DATAFLEX CORPORATION
3920 PARK AVENUE
EDISON, NEW JERSEY 08820
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 1, 1995
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders
(the "Annual Meeting") of Dataflex Corporation, a New Jersey
corporation (the "Company"), will be held at the Company's offices
at 3920 Park Avenue, Edison, New Jersey on September 1, 1995 at
10:00 a.m. Eastern Daylight Time, for the following purposes:
1. To elect two members of the Board of Directors, one to
serve until the 1998 Annual Meeting of Shareholders and
one to serve until the 2000 Annual Meeting of
Shareholders, and until their successors are duly elected
and qualified.
2. To ratify the Board of Directors' appointment of Price
Waterhouse LLP as the Company's independent accountants
for the fiscal year ending March 31, 1996.
3. To approve the Board of Director's resolution proposing
that Article Fourth of the Company's Certificate of
Incorporation be amended to increase the authorized
common shares, no par value, of the Company from
10,000,000 shares to 20,000,000 shares.
4. To approve the Board of Director's resolution proposing
that Article Fourth of the Company's Certificate of
Incorporation be amended to authorize the Company to
issue 10,000,000 shares of Preferred Stock, without par
value.
5. To transact such other business as may properly come
before the Annual Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on July
26, 1995 as the record date for the Annual Meeting. Only
shareholders of record as of the close of business on such date are
entitled to notice of, and to vote at, the Annual Meeting or any
adjournment thereof.
Shareholders are urged to attend the Annual Meeting in person.
If you are not able to do so, please sign, date and return the
accompanying Proxy in the enclosed envelope. No postage is
required if mailed in the United States.
The Board of Directors unanimously recommends a vote FOR the
election of its nominees as Directors, FOR the ratification of the
Board of Directors' appointment of Price Waterhouse LLP as the
Company's independent accountants, FOR the approval of increasing
the authorized number of common shares, no par value, of the
Company's stock and FOR the approval to authorize the Company to
issue 10,000,000 shares of Preferred Stock, without par value.
By Order of the Board of Directors,
__________________________________
ELIZABETH MASSIMO,
Assistant Secretary
Edison, New Jersey
July 26, 1995
WHETHER YOU EXPECT TO ATTEND THE ANNUAL MEETING OR NOT, YOUR VOTE
IS IMPORTANT. ACCORDINGLY, PLEASE COMPLETE, DATE AND SIGN THE
ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE TO
ENSURE THAT YOUR SHARES ARE REPRESENTED. YOUR PROXY WILL BE
REVOKABLE BY WRITTEN NOTICE AS DESCRIBED IN THE ACCOMPANYING PROXY
STATEMENT, AT ANY TIME PRIOR TO ITS EXERCISE.
<PAGE>
<PAGE>
DATAFLEX CORPORATION
3920 PARK AVENUE
EDISON, NEW JERSEY 08820
PROXY STATEMENT
This Proxy Statement and the accompanying Notice of Annual
Meeting and form of Proxy are furnished in connection with the
solicitation of Proxies by the Board of Directors of Dataflex
Corporation, a New Jersey corporation (the "Company"), for use at
the Annual Meeting of Stockholders to be held on September 1, 1995
at 10:00 a.m., at the Company's offices at 3920 Park Avenue,
Edison, New Jersey and at any adjournments thereof (the "Annual
Meeting"). It is anticipated that this Proxy Statement and the
form of Proxy will be mailed on or about July 28, 1995 to holders
of record on July 26, 1995 (the "Record Date") of the Company's
common stock, no par value per share (the "Common Stock"). Holders
of record of Common Stock at the close of business on the Record
Date are entitled to receive notice of, and to vote at, the Annual
Meeting. At the close of business on the Record Date,
shares of Common Stock were issued and outstanding. The
presence in person or by proxy at the Annual Meeting of the holders
of a majority of such shares shall constitute a quorum.
The Company's Annual Report to Stockholders for the fiscal
year ended March 31, 1995, including certified financial
statements, is enclosed with this Proxy Statement.
The Common Stock was the only voting security of the Company
outstanding and entitled to vote on the Record Date. Holders of
Common Stock are entitled to one vote per share on each matter to
be voted upon at the Annual Meeting. Assuming the presence of a
quorum at the Annual Meeting, the affirmative vote of the holders
of 60% of the votes cast by the holders of shares of Common Stock
present in person or represented by Proxy at the Annual Meeting is
necessary for the election of Directors. Assuming the presence of
a quorum at the Annual Meeting, a majority of the votes cast by the
holders of shares of the Common Stock present in person or
represented by proxy at the Annual Meeting and entitled to vote is
required for the ratification of the Board of Directors'
appointment of Price Waterhouse as the Company's independent
auditors for the fiscal year ending March 31, 1996 (the "Auditor
Proposal") and the approval of amending Article Fourth of the
Company's Certificate of Incorporation.
Any Proxy may be revoked at any time before it is actually
voted by written notification delivered to the Secretary of the
Company or by submitting another Proxy bearing a later date.
Properly executed and unrevoked Proxies received by the Company
will be voted by the persons named therein at the Annual Meeting in
the manner specified therein or, if no specification is made, will
be voted: (i) FOR the election of the nominees named herein to the
Company's Board of Directors; (ii) FOR the Auditor Proposal; (iii)
FOR the approval of increasing the authorized number of common
shares, no par value, of the Company's stock; and (iv) FOR the
approval to authorize the Company to issue 10,000,000 shares of
Preferred Stock, without par value.
The expense of preparing, printing and distributing the Proxy
materials will be paid by the Company. In addition to use of the
mail, Proxies may be solicited in person or by telephone by
Directors, officers or employees of the Company without additional
compensation.
