<PAGE> 1
LOGO
COMPUCOM (TM)
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD THURSDAY, MAY 25, 1995
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of CompuCom
Systems, Inc. (the "Company") will be held at the Bristol Suites Hotel at
7800 Alpha Road, Dallas, Texas 75240 on Thursday, May 25, 1995 at 2:00 p.m.,
local time, for the following purposes:
1. To elect nine directors;
2. To consider and vote on a proposal to amend the 1993 Stock Option
Plan;
3. To consider and vote on a proposal to adopt the Stock Option Plan
for Directors; and
4. To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
The Board of Directors has established the close of business on April 7,
1995 as the record date for the determination of stockholders entitled to
notice of, and to vote at the meeting or any adjournments thereof. In order
that the meeting can be held and a maximum number of shares can be voted,
whether or not you plan to be present at the meeting in person, please fill
in, date and sign, and promptly return the enclosed Proxy in the return
envelope provided for your use. No postage is required if mailed in the
United States.
By order of the Board of Directors,
/s/ James A. Ounsworth
----------------------------------
JAMES A. OUNSWORTH
Secretary
10100 North Central Expressway
Dallas, TX 75231
April 24, 1995
<PAGE> 2
COMPUCOM SYSTEMS, INC.
10100 North Central Expressway
Dallas, TX 75231
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
Proxies by the Board of Directors (the "Board") of CompuCom Systems, Inc.
(the "Company") for use at the Annual Meeting of Stockholders to be held on
May 25, 1995 (such meeting and any adjournment or adjournments thereof
referred to as the "Annual Meeting") for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders and in this Proxy
Statement. The Company intends to mail this Proxy Statement and related form
of Proxy to stockholders on or about April 24, 1995.
VOTING SECURITIES
Only the holders of shares of common stock, par value $.01 per share (the
"Common Stock"), and Series B Cumulative Convertible Preferred Stock, par
value $.01 per share (the "Series B Stock") of the Company of record at the
close of business on April 7, 1995 (cumulatively, the "Shares") are entitled
to receive notice of, and to vote at, the Annual Meeting. On that date, there
were 33,987,764 shares of Common Stock and 2,000,000 shares of Series B Stock
outstanding and entitled to be voted at the Annual Meeting. It is the
intention of the persons named in the Proxy to vote as instructed by the
stockholders or, if no instructions are given, to vote as recommended by the
Board. Each stockholder has one vote per Share on all business of the Annual
Meeting, except that in the election of directors each share of Series B
Stock has the right to cast five votes for each share of Common Stock into
which such Series B Stock could then be converted. Each share of Series B
Stock is convertible into 1.477104 shares of Common Stock.
The nine nominees receiving the highest number of affirmative votes of the
Shares present or represented and entitled to be voted shall be elected as
directors. The approval of the adoption of the amendment to the 1993 Stock
Option Plan requires the affirmative vote of a majority of the votes cast at
a meeting at which a quorum is present, either in person or by proxy, and
voting on such plan. The approval of the adoption of the Stock Option Plan
for Directors requires a majority of the votes cast thereon. A majority of
outstanding Shares will constitute a quorum for the transaction of business
at the Annual Meeting. Votes withheld from any director, abstentions and
broker non-votes will be counted for purposes of determining the presence of
a quorum for the transaction of business at the Annual Meeting. Abstentions
are counted in tabulations of the votes cast on proposals presented to
stockholders. Broker non-votes are not counted for purposes of determining
whether a proposal has been approved.
REVOCABILITY OF PROXY
Execution of the enclosed Proxy will not affect a stockholder's right to
attend the Annual Meeting and vote in person. A stockholder, in exercising
his right to vote in person at the Annual Meeting, effectively revokes all
previously executed Proxies. In addition, the Proxy is revocable at any time
prior to the effective exercise thereof by filing notice of revocation with
the Secretary of the Company or by filing a duly executed Proxy bearing a
later date.
PERSONS MAKING THE SOLICITATION
The solicitation of this Proxy is made by the Company. The cost of
soliciting Proxies on behalf of the Board of Directors, including the actual
expenses incurred by brokerage houses, nominees and fiduciaries in forwarding
Proxy materials to beneficial owners, will be borne by the Company. In
addition to solicitation by mail, certain officers and other employees of the
Company may solicit Proxies on behalf of the Board of Directors in person, by
mail, or by telephone.
1
<PAGE> 3
STOCKHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
Stockholders intending to present proposals at the next Annual Meeting of
Stockholders to be held in 1996 must notify the Company of the proposal no
later than December 26, 1995.
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 7, 1995, the Company's Common
Stock beneficially owned by each person known to the Company to be the
beneficial owner of more than 5% of the outstanding Common Stock, and the
number of shares of Common Stock owned beneficially by each director, by each
named executive officer, and by all executive officers and directors as a
group. In addition to the information regarding the Company's Common Stock
listed below, as of April 7, 1995, there were 2,000,000 shares of Series B
Stock issued and outstanding. All of such Series B Stock is owned of record
by Safeguard Scientifics (Delaware), Inc., a wholly owned subsidiary of
Safeguard Scientifics, Inc. ("Safeguard"), and consequently is beneficially
owned by Safeguard.
<TABLE>
<CAPTION>
Number of Percent
Shares of
Owned(1) Class
------------ ---------
<S> <C> <C>
Safeguard Scientifics, Inc. 800 The Safeguard Building,
435 Devon Park Drive Wayne, PA 19087(2) ................ 24,217,392 65.6%
Massachusetts Mutual Life Insurance Company 1295 State
Street Springfield, MA 01111(3) ........................ 4,545,454 11.8%
Froley, Revy Investment Co., Inc. 10900 Wilshire
Boulevard, Suite 1050 Los Angeles, CA 90024-6594(4) .... 2,272,727 6.3%
James W. Dixon(5) ....................................... 386,350 1.1%
Edward R. Anderson(5) ................................... 505,000 1.5%
Daniel F. Brown(5)(6) .................................... 752,546 2.2%
Michael J. Emmi(5) ....................................... 2,500 *
Richard F. Ford(7) ...................................... 1,011,500 3.0%
Ira M. Lubert(5) ........................................ 250,000 *
Warren V. Musser(8) ..................................... 409,147 1.2%
Edward N. Patrone(5) .................................... 7,500 *
Charles A. Root ......................................... 50,000 *
Jean C. Tempel(9) ....................................... 17,000 *
Robert J. Boutin(5)(6) .................................. 147,033 *
Philip W. Wise(5) ....................................... 21,402 *
Executive officers and directors as a group (12 persons)(10) 3,559,978 10.0%
</TABLE>
- ------
* Less than 1%
(1) Except as otherwise disclosed, the nature of beneficial ownership is the
sole power to vote and to dispose of the Shares (except for Shares held
jointly with spouse).
(2) Safeguard Scientifics (Delaware), Inc. ("Safeguard Delaware"), a wholly
owned subsidiary of Safeguard, is the record owner of 19,832,984 shares of
Common Stock and 2,000,000 shares of Series B Stock, which are presently
convertible into 2,954,208 shares of Common Stock. CompuShop Incorporated,
a wholly owned subsidiary of Safeguard Delaware, is the record owner of
1,333,333 shares of Common Stock. Consequently, such shares are
beneficially owned by Safeguard, which is the parent of the Company by
virtue of its share ownership at April 7, 1995. All of the Shares
beneficially owned by Safeguard have been pledged by Safeguard as
collateral under its bank line of credit. Safeguard also may be deemed to
beneficially own an additional 96,867 Shares of Common Stock which are held
by Radnor Venture Partners, L.P., a venture capital fund managed by a
subsidiary of Safeguard. Safeguard disclaims beneficial ownership of all
but its derived proportionate pecuniary interest as a general partner in
the Shares held by Radnor Venture Partners, L.P.
(3) As reflected in Schedule 13G filed with the Securities and Exchange
Commission in October 1992, Massachusetts Mutual Life Insurance Company,
MassMutual Corporate Investors and MassMutual Participation Investors own
$5.5 million, $3 million and $1.5 million, respectively, of the Company's
2
<PAGE> 4
9% Convertible Subordinated Notes due September 24, 2002, which are
convertible into 2,500,000, 1,363,636, and 681,818 Shares of the Company's
Common Stock, respectively. Massachusetts Mutual Life Insurance Company,
MassMutual Corporate Investors and MassMutual Participation Investors,
which may be deemed to be members of a group, disclaim beneficial ownership
of Shares of the Company's Common Stock.
(4) As reflected in Amendment No. 1 to Schedule 13G filed with the Securities
and Exchange Commission, Froley, Revy Investment Co., Inc. is the holder of
$5 million of the Company's 9% Convertible Subordinated Notes due September
24, 2002, which are convertible into 2,272,727 Shares of the Company's
Common Stock.
(5) Includes for Messrs. Dixon, Anderson, Brown, Emmi, Lubert, Patrone, and
Boutin 386,250 Shares, 155,000 Shares, 700,000 Shares, 2,500 Shares,
250,000 Shares, 7,500 Shares, and 102,000 Shares, respectively, which may
be acquired pursuant to stock options which are currently exercisable or
which will become exercisable by June 6, 1995.
(6) Includes for Messrs. Brown and Boutin 16,667 Shares and 13,333 Shares,
respectively, which may be acquired upon the exercise of currently
exercisable warrants to purchase Common Stock.
(7) Includes 2,000 Shares held by Mr. Ford's spouse and 987,500 Shares held by
Gateway Venture Partners III, L.P. Mr. Ford, as Managing General Partner of
Gateway Associates III, L.P., the general partner of Gateway Venture
Partners III, L.P., may be deemed to be the beneficial owner of the 987,500
Shares held by Gateway Venture Partners III, L.P.
(8) Includes 25,564 Shares held by a charitable foundation of which Mr. Musser
is an officer and director. Excludes 24,217,392 Shares beneficially owned
by Safeguard, for which Mr. Musser serves as Chairman of the Board,
President and Chief Executive Officer. Mr. Musser disclaims beneficial
ownership of the Shares beneficially owned by the charitable foundation and
by Safeguard.
(9) Includes 2,000 Shares held by Ms. Tempel's spouse. Ms. Tempel disclaims
beneficial ownership of the Shares held by her spouse.
(10) Includes 1,603,250 Shares which may be acquired upon exercise of stock
options which are currently exercisable or which will become exercisable by
June 6, 1995 and 30,000 Shares which may be acquired upon exercise of
currently exercisable warrants to purchase Common Stock.
At April 7, 1995, Messrs. Musser and Root and Ms. Tempel each beneficially
owned approximately 12.7%, 1.1% and 1.0%, respectively, of the outstanding
common stock of Safeguard. Other than Messrs. Musser and Root and Ms. Tempel,
no executive officers or directors of the Company owned any of Safeguard's
outstanding common stock at such date.
I. ELECTION OF DIRECTORS
It is intended that the persons named as Proxies for this Annual Meeting
will vote in favor of the election of the following nominees as directors of
the Company to hold office until the Annual Meeting of Stockholders in 1996
and until their successors are elected and have qualified. Ms. Tempel has
advised the Company that she will not stand for re-election. All of the
nominees are presently serving as directors of the Company. Proxies may not
be voted for more than nine directors. Each of the nominees has consented to
serve if elected. However, if any of the nominees should become unavailable
prior to the election, the holder of the Proxies may vote the Proxies for the
election of such other persons as the Board may recommend, unless the Board
reduces the number of directors to be elected.
