DAIRY MART CONVENIENCE STORES INC, DEFS14A, 2000-01-06

DAIRY MART CONVENIENCE STORES INC
DEFS14A, 2000-01-06
CONVENIENCE STORES

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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 the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>

DAIRY MART CONVENIENCE STORES, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)

Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies: .......

(2) Aggregate number of securities to which transaction applies: ..........

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined): ............

(4) Proposed maximum aggregate value of transaction: ......................

(5) Total fee paid: .......................................................

[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.

(1) Amount Previously Paid: ...............................................

(2) Form, Schedule or Registration Statement No.: .........................

(3) Filing Party: .........................................................

(4) Date Filed: ...........................................................

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[Dairy Mart Logo]

DAIRY MART CONVENIENCE STORES, INC.
ONE DAIRY MART WAY, 300 EXECUTIVE PARKWAY WEST, HUDSON, OHIO

DEAR DAIRY MART SHAREHOLDER:

You are cordially invited to attend the Special Meeting of Shareholders of
Dairy Mart Convenience Stores, Inc. (the "Company") to be held at 10:00 a.m.
(Eastern Standard Time) on Tuesday, February 8, 2000, at Dairy Mart Convenience
Stores, Inc., One Dairy Mart Way, 300 Executive Parkway West, Hudson, Ohio. At
the Special Meeting, you will be asked to vote on a proposal to amend the
Restated Certificate of Incorporation of the Company. If the proposal is
approved, the amendment will (a) reclassify each issued share of Class A Common
Stock into one share of a new, single class of Common Stock, (b) reclassify each
issued share of Class B Common Stock into 1.1 shares of the new, single class of
Common Stock and (c) provide each share of the new Common Stock with one vote on
all matters. Accordingly, the amendment will substantially reduce the voting
power of the holders of the Class B Common Stock, but will also provide them an
economic premium.

The Board of Directors and a special committee thereof have unanimously
approved the proposal to amend the Restated Certificate of Incorporation. The
Board of Directors recommends that you vote "FOR" this proposal.

Whether or not you plan to attend the Special Meeting, it is important that
your shares are represented. Therefore, we request that you sign, date and
return the enclosed proxy card, even if you plan to attend the Special Meeting.

Sincerely yours,

Dairy Mart Convenience Stores, Inc.

Robert B. Stein, Jr.
Chairman of the Board, President and
Chief Executive Officer

January 6, 2000

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DAIRY MART CONVENIENCE STORES, INC.
---------------

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

TO BE HELD ON FEBRUARY 8, 2000
---------------

Notice is hereby given that a Special Meeting of Shareholders of Dairy Mart
Convenience Stores, Inc. will be held at the Company's offices, One Dairy Mart
Way, 300 Executive Parkway West, Hudson, Ohio, on Tuesday, February 8, 2000, at
10:00 A.M. (Eastern Standard Time), for the following purposes:

1. To consider a proposal to amend the Restated Certificate of
Incorporation to reclassify the Company's Class A Common Stock and
Class B Common Stock into a new, single class of common stock; and

2. To transact such other business as may properly come before the special
meeting or any adjournments thereof.

Only shareholders of record at the close of business on January 3, 2000,
are entitled to notice of and to vote at the special meeting or any adjournment
or postponement thereof.

By Order of the Board of Directors

Robert B. Stein, Jr.,
Chairman of the Board, President and
Chief Executive Officer

January 6, 2000

YOU ARE INVITED TO ATTEND THE SPECIAL MEETING IN PERSON. IF YOU ARE UNABLE TO
ATTEND IN PERSON, WE RESPECTFULLY URGE YOU TO EXECUTE AND RETURN THE ENCLOSED
PROXY AT YOUR EARLIEST CONVENIENCE. IF YOU EXECUTE A PROXY, YOU MAY NEVERTHELESS
ATTEND THE MEETING AND VOTE YOUR SHARES IN PERSON.
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TABLE OF CONTENTS

<TABLE>
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PAGE
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<S> <C>
SOLICITATION OF PROXIES..................................... 1
VOTING RIGHTS............................................... 1
PROPOSAL TO AMEND THE COMPANY'S RESTATED CERTIFICATE OF
INCORPORATION............................................. 3
Background of Amendment................................... 3
Primary Effects and Consequences of the Amendment on the
Company's Capitalization............................... 4
Effects on Derivative Litigation.......................... 5
Reasons for, Advantages of and Possible Disadvantages of
the Amendment.......................................... 6
Financial Advisor's Opinion............................... 8
Interests in Certain Persons.............................. 11
Comparison of Capital Stock Before and After Amendment.... 12
Impact of Amendment on Listing and the American Stock
Exchange, the Operations and Capitalization............ 13
Beneficial Ownership...................................... 14
Federal Tax Consequences.................................. 18
Effective Time; Exchange of Certificates; Fractional
Shares................................................. 19
Recommendation of the Board of Directors.................. 20
SHAREHOLDER PROPOSALS....................................... 20
</TABLE>

ANNEX A -- FORM OF AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION
ANNEX B -- OPINION OF FINANCIAL ADVISOR
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DAIRY MART CONVENIENCE STORES, INC.
PROXY STATEMENT

SOLICITATION OF PROXIES

The accompanying proxy is solicited by the Board of Directors of Dairy Mart
Convenience Stores, Inc., One Dairy Mart Way, 300 Executive Parkway West,
Hudson, Ohio 44236, for use at the Special Meeting of Shareholders to be held on
Tuesday, February 8, 2000, and at any and all adjournments or postponements
thereof. The cost of preparing, assembling and mailing this Proxy Statement is
being borne by the Company. Directors, officers and some employees of the
Company may solicit proxies personally or by telephone, without additional
compensation. The Company may pay persons holding shares for others their
expenses in sending these proxy materials to their principals. In addition, the
Company has retained Corporate Investors Communications, Inc. to assist the
Board of Directors in performing the ministerial tasks in connection with
soliciting proxies for a fee of approximately $10,000, plus reasonable expenses.
This Proxy Statement and the accompanying proxy are being mailed to shareholders
on or about January 6, 2000.

Outstanding shares of Class A Common Stock, par value $.01 per share
("Class A Common Stock"), or Class B Common Stock, par value $.01 per share
("Class B Common Stock," and, together with the Class A Common Stock, the
"Common Stock"), of the Company represented by properly executed proxies will be
voted as directed on the proxy. Properly executed proxies containing no voting
directions to the contrary will be voted for the proposal to amend the Company's
Restated Certificate of Incorporation (the "Existing Certificate of
Incorporation") as described below under "Proposal to Amend the Company's
Restated Certificate of Incorporation." A proxy may be revoked at any time
before it is voted at the Special Meeting by notifying the Chief Financial
Officer of the Company in writing at the address set forth above, by submitting
a properly executed proxy bearing a later date, or by revoking the proxy at the
Special Meeting. Attendance at the Special Meeting will not by itself operate to
revoke a proxy.

VOTING RIGHTS

The Board of Directors has fixed the close of business on January 3, 2000,
as the record date for the determination of shareholders entitled to notice of
the Special Meeting, and only shareholders of record on that date will be
entitled to vote at the Special Meeting. As of that date, 3,307,730 shares of
Class A Common Stock were issued and outstanding and 1,439,680 shares of Class B
Common Stock were issued and outstanding. The Company's Existing Certificate of
Incorporation provides that holders of both classes of Common Stock vote or
consent as a single class on all matters, with each share of Class B Common
Stock having one vote per share and each share of Class A Common Stock having
1/10 of a vote per share, except with respect to the election of directors and
except as required by the Delaware General Corporation Law ("DGCL"). When the
holders of Class A Common Stock or the holders of the Class B Common Stock are
each entitled to vote as a separate class, each share of that class of Common
Stock is entitled to one vote.

Under the DGCL and the Company's Bylaws, the presence in person or by proxy
of the holders of a majority of the voting power of both classes of Common Stock
entitled to vote at the Special Meeting is necessary for a quorum to transact
business at the Special Meeting. In addition, because each class of Common Stock
is also entitled to vote separately on the proposal to amend the Company's
Existing Certificate of Incorporation, the presence in person or by proxy of the
holders of 1/3 of the shares of each

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class of Common Stock is also necessary for a quorum to transact such business
at the Special Meeting. The Company intends to appoint one or more persons to
act as inspectors of elections at the Special Meeting who will be responsible
for counting the votes.

In order for the proposal to amend the Existing Certificate of
Incorporation to be adopted, it must be approved at the Special Meeting by:

- holders holding a majority of the combined voting power of the
outstanding shares of Class A Common Stock and Class B Common Stock,
voting as a single class,

- holders of a majority of the outstanding shares of Class A Common Stock,
voting as a separate class, and

- holders of a majority of outstanding shares of the Class B Common Stock,
voting as a separate class.

You may vote "FOR," "AGAINST," or "ABSTAIN" on the proposal to amend the
Existing Certificate of Incorporation. If you "ABSTAIN" from voting on the
proposal, it has the same effect as a vote "AGAINST" the proposal. If you just
sign your Proxy Card with no further instructions, your shares will be counted
as a vote "FOR" the proposal.

