UNITED STATES SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON, D.C.
SCHEDULE 14C
INFORMATION STATEMENT PURSUANT TO SECTION
14(c) OF THE SECURITIES EXCHANGE ACT OF 1934
Check the appropriate box:
[X ] Preliminary Information Statement
[ ] Confidential, For Use of the Commission Only (as
permitted by Rule 14c-5(g)(2))
[ ] Definitive Information Statement
ALLSTATES WORLDCARGO, INC.
(Name of Registrant as Specified in its Charter)
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Allstates WorldCargo, Inc.
4 Lakeside Drive South
Forked River, New Jersey 08731
Dear Shareholders:
The purpose of this letter and the accompanying Information
Statement is to inform you of certain action that the
shareholders of Allstates WorldCargo, Inc. (the "Company")
have taken by Written Consent in Lieu of a Special Meeting
of the Stockholders of Allstates WorldCargo, Inc. (the
"Written Shareholders' Consent"). The Written Shareholders'
Consent effectuated amendments to the Company's By-Laws,
which amendments are described in detail in the accompanying
Information Statement.
Briefly stated, by Unanimous Written Consent of Directors,
dated as of July 6, 2005 (the "Written Directors' Consent"),
the Board of Directors amended the Company's By-Laws to
provide that the Board of Directors shall consist of seven
directors. The Directors further amended the By-Laws to
provide that vacancies in the Board of Directors shall be
filled by an affirmative vote of a majority of the remaining
Directors, and that in the event of a deadlock or three-to-
three vote with respect to the filling of any vacancy, an
independent arbitrator appointed by the Board shall select
the person to fill the vacancy. A person so appointed shall
hold office until a successor is elected and qualified at
the next annual meeting of shareholders, and in accordance
with the Settlement Agreement in the law suit captioned
"Joseph M. Guido vs. Allstates WorldCargo, Inc., et al.,"
bearing Docket No. OCN-C-048-05. (The foregoing amendments
that were effectuated by the Written Directors' Consent are
referred to as the "Directors' Amendments.")
The Written Shareholders' Consent amended Directors'
Amendments in a simple way. The provisions pertaining to
the filling of vacancies on the Boards were amended to
include the following: "This By-Law shall be deemed to have
been adopted by the shareholders, and cannot be altered or
repealed by the Board of Directors." (The foregoing
amendments that were effectuated by the Written
Shareholders' Consent are referred to as the "Shareholders'
Amendments.")
Pursuant to the applicable provisions of the Securities
Exchange Act of 1934, as amended, the Shareholders'
Amendments will not be effective until twenty days after the
date this Information Statement is mailed to the
shareholders. (Note that this does not affect the
effectiveness of the Directors' Amendments.)
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT
TO SEND US A PROXY. Your consent to the aforementioned
actions is not required and is not being solicited. This
notice and the accompanying Information Statement is being
furnished to you for informational purposes only. Please
read the accompanying Information Statement carefully.
By Order of the Board of Directors
Craig D. Stratton, Secretary
Dated: February ___, 2006
ALLSTATES WORLDCARGO, INC.
4 Lakeside Drive South
Forked River, New Jersey 08731
_________________________________
INFORMATION STATEMENT
Dated February ___, 2006
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY
INTRODUCTION
This Information Statement has been filed with the
Securities and Exchange Commission (the "SEC") and is being
mailed on or about February ___, 2006 to the shareholders of
record of Allstates WorldCargo, Inc. (the "Company") as of
February 17, 2006 (the "Record Date."). This Information
Statement is being sent to you for informational purposes
only. No action is requested or required on your part.
The Information Statement is being sent to shareholders of
the Company to comply with the requirements of Section 14(c)
of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and to provide information to all
shareholders in connection with the action by written
consent taken on August 5, 2005 by certain shareholders
collectively owning 72.47 percent of the Company's
outstanding shares of common stock as of the Record Date.
By written consent, the holders of a majority of the shares
of the Company's outstanding common stock adopted a
resolution amending the Company's Bylaws. Those amendments
are described below. Such action by written consent
constitutes the approval and consent of shareholders
representing a sufficient percentage of the total
outstanding shares to approve the amendment of the Company's
Bylaws. Accordingly, the action will not be submitted to
the other shareholders of the Company for a vote, and no
proxies are being solicited with this Information Statement.
The written consent will be effective the 20th day after the
date this Information Statement is first mailed to the
shareholders.
