<PAGE> 1
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> 2
[COMPUCOM LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
-- MAY 18, 2000 --
Dear CompuCom Stockholder:
The 2000 Annual meeting of stockholders of CompuCom Systems, Inc. will be held
on Thursday, May 18, 2000, at CompuCom's principal executive offices at 7171
Forest Lane, Dallas, Texas 75230 at 2:00 p.m. local time.
Only stockholders who owned stock at the close of business on March 31, 2000 can
vote at this meeting or any adjournments that may take place. At the meeting we
will elect 11 directors, vote for approval of the CompuCom Systems, Inc. 2000
Equity Compensation Plan, including authorizing 3,000,000 shares, vote for
approval of a proposal to increase the number of shares for the CompuCom
Employee Stock Purchase Plan by 1,000,000 shares, and attend to any other
business properly presented at the meeting. We also will report on CompuCom's
1999 business results and other matters of interest to our stockholders. You
will have an opportunity at the meeting to ask questions, make comments and meet
our management team.
COMPUCOM'S BOARD OF DIRECTORS IS A VITAL RESOURCE. NO MATTER HOW MANY SHARES YOU
HOLD, COMPUCOM CONSIDERS YOUR VOTE IMPORTANT, AND WE ENCOURAGE YOU TO VOTE AS
SOON AS POSSIBLE.
All stockholders are cordially invited to attend the meeting. Whether or not you
expect to attend the meeting, please fill in, date and sign the accompanying
proxy and mail it promptly in the enclosed envelope.
This proxy statement, accompanying proxy card, and 1999 annual report are being
mailed to stockholders beginning April 19, 2000, in connection with the
solicitation of proxies by the board of directors.
Please contact M. Lazane Smith, senior vice president and chief financial
officer, at (972) 856-3600 with any questions or concerns.
Sincerely,
/s/ J. Edward Coleman /s/ James A. Ounsworth
- ----------------------------- ------------------------------
Edward Coleman James A. Ounsworth
Chief Executive Officer Secretary
April 19, 2000
<PAGE> 3
QUESTIONS AND ANSWERS
Q: WHO IS ENTITLED TO VOTE?
A: Stockholders of record as of the close of business on March 31, 2000, may
vote at the annual meeting.
Q: HOW MANY SHARES CAN VOTE?
A: On March 31, 2000, there were 48,657,146 common shares and 1,500,000 series
B preferred shares issued and outstanding. In the election of directors,
each series B preferred share may cast five votes for each common share
into which a preferred share may be converted. Each series B preferred
share is convertible into 1.477104 common shares. Every common stockholder
may cast one vote for each share owned.
Q: WHAT MAY I VOTE ON?
A: You may vote on the election of 11 directors who have been nominated to
serve on our board of directors, approval of the 2000 Equity Compensation
Plan, and the adoption of an amendment to our Employee Stock Purchase Plan
to increase the number of shares authorized for issuance.
Q: HOW DOES THE BOARD RECOMMEND I VOTE ON THE PROPOSAL?
A: The board recommends a vote FOR each board nominee, FOR approval of the
2000 Equity Compensation Plan, and FOR the amendment to the Employee Stock
Purchase Plan.
Q: HOW DO I VOTE?
A: Sign and date each proxy card you receive, mark the boxes indicating how
you wish to vote, and return the proxy card in the prepaid envelope
provided.
If you sign your proxy card but do not mark any boxes showing how you wish
to vote, J. Edward Coleman and M. Lazane Smith will vote your shares as
recommended by the board of directors.
Q: WHAT IF I HOLD MY COMPUCOM SHARES IN A BROKERAGE ACCOUNT?
A: If you hold your CompuCom shares through a broker, bank or other nominee,
you will receive a voting instruction form directly from them describing
how to vote your shares. This form will, in most cases, offer you three
ways to vote:
1. by telephone,
2. via the Internet, or
3. by returning the form to your broker.
Q: WHAT IF I WANT TO CHANGE MY VOTE?
A: You may change your vote at any time before the meeting in any of the
following three ways:
1. notifying our chief financial officer, M. Lazane Smith, in writing,
2. voting in person at the meeting, or
3. submitting a proxy card with a later date.
If you hold your shares through a broker, bank or other nominee and wish to
vote at the meeting, you must obtain a legal proxy from that nominee
authorizing you to vote at the meeting. We will be unable to accept a vote
from you at the meeting without that form. If you hold your shares directly
and wish to vote at the meeting, no additional forms will be required.
Q: HOW WILL DIRECTORS BE ELECTED?
A: The 11 nominees who receive the highest number of affirmative votes at a
meeting at which a quorum is present will be elected as directors.
[COMPUCOM LOGO] 2
<PAGE> 4
QUESTIONS AND ANSWERS (CONT'D.)
Q: WHAT VOTE IS REQUIRED TO APPROVE THE 2000 EQUITY COMPENSATION PLAN?
A: To approve the action noted above, a quorum must be present and voting, and
a majority of the votes cast must be in favor of the proposal.
Q: WHAT VOTE IS REQUIRED TO APPROVE THE AMENDMENT TO THE EMPLOYEE STOCK
PURCHASE PLAN?
A: To approve the action noted above, a quorum must be present and voting, and
a majority of the votes cast must be in favor of the amendment.
Q: WHO WILL COUNT THE VOTES?
A: A representative of CompuCom will count the votes and act as the judge of
election.
Q: WHAT DOES IT MEAN IF I GET MORE THAN ONE PROXY CARD?
A: Your shares may be registered differently or may be in more than one
account. We encourage you to have all accounts registered in the same name
and address (whenever possible). You may obtain information about how to do
this by contacting our transfer agent at:
ChaseMellon Shareholder Services
2323 Bryan Street, Suite 2300
Dallas, TX 75201
(toll-free telephone 800-635-9270)
If you provide ChaseMellon with photocopies of the proxy cards that you
receive or with the account numbers that appear on each proxy card, it will
be easier for ChaseMellon to combine your accounts.
You also can find information on transferring shares and other useful
stockholder information on their website at www.chasemellon.com.
Q: WHAT IS A QUORUM?
A: A quorum is a majority of the outstanding shares. The shares may be
represented at the meeting either in person or by proxy. To hold the
meeting, there must be a quorum present.
Q: WHAT IF I ABSTAIN OR FAIL TO GIVE INSTRUCTIONS TO MY BROKER?
A: If you submit a properly executed proxy, your shares will be counted as
part of the quorum even if you abstain from voting or withhold your vote
for a particular director.
Broker non-votes also are counted as part of the quorum. A broker non-vote
occurs when banks, brokers or other nominees holding shares on behalf of a
stockholder do not receive voting instructions from the stockholder by a
specified date before the meeting. In this event, banks, brokers or other
nominees may vote those shares on matters deemed routine such as the
election of directors. Approval of the 2000 Equity Compensation Plan and
approval of the amendment to the Employee Stock Purchase Plan are
considered non-routine matters, therefore, banks, brokers or other nominees
will not be able to vote on these proposals without instructions from the
stockholder. This will result in a "broker non-vote" equal to the number of
shares for which they do not receive specific voting instructions.
Abstentions are counted in tabulations of the votes cast on proposals
presented to stockholders and have the effect of negative votes. A
"withheld" vote is treated the same as an abstention. Broker non-votes are
not counted for purposes of determining whether a proposal has been
approved.
[COMPUCOM LOGO] 3
<PAGE> 5
QUESTIONS AND ANSWERS (CONT'D.)
Q: WHO CAN ATTEND THE MEETING?
A: All stockholders are encouraged to attend the meeting. Admission tickets
are not required.
Q: ARE THERE ANY EXPENSES ASSOCIATED WITH COLLECTING THE STOCKHOLDER VOTES?
A: We will reimburse brokerage firms and other custodians, nominees and
fiduciaries for their reasonable out-of-pocket expenses for forwarding
proxy and other materials to our stockholders. We do not anticipate hiring
an agency to solicit votes at this time.
Q: WHAT IS A STOCKHOLDER PROPOSAL?
A: A stockholder proposal is your recommendation or requirement that CompuCom
or our board of directors take action on a matter that you intend to
present at a meeting of stockholders. However, under the proxy rules we
have the ability to exclude certain matters proposed, including those that
deal with matters relating to our ordinary business operations.
Q: CAN ANYONE SUBMIT A STOCKHOLDER PROPOSAL?
A: To be eligible to submit a proposal, you must have continuously held the
lesser of $2,000 in market value or 1% of our common stock for at least one
year by the date you submit your proposal. You also must continue to hold
those securities through the date of the meeting.
Q: IF I WISH TO SUBMIT A STOCKHOLDER PROPOSAL FOR THE ANNUAL MEETING IN 2001,
WHAT ACTION MUST I TAKE?
A: If you wish us to consider including a stockholder proposal in the proxy
statement for the annual meeting in 2001, you must submit the proposal, in
writing, so that we receive it no later than December 20, 2000. The
proposal must meet the requirements established by the SEC. Send your
proposal to:
M. Lazane Smith, Senior Vice
President and Chief Financial Officer
CompuCom Systems, Inc.
7171 Forest Lane
Dallas, TX 75230
As to any proposal presented by a stockholder at the annual meeting that
has not been included in this proxy statement, management proxies will be
allowed to use their discretionary voting authority unless we receive
notice of such proposal no later than March 5, 2001.
Q: WHO ARE COMPUCOM'S LARGEST STOCKHOLDERS?
A: Safeguard Scientifics, Inc. beneficially owns 52.4% and directors and
officers as a group beneficially own 2.8% of CompuCom common stock. T. Rowe
Price Associates, Inc. beneficially owns 5.1% of our stock.
[COMPUCOM LOGO] 4
<PAGE> 6
ELECTION OF DIRECTORS
ITEM 1 ON PROXY CARD
Directors are elected annually and serve a one-year term. There are 11 nominees
for election this year. The eleven nominees are currently serving as directors.
Each nominee, if elected, has consented to serve until the next annual meeting
or until his successor is elected and qualified. You will find detailed
information on each nominee below. If any director is unable to stand for
re-election after distribution of this proxy statement, the board may reduce its
size or designate a substitute. If the board designates a substitute, proxies
voting on the original director candidate will be cast for the substituted
candidate.
THE BOARD RECOMMENDS A VOTE FOR EACH NOMINEE. THE 11 NOMINEES WHO RECEIVE THE
HIGHEST NUMBER OF AFFIRMATIVE VOTES WILL BE ELECTED AS DIRECTORS.
J. EDWARD COLEMAN Director since 2000
Age 48
Mr. Coleman has served as chief executive officer of CompuCom since December
1999. Prior to joining CompuCom, Mr. Coleman served as a business development
executive and director of marketing for Computer Sciences Corporation from March
1995 to December 1999.
MICHAEL J. EMMI Director since 1994
Age 58
Mr. Emmi has been chairman of the board, president and chief executive officer
of Systems & Computer Technology Corporation, a provider of computer software
and services, since May 1985. Mr. Emmi is a director of Safeguard Scientifics,
Inc., a leader in incubating and operating premier companies in the Internet
infrastructure market with a focus on three sectors: software, communications,
and e-services, and CDI Corp.
RICHARD F. FORD Director since 1991
Age 64
Mr. Ford is a managing general partner of the management companies which act as
a general partner of Gateway Mid-America Partners, L.P., Gateway Venture
Partners II, L.P., Gateway Venture Partners III, L.P. and Gateway Partners,
L.P., private venture capital funds formed in 1984, 1987, 1990 and 1995,
respectively. Mr. Ford is a director of Stifel Financial Corporation, D&K
Healthcare Resources, Inc. and TALX, Inc.
DELBERT W. JOHNSON Director since 1995
Age 61
Mr. Johnson has been a vice president of Safeguard since 1980. Mr. Johnson
served as chairman of the board and chief executive officer of Pioneer Metal
Finishing, Inc., a former division of Safeguard, until October 1997. Mr. Johnson
is a director of Ault and US Bancorp.
[COMPUCOM LOGO] 5
<PAGE> 7
ELECTION OF DIRECTORS (CONT'D.)
ITEM 1 ON PROXY CARD
JOHN D. LOEWENBERG Director since 1995
Age 59
Mr. Loewenberg has been the managing partner of JDL Enterprises, a consulting
firm, since March 1996. From May 1995 through March 1996, Mr. Loewenberg served
as executive vice president and chief administrative officer of Connecticut
Mutual, a life insurance company. Mr. Loewenberg is a director of Sanchez
Computer Associates, Inc., Diamond Technology Partners Incorporated, DocuCorp
International, Inc. and Sherwood International, a United Kingdom company.
THOMAS C. LYNCH Director since 1998
Age 57
Mr. Lynch is president and chief operating officer of CompuCom. From October
1998 to July 1999, Mr. Lynch served as executive vice president and chief
operating officer of CompuCom. Prior to joining CompuCom in October 1998, Mr.
Lynch had been a senior vice president of Safeguard, a position he held from
November 1995. Mr. Lynch is a director of The Eastern Technology Council and a
trustee of the U.S. Naval Academy Foundation. Mr. Lynch is a director of Sanchez
Computer Associates, Inc. and eMerge Interactive, Inc.
EDWIN L. HARPER Director since 2000
Age 58
Mr. Harper is executive vice president of operations and information technology
with Assurant Group. Prior to Assurant, during 1997, Mr. Harper served as vice
chairman and chief executive officer of Commodore Applied Technologies. From
1992 to 1997, Mr. Harper served as president and chief executive officer of the
Association of American Railroads.
WARREN V. MUSSER Director since 1984
Age 73
Mr. Musser has served as chief executive officer of Safeguard since 1953. He is
chairman of the boards of Safeguard and Cambridge Technology Partners
(Massachusetts), Inc., a director of DocuCorp International, Inc., Sanchez
Computer Associates, Inc., and a trustee of Brandywine Realty Trust. Mr. Musser
also serves on a variety of civic, educational and charitable boards of
directors and serves as vice president/development, Cradle of Liberty Council,
Boy Scouts of America, as vice chairman of The Eastern Technology Council, and
as chairman of the Pennsylvania Partnership on Economic Education.
[COMPUCOM LOGO] 6
<PAGE> 8
ELECTION OF DIRECTORS (CONT'D.)
ITEM 1 ON PROXY CARD
ANTHONY J. PAONI Director since 1999
Age 55
Mr. Paoni is a clinical professor of information technology at the Kellogg
Graduate School of Management. Before 1996, Mr. Paoni spent 28 years in the
information technology industry, most recently as the chief executive officer of
Eolas, Inc., an Internet software company. Mr. Paoni manages the Kellogg
Technology Speaker Series and acts as a consultant to several companies
including IBM, Xerox, the American Medical Association and Phillips Petroleum
Company. Mr. Paoni is a strategic advisor to the US Navy for the CVX nuclear
carrier program and a director of US Freightways Corporation.
EDWARD N. PATRONE Director since 1991
Age 65
Mr. Patrone, age 65, retired, was a senior consultant to Alco Standard
Corporation, a national distributor of paper and office products, from 1991 to
1997. He is also a director of Primesource Corporation and Global Imaging Corp.
HARRY WALLAESA Director since 1999
Age 49
Mr. Wallaesa has served as chairman of the board of CompuCom since May 1999. Mr.
Wallaesa became president and chief operating officer of Safeguard in March
1999. Before joining Safeguard, Mr. Wallaesa served as president and chief
executive officer of aligne incorporated, which he co-founded in 1996, until
Safeguard acquired a majority of the company in March 1999. From 1985 to 1995,
Mr. Wallaesa was the chief information officer and vice president of management
information systems at Campbell Soup Company, a global manufacturer and marketer
of branded food products. Mr. Wallaesa is a director of Safeguard, Bowne, Inc.,
Redleaf Group LLC, aligne incorporated, iMedium, Inc., Allied Resource
Corporation, Pennsylvania Academy of Fine Arts, Atlas Commerce and University of
Pennsylvania Health Systems.
BOARD OF DIRECTORS -- ADDITIONAL INFORMATION
MEETINGS OF THE BOARD: The board of directors held four meetings in 1999. Each
of the incumbent 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.
ANNUAL AND MEETING ATTENDANCE FEES: Directors who are executive officers of
Safeguard or employees of CompuCom receive no additional compensation other than
their normal salary for serving on the board or its committees.
Non-employee directors receive:
- - $1,000 monthly cash retainer
- - $750 for each board or committee meeting attended, and
- - reimbursement of out-of-pocket expenses.
STOCK OPTIONS: Directors who are not executive officers of Safeguard or
employees of CompuCom receive:
- - a stock option to purchase 10,000 shares of CompuCom's common stock upon
initial election to the board, and
- - service grants, upon the determination of the compensation committee.
[COMPUCOM LOGO] 7
<PAGE> 9
Directors' options have a ten-year term and vest 25% each year starting on the
first anniversary of the grant date. The exercise price is equal to the closing
price of a share of CompuCom common stock on the grant date.
In February 2000, Messrs. Emmi, Ford, Johnson, Loewenberg, Paoni and Patrone
were each granted an option to purchase 10,000 shares at an exercise price of
$4.4375 per share. In February 2000, Mr. Harper received an initial option to
purchase 10,000 shares at an exercise price of $4.4375 per share.
