SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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
Filed by registrant (X)
Filed by a party other than registrant ( )
Check appropriate box:
(X) Preliminary proxy statement
( ) Definitive proxy statement
( ) Definitive additional materials
( ) Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Diagnostic/Retrieval Systems, Inc.
(Name of registrant as specified in its charter)
Diagnostic/Retrieval Systems, Inc.
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
(X)* $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1)
or 14a-6(i)(2)
( ) $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3)
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
Class A Common Stock
Class B Common Stock
(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:
N/A
(4) Proposed maximum aggregate value of transaction:
N/A
( ) 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 files:
* Previously paid
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
5 SYLVAN WAY
PARSIPPANY, NJ 07054
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD [FEBRUARY __], 1996
TO THE STOCKHOLDERS OF DIAGNOSTIC/RETRIEVAL SYSTEMS INC.:
NOTICE IS HEREBY GIVEN that a Special Meeting of
Stockholders (the "Meeting") of Diagnostic/Retrieval Systems,
Inc., a Delaware corporation (the "Company"), will be held at the
[Parsippany Hilton, 1 Hilton Court, Parsippany, New Jersey] at
A.M., local time, on [day], [February ], 1996, for the
purpose of the consideration and approval of an Amended and
Restated Certificate of Incorporation (the "Restated
Certificate") the full text of which, as proposed to be amended,
is attached as Exhibit A to the accompanying proxy statement:
1. To effect a reclassification of each share of the
Company's Class A Common Stock, par value $.01 per
share (the "Class A Common Stock"), and each share
of the Company's Class B Common Stock, par value
$.01 per share (the "Class B Common Stock"), into
one share of common stock, par value $.01 per
share (the "New Common Stock"), of the Company
(the "Reclassification").
2. To provide that action by stockholders may be
taken only at a duly called annual or special
meeting, and not by written consent (the "Consent
Provision").
3. To provide that the stockholders of the Company
would not have the right to make, adopt, alter,
amend, change or repeal the By-Laws except upon
the affirmative vote of not less than 66 % of the
outstanding stock of the Company entitled to vote
thereon (the "By-Law Amendment Provision").
4. To transact such other business as may properly
come before the Meeting or any adjournments or
postponements thereof.
THE APPROVAL AND ADOPTION OF THE RECLASSIFICATION IS
CONDITIONED UPON THE APPROVAL AND ADOPTION OF PROPOSALS 2 AND 3
(THE "STOCKHOLDER PROTECTION PROPOSALS"). ACCORDINGLY, A VOTE
AGAINST ANY OF THE STOCKHOLDER PROTECTION PROPOSALS WILL HAVE THE
SAME EFFECT AS A VOTE AGAINST THE RECLASSIFICATION.
Holders of record of both classes of common stock at the
close of business on , 1996 are entitled to vote. There are
two proxies--WHITE for Class A Common Stock and BLUE for Class B
Common Stock. If you hold shares of Class A Common Stock and
Class B Common Stock, both proxies should be dated, signed and
returned in the enclosed envelope.
By Order of the Board of Directors,
Diagnostic/Retrieval Systems, Inc.
Nancy R. Pitek
Secretary
YOUR VOTE IS IMPORTANT
WE URGE YOU TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD(S)
WHICH IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AS SOON AS
POSSIBLE, EVEN IF YOU ARE CURRENTLY PLANNING TO ATTEND THE
MEETING. THIS WILL NOT PREVENT YOU FROM VOTING IN PERSON, BUT
WILL ASSURE THAT YOUR VOTE IS COUNTED IF YOU ARE UNABLE TO ATTEND
THE MEETING.
[LOGO]
PROXY STATEMENT
FOR
SPECIAL MEETING OF STOCKHOLDERS
[FEBRUARY ], 1996
This proxy statement and the accompanying proxy or proxies
are to be mailed to holders of Class A Common Stock, $.01 par
value (the "Class A Common Stock"), and Class B Common Stock,
$.01 par value (the "Class B Common Stock"), of
Diagnostic/Retrieval Systems, Inc. (the "Company"), commencing
on or about , 1996 in connection with the solicitation of
proxies by the Board of Directors (the "Board") for a Special
Meeting of Stockholders (the "Meeting") of the Company to be
held , , 1996 at A.M., local time, at the
[Parsippany Hilton, 1 Hilton Court, Parsippany, New Jersey].
VOTING AND REVOCATION OF PROXIES; RECORD DATE
The Board has fixed the close of business on , 1996
as the record date (the "Record Date") for determining the
stockholders of the Company entitled to vote at the Meeting.
As of December 15, 1995, the Company had outstanding 3,307,324
shares of Class A Common Stock and 2,150,558 shares of Class B
Common Stock (exclusive of 432,639 shares of Class A Common
Stock and 65,795 shares of Class B Common Stock held in the
treasury, which will not be voted at the Meeting).
If a proxy card is returned by a stockholder properly
signed and is not revoked, the shares of Class A Common Stock
or Class B Common Stock represented will be voted by the
persons named on the proxy card, or their substitutes, in
accordance with the stockholder's directions. Stockholders are
urged to specify their choice between approval or disapproval
of, or abstention with respect to, the proposals by marking the
appropriate boxes on the proxy card. If a proxy card is signed
and returned without instructions marked on it, it will be
voted as recommended by the Board with respect to each matter.
The execution of a proxy does not affect the right of a
stockholder to attend the Meeting and vote in person. A
stockholder giving a proxy may revoke it at any time before it
is voted by giving written notice of its revocation to the
Secretary of the Company at 5 Sylvan Way, Parsippany, New
Jersey 07054, by executing and delivering to the Company
another proxy dated after the proxy to be revoked or by
attending the Meeting and voting in person.
VOTING RIGHTS
On all matters other than the election or removal of
directors and matters as to which class voting is required by
Delaware law, holders of Class A Common Stock (the "Class A
Stockholders") are entitled to one vote per share and holders
of Class B Common Stock (the "Class B Stockholders") are
entitled to one-tenth vote per share, voting together as a
single class. Adoption of the Reclassification requires
approval of the Class A Stockholders and the Class B
Stockholders, voting together as a single class and with each
voting as separate classes. Adoption of the Stockholder
Protection Proposals requires the approval of the Class A
Stockholders and the Class B Stockholders, voting together as a
class. The vote required to approve each of the proposals is
set forth in the description of each proposal herein. The
presence at the Meeting, in person or by proxy, of a majority
of the shares of the Class A Common Stock and a majority of the
shares of the Class B Common Stock shall constitute a quorum
for the vote on those proposals which require a majority vote,
whether of the Class A Stockholders and Class B Stockholders
voting together as a class, or as separate classes. The
presence at the Meeting, in person or by proxy, of sixty
percent (60%) of the shares of the Class A Common Stock and
sixty percent (60%) of the shares of the Class B Common Stock
shall constitute a quorum for the vote on those proposals which
require a sixty percent (60%) vote, whether of the Class A
Stockholders and Class B Stockholders voting together as a
class, or as separate classes.
Under applicable Delaware law, in determining whether
the proposals have received the requisite number of affirmative
votes, abstentions and broker non-votes will be counted and
will have the same effect as a vote against the proposals.
THE PROPOSALS
The Company's Board has, by a [___ to ___] vote,
approved and recommended for submission to the stockholders of
the Company the consideration and approval of an Amended and
Restated Certificate of Incorporation (the "Restated
Certificate") which will amend and restate the Company's
Certificate (1) to effect a reclassification of each share of
the Class A Common Stock and each share of Class B Common
Stock, into one share of common stock, par value $.01 per share
(the "New Common Stock"), of the Company (the
"Reclassification"), (2) to provide that action by stockholders
may be taken only at a duly called annual or special meeting,
and not by a written consent (the "Consent Provision") and (3)
to provide that the stockholders of the Company would not have
the right to make, adopt, alter, amend, change or repeal the
By-Laws except upon the affirmative vote of not less than 66 %
of the outstanding stock of the Company entitled to vote
thereon (the "By-Law Amendment Provision"). Each of the
proposals is described in detail below.
If Proposals 1-3 are approved at the Meeting, the
Company intends to effectuate such amendments by amending and
restating the Certificate to read substantially in the form of
the Amended and Restated Certificate of Incorporation (the
"Restated Certificate") attached hereto as Exhibit A. The
approval and adoption of the Reclassification is conditioned
upon the approval and adoption of Proposals 2 and 3 (the
"Shareholder Protection Proposals"). Accordingly, if either of
the Shareholder Protection Proposals is not approved, the Board
will not effect the Reclassification or the Stockholder
Protection Proposal approved by stockholders, thereby
abandoning Proposals 1-3.
The proposed amendments to the Certificate contained
in the Restated Certificate and which are described below
should be read in conjunction with, and the following
description is qualified in its entirety by, the terms of the
Restated Certificate. The Company intends to file the Restated
Certificate with the Delaware Secretary of State immediately
following the Meeting or as soon thereafter as is reasonably
practicable, to be effective at the close of business on such
date (the "Effective Time").
PROPOSAL ONE -- THE RECLASSIFICATION PROPOSAL
General
The purpose of the Reclassification is to simplify
the Company's capital structure, streamline the Company's
voting procedures and enhance the marketability and liquidity
of and maximize investor interest in the Company's capital
stock. If the Reclassification is effected, the Board believes
that the Company will be in a more flexible and better position
to raise capital and effect mergers and acquisitions utilizing
its common stock. Although the Company is continually engaged
in exploring investment and acquisition opportunities, there
are no present negotiations which contemplate the issuance of
its equity securities.
At present, the Certificate authorizes the issuance
of up to 32,000,000 shares of capital stock divided into two
classes of common stock (Class A Common Stock and Class B
Common Stock) and preferred stock, par value $10.00 per share
(the "Preferred Stock"). There are 10,000,000 authorized
shares of Class A Common Stock, of which _________ shares were
outstanding as of the Record Date, 20,000,000 authorized shares
of Class B Common Stock, of which _________ shares were
outstanding as of the Record Date, and 2,000,000 shares of
Preferred Stock, of which no shares are outstanding. Except as
outlined below, the Class A Common Stock and the Class B Common
Stock are identical in all respects.
