<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, For use of the
Commission Only (as permitted
by Rule 14a-6(e)(2)
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
COMPUCOM SYSTEMS, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11(set forth the
amount on which the filing fee is calculated and state how it
was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
[GRAPHIC OMITTED]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD WEDNESDAY, MAY 14, 1997
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
CompuCom Systems, Inc. (the "Company") will be held at Corporate Headquarters,
7171 Forest Lane, Dallas, TX 75230 on Wednesday, May 14, 1997 at 2:00 p.m.,
local time, for the following purposes:
1. To elect ten directors;
2. To consider and vote on a proposal to amend the 1993 Stock
Option Plan to increase the number of shares of common stock
authorized for issuance thereunder; and
3. 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 March
31, 1997 as the record date for the determination of stockholders entitled to
receive notice of, and to vote at, the meeting or any adjournments thereof. You
are cordially invited to attend the meeting. However, whether or not you expect
to attend the meeting in person, you are urged to mark, sign, date, and mail the
enclosed form of Proxy promptly so that your shares may be represented and voted
in accordance with your wishes and in order that the presence of a quorum may be
assured at the meeting. No postage is required if mailed in the United States.
You may revoke your Proxy at any time prior to the effective exercise thereof as
set forth in the Proxy Statement.
By order of the Board of Directors,
JAMES A. OUNSWORTH
Secretary
10100 North Central Expressway
Dallas, TX 75231
April 9, 1997
<PAGE>
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
14, 1997 (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 9, 1997.
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 March 31, 1997 (the "Record Date") (cumulatively, the
"Shares") are entitled to receive notice of, and to vote at, the Annual Meeting.
On that date, there were 45,502,013 shares of Common Stock and 1,500,000 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 ten nominees receiving the highest number of affirmative votes of
the Shares present or represented and entitled to be voted shall be elected as
directors. Approval of the proposal to amend the 1993 Stock Option Plan requires
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 such proposed amendment. 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.
1
<PAGE>
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 or by telephone.
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Stockholders intending to present proposals at the next Annual Meeting
of Stockholders to be held in 1998 must notify the Company of the proposal no
later than December 10, 1997.
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of the Record Date, the Company's
Common Stock beneficially owned by each person known to the Company to be the
beneficial owner of 5% or more of the outstanding Common Stock, and the number
of shares of Common Stock owned beneficially by each director and nominee for
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, on the Record Date, there were 1,500,000 shares of
Series B Stock issued and outstanding. All of such Series B Stock is owned of
record by Safeguard Scientifics (Delaware), Inc. ("Safeguard Delaware"), a
wholly owned subsidiary of Safeguard Scientifics, Inc. ("Safeguard"), and
consequently is beneficially owned by Safeguard.
<TABLE>
<CAPTION>
Number of Shares Percent of
Owned (1) Class
-------------------- --------
<S> <C> <C>
Safeguard Scientifics, Inc.
800 The Safeguard Building
435 Devon Park Drive
Wayne, PA 19087(2).......................................... 25,442,393 53.3%
Charles A. Root(3).............................................. 50,000 *
Edward R. Anderson(4)........................................... 815,000 1.8%
Daniel F. Brown(5).............................................. 675,330 1.5%
Donald R. Caldwell(6)........................................... 2,750 *
James W. Dixon(4)............................................... 111,849 *
Michael J. Emmi(4).............................................. 8,000 *
Richard F. Ford(4).............................................. 20,500 *
Delbert W. Johnson(4)........................................... 2,500 *
John D. Loewenberg(4)........................................... 6,250 *
Ira M. Lubert(4)................................................ 194,445 *
Warren V. Musser(7)............................................. 409,147 *
Edward N. Patrone(4) ........................................... 10,500 *
Robert J. Boutin................................................ 102 *
Executive officers and directors as a group
(13 persons)(8)............................................... 2,306,373 4.9%
</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 shown (except for
shares held jointly with spouse).
2
<PAGE>
(2) Safeguard Delaware, a wholly owned subsidiary of Safeguard, is the
record owner of 21,893,403 shares of Common Stock and 1,500,000 shares
of Series B Stock, which are presently convertible into 2,215,657
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 on the Record Date. All of the shares beneficially
owned by Safeguard have been pledged by Safeguard as collateral under
its bank line of credit.
(3) Represents shares held by Mr. Root's spouse.
