conditions or rights under, or amend, alter, suspend,
discontinue, or terminate, any Award theretofore granted and any Award
Agreement relating thereto; PROVIDED, HOWEVER, that, without the consent of
an affected Participant, no such action may materially impair the rights of
such Participant under such Award.
(f) NO RIGHTS TO AWARDS; NO STOCKHOLDER RIGHTS. No Participant,
employee, or other person shall have any claim to be granted any Award under
the Plan, and there is no obligation for uniformity of treatment of
Participants, employees, and other persons. No Award shall confer on any
Participant any of the rights of a stockholder of the Company unless and
until Stock is duly issued or transferred and delivered to the Participant
in accordance with the terms of the Award.
(g) UNFUNDED STATUS OF AWARDS; CREATION OF TRUSTS. The Plan is
intended to constitute an "unfunded" plan for incentive and deferred
compensation. With respect to any payments not yet made to a Participant
pursuant to an Award, nothing contained in the Plan or any Award shall give
any such Participant any rights that are greater than those of a general
creditor of the Company; PROVIDED, HOWEVER, that the Committee may authorize
the creation of trusts or make other arrangements to meet the Company's
obligations under the Plan to deliver cash, Stock,
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other Awards, or other property pursuant to any Award, which trusts or other
arrangements shall be consistent with the "unfunded" status of the Plan
unless the Committee otherwise determines with the consent of each affected
Participant.
(h) NONEXCLUSIVITY OF THE PLAN. Neither the adoption of the Plan by
the Board nor its submission to the stockholders of the Company for approval
shall be construed as creating any limitations on the power of the Board to
adopt such other incentive arrangements as it may deem desirable, including,
without limitation, the granting of stock options otherwise than under the
Plan, and such arrangements may be either applicable generally or only in
specific cases.
(i) NO FRACTIONAL SHARES. No fractional shares of Stock shall be
issued or delivered pursuant to the Plan or any Award. The Committee shall
determine whether cash, other Awards, or other property shall be issued or
paid in lieu of such fractional shares or whether such fractional shares or
any rights thereto shall be forfeited or otherwise eliminated.
(j) COMPLIANCE WITH CODE SECTION 162(M). It is the intent of the
Company that Options and other Awards subject to the performance objectives
specified under Section 7(f) granted under the Plan to persons who are
"covered employees" within the meaning of Code Section 162(m) and
regulations thereunder (including Proposed Regulation 1.162-27(c)(2)) shall
constitute "qualified performance-based compensation" within the meaning of
Code Section 162(m) and regulations thereunder (including Proposed
Regulation 1.162-27(e), and subject to the transition rules under Proposed
Regulation 1.162-27(h)(2)) thereunder. Accordingly, if any provision of the
Plan or any Award Agreement relating to such an Award granted to a "covered
employee" does not comply or is inconsistent with the requirements of Code
Section 162(m) or regulations thereunder, such provision shall be construed
or deemed amended to the extent necessary to conform to such requirements,
and no provision shall be deemed to confer upon the Committee or any other
person discretion to increase the amount of compensation otherwise payable
to a "covered employee" in connection with any such Award upon attainment of
the performance objectives.
(k) GOVERNING LAW. The validity, construction, and effect of the Plan,
any rules and regulations relating to the Plan, and any Award Agreement
shall be determined in accordance with the Delaware General Corporation Law,
without giving effect to principles of conflicts of laws, and applicable
federal law.
(l) EFFECTIVE DATE; PLAN TERMINATION. The Plan shall become effective
as of the date of its adoption by the Board and shall continue in effect
until terminated by the Board.
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EXHIBIT B
U.S. OFFICE PRODUCTS COMPANY
EXECUTIVE DEFERRED COMPENSATION PLAN
1. PURPOSE. The purpose of this Executive Deferred Compensation Plan (the
"Plan") of U.S. Office Products Company, a Delaware corporation (the "Company"),
is to benefit selected management or highly compensated employees of the Company
and its subsidiaries by allowing such employees to defer receipt of a portion of
their compensation and/or convert such compensation into an equity-based award.
2. DEFINITIONS. In addition to terms defined elsewhere in the Plan, the
following are defined terms under the Plan:
(a) "ADMINISTRATOR" shall mean the body designated to administer the
Plan pursuant to Section 4.
(b) "BOARD" means the Board of Directors of the Company.
(c) "DEFERRAL ACCOUNT" shall mean an account established on the books of
the Company or a subsidiary of the Company on behalf of a Participant to
which debits and credits shall be made as provided herein. The Deferral
Account is a bookkeeping device used to measure the amount of compensation
payable in the future and does not constitute a trust fund, escrow, or asset
segregation.
(d) "DEFERRAL AGREEMENT" shall mean an agreement between an eligible
employee and the Company or a subsidiary of the Company pursuant to which
such employee elects to defer compensation otherwise payable to such
employee.
(e) "DEFERRED AMOUNTS" shall mean the amount of compensation that a
Participant elects to defer pursuant to a Deferral Agreement.
(f) "EQUITY-BASED AWARD" shall mean any award that is of a type that may
be granted under the Company's 1994 Long-Term Incentive Plan, as such plan
may be amended from time to time, including, but not limited to, stock
options, deferred stock and restricted stock, PROVIDED, HOWEVER, that
notwithstanding anything contained in such plan to the contrary, deferred
stock and restricted stock may be granted with such forfeiture period, if
any, as determined by the Administrator.
(g) "PARTICIPANT" means any person who has been selected for
participation in the Plan, and who holds an outstanding Equity-Based Award,
or on whose behalf an active Deferral Account is being maintained.
(h) "SHARE" means a share of common stock, $.01 par value, of the
Company and such other securities as may be substituted for such Share or
such other securities pursuant to Section 8.
3. SHARES AVAILABLE UNDER THE PLAN.
(a) Subject to adjustment as provided in Section 8, the total number of
Shares reserved and available for issuance under the Plan pursuant to
Equity-Based Awards is 4,000,0000. If an Equity-Based Award valued by
reference to Shares may only be settled in cash, the number of Shares to
which such award relates shall be deemed to be Shares subject to such award
for purposes of this Section 3(a). Such Shares may be authorized but
unissued Shares, treasury Shares, or Shares acquired in the market for the
account of the Participant. For purposes of the Plan, Shares that may be
delivered upon settlement of an outstanding Equity-Based Award will not be
considered to be available after such award has been granted, except for
purposes of issuance in connection with such award; PROVIDED, HOWEVER, that,
if an award expires or is forfeited for any reason without having been
exercised in full, the Shares subject to such award to the extent expired or
forfeited will again be available for issuance under the Plan.
(b) Subject to adjustment as provided in Section 8, during any calendar
year, no Participant may be granted Equity-Based Awards under the Plan that
may be settled by delivery of more than
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2,000,000 Shares. In addition, with respect to Equity-Based Awards that may
be settled in cash, no Participant may be paid during any calendar year cash
amounts relating to such awards that exceed the greater of the fair market
value of the number of Shares set forth in the preceding sentence at the
date of grant or the date of settlement of the award. This provision sets
forth two separate limitations, so that awards that may be settled solely by
delivery of Shares will not operate to reduce the amount of cash-only
Equity-Based Awards, and vice versa; nevertheless, awards that may be
settled in Shares or cash must not exceed either limitation.