If your shares are held in street name, your brokerage firm will not be
able to vote your shares on the proposal unless you have granted your brokerage
firm discretionary authority over your account. Brokerage firms have authority
under certain circumstances to vote customers' unvoted shares on "routine"
matters, including election of directors. Approval of the proposal is not a
"routine" matter; therefore, unless you have provided your brokerage firm
discretionary authority over your account, your brokerage firm cannot vote your
shares. Under the requirements to approve the proposal, the non-votes of these
shares will have the same effect as votes "AGAINST" the proposal.

Under the DGCL and the Existing Certificate of Incorporation, holders of
the Class A Common Stock and Class B Common Stock have no appraisal rights in
connection with the proposal to amend the Existing Certificate of Incorporation.

The Company is not aware of any matters other than those set forth in this
Proxy Statement or referred to in the accompanying Notice of Special Meeting of
Shareholders that will be presented at the Special Meeting. However, if any
other matters should properly come before the meeting, it is intended that
proxies will be voted thereon in accordance with the best judgment of the person
or persons voting such proxies.

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PROPOSAL TO AMEND THE COMPANY'S
RESTATED CERTIFICATE OF INCORPORATION

The Board of Directors has unanimously approved the proposal to amend the
Existing Certificate of Incorporation (the "Amendment") which, if approved,
would eliminate the Company's two classes of Common Stock and reclassify the
Class A Common Stock and the Class B Common Stock into a new, single class of
common stock, $.01 par value, of the Company (the "New Common Stock"). THE BOARD
OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE AMENDMENT.

BACKGROUND OF AMENDMENT

The Company has had two classes of common stock since 1985 when its
outstanding shares of common stock became the shares of Class B Common Stock and
the Company issued shares of Class A Common Stock in connection with its
acquisition of The Lawson Company. At various times since 1995, the Board of
Directors has discussed the possibility and advisability of collapsing or
reclassifying the two classes of Common Stock into one class. No formal proposal
to reclassify the two classes of Common Stock and no specific reclassification
plan was considered by the Board of Directors until August 1999, when the Board
of Directors began to consider the reclassification again in connection with
settlement discussions relating to the derivative litigation filed against the
Company and certain of its current and former directors in 1995. For a more
complete discussion of the litigation and the terms of the settlement, see
"Effects on Derivative Litigation."

On June 24, 1999, the Board of Directors established a Special Committee
comprised solely of outside directors who were not defendants in the litigation
to assess the advisability of settlement offers (the "Special Committee"). The
members of the Special Committee are Albert T. Adams, J. Kermit Birchfield, Jr.
and William A. Foley. On September 28, 1999, the Special Committee retained
Allen & Company Incorporated ("Allen") to advise it with respect to the
advisability of eliminating the two classes of Common Stock and, if necessary,
regarding the fairness of the reclassification to the holders of the Class A
Common Stock and the holders of the Class B Common Stock from a financial point
of view.

On October 6, 1999, the Special Committee met to consider the terms of a
proposed settlement and whether the reclassification of the two classes of
Common Stock into the New Common Stock was advisable. At the meeting of the
Special Committee, Allen made a presentation and identified reasons for and
against proceeding with a reclassification of the two classes of Common Stock
into the New Common Stock. Following the Special Committee meeting, the Board of
Directors met to consider the same matters and Allen provided its presentation
again to the Board of Directors. Based on the presentations and advice of Allen,
the Special Committee and the Board of Directors concluded that a
reclassification of the Common Stock would be in the best interests of the
holders of the Class A Common Stock and the holders of the Class B Common Stock.

In the context of determining a premium, Allen advised the Special
Committee and the Board of Directors that, although a premium for the holders of
the Class B Common Stock would be appropriate, it should not reflect the full
premium that a controlling shareholder may be able to obtain upon the sale of
its controlling interest in the Company, since the holders of the Class B Common
Stock are not selling their interest in the Company and no change of control is
occurring in connection with the reclassification. Based on these factors and
the advice of Allen, the Special Committee and the Board of Directors determined
that, subject to receiving a fairness opinion from Allen, it would be in the
best interest of the shareholders as a whole if each issued share of Class A
Common Stock was reclassified into one share of

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New Common Stock and each issued share of Class B Common Stock was reclassified
into 1.1 shares of New Common Stock. Allen provided its oral opinion at the
Board of Directors' meeting that the Exchange Ratios were fair to both classes
of shareholders from a financial point of view.

On November 23, 1999, Allen delivered its written opinion dated October 6,
1999 to the Special Committee. On December 16, 1999, the Board of Directors,
upon the recommendation of the Special Committee and Allen, formally approved
the Amendment that could effect the reclassification.

PRIMARY EFFECTS AND CONSEQUENCES OF THE AMENDMENT ON THE COMPANY'S
CAPITALIZATION

If the Amendment is approved, it will have the following effects, among
others, on the Company's capitalization and holders of both classes of Common
Stock:

- EFFECTS ON NUMBER OF ISSUED SHARES OF COMMON STOCK. Each issued share of
Class A Common Stock, including each treasury share, will be reclassified
into one share of New Common Stock (the "A Exchange Ratio"). Each issued
share of Class B Common Stock, including each treasury share, will be
reclassified into 1.1 shares of New Common Stock, rounded to the nearest
whole share (the "B Exchange Ratio" and, together with the A Exchange
Ratio, the "Exchange Ratios"). As of October 31, 1999, 4,726,785 shares
of Common Stock were outstanding, with holders of the Class A Common
Stock owning 3,278,586, or 69.4%, of all the shares of both classes of
Common Stock and holders of the Class B Common Stock owning 1,448,199, or
30.6%, of all the shares of both classes of Common Stock. After giving
effect to the Amendment, as of October 31, 1999, there would be 4,871,605
shares of New Common Stock outstanding, with holders of the Class A
Common Stock owning 3,278,586, or 67.3%, of all the shares of New Common
Stock and holders of the Class B Common Stock owning 1,593,019, or 32.7%,
of all the shares of the New Common Stock outstanding.

- EFFECTS ON THE VOTING RIGHTS OF OUTSTANDING SHARES OF COMMON STOCK. As of
October 31, 1999, (a) holders of the Class A Common Stock were entitled
to cast 327,859 votes, or 18.5% of all the votes entitled to be cast, on
all matters voted on as single class with holders of shares of the Class
B Common Stock and were entitled to elect 25% of the directors, voting as
a separate class from the holders of the Class B Common Stock and (b)
holders of the Class B Common Stock were entitled to cast 1,448,199
votes, or 81.5% of all the votes entitled to be cast, on all matters
voted on as a single class with holders of shares of Class A Common Stock
and were entitled to elect 75% of the directors, voting as a separate
class from the holders of the Class A Common Stock. After giving effect
to the Amendment, as of October 31, 1999, the holders of the New Common
Stock would be entitled to cast 4,871,605 votes on all matters as a
single class, including the election of all of the directors, with
holders of the Class A Common Stock entitled to cast 3,278,586 votes, or
67.3% of all the votes entitled to be cast, of the New Common Stock and
with the holders of Class B Common Stock entitled to cast 1,593,019
votes, or 32.7% of all the votes entitled to be cast, of the New Common
Stock. BASED ON THE AMENDMENT, AS OF OCTOBER 31, 1999, THE VOTING POWER
OF THE HOLDERS OF THE B COMMON STOCK WOULD BE DECREASED FROM 81.5% TO
32.7%.

- EFFECTS ON OPTIONS. The Board of Directors will cause (a) each option to
purchase shares of Class A Common Stock to become an option to purchase
the same number of shares of New Common Stock at the same exercise price
and (b) each option to purchase shares of Class B Common Stock to become
an option to purchase 1.1 shares of New Common Stock for each share

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of Class B Common Stock purchasable under such option at an exercise
price to equal the original exercise price divided by the B Exchange
Ratio (or 1.1). As of October 31, 1999, there were 864,875 options to
purchase shares of Class A Common Stock outstanding at a weighted average
exercise price of $3.78 and 162,500 options to purchase shares of Class B
Common Stock outstanding at a weighted average exercise price of $4.25.
After giving effect to the Amendment, as of October 31, 1999, there would
be 1,043,625 options to purchase shares of New Common Stock at a weighted
average exercise price of $3.79.

- EFFECTS ON WARRANTS. Warrants to purchase, in the aggregate, 1,715,000
shares of Class A Common Stock at an exercise price of $5.45 (the
"Warrants") will become Warrants to purchase 1,810,932 shares of New
Common Stock at an exercise price of $5.16, as a result of anti-dilution
terms provided for in the Warrants.

- EFFECTS ON RIGHTS AGREEMENT. The Board of Directors will amend the Rights
Agreement, dated January 19, 1996, between the Company and Fleet Bank,
successor to The First National Bank of Boston (the "Rights Agreement")
so that holders of shares of Common Stock that currently hold one right
to purchase 1/100(th) of a share of Series A Junior Preferred Stock, par
value $.01 per share (the "Series A Preferred Stock") at $30 per
1/100(th) of a share of Series A Preferred Stock for each share of Common
Stock they hold, will hold one right to purchase 1/100(th) of a share of
Series A Preferred Stock at $30 per 1/100(th) of a share of Series A
Preferred Stock for each share of New Common Stock they will hold.

