<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/X/ Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
VANSTAR CORPORATION
- --------------------------------------------------------------------------------
(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:
------------------------------------------------------------------------
<PAGE>
VANSTAR CORPORATION
5964 WEST LAS POSITAS BLVD.
PLEASANTON, CALIFORNIA 94588
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
---------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of Vanstar Corporation, a Delaware corporation (the "Company"), will
be held at the Waldorf Astoria Hotel, 301 Park Avenue, New York, New York, on
Friday September 13, 1996, at 11:00 a.m. (local time) for the following
purposes:
1. to elect directors of the Company to serve until the next Annual
Meeting of Stockholders of the Company and until their successors are duly
elected and qualified;
2. to ratify the selection of Ernst & Young, LLP as auditors for the
Company for the fiscal year ending April 30, 1997;
3. to approve the Corporation's 1996 Stock Option/Stock Issuance Plan;
and
4. to transact such other business as may properly come before the
Meeting or any adjournments thereof.
Only stockholders of record at the close of business on August 1, 1996, are
entitled to notice of and to vote at the Meeting.
By Order of the Board of Directors,
WILLIAM Y. TAUSCHER
CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE OFFICER
Pleasanton, California
August 23, 1996
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AND VOTED AT THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE READ THE
ENCLOSED PROXY STATEMENT AND COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY
IN THE ENVELOPE PROVIDED.
<PAGE>
VANSTAR CORPORATION
5964 WEST LAS POSITAS BLVD.
PLEASANTON, CALIFORNIA 94588
------------------------
PROXY STATEMENT
---------------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 13, 1996
This Proxy Statement is being mailed to you in connection with the
solicitation of proxies by the Company's Board of Directors (the "Board") for
use at the Annual Meeting of Stockholders (the "Meeting") of Vanstar
Corporation, a Delaware corporation (the "Company"), to be held on Friday,
September 13, 1996, at 11:00 a.m. (local time) at the Waldorf Astoria Hotel, 301
Park Avenue, New York, New York, and at any adjournments thereof.
SOLICITATION OF PROXIES
All shares represented by duly executed proxies in the form enclosed
herewith that are received by the Company prior to the Meeting will be voted at
the Meeting as instructed in such proxies. There are boxes on the proxy card to
vote for or to withhold authority to vote for the director nominees, and there
are also boxes to vote for or against or to abstain on each proposal described
in this Proxy Statement. If no instructions are given, the persons named in the
accompanying proxy intend to vote FOR the eleven nominees named herein as
directors of the Company and FOR each proposal described in this Proxy
Statement.
A stockholder may revoke a previously executed proxy at any time prior to
its exercise by (i) delivering a later-dated proxy, (ii) giving written notice
of revocation to the Secretary of the Company at the address set forth above at
any time before such proxy is voted or (iii) voting in person at the Meeting. No
proxy will be voted if the stockholder attends the Meeting and elects to vote in
person. If a stockholder does not intend to attend the Meeting, any proxy or
notice should be returned to the Company for receipt by the Company not later
than the close of business on Monday, September 9, 1996.
A copy of the Annual Report of the Company containing financial statements
for the fiscal year ended April 30, 1996 (sometimes called "Fiscal Year 1996" in
this Proxy Statement), is enclosed herewith. This Proxy Statement and the form
of proxy enclosed herewith were first mailed to stockholders on or about August
23, 1996. The mailing address of the Company's principal executive offices is
5964 West Las Positas Blvd., Pleasanton, California 94588.
The Board does not know of any matter other than as set forth herein that is
expected to be presented for consideration at the Meeting. If other matters
properly come before the Meeting, however, the persons named in the accompanying
proxy (each of whom is an officer of the Company) intend to vote thereon in
accordance with their judgment.
RECORD DATE, OUTSTANDING VOTING
SECURITIES AND VOTES REQUIRED
The Company's common stock, $.001 par value (the "Common Stock"), is the
only outstanding class of voting securities of the Company. The record date for
determining the holders of Common Stock entitled to vote on the actions to be
taken at the Meeting is the close of business on August 1, 1996 (the "Record
Date"). As of the Record Date, 40,475,144 shares of Common Stock were
outstanding. Each holder of Common Stock on the Record Date is entitled to cast
one vote per share at the Meeting. There are no cumulative voting rights.
Holders of a majority of the shares entitled to vote must be present at the
Meeting, in person or by proxy, so that a quorum may be present for the
transaction of business. The affirmative vote of the
<PAGE>
holders of a majority of the shares of Common Stock present at the Meeting, in
person or by proxy, is necessary for the election of directors of the Company
and for the approval of each proposal described in this Proxy Statement. Broker
non-votes will not be counted as present at the Meeting. Abstentions will be
counted as present and, accordingly, will have the effect of a negative vote.
ELECTION OF DIRECTORS
At the Meeting, eleven persons will be elected to serve as directors until
the Company's next Annual Meeting of Stockholders and until their successors
have been duly elected and qualified as provided in the Company's Restated
Certificate of Incorporation and By-laws. The following persons have been
nominated and, if elected, have consented to serve as directors of the Company.
All nominees are presently members of the Board. Information about each such
nominee is set forth below.
JAY S. AMATO became President and Chief Operating Officer in July 1995 and a
director in December 1995. From January 1993 until July 1995, he was Senior Vice
President and President, North America Operations of the Company. From June 1991
until January 1993, he was Senior Vice President, Major Market Operations of the
Company, and from April 1989 until June 1991, he was Vice President of Business
Development of the Company. Mr. Amato was previously the New York regional
manager and director of operations of The Computer Factory, Inc.
JOHN W. AMERMAN became director in June 1996. He has served as Chairman and
Chief Executive Officer of Mattel, Inc., a leading toy manufacturer, since 1987.
Prior to his chairmanship with Mattel, Inc., Mr. Amerman served as President of
Mattel International. Before joining Mattel in 1980, Amerman was president of
the American Chicle division of Warner Lambert Corp., a consumer and health-care
products company. Mr. Amerman is also a member of the board of directors of
Unocal Corporation, a worldwide energy resources company, a member of the Board
of Governors of the Hugh O'Brian Youth Foundation and a member of the Board of
Overseers of Dartmouth's Amos Tuck School.
RICHARD H. BARD became a director of the Company in September 1987 and
served as Chairman of the Board of Directors from July 1989 to December 1991. He
has been a director and Chief Executive Officer of Optical Security Group, Inc.,
a materials technology company, since September 1993, and became President and
Chairman of the Board of that company in April 1995. From July 1989 to December
1991, he served at different times in the capacities of Director, Chairman,
President and Chief Executive Officer of ComputerLand International Development,
Inc. Since 1991, he has also been Chief Executive Officer of Bard & Co., Inc., a
diversified investment management company. From May 1986 until December 1988, he
was Chairman and Chief Executive Officer of CoastAmerica Corporation, a
franchisor of hardware product stores. Prior to that time, he was President and
Chief Operating Officer of FoxMeyer Corporation, which he co-founded in 1978.
Mr. Bard is also a director of Builder Marts of America Inc., a supplier of
building materials, and Polymedica Industries, Inc., a manufacturer of
healthcare products.
STEPHEN W. FILLO became a director in September 1987. He has been President
of Fillo & Co., Inc., an independent investment firm, since December 1990. He
was a Managing Director of E.M. Warburg, Pincus & Co., Inc., a venture banking
and investment counseling firm, from 1981 to 1990. He is a director of LCI
International Inc., a long distance telephone carrier.
STEWART K.P. GROSS became a director in June 1994. Mr. Gross is a Managing
Director of E.M Warburg, Pincus & Co., Inc. Mr. Gross has been with that firm
since July 1987 and has been a Managing Director since January 1993. He is a
director of several privately-held companies.
WILLIAM H. JANEWAY became a director in June 1994. He has been a Managing
Director and the head of the Venture Capital High Technology Team since 1988 of
E.M. Warburg, Pincus & Co., Inc. Mr. Janeway is a director of Maxis, Inc., an
entertainment software company, Zilog, Inc., a semiconductor manufacturer, and
several private companies.
2
<PAGE>
JOHN R. OLTMAN became director of the Company in June 1996. Mr. Oltman is
the former Chairman and Chief Executive Officer of SHL Systemhouse, Inc., a
provider of client/server consulting, systems integration and technology
outsourcing. Before joining SHL Systemhouse, Mr. Oltman was Worldwide Managing
Partner for Integration Services for Andersen Consulting and a member of
Andersen's Worldwide Organization Board of Directors. Mr. Oltman joined the
Arthur Andersen Worldwide Organization in 1970 and held a number of positions
within that firm, including Managing Partner for Andersen's Chicago Consulting
Group. Mr. Oltman is a director of TSW International and IA Corporation,
application software companies.
JEFFREY S. RUBIN became Vice Chairman in June 1995, Chief Financial Officer
in November 1995 and a director in July 1991. From May 1994 to February 1995,
Mr. Rubin was Senior Vice President, Business Development and Planning for GTE
Corporation. He was Executive Vice President and Chief Financial Officer of
NYNEX Corporation from 1993 until April 1994. From January 1991 to 1993, he was
Senior Vice President and Chief Financial Officer of NYNEX Corporation. From
March 1990 to January 1991, he was Vice President -- Finance of NYNEX
Corporation. Mr. Rubin is a director of Shared Medical Systems Corporation, a
medical financial services company.
WILLIAM Y. TAUSCHER became Chairman of the Board of the Company in September
1987 and Chief Executive Officer in September 1988. He was President from
September 1988 to July 1995. Prior to September 1988, he was Chairman of the
Board, President and Chief Executive Officer of FoxMeyer Corporation, a
wholesale pharmaceutical distributor and franchisor that he co-founded in 1978
and a subsidiary of National Intergroup, Inc., a diversified holding
corporation. He is a director of The Vons Companies, Inc., a grocery store
chain.
JOHN L. VOGELSTEIN became a director in January 1991. He has been President
of E.M. Warburg, Pincus & Co., Inc. since 1994, Vice Chairman of E.M. Warburg,
Pincus & Co., Inc. since 1982, President of Warburg Pincus Ventures, Inc. since
1980 and a Partner of Warburg, Pincus & Co. since 1971. Mr. Vogelstein is a
director of ADVO, Inc., a direct mail marketing company, Aegis Group plc, a
media buying company, LCI International, Inc., a long distance telephone
carrier, Mattel, Inc., a toy manufacturer, Value Health, Inc., a managed care
company, and several private companies.
JOSH S. WESTON became director of the Company in June 1996. Mr. Weston has
served as Chairman and Chief Executive Officer of Automatic Data Processing,
Inc., a computer services company since 1982. Mr. Weston is also a member of the
Board of Directors of Public Service Enterprise Group Inc., an electric and gas
utility company, Olsten Corp., a provider of home health care and temporary
staffing services and Shared Medical Systems, a provider of health information
services.
MEETINGS OF THE BOARD AND COMMITTEES
During the fiscal year ended April 30, 1996, the Board met five (5) times.
The Board of Directors has established three committees. The Executive Committee
is comprised of Messrs. Tauscher, Rubin, Bard and Gross and generally has all
the powers of the Board of Directors, subject to limitations provided by the
Delaware General Corporation Law. The Audit Committee was comprised of Messrs.