BOARD COMMITTEE MEMBERSHIP ROSTER
<TABLE>
<CAPTION>
AUDIT COMPENSATION EXECUTIVE
----- ------------ ---------
<S> <C> <C> <C>
MEETINGS HELD IN 1999 4 4 3
Michael J. Emmi X*
Richard F. Ford X* X*
Delbert W. Johnson X
John D. Loewenberg X
Warren V. Musser X X
Edward N. Patrone X
Harry Wallaesa X X
</TABLE>
* CHAIRPERSON
AUDIT: recommends our independent certified public accountants, discusses the
scope and results of our audit with the independent certified public
accountants, reviews with management and the independent certified public
accountants our interim and year-end operating results, considers the adequacy
of our internal accounting controls and audit procedures, and reviews the
non-audit services to be performed by the independent certified public
accountants.
COMPENSATION: reviews and approves management's recommendations for
compensation, including incentive compensation, for all of our officers, and
administers our stock option plans and management incentive plan.
EXECUTIVE: acts upon all matters with respect to the management of our business
and affairs, except that its authority to authorize and approve investments,
other than investments made in the normal course of business, is limited to
investments of up to $5 million in the aggregate between board meetings.
[COMPUCOM LOGO] 8
<PAGE> 10
PROPOSAL TO ADOPT 2000 EQUITY COMPENSATION PLAN
ITEM 2 ON PROXY CARD
THE BOARD RECOMMENDS A VOTE FOR APPROVAL OF THE 2000 PLAN. APPROVAL OF THIS 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 IS
PRESENT, EITHER IN PERSON OR BY PROXY, AND VOTING ON THE 2000 PLAN.
PURPOSE OF THE 2000 PLAN
The 2000 Plan will provide participants with an opportunity to receive grants of
stock options, stock appreciation rights, restricted stock and performance
units. We have historically granted incentive stock options and non-qualified
stock options with an exercise price equal to the fair market value on the grant
date. We will most likely continue to do so in the future. However, to remain
competitive and to be able to continue attracting outstanding employees, we
believe that it is important to maintain flexibility under our incentive
compensation plans.
We believe the 2000 Plan will encourage the participants to contribute to our
growth, thus benefiting our stockholders, and will align the economic interests
of the participants with those of our stockholders.
The 2000 Plan is not qualified under section 401(a) of the Internal Revenue Code
and is not subject to the provisions of the Employee Retirement Income Security
Act.
SHARES SUBJECT TO THE 2000 PLAN
The 2000 Plan authorizes the issuance of up to 3,000,000 shares of CompuCom
common stock, subject to adjustment as discussed below. The maximum number of
shares that may be granted to any individual during any calendar year is
800,000. If options or stock appreciation rights granted under the plan
terminate, expire or are canceled, forfeited, exchanged or surrendered without
being exercised, or if a restricted stock award or performance unit is
forfeited, those shares will again be available for purposes of the 2000 Plan.
No grants have been made under the 2000 Plan, and there are no current plans to
authorize any specific grants under the plan. The closing price of a share of
CompuCom common stock on March 31, 2000, was $5.25 per share.
ADMINISTRATION OF THE 2000 PLAN
The 2000 Plan is administered by the compensation committee, which is currently
composed of Messrs. Richard F. Ford, Warren V. Musser and Harry Wallaesa.
The committee has the authority to administer and interpret the 2000 Plan.
Specifically, the committee is authorized to:
- determine the individuals to whom grants will be made,
- determine the type, size and terms of the grants,
- determine the time when the grants will be made and the duration of
any applicable exercise or restriction period, including the criteria
for exercisability and the acceleration of exercisability,
- deal with any other matters arising under the 2000 Plan.
ELIGIBILITY FOR PARTICIPATION AND GRANTS
Those eligible to receive grants are employees (including officers or members of
the board of directors), individuals to whom we have offered employment,
non-employee directors, and certain advisors of CompuCom or any subsidiary.
There are approximately 4600 employees and 9 directors currently eligible to
receive grants.
Grants may consist of incentive stock options, non-qualified stock options,
restricted stock awards, stock appreciation rights, or performance units. All
grants are
[COMPUCOM LOGO] 9
<PAGE> 11
subject to the terms and conditions of the 2000 Plan.
Grants will continue to vest and remain exercisable as long as a participant
remains in our service and for a period of time after termination.
STOCK OPTIONS
GRANT OF STOCK OPTIONS. The committee may grant options qualifying as incentive
stock options to employees. The committee may grant non-qualified stock options
to any participant. Grants to employees may be made in any combination of
incentive stock options and non-qualified stock options.
OPTION PRICE. The option exercise price is determined by the committee at the
time of grant. To qualify as an incentive stock option, the exercise price may
not be less than the fair market value of the common stock at the time of grant.
Fair market value shall be the mean between the highest and lowest quoted
selling prices at the time of grant or the latest preceding date when a sale was
reported. Also, the value (determined as of the grant date) of any incentive
stock options held by a participant that become exercisable for the first time
during any calendar year cannot exceed $100,000. The amount of the option over
$100,000 shall be treated as a non-qualified stock option. If a grantee owns
stock having more than 10% of the voting power of CompuCom, the exercise price
of an incentive stock option may not be less than 110% of the fair market value
of the common stock on the date of grant.
TERM AND EXERCISABILITY OF STOCK OPTIONS. The committee determines the term of
stock options granted under the 2000 Plan, although the term may not exceed ten
years. If a grantee owns stock having more than 10% of the voting power of
CompuCom, the term of an incentive stock option may not exceed five years. The
committee determines how stock options will become exercisable and may
accelerate vesting at any time for any reason. The stock option may allow the
participant to exercise any part or all of the shares prior to the full vesting
of the stock option. If any unvested shares are purchased, CompuCom shall have a
repurchase right equal to the original purchase price.
MANNER OF EXERCISE OF STOCK OPTIONS. To exercise a stock option, a grantee must
deliver a written exercise notice specifying the number of shares to be
purchased together with payment of the option exercise price. The exercise price
may be paid as specified by the committee in any of the following ways:
- in cash,
- by delivering shares of CompuCom common stock already owned by the
participant having a fair market value equal to the exercise price, or
- by any other method of payment the committee may approve, including a
"cashless exercise" of a stock option effected by delivering a notice
of exercise to CompuCom and a securities broker with instructions to
the broker to deliver to CompuCom out of the sale proceeds the amount
necessary to pay the exercise price.
For a non-qualified stock option, we are also required to withhold applicable
taxes. If approved by the committee, the income tax withholding obligation may
be satisfied by withholding shares of an equivalent market value.
Shares of common stock tendered in payment of the exercise price must have been
held by the participant long enough to avoid adverse accounting consequences to
CompuCom.
TERMINATION OF STOCK OPTIONS AS A RESULT OF TERMINATION OF EMPLOYMENT,
DISABILITY OR DEATH. Generally, vested stock options will remain exercisable for
a period of time following termination of service as follows:
- one year following termination of service if an individual dies or is
disabled, or
- 90 days following termination of service for any reason, other than
termination for cause.
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<PAGE> 12
The committee, either at or after grant, may provide for different termination
provisions. Options which are not exercisable at the termination of service are
terminated as of that date.
If service is terminated for cause, the committee may terminate all stock
options held by a participant at the date of termination. Termination for cause
shall include any of the following: felony conviction, willful misconduct,
embezzlement, fraud, substantial and continuing neglect, gross negligence,
unauthorized use or disclosure of confidential information, or material breach
of employment agreement or non-competition agreement.
TRANSFERABILITY OF STOCK OPTIONS. Generally, only a participant may exercise
rights under a stock option during his or her lifetime, and those rights may not
be transferred except by will or by the laws of descent and distribution. When a
participant dies, the personal representative or other person entitled to
succeed to his or her rights may exercise those rights upon furnishing
satisfactory proof of that person's right to receive the stock option. The
committee may nevertheless choose to provide, with respect to non-qualified
stock options, that a participant may transfer those options to family members
or other persons or entities.
RESTRICTED STOCK GRANTS
The committee may provide a participant with an opportunity to acquire shares of
our common stock contingent upon his or her continued service or the
satisfaction of other criteria. Restricted stock differs from a stock option in
that a participant must make an immediate decision whether to make an investment
in the stock. The committee determines the amount to be paid for the stock or
may decide to grant the stock for no consideration. The committee may specify
that the restrictions will lapse over a period of time or according to any other
factors or criteria. If a participant's service terminates during the period of
any restrictions, the restricted stock grant will terminate with respect to all
shares as to which the restrictions on transfer have not lapsed unless the
committee provides for an exception to this requirement. Until the restrictions
on transfer have lapsed, a participant may not in any way dispose of the shares
of common stock to which the restriction applies. All restrictions lapse upon
the expiration of the applicable restriction period. Unless the committee
determines otherwise, however, during the restriction period the participant has
the right to vote restricted shares and receive any dividends or other
distributions paid on them, subject to any restrictions specified by the
committee.
STOCK APPRECIATION RIGHTS
The committee may provide a participant with the right to receive a benefit
measured by the appreciation in a specified number of shares of our common stock
over a period of time. The amount of this benefit is equal to the difference
between the fair market value of the stock on the exercise date and the base
amount of the stock appreciation right (SAR). Generally, the base amount of a
SAR is equal to the per share exercise price of the related stock option or, if
there is no related option, the fair market value of a share of common stock on
the date the SAR is granted. The committee may pay this benefit in cash, in
stock, or any combination of the two.
The committee may grant a SAR either separately or in tandem with all or a
portion of a stock option. SARs may be granted when the stock option is granted
or later while it remains outstanding, although in the case of an incentive
stock option, SARs may be granted only at the time the option is granted. Tandem
SARs may not exceed the number of shares of common stock that the participant
may purchase upon the exercise of the related stock option during the period.
Upon the exercise of a stock option, the SARs relating to the common stock
covered by the stock option terminate. Upon the exercise of SARs, the related
stock option terminates to the extent of an equal number of shares of common
stock.
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<PAGE> 13
SARs are subject to the same termination provisions on death, disability or
termination of service as stock options. The committee may accelerate the
exercisability of any or all outstanding SARs.
PERFORMANCE UNITS
The committee may grant performance units to a participant representing a right
to receive an amount based on the value of the performance unit if the
performance goals established by the committee are met. A performance unit may
be based on the fair market value of a share of common stock or on any other
measurement base that the committee deems appropriate. The committee will
determine the number of performance units to be granted, the requirements
applicable to the performance units, the period during which the performance
will be measured, the performance goals applicable to the performance units, and
any other conditions that the committee deems appropriate. At the end of each
performance period, the committee will determine to what extent the performance
goals and other conditions of the performance unit have been met and the amount,
if any, to be paid with respect to the performance units. Payments may be made
in cash, in common stock, or in a combination of the two, as determined by the
committee. Unless the committee provides for a complete or partial exception,
performance units are forfeited if the conditions of the grant are not met and
are subject to the same termination provisions on death, disability or
termination of service as stock options.
The committee shall establish the performance goals in writing either before the
beginning of the performance period or during a period ending no later than the
earlier of 90 days after the beginning of the performance period or the date on
which 25% of the performance period has been completed.
QUALIFIED PERFORMANCE-BASED COMPENSATION
The committee may designate performance units and restricted stock granted to an
employee as qualified performance-based compensation under section 162(m) of the
Code upon the establishment of appropriate performance goals and performance
periods as provided in section 162(m) of the Code. If restricted stock or
performance units measured with respect to the fair market value of CompuCom
common stock are granted, not more than 500,000 shares of the common stock may
be granted to an employee under the performance units or restricted stock for
any performance period. If performance units are measured with respect to other
criteria, the maximum amount that may be paid to an employee with respect to a
performance period is $1,000,000. The committee will certify and announce the
results for each performance period to all participants immediately following
the announcement of our financial results for the performance period. To the
extent the committee does not certify that the performance goals have been met,
the grants of restricted stock or performance units for the performance period
will be forfeited.
TERMINATION OF THE 2000 PLAN; AMENDMENT OF OPTIONS
The board may amend or terminate the 2000 Plan at any time. The 2000 Plan will
terminate, in any event, on February 16, 2010.
Grants made prior to termination will remain in effect after termination of the
2000 Plan unless the participant consents or unless the committee revokes or
amends a grant in accordance with the terms of the 2000 Plan. The termination of
the 2000 Plan will not impair the power and authority of the committee with
respect to outstanding grants.
ADJUSTMENT PROVISIONS
The committee will adjust the number and exercise price of outstanding grants,
as well as the number and kind of shares available
[COMPUCOM LOGO] 12
<PAGE> 14
for grants and individual limits for any single participant under the 2000 Plan,
to appropriately reflect any of the following events:
- a stock dividend, spinoff, recapitalization, stock split, or
combination or exchange of shares;
- a merger, reorganization or consolidation in which CompuCom is the
surviving corporation;
- a reclassification or change in par value;
- any other extraordinary or unusual event affecting the outstanding
common stock as a class without CompuCom's receipt of consideration;
or
- a substantial reduction in the value of outstanding shares of common
stock as a result of a spinoff or CompuCom's payment of an
extraordinary dividend or distribution.
However, fractional shares resulting from adjustments will be eliminated by
rounding up for any portion of a share equal to .5 or greater or rounding down
for any portion of a share equal to less than .5, in each case to the nearest
whole number.
REORGANIZATION; CHANGE IN CONTROL
Unless the committee determines otherwise, upon a reorganization where CompuCom
is not the surviving corporation, or survives only as a subsidiary of another
corporation, all outstanding stock options and SARs that are not exercised will
be assumed by the surviving corporation or replaced with comparable options or
rights. A reorganization is defined as a merger or consolidation of CompuCom
where the CompuCom shareholders will no longer own shares entitling the
shareholders to more than 50% of the votes of the surviving corporation; a sale
of all or substantially all of the assets of CompuCom or a liquidation or
dissolution of CompuCom.
Unless the committee determines otherwise, a change of control will not result
in the acceleration of vesting of outstanding stock options or SARs, the removal
of restrictions and conditions on outstanding restricted stock awards, or any
accelerated payments in connection with outstanding performance units.
However, the committee may elect to take the following actions:
- require that participants surrender their outstanding options and SARs
in exchange for a payment, in cash or common stock, in an amount equal
to the amount by which the then fair market value subject to the
grants exceeds the exercise price of the options or the base amount of
the SARs, or
- terminate any or all unexercised options or SARs after giving
participants an opportunity to exercise the options or SARs.
The committee does not have the right to take any actions that would make the
reorganization or change of control ineligible for pooling of interests
accounting treatment or desired tax treatment if the reorganization or change of
control would otherwise qualify for this treatment and we intend to use this
treatment with respect to the transaction.
REQUIREMENTS FOR ISSUANCE OR TRANSFER OF SHARES
The committee may require a participant to sign a shareholder's agreement with
terms as the committee deems appropriate. Shares of stock shall not be issued or
transferred until all legal requirements have been met.
FEDERAL INCOME TAX CONSEQUENCES
The current federal income tax treatment of grants under the 2000 Plan is
described below. Local and state tax authorities also may tax incentive
compensation awarded under the 2000 Plan. Because of the complexities involved
in the application of tax laws to specific circumstances and the uncertainties
as to possible future changes in those laws, we urge participants to consult
their own tax advisors concerning the application of the general principles
[COMPUCOM LOGO] 13
<PAGE> 15
discussed below to their own situations and the application of state and local
tax laws.
INCENTIVE STOCK OPTIONS. A participant will not recognize taxable income for the
purpose of the regular income tax upon either the grant or exercise of an
incentive stock option. However, for purposes of the alternative minimum tax
imposed under the Code, in the year in which an incentive stock option is
exercised, the amount by which the fair market value of the shares acquired upon
exercise exceeds the exercise price will be treated as an item of adjustment.
If a participant disposes of the shares acquired under an incentive stock option
after at least two years following the date of grant and at least one year
following the date of exercise, the participant will recognize a long-term
capital gain or loss equal to the difference between the amount realized upon
the disposition and the exercise price. CompuCom will not be entitled to any tax
deduction by reason of the grant or exercise of the incentive stock option.
If a participant disposes of shares acquired upon exercise of an incentive stock
option before satisfying both holding period requirements (known as a
disqualifying disposition), the gain recognized on the disposition will be taxed
as ordinary income to the extent of the difference between the lesser of the
sale price or the fair market value of the shares on the date of exercise and
the exercise price. CompuCom will be entitled to a federal income tax deduction
in the same amount. The gain, if any, in excess of the amount recognized as
ordinary income on a disqualifying disposition will be long-term or short-term
capital gain, depending upon the length of time the participant held the shares
before the disposition.
