UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C.
20549
SCHEDULE 14A
(Rule
14a-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
(Amendment
No. 2)
Filed by
the Registrant o
Filed by
a Party other than the Registrant x
Check the
appropriate box:
x Preliminary
Proxy Statement
¨ Confidential,
for Use of the Commission Only (as permitted by Rule14a-6(e)(2))
¨ Definitive
Proxy Statement
¨ Definitive
Additional Materials
o Soliciting
Material Under Rule 14a-12
|
Specialty
Underwriters' Alliance,
Inc.
|
|
(Name
of Registrant as Specified in Its Charter)
|
|
Hallmark
Financial Services, Inc.
American
Hallmark Insurance Company of Texas
Hallmark
Specialty Insurance Company
Mark
E. Schwarz
C.
Gregory Peters
Mark
E. Pape
Robert
M. Fishman
|
|
(Name
of Persons(s) Filing Proxy Statement, if Other Than the
Registrant)
|
Payment
of Filing Fee (Check the appropriate box):
x No
fee required.
¨ Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title
of each class of securities to which transaction applies:
(2) Aggregate
number of securities to which transaction applies:
|
|
(3)
|
Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was
determined):
|
(4) Proposed
maximum aggregate value of transaction:
(5) Total
fee paid:
¨ Fee
paid previously with preliminary materials:
¨ Check
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 filing.
(1) Amount
previously paid:
(2) Form,
Schedule or Registration Statement No.:
(3) Filing
Party:
(4) Date
Filed:
PRELIMINARY
COPY - SUBJECT TO COMPLETION, DATED APRIL 2, 2009
HALLMARK
FINANCIAL SERVICES, INC.
April __,
2009
Dear
Fellow Stockholder:
Hallmark
Financial Services, Inc. (“Hallmark” or “we”), together with its subsidiaries,
is the beneficial owner of an aggregate of 1,429,615 shares of Common Stock of
Specialty Underwriters’ Alliance, Inc. (“SUA” or the “Company”), representing
approximately 9.9% of the outstanding Common Stock of the
Company. For the reasons set forth in the attached Proxy Statement,
we do not believe the Board of Directors of the Company is acting in the best
interests of its stockholders. We are therefore seeking your support
at the annual meeting of stockholders (the “Annual Meeting”) scheduled to be
held in the Lake County Room located at 222 South Riverside Plaza, 19th Floor,
Chicago, IL 60606 on Tuesday, May 5, 2009 at 9:00 a.m., local time, for the
following:
|
|
1.
|
to
elect Hallmark’s slate of three director nominees to the Company’s Board
of Directors in opposition to three of the Company’s incumbent
directors;
|
|
|
2.
|
to
ratify the appointment of PricewaterhouseCoopers LLP as the independent
registered public accounting firm of the Company for the fiscal year
ending December 31, 2009; and
|
|
|
3.
|
to
transact such other business as may properly come before the Annual
Meeting, or any adjournment
thereof.
|
Through
the attached Proxy Statement, we are soliciting proxies to elect not only our
three director nominees, but also the candidates who have been nominated by SUA
other than _______, ______ and _______. This gives stockholders the
ability to vote for the total number of directors up for election at the Annual
Meeting. The names, backgrounds and qualifications of SUA’s nominees,
and other information about them, can be found in the Company’s proxy
statement. There is no assurance that any of SUA’s nominees will
serve as directors if our nominees are elected.
We urge
you to carefully consider the information contained in the attached Proxy
Statement and then support our efforts by signing, dating and returning the
enclosed GOLD proxy card
today. The attached Proxy Statement and the enclosed GOLD proxy card are first
being furnished to the stockholders on or about April __, 2009.
If you
have already voted a proxy card furnished by the Company’s management, you have
every right to change your votes by signing, dating and returning a later dated
proxy.
If you
have any questions or require any assistance with your vote, please contact
MacKenzie Partners, Inc., which is assisting us, at their address and toll-free
numbers listed on the following page.
Thank you
for your support,
Mark E.
Schwarz
Director
& Executive Chairman
Hallmark
Financial Services, Inc.
If
you have any questions, require assistance in voting your GOLD proxy card,
or
need additional copies of Hallmark’s proxy materials, please call
MacKenzie
Partners, Inc. at the phone numbers listed below.
105
Madison Avenue
New York,
New York 10016
(212)
929-5500 (Call Collect)
proxy@mackenziepartners.com
or
CALL
TOLL FREE (800) 322-2885
ANNUAL
MEETING OF STOCKHOLDERS
OF
SPECIALTY
UNDERWRITERS’ ALLIANCE, INC.
_________________________
PROXY
STATEMENT
OF
HALLMARK
FINANCIAL SERVICES, INC.
