This excerpt taken from the EGBN DEF 14A filed Mar 31, 2008.
TO INCREASE AUTHORIZED CAPITAL STOCK
At the meeting, the shareholders are being asked to approve an amendment to the Companys Articles of Incorporation which would increase the number of authorized shares of common stock from 20,000,000 shares to 50,000,000 shares. The Board of Directors is proposing the amendment to ensure that a sufficient amount of capital stock is available for issuance in the future by the Company, upon action of the Board of Directors. The Board of Directors believes that the proposed increase in the authorized common stock is in the best interest of the Company and unanimously recommends a vote FOR the proposed amendment.
The Amendment. The Board of Directors has approved, subject to shareholder approval, the amendment of Article III of the Articles of Incorporation to read in its entirety as follows:
ARTICLE III. Capital Stock. The number of shares of stock of all classes which the Corporation shall have authority to issue is fifty one million (51,000,000), fifty million (50,000,000) of which shall be Common Stock, par value $.01 per share and one million (1,000,000) of which shall be preferred stock, par value $.01 per share, and the aggregate par value of all shares of all classes of stock is $510,000. The Board of Directors, by action of a majority of the full Board of Directors, shall have the authority to issue the shares of preferred stock from time to time on such terms as it may determine, and to divide the preferred stock into one or more classes or series, and, in connection with the creation of such classes or series to fix by resolution or resolutions the designations, voting powers, preferences, participation, redemption, sinking fund, conversion, dividend, and other optional or special rights of such classes or series, and the qualifications, limitations or restrictions thereof.
Purpose of Amendment. The Articles of Incorporation currently authorize the issuance of up to 21,000,000 shares of capital stock, 20,000,000 of which are common stock and 1,000,000 of which are undesignated preferred stock. As of the record date for the meeting, the Company had 9,790,252 shares of common stock outstanding, 1,369,814 shares of common stock reserved for issuance to directors, officers and employees under the Companys equity compensation plans, and 453,000 shares of common stock reserved for issuance under the Companys dividend reinvestment plan. Additionally, in connection with the proposed merger pursuant to which the Company will acquire Fidelity & Trust Financial Corporation in a stock for stock transaction, the Company has reserved an aggregate of 4,500,000 shares of common stock for issuance in the proposed merger and upon the exercise of options issued under Fidelity & Trust Financial Corporations option plans. This leaves only 3,886,934 authorized, unissued and unreserved shares of common stock available for issuance in capital raising transactions, as stock dividends, stock splits or for other corporate purposes.
While the Company has no current plans to issue any shares of capital stock other than pursuant to the plans and agreements described above, the Company may decide to issue common stock in connection with, among other things, capital raising, corporate acquisitions and other transactions, stock splits, stock dividends, and existing and future benefit plans. The currently available number of shares of common stock may not be sufficient to enable the Company to promptly respond to its capital or transactional needs. A delay in a transaction necessary to obtain shareholder