<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 Section 240.14a-11(c) or
Section 240.14a-12
DAISYTEK INTERNATIONAL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
DAISYTEK INTERNATIONAL CORPORATION
500 NORTH CENTRAL EXPRESSWAY
PLANO, TEXAS 75074
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of
Stockholders of Daisytek International Corporation (the "Company"), which will
be held at the Stonebriar Country Club in Frisco, Texas, on Friday, August 2,
1996, at 10:00 a.m. (local time).
At the Annual Meeting, stockholders will be asked to elect
directors, approve an amendment to the Company's certificate of incorporation
increasing the number of authorized shares of common stock, adopt the Company's
Non-Employee Director Stock Option and Retainer Plan and ratify the appointment
of Arthur Andersen LLP as the Company's independent auditors. Information
about these matters is contained in the attached Proxy Statement.
The Company's management would greatly appreciate your
attendance at the Annual Meeting. HOWEVER, WHETHER OR NOT YOU PLAN TO ATTEND
THE ANNUAL MEETING, IT IS MOST IMPORTANT THAT YOUR SHARES BE REPRESENTED.
Accordingly, please sign, date and return the enclosed proxy card which will
indicate your vote upon the matters to be considered. If you do attend the
meeting and desire to vote in person, you may do so by withdrawing your proxy
at that time.
I sincerely hope you will be able to attend the Annual
Meeting, and I look forward to seeing you on August 2, 1996.
Sincerely,
/s/ DAVID A. HEAP
------------------------------------
David A. Heap
Chairman and Chief Executive Officer
June 26, 1996
<PAGE> 3
DAISYTEK INTERNATIONAL CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AUGUST 2, 1996
The Annual Meeting of Stockholders of Daisytek International
Corporation (the "Company") will be held on Friday, August 2, 1996, at 10:00
a.m. at the Stonebriar Country Club, Frisco, Texas, for the following
purposes:
1. To elect two Class II directors;
2. To consider and act upon an amendment to the
Company's Amended and Restated Certificate of
Incorporation increasing the number of authorized
shares of common stock;
3. To consider and act upon a proposal to approve the
Company's Non-Employee Director Stock Option and
Retainer Plan;
4. To ratify the appointment of Arthur Andersen LLP as
the Company's independent auditors for the fiscal
year ending March 31, 1997; and
5. To transact such other business as may properly come
before the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on June
20, 1996 as the record date for the determination of stockholders entitled to
notice of, and to vote at, the Annual Meeting. Each stockholder, even though
he or she may presently intend to attend the Annual Meeting, is requested to
execute and date the enclosed proxy card and return it without delay in the
enclosed postage-paid envelope. Any stockholder present at the Annual Meeting
may withdraw his or her proxy card and vote in person on each matter properly
brought before the Annual Meeting.
Please sign, date and mail the enclosed proxy in the enclosed
envelope promptly, so that your shares of stock may be represented at the
meeting.
By Order of the Board of Directors
/s/ HARVEY H. ACHATZ
----------------------------------
Harvey H. Achatz
Secretary
Plano, Texas
June 26, 1996
<PAGE> 4
DAISYTEK INTERNATIONAL CORPORATION
500 NORTH CENTRAL EXPRESSWAY
PLANO, TEXAS 75074
(214) 881-4700
PROXY STATEMENT
This Proxy Statement is furnished to the stockholders of
Daisytek International Corporation, a Delaware corporation ("Daisytek" or the
"Company"), in connection with the solicitation of proxies for use at the
Company's Annual Meeting of Stockholders (the "Annual Meeting"), to be held at
the Stonebriar Country Club, Frisco, Texas, on Friday, August 2, 1996, at 10:00
a.m., and at any and all adjournments thereof.
This solicitation is being made on behalf of the Board of
Directors of the Company. This Proxy Statement, Notice of Annual Meeting of
Stockholders, the enclosed proxy card and the Company's 1996 Annual Report were
first mailed to stockholders on or about June 26, 1996.
The shares represented by a proxy in the enclosed form, if
such proxy is properly executed and is received by the Company prior to or at
the Annual Meeting, will be voted in accordance with the specifications made
thereon. Proxies on which no specification has been made by the stockholder
will be voted:
(i) in favor of the election of the two nominees to the
Board of Directors listed in this Proxy Statement;
(ii) in favor of the amendment to the Company's Amended
and Restated Certificate of Incorporation;
(iii) in favor of the adoption of the Company's
Non-Employee Director Stock Option and Retainer Plan;
and
(iv) to ratify the appointment of Arthur Andersen LLP as
the Company's independent auditors for the fiscal
year ending March 31, 1997.
Any proxy given by a stockholder may be revoked at any time
before its exercise by sending a subsequently dated proxy or by giving written
notice of revocation, in each case, to the Company's Secretary, at the
Company's principal executive offices at the address set forth above.
Stockholders who attend the Annual Meeting in person may withdraw their proxies
at any time before their shares are voted by voting their shares in person.
Stockholders of record at the close of business on June 20,
1996 (the "Record Date") are entitled to notice of, and to vote at, the Annual
Meeting. On the Record Date, the issued and outstanding voting securities of
the Company consisted of 6,437,774 shares of common stock, par value
<PAGE> 5
$.01 per share (the "Common Stock"), each of which is entitled to one vote on
all matters which may properly come before the Annual Meeting or any
adjournment thereof.
The presence at the Annual Meeting, in person or by proxy, of
the holders of a majority of the outstanding shares of Common Stock is
necessary to constitute a quorum. Each item presented herein to be voted on at
the Annual Meeting must be approved by the affirmative vote of a majority of
the holders of the number of shares present either in person or represented by
proxy. The inspector of elections appointed by the Company will count all
votes cast, in person or by submission of a properly executed proxy, before the
closing of the polls at the meeting. Abstentions and "broker non-votes"
(nominees holding shares for beneficial owners who have not voted on a specific
matter) will be treated as present for purposes of determining whether a quorum
is present at the Annual Meeting. However, abstentions and broker non-votes
will have no effect on the vote, because the vote required is a majority of the
votes actually cast (assuming the presence of a quorum).
All references in this Proxy Statement to the Company's fiscal
year mean the 12 month period ending on March 31 of such year.
ITEM I
ELECTION OF DIRECTORS
Since the date of the Company's last Annual Meeting of
Stockholders, the Board of Directors has expanded the size of the Board to
seven members which are divided into three classes. Each class serves three
years, with the terms of office of the respective classes expiring in
successive years. The term of Class II directors expires at the Annual
Meeting. Each director elected as a Class II director at the Annual Meeting
will have a term of three years. The nominees for the Class II directors are
Mark C. Layton and Timothy M. Murray who have been nominated and recommended by
the Board of Directors. If elected, Messrs. Layton and Murray are expected to
serve until the Company's 1999 annual meeting of stockholders and until their
successors are elected and qualified. The shares represented by proxies in the
accompanying form will be voted for the election of these nominees unless
authority to so vote is withheld. The Board of Directors has no reason to
believe that such nominees will not serve if elected, but if they should become
unavailable to serve as directors, and if the Board designates substitute
nominees, the persons named as proxies will vote for the substitute nominees
designated by the Board. Directors will be elected by a majority of the votes
cast at the Annual Meeting.
The following information, which has been provided by the
individuals named, sets forth the nominees for election to the Board of
Directors and the continuing Class I and III directors, such person's name,
age, principal occupation or employment during at least the past five years,
the name of the corporation or other organization, if any, in which such
occupation or employment is carried on and the period during which such person
has served as a director of the Company.
-2-
<PAGE> 6
DIRECTORS STANDING FOR ELECTION
CLASS II
TERM EXPIRES AT THE 1999 ANNUAL MEETING
MARK C. LAYTON, age 36, has served as President, Chief
Operating Officer and Chief Financial Officer of the Company since 1993, as a
Director since 1988, as Executive Vice President from 1990 to 1993 and as Vice
President - Operations from 1988 to 1990. Mr. Layton served as a management
consultant with Arthur Andersen & Co., S.C. for six years through 1988
specializing in wholesale and retail distribution and technology. Mr. Layton
is primarily responsible for the Company's day-to-day operations and general
business and financial activity.
TIMOTHY M. MURRAY, age 43, has served as a Director of the
Company since 1991. Mr. Murray is a Principal of William Blair & Company,
L.L.C., an investment banking firm he joined in 1979. Mr. Murray is also a
director of several privately held corporations. Mr. Murray is a non-employee
Director.
DIRECTORS CONTINUING IN OFFICE
CLASS I
TERM EXPIRES AT THE 1998 ANNUAL MEETING
CHRISTOPHER YATES, age 41, was appointed Senior Vice President
- - Business Development in February 1996 and has served as Vice President -
Business Development from November 1995 to February 1996, as a Director of the
Company since February 1995, as Vice President-Marketing from January 1994 to
November 1995, as Vice President-Sales from 1988 to 1994 and in various other
sales capacities for the Company since 1982. Prior to joining the Company, Mr.
Yates served in various sales capacities for ISA International plc (and its
predecessors) ("ISA"), a distributor of computer supplies in Western Europe.
Mr. Yates is primarily responsible for business development, special projects
and other sales related functions.
MICHAEL P. KRASNY, age 42, was recently appointed a Director
of the Company. Mr. Krasny is the founder of CDW Computer Centers, Inc.
("CDW"), a direct discount marketer of microcomputer hardware and peripherals,
software, networking products and accessories. Mr. Krasny currently serves as
Chairman of the Board, Chief Executive Officer, Secretary and Treasurer of CDW
and has had similar positions and responsibilities with CDW since its inception
in 1984. Mr. Krasny is a non-employee Director.
