<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Miami Computer Supply Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ 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:
------------------------------------------------------------------------
/ / 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>
[LOGO]
[LETTERHEAD OF MIAMI COMPUTER SUPPLY CORPORATION]
March 25, 1998
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
of Miami Computer Supply Corporation (the "Company"). The meeting will be
held at the Company's principal offices located at 4750 Hempstead Station
Drive, Dayton, Ohio 45429, on Wednesday, April 29, 1998 at 10:30 a.m.,
Eastern Time. The matters to be considered by stockholders at the Annual
Meeting are described in the accompanying materials.
The Board of Directors of the Company has determined that the matters to
be considered at the Annual Meeting are in the best interests of the Company
and its stockholders. FOR THE REASONS SET FORTH IN THE PROXY STATEMENT, THE
BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" EACH MATTER TO BE CONSIDERED.
It is very important that you be represented at the Annual Meeting
regardless of the number of shares you own or whether you are able to attend
the meeting in person. We urge you to mark, sign, and date your proxy card
today and return it in the envelope provided, even if you plan to attend the
Annual Meeting. This will not prevent you from voting in person, but will
ensure that your vote is counted if you are unable to attend.
Your continued support of and interest in Miami Computer Supply
Corporation are sincerely appreciated.
Sincerely,
Michael E. Peppel
President
<PAGE>
MIAMI COMPUTER SUPPLY CORPORATION
4750 HEMPSTEAD STATION DRIVE
DAYTON, OHIO 45429
(937) 291-8282
---------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 29, 1998
---------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders ("Annual
Meeting") of Miami Computer Supply Corporation (the "Company") will be held
at the Company's principal offices located at 4750 Hempstead Station Drive,
Dayton, Ohio 45429, on Wednesday, April 29, 1998 at 10:30 a.m., Eastern
Time, for the following purposes, all of which are more completely set forth
in the accompanying Proxy Statement:
(1) To elect five (5) directors for a one-year term or until their
successors are elected and qualified;
(2) To consider and approve the adoption of the Company's 1998 Stock
Option Plan;
(3) To ratify the appointment by the Board of Directors of Price
Waterhouse LLP as the Company's independent accountants for the fiscal year
ending December 31, 1998;
(4) If necessary, to adjourn the Annual Meeting to solicit additional
proxies; and
(5) To transact such other business as may properly come before the
meeting or any adjournment thereof. Except with respect to the procedural
matters incident to the conduct of the Annual Meeting, management is not
aware of any other such business.
The Board of Directors has fixed March 16, 1998 as the voting record
date for the determination of stockholders entitled to notice of and to vote
at the Annual Meeting. Only those stockholders of record as of the close of
business on that date will be entitled to vote at the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Thomas C. Winstel
Secretary
Dayton, Ohio
March 25, 1998
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IT IS IMPORTANT THAT
YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. EVEN IF YOU
PLAN TO BE PRESENT, YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE
ENCLOSED PROXY PROMPTLY IN THE ENVELOPE PROVIDED. IF YOU ATTEND THE MEETING,
YOU MAY VOTE EITHER IN PERSON OR BY PROXY. ANY PROXY GIVEN MAY BE REVOKED BY
YOU IN WRITING OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE THEREOF.
<PAGE>
MIAMI COMPUTER SUPPLY CORPORATION
--------------------
PROXY STATEMENT
--------------------
ANNUAL MEETING OF STOCKHOLDERS
APRIL 29, 1998
This Proxy Statement is furnished to holders of common stock, no par
value per share ("Common Stock"), of Miami Computer Supply Corporation (the
"Company"), an Ohio corporation. Proxies are being solicited on behalf of
the Board of Directors of the Company to be used at the Annual Meeting of
Stockholders ("Annual Meeting") to be held at the Company's principal offices
located at 4750 Hempstead Station Drive, Dayton, Ohio 45429, on Wednesday,
April, 29, 1998 at 10:30 a.m., Eastern Time, for the purposes set forth in
the Notice of Annual Meeting of Stockholders. This Proxy Statement is first
being mailed to stockholders on or about March 25, 1998.
The proxy solicited hereby, if properly signed and returned to the
Company and not revoked prior to its use, will be voted in accordance with
the instructions contained therein. IF NO CONTRARY INSTRUCTIONS ARE GIVEN,
EACH PROXY RECEIVED WILL BE VOTED FOR THE NOMINEES FOR DIRECTOR DESCRIBED
HEREIN, FOR APPROVAL OF THE 1998 STOCK OPTION PLAN, FOR RATIFICATION OF THE
APPOINTMENT OF PRICE WATERHOUSE LLP FOR FISCAL 1998, FOR ADJOURNMENT, IF
REQUIRED; AND IN THE DISCRETION OF THE PROXY HOLDER, AS TO THE TRANSACTION OF
SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING. ANY HOLDER OF
COMMON STOCK WHO RETURNS A SIGNED PROXY BUT FAILS TO PROVIDE INSTRUCTIONS AS
TO THE MANNER IN WHICH SUCH SHARES ARE TO BE VOTED WILL BE DEEMED TO HAVE
VOTED IN FAVOR OF THE MATTERS SET FORTH IN THE PRECEDING SENTENCE. ANY
STOCKHOLDER GIVING A PROXY HAS THE POWER TO REVOKE IT AT ANY TIME BEFORE IT
IS EXERCISED BY (i) FILING WITH THE SECRETARY OF THE COMPANY WRITTEN NOTICE
THEREOF (SECRETARY, MIAMI COMPUTER SUPPLY CORPORATION, 4750 HEMPSTEAD STATION
DRIVE, DAYTON, OHIO 45429); (ii) SUBMITTING A DULY-EXECUTED PROXY BEARING A
LATER DATE; OR (iii) APPEARING AT THE ANNUAL MEETING AND GIVING THE SECRETARY
NOTICE OF HIS OR HER INTENTION TO VOTE IN PERSON. Proxies solicited hereby
may be exercised only at the Annual Meeting and any adjournment thereof and
will not be used for any other meeting.
VOTING
Only stockholders of record at the close of business on March 16, 1998
("Voting Record Date") will be entitled to vote at the Annual Meeting. On
the Voting Record Date, there were 5,415,991 shares of Common Stock
outstanding and the Company had no other class of equity securities
outstanding. Each share of Common Stock is entitled to one vote at the
Annual Meeting on all matters properly presented at the meeting. Directors
are elected by a plurality of the votes cast with a quorum present. The five
persons who receive the greatest number of votes of the holders of Common
Stock represented in person or by
<PAGE>
proxy at the Annual Meeting will be elected directors of the Company.
Abstentions are considered in determining the presence of a quorum and will
not affect the vote required for the election of directors. The affirmative
vote of the holders of a majority of the total votes represented at the
Annual Meeting, in person or by proxy, is required for approval of the
proposal to approve the 1998 Stock Option Plan and for approval of the
proposal to ratify the appointment of the independent accountants. A
majority of the voting shares represented at the Annual Meeting, in person or
by proxy, will be required to adjourn the Annual Meeting, if such action is
required to be voted on. Abstentions will be counted as votes cast with
respect to these proposals. Due to the vote required, abstentions will have
the effect of a vote against each of these proposals. Under rules of the New
York Stock Exchange, except for the proposal to approve the 1998 Stock Option
Plan, all of the other proposals for consideration at the Annual Meeting are
considered "discretionary" items upon which brokerage firms may vote in their
discretion on behalf of their clients if such clients have not furnished
voting instructions and for which there will not be "broker non-votes." The
proposal to approve the 1998 Stock Option Plan is not considered
"discretionary." Accordingly, a brokerage firm may not vote upon this matter
without instructions from beneficial owners and for which there may be broker
non-votes. A broker non-vote will have the same effect as a vote against the
proposal to approve the 1998 Stock Option Plan.
INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTOR,
CONTINUING DIRECTORS AND EXECUTIVE OFFICERS
ELECTION OF DIRECTORS
The Board of Directors is presently composed of five directors who serve
for a one year term. The directors are elected by the stockholders of the
Company for a one year term, or until their successors are elected and
qualified. Stockholders of the Company are not permitted to cumulate their
votes for the election of directors.
Effective January 1, 1998, Albert L. Schwarz, President and a director
of the Company, resigned from the Board for personal/health reasons and on
February 24, 1998, the Board of Directors elected Michael E. Peppel, the
newly elected President and Chief Executive Officer of the Company, to fill
this vacancy.
As of the date hereof, no director or executive officer of the Company
is related to any other director or executive officer of the Company by
blood, marriage or adoption. Each of the nominees currently serve as a
director of the Company.
Unless otherwise directed, each proxy executed and returned by a
stockholder will be voted FOR the election of the nominees for director
listed below. If the person or persons named as nominee should be unable or
unwilling to stand for election at the time of the Annual Meeting, the
proxies will nominate and vote for one or more replacement nominees
recommended by the Board of Directors. At this time, the Board of Directors
knows of no
-2-
<PAGE>
reason why the nominees listed below may not be able to serve as directors if
elected.
The following table presents information concerning the nominees for
director of the Company.
NOMINEES FOR DIRECTOR FOR ONE-YEAR TERM EXPIRING IN 1999
<TABLE>
<CAPTION>
Director
Name Age Since
- -------------------------- ---------- -------------
<S> <C> <C>
Robert G. Hecht 57 1996
Anthony W. Liberati 65 1996
Harry F. Radcliffe 47 1996
Thomas C. Winstel 51 1981
Michael E. Peppel 30 1998
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THE
ABOVE NOMINEES FOR DIRECTOR.
Information concerning the principal position with the Company and
principal occupation of each nominee for director during the past five years
is set forth below.
ROBERT G. HECHT. Mr. Hecht became a Director of the Company in May 1996
and is also a member of Pittsburgh Investment Group LLC, a major stockholder
of the Company ("LLC"). Mr. Hecht is the Chief Executive Officer of Trumbull
Corporation, a privately held highway construction company, President of
Allegheny Asphalt Manufacturing, Inc., a privately held material supply
company, is the Executive Vice President for P.J. Dick Incorporated, a
privately held construction company and is the Executive Vice President of
Lindy Paving, Inc., a privately held paving company, all of which are located
in Pittsburgh, Pennsylvania. Mr. Hecht is also a director of Essex Bancorp,
Virginia Beach, Virginia, a savings institution holding company which is
traded on the American Stock Exchange. Mr. Hecht received his Juris Doctor
degree from the University of Pittsburgh, Pittsburgh, Pennsylvania and his
undergraduate degree in engineering from the U.S. Naval Academy. Mr. Hecht
is the Co-Chairman of the Washington County Southwestern Pennsylvania Growth
Alliance and a member of the Board of Directors of the Children's Home of
Pittsburgh.
ANTHONY W. LIBERATI. Mr. Liberati has been Chairman of the Board since
May 1996, when LLC, of which he is the Manager -- President and Chief
Executive Officer and a member, acquired a majority interest in the Company.
Commencing in 1982 and until his retirement in August 1995, Mr. Liberati was
employed by the Edward J. DeBartolo
-3-
<PAGE>
Corporation, Youngstown, Ohio (the "DeBartolo Corporation"), the nation's
largest shopping center developer and the owner of the San Francisco 49ers
professional football team. At the time of his retirement, Mr. Liberati was
the Chief Operating Officer of the DeBartolo Corporation. Prior to his
appointment as the Chief Operating Officer, he was the DeBartolo
Corporation's Chief Financial Officer for ten years. Mr. Liberati is a
director of Hawthorne Financial Corporation, Los Angeles, California, a
savings institution holding company which is traded on the Nasdaq National
Market, and First Fidelity Bancorp, Irvine, California, a privately held
thrift and loan holding company and is a former member of the Board of
Directors of DeBartolo Realty Corporation, Youngstown, Ohio, which was a New
York Stock Exchange-traded real estate investment trust until its merger into
Simon Property Group, Inc. in November 1996. He is a current member of the
Board of Directors of Imperial Land Company, Pittsburgh, Pennsylvania, a
privately held land-bank company, Quality Aggregates, Inc., Pittsburgh,
Pennsylvania, a privately held materials supply company, and Pennsylvania
Capital Bank, Pittsburgh, Pennsylvania, a privately held Pennsylvania
commercial bank. He attended Duquesne University, Pittsburgh, Pennsylvania.