If a participant tenders shares of common stock received upon the exercise of an
incentive stock option to pay the exercise price within either the two-year or
one-year holding periods described above, the disqualifying disposition of the
shares used to pay the exercise cost will result in income (or loss) to the
participant and, to the extent of a recognized gain, a tax deduction to
CompuCom. If, however, the holding period requirements are met and the number of
shares received on the exercise does not exceed the number of shares
surrendered, the participant will recognize no gain or loss with respect to the
surrendered shares and will have the same basis and holding period with respect
to the newly acquired shares as with respect to the surrendered shares. To the
extent that the number of shares received exceeds the number surrendered, the
participant's basis in the excess shares will equal the amount of cash paid by
the participant upon the original exercise of the stock option, and the
participant's holding period with respect to the excess shares will begin on the
date the shares are transferred to the participant. The tax treatment described
above for shares newly received upon exercise is not affected by using shares to
pay the exercise price.
NON-QUALIFIED STOCK OPTIONS. There are no federal income tax consequences to a
participant or CompuCom upon the grant of a non-qualified stock option. Upon the
exercise of a non-qualified stock option, a participant will generally recognize
ordinary income in an amount equal to the excess of the fair market value of the
shares at the time of exercise over the exercise price, and CompuCom will be
entitled to a corresponding federal income tax deduction.
If a participant surrenders shares to pay the exercise price, and the number of
shares received on the exercise does not exceed the number of shares
surrendered, the participant will recognize no gain or loss on the surrendered
shares, and will have the same basis and holding period for the newly acquired
shares as for the surrendered shares. To the extent that the number of shares
received exceeds the number surrendered, the fair market value of the excess
shares on the date of exercise, reduced by any cash paid by the participant upon
exercise, will be includible in the gross income of the participant. The
participant's basis in the excess shares will equal the sum of the cash paid by
the
[COMPUCOM LOGO] 14
<PAGE> 16
participant upon the exercise of the stock option plus any amount included in
the participant's gross income as a result of the exercise of the stock option.
The committee may permit a participant to elect to surrender or deliver shares
otherwise issuable upon exercise, or previously acquired shares, to satisfy the
federal income tax withholding, subject to the restrictions set forth in the
2000 Plan. Such an election will result in a disposition of the shares which are
surrendered or delivered, and an amount will be included in the participant's
income equal to the excess of the fair market value of the shares over the
participant's basis in the shares.
Upon the sale of the shares acquired by the exercise of a non-qualified stock
option, a participant will have a capital gain or loss (long-term or short-term
depending upon the length of time the shares were held) in an amount equal to
the difference between the amount realized upon the sale and the participant's
adjusted tax basis in the shares (the exercise price plus the amount of ordinary
income recognized by the participant at the time of exercise of the
non-qualified stock options).
RESTRICTED STOCK. A participant normally will not recognize taxable income upon
the award of a restricted stock grant, and CompuCom will not be entitled to a
deduction, until the stock is transferable by the participant or no longer
subject to a substantial risk of forfeiture for federal tax purposes, whichever
occurs earlier. When the common stock is either transferable or is no longer
subject to a substantial risk of forfeiture, the participant will recognize
ordinary compensation income in an amount equal to the fair market value of the
common stock at that time, less any consideration paid by the participant for
the shares, and CompuCom will be entitled to a federal income tax deduction in
the same amount. A participant may, however, elect to recognize ordinary
compensation income in the year the restricted stock grant is awarded in an
amount equal to the fair market value of the common stock at that time less any
consideration paid by the participant for the shares, determined without regard
to the restrictions. In such event, CompuCom generally will be entitled to a
corresponding federal income tax deduction in the same year. Any gain or loss
recognized by the participant upon a subsequent disposition of the shares will
be capital gain or loss. If, after making the election, any shares subject to a
restricted stock grant are forfeited, or if the market value declines during the
restriction period, the participant is not entitled to any tax deduction or tax
refund if the participant does not recover any consideration paid by the
participant for the restricted stock.
STOCK APPRECIATION RIGHTS. There are no federal income tax consequences to a
participant or to CompuCom upon the grant of a SAR. Upon the exercise of a SAR,
a participant will recognize ordinary compensation income in an amount equal to
the cash and the fair market value of the shares of common stock received upon
exercise. CompuCom generally will be entitled to a corresponding federal income
tax deduction at the time of exercise. Upon the sale of any shares acquired by
the exercise of a SAR, a participant will have a capital gain or loss (long-term
or short-term depending upon the length of time the shares were held) in an
amount equal to the difference between the amount realized upon the sale and the
participant's adjusted tax basis in the shares (the amount of ordinary income
recognized by the participant at the time of exercise of the SAR).
PERFORMANCE UNITS. A participant will not recognize any income upon the grant of
a performance unit. At the time the committee determines an amount, if any, to
be paid with respect to performance units, the participant will recognize
ordinary compensation income in an amount equal to the cash and the fair market
value of the shares of common stock authorized for payment by the committee.
CompuCom generally will be entitled to a corresponding federal income tax
deduction. Upon the sale of any shares acquired, a participant will have a
capital gain or loss (long-term or short-term depending upon the length of time
the shares were held) in an amount equal to the difference between the amount
[COMPUCOM LOGO] 15
<PAGE> 17
realized upon the sale and the participant's adjusted tax basis in the shares
(the amount of ordinary income recognized by the participant upon payment of the
shares).
TAX WITHHOLDING. All grants under the 2000 Plan are subject to applicable tax
withholding requirements. We have the right to deduct from all grants paid in
cash, or from other wages paid to a participant, any taxes required by law to be
withheld with respect to the grant. If grants are paid in shares of common
stock, we may require a participant to pay the amount of any taxes that we are
required to withhold or may deduct the amount of withholding taxes from other
wages paid to the participant. If approved by the committee, the income tax
withholding obligation with respect to grants paid in common stock may be
satisfied by having shares withheld up to an amount that does not exceed the
participant's maximum marginal tax rate for federal (including FICA), state and
local tax liabilities. Our obligations under the 2000 Plan are conditional upon
the payment or arrangement for payment of any required withholding.
SECTION 162(M). Under section 162(m) of the Code, CompuCom may be precluded from
claiming a federal income tax deduction for total remuneration in excess of
$1,000,000 paid to the chief executive officer or to any of the other four most
highly compensated officers in any one year. Total remuneration may include
amounts received upon the exercise of stock options and SARs granted under the
2000 Plan, the value of shares subject to restricted stock grants when the
shares become nonforfeitable (or such other time when income is recognized) and
the amounts received pursuant to other grants under the 2000 Plan. An exception
does exist, however, for "performance-based compensation." Grants of stock
options and SARs generally will meet the requirements of "performance-based
compensation." Restricted stock grants generally will not qualify as, and
performance units may not qualify as, "performance-based compensation."
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<PAGE> 18
PROPOSAL TO AMEND THE EMPLOYEE STOCK PURCHASE PLAN
Item 3 on Proxy Card
THE BOARD RECOMMENDS A VOTE FOR APPROVAL OF THIS AMENDMENT. APPROVAL OF THIS
AMENDMENT 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 IS PRESENT, EITHER IN PERSON OR BY PROXY, AND VOTING ON THIS AMENDMENT.
CompuCom stockholders are being asked to approve the adoption of an amendment to
the CompuCom Systems, Inc. Employee Stock Purchase Plan (the "Purchase Plan").
The amendment increases to 2,000,000 the number of shares reserved for issuance
thereunder. The Purchase Plan was approved by the board of directors on February
19, 1998, with a total of 1,000,000 shares reserved for issuance thereunder. The
purpose of the Purchase Plan is to provide employees of CompuCom and any
majority owned subsidiaries that adopt the Purchase Plan with an opportunity to
purchase common stock from CompuCom through payroll deductions and to provide
CompuCom with the ability to attract, retain, and motivate the best people
available for the successful conduct of our business. The essential features of
the Purchase Plan are outlined below.
OFFERING PERIOD
Offerings under the Purchase Plan have a duration of six months. A new offering
period begins on the first day of each six calendar month period beginning on
each January 1 and July 1 of a calendar year and ending at the end of such six
month period, unless changed by the committee appointed by the board of
directors that administers the Purchase Plan (the "Committee").
GRANT AND EXERCISE OF OPTION
On the first day of an offering period (the "Enrollment Date"), the participant
is granted an option to purchase on the last day of the offering period (the
"Exercise Date") up to a number of shares of the common stock determined by
dividing 10% of the participant's Compensation (as defined in the "Payroll
Deductions" section, below) by the exercise price, which shall not be less than
the lower of (i) 85% of the fair market value of a share of the common stock on
the Enrollment Date or (ii) 85% of the fair market value of a share of common
stock on the Exercise Date. Compensation in excess of $75,000 per offering
period will be disregarded. The exercise price shall be determined by the
Committee. The number of shares subject to such option shall be reduced, if
necessary, to maintain the limitations with respect to a participant's ownership
of stock and/or options to purchase stock possessing 5% or more of the total
combined voting power or value of all classes of stock of CompuCom or any
majority owned subsidiary, and to restrict a participant's right to purchase
stock under the Purchase Plan to $25,000 in fair market value of such stock
(determined at the time the option is granted) for each calendar year in which
such option is outstanding at any time. Unless the employee has withdrawn from
the offering period, his or her option for the purchase of shares will be
exercised automatically on the Exercise Date at the applicable price.
SHARES AVAILABLE UNDER THE PURCHASE PLAN
If this proposal is adopted, the total number of shares of common stock that are
issuable under the Purchase Plan will be 2,000,000 shares.
ELIGIBILITY AND PARTICIPATION
Any employee who is customarily employed for at least 20 hours per week and more
than five months per calendar year by CompuCom is eligible to participate in
offerings under the Purchase Plan. Employees of subsidiaries that adopt the
Purchase Plan with CompuCom's approval
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<PAGE> 19
will be eligible on the same basis. Employees become participants in the
Purchase Plan by delivering to CompuCom a subscription agreement authorizing
payroll deductions within the specified period of time prior to the Enrollment
Date.
No employee is permitted to purchase shares under the Purchase Plan if such
employee owns 5% or more of the total combined voting power or value of all
classes of shares of stock of CompuCom (including shares that may be purchased
under the Purchase Plan or pursuant to any other options). In addition, no
employee is entitled to purchase more than $25,000 worth of shares (based on the
fair market value of the shares at the time the option is granted) in any
calendar year.
PURCHASE PRICE
The Committee will set the price at which shares are sold under the Purchase
Plan, which will not be less than 85% of the fair market value per share of
common stock at either the Enrollment Date or at the Exercise Date, whichever is
lower.
PAYROLL DEDUCTIONS
The purchase price of the shares is accumulated by payroll deduction over each
offering period. The deductions may not be greater than 10% of a participant's
compensation. "Compensation" for purposes of the Purchase Plan shall mean base
pay or regular straight-time earnings plus commissions, and overtime, but
excluding any imputed benefits or pay, bonuses, relocation expense, expense
reimbursements, or other similar items. Compensation in excess of $75,000 per
offering period will be disregarded.
All payroll deductions of a participant are credited to his or her account under
the Purchase Plan and are deposited with the general funds of CompuCom. Such
funds may be used for any corporate purpose pending the purchase of shares.
ADMINISTRATION
The Purchase Plan is administered by the Committee, which shall have all powers
with respect to the Purchase Plan, except for amending or terminating the
Purchase Plan.
WITHDRAWAL FROM THE PLAN
A participant may terminate his or her interest in a given offering by
withdrawing all, but not less than all, of the accumulated payroll deductions
credited to such participant's account at any time prior to the end of the
offering period. The withdrawal of accumulated payroll deductions automatically
terminates the employee's interest in that offering as the case may be. As soon
as practicable after such withdrawal, the payroll deductions credited to a
participant's account are returned to the participant without interest.
A participant's withdrawal from an offering does not have any effect upon such
participant's eligibility to participate in subsequent offerings under the
Purchase Plan.
TERMINATION OF EMPLOYMENT
Termination of a participant's employment for any reason, including retirement,
death, or the failure to remain in the continuous employ of CompuCom for at
least 20 hours per week (except for certain leaves of absence), cancels his or
her participation in the Purchase Plan immediately. In such event, the payroll
deductions credited to the participant's account will be returned to the
participant or, in the case of death, to the person or persons entitled thereto
without interest.
CAPITAL CHANGES
In the event of changes in the common stock of CompuCom due to a stock split or
other changes in capitalization, or in the event of any merger, sale,
reclassification, or any other reorganization, appropriate adjustments will be
made by CompuCom to
[COMPUCOM LOGO] 18
<PAGE> 20
the shares subject to purchase and to the price per share.
NONASSIGNABILITY
No rights or accumulated payroll deductions of a participant under the Purchase
Plan may be pledged, assigned or transferred for any reason, and any such
attempt may be treated by the Committee as an election to withdraw from the
Purchase Plan.
AMENDMENT AND TERMINATION OF THE PURCHASE PLAN
The board of directors of CompuCom may at any time amend or terminate the
Purchase Plan; however, such termination cannot affect options previously
granted nor may any amendment make any change in an existing option that
adversely affects the rights of any participant, except as necessary to comply
with tax or securities laws. No amendment may be made to the Purchase Plan
without prior approval of the stockholders of CompuCom if such amendment would
increase the number of shares that may be issued under the Purchase Plan, permit
payroll deductions at a rate in excess of 10% of a participant's compensation,
change the designation of the employees eligible for participation in the
Purchase Plan or constitute an amendment for which stockholder approval is
required in order to comply with Rule 16b-3, or any successor rule.
TAX INFORMATION
The Purchase Plan and the right of participants to make purchases thereunder is
intended to qualify under the provisions of Section 423 of the Internal Revenue
Code (the "Code"), which incorporates by reference the tax treatment provisions
of Section 421 of the Code. Under these provisions, no income will be taxable to
a participant at the time of grant of the option or purchase of shares. Upon
disposition of the shares, the participant generally will be subject to tax and
the amount of the tax will depend upon the holding period. If the shares have
been held by the participant for more than two (2) years after the Enrollment
Date and one (1) year from the Exercise Date, the amount of ordinary income will
be the lesser of (a) the excess of the fair market value of the shares at the
time of disposition over the purchase price, or (b) the excess of the fair
market value of the shares at the time the option was granted over the purchase
price (which purchase price will be computed as of the Enrollment Date), and any
further gain will be treated as long-term capital gain. If the shares are
disposed of before the expiration of these holding periods, the excess of the
fair market value of the shares on the Exercise Date over the purchase price
will be treated as ordinary income. The Company is not entitled to a deduction
for amounts taxed as ordinary income or capital gain to a participant except to
the extent of ordinary income reported by participants upon disposition of
shares prior to the expiration of the holding period described above.
The foregoing is only a summary of the effect of federal income taxation upon
the participant and CompuCom with respect to the shares purchased under the
Purchase Plan. Reference should be made to the applicable provisions of the
Code. In addition, this summary does not discuss the tax consequences of a
participant's death or the income tax laws of any state or foreign country in
which the participant may reside.
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<PAGE> 21
STOCK OWNERSHIP OF DIRECTORS, EXECUTIVE
OFFICERS AND GREATER THAN 5%
STOCKHOLDERS AS OF MARCH 31, 2000:
<TABLE>
<CAPTION>
SHARES OPTIONS SHARES
BENEFICIALLY EXERCISABLE BENEFICIALLY
NAME OWNED WITHIN 60 DAYS OWNED PERCENT OF
OF MARCH 31, ASSUMING SHARES
2000 EXERCISE
OF OPTIONS
------------ -------------- ------------ -----------
<S> <C> <C> <C> <C>
Safeguard Scientifics, Inc. 26,666,538 0 26,666,538 52.4%
800 The Safeguard building
435 Devon Park Drive
Wayne, PA 19087
T. Rowe Price Associates, Inc. 2,469,200 0 2,469,200 5.1%
100 E. Pratt Street
Baltimore, MD 21202
J. Edward Coleman 30,000 0 30,000 *
Michael J. Emmi 0 20,500 20,500 *
Richard F. Ford 20,000 10,500 30,500 *
Edwin L. Harper 1,000 0 1,000 *
Delbert W. Johnson 23,275 12,500 35,775 *
David A. Loeser 210 25,000 25,210 *
John D. Loewenberg 9,375 33,500 42,875 *
Thomas C. Lynch 501,090 0 501,090 1.0%
Warren V. Musser 522,147 0 522,147 1.1%
Anthony J. Paoni 1,000 2,500 3,500 *
Edward N. Patrone 0 20,500 20,500 *
M. Lazane Smith 7,318 121,500 128,818 *
Harry Wallaesa 1,757 0 1,757 *
Edward R. Anderson 0 0 0
John Lyons 0 0 0
Executive officers and directors as a
group (16 persons) 1,117,172 246,500 1,363,672 2.8%
</TABLE>
* Less than 1% of CompuCom's outstanding shares of common stock
Each individual has the sole power to vote and to dispose of the shares
(other than shares held jointly with spouse) except for the following
shares:
Safeguard Scientifics, Inc. Includes 22,087,848 shares held by
Safeguard Scientifics (Delaware), Inc.,
1,029,700 shares held by Safeguard
Delaware, Inc., and 1,333,333 shares held
by CompuShop, Inc., wholly-owned
subsidiaries of Safeguard Scientifics,
Inc. Safeguard Scientifics (Delaware),
Inc. also holds 1,500,000 shares of
Series B preferred shares. Those shares
are convertible into 2,215,657 shares of
common stock, which also are included.
