UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
(Rule
14a-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE
14A INFORMATION
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1934
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No. )
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the Registrant ¨
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¨
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only
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¨
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Definitive
Additional Materials
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¨
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Soliciting
Material under Rule 14a-12
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THE
PROVIDENCE SERVICE CORPORATION
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(Name
of Registrant as Specified in Its
Charter)
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DONALD
E. SMITH
TIFFANY
SMITH
MICHAEL
BRADLEY
ERIC
S. GRAY
73114
INVESTMENTS, L.L.C.
(referred
to as “The Providence Committee for Accountability”
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(Name
of Persons(s) Filing Proxy Statement, if Other Than the
Registrant)
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(2)
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Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was
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box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its
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Form,
Schedule or Registration Statement
No.:
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PRELIMINARY
COPY - SUBJECT TO COMPLETION, DATED FEBRUARY [__], 2009
THE
PROVIDENCE SERVICE CORPORATION
CONSENT
STATEMENT
OF
THE
PROVIDENCE COMMITTEE FOR ACCOUNTABILITY
PLEASE
SIGN, DATE AND MAIL THE ENCLOSED [WHITE] CONSENT CARD TODAY
This
Consent Statement and the enclosed [WHITE] consent card are being furnished by
The Providence Committee for Accountability (the “Committee”) in connection
with our solicitation of written consents from you, holders of shares of Common
Stock, par value $0.001 per share (the “Common Stock”), of The
Providence Service Corporation, a Delaware corporation (“Providence” or the “Company”). A
solicitation of written consents is a process that allows a company’s
stockholders to act by submitting written consents to any proposed stockholder
actions in lieu of voting in person or by proxy at an annual or special meeting
of stockholders. The Committee is composed of Donald E. and Tiffany
Smith, Michael Bradley, Eric S. Gray, and 73114 Investments, L.L.C. We are
soliciting written consents from the holders of shares of Common Stock to amend
the Providence Bylaws (each, as more fully described in this Consent Statement,
a “Proposal” and
together, the “Proposals”), in the following
order, without a stockholders’ meeting, as authorized by Delaware
law:
Proposal
1
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To
provide that vacancies and newly-created directorships may be filled
either by the vote of stockholders or by the affirmative vote of 75% of
the directors then in office,
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Proposal
2
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To
provide that a stockholder or group of stockholders that succeeds in
having one or more of its nominees elected to the Board in a contested
election (if fewer than 50% of the total number of authorized directors is
contested) shall be entitled to reimbursement from the Company for
reasonable expenses incurred in connection with nominating one or more
candidates for election to the
Board,
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Proposal
3
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To
provide for majority voting in the election of directors in uncontested
elections,
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Proposal
4
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To
reduce the percentage of stock holdings required for stockholders to call
special meetings of stockholders from 50% to 25% and eliminate the
additional limitations imposed on the stockholders’ ability to call
special meetings by the Board’s recent amendments to the
Bylaws,
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Proposal
5
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To
limit the ability of the chairman to adjourn stockholder meetings to a
later date, time and place to situations where no quorum is
present,
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Proposal
6
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To
eliminate the advance notice requirements for stockholders to propose
business to be brought before an annual meeting of stockholders and the
advance notice requirements for stockholders to nominate persons for
election to the Board at an annual or special meeting of
stockholders,
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Proposal
7
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To
eliminate the additional requirements imposed on persons nominated for
election to the Board by the Board’s recent bylaw amendments, including
the requirement that nominees deliver a written questionnaire with respect
to such person’s background and qualifications and enter into an
undisclosed “Prospective Director Agreement”, which can only be obtained
by requesting it from the Company,
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Proposal
8
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To
eliminate the additional procedural requirements imposed on stockholders
proposing to act by written consent by the Board’s recent Bylaw
amendments, and
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Proposal
9
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To
provide that any decision by the Board to repeal, alter or amend any bylaw
adopted by the stockholders of the Company shall, if such repeal,
alteration or amendment has not been approved by the stockholders, require
the affirmative vote of 75% of the directors then in
office.
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Providence
needs a better direction. These bylaw changes will reverse some of
the recent Board amendments and add further stockholder
protections. These modest steps can begin a process of change for
Providence and an increase in stockholder value. Because time is of
the essence, we have undertaken this solicitation. We view a direct
solicitation as the most expeditious means of beginning this change and ensuring
that Providence can move forward as a financially healthy and operationally
sound enterprise.
This
Consent Statement and the enclosed [WHITE] consent card are first being sent or
given to the stockholders of Providence on or about February [__],
2009.
We are
soliciting your consent in favor of these Bylaw changes to restore stockholder
rights that were taken away by the Board’s amendments on November 20, 2008 and
to add further protections to provide better Board accountability to the
stockholders.
On
[______ __], 2009, in accordance with Article V, Section 5.02(c) of the Bylaws,
the Committee provided written notice to the secretary of Providence requesting
that the Board fix a record date for determining stockholders entitled to give
their written consent in connection with this consent
solicitation. On [______ __], 2009, Providence notified the Committee
that the Board had fixed [______ __], 2009, as the record date for the
determination of the Company’s stockholders who are entitled to execute,
withhold or revoke consents relating to this consent solicitation (the “Record Date”).
The
effectiveness of each of the Proposals requires the affirmative consent of the
holders of record of a majority of the Common Stock outstanding and entitled to
vote as of the close of business on the Record Date. Each Proposal
will be effective without further action when we deliver to Providence such
requisite number of consents. Each Proposal is independent of the
others. A Proposal’s effectiveness is not subject to, or conditioned
upon, the effectiveness of the other Proposals.
The
Proposals will be effective when delivery of the written consents complies with
Section 228(c) of the General Corporation Law of the State of Delaware
(“DGCL”) and Article V,
Section 5.02 of the Company's Bylaws. For the Proposals to be
effective, properly completed and unrevoked written consents must be delivered
to Providence within 60 days of the earliest dated written consent delivered to
Providence. Donald E. and Tiffany Smith delivered their written
consent to Providence on February [__], 2009. Consequently, by April
[__], 2009, the Committee will need to deliver properly completed and unrevoked
written consents to the Proposals from the holders of record of a majority of
the shares of Common Stock outstanding and entitled to vote as of the close of
business on the Record Date. We intend to set [_____ __], 2009, as
the goal for submission of written consents.
PLEASE
ACT TODAY TO ENSURE THAT YOUR CONSENT WILL COUNT. The Committee
reserves the right to submit to Providence consents at any time within 60 days
of the earliest dated written consent delivered to Providence. See
“Consent Procedures”
for additional information regarding such procedures.
As of
February [__], 2009, the members of the Committee were the beneficial
owners of an aggregate of 2,302,095 shares of Common Stock, which currently
represent approximately 18.7% of the issued and outstanding shares of Common
Stock.
According
to Providence’s public filings, there were 12,321,736 shares of Common
Stock outstanding as of November 3, 2008. The stockholders of
Providence are entitled to one vote per share of Common Stock.
We
urge you to vote in favor of the Proposals by signing, dating and returning the
enclosed [WHITE] consent card. The failure to sign and return a
consent will have the same effect as voting against the
Proposals. Please note that you must date as well as sign the
enclosed [WHITE] consent card to ensure its validity.
We
urge you not to sign any revocation of consent card that may be sent to you by
Providence. If you have done so, you may revoke that revocation of
consent by delivering a later dated [WHITE] consent card to The Providence
Committee for Accountability, in care of D.F. King & Co., Inc., which is
assisting us, at their address listed below, or to the principal executive
offices of Providence.
THIS
CONSENT SOLICITATION IS BEING MADE BY THE PROVIDENCE COMMITTEE FOR
ACCOUNTABILITY AND NOT BY OR ON BEHALF OF THE COMPANY.
THE
PROVIDENCE COMMITTEE FOR ACCOUNTABILITY URGES YOU TO SIGN, DATE AND RETURN THE
[WHITE] CONSENT CARD IN FAVOR OF THE PROPOSALS DESCRIBED HEREIN.
If
you have any questions, require assistance in submitting your [WHITE] consent
card,
or
need additional copies of the Committee’s consent solicitation materials,
please call
D.F.
King & Co., Inc. at the phone numbers listed below.
D.F.
King & Co., Inc.
48
Wall Street, 22nd Floor
New
York, NY 10005
Stockholders
Call Toll-Free at: (800) 848-3416
Banks
and Brokers Call Collect at: (212)
269-5550
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IMPORTANT
PLEASE
READ THIS CAREFULLY
If your
shares of Common Stock are registered in your own name, please submit your
consent to us today by signing, dating and returning the enclosed [WHITE] consent card in the
postage-paid envelope provided.
If you
hold your shares in “street” name with a bank, broker firm, dealer, trust
company or other nominee, only they can exercise your right to consent with
respect to your shares of Common Stock and only upon receipt of your specific
instructions. Accordingly, it is critical that you promptly give
instructions to consent to the Proposals to your bank, broker firm, dealer,
trust company or other nominee. Please follow the instructions to
consent provided on the enclosed [WHITE] consent
card. If your bank, broker firm, dealer, trust company or other
nominee provides for consent instructions to be delivered to them by telephone
or Internet, instructions will be included on the enclosed [WHITE] consent
card. The Providence Committee for Accountability urges you to
confirm in writing your instructions to the person responsible for your account
and provide a copy of those instructions to The Providence Committee for
Accountability c/o D.F. King & Co., Inc. (“D.F. King” or “D.F. King & Co., Inc.”)
at 48 Wall Street, 22nd Floor, New York, New York 10005 so that The Providence
Committee for Accountability will be aware of all instructions given and can
attempt to ensure that such instructions are followed.
Execution
and delivery of a consent by a record holder of shares of Common Stock will be
presumed to be a consent with respect to all shares held by such record holder
unless the consent specifies otherwise.
Only
holders of record of shares of Common Stock as of the close of business on the
Record Date will be entitled to consent to the Proposals. If you are
a stockholder of record as of the close of business on the Record Date, you will
retain your right to consent even if you sell your shares of Common Stock after
the Record Date.
IF
YOU TAKE NO ACTION, YOU WILL IN EFFECT BE REJECTING THE
PROPOSALS. ABSTENTIONS, FAILURES TO CONSENT AND BROKER NON-VOTES WILL
HAVE THE SAME EFFECT AS WITHHOLDING CONSENT.
If you
have any questions about executing or delivering your [WHITE] consent card or
require assistance, please contact:
If
you have any questions, require assistance in submitting your [WHITE] consent
card,
or
need additional copies of the Committee’s consent solicitation materials,
please call
D.F.
King & Co., Inc. at the phone numbers listed below.
D.F.
King & Co., Inc.
48
Wall Street, 22nd Floor
New
York, NY 10005
Stockholders
Call Toll-Free at: (800) 848-3416
Banks
and Brokers Call Collect at: (212)
269-5550
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QUESTIONS
AND ANSWERS ABOUT THIS CONSENT SOLICITATION
The
following are some of the questions you, as a stockholder, may have and answers
to those questions. The following is not meant to be a substitute for
the information contained in the remainder of this Consent Statement, and the
information contained below is qualified by the more detailed descriptions and
explanations contained elsewhere in this Consent Statement. We urge
you to carefully read this entire Consent Statement before making any decision
on whether to grant any consent hereunder.
Who
Is Making the Solicitation?
The
Providence Committee for Accountability (the “Committee”) is making this
solicitation. The Committee is composed of Donald E. and Tiffany
Smith, Michael Bradley, Eric S. Gray, and 73114 Investments, L.L.C. The
members of the Committee hold in the aggregate 2,302,095 shares of Common
Stock, or approximately 18.7% of the Common Stock outstanding, as disclosed in
our most recent amendment to Schedule 13D filed with the SEC on January 22,
2009. The Committee members are executives, directors and affiliates
of Avalon Correctional Services, Inc., a leading developer and manager of
private community correctional facilities and alternative correctional
programming in the United States. Donald Smith is the Chief
Executive Officer, director and principal stockholder of
Avalon. Tiffany Smith is the [Vice President of Communications]
and principal stockholder of Avalon and the spouse of
Mr. Smith. Michael Bradley is Avalon’s Chief Financial
Officer. Eric Gray is Avalon’s Vice President and Corporate
Counsel. 73114 is a wholly-owned subsidiary of Avalon, which is
managed by Messrs. Smith, Bradley and Gray.
Each
member of the Committee may be deemed a participant in this consent
solicitation. For additional information on the participants, please
see “Additional Information
Concerning the Participants” on page [__].
What
Are You Asking that the Stockholders Consent To?
The
Committee is asking you to consent to nine Proposals, which would amend the
Providence Bylaws to:
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1.
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Fill Board
vacancies either by a
stockholder vote or by the affirmative vote of 75% of the directors
then
in office,
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2.
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Reimburse
stockholders that nominate successful director
candidates,
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3.
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Elect
directors by majority vote in uncontested
elections,
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4.
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Allow
stockholders with 25% or more of the outstanding shares to call special
meetings,
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5.
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Limit
the chair’s ability to adjourn a stockholders’ meeting when a quorum is
present,
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6.
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Eliminate
advance notice provisions,
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7.
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Eliminate
pre-textual questionnaires and “agreements” for director
nominees,
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8.
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Remove
the Board’s control over the record date in consent solicitations,
and
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9.
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Require the
affirmative vote of 75% of the directors then in
office to approve changes to stockholder adopted or amended bylaws unless
approved by the
stockholders.
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These
Proposals are explained fully under the heading “Providing Board Accountability
– Proposed Bylaw Changes”. The text of the existing
Bylaws to be amended is attached as Exhibit A. The text of the
Bylaws, amended in the manner set forth in Proposals 1 through 9, is attached as
Exhibit B.
Why
Are We Soliciting Your Consent?
We are
soliciting your consent because we believe the current Board and executives are
elevating their enrichment and entrenchment above the pursuit of stockholder
value. Our belief is supported by serial misjudgments by management,
especially in the acquisition of LogistiCare, by the dramatic increases in
executive compensation, and by the Board’s implementation of an anti-stockholder
agenda. We believe that Providence cannot realize its intrinsic share
value unless management’s values are realigned to match the stockholders’ best
interests. We believe those values can be realigned starting with the
Proposals in this Consent Solicitation.
Are
You Proposing to Elect Anyone to the Providence Board?
Not at
this time. The Committee is only asking you to consent to the
Proposals described in this Consent Statement. The Committee may
propose one or more director nominees to contest the election of the nominees up
for election at the Company’s upcoming annual meeting. If the
Committee does so, it would distribute additional proxy solicitation
materials. Regardless of whether it proposes one or more director
nominees, the Committee believes that the Proposals are needed and in the best
interests of the Providence stockholders.
Who
Is Eligible to Consent to the Proposals?
If you
are a record owner of Common Stock as of the close of business on the Record
Date, you have the right to consent to the Proposals. Under the
Company’s Bylaws, the Board may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted by
the Board and which record date shall not be more than ten days from the date
upon which the resolution fixing the record date is adopted by the
Board. The Committee made a request on February [__], 2009, that
the Board fix a record date for this consent solicitation. Under the
Bylaws, if the Board does not fix a record date in response to our request, the
record date for determining stockholders entitled to express consent to
corporate action in writing without a meeting shall be the first date on which a
signed written consent setting forth the action taken or proposed to be taken is
delivered to the corporation in accordance with applicable law. The
filing of this Consent Statement with the SEC, whether in preliminary or
definitive form, shall not be deemed to be a request by us for the Board to set
a record date for the consent solicitation.
When
Is the Deadline for Submitting Consents?
The
deadline for submitting consents is April [__], 2009. We urge
you, however, to submit your consent as soon as possible to make the Proposals
effective. For our Proposals to be adopted, the Company must receive
written unrevoked consents signed by a sufficient number of stockholders to
adopt the Proposals within 60 calendar days of the date of the earliest dated
consent delivered to the Company. The earliest dated consent was
delivered to the Company on February [__], 2009. WE URGE YOU TO
ACT AS SOON AS POSSIBLE TO ENSURE THAT YOUR CONSENT WILL COUNT.
How
Many Consents Are Needed to Adopt the Proposals?
The
Committee’s Proposals will be adopted and become effective when properly
completed, unrevoked consents are signed by the holders of a majority of the
outstanding shares of Common Stock entitled to vote as of the close of business
on the Record Date, provided that such consents are delivered to the Company
within 60 calendar days of the date of the earliest dated consent delivered to
the Company. According to the Company’s latest Form 10-Q filed with
the SEC on November 10, 2008, the Company had 12,321,736 shares of Common
Stock outstanding as of November 3, 2008. Cumulative voting is
not permitted. Assuming that the number of issued and outstanding
shares remains 12,321,736 on the Record Date, the consent of the holders of at
least [6,160,869] shares of Common Stock would be necessary to effect these
Proposals. The actual number of consents necessary to effect the
Proposals will depend on the facts as they exist on the Record
Date.
What
Should You Do to Consent to Our Proposals?
If your
shares of Common Stock are registered in your own name, please submit your
consent to us by signing, dating and returning the enclosed [WHITE] consent card
in the postage-paid envelope provided.
If you
hold your shares in “street” name with a bank, broker firm, dealer, trust
company or other nominee, only they can exercise your right to consent with
respect to your shares of Common Stock and only upon receipt of your specific
instructions. Accordingly, it is critical that you give instructions
to consent to the Proposals promptly to your bank, broker firm, dealer, trust
company or other nominee. Please follow the instructions to consent
provided on the enclosed [WHITE] consent card. If your bank, broker
firm, dealer, trust company or other nominee provides for consent instructions
to be delivered to them by telephone or Internet, instructions will be included
on the enclosed [WHITE] consent card. The Committee urges you to
confirm in writing your instructions to the person responsible for your account
and provide a copy of those instructions to The Providence Committee for
Accountability, c/o D.F. King & Co., Inc. at 48 Wall Street, 22nd Floor, New
York, New York 10005, so that the Committee will be aware of all instructions
given and can attempt to ensure that such instructions are
followed.
Whom
Should You Call if You Have Questions about the Solicitation?
Please
call our consent solicitor, D.F. King & Co., Inc., toll free at (800)
848-3416. Banks and brokers may call collect at (212)
269-5550.
IMPORTANT
The
Committee urges you to express your consent on the [WHITE] consent card TODAY
to amend the Company's Bylaws to:
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Fill Board
vacancies either by a stockholder vote or by the affirmative vote of 75%
of the directors then in
office,
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2.
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Reimburse
stockholders that nominate successful director
candidates,
|
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3.
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Elect
directors by majority vote in uncontested
elections,
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4.
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Allow
stockholders with 25% or more of the outstanding shares to call special
meetings,
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5.
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Limit
the chair’s ability to adjourn a stockholders’ meeting when a quorum is
present,
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6.
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Eliminate
advance notice provisions,
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7.
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Eliminate
pre-textual questionnaires and “agreements” for director
nominees,
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8.
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Remove
the Board’s control over the record date in consent solicitations,
and
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9.
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Require the
affirmative vote of 75% of the directors then in
office to approve changes to stockholder adopted or amended bylaws unless
approved by the
stockholders.
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Adopt
the Bylaw Changes for
Better Board
Accountability
REASONS
FOR OUR SOLICITATION
We are
significant stockholders of the Company. The Committee members own in
the aggregate a total of 2,302,095 shares of Common Stock, representing
approximately 18.7% of the issued and outstanding Common Stock. As
the largest stockholders of Providence, the Committee has a vested financial
interest in the maximization of the value of the Company’s Common
Stock. Our interests are aligned with the interests of all
stockholders. We have one simple goal – to maximize the
value of the Common Stock for all stockholders.
We do not
believe that the current executives and the Board have served the best interests
of the Company’s stockholders, and we do not have confidence in their ability to
improve the Company’s operating performance and enhance stockholder
value. Without reordering the Company’s priorities, we also fear that
the Company’s intrinsic value may continue to sharply deteriorate under the
continued stewardship of the Company’s current executive management
team.
Specifically,
our concerns include the following:
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·
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Providence’s disastrous stock
performance.
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·
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The excessive compensation
awarded to Providence’s executives and its
directors.
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·
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The Board’s adoption of bylaws
designed to thwart the
stockholders.
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·
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The lack of strategic planning,
as indicated in the disastrous LogistiCare
acquisition.
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·
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The high and risky levels of
indebtedness.
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·
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The misalignment of management
and Board interests with the best interests of stockholders.
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·
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The apparent inability or
refusal to consider ways of improving the Company’s position other than
the sale of assets.
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·
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The refusal to communicate
regarding critical corporate
issues.
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·
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The incurring of tremendous
costs to the Company with no benefit to the shareholders at a time when
the Company is otherwise incurring operational
losses. Specifically the management and Board have rewarded
themselves with stock and options costing the Company over $5 million
while diluting the interests of the other shareholders and have retained
attorneys and advisors to hinder shareholders to protect their
actions.
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|
·
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Insufficient Board oversight of
management.
