<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
DATAFLEX 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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[LETTERHEAD OF DATAFLEX CORPORATION]
August 25, 1997
Dear Shareholder:
You are invited to attend the Annual Meeting of Shareholders (the "Annual
Meeting") of Dataflex Corporation (the "Company"), which will be held at the
Company's telesales office located at 101 Starcrest Drive, Clearwater, Florida,
September 18, 1997, at 2:00 p.m., local time.
The notice of the Annual Meeting and proxy statement on the following
pages cover the formal business of the Annual Meeting. Whether or not you
expect to attend the Annual Meeting, please sign, date, and return your proxy
promptly in the enclosed envelope to assure your stock will be represented at
the Annual Meeting. If you decide to attend the Annual Meeting and vote in
person, you will, of course, have that opportunity.
The continuing interest of the shareholders in the business of the Company
is gratefully acknowledged. We hope many will attend the Annual Meeting.
Sincerely,
/s/ Deborah Medley
--------------------------------
Deborah Medley
Secretary
<PAGE> 3
DATAFLEX CORPORATION
2145 CALUMET STREET
CLEARWATER, FLORIDA 34625
___________________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
SEPTEMBER 18, 1997
The Annual Meeting of Shareholders (the "Annual Meeting") of Dataflex
Corporation (the "Company") will be held at the Company's telesales office
located at 101 Starcrest Drive, Clearwater, Florida, September 18, 1997, at 2:00
p.m., local time, for the following purposes:
1. To consider and act upon a proposal to change the Company's state of
incorporation from New Jersey to Florida by means of a merger of the Company
into a wholly-owned Florida subsidiary of the Company, Dataflex
Reincorporation, Inc., as described in the accompanying Proxy Statement;
2. To elect five members of the Board of Directors: one director to
serve until the 1998 Annual Meeting; two directors to serve until the 1999
Annual Meeting; and two directors to serve until the 2000 Annual Meeting; and
3. 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 21, 1997,
as the record date for the determination of shareholders entitled to notice of
and to vote at the Annual Meeting.
Shareholders are requested to vote, date, sign and promptly return the
enclosed proxy in the envelope provided for that purpose, WHETHER OR NOT THEY
INTEND TO BE PRESENT AT THE ANNUAL MEETING.
By Order of the Board of Directors,
/s/ Deborah Medley
----------------------------------
Secretary
Clearwater, Florida
August 25, 1997
<PAGE> 4
__________________
PROXY STATEMENT
__________________
ANNUAL MEETING AND PROXY SOLICITATION INFORMATION
This Proxy Statement is first being sent to shareholders on or about
August 25, 1997, in connection with the solicitation of proxies by the Board of
Directors of Dataflex Corporation (the "Company"), to be voted at the Annual
Meeting of Shareholders to be held on September 18, 1997, and at any
adjournment thereof (the "Annual Meeting"). The close of business on July 21,
1997, has been fixed as the record date of the determination of shareholders
entitled to notice of and to vote at the Annual Meeting. At the close of
business on the record date, the Company had outstanding 5,961,169 shares common
stock, no par value per share (the "Common Stock"), entitled to one vote per
share.
Shares represented by duly executed proxies in the accompanying form
received by the Company prior to the Annual Meeting will be voted at the Annual
Meeting. If shareholders specify in the proxy a choice with respect to any
matter to be acted upon, the shares represented by such proxies will be voted as
specified. If a proxy card is signed and returned without specifying a vote or
an abstention on any proposal, it will be voted according to the recommendation
of the Board of Directors on that proposal. The Board of Directors recommends a
vote FOR the election of the nominees for directors listed on the proxies and
other proposals described in this Proxy Statement. The Board of Directors knows
of no other matters that may be brought before the Annual Meeting. However, if
any other matters are properly presented for action, it is the intention of the
named proxies to vote on them according to their best judgment.
Shareholders who hold their shares through an intermediary must provide
instructions on voting as requested by their bank or broker. A shareholder who
signs and returns a proxy may revoke it at any time before it is voted by
taking one of the following three actions: (i) giving written notice of the
revocation to the Secretary of the Company; (ii) executing and delivering a
proxy with a later date; or (iii) voting in person at the Annual Meeting.
Approval of the election of directors will require a plurality of the
votes cast at the Annual Meeting, provided a quorum is present. Votes cast by
proxy or in person at the Annual Meeting will be tabulated by one or more
inspectors of election appointed at the Annual Meeting, who will also determine
whether a quorum is present for the transaction of business. Abstentions and
broker non-votes will be counted as shares present in the determination of
whether shares of the Company's common stock represented at the Annual Meeting
constitute a quorum. Respect to matters to be acted upon at the Annual Meeting,
abstentions and broker non-votes will be counted for the purpose of determining
whether a proposal has been approved.
The Company's Board of Directors has appointed, and the Shareholders have
approved, Price Waterhouse LLP, Tampa, Florida, as independent public
accountants for the year 1997. Representatives of Price Waterhouse LLP are
expected to be present at the Annual Meeting with the opportunity to make a
statement if they desire to do so and to respond to appropriate questions posed
by shareholders. The Company has not had any changes in, or disagreements with,
its independent accountants on accounting or financial disclosure issues.
The expense of preparing, printing and mailing proxy materials to
shareholders of the Company will be borne by the Company. In addition to
solicitations by mail, regular employees of the Company may solicit proxies on
behalf of the Board of Directors in person or by telephone. The Company will
reimburse brokerage houses and other nominees for their expenses in forwarding
proxy material to beneficial owners of the Company's stock.
The executive offices of the Company are located at 2145 Calumet Street,
Clearwater, Florida 34625 and the Company's telephone number is (813) 562-2000.
<PAGE> 5
SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the
beneficial ownership of the Common Stock as of July 21, 1997 by (i) each person
who is known to the Company to be the beneficial owner of more than 5% of the
outstanding Common Stock, (ii) each executive officer named in the Summary
Compensation Table (the "Named Executive Officers"), (iii) each director and
nominee for director of the Company, and (iv) all directors and executive
officers of the Company as a group.
<TABLE>
<CAPTION>
Amount and
Nature
Name and Address of of Beneficial
Beneficial Owner Ownership(1) Percent
- ---------------- ------------ -------
<S> <C> <C>
Anthony G. Lembo(2) 7,500 *
Richard C. Rose(2) 298,156(3) 4.7%
Philip Doganiero(2) 18,000 *
U.S. Bankcorp(4) 551,000 9.4%
Pioneering Management Corporation(5) 423,500 7.2%
W. Keith Schilit(2) 12,500(6) *
Barry M. Alpert(2) 12,500(6) *
All directors and executive
officers as a group (5 persons)(7) 373,656 6.4%
</TABLE>
______________________
* Less than 1%.
(1) Beneficial ownership of shares, as determined in accordance with
applicable Securities and Exchange Commission rules, includes shares as to
which a person shares voting power and/or investment power. The Company
has been informed that all shares shown are held of record with sole
voting and investment power, except as otherwise indicated.
(2) The business address for Messrs. Doganiero, Lembo, Rose, Schilit and
Alpert is 2145 Calumet Street, Clearwater, Florida 34625.
(3) The number of shares shown in the table above includes 271,813 shares that
are subject to options that are currently exercisable.
(4) The number of shares shown is based on a Schedule 13G filed with the
Securities and Exchange Commission, dated February 13, 1997. The business
address for U.S. Bankcorp is 111 Southwest Fifth Avenue, Portland, Oregon
99204.
(5) The number of shares shown is based on a Schedule 13G filed with the
Securities and Exchange Commission, dated January 14, 1997. The business
address for Pioneering Management Corporation is 60 State Street, Boston,
Massachusetts 02108.
(6) The number of shares shown in the table above includes 12,500 shares that
are subject to options that are currently exercisable.
(7) The number of shares shown in the table above includes 373,656 shares
beneficially owned by Messrs. Lembo, Rose, Doganiero, Schilit and Alpert,
of which 296,813 shares are subject to options that are immediately
exercisable.
-2-
<PAGE> 6
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information with respect to each
person who is currently a director or executive officer of the Company.
<TABLE>
<CAPTION>
Year First
Became a
Name Position(s)(1) Age Director
---- -------------- --- --------
<S> <C> <C> <C>
Richard C. Rose . . . . . . . . Chief Executive Officer and Director 49 1984
Anthony G. Lembo . . . . . . . President, Chief Operating Officer, Chief 44 1996
Financial Officer and Director
Philip Doganiero . . . . . . . Chairman and Director 40 1995
W. Keith Schilit . . . . . . . Director 43 1997
Barry M. Alpert . . . . . . . . Director 56 1997
- ----------------
</TABLE>
(1) Currently, the Board of Directors of the Company is divided into five
classes. The current terms expire in 1997 for Class II directors (Mr.
Lembo), 1998 for Class III directors (Mr. Doganiero), 1999 for Class IV
directors (Mr. Schilit), 2000 for Class V directors (Messrs. Rose and
Alpert) and 2001 for Class I directors. Upon shareholder approval of the
reincorporation of the Company from New Jersey to Florida, the Board of
Directors will be divided into three classes with terms expiring in the
years 1998 (Class I), 1999 (Class II), and 2000 (Class III). See "Proposal
2 - Election of Directors."
Richard C. Rose has served as Chief Executive Officer of the Company since
April 1990. Mr. Rose has served as a director of the Company since October
1984 and Chairman of the Board of Directors from September 1993 to December
1996. Prior to April 1990, Mr. Rose served as President of the Company (April
1987 - September 1993), Chief Operating Officer of the Company (July 1986 -
April 1990) and as Vice President - Sales and Marketing of the Company (July
1984 - April 1987).
Anthony G. Lembo has served as President, Chief Operating Officer, Chief
Financial Officer and a director of the Company since October 1996. Prior to
October 1996, Mr. Lembo served as Vice President of the Company (1995 - 1996).
Mr. Lembo's previous experience includes nine years as Chief Operating Officer
of National Data Products ("NDP"), prior to the Company's acquisition of NDP
(1986 - 1995).
Philip Doganiero has served as a director of the Company since January
1995 and as Chairman of the Board of Directors since December 1996. Prior to
December 1996, Mr. Doganiero served as President of the Company (April 1996 -
December 1996) and Co-President of the Company (January 1995 - April 1996),
following the Company's acquisition of NDP. Prior to 1995, Mr. Doganiero was a
founder and President of NDP (1972-1995).
W. Keith Schilit has served as a director of the Company since April 1997.
Dr. Schilit is a professor of management and the director of the Program in
Entrepreneurship at the University of South Florida, Tampa, Florida, having
served on the faculty of the university since 1985. Dr. Schilit, who holds an
MBA and Ph.D. in strategic planning, is also an author, consultant and lecturer.
He has been the principal owner of Catalyst Ventures (and its predecessors), a
business consulting firm, since approximately 1982. From 1982 until 1985, he
was on the faculty of Syracuse University and from 1979 until 1982, he was on
the faculty of University of Maryland. He also is a director of ASM Fund, Inc.
Barry M. Alpert has served as a director of the Company since April 1997.