Current Voting Rights. The Board of Directors of the
Company is classified and is divided into two classes of
directors -- Class A Directors and Class B Directors. So long
as the number of shares of Class B Common Stock outstanding is
not less than 10% of the total number of outstanding shares of
Class A Common Stock and Class B Common Stock, the Class B
Stockholders, voting as a class, are entitled to one vote for
each share of Class B Common Stock held to elect a number of
Class B Directors equal to one-fourth of the number of
directors constituting the whole Board (rounded up to the
nearest whole number). The number of directors constituting
the whole Board is currently seven and the number of Class B
Directors is currently three. The Class A Stockholders, voting
as a class, are entitled to one vote for each share of Class A
Common Stock held to elect the remaining directors, who are
designated Class A Directors. Neither the Class A Common Stock
nor the Class B Common Stock has cumulative voting rights and
thus holders of 50% or more of the outstanding shares of each
such class are able to elect all of the directors to be elected
by that class. On all matters other than the election or the
removal of directors, and matters as to which class voting is
required by Delaware law, the holders of Class A Common Stock
are entitled to one vote per share and the holders of Class B
Common Stock are entitled to one-tenth vote per share, voting
together as a single class.
However, if the number of shares of Class B Common Stock
outstanding should be less than 10% of the total number of
shares of Class A Common Stock and Class B Common Stock
outstanding on any record date for a meeting of stockholders of
the Company, the Class B Stockholders would not be entitled to
elect any Class B Directors and the Class A Stockholders and
the Class B Stockholders would vote together as a single class
on all matters coming before such meeting, including the
election of the Class A Directors to be elected at such
meeting, with the Class A Stockholders entitled to one vote per
share and the Class B Stockholders entitled to one-tenth vote
per share. Alternatively, if on any record date for such a
meeting the number of outstanding shares of Class A Common
Stock should be less than 875,000, then the Class B
Stockholders would continue to elect a number of Class B
Directors equal to one-fourth of the total number of directors
constituting the whole Board of Directors and, in addition,
would vote together with the Class A Stockholders to elect the
Class A Directors to be elected at such meeting, with the Class
A Stockholders entitled to cast one vote per share and the
Class B Stockholders entitled to cast one-tenth vote per share.
The Class A Directors are currently divided into three
subclasses with each subclass consisting of as nearly an equal
number of directors as possible. The members of one of such
subclass are elected each year to hold office for a three-year
term and until their successors have been elected and
qualified. The term of office of each Class B Director is one
year and until such Class B Director's successor has been
elected and qualified. The classification and
subclassification of the Board of Directors may be altered only
by the affirmative vote of 60% of the outstanding shares of the
Class A Common Stock and Class B Common Stock, voting as
separate classes. Stockholders of a particular class may
effect the removal of a director of that class during his term
by a like vote, but only for cause.
Current Dividends and Distributions. Holders of Class A
Common Stock and Class B Common Stock each are entitled to
dividends only if, as and when declared, payable by the Board
of Directors out of funds legally available for such payment.
For so long as any shares of the Class B Common Stock are
outstanding, the Board may not (i) declare any dividends in
cash or property with respect to the Class A Common Stock
unless an equal dividend per share, payable in the same
consideration, shall have been declared with respect to the
outstanding Class B Common Stock and set aside for payment, or
(ii) declare any dividend payable in securities of the Company
with respect to the Class A Common Stock, or distribute any
rights or warrants to purchase securities of the Company with
respect to the Class A Common Stock, unless at the same time it
declares an equivalent dividend or makes an equivalent
distribution with respect to the Class B Common Stock so as to
maintain, as nearly as may be practicable, the relative voting
and other rights of the holders of each class immediately
before such action. In addition, the Company may not combine,
subdivide or reclassify the Class A Common Stock or Class B
Common Stock unless at the same time it takes such action as
may be necessary with respect to the other class so as to
maintain, as nearly as may be practicable, the relative voting
and other rights of the holders of each class immediately
before such action. The foregoing provisions may be changed
only by the affirmative vote of holders of 60% of the
outstanding shares of both the Class A Common Stock and Class B
Common Stock, voting as separate classes. The Board of
Directors is permitted to declare a dividend in cash, property
or securities with respect to the Class B Common Stock without
declaring a dividend with respect to the Class A Common Stock,
although at this time it does not foresee any circumstances
under which it would consider taking such action.
Current Conversion Rights. Holders of Class A Common
Stock have the right at any time, and from time to time, to
convert each share of Class A Common Stock into one share of
Class B Common Stock. Holders of Class B Common Stock do not
have the right to convert their shares into Class A Common
Stock nor do they have any other conversion rights.
Effects of the Reclassification.
If the Reclassification is approved, the Restated
Certificate will provide that the total number of shares which
the Company is authorized to issue is 22,000,000, consisting of
20,000,000 shares of New Common Stock, and 2,000,000 shares of
Preferred Stock. The Company proposes to reduce the number of
authorized shares in order to lower its annual corporate
franchise taxes payable to the Secretary of State of the State
of Delaware.
At the Effective Time, each share of Class A Common Stock
and Class B Common Stock automatically will be reclassified,
changed and converted into one share of the New Common Stock,
with no consideration paid to either the Class A Stockholders
or the Class B Stockholders. Thus, the Class A Common Stock
and the Class B Common Stock will be eliminated. All holders
of the New Common Stock will have the same preferences, rights,
powers and qualifications, including one vote for each share of
New Common Stock held by a stockholder.
After the Effective Time, the transfer agent of the
Company will mail to each of the holders of certificates
representing shares of the Class A Common Stock and Class B
Common Stock outstanding immediately prior to the effectiveness
of the Reclassification a letter instructing those holders as
to the method of surrendering their certificates in exchange
for certificates representing the New Common Stock. All
stockholders will be requested to surrender their current stock
certificates representing the Class A Common Stock and the
Class B Common Stock of the Company. Upon such surrender, the
holders will be entitled to receive a new certificate for the
same number of shares of the New Common Stock to which he, she
or it is surrendered. Until surrendered, each certificate
representing shares of the Class A Common Stock and the Class B
Common Stock will continue to entitle its holder to receive
dividends and to vote on any matter put to a vote of the
stockholders. Until surrendered, each certificate representing
shares of the former Class A Common Stock or Class B Common
Stock will also represent the right to receive, upon surrender,
the number of shares of the New Common Stock of the Company to
which that holder is entitled, as determined in accordance with
the Restated Certificate.
From and after the Effective Time, each option to acquire
shares of the Class A Common Stock and Class B Common Stock
outstanding as of the Effective Time will be deemed to be
exercisable for a like number of shares of the New Common
Stock. The agreements evidencing such options will not be
required to be surrendered for exchange. Future options
granted under the Company's stock option plans will cover
shares of the New Common Stock and the plans will be deemed to
cover only such shares.
As set forth above, the Company's Board of Directors is
currently both classified and divided into two classes -- Class
A Directors and Class B Directors. The Class A Directors are
currently divided into three classes, the Class A-I Directors,
the Class A-II Directors and the Class A-III Directors. In
order to effect the Reclassification, from and after the
Effective Time, the Board of Directors will no longer be
divided into Class A Directors and Class B Directors. The
directors who are currently designated as Class A-I Directors,
the Class A-II Directors and the Class A-III Directors will be
designated as Class I Directors, Class II Directors and Class
III Directors, respectively, and will continue to serve out
their respective terms. Following the Reclassification, each
of the former Class B Directors will be appointed by the former
Class A Directors as Class I Directors, Class II Directors and
Class III Directors and each class will be comprised as
follows:
Class I Class II Class III
(Initial Term (Initial Term (Initial Term
Expiring 1996 Expiring 1997 Expiring 1998
Annual Meeting) Annual Meeting) Annual Meeting)
Mark S. Newman Leonard Newman Jack Rachleff
Theodore Cohn Mark N. Kaplan* Stuart F. Platt*
Donald C. Fraser*
* Currently Class B Directors who will be appointed Class
I Directors, Class II Directors and Class III
Directors following the Reclassification.
Currently each class of Class A Directors consists of as
nearly an equal number of directors as possible. The members
of one of the three subclasses of Class A Directors is elected
each year. Such Class A directors hold office for three-year
terms and until their successors are elected and qualify.
Class B Directors are elected each year to one-year terms.
Following the Reclassification, each class of directors will
consist of as nearly an equal number of directors as possible.
At each annual meeting beginning with the 1996 Annual Meeting,
one class of directors will be elected to succeed those whose
terms expire by all holders of the New Common Stock, with each
newly elected director to serve a three-year term.
The voting power of the Class A Stockholders and the Class
B Stockholders with respect to the election of directors may be
adversely impacted by the Reclassification. Currently, the
Class B Stockholders are entitled to elect a number of Class B
Directors equal to one-fourth of the number of directors
constituting the whole Board of Directors and the Class A
Stockholders are entitled to elect the remainder. Following
the Effective Time, the former Class A Stockholders voting
together as a group may not have the necessary votes to elect
the number of directors to which the former Class A
Stockholders, as a class, were entitled prior to the
Reclassification. Likewise, following the Effective Time, the
former Class B Stockholders, voting together as a group, may
not have the necessary votes to elect the number of directors
to which the former Class B Stockholders, as a class, were
entitled prior to the Reclassification.
The augmented voting power of the Class A Stockholders on
all matters other than the election and removal of directors
will be diluted as a result of the Reclassification. Currently
the Class A Stockholders have approximately 94% of the voting
rights with respect to such matters, while the Class B
Stockholders have approximately 6% of such voting rights.
Immediately following the Effective Time, the former Class A
Stockholders will have approximately 61% of such voting rights
while the former Class B Stockholders will have approximately
39% of such voting rights.
Each of the Class A Common Stock and the Class B Common
Stock is traded on the American Stock Exchange. The Company
expects that the New Common Stock will trade on the American
Stock Exchange.
