<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. _____)
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as
permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
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:
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<PAGE>
April 12, 2000
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 Presidential Banquet Center, 4548 Presidential Way, Dayton, Ohio 45429, on
Tuesday, May 9, 2000 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 ATTACHED 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,
/s/ Michael E. Peppel
Michael E. Peppel
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
<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 MAY 9, 2000
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders ("Annual
Meeting") of Miami Computer Supply Corporation (the "Company") will be held at
the Presidential Banquet Center, 4548 Presidential Way, Dayton, Ohio 45429, on
Tuesday, May 9, 2000 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 reincorporate the Company in Maryland;
(3) To adopt the 2000 Stock Option Plan;
(4) To approve the 2000 Non-Employee Director Stock Option Plan;
(5) To ratify the appointment by the Board of Directors of
PricewaterhouseCoopers LLP as the Company's independent accountants
for the fiscal year ending December 31, 2000;
(6) To vote on a proposal to approve an adjournment of the Annual Meeting
to another date and/or place for the purpose of soliciting additional
proxies if there are not sufficient votes at the time of the Annual
Meeting to approve the foregoing proposals; and
(7) 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 31, 2000 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
/s/ Thomas C. Winstel
Thomas C. Winstel
Secretary
Dayton, Ohio
April 12, 1999
- --------------------------------------------------------------------------------
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
MAY 9, 2000
This Proxy Statement is furnished to holders of common stock, no par value
per share ("Common Stock"), of Miami Computer Supply Corporation, an Ohio
corporation (the "Company"). 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 Presidential Banquet Center, 4548
Presidential Way, Dayton, Ohio 45429, on Tuesday, May 9, 2000 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 April 12, 2000.
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
the reincorporation of the Company in Maryland, FOR the 2000 Stock Option Plan,
FOR the 2000 Non-Employee Director Stock Option Plan, FOR ratification of the
appointment of PricewaterhouseCoopers LLP for fiscal 2000 and upon the
transaction of such other business as may properly come before the meeting, in
accordance with the best judgment of the proxy holder. 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.
The Company may solicit proxies by mail, advertisement, telephone,
facsimile, telegraph and personal solicitation. Directors and executive officers
of the Company may solicit proxies personally or by telephone without additional
compensation. The Company will reimburse banks, brokerage firms and other
custodians, nominees and fiduciaries for reasonable expenses incurred by them in
sending proxy solicitation materials to the beneficial owners of the Company's
Common Stock.
The Company has retained Georgeson Shareholder Communications, Inc., 17
State Street, New York, New York 10004, a professional proxy solicitation firm,
to assist in the solicitation of proxies and for related services. The Company
will pay Georgeson a fee of $5,000 and has agreed to reimburse it for its
reasonable out-of-pocket expenses.
VOTING
Only stockholders of record at the close of business on March 31, 2000
("Voting Record Date") will be entitled to vote at the Annual Meeting. On the
Voting Record Date, there were 12,077,238 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 proxy
at the Annual Meeting will be elected directors of the
<PAGE>
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 proposals to
reincorporate the Company in Maryland, to adopt the 2000 Stock Option Plan, to
approve the 2000 Non-Employee Director Stock Option Plan, to ratify the
appointment of the independent accountants and to approve any adjournment of the
Annual Meeting. Because of the vote required, abstentions will have the effect
of a vote against this proposal. Under rules of the New York Stock Exchange,
except for the proposals to reincorporate the Company in Maryland, to approve
the 2000 Stock Option Plan and to approve the Non-Employee Director 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 proposals
to reincorporate the Company in Maryland, to approve the 2000 Stock Option Plan
and to approve the Non-Employee Director Stock Option Plan are 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
proposals to reincorporate the Company in Maryland, to approve the 2000 Stock
Option Plan and to approve the Non-Employee Director 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.
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 serves 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 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 2001
<TABLE>
<CAPTION>
Director
Name Age Since
- -------------------------------- --------- ----------------
<S> <C> <C>
Robert G. Hecht 59 1996
Michael E. Peppel 33 1998
Richard L. Posen 49 2000
Harry F. Radcliffe 49 1996
Thomas C. Winstel 53 1981
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THE ABOVE
NOMINEES FOR DIRECTOR.
2
<PAGE>
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 former stockholder of the
Company ("LLC"), which distributed its holdings in the Company to the members of
the LLC as of June 4, 1999. 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,
the Executive Vice President for P.J. Dick Incorporated, a privately held
construction company and 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.
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, elected to the Board of Directors as of February 24, 1998 and named
Chairman of the Board on February 8, 2000. 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. Mr. Peppel received
his degree in Economics and Finance from the University of Notre Dame.
RICHARD L. POSEN. Mr. Posen, a partner at the law firm of Willkie Farr &
Gallagher in New York, New York, was appointed as a director of the Company on
February 8, 2000. Previously, Mr. Posen was a director of Ralphs Grocery Company
from 1992 to 1994. Mr. Posen serves as a member of the Company's Audit and
Compensation Committees. Mr. Posen received his degree in History from Johns
Hopkins University and his law degree from New York University School of Law.
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. Mr. Winstel has been the Secretary of the Company since May 1996. Mr.
Winstel is a member of the Company's Executive Management Committee. Mr. Winstel
received his degree in Marketing from the University of Dayton, Ohio.
STOCKHOLDER NOMINATIONS
Article VII.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.
3
<PAGE>
Stockholder nominations must be made pursuant to timely notice in writing to the
Secretary of the Company. To be timely, a stockholder's notice must have been
delivered to, or mailed and received at, the principal executive offices of the
Company 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. Each written notice of a stockholder nomination
is required to set forth certain information specified in the Articles. No
nomination was 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, 1999, the Board of Directors met 10 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 the 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 as noted above. The Executive Committee did not meet during fiscal 1999.
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 was
comprised of Messrs. Anthony W. Liberati (Chairman), who retired from the Board
as of February 8, 2000, Hecht and Radcliffe, met three times during fiscal 1999.
COMPENSATION COMMITTEE. 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. See "Management
Compensation - Compensation Committee Interlocks and Insider Participation."
During fiscal 1999, the members of the Compensation Committee were Messrs.
Radcliffe (Chairman), Hecht and Liberati. The Compensation Committee met four
times during fiscal 1999.
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.
<TABLE>
<CAPTION>
Name Age Positions with the Company
- ---------------------- ----- ----------------------------------------------
<S> <C> <C>
Ira H. Stanley 48 Vice President and Chief Financial Officer
John C. Huffman, III 42 Vice President -- National Sales Manager
Michael D. Trebilcock 40 Vice President -- Chief Development Officer
</TABLE>
IRA H. STANLEY. Mr. Stanley joined the Company as Vice President -- Finance
on April 1, 1998 and was appointed the Company's Vice President and Chief
Financial Officer on October 1, 1998. Prior thereto, from 1990 to March 1998,
Mr. Stanley was the Vice President of Finance and Treasurer of Gosiger, Inc., a
privately held importer
4
<PAGE>
and distributor of machine tools, located in Dayton, Ohio. Mr. Stanley's
position prior thereto was as Corporate Controller of Price Brothers Company, a
manufacturer and distributor of construction products, located in Dayton, Ohio.
Mr. Stanley received his Masters of Business Administration from the University
of Dayton, Dayton, Ohio, and his undergraduate degree in Business from Wright
State University, Dayton, Ohio. He is a member of the Company's Executive
Management Committee.
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, Dayton, Ohio.
MICHAEL D. TREBILCOCK. Mr. Trebilcock joined the Company in 1999 as Vice
President -- Chief Development Officer as a result of the Company's business
combination with DREHER Business Products Corporation ("DBPC"). From 1991 to
August 1999, he served as Vice President of Business Development of DBPC, which
he joined in 1986. Mr. Trebilcock attended Edison College, Fort Myers, Florida.
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) each
executive officer of the Company named in the Summary Compensation Table
appearing under "Management Compensation," below, and (iv) all directors and
executive officers of the Company as a group.
<TABLE>
<CAPTION>
Amount and Nature of
Name of Beneficial Beneficial
Owner or Number of Ownership as of Percent of
Persons in Group March 31, 2000(1) Common Stock
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Value Partners, Ltd. (2) 1,086,644 9.0%
Richard L. Posen(3)(4) 8,500 *
Robert G. Hecht(3)(5) 380,574 3.2%
Harry F. Radcliffe(3)(6) 421,478 3.5%
Thomas C. Winstel(3)(7) 323,818 2.7%
Michael E. Peppel(3)(8) 575,161 4.8%
John C. Huffman, III(3)(9) 35,058 *
Ira H. Stanley(3)(10) 16,812 *
Michael D. Trebilcock(3) 119,251 *
All directors and executive officers as a group 1,880,652 15.6%
(8 persons)(11)
</TABLE>
- -----------------
* Represents beneficial ownership of less than 1.0% of the Company's Common
Stock.
(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 Voting Record Date have
5
<PAGE>
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) Information obtained from Schedule 13D/A filed February 7, 2000, with
respect to shares of Common Stock owned by Value Partners, Ltd. The
business address for Value Partners, Ltd. is 4514 Cole Avenue, Suite 808,
Dallas, Texas 75205. Includes 48,453 shares owned by a general partner of
the general partner of Value Partners, Ltd.
(3) This person's business address is 4750 Hempstead Station, Dayton, Ohio
45429.
(4) Includes options to purchase 7,500 shares of Company Common Stock under the
1996 Non-Employee Directors Stock Option Plan which are exercisable within
60 days of the Voting Record Date.
(5) 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 22,500 shares of Company Common Stock
under the 1996 Non-Employee Directors Stock Option Plan which are
exercisable within 60 days of the Voting Record Date.
(6) Includes 6,750 shares held by Mr. Radcliffe's three children. Also includes
options to purchase 22,500 shares of Company Common Stock under the 1996
Non-Employee Directors Stock Option Plan, which are exercisable within 60
days of the Voting Record Date.
(7) Includes options to purchase 22,500 shares of Company Common Stock under
the Company's 1996 Stock Option Plan which are exercisable within 60 days
of the Voting Record Date.
(8) Includes 4,500 shares held as custodian for Mr. Peppel's two minor
children. Includes options to purchase 114,500 and 68,667 shares of Common
Stock under the Company's 1996 Stock Option Plan and 1998 Stock Option
Plan, respectively, which are exercisable within 60 days of the Voting
Record Date.
(9) Includes options to purchase 3,000 shares of Common Stock under the
Company's 1996 Stock Option Plan which are exercisable within 60 days of
the Voting Record Date.
(10) Includes options to purchase 3,333 shares and 8,333 shares of Common Stock
under the Company's 1998 Stock Option Plan, which are exercisable within
60 days of the Voting Record Date.
(11) Includes options to purchase shares of Common Stock held by such directors
and executive officers which are exercisable within 60 days of the Voting
Record Date.
6
<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 ("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. 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 1999, the Company's officers
and directors, except with respect to those noted below, complied in all
respects with the reporting requirements promulgated under Section 16(a) of the
Exchange Act. The Company understands, from its review of such forms, that
Michael E. Peppel and Ira H. Stanley each filed 1 late report on Form 4, and
Michael D. Trebilcock was late filing a report on Form 3.
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, 1999, 1998 and 1997 to the Chief Executive
Officer and to each of the other most highly compensated executive officers of
the Company whose total compensation during fiscal 1999 exceeded $100,000 (the
"Named Executive Officers").
<TABLE>
<CAPTION>
Annual
Compensation Securities
-------------------------------------- Underlying All Other
Name and Position Year Salary Bonus(3) Options Compensation(4)
- --------------------------------------------------- -------- ----------- ---------- -------- --------------
<S> <C> <C> <C> <C> <C>
Michael E. Peppel.................................. 1999 $206,268 $206,268 80,000 $71,845
President and Chief Executive Officer 1998 206,268 206,268 196,500 15,135
1997 130,452 130,452 -- 11,895
Ira H. Stanley (1)................................. 1999 115,000 30,000 10,000 25,102
Vice President and Chief Financial Officer 1998 75,770 -- 25,000 8,403
Thomas C. Winstel.................................. 1999 164,570 -- -- 16,825
Vice President - Presentation Products 1998 203,313 -- -- 16,886
1997 211,510 -- -- 12,614
John C. Huffman, III............................... 1999 144,275 96,000 5,000 10,996
Vice President - National Sales Manager 1998 135,600 90,000 4,500 11,170
1997 128,400 47,319 -- 10,937
Michael D. Trebilcock (2).......................... 1999 250,000 -- 36,000 18,601
Vice President - Chief Development Officer
</TABLE>
- --------------------
(1) Mr. Stanley joined the Company as Vice President - Finance on April 1,
1998. Mr. Stanley became the Company's Vice President and Chief Financial
Officer on October 1, 1998.
(2) The compensation for Mr. Trebilcock includes his service as Vice
President of Business Development of DBPC and as Vice President - Chief
Development Officer of the Company to which he was named August 13, 1999.
7
<PAGE>
(3) Bonuses shown for fiscal 1997 were paid during fiscal 1997 and fiscal 1998,
and bonuses for fiscal 1998 were paid in fiscal 1999. The fiscal 1997, 1998
and 1999 bonuses paid to Messrs. Peppel and Huffman were based on their
employment agreements. See "Employment Contracts."
(4) All Other Compensation includes car allowance, premiums for life insurance
coverage, taxable relocation, temporary housing and/or other executive or
employee benefits. Also included is the market value of stock options
granted to Messrs. Peppel and Stanley in the Company's subsidiary, Zengine,
Inc.
COMPENSATION OF DIRECTORS
Non-employee directors receive a quarterly retainer of $2,500 and fees of
$1,000 per Board meeting attended. In addition, Board members are reimbursed for
their travel and other out-of-pocket expenses arising from attending Board or
Committee meetings. Non-employee directors also are eligible to receive stock
option grants pursuant to the Company's Non-Employee Directors Stock Option
Plan. Directors who are also employees of the Company do not receive any
compensation for serving on the Board or Committees thereof.
EMPLOYMENT CONTRACTS
On May 30, 1996, the Company entered into employment contracts with Messrs.
Peppel, Winstel and Huffman, and with Joseph R. Hollenshead, the President of
Diversified Data Products, Inc. ("DDP"), a wholly-owned subsidiary of the
Company (the "Executives"), which agreements are substantially similar except
for compensation provisions. Each such agreement provided for termination on
December 31, 1999, 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 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. None of the Executives have entered into
a written extension or new employment agreement with the Company as of the
Voting Record Date.
In addition to, or in lieu of, a base salary, each of such Executives is
entitled to a bonus, or commission, as follows: (i) Mr. Peppel receives 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; (ii) 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, (iii) at the discretion of the
Compensation Committee, Mr. Huffman is eligible to 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 1999, each of the Executives utilized a Company automobile
for Company business for which the Company pays rent, insurance, repairs, gas,
oil and fees, of up to $1,200 per month.
The Executives 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 Executives
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
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Executives 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 Executives 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 was terminated for cause prior to December 31, 1999 and the Common Stock
was not, at the time of termination, publicly traded.
In consideration of the above, each of the Executives 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 15, 1998, in conjunction with the acquisition
of DBPC, an employment agreement was entered into between Michael D. Trebilcock
and DBPC for his employment as its Vice President-Advanced Technology Group.
When Mr. Trebilcock joined the Company as its Vice President of Business
Development, the employment agreement was assumed by the Company. Under the
employment agreement, which will terminate December 15, 2001, unless sooner
terminated for death, retirement, 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 employee'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 employer for the
failure of the Company to provide the resources necessary to the fulfillment of
the employee's responsibilities, the express direction by the Board of Directors
to have the employer perform any illegal action, the threatened or actual
insolvency of the Company or the failure of the Company to perform its
obligations to the employer under the employment agreement.
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 Employment
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 exercisable at January 1, 1998 would be 25,500 (all other
granted options were canceled) 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 paid Mr. Schwarz $20,000
per month from January 1, 1998 through December 31, 1999 and Mr. Schwarz 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 consulted with Mr. Schwarz in
matters of transition, defense of the Company's interest, acquisitions, vendor
relationships and other strategic matters.
CONSULTING AGREEMENT
In December, 1999, DBPC and Mr. Neil Dreher, the Chief Operating Officer of
the Company and President of DBPC, entered into a Consulting Agreement. Pursuant
to the Consulting Agreement, Mr. Dreher retired from his positions as of January
1, 2000. He will provide consulting services, consisting of advising DBPC with
respect to general business matters and strategies until December 31, 2001 and
will be paid consulting fees of $12,500 per month plus certain other expenses.
Mr. Dreher further agreed not to compete with DBPC.
SPLIT DOLLAR LIFE INSURANCE AGREEMENTS
The Company has a "split dollar" life insurance agreement, which it entered
into with Mr. Winstel (the "Insured") in December 1995, as amended on May 30,
1996 (the "Split Dollar Agreement") 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, a term
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life insurance policy in the face amount of $2,300,000. While the Company is the
owner of the policy, the Split Dollar Agreement states that the beneficiaries of
the Insured will be entitled to receive the face value of the policy upon the
Insured's death, less the policy's cash value, which, at December 31, 1999,
approximated $198,393. The Insured has the right to purchase the policy from the
Company when he reaches age 65 for the policy's cash surrender value. The cost
to the Company for the premiums for 1999 was $30,000 for Mr. Winstel. The Split
Dollar Agreement will terminate during the Insured's lifetime upon: (i) the
total cessation of the Company's business, or (ii) the bankruptcy, receivership
or dissolution of the Company, and (iii) the Insured may terminate the Split
Dollar Agreement at any time upon written notice.
STOCK OPTION GRANTS
The following table sets forth certain information concerning individual
grants of stock options awarded to the Named Executive Officers during 1999.
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates
Number of of Stock Price Appreciation
Securities Percent of for Option Term(3)
Underlying Total Exercise ---------------------------
Name Option Options(1) Price/Share(2) Expiration Date 5% 10%
- ----------------------------------------- ------------- ---------------- ------------------ ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Michael E. Peppel 80,000 21.9% $15.875 09/27/09 $3,509,166 $6,252,031
Ira H. Stanley 10,000 2.7 21.313 02/10/09 362,801 662,258
Thomas C. Winstel -- -- -- -- -- --
John C. Huffman, III 5,000 1.4 21.313 02/10/09 181,400 331,129
Michael D. Trebilcock 36,000 9.8 17.00 10/07/09 1,538,625 2,772,914
</TABLE>
- ---------------------------------
(1) Percentage of options granted to all employees during 1999.
(2) In each case the exercise price was based on the fair market value of a
share of the Company's Common Stock on the date of grant.
(3) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on assumed rates of stock price appreciation of 5% and 10%
compounded annually from the date the respective options were granted to
their expiration date. The gains shown are net of the option exercise
price, but do not include deductions for taxes or other expenses associated
with the exercise of the option or the sale of the underlying shares. The
actual gains, if any, on the exercise of stock options will depend, in
part, on the future performance of the Common Stock, the option holder's
continued employment throughout the option period, and the date on which
the options are exercised.
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<PAGE>
The following table sets forth the value of stock options held by the Named
Executive Officers at December 31, 1999. The Named Executive Officers did not
exercise any options during 1999.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Options at In-The-Money Options at
Acquired December 31, 1999 December 31, 1999(1)
on Value ------------------------------ -----------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ------------------------- ----------- --------- ----------- ------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Michael E. Peppel -- -- 183,167 160,833 $4,880,521 $3,543,769
Ira H. Stanley -- -- 8,333 26,667 173,951 506,037
Thomas C. Winstel -- -- 22,500 -- 707,738 --
John C. Huffman, III -- -- 3,000 1,500 83,865 41,933
Michael D. Trebilcock -- -- -- 36,000 -- 724,500
- ------------------------
</TABLE>
(1) Calculated by determining the difference between the fair market value of
the securities underlying the options at December 31, 1999, as reported on
the Nasdaq National Market, and the exercise price of the options.