Mr. Alpert has served as Managing Director, Investment Banking for Raymond
James & Associates, Inc. since January 1997, as director of Reptron
Electronics, Inc. since 1995 and as Chairman of Alpert Financial Group, Inc. (a
family investment holding
-3-
<PAGE> 7
company) since 1989. Prior to January 1997, Mr. Alpert served as Vice
President, and as Senior Vice President-Investment Banking for Robert W. Baird
& Co. Incorporated (1991 - 1997). From 1989 until 1993, Mr. Alpert served as
Vice Chairman of Colony Bank. Mr. Alpert also served as Vice Chairman and
director of Western Reserve Life Assurance Co. of Ohio and as President of
Pioneer Western Corporation from 1989 until 1991. Prior to 1989, Mr. Alpert
served as President and Chief Executive Officer of United Insurance Companies,
Inc. (1988-1989); Chairman of the Board of Directors, President and Chief
Executive Officer of Home Life Financial Assurance Corporation (1982-1988);
Chairman of the Board of Directors, President and Chief Executive Officer of
Orange State Life Insurance Company (1977-1989) and Chairman of the Board of
Directors of Life Savings Bank (1979-1983).
MEETINGS OF THE BOARD OF DIRECTORS AND STANDING COMMITTEES
During 1996, the Company's Board of Directors held 7 meetings. Other than
Messrs. Alpert and Schilit, who were appointed to the Board on April 6, 1997,
each other incumbent director attended at least 75% of the total number of
Board meetings and meetings of committees of which he is a member. Messrs.
Alpert and Schilit have attended all Board meetings since their appointment.
The Company's Board of Directors has established an Audit Committee and a
Compensation Committee. The Audit Committee is composed of two independent
directors, Messrs. Schilit and Alpert. The Audit Committee makes
recommendations concerning the engagement of independent public accountants,
reviews with the independent public accountants the plan and results of the
audit engagement, approves professional services provided by the accountants,
reviews the independence of the accountants, considers the range of audit and
non-audit fees, and reviews the adequacy of the Company's internal accounting
controls.
The Company has established a Compensation Committee, consisting of
Messrs. Schilit and Alpert. The Compensation Committee determines the
compensation of the Company's executive officers and sets financial targets to
be used in determining executive bonuses.
The Company does not have a Nominating Committee. This function is
performed by the Board of Directors.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company are paid $12,000 annually.
All directors receive reimbursement for reasonable out-of-pocket expenses
incurred in connection with meetings of the Board of Directors. No director
who is an employee of the Company receives separate compensation for services
rendered as a director.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who own more than ten
percent of the Common Stock of the Company, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission (the "SEC").
Officers, directors, and ten percent shareholders are required by the SEC
regulations to furnish the Company with copies of all Section 16(a) reports
they file.
Based solely on its review of the copies of such reports received by it,
and written representations from certain reporting persons that no SEC Forms 3,
4, or 5 were required to be filed by those persons, the Company believes that
during fiscal year 1997, its officers, directors and ten percent beneficial
owners timely complied with all applicable filing requirements.
-4-
<PAGE> 8
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the
compensation earned during fiscal years 1995, 1996 and 1997 by the Company's
Chief Executive Officer (the "CEO") and each of the other Named Executive
Officers of the Company whose total annual salary and bonus for fiscal year 1997
exceeded $100,000 (collectively, the "Named Executive Officers"). Messrs.
Doganiero and Lembo were not employed by the Company during fiscal year 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
---------------------------------
Annual Compensation Awards Payouts
------------------------------------ ---------------------- -------
Other Securities
Name Annual Restricted Under- All Other
and Compen- Stock lying LTIP Compen-
Principal Fiscal Salary($) sation Awards(s) Options/SARs Payouts sation
Position Year (1) Bonus($) ($) ($) (#) ($) ($)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Richard C. Rose 1995 $ 329,400 $254,416 ---- ---- ---- ---- $ 1,913 (3)
Chief Executive Officer 1996 $ 329,400 ---- ---- $31,525 (2) ---- ---- $153,550 (4)
1997 $ 354,600 ---- ---- $49,563 (2) 97,022 ---- $ 380 (3)
Anthony G. Lembo 1996 $ 125,000 ---- ---- ---- ---- ---- $ 1,100 (3)
President, Chief 1997 $ 175,000 ---- ---- ---- 40,000 ---- $ 914 (3)
Operating
Officer and Chief
Financial
Officer
Philip Doganiero 1996 $ 225,000 ---- ---- ---- ---- ---- $ 2,187 (3)
Chairman of the Board 1997 $ 103,800(5) ---- $15,000 (5) ---- 40,000 ---- $ 1,052 (3)
of Directors
- -----------
</TABLE>
(1) Includes deferred compensation.
(2) Mr. Rose was granted 27,022 shares of Common Stock in fiscal year 1996,
pursuant to a restricted stock agreement (the "Agreement"). Pursuant to
the terms of the Agreement, the comprising shares are subject to certain
restrictions that expire on March 31, 1998. 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 in the Agreement. If at any time prior to the expiration of
the restriction period, employment 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. Dividends are not payable on the
restricted stock. The number of shares of Common Stock comprising Mr.
Rose's aggregated restricted stock holdings at fiscal year end 1997 was
9,007 and the value of such shares was $24,780. The value of the vested
portion of the restricted stock grants issued to Mr. Rose at fiscal year
end 1997 was $49,563.
(3) All other compensation represents 401(k) matching contributions.
(4) Includes a one-time lump sum distribution to Mr. Rose of $152,000 on April
1, 1995.
(5) Mr. Doganiero voluntarily reduced his base salary to $1.00 effective
October 1, 1996. However, he is entitled to an annual base salary of
$225,000 under the terms of his employment agreement. Neither the Company
nor Mr. Doganiero currently have a plan or proposal for payment of the
foregone salary amounts.
(6) Includes $1,052 of 401(k) matching contributions and $15,000 in premiums,
payable quarterly by the Company, for a split dollar key-man life insurance
policy for which Mr. Doganiero's estate is the beneficiary.
-5-
<PAGE> 9
OPTION GRANTS IN FISCAL YEAR 1997
The following table contains information concerning the grant of
stock options pursuant to the Company's several stock option plans to the Named
Executive Officers during fiscal year 1997.
<TABLE>
<CAPTION>
Individual Grants
- -------------------------------------------------------------------------------------- Potential Realizable
Percent of Value at Assumed Annual
Total Rates of Stock Price
Number of Options/ Appreciation For Option
Securities SARs Term(3)
underlying Granted to ------------------------
option/SARs Employees Exercise of
Granted in Fiscal Base Price Expiration
Name (#)(1) Year ($/Sh)(2) Date 5% ($) 10% ($)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Richard C. Rose . . . . . . . . . . 97,022 16.4% $ 2.06 11/15/06 $ 42,971 $ 92,150
Anthony G. Lembo . . . . . . . . . 40,000 6.76% $ 2.06 11/15/06 17,720 38,000
Philip Doganiero . . . . . . . . . 40,000 6.76% $ 2.06 11/15/06 17,720 38,000
</TABLE>
(1) On November 15, 1996, an option to purchase 97,022 shares at $2.06 per
share was granted to Mr. Rose in exchange for cancellation of the options
previously granted on April 1, 1995 and August 11, 1995 (options to
purchase 27,022 shares at $8.125 per share and 70,000 shares at $5.75 per
share, respectively).
(2) All stock options were granted at the fair market value on the date of
grant.
(3) The amounts set forth are based on assumed appreciation of 5% and 10%
rates as prescribed by the Commission rules and are not intended to
forecast future appreciation, if any, of the stock price.
AGGREGATE OPTION TABLE
The following table shows information concerning options exercised during
fiscal year 1997 and options held by the Named Executive Officers at the end of
fiscal year 1997.
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Securities In-the-Money
Underlying Unexercised Options at
Options at Fiscal Fiscal Year-
Year-End(#) End($)(1)
Shares Acquired Value Exercisable(E)/ Exercisable(E)/
Name on Exercise(#) Realized($) Unexercisable(U) Unexercisable(U)
- ---- -------------- -------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Richard C. Rose -- -- 271,813(E)/ $0(E)/
134,209(U) $66,945(U)
Philip Doganiero -- -- 0(E)/ $0(E)/
40,000(U) $27,600(U)
Anthony G. Lembo -- -- 0(E)/ $0(E)/
40,000(U) $27,600(U)
</TABLE>
_________
(1) Represents the dollar value of the difference between the value at the end
of fiscal year 1997 and the option exercise price of unexercised options
at the end of fiscal year 1997.
TEN-YEAR OPTION REPRICINGS
The following table sets forth certain information concerning repricing of
stock options to purchase shares of Common Stock held by the Named Executive
Officers.
<TABLE>
<CAPTION>
Number of Length Of
Securities Market Price Original Option
Underlying Of Stock At Exercise Price Term
Options/SARs Time of At Time Of New Remaining At
Repriced Or Repricing or Repricing Or Exercise Date If
Amended Amendment Amendment Price Repricing Or
Name Date (#) ($) ($) ($) Amendment
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Richard C. Rose 12/20/96 70,000 $ 2.06 $ 5.75 $ 2.06 9 years
Chief Financial Officer 12/20/96 27,022 $ 2.06 $ 8.125 $ 2.06 9 years
Anthony G. Lembo N/A N/A N/A N/A N/A N/A
President, Chief Operating
Officer and Chief Financial
Officer
Philip Doganiero N/A N/A N/A N/A N/A N/A
Chairman of the Board of
Directors
</TABLE>
-6-
<PAGE> 10
EMPLOYMENT AGREEMENTS
The Company has employment agreements with executive officers Richard C.
Rose and Philip Doganiero. Mr. Rose's agreement, as amended, provides for a
minimum annual base salary of $329,400, a one-time lump sum distribution of
$152,000 on April 1, 1995, discretionary bonuses awarded by the Company's Board
of Directors and awards of restricted stock and stock options that vest over
three years. Mr. Rose's amended employment agreement expires December 31,
1999. Mr. Doganiero's agreement provides for an annual base salary of $225,000
or such greater amount as may be approved from time to time by the Company's
Board of Directors and expires January 11, 1998.
Pursuant to their respective employment agreements, Messrs. Rose and
Doganiero each agree 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 employment and for a period of one year after the termination of their
employment. If either Mr. Rose or Mr. Doganiero is terminated without cause,
the Company is required to pay 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 his employment agreement. If either Mr. Rose or
Mr. Doganiero is terminated with cause, the Company is required to pay only his
base salary up to the date of termination. If either Mr. Rose or Mr.
Doganiero dies during the term of his employment, the Company is required: (a)
to pay to his estate the base salary otherwise payable until the later of (i)
three years from the date of death or (ii) the end of the term of his
employment agreement; and (b) to pay his estate an additional $5,000.
Under their respective employment agreements, if there is a "change in
control" of the Company and, subsequent to such change in control, either Mr.
Rose's or Mr. Doganiero's employment agreement (or any subsequent employment
agreement then in effect which expires prior to the time they have attained 65
years of age) is terminated or is not renewed by the Company at the expiration
of its term, or any renewals, extensions or modifications, then he would
receive compensation in an amount equal to 299% of his annual base salary in
effect at the time of his termination (the "Severance Amount"). This Severance
Amount would be payable in one single payment within 60 days after the
termination of his employment. 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 is 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 each of Mr. Rose's and Mr. Doganiero's employment agreements. A
"change in control" is defined in both 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).