Recommendation of the Board of Directors. For the reasons
set forth above, the Board of Directors recommends that
stockholders vote FOR the Reclassification.
Required Stockholder Vote. Approval of the
Reclassification requires (i) the affirmative vote of the
holders of a majority of the outstanding shares of Class A
Common Stock and Class B Common Stock, voting together as a
single class, (ii) the affirmative vote of the holders of 60%
of the outstanding shares of Class A Common Stock, voting
separately as a class, and (iii) the affirmative vote of the
holders of 60% of the outstanding shares of Class B Common
Stock, voting separately as a class.
PROPOSALS TWO AND THREE - -
THE STOCKHOLDER PROTECTION PROPOSALS
General
The Company's Certificate currently provides for dual
class common stock capitalization. As described above, the
Class A Common Stock has greater voting power and is entitled
to elect three-fourths of the Board of Directors. Because the
augmented voting power of the Class A Common Stock provides
certain protection against coercive takeover tactics, the Board
previously has not considered adopting many of the structural
protections that publicly traded companies without a dual class
common stock capital structure typically have in place. If the
Reclassification is adopted, thereby eliminating the dual class
stock structure, the Board believes the best interests of
stockholders to be served by adopting appropriate defenses to
coercive tender offers or other coercive efforts to gain
control of the Company.
The Stockholder Protection Proposals are proposed with a
view toward better enabling the Company to (i) develop its
business through long-range planning and to foster its long-
term growth, (ii) attempt to avoid the necessity of sacrificing
these plans for the sake of short-term gains and the
disruptions caused by any threat of a takeover not deemed by
the Board to be in the best interests of the Company and all of
its stockholders, (iii) allow the Board to make a reasoned and
unpressured evaluation in the event of an unsolicited takeover
proposal and (iv) to promote conditions of continuity and
stability in the Company's business, management and policies.
In addition, the Shareholder Protection Proposals are
proposed in order to discourage certain types of transactions,
described below, which may involve an actual or threatened
change of control of the Company. The Stockholder Protection
Proposals are designed to make it more difficult and time-
consuming to change, among other things, majority control of
the Board and thus reduce the vulnerability of the Company to
an unsolicited proposal for a takeover of the Company,
particularly one that is made at an inadequate price or does
not contemplate the acquisition of all of the Company's
outstanding shares, or an unsolicited proposal for the
restructuring or sale of all or part of the Company. The Board
believes that, as a general rule, such proposals would not be
in the best interests of the Company and all of its
stockholders.
The accumulation of substantial stock positions in public
companies by third parties is a common prelude to proposing a
takeover or a restructuring or sale of all or part of such
companies or other similar extraordinary corporate action or
simply as a means to put such companies "in play." Such
actions are often undertaken by the third party without advance
notice to or consultation with the management of such
companies. In many cases, the purchaser seeks representation
on the particular company's board of directors in order to
increase the likelihood that its proposal will be implemented
by the company. If the company resists the efforts of the
purchaser to obtain representation on the particular company's
board, the purchaser may commence a proxy contest to have its
nominee elected to the board in place of certain directors or
the entire board. In a number of cases, the purchaser may not
truly be interested in taking over the company, but uses the
threat of a proxy fight or bid to take over the company as a
means of forcing the company to repurchase the purchaser's
equity position at a substantial premium over market price or
as a means to put the company into "play" solely to reap short-
term gains from such purchaser's recent accumulation of stock.
The Board believes that the imminent threat of removal of
the Company's management in such situations would severely
curtail management's ability to negotiate effectively with such
purchasers. In addition, the Board believes that the ability
of a third party to put the Company "in play" would severely
curtail management's ability to negotiate effectively with any
other third party interested in acquiring the Company. The
Company's management would be deprived of the time and
information necessary to evaluate the takeover proposal, to
study alternative proposals and to help ensure that the best
price is obtained in any transactions involving the Company
which may ultimately be undertaken. If the real purpose of a
takeover bid were to force the Company to repurchase an
accumulated stock interest at a premium price, management would
face the risk that, if it did not repurchase the purchaser's
stock interest, the Company's business and management would be
disrupted, perhaps irreparably.
In addition to recommending the Shareholder Protection
Proposals to the stockholders for their adoption, on [
], the Board adopted certain amendments to the By-Laws
affecting the ability of stockholders to nominate directors and
introduce business at any annual or special meetings of the
stockholders.(1) The Board adopted such amendments as part of
its effort to protect stockholder value against coercive
takeover tactics. For a detailed description of the
amendments, see Advance Notice Provisions herein. The Board
does not presently contemplate adopting or recommending to the
stockholders for their adoption, any further amendments to the
Restated Certificate, By-Laws, or other agreements which would
affect the ability of third parties to take over or change
control of the Company, except for amendments to the By-Laws to
conform them to the Reclassification and the Stockholder
Protection Proposals.
The Stockholder Protection Proposals are not in response
to efforts of which the Company is aware to accumulate the
Company's stock or to obtain control of the Company. The Board
of Directors believes, however, that it is appropriate to act
on the Stockholder Protection Proposals at the Meeting when the
Reclassification is being voted on by the Stockholders and when
the Stockholder Protection Proposals can be considered
carefully, rather than in the midst of a takeover attempt.
Existing Certificate and By-Laws and Section 203 of the DGCL
and Certain Anti-Takeover Effects.
The Company's Certificate and By-Laws currently contain
certain provisions which may have the effect of delaying,
deferring or making more expensive or difficult a change in
control. Such provisions include (a) the dual class stock
structure, (b) the classified Board, (c) the existence of
authorized but unissued Preferred Stock, (d) the supermajority
vote requirement with respect to the amendment of certain by-
laws and (e) the advance notice provisions in the By-Laws.
Further, Section 203 of the DGCL provides certain anti-takeover
protection.
Dual Class Stock. The Company's Certificate currently
provides for dual class common stock capitalization. As
described above, the Class A Common Stock has greater voting
power than the Class B Common Stock and is entitled to elect
three-fourths of the Board of Directors. Because of the
augmented voting power of the Class A Common Stock and the
ability of the Class A Stockholders to elect three-fourths of
the Board, the Class A Stockholders, which holders include
certain directors and executive officers of the Company, have
significant influence over the composition of the Board and
significant voting power with respect to the approval of
proposals submitted to a stockholder vote. As a result, in the
event of a proposed merger, tender offer or attempt to gain
control of the Company of which the holders of the Class A
Common Stock do not approve, the holders of Class A Common
Stock at that time could prevent or impede the completion of
such transaction.
In the event the Reclassification is approved and adopted,
the existing classes of common stock would be reclassified into
___________________
1 Adoption of Advance Notice By-Laws are being proposed at the
Board's regular February meeting, prior to the mailing of
this Proxy Statement.
one single class with all stockholders entitled to identical
voting rights, thereby eliminating the disparate voting power
of the Class A Stockholders, many of whom are directors and
officers of the Company.
Classified Board. The Board is currently divided into two
classes -- Class A Directors and Class B Directors. The Class
A Directors are further divided into three subclasses. So long
as the number of shares of Class B Common Stock outstanding is
not less than 10% of the total number of outstanding shares of
Class A Common Stock and Class B Common Stock, the Class B
Common Stockholders, voting as a class, are entitled to elect a
number of Class B Directors equal to one-fourth of the number
of directors constituting the whole Board of Directors. The
Class A Stockholders, voting as a class, are entitled to elect
the remaining directors, who are designated Class A Directors.
If the Reclassification is implemented, each class of
directors will consist of as nearly an equal number of
directors as possible. At each annual meeting beginning with
the 1996 Annual Meeting, one class of directors will be elected
to succeed those whose terms expire by all holders of the New
Common Stock, with each newly elected director to serve a
three-year term.
The classified Board may discourage minority stockholders
who attempt to elect the Company's entire board of directors
through a proxy contest or otherwise, even though they do not
own a majority of the Company's outstanding shares entitled to
vote. The classified Board could delay the purchaser's ability
to obtain control of the Board in a relatively short period of
time because it will generally take a purchaser two annual
meetings of stockholders to elect a majority of the Board and
pursuant to 141(k) of the DGCL, the insurgent would need to
show cause in order to remove any director. Also, since
neither the DGCL nor the Certificate or By-Laws require
cumulative voting, a purchaser of a block of stock of the
Company constituting less than a majority of the outstanding
shares has no assurance of proportional representation on the
Board.
Preferred Stock. The Certificate authorizes 2,000,000
shares of Preferred Stock of which, on the Record Date, no
shares were outstanding. Subject to applicable law, the Board
may issue, in its sole discretion, shares of Preferred Stock
without further stockholder action. The Preferred Stock may be
issued in one or more series and may have such designations,
preferences and relative rights, qualifications and limitations
as the Board may fix by resolution at the time of issuance
except that the Board shall not create any series of Preferred
Stock with more than one vote per share, or with voting rights
which would limit, reduce or otherwise abridge certain rights
of the Class B Stockholders. It may be possible for the Board
to use its authority to issue Preferred Stock in a way which
could deter or impede the completion of a tender offer or other
attempt to gain control of the Company of which the Board does
not approve.
Stockholder Meeting Provision. Under the DGCL, special
meetings of stockholders of a corporation may be called by the
corporation's board of directors or by such persons as may be
authorized by a corporation's certificate of incorporation or
by-laws. The By-Laws currently provide that a special meeting
of stockholders may only be called by the Board. This
provision is intended to make it more difficult for
stockholders to take actions which require a meeting of
stockholders unless the Board or a majority of the Board calls
such a meeting. The Board believes that it is in the best
position to determine those issues which are properly the
subject of a special meeting of stockholders. In making such a
determination, the Board must consider that conducting
stockholder meetings is extremely costly and time-consuming and
distracts management from the day-to-day operation of the
business. The Board believes that it is in the best position
to consider these factors and make the appropriate
determination. Although the Stockholder Meeting Provision has
the effect of precluding stockholder consideration of a
proposal to which the Board is opposed, the Board believes that
stockholders are provided a full opportunity to make proper
proposals at duly convened stockholder meetings and to request
that any such proposal be presented for consideration to other
stockholders in the Company's annual proxy statement.
