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Item
5.02.
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Departure
of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
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Director
and Officer Resignations
At
the effective time of the Merger, David Newman, the Company’s Chief Business Development Officer and a director of the Board,
Spencer Richardson, the Company’s Chief Executive Officer and a director of the Board, and Solomon Mayer, a director of
the Board, all tendered their resignations from their respective positions as officers and directors of the Company. These letters
did not contain any statements describing disagreements with the Company related to its operations, policies or practices, nor
did any disagreements lead to their resignation.
Officer
Restricted Stock Grants
Pursuant
to (i) Section 3(e) of an employment agreement, dated as of September 6, 2017, by and between the Company and Spencer Richardson
and (ii) Section 3(e) of an employment agreement, dated as of September 6, 2017, by and between the Company and David Newman,
on January 30, 2020, each of Mr. Richardson and Mr. Newman was entitled to receive a grant of options to purchase shares of the
Company’s stock in an amount equal to 1% of the then-outstanding shares of Company Common Stock on a fully diluted basis
(which would have been equal to options to purchase 125,700 shares each). Such grants were not issued due to a lack of shares
available for issuance pursuant to the Company’s Amended and Restated 2014 Equity Incentive Plan. Following approval of
the 2020 Plan (defined below) by the stockholders of the Company and prior to the consummation of the Merger and in lieu of the
January 30, 2020 options at the request of Messrs. Richardson and Newman, the Company issued to each of Mr. Richardson and Mr.
Newman a grant of 62,500 pre-Reverse Stock Split and pre-Stock Dividend restricted shares of Company Common Stock, without giving
effect to the Reverse Stock Split and the Stock Dividend. Such shares were granted pursuant to an exemption from registration
pursuant to Rule 506(b) of Regulation D.
Director
Appointments
Pursuant
to the terms of the Merger Agreement, the Board appointed Rodney C. Keller, Jr., George Devlin and Mark Adams (the “New
Directors”), who were members of AYRO Operating’s board of directors immediately prior to the effective time of the
Merger, to the Board at the effective time of the Merger.
Following
the effective time of the Merger, the Board appointed Joshua Silverman, Greg Schiffman and Zvi Joseph as the members of the Audit
Committee of the Board, Joshua Silverman, Greg Schiffman and Zvi Joseph as the members of the Compensation Committee of the Board
and Joshua Silverman, Greg Schiffman and Zvi Joseph as the members of the Nominating and Governance Committee of the Board.
Information
concerning related party transactions between AYRO Operating, the predecessor company, and Mr. Adams was previously reported in
the Company’s Registration Statement on Form S-4 (File No. 333-236461) filed with the SEC on April 24, 2020, as amended.
The
Chairman of the Board shall be paid an annual compensation of $200,000 and shall be granted a non-qualified stock option based
upon the value of $30,000 under the Company’s 2020 Plan (defined below) each year at the annual meeting of the Board following
the Company’s annual meeting of stockholders. Each other non-employee director shall be granted a non-qualified stock option
based upon the value of $20,000 under the 2020 Plan each year at the annual meeting of the Board following the Company’s
annual meeting of stockholders.
Officer
Appointments
Immediately
following the effective time of the Merger, the Board appointed the following individuals to the office or offices set forth opposite
his name below:
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Name:
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Office:
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Rodney
C. Keller, Jr.
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Chief
Executive Officer and President
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Curtis
Smith
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Chief
Financial Officer
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Brian
Groh
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Chief
of Business Development
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Richard
Perley
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Chief
Marketing Officer
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Mr.