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PROVIDING
FOR BOARD ACCOUNTABILITY:
PROPOSED
BYLAW CHANGES
The
Company’s Second Amended and Restated Certificate of Incorporation provides for
a three-class staggered board, the size of which may only be fixed by a
resolution of the Board of Directors of the Company (the “Board”). The
Board’s recent amendments to the Company’s Amended and Restated Bylaws (the
“Bylaws”) on November
20, 2008 placed additional restrictions on the stockholders’ ability to act and,
in particular, on the stockholders’ ability to change the composition of the
Board. In order to increase stockholders’ opportunities to gain
representation on the Board, increase the accountability of each director to the
stockholders and minimize or eliminate the additional restrictions imposed on
stockholders’ ability to act by the Board’s recent bylaw amendments, the
Committee will seek to amend the Bylaws to: (1) fill Board
vacancies and newly-created directorships either by a stockholder vote or by the
affirmative vote of 75% of the directors then in office, (2) provide that a
stockholder or group of stockholders that succeeds in having one or more of its
nominees elected to the Board in a contested election (if fewer than 50% of the
total number of authorized directors is contested) shall be entitled to
reimbursement from the Company for reasonable expenses incurred in connection
with nominating one or more candidates for election to the Board,
(3) provide for majority voting in the election of directors in uncontested
elections, (4) reduce the percentage of stock holdings required for
stockholders to call special meetings of stockholders from 50% to 25% and
eliminate the additional limitations imposed on the stockholders’ ability to
call special meetings by the Board’s recent amendments to the Bylaws,
(5) limit the ability of the chairman to adjourn stockholder meetings to a
later date, time and place to situations where no quorum is present,
(6) eliminate the advance notice requirements for stockholders to propose
business to be brought before an annual meeting of stockholders and the advance
notice requirements for stockholders to nominate persons for election to the
Board at an annual or special meeting of stockholders, (7) eliminate the
additional requirements imposed on persons nominated for election to the Board
by the Board’s recent bylaw amendments, including the requirement that nominees
deliver a written questionnaire with respect to such person’s background and
qualifications and enter into a undisclosed “Prospective Director Agreement,”
which can only be obtained by requesting it from the Company (8) eliminate
the additional procedural requirements imposed on stockholders proposing to act
by written consent by the Board’s recent bylaw amendments, and (9) provide
that any decision by the Board to repeal, alter or amend any bylaw adopted by
the stockholders of the Company shall, if such repeal, alteration or amendment
has not been approved by the stockholders, require the affirmative vote of 75%
of the directors then in office.
PROPOSAL 1. FILL BOARD VACANCIES BY A STOCKHOLDER
VOTE OR BY THE
AFFIRMATIVE VOTE OF 75% OF THE
DIRECTORS THEN IN
OFFICE
On
November 18, 2008, the Board acted to appoint the Company's Chief Operating
Officer, Craig Norris, to the Board of Directors to fill a vacancy on the Board
left by the resignation of Stephen Geringer in April 2008. Under the
Bylaws, stockholders will not have the opportunity to vote on this director
until the 2010 annual meeting of stockholders. Having more than one
member of management on the Board is contrary to acceptable corporate governance
principles. Moreover, were the stockholders to decline to reelect a
management director to the Board, the Board could just expand the Board and fill
the vacancy with the same management director that the stockholders had chosen
not to reelect.
Presently,
Article II, Section 2.04 of the Bylaws provides that vacancies in the Board
shall be filled only by the remaining members of the Board and that
newly-created directorships resulting from an increase in the number of
directors shall be filled only by the Board unless the Board fails to do so, in
which case the stockholders may fill the newly-created directorship at an annual
or special meeting of stockholders. Article II, Section 2.04 reads in its
entirety as follows:
“Vacancies on the
Board. Vacancies in the Board, whether resulting from death,
resignation, removal or other cause, shall be filled only by the Board and not
by the stockholders, by the affirmative vote of at least a majority of the
remaining members of the Board, even though less than a quorum, or by a sole
remaining director, and newly-created directorships resulting from any increase
in the number of directors shall only be filled by the Board, or if not so
filled, by the stockholders at the next annual meeting thereof or at a special
meeting called for that purpose in accordance with Section 1.03 of these
Bylaws. Any director elected in accordance with the preceding
sentence of this Section 2.04 shall hold office for a term that shall
coincide with the term of the class to which such director shall have been
elected or appointed and until his or her successor shall have been duly elected
and qualified, except in the event of his or her earlier death, resignation or
removal.”
To
eliminate the ability of the Board to thwart the will of stockholders by filling
vacancies and otherwise manipulating the election process, the Committee seeks
to provide that vacancies and newly-created directorships on the Board may be
filled either by the stockholders or by the affirmative vote of seventy-five
percent (75%) of the directors then in office. As such, the Committee
seeks to amend the Bylaws by deleting Article II, Section 2.04 in its entirety
and inserting the following in lieu thereof:
“Vacancies in the
Board. Vacancies in the Board, whether resulting from death,
resignation, removal or other cause, and newly-created directorships resulting
from any increase in the number of directors may be filled either by the vote of
stockholders or by the affirmative vote of seventy-five percent (75%) of the
directors then in office, even if less than a quorum. Any director
elected in accordance with the preceding sentence of this Section shall hold
office for a term that shall coincide with the term of the class to which such
director shall have been elected or appointed and until his or her successor
shall have been duly elected and qualified, except in the event of his or her
earlier death, resignation or removal.”
The
proposed amendment to Article II, Section 2.04 also clarifies that any
director elected to fill a vacancy resulting from death, resignation, removal or
other cause shall hold office for a term that coincides with the term of the
class to which the director was elected or appointed.
THE
COMMITTEE URGES YOU TO CONSENT TO THIS BYLAW PROPOSAL.
PROPOSAL
2. REIMBURSEMENT OF PROXY EXPENSES
A proxy
contest is a powerful tool available to stockholders seeking to influence, among
other things, the composition of a board of directors. One of the
principal impediments to utilizing this tool, however, is its
cost. The stockholder or group of stockholders nominating persons for
election to the board of directors must spend its own money to wage a proxy
contest in support of the election of an insurgent slate while the corporation
generally pays all the expenses for the reelection campaign of incumbent
directors. Presently, the Bylaws do not contain a provision for the
reimbursement of expenses associated with running a successful insurgent
slate. In order to eliminate the principal impediment to utilizing
proxy contests to nominate insurgent directors, the Committee seeks to amend the
Bylaws to add the following provision as the new Article I, Section 1.07
thereof:
“Reimbursement of Proxy
Expenses. The Board shall cause the corporation to reimburse a
stockholder or group of stockholders (together, the “Nominator”) for
reasonable expenses (“Expenses”) incurred
in connection with nominating one or more candidates in a contested election of
directors to the Board, including, without limitation, printing, mailing, legal,
solicitation, travel, advertising and public relations expenses, if (a) the
election of fewer than 50% of the total number of authorized directors is
contested in the election, (b) one or more candidates nominated by the
Nominator are elected to the Board, (c) stockholders are not permitted to
cumulate their votes for directors, and (d) the election occurred, and the
Expenses were incurred, after this bylaw’s adoption. The amount paid
to a Nominator under this bylaw in respect of a contested election shall not
exceed the amount expended by the corporation in connection with such
election.”
THE
COMMITTEE URGES YOU TO CONSENT TO THIS BYLAW PROPOSAL.
PROPOSAL
3. ELECT DIRECTORS BY MAJORITY VOTE IN UNCONTESTED ELECTIONS
Presently,
the directors of the Company are elected by plurality vote – the default voting
standard under the DGCL. Under such a plurality voting standard, a
director nominee who receives the highest number of affirmative votes cast is
elected, whether or not such votes constitute a majority of all votes cast
(including those withheld). Thus, a director can be elected even if a
majority of the votes cast are voted against the director’s
election. To increase the accountability of each director to the
Company’s stockholders, the Committee seeks to amend the Bylaws to adopt
majority voting in uncontested director elections. Under this
Proposal, a director will not be validly elected in an uncontested director
election unless a majority of the votes cast for the director are voted in favor
of the election of the director. As such, the Committee seeks to
amend the Bylaws by adding the following provision as the new Article II,
Section 2.03 thereof:
“Required Vote for
Directors. Unless otherwise provided by these Bylaws, each
director shall be elected by the vote of the majority of the votes cast with
respect to that director’s election at any meeting for the election of directors
at which a quorum is present, provided that if, as of the tenth (10th) day
preceding the date the Corporation first mails its notice of meeting for such
meeting to the stockholders of the Corporation, the number of nominees exceeds
the number of directors to be elected (a “Contested Election”),
the directors shall be elected by the vote of a plurality of the votes
cast. For purposes of this Section 2.03 of these Bylaws, a
majority of votes cast shall mean that the number of votes cast “for” a
director’s election exceeds the number of votes cast “against” that director’s
election (with “abstentions” and “broker nonvotes” not counted as a vote cast
either “for” or “against” that director’s election).
In order
for any incumbent director to become a nominee of the Board for further service
on the Board, such person must submit an irrevocable resignation, contingent on
(i) that person not receiving a majority of the votes cast in an election that
is not a Contested Election, and (ii) acceptance of that resignation by the
Board in accordance with the policies and procedures adopted by the Board for
such purpose. In the event an incumbent director fails to receive a
majority of the votes cast in an election that is not a Contested Election, the
nominating and governance committee, or such other committee designated by the
Board pursuant to these Bylaws, shall make a recommendation to the Board as to
whether to accept or reject the resignation of such incumbent director, or
whether other action should be taken. The Board shall act on the
resignation, taking into account the committee’s recommendation, and publicly
disclose (by a press release and filing an appropriate disclosure with the
Securities and Exchange Commission) its decision regarding the resignation and,
if such resignation is rejected, the rationale behind the decision within ninety
(90) days following certification of the election results. The
committee in making its recommendation and the Board in making its decision each
may consider any factors and other information that they consider appropriate
and relevant.
If the
Board accepts a director’s resignation pursuant to this Section 2.03, or if
a nominee for director is not elected and the nominee is not an incumbent
director, then the resulting vacancy may be filled pursuant to Article II,
Section 2.04 of these Bylaws.”
This new
Article II, Section 2.03 provides that director nominees in uncontested
elections would be elected by a majority vote. Under the majority
voting standard, director nominees would be elected only if the nominee received
more votes “for” than “against,” thereby enhancing the accountability of each
director to the Company’s stockholders. Abstentions and broker
non-votes with respect to the election of a director would not be counted as
votes cast and would have no effect in determining whether the required
affirmative majority vote has been obtained. In the event of a
contested election, however, a plurality voting standard would continue to apply
to protect against the possibility of a failed election contest in which no
candidate receives a majority of votes “for” his or her election.
THE
COMMITTEE URGES YOU TO CONSENT TO THIS BYLAW PROPOSAL.
PROPOSAL
4. ALLOW STOCKHOLDERS WITH 25% OR MORE OF THE
OUTSTANDING
SHARES TO CALL SPECIAL MEETINGS
On
November 20, 2008 the Board amended the Bylaws to, among other things, impose
additional requirements on the stockholders’ ability to request special meetings
of stockholders. In particular, the Board added certain conditions,
which if met, would preclude the stockholders’ request to call a special
meeting. The combination of the additional notice requirements and
the procedural conditions creates a significant impediment to stockholders
requesting special meetings and, as a practical matter, effectively eliminates
the utility of a bylaw permitting stockholders to request special
meetings. Article I, Section 1.03(b) of the Bylaws, as amended
on November 20, 2008, reads in its entirety as follows:
“Stockholder Requested
Special Meetings. Subject to the provisions of this
Section 1.03(b), a special meeting of stockholders shall be called by a
majority of the entire Board, or a Committee delegated such authority by the
Board, in accordance with this Section 1.03(b), following receipt by the
Secretary of the Corporation (the “Secretary”) of a
written request for a special meeting (a “Special Meeting
Request”) from the record holders of shares representing at least fifty
percent (50%) (the “Requisite
Percentage”) of the combined voting power of the then outstanding shares
of all classes and series of capital stock of the Corporation entitled generally
to vote in the election of directors of the Corporation, voting as a single
class (the “Requisite
Holders”), if such Special Meeting Request complies with the requirements
of this Section 1.03(b) and all other applicable sections of these
Bylaws. The Board shall determine whether all requirements set forth
in these Bylaws have been satisfied and such determination shall be binding on
the Corporation and its stockholders. If a Special Meeting Request is
made that complies with this Section 1.03(b) and all other applicable
sections of these Bylaws, the Board may (in lieu of calling the special meeting
requested in such Special Meeting Request) present an identical or substantially
similar item (a “Similar Item”) for
stockholder approval at any other meeting of stockholders that is held within
one hundred twenty (120) days after the Corporation receives such Special
Meeting Request.
A Special
Meeting Request must be delivered by hand or by registered U.S. mail or courier
service, postage prepaid, to the attention of the Secretary during regular
business hours. A Special Meeting Request shall only be valid if it
is signed and dated by each of the Requisite Holders or its duly authorized
agent and includes the following: (i) a statement of the specific
purpose(s) of the special meeting, the matter(s) proposed to be acted on at the
special meeting and the reasons for conducting such business at the special
meeting; (ii) the text of any proposed amendment to the Bylaws to be
considered at the special meeting; (iii) the name and address, as they
appear on the Corporation’s books, of each stockholder of record signing such
request, the date of each such stockholder’s signature and the name and address
of any Stockholder Associated Person (as defined below); (iv) (A) the
class and series and number of shares of each class and series of capital stock
of the Corporation which are, directly or indirectly, owned beneficially and/or
of record by each such stockholder or any Stockholder Associated Person,
documentary evidence of such record or beneficial ownership, and the date or
dates such shares were acquired and the investment intent at the time such
shares were acquired, (B) any option, warrant, convertible security, stock
appreciation right, or similar right with an exercise or conversion privilege or
a settlement payment or mechanism at a price related to any class or series of
shares of the Corporation or with a value derived in whole or in part from the
value of any class or series of shares of the Corporation, whether or not such
instrument or right shall be subject to settlement in the underlying class or
series of capital stock of the Corporation or otherwise (a “Derivative
Instrument”) directly or indirectly owned beneficially by each such
stockholder or any Stockholder Associated Person and any other direct or
indirect right held by each such stockholder or any Stockholder Associated
Person to profit from, or share in any profit derived from, any increase or
decrease in the value of shares of the Corporation, (C) any proxy,
contract, arrangement, understanding, or relationship pursuant to which each
such stockholder or any Stockholder Associated Person has a right to vote any
shares of any security of the Corporation, (D) any contract, arrangement,
understanding, relationship or otherwise pursuant to which each such stockholder
or any Stockholder Associated Person has the opportunity, directly or
indirectly, to profit or share in any profit derived from any decrease in the
value of any security issued by the Corporation (a “Short Interest”),
(E) any rights to dividends on the shares of the Corporation owned
beneficially by each such stockholder or any Stockholder Associated Person that
are separated or separable from the underlying shares of the Corporation,
(F) any proportionate interest in shares of the Corporation or Derivative
Instruments held, directly or indirectly, by a general or limited partnership in
which each such stockholder or any Stockholder Associated Person is a general
partner or, directly or indirectly, beneficially owns an interest in a general
partner, and (G) any performance-related fees (other than an asset-based
fee) that each such stockholder or any Stockholder Associated Person is entitled
to based on any increase or decrease in the value of shares of the Corporation
or Derivative Instruments, if any, as of the date of such notice, including
without limitation any such interests held by members of each such stockholder’s
or any Stockholder Associated Person’s immediate family sharing the same
household (which information, in each case, shall be supplemented by such
stockholder and any Stockholder Associated Person not later than ten
(10) calendar days after the record date for the meeting to disclose such
ownership as of the record date); (v) whether and the extent to which any
agreement, arrangement or understanding has been made, the effect or intent of
which is to increase or decrease the voting power of such stockholder or any
Stockholder Associated Person with respect to any shares of the capital stock of
the Corporation, without regard to whether such transaction is required to be
reported on a Schedule 13D or other form in accordance with Section 13(d)
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or
any successor provisions thereto and the rules and regulations promulgated
thereunder; (vi) any material interest of each such stockholder or any
Stockholder Associated Person in the business proposed to be conducted at the
special meeting; (vii) a representation that each of the stockholders and
any Stockholder Associated Persons submitting the Special Meeting Request intend
to appear in person or by proxy at the special meeting to present the
proposal(s) or business to be brought before the special meeting; (viii) if
any stockholder submitting the Special Meeting Request or any Stockholder
Associated Person intends to solicit proxies with respect to the stockholder’s
proposal(s) or business to be presented at the special meeting, a representation
to that effect; (ix) all information relating to each stockholder signing
the Special Meeting Request and any Stockholder Associated Person that must be
disclosed in a proxy statement or other filing made with the Securities and
Exchange Commission (the “SEC”) in connection
with the solicitation of proxies for the election of directors in an election
contest (even if an election contest is not involved) pursuant to
Section 14 of the Exchange Act or any successor provisions thereto and the
rules and regulations promulgated thereunder; and (x) if the purpose of the
special meeting includes the election of one or more directors, all the
information each such stockholder would be required to include in a
stockholder’s notice of nomination delivered to the Corporation pursuant to
Section 2.02(a)(2) of these Bylaws. For purposes of these
Bylaws, a “Stockholder
Associated Person” shall mean with respect to any stockholder
(A) any person controlling, directly or indirectly, or acting in concert
with, such stockholder, (B) any beneficial owner of shares of stock of the
Corporation owned of record or beneficially by such stockholder, and
(C) any person controlling, controlled by or under common control with such
Stockholder Associated Person.
In
addition, a Special Meeting Request shall not be valid if (i) the Special
Meeting Request relates to an item of business that is not a proper subject for
stockholder action under the General Corporation Law of the State of Delaware,
as amended from time to time (the “DGCL”), and other
applicable law; (ii) the Special Meeting Request is received by the
Corporation during the period commencing ninety (90) days prior to the
first anniversary of the date of the immediately preceding annual meeting and
ending on the date of the next annual meeting; (iii) a Similar Item was
presented at any meeting of stockholders held within one hundred twenty
(120) days prior to receipt by the Corporation of such Special Meeting
Request (and, for purposes of this clause (iii), the election of directors shall
be deemed a “Similar Item” with respect to all items of business involving the
election or removal of directors); (iv) a Similar Item is included in the
Corporation’s notice as an item of business to be brought before a stockholder
meeting that has been called but not yet held; or (v) such Special Meeting
Request was made in a manner that involved a violation of Regulation 14A under
the Exchange Act or other applicable law.
Stockholders
may revoke a Special Meeting Request by written revocation delivered to the
Corporation at any time prior to the special meeting; provided, however, the
Board shall have the discretion to determine whether or not to proceed with the
special meeting. In addition, failure of the Requisite Holders
(A) to appear or send a qualified representative to present such
proposal(s) or business for consideration at the special meeting; or (B) to
own of record shares representing at least the Requisite Percentage at the time
of the special meeting shall also constitute a revocation of the Special Meeting
Request.”
In order
to reduce the percentage of stock required to be held by the stockholder or
group of stockholders requesting a special meeting from 50% to 25% and eliminate
the additional limitations imposed on the stockholders’ ability to request
special meetings by the Board’s recent bylaw amendments, the Committee seeks to
amend the Bylaws by deleting Article I, Section 1.03(b) in its entirety and
inserting the following in lieu thereof:
“Stockholder Requested
Special Meetings. A special meeting of stockholders shall be
called by the Secretary upon the written request of stockholders holding of
record at least 25% of the outstanding shares of the Corporation entitled to
vote at such meeting. Business transacted at a special meeting
requested by stockholders shall be limited to the purposes stated in the request
for the special meeting.”
THE
COMMITTEE URGES YOU TO CONSENT TO THIS BYLAW PROPOSAL.
PROPOSAL
5. LIMIT THE CHAIR’S ABILITY TO ADJOURN A
STOCKHOLDERS’
MEETING WHEN A QUORUM IS PRESENT
On
November 20, 2008 the Board also amended the Bylaws to permit adjournments of
stockholders’ meetings to be called by the chairman of the meeting whether or
not a quorum exists. Permitting the chairman of the meeting to
adjourn a stockholders’ meeting at which a quorum is present can frustrate the
will of the stockholders which constitute such quorum. Article I,
Section 1.05 of the Bylaws, as amended on November 20, 2008, reads in its
entirety as follows:
“Adjournment. The
chairman of the meeting or the holders of a majority of the votes entitled to be
cast by the stockholders who are present in person or by proxy may adjourn the
meeting from time to time whether or not a quorum is present. In the
event that a quorum does not exist with respect to any vote to be taken by a
particular class or series, the chairman of the meeting or the holders of a
majority of the votes entitled to be cast by the stockholders of such class or
series who are present in person or by proxy may adjourn the meeting with
respect to the vote(s) to be taken by such class or series. At any
such adjourned meeting at which a quorum may be present, any business may be
transacted which might have been transacted at the meeting as originally
called.”
To
eliminate the ability of the chairman of the meeting to frustrate the will of
the stockholders by adjourning a meeting at which a quorum is present, the
Committee seeks to amend the Bylaws to provide that the chairman of the meeting
may adjourn a meeting of the stockholders only in the absence of a quorum by
deleting Article I, Section 1.05 in its entirety and inserting the
following in lieu thereof:
“Adjournment. The
holders of a majority of the votes entitled to be cast by the stockholders who
are present in person or by proxy may adjourn any meeting of stockholders,
annual or special, from time to time whether or not a quorum is present to
reconvene at the same or some other place. Only in the absence of a
quorum, may the chairman of the meeting adjourn any meeting of the stockholders
from time to time to reconvene at the same or some other
place. Notice need not be given of any such adjourned meeting if the
time and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the Corporation may transact any
business which might have been transacted at the original meeting. If
the adjournment is for more than thirty (30) days, or if after the adjournment a
new record date is fixed for the adjourned meeting, notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
meeting.”
In this
connection, the Committee also seeks to amend the Bylaws by inserting the
language underlined below at the beginning of clause (ix) of Article I,
Section 1.04 so that clause (ix) reads in its entirety as
follows:
“(ix) in the absence of a
quorum, adjourning the meeting to a later date, time and place announced
at the meeting by the chairman;”
THE
COMMITTEE URGES YOU TO CONSENT TO THIS BYLAW PROPOSAL.
PROPOSAL
6. ELIMINATE ADVANCE NOTICE PROVISIONS
Presently,
the Bylaws require advance notice of (1) any business which a stockholder
proposes to bring at an annual meeting of stockholders (Article I,
Section 1.07 of the Bylaws) and (2) any nominations of persons for election
to the Board which a stockholder proposes to bring at an annual or special
meeting of stockholders (Article II, Section 2.02 of the
Bylaws). The notice required in each case must contain detailed
information with respect to the stockholder proposing the business or nominee
and with respect to the business or nominee to be considered at the annual or
special meeting, as the case may be. Article I, Section 1.07 of
the Bylaws reads in its entirety as follows:
“Notice of Stockholder
Proposals.