(4) Includes for Messrs. Anderson, Dixon, Emmi, Ford, Johnson, Loewenberg
and Patrone 465,000 shares, 91,680 shares, 8,000 shares, 500 shares,
2,500 shares, 6,250 shares, and 10,500 shares, respectively, that may
be acquired pursuant to stock options that are currently exercisable or
that will become exercisable within 60 days of the Record Date.
(5) Includes 660,000 shares that may be acquired pursuant to stock options
that are currently exercisable or that will become exercisable within
60 days of the Record Date, and 306 shares held by Mr. Brown's
daughter. Mr. Brown disclaims beneficial ownership of the shares owned
by his daughter.
(6) Includes 100 shares held by Mr. Caldwell's spouse, 1,500 shares held in
a trust for the benefit of his spouse and 1,150 shares held in
custodial accounts for Mr. Caldwell's children.
(7) Includes 25,564 shares held by a charitable foundation of which Mr.
Musser is an officer and director. Excludes 25,442,393 shares
beneficially owned by Safeguard, for which Mr. Musser serves as
Chairman of the Board and Chief Executive Officer. Mr. Musser disclaims
beneficial ownership of the shares beneficially owned by the charitable
foundation and by Safeguard.
(8) Includes 1,244,430 shares that may be acquired upon exercise of stock
options that are currently exercisable or that will become exercisable
within 60 days of the Record Date.
As of the Record Date, Messrs. Musser and Root each beneficially owned
approximately 9.9% and 1.2%, respectively, of the outstanding common stock of
Safeguard. All officers and directors of the Company as a group, other than
Messrs. Musser and Root, owned less than 1% of Safeguard's outstanding common
stock. As of the Record Date, ClientLink, Inc. was a majority owned subsidiary
of the Company. Executive officers and directors of the Company beneficially
owned as of such date the following shares of ClientLink, Inc. common stock: Mr.
Anderson, 27,000 shares, (9,000 of which may be acquired pursuant to currently
exercisable stock options), .8%; Mr. Dixon, 154,000 shares, 4.4%; Mr. Brown,
18,000 shares, .5%; Mr. Boutin, 33,000 shares (15,000 of which may be acquired
pursuant to currently exercisable stock options), .9%; and officers and
directors as a group, 246,000 shares (24,000 of which may be acquired pursuant
to currently exercisable stock options), 6.6%.
I. ELECTION OF DIRECTORS
It is intended that the persons named as proxies for the Annual Meeting
will vote in favor of the election of the following ten nominees as directors of
the Company to hold office until the Annual Meeting of Stockholders in 1998 and
until their successors are elected and have qualified. All of the nominees, with
the exception of Donald R. Caldwell, are presently serving as directors of the
Company. 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 TEN 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>
<TABLE>
<CAPTION>
Has Been
Principal Occupation and Business A Director
Name Experience During Last Five Years Since Age
---- --------------------------------- ----- ---
<S> <C> <C> <C>
Charles A. Root Executive Vice President, Safeguard
Scientifics, Inc., a strategic information
systems company, and Chairman of the
Board of the Company(3)(4).......................... 1986 64
Edward R. Anderson President and Chief Executive Officer of
the Company(5)...................................... 1993 50
Daniel F. Brown Executive Vice President, Sales of the
Company............................................. 1990 51
Donald R. Caldwell President and Chief Operating Officer
of Safeguard Scientifics, Inc.,(6).................. 50
Michael J. Emmi Chairman of the Board, President and
Chief Executive Officer, Systems &
Computer Technology Corporation, a
provider of computer software and
services(1)(7)...................................... 1994 55
Richard F. Ford Managing General Partner, GM
Management Company Limited
Partnership and Gateway Associates III,
L.P., venture capital management
companies(2)(3)(8).................................. 1991 60
Delbert W. Johnson Chairman and Chief Executive Officer,
Pioneer Metal Finishing, a specialty metal
finishing division of Safeguard Scientifics,
Inc.(1)(9).......................................... 1995 58
John D. Loewenberg Managing Partner, JDL Enterprises, a
consulting firm(1)(10).............................. 1995 56
Warren V. Musser Chairman of the Board and Chief
Executive Officer, Safeguard Scientifics,
Inc.(2)(3)(11)...................................... 1984 70
Edward N. Patrone Business Consultant(1)(12).......................... 1991 62
</TABLE>
- ----------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
(3) Member of the Executive Committee.
