<PAGE>
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:
[ ] PRELIMINARY PROXY STATEMENT
[X] 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):
[*] $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:
N/A
(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
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February 22, 1996
Dear Stockholder:
You are cordially invited to attend a Special Meeting of Stockholders (the
"Meeting") of Diagnostic/Retrieval Systems, Inc., a Delaware corporation (the
"Company"), which will be held at Skadden, Arps, Slate, Meagher & Flom, 919
Third Avenue, 35th Floor, New York, New York at 10:00 A.M., local time, on
March 26, 1996.
For many years the Company has had two classes of common stock, with each
share of Class A Common Stock possessing a greater vote than a comparable
share of Class B Common Stock and the Class B Common Stock being able to
elect only one-fourth of the Board of Directors. We believe that this
situation has caused confusion in the market about the Company and has
diminished institutional and investor interest generally in the Company.
Your Board of Directors has determined that it is in the best interests of
the Company to remedy this situation. Accordingly, the Board of Directors has
authorized for stockholder consideration a proposed reclassification of the
two classes of stock into a new single class of common stock (the
"Reclassification"). Each outstanding share of Class A and Class B would be
converted automatically into the new common stock on a share for share basis,
without payment or further consideration.
The Board of Directors has also authorized for consideration at the
Meeting certain other changes to the Company's Certificate of Incorporation
and By-Laws. These changes are designed to put into effect measures which
will protect the Company from takeovers and related actions which are not in
the best interests of all stockholders. These measures were not previously
needed because of the dual class structure. With the elimination of the dual
classes through the proposed Reclassification, your Board believes that
certain basic protections are important and has conditioned the
Reclassification on the approval of these other measures.
The Company's operations have steadily improved and we believe our
prospects are excellent. The Reclassification should put the Company in a
more flexible position to take advantage of opportunities as they develop.
The Board of Directors has approved the proposals and recommends that
stockholders vote for approval of each of the proposals to be considered at
the meeting.
It is important that you sign, date and return your proxy 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.
It is always a pleasure to meet with our stockholders and I personally
look forward to seeing as many of you as possible at the Meeting. On behalf
of the Board of Directors, I thank you for your consideration and
cooperation.
Sincerely,
MARK S. NEWMAN
Chairman of the Board,
President and Chief
Executive Officer
<PAGE>
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
5 SYLVAN WAY
PARSIPPANY, NJ 07054
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 26, 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 Skadden, Arps, Slate, Meagher & Flom, 919 Third
Avenue, 35th Floor, New York, New York at 10:00 A.M., local time, on Tuesday,
March 26, 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 in order:
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"); and
3. To provide that the stockholders of the Company would have the right
to make, adopt, alter, amend, change or repeal the By-Laws only upon the
affirmative vote of not less than 66 2/3 % of the outstanding capital
stock of the Company entitled to vote thereon (the "By-Law Amendment
Provision").
THE APPROVAL AND ADOPTION OF EACH OF THE PROPOSALS IS CONDITIONED UPON THE
APPROVAL AND ADOPTION OF EACH OTHER PROPOSAL. AS SUCH, THE APPROVAL AND
ADOPTION OF THE RECLASSIFICATION PURSUANT TO PROPOSAL 1 IS CONDITIONED UPON
THE APPROVAL AND ADOPTION OF PROPOSALS 2 AND 3 (THE "STOCKHOLDER PROTECTION
PROPOSALS"). ACCORDINGLY, A VOTE AGAINST EITHER OF THE STOCKHOLDER PROTECTION
PROPOSALS WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE RECLASSIFICATION.
Holders of record of each class of common stock at the close of business
on February 12, 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.
<PAGE>
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==============================================================================
PROXY STATEMENT
FOR
SPECIAL MEETING OF STOCKHOLDERS
MARCH 26, 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., a Delaware corporation (the
"Company"), commencing on or about February 22, 1996 in connection with the
solicitation of proxies by the Company's Board of Directors (the "Board") for
a Special Meeting of Stockholders (the "Meeting") of the Company to be held
March 26, 1996 at 10:00 A.M., local time, at Skadden, Arps, Slate, Meagher &
Flom, 919 Third Avenue, 35th Floor, New York, New York.