(a) At
any annual meeting of the stockholders, only such business shall be conducted as
shall have been properly brought before such meeting. To be properly
brought before an annual meeting, business must be (i) specified in the
notice of meeting (or any supplement thereto) given by or at the direction of
the Board, (ii) otherwise properly brought before the meeting by or at the
direction of the Board, or (iii) otherwise properly and timely brought
before the meeting by any stockholder of the Corporation in compliance with the
notice procedures and other provisions of this Section 1.07.
(b) For
business to be properly brought before an annual meeting by a stockholder, such
business must be a proper subject for stockholder action under the DGCL and
other applicable law, as determined by the Chairman of the Board or such other
person as is presiding over the meeting, and such stockholder (i) must be a
stockholder of record on the date of the giving of the notice provided for in
this Section 1.07 and on the record date for the determination of
stockholders entitled to vote at such annual meeting, (ii) must be entitled
to vote at such annual meeting, and (iii) must comply with the notice
procedures set forth in this Section 1.07. In addition to any
other applicable requirements, for business to be properly brought before an
annual meeting by a stockholder, such stockholder must have given timely notice
thereof in proper written form to the Secretary.
(c) To be
timely, a stockholder’s notice must be delivered to, or mailed and received by,
the Secretary at the principal executive offices of the Corporation not earlier
than the close of business on the one hundred twentieth (120th) calendar
day, and not later than the close of business on the ninetieth (90th) calendar
day, prior to the first anniversary of the immediately preceding year’s annual
meeting of stockholders; provided, however, that in the event that no annual
meeting was held in the previous year or the annual meeting is called for a date
that is more than thirty (30) calendar days earlier or more than sixty
(60) calendar days later than such anniversary date, notice by the
stockholder in order to be timely must be so delivered or received not earlier
than the close of business on the one hundred twentieth (120th) calendar
day prior to the date of such annual meeting and not later than the close of
business on the later of the ninetieth (90th) calendar
day prior to the date of such annual meeting or, if the first pubic disclosure
of the date of such annual meeting is less than one hundred (100) calendar
days prior to the date of such annual meeting, the tenth (10th) calendar
day following the day on which public disclosure of the date of such annual
meeting is first made by the Corporation. In no event shall any
adjournment or postponement of an annual meeting or the public disclosure
thereof commence a new time period for the giving of a stockholder’s notice as
described above.
(d) To be
in proper written form, a stockholder’s notice to the Secretary shall set forth
in writing, as to each matter the stockholder proposes to bring before the
meeting the following: (i) a description of the business desired to be
brought before the meeting, including the text of the proposal or business and
the text of any resolutions proposed for consideration; (ii) the name and
record address, as they appear on the Corporation’s stock ledger, of such
stockholder and the name and address of any Stockholder Associated Person;
(iii) (A) the class and series and number of shares of each class and
series of capital stock of the Corporation which are, directly or indirectly,
owned beneficially and/or of record by such stockholder or any Stockholder
Associated Person, documentary evidence of such record or beneficial ownership,
and the date or dates such shares were acquired and the investment intent at the
time such shares were acquired, (B) any Derivative Instrument directly or
indirectly owned beneficially by such stockholder or any Stockholder Associated
Person and any other direct or indirect right held by such stockholder or any
Stockholder Associated Person to profit from, or share in any profit derived
from, any increase or decrease in the value of shares of the Corporation,
(C) any proxy, contract, arrangement, understanding, or relationship
pursuant to which such stockholder or any Stockholder Associated Person has a
right to vote any shares of any security of the Corporation, (D) any Short
Interest indirectly or directly held by such stockholder or any Stockholder
Associated Person in any security issued by the Corporation, (E) any rights
to dividends on the shares of the Corporation owned beneficially by such
stockholder or any Stockholder Associated Person that are separated or separable
from the underlying shares of the Corporation, (F) any proportionate
interest in shares of the Corporation or Derivative Instruments held, directly
or indirectly, by a general or limited partnership in which such stockholder or
any Stockholder Associated Person is a general partner or, directly or
indirectly, beneficially owns an interest in a general partner, and (G) any
performance-related fees (other than an asset-based fee) that such stockholder
or any Stockholder Associated Person is entitled to based on any increase or
decrease in the value of shares of the Corporation or Derivative Instruments, if
any, as of the date of such notice, including without limitation any such
interests held by members of such stockholder’s or any Stockholder Associated
Person’s immediate family sharing the same household (which information, in each
case, shall be supplemented by such stockholder and any Stockholder Associated
Person not later than ten (10) calendar days after the record date for the
meeting to disclose such ownership as of the record date); (iv) a
description of all arrangements or understandings between such stockholder
and/or any Stockholder Associated Person and any other person or persons (naming
such person or persons) in connection with the proposal of such business by such
stockholder; (v) any material interest of such stockholder or any
Stockholder Associated Person in such business, individually or in the
aggregate, including any anticipated benefit to such stockholder or any
Stockholder Associated Person therefrom; (vi) a representation from such
stockholder as to whether the stockholder or any Stockholder Associated Person
intends or is part of a group which intends (1) to deliver a proxy
statement and/or form of proxy to holders of at least the percentage of the
Corporation’s outstanding capital stock required to approve or adopt the
proposal and/or (2) otherwise to solicit proxies in support of such
proposal; (vii) a representation that such stockholder is a holder of
record of stock of the Corporation entitled to vote at such meeting, that such
stockholder intends to vote such stock at such meeting, and that such
stockholder intends to appear at the meeting in person or by proxy to bring such
business before such meeting; (viii) whether and the extent to which any
agreement, arrangement or understanding has been made, the effect or intent of
which is to increase or decrease the voting power of such stockholder or any
Stockholder Associated Person with respect to any shares of the capital stock of
the Corporation, without regard to whether such transaction is required to be
reported on a Schedule 13D or other form in accordance with Section 13(d)
of the Exchange Act or any successor provisions thereto and the rules and
regulations promulgated thereunder; (ix) in the event that such business
includes a proposal to amend these Bylaws, the complete text of the proposed
amendment; and (x) such other information regarding each matter of business
to be proposed by such stockholder, regarding the stockholder in his or her
capacity as a proponent of a stockholder proposal, or regarding any Stockholder
Associated Person, that would be required to be disclosed in a proxy statement
or other filings required to be made with the SEC in connection with the
solicitations of proxies for such business pursuant to Section 14 of the
Exchange Act (or pursuant to any law or statute replacing such section) and the
rules and regulations promulgated thereunder.
(e) If
the information submitted pursuant to this Section 1.07 by any stockholder
proposing business for consideration at an annual meeting shall be inaccurate to
any material extent, such information may be deemed not to have been provided in
accordance with this Section 1.07. Upon written request by the
Secretary, the Board or any committee thereof, any stockholder proposing
business for consideration at an annual meeting shall provide, within seven
(7) business days of delivery of such request (or such other period as may
be specified in such request), written verification, satisfactory in the
discretion of the Board, any committee thereof or any authorized officer of the
Corporation, to demonstrate the accuracy of any information submitted by the
stockholder pursuant to this Section 1.07. If a stockholder
fails to provide such written verification within such period, the information
as to which written verification was requested may be deemed not to have been
provided in accordance with this Section 1.07.
(f) For
purposes of these Bylaws, “public disclosure”
shall be deemed to include a disclosure made in a (A) press release
reported by the Dow Jones News Service, Reuters Information Service, Associated
Press or any similar or successor news wire service, or (B) in a document
filed by the Corporation with the Securities and Exchange Commission pursuant to
Section 13, 14 or 15(d) of the Exchange Act or any successor provisions
thereto.
(g) No
business (other than nominations of persons for election to the Board which
shall be made in accordance with the procedures set forth in Article II,
Section 2.02 of these Bylaws) shall be conducted at the annual meeting of
stockholders except business brought before the annual meeting in accordance
with the procedures set forth in this Section 1.07.
(h)
Except as otherwise required by the DGCL and other applicable law, the
Certificate or these Bylaws, the Chairman of the Board or other person presiding
at an annual meeting shall have the power and duty (i) to determine whether
any business proposed to be brought before the annual meeting was properly
brought before the meeting in accordance with the procedures set forth in this
Section 1.07, including whether the stockholder or any Stockholder
Associated Person on whose behalf the proposal is made, solicited (or is part of
a group which solicited) or did not so solicit, as the case may be, proxies in
support of such stockholder’s proposal in compliance with such stockholder’s
representation as required by this Section 1.07, and (ii) if any
proposed business was not brought in compliance with this Section 1.07, to
declare that such proposal is defective and shall be disregarded.
(i) In
addition to the provisions of this Section 1.07, a stockholder shall also
comply with all applicable requirements of the DGCL, other applicable law and
the Exchange Act, and the rules and regulations thereunder, with respect to the
matters set forth herein, provided, however, that any
references in these Bylaws to the Exchange Act or the rules promulgated
thereunder are not intended to and shall not limit the requirements applicable
to stockholder proposals to be considered pursuant to Section 1.07(a)(iii)
of these Bylaws.
(j)
Nothing in this Section 1.07 shall be deemed to affect any rights of
stockholders to request the inclusion of proposals in the Corporation’s proxy
statement pursuant to Rule 14a-8 under the Exchange Act.
(k)
Notwithstanding anything in this Section 1.07 to the contrary, a
stockholder intending to nominate one or more persons for election as a director
at an annual meeting must comply with Article II, Section 2.02 of these
Bylaws for any such nomination to be properly brought before such
meeting.”
Article
II, Section 2.02 of the Bylaws reads in its entirety as
follows:
Notice of Nominations for
Directors.
(a) Annual Meetings of
Stockholders.
(1)
Nominations of persons for election to the Board at an annual meeting of
stockholders may be made (A) by or at the direction of the Board or a
committee appointed by the Board, or (B) by any stockholder of the
Corporation (i) who is a stockholder of record on the date of the giving of
the notice provided for in this Section 2.02(a), on the record date for the
determination of the stockholders entitled to vote at such annual meeting of
stockholders and at the time of such annual meeting of stockholders,
(ii) who is entitled to vote at the annual meeting of stockholders, and
(iii) who complies with the notice procedures set forth in this
Section 2.02(a) as to such nominations, including, but not limited to, the
procedures regarding such notice’s timeliness and required form.
(2) For a
stockholder’s notice of nomination of persons for election to the Board at an
annual meeting of stockholders to be brought before an annual meeting by a
stockholder pursuant to Section 2.02(a)(1)(B) of these Bylaws, the
stockholder must have given timely notice thereof, in proper written form, to
the Secretary. To be considered timely, a stockholder’s notice of
nomination must be delivered to, or mailed and received by, the Secretary at the
principal executive offices of the Corporation not earlier than the close of
business on the one hundred twentieth (120th) calendar day, and not later
than the close of business on the ninetieth (90th) calendar day, prior to
the first anniversary of the immediately preceding year’s annual meeting;
provided, however, that in the event that no annual meeting was held in the
previous year or the annual meeting is called for a date that is more than
thirty (30) calendar days earlier or more than sixty (60) calendar
days later than such anniversary date, notice by the stockholder in order to be
timely must be so delivered or received not earlier than the close of business
on the one hundred twentieth (120th) calendar
day prior to the date of such annual meeting and not later than the close of
business on the later of the ninetieth (90th) calendar
day prior to the date of such annual meeting or, if the first public disclosure
of the date of such annual meeting is less than one hundred (100) calendar
days prior to the date of such annual meeting, the tenth (10th) calendar
day following the day on which public disclosure of the date of such annual
meeting is first made by the Corporation. In no event shall any
adjournment or postponement of an annual meeting or the public disclosure
thereof commence a new time period for the giving of a stockholder’s notice as
described above.
To be in
proper written form, a stockholder’s notice of nomination to the Secretary
(whether given pursuant to this Section 2.02(a) or Section 2.02(b) of
these Bylaws) shall set forth in writing the following: (a) as to each
person whom the stockholder proposes to nominate for election or reelection as a
director (i) the name, age, business address and residence address of such
person; (ii) the principal occupation and employment of such person;
(iii) the class and series and number of shares of each class and series of
capital stock of the Corporation which are owned beneficially or of record by
such person (which information shall be supplemented not later than ten
(10) calendar days after the record date for the meeting to disclose such
ownership as of the record date); (iv) such person’s executed written
consent to being named in the proxy statement as a nominee and to serving as a
director if elected; (v) all information relating to such person that would
be required to be disclosed in a proxy statement or other filings required to be
made with the SEC in connection with the solicitation of proxies for the
election of directors in a contested election pursuant to Section 14 of the
Exchange Act (or pursuant to any law or statute replacing such section), and the
rules and regulations promulgated thereunder; (vi) a description of all
direct and indirect compensation and other material monetary agreements,
arrangements and understandings during the past three years, and any other
material relationships, between or among such person being nominated, on the one
hand, and the stockholder and any Stockholder Associated Person, on the other
hand, including, without limitation all information that would be required to be
disclosed pursuant to Item 404 promulgated under Regulation S-K of the
Exchange Act if the stockholder making the nomination and any Stockholder
Associated Person were the “registrant” for purposes of such rule and the person
being nominated were a director or executive officer of such registrant; and
(vii) the information and agreement required under Section 2.03(b) of
these Bylaws; and (b) as to the stockholder giving the notice (i) the
name and record address of such stockholder, as they appear on the Corporation’s
stock ledger, and the name and address of any Stockholder Associated Person;
(ii) (A) the class and series and number of shares of each class and
series of capital stock of the Corporation which are, directly or indirectly,
owned beneficially and/or of record by such stockholder or any Stockholder
Associated Person, documentary evidence of such record or beneficial ownership,
and the date or dates such shares were acquired and the investment intent at the
time such shares were acquired, (B) any Derivative Instrument directly or
indirectly owned beneficially by such stockholder or any Stockholder Associated
Person and any other direct or indirect right held by such stockholder or any
Stockholder Associated Person to profit from, or share in any profit derived
from, any increase or decrease in the value of shares of the Corporation,
(C) any proxy, contract, arrangement, understanding, or relationship
pursuant to which such stockholder or any Stockholder Associated Person has a
right to vote any shares of any security of the Corporation, (D) any Short
Interest indirectly or directly held by such stockholder or any Stockholder
Associated Person in any security issued by the Corporation, (E) any rights
to dividends on the shares of the Corporation owned beneficially by such
stockholder or any Stockholder Associated Person that are separated or separable
from the underlying shares of the Corporation, (F) any proportionate
interest in shares of the Corporation or Derivative Instruments held, directly
or indirectly, by a general or limited partnership in which such stockholder or
any Stockholder Associated Person is a general partner or, directly or
indirectly, beneficially owns an interest in a general partner, and (G) any
performance-related fees (other than an asset-based fee) that such stockholder
or any Stockholder Associated Person is entitled to based on any increase or
decrease in the value of shares of the Corporation or Derivative Instruments, if
any, as of the date of such notice, including without limitation any such
interests held by members of such stockholder’s or any Stockholder Associated
Person’s immediate family sharing the same household (which information shall,
in each case, be supplemented by such stockholder and any Stockholder Associated
Person not later than ten (10) calendar days after the record date for the
meeting to disclose such ownership as of the record date); (iii) a
description of all arrangements or understandings between such stockholder or
any Stockholder Associated Person and each proposed nominee and any other person
or persons (naming such person or persons) pursuant to which the nomination(s)
are to be made by such stockholder; (iv) any material interest of such
stockholder or any Stockholder Associated Person in the election of such
proposed nominee, individually or in the aggregate, including any anticipated
benefit to the stockholder or any Stockholder Associated Person therefrom;
(v) a representation that such stockholder is a holder of record of stock
of the Corporation entitled to vote at such meeting and that such stockholder
intends to appear in person or by proxy at the meeting to nominate the person or
persons named in its notice; (vi) a representation from the stockholder as
to whether the stockholder or any Stockholder Associated Person intends or is
part of a group which intends (A) to deliver a proxy statement and/or form
of proxy to holders of at least the percentage of the Corporation’s outstanding
capital stock required to elect the person proposed as a nominee and/or
(B) otherwise to solicit proxies in support of the election of such person;
(vii) whether and the extent to which any agreement, arrangement or
understanding has been made, the effect or intent of which is to increase or
decrease the voting power of such stockholder or such Stockholder Associated
Person with respect to any shares of the capital stock of the Corporation,
without regard to whether such transaction is required to be reported on a
Schedule 13D or other form in accordance with Section 13(d) of the Exchange
Act or any successor provisions thereto and the rules and regulations
promulgated thereunder; and (viii) any other information relating to such
stockholder and any Stockholder Associated Person that would be required to be
disclosed in a proxy statement or other filings required to be made with the SEC
in connection with solicitations of proxies for the election of directors in a
contested election pursuant to Section 14 of the Exchange Act (or pursuant
to any law or statute replacing such section) and the rules and regulations
promulgated thereunder. In addition to the information required
above, the Corporation may require any proposed nominee to furnish such other
information as may reasonably be required by the Corporation to determine the
eligibility of such proposed nominee to serve as an independent director of the
Corporation or that could be material to a reasonable stockholder’s
understanding of the independence, or lack thereof, of such
nominee.
(3)
Notwithstanding anything in this Section 2.02 to the contrary, in the event
that the number of directors to be elected to the Board at an annual meeting of
the stockholders is increased and there is no public disclosure by the
Corporation, naming all of the nominees for directors or specifying the size of
the increased Board, at least ninety (90) calendar days prior to the first
anniversary of the date of the immediately preceding year’s annual meeting, a
stockholder’s notice required by this Section 2.02 shall also be considered
timely, but only with respect to nominees for any new positions created by such
increase, if it shall be delivered to, or mailed and received by, the Secretary
at the principal executive offices of the Corporation not later than the close
of business on the tenth (10 th) calendar
day following the day on which such public disclosure is first made by the
Corporation.
(b) Special Meetings of
Stockholders. Nominations of persons for election to the Board
may be made at a special meeting of stockholders at which directors are to be
elected (i) pursuant to the Corporation’s notice of meeting, (ii) by
or at the direction of the Board, or (iii) provided that the Board has
determined that directors shall be elected at such meeting, by any stockholder
of the Corporation who (A) is a stockholder of record at the time of giving
of notice provided for in this Section 2.02(b), (B) is a stockholder
of record on the record date for the determination of the stockholders entitled
to vote at such meeting, (C) is a stockholder of record at the time of such
meeting, (D) is entitled to vote at such meeting, and (E) complies
with the notice procedures set forth in this Section 2.02(b) as to such
nomination. In the event the Corporation calls a special meeting of
stockholders for the purpose of electing one or more directors to the Board, any
such stockholder may nominate a person or persons (as the case may be) for
election to such position(s) as specified in the Corporation’s notice of
meeting, if the proper form of stockholder’s notice required by
Section 2.02(a)(2) of these Bylaws with respect to any nomination shall be
delivered to the Secretary at the principal executive offices of the Corporation
not earlier than the close of business on the one hundred twentieth (120th) calendar
day prior to the date of such special meeting and not later than the close of
business on the later of the ninetieth (90th) calendar
day prior to the date of such special meeting or, if the first public disclosure
made by the Corporation of the date of such special meeting is less than one
hundred (100) days prior to the date of such special meeting, not later
than the tenth (10th) calendar
day following the day on which public disclosure is first made of the date of
the special meeting and of the nominees proposed by the Board to be elected at
such meeting. In no event shall any adjournment or postponement of a
special meeting or the public disclosure thereof commence a new time period for
the giving of a stockholder’s notice as described above.
(c) General.
(1) If
the information submitted pursuant to this Section 2.02 by any stockholder
proposing a nominee for election as a director at a meeting of stockholders
shall be inaccurate to any material extent, such information may be deemed not
to have been provided in accordance with this Section 2.02. Upon
written request by the Secretary, the Board or any committee thereof, any
stockholder proposing a nominee for election as a director at a meeting shall
provide, within seven (7) business days of delivery of such request (or
such other period as may be specified in such request), written verification,
satisfactory in the discretion of the Board, any committee thereof or any
authorized officer of the Corporation, to demonstrate the accuracy of any
information submitted by the stockholder pursuant to this
Section 2.02. If a stockholder fails to provide such written
verification within such period, the information as to which written
verification was requested may be deemed not to have been provided in accordance
with this Section 2.02.
(2)
Notwithstanding anything in these Bylaws to the contrary, no person shall be
eligible for election as a director of the Corporation at any meeting of
stockholders unless nominated in accordance with the procedures set forth in
this Section 2.02.
(3)
Notwithstanding anything in these Bylaws to the contrary, if a stockholder who
has submitted a written notice of intention to propose a nominee for election as
a director at a meeting of stockholders (or a designated representative of the
stockholder) does not appear at the annual or special meeting of stockholders of
the Corporation to present the nomination, such nomination shall be disregarded
notwithstanding that proxies in respect of such vote may have been received by
the Corporation.
(4)
Except as otherwise required by the DGCL and other applicable law, the
Certificate or these Bylaws, the Chairman of the Board or other person presiding
at the meeting shall have the power and duty (a) to determine whether any
nomination proposed to be brought before the meeting was properly made in
accordance with the procedures set forth in this Section 2.02, including
whether the stockholder or any Stockholder Associated Person on whose behalf the
nomination is made, solicited (or is part of a group which solicited) or did not
so solicit, as the case may be, proxies in support of the election of such
stockholder’s nominee(s) in compliance with such stockholder’s representation as
required by this Section 2.02, and (b) if any proposed nomination was
not made in compliance with this Section 2.02, to declare that such
nomination is defective and shall be disregarded.