(4) 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. and a director of USDATA Corporation.
(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. Mr. Anderson is a director of M/A/R/C and Diamond
Technology Partners Incorporated.
(6) Mr. Caldwell served as Executive Vice President of Safeguard from
November 1993 until February 1996, when he was promoted to President
and Chief Operating Officer. From 1991 through 1993, Mr. Caldwell was
President of Valley Forge Capital Group, Ltd., a business mergers and
acquisition advisory firm that he founded. Mr. Caldwell is a director
of Safeguard Scientifics, Inc., Integrated Systems Consulting Group,
Inc. and Diamond Technology Partners Incorporated and is a nominee for
election as a director of Quaker Chemical Company of Philadelphia. Mr.
Caldwell also serves on a variety of civic and charitable boards,
including The Philadelphia Orchestra and The Pennsylvania Academy of
Fine Arts, of which he is Chairman.
4
<PAGE>
(7) Mr. Emmi is a director of National Media Corporation and Systems &
Computer Technology Corporation.
(8) Mr. Ford is a director of Stifel Financial Corporation and D&K
Wholesale Drug, Inc.
(9) Mr. Johnson served as the President and Chief Executive Officer of
Pioneer Metal Finishing, a division of Safeguard, from 1978 until
October 1994, when he assumed the position of Chairman of the Board and
Chief Executive Officer. Mr. Johnson is a director of Coherent
Communications Systems Corporation, Ault, Inc., First Bank Systems,
Inc., Safeguard, and Tennant Company. Mr. Johnson was the Chairman of
the Ninth District Federal Reserve Bank from 1991 to 1993 and was the
1993 Chairman of the Federal Reserve Board Conference of Chairmen.
(10) From May 1995 through March 1996, Mr. Loewenberg served as Executive
Vice President and Chief Administrative Officer of Connecticut Mutual,
a life insurance company. Prior to joining Connecticut Mutual, Mr.
Loewenberg served as Senior Vice President of Aetna Life and Casualty,
a multi-line insurer, from March 1989 to May 1995. For the first five
years, he was Chief Executive Officer of Aetna Information Technology,
the information systems company of Aetna. Subsequently, he became
Senior Vice President of Aetna Health Plans, the managed care
operations of Aetna. Mr. Loewenberg is a director of Sanchez Computer
Associates, Inc. and Diamond Technology Partners Incorporated.
(11) Mr. Musser is Chairman of the Board of Cambridge Technology Partners
(Massachusetts), Inc., a director of Coherent Communications Systems
Corporation and National Media Corporation, and a trustee of Brandywine
Realty Trust. Mr. Musser also serves on a variety of civic, educational
and charitable Boards of Directors including The Franklin Institute and
the Board of Overseers of The Wharton School of the University of
Pennsylvania and serves as Vice President/Development, Cradle Liberty
Council, Boy Scouts of America, as Vice Chairman of The Eastern
Technology Council, and as Chairman of the Pennsylvania Council on
Economic Education.
(12) 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. Mr. Patrone is a director of Primesource
Corporation and Nocopi, 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
1996, 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.
Non-employee directors are initially granted 10,000 shares upon
election to the board, with subsequent service grants awarded in accordance with
formulas based on years of service. Options are granted with an exercise price
equal to the market price of the Company's Common Stock on the date of grant,
vest 25% each year commencing on the first anniversary of the grant date, and
expire after 10 years. Pursuant to this formula, in May 1996, Messrs. Emmi, Ford
and Patrone each received an option to purchase 2,000 shares of Common Stock of
the Company at an exercise price of $12.50 per share. The Company also granted
to Mr. Loewenberg an option to purchase 15,000 shares of Common Stock of the
Company in June 1996 at an exercise price of $10.75 per share in connection with
consulting services rendered by Mr. Loewenberg to the Company. Mr. Loewenberg's
option vests 25% each year commencing on the first anniversary of the grant date
and has a term of 10 years.
5
<PAGE>
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board held five meetings in 1996. 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
four times during 1996. The Executive Committee, which met twice during 1996, 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 three
times during 1996. 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 meetings of the Board and Committees of which they
were members during the period in which they served as a director, with the
exception of Mr. Ford, who attended 64% of the total number of meetings of the
Board and Committees of which he was a member.