MICHAEL E. PEPPEL. Mr. Peppel joined the Company in May 1996 and served
as the Company's Chief Financial Officer from May 1996 to December 1997. He
was elected President and Chief Executive Officer of the Company as of
January 1, 1998 and was elected to the Board of Directors as of February 24,
1998. Mr. Peppel is a member of the Company's Executive Management
Committee, a committee composed of management which deals with Company
operating issues. Mr. Peppel is also an officer and member of LLC. From
November 1990 to May 1996, he was a director and Chief Financial Officer of
Diversified Data Products, Inc. which was acquired by LLC and contributed to
the Company in May 1996. From April 1987 to October 1990, he was the money
desk manager for the DeBartolo Corporation, Youngstown, Ohio. Mr. Peppel
received his degree in economics and finance from the University of Notre
Dame.
HARRY F. RADCLIFFE. Mr. Radcliffe, an officer and member of LLC, was
elected as a Director in May 1996. He has been the President and Chief
Executive Officer of Fort Pitt Capital Management, Pittsburgh, Pennsylvania,
a private investment management company, since September 1995 and was the
President and Chief Executive Officer of First Home Bancorp, Inc., a
privately-held savings institution holding company until its sale in April
1996. He is a director of Essex Bancorp, Virginia Beach, Virginia, a savings
institution holding company which is traded on the American Stock Exchange,
of Hawthorne Financial Corporation, Los Angeles, California, a savings
institution holding company which is traded on the Nasdaq National Market,
and First Fidelity Bancorp, Irvine, California, a privately held thrift and
loan holding company. From 1989 to 1993, Mr. Radcliffe was the President and
Chief Executive Officer of First South Savings Association, a
Pennsylvania-chartered stock savings association located in Pittsburgh,
Pennsylvania. Mr. Radcliffe received his degree in economics from Ohio
Wesleyan University.
THOMAS C. WINSTEL. Mr. Winstel co-founded the Company in 1981 and has been
a Director, the Company's Secretary, and a Vice President of the Company since
that time.
-4-
<PAGE>
Mr. Winstel has been the corporate Secretary of the Company since May 1996.
Mr. Winstel is a member of the Company's Executive Management Committee. Mr.
Winstel received his marketing degree from the University of Dayton, Ohio.
STOCKHOLDER NOMINATIONS
Article VIII.D. of the Company's Amended and Restated Articles of
Incorporation ("Articles") governs nominations for election to the Board of
Directors and requires all such nominations, other than those made by or at
the direction of the Board, to be made only by a stockholder who has complied
with the notice provisions in that section. Stockholder nominations must be
made pursuant to timely notice in writing to the Secretary of the Company.
To be timely for this Annual Meeting, a stockholder's notice must be
delivered to, or mailed and received at, the principal executive offices of
the Company not less than 60 days prior to the anniversary date (April 29) of
the mailing of proxy materials by the Company in connection with the
immediately preceding annual meeting of the Company. Each written notice of
a stockholder nomination is required to set forth certain information
specified in the Articles. No such proposals were received by the Company
for this Annual Meeting.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES OF THE COMPANY
The Board of Directors of the Company currently meets monthly and is
required to meet not less than quarterly. During the fiscal year ended
December 31, 1997, the Board of Directors met 12 times. No director attended
fewer than 75% of the total number of Board meetings or committee meetings on
which he served that were held during this period. The entire Board of
Directors of the Company acts as a Nominating Committee. The Board of
Directors of the Company has established the following committees:
EXECUTIVE COMMITTEE. The Executive Committee of the Company has the
authority to act as the Board of Directors when the Board is not in session.
Actions of the Executive Committee may be taken upon the affirmative vote of
any three of the five directors, provided that of the three directors who are
so acting, one must be a non-employee director. The Executive Committee is
comprised of all of the members of the Board, when and if they are available
to act. The Executive Committee did not meet during fiscal 1997.
AUDIT COMMITTEE. The Audit Committee of the Company recommends the
independent accountants to the Board annually and reviews the Company's
financial statements and the scope and results of the audit performed by the
Company's independent accountants and the Company's system of internal
control with management and such independent accountants. The Audit
Committee, which is comprised of Messrs. Liberati (Chairman), Hecht and
Radcliffe, met twice during fiscal 1997.
COMPENSATION COMMITTEE. The Compensation Committee of the Company's Board
of Directors reviews the compensation and benefits for the Company's employees
and
-5-
<PAGE>
recommends to the Board adjustments in such compensation. See "Management
Compensation - Compensation Committee Interlocks and Insider Participation."
During fiscal 1997, the members of the Compensation Committee were Messrs.
Radcliffe (Chairman), Hecht and Liberati. The Compensation Committee met
once during fiscal 1997.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Set forth below is information concerning the executive officers of the
Company who do not serve on the Board of Directors of the Company. All
executive officers are elected annually by the Board of Directors and serve
until their successors are elected and qualified. As of the date hereof, no
executive officer is related to any director or other executive officer of
the Company by blood, marriage or adoption, and there are no arrangements or
understandings between a director of the Company and any other person
pursuant to which such person was elected an executive officer.
ROGER E. TURVY. Mr. Turvy joined the Company in 1981 and has been the
Vice President -- Product Sales and Development since that time. Mr. Turvy
is a member of the Company's Executive Management Committee. Mr. Turvy
received his degree in mathematics and business from Miami University,
Oxford, Ohio and his MBA from Ohio State University. Mr. Turvy is the
brother-in-law of Albert L. Schwarz, who retired effective January 1, 1998.
JOHN C. HUFFMAN, III. Mr. Huffman joined the Company in 1981 and is the
Company's Vice President -- National Sales Manager. He is a member of the
Company's Executive Management Committee. Mr. Huffman was the General Manager
of the Company from 1985 to 1987, the Dayton Sales Manager from 1987 to 1989
and has been the National Sales Manager since 1989. Mr. Huffman received his
degree in business management from Wright State University, Fairborn, Ohio.
MARY A. STEWART. Ms. Stewart joined the Company in 1989 as a staff
accountant and is currently the Company's Vice President -- Operations. From
1991 to May 1996, Ms. Stewart served the Company as Controller. She is a
member of the Company's Executive Management Committee.
ALBERT L. SCHWARZ. Effective January 1, 1998, Mr. Schwarz resigned from
the Company for personal/health reasons. Mr. Schwarz joined the Company in
1987 as President and a Director. He was the Chairman of the Company's
Executive Management Committee. Prior thereto, Mr. Schwarz was a division
controller of Amcast Industries Corp., a New York Stock Exchange-traded
company which manufactures metal castings located in Dayton, Ohio from 1984
to 1987. Mr. Schwarz received his MBA from the University of Dayton, Dayton,
Ohio, and his undergraduate degree in accounting from Wright State
University, Fairborn, Ohio.
-6-
<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK
BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of the Voting Record Date, certain
information as to the Common Stock beneficially owned by (i) each person or
entity, including any "group" as that term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended ("Exchange Act"), who or which
was known to the Company to be the beneficial owner of more than 5% of the
issued and outstanding Common Stock, (ii) the directors of the Company, (iii)
the President and the three most highly compensated executive officers of the
Company (other than the President), and (iv) all directors and executive
officers of the Company as a group.
<TABLE>
<CAPTION>
Amount and Nature
Name of Beneficial of Beneficial
Owner or Number of Ownership as of Percent of
Persons in Group March 16, 1998(1) Common Stock
- ------------------ ----------------- ------------
<S> <C> <C>
Pittsburgh Investment Group LLC(2) 509,012 9.40%
Value Partners, Ltd. (3) 817,127 15.09
Anthony W. Liberati(4)(5) 111,977 2.07
Albert L. Schwarz(6) 61,155 1.13
Robert G. Hecht(4)(7) 114,977 2.12
Harry F. Radcliffe(4)(8) 111,977 2.07
Thomas C. Winstel(4)(9) 199,060 3.68
Michael E. Peppel(4)(10) 135,784 2.51
John C. Huffman, III(4)(11) 20,300 0.37
H. Clark Gilson as Trustee of the
Gilson Trust(11) 293,901 5.43
Ruy J. Pereira as Trustee of the
Pereira Trust(11) 293,901 5.43
Larry R. Goodman as Trustee of the
Goodman Trust(11) 293,901 5.43
The Schwarz Family Limited Partnership (12) 158,400 2.92
All directors and executive officers
as a group (9 persons)(13) 902,930 16.67%
</TABLE>
- -------------------------------
(1) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from the Voting Record Date upon the
exercise of options or warrants. Each beneficial owner's percentage
ownership is determined by assuming that options or warrants that are held
by such person (but not those held by any other person) and that are
exercisable within 60 days from the date of the
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
-7-
<PAGE>
(FOOTNOTES CONTINUED FROM PREVIOUS PAGE)
Voting Record Date have been exercised. Unless otherwise noted, the
Company believes that all persons named in the table have sole voting
and dispositive power with respect to all shares of Common Stock
beneficially owned by them.
(2) The business address of LLC is 40 Wiggins Lane, Uniontown, Pennsylvania
15401.
(3) The business address for Value Partners, Ltd. is 2200 Ross Avenue, Suite
4660 West, Dallas, Texas 75201. Includes 29,202 shares owned by the
general partner of the general partner of Value Partners, Ltd.
(4) This person's business address is 4750 Hempstead Station, Dayton, Ohio
45429.
(5) Does not include the shares of Common Stock owned by LLC. Mr. Liberati is
the Manager -- President and Chief Executive Officer of LLC and, as such,
may be deemed to have the power to vote or direct the voting of, and to
dispose and direct the disposition of, the shares of Company Common Stock
owned by LLC. Includes 101,977 shares distributed to Mr. Liberati by LLC
on September 15, 1997. Also includes options to purchase 10,000 shares of
Company Common Stock, 5,000 of which are immediately exercisable and 5,000
shares of which will become excersiable on the date of this Annual Meeting;
does not include options to purchase 5,000 shares of Company Common Stock,
which will become exercisable on the date of the 1999 Annual Meeting in
accordance with the Non-employee Directors Stock Option Plan.
(6) Does not include the shares owned by the Schwarz Family Limited
Partnership. The general partner of the Schwarz Family Partnership is the
Albert L. Schwarz Family Trust, of which Mr. Schwarz is the sole trustee
and members of his immediate family are the beneficiaries. See footnote
(12), below. Mr. Schwarz is a limited partner of Schwarz Family Limited
Partnership. Includes options to purchase 25,500 shares of Common Stock
granted to Mr. Schwarz pursuant to the Stock Option Plan, all of which
shares are presently exercisable. Mr. Schwarz resigned as a director and
President of the Company as of January 1, 1998. See "Management
Compensation -Employment Contracts."
(7) Does not include the shares of Common Stock owned by LLC, but includes
101,977 shares distributed to Mr. Hecht by LLC on September 15, 1997. Mr.
Hecht is a member, but not an officer of, LLC. Also includes 2,000 shares
held in a custodial account for two minor children and 1,000 shares owned
by another child, all of whom share the same household with Mr. Hecht, who
disclaims beneficial ownership of such shares. Includes options to purchase
10,000 shares of Company Common Stock, 5,000 of which are immediately
exercisable and 5,000 of which will become exercisable on the date of this
Annual Meeting; does not include options to purchase 5,000 shares of
Company Common Stock, which will become exercisable on the date of the 1999
Annual Meeting in accordance with the Non-employee Directors Stock Option
Plan.
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
-8-
<PAGE>
(FOOTNOTES CONTINUED FROM PRIOR PAGE)
(8) Includes 4,500 shares held by Mr. Radcliffe's three children.
Does not include the shares of Common Stock owned by LLC. Mr. Radcliffe
is the Manager -- Secretary of LLC and, as such, may be deemed to have
the power to vote or direct the voting of, and to dispose and direct the
disposition of, the shares of the Common Stock owned by LLC. Includes
101,977 shares distributed to him by LLC on September 15, 1997. Also
includes options to purchase 10,000 shares of Company Common Stock,
5,000 of which are immediately exercisable and 5,000 of which will
become exercisable on the date of this Annual Meeting; does not include
options to purchase 5,000 shares of Company Common Stock, which will
become exercisable on the date of the 1999 Annual Meeting in accordance
with the Non-employee Directors Stock Option Plan.
(9) Does not include options to purchase 10,000 shares of Common Stock
granted to Mr. Winstel pursuant to the Stock Option Plan as of November
15, 1996, of which 5,000 shares become exercisable on November 15, 1998
and 1999. Includes options to purchase 5,000 shares of Company Common
Stock which became exercisable on November 15, 1997 pursuant to the
Stock Option Plan.
