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PROPOSAL TO AMEND THE COMPANY’S CERTIFICATE OF INCORPORATION TO AUTHORIZE A PREFERRED STOCK (Item 3) The Board of Directors unanimously recommends the approval of a proposed amendment to Article FOURTH of the Certificate of Incorporation of the Company which would authorize the issuance of 1,000,000 shares of Preferred Stock. Listed on Exhibit A hereto and incorporated herein by reference is the complete text of the proposed additional language to be added after the first paragraph of Article FOURTH. The proposed amendment will authorize the issuance of 1,000,000 shares of Preferred Stock, par value SO. 0001 per share ("Preferred Stock"). The Company currently has no authorized stock other than common stock. Upon adoption of the amendment, the Board of Directors will, without further action by the stockholders, unless otherwise required by law or any applicable stock exchange rules, be authorized to issue up to 1,000,000 shares of Preferred Stock at such times, for such purposes and for such consideration as it may determine. Although it has no present plans or commitments to issue any shares of Preferred Stock, management believes that the availability of such a security may prove useful in connection with financing the capital needs of the corporation, possible future acquisitions and mergers, employee incentive or compensation plans, or other purposes. The authorization will enable the Company to act promptly if appropriate circumstances arise which require the issuance of such shares. The proposed amendment would authorize the Board of Directors to provide for the issuance, from time to time, of Preferred Stock in one or more series and to fix the terms of each series. Each series of Preferred Stock could, as determined by the Board of Directors at the time of issuance, rank, in respect of dividends and liquidation, senior to the Common Stock. In establishing the terms of a series of Preferred Stock, the Board of Directors would be authorized to set, among other things, the number of shares, the dividend rate and preferences, the cumulative or non-cumulative nature of dividends, the redemption provisions, the sinking fund provisions, the conversion fights, the amounts payable, and preferences, in the event of the voluntary or involuntary liquidation of the Company, and the voting rights in addition to those required by law. Such terms could include provisions prohibiting the payment of Common Stock dividends or purchases by the Company of Common Stock in the event dividends or sinking fund payments on the Preferred Stock were in arrears. In the event of liquidation, the holders of Preferred Stock of each series might be entitled to receive an amount specified for such series by the Board of Directors before any payment could be made to the holders of Common Stock. The authorization of new shares of Preferred Stock will not, by itself, have any effect on the rights of the holders of shares of Common Stock. Nonetheless, the issuance of one or more series of Preferred Stock could affect the holders of shares of the Common Stock in a number of respects, including the following: (a) if voting rights are granted to any newly issued series of Preferred Stock, the voting power of the Common Stock will be diluted, (b) the issuance of Preferred Stock may result in a dilution of earnings per share of the Common Stock, (c) dividends payable on any newly issued series of Preferred Stock will reduce the amount of funds available for payment of dividends on the Common Stock and (d) future amendments to the Certificate of Incorporation affecting the Preferred Stock may require approval by the separate vote of the holders of the Preferred Stock or in some cases the holders of shares of one or more series of Preferred Stock (in addition to the approval of the holders of shares of the Common Stock) before action can be taken by the Company. The availability of the Preferred Stock authorized by the amendment may enable the Company to engage in transactions, such as stock placements or acquisitions, which could aid management in defending against an unsolicited bid for control of the Company. The Board of Directors has unanimously determined that the proposed amendment to Article FOURTH of the Company's Certificate of Incorporation is in the best interest of the Company and its stockholders. The Board of Directors therefore recommends a vote FOR adoption of the proposed amendment to Article FOURTH. The affirmative vote of the holders of at least a majority of the issued and outstanding shares of the Company's Common Stock entitled to vote at the 1996 Annual Meeting of Stockholders is required for the amendment to Article FOURTH to be effective. EXHIBIT A Proposed Language to be added to the end of Article FOURTH of the Certificate of incorporation of Research Frontiers Incorporated: In addition, the Corporation shall have authority to issue a total of one million (1,000,000) shares of preferred stock of the par value $0.0001 per share ("Preferred Stock"). The Preferred Stock may be issued from time to time as herein provided in one or more series. The designations, relative rights, preferences and limitations of the Preferred Stock, and particularly of the shares of each series thereof, may, to the extent permitted by law, be similar to or differ from those of any other series. The Board of Directors of the Corporation or a duly authorized committee thereof is hereby expressly granted authority, subject to the provisions of this Article FOURTH, to fix by resolution from time to time before issuance thereof 'the number of shares in each series of such class and all designations, preferences, relative participating, optional or other special rights and qualifications, limitations and restrictions of the shares in each such series, including, but without limiting generality of the foregoing, the following: (a) the designation of the series and the number of shares to constitute such series (which number may be increased or decreased from time to time unless otherwise provided by the Board of Directors); (b) the dividend rate (or method of determining such rate), any conditions on which and times at which dividends arc payable, the preference or relation which such dividends shall bear to the dividends payable on any other class or classes or of an), other series of capital stock including the Preferred Stock, and whether such dividends shall be cumulative or noncumulative, (c) whether the series will be redeemable (at the option of the Company or the holders of such shares or both, or upon the happening of a specified event) and, if so, the redemption prices and the conditions and times upon which redemption may take place and whether for cash, property or rights, including securities of the company or another corporation, (d) the terms and amount of any sinking, retirement or purchase fund; (e) the conversion or exchange rights (at the option of the Company or the holders of such shares or both, or upon the happening of a specified event), if any, including the conversion or exchange times, prices, rates, adjustments and other terms of conversion or exchange; (f) the voting rights, if any (other than any voting rights that the Preferred Stock may have as a matter of law); (g) any restrictions on the issue or reissue or sale of additional Preferred Stock; (h) the rights of the holders upon voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company (including preferences over the common Stock or other class or classes or series of capital stock including the Preferred Stock); (i) the preemptive rights, if any, to subscribe to additional issues of stock or securities of the Company; and (j) such other special rights and privileges, if any, for the benefit of the holders of the Preferred Stock, as shall not be inconsistent with the provisions of the Certificate of Incorporation, as amended, or applicable law. All shares of Preferred Stock of the same series shall be identical in all respects, except that shares of any one series issued at different times may differ as to daws, if any, from which dividends thereon may accumulate. All shares of Preferred Stock redeemed, purchased or otherwise acquired by the Corporation (including shares surrendered for conversion) shall be cancelled and thereupon restored to the status of authorized but unissued shares of Preferred Stock undesignated as to series. Except as otherwise may be required by law, and except as otherwise may he provided in the Certificate of Incorporation, as amended, or in the resolution of the Board of Directors of the Corporation creating any series of Preferred Stock, the Common Stock shall have the exclusive right to vote for the election of directors and for all other purposes, each holder of the Common Stock being entitled to one vote for each share thereof held. Except as may be stated and expressed in any resolution or resolutions of the Board of Directors providing for the issue of any series of Preferred Stock, (i) any amendment to the Certificate of Incorporation which shall increase or decrease the number of shares of any class or classes of authorized capital stock of the Corporation (but not below the number of shares thereof then outstanding) may be adopted by the affirmative vote of the holders of a majority of the outstanding shares of the voting stock of the Corporation, and (ii) no holder of capital stock shall he entitled as a matter of right to subscribe for or purchase, or have any preemptive right with respect to, any part of any new or additional issue of stock of any class whatsoever, or of securities convertible into any stock of any class whatsoever, whether now or hereafter authorized and whether issued for cash or other consideration or by way of dividend. Research Frontiers Incorporated 4/29/96