(5) In
addition to the provisions of this Section 2.02, a stockholder shall also
comply with all applicable requirements of the DGCL, other applicable law and
the Exchange Act, and the rules and regulations thereunder, with respect to the
matters set forth herein, provided, however, that any
references in these Bylaws to the Exchange Act or the rules promulgated
thereunder are not intended to and shall not limit the applicable requirements
for nominations by stockholders to be considered pursuant to
Section 2.02(a) or Section 2.02(b) of these Bylaws.
(6)
Nothing in this Section 2.02 shall be deemed to affect any rights of the
holders of any series of Preferred Stock, if and to the extent provided for,
under applicable law, the Certificate or these Bylaws.
Because
the advance notice requirements set forth in Article I, Section 1.07 and
Article II, Section 2.02 of the Bylaws unduly restricts the stockholders’
ability to present and act upon matters at stockholder meetings, the Committee
seeks to amend the Bylaws to eliminate the advance notice requirements for
stockholders to propose business to be brought before an annual meeting of
stockholders and to eliminate the advance notice requirements for stockholders
to nominate persons for election to the Board at an annual or special meeting of
stockholders. As such, the Committee seeks to amend the Bylaws by
deleting Article I, Section 1.07 and Article II, Section 2.02 thereof
in their entirety.
THE
COMMITTEE URGES YOU TO CONSENT TO THIS BYLAW PROPOSAL.
PROPOSAL
7. ELIMINATE PRE-TEXTUAL QUESTIONNAIRES AND “AGREEMENTS”
FOR
DIRECTOR NOMINEES
On
November 20, 2008, the Board amended the Bylaws to adopt a new clause (b) to
Article II, Section 2.03 of the Bylaws to require each director and nominee
for election as a director to deliver to the Company a written questionnaire
with respect to the director’s or nominee’s background and qualifications and to
enter into an undisclosed “Prospective Director Agreement,” which is obtained
only by requesting it from the Company. Article II,
Section 2.03(b) of the Bylaws, as amended on November 20, 2008, reads in
its entirety as follows:
Qualifications. Each
director and nominee for election as a director of the Corporation must deliver
to the Secretary at the principal office of the Corporation a written
questionnaire with respect to the background and qualifications of such person
(which questionnaire shall be provided by the Secretary upon written request and
approved from time to time by the Board or its Nominating and Corporate
Governance Committee) and a written representation and agreement (in the form
provided by the Secretary upon written request) (the “Prospective Director
Agreement”). The Prospective Director Agreement (i) shall
provide that such person (A) is not and will not become a party to
(1) any agreement, arrangement or understanding with, and has not given any
commitment or assurance to, any person or entity as to how such person, if such
person is at the time a director or is subsequently elected as a director of the
Corporation, will act or vote on any issue or question (a “Voting Commitment”)
that has not been disclosed to the Corporation, or (2) any Voting
Commitment that could limit or interfere with such person’s ability to comply,
if such person is at the time a director or is subsequently elected as a
director of the Corporation, with such person’s duties as a director under
applicable law, (B) is not and will not become a party to any agreement,
arrangement or understanding with any person or entity other than the
Corporation with respect to any direct or indirect compensation, reimbursement
or indemnification in connection with service or action as a director that has
not been disclosed therein, and (C) would be in compliance, if elected as a
director of the Corporation, and will, if such person is at the time a director
or is subsequently elected as a director of the Corporation, comply with all
applicable corporate governance, conflicts of interest, confidentiality,
securities ownership and stock trading policies and guidelines of the
Corporation (copies of which shall be provided by the Secretary upon written
request), and (ii) shall include, if such person is at the time a director
or is subsequently elected as a director of the Corporation, such person’s
irrevocable resignation as a director if such person is found by a court of
competent jurisdiction to have breached the Prospective Director Agreement in
any material respect.
To
eliminate the additional requirements imposed on persons nominated for election
to the Board by the Board’s recent bylaw amendments, including the requirement
that nominees deliver a questionnaire and enter into an undisclosed “Prospective
Director Agreement,” the Committee seeks to amend the Bylaws by deleting Article
II, Section 2.03(b) thereof in its entirety.
THE
COMMITTEE URGES YOU TO CONSENT TO THIS BYLAW PROPOSAL.
PROPOSAL
8. REMOVE THE BOARD’S ATTEMPT TO IMPEDE
THE
ABILITY OF STOCKHOLDERS TO ACT BY WRITTEN CONSENT
On
November 20, 2008, the Board also amended the Bylaws to add a new clause (c) to
Article V, Section 5.02 to impose additional procedural requirements on the
stockholders’ ability to act by written
consent. Section 5.02(c), as amended, requires, among other
things, that any person seeking to have the stockholders take action by written
consent first submit a written request to the Board requesting that the Board
fix a record date for such purpose. To eliminate the additional
procedural requirements imposed on stockholders proposing to act by written
consent, the Committee seeks to amend the Bylaws by deleting Article V,
Section 5.02(c) thereof in its entirety.
THE
COMMITTEE URGES YOU TO CONSENT TO THIS BYLAW PROPOSAL.
PROPOSAL
9. REQUIRE 75% OF THE DIRECTORS THEN IN OFFICE TO APPROVE
CHANGES
TO STOCKHOLDER ADOPTED OR AMENDED BYLAWS
UNLESS
APPROVED BY THE STOCKHOLDERS
Pursuant
to Section 109(a) of the DGCL and Article VI, Section 6.02 of the
Bylaws, the stockholders have the power to adopt, amend or repeal the
Bylaws. However, because the Company’s Certificate confers such
power, the Board also has the power to adopt, amend or repeal the
Bylaws. In order to prevent the Board from frustrating the will of
the stockholders where the stockholders and the Board have concurrent power to
amend the Bylaws, the Committee seeks to amend the Bylaws to provide that any
decision by the Board to repeal, alter or amend any bylaw adopted or amended by
the stockholders of the Company shall, if such repeal, alteration or amendment
has not been approved by the stockholders, require the affirmative vote of 75%
of the directors then in office. As such, the Committee seeks to
amend the Bylaws by inserting the following sentence at the end of Article VI,
Section 6.01 thereof:
“Notwithstanding
the foregoing, any decision by the Board to repeal, alter or amend, or to adopt
or readopt any bylaw inconsistent with a bylaw adopted or repealed, altered or
amended by the stockholders of the Corporation shall, if such repeal, alteration
or amendment is not approved by stockholders, require the affirmative vote of
seventy-five percent (75%) of the directors then in office at any regular or
special meeting of the Board.”
THE
COMMITTEE URGES YOU TO CONSENT TO THIS BYLAW PROPOSAL.
BACKGROUND
OF THE CONSENT SOLICITATION
The
following is a chronology of events leading up to this consent
solicitation:
Between
October 24, 2008, and November 20, 2008, 73114 Investments, L.L.C., Donald E.
and Tiffany Smith, Michael Bradley, and Eric S. Gray, the members of The
Providence Committee for Accountability (the “Committee”), purchased an
aggregate of 2,302,095 shares of Common Stock. On November 10,
2008, the members filed a Schedule 13D disclosing their
purchases. They disclosed that the shares of Common Stock were
acquired for, and are being held for, investment purposes. At the
time that the members purchased those shares of Common Stock, the members
believed the shares of the Common Stock of Providence were undervalued and
represented an attractive investment opportunity.
On
November 10, 2008, Don Smith telephoned Fletcher J. McCusker, the Chief
Executive Officer of Providence, to arrange a meeting with management at the
Company’s offices in Tucson, Arizona. After several delays, the
parties agreed to meet on Saturday morning, November 22,
2008. Messrs. Smith, Bradley and Gray traveled to Tucson on Friday
afternoon, November 21, 2008.
On
Saturday, November 22, 2008, Messrs. Smith, Bradley and Gray met with
Mr. McCusker and Fred Furman, General Counsel of the
Company. Throughout the meeting, these members emphasized that their
focus was the undervaluation of the shares of Common Stock and assisting
management in addressing the challenges faced by Providence and the
undervaluation of the shares of Common Stock. They inquired about the
Company’s ability to meet the covenants of its existing debt
agreements. Messrs. McCusker and Furman continued to reply that
they were unable to discuss any operational matters or matters associated with
the debt as they were restricted by Regulation FD. The participating
members asked if Providence would have any interest in exchanging stock for
outstanding indebtedness of the Company, thereby allowing Providence to reduce
its debt without spending cash and give Providence a greater ability to meet
debt covenants. The meeting concluded after about an
hour. The Providence executives advised the participating members
that the Board of Directors had filled a vacancy by adding another employee
director, Craig A. Norris, the Chief Operating Officer of the
Company. They did not advise the members that the Board had amended
and restated the Providence Bylaws.
Concerned
about the Company’s continued compliance with its coverage ratios and debt
covenants on November 24, 2008, the Committee reiterated its willingness to
assist the Company. Mr. Smith wrote the following letter to
Mr. McCusker.
[Avalon
Correctional Services, Inc. letterhead]
November
21, 2008
Fletcher
J. McCusker, CEO
Providence
Service Corporation
5524 East
Fourth Street
Tucson,
AZ 85711
Re:
Possible assistance
Dear Mr.
McCusker,
Thank you
for meeting with us on Saturday. On behalf of 73114 Investments,
L.L.C. (“LLC”), I would like to reiterate our desire and willingness to
help Providence Service Corporation (“Providence” or the “Company”) continue in
compliance with its debt covenants and coverage ratios. In that
regard, set forth below is a suggestion as to a method of compliance that may
interest you. Please note that this is a suggestion only and not a
binding offer of any kind. Further, it is our intent for you to
continue in compliance with your debt instruments and if any provision set forth
would cause a violation of any covenant we would propose
alternatives.
We
suggest the following:
We would
arrange for the acquisition of Five Million Dollars ($5,000,000.00) of
subordinated debentures of Providence by the LLC or some related party (the
“Holder”).
The
Holder would exchange the Five Million Dollars ($5,000,000.00) of subordinated
convertible debt for Five Million Dollars ($5,000,000.00) of voting cumulative
preferred stock issued at $5.00 per share. The preferred stock would
have the following terms:
|
1.
|
8.5%
annual dividend rate on the Five Million Dollars ($5,000,000.00)
cumulative, (declared and paid if possible but if payment cannot be made
because of debt instruments then declared and accrued with payment due
upon liquidation of existing
indebtedness).
|
|
2.
|
The
preferred stock would be convertible in whole or in part into common
shares at holder’s option at the exchange rate at the date of closing
($5.00 share price / 10 day trailing average closing price) provided no
conversion would be permitted that would result in the violation of
presently existing change of control
provisions.
|
|
3.
|
Anti-dilution
provisions to make the Holder whole in the case of any issuance of new or
treasury shares.
|
|
4.
|
Issuance
of additional preferred would require Holder’s
approval.
|
|
5.
|
The
Holder would have the right to name two directors as long as the preferred
stock is outstanding.
|
|
6.
|
The
preferred shares would be redeemable at holder’s option upon amendment,
replacement, maturity, or extension of senior credit facility and/or
subordinated debt indenture.
|
|
7.
|
The
underlying common shares would be registered at Company’s
expense.
|
|
8.
|
In
the event of a declared default on any Company indebtedness the preferred
shares would be exchangeable for the original
debentures.
|
The
transaction would be predicated on Providence providing projections for the term
of the senior debt demonstrating continual compliance with coverage
ratios. Projections would be updated quarterly or more often at
Holder’s request. The Company would agree not to enter into any
additional agreements with change of control provisions below 50% and the
management and Board would agree to except and exempt Holder to the extent
possible from all current 25% change of control provisions.
If you
are interested in this structure or a similar one please let me know within ten
(10) days from the date of this letter. If you have any questions
please don’t hesitate to contact me.
|
Very
Truly Yours,
Donald
E. Smith, CEO
|
Following
the meeting, Eric Gray wrote to Fred Furman after discovering that Providence
had filed a Form 8-K with the Securities and Exchange Commission (the “SEC”) on November 21,
2008, the day before the meeting. The Form 8-K disclosed the Board’s
amendment and restatement of the Providence bylaws.
[Avalon
Correctional Services, Inc. letterhead]
November
24, 2008
Fred D.
Furman, Esq.
Executive
Vice President
and
General Counsel
Providence
Service Corporation
5524 East
Fourth Street
Tucson,
AZ 85711
Re:
Corporate Governance Issues
Dear Mr.
Furman,
I
appreciated the opportunity to meet with you on Saturday morning November 22nd
to discuss how 73114 Investments, L.L.C (“LLC”) and the members of its
management could assist Providence Service Corporation (“Providence” or the
“Company”) in the future. After our meeting I was quite surprised,
however, to learn that Providence had filed an 8K late Friday disclosing the
adoption by the Board of Directors of new By-Laws for Providence. The
new By-Laws extensively amend the prior By-Laws and appear to be directed at
insulating the Company from shareholder input and influence.
I was
surprised for a number of reasons. First, I was surprised that no
mention was made in our meeting of the changes to the By-Laws since the changes
were obviously in response to our acquisition of 18%+ of Providence
stock. I can overlook this based upon your unfamiliarity with us and
your hesitancy to provide any information at all to us in the
meeting.
More
importantly, I was surprised by the new By-Laws because it appears that the
Company’s Board spent significant time dealing with the potential influence of
stockholders when that time could have been better spent dealing with the
critical operational and debt issues facing the Company.
Beyond
the time spent by the Board trying to block the influence of the LLC (as well as
all other shareholders), I was surprised that no mention in the 8K was made of
the consent of the Senior Credit Facility lenders to the material changes in the
By-Laws. As you know, Section 7.12 of the Credit Facility provides
that the Company covenants not to amend, modify or change its organizational
documents in a manner materially adverse to the interests of the
lenders. Prudence would dictate that the lenders be contacted before
any changes to determine whether the lenders viewed the changes as materially
adverse to their interests and whether they would consent to the changes in any
event. Since no mention was made in the 8K of the lender’s consent I
can only assume such consent was not sought.
On behalf
of the LLC as the major shareholder of the Company I urge you and the Board not
to make further presumptions and hasty decisions such as the By-Law changes and
thereby jeopardize our investment and the viability of the Company by giving the
lenders an excuse to accelerate the Company’s indebtedness. These
types of actions are not in anyone’s best interests.
Despite
the Board’s recent measures that are hostile to shareholders we intend to move
forward in good faith to convince you that we want to help the Company and
increase the value for all stakeholders. If you have any questions
regarding the matters set forth herein please do not hesitate to contact
me.
|
Very
Truly Yours,
Eric
S. Gray
Vice
President and
Corporate
Counsel
|
cc:
Fletcher J. McCusker, CEO
Warren S.
Rustand, Lead Director
Mr. Gray
also wrote the following letter to Mr. Furman.
[Avalon
Correctional Services, Inc. letterhead]
November
24, 2008
Fred D,
Furman, Esq.
Executive
Vice President
and
General Counsel
Providence
Service Corporation
5524 East
Fourth Street
Tucson,
AZ 85711
Re:
Corporate Governance Issues
Dear Mr.
Furman,
Pursuant
to the discussion in our meeting on Saturday morning November 22nd please be
advised that three officers and managers of 73114 Investments, L.L.C. (“LLC”)
have an interest in assisting Providence Service Corporation (“Providence” or
the “Company”) by becoming Board of Director members of the
Company.
As a
consequence of our interest I am requesting that you forward to me a copy of the
application for Board membership as well as a copy of the policies for Directors
regarding trading of the Company’s securities.
Also, in
reviewing the new By-Laws and comparing them to your prior SEC filings there
seems to be a conflict. Prior SEC filings have indicated a cutoff
date for shareholder proposals of December 22, 2008. Your new By-Laws
indicate a cutoff date (by calculation) of February 21, 2009. Can you
clarify?
If you
cannot supply the requested information please let me know within five (5) days
from the date of this letter. If you have any questions regarding the
matters set forth herein please do not hesitate to contact me.
|
Very
Truly Yours,
Eric
S. Gray
Vice
President and
Corporate
Counsel
|
Providence
responded in a letter from Mr. Furman to Mr. Gray.
[Providence
Service Corporation letterhead]
December
3, 2008
VIA
OVERNIGHT MAIL
AND
FACSIMILE TRANSMISSION
Eric S.
Gray, Esq.
Vice
President and Corporate Counsel
Avalon
Correctional Services, Inc
13401
Railway Drive
Oklahoma
City. Oklahoma 73 I 14
Dear Mr.
Gray:
I am
responding to your letters to me dated November 24, 2008 (collectively,
“letters”) that followed our in-person meeting two Saturdays ago at our offices
in Tucson. It was a pleasure to meet you, your CEO Donald E. Smith
and your CFO, Michael Bradley from Avalon Correctional Services, Inc
(“Avalon”). We appreciate your collective interest in The Providence
Service Corporation (“Providence”) and are always interested in hearing
suggestions from our shareholders on how to further enhance shareholder
value.
In your
letters, you indicate that you and your colleagues at Avalon are interested in
helping Providence increase value for all of our
shareholders. Increasing value for ALL our shareholders is the
paramount goal of our Board of Directors and management team.
In your
letters, you also indicated that three officers and managers of an Avalon
affiliate have an interest in joining the Providence Board. Please be
advised that as our Board of Directors is classified, shareholders will be asked
to vote for the election of only two directors at our next annual
meeting. While we recently had a vacancy in our Board due to a
director’s resignation, that vacancy has since been filled with the appointment
of our Chief Operating Officer, Craig A Norris, to the Board.
As is
discussed in our 2008 annual meeting proxy statement, candidates for director
are selected on the basis of various criteria including, by way of example,
outstanding achievement in their career, board experience, education, whether
they are independent under applicable Nasdaq listing standard and the SEC rules,
financial expertise. Integrity, ability to make independent analytical
inquiries, understanding of the business environment, experience in the social
services industry and knowledge about the issues affecting the social issues
industry, and willingness to devote adequate time to board and committee
duties. The proposed candidates should also be free of conflicts of
interest that could prevent such candidate from acting in the best interest of
Providence and our shareholders. Additional special criteria apply to
candidates who would also be considered to serve on a particular committee of
the Board. Our Bylaws also contain qualifications that require
compliance, such as a commitment to avoid any situations that can compromise a
director’s ability to fully comply with his fiduciary duties to
Providence.
To the
extent that you or your colleagues are interested in submitting a shareholder
recommendation of candidates for director, you are certainly welcome to do
so. Director candidates recommended by shareholders are given the
same consideration as candidates suggested by directors and executive
officers. All such shareholder recommendations, together with
supporting materials such as detailed resumes, should be sent to my attention
and I will forward such materials to the Chairman of the Nominating and
Governance Committee (“Nominating Committee”). In the interim, I have
made the Chairman of the Nominating Committee aware of your potential interest
in serving on the Providence Board. In submitting any shareholder
recommendations of candidates for director, please feel free to include any
additional materials and other information that you believe would be relevant to
the Nominating Committee in considering the qualifications of your recommended
candidates. Among the types of information that would be of interest
to the Nominating Committee in considering a shareholder recommended candidate
is the information that would be required to be disclosed in a proxy statement
with respect to a candidate were such person to be nominated for election as
director. We also suggest that you review the provisions in our
Bylaws with respect to qualifications of directors and consider whether your
candidates will be able to comply with the requirements included
therein. Among other requirements, our Bylaws require all prospective
director candidates to complete a detailed questionnaire. Our
questionnaire is updated on an annual basis as necessary to comply with new
developments in the securities laws as well as to comply with best
practices. Once the 2009 questionnaire is available and we are ready
to distribute it to our current directors and officers and any director
candidates who are being considered, we will provide you with a copy as
well. Please note that we also require all directors to comply with
our codes of conduct, conflicts of interest, confidentiality, and stock trading
policies and guidelines. At our recent meeting, you expressed some
concern with our stock trading policy and requested that a copy be provided to
you. In response to such request, we are prepared to provide you with
a current copy of such policy once you confirm to us that you will treat such
policy as confidential material.
You also
expressed some concern in your letters with respect to our credit agreement and
whether the recent updating of our Bylaws required any lender
consent. We appreciate your concern in this regard as we very much
value our relations with our lenders who we consider key
stakeholders. We believe that your concern is unwarranted as our
credit facility only requires the lender’s consent if we amended our
organizational documents in a manner “materially adverse to the interests of our
lenders”. We do not believe that any of our Bylaw amendments can be
possibly construed in a way that adversely affects our lenders.
Finally,
at our meeting in Tucson, you and your colleagues expressed some frustration
with our inability to share any non-public information with you concerning
Providence. Please keep in mind that it is the policy of Providence
to strictly comply with all federal securities laws, including, but not limited
to, those laws, rules and regulations that prohibit selective disclosure to
investors of material non-public information. These rules apply
equally to all stockholders regardless of the size of their investment in a
company. For more information on these rules, we refer you to the
text of Regulation FD promulgated by the SEC.
We again
thank you for your interest in Providence and in your willingness to
constructively engage with us as we continuously look for opportunities to
enhance value for ALL of our shareholders,
Sincerely
Fred D.
Furman
Executive
Vice President and General Counsel
cc:
Fletcher J. McCusker
Elise
Adams, Esq.
On the
same day, Mr. McCusker wrote to Mr. Smith.
[Providence
Service Corporation letterhead]
December
3, 2008
VIA
OVERNIGHT MAIL
AND
FACSIMILE TRANSMISSION
Donald E.
Smith
Chief
Executive Officer
Avalon
Correctional Services, Inc.
1340 I
Railway Drive
Oklahoma
City, Oklahoma 73114
Dear Mr.
Smith:
I am
responding to your recent letter to me that followed our in-person meeting on
Saturday, November 22, 2008 at our offices in Tucson. We appreciate
your collective interest in The Providence Service Corporation (“Providence”)
and are always interested in hearing suggestions from our shareholders on how to
further enhance shareholder value.