Keller, 61, in addition to his roles as the Company’s President, Chief Executive Officer and a member of the
Board, has served as AYRO Operating’s chief executive officer, president and director since November 2017. Mr. Keller is
an accomplished executive with domestic and international experience in sales, marketing, operations, profit and loss oversight,
multi-channel product distribution involving both start-up and growth organizations. Prior to AYRO Operating, Mr. Keller was a
partner with Odgers Berndtson, a global leader in executive search, leadership services and talent management from January 2016
to November 2017. From April 2013 until January 2016, Mr. Keller served as the president of Segway Inc. During Mr. Keller’s
tenure as the president, Segway Inc. more than doubled its revenues, and Mr. Keller led the sale of the company to Beijing-based
Ninebot in China, the resulting company becoming a global leader in intelligent short-distance electric personal transportation
solutions. From January 2012 to April 2013, Mr. Keller served as president and chief executive officer of T3 Motion, which was
a Nasdaq-listed company during his tenure, a producer of job-specific, 3-wheeled electric-vehicles primarily serving law enforcement
and private security applications. From August 2010 to January 2012, Mr. Keller was vice president and general manager of DIRECTV’s
commercial business. During Mr. Keller’s tenure this business grew more than 20% annually. From January 2007 to August 2010
Mr. Keller was president and chief executive officer of Siemens Home and Office Communications business in North America. During
his service, Mr. Keller more than doubled revenues while expanding Siemen’s retail and internet footprint with some of the
largest retailers in North America. From January 2005 to January 2007, Mr. Keller was president and chief executive officer of
Augmentix, a venture capital-backed company building ruggedized servers and notebooks based on Dell Inc.’s platform of computing
solutions, which was subsequently sold to Dell. From 1996 until January 2004, Mr. Keller held different management roles in Toshiba
America Information Systems. Mr. Keller is a Distinguished Alumnus of Texas State University, a Trustee for the Development Foundation
of Texas State University and member of the McCoy College Advisory Council at Texas State University since 1987.
Mr.
Groh, 61, in addition to his role as the Company’s Chief of Business Development, has served as AYRO Operating’s contracted
Chief of Business Development since September 2019. Mr. Groh is an executive and entrepreneur with over thirty-five years’
experience in technology start-ups, accelerated growth and large corporations, with an extensive experience in negotiations, mergers
and acquisitions, in addition to establishing mutually beneficial and long-term partner relationships. Mr. Groh was the founder
and chief executive officer of public companies for over twenty years in various technology companies in the cellular, tablet
and mobile computing sectors. Since January 2018, Mr. Groh has been on the Board of Advisors Meghraj Capital International, an
international banking advisory, fiduciary services and consulting company headquartered in the British Isles that manages over
$100 billion in client assets. Mr. Groh also serves on the board of WellSmith, an Austin-based digital platform company for population
health management of chronic diseases that has partnered with Cone Health, a private, not-for-profit, healthcare delivery system.
From August 2015 to January 2018, Mr. Groh was employed as General Manager of Business Development at Wistron Corporation, a Taiwanese
global technology engineering and manufacturing leader, and was responsible for creating Wistron’s smart product business
development operations in North America. From October 2008 until July 2015, Mr. Groh served as General Manager of Business Development
of Wistron as a contractor and oversaw the growth of Wistron’s smartphone business where he was successful in securing over
$7 billion in contacts. From 2005 until 2008, Mr. Groh provided consulting services to a number of high tech companies in Canada
and the United States. Prior to working with Wistron, Mr. Groh founded and served as CEO of Xplore Technologies Corp. from 1995
to September 2005, a global rugged tablet provider, and Mr. Groh spearheaded Xplore’s initial public offering and acquisitions,
raising more than $70 million in funding. From 1986 to 1995, Mr. Groh founded and served as the CEO of Telular Canada, an innovative
wireless data company with patented rights from its U.S. counterpart, Telular Corporation. Mr. Groh led Telular Canada’s
$18 million initial public offering in 1992 and acquisition of 20% of Telular Corporation that had a $40 million market cap at
the time. Less than one year after the acquisition, Telular Corporation conducted its initial public offering as a $400 million
market cap company. From 1985 until 1989, Mr. Groh was the Founder and CEO of Roadway Communications, one of Canada’s first
cellular phone dealers.
Mr.