VOTING AND REVOCATION OF PROXIES; RECORD DATE
The Board has fixed the close of business on February 12, 1996 as the
record date (the "Record Date") for determining the stockholders of the
Company entitled to vote at the Meeting. As of February 12, 1996, the Company
had outstanding 3,307,324 shares of Class A Common Stock and 2,154,808 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 single 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 holders of a
majority of the shares of the Class A Common Stock and holders of a majority
of the shares of the Class B Common Stock outstanding 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.
<PAGE>
THE PROPOSALS
The Board has approved and recommended for submission to the stockholders
of the Company by a 6 to 1 vote, with Leonard Newman voting against such
submission (see "Security Ownership"), 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 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
have the right to make, adopt, alter, amend, change or repeal the By-Laws
only upon the affirmative vote of not less than 66 2/3 % of the outstanding
capital 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 "Stockholder Protection
Proposals"). Accordingly, if either of the Stockholder 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 Secretary of State of the State of Delaware 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 3,307,324 shares were outstanding as of the
Record Date, 20,000,000 authorized shares of Class B Common Stock, of which
2,154,808 shares were outstanding as of the Record Date, and 2,000,000
authorized 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 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 together as a single class, are
entitled 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), on the basis of one vote for each share of Class B Common
Stock held. 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 together as a single class, are entitled to elect the
remaining directors (who are designated Class A Directors), on the basis of
one vote for each share of Class A Common Stock held. 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
2
<PAGE>
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.
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 (i) 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 (ii) 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 serving
staggered terms with each subclass consisting of as nearly an equal number of
Class A 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 such director's 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 form of 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 at least 60% of the outstanding
shares of each of 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
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<PAGE>
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, without any action on the part of the
holder thereof, and 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 and all references in the
Certificate relating to such stock will be eliminated in the Restated
Certificate. 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 holder of a certificate theretofore representing shares of Class A
Common Stock or Class B Common Stock outstanding immediately prior to the
Effective Time of the Reclassification a letter instructing those holders as
to the method of surrendering their certificates in exchange for certificates
representing New Common Stock. All stockholders will be requested to
surrender their current stock certificates representing Class A Common Stock
and Class B Common Stock. Upon such surrender, each holder will be entitled
to receive a new certificate representing the same number of shares of the
New Common Stock. Until surrendered, each certificate theretofore
representing shares of Class A Common Stock or Class B Common Stock will
represent the right to receive, upon surrender, the number of shares of the
New Common Stock to which that holder is entitled, as determined in
accordance with the Restated Certificate. Until surrendered, each certificate
will entitle its holder to receive dividends and to vote on any matter put to
a vote of the stockholders as if the certificate representing New Common
Stock had been issued to such holder.
Immediately following the Effective Time, pursuant to the terms of the
Company's 1981 Non- Qualified Stock Option Plan, 1981 Incentive Stock Option
Plan and 1991 Stock Option Plan, the appropriate committees will take action
such that each option to acquire shares of Class A Common Stock or Class B
Common Stock outstanding as of the Effective Time will be deemed to be
exercisable for a like number of shares of 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 New Common Stock and the plans will be deemed to cover only such
shares.
The Board currently is divided into two classes--Class A Directors and
Class B Directors. The Class A Directors currently are divided into three
classes serving staggered terms, the Class A-I Directors, the Class A-II
Directors and the Class A-III Directors. As a result of the Reclassification,
from and after the Effective Time, the Board will no longer be divided into
Class A Directors and Class B Directors. The directors who currently are
designated as Class A-I Directors, Class A-II Directors and 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 to serve as either a Class I Director, Class II
Director or Class III Director and each class will be comprised as follows:
<TABLE>
<CAPTION>
CLASS I CLASS II CLASS III
(INITIAL TERM (INITIAL TERM (INITIAL TERM
EXPIRING 1996 EXPIRING 1997 EXPIRING 1998
ANNUAL MEETING) ANNUAL MEETING) ANNUAL MEETING)
- ------------------ ------------------ -----------------
<S> <C> <C>
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Mark S. Newman Leonard S. Newman Jack Rachleff
Theodore Cohn Mark N. Kaplan* Stuart F. Platt*
Donald C. Fraser*
</TABLE>
- ------------
* Currently a Class B Director.