_________________________
PLEASE
SIGN, DATE AND MAIL THE ENCLOSED GOLD PROXY CARD TODAY
Hallmark
Financial Services, Inc., a Nevada corporation (“Hallmark” or “we”), together
with its subsidiaries, is one of the largest stockholders of Specialty
Underwriters’ Alliance, Inc., a Delaware corporation (“SUA” or the
“Company”). We are writing to you in connection with the election of
three director nominees to the board of directors of SUA (the “Board”) at the
annual meeting of stockholders scheduled to be held in the Lake County Room
located at 222 South Riverside Plaza, 19th Floor,
Chicago, IL 60606 on Tuesday, May 5, 2009 at 9:00 a.m., local time, including
any adjournments or postponements thereof and any meeting which may be called in
lieu thereof (the “Annual Meeting”). This proxy statement (the “Proxy
Statement”) and the enclosed GOLD proxy card are first
being furnished to stockholders on or about April __, 2009.
This
Proxy Statement and the enclosed GOLD proxy card are being
furnished to stockholders of SUA by Hallmark in connection with the solicitation
of proxies from the Company’s stockholders for the following:
|
|
1.
|
the
election of Hallmark’s director nominees, Robert M. Fishman, Mark E. Pape
and C. Gregory Peters (the “Nominees”), to serve as directors of SUA, in
opposition to the Company’s incumbent directors whose terms expire at the
Annual Meeting;
|
|
|
2.
|
the
ratification of the appointment of PricewaterhouseCoopers LLP as the
independent registered public accounting firm of the Company for the
fiscal year ending December 31, 2009;
and
|
|
|
3.
|
the
transaction of such other business as may properly come before the Annual
Meeting, or any adjournment
thereof.
|
This
Proxy Statement is soliciting proxies to elect not only our three director
nominees, but also the candidates who have been nominated by SUA other than
_______, ______ and _______. This gives stockholders who wish to vote
for our three nominees the ability to vote for a full slate of seven
nominees.
Hallmark,
American Hallmark Insurance Company of Texas (“AHIC”), Hallmark Specialty
Insurance Company (“HSIC”), Mark E. Schwarz (Mr. Schwarz together with Hallmark,
AHIC and HSIC, the “Hallmark Parties”), Robert M. Fishman, Mark E. Pape and C.
Gregory Peters are members of a group formed in connection with this proxy
solicitation and are deemed participants in this proxy
solicitation.
SUA has
set the record date for determining stockholders entitled to notice of and to
vote at the Annual Meeting as March 25, 2009 (the “Record Date”). The
mailing address of the principal executive offices of SUA is 222 South Riverside
Plaza, Chicago, Illinois 60606. Stockholders of record at the close
of business on the Record Date will be entitled to vote at the Annual
Meeting. According to SUA, as of the Record Date, there were
14,437,355 shares of common stock, $0.01 par value per share (the “Shares”)
outstanding and entitled to vote at the Annual Meeting. As of the
Record Date, Hallmark, along with all of the participants in this solicitation,
were the beneficial owners of an aggregate of 1,429,615 Shares, which represents
approximately 9.9% of the Shares outstanding (based on the Company’s proxy
statement). The participants in this solicitation intend to vote such
Shares (i) for the election of the Nominees and (ii) for the ratification of the
appointment of PricewaterhouseCoopers LLP as described herein.
THIS
SOLICITATION IS BEING MADE BY HALLMARK AND NOT ON BEHALF OF THE BOARD OF
DIRECTORS OR MANAGEMENT OF SUA. HALLMARK IS NOT AWARE OF ANY OTHER
MATTERS TO BE BROUGHT BEFORE THE ANNUAL MEETING. SHOULD OTHER
MATTERS, WHICH HALLMARK IS NOT AWARE OF A REASONABLE TIME BEFORE THIS
SOLICITATION, BE BROUGHT BEFORE THE ANNUAL MEETING, THE PERSONS NAMED AS PROXIES
IN THE ENCLOSED GOLD
PROXY CARD WILL VOTE ON SUCH MATTERS IN THEIR DISCRETION.
HALLMARK
URGES YOU TO SIGN, DATE AND RETURN THE GOLD PROXY CARD IN FAVOR OF
THE ELECTION OF ITS NOMINEES.