Perley, 55, in addition to serving as the Company’s Chief Marketing Officer, has served as AYRO Operating’s contracted
Chief Marketing Officer since September 2019, and previously from October 2018 through April 2019. Mr. Perley is an experienced
technology executive and entrepreneur who has led successful marketing, product management, business development and operational
teams over a thirty-two-year career. He has extensive experience in high-growth, early-stage technology/innovation companies in
the consumer, commercial, industrial and government sectors. From February 2018 through August 2018, and from May 2019 through
August 2019, Mr. Perley founded and was a managing director and Chief Marketing Officer of PerlTek, a technology consulting firm
providing marketing, product management and business development services to a range of companies from the healthcare, cybersecurity
and blockchain industries. From September 2015 to January 2018, Mr. Perley served as Vice President, Business Development for
Wistron Corporation. Mr. Perley helped create Wistron’s smart product business development operations in North America where
major account customer acquisition opportunities expanded by 20 times during Mr. Perley’s employment. From September 2015
to January 2018, Mr. Perley was Chief Marketing Officer and Managing Partner of Kinetex, LLC, an integrated product marketing,
launch, sales and strategic planning accelerator for B2B and B2C companies in North America and Western Europe he co-founded.
Prior to Kinetex, Mr. Perley served as VP of Marketing and Services for Augmentix and Xplore Technologies (co-founder), both rugged
field computing companies. He was instrumental in driving accelerated product, market and revenue growth for both organizations
which ultimately were successfully sold to larger entities. Mr. Perley was also a Director at Motorola where he led wireline marketing
and sales team. He has an honors Business Degree from McMaster University, Ontario Canada.
Mr.
Smith, 52, in addition to serving as the Company’s Chief Financial Officer, has served as AYRO Operating’s chief financial
officer since March 2018. Mr. Smith has been a CPA for more than 25 years with experience in public accounting and executive level
experience in financial, operations and IT systems management. From November 2015 through February 2018, Mr. Smith served as the
chief financial officer for LAC Group, a private equity-backed portfolio company, responsible for all aspects of strategic planning,
investor relations, treasury management, finance, accounting, HR and IT. Prior to LAC Group, he served as a consultant to various
private companies regarding their financial and operational affairs. From November 2010 to February 2013, he served as the chief
financial officer of AgileAssets, a software developer building transportation asset management enterprise software. Mr. Smith
was instrumental in developing the SaaS-business model for AgileAssets. Prior to AgileAssets, Mr. Smith served as Vice President-Finance
and Administration for Troux Technologies. Prior to Troux Technologies, he served as Director of Finance and Director of Operations
with Verio (Nasdaq: VRIO), a 55+ company rollup and was instrumental in both the rollup as well as the company’s successful
IPO in 1998. Mr. Smith holds a B.B.A in accounting from Texas A&M University.
Employment
Agreements
Pursuant
to the Merger Agreement, effective upon consummation of the Merger and as a condition to the closing of the Merger, immediately
prior to the effective time of the Merger, the Company entered into an executive employment agreement with Mr. Keller (the “Keller
Employment Agreement”). In addition, on May 28, 2020, AYRO Operating entered into an amendment to its executive employment
agreement with Curtis E. Smith (the “Smith Amendment,” and together with the Keller Employment Agreement, the “Executive
Employment Agreements”).
Keller
Employment Agreement
Pursuant
to the Keller Employment Agreement, Mr. Keller will serve as the chief executive officer of the Company and as a director for
the one-year initial term commencing upon effective time of the Merger, which term shall be automatically renewed for a successive
one-year term, unless earlier terminated by either party upon four months’ written notice or terminated otherwise as set
forth in the new employment agreement. Mr. Keller will also serve as a director of the Company.
The
Keller Employment Agreement provides that Mr. Keller is entitled to a base salary of $250,000, which may be increased at the discretion
of Company’s Board of Directors but may not be decreased without Mr. Keller’s consent. Mr. Keller is also eligible
to receive for fiscal years during the term of his employment periodic bonuses up to 50% of his annual base salary upon achievement
of target objectives and performance criteria, payable on or before March 15 of the fiscal year following the fiscal year to which
the bonus relates. Except upon termination by the Company without cause or upon non-renewal, or by Mr. Keller for good reason,
Mr. Keller shall be entitled to a bonus for a year, subject to achievement of the performance criteria, if he is employed by the
Company as of December 31 for the year to which services to which the bonus applies were performed. Targets and performance criteria
shall be established by the Company’s Board of Directors after consultation with Mr. Keller, but the evaluation of Mr. Keller’s
performance shall be at the Company’s Board of Directors’ sole discretion.