The expense of this solicitation is to be borne by the
Company. The Company may also reimburse persons holding shares in
their names or in the names of their nominees for their expenses in
sending proxies and proxy material to their principals.
Unless otherwise directed, the persons named in the
accompanying form of proxy intend to vote all proxies received by
them (i) in favor of the election of the nominees to the Board of
Directors herein, (ii) in favor of the ratification of the selected
independent auditors, (iii) in favor of the increase of additional
common shares, no par value, of the Company's stock, and (iv) in
favor of the issuance of shares of Preferred Stock, without par
value.
Management does not intend to present any business at the
meeting other than that set forth in the accompanying Notice of
Annual Meeting, and it has no information that others will do so.
If other matters requiring the vote of the shareholders properly
come before the meeting and any adjournments thereof, it is the
intention of the persons named in the accompanying form of proxy to
vote the proxies held by them in accordance with their judgment on
such matters.
SHAREHOLDER PROPOSALS FOR THE 1995 ANNUAL MEETING
Shareholder proposals for inclusion in the proxy materials
related to the 1996 Annual Meeting of Shareholders must be received
by the Company no later than June 30, 1995.
<PAGE>
<PAGE>
ELECTION OF DIRECTORS
(PROPOSAL 1)
Pursuant to the Company's Certificate of Incorporation, the
Company's Board of Directors is divided into five classes. The
term of the Directors in Class I expires at the 1996 Annual
Meeting of Shareholders; the term of the Directors in Class II
expires at the 1997 Annual Meeting of Shareholders; the term of
the Directors in Class III expires at the 1998 Annual Meeting of
Shareholders; the term of the Directors in Class IV expires at
the 1999 Annual Meeting of Shareholders; and the term of the
Directors in Class V expires at the 1995 Annual Meeting of
Shareholders; and in all cases at the time their respective
successors have been duly elected and qualified.
Notwithstanding the foregoing, any Director who is elected
to the Company's Board of Directors by the Directors to fill a
vacancy will serve until the next Annual Meeting of Shareholders.
Mr. Doganiero was elected to the Board of Directors by the
Directors in fiscal year 1995, for a term expiring at the 1995
Annual Meeting. The Board of Directors has nominated Mr.
Doganiero for election as a Class III Director at the Annual
Meeting.
The term of Richard C. Rose, a Class V Director of the
Company, expires at the 1995 Annual Meeting of Shareholders. The
Board of Directors has renominated him to serve as a Class V
Director of the Company to serve until the 2000 Annual Meeting.
Pursuant to the Company's by-laws, a shareholder is only
permitted to nominate a person for election as a Director if he
or she has given written notice to the Company's secretary of
such intent no later than sixty (60) days prior to the scheduled
date of the annual meeting of shareholders. Such notice must
include the identity of the person to be nominated, a description
of all agreements, arrangements, or understandings between the
nominating shareholders and the person to be nominated pursuant
to which the nomination is to be made or the nominee is to be
elected, and such other information regarding the nominee as
would be required to be included in a proxy statement filed
pursuant to the then current proxy rules of the Securities and
Exchange Commission. The Board of Directors is authorized to
disqualify any nominee where the person nominating such person
has failed to provide the Company with complete and accurate
information as required above. No such notices were given for
the 1995 Annual Meeting.
The persons who currently serve as the Company's Directors
or Officers and brief summaries of their business experience and
certain other information with respect to them are set forth in
the following table and in the information which follows the
table.
<PAGE>
<TABLE>
<CAPTION>
Director or
Name Age Position Officer Since
<S> <C> <C> <C>
Richard C. Rose 47 Chairman, Chief 1984
Executive Officer,
Director, Class V
Gordon J. McLenithan54 President-Dataflex 1985
East, Director,
Class IV
Peter H. Jackson 37 Co-President, 1994
Director, Class I
Philip Doganiero 38 Co-President, 1995
Director, Class III
Raymond DioGuardi 40 Senior Vice President, 1995
Chief Financial
Officer
John G. Raos 45 Director, Class III 1993
Charles C. Kelly 56 Director, Class II 1994
</TABLE>
Richard C. Rose has served as Chief Executive Officer of the
Company since April 1990 and Chairman of the Board of Directors
since September 1993. He served as President of the Company from
April 1987 to September 1993. He has served as a Director of the
Company since October 1984, and has served as Chief Operating
Officer from July 1986 through April 1990 and as Vice President -
Sales and Marketing of the Company from July 1984 through April
1987. From 1979 through June 1984, he served as Vice President
and Director of Sales of David Jamison Carlyle, a computer
peripheral distributor. Prior to 1979, he was employed in two
sales management positions. Mr. Rose is a graduate of the
University of Miami with a Bachelor's Degree in Mathematics.
Gordon J. McLenithan has served as President of Dataflex
East since January 1995. He served as Vice Chairman from April
1994 to January 1995, and as President of the Company from
September 1993 until April 1994. He served as Chief Operating
Officer of the Company from April 1990 until April 1994 and as
its Chief Financial Officer from January 1986 to March 1995. He
has served as a Director of the Company since April 1990. Mr.
McLenithan also served as the Company's Executive Vice President
from April 1990 to October 1993, Vice President from May 1985
until April 1990, its General Manager from January 1986 until
April 1990 and as Controller from May 1984 until January 1986.
From 1982 to 1984, he was employed as Vice President - Finance of
Eutectic Corporation, a manufacturer of consumable welding
materials. Prior to 1982, he was employed in a number of
financial management positions, including 10 years with Price
Waterhouse, most recently as an Audit Manager. Mr. McLenithan, a
certified public accountant, is a graduate of Bentley College
with a Bachelor's Degree in Accounting.