IF YOU
HAVE ALREADY SENT A PROXY CARD FURNISHED BY SUA’S MANAGEMENT TO THE COMPANY, YOU
MAY REVOKE THAT PROXY AND VOTE FOR THE ELECTION OF HALLMARK’S NOMINEES BY
SIGNING, DATING AND RETURNING THE ENCLOSED GOLD PROXY
CARD. THE LATEST DATED PROXY IS THE ONLY ONE THAT
COUNTS. ANY PROXY MAY BE REVOKED AT ANY TIME PRIOR TO THE ANNUAL
MEETING BY DELIVERING A WRITTEN NOTICE OF REVOCATION OR A LATER DATED PROXY FOR
THE ANNUAL MEETING TO HALLMARK, C/O MACKENZIE PARTNERS, INC. WHICH IS ASSISTING
IN THIS SOLICITATION, OR TO THE SECRETARY OF SUA, OR BY VOTING IN PERSON AT THE
ANNUAL MEETING.
Important
Notice Regarding the Availability of Proxy Materials for the Annual
Meeting
This
Proxy Statement and our GOLD proxy card are available at
www._______.com
-2-
IMPORTANT
Your
vote is important, no matter how many or how few Shares you own. We
urge you to sign, date, and return the enclosed GOLD proxy card today to vote
FOR the election of our Nominees.
|
|
·
|
If
your Shares are registered in your own name, please sign and date the
enclosed GOLD
proxy card and return it to Hallmark, c/o MacKenzie Partners, Inc., in the
enclosed envelope today.
|
|
|
·
|
If
your Shares are held in a brokerage account or bank, you are considered
the beneficial owner of the Shares, and these proxy materials, together
with a GOLD voting
form, are being forwarded to you by your broker or bank. As a
beneficial owner, you must instruct your broker, trustee or other
representative how to vote. Your broker cannot vote your Shares
on your behalf without your
instructions.
|
|
|
·
|
Depending
upon your broker or custodian, you may be able to vote either by toll-free
telephone or by the Internet. Please refer to the enclosed
voting form for instructions on how to vote electronically. You
may also vote by signing, dating and returning the enclosed voting
form.
|
Since
only your latest dated proxy card will count, we urge you not to return any
proxy card you receive from the Company. Even if you return the
management proxy card marked “withhold” as a protest against the incumbent
directors, it will revoke any proxy card you may have previously sent to
Hallmark. Remember, you can vote for our three independent nominees
only on our GOLD proxy
card. So please make certain that the latest dated proxy card you
return is the GOLD proxy
card.
If you
have any questions regarding your proxy,
or need
assistance in voting your Shares, please call:
105
Madison Avenue
New York,
New York 10016
(212)
929-5500 (Call Collect)
proxy@mackenziepartners.com
or
CALL
TOLL FREE (800) 322-2885
-3-
BACKGROUND
TO SOLICITATION
|
·
|
We
made our first investment in Shares of SUA in February
2008.
|
|
·
|
On
February 29, 2008, Mark Schwarz and Mark Morrison, our Executive Chairman
and Chief Executive Officer, respectively, met with Courtney Smith, SUA’s
Chief Executive Officer, along with SUA’s Chief Financial Officer and its
General Counsel, at SUA’s Chicago headquarters to discuss Hallmark’s and
SUA’s respective businesses.
|
|
·
|
On
March 31, 2008, Mr. Morrison had a telephone conversation with Mr. Smith,
during which the benefits and possible structure of a potential
Hallmark-SUA business combination, including by way of a stock-for-stock
transaction, were discussed.
|
|
·
|
On
April 9, 2008, SUA disclosed in a Current Report on Form 8-K that the
Company had entered into new employment agreements and a change in control
agreement with certain key employees, including Courtney Smith and Peter
Jokiel.
|
|
·
|
On
May 30, 2008, Mr. Morrison sent Mr. Smith an email outlining in greater
detail our view of the significant and compelling benefits of a potential
stock-for-stock business combination between Hallmark and
SUA. Mr. Morrison also reiterated a desire to host Mr. Smith in
Dallas, and noted that Mr. Schwarz and he would be traveling to Chicago
soon and proposed a dinner meeting. Mr. Smith responded to Mr.
Morrison’s note by email on June 2, 2008 stating the following: “Thanks
for your thoughtful note Mark….To be candid, we just do not see the kind
of strategic fit which can best benefit SUA with your
company. Thank you for your interest and great success in your
endeavors.”
|
|
·
|
Between
June 3, 2008 and June 12, 2008, we made significant additional purchases
of Shares of SUA.
|
|
·
|
On
June 13, 2008, Mr. Schwarz sent to Mr. Smith a letter proposing a dinner
meeting, and a meeting was confirmed for the evening of June 16,
2008.
|
|
·
|
On
June 16, 2008, during their dinner meeting, Mr. Schwarz handed to Mr.