EFFECTS ON DERIVATIVE LITIGATION

If the Amendment is approved, it will satisfy a condition to the settlement
of a derivative action that was filed against the Company and certain of its
current and former directors in 1995. The derivative litigation is the
consolidation of two actions filed in The Delaware Court of Chancery, New Castle
County captioned Kahn v. Nirenberg, (C.A. No. 14893), and Uni-Marts, Inc. v.
Stein, (C.A. No. 14713), that were later consolidated into the now pending
action captioned In re Dairy Mart Convenience Stores, Inc., Derivative
Litigation.

In their complaints, the plaintiffs alleged, among other things that, in
connection with the settlement of a dispute between Charles Nirenberg, a former
director, officer and shareholder of the Company, and the Company's management
with respect to control of the Company, the directors violated their fiduciary
duty to the Company and its shareholders, violated provisions of Delaware
corporate law and wasted corporate assets. The plaintiffs sought, among other
things, a declaration that none of the shares of Class B Common Stock held by DM
Associates Limited Partnership ("DM Associates") could be voted or counted for
quorum purposes in any vote of the shareholders of the Company. DM Associates
owns approximately 44% of the outstanding shares of Class B Common Stock and
except for certain veto rights of HNB Investment Corp. ("HNB"), a limited
partner of DM Associates, is controlled by its general partner, DM Management
Associates I ("DM I"). Robert B. Stein, Jr., the Chairman of the Board and Chief
Executive Officer, and Gregory G. Landry, a director and Chief Financial
Officer, each own 50% of the interests of DM I. See "Beneficial Ownership, Note
1."

On August 9, 1996, the Court granted in part and denied in part the
defendants' motions to dismiss. The Court held that the plaintiffs failed to
state (a) a claim for waste, (b) a claim that the defendants did not make
adequate disclosure in connection with the transaction, and (c) any claim under
the DGCL. The Court, however, did not dismiss certain claims for breaches of
fiduciary duty.

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On May 24, 1999, the court denied cross-motions for summary judgment filed
by both plaintiffs and the director-defendants. In doing so, the court stated
that the director-defendants would have the burden at trial of proving the
entire fairness of the transaction with Mr. Nirenberg.

On July 27, 1999, a three-day bench trial commenced with respect to the
breach of fiduciary duty claims. After the trial, during the pendency of
post-trial briefing, the plaintiffs approached the defendants with a proposal to
resolve the litigation on terms the defendant-directors believed would be
advantageous to the Company. In mid-September 1999, a Memorandum of
Understanding was proposed that outlined the terms of a settlement between the
plaintiffs and the defendants, which, among other things, required that the
Company reclassify its Common Stock into a new, single class of common stock as
an alternative to the plaintiffs' effort to eliminate certain voting rights held
by DM Associates. On November 8, 1999, the parties to the litigation executed a
formal Stipulation of Settlement that included as a condition of the settlement
that the reclassification be approved (the "Settlement Agreement"). Other
material terms and conditions of the Settlement Agreement include the following.

- The lawsuit will be dismissed.

- The Company's insurance carrier will make a payment of $2,000,000 on
behalf of the director-defendants to the Company, some or all of which is
expected to be used by the Company to cover the fees and expenses,
including attorneys' fees that were awarded to plaintiffs by the court.

- The Company must hold its 2000 annual meeting of its shareholders on or
before May 31, 2000.

- Mr. Stein and Mr. Landry have agreed that, upon any event that would
result in the disposition of their interests in DM I, including a
liquidation of DM Associates, they will pay to the Company any proceeds
generated upon such disposition, except each of them may retain 17.9% of
the proceeds for himself.

- All the defendant directors must vote any shares over which they have
voting control "FOR" the Amendment. See "Interests in Certain Persons."

On November 17, 1999, the Company's shareholders were sent the terms of the
Settlement Agreement and were notified that the terms of the Settlement
Agreement were scheduled for a court hearing and approval on December 13, 1999.
On December 13, 1999, the court approved the terms of the Settlement Agreement.

REASONS FOR, ADVANTAGES OF AND POSSIBLE DISADVANTAGES OF THE AMENDMENT

In determining whether to recommend and adopt the Amendment, the Special
Committee and the Board of Directors, respectively, considered a number of
factors, including the following:

- The capital structure of the Company would be simplified and potential
investor confusion and additional administrative expenses caused by the
dual class structure would be eliminated.

- Any negative impact on the market price of the Common Stock that results
from having a dual class structure would be eliminated.

- Liquidity, trading efficiencies and the investor base would potentially
increase.

- Any takeover premium would likely to be paid to all shareholders on a pro
rata basis, rather than disproportionately to any controlling
shareholders.

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- Voting rights of holders of Class A Common Stock and Class B Common Stock
would be better aligned with their economic risk of ownership.

- Flexibility to structure acquisitions and equity financings would likely
increase.

- Adopting the Amendment would eliminate the ongoing burden, expense and
distraction caused by the litigation.

- The American Stock Exchange favors one-vote, one-share common stock
capitalization.

- The reclassification is not expected to cause the shareholders to receive
taxable income at the time of the reclassification.

The Special Committee and Board of Directors also considered the following
factors relating to the Exchange Ratio in connection with the recommendation and
adoption of the Amendment:

- The opinion of Allen that, based on the matters described in such opinion
and as of the date of the opinion, the Exchange Ratios are fair to all
the shareholders from a financial point of view.

- The historical trading price of the Class A Common Stock compared to the
historical trading price of the Class B Common Stock in relation to the
Exchange Ratios used to reclassify the Class A Common Stock and the Class
B Common Stock into New Common Stock.

- The expectations of HNB, whose consent was required in order for DM
Associates to vote "FOR" the proposal to amend the Existing Certificate
of Incorporation, and the need to balance that expectation with the
interests of the holders of the Class A Common Stock who are entitled to
share pro rata in the assets of the Company with the holders of the Class
B Common Stock.

- Since the holders of the Class B Common Stock are not selling their
shares of Class B Common Stock, the B Exchange Ratio is not intended to
provide the holders of the Class B Shares the equivalent premium they may
have been able to receive upon a sale of their shares that could have
resulted in a change of control of the Company.

- The price trading differentials between two classes of stock of other
similarly situated companies in relation to the Exchange Ratios.

The Board of Directors and Special Committee also considered the following
factors, which the Board of Directors and Special Committee recognized as not
being advantageous to adopting the Amendment:

- The holders of shares of Class A Common Stock will experience book
dilution of $0.09 per share as of October 30, 1999, resulting from the
book value of a share decreasing from $1.48 per share to $1.39 per share.

- The Company may be more vulnerable to hostile takeovers and changes of
control through proxy solicitations, which could result in a sale of the
Company without the Board of Directors being able to obtain an
appropriate change-of-control premium.

- The ability of holders of the Class B Common Stock to receive a control
premium represented by their current ownership of Class B Common Stock
has been substantially reduced.

- The determination of the Exchange Ratios was based on a number of
assumptions that were difficult to quantify, which results in uncertainty
with respect to whether the B Exchange Ratio is an

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accurate reflection of the value of the voting rights that are being
surrendered by the holders of the Class B Common Stock.

- The Amendment may prohibit the Company from acquiring any other company
or from being acquired by another company for two years in a transaction
that qualifies for the "pooling-of-interest" method of accounting.

The foregoing discussion of information and factors considered by the Board
of Directors and the Special Committee is not intended to be exhaustive but
includes all material factors considered by the Board of Directors and the
Special Committee in making their decision. In view of the wide variety of
factors considered by the Board of Directors and the Special Committee in
connection with their evaluations of the Exchange Ratios and the complexity of
those matters, the Board of Directors and the Special Committee did not consider
it practicable to, nor did they attempt to, quantify, rank or otherwise assign
relative weights to the specific factors they considered in reaching their
decision to approve the Amendment, including the establishment of the Exchange
Ratios. In considering the factors described above, individual members of the
Board of Directors and the Special Committee may have given different weight to
different factors. The Board of Directors and the Special Committee relied on
the experience and expertise of their financial advisors for quantitative
analysis of the Exchange Ratios. See "Financial Advisor's Opinion."

FINANCIAL ADVISOR'S OPINION

The Special Committee retained Allen in September 1999 to act as its
financial advisor and to render an opinion as to the fairness of a possible
reclassification, from a financial point of view, to the holders of Class A
Common Stock and Class B Common Stock. On October 6, 1999, representatives of
Allen formally presented to the Special Committee and the Board of Directors its
findings on the change to a new, single class of common stock. When determining
whether to propose the Amendment, the Special Committee considered the analyses
performed by Allen which are described below. Based upon Allen's analyses, the
Special Committee set the Exchange Ratios. On October 6, 1999, Allen also orally
advised the Special Committee that the Exchange Ratios were fair, from a
financial point of view, to the holders of each of the Class A Common Stock and
the Class B Common Stock. Allen has now delivered its written opinion, dated
October 6, 1999, the full text of which is set forth in Annex B and sets forth
certain assumptions made, certain procedures followed and certain matters
considered by Allen. The Company's shareholders are urged to read the opinion
carefully and in its entirety.