-3-
<PAGE> 7
CLASS III
TERM EXPIRES AT THE 1997 ANNUAL MEETING
DAVID A. HEAP, age 52, has served as Chairman of the Board and
Chief Executive Officer of the Company since 1982 and as President from 1982 to
1990. From 1970 to 1985, Mr. Heap served as Chairman of ISA, a now publicly
traded company he founded in England in 1970. Mr. Heap is primarily
responsible for the Company's general business strategy and long-term planning.
EDGAR D. JANNOTTA, JR., age 35, has served as a Director of
the Company since 1991. Mr. Jannotta is a Principal of William Blair &
Company, L.L.C., an investment banking firm he joined in 1988. Mr. Jannotta is
also a director of Gibraltar Packaging Group, Inc., a diversified packaging
company. Mr. Jannotta is a non-employee Director.
PETER P. J. VIKANIS, age 45, was recently appointed a Director
of the Company. Mr. Vikanis served as Chief Operating Officer of ISA from 1991
to 1995, as a director of ISA from 1979 to 1995, and also served in various
management capacities at ISA from 1971 to 1991. Mr. Vikanis is a non-employee
Director.
EXECUTIVE OFFICERS
In addition to the individuals named above, the following are
the names, ages and positions of the other executive officers of the Company:
JAMES R. POWELL, age 35, serves as Senior Vice President -
Sales and Marketing, a position he has held since February 1996. Mr. Powell
has served as Vice President - Sales from 1992 to 1996, and in various other
sales capacities from 1988 to 1992. Prior to joining the Company, Mr. Powell
was engaged in various sales and marketing activities.
HARVEY H. ACHATZ, age 55, serves as Vice President -
Administration and Secretary, positions he has held since 1993 and 1984,
respectively. Mr. Achatz has served as Vice President - Finance from 1985 to
1993, as Controller from 1981 to 1985 and as a Director from 1984 to 1990. Mr.
Achatz is responsible for various administrative functions, including human
resources.
RANDY L. STANCILL, age 36, serves as Vice President -
Logistics, a position he has held since February 1996. Mr. Stancill has served
as Vice President - Management Information Systems from 1992 to 1996 and in
various other information systems capacities from 1988 to 1992. Prior to
joining the Company, Mr. Stancill was employed by J.D. Edwards & Company, a
computer software and systems firm.
-4-
<PAGE> 8
THOMAS J. MADDEN, age 34, serves as Vice President - Finance,
Treasurer and as Chief Accounting Officer, positions he has held since November
1994, March 1994 and 1992, respectively. From 1992 to 1994 he also served as
Controller. From 1983 to 1992, Mr. Madden served in various capacities with
Arthur Andersen & Co., S.C., including financial consulting and audit manager.
Mr. Madden is a certified public accountant. Mr. Madden is responsible for the
Company's treasury and accounting functions.
PETER D. WHARF, age 37, serves as Vice President -
International Markets, a position he has held since February 1996. Mr. Wharf
joined the Company in 1992 and has served in various export and international
sales capacities since such time. Prior to joining the Company, Mr. Wharf
served in various sales capacities for ISA.
MEETINGS OF THE BOARD
The Board of Directors met nine times during the Company's
1996 fiscal year. No Director attended fewer than 75% of the aggregate number
of meetings of the Board and Committees on which such director served.
COMMITTEES OF THE BOARD
The Board of Directors currently has standing Audit,
Compensation and Stock Option Committees.
The Audit Committee makes recommendations to the Board of
Directors as to the engagement or discharge of the independent auditors,
reviews the plan and results of the auditing engagement with the independent
auditors, reviews the adequacy of the Company's system of internal accounting
controls, monitors compliance with the Company's business conduct policy and
directs and supervises investigations into matters within the scope of its
duties. The Audit Committee met once during fiscal year 1996. The Audit
Committee presently is composed of Messrs. Krasny and Murray who are
non-employee directors.
The Compensation Committee approves, or in some cases
recommends, to the Board, remuneration and compensation arrangements involving
the Company's executive officers and other key employees. The Compensation
Committee is presently composed of Messrs. Heap, Murray and Jannotta. During a
portion of fiscal year 1996, the Compensation Committee also served as the
Stock Option Committee to administer the Company's employee stock option plans.
The Compensation Committee and Stock Option Committee met once in fiscal year
1996.
The Stock Option Committee administers the Company's employee
stock option plans. The Stock Option Committee is presently composed of
Messrs. Murray and Jannotta.
-5-
<PAGE> 9
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Compensation Committee of the
Company's Board of Directors are David Heap, Chairman of the Board and Chief
Executive Officer of the Company, Timothy M. Murray and Edgar D. Jannotta, Jr.
Prior to February 1996, Mr. Jannotta served on the Compensation Committee
pursuant to a Stockholders Agreement (the "Stockholders Agreement") between the
Company, Mr. Heap (and certain family trusts) and William Blair Leveraged
Capital Fund, Limited Partnership ("WBLCF"). Under the terms of the
Stockholders Agreement, Mr. Heap (and such trusts) and WBLCF agreed to vote
their respective shares of Common Stock, at each annual or special meeting of
stockholders at which directors are to be elected, for two representatives
designated by WBLCF and for five representatives designated by David Heap. In
addition, under the Stockholders Agreement, WBLCF had the right to designate
one representative to each committee of the Company's Board of Directors, to
the Board of Directors of each subsidiary of the Company (a "Sub Board") and to
each Sub Board committee. In February 1996, following the consummation of a
secondary offering of Common Stock by Mr. Heap and WBLCF, the Stockholders
Agreement was terminated. See "Certain Relationships and Related
Transactions."
COMPENSATION OF DIRECTORS
Commencing with the Company's 1997 fiscal year, each
non-employee Director will receive an annual director's fee of $20,000 for each
year in which he or she serves as a director. Non-employee directors will not
receive additional Board or Committee meeting fees. If approved by
stockholders at the Annual Meeting, the Company will adopt the Non-Employee
Director Stock Option and Retainer Plan pursuant to which each non-employee
director (i) may elect to receive payment of the director's fees in shares of
Common Stock in lieu of cash, (ii) will receive an option to purchase 1,000
shares of Common Stock as of the date of the Annual Meeting at an exercise
price equal to the fair market value of the Common Stock as of such date (as
determined in accordance with the provisions of said Plan) and (iii) is
entitled to receive future grants of options in accordance with the formula,
and subject to the conditions precedent, set forth in said Plan. See "Proposal
to Adopt the Company's Non-Employee Director Stock Option and Retainer Plan."
Directors who are employees of the Company or any of its
subsidiaries do not receive additional compensation for service on the Board of
Directors.
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid or
accrued by the Company to its Chief Executive Officer and to each of the four
most highly compensated executive officers for services rendered during the
fiscal years ended March 31, 1996, 1995 and 1994.
-6-
<PAGE> 10
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
NUMBER OF
SECURITIES
ANNUAL UNDERLYING ALL OTHER
COMPENSATION OPTIONS COMPENSATION(2)
---------------------------------------------- ------------ --------------
YEAR SALARY BONUS(1)
---- ------ --------
NAME AND PRINCIPAL POSITION
- ---------------------------
<S> <C> <C> <C> <C> <C>
David A. Heap . . . . . . . 1996 $385,000 $280,676 37,833 $ 8,636
Chairman and Chief 1995 350,000 $171,000 -- 24,701
Executive Officer 1994 325,000 75,760 -- 20,154
Mark C. Layton . . . . . . 1996 276,386 $280,676 28,020 $ 6,008
President, Chief Operating 1995 250,971 171,000 -- 3,967
and Financial Officer 1994 213,621 75,760 32,078 3,874
Christopher Yates. . . . . 1996 215,000 $ 92,623 20,138 $ 2,430
Senior Vice President - 1995 195,000 -- -- 3,321
Business Development 1994 150,000 -- 12,688 3,488
James R. Powell. . . . . . 1996 150,359 $ 70,169 14,004 $ 3,707
Senior Vice President - 1995 123,551 -- -- 3,414
Sales and Marketing 1994 108,852 -- 9,788 1,822
Thomas J. Madden. . . . . . 1996 $112,649 -- 14,703 $ 4,005
Vice President - Finance, 1995 94,294 -- -- --
Chief Accounting Officer 1994 81,904 -- 11,600 --
and Treasurer
</TABLE>
- ----------------------
(1) Such amounts are pursuant to an agreement between the Company and
Messrs. Heap and Layton pursuant to which, subject to the Company's
pre-tax net income (excluding such extraordinary, unusual or
non-recurring items as the Board of Directors deems appropriate, in
accordance with generally accepted accounting principles) ("EBT") for
each fiscal year (as set forth in the Company's audited Consolidated
Financial Statements) being equal to or greater than the EBT projected
in the Company's approved budget for such fiscal year, Messrs. Heap and
Layton are each entitled to receive a cash bonus equal to (i) 1% of
EBT, to the extent EBT is 100% to 105% of the projected EBT and (ii) 5%
of that portion of EBT which exceeds 105% of the projected EBT. For
fiscal year 1996, Messrs. Powell and Yates received a cash bonus equal
to (i) .25% and .33%, respectively, of EBT, to the extent EBT was 100%
to 105% of projected EBT and (ii) 1.25% and 1.65%, respectively, of
that portion of EBT which exceeds 105% of projected EBT.