The Company will pay all costs associated with the
distribution of this Information Statement, including the
costs of printing and mailing. We will reimburse brokerage
firms and other custodians, nominees and fiduciaries for
reasonable expenses incurred by them in sending this
Information Statement to the beneficial owners of our common
stock.
The board of directors fixed the close of business on
February 17 as the record date for determining the
shareholders entitled to receive this Information Statement
pertaining to this action by written consent. As of the
record date, there were 32,509,872 common shares
outstanding. Each common share held as of the record date
was entitled to one vote per share. The Company has no
other voting securities outstanding.
Briefly stated, the Board of Directors recently amended
Section 3.12(b) and Section 3.12(c) of the Bylaws to provide
for a method to fill vacancies that may arise on the Board.
That action by the Board of Directors was described in a
Form 8-K filed with the Securities and Exchange Commission
(the "SEC") by the Company on August 29, 2005.
Subsequently, the holders of a majority of the Company's
outstanding shares of common stock, by a Written Consent in
Lieu of Special Meeting of the Stockholders of Allstates
WorldCargo, Inc. (the "Written Shareholders' Consent"),
further amended Sections 3.12(b) and 3.12(c) to provide that
those provisions shall be deemed to have been adopted by the
shareholders, and cannot be altered or repealed by the Board
of Directors.
BACKGROUND
As previously reported, the Company has been engaged in
litigation brought by the Company's majority shareholder.
On October 14, 2004, Joseph M. Guido, the majority
shareholder of the Company, who is also employed by the
Company as its Chairman, commenced an action against the
Company and three of the Company's directors, entitled
"Joseph M. Guido v. Allstates WorldCargo, Inc., Sam
DiGiralomo, Barton C. Theile, and Craig D. Stratton," in the
Superior Court of New Jersey, Chancery Division, Ocean
County (the "First Action"). Messrs. DiGiralomo, Theile and
Stratton are also employed by the Company as its President
and Chief Executive Officer, Executive Vice President and
Chief Operating Officer, and Chief Financial Officer,
respectively.
Mr. Guido alleged that on August 16, 2004, he delivered to
the Company's Secretary (1) an executed Written Consent in
Lieu of a Special Meeting of the Stockholders of Allstates
WorldCargo, Inc. dated August 16, 2004 (the "Guido
Consent"), (2) Amended and Restated Bylaws of the Company
adopted pursuant to the Guido Consent, and (3) a draft
Information Statement pursuant to Section 14(c) of the
Securities Exchange Act of 1934 (the "1934 Act"). Mr. Guido
alleged that, pursuant to the Guido Consent, he had amended
the Company's bylaws to (among other things) expand its
Board of Directors from four to seven members, and had
appointed three persons (alleged to be independent) to fill
the newly created seats. He alleged that the Company was
required by law to comply with his demand to notify its
shareholders of his action. He also alleged that the three
individual defendants, both as directors and officers, owed
the Company and its shareholders certain fiduciary duties to
direct that appropriate steps be taken by the Company to
allegedly comply with applicable law in response to the
Guido Consent. Mr. Guido demanded relief enjoining a
scheduled special Board of Directors meeting pending
Company's performance of acts allegedly required by New
Jersey law and by the 1934 Act. Mr. Guido also sought a
permanent injunction requiring the Company and its Secretary
to prepare and distribute to the Company's shareholders all
notices allegedly required by state and federal law in
connection with the Guido Consent. Finally, he sought entry
of an order requiring the Company to file and serve upon
him, within seven days after entry of a permanent
injunction, a written report setting forth the manner and
form in which the Company complied with the injunctions.
The Company (and the three individual defendants) opposed
the application for relief upon the grounds that subsequent
to his execution of the Guido Consent, Mr. Guido advised one
of the individual defendants that he had decided not to
proceed with his amendment of the Bylaws or his expansion of
the Board of Directors. The Defendants also alleged that
Mr. Guido's actions were not in the best interest of the
Company, and motivated by self-interest, that because of
such concerns, the Company needed time to determine its
obligations under the law, and that the purpose of the
Special Board Meeting (among others) was to consider issues
pertaining to the request by Mr. Guido to file the Schedule
14C presented to the Secretary of the Corporation.