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
4
<PAGE>
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 B Stockholders with respect to the election
of directors may be adversely affected 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 B Stockholders,
taken as a whole, will 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 taken as
a whole group.
In addition, stockholders will no longer have the right to fill vacancies
and newly created directorships as a result of the Reclassification.
Currently, the Class A Stockholders and the Board of Directors may fill
vacancies and newly created Class A directorships and the Class B
Stockholders and the Board of Directors may fill vacancies and newly created
Class B directorships. Following the Reclassification, only the Board of
Directors will be authorized to fill vacancies or newly created
directorships.
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 a dual class common stock
capitalization structure (the "Dual Class Structure"). As described above,
the Class A Common Stock has greater voting power and is entitled to elect
three-fourths of the members of the Board. Because the augmented voting power
of the Class A Common Stock provides certain protection against coercive
takeover tactics, the Board previously has not deemed necessary the adoption
of many of the structural protections that publicly traded companies without
a Dual Class Structure typically have in place. If the Reclassification is
adopted, thereby eliminating the Dual Class Structure, the Board believes the
best interests of stockholders would 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
5
<PAGE>
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 Stockholder 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 Stockholder Protection Proposals to the
stockholders for their adoption, on February 7, 1996, 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. 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 Restated Certificate.
The Stockholder Protection Proposals are not in response to any efforts of
which the Company is aware to accumulate the Company's stock or to obtain
control of the Company. The Board 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.
6
<PAGE>
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
Structure, (b) the staggered Board, (c) the existence of authorized but
unissued Preferred Stock, (d) the supermajority vote requirement with respect
to the amendment of the Certificate and certain by-laws and (e) the advance
notice provisions in the By-Laws. Further, Section 203 of the General
Corporation Law of the State of Delaware (the "DGCL") provides certain
anti-takeover protection.
Dual Class Stock. The Company's Certificate currently provides for the
Dual Class Structure. 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 members of the Board. 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 might be able to prevent or impede the completion of such
transaction. Further, the Certificate requires the affirmative vote of the
holders of not less than 60% of the outstanding shares of both the Class A
Common Stock and the Class B Common Stock, with each class voting separately
as a class in order to amend certain provisions relating to the dividend and
voting rights of the Class A Stockholders and the Class B Stockholders.
In the event the Reclassification is approved and adopted, the existing
classes of common stock would be reclassified into 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. Further, the provision in the
Certificate which requires the affirmative vote of the holders of not less
than 60% of the outstanding shares of both the Class A Common Stock and the
Class B Common Stock, with each class voting separately, will be eliminated.
Staggered 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 serving staggered terms. 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 together as a single class,
are entitled to elect a number of Class B Directors equal to one-fourth of
the number of directors constituting the whole Board. The Class A
Stockholders, voting together as a single 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 staggered Board may discourage minority stockholders from attempting
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 a
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. A purchaser's ability to
obtain control of the Board will be further deterred because, pursuant to
Section 141(k) of the DGCL, the insurgent would need to show cause in order
to remove any director and, in the event the Reclassification is approved and
adopted, because only the Board of Directors will be authorized to fill
vacancies or newly created directorships. 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 representation on the Board.
7
<PAGE>
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 powers, including voting
powers, and 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 be called only 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 the call of a
special meeting for 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 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
8
<PAGE>
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. Section 203 of the DGCL generally restricts a
Delaware corporation, including the Company, from entering into certain
business combinations with an interested stockholder (defined, with certain
exceptions, as any person or entity that is the beneficial owner of at least
15% of a corporation's outstanding voting stock or is an affiliate or
associate of the corporation and was the owner of 15% or more of the
outstanding voting stock of the corporation at any time in the preceding
three years) or its affiliates or associates (as defined) for a period of
three years following the time such stockholder became an interested
stockholder, unless (i) either the business combination or the transaction
which resulted in the stockholder becoming an interested stockholder is
approved by the board of directors of the corporation prior to the date such
person became an interested stockholder, (ii) the interested stockholder
acquires 85% of the corporation's outstanding voting stock in the same
transaction in which it becomes an interested stockholder, or (iii) the
business combination is approved by the board of directors and by a vote of
two-thirds of the outstanding voting stock not owned by the interested
stockholder. Section 203 may render more difficult a change of control of the
Company.