The Board unanimously recommends that stockholders vote FOR the election
of the slate of nominees set forth in this Proposal. Proxies received by the
Board will be so voted unless stockholders specify otherwise on their Proxy
cards. The nine nominees receiving the highest number of affirmative votes of
the Shares present or represented and entitled to be voted shall be elected
as directors.
3
<PAGE> 5
<TABLE>
<CAPTION>
Has
Been a
Principal Occupation and Business Director
Name Experience During Last Five Years Since Age
- ------------------ -------------------------------------------------- ---------- -----
<S> <C> <C> <C>
James W. Dixon Chairman of the Board of the Company(4) .............. 1988 48
Edward R. Anderson President and Chief Executive Officer of the
Company(5) ........................................... 1993 48
Daniel F. Brown Executive Vice President, Sales of the Company(6)..... 1990 49
Michael J. Emmi Chairman of the Board, Chief Executive Officer and
President, Systems & Computer Technology
Corporation, a provider of computing management
services and administrative applications software(1).. 1994 53
Richard F. Ford Managing General Partner, GM Management Company
Limited Partnership and Gateway Associates III,
L.P., venture capital management companies(2)(3)(7).. 1991 58
Ira M. Lubert Managing Director, Technology Leaders Management,
Inc. and Radnor Venture Management Company,
venture capital management companies(2)(3)(8) ........ 1987 45
Warren V. Musser Chairman of the Board, President and Chief
Executive Officer, Safeguard Scientifics, Inc., an
entrepreneurial, technology-based company(2)(3)(9) ... 1984 68
Edward N. Patrone Business Consultant(1)(10) ........................... 1991 60
Charles A. Root Executive Vice President, Safeguard Scientifics,
Inc.(1)(11) .......................................... 1986 62
</TABLE>
- ------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
(3) Member of the Executive Committee.
(4) Mr. Dixon is a director of Fisher Business Systems, Inc.
(5) Mr. Anderson served as Chief Operating Officer from August 1993 through
December 1993 and has served as President and Chief Executive Officer of
the Company since January 1994. Prior to joining the Company, Mr. Anderson
served from May 1988 to July 1993 as President and Chief Operating Officer
of Computerland Corporation (now known as Vanstar), a computer reseller.
(6) Mr. Brown has held the position of Executive Vice President, Sales since
February 1989, when he was promoted from Vice President-Sales.
(7) Mr. Ford is a director of Stifel Financial Corporation and D&K Wholesale
Drug, Inc.
(8) Mr. Lubert is a director of National Media Corporation. Mr. Lubert has been
a Managing Director of Technology Leaders Management, Inc. since December
1991 and Radnor Venture Management Company since July 1989.
(9) Mr. Musser is Chairman of the Board of Cambridge Technology Partners
(Massachusetts), Inc. and is a director of Coherent Communications Systems
Corporation and Tangram Enterprise Solutions, Inc. Mr. Musser also serves
on a variety of civic, educational and charitable Boards of Directors
including The Franklin Institute, the Board of Overseers of The Wharton
School, and the Wistar Institute of Anatomy and Biology, acts as Vice
Chairman of the Eastern Technology Council, and was Chairman of the 1994
United Way Campaign for the Philadelphia metropolitan area. Mr. Musser
served as Vice Chairman of the Company's Board from June 1988 until March
1991.
(10) Mr. Patrone served as President and Chief Executive Officer of Paper
Corporation of America, a distributor of paper products, from 1988 until
his retirement in 1991.
4
<PAGE> 6
(11) Mr. Root served as Vice Chairman of the Board from June 1988 until March
1991. Mr. Root is Chairman of the Board of Coherent Communications Systems
Corporation and Tangram Enterprise Solutions, Inc.
DIRECTORS' COMPENSATION
Directors are elected annually and hold office until their successors are
elected and have qualified or until their earlier resignation or removal. In
1994, each director who was not an employee or consultant of the Company, its
subsidiaries or Safeguard, received an annual cash retainer of $6,000,
payable quarterly in arrears, and $1,200 for each Board meeting attended,
payable quarterly in arrears. Directors also were reimbursed for
out-of-pocket expenses incurred in connection with attendance at meetings or
other Company business.
Subject to stockholder approval of the Stock Option Plan for Directors
described below in Proposal III, in May 1994, Mr. Emmi was granted an option
under the Company's Stock Option Plan for Directors to purchase 10,000 shares
of Common Stock at an exercise price of $4.75 per share.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board held five meetings in 1994. The Company's Board has appointed
standing Compensation, Executive and Audit Committees. The Compensation
Committee reviews and approves management's recommendations for compensation
levels, including incentive compensation for all executive officers, and
administers the Company's stock option plans. The Compensation Committee met
five times during 1994. The Executive Committee, which did not meet during
1994, is authorized to act upon all matters with respect to the management of
the business and affairs of the Company, except that its authority to
authorize and approve transactions is limited to up to $5 million in the
aggregate between meetings of the Board. The Audit Committee recommends the
firm to be appointed as independent certified public accountants to audit the
Company's financial statements, discusses the scope and results of the audit
with the independent certified public accountants, reviews with management
and the independent certified public accountants the Company's interim and
year-end operating results, considers the adequacy of the internal accounting
controls and audit procedures of the Company, and reviews the non-audit
services to be performed by the independent certified public accountants. The
Audit Committee met once during 1994. The Company does not have a nominating
committee or any committee performing similar functions. All of the directors
attended at least 75% of the total number of Board and Committee meetings of
which they were members during the period in which they served as a director,
except Mr. Emmi who missed one of two meetings during the period in 1994 in
which he served as a director.
REPORT OF THE BOARD COMPENSATION COMMITTEE
The Compensation Committee of the Board (the "Compensation Committee")
reviews and approves compensation levels recommended by management, including
incentive compensation, for the executives of the Company, and administers
the Company's stock option plans. Messrs. Ford, Lubert and Musser currently
constitute the Compensation Committee.
EXECUTIVE COMPENSATION POLICIES
The Company is in a highly competitive industry. In order to succeed, the
Company believes that it must be able to attract and retain outstanding
executives, promote among them the economic benefits of stock ownership in
the Company, and motivate and reward executives who, by their industry,
loyalty and exceptional service, make contributions of special importance to
the success of the business of the Company. The Company has structured its
executive compensation program to support the strategic goals and objectives
of the Company.
Base compensation levels and benefits are initially established for new
executives on the basis of a combination of factors, including a review of
various published industry salary surveys which include many, but not all, of
the companies included in the Company's peer group in the Stock Performance
Graph which follows, and certain subjective factors, including reference to
experience and achievements of the individual and the level of responsibility
5
<PAGE> 7
to be assumed in the Company. Any salary increases that are approved by the
Compensation Committee are generally awarded at year-end based on a review of
the level of achievement of financial and strategic objectives as defined in the
Company's annual strategic plan, and individual performance and contributions to
the achievement of the Company's objectives. Annual cash bonuses are intended to
create an incentive for executives who significantly contribute to and influence
the Company's strategic plans and are responsible for the Company's performance.
The aim is to focus executives' attention on areas such as profitability and
asset management, encourage teamwork, and tie executive pay to corporate
performance goals which are consistent with the long-term goals of stockholders
and other investors. Bonuses are awarded based on the achievement of annual
financial and strategic goals as approved by the Compensation Committee at the
beginning of each year, which goals may include a target range of pretax
earnings, earnings per share, return on equity, or some other objective
measurement that is consistent with long- term stockholder goals. The
Compensation Committee approves a target range for specific financial and/or
strategic goals, and a range of potential bonus amounts for each executive,
stated as a percentage of base salary. Ranges of potential bonuses are
determined based upon the executive's ability to impact the Company's
performance, and actual bonuses are awarded at year-end based on the actual
achievement level of the specified corporate goals compared to the target range
of achievement. For fiscal 1994, the Compensation Committee determined that
bonuses would be awarded based solely upon a target range for annual pretax
earnings.
Grants of Company stock options are intended to align the interests of
executives and key employees with the long-term interests of the Company's
stockholders and other investors and to encourage executives and key
employees to remain in the Company's employ. Grants are not made in every
year, but are awarded subjectively based on a number of factors, including
the individual's level of responsibility, the amount and term of options
already held by the individual, the individual's contributions to the
achievement of the Company's financial and strategic objectives as defined in
the Company's annual plan, and the Company's achievement of its financial and
strategic objectives, which may include the goals described above and
developing strategic alliances, identifying and exploiting markets, expanding
existing market share and penetration, expanding operating capabilities, and
improving net operating margins, productivity of sales representatives and
return on equity.
COMPANY POLICY ON QUALIFYING COMPENSATION
Internal Revenue Code section 162(m), adopted in 1993, provides that
publicly held companies may not deduct in any taxable year compensation in
excess of one million dollars paid to any of the individuals named in the
Summary Compensation Table which is not "performance-based" as defined in
section 162(m). In order for incentive compensation to qualify as
"performance-based" compensation under section 162(m), the Compensation
Committee's discretion to grant awards must be strictly limited. The
Compensation Committee believes that the benefit to the Company of retaining
the ability to exercise discretion under the Company's incentive compensation
plans outweighs the limited risk of loss of tax deductions under section
162(m). Therefore, the Compensation Committee does not currently intend to
seek to qualify any of its incentive compensation plans under section 162(m).
CEO COMPENSATION
Mr. Anderson was awarded a bonus for 1994 equal to 100% of his target
bonus. This decision was based on the Company achieving 1994 pretax earnings
equal to 100% of the target. In August 1993, the Company sold 350,000 shares
of its Common Stock to Mr. Anderson. The sale was not consummated in
accordance with the objectives of the Compensation Committee and as a result,
it was rescinded. Following such rescission, the Compensation Committee
authorized the grant to Mr. Anderson of a fully vested option to purchase
350,000 shares of the Company's Common Stock under the 1993 Stock Option
Plan. This grant was made in order to accomplish the original objectives of
the Compensation Committee in connection with the compensation arrangements
approved at the time Mr. Anderson joined the Company in 1993.
6
<PAGE> 8
OTHER EXECUTIVE COMPENSATION
The Compensation Committee approved executive cash bonuses equal to 100%
of the target bonus amounts. As noted above under discussion of the CEOs
compensation, these decisions were based on the Company's pretax earnings
being equal to 100% of the target. The Compensation Committee also granted
options under the Company's 1993 Stock Option Plan to certain of its
executives and employees. Certain of these options were granted in order to
establish appropriate relative numbers of options held by each executive and
employee based on their current responsibilities.
