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:
[ ] Preliminary Information Statement
[ ] Confidential, For Use of the Commission Only (as
permitted by Rule 14c-5(g)(2))
[X ] 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be altered or repealed by the Board of Directors."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: April 4, 2006
ALLSTATES WORLDCARGO, INC.
4 Lakeside Drive South
Forked River, New Jersey 08731
_________________________________
INFORMATION STATEMENT
Dated April 4, 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 April 4, 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.
April 4, 2006
2