Advance Notice Provisions. The Board recently adopted By-
Laws which provide that stockholders be required to give
advance notice to the Company of (i) any stockholder-proposed
director nomination or (ii) any business to be introduced by a
stockholder at any annual or special meeting (the "Advance
Notice Provisions"). The Advance Notice Provisions provide
that any stockholder entitled to vote in the election of
directors generally may nominate one or more persons for
election as director or directors at an annual meeting only if
written notice of such stockholder's intent has been given to
the Secretary of the Company not later than 60 days nor more
than 90 days prior to the anniversary date of the immediately
preceding annual meeting. In the event the annual meeting is
called for a date that is not within 30 days before or after
such anniversary date, the stockholder's written notice of such
intent must be given within 10 days before or after such
anniversary date. In the case of a special meeting of
stockholders called for the purpose of electing directors, to
be timely, a stockholder's notice must be delivered to or
mailed and received not later than the close of business on the
tenth day following the day on which notice of the date of the
special meeting was mailed or public disclosure of the date of
the special meeting was made by the Company, whichever first
occurs. The Chairman of the meeting may determine that the
nomination of any person was not made in compliance with the
Advance Notice Provisions.
The Advance Notice Provisions further provide that, for
business to be properly introduced by a stockholder of the
Company where such business is not specified in the notice of
meeting or brought by or at the direction of the Board, the
stockholder must have given not less than 60 nor more than 90
days prior to the anniversary date of the immediately preceding
annual meeting of the stockholders. In the event the annual
meeting is called for a date that is not within 30 days before
or after such anniversary date, notice by the stockholder must
be given 10 days before or after such anniversary date. The
Chairman of the Board may, if the facts warrant, determine and
declare that any business was not properly brought before such
meeting and such business will not be transacted.
The Advance Notice Provisions are designed to provide the
Company with advance warning of a threatened proxy contest and
time to evaluate and react to any such contest. Although the
Advance Notice Provisions do not give the Board or the Chairman
of the meeting any powers to approve or disapprove such
stockholder nominees or other matters, provisions may have the
effect of (i) precluding the consideration of nominees and
other matters at a particular meeting or (ii) discouraging or
deterring a third party from conducting a solicitation of
proxies to elect its own slate of directors or otherwise
attempting to obtain control of the Company, if the proper
procedures are not followed, such matters may be deemed by some
stockholders to be beneficial to the Company and its
stockholders.
Section 203 of the DGCL. Under Section 203 of the DGCL,
as applicable to the Company, certain "business combinations"
(defined generally to include (1) mergers or consolidations
between a Delaware corporation and an interested stockholder
(as defined below) and (2) transactions between a Delaware
corporation and an interested stockholder involving the assets
or stock of such corporation or its majority-owned
subsidiaries, including transactions that increase the
interested stockholder's percentage ownership of stock) between
a Delaware corporation, whose stock generally is publicly
traded or held of record by more than 2,000 stockholders, and
an interested stockholder (defined generally as a stockholder
who becomes a beneficial owner of 15 percent or more of a
Delaware corporation voting stock) are prohibited for a three-
year period following the date that such stockholder became an
interested stockholder, unless (1) before the date such
stockholder became an interested stockholder, the board of
directors of the corporation approved either the business
combination or the transaction which resulted in the
stockholder becoming an interested stockholder, (2) upon
consummation of the transaction that made such stockholder an
interested stockholder, the interested stockholder owned at
least 85 percent of the voting stock of the corporation
outstanding at the time the transaction commenced (excluding
voting stock owned by officers who are also directors and
voting stock held in employee benefit plans in which the
employees have a confidential right to tender or vote stock
held by the plan), or (3) the business combination was approved
by the board of directors of the corporation and ratified by
two-thirds of the voting stock which the interested stockholder
did not own. The three-year prohibition also does not apply to
certain business combinations proposed by an interested
stockholder following the announcement or notification of
certain extraordinary transactions involving the corporation
and a person who had been an interested stockholder during the
previous three years or who became an interested stockholder
with the approval of a majority of the corporation's directors.
By imposing a three-year moratorium on mergers and certain
other business combinations between the interested stockholder
and the Company in certain circumstances, Section 203 may
discourage an acquiror wishing to acquire a target company
through a business combination form targeting the Company. On
the other hand, Section 203 contains numerous exceptions in
which the three-year moratorium will not apply and,
accordingly, is unlikely to provide complete protection to the
Company against an unwanted acquisition.
In the opinion of the Board, if the Reclassification were
adopted, the existing Certificate and By-Laws would provide
inadequate protection against unsolicited takeover attempts.
In the opinion of the Board, the Stockholder Protection
Proposals described below would provide further assurance that
the Board, if confronted by a proposal from a third party which
has acquired a block of common stock, will have sufficient time
to review the proposal and appropriate alternatives to the
proposal and to act in what it believes to be the best
interests of the stockholders. For that reason, the Board has
conditioned the adoption of the Reclassification on the
approval and adoption of the Stockholder Protection Proposals.
Set forth below is a description of the Stockholder
Protection Proposals.
Proposal Two -- The Consent Provision
Subsection 4 of Article SEVENTH of the current Certificate
provides that any action which may be taken at any annual or
special meeting of stockholders may instead be taken without a
meeting, without prior written notice and without a vote if a
written consent setting forth the action to be taken is signed
by the holders of outstanding shares of stock having at least
the number of votes as would be required to authorize such
action at a meeting of stockholders at which all shares
entitled to vote thereon were present and voting so long as
prompt notice of such action is given to the non-consenting
stockholders. The Consent Provision (Subsection 5 of Article
SEVENTH of the Restated Certificate) provides that action by
stockholders may be taken only at a duly called annual or
special meeting and not by written consent.
The Consent Provision limits the ability of any
stockholder to take action immediately and without prior notice
to the Board. The Consent Provision would allow stockholders
to act only at an annual or special meeting. By prohibiting
stockholders from acting without a meeting, the Consent
Provision ensures that all stockholders will have the
opportunity to consider any matter that could affect their
rights. The Consent Provision is intended to provide the Board
of Directors and the non-consenting stockholders with an
opportunity to review any proposed action and, if necessary, to
take any necessary action to protect the interest of minority
stockholders and the Company before the proposed action is
taken. As a result, the Board may take action that certain
stockholders do not believe are in their best interest.
Additionally, in conjunction with the Special Meeting
Provision, a majority of the incumbent Board could delay until
the annual meeting any action that required stockholder
approval, even if the proponents of the action has sufficient
stockholder votes to obtain approval of the action at a
stockholder meeting.
The Board, however, believes that action by written
consent of the stockholders is inappropriate for a public
company and that it is in the best interest of the stockholders
and the Company to require full consideration of a matter at a
meeting of stockholders before acting on it.
Recommendation of the Board of Directors. For the reasons
set forth above, the Board of Directors recommends that
stockholders vote FOR the Consent Provision.
Required Stockholder Vote. Approval of the Consent
Provision requires the affirmative vote of the holders of a
majority of the outstanding shares of Class A Common Stock and
Class B Common Stock, voting together as a single class.
Proposal Three -- The By-Law Amendment Provision.
Subsection 2 of Article SEVENTH of the Certificate and
Article VIII of the By-Laws currently provide that the power to
amend, alter and repeal the By-Laws and to adopt new By-Laws,
is vested in the Board of Directors as well as in the
stockholders. Article VIII of the By-Laws further provides
that a 60% vote of the stockholders is required to amend
Article II (relating to the number and qualifications of
directors) or Article VIII of the By-Laws. The By-Law
Amendment Provision (Subsection 3 of Article SEVENTH of the
Restated Certificate) provides that the stockholders of the
Company may not make, adopt, alter, amend, change or repeal the
By-Laws except upon the affirmative vote of not less than 66 %
of the outstanding stock of the Company entitled to vote
thereon. The ability of the Board to amend the By-Laws would
remain intact from and after the Effective Time.
The By-Law Amendment Provision is intended to discourage
and, in certain instances, to prevent shareholders controlling
less than 75% of the total voting power of all outstanding
voting securities of the Company from making changes in the By-
Laws which may (i) interfere with or frustrate the power of the
then incumbent Board to manage the business and affairs of the
Company, or (ii) increase the number of directors or reduce the
authority of the Board thereby undercutting the effect of the
provisions for a classified Board of Directors and the other
provisions described herein. However, the By-Law Amendment
Provision would enable the holders of more than 25% of the
total voting power of all outstanding voting securities of the
Company to prevent an amendment to the By-Laws even if such
change were desired by the holders of a majority of the
outstanding voting securities of the Company.
If the By-Law Amendment Provision is implemented, the
Board of Directors will amend the By-Laws to delete Article
VIII, in order to conform the By-Laws to the Restated Charter.
Recommendation of the Board of Directors. For the reasons
set forth above, the Board of Directors recommends that
stockholders vote FOR the By-Law Amendment Provision.
Required Stockholder Vote. Approval of the By-Law
Amendment Provision requires the affirmative vote of the
holders of a majority of the outstanding shares of Class A
Common Stock and Class B Common Stock, voting together as a
single class.
THE STOCKHOLDER PROTECTION PROPOSALS DESCRIBED ABOVE,
COULD MAKE MORE DIFFICULT OR DISCOURAGE THE REMOVAL OF THE
COMPANY'S MANAGEMENT, WHICH SOME OR A MAJORITY OF HOLDERS OF
THE COMPANY'S CAPITAL STOCK MAY BELIEVE TO BE BENEFICIAL, AND
COULD DISCOURAGE OR MAKE MORE DIFFICULT OR EXPENSIVE, AMONG
OTHER TRANSACTIONS, A MERGER INVOLVING THE COMPANY, OR A TENDER
OFFER, OPEN MARKET PURCHASE PROGRAM OR OTHER PURCHASES OF THE
COMPANY'S CAPITAL STOCK IN CIRCUMSTANCES THAT WOULD GIVE
STOCKHOLDERS THE OPPORTUNITY TO REALIZE A PREMIUM ON THE SALE
OF THEIR COMPANY STOCK OVER THE THEN-PREVAILING MARKET PRICES,
WHICH SOME OR A MAJORITY OF SUCH HOLDERS MAY DEEM TO BE IN
THEIR BEST INTERESTS.
