Notes that Purported Nomination of Director
Candidates by a Riverstyx Principal Is Invalid and that the
Nominations Will Not be Recognized
RESEARCH
TRIANGLE PARK, N.C., Oct. 7, 2024
/PRNewswire/ -- Charles & Colvard, Ltd. ("Charles &
Colvard" or the "Company") (Nasdaq: CTHR) today commented on a
letter sent to the Company's shareholders and released publicly by
Riverstyx Capital Management, LLC ("Riverstyx"). The Company
provided the following statement in response:
On August 27,
Charles & Colvard received a purported notice (the "Notice")
from Ben Franklin, a principal of
Riverstyx Capital Management, indicating his intention to nominate
three candidates to stand for election to Charles & Colvard's
Board of Directors (the "Board") at the Company's upcoming Annual
Meeting (the "Annual Meeting").
Like most public companies, Charles &
Colvard's Bylaws require a shareholder that wishes to nominate
candidates for election to provide the Company with advance notice
and relevant information regarding the shareholder and its
candidates. The aim of such provisions, which numerous courts have
recognized as valid, is to ensure that the Board and shareholders
have adequate information with which to evaluate candidates and
make an informed decision about the nomination and election of
directors.
The Notice failed to comply with the clear
requirements of the Company's 2011 Amended and Restated Bylaws (the
"Bylaws"), which are consistent with the Bylaws of the majority of
public companies in relevant respects. Among many other
deficiencies, the Notice omitted basic and critical information
required by the Bylaws, such as:
-
- The biographies and work histories of the candidates;
- The ownership stakes of the candidates and of the nominating
person (Mr. Franklin) and his affiliates and associates, which
appear to include various entities that own the Company's stock
that are not even mentioned in the Notice; and
- The consent of each candidate to serve as a director.
After a comprehensive review of the Notice and
its deficiencies, and with input from its advisors, the Board today
notified Mr. Franklin that the Notice is invalid. Mr. Franklin
waited until the day before the last day of the nomination window
to deliver the deficient Notice. Accordingly, the Company will not
recognize Mr. Franklin's nominations. Any proxies submitted, or
votes cast, for the election of Mr. Franklin's candidates will be
disregarded.
Charles & Colvard's Board is committed to
acting in the best interests of all shareholders and has invited
Mr. Franklin to share his perspectives on the Company's business
and strategy directly with the Board. The Board and management team
look forward to constructively engaging with Mr. Franklin.
Charles & Colvard's Board will make a recommendation to
shareholders with respect to the upcoming Annual Meeting and
director elections in due course. Charles & Colvard
shareholders are not required to take any action at this time.
About Charles & Colvard, Ltd.
Charles & Colvard, Ltd. (Nasdaq: CTHR) believes that fine
jewelry should be as ethical as it is exquisite. Charles &
Colvard is the original creator of lab grown moissanite (a rare
gemstone formed from silicon carbide). The Company brings
revolutionary gems and fine jewelry to market by using exclusively
Made, not Mined™ above ground gemstones and a dedication to 100%
recycled precious metals. The Company's Forever One™ moissanite and
Caydia® lab grown diamond brands provide exceptional
quality, incredible value and a conscious approach to bridal, high
fashion, and everyday jewelry. Charles & Colvard was founded in
1995 and is based in North
Carolina's Research Triangle
Park region. For more information, please visit
https://www.charlesandcolvard.com/.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Statements expressing expectations regarding our future
and projections relating to our products, sales, revenues, and
earnings are typical of such statements and are made under the
Private Securities Litigation Reform Act of 1995. These
forward-looking statements include, but are not limited to,
statements about our plans, objectives, representations, and
contentions and are not historical facts and typically are
identified by use of terms such as "may," "will," "should,"
"could," "expect," "intend," "plan," "anticipate," "believe,"
"estimate," "predict," "continue," and similar words, although some
forward-looking statements are expressed differently.
All forward-looking statements are subject to the risks and
uncertainties inherent in predicting the future. You should be
aware that although the forward-looking statements included herein
represent management's current judgment and expectations, our
actual results may differ materially from those projected, stated,
or implied in these forward-looking statements as a result of many
factors including, but not limited to, some anti-takeover
provisions of our charter documents may delay or prevent a takeover
of our Company; risks related to our ongoing confidential
arbitration and relationship with Wolfspeed, Inc.; our business and
our results of operations could be materially adversely affected as
a result of general economic and market conditions; the execution
of our business plans could significantly impact our liquidity;
negative or inaccurate information on social media could adversely
impact our brand and reputation; our failure to maintain compliance
with The Nasdaq Stock Market's continued listing requirements,
including filing our U.S. Securities and Exchange Commission
("SEC") reports on a timely basis, could result in the delisting of
our common stock; and the other risks and uncertainties described
in more detail in our filings with the SEC, including our Annual
Report on Form 10-K for the fiscal year ended June 30, 2023 and subsequent reports filed with
the SEC. Forward-looking statements speak only as of the date they
are made. We undertake no obligation to update or revise such
statements to reflect new circumstances or unanticipated events as
they occur except as required by the federal securities laws, and
you are urged to review and consider disclosures that we make in
the reports that we file with the SEC that discuss other factors
relevant to our business.
Important Additional Information Regarding Proxy
Solicitation
Charles & Colvard intends to file a proxy statement and
WHITE proxy card with the SEC in connection with the solicitation
of proxies for the Company's upcoming Annual Meeting. Charles &
Colvard, its directors and certain of its executive officers will
be participants in the solicitation of proxies from shareholders in
respect of the Annual Meeting. Information regarding the names of
Charles & Colvard's directors and executive officers and their
respective interests in the Company's securities or otherwise is
set forth in the Company's proxy statement for the 2024 Special
Meeting of Shareholders, filed with the SEC on April 8, 2024 (the "Special Meeting Proxy
Statement"), and the proxy statement for the 2023 Annual Meeting of
Shareholders, filed with the SEC on October
27, 2023 (together with the Special Meeting Proxy Statement,
the "Prior Proxy Statements"). To the extent holdings of such
participants in Charles & Colvard's securities have changed
since the amounts described in the Prior Proxy Statements, such
changes have been reflected on Initial Statements of Beneficial
Ownership on Form 3 or Statements of Change in Ownership on Form 4
filed with the SEC. Additional information can also be found in the
Company's Annual Report on Form 10-K for the year ended
June 30, 2023, filed with the SEC on
October 12, 2023, and subsequent
reports filed by the Company with the SEC. Details concerning the
nominees of the Charles & Colvard
Board of Directors for election at the upcoming Annual
Meeting will be included in the proxy statement to be filed for the
Annual Meeting. BEFORE MAKING ANY VOTING DECISION, INVESTORS AND
SHAREHOLDERS OF CHARLES & COLVARD ARE URGED TO READ ALL
RELEVANT DOCUMENTS FILED WITH OR FURNISHED TO THE SEC, INCLUDING
THE COMPANY'S DEFINITIVE PROXY STATEMENT AND ANY AMENDMENTS AND
SUPPLEMENTS THERETO ONCE AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION. These documents, including the definitive
proxy statement (and any amendments or supplements thereto) and
other documents filed by Charles & Colvard with the SEC, are or
will be available for no charge at the SEC's website at
http://www.sec.gov and at Charles & Colvard's investor
relations website at https://ir.charlesandcolvard.com/.
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SOURCE Charles & Colvard, Ltd.