Document:

Exhibit 10.2

 

Membership
Interest Purchase Agreement

 

This
Membership Interest Purchase Agreement (this “Agreement”), dated as of March [●], 2020 (the “Effective
Date”), is entered into between HaloVax, LLC, a Delaware limited liability company (the “Company”),
and Hoth Therapeutics, Inc., a Nevada corporation (“Purchaser”).

 

Recitals

 

WHEREAS,
on March 23, 2020, Voltron Therapeutics, Inc. (“Voltron”) and the Purchaser entered into a Development and
Royalty Agreement (the “Development and Royalty Agreement”) pursuant to which Voltron agreed to form the
Company to develop certain products for the prevention, interception or treatment of COVID-19 and related corona viruses (the
“Licensed Products”); and

 

WHEREAS,
pursuant to the Development and Royalty Agreement, the Purchaser agreed to assist Voltron and the Company in the development of
the Licensed Products and to purchase from the Company a percentage of the Company’s outstanding membership interests (the
“Membership Interests”); and

 

WHEREAS,
 the Company wishes to sell to the Purchaser, and Purchaser wishes to purchase from the Company, a percentage of the Company’s
outstanding Membership Interests, subject to the terms and conditions set forth herein.

 

NOW,
THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.
Subscription.

 

(a)
The Purchaser, intending to be legally bound, hereby irrevocably agrees to purchase five percent (5%) of the Company’s outstanding
Membership Interests (the “Initial Membership Interests”) as of the Initial Closing Date (as defined below)
for a purchase price of $250,000.

 

(b)
The Purchaser shall have the option (the “Option”), during the Term, to purchase from the Company up to an
additional twenty-five percent (25%) of the Company’s outstanding Membership Interests (the “Additional Membership
Interests” and, together with the Initial Membership Interests, the “Purchased Membership Interests”)
as of each Subsequent Closing (as defined below) date for up to an aggregate purchase price of $2,750,000 (the “Additional
Option”). The Option will expire thirty (30) days after the Initial Closing Date.

 

2.
The Offering. The offering of the Purchased Membership Interests contemplated hereby (the “Offering”)
is being made in reliance on the exemption from registration provided in Section 4(a)(2) of the Securities Act of 1933, as amended
(the “Act”).

 

     

     

    

 

3.
Deliveries and Payment.

 

(a)
Simultaneously with the execution hereof, the Purchaser shall deliver to the Company a completed and executed signature page to
this Agreement.

 

(b)
The Initial Membership Interests will be issued and sold by the Company to the Purchaser at a closing (the “Initial Closing”)
to occur on or before May 23, 2020 (the “Initial Closing Date”). At the Initial Closing, the Company shall
issue and sell to the Purchaser and the Purchaser shall purchase from the Company the Initial Membership Interests.

 

(c)
Any Additional Membership Interests will be issued and sold by the Company to the Purchaser at subsequent closings (each, a “Subsequent
Closing”). At each Subsequent Closing, the Company shall issue and sell to the Purchaser and the Purchaser shall purchase
from the Company such number of Additional Membership Interests as determined by the Purchaser, in its sole and absolute discretion;
provided, that the Option must be exercised for (i) at least $1,000,000 (inclusive of the $250,000 paid pursuant to the Section
1(a)) (the “Minimum Subscription Amount”) and (ii) no more than $3,000,000 (inclusive of the $250,000 paid
for the Initial Membership Interests pursuant to Section 1(a)) (the “Maximum Subscription Amount”); provided
further, that, if more than $2,000,000 of Membership Interests (in the aggregate) are purchased, at Hoth’s option, Hoth
may elect to receive the value of the last $1,000,000, representing ten percent (10%) of the Membership Interests of the Company,
either in (i) Membership Interests or (ii) a pre-paid option to purchase such Additional Membership Interests. Each Subsequent
Closing shall be deemed a “Subsequent Subscription Amount” for purposes of this Agreement.

 

(d)
On or before the Initial Closing and each Subsequent Closing, the Purchaser shall make a wire transfer payment in the full amount
of the purchase price for the Purchased Membership Interests to an account specified in writing by the Company.