In your
letter, you suggest a creative transaction where you would arrange for an
affiliate of Avalon Correctional Services, Inc. to acquire five million dollars
of Providence’s subordinated debentures that you would later exchange for an
equal dollar value of voting cumulative preferred stock with various
preferential terms, including an 8.5% annual dividend and the right for you to
name two directors to the Board of Providence. We have referred your
suggestion to our Board and it has determined, after due consideration and
deliberation, that your proposal is not in the best interests of the Company or
its stockholders at this time.
Again, we
thank you for your interest in Providence.
Sincerely,
Fletcher
J. McCusker
Chief
Executive Officer
cc: Fred
D. Furman, Esq.
Elise
Adams, Esq.
The
Committee has received no further communications from the Providence
executives.
On
December 10, 2008, the Company issued a press release announcing the
Board’s adoption on December 9, 2008, of a stockholder rights plan, also
known as a “poison pill”.
As
disclosed in a Form 8-K filed with the SEC on
January 5, 2009, on December 30, 2008, the Compensation Committee
awarded restricted stock grants to its executive officers and the non-employee
directors. The Compensation Committee also announced the immediate
acceleration of all unvested stock options and restricted stock previously
awarded to eligible employees and consultants, including stock options and
restricted stock granted to senior management and non-employee
directors. The result of these actions was an expense charge to the
Company of approximately $5.8 million.
On
January 21, 2009, 73114 sent a stockholder demand for books and records as
well as a stockholder demand for inspection of the stockholder list to the
Company to facilitate communication with fellow stockholders, investigate
potential wrongdoing, mismanagement, waste of corporate assets and breaches of
fiduciary duties by members of the Company’s Board and to assess the ability of
the Board to impartially consider a demand for action related to the items
described in the demands. The Committee stated that it had become
increasingly concerned about the oversight of the Company’s Board and of
management’s actions at a critical juncture in the Company’s business,
particularly in connection with (a) the authorization of large increases in
the levels of executive compensation; (b) the award of restricted stock
grants under the Company’s 2006 Long Term Incentive Plan and the acceleration of
the incentive awards and grants; (c) the amendments to the employment
agreements between the Company and Messrs. McCusker, Deitch, Furman and Norris
and the financial impact thereof; (d) possible accounting irregularities in
the recording of asset values; and (e) the annual incentive compensation
program of the Company. The Committee also expressed concern about
management’s unwillingness to communicate with them about these
matters. The demands were included as exhibits to an Amendment
No. 1 to Schedule 13D, which the Committee filed with the SEC on
January 22, 2009.
Providence’s outside legal counsel
responded to the two inspection demands in letters dated January 26,
2009. As to the demand for inspection of the stockholder list,
counsel stated that Providence would make the requested list available and the
Committee has obtained the stockholder list. As to the books and
records demand, counsel for Providence refused to make any books and records
available asserting that the demand was “extraordinarily overbroad,
patently inappropriate, unduly burdensome and devoid of a proper purpose, and,
as such, represent an egregious abuse of the Section 220 demand
process.” The full text of these response letters and a press release
issued by Providence were attached as exhibits in Form 8-K filed by Providence
on January 26, 2009.
The
Committee is weighing its response to the rejection of its books and records
inspection demand.
NUMBER
OF CONSENTS REQUIRED FOR THE PROPOSALS
Each
Proposal will be adopted and become effective when properly completed, unrevoked
consents are signed by the holders of a majority of the outstanding shares of
Common Stock entitled to vote as of the close of business on the Record Date,
provided that such consents are delivered to Providence within 60 days of the
earliest dated written consent delivered to Providence. According to
Providence’s quarterly report on Form 10-Q filed with the SEC on
November 10, 2008, as of November 3, 2008 there were 12,321,736 shares
of Common Stock outstanding.
Assuming
that the number of outstanding shares of Common Stock is 12,321,736 as of the
Record Date, the consent of stockholders holding at least [6,160,869] shares of
Common Stock would be necessary to effect each of the Proposals to amend the
Company's Bylaws. IF YOU TAKE NO ACTION, YOU WILL IN EFFECT BE
REJECTING THE PROPOSALS. ABSTENTIONS, FAILURES TO CONSENT AND BROKER
NON-VOTES WILL HAVE THE SAME EFFECT AS WITHHOLDING CONSENT. “Broker
non-votes” occur when a bank, broker or other nominee holder has not received
instructions with respect to a particular matter, including the Proposals, and
therefore does not have discretionary power to vote on that
matter. As a result, we urge you to contact your broker, banker or
other nominee TODAY if any shares of Common Stock you own are held in the name
of a broker, banker or other nominee and you have not provided to them
instructions to promptly consent to the Proposals. Please follow the
instructions to the consent provided on the enclosed [WHITE] consent
card. If your bank, broker firm, dealer, trust company or other
nominee provides for consent instructions to be delivered to them by telephone
or internet, instructions will be included on the enclosed [WHITE] consent
card.
Each
Proposal is independent of the others. A Proposal’s effectiveness is
not subject to, or conditioned upon, the effectiveness of the other
Proposals.
CONSENT
PROCEDURES
Section 228
of the DGCL provides that, absent a contrary provision in a Delaware
corporation’s certificate of incorporation, any action that is required or
permitted to be taken at any annual or special meeting of the corporation’s
stockholders may be taken without a meeting, without prior notice and without a
vote, if a consent or consents in writing, setting forth the action so taken,
are signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted and
such consents are properly delivered to the corporation by delivery to its
registered office in Delaware, its principal place of business or an officer or
agent of the corporation having custody of the book in which proceedings of
meetings of stockholders are recorded. Providence’s Certificate of
Incorporation does not contain any such contrary provision.
The
Bylaws provide that, in order that Providence may determine the stockholders
entitled to express consent to corporate action in writing without a meeting,
the Board may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board, and
which date shall not be more than ten days after the date upon which the
resolution fixing the record date is adopted by the Board. On
[________ __], 2009, the Board fixed [________ __], 2009 as the record date for
the solicitation made hereby (the “Record Date”).
For the
Proposals to be effective, properly completed and unrevoked written consents
must be delivered to Providence within 60 days of the earliest dated written
consent delivered to Providence. Donald E. and Tiffany Smith
delivered their signed written consent to Providence on February [__],
2009. Consequently, the Committee will need to deliver properly
completed and unrevoked written consents to the Proposals from the holders of
record of a majority of the shares of Common Stock outstanding and entitled to
vote as of the close of business on the Record Date no later than
April [__], 2009. Nevertheless, we intend to set [_______ __],
2009 as the goal for submission of written consents. WE URGE YOU TO
ACT TODAY TO ENSURE THAT YOUR CONSENT WILL COUNT. The Committee
reserves the right to submit to Providence consents at any time within 60 days
of the earliest dated written consent delivered to Providence.
If the
Proposals become effective as a result of this consent solicitation by less than
unanimous written consent, prompt notice of the effectiveness of the Proposals
will be given under Section 228(e) of the DGCL to stockholders who have not
executed written consents. All stockholders will be notified as
promptly as possible by press release of the results of the
solicitation.
PROCEDURAL
INSTRUCTIONS
You may
consent to any of the proposals on the enclosed [WHITE] consent card by marking
the “CONSENT” box and signing, dating and returning the [WHITE] consent card in
the envelope provided. You may also withhold your consent with
respect to any of the proposals on the enclosed [WHITE] consent card by marking
the “DOES NOT CONSENT” box, and signing, dating and returning the [WHITE]
consent card in the envelope provided. You may abstain from
consenting to any of the proposals on the enclosed [WHITE] consent card by
marking the “ABSTAIN” box and signing, dating and returning the [WHITE] consent
card in the envelope provided.
If you
sign, date and return the [WHITE] consent card, but give no direction with
respect to certain of the proposals, you will be deemed to consent to any such
proposal.
Please
note that in addition to signing the enclosed [WHITE] consent card, you must
also date it to ensure its validity.
THE
COMMITTEE URGES YOU TO CONSENT TO ALL THE PROPOSALS
ON THE
ENCLOSED [WHITE] CONSENT CARD
Revocation of Written
Consents. An executed consent card may be revoked at any time
by delivering a written consent revocation before the time that the action
authorized by the executed consent becomes effective. Revocations may
only be made by the record holder that granted such consent. A
revocation may be in any written form validly signed by the record holder as
long as it clearly states that the consent previously given is no longer
effective. The delivery of a subsequently dated [WHITE] consent card
that is properly executed will constitute a revocation of any earlier
consent. The revocation may be delivered either to the Committee, in
care of D.F. King, or to the principal executive offices of
Providence. Although a revocation is effective if delivered to
Providence, the Committee requests that either the original or photostatic
copies of all revocations of consents be mailed or delivered to The Providence
Committee for Accountability, c/o D.F. King & Co., Inc., 48 Wall Street,
22nd Floor, New York, New York 10005, so that the Committee will be aware of all
revocations and can more accurately determine if and when sufficient unrevoked
consents to the actions described in this Consent Statement have been
received.
SOLICITATION
OF CONSENTS
The
solicitation of consents under this consent solicitation is being made by the
Committee. Consents may be solicited by mail, facsimile, telephone,
telegraph, Internet, in person and by advertisements.
The
Committee has entered into an agreement with D.F. King & Co., Inc. for
solicitation and advisory services in connection with this solicitation, for
which D.F. King & Co., Inc. will receive a fee not to exceed $[_________],
together with reimbursement for its reasonable out-of-pocket expenses, and will
be indemnified against certain liabilities and expenses, including certain
liabilities under the federal securities laws. D.F. King & Co.,
Inc. will solicit proxies from individuals, brokers, banks, bank nominees and
other institutional holders. The Committee has requested banks,
brokerage houses and other custodians, nominees and fiduciaries to forward all
solicitation materials to the beneficial owners of the shares of Common Stock
they hold of record. The Committee will reimburse these record
holders for their reasonable out-of-pocket expenses in so doing. It
is anticipated that D.F. King & Co., Inc. will employ approximately 30
persons to solicit Providence stockholders as part of this
solicitation.
The
entire expense of soliciting proxies is being borne by the
Committee. Costs of this solicitation of proxies are currently
estimated to be approximately $[___,000.00]. The Committee estimates
that through the date hereof its expenses in connection with this solicitation
are approximately $[___,000.00].
ADDITIONAL
INFORMATION CONCERNING THE PARTICIPANTS
The
participants in the proxy solicitation are Donald E. and Tiffany Smith, Michael
Bradley, Eric S. Gray, and 73114 Investments, L.L.C. The Committee members
are executives, directors and affiliates of Avalon Correctional Services, Inc.,
a leading developer and manager of private community correctional facilities and
alternative correctional programming in the United States.
Donald Smith
is the Chairman, Chief Executive Officer and principal stockholder of
Avalon. Tiffany Smith is the Vice President of Communications
and principal stockholder of Avalon and the spouse of
Mr. Smith. Michael Bradley is Avalon’s Chief Financial
Officer. Eric Gray is Avalon’s Vice President and Corporate
Counsel. 73114 is a wholly-owned subsidiary of Avalon, which is
managed by Messrs. Smith, Bradley and Gray. The principal
business address of each of the participants is 13401 Railway Drive, Oklahoma
City, Oklahoma 73114.
As of the
date of this filing, the Committee members held in the aggregate 2,302,095
shares of Common Stock, or approximately 18.7% of the Common Stock outstanding,
as disclosed in the Company’s most recent public filing. As disclosed
in the most recent amendment to Schedule 13D filed with the SEC on
January 22, 2009, Donald E. and Tiffany Smith directly beneficially owns
7,200 shares of Common Stock of the Company, Michael Bradley directly
beneficially owns 1,000 shares of Common Stock of the Company, Eric S. Gray
directly beneficially owns 1,000 shares of Common Stock of the Company, and
73114 Investments, L.L.C. directly beneficially owns 2,292,895 shares of
Common Stock of the Company.
Apart
from their stock ownership in the Company, none of the Committee members have
any interest in, or relationship with, the Company.
For the
purposes of Rule 13d-5(b)(1) of the Securities Exchange Act of 1934, as amended,
each member of the Committee is deemed to beneficially own the shares of Common
Stock of the Company beneficially owned in the aggregate by all other members of
the Committee. Each member of the Committee disclaims beneficial
ownership of such shares of Common Stock except to the extent of his or its
pecuniary interest therein.
For
information regarding purchases and sales of securities of Providence during the
past two years by members of the Committee, see Schedule I.
The
Committee may seek reimbursement from Providence of all expenses it incurs in
connection with the solicitation. The Committee does not intend to
submit the question of such reimbursement to a vote of security holders of the
Company.
The
members of the Committee intend to enter into a Joint Filing and Solicitation
Agreement in which, among other things, (i) the parties agree to the joint
filing on behalf of each of them of statements on Schedule 13D with respect to
the securities of Providence, (ii) the parties agree to solicit written consents
or proxies in favor of the Proposals and to take all other action necessary or
advisable to achieve the foregoing (the “Solicitation”), and (iii) the
Committee agrees to bear all expenses incurred in connection with the
Committee’s activities, including approved expenses incurred by any
of the parties in connection with the Solicitation, subject to certain
limitations.
Except as
set forth in this Consent Statement (including the Schedules hereto),
(i) during the past 10 years, no participant in this solicitation has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors); (ii) no participant in this solicitation directly or
indirectly beneficially owns any securities of Providence; (iii) no
participant in this solicitation owns any securities of Providence which are
owned of record but not beneficially; (iv) no participant in this
solicitation has purchased or sold any securities of Providence during the past
two years; (v) no part of the purchase price or market value of the
securities of Providence owned by any participant in this solicitation is
represented by funds borrowed or otherwise obtained for the purpose of acquiring
or holding such securities; (vi) no participant in this solicitation is, or
within the past year was, a party to any contract, arrangements or
understandings with any person with respect to any securities of Providence,
including, but not limited to, joint ventures, loan or option arrangements, puts
or calls, guarantees against loss or guarantees of profit, division of losses or
profits, or the giving or withholding of proxies; (vii) no associate of any
participant in this solicitation owns beneficially, directly or indirectly, any
securities of Providence; (viii) no participant in this solicitation owns
beneficially, directly or indirectly, any securities of any parent or subsidiary
of Providence; (ix) no participant in this solicitation or any of his or
its associates was a party to any transaction, or series of similar
transactions, since the beginning of Providence’s last fiscal year, or is a
party to any currently proposed transaction, or series of similar transactions,
to which Providence or any of its subsidiaries was or is to be a party, in which
the amount involved exceeds $120,000; (x) no participant in this
solicitation or any of his or its associates has any arrangement or
understanding with any person with respect to any future employment by
Providence or its affiliates, or with respect to any future transactions to
which Providence or any of its affiliates will or may be a party; and
(xi) no person, including any of the participants in this solicitation, who
is a party to an arrangement or understanding under which the Nominees are
proposed to be elected has a substantial interest, direct or indirect, by
security holdings or otherwise in any matter to be acted on as set forth in this
Consent Statement. There are no material proceedings to which any
participant in this solicitation or any of his or its associates is a party
adverse to Providence or any of its subsidiaries or has a material interest
adverse to Providence or any of its subsidiaries. With respect to
each of the participants in this solicitation, none of the events enumerated in
Item 401(f)(1)-(6) of Regulation S-K of the Exchange Act occurred during the
past five years.
APPRAISAL
RIGHTS
The
Company’s stockholders are not entitled to appraisal rights in connection with
these Proposals under Delaware law.
SPECIAL
INSTRUCTIONS
If you
were a record holder of shares of Common Stock as of the close of business on
the Record Date for this consent solicitation, you may elect to consent to,
withhold consent to or abstain with respect to each Proposal by marking the
“CONSENT,” “WITHHOLD CONSENT” or “ABSTAIN” box, as applicable, underneath each
Proposal on the accompanying [WHITE] consent card and signing, dating and
returning it promptly in the enclosed post-paid envelope. In
addition, you may withhold consent to the removal of any individual director or
the election of any individual Nominee by writing that person’s name on the
consent card.
IF
A STOCKHOLDER EXECUTES AND DELIVERS A [WHITE] CONSENT CARD, BUT FAILS TO CHECK A
BOX MARKED “CONSENT,” “WITHHOLD CONSENT” OR “ABSTAIN” FOR A PROPOSAL, THAT
STOCKHOLDER WILL BE DEEMED TO HAVE CONSENTED TO THAT PROPOSAL.
YOUR
CONSENT IS IMPORTANT. PLEASE SIGN AND DATE THE ENCLOSED [WHITE]
CONSENT CARD AND RETURN IT IN THE ENCLOSED POST-PAID ENVELOPE
PROMPTLY. YOU MUST DATE YOUR CONSENT IN ORDER FOR IT TO BE
VALID. FAILURE TO SIGN, DATE AND RETURN YOUR CONSENT WILL HAVE THE
SAME EFFECT AS VOTING AGAINST THE PROPOSALS.
If your
shares are held in the name of a brokerage firm, bank nominee or other
institution, only it can execute a consent with respect to those shares of
Common Stock and only on receipt of specific instructions from
you. Thus, you should contact the person responsible for your account
and give instructions for the [WHITE] consent card to be signed representing
your shares. You should confirm in writing your instructions to the
person responsible for your account and provide a copy of those instructions to
D.F. King & Co., Inc. at 48 Wall Street, 22nd Floor, New York, NY 10005, so
that we will be aware of all instructions given and can attempt to ensure that
those instructions are followed.
If you
have any questions or require any assistance in executing your consent, please
call:
D.F.
King & Co., Inc.
Stockholders
call toll-free: (800) 848-3416
Banks
and Brokers call collect: (212) 269-5550
INFORMATION
CONCERNING PROVIDENCE
Although
we do not have any knowledge indicating that any statement made herein is
untrue, we do not take any responsibility for the accuracy or completeness of
statements taken from public documents and records that were not prepared by or
on our behalf, or for any failure by Providence to disclose events that may
affect the significance or accuracy of such information. See Schedule
II for information regarding persons who beneficially own more than 5% of the
Shares and the ownership of the Shares by the directors and management of
Providence.
|
THE
PROVIDENCE COMMITTEE
FOR
ACCOUNTABILITY
|
February [____],
2009
SCHEDULE
I
TRANSACTIONS
IN SECURITIES OF
THE
PROVIDENCE SERVICE CORPORATION
DURING
THE PAST TWO YEARS
Filing
Party
|
Date
|
Buy or
Sell
|
No.
of Common
Shares
|
Price
|
Eric
S. Gray
|
10/30/2008
|
Buy
|
1,000
|
$0.86
|
|
|
|
|
|
Michael
Bradley
|
10/30/2008
|
Buy
|
1,000
|
$0.85
|
|
|
|
|
|
Donald
E. Smith and Tiffany Smith
|
10/24/2008
10/30/2008
11/04/2008
11/05/2008
|
Buy
|
1,500
5,000
100
600
|
$1.01
$0.85
$2.63
$2.51
|
|
|
|
|
|
73114
Investments, L.L.C.