(2) Represents compensation in respect of one or more of the following:
personal use of Company automobiles; life insurance premiums paid by
the Company for the benefit of the named executive officer; tax return
preparation services paid by the Company; and personal travel expenses.
The following table sets forth information with respect to grants of
stock options during the year ended March 31, 1996, to the named executive
officers reflected in the Summary Compensation Table:
-7-
<PAGE> 11
OPTION GRANTS IN FISCAL YEAR 1996
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERMS(2)
----------------------------------------------------- --------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED FISCAL YEAR PER SHARE DATE(1) 5% 10%
---- ---------- ------------ --------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
David A. Heap ...... 37,833 14.6 $ 19.50 5-9-05 $463,833 $1,175,850
Mark C. Layton ..... 28,020 10.8 19.50 5-9-05 343,525 870,862
Christopher Yates... 20,138 7.7 19.50 5-9-05 246,892 625,889
James R. Powell..... 14,004 5.4 19.50 5-9-05 171,689 435,244
Thomas J. Madden.... 14,703 5.7 19.50 5-9-05 180,259 456,969
</TABLE>
- ---------------------------
(1) All of such options are subject to a three year cumulative
vesting schedule under which 15% vested on May 9, 1996, 50%
will vest on May 9, 1997 and 100% will vest on May 9, 1998.
(2) These are hypothetical values using assumed annual rates of
stock price appreciation as prescribed by the rules of the
Securities and Exchange Commission.
The following table sets forth information concerning the
aggregate stock option exercises during the fiscal year ended March 31, 1996
and stock option values as of the end of fiscal year 1996 for unexercised stock
options held by each of the named executive officers:
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1996
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT FISCAL YEAR END AT FISCAL YEAR END(1)
ACQUIRED ON VALUE --------------------------- ----------------------------
NAME EXERCISE REALIZED(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David A. Heap...... - - - 37,833 - $510,746
Mark C. Layton..... - - 29,727 44,059 $ 823,438 822,550
Christopher Yates.. - - 54,456 26,482 1,668,825 447,592
James R. Powell.... 12,738 $279,803 19,532 18,898 541,036 324,618
Thomas J. Madden... 1,150 29,555 12,863 20,503 356,305 359,151
</TABLE>
- -------------------------
(1) Calculated by determining the difference between $ 33 (the
last sale price of the Common Stock on March 31, 1996 as
reported by the Nasdaq National Market) and the exercise price
of the shares of Common Stock underlying the options.
(2) Calculated by determining the difference between the last sale
price of the Common Stock on the date of exercise as reported
by the Nasdaq National Market and the exercise price.
-8-
<PAGE> 12
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the
"Committee") is presently comprised of Messrs. Heap, Murray and Jannotta and is
responsible for approval or recommendation to the Board of Directors of the
compensation arrangements for the Company's senior executive officers.
The Committee believes that the total compensation of the
Company's senior executive officers should be primarily based on the subjective
determination of the Committee as to the Company's overall financial
performance and the individual contribution to such performance. The Committee
further believes that a portion of total compensation should consist of
variable, performance-based components such as stock option awards and bonuses,
which it can increase or decrease to reflect its assessment of changes in
corporate and individual performance. These incentive compensation programs
are intended to reinforce management's commitment to enhance profitability and
stockholder value.
In formulating compensation levels and policies for the 1996
fiscal year, the Committee did not retain an independent compensation
consultant, nor did the Committee rely upon any formal study or review of
comparable companies in the Company's industry. Nevertheless, the Committee
believes that the Company's executive compensation salary levels may be less
than industry norms in the Company's geographic regions.
The Committee annually establishes the salaries to be paid to
the Chief Executive Officer and other senior executive officers during each
fiscal year. Base salaries for senior executive officers are set to reflect
the duties and level of responsibility in each position. In setting salaries,
the Committee takes into account several factors including individual job
performance, the level of responsibility and, to the extent information is
available, competitive pay practices in the Company's industry. In considering
job performance, the Committee generally ranks each individual's performance on
a scale of "1 to 5", with "5" signifying excellent performance, "3"
representing average performance and "1" representing unsatisfactory
performance. Subject to the Committee's consideration of other factors, the
Committee generally recommends a salary increase of between 6% or more
(generally up to 10%) for individuals receiving a "5" rating, between 4% and 6%
for individuals receiving a "4" rating, between 3% and 4% for individuals
receiving a "3" rating and no increase for individuals receiving less than a
"3" rating. Nevertheless, the Committee does not assign specific relative
weights to the various factors it considers, but rather exercises its
discretion and makes a judgment after considering all factors it deems
relevant.
For fiscal year 1996, the base salary of Mr. David Heap, the
Company's Chairman and Chief Executive Officer, was $385,000, which represented
a 10% increase from his base salary for the prior fiscal year. The Committee
believes that this amount appropriately reflected Mr. Heap's services as Chief
Executive Officer, although such determination was not based upon any specific
qualitative or quantitative formula.
-9-
<PAGE> 13
In considering bonus compensation awards, and in order to more
closely link executive compensation to the Company's performance, the Committee
approved an agreement between the Company and Messrs. Heap and Layton pursuant
to which, subject to the Company's pre-tax net income (excluding such
extraordinary, unusual or non-recurring items as the Board of Directors deems
appropriate, in accordance with generally accepted accounting principles)
("EBT") for each fiscal year (as set forth in the Company's audited
Consolidated Financial Statements) being equal to or greater than the EBT
projected in the Company's approved budget for such fiscal year, Messrs. Heap
and Layton are each entitled to receive a cash bonus equal to (i) 1% of EBT, to
the extent EBT is 100% to 105% of the projected EBT and (ii) 5% of that portion
of EBT which exceeds 105% of the projected EBT. Pursuant to this Agreement,
each of Messrs. Heap and Layton received a bonus of $280,676 for the 1996
fiscal year. For fiscal year 1996, the Committee also approved a similar bonus
program for Messrs. Powell and Yates pursuant to which they were entitled to
receive a cash bonus equal to (i) a .25% and .33%, respectively, of EBT, to the
extent EBT is 100% of projected EBT and (ii) 1.25% and 1.65%, respectively, of
that portion of EBT which exceeds 105% of projected EBT. Under this program,
Mr. Yates received a bonus of $92,623 and Mr. Powell received a bonus of
$70,169.
In keeping with the Committee's policy of linking executive
compensation to Company performance, the Company's 1994 Stock Option Plan
provides that, for each fiscal year, options may only be granted if the
Company's EBT for such year equals or exceeds the Company's projected EBT for
such year.
In addition, the 1994 Stock Option Plan contains general
non-binding guidelines which the Committee considers in granting options.
Under these guidelines, the Committee classifies all executive employees into
an A, B or C performance group, with such classification being based upon
various factors, such as performance and contribution of each such person. The
Committee then considers granting to each person in a performance group a
number of options equal to the product obtained by multiplying the "performance
multiplier" (as hereinafter defined) by the quotient obtained by dividing such
person's average annual base salary (excluding bonuses and other compensation)
for such fiscal year by 10,000. The performance multiplier for the A group is
725; the performance multiplier for the B group is 435; and the performance
multiplier for the C group is 145. As provided in these guidelines, to the
extent the Company's EBT in any fiscal year exceeds the projected EBT for such
fiscal year, the Committee considers increasing the number of options granted
using such excess (expressed as a percentage) to increase the performance
multiplier.
Under the terms of the 1994 Stock Option Plan, the number of
options to be issued to Messrs. Heap and Layton (for so long as such persons
serve on the Stock Option Committee and for 12 months thereafter) is equal to
the product obtained by multiplying 725 (the performance multiplier for the A
group as described above) by the quotient obtained by dividing such person's
annual base salary (excluding bonuses and other compensation) for such fiscal
year by 10,000. In accordance with this formula, during fiscal year 1996, Mr.
Heap received options to purchase 25,333 shares and Mr. Layton received options
to purchase 18,020 shares. In addition, in recognition of such persons'
contribution to the Company's performance and financial success during fiscal
year 1995, the
-10-
<PAGE> 14
Committee approved a special one-time grant of 12,500 options and 10,000
options to Messrs. Heap and Layton, respectively. All of such options have an
exercise price of $19.50 per share which was the closing sale price of the
Common Stock (as reported by the Nasdaq National Market) on the date of grant.
As part of its overall consideration of executive
compensation, the Committee considers the anticipated tax treatment of various
payments and benefits, including the applicability of Section 162(m) of the
Internal Revenue Code which provides a limit on the deductibility of
compensation for certain executive officers in excess of $1,000,000 per year.
The Committee believes that no named officer in the Summary Compensation Table
had taxable compensation for fiscal year 1996 in excess of the deduction limit.
The Committee intends to continue to evaluate the impact of this Code
provision.
The Committee believes that the policies and programs
described above have supported the Company's business objectives and have
contributed to the Company's performance.
COMPENSATION COMMITTEE
David A. Heap
Timothy M. Murray
Edgar D. Jannotta, Jr.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of May 31, 1996, certain
information regarding the beneficial ownership of the Common Stock by (i) each
person who is known to the Company to beneficially own more than 5% of the
Common Stock, (ii) each of the Directors and executive officers of the Company
individually and (iii) the Directors and executive officers of the Company as a
group. The information contained in this table reflects "beneficial ownership"
as defined in Rule 13d-3 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). Unless otherwise indicated, the stockholders identified
in this table have sole voting and investment power with respect to the shares
owned of record by them.