Smith a private letter addressed to the Board, which also included a
specific transaction proposal (the “June 16 Letter”). In the
June 16 Letter, we set forth our willingness to enter into discussions
with the Board to pursue negotiations of a definitive merger agreement to
acquire 100% of the Shares of SUA for a price of $6.50 per share in
Hallmark stock (the “Offer”). This Offer represented a 30%
premium to the June 13, 2008 closing price of $4.99 per Share and an even
greater 37% premium to SUA’s trailing 30-day average closing price of
$4.74. The June 16 Letter further stated that (i) the Offer was
not subject to any financing contingency and (ii) the Offer was subject to
confirmatory due diligence, the negotiation of a definitive acquisition
agreement and the receipt of all necessary stockholder and regulatory
approvals. We expressed in the June 16 Letter that we were
prepared to commence due diligence and begin discussions immediately, and
because the proposed consideration would consist of Hallmark stock, that
we would also provide SUA the opportunity to conduct appropriate due
diligence. We emphasized the significant and compelling
benefits we believe existed for SUA stockholders through a Hallmark-SUA
transaction, and requested a meeting with the Board and/or management of
SUA as soon as possible to discuss the Offer in order to facilitate a
possible transaction. We noted that our senior management stood
ready to meet and answer any questions concerning our
Offer.
|
-4-
|
·
|
During
their dinner meeting, Mr. Schwarz also informed Mr. Smith that we would be
required to make an upcoming Schedule 13D filing with the SEC based on our
ownership of Shares of SUA.
|
|
·
|
Between
June 17, 2008 and June 20, 2008, Mr. Schwarz made numerous attempts to
speak with Mr. Smith and SUA’s advisors regarding the Offer but was
consistently rebuffed. In an email on June 20, 2008, Mr.
Schwarz posed the following question to Mr. Smith: “if you are endeavoring
to make the best decision possible on behalf of shareholders, why deny
yourself the benefit of having all information available to you before
making an important decision.”
|
|
·
|
On
June 23, 2008, we filed a Schedule 13D with the SEC in which we disclosed
our beneficial ownership of 9.6% of the outstanding Shares of SUA, making
us the largest SUA stockholder. Pursuant to legal requirements,
we also disclosed the fact that we had delivered the Offer to the Board on
June 16, 2008.
|
|
·
|
On
June 23, 2008, following our Schedule 13D filing, SUA publicly
acknowledged receipt of the Offer from
us.
|
|
·
|
On
June 26, 2008, by way of a press release, SUA rejected our
Offer. The brief press release stated that “[a]fter due
deliberation, the [SUA] Board unanimously concluded not to accept this
offer, remain independent and continue with the execution of its current
business strategy, which the Board believes represents a better long-term
value for the company’s
shareholders.”
|
|
·
|
On
July 1, 2008, we sent a public letter (the “July 1 Letter”) to the Board
reaffirming the Offer included in the June 16 Letter. We
reiterated that the proposed Offer price represented a significant 37%
premium to SUA’s trailing 30-day average closing price of $4.74 on June
13, 2008, the trading day prior to the delivery of the
Offer. In the July 1 Letter, we also expressed our deep
disappointment with SUA’s publicly-stated response to our Offer, and asked
how, in light of the numerous attempts we had made to speak to
representatives of SUA regarding the Offer, it was possible “that, on
behalf of [SUA] shareholders, the [SUA] Board fully and fairly considered
Hallmark’s proposal while at the same time refusing to engage us in any
dialogue?” We stated that our Offer was subject only to
confirmatory due diligence, the negotiation of a mutually satisfactory
definitive agreement and customary stockholder and regulatory
approvals. We also restated that our senior management stood
ready to meet with SUA to answer any questions regarding the
Offer.
|
|
·
|
On
July 1, 2008, we also amended our Schedule 13D filing to include the June
16 Letter and the July 1 Letter as exhibits. We also reported
beneficial ownership of 9.7% of SUA’s outstanding Shares as of July 1,
2008.
|
|
·
|
On
July 2, 2008, SUA sent a public letter to Hallmark stating that, since the
Board had previously rejected Hallmark’s Offer contained in the June 16
Letter, SUA saw no reason to reconsider that Offer. The letter
stated that the Board “thoroughly considered the Hallmark proposal” and
restated that “it unanimously concluded that the Hallmark proposal should
be rejected…”
|
-5-
|
·
|
In
its Quarterly Report filed on Form 10-Q with the SEC on August 8, 2008,
SUA disclosed that the Board had adopted amended and restated bylaws,
effective on August 5, 2008 (the “Bylaws”). The Bylaws included
certain “defensive” measures including the elimination of stockholders’
rights to fill vacancies on the Board or to call special meetings and the
addition of advance notice provisions for nominations by
stockholders.
|
|
·
|
On
January 13, 2009, we delivered a nomination letter to the Secretary of SUA
nominating the Nominees for election to the Board at the Annual
Meeting.
