Page 10 of 15 – SEC Filing 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 was
attached as Exhibit D to the Filers’ prior Schedule 13D and incorporated therein 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 was attached as Exhibit E to the Filers’ prior Schedule 13D and incorporated therein 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 was attached as Exhibit F to the Filers’ prior Schedule
13D and incorporated therein 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.
The Issuer also agreed to recommend that the
stockholders of the Issuer vote at the 2015 Annual Meeting in favor of (i) the Issuer’s precatory proposal (the “Majority
Voting Proposal”) regarding the implementation of a majority voting standard in uncontested elections of directors (a “Majority
Voting Standard”); (ii) the Issuer’s precatory proposal (the “Supermajority Voting Proposal”) regarding
the elimination of certain provisions in the Issuer’s charter and bylaws that require the affirmative vote of at least 80%
of the voting power of all of the Issuer’s then-outstanding shares of common stock (the “Supermajority Voting Provisions”);
and (iii) SCM’s stockholder proposal relating to the elimination of the classified structure of the Board (the “Declassified
Board Proposal”).
If the Majority Voting Proposal receives a
majority of the votes cast at the 2015 Annual Meeting with respect to such proposal, then, within 30 days after the 2015 Annual
Meeting, the Board will take all actions necessary to amend the Issuer’s bylaws to implement a Majority Voting Standard.
If the Supermajority Voting Proposal receives
a majority of the votes cast at the 2015 Annual Meeting with respect to such proposal, then, at the Issuer’s 2016 Annual
Meeting of Stockholders (the “2016 Annual Meeting”), the Board will present to the stockholders of the Issuer, and
will recommend that the stockholders of the Issuer vote in
10
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 was
attached as Exhibit D to the Filers’ prior Schedule 13D and incorporated therein 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 was attached as Exhibit E to the Filers’ prior Schedule 13D and incorporated therein 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 was attached as Exhibit F to the Filers’ prior Schedule
13D and incorporated therein 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.
The Issuer also agreed to recommend that the
stockholders of the Issuer vote at the 2015 Annual Meeting in favor of (i) the Issuer’s precatory proposal (the “Majority
Voting Proposal”) regarding the implementation of a majority voting standard in uncontested elections of directors (a “Majority
Voting Standard”); (ii) the Issuer’s precatory proposal (the “Supermajority Voting Proposal”) regarding
the elimination of certain provisions in the Issuer’s charter and bylaws that require the affirmative vote of at least 80%
of the voting power of all of the Issuer’s then-outstanding shares of common stock (the “Supermajority Voting Provisions”);
and (iii) SCM’s stockholder proposal relating to the elimination of the classified structure of the Board (the “Declassified
Board Proposal”).
If the Majority Voting Proposal receives a
majority of the votes cast at the 2015 Annual Meeting with respect to such proposal, then, within 30 days after the 2015 Annual
Meeting, the Board will take all actions necessary to amend the Issuer’s bylaws to implement a Majority Voting Standard.
If the Supermajority Voting Proposal receives
a majority of the votes cast at the 2015 Annual Meeting with respect to such proposal, then, at the Issuer’s 2016 Annual
Meeting of Stockholders (the “2016 Annual Meeting”), the Board will present to the stockholders of the Issuer, and
will recommend that the stockholders of the Issuer vote in
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