As soon as administratively practicable after the
closing date of the Merger, the Company agreed to grant Mr. Keller an award of 5,553,592 (pre-Reverse Stock Split and pre-Stock
Dividend) restricted stock units equivalent to 5% of the issued and outstanding shares of Company Common Stock on a fully diluted
basis, subject to the terms and conditions of the Company’s equity plan and form of restricted stock unit award agreement,
which terms shall include (i) forfeiture of any unvested restricted stock units on termination of employment for any reason; and
(ii) vesting of the restricted stock units as follows: (A) 33.33% will vest upon the Company’s receipt of purchase orders
for at least 500 AYRO vehicles to be sold to Club Car in calendar year 2020 with specified quarterly targets, provided, that (1)
on or before December 16, 2019, a definitive written agreement with respect to such purchase is executed, and at least $1,000,000
of the purchase has been received by the Company; (2) on the closing date of the Merger, AYRO Operating secures borrowing based
on a line of credit of $4,000,000 to support inventory purchase flow in line with the Company’s 2020 budget; (3) the Merger
closes on or before April 23, 2020 and the Company receives additional funding of at least $5,000,000 by the closing date of the
Merger; (4) in the event the closing date of the Merger is after January 25, 2020, AYRO Operating and the investors mutually agree
on the earlier release of approved funding of at least $500,000; and (5) the Company receives additional funding from third parties
of at least $1,500,000 on or before September 30, 2020; (B) an additional 33.33% on the date that, in addition to the conditions
set forth in (A), the Company enters into a definitive written agreement with Club Car or Ingersoll Rand on or before May 31, 2020,
that results in a minimum equity investment of $1,500,000, and publicly discloses such investment; and (C) the remainder on the
date that the Company achieves a minimum average valuation of 25% higher for twenty out of the thirty calendar days following the
end of the first full quarter after the closing date of the Merger than the Company’s valuation on the date of the Merger,
provided that the conditions set forth in (A) have been achieved by such date.
The
Company may terminate Mr. Keller’s employment for cause at any time after providing written notice to Mr. Keller, and without
cause with thirty days’ written notice. Mr. Keller may terminate his employment without good reason at any time upon thirty
days’ written notice or with good reason, which requires delivery of a notice of termination within ninety days after Mr.
Keller first learns of the existence of the circumstances giving rise to good reason, and failure of the combined company to cure
the circumstances giving rise to the good reason within thirty days following delivery of such notice.
If
the Company terminates Mr. Keller’s employment for cause or if Mr. Keller resigns, Mr. Keller shall receive, within thirty
days of such termination, any accrued but unpaid base salary and expenses required to be reimbursed, and all vested outstanding
stock options will remain exercisable until the earlier of expiration of the option’s term or the date that is two years
following the termination.
If
Mr. Keller’s employment is terminated due to his death or disability, Mr. Keller or his estate will receive the accrued
obligation Mr. Keller would have received upon termination by the Company for cause or by Mr. Keller by resignation, and any earned,
but unpaid, bonus for services rendered during the year preceding the date of termination.
If
the Company terminates Mr. Keller’s employment without cause or upon non-renewal or by Mr. Keller for good reason, Mr. Keller
is entitled to receive the accrued obligation Mr. Keller would have received upon termination by the Company for cause or by Mr.
Keller by resignation, and any earned, but unpaid, bonus for services rendered during the year preceding the date of termination.