The Company has also entered into an employment agreement with Anthony G.
Lembo, its President, Chief Operating Officer and Chief Financial Officer,
effective January 11, 1995. Mr. Lembo's employment agreement is for a period of
three years and provides for an annual base salary of $125,000 or such greater
amount as may be approved from time to time by the Company's Board of Directors.
Upon Mr. Lembo's election as President of the Company, the Board of Directors
approved an increase of Mr. Lembo's annual base salary to $175,000 ("Base
Salary") and an amount equal to $50,000 per year, or such greater amount as may
be approved from time to time by the Company's Board of Directors, if the
Company's Southeast division meets or exceeds certain financial targets, to be
determined by the Company's Board of Directors ("Performance Bonus"). The
financial targets for the current fiscal year have not been established, but the
Board expects to do so in the near future. In fiscal year 1997, because of the
Company's performance, it was determined that no bonus for executive officers
would be paid. Pursuant to his employment agreement, Mr. Lembo agrees not to
compete, directly or indirectly, with the Company in the states in which the
Company does or may do business, during the term of his employment and for a
period of one year after the termination of his employment. The employment
agreement also provides that Mr. Lembo shall receive severance benefits if his
employment is terminated by the Company "without cause" (as defined in the
employment agreement). In such a case, Mr. Lembo would receive his Base Salary,
as in effect upon his termination, for the remaining term of his employment
agreement and his Performance Bonus for the last full fiscal year completed
prior to the date of his termination. Mr. Lembo's employment agreement expires
January 11, 1998.
-7-
<PAGE> 11
STOCK OPTION PLANS
The Company maintains two incentive stock option plans (the "ISO Plans")
and five incentive and nonqualified stock option plans. The 1989, 1990, 1991,
1992 and 1994 incentive and nonqualified stock option plans (the "NQSO Plans")
provide for the grant of both incentive stock options and nonqualified stock
options to employees of the Company.
Shares of Common Stock have been reserved and issued under the above plans
as follows:
<TABLE>
<CAPTION>
Stock Option Plan Shares Reserved Shares Granted
----------------- --------------- --------------
<S> <C> <C>
1984 and 1987 ISO Plans 700,000 700,000
1989 NQSO Plan 400,000 400,000
1990 NQSO Plan 160,000 110,250
1991 NQSO Plan 200,000 50,000
1992 NQSO Plan 400,000 372,750
1994 NQSO Plan 800,000 622,722
</TABLE>
The ISO Plans and the NQSO Plans, excluding the 1990 NQSO Plan, provide
for the discretionary grant of options to purchase Common Stock at a price
determined by the Compensation Committee of the Board of Directors, but, in the
case of incentive stock options, at a price not less than the fair market value
thereof on the date of grant. The options, by their terms, must be exercised
within ten years from the date on which they are granted or within 90 days of
employment termination.
All options fully vest at date of grant except for stock options granted
under the 1989, 1991 and 1992 NQSO Plans, which vest 25% per year beginning one
year after grant date, and the 1994 NQSO Plan, which provides the Board of
Directors with discretion to determine vesting.
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<PAGE> 12
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933 or the Securities Exchange
Act of 1934 that might incorporate future filings, including this Proxy
Statement, in whole or in part, the following Board Compensation Committee
Report on Executive Compensation and Repricing of Options and the Performance
Graph shall not be incorporated by reference into any such filings.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") is comprised of the two
outside directors of the Company, Messrs. Alpert and Schilit. The Committee
reviews, recommends and approves changes to the Company's compensation policies
and programs and administers the Company's stock option plans. The Committee
is also responsible for reviewing and approving all compensation decisions for
the CEO and other executive officers.
Compensation packages granted to the Company's 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. The Company has structured its
compensation packages to support the strategic goals and objectives of the
Company.
Base Salaries
Base salaries of the CEO and other executive offices are customarily
targeted to be competitive with salaries commanded by those in similar positions
within the Company's Peer Group in the Performance Graph set forth below. In
setting individual base salary levels of the CEO and other executive officers,
the Committee reviews and compares various published salary surveys and
specifically, the salaries and financial performance of the companies in the
Company's Peer Group. Although the Company's base salaries for its CEO and
other executive officers were similar to the competitive median for the
Company's Peer Group competitors in fiscal year 1997, the Company's grant of
bonuses and annual incentives fell significantly below the competitive median
due to the Company's financial performance in fiscal year 1997.
The minimum base salaries of the CEO and other executive officers are set
forth in employment agreements between the Company and such executive officers,
which agreements are reviewed annually by the Committee to determine if
increases are warranted. Any salary increases that are approved by the
Committee are generally awarded at fiscal year end based on a review of the
level of achievement of targeted financial and strategic objectives, individual
performance and contributions to the achievement of the Company's objectives.
Following a review of the Company's financial statements for fiscal year 1997,
including the decrease in the Company's earnings, the Committee determined to
maintain the base salaries of its CEO and other executive officers, and to not
award any executive officer a bonus for fiscal year 1997.
Stock Options and Restricted Stock
The Company's long-term incentives for executive officers are provided
through restricted stock awards and stock option grants and are granted to
reinforce the importance of improving shareholder value over time. The
Committee did not grant any restricted stock in fiscal year 1997. The Committee
awarded a special restricted stock grant to the CEO in fiscal year 1996,
vesting over three years, and did not issue any stock-based grants to the CEO
in fiscal year 1997.
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. Option grants generally
vest over a period of three to four years, and the executives must be employed
by the Company at the time of vesting in order to exercise the options. The size
of the option grant is based upon competitive practice and position level, the
expected contribution of each executive officer to the Company's strategic and
financial objectives, and the Committee's desire to provide the executive
officers with an opportunity to build a meaningful stake in the Company with the
objective of aligning the executive officers' long-range interests with those of
the Company's shareholders and to encourage executives to remain in the
Company's employ. In fiscal year 1997, the Committee granted stock options to
its executive officers, as shown in the Summary Compensation Table, and
determined to reprice the stock options previously granted to the Company's CEO,
as shown in the Ten-Year Option Repricings table.
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 that 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 SEC requires compensation committees of public companies to state
their compensation policies with respect to the recently enacted federal income
tax laws that limit to $1 million the deductibility of compensation paid to
executive officers named in proxy statements of such companies. In light of the
current level of compensation for the Company's Named Executive Officers, the
Compensation Committee has not adopted a policy with respect to the
deductibility limit, but will adopt such a policy should it become relevant.
Barry M. Alpert
W. Keith Schilit
BOARD COMPENSATION COMMITTEE REPORT ON REPRICING OF OPTIONS
In December 1996, the Committee determined to exchange and reprice
(the "Repricing") certain outstanding stock options ("Outstanding Options") held
by the Company's CEO, Richard C. Rose. The Committee noted that the overall
purpose of the Company's stock option plans had been to attract and retain the
services of the Company's executives and to provide incentives to such persons
to exert maximum efforts for the Company's success. The Committee concluded that
the decline in the market value of shares of Common stock had frustrated these
purposes and diminished the value of the Company's stock option program as an
element of the Company's overall compensation arrangements.
In connection with the Repricing, Mr. Rose exchanged an aggregate of
97,022 Outstanding Options. At the time of the Repricing, the exercise price of
70,000 Outstanding Options was $5.75 per share of Common Stock and $8.125 per
share of Common Stock for the remaining 27,022 Outstanding Options. The
exercise price of all new options ("New Options") is $2.06 per share of Common
Stock, the then market price of the Common Stock. In addition, the Outstanding
Options exchanged by Mr. Rose had remaining terms of approximately nine years
at the time of repricing. The New Options issued in exchange for such
Outstanding Options have terms of ten years.
Barry M. Alpert
W. Keith Schilit
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<PAGE> 13
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 Corp. and TransNet
Corporation, public companies in the same industry as the Company, involved in
the sale of similar products and with similar lengths of corporate existence
(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 beginning of the five 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.
Comparison of 5 Year Cumulative Total Return
of Company, Peer Group and Broad Market
FISCAL YEAR ENDING
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
Company 55.26 77.63 85.53 31.11 28.21
Peer Group 180.09 227.87 129.77 220.28 249.63
Broad Market 130.08 150.33 159.48 194.52 206.47
</TABLE>
[GRAPH]
CERTAIN TRANSACTIONS
The Company has made loans from time to time during fiscal years 1987
through 1997 to its employees, including Richard C. Rose, the Company's CEO,
primarily to enable them to exercise stock options to purchase the Company's
Common Stock. During fiscal year 1997, the amount of indebtedness owed on such
loans was evidenced by promissory notes from the appropriate employees. The
loans to the employees of the Company bear interest at rates ranging from 7.0%
per annum to prime plus 1.5% per annum and are payable upon demand. On May 6,
1986, June 30, 1991, March 31, 1992 and September 30, 1993, the Company made
loans to Mr. Rose for $20,000, $75,425, $73,616 and $50,000, respectively, to
enable Mr. Rose to exercise stock options. The loans to Mr. Rose bear interest
at rates of 7.0%, 0%, 7.0% and 6.0%, respectively, with interest only due and
payable until January 1, 2000, and thereafter, Mr. Rose is obligated to pay the
remaining balance in five equal principal installments due and payable on
January 1, 2001,2002,2003,2004 and 2005. As of March 31, 1996 and 1997, Mr.
Rose's outstanding loan balance was $228,594 and $238,147, respectively.
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<PAGE> 14
PROPOSAL 1 - REINCORPORATION OF THE COMPANY FROM NEW JERSEY TO FLORIDA
INTRODUCTION
On June 16, 1997, the Board of Directors approved an Agreement and Plan of
Merger (the "Merger Agreement") between the Company and Dataflex
Reincorporation, Inc. ("Dataflex Florida"), a copy of which is attached as
Exhibit A to this Proxy Statement, whereby the Company will merge with and into
Dataflex Florida (the "Merger"). Upon shareholder approval of the Merger
Agreement, the Company's state of incorporation will change from New Jersey to
Florida (the "Reincorporation"). Dataflex Florida is a wholly-owned
nonoperating subsidiary of the Company recently incorporated in Florida solely
for purposes of effecting the Reincorporation.
REASONS FOR THE REINCORPORATION
The principal reason for the Reincorporation is to conform the Company's
legal residence to its principal place of business. The Company was
incorporated under New Jersey law at a time when the Company's business was
closely linked to New Jersey. The Company had its principal place of business
in New Jersey and a substantial portion of its business was conducted in New
Jersey. The Company has subsequently relocated its primary operations to
Florida. With the primary operations of the Company outside of New Jersey, the
Company's historical ties to New Jersey no longer appear to management to be
decisive in determining the best jurisdiction to fulfill the business needs of
the Company. Also, the Board of Directors believes that having the Company's
legal residence in Florida may have certain advantages. For example, it could
enable the Company to have a more significant voice in the legislative process
with respect to corporate and other Florida laws directly affecting it. This
opportunity can be important, as corporations are substantially affected by
changes in the legal and financial environment in which they operate, and by the
variety of legislative and other governmental actions that may be taken in
response to such changes. In addition, a corporation's state of incorporation
is likely to be a litigation forum from time to time, and litigation at a
distance from the Company's principal offices can result in significant
inconveniences and added expenses to the Company.
