Page 10 of 17 – SEC Filing On January 21, 2015, Mr. DeMarco submitted a letter to the Chairman
of the Board outlining his concerns with the Board’s decision on January 19, 2015, to (i) create a special committee that
has the full authority to take “all actions” and make all decisions that the “full Board would be empowered to
take or make”; and (ii) exclude Mr. DeMarco, and Mr. DeMarco alone, from this “Super Committee”. The letter asserts
that the formation of such a committee is premised upon an alleged conflict of interest between SCM and other non-management stockholders
that is non-existent. It further states that the Board ignored the potential conflicts of other directors, and deliberately crafted
the committee in an overly broad manner to effectively exclude Mr. DeMarco from all Board business. The letter also notes that
the stockholders of the Issuer must soon determine how to best respond to the Board’s actions and that non-management stockholders
have tolerated negative stockholder returns, poor governance and limited accountability at the Issuer for far too long. A copy
of the letter is attached as Exhibit D and incorporated herein by reference.
On February 4, 2015, Mr. DeMarco submitted a letter to the Chairman
of the Board in response to a letter from the Chairman to Mr. DeMarco dated January 30, 2015. Mr. DeMarco’s letter reiterates
that there is no conflict between SCM and other non-management stockholders, and examines the potential conflicts of the other
current members of the Board. Further, the letter corrects certain misstatements made by the Chairman regarding SCM’s history
of governance concerns with the Issuer and motivations for seeking governance improvements. In addition, the letter asserts that
the Chairman continues to be deliberately vague about the scope and purpose of the “Super Committee” formed on January
19, 2015. Finally, the letter refutes the insinuation that Mr. DeMarco has improperly shared confidential Board matters. A copy
of the letter is attached as Exhibit E and incorporated herein by reference.
On March 17, 2015, SCP submitted a letter to the Issuer (the “Nomination
Letter”) nominating Dominic P. DeMarco, Nicholas Donatiello, Jr. and Michael J. McConnell (collectively, the “Nominees”)
for election to the Board at the Issuer’s 2015 Annual Meeting of Stockholders. In its Nomination Letter, SCP also reserved
the right to further nominate, substitute or add additional persons in the event that (a) the Issuer purports to increase the number
of directorships; (b) the Issuer makes or announces any changes to its bylaws or takes or announces any other action that purports
to have, or if consummated would purport to have, the effect of disqualifying any of the Nominees; or (c) any of the Nominees is
unable or hereafter becomes unwilling for any reason to serve as a director.
On March 17, 2015, SCM issued a press release regarding the submission
of the Nomination Letter and containing the text of a letter submitted to the Chairman of the Board. Among other things, the letter
highlights the Issuer’s underperformance over the last one, five and ten years relative to its peer group, the S&P 600
Retailing Index and the Russell 2000. In addition, the letter notes the Issuer’s poor governance practices and the need for
a fresh perspective on the Board. The press release is attached as Exhibit F and incorporated herein by reference.
On April 30, 2015, (i) the Issuer, (ii) SCM, SCMGP, SCP and SQP
(collectively, “Stadium”), (iii) Mr. DeMarco and (iv) Nicholas Donatiello, Jr. entered into a Settlement Agreement
(the “Settlement Agreement”). Under the terms of the Settlement Agreement, in addition to David R. Jessick, the Issuer
agreed to nominate Mr. DeMarco for re-election and Mr. Donatiello for election to the Board at the 2015 Annual Meeting as Class
A Directors.
The Issuer also agreed to expand the Board from seven to eight members
and appoint Robert C. Galvin to the Board as a Class A Director as soon as practicable after the 2015 Annual Meeting. If Mr. Galvin
is not available to serve as a director, then the Issuer and Stadium will agree upon one candidate from a pool of candidates identified
by an executive search firm.
Page 10 of 17
On January 21, 2015, Mr. DeMarco submitted a letter to the Chairman
of the Board outlining his concerns with the Board’s decision on January 19, 2015, to (i) create a special committee that
has the full authority to take “all actions” and make all decisions that the “full Board would be empowered to
take or make”; and (ii) exclude Mr. DeMarco, and Mr. DeMarco alone, from this “Super Committee”. The letter asserts
that the formation of such a committee is premised upon an alleged conflict of interest between SCM and other non-management stockholders
that is non-existent. It further states that the Board ignored the potential conflicts of other directors, and deliberately crafted
the committee in an overly broad manner to effectively exclude Mr. DeMarco from all Board business. The letter also notes that
the stockholders of the Issuer must soon determine how to best respond to the Board’s actions and that non-management stockholders
have tolerated negative stockholder returns, poor governance and limited accountability at the Issuer for far too long. A copy
of the letter is attached as Exhibit D and incorporated herein by reference.
On February 4, 2015, Mr. DeMarco submitted a letter to the Chairman
of the Board in response to a letter from the Chairman to Mr. DeMarco dated January 30, 2015. Mr. DeMarco’s letter reiterates
that there is no conflict between SCM and other non-management stockholders, and examines the potential conflicts of the other
current members of the Board. Further, the letter corrects certain misstatements made by the Chairman regarding SCM’s history
of governance concerns with the Issuer and motivations for seeking governance improvements. In addition, the letter asserts that
the Chairman continues to be deliberately vague about the scope and purpose of the “Super Committee” formed on January
19, 2015. Finally, the letter refutes the insinuation that Mr. DeMarco has improperly shared confidential Board matters. A copy
of the letter is attached as Exhibit E and incorporated herein by reference.
On March 17, 2015, SCP submitted a letter to the Issuer (the “Nomination
Letter”) nominating Dominic P. DeMarco, Nicholas Donatiello, Jr. and Michael J. McConnell (collectively, the “Nominees”)
for election to the Board at the Issuer’s 2015 Annual Meeting of Stockholders. In its Nomination Letter, SCP also reserved
the right to further nominate, substitute or add additional persons in the event that (a) the Issuer purports to increase the number
of directorships; (b) the Issuer makes or announces any changes to its bylaws or takes or announces any other action that purports
to have, or if consummated would purport to have, the effect of disqualifying any of the Nominees; or (c) any of the Nominees is
unable or hereafter becomes unwilling for any reason to serve as a director.
On March 17, 2015, SCM issued a press release regarding the submission
of the Nomination Letter and containing the text of a letter submitted to the Chairman of the Board. Among other things, the letter
highlights the Issuer’s underperformance over the last one, five and ten years relative to its peer group, the S&P 600
Retailing Index and the Russell 2000. In addition, the letter notes the Issuer’s poor governance practices and the need for
a fresh perspective on the Board. The press release is attached as Exhibit F and incorporated herein by reference.
On April 30, 2015, (i) the Issuer, (ii) SCM, SCMGP, SCP and SQP
(collectively, “Stadium”), (iii) Mr. DeMarco and (iv) Nicholas Donatiello, Jr. entered into a Settlement Agreement
(the “Settlement Agreement”). Under the terms of the Settlement Agreement, in addition to David R. Jessick, the Issuer
agreed to nominate Mr. DeMarco for re-election and Mr. Donatiello for election to the Board at the 2015 Annual Meeting as Class
A Directors.
The Issuer also agreed to expand the Board from seven to eight members
and appoint Robert C. Galvin to the Board as a Class A Director as soon as practicable after the 2015 Annual Meeting. If Mr. Galvin
is not available to serve as a director, then the Issuer and Stadium will agree upon one candidate from a pool of candidates identified
by an executive search firm.
| Page 10 of 17 |