 

4.
Acceptance of Subscription. The Purchaser understands and agrees that the Company, in its sole discretion, reserves the
right to accept or reject this subscription or any other subscription for the Purchased Membership Interests, in whole or in part,
notwithstanding prior receipt by the Purchaser of notice of acceptance of a subscription. The Company shall have no obligation
hereunder until the Company executes and delivers to the Purchaser an executed copy of this Agreement. If any subscription is
rejected in whole or in part or the Offering is terminated, all funds received from the Purchaser will be returned without interest
or offset, and this Agreement shall thereafter be of no further force or effect.

 

Within
five (5) calendar days of the Initial Closing and each Subsequent Closing, the Company shall deliver the Purchased Membership
Interests to the Purchaser at the address set forth on the signature page hereto.

 

5.
Representations and Warranties.

 

The
Company hereby represents and warrants to Purchaser as of the date of this Agreement as set forth below.

 

(a)
The Company is a limited liability company duly organized, validly existing and in good standing under the laws of the State of
Delaware. The Company has all requisite power and authority to (1) own and operate its properties and assets, (2) execute and
deliver this Agreement, (3) issue and sell the Purchased Membership Interests, (4) carry out the provisions of this Agreement,
and (5) carry on its business as presently conducted and as presently proposed to be conducted. The Company is duly authorized
to do business and is in good standing in all jurisdictions in which the nature of its activities and of its properties makes
such qualification necessary, except for those jurisdictions in which failure to do so would not have a material adverse effect
on the Company or its business.

 

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(b)
All action on the part of the Company, its officers, board of managers and members necessary for the authorization of this Agreement,
the performance of all obligations of the Company hereunder at the Initial Closing or each Subsequent Closing and the authorization,
sale, issuance and delivery of the Purchased Membership Interests pursuant hereto has been taken or will be taken prior to the
Initial Closing or each Subsequent Closing, as applicable. This Agreement, when executed and delivered, will be a valid and binding
obligation of the Company enforceable in accordance with its terms except (1) as limited by the applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting enforcement of creditors’ rights, and (2) general
principles of equity that restrict the availability of equitable remedies.

 

(c)
The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the transactions
contemplated hereby do not, and will not, (i) conflict with or violate any provision of the Company’s certificate or articles
of organization, bylaws or other organizational or charter documents, (ii) in any material respect, conflict with, or constitute
a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit
facility, debt or other instrument (evidencing a Company debt or otherwise) or other understanding to which the Company is a party
or by which any property or asset of the Company is bound, or affected, or (iii) in any material respect, result in a violation
of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority
to which the Company is subject (including, assuming the accuracy of the representations and warranties of the Purchaser set forth
in this Section 5, federal and state securities laws and regulations and the rules and regulations of any self-regulatory organization
to which the Company or their respective securities are subject, including all applicable trading markets), or by which any property
or asset of the Company is bound or affected, except in the case of clauses (ii) and (iii) such as would not, have a material
adverse effect on the Company or its business.

 

The
Purchaser hereby acknowledges, represents, warrants, and agrees as follows:

 

(a)
The Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada with
the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and
otherwise to carry out its obligations hereunder. The purchase by the Purchaser of the Purchased Membership Interests hereunder
has been duly authorized by all necessary corporate action on the part of the Purchaser. This Agreement has been duly executed
and delivered by the Purchaser and constitutes the valid and binding obligation of the Purchaser, enforceable against it in accordance
with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of creditors’ rights generally, and (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other equitable remedies.

 

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(b)
None of the Purchased Membership Interests are registered under the Act, or any state securities laws. The Purchaser understands
that the offering and sale of the Purchased Membership Interests is intended to be exempt from registration under the Act by virtue
of Section 4(a)(2) thereof based, in part, upon the representations, warranties and agreements of the Purchaser contained in this
Agreement.

 

(c)
The execution, delivery and performance by the Purchaser of this Agreement and the consummation by the Purchaser of the transactions
contemplated hereby do not and will not (i) result in a violation of the organizational documents of the Purchaser or (ii) conflict
with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which
the Purchaser is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal
and state securities laws) applicable to the Purchaser, except in the case of clauses (ii) and (iii) above, for such that are
not material and do not otherwise affect the ability of the Purchaser to consummate the transactions contemplated hereby.