4. ADMINISTRATION OF THE PLAN. The Plan will be administered by the Board
or such committee as may be designated by the Board. In addition to the duties
and powers described elsewhere in the Plan, the Administrator shall have the
complete discretion and authority to resolve questions, disputes, or factual
issues relating to eligibility for benefits or the amount of benefits under the
Plan and to construe and interpret and supply omissions with respect to the
terms and provisions of the Plan. Any decisions and determinations (including
factual decisions and determinations) made by the Administrator pursuant to its
duties and powers described in the Plan shall be conclusive and binding upon all
parties. The Administrator may delegate to officers or managers of the Company
or any subsidiary of the Company the authority, subject to such terms as the
Administrator shall determine, to perform such functions as the Administrator
may determine.
5. ELIGIBILITY. Participation in the Plan shall be limited to a select
group of management and highly compensated employees of the Company and its
subsidiaries. From that group, the Administrator shall select, in its sole
discretion, employees who may participate in the Plan. The Administrator may
terminate the participation of any Participant at any time.
6. DEFERRALS.
(a) Each Participant may elect to defer receipt of such portion of his
or her cash compensation (including base salary and bonus) as may be
permitted by the Administrator. To the extent Deferred Amounts are not
converted to Equity Based Awards pursuant to Section 7, the Deferred Amounts
shall be credited to a Deferral Account.
(b) The Deferral Account shall be credited (or debited) with such rate
of return (or loss), which rate may be a set rate established by the
Administrator, or may be determined by reference to the rate of return
(including reinvestment of all distributions) on such market indices or
registered investment companies as selected by the Administrator, or, if
permitted by the Administrator, as selected by the Participant. The Deferral
Account shall be debited with all distributions therefrom, and, if
determined by the Administrator, fees relating to the administration of the
Plan and any trust established hereunder. Unless otherwise determined by the
Administrator and set forth in a Deferral Agreement, a Participant's right
to the credit balance of the Deferral Account shall at all times be
nonforfeitable.
(c) In addition to the discretion provided elsewhere herein, the
Administrator shall have the discretion to determine:
(i) the time and manner in which a Participant may elect to defer
compensation under the Plan;
(ii) a minimum and maximum amount that may be deferred;
(iii) the period of the deferral (including whether to permit early
distribution on account of the occurrence of certain events, such as
termination of employment, hardship, or change in control, and whether to
extend the period under certain circumstances, including a subsequent
election by the Participant or the need to avoid application of section
162(m) of the Internal Revenue Code);
(iv) the form in which the Deferral Account shall be distributed
(i.e., lump-sums or installments);
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(v) whether Deferred Amounts shall be deposited in trust for the
benefit of the Participant; and
(vi) the portion of the Deferred Account which may, or must, be
converted to an Equity-Based Award.
(d) The terms and conditions relating to Deferred Amounts shall be set
forth in Deferral Agreements, which terms and conditions shall not be
inconsistent with the provisions of the Plan.
7. EQUITY-BASED AWARDS. The Administrator may, in its discretion, require
or permit a Participant to convert all or a portion of a Deferred Amount into an
Equity-Based Award. The Administrator shall have the discretion to determine the
form of the award, and the terms and conditions thereof. The terms and
conditions of an Equity-Based Award shall be set forth in a written agreement
that may be part of, or separate from, the Deferral Agreement. Unless otherwise
determined by the Administrator and set forth in such agreement, Participants'
rights in Equity-Based Awards shall at all times be nonforfeitable.
8. ADJUSTMENT PROVISIONS.
(a) CORPORATE TRANSACTIONS AND EVENTS. In the event any dividend or
other distribution (whether in the form of cash, Shares or other property),
recapitalization, forward or reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, exchange of Shares or
other securities of the Company, extraordinary dividend (whether in the form
of cash, Shares, or other property), liquidation, dissolution, or other
similar corporate transaction or event affects the Shares such that an
adjustment is appropriate in order to prevent dilution or enlargement of
each Participant's rights under the Plan, then an adjustment shall be made,
in a manner that is proportionate to the change to the Shares and otherwise
equitable, in (i) the number and kind of Shares remaining reserved and
available for issuance under Section 3(a), (ii) the number and kind of
Shares that may be delivered or deliverable in respect of outstanding
Equity-Based Awards, (iii) the number of Shares with respect to which
Equity-Based Awards may be granted to a given Participant in the specified
period as set forth in Section 3(b), and (iv) the exercise price, grant
price, or purchase price relating to any Equity-Based Award (or, if deemed
appropriate, the Administrator may make provision for a cash payment with
respect to any outstanding Award). In addition, the Administrator is
authorized to make such adjustments in recognition of unusual or
non-recurring events (including, without limitation, events described in the
preceding sentence) affecting the Company or any subsidiary or the financial
statements of the Company or any subsidiary, or in response to changes in
applicable laws, regulations or accounting principles.
9. CHANGES TO THE PLAN. The Board may amend, alter, suspend, discontinue,
or terminate the Plan without the consent of stockholders or Participants,
except that any amendment or alteration will be subject to the approval of the
Company's stockholders at or before the next annual meeting of stockholders for
which the record date is after the date of such Board action if such stockholder
approval is required by any federal or state law or regulation or the rules of
any stock exchange or automated quotation system as then in effect, and the
Board may otherwise determine to submit other such amendments or alterations to
stockholders for approval; PROVIDED, HOWEVER, that, without the consent of an
affected Participant, no such action may materially impair the rights of such
Participant with respect to any amount then credited to his or her Deferral
Account or with respect to any previously granted Equity-Based Award.
10. GENERAL PROVISIONS.
(a) UNFUNDED STATUS; CREATION OF TRUSTS. The Plan is intended to
constitute an "unfunded" plan for incentive and deferred compensation. With
respect to any payments not yet made to a Participant pursuant to an
Equity-Based Award or in respect of his or her Deferral
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Account, nothing contained in the Plan or any agreement hereunder shall give
any such Participant any rights that are greater than those of a general
creditor of the Company; PROVIDED, HOWEVER, that the Administrator may
authorize the creation of trusts or make other arrangements to meet the
Company's obligations under the Plan to deliver cash, Shares, or other
property.
(b) COMPLIANCE WITH LAWS AND OBLIGATIONS. The Company will not be
obligated to issue or deliver Shares in connection with any Equity-Based
Award in a transaction subject to the registration requirements of the
Securities Act of 1933, as amended, or any other federal or state securities
law, any requirement under any listing agreement between the Company and any
stock exchange or automated quotation system, or any other law, regulation,
or contractual obligation of the Company, until the Company is satisfied
that such laws, regulations, and other obligations of the Company have been
complied with in full. Certificates representing Shares issued under the
Plan will be subject to such stop-transfer orders and other restrictions as
may be applicable under such laws, regulations, and other obligations of the
Company, including any requirement that a legend or legends be placed
thereon.
(c) LIMITATIONS ON TRANSFERABILITY. Unless otherwise permitted by the
Administrator, Equity-Based Awards and amounts credited to Deferral Accounts
will not be transferable by a Participant except by will or the laws of
descent and distribution (or to a designated beneficiary in the event of a
Participant's death). Equity-Based Awards and amounts credited to Deferral
Accounts may not be pledged, mortgaged, hypothecated, or otherwise
encumbered, and shall not be subject to the claims of creditors of any
Participant.
(d) NO RIGHT TO CONTINUE AS AN EMPLOYEE. Nothing contained in the Plan
or any agreement hereunder will confer upon any Participant any right to
continue to be employed by the Company or any subsidiary of the Company.