Fillo and Gross until August 1995, when Mr. Oltman replaced Mr. Gross. The Audit
Committee oversees the activities of the Company's independent auditors and
reviews the Company's internal accounting procedures and controls. The
Compensation and Stock Option Committee is comprised of Messrs. Janeway and Bard
and makes recommendations to the Board of Directors with respect to general
compensation and benefit levels, determines the compensation and benefits for
the Company's executive officers and administers the Company's stock option
plans. The Executive and Audit Committees met once each during the fiscal year
and the Compensation and Stock Option Committee did not meet during the fiscal
year.
3
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS, DIRECTORS AND MANAGEMENT
The outstanding capital stock of the Company consists of the Common Stock.
The following table sets forth information with respect to the beneficial
ownership of the Common Stock as of July 26, 1996, by (i) each person known by
the Company to own beneficially more than 5% of the outstanding Common Stock,
(ii) each of the Company's directors and nominees for director and certain
executive officers and other significant employees of the Company (collectively,
the "Named Executive Officers") and (iii) all directors and executive officers
of the Company as a group. Since there is no outstanding preferred stock of the
Company, none of the directors, nominees for director or executive officers of
the Company beneficially owns any preferred stock of the Company. Except as
otherwise stated, the Company believes that each of the beneficial owners named
in the table has sole voting and investment power with respect to all shares of
Common Stock beneficially owned by such stockholder as set forth opposite such
stockholder's name, subject to applicable community property laws. Except as
noted below, the address of each director and Named Executive Officer is c/o
Vanstar Corporation, 5964 West Las Positas Blvd., Pleasanton, California 94588.
<TABLE>
<CAPTION>
NO. OF SHARES
NAME OF BENEFICIAL OWNER/DIRECTOR AGE OF COMMON STOCK PERCENTAGE (1)
- ------------------------------------------------------ --- ---------------- ---------------
<S> <C> <C> <C>
Warburg, Pincus Capital Company, L.P. (2) ............ -- 13,878,401.21 34.3
466 Lexington Avenue
10th Floor
New York, NY 10017
William Y. Tauscher (3)............................... 46 2,669,424.49 6.5
Jeffrey S. Rubin (4).................................. 52 168,641.00 *
Richard H. Bard (5)................................... 48 1,157,546.26 2.8
Stephen W. Fillo (6).................................. 59 1,000.00 *
Stewart K.P. Gross (2)(7)............................. 37 13,878,401.21 34.3
William H. Janeway (2)(7)............................. 53 13,878,401.21 34.3
John L. Vogelstein (2)(7)............................. 61 13,878,401.21 34.3
Jay S. Amato (8)...................................... 37 140,000.00 *
Richard N. Anderson (9)............................... 39 60,107.00 *
Ahmad Manshouri (10).................................. 55 61,215.00 *
John W. Amerman (11).................................. 64 5,000.00 *
Josh S. Weston (11)................................... 67 5,000.00 *
John R. Oltman (11)................................... 51 5,000.00 *
All Directors and Executive Officers as a group (21 -- 4,535,687.75 10.8
persons) (7)(12).....................................
</TABLE>
- --------------------------
* Less than one percent.
(1) Applicable percentage of ownership is based on 40,475,144 shares of Common
Stock outstanding as of July 26, 1996, together with the applicable options
for such stockholder. Beneficial ownership is determined in accordance with
the rules of the Securities and Exchange Commission and generally includes
voting or investment power with respect to securities, subject to community
property laws, where applicable. Shares of Common Stock subject to options
that are either presently exercisable or become exercisable within 60 days
are deemed to be beneficially owned by the person holding such options for
the purpose of computing the percentage of ownership of such person, but are
not treated as outstanding for the purpose of computing the ownership
percentage of any other person.
(2) The sole general partner of Warburg, Pincus Capital Company, L.P.
("CapCo"), is Warburg, Pincus & Co., a New York general partnership ("WP").
Lionel I. Pincus is the Managing Partner of WP and may be deemed to control
WP. E.M. Warburg Pincus & Co., Inc. ("EMWP"), through a wholly-owned
subsidiary, manages CapCo. WP owns all of the outstanding stock of EMWP and,
as the general partner
4
<PAGE>
of CapCo, has a 20% interest in the profits of CapCo. EMWP owns 0.9% of the
limited partnership interests in CapCo. Number of shares includes 68,641
shares that are subject to options granted to Jeffrey S. Rubin as described
under note (4) below.
(3) Includes 374,974 shares of Common Stock reserved for issuance upon the
exercise of stock options granted under the Company's stock options plans
that are either presently exercisable or become exercisable within 60 days.
(4) Includes 100,000 shares of Common Stock reserved for issuance upon the
exercise of stock options granted under the Company's stock option plans
that are either presently exercisable or become exercisable within 60 days,
39,259 shares subject to exercise within 60 days under a
presently-exercisable stock option issued by CapCo, exercisable at $4.51 per
share until 2005, 19,630 shares subject to exercise within 60 days under a
presently-exercisable stock option issued by CapCo, exercisable at $8.12 per
share until 2005, 738 shares subject to exercise within 60 days under a
presently-exercisable stock option issued by CapCo, exercisable at $1.00 per
share until 2000, and 9,014 shares subject to exercise within 60 days under
a presently-exercisable stock option issued by CapCo, exercisable at $1.00
per share until 2005.
(5) Includes 363,434 shares of Common Stock reserved for issuance upon the
exercise of stock options granted under the Company's stock option plans
that are either presently exercisable or become exercisable within 60 days.
Includes 45,596 shares of Common Stock owned by the Bard Family Foundation,
of which Mr. Bard is President, and as to which Mr. Bard disclaims
beneficial ownership.
(6) Consists of 1,000 shares of Common Stock reserved for issuance upon
exercise of stock options granted under the Company's stock option plans
that are either presently exercisable or become exercisable within 60 days.
Pursuant to an arrangement between WP and Mr. Fillo, Mr. Fillo has an
indirect pecuniary interest in the capital stock of the Company owned by
CapCo. Mr. Fillo disclaims beneficial ownership of all such capital stock
within the meaning of the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
(7) Mr. Gross, Mr. Janeway and Mr. Vogelstein, directors of the Company, are
Managing Directors of EMWP and general partners of WP. As such, Mr. Gross,
Mr. Janeway and Mr. Vogelstein may be deemed to have an indirect pecuniary
interest (within the meaning of Rule 16a-1 under the Exchange Act) in an
indeterminate portion of the shares beneficially owned by CapCo. All of the
shares indicated as owned by Mr. Gross, Mr. Janeway and Mr. Vogelstein are
owned beneficially by CapCo and are included because of the affiliation of
such persons with CapCo. Mr. Gross, Mr. Janeway and Mr. Vogelstein disclaim
beneficial ownership of these shares within the meaning of Rule 13d-3 under
the Exchange Act.
(8) Includes 140,000 shares of Common Stock reserved for issuance upon exercise
of stock options granted under the Company's stock option plans that are
either presently exercisable or become exercisable within 60 days.
(9) Includes 41,040 shares of Common Stock reserved for issuance upon exercise
of stock options granted under the Company's stock option plans that are
either presently exercisable or become exercisable within 60 days, and
options to purchase 14,900 shares of Common Stock at an exercise price of
$6.00 per share granted to such person that are presently exercisable. The
options to purchase 14,900 shares of Common Stock were granted under a
separate stock option plan.
(10) Includes 37,000 shares of Common Stock reserved for issuance upon the
exercise of stock options granted under the Company's stock option plans
that are either presently exercisable or become exercisable within 60 days
and 11,920 shares of Common Stock held of record by Mr. Manshouri's wife.
(11) Consists of 5,000 shares of Common Stock reserved for issuance upon
exercise of stock options granted under the Company's stock option plans
that are either presently exercisable or become exercisable within 60 days.
(12) Includes 1,324,243 shares of Common Stock reserved for issuance upon
exercise of stock options granted under the Company's stock option plans
that are either presently exercisable or become exercisable within 60 days,
68,641 shares reserved for issuance upon the exercise of
presently-exercisable options and options exercisable within 60 days granted
by CapCo to Jeffrey S. Rubin and options to purchase 14,900 shares of Common
Stock granted to Richard N. Anderson under a separate stock option agreement
with the Company.
5
<PAGE>
EXECUTIVE OFFICERS
The following table sets forth the executive officers of the Company. See
"Election of Directors" for a description of the business experience of Messrs.
Tauscher, Rubin and Amato.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------ --- ---------------------------------------------------
<S> <C> <C>
William Y. Tauscher 46 Chairman of the Board and Chief Executive Officer
Jeffrey S. Rubin 52 Vice Chairman of the Board and Chief Financial
Officer
Jay S. Amato 37 President and Chief Operating Officer and Director
Richard N. Anderson 39 Senior Vice President Sales
H. Christopher Covington 46 Senior Vice President, General Counsel and
Secretary
Robert C. Kuntzendorf 51 Senior Vice President Operations
Chris M. Laney 39 Senior Vice President Networking Services
Ahmad Manshouri 55 Senior Vice President and General Manager Product
Operations
Michael J. Moore 45 Senior Vice President Management Information
Services
Coleman D. Sisson 39 Senior Vice President and General Manager Learning
Network
Thanos M. Triant 50 Senior Vice President and Chief Technology Officer
William R. Waas 48 Senior Vice President Service
</TABLE>
RICHARD N. ANDERSON became Senior Vice President Sales in December 1993. He
was Vice President, Field Sales from October 1992 until December 1993. From July
1991 to October 1992, he was an Area Director for the Company, responsible for
sales in the New England area. From December 1983 until July 1991, he was a
founder and Chief Operating Officer of New England Computer Corporation, one of
the largest Company franchisees. Prior thereto, he was a Financial Systems
Consultant for Digital Equipment Corporation.
H. CHRISTOPHER COVINGTON became Senior Vice President, General Counsel and
Secretary in August 1994. From April 1993 until August 1994, he was Vice
President. From November 1990 until April 1993, he was Assistant General Counsel
and Assistant Secretary of the Company. From January 1988 until November 1990,
he was a partner of the law firm of Hardin, Cook, Loper, Engel & Bergez.
ROBERT C. KUNTZENDORF became Senior Vice President Operations in April 1990.
Before joining the Company, he served as Vice Chairman of FoxMeyer Corporation,
a wholesale pharmaceutical distributor and franchisor, which he joined in 1983.
CHRIS M. LANEY became Senior Vice President Networking Services in July
1995. From July 1993 until July 1995, he was Vice President Networking Services.
From April 1992 until July 1993, he was Western Regional Director of Networking
Services. From October 1989 until April 1992, he was Director of Networking
Services for Dataphaz, Inc., a Company franchise.
AHMAD MANSHOURI became Senior Vice President and General Manager Product
Operations in July 1995. He was Senior Vice President, Purchasing and Vendor
Management from January 1993
6
<PAGE>
until July 1995. From July 1992 until January 1993, he was a Vice President of
the Company. Prior thereto, he was the founder and Vice President of Infomax,
Inc., one of the largest Company franchisees.
MICHAEL J. MOORE became Senior Vice President Management Information
Services in January 1993. From May 1987 until January 1993, he was Vice
President Information Systems. Prior thereto, he was President and Chief
Executive Officer of The Software Place, a retailer of computer software.
COLEMAN D. SISSON became Senior Vice President and General Manager Learning
Network in July 1995. From 1992 until July 1995, he was Vice President, Customer
Services for Powersoft Corp., a software company, and from 1987 until 1992, he
was the Training and Customer Service Manager of Compaq Computer Corporation.