 

(d)
The Purchased Membership Interests to be received by the Purchaser hereunder will be acquired for such Purchaser’s own account,
not as nominee or agent, and not with a view to the resale or distribution of any part thereof in violation of the Act, and the
Purchaser has no present intention of selling, granting any participation in, or otherwise distributing the same in violation
of the Act without prejudice, however, to the Purchaser’s right at all times to sell or otherwise dispose of all or any
part of such Purchased Membership Interests in compliance with applicable federal and state securities laws. The Purchaser is
not a broker-dealer registered with the Securities and Exchange Commission (“SEC”) under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), or an entity engaged in a business that would require it to be
so registered.

 

(e)
The Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Purchased Membership
Interests, and has so evaluated the merits and risks of such investment. The Purchaser understands that it must bear the economic
risk of this investment in the Purchased Membership Interests indefinitely, and is able to bear such risk and is able to afford
a complete loss of such investment.

 

(f)
Neither the SEC nor any state securities commission or other regulatory authority has approved the Purchased Membership Interests,
or passed upon or endorsed the merits of the Offering or confirmed the accuracy or determined the adequacy of any information
provided by the Company to the Purchaser in connection with the Offering.

 

(g)
The Purchaser has had an opportunity to receive all information related to the Company requested by it and to ask questions of
and receive answers from the Company regarding the Company, its business and the terms and conditions of the offering of the Purchased
Membership Interests.

 

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(h)
The Purchaser is unaware of, is in no way relying on, and did not become aware of the Offering through or as a result of, any
form of general solicitation or general advertising.

 

(i)
The Purchaser has taken no action that would give rise to any claim by any person for brokerage commissions, finders’ fees
or the like relating to this Agreement or the transactions contemplated hereby (other than commissions payable by the Company
pursuant to the terms of any contract to which the Company is a party).

 

(j)
The Purchaser is aware that an investment in the Company is subject to substantial risks.

 

(k)
At the time the Purchaser was offered the Purchased Membership Interests, it was, and at the date hereof it is an “accredited
investor” as defined in Rule 501(a) under the Act or a “qualified institutional buyer” as defined in Rule 144A(a)
under the Act.

 

(l)
It is understood that the certificates representing the Purchased Membership Interests will bear the following legends:

 

THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION
OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND, ACCORDINGLY, MAY
NOT BE TRANSFERRED UNLESS (I) SUCH MEMBERSHIP INTERESTS HAVE BEEN REGISTERED FOR SALE PURSUANT TO THE SECURITIES ACT OF 1933,
AS AMENDED, (II) SUCH MEMBERSHIP INTERESTS MAY BE SOLD PURSUANT TO RULE 144, OR (III) THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO IT THAT SUCH TRANSFER MAY LAWFULLY BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED.

 

TRANSFER
OF THE MEMBERSHIP INTERESTS REPRESENTED HEREBY IS RESTRICTED PURSUANT TO THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE
INITIAL PURCHASER OF THIS SECURITY AND THE COMPANY’S OPERATING AGREEMENT, AS APPLICABLE. ANY PURPORTED TRANSFER IN VIOLATION
OF SUCH AGREEMENT IS NULL AND VOID, AB INITIO.

 

6.
Tag-Along Rights.

 

(a)
Tag-Along Rights.

 

(i)
If the Company wishes to sell, give, assign, hypothetic, pledge, encumber, grant a security interest in or otherwise dispose of
(whether by operation of law or otherwise) (each a “Transfer”) fifty percent (50%) of its Membership Interests
to a third-party purchaser, then the Purchaser shall have the right to sell to such third-party purchaser, upon the same terms
and conditions as the Company, up to that number of Membership Interests held by the Purchaser equal to that percentage of the
number of Membership Interests proposed to be Transferred by the Company determined by dividing the total number of Membership
Interests then owned by the Purchaser by the total number of Membership Interests then owned by the Company.