Peter H. Jackson has served as the Co-President of the
Company since January 1995 and Director since April 1994. From
April 1994 through December 1995, he was President and Chief
Operating Officer, following the Company's acquisition of
substantially all of the assets and assumption of certain
liabilities of Granite Computer Products, Inc. ("Granite"). From
March 1985 to March 1994 he was President of Granite, a computer
services company providing hardware, software and networking
services to large corporations. Prior to March 1985, he was a
National Sales Manager for LEX Electronics, a distributor of
microcomputer products and peripherals. Mr. Jackson graduated
from the University of California with a Bachelor's Degree in
History.
Philip Doganiero has served as Co-President of the Company
and Director since January 1995, following the Company's
acquisition of substantially all of the assets and assumption of
certain liabilities of National Data Products, Inc. ("NDP").
From May 1982 to January 1995, he was founder and President of
NDP, a reseller of personal computers and related services.
Prior to May 1982, he was a sales representative for Better
Business Forms and NCR Corporation. Mr. Doganiero graduated from
Florida State University with a Bachelor's Degree in Marketing.
Raymond DioGuardi has served as Senior Vice President of
Finance since November 1994 and as Chief Financial Officer since
March 1995. From the period of December 1989 to October 1994, he
held the position of Vice President of Finance, CFO and Secretary
of Nathan's Famous, Inc. Prior to this time, he spent twelve
years at various levels of increasing responsibility with the
international accounting firm of Price Waterhouse LLP. He is a
Certified Public Accountant, member of the AICPA, New Jersey
Society of Certified Public Accountants and Institute of
Management Accountants.
John G. Raos has served as a Director of the Company since
October 1993. Mr. Raos is President and Chief Operating Officer
of U.S. Industries, Inc. Prior to June 1995, he was President
and Chief Operating Officer of Hanson Industries, Inc., a $15
billion British-American industrial management corporation. He
joined Hanson Industries as Corporate Controller in 1976. From
1970-1976, Mr. Raos was employed by Price Waterhouse LLP in New
York as an auditor. Mr. Raos, a certified public accountant, is
a graduate of Queens College with a Bachelor's Degree in
Accounting.
Charles C. Kelly has served as a Director of the Company
since May 1994. Mr. Kelly has been employed by First Fidelity
Bankcorporation ("FFB") since October 1990, currently serving as
Executive Vice President and Division Head of FFB's Investment
Bank (the "Investment Bank"), which is responsible for FFB's
private placements, mergers and acquisitions business. In
addition, Mr. Kelly is the head of loan pricing and syndications
for FFB's wholesale bank. Prior to this position, Mr. Kelly was
Group Head of FFB's wholesale bank - northern region. Prior to
joining FFB, Mr. Kelly served for over 20 years, from April 1970
to October 1990, with Citibank, N.A., where he was Vice President
and Senior Credit Officer. He has worked for two years in the
Investment Bank, heading corporate finance for the middle market,
media and health care sectors. Prior to working at the
Investment Bank, Mr. Kelly was the Regional Executive of
Citibank's Northeast U.S. Corporate Bank. Mr. Kelly holds a J.D.
degree, and is admitted to the New York Bar.
Board Meetings
During the fiscal year ended March 31, 1995, the Board of
Directors held nine meetings. Each Director attended at least
75% of the aggregate of the total number of meetings of the Board
of Directors plus the total number of meetings of all committees
of the Board on which he served.
Committees of the Board
The Board of Directors has an Audit Committee, a
Compensation Committee, and a Nominating Committee, each
comprised of the Company's two non-employee Directors, Messrs.
Raos and Kelly. The Audit Committee is responsible for reviewing
the Company's audited financial statements, meeting with the
Company's independent auditors to review the Company's internal
controls and financial management practices and examining all
agreements or other transactions between the Company and its
Directors and officers (other than those compensation functions
assigned to the Compensation Committee) to determine whether such
agreements or transactions are fair to the Company's
shareholders. During fiscal 1995, the Audit Committee held one
meeting.
The Compensation Committee is responsible for reviewing the
compensation and benefits of the Company's executive officers,
making recommendations to the Board of Directors concerning
compensation and benefits for such executive officers and
administering the Company's stock option plans. During fiscal
1995, the Compensation Committee held three meetings.
The Nominating Committee is responsible for nominating new
directors of the Company.
Directors who are not employees of the Company (other than
Mr. Raos) received $6,000 during fiscal 1995 for serving as
Directors. Mr. Raos has waived all fees to which he is entitled
for serving as Director. Directors who are employees of the
Company do not receive any additional compensation for such
services.
Recommendation and Vote
Assuming the presence of a quorum, the affirmative vote of
60% of the total number of votes cast in person or by proxy at
the Annual Meeting is required for the election of nominees as
Directors of the Company. Broker non-votes and shares
represented by proxies as to which the authority to vote for a
nominee has been withheld will not be considered to have been
cast and therefore will not be counted toward such nominee's
attainment of the 60% vote. The Company expects each nominee for
election as a Director of the Company to be able to accept such
nomination. If any nominee is unable to accept such nomination,
Proxies may be voted for substitute nominees. THE BOARD OF
DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE NOMINEES NAMED
ABOVE.
RATIFICATION OF THE
SELECTION OF INDEPENDENT ACCOUNTANTS
(PROPOSAL 2)
Pursuant to the recommendation of the Audit Committee, the
Board of Directors has proposed the appointment of the firm Price
Waterhouse LLP independent accountants, to audit the consolidated
financial statements of the Company for the fiscal year ending
March 31, 1996. Price Waterhouse LLP has acted as independent
accountants of the Company since fiscal year 1990.
