SCHEDULE 14(A) INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section240.14a-12
AW Computer Systems, Inc.
Name of the Registrant as Specified in its Charter
N/A
Name of Person(s) Filing Proxy Statement, if other than the Registrant
Payment of Filling Fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 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 Rule 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: N/A
(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 (Set forth the amount on which the
filing fee is calculated and state how it was determined): N/A
(4) Proposed maximum aggregate value of transaction: N/A
(5) Total fee paid: N/A
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: N/A
(2) Form, Schedule or Registration Statement No.: N/A
(3) Filing Party: N/A
(4) Date Filed: N/A
<PAGE>
AW COMPUTER SYSTEMS, INC.
9000A Commerce Parkway
Mount Laurel, NJ 08054
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 1, 1996
Dear Shareholder:
The 1996 Annual Meeting of Shareholders of AW Computer Systems, Inc. (the
"Company") will be held on Friday, November 1, 1996, at the Marriott Courtyard,
1000 Century Parkway, Mount Laurel, NJ 08054 at 10:30 a.m. for the following
purposes:
(1) To elect five directors;
(2) To increase the number of Class A Common Shares, $.01 par value, from
10,000,000 shares to 25,000,000 and to authorize 5,000,000 shares of
Preferred Stock; and
(3) To transact such other business as may properly come before the
Meeting or any adjournment or adjournments thereof.
Only shareholders of record at the close of business on September 25, 1996
are entitled to notice of, and to vote at, the Meeting and any adjournment or
adjournments thereof.
Sincerely,
P. Michael Lutze
Secretary
Dated: Mount Laurel, NJ
October 10, 1996
IMPORTANT: PLEASE FILL IN, DATE, SIGN AND MAIL PROMPTLY THE ENCLOSED PROXY
IN THE POSTAGE-PAID ENVELOPE PROVIDED TO ASSURE THAT YOUR SHARES ARE REPRESENTED
AT THE MEETING.
<PAGE>
AW COMPUTER SYSTEMS, INC.
9000A Commerce Parkway
Mount Laurel, New Jersey 08054
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of proxies
by the Board of Directors of AW Computer Systems, Inc. (the "Company") for use
at the Annual Meeting of the Company's Shareholders to be held at 10:30 a.m. on
November 1, 1996, at the Marriott Courtyard, 1000 Century Parkway, Mount Laurel,
NJ 08054, and at any adjournment or adjournments of said Meeting. Proxies are
revocable at any time before they are voted by delivering written notice of
revocation to the Secretary of the Company prior to or at the Meeting, by filing
a duly executed proxy bearing a later date, or by voting in person at the Annual
Meeting. Unless so revoked, the shares represented by proxies will be voted at
the Meeting.
This Proxy Statement and related form of proxy is being mailed to Shareholders
on or about October 10, 1996. Only holders of record of the Company's Class A
Common Shares, $.01 par value per share (the "Class A Common Shares"), at the
close of business on September 25, 1996, are entitled to receive notice of, and
to vote at, the Meeting and any adjournment or adjournments thereof.
The cost of soliciting proxies will be borne by the Company. Solicitation may be
made by mail, personal interview, telephone and telegraph by officers and
regular employees of the Company who will receive no additional compensation
therefor. The Company will reimburse banks, brokers and other nominees for their
reasonable expenses in forwarding proxy materials to the beneficial owners for
whom they hold shares.
On September 25, 1996, there were 6,602,067 Class A Common Shares issued and
outstanding, the only class of securities of the Company entitled to vote. Each
Class A Common Share is entitled to one vote for each director to be elected and
one vote for each other matter to be considered. The presence at the Annual
Meeting, in person or by proxy, of the holders of a majority of the Class A
Common Shares entitled to vote is necessary to constitute a quorum. Abstentions
and broker nonvotes will be counted for purposes of determining the presence or
absence of a quorum for the transaction of business. Assuming the presence of a
quorum, a vote of a majority of the Class A Common Shares present and voting, in
person or by proxy, at the Meeting is required to pass upon each of the matters
presented. Abstentions will be counted in tabulations of the votes on each of
the proposals presented at the Meeting, whereas broker nonvotes will not be
counted for purposes of determining whether a proposal has been approved.