CERTAIN TRANSACTIONS
RELATED PARTY TRANSACTIONS
LEASE AGREEMENTS. The Company entered into a lease with Draft Partnership
("Lessor") for a 30,000 square foot office and warehouse building in Dayton,
Ohio which serves as the Company's principal executive offices. The general
partners of Draft Partnership were James F. Rowland (owning a 50.0% partnership
interest), and Mr. Albert Schwarz, the former President of the Company, and Mr.
Winstel and Mr. Turvy, the former Vice President -- Products Sales and
Development of the Company, each of whom owned a 12.5% partnership interest.
During 1999, the interests of Messrs. Winstel and Turvy were transferred to Mr.
Schwartz. The lease is for a term of ten years commencing on November 1, 1996
for a base monthly rental of $23,799. 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.
The Company has a lease for 50,000 square feet of warehouse and office
space in Strongville, Ohio. The lease expires in 2024 and has an annual rental
cost of approximately $528,000. The Company assumed the lease upon its
acquisition of DBPC in December 1998. The space is leased to the Company by D&K
LLC and D&H LLC, interests in which are held by Mr. Neil M. Dreher, the
Company's former Vice President and Chief Operating Officer, and Mr. Trebilcock.
Mr. Dreher owns 1.0% and 30.0% of D&K LLC and D&H LLC, respectively and Mr.
Trebilcock owns 15.0% of D&H LLC.
The Company entered into a lease with MCSi Realty Co., L.L.C., a Kentucky
limited liability company ("MCSi Realty") for real estate and improvements at
4281 Olympic Boulevard, Erlanger, Kentucky on which is constructed a 255,000
square foot warehouse and office building. The members of MCSi Realty are
Anthony W. Liberati, former Chairman of the Board of the Company, and the
following directors, officers and/or employees of the
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<PAGE>
Company, including Robert G. Hecht, John C. Huffman, III, Michael E. Peppel,
Harry F. Radcliffe, Ira H. Stanley, and Michael D. Trebilcock. The lease is for
a term of eight years commencing on January 1, 2000 for a base monthly rental of
$75,000. The Company is responsible for paying all taxes, utilities, insurance
and other expenses for the use, operation, maintenance care and occupancy of the
Leased Premises. In addition, the Company has indemnified MCSi Realty 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.
The Company maintains property and vehicle leases with entities that are
directly or indirectly controlled by non-executive employees of the Company or
such employees derive some benefit therefrom. Such leases were acquired as a
result of the Company's acquisitions of Consolidated Media Systems, Inc. and
Minnesota Western/Creative Office Products, Inc. in 1998 and Audio Visual
Systems, Inc., Technical Industries, Inc., C&G Marketing, Inc., Video Images,
Inc. and Fairview-AFX, Inc. in 1999. The aggregate amount paid on such leases by
the Company in 1999 was approximately $801,000.
Management of the Company believes that the terms and conditions of the
foregoing leases are no less favorable than those that could have been obtained
from a non-affiliated third party.
In 1999, the Company purchased inventory in an amount equal to $38,185 from
Cranel, Inc., Columbus, Ohio, a computer supply wholesaler. The brother of John
C. Huffman, III, Vice President - National Sales Manager of the Company, is a
sales representative for Cranel, Inc. The purchase price for the inventory was
determined through arm's length negotiations. Management believes that the terms
of the purchases were at least as favorable to the Company as could have been
obtained in an arm's length transaction with an unaffiliated third party.
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. 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. 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. 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. Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended ("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,
12
<PAGE>
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.
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. The Company maintains
director and officer liability insurance coverage.
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 1999, 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. No transactions
effecting the members of the Compensation Committee, or their affiliates,
occurred during 1999.
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,
1999 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 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 1999, 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 four times during 1999 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 1999 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 members of the Compensation Committee also administer the granting of
stock options pursuant to the 1996 Stock Option Plan and the 1998 Stock Option
Plan. The Compensation Committee exercises discretion with respect to the timing
and amount of awards to be granted under both option plans and in 1999, awarded
options covering 80,000 shares, 5,000 shares, 10,000 shares, and 36,000 shares
of Common Stock to Mr. Michael E. Peppel, the Company's President and Chief
Executive Officer, Mr. John C. Huffman, III, the Company's Vice President
National
13
<PAGE>
Sales Manager, Mr. Ira H. Stanley, the Company's Vice President and Chief
Financial Officer and Mr. Michael D. Trebilcock, Vice President-Chief
Development Officer, respectively, under the 1998 Stock Option Plan.
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 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
14
<PAGE>
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 considered indicative of potential future
stock price performance. The Common Stock commenced trading on the Nasdaq
National Market System on November 12, 1996.
[GRAPHIC OMITTED]
15
<PAGE>
PROPOSAL TO REINCORPORATE AS A MARYLAND CORPORATION
The Board of Directors of the Company has unanimously approved, subject to
shareholder approval, a proposal to change the Company's state of incorporation
from Ohio to Maryland by means of a merger (the "Merger") of the Company with
and into MCSi, Inc., a Maryland corporation ("MCSi Maryland"), a newly formed,
wholly-owned subsidiary of the Company (the "Reincorporation Proposal"). The
principal office of MCSi Maryland is 4750 Hempstead Station Drive, Dayton, Ohio
45429, telephone (937) 291-8282. MCSi Maryland will be the surviving
corporation, the effect of which will be a change in the law applicable to the
Company's corporate affairs from the Ohio General Corporation Law ("Ohio Law" or
"OGCL") to the Maryland General Corporation Law ("Maryland Law" or "MGCL"),
including certain differences in shareholders' rights. See "-Comparison of
Shareholder Rights."
The following discussion summarizes certain aspects of the Reincorporation
Proposal, including certain material differences between Ohio Law and Maryland
Law. This summary is not intended to be a complete description of the
Reincorporation Proposal or the differences between shareholders' rights under
Ohio Law or Maryland Law, and is qualified in its entirety by reference to (i)
the Proposed Plan of Reorganization and Agreement of Merger between the Company
and MCSi Maryland (the "Merger Agreement") attached hereto at Appendix A, (ii)
the Articles of Incorporation of MCSi Maryland (the "New Charter") attached
hereto at Appendix B, and (iii) the Bylaws of MCSi Maryland (the "New Bylaws")
attached hereto at Appendix C. Copies of the Company's Articles of Incorporation
(the "Present Charter") and Code of Regulations (the "Present Bylaws") are
available for inspection at the Company's executive office, and copies will be
provided to shareholders upon request and without charge.
The Company's Board of Directors has unanimously approved the
Reincorporation Proposal and, for the reasons set forth below, believes that the
best interests of the Company and its shareholders will be served by changing
the Company's state of incorporation from Ohio to Maryland. The Company's
shareholders are being asked to approve the Reincorporation Proposal (including
the adoption of the Merger Agreement and the approval of New Charter and New
Bylaws) at the Annual Meeting. The Board of Directors unanimously recommends
that the Company's shareholders approve the Reincorporation Proposal.
Approval of the Reincorporation Proposal by the Company's shareholders will
constitute adoption of the Merger Agreement and approval of the Merger, the New
Charter and the New Bylaws. Pursuant to the terms of the Merger Agreement, the
New Charter and New Bylaws will replace the Present Charter and Present Bylaws
as the charter documents affecting corporate governance and shareholders'
rights. See "-Comparison of Shareholder Rights." Accordingly, shareholders are
urged to read carefully this Proxy Statement and the Annexes attached hereto.
Principal Features of the Reincorporation Proposal
At the Effective Date of the Merger (as defined in the Merger Agreement),
the separate existence of the Company will cease and MCSi Maryland, as the
surviving corporation, will succeed to all business, properties, assets and
liabilities of the Company. Each share of Common Stock of the Company issued and
outstanding immediately prior to the Effective Date will by virtue of the Merger
be converted into one share of common stock, no par value per share, of MCSi
Maryland ("MCSi Maryland Common Stock"). At the Effective Date, certificates
which immediately prior to the Effective Date represented shares of Common Stock
of the Company will be deemed for all purposes to represent the same number of
shares of MCSi Maryland Common Stock. It will not be necessary for shareholders
of the Company to exchange their existing stock certificates for stock
certificates of MCSi Maryland. However, when outstanding certificates
representing shares of Common Stock of the Company are presented for transfer
after the Merger, new certificates representing shares of MCSi Maryland Common
Stock will be issued. New certificates will also be issued upon the request of
any shareholder, subject to normal requirements as to proper endorsement,
signature, guarantee, if required, and payment of applicable taxes, if any.
MCSi Maryland's Common Stock will be listed for trading on The NASDAQ Stock
Market, the market on which the Common Stock of the Company is currently listed
for trading, as a condition to consummating the Merger.
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<PAGE>
Delivery of existing stock certificates representing Common Stock of the Company
will constitute "good delivery" of shares of MCSi Maryland Common Stock in
transactions subsequent to the Effective Date of the Merger.
Approval of the Reincorporation Proposal will effect a change in the legal
domicile of the Company and certain other changes of a legal nature, as
described in this Proxy Statement. Reincorporation of the Company will not, in
and of itself, result in any change in the business, management, location of the
principal executive offices, assets, liabilities or shareholders' equity of the
Company. The number of directors comprising the Board of Directors of MCSi
Maryland will be five initially, each of whom is currently a director of the
Company. The president and chief executive officer of MCSi Maryland is currently
serving as the president and chief executive officer of the Company.
Shareholders should note that approval of the Reincorporation Proposal will
constitute ratification of all of the currently serving directors of MCSi
Maryland. See "--Comparison of Shareholder Rights--Board of Directors."
Pursuant to the terms of the Merger Agreement, each option to purchase
Common Stock of the Company outstanding immediately prior to the Effective Date
of the merger under the Company's Stock Option Plans will become an option to
purchase MCSi Maryland Common Stock, subject to the same terms and conditions as
set forth in the Stock Option Plans or other agreements pursuant to which such
option was granted. All other employee benefit plans and other agreements and
arrangements of the Company will be continued by MCSi Maryland upon the same
terms and subject to the same conditions. Approval of the Reincorporation
Proposal will constitute approval by the shareholders of the Company of MCSi
Maryland's assumption of the Stock Option Plans and the other employee benefit
plans and arrangements of the Company.
Upon approval of the Reincorporation Proposal by the Company's
shareholders, the proposed reorganization will be consummated at such time as
the Boards of Directors of the Company and MCSi Maryland determine is advisable.
The Merger Agreement provides, however, that the Merger may be abandoned by the
Board of Directors of either the Company or MCSi Maryland prior to the Effective
Date, either before or after shareholder approval. In addition, the Merger
Agreement may be amended prior to the Effective Date, either before or after
shareholder approval; provided, however, that the Merger Agreement may not be
amended after shareholder approval if such amendment would (i) alter or change
the amount or kind of shares or other consideration to be received by
shareholders in the Merger, (ii) alter or change any term of the New Charter,
(iii) alter or change any of the terms and conditions of the Merger Agreement if
such alteration or change would adversely affect the shareholders, or (iv)
otherwise violate applicable law.
Purpose for Proposed Reincorporation
Miami Computer Supply Company's name no longer accurately reflects the
totality of the Company's business with its advancement into the audio-visual
presentation field as a companion to computer supplies. The Company has
developed into a solutions-focused, reseller of computer technology products,
supplies and technical support services, audio-visual presentation products and
an advanced systems integrator of visual communications products, technologies
and services. The Company's computer supply products are used in, or in
conjunction with, a broad range of computer and office automation products such
as mainframe, mini-personal, laptop and notebook computers, laser and ink jet
printers, photocopiers, fax machines and data storage products. The Company's
audio-visual/broadcast presentation products and solutions are used singly with
laptops or are part of an integrated system designed and installed by the
Company. The Company believes it is currently the largest independent computer
and office automation supply and audio-visual/broadcast presentation products
distributor and systems integrator in the United States. In light of its
emphasis as media consultants and system integrators, the Board of Directors of
the Company believes that the best interests of the Company and its shareholders
will be served by changing the Company's name to MCSi, Inc. to mirror its
emerging business model. Unfortunately, the name "MSCi, Inc." is unavailable in
Ohio, but is available in Maryland. With the similarity between the laws in the
two states, it was determined that reincorporation in Maryland would provide for
a fairly effortless corporate transition, while providing the Company with a
name that identifies with its operations. See "--Comparison of Shareholder
Rights" and "--Possible Disadvantages of the Reincorporation Proposal."
17
<PAGE>
Comparison of Shareholder Rights
Upon consummation of the Merger, the Company will be governed by Maryland
Law and by the New Charter and New Bylaws. The New Charter and New Bylaws are
substantially similar to the Present Charter and Present Bylaws of the Company
with respect to material provisions. Differences between the New Charter and New
Bylaws and the Present Charter and Present Bylaws are primarily the result of
differences between Ohio Law and Maryland Law. Significant provisions of the New
Charter and New Bylaws and certain important differences between such new
charter documents and the present charter documents of the Company are discussed
below. In addition, although it is impracticable to compare all of the aspects
in which Maryland Law and Ohio Law differ, the following is a summary of certain
significant differences between the provisions of these laws. For purposes of
this section, the "Company" shall refer to Miami Computer Supply Corporation
incorporated under Ohio Law and/or MCSi, Inc. incorporated under Maryland Law,
as the context indicates.
The following discussion is not intended to be a complete statement of the
differences affecting the rights of shareholders, but rather summarizes material
differences and certain important similarities. The discussion is qualified in
its entirety by reference to the New Charter and New Bylaws which are attached
as Appendix B and C, respectively, to this Proxy Statement, and the Present
Charter and Present Bylaws, copies of which are available for inspection at the
Company's executive office or will be provided to shareholders upon request and
without charge.
CAPITAL STOCK. The Company's current authorized capital stock consists of
35,000,000 shares of Common Stock and 5,000,000 shares of preferred stock, no
par value per share ("Preferred Stock"). No shares of Preferred Stock of the
Company have been issued. As of March 31, 2000, 12,077,238 shares of Common
Stock are issued and outstanding. The capitalization of MCSi Maryland and
provisions of the New Charter setting the terms of the MCSi Maryland Common
Stock are unchanged from the Present Charter.
The Present Charter authorizes the Board of Directors to issue Preferred
Stock from time to time in one or more series subject to applicable provisions
of law, and the Board of Directors is authorized to fix the designations,
powers, preferences and relative participating, optional and other special
rights of such shares, including voting rights (which could be multiple or as a
separate class) and conversion rights. The Company also has a substantial number
of authorized but unissued shares of Common Stock available for issuance. The
authorized but unissued and unreserved shares of Common Stock are available for
issuance for general corporate purposes, including but not limited to possible
issuance as stock dividends or stock splits, in future mergers or acquisitions,
under a cash dividend reinvestment and stock purchase plan, in a future
underwritten or other public offering, or under a stock based employee plan. The
authorized but unissued shares of Preferred Stock are similarly available for
issuance in future mergers or acquisitions, in a future underwritten public
offering or private placement or for other general corporate purposes. Except as
required by law or as otherwise required to approve the transaction in which the
additional authorized shares of Common Stock or authorized shares of Preferred
Stock would be issued, no shareholder approval is required for the issuance of
these shares. Accordingly, the Board of Directors of the Company, without
shareholder approval, can issue Preferred Stock with voting and conversion
rights which could adversely affect the voting power of the holders of Common
Stock. The Board of Directors of MCSi Maryland will have similar rights and
powers under the New Charter.
As of the date of this Proxy Statement, management is not aware that any
person or group has indicated an intention or desire to institute a takeover of
the Company. In addition, the Board of Directors has no present plans or
understandings for the issuance of any Preferred Stock and does not intend to
issue any Preferred Stock except on terms which the Board deems to be in the
best interests of the Company and its shareholders.
PAYMENTS OF DIVIDENDS. Both the OGCL and the MGCL permit the payment of
dividends and the redemption of shares out of paid-in, earned or other surplus.
However, under the OGCL, if a dividend is paid out of capital surplus,
shareholders must be so notified.
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Under Maryland Law, dividends may be declared and paid out of capital
surplus, provided that no dividends may be paid if, after giving effect to the
distribution (i) the corporation would not be able to pay its debts as they
become due in the usual course of business, or (ii) the corporation's total
assets would be less than the sum of its total liabilities plus the amount that
would be needed, if the corporation were to be dissolved at the time of the
distributions, to satisfy the preferential rights upon dissolution of
shareholders whose preferential rights on dissolution are superior to those
receiving the distribution.
BOARD OF DIRECTORS. Both the Present Charter and Present Bylaws and the New
Charter and New Bylaws establish one class of directors consisting of five (5)
members. A resolution of a majority of the Board of Directors of the Company may
permit the Board to be divided into two or three classes, but only if each class
has not less than three directors, and that the members of each class shall be
elected annually.
Set forth below are the names of the directors of MCSi Maryland and the
term of office for each of such persons. All such individuals presently serve as
directors of the Company. By voting in favor of the Reincorporation Proposal,
the Company's shareholders will be deemed to have approved of such persons as
directors of MCSi Maryland without further action and without changes in the
classes or terms. For additional information concerning these directors, see
"Information with Respect to Nominees for Director, Continuing Directors and
Executive Officers Election of Directors."
<TABLE>
<CAPTION>
NAME POSITION(S) HELD IN THE COMPANY TERM TO EXPIRE
<S> <C> <C>
Robert G. Hecht Director 2001
Michael E. Peppel Chairman, President and Chief 2001
Executive Officer
Richard L. Posen Director 2001
Harry F. Radcliffe Director 2001
Thomas C. Winstel Director, Corporate Secretary 2001
</TABLE>
CUMULATIVE VOTING. Neither the Present Charter and Present Bylaws, nor the
New Charter and New Bylaws permit cumulative voting. Cumulative voting entitles
each shareholder to vote as many votes as he or she has shares of Common Stock,
multiplied by the number of directors to be elected at any shareholder meeting;
the shareholder may cast all votes for a single nominee or may distribute votes
among as many nominees as such shareholder chooses. Cumulative voting may allow
holders of a significant minority of a corporation's stock to assure the
election of one or more directors.
REMOVAL OF DIRECTORS. The Present Charter and the New Charter provide that
a director may be removed for cause by the Board of Directors or may be removed
with or without cause by the affirmative vote of not less than two-thirds of the
voting power of all of the then outstanding shares entitled to vote at an
election of directors.
BOARD VACANCIES. Under the Present Charter vacancies occurring on the Board
of Directors may only be filled by a majority vote of the remaining directors.
Directors so elected serve until the term of office of the class to which they
have been elected expires.
Under the New Charter any vacancies on the Board of Directors shall be
filled only by a majority vote of the directors then in office. In accordance
with Maryland Law a director so chosen by the remaining directors shall hold
office until the next succeeding annual meeting of stockholders, at which time
the stockholders shall elect a director to hold office for the balance of the
time then remaining in the unexpired term.
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LIMITATIONS ON DIRECTOR AND OFFICER LIABILITY; INDEMNIFICATION. The New
Charter and the Present Charter both contain a provision that eliminates or
limits a director's personal liability for monetary damages for breach of his
fiduciary duty, subject to certain limitations. The Present Charter provides
that a director of the Company shall not be personally liable to the Company or
its shareholders for monetary damages for breach of fiduciary duty as a
director, provided that a director's liability shall not be limited or
eliminated to the extent that it is proved by clear and convincing evidence in a
court of competent jurisdiction that his action or failure to act involved an
act or omission undertaken with deliberate intent to cause injury to the
Company, or was undertaken with reckless disregard for the best interests of the
Company. The New Charter provides that the personal liability of the directors
and officers of the Company for monetary damages shall be eliminated to the
fullest extent permitted by the General Corporation Law of the State of Maryland
as it exists on the effective date of the New Charter or as such law may be
thereafter in effect.
The indemnification provisions contained in the Present Charter and the New
Charter, as governed by Ohio Law and Maryland Law, respectively, are similar.
