No Preemptive, Conversion or Redemption Rights
Holders of shares of our common stock do not have preemptive rights to subscribe for any new or additional securities, including shares of
common stock that we may offer or sell or issue in the future. Holders of shares of common stock have no conversion, exchange or sinking fund rights. Shares of our common stock are not redeemable at our option or at the option of the holders of
shares of common stock.
Shareholder Liability
All of our outstanding shares of common stock are fully paid and nonassessable. Under the New Jersey Business Corporation Law, shareholders
generally are not personally liable for a corporations acts or debts.
Limits on Rights of Shareholders to Bring Derivative and Other Actions
In the second quarter of 2015, our shareholders approved an amendment to our certificate of incorporation that make the provisions of
Sections 14A:3-6.1
to
14A:3-6.9
of the New Jersey Business Corporation Act applicable to us and our shareholders. Such provisions restrict the ability of shareholders to
bring a derivative action with respect to the corporation or an action against our directors and officers for breach of fiduciary duty to those shareholders who held shares at the time of the alleged action or omission and who continue to hold such
shares and require shareholders who own shares with a value of less than $250,000 to post security for expenses related to the action. In addition, such provisions require a shareholder to make written demand on the corporation to take appropriate
action at least 90 days prior to commencing any derivative proceeding. Finally, if the independent directors of the corporation evaluate the claim and, after a good faith, reasonable investigation, make a determination that such derivative
proceeding is not in the best interest of the corporation, such proceeding must be dismissed on motion by the corporation.
Anti-takeover Provisions
Certain provisions of United States and New Jersey law and certain provisions of our certificate of incorporation and bylaws, as
summarized in the following paragraphs, may have anti-takeover effects and could delay, defer, or prevent a tender offer or takeover attempt that a shareholder might consider to be in such shareholders best interest, including those attempts
that might result in a premium over the market price for the shares held by shareholders, and may make removal of the incumbent management and directors more difficult.
Authorized Shares
.
Our certificate of incorporation authorizes the issuance of 25,000,000 shares of common stock and
6,500,000 shares of preferred stock. These shares of common stock and preferred stock provide our Board of Directors with as much flexibility as possible to effect, among other transactions, financings, acquisitions, stock dividends, stock
splits and the exercise of employee stock options. However, these additional authorized shares may also be used by the Board of Directors consistent with its fiduciary duty to deter future attempts to gain control of us. The Board of Directors also
has sole authority to determine the terms of any one or more series of preferred stock, including voting rights, conversion rates, and liquidation preferences. As a result of the ability to fix voting rights for a series of preferred stock, the
Board has the power to the extent consistent with its fiduciary duty to issue a series of preferred stock to persons friendly to management in order to attempt to block a tender offer, merger or other transaction by which a third party seeks control
of us, and thereby assist members of management to retain their positions.
Classified Board of Directors.
Our certificate
of incorporation provides for a classified Board of Directors of not less than one nor more than 15 members, which number is fixed by the Board of Directors, divided into three classes, serving for terms currently expiring in 2019,
2020, and 2021, respectively, and after such terms, for successive terms of three years each. This provision is designed to assure experience, continuity, and stability in the Boards leadership and policies. The Board of Directors believes
that this can best be accomplished by electing each director to a three-year term and electing only approximately
one-third
of the directors each year.
The election of directors for staggered terms significantly extends the time required to make any change in control of the Board of Directors
and may tend to discourage any surprise or
non-negotiated
takeover bid for control of
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