Allen's opinion is directed only to the fairness, from a financial point of
view, of the Amendment and Exchange Ratios to the holders of Class A Common
Stock and Class B Common Stock and does not constitute a recommendation of the
Amendment over other courses of action that may be available to the Company or
constitute a recommendation to any of the Company's shareholders on how to vote
with respect to the Amendment. In connection with its engagement, however, Allen
has advised the Special Committee that a reclassification of the two classes of
common stock into a single class of common stock is advisable. The summary of
the opinion of Allen set forth in this Proxy Statement is qualified in its
entirety by reference to the full text of such opinion.

In arriving at its opinion, Allen:

- reviewed and analyzed the Company's Forms 10-K for the fiscal years ended
1998 and 1999, the Company's Form 10-Q for the period ended July 31,
1999, the Company's Schedule 14A filed in

8
<PAGE> 13

connection with its Annual Meeting held on June 10, 1999 and the
Company's Restated Certificate of Incorporation filed as an exhibit to
the Company's 1998 Form 10-K;

- reviewed and analyzed the public market prices and trading activity of
the Class A Common Stock and Class B Common Stock;

- reviewed and analyzed the public market prices and trading activity of
the common stock of selected companies with two classes of publicly
traded common stock;

- reviewed and analyzed the terms of transactions in which two classes of
common stock of public companies were converted into a single class of
common stock;

- reviewed and analyzed the terms of transactions in which public companies
with two classes of common stock were acquired;

- analyzed the potential accretion or dilution to the earnings per share
due to a reclassification transaction;

- reviewed and analyzed premiums paid in relevant transactions in which the
purchaser acquired a controlling share of a target company; and

- conducted other financial analyses and investigations as Allen deemed
necessary or appropriate for the purposes of the opinion expressed
therein.

Allen's opinion was necessarily based upon market, economic and other
conditions as they existed on, and could be evaluated as of, the date of its
opinion. Allen's opinion does not imply any conclusion as to the likely trading
range of the New Common Stock following the approval of the Amendment. This may
vary depending on, among other factors, changes in interest rates, dividend
rates, market conditions, general economic conditions and other factors that
generally influence the price of securities.

The following is the summary of the analyses Allen made while preparing its
fairness opinion.

ANALYSIS OF THE HISTORICAL TRADING ACTIVITY OF THE COMPANY'S COMMON STOCK.
Allen analyzed the historical trading activity of the Class A Common Stock and
Class B Common Stock. This included an examination of the average percentage by
which the price per share of the Company's higher voting stock exceeded the
price per share of the Company's lower voting stock (such percentage is referred
to herein as the "Trading Premium;" a negative Trading Premium is sometimes
referred to herein as the "Trading Discount") exhibited by the Company's stock
based on daily closing prices over the five-year period from September 22, 1994
to September 16, 1999. The average Trading Discount for the past year was 1.8%;
the average Trading Premium for the past three years was 0.3%; and the average
Trading Premium for the past five years was 1.1%.

ANALYSIS OF DUAL CLASS PUBLICLY TRADED COMPANIES. Allen identified and
analyzed approximately 400 companies which, as of the time of the analysis,
demonstrated two classes of publicly traded common stock with different voting
rights ("Public Company Analysis"). Based upon a search of companies listed on
the New York Stock Exchange, the American Stock Exchange and the Nasdaq National
Market an initial group of approximately 70 companies was identified (the
"Comparable Companies"). For each of the Comparable Companies in the Public
Company Analysis, Allen determined the Trading Premium or Trading Discount. The
Trading Premiums for the Comparable Companies for the past one year had an
average high of 27%, an average low of (-10%) and a total average Trading
Premium of 4%. The Trading Premiums for the Comparable Companies for the past
three years had an average high of 36%, an average

9
<PAGE> 14

low of (-13%) and a total average Trading Premium of 4%. The Trading Premiums
for the Comparable Companies for the past five years had an average high of 39%,
an average low of (-13%) and a total average Trading Premium of 5%. For most of
the Comparable Companies, the trading volume of the higher voting stock was
lower than the trading volume of the lower voting stock; the trading volume for
the higher voting shares of Comparable Companies ranged from very few shares to
over two times the volume of the lower voting stock.

For the five-year period ended September 16, 1999, the average daily
trading volume of the Company's Class A Common Stock was approximately 7,950
shares, and the average daily trading volume of the Company's Class B Common
Stock was approximately 1,880 shares.

ANALYSIS OF HISTORICAL RECLASSIFICATION TRANSACTIONS. Allen identified and
analyzed 22 reclassification transactions occurring among publicly traded
companies over the years 1989 to 1999 (the "Reclassification Transaction
Analysis"). In each reclassification transaction, two classes of stock of a
single company with differential voting rights were reclassified as a single
class of common stock. For each of the companies identified for the
Reclassification Transaction Analysis, Allen examined the number of new shares
received in the reclassification for each share of the higher voting stock and
the number of new shares received in the reclassification for each share of the
lower voting stock (the ratio of new shares received per share of higher voting
stock to the shares received per lower voting stock is referred to herein as the
"Conversion Ratio"). Of the transactions examined in the Reclassification
Transaction Analysis, 10 had a Conversion Ratio of 1:1 and no premium was paid
to the higher voting stock. In the 12 other cases, a premium (e.g., additional
stock, dividend payment, etc.) was granted to the higher voting class of common
stock: in six transactions, the premiums ranged from 1% to 3%; in four
transactions, the premiums ranged from 5% to 10%, and in the final two
transactions, the premiums were 12% and 15%, respectively.

ANALYSIS OF HISTORICAL ACQUISITIONS OF DUAL CLASS PUBLIC COMPANIES. Allen
identified and analyzed 28 out of a larger population of acquisition
transactions occurring between 1994 and 1999 or currently pending of companies
with two classes of common stock with different voting rights ("Acquisition
Transaction Analysis"). For each of the transactions in the Acquisition
Transaction Analysis, the consideration paid to the holders of each class of
stock was examined to determine the percentage by which the price per share paid
to holders of higher voting shares exceeded the price per share paid to holders
of lower voting shares (the "Transaction Premium"). Of the transactions
examined, six demonstrated a Transaction Premium. In three transactions, the
Transaction Premium ranged from 0.5% to 4%; in one transaction, the Transaction
Premium was approximately 5%; and in two transactions, the Transaction Premiums
were 9% and 10%, respectively.

POTENTIAL EARNINGS DILUTION ANALYSIS. Allen performed an analysis of
potential dilution to earnings per share of the Class A Common Stock and Class B
Common Stock if the reclassification and conversion of shares were to occur at
the Exchange Ratios. Since the Exchange Ratios are greater than 1:1 for the
Class B Common Stock, the Amendment will be dilutive to the holders of Class A
Common Stock.

ANALYSIS OF PREMIUMS PAID FOR SIGNIFICANT OWNERSHIP PURCHASES. Allen
reviewed over 500 transactions from 1997 to the present in which the target
company had a maximum equity value of $100 million. Allen analyzed the premiums
paid in these transactions for significant positions of equity ranging from 10%
to 60%. The corresponding premiums ranged from less than 5% to as much as 35%.

The preparation of a fairness opinion is not susceptible to partial
analysis or summary description. Allen believes that its analyses and the
summary set forth above must be considered as a whole and that
10
<PAGE> 15

selecting portions of its analyses and the factors considered by it, without
considering all analyses and factors, could create an incomplete view of the
processes underlying the analysis set forth in its opinion. Allen has not
indicated that any of the analyses which it performed had a greater significance
than any other.

In determining the appropriate analyses to conduct and when performing
those analyses, Allen made numerous assumptions with respect to industry
performance, general business, financial, market and economic conditions and
other matters, many of which are beyond the control of the Company. The analyses
which Allen performed are not necessarily indicative of actual values or actual
future results, which may be significantly more or less favorable than suggested
by the analyses. The analyses were prepared solely as part of Allen's analysis
of the fairness, from a financial point of view, of the Amendment to the holders
of the Class A Common Stock and the Class B Common Stock. The analyses are not
appraisals and do not reflect the prices at which any securities may trade at
the present time or at any time in the future.

Allen is a nationally recognized investment banking firm that is regularly
engaged in the valuation of businesses and their securities in connection with
recapitalizations, mergers and acquisitions, negotiated underwriting,
competitive bids, secondary distributions of listed and unlisted securities,
private placements and valuations for estate, corporate and other purposes. The
Special Committee retained Allen based on such qualifications. In connection
with its engagement, Allen was not retained to identify, analyze or otherwise
pursue any possible transactions other than the Amendment, and Allen has not
identified, analyzed or pursued any transactions other than the Amendment.

The Special Committee entered into an engagement letter agreement with
Allen as of September 28, 1999, in which Allen agreed to act as the Special
Committee's financial advisor in connection with a possible reclassification and
to render an opinion as to the fairness from a financial point of view of the
Amendment to the holders of Class A Common Stock and the Class B Common Stock.
Under the engagement letter, the Special Committee, on behalf of the Company,
agreed that the Company will pay a fee of $300,000 to Allen. In addition, under
the engagement letter, the Special Committee agreed that the Company will
reimburse Allen for its travel and out-of-pocket expenses reasonably and
actually incurred in connection with the performance of Allen's services under
the engagement letter, including the reasonable fees and disbursements of its
legal counsel, which legal fees and disbursements will not exceed $15,000
without the Special Committee's consent and to indemnify Allen against certain
liabilities and expenses in connection with its engagement.