(10) Includes 3,000 shares held as custodian for Mr. Peppel's two minor
children. Does not include options to purchase 30,000 shares of Common
Stock granted to Mr. Peppel pursuant to the Stock Option Plan as of
November 15, 1996, of which 15,000 shares become exercisable on November
15, 1998 and 1999 or options to purchase 25,000 shares granted to Mr.
Peppel pursuant to the Stock Option Plan as of January 15, 1998,
excersiable in three equal annual installments beginning December 31,
1998. Includes options to purchase 15,000 shares of Common Stock which
became exercisable on November 15, 1997 pursuant to the Stock Option
Plan. Does not include shares of Common Stock owned by LLC. Mr. Peppel
is the Manager-Treasurer of LLC and, as such, may be deemed to have the
power to vote or direct the voting of, and to dispose or direct the
disposition of, the shares of Company Common Stock owned by LLC.
Includes 92,704 shares distributed to him by LLC on September 15, 1997.
(11) The business address for the Gilson Trust, the Pereira Trust and the
Goodman Trust is 921 Parker Street, Berkeley, California 94710.
(12) Does not include shares of Common Stock owned individually by Albert L.
Schwarz, who is the trustee of the Schwarz Family Trust, an inter vivos
revocable Ohio trust, which is the general partner of the Schwarz Family
Limited Partnership, an Ohio limited partnership. The address for the
Schwarz Family Limited Partnership is 453 Rolling Timber Trail,
Kettering, Ohio 45429.
(13) Does not include shares of Common Stock owned by LLC.
-9-
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers,
directors and persons who own more than 10% of the Company's Common
Stock to file reports of ownership and changes in ownership with the
Securities and Exchange Commission and the National Association of
Securities Dealers, Inc. Officers, directors and greater than 10%
stockholders are required by regulation to furnish the Company with
copies of all forms they file pursuant to Section 16(a) of the Exchange
Act. Except for Value Partners, Ltd., the Company knows of no person
who owns 10% or more of the Company's Common Stock.
Based solely on review of the copies of such forms furnished to the
Company, or written representations from its officers and directors, the
Company believes that during, and with respect to, fiscal 1997, the
Company's officers and directors complied in all respects with the
reporting requirements promulgated under Section 16(a) of the 1934 Act.
The Company understands, from its review of such forms, that Value
Partners, Ltd. did not timely file a Form 4 for 36,000 shares purchased
in November 1997, but did include that information on a Form 4 filed on
February 17, 1998 and Mr. Radcliffe, a director of the Company, did not
file a Form 5 for the gift of 4,500 shares to his three children in
December 1997. LLC has not filed a Form 4 reflecting the distribution
of 770,723 shares on September 15, 1997.
MANAGEMENT COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth a summary of certain information
concerning the compensation paid by the Company for services rendered in
all capacities during the years ended December 31, 1997, 1996 and 1995
to the President and to each of the three most highly compensated
executive officers (other than the President) of the Company (the "Named
Executive Officers").
<TABLE>
<CAPTION>
Annual
Compensation Securities All Other
--------------------------------- Underlying Compensation
Name and Position Year Salary(1) Bonus(2) Options (3)
- ------------------------------ ------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Michael E. Peppel(1)......................... 1997 $130,452 $130,452 -- $11,895
Vice President - Chief Financial Officer 1996 46,669 146,578 45,000 4,218
Albert L. Schwarz(1)......................... 1997 180,000 180,000 -- 13,949
President 1996 110,235 239,536 25,500 23,401
1995 102,000 164,579 -- 17,400
Thomas C. Winstel............................ 1997 211,510 -- -- 12,614
Vice President - Presentation Products 1996 194,011 -- 15,000 18,043
1995 172,215 23,520 -- 14,400
John C. Huffman, III......................... 1997 128,400 47,319 -- 10,937
Vice President - National Sales Manager 1996 118,800 9,063 -- 18,597
1995 92,000 13,975 -- 14,400
</TABLE>
-----------------------------
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
-10-
<PAGE>
(FOOTNOTES CONTINUED FROM PREVIOUS PAGE)
(1) Effective January 1, 1998, Michael E. Peppel became the Company's
President -- Chief Executive Officer upon the resignation for
personal/health reasons, effective that date, of Albert L. Schwarz. See
"--Employment Contracts." Mr. Peppel joined the Company in May, 1996.
(2) Bonuses shown for the years 1995 and 1996 were paid during 1996 and
1997, respectively, and bonuses for 1997 were paid during 1997 and 1998.
The 1997 bonuses paid to Messrs. Schwarz, Peppel, Winstel and Huffman
were based on their employment agreements. For 1995 and 1996, Mr.
Schwarz's bonuses were based upon his prior employment agreement with
the Company pursuant to which he received 10.0% of the total sum of (i)
the pre-tax net income, before taxes, (ii) other officers' bonus
expenses, and (iii) the accrued profit sharing expense. Mr. Winstel's
1995 bonus was determined by the President (Mr. Schwarz) of the Company.
Mr. Huffman's 1995 bonus was based upon attaining business plan margin
goals. Messrs. Schwarz's, Winstel's and Huffman's previous employment
agreements were terminated on May 30, 1996. See "Employment Contracts."
(3) All Other Compensation includes director's fees (for 1995 and through
the second quarter of 1996) and expense reimbursement, car allowance,
premiums for split dollar life insurance coverage, sporting event
tickets, annual medical examination expenses, taxable relocation,
temporary housing and/or other executive or employee benefits. There
was no stock option plan in effect during 1995 or the years prior
thereto.
COMPENSATION OF DIRECTORS
The Company began paying non-employee directors a quarterly retainer of
$2,500 and fees of $1,000 per Board meeting attended and $250 per Committee
meeting attended beginning with the third quarter of fiscal 1996. From January
through May of 1996, the Company paid $50.00 per month to all directors and from
May through July 1996, directors received no compensation. In addition, Board
members are reimbursed for their travel and other out-of-pocket expenses arising
from attending Board or Committee meetings.
EMPLOYMENT CONTRACTS
On May 30, 1996, in conjunction with the acquisition of the controlling
interest in the Company by LLC, the Company entered into employment contracts
with Messrs. Schwarz, Peppel, Winstel, Turvy, Huffman, and with Richard
Newkold (a co-founder, director and Vice President-Training and Development
of the Company), Joseph R. Hollenshead, the President of DDP, a wholly-owned
subsidiary of the Company, and David White (the former Vice President of
DDP's international operations) (the "Executives"), which agreements are
substantially similar except for compensation provisions. Each such
agreement terminates on December 31, 1999 (except for the agreements of
Messrs. Newkold, Hollenshead and White which terminated on December 31, 1996)
unless sooner terminated for death, physical or mental incapacity or cause
(which is defined as the uncured refusal to perform, or substantial neglect
of, or an intentional failure to perform, a material portion of the
-11-
<PAGE>
Executive's duties, willful misconduct, breach of a fiduciary duty involving
personal gain, a material breach of the employment agreement, or a felony
conviction), or terminated by the Executive for the failure of the Company to
provide the resources necessary to the fulfillment of the Executive's
responsibilities, the express direction by the Board of Directors to have the
Executive perform any illegal action, the threatened or actual insolvency of
the Company or the failure of the Company to perform its obligations to the
Executive under the employment agreement. Mr. Peppel's agreement was amended
as to his salary only as of January, 1998. Mr. Schwarz's agreement was
terminated effective January 1, 1998. The contracts for Messrs. Newkold and
White were not renewed upon their termination at December 31, 1996 and those
persons are no longer employed by the Company. Mr. Hollenshead's contract
was renewed effective January 1, 1997, for a one year term.
In addition to, or in lieu of, a base salary, each such Named Executive
Officer is entitled to a bonus, or commission, as follows: (i) for 1997 only,
Mr. Schwarz received a bonus of 10.0% of pre-tax profits before employee
profit sharing or any other bonuses, which will not exceed the amount of his
base salary; (ii) Mr. Peppel received a bonus equal to 9.0% of the pre-tax
profits of the Company before employee profit sharing or any other bonuses,
which cash bonus will not exceed the amount of his base salary; (iii) Mr.
Winstel will receive a monthly commission in the amount of 40.0% of the Gross
Margin (as defined below) of all sales to certain accounts set forth in Mr.
Winstel's agreement plus the sum of $3,000 plus 5% of the Gross Margin on
sales of all presentation products, which commission will be paid only when
the amount of commission exceeds his monthly base salary and will be paid in
lieu of a monthly base salary; and, (iv) Mr. Huffman will be paid a bonus of
0.5% of Gross Margin over $9.0 million in any calendar year. "Gross Margin"
is defined by the employment agreements to mean the difference of the unit
sales price of the product and the actual cost of the product to the Company.
In addition, for 1997, each of the Named Executive Officers utilized a
Company automobile for Company business having a retail value of up to
$35,000, for which the Company pays rent, insurance, repairs, gas, oil and
fees, of up to $1,200 per month.
The Named Executive Officers are granted up to six weeks vacation
annually and are entitled to participate in and receive the benefits of any
pension or other retirement benefit plan, profit sharing, stock options,
employee stock ownership, or other plans, benefits and privileges given to
employees and executives of the Company, to the extent commensurate with his
then duties and responsibilities, as fixed by the Board of Directors.
Moreover, the Named Executive Officers are eligible to participate in and may
be covered by all plans effective generally for executives of the Company
with respect to life, accident or health insurance, hospitalization,
disability and other benefits. The Company will pay or reimburse the Named
Executive Officers for all reasonable out-of-pocket expenses incurred or paid
by him in connection with the performance of his duties under the agreement.
The contracts also provide for the indemnification of the Named Executive
Officers to the extent permitted by the Company's Articles, Code of
Regulations and applicable law, and the valuation and purchase of the
Executive's shares of Common Stock of the Company if he is terminated for
cause prior to December 31, 1999 and the Common Stock is not, at the
-12-
<PAGE>
time of termination, publicly traded.
In consideration of the above, each of the Named Executive Officers also
has agreed, during the term of the agreement and for 12 months after the
termination of the agreement, not to compete with the Company in any area
which is within a 100-mile radius of any existing office of the Company. All
disputes are to be resolved using alternative dispute resolution procedures
(such as arbitration) rather than litigation.
The Company has, in the past, entered into employment and
non-competition agreements with the senior management of the companies it has
acquired and may do so in the future.
On December 23, 1997, the Company entered into a Severance Agreement
with Albert L. Schwarz, then the President and a director of the Company.
Pursuant to the Severance Agreement, Mr. Schwarz retired from his position as
President and resigned as a member of the Board as of January 1, 1998. His
Employee Agreement, Split Dollar Life Insurance Agreement and Stock Option
Agreement were terminated. The Company accelerated the vesting of certain
stock options so that the number immediately excercisable at January 1, 1998
would be 25,500 (all other granted options were cancelled) and agreed to use
its best efforts to continue health insurance benefits for Mr. Schwarz and
his spouse until he reaches 65 years of age. The Company agreed to indemnify
Mr. Schwarz as a former director and officer and both parties agreed to
release the other from or for claims during Mr. Schwarz's time of employment.
The Company will pay Mr. Schwarz $20,000 per month from January 1, 1998
through December 31, 1999 and Mr. Schwarz has agreed not to compete with the
Company and to serve as a consultant to assist and advise the Company in
matters of transition and defense of the Company's interest. During the
transition period, management will consult with Mr. Schwarz in matters of
transition, defense of the Company's interest, acquisitions, vendor
relationships and other strategic matters.
In 1996, Messrs. Peppel, Hollenshead and White received certain stock
compensation from LLC. See "Certain Transactions -- Related Party
Transactions -- Other Transactions."
EMPLOYEE BENEFIT PLANS
STOCK PLANS.
1996 STOCK OPTION PLAN. Effective September 19, 1996, the Board of
Directors of the Company adopted the 1996 Stock Option Plan (the "Stock
Option Plan") which was approved by the stockholders of the Company by the
unanimous written consent of the stockholders as of October 25, 1996.
