Thank you to the individual investor that questioned the anti takeover proposal in the Proxy. Hopefully this proposal will be voted down.
here is the explanation of the proposal from the proxy(emphasis added);
Our certificate of incorporation presently provides that stockholders
holding a majority of our outstanding stock may remove any director from our
board of directors for any reason. The remaining directors have the exclusive
power to fill vacancies on our board, whether the vacancy results from the
removal of a director or from another cause. We propose to change the
certificate of incorporation and our bylaws to provide that our stockholders may
only remove a director for cause and only with the vote of stockholders holding
80% of the outstanding voting stock. We also proposed to change the certificate
of incorporation and bylaws to state that the provisions concerning removal of
directors may only be amended with the vote of stockholders holding 80% of the
outstanding voting stock. Our board of directors has already approved this
proposed amendment, and we discuss below our reasons for initiating this change.
REASONS FOR THE AMENDMENT
We are proposing this change in our certificate of incorporation to help
protect our stockholders from a coercive or unwelcome attempt by third parties
to influence the management or direction of our company. These parties could
purchase significant amounts of our stock in order to use a controlling block of
stock to force us to enter into a specific transaction or to prevent us from
doing so. The parties might attempt to replace all or part of our board (which,
in most cases, would have been elected by the stockholders at the immediately
preceding annual meeting) rather than consult with our management about the
proposed transaction. We recommend adoption of this proposed amendment to
prevent one or a small group of stockholders from removing members of our board
in order to control a specific business decision. We believe that our company
and our stockholders are better served if our board has the time and information necessary for
careful evaluation of any proposed transaction and all of the alternatives.
Therefore, we believe that permitting removal of our directors only for cause
and requiring that 80% of our stockholders vote in favor of that removal would
provide our board with the flexibility to give any proposed transaction the
required consideration. We believe that the proposed amendment's special
requirements for amending the certificate of incorporation and bylaws would
further protect us from unsolicited takeover attempts. For example, the super-
majority requirement for amending the removal of directors provisions would
prevent one or a small group of stockholders from avoiding the requirement of
obtaining an 80% stockholder vote to remove a director by simply amending the
certificate of incorporation and bylaws to delete the provisions. This amendment
would encourage persons seeking to acquire control of our company to initiate
arm's-length negotiations with our board and management. We believe undertaking
transactions in this manner best preserves continuity in our management and
business strategy.
TEXT OF THE AMENDMENTS
The actual text of the proposed amendments to the first sentence of Article
FIFTH of our certificate of incorporation and Article EIGHTH is underlined and
reads as follows:
A. Removal
Except as otherwise provided pursuant to the provisions of this Certificate
of Incorporation or a certificate of designations relating to the rights of the
holders of any class or series of Preferred Stock, voting separately by class or
series, to elect directors under specified circumstances, any director or
directors may be removed from office at any time, but only for cause and by the
affirmative vote of the holders of at least eighty percent (80%) of the
outstanding stock of the Corporation then entitled to vote generally for the
election of directors, given at a duly called annual or special meeting of
stockholders.
EIGHTH: The Corporation reserves the right at any time and from time to
time to amend, alter, change or repeal any provision contained in this
Certificate of Incorporation and other provisions authorized by the laws of the
State of Delaware at the time in force may be added or inserted, in the manner
now or hereafter prescribed by law, except that the first sentence of Section A
of Article FIFTH and this clause of this Article EIGHTH may not be amended,
altered, changed or repealed except by affirmative vote of a least eighty
percent (80%) of the shares entitled to vote thereon.
OTHER EFFECTS OF PROPOSAL NO. 2 AND PROPOSAL NO. 3
Adoption of the proposed amendments to our certificate of incorporation may
have the effect of making it more difficult for a third party to take control of
our company, either by a tender offer for our stock or otherwise. Instead, these
proposals may encourage a third party who intends to take control of our company
to negotiate with our board of directors. We believe that this procedure is in
the best interest of you, the stockholders. However, eliminating stockholder
action by written consent could limit your ability to participate in
transactions favored by a majority of stockholders that might have occurred in
the absence of the requirement that it be considered at a duly called meeting of
stockholders. Both of the amendments could also increase the likelihood that our
management and the board retain control of the company, if a majority of
stockholders desired a change in control of the company but were precluded by
these amendments from effecting such a change through a written consent or
removal of directors without cause. A
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stockholder who holds a large block of our stock may find it more difficult to
assume control of our company and remove our management without our board's
consent. The proposed amendments may also make it more difficult for a third
party to wage a proxy contest or complete a merger with our company. In some
cases, action by written consent might permit stockholders to more rapidly take
an action that our board of directors opposes than would be possible if
stockholders could only take that action at a meeting. Also, a group of
stockholders might find it easier to control our company's business if they
could replace members of the board with their own nominees.
We are not making these two proposals in response to any action by a
minority stockholder or group of stockholders to acquire greater influence in
the management of our business or gain board representation. We are not aware of
any effort of that type by any group of stockholders. Furthermore, we are not
making these proposals in response to any attempt to acquire control of us and
we are not aware of any attempt of this type. Other than these two proposals,
our board does not currently contemplate recommending to the stockholders for
approval any further measures that would affect the ability of third parties to
effect a change control of our company.
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