THANOS M. TRIANT became Senior Vice President and Chief Technology Officer
for the Company in November 1995. Prior to joining the Company, Mr. Triant was
Vice President of Information Systems for the Times Mirror Company from January
1994 to November 1995. From January 1990 to January 1994, he was the Director of
Systems Architecture for Sun Microsystems Inc.
WILLIAM R. WAAS became Senior Vice President Service in July 1995. From
January 1989 until July 1995, he was Vice President Service. Prior to joining
the Company, he was Vice President of Systems Support of Grumman Data Systems
Corporation, a computer services company. He is currently Chairman of CompTIA,
an industry association.
LEGAL PROCEEDINGS
Various legal actions arising in the normal course of business have been
brought against the Company and certain of its subsidiaries. Management believes
that the ultimate resolution of these actions will not have a material adverse
effect on the Company's financial position or results of operations, taken as a
whole.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In July 1992, in connection with the purchase of a former Company
franchisee, the Company received a three year non-recourse promissory note in
the principal amount of $333,333 from Ahmad Manshouri, an executive officer, and
his wife. Payment of such note was secured by the pledge of 27,778 shares of
Common Stock of the Company held by Mr. and Mrs. Manshouri. In October 1995, Mr.
and Mrs. Manshouri transferred all of the pledged shares to the Company in lieu
of making payment on such note.
7
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth a summary of the compensation of the Named
Executive Officers for services rendered in all capacities to the Company during
the Company's fiscal years ended April 30, 1995 and 1996.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION ($) OPTIONS/SARS (#) COMPENSATION ($)
- ---------------------------- --------- ----------- ----------- ------------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
William Y. Tauscher......... 1995 $ 550,008 $ 30,000 -- 325,000(1) $ 87,634(2)
Chairman of the Board and 1996 550,008 550,008 1,187,434(1) 1,566(3)
Chief Executive Officer
Jay S. Amato................ 1995 256,245 25,000 -- 47,726(1) 1,014(3)
President and Chief 1996 312,498 312,293 300,000(1) 2,094(4)
Operating Officer
Jeffrey S. Rubin............ 1995 -- -- -- 4,037(1)(5)
Vice Chairman of the Board 1996 243,756 242,424 250,000(1)(6) 1,944(3)
and Chief Financial
Officer
Ahmad Manshouri............. 1995 204,006 20,000 -- 15,000(1) 768(3)
Senior Vice President and 1996 242,834 194,142 75,000(1) 3,921(3)
General Manager Operations
Richard N. Anderson......... 1995 182,508 20,000 1,940(7) 15,000(1) 1,669(8)
Senior Vice President 1996 219,168 175,258 85,100(1) 2,105(9)
Sales
</TABLE>
- ------------------------------
(1) These shares are subject to purchase upon exercise of stock options granted
under the Company's stock option plans.
(2) Comprised of $86,074 of forgiveness of interest on a promissory note payable
to the Company and $1,560 of premiums for insurance policies for which such
person is the beneficiary.
(3) Comprised of premiums for insurance policies where such persons are the
beneficiaries.
(4) Comprised of $1500 matching contributions made to the Company's 401(k) plan
for the benefit of such person and $594 of premiums for insurance policies
for which such person is the beneficiary.
(5) Includes options to purchase 573 shares of Common Stock at a price of $1.00
per share, options to purchase 2,309 shares of Common Stock at a price of
$4.51 per share and options to purchase 1,155 shares of Common Stock at a
price of $8.12 per share granted by CapCo to Jeffrey S. Rubin.
(6) Includes options to purchase 7,457 shares at a price of $1.00 per share,
options to purchase 30,022 shares of Common Stock at a price of $4.51 per
share and options to purchase 15,011 shares of Common Stock at a price of
$8.12 per share granted by CapCo to Jeffrey S. Rubin.
(7) Comprised of $1,940 for relocation expenses.
(8) Comprised of a $967 matching contribution made to the Company's 401(k) plan
for the benefit of such person and $702 of premiums for insurance policies
for which such person is the beneficiary.
(9) Comprised of a $1,500 matching contribution made to the Company's 401(k)
plan for the benefit of such person and $605 of premiums for insurance
policies for which such person is the beneficiary.
8
<PAGE>
VANSTAR CORPORATION PROXY STATEMENT
OPTION GRANTS IN FISCAL YEAR 1996
The following table sets forth the number of individual stock option grants
made to each Named Executive Officer during Fiscal Year 1996. All options were
granted pursuant to the Company's Stock Option Plans.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
------------------------------------------------------------------------ ANNUAL RATES OF
NUMBER OF PERCENT OF TOTAL STOCK PRICE
SECURITIES OPTIONS/SARS APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERM ($) (3)
OPTIONS/SARS EMPLOYEES IN EXERCISE OR BASE --------------------
NAME GRANTED (#) (1) FISCAL YEAR (2) PRICE ($/SH) EXPIRATION DATE 5% 10%
- ---------------------- --------------- ------------------- ----------------- --------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
William Y. Tauscher... 687,434(4)(5 (6) 40% $ 3.00 05/01/05 1,297,188 3,287,309
500,000(6) $ 10.00 03/11/06 3,145,000 7,970,000
Jay S. Amato.......... 300,000(7)(6) 10% $ 3.00 05/01/05 566,100 1,434,600
Jeffrey S. Rubin...... 250,000 8% $ 3.00 05/01/05 471,750 1,195,500
Ahmad Manshouri....... 75,000(8)(6) 2.5% $ 3.00 05/01/05 141,525 358,650
Richard N. Anderson... 85,100(9)(6) 2.9% $ 3.00 05/01/05 160,584 406,948
</TABLE>
- ------------------------------
(1) All options vest in four or five equal annual installments, subject to
acceleration in the event of termination within six months of a change of
control (as defined in the Company's stock option plans), and have a term of
10 years.
(2) The Company granted options to purchase an aggregate of 2,966,943 shares of
Common Stock during fiscal year 1996.
(3) Potential realizable value is based on the assumption that the price of the
Common Stock appreciates at the annual rate shown, compounded annually, from
the date of grant until the end of the 10-year option term. The values are
calculated in accordance with rules promulgated by the Securities and
Exchange Commission and do not reflect the Company's estimate of future
stock price appreciation.
(4) Includes options to purchase 325,000 shares of Common Stock at an exercise
price of $3.00 per share which were granted on May 1, 1995, in exchange for
cancellation of options to purchase a like number of shares at an exercise
price of $6.00 per share.
(5) Includes options to purchase 362,434 shares of Common Stock at an exercise
price of $3.00 per share which were granted on May 1, 1995, in exchange for
cancellation of options to purchase a like number of shares at an exercise
price of $5.55 per share.
(6) The options vest in 20% installments on each of May 1, 1995, 1996, 1997,
1998 and 1999, subject to acceleration in the event of termination within
six months of a change of control (as defined in the Company's stock option
plans).
(7) Includes options to purchase 56,726 shares of Common Stock at an exercise
price of $3.00 per share which were granted on May 1, 1995, in exchange for
cancellation of options to purchase a like number of shares at an exercise
price of $6.00 per share and also includes options to purchase 43,274 shares
of Common Stock at an exercise price of $3.00 per share which were granted
on May 1, 1995, in exchange for cancellation of options to purchase a like
number of shares at an exercise price of $5.50 per share.
(8) Includes options to purchase 15,000 shares of Common Stock at an exercise
price of $3.00 per share which were granted on May 1, 1995, in exchange for
cancellation of options to purchase a like number of shares at an exercise
price of $6.00 per share.
(9) Includes options to purchase 20,000 shares of Common Stock at an exercise
price of $3.00 per share which were granted on May 1, 1995, in exchange for
cancellation of options to purchase a like number of shares at an exercise
price of $6.00 per share.
[CORRECTED PAGE 9. INSERT IN PLACE OF PAGE 9 OF PROXY STATEMENT.]
9
<PAGE>
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END VALUE
The following table sets forth with respect to each Named Executive Officer
the number of options held and the aggregate value of in-the-money-options held
at the end of Fiscal Year 1996. None of the Named Executive Officers exercised
options in Fiscal Year 1996.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING OPTIONS/SARS VALUE OF UNEXERCISED IN-THE-
SHARES AT FISCAL YEAR-END (#) MONEY OPTIONS/SARS AT
ACQUIRED ON VALUE EXERCISABLE/ FISCAL YEAR-END ($)
NAME EXERCISE (#) REALIZED (#) UNEXERCISABLE EXERCISABLE/UNEXERCISABLE (1)
- -------------------- ------------ ------------ ----------------------- -----------------------------
<S> <C> <C> <C> <C>
William Y.
Tauscher........... -- -- 237,487/949,947 $1,794,487/$7,297,937
Jay S. Amato........ -- -- 60,000/240,000 637,800/2,551,200
Jeffrey S. Rubin.... -- -- 50,000/200,000 531,500/2,126,000
Ahmad Manshouri..... -- -- 15,000/60,000 159,450/637,800
Richard N.
Anderson........... -- -- 31,920/68,080 345,619/723,690
</TABLE>
- ------------------------
(1) Based on the fair market value of the Common Stock at year end ($13.63 per
share), as reported by the New York Stock Exchange at the close of business
on April 30, 1996.
COMPENSATION AND STOCK OPTION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation and Stock Option Committee makes recommendations to the
full Board with respect to compensation and benefit levels, determines the
compensation and benefits for the Company's executive officers and administers
the Company's stock option plans. The Compensation and Stock Option Committee is
comprised of Messrs. Bard and Janeway. Neither Mr. Bard nor Mr. Janeway is an
officer or employee of the Company or any of its subsidiaries.
COMPENSATION AND STOCK OPTION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's compensation program has consistently required that a
substantial portion of any executive's compensation (including that of the Chief
Executive Officer) be tied to the profitability and performance of the Company.
In addition, the Company believes that tying an employee's compensation to stock
performance enables the Company to align employee interests more closely with
those of its stockholders.
To implement these policies, the Company's executive compensation program
consists of two main elements: (i) annual compensation, consisting of base
salary and annual incentive bonuses; and (ii) long-term incentives that provide
a financial opportunity through stock options or stock grants. Each component of
compensation has an integral role in the total executive compensation program.
The base salary component of annual compensation is based on competitive
salaries earned by executives with similar experience in companies similar in
size to the Company. Increases in base salary are the direct result of
individual achievements within a fiscal year.
The incentive bonus component of annual compensation is a function of an
individual's contributions relative to pre-established performance objectives
and overall Company profitability. The incentive bonus portion of executive
compensation reflects the Compensation and Stock Option Committee's view that,
for senior executives, a meaningful portion of compensation should be "at risk,"
providing a direct link between pay, achievements and Company results for any
year.
Long-term incentive compensation, rather than reflecting a single year's
results, is intended to focus management's attention on the Company's future.
The Compensation and Stock Option Committee believes strongly that executive pay
should relate directly to Company performance. Long-term incentives are intended
to provide financial opportunities for executives based on the Company's
performance over a number of years.