-11-
<PAGE> 15
<TABLE>
<CAPTION>
Number
Name and Address of Beneficial Owner of shares Percent (1)
------------------------------------ --------- -----------
<S> <C> <C>
David A. Heap (2) . . . . . . . . . . . . . . . . . . . . . . . 1,068,974 16.6%
500 North Central Expressway
Plano, Texas 75074
Royal Bank of Canada Trust Company
(Jersey) Limited, Brian Gerald Balleine,
Kenneth Edward Rayner, Trustees,
of the David Anthony Heap 1996
Interest in Possession Settlement (3) . . . . . . . . . . . . . 565,173 8.8%
19-21 Broad Street
St. Helier, Jersey, Channel Islands
Royal Bank of Canada Trust Company
(Jersey) Limited, Brian Gerald Balleine
and Kenneth Edward Rayner, Trustees,
of the David Heap Life Interest
Settlement (No. 10) (4) . . . . . . . . . . . . . . . . . . . . 584,673 9.1%
19-21 Broad Street
St. Helier, Jersey, Channel Islands
William Blair Leveraged Capital Fund
Limited Partnership . . . . . . . . . . . . . . . . . . . . . . 516,006 8.0%
222 West Adams Street
Chicago, Illinois 60606
Mark C. Layton (5) . . . . . . . . . . . . . . . . . . . . . . 211,087 3.3%
Christopher Yates (6) . . . . . . . . . . . . . . . . . . . . . 124,048 1.9%
Harvey H. Achatz (7) . . . . . . . . . . . . . . . . . . . . . 61,909 *
James R. Powell (8) . . . . . . . . . . . . . . . . . . . . . . 39,265 *
Randy L. Stancill (9). . . . . . . . . . . . . . . . . . . . . 28,381 *
Thomas J. Madden (10) . . . . . . . . . . . . . . . . . . . . . 25,343 *
Peter D. Wharf (11) . . . . . . . . . . . . . . . . . . . . . . 7,902 *
Edgar D. Jannotta, Jr. (12) . . . . . . . . . . . . . . . . . . 10,327 *
Timothy M. Murray (12) . . . . . . . . . . . . . . . . . . . . 20,000 *
Michael P. Krasny . . . . . . . . . . . . . . . . . . . . . . . 5,000 *
Peter P. J. Vikanis . . . . . . . . . . . . . . . . . . . . . . -- --
All directors and executive officers
as a group (12 persons) (13) . . . . . . . . . . . . . . . . . 1,602,236 24.9%
</TABLE>
- --------------------------
*Represents less than 1%
(1) This table is based on 6,437,774 shares of Common Stock outstanding
as of May 31, 1996.
-12-
<PAGE> 16
(2) Includes outstanding options to purchase 5,675 shares of Common
Stock which are fully vested and exercisable. Does not include (i)
900 shares held by Mr. Heap's spouse as custodian for minor children
as to which beneficial ownership is disclaimed, (ii) options to
purchase 75,022 shares of Common Stock which are not vested or
exercisable and (iii) an aggregate of 1,149,846 shares of Common
Stock held of record by the trusts set forth above (the "Heap
Trusts"). Although Mr. Heap and members of his family are the
primary beneficiaries of the Heap Trusts, neither Mr. Heap nor such
beneficiaries have voting or investment power with respect to such
shares. Of the shares owned of record by Mr. Heap, 76,500 are
pledged to a financial institution to secure indebtedness owing by
Mr. Heap to such institution.
(3) Shares are held of record by a Trust established by Mr. Heap for
which he and members of his family are the primary beneficiaries,
although neither Mr. Heap nor such beneficiaries may exercise voting
or investment power with respect to such shares.
(4) Shares are held of record by a Trust established by Mr. Heap for
which he and members of his family are the primary beneficiaries,
although neither Mr. Heap nor such beneficiaries may exercise voting
or investment power with respect to such shares. All of such shares
are pledged to a financial institution to secure indebtedness owing
by such Trust and Mr. Heap to such institution.
(5) Includes outstanding options to purchase 49,969 shares of Common
Stock which are fully vested and exercisable. Does not include
outstanding options to purchase 58,733 shares of Common Stock which
are not vested or exercisable.
(6) Includes outstanding options to purchase 63,821 shares of Common
Stock which are fully vested and exercisable. Does not include
outstanding options to purchase 37,677 shares of Common Stock which
are not vested or exercisable.
(7) Includes outstanding options to purchase 27,658 shares of Common
Stock which are fully vested and exercisable. Does not include
outstanding options to purchase 3,360 shares of Common Stock which
are not vested or exercisable.
(8) Includes outstanding options to purchase 24,527 shares of Common
Stock which are fully vested and exercisable. Does not include
outstanding options to purchase 33,233 shares of Common Stock which
are not vested or exercisable.
(9) Includes outstanding options to purchase 2,005 shares of Common Stock
which are fully vested and exercisable. Does not include outstanding
options to purchase 7,541 shares of Common Stock which are not vested
or exercisable.
(10) Includes outstanding options to purchase 20,868 shares of Common
Stock which are fully vested and exercisable. Does not include
outstanding options to purchase 29,085 shares of Common Stock which
are not vested or exercisable.
(11) Includes outstanding options to purchase 7,902 shares of Common Stock
which are fully vested and exercisable. Does not including
outstanding options to purchase 21,505 shares of Common Stock which
are not vested or exercisable.
(12) Does not include shares of Common Stock held by WBLCF as to which
beneficial ownership is disclaimed.
-13-
<PAGE> 17
(13) Includes outstanding options to purchase 202,425 shares of Common
Stock which are fully vested and exercisable. Does not include (i)
outstanding options to purchase 266,156 shares of Common Stock which
are not vested or exercisable or (ii) shares of Common Stock held by
WBLCF or the Heap Trusts.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PRIVATE PLACEMENT
In December 1991, the Company and WBLCF entered into a Stock
Purchase Agreement (as amended, the "Stock Purchase Agreement"), pursuant to
which the Company issued to WBLCF an aggregate of 1,666,830 shares of Common
Stock, warrants to purchase 398,678 shares of Common Stock (the "A Warrants")
and warrants to purchase 470,671 shares of Common Stock (the "B Warrants") for
an aggregate consideration of $10.0 million (the "Private Placement").
The A Warrants and the B Warrants contained an exercise price of
$0.01 per share. The A Warrants were exercised by the holders thereof in
January 1995 in connection with the consummation of the Company's initial
public offering, and the B Warrants were terminated, pursuant to their terms,
on the effective date of the registration statement filed by the Company under
the Securities Act with respect to such offering and are no longer outstanding.
Under the terms of the Stock Purchase Agreement, the Company was
prohibited from taking certain actions, including any merger, consolidation or
acquisition (with certain exceptions for smaller transactions), sale of
substantially all of its assets, liquidation, dissolution or certain charter
amendments, without the consent of WBLCF. In addition, as part of the Private
Placement, WBLCF was granted certain registration rights and the Company,
WBLCF, Mr. Heap and the Heap Trusts entered into the Stockholders Agreement.
See "Compensation Committee Interlocks and Insider Participation."
In February 1996, following the consummation of a secondary
offering of Common Stock by Mr. Heap and WBLCF, all of the provisions of the
Stock Purchase Agreement and the Stockholders Agreement were terminated.
CERTAIN TRANSACTIONS
During the past several years, the Company made loans in varying
amounts to David Heap, the Company's Chairman of the Board and Chief Executive
Officer, and Mark Layton, the Company's President, Chief Operating and
Financial Officer and a member of its Board of Directors, in order to provide
such persons with the funds necessary to satisfy various personal obligations
and for other purposes. In February 1995, Mr. Heap repaid his loan in full
concurrent with the consummation of the Company's initial public offering.
During fiscal year 1996, the largest amount owing by Mr. Layton was $395,052
and as of
-14-
<PAGE> 18
May 31, 1996, Mr. Layton was indebted to the Company in the amount of $399,652.
The indebtedness owing by Mr. Layton accrues interest at the rate charged to the
Company for working capital borrowings and is due and payable in one installment
on December 31, 1996.
David Heap, the Company's Chairman of the Board and Chief
Executive Officer, owns approximately a one-third equity interest in a small
computer supplies dealer, Business Software Centers, Inc. ("BSC"). In December
1991, Mr. Heap agreed to remit to the Company any dividends, distributions or
other amounts which he may receive in respect of such interest. Mr. Heap has
not received any dividends, distributions or other amounts in respect of his
equity interest and it is unlikely that he will receive any in the future.
During fiscal year 1996, the Company's sales to BSC aggregated
approximately $1,520,000, and constituted less than 1% of the Company's total
sales in such fiscal year. Such sales were made in accordance with the
Company's usual terms, except that BSC received extended payment terms in
return for which BSC agreed, among other things, to provide the Company with
quarterly financial information. In December 1993, the Company and BSC agreed
that (i) $500,000 of the past due trade receivable then owing by BSC would be
evidenced by a promissory note, payable in 48 monthly installments and accruing
interest at the rate of 7% per annum, (ii) the Company would provide BSC with
60 day credit terms up to a maximum amount of $350,000 (subject to BSC
continuing to meet its obligations under the note), (iii) BSC would provide the
Company with quarterly financial information and (iv) at such time as the note
is paid in full, Mr. Heap will transfer to BSC, for a nominal consideration,
the one-third equity interest held in BSC. As of May 31, 1996, there was
approximately $152,000 outstanding under the note and there were no past due
trade amounts payable by BSC to the Company.