In addition, subject to compliance with the restrictive covenants set forth in the Keller Employment Agreement and the execution
of a release of claims, the Company will pay the following severance payments and benefits: (1) an amount equal to twelve months’
base salary, payable in equal monthly installments over a twelve-month severance period; (2) an amount equal to the greater of
(x) the most recent annual bonus earned by Mr. Keller, (y) the average of the immediately preceding two year’s annual bonuses
earned by Mr. Keller, or (z) if Mr. Keller’s termination of employment occurs during the first calendar year of the initial
employment term before any annual bonus for a full twelve-month period of service has been paid, then the target bonus Mr. Keller
is eligible for under the employment agreement; provided that no bonus amount shall be payable if the bonuses for the year of
termination are subject to achievement of performance goals and such performance goals are not achieved by the combined company
for such year; provided further that the bonus amount shall be paid at the same time bonuses would be payable under the employment
agreement as if Mr. Keller was actively employed; (3) all outstanding stock options and restricted stock unit awards granted shall
be fully and immediately vested, to the extent not previously vested and shares with respect to the restricted stock unit awards
that become vested under the employment agreement shall be delivered within ten days of termination; and (4) continued healthcare
coverage under the group health plan at the same cost, if any, imposed on active employees of the company, until the earlier of
(x) the expiration of the severance period or (y) the date Consolidated Omnibus Budget Reconciliation Act of 1986 (“COBRA”)
coverage terminates or expires.
If
the Company terminates Mr. Keller’s employment without cause or upon non-renewal or by Mr. Keller for good reason in connection
with or within 24 months following a change in control (as defined in the Company’s 2020 Long-Term Equity Incentive Plan),
Mr. Keller shall receive the severance payments and benefits he would receive in the event that the Company terminates Mr. Keller’s
employment without cause or upon non-renewal or by Mr. Keller for good reason set forth above, but instead of twelve months’
base salary, Mr. Keller will receive twenty-four months’ base salary over a twelve-month severance period and double the
bonus amount he would have received without change in control.
The
Keller Employment Agreement also contains certain standard noncompetition, non-solicitation, non-disparagement, confidentiality,
and assignment of inventions requirements for Mr. Keller.
Smith
Amendment
AYRO
Operating entered into the Smith Amendment immediately prior to the effective time of the Merger. The Smith Amendment provides
that if Mr. Smith’s employment is terminated upon either party’s failure to renew or by Mr. Smith without good reason,
then all of Mr. Smith’s vested, outstanding stock options will remain exercisable until the earlier of the expiration of
the option’s term or the date that is two years following the termination. The Smith Amendment further provides that if
Mr. Smith’s employment is terminated by AYRO Operating without cause or by Mr. Smith for good reason, then all outstanding
equity awards granted to Mr. Smith pursuant to his employment agreement shall be fully and immediately vested, to the extent not
previously vested, and all of his then vested, outstanding stock options shall remain exercisable until the earlier of the expiration
of the options’ term or the date that is two years following termination.
The
foregoing description of the Executive Employment Agreements does not purport to be complete and is qualified entirely by reference
to the full text of the Executive Employment Agreements, with the Keller Employment Agreement and the Smith Amendment attached
hereto as Exhibits 10.6 and 10.7, respectively, which in each case is incorporated by reference herein.
Adoption
of Benefit Plan and Assumption of Stock Options and Warrants
Pursuant
to the Merger Agreement, effective as of the effective time of the Merger, the Company assumed AYRO Operating’s 2017 Long-Term
Incentive Plan (the “2017 Plan”), assuming all of AYRO Operating’s rights and obligations with respect to the
options issued thereunder. Immediately thereafter, the Company terminated the 2017 Plan. Pursuant to the Merger Agreement, at
the effective time of the Merger, the Company adopted the 2020 Long-Term Equity Incentive Plan (the “2020 Plan”).
The
2020 Plan provides for the granting of incentive stock options, nonqualified stock options, stock appreciation rights, restricted
stock, restricted stock units, performance awards, dividend equivalent rights and other awards which may be granted singly, in
combination or in tandem, and which may be paid in shares of Company Common Stock. At the effective time of the Merger, the number
of shares of Company Common Stock that are reserved for issuance pursuant to awards under the 2020 Plan is 2,289,650 shares (post-Reverse
Stock Split and post-Stock Dividend), 100% of which may be delivered as incentive stock options.