T. Rowe Price Associates, Inc. These securities are owned by various
individuals and institutional investors
which T. Rowe Price, Inc. (Price
Associates) serves as investment adviser
with power to direct investments and/or
sole power to vote securities. For
purposes of the reporting requirements of
the Securities Exchange Act of 1934,
Price Associates is deemed to be a
beneficial owner of such securities;
however,
[COMPUCOM LOGO] 20
<PAGE> 22
Price Associates expressly disclaims that
it is, in fact, the beneficial owner of
such securities.
Edwin L. Harper Includes 1,000 shares held in a Revocable
Trust.
Delbert W. Johnson Includes 10,775 shares held in a
Remainder Trust.
John D. Loewenberg Includes 9,375 shares held by his spouse.
Thomas C. Lynch Includes 1,000 shares held in a spousal
trust, of which Mr. Lynch disclaims
beneficial ownership.
Warren V. Musser Includes 25,564 shares held by a
charitable foundation of which Mr. Musser
is an officer and director, and 53,300
shares held by two trusts of which Mr.
Musser is a co-trustee. Excludes
26,666,538 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 Safeguard.
SHARES OWNED BY DIRECTORS AND OFFICERS OF PARENT AND SUBSIDIARY CORPORATIONS:
Safeguard is the parent corporation of CompuCom. As of March 31, 2000, executive
officers and directors of CompuCom beneficially owned the following percentage
of the outstanding shares of Safeguard common stock:
Mr. Musser 8.5%
All other officers and directors of CompuCom, as a group, beneficially own less
than 1% of Safeguard stock.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION:
Mr. Wallaesa, a member of our compensation committee, served as our acting CEO
from July 1999 through November 1999. Mr. Wallaesa is president and chief
operating officer of Safeguard Scientifics, Inc. Mr. Wallaesa did not receive
any compensation from CompuCom in 1999.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE: The rules of the
Securities and Exchange Commission require that we disclose late filings of
reports of stock ownership by our directors and executive officers. To the best
of our knowledge, the only late filing during 1999 was a Form 3 by David A.
Loeser.
[COMPUCOM LOGO] 21
<PAGE> 23
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total return on our common stock for
the period from December 31, 1994, through December 31, 1999, with the
cumulative total return on the Nasdaq Index and the peer group index for the
same period.
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C>
CompuCom 100 304 344 264 112 132
NASDAQ 100 141 174 213 300 546
Peer Group 100 130 175 154 145 150
</TABLE>
1. The peer group consists of SIC Code 5045 -- Computer, Peripheral Equipment
and Software Wholesalers, with a 50% weighting for each SIC Code.
2. We have historically reinvested earnings in the growth of our business and
have not paid cash dividends on our common stock.
3. Assumes an investment of $100 on December 31, 1994.
[COMPUCOM LOGO] 22
<PAGE> 24
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
COMPENSATION PHILOSOPHY
Our mission is to succeed in a highly competitive business and achieve maximum
returns for our stockholders by being the leader in providing IT infrastructure
solutions to large enterprises based on a strategy of customer intimacy and
operational efficiency.
Our philosophy is to align the compensation of senior management and other
employees with that mission and the long-term interests of our stockholders.
This philosophy also helps us to:
- - attract and retain outstanding employees who can thrive in a competitive
environment of continuous change,
- - promote among our employees the economic benefits of stock ownership, and
- - motivate and reward employees who, by their hard work, loyalty and
exceptional service, make contributions of special importance to the
success of our business.
COMPENSATION STRUCTURE
The compensation of our executives consists of:
- - base salary,
- - annual cash incentives, and
- - stock options.
BASE PAY
Base pay is established initially on a combination of factors, including a
review of various published salary surveys, and certain subjective factors
including experience and achievements of the individual and the level of
responsibility assumed at CompuCom. Salary increases for our CEO and other
highly compensated executives for 1999 were based on:
- - level of achievement of financial and strategic objectives,
- - individual performance, and contributions to the achievement of our
objectives.
ANNUAL CASH INCENTIVES
Annual cash incentives are intended to create an incentive for executives who
significantly contribute to and influence our strategic plans and are
responsible for our performance. Our primary objectives are to:
- - focus executives' attention on areas such as profitability and asset
management,
- - encourage teamwork, and
- - tie executives' pay to corporate performance goals consistent with
long-term performance goals of our stockholders.
Incentives are generally awarded based on the achievement of annual financial
and/or strategic goals approved by the compensation committee at the beginning
of the year, which goals may include target ranges of:
- - pretax earnings,
- - earnings per share,
- - return on equity, or
- - some other objective measurement consistent with long-term goals of our
stockholders.
Incentives may also be awarded based upon individual performance.
The committee determines a range of potential incentive amounts for each
executive, stated as a percentage of base salary, and based upon the executive's
ability to impact our performance.
[COMPUCOM LOGO] 23
<PAGE> 25
Incentives are awarded at year-end based on the actual achievement level of the
specified corporate goals compared to the target range of achievement.
Additional amounts may be awarded for outstanding individual performance. For
1999, the compensation committee determined that, based on CompuCom's
performance, there would be incentive awards.
MR. COLEMAN'S 1999 CASH INCENTIVE. As part of his employment agreement, Mr.
Coleman received a one-time signing bonus of $100,000.
OTHER HIGHLY COMPENSATED EXECUTIVES' BONUS COMPENSATION. The compensation
committee approved executive cash bonuses equal to approximately 100% of the
applicable target bonus amounts.
STOCK OPTIONS
Stock options are intended to align the interests of executives and key
employees with the long-term interests of our stockholders and other investors
and to encourage executives and key employees to remain in our employ. Grants
are not made in every year, but are awarded subjectively based on the following
factors including:
- - individual's level of responsibility,
- - amount and term of options already held by the individual,
- - individual's contributions to the achievement of our financial and
strategic objectives, and
- - our achievement of financial and strategic objectives, which may include:
- developing strategic alliances,
- identifying and exploiting markets,
- expanding existing market share and penetration,
- expanding operating capabilities, and
- improving net operating margins.
1999 STOCK OPTION AWARDS. The committee granted stock options during 1999 to all
directors who are not employees of Safeguard or CompuCom, certain executives
upon joining CompuCom and other executives and employees.
IRS LIMITS ON DEDUCTIBILITY OF COMPENSATION.
The committee is aware that Internal Revenue Code section 162(m) 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
compensation tables that is not "performance based" as defined in section
162(m). The committee believes that annual levels of executive compensation that
are not performance based are not likely to exceed one million dollars in the
foreseeable future.
Submitted by the compensation committee:
Richard D. Ford, Chairman
Warren V. Musser
Harry Wallaesa
[COMPUCOM LOGO] 24
<PAGE> 26
EXECUTIVE COMPENSATION & OTHER ARRANGEMENTS
1999 ANNUAL COMPENSATION FOR THE TOP SEVEN OFFICERS
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
AWARDS
- -------------------------------------------------------------------- ----------------------
SECURITIES UNDERLYING ALL OTHER
OPTIONS/SARS (#) COMPENSATION
NAME AND PRINCIPAL ($)(3)
POSITION YEAR SALARY ($)(1) BONUS ($)(2)
- ------------------------- ------ --------------- ------------ --------------------- -----------------
<S> <C> <C> <C> <C> <C>
J. Edward Coleman, 1999 $ 26,750 $ 100,000 800,000 $ 0
Chief Executive Officer(4)
Edward R. Anderson, 1999 $ 343,136 $ 0 0 $ 112,946
Former President and Chief
Executive Officer(4) 1998 360,000 12,833 0 191,409
1997 360,000 530,122 300,000 11,875
Harry Wallaesa, 1999 $ 330,770 $1,386,176 1,590,000(6) $ 10,970(7)
Chairman of the Board and
Former acting Chief
Executive Officer(5)
Thomas C. Lynch, President 1999 $ 360,000 $ 360,000 0 $ 16,055
and Chief Operating Officer
1998 55,385 100,000 500,000 0
M. Lazane Smith, Senior 1999 $ 260,000 $ 206,000 0 $ 3,571
Vice President, Finance and
Chief Financial Officer 1998 220,000 1,581 200,000 3,489
1997 187,000 121,444 50,000 2,375
David A. Loeser, Senior 1999 $ 142,307 $ 100,000 100,000 $ 0
Vice President, Human
Resources(4)
John Lyons, Former Senior 1999 $ 169,231 $ 85,230 200,000 $ 0
Vice President, Sales(4)
</TABLE>
[COMPUCOM LOGO] 25
<PAGE> 27
NOTES TO ANNUAL COMPENSATION TABLE:
(1) Includes compensation that has been deferred by the top officers under
defined contribution plan.
(2) With respect to Mr. Anderson and Ms. Smith, includes 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, 25% was
paid in February 1998, and 25% was paid in 1999.
(3) For 1999, all other compensation includes the following:
<TABLE>
<CAPTION>
Company Match Life Insurance Amounts Paid
Name Defined Contribution Premiums Paid Pursuant to
Plan Employment
Arrangements
---------------------------- ---------------------- -------------------- --------------------
<S> <C> <C> <C>
Edward R. Anderson $ 3,571 $ $ 109,375
Thomas C. Lynch 3,571 12,484
M. Lazane Smith 3,571
</TABLE>
(4) Mr. Coleman became chief executive officer in December 1999; Mr. Loeser
became senior vice president, human resources in April 1999. Mr. Anderson
served as president and chief executive officer and Mr. Lyons served as
senior vice president, sales, until their resignations in July 1999 and
February 2000, respectively.
(5) Mr. Wallaesa is an executive officer of Safeguard and served as chief
executive officer of CompuCom from July 1999 through November 1999. The
cash compensation amounts reported in this table with respect to Mr.
Wallaesa are monies which have been paid by Safeguard and which represent
compensation for services rendered to Safeguard for the benefit of
Safeguard and its affiliated partnership companies, including CompuCom. No
cash compensation has been paid to Mr. Wallaesa directly by CompuCom.
CompuCom pays Safeguard a fee pursuant to an Administrative Services
Agreement. These fees are used by Safeguard to cover a portion of its
overhead, including compensation paid to its officers and employees. See
"Relationships and Related Transactions with Management and Others."
(6) Represents options granted to Mr. Wallaesa by Safeguard to purchase shares
of Safeguard common stock.
(7) The amount reported for Mr. Wallaesa represents contributions of $7,200
made by Safeguard under its defined contribution pension plan and $3,770 of
life insurance premiums paid by Safeguard.
[COMPUCOM LOGO] 26
<PAGE> 28
1999 STOCK OPTION GRANTS
The following table relates to options to acquire CompuCom common
stock, unless otherwise noted in the footnotes.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(1)
- ------------------------------------------------------------------------------------------- ----------------------------
% OF TOTAL
NUMBER OF OPTIONS/
SECURITIES SARS
UNDERLYING GRANTED TO
OPTIONS/ EMPLOYEES IN EXERCISE OR
SARS FISCAL BASE PRICE EXPIRATION 5% 10%
NAME GRANTED (#)(2) YEAR ($/SH)(3) DATE ($) ($)
---- -------------- ---- --------- ---- --- ---
<S> <C> <C> <C> <C> <C> <C>
J. Edward Coleman 800,000 42.0% $ 3.1875 12/01/09 $1,603,681 $ 4,064,043
Edward R. Anderson 0 0% - - - -
Harry Wallaesa 1,500,000(4) 37.65%(5) 12.3542(6) 03/01/07 $8,847,870 $21,192,187
90,000 2.26% 45.4687 12/15/07 $1,953,835 $ 4,679,775
Thomas C. Lynch 0 0% - - - -
M. Lazane Smith 0 0% - - - -
David Loeser 100,000 5.0% 3.3125 04/05/09 $ 208,321 $ 527,927
John Lyons (7) 200,000 10.0% 3.625 05/13/09 $ 455,949 $ 1,155,463
</TABLE>
(1) These values assume that the shares appreciate at the compounded annual
rate shown from the grant date until the end of the option term. These
values are not estimates of future price growth of our stock.
Executives will not benefit unless the common stock price increases
above the stock option exercise price.
(2) We granted an option to Mr. Coleman to acquire shares of common stock.
The option vests 25% each year beginning on December 1, 2000, and has a
ten-year term. Mr. Coleman may exercise the option at any time. If his
employment is terminated, we may repurchase the unvested shares
purchased by Mr. Coleman at the exercise price. The option exercise
price may be paid in cash, by delivery of previously acquired shares,
subject to certain conditions, or same-day sales (that is, a cashless
exercise through a broker). The compensation committee may modify the
terms of outstanding options, including acceleration of the exercise
date.
(3) All options have an exercise price equal to or greater than the fair
market value on the grant date of the shares subject to each option.
The option exercise price may be paid in cash, by delivery of
previously acquired shares, subject to certain conditions, or same-day
sales (that is, a cashless exercise through a broker). The compensation
committee, upon exercise of an option, may elect to pay an individual,
in cash or in common stock, the difference between the exercise price
and the fair market value on the exercise date. The compensation
committee may modify the terms of outstanding options, including
acceleration of the exercise date.
(4) These options are for Safeguard stock and have an eight-year term and
vest 25% each year commencing on the first anniversary of the grant. If
an executive retires on or after his 65th birthday, the options will
become fully vested on his retirement date. Certain of the options
reported in the above table may be exercised at any time. If an
executive exercises unvested options and his employment is terminated,
Safeguard may repurchase the unvested shares at the exercise price. The
option exercise price may be paid in cash, by delivery of previously
acquired shares, subject to certain conditions, or same-day sales (that
is, a cashless exercise through a broker), or such other method as the
Safeguard compensation committee may approve. The Safeguard
compensation committee may modify the terms of outstanding options,
including acceleration of the exercise date.
(5) Based on the total of all options granted by Safeguard to its employees
in 1999.
(6) All options have an exercise price equal to the fair market value of
the shares subject to each option on the grant date.
(7) Mr. Lyons resigned in February 2000. All stock options were terminated
at that time.
[LOGO] COMPUCOM(TM) 27
<PAGE> 29
1999 STOCK OPTION EXERCISES AND YEAR-END STOCK OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS/SARS IN-THE-MONEY OPTIONS/SARS
ACQUIRED AT FISCAL YEAR-END (#) AT FISCAL YEAR-END ($) (1)
ON VALUE
NAME EXERCISE (#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
J. Edward Coleman 30,000 $28,125 0 770,000 0 $ 721,875
Edward R. Anderson 0 0 0 0 0 0
Harry Wallaesa 0 0 0 1,590,000 0 $63,766,464
Thomas C. Lynch 0 0 0 0 0 0
M. Lazane Smith 0 0 107,500 192,500 $54,406 $ 106,719
David Loeser 0 0 0 100,000 0 $ 81,250
John Lyons 0 0 0 200,000 0 $ 100,000
</TABLE>
(1) Value is calculated using the difference between the option exercise
price and the year-end stock price, multiplied by the number of shares
subject to an option. The year-end stock price used was $4.125 for each
share of CompuCom common stock and $54.3333 for each share of Safeguard
common stock.
[LOGO] COMPUCOM(TM) 28
<PAGE> 30
EMPLOYMENT CONTRACTS; SEVERANCE AND CHANGE-IN-CONTROL ARRANGEMENTS
J. Edward Coleman entered into an employment agreement with CompuCom that
provides for his employment as an executive officer until the employment
relationship is terminated under certain conditions, at a minimum monthly salary
of $44,583. As part of the employment agreement, Mr. Coleman received a one-time
signing bonus of $100,000. In addition, Mr. Coleman was granted a non-qualified
stock option to purchase 800,000 shares of CompuCom at an exercise price per
share equal to the closing price of CompuCom's common stock on the date his
employment commenced. This option will become exercisable in equal increments
over four years. The agreement entitles Mr. Coleman to a bonus of up to 120% of
his base salary. CompuCom is required to purchase a renewable term life
insurance policy in the amount of $1,000,000, payable to Mr. Coleman's
designated beneficiary, and a comprehensive long-term disability insurance
policy and provides Mr. Coleman with other standard benefits available to senior
management. If employment is terminated without cause, or if CompuCom demotes
him or reduces his salary or benefits below the level described in his
agreement, Mr. Coleman will be entitled to payment of his salary for two years.
Mr. Coleman has agreed not to compete with CompuCom for two years after his
voluntary termination of employment, and if his employment is terminated for any
reason other than due cause, for the same period of time for which he receives
compensation. Within 10 days of a change in control, all unvested stock options
held by Mr. Coleman to purchase shares of CompuCom will be vested. If he
voluntarily leaves within six months of a change in control, he will be entitled
to receive, in lump sum payment, all payments due to him.
