Control Share Acquisitions
The control share provisions of Sections 78.378 to 78.3793, inclusive, of the NRS apply to issuing corporations that
are Nevada corporations with at least 200 stockholders of record, including at least 100 stockholders of record who are Nevada residents, and that conduct business directly or indirectly in Nevada. The control share statute prohibits an acquirer,
under certain circumstances, from voting its shares of a target corporations stock after crossing certain ownership threshold percentages, unless the acquirer obtains approval of the target corporations disinterested stockholders. The
statute specifies three thresholds: one-fifth or more but less than one-third, one-third but less than a majority, and a majority or more, of the outstanding voting power. Generally, once an acquirer crosses one of the above thresholds, those shares
in an offer or acquisition and acquired within 90 days thereof become control shares and such control shares are deprived of the right to vote until disinterested stockholders restore the right. These provisions also provide that if
control shares are accorded full voting rights and the acquiring person has acquired a majority or more of all voting power, all other stockholders who do not vote in favor of authorizing voting rights to the control shares are entitled to demand
payment for the fair value of their shares in accordance with statutory procedures established for dissenters rights.
A corporation
may elect to not be governed by, or opt out of, the control share provisions by making an election in its articles of incorporation or bylaws, provided that the opt-out election must be in place on the 10th day following the date an
acquiring person has acquired a controlling interest, that is, crossing any of the three thresholds described above. We have not opted out of the control share statutes, and will be subject to these statutes if we are an issuing
corporation as defined in such statutes.
The effect of the Nevada control share statutes is that the acquiring person, and those
acting in association with the acquiring person, will obtain only such voting rights in the control shares as are conferred by a resolution of the stockholders at an annual or special meeting. The Nevada control share law, if applicable, could have
the effect of discouraging takeovers of our company.
Limitations of Liability and Indemnification of Officers and Directors
Our amended and restated articles of incorporation, as amended, limit the liability of directors to the fullest extent permitted by Nevada law
and provides that no director or officer of ours will be personally liable to us or any of our stockholders for damages for breach of fiduciary duty as a director or officer involving any act or omission of any act by such director or officer, other
than (i) for acts or omissions which involve intentional misconduct, fraud, or a known violation of the law, or (ii) the payment of dividends in violation of Section 78.300 of the NRS. In addition, our amended and restated articles of
incorporation, as amended, provide that we will indemnify our directors and officers to the fullest extent permitted by law.
We are a
Nevada corporation and generally governed by the Nevada Private Corporations Code, Chapter 78 of the Nevada Revised Statutes, or NRS.
Section 78.138 of the NRS provides that, unless the corporations articles of incorporation provide otherwise, a director or officer
is not individually liable to the corporation or its stockholders or creditors for damages as a result of any action or omission to act as a director or officer unless the trier of fact determines that the presumption that the director or officer
acted in good faith, on an informed basis and with a view to the interests to the corporation is rebutted and it is proven that (i) the directors or officers acts or omissions constituted a breach of his or her fiduciary duties, and
(ii) such breach involved intentional misconduct, fraud, or a knowing violation of the law.
Section 78.7502 of the NRS permits
a company to indemnify its directors and officers against expenses, judgments, fines, and amounts paid in settlement actually and reasonably incurred in connection with a threatened, pending, or completed action, suit, or proceeding, if the officer
or director (i) is not liable pursuant to Section 78.138 of the NRS, or (ii) acted in good faith and in a manner the officer or director reasonably believed
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