Both provisions generally allow for indemnification of officers and directors to
the fullest extent permitted by law. In general, Maryland Law and Ohio Law
permit a corporation to provide complete indemnification, including protection
against settlements, judgments and expenses actually and reasonably incurred, in
all proceedings other than derivative actions (i.e., actions brought against
such persons by or on behalf of the corporation), subject to certain statutory
limitations. Under Ohio Law indemnification is permitted if the indemnitee acted
in good faith and in a manner the person reasonably believed to be in the
corporation's best interest, and in a criminal proceeding, had no reasonable
cause to believe that the conduct was unlawful. Under Maryland Law,
indemnification is permitted unless the individual acted in bad faith or with
active and deliberate dishonesty, actually received an improper personal benefit
in money, property or services, or in the case of a criminal proceeding had
reasonable cause to believe that the conduct was unlawful.
Maryland Law also generally permits indemnification for amounts paid in
settlement (including expenses) of derivative suits, whereas the Ohio Law does
not expressly authorize indemnification for judgments, fines and amounts paid in
settlement in derivative suits. Both Maryland Law and Ohio Law, however,
prohibit such indemnification if the proposed indemnitee is adjudged liable to
the corporation, except upon application to a court which determines such person
is reasonably entitled to such indemnification. The rights to indemnification
and to the advancement of expenses are not exclusive of any other right which
any person may have or hereafter acquire under any statute, the New Charter, the
New Bylaws, by agreement, a vote of the shareholders or directors, or otherwise.
CONDUCT OF BUSINESS; NOTICE REQUIREMENTS FOR SHAREHOLDER NOMINATIONS AND
SHAREHOLDER PROPOSALS. The Present Charter and the New Charter both generally
provide that, at any annual meeting of the shareholders, only such business
shall be conducted as shall have been brought before the meeting (i) pursuant to
the Company's notice of meeting by or at the direction of the Board of
Directors, or (ii) by any shareholder of the Company who is entitled to vote
with respect thereto and who complies with the notice procedures set forth in
the bylaws.
The Present Charter and New Charter generally provide that any shareholder
desiring to nominate candidates for election as a director must deliver written
notice to the Secretary of the Company which must be received at the executive
offices of the Company at least sixty (60) days prior to the date of the mailing
of proxy materials in connection with the immediately preceding annual meeting.
The Present Charter and New Charter also generally provide that any shareholder
desiring to make a proposal for new business at a meeting of shareholders must
deliver written notice to the Secretary of the Company which must be received at
the executive offices of the Company at least sixty (60) days prior to the
anniversary of the mailing of proxy materials in connection with the preceding
year's annual meeting. In all cases such written notice must be in the form
prescribed by the Present Charter and New Charter.
Adequate advance notice of shareholder proposals and nominations gives
management time to evaluate such proposals and nominations and to determine
whether to recommend to the shareholders that such proposals be adopted. In
certain instances, such provisions could make it more difficult to oppose
management's proposals or nominations if shareholders believe such proposals or
nominations are not in their best interests.
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SHAREHOLDERS' INSPECTION RIGHTS. Under Ohio Law upon written demand stating
the specific purpose, any shareholder may inspect the corporation's stock
ledgers, the shareholders' list and its other books and record for any purpose
reasonably related to such person's interest as a shareholder. Maryland Law
provides that the corporation's books of account, its stock ledger and the
shareholders' list may be inspected only by one or more persons who together
have been shareholders of record for at least six months and who together hold
at least 5% of the outstanding stock of any class.
SPECIAL MEETINGS OF SHAREHOLDERS. The Present Charter and New Charter
provide that special meetings of shareholders may only be called by the Board of
Directors pursuant to a resolution adopted by a majority of the total number of
directors which the Company would have if there were no vacancies on the Board
of Directors, the Chairman of the Board, the President, or by the Secretary of
the Company at the written request of shareholders entitled to cast at least 50%
of all the votes entitled to be cast at such meeting.
SHAREHOLDER ACTION WITHOUT A MEETING. Ohio Law and Maryland Law and the
Present Charter and New Charter provide that any action to be taken or which may
be taken at any annual or special meeting may be taken, without a meeting if a
consent in writing, setting forth the action so taken is given by the holders of
all outstanding shares entitled to vote on the matter. A written waiver of any
right to dissent also must signed by each shareholder entitled to notice of the
meeting but not entitled to vote.
BUSINESS COMBINATION PROVISIONS; ANTITAKEOVER STATUTES. Ohio Law and
Maryland Law regulate transactions with major stockholders after they become
major stockholders. Chapter 1704 of the OGCL provides that, unless the articles
of incorporation or code of regulations of a corporation otherwise provide, an
"issuing public corporation" may not engage in a "Chapter 1704 transaction" for
three years following the date on which a person becomes an "interested
shareholder" with that interested shareholder unless the Chapter 1704
transaction is approved by the corporation's board of directors prior to the
time the person becomes an interested shareholder. "Chapter 1704 transactions"
include mergers, consolidations, combinations, liquidations, recapitalizations
and other transactions involving 5% or more of the assets or shares of the
issuing public corporation or 10% of more of its earning power. After the
initial three-year moratorium such transactions are prohibited absent approval
by disinterested shareholders or unless the transaction meets certain
statutorily defined fair price provisions. The Present Charter provides that it
shall not be governed by this statute.
Maryland Law prohibits an interested stockholder from engaging in a wide
range of business combinations similar to those prohibited by Ohio Law. Under
Maryland Law, however, an interested stockholder is a person or group that owns
10% or more of the voting stock of the corporation and the restricted period is
for five years after the interested stockholder crosses the 10% threshold.
Maryland Law also provides for certain exemptions from these restrictions on
transactions involving an interested stockholder.
CONTROL SHARE ACQUISITIONS. Under the Section 1701.831 of the Ohio Law (the
"Ohio Control Share Statute"), unless the articles of incorporation or code of
regulations of a corporation otherwise provide, any control share acquisition of
an "issuing public corporation" can only be made with the prior approval of the
corporation's shareholders. A control share acquisition for purposes of Section
1701.831 of the Ohio Law is defined as any acquisition of shares of a
corporation that, when added to all other shares of that corporation owned by
the acquiring person, would enable that person to exercise levels of voting
power in any of the following ranges: at least 20% but less than 33 1/3%; at
least 33 1/3% but less than 50%; or 50% or more. The Present Charter provides
that the Ohio Control Share Statute does not apply to the Company.
Maryland Law also contains a control share statute which requires an
interested investor who acquires a threshold percentage of stock in a target
corporation to obtain the approval of non-interested shareholders before it may
exercise voting rights. Under Maryland Law, certain notice and informational
filings and special shareholder meeting and voting procedures must be followed
prior to consummation of a proposed "control share acquisition," which is
defined as any acquisition of an issuer's shares which would entitle the
acquiror, immediately after such acquisition,
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directly or indirectly, to exercise or direct the exercise of voting power of
the issuer in the election of directors within any of the following ranges of
such voting power: (i) one-fifth or more but less than one-third of such voting
power; (ii) one-third or more but less than a majority of such voting power; or
(iii) a majority or more of such voting power. Assuming compliance with the
notice and information filings prescribed by statute, the proposed control share
acquisition may be made only if the acquisition is approved by two-thirds of the
voting power of the issuer, excluding the combined voting power of the
"interested shares," being the shares held by the intended acquiror and the
directors and officers of the issuer. The application of the Maryland control
share statute may be made inapplicable to a company by its corporate governance
documents, as the New Charter so provides.
The Present Charter and New Charter contain provisions relating to
business combinations (as defined therein). The Present Charter and the New
Charter both require that certain business combinations between the Company (or
any majority-owned subsidiary thereof) and a 10% or more shareholder ("Related
Person") be approved by at least 80% of the total number of outstanding voting
shares, voting as a single class, of the Company unless the transaction (i) is
authorized by a majority of the directors of the Board of Directors who are
unaffiliated with the Related Person and who were directors prior to the time
that the Related Person became a Related Person, or (ii) meets certain fair
price requirements. If the Company's Board gives such approval or such fair
price requirements are met, only the affirmative vote of the majority of the
outstanding stock, voting as a single class, would be required. The New Charter
also provides that the Company has elected not to be governed by the Maryland
Law relating to business combinations.
CONSOLIDATION, MERGERS, SHARE EXCHANGE AND TRANSFER OF ASSETS. In
addition to the antitakeover provisions discussed above, Maryland Law requires
consolidations, mergers, share exchanges and certain asset transfers to be
approved by a two-thirds vote of the voting power of the corporation, which vote
requirement can be reduced to a majority of the voting power of the corporation,
as so provided in the New Charter. Ohio Law does not require shareholder
approval in the case of asset and share acquisitions and, in general, requires
approval of mergers and disposition of substantially all of a corporation's
assets by a majority vote of the voting power of the corporation.
AMENDMENT OF CERTIFICATE OF INCORPORATION, ARTICLES OF INCORPORATION
AND BYLAWS. No amendment of the Present Charter may be made unless it is
approved by a majority of the Board of Directors, and approved by the holders of
a majority of the total votes eligible to be cast at a legal meeting; provided,
however, that approval by at least 75% of the outstanding shares entitled to
vote is generally required for certain provisions, such as provisions relating
to number, classification, election and removal of directors; amendments of
bylaws, call of special shareholder meetings; voting limitations; offers to
acquire and acquisitions of control; director liability; certain business
combinations; power of indemnification; and amendments to provisions relating to
the foregoing. The Present Bylaws may be amended by a majority vote of the Board
of Directors or 75% of the total votes eligible to be voted at a duly
constituted meeting of shareholders.
The New Charter generally provides that the New Charter and New Bylaws
may be amended in a similar manner as the Present Charter and Present Bylaws,
and includes the numerous supermajority voting provisions required to amend
various provisions contained therein.
SHAREHOLDERS' RIGHTS IN CERTAIN TRANSACTIONS. Maryland Law provides
generally, with certain exceptions hereinafter described, that a shareholder of
a Maryland corporation has the right to demand and receive payment of the fair
value of the shareholder's stock from a successor corporation if (i) the
corporation merges or consolidates with another corporation, (ii) the
shareholder's stock is to be acquired in a share exchange, (iii) the corporation
transfers its assets other than in the ordinary course of business, or (iv) the
corporation alters its charter in a way which alters contractual rights, as
expressly set forth in the charter, of any outstanding stock and substantially
adversely affects the shareholder's rights, unless the right to do so is
reserved by the charter of the corporation.
A shareholder must file with the corporation a demand in writing for
the fair cash value of his shares within certain time periods depending on the
transaction involved. Maryland Law provides that the right to fair value does
not apply, with certain exceptions, if (i) the stock is listed on a national
securities exchange or is designated as a national
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market system security on an interdealer quotation system by the National
Association of Securities Dealers, Inc., (ii) the stock is that of a successor
in a merger, unless the merger alters the contract rights of the stock as
expressly set forth in the charter and the charter does not reserve the right to
do so, or (iii) the stock is that of an open-end investment company registered
with the Securities and Exchange Commission and the value placed on the stock in
the transaction is its net asset value.
Ohio Law provides similar rights in the context of a merger or
consolidation only. Such rights are not available, however, with respect to the
merger of a parent corporation with a wholly owned subsidiary corporation, as in
the Merger discussed herein pursuant to Section 1701.80 of the OGCL.
If the Reincorporation Proposal is approved by shareholders, after
consummation of the Merger, shareholders will have dissenters' rights in
connection with the types of transactions described under Maryland Law above.
ANTI-TAKEOVER EFFECTS. Many of the provisions contained in the New
Charter and New Bylaws and under Maryland Law are similar to the provisions
contained in the Present Charter, Present Bylaws and under Ohio Law. These
provisions could have the effect of discouraging an acquisition of the Company
or stock purchases in furtherance of an acquisition, and could, under certain
circumstances, discourage transactions which might otherwise have a favorable
effect on the price of the Company's common stock. These provisions may serve to
make it more difficult to remove incumbent management and may also discourage
all attempts to acquire control not approved by the Board of Directors for any
reason. As a result, shareholders who might desire to participate in, or benefit
from, such a transaction may not have an opportunity to do so.
COSTS. The Company, if incorporated in Maryland, would not be subject
to any annual franchise tax; however, it would be subject to personal property
tax.
Possible Disadvantages of the Reincorporation Proposal
While the Company has significant roots in the State of Ohio, it is not
able to use the name "MCSi, Inc." in Ohio, even as a trade name. Despite the
Company's lack of physical presence in Maryland, it is the belief of the Board
of Directors that the Reincorporation Proposal is in the best interests of the
Company and its shareholders. Nonetheless, shareholders should be aware that
many provisions in the New Charter, the New Bylaws and under Maryland Law have
not yet received extensive scrutiny and interpretation by the Maryland courts.
The Board of Directors, however, believes Maryland Law will provide the Company
with the comprehensive, flexible structure which it needs to operate
effectively.
Tax Consequences
The Company will receive an opinion from its special counsel, Elias,
Matz, Tiernan & Herrick, LLP, Washington, D.C., to the effect that the proposed
Merger will be a tax free reorganization under the Internal Revenue Code of
1986, as amended. Accordingly, (i) no gain or loss will be recognized for
federal income tax purposes by the shareholders of the Company as a result of
the Merger and (ii) the basis and holding period for the stock of MCSi Maryland
received by the shareholders of the Company in exchange for Common Stock of the
Company will be the same as the basis and holding period of the stock of the
Company exchanged therefor. The Merger will have no federal income tax effect on
the Company. State, local or foreign income tax consequences to shareholders may
vary from the federal tax consequences described above, and shareholders should
consult their own tax advisors as to the effect of the Reincorporation Proposal
under applicable state, local or foreign income tax laws.
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Abandonment
Notwithstanding a favorable vote of the shareholders, the Company
reserves the right by action of its Board of Directors to abandon the proposed
reincorporation prior to the Effective Date of the Merger if it determines that
such abandonment is in the best interests of the Company. The board of Directors
has made no determination as to any circumstances which may prompt a decision to
abandon the proposed reincorporation.
Vote Required
Pursuant to Ohio Law and the Present Charter, the affirmative vote of
the holders of a majority of the outstanding shares of the Company's Common
Stock is required for approval of the Merger to effectuate the reincorporation
of the Company in Maryland. Approval of the Reincorporation Proposal by
shareholders of the Company will constitute specific approval of the Merger
Agreement, the New Charter and New Bylaws, and of all other transactions and
proceedings relating to the Merger, including ratification of the directors of
the Company in the classes as set forth under "-Comparison of Shareholder
Rights-Board of Directors," the assumption by the surviving Company of the
Company's Stock Option Plans and all other employee benefit plans and
agreements, and the obligations of the Company under such plans and agreements.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE REINCORPORATION
PROPOSAL AND THE MERGER WHICH WILL EFFECTUATE THE PROPOSED REINCORPORATION AND
UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE REINCORPORATION PROPOSAL.
PROPOSAL TO ADOPT THE 2000 STOCK OPTION PLAN
General. The Board of Directors has adopted the 2000 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 2000 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 2000 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 and most of the
options currently available under the 1998 Stock Option Plan have been granted.
Accordingly, the Board of Directors believes that the 2000 Stock Option Plan is
in the best interest of the Company and its stockholders.
DESCRIPTION OF THE 2000 STOCK OPTION PLAN. The following description of
the 2000 Stock Option Plan is a summary of its terms and is qualified in its
entirety by reference to the 2000 Stock Option Plan, a copy of which is attached
hereto as Appendix D.
ADMINISTRATION. The 2000 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 things, which officers and 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
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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 of 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 2000 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 2000 STOCK OPTION PLAN. A total of
900,000 shares of Common Stock has been reserved for issuance pursuant to the
2000 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 2000 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 2000 STOCK OPTION PLAN. Unless sooner
terminated, the 2000 Stock Option Plan shall continue in effect for a period of
ten years from the effective date, which is March 31, 2000, the date the 2000
Stock Option Plan was adopted by the Board and became effective by its terms.
Termination of the 2000 Stock Option Plan shall not affect any previously
granted options. The Board of Directors may at any time terminate or amend the
2000 Stock Option Plan with respect to any shares of 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.
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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 2000
Stock Option Plan currently requires any charge against earnings under generally
accepted accounting principles. If a non-qualified option has an exercise 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 2000 Stock Option Plan might be considered
outstanding for purposes of calculating diluted earnings per share.
STOCKHOLDER APPROVAL. No options will be granted under the 2000 Stock
Option Plan unless the 2000 Stock Option Plan is approved by stockholders.
Stockholder ratification of the 2000 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
2000 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.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR ADOPTION
OF THE 2000 STOCK OPTION PLAN.
PROPOSAL TO APPROVE THE COMPANY'S
2000 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
GENERAL. The Board of Directors has approved the 2000 Non-Employee
Directors Stock Option Plan (the "Directors Plan"), a self-governing plan that
provides for automatic grants of non-qualified stock options on the date of each
annual meeting of stockholders, commencing with the 2000 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 is
designed to promote the long-term growth and financial success of the Company by
enabling it to attract, retain and motivate non-employee members of the
Company's Board of Directors by providing for or increasing their proprietary
interest in the Company.
DESCRIPTION OF THE DIRECTORS PLAN. The following description of the
Directors Plan is a summary of its terms and is qualified in its entirety by
reference to the Directors Plan, a copy of which attached hereto as Appendix E.
The Directors Plan calls for the grant of options covering 15,000
shares of Common Stock to each person who is a non-employee director as of the
date of this Annual Meeting, which options will vest in 5,000 share increments.
The options shall vest over a three year period on the date of each Annual
Meeting beginning with the 2000 Annual Meeting, except that all such options
shall become immediately vested if the Company engages in a Business
Combination, defined by the Company's Articles of Incorporation.
All of the options granted under the Directors Plan, 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 share of Common Stock have
been reserved for future grants of options under the Directors Plan.
FEDERAL INCOME TAX CONSEQUENCES. Under current provisions of the
Internal Revenue Code of 1986, as amended ("Code"), the difference between the
fair market value on the date of exercise and the option exercise price of a
non-qualified option 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. The foregoing 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 under the federal income tax laws.
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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 a
non-qualified stock option under the Directors Plan currently requires any
charge against earnings under generally accepted accounting principles. If a
non-qualified option has an exercise 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
Directors Plan might be considered outstanding for purposes of calculating
diluted earnings per share.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR ADOPTION
OF THE COMPANY'S NON- EMPLOYEE DIRECTORS STOCK OPTION PLAN.
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company has appointed
PricewaterhouseCoopers LLP, independent accountants, to perform the audit of the
Company's financial statements for the year ending December 31, 2000, 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 PricewaterhouseCoopers 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. PricewaterhouseCoopers 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 PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT ACCOUNTANTS FOR THE
FISCAL YEAR ENDING DECEMBER 31, 2000.
APPROVAL OF ADJOURNMENT
Each proxy solicited hereby by the Company requests authority to vote
for an adjournment of the Annual Meeting if an adjournment of such meeting is
deemed to be necessary. The Company may seek an adjournment of the Annual
Meeting for not more than 120 days in order to enable it to solicit additional
votes in favor of the proposals to reincorporate the Company in Maryland, to
adopt the 2000 Stock Option Plan and to adopt the 2000 Non-Employee Director
Stock Option Plan (the "Proposals") in the event the requisite vote of
Stockholders has not been received. If the Company desires to adjourn the Annual
Meeting with respect to the Proposals, it will request a motion that the Annual
Meeting be adjourned for up to 120 days with respect to such Proposals, and no
vote will be taken on such Proposals at the originally scheduled 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 such 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 by the
Company to adjourn the Annual Meeting. Unless revoked prior to its use, any
proxy solicited for the Annual Meeting will continue to be valid for any
adjournment of such meeting, and will be voted in accordance with the
instructions contained therein, and if no contrary instructions are given, for
the Proposals.
Any adjournment will permit the Company to solicit additional proxies
and will permit a greater expression of the Stockholders' views with respect to
such Proposals. Such an adjournment would be disadvantageous to Stockholders who
are against the Proposals, because an adjournment will give the Company
additional time to solicit favorable votes and thus increase the chances of
approving such proposal.
If a quorum is not present at the Annual Meeting, no proposal will be
acted upon and the Company will adjourn the Annual Meeting to an alternative
date in order to solicit additional proxies on each of the Proposals being
submitted to Stockholders.
27
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An adjournment for up to 120 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 does not have any reason to believe that an
adjournment of the Annual Meeting will be necessary at this time.