The
2020 Plan will terminate on May 28, 2030, the tenth anniversary of its effective date. No award may be made under the 2020 Plan
after its expiration date.
The
foregoing description of the 2020 Plan does not purport to be complete and is qualified entirely by reference to the full text
of the 2020 Plan, which is attached hereto as Exhibit 10.8 and is incorporated by reference herein.
In
addition, under the terms of the Merger Agreement, the Company assumed all of AYRO Operating’s rights and obligations under
AYRO Operating’s stock options and warrants that were outstanding immediately prior to the effective time of the Merger,
and each such stock option or warrant, to the extent unexercised, was converted into a stock option or warrant representing the
right to purchase shares of Company Common Stock on terms substantially the same as those in effect immediately prior to the effective
time, except that the number of shares of Company Common Stock issuable and the exercise price per share of such stock options
or warrants were adjusted by the Exchange Ratio. Additionally, the number of shares and exercise price per share of Company Common
Stock issuable under the assumed AYRO Operating stock options and warrants were further adjusted by the Reverse Stock Split.
In
connection with the 2020 Plan, the Board adopted forms of (i) an Incentive Stock Option Agreement, (ii) a Nonqualified Stock Option
Agreement (copy language) and (iii) a Restricted Stock Unit Award Agreement, each of which are attached hereto as Exhibits 10.9,
10.10 and 10.11, respectively, and are incorporated by reference herein.
Pursuant
to the Incentive Stock Option Agreement, participants will be granted options to purchase shares of Company Common Stock at a
price equal to the fair market value per share of the Company Common Stock on the date of grant or 110% of such fair market value,
in the case of a ten percent (10%) or more stockholder as provided in Section 422 of the United States Internal Revenue Code of
1986 (the “Code”). Options granted pursuant to the Incentive Stock Option Agreement will expire on the date immediately
preceding the tenth anniversary of the date of grant (or the date immediately preceding the fifth anniversary of the date of grant,
in the case of a ten percent (10%) or more stockholder, as provided in Section 422 of the Code), unless terminated earlier.
Pursuant
to the Nonqualified Stock Option Agreement, participants will be granted options to purchase shares of Company Common Stock at
a price equal to the fair market value per share of the Company Common Stock on the date of grant. The options issued pursuant
to the Incentive Stock Option Agreement will expire on the date immediately preceding the tenth anniversary of the date of grant,
unless terminated earlier.
Restricted
stock units granted to participants pursuant to the Restricted Stock Unit Award Agreement may be converted into the number of
shares of Company Common Stock equal to the number of restricted stock units, with each restricted stock unit to represent a notional
share of Company Common Stock, with a value equal to the fair market value of a share of Company Common Stock at any time.
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Item
5.03.
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Amendments
to Articles of Incorporation or Bylaws; Change in Fiscal Year.
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Charter
Amendments
The
information set forth in Item 3.03 under the headings “Amendment to Series H-4 Certificate of Designation” and “Reverse
Stock Split” are incorporated by reference herein.
Amended
and Restated Certificate of Incorporation
In
connection with the Merger Agreement, the Company agreed to seek the approval of its stockholders to amend and restate the Company’s
Certificate of Incorporation (the “A&R Charter”). The Company obtained stockholder approval of the A&R Charter
and, on May 28, 2020, filed the A&R Charter with the Secretary of State of the State of Delaware.