10
<PAGE>
Long-term incentive compensation is achieved through grants of stock
options, which may be either incentive stock options ("ISOs") or stock options
that are non-qualified for Federal income tax purposes ("NQSOs") under the
Company's 1988 Stock Option Plan (the "1988 Option Plan") and the Company's 1993
Stock Option/Stock Issuance Plan (the "1993 Option Plan") (the 1988 Option Plan
and the 1993 Option Plan are collectively referred to herein as the "Option
Plans"). Options provide executives with the opportunity to buy and maintain an
equity interest in the Company and to share in the appreciation of the value of
the Company's stock. Under the Option Plans, the exercise price of ISOs may not
be less than 100% of the fair market value of the Common Stock at the time of
grant and the exercise price of NQSOs is determined by the Compensation and
Stock Option Committee at the time such option is granted, except that NQSO's
issued pursuant to the 1993 Option Plan may not be less than 85% of the fair
market value of the Common Stock at the time of grant. Options granted under the
Option Plans typically vest in equal installments over a four- or five-year
period. These features result in (i) enhancing the Company's ability to retain,
for an extended period of time, those individuals who are key to the creation of
stockholder value and (ii) ensuring that executives gain only when stockholders
gain through appreciation in the market price of the Company's Common Stock.
Long-term incentive compensation is also achieved through the Company's
Employee Stock Purchase Plan (the "Purchase Plan"), which allows participants to
purchase Common Stock of the Company through regular payroll deductions. The
Purchase Plan, which is intended to qualify as an "employee stock purchase plan"
under Section 423 of the Code, is open to voluntary participation by all
full-time employees and part-time employees who work more than 20 hours per
week.
Richard H. Bard
William H. Janeway
COMPENSATION OF DIRECTORS
Directors who are full-time employees of the Company receive no additional
compensation for services rendered as members of the Board or committees
thereof. Directors who are not full-time employees of the Company receive
reimbursement of out-of-pocket expenses for attendance at Board meetings. All
directors who are not full-time employees of the Company, other than those
directors affiliated with E. M. Warburg, Pincus & Co., Inc. receive an annual
fee of $20,000 and a meeting fee of $1,000 per meeting attended. Each director
who receives a $20,000 annual fee may elect to forego the $20,000 annual payment
in lieu of receiving options to purchase 5,000 shares of Common Stock of the
Company. Messrs. Amerman, Oltman and Weston received options to purchase 20,000
shares of Common Stock upon their appointment to the Board.
EMPLOYMENT CONTRACTS AND EMPLOYMENT TERMINATION ARRANGEMENTS
The Company has no employment agreements or employment termination
arrangements in place.
11
<PAGE>
COMPARISON OF CUMULATIVE TOTAL RETURNS
The following graph compares the cumulative total stockholder returns for
the Company's Common Stock, the Standard & Poor 500 Index ("S&P 500") and the
Standard & Poor High Tech Composite Index ("S&P High Tech Index") for the period
from March 11, 1996 (the date on which the Company's Common Stock commenced
public trading) through June 30, 1996. The following comparison assumes the
investment on March 11, 1996 (the day on which the Company's Common Stock
commenced public trading), of $100 in the Company's Common Stock and on February
29, 1996 in each of the foregoing indices and assumes the reinvestment of all
dividends. The Company has paid no dividends. Total stockholder returns for
prior periods are not necessarily an indication of future performance.
COMPARISON OF 3 MONTH CUMULATIVE TOTAL RETURN*
AMONG VANSTAR CORPORATION, THE S&P 500 INDEX
AND THE S&P HIGH TECH COMPOSITE INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
DOLLARS
<S> <C> <C> <C> <C> <C>
3/11/96 3/96 4/96 5/96 6/96
VANSTAR CORPORATION 100 101 136 144 168
S&P 500 100 101 102 105 105
S&P HIGH TECH COMPOSITE 100 97 105 108 105
</TABLE>
* $100 INVESTED ON 03/11/96 IN STOCK OR
ON 02/29/92 IN INDEX --
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING APRIL 30, 1996.
APPROVAL OF 1996 STOCK OPTION/STOCK ISSUANCE PLAN
On August 13, 1996, the Board adopted the Vanstar Corporation 1996 Stock
Option/Stock Issuance Plan (the "1996 Option Plan"), which provides for the
grant to directors, officers and employees of the Company, independent
consultants retained by the Company and any other highly-compensated
managerial/supervisory personnel responsible for the management, growth and
financial success of the Company, of stock options, including both ISOs and
NQSOs, and direct grants of Common Stock. The maximum aggregate number of shares
of Common Stock reserved for issuance under the 1996 Option Plan is 3,300,000
shares. No options have been granted and no shares have been issued under the
1996 Option Plan as of the date hereof. On August 13, 1996, the Board also
reduced the aggregate number of shares of Common Stock that may be issued under
the 1988 Option Plan by
12
<PAGE>
200,000 shares, from 222,277 shares to 22,277 shares, and reduced the aggregate
number of shares of Common Stock that may be issued under the 1993 Option Plan
by 100,000 shares, from 114,221 shares to 14,221 shares. The Board intends that
substantially all future stock option grants will be made pursuant to the 1996
Option Plan. Future grants under the 1988 Option Plan and the 1993 Option Plan
may be made, but only to the extent of the shares remaining reserved thereunder
and to the extent that currently outstanding options thereunder expire or are
canceled without being fully exercised, in which the case the underlying shares
become available for future grants under the respective terms of such plans.
Similar to the 1993 Option Plan, the 1996 Option Plan is divided into two
separate components: the Option Grant Program (the "Option Grant Program") and
the Stock Issuance Program (the "Stock Issuance Program"). Under the Option
Grant Program, eligible individuals may be granted options to purchase shares of
the Common Stock at an exercise price to be determined by the Compensation and
Stock Option Committee (except that, in the case of an ISO, such exercise price
may not be less than 100 percent (or 110 percent in the case of an ISO granted
to a 10 percent stockholder)) of the fair market value of the Common Stock on
the date of grant. Under the Stock Issuance Program, eligible individuals may be
issued shares of Common Stock directly, either through the immediate purchase of
such shares at a price to be determined by the Compensation and Stock Option
Committee or as a bonus tied to the performance of services or the Company's
attainment of financial objectives, without any cash payment required of the
recipient. Such shares may be fully vested when issued or may vest over time.
The purpose of the 1996 Option Plan is to further the growth and success of
the Company by enabling directors, officers and employees of the Company and
independent consultants retained by the Company who have been selected by the
Compensation and Stock Option Committee to acquire Common Stock, thereby
increasing their personal interest in such growth and success and to provide a
means of rewarding outstanding service by them on the Company's behalf.
Approximately 4,000 persons are eligible to participate in the 1996 Option Plan,
subject to the discretion of the Compensation and Stock Option Committee in
granting options or issuing stock thereunder. More than one option or share may
be granted to any one person and be outstanding at any one time.
The 1996 Option Plan will be administered by the Compensation and Stock
Option Committee, comprised of Messrs. Bard and Janeway. The Compensation and
Stock Option Committee shall have the full authority to determine (i) with
respect to the option grants, the number of shares to be covered by each such
grant, the per share exercise price thereof, the status of the granted option as
either an ISO or an NQSO, the time or times at which each granted option is to
become purchasable under the option and the maximum term for which the option
may remain outstanding, and (ii) with respect to share issuances under the Stock
Issuance Program, the number of shares to be issued to each participant, the
vesting schedule (if any) to be applicable to the issued shares and the
consideration to be paid by the individual for such shares. The Compensation and
Stock Option Committee has the absolute discretion either to grant options in
accordance with the Option Grant Program or to effect share issuances in
accordance with the Stock Issuance Program. Options granted and stock issued
pursuant to the 1996 Option Plan are evidenced by instruments (which need not be
identical) in such form as the Compensation and Stock Option Committee may, from
time to time, authorize.
The exercise price of ISOs granted under the 1996 Option Plan may not be
less than 100% of the fair market value of the Common Stock on the date of the
grant. With respect to any employee who owns stock possessing more than 10% of
the voting power of the outstanding capital stock of the Company, the exercise
price of any incentive stock option may not be less than 110% of the fair market
value of such shares on the date of grant, and the terms of such option may not
exceed five years. The exercise price of an NQSO shall be an amount determined
by the Compensation and Stock Option Committee in its sole discretion. Stock
issued pursuant to the 1996 Option Plan may be issued by the Compensation and
Stock Option Committee at such price as may be determined by the Compensation
and Stock Option Committee in its sole discretion.
13
<PAGE>
Options granted pursuant to the 1996 Option Plan will be exercisable at such
rate as may be determined by the Compensation and Stock Option Committee.
Options granted under the 1996 Option Plan will generally expire after ten
years, unless terminated earlier or as otherwise determined by the Compensation
and Stock Option Committee at the time of grant. Options granted under the 1996
Option Plan will be nontransferable and, with certain exceptions in the event of
the death or disability of an optionee, may be exercised by the optionee only
during employment. In the discretion of the Compensation and Stock Option
Committee, shares granted under the 1996 Option Plan may be fully and
immediately vested upon issuance or may vest in one or more installments over
the participant's period of service with the Company.
Upon exercise of an option, payment in full of the purchase price either in
cash, check, through a special sale and remittance procedure or, if, at the time
of grant, the Company's Common Stock is registered under Section 12(g) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), at the time of
grant, in equivalently valued shares of Common Stock of the Company, is required
before the option shares are delivered. By allowing payment of the exercise
price by delivering shares of the Company's Common Stock, the 1996 Option Plan
permits the "pyramiding" of shares. Pyramiding occurs when the option holder in
a series of successive transactions uses the shares received upon the prior
exercise of an option to purchase additional shares under other outstanding
options. An option holder can thereby substantially increase his or her equity
ownership in the Company without a significant capital contribution. All options
presently outstanding under the Company's 1988 Option Plan and 1993 Option Plan
may be exercised by the use of pyramiding. The consideration accepted by the
Company for shares issued pursuant to the 1996 Option Plan shall be cash,
checks, promissory notes or past services rendered to the Company.
The Board may from time to time adopt such amendments to the 1996 Option
Plan as it may deem appropriate, provided that stockholder approval of such
amendments must be obtained if required to comply with regulations promulgated
by the Securities and Exchange Commission under Section 16(b) of the Exchange
Act or with Section 422 of the Code or the regulations promulgated by the
Treasury Department thereunder. The 1996 Option Plan shall terminate on the
earlier of (i) the tenth anniversary of the date on which the 1996 Option Plan
was adopted by the Board or (ii) the date on which all shares available for
issuance have been issued but any such action would not affect options
previously granted.
Under the 1996 Option Plan, any optionee whose employment with the Company
is terminated for any reason, other than death or disability or a termination
for cause, may exercise his or her option, to the extent exercisable on the
effective date of such termination, at any time within three months after the
date of termination, provided such option has not expired on the date of such
exercise. In the event of the death or disability of an optionee, the option may
be exercised, to the extent exercisable on the date of death or disability, by
the person to whom the option shall have passed by will or the laws or descent
and distribution or the optionee, as the case may be, at any time prior to the
earlier of 12 months from the date of death or disability or the option's
specified expiration date. In the event of the termination of an optionee's
employment for cause, the option terminates immediately.
Under present accounting rules, neither the grant nor the exercise of
options granted with an exercise price equal to the fair market value of the
Common Stock will result in any charge to the Company's earnings. However, the
number of outstanding options, even if not granted at a discount, may be a
factor in determining the Company's reported earnings per share.
An NQSO granted under the 1996 Option Plan is taxed in accordance with
Section 83 of the Code and the regulations issued thereunder. The following
general rules are applicable to holders of such NQSOs and to the Company for
Federal income tax purposes under existing law.
1. The optionee will not recognize any income on the grant of the
option pursuant to the 1996 Option Plan.