On October 28, 2004, Mr. Guido, by his counsel, filed a
Notice of Voluntary Dismissal Without Prejudice, dismissing
the First Action. The parties agreed, subject to the terms
of definitive settlement agreements, to settle the issue
raised in the First Action upon the following terms: (1) the
Company's Board of Directors would not be expanded except by
unanimous consent, (2) Mr. Guido and the individual
defendants would enter into a voting agreement pursuant to
which each would agree to vote his respective shares in the
Company for the others as directors of the Company, (3) the
Company would enter into new employment agreements with the
individual defendants (the existing employment agreements
being due to expire on December 31, 2004), (4) the parties
would exchange general releases and (5) the Company would,
to the extent lawfully required by Mr. Guido's existing
employment agreement, reimburse him for the attorneys fees
he incurred in connection with the action. It was
anticipated that the complete terms of a settlement would be
agreed upon, and that formal settlement documents would be
prepared and executed. Such formal documentation was
prepared and delivered to Mr. Guido's counsel on December
27, 2004.
Mr. Guido refused to execute formal settlement
documentation, and commenced a second action, in the same
court and entitled in the same style, seeking the same
relief (the "Second Action"). The Defendants answered,
denying the allegations, and asserting counterclaims against
Mr. Guido and his wife, Teresa Guido.
On April 5, 2005, the parties agreed to a full and final
settlement of the Second Action, the terms of which were
placed on the record in court, and the parties acknowledged
to the court, under oath, their obligation to be bound
thereby. The material terms of that agreement (referred to
as the "Settlement Agreement") were:
(1) the Company's Board of Directors would be expanded from
four to seven members, and the Court would appoint the three
new directors, (2) vacancies thereafter would be filled by
vote of the remaining Board members, and in the event of a
tie or deadlock in filling any vacancy, the vacancy would be
filled by an arbitrator chosen by the Board, (3) Mr. Guido
and the individual defendants would enter into a voting
agreement pursuant to which each would agree to vote his
respective shares of the Company for the others as directors
of the Company, (4) the Company would enter into new
employment agreements with Mr. Guido and the individual
defendants, (5) the parties would exchange general releases
and (6) the Company would, to the extent lawfully required
by Mr. Guido's previous employment agreement, reimburse him
for the attorneys fees he incurred in connection with the
action.
On May 27, 2005, a final judgment was ordered, granted and
entered by the court in accordance with the settlement terms
agreed to by the parties on April 5, 2005. Finally, on June
6, 2005, Court declared the new employment agreements, the
voting agreement, and the mutual general release to be
effective as of April 5, 2005, notwithstanding any lack of
signatures. Pursuant to the mutual general release, the
Company and each of Mr. Guido, his wife, and Messrs.
DiGiralomo, Theile and Stratton each released and forever
discharged each and all of the others from any and all
causes of actions, known and unknown, then existing.
Pursuant to the terms of the settlement, on June 6, 2005,
the Company and Messrs. Guido, DiGiralomo, Theile and
Stratton (collectively, for purposes of this section, the
"Voters") entered into a Voting Agreement whereby each of
the Voters agreed to vote all of the capital stock of the
Company that each Voter is entitled to vote, for each other
as directors of the Company. Further, pursuant to the terms
of the Voting Agreement, any action taken to expand or in
any way modify the composition of the Board of Directors of
the Company from its present constitution shall require the
unanimous consent of all of the Voters. Additionally, in
the event that shareholder action is taken to alter or amend
the Certificate of Incorporation or Bylaws of the Company,
the Voters agree to vote all of their shares unanimously in
the same manner. If the Voters are unable to reach a
unanimous decision, then the proposed change shall be
rejected. The Voting Agreement terminates when each of
Messrs. Guido, DiGiralomo, Theile and Stratton no longer
own, control or hold any shares of capital stock of the
Company.
For so long as the Voting Agreement remains in effect, the
Voters also agreed, with a certain agreed-to exception, not
to transfer any of the shares of capital stock of the
Company they hold without the prior written consent of all
of the Voters, unless the other party to any such
transaction agrees in writing to join and be bound by all of
the terms of the Voting Agreement. To that end, the Voters
agreed to the placement of an additional restrictive legend
on all of their shares (including subsequently acquired
shares), which restrictive legend shall read:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO RESTRICTIONS ON TRANSFER, VOTING AND OTHER RESTRICTIONS
PURSUANT TO A VOTING AGREEMENT ENTERED INTO BY THE COMPANY,
THE HOLDER OF THIS CERTIFICATE AND CERTAIN OTHER
STOCKHOLDERS OF THE COMPANY, A COPY OF WHICH IS AVAILABLE
FOR INSPECTION AT THE OFFICES OF THE SECRETARY OF THE
COMPANY."