BECAUSE THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS STOCKHOLDERS
VOTE FOR THE PROPOSALS, AS DISCUSSED ABOVE, THE BOARD OF DIRECTORS OF THE
COMPANY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE POSSIBLE ADJOURNMENT OF THE
ANNUAL MEETING ON SUCH PROPOSAL.
ANNUAL REPORTS
A copy of the Company's Annual Report to Stockholders for the year
ended December 31, 1999 accompanies this Proxy Statement. Such Annual Report is
not part of the proxy solicitation materials.
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 1999 REQUIRED TO BE FILED UNDER THE EXCHANGE ACT. SUCH WRITTEN
REQUESTS SHOULD BE DIRECTED TO IRA H. STANLEY, VICE PRESIDENT AND CHIEF
FINANCIAL OFFICER, 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.
By Order of the Board of Directors
/s/ Thomas C. Winstel
Thomas C. Winstel
Corporate Secretary
April 12, 2000
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APPENDIX A
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
MCSi, INC.
AND
MIAMI COMPUTER SUPPLY CORPORATION
This Plan of Reorganization and Agreement of Merger (hereinafter called
the "Merger Agreement") is made as of March 24, 2000, by and between Miami
Computer Supply Corporation, an Ohio corporation ("MCSi Ohio") and MCSi, Inc., a
Maryland corporation ("MCSi Maryland"). MCSi Ohio and/or MCSi Maryland, when
reference is made to the entity irrespective of the state of incorporation, is
sometimes herein referred to as the "Company."
WITNESSETH:
WHEREAS, MCSi Ohio is a corporation duly organized and existing under
the laws of the State of Ohio;
WHEREAS, MCSi Maryland is a corporation duly organized and existing
under the laws of the State of Maryland;
WHEREAS, as of the date of this Merger Agreement, MCSi Ohio has
authority to issue 30,000,000 shares of common stock, no par value per share, of
which 12,065,107 shares are issued and outstanding; and 5,000,000 shares of
preferred stock, par value $.01 per share, none of which are issued or
outstanding;
WHEREAS, as of the date of this Merger Agreement, MCSi Maryland has
authority to issue 30,000,000 shares of common stock, no par value per share, of
which of which 100 shares are issued and outstanding and owned by MCSi Ohio; and
5,000,000 shares of preferred stock, no par value per share, none of which are
issued or outstanding;
WHEREAS, the respective Boards of Directors of MCSi Ohio and MCSi
Maryland have determined that, for the purpose of effecting the reincorporation
of MCSi Ohio in the State of Maryland, it is advisable and to their advantage
and the advantage of their respective stockholders that MCSi Ohio merge with and
into MCSi Maryland upon the terms and conditions herein provided; and
WHEREAS, the respective Boards of Directors of MCSi Ohio and MCSi
Maryland have approved this Merger Agreement and have directed that this Merger
Agreement be submitted to the vote of their respective stockholders.
AGREEMENT
NOW, THEREFORE, the parties do hereby adopt the plan of reorganization
encompassed by this Merger Agreement and do hereby agree that MCSi Ohio shall
merge with and into MCSi Maryland on the following terms, conditions and other
provisions:
TERMS AND CONDITIONS
1.1 Merger. Subject to approval of the respective stockholders of MCSi
Ohio and MCSi Maryland and the receipt of all required regulatory approvals,
MCSi Ohio shall be merged with and into MCSi Maryland (the "Merger"), and MCSi
Maryland shall be the surviving corporation, effective upon the date when this
Merger Agreement is made effective in accordance with applicable law (the
"Effective Date").
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1.2 Succession. Upon the Effective Date, MCSi Maryland shall succeed to
all of the rights, privileges, powers and property of MCSi Ohio in the manner of
and as more fully set forth in Section 3-114 of the Maryland General Corporation
Law.
1.3 Common Stock of MCSi Ohio. Upon the Effective Date, by virtue of
the Merger and without any action on the part of the holder thereof, each share
of common stock, no par value per share, of MCSi Ohio outstanding immediately
prior thereto shall be changed and converted into one fully paid and
non-assessable share of the common stock of MCSi Maryland, no par value per
share and be listed on the NASDAQ Stock Market.
1.4 Common Stock of MCSi Maryland. Upon the Effective Date, by virtue
of the Merger and without any action on the part of the holder thereof, the 100
shares of common stock, no par value per share, of MCSi Maryland outstanding
immediately prior thereto shall be canceled and returned to the status of
authorized but unissued shares.
1.5 Stock Certificates. Upon and after the Effective Date, all of the
outstanding certificates which prior to that time represented shares of common
stock, no par value per share, of MCSi Ohio shall be deemed for all purposes to
evidence ownership of and to represent the shares of common stock, no par value
per share, of MCSi Maryland into which the shares of MCSi Ohio represented by
such certificates have been converted as herein provided. The registered owner
on the books and records of MCSi Maryland or its transfer agent of any such
outstanding stock certificate shall, until such certificate shall have been
surrendered for transfer or conversion or otherwise accounted for to MCSi
Maryland or its transfer agent, have and be entitled to exercise any voting and
other rights with respect to, and to receive any dividend and other
distributions upon, the shares of MCSi Maryland evidenced by such outstanding
certificate as above provided.
1.6 Options. Upon the Effective Date, MCSi Maryland will assume and
continue all of MCSi Ohio's stock option plans, including but not limited to the
1996 Stock Option Plan, the 1998 Stock Option Plan and the 1996 Non- Employee
Director Stock Option Plan, and the outstanding and unexercised portions of all
options and rights to buy common stock, no par value per share, of MCSi Ohio
shall become options or rights for the same number of shares of common stock, no
par value per share, of MCSi Maryland, with no other changes in the terms and
conditions of such options or rights, including exercise prices, and effective
upon the Effective Date, MCSi Maryland hereby assumes the outstanding and
unexercised portions of such options and rights and the obligations of MCSi Ohio
with respect thereto.
1.7 Other Employee Benefit Plans. Upon the Effective Date, MCSi
Maryland will assume all obligations of MCSi Ohio under any and all employee
benefit plans in effect as of the Effective Date or with respect to which
employee rights or accrued benefits are outstanding as of the Effective Date.
II. CHARTER DOCUMENTS, DIRECTORS AND OFFICERS
2.1 Articles of Incorporation and Bylaws. The Articles of Incorporation
of MCSi Maryland in effect on the Effective Date (a copy of which is attached
hereto and incorporated herein by this reference), shall continue to be the
Articles of Incorporation of MCSi Maryland. The Bylaws of MCSi Maryland in
effect on the Effective Date shall continue to be the Bylaws of MCSi Maryland.
2.2 Directors. The directors of MCSi Maryland immediately preceding the
Effective Date shall remain the directors of MCSi Maryland on and after the
Effective Date. Such directors of MCSi Maryland shall hold office in the classes
and for the terms as in effect immediately prior to the Effective Date, and
until their successors are elected and qualified or their prior resignation,
removal or death.
2.3 Officers. The officers of MCSi Maryland shall remain the officers
of MCSi Maryland upon the Effective Date and shall serve until their successors
are elected and qualified or their prior resignation, removal or death.
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III. MISCELLANEOUS
3.1 Further Assurances. From time to time, as and when required by MCSi
Maryland or by its successors and assigns, there shall be executed and delivered
on behalf of MCSi Ohio such deeds and other instruments, and there shall be
taken or caused to be taken by it such further and other action as shall be
appropriate or necessary in order to vest or perfect, or to conform of record or
otherwise, in MCSi Maryland the title to and possession of all the property,
interests, assets, rights, privileges, immunities, powers, franchises, and
authority of MCSi Ohio, and otherwise to carry out the purposes of this Merger
Agreement, and the officers and directors of MCSi Maryland are fully authorized
in the name of and on behalf of MCSi Ohio or otherwise to take any and all such
action and to execute and deliver any and all such deeds and other instruments.
3.2 Amendment. At any time before or after approval by the stockholders
of MCSi Ohio, this Merger Agreement may be amended in any manner (except that
Section 1.3 and 1.4 may not be amended without the approval of the stockholders
of MCSi Ohio) as may be determined in the judgment of the respective Boards of
Directors of MCSi Ohio and MCSi Maryland to be necessary, desirable or expedient
in order to clarify the intention of the parties hereto or to effect or
facilitate the purposes and intent of this Merger Agreement.
3.3 Abandonment. At any time before the Effective Date, this Merger
Agreement may be terminated and the Merger may be abandoned by the Board of
Directors of either MCSi Ohio or MCSi Maryland or both, notwithstanding the
approval of this Merger Agreement by the stockholders of MCSi Ohio.
3.4 Counterparts. In order to facilitate the filing and recording of
this Merger Agreement, the same may be executed in any number of counterparts,
each of which shall be deemed to be an original.
IN WITNESS WHEREOF, this Merger Agreement, having first been duly
approved by the Boards of Directors of MCSi Ohio and MCSi Maryland, is hereby
executed on behalf of each said corporation and attested by their respective
officers thereunto duly authorized.
MIAMI COMPUTER SUPPLY CORPORATION
ATTEST:
By: _____________________________ By: _____________________________
Thomas C. Winstel Ira H. Stanley
Secretary Vice President and Chief
Financial Officer
MCSi, INC.
ATTEST:
By: _____________________________ By: _____________________________
Thomas C. Winstel Michael E. Peppel
Secretary President
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APPENDIX B
ARTICLES OF INCORPORATION
OF
MCSi, INC.
The undersigned, Michael E. Peppel, whose address is 4750 Hempstead
Station Drive, Dayton, Ohio, 45429, being at least 18 years of age, acting as
sole incorporator, does hereby form a corporation under the General Laws of the
State of Maryland having the following Charter:
ARTICLE I
NAME
NAME. The name of the corporation is MCSi, Inc. (hereinafter referred
to as the "Corporation").
ARTICLE II
DURATION
DURATION. The period of duration of the existence of the Corporation is
perpetual.
ARTICLE III
PURPOSE; EFFECTIVE DATE
PURPOSE AND EFFECTIVE DATE. The purpose of the Corporation is to sell
computer equipment, audio-visual presentation products, accessories and supplies
in the United States of America and in other countries at such times and places
and in such manner as may be permitted under the applicable laws of the United
States, the State of Maryland and the several states and to engage in any other
lawful activity or business for which a corporation may be incorporated under
the Maryland General Corporation Law (the "MGCL.") The Corporation shall have
all of the general powers of a corporation as provided by the MGCL. These
Articles of Incorporation ("Articles") shall become effective upon the date that
they are accepted by the Department for record.
ARTICLE IV
PRINCIPAL OFFICE; REGISTERED OFFICE
PRINCIPAL OFFICE. The address of the principal office of the
Corporation in the State of Maryland, until such time as the Board of Directors
shall direct the establishment of a different principal office in compliance
with the Corporation's Bylaws (the "Bylaws") and applicable Maryland law is 300
East Lombard Street, Baltimore, Maryland 21202. The name of the Registered agent
is The Corporation Trust Incorporated.
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ARTICLE V
CAPITAL STOCK
CAPITAL STOCK. The total number of shares of capital stock which the
Corporation has authority to issue is thirty five million (35,000,000), of which
thirty million (30,000,000) shall be common stock, no par value per share
(hereinafter the "Common Stock") and of which five million (5,000,000) shall be
preferred stock, no par value per share (hereinafter the "Preferred Stock"). The
Board of Directors shall have the authority to establish series of unissued
shares of any class of capital stock by fixing and determining the number,
designations, preferences, limitations and relative rights, including voting
rights, of the shares of any series so established to the same extent that such
number, designations, preferences, limitations and relative rights could be
stated if fully set forth in these Articles of Amendment. Except to the extent
required by governing law, the shares of capital stock may be issued from time
to time by resolution of the Board of Directors without further approval of
stockholders. The Corporation shall have the authority to purchase its capital
stock out of funds lawfully available therefor, which capital stock, unless
otherwise stated herein or in any resolution relating to the Preferred Stock,
shall constitute authorized but unissued shares and may then be issued by the
Corporation as set forth herein.
A description of the different classes and series (if any) of the
Corporation's capital stock and a statement of the designations, and the
relative rights, preferences and limitations of the shares of each class of and
series (if any) of capital stock are as follows:
A. COMMON STOCK. Except as provided in this Article V (or in any
resolution or resolutions adopted by the Board of Directors pursuant hereto),
the exclusive voting power shall be vested in the Common Stock, the holders
thereof being entitled to one vote for each share of such Common Stock standing
in the holder's name on the books of the Corporation. Subject to any rights and
preferences of any class of stock having preference over the Common Stock,
holders of Common Stock shall be entitled to such dividends as may be declared
by the Board of Directors out of funds lawfully available therefor. Upon any
liquidation, dissolution or winding up of the affairs of the Corporation,
whether voluntary or involuntary, holders of Common Stock shall be entitled to
receive pro rata the remaining assets of the Corporation after the payment or
provision for payment of the Corporation's debts and liabilities and after the
holders of any class of stock having preference over the Common Stock have been
paid in full any sums to which they may be entitled.
B. PREFERRED STOCK. The Board of Directors is hereby expressly
authorized to provide, by resolution or resolutions, out of the unissued shares
of Preferred Stock, for series of Preferred Stock. Before any shares of any such
series are issued, the Board of Directors shall fix, and hereby is expressly
empowered to fix, by resolution or resolutions, the following provisions of the
shares thereof:
(a) The designation of such series, the number of shares to
constitute such series and the stated value thereof;
(b) Whether the shares of such series shall have voting
rights, in addition to any voting rights provided by law, and, if so, the terms
of such voting rights, which may be general or limited;
(c) The dividends, if any, payable on such series, whether any
such dividends shall be cumulative, and, if so, from what dates, the conditions
and dates upon which such dividends shall be payable, the preference or relation
which such dividends shall bear to the dividends payable on any shares of stock
of any other class or any other series of this class;
(d) Whether the shares of such series shall be subject to
redemption by the Corporation, and, if so, the times, prices and other
conditions of such redemption;
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(e) The amount or amounts payable upon shares of such series
upon, and the rights of the holders of such series in, the voluntary or
involuntary liquidation, dissolution or winding up, or upon any distribution of
the assets, of the Corporation;
(f) Whether the shares of such series shall be subject to the
operation of a retirement or sinking fund and, if so, the extent to and manner
in which any such retirement or sinking fund shall be applied to the purchase or
redemption of the shares of such series for retirement or other corporate
purposes and the terms and provisions relative to the operation thereof;
(g) Whether the shares of such series shall be convertible
into, or exchangeable for, shares of stock of any other class or any other
series of this class or any other securities, and, if so, the price or prices or
the rate or rates of conversion or exchange and the method, if any, of adjusting
the same, and any other terms and conditions of conversion or exchange;
(h) The price or other consideration for which the shares of
such series shall be issued;
(i) Whether the shares of such series which are redeemed or
converted shall have the status of authorized but unissued shares of preferred
stock and whether such shares may be reissued as shares of the same or any other
series of preferred stock;
(j) The limitations and restrictions, if any, to be effective
while any shares of such series are outstanding upon the payment of dividends or
the making of other distributions on, and upon the purchase, redemption or other
acquisition by the Corporation of, the Common Stock or shares of stock of any
other class or any other series of this class;
(k) The conditions or restrictions, if any, upon the creation
of indebtedness of the Corporation or upon the issue of any additional stock,
including additional shares of such series or of any other series of this class
or of any other class; and
(l) Any other powers, preferences and relative, participating,
optional and other special rights, and any qualifications, limitations and
restrictions thereof.
The powers, preferences and relative, participating, optional and other
special rights of each series of Preferred Stock, and the qualifications,
limitations or restrictions thereof, if any, shall be identical, except that
there may be variations in respect of: the dividend or distribution rate; the
dates from which dividends thereon shall accrue and/or be cumulative; the dates
of the payment of dividends; redemption rights and price; liquidation price;
sinking fund requirements; conversion rights; and restrictions on the issuance
of shares of the same series or of any other class or series.
Prior to the issuance of any shares of a series of capital stock
established by resolution adopted by the Board of Directors, if such issuance is
the first issuance of shares of such series since the resolution was adopted,
the Corporation shall file with the Department for record articles of amendment
as required by the MGCL. Upon the filing of such articles of amendment with the
Department, the resolution establishing and designating the series and fixing
and determining the preferences, limitations and relative rights thereof shall
become an amendment of these Articles.
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ARTICLE VI
NO PREEMPTIVE RIGHTS
NO PREEMPTIVE RIGHTS. No holder of the capital stock of the Corporation
shall be entitled as such, as a matter of right or otherwise, to subscribe for
or purchase any part of any new or additional issue of equity or debt of any
class or series whatsoever, of the Corporation, or of securities convertible
into equity or debt of any class whatsoever, whether now or hereafter
authorized, or whether issued for cash or other consideration or by way of a
dividend.
ARTICLE VII
BOARD OF DIRECTORS
DIRECTORS. The business and affairs of the Corporation shall be managed
by or under the direction of a Board of Directors. The current number of
directors of the Corporation is five (5). The names of the current members of
the Board of Directors of the Corporation are: Robert G. Hecht, Richard L.
Posen, Harry F. Radcliffe, Michael E. Peppel and Thomas C. Winstel. The business
address of each member of the Board of Directors of the Corporation is 4750
Hempstead Station Drive, Dayton, Ohio 45429.
Except as otherwise fixed pursuant to the provisions of Article V
hereof relating to the rights of the holders of any class or series of stock
having a preference over the Common Stock as to dividends or upon liquidation to
elect additional directors, the number of directors shall be determined by
resolution of the majority of the entire Board of Directors as provided in the
Corporation's Bylaws, as may be amended from time to time, provided, however,
that the number of directors shall not be less than three nor greater than
twenty-one. Directors shall be elected by a plurality of the votes cast by the
holders of shares entitled to vote in the election of directors at a meeting of
stockholders at which a quorum is present. No holder of the capital stock of the
Corporation shall be permitted to cumulate his votes in the election of
directors.
A. CLASSIFICATION AND TERM. The Board of Directors, other than those
directors who may be elected by the holders of any class or series of stock
having preference over the Common Stock as to dividends or upon liquidation,
may, by resolution of the majority of the Whole Board of Directors and a
majority of the Continuing Directors then in office (as defined by Article X) be
divided into two or three classes as nearly equal in number as possible, each
class having not less than three directors, with one class to be elected
annually, as set forth in the Bylaws of the Corporation. The terms of all of the
current directors shall expire at the annual meeting of stockholders to be held
in 2001 and, unless the Board is divided into classes as permitted hereby, all
Directors shall be elected annually.
B. VACANCIES. Except as otherwise fixed pursuant to the provisions of
Article V hereof relating to the rights of the holders of any class or series of
stock having a preference over the Common Stock as to dividends or upon
liquidation to elect directors, any vacancy occurring in the Board of Directors,
whether due to an increase in the number of directors or otherwise, shall be
filled by a majority vote of the Whole Board of Directors and a majority of the
Continuing Directors then in office (as defined by Article X) though less than a
quorum of the Board of Directors, or by a sole remaining director, and any
director so chosen shall be elected until the next succeeding annual meeting of
stockholders, and until such director's successor shall have been elected and
qualified. Whenever the holders of any class or series of shares or group of
classes or series of shares are entitled to elect one or more directors by the
provisions of these Articles of Amendment, any vacancies in such directorships
and any newly created directorships of such class or series to be filled by
reason of increase in the number of such directors shall be filled by the
affirmative vote of a majority vote of the Whole Board of Directors and a
majority of the Continuing Directors then in office (as defined by Article X),
though less than a quorum of the Board of Directors, or by a sole remaining
director, and any director so chosen shall be elected until the next succeeding
annual meeting of stockholders such director's successor shall have been elected
and qualified. When the number of directors is changed, the Board of Directors
shall determine
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the class or classes to which the increased or decreased number of directors
shall be apportioned; provided that no decrease in the number of directors shall
shorten the term of any incumbent director.