|
|
·
|
On
January 16, 2009, we amended our Schedule 13D filing to disclose our
nomination of the Nominees and other related agreements. We
also reported our beneficial ownership of 9.9% of SUA’s outstanding Shares
as of January 16, 2009.
|
|
·
|
On
February 26, 2009, Mr. Schwarz sent to Mr. Smith a letter proposing a
dinner meeting, and a meeting was confirmed for the evening of March 2,
2009. Mr. Schwarz was informed that, in addition to Mr. Smith,
Scott Goodreau, SUA’s General Counsel, would also attend the
meeting.
|
|
·
|
On
March 2, 2009, Mr. Schwarz, Mr. Smith and Mr. Goodreau engaged in a dinner
meeting. During the meeting a wide-ranging conversation took
place that covered a variety of topics, including, but not limited to,
general industry, economic and market conditions, recent developments in
both Hallmark’s and SUA’s respective businesses, SUA’s formation and early
history, Hallmark’s view regarding SUA’s business model, Hallmark’s
continuing interest in entering into discussions with the Board to pursue
negotiations of a definitive merger, the important differences between a
share exchange and a cash merger, and Hallmark’s reasons for delivering a
nomination letter to the Secretary of SUA nominating the Nominees for
election to the Board at the Annual
Meeting.
|
|
·
|
On
March 23, 2009, Hallmark filed an Acquisition Statement on Form A with the
Illinois Department of Insurance seeking approval to increase Hallmark’s
ownership position in the Company in excess of 10% of the Company’s
outstanding Common Stock through open market purchases of Common
Stock.
|
|
·
|
On
March 26, 2009, Mr. Schwarz delivered a letter to Mr. Smith expressing Mr.
Schwarz’s interest in meeting with members of the Board consistent with
the suggestion of Mr. Smith to Mr. Schwarz on March 2, 2009. Certain
members of the Board have agreed to meet with Mr. Schwarz at the corporate
headquarters of SUA on April 7,
2009.
|
* * * *
-6-
REASONS
FOR OUR SOLICITATION
We
believe SUA has failed to create value for its stockholders.
We
believe SUA’s stock price performance during the more than four-year period,
from its initial public offering on November 23, 2004 through December 31, 2008,
demonstrates the Company’s inability to create value for its
stockholders.
On
November 23, 2004, the Company completed its initial public offering at $9.50
per Share. On December 31, 2008, SUA’s Share price closed at $2.63,
resulting in a -72% cumulative total stockholder return during this
period. The Share price closed at $3.35 on April 1,
2009.
The
following graph illustrates, for the period of November 23, 2004 through
December 31, 2008, the significant under-performance of the cumulative total
stockholder return on SUA’s Shares compared to the cumulative total return of
the Standard & Poor’s 500 Stock Index and the S&P 500 Property &
Casualty Insurance Index.1
We believe SUA’s
inability to create value for its stockholders is also reflected in its low
growth in book value per Share.
The table
below depicts SUA’s reported book value per Share for each of the five years
ending December 31, 2008. As illustrated in this table, book value
per Share has only grown 1.6% annually during this period.
|
1
|
The
graph assumes that the Shares were purchased at the price of $100 per
Share and that the value of the investment in each Share and the indices
was $100 at the beginning of the period. The graph further
assumes the reinvestment of dividends when paid. The graph is
reprinted from SUA’s Annual Report on Form 10-K for the year ended
December 31, 2008.
|
-7-
|
Book
Value
|
|||
|
Year
|
Per
Share
|
||
|
2004
|
$ | 8.09 | |
|
2005
|
$ | 6.76 | |
|
2006
|
$ | 7.42 | |
|
2007
|
$ | 8.42 | |
|
2008
|
$ | 8.62 | |
|
Annual
growth
|
1.6% | ||
Certain
characteristics of SUA’s business may contribute to the Company’s inability to
create value for its stockholders.
We believe SUA is
overly dependent on a limited number of partner agents and has demonstrated an
inability to meaningfully grow its partner agent
relationships.