14
<PAGE>
2. The optionee will recognize ordinary compensation income at the time
of the exercise of the option in an amount equal to the excess of the fair
market value of the shares acquired on the date of exercise, over the
exercise price thereof.
3. When the optionee sells the shares, he or she will recognize capital
gain or loss (assuming the shares are held as a capital asset) in an amount
equal to the difference between the fair market value of the shares on the
date of exercise and his or her selling price.
4. In general, the Company will be entitled to a tax deduction in the
year in which ordinary compensation income based on exercise is recognized
by the optionee and in the same amount of such ordinary compensation income
recognized by the optionee, subject to applicable tax withholding
requirements.
The following Federal income tax consequences are applicable to ISOs granted
and exercised pursuant to the 1996 Option Plan.
1. If the optionee does not own stock possessing more than 10% of the
total voting power of all classes of stock of the Company (or if the
optionee owns stock possessing more than 10% of the total voting power of
all classes of stock of the Company, the option price is at least 110% of
the fair market value of the shares at the date of grant and the option by
its terms is not exercisable more than five years from the date of grant),
no taxable income results to the optionee upon the grant of an ISO or upon
the issuance of shares to him or her upon exercise of the option.
2. No tax deduction is allowed to the Company upon either the grant or
exercise of an ISO pursuant to the 1996 Option Plan.
3. If shares acquired upon exercise of an ISO are not disposed of (i)
within the two years following the date the option was granted or (ii)
within one year following the date the shares are transferred to the
optionee pursuant to the option exercise (the "Holding Periods"), the
difference between the amount realized on any disposition of the shares
thereafter and the exercise price will be treated as long-term capital gain
or loss to the optionee.
4. If shares acquired upon exercise of an ISO are disposed of before
the expiration of either of the Holding Periods, then the lesser of (i) any
excess of the fair market value of the shares at the time of exercise of the
option over the exercise price or (ii) the actual gain on disposition will
be treated as compensation to the optionee and will be taxed as ordinary
income in the taxable year in which the disposition occurs.
5. In any taxable year that an optionee recognizes compensation income
on disposition of an ISO, the Company will generally be entitled to a
corresponding deduction, subject to applicable tax withholding requirements.
6. Any excess of the amount realized by the optionee on disposition
over the sum of (i) the exercise price and (ii) the amount of ordinary
income recognized under the above rules may be either long-term or
short-term capital gain, depending upon the time elapsed between receipt and
disposition of such shares.
7. An option will not be treated as an ISO to the extent the aggregate
fair market value for which ISOs are exercisable by an optionee for the
first time in a calendar year exceeds $100,000.
The vote of a majority of the shares of Common Stock represented in person
or by proxy at the Meeting is required to approve the 1996 Stock Option/Stock
Issuance Plan. THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF THE
1996 STOCK OPTION/STOCK ISSUANCE PLAN.
RATIFICATION OF SELECTION OF AUDITORS
The Board has selected the firm of Ernst & Young, LLP, independent auditors,
to serve as auditors for the Company for the fiscal year ending April 30, 1997.
Ernst & Young, LLP has served as the Company's auditors since June 16, 1989. It
is expected that a representative of Ernst & Young, LLP
15
<PAGE>
will be present at the Meeting and will be available to make a statement (if he
or she desires to do so) and to respond to appropriate questions at the Meeting.
If the stockholders do not ratify the selection of Ernst & Young, LLP, the Board
may consider selection of other independent auditors, but no assurances can be
made that the Board will do so or that any other independent auditors would be
willing to serve. The vote of a majority of the shares of Common Stock
represented in person or by proxy at the Meeting is required to ratify the
selection of auditors. THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR RATIFICATION
OF THIS SELECTION.
DISCLOSURE PURSUANT TO SECTION 16 OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's officers and
directors and persons who are beneficial owners of ten percent or more of the
Company's Common Stock to file reports of ownership and changes in ownership of
the Company's securities with the Securities and Exchange Commission. Such
officers, directors and beneficial owners are required by applicable regulations
to provide to the Company copies of all forms they file under Section 16(a).
Based solely upon a review of the copies of forms furnished to the Company,
and written representations from certain reporting persons that no Forms 5 were
required, the Company believes that during the fiscal year ended April 30, 1996,
all filing requirements applicable to its officers, directors and ten percent
beneficial owners were complied with.
STOCKHOLDER PROPOSALS
It is presently contemplated that the 1997 Annual Meeting of Stockholders
will be held on or about September 15, 1997. Proposals by stockholders intended
for inclusion in the proxy statement to be furnished to all stockholders
entitled to vote at the next annual meeting of the Company must be received at
the Company's principal executive offices not later than May 19, 1997. In order
to curtail controversy as to the date on which a proposal was received by the
Company, it is suggested that proponents submit their proposals by certified
mail, return receipt requested. Any such proposal must also meet the other
requirements of the rules of the Securities and Exchange Commission relating to
stockholder proposals.
EXPENSES AND SOLICITATION
The Company will bear the cost of soliciting proxies, including expenses in
connection with the preparation and mailing of this Proxy Statement and all
papers which now accompany or may hereafter supplement it. Solicitation of
proxies will be primarily by mail. However, proxies may also be solicited by
directors, officers and regular employees of the Company (who will not be
specifically compensated for such services) by telephone or otherwise. Brokerage
houses and other custodians, nominees and fiduciaries will be requested to
forward proxies and proxy material to the beneficial owners of Common Stock, and
the Company will reimburse them for their expenses.
The Company will provide without charge to each person being solicited by
this Proxy Statement, upon written request, a copy of the Company's Annual
Report on Form 10-K for the fiscal year ended April 30, 1996, filed with the
Securities and Exchange Commission. All such requests should be directed to H.
Christopher Covington, Vanstar Corporation, 5964 West Las Positas Blvd.,
Pleasanton, California 94588.
By Order of the Board of Directors,
WILLIAM Y. TAUSCHER
CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE OFFICER
Pleasanton, California
August 23, 1996
16
<PAGE>
________________________________________________________________________________
VANSTAR CORPORATION
PROXY - THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints William Y. Tauscher and Jeffrey S. Rubin as
proxies, each with full powers of substitution, and hereby authorizes them to
represent and to vote, as designated below, all shares of the Common Stock,
$.001 par value, of Vanstar Corporation, held of record by the undersigned on
August 1, 1996, at the Annual Meeting of Stockholders to be held on
September 13, 1996, or at any adjournment thereof.
THIS PROXY, WHEN PROPERLY EXECUTED AND RETURNED IN A TIMELY MANNER, WILL BE
VOTED AT THE ANNUAL MEETING AND AT ANY ADJOURNMENT THEREOF IN THE MANNER
DIRECTED HEREIN. IF NO DIRECTION IS MADE, THE PROXY WILL BE VOTED FOR ALL
NOMINEES, FOR PROPOSAL 2, AND FOR PROPOSAL 3 AND IN ACCORDANCE WITH THE JUDGMENT
OF THE PERSONS NAMED AS PROXIES HEREIN ON ANY OTHER MATTERS THAT MAY PROPERLY
COME BEFORE THE ANNUAL MEETING.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
________________________________________________________________________________
TRIANGLE FOLD AND DETACH HERE TRIANGLE
<PAGE>
Please mark
your votes as /x/
indicated in
this example
The Board of Directors recommends a vote FOR Items 1, 2, and 3.
WITHHELD
FOR FOR ALL
ITEM 1 - ELECTION OF DIRECTORS
Nominees: / / / /
Jay S. Amato William H. Janeway
John W. Amerman John R. Oltman
Richard H. Bard Jeffery S. Rubin
Steven W. Fillo William Y. Tauscher
Stewart K. P. Gross John L. Vogalstein
Josh S. Weston
WITHHELD FOR: (Write that nominee's name in the space provided below).
______________________________________________________________________
FOR AGAINST ABSTAIN
ITEM 2 - RATIFICATION OF
INDEPENDENT / / / / / /
AUDITORS
ITEM 3 - APPROVAL OF THE
1996 STOCK / / / / / /
OPTION PLAN
FOR AGAINST ABSTAIN
ITEM 4 - IN ACCORDANCE WITH
THEIR JUDGMENT, THE / / / / / /
PROXIES ARE AUTHORIZED
TO VOTE UPON SUCH
OTHER MATTERS AS MAY
PROPERLY COME BEFORE
THE ANNUAL MEETING, OR
ANY ADJOURNMENT
THEREOF.
Signature(s)________________________________ Date________________
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
________________________________________________________________________________
TRIANGLE FOLD AND DETACH HERE TRIANGLE
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VANSTAR CORPORATION
1996 STOCK OPTION/STOCK ISSUANCE PLAN
ARTICLE I
GENERAL PROVISIONS
A. PURPOSE
1. This 1996 Stock Option/Stock Issuance Plan (the "Plan") is
intended to promote the interests of Vanstar Corporation, a Delaware corporation
(the "Corporation"), by providing a method whereby eligible individuals who
provide valuable services to the Corporation (or its Parent or Subsidiary
corporations) may be offered incentives and rewards which will encourage them to
acquire a proprietary interest, or otherwise increase their proprietary
interest, in the Corporation and continue to render services to the Corporation
(or its Parent or Subsidiary corporations).
2. For purposes of the Plan, the following provisions shall be
applicable in determining the Parent and Subsidiary corporations of the
Corporation:
(a) Any corporation (other than the Corporation) in an unbroken
chain of corporations ending with the Corporation shall be considered to be a
Parent ("Parent") corporation of the Corporation, provided each such corporation
in the unbroken chain (other than the Corporation) owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
(b) Each corporation (other than the Corporation) in an unbroken
chain of corporations beginning with the Corporation shall be considered to be a
Subsidiary ("Subsidiary") of the Corporation, provided each such corporation
(other than the last corporation) in the unbroken chain owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain. However, for purposes of any NSO grants made under Article II
and direct share issuances made under Article III, the term subsidiary shall
also include any other corporation, partnership, joint venture or other business
entity of which the Corporation owns, directly or indirectly through another
subsidiary corporation, a fifty percent (50%) or greater interest in voting
power, capital or profits.
<PAGE>
B. STRUCTURE OF THE PLAN
1. The Plan shall be divided into two separate components: the
Option Grant Program (the "Option Grant Program") specified in Article II and
the Stock Issuance Program (the "Stock Issuance Program") specified in Article
III.
2. Under the Option Grant Program, eligible individuals may be
granted options to purchase shares of Common Stock. Each person to whom an
option is granted under the Option Grant Program is referred to herein as an
"Optionee."
3. Under the Stock Issuance Program, eligible individuals may be
issued shares of Common Stock directly, either through the immediate purchase of
such shares from the Corporation or as a bonus tied to the performance of
services or the Corporation's attainment of financial objectives, without any
cash payment required of the recipient. Such shares may be fully vested when
issued or may vest over time. Each person to whom shares are issued under the
Stock Issuance Program is referred to herein as a "Participant."
4. The provisions of Articles I and IV of the Plan shall apply to
both the Option Grant Program and the Stock Issuance Program and shall
accordingly govern the interests of all individuals in the Plan.
C. ADMINISTRATION OF THE PLAN
1. The Corporation's Board of Directors (the "Board"), its Executive
Committee or a committee (the "Committee") of two or more Board members shall
administer the Plan. Members of the Committee shall serve for such period of
time as the Board may determine and shall be subject to removal by the Board at
any time. When used in this Plan, the term "Plan Administrator" shall mean the
Board, the Executive Committee or the Committee, as the case may be,
administering the Plan at the time in question.