M. Lazane Smith entered into an employment agreement with CompuCom that provides
for her employment as an executive officer through October 24, 1999, subject to
annual renewals, at a minimum monthly salary of $16,666. The agreement entitles
Ms. Smith to a bonus of up to 50% of her base salary. CompuCom is required to
purchase a renewable term life insurance policy in the amount of $1,000,000,
payable to Ms. Smith's designated beneficiary, and a comprehensive long-term
disability insurance policy and provides Ms. Smith with other standard benefits
available to senior management. If her employment is terminated without cause,
or if CompuCom demotes her or reduces her salary or benefits below the level
described in her agreement, Ms. Smith will be entitled to payment of her salary
for the remaining term of the agreement. Ms. Smith has agreed not to compete
with Compucom for two years after her voluntary termination of employment, and
if her employment is terminated for any reason other than due cause, for the
same period of time for which she receives compensation. Within 10 days of a
change in control, all unvested stock options held by Ms. Smith to purchase
shares of CompuCom will be vested. if she voluntarily leaves within six months
of a change in control, she will be entitled to receive, in a lump sum payment,
all payments due to her for the remainder of the agreement.
In February 2000, CompuCom accepted the resignation of John Lyons as senior vice
president, sales. CompuCom entered into a severance agreement providing for the
continuation of Mr. Lyons' 1999 base salary through January 2001, subject to
certain conditions. All unvested stock options were terminated in January 2000.
Mr. Lyons agreed not to compete with CompuCom for the length of the severance
period.
RELATIONSHIPS AND RELATED TRANSACTIONS WITH MANAGEMENT AND OTHERS
In 1994, Edward R. Anderson exercised an option to purchase 350,000 shares of
CompuCom common stock and delivered to CompuCom a full recourse promissory note
in the amount of $1,181,250 in payment of the exercise price. Interest on the
note accrues at the rate of 6% per annum and was initially payable on an annual
basis. The note was replaced with a new note in February 1997 that extended the
due date to February 1999. That note was amended
[LOGO] COMPUCOM(TM) 29
<PAGE> 31
in February 1999 to extend the due date to October 20, 2001, and to provide for
payment of interest at maturity rather than on an annual basis. The highest
outstanding balance during 1998 was $900,000, and the balance outstanding at
February 28, 1999 was $900,000. The note was secured by a pledge of 266,667
shares of CompuCom common stock.
In October 1998, CompuCom loaned Edward Anderson the sum of $2,021,875, which
provided Mr. Anderson with the funds to pay the cost of exercising his stock
options to acquire 647,000 shares of stock in October 1998. The loan was
evidenced by a full recourse promissory note, which bore interest at the annual
rate of 5.1% and was secured by a pledge of 647,000 shares of CompuCom common
stock. The principal and interest were originally payable on October 22, 2001.
In January 2000, Mr. Anderson transferred 685,635 shares of CompuCom common
stock to CompuCom in satisfaction of the outstanding principal and interest
balances on the two notes described above.
In December 1998, CompuCom loaned Thomas Lynch the sum of $796,875 which
provided Mr. Lynch with funds to pay the cost of exercising his stock options to
acquire 500,000 shares of stock and to pay related taxes in October 1998. The
loan is evidenced by a full recourse promissory note, which bears interest at
the annual rate of 4.55% and is secured by a pledge of 500,000 shares of
CompuCom common stock. The principal and interest will be payable on December
31, 2001.
CompuCom pays Safeguard an administrative support service fee equal to 1/4 of
1% of net sales, up to a maximum of $600,000 annually, including reimbursement
of certain out-of-pocket expenses incurred by Safeguard. The administrative
support services include consultation regarding our general management, investor
relations, financial management, certain legal services, insurance programs
administration, and tax research and planning, but does not cover extraordinary
services or services that are contracted out. The agreement is subject to
termination by Safeguard or CompuCom upon notice 90 days prior to the end of any
fiscal year. CompuCom incurred charges from Safeguard of $600,000 during 1999
for these services.
During 1999, CompuCom incurred approximately $1,900,000 of consulting-related
expenses from aligne incorporated. Mr. Wallaesa, chairman of the board of
CompuCom, served as president and chief executive officer of aligne incorporated
until March 1999. CompuCom believes that the terms of these consulting-related
expenses were similar to those obtainable from unrelated parties.
INDEPENDENT PUBLIC ACCOUNTANTS
Since 1987, we have retained KPMG LLP as our independent public accountants and
intend to retain KPMG LLP for the current year ending December 31, 2000.
Representatives of KPMG 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.
[LOGO] COMPUCOM(TM) 30
<PAGE> 32
PROXY
COMPUCOM SYSTEMS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Please sign and date this proxy, and indicate how you wish to vote, on the back
of this card. Please return this card promptly in the enclosed envelope. YOUR
VOTE IS IMPORTANT.
When you sign and return this proxy card, you
- - appoint J. Edward Coleman and M. Lazane Smith, and each of them (or any
substitutes they may appoint), as proxies to vote your shares, as you
have instructed, at the annual meeting on May 18, 2000, and at any
adjournments of that meeting,
- - authorize the proxies to vote, in their discretion, upon any other
business properly presented at the meeting, and
- - revoke any previous proxies you may have signed.
IF YOU DO NOT INDICATE HOW YOU WISH TO VOTE, THE PROXIES WILL VOTE FOR ALL
NOMINEES TO THE BOARD OF DIRECTORS, AND AS THEY MAY DETERMINE, IN THEIR
DISCRETION, WITH REGARD TO ANY OTHER MATTER PROPERLY PRESENTED AT THE MEETING.
- FOLD AND DETACH HERE -
<PAGE> 33
Please mark[X]
your votes as
indicated in
this example
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3.
1. ELECTION OF DIRECTORS
Nominees:
Michael J. Emmi Edwin L. Harper
J. Edward Coleman Warren V. Musser
Richard F. Ford Anthony J. Paoni
Delbert W. Johnson Edward N. Patrone
John D. Loewenberg Harry Wallaesa
Thomas C. Lynch
FOR - WITHHELD -
FOR ALL
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. THE 2000 EQUITY COMPENSATION FOR - WITHHELD - ABSTAIN -
PLAN.
3. AMENDMENT TO THE EMPLOYEE STOCK FOR - WITHHELD - ABSTAIN -
PURCHASE PLAN TO INCREASE THE NUMBER
OF SHARES AUTHORIZED FOR ISSUANCE
SIGNATURE(S) DATE: , 2000
--------------------------------- --------------
YOU MUST SIGN EXACTLY AS YOUR NAME APPEARS ON THIS CARD. If shares are jointly
owned, you must both sign. Include title if you are signing as an attorney,
executor, administrator, trustee or guardian, or on behalf of a corporation or
partnership.
- FOLD AND DETACH HERE -
YOUR 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.
[COMPUCOM LOGO]
<PAGE> 34
Exhibit A
COMPUCOM SYSTEMS, INC.
2000 EQUITY COMPENSATION PLAN
The purpose of the CompuCom Systems, Inc. 2000 Equity Compensation Plan
(the "Plan") is to provide (i) designated employees of CompuCom Systems, Inc.
(the "Company") and its subsidiaries, (ii) individuals to whom an offer of
employment has been extended, (iii) certain advisors who perform services for
the Company or its subsidiaries, and (iv) non-employee members of the Board of
Directors of the Company (the "Board") with the opportunity to receive grants of
incentive stock options, nonqualified stock options, stock appreciation rights,
restricted stock and performance units. The Company believes that the Plan will
encourage the participants to contribute materially to the growth of the
Company, thereby benefiting the Company's shareholders, and will align the
economic interests of the participants with those of the shareholders.
1. Administration
(a) Committee. The Plan shall be administered and interpreted
by a committee appointed by the Board (the "Committee"). The Committee shall
consist of two or more persons appointed by the Board, all of whom may be
"outside directors" as defined under section 162(m) of the Internal Revenue Code
of 1986, as amended (the "Code") and related Treasury regulations and may be
"non-employee directors" as defined under Rule 16b-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Except to the extent
prohibited by applicable law or the applicable rules of a stock exchange, the
Committee may allocate all or any portion of its responsibilities and powers to
any one or more of its members or may delegate all or any part of its
responsibilities and powers to any person or persons selected by it. Any such
allocation or delegation may be revoked by the Committee at any time. If the
Committee does not exist, or for any other reason determined by the Board, the
Board may take any action under the Plan that would otherwise be the
responsibility of the Committee.
(b) Committee Authority. The Committee shall have the sole
authority to (i) determine the individuals to whom grants shall be made under
the Plan, (ii) determine the type, size and terms of the grants to be made to
each such individual, (iii) determine the time when the grants will be made and
the duration of any applicable exercise or restriction period, including the
criteria for exercisability and the acceleration of exercisability, and (iv)
deal with any other matters arising under the Plan.
(c) Committee Determinations. The Committee shall have full
power and authority to administer and interpret the Plan, to make factual
determinations and to adopt or amend such rules, regulations, agreements and
instruments for implementing the Plan and for the conduct of its business as it
deems necessary or advisable, in its sole discretion. The Committee's
interpretations of the Plan and all determinations made by the Committee
pursuant to the powers vested in it hereunder shall be conclusive and binding on
all persons having any interest in the Plan or in any awards granted hereunder.
All powers of the Committee shall be executed in its sole discretion, in the
best interest of the Company, not as a fiduciary, and in keeping with the
objectives of the Plan and need not be uniform as to similarly situated
individuals.
<PAGE> 35
2. Grants
Awards under the Plan may consist of grants of incentive stock options
as described in Section 5 ("Incentive Stock Options"), nonqualified stock
options as described in Section 5 ("Nonqualified Stock Options") (Incentive
Stock Options and Nonqualified Stock Options are collectively referred to as
"Options"), restricted stock as described in Section 6 (Restricted Stock"),
stock appreciation rights as described in Section 7 ("SARs"), and performance
units as described in Section 8 ("Performance Units") (hereinafter collectively
referred to as "Grants"). All Grants shall be subject to the terms and
conditions set forth herein and to such other terms and conditions consistent
with this Plan as the Committee deems appropriate and as are specified in
writing by the Committee to the individual in a grant instrument (the "Grant
Instrument") or an amendment to the Grant Instrument. The Committee shall
approve the basic form and provisions of each Grant Instrument. Grants under a
particular Section of the Plan need not be uniform as among the grantees.
3. Shares Subject to the Plan
(a) Shares Authorized. Subject to the adjustment specified
below, the aggregate number of shares of common stock of the Company ("Company
Stock") that may be issued or transferred under the Plan is 3,000,000 shares.
The maximum aggregate number of shares of Company Stock that shall be subject to
Grants made under the Plan to any individual during any calendar year shall be
800,000 shares. The shares may be authorized but unissued shares of Company
Stock or reacquired shares of Company Stock, including shares purchased by the
Company on the open market for purposes of the Plan. If and to the extent
Options or SARs granted under the Plan terminate, expire, or are canceled,
forfeited, exchanged or surrendered without having been exercised, or if any
shares of Restricted Stock or Performance Units are forfeited, the shares
subject to such Grants shall again be available for purposes of the Plan.
(b) Adjustments. If there is any change in the number or kind
of shares of Company Stock outstanding (i) by reason of a stock dividend,
spinoff, recapitalization, stock split or combination or exchange of shares,
(ii) by reason of a merger, reorganization or consolidation in which the Company
is the surviving corporation, (iii) by reason of a reclassification or change in
par value, or (iv) by reason of any other extraordinary or unusual event
affecting the outstanding Company Stock as a class without the Company's receipt
of consideration, or if the value of outstanding shares of Company Stock is
substantially reduced as a result of a spinoff or the Company's payment of an
extraordinary dividend or distribution, the maximum number of shares of Company
Stock available for Grants, the maximum number of shares of Company Stock that
any individual participating in the Plan may be granted in any year, the number
of shares covered by outstanding Grants, the kind of shares issued under the
Plan, and the price per share or the applicable market value of such Grants
shall be appropriately adjusted by the Committee to reflect any increase or
decrease in the number of, or change in the kind or value of, issued shares of
Company Stock to preclude, to the extent practicable, the enlargement or
dilution of rights and benefits under such Grants; provided, however, that any
fractional shares resulting from such adjustment shall be eliminated by rounding
any portion of a
2
<PAGE> 36
share equal to .5 or greater up, and any portion of a share equal to less than
.5 down, in each case to the nearest whole number. Any adjustments determined by
the Committee shall be final, binding and conclusive.
4. Eligibility for Participation
(a) Eligible Persons. All employees of the Company and its
subsidiaries ("Employees"), including Employees who are officers or members of
the Board, individuals to whom an offer of employment has been extended ("New
Hire"), and members of the Board who are not Employees ("Non-Employee
Directors") shall be eligible to participate in the Plan. Advisors who perform
services to the Company or any of its subsidiaries ("Key Advisors") shall be
eligible to participate in the Plan if the Key Advisors render bona fide
services and such services are not in connection with the offer or sale of
securities in a capital-raising transaction.
(b) Selection of Grantees. The Committee shall select the
Employees, New Hires, Non-Employee Directors and Key Advisors to receive Grants
and shall determine the number of shares of Company Stock subject to a
particular Grant in such manner as the Committee determines. Employees, New
Hires, Key Advisors, and Non-Employee Directors who receive Grants under this
Plan shall hereinafter be referred to as "Grantees."
5. Granting of Options
(a) Number of Shares. The Committee shall determine the number
of shares of Company Stock that will be subject to each Grant of Options to
Employees, New Hires, Non-Employee Directors, and Key Advisors.
(b) Type of Option and Price.
(i) The Committee may grant Incentive Stock Options
that are intended to qualify as "incentive stock options" within the meaning of
section 422 of the Code, Nonqualified Stock Options that are not intended so to
qualify, or any combination of Incentive Stock Options and Nonqualified Stock
Options, all in accordance with the terms and conditions set forth herein.
Incentive Stock Options may be granted only to Employees. Nonqualified Stock
Options may be granted to Employees, New Hires, Non-Employee Directors, and Key
Advisors.
(ii) The purchase price (the "Exercise Price") of
Company Stock subject to an Option shall be determined by the Committee and may
be equal to, greater than, or less than the Fair Market Value (as defined below)
of a share of Company Stock on the date the Option is granted, provided,
however, that (x) the Exercise Price of an Incentive Stock Option shall be equal
to, or greater than, the Fair Market Value of a share of Company Stock on the
date the Incentive Stock Option is granted and (y) an Incentive Stock Option may
not be granted to an Employee who, at the time of grant, owns stock possessing
more than 10 percent of the total combined voting power of all classes of stock
of the Company or any parent or subsidiary of the Company, unless the Exercise
Price per share is not less than 110% of the Fair Market Value of Company Stock
on the date of grant.
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(iii) If the Company Stock is publicly traded, then,
except as otherwise determined by the Committee, the following rules regarding
the determination of Fair Market Value per share apply:
(x) if the principal trading market for the
Company Stock is a national securities exchange or
the Nasdaq National Market, the mean between the
highest and lowest quoted selling prices on the
relevant date or (if there were no trades on that
date) the latest preceding date upon which a sale was
reported, or
(y) if the Company Stock is not principally
traded on such exchange or market, the mean between
the last reported "bid" and "asked" prices of Company
Stock on the relevant date, as reported on Nasdaq or,
if not so reported, as reported by the National Daily
Quotation Bureau, Inc. or as reported in a customary
financial reporting service, as applicable and as the
Committee determines. If the Company Stock is not
publicly traded or, if publicly traded, is not
subject to reported transactions or "bid" or "asked"
quotations as set forth above, the Fair Market Value
per share shall be as determined by the Committee.
(c) Option Term. The Committee shall determine the term of
each Option. The term of any Option shall not exceed ten years from the date of
grant. However, an Incentive Stock Option that is granted to an Employee who, at
the time of grant, owns stock possessing more than 10 percent of the total
combined voting power of all classes of stock of the Company, or any parent or
subsidiary of the Company, may not have a term that exceeds five years from the
date of grant.
(d) Exercisability of Options.
(i) Options shall become exercisable in accordance
with such terms and conditions, consistent with the Plan, as may be determined
by the Committee and specified in the Grant Instrument or an amendment to the
Grant Instrument. The Committee may accelerate the exercisability of any or all
outstanding Options at any time for any reason.
(ii) Notwithstanding the foregoing, the Option may,
but need not, include a provision whereby the Grantee may elect at any time
while an Employee, Non-Employee Director, or Key Advisor to exercise the Option
as to any part or all of the shares subject to the Option prior to the full
vesting of the Option. Any unvested shares so purchased shall be subject to a
repurchase right in favor of the Company, with the repurchase price to be equal
to the original purchase price, and any other restrictions the Committee
determines to be appropriate.
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(e) Termination of Employment, Disability or Death.
(i) Except as provided below, an Option may only be
exercised while the Grantee is employed by the Company as an Employee, Key
Advisor or member of the Board. In the event that a Grantee ceases to be
employed by the Company for any reason other than a "disability," death or
"termination for cause," any Option which is otherwise exercisable by the
Grantee shall terminate unless exercised within 90 days after the date on which
the Grantee ceases to be employed by the Company (or within such other period of
time as may be specified by the Committee), but in any event no later than the
date of expiration of the Option term. Any of the Grantee's Options that are not
otherwise exercisable as of the date on which the Grantee ceases to be employed
by the Company shall terminate as of such date.
(ii) In the event the Grantee ceases to be employed
by the Company on account of a "termination for cause" by the Company, any
Option held by the Grantee shall terminate as of the date the Grantee ceases to
be employed by the Company.