The Board of Directors believes that the Florida Business Corporation Act
(the "Florida Act") will meet the Company's business needs. The Florida Act is
a comprehensive, modern and flexible statute based on the Revised Model
Business Corporation Act. For the most part, it provides the flexibility in
management of a corporation and in the conduct of various business transactions
that is characteristic of the New Jersey Business Corporation Act (the "New
Jersey Act"). See "Material Terms of New Jersey and Florida Corporate Laws and
Differences."
Based upon the foregoing, the Board of Directors has determined that it
would be in the best interests of the Company and its shareholders to
reincorporate in Florida, through a merger with its wholly-owned subsidiary,
Dataflex Florida.
THE MERGER
The Reincorporation will be effected by merging the Company into Dataflex
Florida, which will be the surviving corporation of the Merger. The terms and
conditions of the Merger are set forth in the Merger Agreement included as
Exhibit A to this proxy statement, and the summary of the terms and conditions
of the Merger set forth below is qualified by reference to the full text of the
Merger Agreement.
Upon consummation of the Merger, Dataflex Florida will continue the
current operations of the Company, change its name to "Dataflex Corporation,"
and the Company will cease to exist. The Reincorporation will change the legal
domicile of the Company, but will not result in a change in the name, principal
office, business, management, capitalization, assets or liabilities of the
Company. By operation of law, Dataflex Florida will succeed to all of the
assets and assume all of the liabilities of the Company. After the Merger, the
Board of Directors of Dataflex Florida will be comprised of the persons elected
to the Board of Directors of the Company at the Annual Meeting, and the
persons who are currently serving as executive officers of the Company will
continue to serve in the same capacities for Dataflex Florida.
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<PAGE> 15
After the Merger, the rights of shareholders and the Company's corporate
affairs will be governed by the Florida Act and by the Articles of
Incorporation and By-Laws of Dataflex Florida, instead of the New Jersey Act
and the Certificate of Incorporation and By-Laws of the Company. The material
differences between the New Jersey Act and Florida Act are discussed below
under "Material Terms of New Jersey and Florida Corporate Laws and
Differences." The Articles of Incorporation of Dataflex Florida are similar to
the Certificate of Incorporation of the Company in material respects, except as
discussed below under "Material Terms of New Jersey and Florida Corporate Laws
and Differences." The By-Laws of Dataflex Florida and of the Company contain
differences attributable to the differences between the Florida Act and the New
Jersey Act. The Company does not believe that such differences are material to
the shareholders, except as noted below in "Material Terms of New Jersey and
Florida Corporate Laws and Differences." A copy of the Articles of
Incorporation of Dataflex Florida is set forth as Exhibit B to this Proxy
Statement. The Certificate of Incorporation and By-Laws of the Company and the
By-Laws of Dataflex Florida are available for inspection by shareholders of the
Company at the principal offices of the Company located at 2145 Calumet Street,
Clearwater, Florida 34625.
Upon the effectiveness of the Merger, each outstanding share of Common
Stock of the Company will be automatically converted into one share of the
Common Stock, no par value per share, of Dataflex Florida (the "Florida Common
Stock"). Each outstanding certificate representing shares of Common Stock of
the Company will continue to represent the same number of shares of Florida
Common Stock, and such certificates will be deemed for all corporate purposes
to evidence ownership of shares of the Company Common Stock. IT WILL NOT BE
NECESSARY FOR SHAREHOLDERS TO EXCHANGE THEIR EXISTING STOCK CERTIFICATES FOR
STOCK CERTIFICATES OF DATAFLEX FLORIDA. The Florida Common Stock will be
traded on the Nasdaq Stock Market's National Market (the "Nasdaq National
Market") under the symbol "DFLX," without interruption, and the delivery of
existing stock certificates of the Company will constitute "good delivery" of
shares of Dataflex Florida in stock transactions effected after the Merger.
Following the Merger, the Company's stock option plans will be continued by
Dataflex Florida, and each outstanding option granted pursuant to the plans will
automatically be converted into an option to purchase the same number of shares
of Florida Common Stock at the same exercise price and upon the same terms and
conditions as set forth in the options. Any other of the Company's employee
benefit arrangements will also be continued by Dataflex Florida upon the same
terms and conditions. Upon the effectiveness of the Merger, all outstanding
warrants to acquire Common Stock will automatically be converted into warrants
to purchase the same number of shares of Florida Common Stock on identical
terms and conditions.
Consummation of the Merger is subject to the approval of the shareholders.
The Merger is expected to become effective as soon as practicable after
shareholder approval is obtained. Prior to its effectiveness, however, the
Merger may be abandoned by the Board of Directors if, for any reason, the Board
of Directors determines that consummation of the Merger is no longer advisable.
Dissenter's rights are not available to shareholders of the Company with
respect to the proposed Merger.
FEDERAL INCOME TAX CONSEQUENCES OF THE REINCORPORATION
The discussion below provides general information about certain expected
federal income tax consequences of the Merger. The following summary does not
discuss certain tax considerations, which vary depending on the particular
circumstances of particular shareholders and does not discuss state, local or
foreign tax laws. EACH SHAREHOLDER OF THE COMPANY SHOULD CONSULT HIS OWN TAX
ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES OF THE MERGER FOR SUCH SHAREHOLDER,
INCLUDING THE APPLICABLE AND POSSIBLE EFFECT OF FOREIGN, STATE AND LOCAL TAX
LAWS.
The Reincorporation will qualify as a tax-free corporate reorganization
under Section 368(a)(1)(F) of the Code. No gain or loss will be recognized by
holders of Company shares on the exchange of such shares for shares of Dataflex
Florida as a result of the Reincorporation and no gain or loss will be
recognized by the Company or Dataflex Florida. Each former holder of Company
shares will have a basis in his shares of Dataflex Florida equal to his basis in
the shares of Company held prior to the Reincorporation.
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<PAGE> 16
In conjunction with the Reincorporation, various rights, options and
warrants to acquire Common Stock of the Company will be converted into rights,
options and warrants to acquire Florida Common Stock. Because the Company is
treated as remaining in existence for federal income tax purposes, this
conversion of the rights, options and warrants will not be taxable.
The holding period of the shares of Dataflex Florida will include the
period during which the corresponding shares of the Company were held.
THE DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY.
IT DOES NOT ADDRESS THE STATE, LOCAL OR FOREIGN TAX ASPECTS OF THE MERGER. THE
ABOVE DISCUSSION IS BASED ON CURRENTLY EXISTING PROVISIONS OF THE CODE,
EXISTING TREASURY REGULATIONS THEREUNDER AND CURRENT ADMINISTRATIVE RULINGS AND
COURT DECISIONS. THE FOREGOING IS NOT BINDING UPON THE INTERNAL REVENUE
SERVICE, AND NO RULINGS OF THE INTERNAL REVENUE SERVICE WILL BE SOUGHT OR
OBTAINED. THERE IS NO ASSURANCE THAT THE INTERNAL REVENUE SERVICE WILL AGREE
WITH THE FOREGOING DISCUSSION. THE FOREGOING IS SUBJECT TO CHANGE AND ANY SUCH
CHANGE COULD AFFECT THE CONTINUING VALIDITY OF SUCH DISCUSSION. EACH
SHAREHOLDER OF THE COMPANY SHOULD CONSULT THEIR TAX ADVISOR WITH RESPECT TO THE
SPECIFIC TAX CONSEQUENCES OF THE MERGER TO SUCH SHAREHOLDER, INCLUDING THE
APPLICATION AND EFFECT OF STATE, LOCAL AND FOREIGN TAX LAWS.
MATERIAL TERMS OF NEW JERSEY AND FLORIDA CORPORATE LAWS AND DIFFERENCES
The more significant differences between the Florida Act and the Articles
of Incorporation and the By-Laws of Dataflex Florida on the one hand, and the
New Jersey Act and the Certificate of Incorporation and By-Laws of the Company
on the other, are summarized below.
Liability of Directors
The Florida Act provides that a director is not personally liable for
monetary damages to the corporation or any other person for any statement,
vote, decision, or failure to act, regarding corporate management or policy, by
a director, unless the director breaches or fails to perform his statutory
duties as a director and such breach or failure (1) constitutes a violation of
criminal law, unless the director has reasonable cause to believe his conduct
was lawful or has no reasonable cause to believe his conduct was unlawful, (2)
constitutes a transaction from which the director derives an improper personal
benefit, (3) results in an unlawful distribution, (4) in a derivative action or
an action by a shareholder, constitutes conscious disregard for the best
interests of the corporation or willful misconduct, or (5) in a proceeding other
than a derivative action or an action by a shareholder, constitutes recklessness
or an act or omission which is committed in bad faith or with malicious purpose
or in a manner exhibiting wanton and willful disregard of human rights, safety
or property. The Florida Act further provides that a director shall discharge
his duties as a director (1) in good faith, (2) with the care an ordinarily
prudent person in a like position would exercise under similar circumstances,
and (3) in a manner he reasonably believes to be in the best interests of the
corporation. Under the New Jersey Act, a certificate of incorporation may
provide that a director shall not be personally liable to the corporation or its
shareholders for damages for breach of any duty owed to them, except for a
breach of duty based upon an act or omission (a) in breach of such person's duty
of loyalty to the corporation or its shareholders, (b) not in good faith or
involving a knowing violation of law or (c) resulting in receipt by such person
of an improper personal benefit. The Company's Certificate of Incorporation
currently includes this provision. The Articles of Incorporation of Dataflex
Florida do not include a comparable provision because the provisions of the
Florida Act eliminating personal liability of directors under the circumstances
described above automatically apply to all Florida corporations. Therefore, if
the Merger is approved, the above-described provision under the Florida Act will
apply to the directors of Dataflex Florida.
Classification of the Board of Directors
Under the New Jersey Act, directors are elected for a term of one year and
until their successors are elected and qualified, unless the certificate of
incorporation provides for the classification of directors with respect to the
duration of time for which they hold office. The Company's Certificate of
Incorporation currently provides that the Board of Directors shall be divided
into five classes of directors. In contrast, the Florida Act allows only three
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<PAGE> 17
classes of directors and Article VII of the Articles of Incorporation for
Florida Dataflex, attached hereto as Exhibit B, provides that the Board shall
be divided into three classes of directors, Class I, Class II and Class III,
each class to be as nearly equal in number of directors as possible. Each
director shall serve for a term ending at the third annual shareholders'
meeting following the Annual Meeting at which such director was elected;
provided, however, that the directors first elected to Class I shall serve for a
term ending at the 1998 Annual Meeting, the directors first elected to Class II
shall serve for a term ending at the 1999 Annual Meeting, and the directors
first elected to Class III shall serve for term ending at the 2000 Annual
Meeting. Article XI of the Florida Dataflex Articles of Incorporation further
provides that the affirmative vote of the holders of at least 60% of the entire
capital stock of the Company issued and outstanding and entitled to vote is
required to alter, amend or repeal Article VII.