2. The Plan Administrator shall have full power and authority
(subject to the express provisions of the Plan) to establish such rules and
regulations as it may deem appropriate for the proper administration of the Plan
and to make such determinations under, and issue such interpretations of, the
Plan and any outstanding option grants or share issuances as it may deem
necessary or advisable. Decisions of the Plan Administrator shall be final and
binding on all parties who have an interest in the Plan or any outstanding
option or share issuance.
D. OPTION GRANTS AND SHARE ISSUANCES
1. The persons eligible to receive option grants pursuant to the
Option Grant Program and/or share issuances under the Stock Issuance Program
shall be officers, directors and
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employees of, and consultants to, the Corporation (or its Parent or Subsidiary
corporations).
2. The Plan Administrator shall have full authority to determine,
(i) with respect to the option grants made under the Plan, which eligible
individuals are to receive option grants, the number of shares to be covered by
each such grant, the status of the granted option as either an incentive stock
option (an "ISO") which satisfies the requirements of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), or a non-qualified stock
option (an "NSO") not intended to meet such requirements, the time or times at
which each granted option is to become exercisable, the vesting schedule (if
any) applicable to the shares purchasable under the option, the exercise price
of such option and the maximum term for which the option may remain outstanding,
and (ii) with respect to share issuances under the Stock Issuance Program, the
number of shares to be issued to each Participant, the vesting schedule (if any)
to be applicable to the issued shares, and the consideration to be paid by the
individual for such shares.
3. The Plan Administrator shall have the absolute discretion either
to grant options in accordance with Article II of the Plan or to effect share
issuances in accordance with Article III of the Plan.
E. STOCK SUBJECT TO THE PLAN
1. The stock issuable under the Plan shall be shares of the
Corporation's authorized and unissued or reacquired common stock, $.001 par
value (the "Common Stock"). The maximum number of shares which may be issued
over the term of the Plan shall not exceed 3,300,000 shares. The total number
of shares issuable under the Plan shall be subject to adjustment from time to
time in accordance with the provisions of Section E.3. of this Article I.
2. Shares subject to the unexercised portion of any outstanding
options under the Plan which expire or terminate prior to exercise in full or
which are otherwise cancelled in accordance with the cancellation-regrant
provisions of Section D of Article II shall be available for subsequent option
grants or stock issuances under the Plan. Shares subject to outstanding options
shall NOT be available for subsequent option grants under the Plan to the extent
options are surrendered in accordance with the stock appreciation right
provisions of Section E of Article II. Shares issued under either the Option
Grant Program or the Stock Issuance Program (whether as vested or unvested
shares) and repurchased by the Corporation shall NOT be available for subsequent
option grants or stock issuances under the Plan.
3. In the event any change is made to the outstanding Common Stock
by reason of any stock dividend, stock split, combination of shares, exchange of
shares or other change
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affecting the outstanding Common Stock as a class without the Corporation's
receipt of consideration, appropriate adjustments shall be made to (i) the
maximum number and/or class of securities issuable under the Plan and (ii) the
number and/or class of securities and the option price per share in effect under
each outstanding option in order to prevent the dilution or enlargement of
benefits thereunder. The adjustments determined by the Plan Administrator shall
be final, binding and conclusive.
4. Common Stock issuable under the Plan, whether under the Option
Grant Program or the Stock Issuance Program, may be subject to such restrictions
on transfer, repurchase rights or other restrictions as may be determined by the
Plan Administrator.
ARTICLE II
OPTION GRANT PROGRAM
A. TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to the Plan shall be authorized by action of
the Plan Administrator and may, at the Plan Administrator's discretion, be
either ISOs or NSOs. Individuals who are not Employees (as defined in
subsection 3.(b) below) may only be granted NSOs. Each granted option shall be
evidenced by one or more instruments in the form approved by the Plan
Administrator; PROVIDED, HOWEVER, that each such instrument shall comply with
the terms and conditions specified in Sections A and C of this Article II. Each
instrument evidencing an ISO shall, in addition, be subject to the applicable
provisions of Section B of this Article II.
1. OPTION PRICE.
(a) The option price per share shall be fixed by the Plan
Administrator.
(b) The option price shall become immediately due upon exercise
of the option and shall, subject to the provisions of Article IV, Section A, be
payable in cash or check drawn to the Corporation's order. Should the
Corporation's outstanding Common Stock be registered under Section 12(g) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), at the time
the option is exercised, then the option price may also be paid as follows:
(i) in shares of Common Stock held by the Optionee for the
requisite period necessary to avoid a charge to the Corporation's earnings
for financial reporting purposes and valued at fair market value on the
Exercise Date (as defined herein); or
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(ii) through a special sale and remittance procedure
pursuant to which the Optionee is to provide irrevocable written
instructions (i) to a designated brokerage firm to effect the immediate
sale of the purchased shares and remit to the Corporation, out of the sale
proceeds available on the settlement date, sufficient funds to cover the
aggregate option price payable for the purchased shares plus all applicable
Federal and state income and employment taxes required to be withheld by
the Corporation by reason of such purchase and (ii) concurrently to the
Corporation or, if instructed by the Corporation, to the transfer agent for
the Common Stock, to deliver the certificates for the purchased shares
directly to such brokerage firm in order to complete the sale transaction.
The Exercise Date shall be the date on which the Corporation shall have received
an executed stock purchase agreement for the purchased shares, in form and
substance satisfactory to the Corporation. Except to the extent such sale and
remittance procedure above is used in connection with the option exercise,
payment of the option price for the purchased shares plus all applicable Federal
and state income and employment taxes required to be withheld by the Corporation
by reason of such purchase must accompany the stock purchase agreement.
(c) The fair market value per share of Common Stock on any
relevant date under the Plan shall be determined in accordance with the
following provisions:
(i) If the Common Stock is not at the time listed or
admitted to trading on any stock exchange but is traded on the NASDAQ
National Market System ("NASDAQ"), the fair market value shall be the
closing selling price per share of Common Stock on the date in question, as
such price is reported by the National Association of Securities Dealers
through NASDAQ or any successor system. If there is no closing selling
price for the Common Stock on the date in question, then the fair market
value shall be the closing selling price on the last preceding date for
which such quotation exists.
(ii) If the Common Stock is at the time listed or admitted
to trading on any stock exchange, then the fair market value shall be the
closing selling price per share of Common Stock on the date in question on
the stock exchange determined by the Plan Administrator to be the primary
market for the Common Stock, as such price is officially quoted in the
composite tape of transactions on such exchange. If there is no closing
selling price for the Common Stock on the date in question, then the fair
market value shall be the closing selling price on the last preceding date
for which such quotation exists.
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<PAGE>
(iii) If the Common Stock at the time is neither listed nor
admitted to trading on any stock exchange nor traded on NASDAQ, or if the
Plan Administrator determines that the value determined pursuant to
subparagraphs (i) and (ii) above does not accurately reflect the fair
market value of the Common Stock, then such fair market value shall be
determined by the Plan Administrator after taking into account such factors
as the Plan Administrator shall deem appropriate.
2. TERM AND EXERCISE OF OPTIONS. Each option granted under the Plan
shall be exercisable at such time or times, during such period, and for such
number of shares as shall be determined by the Plan Administrator and set forth
in the stock option agreement evidencing such option. However, no option
granted under the Plan shall have a term in excess of ten (10) years from the
grant date. During the lifetime of the Optionee, the option shall be
exercisable only by the Optionee and shall not be assignable or transferable by
the Optionee otherwise than by will or by the laws of descent and distribution
following the Optionee's death.
3. TERMINATION OF SERVICE.
(a) The following provisions shall govern the exercise period
applicable to any options held by the Optionee at the time of cessation of
service with the Corporation ("Cessation of Service") or death.
(i) The option shall, to the extent it is not otherwise at
the time exercisable for vested shares of Common Stock, immediately
terminate and cease to be outstanding upon the Optionee's Cessation of
Service.
(ii) Should the Optionee cease to remain in Service (as
hereinafter defined) for any reason other than death or permanent
disability, then the period during which each outstanding option held by
such Optionee is to remain exercisable shall be limited to the three (3)
month period following the date of such Cessation of Service.
(iii) In the event such Service terminates by reason of
permanent disability (as defined in Section 22(e)(3) of the Code) or should
the Optionee die while holding one or more outstanding options, then the
period during which each such option is to remain exercisable (to the
extent exercisable at the effective time of such termination) shall be
limited to the twelve (12) month period following the date of the
Optionee's Cessation of Service or death. During the limited exercise
period following the Optionee's death, the option may be exercised by the
personal representative of the Optionee's estate or by the person or
persons to whom the option is transferred
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<PAGE>
pursuant to the Optionee's will or in accordance with the laws of descent
and distribution.
(iv) Under no circumstances, however, shall any such option
be exercisable after the specified expiration date of the option term.
(v) During the applicable post-Service exercise period, the
option may not be exercised for more than the number of option shares (if
any) in which the Optionee is vested at the time of Cessation of Service.
Upon the expiration of such post-Service exercise period or (if earlier)
upon the expiration of the option term, the option shall terminate and
cease to be outstanding for any vested shares for which the option has not
otherwise been exercised.
(vi) Should (A) the Optionee's Service be terminated for
misconduct (including, but not limited to, any act of dishonesty, willful
misconduct, fraud or embezzlement) or (B) the Optionee make any
unauthorized use or disclosure of confidential information or trade secrets
of the Corporation or its Parent or Subsidiaries, then in any such event
all outstanding options held by the Optionee under this Article II shall
terminate immediately and cease to be outstanding.
(b) For all purposes under the Plan, unless specifically
provided otherwise in the option agreement evidencing the option grant and/or
the purchase agreement evidencing the purchased shares, the Optionee shall be
deemed to remain in "Service" for so long as such individual renders services on
a periodic basis to the Corporation or any Parent or Subsidiary corporation in
the capacity of an Employee, a non-employee member of the board of directors or
a consultant or independent contractor. The Optionee shall be considered to be
an "Employee" for so long as such individual remains in the employ of the
Corporation or one or more of its Parent or Subsidiary corporations, subject to
the control and direction of the employer entity as to both the work to be
performed and the manner and method of performance.
(c) The Plan Administrator shall have complete discretion,
exercisable either at the time the option is granted or at any time the option
remains outstanding, to permit one or more options granted under this Article II
to be exercised not only for the number of shares for which each such option is
exercisable at the time of the Optionee's Cessation of Service but also for one
or more subsequent installments of purchasable shares for which the option would
otherwise have become exercisable had such Cessation of Service not occurred.
(d) The Plan Administrator shall have full power and authority
to extend the period of time for which the option
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is to remain exercisable following the Optionee's Cessation of Service or death
from the limited period specified in subparagraph (a) to such greater period of
time as the Plan Administrator shall deem appropriate under the circumstances.
In no event, however, shall such option be exercisable after the specified
expiration date of the option term.
4. STOCKHOLDER RIGHTS. An Optionee shall have none of the rights of
a stockholder with respect to any shares covered by the option until such
Optionee shall have exercised the option and paid the option price.
5. REPURCHASE RIGHTS.
(a) The Plan Administrator shall have the discretion to
authorize the issuance of unvested shares of Common Stock under this Article II.
Should the Optionee cease Service while holding such unvested shares, then the
Corporation shall have the right to repurchase any or all of those unvested
shares at the option price paid per share. The terms and conditions upon which
such repurchase right shall be exercisable (including the period and procedure
for exercise and the appropriate vesting schedule for the purchased shares)
shall be established by the Plan Administrator and set forth in the instrument
evidencing such repurchase right.