Finally, during the term of the Voting Agreement, the Voters
agreed not to enter into any agreements that would be
inconsistent with any of the provisions therein.
Also pursuant to the terms of the settlement, on June 6,
2005 the Company and Allstates Air Cargo, Inc., its wholly
owned subsidiary, (together, the Employer) entered into
individual employment agreements with each of Messrs.
DiGiralomo (as President and Chief Executive Officer), Guido
(as Chairman), Theile (as Executive Vice President and Chief
Operating Officer) and Stratton (as Chief Financial
Officer). Messrs. DiGiralomo, Guido, Theile and Stratton
are collectively referred to herein as Executives. Each of
the employment agreements is effective as of April 5, 2005,
and expires on December 31, 2009, but may be extended if
agreed to in writing by the parties. Per each of the
employment agreements, Mr. DiGiralomo's annual salary shall
be $250,000; Mr. Guido's annual salary shall be $370,000;
Mr. Theile's annual salary shall be $250,000; and Mr.
Stratton's annual salary shall be $185,000. Each of these
salaries is subject to an annual increase at the discretion
of the Company's Board of Directors. Additionally, each of
Messrs. DiGiralomo, Guido and Theile shall receive an annual
bonus payment equal to 3% of the increase of the net profits
of the Employer from the fiscal year end 2003 to the fiscal
year end 2004. Each of Messrs. DiGiralomo, Guido, Theile
and Stratton remains eligible to participate in the
Employer's stock option plan, 401(k) retirement plan and
insurance plans.
Excluding the above-described salary and bonus information,
the material terms of each of the Executives' employment
agreements are substantially the same. In the event any
Executive dies during the term of his respective employment
agreement, then for the longer of the remaining term of the
employment agreement or three years, the Employer shall
continue to pay the Executive's then current base salary to
the Executive's designated beneficiary or estate and will
also pay for insurance for any Executive's surviving
immediate family. If, within twenty-four months following a
"Change of Control" of the Employer, as defined in each of
the employment agreements, the Executive voluntarily resigns
or retires, the Employer shall pay to the Executive all
compensation and benefits due to him up to the date of his
termination, including, but not limited to, base salary and
any expense reimbursement, and within one month of
termination, a lump-sum payment equal to 299% of the
Executive's then current base salary, bonus for the fiscal
year end 2004, and of the amount reimbursed to the Executive
for business-related expenses for the calendar year
preceding the termination. Additionally, any options and/or
restricted stock granted to the Executive shall become fully
vested and registered as of the date of the termination.
The Executive shall have the right to exercise all of his
options for a period of five years from the date of the
termination. Additionally, all then-existing life and
health insurance benefits shall continue for the Executive
and his immediate family for a period of five years from the
date of termination. In the event of a "For Cause"
termination, as defined in each of the employment
agreements, the Employer shall pay to the Executive all
compensation and benefits due to him up to the date of his
termination, including but not limited to base salary and
expense reimbursement. At any time after 180 days have
elapsed from the date of his respective employment
agreement, each Executive shall have the right to terminate
his employment agreement on 90 days written notice to the
Employer. In the event of such termination, the Executive
shall be entitled to such compensation that is equal to the
"For Cause" termination compensation described above. A
termination that is neither a Change of Control termination,
a For Cause termination, is due to the Executive's death,
nor a termination by the Executive as provided above, is a
"Without Cause" Termination. In the event of a Without
Cause termination, the Executive shall be entitled to such
compensation that is equal to the Change of Control
termination compensation described above. Finally, if the
Employer breaches any material term of each respective
employment agreement or reduces the Executive's respective
title or responsibilities, the Executive may, at his option,
elect to leave the Employer, in which case he shall be
entitled to all of the Change of Control termination
compensation described above, except that the lump sum
payment to be paid to the Executive would be limited to 100%
of the Executive's base salary and bonus (if applicable).
On July 6, 2005, to effectuate part of the settlement of the
Second Action, the Court entered an Order (the "July 6
Order") that expanded the Company's Board of Directors,
effective immediately, from four members to seven. The July
6 Order also appointed, effective immediately, Messrs.
Joseph Buckelew, Alan E. Meyer, and Charles F. Starkey, to
the Board.