"Broker nonvotes" are proxies received from brokers who, in the absence of
specific voting instructions from beneficial owners of shares held in brokerage
name, have declined to vote such shares in those instances where discretionary
voting by brokers is permitted.
1
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth the beneficial ownership of the Company's Class A
Common Shares by: (i) each director of the Company; (ii) each officer named in
the Summary Compensation Table elsewhere herein; (iii) to the Company's
knowledge, each person owning more than 5% of the Company's Class A Common
Shares; and (iv) the executive officers and directors of the Company as a group.
Unless otherwise noted, each person listed below is the record owner of, and has
sole voting and investment power over, the Class A Common Shares which such
person beneficially owns. For purposes of this table, a person or group of
persons is deemed to be the beneficial owner of any shares that such person has
the right to acquire within sixty days.
<TABLE>
<CAPTION>
Number of Class A Percent of Class A
Name and Address Common Shares Common Shares
of Beneficial Owner Beneficially Owned Beneficially Owned
- - - ------------------- ------------------ ------------------
<S> <C> <C>
Charles J. McMullin
19 Normandie Lane 397,000(1) 5.8%
Raritan, NJ 08869
Charles Welch
1904 Woodhollow Drive 802,360(2) 11.9%
Marlton, NJ 08053
P. Michael Lutze
117 Lamplighter Court 84,500(3) 1.3%
Marlton, NJ 08053
Frank A. Cappiello
Greenspring Station, Suite 250 87,500(4) 1.4%
10751 Falls Road
Lutherville, MD 21093
Patricia Sunseri
1030 Century Building 87,500(5) 1.4%
130 Seventh Street
Pittsburgh, PA 15222
Vincent G. Vidas
730 Lippincott Avenue 372,574(6) 5.6%
Moorestown, NJ 08057
Nicholas Ambrus
c/o AW Computer Systems, Inc. 364,200(7) 5.5%
9000A Commerce Parkway
Mount Laurel, NJ 08054
Mylan Laboratories, Inc.
1030 Century Building 1,250,000 18.9%
130 Seventh Street
Pittsburgh, PA 15222
Winn-Dixie Stores, Inc.
5050 Edgewood Court 669,796(8) 9.8%
Jacksonville, FL 32205
All current executive
officers and directors as
a group (six persons) 1,951,434(1)(2)(3)(4)(5)(6) 26.9%
</TABLE>
Footnotes on Following Page
2
<PAGE>
[FN]
Continued from Ownership of Shares Table on Previous Page
(1) Includes 261,000 shares which Mr. McMullin has the right to acquire within
60 days pursuant to options and warrants.
(2) Includes 121,000 shares which Mr. Welch has the right to acquire within 60
days pursuant to options and warrants.
(3) Includes 26,500 shares which Mr. Lutze has the right to acquire within 60
days pursuant to options.
(4) Includes 62,500 shares which Mr. Cappiello has the right to acquire within
60 days pursuant to options.
(5) Includes 62,500 shares which Ms. Sunseri has the right to acquire within 60
days pursuant to options.
(6) Includes 62,500 shares which Mr. Vidas has the right to acquire within 60
days pursuant to options.
(7) Includes 76,000 shares which Mr. Ambrus has the right to acquire within 60
days pursuant to options and warrants, and 8,000 shares beneficially owned
pursuant to a letter agreement with Mr. Lutze.
(8) Includes 236,773 shares which Winn-Dixie Stores, Inc. has the right to
acquire within 60 days pursuant to warrants.
ELECTION OF DIRECTORS
Five directors are to be elected at the Annual Meeting to serve until the next
annual meeting or until their respective successors shall have been elected and
shall have qualified.
Nominees for Election as Directors
- - - ----------------------------------
The Board of Directors has nominated the persons named in the following table
for election as directors at the Annual Meeting. If any of the persons named
below is not available at the time of the Annual Meeting, the persons named in
the proxies may vote the proxies for such other persons as they may choose
unless the Board of Directors reduces the number of directors to be elected. The
table on the following page contains certain information concerning the
nominees, including their ages, current positions with the Company and principal
occupations during the past five years.