|
10/27/2008
|
Buy
|
4,092
|
$0.98
|
|
|
Buy
|
5,800
|
$0.99
|
|
|
Buy
|
94,422
|
$1.00
|
|
|
Buy
|
39,308
|
$1.01
|
|
|
Buy
|
93,550
|
$1.02
|
|
|
Buy
|
57,285
|
$1.03
|
|
|
Buy
|
32,600
|
$1.04
|
|
|
Buy
|
37,800
|
$1.05
|
|
|
Buy
|
42,300
|
$1.06
|
|
|
Buy
|
26,865
|
$1.07
|
|
|
Buy
|
4,092
|
$0.98
|
|
|
Buy
|
5,800
|
$0.99
|
|
|
Buy
|
94,422
|
$1.00
|
|
|
Buy
|
39,308
|
$1.01
|
|
|
Buy
|
93,550
|
$1.02
|
|
|
Buy
|
57,285
|
$1.03
|
|
|
Buy
|
32,600
|
$1.04
|
|
|
Buy
|
37,800
|
$1.05
|
|
|
Buy
|
42,300
|
$1.06
|
|
|
Buy
|
26,865
|
$1.07
|
|
10/28/2008
|
Buy
|
10,815
|
$0.83
|
|
|
Buy
|
10,000
|
$0.85
|
|
|
Buy
|
10,000
|
$0.87
|
|
|
Buy
|
10,000
|
$0.89
|
|
|
Buy
|
10,519
|
$0.92
|
|
|
Buy
|
9,581
|
$0.93
|
|
10/29/2008
|
Buy
|
34,317
|
$0.71
|
|
|
Buy
|
10,000
|
$0.76
|
|
|
Buy
|
500
|
$0.77
|
|
|
Buy
|
9,000
|
$0.78
|
|
|
Buy
|
12,000
|
$0.79
|
|
|
Buy
|
15,000
|
$0.80
|
|
|
Buy
|
10,000
|
$0.81
|
|
|
Buy
|
10,000
|
$0.82
|
|
10/30/2008
|
Buy
|
15,000
|
$0.80
|
|
|
Buy
|
19,777
|
$0.81
|
|
|
Buy
|
20,000
|
$0.82
|
|
|
Buy
|
15,623
|
$0.83
|
|
|
Buy
|
95,590
|
$0.84
|
|
|
Buy
|
47,357
|
$0.85
|
|
|
Buy
|
46,653
|
$0.86
|
|
|
Buy
|
2,000
|
$0.88
|
|
|
Buy
|
3,440
|
$0.90
|
|
|
Buy
|
101,284
|
$0.91
|
|
|
Buy
|
13,386
|
$0.92
|
|
|
Buy
|
7,014
|
$0.93
|
|
|
Buy
|
11,330
|
$0.94
|
|
10/31/2008
|
Buy
|
9,000
|
$0.96
|
|
|
Buy
|
1,409
|
$1.00
|
|
|
Buy
|
9,355
|
$1.12
|
|
|
Buy
|
3,900
|
$1.15
|
|
|
Buy
|
1,500
|
$1.16
|
|
|
Buy
|
31,261
|
$1.17
|
|
|
Buy
|
6,652
|
$1.18
|
|
|
Buy
|
69,291
|
$1.19
|
|
|
Buy
|
67,526
|
$1.20
|
|
|
Buy
|
57,718
|
$1.21
|
|
|
Buy
|
37,427
|
$1.22
|
|
|
Buy
|
20,290
|
$1.23
|
|
|
Buy
|
17,274
|
$1.24
|
|
|
Buy
|
32,677
|
$1.25
|
|
|
Buy
|
110,100
|
$1.26
|
|
11/03/2008
|
Buy
|
5,000
|
$1.28
|
|
|
Buy
|
26,464
|
$1.32
|
|
|
Buy
|
33,390
|
$1.33
|
|
|
Buy
|
44,431
|
$1.34
|
|
|
Buy
|
47,177
|
$1.35
|
|
|
Buy
|
42,955
|
$1.36
|
|
|
Buy
|
20,068
|
$1.37
|
|
|
Buy
|
14,175
|
$1.38
|
|
|
Buy
|
19,920
|
$1.39
|
|
|
Buy
|
22,362
|
$1.40
|
|
|
Buy
|
4,343
|
$1.41
|
|
11/04/2008
|
Buy
|
5,200
|
$1.44
|
|
|
Buy
|
12,288
|
$1.45
|
|
|
Buy
|
11,430
|
$1.46
|
|
|
Buy
|
27,500
|
$1.47
|
|
|
Buy
|
20,100
|
$1.56
|
|
|
Buy
|
100
|
$1.59
|
|
|
Buy
|
7,300
|
$2.05
|
|
|
Buy
|
12,518
|
$2.12
|
|
|
Buy
|
9,550
|
$2.48
|
|
|
Buy
|
100
|
$2.49
|
|
|
Buy
|
25,742
|
$2.50
|
|
|
Buy
|
600
|
$2.53
|
|
|
Buy
|
22,700
|
$2.54
|
|
11/05/2008
|
Buy
|
2,150
|
$2.25
|
|
|
Buy
|
225
|
$2.30
|
|
|
Buy
|
2,655
|
$2.33
|
|
|
Buy
|
12,500
|
$2.34
|
|
|
Buy
|
2,500
|
$2.35
|
|
|
Buy
|
3,100
|
$2.39
|
|
|
Buy
|
8,900
|
$2.40
|
|
|
Buy
|
5,200
|
$2.41
|
|
|
Buy
|
4,500
|
$2.43
|
|
|
Buy
|
17,580
|
$2.45
|
|
|
Buy
|
5,000
|
$2.47
|
|
|
Buy
|
5,000
|
$2.48
|
|
|
Buy
|
5,300
|
$2.49
|
|
|
Buy
|
10,775
|
$2.50
|
|
|
Buy
|
45,528
|
$2.51
|
|
|
Buy
|
5,000
|
$2.54
|
|
|
Buy
|
5,000
|
$2.55
|
|
|
Buy
|
10,000
|
$2.65
|
|
|
Buy
|
7,500
|
$2.68
|
|
11/06/2008
|
Buy
|
3,606
|
$2.00
|
|
|
Buy
|
1,000
|
$2.01
|
|
|
Buy
|
2,500
|
$2.03
|
|
|
Buy
|
2,500
|
$2.04
|
|
|
Buy
|
5,639
|
$2.05
|
|
|
Buy
|
300
|
$2.07
|
|
|
Buy
|
12,500
|
$2.08
|
|
|
Buy
|
3,200
|
$2.09
|
|
|
Buy
|
12,057
|
$2.10
|
|
|
Buy
|
200
|
$2.11
|
|
|
Buy
|
3,400
|
$2.12
|
|
|
Buy
|
5,682
|
$2.13
|
|
|
Buy
|
13,150
|
$2.14
|
|
|
Buy
|
22,761
|
$2.15
|
|
11/06/2008
|
Buy
|
20,524
|
$2.16
|
|
|
Buy
|
2,500
|
$2.30
|
|
|
Buy
|
5,000
|
$2.32
|
|
|
Buy
|
2,500
|
$2.33
|
|
|
Buy
|
2,500
|
$2.35
|
|
|
Buy
|
2,500
|
$2.39
|
|
|
Buy
|
2,500
|
$2.40
|
|
|
Buy
|
2,500
|
$2.49
|
|
|
Buy
|
2,500
|
$2.50
|
|
|
Buy
|
2,500
|
$2.60
|
|
11/07/2008
|
Buy
|
100
|
$2.09
|
|
|
Buy
|
10,000
|
$2.10
|
|
|
Buy
|
5,100
|
$2.11
|
|
|
Buy
|
900
|
$2.12
|
|
|
Buy
|
2,500
|
$2.15
|
|
|
Buy
|
1,200
|
$2.17
|
|
|
Buy
|
3,400
|
$2.18
|
|
|
Buy
|
14,100
|
$2.19
|
|
|
Buy
|
62
|
$2.27
|
|
|
Buy
|
8,000
|
$2.28
|
|
|
Buy
|
675
|
$2.53
|
|
|
Buy
|
14,238
|
$2.55
|
|
|
Buy
|
6,500
|
$2.58
|
|
|
Buy
|
3,500
|
$2.65
|
|
|
Buy
|
1,280
|
$2.67
|
|
|
Buy
|
2,500
|
$2.68
|
|
|
Buy
|
8,020
|
$2.69
|
|
11/10/2008
|
Buy
|
2,500
|
$2.35
|
|
|
Buy
|
800
|
$2.55
|
|
11/20/2008
|
Buy
|
487
|
$1.34
|
SCHEDULE
II
The
following tables are reprinted from Providence’s Definitive Proxy Statement on
Schedule 14A filed
with
the Securities and Exchange Commission on April 25, 2008.
Principal
Stockholders
The
following table sets forth certain information, as of the Record Date, with
respect to the beneficial ownership of Providence’s Common Stock by each
stockholder known by Providence to own beneficially more than five percent of
our outstanding Common Stock. Except as otherwise specified, the named
beneficial owner has sole voting and investment power with respect to his/her
shares.
|
|
No. of shares of
Common
Stock
Beneficially
Owned
(1)
|
|
|
Percent of
Voting
Power
of
Common
Stock
(1)
|
|
William
Blair & Company, L.L.C. (2)
222
W. Adams, Chicago, IL 60606
|
|
|
1,062,780 |
|
|
|
8.7
|
% |
Next
Century Growth Investors, LLC(3)
5500
Wayzata Blvd., Suite 1275, Minneapolis, MN 55416
|
|
|
1,053,016 |
|
|
|
8.7
|
% |
Cardinal
Capital Management, LLC(4)
One
Greenwich Office Park, Greenwich, CT 06831
|
|
|
1,048,100 |
|
|
|
8.6
|
% |
Wasatch
Advisors, Inc.(5)
150
Social Hall Avenue, Salt Lake City, UT 84111
|
|
|
902,065 |
|
|
|
7.4
|
% |
Deutsche
Bank AG(6)
Theodore-Heuss-Allee
70-60468
Frankfurt
am Main, Federal Republic of Germany
|
|
|
721,170 |
|
|
|
5.9
|
% |
Bank
of America Corporation(7)
100
N. Tryon St., Charlotte, NC 28255
|
|
|
688,501 |
|
|
|
5.7
|
% |
Zesiger
Capital Group LLC (8)
320
Park Avenue, New York, NY 10022
|
|
|
662,050 |
|
|
|
5.4
|
% |
The
Bank of New York Mellon Corporation (9)
One
Wall Street, 31st
Floor, New York, NY 10286
|
|
|
633,497 |
|
|
|
5.2
|
% |
(1)
|
The
securities “beneficially owned” by an individual are determined as of the
Record Date in accordance with the definition of “beneficial ownership”
set forth in the regulations of the Securities and Exchange Commission
(“SEC”). Accordingly, they may include securities owned by or
for, among others, the spouse and/or minor children of the individual and
any other relative who has the same home as such individual, as well
as other securities as to which the individual has or shares voting or
investment power or has the right to acquire under outstanding stock
options within 60 days after the Record Date. Beneficial
ownership may be disclaimed as to certain of the
securities.
|
(2)
|
Includes
1,062,780 shares of Common Stock indirectly beneficially owned by William
Blair& Company, L.L.C. This is based on the Schedule 13G/A
filed with the SEC on January 9,
2008.
|
(3)
|
Includes
1,053,016 shares of Common Stock indirectly beneficially owned by Next
Century Growth Investors, LLC. As a result of their position
with and ownership in Next Century Growth Investors, LLC, Thomas L. Press
and Donald M. Longlet may be deemed to indirectly beneficially own the
1,053,016 shares of Common Stock indirectly beneficially owned by Next
Century Growth Investors, LLC. The shares are owned by various
accounts managed by Next Century Growth Investors, LLC. Those
accounts have the right to receive, or the power to direct the receipt of,
dividends from, and the proceeds from the sale of, such
shares. This is based on the Schedule 13G/A filed with the SEC
on February 14, 2008.
|
(4)
|
Includes
1,048,100 shares of Common Stock indirectly beneficially owned by Cardinal
Capital Management, LLC. This is based on the Schedule 13G/A
filed with the SEC on February 14,
2008.
|
(5)
|
Includes
902,065 shares of Common Stock indirectly beneficially owned by Wasatch
Advisors, Inc. This is based on the Schedule 13G/A filed with
the SEC on February 14, 2008.
|
(6)
|
Includes
721,170 shares of Common Stock indirectly beneficially owned by Deutsche
Bank AG. The shares are owned by various accounts managed by
Deutsche Bank AG. Those accounts have the right to receive, or
the power to direct the receipt of, dividends from, and the proceeds from
the sale of, such shares. This is based on the Schedule 13G/A
filed with the SEC on February 6,
2008.
|
(7)
|
Includes
688,501 shares of Common Stock indirectly beneficially owned by Bank of
America Corporation. Includes shares held in separately managed
account programs over which unaffiliated managers exercise investment
discretion and voting power and over which, in certain instances, Bank of
America Corporation has concluded that it also could be deemed to have
shared investment discretion and voting power. This is based on
the Schedule 13G/A filed with the SEC on February 7,
2008.
|
(8)
|
Includes
662,050 shares of Common Stock indirectly beneficially owned by Zesiger
Capital Group LLC. This is based on the Schedule 13G filed with
the SEC on February 11, 2008.
|
(9)
|
Includes
633,497 shares of Common Stock indirectly beneficially owned by The Bank
of New York Mellon Corporation. The amount beneficially owned
includes, where appropriate, securities not outstanding which are subject
to options, warrants, rights or conversion privileges that are exercisable
within 60 days. These securities may exclude securities of
Providence with respect to which voting and/or dispositive power is
exercised by subsidiaries of The Bank of New York Mellon Corporation, or
departments or units thereof, independently from the exercise of those
powers over the securities reported on Schedule 13G filed with the SEC on
February 14, 2008.
|
Management
and Directors Only
The
following table sets forth certain information, as of the Record Date, with
respect to the beneficial ownership of Providence’s Common Stock by (i) all
of Providence’s directors and each nominee for director, (ii) all of
Providence’s executive officers named in the “Summary Compensation Table” which
follows and (iii) all of Providence’s directors and executive officers as a
group. Except as otherwise specified, the named beneficial owner has
sole voting and investment power with respect to his/her shares.
|
|
No. of shares of
Common Stock Beneficially
Owned
(1)
|
|
|
Percent of
Voting Power of
Common
Stock
(1)
|
|
Michael
N. Deitch(2)
|
|
|
45,000 |
|
|
|
* |
|
Fred
Furman (3)
|
|
|
68,446 |
|
|
|
* |
|
Fletcher
Jay McCusker(4)
|
|
|
82,500 |
|
|
|
* |
|
Craig
A. Norris(5)
|
|
|
25,000 |
|
|
|
* |
|
Mary
J. Shea(6)
|
|
|
19,665 |
|
|
|
* |
|
Hunter
Hurst, III(7)
|
|
|
13,999 |
|
|
|
* |
|
Kristi
L. Meints(8)
|
|
|
55,428 |
|
|
|
* |
|
Warren
S. Rustand(9)
|
|
|
23,999 |
|
|
|
* |
|
Richard
Singleton(10)
|
|
|
41,407 |
|
|
|
* |
|
All
directors and executive officers as a group (10
persons)(11)
|
|
|
478,022 |
|
|
|
3.8
|
% |
(1)
|
The
securities “beneficially owned” by an individual are determined as of the
Record Date in accordance with the definition of “beneficial ownership”
set forth in the regulations of the SEC. Accordingly, they may
include securities owned by or for, among others, the spouse and/or minor
children of the individual and any other relative who has the same home as
such individual, as well as other securities as to which the individual
has or shares voting or investment power or has the right to acquire under
outstanding stock options within 60 days after the Record
Date. Beneficial ownership may be disclaimed as to certain of
the securities.
|
(2)
|
Represents
45,000 shares of Common Stock issuable upon the exercise of options that
are exercisable within 60 days of the Record
Date.
|
(3)
|
Represents
68,446 shares of Common Stock issuable upon the exercise of options that
are exercisable within 60 days of the Record
Date.
|
(4)
|
Includes
12,500 shares of Common Stock held by
Mr. McCusker. Includes 70,000 shares of Common Stock
issuable upon the exercise of options that are exercisable within 60 days
of the Record Date.
|
(5)
|
Represents
25,000 shares of Common Stock issuable upon the exercise of options that
are exercisable within 60 days of the Record
Date.
|
(6)
|
Includes
15,000 shares of Common Stock issuable upon the exercise of options that
are exercisable within 60 days of the Record Date and 4,665 shares of
Common Stock held by the Mary J. Shea Revocable Trust for which
Ms. Shea is the sole trustee and sole
beneficiary.
|
(7)
|
Includes
666 shares of Common Stock held by Mr. Hurst. Includes
13,333 shares of Common Stock issuable upon the exercise of options that
are exercisable within 60 days of the Record
Date.
|
(8)
|
Includes
666 shares of Common Stock held by Ms. Meints. Includes
54,762 shares of Common Stock issuable upon the exercise of options that
are exercisable within 60 days of the Record
Date.
|
(9)
|
Includes
666 shares of Common Stock held by Mr. Rustand. Includes
23,333 shares of Common Stock issuable upon the exercise of options that
are exercisable within 60 days of the Record
Date.
|
(10)
|
Includes
666 shares of Common Stock held by Mr. Singleton. Includes
40,741 shares of Common
|
EXHIBIT
A
Text
of Existing Bylaws
(Proposed
to Be Changed)
PROPOSAL 1. FILL BOARD VACANCIES BY A STOCKHOLDER
VOTE OR BY THE AFFIRMATIVE VOTE OF 75% OF THE DIRECTORS THEN IN OFFICE
Article
II, Section 2.04, presently reads in its entirety:
“Vacancies on the
Board. Vacancies in the Board, whether resulting from death,
resignation, removal or other cause, shall be filled only by the Board and not
by the stockholders, by the affirmative vote of at least a majority of the
remaining members of the Board, even though less than a quorum, or by a sole
remaining director, and newly-created directorships resulting from any increase
in the number of directors shall only be filled by the Board, or if not so
filled, by the stockholders at the next annual meeting thereof or at a special
meeting called for that purpose in accordance with Section 1.03 of these
Bylaws. Any director elected in accordance with the preceding
sentence of this Section 2.04 shall hold office for a term that shall
coincide with the term of the class to which such director shall have been
elected or appointed and until his or her successor shall have been duly elected
and qualified, except in the event of his or her earlier death, resignation or
removal.”
PROPOSAL
2. REIMBURSEMENT
OF PROXY EXPENSES
No
existing Bylaw is changed by this Proposal.
PROPOSAL
3. ELECT
DIRECTORS BY MAJORITY VOTE IN UNCONTESTED ELECTIONS
No
existing Bylaw is changed by this Proposal.
PROPOSAL
4. ALLOW
STOCKHOLDERS WITH 25% OR MORE OF THE OUTSTANDING SHARES TO CALL SPECIAL
MEETINGS
Article
I, Section 1.03(b), presently reads in its entirety:
“Stockholder Requested
Special Meetings. Subject to the provisions of this
Section 1.03(b), a special meeting of stockholders shall be called by a
majority of the entire Board, or a Committee delegated such authority by the
Board, in accordance with this Section 1.03(b), following receipt by the
Secretary of the Corporation (the “Secretary”) of a
written request for a special meeting (a “Special Meeting
Request”) from the record holders of shares representing at least fifty
percent (50%) (the “Requisite
Percentage”) of the combined voting power of the then outstanding shares
of all classes and series of capital stock of the Corporation entitled generally
to vote in the election of directors of the Corporation, voting as a single
class (the “Requisite
Holders”), if such Special Meeting Request complies with the requirements
of this Section 1.03(b) and all other applicable sections of these
Bylaws. The Board shall determine whether all requirements set forth
in these Bylaws have been satisfied and such determination shall be binding on
the Corporation and its stockholders. If a Special Meeting Request is
made that complies with this Section 1.03(b) and all other applicable
sections of these Bylaws, the Board may (in lieu of calling the special meeting
requested in such Special Meeting Request) present an identical or substantially
similar item (a “Similar Item”) for
stockholder approval at any other meeting of stockholders that is held within
one hundred twenty (120) days after the Corporation receives such Special
Meeting Request.
A Special
Meeting Request must be delivered by hand or by registered U.S. mail or courier
service, postage prepaid, to the attention of the Secretary during regular
business hours. A Special Meeting Request shall only be valid if it
is signed and dated by each of the Requisite Holders or its duly authorized
agent and includes the following: (i) a statement of the specific
purpose(s) of the special meeting, the matter(s) proposed to be acted on at the
special meeting and the reasons for conducting such business at the special
meeting; (ii) the text of any proposed amendment to the Bylaws to be
considered at the special meeting; (iii) the name and address, as they
appear on the Corporation’s books, of each stockholder of record signing such
request, the date of each such stockholder’s signature and the name and address
of any Stockholder Associated Person (as defined below); (iv) (A) the
class and series and number of shares of each class and series of capital stock
of the Corporation which are, directly or indirectly, owned beneficially and/or
of record by each such stockholder or any Stockholder Associated Person,
documentary evidence of such record or beneficial ownership, and the date or
dates such shares were acquired and the investment intent at the time such
shares were acquired, (B) any option, warrant, convertible security, stock
appreciation right, or similar right with an exercise or conversion privilege or
a settlement payment or mechanism at a price related to any class or series of
shares of the Corporation or with a value derived in whole or in part from the
value of any class or series of shares of the Corporation, whether or not such
instrument or right shall be subject to settlement in the underlying class or
series of capital stock of the Corporation or otherwise (a “Derivative
Instrument”) directly or indirectly owned beneficially by each such
stockholder or any Stockholder Associated Person and any other direct or
indirect right held by each such stockholder or any Stockholder Associated
Person to profit from, or share in any profit derived from, any increase or
decrease in the value of shares of the Corporation, (C) any proxy,
contract, arrangement, understanding, or relationship pursuant to which each
such stockholder or any Stockholder Associated Person has a right to vote any
shares of any security of the Corporation, (D) any contract, arrangement,
understanding, relationship or otherwise pursuant to which each such stockholder
or any Stockholder Associated Person has the opportunity, directly or
indirectly, to profit or share in any profit derived from any decrease in the
value of any security issued by the Corporation (a “Short Interest”),
(E) any rights to dividends on the shares of the Corporation owned
beneficially by each such stockholder or any Stockholder Associated Person that
are separated or separable from the underlying shares of the Corporation,
(F) any proportionate interest in shares of the Corporation or Derivative
Instruments held, directly or indirectly, by a general or limited partnership in
which each such stockholder or any Stockholder Associated Person is a general
partner or, directly or indirectly, beneficially owns an interest in a general
partner, and (G) any performance-related fees (other than an asset-based
fee) that each such stockholder or any Stockholder Associated Person is entitled
to based on any increase or decrease in the value of shares of the Corporation
or Derivative Instruments, if any, as of the date of such notice, including
without limitation any such interests held by members of each such stockholder’s
or any Stockholder Associated Person’s immediate family sharing the same
household (which information, in each case, shall be supplemented by such
stockholder and any Stockholder Associated Person not later than ten
(10) calendar days after the record date for the meeting to disclose such
ownership as of the record date); (v) whether and the extent to which any
agreement, arrangement or understanding has been made, the effect or intent of
which is to increase or decrease the voting power of such stockholder or any
Stockholder Associated Person with respect to any shares of the capital stock of
the Corporation, without regard to whether such transaction is required to be
reported on a Schedule 13D or other form in accordance with Section 13(d)
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or
any successor provisions thereto and the rules and regulations promulgated
thereunder; (vi) any material interest of each such stockholder or any
Stockholder Associated Person in the business proposed to be conducted at the
special meeting; (vii) a representation that each of the stockholders and
any Stockholder Associated Persons submitting the Special Meeting Request intend
to appear in person or by proxy at the special meeting to present the
proposal(s) or business to be brought before the special meeting; (viii) if
any stockholder submitting the Special Meeting Request or any Stockholder
Associated Person intends to solicit proxies with respect to the stockholder’s
proposal(s) or business to be presented at the special meeting, a representation
to that effect; (ix) all information relating to each stockholder signing
the Special Meeting Request and any Stockholder Associated Person that must be
disclosed in a proxy statement or other filing made with the Securities and
Exchange Commission (the “SEC”) in connection
with the solicitation of proxies for the election of directors in an election
contest (even if an election contest is not involved) pursuant to
Section 14 of the Exchange Act or any successor provisions thereto and the
rules and regulations promulgated thereunder; and (x) if the purpose of the
special meeting includes the election of one or more directors, all the
information each such stockholder would be required to include in a
stockholder’s notice of nomination delivered to the Corporation pursuant to
Section 2.02(a)(2) of these Bylaws. For purposes of these
Bylaws, a “Stockholder
Associated Person” shall mean with respect to any stockholder
(A) any person controlling, directly or indirectly, or acting in concert
with, such stockholder, (B) any beneficial owner of shares of stock of the
Corporation owned of record or beneficially by such stockholder, and
(C) any person controlling, controlled by or under common control with such
Stockholder Associated Person.
