Reasons for the Proposed Amendment
After careful consideration our Board determined at its meeting held on March 24, 2021, subject to shareholder approval, to approve the amendment to the
Certificate of Incorporation to authorize an additional 50 million shares of Common Stock as set forth in Article FOURTH of the Certificate of Incorporation as described above. In making this decision, the Board considered it advisable and
preferable to have a sufficient number of unissued and unreserved authorized shares of Common Stock to provide us with flexibility with respect to our authorized capital sufficient to execute our business strategy and to enhance shareholder value
without delay or the necessity for a special shareholders meeting. At the same time, the proposed authorized share increase was designed, based on a survey of shares of Common Stock authorized and shares of Common Stock outstanding at our peer
group companies, to strike the appropriate balance so that we do not have what some shareholders might view as an unreasonably high number of authorized shares of Common Stock that are unissued or reserved for issuance.
The additional shares of Common Stock will be available for issuance by the Board of Directors for various corporate purposes, including but not limited to,
raising capital, strategic transactions, including mergers, acquisitions, strategic partnerships, joint ventures, divestitures, business combinations, stock splits and stock dividends, as well as other general corporate transactions, and providing
equity incentive grants under employee stock plans. We do not currently have any definitive agreements or arrangements to issue any of the proposed additional authorized shares of Common Stock that will become available for issuance if this proposal
is approved.
The amendment to our Certificate of Incorporation will ensure that we will continue to have an adequate number of authorized and unissued
shares of common stock available for future use. As is the case with the shares of common stock which are currently authorized but unissued, if this amendment to the our Certificate of Incorporation is adopted by the Companys shareholders, the
Board will only have authority to issue the additional shares of common stock from time to time without further action on the part of shareholders to the extent not prohibited by applicable law or by the rules of any stock exchange or market on
which our securities may then be listed or authorized for quotation.
Effect of the Proposed Amendment
If the proposed amendment to the Certificate of Incorporation to authorize an additional 50 million shares of Common Stock described above is approved and
adopted by our shareholders, we will have the authority under our Certificate of Incorporation to have up to 100 million shares of Common Stock and 5,882,352 shares of preferred stock issued and outstanding. As of the close of business on the
Record Date, we had [ ] shares of Common Stock and no shares of preferred stock issued and outstanding. If this proposal is
approved, the additional authorized shares may be issued at the discretion of the Companys Board of Directors without further shareholder action, except as may be required by law or the rules of Nasdaq. The increase in authorized shares would
not have any immediate dilutive effect on the proportionate voting power or other rights of existing shareholders. However, any subsequent issuance of shares of common stock, other than on a pro-rata basis to
all shareholders, would reduce each shareholders proportionate interest in our company. Any of the additional shares of common stock issued in the future would have the same rights and privileges as attach to the common stock currently
authorized and outstanding and the par value of the Common Stock would remain unchanged at no par value per share. Those rights do not include preemptive rights with respect to the future issuance of any additional shares.
The Board of Directors has not proposed the increase in the amount of authorized shares with the intention of discouraging tender offers or takeover attempts
of the Company. However, the availability of additional authorized shares for issuance may have the effect of discouraging a merger, tender offer, proxy contest, or other attempt to obtain control of the Company
If the shareholders approve the proposal, the amendment will become effective upon the filing of the Certificate of Amendment to the Certificate of
Incorporation as set out above and in Appendix A with the State Treasurer of the State of New Jersey.
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