(iii) In the event the Grantee ceases to be employed
by the Company because the Grantee is "disabled," any Option which is otherwise
exercisable by the Grantee shall terminate unless exercised within one year
after the date on which the Grantee ceases to be employed by the Company (or
within such other period of time as may be specified by the Committee), but in
any event no later than the date of expiration of the Option term. Any of the
Grantee's Options which are not otherwise exercisable as of the date on which
the Grantee ceases to be employed by the Company shall terminate as of such
date.
(iv) If the Grantee dies while employed by the
Company or within 90 days after the date on which the Grantee ceases to be
employed on account of a termination of employment specified in Section 5(e)(i)
above (or within such other period of time as may be specified by the
Committee), any Option that is otherwise exercisable by the Grantee shall
terminate unless exercised within one year after the date on which the Grantee
ceases to be employed by the Company (or within such other period of time as may
be specified by the Committee), but in any event no later than the date of
expiration of the Option term. Any of the Grantee's Options that are not
otherwise exercisable as of the date on which the Grantee ceases to be employed
by the Company shall terminate as of such date.
(v) For purposes of Sections 5(e), 6, 7, and 8:
(A) "Company," when used in the phrase
"employed by the Company," shall mean the Company and its
parent, subsidiary corporations, and any business venture in
which the Company has a significant interest.
(B) "Employed by the Company" shall mean
employment or service as an Employee of the Company or any
subsidiary or business venture in which the Company has a
significant interest, Key Advisor, or member of the Board (so
that, for purposes of exercising Options and SARs and
satisfying conditions with respect to Restricted Stock and
Performance Units, a Grantee
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shall not be considered to have terminated employment or
service until the Grantee ceases to be an Employee of the
Company or any subsidiary or business venture in which the
Company has a significant interest, Key Advisor, and member of
the Board), unless the Committee determines otherwise. The
Committee's determination as to a participant's employment or
other provision of services, termination of employment or
cessation of the provision of services, leave of absence, or
reemployment shall be conclusive on all persons unless
determined to be incorrect.
(C) "Disability" shall mean a Grantee's
becoming disabled within the meaning of section 22(e)(3) of
the Code.
(D) "Termination for cause" shall mean the
determination of the Committee that any one or more of the
following events has occurred:
(1) the Grantee's conviction of any act
which constitutes a felony under applicable federal or state
law, either in connection with the performance of the
Grantee's obligations on behalf of the Company or which
affects the Grantee's ability to perform his or her
obligations as an employee, board member or advisor of the
Company or under any employment agreement, non-competition
agreement, confidentiality agreement or like agreement or
covenant between the Grantee and the Company (any such
agreement or covenant being herein referred to as an
"Employment Agreement");
(2) the Grantee's willful misconduct in
connection with the performance of his or her duties and
responsibilities as an employee, board member or advisor of
the Company or under any Employment Agreement, which willful
misconduct is not cured by the Grantee within 10 days of his
or her receipt of written notice thereof from the Committee;
(3) the Grantee's commission of an act of
embezzlement, fraud or dishonesty which results in a loss,
damage or injury to the Company;
(4) the Grantee's substantial and continuing
neglect, gross negligence or inattention in the performance of
his or her duties as an employee, board member or advisor of
the Company or under any Employment Agreement which is not
cured by the Grantee within 10 days of his or her receipt of
written notice thereof from the Committee;
(5) the Grantee's unauthorized use or
disclosure or any trade secret or confidential information of
the Company which adversely affects the business of the
Company, provided that any disclosure of any trade secret or
confidential information of the Company to a third party in
the ordinary course of business who signs a confidentiality
agreement shall not be deemed a breach of this subparagraph;
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(6) the Grantee's material breach of any of
the provisions of any Employment Agreement, which material
breach is not cured by the Grantee within 10 days of his or
her receipt of a written notice from the Company specifying
such material breach; or
(7) the Grantee has voluntarily terminated
his or her employment or service with the Company and breaches
his or her noncompetition agreement with the Company.
(f) Exercise of Options. A Grantee may exercise an Option that
has become exercisable, in whole or in part, by delivering a written notice of
exercise to the Company with payment of the Exercise Price. The Grantee shall
pay the Exercise Price for an Option as specified by the Committee:
(i) in cash,
(ii) by delivering shares of Company Stock owned by
the Grantee for the period necessary to avoid a charge to the Company's earnings
for financial reporting purposes (including Company Stock acquired in connection
with the exercise of an Option, subject to such restrictions as the Committee
deems appropriate) and having a Fair Market Value on the date of exercise equal
to the Exercise Price,
(iii) by payment through a broker in accordance with
procedures permitted by Regulation T of the Federal Reserve Board, or
(iv) by such other method of payment as the Committee
may approve.
Shares of Company Stock used to exercise an Option
shall have been held by the Grantee for the requisite period of time to avoid
adverse accounting consequences to the Company with respect to the Option. The
Grantee shall pay the Exercise Price and the amount of any withholding tax due
(pursuant to Section 9) at the time of exercise.
(g) Limits on Incentive Stock Options. Each Incentive Stock
Option shall provide that if the aggregate Fair Market Value of the stock on the
date of the grant with respect to which Incentive Stock Options are exercisable
for the first time by a Grantee during any calendar year, under the Plan or any
other stock option plan of the Company or a parent or subsidiary, exceeds
$100,000, then the option, as to the excess, shall be treated as a Nonqualified
Stock Option. An Incentive Stock Option shall not be granted to any person who
is not an Employee of the Company or a parent or subsidiary (within the meaning
of section 424(f) of the Code).
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6. Restricted Stock Grants
The Committee may issue or transfer shares of Company Stock to a
Grantee under a Grant of Restricted Stock upon such terms as the Committee deems
appropriate. The following provisions are applicable to Restricted Stock:
(a) General Requirements. Shares of Company Stock issued or
transferred pursuant to Restricted Stock Grants may be issued or transferred for
consideration or for no consideration, as determined by the Committee. The
Committee may establish conditions under which restrictions on shares of
Restricted Stock shall lapse over a period of time or according to such other
criteria as the Committee deems appropriate. The period of time during which the
Restricted Stock will remain subject to restrictions will be designated in the
Grant Instrument as the "Restriction Period."
(b) Number of Shares. The Committee shall determine the number
of shares of Company Stock to be issued or transferred pursuant to a Restricted
Stock Grant and the restrictions applicable to such shares.
(c) Requirement of Employment. If the Grantee ceases to be
employed by the Company (as defined in Section 5(e)) during a period designated
in the Grant Instrument as the Restriction Period, or if other specified
conditions are not met, the Restricted Stock Grant shall terminate as to all
shares covered by the Grant as to which the restrictions have not lapsed, and
those shares of Company Stock must be immediately returned to the Company. The
Committee may, however, provide for complete or partial exceptions to this
requirement as it deems appropriate.
(d) Restrictions on Transfer and Legend on Stock Certificate.
During the Restriction Period, a Grantee may not sell, assign, transfer, pledge
or otherwise dispose of the shares of Restricted Stock except to a Successor
Grantee under Section 10(a). Each certificate for a share of Restricted Stock
shall contain a legend giving appropriate notice of the restrictions in the
Grant. The Grantee shall be entitled to have the legend removed from the stock
certificate covering the shares subject to restrictions when all restrictions on
such shares have lapsed. The Committee may determine that the Company will not
issue certificates for shares of Restricted Stock until all restrictions on such
shares have lapsed, or that the Company will retain possession of certificates
for shares of Restricted Stock until all restrictions on such shares have
lapsed.
(e) Right to Vote and to Receive Dividends. Unless the
Committee determines otherwise, during the Restriction Period, the Grantee shall
have the right to vote shares of Restricted Stock and to receive any dividends
or other distributions paid on such shares, subject to any restrictions deemed
appropriate by the Committee.
(f) Lapse of Restrictions. All restrictions imposed on
Restricted Stock shall lapse upon the expiration of the applicable Restriction
Period and the satisfaction of all conditions imposed by the Committee. The
Committee may determine, as to any or all Restricted Stock Grants, that the
restrictions shall lapse without regard to any Restriction Period.
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7. Stock Appreciation Rights
(a) General Requirements. The Committee may grant stock
appreciation rights ("SARs") to a Grantee separately or in tandem with any
Option (for all or a portion of the applicable Option). Tandem SARs may be
granted either at the time the Option is granted or at any time thereafter while
the Option remains outstanding; provided, however, that, in the case of an
Incentive Stock Option, SARs may be granted only at the time of the Grant of the
Incentive Stock Option. The Committee shall establish the base amount of the SAR
at the time the SAR is granted. Unless the Committee determines otherwise, the
base amount of each SAR shall be equal to the per share Exercise Price of the
related Option or, if there is no related Option, the Fair Market Value of a
share of Company Stock as of the date of Grant of the SAR.
(b) Tandem SARs. In the case of tandem SARs, the number of
SARs granted to a Grantee that shall be exercisable during a specified period
shall not exceed the number of shares of Company Stock that the Grantee may
purchase upon the exercise of the related Option during such period. Upon the
exercise of an Option, the SARs relating to the Company Stock covered by such
Option shall terminate. Upon the exercise of SARs, the related Option shall
terminate to the extent of an equal number of shares of Company Stock.
(c) Exercisability. A SAR shall be exercisable during the
period specified by the Committee in the Grant Instrument and shall be subject
to such vesting and other restrictions as may be specified in the Grant
Instrument. The Committee may accelerate the exercisability of any or all
outstanding SARs at any time for any reason. SARs may only be exercised while
the Grantee is employed by the Company or during the applicable period after
termination of employment as described in Section 5(e). A tandem SAR shall be
exercisable only during the period when the Option to which it is related is
also exercisable. No SAR may be exercised for cash by an officer or director of
the Company or any of its subsidiaries who is subject to Section 16 of the
Exchange Act, except in accordance with Rule 16b-3 under the Exchange Act.
(d) Value of SARs. When a Grantee exercises SARs, the Grantee
shall receive in settlement of such SARs an amount equal to the value of the
stock appreciation for the number of SARs exercised, payable in cash, Company
Stock or a combination thereof. The stock appreciation for a SAR is the amount
by which the Fair Market Value of the underlying Company Stock on the date of
exercise of the SAR exceeds the base amount of the SAR as described in
Subsection (a).
(e) Form of Payment. The Committee shall determine whether the
appreciation in a SAR shall be paid in the form of cash, shares of Company
Stock, or a combination of the two, in such proportion as the Committee deems
appropriate. For purposes of calculating the number of shares of Company Stock
to be received, shares of Company Stock shall be valued at their Fair Market
Value on the date of exercise of the SAR. If shares of Company Stock are to be
received upon exercise of an SAR, cash shall be delivered in lieu of any
fractional share.
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8. Performance Units
(a) General Requirements. The Committee may grant performance
units ("Performance Units") to a Grantee. Each Performance Unit shall represent
the right of the Grantee to receive an amount based on the value of the
Performance Unit, if performance goals established by the Committee are met. A
Performance Unit shall be based on the Fair Market Value of a share of Company
Stock or on such other measurement base as the Committee deems appropriate. The
Committee shall determine the number of Performance Units to be granted and the
requirements applicable to such Units.
(b) Performance Period and Performance Goals. When Performance
Units are granted, the Committee shall establish the performance period during
which performance shall be measured (the "Performance Period"), performance
goals applicable to the Units ("Performance Goals") and such other conditions of
the Grant as the Committee deems appropriate. Performance Goals may relate to
the financial performance of the Company or its operating units, the performance
of Company Stock, individual performance, or such other criteria as the
Committee deems appropriate.
(c) Payment with respect to Performance Units. At the end of
each Performance Period, the Committee shall determine to what extent the
Performance Goals and other conditions of the Performance Units are met and the
amount, if any, to be paid with respect to the Performance Units. Payments with
respect to Performance Units shall be made in cash, in Company Stock, or in a
combination of the two, as determined by the Committee.
(d) Requirement of Employment. If the Grantee ceases to be
employed by the Company (as defined in Section 5(e)) during a Performance
Period, or if other conditions established by the Committee are not met, the
Grantee's Performance Units shall be forfeited. The Committee may, however,
provide for complete or partial exceptions to this requirement as it deems
appropriate.
9. Qualified Performance-Based Compensation.
(a) Designation as Qualified Performance-Based Compensation.
The Committee may determine that Performance Units or Restricted Stock granted
to an Employee shall be considered "qualified performance-based compensation"
under Section 162(m) of the Code. The provisions of this Section 9 shall apply
to Grants of Performance Units and Restricted Stock that are to be considered
"qualified performance-based compensation" under Section 162(m) of the Code.
(b) Performance Goals. When Performance Units or Restricted
Stock that are to be considered "qualified performance-based compensation" are
granted, the Committee shall establish in writing (i) the objective performance
goals that must be met in order for restrictions on the Restricted Stock to
lapse or amounts to be paid under the Performance Units, (ii) the Performance
Period during which the performance goals must be met, (iii) the threshold,
target and maximum amounts that may be paid if the performance goals are met,
and (iv) any other
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conditions, including without limitation provisions relating to death,
disability, other termination of employment or Reorganization, that the
Committee deems appropriate and consistent with the Plan and Section 162(m) of
the Code. The performance goals may relate to the Employee's business unit or
the performance of the Company and its subsidiaries as a whole, or any
combination of the foregoing. The Committee shall use objectively determinable
performance goals based on one or more of the following criteria: stock price,
earnings per share, net earnings, operating earnings, return on assets,
shareholder return, return on equity, growth in assets, unit volume, sales,
market share, or strategic business criteria consisting of one or more
objectives based on meeting specific revenue goals, market penetration goals,
geographic business expansion goals, cost targets or goals relating to
acquisitions or divestitures.
(c) Establishment of Goals. The Committee shall establish the
performance goals in writing either before the beginning of the Performance
Period or during a period ending no later than the earlier of (i) 90 days after
the beginning of the Performance Period or (ii) the date on which 25% of the
Performance Period has been completed, or such other date as may be required or
permitted under applicable regulations under Section 162(m) of the Code. The
performance goals shall satisfy the requirements for "qualified
performance-based compensation," including the requirement that the achievement
of the goals be substantially uncertain at the time they are established and
that the goals be established in such a way that a third party with knowledge of
the relevant facts could determine whether and to what extent the performance
goals have been met. The Committee shall not have discretion to increase the
amount of compensation that is payable upon achievement of the designated
performance goals.
(d) Maximum Payment. If Restricted Stock, or Performance Units
measured with respect to the fair market value of the Company Stock, are
granted, not more than 500,000 shares may be Granted to any Grantee for any
Performance Period. If Performance Units are measured with respect to other
criteria, the maximum amount that may be paid to a Grantee with respect to a
Performance Period is $1,000,000.
(e) Announcement of Grants. The Committee shall certify and
announce the results for each Performance Period to all Grantees immediately
following the announcement of the Company's financial results for the
Performance Period. If and to the extent that the Committee does not certify
that the performance goals have been met, the grants of Restricted Stock or
Performance Units for the Performance Period shall be forfeited.
10. Withholding of Taxes
(a) Required Withholding. All Grants under the Plan shall be
subject to applicable federal (including FICA), state and local tax withholding
requirements. The Company shall have the right to deduct from all Grants paid in
cash, or from other wages paid to the Grantee, any federal, state or local taxes
required by law to be withheld with respect to such Grants. In the case of
Options and other Grants paid in Company Stock, the Company may require the
Grantee or other person receiving such shares to pay to the Company the amount
of any such taxes that the Company is required to withhold with respect to such
Grants, or the
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Company may deduct from other wages paid by the Company the amount of any
withholding taxes due with respect to such Grants.
(b) Election to Withhold Shares. If the Committee so permits,
a Grantee may elect to satisfy the Company's income tax withholding obligation
with respect to an Option, SAR, Restricted Stock or Performance Units paid in
Company Stock 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.
11. Transferability of Grants
(a) Nontransferability of Grants. Except as provided below,
only the Grantee may exercise rights under a Grant during the Grantee's
lifetime. A Grantee may not transfer those rights except by will or by the laws
of descent and distribution or, with respect to Grants other than Incentive
Stock Options, if permitted in any specific case by the Committee, pursuant to a
domestic relations order (as defined under the Code or Title I of the Employee
Retirement Income Security Act of 1974, as amended, or the regulations
thereunder). When a Grantee dies, the personal representative or other person
entitled to succeed to the rights of the Grantee ("Successor Grantee") may
exercise such rights. A Successor Grantee must furnish proof satisfactory to the
Company of his or her right to receive the Grant under the Grantee's will or
under the applicable laws of descent and distribution.
(b) Transfer of Nonqualified Stock Options. Notwithstanding
the foregoing, the Committee may provide, in a Grant Instrument, that a Grantee
may transfer Nonqualified Stock Options to family members or other persons or
entities according to such terms as the Committee may determine; provided that
the Grantee receives no consideration for the transfer of an Option and the
transferred Option shall continue to be subject to the same terms and conditions
as were applicable to the Option immediately before the transfer.