INTERESTS IN CERTAIN PERSONS

Mr. Stein, Mr. Landry, Mr. Barrett and Mr. Everets, each a current
director, are defendants in the derivative litigation. If the Amendment is
approved and the Settlement is consummated, then the defendant-directors will be
released from all claims against them and the Company's insurance carrier will
make a payment of $2,000,000 on behalf of all the defendants in the action. As
of October 31, 1999, the defendant-directors beneficially owned 686,868 shares
and had voting control over 649,993 shares, or 44.9%, of the Class B Common
Stock, beneficially owned 392,491 shares and had voting control over 38,741
shares, or 1.2%, of the Class A Common Stock and had voting control over 36.8%
of the total voting power of both classes of Common Stock. The
defendant-directors also hold options to purchase or have the right to receive
110,625 shares of Class B Common Stock at an average exercise price of $4.25
that are not deemed to be beneficially owned because they are subject to
forfeiture. As part of the

11
<PAGE> 16

Settlement, the defendant-directors have agreed to vote "FOR" the Amendment. The
defendant-directors may have different interests from you in voting on the
Amendment.

As of October 31, 1999, the remaining directors, some of whom serve on the
Special Committee, beneficially owned 5,750 shares and had voting control over
2,000 shares, or .1%, of the Class B Common Stock, beneficially owned 791,000
shares and had voting control over 12,000 shares, or .4%, of the Class A Common
Stock and had voting control over .2% of the total voting power of both classes
of Common Stock. The remaining directors are not required to vote "FOR" the
Amendment, but have indicated that it is their intention to do so. The remaining
directors may have different interests from you in voting on the Amendment.

COMPARISON OF CAPITAL STOCK BEFORE AND AFTER AMENDMENT

The existing rights, powers and limitations of Class A Common Stock and
Class B Common Stock are set forth in Article Fourth of the Existing Certificate
of Incorporation. The rights, powers and limitations of the New Common Stock
that will be issued pursuant to the Amendment will be set forth in the amended
and restated Article Fourth of the Existing Certificate of Incorporation. The
following summary should be read in conjunction with, and is qualified in its
entirety by reference to, the form of Amendment to the Existing Certificate of
Incorporation set forth in Annex A hereto:

COMPARISON OF CLASS A COMMON STOCK, CLASS B COMMON STOCK AND NEW COMMON STOCK

<TABLE>
<CAPTION>
RIGHT, POWER CLASS A CLASS B NEW
OR LIMITATION COMMON STOCK COMMON STOCK COMMON STOCK
------------- ------------ ------------ ------------
<S> <C> <C> <C>
Election of - Holders entitled to - Holders entitled to - Holders entitled to
Directors: elect 25% of the elect the remaining elect all the
directors (rounded to directors not elected directors.
the nearest whole by holders of Class A
number). Common Stock.
Removal of Directors - Holders entitled to - Holders entitled to - Holders entitled to
(to the extent remove only directors vote to remove only remove all directors.
permitted under elected by holders of directors elected by
By-laws): Class A Common Stock. holders of Class B
Common Stock.
Class Voting: - Holders vote together - Holders vote together - Holders vote as a
as a single class with as a single class with single class on all
holders of Class B holders of Class A matters.
Common Stock except for Common Stock except for
election of directors election of directors
and as provided under and as provided under
Delaware law. Delaware law.
</TABLE>

12
<PAGE> 17

<TABLE>
<CAPTION>
RIGHT, POWER CLASS A CLASS B NEW
OR LIMITATION COMMON STOCK COMMON STOCK COMMON STOCK
------------- ------------ ------------ ------------
<S> <C> <C> <C>
Number of Votes Per - 1/10(th) of a vote per - One vote per share. - One vote per share.
Share: share when voting with
holders of Class B
Common Stock and one
vote per share when
voting as a separate
class.
Dividends and Stock - Dividends payable or - Dividends payable or - Except as prohibited
Splits and stock divisions or stock divisions or under Delaware law, no
Combinations: combinations with combinations with prohibition on the
respect to shares of respect to shares of payment of dividends or
Class A Common Stock Class B Common Stock stock divisions or
must be made pro rata must be made pro rata combinations.
with shares of Class B with shares of Class A
Common Stock. Common Stock.
Liquidation: - Participate pro rata - Participate pro rata - Participate with other
with the holders of with the holders of holders of New Common
Class B Common Stock. Class A Common Stock. Stock.
</TABLE>

IMPACT OF AMENDMENT ON LISTING AND THE AMERICAN STOCK EXCHANGE, THE OPERATIONS
AND CAPITALIZATION

The shares of Class A Common Stock and Class B Common Stock are both quoted
on the American Stock Exchange. After filing the Amendment with the State of
Delaware, the shares of New Common Stock will be quoted on the American Stock
Exchange.

The Company expects that the Amendment will have no impact on operations of
the Company. In addition, the Amendment involves no increase in the total number
of shares of Common Stock authorized in the Existing Certificate of
Incorporation. The Company currently has no plans to effect a secondary offering
of shares of New Common Stock following adoption of the Amendment. However, the
Amendment to the Existing Certificate of Incorporation will provide for
sufficient authorized shares of New Common Stock such that the Board of
Directors could effect such a secondary offering without seeking additional
shareholder approval for such action.

In addition to the effects on the outstanding shares of Common Stock
described elsewhere in this Proxy Statement, the following action with respect
to the Warrants, the option plans and related option agreements, and the Rights
Agreement have been or will be taken:

- The Company will notify the holders of the Warrants that their Warrants
to purchase, in the aggregate, 1,715,000 shares of Class A Common Stock
at an exercise price per share of $5.45 have become Warrants to purchase,
in the aggregate, 1,810,932 shares of New Common Stock at an exercise
price of $5.16.

13
<PAGE> 18

- The Board of Directors will cause each option to purchase shares of Class
A Common Stock to become an option to purchase the same number of shares
of New Common Stock at the same exercise price.

- The Board of Directors will cause each option to purchase shares of Class
B Common Stock to become an option to purchase 1.1 shares of New Common
Stock for each share of Class B Common Stock purchasable upon exercise of
the option at an exercise price equal to the existing exercise price per
share divided by 1.1.

- The Board of Directors will amend the Rights Agreement so that holders of
shares of Common Stock that currently hold one right to purchase
1/100(th) of a share of Series A Preferred Stock at $30 per 1/100(th) of
a share of Series A Preferred Stock for each share of Common Stock they
hold, will hold one right to purchase 1/100(th) of a share of Series A
Preferred Stock at $30 per 1/100(th) of a share of Series A Preferred
Stock for each share of New Common Stock they will hold.

- The Board of Directors will cause such other technical amendments to the
Rights Agreement and option plans to be made to eliminate references to
the Class A Common Stock and the Class B Common Stock and substitute
therefor appropriate references to the New Common Stock, together with
any other amendments to any of the foregoing that the Board of Directors
considers are appropriate in connection with adopting the Amendment. In
addition, the Board of Directors will cause the Rights Agreement to be
amended to delete certain provisions that Delaware courts may deem
unenforceable based on decisions by the Delaware courts that were decided
after the initial adoption of the Rights Agreement.

BENEFICIAL OWNERSHIP

The following table sets forth, as of October 31, 1999, certain information
concerning beneficial ownership of the Company's Common Stock with respect to
(a) each shareholder known by the Company to be the beneficial owner of 5% or
more of either class of Common Stock, (b) all the members of the Board of
Directors, (c) each person who was a "Named Executive Officer" in the Company's
1999 Annual Proxy Statement who is presently still with the Company, and (d) all
the directors and executive officers as a group. The number of shares of Common
Stock or New Common Stock beneficially owned includes shares that such persons
have the right to acquire immediately or will have the right to acquire within
60 days of October 31, 1999, including upon the exercise of Warrants and stock
options. The "Percentage of Class" is calculated by dividing the number of
shares of the respective class that are beneficially owned by the reporting
person by the number of shares of the respective class that are outstanding plus
the number

14
<PAGE> 19

of shares of the respective class that are beneficially owned by the reporting
person that are not outstanding.