By the Compensation Committee:
Warren V. Musser Richard F. Ford Ira M. Lubert
7
<PAGE> 9
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information concerning compensation paid
during the last three fiscal years to the Chief Executive Officer and each of
the other most highly compensated executive officers of the Company whose
salary and bonus exceeded $100,000 in 1994, and to one individual who
resigned prior to December 31, 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
------------------------------------------ --------------
Awards
--------------
Securities
Other Annual Underlying All Other
Name and Principal Salary Bonus Compensation Options/SARS Compensation
Position Year ($)(1) ($)(2) ($)(3) (#) ($)(4)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Edward R. Anderson, 1994 $310,000 $310,000 $608,874 350,000 $1,938
President and Chief
Executive Officer(5) 1993 121,022 235,600 -- 775,000 0
1992 -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------
James W. Dixon, 1994 $310,000 $310,000 -- 0 $3,143
Chairman of the Board
1993 310,000 471,200 -- 0 4,497
1992 275,000 257,141 -- 0 4,364
- --------------------------------------------------------------------------------------------------------------
Daniel F. Brown, 1994 $245,000 $220,500 -- 0 $3,033
Executive Vice
President, Sales 1993 225,000 256,500 -- 0 4,497
1992 205,000 143,765 -- 0 3,908
- --------------------------------------------------------------------------------------------------------------
Robert J. Boutin, 1994 $200,000 $100,000 -- 50,000 $2,932
Senior Vice President,
Finance and Chief 1993 150,000 114,000 -- 50,000 3,032
Financial Officer
1992 125,000 58,441 -- 0 2,409
- --------------------------------------------------------------------------------------------------------------
Philip W. Wise, Former 1994 $210,000 $ 84,375 -- 0 $3,035
Executive Vice
President(6) 1993 175,000 133,000 -- 0 3,478
1992 140,000 65,454 -- 100,000 2,800
- --------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes annual compensation which has been deferred by the named
executives pursuant to the Company's 401(k) matched savings plan.
(2) A portion of the cash bonus paid for services rendered in each year was
paid the following fiscal year.
(3) The amount reported for Mr. Anderson includes, among other things,
relocation expenses totaling $592,133. While other named executives enjoy
certain similar perquisites, such perquisites do not exceed the lesser of
$50,000 or 10% of such executive salary and bonus.
(4) The stated amounts represent Company matching contributions made under its
401(k) matched savings plan.
(5) Mr. Anderson joined the Company in August 1993.
(6) Mr. Wise resigned his position in October 1994.
8
<PAGE> 10
STOCK OPTIONS
The following tables set forth information with respect to (i) individual
grants of stock options to the Company's Chief Executive Officer and each of
the other named executive officers during the last fiscal year, (ii) options
exercised during fiscal year 1994, and (iii) the number of unexercised
options and the value of unexercised in-the-money options at December 31,
1994.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Individual Grants for Option Term(1)
- -----------------------------------------------------------------------------------------------------------------
Number of % of Total
Securities Options/SARS
Underlying Granted to Exercise or
Options/SARs Employees in Base Price Expiration 5% 10%
Name Granted (#) Fiscal Year ($/Sh)(2) Date ($) ($)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Edward R. Anderson 350,000(3) 56.7% $3.375 08/30/04 $742,882 $1,882,608
- ----------------------------------------------------------------------------------------------------------------
James W. Dixon 0 -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------
Daniel F. Brown 0 -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------
Robert J. Boutin 50,000(4) 8.1% $4.125 06/13/04 $129,710 $ 328,709
- ----------------------------------------------------------------------------------------------------------------
Philip W. Wise 0 -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The potential realizable values are based on an assumption that the stock
price of the shares of Common Stock of the Company appreciate at the annual
rate shown (compounded annually) from the date of grant until the end of
the option term. These values do not take into account amounts required to
be paid as income taxes under the Code and any applicable state laws or
option provisions providing for termination of an option following
termination of employment, nontransferability, or vesting over periods of
up to five years. These amounts are calculated based on the requirements
promulgated by the Securities and Exchange Commission and do not reflect
the Company's estimate of future stock price growth of the shares of Common
Stock of the Company.
(2) All options have an exercise price at least equal to the fair market value
of the shares subject to each option on the date of grant.
(3) This option was granted in August 1994 and was fully vested and exercised
on the date of grant. The option exercise price was paid by delivery of a
full recourse promissory note.
(4) This option was granted in June 1994, vests 20% each year commencing on
January 2, 1995, has a ten-year term, and continues vesting and remains
exercisable so long as employment with the Company or one of its
subsidiaries continues. The option exercise price may be paid in cash or,
in the discretion of the Compensation Committee, by (i) delivery of
previously acquired shares, or (ii) same day sales, i.e. cashless broker's
exercises. The Compensation Committee also may elect to cash-out all or
part of the portion of the option to be exercised by paying optionee an
amount, in cash or stock, equal to the excess of the fair market value of
the stock over the exercise price on the effective date of such cash-out.
9
<PAGE> 11
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Number of Securities
Underlying Unexercised Value Of Unexercised
Shares Options/SARs in-the-Money Options/SARs
Acquired on Value at Fiscal Year-End (#) at Fiscal Year-End ($)(1)
Name Exercise (#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Edward R. Anderson 350,000 0 155,000 620,000 $ 0 $ 0
- -------------------------------------------------------------------------------------------------------
James W. Dixon 0 -- 461,250 0 $ 738,871 $ 0
- -------------------------------------------------------------------------------------------------------
Daniel F. Brown 0 -- 700,000 0 $1,180,500 $ 0
- -------------------------------------------------------------------------------------------------------
Robert J. Boutin 22,000 $104,500 80,000 94,000 $ 118,860 $39,500
- -------------------------------------------------------------------------------------------------------
Philip W. Wise 100,000 $205,375 0 90,000 0 $87,250
- -------------------------------------------------------------------------------------------------------
</TABLE>
(1) The value of unexercised in-the-money options is calculated based upon (i)
the fair market value of the stock at December 30, 1994 less the option
exercise price, multiplied by (ii) the number of shares subject to an
option. On December 30, 1994, the fair market value was $3.125.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS.
In 1991, the Company entered into an employment agreement with Daniel F.
Brown providing for his employment through March 1, 1996 as an officer of the
Company at a minimum annual base salary of $185,000. The agreement provides
for Mr. Brown's participation in management bonuses, requires the Company to
obtain a term life insurance policy in the amount of $185,000 payable to Mr.
Brown's designated beneficiary, and affords him other standard benefits
awarded to other senior management.
STOCK PERFORMANCE GRAPH
The following chart compares the cumulative total stockholder return on
the Company's Common Stock for the period December 31, 1989 through December
31, 1994 with the cumulative total return on the NASDAQ Index and the
cumulative total return for a peer group index for the same period. The peer
group consists of SIC Code 5045 -- Computer, Peripheral Equipment and
Software Wholesalers.
CompuCom Stock Performance Analysis
1989-1994
Value Including Reinvested Dividends
1989 1990 1991 1992 1993 1994
350 -----------------------------------------------------@-------------------
-------------------------------------------------------------------------
300 -----------------------------------------------------#-------------------
--------------------------------------------------------------------@----
250 -------------------------------------------------------------------------
-------------------------------------------------------------------------
200 ---------------------------@------------@#--------------------------#----
----------------------------------------*------------*--------------*----
150 ---------------------------#---------------------------------------------
--------------@------------*---------------------------------------------
100 @*#----------------------------------------------------------------------
--------------*#---------------------------------------------------------
50 -------------------------------------------------------------------------
-------------------------------------------------------------------------
0 -------------------------------------------------------------------------
@ = Compucom * = NASDAQ # = Peer Group
1989 1990 1991 1992 1993 1994
---- ---- ---- ---- ---- ----
Compucom 100 116 199 194 359 277
NASDAQ 100 85 136 159 181 177
Peer group 100 88.96 168.35 190.09 305.73 197.75
The comparison assumes that $100 was invested on December 31, 1989 in the
Company's Common Stock and in each of the comparison indices, and assumes
reinvestment of dividends. The Company has historically reinvested earnings
in the growth of its business and has not paid cash dividends on its Common
Stock.
10
<PAGE> 12
CERTAIN TRANSACTIONS
In August 1993, Edward R. Anderson joined the Company as Chief Operating
Officer. As a partial condition for his accepting employment, the Company
provided Mr. Anderson with a bridge loan of $194,816 evidenced by a
promissory note which bears interest at 1% in excess of the prime rate. The
principal and accrued interest on this note was payable within seven days of
the sale of his California residence. In December 1994, Mr. Anderson paid in
full the outstanding principal balance and accrued interest of $15,091.
In August 1993, Mr. Anderson also delivered to the Company in payment of
the purchase price of 350,000 shares of Common Stock of the Company a full
recourse, four-year promissory note in the amount of $1,093,750 which was
secured by a pledge of the 350,000 CompuCom Shares. This sale was not
consummated in accordance with the objectives of the Compensation Committee
and as a result, it was rescinded and the note delivered by Mr. Anderson was
canceled without obligation.
In August 1994, Mr. Anderson delivered to the Company in payment of the
purchase price of 350,000 shares of Common Stock of the Company which he
acquired upon exercise of stock options a full recourse, four-year promissory
note in the amount of $1,181,250 which is secured by a pledge of the 350,000
CompuCom Shares. Interest on the note accrues at the rate of 6% per annum and
is payable annually beginning January 1, 1996. Principal is payable in two
equal annual installments on August 31 in each of 1996 and 1997.
In November 1994, the Company provided Mr. Dixon with a loan of $210,000
evidenced by a promissory note and secured by a lien on Mr. Dixon's home in
Dallas, Texas. The promissory note bears interest at the prime rate.
One-third of the principal amount of the note together with accrued interest
was paid on March 31, 1995, and the remaining unpaid principal together with
accrued interest is payable on the earlier of December 31, 1996 or Mr.
Dixon's termination of employment. At the date of this Proxy Statement, the
principal balance due on this note was $140,000.
In October 1994, the Company provided Mr. Dixon with a bridge loan of
$217,000 in connection with his relocation from Georgia to Texas. This loan
is evidenced by a promissory note which bears interest at 1% in excess of the
prime rate and is secured by a second mortgage on his Georgia residence. The
principal and accrued interest on the note are payable within seven days of
the sale of Mr. Dixon's residence in Georgia.
The Company and Safeguard are parties to an Administrative Services
Agreement pursuant to which Safeguard provides the Company with
administrative support services for an annual fee equal to 1/4 of 1% of the
Company's net sales, up to a maximum annual fee of $600,000, and the
reimbursement of certain out-of-pocket expenses incurred by Safeguard in
performing services under the agreement. The administrative support services
include consultation regarding the Company's general management, investor
relations, financial management, certain legal services, insurance programs
administration, and tax research and planning. The annual administrative
services fee does not cover extraordinary services provided by Safeguard to
the Company or services which are contracted out. The agreement is subject to
termination by the Company or Safeguard upon notice no later than ninety days
prior to the end of any fiscal year. The Company expensed $600,000 during
1994 for these services.
During 1994, Safeguard purchased 2,000,000 shares of Series B Cumulative
Convertible Preferred Stock ('Series B Shares") from the Company. The Series
B Shares are entitled to one vote for each share of Common Stock into which
such Series B Shares may be converted, except that in the election of
directors, the Series B Shares are entitled to five votes for each share of
Common Stock into which such Series B Shares may be converted. In the event
Safeguard's ownership of Company Common Stock falls below 40% (calculated
before conversion of the Series B Shares), the voting right of the Series B
Shares in the election of directors will be reduced to one vote per share of
Common Stock into which such Series B Shares could be converted.
11
<PAGE> 13
II. PROPOSAL TO APPROVE AMENDMENT TO THE 1993 STOCK OPTION PLAN
The Board believes that the following proposal to amend the 1993 Stock
Option Plan is in the best interests of the Company and its stockholders and
unanimously recommends a vote FOR approval of this proposal. Proxies
solicited by the Board will be so voted unless stockholders specify otherwise
on their Proxy Cards.