(e) NO STOCKHOLDER RIGHTS CONFERRED. Nothing contained in the Plan or
any agreement hereunder will confer upon any Participant (or any person or
entity claiming rights by or through a Participant) any rights of a
stockholder of the Company unless and until Shares are in fact issued to
such Participant (or person).
(f) NONEXCLUSIVITY OF THE PLAN. Neither the adoption of the Plan by
the Board nor its submission to the stockholders of the Company for approval
shall be construed as creating any limitations on the power of the Board to
adopt such other compensatory arrangements for employees as it may deem
desirable.
(g) GOVERNING LAW. The validity, construction, and effect of the Plan
and any agreement hereunder will be determined in accordance with the laws
of the State of Delaware, without giving effect to principles of conflicts
of laws, and applicable federal law.
11. EFFECTIVE DATE AND PLAN TERMINATION. The Plan will be effective as of
the date of its approval by the stockholders of the Company.
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EXHIBIT C
U.S. OFFICE PRODUCTS COMPANY
1996 NON-EMPLOYEE DIRECTORS' STOCK PLAN
1. PURPOSE. The purpose of this 1996 Non-Employee Directors' Stock Plan
(the "Plan") of U.S. Office Products Company, a Delaware corporation (the
"Company"), is to advance the interests of the Company and its stockholders by
providing a means to attract and retain highly qualified persons to serve as
non-employee directors of the Company and to enable such persons to acquire or
increase a proprietary interest in the Company, thereby promoting a closer
identity of interests between such persons and the Company's stockholders.
2. DEFINITIONS. In addition to terms defined elsewhere in the Plan, the
following are defined terms under the Plan:
(a) "BOARD" means the Board of Directors of the Company.
(b) A "CHANGE IN CONTROL" shall be deemed to have occurred if:
(i) any person, other than the Company or an employee benefit plan of
the Company, acquires directly or indirectly the beneficial ownership (as
defined in Section 13(d) of the Securities Exchange Act of 1934, as
amended) of any voting security of the Company and immediately after such
acquisition such Person is, directly or indirectly, the Beneficial Owner
of voting securities representing 50% or more of the total voting power
of all of the then-outstanding voting securities of the Company;
(ii) the individuals (A) who, as of the closing date of the Company's
initial public offering, constitute the Board of Directors of the Company
(the "Original Directors") or (B) who thereafter are elected to the Board
of Directors of the Company and whose election, or nomination for
election, to the Board of Directors of the Company was approved by a vote
of at least two-thirds (2/3) of the Original Directors then still in
office (such directors becoming "Additional Original Directors"
immediately following their election) or (C) who are elected to the Board
of Directors of the Company and whose election, or nomination for
election, to the Board of Directors of the Company was approved by a vote
of at least two-thirds (2/3) of the Original Directors and Additional
Original Directors then still in office (such directors also becoming
"Additional Original Directors" immediately following their election)
(such individuals being the "Continuing Directors"), cease for any reason
to constitute a majority of the members of the Board of Directors of the
Company;
(iii) the stockholders of the Company shall approve a merger,
consolidation, recapitalization, or reorganization of the Company, a
reverse stock split of outstanding voting securities, or consummation of
any such transaction if stockholder approval is not sought or obtained,
other than any such transaction which would result in at least 75% of the
total voting power represented by the voting securities of the surviving
entity outstanding immediately after such transaction being Beneficially
Owned by at least 75% of the holders of outstanding voting securities of
the Company immediately prior to the transaction, with the voting power
of each such continuing holder relative to other such continuing holders
not substantially altered in the transaction; or
(iv) the stockholders of the Company shall approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by
the Company of all or a substantial portion of the Company's assets
(i.e., 50% or more of the total assets of the Company).
(c) "DEFERRED SHARE" means a credit to a Participant's deferral account
under Section 7 which represents the right to receive one Share upon
settlement of the deferral account. Deferral accounts, and Deferred Shares
credited thereto, are maintained solely as bookkeeping entries by the
Company evidencing unfunded obligations of the Company.
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(d) "FAIR MARKET VALUE" of a Share on a given date mean the last sales
price or, if last sales information is generally unavailable, the average of
the closing bid and asked prices per Share on such date (or, if there was no
trading or quotation in the stock on such date, on the next preceding date
on which there was trading or quotation) as reported in the WALL STREET
JOURNAL.
(e) "OPTION" means the right, granted to a director under Section 6, to
purchase a specified number of Shares at the specified exercise price for a
specified period of time under the Plan. All Options will be non-qualified
stock options.
(f) "PARTICIPANT" means any person who, as a non-employee director of
the Company, has been granted an Option or Deferred Shares which remain
outstanding or who has elected to be paid fees in the form of Shares or
Deferred Shares under the Plan.
(g) "SHARE" means a share of common stock, $.01 par value, of the
Company and such other securities as may be substituted for such Share or
such other securities pursuant to Section 8.
3. SHARES AVAILABLE UNDER THE PLAN. Subject to adjustment as provided in
Section 8, the total number of Shares reserved and available for issuance under
the Plan is 750,000. Such Shares may be authorized but unissued Shares, treasury
Shares, or Shares acquired in the market for the account of the Participant. For
purposes of the Plan, Shares that may be purchased upon exercise of an Option or
delivered in settlement of Deferred Shares will not be considered to be
available after such Option has been granted or Deferred Share credited, except
for purposes of issuance in connection with such Option or Deferred Share;
PROVIDED, HOWEVER, that, if an Option expires for any reason without having been
exercised in full, the Shares subject to the unexercised portion of such Option
will again be available for issuance under the Plan.
4. ADMINISTRATION OF THE PLAN. The Plan will be administered by the Board;
PROVIDED, HOWEVER, that any action by the Board relating to the Plan will be
taken only if, in addition to any other required vote, such action is approved
by the affirmative vote of a majority of the directors who are not then eligible
to participate in the Plan.
5. ELIGIBILITY. Each director of the Company who, on any date on which an
Option is to be granted under Section 6 or on which fees are to be paid which
could be received in the form of Shares or deferred in the form of Deferred
Shares under Section 7, is not an employee of the Company or any subsidiary of
the Company will be eligible, at such date, to be granted an Option under
Section 6 or receive fees in the form of Shares or defer fees in the form of
Deferred Shares under Section 7. No person other than those specified in this
Section 5 will be eligible to participate in the Plan.
6. OPTIONS.
(a) NUMBER OF SHARES. On the date of the annual meeting of
stockholders at which the Plan is approved: (i) each person who, at such
meeting, is elected to serve as a director and who is otherwise eligible
pursuant to Section 5 shall receive an Option to purchase 21,000 Shares, and
(ii) each such person who, on the day prior to such annual meeting, was
serving in such capacity, shall receive an Option to purchase an additional
6,000 Shares, in each case subject to adjustment as provided in Section 8.
Thereafter: (i) on the date each person first becomes a director and is
otherwise eligible pursuant to Section 5 shall receive an Option to purchase
21,000 Shares, and (ii) on the date of each annual meeting of stockholders
of the Company, each person who, on the day prior to such annual meeting,
was serving as a non-employee director of the Company and, after such
meeting will continue in such capacity, shall receive an Option to purchase
6,000 Shares, in each case subject to adjustment as provided in Section 8.
(b) EXERCISE PRICE. The exercise price per Share purchasable upon
exercise of an Option will be equal to 100% of the Fair Market Value of a
Share on the date of grant of the Option.