PERFORMANCE GRAPH
The following line graph displays the cumulative total return to
stockholders of the Company's Common Stock from January 27, 1995 (the
commencement of trading of the Company's Common Stock) to March 31, 1996,
compared to the cumulative total return for the Total Return Index for The
Nasdaq Stock Market (US), a broad market index, and to the Nasdaq Non-Financial
Stocks Index, an index of non-financial companies found within a range of
Standard Industrial Classification code numbers, which includes the Company.
The graph assumes a $100 investment in the Company's Common Stock
on January 27, 1995 at the initial offering price of $15 per share. The graph
also assumes investments in the Nasdaq Total Return (US) Index and the Nasdaq
Non-Financial Stocks Index of $61.32 and $67.18 respectively on March 31, 1991.
The value of these investments would have increased to $100 on January 27,
1995.
Although the Common Stock has only been publicly-held since
January 1995, the graph shows the performance of the Nasdaq Total Return (US)
Index and the Nasdaq Non-Financial Stocks Index for the past five years. This
information is being provided as the Company believes that it enhances the
reader's understanding of the performance of the Common Stock. Depicting the
two Nasdaq indexes only
-15-
<PAGE> 19
for the period that the Common Stock has been publicly-held would deprive the
reader of the historical perspective of the indexes.
[CHART]
<TABLE>
<CAPTION>
3/31/91 3/31/92 3/31/93 3/31/94 1/27/95 3/31/95 3/31/96
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Daisytek 100.00 146.67 220.00
Nasdaq U.S. (a) 61.32 78.15 89.84 96.97 100.00 107.87 146.48
Nasdaq nonfinancial (a) 67.18 83.63 90.22 99.00 100.00 107.90 143.48
</TABLE>
(a) Prepared by the Center for Research in Security Prices (CRSP)
-16-
<PAGE> 20
ITEM 2
PROPOSED AMENDMENT TO COMPANY CHARTER
The Board of Directors recommends that Article Fourth of the
Company's Amended and Restated Certificate of Incorporation be amended for the
purpose of increasing the number of authorized shares of Common Stock from 10
million shares to 20 million shares. The form of Amendment is set forth as
Appendix I to this Proxy Statement.
The additional authorized shares may be used in the future for
any proper corporate purpose approved by the Board of Directors. Permissible
uses might include financings, corporate mergers or acquisitions, employee
benefit programs, acquisitions of property, funding of new product programs or
businesses, stock dividends, stock splits and other corporate purposes. No
further action or authorization by the stockholders would be necessary prior to
the issuance of additional shares unless the applicable laws or regulations or
the rules of any stock exchange on which the Company's common stock may then be
listed require such approval. If the proposed Amendment is adopted, all or any
of the authorized shares of Common Stock may be issued without first offering
such shares to existing stockholders for subscription. The issuance of such
shares otherwise than to existing stockholders on a pro rata basis could have
the effect of reducing an existing stockholder's proportionate interests. The
Company has no present plans, agreements, commitments or understandings
regarding the issuance of any newly authorized shares.
As is presently the case, the availability for issuance of
additional shares of Common Stock could enable the Board of Directors to render
more difficult or discourage an attempt to obtain control of the Company. For
example, the issuance of shares of Common Stock in a public or private sale,
merger or similar transaction would increase the number of outstanding shares,
thereby possibly diluting the interest of a party attempting to obtain control
of the Company. The Company is not aware of any efforts to obtain control of
the Company.
If adopted, the Amendment will be effective upon filing with the
Delaware Secretary of State as required by the General Corporation Law of
Delaware. It is anticipated that this will occur promptly following the date
of the Annual Meeting.
The Board of Directors recommends a vote FOR the adoption of the
Amendment to the Company's Amended and Restated Certificate of Incorporation.
ITEM 3
PROPOSAL TO ADOPT THE COMPANY'S NON-EMPLOYEE DIRECTOR
STOCK OPTION AND RETAINER PLAN
The Company's Non-Employee Director Stock Option and Retainer
Plan (the "Plan") was adopted by the Company's Board of Directors in April 1996
and is subject to approval by stockholders at the Annual Meeting. The
following description of the Plan is qualified in its entirety by the
provisions of the Plan, a copy of which is attached as Appendix II to this
Proxy Statement.
-17-
<PAGE> 21
The Plan was adopted to enable the Company to provide an
incentive to attract and retain qualified outside directors to serve on the
Company's Board of Directors and to further the identity of interests of the
outside directors and stockholders of the Company. There are currently four
outside directors on the Board.
Under the Plan, outside directors may elect to receive payment of
all or any portion of their annual director's fee either in cash or shares of
Common Stock. Any election to receive shares must be made pursuant to an
election at least six months in advance of the date such payment is due (or
such earlier date as may be permitted under Rule 16b-3 promulgated under the
Exchange Act), and such election may not be revoked except by a revocation made
at least six months prior to its effective date (or such earlier date as may be
permitted under Rule 16b-3). The number of shares is determined by the fair
market value of a share of Common Stock as of the most recent trading day
immediately preceding the date payment is due.
The Plan is a formula grant plan pursuant to which each outside
director will receive an option to purchase 1,000 shares as of the date of the
Annual Meeting. Commencing with the 1997 fiscal year, and on a cumulative
basis for each fiscal year thereafter, the number of options to be issued to
each outside director will increase by the percentage increase, if any, in the
Company's EBT for such fiscal year over the Company's EBT for the immediately
preceding fiscal year. No options will be issued, however, with respect to any
fiscal year in which the Company's EBT does not equal or exceed the Company's
projected EBT for such year, nor will any options be issued to any outside
director who does not attend at least 75% of all Board (and committee) meetings
held during such fiscal year. All options will be non-qualified options for
federal income tax purposes, will be issued as of the date of the Company's
annual meeting of stockholders and will have an exercise price equal to the
fair market value of a share of Common Stock as of such date. All options are
subject to a three year cumulative vesting schedule under which 15% vest after
the first year, 50% vest after the second year and 100% vest after the third
year; provided, however, that all options fully vest upon the termination of
the outside director's service as a director so long as such termination is no
earlier than one year from the date of grant. All vested options must be
exercised before the earlier of (i) ten years from the date of grant, (ii) one
year from the date of the outside director's death or retirement due to
disability or (iii) three months from the termination of the outside director's
service as a director other than by reason of death or disability.
The aggregate number of shares of Common Stock which may be
issued under the Plan is 50,000. The Plan will be administered by a committee
of two Directors appointed by the Board or, in and absence of such appointment,
by the Board; provided, however, that the Plan will be administered in a manner
sufficient to comply with the provisions of Rule 16b-3 and, in particular, in
order to provide that the persons responsible for the administration of the
Plan satisfy any requirements of Rule 16b-3. The Plan may be amended or
modified by the Board from time to time; provided, however, that no amendment
or modification which requires shareholder approval under Rule 16b-3 will be
effective in the absence of such approval.
The Board of Directors recommends a vote FOR adoption of the
Company's Non-Employee Director Stock Option and Retainer Plan.
-18-
<PAGE> 22
ITEM 4
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Company has appointed Arthur Andersen LLP as the Company's
independent auditors for the fiscal year ending March 31, 1997. Arthur
Andersen LLP has audited the Company's financial statements since 1988.
Ratification of the appointment of Arthur Andersen LLP as the Company's
independent auditors will require the affirmative vote of a majority of the
shares of Common Stock represented in person or by proxy and entitled to vote
at the Annual Meeting. In the event shareholders do not ratify the appointment
of Arthur Andersen LLP as the Company's independent auditors, such appointment
will be reconsidered by the Audit Committee and the Board of Directors.
Representatives of Arthur Andersen LLP will be present at the Annual Meeting to
respond to appropriate questions and to make such statements as they may
desire.
The Board of Directors of the Company recommends a vote FOR
ratification of Arthur Andersen LLP as the Company's independent auditors for
the fiscal year ending March 31, 1997.
GENERAL INFORMATION
VOTING PROCEDURES
All matters specified in this Proxy Statement that are to be
voted on at the Annual Meeting will be by written ballot. One or more
inspectors of election will be appointed, among other things, to determine the
number of shares outstanding and the voting power of each, the shares
represented at the Annual Meeting, the existence of a quorum and the
authenticity, validity and effect of proxies, to receive votes or ballots, to
hear and determine all challenges and questions in any way arising in
connection with the right to vote, to count and tabulate all votes and to
determine the result.
SOLICITATION COSTS
The Company will pay the cost of preparing and mailing this Proxy
Statement and other costs of the proxy solicitation made by the Board of
Directors. Certain of the Company's officers and employees may solicit the
submission of proxies authorizing the voting of shares in accordance with the
Board of Directors' recommendations, but no additional remuneration will be
paid by the Company for the solicitation of those proxies. Such solicitations
may be made by personal interview or telephone. Arrangements have also been
made with brokerage firms and others for the forwarding of proxy solicitation
materials to the beneficial owners of Common Stock, and the Company will
reimburse such persons for reasonable out-of-pocket expenses incurred in
connection therewith.
-19-
<PAGE> 23
STOCKHOLDER PROPOSALS FOR THE 1997 ANNUAL MEETING
A stockholder desiring to submit an otherwise eligible proposal
for inclusion in the Company's proxy statement for the 1997 annual meeting of
stockholders of the Company must deliver the proposal so that it is received by
the Company no later than March 2, 1997. The Company requests that all such
proposals be addressed to the Company's Secretary at the Company's principal
executive offices, 500 North Central Expressway, Plano, Texas 75074, and mailed
by certified mail, return-receipt requested.