BACKGROUND
At the Annual Meeting, the stockholders will be asked to approve an
amendment to the Company's 1993 Stock Option Plan which was adopted by the
Board, subject to stockholder approval, in February 1995. The 1993 Stock
Option Plan, as proposed to be amended, is hereinafter referred to as the
"1993 Plan."
PROPOSED AMENDMENT TO THE 1993 PLAN
The proposed amendment to the 1993 Plan authorizes an increase in the
number of shares of Common Stock which may be issued upon exercise of options
granted or to be granted under the 1993 Plan by 3,000,000 shares of Common
Stock, from 1,750,000 to 4,750,000 shares of Common Stock in the aggregate.
The Board believes that additional shares should be made available under
the 1993 Plan for the granting of options in order to enable the Company to
recruit and retain capable officers and employees. In February 1995, less
than 150,000 shares remained available for the granting of options under the
1993 Plan. The Board awarded options in February 1995 for the purchase of
827,500 shares, which are expressly subject to stockholder approval of the
amendment to the 1993 Plan. The balance of the newly authorized shares would
be available for the granting of options to existing and future employees
from time to time. The Company has no plans to make any material additional
awards of options to officers or employees of the Company at this time.
We direct your attention to Appendix A of this Proxy Statement,
incorporated herein by reference, which contains a description of the
material features of the 1993 Plan.
APPROVAL BY STOCKHOLDERS
Approval of the adoption of the amendment to the 1993 Plan requires the
affirmative vote of a majority of the votes cast at a meeting at which a
quorum representing a majority of all outstanding voting stock of the Company
is present, either in person or by proxy, and voting on the 1993 Plan. If not
so approved, then (i) the 1993 Plan in the form as approved by the
stockholders at the 1993 Annual Meeting will remain in full force and effect;
(ii) options to purchase an aggregate of 947,500 shares issued to executives
and other employees of the Company under the 1993 Plan will be void; and
(iii) the aggregate number of shares of Common Stock that are subject to
options granted under the 1993 Plan will not exceed 1,750,000 shares of
Common Stock.
III. PROPOSAL TO APPROVE THE STOCK OPTION PLAN FOR DIRECTORS
The Board of Directors believes that the following proposal to adopt the
Stock Option Plan for Directors is in the best interests of the Company and
its stockholders and unanimously recommends a vote FOR approval of this
proposal. Proxies solicited by the Board of Directors will be so voted unless
stockholders specify otherwise on their Proxy Cards.
BACKGROUND
At the Annual Meeting, the stockholders will be asked to approve the Stock
Option Plan for Directors (the "Directors' Plan") which was adopted by the
Company's Board of Directors in May 1994, subject to stockholder approval.
The Directors' Plan is designed to promote the interest of the Company and
its stockholders by attracting and retaining highly qualified, independent
directors with an investment interest in the Company's future success.
12
<PAGE> 14
INITIAL GRANTS
On May 26, 1994, the Company issued an option to purchase 10,000 shares of
Common Stock at an exercise price of $4.75 per share to Director Emmi. The
proposed Directors' Plan and the option granted to Director Emmi will not be
effective unless and until stockholder approval is obtained.
The following description of the proposed Directors' Plan is intended
merely as a summary of the principal features of the Directors' Plan.
SHARES SUBJECT TO THE DIRECTORS' PLAN
Subject to the adjustment provisions discussed below, the maximum number
of shares of Common Stock which may be issued under the Directors' Plan is
100,000. Such shares may be authorized but unissued shares of Common Stock or
previously issued but reacquired shares of Common Stock. Shares of Common
Stock subject to options granted under the Directors' Plan which have lapsed
or terminated may again be subject to options granted under the Directors'
Plan. The closing price of the Company's Common Stock on the Nasdaq National
Market on April 7, 1995 was $3.125 per share.
ELIGIBILITY; GRANT OF OPTIONS
Options under the Directors' Plan are awarded only to directors who are
not otherwise employed by the Company or the Company's affiliates ("Eligible
Director"). In accordance with the proposed Directors' Plan, on May 26, 1994,
one Eligible Director received an option to purchase 10,000 shares of Common
Stock upon his election to the Company's Board, and each new Eligible
Director elected to the Board after May 26, 1994 will receive, upon election
to the Board, an option to purchase 10,000 shares of Common Stock ("Initial
Grant"), subject to adjustment as described below.
In addition to the Initial Grant, each Eligible Director elected to the
Board on or before May 26, 1994 will receive under the Directors' Plan an
option to purchase 2,000 shares of Common Stock ("Service Grant") on May 26,
1996, and each other Eligible Director elected to the Board after May 26,
1994 will receive a Service Grant on the second anniversary of his or her
election as a director. Each Eligible Director will be entitled to an
additional Service Grant at the end of every two years' service after the
initial Service Grant.
The number of options which may be granted to an Eligible Director under
the Directors' Plan cannot exceed 20,000 options. On April 7, 1995, there
were 3 directors eligible to participate in the Directors' Plan.
EXERCISE PRICE
The option exercise price per share must be equal to the fair market value
of the shares on the date of grant, which for purposes of the Directors' Plan
is defined as the closing price on the Nasdaq National Market on the date of
grant. The exercise price of the option must be paid in full, at the time of
exercise, (i) in cash or its equivalent; (ii) in shares of Common Stock of
the Company previously acquired by the optionee; (iii) in any combination of
(i) and (ii) above; or (iv) by delivering a properly executed notice of
exercise of the option to the Company and a broker, with irrevocable
instructions to the broker to sell the underlying shares of Common Stock and
promptly deliver to the Company the amount of sale proceeds necessary to pay
the exercise price of the option. Shares of Common Stock previously acquired
by an Eligible Director which are tendered in payment of the option price may
be subject to certain holding period and other requirements as set forth in
the Directors' Plan.
TERMS OF OPTIONS
The Directors' Plan requires that each Eligible Director enter into a
stock option agreement with the Company which incorporates the terms of the
option.
The term of an option under the Directors' Plan may not exceed ten years.
A director who becomes an employee of the Company or a consolidated
subsidiary or whose service on the Board is terminated as a result of
retirement after age 65 will continue to vest in, and to retain the right to
13
<PAGE> 15
exercise, the installments of his or her previously granted options in
accordance with their terms. In the event of a director's death, the director's
estate or the person or persons who acquired the right to exercise such
director's options by bequest or inheritance may exercise any outstanding
installments of such options which were exercisable as of the date of death
within one year of the date of death. Following termination of service on the
Board for any reason other than as specified above, a director may exercise any
outstanding installments of an option which were exercisable as of the date of
such termination within six months after such termination. In no event are
options exercisable beyond their stated terms.
EXERCISABILITY
Each Initial Grant and Service Grant will become exercisable in four equal
installments beginning on the first anniversary of the date of grant.
TRANSFER OF OPTIONS
Options are not assignable or otherwise transferable except by will or the
laws of descent and distribution. During the lifetime of the optionee, an
option is exercisable solely by the optionee.
CERTAIN CAPITAL CHANGES
In the event of any change in the number or class of shares of Common
Stock outstanding by reason of a stock dividend, stock split, subdivision or
combination of shares, the number and class of shares of Common Stock subject
to the Directors' Plan and to options granted or to be granted under the
Directors' Plan, and the exercise price of each outstanding option, will be
proportionately adjusted.
In the event of the liquidation, dissolution or reorganization of the
Company, or a merger or consolidation in which the Company is not the
surviving entity or in which the outstanding shares of Common Stock are
converted into cash, securities or other property, upon exercise of an
option, an optionee will receive for the total exercise price of the option
only the amount of cash, securities or other property into which one share of
Common Stock was converted or exchanged multiplied by the number of shares of
Common Stock subject to such option.
TERM; AMENDMENTS
The Board may terminate the Directors' Plan and may make modifications and
amendments to the Directors' Plan, but the Board may not, without further
approval by the holders of a majority of the outstanding shares present and
entitled to vote on such issues, (a) change the number of shares for which
options may be granted under the Directors' Plan in the aggregate or to any
optionee (except as provided under the adjustment provisions described
above); or (b) make any other material amendment to the Directors' Plan,
provided that no stockholder approval will be required if Rule 16b-3, or any
successor provision promulgated pursuant to Section 16 of the Securities
Exchange Act of 1934 does not require stockholder approval.
FEDERAL INCOME TAX CONSEQUENCES
Options granted under the Directors' Plan constitute "non-qualified" stock
options under the Internal Revenue Code of 1986, as amended ("Code"), and
will not qualify for any special tax benefits to the optionee. Under present
Treasury Regulations, the Company's stock options are not deemed to have a
readily ascertainable value. Accordingly, an optionee will not recognize any
taxable income at the time he or she is granted a non-qualified stock option.
However, upon exercise of the option, the optionee will recognize ordinary
income for federal income tax purposes in an amount generally measured as the
excess of the then fair market value of the shares over the exercise price,
which amount is subject to federal income tax withholding. Upon an optionee's
sale of such shares, any difference between the sale price and the fair
market value of such shares on the date of exercise will be treated as
capital gain or loss and will qualify for long-term capital gain or loss
treatment if the shares have been held for more than one year.
14
<PAGE> 16
The Company will be entitled to a tax deduction in the amount and at the
time that an optionee recognizes ordinary income with respect to an option.
The comments set forth in the above paragraphs are only a summary of
certain of the federal income tax consequences relating to the Directors'
Plan. No consideration has been given to the effects of state, local and
other tax laws on the optionee or the Company. The summary also does not
reflect the special tax rules applicable to optionees who could be subject to
liability under Section 16(b) of the Securities Exchange Act of 1934.
ACCOUNTING ASPECTS OF THE DIRECTORS' PLAN
Under generally accepted accounting principles as presently applied, there
will be no charge to the Company's income in connection with the grant or
exercise of an option under the Directors' Plan. Cash received by the Company
as a result of the exercise of an option will be reflected as a credit to the
Common Stock and paid-in-capital accounts on the balance sheet and will not
be treated as income. Earnings per share may be affected as a result of the
implementation of the Directors' Plan by the effect on the calculation, as
prescribed under generally accepted accounting principles, of the number of
outstanding common and common equivalent shares of the Company. This
calculation will reflect the potential dilutive effect, using the treasury
stock method, of outstanding stock options assumed to be exercised. When
shares are actually issued as a result of exercise of the options, additional
dilution of earnings per share may result.
APPROVAL BY STOCKHOLDERS
The approval of the adoption of the Directors' Plan requires a majority of
the votes cast thereon. If the proposal to adopt the Directors' Plan is not
approved, then (i) the Initial Grant issued under the Directors' Plan to
Director Emmi will be void and (ii) the Directors' Plan will be void.
NEW PLAN BENEFITS
The following table sets forth the number of options which were granted
under the 1993 Stock Option Plan and the Directors' Plan, which options are
subject to stockholder approval at the 1995 Annual Meeting of the proposals
contained in Items II and III above.