(c) OPTION EXPIRATION. A Participant's Option will expire at the
earlier of (i) 10 years after the date of grant or (ii) one year after the
date the Participant ceases to serve as a director of the
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Company for any reason, provided, however, that with respect to clause (ii),
such Option shall be exercisable during such one-year period only to the
extent it was exercisable pursuant to Section 6(d) on the date of such
cessation.
(d) EXERCISABILITY. Each Option shall become exercisable in two equal
installments. The first installment shall become exercisable on the date
that is six months from the date the Option is granted and the second
installment shall become exercisable on the date that is one year from the
date the Option is granted, provided, however, that unless otherwise
determined by the Board, all Options held by a Participant shall become
immediately exercisable upon (i) a Change in Control or (ii) the death of
such Participant.
(e) METHOD OF EXERCISE. A Participant may exercise an Option, in whole
or in part, at such time as it is exercisable and prior to its expiration,
by giving written notice of exercise to the Secretary of the Company,
specifying the Option to be exercised and the number of Shares to be
purchased, and paying in full the exercise price in cash (including by
check) or by surrender of Shares already owned by the Participant (except
for Shares acquired from the Company by exercise of an option less than six
months before the date of surrender) having a Fair Market Value at the time
of exercise equal to the exercise price, or by a combination of cash and
Shares.
7. RECEIPT OF SHARES OR DEFERRED SHARES IN LIEU OF FEES. Each director of
the Company may elect to be paid fees, in his or her capacity as a director
(including annual retainer fees for service on the Board, fees for service on a
Board committee, fees for service as chairman of a Board committee, and any
other fees paid to directors) in the form of Shares or Deferred Shares in lieu
of cash payment of such fees, if such director is eligible to do so under
Section 5 at the date any such fee is otherwise payable. If so elected, payment
of fees in the form of Shares or Deferred Shares shall be made in accordance
with this Section 7.
(a) ELECTIONS. Each director who elects to be paid fees for a given
calendar year in the form of Shares shall file an election in such form and
in such time in advance as prescribed by the Board. Each director who elects
to defer such payment of fees in the form of Deferred Shares for such year
must file an irrevocable written election with the Secretary of the Company
no later than December 31 of the year preceding such calendar year;
PROVIDED, HOWEVER, that any newly elected or appointed director may file an
election for any year not later than 30 days after the date such person
first became a director, and a director may file an election for the year in
which the Plan became effective not later than 30 days after the date of
effectiveness. An election by a director shall be deemed to be continuing
unless the director revokes or changes such election by filing a new
election form by the due date for such form specified in this Section 7(a).
The election must specify the following:
(i) A percentage of fees to be received in the form of Shares or
deferred in the form of Deferred Shares under the Plan; and
(ii) In the case of a deferral, the period or periods during which
settlement of Deferred Shares will be deferred (subject to such
limitations as may be specified by counsel to the Company).
(b) PAYMENT OF FEES IN THE FORM OF SHARES. At any date on which fees
are payable to a Participant who has elected to receive such fees in the
form of Shares, the Company will issue to such Participant, or to a
designated third party for the account of such Participant, a number of
Shares having an aggregate Fair Market Value at that date equal to the fees,
or as nearly as possible equal to the fees (but in no event greater than the
fees), that would have been payable at such date but for the Participant's
election to receive Shares in lieu thereof. If the Shares are to be credited
to an account maintained by the Participant and to the extent reasonably
practicable without requiring the actual issuance of fractional Shares, the
Company shall cause fractional Shares to be credited to the Participant's
account. If fractional Shares are not so credited, any
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part of the Participant's fees not paid in the form of whole Shares will be
payable in cash to the Participant (either paid separately or included in a
subsequent payment of fees, including a subsequent payment of fees subject
to an election under this Section 7).
(c) DEFERRAL OF FEES IN THE FORM OF DEFERRED SHARES. The Company will
establish a deferral account for each Participant who elects to defer fees
in the form of Deferred Shares under this Section 7. At any date on which
fees are payable to a Participant who has elected to defer fees in the form
of Deferred Shares, the Company will credit such Participant's deferral
account with a number of Deferred Shares equal to the number of Shares
having an aggregate Fair Market Value at that date equal to the fees that
otherwise would have been payable at such date but for the Participant's
election to defer receipt of such fees in the form of Deferred Shares. The
amount of Deferred Shares so credited shall include fractional Shares
calculated to at least three decimal places.
(d) CREDITING OF DIVIDEND EQUIVALENTS. Whenever dividends are paid or
distributions made with respect to Shares, a Participant to whom Deferred
Shares are then credited in a deferral account shall be entitled to be
receive, as dividend equivalents, an amount equal in value to the amount of
the dividend paid or property distributed on a single Share multiplied by
the number of Deferred Shares (including any fractional Share) credited to
his or her deferral account as of the record date for such dividend or
distribution. Such dividend equivalents shall be credited to the
Participant's deferral account as a number of Deferred Shares determined by
dividing the aggregate value of such dividend equivalents by the Fair Market
Value of a Share at the payment date of the dividend or distribution.
(e) SETTLEMENT OF DEFERRED SHARES. The Company will settle the
Participant's deferral account by delivering to the Participant (or his or
her beneficiary) a number of Shares equal to the number of whole Deferred
Shares then credited to his or her deferral account (or a specified portion
in the event of any partial settlement), together with cash in lieu of any
fractional Share remaining at a time that less than one whole Deferred Share
is credited to such deferral account. Such settlement shall be made at the
time or times specified in the Participant's election filed in accordance
with Section 7(a); PROVIDED, HOWEVER, that a Participant may further defer
settlement of Deferred Shares if counsel to the Company determines that such
further deferral likely would be effective under applicable federal income
tax laws and regulations.
(f) NONFORFEITABILITY. The interest of each Participant in any fees
paid in the form of Shares or Deferred Shares (and any deferral account
relating thereto) at all times will be nonforfeitable.
8. ADJUSTMENT PROVISIONS.
(a) CORPORATE TRANSACTIONS AND EVENTS. In the event any dividend or
other distribution (whether in the form of cash, Shares or other property),
recapitalization, forward or reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, exchange of Shares or
other securities of the Company, extraordinary dividend (whether in the form
of cash, Shares, or other property), liquidation, dissolution, or other
similar corporate transaction or event affects the Shares such that an
adjustment is appropriate in order to prevent dilution or enlargement of
each Participant's rights under the Plan, then an adjustment shall be made,
in a manner that is proportionate to the change to the Shares and otherwise
equitable, in (i) the number and kind of Shares remaining reserved and
available for issuance under Section 3, (ii) the number and kind of Shares
issuable upon exercise of outstanding Options, and/or the exercise price per
Share thereof (provided that no fractional Shares will be issued upon
exercise of any Option), (iii) the kind of Shares to be issued in lieu of
fees under Section 7, and (iv) the number and kind of Shares to be issued
upon settlement of Deferred Shares under Section 7. In addition, the Board
is authorized to make such adjustments in recognition of unusual or
non-recurring events (including, without limitation, events described in the
preceding sentence) affecting the Company or any subsidiary or the financial
statements of the Company or any subsidiary, or in response to changes in
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applicable laws, regulations or accounting principles. The foregoing
notwithstanding, no adjustment may be made hereunder except as will be
necessary to maintain the proportionate interest of the Participant under
the Plan and to preserve, without exceeding, the value of outstanding
Options and potential grants of Options and the value of outstanding
Deferred Shares.