COMPLIANCE WITH CERTAIN REPORTING OBLIGATIONS
Section 16(a) of the Exchange Act requires the Company's
executive officers, directors and controlling stockholders to file initial
reports of ownership and reports of changes of ownership of the Company's
Common Stock with the Securities and Exchange Commission and the Company. To
the Company's knowledge, all reports required to be so filed were filed in
accordance with the provisions of said Section 16(a).
FINANCIAL AND OTHER INFORMATION
The Company's Annual Report for the year ended March 31, 1996,
including financial statements, is being sent to stockholders of record as of
the Record Date together with this Proxy Statement. The Annual Report is not a
part of the proxy solicitation materials. The Company will furnish, without
charge, a copy of its Annual Report on Form 10-K for the year ended March 31,
1996 as filed with the Securities and Exchange Commission to any stockholder
who submits a written request to the Company at its executive offices, 500
North Central Expressway, Plano, Texas 75074, Attention: Investor Relations.
OTHER MATTERS
The Board of Directors knows of no matters other than those
described in this Proxy Statement which are likely to come before the Annual
Meeting. If any other matters properly come before the Annual Meeting, or any
adjournment thereof, the persons named in the accompanying form of proxy intend
to vote the proxies in accordance with their best judgment.
By Order of the Board of Directors,
/s/ HARVEY H. ACHATZ
-----------------------------------
Harvey H. Achatz
Secretary
Plano, Texas
June 26, 1996
-20-
<PAGE> 24
APPENDIX I
CERTIFICATE OF AMENDMENT
OF
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
DAISYTEK INTERNATIONAL CORPORATION
(A DELAWARE CORPORATION)
It is hereby certified that:
1. The name of the corporation (hereinafter called the "Corporation") is
Daisytek International Corporation.
2. The Amended and Restated Certificate of Incorporation of the
Corporation is hereby amended by striking out Article FOURTH of Section 4
thereof and by substituting in lieu of said Article the following new Article
FOURTH:
"The total number of shares which the Corporation shall have
authority to issue is Twenty-one Million (21,000,000) shares,
consisting of One Million (1,000,000) shares of Preferred Stock, of a
par value of One Dollar ($1.00) per share (hereinafter
called "Preferred Stock"), and Twenty Million (20,000,000) shares of
Common Stock, of the par value of One Cent ($.01) per share
(hereinafter called "Common Stock")."
3. The amendment of the Amended and Restated Certificate of Incorporation
herein certified has been duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware.
Signed on August 2, 1996.
DAISYTEK INTERNATIONAL CORPORATION
By:
-------------------------------
Mark C. Layton, President
ATTEST:
By:
------------------------------
Harvey Achatz, Secretary
<PAGE> 25
APPENDIX II
NON-EMPLOYEE DIRECTOR STOCK OPTION AND RETAINER PLAN
OF
DAISYTEK INTERNATIONAL CORPORATION
__________________________
Daisytek International Corporation, a corporation organized under
the laws of the State of Delaware, hereby adopts this Non-Employee Director
Stock Option and Retainer Plan. The purposes of this Plan are as follows:
(1) To further the growth, development and financial success of
the Company by providing incentives to its non-employee Directors by assisting
them to become owners of the Company's Common Stock and thus to benefit
directly from its growth, development and financial success.
(2) To enable the Company to obtain and retain the services of
qualified non-employee Directors in order to contribute to the long-range
success of the Company by providing and offering them an opportunity to become
owners of the Company's Common Stock.
ARTICLE I
DEFINITIONS
Whenever the following terms are used in this Plan, they shall
have the meaning specified below unless the context clearly indicates to the
contrary. The masculine pronoun shall include the feminine and neuter and the
singular shall include the plural, where the context so indicates.
Section 1.1 - Board
"Board" shall mean the Board of Directors of the Company.
Section 1.2 - Code
"Code" shall mean the Internal Revenue Code of 1986, as amended.
Section 1.3 - Committee
"Committee" shall mean the Committee appointed by the Board, as
provided in Section 6.1.
-1-
<PAGE> 26
Section 1.4 - Company
"Company" shall mean Daisytek International Corporation, a
Delaware corporation.
Section 1.5 - Director
"Director" shall mean a member of the Board who is not an
Employee.
Section 1.6 - Effective Date
"Effective Date" shall mean the date upon which this Plan shall
be approved by the stockholders of the Company in accordance with the Company's
bylaws.
Section 1.7 - Employee
"Employee" shall mean any employee (as defined in accordance with
the regulations and revenue rulings then applicable under Section 3401(c) of
the Code) of the Company, or of any corporation which is then a Parent
Corporation or a Subsidiary.
Section 1.8 - Exchange Act
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
Section 1.9 - Non-Qualified Option
"Non-Qualified Option" shall mean an Option which is not an
incentive stock option and is not qualified under Section 422 of the Code.
Section 1.10 - Officer
"Officer" shall mean an officer of the Company, as defined in
Rule 16a-1(f) under the Exchange Act, as such Rule may be amended in the
future.
Section 1.11 - Option
"Option" shall mean an option to purchase Common Stock of the
Company granted under the Plan.
Section 1.12 - Optionee
"Optionee" shall mean a Director to whom an Option is granted
under the Plan.
-2-
<PAGE> 27
Section 1.13 - Parent Corporation
"Parent Corporation" shall mean any corporation in an unbroken
chain of corporations ending with the Company if each of the corporations other
than the Company then owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.
Section 1.14 - Plan
"Plan" shall mean this Non-Employee Director Stock Option and
Retainer Plan of Daisytek International Corporation.
Section 1.15 - Retainer
"Retainer" shall mean the annual cash retainer payable to each
Director for services as a member of the Board and any committee or committees
of the Board.
Section 1.16 - Rule 16b-3
"Rule 16b-3" shall mean that certain Rule 16b-3 under the
Exchange Act, as such Rule may be amended in the future.
Section 1.17 - Secretary
"Secretary" shall mean the Secretary of the Company.
Section 1.18 - Securities Act
"Securities Act" shall mean the Securities Act of 1933, as
amended.
Section 1.19 - Shares
"Shares" shall mean shares of the Company's Common Stock, $.01
par value.
Section 1.20 - Subsidiary
"Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other than
the last corporation in the unbroken chain then owns stock possessing 50% or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.
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Section 1.21 - Termination
"Termination" shall mean the time when the Director no longer
serves as a member of the Board, including, but not by way of limitation, a
termination by resignation, discharge, death or retirement.
ARTICLE II
SHARES SUBJECT TO PLAN
Section 2.1 - Shares Subject to Plan
The Shares of stock subject to this Plan shall be shares of the
Company's Common Stock, $.01 par value. The aggregate number of such Shares
which may be issued pursuant to this Plan shall be 50,000.
Section 2.2 - Unexercised Options
If any Option expires or is canceled without having been fully
exercised, the number of Shares subject to such Option but as to which such
Option was not exercised prior to its expiration or cancellation, may again be
optioned hereunder, subject to the limitations of Section 2.1.
Section 2.3 - Changes in Company's Shares
In the event that the outstanding Shares of Common Stock of the
Company are hereafter changed into or exchanged for a different number or kind
of shares or other securities of the Company, or of another corporation, by
reason of reorganization, merger, consolidation, recapitalization,
reclassification, stock split-up, stock dividend or combination of shares,
appropriate adjustments shall be made by the Committee in the number and kind
of Shares which may be issued hereunder, including adjustment to the number of
Options to be issued to Directors hereunder and adjustment to the aggregate
number of Shares subject hereto.
ARTICLE III
RETAINER FEES AND GRANTING OF OPTIONS
Section 3.1 - Payment of Retainer
(a) Commencing on the Effective Date, each Director may elect
under the Plan to receive payment of any Retainer (in such installments as such
Retainer shall be payable) in Shares, in lieu of cash, by
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submitting a written election (the "Notice of Election") to the Company. The
Notice of Election shall become effective six months following the date of the
Notice of Election or such earlier date as may be permitted under Rule 16b-3
(the "Election Effective Date") and, from and after the Election Effective Date,
all Retainers payable to the electing Director (whether in installments or
otherwise) shall be payable in Shares in the manner set forth herein.
(b) Each Notice of Election shall become effective on its
Election Effective Date and shall continue in effect until revoked by the
electing Director in a written notice of revocation (the "Notice of
Revocation") delivered to the Company; provided, however, that no Notice of
Revocation shall become effective until six months following the date of the
Notice of Revocation or such earlier date as may be permitted under Rule 16b-3.
(c) If no Notice of Election is submitted to the Company, all
Retainers shall be payable in cash.
Section 3.2 - Number of Shares
The number of Shares to be issued to each Director electing to
have his or her Retainer paid in Shares shall be determined by dividing the
dollar amount of the then payable Retainer by the fair market value of the
Shares as of the most recent trading day immediately prior to the date the
Retainer is otherwise payable. No fractional Shares shall be issued and any
fractional Share shall be rounded to the nearest whole Share. Subject to the
terms and provisions hereof, all Shares shall be issued in certificate form in
the name of the Director (or any designee) as promptly as practicable following
the date of payment. For purposes of this Section, fair market value shall be
determined in accordance with Section 4.2(b) below.
Section 3.3 - Eligibility
Each Director shall be granted Options in accordance with the
provisions set forth herein.
Section 3.4 - Non-Qualification of Options
Each Option shall be a Non-Qualified Option.
