Our directors are divided into three classes. The members of each class are elected for a
term of three years and only one class of directors will be elected annually. Thus, it would take at least two annual elections to replace a majority of our board of directors. Further, our policies impose certain notice and information requirements
in connection with the nomination by shareholders of candidates for election to our board of directors at an annual meeting of shareholders.
Extraordinary Transactions. Pursuant to the NJBCA, a New Jersey corporation generally cannot (except under and in compliance with
specifically enumerated provisions of the NJBCA) amend its certificate of incorporation, consolidate, merge, sell, lease or exchange all or substantially all of its assets, engage in a share exchange, or liquidate, dissolve or wind-up unless such acts are approved by the affirmative vote of a majority of the votes cast by the corporations stockholders entitled to vote, unless a greater percentage is set forth in the
corporations certificate of incorporation.
Charter Amendments. In general, a proposed amendment to our certificate of
incorporation will be adopted upon receiving the affirmative vote of a majority of the votes cast by the holders of shares entitled to vote thereon and, in addition, if any class or series of shares is entitled to vote thereon as a class, the
affirmative vote of a majority of the votes cast in each class vote.
Bylaws Amendments. Our bylaws may be amended by a majority of
the directors then in office or by a vote of the majority of the capital stock outstanding and entitled to vote. Any bylaw, whether adopted, amended or repealed by the shareholders or directors, may be amended or reinstated by the shareholders or
directors.
Removal of Directors. Our charter provides that a director may only be removed, with or without cause, by the
affirmative vote of the holders of the majority of shares issued and outstanding and entitled to be cast in the election of directors. In addition, the NJBCA provides that if a corporations directors are divided into classes, shareholders
shall not be entitled to remove directors without cause.
Absence of Cumulative Voting. There is no cumulative voting in the
election of our directors. Cumulative voting means that holders of stock of a corporation are entitled, in the election of directors, to cast a number of votes equal to the number of shares that they own multiplied by the number of directors to be
elected. Because a stockholder entitled to cumulative voting may cast all of his, her or its votes for one nominee or disperse his, her or its votes among nominees as the stockholder chooses, cumulative voting is generally considered to increase the
ability of minority stockholders to elect nominees to a corporations board of directors. The absence of cumulative voting means that the holders of a majority of our voting shares can elect all of the directors then standing for election and
the holders of the remaining shares will not be able to elect any directors.
Authorized Shares. As indicated above, our charter
currently authorizes the issuance of 40,000,000 shares of common stock and 10,000,000 shares of preferred stock. The unissued authorized shares may be used by our board of directors consistent with its fiduciary duty to deter future
attempts to gain control of the Company. Also, as indicated above, our board of directors right to set the terms of one or more series of preferred stock may have anti-takeover effects.
Effect of Anti-Takeover Provisions
The
foregoing provisions of our charter and bylaws and New Jersey law could have the effect of discouraging an acquisition of the Company or stock purchases in furtherance of an acquisition, and could accordingly, under certain circumstances, discourage
transactions that might otherwise have a favorable effect on the price of our common stock. In addition, such provisions may make us less attractive to a potential acquirer and/or might result in stockholders receiving a lesser amount of
consideration for their shares of our common stock than otherwise could have been available.
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