(b) INSUFFICIENT NUMBER OF SHARES. If at any date an insufficient
number of Shares are available under the Plan for the receipt of fees in the
form of Shares or deferral of fees in the form of Deferred Shares at that
date, fees shall be paid in the form of Shares or deferred in the form of
Deferred Shares proportionately among directors then eligible to participate
to the extent Shares are then available and otherwise as provided under
Section 7.
9. CHANGES TO THE PLAN. The Board of Directors may amend, alter, suspend,
discontinue, or terminate the Plan or authority to grant Options or pay fees in
the form of Shares or Deferred Shares under the Plan without the consent of
stockholders or Participants, except that any amendment or alteration will be
subject to the approval of the Company's stockholders at or before the next
annual meeting of stockholders for which the record date is after the date of
such Board action if such stockholder approval is required by any federal or
state law or regulation or the rules of any stock exchange or automated
quotation system as then in effect, and the Board may otherwise determine to
submit other such amendments or alterations to stockholders for approval;
PROVIDED, HOWEVER, that, without the consent of an affected Participant, no such
action may materially impair the rights of such Participant with respect to any
previously granted Option or any previous payment of fees in the form of Shares
or Deferred Shares.
10. GENERAL PROVISIONS.
(a) AGREEMENTS. Options, Deferred Shares, and any other right or
obligation under the Plan may be evidenced by agreements or other documents
executed by the Company and the Participant incorporating the terms and
conditions set forth in the Plan, together with such other terms and
conditions not inconsistent with the Plan, as the Board may from time to
time approve.
(b) COMPLIANCE WITH LAWS AND OBLIGATIONS. The Company will not be
obligated to issue or deliver Shares in connection with any Option, in
payment of any directors' fees, or in settlement of Deferred Shares in a
transaction subject to the registration requirements of the Securities Act
of 1933, as amended, or any other federal or state securities law, any
requirement under any listing agreement between the Company and any stock
exchange or automated quotation system, or any other law, regulation, or
contractual obligation of the Company, until the Company is satisfied that
such laws, regulations, and other obligations of the Company have been
complied with in full. Certificates representing Shares issued under the
Plan will be subject to such stop-transfer orders and other restrictions as
may be applicable under such laws, regulations, and other obligations of the
Company, including any requirement that a legend or legends be placed
thereon.
(c) LIMITATIONS ON TRANSFERABILITY. Unless otherwise permitted by the
Board, Options, Deferred Shares, and any other right under the Plan will not
be transferable by a Participant except by will or the laws of descent and
distribution (or to a designated beneficiary in the event of a Participant's
death), and will be exercisable during the lifetime of the Participant only
by such Participant or his or her guardian or legal representative. Options,
Deferred Shares, and other rights under the Plan may not be pledged,
mortgaged, hypothecated, or otherwise encumbered, and shall not be subject
to the claims of creditors of any Participant.
(d) NO RIGHT TO CONTINUE AS A DIRECTOR. Nothing contained in the Plan
or any agreement hereunder will confer upon any Participant any right to
continue to serve as a director of the Company.
(e) NO STOCKHOLDER RIGHTS CONFERRED. Nothing contained in the Plan or
any agreement hereunder will confer upon any Participant (or any person or
entity claiming rights by or through
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a Participant) any rights of a stockholder of the Company unless and until
Shares are in fact issued to such Participant (or person) or, in the case an
Option, such Option is validly exercised in accordance with Section 6.
(f) NONEXCLUSIVITY OF THE PLAN. Neither the adoption of the Plan by
the Board nor its submission to the stockholders of the Company for approval
shall be construed as creating any limitations on the power of the Board to
adopt such other compensatory arrangements for directors as it may deem
desirable.
(g) GOVERNING LAW. The validity, construction, and effect of the Plan
and any agreement hereunder will be determined in accordance with the laws
of the State of Delaware, without giving effect to principles of conflicts
of laws, and applicable federal law.
11. EFFECTIVE DATE AND PLAN TERMINATION. The Plan will be effective as of
the date of its approval by the stockholders of the Company, and, unless earlier
terminated by action of the Board, shall terminate at such time as no Shares
remain available for issuance under the Plan and the Company and Participants
have no further rights or obligations under the Plan.
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EXHIBIT D
U.S. OFFICE PRODUCTS COMPANY
AMENDED AND RESTATED
EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I
INTRODUCTION
Sec. 1.01 STATEMENT OF PURPOSE. The purpose of the U.S. Office Products
Company Employee Stock Purchase Plan is to provide eligible employees of the
Company and its Subsidiaries, who wish to become stockholders, an opportunity to
purchase Common Stock of the Company. The Board of Directors of the Company
believes that employee participation in ownership will be to the mutual benefit
of both the employees and the Company.
Sec. 1.02 INTERNAL REVENUE CODE CONSIDERATIONS. The Plan is intended to
constitute an "employee stock purchase plan" within the meaning of section 423
of the Internal Revenue Code of 1986, as amended.
ARTICLE II
DEFINITIONS
Sec. 2.01 "ADMINISTRATIVE COMMITTEE" means the committee appointed by the
Board to administer the Plan, as provided in Section 6.03 hereof.
Sec. 2.02 "BOARD" means the Board of Directors of the Company.
Sec. 2.03 "CODE" means the Internal Revenue Code of 1986, as amended.
Sec. 2.04 "COMPANY" means U.S. Office Products Company, a Delaware
corporation.
Sec. 2.05 "COMPENSATION" means the total remuneration paid, during the
period of reference, to an Employee by the Company, including regular salary or
wages, overtime payments, bonuses, commissions and vacation pay, to which has
been added (a) any elective deferral amounts by which the Employee has had his
current remuneration reduced for the purposes of funding a contribution to any
plan sponsored by the Company and satisfying the requirements of section 401(k)
of the Code, and (b) any amounts by which the Employee's compensation has been
reduced pursuant to a compensation reduction agreement between the Employee and
the Company for the purpose of funding benefits through any cafeteria plan
sponsored by the Company meeting the requirements of section 125 of the Code.
There shall be excluded from "Compensation" for the purposes of the Plan,
whether or not reportable as income by the Employee, expense reimbursements of
all types, payments in lieu of expenses, the Company contributions to any
qualified retirement plan or other program of deferred compensation (except as
provided above), the Company contributions to Social Security or worker's
compensation, the costs paid by the Company in connection with fringe benefits
and relocation, including gross-ups, and any amounts accrued for the benefit of
Employee, but not paid, during the period of reference.
Sec. 2.06 "CONTINUOUS SERVICE" means the period of time during which the
Employee has been employed by the Company or a Subsidiary and during which there
has been no interruption of Employee's employment by the Company. For this
purpose, periods of Excused Absence shall not be considered to be interruptions
of Continuous Service.
Sec. 2.07 "EFFECTIVE DATE" shall mean November 1, 1995, if within twelve
months of that date, the Plan is or has been approved at a meeting of the
stockholders of the Company by the affirmative vote of the holders of the
majority of Common Stock of the Company outstanding.
Sec. 2.08 "ELIGIBLE EMPLOYEE" means each person who:
(a) is an Employee whose customary employment is for more than 5 months
in any calendar year;
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(b) has completed at least 90 days of Continuous Service; and
(c) is not deemed for purposes of section 423(b)(3) of the Code to own
stock possessing five percent (5%) or more of the total combined voting
power or value of all classes of stock of the Company.
Sec. 2.09 "EMPLOYEE" means each person employed by the Company or a
Subsidiary.