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 a greater amount of 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 that 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 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 believe are not in their best interests. Additionally, in
conjunction with the Special Meeting Provision, a majority of the incumbent
Board could delay until the annual meeting any action that requires
stockholder approval, even if the proponents of the action have 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.
9
<PAGE>
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 66-2/3% of the outstanding capital stock of the Company
entitled to vote thereon. The ability of the Board to amend the By-Laws would
remain unchanged from and after the Effective Time.
The By-Law Amendment Provision is intended to discourage and, in certain
instances, to prevent stockholders controlling less than 66 2/3 % 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 33 1/3 % 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 Certificate.
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 MEMBERS OF THE COMPANY'S BOARD,
EVEN IF SOME OR A MAJORITY OF HOLDERS OF THE COMPANY'S CAPITAL STOCK
DETERMINED SUCH ACTION 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, EVEN IF SOME OR A MAJORITY OF SUCH HOLDERS
DETERMINED SUCH ACTION TO BE IN THEIR BEST INTERESTS.
SECURITY OWNERSHIP
The following table shows, as of January 15, 1996, (i) the number of
shares of Class A Common Stock and Class B Common Stock held by each director
and executive officer, 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 Rules") and
(ii) the pro forma number of shares of New Common Stock which will be held by
each director and executive officer and by all directors and executive
officers of the Company as a group assuming the approval and adoption of the
Reclassification and the percentage of the New Common Stock beneficially
owned (within the meaning of Rule 13d-3 of the Exchange Rules).
10
<PAGE>
<TABLE>
<CAPTION>
CLASS A
COMMON STOCK (A)
---------------------------
PERCENT OF
NAME OF BENEFICIAL OWNER SHARES CLASS
- ------------------------ --------------- ----------
<S> <C> <C>
Leonard Newman .......... 617,600 18.7%
Mark S. Newman .......... 71,618(c)(f) 2.2
Theodore Cohn ........... 1,600 -- (h)
Donald C. Fraser ........ -- --
Mark N. Kaplan .......... 1,000 -- (h)
Stuart F. Platt ......... -- --
Jack Rachleff ........... 1,000 -- (h)
Paul G. Casner, Jr. .... 1,000 -- (h)
Nancy R. Pitek .......... 5,724(c) 0.2
Richard Ross ............ -- --
All directors and
executive officers as a
group (10 persons) ..... 699,542(c)(f) 21.2%
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
CLASS B NEW COMMON STOCK
COMMON STOCK (A)(B) PRO FORMA
---------------------------- -------------------------------
PERCENT OF PERCENT OF SHARES
NAME OF BENEFICIAL OWNER SHARES CLASS SHARES OUTSTANDING
- ------------------------ ---------------- ---------- ----------- ------------------
<S> <C> <C> <C> <C>
Leonard Newman .......... 200,824 29.6% 818,424 15.0%
Mark S. Newman .......... 92,531(d)(e)(g) 7.2 164,149 3.0
Theodore Cohn ........... 4,300 0.3 5,900 0.1
Donald C. Fraser ........ -- -- -- --
Mark N. Kaplan .......... -- -- 1,000 -- (h)
Stuart F. Platt ......... 3,000(e) 0.1 3,000 0.1
Jack Rachleff ........... -- -- 1,000 -- (h)
Paul G. Casner, Jr. .... 30,000 1.4 31,000 0.6
Nancy R. Pitek ......... 8,583(d)(e) 0.7 14,307 0.3
Richard Ross ............ 3,000(e) 0.1 3,000 0.1
All directors and
executive officers as a
group (10 persons) ..... 342,238(d)(e)(g) 35.3% 1,041,780 18.8%
<FN>
- ------------
(a) As of January 15, 1996, 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 2,151,458 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 executive officer
had sole voting power and investment power over the shares of Class A
Common Stock and Class B Common Stock indicated opposite such
director's and executive officer's 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 January 15, 1996 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%.