C. REMOVAL. Subject to the rights of any class or series of stock
having preference over the Common Stock as to dividends or upon liquidation to
elect directors, any director (including persons elected by directors to fill
vacancies in the Board of Directors) may be removed from office (i) by the Board
of Directors, if by order of court he has been found to be of unsound mind, or
if he is adjudicated bankrupt, or if, within sixty (60) days from the date of
his election he does not qualify as a director by accepting in writing his
election or by acting at a meeting of directors, or (ii) with or without cause
by an affirmative vote of not less than two-thirds of the votes eligible to be
cast by stockholders at a duly constituted meeting of stockholders called
expressly for such purpose. Whenever the holders of any class or series of
capital stock of the Corporation are entitled to elect one or more directors by
the provisions of these Articles or any amendment or supplement thereto, only
the holders of shares of that class or series of capital stock shall be entitled
to vote for or against the removal of any director elected by the holders of the
shares of that class or series. At least thirty (30) days prior to such meeting
of stockholders, written notice shall be sent to the director whose removal will
be considered at the meeting.
D. NOMINATIONS OF DIRECTORS. Nominations of candidates for election as
directors of the Corporation at any annual meeting of stockholders may be made
(i) by, or at the direction of, a majority of the Board of Directors, or (ii) by
any stockholder entitled to vote at such annual meeting. Only persons nominated
in accordance with the procedures set forth in this Article VII.D. shall be
eligible for election as directors at an annual meeting. Ballots bearing the
names of all the persons who have been nominated for election as directors at an
annual meeting in accordance with the procedures set forth in this Article
VII.D. shall be provided for use at the annual meeting.
Subject to the rights of the holders of any class or series of stock
having a preference over the Common Stock as to dividends or upon liquidation,
nominations, other than those made by or at the direction of the Board of
Directors, shall be made pursuant to timely notice in writing to the Secretary
of the Corporation as set forth in this Article VII.D. To be timely, a
stockholder's notice shall be delivered to, or mailed and received at, the
principal office of the Corporation not less than (i) with respect to an
election to be held at any annual meeting of stockholders of the Corporation,
(a) for the first such annual meeting after the filing of these Articles the
close of business on the tenth day following the date on which notice of such
meeting is first given to stockholders, and (b) thereafter, sixty (60) days
prior to the anniversary date of the mailing of proxy materials by the
Corporation in connection with the immediately preceding annual meeting of
stockholders of the Corporation; and (ii) with respect to a special meeting of
stockholders for the election of directors, the close of business on the tenth
day following the date on which notice of such meeting is first given to
stockholders. Such stockholder's notice shall set forth (a) as to each person
whom the stockholder proposes to nominate for election or re-election as a
director and as to the stockholder giving the notice (i) the name, age, business
address and residence address of such person, (ii) the principal occupation or
employment of such person, (iii) the class and number of shares of Corporation
stock which are beneficially owned by such person on the date of such
stockholder notice, and (iv) any other information relating to such person that
is required to be disclosed in solicitations of proxies with respect to nominees
for election as directors pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), including, but not
limited to, information required to be disclosed by Items 4, 5, 6 and 7 of
Schedule 14A (or any successors of such items); and (b) as to the stockholder
giving the notice (i) the name and address, as they appear on the Corporation's
books, of such stockholder and any other stockholders known by such stockholder
to be supporting such nominees and (ii) the class and number of shares of
Corporation stock which are beneficially owned by such stockholder on the date
of such stockholder notice and, to the extent known, by any other stockholders
known by such stockholder to be supporting such nominees on the date of such
stockholder notice. At the request of the Board of Directors, any person
nominated by, or at the direction of, the Board for election as a director at an
annual or special meeting of stockholders shall furnish to the Secretary of the
Corporation that information required to be set forth in a stockholder's notice
of nomination which pertains to the nominee.
The Board of Directors may reject any nomination by a stockholder not
timely made in accordance with the requirements of this Article VII.D. If the
Board of Directors, or a designated committee thereof, determines that the
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information provided in a stockholder's notice does not satisfy the
informational requirements of this Article VII.D. in any material respect, the
Secretary of the Corporation shall promptly notify such stockholder of the
deficiency in the notice. The stockholder shall have an opportunity to cure the
deficiency by providing additional information to the Secretary within such
period of time, not to exceed five (5) days from the date such deficiency notice
is given to the stockholder, as the Board of Directors or such committee thereof
shall reasonably determine. If the deficiency is not cured within such period,
or if the Board of Directors or such committee thereof reasonably determines
that the additional information provided by the stockholder, together with
information previously provided, does not satisfy the requirements of this
Article VII.D. in any material respect, then the Board of Directors may reject
such stockholder's nomination. The Secretary of the Corporation shall notify a
stockholder in writing whether his nomination has been made in accordance with
the time and informational requirements of this Article VII.D. Notwithstanding
the procedures set forth in this paragraph, if neither the Board of Directors
nor such committee thereof makes a determination as to the validity of any
nominations by a stockholder, the presiding officer of the annual meeting shall
determine and declare at the annual meeting whether the nomination was made in
accordance with the terms of this Article VII.D. If the presiding officer
determines that a nomination was made in accordance with the terms of this
Article VII.D., he shall so declare at the annual meeting and ballots shall be
provided for use at the meeting with respect to such nominee. If the presiding
officer determines that a nomination was not made in accordance with the terms
of this Article VII.D., he shall so declare at the annual meeting and the
defective nomination shall be disregarded.
Notwithstanding the foregoing, and except as otherwise required by law
or by further articles of amendment of these Articles, whenever the holders of
any one or more series of Preferred Stock shall have the right, voting
separately as a class, to elect one or more directors of the Corporation, the
provisions of this Article VII.D. shall not apply with respect to the director
or directors elected by such holders of Preferred Stock.
E. DISCHARGE OF DUTIES. In discharging the duties of their respective
positions, the Board of Directors, committees of the Board and individual
directors shall, in considering the best interests of the Corporation, consider
the effects of any action upon the Corporation's stockholders, employees,
suppliers, creditors, customers, the economy of the United States of America,
the communities in which offices or other establishments of the Corporation or
any subsidiary are located, the long-term as well the short-term interests of
the Corporation and its stockholders, including the possibility that these
interests may be best served by the continued independence of the Corporation,
and all other pertinent factors.
ARTICLE VIII
INDEMNIFICATION, ETC. OF OFFICERS, DIRECTORS, EMPLOYEES AND
AGENTS
A. LIMITATION OF LIABILITY. The personal liability of the directors and
officers of the Corporation for monetary damages shall be eliminated to the
fullest extent permitted by the Maryland General Corporation Law as it exists on
the effective date of this Certificate of Incorporation or as such law may be
thereafter in effect. No director who has performed his or her duties in
accordance with the standard set forth in Section 2-405.1 of the MGCL (or any
successor provision thereto) shall be personally liable to the Corporation or
its stockholders for monetary damages for any act or omission by such director
as a director; provided that a director's liability shall not be limited or
eliminated to the extent that: (i) it is proved that the director actually
received an improper benefit or profit in money, property or services for the
amount of the benefit or profit in money, property or services actually
received; or (ii) a judgment or other final adjudication adverse to the director
is entered in a proceeding based on a finding in the proceeding that the
director's action, or failure to act, was the result of active and deliberate
dishonesty and was material to the cause of action adjudicated in the
proceeding. No amendment, modification or repeal of this Article VII shall
adversely affect the rights provided hereby with respect to any claim, issue or
matter in any proceeding that is based in any respect on any alleged action or
failure to act prior to such amendment, modification or repeal.
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B. INDEMNIFICATION. The Corporation 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,
arbitrative or investigative, by reason of the fact that such person is or was a
director, trustee, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, trustee, officer,
employee, member, manager or agent of another corporation, domestic or foreign,
nonprofit or for profit, a limited liability company, partnership, joint
venture, trust or other enterprise or employee benefit plan, against liability
and expenses (including court costs and attorney's fees), judgments, fines,
excise taxes and amounts paid in satisfaction, settlement or compromise actually
and reasonably incurred by such person in connection with such action, suit or
proceeding to the full extent authorized by Section 2-418 of the MGCL or any
successor provision thereto.
C. ADVANCEMENT OF EXPENSES. Reasonable expenses incurred by a director,
officer, employee or agent of the Corporation in defending an action, suit or
proceeding described in Article VIII.B. shall be paid by the Corporation as they
are incurred, in advance of the final disposition of such action, suit or
proceeding, as authorized by the Board of Directors only upon receipt of written
affirmation by or on behalf of such person in which he agrees to do both of the
following: (i) repay such amount if it is proved by clear and convincing
evidence in a court of competent jurisdiction that his action or failure to act
involved an act or omission undertaken with the deliberate intent to cause
injury to the Corporation or undertaken with reckless disregard for the best
interests of the Corporation, and (ii) reasonably cooperate with the Corporation
concerning the action, suit or proceeding.
D. OTHER RIGHTS AND REMEDIES. The indemnification provided by this
Article VIII shall not be deemed to exclude any other rights to which those
seeking indemnification or advancement of expenses may be entitled under the
Corporation's Articles, any insurance or other agreement, trust fund, letter of
credit, surety bond, vote of stockholders or disinterested directors or
otherwise, both as to actions in their official capacity and as to actions in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee, member, manager or agent and
shall inure to the benefit of the heirs, executors and administrators of such
person; provided that no indemnification shall be made to or on behalf of an
individual in respect of any of the following: (i) any claim, issue, or matter
as to which such person is adjudged to be liable for negligence or misconduct in
the performance of his duty to the Corporation unless, and only to the extent
that, a court of competent jurisdiction determines that, despite the
adjudication of liability, but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses as
the court shall deem proper; or (ii) any action or suit in which the only
liability asserted against a director is pursuant to Section 2-312 of the MGCL
or any successor thereto.
E. INSURANCE. Upon resolution passed by the Board of Directors, the
Corporation may purchase and maintain insurance on behalf of any person who is
or was a director, officer, employee, or agent of the Corporation, or was
serving at the request of the Corporation as a director, officer, employee,
member, manager or agent of another corporation, domestic or foreign, nonprofit
or for profit, a limited liability company, partnership, joint venture, trust or
another enterprise or employee benefit plan, against any liability asserted
against him or incurred by him in any such capacity, or arising out of his
status, whether or not the Corporation would have the power to indemnify him
against such liability under the provisions of this Article or the MGCL.
F. MODIFICATION. The duties of the Corporation to indemnify and to
advance expenses to a director, officer, employee or agent provided in this
Article VIII shall be in the nature of a contract between the Corporation and
each such director, officer, employee or agent and no amendment or repeal of any
provision of this Article VIII shall alter, to the detriment of such director,
officer, employee or agent, the right of such person to the advance of expenses
or indemnification related to a claim based on an act or failure to act which
took place prior to such amendment or repeal.
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ARTICLE IX
MEETINGS OF STOCKHOLDERS AND STOCKHOLDER PROPOSALS
A. SPECIAL MEETINGS OF STOCKHOLDERS. Except as otherwise required by
law and subject to the rights of the holders of any class or series of Preferred
Stock, special meetings of the stockholders of the Corporation may be called
only by (i) the Board of Directors pursuant to a resolution approved by the
affirmative vote of a majority of the Whole Board of Directors and a majority of
the Continuing Directors then in office (as defined by Article X), (ii) the
Chairman of the Board, (iii) the President, or (iv) the holders of not less than
50 percent of all votes outstanding and entitled to be cast on any issue
proposed to be considered at such special meeting. A request for a special
meeting of stockholders by stockholders of the Corporation shall state the
purpose of the meeting and the matters proposed to be acted on. The Secretary of
the Corporation shall inform the stockholders who make the request for the
special meeting of the reasonably estimated cost of preparing and mailing a
notice of the meeting and on payment of such costs to the Corporation, the
Secretary shall notify each stockholder entitled to notice of the special
meeting.
B. ACTION WITHOUT A MEETING. Any action permitted to be taken by the
stockholders at a meeting may be taken without a meeting if consent in writing
setting forth the action so taken shall be signed by all of the stockholders who
would be entitled to vote at a meeting for such purpose and a written waiver of
any right to dissent signed by each stockholder entitled to notice of the
meeting but not entitled to vote at it, and both are filed with the Secretary of
the Corporation as part of the corporate records.
C. STOCKHOLDER PROPOSALS. At an annual meeting of stockholders, only
such business shall be conducted, and only such proposals shall be acted upon,
as shall have been brought before the annual meeting by, or at the direction of,
(a) the Board of Directors or (b) any stockholder of the Corporation who
complies with all the requirements set forth in this Article IX.C.
Proposals, other than those made by or at the direction of the Board of
Directors, shall be made pursuant to timely notice in writing to the Secretary
of the Corporation as set forth in this Article IX.C. For stockholder proposals
to be included in the Corporation's proxy materials, the stockholder must comply
with all the timing and informational requirements of Rule 14a-8 of the Exchange
Act (or any successor regulation). With respect to stockholder proposals to be
considered at the annual meeting of stockholders but not included in the
Corporation's proxy materials, the stockholder's notice shall be delivered to,
or mailed and received at, the principal office of the Corporation (a) for the
first such annual meeting after the filing of these Articles of Amendment, at
the close of business on the tenth day following the date on which notice of
such meeting is first given to stock-holders, and (b) thereafter not less than
sixty (60) days prior to the anniversary date of the mailing of proxy materials
by the Corporation in connection with the immediately preceding annual meeting
of stockholders of the Corporation. Such stockholder's notice shall set forth as
to each matter the stockholder proposes to bring before the annual meeting (a) a
brief description of the proposal desired to be brought before the annual
meeting and the reasons for conducting such business at the annual meeting, (b)
the name and address, as they appear on the Corporation's books, of the
stockholder proposing such business and, to the extent known, any other
stockholders known by such stockholder to be supporting such proposal, (c) the
class and number of shares of the Corporation stock which are beneficially owned
by the stockholder on the date of such stockholder notice and, to the extent
known, by any other stockholders known by such stockholder to be supporting such
proposal on the date of such stockholder notice, and (d) any financial interest
of the stockholder in such proposal (other than interests which all stockholders
would have).
The Board of Directors may reject any stockholder proposal not timely
made in accordance with the terms of this Article IX.C. If the Board of
Directors, or a designated committee thereof, determines that the information
provided in a stockholder's notice does not satisfy the informational
requirements of this Article IX.C. in any material respect, the Secretary of the
Corporation shall promptly notify such stockholder of the deficiency in the
notice. The stockholder shall have an opportunity to cure the deficiency by
providing additional information to the Secretary within such period of time,
not to exceed five (5) days from the date such deficiency notice is given to the
stockholder, as the Board of
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Directors or such committee thereof shall reasonably determine. If the
deficiency is not cured within such period, or if the Board of Directors or such
committee thereof determines that the additional information provided by the
stockholder, together with information previously provided, does not satisfy the
requirements of this Article IX.C. in any material respect, then the Board of
Directors may reject such stockholder's proposal. The Secretary of the
Corporation shall notify a stockholder in writing whether his proposal has been
made in accordance with the time and informational requirements of this Article
IX.C. Notwithstanding the procedures set forth in this paragraph, if neither the
Board of Directors nor such committee thereof makes a determination as to the
validity of any stockholder proposal, the presiding officer of the annual
meeting shall determine and declare at the annual meeting whether the
stockholder proposal was made in accordance with the terms of this Article IX.C.
If the presiding officer determines that a stockholder proposal was made in
accordance with the terms of this Article IX.C., he shall so declare at the
annual meeting and ballots shall be provided for use at the meeting with respect
to any such proposal. If the presiding officer determines that a stockholder
proposal was not made in accordance with the terms of this Article IX.C., he
shall so declare at the annual meeting and any such proposal shall not be acted
upon at the annual meeting.
This provision shall not prevent the consideration and approval or
disapproval at the annual meeting of reports of officers, directors and
committees of the Board of Directors, but in connection with such reports, no
new business shall be acted upon at such annual meeting unless stated, filed and
received as herein provided.
ARTICLE X
CERTAIN BUSINESS COMBINATIONS AND ACQUISITIONS OF STOCK
A. DEFINITIONS AND RELATED MATTERS.
(a) AFFILIATE. An "Affiliate" of, or a Person "affiliated
with," a specified Person means a Person that directly, or indirectly through
one or more intermediaries, controls, or is controlled by, or is under common
control with, the Person specified.
(b) ASSOCIATE. The term "Associate" when used to indicate a
relationship with any Person means:
(i) Any corporation or organization (other than the
Corporation or a Subsidiary of the Corporation) of which such
Person is an officer or partner or is, directly or indirectly,
the beneficial owner of 10 percent or more of any class of
equity securities;
(ii) Any trust or other estate in which such Person
has a 10 percent or greater beneficial interest or as to which
such Person serves as trustee or in a similar fiduciary
capacity;
(iii) Any relative or spouse of such Person, or any
relative of such spouse who has the same home as such Person;
or
(iv) Any investment company registered under the
Investment Company Act of 1940 for which such Person or any
Affiliate or Associate of such Person serves as investment
advisor.
(c) BENEFICIAL OWNER. A Person shall be considered the
"Beneficial Owner" of any shares of stock (whether or not owned of record):
(i) With respect to which such Person or any
Affiliate or Associate of such Person directly or indirectly
has or shares (1) voting power, including the power to vote or
to direct the voting of such shares of stock and/or (2)
investment power, including the power to dispose of or to
direct the disposition of such shares of stock;
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(ii) Which such Person or any Affiliate or Associate
of such Person has (1) the right to acquire (whether such
right is exercisable immediately or only after the passage of
time) pursuant to any agreement, arrangement or understanding
or upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, and/or (2) the right to
vote pursuant to any agreement, arrangement or understanding
(whether such right is exercisable immediately or only after
the passage of time); or
(iii) Which are Beneficially Owned within the meaning
of (i) or (ii) of this Article X.A.(c) by any other Person
with which such first-mentioned Person or any of its
Affiliates or Associates has any agreement, arrangement or
understanding, written or oral, with respect to acquiring,
holding, voting or disposing of any shares of stock of the
Corporation or any Subsidiary of the Corporation or acquiring,
holding or disposing of all or substantially all, or any
Substantial Part, of the assets or businesses of the
Corporation or a Subsidiary of the Corporation.
For the purpose only of determining whether a Person is the Beneficial
Owner of a percentage specified in this Article X of the outstanding Voting
Shares, such shares shall be deemed to include any Voting Shares which may be
issuable pursuant to any agreement, arrangement or understanding or upon the
exercise of conversion rights, exchange rights, warrants, options or otherwise
and which are deemed to be Beneficially Owned by such Person pursuant to the
foregoing provisions of this Article X.A.(c).
(d) BUSINESS COMBINATION. A "Business Combination" means:
(i) The sale, exchange, lease, transfer or other
disposition to or with a Related Person or any Affiliate or
Associate of such Related Person by the Corporation or any of
its Subsidiaries (in a single transaction or a series of
related transactions) of all or substantially all, or any
Substantial Part, of its or their assets or businesses
(including, without limitation, any securities issued by a
Subsidiary);
(ii) The purchase, exchange, lease or other
acquisition by the Corporation or any of its Subsidiaries (in
a single transaction or a series of related transactions) of
all or substantially all, or any Substantial Part, of the
assets or business of a Related Person or any Affiliate or
Associate of such Related Person;
(iii) Any merger or consolidation of the Corporation
or any Subsidiary thereof into or with a Related Person or any
Affiliate or Associate of such Related Person or into or with
another Person which, after such merger or consolidation,
would be an Affiliate or an Associate of a Related Person, in
each case irrespective of which Person is the surviving entity
in such merger or consolidation;
(iv) Any reclassification of securities,
recapitalization or other transaction (other than a redemption
in accordance with the terms of the security redeemed) which
has the effect, directly or indirectly, of increasing the
proportionate amount of Voting Shares of the Corporation or
any Subsidiary thereof which are Beneficially Owned by a
Related Person, or any partial or complete liquidation,
spinoff or splitup of the Corporation or any Subsidiary
thereof; provided, however, that this Article X.A.(d)(iv)
shall not relate to any transaction of the types specified
herein that have been approved by the affirmative vote of at
least two-thirds of the Whole Board of Directors and a
majority of the Continuing Directors; or
(v) The acquisition upon the issuance thereof of
Beneficial Ownership by a Related Person of Voting Shares or
securities convertible into Voting Shares or any voting
securities or securities convertible into voting securities of
any Subsidiary of the Corporation, or the acquisition
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upon the issuance thereof of Beneficial Ownership by a Related
Person of any rights, warrants or options to acquire any of
the foregoing or any combination of the foregoing Voting
Shares or voting securities of a Subsidiary.