A representative of Price Waterhouse LLP is expected to be
present at the meeting, with the opportunity to make a statement
if such representative desires to do so, and will be available to
respond to appropriate questions.
Recommendation and Vote
Ratification of the appointment of Price Waterhouse LLP
requires a majority of the votes cast regarding the matter by the
holders of the shares of Common Stock present, in person or by
proxy, at the Annual Meeting and entitled to vote. With respect
to broker non-votes and abstentions on this matter, the shares
will not be considered to have been cast and therefore will not
be counted toward the attainment of a majority vote.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
RATIFICATION.
AMENDMENT TO ARTICLES OF INCORPORATION
(PROPOSAL 3)
On May 31, 1995, the Board of Directors unanimously adopted
a resolution proposing that Article Fourth of the Company's
Certificate of Incorporation be amended to increase from
10,000,000 shares to 20,000,000 shares the Common Stock of the
Company, without par value, which the Company is authorized to
issue. The Board directed that the proposed amendment be
submitted to a vote of the holders of all of the Company's
outstanding stock. If the amendment is approved by the holders
of a majority of the Company's shares represented in person or by
proxy at the Meeting, the Company's Certificate of Incorporation
will be amended to provide that the Company is authorized to
issue 20,000,000 shares of Common Stock, without par value.
As of the date of this Proxy Statement, the Company has
[4,835,102] shares of Common Stock outstanding. In addition, the
Company has options exercisable for 719,583 shares of Common
Stock and options reserved for issuance which, if granted and
exercised, would be exercisable for 552,251 shares of Common
Stock. Other than to meet the requirements of various employee
benefit and incentive plans of the Company, the Company has no
present plan, understanding or agreement to issue the additional
10,000,000 shares of Common Stock. However, the Board of
Directors believes that the proposed increase in the number of
authorized shares of Common Stock is desirable to enhance the
Company's flexibility in connection with possible future actions,
such as stock dividends, stock splits, corporate mergers,
acquisitions of property and the possible funding of its
business, or other corporate purposes. The Board will determine
whether, when and on what terms the issuance of shares of Common
Stock may be warranted in connection with any of the foregoing
purposes.
As with the issuance of any shares of the Company's Common
Stock other than on a pro-rata basis to all current shareholders,
the issuance of additional shares to be authorized pursuant to
the proposed amendment would reduce the proportionate interests
in the Company held by current shareholders.
A vote in favor of the proposed amendment to the Company's
Certificate of Incorporation by the holders of the outstanding
shares of Common Stock represented at the Meeting, in person or
by proxy, is necessary for the adoption of this proposal. If the
proposed amendment is adopted by the shareholders, it will become
effective upon filing a Certificate of Amendment as required by
the New Jersey Business Corporation Act. The Company's financial
statements, included in its 1995 Annual Report furnished to
shareholders in connection with the distribution of this Proxy
Statement, are incorporated in this Proxy Statement by reference.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO
INCREASE THE NUMBER OF AUTHORIZED COMMON SHARES, NO PAR VALUE.
AMENDMENT TO ARTICLES OF INCORPORATION
(PROPOSAL 4)
On May 31, 1995, the Board of Directors unanimously adopted
a resolution proposing that Article Fourth of the Company's
Certificate of Incorporation be amended to authorize the Company
to issue 10,000,000 shares of Preferred Stock, without par value.
The Board directed that the proposed amendment be submitted to a
vote of the holders of all of the Company's outstanding stock.
If the amendment is approved by the holders of a majority of the
Company's shares represented in person or by proxy at the
Meeting, the Company's Certificate of Incorporation will be
amended to provide that the Company is authorized to issue
10,000,000 shares of Preferred Stock, without par value.
The proposed amendment to the Certificate of Incorporation
would empower the Board of Directors to designate and issue from
time to time one or more classes or series of Preferred Stock
without any action by the Company's shareholders. The Board of
Directors would be empowered to authorize issuances or one or
more classes or series and to determine and fix the relative
rights, preferences and limitations of each class or series so
authorized. Such action could adversely affect the voting power
of the holder of the Company's Common Stock or could have the
effect of discouraging or making difficult any attempt by a
person or group to obtain control of the Company.
The Company has no present plan, understanding or agreement
to issue shares of Preferred Stock. However, the Board of
Directors believes that the proposed authorization of Preferred
Stock is desirable to enhance the Company's flexibility in
connection with possible future actions, such as stock dividends,
stock splits, corporate mergers, acquisitions of property and the
possible funding of its business, or other corporate purposes.
The Board will determine whether, when and on what terms the
issuance of shares of Preferred Stock may be warranted in
connection with any of the foregoing purposes.
A vote in favor of the proposed amendment to the Company's
Certificate of Incorporation by the holders of the outstanding
shares of Common Stock represented at the Meeting, in person or
by proxy, is necessary for the adoption of this proposal. If the
proposed amendment is adopted by the shareholders, it will become
effective upon filing a Certificate of Amendment as required by
the New Jersey Business Corporation Act. The Company's financial
statements, included in its 1995 Annual Report furnished to
shareholders in connection with the distribution of this Proxy
Statement, are incorporated in this Proxy Statement by reference.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO
AUTHORIZE THE COMPANY TO ISSUE 10,000,000 SHARES OF PREFERRED
STOCK, NO PAR VALUE.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act requires the
Company's officers and Directors, and persons who own more than
10 percent of a registered class of the Company's equity
securities, to file reports of ownership and changes in ownership
on Forms 3, 4 and 5 with the Securities and Exchange Commission
(the "SEC"). Such persons are required by SEC Regulation to
furnish the Company with copies of all Forms 3, 4 and 5 they file
although the Company has undertaken the preparation and filing of
such reports on behalf of its officers and Directors.