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; however, Mr. Lubert has declined to stand
for reelection as a director and consequently will not continue service on the
Compensation Committee after the Annual Meeting.
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
necessarily 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 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 aims are to focus executives' attention on
areas such as profitability and asset management, to encourage teamwork and to
tie executive pay to corporate performance goals that are consistent with the
long-term goals of stockholders and other investors. Bonuses are awarded based
on the achievement of annual
6
<PAGE>
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 1996, the Compensation Committee determined that
bonuses would be awarded based solely upon a target range of annual pretax
earnings as a percentage of revenue.
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
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), 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 that 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 its incentive compensation plans under section 162(m).
CEO COMPENSATION
Mr. Anderson's base salary for 1996 was maintained at the same level as
for 1995. Mr. Anderson was awarded a bonus for 1996 equal to approximately 91%
of his target bonus. This decision was based on the Company achieving 1996
pretax earnings equal to 91% of the target.
OTHER EXECUTIVE COMPENSATION
The Compensation Committee approved executive cash bonuses equal to
approximately 91% of the target bonus amounts. These decisions were based on the
Company's pretax earnings being equal to 91% of the target. There were no grants
of options by the Compensation Committee under the Company's 1993 Stock Option
Plan to the CEO or any of the other named executive officers in 1996.
By the Compensation Committee:
Warren V. Musser Richard F. Ford Ira M. Lubert
7
<PAGE>
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, each of the
other most highly compensated executive officers of the Company whose salary and
bonus exceeded $100,000 in 1996, and one individual who resigned prior to
December 31, 1996.
<TABLE>
<CAPTION>
Summary Compensation Table
- --------------------------------------------------------------------------------------------------------------------
Long-Term
Annual Compensation Compensation
------------------------------------------------ ------------------
Awards
------------------
Securities
Other Annual Underlying All Other
Name and Principal Compensation Options/SARS Compensation
Position Year Salary ($)(1) Bonus ($)(2) ($)(3) (#) ($)(4)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Edward R. Anderson, 1996 $ 310,000 $ 360,907 -- -- $ 2,673
President and Chief
Executive Officer 1995 310,000 416,020 -- -- 3,750
1994 310,000 310,000 $ 608,874 350,000 1,938
- --------------------------------------------------------------------------------------------------------------------
Daniel F. Brown, 1996 $ 290,000 $ 306,368 -- -- $ 2,519
Executive Vice
President, Sales 1995 245,000 298,900 -- 150,000 3,750
1994 245,000 220,500 -- -- 3,033
- --------------------------------------------------------------------------------------------------------------------
Robert J. Boutin, Senior 1996 $ 200,000 $ 137,989 -- -- $ 2,905
Vice President, Finance
and Chief Financial 1995 200,000 139,080 -- 120,000 3,750
Officer (5)
1994 200,000 100,000 -- 50,000 2,932
- --------------------------------------------------------------------------------------------------------------------
James W. Dixon, 1996 $ 258,334 $ 21,000 $ 29,815 -- $ 3,496
Former Chairman of the
Board(6) 1995 310,000 416,020 197,211 300,000 3,750
1994 310,000 310,000 -- -- 3,143
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes annual compensation that has been deferred by the named
executives pursuant to the Company's 401(k) matched savings plan.
(2) Includes 1996 bonus paid in 1997 and a portion of the deferred bonus
from 1995. Approximately 9% of the bonus earned for 1995 was deferred.
Of this deferred amount, 50% was paid in February 1997 and 25% will be
paid in each of February 1998 and 1999, subject to forfeiture in the
event of termination of employment with the Company or its
subsidiaries. Mr. Dixon's bonus represents 50% of the 1995 deferred
bonus.
(3) The amount reported for Mr. Dixon includes, among other things,
relocation expenses totaling $14,324. While other named executives
enjoy certain perquisites, such perquisites did not exceed the lesser
of $50,000 or 10% of such executive's salary and bonus.
(4) The stated amounts represent Company matching contributions made under
its 401(k) matched savings plan.
(5) Mr. Boutin resigned as Senior Vice President, Finance and Chief
Executive Officer in February 1997.
(6) Mr. Dixon resigned as Chairman of the Company in March 1996.