3
<PAGE>
<TABLE>
<CAPTION>
Current positions with the Company and
Nominee Age principal occupations during past five years
------- --- --------------------------------------------
<S> <C> <C>
Charles J. McMullin(1)(3) 46 Chairman of the Board of Directors since
August 1996, Chief Operating Officer since
April 1995, Executive Vice President from
April 1994 to April 1995, and Director of the
Company since October 1994. Vice President of
Somerset Kensington Capital Co., Inc., a
private investment firm, from December 1993
to May 1994. Vice Chairman and Chief
Executive Officer of Vertex Electronics,
Inc., an electronics assembly and
distribution company, from October 1990 to
December 1993.
Charles Welch(1) 57 Chief Executive Officer and President of the
Company since December 1994, President of the
Company from May 1986 to December 1994, and
Director since 1973. Founder of the Company.
Frank A. Cappiello(2)(3) 70 Director of the Company since August 1996.
President of McCullough, Andrews & Cappiello,
an investment counseling firm since prior to
1990. Founder and Principal of Closed-End
Fund Advisors, Inc., an investment management
firm. Chairman of a group of no-load mutual
funds including the Cappiello-Rushmore Growth
Fund, the Cappiello-Rushmore Utility Income
Fund, the Cappiello-Rushmore Engineering
Growth Fund and the Cappiello-Rushmore Gold
Funds since prior to 1990.
Patricial Sunseri(2) 57 Director of the Company since August 1996.
Vice President of Mylan Laboratories, Inc., a
NYSE-listed pharmaceutical company, since
prior to 1990.
Vincent Vidas(1) 65 Director of the Company since August 1996.
President and Chief Executive Officer of
SEMCOR, INC., a private technologies
engineering and management consulting firm,
since prior to 1990.
</TABLE>
[FN]
(1)Member of the Executive Committee of the Board of Directors.
(2)Member of the Compensation Committee of the Board of Directors.
(3)Member of the Audit Committee of the Board of Directors.
[/FN]
Board Meetings
- - - --------------
The Board of Directors held seven (7) meetings during 1995.
The Company's Board of Directors has appointed standing Compensation and Audit
Committees. The Compensation Committee acted by unanimous consent twice during
1995. The standing Audit Committee held one meeting in 1995. The Company's Board
of Directors expects to reconstitute a standing Audit Committee, Compensation
Committee, and a Nominating Committee for 1996. Each director attended more than
75% of the aggregate of Board meetings and meetings of committees on which he
served.
4
<PAGE>
The Compensation Committee periodically reviews the compensation paid to the
executive officers of the Company and makes recommendations to the Board with
respect thereto and is responsible for administering the Company's stock option
plans. The members of the Compensation Committee consist of the two non-employee
directors, Ms. Sunseri and Mr. Cappiello.
The Audit Committee meets with the Company's independent accountants to review
and approve the scope and results of their professional services. It also
reviews the procedures for evaluating the adequacy of the Company's accounting
controls, considers the range of audit fees and makes recommendations to the
Board regarding the engagement of the Company's independent accountants. The
members of the Audit Committee consist of the non-employee director, Mr.
Cappiello, and the Chairman of the Board, Mr. McMullin.
Compensation of Directors
- - - -------------------------
During 1995, two non-employee directors, Messrs. Hannon and Schroeter, received
15,000 shares each as compensation for their services as directors. Messrs.
Hannon and Schroeter resigned from the Board of Directors in August 1996.
Related Transactions
On September 20, 1996, the Company consummated the private placement of
1,678,023 Class A Common Shares to a limited number of qualified investors,
including certain officers and directors of the Company, as listed in the table
below. The price per share was $1.00, or an aggregate consideration of
$1,678,023. The proceeds of the private placement will be used to finance
on-going operations and the development of new products. The securities sold in
this private transaction are not registered for public sale under the Securities
Act of 1933 or any state securities law. The purchasers were granted certain
registration rights commencing on or after September 1, 1997.