Section 3.5 - Granting of Options
(a) Each person who is a Director on the Effective Date shall
receive an Option to purchase 1,000 Shares as of such date.
(b) Options shall be granted to each Director under this Plan
with respect to the Company's 1997 fiscal year and each fiscal year thereafter
so long as this Plan remains in effect, provided, however, that for each such
fiscal year, the Company's consolidated income from operations before taxes
(excluding such extraordinary, unusual or non-recurring items as the Committee
shall determine to be appropriate, in accordance with generally accepted
accounting principles) ("EBT") must equal or exceed the projected EBT
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for such year as set forth in the annual budget for such year approved by the
Board within 90 days of the first day of such fiscal year.
(c) No Options shall be granted to any Director in respect of the
1997 fiscal year or any fiscal year thereafter if the Company's EBT for such
fiscal year does not equal or exceed the projected EBT for such year as
aforesaid.
(d) For each fiscal year for which Options shall be granted
hereunder, the number of Options to be granted to each Director shall equal the
sum of the "Option Amount" plus the "Adjustment Amount." As used herein, the
"Option Amount" shall mean the number of Options granted to each Director
hereunder for the immediately preceding year (which shall be 1,000 for fiscal
year 1996) and the "Adjustment Amount" shall mean the product obtained by
multiplying (1) the percentage increase, if any, in the Company's EBT for such
fiscal year over the Company's EBT for the immediately preceding fiscal year by
(2) the Option Amount.
(e) Subject to the provisions set forth above, the Options to be
granted to each Director hereunder in respect of each fiscal year shall be
granted to those persons serving as Directors on the date of the Company's
Annual Meeting of Stockholders immediately following the last day of such
fiscal year, provided that such Director shall have attended at least 75% of
the meetings of the Board (which may include committee meetings) held during
such fiscal year.
(f) For purposes of illustration, if the Company's fiscal 1997
EBT equals or exceeds the projected EBT for such year, and if the Company's
fiscal 1997 EBT is 10% greater than the Company's fiscal 1996 EBT, then each
person serving as a Director on the date of the Company's 1997 Annual Meeting
of Stockholders (to be held following the last day of the 1997 fiscal year)
shall receive 1,100 Options, calculated as follows:
Option Amount = 1,000 = Options granted for fiscal year 1996
Adjustment Amount = 100 = 1,000 x 10%
Options Granted = 1,100
ARTICLE IV
TERMS OF OPTIONS
Section 4.1 - Option Agreement
Each Option shall be evidenced by a written Stock Option
Agreement, which shall be executed by the Optionee and an authorized Officer of
the Company and which shall contain such terms and conditions as are consistent
with the Plan.
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Section 4.2 - Option Price
(a) The price of the Shares subject to each Option shall be equal
to 100% of the fair market value of such Shares on the date such Option is
granted.
(b) For purposes of the Plan, the fair market value of a Share
of the Company's Common Stock as of a given date shall be: (i) the closing
price of a Share of the Company's Common Stock on the principal exchange on
which Shares of the Company's Common Stock are then trading; or (ii) if such
Common Stock is not traded on an exchange but is quoted on NASDAQ or a
successor quotation system, (1) the last sales price (if the Company's Common
Stock is then listed as a National Market Issue under the NASD National Market
System) or (2) the mean between the closing representative bid and asked prices
(in all other cases) for the Company's Common Stock, in each case, on such date
as reported by NASDAQ or such successor quotation system; or (iii) if such
Common Stock is not publicly traded on an exchange and not quoted on NASDAQ or
a successor quotation system, the mean between the closing bid and asked prices
for the Company's Common Stock, on such date, as determined in good faith by
the Committee; or (iv) if the Company's Common Stock is not publicly traded,
the fair market value established by the Committee acting in good faith.
Section 4.3 - Commencement of Exercisability
(a) No Option may be exercised in whole or in part during the six
months after such Option is granted.
(b) Subject to the provisions of paragraph (c) below, each Option
granted hereunder shall be subject to the following cumulative vesting schedule:
(i) Until the date which is one year from the date of grant, the
Option shall not be vested and shall not be exercisable as to any of the
shares subject thereto;
(ii) From and after the date which is one year from the date of
grant, the Option shall vest and be exercisable as to 15% of the number
of shares subject thereto;
(iii) From and after the date which is two years from the date of
grant, the Option shall vest and be exercisable as to 50% of the original
number of shares subject thereto; and
(iv) From and after the date which is three years from the date
of grant, the Option shall be fully vested and be exercisable as to 100%
of the number of shares subject thereto.
(c) Upon the Termination of the holder of an Option, such portion
of such Option which has not then vested and become exercisable shall
automatically become fully vested and exercisable, provided, however, that such
Termination shall not be less than one year from the date of grant of such
Option.
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Section 4.4 - Expiration of Options
No Option may be exercised to any extent after the first to occur
of the following events:
(i) The expiration of ten years from the date the Option was
granted; or
(ii) Except in the case of any Optionee who is disabled (within
the meaning of Section 22(e)(3) of the Code), the expiration of three
months from the date of the Optionee's Termination for any reason
other than such Optionee's death; or
(iii) With respect to an Option held by an Optionee who is
disabled (within the meaning of Section 22(e)(3) of the Code), the
expiration of one year from the date of the Optionee's Termination
for any reason other than such Optionee's death unless the Optionee
dies within said one-year period; or
(iv) The expiration of one year from the date of the Optionee's
death with respect to all Options held by such Optionee.
Section 4.5 - Adjustments in Outstanding Options
In the event that the outstanding Shares of the stock subject to
Options are changed into or exchanged for a different number or kind of shares
of the Company or other securities of the Company by reason of merger,
consolidation, recapitalization, reclassification, stock split-up, stock
dividend or combination of shares, the Committee shall make an appropriate and
equitable adjustment in the number and kind of shares as to which all
outstanding Options, or portions thereof then unexercised, shall be
exercisable, to the end that after such event the Optionee's proportionate
interest shall be maintained as before the occurrence of such event. Such
adjustment in an outstanding Option shall be made without change in the total
price applicable to the Option or the unexercised portion of the Option (except
for any change in the aggregate price resulting from rounding-off of share
quantities or prices) and with any necessary corresponding adjustment in Option
price per share. Any such adjustment made by the Committee shall be final and
binding upon all Optionees, the Company and all other interested persons.
ARTICLE V
EXERCISE OF OPTIONS
Section 5.1 - Person Eligible to Exercise
During the lifetime of the Optionee, only such Optionee may
exercise an Option (or any portion thereof) granted to him; provided, however,
that, unless otherwise prohibited by Rule 16b-3, an Optionee may transfer all
or any portion of an Option to his spouse or immediate family member or any
trust for the benefit thereof. After the death of the Optionee, any
exercisable portion of an Option may, prior to the time when such portion
becomes unexercisable under the Plan, be exercised by his personal
representative or by
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any person empowered to do so under the deceased Optionee's will or under the
then applicable laws of descent and distribution.
Section 5.2 - Partial Exercise
At any time and from time to time prior to the time when any
exercisable Option or exercisable portion thereof becomes unexercisable under
the Plan, such Option or portion thereof may be exercised in whole or in part;
provided, however, that the Company shall not be required to issue fractional
shares and the Committee may, by the terms of the Option, require any partial
exercise to be with respect to a specified minimum number of shares.
Section 5.3 - Manner of Exercise
An exercisable Option, or any exercisable portion thereof, may be
exercised solely by delivery to the Secretary or his office of all of the
following prior to the time when such Option or such portion becomes
unexercisable under the Plan or the applicable Stock Option Agreement:
(a) Notice in writing signed by the Optionee or other person then
entitled to exercise such Option or portion, stating that such Option or
portion is exercised, such notice complying with all applicable rules
established by the Committee; and
(b)(i) Full payment (in cash or by check) for the Shares with
respect to which such Option or portion is thereby exercised; or
(ii)(A) Shares of the Company's Common Stock owned by the Optionee
duly endorsed for transfer to the Company or (B) subject to the timing
requirements of Section 5.4, Shares of the Company's Common Stock issuable
to the Optionee upon exercise of the Option, with a fair market value (as
determined under Section 4.2(b)) on the date of Option exercise equal to
the aggregate Option price of the Shares with respect to which such Option
or portion is thereby exercised; or
(iii) Any combination of the consideration provided in the
foregoing subsections (i) and (ii); and
(c) The payment to the Company (or other employer corporation) of
all amounts which it is required to withhold under federal, state or local law
in connection with the exercise of the Option; provided, that any combination
of the following may be used to make all or part of such payment: (i) Shares
of the Company's Common Stock owned by the Optionee duly endorsed for transfer
or (ii) subject to the timing requirements of Section 5.4, Shares of the
Company's Common Stock issuable to the Optionee upon exercise of the Option,
valued in accordance with Section 4.2(b) at the date of Option exercise; and
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(d) Such representations and documents as the Committee, in its
absolute discretion, deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act and any other federal or state
securities laws or regulations. The Committee may, in its absolute discretion,
also take whatever additional actions it deems appropriate to effect such
compliance including, without limitation, placing legends on Share certificates
and issuing stop-transfer orders to transfer agents and registrars; and
(e) In the event that the Option or portion thereof shall be
exercised pursuant to Section 5.1 by any person or persons other than the
Optionee, appropriate proof of the right of such person or persons to exercise
the Option or portion thereof.