 

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(ii)
The Company shall give written notice to the Purchaser of each proposed sale by it of Membership Interests which gives rise to
the rights of the Purchaser set forth in this Section 6(a) at least fifteen (15) days prior to the proposed consummation of such
sale, setting forth the number of Membership Interests proposed to be sold, the name and address of the proposed third-party purchaser,
the proposed amount and form of consideration and terms and conditions of payment offered by such third-party purchaser, the percentage
of Membership Interests that the Purchaser may sell to such third-party purchaser (determined in accordance with Section 6(a)),
and a representation that such third-party purchaser has been informed of the “tag-along” rights provided for in this
Section 6(a) and has agreed to purchase Membership Interests in accordance with the terms hereof. The tag-along rights provided
by this Section 6(a) must be exercised by the Purchaser pursuant to this Section 6(a) within ten (10) days following receipt of
the notice required by the preceding sentence, by delivery of a written notice to the Company indicating the Purchaser wishes
to exercise its rights and specifying the number of Membership Interests (up to the maximum number of Membership Interests owned
by the Purchaser required to be purchased by such third-party purchaser) it wishes to sell. The failure of the Purchaser to respond
within such 10-day period shall be deemed to be a waiver of the Purchaser rights under this Section 6(a), provided that the Purchaser
may waive its rights under this Section 6(a) prior to the expiration of such 10-day period by giving written notice to the Company.
If a third-party purchaser fails to purchase Membership Interests from the Purchaser pursuant to this Section 6(a), then the Company
shall not be permitted to consummate the proposed sale of its Membership Interests unless and until, simultaneous with such sale,
the Company purchases from the Purchaser the number of Membership Interests the Purchaser is entitled to sell under this Section
6(a) on the same terms and conditions as the Company is Transferring its Membership Interests to the third-party purchaser.

 

(b)
General. Any attempt to Transfer any Membership Interests or any rights thereunder in violation of this Agreement shall
be null and void ab initio. 

 

7.
Modification. This Agreement shall not be modified or waived except by an instrument in writing signed by the party against
whom any such modification or waiver is sought.

 

8.
Notices. Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be
deemed effectively given: (a) upon personal delivery to the party notified, (b) when sent by confirmed email or facsimile if sent
during normal business hours of the recipient, if not, then on the next business day, (c) five (5) days after having been sent
by registered or certified mail, return receipt requested, postage prepaid, or (d) one day after deposit with a nationally recognized
overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the
parties at their respective address, email or facsimile number set forth on the signature page hereto, or to such other address
as such party shall have furnished in writing in accordance with the provisions of this Section 8.

 

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9.
Assignability. This Agreement and the rights, interests and obligations hereunder are not transferable or assignable by
the Purchaser and the transfer or assignment of any Purchased Membership Interests acquired by the Purchaser shall be made only
in accordance with all applicable laws and the terms of the Company’s Operating Agreement, as applicable. Any purported
transfer in violation of this Agreement or the Operating Agreement, as applicable, shall be null and void ab initio.

 

10.
Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York
applicable to contracts to be wholly- performed within said State.

 

11.
Dispute Resolution. The parties (a) hereby irrevocably and unconditionally submit to the jurisdiction of the state courts
of New York located in New York county and to the jurisdiction of the United States District Court for the Southern District of
New York for the purpose of any suit, action or other proceeding arising out of or based upon this Agreement, (b) agree not to
commence any suit, action or other proceeding arising out of or based upon this Agreement except in such courts, and (c) hereby
waive, and agree not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim
that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment
or execution, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding
is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court.

 

WAIVER
OF JURY TRIAL: EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
THIS AGREEMENT, THE PURCHASED MEMBERSHIP INTERESTS OR THE SUBJECT MATTER HEREOF OR THEREOF. THE SCOPE OF THIS WAIVER IS INTENDED
TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION,
INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS (INCLUDING NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON
LAW AND STATUTORY CLAIMS.

 

12.
Blue Sky Qualification. The purchase of Purchased Membership Interests under this Agreement is expressly conditioned upon
the exemption from qualification of the offer and sale thereof, as applicable, from applicable federal and state securities laws.
The Company shall not be required to qualify the Offering or any issuance of Purchased Membership Interests under the securities
laws of any jurisdiction.

 

13.
Use of Pronouns. All pronouns and any variations thereof used herein shall be deemed to refer to the masculine, feminine,
neuter, singular or plural as the identity of the person or persons referred to may require.