8
<PAGE>
STOCK OPTIONS
There were no individual grants of stock options to the Company's Chief
Executive Officer or any of the other named executive officers during the last
fiscal year. The following table sets forth information with respect to (i)
options exercised during fiscal year 1996 and (ii) the number of unexercised
options and the value of unexercised in-the-money options at December 31, 1996.
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year End Option/SAR Values
- ---------------------------------------------------------------------------------------------------------------------
Number of Securities
Underlying Unexercised Value Of Unexercised
Shares Options/SARs In-the-Money Options/SARs at
Acquired on at Fiscal Year-End (#) Fiscal Year-End ($)(1)
Exercise Value
Name (#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Edward R. Anderson -- -- 465,000 310,000 $ 3,545,625 $ 2,363,750
--------------------------------------------------------------------------------------------------------------------
Daniel F. Brown -- -- 630,000 120,000 5,810,500 870,000
--------------------------------------------------------------------------------------------------------------------
Robert J. Boutin 24,000 $ 161,750 114,000 146,000 980,750 1,064,750
--------------------------------------------------------------------------------------------------------------------
James W. Dixon 266,571 $ 2,213,890 91,680 60,000 665,182 435,000
--------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The value of unexercised in-the-money options is calculated based upon
(i) the fair market value of the stock at December 31, 1996, less the
option exercise price, multiplied by (ii) the number of shares subject
to an option. On December 31, 1996, the fair market value was $10.75.
This table is presented solely for the purpose of complying with
Securities and Exchange Commission rules and does not necessarily
reflect the amounts the optionees will actually receive upon any sale
of the shares acquired upon the exercise of the options.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
AND CHANGE-IN-CONTROL ARRANGEMENT.
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 provided for
Mr. Brown's participation in management bonuses, required the Company to obtain
a term life insurance policy in the amount of $185,000 payable to Mr. Brown's
designated beneficiary, and afforded him other standard benefits awarded to
other senior management. This employment agreement terminated by its terms on
March 1, 1996 and has not been renewed by the Company.
In 1996, the Company accepted the resignation of Mr. Dixon and entered
into an agreement providing for the continuance of one-half his base salary
through May 1997, subject to certain conditions. In addition, the Company
accelerated the vesting of 60,000 stock options with an exercise price of $3.50.
Pursuant to this agreement, Mr. Dixon agreed to refrain from competing with the
Company until March 1, 1998.
In 1997, the Company accepted the resignation of Mr. Boutin and entered
into an agreement providing for the continuance of his base salary through
November 1997, subject to certain conditions. The Company also agreed to pay Mr.
Boutin the remaining bonus deferred from 1995 of $7,500 plus interest and to
assist with outplacement costs. In addition, the Company accelerated the vesting
of an aggregate of 44,000 stock options to purchase shares of Company Common
Stock with exercise prices ranging from $2.25 per share to $4.125 per share and
6,000 stock options to purchase shares of common stock of ClientLink with an
exercise price of $.75 per share.
9
<PAGE>
STOCK PERFORMANCE GRAPH
The following chart compares the cumulative total stockholder return on
the Company's Common Stock for the period December 31, 1991 through December 31,
1996 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. The
comparison assumes that $100 was invested on December 31, 1991 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.
[GRAPHIC OMITTED]
1991 1992 1993 1994 1995 1996
CompuCom 100 97 180 139 422 478
NASDAQ 100 116 134 131 185 227
Peer Group 100 113 182 117 153 206
CERTAIN TRANSACTIONS
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 that 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 shares.
Interest on the note accrues at the rate of 6% per annum and became payable
annually beginning January 1, 1996. Mr. Anderson made interest payments of
$100,584 and $65,050 in 1996 and 1997, respectively. In 1996, Mr. Anderson
undertook to renegotiate the terms of the note, and in February 1997, delivered
to the Company a new note in the amount of $1,181,250 which extended the payment
of the principal to February 1999. In March 1997, Mr. Anderson delivered
$281,250 as a payment against principal, and the Company released 83,333 of the
shares that secured the note.
10
<PAGE>
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. The
remaining unpaid principal balance of $70,000 together with accrued interest of
approximately $4,600 was paid by Mr. Dixon in 1997.
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 was
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
was repaid in two installments during the first half of 1995, and the accrued
interest of approximately $6,200 was repaid in 1997.