On August 24, 2005, upon the Company's Motion for
Reconsideration, the Court entered and order amending the
July 6 Order (the "First August 24 Order"). Instead of
declaring the Board expanded, and appointing Messrs.
Buckelew, Meyer, and Starkey to the Board, the July 6 Order
was amended to show that the parties agreed that a Unanimous
Written Consent of the Directors of Allstates WorldCargo,
Inc. (attached to the First August 24 Order, and referred to
as the "Directors' Consent") was consistent with the
Settlement Agreement, and shall be deemed signed by Messrs.
DiGiralomo, Theile, Stratton, and Guido.
Pursuant to the Directors' Consent, the Board of Directors
amended Section 3.02 of the Bylaws to provide that the Board
of Directors shall consist of seven members. Prior to the
amendment, Section 3.02 of the Bylaws provided that the
Board of Directors shall consist of not less than one nor
more than ten Directors. The precise number of Directors
within this range was to be fixed by the Board each year
before the annual meeting of shareholders. The number of
Directors prior to the amendment was four.
Pursuant to the Directors' Consent, the Board of Directors
appointed Joseph Buckelew, Alan E. Meyer, C.P.A., and
Charles F. Starkey, Esq. to fill the vacancies created by
the expansion of the Board, to serve in accordance with the
Settlement Agreement.
Pursuant to the Directors' Consent, the Board of Directors
also amended Sections 3.12(b) and 3.12(c) of the Bylaws.
Prior to the amendment described herein, Section 3.12(b)
provided that vacancies in the Board may be filled by the
affirmative vote of a majority of the remaining Directors
then in office, even if their number is insufficient to
constitute a quorum. A director so elected was to hold
office until a successor is elected and qualified at the
next annual meeting of the shareholder. As amended, Section
3.12(b) provides that any vacancy shall be filled in the
manner provided therein, and that in the event of a
deadlock, or a three-to-three vote, with respect to filling
any vacancy, an independent arbitrator appointed by the
Board shall select the person to fill the vacancy. The
amended Bylaw also provides that any director so appointed
pursuant to Section 3.12(b) shall also hold office in
accordance with the Settlement Agreement.
Prior to the amendment described herein, Section 3.12(c)
provided that if a director resigns from the Board effective
at some future date, the future vacancy may be filled by the
affirmative vote of a majority of the directors then in
office, including the director who has resigned, even if
their number is insufficient to constitute a quorum. The
term of the newly elected director would begin when the
resignation becomes effective. A director so elected was to
hold office from the effective date of the predecessor's
resignation until a successor is elected and qualified at
the next annual or special meeting of the shareholders. As
amended, Section 3.12(c) provides that any future vacancy
shall be filled in the manner provided therein, and that in
the event of a deadlock, or a three-to-three vote, with
respect to filling any vacancy, an independent arbitrator
appointed by the Board shall select the person to fill the
vacancy. The amended By-Law also provides that any director
so appointed pursuant to Section 3.12(c) shall also hold
office in accordance with the Settlement Agreement.
In order to ensure that Messrs. Buckelew, Meyer, and Starkey
(or their successors duly appointed pursuant to the Bylaws)
continue to serve pursuant to the terms of the Settlement
Agreement, and not at the pleasure of the majority
shareholder, the Court entered a second order on August 24,
2005 (the "Second August 24 Order"), which provides that the
parties are required by the Settlement Agreement to nominate
and vote for, as Directors, Messrs. Buckelew, Starkey, and
Meyer (or their duly appointed successors) at future
meetings of the Company's shareholders at which directors
are to be chosen.
On November 7, 2005, the Court entered a Consent Order
pursuant to which Mr. and Mrs. Guido waived their right to
pursue reimbursement from the defendants of any and all
counsel fees paid or incurred in connection with the matter.
DISSENTERS' RIGHTS
Under the New Jersey Business Corporation Law, the Company's
shareholders are not entitled to dissent and obtain payment
of the fair value of their shares in connection with the
amendment of the Bylaws.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table presents information concerning the
beneficial ownership of the Company's shares of common stock
as of February 17, 2006 by each person the Company has
reason to believe to be the beneficial owner of 5% or more
of our outstanding shares of common stock, each of our
current directors, each of our current executive officers
and all of our directors and executive officers as a group.
Beneficial ownership is determined under the rules of the
Securities and Exchange Commission ("SEC") and generally
includes voting or investment power over securities. Except
as indicated in the footnotes to this table, the Company
believes that each shareholder identified in the table
possesses sole voting and investment power over all shares
of common stock shown as beneficially owned by the
stockholder.