 

14.
Miscellaneous.

 

(a)
This Agreement, including all attachments, schedules and exhibits thereto, constitutes the entire agreement between the Purchaser
and the Company with respect to the subject matter hereof and supersede all prior oral or written agreements and understandings,
if any, relating to the subject matter hereof.

 

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(b)
The representations and warranties of the Purchaser made in this Agreement shall survive the execution and delivery hereof and
delivery of the Purchased Membership Interests.

 

(c)
Each of the parties hereto shall pay its own fees and expenses (including the fees of any attorneys, accountants, appraisers or
others engaged by such party) in connection with this Agreement and the transactions contemplated hereby whether or not the transactions
contemplated hereby are consummated.

 

(d)
This Agreement may be executed in one or more counterparts (including electronic counterparts), each of which shall be deemed
an original, but all of which shall together constitute one and the same instrument. This Agreement will be binding on the parties
hereto and their successors, permitted assigns and legal representatives.

 

(e)
Each provision of this Agreement shall be considered separable and, if for any reason any provision or provisions hereof are determined
to be invalid or contrary to applicable law, such invalidity or illegality shall not impair the operation of or affect the remaining
portions of this Agreement.

 

(f)
Paragraph and Section titles are for convenience and descriptive purposes only and are not to be considered in construing or interpreting
this Agreement.

 

[SIGNATURE
PAGE FOLLOWS]

 

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In
Witness Whereof, the parties hereto have
executed this Agreement as of the last date set forth in the spaces provided below on which a party executed this Agreement.

 

	PURCHASER:	 
	 	 
	HOTH
    THERAPEUTICS, INC.	 
	 	 	 
	By:	 	 
	Name:	Robb Knie	 
	Title:	Chief Executive
    Officer	 
	 	 	 
	Date:	 	 

 

Address:
1 Rockefeller Plaza, Suite 1039, New York, NY 10020

 

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In
Witness Whereof, the parties hereto have
executed this Agreement as of the last date set forth in the spaces provided below on which a party executed this Agreement.

 

	COMPANY:	 
	 	 
	HALOVAX,
    LLC	 
	 	 	 
	By:	 	 
	Name: 	          	 
	Title:	 	 
	 	 	 
	Date:	 	 

 

 

-10-Exhibit

Exhibit 4.21

DESCRIPTION OF OUR REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE 
SECURITIES EXCHANGE ACT OF 1934 

DESCRIPTION OF OUR COMMON STOCK
The following description of certain terms of our common stock does not purport to be complete and is qualified in its entirety by reference to our Restated Charter (the “Restated Charter”), our Bylaws, as amended and restated (the “Bylaws”), and the applicable provisions of the North Carolina Business Corporation Act (the “NCBCA”). We encourage you to review complete copies of the Restated Charter and the Bylaws, which we have previously filed with the SEC and which are included as exhibits to our Form 10-K of which this is also an exhibit. 
The Restated Charter authorizes us to issue 5,600,000,000 shares of common stock, par value $0.50 per share. Each share of our common stock is entitled to one vote on all matters submitted to a vote of shareholders. Holders of our common stock are entitled to receive dividends when our Board of Directors declares them out of funds legally available therefor. Dividends may be paid on our common stock only if all dividends on any outstanding preferred stock have been paid or provided for.
The issued and outstanding shares of our common stock are fully paid and nonassessable. Holders of our common stock do not have any preemptive or conversion rights, and we may not make further calls or assessments on our common stock. There are no redemption or sinking fund provisions applicable to our common stock.
In the event of our voluntary or involuntary dissolution, liquidation or winding up, holders of common stock are entitled to receive, pro rata, after satisfaction in full of the prior rights of creditors and holders of preferred stock, if any, all of our remaining assets available for distribution.
Directors are elected by a majority vote of the holders of common stock voting at a meeting in person or by proxy, except in the event of a contested election, in which case, directors are elected by a plurality of the votes cast by the shares entitled to vote in the election. Holders of common stock are not entitled to cumulative voting rights for the election of directors.
Our common stock is traded on the New York Stock Exchange under the symbol “LOW.”
Computershare Trust Company, N.A. of Providence, Rhode Island, acts as the transfer agent and registrar for our common stock.
Anti-Takeover Effects of North Carolina Law, the Restated Charter and the Bylaws
Certain provisions of the NCBCA, the Restated Charter and the Bylaws may have the effect of delaying, deferring or preventing another party from acquiring control of our company. These provisions, which are summarized below, are expected to discourage coercive takeover practices and inadequate takeover bids. These provisions are also designed, in part, to encourage persons seeking to acquire control of our company to negotiate first with our Board of Directors. We believe that the benefits of increased protection of our potential ability to negotiate more favorable terms with an unfriendly or unsolicited acquirer outweigh the disadvantages of discouraging a proposal to acquire our company.
Authorized but Unissued Stock
The Restated Charter authorizes the issuance of a significant number of shares of common stock and preferred stock. A large quantity of authorized but unissued shares may deter potential takeover attempts because of the ability of our Board of Directors to authorize the issuance of some or all of these shares to a friendly party, or to the public, which would make it more difficult for a potential acquirer to obtain control of our company. This possibility may encourage persons seeking to acquire control of our company to negotiate first with our Board of Directors.
 