The
key amendments included in the A&R Charter are as follows:
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the
name of the Company is changed to “AYRO, Inc.”;
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the
address of the Company’s registered office in the State of Delaware is Corporation Trust Center, 1209 St., Wilmington,
New Castle County, Delaware 19801;
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the
number of authorized shares of AYRO preferred stock increased from 5,000,000 shares to 20,000,000 shares;
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any
amendment of clauses addressing indemnification of directors and officers does not eliminate or reduce the effect of the indemnification
in respect of any matter occurring, or any proceeding accruing or arising or that, but for the indemnification provisions,
would accrue or arise, prior to such amendment, repeal or adoption of an inconsistent provision;
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removal
of certain provisions under Article IV providing for previously effectuated stock splits which have already been effectuated;
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removal
of Article V, which addressed, among other things, preferences, limitations, and the relative rights of capital stock, including
removing clauses that addressed the following:
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o
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all
shares of common stock shall share equally in dividends;
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o
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all
shares of common stock shall share equally in distributions in partial liquidation;
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o
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the
prohibition of preemptive or preferential rights of holders of shares of capital stock and discretion of the Board to amend
such;
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replacement
of Article VII with a simplified article, which authorizes the Board to set the number of directors in accordance with the
Company’s Bylaws;
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removal
of Article VIII, which stated that officers are prescribed as set forth in the Company’s Bylaws;
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the
removal of Article XII, which restricted certain transactions with directors and other interested parties; and
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simplification
and consolidation of various clauses, which substantially provide the same rights, procedures, policies and restrictions regarding,
among other things, meetings of stockholders, stockholder voting rights, prohibition on cumulative voting, and powers granted
to the Board.
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The
foregoing description of the A&R Charter does not purport to be complete and is qualified entirely by reference to the full
text of the A&R Charter, which is attached hereto as Exhibit 3.2 and is incorporated by reference herein.
Amended
and Restated Bylaws
Pursuant
to the Merger Agreement, effective as of the effective time of the Merger, the Company adopted amended and restated bylaws (the
“Amended and Restated Bylaws”). The differences between the Company’s Amended and Restated Bylaws now (i) do
not contain an exclusive forum provision and (ii) provide that the number of board members will now be determined by a resolution
adopted by the entire Board, rather than just a majority of the Board. Additionally, the Amended and Restated Bylaws now provide
that directors shall be elected by a plurality of the voting power of the shares present in person or represented by proxy at
the meeting and entitled to vote on the election of directors.
Advance Notice
of Stockholder Business
The Amended and Restated
Bylaws have also revised advance notice procedures for stockholders. Pursuant to the Amended and Restated Bylaws, only such business
shall be conducted as shall have been properly brought before the annual meeting of Company stockholders. To be properly brought
before an annual meeting, business must be brought: (A) pursuant to the Company’s proxy materials with respect to such meeting,
(B) by or at the direction of the Board, or (C) by a stockholder of the Company who (1) is a stockholder of record at the time
of the giving of the notice and on the record date for the determination of stockholders entitled to vote at the annual meeting
and (2) has timely complied in proper written form with the notice procedures set forth in the Amended and Restated Bylaws. In
addition, for business to be properly brought before an annual meeting by a stockholder, such business must be a proper matter
for stockholder action pursuant to the Amended and Restated Bylaws and applicable law. Except for proposals properly made in accordance
with Rule 14a-8 under the Securities and Exchange Act of 1934, and the rules and regulations thereunder (as so amended and inclusive
of such rules and regulations, the “Exchange Act”), clause (C) above shall be the exclusive means for a stockholder
to bring business before an annual meeting of stockholders.
A stockholder’s notice
must set forth all information required under Section 2.4(i) of the Amended and Restated Bylaws and must be timely received by
the secretary of the Company. To be timely, a stockholder’s notice must be received by the secretary at the principal executive
offices of the Company not later than the 45th day nor earlier than the 75th day before the one-year anniversary of the date on
which the Company first mailed its proxy materials or a notice of availability of proxy materials (whichever is earlier) for the
preceding year’s annual meeting; provided, however, that in the event that no annual meeting was held in the previous year
or if the date of the annual meeting is advanced by more than 30 days prior to or delayed by more than 60 days after the one-year
anniversary of the date of the previous year’s annual meeting, then, for notice by the stockholder to be timely, it must
be so received by the secretary not earlier than the close of business on the 120th day prior to such annual meeting and not later
than the close of business on the later of (i) the 90th day prior to such annual meeting, or (ii) the tenth day following the day
on which Public Announcement (which is a disclosure in a press release reported by the Dow Jones News Service, Associated Press
or a comparable national news service or in a document publicly filed by the Corporation with the SEC pursuant to Section 13, 14
or 15(d) of the Exchange Act) of the date of such annual meeting is first made. In no event shall any adjournment or postponement
of an annual meeting or the announcement thereof commence a new time period for the giving of a stockholder’s notice.
