The Company purchased 194,000 shares of its common stock from a director of the Company for $3.7 million in cash during the fiscal year ended August 31, 1998. Also during fiscal 1998, the Company purchased 57,094 shares of its common stock from a former officer of the Company for $1.1 million. The shares were purchased at the existing fair market value on the dates of the transactions. 

During fiscal 1998, the Company sold one of its consult- ing units to a group of former employees for $1.6 million. The amount is payable to the Company in six annual installments from September 1998 through 2003. The Company also granted certain employees the option to purchase another consulting unit of the Company for $1.2 million payable to the Company in equal annual installments over a ten-year period commencing January 2001. Such option becomes exerciseable upon the achievement of certain financial thresholds. As of August 31, 2000, the consulting unit had not yet reached planned financial thresholds and the Company does not expect that the option will be exercised. 

Each transaction described above was entered into pursuant to arm’s length negotiations with the party involved and were approved by disinterested majorities of the board of directors or the Compensation Committee of the Board. 

## PROPOSAL TO ADOPT AN EXECUTIVE PERFORMANCE AWARD FOR THE CHIEF EXECUTIVE OFFICER OF THE COMPANY 

## General 

In an effort to develop a compensation agreement that would create a strong link in both pay for performance and shareholder value creation, the Board and Mr. Whitman have directly linked Mr. Whitman’s annual performance award and long-term compensation to measures that create value and increase the price of the Company’s Common Stock. The performance award’s unusual structure differs from normal executive compensation programs in that the annual performance pay is tied to very aggressive growth goals and the long- term compensation is awarded only after most shareholders have benefited from a substantial increase in share price. For example, for fiscal year 2001, Mr. Whitman would receive no performance pay until an approximate 36% increase in EBITDA is achieved and would not receive a full reward unless an 84% increase 

in EBITDA is achieved. Though subsequent years’ performance requirements may not necessarily be that aggressive, the hurdle tied to value creation is expected to be high. The Company’s outside compensation consultants advised the Board that long-term compensation is typically bench-marked by company size and is usually granted at current market price. However,to emphasize pay for performance, the options granted to Mr. Whitman have an unusually conservative vesting schedule and grant price, consistent with Mr. Whitman’s desire that value be created for existing shareholders before he receives long-term compensation rewards. The award provides for no vesting for seven years (and only then if currently employed) of any of the options unless the market price of the Company’s stock price reaches certain levels which would increase shareholders value by approximately 300% to 700% over that time period. The grant price of $14.00 is also well above the current market price. The Board and Mr. Whitman have designed this compensation package with the intent that existing shareholders would benefit prior to Mr. Whitman receiving meaningful compensation. 

On July 14, 2000, which became effective September 1, 2000, the Board of Directors and the Compensation Committee of the Board approved the terms of an employment agreement (the “Employment Agreement” or “Agreement”) containing a performance award for Robert A. Whitman, the Chairman of the Board, President and Chief Executive Officer of the Company, subject to approval by the Company’s shareholders in accordance with the provisions of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). Section 162(m) generally authorizes the deduction of compensation in excess of $1,000,000 per taxable year payable to a chief executive officer (and certain other officers) only where such compensation is at least partially based on performance, satisfies other require- ments, and is approved by shareholder vote. 

If the performance award is approved by the affirmative vote of the holders of at least a majority of the shares of Common Stock present and entitled to vote at the meet- ing and certain other requirements set forth in Section 162(m) of the Code are satisfied, the performance awards paid to Mr. Whitman pursuant to the Employment Agreement will qualify for deduction under Section 162(m) of the Code. A description of the performance award for Mr. Whitman is set forth below. 