12. Reorganization of the Company.
(a) Reorganization. As used herein, a "Reorganization" shall
be deemed to have occurred if the shareholders of the Company approve (or, if
shareholder approval is not required, the Board approves) an agreement providing
for (i) the merger or consolidation of the Company with another corporation
where the shareholders of the Company, immediately prior to the merger or
consolidation, will not beneficially own, immediately after the merger or
consolidation, shares entitling such shareholders to more than 50% of all votes
to which all shareholders of the surviving corporation would be entitled in the
election of directors (without consideration of the rights of any class of stock
to elect directors by a separate class vote), (ii) the sale or other disposition
of all or substantially all of the assets of the Company, or (iii) a liquidation
or dissolution of the Company.
(b) Assumption of Grants. Upon a Reorganization where the
Company is not the surviving corporation (or survives only as a subsidiary of
another corporation), unless the
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Committee determines otherwise, all outstanding Options and SARs that are not
exercised shall be assumed by, or replaced with comparable options or rights by,
the surviving corporation.
(c) Other Alternatives. Notwithstanding the foregoing, in the
event of a Reorganization, the Committee may take one or both of the following
actions: the Committee may (i) require that Grantees surrender their outstanding
Options and SARs in exchange for a payment by the Company, in cash or Company
Stock as determined by the Committee, in an amount equal to the amount by which
the then Fair Market Value of the shares of Company Stock subject to the
Grantee's unexercised Options and SARs exceeds the Exercise Price of the Options
or the base amount of the SARs, as applicable, or (ii) after giving Grantees an
opportunity to exercise their outstanding Options and SARs, terminate any or all
unexercised Options and SARs at such time as the Committee deems appropriate.
Such surrender or termination shall take place as of the date of the
Reorganization or such other date as the Committee may specify.
(d) Limitations. Notwithstanding anything in the Plan to the
contrary, in the event of a Reorganization, the Committee shall not have the
right to take any actions described in the Plan (including without limitation
actions described in Subsection (b) above) that would make the Reorganization
ineligible for pooling of interests accounting treatment or that would make the
Reorganization ineligible for desired tax treatment if, in the absence of such
right, the Reorganization would qualify for such treatment and the Company
intends to use such treatment with respect to the Reorganization.
13. Change of Control of the Company.
(a) As used herein, a "Change of Control" shall be deemed to
have occurred if
(i) Any "person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act) becomes a "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing a majority of the voting power of the then outstanding
securities of the Company except where the acquisition is approved by the Board;
or
(ii) Any person has commenced a tender offer or
exchange offer for a majority of the voting power of the then outstanding shares
of the Company.
(b) Notice and Acceleration. Unless the Committee determines
otherwise, a Change of Control shall not result in the acceleration of vesting
of outstanding Options and SARs, the removal of restrictions and conditions on
outstanding Restricted Stock grant, or any accelerated payments in connection
with outstanding Performance Units.
(c) Other Alternatives. Notwithstanding the foregoing, in the
event of a Change of Control, the Committee may take one or both of the
following actions: the Committee may (i) require that Grantees surrender their
outstanding Options and SARs in exchange for a payment by the Company, in cash
or Company Stock as determined by the Committee, in an
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amount equal to the amount by which the then Fair Market Value of the shares of
Company Stock subject to the Grantee's unexercised Options and SARs exceeds the
Exercise Price of the Options or the base amount of the SARs, as applicable, or
(ii) after giving Grantees an opportunity to exercise their outstanding Options
and SARs, terminate any or all unexercised Options and SARs at such time as the
Committee deems appropriate. Such surrender or termination shall take place as
of the date of the Change of Control or such other date as the Committee may
specify.
(d) Limitations. Notwithstanding anything in the Plan to the
contrary, in the event of a Change of Control, the Committee shall not have the
right to take any actions described in the Plan (including without limitation
actions described in Subsection (c) above) that would make the Change of Control
ineligible for pooling of interests accounting treatment or that would make the
Change of Control ineligible for desired tax treatment if, in the absence of
such right, the Change of Control would qualify for such treatment and the
Company intends to use such treatment with respect to the Change of Control.
14. Requirements for Issuance or Transfer of Shares
(a) Shareholder's Agreement. The Committee may require that a
Grantee execute a shareholder's agreement, with such terms as the Committee
deems appropriate, with respect to any Company Stock distributed pursuant to
this Plan.
(b) Limitations on Issuance or Transfer of Shares. No Company
Stock shall be issued or transferred in connection with any Grant hereunder
unless and until all legal requirements applicable to the issuance or transfer
of such Company Stock have been complied with to the satisfaction of the
Committee. The Committee shall have the right to condition any Grant made to any
Grantee hereunder on such Grantee's undertaking in writing to comply with such
restrictions on his or her subsequent disposition of such shares of Company
Stock as the Committee shall deem necessary or advisable as a result of any
applicable law, regulation or official interpretation thereof, and certificates
representing such shares may be legended to reflect any such restrictions.
Certificates representing shares of Company Stock issued or transferred under
the Plan will be subject to such stop-transfer orders and other restrictions as
may be required by applicable laws, regulations and interpretations, including
any requirement that a legend be placed thereon.
15. Amendment and Termination of the Plan
(a) Amendment. The Board may amend or terminate the Plan at
any time.
(b) Termination of Plan. The Plan shall terminate on the day
immediately preceding the tenth anniversary of its effective date, unless the
Plan is terminated earlier by the Board or is extended by the Board with the
approval of the shareholders.
(c) Termination and Amendment of Outstanding Grants. A
termination or amendment of the Plan that occurs after a Grant is made shall not
materially impair the rights of
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<PAGE> 48
a Grantee unless the Grantee consents. The termination of the Plan shall not
impair the power and authority of the Committee with respect to an outstanding
Grant. Whether or not the Plan has terminated, an outstanding Grant may be
terminated or amended in accordance with the Plan or may be amended by agreement
of the Company and the Grantee consistent with the Plan.
(d) Governing Document. The Plan shall be the controlling
document. No other statements, representations, explanatory materials or
examples, oral or written, may amend the Plan in any manner. The Plan shall be
binding upon and enforceable against the Company and its successors and assigns.
16. Funding of the Plan
This Plan shall be unfunded. The Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the payment of any Grants under this Plan. In no event shall
interest be paid or accrued on any Grant, including unpaid installments of
Grants.
17. Rights of Grantees
Nothing in this Plan shall entitle any Grantee or other person to any
claim or right to be granted a Grant under this Plan. Neither this Plan nor any
action taken hereunder shall be construed as giving any individual any rights to
be retained by or in the employ of the Company or any other employment rights.
18. No Fractional Shares
No fractional shares of Company Stock shall be issued or delivered
pursuant to the Plan or any Grant. The Committee shall determine whether cash,
other awards or other property shall be issued or paid in lieu of such
fractional shares or whether such fractional shares or any rights thereto shall
be forfeited or otherwise eliminated.
19. Headings
Section headings are for reference only. In the event of a conflict between a
title and the content of a Section, the content of the Section shall control.
20. Effective Date of the Plan
Subject to the approval of the Company's shareholders, the Plan shall
be effective on February 16, 2000.
21. Miscellaneous
(a) Grants in Connection with Corporate Transactions and
Otherwise. Nothing contained in this Plan shall be construed to (i) limit the
right of the Committee to make
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<PAGE> 49
Grants under this Plan in connection with the acquisition, by purchase, lease,
merger, consolidation or otherwise, of the business or assets of any
corporation, firm or association, including Grants to employees thereof who
become Employees of the Company, or for other proper corporate purposes, or (ii)
limit the right of the Company to grant stock options or make other awards
outside of this Plan. Without limiting the foregoing, the Committee may make a
Grant to an employee of another corporation who becomes an Employee by reason of
a corporate merger, consolidation, acquisition of stock or property,
reorganization or liquidation involving the Company or any of its subsidiaries
in substitution for a stock option or restricted stock grant made by such
corporation. The terms and conditions of the substitute grants may vary from the
terms and conditions required by the Plan and from those of the substituted
stock incentives. The Committee shall prescribe the provisions of the substitute
grants.
(b) Compliance with Law. The Plan, the exercise of Options and
SARs and the obligations of the Company to issue or transfer shares of Company
Stock under Grants shall be subject to all applicable laws and to approvals by
any governmental or regulatory agency as may be required. With respect to
persons subject to section 16 of the Exchange Act, it is the intent of the
Company that the Plan and all transactions under the Plan comply with all
applicable provisions of Rule 16b-3 or its successors under the Exchange Act.
The Committee may revoke any Grant if it is contrary to law or modify a Grant to
bring it into compliance with any valid and mandatory government regulation. The
Committee may also adopt rules regarding the withholding of taxes on payments to
Grantees. The Committee may, in its sole discretion, agree to limit its
authority under this Section.
(c) Governing Law. The validity, construction, interpretation
and effect of the Plan and Grant Instruments issued under the Plan shall
exclusively be governed by and determined in accordance with the law of the
state of Texas.
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<PAGE> 50
Exhibit B
COMPUCOM SYSTEMS, INC.
AMENDED AND RESTATED
EMPLOYEE STOCK PURCHASE PLAN
The following constitute the provisions of the Employee Stock Purchase Plan of
CompuCom Systems, Inc.
1. PURPOSE. The purpose of the Plan is to provide Employees of
the Company and its Subsidiaries with an opportunity to purchase Common Stock of
the Company through accumulated payroll deductions. It is the intention of the
Company to have the Plan qualify as an "Employee Stock Purchase Plan" under
Section 423 of the Code (as defined below). The provisions of the Plan shall be
construed accordingly, so as to extend and limit participation in a manner
consistent with the requirements of that Section of the Code.
2. DEFINITIONS.
(a) "Act" shall mean the Securities Exchange Act of 1934, as
amended.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(d) "Common Stock" shall mean the common stock, $.01 par value
per share, of the Company.
(e) "Committee" shall mean the committee appointed pursuant to
PARAGRAPH 11.
(f) "Company" shall mean CompuCom Systems, Inc., a Delaware
corporation, or any successor which adopts this Plan.
(g) "Compensation" shall mean the base pay or regular
straight-time earnings plus commissions, and overtime, but excluding
any imputed benefits or pay, bonuses, relocation expense, expense
reimbursements, or other similar items. Compensation in excess of
$75,000 per offering period will be disregarded.
(h) "Continuous Status as an Employee" shall mean the absence
of any interruption or termination of service as an Employee.
Continuous Status as an Employee shall not be considered interrupted in
the case of a leave of absence that meets the requirements of PARAGRAPH
9(b).
(i) "Designated Subsidiary" shall mean any Subsidiary that has
adopted the Plan in accordance with PARAGRAPH 29.
(j) "Eligible Employee" shall have the meaning defined in
PARAGRAPH 3(a).
(k) "Employee" shall mean any person, including an officer,
who is customarily employed for at least 20 hours per week and for more
than five months in the calendar year by an Employer and whose wages
are subject to withholding for purposes of federal income taxes.
(l) "Employer" shall mean the Company and each of its
Designated Subsidiaries.
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<PAGE> 51
(m) "Enrollment Date" shall mean the first day of each
Offering Period.
(n) "Exercise Date" shall mean the last day of each Offering
Period.
(o) "Exercise Price" shall have the meaning as defined in
PARAGRAPH 6(b).
(p) "Offering Period" shall mean that period to be determined
by the Committee beginning on the date Eligible Employees are offered
the opportunity to purchase Shares hereunder. The first Offering Period
shall begin on July 1, 1998, and shall end on December 31, 1998. Until
changed by the Committee in its sole and absolute discretion, a new
Offering Period shall begin on the first day of each six calendar month
period beginning on each January 1 and July 1 of a calendar year,
starting with January 1, 1999, and shall end on the end of such six
month period.
(q) "Participant" shall mean an Eligible Employee who has
elected to participate herein by authorizing payroll deductions
pursuant to PARAGRAPH 4.
(r) "Payroll Deduction Account" shall mean the separate
account maintained hereunder to record the amount of a Participant's
Compensation that has been withheld pursuant to PARAGRAPH 5.
(s) "Plan" shall mean the CompuCom Systems, Inc. Employee
Stock Purchase Plan.
(t) "Share" shall mean a share of Common Stock.
(u) "Subscription Agreement" shall have the meaning as defined
in PARAGRAPH 4(a).
(v) "Subsidiary" shall mean a corporation, domestic or
foreign, of which at the time of the granting of the option pursuant to
PARAGRAPH 6, not less than 50% of the total combined voting power of
all classes of stock are held by the Company or a Subsidiary, whether
or not such corporation now exists or is hereafter organized or
acquired by the Company or a Subsidiary.
3. ELIGIBILITY.
(a) General Rule. Any Employee on an Enrollment Date shall be
eligible to participate as an "Eligible Employee" during the Offering
Period beginning on such Enrollment Date, subject to the requirements
of PARAGRAPH 4(a) and the limitations imposed by Section 423(b) of the
Code.
(b) Exceptions. Any provisions of the Plan to the contrary
notwithstanding, no Employee shall be an Eligible Employee if:
(i) Immediately after the grant, such Employee (or
any other person whose stock would be attributed to such
Employee pursuant to Section 424(d) of the Code) would own
stock (including for purposes of this PARAGRAPH 3(b) any stock
he or she holds outstanding options to purchase) possessing 5%
or more of the total combined voting power or value of all
classes of stock of the Company or of any Subsidiary computed
in accordance with Section 423(b)(3) of the Code; or
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<PAGE> 52
(ii) Such option would permit such Employee's right
to purchase stock under all employee stock purchase plans
(described in Section 423 of the Code) of the Company and its
Subsidiaries to accrue at a rate which exceeds $25,000 of the
fair market value of such stock (determined at the time such
option is granted) for each calendar year in which such option
is outstanding at any time, in accordance with the provisions
of Section 423(b)(8) of the Code.
4. PARTICIPATION.
(a) An Eligible Employee may become a Participant in the Plan
by completing a Subscription Agreement authorizing payroll deductions,
in a form substantially similar to EXHIBIT A attached to this Plan
("Subscription Agreement"), and filing it with the Company's Human
Resources Department prior to the applicable Enrollment Date, unless a
later time for filing the Subscription Agreement is set by the
Committee for all Eligible Employees with respect to a given Offering
Period.
(b) Payroll deductions for a Participant shall commence with
the first payroll following the Enrollment Date and shall end on the
last payroll in the Offering Period to which such authorization is
applicable, unless sooner terminated by the Participant as provided in
PARAGRAPH 9.
(c) An Eligible Employee may waive his or her right to
participate for any Offering Period by declining to authorize a payroll
deduction. Such declination shall result in the Employee's waiver of
participation for only the Offering Period to which it relates and
shall be irrevocable with respect to such Offering Period. Except as
otherwise provided in this PARAGRAPH, an Employee's waiver of
participation for a specified Offering Period shall not, in and of
itself, adversely impact the right of such Employee to participate in
the Plan during any subsequent Offering Periods.
5. PAYROLL DEDUCTIONS.
(a) At the time a Participant files his or her Subscription
Agreement, such Participant shall elect to have payroll deductions (in
whole percentage increments) made on each pay date during the Offering
Period in an amount of not less than 1% nor more than 10% of the
Compensation which he or she receives on each pay date during the
Offering Period.
(b) All payroll deductions made by a Participant shall be
credited to his or her Payroll Deduction Account under the Plan. No
interest shall accrue on the payroll deductions in a Participant's
Payroll Deduction Account in the Plan.
(c) No changes in the rate of payroll deductions other than a
withdrawal pursuant to PARAGRAPH 9 are permitted.
6. GRANT OF OPTION.
(a) On the Enrollment Date of each Offering Period during the
term of the Plan each Participant in such Offering Period shall be
granted an option to purchase up to a number of Shares determined by
dividing ten percent (10%) of the Participant's Compensation by the
Exercise Price; provided, however, that the number of shares subject to
such option shall be reduced, if necessary, to a number of shares which
would not exceed the limitations described in PARAGRAPH 3(b) or
PARAGRAPH 10(a) hereof. The fair market value of a Share shall be
determined as provided in PARAGRAPH 6(b).
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<PAGE> 53
(b) The "Exercise Price" per Share offered in a given Offering
Period shall be determined by the Committee, but shall not be less than
the lower of: (i) 85% of the fair market value of a Share on the
Enrollment Date, or (ii) 85% of the fair market value of a Share on the
Exercise Date. The fair market value of a Share on a given date shall
be the closing price of such Share as reported by the National
Association of Securities Dealers, Incorporated Automated Quotations,
Incorporated ("Nasdaq") National Market System or reported on such
other national exchange as it may, from time to time, be reported on,
on such date (or if there shall be no trading on such date, then on the
first previous date on which there is such trading), unless the Shares
cease to be traded on a national exchange. If the Shares cease to be
traded on a national exchange, fair market value shall be determined by
the Committee in its discretion consistent with Section 423 of the Code
or the regulations thereunder.
(c) All grants made hereunder shall be deemed to have been
made on the applicable Enrollment Date.
7. EXERCISE OF OPTION. The Participant's option for the purchase
of Shares will be exercised automatically on the Exercise Date of each Offering
Period, and the maximum number of shares subject to such option will be
purchased for such Participant at the applicable Exercise Price with the payroll
deductions accumulated in his or her Payroll Deduction Account, unless prior to
such Exercise Date the Participant has withdrawn from the Offering Period as
provided in PARAGRAPH 9. During a Participant's lifetime a Participant's option
to purchase shares hereunder is exercisable only by such Participant.