Percentage of beneficial ownership is based on 32,509,872
shares of common stock outstanding on February 17, 2006.
Name and Address of Amount and Nature Percentage of
Beneficial of Class
Owner Beneficial
Ownership
Joseph M. Guido 19,010,000 58.47%
Chairman
4 Lakeside Drive
South
Forked River, NJ
08731
Sam DiGiralomo 3,850,000 11.84%
Director/President/
CEO
7 Doig Road, Ste. 3
Wayne, NJ 07470
Barton C. Theile 500,000 1.54%
Director/Executive
VP/COO
4 Lakeside Drive
South
Forked River, NJ
08731
Craig D. Stratton 200,000 0.62%
Director/Secretary/
CFO
4 Lakeside Drive
South
Forked River, NJ
08731
Charles F. Starkey ---- ----
Director
1593 Route 88 West
Brick, NJ 08724
Joseph Buckelew ---- ----
231 Main Street
Director
Toms River, NJ
08754
Alan E. Meyer ---- ----
Director
512 Main Street
Toms River, NJ
08754
All Current 23,560,000 72.47%
Officers
and Directors as
a Group
THE BYLAW AMENDMENTS BY THE SHAREHOLDER
On August 24, 2005, the Court entered a third order (the
"Third August 24 Order"), which provides that the Written
Consent in Lieu of a Special Meeting of the Stockholders of
Allstates WorldCargo, Inc. (attached thereto, and referred
to as the "Shareholders' Consent") was consistent with the
settlement agreement, and shall be deemed signed by Messrs.
DiGiralomo, Stratton, Theile, and Guido, consisting of the
holders of a majority of the issued and outstanding shares
of the Company's common stock.
The Shareholders' Consent addressed the amendments that the
Directors had made to Sections 3.12(b) and (c) of the
Bylaws, and added the following: "This By-Law shall be
deemed to have been adopted by the shareholders, and cannot
be altered or repealed by the Board of Directors."
THE REASONS FOR THE AMENDMENTS
The Bylaw amendments proposed by the Shareholders in the
Shareholders' Consent were necessary to effectuate the
Settlement Agreement that was entered into between and among
Messrs. Guido, DiGiralomo, Theile, and Stratton.
A key provision of the Settlement Agreement was the manner
in which future vacancies on the Board of Directors are to
be filled - by affirmative vote of a majority of the
directors then in office, or, in case of a deadlock or a
tie, by an independent arbitrator appointed by the Board.
As a first step to effectuate that agreement, Sections
3.12(b) and 3.12(c) of the Bylaws were amended by the
Directors.
To ensure that the terms of the Settlement Agreement cannot
be changed without the unanimous consent of Messrs. Guido,
DiGiralomo, Theile, and Stratton (the settling parties),
those persons, constituting the holders of a majority of the
outstanding shares of the Company's common stock, further
amended Sections 3.12(b) and 3.12(c) of the Bylaws to
provide that those provisions are deemed to have been
adopted by the shareholders, and cannot be altered or
repealed by the Board of Directors.
Thus, under New Jersey law, Sections 3.12(b) and 3.12(c) of
the Bylaws can be amended only by shareholder action. The
Voting Agreement entered into among Messrs. Guido,
DiGiralomo, Theile, and Stratton (the "Voters") provides
that in the event that shareholder action is taken to alter
or amend the Bylaws, the Voters agree to vote all of their
shares unanimously. If the Voters are unable to reach a
unanimous decision, then the proposed change shall be
rejected. Consequently, Sections 3.12(b) and 3.12(c) of the
Bylaws cannot be changed except by the unanimous consent of
the Voters.
INTEREST OF CERTAIN PERSON IN MATTERS TO BE ACTED UPON
The security holdings of the Company's directors and
executive officers are listed above in the section entitled
"Security Ownership of Certain Beneficial Owners and
Management." Except as disclosed above, none of the
following persons has any substantial interest, direct or
indirect, by security holdings or otherwise, in any matter
to be acted upon:
(i) Any director or officer since the beginning of
the Company's last fiscal year;
(ii) Any proposed nominee for election as a director;
or
(iii) Any associate or affiliate of any of the
foregoing persons.
By Order of the Board:
______________________________
SAM DIGIRALOMO
President/C.E.O.
February ___ 2006