Indemnification
Under both the Florida Act and the New Jersey Act, a corporation may
generally indemnify its officers, directors, employees and agents against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement of any proceedings (other than derivative actions), if they act in
good faith and in a manner they reasonably believe to be in or not opposed to
the best interests of the corporation and, with respect to any criminal action
or proceeding, has no reasonable cause to believe their conduct was unlawful.
A similar standard is applicable in derivative actions, except that
indemnification may be made only for (1) expenses (including attorneys' fees)
and certain amounts paid in settlement, and (2) in the event the person seeking
indemnification has been adjudicated liable, amounts deemed proper, fair and
reasonable by the appropriate court upon application thereto. The New Jersey
Act and the Florida Act both provide that to the extent that such persons have
been successful in defense of any proceeding, they must be indemnified by the
corporation against expenses actually and reasonably incurred in connection
therewith. The Company's Certificate of Incorporation currently provides for
indemnification of its officers and directors to the fullest extent permitted
by law. The By-Laws of Dataflex Florida provide that directors and officers
will be indemnified to the fullest extent permitted by law.
Derivative Actions
Under both the Florida Act and the New Jersey Act, an individual or entity
may not bring a derivative action unless the individual or entity is a
shareholder of the corporation at the time of the challenged transaction or
unless the individual or entity acquired the shares by operation of law from an
individual or entity who was a shareholder at such time. The Florida Act also
provides that a complaint in a derivative proceeding must be verified and must
allege with particularity that a demand was made to obtain action by the board
of directors and that the demand was refused or ignored. Under both the Florida
Act and the New Jersey Act, a derivative proceeding may be settled or
discontinued only with court approval, and under the Florida Act, the court may
dismiss a derivative proceeding if the court finds that certain independent
directors (or a committee of independent persons appointed by such directors)
have determined in good faith after conducting a reasonable investigation that
the maintenance of the action is not in the best interests of the corporation.
Both the Florida Act and the New Jersey Act provide that if an action was
brought without reasonable cause the court may require the plaintiff to pay the
corporation's reasonable expenses, and if the plaintiff is successful the court
may require the corporation to pay the reasonable expenses of the plaintiff.
Distributions and Redemptions
A Florida corporation may make distributions to shareholders as long as,
after giving effect to such distribution (1) the corporation would be able to
pay its debts as they become due in the usual course of business, or (2) the
corporation's total assets would not be less than the sum of its total
liabilities plus (unless the articles of incorporation permit otherwise, which
Dataflex Florida's Articles of Incorporation do not) the amount that would be
needed if the corporation were to be dissolved at the time of the distribution
to satisfy the preferential rights upon dissolution of shareholders whose
preferential rights are superior to those receiving the distribution. Under
the Florida Act, a corporation's redemption of its own capital stock is deemed
to be a distribution. Under New Jersey law, the standard for determining when
a corporation may make distributions on or repurchase shares of stock is
whether, after paying the dividend or repurchasing the shares, the corporation
would be unable to pay its debts as they become due in the usual course of
business, or whether the corporation's total assets would be less than its
total liabilities. The New Jersey standard is also stated as permitting
distributions and redemptions unless the corporation is insolvent or would
thereby become insolvent. Such dividends or distributions may be made out of
surplus only,
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<PAGE> 18
except in dissolution. Under New Jersey law, surplus means the excess of net
assets of a corporation over its stated capital.
Shareholder Inspection of Books and Records
Under the Florida Act, a shareholder is entitled to inspect and copy the
articles of incorporation, by-laws, certain board and shareholder resolutions,
certain written communications to shareholders, a list of the names and
business addresses of the corporation's directors and officers, minutes of all
shareholder meetings and records of all actions taken by shareholders without a
meeting for the past three years, and the corporation's most recent annual
report, during regular business hours if the shareholder gives at least five
business days' prior written notice to the corporation. In addition, a
shareholder of a Florida corporation is entitled to inspect and copy other
books and records of the corporation during regular business hours if the
shareholder gives at least five business days' prior written notice to the
corporation and (1) the shareholder's demand is made in good faith and for a
proper purpose, (2) the demand describes with particularity its purpose and the
records to be inspected or copied, and (3) the requested records are directly
connected with such purpose. The Florida Act also provides that a corporation
may deny any demand for inspection if the demand was made for an improper
purpose or if the demanding shareholder has, within two years preceding such
demand, sold or offered for sale any list of shareholders of the corporation or
any other corporation, has aided or abetted any person in procuring a list of
shareholders for such purpose or has improperly used any information secured
through any prior examination of the records of the corporation or any other
corporation.
Under the New Jersey Act, a voting list setting forth the name, address
and number of shares held must be available for inspection by any shareholder
during any shareholders' meeting. In addition, any person who has been a
shareholder of record for at least six months immediately preceding a demand by
such person, or any person holding, or so authorized by the holders of, at
least 5% of the outstanding shares of any class or series, upon at least five
days written demand, has the right, for any proper purpose, to examine, in
person or by agent or attorney, during usual business hours, the minutes of the
proceedings of the corporation's shareholders and record of shareholders, and
to make extracts therefrom at the places where they are kept (within or outside
of New Jersey), or, in the case of shareholder records, within ten days after
the demand, at the corporation's registered office or at the office of its
transfer agent within New Jersey, or, in the case of shares listed on a
national securities exchange, at the office of the corporation's transfer agent
within or outside of New Jersey. Also, irrespective of the length of time
during which a shareholder shall have been a record shareholder or of the
number of shares held, a court is empowered, upon proof of proper purpose, to
compel production for examination by the shareholder of the books and records
of account, minutes and record of shareholders.
Dissenters' Rights
A shareholder of a Florida corporation, with certain exceptions, has the
right to dissent from, and obtain payment of the fair value of his shares in
the event of (1) a merger or consolidation to which the corporation is a party,
(2) a sale or exchange of all or substantially all of the corporation's
property other than in the usual and regular course of business, (3) the
approval of a control share acquisition, (4) a statutory share exchange to
which the corporation is a party as the corporation whose shares will be
acquired, (5) an amendment to the articles of incorporation if the shareholder
is entitled to vote on the amendment and the amendment would adversely affect
the shareholder, and (6) any corporate action taken to the extent that the
articles of incorporation provide for dissenters' rights with respect to such
action. The Florida Act provides that unless a corporation's articles of
incorporation provide otherwise, which Dataflex Florida's articles of
incorporation do not, a shareholder does not have dissenters' rights with
respect to a plan of merger, share exchange or proposed sale or exchange of
property if the shares held by the shareholder are either registered on a
national securities exchange or held of record by 2,000 or more shareholders.
Under the New Jersey Act, no dissenters' rights exist with respect to any
class or series of shares listed on a national securities exchange or held of
record by 1,000 holders or more, or, generally, in any transaction in
connection with which the shareholders of the corporation will receive only (a)
cash, (b) securities that, upon consummation of the transaction, will be listed
on a national securities exchange or be held of record by not less than 1,000
holders, or (c) cash and such securities. Currently, the Company's Common Stock
is listed on the Nasdaq National Market and held of record by more than 1,000
holders and upon consummation of the merger, the Florida Common Stock will be
listed on the Nasdaq National Market and held of record by more than 1,000
holders.
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<PAGE> 19
Board Vacancies
The Florida Act provides that a vacancy on the board of directors
generally may be filled by the affirmative vote of a majority of the remaining
directors, though less than a quorum of the board of directors, or by the
shareholders, unless the articles of incorporation provide otherwise. Dataflex
Florida's Articles of Incorporation do not alter this provision. Under the New
Jersey Act, a vacancy on the board of directors generally may be filled by a
majority of the remaining directors even though less than a quorum of the board
or in the manner specified in a corporation's certificate of incorporation or
by-laws. The Company's By-Laws provide that a vacancy on the board may be
filled by the remaining directors or by the shareholders at any meeting called
for that purpose.
Removal of Directors
The Florida Act and the New Jersey Act provide that shareholders may
remove one or more directors with or without cause unless the articles of
incorporation provide that directors may be removed only for cause. The
Company's Certificate of Incorporation and Dataflex Florida's Articles of
Incorporation provide that shareholders may remove a director only for cause.
Amendments to Articles of Incorporation
An amendment to a Florida corporation's articles of incorporation must be
approved by the corporation's shareholders, except that certain immaterial
amendments specified in the Florida Act may be made by the board of directors.
Unless a specific section of the Florida Act or a Florida corporation's
articles of incorporation require a greater vote, an amendment to a Florida
corporation's articles of incorporation generally must be approved by a
majority of the votes entitled to be cast on the amendment. Dataflex Florida's
Articles of Incorporation do not include any provision requiring greater than a
majority of votes to amend its articles of incorporation, except with respect
to provisions relating to the Board of Directors. The New Jersey Act
establishes specific circumstances under which a company's certificate of
incorporation may be amended, and generally requires approval by a majority of
the outstanding stock entitled to vote thereon.
Special Meetings of Shareholders
Special meetings of a Florida corporation's shareholders may be called by
its board of directors, by the persons authorized to do so in its articles of
incorporation or by-laws or by the holder of not less than 10% of all votes
entitled to be cast on any issue proposed to be considered at the special
meeting, unless a greater percentage not to exceed 50% is required by the
articles of incorporation. In order for the shareholders to call a special
meeting, Dataflex Florida's Articles of Incorporation require that call be made
by the holders of an aggregate of at least 20% of all votes entitled to be cast
on the issue proposed to be considered at the special meeting. Under the
Company's By-Laws, special meetings may be called by the president, the
directors, or the holders of 20% of all votes entitled to be cast on any matter
at the special meeting. Under the New Jersey Act, special meetings of
shareholders may be called by the president or the board, or by such other
officers or directors. The New Jersey Act also provides that upon application
of the holders of not less than 10% of all shares entitled to vote at a
meeting, the Superior Court may in a summary manner, for good cause shown,
order a special meeting of shareholders to be called and held. At any meeting
ordered by the Superior Court, a quorum consists of all shareholders present in
person or by proxy.
Corporate Control Statutes
The Florida Act contains an affiliated transactions statute which provides
that certain transactions involving a corporation and a shareholder owning 10%
or more of the corporation's outstanding voting shares (an "affiliated
shareholder") must generally be approved by the affirmative vote of the holders
of two-thirds of the voting shares other than those owned by the affiliated
shareholder. The transactions covered by the statute include, with certain
exceptions, (1) mergers and consolidations to which the corporation and the
affiliated shareholder are parties,
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<PAGE> 20
(2) sales or other dispositions of substantial amounts of the corporation's
assets to the affiliated shareholder, (3) issuances by the corporation of
substantial amounts of its securities to the affiliated shareholder, (4) the
adoption of any plan for the liquidation or dissolution of the corporation
proposed by or pursuant to an arrangement with the affiliated shareholder, (5)
any reclassification of the corporation's securities which has the effect of
substantially increasing the percentage of the outstanding voting shares of the
corporation beneficially owned by the affiliated shareholder, and (6) the
receipt by the affiliated shareholder of certain loans or other financial
assistance from the corporation. These special voting requirements do not
apply in any of the following circumstances: (1) if the transaction was
approved by a majority of the corporation's disinterested directors, (2) if the
corporation did not have more than 300 shareholders of record at any time
during the preceding three years, (3) if the affiliated shareholder has been
the beneficial owner of at least 80% of the corporation's outstanding voting
shares for the past five years, (4) if the affiliated shareholder is the
beneficial owner of at least 90% of the corporation's outstanding voting
shares, exclusive of those acquired in a transaction not approved by a majority
of disinterested directors, or (5) if the consideration received by each
shareholder in connection with the transaction satisfies the "fair price"
provisions of the statute. This statute applies to any Florida corporation
unless the original articles of incorporation or an amendment to the articles
of incorporation or by-laws contain a provision expressly electing not to be
governed by this statute. Such an amendment to the articles of incorporation
or by-laws must be approved by the affirmative vote of a majority of
disinterested shareholders and is not effective until 18 months after approval.