The Stock Option Plan is designed to attract and retain qualified
personnel in key positions, provide officers and key employees with a
proprietary interest in the Company as an incentive to contribute to the
success of the Company and to reward key employees for outstanding
performance and the attainment of targeted goals. The Stock Option Plan
-13-
<PAGE>
provides for the grant of incentive stock options intended to comply with the
requirements of Section 422 of the Internal Revenue Code, as amended (the
"Code"). The Company reserved 250,000 shares of Common Stock for issuance
pursuant to the exercise of Options granted under the Stock Option Plan,
subject to adjustment. In the event of a stock split, reverse stock split or
stock dividend, the number of shares of Common Stock under the Stock Option
Plan, the number of shares to which any Option relates and the exercise price
per share under any option will be adjusted to reflect such increase or
decrease in the total number of shares of the Common Stock outstanding.
The Stock Option Plan is administered and interpreted by a committee of
the Board of Directors ("Option Committee") composed of non-employee
directors. Unless sooner terminated, the Stock Option Plan will be in effect
until September 19, 2006, ten years from the date of the adoption of the
Stock Option Plan by the Board of Directors.
Under the Stock Option Plan, the Option Committee will determine, among
other things, which officers and key employees of the Company or its
subsidiaries will be granted Options, the performance goals which must be met
to receive Options, the number of shares subject to each Option, the exercise
price of the Option, whether such Options may be exercised by delivering
other shares of Common Stock or other consideration and when such Options
become exercisable. The per share exercise price of all Options is required
by the Code to be at least equal to the fair market value of a share of
Common Stock on the date the Option is granted. The Code also requires that
the aggregate fair market value of the Common Stock with respect to which the
Options are exercisable for the first time by the Optionee during any
calendar year cannot exceed $100,000. Moreover, any person who owns 10.0% or
more of the voting power of the Common Stock may not receive Options whose
exercise price is less than 110.0% of the fair market value of a share of
Common Stock of the Company on the date of grant.
Options will become vested and exercisable in the manner specified by
the Option Committee and all Options will become fully vested and exercisable
in the event of a change in control of the Company, as defined in the Stock
Option Plan. Each Option or portion thereof will be exercisable at any time
on or after it vests and is exercisable until ten years after its date of
grant or three months after the date on which the optionee's employment
terminates, unless extended by the Option Committee to a period not to exceed
five years from such termination. However, failure to exercise Options
within three months after the date on which the optionee's employment
terminates may result in adverse tax consequences to the optionee. Options
are non-transferable except by will or the laws of descent and distribution.
Under current provisions of the Code, the federal income tax treatment of
incentive stock options is as follows. An optionee who meets certain holding
period requirements will not recognize income at the time the option is granted
or at the time the option is exercised, and a federal income tax deduction
generally will not be available to the Company at any time as a result of such
grant or exercise.
-14-
<PAGE>
In 1997, no options to purchase shares of Company Common Stock were
granted to the Named Executive Officers and options to purchase an aggregate
of 6,600 shares of Common Stock were granted to three non-executive employees
of the Company. In January 1998, the remaining options in the Stock Option
Plan were granted to certain employees of the Company and its subsidiaries.
As of March 16, 1998, the Stock Option Plan had no shares reserved for which
options had not been granted and thus no additional options may currently be
granted under this Stock Option Plan.
NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN. The Company's Non-employee
Directors Stock Option Plan (the "Directors Plan") provides for automatic
grants of non-qualified stock options on the date of each annual meeting of
stockholders, commencing with the 1997 annual stockholders meeting, to each
non-employee director of the Company, so long as shares of Common Stock
remain available under the Directors Plan. The Directors Plan calls for the
grant of options covering 15,000 shares of Common Stock to each person who
was then a non-employee director at the first annual meeting of shareholders
following the closing of the Company's initial public offering, which options
will vest in 5,000 share increments. The first increment vested immediately,
the second increment will vest on the date of this Annual Meeting and the
last increment will vest on the date of the annual meeting of shareholders in
1999, except that all such options shall become immediately vested if the
Company engages in a Business Combination, as defined by the Articles.
Commencing on the date of the 1998 annual meeting of shareholders, and on the
date of each such meeting thereafter, each person who is a non-employee
director, other than the non-employee directors who received the 15,000 share
grants at the 1997 Annual Meeting, will be automatically granted a
non-qualified stock option to purchase 5,000 shares of the Common Stock, not
to exceed 15,000 shares for any director. All of the options granted
hereunder, except for the options granted on the date of the 1997 Annual
Meeting, shall become immediately exercisable in full on the date of grant.
The exercise price of each option is the fair market value of the Common
Stock on the date of grant. Each option expires upon the earlier of ten
years after grant or one year after the death of the recipient director. A
total of 100,000 shares of Common Stock has been reserved for future grants
of options under the Directors Plan. In 1997, 45,000 options were granted
under the Directors Plan; none of such options have been exercised.
STOCK OPTION GRANTS
As of December 31, 1997, the following number of Options were
outstanding to the following executive officers of the Company with an
exercise price equal to $8.50 per share: 25,500 to Mr. Schwarz, 45,000 to Mr.
Peppel and 15,000 to Mr. Winstel. Except for Mr. Schwarz, these Options are
subject to a three year vesting schedule which provides that one-third of
such Options will vest annually beginning on November 15, 1997.
-15-
<PAGE>
OPTION GRANTS IN 1997
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Number of Appreciation for
Securities Percent of Option Term(4)
Underlying Total Exercise ----------------------
Name Option Options(1) Price/Share Expiration Date 5% 10%
- --------------------- ---------- ---------- ----------- --------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Albert L. Schwarz 25,500 29.8% $8.50(2) November 15, 2006 $353,063 $562,194
Thomas C. Winstel 15,000 17.5 8.50(2) November 15, 2006 207,687 330,702
Michael E. Peppel 45,000 52.6 8.50(2) November 15, 2006 623,052 992,106
Anthony W. Liberati 15,000 29.1 10.25(3) May 29, 2007 250,443 398,788
Robert G. Hecht 15,000 29.1 10.25(3) May 29, 2007 250,443 398,788
Harry F. Radcliffe 15,000 29.1 10.25(3) May 29, 2007 250,443 398,788
</TABLE>
- -----------------------
(1) Percentage of options to purchase 85,500 shares of Common Stock granted
to the named individuals in 1996; no options were granted to other
employees in 1996. The number of options granted to Mr. Schwarz was
based on his Severance Agreement. In 1997, 6,600 options were granted
to three non-executive employees of the Company.
(2) The exercise price was based on the initial public offering price of the
Company's Common Stock on the date of grant, November 15, 1996.
(3) Represents the options granted pursuant to the Non-employee Directors
Stock Option Plan. The exercise price was based on the fair market value
of the Common Stock on the date of grant, May 29, 1997.
(4) Assumes compounded rates of return for the remaining life of the options
and a future stock price of $8.50 and $10.25 at compounded rates of
return of 5% and 10%, respectively.
No options were exercised in 1997.
401(k) PLAN. The Company has a 401(k) plan for all employees (the
"401(k) Plan"), age 21 or older, with one year of service. The 401(k) Plan
is a contributory defined contribution plan which is intended to qualify
under Section 401(k) of the Code. Participants may contribute to the 401(k)
Plan by salary reduction up to 20.0% of annual compensation for the year.
Such contribution defers the employee's earnings up to a maximum of $9,500 in
1997 and $10,000 in each future plan year, indexed annually. The Company
may, in its discretion, determine each year to make a matching contribution
out of current or accumulated pre-tax profit equal to up to 50.0% of the
amount deferred by the
-16-
<PAGE>
employee, with a maximum contribution of 1.5% of the employee's compensation.
An employee's contributions to the 401(k) Plan vest immediately while all
employer matching contributions are vested after three years for employees
whose employment began in 1998 or thereafter. For all employees employed
prior to January 1, 1998, both the employee and employer contributions vest
immediately. All funds contributed to the 401(k) Plan are held in a trust
fund, which are invested at the direction of the employee in any one or more
of five separate mutual funds: a stock growth fund, an aggressive stock
growth fund, a growth and income equity fund, an income fund and a money
market fund. Contributions by the Company to the 401(k) Plan were $93,452
for the year ended December 31, 1997.
SECTION 125 C CAFETERIA PLAN. All Company employees are eligible to
participate in the Company's Section 125 C Cafeteria Plan which permits
employees to deduct all or a portion of their gross wages prior to the
calculation of federal income tax, FICA and Medicare deductions and state
income tax, to be used to pay for the following permissible benefits: group
health insurance, long and/or short-term disability insurance, child care or
dental insurance.
PROFIT SHARING PLAN. All Company employees (excluding sales personnel
of the Company and employees of the Company's subsidiaries) who have been
employed for the calendar year and through the date of distribution (March 15
of the following year) are eligible to participate in the Company's profit
sharing plan (the "Profit Sharing Plan") which was inaugurated in 1995.
Assuming that the Company achieves projected pre-tax income for the year,
3.0% of the Company's pre-tax income is set aside for distribution (the
"Profit Sharing Pool") under the Profit Sharing Plan. Employees are entitled
to a portion of the Profit Sharing Pool based on the employee's number of
years of service as of the end of the Profit Sharing Plan year (a "Unit").
Managers of the Company, who are designated annually, have their Units
multiplied times three, and part-time employees who work an average of 30
hours per week earn fractions of Units based on the number of hours worked in
a 2,080 hour year. Under the Profit Sharing Plan, for 1997 one-third of the
Profit Sharing Pool is awarded based on Units and the remainder is awarded
based on the employee's individual performance as determined by Management.
In 1998, the allocation to employees from the Profit Sharing Pool will be
based solely on the employee's performance as determined by Management. The
Company recorded an expense of $46,332 for the Profit Sharing Plan in 1997.
SPLIT DOLLAR LIFE INSURANCE AGREEMENTS. In December 1995, the Company
entered into "split dollar" life insurance agreements, which were amended on
May 30, 1996 in conjunction with the acquisition of control of the Company by
LLC (the "Split Dollar Agreements"), with Messrs. Schwarz, Winstel, Newkold
and Turvy (the "Insureds") pursuant to which the Company purchased, and
currently pays the premiums on, and the income tax gross-up at a 40.0% tax
rate for, term life insurance policies in the face amounts of $1,550,000,
$2,300,000, $1,600,000 and $1,050,000, respectively. While the Company is
the owner of the policies, the Split Dollar Agreements state that the
beneficiaries of the Insureds will be entitled to receive the face value of
the policies upon the death of the Insureds, less the policies' cash value,
which, at December 31, 1997, approximated $194,554,
-17-
<PAGE>
$134,082, $172,328 and $137,056, respectively. The Insureds have the right
to purchase the policies from the Company when they reach age 65 for their
then cash surrender values. (Mr. Schwarz, pursuant to his Severance
Agreement, purchased his policy on January 23, 1998, for its cash value of
$195,928). The cost to the Company for the premiums for 1997 was $40,000 for
Mr. Schwarz, $30,000 for Mr. Winstel, $30,000 for Mr. Newkold and $30,000 for
Mr. Turvy. The Split Dollar Agreements will terminate during the Insureds'
lifetimes upon: (i) the total cessation of the Company's business, or (ii)
the bankruptcy, receivership or dissolution of the Company, and (iii) the
Insureds may terminate the Split Dollar Agreements at any time upon written
notice.
CERTAIN TRANSACTIONS
RELATED PARTY TRANSACTIONS
LEASE AGREEMENTS. The Company has entered into a lease with Draft
Partnership ("Lessor") for a 30,000 square foot office and warehouse building
in Dayton, Ohio. The general partners of Draft Partnership are James F.
Rowland (owning a 50.0% partnership interest), and Messrs. Schwarz, Winstel,
Newkold and Turvy, each of whom own a 12.5% partnership interest. The lease
is for a term of ten years commencing on November 1,1996 for a base monthly
rental of $20,000 plus the difference between $1.5 million and the total cost
of construction, subject to a proportionate increase each year after July
1999 based on the increase in the Consumer Price Index ("CPI"). The Company
is responsible for paying all taxes, public liability insurance but not fire
and property damage insurance, and all utilities on the leased premises.
Provided that the Company is not in default under the lease, it has the
option to renew the term of the lease for two successive terms of five years
each, commencing on the expiration of the initial term. The Lessor has
agreed to maintain the exterior of the building, all structural components
and the parking lot, while the Company has agreed to maintain the interior,
including glass, mechanical, electrical, plumbing, heating and air
conditioning, as well as grounds maintenance. In addition, the Company has
indemnified the Lessor against any claims which may arise out of the
Company's occupancy of the leased premises or any act of the Company or its
employees, agents, invitees or licensees.