Based solely on the Company's review of the copies of the
forms it has filed and copies of such forms it has received, the
Company believes that all its officers, Directors and greater
than 10 percent beneficial owners complied with all filing
requirements applicable to them with respect to transactions
during fiscal 1995.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table presents certain information regarding
the beneficial ownership of the Common Stock as of June 2, 1995
by (i) each Director and nominee for election at the Annual
Meeting, (ii) all Directors and the named executive officers in
the Summary Compensation table appearing below as a group, and
(iii) each other person known by the Company to own more than 5%
of any class of equity securities of the Company.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Number of Shares Percent
Owned <F1> of Class
---------------- --------
<S> <C> <C>
Richard C. Rose 182,863 <F2> 3.8%
Gordon J. McLenithan 242,103 <F3> 5.0%
John G. Raos 95,000 <F4> 2.0%
Charles C. Kelly 0 <F5> *
Peter H. Jackson 55,250 <F6> 1.1%
Philip Doganiero 375,000 <F7> 7.8%
National Data
Products, Inc. 625,000 <F8> 12.9%
2145 Calumet Street
Clearwater, FL 34625
Qualivest Capital
Management 372,400 <F9> 7.7%
c/o U.S. Bankcorp
111 Southwest Fifth Avenue
Portland, Oregon 97204
Pioneer Management Corp. 349,900 <F10> 7.2%
60 State Street
Boston, MA 02108
Fidelity Management
and Research Co. 243,500 <F11> 5.0%
82 Devonshire Street
Boston, Massachusetts 02109
All Directors and officers
as a group (7 persons) 950,216 <F12> 19.7%
____________________
* Less than 1%.
<FN>
<F1>
Unless otherwise indicated, each stockholder has sole voting and
investment power.
<F2>
Includes 179,936 shares which Mr. Rose has the right to acquire
through the exercise of stock options granted to him under the
Company's various stock option plans. Does not include 129,064
shares subject to options granted to Mr. Rose under the Company's
various stock option plans that do not vest within 60 days of the
date of this Proxy Statement.
<F3>
Includes 189,686 shares which Mr. McLenithan has the right to
acquire through the exercise of stock options granted to him
under the Company's various stock option plans. Does not include
129,064 shares subject to options granted to Mr. McLenithan under
the Company's various stock option plans that do not vest within
60 days of the date of this Proxy Statement.
<F4>
Includes 75,000 shares which Mr. Raos has the right to acquire
through the exercise of stock options granted to him under a
separate issuance of stock options. Does not include 225,000
shares subject to options granted to Mr. Raos that do not vest
within 60 days of the date of this proxy.
<F5>
Does not include 10,000 shares which Mr. Kelly has the right to
acquire through the exercise of stock options granted to him
under a separate issuance of stock options.
<F6>
Includes 53,750 shares which Mr. Jackson has the right to acquire
through the exercise of stock options granted to him under a
separate issuance of stock options pursuant to the Asset Purchase
Agreement of Granite Computer Products, Inc. on April 6, 1994.
Does not include 161,250 shares subject to options granted to Mr.
Jackson that do not vest within 60 days of the date of this
proxy.
<F7>
Consists of 375,000 shares owned by National Data Products, Inc.
which Mr. Doganiero may be deemed the beneficial owner by virtue
of his ownership interest in National Data Products, Inc.
<F8>
Represents shares issued as part of the consideration in
connection with the Company's purchase of substantially all the
assets and substantially all the liabilities of National Data
Products, Inc.
<F9>
Based on a Schedule 13G filed with the Securities and Exchange
Commission, dated February 11, 1995.
<F10>
Based on a Schedule 13G filed with the Securities and Exchange
Commission, dated January 18, 1995.
<F11>
Based on a Schedule 13G filed with the Securities and Exchange
Commission, dated February 13, 1995.
<F12>
Includes 76,844 shares beneficially owned by Messrs. Rose,
McLenithan, Raos, Kelly, Jackson and Doganiero, after elimination
of shares as to which beneficial ownership is shared by more than
one member of this group (see Notes 2 through 7), and 498,372
shares subject to immediately exercisable stock options granted
under the Company's stock option plans.
</FN>
/TABLE
<PAGE>
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth, for each of the last three
fiscal years, cash and certain other compensation paid or accrued
by the Company for the Chief Executive Officer and for each of
the other named executive officers (the "Named Officers") of the
Company in all capacities in which they served:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards Payouts
Other Restricted Securities All
Other
Name and Annual Stock Underlying Compen-
Principal Compen- Awards Options LTIP sation
Position Year Salary($) Bonus($) sation($) ($) (#) Payouts ($)(<F1>)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Richard
C. Rose
Chairman, 1995 $329,400 $254,416 $0 NA $0 NA
$1913
CEO 1994 329,400 83,133 0 NA 158,750 NA
899 1993 329,400 92,825 0 NA 50,000 NA
456
Gordon J.
McLenithan
President 1995 297,000 165,812 0 NA 0 NA
1918
Dataflex- 1994 297,000 76,114 0 NA 158,750 NA
548
East 1993 297,000 83,314 0 NA 50,000 NA
754
Peter H.
Jackson 1995 297,500 115,812 0 NA 215,000 NA 2851
Co-President
<FN>
<F1>
All Other Compensation represents 401(k) Matching Contributions.