Dataflex Florida's Articles of Incorporation do not contain a provision
electing not to be governed by the statute.
The Florida Act also contains a control share acquisition statute which
provides that a person who acquires shares in an issuing public corporation in
excess of certain specified thresholds will generally not have any voting
rights with respect to such shares unless the voting rights are approved by a
majority of the shares entitled to vote, excluding interested shares. This
statute does not apply to acquisitions of shares of a corporation if, prior to
the pertinent acquisition of shares, the corporation's articles of
incorporation or by-laws provide that the corporation shall not be governed by
the statute. Unless otherwise provided in the corporation's articles of
incorporation or by-laws prior to the pertinent acquisition of shares, in the
event that such shares are accorded full voting rights by the shareholders of
the corporation and the acquiring shareholder acquires a majority of the voting
power of the corporation, all shareholders who do not vote in favor of
according voting rights to such acquired shares are entitled to dissenters'
rights. Dataflex Florida's Articles of Incorporation and By-Laws do not
contain any provision with respect to this statute.
Companies incorporated under the New Jersey Act can invoke the benefits of
the New Jersey Shareholders Protection Act (which has been characterized as an
"anti-takeover statute"). This act prohibits certain types of transactions
involving a New Jersey corporation having its principal executive offices and
significant business operations located in New Jersey and certain present or
past beneficial owners of 10% or more of such corporation's voting stock
("interested shareholders") for a period of five years following the date upon
which the interested shareholder first became such (the "stock acquisition
date"), unless prior to such date, the transaction was approved by the board of
directors of the corporation. This act also regulates transactions permitted
after such five-year period. There also exists under New Jersey law a
Corporation Takeover Bid Disclosure Law, which regulates "takeover offers" to
purchase such number of shares of any class of equity securities of a "target
company" as would result in the offeror's owning more than 10% of the
outstanding shares of such class, or in the aggregate (after giving effect to
all conversion and purchase rights held by the offeror), more than 10% of the
stock of the target company which will be outstanding, unless such takeover
offer is approved by the target company's board of directors. Among other
things, the Corporation Takeover Bid Disclosure Law requires, at least 20 days
before a takeover offer is made, filing by the offeror with the New Jersey
Bureau of Securities in the Division of Consumer Affairs in the Department of
Law and Public Safety, and delivery of a copy thereof to the target company, of
a statement setting forth extensive information concerning the offeror, the
offer, plans for material changes in the business, and other matters. The law
permits the chief of the Bureau of Securities to permit the takeover bid to go
forward, or to hold a public hearing respecting the offer, if he determines
such hearing to be necessary or if the target company's board of directors so
requests. After the hearing, the Bureau chief may prohibit the offer from
proceeding if he finds that (1) the financial condition of the offeror is such
as to jeopardize the financial stability of the target company or prejudice the
interests of any employees or security holders unaffiliated with the offeror;
(2) the terms of the proposal are unfair to the target company's security
holders; (3) the offeror's plans respecting material changes in the target
Company's business or corporate structure or management
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<PAGE> 21
are not in the interests of the target company's remaining security holders or
employees; (4) the competence, experience and integrity of the persons
contemplated to control the target company after the takeover are such that it
would not be in the interest of the target company's remaining security holders
or employees to permit the takeover; or (5) the terms of the takeover bid do
not comply with the provisions of the statute. New Jersey Corporation Takeover
Bid Disclosure Law has been held unconstitutional by at least one court. The
Company is not able to predict whether the constitutionality of either of these
New Jersey statutes would ultimately be upheld against constitutional
challenge.
RECOMMENDATION OF THE BOARD OF DIRECTORS
For the reasons set forth above in "Reasons for the Reincorporation," the
Board of Directors believes that the best interests of the Company and its
shareholders will be served by the approval of the Reincorporation. A vote in
favor of the Reincorporation will constitute specific approval of the Merger
Agreement, the Dataflex Florida Articles of Incorporation, and all transactions
and proceedings related to the Reincorporation described in this Proxy
Statement.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF THE
REINCORPORATION.
PROPOSAL 2 - ELECTION OF DIRECTORS
The Merger Agreement provides that the Board of Directors serving the
Company immediately prior to the effective date of the Merger shall be
nominated for election to the Board of Directors of Dataflex Florida. The
Company's Board of Directors is currently divided into five classes of
directors. Following the Reincorporation, the Board of Directors shall be
divided into three classes of directors, with terms expiring in the years 1998
(Class I), 1999 (Class II), and 2000 (Class III). One director is to be elected
at the Annual Meeting for a term ending in 1998, two directors are to be elected
at the Annual Meeting for a term ending in 1999, and two directors are to be
elected at the Annual Meeting for a term ending in 2000, or until their
respective successors have been duly elected and qualified.
The Board of Directors has nominated Anthony Lembo to stand for election
at the Annual Meeting for a Class I director seat, Messrs. Rose and Schilit to
stand for election at the Annual Meeting for Class II director seats, and
Messrs. Doganiero and Alpert to stand for election at the Annual Meeting for
Class III director seats. Information concerning each of the nominees is set
forth under the caption "Management - Directors and Executive Officers."
Unless otherwise indicated, votes will be cast pursuant to the accompanying
proxy FOR the election of these nominees. Should any nominee become unable or
unwilling to accept nomination or election for any reason, it is intended that
votes will be cast for a substitute nominee designated by the Board of
Directors, which has no reason to believe that any of the nominees named will
be unable or unwilling to serve if elected.
PROPOSALS OF SHAREHOLDERS FOR THE NEXT ANNUAL MEETING
Proposals of shareholders intended for presentation at the next annual
meeting must be received by the Company on or before April 23, 1998, in order
to be included in the Company's proxy statement and form of proxy for that
meeting.
The Company's Articles of Incorporation also require advance notice to the
Company of any shareholder proposal and of any nominations by shareholders of
persons to stand for election as directors at a shareholders' meeting. Notice
of shareholder proposals and of director nominations must be timely given in
writing to the Secretary of the Company prior to the meeting at which the
directors are to be elected. To be timely, notice must be received at the
principal executive office of the Company not less than 60 days prior to the
meeting of shareholders; provided, however, that in the event that less than 70
days' notice prior to public disclosure of the date of the meeting is given or
made to the shareholders, notice by the shareholder, in order to be timely,
must be
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<PAGE> 22
so delivered or received not later than the close of business on the tenth day
following the day on which such notice of the date of the annual meeting was
mailed or public disclosure of the date of the annual meeting was made,
whichever first occurs.
In addition to the matters required to be set forth by the rules of the
SEC, a shareholder's notice with respect to a proposal to be brought before the
annual meeting must set forth (a) a brief description of the proposal and the
reasons for conducting such business at the annual meeting, (b) the name and
address, as they appear on the Company's books, of the shareholder proposing
such business and any other shareholders known by such shareholder to be
supporting such proposal, (c) the class and number of shares of the Company that
are beneficially owned by such shareholder on the date of such shareholder
notice and by other shareholders known to such shareholder to be supporting such
proposal on the date of such shareholder notice, and (d) any financial interest
of the shareholder in such proposal.
A shareholder's notice with respect to a director nomination must set
forth (a) as to each nominee (i) the name, age, business address, and residence
address of the person, (ii) the principal occupation or employment of the
person, (iii) the class and number of shares of the Company that are
beneficially owned by such person, (iv) all information that would be required
to be included in the proxy statement soliciting proxies for the election of
the nominee director (including such person's written consent to serve as a
director if so elected), and (b) as to the shareholder providing such notice
(i) the name and address, as they appear on the Company's books, of the
shareholder, and (ii) the class and number of shares of the Company that are
beneficially owned by such shareholder on the date of such shareholder notice.
The complete Articles of Incorporation provisions governing these
requirements are available to any shareholder without charge upon request from
the Secretary of the Company.
OTHER MATTERS
THE BOARD OF DIRECTORS KNOWS OF NO OTHER MATTER TO BE PRESENTED AT THE
ANNUAL MEETING. IF ANY OTHER MATTER SHOULD BE PRESENTED PROPERLY, IT IS
INTENDED THAT THE ENCLOSED PROXY WILL BE VOTED IN ACCORDANCE WITH THE
JUDGMENT OF THE INDIVIDUALS NAMED IN THE PROXY.
THE COMPANY WILL PROVIDE TO ANY SHAREHOLDER, UPON THE WRITTEN REQUEST OF
ANY SUCH PERSON, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K, INCLUDING
THE FINANCIAL STATEMENTS AND THE SCHEDULES THERETO, FOR ITS FISCAL YEAR ENDED
MARCH 31, 1997, AS FILED WITH THE SEC PURSUANT TO RULE 13a-1 UNDER THE
SECURITIES EXCHANGE ACT OF 1934. ALL SUCH REQUESTS SHOULD BE DIRECTED TO
DEBORAH MEDLEY, SECRETARY, DATAFLEX CORPORATION, 2145 CALUMET STREET,
CLEARWATER, FLORIDA 34625. NO CHARGE WILL BE MADE FOR COPIES OF SUCH ANNUAL
REPORT; HOWEVER, A REASONABLE CHARGE FOR THE EXHIBITS WILL BE MADE.
By Order of the Board of Directors,
/s/ Deborah Medley
-----------------------------------
Deborah Medley, Secretary
Clearwater, Florida
August 25, 1997
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<PAGE> 23
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER dated September 18, 1997 (the
"Agreement"), is entered into between DATAFLEX REINCORPORATION, INC., a Florida
corporation ("Dataflex Florida"), and DATAFLEX CORPORATION, a New Jersey
corporation ("Dataflex New Jersey").
BACKGROUND
A. Dataflex New Jersey has an aggregate authorized capital of 20,000,000
shares of Common Stock, no par value per share (the "Dataflex New Jersey Common
Stock"), of which, as of July 21, 1997, 5,961,169 were duly issued and
outstanding and 10,000,000 shares of Preferred Stock, no par value per share, of
which, as of July 21, 1997, no shares were outstanding.
B. Dataflex Florida has an aggregate authorized capital stock of
20,000,000 shares of Common Stock, no par value per share (the "Dataflex
Florida Common Stock"), of which 100 shares were duly issued and are now
outstanding and held by Dataflex New Jersey, and 10,000,000 shares of Preferred
Stock, no par value per share, of which no shares are currently outstanding.