</TABLE>
11
<PAGE>
The following table sets forth certain information, as of January 15, 1996
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 Exchange Rules) 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.
The following table also sets forth pro forma information with respect to
each such person assuming the approval and adoption of the Reclassification.
<TABLE>
<CAPTION>
CLASS A
COMMON STOCK
--------------------------
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT OF
OF BENEFICIAL OWNER OWNERSHIP CLASS
- ---------------------------- ------------ ------------
<S> <C> <C>
First Pacific Advisors, Inc. 965,678(a) 25.7%
10301 West Pico Blvd.
Los Angeles, CA 90064
Michael N. Taglich 286,550(b) 8.7
Taglich Brothers,
D'Amadeo, Wagner &
Company, Incorporated
100 Wall Street
New York, NY 10005
David E. Gross 65,880(c) 2.0
</TABLE>
27 Cameron Road
Saddle River, NJ 07458
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
CLASS B NEW COMMON STOCK
COMMON STOCK PRO FORMA
---------------------------- ------------------------------
AMOUNT AND AMOUNT AND
NATURE OF NATURE OF PERCENT OF
NAME AND ADDRESS BENEFICIAL PERCENT OF BENEFICIAL SHARES
OF BENEFICIAL OWNER OWNERSHIP CLASS OWNERSHIP OUTSTANDING
- ---------------------------- -------------- ------------ --------------- -------------
<S> <C> <C> <C> <C>
First Pacific Advisors, Inc. 1,717,955(d) 51.7% 1,717,955(a)(d) 28.1%
10301 West Pico Blvd.
Los Angeles, CA 90064
Michael N. Taglich 529,850(f) 21.7 529,850(b)(f) 9.7
Taglich Brothers,
D'Amadeo, Wagner &
Company, Incorporated
100 Wall Street
New York, NY 10005
David E. Gross 335,701(e) 15.1 335,701(c)(e) 6.2
27 Cameron Road
Saddle River, NJ 07458 <FN>
</TABLE>
- ------------
(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) Includes 25,000 shares of Class A Common Stock held by Mr. Gross for
which he has sole voting and dispositive power. Also included are
20,000 shares of Class A Common Stock held by David E. Gross' wife
personally, and 20,880 shares of Class A Common Stock held by her as
custodian for her two children, as to which Mr. Gross disclaims any
beneficial interest and over which he has neither voting power nor
investment power.
(d) 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 8-1/2%
12
<PAGE>
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.
(e) 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 owned, as
described in note (c) above. 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 the assumed conversion of the shares of Class A Common
Stock owned by Mr. Gross' wife and held by her as custodian for her two
children, as described in note (c) above. 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.
(f) 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, 18,400 shares of Class B Common Stock held by
Michael Lauer and the assumed conversion of the shares of Class A
Common Stock owned by each of such entities, respectively, as described
in note (b) above. 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 of the
Class B Common Stock and assuming the conversion of the Class A Common
Stock, with respect to an additional 282,700 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 March 9, 1996.
As discussed above, the Advance Notice Provisions of the By-Laws provide
that stockholders are 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 meeting. 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 less
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
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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.
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 not more than approximately $7,500 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: February 22, 1996
By Order of the Board of
Directors,
NANCY R. PITEK
Secretary
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In the printed proxy statement, which was mailed to stockholders,
the text between asterisks is underlined and the text between
brackets appears as though crossed out.
EXHIBIT A
The Proposed Additions are Underscored and
the Proposed Deletions Appear as though Crossed Out
*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.
[On August 29, 1974 an amendment to the Corporation's Certificate of
Incorporation was filed striking the existing Article FOURTH and
substituting in its place a new Article FOURTH which provided for a
decrease in the number of authorized shares of stock of the Corporation.]
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 [by the Board of Directors at a special meeting held on November
19, 1980 and approved by the required number of stockholders of the
Corporation at a special meeting of Stockholders held on December 16,
1980,] all in accordance with the provisions of Sections 242 and 245 of the
Delaware General Corporation Law.