To be in proper
written form, a stockholder’s notice to the secretary must set forth as to each matter of business the stockholder intends
to bring before the annual meeting: (1) a brief description of the business intended to be brought before the annual meeting,
the text of the proposed business (including the text of any resolutions proposed for consideration) and the reasons for conducting
such business at the annual meeting, (2) the name and address, as they appear on the Company’s books, of the stockholder
proposing such business, (3) the class and number of shares of the Company that are held of record or are beneficially owned
by the stockholder and any derivative positions held or beneficially held by the stockholder as of the date of delivery of such
notice, (4) whether and the extent to which any hedging or other transaction or series of transactions has been entered into
by or on behalf of such stockholder with respect to any securities of the Company, and a description of any other agreement, arrangement
or understanding (including any short position or any borrowing or lending of shares), the effect or intent of which is to mitigate
loss to, or to manage the risk or benefit from share price changes for, or to increase or decrease the voting power of, such stockholder
with respect to any securities of the Company, (5) any material interest of the stockholder in such business, and (6) a
statement whether either such stockholder will deliver a proxy statement and form of proxy to holders of at least the percentage
of the voting power of the Company’s voting shares required under applicable law to carry the proposal (such information
provided and statements made as required by clauses (1) through (6), a “Business Solicitation Statement”). In
addition, to be in proper written form, a stockholder’s notice to the secretary must be supplemented not later than ten days
following the record date for notice of the meeting to disclose the information contained in clauses (3) and (4) above
as of the record date for notice of the meeting.
Advance Notice of Director Nominations at
Annual Meetings
Nominations of persons for election or re-election
to the Board shall be made at an annual meeting of stockholders only (A) by or at the direction of the Board or (B) by a stockholder
of the Company who (1) was a stockholder of record at the time of the giving of the notice required and on the record date for
the determination of stockholders entitled to vote at the annual meeting and (2) has complied with the notice procedures. In addition
to any other applicable requirements, for a nomination to be made by a stockholder, the stockholder must have given timely notice
thereof in proper written form to the secretary of the Company.
To comply with clause (B) of the above, a nomination
to be made by a stockholder must set forth all information required and must be received by the secretary of the Company at the
principal executive offices of the Company at the time set forth in, and in accordance with, the final three sentences of Section
2.4(i)(a) in the Amended and Restated Bylaws; provided additionally, however, that in the event the number of directors to be elected
to the board of directors is increased and there is no Public Announcement naming all of the nominees for director or specifying
the size of the increased board made by the Company at least ten (10) days before the last day a stockholder may deliver notice
of nomination pursuant to the foregoing provisions, a stockholder’s notice shall also be considered timely, but only with
respect to nominees for any new positions created by such increase, if it shall be received by the secretary at the principal executive
offices of the Company not later than the close of business on the tenth day following the date on which such Public Announcement
is first made by the Company.
Advance Notice of Director Nominations for
Special Meetings
If the Board has authorized in the specific
case that stockholders may fill a vacancy or newly created directorship at a special meeting of stockholders, and a special meeting
has been properly called for such purpose, nominations of persons for election or appointment to the Board at such special meeting
shall be made only (1) by or at the direction of the Board or (2) by any stockholder of the Company who (A) is a stockholder of
record at the time of the giving of the notice and on the record date for the determination of stockholders entitled to vote at
the special meeting and (B) delivers a timely written notice of the nomination to the secretary of the Company. To be timely, such
notice must be received by the secretary at the principal executive offices of the Company not later than the close of business
on the later of the 90th day prior to such special meeting or the tenth day following the day on which Public Announcement is first
made of the date of the special meeting and of the nominees proposed by the board of directors to be elected or appointed at such
meeting.
The foregoing description
of the Amended and Restated Bylaws does not purport to be complete and is qualified entirely by reference to the full text of the
Amended and Restated Bylaws Amendment, which is attached hereto as Exhibit 3.4 and is incorporated by reference herein.
