AMENDMENT OF AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO INCREASE AUTHORIZED SHARES
On March 2, 2022, the Board, determining it to be advisable and in the best interests of the Company and its stockholders, authorized, subject to approval and adoption by the stockholders, an amendment (the “Authorized Shares Amendment”) to our Amended and Restated Certificate of Incorporation (as amended by the Authorized Shares Amendment, the “Post-Authorized Shares Certificate”) to increase the number of authorized shares of our common stock from 25 million to 50 million. The full text of the Authorized Shares Amendment is attached to this proxy statement as Appendix A.
As of March 17, 2022, a total of 19,504,055 of the Company’s currently authorized 25 million shares of DMC common stock were outstanding and 2,890,480 shares were reserved for issuance under our employee benefit plans, leaving only 2,605,465 shares available for issuance. The increase in the number of authorized but unissued shares of our common stock would enable the Company, without further stockholder approval (other than as required by applicable Nasdaq rules), to issue shares from time to time as may be required for business purposes such as raising additional capital for ongoing operations, business and asset acquisitions, present and future employee benefit programs and other corporate purposes. In addition, under the operating agreement for Arcadia, we have the right to acquire the remaining 40% ownership interest in Arcadia beginning in December 2024. We may also be required to purchase some or all of the remaining interests by the minority holder at any time after December 2024, and may elect to pay the purchase price for such interests through the issuance of newly created series A preferred stock, which would be convertible into common stock. In order to allow flexibility to purchase and finance the remaining ownership interest in Arcadia in either cash or preferred stock, it is critical to have sufficient authorized common stock.
The proposed Authorized Shares Amendment would not change the terms of our common stock, and the additional shares of DMC common stock to be authorized pursuant to the Authorized Shares Amendment would have rights identical to the currently outstanding shares of DMC common stock. The Board has not proposed an increase in the number of authorized shares of our common stock with the intention of discouraging tender offers or takeover attempts relating to 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.
The Board recognizes that the issuance of additional shares of our common stock may adversely affect the interests of the holders of DMC Global common stock. For example, in the absence of a proportionate increase in the Company’s earnings and book value, an increase in the aggregate number of outstanding shares caused by the issuance of additional shares would dilute the earnings per share and book value per share of all of the existing outstanding shares of our common stock. However, the Board believes that these potential risks are outweighed by the benefit that an increase in the number of available shares would provide in terms of additional financing flexibility. The Board believes that retaining the ability to act quickly on future opportunities that may require or be facilitated by additional stock issuances and the ability to finance the purchase of the remainder of Arcadia will benefit existing stockholders.
The effective time of the Authorized Shares Amendment, if approved by the stockholders and not otherwise abandoned by the Board, will be the time that the Certificate of Amendment setting forth the Authorized Shares Amendment is filed with the Delaware Secretary of State. The exact timing of the filing of the Certificate of Amendment setting forth the Authorized Shares Amendment will be determined by our Board based on its evaluation as to when such action will be the most advantageous to the Company and its stockholders.
|DMC GLOBAL INC. • 2022 PROXY STATEMENT||22|
If, at any time prior to the filing of the Certificate of Amendment setting forth the Authorized Shares Amendment with the Delaware Secretary of State, notwithstanding stockholder approval and without further action by the stockholders, the Board, in its sole discretion, determines that it is in the Company’s best interests and the best interests of our stockholders to abandon the Authorized Shares Amendment, the Authorized Shares Amendment may be abandoned.
In light of the foregoing, the Board recommends that you vote in favor of the following resolution at the Meeting:
RESOLVED, that the amendment to the Amended and Restated Certificate of Incorporation of DMC Global Inc. to increase the number of authorized shares of DMC Global common stock from 25 million to 50 million is hereby approved and adopted.
Approval of the Authorized Shares Proposal will require the affirmative vote of the holders of a majority in voting power of the outstanding shares of DMC Global common stock.
If you fail to vote or submit a proxy or fail to instruct your broker to vote (and your broker does not exercise its discretion to vote your shares on this matter) or vote to “abstain,” it will have the same effect as a vote “AGAINST” the Authorized Shares Proposal.
|THE BOARD RECOMMENDS VOTE “FOR” APPROVAL OF PROPOSAL 3.|