<TABLE>
<CAPTION>
1993 Plan Directors' Plan Dollar
Name and Position Number of Options Number of Options Value($)(1)
- ---------------------------------- ----------------- ----------------- ---------
<S> <C> <C> <C>
Edward R. Anderson President and
Chief Executive Officer ......... -- -- $ --
James W. Dixon Chairman of the
Board ........................... 300,000 -- 0
Daniel F. Brown Executive Vice
President, Sales ................ 150,000 -- 0
Robert J. Boutin Senior Vice
President, Finance and Chief
Financial Officer ............... -- -- --
Philip W. Wise Former Senior Vice
President ....................... -- -- --
Executive Officers as a Group .... 450,000 -- 0
Non-Employee Directors as a Group -- 10,000 0
Director Nominees ................ -- -- --
Non-Executive Officer Employees as
a Group ......................... 377,500 -- 0
</TABLE>
- ------------
(1) All options granted under the 1993 Plan and the Directors' Plan have an
exercise price at least equal to the fair market value of the Common Stock
as of the date of grant. As optionees must pay the exercise price to the
Company to acquire the shares upon exercise of the option, the dollar value
of benefits received by or allocated to the optionees on the grant date was
zero.
15
<PAGE> 17
INDEPENDENT PUBLIC ACCOUNTANTS
Since 1987, the Company has retained KPMG Peat Marwick LLP as its
independent public accountants, and it intends to retain KPMG Peat Marwick
LLP for the current year ending December 31, 1995. Representatives of KPMG
Peat Marwick LLP are expected to be present at the Annual Meeting and will
have an opportunity at the meeting to make a statement if they desire to do
so and will be available to respond to appropriate questions.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, executive officers, and persons who own more than ten
percent of a registered class of the Company's equity securities ("10%
Stockholders") to file reports of ownership and changes in ownership of
Common Stock and other equity securities of the Company with the Securities
and Exchange Commission ("SEC"). Officers, directors and 10% Stockholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms which they file. Based solely on its review of the copies of such
forms received by it and written representations from certain reporting
persons that no other reports were required for those persons, the Company
believes that during the period from January 1, 1994 to December 31, 1994,
all Section 16(a) filing requirements applicable to its officers, directors
and 10% Stockholders were complied with, except for one late filing on Form 4
by Mr. Dixon to report six transactions in connection with a qualified
domestic relations order and one late filing on Form 5 by Mr. Boutin in
connection with one transaction.
OTHER MATTERS
The Company is not aware of any other business to be presented at the
Annual Meeting. If any other matters should properly come before the Annual
Meeting, however, the enclosed Proxy confers discretionary authority with
respect thereto.
The Company's Annual Report for 1994, including financial statements and
other information with respect to the Company and its subsidiaries, is being
mailed simultaneously to the stockholders but is not to be regarded as proxy
solicitation material.
Dated: April 24, 1995
16
<PAGE> 18
APPENDIX A
1993 STOCK OPTION PLAN
BACKGROUND AND PROPOSED AMENDMENTS
As set forth in Proposal II of this Proxy Statement, subject to approval
by the Company's stockholders at the Annual Meeting, the Board has adopted an
amendment to the 1993 Stock Option Plan, effective as of February 1995,
increasing the number of shares of Common Stock authorized for issuance upon
exercise of options granted or to be granted under the 1993 Stock Option Plan
by 3,000,000 shares, from 1,750,000 shares to 4,750,000 shares in the
aggregate. The 1993 Stock Option Plan, as proposed to be amended, is
hereinafter referred to as the "1993 Plan." The following description of the
1993 Plan is intended merely as a summary of the principal features of the
1993 Plan.
PURPOSE OF THE 1993 PLAN
The purpose of the 1993 Plan is to provide additional incentive to
employees of the Company and its subsidiaries and to increase their
proprietary interest in the success of the enterprise to the benefit of the
Company and its stockholders.
SHARES SUBJECT TO THE 1993 PLAN
Subject to the adjustment provisions discussed below, the maximum number
of shares of Common Stock which may be issued under the 1993 Plan is
4,750,000. Such shares may be authorized but unissued shares of Common Stock
or previously issued but reacquired shares of Common Stock. Shares subject to
options which remain unexercised upon expiration, exchange of existing
options, or earlier termination of such options will again become available
for issuance in connection with stock options awarded under the 1993 Plan.
The closing price of the Company's Common Stock on the Nasdaq National Market
on April 7, 1995 was $3.125 per share.
ADMINISTRATION
The 1993 Plan is administered by the Compensation Committee, which
currently is composed of Directors Ford, Lubert and Musser. The Compensation
Committee has the authority to interpret the 1993 Plan; to establish
appropriate rules and regulations for the proper administration of the 1993
Plan; to select the persons to whom options should be granted; to determine
the number of shares to be covered by such options, the times and dates at
which such options shall be granted, and whether the options shall be ISOs or
NQSOs; and generally to administer the 1993 Plan.
ELIGIBILITY
Employees (including any directors who are also employees) of the Company
or of any subsidiary who are significant contributors to the business of the
Company and its subsidiaries are eligible to participate in the 1993 Plan. On
April 7, 1995, there were approximately 150 persons considered eligible to
participate in the 1993 Plan.
STOCK OPTIONS
The 1993 Plan requires that each optionee enter into a stock option
agreement with the Company which incorporates the terms of the option and
such other terms, conditions and restrictions, not inconsistent with the 1993
Plan, as the Compensation Committee may determine.
The option price will be determined by the Compensation Committee, but may
not, with respect to ISOs, be less than the greater of 100% of the fair
market value of the optioned shares of Common Stock or the par value thereof
on the date of grant. If the grantee of an ISO under the 1993 Plan owns more
than 10% of the total combined voting power of all shares of stock of the
Company or of any parent or subsidiary of the Company, the option price
cannot be less than 110% of the fair market value at the date of grant and
the term of such option cannot be more than five years.
A-1
<PAGE> 19
The term of any other option granted under the 1993 Plan may not exceed
ten years. Options will become exercisable in such installments and on such
dates as the Compensation Committee may specify. The Compensation Committee
may accelerate the exercise date of any outstanding options, in its
discretion, if it deems such acceleration desirable. Any option held by an
individual who dies while employed by the Company or any subsidiary, or whose
employment with the Company and all subsidiaries is terminated, prior to the
expiration date of such option, will remain exercisable by the former
employee or his personal representative for a period of time following the
employee's termination of employment or death as provided for in the 1993
Plan and the applicable option agreement. Options are not transferable except
at death.
The 1993 Plan provides that the aggregate fair market value (determined as
of the time the ISO is granted) of the shares with respect to which ISOs are
exercisable for the first time by an optionee during any calendar year under
the 1993 Plan and any other ISO plan of the Company, or any parent or
subsidiary of the Company, cannot exceed $100,000.
The option price is payable in cash or its equivalent or, in the
discretion of the Compensation Committee, (i) in shares of Common Stock of
the Company previously acquired by the optionee, provided that if such shares
were acquired through exercise of an ISO, such shares have been held by the
optionee for a period of not less than the statutory holding periods
described in the Internal Revenue Code of 1986, as amended, (the "Code") on
the date of exercise (which as of April 7, 1995 are two years from the date
of grant of the ISO and one year following the date of transfer of the shares
to the optionee), or if such shares were acquired through exercise of an
NQSO, such shares have been held by the optionee for a period of more than
one year on the date of exercise and provided further that each optionee may
use the procedure described in this clause (i) only once during any six-month
period; (ii) by delivering a properly executed notice of exercise of the
option to the Company and a broker, with irrevocable instructions to the
broker to promptly sell the underlying shares of Common Stock and deliver to
the Company the amount of sale proceeds necessary to pay the exercise price
of the option; or (iii) by delivery of a full recourse promissory note. The
Compensation Committee also may elect to cash-out all or part of the portion
of the option to be exercised by paying optionee an amount, in cash or stock,
equal to the excess of the fair market value of the stock over the exercise
price on the effective date of such cash-out.
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, MERGERS AND OTHER EVENTS
The number of shares issuable under the 1993 Plan and upon the exercise of
options outstanding thereunder, and the exercise price of such options, are
subject to adjustment in the event of a stock split, stock dividend or
similar change in the capitalization of the Company. In the event of a
merger, consolidation or other specified corporate transactions, options will
be assumed by the surviving or successor corporation, if any. However, in the
event of such a corporate transaction, the 1993 Plan also authorizes the
Compensation Committee to terminate options to the extent they are not
exercised prior to consummation of such a transaction, and to accelerate the
vesting of options so that they are immediately exercisable prior to the
consummation of the transaction.
DURATION AND AMENDMENT OF THE 1993 PLAN
The Board may amend or modify the 1993 Plan at any time, but no such
amendment or modification, without the approval of the stockholders, shall
(a) increase the amount of Common Stock on which options may be granted,
except pursuant to the adjustment provisions of the 1993 Plan, (b) change the
provision relating to the eligibility of employees to whom options may be
granted, or (c) materially increase the benefits accruing to participants
under the 1993 Plan; provided, however, that no stockholder approval will be
required for an amendment or modification pursuant to (a) and (b) above if
the applicable sections of the Code, and rules and regulations thereunder
governing incentive stock options, do not require stockholder approval and,
provided further, that no stockholder approval will be required for an
amendment or modification pursuant to (c) above if Rule 16b-3, or any
successor provision promulgated pursuant to Section 16 of the Securities
Exchange Act of 1934, does not require stockholder approval. The 1993 Plan
A-2
<PAGE> 20
will terminate on February 18, 2003 unless terminated earlier by the Board. No
options may be granted after such termination, but options outstanding at the
time of termination will remain exercisable in accordance with their terms.
FEDERAL INCOME TAX CONSEQUENCES
Based on the advice of counsel, the Company believes that under the Code,
and the regulations and rulings thereunder, all as in effect on April 7,
1995, the normal operation of the 1993 Plan should generally have the federal
income tax consequences described below.
INCENTIVE STOCK OPTIONS
ISOs under the 1993 Plan are afforded favorable federal income tax
treatment under the Code. If an option is treated as an ISO, the optionee
will recognize no income upon the grant of the option and will recognize no
income upon the exercise of the option except to the extent provided by the
alternative minimum tax rules.
Upon an optionee's sale of the shares (assuming that the sale occurs no
sooner than two years after grant of the option and one year after exercise
of the option), any gain will be taxed to the optionee as long-term capital
gain. Under current law, capital gain is fully included in gross income and
is taxed at the same rate as ordinary income, to the extent such tax rate on
capital gain does not exceed 28%. Any loss on such sale will be treated as
capital loss and thus may be used to offset up to $3,000 per year ($1,500 in
the case of a married individual filing separately) of ordinary income.
If the optionee disposes of the shares prior to the expiration of the
one-year and two-year holding periods, the optionee will recognize ordinary
income in an amount generally measured as the difference between the exercise
price and the lower of the fair market value of the shares at the exercise
date or the sale price of the shares. Any gain recognized on such a premature
sale of the shares in excess of the amount treated as ordinary income will be
characterized as long-term capital gain if the sale occurs more than one year
after the exercise or as short-term capital gain if the sale is made earlier.
If an option is treated as an ISO and the optionee does not sell the shares
prior to the expiration of the one- year and two-year holding periods, the
Company is not entitled to any federal income tax deduction with respect to
the ISO.
NON-QUALIFIED STOCK OPTIONS
All other options granted under the 1993 Plan are NQSOs and will not
qualify for any special tax benefits to the optionee. Under present Treasury
Regulations, the Company's stock options are not deemed to have a readily
ascertainable value. Accordingly, an optionee will not recognize any taxable
income at the time he or she is granted a NQSO. However, upon exercise of the
option, the optionee will recognize ordinary income for federal income tax
purposes in an amount generally measured as the excess of the then fair
market value of the shares over the exercise price, which amount is subject
to federal income tax withholding. Upon an optionee's sale of such shares,
any difference between the sale price and the fair market value of such
shares on the date of exercise will be treated as capital gain or loss and
will qualify for long-term capital gain or loss treatment if the shares have
been held for more than one year.