New DM Management Associates I
300 Executive Parkway West
Hudson, Ohio..................... 638,743(1) 44.1% 702,617 14.4%

Wilen Management Company, Inc.
2360 West Joppa Road
Suite 226
Lutherville, Maryland............ 143,075(2) 9.9% 242,323(2) 7.4% 399,706 8.2%

Frank Colaccino
360 Bloomfield Avenue
Suite 208
Windsor, Connecticut............. 78,682(3) 5.4% 86,550 1.8%

Triumph-Connecticut Limited
Partnership
28 State Street, 37th Floor
Boston, Massachusetts............ 765,000(4) 18.9% 807,792 14.2%

The IDS Mutual Fund Group IDS
Tower
Minneapolis, Minnesota........... 372,999(5) 10.2% 393,864 7.5%

American International Group,
Inc.
70 Pine Street
New York, New York............... 360,001(6) 9.9% 380,138 7.2%

William L. Musser, Jr. and New
Frontier Capital, L.P.
919 Third Avenue
New York, New York............... 314,900(7) 9.6% 314,900 6.5%

Robert B. Stein, Jr. -- Class B
Director, Chairman, Chief
Executive Officer and President
300 Executive Parkway West
Hudson, Ohio..................... 660,618(8)(9) 44.9% 229,866(8)(9) 6.6% 956,546 18.8%

Gregory G. Landry -- Class B
Director and Executive Vice
President
300 Executive Parkway West
Hudson, Ohio..................... 651,243(8)(10) 44.6% 138,375(8)(10) 4.1% 854,742 17.0%

Frank W. Barrett -- Class B
Director......................... 2,500(11) * 13,375(11) * 16,125 *

J. Kermit Birchfield,
Jr. -- Class B Director.......... 3,250(12) * 12,375(12) * 15,950 *

John W. Everets -- Class B
Director......................... 11,250(13) * 10,875(13) * 23,250 *

William A. Foley -- Class B
Director......................... * * *
</TABLE>

15
<PAGE> 20

<TABLE>
<CAPTION>
GIVING EFFECT TO
AMOUNT OF BENEFICIAL OWNERSHIP AS OF OCTOBER 31, 1999 THE AMENDMENT
-------------------------------------------------------- -----------------------
PERCENTAGE
CLASS B PERCENTAGE CLASS A PERCENTAGE NEW OF NEW
NAME OF BENEFICIAL COMMON OF COMMON OF COMMON COMMON
OWNER STOCK CLASS STOCK CLASS STOCK STOCK
------------------ ------- ---------- ------- ---------- ------ ----------
<S> <C> <C> <C> <C> <C> <C>
Thomas W. Janes -- Class A
Director......................... 1,250(14)(15) 772,375(14)(15) 19.1% 816,542 14.4%
Albert T. Adams -- Class A
Director......................... 1,250(16) * 6,250(16) * 7,625 *
Susan Adams -- Vice President
Finance and Treasurer............ 10,000(17) * 10,000 *
Alice Guiney -- Vice President
Human Resources.................. 11,522(18) * 11,522 *
All directors and executive
officers as a group (14
persons)......................... 692,618(19) 46.5% 1,278,752(19) 28.4% 2,083,424 33.7%
</TABLE>

- ---------------

Notes to Table

(*) Owns less than 1% of the issued and outstanding class of Common Stock and
the total voting power.

(1) DM Associates is the owner of record of 638,743 shares of Class B Common
Stock of the Company, representing approximately 44.1% of the issued and
outstanding shares of Class B Common Stock, and 36.0% of the total voting
power of both classes of the Common Stock. The general partner of DM
Associates is DM I, which is a general partnership. The general partners of
DM I are Mr. Stein and Mr. Landry, each of whom owns 50% of the partnership
interest of DM I.

As the sole general partner of DM Associates, DM I has the power to vote
and dispose of the 638,743 shares of Class B Common Stock owned by DM
Associates, subject to the required consent of HNB with respect to certain
matters, including the matter being voted on in this proposal. The
partnership agreement of DM I provides that a majority of the partnership
interests of DM I is required to vote the shares of Class B Common Stock
owned by DM Associates.

As the managing general partner of DM I, Mr. Stein has sole dispositive
power with respect to the 638,743 shares owned by DM Associates, subject to
the limitation described above. As general partners of DM I, Mr. Stein and
Mr. Landry share voting power with respect to the 638,743 shares of Class B
Common Stock owned by DM Associates.

(2) Two Schedules 13G were filed with the SEC by Wilen Management Company, Inc.
("Wilen") and James Wilen, in his capacity as President and sole owner of
Wilen, to report Wilen's beneficial ownership, as an investment advisor to
various clients, of shares of Class A Common Stock and Class B Common
Stock. The total of 385,398 shares of Class A Common Stock and Class B
Common Stock represents approximately 8.2% of the total number of issued
and outstanding shares of both classes of the Company's Common Stock, and
approximately 9.4% of the total voting power of both classes of the
Company's Common Stock.

(3) Frank Colaccino reported on a Schedule 13G filed with the SEC his
beneficial ownership, as a private investor, of shares of Class B Common
Stock. The 78,682 shares represent approximately 1.7% of the total number
of issued and outstanding shares of both classes of the Company's Common
Stock and approximately 4.4% of the total voting power of both classes of
the Company's Common Stock.

(4) Triumph-Connecticut Limited Partnership ("Triumph"), Triumph's general
partner, Triumph-Connecticut Capital Advisors, Limited Partnership
("TCCALP"), and TCCALP's general partners, Triumph-Capital Group, Inc.,
Fredrick W. McCarthy, Fredrick S. Moseley, IV, E. Mark Noonan,

16
<PAGE> 21

Thomas W. Janes, John M. Chapman and Richard J. Williams, reported on a
Schedule 13D filed with the SEC their shared beneficial ownership of
currently exercisable Warrants to purchase an aggregate of 765,000 shares
of Class A Common Stock. If the 765,000 shares underlying the Warrants were
issued, they would represent approximately 13.9% of the total number of
issued and outstanding shares of both classes of the Company's Common
Stock, and approximately 4.1% of the total voting power of both classes of
the Company's Common Stock. After giving effect to the Amendment, the
number of shares of Class A Common Stock purchasable upon the exercise of
the Warrants would increase due to anti-dilution provisions contained in
the Warrants.

(5) The IDS Mutual Fund Group, through nominees, holds currently exercisable
Warrants to purchase an aggregate of 372,999 shares of Class A Common
Stock. If the 372,999 shares underlying the Warrants were issued, they
would represent approximately 7.3% of the total number of issued and
outstanding shares of both classes of the Company's Common Stock, and
approximately 2.1% of the total voting power of both classes of the
Company's Common Stock. After giving effect to the Amendment, the number of
shares of Class A Common Stock purchasable upon the exercise of the
Warrants would increase due to anti-dilution provisions contained in the
Warrants.

(6) American International Group, Inc. and its affiliates hold currently
exercisable Warrants to purchase an aggregate of 360,001 shares of Class A
Common Stock. If the 360,001 shares underlying the Warrants were issued,
they would represent approximately 7.1% of the total number of issued and
outstanding shares of both classes of the Company's Common Stock, and
approximately 2.0% of the total voting power of both classes of the
Company's Common Stock. After giving effect to the Amendment, the number of
shares of Class A Common Stock purchasable upon the exercise of the
Warrants would increase due to anti-dilution provisions contained in the
Warrants.

(7) New Frontier Capital, L.P., and William L. Musser, Jr., in his capacity as
General Partner, reported on a Schedule 13D filed with the SEC its
beneficial ownership, as an investment advisor to various clients, of
314,900 shares of Class A Common Stock. The 314,900 shares represent
approximately 6.7% of the total number of issued and outstanding shares of
both classes of the Company's Common Stock, and approximately 1.8% of the
total voting power of both classes of the Company's Common Stock.

(8) Messrs. Stein and Landry are the general partners of DM Management I
(described in footnote 1 above). The shares of Class B Common Stock set
forth in this table for Messrs. Stein and Landry include the shares
beneficially owned by them in their capacity as general partners of DM
Management I.

(9) Includes 199,375 shares of Class A Common Stock and 21,875 shares of Class
B Common Stock that may be acquired upon exercise of stock options granted
to Mr. Stein.

(10) Includes 132,125 shares of Class A Common Stock and 12,500 shares of Class
B Common Stock that may be acquired upon exercise of stock options granted
to Mr. Landry.

(11) Includes 12,375 shares of Class A Common Stock and 1,250 shares of Class B
Common Stock that may be acquired upon exercise of stock options granted to
Mr. Barrett.

(12) Includes 6,375 shares of Class A Common Stock and 1,250 shares of Class B
Common Stock that may be acquired upon exercise of stock options granted to
Mr. Birchfield.

(13) Includes 9,875 shares of Class A Common Stock and 1,250 shares of Class B
Common Stock that may be acquired upon exercise of stock options granted to
Mr. Everets.

17
<PAGE> 22

(14) The shares of Class A Common Stock set forth in this table for Mr. Janes
include the shares set forth for Triumph in this table. Mr. Janes'
pecuniary interest in the 765,000 shares is based upon his status as
general partner of TCCALP, general partner of Triumph, the entity holding
the shares, and is not discernible. Mr. Janes disclaims beneficial
ownership of all shares other than those attributable to him as a general
partner of TCCALP.

(15) Includes 6,375 shares of Class A Common Stock and 1,250 shares of Class B
Common Stock that may be acquired upon exercise of stock options granted to
Mr. Janes.

(16) Includes 1,250 shares of Class A Common Stock and 1,250 shares of Class B
Common Stock that may be acquired upon exercise of stock options granted to
Mr. Adams.

(17) Includes 10,000 shares of Class A Common Stock that may be acquired upon
exercise of stock options granted to Ms. Adams.

(18) Includes 11,250 shares of Class A Common Stock that may be acquired upon
exercise of stock options granted to Ms. Guiney.

(19) Includes 452,750 shares of Class A Common Stock, 40,625 shares of Class B
Common Stock and currently exercisable Warrants to purchase 765,000 shares
of Class A Common Stock that may be acquired upon exercise of options
granted or Warrants issued to officers, directors and executive officers of
the Company.