Management of the Company believes that the terms and conditions of such
lease are no less favorable than those that could be obtained from a
non-affiliated third party in the local real estate market for similar
office/warehouse structures and, although the Company has not obtained a third
party opinion regarding the fairness of the above-described transaction, the
Company believes that the rental and other payments under the lease are at or
below current comparable rates in the local market.
John Schwarz and Robert Schwarz, two employees and stockholders of the
Company who are brothers (but not related to Albert L. Schwarz) and who were
stockholders of Paper Rolls and Computer Supplies, Inc. ("Paper Rolls") at
the time of the acquisition by the Company of the assets of Paper Rolls in
June 1994, and their parents are among the lessors
-18-
<PAGE>
of the Company's 7,500 square foot office/warehouse facility in Louisville,
Kentucky. This lease is for a ten year term, expiring in June 2004, at a
rental of $2,000 per month, plus an annual increase based on the CPI with the
base month being July 1994. Rent adjusts annually on the first day of July.
The Company, as lessee, is obligated to pay the taxes, insurance and
utilities for the property and has indemnified the lessors against all
liability arising from injury or damage during the term of the lease to any
person or property occasioned wholly or in part by any act or omission of the
Company or any guest, servant, assign or sub-tenant of the Company.
Management of the Company believes that the terms and such lease are no
less favorable than those that could be obtained from a non-affiliated third
party in the local real estate market for similar office/warehouse structures
and, although the Company has not obtained a third party opinion regarding
the fairness of the above-described transaction, the Company believes that
the rental and other payments under the lease are at or below current
comparable rates in the local market.
OTHER TRANSACTIONS. In connection with the acquisition of control of
the Company in May 1996, LLC purchased 70.0% of the issued and outstanding
shares of voting and non-voting common stock of the Company for $8.0 million
in cash and notes (which notes were paid in November 1996) or $4.78 per
share. Messrs. Liberati, Hecht, Radcliffe, Peppel, Hollenshead and White
(and an investment fund of Friedman, Billings, Ramsey & Co., Inc., the
underwriter in the Company's initial public offering, and a partnership
composed of certain members of Elias, Matz, Tiernan & Herrick L.L.P., special
counsel to the Company) are members of LLC. The stockholders of the Company
who sold shares to LLC included Messrs. Schwarz, Winstel, Newkold, Turvy,
Huffman and a family limited partnership affiliated with Mr. Schwarz.
In addition, at the same time, LLC purchased 100.0% of the issued and
outstanding common stock of DDP for a $250,000 loan to Messrs. Hollenshead
and White, stockholders of DDP, which loan was completely cancelable if DDP
generated pre-tax income of $250,000 for the year ended December 31, 1996 and
partially cancelable based upon the amount of pre-tax income generated by DDP
which was less than $250,000. The loan was cancelled at December 31, 1996.
Mr. Peppel was a director and the Chief Financial Officer and a selling
stockholder of DDP, but received no cash consideration in the transaction.
LLC contributed all of the shares of common stock of DDP to the Company on
May 30, 1996.
In conjunction with the purchase of DDP by LLC, LLC agreed to provide
the three selling stockholders of DDP a stock incentive so long as such
stockholders remain employees of the Company or DDP, as a subsidiary of the
Company, for the years ended December 31, 1996, 1997 and 1998. Under the
Stock Purchase Agreement by and among LLC, DDP and the selling stockholders
of DDP (Messrs. Hollenshead, Peppel and White), LLC transferred 58,520 shares
of Common Stock to them as of November 15, 1996.
In 1997, the Company purchased inventory in an amount equal to $237,000
from Cranel, Inc., Columbus, Ohio, a computer supply wholesaler. The brother
of John C.
-19-
<PAGE>
Huffman, III, Vice President - National Sales Manager of the Company, is a
sales representative for Cranel, Inc.
LIMITATIONS ON LIABILITY AND INDEMNIFICATION MATTERS. The Company has
adopted provisions in its Articles that eliminate to the fullest extent
permissible under Ohio law the liability of its directors to the Company or
its stockholders for monetary damages except to the extent that it is proved
by clear and convincing evidence that the director took or failed to take
action, and that such action or failure to act involved an act or omission
undertaken with the deliberate intent to cause injury to the Company or was
undertaken with reckless disregard for the best interests of the Company.
The Articles do not, however, affect the liability of directors for the
granting of unlawful loans, dividends or distributions of assets. Under Ohio
law, directors will not be found to have violated their duties to the
corporation unless it is proved by clear and convincing evidence that the
director has not acted in good faith, in a manner he reasonably believes to
be in, or not opposed to, the best interests of the corporation, or with the
care that an ordinarily prudent person in a like position would use under
similar circumstances, in any action brought against the director. However,
a director will not be considered to be acting in good faith if he has
knowledge concerning the matter in question that would cause reliance on
information, opinions or reports prepared by counsel or the Company's
auditors to be unwarranted. A director, in determining what he reasonably
believes to be in the best interests of the Company, is allowed by the
General Corporation Law of the State of Ohio ("OGCL") to consider the
interests of the Company's stockholders, and may, in his discretion,
consider: (i) the interests of the Company's employees, suppliers, creditors
and customers; (ii) the local and national economy; (iii) community and
societal considerations; and (iv) the long-term as well as the short-term
interests of the Company and its stockholders, including the possibility that
these interests may be best served by the continued independence of the
Company. This limitation of liability provision is designed to ensure that
the ability of the Company's directors to exercise their best business
judgment in managing the Company's affairs, subject to their continuing
fiduciary duties to the Company and its stockholders, is not unreasonably
impeded by exposure to potentially high personal costs or other uncertainties
of litigation.
The Articles also provide that the Company shall indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, because such person is or was a director, officer, employee or
agent of the Company. Under the terms of the Company's Articles, such
indemnification also will be provided to any person who is or was serving at the
request of the Company as a director, officer, employee, agent or in certain
other capacities of another corporation, partnership, joint venture, trust or
certain other enterprises. Such indemnification is furnished to the full extent
provided by law against expenses (including attorneys' fees), judgments, fines,
excise taxes and amounts paid in settlement actually and reasonably incurred in
connection with such action, suit or proceeding; if such person acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Company, and with respect to a criminal action, if he had no
reasonable cause to believe his conduct was unlawful. However, in an action by
or in the right of the Company, no indemnification will be made if such person
-20-
<PAGE>
is adjudged liable for negligence or misconduct in the performance of his
duty to the Company unless the court determines that despite such liability,
but in view of all of the circumstances, such person is fairly and reasonably
entitled to indemnity for expenses as determined by the court, or unless such
action is for an unlawful loan, dividend or distribution of assets. The
indemnification provisions also permit the Company to pay reasonable expenses
in advance of the final disposition of any action, suit or proceeding as
authorized by the Company's Board of Directors, provided that the indemnified
person provides an undertaking to repay the Company if it is ultimately
proved by clear and convincing evidence in court that his action or failure
to act involved an act or omission undertaken with the deliberate intent to
cause injury to the Company or undertaken with reckless disregard for the
best interests of the Company and to reasonably cooperate with the Company
concerning the action, suit or proceeding.
The rights of indemnification provided in the Company's Articles are not
exclusive of any other rights which may be available under the Articles or
Code of Regulations of the Company, any insurance or other agreement, by vote
of stockholders or disinterested directors or otherwise. In addition, the
Articles authorize the Company to maintain insurance on behalf of any person
who is or was a director, officer, employee or agent of the Company or with
another entity at the request of the Company, whether or not the Company
would have the power to provide indemnification to such person. The Company
maintains director and officer liability insurance coverage.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the
Company pursuant to the foregoing provisions, it is the published opinion of
the Commission that such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.
At the present time, there is no pending litigation or proceedings
involving a director, officer, employee or other agent of the Company in
which indemnification would be required or permitted. The Company is not
presently aware of any other threatened litigation or proceeding which may
result in a claim for such indemnification.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Company's Board of Directors reviews
the compensation and benefits for the Company's employees and recommends to
the Board adjustments in such compensation. During fiscal 1997, the members
of the Compensation Committee were Messrs. Harry F. Radcliffe (Chairman),
Anthony W. Liberati and Robert G. Hecht.
None of the executive officers of the Company currently serves on the
compensation committee of another entity or on any other committee of the
board of directors of another entity performing similar functions. Except
for the granting of options under the Directors Plan, no transactions
effecting the members of the Compensation Committee, or their affiliates,
occurred during 1997.
-21-
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The report of the Compensation Committee with respect to compensation
for the executive officers of the Company for the fiscal year ended December
31, 1997 is set forth below.
The Report of the Compensation Committee on Executive Compensation and
the Stock Performance Graph immediately following this section shall not be
deemed incorporated by reference by any general statement incorporating by
reference this Proxy Statement into any filing under the Securities Act of
1933, as amended, or the Exchange Act, except to the extent that the Company
specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
The Compensation Committee of the Company's Board of Directors, at the
direction of the Board of Directors, prepared the following report.
The members of the Compensation Committee are non-employee directors
and, in 1997, the Compensation Committee was composed of Messrs. Radcliffe
(Chairman), Hecht and Liberati. The Compensation Committee reviews
compensation and benefits for the Company's executive officers and recommends
to the Board adjustments in such compensation. The Committee met once during
1997 and reviewed base salaries, estimated annual bonuses and long term
compensation in the form of stock options.
Executive officers are paid salaries and bonuses in accordance with what
the Compensation Committee believes to be the ability of such officer to
influence the attainment of financial goals by the Company. Most of the
bonuses, which in 1997 represented a significant portion of such individual's
overall compensation package, are tied to either Company pre-tax profits or
the Company's Gross Margin. This structure intentionally emphasizes sales
and cost containment and directly relates the officer's compensation to the
Company's performance. The Compensation Committee negotiated the Severance
Agreement with Albert L. Schwarz and believes that such agreement compensates
Mr. Schwarz for his consulting arrangement and certain restrictive covenants
and is in the best interest of the Company and its stockholders.
The members of the Compensation Committee also administer the granting
of stock options pursuant to the Stock Option Plan. The Compensation
Committee exercises discretion with respect to the timing and amount of
awards to be granted under the Stock Option Plan. No options were granted to
executive officers in 1997. Future option grants will be based upon, among
other things, one or more of the following factors: the Company's attainment
of corporate performance goals, the responsibility and performance of the
particular executive and his or her contribution to the attainment of
corporate performance goals, the tenure of the particular executive officer,
the officer's level of competency, skill and experience, the salary and bonus
component of the officer's total compensation package, compensation paid to
officers in companies of similar size in the same industry, and other
pertinent factors. Stock option grants are aimed at aligning the
-22-
<PAGE>
executive's long-range interest with those of the stockholders of the Company
by providing an opportunity for such key employees to possess a meaningful
stake in the Company through stock ownership.
Respectfully submitted:
Harry F. Radcliffe (Chairman)
Anthony W. Liberati
Robert G. Hecht
PERFORMANCE GRAPH
The following graph compares the cumulative total returns for the Common
Stock of the Company, the Russell 2000 Index and the Nasdaq Stock Market
- -U.S. since the Company's initial public offering in November 1996.* All of
these cumulative returns are computed assuming that no dividends were paid
during the period. Management of the Company cautions that the stock price
performance shown in the graph below should not be indicative of potential
future stock price performance.
STOCK PRICE PERFORMANCE
[INSERT GRAPH HERE]
[GRAPH]
* Represents $100 invested on November 12, 1996 in Company Common Stock
or in the referenced index on October 31, 1996. (The Stock
Performance Graph was produced by Research Data Group based on
financial information provided by the sources set forth above).
-23-
<PAGE>
STOCK PRICE PERFORMANCE
FOR PERIOD ENDING
<TABLE>
<CAPTION>
11/12/96 11/30/96 12/31/96 12/31/97
-------- -------- -------- --------
<S> <C> <C> <C> <C>
MCSC 100.00 106.00 109.00 169
Nasdaq Stock Market - U.S. 100.00 110.00 106.00 130
Russell 2000 Index 100.00 104.00 107.00 131
</TABLE>
The Common Stock commenced trading on the Nasdaq National Market System
on November 12, 1996.