C. The respective Boards of Directors of Dataflex Florida and Dataflex
New Jersey believe that the best interests of Dataflex Florida and Dataflex New
Jersey and their respective shareholders will be served by the merger of
Dataflex New Jersey with and into Dataflex Florida under and pursuant to the
provisions of this Agreement and the New Jersey Business Corporation Act (the
"New Jersey Act") and the Florida Business Corporation Act (the "Florida Act").
TERMS
In consideration of the mutual agreements contained in this Agreement, the
parties hereto agree as set forth below.
1. Merger. Dataflex New Jersey shall be merged with and into
Dataflex Florida (the "Merger").
2. Effective Date. The Merger shall become effective immediately
upon the later of the filing of this Agreement or a certificate of merger with
the Secretary of State of New Jersey in accordance with the New Jersey Act and
the filing of articles of merger with the Secretary of State of Florida in
accordance with the Florida Act. The time of such effectiveness is hereinafter
called the "Effective Date."
3. Surviving Corporation. Dataflex Florida shall be the surviving
corporation of the Merger and shall continue to be governed by the laws of the
State of Florida. On the Effective Date, the separate corporate existence of
Dataflex New Jersey shall cease.
4. Name of Surviving Corporation. On the Effective Date, the
Articles of Incorporation of Dataflex Florida shall be amended to change the
name of Dataflex Florida to "Dataflex Corporation."
5. Certificate of Incorporation. Except as provided in Section 4,
the Articles of Incorporation of Dataflex Florida as it exists on the Effective
Date shall be the Articles of Incorporation of Dataflex Florida immediately
following the Effective Date, unless and until the same shall thereafter be
amended or repealed in accordance with the laws of the State of Florida.
6. Bylaws. The By-Laws of Dataflex Florida as they exist on the
Effective Date shall be the By-Laws of Dataflex Florida immediately following
the Effective Date, unless and until the same shall be amended or repealed in
accordance with the provisions thereof and the laws of the State of Florida.
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<PAGE> 24
7. Board of Directors and Officers. The members of the Board of
Directors of Dataflex New Jersey immediately prior to the Effective Date shall
be nominated for election to the Board of Directors of Dataflex Florida. The
officers of Dataflex New Jersey immediately prior to he Effective Date shall be
the officers of Dataflex Florida immediately following the Effective Date, and
such persons shall serve in such offices for the terms provided by law or in
the By-Laws, or until their respective successors are elected and qualified.
8. Retirement of Outstanding Dataflex Florida Stock. On the
Effective Date, each of the 100 shares of the Dataflex Florida Common Stock
presently issued and outstanding shall be retired, and no shares of Dataflex
Florida Common Stock or other securities of Dataflex Florida shall be issued
in respect thereof.
9. Conversion of Outstanding Dataflex New Jersey Stock. On the
Effective Date, each issued and outstanding share of Dataflex New Jersey Common
Stock and all rights in respect thereof shall be converted into one fully-paid
and nonassessable share of Dataflex Florida Common Stock, and each certificate
representing shares of Dataflex New Jersey Common Stock shall for all purposes
be deemed to evidence the ownership of the same number of shares of Dataflex
Florida Common Stock as are set forth in such certificate. After the Effective
Date, each holder of an outstanding certificate representing shares of Dataflex
New Jersey Common Stock may (but will not be required to), at such shareholder's
option, surrender the same to Dataflex Florida's registrar and transfer agent
for cancellation, and each such holder shall be entitled to receive in exchange
therefore a certificate(s) evidencing the ownership of the same number of
shares of Dataflex Florida Common Stock as are represented by the Dataflex New
Jersey certificate(s) surrendered to Dataflex Florida's registrar and transfer
agent.
10. Stock Options, Warrants, Etc. On the Effective Date, each stock
option, stock warrant, and other right to subscribe for or purchase shares of
Dataflex New Jersey Common Stock shall be converted into a stock option, stock
warrant, or other right to subscribe for or purchase the same number of shares
of Dataflex Florida Common Stock, and each certificate, agreement, note or
other document representing such stock option, stock warrant, or other right
to subscribe for or purchase shares of Dataflex New Jersey Common Stock shall
for all purposes be deemed to evidence the ownership of a stock option, stock
warrant, or other right to subscribe for or purchase shares of Dataflex Florida
Common Stock.
11. Rights and Liabilities of Dataflex Florida. At and after the
Effective Date, and all in the manner of and as more fully set forth in the
Florida Act and the New Jersey Act, the title to all real estate and other
property, or any interest therein, owned by each of Dataflex New Jersey and
Dataflex Florida shall be vested in Dataflex Florida without reversion or
impairment; Dataflex Florida shall succeed to and possess, without further act
or deed, all estates, rights, privileges, powers and franchises, both public and
private, and all of the property, real, personal and mixed, of each of Dataflex
New Jersey and Dataflex Florida without reversion or impairment; Dataflex
Florida shall thereafter be responsible and liable for all the liabilities and
obligations of each of Dataflex New Jersey and Dataflex Florida; any claim
existing or action or proceeding pending by or against Dataflex New Jersey or
Dataflex Florida may be continued as if the Merger did not occur or Dataflex
Florida may be substituted for Dataflex New Jersey in the proceeding; neither
the rights of creditors nor any liens upon the property of Dataflex New Jersey
or Dataflex Florida shall be impaired by the Merger; and Dataflex Florida shall
indemnify and hold harmless the officers and directors of each of the parties to
this Agreement against all such debts, liabilities and duties and against all
claims and demands arising out of the Merger.
12. Termination. This Agreement may be terminated and abandoned by
action of the respective Boards of Directors of Dataflex New Jersey and
Dataflex Florida at any time prior to the Effective Date, whether before or
after approval by the shareholders of either or both of the parties to this
Agreement.
13. Amendment. The Boards of Directors of the parties to this
Agreement may amend this Agreement at any time prior to the Effective Date;
provided that an amendment made subsequent to the approval of this Agreement by
the shareholders of either of the parties to this Agreement shall not: (a)
change the amount or kind of shares, securities, cash, property or rights to be
received in exchange for or on conversion of all or any of the shares of the
parties hereto, (b) change any term of the Articles of Incorporation of Dataflex
Florida, or (c) change any other terms or conditions of this Agreement if such
change would adversely affect the holders of any capital stock of either party
to this Agreement.
A-2
<PAGE> 25
14. Registered Office. The registered office of Dataflex Florida in
the State of Florida is located at 2145 Calumet Street, Clearwater, Florida
34625, and Anthony G. Lembo is the registered agent of Dataflex Florida at such
address.
15. Inspection of Agreement. Executed copies of this Agreement will
be on file at the principal place of business of Dataflex Florida at 2145
Calumet Street, Clearwater, Florida 34625. A copy of this Agreement shall be
furnished by Dataflex Florida, on request and without cost, to any shareholder
of either Dataflex New Jersey or Dataflex Florida.
16. Governing Law. This Agreement shall in all respects be
construed, interpreted and enforced in accordance with and governed by the laws
of the State of Florida.
17. Service of Process. On and after the Effective Date, Dataflex
Florida agrees that it may be served with process in New Jersey in any
proceeding for enforcement of any obligation of Dataflex New Jersey or Dataflex
Florida arising from the Merger.
18. Designation of New Jersey Secretary of State as Agent for
Service of Process. On and after the Effective Date, Dataflex Florida
irrevocably appoints the Secretary of State of New Jersey as its agent to
accept service of process in any suit or other proceeding to enforce the rights
of any shareholders of Dataflex New Jersey or Dataflex Florida arising from the
Merger. The New Jersey Secretary of State is requested to mail a copy of any
such process to Dataflex Florida at 2145 Calumet Street, Clearwater, Florida
34625, Attention: Anthony G. Lembo.
IN WITNESS WHEREOF, each of the parties to this Agreement, pursuant to
authority duly granted by their respective Board of Directors, has caused this
Agreement to be executed as of the date first written above.
DATAFLEX REINCORPORATION, INC.,
a Florida corporation
By:
-----------------------------------
Anthony G. Lembo, President
DATAFLEX CORPORATION,
a New Jersey corporation
By:
-----------------------------------
Richard C. Rose,
Chief Executive Officer
A-3
<PAGE> 26
EXHIBIT B
ARTICLES OF INCORPORATION
OF
DATAFLEX REINCORPORATION, INC.
The undersigned, acting as incorporator of Dataflex Reincorporation,
Inc., (the "Corporation") under the Florida Business Corporation Act, adopts
the following Articles of Incorporation.
ARTICLE I. NAME
The name of the Corporation is:
DATAFLEX REINCORPORATION, INC.
ARTICLE II. ADDRESS
The mailing address of the Corporation is:
2145 Calumet Street
Clearwater, Florida 34625
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the Corporation will commence on the date of filing
of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or business
permitted under the laws of the United States and Florida.
ARTICLE V. CAPITAL STOCK
The capital stock of the corporation shall be divided into two
classes: 20,000,000 shares of Common Stock having no par value per share (the
"Common Stock") and 10,000,000 shares of Preferred Stock having no par value per
share (the "Preferred Stock").
The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is authorized to fix the number of shares in
each series, the designation thereof, and the relative rights, preferences, and
limitations of each series, and specifically the Board of Directors is
authorized to fix with respect to each series (a) the dividend rate; (b)
redeemable features, if any; (c) rights upon liquidation; (d) whether or not
the shares of such series shall be subject to a purchase, retirement, or
sinking fund provision; (e) whether or not the shares of such series shall be
convertible into or exchangeable for shares of any other class and, if so, the
rate of conversion or exchange; (f) restrictions, if any, upon the payment of
dividends on Common Stock, (g) restrictions, if any, upon
B-1
<PAGE> 27
the creation of indebtedness; (h) voting powers, if any, of the shares of each
series; and (i) such other rights, preferences and limitations as shall not be
inconsistent with the laws of the State of Florida.
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the Corporation
is 2145 Calumet Street, Clearwater, Florida 34625, and the name of the
corporation's initial registered agent at that address is Anthony G. Lembo.
ARTICLE VII. BOARD OF DIRECTORS
The Corporation shall have five directors initially. The number of
directors may be either increased or diminished from time to time, as provided
in the bylaws, but shall never be more than twelve. The directors shall be
divided into three classes, Class I, Class II and Class III, as nearly equal in
number as possible. The term of office for the Class I directors shall expire
at the first annual meeting of the shareholders in 1998; the term of office for
the Class II directors shall expire at the annual meeting of the shareholders
in 1999; and the term of office for the Class III directors shall expire at the
annual meeting of the shareholders in 2000. At each annual meeting of the
shareholders commencing in 2000, the successors to the directors whose term is
expiring shall be elected to a term expiring at the third succeeding annual
meeting of the shareholders. If the number of directors is changed, any
increase or decrease shall be apportioned among the classes so as to maintain
the number of directors in each class as nearly equal as possible, and any
additional directors of any class elected to fill a vacancy resulting from an
increase in such class shall hold office for a term that shall coincide with
the remaining term of that class, but in no case will a decrease in the number
of directors shorten the term of any incumbent director. A director shall hold
office until the annual meeting for the year in which his term expires and
until his successor shall be elected and shall qualify, subject, however, to
prior death, resignation, retirement, disqualification, or removal from office.