*Upon the filing (the "Effective Time") of this Amended and Restated
Certificate of Incorporation pursuant to the Delaware General Corporation
Law, 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"), shall be
reclassified as and changed into one validly issued, fully paid and
non-assessable share of Common Stock authorized by subparagraph (a) of
Article FOURTH, without any action by the holder thereof. Each certificate
that theretofore represented a share or shares of Class A Common Stock or
Class B Common Stock shall thereafter represent that number of shares of
Common Stock into which the share or shares of Class A Common Stock or Class
B Common Stock represented by such Certificate shall have been reclassified.*
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 Wilmington,
County of New Castle (19905) [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,
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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 apper taining
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
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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,
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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 *capital* stock which the
corporation is authorized to issue is [32,000,000 shares] *22,000,000*
consisting of: [(i) 10,000,000 shares which are designated Class A] *20,000,000
shares of* Common Stock [and have] *each having* a par value of $0.01 per share
[; (ii) 20,000,000 shares which are designated Class B Common Stock and have a
par value of $0.01 per share; and (iii) 2,000,000 shares which are designated
Preferred Stock and have] *and 2,000,000 shares of 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[, or
with voting rights which would limit, reduce or otherwise abridge the rights
of the holders of Class B Common Stock set forth in paragraphs (d)(2)(A) and
(d)(2)(D) of this Article FOURTH];
(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;
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(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.
[(d) The shares of Class A Common Stock and the shares of Class B Common
Stock shall be identical in all respects and shall have equal rights and
privileges, except as follows. The relative rights, preferences and
limitations of the Class A Common Stock and Class B Common Stock are as
follows:
(1) DIVIDENDS AND DISTRIBUTIONS.
So long as any shares of Class B Common Stock are outstanding, the Board
of Directors of the corporation shall not (A) declare any dividends in cash
or other property with respect to shares of 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 shares of the Class B Common
Stock and set aside for payment, or (B)(i) declare any dividend payable in
securities of the corporation, or (ii) distribute any rights or warrants to
purchase securities of the corporation, with respect to shares of the Class A
Common Stock unless at the same time it declares an equivalent dividend or
makes an equivalent distribution with respect to the shares of 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.
So long as any shares of the Class B Common Stock are outstanding, the
corporation shall not combine, subdivide or reclassify the outstanding shares
of the Class A Common Stock or the Class B Common Stock unless at the same
time it takes such action as may be necessary with respect to the outstanding
shares of the other class so as to maintain, as nearly as may be practicable,
the relative voting and other rights of the holders of shares of each class
immediately before such action. The Board of Directors of the corporation may
declare a dividend in cash, property or securities with respect to shares of
the Class B Common Stock without declaring a dividend with respect to shares
of the Class A Common Stock.
(2) VOTING.
(A) Subject to paragraph (d)(2)(E), at all meetings of stockholders at
which directors are to be elected, holders of shares of Class B Common Stock,
voting as a separate class, shall be entitled to elect that number of
directors which shall constitute one-fourth of the whole Board and, if the
application of such fraction does not result in a whole number, then the
holders of shares of Class B Common Stock shall be entitled to elect the next
higher whole number of directors as is at least one-fourth of the whole
Board. The directors elected by the holders of shares of Class B Common Stock
shall be designated "Class B directors." Class B directors shall be elected
at the first meeting of stockholders called for the purpose of electing
directors following the issuance of any shares of Class B Common Stock. Each
Class B director shall be elected for a term to expire at the next ensuing
annual meeting of stockholders after his or her election, and until his or
her successor is elected and qualified.
(B) Holders of shares of Class A Common Stock, voting as a separate class,
shall be entitled to elect all of the directors other than those to be
elected by the holders of shares of Class B Common Stock, voting as a
separate class; provided, however, that if, as of the record date for any
meeting of stockholders at which directors are to be elected, the number of
outstanding shares of Class A Common Stock is less than 875,000, or the
provisions of paragraph (d)(2)(E) are applicable, then the holders of shares
of Class A Common Stock and the holders of shares of Class B Common Stock,
voting together as a single class, shall be entitled to elect all of the
directors (other than those to be elected by the holders of shares of Class B
Common Stock, voting as a separate class, if any), with the holders of shares
of Class A Common Stock entitled to cast one vote per share and the holders
of shares of Class B Common Stock entitled to
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cast one-tenth vote per share. Such directors elected by the holders of
shares of Class A Common Stock, voting as a separate class, or the holders of
Class A Common Stock and Class B Common Stock voting together as a single
class, as the case may be, shall be designated "Class A directors."