<TABLE>
<CAPTION>
Number of
Officer/Director Title Class A Common Shares
---------------- ----- ---------------------
<S> <C> <C>
Charles J. McMullin Chairman of the Board 40,000
Charles Welch CEO/President 25,000
Charles F. Trapp Vice President 60,000
P. Michael Lutze Vice President 35,000
Patricia Sunseri Director 25,000
Frank A. Cappiello Director 25,000
</TABLE>
On April 27, 1995, the Company sold 394,000 units, each unit consisting of one
Class A Common Share and a Warrant to purchase one additional Class A Common
Share. The purchase price of each unit was $.55, or an aggregate consideration
of $216,700. The units were sold to seven individuals, including certain
officers and directors of the Company, as listed in the table below. The
warrants are exercisable for five years from the date of issuance at an exercise
price of $2.00 per share. The proceeds were used to finance on-going operations
and the development of new products The units were offered and sold to the
individuals in reliance on an exemption for non-public offerings afforded by the
Securities Act of 1933.
<TABLE>
<CAPTION>
Officer/Director Title Number of Units
---------------- ----- ---------------
<S> <C> <C>
Charles J. McMullin Chief Operating Officer 96,000
Charles Welch CEO/President 46,000
Nicholas Ambrus Former Director 46,000
Richard Schroeter Former Director 55,000
</TABLE>
5
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation
- - - --------------------
The following table sets forth a summary of the aggregate compensation earned
for services rendered in all capacities to the Company during the years 1993
through 1995 by the Chief Executive Officer, and by each of the three other most
highly compensated executive officers earning over $100,000 in 1995 (the "Named
Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation(1)
---------------------------------------
Awards Payouts
------ -------
Other Long
Annual Restricted Number Term All
Name and Fiscal Compen- Stock of Incentive Other
Principal Position Year Salary Bonus sation(2) Awards Options Payouts Compensation(3)
------------------ ---- ------ ----- --------- ------ ------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Charles J. McMullin 1995 $140,000(5) --- $ 7,750 --- 25,000 --- $2,152
Chairman and Chief 1994 $ 93,333 --- $ 5,167 --- 60,000 --- $2,692
Operating Officer
Charles Welch 1995 $168,150(6) --- $15,400 --- 10,000 --- $3,105
President and Chief 1994 $168,150 --- $18,490 --- --- --- $2,500
Executive Officer 1993 $160,988 $72,693 $21,592 --- --- --- $2,160
P. Michael Lutze 1995 $126,800(7) --- $16,450 --- 12,500 ---
Vice President 1994 $126,800 --- $12,302 --- --- --- ---
1993 $121,265 $10,000 $18,473 --- --- --- ---
Nicholas Ambrus4 1995 $137,924 --- $13,900 --- 10,000 --- ---
Former Chairman 1994 $ 98,176 --- $15,890 --- --- --- ---
1993 $161,140 $72,693 $37,225 --- --- --- $4,398
</TABLE>
- - - -----------------------
[FN]
(1) During three years, 1993 through 1995, no Named Officer received stock
appreciation rights, restricted stock awards or Long-Term Incentive Plan
payouts.
(2) Other Annual Compensation includes the following:
For Mr. McMullin: in 1995, $7,750 automobile benefit and in 1994, $5,167
automobile benefit.
For Mr. Welch: in 1995, $6,150 gain on exercise of options and $9,250
automobile benefit; in 1994, $9,250 automobile benefit and $9,240
Company contribution to his 401(k) account; and in 1993, $12,598
automobile benefit and $8,994 Company contribution to his 401(k)
account.
For Mr. Lutze: in 1995, $8,200 gain on exercise of options and $8,250
automobile benefit; in 1994, $8,250 automobile benefit and $4,052
Company contribution to his 401(k) account; and in 1993, $10,102
automobile benefit and $8,371 Company contribution to his 401(k)
account.
For Mr. Ambrus: in 1995, $6,150 gain on exercise of options and $7,750
automobile benefit; in 1994, $7,750 automobile benefit and $8,140
Company contribution to his 401(k) account; and in 1993, $18,609 of
gain on exercise of options, $9,622 automobile benefit, and $8,994
Company contribution to his 401(k) account.
(3) All Other Compensation is comprised of life insurance premiums paid on
behalf of the respective individuals.
(4) Mr. Ambrus resigned as Chairman in August 1996.
(5) Includes $13,125 of deferred salary.