As used in this definition, a "series of related transactions" shall be
deemed to include not only a series of transactions with the same Related Person
but also a series of separate transactions with a Related Person or any
Affiliate or Associate of such Related Person.
Anything in this definition to the contrary notwithstanding, this
definition shall not be deemed to include any transaction of the type set forth
in Article X.A.(d)(i) through X.A.(d)(iii) between or among any two or more
Subsidiaries of the Corporation or the Corporation and one or more Subsidiaries
of the Corporation if such transaction has been approved by the affirmative vote
of at least two-thirds of the Whole Board of Directors and a majority of the
Continuing Directors on or prior to the Date of Determination.
(e) CONTINUING DIRECTOR. A "Continuing Director" shall mean:
(i) Each of the present directors of the Corporation
as set forth in Article VII, whether or not such person is a
Related Person or an Affiliate or Associate of a Related
Person, except that such designation shall in no way be deemed
to affect or change or diminish the fiduciary duties of such
person to the Corporation;
(ii) An individual who is unaffiliated with a Related
Person and who was a member of the Board of Directors prior to
the time that a Related Person acquired 10% or more of the
Voting Shares; or,
(iii) An individual who is unaffiliated with a
Related Person and who is designated before his or her initial
election as a Continuing Director by a majority of the then
Continuing Directors.
(f) DATE OF DETERMINATION. The term "Date of Determination"
means:
(i) The date on which a binding agreement (except for
the fulfillment of conditions precedent, including, without
limitation, votes of stockholders to approve such transaction)
is entered into by the Corporation, as authorized by its Board
of Directors, and another Person providing for any Business
Combination; or,
(ii) If such an agreement as referred to in Article
X.A.(f)(i) above is amended so as to make it less favorable to
the Corporation and its stockholders, the date on which such
amendment is approved by the Board of Directors of the
Corporation; or,
(iii) In cases where neither Article X.A.(f)(i) nor
(ii) shall be applicable, the record date for the
determination of stockholders of the Corporation entitled to
notice of and to vote upon the transaction in question.
A majority of the Continuing Directors shall have the power and duty to
determine the Date of Determination as to any transaction under this Article X.
Any such determination shall be conclusive and binding for all purposes of this
Article X.
(g) FAIR MARKET VALUE. The term "Fair Market Value" shall
mean:
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(i) In the case of stock, the highest closing sale
price during the 30-day period immediately preceding the date
in question of a share of such stock on the Composite Tape for
New York Stock Exchange - Listed Stocks, or, if such stock is
not quoted on the Composite Tape, on the New York Stock
Exchange or the American Stock Exchange, or, if such stock is
not listed on such exchanges, on the principal United States
securities exchange registered under the Exchange Act on which
such shares are listed, or, if such shares are not listed on
any such exchange, the highest closing price with respect to a
share of such stock during the 30-day period preceding the
date in question on the National Market System of the National
Association of Securities Dealers Automated Quotations
("NASDAQ") System, or, if not listed on the National Market
System, the highest mean of the closing bid and asked
quotations on the NASDAQ System during such 30-day period or
any system 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 Continuing Directors
in good faith; and
(ii) In the case of property other than cash or
stock, the fair market value of such property on the date in
question as determined by a majority of the Continuing
Directors in good faith.
(h) INDEPENDENT MAJORITY OF STOCKHOLDERS. The term
"Independent Majority of Stockholders" shall mean the holders of a majority of
the outstanding Voting Shares that are not Beneficially Owned or controlled,
directly or indirectly, by a Related Person.
(i) OFFER. The term "Offer" shall mean every offer to buy or
otherwise acquire, solicitation of an offer to sell, tender offer for, or
request or invitation for tenders of, a security or interest in a security for
value; PROVIDED that the term "Offer" shall not include: (a) inquiries directed
solely to the management of the Corporation and not intended to be communicated
to stockholders which are designed to elicit an indication of management's
receptivity to the basic structure of a potential acquisition with respect to
the amount of cash and/or securities, manner of acquisition and formula for
determining price, or (b) non-binding expressions of understanding or letters of
intent with the management of the Corporation regarding the basic structure of a
potential acquisition with respect to the amount of cash and/or securities,
manner of acquisition and formula for determining price.
(j) PERSON. The term "Person" shall mean any person,
partnership, corporation, or group or other entity (other than the Corporation,
any Subsidiary of the Corporation or a trustee holding stock for the benefit of
employees of the Corporation or its Subsidiaries, or any one of them, pursuant
to one or more employee benefit plans or arrangements). When two or more Persons
act as a partnership, limited partnership, syndicate, association or other group
for the purpose of acquiring, holding or disposing of shares of stock, such
partnership, syndicate, association or group shall be deemed a "Person."
(k) RELATED PERSON. The term "Related Person" shall mean any
Person who or which is (a) the Beneficial Owner, as of the Date of
Determination, or immediately prior to the consummation of a Business
Combination, of 10% or more of the Voting Shares; or (b) an Affiliate of the
Corporation and at any time within the two-year period immediately prior to the
announcement of a Business Combination was the Beneficial Owner, directly or
indirectly, of 10% or more of the then outstanding Voting Shares; or (c) an
assignee of or has otherwise succeeded to any Voting Shares which were at any
time within the two-year period immediately prior to the announcement of a
Business Combination Beneficially Owned by any Related Person, if such
assignment or succession shall have occurred in the course of a transaction or
series of transactions not involving a public offering within the meaning of the
Securities Act of 1933.
(l) SUBSTANTIAL PART. The term "Substantial Part" as used with
reference to the assets of the Corporation, of any Subsidiary or of any Related
Person means assets having a value of more than 10% of the total consolidated
assets of the Corporation and its Subsidiaries as of the end of the
Corporation's most recent fiscal year ending prior to the time the determination
is being made.
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(m) SUBSIDIARY. The term "Subsidiary" shall mean any
corporation or other entity of which the Person in question owns not less than
50 percent of any class of equity securities, directly or indirectly.
(n) VOTING SHARES. The term "Voting Shares" shall mean shares
of the Corporation entitled to vote generally in the election of directors.
(o) WHOLE BOARD OF DIRECTORS. The term "Whole Board of
Directors" shall mean the total number of directors which the Corporation would
have if there were no vacancies.
(p) CERTAIN DETERMINATIONS WITH RESPECT TO ARTICLE X.
(i) A majority of the Continuing Directors shall have
the power to determine for the purposes of this Article X, on
the basis of information known to them: (1) the number of
Voting Shares of which any Person is the Beneficial Owner, (2)
whether a Person is an Affiliate or Associate of another, (3)
whether a Person has an agreement, arrangement or
understanding with another as to the matters referred to in
the definition of "Beneficial Owner" as hereinabove defined,
(4) whether the assets subject to any Business Combination
constitute a "Substantial Part" as hereinabove defined, (5)
whether two or more transactions constitute a "series of
related transactions" as hereinabove defined, (6) any matters
referred to in Article X.A.(p)(ii) below, and (7) such other
matters with respect to which a determination is required
under this Article X.
(ii) A Related Person shall be deemed to have
acquired a share of the Corporation at the time when such
Related Person became a Beneficial Owner thereof. With respect
to shares owned by Affiliates, Associates or other Persons
whose ownership is attributable to a Related Person under the
foregoing definition of Beneficial Owner, if the price paid by
such Related Person for such shares is not determinable, the
price so paid shall be deemed to be the higher of (1) the
price paid upon acquisition thereof by the Affiliate,
Associate or other Person or (2) the market price of the
shares in question (as determined by a majority of the
Continuing Directors) at the time when the Related Person
became the Beneficial Owner thereof.
(q) FIDUCIARY OBLIGATIONS. Nothing contained in this Article X
shall be construed to relieve any Related Person from any fiduciary obligation
imposed by law.
B. APPROVAL OF BUSINESS COMBINATION.
(a) Except as provided in Article X.B.(b), neither the
Corporation nor any of its Subsidiaries shall become party to any Business
Combination without the prior affirmative vote at a meeting of the Corporation's
stockholders of:
(i) The holders of not less than 80 percent of the
outstanding Voting Shares, voting separately as a class, and
(ii) An Independent Majority of Stockholders.
Such favorable votes shall be in addition to any stockholder vote which
would be required without reference to this Article X.B.(a) and shall be
required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified by law or otherwise.
(b) The provisions of Article X.B.(a) shall not apply to a
particular Business Combination, and such Business Combination shall require
only such stockholder vote (if any) as would be required without reference to
this Article X.B., if all of the conditions set forth in subparagraphs (i)
through (vii) below are satisfied:
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(i) The ratio of (1) the aggregate amount of the cash
and the Fair Market Value of the other consideration to be
received per share of Common Stock (as defined in Article V)
of the Corporation in such Business Combination by holders of
Common Stock other than the Related Person involved in such
Business Combination, to (2) the market price per share of the
Common Stock immediately prior to the announcement of the
proposed Business Combination, is at least as great as the
ratio of (x) the highest per share price (including brokerage
commissions, transfer taxes and soliciting dealers' fees)
which such Related Person has theretofore paid in acquiring
any Common Stock prior to such Business Combination, to (y)
the market price per share of Common Stock immediately prior
to the initial acquisition by such Related Person of any
shares of Common Stock; and
(ii) The aggregate amount of the cash and the Fair
Market Value of other consideration to be received per share
of Common Stock in such Business Combination by holders of
Common Stock, other than the Related Person involved in such
Business Combination, is not less than the highest per share
price (including brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by such Related Person in
acquiring any of its holdings of Common Stock; and
(iii) If applicable, the ratio of (1) the aggregate
amount of the cash and the Fair Market Value of other
consideration to be received per share of Preferred Stock (as
defined in Article V) of the Corporation in such Business
Combination by holders of Preferred Stock other than the
Related Person involved in such Business Combination, to (2)
the market price per share of the Preferred Stock immediately
prior to the announcement of the proposed Business
Combination, is at least as great as the ratio of (x) the
highest per share price (including brokerage commissions,
transfer taxes and soliciting dealers' fees) which such
Related Person has theretofore paid in acquiring any Preferred
Stock prior to such Business Combination to (y) the market
price per share of Preferred Stock immediately prior to the
initial acquisition by such Related Person of any shares of
Preferred Stock; and
(iv) If applicable, the aggregate amount of the cash
and the Fair Market Value of other consideration to be
received per share of Preferred Stock in such Business
Combination by holders of Preferred Stock, other than the
Related Person involved in such Business Combination, is not
less than the highest per share price (including brokerage
commissions, transfer taxes and soliciting dealers' fees) paid
by such Related Person in acquiring any of its holdings of
Preferred Stock; and
(v) The consideration (if any) to be received in such
Business Combination by holders of stock other than the
Related Person (whether Common Stock or Preferred Stock)
involved shall, except to the extent that a stockholder agrees
otherwise as to all or part of the shares which he owns, be in
the same form and of the same kind as the consideration paid
by the Related Person in acquiring Common Stock already owned
by it; and
(vi) After such Related Person became a Related
Person and prior to the consummation of such Business
Combination:
(1) such Related Person shall vote his
shares in such a manner as to cause, to the extent
necessary and within his power as a stockholder, the
Board of Directors of the Corporation to include at
all times representation by Continuing Directors
proportionate to the ratio that the number of Voting
Shares of the Corporation from time to time owned by
stockholders who are not Related Persons bears to all
Voting Shares of the Corporation outstanding at the
time in question (with a Continuing Director to
occupy any resulting fractional position among the
directors);
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(2) such Related Person shall not have
acquired from the Corporation, directly or
indirectly, any shares of the Corporation (except (x)
upon conversion of convertible securities acquired by
it prior to becoming a Related Person or (y) as a
result of a pro rata stock dividend, stock split or
division of shares or (z) in a transaction which
satisfied all applicable requirements of this Article
X);
(3) such Related Person shall not have
acquired any additional Voting Shares of the
Corporation or securities convertible into or
exchangeable for Voting Shares except as a part of
the transaction which resulted in such Related Person
becoming a Related Person;
(4) such Related Person shall not have
(x) received the benefit, directly or indirectly
(except proportionately as a stockholder), of any
loans, advances, guarantees, pledges or other
financial assistance or tax credits provided by the
Corporation or any Subsidiary, or (y) made any major
change in the Corporation's business or equity
capital structure or entered into any contract,
arrangement or understanding with the Corporation
except any such change, contract, arrangement or
understanding as may have been approved by the
favorable vote of not less than a majority of the
Whole Board of Directors and a majority of the
Continuing Directors of the Corporation; and
(5) except as approved by a majority of
the Whole Board of Directors and a majority of the
Continuing Directors, there shall have been: (x) no
failure to declare and pay at the regular date
therefor any dividends (whether or not cumulative) on
any outstanding Preferred Stock; (y) no reduction in
the annual rate of dividends paid on the Common Stock
(except as necessary to reflect any subdivision of
the Common Stock); and (z) an increase in such annual
rate of dividends as necessary to reflect any
reclassification (including any reverse stock split),
recapitalization, reorganization or any similar
transaction which has the effect of reducing the
number of outstanding shares of the stock; and
(vii) A proxy statement complying with the
requirements under the Exchange Act shall have been mailed to
all holders of Voting Shares for the purpose of soliciting
stockholder approval of such Business Combination. Such proxy
statement is not required to be filed with or approved by the
Securities and Exchange Commission unless otherwise required
by law. Such proxy statement shall contain at the front
thereof, in a prominent place, any recommendations as to the
advisability (or inadvisability) of the Business Combination
which the Continuing Directors, or any of them, may have
furnished in writing and, if deemed advisable by a majority of
the Continuing Directors, an opinion of a reputable investment
banking firm as to the fairness (or lack of fairness) of the
terms of such Business Combination from the point of view of
the holders of Voting Shares other than any Related Person
(such investment banking firm to be selected by a majority of
the Continuing Directors, to be furnished with all information
it reasonably requests, and to be paid a reasonable fee for
its services upon receipt by the Corporation of such opinion).
(c) For purposes of Article X.B.(b)(i) through X.B.(b)(iv)
hereof, in the event of a Business Combination upon consummation of which the
Corporation would be the surviving corporation or company or would continue to
exist (unless it is provided, contemplated or intended that as part of such
Business Combination or within one year after consummation thereof a plan of
liquidation or dissolution of the Corporation will be effected), the term "other
consideration to be received" shall include (without limitation) Common Stock
retained by the stockholders of the Corporation other than Related Persons who
are parties to such Business Combination.
(d) The provisions of this Article X.B. shall not apply to (i)
any Business Combination approved by two-thirds of the Whole Board of Directors
of the Corporation at a time prior to the acquisition of 10 percent or more
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of the outstanding Voting Shares of the Corporation by the Related Person, or
(ii) any Business Combination approved by two-thirds of the Whole Board of
Directors and a majority of the Continuing Directors after such acquisition.
C. EVALUATION OF BUSINESS COMBINATIONS, ETC. In connection with the
exercise of its judgment in determining what is in the best interest of the
Corporation and its stockholders when evaluating a Business Combination or a
proposal by another Person or Persons to make a Business Combination or a tender
or exchange offer, the Board of Directors of the Corporation shall, in addition
to considering the adequacy of the amount to be paid in connection with any such
transaction, consider all of the following factors and any other factors which
it deems relevant: (i) the social and economic effects of the transaction on the
Corporation and its Subsidiaries and their respective employees, customers,
creditors and other elements of the communities in which the Corporation and its
Subsidiaries operate or are located; (ii) the business and financial condition
and earnings prospects of the acquiring Person or Persons, including, but not
limited to, debt service and other existing or likely financial obligations of
the acquiring Person or Persons, and the possible effect of such conditions upon
the Corporation and its Subsidiaries and the elements of the communities in
which the Corporation and its Subsidiaries operate or are located; and (iii) the
competence, experience and integrity of the acquiring Person or Persons and its
or their management.
D. VOTING RIGHTS OF CERTAIN CONTROL SHARES. The Corporation shall be
governed by Section3-702 of the MGCL "Voting Rights," or its successor, and
hereby adopts such language and provisions and incorporates the same herein by
reference as though it were written out herein in full.
E. AMENDMENTS, ETC. OF THIS ARTICLE X. Notwithstanding any other
provisions of these Articles or the Bylaws of the Corporation (and
notwithstanding the fact that some lesser percentage may be specified by law,
these Articles or the Bylaws of the Corporation), this Article X shall not be
amended, altered, changed, or repealed without the affirmative vote of (i) the
holders of 80% or more of the outstanding Voting Shares, voting separately as a
class, and (ii) an Independent Majority of Stockholders; provided, however, that
this Article X.E. shall not apply to, and such vote shall not be required for,
any such amendment, change or repeal recommended to stockholders by the
favorable vote of not less than two-thirds of the Whole Board of Directors,
including a majority of the Continuing Directors, and any such amendment, change
or repeal so recommended shall require only the vote, if any, required under the
applicable provisions of the Act, these Articles and the Bylaws of the
Corporation.
F. MARYLAND BUSINESS COMBINATION STATUTE. Pursuant to a vote of the
stockholders of the Corporation and notwithstanding any contrary provision of
law, the Corporation has expressly elected, under Section 3-603(e)(iii) of the
MGCL, not to be governed by the provisions of Title 3, Subtitle 6, Section
3-601, ET SEQ. of the MGCL, as now or hereafter in force.
ARTICLE XI
AMENDMENT OF ARTICLES OF INCORPORATION AND REGULATIONS
A. ARTICLES OF INCORPORATION. The Corporation reserves the right to
amend, alter, change or repeal any provision contained in these Articles, in the
manner now or hereafter prescribed by law, and all rights conferred upon
stockholders herein are granted subject to this reservation. No amendment,
addition, alteration, change or repeal of these Articles shall be made unless it
is first approved by the Board of Directors of the Corporation pursuant to a
resolution adopted and declared advisable by the affirmative vote of a majority
of the directors then in office, and thereafter is approved, at an annual or
special meeting, by the holders of two-thirds of the shares of the Corporation
entitled to vote generally in an election of directors, voting together as a
single class, unless any class or series of shares is entitled to vote thereon
as a class, in which event the proposed amendment shall be adopted upon
receiving the affirmative vote of the holders of a majority of the shares within
each class or series of outstanding shares entitled to vote thereon as a class
and of at least two-thirds of the total outstanding shares entitled to vote
thereon, provided that, notwithstanding anything contained in these Articles to
the contrary, (i) the affirmative vote of the holders of at least 75 percent of
the shares of the Corporation entitled to vote generally in an election of
directors, voting together as a
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single class, unless any class or series of shares is entitled to vote thereon
as a class, in which event the proposed amendment shall be adopted upon
receiving the affirmative vote of the holders of 75 percent of the shares within
each class or series of outstanding shares entitled to vote thereon as a class
and of at least 75 percent of the total outstanding shares entitled to vote
thereon, shall be required to amend, adopt, alter, change or repeal any
provision inconsistent with Articles VI (relating to preemptive rights), VII
(relating to the Board of Directors), VIII (relating to indemnification), IX
(relating to meetings of stockholders), and this Article XI, and (ii) Article X
shall be amended in the manner specified in Article X.E.
B. BYLAWS. The stockholders may adopt, alter, amend or repeal the
Bylaws of the Corporation pursuant to Section 2-109 of the MGCL or any successor
thereto.
I, THE UNDERSIGNED, being the incorporator, for the purpose of forming
a corporation under the laws of the State of Maryland, do make, file and record
the Charter, do certify that the facts herein stated are true, and accordingly,
have hereto set my hand this day of May, 2000.
----------------------------------
Michael E. Peppel, Incorporator
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APPENDIX C
BYLAWS
OF
MCSi, INC.
