Item 4 of the Schedule 13D is hereby amended and supplemented as follows:
The Reporting Person, alone or in conjunction with Mr. Brown, has determined from time to time, to engage with the Company’s Board of Directors (the “Board”) and to take actions in his capacity as a significant stockholder to strengthen the Company’s corporate governance. Under the Company’s bylaws, the Reporting Person and Mr. Brown, together as owners of more than a majority of the Company’s outstanding Common Stock, have the right to call special meetings of stockholders and to take action by written consent in lieu of a meeting.
As previously reported in Amendment No. 2, on August 6,2018, the Reporting Person and Mr. Brown (the “Stockholders”) delivered an action by written consent of stockholders, executed on August 6,2018 (the “August 6 Consent”), pursuant to which the Stockholders resolved to adopt amendments to the Company’s bylaws (the “Bylaw Amendments”). The August 6 Consent represented 9,047,601 shares, or 43.8% of the Company’s outstanding Common Stock. In Amendment No. 2, the Stockholders disclosed their intention to engage with the Board regarding the Bylaw Amendments prior to delivery of the remaining written consents required to represent a majority of the outstanding Common Stock.
Notwithstanding the Stockholders’ willingness to engage with the Board regarding the Bylaw Amendments, on September 4,2018, the Company filed a claim against the Stockholders in the Court of Chancery of the State of Delaware in response to the August 6 Consent, which, among other things, challenges the validity of the Bylaw Amendments. The Company reported the filing of this claim in a Current Report on Form 8K filed with the SEC on September 10,2018.
CUSIP No. 784933103
Page 4 of 6 Pages
Thereafter, on September 18,2018, the Stockholders delivered executed written consents resolving to adopt the Bylaw Amendments representing an additional 1,633,849 shares, or 7.9% of the Company’s outstanding Common Stock, which the Stockholders hold in street name (the “September 18 Consents,” and together with the August 6 Consent, the “Bylaw Consents”). Upon delivery of the Bylaw Consents, which represent a majority of the Company’s outstanding Common Stock, the Bylaw Amendments became effective under Section 228 of the Delaware General Corporation Law (the “DGCL”). The Stockholders understand that the Bylaw Amendments are the subject of pending litigation but submitted the remaining consents to preserve their rights under DGCL Section 228.
The Stockholders maintain the validity of, and their authority to adopt, the Bylaw Amendments, and believe that the Bylaw Amendments are in the best interests of the Company and all of its stockholders. The Bylaw Amendments were previously described in Amendment No. 2, and a copy of the Company’s bylaws marked to show the Bylaw Amendments is filed as Exhibit 4 to this Amendment.
The Bylaw Consents resolving to adopt the Bylaw Amendments followed earlier written consents delivered by the Stockholders on June 29,2018 and July 5,2018, resolving to remove Mr. Lorrence Kellar from the Board and to elect and appoint Mr. Jeffrey Mayer as a director to fill the resulting vacancy (the “Mayer Consents”). On September 18,2018, Mr. Brown filed an action in the Court of Chancery of the State of Delaware pursuant to DGCL Section 225 seeking a declaratory judgment that the Mayer Consents are valid and effective and that Mr. Kellar has validly been removed from the Board and Mr. Mayer has validly been elected to the Board and also filed a motion to expedite the proceedings in this matter and to maintain the status quo pending the Court’s final determination. A copy of the Verified Complaint Pursuant to 8 DEL. C. § 225 is filed as Exhibit 5 to this Amendment.
Except as otherwise set forth in this Item 4, the Reporting Person (alone or in conjunction with other stockholders of the Company) currently has no plan or proposal which relates to or would result in any of the matters referred to in paragraphs (a) through (j), inclusive, of Item 4 of Schedule 13D; provided, such plans or proposals may have been considered, and may from time to time hereafter be considered. The Reporting Person may also acquire or dispose of Company securities in the ordinary course.