PROPOSAL TO ADOPT THE 1998 STOCK OPTION PLAN
GENERAL
The Board of Directors has adopted the 1998 Stock Option Plan which is
designed to attract and retain qualified officers and other employees,
provide officers and other employees with a proprietary interest in the
Company as an incentive to contribute to the success of the Company and
reward officers and other employees for outstanding performance. The 1998
Stock Option Plan provides for the grant of incentive stock options intended
to comply with the requirements of Section 422 of the Code ("incentive stock
options") and non-qualified or compensatory stock options (together, the
"options"). The Board of Directors believes that the 1998 Stock Option Plan
is necessary because it will continue to motivate Company employees to
perform well and because all options currently available under the 1996 Stock
Option Plan have been granted. Accordingly, the Board of Directors believes
that the 1998 Stock Option Plan is in the best interest of the Company and
its stockholders.
DESCRIPTION OF THE 1998 STOCK OPTION PLAN
The following description of the 1998 Stock Option Plan is a summary of
its terms and is qualified in its entirety by reference to the 1998 Stock
Option Plan, a copy of which is attached hereto as Appendix A.
ADMINISTRATION
The 1998 Stock Option Plan will be administered and interpreted by the
Compensation Committee of the Board of Directors (the "Option Committee")
which is composed of non-employee directors.
STOCK OPTIONS
Under the Stock Option Plan, the Option Committee will determine, among
other
-24-
<PAGE>
things, which officers and other employees will be granted options, the
performance goals which must be met to receive options, the number of shares
subject to each option, the exercise price of the option, whether such
options may be exercised by delivering other shares of Common Stock or other
consideration and when such options become exercisable. The per share
exercise price of incentive stock options is required by the Code to be at
least equal to the fair market value of a share of Common Stock on the date
the option is granted. Compensatory or non-qualified options may have an
exercise price no less than 85% of the fair market value of a share of Common
Stock on the date of grant. The Code also requires that the aggregate fair
market value of the Common Stock with respect to which the incentive stock
options are exercisable for the first time by the optionee during any
calendar year cannot exceed $100,000. Moreover, any person who owns 10.0% or
more of the voting power of the Common Stock may not receive incentive stock
options whose exercise price is less than 110.0% of the fair market value of
a share of Common Stock of the Company on the date of grant.
Options will become vested and exercisable in the manner specified by
the Option Committee and all options will become fully vested and exercisable
in the event of a change in control of the Company, as defined in the 1998
Stock Option Plan. Each option or portion thereof will be exercisable at any
time on or after it vests and is exercisable until ten years after its date
of grant or three months after the date on which the optionee's employment
terminates, unless extended by the Option Committee to a period not to exceed
five years from such termination. However, failure to exercise options
within three months after the date on which the optionee's employment
terminates may result in adverse tax consequences to the optionee. Incentive
stock options are non-transferable except by will or the laws of descent and
distribution; compensatory or non-qualified stock options may be transferred
to an optionee's spouse, lineal descendants, ascendants or to a trust
established for the benefit of one of these individuals. Options so
transferred may thereafter be transferred only to the optionee who originally
received the grant or to an individual or trust to whom the optionee could
have initially transferred the option. Options so transferred shall be
exercisable by the transferee according to the same terms and conditions as
applied to the optionee.
NUMBER OF SHARES COVERED BY THE 1998 STOCK OPTION PLAN. A total of
500,000 shares of Common Stock has been reserved for issuance pursuant to the
1998 Stock Option Plan. In the event of a stock split, reverse stock split
or stock dividend, the number of shares of Common Stock under the 1998 Stock
Option Plan, the number of shares to which any option relates and the
exercise price per share under any option shall be adjusted to reflect such
increase or decrease in the total number of shares of the Common Stock
outstanding.
AMENDMENT AND TERMINATION OF THE 1998 STOCK OPTION PLAN. Unless sooner
terminated, the 1998 Stock Option Plan shall continue in effect for a period
of ten years from the effective date, which is January 28, 1998, the date the
1998 Stock Option Plan was adopted by the Board and became effective by its
terms. Termination of the 1998 Stock Option Plan shall not affect any
previously granted options. The Board of Directors may at any time terminate
or amend the 1998 Stock Option Plan with respect to any shares of
-25-
<PAGE>
Common Stock as to which options have not been granted, subject to any
required stockholder approval.
FEDERAL INCOME TAX CONSEQUENCES. Under current provisions of the Code,
the federal income tax treatment of incentive stock options and compensatory
or non-qualified stock options is different. As regards to incentive stock
options, an optionee who meets certain holding period requirements will not
recognize income at the time the option is granted or at the time the option
is exercised, and a federal income tax deduction generally will not be
available to the Company at any time as a result of such grant or exercise.
With respect to compensatory or non-qualified stock options, the difference
between the fair market value on the date of exercise and the option exercise
price generally will be treated as compensation income upon exercise, and the
Company will be entitled to a deduction in the amount of income so recognized
by the optionee.
In the event a compensatory or non-qualified stock option is issued that
has an exercise price as of the date of grant which is substantially lower
than the fair market value of the underlying Common Stock so that the
tendering of the exercise price is not considered a substantial obstacle to
the ultimate receipt of the underlying Common Stock, the Internal Revenue
Service may deem the underlying stock to have been constructively received by
the optionee in which case the optionee will be treated as having exercised
the option and the tax consequence will be the same as discussed above.
The above description of tax consequences under federal law is
necessarily general in nature and does not purport to be complete. Moreover,
statutory provisions are subject to change, as are their interpretations, and
their application may vary in individual circumstances. Finally, the
consequences under applicable state and local income tax laws may not be the
same as under the federal income tax laws.
ACCOUNTING TREATMENT. So long as an option is granted at fair market
value on the date of grant, neither the grant nor the exercise of an
incentive stock option or a compensatory or non-qualified stock option under
the 1998 Stock Option Plan currently requires any charge against earnings
under generally accepted accounting principles. If a non-qualified option
has an excercise price of less than fair market value, the Company would be
required to accrue a charge of compensation. In certain circumstances,
shares issuable pursuant to outstanding options under the 1998 Stock Option
Plan might be considered outstanding for purposes of calculating diluted
earnings per share.
STOCKHOLDER APPROVAL. No options will be granted under the 1998 Stock
Option Plan unless the 1998 Stock Option Plan is approved by stockholders.
Stockholder ratification of the 1998 Stock Option Plan will satisfy certain
Nasdaq market listing and tax requirements.
OPTIONS TO BE GRANTED. No options have been granted to date under the
1998 Stock Option Plan and no determination has been made at this time
regarding the amount or timing of options to be made under the Plan.
-26-
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR ADOPTION OF
THE 1998 STOCK OPTION PLAN.
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company has appointed Price Waterhouse
LLP, independent accountants, to perform the audit of the Company's financial
statements for the year ending December 31, 1998, and further directed that
the selection of accountants be submitted for ratification by the
stockholders at the Annual Meeting.
The Company has been advised by Price Waterhouse LLP that neither that
firm nor any of its associates has any relationship with the Company or its
subsidiaries other than the usual relationship that exists between
independent accountants and clients. Price Waterhouse LLP will have one or
more representatives at the Annual Meeting who will have an opportunity to
make a statement, if they so desire, and who will be available to respond to
appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF
THE APPOINTMENT OF PRICE WATERHOUSE LLP AS INDEPENDENT ACCOUNTANTS FOR THE
FISCAL YEAR ENDING DECEMBER 31, 1998.
ADJOURNMENT OF ANNUAL MEETING
Each proxy solicited hereby requests authority to vote for an
adjournment of the Annual Meeting, if an adjournment is deemed to be
necessary. The Company may seek an adjournment of the Annual Meeting for not
more than 30 days in order to enable the Company to solicit additional votes
in favor of the proposal to adopt the 1998 Stock Option Plan in the event
that such proposal has not received the requisite vote of stockholders at the
Annual Meeting and such proposal has not received negative votes with respect
to a majority of the total votes represented at the Annual Meeting. If the
Company desires to adjourn the meeting with respect to the foregoing
proposal, it will request a motion that the meeting be adjourned for up to 30
days with respect to such proposal (and solely with respect to such proposal,
provided that a quorum is present at the Annual Meeting), and no vote will be
taken on such proposal at the originally scheduled Annual Meeting. Each
proxy solicited hereby, if properly signed and returned to the Company and
not revoked prior to its use, will be voted on any motion for adjournment in
accordance with the instructions contained therein. If no contrary
instructions are given, each proxy received will be voted in favor of any
motion to adjourn the meeting. Unless revoked prior to its use, any proxy
solicited for the Annual Meeting will continue to be valid for any
adjournment of the Annual Meeting, and will be voted in accordance with
instructions contained therein, and if no contrary instructions are given,
for the proposal in question.
Any adjournment will permit the Company to solicit additional proxies
and will permit a greater expression of the stockholders' views with respect
to such proposal. Such an adjournment would be disadvantageous to
stockholders who are against the proposal,
-27-
<PAGE>
because an adjournment will give the Company additional time to solicit
favorable votes and thus increase the chances of passing such proposal.
If a quorum is not present at the Annual Meeting, no proposal will be
acted upon and the Board of Directors of the Company will adjourn the Annual
Meeting to a later date in order to solicit additional proxies on each of the
proposals being submitted to stockholders.
An adjournment for up to 30 days will not require either the setting of
a new record date or notice of the adjourned meeting as in the case of an
original meeting. The Company has no reason to believe that an adjournment
of the Annual Meeting will be necessary at this time.
BECAUSE THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
PROPOSAL TO ADOPT THE 1998 STOCK OPTION PLAN, AS DISCUSSED ABOVE, THE BOARD
OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE POSSIBLE ADJOURNMENT
OF THE ANNUAL MEETING.
STOCKHOLDER PROPOSALS
Any proposal which a stockholder wishes to have included in the proxy
materials of the Company relating to the next annual meeting of stockholders
of the Company, which currently is scheduled to be held in April 1999, must
be received at the principal executive offices of the Company, 4750 Hempstead
Station Drive, Dayton, Ohio 45429, Attention: Thomas C. Winstel, Secretary,
no later than November 25, 1998.
Stockholder proposals which are not submitted for inclusion in the
Company's proxy materials pursuant to Rule 14a-8 under the Exchange Act may
be brought before an annual meeting pursuant to Article IX.C. of the
Company's Articles, which provides that business at an annual meeting of
stockholders must be (a) properly brought before the meeting by or at the
direction of the Board of Directors, or (b) otherwise properly brought before
the meeting by a stockholder. For business to be properly brought before an
annual meeting by a stockholder, the stockholder must have given timely
notice thereof in writing to the Secretary of the Company. To be timely, a
stockholder's notice must be delivered to, or mailed and received at, the
principal executive offices of the Company at the close of business not less
than 60 days prior to the anniversary date of the mailing of proxy materials
by the Company in connection with the immediately preceding annual meeting of
the Company.
ANNUAL REPORTS
A copy of the Company's Annual Report to Stockholders for the year ended
December 31, 1997 accompanies this Proxy Statement. Such Annual Report is
not part of the proxy solicitation materials.
-28-
<PAGE>
UPON RECEIPT OF A WRITTEN REQUEST, THE COMPANY WILL FURNISH TO ANY
STOCKHOLDER WITHOUT CHARGE A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K
FOR FISCAL 1997 REQUIRED TO BE FILED UNDER THE EXCHANGE ACT. SUCH WRITTEN
REQUESTS SHOULD BE DIRECTED TO INVESTOR RELATIONS DEPARTMENT, MIAMI COMPUTER
SUPPLY CORPORATION, 4750 HEMPSTEAD STATION DRIVE, DAYTON, OHIO 45429. The
Form 10-K is not part of the proxy solicitation materials.
OTHER MATTERS
Each proxy solicited hereby also confers discretionary authority on the
Board of Directors of the Company to vote the proxy with respect to the
approval of the minutes of the last meeting of stockholders, the election of
any person as a director if the nominee is unable to serve or for good cause
will not serve, matters incident to the conduct of the meeting, and upon such
other matters as may properly come before the Annual Meeting. Management is
not aware of any business that may properly come before the Annual Meeting
other than the matters described above in this Proxy Statement. However, if
any other matters should properly come before the meeting, it is intended
that the proxies solicited hereby will be voted with respect to those other
matters in accordance with the discretion of the persons voting the proxies.
The cost of the solicitation of proxies will be borne by the Company.
The Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending the proxy
materials to the beneficial owners of the Company's Common Stock. In
addition to solicitations by mail, directors, officers and employees of the
Company may solicit proxies personally or by telephone without additional
compensation.
By Order of the Board of Directors
Thomas C. Winstel
Secretary
March 25, 1998
-29-
<PAGE>
APPENDIX A
MIAMI COMPUTER SUPPLY CORPORATION
1998 STOCK OPTION PLAN
ARTICLE I
ESTABLISHMENT OF THE PLAN
Miami Computer Supply Corporation (the "Corporation") hereby establishes
this 1998 Stock Option Plan (the "Plan") upon the terms and conditions
hereinafter stated.
ARTICLE II
PURPOSE OF THE PLAN
The purpose of this Plan is to improve the growth and profitability of
the Corporation by providing Employees with a proprietary interest in the
Corporation as an incentive to contribute to the success of the Corporation,
and rewarding those Employees for outstanding performance and the attainment
of targeted goals. All Incentive Stock Options issued under this Plan are
intended to comply with the requirements of Section 422 of the Code, and the
regulations thereunder, and all provisions hereunder shall be read,
interpreted and applied with that purpose in mind.
ARTICLE III
DEFINITIONS
3.01 "Board" means the Board of Directors of the Corporation.
3.02 "Code" means the Internal Revenue Code of 1986, as amended.
3.03 "Committee" means a committee of two or more directors appointed by
the Board pursuant to Article IV hereof, each of whom shall be a
"non-employee director" as defined in Rule 16b-3(b)(3)(i) of the Exchange Act
or any successor thereto.
3.04 "Common Stock" means shares of the common stock, no par value per
share, of the Corporation.
3.05 "Disability" means any physical or mental impairment which
qualifies an Employee for disability benefits under the applicable long-term
disability plan maintained by the Corporation or, if no such plan applies,
which would qualify such Employee for disability benefits under the Federal
Social Security System.
3.06 "Effective Date" means the date upon which the Board approves this
Plan.
3.07 "Employee" means any person who is employed by the Corporation.
3.08 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
<PAGE>
3.09 "Fair Market Value" shall be equal to the fair market value per
share of the Corporation's Common Stock on the date an Option is granted.
For purposes hereof, the Fair Market Value of a share of Common Stock shall
be the mean between the high bid and low asked prices that day on the
principal market then in use, or if no such quotations are available, the
fair market value on the date in question of a share as determined by a
majority of the Board in good faith.
3.10 "Incentive Stock Option" means any Option granted under this Plan
which the Board intends (at the time it is granted) to be an incentive stock
option within the meaning of Section 422 of the Code or any successor thereto.
3.11 "Non-Qualified Stock Option" means any Option granted under this
Plan which is not an Incentive Stock Option.
3.12 "Officer" means an Employee whose position in the Corporation is
that of a corporate officer, as determined by the Board.
3.13 "Option" means a right granted under this Plan to purchase Common
Stock.
3.14 "Optionee" means an Employee or former Employee to whom an Option
is granted under the Plan.
3.15 "Retirement" means a termination of employment which constitutes a
"retirement" under any applicable qualified pension benefit plan maintained
by the Corporation.
3.16 "Stock Option Agreement" means the written agreement pursuant to
Section 8.01 hereof that sets forth the terms, conditions, restrictions and
privileges for an Incentive Stock Option.
ARTICLE IV
ADMINISTRATION OF THE PLAN
4.01 DUTIES OF THE COMMITTEE. The Plan shall be administered and
interpreted by the Committee, as appointed from time to time by the Board
pursuant to Section 4.02. The Committee shall have the authority in its
absolute discretion to adopt, amend and rescind such rules, regulations and
procedures as, in its opinion, may be advisable in the administration of the
Plan, including, without limitation, rules, regulations and procedures which
(i) deal with satisfaction of an Optionee's tax withholding obligation
pursuant to Section 12.02 hereof, (ii) include arrangements to facilitate the
Optionee's ability to borrow funds for payment of the exercise or purchase
price of an Option, if applicable, from securities brokers and dealers, and
(iii) include arrangements which provide for the payment of some or all of
such exercise or purchase price by delivery of previously-owned shares of
Common Stock or other property and/or by withholding some of the shares of
Common
-A2-
<PAGE>
Stock which are being acquired. The interpretation and construction by the
Committee of any provisions of the Plan, any rule, regulation or procedure
adopted by it pursuant thereto or of any Option shall be final and binding.
4.02 APPOINTMENT AND OPERATION OF THE COMMITTEE. The members of the
Committee shall be appointed by, and will serve at the pleasure of, the
Board. The Board from time to time may remove members from, or add members
to, the Committee, provided the Committee shall continue to consist of two or
more members of the Board, each of whom shall be a "non-employee director" as
defined in Rule 16b-3(b)(3)(i) of the Exchange Act or any successor thereto.
The Committee shall act by vote or written consent of a majority of its
members. Subject to the express provisions and limitations of the Plan, the
Committee may adopt such rules, regulations and procedures as it deems
appropriate for the conduct of its affairs. It may appoint one of its
members to be chairman and any person, whether or not a member, to be its
secretary or agent. The Committee shall report its actions and decisions to
the Board at the next regularly scheduled meeting of the Board following each
meeting of the Committee.
4.03 REVOCATION FOR MISCONDUCT. The Committee may by resolution
immediately revoke, rescind and terminate any Option, or portion thereof, to
the extent not yet vested, previously granted or awarded under this Plan to
an Employee who is discharged from the employ of the Corporation for cause,
which, for purposes hereof, shall mean termination because of the Employee's
personal dishonesty, incompetence, willful misconduct, breach of fiduciary
duty involving personal profit, intentional failure to perform stated duties,
or willful violation of any law, rule, or regulation (other than traffic
violations or similar offenses).
4.04 LIMITATION ON LIABILITY. No member of the Committee shall be
liable for any action or determination made in good faith with respect to the
Plan, any rule, regulation or procedure adopted by it pursuant thereto or any
Options granted under it. If a member of the Committee is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative, arbitrative or
investigative, by reason of anything done or not done by him in such capacity
under or with respect to the Plan, the Corporation shall indemnify him to the
extent permitted by the Corporation's Amended and Restated Articles of
Incorporation and Code of Regulations and by Ohio General Corporation Law.
4.05 COMPLIANCE WITH LAW AND REGULATIONS. All Options granted hereunder
shall be subject to all applicable federal and state laws, rules and
regulations and to such approvals by any government or regulatory agency as
may be required. The Corporation shall not be required to issue or deliver
any certificates for shares of Common Stock prior to the completion of any
registration or qualification of or obtaining of consents or approvals with
respect to such shares under any Federal or state law or any rule or
regulation of any government body, which the Corporation shall, in its sole
discretion, determine to be necessary or advisable. Moreover, no Option may
be exercised if such exercise would be contrary to applicable laws and
regulations.
-A3-
<PAGE>
4.06 RESTRICTIONS ON TRANSFER. The Corporation may place a legend upon
any certificate representing shares acquired pursuant to an Option granted
hereunder noting that the transfer of such shares may be restricted by
applicable laws and regulations.
ARTICLE V
ELIGIBILITY
Options may be granted to such Employees of the Corporation as may be
designated from time to time by the Committee, pursuant to guidelines, if
any, which may be adopted by the Committee from time to time.
ARTICLE VI
COMMON STOCK COVERED BY THE PLAN
6.01 OPTION SHARES. The aggregate number of shares of Common Stock
which may be issued pursuant to this Plan, subject to adjustment as provided
in Article IX, shall be 500,000 shares of Common Stock. None of such shares
shall be the subject of more than one Option at any time, but if an Option as
to any shares is surrendered before exercise, or expires or terminates for
any reason without having been exercised in full, or for any other reason
ceases to be exercisable, the number of shares covered thereby shall again
become available for grant under the Plan as if no Options had been
previously granted with respect to such shares.
6.02 SOURCE OF SHARES. The shares of Common Stock issued under the Plan
may be authorized but unissued shares, treasury shares or shares purchased by
the Corporation on the open market or from private sources for use under the
Plan.
ARTICLE VII
DETERMINATION OF
OPTIONS, NUMBER OF SHARES, ETC.
The Committee shall, in its discretion, determine from time to time
which Employees will be granted Options under the Plan, the number of shares
of Common Stock subject to each Option, whether each Option will be an
Incentive Stock Option or a Non-Qualified Stock Option and the exercise price
of an Option. In making all such determinations there shall be taken into
account the duties, responsibilities and performance of each respective
Employee, his present and potential contributions to the growth and success
of the Corporation, his salary and such other factors as the Committee shall
deem relevant to accomplishing the purposes of the Plan.
-A4-
<PAGE>
ARTICLE VIII
OPTIONS
Each Option granted hereunder shall be on the following terms and
conditions:
8.01 STOCK OPTION AGREEMENT. The proper Officers or a member of the
Committee on behalf of the Corporation and each Optionee shall execute a
Stock Option Agreement which shall set forth the total number of shares of
Common Stock to which it pertains, the exercise price, whether it is a
Non-Qualified Stock Option or an Incentive Stock Option and such other terms,
conditions, restrictions and privileges as the Committee in each instance
shall deem appropriate, provided they are not inconsistent with the terms,
conditions and provisions of this Plan. Each Optionee shall receive a copy
of his executed Stock Option Agreement.
8.02 OPTION EXERCISE PRICE.
(a) INCENTIVE STOCK OPTIONS. The per share price at which the
subject Common Stock may be purchased upon exercise of an Incentive Stock
Option shall be no less than one hundred percent (100%) of the Fair Market
Value of a share of Common Stock at the time such Incentive Stock Option is
granted, except as provided in Section 8.09(b).
(b) NON-QUALIFIED STOCK OPTIONS. The per share price at which the
Common Stock may be purchased upon exercise of a Non-Qualified Stock Option
shall be no less than eighty-five percent (85%) of the Fair Market Value of a
share of Common Stock at the time such Non-Qualified Option is granted,
except as provided in Section 8.09(b).
8.03 VESTING AND EXERCISE OF OPTIONS
(a) GENERAL RULES. Incentive Stock Options and Non-Qualified
Stock Options granted to Employees shall become vested and exercisable at the
rate, to the extent and subject to such limitations as may be specified by
the Committee. Notwithstanding the foregoing, no vesting shall occur on or
after an Employee's employment with the Corporation is terminated for any
reason other than his death, Disability or Retirement. In determining the
number of shares of Common Stock with respect to which Options are vested
and/or exercisable, fractional shares will be rounded up to the nearest whole
number if the fraction is 0.5 or higher, and down if it is less.
(b) VESTING UPON TERMINATION OF EMPLOYMENT, DEATH, DISABILITY OR
RETIREMENT. Unless the Committee shall specifically state otherwise at the time
an Option is granted, only those Options granted to Employees under this Plan
which are vested and exercisable on the date an Optionee terminates his
employment with the Corporation because of his termination of employment under
certain circumstances as set forth in the Optionee's Stock Option Agreement, or
because of his death, Disability or Retirement shall
-A5-
<PAGE>
be vested and exercisable by the Optionee thereafter as set forth in Section
8.04.
(c) ACCELERATED VESTING FOR CHANGES IN CONTROL. Notwithstanding
the general rule described in Section 8.03(a), all outstanding Options shall
become immediately vested and exercisable in the event there is a change in
control of the Corporation. A "change in control of the Corporation" for
this purpose shall mean a change in control of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Exchange Act, or any successor thereto,
whether or not the Corporation in fact is required to comply with Regulation
14A thereunder.
8.04 DURATION OF OPTIONS.
(a) GENERAL RULE. Except as provided in Sections 8.04(b) and
8.09, each Option granted to Employees shall be exercisable at any time on or
after it vests and becomes exercisable until the earlier of (i) ten (10)
years after its date of grant or (ii) three (3) months after the date on
which the Optionee ceases to be employed by the Corporation, unless the
Committee in its discretion decides at the time of grant or thereafter to
extend such period of exercise upon termination of employment from three (3)
months to a period not exceeding five (5) years.
(b) EXCEPTION FOR TERMINATION DUE TO DEATH, DISABILITY OR
RETIREMENT. If an Employee dies while in the employ of the Corporation or
terminates employment with the Corporation as a result of Disability or
Retirement without having fully exercised his Options, the Optionee or his
legal representative or guardian, or the executors, administrators, legatees
or distributees of his estate shall have the right, during the twelve-month
period following the earlier of his death, Disability or Retirement, to
exercise such Options to the extent vested on the date of such death,
Disability or Retirement. In no event, however, shall any Option be
exercisable within six (6) months after the date of grant or more than ten
(10) years from the date it was granted.
