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The Shares held by the Reporting Persons were acquired for, and are being held for, investment purposes only. The acquisitions of these securities were made in the ordinary course of the Reporting Persons' investment activities.
Mr. Zepf, on behalf of the Reporting Persons, has recently had communications with Issuer's management to explore whether he is properly qualified and would otherwise be a suitable candidate to fill a currently open seat on the Issuer's board of directors (the "Board"). Such communications were originally preliminary in nature as Mr. Zepf was undecided as to whether he intended to seek such position. However, on May 5, 2015, the Issuer sent Mr. Zepf a letter agreement (the "Letter Agreement") formally inviting Mr. Zepf to join the Board and Mr. Zepf accepted. Pursuant to the terms of Letter Agreement, the Board intends to confirm Mr. Zepf's appointment to the Board at its upcoming regular meeting on May 20, 2015, at which time Mr. Zepf's term as a director of the issuer will officially commence. In this regard, on May 14, 2015, the Issuer issued a press release (the "Press Release") to inform its Investors of the executed Letter Agreement.
Further, the Letter Agreement provides that, subject to Mr. Zepf's compliance with the terms of the Letter Agreement, the Board will nominate and recommend a vote in favor of Mr. Zepf's election at the Issuer's 2015 Annual Stockholder's Meeting to be held in August 2015 (the "Annual Stockholder's Meeting").
Under the Letter Agreement, among other things, Mr. Zepf will be entitled to receive certain fees and restricted stock units of the Issuer as compensation for his service on the Board. The Letter Agreement also provides that Mr. Zepf must vote the Reporting Persons' Shares at the Annual Stockholder's Meeting: (i) in favor of each director nominated and recommended by the Board for election; (ii) against any stockholder nominations for director which are not approved and recommended by the Board; (iii) in favor of the Issuer's proposal for ratification of the re-appointment of its current independent public accounting firm; (iv) in favor of the Issuer's "say-on-pay" proposal, and (v) in favor of an increase, not to exceed 5,000,000 Shares, to the Issuer's current equity incentive plan share reserve.
Subject to certain notification requirements, the Reporting Persons also agreed to not: (i) form an investor "group" as such term is defined under the Securities Exchange Act of 1934, as amended (the "Exchange Act"); (ii) make, or in any way encourage or participate in any solicitation of proxies or otherwise consent to vote, advise, encourage or influence any person or entity with respect to the Shares; (iii) communicate with the Issuer's other stockholders or others regarding the Board, the Issuer, or the management, policies, strategies, affairs or business of the Issuer; (iv) initiate, propose or otherwise solicit stockholders of the Issuer for approval of any stockholder proposal or cause or encourage any person or entity to initiate any such proposal; (v) participate in, or take any action pursuant to, any "stockholder access" proposal that may be adopted by the Securities and Exchange Commission; (vi) call or request the call of a special meeting of the stockholders of the Issuer; (vii) make a request for a list of the Issuer's stockholders or other Issuer records; (viii) support or participate in any "withhold the vote" or similar campaign with respect to the Issuer or the Board, or seek election or appointment to, or representation on, or to nominate or propose the nomination of any candidate to the Board, including any nomination of any candidate to stand for election at the Annual Stockholder's Meeting, other than for a director nominated by the Board; (ix) seek the removal of any member of the Board; or (x) otherwise take, or may any public disclosure, announcement or statement with respect to any intention, plan or arrangement to take any actions inconsistent with the terms of the Letter Agreement or that relate to an attack or disparagement of the Issuer and/or any of its current or former directors and officers. However, the Letter Agreement provides that the above restrictions will not place any limitation on Mr. Zepf with respect to actions that may be taken by him acting solely as a director of the Issuer consistent with his fiduciary duties to the Issuer and its stockholders.
Finally, pursuant to the Letter Agreement, if at any time while serving as a director of the Issuer Mr. Zepf and/or the other Reporting Persons breach or otherwise fail to comply with certain terms of the Letter Agreement, or if the Reporting Persons collectively cease to beneficially own, in the aggregate, at least 5% of the Shares (other than as a result of additional shares issued by the Issuer subsequent to Mr. Zepf's appointment to the Board), then after a 10 business day cure period, Mr. Zepf must resign from the Board immediately upon the written request of the Board.
The foregoing was a summary of the Press Release and certain material terms of the Letter Agreement. The foregoing descriptions do not purport to be complete and are qualified in their entirety by reference to a copy of the full text of the Press Release and the form of the Letter Agreement, which have been filed as Exhibits C and D hereto, respectively, and are incorporated herein by reference.
Except as otherwise set forth herein, the Reporting Persons do not have any present plans or proposals which would relate to, or result in, the matters set forth in subparagraphs (a) – (j) of Item 4 of Schedule 13D.
The Reporting Persons reserve the right, at a later date, to effect one or more of such changes or transactions in the number of Shares they may be deemed to beneficially own.
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