(C) The holders of shares of Class A Common Stock shall be entitled to
vote as a separate class to remove any Class A director and the holders of
shares of Class B Common Stock shall be entitled to vote as a separate class
to remove any Class B director; provided, however, that directors of either
class may be removed only upon a showing of good cause by the affirmative
vote of the holders of 60 percent of the outstanding shares of such class
entitled to vote at any meeting called for such purpose.
(D) Any vacancy in the office of a Class A director may be filled by a
vote of the holders of shares of Class A Common Stock voting as a separate
class and, subject to paragraph (d)(2)(E), any vacancy in the office of a
Class B director may be filled by a vote of the holders of shares of Class B
Common Stock voting as a separate class. Notwithstanding anything to the
contrary herein, any vacancy in the office of a director elected by either
class may be filled by the vote of the majority of the remaining directors in
such class, by the sole remaining director in such class or, in the event
that there are no remaining directors in such class, by the vote of the
majority of the directors in the other class or by the sole director in such
other class, regardless, in each instance, of any quorum requirements set
forth in the By-Laws of the corporation. Any director elected to fill a
vacancy in the office of a Class B director shall serve until the following
annual meeting of stockholders and until his or her successor is elected and
qualified. Any director elected to fill a vacancy in the office of a Class A
director shall serve until the next annual meeting of stockholders at which
directors of the subclass 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; provided,
however, that, subject to paragraph (d)(2)(E), so long as any shares of Class
B Common Stock are outstanding, the Board of Directors may be so enlarged
only if at least one-fourth of the whole Board as enlarged consists of Class
B directors, including Class B directors appointed to fill vacancies.
(E) The holders of shares of Class B Common stock will not have the rights
to elect directors set forth in paragraphs (d)(2)(A) and (d)(2)(D) if, as of
the record date for any meeting of stockholders at which directors are to be
elected, the number of outstanding shares of Class B Common Stock is less
than 10 percent of the aggregate number of outstanding shares of Class A
Common Stock and Class B Stock. In such case, all directors to be elected at
any such meeting shall be elected by the holders of shares of Class A Common
Stock and the holders of shares of Class B Common Stock voting together as a
single class, with the holders of shares of Class B Common Stock entitled to
cast one-tenth vote per share and the holders of shares of Class A Common
Stock entitled to cast one vote per share.
(F) Except as specified above in this paragraph (d)(2) or as otherwise
required by law, the holders of shares of Class A Common Stock and Class B
Common Stock shall vote together as a single class, with the holders of Class
A Common Stock entitled to cast one vote per share and the holders of Class B
Common Stock entitled to cast one-tenth vote per share.
(G) Notwithstanding anything in this paragraph (d)(2) to the contrary, the
holders of shares of Class A Common Stock shall have exclusive voting power
on all matters at any time when no shares of Class B Common Stock are issued
and outstanding, and vice versa.
(3) CONVERSION.
Any whole number of shares of Class A Common Stock may be converted at any
time by the holder thereof into fully paid and nonassessable shares of Class
B Common Stock at the rate of one share of Class B Common Stock for each
share of Class A Common Stock surrendered for conversion. Any such conversion
may be effected by surrendering the certificate or certificates for the
shares of Class A Common Stock to be converted, duly endorsed, at the office
of the transfer agent for the Class A Common Stock, together with a written
notice in form acceptable to the corporation that the holder elects to
convert all or a specified number of the shares of Class A Common Stock
represented by such certificate or certificates. Promptly thereafter, the
corporation shall cause to be issued and deliver to such holder a certificate
or certificates for the number of shares of Class B Common Stock to which
such holder
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shall be entitled as aforesaid. Such conversion shall be deemed to have been
made at the close of business at the date of such surrender and the person or
persons entitled to receive the shares of Class B Common Stock issuable on
such conversion shall be treated for all purposes as the record holder or
holders of such shares of Class B Common Stock on that date.