SECURITY OWNERSHIP
The following table shows as of December 15, 1995, the
number of shares of Class A Common Stock and Class B Common
Stock held by each director and nominee, and by all directors
and executive officers of the Company as a group and the
percentage of each class beneficially owned (within the meaning
of Rule 13d-3 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended (the "Exchange
Act").
CLASS A CLASS B
COMMON STOCK (A) COMMON STOCK (A)(B)
PERCENT PERCENT
NAME OF BENEFICIAL OWNER SHARES OF CLASS SHARES OF CLASS
Leonard Newman . 617,600 18.7% 200,824 29.6%
Mark S. Newman . 71,618(c)(f) 2.2 93,531(d)(e)(g) 7.3
Theodore Cohn . . 1,600 -- (h) 4,300 0.3
Donald C. Fraser . . -- -- -- --
Mark N. Kaplan . 1,000 -- (h) -- --
Stuart F. Platt . -- -- 3,000(e) 0.1
Jack Rachleff . . 1,000 -- (h) -- --
Paul G. Casner, Jr.. . . . 1,000 -- (h) 30,000 1.4
Nancy R. Pitek . 5,724(c) 0.2 8,583(d)(e) 0.7
Richard Ross . . -- -- 3,000(e) 0.1
All directors and
executive officers as
a group (10 persons). . . 699,542(c)(f) 21.2% 342,238(d)(e)(g) 35.3%
(a) As of December 15, 1995, the Company had outstanding
3,307,324 shares of Class A Common Stock (excluding 432,639
shares of Class A Common Stock held in the treasury) and
2,150,558 shares of Class B Common Stock (excluding 65,795
shares of Class B Common Stock held in the treasury).
Unless otherwise noted, each director and nominee had sole
voting power and investment power over the shares of Class
A Common Stock and Class B Common Stock indicated opposite
his name.
(b) Each share of Class A Common Stock is convertible at any
time into one share of Class B Common Stock and,
accordingly, each person who owns Class A Common Stock may
be deemed to be the beneficial owner of the number of
shares of Class B Common Stock equal to the number of
shares of Class A Common Stock owned. The number of shares
of Class B Common Stock shown does not include the number
of shares of Class B Common Stock into which the number of
shares of Class A Common Stock shown may be converted.
However, the computation of the percentage of class shown
includes the number of shares of Class B Common Stock into
which the number of shares of Class A Common Stock shown
may be converted.
(c) Includes 5,724 shares of Class A Common Stock held by the
trustee of the Company's Retirement/Savings Plan. Mr. M.
Newman and Ms. N. Pitek share the power to direct the
voting of such shares as members of the administrative
committee of such plan. Mr. M. Newman and Ms. N. Pitek
disclaim beneficial ownership as to and of such shares.
(d) Includes 7,383 shares of Class B Common Stock held by the
trustee of the Company's Retirement/Savings Plan. Mr. M.
Newman and Ms. N. Pitek share the power to direct the
voting of such shares as members of the administrative
committee of such plan. Mr. M. Newman and Ms. N. Pitek
disclaim beneficial ownership as to and of such shares.
(e) Includes shares of Class B Common Stock which might be
purchased upon exercise of options which were exercisable
on December 15, 1995 or within 60 days thereafter, as
follows: Mr. P. Casner, Jr., 30,000 shares; Mr. M. Newman,
60,000 shares; Ms. N. Pitek, 1,200 shares, Mr. S. Platt,
3,000 shares; Mr. R. Ross, 3,000 shares; and all directors
and executive officers as a group, 97,200 shares.
(f) Includes 3,200 shares of Class A Common Stock held by Mr.
M. Newman as custodian for Amanda Newman, his daughter,
over which Mr. M. Newman has sole voting and investment
power.
(g) Includes 1,600 shares of Class B Common Stock held by Mr.
M. Newman as custodian for Amanda Newman, his daughter,
over which Mr. M. Newman has sole voting and investment
power.
(h) Less than 0.1%.
The following table sets forth certain information, as of
December 15, 1995 with respect to each person, other than
executive officers and directors of the Company, which has
advised the Company that it may be deemed to be the beneficial
owner (within the meaning of Rule 13d-3 of the General Rules
and Regulations under the Exchange Act) of more than five
percent of a class of voting securities of the Company. Such
information has been derived from statements on Schedule 13D or
13G filed with the Securities and Exchange Commission by the
person(s) listed below.
Amount and
Nature of
Title of Name and Address Beneficial Percent
Class of Beneficial Owner Ownership of Class
Class A Common Stock First Pacific Advisors, Inc. 965,678(a) 29.2%
10301 West Pico Blvd.
Los Angeles, CA 90064
Class A Common Stock Michael N. Taglich 286,550(b) 8.7
Taglich Brothers, D'Amadeo,
Wagner & Company, Incorporated
100 Wall Street
New York, NY 10005
Class B Common Stock First Pacific Advisors, Inc. 1,717,955(c) 51.7
10301 West Pico Blvd.
Los Angeles, CA 90064
Class B Common Stock David E. Gross 335,701(d) 15.1
27 Cameron Road
Saddle River, NJ 07458
Class B Common Stock Michael N. Taglich 243,300(e) 11.3
Taglich Brothers, D'Amadeo,
Wagner & Company, Incorporated
100 Wall Street
New York, NY 10005
(a) Includes 451,978 shares of Class A Common Stock from the
assumed conversion of $4,000,000 principal amount of the
Company's 9% Senior Subordinated Convertible Debentures due
2003 (the "9% Debentures") and 310,000 shares of Class A
Common Stock beneficially owned by First Pacific Advisors,
Inc. ("First Pacific") through control of FPA Capital Fund,
Inc. ("FPA") to which First Pacific serves as investment
advisor. The Company has been advised that FPA has sole
voting power and shared dispositive power with respect to
310,000 shares. First Pacific has advised the Company that
it has shared voting power with respect to 100,000 shares
and shared dispositive power with respect to 965,678
shares.
(b) Consists of 186,300 shares of Class A Common Stock held by
Lancer Partners, Inc. ("Lancer Partners"), 7,500 shares of
Class A Common Stock held by Antrade, N.V. ("Antrade"),
10,200 shares of Class A Common Stock held by Album N.V.
("Album"), 7,600 shares of Class A Common Stock held by
Ralco Investments Corp. ("Ralco"), 71,100 shares of Class A
Common Stock held by Lancer Offshore, Inc. ("Lancer
Offshore") and 3,850 shares of Class A Common Stock held by
Michael Lauer. Michael N. Taglich and Michael Lauer serve
as general partners of Lancer Partners and managing
partners of Lancer Offshore. The Company has been advised
that Messrs. Taglich and Lauer also share voting and
dispositive authority over the shares held by Album,
Antrade and Ralco resulting in shared voting and shared
dispositive power with respect to a total of 282,700
shares.
(c) Consists of 543,400 shares of Class B Common Stock, the
beneficial ownership of 513,700 shares of Class B Common
Stock from the assumed conversion of Class A Common Stock,
beneficial ownership of 451,978 shares of Class B Common
Stock from the assumed conversion of $4,000,000 principal
amount of the Company's 9% Debentures and an additional
208,877 shares of Class B Common Stock from the assumed
conversion of $3,133,000 principal amount of the Company's
81/2% Convertible Subordinated Debentures due 1998
beneficially owned by First Pacific through its control of
FPA, Source Capital, Inc. ("Source Capital") and FPA New
Income, Inc. ("New Income") to which First Pacific serves
as investment advisor. The Company has been advised that
FPA has sole voting power and shared dispositive power with
respect to 510,000 shares, Source Capital has sole voting
power and shared dispositive power with respect to 262,363
shares and New Income has sole voting power and shared
dispositive power with respect to 339,328 shares. First
Pacific has advised the Company that it has shared
dispositive power with respect to 1,717,955 shares.
(d) Includes 257,381 shares of Class B Common Stock held by Mr.
Gross for which he has sole voting and dispositive power
and the beneficial ownership of an additional 25,000 shares
of Class B Common Stock through the assumed conversion of
Class A Common Stock for which he has sole voting and
dispositive power. Also included are 6,000 shares of Class
B Common Stock held by Mr. Gross' wife personally, 6,440
shares of Class B Common Stock held by her as custodian for
her two children and the beneficial ownership of an
additional 40,880 shares of Class B Common Stock through
Mr. Gross' wife's beneficial ownership of 20,000 shares of
Class A Common Stock, personally, and 20,880 shares of
Class A Common Stock held by her as custodian for her two
children. Mr. Gross has neither voting power nor investment
power over the shares of Class A Common Stock and Class B
Common Stock held by his wife, either personally or as
custodian for her children, and disclaims any beneficial
interest in such shares.
(e) Consists of 126,150 shares of Class B Common Stock held by
Lancer Partners, 4,000 shares of Class B Common Stock held
by Antrade, 5,000 shares of Class B Common Stock held by
Album, 4,000 shares of Class B Common Stock held by Ralco,
85,750 shares of Class B Common Stock held by Lancer
Offshore and 18,400 shares of Class B Common Stock held by
Michael Lauer. The Company has been advised that Messrs.
Taglich and Lauer share voting and dispositive authority
over the shares held by Album, Antrade and Ralco resulting
in shared voting and shared dispositive power with respect
to a total of 224,700 shares.
STOCKHOLDERS' PROPOSALS
Any stockholder who desires to submit a proposal for
inclusion in the Company's proxy materials for the 1996 Annual
Meeting of Stockholders must comply with the requirements
concerning both the eligibility of the proponent and the form
and substance of the proposal established by applicable law,
regulations and the Company's By-Laws. Such proposal must be
received by the Company at its offices at 5 Sylvan Way,
Parsippany, New Jersey 07054 no later than the close of
business on July [8], 1996.