According
to SUA’s Annual Report on Form 10-K for the year ended December 31, 2008 (the
“2008 10-K”), SUA has only nine partner agents. As illustrated in the
table below, the top five partner agents in 2008 make up over 90% of SUA’s
written premiums, based on information contained in the 2008 10-K. This is
relatively unchanged from 2005, when these same five partner agents made up 100%
of SUA’s written premium, based on information contained in SUA’s Annual Report
on Form 10-K for the year ended December 31, 2006 (the “2006
10-K”). This table in our view demonstrates SUA’s inability to
meaningfully expand its partner agent relationships. We believe a
lack of premium production from any one of these partner agents could adversely
affect SUA’s business. Similarly, a reliance on any one partner agent
to produce premiums may adversely affect SUA’s business. For the year
ended December 31, 2008, SUA’s partner agent Risk Transfer Holdings, Inc.
produced approximately 44.7% of total gross written premiums as compared to
approximately 55.3% for the year ended December 31, 2005, based on information
contained in the 2008 10-K and the 2006 10-K. We believe any
deterioration of SUA’s relationship with Risk Transfer Holdings, Inc. or
decrease in its premium production could have a material adverse effect on the
Company’s results in future periods.
|
2008
|
2005
|
||||||
|
Top-5
Partner Agents
|
Percentage
of Gross Written Premium
|
Percentage
of Gross Written Premium
|
|||||
|
Risk
Transfer Holdings, Inc.
|
44.7% | 55.3% | |||||
|
American
Team Managers
|
16.0% | 24.4% | |||||
|
AEON
Insurance Managers
|
13.4% | 12.1% | |||||
|
Appalachian
Underwriters, Inc.
|
5.6% | 0.5% | |||||
|
Specialty
Risk Solutions, LLC
|
11.7% | 7.7% | |||||
|
Top-5
Total
|
91.4% | 100.0% | |||||
-8-
We believe SUA’s
“B+” rating from A.M. Best places it at a competitive
disadvantage.
We
believe competition in the types of insurance business that SUA underwrites is
based on many factors, including the perceived financial strength of the insurer
and ratings assigned by independent rating agencies. A.M. Best is
generally considered to be a significant rating agency with respect to the
evaluation of insurance companies.
In our
experience as an insurer, we are aware that certain financial institutions and
banks require property owners with loans to be insured by insurers with at least
an “A-” rating by A.M. Best. Certain other insureds choose to insure
their own property and casualty risks only with such higher-rated
insurers. It is also our experience that, due to financial
responsibility laws, we are aware some states and the federal government require
certain regulated entities to purchase mandatory insurance from insurers holding
a minimum of “A-” rating by A.M. Best. Accordingly, some agents may
be unwilling or unable to underwrite certain lines of business such as property,
long-tail liability lines and automobile liability with insurers that are not
rated at least “A-” by A.M. Best. As a result, SUA may be at a
competitive disadvantage in competing with other insurance companies that are
rated at least “A-”.
We believe SUA is
narrowly concentrated in the types of business it underwrites and in the
geographic markets it serves.
SUA
primarily chooses types and lines of businesses that do not require “A-” level
A.M. Best ratings, such as tow trucks and workers’
compensation. Based on information contained in the 2008 10-K,
workers’ compensation comprised approximately 54.8% and commercial automobile
comprised approximately 23.6% of total gross written premiums in
2008. Together these two lines of business account for approximately
78% of the Company’s 2008 total gross premiums written.
Furthermore,
based on information contained in the 2008 10-K, approximately 63% of SUA’s
business is concentrated in the states of California and
Florida. According to the 2008 10-K, Florida experienced an 18.4%
rate decrease in workers’ compensation in 2008 and an additional rate decrease
of 18.6% went into effect January 1, 2009.
We
believe SUA’s narrow concentration in the type of business it underwrites and in
geographic markets makes it difficult for the Company to compete with the large
number of U.S. and non-U.S. insurers, insurance agencies and intermediaries, and
diversified financial services companies, most of which possess greater
financial resources, broader product lines, higher ratings and stronger
financial performance than SUA. In our opinion, these factors may
impair SUA’s ability to retain existing customers and maintain or grow its
profitability and financial strength.
We
believe SUA’s expense ratio is high when compared to the average expense ratio
of the industry.
The table
below depicts SUA’s annual and average expense ratios during the last four
completed fiscal years as compared to the industry averages for the same period,
based on information provided by SNL Financial. This table shows that
SUA’s expense ratio has been significantly higher than the industry average for
each year during this period and that SUA’s expense ratio has averaged more than
fourteen percentage points higher than the industry average during this
period. We believe SUA’s high expense ratio is an inefficiency that
results from the lack of scale achieved by the Company in its
business.
-9-
|
SUA
|
Industry
|
Difference
|
|||||||
|
Expense
|
Expense
|
SUA
vs.
|
|||||||
|
Year
|
Ratio
|
Ratio
|
Industry
|
||||||
|
2005
|
48.8% | 25.8% | 23.0% | ||||||
|
2006
|
37.4% | 26.4% | 11.0% | ||||||
|
2007
|
36.7% | 27.2% | 9.5% | ||||||
|
2008
|
40.6% | 27.0% | 13.6% | ||||||
|
Average
|
40.9% | 26.6% | 14.3% | ||||||
We
believe SUA needs improved corporate governance.