</FN>
</TABLE>
<PAGE>
Stock Options
The following table contains information concerning the
grant of stock options pursuant to the Company's several stock
option plans to the Named Officers during the year ended March
31, 1995:
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation
for
Individual Grants Option Term <F3>
Number of Exercise
Securities % of Total or Base
Underlying Options Granted Price
Options to Employees in ($/Sh) Exercise
Name Granted(#) Fiscal Year (<F2>) Date 5% ($) 10%($)
<S> <C> <C> <C> <C> <C> <C>
Peter H.
Jackson 215,000<F1> 33.6% $7.00 4/6/04 $946,486
$2,398,582
<FN>
<F1>
On April 6, 1994, 300,000 options were granted under a separate
issuance pursuant to the Asset Purchase Agreement of Granite
Computer Products, Inc. All of these options are subject to a
four-year vesting schedule beginning on the particular grant date
with 25% vested per year.
<F2>
All stock options were granted at the fair market value on the date
of grant.
<F3>
The amounts set forth are based on assumed appreciation of 5% and
10% rates as prescribed by the Securities and Exchange Commission
rules and are not intended to forecast future appreciation, if any,
of the stock price. The Company did not use an alternate formula
for a grant date valuation as it is not aware of any formula which
will determine with reasonable accuracy a present value based on
future unknown or volatile factors. Actual gains, if any, on stock
option exercises and common stock holdings are dependent on the
future performance of the Company's common stock. There can be no
assurance that the amounts reflected in this table will be
achieved.
</FN>
</TABLE>
Option Exercises and Fiscal Year-End Values
The following table sets forth information with respect to the
Named Officers concerning the exercise of options during the 1995
fiscal year and unexercised options held as of the end of such
fiscal year.
<PAGE>
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
Shares
Acquired Number of Securities Value of
on Value Underlying Unexercised in-the-Money Options
Exercise Realized Options at FY-ENd (<F1>) at FY-End (<F2>)
Name (#) ($) Exercisable/Unexercisable
Exercisable/Unexercisable
<S> <C> <C> <C> <C>
Richard
C. Rose 0 0 179,936/129,064 $534,361/$459,889
Gordon J.
McLenithan 0 0 189,686/129,064 $564,955/$459,889
Peter H.
Jackson 0 0 0/215,000 $0/$241,875
<FN>
<F1>
This represents the total number of stock options held by the named
executives. These options were granted on various dates during the
years 1991-1994.
<F2>
These amounts represent the difference between the exercise price
of the stock options and the closing price of the Common Stock on
March 31, 1995.
</FN>
</TABLE>
Restricted Stock Grants
In April, 1995, the Company issued 27,022 shares, 17,298
shares and 21,980 shares of common stock to Mr. Rose, Mr.
McLenithan and Mr. Jackson, respectively. Pursuant to the terms of
the agreements, the shares are subject to certain restrictions
which expire by March 31, 1998 for Mr. Rose and Mr. McLenithan and
by March 31, 1997 for Mr. Jackson. The restrictions lapse equally
each year for the term of the grant and with respect to all shares
in the event of termination of employment for any reason other than
"cause", voluntary termination for "good reason" and death or
disability, as defined. If at any time prior to the expiration of
the restriction period, employment of either officer is terminated
"for cause" or any other reason not provided for under the
agreement, any such shares still subject to restrictions, as
previously described, shall be transferred to the Company, without
monetary consideration.
Employment Agreements
The Company has employment agreements with executive officers
Rose, McLenithan, Jackson and Doganiero. Mr. Rose's fiscal year
1995 agreement provided for a minimum annual base salary of
$329,400 plus an incentive bonus based on the Company's annual
income before income taxes and discretionary bonuses awarded by the
Company's Board of Directors. Bonuses awarded for fiscal year 1995
equaled $254,416. This agreement was amended on April 1, 1995 to
provide for a minimum annual base salary of $329,400, discretionary
bonuses awarded by the Company's Board of Directors, and awards of
restricted stock and stock options which vest over three years.
The amended agreement expires January 29, 1998.
Mr. McLenithan's fiscal year 1995 agreement provided for a
minimum annual base salary of $297,000 plus an incentive bonus
based on the Company's annual income before income taxes and
discretionary bonuses awarded by the Company's Chief Executive
Officer or its Board of Directors. Bonus awarded for fiscal year
1995 equaled $165,812. This agreement was amended on April 1, 1995
to provide for a minimum annual base salary of $200,000, a lump sum
distribution for fiscal year 1996 of $97,300 and awards of
restricted stock and stock options which vest over three years.
Bonuses after March 31, 1995 are subject to approval by the
Company's Chief Executive Officer or Board of Directors. The
amended agreement expires January 29, 1998.
Mr. Jackson's fiscal year 1995 agreement provided for a
minimum annual base salary of $297,500 plus an incentive bonus
based on the Company's annual income before income taxes and
discretionary bonuses awarded by the Company's Chief Executive
Officer or its Board of Directors. Bonus awarded for fiscal year
1995 equaled $115,812. This agreement was amended on April 1, 1995
to provide for a minimum annual base salary of $225,000, a lump sum
distribution for fiscal year 1996 of $123,640 and awards of
restricted stock and stock options which vest over two years.
Bonuses after March 31, 1995 are subject to approval by the
Company's Chief Executive Officer or Board of Directors. The
amended agreement expires April 5, 1997.
In January 1995, the Company entered into an employment
agreement with Mr. Doganiero, for a term expiring on January 10,
1998, providing for an annual base salary of $296,400 and various
benefits, including participation in a discretionary bonus program
awarded by the Company's Chief Executive Officer or its Board of
Directors. There was no bonus awarded for fiscal year 1995. This
agreement was amended on April 1, 1995 to provide for a minimum
annual base salary of $225,000. Bonuses after March 31, 1995 are
subject to approval by the Company's Chief Executive Officer or
Board of Directors. The amended agreement expires on January 10,
1998.