Sec. 2.10 "EXCUSED ABSENCE" means absence pursuant to a leave of absence
granted by the Company or any other entity constituting the Company, absence due
to disability or illness, absence by reason of a layoff, or absence by reason of
active duty in the armed forces of the United States. In no event may an Excused
Absence exceed six (6) months in length (or, if longer and if applicable, the
period of the individual's active duty in the armed forces of the United States
and such period thereafter as such individual's right to reemployment by the
Company is protected by law), and any absence shall cease to be an Excused
Absence upon the earlier of (a) the last day of the calendar month in which the
duration of the absence reaches six (6) months or (b) the last day of the
calendar month in which the leave expires by its terms, the layoff ends by
recall or permanent separation from service, or recovery from illness or
disability occurs.
Sec. 2.11 "EXERCISE DATE" means the last day of each Purchase Period.
Sec. 2.12 "MARKET VALUE" means, with respect to Stock, the fair market
value of such Stock, determined by such methods or procedures as shall be
established from time to time by the Administrative Committee, provided,
however, that if the Stock is listed on a national securities exchange or quoted
in an interdealer quotation system, the Market Value of such Stock on a given
date shall be based upon the last sales price or, if unavailable, the average of
the closing bid and asked prices per share of the Stock on such date (or, if
there was no trading or quotation in the Stock on such date, on the next
preceding date on which there was trading or quotation) as provided by one of
such organizations.
Sec. 2.13 "OFFERING" means the offering of shares of Stock under the Plan.
Sec. 2.14 "OFFERING DATE" means the first business day of each February,
May, August and November during which the Plan is in effect, commencing with the
first business day on or after the Effective Date.
Sec. 2.15 "PARTICIPANT" means each Eligible Employee who elects to
participate in the Plan.
Sec. 2.16 "PLAN" means the U.S. Office Products Company Employee Stock
Purchase Plan, as the same is set forth herein and as the same may hereafter be
amended.
Sec. 2.17 "PURCHASE AGREEMENT" means the document prescribed by the
Administrative Committee pursuant to which an Eligible Employee has enrolled to
be a Participant.
Sec. 2.18 "PURCHASE PERIOD" means the period beginning on an Offering Date
and ending on the last business day of the second calendar month following the
calendar month in which such Offering Date occurred.
Sec. 2.19 "PURCHASE PRICE" means such term as it is defined in Section 4.03
hereof.
Sec. 2.20 "STOCK" means Common Stock of the Company.
Sec. 2.21 "STOCK PURCHASE ACCOUNT" means a noninterest bearing account
consisting of all amounts withheld from an Employee's compensation (or otherwise
paid into the Plan) for the purpose of purchasing shares of Stock for such
employee under the Plan, reduced by all amounts applied to the purchase of Stock
for such Employee under the Plan.
Sec. 2.22 "SUBSIDIARY" shall mean a corporation described in section 424(f)
of the Code that has, with the permission of the Board, adopted the Plan.
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ARTICLE III
ADMISSION TO PARTICIPATION
Sec. 3.01 INITIAL PARTICIPATION. Any Eligible Employee may elect to be a
Participant and may become a Participant by executing and filing with the
Administrative Committee a Purchase Agreement at such time in advance and on
such forms as prescribed by the Administrative Committee. The effective date of
an Eligible Employee's participation shall be the Offering Date next following
the date on which the Administrative Committee receives from the Eligible
Employee a properly executed and timely filed Purchase Agreement. Participation
in the Plan will continue automatically from one Purchase Period to another
unless notice is given pursuant to Section 3.02.
Sec. 3.02 VOLUNTARY DISCONTINUANCE OF PARTICIPATION. Any Participant may
voluntarily withdraw from the Plan by filing a Notice of Withdrawal with the
Administrative Committee at such time in advance as the Administrative Committee
may specify. Upon such withdrawal, there shall be paid to the Participant the
amount, if any, standing to his credit in his Stock Purchase Account.
Sec. 3.03 INVOLUNTARY DISCONTINUANCE OF PARTICIPATION. If a Participant
ceases to be an Eligible Employee, the entire amount, if any, standing to the
Participant's credit in his Stock Purchase Account shall be refunded to him.
Notwithstanding the foregoing, should a Participant cease to be an Eligible
Employee by reason of being granted an option to purchase Stock under a stock
option plan maintained by the Company, such Participant may continue to
participate only through the end of the Purchase Period during which such option
was granted.
Sec. 3.04 READMISSION TO PARTICIPATION. Any Eligible Employee who has
previously been a Participant, who has discontinued participation, and who
wishes to be reinstated as a Participant may again become a Participant for any
subsequent Purchase Period by executing and filing with the Administrative
Committee, at such time in advance as the Administrative Committee shall
determine, a new Purchase Agreement on forms provided by the Administrative
Committee. Reinstatement to Participant status shall be effective as of the
Offering Date next following the date on which the Administrative Committee
receives from the Eligible Employee the properly executed and timely filed
Purchase Agreement. Notwithstanding the foregoing, readmission of any Eligible
Employee may be suspended for such time as may be necessary to comply with Rule
16b-3 promulgated under the Securities Exchange Act of 1934.
ARTICLE IV
STOCK PURCHASE
Sec. 4.01 RESERVATION OF SHARES. There shall be 1,000,000 shares of Stock
reserved for the Plan, subject to adjustment in accordance with the antidilution
provisions hereinafter set forth. Except as provided in Section 5.02 hereof, the
aggregate number of shares that may be purchased under the Plan shall not exceed
the number of shares reserved for the Plan.
Sec. 4.02 LIMITATION ON SHARES AVAILABLE. The maximum number of shares of
Stock that may be purchased for each Participant on an Exercise Date is the
least of (a) the number of shares of Stock that can be purchased by applying the
full balance of his Stock Purchase Account to such purchase of shares at the
Purchase Price (as hereinafter determined), or (b) the Participant's
proportionate part of the maximum number of whole shares of Stock available
within the limitation established by the maximum aggregate number of such shares
reserved for the Plan, as stated in Section 4.01 hereof. Notwithstanding the
foregoing, if any person entitled to purchase shares pursuant to any offering
hereunder would be deemed for the purposes of section 423(b)(3) of the Code to
own stock (including any number of shares that such person would be entitled to
purchase hereunder) possessing five percent (5%) or more of the total combined
voting power or value of all classes of stock of Company, the maximum number of
shares that such person shall be entitled to purchase pursuant to the Plan shall
be reduced to that number which, when added to the number of shares of Stock
that such person is so
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deemed to own (excluding any number of shares that such person would be entitled
to purchase hereunder), is one less than such five percent (5%). Any portion of
a Participant's Stock Purchase Account that cannot be applied by reason of the
foregoing limitation shall remain in the Participant's Stock Purchase Account
for application to the purchase of Stock on the next Offering Date (unless
withdrawn before that Offering Date).
Sec. 4.03 PURCHASE PRICE OF SHARES. The Purchase Price per share of the
Stock sold to Participants pursuant to any Offering shall be the sum of (a)
eighty-five percent (85%) of the Market Value of such share on the Offering Date
on which such Offering commences or on the Exercise Date on which such Offering
expires, whichever is lower, and (b) any transfer, excise or similar tax imposed
on the transaction pursuant to which such share of Stock is purchased. If the
Exercise Date with respect to the purchase of Stock is a day on which the stock
is selling ex-dividend but is on or before the record date for such dividend,
then for Plan purposes the Purchase Price per share will be increased by an
amount equal to the dividend per share. In no event shall the Purchase Price be
less than the par value of the Stock.