Notwithstanding the foregoing, whenever the holders of any one or more
classes or series of Preferred Stock issued by the Corporation shall have the
right, voting separately by class or series, to elect directors at an annual or
special meeting of shareholders, the election, term of office, filling of
vacancies, and other features of such directorships shall be governed by the
terms of these Articles of Incorporation or the resolution or resolutions
adopted by the Board of Directors pursuant to Article V hereof, and such
directors so elected shall not be divided into classes pursuant to this Article
VII, unless expressly provided by such terms.
Subject to the rights, if any, of the holders of shares of Preferred
Stock then outstanding, any or all of the directors of the Corporation may be
removed from office for cause by the shareholders of this Corporation at any
annual or special meeting of shareholders by the affirmative vote of at least
60% of the outstanding shares of Common Stock of this Corporation or by the
affirmative vote of a majority of the directors of the Corporation then in
office. Notice of any annual or special meeting of shareholders shall state
that the removal of a director or directors for cause is among the purposes of
the meeting. Directors may not be removed by the shareholders without cause.
Newly created directorships resulting from any increase in the number
of directors or any vacancy on the Board of Directors resulting from death,
resignation, disqualification, removal, or other cause shall be filled solely
by the affirmative vote of a majority of the remaining directors then in
office, even though less than a quorum, or by a sole remaining director, or, if
not filled by the directors, by the shareholders. Any director elected in
accordance with the preceding sentence shall hold office for the remainder of
the full term of the class of directors in which the new directorship was
created or the vacancy occurred and until such director's successor shall have
been elected and qualified. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.
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<PAGE> 28
Subject to the rights, if any, of the holders of shares of Preferred
Stock then outstanding, only persons who are nominated in accordance with the
following procedures shall be eligible for election as directors at meetings of
shareholders.
Nominations of persons for election to the Board of Directors of the
Corporation may be made at a meeting of shareholders by or at the direction of:
(a) the Board of Directors; (b) by any nominating committee or person appointed
by the Board; (c) or by any shareholder of this Corporation entitled to vote
for the election of directors at the meeting who complies with the notice
procedures set forth in this Article VII.
Nominations by shareholders shall be made pursuant to timely notice in
writing to the Secretary of this Corporation. To be timely, a shareholder's
notice must be delivered to, or mailed and received at, the principal executive
offices of the Corporation not less than 60 days prior to the date of the
meeting at which the director(s) are to be elected, regardless of any
postponements, deferrals, or adjournments of that meeting to a later date.
However, if less than 70 days' notice or prior public disclosure of the date of
the scheduled meeting is given or made, notice by the shareholder, to be
timely, must be so delivered or received not later than the close of business
on the tenth day following the earlier of the day on which notice was given or
such public disclosure was made.
A shareholder's notice to the Secretary shall set forth (a) as to each
person that the shareholder proposes to nominate for election or reelection as a
director, (i) the name, age, business address and residence address of the
person, (ii) the principal occupation or employment of the person, (iii) the
class and number of shares of capital stock of the Corporation which are
beneficially owned by the person and (iv) any other information relating to the
person that is required to be disclosed in solicitations for proxies for
election of directors pursuant to Schedule 14A under the Securities Exchange
Act of 1934, as amended; and (b) as to the shareholder giving the notice (i)
the name and address, as they appear on the Corporation's books, of the
shareholder and (ii) the class and number of shares of the Corporation's stock
that are beneficially owned by the shareholder on the date of such shareholder
notice. The Corporation may require any proposed nominee to furnish such
other information as may reasonably be required by the Corporation to
determine the eligibility of such proposed nominee to serve as a director of
the Corporation.
The presiding officer of the meeting shall determine and declare at
the meeting whether the nomination was made in accordance with the terms of
this Article VII. If the presiding officer determines that a nomination was
not made in accordance with the terms of this Article VII, he shall so declare
at the meeting and any such defective nomination shall be disregarded.
Any or all of the directors of the Corporation may be removed from
office for cause by the shareholders of the Corporation at any annual or
special meeting of shareholders by the affirmative vote of at least 60% of the
outstanding shares of Common Stock of this corporation. Notice of any such
annual or special meeting of shareholders shall state that the removal of a
director or directors for cause is among the purposes of the meeting.
Directors may not be removed by the shareholders without cause.
B-3
<PAGE> 29
The names and street addresses of the initial directors are:
<TABLE>
<CAPTION>
Name Address Class
---- ------- -----
<S> <C> <C>
Anthony G. Lembo 2145 Calumet Street
Clearwater, Florida 34625 I
Richard C. Rose 2145 Calumet Street
Clearwater, Florida 34625 II
Philip Doganiero 2145 Calumet Street
Clearwater, Florida 34625 III
W. Keith Schilit 2145 Calumet Street
Clearwater, Florida 34625 II
Barry M. Alpert 2145 Calumet Street
Clearwater, Florida 34625 III
</TABLE>
B-4
<PAGE> 30
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
---- --------
Robert J. Grammig Holland & Knight LLP
400 North Ashley, Suite 2300
Tampa, Florida 33602
The incorporator of the Corporation assigns to the Corporation his rights
under Section 607.0201, Florida Statutes, to constitute a corporation, and he
assigns to those persons designated by the Board of Directors any rights he may
have as incorporator to acquire any of the capital stock of this corporation,
this assignment becoming effective on the date corporate existence begins
ARTICLE IX. SHAREHOLDER MEETINGS
At an annual meeting of shareholders, only such business shall be
conducted, and only such proposals shall be acted upon, as shall have been
brought before the annual meeting (a) by, or at the direction of, the Board of
Directors, or (b) by any shareholder of this corporation who complies with the
notice procedures set forth in this Article IX and the requirements of Rule
14a-8 under the Securities Exchange Act of 1934.
For a proposal to be properly brought before an annual meeting by a
shareholder, the shareholder must have given timely notice thereof in writing
to the Secretary of this corporation. To be timely, a shareholder's notice
must be delivered to, or mailed and received at, the principal executive
offices of this corporation not less than 60 days prior to the scheduled annual
meeting, regardless of any postponements, deferrals, or adjournments of that
meeting to a later date; however, if less than 70 days' notice or prior public
disclosure of the date of the scheduled annual meeting is given or made, notice
by the shareholder, to be timely, must be so delivered or received not later
than the close of business on the tenth day following the earlier of the day on
which such notice of the date of the scheduled annual meeting was given or the
day on which such public disclosure was made.
A shareholder's notice to the Secretary shall set forth as to each matter
the shareholder 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 this corporation's books, of the shareholder
proposing such business and any other shareholders known by such shareholder to
be supporting such proposal, (c) the class and number of shares of this
corporation's stock that are beneficially owned by the shareholder on the date
of such shareholder notice and by any other shareholders known by such
shareholder to be supporting such proposal on the date of such shareholder
notice, and (d) any financial interest of the shareholder in such proposal.
The presiding officer of the annual meeting shall determine and declare at
the annual meeting whether the shareholder proposal was made in accordance with
the terms of this Article IX. If the presiding officer determines that a
shareholder proposal was not made in accordance with the terms of this Article
IX, he shall so declare at the annual meeting and any such proposal shall not
be acted upon at the annual meeting.
B-5
<PAGE> 31
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.
Special meetings of the shareholders of this corporation for any purpose
or purposes may be called at any time by (a) the Board of Directors; (b) the
Chairman of the Board of Directors (if one is so appointed); or (c) the
President of this corporation. Special meetings of the shareholders of this
corporation may not be called by any other person or persons.
At any special meeting of shareholders, only such business shall be
conducted, and only such proposals shall be acted upon, as shall have been set
forth in the notice of such special meeting.
ARTICLE X. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be vested in the
Board of Directors and the shareholders, except that the Board of Directors may
not amend or repeal any bylaw adopted by the shareholders if the shareholders
specifically provide that the bylaw is not subject to amendment or repeal by
the directors.
ARTICLE XI. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal any
provision in these Articles of Incorporation in the manner now or hereafter
prescribed by statute, and all rights conferred upon the shareholders herein
are subject to this reservation. Notwithstanding anything contained in these
Articles of Incorporation to the contrary, the affirmative vote of at least 60%
of the outstanding shares of Common Stock of the Corporation shall be required
to amend or repeal Article VII of these Articles of Incorporation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this ____ day of July, 1997.
----------------------------
Robert J. Grammig,
Incorporator
B-6
<PAGE> 32
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is submitted:
That Dataflex Reincorporation, Inc. desiring to organize under the laws of
the State of Florida with its initial registered office, as indicated in the
Articles of Incorporation, at 2145 Calumet Street, Clearwater, Florida 34625,
has named Anthony G. Lembo as its agent to accept service of process within
this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation named
above, at the place designated in this certificate, I agree to act in that
capacity, to comply with the provisions of the Florida Business Corporation
Act, and am familiar with, and accept, the obligations of that position.
---------------------------------
Anthony G. Lembo,
Registered Agent
B-7
<PAGE> 33
APPENDIX I
DATAFLEX CORPORATION
2145 CALUMET STREET
CLEARWATER, FLORIDA 34625
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Philip Doganiero, Anthony Lembo and
Richard C. Rose, or any of them, as Proxies, each with the power to appoint his
substitute, and hereby authorizes them or their substitutes to represent and to
vote, as designated below, all the shares of common stock of Dataflex
Corporation held of record by the undersigned on July 21, 1997, at the annual
meeting of shareholders to be held on September 18, 1997 or any adjournment
thereof.
<TABLE>
<S> <C> <C>
1. PROPOSAL TO APPROVE REINCORPORATION OF THE COMPANY FROM NEW JERSEY TO FLORIDA
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. ELECTION OF CLASS I DIRECTORS FOR the nominee listed WITHHOLD AUTHORITY
below (except as marked to the to vote for the nominee
contrary below) [ ] listed below [ ]
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME IN
THE LIST BELOW)
Anthony G. Lembo
3. ELECTION OF CLASS II DIRECTORS FOR the nominee listed WITHHOLD AUTHORITY
below (except as marked to the to vote for the nominee
contrary below) [ ] listed below [ ]
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME IN
THE LIST BELOW)
Richard C. Rose and W. Keith Schilit
4. ELECTION OF CLASS III DIRECTORS FOR the nominee listed WITHHOLD AUTHORITY
below (except as marked to the to vote for the nominee
contrary below) [ ] listed below [ ]
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME IN
THE LIST BELOW)
Philip Doganiero and Barry M. Alpert
5. In their discretion the Proxies are authorized to vote upon such other business as may properly come before the
meeting.
</TABLE>
<PAGE> 34
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED ON FOR PROPOSAL 1, 2, 3 AND 4.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
<TABLE>
<S> <C>
DATED: _____________________________________1997 __________________________________________
________________________________________________ Signature
PLEASE MARK, SIGN, DATE, AND RETURN THE
PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE
___________________________________________ __________________________________________
Signature if held jointly
</TABLE>