In July 1995, Mr. Dixon purchased from the Company 150,000 shares of
common stock of ClientLink, Inc. at a cost of $.75 per share. The purchase
price, which was based upon a third-party valuation, was paid by delivery of a
$112,500 full recourse promissory note with a five-year term and is secured by a
pledge of the 150,000 shares as collateral. The note bears interest at the rate
of 8% per annum. Interest will accrue and be due and payable on July 15th of
each year, commencing in 1996. In connection with Mr. Dixon's resignation, the
Company amended the terms of the note such that principal on the note is due on
May 31, 1997.
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 that are contracted
out. The agreement is subject to termination by the Company or Safeguard upon
notice no later than 90 days prior to the end of any fiscal year. The Company
expensed $600,000 during 1996 for these services.
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 1997. 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 that may be issued upon exercise of options
granted or to be granted under the 1993 Plan by 1,000,000 shares of Common
Stock, from 4,750,000 to 5,750,000 shares of Common Stock in the aggregate. As
of the Record Date, after giving effect to the proposed increase in shares,
there were 5,016,229 shares of Common Stock reserved for issuance upon the
exercise of options under the 1993 Plan. Of the shares reserved for issuance,
3,012,979 are subject to outstanding
11
<PAGE>
options and 2,003,250 remain available for future grant. The closing price of
the Company's Common Stock on the Nasdaq National Market on the Record Date was
$6.00 per share.
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 1997,
approximately 1,000,000 shares remained available for the granting of options
under the 1993 Plan. 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 awards or allocations 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 the aggregate number of shares of Common Stock that are subject
to options granted under the 1993 Plan will not exceed 4,750,000 shares of
Common Stock.
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, 1997. Representatives of KPMG Peat
Marwick LLP are expected to be present at the Annual Meeting, 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.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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, 1996 to December 31, 1996, all Section 16(a)
filing requirements applicable to its officers, directors and 10% Stockholders
were complied with, except for three transactions reported late by Mr. Brown and
one transaction reported late by Mr. Loewenberg.
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.
12
<PAGE>
The Company's Annual Report for 1996, 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 9, 1997
13
<PAGE>
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
1997, 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 1,000,000 shares, from 4,750,000 shares to 5,750,000 shares in the
aggregate. The 1993 Stock Option Plan, as proposed to be amended, is herein
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, non-employee directors and independent consultants and advisors 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 that may be issued under the 1993 Plan is
5,750,000. Such shares may be authorized but unissued shares of Common Stock or
previously issued but reacquired shares of Common Stock. Shares subject to
options that 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.
ADMINISTRATION
The 1993 Plan is administered by the Compensation Committee, which
currently is composed of Directors Ford, Lubert and Musser. Mr. Lubert has
declined to stand for reelection as a director; consequently, he will not
continue service on the Compensation Committee after the Annual Meeting. 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 incentive stock
options ("ISOs") or nonqualified stock options ("NQSOs"); and generally to
administer the 1993 Plan.
ELIGIBILITY
Employees (including any directors who are also employees),
non-employee directors, and independent consultants and advisors 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
the Record Date, there were approximately 300 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 that 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.
14
<PAGE>
The maximum aggregate number of shares of stock that shall be subject to options
granted under the Plan to any optionee shall not exceed 2,500,000 shares.
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.
The term of any other option granted under the 1993 Plan may not exceed
10 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 or in the service of the Company or any subsidiary, or whose
employment or service with the Company and all subsidiaries is terminated, prior
to the expiration date of such option, will remain exercisable by the optionee
or his personal representative for a period of time following such individual's
termination of employment or service with the Company or death as provided for
in the 1993 Plan and the applicable option agreement, provided, however, that in
the event of termination of employment or service for cause, the Compensation
Committee, in its discretion, may terminate all Options held by an optionee at
the date of termination and may require the optionee to forfeit all shares
underlying any exercised portion of an Option for which the Company has not yet
delivered the share certificates upon refund by the Company of the exercise
price paid by the optionee for such shares. Options are generally not
transferable, except at death, provided, however, that the Compensation
Committee, in its discretion, may permit the transfer of NQSOs pursuant to a
domestic relations order or to family members or other persons or entities on
such terms as the Compensation Committee may determine.