(6) Includes $15,998 of deferred salary.
(7) Includes $11,888 of deferred salary.
[/FN]
6
<PAGE>
STOCK OPTION GRANTS IN 1995
<TABLE>
<CAPTION>
Options Percent of Total
Name and Granted Options Granted Exercise Expiration
Principal Position (2) To Employees Price Date
- - - ------------------ --- ------------ ----- ----
<S> <C> <C> <C> <C>
Charles J. McMullin 25,000 9.2% $1.00 6-27-2000
Chairman and Chief
Operating Officer
Charles Welch 10,000 3.7% $1.00 6-27-2000
President and Chief
Executive Officer
P. Michael Lutze 12,500 4.6% $1.00 6-27-2000
Vice President
</TABLE>
Exercise of Stock Options and Aggregate Outstanding Stock Options at December
31, 1995
- - - -----------------
The following table sets forth information concerning stock options which were
exercised during 1995 by the Chief Executive Officer and the other Named
Officers and the amounts of their respective unexercised options as of
December 31, 1995.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTIONS
<TABLE>
<CAPTION>
Number of Value of
Shares In-the-Money
Unexercised Unexercised
Number of Options at Options at
Shares 12/31/95 12/31/95
Name and Acquired on Value Exercisable/ Exercisable/
Principal Position Exercise Realized Unexercisable Unexercisable
- - - ------------------ -------- -------- ------------- -------------
<S> <C> <C> <C> <C>
Nicholas Ambrus 15,000 $6,150 20,000/-- --/--
Former Chairman
P. Michael Lutze 20,000 $8,200 14,000/-- --/--
Senior Vice President
Charles J. McMullin -- -- 20,000/40,000 --/--
Chairman and Chief
Operating Officer
Charles Welch 15,000 $6,150 20,000/-- --/--
President and Chief
Executive Officer
</TABLE>
7
<PAGE>
Bonus Plans
- - - -----------
The Board of Directors adopted a bonus plan for Mr. Welch under which a varying
percentage of the Company's net profits in a particular year are paid as an
annual bonus if certain profit objectives established by the Board of Directors
for that year are achieved. Under the plan now in effect, Mr. Welch would
receive 2.5% of the first $99,999 of the Company's annual pre-tax profit, 3.75%
of the next $100,000 of the Company's annual pre-tax profit and 5% of the
Company's annual pre-tax profit in excess of $199,999. No bonus was paid under
this plan for 1995.
On April 25, 1994, the Company and Charles J. McMullin entered into an
employment agreement that provides for a term of employment of three years at a
salary of $140,000 and a cash bonus of 1.25% of the first $99,999 of the net
income of the Company before charges for officers' bonuses and income taxes
("EBOBAT"), 1.875% of the next $100,000 of EBOBAT and 2.5% of EBOBAT in excess
of $200,000. No bonus was paid under this plan for 1995.
Since the organization of the Company in 1973, it has been the policy of the
Company to award an annual bonus to the Company's officers and employees. The
amount of the bonus awarded to an officer or employee in a particular year is
discretionary and has been dependent upon the officer's or employee's level of
performance during the year, his length of service with the Company, and the
Company's earnings during the year. No discretionary bonuses were paid in 1995.
Under the Company's current discretionary bonus arrangement, Messrs. McMullin
and Welch are not eligible for discretionary bonuses. The Company may award
discretionary bonuses for 1996 and subsequent years.
Employment Agreements
- - - ---------------------
The Company has entered into an agreement with Mr. McMullin providing for his
employment in an executive capacity from April 25, 1994 through April 24, 1997
at an annual minimum base salary of $140,000. If the employment of Mr. McMullin
is terminated by the Company prior to the end of his employment term without
cause, the Company will continue to pay Mr. McMullin his salary until the end of
such term, his death, or his employment with another organization, at which time
the Company shall be only obligated to pay Mr. McMullin the difference between
his compensation from the new employer and his current compensation. During
1995, Mr. McMullin deferred receipt of $13,125 of salary.
