Jack,
They aren't going to "issue an additional 400 million shares". They want authorization to increase the float to 400 million shares so that they can use the stock to purchase another company or to do a split without going back to the shareholders for authorization. From the filing:
PROPOSAL NO. 2
INCREASE OF NUMBER OF SHARES OF AUTHORIZED COMMON STOCK
______________________________________________
The Company is asking the stockholders to approve an amendment to the
Company's Certificate of Incorporation to increase the authorized shares of the
Company's common stock (the "Common Stock") from 125,000,000 shares to
400,000,000 shares. The Board of Directors of the Company believes the increase
in the authorized shares is necessary to provide the Company with the
flexibility to act in the future with respect to financing programs,
acquisitions and other corporate purposes, including effecting potential stock
splits, without the delay and expense of obtaining stockholder approval each
time an opportunity requiring the issuance of shares may arise.
On March 15, 2000, the Company had approximately 66,531,812 shares of
Common Stock issued and outstanding. Also on that date, the Company had
8,252,944 shares of Common Stock subject to outstanding options under the
Company's 1995 Stock Option Plan and the Company's 1995 Non-Employee Directors
Stock Option Plan, including options incorporated from the predecessor plans,
6,190,659 shares available for future grant under such plans and 1,359,396
shares available for issuance under the Company's Employee Stock Purchase Plan.
A substantial majority of the Company's 125 million authorized shares have been
issued or are reserved for issuance and thus few shares are available to the
Company for use in connection with its future financing and other corporate
needs. The lack of authorized Common Stock available for issuance could
unnecessarily limit the Company's ability to pursue opportunities for future
financings, acquisitions, mergers and other transactions. The Company would also
be limited in its ability to effectuate future stock splits or stock dividends.
The Company has considered other plans to issue additional shares of Common
Stock in possible future financings. The Board of Directors believes that the
increase in the authorized shares of Common Stock is necessary to provide the
Company with the flexibility to pursue the types of opportunities described
above without added delay and expense, including the facilitation of the
Company's ability to effect stock splits and thereby provide the opportunity to
broaden the stockholder base.
The availability of authorized but unissued shares of Common Stock might be
deemed to have the effect of preventing or discouraging an attempt by another
person to obtain control of the Company, because the additional shares could be
issued by the Board of Directors, which could dilute the stock ownership of such
person. The Company has no plans for such issuances and this proposal is not
being proposed in response to a known effort to acquire control of the Company.
In addition, an issuance of additional shares by the Company could have an
effect on the potential realizable value of a stockholder's investment. In the
absence of a proportionate increase in the Company's earnings and book value, an
increase in the aggregate number of outstanding shares of the Company caused by
the issuance of the additional shares would dilute the earnings per share and
book value per share of all outstanding shares of the Company's capital stock.
If such factors were reflected in the price per share of Common Stock, the
potential realizable value of a stockholder's investment could be adversely
affected.
The additional shares of Common Stock to be authorized by adoption of the
amendment to the Certificate of Incorporation would have rights identical to the
currently outstanding shares of Common Stock of the Company. Adoption of the
proposed amendment to the Certificate of Incorporation would not affect the
rights of the holders of currently outstanding shares of Common Stock.
Adoption of the amendment to the Certificate of Incorporation to increase
the Company's authorized Common Stock requires the vote of a majority of the
outstanding shares of the Company's Common Stock. Votes, abstentions and broker
non-votes will be counted as set forth above in "VOTING PROCEDURES." If the
proposal is approved, the Company intends to file an amendment to its
Certificate of Incorporation promptly after the Meeting. The amendment to the
Certificate of Incorporation will be effective immediately upon acceptance of
filing
6
by the Secretary of State of the State of Delaware. Thereafter, the Board of
Directors would generally be free to issue Common Stock without further action
on the part of the stockholders.
The Board of Directors recommends that the stockholders vote FOR the
adoption of the proposed increase in the number of shares of authorized Common
Stock. |