Pursuant to the terms of their respective employment
agreements, Mr. Rose, Mr. McLenithan, Mr. Jackson and Mr. Doganiero
each agreed not to compete, directly or indirectly, with the
Company in the states in which the Company does or may do business
during the terms of their respective agreements and for a period of
one year after the termination of their respective employments,
either with or without cause. If the Company were to terminate the
employment of Mr. Rose, Mr. McLenithan, Mr. Jackson or Mr.
Doganiero without cause, the Company would be required to pay such
terminated employee his remaining base salary and any additional
compensation earned in excess of his base salary until the date of
termination, plus an amount equal to his then annual base salary
for the period through and including the expiration of such
employee's employment agreement. If the employment of Mr. Rose,
Mr. McLenithan, Mr. Jackson or Mr. Doganiero were terminated with
cause, the Company would be required to pay the terminated employee
only their base salary up to the date of termination. If Mr. Rose,
Mr. McLenithan, Mr. Jackson or Mr. Doganiero were to die during
their term of employment, the Company would be required to pay to
their respective estate, the base salary otherwise payable until
the end of the term of their respective agreement and to pay their
spouse and surviving children, in equal shares, an additional
$5,000.
Under their respective employment agreements, if there were a
"change in control" of the Company (as defined therein), and
subsequent to such change in control any of their employment
agreements (or any subsequent employment agreement then in effect
which expires prior to the time that they have attained 65 years of
age) were to be terminated or were not to be renewed by the Company
at the expiration of the term of such agreement, or any renewals,
extensions or modifications, then such employee would be entitled
to receive compensation in an amount equal to 299% of such
employee's annual base salary in effect at the time of the
termination (the "Severance Amount"). This Severance Amount would
be payable in one single payment within 60 days after the
termination of the employment of such employee. The Severance
Amount, however, may not exceed three times the "base amount" as
determined under Section 280G of the Internal Revenue Code of 1986,
as amended (the "Code"). In the event the Severance Amount payable
to such employees were to be reduced for the reason set forth in
the preceding sentence, the Severance Amount would be reduced prior
to the reduction of any other payments due under their respective
employment agreements. A "change in control" is defined in each of
the existing employment agreements as a transfer of more than 50%
of the Company's common stock in a single transaction or series of
transactions in concert with each other (excluding transfers made
by persons who were officers or were related to officers of the
Company immediately prior to the change in control).
COMPENSATION COMMITTEE REPORT
The Compensation Committee is comprised entirely of the
independent Members of the Board of Directors, John G. Raos and
Charles C. Kelly. The Compensation Committee reviews, recommends
and approves changes to the Company's compensation policies and
programs and administers the Company's stock option plans. The
Committee also is responsible for reviewing and approving all
compensation decisions for the Chief Executive Officer and other
executive officers. On April 1, 1995, the Committee amended the
employment agreements of the Company's Chief Executive Officer and
other executive officers.
Compensation packages granted to the Company's Chief Executive
Officer (the "CEO") and other executive officers are designed to
provide executives with (i) competitive base salaries, and (ii)
incentive opportunities to earn additional compensation based on
corporate performance. The incentive portion of the packages
includes bonuses, stock options and restricted stock. All are
intended to link pay to corporate performance.
Base Salaries
Base salaries of the CEO and other executive officers are
targeted to be competitive with salaries commanded by those in
similar positions within the Company's Peer Group (as hereinafter
defined). In setting individual base salary levels of the CEO and
other executive officers, the Committee considers such factors as
the executive's scope of responsibility, current performance and
future potential.
The minimum base salary of the CEO and other executive
officers are set forth in employment agreements between the Company
and such executive officer, which agreements are reviewed annually
by the Compensation Committee to determine if increases are
warranted. For the Company's 1995 fiscal year, the Compensation
Committee determined to maintain the base salaries as in fiscal
year 1994, in light of the Company's performance in fiscal year
1994.
Cash Bonus Compensation
Cash bonus compensation, in fiscal year 1995, to the Company's
executive officers was equal to a percentage of the Company's "net
income before tax" as defined in such officers' employment
agreements and discretionary bonuses awarded by the Company's Chief
Executive Officer. The percentages for the Company's fiscal year
1995 for Messrs. Rose, McLenithan and Jackson were 4%, 3% and 3%,
respectively. Based on net income before taxes and other
discretionary bonuses, cash bonus compensation paid to Messrs.
Rose, McLenithan and Jackson in fiscal year 1995 equaled $254,416,
$165,812 and $115,812, respectively.
Stock Options and Restricted Stock
Stock options and restricted stock for Common Stock are
granted to reinforce the importance of improving shareholder value
over time. Stock options are granted at the fair market value of
the stock on the date of grant to ensure that senior officers are
rewarded only for any prospective appreciation in the price of the
Common Stock. Restricted stock is granted at a value determined by
the Board of Directors. This links executive compensation to
benefits produced for all shareholders.
Benefits
Benefits offered to executive officers serve a different
purpose than do other elements of total compensation. In general,
they provide a safety net against problems which can arise from
illness, disability or death. Benefits offered to executive
officers include medical and dental benefits and life insurance.
The Company also matches up to 6% of employee contributions to a
401(k) plan at a percentage determined each year by the Company.