Sec. 4.04 EXERCISE OF PURCHASE PRIVILEGE.
(a) Subject to the provisions of Section 4.02 above, if on the date of
the last paycheck of a Participant issued prior to any Exercise Date there
is a credit balance in the Participant's Stock Purchase Account, there shall
be purchased for the Participant at the Purchase Price for the Purchase
Period that expires on such Exercise Date the largest number of whole shares
of Stock, as can be purchased with the entire amount standing to the
Participant's credit in his Stock Purchase Account on such paycheck issue
date. Each such purchase shall be deemed to have occurred on the Exercise
Date occurring at the close of the Offering for which the purchase was made.
(b) Any amount remaining in the Stock Purchase Account on the Exercise
Date after the purchase of the maximum number of whole shares shall remain
in the Stock Purchase Account to the credit of the Participant and applied
to purchase additional shares of Stock on subsequent Exercise Dates.
(c) Notwithstanding anything contained herein to the contrary, a
Participant may not during any calendar year purchase shares of Stock having
an aggregate Market Value, determined at the time of each Offering Date
during such calendar year, of more than $25,000.
Sec. 4.05 ESTABLISHMENT OF STOCK PURCHASE ACCOUNT. Each Participant shall
authorize payroll deductions from Compensation for the purposes of funding his
Stock Purchase Account. In the Purchase Agreement, each Participant shall
authorize a deduction from each payment of his Compensation during a Purchase
Period, which deduction shall be not less than one percent (1%) nor more than
ten percent (10%) of the gross amount of such payment, subject to Section
4.04(c). Subject to Section 3.02, a Participant may not reduce or increase his
payroll deduction rate during any Purchase Period. However, a Participant may
change the deduction to any permissible level for any subsequent Offering by
filing notice thereof at such time preceding the Offering Date on which such
subsequent Offering commences as the Administrative Committee shall determine.
Sec. 4.06 PAYMENT FOR STOCK. The Purchase Price for all shares of Stock
purchased by a Participant under the Plan shall be paid out of the Participant's
Stock Purchase Account. As of each Exercise Date, the entire amount standing to
the credit of each Participant in his Stock Purchase Account on the date of the
last paycheck issued to the Participant prior to the Exercise Date in the
Purchase Period that expires on such Exercise Date shall be charged with the
aggregate Purchase Price of the shares of Stock purchased by such Participant on
the Exercise Date. No interest shall be paid or payable with respect to any
amount held in the Participant's Stock Purchase Account.
Sec. 4.07 SHARE OWNERSHIP; ISSUANCE OF CERTIFICATES.
(a) The shares purchased by a Participant on an Exercise Date shall, for
all purposes, be deemed to have been issued and/or sold at the close of
business on such Exercise Date. Prior to
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that time, none of the rights or privileges of a stockholder of the Company
shall inure to the Participant with respect to such shares. All the shares
of Stock purchased under the Plan shall be delivered by the Company in a
manner as determined by the Administrative Committee.
(b) The Administrative Committee, in its sole discretion, may determine
that the shares of Stock shall be delivered by the Company (i) by issuing
and delivering to the Participant a certificate for the number of whole
shares of Stock purchased by such Participant on an Exercise Date or during
a Calendar year, or (ii) by issuing and delivering a certificate or
certificates for the number of shares of Stock purchased by all Participants
on an Exercise Date or during a Calendar year to a member firm of the New
York Stock Exchange which is also a member of the National Association of
Securities Dealers, as selected by the Administrative Committee from time to
time, which shares shall be maintained by such member firm in separate
brokerage accounts of each Participant, or (iii) by issuing and delivering a
certificate or certificates for the number of shares of Stock purchased by
all Participants on an Exercise Date or during the calendar year to a bank
or trust company or affiliate thereof, as selected by the Administrative
Committee from time to time, which shares shall be maintained by such bank
or trust company or affiliate in separate accounts for each Participant or,
if he designates on his Stock Purchase Agreement, in his name jointly with
his spouse, with right of survivorship. A Participant who is a resident of a
jurisdiction that does not recognize such joint tenancy may have a
certificate or account in his name as tenant in common with his spouse,
without right of survivorship. Such designation may be changed by filing a
notice thereof signed by the Participant and his spouse. Such spouse shall
be bound by all of the terms and conditions of the Plan as if such spouse
were a Participant.
Sec. 4.08 RESTRICTIONS ON RESALE. Stock acquired under the Plan may not be
sold or otherwise disposed of for at least one year after the Exercise date on
which the shares were acquired, except in the case of death or disability.
ARTICLE V
SPECIAL ADJUSTMENTS
Sec. 5.01 SHARES UNAVAILABLE. If, on any Exercise Date, the aggregate
funds available for the purchase of Stock would purchase a number of shares in
excess of the number of shares then available for purchase under the Plan, the
following events shall occur:
(a) The number of shares that would otherwise be purchased by each
Participant shall be proportionately reduced on the Exercise Date in order
to eliminate such excess;
(b) The Plan shall automatically terminate immediately after the
Exercise Date as of which the supply of available shares is exhausted; and
(c) Any amount remaining in the Stock Purchase Account of each of the
Participants shall be repaid to such Participants.
Sec. 5.02 ANTIDILUTION PROVISIONS. The aggregate number of shares of Stock
reserved for purchase under the Plan, as hereinabove provided, and the
calculation of the Purchase Price per share may be appropriately adjusted to
reflect any increase or decrease in the number of issued shares of Stock
resulting from a subdivision or consolidation of shares or other capital
adjustment, or the payment of a stock dividend, or other increase or decrease in
such shares, if effected without receipt of consideration by the Company. Any
such adjustment shall be made by the Administrative Committee acting with the
consent of, and subject to the approval of, the Board.
Sec. 5.03 EFFECT OF CERTAIN TRANSACTIONS. Subject to any required action
by the stockholders, if the Company shall be the surviving or resulting
corporation in any merger or consolidation, or if the Company shall be merged
for the purpose of changing the jurisdiction of its incorporation, any Offering
hereunder shall pertain to and apply to the shares of stock of the Company or
the survivor. However, in the event of a dissolution or liquidation of the
Company, or of a merger or consolidation in
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which the Company is not the surviving or resulting corporation, the Plan and
any Offering hereunder shall terminate upon the effective date of such
dissolution, liquidation, merger or consolidation, and the balance then standing
to the credit of each Participant in his Stock Purchase Account shall be
returned to him.
ARTICLE VI
MISCELLANEOUS
Sec. 6.01 NONALIENATION. The right to purchase shares of Stock under the
Plan is personal to the Participant, is exercisable only by the Participant
during his lifetime except as hereinafter set forth, and may not be assigned or
otherwise transferred by the Participant. Notwithstanding the foregoing, there
shall be delivered to the executor, administrator or other personal
representative of a deceased Participant such shares of Stock and such residual
balance as may remain in the Participant's Stock Purchase Account as of the date
the Participant's death occurs. However, such representative shall be bound by
the terms and conditions of the Plan as if such representative were a
Participant.
Sec. 6.02 ADMINISTRATIVE COSTS. The Company shall pay all administrative
expenses associated with the operation of the Plan. No administrative charges
shall be levied against the Stock Purchase Accounts of the Participants.
Sec. 6.03 COLLECTION OF TAXES. The Company shall be entitled to require
any Participant to remit, through payroll withholding or otherwise, any tax that
it determines it is so obligated to collect with respect to the issuance of
Stock hereunder, or the subsequent sale or disposition of such Stock, and the
Administrative Committee shall institute such mechanisms as shall insure the
collection of such taxes.