We
believe that corporate governance practices and the level of board and
management accountability to stockholders are highly relevant to SUA’s Share
price and its financial performance. We believe the state of SUA’s
corporate governance is inadequate and requires significant
improvement.
We
do not believe the members of the Board have a meaningful ownership interest in
SUA.
According
to SUA’s proxy materials in connection with the Annual Meeting (the “2009 Proxy
Materials”), the directors of the Company held 612,023 Shares as of March 25,
2009 (including Shares underlying currently exercisable options and restricted
stock that vests within 60 days of March 20, 2009), constituting slightly over 4% of
the then outstanding Shares. Moreover, as the following table
illustrates, the directors’ ownership of Shares held outright (i.e., exclusive
of Shares underlying options and restricted stock) as of March 25, 2009
constituted slightly
over 1% of the then outstanding Shares, based on information contained in
the 2009 Proxy Materials.
-10-
|
Options
and
|
Shares
held
|
||||||||||
|
Director
|
Total
|
Restricted
Stock
|
Outright
|
||||||||
|
Courtney
C. Smith
|
226,481 | 202,000 | 24,481 | ||||||||
|
Peter
E. Jokiel
|
247,542 | 144,400 | 103,142 | ||||||||
|
Robert
E. Dean
|
28,500 | 20,000 | 8,500 | ||||||||
|
Raymond
C. Groth
|
27,000 | 20,000 | 7,000 | ||||||||
|
Paul
A. Philp
|
27,000 | 20,000 | 7,000 | ||||||||
|
Robert
H. Whitehead
|
28,000 | 20,000 | 8,000 | ||||||||
|
Russell
E. Zimmerman
|
27,500 | 20,000 | 7,500 | ||||||||
|
Total
|
612,023 | 446,400 | 165,623 | ||||||||
|
Ownership
Percentage
|
4.06% | 2.96% | 1.10% | ||||||||
|
Outstanding Shares
(1)
|
15,076,095 | 15,076,095 | 15,076,095 | ||||||||
(1)
represents (a) 14,437,355 Shares outstanding reported as of March 25, 2009 and
(b) (i) 594,400 Shares issuable upon exercise of options that are currently
exercisable and (ii) 44,340 shares of restricted stock of SUA which vest within
60 days of March 20, 2009, held in each case by all executive officers and
directors as a group (13 people), as set forth in the 2009 Proxy
Materials.
We
believe current employment agreements with SUA executives may also deter actions
that are in the best interests of stockholders.
At the
same time that SUA revealed that its Board had adopted certain Bylaw amendments
in August 2008 (see discussion in “Background to Solicitation”), the Company
also disclosed the full terms of eight new employment agreements and change of
control agreements the Company had recently entered into with SUA’s senior
management team, including Courtney Smith (Chairman and Chief Executive
Officer), Peter Jokiel (Chief Financial Officer), Gary Ferguson (Chief Claims
Officer), Barry Cordeiro (Chief Information Officer), Scott Goodreau (General
Counsel), Scott Charbonneau (Chief Actuary), Daniel Cacchione (Chief
Underwriting Officer) and Daniel Rohan (Controller).
Under
these agreements, SUA is obligated to make one-time payments to executives after
they depart from the Company under certain circumstances, including following a
change of control of the Company. In the case of Messrs. Smith and
Jokiel, if the executive voluntarily decides to
resign following a sale of the Company in a situation deemed to be a
“material diminution in his authority, duties or responsibility”, the executive
has the right to, in addition to his accrued salary and bonus, a lump sum
payment of three times his base
salary (which salary was $463,050 for Smith and $405,200 for Jokiel in 2008
according to SUA’s Current Report on Form 8-K filed on April 9, 2008), as well
as the acceleration of all equity awards. Other executives also
receive payments based on multiples of salary under these agreements following a
change of control. Moreover, if either Mr. Smith or Mr. Jokiel
is terminated (other than for “cause”), but such termination does not follow a
change of ownership of SUA, severance payments equal 225% of base
salary. We believe these golden parachutes serve to entrench current
management and could deter a potential value enhancing sale of SUA by making
such a sale more expensive.
-11-
We
believe the lack of separation of the Chairman and CEO roles is a fundamental
weakness at SUA.
Mr. Smith
holds both the position of CEO and Chairman of the Board. We
generally believe it is a fundamental responsibility of the Board of Directors
of any public company to protect stockholders’ interests by providing
independent oversight of management, including the CEO and the other principal
executives. This role may be strongly compromised when the CEO is
also the Chairman of the very Board charged with negotiating the CEO’s
compensation arrangements and evaluating his or her
performance. Separating the positions of Chairman of the Board and
CEO in our opinion prevents this conflict of interest, yet SUA fails to provide
for such vital separation.