The Company has entered into an agreement with Mr. Welch providing for his
employment in an executive capacity from October 1, 1995 through September 30,
1998, at an annual minimum base salary of $168,150. The agreement requires that
this minimum base salary be adjusted annually during the second and third years
of the contract to reflect the average percentage salary increase awarded other
senior and executive employees of the Company during the preceding twelve
months. If the employment of Mr. Welch is terminated by the Company prior to the
end of his employment term without cause, the Company will continue to pay Mr.
Welch his salary until the end of such term, or the date on which he begins
competing with, or begins working for an organization which competes with the
Company. During 1995, Mr. Welch deferred receipt of $15,998 of salary.
8
<PAGE>
The Company has entered into an agreement with Mr. Lutze providing for his
employment in an executive capacity from February 15, 1996 through February 14,
1999 at an annual minimum base salary of $126,800. If the employment of Mr.
Lutze is terminated by the Company prior to the end of his employment term
without cause, the Company will continue to pay Mr. Lutze his salary until the
end of such term, his death, or his employment with another organization, at
which time the Company shall be only obligated to pay Mr. Lutze the difference
between his compensation from the new employer and his current compensation.
During 1995, Mr. Lutze deferred receipt of $11,888 of salary.
On March 1, 1993, Mr. Ambrus entered into a Supplemental Employment and
Retirement Agreement with the Company, providing for his phased withdrawal from
active involvement in daily management activities. Effective December 31, 1993,
Mr. Ambrus ceased to serve as Chief Executive Officer of the Company. Mr.
Nicholas Ambrus retired as Chairman and as a member of the Board of Directors in
August 1996. In July 1996, Mr. Ambrus entered into a seven year consulting
agreement with the Company which provides for a monthly retainer of $4,675 and
the use of a Company automobile through December 31, 1998. The agreement also
provides that, effective August 1, 2003, and continuing until January 31, 2008,
the Company will pay Mr. Ambrus a retirement benefit of $4,675 per month.
9
<PAGE>
PROPOSAL TO AMEND ARTICLE THREE OF THE RESTATED CERTIFICATE OF INCORPORATION
OF THE COMPANY TO PROVIDE FOR AN INCREASE TO 25,000,000
CLASS A COMMON SHARES AND TO AUTHORIZE 5,000,000 SHARES OF PREFERRED STOCK
The Board of Directors of the Company has adopted a resolution unanimously
approving and recommending to the Company's shareholders for their approval, an
amendment to the Company's Restated Certificate of Incorporation to provide
therein for an increase in the authorization of Class A Common Shares, $.01 par
value, from 10,000,000 shares to 25,000,000 shares, and the creation of a new
class of 5,000,000 shares of Preferred Stock. The text of the proposed amendment
is attached hereto as Appendix A.
The Board of Directors believes the authorization of the increase in the number
of Class A Common Shares and the creation of the Preferred Stock is in the best
interests of the Company and its shareholders and believes it advisable to
authorize such shares to have them available for, among other things, possible
issuance in connection with such activities as public or private offerings of
shares for cash, dividends payable in stock of the Company, acquisitions of
other companies, implementation of employee benefit plans, and otherwise.
The Board of Directors may determine, in its sole discretion with no further
authorization by the Company's shareholders required for the creation and
issuance thereof, the designations, preferences, conversion rights, cumulative,
relative participating, optional or other rights, including voting rights,
qualifications, limitations or restrictions thereof (collectively, the
"Limitations and Restrictions"). The Board of Directors of the Corporation will,
in the event of the approval of this proposal by the Company's shareholders, be
entitled to authorize the creation and issuance of 5,000,000 shares of Preferred
Stock in one or more series with such Limitations and Restrictions as it may
determine.
The Board of Directors is required by applicable law to make any determination
to issue shares of Common Stock or Preferred Stock based on its judgment as to
the best interests of the shareholders and the Company. Although the Board of
Directors has no present intention of doing so, it could issue shares of Common
Stock or Preferred Stock that could, depending on the terms of such series, make
more difficult or discourage an attempt to obtain control of the Company by
means of a merger, tender offer, proxy contest or other means. When in the
judgment of the Board of Directors this action will be in the best interests of
the shareholders and the Company, such shares could be used to create voting or
other impediments or to discourage persons seeking to gain control of the
Company. Such shares could be privately placed with purchasers favorable to the
Board of Directors in opposing such action. In addition, the Board of Directors
could authorize holders of a series of Preferred Stock to vote either separately
as a class or with the holders of the Company's Common Shares, on any merger,
sale or exchange of assets by the Company or any other extraordinary corporate
transaction. The existence of the additional authorized shares could have the
effect of discouraging unsolicited takeover attempts. The issuance of new shares
also could be used to dilute the stock ownership of a person or entity seeking
to obtain control of the Company should the Board of Directors consider the
action of such entity or person not to be in the best interests of the
shareholders and the Company.