Our authorized but unissued shares of preferred stock could also have other anti-takeover effects. Under certain circumstances, any or all of the preferred stock could be used as a method of discouraging, delaying or preventing a change in control or management of our company. For example, our Board of Directors could designate and issue a series of preferred stock in an amount that sufficiently increases the number of outstanding shares to overcome a vote by the holders of common stock, or with rights and preferences that include special voting rights to veto a change in control. The preferred stock could also be used 

in connection with the issuance of a shareholder rights plan, sometimes referred to as a “poison pill.” Our Board of Directors is able to implement a shareholder rights plan without further action by our shareholders.
Use of our preferred stock in the foregoing manner could delay or frustrate a merger, tender offer or proxy contest, the removal of incumbent directors or the assumption of control by shareholders, even if these actions would be beneficial to our shareholders. In addition, the existence of authorized but unissued shares of preferred stock could discourage bids for our company even if such bid represents a premium over our then-existing trading price.
Shareholder Action by Written Consent
Under the NCBCA, our shareholders may take action by the unanimous written consent of the holders of all of our outstanding shares of common stock in lieu of an annual or special meeting. Otherwise, shareholders will only be able to take action at an annual or special meeting called in accordance with the Bylaws.
Requirements for Advance Notification of Shareholder Proposals and Nominations
The Bylaws provide for advance notice procedures with respect to shareholder proposals (except proposals submitted in accordance with the eligibility and procedural requirements of Rule 14a-8 under the Exchange Act and included in our proxy statement) and the nomination of candidates for election as directors, other than nominations made by or at the direction of our Board of Directors. Pursuant to these provisions, to be timely, a shareholder’s notice must meet certain requirements with respect to its content and be received at our principal executive offices, addressed to the Secretary of our company, within the following time periods:
 
	
				
	 •
	 
	 
	In the case of an annual meeting, not earlier than the close of business on the 150th calendar day nor later than the close of business on the 120th calendar day prior to the first anniversary of the preceding year’s annual meeting; provided, however, that if the date of the annual meeting is more than 30 calendar days before or more than 60 calendar days after such anniversary date, or if no annual meeting was held in the preceding year, then to be timely, the shareholder notice must be received no earlier than the close of business on the 120th calendar day prior to such annual meeting and not later than the close of business on the later of the 90th calendar day prior to such annual meeting or, if the first public announcement of the date of such annual meeting is less than 100 calendar days prior to the date of such annual meeting, the 10th calendar day following the calendar day on which public announcement of the date of such meeting is first made; and

 
	
				
	 •
	 
	 
	In the case of a special meeting, not earlier than the close of business on the 150th calendar day prior to such special meeting and not later than the close of business on the later of the 120th calendar day prior to such special meeting or the 10th calendar day following the day on which public announcement of the date of the special meeting is first made by us.

These provisions may have the effect of precluding the conduct of certain business at a meeting if the proper procedures are not followed. These provisions may also discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company.
 