Section 5.4 - Certain Timing Requirements
Shares of the Company's Common Stock issuable to the Optionee
upon exercise of the Option may be used to satisfy the Option price or the tax
withholding consequences of such exercise only (i) during the trading window
period following the date of release of the quarterly or annual summary
statement of sales and earnings of the Company as may be established by the
Company for its senior executives from time to time or (ii) pursuant to an
irrevocable written election by the Optionee to use Shares of the Company's
Common Stock issuable to the Optionee upon exercise of the Option to pay all or
part of the Option price or the withholding taxes made at least six months
prior to the payment of such Option price or withholding taxes.
Section 5.5 - Conditions to Issuance of Stock Certificates
The Shares of stock issuable and deliverable upon the exercise of
an Option, or any portion thereof, may be either previously authorized but
unissued Shares or issued Shares which have then been reacquired by the
Company. The Company shall not be required to issue or deliver any certificate
or certificates for Shares of stock issued in payment of any Retainer or
purchased upon the exercise of any Option or portion thereof prior to the
fulfillment of all of the following conditions:
(a) The admission of such Shares to listing on all stock
exchanges on which such class of stock is then listed; and
(b) The completion of any registration or other qualification of
such Shares under any state or federal law or under the rulings or regulations
of the Securities and Exchange Commission or any other governmental regulatory
body, if any such registration or qualification may be necessary or advisable;
and
(c) The obtaining of any approval or other clearance from any
state or federal governmental agency which may be necessary or advisable; and
(d) The payment to the Company (or other employer corporation) of
all amounts which it is required to withhold under federal, state or local law
in connection with the exercise of the Option; and
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(e) The lapse of such reasonable period of time following the
exercise of the Option as the Secretary of the Company may establish from time
to time for reasons of administrative convenience.
ARTICLE VI
ADMINISTRATION
Section 6.1 - Committee
The Plan shall be administered by the Committee which shall
consist of two or more members of the Board, as the Board may appoint from time
to time; provided, however that, in the absence of such appointment, the Plan
shall be administered by the Board (in which event the term "Committee" as used
herein shall mean the Board); provided, further, however, that, notwithstanding
the foregoing, the Plan shall be construed, interpreted, implemented and
administered in a manner sufficient to comply with the provisions of Rule
16b-3, and, in particular, in order to provide that the members of the
Committee shall at all times satisfy the requirements set forth therein.
Section 6.2 - Duties and Powers of Committee
It shall be the duty of the Committee to conduct the general
administration of the Plan in accordance with its provisions. The Committee
shall have the power to interpret the Plan and the Options and to adopt such
rules for the administration, interpretation and application of the Plan as are
consistent therewith and to interpret, amend or revoke any such rules.
Section 6.3 - Majority Rule
The Committee shall act by a majority of its members in office.
The Committee may act either by vote at a meeting or by a memorandum or other
written instrument signed by a majority of the Committee.
Section 6.4 - Compensation; Professional Assistance; Good Faith Actions
Members of the Committee shall receive such compensation for
their services as members as may be determined by the Board. All expenses and
liabilities incurred by members of the Committee in connection with the
administration of the Plan shall be borne by the Company. The Committee may
employ attorneys, consultants, accountants, appraisers, brokers or other
persons. The Committee, the Company and its Officers and Directors shall be
entitled to rely upon the advice, opinions or valuations of any such
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persons. All actions taken and all interpretations and determinations made by
the Committee in good faith shall be final and binding upon all Optionees, the
Company and all other interested persons. No member of the Committee shall be
personally liable for any action, determination or interpretation made in good
faith with respect to the Plan or the Options, and all members of the Committee
shall be fully protected by the Company in respect to any such action,
determination or interpretation.
ARTICLE VII
OTHER PROVISIONS
Section 7.1 - Options Not Transferable
Except as set forth in Section 5.1 hereof, no Option or interest
or right therein or part thereof shall be liable for the debts, contracts or
engagements of the Optionee or his successors in interest or shall be subject
to disposition by transfer, alienation, anticipation, pledge, encumbrance,
assignment or any other means whether such disposition be voluntary or
involuntary or by operation of law by judgment, levy, attachment, garnishment
or any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect;
provided, however, that nothing in this Section 7.1 shall prevent transfers by
will or by the applicable laws of descent and distribution.
Section 7.2 - Amendment, Suspension or Termination of the Plan
The Plan may be wholly or partially amended or otherwise
modified, suspended or terminated at any time or from time to time by the
Committee; provided, however, that no amendment or modification which requires
shareholder approval under Rule 16b-3, if any, shall be effective in the
absence of such approval. Neither the amendment, suspension nor termination of
the Plan shall, without the consent of the holder of the Option, impair any
rights or obligations under any Option theretofore granted. No Option may be
granted during any period of suspension nor after termination of the Plan, and
in no event may any Option be granted under this Plan after the first to occur
of the following events:
(a) March 31, 2006; or
(b) The expiration of ten years from the date the Plan is
approved by the Company's shareholders under Section 7.3.
Section 7.3 - Approval of Plan by Shareholders
This Plan will be submitted for the approval of the Company's
shareholders within 12 months after the date of the Board's initial adoption of
the Plan. No Options shall be granted prior to such
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shareholder approval. The Company shall take such actions with respect to the
Plan as may be necessary to satisfy the requirements of Rule 16b-3(b).
Section 7.4 - Effect of Plan Upon Other Option and Compensation Plans
The adoption of this Plan shall not affect any other compensation
or incentive plans in effect for the Company, any Parent Corporation or any
Subsidiary. Nothing in this Plan shall be construed to limit the right of the
Company, any Parent Corporation or any Subsidiary to (a) establish any other
forms of incentives or compensation for employees and Directors of the Company,
any Parent Corporation or any Subsidiary or (b) grant or assume options
otherwise than under this Plan in connection with any proper corporate purpose,
including, but not by way of limitation, the grant or assumption of options in
connection with the acquisition by purchase, lease, merger, consolidation or
otherwise, of the business, stock or assets of any corporation, firm or
association.
Section 7.5 - Titles
Titles are provided herein for convenience only and are not to
serve as a basis for interpretation or construction of the Plan.
Section 7.6 - Conformity to Securities Laws
The Plan is intended to conform to the extent necessary with all
provisions of the Securities Act and the Exchange Act and any and all
regulations and rules promulgated by the Securities and Exchange Commission
thereunder, including without limitation Rule 16b-3. Notwithstanding anything
herein to the contrary, the Plan shall be administered, and Options shall be
granted and may be exercised, only in such a manner as to conform to such laws,
rules and regulations. To the extent permitted by applicable law, the Plan and
Options granted hereunder shall be deemed amended to the extent necessary to
conform to such laws, rules and regulations.
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DAISYTEK INTERNATIONAL CORPORATION
PROXY
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS - AUGUST 2, 1996
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned shareholder of Daisytek International Corporation (the
"Company") hereby constitutes and appoints DAVID A. HEAP, MARK C. LAYTON and
HARVEY H. ACHATZ, or any of them, the attorneys or attorney and proxies or proxy
of the undersigned with full power of substitution and revocation for and in the
name of the undersigned, to attend the Annual Meeting of Shareholders of the
Company to be held at the Stonebriar Country Club in Frisco, Texas on August 2,
1996 at 10:00 a.m., and any adjournment or adjournments thereof, receipt of the
notice of which meeting stating the purposes thereof being hereby acknowledged,
to vote all of the shares of the Company which the undersigned would be
entitled to vote if then personally present as indicated on the reverse side
hereof.
This Proxy is given and is to be construed under the laws of the State of
Delaware and will be voted "FOR" nominee named herein and "FOR" Proposal 2, 3
and 4, if, in any case, the undersigned has not specified a choice in the space
provided therefor. This proxy when properly executed will be voted in the
manner directed herein by the undersigned.
(Continued on other side)
DAISYTEK INTERNATIONAL CORPORATION
P.O. BOX 11326
NEW YORK, N.Y. 10203-0328
<PAGE> 39
[ ]
1. ELECTION OF DIRECTORS FOR the nominees [ X ]
listed below
WITHHOLD AUTHORITY to vote [ X ] EXCEPTION [ X ]
for the nominees listed below:
The nominees to Class II are MARK C. LAYTON and TIMOTHY M. MURRAY
(INSTRUCTIONS: To withhold authority to vote for any individual nominee,
mark the "Exceptions" box and strike a line through that nominee's name.)
2. To approve an amendment to the Company's Amended and Restated
Certificate of Incorporation increasing the number of authorized shares
of Common Stock.
FOR [ X ] AGAINST [ X ] ABSTAIN [ X ]
3. To approve the Company's Non-Employee Director Stock Option
and Retainer Plan.
FOR [ X ] AGAINST [ X ] ABSTAIN [ X ]
4. Approval of Auditors.
FOR [ X ] AGAINST [ X ] ABSTAIN [ X ]
To vote all of such shares as they or he or she may deem proper upon all other
matters that may properly come before said meeting and any adjournment or
adjournments thereof.
I plan to attend the Annual Meeting in person.
The number of shareholders in my party, including myself, will be ___________.
Address Change and
or Comments Mark Here [ X ]
Please date and sign exactly as the name appears hereon. When shares
are held by joint tenants, both should sign. (Executors,
Administrators, Trustees, etc., should so indicate)
Dated: , 1996
-------------------------------------------------------
--------------------------------------------------------------
(Stockholder sign here)
--------------------------------------------------------------
(Stockholder sign here)
Votes MUST be indicated (x) in Black or Blue Ink. [ X ]
Sign, Date, and Return the Proxy Card Promptly Using the Enclosed Envelope.