The Company will be entitled to a tax deduction in the amount and at the
time that an optionee recognizes ordinary income with respect to the option,
but generally only if the Company withholds the required amounts under the
Code. Any required withholding in connection with the exercise of stock
options under the 1993 Plan may, with the consent of the Compensation
Committee, be satisfied by the optionee surrendering to the Company a portion
of the shares issued upon exercise of his option or by delivering to the
Company other shares of Common Stock of the Company.
The 1993 Plan is not qualified under Section 401(a) of the Code and is not
subject to the provisions of the Employee Retirement Income Security Act of
1974, as amended to date. The comments set forth in the above paragraphs are
only a summary of certain of the federal income tax consequences relating to
A-3
<PAGE> 21
the 1993 Plan. No consideration has been given to the effects of state, local
and other tax laws on the optionee or the Company. The summary also does not
reflect the special tax rules applicable to optionees who could be subject to
liability under Section 16(b) of the Securities Exchange Act of 1934.
A-4
<PAGE> 22
PROXY
COMPUCOM SYSTEMS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
I hereby constitute and appoint James W. Dixon and Edward R.
Anderson, and each of them, my true and lawful agents and proxies
with full power of substitution in each, to vote all shares held of
record by me as specified on the reverse side, and in their
discretion, on all other matters which may properly come before the
1995 Annual Meeting of Stockholders of CompuCom Systems, Inc. to be
held on May 25, 1995, and at any adjournments thereof.
This proxy, when properly executed, will be voted in the
manner directed herein by the undersigned stockholder. If no
direction is made, this proxy will be voted for all nominees to
the Board of Directors, for the approval of the amendment to the
1993 Stock Option Plan, for the approval of the adoption of the
Stock Option Plan for Directors, and as the proxies may
determine in their discretion with regard to any other matter
properly brought before the meeting.
PLEASE MARK, SIGN AND DATE THE PROXY CARD ON THE REVERSE SIDE
AND RETURN PROMPTLY USING THE ENCLOSED ENVELOPE.
FOLD AND DETACH HERE
<PAGE> 23
I. Election of Directors:
FOR WITHHOLD TO WITHHOLD AUTHORITY TO VOTE FOR ANY
all nominees AUTHORITY INDIVIDUAL WHILE VOTING FOR THE REMAINDER,
listed (except to vote for all STRIKE A LINE THROUGH THE NOMINEE'S NAME
as marked to nominees IN THE LIST BELOW:
the contrary) Nominees: James W. Dixon,
Edward R. Anderson, Daniel F. Brown,
Michael J. Emmi, Richard F. Ford, Ira M.
Lubert, Warren V. Musser, Edward N.
Patrone, and Charles A. Root
| | | |
II. Proposal to Approve an III. Proposal to Approve the
Amendment to the Stock Option Plan for
1993 Stock Option Plan Directors
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
| | | | | | | | | | | |
DATED:___________________________________, 1995
_______________________________________________
Signature
_______________________________________________
Signature, if held jointly
THIS PROXY MUST BE SIGNED EXACTLY AS NAME
APPEARS HEREIN. When shares are held by joint
tenants, both should sign. Attorneys, executors,
administrators, trustees, etc. should give full
title as such. If a corporation, please sign in
full corporate name by duly authorized officer.
If a partnership, please sign in partnership
name by authorized person.
_______________________________________________
| |
| "PLEASE MARK INSIDE BLUE BOXES SO THAT DATA |
| PROCESSING EQUIPMENT WILL RECORD YOUR VOTES" |
|_______________________________________________|
FOLD AND DETACH HERE
Your Proxy vote is important, regardless of the
number of shares you own.
Whether or not you plan to attend the meeting in
person, please complete, date and sign the above
Proxy card and return it without delay in the
enclosed envelope.
LOGO COMPUCOM\TM\
<PAGE> 24
COMPUCOM SYSTEMS, INC.
1993 STOCK OPTION PLAN
1. Purpose. The purpose of this Stock Option Plan (the "Plan") is to
provide additional incentive, in the form of stock options which may be either
incentive stock options or non-qualified stock options, to employees (as
described in Section 4 hereof) of CompuCom Systems, Inc., a Delaware
corporation, (the "Corporation") and its subsidiaries whose judgment, initiative
and efforts contribute significantly to the successful operation of the
Corporation's business, and to increase their proprietary interest in the
success of the enterprise to the benefit of the Corporation and its
stockholders.
2. Definitions. When used in this Plan, unless the context otherwise
requires:
(a) "ISO" shall mean a stock option which, at the time such option is
granted, qualifies as an incentive stock option, as defined in Section 422
of the Internal Revenue Code of 1986, as amended (the "Code").
(b) "NQSO" shall mean a stock option which, at the time such option is
granted, does not qualify as an ISO as defined in the Code.
(c) "Options" shall mean all ISOs and NQSOs which from time to time may
be granted under this Plan.
(d) "Share" shall mean a share of the common stock, $.01 par value, of
the Corporation.
(e) "Parent" shall mean any corporate parent of the Corporation, as
defined in Section 424(e) of the Code.
(f) "Subsidiary" shall mean any corporate subsidiary of the Corporation,
as defined in Section 424(f) of the Code.
3. Administration. The Plan shall be administered by a Committee of the
Board of Directors ("Committee"), which shall consist of not less than two
members of the Board of Directors ("Board") of the Corporation, who shall be
appointed by, and shall serve at the pleasure of, the Board; provided that to
the extent required by Rule 16b-3, or any successor provision ("Rule 16b-3"), of
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<PAGE> 25
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Plan
shall be administered by disinterested administrators within the meaning of Rule
16b-3. Each member of such Committee, while serving as such, shall be deemed to
be acting in his capacity as a director of the Corporation.
The Committee shall have full authority, subject to the terms of the Plan,
to select the persons to whom ISOs or NQSOs may be granted under the Plan, to
grant options on behalf of the Corporation, and to set the number of Shares to
be covered by such Options, the times and dates at which such Options shall be
granted and exercisable and the other terms of such Options. The Committee also
shall have the authority to establish such rules and regulations, not
inconsistent with the provisions of the Plan, for the proper administration of
the Plan, and to amend, modify or rescind any such rules and regulations, and to
make such determinations and interpretations under, or in connection with, the
Plan, as it deems necessary or advisable. All such rules, regulations,
determinations and interpretations shall be binding and conclusive upon the
Corporation, its stockholders and all employees, and upon their respective legal
representatives, beneficiaries, successors and assigns and upon all other
persons claiming under or through any of them.
No member of the Board or the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any Option granted
under it. Nothing herein shall be deemed to expand the personal liability of a
member of the Board or Committee beyond that whic may arise under any applicable
standards set forth in the Corporation's by-laws and Delaware law, nor shall
anything herein limit any rights to indemnification or advancement of expenses
to which any member of the Board or the Committee may be entitled under any
by-law, agreement, vote of the stockholders or directors, or otherwise.
4. Eligibility. The class of employees who shall be eligible to receive
Options under the Plan shall be the employees (including any directors who also
are employees) of the Corporation or of any Subsidiary who, from time to time,
contribute significantly to the management and growth of the business of the
Corporation or of such Subsidiaries. More than one Option may be granted to an
employee under the Plan.
The Committee may require that the exercise of the Option shall be subject
to the satisfaction of conditions relating to the Optionee's position and duties
with the Corporation and the performance thereof.
2
<PAGE> 26
5. Amount of Stock. The stock to be offered for purchase pursuant to
Options granted under this Plan shall be treasury or authorized but unissued
Shares, and the total number of such Shares which may be issued pursuant to
Options under this Plan shall not exceed 4,750,000 Shares, subject to adjustment
as provided in Section 16 hereof. If any unexercised Options are exchanged for
new Options, lapse or terminate for any reason, the Shares covered thereby may
again be optioned.
6. Stock Option Agreement. Each Option granted under this Plan shall be
evidenced by an appropriate stock option agreement ("Agreement"), which
Agreement shall expressly specify whether such Option is an ISO or NQSO and
shall be executed by the Corporation and by the person to whom the Option is
granted ("Optionee"). The Agreement shall contain such terms and provisions, not
inconsistent with the Plan, as shall be determined by the Committee. Such terms
and provisions may vary between Optionees or as to the same Optionee to whom
more than one Option may be granted.
7. Option Price. The exercise price under each Option granted hereunder
shall be determined by the Committee in its discretion, provided, however, that
the exercise price of an ISO shall in no event be less than an amount equal to
the fair market value of the Shares subject to the ISO on the date of grant.
8. Ten Percent Stockholders. If an Optionee owns more than ten percent of
the total combined voting power of all shares of stock of the Corporation or of
a Parent or Subsidiary at the time an ISO is granted to him, the Option price
for the ISO shall be not less than 110% of the fair market value of the Shares
subject to the ISO on the date the ISO is granted, and such ISO, by its terms,
shall not be exercisable after the expiration of five years from the date the
ISO is granted. The conditions set forth in this Section 8 shall not apply to
the grant of NQSOs.
9. Term and Exercise of Option. Each Option shall expire on such date as
may be determined by the Committee with respect to such Option, but in no event
shall any Option expire more than ten years from the date it is granted. The
date on which an Option shall be granted shall be the date of the Committee's
authorization of the Option or such later date as may be determined by the
Committee at the time the Option is authorized.
Options shall be exercisable in such installments and on such dates, and/or
upon the occurrence of such events, as the Committee may specify. The Committee
3
<PAGE> 27
may accelerate the exercise date of any outstanding Options, in its discretion,
if it deems such acceleration to be desirable. Except as provided in Section 11,
no Option shall be exercised unless at the time of such exercise the Optionee is
then an employee of the Corporation or any Subsidiary. Exercisable Options may
be exercised, in whole or in part, from time to time, by giving written notice
of exercise to the Corporation at its principal office, specifying the number of
Shares to be purchased and accompanied by payment in full of the aggregate
Option price for such Shares. Only full Shares shall be issued under the Plan,
and any fractional Share which might otherwise be issuable upon exercise of an
Option granted hereunder shall be forfeited.
The Option price shall be payable (a) in cash or its equivalent; (b) in the
discretion of the Committee, in Shares previously acquired by the Optionee,
provided that if such Shares were acquired through exercise of an ISO, such
Shares have been held by the Optionee for a period of n less than the holding
period described in section 422(a)(1) of the Code on the date of exercise, or if
such Shares were acquired through exercise of an NQSO or of an option under a
similar plan of the Corporation, such Shares have been held by the Optionee for
a period of more than one year on the date of exercise, and further provided
that the Optionee shall not have tendered Shares in payment of the exercise
price of any other Option under the Plan or any other stock option plan of the
Corporation within six calendar months of the date of exercise; (c) in the
discretion of the Committee, in any combination of (a) and (b) above; or (d) in
the discretion of the Committee, by delivering a properly executed notice of
exercise of the Option to the Corporation and a broker, with irrevocable
instructions to the broker to deliver to the Corporation on the settlement date
the amount of sale proceeds necessary to pay the exercise price of the Option.
In the event the Option price is paid, in whole or in part, with Shares, the
portion of the Option price so paid shall be valued based upon the closing price
of the Shares on the business date preceding tender if received prior to the
close of the stock market and at the closing price on the date of tender if
received after the stock market closes.
