Page 8 of 13 – SEC Filing
Reporting Persons, and the availability of shares of Common Stock at prices that would make the purchase or sale of such shares desirable, the Reporting Persons may endeavor to increase or
decrease their position in the Issuer through, among other things, the purchase or sale of shares of Common Stock on the open market or in private transactions or otherwise, on such terms and at such times as the Reporting Persons may deem
advisable.
As a shareholder of more than three years, HCPF has actively followed the Companys performance and engaged in over a dozen discussions
with the one or more members of the Issuers management and Board of Directors (the Board). These discussions reviewed various topics including, but not limited to, manufacturing and production, capital allocation, sales and
marketing, investor relations, and corporate governance.
As a result of these discussions and continued lack of progress, HCPF issued a letter on
December 16, 2016 to the Board advocating that the Company be more proactive, more transparent and take steps to strengthen its Board. A copy of the December 16, 2016 Letter and subsequent Press Release in connection therewith, are filed
as Exhibits 3 and 4, respectively, to this Schedule 13D and are incorporated herein by reference.
In subsequent communications, the Company indicated
that they are conducting a Board evaluation process and invited HCPF to suggest candidates for consideration. Therefore, on March 3, 2017, HCPF, in compliance with the bylaws of the Issuer, submitted its formal notice of intent (the
Notice or Nomination Letter) to nominate candidates for election to the Board and present a shareholder proposal at the 2017 annual meeting of shareholders of the Issuer. A copy of the Notice is filed herewith as Exhibit 5
and is incorporated herein by reference.
The Notice stated that, at the Annual Meeting, HCPF intended to nominate for election as directors of the
Issuer, (i) Thomas J. Coffey, (ii) Mitchell H. Herbets, (iii) Michael J. Howe (iv) Leo L. Linehan and (v) Matthew Moynihan (collectively, the Nominees). HCPF believes that the Nominees would help create value for
shareholders if they were elected to the Board because the Nominees have experience that the incumbent Board lacks, and will bring fresh perspectives and improve oversight of the Issuer. Importantly, the Nominees are proven business leaders who are
committed to working with current management to accelerate growth, reduce cost, improve governance and transparency, and ultimately create value for all shareholders of the Issuer.
In the Nomination Letter, HCPF noted that there are four (4) directors currently serving whose terms expire at the Annual Meeting. If this remains the
case, Horton intends to withdraw the one (1) of its Nominees. Notwithstanding the forgoing, HCPF reserved the right to further nominate, substitute or add additional persons in the event that the Issuer purports to increase the number of
directorships.
HCPF also submitted a shareholder proposal (the Shareholder Proposal) for consideration at the 2017 Annual Meeting proposing
an amendment to Section 1.9 of the Issuers By-Laws to establish a majority vote standard in uncontested director elections. Under the Companys current plurality vote standard, a director
nominee can be elected with as little as a single affirmative vote, even if a substantial majority of the withheld votes are cast against the nominee. HCPF believes that a majority vote standard in uncontested director elections
establishes an appropriate vote standard for nominees, enhances accountability, and improves the performance of boards and individual directors and better aligns the Companys corporate governance policies with that of 2017 ISS proxy voting
guidelines.
After submitting the Notice and Shareholder Proposal, HCPF received no feedback from the Company regarding the Nominees or the Shareholder
Proposal and was not aware of any outreach made from the Issuer to any of the Nominees. While some subsequent discussions were had between the Issuer and HCPF, these discussions terminated on March 16, 2017 with HCPFs rejection of the
Issuers only settlement proposal to nominate one new member at an undefined time in the future without Hortons input in exchange for a two year standstill.