(b) The Plan Administrator shall have the discretionary
authority, exercisable either before or after the Optionee's Cessation of
Service, to cancel the Corporation's outstanding repurchase rights with respect
to one or more shares purchased or purchasable by the Optionee under this
Article II and thereby accelerate the vesting of such shares in whole or in part
at any time. All outstanding repurchase rights under the Plan shall terminate
automatically upon the occurrence of any Corporate Transaction under Section C
of this Article II, except to the extent the repurchase rights are to be
assigned to the successor corporation (or parent thereof) in connection with the
Corporate Transaction.
B. INCENTIVE STOCK OPTIONS
The terms and conditions specified below shall be applicable to all
ISOs granted under the Plan. ISOs may only be granted to individuals who are
Employees. Options which are specifically designated as NSOs when issued under
the Plan shall NOT be subject to such terms and conditions.
1. OPTION PRICE. The option price per share of the Common Stock
subject to an ISO shall in no event be less than one hundred percent (100%) of
the fair market value per share of Common Stock on the grant date.
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2. DOLLAR LIMITATION. The aggregate fair market value (determined as
of the respective date or dates of grant) of the Common Stock for which one or
more options granted to any Employee under this Plan (or any other option plan
of the Corporation or any Parent or Subsidiary corporation) may for the first
time become exercisable as incentive stock options under the Federal tax laws
during any one calendar year shall not exceed the sum of One Hundred Thousand
Dollars ($100,000). To the extent the Employee holds two or more such options
which become exercisable for the first time in the same calendar year, the
foregoing limitation on the exercisability of such options as ISOs under the
Federal tax laws shall be applied on the basis of the order in which such
options are granted. Should the number of shares of Common Stock for which any
ISO first becomes exercisable in any calendar year exceed the applicable One
Hundred Thousand Dollar ($100,000) limitation, then the option may nevertheless
be exercised in that calendar year for the excess number of shares as an NSO
under the Federal tax laws.
3. 10% STOCKHOLDER. If any individual to whom an ISO is granted is
the owner of stock (as determined under Section 424(d) of the Code) possessing
ten percent (10%) or more of the total combined voting power of all classes of
stock of the Corporation or any one of its Parent or Subsidiary corporations,
then the option price per share shall not be less than one hundred ten percent
(110%) of the fair market value per share of Common Stock on the grant date, and
the option term shall not exceed five (5) years from the grant date.
4. OTHER PLAN PROVISIONS. Except as modified by the preceding
provisions of this Section B, all the provisions of the Plan shall be applicable
to the ISOs granted hereunder.
C. CORPORATE TRANSACTION
1. The Plan Administrator shall have complete discretion,
exercisable either at the time the option is granted or at any time while the
option is outstanding, to provide that one or more options at the time
outstanding under this Article II shall automatically accelerate in connection
with any Corporate Transaction (as hereinafter defined) so that each such option
shall, immediately prior to the specified effective date for such Corporate
Transaction, become fully exercisable with respect to the total number of shares
of Common Stock at the time subject to such option and may be exercised for all
or any portion of such shares. For purposes of such acceleration, the term
Corporate Transaction shall be limited to any of the following
stockholder-approved transactions:
(i) a merger or consolidation in which more than fifty percent
(50%) of the Corporation's outstanding voting stock is transferred to a
person or persons different from those who held the stock immediately prior
to such transaction, or
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(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation or
dissolution of the Corporation.
In no event, however, shall an outstanding option with such acceleration
provision accelerate if and to the extent: (A) such option is, in connection
with the Corporate Transaction, either to be assumed by the successor
corporation or parent thereof or be replaced with a comparable option to
purchase shares of the capital stock of the successor corporation or parent
thereof, (B) such option is to be replaced with a cash incentive program of the
successor corporation which, as determined by the Plan Administrator, preserves
the option spread existing at the time of the Corporate Transaction and provides
for subsequent payout in accordance with the same vesting schedule applicable to
such option or (C) the acceleration of such option is subject to other
limitations imposed by the Plan Administrator at the time of the option grant.
The determination of option comparability under clause (A) above shall be made
by the Plan Administrator, and its determination shall be final, binding and
conclusive. The Plan Administrator shall also have full power and authority to
grant options under the Plan which are to automatically accelerate in whole or
in part immediately prior to the Corporate Transaction or upon the subsequent
termination of the Optionee's Service, whether or not those options are
otherwise to be assumed or replaced in connection with the consummation of such
Corporate Transaction.
2. Upon the consummation of the Corporate Transaction, all
outstanding options under the Plan, whether or not they contain an acceleration
provision under subparagraph 1. above, shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation or its
parent company.
3. Each outstanding option which is assumed in connection with the
Corporate Transaction or is otherwise to continue in effect shall be
appropriately adjusted, immediately after such Corporate Transaction, to apply
and pertain to the number and class of securities which would have been issued
to the option holder, in consummation of such Corporate Transaction, had such
person exercised the option immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to the option price payable per
share, except that the aggregate option price payable for such securities shall
remain the same. In addition, the class and number of securities available for
issuance under the Plan following the consummation of the Corporate Transaction
shall be appropriately adjusted.
4. The grant of options under this Plan shall in no way affect the
right of the Corporation to adjust, reclassify, reorganize or otherwise change
its capital or business structure or to merge, consolidate, dissolve, liquidate
or sell or transfer all or any part of its business or assets.
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5. The following provisions shall apply in the event of a merger,
consolidation, sale of assets, etc., resulting in a Change of Control (as
hereinafter defined):
(a) In the event of a Change in Control, anything contained
herein to the contrary notwithstanding, an option granted shall become fully
exercisable if, within six months of such Change in Control, the holder of such
Option shall cease to be an employee or for any reason to be a member of the
Board. For purposes hereof, a Change in Control of the Corporation shall be
deemed to have occurred if:
(i) there shall be consummated (x) any consolidation or
merger of the Corporation in which the Corporation is not the continuing or
surviving corporation or pursuant to which shares of common stock of the
Corporation would be converted into cash, securities or other property,
other than a merger of the Corporation in which the holders of common stock
of the Corporation immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation
immediately after the merger, or (y) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all,
or substantially all, of the assets of the Corporation; or
(ii) the stockholders of the Corporation approve any plan or
proposal for the liquidation or dissolution of the Corporation; or
(iii) any person (as such term is used in Sections 13(d) and
14(d)(2) of the Exchange Act, shall become the beneficial owner (within the
meaning of Rule 13d-3 under the Exchange Act) of 30% or more of the
Corporation's outstanding common stock; or
(iv) during any period of two consecutive years, individuals
who at the beginning of such period constitute the entire Board shall cease
for any reason to constitute a majority thereof unless the election, or the
nomination for election by the Corporation's stockholders, of each new
director was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of the period.
(b) Any exercise of an option permitted pursuant to Section
5.C.1 shall be made within 180 days of the relevant Participant's termination as
an employee or director of the Corporation.
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D. CANCELLATION AND NEW GRANT OF OPTIONS
The Plan Administrator shall have the authority to effect, at any time
and from time to time, with the consent of the affected Optionees, the
cancellation of any or all outstanding options under the Plan and to grant in
substitution therefor new options under the Plan covering the same or different
numbers of shares of Common Stock and having an option price per share as may be
determined by the Plan Administrator, but not less than (i) one hundred percent
(100%) of the fair market value per share of Common Stock on the new grant date
in the case of a grant of an ISO, or (ii) one hundred ten percent (110%) of such
fair market value in the case of a grant of an ISO to a 10% Stockholder.
E. STOCK APPRECIATION RIGHTS
1. One or more Optionees may be granted the right, exercisable upon
such terms and conditions as the Plan Administrator may establish, to surrender
all or part of an unexercised option under this Article II in exchange for a
distribution from the Corporation in an amount equal to the excess of (i) the
fair market value (on the option surrender date) of the number of shares in
which the Optionee is at the time vested under the surrendered option (or
surrendered portion thereof) over (ii) the aggregate option price payable for
such vested shares.
2. No such option surrender shall be effective unless it is approved
by the Plan Administrator. If the surrender is so approved, then the
distribution to which the Optionee shall accordingly become entitled under this
Section E may be made in shares of Common Stock valued at fair market value on
the option surrender date, in cash, or partly in shares and partly in cash, as
the Plan Administrator shall in its sole discretion deem appropriate.
3. If the surrender of an option is rejected by the Plan
Administrator, then the Optionee shall retain whatever rights the Optionee had
under the surrendered option (or surrendered portion thereof) on the option
surrender date and may exercise such rights at any time prior to the LATER of
(i) five (5) business days after the receipt of the rejection notice or (ii) the
last day on which the option is otherwise exercisable in accordance with the
terms of the instrument evidencing such option, but in no event may such rights
be exercised more than ten (10) years after the date of the option grant.
4. One or more Optionees may, in the Plan Administrator's sole
discretion, be granted limited stock appreciation rights in tandem with their
outstanding options under this Article II. Upon the occurrence of a Hostile
Take-Over (as hereinafter defined) at a time when the Optionee is an officer or
director of the Corporation subject to the short-swing
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profit restrictions of the Federal securities laws, then such Optionee shall
have the unconditional right, exercisable during the thirty (30)-day period
following the consummation of the Hostile Take-Over, to surrender each option
with such a limited stock appreciation right outstanding for at least six (6)
months to the Corporation, to the extent the option is at the time exercisable
for vested shares of Common Stock. In return for the surrendered option, the
officer shall be entitled to a cash distribution from the Corporation in an
amount equal to the excess of (i) the Take-Over Price (as hereinafter defined)
of the shares of Common Stock which are at the time vested under each
surrendered option (or surrendered portion) over (ii) the aggregate exercise
price payable for such vested shares. Such cash distribution shall be paid
within five (5) days following the option surrender date. Neither the approval
of the Plan Administrator nor the consent of the Board shall be required in
connection with such option surrender and cash distribution. The balance of the
option (if any) shall continue in full force and effect in accordance with the
instrument evidencing such grant.
5. For purposes of calculating the cash distribution under Paragraph
4. above, the following terms shall have the meanings ascribed to them below:
(a) "Hostile Take-Over" means a change in ownership of the
Corporation effected through the following transaction:
(i) any person or related group of persons (other than the
Corporation or a person that directly or indirectly controls, is controlled
by, or is under common control with, the Corporation) directly or
indirectly acquires beneficial ownership (within the meaning of Rule 13d-3
of the 1934 Act) of securities possessing more than fifty percent (50%) of
the total combined voting power of the Corporation's outstanding securities
pursuant to a tender or exchange offer made directly to the Corporation's
stockholders which the Board does not recommend such stockholders to
accept, and
(ii) more than fifty percent (50%) of the securities so
acquired in such tender or exchange offer are accepted from holders other
than the officers and directors of the Corporation subject to the
short-swing profit restrictions of Section 16 of the 1934 Act.
(b) "Take-Over Price" means the GREATER of (a) the fair market
value per share of Common Stock on the date of surrender, as determined in
accordance with the valuation provisions of subsection A.1.(c) of Article II,
and (b) the highest reported price per share of Common Stock paid by the
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tender offeror in effecting such Hostile Take-Over; PROVIDED, HOWEVER, that if
the surrendered option is an ISO, the Take-Over Price shall not exceed the price
per share determined pursuant to clause (a) above.