Upon this Certificate of Amendment becoming effective, (i) each
outstanding share of the Common Stock, $.01 par value, of the corporation
will be converted, automatically and without more, into one share of Class A
Common Stock, and (ii) each of the directors designated Class I directors,
Class II directors and Class III directors will be reclassified Class A-I
directors, Class A-II directors and Class A-III directors, respectively.]
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. [Class A] Directors *are and* shall* continue to* be divided into three
subclasses[, which shall be designated]. *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, respectively*. 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 [A] I
directors *initially* shall expire at the annual meeting of stockholders
[ensuing after the annual meeting of stockholders] held in [1983] *1996*; the
term of Class [A] II directors *initially* shall expire at the [second] *next*
ensuing annual meeting of stockholders; and the term of Class [A] III directors
*initially* shall expire at the [third] *second* ensuing annual meeting of
stockholders. In the case of each [sub]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 may be filled by the vote of the
majority of the remaining directors, regardless of any quorum requirements
set forth in* the By-Laws of the corporation.* Any director elected to fill a
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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;
[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.]*
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
sixty-six and two-thirds percent (66 2/3%) of the outstanding stock of the
Corporation entitled to vote thereon.*
[3] *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 out
standing 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] *required by law*; 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.
[4. Any action which may be taken at any] *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 [the stockholders, may be taken without a meeting,
without prior notice and without a vote, if a consent in writing, setting
forth the action so taken, shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which the holders
of all shares entitled to vote thereon were present and voted, and, provided,
that prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing.] *such stockholders and may not be taken by
written consent without such a meeting.*
[5] *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] *omissions* 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 [and] *any* director of the
[Corporation] *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
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(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
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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. [No amendment to this certificate of
incorporation shall alter, change or repeal any of the provisions of
paragraph (c)(2), (d)(1) or (d)(2) of Article FOURTH hereof unless such
amendment shall receive the affirmative vote of the holders of not less than
60 percent of the outstanding shares of both the Class A Common Stock and the
Class B Common Stock, with each class voting separately as a class.] 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.
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IN WITNESS WHEREOF, we have duly executed this certificate on behalf of
the corporation this [16th day of , 1980.] *26th day of March, 1996.*
-----------------------------------
[David E. Gross, President]
*Mark S. Newman*
*Chairman of the Board,*
*President and Chief
Executive Officer*
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<PAGE>
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS CLASS A
FOR THE SPECIAL MEETING OF STOCKHOLDERS TO BE HELD
MARCH 26, 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 Tuesday, March 26, 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.
[X] Please mark your votes as in this example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSALS:
1. APPROVAL of an Amended and Restated Certificate of Incorporation to
effect a reclassification of each share of the Company's Class A Common Stock
and each share of Class B Common Stock into one share of new common stock.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. APPROVAL of an Amended and Restated Certificate to provide that action
by stockholders may be taken only at a duly called annual or special meeting
and not by written consent.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. APPROVAL of an Amended and Restated Certificate to provide that the
stockholders of the Company would not have the right to make, adapt, alter,
amend, change or repeal the By-Laws except upon the affirmative vote of not
less than 66 2/3 % of the outstanding stock of the Company entitled to vote
thereon.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE>
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 fully
corporate name by a duly authorized
officer.
<PAGE>
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS CLASS B
FOR THE SPECIAL MEETING OF STOCKHOLDERS TO BE HELD
MARCH 26, 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 Tuesday, March 26, 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.
[X] Please mark your votes as in this example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSALS:
1. APPROVAL of an Amended and Restated Certificate of Incorporation to
effect a reclassification of each share of the Company's Class A Common Stock
and each share of Class B Common Stock into one share of new common stock.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. APPROVAL of an Amended and Restated Certificate to provide that action
by stockholders may be taken only at a duly called annual or special meeting
and not by written consent.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. APPROVAL of an Amended and Restated Certificate to provide that the
stockholders of the Company would not have the right to make, adapt, alter,
amend, change or repeal the By-Laws except upon the affirmative vote of not
less than 66 2/3 % of the outstanding stock of the Company entitled to vote
thereon.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE>
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 fully
corporate name by a duly authorized
officer.