In
addition, a Special Meeting Request shall not be valid if (i) the Special
Meeting Request relates to an item of business that is not a proper subject for
stockholder action under the General Corporation Law of the State of Delaware,
as amended from time to time (the “DGCL”), and other
applicable law; (ii) the Special Meeting Request is received by the
Corporation during the period commencing ninety (90) days prior to the
first anniversary of the date of the immediately preceding annual meeting and
ending on the date of the next annual meeting; (iii) a Similar Item was
presented at any meeting of stockholders held within one hundred twenty
(120) days prior to receipt by the Corporation of such Special Meeting
Request (and, for purposes of this clause (iii), the election of directors shall
be deemed a “Similar Item” with respect to all items of business involving the
election or removal of directors); (iv) a Similar Item is included in the
Corporation’s notice as an item of business to be brought before a stockholder
meeting that has been called but not yet held; or (v) such Special Meeting
Request was made in a manner that involved a violation of Regulation 14A under
the Exchange Act or other applicable law.
Stockholders
may revoke a Special Meeting Request by written revocation delivered to the
Corporation at any time prior to the special meeting; provided, however, the
Board shall have the discretion to determine whether or not to proceed with the
special meeting. In addition, failure of the Requisite Holders
(A) to appear or send a qualified representative to present such
proposal(s) or business for consideration at the special meeting; or (B) to
own of record shares representing at least the Requisite Percentage at the time
of the special meeting shall also constitute a revocation of the Special Meeting
Request.”
PROPOSAL
5. LIMIT
THE CHAIR’S ABILITY TO ADJOURN A STOCKHOLDERS’ MEETING WHEN A QUORUM IS
PRESENT
Article
I, Section 1.05, presently reads in its entirety:
“Adjournment. The
chairman of the meeting or the holders of a majority of the votes entitled to be
cast by the stockholders who are present in person or by proxy may adjourn the
meeting from time to time whether or not a quorum is present. In the
event that a quorum does not exist with respect to any vote to be taken by a
particular class or series, the chairman of the meeting or the holders of a
majority of the votes entitled to be cast by the stockholders of such class or
series who are present in person or by proxy may adjourn the meeting with
respect to the vote(s) to be taken by such class or series. At any
such adjourned meeting at which a quorum may be present, any business may be
transacted which might have been transacted at the meeting as originally
called.”
Clause
(ix) of Article I, Section 1.04, presently reads in its entirety:
“(ix) adjourning
the meeting to a later date, time and place announced at the meeting by the
chairman;”
PROPOSAL
6. ELIMINATE
ADVANCE NOTICE PROVISIONS
Article
I, Section 1.07, presently reads in its entirety:
“Notice of Stockholder
Proposals.
(a) At
any annual meeting of the stockholders, only such business shall be conducted as
shall have been properly brought before such meeting. To be properly
brought before an annual meeting, business must be (i) specified in the
notice of meeting (or any supplement thereto) given by or at the direction of
the Board, (ii) otherwise properly brought before the meeting by or at the
direction of the Board, or (iii) otherwise properly and timely brought
before the meeting by any stockholder of the Corporation in compliance with the
notice procedures and other provisions of this Section 1.07.
(b) For
business to be properly brought before an annual meeting by a stockholder, such
business must be a proper subject for stockholder action under the DGCL and
other applicable law, as determined by the Chairman of the Board or such other
person as is presiding over the meeting, and such stockholder (i) must be a
stockholder of record on the date of the giving of the notice provided for in
this Section 1.07 and on the record date for the determination of
stockholders entitled to vote at such annual meeting, (ii) must be entitled
to vote at such annual meeting, and (iii) must comply with the notice
procedures set forth in this Section 1.07. In addition to any
other applicable requirements, for business to be properly brought before an
annual meeting by a stockholder, such stockholder must have given timely notice
thereof in proper written form to the Secretary.
(c) To be
timely, a stockholder’s notice must be delivered to, or mailed and received by,
the Secretary at the principal executive offices of the Corporation not earlier
than the close of business on the one hundred twentieth (120th) calendar
day, and not later than the close of business on the ninetieth (90th) calendar
day, prior to the first anniversary of the immediately preceding year’s annual
meeting of stockholders; provided, however, that in the event that no annual
meeting was held in the previous year or the annual meeting is called for a date
that is more than thirty (30) calendar days earlier or more than sixty
(60) calendar days later than such anniversary date, notice by the
stockholder in order to be timely must be so delivered or received not earlier
than the close of business on the one hundred twentieth (120th) calendar
day prior to the date of such annual meeting and not later than the close of
business on the later of the ninetieth (90th) calendar
day prior to the date of such annual meeting or, if the first pubic disclosure
of the date of such annual meeting is less than one hundred (100) calendar
days prior to the date of such annual meeting, the tenth (10th) calendar
day following the day on which public disclosure of the date of such annual
meeting is first made by the Corporation. In no event shall any
adjournment or postponement of an annual meeting or the public disclosure
thereof commence a new time period for the giving of a stockholder’s notice as
described above.
(d) To be
in proper written form, a stockholder’s notice to the Secretary shall set forth
in writing, as to each matter the stockholder proposes to bring before the
meeting the following: (i) a description of the business desired to be
brought before the meeting, including the text of the proposal or business and
the text of any resolutions proposed for consideration; (ii) the name and
record address, as they appear on the Corporation’s stock ledger, of such
stockholder and the name and address of any Stockholder Associated Person;
(iii) (A) the class and series and number of shares of each class and
series of capital stock of the Corporation which are, directly or indirectly,
owned beneficially and/or of record by such stockholder or any Stockholder
Associated Person, documentary evidence of such record or beneficial ownership,
and the date or dates such shares were acquired and the investment intent at the
time such shares were acquired, (B) any Derivative Instrument directly or
indirectly owned beneficially by such stockholder or any Stockholder Associated
Person and any other direct or indirect right held by such stockholder or any
Stockholder Associated Person to profit from, or share in any profit derived
from, any increase or decrease in the value of shares of the Corporation,
(C) any proxy, contract, arrangement, understanding, or relationship
pursuant to which such stockholder or any Stockholder Associated Person has a
right to vote any shares of any security of the Corporation, (D) any Short
Interest indirectly or directly held by such stockholder or any Stockholder
Associated Person in any security issued by the Corporation, (E) any rights
to dividends on the shares of the Corporation owned beneficially by such
stockholder or any Stockholder Associated Person that are separated or separable
from the underlying shares of the Corporation, (F) any proportionate
interest in shares of the Corporation or Derivative Instruments held, directly
or indirectly, by a general or limited partnership in which such stockholder or
any Stockholder Associated Person is a general partner or, directly or
indirectly, beneficially owns an interest in a general partner, and (G) any
performance-related fees (other than an asset-based fee) that such stockholder
or any Stockholder Associated Person is entitled to based on any increase or
decrease in the value of shares of the Corporation or Derivative Instruments, if
any, as of the date of such notice, including without limitation any such
interests held by members of such stockholder’s or any Stockholder Associated
Person’s immediate family sharing the same household (which information, in each
case, shall be supplemented by such stockholder and any Stockholder Associated
Person not later than ten (10) calendar days after the record date for the
meeting to disclose such ownership as of the record date); (iv) a
description of all arrangements or understandings between such stockholder
and/or any Stockholder Associated Person and any other person or persons (naming
such person or persons) in connection with the proposal of such business by such
stockholder; (v) any material interest of such stockholder or any
Stockholder Associated Person in such business, individually or in the
aggregate, including any anticipated benefit to such stockholder or any
Stockholder Associated Person therefrom; (vi) a representation from such
stockholder as to whether the stockholder or any Stockholder Associated Person
intends or is part of a group which intends (1) to deliver a proxy
statement and/or form of proxy to holders of at least the percentage of the
Corporation’s outstanding capital stock required to approve or adopt the
proposal and/or (2) otherwise to solicit proxies in support of such
proposal; (vii) a representation that such stockholder is a holder of
record of stock of the Corporation entitled to vote at such meeting, that such
stockholder intends to vote such stock at such meeting, and that such
stockholder intends to appear at the meeting in person or by proxy to bring such
business before such meeting; (viii) whether and the extent to which any
agreement, arrangement or understanding has been made, the effect or intent of
which is to increase or decrease the voting power of such stockholder or any
Stockholder Associated Person with respect to any shares of the capital stock of
the Corporation, without regard to whether such transaction is required to be
reported on a Schedule 13D or other form in accordance with Section 13(d)
of the Exchange Act or any successor provisions thereto and the rules and
regulations promulgated thereunder; (ix) in the event that such business
includes a proposal to amend these Bylaws, the complete text of the proposed
amendment; and (x) such other information regarding each matter of business
to be proposed by such stockholder, regarding the stockholder in his or her
capacity as a proponent of a stockholder proposal, or regarding any Stockholder
Associated Person, that would be required to be disclosed in a proxy statement
or other filings required to be made with the SEC in connection with the
solicitations of proxies for such business pursuant to Section 14 of the
Exchange Act (or pursuant to any law or statute replacing such section) and the
rules and regulations promulgated thereunder.
(e) If
the information submitted pursuant to this Section 1.07 by any stockholder
proposing business for consideration at an annual meeting shall be inaccurate to
any material extent, such information may be deemed not to have been provided in
accordance with this Section 1.07. Upon written request by the
Secretary, the Board or any committee thereof, any stockholder proposing
business for consideration at an annual meeting shall provide, within seven
(7) business days of delivery of such request (or such other period as may
be specified in such request), written verification, satisfactory in the
discretion of the Board, any committee thereof or any authorized officer of the
Corporation, to demonstrate the accuracy of any information submitted by the
stockholder pursuant to this Section 1.07. If a stockholder
fails to provide such written verification within such period, the information
as to which written verification was requested may be deemed not to have been
provided in accordance with this Section 1.07.
(f) For
purposes of these Bylaws, “public disclosure”
shall be deemed to include a disclosure made in a (A) press release
reported by the Dow Jones News Service, Reuters Information Service, Associated
Press or any similar or successor news wire service, or (B) in a document
filed by the Corporation with the Securities and Exchange Commission pursuant to
Section 13, 14 or 15(d) of the Exchange Act or any successor provisions
thereto.
(g) No
business (other than nominations of persons for election to the Board which
shall be made in accordance with the procedures set forth in Article II,
Section 2.02 of these Bylaws) shall be conducted at the annual meeting of
stockholders except business brought before the annual meeting in accordance
with the procedures set forth in this Section 1.07.
(h)
Except as otherwise required by the DGCL and other applicable law, the
Certificate or these Bylaws, the Chairman of the Board or other person presiding
at an annual meeting shall have the power and duty (i) to determine whether
any business proposed to be brought before the annual meeting was properly
brought before the meeting in accordance with the procedures set forth in this
Section 1.07, including whether the stockholder or any Stockholder
Associated Person on whose behalf the proposal is made, solicited (or is part of
a group which solicited) or did not so solicit, as the case may be, proxies in
support of such stockholder’s proposal in compliance with such stockholder’s
representation as required by this Section 1.07, and (ii) if any
proposed business was not brought in compliance with this Section 1.07, to
declare that such proposal is defective and shall be disregarded.
(i) In
addition to the provisions of this Section 1.07, a stockholder shall also
comply with all applicable requirements of the DGCL, other applicable law and
the Exchange Act, and the rules and regulations thereunder, with respect to the
matters set forth herein, provided, however, that any
references in these Bylaws to the Exchange Act or the rules promulgated
thereunder are not intended to and shall not limit the requirements applicable
to stockholder proposals to be considered pursuant to Section 1.07(a)(iii)
of these Bylaws.
(j)
Nothing in this Section 1.07 shall be deemed to affect any rights of
stockholders to request the inclusion of proposals in the Corporation’s proxy
statement pursuant to Rule 14a-8 under the Exchange Act.
(k)
Notwithstanding anything in this Section 1.07 to the contrary, a
stockholder intending to nominate one or more persons for election as a director
at an annual meeting must comply with Article II, Section 2.02 of these
Bylaws for any such nomination to be properly brought before such
meeting.”
Article
II, Section 2.02, presently reads in its entirety:
Notice of Nominations for
Directors.
(a) Annual Meetings of
Stockholders.
(1)
Nominations of persons for election to the Board at an annual meeting of
stockholders may be made (A) by or at the direction of the Board or a
committee appointed by the Board, or (B) by any stockholder of the
Corporation (i) who is a stockholder of record on the date of the giving of
the notice provided for in this Section 2.02(a), on the record date for the
determination of the stockholders entitled to vote at such annual meeting of
stockholders and at the time of such annual meeting of stockholders,
(ii) who is entitled to vote at the annual meeting of stockholders, and
(iii) who complies with the notice procedures set forth in this
Section 2.02(a) as to such nominations, including, but not limited to, the
procedures regarding such notice’s timeliness and required form.
(2) For a
stockholder’s notice of nomination of persons for election to the Board at an
annual meeting of stockholders to be brought before an annual meeting by a
stockholder pursuant to Section 2.02(a)(1)(B) of these Bylaws, the
stockholder must have given timely notice thereof, in proper written form, to
the Secretary. To be considered timely, a stockholder’s notice of
nomination must be delivered to, or mailed and received by, the Secretary at the
principal executive offices of the Corporation not earlier than the close of
business on the one hundred twentieth (120th) calendar day, and not later
than the close of business on the ninetieth (90th) calendar day, prior to
the first anniversary of the immediately preceding year’s annual meeting;
provided, however, that in the event that no annual meeting was held in the
previous year or the annual meeting is called for a date that is more than
thirty (30) calendar days earlier or more than sixty (60) calendar
days later than such anniversary date, notice by the stockholder in order to be
timely must be so delivered or received not earlier than the close of business
on the one hundred twentieth (120th) calendar
day prior to the date of such annual meeting and not later than the close of
business on the later of the ninetieth (90th) calendar
day prior to the date of such annual meeting or, if the first public disclosure
of the date of such annual meeting is less than one hundred (100) calendar
days prior to the date of such annual meeting, the tenth (10th) calendar
day following the day on which public disclosure of the date of such annual
meeting is first made by the Corporation. In no event shall any
adjournment or postponement of an annual meeting or the public disclosure
thereof commence a new time period for the giving of a stockholder’s notice as
described above.
To be in
proper written form, a stockholder’s notice of nomination to the Secretary
(whether given pursuant to this Section 2.02(a) or Section 2.02(b) of
these Bylaws) shall set forth in writing the following: (a) as to each
person whom the stockholder proposes to nominate for election or reelection as a
director (i) the name, age, business address and residence address of such
person; (ii) the principal occupation and employment of such person;
(iii) the class and series and number of shares of each class and series of
capital stock of the Corporation which are owned beneficially or of record by
such person (which information shall be supplemented not later than ten
(10) calendar days after the record date for the meeting to disclose such
ownership as of the record date); (iv) such person’s executed written
consent to being named in the proxy statement as a nominee and to serving as a
director if elected; (v) all information relating to such person that would
be required to be disclosed in a proxy statement or other filings required to be
made with the SEC in connection with the solicitation of proxies for the
election of directors in a contested election pursuant to Section 14 of the
Exchange Act (or pursuant to any law or statute replacing such section), and the
rules and regulations promulgated thereunder; (vi) a description of all
direct and indirect compensation and other material monetary agreements,
arrangements and understandings during the past three years, and any other
material relationships, between or among such person being nominated, on the one
hand, and the stockholder and any Stockholder Associated Person, on the other
hand, including, without limitation all information that would be required to be
disclosed pursuant to Item 404 promulgated under Regulation S-K of the
Exchange Act if the stockholder making the nomination and any Stockholder
Associated Person were the “registrant” for purposes of such rule and the person
being nominated were a director or executive officer of such registrant; and
(vii) the information and agreement required under Section 2.03(b) of
these Bylaws; and (b) as to the stockholder giving the notice (i) the
name and record address of such stockholder, as they appear on the Corporation’s
stock ledger, and the name and address of any Stockholder Associated Person;
(ii) (A) the class and series and number of shares of each class and
series of capital stock of the Corporation which are, directly or indirectly,
owned beneficially and/or of record by such stockholder or any Stockholder
Associated Person, documentary evidence of such record or beneficial ownership,
and the date or dates such shares were acquired and the investment intent at the
time such shares were acquired, (B) any Derivative Instrument directly or
indirectly owned beneficially by such stockholder or any Stockholder Associated
Person and any other direct or indirect right held by such stockholder or any
Stockholder Associated Person to profit from, or share in any profit derived
from, any increase or decrease in the value of shares of the Corporation,
(C) any proxy, contract, arrangement, understanding, or relationship
pursuant to which such stockholder or any Stockholder Associated Person has a
right to vote any shares of any security of the Corporation, (D) any Short
Interest indirectly or directly held by such stockholder or any Stockholder
Associated Person in any security issued by the Corporation, (E) any rights
to dividends on the shares of the Corporation owned beneficially by such
stockholder or any Stockholder Associated Person that are separated or separable
from the underlying shares of the Corporation, (F) any proportionate
interest in shares of the Corporation or Derivative Instruments held, directly
or indirectly, by a general or limited partnership in which such stockholder or
any Stockholder Associated Person is a general partner or, directly or
indirectly, beneficially owns an interest in a general partner, and (G) any
performance-related fees (other than an asset-based fee) that such stockholder
or any Stockholder Associated Person is entitled to based on any increase or
decrease in the value of shares of the Corporation or Derivative Instruments, if
any, as of the date of such notice, including without limitation any such
interests held by members of such stockholder’s or any Stockholder Associated
Person’s immediate family sharing the same household (which information shall,
in each case, be supplemented by such stockholder and any Stockholder Associated
Person not later than ten (10) calendar days after the record date for the
meeting to disclose such ownership as of the record date); (iii) a
description of all arrangements or understandings between such stockholder or
any Stockholder Associated Person and each proposed nominee and any other person
or persons (naming such person or persons) pursuant to which the nomination(s)
are to be made by such stockholder; (iv) any material interest of such
stockholder or any Stockholder Associated Person in the election of such
proposed nominee, individually or in the aggregate, including any anticipated
benefit to the stockholder or any Stockholder Associated Person therefrom;
(v) a representation that such stockholder is a holder of record of stock
of the Corporation entitled to vote at such meeting and that such stockholder
intends to appear in person or by proxy at the meeting to nominate the person or
persons named in its notice; (vi) a representation from the stockholder as
to whether the stockholder or any Stockholder Associated Person intends or is
part of a group which intends (A) to deliver a proxy statement and/or form
of proxy to holders of at least the percentage of the Corporation’s outstanding
capital stock required to elect the person proposed as a nominee and/or
(B) otherwise to solicit proxies in support of the election of such person;
(vii) whether and the extent to which any agreement, arrangement or
understanding has been made, the effect or intent of which is to increase or
decrease the voting power of such stockholder or such Stockholder Associated
Person with respect to any shares of the capital stock of the Corporation,
without regard to whether such transaction is required to be reported on a
Schedule 13D or other form in accordance with Section 13(d) of the Exchange
Act or any successor provisions thereto and the rules and regulations
promulgated thereunder; and (viii) any other information relating to such
stockholder and any Stockholder Associated Person that would be required to be
disclosed in a proxy statement or other filings required to be made with the SEC
in connection with solicitations of proxies for the election of directors in a
contested election pursuant to Section 14 of the Exchange Act (or pursuant
to any law or statute replacing such section) and the rules and regulations
promulgated thereunder. In addition to the information required
above, the Corporation may require any proposed nominee to furnish such other
information as may reasonably be required by the Corporation to determine the
eligibility of such proposed nominee to serve as an independent director of the
Corporation or that could be material to a reasonable stockholder’s
understanding of the independence, or lack thereof, of such
nominee.
(3)
Notwithstanding anything in this Section 2.02 to the contrary, in the event
that the number of directors to be elected to the Board at an annual meeting of
the stockholders is increased and there is no public disclosure by the
Corporation, naming all of the nominees for directors or specifying the size of
the increased Board, at least ninety (90) calendar days prior to the first
anniversary of the date of the immediately preceding year’s annual meeting, a
stockholder’s notice required by this Section 2.02 shall also be considered
timely, but only with respect to nominees for any new positions created by such
increase, if it shall be delivered to, or mailed and received by, the Secretary
at the principal executive offices of the Corporation not later than the close
of business on the tenth (10 th) calendar
day following the day on which such public disclosure is first made by the
Corporation.
(b) Special Meetings of
Stockholders. Nominations of persons for election to the Board
may be made at a special meeting of stockholders at which directors are to be
elected (i) pursuant to the Corporation’s notice of meeting, (ii) by
or at the direction of the Board, or (iii) provided that the Board has
determined that directors shall be elected at such meeting, by any stockholder
of the Corporation who (A) is a stockholder of record at the time of giving
of notice provided for in this Section 2.02(b), (B) is a stockholder
of record on the record date for the determination of the stockholders entitled
to vote at such meeting, (C) is a stockholder of record at the time of such
meeting, (D) is entitled to vote at such meeting, and (E) complies
with the notice procedures set forth in this Section 2.02(b) as to such
nomination. In the event the Corporation calls a special meeting of
stockholders for the purpose of electing one or more directors to the Board, any
such stockholder may nominate a person or persons (as the case may be) for
election to such position(s) as specified in the Corporation’s notice of
meeting, if the proper form of stockholder’s notice required by
Section 2.02(a)(2) of these Bylaws with respect to any nomination shall be
delivered to the Secretary at the principal executive offices of the Corporation
not earlier than the close of business on the one hundred twentieth (120th) calendar
day prior to the date of such special meeting and not later than the close of
business on the later of the ninetieth (90th) calendar
day prior to the date of such special meeting or, if the first public disclosure
made by the Corporation of the date of such special meeting is less than one
hundred (100) days prior to the date of such special meeting, not later
than the tenth (10th) calendar
day following the day on which public disclosure is first made of the date of
the special meeting and of the nominees proposed by the Board to be elected at
such meeting. In no event shall any adjournment or postponement of a
special meeting or the public disclosure thereof commence a new time period for
the giving of a stockholder’s notice as described above.