OTHER MATTERS
The Board of Directors is not aware of any business to come
before the Meeting other than those matters described above in
this Proxy Statement. However, if any other matters should
properly come before the Meeting, the proxies confer
discretionary authority with respect to acting thereon, and the
persons named in such proxies intend to vote, act and consent
in accordance with their best judgment with respect thereto.
SOLICITATION EXPENSES
Proxies are being solicited by and on behalf of the Board.
All expenses of this solicitation, including the cost of
preparing and mailing this Proxy Statement will be borne by the
Company. In addition to solicitation by use of the mails,
proxies may be solicited by directors, officers and employees
of the Company in person or by telephone, telegram or other
means of communication. Such directors, officers and employees
will not be additionally compensated, but may be reimbursed for
out-of-pocket expenses, in connection with such solicitation.
Arrangements will also be made with custodians, nominees and
fiduciaries for forwarding of proxy solicitation material to
beneficial owners of shares held of record by such persons, and
the Company may reimburse such custodians, nominees and
fiduciaries for reasonable expenses incurred in connection
therewith. MacKenzie Partners, Inc. has been engaged to
solicit proxies on behalf of the Company. MacKenzie Partners,
Inc. will be paid $____ for their solicitation of proxies on
behalf of the Company. MacKenzie Partners, Inc. will be
reimbursed for its reasonable out-of-pocket expenses and will
be indemnified against certain liabilities in connection with
its solicitation of proxies, including certain liabilities
under the Federal securities laws.
GENERAL
UPON RECEIPT OF A WRITTEN REQUEST, THE COMPANY WILL FURNISH
TO ANY STOCKHOLDER WITHOUT CHARGE A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED MARCH 31, 1995
AND THE EXHIBITS THERETO REQUIRED TO BE FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED. SUCH WRITTEN REQUEST SHOULD
BE DIRECTED TO PATRICIA WILLIAMSON, ASSISTANT VICE PRESIDENT,
CORPORATE COMMUNICATIONS, DIAGNOSTIC/RETRIEVAL SYSTEMS, INC., 5
SYLVAN WAY, PARSIPPANY, NEW JERSEY 07054.THE FORM 10-K IS NOT
PART OF THE PROXY SOLICITATION MATERIALS.
Dated: __________, 1996 By Order of the Board of Directors,
Nancy R. Pitek
Secretary
EXHIBIT A
FORM OF
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
We, the President and Secretary of
Diagnostic/Retrieval Systems, Inc., a corporation
existing under the laws of the State of Delaware, do
hereby certify as follows:
The original Certificate of Incorporation
of Diagnostic/Retrieval Systems, Inc. (the
"Corporation") was filed with the Secretary of State
of the State of Delaware on November 8, 1968.
This Amended and Restated Certificate of
Incorporation restates, integrates and further
amends the provisions of the Certificate of
Incorporation of the Corporation.
This Amended and Restated Certificate of
Incorporation has been duly adopted, all in
accordance with the provisions of Sections 242 and
245 of the Delaware General Corporation Law.
FIRST: The name of the corporation
(hereinafter called the "corporation") is
Diagnostic/Retrieval Systems, Inc.
SECOND: The address, including street,
number, city and county of the registered office of
the corporation in the State of Delaware is 229
South State Street, City of Dover, County of Kent
(19901); and the name of the registered agent of
the corporation in the State of Delaware at such
address is The Prentice-Hall Corporation System,
Inc.
THIRD: The nature of the business and of
the purposes to be conducted and promoted by the
corporation, which shall be in addition to the
authority of the corporation to conduct any lawful
business, to promote any lawful purpose, and to
engage in any lawful act or activity for which
corporations may be organized under the General
Corporation Law of the State of Delaware, is as
follows:
To carry on a general mercantile,
industrial, investing, and trading business in all
its branches; to devise, invent, manufacture,
fabricate, assemble, install, service, maintain,
alter, buy, sell, import, export, license as
licensor or licensee, lease as lessor or lessee,
distribute, job, enter into, negotiate, execute,
acquire, and assign contracts in respect of, as
principal, and as sales, business, special, or
general agent, representative, broker, factor,
merchant, distributor, jobber, advisor, and in any
other lawful capacity, goods, wares, merchandise,
commodities, and unimproved, improved, finished,
processed, and other real, personal, and mixed pro-
party of any and all kinds, together with the
components, resultants, and by-products thereof.
To purchase, receive, take by grant, gift,
devise, bequest or otherwise, lease or otherwise
acquire, own, hold, improve, employ, use and
otherwise deal in and with real or personal
property, or any interest therein, wherever
situated, and to sell, convey, lease, exchange,
transfer or otherwise dispose of, or mortgage or
pledge, all or any of its property and assets, or
any interest therein, wherever situated.
To engage generally in the real estate
business as principal, agent, broker, and in any
lawful capacity, and generally to take, lease,
purchase, or otherwise acquire, and to own, use,
hold, sell, convey, exchange, mortgage, work,
clear, improve, develop, divide, and otherwise
handle, manage, operate, deal in, and dispose of,
real estate, real property, lands, multiple-dwelling
structures, houses, buildings and other works and
any interest or right therein; to take, lease,
purchase or otherwise acquire, and to own, use,
hold, sell, convey, exchange, hire, pledge,
mortgage, and otherwise handle, and deal in and
dispose of, as principal, agent, broker, and in any
lawful capacity, such personal property, chattels,
chattels real, rights, easements, privileges,
chooses in action, notes, bonds, mortgages, and
securities as may lawfully be acquired, held, or
disposed of, and to acquire, purchase, sell, assign,
transfer, dispose of, and generally deal in and
with, as principal, agent, broker, and in any lawful
capacity, mortgages and other interests in real,
personal, and mixed properties; to carry on a
general construction, contracting, building, and
realty management business as principal, agent,
representative, contractor, sub-contractor, and in
any other lawful capacity.
To apply for, register, obtain, purchase,
lease, take licenses in respect of, or otherwise
acquire, and to hold, own, use, operate, develop,
enjoy, turn to account, grant licenses, franchises
and immunities in respect of, manufacture under and
to introduce, sell, assign, mortgage, pledge or
otherwise dispose of, and, in any manner, deal with
and contract with reference to:
(a) inventions, devices,
formulae, processes and any
improvements and modifications
thereof;
(b) letters patent, patent
rights, patented processes,
copyrights, designs, and similar
rights, trade-marks, trade names,
trade symbols and other indications
of origin and ownership granted by or
recognized under the laws of the
United States of America, the
District of Columbia, any state or
subdivision thereof, and any
commonwealth, territory, possession,
dependency, colony, agency or
instrumentality of the United States
of America and of any foreign
country, and all rights connected
therewith or appertaining thereunto;
(c) franchises, licenses,
grants and concessions.
To guarantee, purchase, take, receive,
subscribe for, and otherwise acquire, own, hold,
use, and otherwise employ, sell, lease, exchange,
transfer, and otherwise dispose of, mortgage, lend,
pledge, and otherwise deal in and with, securities
(which term, for the purpose of this Article THIRD,
includes, without limitation of the generality
thereof, any shares of stock, bonds, debentures,
notes, mortgages, other obligations, and any
certificates, receipts or other instruments
representing rights to receive, purchase or
subscribe for the same, or representing any other
rights or interests therein or in any property or
assets) of any persons, domestic and foreign firms,
associations, and corporations, and by any
government or agency or instrumentality thereof; to
make payment therefor in any lawful manner; and,
while owner of any such securities, to exercise any
and all rights, powers and privileges in respect
thereof, including the right to vote.
To make, enter into, perform and carry out
contracts of every kind and description with any
person, firm, association, corporation or government
or agency or instrumentality thereof.
To acquire by purchase, exchange or
otherwise, all, or any part of, or any interest in,
the properties, assets, business and good will of
any one or more persons, firms, associations or
corporations heretofore or hereafter engaged in any
business for which a corporation may now or
hereafter be organized under the laws of the State
of Delaware; to pay for the same in cash, property
or its own or other securities; to hold, operate,
reorganize, liquidate, sell or in any manner dispose
of the whole or any part thereof; and in connection
therewith, to assume or guarantee performance of any
liabilities, obligations or contracts of such
persons, firms, associations or corporations, and to
conduct the whole or any part of any business thus
acquired.
To lend money in furtherance of its
corporate purposes and to invest and reinvest its
funds from time to time to such extent, to such
persons, firms, associations, corporations,
governments or agencies or instrumentalities
thereof, and on such terms and on such security, if
any, as the Board of Directors of the corporation
may determine.
To make contracts of guaranty and
suretyship of all kinds and endorse or guarantee the
payment of principal, interest or dividends upon,
and to guarantee the performance of sinking fund or
other obligations of, any securities, and to
guarantee in any way permitted by law the
performance of any of the contracts or other
undertakings in which the corporation may otherwise
be or become interested, of any person, firm,
association, corporation, government or agency or
instrumentality thereof, or of any other
combination, organization or entity whatsoever.
To borrow money without limit as to amount
and at such rates of interest as it may determine;
from time to time to issue and sell its own
securities, including its shares of stock, notes,
bonds, debentures, and other obligations, in such
amounts, on such terms and conditions, for such
purposes and for such prices, now or hereafter
permitted by the laws of the State of Delaware and
by this certificate of incorporation, as the Board
of Directors of the corporation may determine; and
to secure any of its obligations by mortgage, pledge
or other encumbrance of all or any of its property,
franchises and income.
To be a promoter or manager of other
corporations of any type or kind; and to participate
with others in any corporation, partnership, limited
partnership, joint venture, or other association or
any kind, or in any transaction, undertaking or
arrangement which the corporation would have power
to conduct by itself, whether or not such
participation involves sharing or delegation of
control with or to others.