THE COMPENSATION COMMITTEE
John G. Raos
Charles C. Kelly
<PAGE>
PERFORMANCE GRAPH
The following performance graph compares the cumulative total
shareholders' return on the Company's common stock with that of the
NASDAQ Market Index, a broad market index published by Media
General Financial Services, and that of Compucom Systems, Inc.,
Inacom CP and Transnet CP, public companies in the same industry as
the Company (the "Peer Group"). The comparison assumes that $100
was invested in each of the Company's Common Stock, the stocks
included in the NASDAQ Market Index and the stocks included in the
Peer Group at the outset of the five (5) year period covered by the
graph. The indexes reflect formulas for dividend reinvestment and
weighting of individual stocks. Stock price performances shown on
the graph are not intended to be indicative of future price
performances.
<TABLE>
<CAPTION>
Comparison of 5 Year Cumulative Total Return
of Company, Peer Group and Broad Market
Fiscal Year Ending
Company 1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
Dataflex CP 100 118.42 102.63 55.26 77.63
85.53
Peer Group 100 149.43 104.57 180.09 227.87
129.77
Broad Market 100 110.28 116.23 130.08 150.33
159.48
</TABLE>
Certain Relationships and Related Transactions
The Company has made loans from time to time during fiscal
years
1987 through 1995 to its employees primarily to enable them to
exercise
stock options to purchase the Company's Common Stock. During the
1995
fiscal year, the amount of indebtedness owed on such loans was
evidenced
by a promissory note from the appropriate employee. These loans
bear
interest at rates ranging from 7% per annum to prime plus 1.5% per
annum
and are payable upon demand. <PAGE>
ANNUAL REPORT (FORM 10-K)
A copy of the 1994 Annual Report (Form 10-K) of the Company
filed
with the Securities and Exchange Commission is available upon
request
from:
Raymond DioGuardi
Senior Vice President, Finance
and Chief Financial Officer
Dataflex Corporation
3920 Park Avenue
Edison, New Jersey 08820
By Order of the Board of Directors
DATAFLEX CORPORATION
Edison, New Jersey
July 25, 1995<PAGE>
Exhibit 1
CERTIFICATE OF AMENDMENT TO THE
CERTIFICATE OF INCORPORATION
OF
DATAFLEX CORPORATION
Pursuant to the provisions of the New Jersey Business
Corporation
Act, the undersigned Corporation executes the following Certificate
of
Amendment to its Certificate of Incorporation:
1. The name of the Corporation is: DATAFLEX CORPORATION
2. The number of authorized shares of the Corporation is
being
changed from 10,000,000 to 30,000,000 shares. In order to
accomplish
the foregoing, Article Fourth of the Certificate of Incorporation
is
hereby amended to read as follows:
"FOURTH: The aggregate number of shares of capital
stock which this Corporation shall have authority
to issue is Thirty Million (30,000,000) shares of
stock, of which Twenty Million (20,000,000) shares
shall consist of common stock, without nominal or
par value, and Ten Million (10,000,000) shares
shall consist of preferred stock, without nominal
or par value.
A.Common Stock. This Corporation's Twenty
Million (20,000,000) shares of Common Stock,
without nominal or par value, shall not have
cumulative voting or pre-emptive rights and shall
be entitled to one vote for each share in the
election of directors and on any other matter
presented to the shareholders.
B.Preferred Stock. This Corporation's Ten
Million (10,000,000) shares of Preferred Stock
shall be without nominal or par value. Each series
of shares of Preferred Stock so issued shall have
such rights and obligations as to dividends,
redemptions by this Corporation, and other rights
or obligations as may be established by this
Corporation's Board of Directors with respect to
each such series, as set forth in a certified
resolution duly filed with the Secretary of State
of New Jersey pursuant to N.J.S.A. 14:A:7-2 of the
New Jersey Business Corporations Act, as amended,
or any successor provision of statute thereto.
Upon dissolution, whether voluntary or
involuntary, the holders of shares of Preferred
Stock shall first be entitled to receive, out of
the net assets of this Corporation, any amount set
forth in the Board of Director's resolution
authorizing the series of Preferred Stock of which
such shares are a part, plus unpaid accumulated
dividends, if any, without interest. All of the
assets, if any, thereafter remaining shall be
distributed among the holders of the Common Stock.
The consolidation or merger of this Corporation at
any time, or from time to time, with any other
corporation or corporations, or a sale of all or
substantially all of the assets of this Corporation
shall not be construed as a dissolution,
liquidation, or winding up of the Corporation
within the meaning hereof.
Except as otherwise expressly provided by the
Board of Directors, or as otherwise provided by the
laws of the State of New Jersey, the holders of the
Common Stock shall exclusively possess all of the
voting powers of this Corporation for all voting
purposes, and the holders of the Preferred Stock
shall have no voting power and no holder thereof
shall be entitled to receive notice of any meetings
of the shareholders of this Corporation.
The Board of Directors of this Corporation, in
its discretion, may declare and pay dividends on
the Common Stock concurrently with dividends on the
Preferred Stock for any dividend period of any
fiscal year when such dividends are applicable to
the Common Stock; provided that any and all
accumulated dividends on the Preferred Stock for
all previous fiscal years and all dividends on the
Preferred Stock for the previous dividend period
for the current fiscal year have been paid in full.
3. The foregoing amendment to the Certificate of
Incorporation
was approved and adopted by the directors of the Corporation on
June
, 1995 and by the shareholders of the Corporation on September
,
1995.
4. The number of shares of capital stock entitled to vote
the
foregoing amendment was shares of common stock, no par
value.
5. The number of shares voting for and against such
amendment was
as follows:
No. of Shares Voting No. of Shares Voting
For Amendment Against Amendment
This Certificate of Amendment has been executed on behalf of
the
Corporation by its Chairman and Chief Executive Officer this
day of September, 1995
Richard C. Rose
Chairman and
Chief Executive Officer