8. DELIVERY. As soon as practicable after the Exercise Date, the
Committee shall arrange the delivery to each Participant, or to his or her
account at a brokerage firm, of a certificate representing the shares purchased
upon exercise of his or her option.
9. WITHDRAWAL; TERMINATION OF EMPLOYMENT.
(a) A Participant may withdraw all, but not less than all, of
the payroll deductions credited to his or her Payroll Deduction Account
and not yet used toward the exercise of his or her option under the
Plan at any time by giving written notice to the Committee on a form
substantially similar to EXHIBIT B attached to this Plan. All of the
Participant's payroll deductions credited to his or her Payroll
Deduction Account that have not yet been used to purchase Shares will
be paid to such Participant as soon as practicable after receipt of his
or her notice of withdrawal. A withdrawal of a Participant's Payroll
Deduction Account shall terminate the Participant's participation for
the Offering Period in which the withdrawal occurs. No further payroll
deductions or the purchase of shares will be made during the Offering
Period.
(b) Upon termination of the Participant's Continuous Status as
an Employee of the Company for any reason, he or she will be deemed to
have elected to withdraw from the Plan and the payroll deductions
credited to his or her Payroll Deduction Account will be returned to
such Participant and his or her option will be canceled; provided,
however, a Participant who goes on a leave of absence shall be
permitted to remain in the Plan with respect to an Offering Period
which commenced prior to the beginning of such leave of absence. If
such Participant is not guaranteed reemployment by contract or statute
and the leave of absence exceeds 90 days, such Participant shall be
deemed to have terminated employment on the 91st day of such leave of
absence. Payroll deductions for a Participant who has been on a leave
of absence will resume upon return to work at the same rate as in
effect prior to such leave unless the leave of absence begins in one
Offering Period and ends in a subsequent Offering Period, in
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<PAGE> 54
which case the Participant shall not be permitted to re-enter the Plan
until a new Subscription Agreement is filed with respect to an Offering
Period which commences after such Participant has returned to work from
the leave of absence.
(c) A Participant's withdrawal from one Offering Period will
not have any effect upon his or her eligibility to participate in a
different Offering Period or in any similar plan which may hereafter be
adopted by the Company.
10. SHARES.
(a) The maximum number of Shares which shall be made available
for sale under the Plan shall be 2,000,000 Shares, subject to
adjustment upon changes in capitalization of the Company as provided in
PARAGRAPH 16. Either authorized and unissued Shares or issued Shares
heretofore or hereafter reacquired by the Employer may be made subject
to purchase under the Plan, in the sole and absolute discretion of the
Committee. Further, if for any reason any purchase of any Shares under
the Plan is not consummated, Shares subject to such purchase agreement
may be subjected to a new Subscription Agreement under the Plan. If, on
the Exercise Date, the number of Shares with respect to which options
are to be exercised exceeds the number of Shares then available under
the Plan, the Company shall make a pro rata allocation of the shares
remaining available for purchase in as uniform a manner as shall be
practicable and as it shall determine to be equitable. In such event,
the Company shall give written notice of such reduction of the Shares
which each Employee shall be allowed to purchase. Notwithstanding
anything to the contrary herein, the Company shall not be obligated to
issue Shares hereunder if, in the opinion of counsel for the Company,
such issuance would constitute a violation of Federal or state
securities laws.
(b) The Participant will have no interest or voting right in
Shares covered by his or her option until such option has been
exercised and the Shares have been issued or transferred to the
Participant.
(c) Shares to be delivered to a Participant under the Plan
will be registered in the name of the Participant or, at the prior
written request of the Participant, in the names of the Participant and
his or her spouse.
11. ADMINISTRATION. The Plan shall be administered by a Committee
appointed by the Board. Such Committee shall have all powers with respect to the
Plan, except for amending or terminating the Plan as set forth in PARAGRAPH 17
hereof.
(a) Each member of the Committee shall serve until his or her
successor is appointed. Any member of the Committee may be removed at
any time by the Board, with or without cause, which shall have the
power to fill any vacancy which may occur. A Committee member may
resign by giving 30 days written notice to the Company.
(b) The members of the Committee shall serve without
compensation for services as such, but the Company shall pay all
expenses of the Committee.
(c) The Committee shall have the following powers and duties:
(1) To direct the administration of the Plan in
accordance with the provisions herein set forth;
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<PAGE> 55
(2) To adopt rules of procedure and regulations
necessary for the administration of the Plan provided the
rules are not inconsistent with the terms of the Plan;
(3) To determine all questions with regard to rights
of Employees and Participants under the Plan, including, but
not limited to, the eligibility of an Employee to participate
in the Plan;
(4) To enforce the terms of the Plan and the rules
and regulations it adopts;
(5) To direct the distribution of the Shares
purchased hereunder;
(6) To furnish the Employer with information which
the Employer may require for tax or other purposes;
(7) To engage the service of counsel (who may, if
appropriate, be counsel for an Employer) and agents whom it
may deem advisable to assist it with the performance of its
duties;
(8) To prescribe procedures to be followed by
Participants in electing to participate herein;
(9) To receive from each Employer and from Employees
such information as shall be necessary for the proper
administration of the Plan;
(10) To maintain, or cause to be maintained, separate
accounts in the name of each Participant to reflect the
Participant's Payroll Deduction Account under the Plan; and
(11) To interpret and construe the Plan.
12. DESIGNATION OF BENEFICIARY.
(a) A Participant may file a written designation of a
beneficiary (as indicated in the Subscription Agreement or otherwise)
who is to receive any Shares under the Plan in the event of such
Participant's death subsequent to the Exercise Date on which an option
is exercised but prior to the issuance of such shares. In addition, a
Participant may file a written designation of a beneficiary who is to
receive any cash from the Participant's Payroll Deduction Account under
the Plan in the event of such Participant's death prior to the Exercise
Date of the option.
(b) Such designation of beneficiary may be changed by the
Participant at any time by written notice. In the event of the death of
a Participant and in the absence of a beneficiary validly designated
under the Plan, the Committee shall deliver such shares and/or cash to
the executor or administrator of the estate of the Participant, or if
no such executor or administrator has been appointed (to the knowledge
of the Company or Committee), the Committee, in its discretion, may
deliver such shares and/or cash to the spouse or to any one or more
dependents or relatives of the Participant, or if no spouse, dependent
or relative is known to the Committee, then to such other person as the
Committee may designate.
13. TRANSFERABILITY. Neither payroll deductions credited to
Participant's Payroll Deduction Account nor any rights with regard to the
exercise of an option to receive Shares
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<PAGE> 56
under the Plan may be assigned, transferred, pledged or otherwise disposed of in
any way (other than by will, the laws of descent and distribution or as provided
in PARAGRAPH 12 hereof) by the Participant. Any such attempt at assignment,
transfer, pledge or other disposition shall be without effect, except that the
Committee may treat such act as an election to withdraw funds in accordance with
PARAGRAPH 9.
14. USE OF FUNDS. All payroll deductions received or held by the
Company under the Plan may be used by the Company for any corporate purpose, and
the Company shall not be obligated to segregate such payroll deductions.
15. REPORTS. Individual Payroll Deduction Accounts will be maintained
for each Participant in the Plan. Statements of Payroll Deduction Account will
be given to Participants as soon as practicable following an Exercise Date, such
statements will set forth the amounts of payroll deductions, the per share
purchase price, the number of shares purchased and the remaining cash balance,
if any.
16. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. If an option under this
Plan is exercised subsequent to any stock split, spinoff, recapitalization,
reorganization, reclassification, merger, consolidation, exchange of shares, or
the like occurring after such option was granted, as a result of which shares of
any class of stock shall be issued in respect of the outstanding shares, or
shares shall be changed into a different number of the same or another class or
classes, the number of Shares to which such option shall be applicable and the
option price for such Shares shall be appropriately adjusted by the Company. Any
such adjustment, however, in the Shares shall be made without change in the
total price applicable to the portion of the Shares purchased hereunder which
has not been fully paid for, but with a corresponding adjustment, if
appropriate, in the price for the Shares.
In the event of the proposed dissolution or liquidation of the Company
or upon a proposed reorganization, merger, or consolidation of the Company with
one or more corporations as a result of which the Company is not the surviving
corporation, or upon a proposed sale of substantially all of the property or
stock of the Company to another corporation, the Offering Period will terminate
immediately prior to the consummation of such proposed action, unless otherwise
provided by the Board, and the holder of each option then outstanding under the
Plan will thereafter be entitled to receive, upon the exercise of such option,
as nearly as reasonably may be determined, the cash, securities, and/or property
which a holder of one Share was entitled to receive upon and at the time of such
transaction for each Share to which such option shall be exercised. The Board
shall take such steps in connection with such transactions as the Board shall
deem necessary to assure that the provisions of this PARAGRAPH shall thereafter
be applicable, as nearly as reasonably may be determined, in relation to the
said cash, securities, and/or property as to which such holder of such option
might thereafter be entitled to receive.
17. AMENDMENT OR TERMINATION. The Board may at any time and for any
reason terminate or amend the Plan. Except as specifically provided in the Plan,
no such termination can affect options previously granted, provided that an
Offering Period may be terminated by the Board on any Exercise Date if the Board
determines that the termination of the Plan is in the best interest of the
Company and its stockholders. Except as specifically provided in the Plan or as
required to obtain a favorable ruling from the Internal Revenue Service or to
comply with tax or securities law, no amendment may make any change in any
option theretofore granted which adversely affects the rights of any
Participant. To the extent necessary to comply with Rule 16b-3 under the Act or
Section 423 of the Code (or any successor rule or provision or any other
applicable law or regulation), the Company shall obtain stockholder approval in
such manner and to such a degree as required.
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<PAGE> 57
18. NOTICES. All notices or other communications by a Participant to
the Company or Committee under or in connection with the Plan shall be deemed to
have been duly given when received in the form specified by the Committee at the
location, or by the person, designated by the Committee for the receipt thereof.
19. STOCKHOLDER APPROVAL. Commencement of the Plan shall be subject to
approval by the stockholders of the Company within 12 months before or after the
date the Plan is adopted. Notwithstanding any provision to the contrary, failure
to obtain such stockholder approval shall void the Plan, any options granted
under the Plan, any Share purchased pursuant to the Plan, and all rights of all
Participants.
20. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance and
delivery of such Shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Act, the rules and regulations
promulgated thereunder, and the requirements of any stock exchange upon which
the Shares may then be listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance.
As a condition to the exercise of an option, the Company may require
the person exercising such option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute, such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.
21. TERM OF PLAN. The Plan shall become effective upon the earlier to
occur of its adoption by the Board or its approval by the stockholders of the
Company as described in PARAGRAPH 19. It shall continue in effect for a term of
ten years unless sooner terminated under PARAGRAPH 17.
22. NO RIGHTS IMPLIED. Nothing contained in this Plan or any
modification or amendment to the Plan or in the creation of any Payroll
Deduction Account, or the execution of any participation election form, or the
issuance of any Shares, shall give any Employee or Participant any right to
continue employment, any legal or equitable right against the Employer or
Company or any officer, director, or Employee of an Employer or Company, except
as expressly provided by the Plan.
23. SEVERABILITY. In the event any provision of the Plan shall be held
to be illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining provisions of the Plan, but shall be fully severable and
the Plan shall be construed and enforced as if the illegal or invalid provision
had never been included herein.
24. WAIVER OF NOTICE. Any person entitled to notice under the Plan may
waive the notice.
25. SUCCESSORS AND ASSIGNS. The Plan shall be binding upon all persons
entitled to purchase Shares under the Plan, their respective heirs, legatees,
and legal representatives, and upon the Employer, its successors and assigns.
26. HEADINGS. The titles and headings of the Paragraphs are included
for convenience of reference only and are not to be considered in construction
of the provisions hereof.
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27. GOVERNING LAW. All questions arising with respect to the provisions
of this Plan shall be determined by application of the laws of the State of
Texas except to the extent Texas law is preempted by Federal statute. The
obligation of the Employer to sell and deliver Shares under the Plan is subject
to applicable laws and to the approval of any governmental authority required in
connection with the authorization, issuance, sale or delivery of such Shares.
28. NO LIABILITY FOR GOOD FAITH DETERMINATIONS. Neither the members of
the Board nor any member of the Committee (nor their delegates) shall be liable
for any act, omission, or determination taken or made in good faith with respect
to the Plan or any right to purchase Shares granted under it, and members of the
Board and the Committee (and their delegatees) shall be entitled to
indemnification and reimbursement by the Company in respect of any claim, loss,
damage, or expense (including attorneys' fees, the costs of settling any suit,
provided such settlement is approved by independent legal counsel selected by
the Company, and amounts paid in satisfaction of a judgment, except a judgment
based on a finding of bad faith) arising therefrom to the full extent permitted
by law and under any directors and officers liability or similar insurance
coverage that may from time to time be in effect.
29. PARTICIPATING EMPLOYERS. This Plan shall constitute the employee
stock purchase plan of the Company and each Designated Subsidiary. A Designated
Subsidiary may adopt and participate in this Plan beginning as of the next
Enrollment Date, provided the Board has consented to such Designated
Subsidiary's participation. A Designated Subsidiary may withdraw from the Plan
as of any Enrollment Date by giving written notice to the Board, and such notice
must be received by the Board at least 30 days prior to such Enrollment Date.
30. NO GUARANTEE OF INTERESTS OR TAX TREATMENT. Neither the Committee
nor the Company guarantees the Common Stock from loss or depreciation. Neither
the Committee nor the Company guarantees favorable tax treatment for the
purchase of Shares hereunder.
31. PAYMENT OF EXPENSES. All expenses incident to the administration,
termination, or protection of the Plan, including, but not limited to, legal and
accounting fees, shall be paid by the Company.
IN WITNESS WHEREOF, this Employee Stock Purchase Plan has been executed
effective this day of , 1998.
COMPUCOM SYSTEMS, INC.
ATTEST: By:
--------------------------------
Its
- ------------------------------- -----------------------------
Secretary
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EXHIBIT A
COMPUCOM SYSTEMS, INC.
EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
I, ___________________, have read the attached prospectus explanation
of the CompuCom Systems, Inc. Employee Stock Purchase Plan (the "Plan"). I have
decided to participate. I wish to purchase that number of shares of CompuCom
Systems, Inc. common stock, $.01 par value (the "Shares") that can be purchased
with ______% of my Compensation(1) (select the percentage of your compensation
from 1 to 10, in increments of 1, that you elect to contribute).
In order to pay for the Shares that I have elected to purchase, I
hereby authorize my Employer to deduct the percentage of my Compensation that I
specified above from my pay each pay period while this election is in effect.
I understand that said payroll deductions shall be accumulated for the
purchase of the Shares at the applicable purchase price determined in accordance
with the Plan. I further understand that, except as otherwise set forth in the
Plan, Shares will be purchased for me automatically on the Exercise Date of the
Offering Period unless I otherwise withdraw from the Offering Period or the
Plan.
I have received a copy of the CompuCom Systems, Inc.'s most recent
prospectus that describes the Plan and a copy of the complete Plan. I understand
that my participation in the Plan is in all respects subject to the terms of the
Plan.
I hereby agree to be bound by the terms of the Plan. The effectiveness
of this Subscription Agreement is dependent upon my eligibility to participate
in the Plan.
BENEFICIARY DESIGNATION. In the event of my death, I hereby designate
the following as my beneficiary to receive all payments and Shares due me and
not yet paid or issued under the Plan, pursuant to PARAGRAPH 12 of the Plan:
- ----------------------------------
- ----------------------------------
Name and Address of Participant:
- ----------------------------------
- ----------------------------------
Signature:
- ---------------------------------- Date:
------------------------------
- --------
(1) Please refer to the Plan document for definitions of capitalized words that
are not defined in this Subscription Agreement.
10
<PAGE> 60
EXHIBIT B
COMPUCOM SYSTEMS, INC.
EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
The undersigned Participant(2) in the Offering Period of the CompuCom Systems,
Inc. Employee Stock Purchase Plan (the "Plan") which began on _________________,
19___ (the "Enrollment
- --------
(2) Please refer to the Plan document for definitions of capitalized words that
are not defined in this Notice of Withdrawal
11
<PAGE> 61
Date") hereby notifies the Committee that effective on the later of
__________________, 19___ (the "Withdrawal Date") or the date this form is
received by the Committee, he or she withdraws from the Offering Period.
The undersigned hereby directs CompuCom Systems, Inc. (the "Company") to pay to
the undersigned as promptly as possible following the Withdrawal Date all the
payroll deductions credited to his or her Payroll Deduction Account with respect
to such Offering Period. The undersigned understands and agrees that upon
withdrawing from the Offering Period no further payroll deductions will be made
for the purchase of shares in such Offering Period.
Name and Address of Participant:
- ----------------------------------
- ----------------------------------
- ----------------------------------
Signature:
- ----------------------------------
Date:
-----------------------------
12