No Cumulative Voting
Cumulative voting allows a shareholder to vote a portion or all of its shares for one or more candidates for seats on a company’s board of directors. The absence of cumulative voting makes it more difficult for a minority shareholder to gain a seat on a company’s board of directors to influence the board’s decision regarding a takeover. Under the NCBCA, by virtue of our date of incorporation and the fact that the Restated Charter does not give our shareholders the right to cumulate their votes, our shareholders are not entitled to cumulate their votes.
Shareholder Approval of Certain Business Combinations
The NCBCA has two primary anti-takeover statutes, The North Carolina Shareholder Protection Act and The North Carolina Control Share Acquisition Act, which govern the shareholder approval required for certain business combinations. Since we have not opted out of either of these provisions, we are subject to the anti-takeover effects of The North Carolina Shareholder Protection Act and The North Carolina Control Share Acquisition Act.
The North Carolina Shareholder Protection Act generally requires the affirmative vote of 95% of a public corporation’s voting shares to approve a “business combination” with any other entity that a majority of continuing directors determines beneficially 

owns, directly or indirectly, more than 20% of the voting shares of the corporation (or ever owned more than 20% and is still an “affiliate” of the corporation) unless the fair price provisions and the procedural provisions of the statute are satisfied.
“Business combination” is defined by the statute as (i) any merger, consolidation or conversion of a corporation with or into any other entity, (ii) any sale or lease of all or any substantial part of the corporation’s assets to any other entity or (iii) any payment, sale or lease to the corporation or any subsidiary thereof by any other entity of assets having an aggregate fair market value of $5,000,000 or more in exchange for securities of the corporation.
Under The North Carolina Control Share Acquisition Act, “control shares” of a corporation that are acquired in a “control share acquisition” (as defined in the statute) have no voting rights unless such rights are granted by resolution adopted by a majority of the disinterested shareholders of the corporation, and in the event such voting rights were to be granted, all other shareholders would have the right, subject to certain limitations, to have their shares in the corporation redeemed at their fair value.
A person acquires “control shares” whenever such person acquires shares that, when added to all other shares of the corporation beneficially owned by such person, would entitle the person to voting power in the election of directors equal to or greater than one of three thresholds: one-fifth, one-third or a majority.
Election and Number of Directors
The Restated Charter and the Bylaws contain provisions that establish specific procedures for nominating and electing members of our Board of Directors, including the advance notice requirements discussed above under “-Requirements for Advance Notification of Shareholder Proposals and Nominations.”
The Restated Charter and the Bylaws provide that the number of directors will be established by our Board of Directors but may not be fewer than three. Accordingly, our shareholders may not increase the size of our Board of Directors for the purpose of electing new directors.
Amendment of the Restated Charter
Except as provided under the NCBCA, amendments to the Restated Charter must be proposed by our Board of Directors and approved by holders of a majority of our total outstanding shares entitled to vote. In the case of any
special meeting of shareholders, the notice of such meeting must have stated that the amendment of the Restated Charter was one of the purposes of the meeting. These provisions may have the effect of deferring, delaying or discouraging the removal of any anti-takeover defenses provided for in the Restated Charter.
Amendment of the Bylaws
The Bylaws may be altered, amended or repealed, or new bylaws may be adopted, by (i) a majority of the members of our Board of Directors or (ii) the holders of a majority of the votes cast at a meeting in which a quorum is present, provided in the case of any special meeting of shareholders or directors, that the notice of such meeting must have stated that the amendment of the Bylaws was one of the purposes of the meeting.
Limits on Calling Special Meetings of Shareholders
A special meeting of our shareholders may be called by the Chairman of our Board of Directors, our Chief Executive Officer or by a majority of our Board of Directors, and must be called by the Secretary of our company upon the written request of one or more shareholders owning at least 25% in the aggregate of the total number of shares of capital stock of our company outstanding and entitled to vote at such meeting. Any such special meeting called at the request of our shareholders will be held at such date, time and place as may be fixed by our Board of Directors, provided that the date of such special meeting may not be more than 90 days after the receipt of such request by the Secretary. The Bylaws specify the form and content of a shareholder’s request for a special meeting. These provisions may make a change in control of our company more difficult by delaying shareholder actions to elect directors until the next annual meeting of shareholders.

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