8.05 NONASSIGNABILITY. Options shall not be transferable by an Optionee
except by will or the laws of descent or distribution, and during an
Optionee's lifetime shall be exercisable only by such Optionee or the
Optionee's guardian or legal representative. Notwithstanding the foregoing,
or any other provision of this Plan, an Optionee who holds Non-Qualified
Stock Options may transfer such Options to his or her spouse, lineal
ascendants, lineal descendants, or to a duly established trust for the
benefit of one or more of these individuals. Options so transferred may
thereafter be transferred only to the Optionee who originally received the
grant or to an individual or trust to whom the Optionee would have initially
transferred the Option pursuant to this Section 8.06. Options which are
transferred pursuant to this Section 8.06 shall be exercisable by the
transferee according to the same terms and conditions as applied to the
Optionee.
8.06 MANNER OF EXERCISE. Options may be exercised in part or in whole
and at one time or from time to time. The procedures for exercise shall be
set forth in the written Stock Option Agreement provided for in Section 8.01
above.
-A6-
<PAGE>
8.07 PAYMENT FOR SHARES. Payment in full of the purchase price for
shares of Common Stock purchased pursuant to the exercise of any Option shall
be made to the Corporation upon exercise of the Option. All shares sold
under the Plan shall be fully paid and nonassessable. Payment for shares may
be made by the Optionee in cash or, at the discretion of the Committee, by
delivering shares of Common Stock (including shares acquired pursuant to the
exercise of an Option) or other property equal in Fair Market Value to the
purchase price of the shares to be acquired pursuant to the Option, by
withholding some of the shares of Common Stock which are being purchased upon
exercise of an Option, or any combination of the foregoing. Notwithstanding
the foregoing payment may also be made by delivering a properly executed
exercise notice together with irrevocable instructions to a broker to
promptly deliver to the Corporation the amount of sale or loan proceeds to
pay the exercise price.
8.08 VOTING AND DIVIDEND RIGHTS. No Optionee shall have any voting or
dividend rights or other rights of a stockholder in respect of any shares of
Common Stock covered by an Option prior to the time that his name is recorded
on the Corporation's stockholder ledger as the holder of record of such
shares acquired pursuant to an exercise of an Option.
8.09 ADDITIONAL TERMS APPLICABLE TO INCENTIVE STOCK OPTIONS. All
Options issued under the Plan as Incentive Stock Options will be subject, in
addition to the terms detailed in Sections 8.01 to 8.08 above, to those
contained in this Section 8.09.
(a) $100,000 LIMITATION. Notwithstanding any contrary provisions
contained elsewhere in this Plan and as long as required by Section 422 of
the Code, the aggregate Fair Market Value, determined as of the time an
Incentive Stock Option is granted, of the Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by the Optionee
during any calendar year, under this Plan and stock options that satisfy the
requirements of Section 422 of the Code under any other stock option plan or
plans maintained by the Corporation, shall not exceed $100,000.
(b) LIMITATION ON TEN PERCENT STOCKHOLDERS. The price at which
shares of Common Stock may be purchased upon exercise of an Incentive Stock
Option granted to an individual who, at the time such Incentive Stock Option
is granted, owns, directly or indirectly, more than ten percent (10%) of the
total combined voting power of all classes of stock issued to stockholders of
the Corporation, shall be no less than one hundred and ten percent (110%) of
the Fair Market Value of a share of the Common Stock of the Corporation at
the time of grant, and such Incentive Stock Option shall by its terms not be
exercisable after the earlier of the date determined under Section 8.03 or
the expiration of five (5) years from the date such Incentive Stock Option is
granted.
(c) NOTICE OF DISPOSITION; WITHHOLDING; ESCROW. An Optionee shall
immediately notify the Corporation in writing of any sale, transfer,
assignment or other disposition (or action constituting a disqualifying
disposition within the meaning of Section 421 of the Code) of any shares of
Common Stock acquired through exercise of an Incentive Stock Option, within
two (2) years after the grant of such Incentive Stock Option or within
-A7-
<PAGE>
one (1) year after the acquisition of such shares, setting forth the date and
manner of disposition, the number of shares disposed of and the price at
which such shares were disposed. The Corporation shall be entitled to
withhold from any compensation or other payments then or thereafter due to
the Optionee such amounts as may be necessary to satisfy any withholding
requirements of Federal or state law or regulation and, further, to collect
from the Optionee any additional amounts which may be required for such
purpose. The Committee may, in its discretion, require shares of Common
Stock acquired by an Optionee upon exercise of an Incentive Stock Option to
be held in an escrow arrangement for the purpose of enabling compliance with
the provisions of this Section 8.09(c).
ARTICLE IX
ADJUSTMENTS FOR CAPITAL CHANGES
The aggregate number of shares of Common Stock available for issuance
under this Plan, the number of shares to which any Option relates and the
exercise price per share of Common Stock under any Option shall be
proportionately adjusted for any increase or decrease in the total number of
outstanding shares of Common Stock issued subsequent to the effective date of
this Plan resulting from a split, subdivision or consolidation of shares or
any other capital adjustment, the payment of a stock dividend, or other
increase or decrease in such shares effected without receipt or payment of
consideration by the Corporation. If, upon a merger, consolidation,
reorganization, liquidation, recapitalization or the like of the Corporation,
the shares of the Corporation's Common Stock shall be exchanged for other
securities of the Corporation or of another corporation, each recipient of an
Option shall be entitled, subject to the conditions herein stated, to
purchase or acquire such number of shares of Common Stock or amount of other
securities of the Corporation or such other corporation as were exchangeable
for the number of shares of Common Stock of the Corporation which such
optionees would have been entitled to purchase or acquire except for such
action, and appropriate adjustments shall be made to the per share exercise
price of outstanding Options.
ARTICLE X
AMENDMENT AND TERMINATION OF THE PLAN
The Board may, by resolution, at any time terminate or amend the Plan
with respect to any shares of Common Stock as to which Options have not been
granted, subject to any required stockholder approval or any stockholder
approval which the Board may deem to be advisable for any reason, such as for
the purpose of obtaining or retaining any statutory or regulatory benefits
under tax, securities or other laws or satisfying any applicable stock
exchange listing requirements. The Board may not, without the consent of the
holder of an Option, alter or impair any Option previously granted or awarded
under this Plan as specifically authorized herein.
-A8-
<PAGE>
ARTICLE XI
EMPLOYMENT RIGHTS
Neither the Plan nor the grant of any Options hereunder nor any action
taken by the Committee or the Board in connection with the Plan shall create
any right on the part of any Employee of the Corporation to continue in such
capacity.
ARTICLE XII
WITHHOLDING
12.01 TAX WITHHOLDING. The Corporation may withhold from any cash
payment made under this Plan sufficient amounts to cover any applicable
withholding and employment taxes, and if the amount of such cash payment is
insufficient, the Corporation may require the Optionee to pay to the
Corporation the amount required to be withheld as a condition to delivering
the shares acquired pursuant to an Option. The Corporation also may withhold
or collect amounts with respect to a disqualifying disposition of shares of
Common Stock acquired pursuant to exercise of an Incentive Stock Option, as
provided in Section 8.09(c).
12.02 METHODS OF TAX WITHHOLDING. The Committee is authorized to adopt
rules, regulations or procedures which provide for the satisfaction of an
Optionee's tax withholding obligation by the retention of shares of Common
Stock to which the Employee would otherwise be entitled pursuant to an Option
and/or by the Optionee's delivery of previously-owned shares of Common Stock
or other property.
ARTICLE XIII
EFFECTIVE DATE OF THE PLAN; TERM
13.01 EFFECTIVE DATE OF THE PLAN. This Plan shall become effective on
the Effective Date, and Options may be granted hereunder as of or after the
Effective Date and prior to the termination of the Plan, provided that no
Incentive Stock Option issued pursuant to this Plan shall qualify as such
unless this Plan is approved by the requisite vote of the holders of the
outstanding voting shares of the Corporation at a meeting of stockholders of
the Corporation held within twelve (12) months before or after the Effective
Date.
13.02 TERM OF PLAN. Unless sooner terminated, this Plan shall remain in
effect for a period of ten (10) years ending on the tenth anniversary of the
Effective Date. Termination of the Plan shall not affect any Options
previously granted and such Options shall remain valid and in effect until
they have been fully exercised or earned, are surrendered or by their terms
expire or are forfeited.
-A9-
<PAGE>
ARTICLE XIV
MISCELLANEOUS
14.01 GOVERNING LAW. To the extent not governed by Federal law, this
Plan shall be construed under the laws of the State of Ohio.
14.02 PRONOUNS. Wherever appropriate, the masculine pronoun shall
include the feminine pronoun, and the singular shall include the plural.
-A10-
<PAGE>
REVOCABLE PROXY
MIAMI COMPUTER SUPPLY CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
APRIL 29, 1998
The undersigned, being a stockholder of Miami Computer Supply
Corporation ("Company") as of March 16, 1998, hereby authorizes Anthony W.
Liberati and Robert G. Hecht or any successors thereto as proxies with full
powers of substitution, to represent the undersigned at the Annual Meeting of
Stockholders of the Company to be held at the Company's principal offices,
located at 4750 Hempstead Station Drive, Dayton, Ohio 45429, on Wednesday,
April 29, 1998 at 10:30 a.m., Eastern Time, and at any adjournment of said
meeting, and thereat to act with respect to all votes that the undersigned
would be entitled to cast, if then personally present, as follows:
1. ELECTION OF DIRECTORS
Nominees for a one-year term: Robert G. Hecht, Anthony W. Liberati, Harry F.
Radcliffe, Thomas C. Winstel and Michael E.
Peppel.
/ / FOR / / WITHHOLD / / FOR ALL
AUTHORITY EXCEPT
NOTE: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
MARK "FOR ALL EXCEPT" AND WRITE THAT NOMINEE'S NAME IN THE
SPACE PROVIDED BELOW. UNLESS AUTHORITY TO VOTE FOR ALL OF
THE FOREGOING NOMINEES IS WITHHELD, THIS PROXY WILL BE
DEEMED TO CONFER AUTHORITY TO VOTE FOR EACH NOMINEE WHOSE
NAME IS NOT WRITTEN BELOW.
----------------------------------
2. PROPOSAL to approve the 1998 Stock Option Plan.
/ / FOR / / AGAINST / / ABSTAIN
3. PROPOSAL to ratify the appointment of the Board of Directors of Price
Waterhouse LLP as the Company's independent auditors for the fiscal year
ending December 31, 1998.
/ / FOR / / AGAINST / / ABSTAIN
<PAGE>
4. PROPOSAL, if necessary, to adjourn the Annual Meeting to solicit additional
proxies.
/ / FOR / / AGAINST / / ABSTAIN
5. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE
COMPANY FOR USE AT THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 29,
1998 AND AT ANY ADJOURNMENT THEREOF.
SHARES OF THE COMPANY'S COMMON STOCK WILL BE VOTED AS SPECIFIED. IF
RETURNED BUT NOT OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF THE BOARD OF DIRECTORS' NOMINEES TO THE BOARD OF DIRECTORS, FOR
THE 1998 STOCK OPTION PLAN, FOR RATIFICATION OF THE COMPANY'S INDEPENDENT
AUDITORS, FOR ADJOURNMENT OF THE ANNUAL MEETING, IF NECESSARY, AND OTHERWISE
AT THE DISCRETION OF THE PROXIES. YOU MAY REVOKE THIS PROXY AT ANY TIME
PRIOR TO THE TIME IT IS VOTED AT THE ANNUAL MEETING.
PLEASE BE SURE TO SIGN AND DATE THIS PROXY IN THE
SPACE BELOW.
Date: , 1998
---------------------------
(SIGNATURE)
PLEASE SIGN ABOVE EXACTLY AS YOUR NAME(S) APPEAR(S) ON THIS PROXY. WHEN
SIGNING IN A REPRESENTATIVE CAPACITY, PLEASE GIVE FULL TITLE. WHEN SHARES
ARE HELD JOINTLY, ONLY ONE HOLDER NEED SIGN.
PLEASE ACT PROMPTLY. SIGN, DATE AND MAIL YOUR PROXY CARD TODAY.