To draw, make, accept, endorse, discount,
execute, and issue promissory notes, drafts, bills
of exchange, warrants, bonds, debentures, and other
negotiable or transferable instruments and evidences
of indebtedness whether secured by mortgage or
otherwise, as well as to secure the same by mortgage
or otherwise, so far as may be permitted by the laws
of the State of Delaware.
To purchase, receive, take, reacquire or
otherwise acquire, own and hold, sell, lend,
exchange, reissue, transfer or otherwise dispose of,
pledge, use, cancel, and otherwise deal in and with
its own shares and its other securities from time to
time to such an extent and in such manner and upon
such terms as the Board of Directors of the
corporation shall determine; provided that the
corporation shall now use its funds or property for
the purchase of its own shares of capital stock when
its capital is impaired or when such use would cause
any impairment of its capital, except to the extent
permitted by law.
To organize, as an incorporator, or cause
to be organized under the laws of the State of
Delaware, or of any other state of the United States
of America, or of the District of Columbia, or of
any commonwealth, territory, dependency, colony,
possession, agency or instrumentality of the United
States of America, or of any foreign country, a
corporation or corporations for the purpose of
conducting and promoting any business or purpose for
which corporations may be organized, and to
dissolve, wind up, liquidate, merge or consolidate
any such corporation or corporations or to cause the
same to be dissolved, wound up, liquidated, merged
or consolidated.
To conduct its business, promote its
purposes, and carry on its operations in any and all
of its branches and maintain offices both within and
without the State of Delaware, in any and all States
of the United States of America, in the District of
Columbia, and in any or all commonwealths,
territories, dependencies, colonies, possessions,
agencies or instrumentalities of the United States
of America and of foreign governments.
To promote and exercise all or any part of
the foregoing purposes and powers in any and all
parts of the world, and to conduct its business in
all or any of its branches as principal, agent,
broker, factor, contractor, and in any other lawful
capacity, either alone or through or in conjunction
with any corporations, associations, partnerships,
firms, trustees, syndicates, individuals,
organizations, and other entities in any part of the
world, and, in conducting its business and promoting
any of its purposes, to maintain offices, branches
and agencies in any part of the world, to make and
perform any contracts and to do any acts and things,
and to carry on any business, and to exercise any
powers and privileges suitable, convenient, or
proper for the conduct, promotion, and attainment of
any of the business and purposes herein specified or
which at any time may be incidental thereto or may
appear conducive to, or expedient for, the
accomplishment of any of such business and purposes
and which might be engaged in or carried on by a
corporation incorporated or organized under the
General Corporation Law of the State of Delaware,
and to have and exercise all of the powers conferred
by the laws of the State of Delaware upon
corporations incorporated or organized under the
General Corporation Law of the State of Delaware.
The foregoing provisions of this Article
THIRD shall be construed both as purposes and powers
and each as an independent purpose and power. The
foregoing enumeration of specific purposes and
powers shall not be held to limit or restrict in any
manner the purposes and powers of the corporation,
and the purposes and powers herein specified shall,
except when otherwise provided in this Article
THIRD, be in no wise limited or restricted by
reference to, or inference from, the terms of any
provision of this or any other Article of this
certificate of incorporation; provided, that the
corporation shall not conduct any business, promote
any purpose, or exercise any power or privilege
within or without the State of Delaware which, under
the laws thereof, the corporation may not lawfully
conduct, promote, or exercise.
FOURTH: (a) The aggregate number of
shares of stock which the corporation is authorized
to issue is 22,000,000 consisting of 20,000,000
shares of Common Stock each having a par value of
$0.01 per share and 2,000,000 shares which are
designated Preferred Stock each having a par value
of $10.00 per share.
(b) No holder of shares of
stock of the corporation of any class now or
hereafter authorized shall be entitled as of right
to purchase or subscribe for any part of any
unissued shares of stock of the corporation of any
class now or hereafter authorized or any additional
shares of stock to be issued by reason of any
increase of the authorized capital stock of the
corporation of any class, or any bonds, certificates
of indebtedness, debentures or other securities
convertible into stock of the corporation of any
class now or hereafter authorized, but any such
unissued stock or such additional authorized issue
of new stock, or such securities convertible into
stock, may be issued and disposed of, pursuant to
resolutions of the Board of Directors, to such
persons, firms, corporations or associations, and
upon such terms, as may be deemed advisable by the
Board of Directors in the exercise of its
discretion.
(c) The Board of Directors
hereby is vested with the authority to provide for
the issuance of the Preferred Stock, at any time and
from time to time, in one or more series, each of
such series to have such powers, designations,
preferences and relative, participating or optional
or other special rights and such qualifications,
limitations or restrictions thereon as expressly
provided in the resolution or resolutions duly
adopted by the Board of Directors providing for the
issuance of shares of such series. The authority
which hereby is vested in the Board of Directors
shall include, but not be limited to, the authority
to provide for the following matters relating to
each series of the Preferred Stock:
(1) the number of shares
to constitute such series and the designations
thereof;
(2) the voting power, if
any, of holders of shares of such series and,
if voting power is limited, the circumstances
under which such holders may be entitled to
vote; provided, however, that the Board of
Directors shall not create any series of
Preferred Stock with more than one vote per
share;
(3) the rate of dividends,
if any, and the extent of further participation
in dividend distributions, if any, and whether
dividends shall be cumulative or non-
cumulative;
(4) whether or not such
series shall be redeemable, and, if so, the
terms and conditions upon which shares of such
series shall be redeemable;
(5) the extent, if any, to
which such series shall have the benefit of any
sinking fund provision for the redemption or
purchase of shares;
(6) the rights, if any, of
such series, in the event of the dissolution of
the corporation, or upon any distribution of
the assets of the corporation; and
(7) whether or not the
shares of such series shall be convertible,
and, if so, the terms and conditions upon which
shares of such series shall be convertible.
FIFTH: The corporation is to have
perpetual existence.
SIXTH: Whenever a compromise or
arrangement is proposed between this corporation and
its creditors or any class of them and/or between
this corporation and its stockholders or any class
of them, any court of equitable jurisdiction within
the State of Delaware may, on the application in a
summary way of this corporation or of any creditor
or stockholder thereof or on the application of any
receiver or receivers appointed for this corporation
under the provisions of section 291 of Title 8 of
the Delaware Code or on the application of trustees
in dissolution or of any receiver or receivers
appointed for this corporation under the provisions
of section 279 of Title 8 of the Delaware Code order
a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders
of this corporation, as the case may be, to be
summoned in such manner as the said court directs.
If a majority in number representing three-fourths
in value of the creditors or class of creditors,
and/or of the stockholders or class of stockholders
of this corporation, as the case may be, agree to
any compromise or arrangement and to any
reorganization of this corporation as consequence of
such compromise or arrangement, the said compromise
or arrangement and the said reorganization shall, if
sanctioned by the court to which the said
application has been made, be binding on all the
creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this
corporation, as the case may be, and also on this
corporation.
SEVENTH: For the management of the
business and for the conduct of the affairs of the
corporation, and in further definition, limitation
and regulation of the powers of the corporation and
of its directors and of its stockholders or any
class thereof, as the case may be, it is further
provided:
1. The management of the business
and the conduct of the affairs of the
corporation, including the election
of the Chairman of the Board of
Directors, if any, the President, the
Treasurer, the Secretary, and other
principal officers of the
corporation, shall be vested in its
Board of Directors. The number of
directors which shall constitute the
whole Board of Directors shall be
fixed by, or in the manner provided
in, the By-Laws. The phrase "whole
Board" and the phrase "total number
of directors" shall be deemed to have
the same meaning, to wit, the total
number of directors which the
corporation would have if there were
no vacancies. No election of
directors need be by written ballot.
2. Directors are and shall continue
to be divided into three subclasses.
As of the date hereof, the subclasses
Class A-I, Class A-II and Class A-III
shall be designated Class I, Class II
and Class III. The number of
directors in each subclass shall
continue to be determined by the
Board of Directors and shall consist
of as nearly equal a number of
directors as possible. The term of
Class I directors shall expire at the
annual meeting of stockholders held
in 1996; the term of Class II
directors shall expire at the next
ensuing annual meeting of
stockholders; and the term of Class
III directors shall expire at the
second ensuing annual meeting of
stockholders. In the case of each
class, the directors shall serve
until their respective successors are
duly elected and qualified. At each
annual meeting of stockholders,
directors of the respective class
whose term expires shall be elected,
and the directors chosen to succeed
those whose terms shall have expired
shall be elected to hold office for a
term to expire at the third ensuing
annual meeting of stockholders after
their election, and until their
respective successors are elected and
qualified.
Any vacancy in the office of a
director elected may be filled by the
vote of the majority of the remaining
directors, by the sole remaining
director of any quorum requirements
set forth in the By-Laws of the
corporation. Any director elected to
fill a vacancy in the office of
director shall serve until the next
annual meeting of stockholders at
which directors of the class for
which such director shall have been
chosen are to be elected, and until
his or her successor is elected and
qualified. Newly created
directorships may be filled by the
Board of Directors
3. In furtherance and not in
limitation of the powers conferred by
statute, the power to adopt, alter,
or repeal the By-Laws of the
Corporation shall be vested in the
Board of Directors as well as the
stockholders; stockholders may not
make, adopt, alter, amend, change or
repeal the By-Laws of the Corporation
except upon the affirmative vote of
not less than seventy-five percent
(75%) of the outstanding stock of the
Corporation entitled to vote thereon;
provided, however, that any provision
relating to the classification of
directors of the corporation for
staggered terms pursuant to the
provisions of subsection (d) of
Section 141 of the General
Corporation Law of the State of
Delaware shall be as set forth in the
certificate of incorporation.
4. Whenever the corporation shall be
authorized to issue only one class of
stock, each outstanding share shall
entitle the holder thereof to notice
of, and the right to vote at, any
meeting of stockholders. Whenever
the corporation shall be authorized
to issue more than one class of
stock, no outstanding share of any
class of stock which is denied voting
power under the provisions of the
certificate of incorporation shall
entitle the holder thereof to notice
of, and the right to vote at, any
meeting of stockholders, except as
the provisions of paragraph (d)(2) of
Section 242 of the General
Corporation Law and of sections 251,
252 and 253 of the General
Corporation Law shall otherwise
require; provided, that no share of
any such class which is otherwise
denied voting power shall entitle the
holder thereof to vote upon the
increase or decrease in the number of
authorized shares of said class.