FEDERAL TAX CONSEQUENCES

The following discussion is intended only as a brief summary of the federal
income tax consequences of the Amendment, based on the Internal Revenue Code of
1986, as amended and currently in effect (the "Code"). This summary is not tax
advice, is not exhaustive and does not describe state, local and foreign or
certain other tax consequences of the proposed Amendment. You should consult
your own tax advisor with respect to the tax consequences of the proposed
Amendment, including tax reporting requirements and tax consequences under
state, local or foreign law.

Nonrecognition of Gain or Loss

The Company believes that the reclassification of shares of Class A Common
Stock and Class B Common Stock into shares of the New Common Stock pursuant to
the Amendment will be treated as a tax-free recapitalization under Section
368(a)(1)(E) of the Code and, therefore, (a) will not result in the recognition
of any gain or loss by the holders of Class A Common Stock or Class B Common
Stock, (b) the basis of the New Common Stock will be the same as the
shareholder's basis in the Class A Common Stock or the Class B Common Stock, as
the case may be, surrendered therefor, and (c) the holding period of the New
Common Stock received by a shareholder will include such shareholder's holding
period for the Class A Common Stock or the Class B Common Stock, as the case may
be, surrendered therefor, provided that each share of the Class A Common Stock
or the Class B Common Stock, as the case may be, held on the date of the
reclassification is a capital asset as defined in Section 1221 of the Code.

Deemed Dividend Distribution to Shareholders

Pursuant to Section 305(c) of the Code and the regulations promulgated
thereunder, a recapitalization which has the effect of causing a change in the
conversion ratio, a change in redemption price, a difference between redemption
price and issue price, a redemption treated as a dividend or any other
transaction

18
<PAGE> 23

having a similar effect with respect to a class of stock may, under limited
circumstances, be deemed to be a taxable distribution of stock with respect to
the holders of any class of stock whose proportionate interest in the assets or
earnings and profits of the corporation is increased as a result of such
recapitalization. If, pursuant to a plan to periodically increase a
shareholder's proportionate interest in the assets or earnings and profits of
the corporation, an exchange occurs whereby certain shareholders increase their
proportionate interest in the assets or earnings and profits of the corporation,
then the shareholders whose proportionate interest is increased would be deemed
to have received a taxable distribution of stock to the extent the corporation
has accumulated earnings or current income in the year the recapitalization
became effective.

By reclassifying the shares of Class B Common Stock into shares of New
Common Stock at a greater rate per share than the shares of Class A Common Stock
are being reclassified, even though the Class B Common Stock has the same
liquidation preferences and rights to dividends as Class A Common Stock, the
holders of the Class B Common Stock are receiving an increase in the
proportionate interests in the assets or earnings and profits of the Company.
The Company believes that the Amendment should not result in any deemed taxable
distribution of stock to the current holders of Class B Common Stock because the
reclassification under the Amendment should be treated as an isolated
recapitalization and not as part of a plan to periodically increase the
proportionate interest of holders of Class B Common Stock in the Company's
assets or earnings and profits. However, if the recapitalization were deemed not
to be an isolated recapitalization with respect to the Class B Common Stock,
then the recapitalization may result in a taxable dividend to the holders of the
Class B Common Stock.

EFFECTIVE TIME; EXCHANGE OF CERTIFICATES; FRACTIONAL SHARES

The Amendment will become effective when it is filed with the Secretary of
State of the State of Delaware. If approved, the Amendment will be filed as soon
as practicable after the Special Meeting. At the effective time, shares of Class
A Common Stock and Class B Common Stock will become shares of New Common Stock,
without any action on your part.

Promptly after the effective time, American Stock Transfer & Trust Company,
the transfer agent, will mail each record holder of Class A Common Stock and
Class B Common Stock instructions and transmittal materials for effecting the
surrender of stock certificates for Class A Common Stock and Class B Common
Stock in exchange for replacement certificates representing the number of whole
shares of New Common Stock into which such shares of Class A Common Stock and
Class B Common Stock have been reclassified.

No fractional shares will be issued in connection with the Amendment.
Rather, holders of shares of Class B Common Stock who would otherwise be
entitled to receive a fraction of a share of New Common Stock (after aggregating
all the shares that are evidenced by certificates registered in the same name of
such holder) will receive (a) one additional share of New Common Stock in lieu
thereof if such fraction of a share of New Common Stock is equal to .50 or
greater or (b) no additional shares of New Common Stock or other consideration
in lieu thereof, if such fraction of a share of New Common Stock is less than
.50.

YOU ARE ASKED NOT TO SEND ANY CERTIFICATES WITH THE ENCLOSED PROXY AND NOT
TO SURRENDER ANY CERTIFICATE FOR EXCHANGE UNTIL YOU HAVE RECEIVED SUCH
TRANSMITTAL MATERIALS FROM THE TRANSFER AGENT.

19
<PAGE> 24

RECOMMENDATION OF THE BOARD OF DIRECTORS

THE BOARD OF DIRECTORS AND THE SPECIAL COMMITTEE HAVE UNANIMOUSLY APPROVED
THE AMENDMENT AND BELIEVE IT IS IN THE BEST INTEREST OF THE SHAREHOLDERS TO
ADOPT THE AMENDMENT. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE
AMENDMENT.

SHAREHOLDER PROPOSALS

Any shareholder who intends to present a proposal in the Company's Proxy
Statement for the fiscal year 2000 Annual Meeting of the Shareholders of the
Company may do so in accordance with Securities and Exchange Commission Rule
14a-8 and is advised that the proposal must be received by the Company's Chief
Financial Officer at the Company's principal office located at One Dairy Mart
Way, 300 Executive Parkway West, Hudson, Ohio 44236, no later than January 17,
2000. For those shareholder proposals which are not submitted in accordance with
Rule 14a-8, the proxies designated by the Board of Directors may exercise their
discretionary voting authority, without any discussion on the proposal in next
year's Proxy Statement, with respect to any proposal which is received by the
Company after March 30, 2000.

20
<PAGE> 25

ANNEX A

ARTICLE IV

A. Authorized Capital Stock. The aggregate number of shares which the
Corporation shall have authority to issue is 31,000,000 shares, consisting of:

1. 1,000,000 shares of Serial Preferred Stock, par value $.01 per share
("Serial Preferred Stock"); and

2. 30,000,000 shares of Common Stock, par value $.01 per share (the
"Common Stock").

B. Serial Preferred Stock. The Board of Directors is authorized at any
time, and from time to time, to provide for the issuance of shares of Serial
Preferred Stock in one or more series, and to determine the designations,
preferences, limitations and relative or other rights of the Serial Preferred
Stock or any series thereof. For each series, the Board of Directors shall
determine, by resolution or resolutions adopted prior to the issuance of any
shares thereof, the designations, preferences, limitations and relative or other
rights thereof, including but not limited to the following relative rights and
preferences, as to which there may be variations among different series:

1. The rate and manner of payment of dividends, if any;

2. Whether shares may be redeemed and, if so, the redemption price and
the terms and conditions of redemption;

3. The amount payable for shares in the event of liquidation,
dissolution or other winding up of the Corporation;

4. Sinking fund provisions, if any, for the redemption or purchase of
shares;

5. The terms and conditions, if any, on which shares may be converted or
exchanged;

6. Voting rights, if any; and

7. Any other rights and preferences of such shares, to the full extent
now or hereafter permitted by the laws of the State of Delaware.

The Board of Directors shall have the authority to determine the number of
shares that will comprise each series.

Prior to the issuance of any shares of a series, but after adoption by the
Board of Directors of the resolution establishing such series, the appropriate
officers of the Corporation shall file such documents with the State of Delaware
as may be required by law.

C. Common Stock. The powers, preferences, rights, qualifications,
limitations and restrictions of the shares of Common Stock are as follows:

1. Voting. Each outstanding share of Common Stock will entitle the
holder thereof to one vote on each matter submitted to such holder to vote
on.

2. Conversion.

(a) Upon the effectiveness of this Article IV, (ii) each issued
share of Class A Common Stock, $.01 par value (the "Class A Common
Stock") (including each treasury share), shall

A-1
<PAGE> 26

automatically be changed, reclassified, converted and thereafter
constitute one share of Common Stock and (ii) each issued share of Class
B Common Stock, $.01 par value (the "Class B Common Stock") (including
each treasury share), shall, subject to paragraph 2(b), automatically be
changed, reclassified, converted and thereafter constitute 1.1 shares of
Common Stock, in each case without any action on the part of any holder
thereof.

(b) No fractional shares will be issued in connection with any
change, reclassification, conversion or reconstitution of shares of
Class B Common Stock. Rather, holders of Class B Common Stock who would
otherwise be entitled to receive a fraction of a share of Common Stock
(after aggregating all the shares that are evidenced by certificates
registered in the name of such holder) will receive (i) one additional
share of Common Stock in lieu thereof if such fraction of a share of
Common Stock is equal to .50 or greater or (ii) no additional shares of
Common Stock or other consideration in lieu thereof, if such fraction of
a share of Common Stock is less than .50.

(c) Upon the effectiveness of this Article IV, holders of record of
any certificates that, immediately prior to the effectiveness of this
Article IV, represented shares of Class A Common Stock or Class B Common
Stock, but which now, by virtue of the effectiveness of this Article IV,
represent shares of Common Stock, shall be entitled to receive, upon
surrender of such certificates, new certificates that evidence the
appropriate number of shares and designation of the Common Stock.