Sec. 6.04 ADMINISTRATIVE COMMITTEE. The Compensation Committee of the
Board shall appoint an Administrative Committee, which shall have the authority
and power to administer the Plan and to make, adopt, construe, and enforce rules
and regulations not inconsistent with the provisions of the Plan. The
Administrative Committee shall adopt and prescribe the contents of all forms
required in connection with the administration of the Plan, including, but not
limited to, the Purchase Agreement, payroll withholding authorizations,
withdrawal documents, and all other notices required hereunder. The
Administrative Committee shall have the fullest discretion permissible under law
in the discharge of its duties. The Administrative Committee's interpretations
and decisions in respect of the Plan, the rules and regulations pursuant to
which it is operated, and the rights of Participants hereunder shall be final
and conclusive.
Sec. 6.05 AMENDMENT OF THE PLAN. The Board may amend the Plan without the
consent of stockholders or Participants, except that any such action shall be
subject to the approval of the Company's stockholders at or before the next
annual meeting of stockholders for which the record date is after such Board
action if such stockholder approval is required by any federal or state law or
regulation or the rules of any stock exchange or automated quotation system on
which the Stock may then be listed or quoted, and the Board may otherwise, in
its discretion, determine to submit other such changes to the Plan to
stockholders for approval; provided, however, that, without the consent of an
affected Participant, no such action may materially impair the rights of such
Participant under any award theretofore granted to him.
Sec. 6.06 TERMINATION OF THE PLAN. The Plan shall continue in effect
unless terminated pursuant to action by the Board, which shall have the right to
terminate the Plan at any time without prior notice to any Participant and
without liability to any Participant. Upon the termination of the Plan, the
balance, if any, then standing to the credit of each Participant in his Stock
Purchase Account shall be refunded to him.
6
<PAGE>
Sec. 6.07 REPURCHASE OF STOCK. The Company shall not be required to
purchase or repurchase from any Participant any of the shares of Stock that the
Participant acquired under the Plan.
Sec. 6.08 NOTICE. A Purchase Agreement and any notice that a Participant
files pursuant to the Plan shall be on the form prescribed by the Administrative
Committee and shall be effective only when received by the Administrative
Committee. Delivery of such forms may be made by hand or by certified mail, sent
postage prepaid, to U.S. Office Products Company, 1440 New York Avenue, N.W.,
Washington, D.C. 20005, Attention: Stock Purchase Plan Committee. Delivery by
any other mechanism shall be deemed effective at the option and discretion of
the Administrative Committee.
Sec. 6.09 GOVERNMENT REGULATION. The Company's obligation to sell and to
deliver the Stock under the Plan is at all times subject to all approvals of any
governmental authority required in connection with the authorization, issuance,
sale or delivery of such Stock.
Sec. 6.10 HEADINGS, CAPTIONS, GENDER. The headings and captions herein are
for convenience of reference only and shall not be considered as part of the
text. The masculine shall include the feminine, and vice versa.
Sec. 6.11 SEVERABILITY OF PROVISIONS; PREVAILING LAW. The provisions of
the Plan shall be deemed severable. In the event any such provision is
determined to be unlawful or unenforceable by a court of competent jurisdiction
or by reason of a change in an applicable statute, the Plan shall continue to
exist as though such provision had never been included therein (or, in the case
of a change in an applicable statute, had been deleted as of the date of such
change). The Plan shall be governed by the laws of the State of Delaware, to the
extent such laws are not in conflict with, or superseded by, federal law.
7
<PAGE>
U.S. OFFICE PRODUCTS COMPANY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 20, 1996
Revoking all prior proxies, the undersigned, a stockholder of U.S. OFFICE
PRODUCTS COMPANY (the "Company"), hereby appoints Jonathan J. Ledecky, Donald H.
Platt and Mark D. Director, and each of them, attorneys and agents of the
undersigned, with full power of substitution, to vote all shares of the Common
Stock, par value $.001 per share (the "Common Stock"), of the undersigned in the
Company at the Annual Meeting of Stockholders of the Company to be held in the
Crystal Room of the Willard Intercontinental Hotel, 1401 Pennsylvania Avenue,
N.W., Washington, D.C. 20005 on August 20, 1996 at 10:00 a.m., local time, and
at any adjournment thereof, as fully and effectively as the undersigned could do
if personally present and voting, hereby approving, ratifying and confirming all
that said attorneys and agents or their substitutes may lawfully do in place of
the undersigned as indicated below.
<TABLE>
<S> <C> <C> <C>
1. Election of Directors / / FOR all nominees listed below / / WITHHOLD AUTHORITY
(Except as marked to the contrary below) to vote for all nominees listed
below
</TABLE>
Nominees: Jonathan J. Ledecky, Jack L. Becker, Jr., John K. Burgess, David C.
Copenhaver, Timothy J. Flynn, David Gezon, Milton H. Kuyers, Allon H. Lefever,
Edward J. Mathias, Clifton B. Phillips, John A. Quelch, Thomas J. Reaser, and
Mark A. Sorgenfrei
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
________________________________________
<TABLE>
<S> <C> <C> <C>
2. Approval of the the amendment and restatement of Company's Amended and Restated Certificate of
Incorporation.
</TABLE>
/ / FOR / / AGAINST / / ABSTAIN
<TABLE>
<S> <C> <C> <C>
3. Approval of the adoption of Amendment No. 2 to the U.S. Office Products Company Amended and Restated 1994
Long-Term Incentive Plan.
</TABLE>
/ / FOR / / AGAINST / / ABSTAIN
<TABLE>
<S> <C> <C> <C>
4. Approval of adoption of the U.S. Office Products Company 1996 Executive Deferred Compensation Plan.
</TABLE>
/ / FOR / / AGAINST / / ABSTAIN
<TABLE>
<S> <C> <C> <C>
5. Approval of the adoption of the U.S. Office Products Company 1996 Non-Employee Directors' Stock Plan.
</TABLE>
/ / FOR / / AGAINST / / ABSTAIN
(CONTINUED AND TO BE SIGNED AND DATED ON THE OTHER SIDE)
<PAGE>
<TABLE>
<S> <C> <C> <C>
6. Approval of the amendment to the U.S. Office Products Company Employee Stock Purchase Plan.
</TABLE>
/ / FOR / / AGAINST / / ABSTAIN
<TABLE>
<S> <C> <C> <C>
7. Ratification of the appointment of Price Waterhouse LLP as the independent public accountants to examine the
Company's consolidated financial statements for the fiscal year ending April 30, 1996.
</TABLE>
/ / FOR / / AGAINST / / ABSTAIN
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON ANY OTHER
MATTERS WHICH MAY PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENT THEREOF.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED. IF NO
DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE LISTED
NOMINEES AS DIRECTORS AND FOR PROPOSALS 2, 3, 4, 5, 6 AND 7.
When shares are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title
as such. If a corporation, please sign in full corporation name by President or
other authorized officer. If a partnership, please sign in partnership name by
authorized person.
PLEASE SIGN, DATE AND RETURN THE PROXY
CARD PROMPTLY, USING THE ENCLOSED
ENVELOPE.
Please sign exactly as name appears
below.
Dated __________________________, 1996
______________________________________
Signature
______________________________________
Signature (if held jointly)
/ / PLEASE CHECK HERE IF YOU PLAN TO
ATTEND THE
ANNUAL MEETING.
