Enom 2013 Annual Report Download - page 38

governance practices. These and proposed corporate governance laws and regulations under consideration may further increase our compliance
costs. If compliance with these various legal and regulatory requirements diverts our management’s attention from other business concerns, it
could have a material adverse effect on our business, financial condition and results of operations. We also expect that these laws and regulations
may make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced
policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage than used to be available. As a result, it may
be more difficult for us to attract and retain qualified individuals to serve on our board of directors, on committees of our board of directors, or as
executive officers.
We are required to make an assessment of the effectiveness of our internal controls over financial reporting in accordance with
Section 404 of the Sarbanes-Oxley Act of 2002. We are also required to obtain an opinion on the effectiveness of our internal controls over
financial reporting from our independent registered public accounting firm. Section 404 requires us to perform system and process evaluation
and testing of our inter nal controls over financial reporting to allow management and our independent registered public accounting firm to
report on the effectiveness of our internal controls over financial reporting for each fiscal year. Our testing, or the subsequent testing by our
independent registered public accounting firm, may reveal deficiencies in our internal controls over financial reporting that are deemed to be
material weaknesses. If we are unable to comply with the requirements of Section 404, management may not be able to assess whether our
internal controls over financial reporting are effective, which may subject us to adverse regulatory consequences and could result in a negative
reaction in the financial markets due to a loss of confidence in the reliability of our financial statements. In addition, if we fail to maintain
effective controls and procedures, we may be unable to provide the required financial information in a timely and reliable manner or otherwise
comply with the standards applicable to us as a public company. Any failure by us to provide the required financial information in a timely
reliable manner could materially and adversely impact our financial condition and the trading price of our securities. In addition, we may incur
additional expenses and commitment of management’s time in connection with further assessments of our compliance with the requirements of
Section 404, which could materially increase our operating expenses and adversely impact our operating results.
If securities or industry analysts publish inaccurate or unfavorable research about our business, our stock price and trading volume could
decline.
The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about
us or our business. If one or more of the analysts who cover us downgrade our stock or publish inaccurate or unfavorable research about our
business, our stock price would likely decline. If one or more of these analysts cease coverage of our Company or fail to publish reports on us
regularly, demand for our stock could decrease, which might cause our stock price and trading volume to decline.
We do not anticipate paying cash dividends, and accordingly, stockholders must rely on stock appreciation for any return on their
investment.
The terms of our credit agreement currently prohibit us from paying cash dividends on our common stock. In addition, we do not
anticipate paying cash dividends in the future. As a result, only appreciation of the price of our common stock, which may never occur, will
provide a return to stockholders. Investors seeking cash dividends should not invest in our common st ock.
Certain provisions in our charter documents and Delaware law could discourage takeover attempts and lead to management entrenchment.
Our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that could have the effect of
delaying or preventing changes in control or changes in our management without the consent of our board of directors, including, among other
things:
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a classified board of directors with three-year staggered terms, which may delay the ability of stockholders to change the membership
of a majority of our board of directors;
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no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;
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the ability of our board of directors to determine to issue shares of preferred stock and to determine the price and other terms of those
shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the
ownership of a hostile acquiror;
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the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of our board of directors or
the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of
directors;