Rosetta Stone Inc.
Extract: Bylaws Amended/Restated (Plain English Desc) from a 8-K on 06/22/2020   Download
SEC Document
SEC Filing

On June 19, 2020, the Board of Directors (the “Board”) of Rosetta Stone Inc. (the “Company”) approved amendments to the Company’s bylaws (the “Bylaws”), which became effective upon approval. The amendments to the Bylaws:

 

 

provide for the declassification of the Company’s Board beginning at the 2021 annual meeting of stockholders, such that the Board will cease to be classified at the 2023 annual meeting of stockholders;

 

provide that, in uncontested elections, director nominees will be elected by a majority of the votes cast, which requires that the votes cast “for” such nominee’s election exceed the votes cast “against” such nominee’s election; and

 

revise the exclusive forum provision to specify that the provision shall not apply to claims for which the federal courts have exclusive jurisdiction.

 

The Board also approved changes to the Company’s Corporate Governance Guidelines to add procedures requiring a director to tender a resignation where, in an uncontested election, the votes cast against such director’s election exceeded the votes cast for such director’s election.

 

The foregoing amendments had been previously approved by the Board in February 2020, subject to stockholder approval of a proposed amendment to our Second Amended and Restated Certificate of Incorporation (the “Charter”) at the 2020 Annual Meeting of Stockholders (the “2020 Annual Meeting”). The proposed Charter amendment provided for the elimination of a provision stating that directors may be removed from the Board by the stockholders of the Company only for cause, and in such case only by the affirmative vote of the holders of at least a majority of the total voting power of all then outstanding stock entitled to vote in the election of directors (the “for cause” provision). Section 141(k)(1) of the Delaware General Corporation Law permits a corporation to include a for cause provision in its Charter only in circumstances where the corporation has a classified board structure.  In order to be approved, the Charter amendment required the affirmative vote of the holders of at least 66 2/3% of the total voting power of the shares outstanding on April 20, 2020, the record date for the 2020 Annual Meeting, and entitled to vote in the election of directors.

 

On June 11, 2020, the Company held its 2020 Annual Meeting. Although over 99% of the votes cast on the Charter amendment proposal were cast in favor of the Charter amendment, those votes represented only 58% of the Company’s outstanding shares on the record date for the 2020 Annual Meeting. Accordingly, as the required vote threshold was not achieved, the Charter amendment was not approved.

 

Although the Charter amendment was not approved, the Board continues to believe that declassification of the Board is in the best interest of the Company and its stockholders. In approving the amendments to the Bylaws to declassify the Board, the Board considered the overwhelming support of the stockholders who cast votes on the Charter amendment proposal at the 2020 Annual Meeting as well as other communications from stockholders supporting the elimination of the classified Board structure and staggered director terms. The Board also acknowledged that the existing “for cause” provision of the Charter would be rendered invalid as a matter of Delaware law once the Board is declassified.