If the applicable Agreement so provides, at the request of the Optionee, the
Corporation shall loan the Optionee, upon exercise of an Option, an amount not
in excess of the sum of (i) 100% of the exercise price of the Shares subject to
that portion of the Option being exercised and (ii) any taxes due upon exercise
of said portion of the Option. The Optionee shall furnish to the Corporation the
4
<PAGE> 28
Optionee's personal, negotiable promissory note for the loan, bearing interest
at a rate prescribed by the Committee (but not less than the lowest rate which
will avoid imputation of interest under section 7872 of the Code) and including
such other terms as the Committee shall prescribe. Any amounts outstanding under
the note shall become due and payable in full upon the termination of the
Optionee's employment by the Corporation or any subsidiary. The Optionee shall
deliver the optioned Shares, endorsed in blank, to the Corporation, to be
pledged to, and held by, the Corporation, as collateral to secure the loan. The
Optionee shall remain personally liable to the Corporation or the Corporation's
transferee for the repayment of said note. When the entire amount of the loan is
repaid in cash or its equivalent, the Corporation shall deliver all certificates
for Shares for which payment in full has been made to the Optionee.
On receipt of a written notice to exercise, the Committee may, in its sole
discretion, elect to cash-out all or part of the portion of the Option(s) to be
exercised by paying the Optionee an amount, in cash or Shares, equal to the
excess of the fair market value of the Shares over the exercise price (the
"Spread Value") on the effective date of such cash-out.
10. Maximum Value of ISOs. The aggregate fair market value of the Shares,
determined as of the date of grant, with respect to which ISOs first become
exercisable during any calendar year by an Optionee (under this Plan and any
other plan of the Corporation or any Parent or Subsidiary) shall not exceed
$100,000.
11. Termination of Employment.
(a) Except as set forth below, in the event of termination (voluntary or
involuntary) for any reason of an Optionee's employment by the Corporation
or any subsidiary, all Options granted hereunder to such Optionee, to the
extent exercisable on the date of termination, or to any greater extent
permitted by the Committee, may be exercised by the Optionee at any time
within three months after the date of such termination, provided, however,
that in no event shall any Option be exercisable after the expiration of its
term.
(b) If, however, the termination of employment is due to disability (as
defined in Section 22(e)(3) of the Code), the Optionee shall have the
privilege of exercising the unexercised Option to the extent such Option was
exercisable on the date of such termination due to disabilit to any greater
5
<PAGE> 29
extent permitted by the Committee, within one year of such date, provided,
however, that in no event shall any Option be exercisable after the
expiration of its term.
(c) If, however, the Optionee dies within three months of termination of
employment or the termination of employment is due to the death of the
Optionee while in the employ of the Corporation or a subsidiary, the estate
of the holder or the person or persons who acquired the rig exercise such
Option by bequest or inheritance, shall have the privilege of exercising the
unexercised Option to the extent such Option was exercisable on the date of
such termination, or to any greater extent permitted by the Committee,
within one year of the earlier of the date of termination or the date of
death, but in no event shall any Option be exercisable after the expiration
of its term.
(d) Notwithstanding the provisions of subparagraphs 11(a), 11(b) and
11(c) above, the Committee may determine with respect to any NQSO that such
NQSO shall terminate at a time later than the expiration of such three-month
or one-year periods, as set forth in the Agreement.
12. Withholding and Use of Shares to Satisfy Tax Obligations. The obligation
of the Corporation to deliver Shares upon the exercise of any Option shall be
subject to applicable federal, state and local tax withholding requirements.
If the exercise of any Option is subject to the withholding requirements of
applicable federal tax laws, the Committee, in its discretion (and subject to
such withholding rules ("Withholding Rules") as shall be adopted by the
Committee), may permit the Optionee to satisfy the federa withholding tax, in
whole or in part, by electing to have the Corporation withhold (or by delivering
to the Corporation) Shares, which Shares shall be valued, for this purpose, at
their fair market value on the date the amount of tax required to be withheld is
determined (the "Determination Date"). Such election must be made in compliance
with and subject to the Withholding Rules, and the Committee may not withhold
Shares in excess of the number necessary to satisfy the minimum federal income
tax withholding requirements. In the event Shares acquired under the exercise of
an ISO are used to satisfy such withholding requirement, such Shares must have
been held by the Optionee for a period of not less than the holding period
described in Section 422(a)(1) of the Code on the Determination Date. In the
event Shares acquired through exercise of an NQSO or of an option under a
6
<PAGE> 30
similar plan are delivered by the Optionee to the Corporation to satisfy such
withholding requirement, such Shares must have been held by the Optionee for a
period of more than one year on the Determination Date. For Optionees subject to
Section 16 of the Exchange Act, to the extent required by Section 16, the
election to have Shares withheld by the Corporation hereunder must be either (a)
an irrevocable election made six months before the Determination Date; or (b) an
irrevocable election where both the election and the Determination Date occur
during one of the ten-day periods beginning on the third business day following
the date of release of the Corporation's quarterly or annual summary finanicial
data and ending on the twelfth business day following such release.
13. Non-Assignability. Each Option granted under the Plan shall be
non-transferable by the Optionee except by will or the laws of descent and
distribution, and each Option shall be exercisable during the Optionee's
lifetime only by him.
14. Issuance of Shares and Compliance with Securities Acts. Within a
reasonable time after exercise of an Option, the Corporation shall cause to be
delivered to the Optionee a certificate for the Shares purchased pursuant to the
exercise of the Option. At the time of any exercise of any Option, the
Corporation may, if it shall deem it necessary and desirable for any reason
connected with any law or regulation of any governmental authority relative to
the regulation of securities, require the Optionee to represent in writing to
the Corporation that it is his then intention to acquire the Shares for
investment and not with a view to distribution thereof and that such Optionee
will not dispose of such Shares in any manner that would involve a violation of
applicable securities laws. In such event, no Shares shall be issued to such
holder unless and until the Corporation is satisfied with such representation.
Certificates for Shares issued pursuant to the exercise of Options may bear an
appropriate securities law legend.
15. Rights as a Stockholder. An Optionee shall have no rights as a
stockholder with respect to Shares covered by his Option until the date of the
issuance or transfer of the Shares to him and only after the exercise price for
such Shares is fully paid either in cash, by the withholding or delivery of
Shares, or by the delivery of a promissory note pursuant to Section 9 hereof. No
adjustment shall be made for dividends or other rights for which the record date
is prior to the date of such issuance or transfer.
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<PAGE> 31
16. Stock Adjustments. In the event of a reorganization, recapitalization,
change of shares, stock split, or spinoff, stock dividend, reclassification,
subdivision or combination of shares, merger, consolidation, rights offering, or
any other change in the corporate structure or shares of the Corporation, the
Committee shall make such adjustment as it, in its sole discretion, deems
appropriate in the number and kind of shares authorized by the Plan, in the
number and kind of shares covered by grants made under the Plan or in the
purchase prices of outstanding Options, and such adjustments shall be effective
and binding on the Optionee and the Corporation for all purposes of the Plan,
provided, however, that no such adjustments shall be made to any ISO without the
Optionee's consent if such adjustment would cause such ISO to fail to qualify as
such under Section 422 of the Code.
In the event of a corporate transaction (as that term is described in
Section 424(a) of the Code and the Treasury Regulations issued thereunder as,
for example, a merger, consolidation, acquisition of property or stock,
separation, reorganization, or liquidation), each outstanding Option shall be
assumed by the surviving or successor corporation, provided, however, that in
the event of a proposed corporate transaction, the Committee may terminate all
or a portion of the outstanding Options if it determines that such termination
is in the best interests of the Corporation. If the Committee decides to
terminate outstanding Options, the Committee shall give each Optionee holding an
Option to be terminated not less than seven days' notice prior to any such
termination by reason of such a corporate transaction, and any such outstanding
Option which is to be so terminated may be exercised (if and only to the extent
that it is then exercisable) up to and including the date immediately preceding
such termination. Notwithstanding the preceding sentence, as provided in Section
9 hereof, the Committee, in its discretion, may accelerate, in whole or in part,
the date on which any or all Options become exercisable.
17. Adoption by Board and Approval by Stockholders. This Plan becomes
effective on February 18, 1993 (the date the Plan was adopted by the Board),
provided, however, that if the Plan is not approved by a majority of the votes
cast at a duly held meeting at which a quorum representing a majority of all
outstanding voting stock of the Corporation is, either in person or by proxy,
present and voting on the Plan, within 12 months after said date, the Plan and
all Options granted hereunder shall be null and void and no additional Options
shall be granted hereunder.
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<PAGE> 32
18. Termination and Amendment of the Plan. Subject to the right of the
Board to terminate the Plan prior thereto, the Plan shall terminate on, and no
Options shall be granted hereunder after, February 18, 2003. The Board shall
have the power at any time, in its discretion, to amend, abandon or terminate
the Plan, in whole or in part, provided that no such action shall affect any
Options theretofore granted and then outstanding under the Plan. Nothing
contained in this Section 18, however, shall terminate or affect the continued
existence of rights created under Options issued hereunder and outstanding on
February 18, 2003, which by their terms extend beyond such date.
Any Plan amendment which would (a) increase the maximum number of Shares
which may be issued under the Plan, except pursuant to Paragraph 16 above; (b)
modify the requirements as to eligibility for participation in the Plan; or (c)
materially increase the benefits accruing to participants under the Plan, shall
not be effective unless approved by a majority of the votes cast at a duly held
meeting at which a quorum representing a majority of all outstanding voting
stock of the Corporation is, either in person or by proxy, present and voting on
the Plan; provided, however, that no stockholder approval shall be required for
an amendment or modification pursuant to (a) and (b) above if the applicable
sections of the Code, and rules and regulations thereunder governing incentive
stock options, do not require stockholder approval and, provided further, that
no stockholder approval shall be required for an amendment or modification
pursuant to (c) above if Rule 16b-3 does not require stockholder approval.
19. Interpretation. A determination of the Committee as to any question
which may arise with respect to the interpretation of the provisions of this
Plan or any Options shall be final and conclusive, and nothing in this Plan, or
in any regulation hereunder, shall be deemed to give any Optionee, his legal
representatives, assigns or any other person any right to participate herein
except to such extent, if any, as the Committee may have determined or approved
pursuant to this Plan. The Committee may consult with legal counsel who may be
counsel to the Corporation and shall not incur any liability for any action
taken in good faith in reliance upon the advice of such counsel.
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<PAGE> 33
20. Governing Law. With respect to any ISOs granted pursuant to the Plan and
the Agreements thereunder, the Plan, such Agreements and any ISOs granted
pursuant thereto shall be governed by the applicable Code provisions to the
maximum extent possible. Otherwise, the laws of the State of Delaware shall
govern the operation of, and the rights of Optionees under, the Plan, the
Agreements and any Options granted thereunder.
21. Rule 16b-3 Compliance.
(a) Additional Restrictions under Rule 16b-3. Unless an Optionee could
otherwise transfer Shares issued hereunder without incurring liability under
Section 16(b) of the Exchange Act, at least six months must elapse from the
date of grant of an Option to the date of disposition the Shares issued upon
exercise of the Option.