A-2
<PAGE> 27

ANNEX B

October 6, 1999

Special Committee of the Board of Directors
of Dairy Mart Convenience Stores, Inc.
One Dairy Mart Way
300 Executive Parkway West
Hudson, OH 44236

Gentlemen:

We hereby confirm our oral opinion presentation as to the fairness, from a
financial point of view, of the Proposed Reclassification (as defined below) to
the shareholders of Dairy Mart Convenience Stores, Inc. ("Dairy Mart" or the
"Company") that we presented to the Special Committee of the Board of Directors
of the Company (the "Special Committee") and the Board of Directors at their
respective meetings on October 6, 1999. We understand that the Company is
currently capitalized with Class A Common Stock, par value $0.01 per share
("Class A Common Stock") and Class B Common Stock, par value $0.01 per share
("Class B Common Stock"). We further understand that Dairy Mart is considering
an amendment to the Company's Certificate of Incorporation which would provide
that all of the shares of Class A Common Stock and all of the shares of Class B
Common Stock would be converted into a new, single class of common stock (the
"New Common Stock"). We further understand that each share of Class A Common
Stock would be reclassified into one share of New Common Stock, and each share
of Class B Common Stock would be reclassified into 1.1 shares of New Common
Stock (the "Proposed Reclassification"). We understand that the Proposed
Reclassification will be submitted to the shareholders of the Class A Common
Stock and shareholders of the Class B Common Stock (collectively, the
"Shareholders") for approval at a Special Meeting of the Shareholders.

You have requested our written opinion as to the fairness, from a financial
point of view, of the Proposed Reclassification to the Shareholders of Dairy
Mart (our "Opinion").

We, as part of our investment banking business, are regularly engaged in
the valuation of businesses and their securities in connection with
recapitalizations, mergers and acquisitions, negotiated underwritings, secondary
distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes. We will receive a fee in
connection with services provided in rendering our Opinion pursuant to an
engagement letter with the Special Committee dated September 28, 1999. In
connection with our engagement, we were not retained to identify, analyze or
otherwise pursue any possible transactions other than the Proposed
Reclassification, and we have not identified, analyzed or pursued any
transactions other than the Proposed Reclassification, nor did we review any
material financial information, reports or analyses or discuss the current
operations or future outlook of Dairy Mart with management or the Board of
Directors.

In connection with delivering our Opinion, we have (i) reviewed the
Company's Forms 10-K for the fiscal years ended 1998 and 1999, the Company's
Form 10-Q for the period ended July 31, 1999, the Company's Schedule 14A filed
in connection with its Annual Meeting held June 10, 1999 and the Company's
Restated Certificate of Incorporation filed as an exhibit to the Company's 1998
Form 10-K; (ii) reviewed and analyzed the public market prices and trading
activity of the Class A Common Stock and Class B Common Stock for the period
from September 22, 1994 to September 16, 1999 (iii) reviewed and

B-1
<PAGE> 28

analyzed the public market prices and trading activity of the common stock of
selected companies with two classes of publicly traded stock; (iv) reviewed and
analyzed the terms of transactions in which two classes of common stock of
public companies were converted into a single class of common stock; (v)
reviewed and analyzed the terms of transactions in which public companies with
two classes of common stock were acquired; (vi) analyzed the potential accretion
or dilution to the earnings per share due to a reclassification transaction;
(vii) reviewed and analyzed premiums paid in relevant transactions in which the
purchaser acquired a controlling share of the target company; and (viii)
conducted other financial analyses and investigations as we deemed necessary or
appropriate in arriving at our Opinion.

We have assumed and relied upon the accuracy and completeness of the
financial and other information used by us in arriving at our Opinion without
independent verification, and have further relied upon the assurances of
management of Dairy Mart that they are not aware of any facts that would make
such information inaccurate or misleading. In arriving at our Opinion, we
neither conducted a physical inspection of the properties and facilities of
Dairy Mart nor obtained any evaluations or appraisals of the assets or
liabilities of Dairy Mart. Our Opinion is necessarily based upon market,
economic and other conditions as they exist on, and can be evaluated as of, the
date of this letter.

Our Opinion rendered herein does not constitute a recommendation of the
Proposed Reclassification over any other alternative transaction which may be
available to Dairy Mart. The Opinion contained herein relates to the fairness
from a financial point of view of the Proposed Reclassification to the
Shareholders of Dairy Mart, and does not address any other aspect of the
Proposed Reclassification or any related transaction and does not constitute a
recommendation that any Shareholder of Dairy Mart vote to approve the Proposed
Reclassification. We have not appraised or valued the Company or its securities,
and we make no prediction as to how any of the Company's securities may trade in
the future or as to the value of the New Common Stock. We have prepared this
Opinion at the request and for the benefit of the Special Committee, and we
consent to its inclusion in its entirety in filings Dairy Mart may be required
to make with the Securities and Exchange Commission.

Based on the foregoing and subject to the qualifications stated herein, we
are of the Opinion that as of the date hereof the Proposed Reclassification is
fair to the shareholders of the Class A Common Stock and the shareholders of the
Class B Common Stock from a financial point of view.

Very truly yours,

ALLEN & COMPANY INCORPORATED

By: /s/ JOHN SIMON
------------------------------------
John Simon
Managing Director

B-2
<PAGE> 29

CLASS B PROXY

DAIRY MART CONVENIENCE STORES, INC.

SPECIAL MEETING OF SHAREHOLDERS
FEBRUARY 8, 2000

THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Robert B. Stein, Jr. and Gregory G.
Landry, and each or any of them, with full power of substitution, the proxies of
the undersigned to vote all of the shares of Class B Common Stock of Dairy Mart
Convenience Stores, Inc. ("Dairy Mart") which the undersigned is entitled to
vote at the Special Meeting of Shareholders of Dairy Mart to be held at the
Dairy Mart Convenience Stores, Inc., One Dairy Mart Way, 300 Executive Parkway
West, Hudson, Ohio on the 8th day of February, 2000 at 10:00 a.m. (eastern
time), and at any adjournment or postponement thereof, with all the powers the
undersigned would possess if personally present upon:

(TO BE SIGNED ON REVERSE SIDE)

<PAGE> 30

PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!

SPECIAL MEETING OF SHAREHOLDERS
DAIRY MART CONVENIENCE STORES, INC.

CLASS B PROXY

FEBRUARY 8, 2000

Please Detach and Mail in the Envelope Provided
- --------------------------------------------------------------------------------

Please mark your
A [X] votes as in this
example.

FOR ABSTAIN AGAINST

1. Proposal to adopt the Amendment to the [ ] [ ] [ ]
Restated Certificate of Incorporation:

2. In their discretion such other matters as may properly come
before the meeting.

UNLESS A CONTRARY DIRECTION IS INDICATED, THE SHARES
REPRESENTED BY THIS PROXY SHALL BE VOTED FOR THE PROPOSAL TO
ADOPT THE AMENDMENT AND IN THE DISCRETION OF THE PROXIES AS TO
OTHER MATTERS.

SIGNATURE(S)_________________________________________ DATE: ___________________

NOTE: Please sign above exactly as the shares are issued. When shares are held
by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by the president or other
authorized officer. If a partnership, please sign in partnership name by
an authorized person.

<PAGE> 31

CLASS A PROXY

DAIRY MART CONVENIENCE STORES, INC.

SPECIAL MEETING OF SHAREHOLDERS

FEBRUARY 8, 2000

THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Robert B. Stein, Jr. and Gregory G.
Landry, and each or any of them, with full power of substitution, the proxies of
the undersigned to vote all of the shares of Class A Common Stock of Dairy Mart
Convenience Stores, Inc. ("Dairy Mart") which the undersigned is entitled to
vote at the Special Meeting of Shareholders of Dairy Mart to be held at the
Dairy Mart Convenience Stores, Inc., One Dairy Mart Way, 300 Executive Parkway
West, Hudson, Ohio on the 8th day of February, 2000 at 10:00 a.m. (eastern
time), and at any adjournment or postponement thereof, with all the powers the
undersigned would possess if personally present upon:

(TO BE SIGNED ON REVERSE SIDE)

<PAGE> 32

PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!

SPECIAL MEETING OF SHAREHOLDERS
DAIRY MART CONVENIENCE STORES, INC.

CLASS A PROXY

FEBRUARY 8, 2000

Please Detach and Mail in the Envelope Provided
- --------------------------------------------------------------------------------

Please mark your
A [X] votes as in this
example.

FOR ABSTAIN AGAINST

1. Proposal to adopt the Amendment to the [ ] [ ] [ ]
Restated Certificate of Incorporation:

2. In their discretion such other matters as may properly come
before the meeting.

UNLESS A CONTRARY DIRECTION IS INDICATED, THE SHARES
REPRESENTED BY THIS PROXY SHALL BE VOTED FOR THE PROPOSAL TO
ADOPT THE AMENDMENT AND IN THE DISCRETION OF THE PROXIES AS TO
OTHER MATTERS.

SIGNATURE(S)_________________________________________ DATE: ___________________