5. Notwithstanding any other
provisions of this Certificate of
Incorporation or the By-Laws of the
Corporation to the contrary, any
action required or permitted to be
taken by the stockholders of the
Corporation must be effected at a
duly called annual or special meeting
of such stockholders and may not be
taken by written consent without such
a meeting.
6. No director shall be personally
liable to the Corporation or its
stockholders for monetary damages for
any breach of fiduciary duty by such
director as a director.
Notwithstanding the foregoing
sentence, a director shall be liable
to the extent provided by applicable
law (i) for breach of the director's
duty of loyalty to the Corporation or
its stockholders, (ii) for acts or
omission not in good faith or which
involve intentional misconduct or a
knowing violation of law, (iii)
pursuant to Section 174 of the
Delaware General Corporation Law or
(iv) for any transaction from which
the director derived an improper
personal benefit. No amendment to or
repeal of this subsection 6 to
Article SEVENTH shall apply to or
have any effect on the liability or
alleged liability of any director of
the corporation for or with respect
to any acts or omissions of such
director occurring prior to such
amendment.
EIGHTH: (a) No contract or transaction
between the corporation and one or more of its
directors or officers, or between the corporation
and any other corporation, partnership, association,
or other organization in which one or more of its
directors or officers are directors or officers, or
have a financial interest, shall be void or voidable
solely for this reason, or solely because the
director or officer is present at, or participates
in, the meeting of the Board of Directors or a
committee thereof which authorizes the contract or
transaction, or solely because his or their votes
are counted for such purpose, if:
(1) The material facts as to
his relationship or interest and as
to the contract or transaction are
disclosed or are known to the Board
of Directors or the committee, and
the Board or committee in good faith
authorizes the contract or
transaction by the affirmative votes
of a majority of the disinterested
directors, even though the
disinterested directors be less than
a quorum; or
(2) The material facts as to
his relationship or interest and as
to the contract or transaction are
disclosed or are known to the
stockholders entitled to vote
thereon, and the contract or
transaction is specifically approved
in good faith by vote of the
stockholders; or
(3) The contract or transaction
is fair as to the corporation as of
the time it is authorized, approved
or ratified, by the Board of
Directors, a committee thereof, or
the stockholders.
(b) Common or interested
directors may be counted in determining the presence
of a quorum at a meeting of the Board of Directors
or of a committee which authorizes the contract or
transaction.
NINTH: (a) The corporation shall have
power to indemnify any person who was or is a party
or is threatened to be made a party to any
threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the
right of the corporation) by reason of the fact that
he is or was a director, officer, employee or agent
of the corporation, or is or was serving at the
request of the corporation as a director, officer,
employee or agent of another corporation,
partnership, joint venture, trust or other
enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him
in connection with such action, suit or proceeding
if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the
best interests of the corporation, and, with respect
to any criminal action or proceeding, had no
reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create an
assumption that the person did not act in good faith
and in a manner which he reasonably believed to be
in, or not opposed to, the best interests of the
corporation, and, with respect to any criminal
action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
(b) The corporation shall have
power to indemnify any person who was or is a party
or is threatened to be made a party to any
threatened, pending or completed action or suit by
or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he
is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request
of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or
settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to
be in, or not opposed to, the best interests of the
corporation and except that no indemnification shall
be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be
liable for negligence or misconduct in the
performance of his duty to the corporation unless,
and only to the extent that, the Court of Chancery
or the court in which such action or suit was
brought shall determine upon application that,
despite the adjudication of liability but in view of
all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other
court shall deem proper.
(c) To the extent that a
director, officer, employee or agent of the
corporation has been successful on the merits or
otherwise in defense of any action, suit or
proceeding referred to in paragraphs (a) and (b), or
in defense of any claim, issue or matter therein, he
shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by
him in connection therewith.
(d) Any indemnification under
paragraphs (a) and (b) (unless ordered by a court)
shall be made by the corporation only as authorized
in the specific case upon a determination that
indemnification of the director, officer, employee
or agent is proper in the circumstances because he
has met the applicable standard of conduct set forth
in paragraphs (a) and (b). Such determination shall
be made (1) by the Board of Directors by a majority
vote of a quorum consisting of directors who were
not parties to such action, suit or proceeding, or
(2) if such a quorum is not obtainable, or, even if
obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written
opinion, or (3) by the stockholders.
(e) Expenses incurred in
defending a civil or criminal action, suit or
proceeding may be paid by the corporation in advance
of the final disposition of such action, suit or
proceeding as authorized by the Board of Directors
in the specific case upon receipt of any undertaking
by or on behalf of the director, officer, employee
or agent to repay such amount unless it shall
ultimately be determined that he is entitled to be
indemnified by the corporation as authorized in this
Article.
(f) The indemnification
provided by this Article shall not be deemed
exclusive of any other rights to which those seeking
indemnification may be entitled under any By-Law,
agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his
official capacity and as to action in another
capacity while holding such office, and shall
continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure
to the benefit of the heirs, executors and
administrators of such a person.
(g) The corporation shall have
power to purchase and maintain insurance on behalf
of any person who is or was a director, officer,
employee or agent of the corporation, or is or was
serving at the request of the corporation as a
director, officer, employee or agent of another
corporation, partnership, joint venture, trust or
other enterprise against any liability asserted
against him and incurred by him in any such capacity
or arising out of his status as such, whether or not
the corporation would have the power to indemnify
him against such liability under the provisions of
this Article.
TENTH: From time to time any of the
provisions of this certificate of incorporation may
be amended, altered or repealed, and other
provisions authorized by the laws of the State of
Delaware at the time in force may be added or
inserted in the manner and at the time prescribed by
said laws and by this certificate of incorporation.
All rights at any time conferred upon the
stockholders of the corporation by this certificate
of incorporation are granted subject to the
provisions of this Article TENTH.
IN WITNESS WHEREOF, we have duly executed this
certificate on behalf of the corporation this __th day of
__________, 1996.
Mark S. Newman
Chairman of the Board,
President and Chief
Executive Officer
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS CLASS A
FOR THE SPECIAL MEETING OF STOCKHOLDERS TO BE HELD
[FEBRUARY __, 1996]. COMMON STOCK
The undersigned, revoking all previous proxies, appoints Mark S.
Newman and Nancy R. Pitek, and each of them, acting unanimously if more
than one be present, attorneys and proxies of the undersigned, with power
of substitution, to represent the undersigned at the special meeting of
stockholders of Diagnostic/Retrieval Systems, Inc. (the "Company") to be
held on [day], [February _, 1996], and at any adjournments thereof, and to
vote all shares of Class A Common Stock of the Company which the
undersigned is entitled to vote, on all matters coming before said meeting.
------ PLEASE MARK YOUR
VOTES AS IN THIS
X EXAMPLE.
------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSALS:
--- ------- ------- -- ------- -------
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
--- ------- ------- --- ------- -------
1.APPROVAL of an 3.APPROVAL of an
Amended and Amended and
Restated Restated
Certificate of Certificate to
Incorporation to provide that the
effect a stockholders of
reclassification the Company would
of each share of not have the
the Company's right to make,
Class A Common adapt, alter,
Stock and each amend, change or
share of Class B repeal the By-
Common Stock into Laws except upon
one share of new the affirmative
common stock. vote of not less
than 66-2/3% of
2.APPROVAL of an the outstanding
Amended and stock of the
Restated Company entitled
Certificate to to vote thereon.
provide that
action by
stockholders may
be taken only at
a duly called
annual or special
meeting and not
by written
consent.
PLEASE DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED "FOR" ITEMS 1 THROUGH 3.
Date: _________________________________, 1996
_______________________________________________
Signature
________________________________________________
Signature of joint holder, if any
Please sign exactly as your name
appears to the left, Executors,
administrators, trustees, etc.
should give full title as such. If
the signer is a corporation, please
sign full corporate name by a duly
authorized officer.
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS CLASS B
FOR THE SPECIAL MEETING OF STOCKHOLDERS TO BE HELD
[FEBRUARY __, 1996]. COMMON STOCK
The undersigned, revoking all previous proxies, appoints Mark S.
Newman and Nancy R. Pitek, and each of them, acting unanimously if more
than one be present, attorneys and proxies of the undersigned, with power
of substitution, to represent the undersigned at the special meeting of
stockholders of Diagnostic/Retrieval Systems, Inc. (the "Company") to be
held on [day], [February _, 1996], and at any adjournments thereof, and to
vote all shares of Class B Common Stock of the Company which the
undersigned is entitled to vote, on all matters coming before said meeting.
------ PLEASE MARK YOUR
VOTES AS IN THIS
X EXAMPLE.
------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSALS:
---- ------- ------- --- ------- -------
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
--- ------- ------- --- ------- -------
1.APPROVAL of an 3.APPROVAL of an
Amended and Amended and
Restated Restated
Certificate of Certificate to
Incorporation to provide that the
effect a stockholders of
reclassification the Company would
of each share of not have the
the Company's right to make,
Class A Common adapt, alter,
Stock and each amend, change or
share of Class B repeal the By-
Common Stock into Laws except upon
one share of new the affirmative
common stock. vote of not less
than 66-2/3% of
2.APPROVAL of an the outstanding
Amended and stock of the
Restated Company entitled
Certificate to to vote thereon.
provide that
action by
stockholders may
be taken only at
a duly called
annual or special
meeting and not
by written
consent.
PLEASE DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED "FOR" ITEMS 1 THROUGH 3.
Date: ________________________, 1996
_____________________________________
Signature
______________________________________
Signature of joint holder, if any
Please sign exactly as your name
appears to the left, Executors,
administrators, trustees, etc.
should give full title as such. If
the signer is a corporation, please
sign full corporate name by a duly
authorized officer.