(b) Compliance with Rule 16b-3. It is the intent of the Corporation that
this Plan comply in all respects with applicable provisions of Rule 16b-3 in
connection with any grant of Options to, or other transaction by, an
Optionee who is subject to Section 16 of the Exchange Act. Accordingly, if
any provision of this Plan or any Agreement relating to an Option does not
comply with the requirements of Rule 16b-3 as then applicable to any such
Optionee, such provision will be construed or deemed amended to the extent
necessary to conform to such requirements with respect to such person. In
addition, the Committee shall have no authority to make any amendment,
alteration, suspension, discontinuation, or termination of the Plan or any
Agreement hereunder, or take other action if such authority would cause an
Optionee's transactions under the Plan not to be exempt under Rule 16b-3.
10
<PAGE> 34
COMPUCOM SYSTEMS, INC.
STOCK OPTION PLAN FOR DIRECTORS
Section 1. Purpose.
The purpose of the Plan is to promote the interests of the Corporation and
its stockholders by attracting and retaining highly qualified independent
directors with an investment interest in the future success of the Corporation.
Section 2. Definitions.
Unless the context clearly indicates otherwise, the following terms, when
used in the Plan, shall have the meanings set forth in this Section.
(a) "Board" shall mean the Board of Directors of the Corporation.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Corporation" shall mean CompuCom Systems, Inc., a Delaware corporation.
(d) "Corporation's Affiliates" shall mean the Corporation's consolidated
subsidiaries, Safeguard Scientifics, Inc. ("Safeguard"), and any consolidated
subsidiary or affiliated partnership company of Safeguard. For purposes of this
definition, an affiliated partnership company o Safeguard shall be defined as an
entity controlled by Safeguard, directly or indirectly, through one or more
intermediaries or through management of any venture capital fund.
(e) "Director" shall mean any member of the Board.
(f) "Fair Market Value" shall mean the closing price on the NASDAQ National
Market or any other national securities exchange on the date of grant.
(g) "Grantee" shall mean a person granted an Option under the Plan.
(h) "Eligible Directors" shall mean Directors who are not also employees of
the Corporation or the Corporation's Affiliates.
(i) "Options" shall mean options granted under the Plan.
(j) "Plan" shall mean this Stock Option Plan for Directors as set forth
herein and as amended from time to time.
(k) "Stock" shall mean shares of the common stock, $.01 par value, of the
Corporation.
1
<PAGE> 35
Section 3. Shares of Stock Subject to the Plan.
Subject to the provisions of Section 6, the Stock which may be issued
pursuant to Options granted under the Plan shall not exceed 100,000 shares in
the aggregate. Stock issuable upon the exercise of any Option may be authorized
but unissued shares or reacquired shares of Stock. Shares of Stock subject to an
Option which are not issued pursuant to the exercise of such Option shall be
available for subsequent issuance under the Plan.
Section 4. Grant of Options.
(a) Eligibility; Grant. Only Eligible Directors of the Corporation shall
receive Options under the Plan. Subject to the approval of the Plan by the
stockholders of the Corporation and to the availability of Stock issuable under
the Plan pursuant to Section 3 hereof, each Eligible Director who was elected to
office on or after May 26, 1994, shall receive, and upon election, any Eligible
Director who has not theretofore been a Director of the Corporation shall
receive, an Option under the Plan to purchase 10,000 shares of Stock (the
"Initial Grant"). Thereafter additional Options under the Plan to purchase 2,000
shares of Stock (the "Service Grants") shall be granted on May 26, 1996 to each
Eligible Director elected to the Board on or before May 26, 1994 and to each
other Eligible Director elected to the Board after May 26, 1994 on the second
anniversary of his or her election as a Director. Thereafter, each Eligible
Director will receive an additional Service Grant at the end of every two years'
service following the initial Service Grant, provided, however, that the maximum
number of shares of Stock subject to Options which may be granted to an Eligible
Director under the Plan shall not exceed 20,000 shares of Stock. The Initial
Grant and the Service Grants shall be subject to the availability of Stock
issuable under the Plan pursuant to Section 3 hereof, shall be subject to
adjustment as provided in Section 6 hereof, and shall not be subject to the
discretion of any person or persons.
(b) Exercise Price. The exercise price of each share of Stock subject to an
Option shall equal the Fair Market Value of a share of Stock on the date such
Option is granted. In the event the anniversary of an Eligible Director's
election shall fall on a Saturday, Sunday or holiday the exercise price of each
share of Stock subject to such Option shall equal the Fair Market Value of a
share of Stock on the last trading day immediately preceding such date.
(c) Term; Exercise. Each Option shall have a term of ten years from the
date of Option grant. Each Initial Grant and Service Grant shall become
exercisable in four equal installments of a whole number of shares of Stock on
the first, second, third and fourth anniversaries of the date of grant of such
Option.
Section 5. Exercise of Options.
Upon the exercise of any Option, the Grantee shall pay the exercise price of
the shares of Stock being purchased (a) in cash or its equivalent; (b) in Stock
previously acquired by the Grantee, provided that if such Stock was acquired
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through exercise of an ISO, such Stock has been h by the Grantee for a period of
not less than the holding period described in section 422(a)(1) of the Internal
Revenue Code of 1986, as amended (the "Code"), on the date of exercise, or if
such Stock was acquired through exercise of an NQSO or of an option under a
similar plan, such Stock has been held by the Grantee for a period of more than
one year on the date of exercise, and further provided that the Grantee shall
not have tendered Stock in payment of the exercise price of any other Option
under the Plan or any other stock option plan of the Corporation within six
calendar months of the date of exercise; (c) in any combination of (a) and (b)
above; or (d) by delivering a properly executed notice of exercise of the Option
to the Corporation and a broker, with irrevocable instructions to the broker to
deliver to the Corporation on the settlement date the amount of sale proceeds
necessary to pay the exercise price of the Option. In the event the Option price
is paid, in whole or in part, with Stock, the portion of the Option price so
paid shall be equal to the "fair market value" on the date of tender of the
Stock so tendered in payment of such Option price.
The number of shares of Stock which are issued pursuant to the exercise of
an Option shall be charged against the maximum limitation on shares of Stock set
forth in Section 3 hereof.
Section 6. Certain Corporate Changes.
(a) Stock Splits, Etc.. In the event of any change in the number or class
of shares of Stock outstanding by reason of a stock dividend, stock split,
subdivision or combination of shares, the number and class of shares of Stock
subject to the Plan and to Options granted or to be granted under the Plan, and
the exercise price of each outstanding Option, shall be proportionately adjusted
(rounded to the nearest whole number of shares).
(b) Corporate Reorganizations. In the event that the Corporation is to be
dissolved or liquidated, or the Corporation is a party to a merger or
consolidation with another corporation in which the Corporation will not be the
surviving entity or in which the outstanding shares of St will be converted into
cash, securities or other property, or in the event that the Corporation is a
party to a reorganization, then upon exercise of the Options, the holder thereof
shall be entitled only to receive for the exercise price thereof the amount of
cash, securities or other property into or for which one share of Stock was
converted or exchanged multiplied by the number of shares of Stock subject to
such Option.
Section 7. Termination of Directorship.
Upon the Grantee ceasing to be an Eligible Director of the Corporation for
any reason other than as a result of (i) the employment of such person by the
Corporation or the Corporation's Affiliates (ii) the Grantee's death, or (iii)
the Grantee's retirement after age 65, such Grantee's Options shall be
terminated six months after such Grantee's so ceasing to be an Eligible
Director, provided, however, that in no event shall the period extend beyond the
expiration of the Option term. In no event shall any Option be exercisable for
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more than the maximum number of shares of Stock that the Grantee was entitled to
purchase at the date of the Grantee's so ceasing to be an Eligible Director.
Upon the Grantee ceasing to be an Eligible Director as a result of the
employment of such person by the Corporation or the Corporation's affiliates or
as a result of the retirement of the Grantee after age 65, such Grantee shall
retain the right to exercise the installments of his or her Options in
accordance with the terms of this Plan, whether or not such installments were
exercisable as of the date the Eligible Director became an employee or retired,
provided, however, that the Options and the exercise of installments with
respect thereto shall be subject to the same restrictions set forth in the first
and third paragraphs of this Section 7 as if the Grantee had been an Eligible
Director upon the occurrence of any of the events described therein.
Upon the Grantee ceasing to be an Eligible Director as a result of death,
the period during which such Grantee's estate or the person or persons who
acquired the right to exercise such Option by bequest or inheritance, may
exercise any outstanding installments of such Grantee's Options which were
exercisable as of the date of such death shall not exceed one year from the date
of death, provided, however, that in no event shall the period extend beyond the
expiration of the Option term. In no event shall any Option be exercisable for
more than the maximum number of shares of Stock that the Grantee was entitled to
purchase at the date of death.
Section 8. General Provisions.
(a) Each Option grant shall be evidenced by a written instrument containing
terms and conditions consistent with the Plan.
(b) No Grantee, and no beneficiary or other persons claiming under or
through the Grantee, shall have any right, title or interest by reason of any
Option to any particular assets of the Corporation, or any shares of Stock
allocated or reserved for the purposes of the Plan or subject to any Option
except as set forth herein. The Corporation shall not be required to establish
any fund or make any other segregation of assets to assure the payment of any
Option.
(c) No right under the Plan shall be subject to anticipation, sale,
assignment, pledge, encumbrance, or charge except by will or the laws of descent
and distribution, and an Option shall be exercisable during the Grantee's
lifetime only by the Grantee. Subject to the provisions of Section 7 hereof, in
the event of a Grantee's death, his Options may be exercised by the Grantee's
legal representatives.
(d) Notwithstanding any other provision of the Plan or agreements made
pursuant hereto, the Corporation shall not be required to issue or deliver any
certificate for shares of Stock under this Plan prior to fulfillment of all of
the following conditions:
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(1) Any registration or other qualification of such shares under any
state or federal law or regulation, or other qualification which the Board
shall, upon the advice of counsel, deem necessary or advisable;
(2) The obtaining of any other required consent, approval or permit
from any state or federal governmental agency; and
(3) The execution by the Grantee (or the Grantee's legal
representative) of such written representation that counsel for the
Corporation shall advise is necessary or advisable to the effect that the
shares of Stock then being purchased are being purchased for investment
with no present intention of reselling or otherwise disposing of such
shares in any manner which may result in a violation of the Securities Act
of 1933, as amended, and the placement upon certificates for such shares of
an appropriate legend in connection therewith.
(e) In no event shall the Corporation be required to issue a fractional
share hereunder.
Section 9. Effective Date; Termination and Amendment.
The Plan became effective on May 26, 1994, the date of its adoption by the
Board, subject to the approval of the Corporation's stockholders at its 1995
Annual Meeting.
The Board may terminate the Plan or make such modifications or amendments to
the Plan as it shall deem advisable, provided, however, that the Board may not,
without the affirmative vote of the holders of a majority of the outstanding
shares present, or represented and entitled to vote on such issues, at a meeting
held in accordance with Delaware law or, alternatively, without the written
consent of the holders of a majority of the outstanding shares entitled to vote
on such issues: (a) change the number of shares for which Options may be granted
under the Plan in the aggregate or to any Grantee (except as provided in Section
6 hereof) or (b) make any other material amendment to the Plan, provided,
however, that no stockholder approval shall be required for an amendment or
modification pursuant to Section 9(b) if Rule 16b-3, or any successor provision
promulgated pursuant to Section 16 of the Securities Exchange Act of 1934 does
not require stockholder approval.
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