10
<PAGE>
While the Company may consider effecting an equity offering of Common Shares or
Preferred Stock in the proximate future for purposes of raising additional
working capital or otherwise, the Company, as of the date hereof, has no
agreements or understandings with any third party to effect such offering, to
purchase any shares offered in connection therewith, or to veto any such shares,
and no assurances can be given that any offering will in fact be effected.
Therefore, the terms of any Preferred Stock subject to this proposal cannot be
stated or estimated with respect to any or all of the securities authorized.
The Board of Directors recommends a vote "FOR" the amendment to the
Company's Restated Certificate of Incorporation to provide an increase
in Class A Common Shares from 10,000,000 shares to 25,000,000 shares
and to authorize 5,000,000 shares of Preferred Stock.
OTHER MATTERS
Independent Accountants
- - - -----------------------
In the fiscal year ended December 31, 1995, Coopers & Lybrand served as the
independent accountants for the Company and conducted the annual audit of the
Company's financial statements. Representatives of Coopers & Lybrand are not
expected to be present at the Annual Meeting of Shareholders.
Section 16(a) Beneficial Ownership Reporting Compliance
- - - -------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Company's directors and executive officers, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file with
the Securities and Exchange Commission (the "SEC") initial reports of ownership
and reports of changes in ownership of Class A Common Shares of the Company.
Officers, directors and greater than ten percent shareholders are required by
SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file. To the Company's knowledge, based solely on review of the copies of
Forms 3, 4 and 5 furnished to the Company and written representations that no
other reports were required during 1995, all Section 16(a) filing requirements
applicable to its officers, directors and greater than ten percent beneficial
owners were complied with.
Sharholders Proposals
- - - ---------------------
Shareholders proposals intended to be presented at the Company's 1997 Annual
Meeting of Shareholders pursuant to the provisions of Rule 14a-8, promulgated
under the Securities Exchange Act of 1934, as amended, must be received by the
Company's offices in Mount Laurel, New Jersey by January 6, 1997 for inclusion
in the Company's proxy statement and form of proxy relating to such meeting.
Other Business
- - - --------------
At the date of this Proxy Statement, the only business which the Board of
Directors intends to present or knows that others will present at the Meeting is
that hereinabove set forth. If any other matters are properly brought before the
Meeting, or any adjournments or adjournments thereof, it is the intention of the
persons named in the accompanying form of Proxy to vote the Proxy on such
matters in accordance with their judgment.
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APPENDIX A
TEXT OF PROPOSED ARTICLE THREE
OF THE RESTATED CERTIFICATE OF INCORPORATION
OF
AW COMPUTER SYSTEMS, INC.
The aggregate number of shares of capital stock which the Corporation shall have
authority to issue is 30,100,000 shares, which are to be divided into three
classes as follows: 25,000,000 Class A Common Shares, each of which shall have
the par value of $.01 per share, 100,000 Class B Common Shares, each of which
shall have the par value of $.20 per share, and 5,000,000 shares of Preferred
Stock, with no par value per share.
. . . .