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 (i) in cash or its equivalent; (ii) 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 holding
period described in section 422(a)(1) of the Code on the date of exercise, and
that, in any case, such shares have been held by the optionee for the requisite
period of time necessary to avoid a charge to the Company's earnings for
financial reporting purposes and adverse accounting consequences to the Company
with respect to the option, and provided further that each optionee may use the
procedure described in this clause (ii) only once during any six-month period;
(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 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. The Compensation Committee also may elect
to (i) loan an optionee an amount not in excess of the exercise price of the
shares subject to the option and any taxes due upon exercise of the option upon
delivery by the optionee of a promissory note for the loan and delivery of the
option shares as collateral to secure the loan or (ii) 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.
15
<PAGE>
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 transaction, 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 has the power, without the consent of the stockholders, to
discontinue, amend or revise the terms of the 1993 Plan, provided, however, that
the Board shall not amend the Plan without stockholder approval if such approval
is required pursuant to the Code or the rules of any national securities
exchange or over-the-counter market on which the Company's shares are then
listed or included. The 1993 Plan 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 the Record
Date, 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.
16
<PAGE>
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 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.
17
<PAGE>
____
Please mark | |
your votes as | X |
indicated in |____|
this example
The Board of Directors recommends a vote FOR proposals 1 and 2.
1. ELECTION OF DIRECTORS
Nominees:
Charles A. Root Delbert W. Johnson WITHHELD
Edward R. Anderson John D. Loewenberg FOR FOR ALL
Daniel F. Brown Warren V. Musser [ ] [ ]
Donald R. Caldwell Edward N. Patrone
Michael J. Emmi
Richard F. Ford
To withhold authority to vote for
any individual nominee while voting
for the remainder, strike a line
through the nominee's name in the
list.
2. Amendment to 1993 Stock Option Plan FOR WITHHELD ABSTAIN
[ ] [ ] [ ]
SIGNATURE(S) DATE:
----------------------------------------------- --------------
THIS PROXY MUST BE SIGNED EXACTLY AS NAME APPEARS HEREIN. Joint tenants must
both sign. When signing as attorney, executor, administrator, trustee or
guardian, or for a corporation or partnership, please give full title.
*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.
[GRAPHIC OMITTED]
<PAGE>
PROXY
COMPUCOM SYSTEMS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
I hereby constitute and appoint Edward R. Anderson and M. Lazane Smith, 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 1997 Annual Meeting of Stockholders of CompuCom Systems, Inc. to be
held on May 14, 1997, 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 AMENDMENT TO THE 1993
STOCK OPTION PLAN, 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>
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,
(including employees who are also officers or directors), non-employee directors
and Eligible Independent Contractors (as hereinafter defined) 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) "Board" shall mean the Board of Directors of the
Corporation.
(b) "Cause" shall mean, except to the extent otherwise
specified by the Committee, a finding by the Committee that the Optionee has
breached his or her employment or service contract, non-competition agreement or
other obligation with the Corporation, or has been engaged in disloyalty to the
Corporation, including without limitation, fraud, embezzlement, theft,
commission of a felony or proven dishonesty in the course of his or her
employment or service, or has disclosed trade secrets or confidential
information of the Corporation to persons not entitled to receive such
information.
(c) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and any successor thereto.
(d) "Committee" shall mean the Committee designated by the
Board to administer the Plan.
(e) "Eligible Independent Contractor" shall mean an
independent consultant or advisor hired by the Corporation to provide bona fide
services for the Corporation that are not in connection with the offer or sale
of securities in a capital-raising transaction.
(f) "Employed by the Corporation" shall mean employment as an
employee or Eligible Independent Contractor or member of the Board so that for
purposes of exercising Stock Options, an Optionee shall not be considered to
have terminated employment until the Optionee ceases to be an employee, Eligible
<PAGE>
Independent Contractor or member of the Board; provided, however, that the
Committee may determine otherwise as may be specified in an individual
Optionee's Grant Letter.
(g) "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 Code.
(h) "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.
(i) "Optionee" shall mean an employee, non-employee director
or Eligible Independent Contractor to whom an award is granted pursuant to the
Plan.
(j) "Options" shall mean all ISOs and NQSOs which from time to
time may be granted under this Plan.
(k) "Share" shall mean a share of the common stock, $.01 par
value, of the Corporation.
(l) "Parent" shall mean any corporate parent of the
Corporation, as defined in Section 424(e) of the Code.
(m) "Plan" shall mean the CompuCom Systems, Inc. 1993 Stock
Option Plan, as amended from time to time.
