This excerpt taken from the ATVI DEF 14A filed Feb 23, 2005.
Approval of Amendment to Amended and Restated Certificate of Incorporation, as Amended, to Increase Authorized Shares
The Stockholders are being asked to approve an amendment to the Companys Amended and Restated Certificate of Incorporation, as amended (the Certificate), to increase the number of authorized shares of Common Stock from 225,000,000 to 450,000,000. The Board on January 24, 2005, adopted resolutions approving and authorizing the amendment and directing that the amendment be submitted to a vote of the Stockholders at a Special Meeting. The Board determined that the amendment is in the best interests of the Company and its Stockholders and unanimously recommends approval by the Stockholders. If the proposed amendment is approved by the Stockholders, the Board currently intends to file with the Secretary of State of the State of Delaware a Certificate of Amendment to the Certificate reflecting such amendment as soon as practicable following Stockholder approval.
The Certificate currently authorizes the issuance of up to 230,000,000 shares of stock, of which 225,000,000 shares are designated as Common Stock and 5,000,000 shares are designated as Preferred Stock. Of the 5,000,000 shares of Preferred Stock authorized, 1,250,000 shares have been designated as Series A Junior Preferred Stock. No shares of Preferred Stock or Series A Junior Preferred Stock are issued and outstanding. The proposed amendment will not, if adopted, result in an increase in the number of authorized shares of Series A Junior Preferred Stock or an increase in the total number of authorized shares of Preferred Stock. Of the 225,000,000 shares of Common Stock currently authorized, as of the close of business on February 1, 2005, there were 142,517,969 shares issued and outstanding. In addition, as of February 1, 2005, the Company has reserved up to approximately 1,539,000 shares of Common Stock for issuance upon the exercise of outstanding warrants, 418,683 shares of Common Stock for issuance pursuant to the Companys employee stock purchase plans and 48,965,683 shares of Common Stock for issuance pursuant to the Companys current incentive compensation plans and programs.
The Board of Directors has proposed this amendment to ensure that the Company has sufficient shares available for general corporate purposes including, without limitation, equity financings, acquisitions, establishing strategic relationships with corporate partners, providing equity incentives to employees, and payments of stock dividends, stock splits or other recapitalizations. The Company considers from time to time acquisitions, equity financings, strategic relationships and other transactions as market conditions or other opportunities arise.
Concurrently with the filing of this Notice of Special Meeting and proxy solicitation, the Company has announced a four-for-three stock split, which shall be effected by a 33-1/3% stock dividend to stockholders of record as of March 7, 2005, payable on March 22, 2005. This stock split will significantly increase the number of shares of Common Stock outstanding and the number reserved for issuance, thus necessitating the need to increase the number of authorized shares of the Company. The stock split is not conditioned upon the approval of the proposed amendment to increase the amount of authorized shares of Common Stock. Except for the stock split, the Companys management has no present arrangements, agreements, understandings or plans for the issuance or use of the additional shares of Common Stock proposed to be authorized by the amendment.
If the Stockholders approve the proposed amendment, the Board may cause the issuance of additional shares of Common Stock without further vote of the Stockholders of the Company, except as may be required in particular cases by the Companys charter documents, applicable law or the rules of any national securities exchange on which shares of Common Stock of the Company may then be listed. Under the Companys Certificate, the Companys Stockholders do not have preemptive rights to subscribe to additional securities that may be issued by the Company, which means that current Stockholders do not have a prior right to purchase any new issue of capital stock of the Company in order to maintain their proportionate ownership of Common Stock. In addition, if the Board elects to cause the Company to issue additional shares of Common Stock or securities convertible into or exercisable for Common Stock, such issuance could have a dilutive effect on the voting power and earnings per share of existing Stockholders.
The increase in the number of authorized shares of Common Stock could have an anti-takeover effect, although this is not the intent of the Board in proposing the amendment. For example, if the Board issues additional shares in the future, such issuance could dilute the voting power of a person seeking control of the Company, thereby deterring or rendering more difficult a merger, tender offer, proxy contest or an extraordinary transaction opposed by the Board of Directors. As of the date of this Proxy Statement, the Board is not aware of any attempt or plan to obtain control of the Company.
If approved, the amendment would amend and restate Article Fourth of the Certificate as follows:
The affirmative vote of a majority of the outstanding shares of Common Stock is required for approval of the proposed amendment.