6. The shares of Common Stock subject to any option surrendered for
an appreciation distribution in accordance with this Section E shall NOT be
available for subsequent option grants or share issuances under the Plan.
ARTICLE III
STOCK ISSUANCE PROGRAM
A. TERMS AND CONDITIONS OF STOCK ISSUANCES
Shares of Common Stock shall be issuable under the Stock Issuance
Program through direct and immediate issuances without any intervening stock
option grants. Each such stock issuance shall be evidenced by a Stock Issuance
Agreement ("Issuance Agreement") which complies with each of the terms and
conditions of this Article III.
1. CONSIDERATION
(a) Shares of Common Stock drawn from the Corporation's
authorized but unissued shares of Common Stock ("Newly Issued Shares") shall be
issued under the Plan for one or more of the following items of consideration
which the Plan Administrator may deem appropriate in each individual instance:
(i) cash or check drawn to the Corporation's order;
(ii) a promissory note payable to the Corporation's order in
one or more installments, which may be subject to cancellation in whole or
in part upon terms and conditions established by the Plan Administrator; or
(iii) past services rendered to the Corporation or any Parent
or Subsidiary corporation.
(b) Newly Issued Shares may in the sole discretion of the Plan
Administrator be issued for consideration with a value determined by the Plan
Administrator in its sole discretion.
(c) Shares of Common Stock reacquired by the Corporation and held
as treasury shares ("Treasury Shares") may be issued under the Plan for such
consideration (in whatever form) as the Plan Administrator may deem appropriate.
Accordingly, such Treasury Shares may, in lieu of any cash consideration, be
issued subject to such vesting requirements
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tied to the Participant's period of future Service or the Corporation's
attainment of specified performance objectives as the Plan Administrator may
establish at the time of issuance.
2. VESTING PROVISIONS
(a) Shares of Common Stock issued under the Plan may, in the
absolute discretion of the Plan Administrator, be fully and immediately vested
upon issuance or may vest in one or more installments over the Participant's
period of Service (as such term is defined in subsection A.3.(b) of Article II).
The elements of the vesting schedule applicable to any unvested shares of Common
Stock issued under the Plan, namely:
(i) the Service period to be completed by the Participant
or the performance objectives to be achieved by the Corporation,
(ii) the number of installments in which the shares are to
vest,
(iii) the interval or intervals (if any) which are to lapse
between installments, and
(iv) the effect which death, disability or other event
designated by the Plan Administrator is to have upon the vesting schedule,
shall be determined by the Plan Administrator and incorporated into the Issuance
Agreement executed by the Corporation and the Participant at the time such
unvested shares are issued.
(b) The Participant shall have full stockholder rights with
respect to any shares of Common Stock issued to him or her under the Plan,
whether or not his or her interest in those shares is vested. Accordingly, the
Participant shall have the right to vote such shares and to receive any regular
cash dividends paid on such shares. Any new, additional or different shares of
stock or other property (including money paid other than as a regular cash
dividend) which the Participant may have the right to receive with respect to
his or her unvested shares by reason of any stock dividend, stock split,
reclassification of Common Stock or other similar change in the Corporation's
capital structure or by reason of any Corporate Transaction under Section B of
this Article III shall be issued, subject to (i) the same vesting requirements
applicable to his or her unvested shares and (ii) such escrow arrangements as
the Plan Administrator shall deem appropriate.
(c) Should the Participant cease to remain in Service while
holding one or more unvested shares of Common Stock under the Plan, then those
shares shall be immediately surrendered to the Corporation for cancellation, and
the Participant shall have no further stockholder rights with respect
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to those shares. To the extent the surrendered shares were previously issued to
the Participant for consideration paid in cash or cash equivalent (including the
Participant's purchase-money promissory note), the Corporation shall repay to
the Participant the cash consideration paid for the surrendered shares and shall
cancel the principal balance of any outstanding purchase-money note of the
Participant to the extent attributable to such surrendered shares. The
surrendered shares may, at the Plan Administrator's discretion, be retained by
the Corporation as Treasury Shares or may be retired to authorized but unissued
share status.
(d) The Plan Administrator may in its discretion elect to waive
the surrender and cancellation of one or more unvested shares of Common Stock
(or other assets attributable thereto) which would otherwise occur upon the
non-completion of the vesting schedule applicable to such shares. Such waiver
shall result in the immediate vesting of the Participant's interest in the
shares of Common Stock as to which the waiver applies. Such waiver may be
effected at any time, whether or before after the Participant's Cessation of
Service or the attainment or non-attainment of the applicable performance
objectives.
3. TRANSFER RESTRICTIONS/SHARE ESCROW
(a) Unvested shares may, in the Plan Administrator's discretion,
be held in escrow by the Corporation until the Participant's interest in such
shares vests or may be issued directly to the Participant with restrictive
legends on the certificates evidencing such unvested shares. To the extent an
escrow arrangement is utilized, the unvested shares and any securities or other
assets issued with respect to such shares (other than regular cash dividends)
shall be delivered in escrow to the Corporation to be held until the
Participant's interest in such shares (or other securities or assets) vests.
Alternatively, if the unvested shares are issued directly to the Participant,
the restrictive legend on the certificates for such shares shall read
substantially as follows:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE UNVESTED AND ARE
ACCORDINGLY SUBJECT TO CERTAIN TRANSFER RESTRICTIONS AND TO
CANCELLATION OR REPURCHASE IN THE EVENT THE REGISTERED HOLDER (OR
HIS/HER PREDECESSOR IN INTEREST) CEASES TO REMAIN IN THE CORPORATION'S
SERVICE. SUCH TRANSFER RESTRICTIONS AND THE TERMS AND CONDITIONS OF
SUCH CANCELLATION OR REPURCHASE ARE SET FORTH IN A STOCK ISSUANCE
AGREEMENT BETWEEN THE CORPORATION AND THE REGISTERED HOLDER (OR
HIS/HER PREDECESSOR IN INTEREST) DATED ________, 19___, A COPY OF
WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE CORPORATION."
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(b) The Participant shall have no right to transfer any unvested
shares of Common Stock issued to him or her under the Plan. For purposes of
this restriction, the term "transfer" shall include (without limitation) any
sale, pledge, assignment, encumbrance, gift, or other disposition of such
shares, whether voluntary or involuntary. Upon any such attempted transfer, the
unvested shares shall immediately be cancelled, and neither the Participant nor
the proposed transferee shall have any rights with respect to those shares.
However, the Participant shall have the right to make a gift of unvested shares
acquired under the Plan to his or her spouse or issue, including adopted
children, or to a trust established for such spouse or issue, provided the donee
of such shares delivers to the Corporation a written agreement to be bound by
all the provisions of the Plan and the Issuance Agreement applicable to the
gifted shares.
B. CORPORATE TRANSACTION
All of the Corporation's outstanding repurchase rights under this
Article III shall automatically terminate upon the occurrence of a Corporate
Transaction (as defined in Section C of Article II), except to the extent the
Corporation's outstanding repurchase rights are to be assigned to the successor
corporation (or parent thereof) in connection with the Corporate Transaction.
ARTICLE IV
MISCELLANEOUS
A. LOANS
1. The Plan Administrator may assist any Optionee or Participant
(including an Optionee or Participant who is an officer or director of the
Corporation) in the exercise of one or more options granted to such Optionee
under the Article II Option Grant Program or the purchase of one or more shares
issued to such Participant under the Article III Stock Issuance Program,
including the satisfaction of any Federal and state income and employment tax
obligations arising therefrom, by
(i) authorizing the extension of a loan from the Corporation to
such Optionee or Participant, or
(ii) permitting the Optionee or Participant to pay the option
price or purchase price for the purchased Common Stock in installments over
a period of years.
2. The terms of any loan or installment method of payment (including
the interest rate and terms of repayment) shall be established by the Plan
Administrator in its sole discretion. Loans or installment payments may be
granted with or without security or collateral. In all events the maximum
credit
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available to each Optionee or Participant may not exceed the SUM of (i) the
aggregate option price or purchase price payable for the purchased shares (less
the par value payable for the purchased shares) plus (ii) any Federal and state
income and employment tax liability incurred by the Optionee or Participant in
connection with such exercise or purchase.
3. The Plan Administrator may, in its absolute discretion, determine
that one or more loans extended under the financial assistance program shall be
subject to forgiveness by the Corporation in whole or in part upon such terms
and conditions as the Plan Administrator in its discretion deems appropriate.
B. NO EMPLOYMENT OR SERVICE RIGHTS
Nothing in the Plan shall confer upon the Optionee or the Participant
any right to continue in Service for any period of specific duration or
interfere with or otherwise restrict in any way the rights of the Corporation
(or any Parent or Subsidiary corporation of the Corporation) or of the Optionee
or the Participant, which rights are hereby expressly reserved by each, to
terminate the Service of the Optionee or Participant at any time for any reason
whatsoever, with or without cause.
C. AMENDMENT OF THE PLAN
The Board may at any time prior to the Termination Date (as defined
herein) modify and amend the Plan in any respect; PROVIDED, HOWEVER, that the
approval of the holders of a majority of the votes that may be cast by all of
the holders of shares of capital stock of the Company, if any, entitled to vote
(voting as a single class) shall be obtained prior to any such amendment
becoming effective if such approval is required by law or is necessary to comply
with regulations promulgated by the SEC under Section 16(b) of the 1934 Act or
with Section 422 of the Code or the regulations promulgated by the Treasury
Department thereunder.
D. EFFECTIVE DATE AND TERM OF PLAN
1. The Plan shall become effective when adopted by the Board, but no
ISO granted under the Plan shall become exercisable unless and until the Plan
shall have been approved by the Corporation's stockholders. If such stockholder
approval is not obtained within twelve (12) months after the date of the Board's
adoption of the Plan, then all options previously granted under the Plan
intended as ISOs shall thereupon be deemed to have been issued as NSOs, and no
further ISOs shall be granted hereunder. Subject to such limitation in the case
of ISOs, the Plan Administrator may grant options under the Plan at any time
after the effective date and before the date fixed herein for termination of the
Plan.
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2. The Plan shall terminate upon the EARLIER of (i) the tenth
anniversary of the date on which the plan is adopted by the Board or (ii) the
date on which all shares available for issuance under the Plan have been issued
or cancelled pursuant to the exercise of options or stock appreciation rights
granted under Article II or the issuance of shares under Article III (in each
case, the "Termination Date"). If the Termination Date is determined under
clause (i) above, then no options or stock appreciation rights outstanding on
such date under Article II and no shares issued and outstanding on such date
under Article III shall be affected by the termination of the Plan, and such
securities shall thereafter continue to have force and effect in accordance with
the provisions of the stock option agreements evidencing such Article II options
and stock appreciation rights and the stock purchase agreements evidencing the
issuance of such Article III shares.
F. WITHHOLDING
The Corporation's obligation to deliver shares upon the exercise of
any options granted under Article II or upon the purchase of any shares issued
under Article III shall be subject to the satisfaction of all applicable
Federal, state and local income and employment tax withholding requirements.
G. REGULATORY APPROVALS
The implementation of the Plan, the granting of any options under the
Option Grant Program, the issuance of any shares under the Stock Issuance
Program, and the issuance of Common Stock upon the exercise of the option grants
made hereunder shall be subject to the Corporation's procurement of all
approvals and permits required by regulatory authorities having jurisdiction
over the Plan, the options granted under it, and the Common Stock issued
pursuant to it.
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