(n) "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, which shall consist of not less than two members of the
Board of the Corporation, who shall be appointed by, and shall serve at the
pleasure of, the Board. 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
<PAGE>
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 which 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 persons who shall be eligible to receive
Options under the Plan shall be the employees (including any employees who are
also officers or directors ), non-employee directors and Eligible Independent
Contractors of the Corporation or of any Subsidiary. More than one Option may be
granted to an Optionee 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.
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 5,750,000 Shares, subject to adjustment
as provided in Section 16 hereof. The maximum aggregate number of shares of
Stock that shall be subject to Options granted under the Plan to any Optionee
shall not exceed 2,500,000. 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 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.
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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.
(a) Term. 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.
(b) Exercise. 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 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 employed by 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.
(c) Payment of Option Price. The Option price shall be payable
(i) in cash or its equivalent; (ii) in the discretion of the Committee, in
Shares previously acquired by the Optionee (including Shares acquired in
connection with the exercise of an Option, subject to such restrictions as the
Committee deems appropriate), 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 holding period described in section 422(a)(1) of the
Code on the date of exercise, and that, in any case, such Shares have been held
by the Optionee for the requisite period of time necessary to avoid a charge to
<PAGE>
the Corporation's earnings for financial reporting purposes and adverse
accounting consequences to the Company with respect to the Option; (iii) in the
discretion of the Committee, in any combination of (i) and (ii) above; or (iv)
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.
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 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.
(d) Cash-Out Option. 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.
(e) Replacement Options. The Committee may, in its sole
discretion and at the time of the original option grant, authorize the Optionee
to receive automatically replacement Options pursuant to this part of the Plan.
Any such replacement Option shall be granted upon such terms and subject to such
conditions and limitations as the Committee may deem appropriate. Any
replacement Option shall cover a number of shares determined by the Committee,
but in no event more than the number of shares of the original Option exercised.
The per share exercise price of any replacement Option shall equal the then
current Fair
<PAGE>
Market Value of a Share, and shall have a term as determined by the Committee at
the time of grant of the original Option.
The Committee shall have the right, and may reserve the right
in any Option grant, in its sole discretion and at any time, to discontinue the
automatic grant of replacement Options if it determines the continuance of such
grants to no longer be in the best interest of the Corporation.
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 disability, or to any greater
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 right to 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) If, however, the Corporation terminates the employment of
the Optionee for Cause, any Option held by such Optionee shall terminate as of
the date the Optionee ceases to be employed by the Corporation, and the Optionee
shall automatically
<PAGE>
forfeit all Shares underlying any exercised portion of an Option for which the
Corporation has not yet delivered the share certificates upon refund by the
Corporation of the exercise price paid by the Optionee for such Shares.
(e) 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.
(a) Required Withholding. The obligation of the Corporation to
deliver Shares upon the exercise of any Option shall be subject to applicable
federal (including FICA), state and local tax withholding requirements. The
Corporation may require the Optionee or other person receiving such Shares to
pay to the Corporation the amount of any such taxes that the Corporation is
required to withhold with respect to such Options, or the Corporation may deduct
from other wages paid by the Corporation the amount of any withholding taxes due
with respect to such Options.
(b) Election to Withhold Shares. If the Committee so permits,
an Optionee may elect to satisfy the Corporation's income tax withholding
obligation with respect to an Option by having shares withheld up to an amount
that does not exceed the Grantee's maximum marginal tax rate for federal
(including FICA), state and local tax liabilities. The election must be in a
form and manner prescribed by the Committee and shall be subject to the prior
approval of the Committee.
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. Notwithstanding the foregoing, the Committee may provide,
at or after grant, that an Optionee may transfer NQSOs pursuant to a domestic
relations order or to family members or other persons or entities on such terms
as the Committee may determine.
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,
<PAGE>
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.
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
<PAGE>
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.
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.
The Board may amend or terminate the Plan at any time or from
time to time, but no amendment or termination shall be made which would impair
the rights of an Optionee under an Option theretofore granted without the
Optionee's consent; and provided, further that the Board shall not amend the
Plan without stockholder approval if such approval is required pursuant to the
Code or the rules of any national securities exchange or over-the-counter market
on which the Corporation's Shares are then listed or included.
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.
<PAGE>
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. 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 of the Shares issued upon exercise of the
Option.