(c) General.
(1) If
the information submitted pursuant to this Section 2.02 by any stockholder
proposing a nominee for election as a director at a meeting of stockholders
shall be inaccurate to any material extent, such information may be deemed not
to have been provided in accordance with this Section 2.02. Upon
written request by the Secretary, the Board or any committee thereof, any
stockholder proposing a nominee for election as a director at a meeting shall
provide, within seven (7) business days of delivery of such request (or
such other period as may be specified in such request), written verification,
satisfactory in the discretion of the Board, any committee thereof or any
authorized officer of the Corporation, to demonstrate the accuracy of any
information submitted by the stockholder pursuant to this
Section 2.02. If a stockholder fails to provide such written
verification within such period, the information as to which written
verification was requested may be deemed not to have been provided in accordance
with this Section 2.02.
(2)
Notwithstanding anything in these Bylaws to the contrary, no person shall be
eligible for election as a director of the Corporation at any meeting of
stockholders unless nominated in accordance with the procedures set forth in
this Section 2.02.
(3)
Notwithstanding anything in these Bylaws to the contrary, if a stockholder who
has submitted a written notice of intention to propose a nominee for election as
a director at a meeting of stockholders (or a designated representative of the
stockholder) does not appear at the annual or special meeting of stockholders of
the Corporation to present the nomination, such nomination shall be disregarded
notwithstanding that proxies in respect of such vote may have been received by
the Corporation.
(4)
Except as otherwise required by the DGCL and other applicable law, the
Certificate or these Bylaws, the Chairman of the Board or other person presiding
at the meeting shall have the power and duty (a) to determine whether any
nomination proposed to be brought before the meeting was properly made in
accordance with the procedures set forth in this Section 2.02, including
whether the stockholder or any Stockholder Associated Person on whose behalf the
nomination is made, solicited (or is part of a group which solicited) or did not
so solicit, as the case may be, proxies in support of the election of such
stockholder’s nominee(s) in compliance with such stockholder’s representation as
required by this Section 2.02, and (b) if any proposed nomination was
not made in compliance with this Section 2.02, to declare that such
nomination is defective and shall be disregarded.
(5) In
addition to the provisions of this Section 2.02, a stockholder shall also
comply with all applicable requirements of the DGCL, other applicable law and
the Exchange Act, and the rules and regulations thereunder, with respect to the
matters set forth herein, provided, however, that any
references in these Bylaws to the Exchange Act or the rules promulgated
thereunder are not intended to and shall not limit the applicable requirements
for nominations by stockholders to be considered pursuant to
Section 2.02(a) or Section 2.02(b) of these Bylaws.
(6)
Nothing in this Section 2.02 shall be deemed to affect any rights of the
holders of any series of Preferred Stock, if and to the extent provided for,
under applicable law, the Certificate or these Bylaws.
PROPOSAL
7. ELIMINATE
PRE-TEXTUAL QUESTIONNAIRES AND “AGREEMENTS” FOR DIRECTOR
NOMINEES
Article
II, Section 2.03(b), presently reads in its entirety:
Qualifications. Each
director and nominee for election as a director of the Corporation must deliver
to the Secretary at the principal office of the Corporation a written
questionnaire with respect to the background and qualifications of such person
(which questionnaire shall be provided by the Secretary upon written request and
approved from time to time by the Board or its Nominating and Corporate
Governance Committee) and a written representation and agreement (in the form
provided by the Secretary upon written request) (the “Prospective Director
Agreement”). The Prospective Director Agreement (i) shall
provide that such person (A) is not and will not become a party to
(1) any agreement, arrangement or understanding with, and has not given any
commitment or assurance to, any person or entity as to how such person, if such
person is at the time a director or is subsequently elected as a director of the
Corporation, will act or vote on any issue or question (a “Voting Commitment”)
that has not been disclosed to the Corporation, or (2) any Voting
Commitment that could limit or interfere with such person’s ability to comply,
if such person is at the time a director or is subsequently elected as a
director of the Corporation, with such person’s duties as a director under
applicable law, (B) is not and will not become a party to any agreement,
arrangement or understanding with any person or entity other than the
Corporation with respect to any direct or indirect compensation, reimbursement
or indemnification in connection with service or action as a director that has
not been disclosed therein, and (C) would be in compliance, if elected as a
director of the Corporation, and will, if such person is at the time a director
or is subsequently elected as a director of the Corporation, comply with all
applicable corporate governance, conflicts of interest, confidentiality,
securities ownership and stock trading policies and guidelines of the
Corporation (copies of which shall be provided by the Secretary upon written
request), and (ii) shall include, if such person is at the time a director
or is subsequently elected as a director of the Corporation, such person’s
irrevocable resignation as a director if such person is found by a court of
competent jurisdiction to have breached the Prospective Director Agreement in
any material respect.
PROPOSAL
8. REMOVE
THE BOARD’S ATTEMPT TO IMPEDE THE ABILITY OF STOCKHOLDERS TO ACT BY WRITTEN
CONSENT
Article
V, Section 5.02(c), reads in its entirety:
“Record Date for Corporate
Actions by Written Consent.
(i)
Notwithstanding Section 5.02(a) and Section 5.02(b) of these Bylaws,
the record date for determining stockholders entitled to express consent to
corporate action in writing without a meeting shall be as fixed by the Board or
as otherwise established under this Section 5.02(c). Any person
seeking to have the stockholders authorize or take corporate action by written
consent without a meeting shall, by written notice addressed to the Secretary
and delivered to the Corporation, request that a record date be fixed for such
purpose. The Board may fix a record date for such purpose which shall
be no more than ten (10) days after the date upon which the resolution
fixing the record date is adopted by the Board and shall not precede the date on
which such resolution is adopted. If the Board fails within ten
(10) days after the Corporation receives such notice to fix a record date
for such purpose, the record date shall be the day on which the first written
consent is delivered to the Corporation in the manner described in
Section 5.02(c)(ii) below unless prior action by the Board is required
under the DGCL, in which event the record date shall be at the close of business
on the day on which the Board adopts the resolution taking such prior
action.
(ii)
(A) Every written consent purporting to take or authorizing the taking of
corporate action and/or related revocations (each such written consent and
related revocation is referred to in this Section 5.02(c)(ii) of these
Bylaws as a “Consent”) shall bear
the date of signature of each stockholder who signs the Consent, and no Consent
shall be effective to take the corporate action referred to therein unless,
within sixty (60) days of the earliest dated Consent delivered in the
manner required by this Section 5.02(c)(ii), Consents signed by a
sufficient number of stockholders to take such action are so delivered to the
Corporation.
(B) A
Consent shall be delivered to the Corporation by delivery to its registered
office in the State of Delaware, its principal place of business, or an officer
or agent of the Corporation having custody of the book in which proceedings of
meetings of stockholders are recorded. Delivery to the Corporation’s
registered office shall be made by hand or by certified or registered mail,
return receipt requested.
(C) In
the event of the delivery to the Corporation of a Consent, the Secretary shall
provide for the safe-keeping of such Consent and shall promptly conduct such
ministerial review of the sufficiency of the Consents and of the validity of the
action to be taken by stockholder consent as he deems necessary or appropriate,
including, without limitation, whether the holders of a number of shares having
the requisite voting power to authorize or take the action specified in the
Consent have given consent; provided, however, that if the corporate action to
which the Consent relates is the removal or replacement of one or more members
of the Board, the Secretary shall promptly designate two persons, who shall not
be members of the Board, to serve as inspectors with respect to such Consent and
such inspectors shall discharge the functions of the Secretary under this
Section 5.02(c)(ii). If after such investigation the Secretary
or the inspectors (as the case may be) shall determine that the Consent is valid
and that the action therein specified has been validly authorized, that fact
shall forthwith be certified on the records of the Corporation kept for the
purpose of recording the proceedings of meetings of stockholders, and the
Consent shall be filed in such records, at which time the Consent shall become
effective as stockholder action. In conducting the investigation
required by this Section 5.02(c)(ii), the Secretary or the inspectors (as
the case may be) may, at the expense of the Corporation, retain special legal
counsel and any other necessary or appropriate professional advisors, and such
other personnel as they may deem necessary or appropriate to assist them, and
shall be fully protected in relying in good faith upon the opinion of such
counsel or advisors.”
PROPOSAL
9. REQUIRE
75% OF THE DIRECTORS THEN IN OFFICE TO APPROVE CHANGES TO STOCKHOLDER ADOPTED OR
AMENDED BYLAWS UNLESS APPROVED BY THE STOCKHOLDERS
Article
VI, Section 6.01, presently reads in its entirety:
“Amendment or Repeal by the
Board. Except as otherwise provided by the DGCL or the
Certificate, these Bylaws may be amended or repealed, in whole or in part, by
the affirmative vote of not less than a majority of the Board of Directors at
any regular or special meeting of the Board provided that notice of such
proposed amendment or repeal to be made is included in the notice of the meeting
at which such action takes place, which shall also include, without limitation,
the text of any such proposed amendment and/or any resolution calling for any
such amendment or repeal.”
EXHIBIT
B
Text
of Proposed Bylaws
PROPOSAL 1. FILL BOARD VACANCIES BY A STOCKHOLDER
VOTE OR BY THE AFFIRMATIVE VOTE OF 75% OF THE DIRECTORS THEN IN
OFFICE
As
amended, Article II, Section 2.04, would read in its entirety:
“Vacancies in the
Board. Vacancies in the Board, whether resulting from death,
resignation, removal or other cause, and newly-created directorships resulting
from any increase in the number of directors may be filled either by the vote of
stockholders or by the affirmative vote of seventy-five percent (75%) of the
directors then in office, even if less than a quorum. Any director
elected in accordance with the preceding sentence of this Section shall hold
office for a term that shall coincide with the term of the class to which such
director shall have been elected or appointed and until his or her successor
shall have been duly elected and qualified, except in the event of his or her
earlier death, resignation or removal.”
PROPOSAL
2. REIMBURSEMENT
OF PROXY EXPENSES
A new
Article I, Section 1.07, would read in its entirety:
“Reimbursement of Proxy
Expenses. The Board shall cause the corporation to reimburse a
stockholder or group of stockholders (together, the “Nominator”) for
reasonable expenses (“Expenses”) incurred
in connection with nominating one or more candidates in a contested election of
directors to the Board, including, without limitation, printing, mailing, legal,
solicitation, travel, advertising and public relations expenses, if (a) the
election of fewer than 50% of the total number of authorized directors is
contested in the election, (b) one or more candidates nominated by the
Nominator are elected to the Board, (c) stockholders are not permitted to
cumulate their votes for directors, and (d) the election occurred, and the
Expenses were incurred, after this bylaw’s adoption. The amount paid
to a Nominator under this bylaw in respect of a contested election shall not
exceed the amount expended by the corporation in connection with such
election.”
PROPOSAL
3. ELECT
DIRECTORS BY MAJORITY VOTE IN UNCONTESTED ELECTIONS
A new
Article II, Section 2.03, would read in its entirety:
“Required Vote for
Directors. Unless otherwise provided by these Bylaws, each
director shall be elected by the vote of the majority of the votes cast with
respect to that director’s election at any meeting for the election of directors
at which a quorum is present, provided that if, as of the tenth (10th) day
preceding the date the Corporation first mails its notice of meeting for such
meeting to the stockholders of the Corporation, the number of nominees exceeds
the number of directors to be elected (a “Contested Election”),
the directors shall be elected by the vote of a plurality of the votes
cast. For purposes of this Section 2.03 of these Bylaws, a
majority of votes cast shall mean that the number of votes cast “for” a
director’s election exceeds the number of votes cast “against” that director’s
election (with “abstentions” and “broker nonvotes” not counted as a vote cast
either “for” or “against” that director’s election).
In order
for any incumbent director to become a nominee of the Board for further service
on the Board, such person must submit an irrevocable resignation, contingent on
(i) that person not receiving a majority of the votes cast in an election that
is not a Contested Election, and (ii) acceptance of that resignation by the
Board in accordance with the policies and procedures adopted by the Board for
such purpose. In the event an incumbent director fails to receive a
majority of the votes cast in an election that is not a Contested Election, the
nominating and governance committee, or such other committee designated by the
Board pursuant to these Bylaws, shall make a recommendation to the Board as to
whether to accept or reject the resignation of such incumbent director, or
whether other action should be taken. The Board shall act on the
resignation, taking into account the committee’s recommendation, and publicly
disclose (by a press release and filing an appropriate disclosure with the
Securities and Exchange Commission) its decision regarding the resignation and,
if such resignation is rejected, the rationale behind the decision within ninety
(90) days following certification of the election results. The
committee in making its recommendation and the Board in making its decision each
may consider any factors and other information that they consider appropriate
and relevant.
If the
Board accepts a director’s resignation pursuant to this Section 2.03, or if
a nominee for director is not elected and the nominee is not an incumbent
director, then the resulting vacancy may be filled pursuant to Article II,
Section 2.04 of these Bylaws.”
PROPOSAL
4. ALLOW
STOCKHOLDERS WITH 25% OR MORE OF THE OUTSTANDING SHARES TO CALL SPECIAL
MEETINGS
As
amended, Article I, Section 1.03(b), would read in its
entirety:
“Stockholder Requested
Special Meetings. A special meeting of stockholders shall be
called by the Secretary upon the written request of stockholders holding of
record at least 25% of the outstanding shares of the Corporation entitled to
vote at such meeting. Business transacted at a special meeting
requested by stockholders shall be limited to the purposes stated in the request
for the special meeting.”
PROPOSAL
5. LIMIT
THE CHAIR’S ABILITY TO ADJOURN A STOCKHOLDERS’ MEETING WHEN A QUORUM IS
PRESENT
As
amended, Article I, Section 1.05, would read in its entirety:
“Adjournment. The
holders of a majority of the votes entitled to be cast by the stockholders who
are present in person or by proxy may adjourn any meeting of stockholders,
annual or special, from time to time whether or not a quorum is present to
reconvene at the same or some other place. Only in the absence of a
quorum, may the chairman of the meeting adjourn any meeting of the stockholders
from time to time to reconvene at the same or some other
place. Notice need not be given of any such adjourned meeting if the
time and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the Corporation may transact any
business which might have been transacted at the original meeting. If
the adjournment is for more than thirty (30) days, or if after the adjournment a
new record date is fixed for the adjourned meeting, notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
meeting.”
And the
language underlined below would be inserted at the beginning of clause (ix) of
Article I, Section 1.04, so that clause (ix) would read in its
entirety:
“(ix) in the absence of a
quorum, adjourning the meeting to a later date, time and place announced
at the meeting by the chairman;”
PROPOSAL
6. ELIMINATE ADVANCE NOTICE PROVISIONS
Article
I, Section 1.07, and Article II, Section 2.02, would be deleted in
their entirety.
PROPOSAL
7. ELIMINATE
PRE-TEXTUAL QUESTIONNAIRES AND “AGREEMENTS” FOR DIRECTOR
NOMINEES
Article
II, Section 2.03(b), would be deleted in its entirety.
PROPOSAL
8. REMOVE
THE BOARD’S ATTEMPT TO IMPEDE THE ABILITY OF STOCKHOLDERS TO ACT BY WRITTEN
CONSENT
Article
V, Section 5.02(c), would be deleted in its entirety.
PROPOSAL
9. REQUIRE
75% OF THE DIRECTORS THEN IN OFFICE TO APPROVE CHANGES TO STOCKHOLDER ADOPTED OR
AMENDED BYLAWS UNLESS APPROVED BY THE STOCKHOLDERS
As
amended, Article VI, Section 6.01, would read in its entirety:
“Amendment or Repeal by the
Board. Except as otherwise provided by the DGCL or the
Certificate, these Bylaws may be amended or repealed, in whole or in part, by
the affirmative vote of not less than a majority of the Board of Directors at
any regular or special meeting of the Board provided that notice of such
proposed amendment or repeal to be made is included in the notice of the meeting
at which such action takes place, which shall also include, without limitation,
the text of any such proposed amendment and/or any resolution calling for any
such amendment or repeal. Notwithstanding the foregoing, any decision
by the Board to repeal, alter or amend, or to adopt or readopt any bylaw
inconsistent with a bylaw adopted or repealed, altered or amended by the
stockholders of the Corporation shall, if such repeal, alteration or amendment
is not approved by stockholders, require the affirmative vote of seventy-five
percent (75%) of the directors then in office at any regular or special meeting
of the Board.”
PRELIMINARY
COPY - SUBJECT TO COMPLETION, DATED FEBRUARY [__], 2009
[WHITE]
CONSENT CARD
CONSENT
OF STOCKHOLDERS OF PROVIDENCE TO ACTION WITHOUT A MEETING:
THIS
CONSENT IS SOLICITED BY
THE
PROVIDENCE COMMITTEE FOR ACCOUNTABILITY.
Unless
otherwise indicated below, the undersigned, a stockholder of record of The
Providence Service Corporation (the “Company”) on [______ __],
2009 (the “Record
Date”), hereby consents under Section 228(a) of the General
Corporation Law of the State of Delaware with respect to all Shares of common
stock (the “Shares”)
held by the undersigned to the taking of the following actions without a meeting
of the stockholders of the Company:
IF
NO BOX IS MARKED FOR PROPOSAL, THE UNDERSIGNED WILL BE DEEMED TO CONSENT TO SUCH
PROPOSAL. THE PROVIDENCE COMMITTEE FOR ACCOUNTABILITY RECOMMENDS
THAT YOU CONSENT TO PROPOSALS 1-9.
|
1.
|
To
provide that vacancies and newly-created directorships may be filled
either by the vote of stockholders or by the affirmative vote of 75% of
the directors then in
office,
|
o |
|
o |
|
o |
Consent
|
|
Withhold
Consent
|
|
Abstain
|
|
2.
|
To
provide that a stockholder or group of stockholders that succeeds in
having one or more of its nominees elected to the Board in a contested
election (if fewer than 50% of the total number of authorized directors is
contested) shall be entitled to reimbursement from the Company for
reasonable expenses incurred in connection with nominating one or more
candidates for election to the
Board,
|
o |
|
o |
|
o |
Consent
|
|
Withhold
Consent
|
|
Abstain
|
|
3.
|
To
provide for majority voting in the election of directors in uncontested
elections,
|
o |
|
o |
|
o |
Consent
|
|
Withhold
Consent
|
|
Abstain
|
|
4.
|
To
reduce the percentage of stock holdings required for stockholders to call
special meetings of stockholders from 50% to 25% and eliminate the
additional limitations imposed on the stockholders’ ability to call
special meetings by the Board’s recent amendments to the
Bylaws,
|
o |
|
o |
|
o |
Consent
|
|
Withhold
Consent
|
|
Abstain
|
|
5.
|
To
limit the ability of the chairman to adjourn stockholder meetings to a
later date, time and place to situations where no quorum is
present,
|
o |
|
o |
|
o |
Consent
|
|
Withhold
Consent
|
|
Abstain
|
|
6.
|
To
eliminate the advance notice requirements for stockholders to propose
business to be brought before an annual meeting of stockholders and the
advance notice requirements for stockholders to nominate persons for
election to the Board at an annual or special meeting of
stockholders,
|
o |
|
o |
|
o |
Consent
|
|
Withhold
Consent
|
|
Abstain
|
|
7.
|
To
eliminate the additional requirements imposed on persons nominated for
election to the Board by the Board’s recent bylaw amendments, including
the requirement that nominees deliver a written questionnaire with respect
to such person’s background and qualifications and enter into a
undisclosed “Prospective Director Agreement”, which can only be obtained
by requesting it from the Company,
|
o |
|
o |
|
o |
Consent
|
|
Withhold
Consent
|
|
Abstain
|
|
8.
|
To
eliminate the additional procedural requirements imposed on stockholders
proposing to act by written consent by the Board’s recent Bylaw
amendments, and
|
o |
|
o |
|
o |
Consent
|
|
Withhold
Consent
|
|
Abstain
|
|
9.
|
To
provide that any decision by the Board to repeal, alter or amend any bylaw
adopted by the stockholders of the Company shall, if such repeal,
alteration or amendment has not been approved by the stockholders, require
the affirmative vote of 75% of the directors then in
office.
|
o
|
|
o |
|
o |
Consent
|
|
Withhold
Consent
|
|
Abstain
|
Each
Proposal is independent of the others. A Proposal’s effectiveness is
not subject to, or conditioned upon, the effectiveness of the other
Proposals.
IN
THE ABSENCE OF DISSENT OR ABSTENTION BEING INDICATED ABOVE, THE UNDERSIGNED
HEREBY CONSENTS TO EACH ACTION LISTED ABOVE.
IN
ORDER FOR YOUR CONSENT TO BE VALID, IT MUST BE DATED.
Date:
_________________, 2009
|
|
Signature:
|
___________________________________________
|
Signature
(if held jointly)
|
___________________________________________
|
Title(s):
|
___________________________________________
|
Please
sign exactly as name appears on stock certificates or on label affixed
hereto. When shares are held by joint tenants, both should
sign. In case of joint owners, EACH joint owner should
sign. When signing as attorney, executor, administrator, trustee,
guardian, corporate officer, etc., give full title as such.
THIS
SOLICITATION IS BEING MADE BY THE PROVIDENCE COMMITTEE FOR ACCOUNTABILITY AND
NOT ON BEHALF OF THE COMPANY.
PLEASE
SIGN, DATE AND MAIL YOUR CONSENT PROMPTLY IN THE POSTAGE-PAID ENVELOPE
ENCLOSED.