ARTICLE I
OFFICES
The following Bylaws (the "Bylaws") of MCSi, Inc., Dayton, Ohio, were
duly adopted by the stockholders of the Corporation as of May 9, 2000:
1.1 PRINCIPAL OFFICE AND STATUTORY AGENT. The principal office of MCSi,
Inc. (the "Corporation") shall be located in the State of Ohio at such place as
may be fixed from time to time by the Board of Directors upon filing of such
notices as may be required by law, and the statutory agent shall have a business
office identical with such principal office.
1.2 OTHER OFFICES. The Corporation may have other offices within or
outside the State of Ohio at such place or places as the Board of Directors may
from time to time determine.
ARTICLE II
STOCKHOLDERS' MEETINGS
2.1 MEETING PLACE. All meetings of the stockholders shall be held at
the principal office of the Corporation, or at such other place within or
without the State of Ohio as shall be determined from time to time by the Board
of Directors, and the place at which any such meeting shall be held shall be
stated in the notice of the meeting.
2.2 ANNUAL MEETING TIME. The annual meeting of the stockholders for the
election of directors and for the transaction of such other business as may
properly come before the meeting shall be held each year on the first Monday of
the fourth month following the close of each fiscal year of the Corporation at
the hour of 10:00 a.m., if not a legal holiday, and if a legal holiday, then on
the next succeeding day not a legal holiday, at the same hour, or at such other
date and time as may be determined by the Board of Directors and stated in the
notice of such meeting.
2.3 ORGANIZATION. Each meeting of the stockholders shall be presided
over by the Chairman of the Board, or by the President, or if neither the
Chairman, nor the President is present, by a Vice President or such other
officer as designated by the Board of Directors. The Secretary, or in his or her
absence a temporary Secretary, shall act as secretary of each meeting of the
stockholders. In the absence of the Secretary and any temporary Secretary, the
chairman of the meeting may appoint any person present to act as secretary of
the meeting. The chairman of any meeting of the stockholders, unless prescribed
by law or unless the Chairman of the Board has otherwise determined, shall
determine the order of the business and the procedure at the meeting, including
such regulation of the manner of voting and the conduct of discussions as shall
be deemed appropriate by him in his sole discretion.
2.4 SPECIAL MEETINGS. Special meetings of the stockholders for any
purpose may be called at any time in the manner provided in the Corporation's
Articles of Incorporation, which are incorporated herein with the same effect as
if they were set forth herein.
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2.5 NOTICE.
(a) Notice of the time and place of the annual meeting of
stockholders shall be given by delivering personally, leaving at his or her
residence or usual place of business or by mailing to the stockholder's address
as it appears on the records of the Corporation a written or printed notice of
the same to each stockholder of record stating the place, day and hour of the
meeting, at least ten (10) days and not more than ninety (90) days prior to the
meeting, to each stockholder of record entitled to vote at such meeting and to
each other stockholder entitled to notice of said meeting.
(b) At least ten (10) days and not more than ninety (90) days
prior to the meeting, a written or printed notice of each special meeting of
stockholders, stating the place, day and hour of such meeting, and the purpose
or purposes for which the meeting is called, shall be either delivered
personally, left at his or her residence or principal place of business or
mailed to each stockholder of record entitled to vote at such meeting at such
stockholder's address as it appears on the records of the Corporation and to
each other stockholder entitled to notice of said meeting.
(c) A person entitled to notice of any meeting of stockholders
may waive such notice if he or she: (i) before or after the meeting signs a
waiver of notice which is filed with the records of the stockholders' meeting,
or (ii) is present at the meeting in person or by proxy.
(d) A meeting of stockholders, either annual or special,
convened on the date for which it was called may be adjourned from time to time
without further notice to a date not more than one hundred and twenty (120) days
after the original record date. When any stockholders' meeting, either annual or
special, is adjourned and if a new record date is fixed for an adjourned meeting
of stockholders, notice of the adjourned meeting shall be given as in the case
of an original meeting. It shall not be necessary to give any written notice of
the time and place of any meeting adjourned, unless a new record date is fixed
therefor, other than an announcement at the meeting at which such adjournment is
taken.
2.6 VOTING LIST. A complete list of the stockholders entitled to vote
at any meeting of stockholders, or any adjournment thereof, shall be made by the
Secretary, arranged in alphabetical order, with the address of and number of
shares registered in the name of each, which list shall be produced at any
meeting of stockholders for the examination of any stockholder, upon the request
of any stockholder at any meeting of stockholders. The Stock Ledger shall be the
only evidence as to who are the stockholders entitled to examine the Stock
Ledger, the voting list required by these Bylaws or the books of the
Corporation, or to vote in person or by proxy at any meeting of the
stockholders.
2.7 QUORUM; VOTING. Except as otherwise required by law:
(a) A quorum for the transaction of business at any annual or
special meeting of stockholders shall consist of stockholders representing,
either in person or by proxy, a majority of the outstanding capital stock of the
Corporation entitled to vote on that matter at such meeting, except as otherwise
provided by statute, the Articles of Incorporation (the "Articles") or these
Bylaws; but in the absence of such a quorum, the holders of a majority of the
shares represented at the meeting shall have the right successively to adjourn
the meeting to a specified date. At the adjourned meeting, the Corporation may
transact any business which might have been transacted at the original meeting.
The absence from any meeting of the number of shares required by law, the
Articles or these Bylaws for action upon one matter shall not prevent action at
such meeting upon any other matter or matters which may properly come before the
meeting, if the number of shares required in respect of such other matters shall
be present.
(b) With respect to any other matter other than the election
of directors, the votes of a majority of all votes cast at any properly called
meeting or adjourned meeting of stockholders at which a quorum, as defined
above, is present, shall be sufficient to approve any matter which properly
comes before the meeting, unless the proposition or question is one upon which
by express provisions of law or of the Articles or these Bylaws, a different
vote is
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required, in which case with express provision shall govern and establish the
number of votes required to determine such proposition or questions.
(c) Directors are to be elected by a plurality of votes cast
by the shares entitled to vote in the election at a meeting at which a quorum is
present. Stockholders shall not be permitted to cumulate their votes for the
election of directors. If, at any meeting of the stockholders, due to a vacancy
or vacancies or otherwise, directors of more than one class of the Board of
Directors are to be elected, each class of directors to be elected at the
meeting shall be elected in a separate election by a plurality vote.
2.8 VOTING OF SHARES. Except as otherwise provided in these Bylaws or
to the extent that voting rights of the shares of any class or classes are
limited or denied by the Articles, each stockholder, on each matter submitted to
a vote at a meeting of stockholders, shall have one (1) vote for each share of
stock registered in his name on the books of the Corporation.
2.9 CLOSING OF TRANSFER BOOKS AND FIXING RECORD DATE. For the purpose
of determining stockholders entitled to notice of or to vote at any meeting of
stockholders, or any adjournment thereof, or entitled to receive payment of any
distribution by the Corporation or a share dividend, or in order to make a
determination of stockholders for any other proper purpose, the Board of
Directors may provide that the stock transfer books shall be closed for a stated
period not to exceed twenty (20) days preceding such meeting. In lieu of closing
the stock transfer books, the Board of Directors may fix in advance a record
date for any such determination of stockholders, such date to be not more than
ninety (90) days preceding the date fixed for payment, the date of the meeting
or any other such date.
2.10 PROXIES. A stockholder may vote either in person or by proxy
executed in writing by the stockholder, or his duly authorized attorney-in-fact.
No proxy shall be valid after eleven months from the date of its execution,
unless otherwise provided in the proxy.
2.11 VOTING OF SHARES IN THE NAME OF TWO OR MORE PERSONS. When
ownership stands in the name of two or more persons, in the absence of written
directions to the Secretary of the Corporation to the contrary, at any meeting
of the stockholders of the Corporation any one or more of such stockholders may
cast, in person or by proxy, all votes to which such ownership is entitled. In
the event an attempt is made to cast conflicting votes, in person or by proxy,
by the several persons in whose names shares of stock stand, the vote or votes
to which those persons are entitled shall be cast as directed by a majority of
those holding such stock and present in person or by proxy at such meeting. In
the event an attempt is made to cast conflicting votes by more than one person
and the number executing consents exceeds the number executing objections to
consents, the former may act for all, and likewise if the number executing
objections to consents exceeds the number executing consents, the greater number
may act for all and if only one person attends the meeting, or executes a
consent and no other of said persons executes an objection to such consent, then
that one person may act for all, and if an even number attend the meeting and a
majority of all the persons so attending do not agree on any particular issue or
if one or more execute consents and a like number execute objections to
consents, each person so attending or executing consents or objections to
consents may act with respect to an equal number of shares.
2.12 VOTING OF SHARES BY CERTAIN HOLDERS. Shares standing in the name
of another corporation may be voted by the chairman of the board, president, any
vice president, the secretary or the treasurer of the corporation holding such
shares and any such officer shall conclusively be deemed to have authority to
vote on behalf of such corporation and to appoint proxies and execute consents,
waivers or releases unless it appears by a certified copy of the regulations,
bylaws or a resolution of the board of directors or executive committee of such
corporation that such authority does not exist or is vested in some other
officer or person. Shares registered in the name of another held by a fiduciary
may be voted by him or her, either in person or by proxy, on proof of the fact
that legal title to the stock has devolved on him, or her in a fiduciary
capacity and that he or she is qualified to act in that capacity. A stockholder
whose shares are pledged shall be entitled to vote such shares until the shares
have been transferred into the name of the pledgee, and thereafter the pledgee
shall be entitled to vote the shares so transferred, but this Amended and
Restated
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Bylaws does not affect the validity of any agreement between the pledgor and
pledgee as to the giving of proxies or the exercise of voting rights.
2.13 STOCKHOLDER PROPOSALS. Stockholder proposals shall be made in
accordance with the provisions of the Corporation's Articles of Incorporation,
which provisions are incorporated herein with the same effect as if they were
set forth herein.
2.14 INSPECTORS. For each meeting of stockholders, the Board of
Directors in advance of the meeting, may appoint one or more inspectors of
election. If for any meeting the inspector(s) appointed by the Board of
Directors shall be unable to act or the Board of Directors shall fail to appoint
any inspector, one or more inspectors may be appointed at the meeting by the
chairman thereof. Such inspectors shall determine the number of shares
outstanding, the voting rights with respect to each, the shares represented at
the meeting, the existence of a quorum, the authenticity, validity and effect of
proxies, receive and canvass the votes for the election of directors and or any
proposal voted on by ballot and/or by proxy and hear and determine all
challenges and questions arising in connection with the vote, count and tabulate
all votes, consents, waivers and releases, determine and announce the result and
do all acts as are proper to conduct the election or vote with fairness to all
stockholders. In all cases where the right to vote upon any share of the
Corporation shall be questioned, it shall be the duty of the inspectors to
examine the Stock Ledger of the Corporation as evidence of the shares held, and
all shares that appear standing thereon in the name of any person or persons may
be voted upon by such person or persons. Each inspector before entering upon the
duties of such office shall take an oath to execute his or her duties with
strict impartiality and to the best of his or her ability.
ARTICLE III
BOARD OF DIRECTORS
3.1 NUMBER AND POWERS. The management of all the affairs, property and
interests of the Corporation shall be vested in a Board of Directors. The Board
of Directors shall consist of five (5) persons as of the effective date of these
Bylaws. Directors need not be residents of the State of Ohio nor hold stock of
the Corporation. The Board of Directors, other than those who may be elected by
the holders of any class or series of stock having preference over the Common
Stock as to dividends or upon liquidation, may, by resolution of the majority of
the Whole Board of Directors and a majority of the Continuing Directors then in
office (as defined by Article X of the Amended and Restated Articles), be
divided into two or three classes as nearly equal in number as possible, each
class having not less than three directors, with one class to be elected
annually. At each annual meeting of stockholders subsequent to the effective
date of the Articles, if the Board is divided into two or three classes,
directors elected to succeed those whose terms are expiring shall be elected for
a term of office to expire at the second or third succeeding annual meeting of
stockholders, respectively, and when their respective successors are elected and
qualified. Unless the Board is divided into classes as permitted hereby, all
Directors shall be elected annually. No holder of the capital stock of the
Corporation shall be permitted to cumulate his votes in the election of
directors. In addition to the powers and authorities expressly conferred upon it
by these Bylaws and the Articles, the Board of Directors may exercise all such
powers of the Corporation and do all such lawful acts and things as are not by
statute or by the Articles or by these Bylaws directed or required to be
exercised or done by the stockholders.
3.2 CHANGE OF NUMBER. The number of directors may at any time be
increased or decreased by a vote of a majority of the Whole Board of Directors
and a majority of the Continuing Directors, as such terms are defined in the
Amended and Restated Articles, provided that no decrease shall have the effect
of shortening the term of any incumbent director except as provided in Sections
4.3 and 4.4 hereunder.
3.3 VACANCIES. All vacancies in the Board of Directors shall be filled
in the manner provided in the Corporation's Articles, which provisions are
incorporated herein with the same effect as if they were set forth herein.
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3.4 REMOVAL OF DIRECTORS. Directors may be removed in the manner
provided in the Corporation's Articles, which provisions are incorporated herein
with the same effect as if they were set forth herein.
3.5 REGULAR MEETINGS. Regular meetings of the Board of Directors shall
be held at least once each quarter on such day as the Board of Directors by
resolution shall prescribe and at such hour as may be stated in the notice of
the meeting. Meetings of committees of the Board shall be held as prescribed by
resolution of the Board of Directors or by resolution of such committee. At
least two (2) days' notice of the time and place of each meeting shall be
personally delivered, mailed, sent by facsimile with receipt confirmed by
telephone at the director's residence or principal place of business or given by
telephone to each member of the Board or such committee. Such notice shall be
deemed to be delivered when deposited in the mail so addressed with postage
prepaid. Neither the business to be transacted at, nor the purpose of, any
regular meeting need be specified in the notice or any waiver of notice of such
meeting. Regular meetings of the Board of Directors or any committee may be held
at the principal place of business of the Corporation or at such other place or
places, either within or without the State of Ohio, as the Board of Directors or
such committee, as the case may be, may from time to time designate. The annual
meeting of the Board of Directors shall be held without notice immediately after
the adjournment of the annual meeting of stockholders, for the purpose of
organizing the Board, electing officers and members of committees and
transacting other business.
3.6 SPECIAL MEETINGS.
(a) Special meetings of the Board of Directors may be called
at any time by the Chairman, the President or by a majority of the authorized
number of directors, to be held at the principal place of business of the
Corporation or at such other place or places as the Board of Directors or the
person or persons calling such meeting may from time to time designate. Notice
of all special meetings of the Board of Directors shall be given to each
director by at least two (2) days' service of the same by facsimile with receipt
confirmed by telephone, telephone or personally, and by at least three (3) days'
service when delivered by mail at the address at which the director is most
likely to be reached. Such notice shall be deemed to be delivered when deposited
in the mail so addressed with postage prepared. Such notice need not specify the
business to be transacted at, nor the purpose of, the meeting.
(b) Special meetings of any committee may be called at any
time by such person or persons and with such notice as shall be specified for
such committee by the Board of Directors, or in the absence of such
specification, in the manner and with the notice required for special meetings
of the Board of Directors.
3.7 QUORUM.
(a) A majority of the Whole Board of Directors of the Corporation, as
such term is defined in the Amended and Restated Articles, at the time of a
meeting of the Board of Directors shall be necessary at all meetings to
constitute a quorum for the transaction of business. At any meeting of the
Board, no action shall be taken (except adjournment, in the manner provided
below) until after a quorum has been established.
(b) The act of a majority of directors who are present at a meeting at
which a quorum previously has been established (or at any adjournment of such
meeting, provided that a quorum previously shall have been established at such
adjourned meeting) shall be the act of the Board of Directors, regardless of
whether or not a quorum is present at the time such action is taken. In
determining the number of directors who are present at the time any such action
is taken (for the purpose of establishing the number of votes required to take
action on any proposition or question submitted to the Board), any director who
is in attendance at such meeting but who, for just cause, is disqualified to
vote on such proposition or question, shall not be considered as being present
at the time of such action.
(c) In the event a quorum cannot be established at the beginning of a
meeting, a majority of the directors present at the meeting, or the director, if
there be only one person, or the Secretary of the Corporation, if there be no
director present, may adjourn the meeting from time to time until a quorum be
present. Only such notice of such adjournment need be given as the Board may
from time to time prescribe.
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3.8 WAIVER OF NOTICE. Attendance of a director at a meeting of
directors shall constitute a waiver of notice of such meeting, except where a
director attends for the express purpose of objecting, prior to or at the
commencement of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened. A waiver of notice signed by the
director or directors, whether before or after the time stated for the meeting,
shall be equivalent to the giving of notice.
3.9 REGISTERING DISSENT. A director who is present at a meeting of the
Board of Directors at which action on a corporate matter is taken shall be
presumed to have assented to such action unless the director announces his
dissent at the meeting and his dissent shall be entered in the minutes of the
meeting, or unless he shall file his written dissent to such action with the
person acting as the secretary of the meeting, before the adjournment thereof,
or shall forward such dissent by certified mail, return receipt requested,
bearing a postmark from the United State Postal Service to the Secretary of the
Corporation within a reasonable time after the adjournment of the meeting. Such
right to dissent shall not apply to a director who voted in favor of such action
or failed to make his dissent known at the meeting.
3.10 EXECUTIVE, AUDIT AND OTHER COMMITTEES.
(a) Standing or special committees may be appointed from its own number
by the Board of Directors from time to time and the Board of Directors may from
time to time invest such committees with such powers as it may see fit, subject
to such conditions as may be prescribed by the Board. An Executive Committee may
be appointed by resolution passed by a majority of the Whole Board of Directors.
It shall have and exercise all of the authority of the Board of Directors,
except in reference to the filling of vacancies among the directors or in any
committee of the directors. An Audit Committee may be appointed by a resolution
approved by a majority of the Whole Board of Directors, as such term is defined
in the Corporation's Articles, and the members of the Audit Committee shall be
directors who are not also officers of the Corporation. The Audit Committee
shall recommend independent auditors to the Board of Directors annually and
shall review the Corporation's budget, the scope and results of the audit
performed by the Corporation's independent auditors and the Corporation's system
of internal control with management and such independent auditors, and such
other duties as may be assigned to such Committee. All committees so appointed
shall consist of not less than three (3) directors, keep regular minutes of the
transactions of their meetings and shall cause them to be recorded in books kept
for that purpose at the principal office of the Corporation. The designation of
any such committee, and the delegation of authority thereto, shall not relieve
the Board of Directors, or any member thereof, of any responsibility imposed by
law.
(b) Unless otherwise provided by the Board of Directors, a majority of
the members of any committee shall constitute a quorum for the transaction of
business at any meeting of such committee and the acts of a majority of the
members present at a meeting at which a quorum is present shall be the acts of
the committee.
3.11 REMUNERATION. Directors, as such, may receive a stated salary for
their service, and by resolution of the Board of Directors, a fixed sum and
expenses of attendance, if any, may be allowed for attendance at each regular or
special meeting of such Board. Members of standing or special committees may be
allowed like compensation for attending committee meetings.
3.12 ACTION BY DIRECTORS WITHOUT A MEETING. Any action required or
which may be taken at a meeting of the directors, or of a committee thereof, may
be taken without a meeting if a consent in writing, setting forth the action so
taken or to be taken, shall be signed by all of the directors, or all of the
members of the committee, as the case may be and filed with the minutes of the
proceedings of the Board or Committee. Such consent shall have the same effect
as a unanimous vote.
3.13 ACTION OF DIRECTORS BY COMMUNICATIONS EQUIPMENT. Any action
required or which may be taken at a meeting of directors, or of a committee
thereof, may be taken by means of a conference telephone or similar
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communications equipment by means of which all persons participating in the
meeting can hear each other at the same time.
3.14 NOMINATIONS. Nominations of candidates for election as directors
at any annual meeting of stockholders shall be made in the manner set forth in
the provisions of the Corporation's Articles, which provisions are incorporated
herein with the same effect as if they were set forth herein.