The Board of Directors of the Corporation is authorized at any time and from
time to time, to issue the Preferred Stock in one or more series, and, in
connection with the creation of such series, to fix by the resolution or
resolutions providing for the issue of shares thereof the number of shares to be
included in such series, and the designation, powers, preferences and rights of
the shares of each such series and the qualifications, limitations or
restrictions thereof, to the fullest extent now or hereafter permitted by the
laws of the State of New Jersey. The authority of the Board of Directors with
respect to each series of Preferred Stock shall include, but not be limited to,
determination of the following:
(i) The number of shares constituting that series and the distinctive
designation of that series;
(ii) The dividend rate on the shares of that series, whether dividends
shall be cumulative, and, if so, the date or dates, and the relative rights of
priority, if any, of payment of dividends on shares of that series;
(iii) Whether that series shall have voting rights, in addition to the
voting rights provided by law, and, if so, the terms of such voting rights;
(iv) Whether that series shall have conversion privileges, and, if so, the
terms and conditions of such conversion, including provision for adjustment of
the conversion rate in such events as the Board of Directors shall determine;
(v) Whether or not the shares of that series shall be redeemable, and, if
so, the terms and conditions of such redemption, including the date or date upon
or after which they shall be redeemable, and the amount per share payable in
case of redemption which amount may vary under different conditions and at
different redemption dates;
(vi) Whether that series shall have a sinking fund for the redemption or
purchase of shares of that series, and, if so, the terms and amount of such
sinking fund;
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(vii) The rights of the shares of that series in the event of voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, and the
relative rights of priority, if any, of payment of shares of that series; and
(viii) Any other relative rights, preferences and limitations of that
series.
Dividends on outstanding shares of Preferred Stock shall be paid or declared and
set apart for payment before any dividends shall be paid and set apart for
payment or declared on the Common Shares with respect to the same dividend
period.
If upon any voluntary or involuntary liquidation, dissolution or winding up of
the Corporation, the assets available for distribution to holders of shares of
Preferred Stock of all series shall be insufficient to pay such holders the full
preferential amount to which they are entitled, then such assets shall be
distributed ratably among the shares of all series of Preferred Stock in
accordance with the respective preferential amounts (including unpaid cumulative
dividends, if any) payable with respect thereto.
Except for and subject to those rights expressly granted to the holders of
Preferred Stock, or any series thereof, pursuant hereto or pursuant to the
authority hereby vested in the Board of Directors or except as may be provided
by the laws of the State of New Jersey, the holders of Class A Common Shares
(and the Class B Common Shares to the extent provided hereby) shall have
exclusively all rights of shareholders including but not limited to the entire
voting power, all dividends declared by the Corporation and all assets of the
Corporation in the event of any liquidation, dissolution or winding up of the
Corporation.
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PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF
AW COMPUTER SYSTEMS, INC.
The undersigned hereby appoints Charles Welch and Charles J. McMullin
proxies of the undersigned in his name, place and stead, each with full power to
appoint his substitute, and authorizes each of them to represent and to vote, as
specified below, all of the shares of the undersigned held of record by the
undersigned on September 25, 1996, at the Annual Meeting of Shareholders of AW
Computer Systems, Inc. (the "Company") on November 1, 1996, and at all
adjournments thereof, on the matters set forth below AND TO VOTE IN THEIR
DISCRETION FOR THE TRANSACTION OF SUCH OTHER BUSINESS AS MAY BE PROPERLY BROUGHT
BEFORE THE MEETING.
1. ELECTION OF DIRECTORS:
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for all
(except as marked to the nominees listed below.
contrary below).
Charles J. McMullin Frank A. Cappiello
Charles Welch Patricia Sunseri Vincent Vidas
INSTRUCTION: To withhold authority to vote for any individual nominee,
print that nominee's name in the following space:__________________________
2. To increase the number of Class A Common Shares, $.01 par value, from
10,000,000 shares to 25,000,000 and to authorize 5,000,000 shares of
Preferred Stock
[ ] FOR [ ] AGAINST
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED ABOVE. IF NO
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF NOMINEES
FOR DIRECTOR LISTED ABOVE AND FOR THE AUTHORIZATION OF THE INCREASE IN CLASS A
COMMON SHARES AND THE CREATION OF PREFERRED STOCK.
___________________________________
Signature
___________________________________
Signature
Your signature should appear exactly as your name appears in the space at the
left. For joint accounts, any co-owner may sign. When signing in a fiduciary or
representative capacity, please give your full title as such. If a corporation
or partnership, sign in full corporate or partnership name by authorized officer
or partner.
______________________________,1996
Date
PLEASE SIGN, DATE AND RETURN THIS PROXY IN
THE ENCLOSED POSTAGE PAID ENVELOPE