3.15 PRESIDING OFFICER. The Chairman of the Board shall preside at all
meetings of the Board of Directors at which the Chairman is present. In the
Chairman's absence, the Vice Chairman (if any) shall preside. In the absence of
the Chairman and/or Vice Chairman, the Board shall select a chairman of the
meeting from among the directors present.
ARTICLE IV
CAPITAL STOCK
4.1 CERTIFICATES. Certificates of stock shall be issued in numerical
order, and each stockholder shall be entitled to a certificate signed by the
Chairman of the Board, President or a Vice President, and the Secretary or an
Assistant Secretary or the Treasurer or an Assistant Treasurer, and may be
sealed with the seal of the Corporation or a facsimile thereof. The signatures
of such officers may be facsimiles if the certificate is manually signed on
behalf of a transfer agent, or registered by a registrar, other than the
Corporation itself or an employee of the Corporation. If an officer who has
signed or whose facsimile signature has been placed upon such certificate ceases
to be an officer before the certificate is issued, it may be issued by the
Corporation with the same effect as if the person were an officer on the date of
issue. Each certificate of stock shall state:
(a) the name of the Corporation;
(b) the name of the person to whom issued;
(c) the number and class of shares and the designation
of the series, if any, which such certificate represents;
(d) the par value of each share represented by such
certificate; and
(e) the designations and preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption and the differences of
the relative rights and preference between the shares of each series to the
extent that they have been set and the authority of the Board of Directors to
set the relative rights and preferences of subsequent series, or a statement
that the Corporation shall provide such information to any stockholder upon
request and without charge within five (5) days after receipt of written request
therefor.
4.2 TRANSFERS.
(a) Transfers of stock shall be made only upon the stock
transfer books of the Corporation, kept at the principal office of the
Corporation or at its principal place of business, or at the office of its
transfer agent or registrar, by the person or person named in the certificate or
by the attorney lawfully constituted in writing representing such person or
persons and upon surrender of the certificate or certificates being transferred
which certificate shall be properly endorsed for transfer or accompanied by a
duly executed stock power. Whenever a certificate is endorsed by or accompanied
by a stock power executed by someone other than the person or persons named in
the certificate, evidence of authority to transfer shall also be submitted with
the certificate. All certificates surrendered to the Corporation for transfer
shall be canceled.
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(b) The Board of Directors shall have the power and authority
to make all such rules and regulations as it shall deem expedient concerning the
issue, transfer and registration of certificates for shares of stock of the
Corporation.
(c) Transfer agents and registrars for the Corporation's stock
shall be banks, trust companies or other corporations located within or without
the State of Ohio as shall be appointed by the Board of Directors. The Board
shall also define the authority of such transfer agents and registrars. The
Board of Directors may, by resolution, open a share register in any state of the
United States, and may employ an agent or agents to keep such register, and to
record transfers of shares therein.
(d) The Corporation shall not transfer shares of capital stock
of the Corporation and no person shall have the right to receive shares of
capital stock of the Corporation in any transaction which is deemed by the Board
of Directors to be "control share acquisition" as defined by Section 3-701 of
the Maryland General Corporation Law ("MGCL") unless such acquisition is
determined to be in the best interests of the Corporation by a majority of the
Whole Board of Directors and a majority of the Continuing Directors and the
Board of Directors consents to such transfer prior to any transfer to any
interested shareholder.
4.3 REGISTERED OWNER. Registered stockholders shall be treated by the
Corporation as the holders in fact of the stock standing in their respective
names and the Corporation shall not be bound to recognize any equitable or other
claim to or interest in any share on the part of any other person, whether or
not it shall have express or other notice thereof, except as expressly provided
below or by the laws of the State of Maryland. The Board of Directors may adopt
by resolution a procedure whereby a stockholder of the Corporation may certify
in writing to the Corporation that all or a portion of the shares registered in
the name of such stockholder are held for the account of a specified person or
persons.
4.4 MUTILATED, LOST OR DESTROYED CERTIFICATES. In case of any
mutilation, loss or destruction of any certificate of stock, another may be
issued in its place upon receipt of satisfactory proof of such mutilation, loss
or destruction. The Board of Directors may impose conditions on such issuance
and may require the giving of a satisfactory open penalty bond with surety or
indemnity to the Corporation in such sum as they might determine and upon the
payment of the Corporation's reasonable costs incident thereto, or establish
such other procedures as they deem necessary.
4.5 FRACTIONAL SHARES OR SCRIP. The Corporation may but is not obliged
to (a) issue fractions of a share which shall entitle the holder to exercise
voting rights, to receive dividends thereon, and to participate in any of the
assets of the Corporation in the event of liquidation; (b) arrange for the
disposition of fractional interests by those entitled thereto; (c) pay in cash
the fair value of fractions of a share as of the time when those entitled to
receive such shares are determined; or (d) issue scrip in registered or bearer
form which shall entitle the holder to receive a certificate for a full share
upon the surrender of such scrip aggregating a full share, and unless otherwise
provided, does not entitle its holder to exercise voting rights, receive
dividends, or participate in the assets of the Corporation in the event of
liquidation.
4.6 SHARES OF ANOTHER CORPORATION. Shares owned by the Corporation in
another corporation, domestic or foreign, may be voted by such officer, agent or
proxy as the Board of Directors may determine or, in the absence of such
determination, by the President or a Vice President of the Corporation.
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ARTICLE V
OFFICERS
5.1 DESIGNATIONS. The officers of the Corporation shall be a Chairman
of the Board, a President, a Secretary and a Treasurer, such Vice Presidents,
Assistant Secretaries and Assistant Treasurers as the Board may designate, each
of whom shall be elected by a majority vote of the Board of Directors for one
year at their first meeting after the annual meeting of stockholders, and who
shall hold office until their successors are elected and qualify. The Board of
Directors also may elect or authorize the appointment of such other officers as
the business of the Corporation may require. Any two or more offices may be held
by the same person, but may not execute, acknowledge or verify an instrument
required by law to be executed, acknowledged or verified by two or more
officers. The Board of Directors may appoint a Vice Chairman of the Board, but
the person holding that position shall not be considered an officer of the
Corporation.
5.2 POWERS AND DUTIES. The officers of the Corporation shall have such
authority and perform such duties as the Board of Directors may from time to
time authorize or determine. In the absence of action of the Board of Directors,
the officers shall have such powers and duties as may be provided in these
Regulations and as generally pertain to their respective offices.
5.3 DELEGATION. In the case of absence or inability to act of any
officer of the Corporation and of any person herein authorized to act in his
place, the Board of Directors may from time to time delegate the powers or
duties of such officer to any other officer or any directors or other person
whom it may select.
5.4 VACANCIES. Vacancies in any office arising from any cause may be
filled by a vote of a majority of the Whole Board of Directors, as such term is
defined in the Articles, at any regular or special meeting of the Board.
5.5 OTHER OFFICERS. Directors may appoint such other officers and
agents as it shall deem necessary or expedient, who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the Board of Directors.
5.6 TERM; REMOVAL. The officers of the Corporation shall hold office
until their successors are chosen and qualify. Any officer or agent elected or
appointed by the Board of Directors may be removed at any time, with or without
cause, by the affirmative vote of a majority of the Whole Board of Directors, as
such term is defined in the Corporation's Articles, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed.
5.7 SALARIES. The salaries and other compensation of all officers of
the Corporation shall be fixed by the Board of Directors.
ARTICLE VI
DIVIDENDS AND FINANCE
6.1 DIVIDENDS. Subject to the conditions and limitations imposed by the
MGCL, dividends may be declared by the Board of Directors and paid by the
Corporation.
6.2 RESERVES. There may be set aside out of the net earnings of the
Corporation such sum or sums as the directors from time to time in their
absolute discretion deem expedient as a reserve fund to meet contingencies or
for any other proper purpose.
6.3 DEPOSITORIES. The monies of the Corporation shall be deposited in
the name of the Corporation in such financial institution or financial
institutions or trust company or trust companies as the Board of Directors shall
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designate, and shall be drawn out only by check or other order for payment of
money signed by such persons and in such manner as may be determined by
resolution of the Board of Directors. All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name of
the Corporation and in such manner as shall from time to time be determined by
resolution of the Board of Directors. In the absence of such a resolution, the
President, and Vice President - Chief Financial Officer shall be deemed
authorized to sign such documents.
6.4 CONTRACTS. The Board of Directors may authorize any officer or
officers, agent or agents to enter into any contracts or execute and deliver any
instrument in the name and on behalf of the Corporation. Such authority may be
general or confined to specific instances. Unless otherwise directed by the
Board of Directors, the Chairman of the Board shall have the authority to bind
the Corporation to those contracts made in the ordinary and usual course of
business of the Corporation.
6.5 LOANS. No loan shall be contracted on behalf of the Corporation and
no evidence of indebtedness shall be issued in its name unless authorized by the
Board of Directors. Such authority may be general or confined to specific
purposes.
ARTICLE VII
CORPORATE SEAL
The Board of Directors may provide a suitable seal, containing the name
of the Corporation, which seal shall be in the custody of the Secretary of the
Corporation, and may provide for one or more duplicates thereof to be kept in
the custody of such other officer of the Corporation as the Board may prescribe.
ARTICLE VIII
BOOKS AND RECORDS
The Corporation shall keep correct and complete books and records of
account and shall keep minutes and proceedings of its stockholders and Board of
Directors; and it shall keep at its principal office, or at the office of its
transfer agent or registrar, a record of its stockholders, giving the names and
addresses of all stockholders and the number and class of the shares held by
each. Any books, records and minutes may be in written form or any other form
capable of being converted into written form within a reasonable time.
ARTICLE IX
FISCAL YEAR; ANNUAL AUDIT
The fiscal year of the Corporation shall end on the last day of
December each year. The Corporation shall be subject to an annual audit as of
the end of its fiscal year by independent public accountants appointed by and
responsible to the Board of Directors. The appointment of such accountants shall
be subject to annual ratification by the stockholders.
ARTICLE X
PERSONAL LIABILITY OF DIRECTORS; INDEMNIFICATION
(a) A director of the Corporation shall not be personally
liable for monetary damages for action taken, or any failure to take action, as
a director, to the extent set forth in the Corporation's Articles, which
provisions are incorporated herein with the same affect as if they were set
forth herein.
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(b) The Corporation shall indemnify any person who is a
director, officer, employee or agent of the Corporation to the extent set forth
in the Corporation's Articles, which provisions are incorporated herein with the
same affect as if they were set forth herein.
ARTICLE XI
AMENDMENTS
AMENDMENTS. These Regulations may be altered, amended or repealed only
in the manner set forth in the Corporation's Articles, which provisions are
incorporated herein with the same effect as if they were set forth herein.
As adopted by the stockholders of the Corporation this ___ day of May
2000.
------------------------------
Thomas C. Winstel
Secretary
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APPENDIX D
MIAMI COMPUTER SUPPLY CORPORATION
2000 STOCK OPTION PLAN
ARTICLE I
ESTABLISHMENT OF THE PLAN
Miami Computer Supply Corporation (the "Corporation") hereby
establishes this 2000 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.
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.
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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 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
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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.
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 900,000 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
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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.
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 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.
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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 8.05.
Options which are transferred pursuant to this Section 8.05 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.
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
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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 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.
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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.
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.
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APPENDIX E
MIAMI COMPUTER SUPPLY CORPORATION
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
1. PURPOSE OF THE PLAN. Under this Non-Employee Director Stock Option
Plan (the "Director Plan") of Miami Computer Supply Corporation, an Ohio
corporation (the "Company"), options may be granted to eligible persons, as set
forth in Section 4, to purchase shares of the Company's common stock, no par
value per share ("Common Stock"). This Director Plan is designed to promote the
long-term growth and financial success of Miami Computer Supply Corporation by
enabling the Company to attract, retain and motivate such persons serving on the
Company's Board of Directors by providing for or increasing their proprietary
interest in the Company.
2. EFFECTIVE DATE. This Director Plan shall be in effect commencing on
the date of closing of the initial public offering of the Company's Common
Stock, subject to approval by the Company's stockholders. Options may not be
granted more than ten years after the date of stockholder approval of this
Director Plan or termination of this Director Plan by the Board of Directors of
the Company (the "Board"), whichever is earlier.
3. PLAN OPERATION. This Director Plan is intended to meet the
requirements of Rule 16b-3(c)(2)(ii) adopted under the Securities Exchange Act
of 1934 (or its successor) and accordingly is intended to be self-governing. To
this end, this Director Plan requires no discretionary action by any
administrative body with regard to any transaction under this Director Plan. To
the extent, if any, that any questions of interpretation arise, such questions
shall be resolved by the Board.
4. ELIGIBLE PERSONS. The persons eligible to receive a grant of
non-qualified stock options hereunder are any Director of the Board who on the
date of said grant is not an employee of the Company or a subsidiary of the
Company. For purposes of this Section 4, a person shall not be considered an
employee solely by reason of serving as Chairman of the Board.
5. STOCK SUBJECT TO DIRECTOR PLAN. The maximum number of shares that
may be subject to options granted hereunder shall be 100,000 shares of Common
Stock, subject to adjustments under Section 6. Shares of Common Stock subject to
the unexercised portions of any options granted under this Director Plan which
expire, terminate or are canceled may again be subject to options under this
Director Plan.
6. ADJUSTMENTS. If the outstanding shares of stock of the class then
subject to this Director Plan are increased or decreased, or are changed into or
exchanged for a different number or kind of shares or securities, as a result of
one or more reorganizations, recapitalizations, stock splits, reverse stock
splits, stock dividends, spin-offs and the like, appropriate adjustments shall
be made in the price, number and/or type of shares or securities for which
options may thereafter be granted under this Director Plan and for which options
then outstanding under this Director Plan may thereafter be exercised. Any such
adjustments in outstanding options shall be made without changing the aggregate
exercise price applicable to the unexercised portions of such options.
7. STOCK OPTIONS. Commencing on the date of the first annual meeting of
the Company's shareholders following the closing of the initial public offering
of this Company's Common Stock, each person who is then a non-employee director
of the Board immediately following such meeting will be automatically granted a
non-qualified option to purchase 15,000 shares of the Company's Common Stock,
which options will vest in 5,000 share increments over a three year period
(5,000 of which will vest immediately, 5,000 of which will vest upon the date of
the second annual meeting following the closing of the initial public offering
and 5,000 of which will vest upon the date of the third annual meeting following
the initial public offering), subject however, to the immediate vesting of all
such options should the Company engage in a Business Combination, as defined in
Article X of the Company's Amended and Restated Articles of Incorporation.
Commencing on the date of the second annual meeting of the Company's
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shareholders to be held following the closing of the initial public offering of
this Company's Common Stock, and on the date of each annual meeting of the
Company's shareholders thereafter, each person who is a non-employee director of
the Board immediately following each such annual meeting, other than the
non-employee directors who received the 15,000 options each granted after the
date of the first annual meeting of shareholders following the closing of the
initial public offering, will be automatically granted a non-qualified stock
option to purchase 5,000 shares of the Company's Common Stock, not to exceed
15,000 shares for any such director. The per share exercise price of each option
will be the fair market value of a share of the Company's Common Stock on the
date of grant, defined as the closing price of the Company's Common Stock on the
Nasdaq National Market (or such other securities market on which the Company's
Common Stock is primarily traded) on such date. Each option will have a term of
ten years and except for the options granted on the date of the first annual
meeting of shareholders following the closing of the initial public offering,
shall become immediately exercisable in full on the date of grant. If on any
date upon which options are to be granted under this Director Plan the number of
shares of Common Stock remaining available under the Director Plan are less than
the number of shares required for all grants to be made on such date, then
options to purchase a proportionate amount of such available number of shares of
Common Stock shall be granted to each eligible non-employee director.
8. DOCUMENTATION OF GRANTS. Awards made under this Director Plan shall
be evidenced by written agreements or such other appropriate documentation as
the Board shall prescribe. The Board need not require the execution of any
instrument or acknowledgment of notice of an award under this Director Plan, in
which case acceptance of such award by the respective optionee will constitute
agreement to the terms of the award.
9. NONTRANSFERABILITY. Any option granted under this Director Plan
shall by its terms be nontransferable by the optionee otherwise than by will or
the laws of descent and distribution, and shall be exercisable, during the
optionee's lifetime, only by the optionee.
10. AMENDMENT AND TERMINATION. The Board may alter, amend, suspend, or
terminate this Director Plan, provided that no such action shall deprive any
optionee, without his consent, of any option granted to the optionee pursuant to
this Director Plan or of any of his rights under such option and provided
further that the provisions of this Director Plan designating persons eligible
to participate in the Director Plan and specifying the amount, exercise price
and timing of grants under the Director Plan shall not be amended more than once
every six months other than to comport with changes in the Internal Revenue
Code, the Employee Retirement Income Security Act, or the rules thereunder.
11. TERMINATION OF DIRECTORSHIP. All options granted hereunder and held
by non-employee directors as of the date of cessation of service as a director
may be exercised by the non-employee director or his heirs or legal
representatives until the earlier of the tenth anniversary of the date of grant
or the expiration of twelve months after the date of cessation of such service.
12. MANNER OF EXERCISE. All or a portion of an exercisable option shall
be deemed exercised upon delivery to the Secretary of the Company at the
Company's principal office of all of the following: (i) a written notice of
exercise specifying the number of shares to be purchased signed by the
non-employee director or other person then entitled to exercise the option, (ii)
full payment of the exercise price for such shares by any of the following or
combination thereof: (a) cash, (b) certified or cashier's check payable to the
order of the Company, (c) the delivery of whole shares of the Company's Common
Stock owned by the option holder, or (d) by requesting that the Company withhold
whole shares of Company Common Stock then issuable upon exercise of the option
(for purposes of such a transaction the value of shares of the Company's Common
Stock shall be the closing price of the Company's Common Stock on the Nasdaq
National Market (or such other securities market on which the Company's Common
Stock is primarily traded) on such date), (iii) such representations and
documents as the Board, in its sole discretion, deems necessary or advisable to
effect compliance with all applicable provisions of the Securities Act of 1933,
as amended, and any other federal or state securities laws or regulations, (iv)
in the event that the option shall be exercised by any person or persons other
than the non-employee director, appropriate proof of the right of such person or
persons to exercise the option, and (v) such representations and documents as
the Board, in its sole discretion, deems necessary or advisable.
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13. COMPLIANCE WITH LAW. Common Stock shall not be issued upon exercise
of an option granted under this Director Plan unless and until counsel for the
Company shall be satisfied that any conditions necessary for such issuance to
comply with applicable federal, state or local tax, securities or other laws or
rules or applicable securities exchange requirements have been fulfilled.
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REVOCABLE PROXY
MIAMI COMPUTER SUPPLY CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
MAY 9, 2000
The undersigned, being a stockholder of Miami Computer Supply
Corporation ("Company") as of March 31, 2000, hereby authorizes Michael E.
Peppel 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 Presidential Banquet Center
located at 4548 Presidential Way, Dayton, Ohio 45429, on Tuesday, May 9, 2000 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, Michael E Peppel,
Richard L. Posen, Harry F.
Radcliffe and Thomas C. Winstel.
/ / FOR / / WITHHOLD AUTHORITY
/ / FOR ALL 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 reincorporate the Company in Maryland.
/ / FOR / / AGAINST
/ / ABSTAIN
3. PROPOSAL to approve the 2000 Stock Option Plan.
/ / FOR / / AGAINST
/ / ABSTAIN
4. PROPOSAL to approve the 2000 Non-Employee Director Stock Option Plan.
/ / FOR / / AGAINST
/ / ABSTAIN
<PAGE>
5. 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, 2000.
/ / FOR / / AGAINST
/ / ABSTAIN
6. PROPOSAL, if necessary, to adjourn the Annual Meeting to solicit
additional proxies.
/ / FOR / / AGAINST
/ / ABSTAIN
7. 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 MAY 9, 2000
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
REINCORPORATION OF THE COMPANY IN MARYLAND, FOR THE 2000 STOCK OPTION PLAN, FOR
THE 2000 NON-EMPLOYEE DIRECTOR 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: , 2000
------------------------------------------
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(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.