We
believe the Board’s behavior last summer – refusing to engage with Hallmark and
become more educated about a credible transaction proposal – further
demonstrates the weaknesses of the Board.
Last
summer, Hallmark made a proposal to acquire SUA in a stock-for-stock transaction
that would have delivered a substantial premium to SUA stockholders at the
time. Hallmark is an insurance company nearly three times as large as
SUA, with the scale and relationships that, in our view, would greatly enhance
SUA stockholders’ prospects for future returns.
The offer
price of $6.50 in Hallmark stock for each outstanding Share of SUA represented a
significant 30% premium to SUA’s closing price of $4.99 per Share on June 13,
2008, the business day prior to delivery of the offer, and represented an even
greater 37% premium to SUA’s trailing 30-day average closing price of $4.74 per
Share on June 13, 2008. In addition, the offer in Hallmark stock
meant that stockholders’ upside potential would not be capped. In
addition to realizing an immediate significant 30% premium for their Shares, SUA
stockholders would have retained a continuing ownership interest in Hallmark and
would participate in any future gains in Hallmark shares.
Despite
Hallmark’s best efforts, including delivering and reaffirming its proposal and
its numerous attempts to meet with the SUA Board and management to discuss the
Offer, SUA’s Board rejected Hallmark’s proposal and refused to enter into
discussions with Hallmark. Hallmark was disappointed and surprised by such a
reaction.
Hallmark
believes that if a Board truly endeavors to act in the best interests of its
stockholders, it cannot deny itself the benefit of having all information
available before making an important decision for stockholders, particularly
when a transaction proposal is on the table from a credible buyer which has real
prospects to enhance stockholder value.
-12-
The
Nominees have the experience and qualifications to address SUA’s numerous
financial, business and corporate governance deficiencies.
Hallmark’s
Nominees are independent and have extensive experience in the insurance
industry, business management, finance and corporate
governance. Specifically, Robert M. Fishman and Mark E. Pape are
highly seasoned insurance industry executives as further discussed in their
biographical extracts below. C. Gregory Peters has extensive
experience analyzing insurance companies and their strategies as a financial
analyst. Both Mr. Pape and Mr. Peters possess the skills and
experience necessary to qualify as audit committee financial experts, given
their background in investment banking and research. All of the
Nominees have significant experience working for or with public companies and
all of the Nominees are entirely independent of SUA. If elected to
the SUA Board, these experienced Nominees will seek to improve SUA’s financial
performance, address the Company’s business and strategic issues and enhance its
corporate governance, while also remaining open to exploring all available
alternatives to maximize stockholder value. There can be no assurance
that the election of the Nominees will improve financial performance or
corporate governance or otherwise maximize stockholder value. If
elected, the Nominees will represent a minority of the members of the entire SUA
Board and a [majority/minority] of the independent directors of the SUA Board.
Accordingly,
if elected, the Nominees will not be in a position to compel the other directors
to consider initiatives to maximize stockholder value.
|
|
·
|
Robert
M. Fishman served as Managing Director of Southwest Insurance
Partners, Inc. in 2008 and, from November 2006 through May 2007,
was the Chief Executive Officer and President of United America Indemnity
Ltd. Mr. Fishman also held senior positions at ARAG NA and Zurich
Financial Services.
|
|
|
·
|
Mark E. Pape served as
Executive Vice President and Chief Financial Officer at Affirmative
Insurance Holdings, Inc. from November 2005 through December 2007 and
served on Affirmative’s Board of Directors from July 2004 through November
2005. Mr. Pape also held positions at Torchmark Corporation and
American Income Holding, Inc.
|
|
|
·
|
C. Gregory Peters served
as Senior Vice President, Equity Research at Raymond James and Associates
from November 1999 through June 2007, where Mr. Peters was responsible for
launching Raymond James’ sell-side research practice for the insurance
industry and served as its lead analyst for property and casualty
companies.
|
-13-
ELECTION
OF DIRECTORS
The Board
is currently composed of seven directors. The Nominees, if elected,
would hold office until the next annual meeting of stockholders and until their
successors are duly elected and qualified or until their earlier death,
resignation or removal.
THE
NOMINEES
We have
nominated a slate of highly qualified nominees who we believe possess the
expertise necessary to work with the other members of the Board to restore and
enhance stockholder value. The following information sets forth the
name, age, business address, present principal occupation, and employment and
material occupations, positions, offices, or employments for the past five years
of each of the Nominees. This information has been furnished to
Hallmark by the Nominees. The Nominees are citizens of the United
States of America.
Robert
M. Fishman (Age 59) has been
self-employed as an insurance industry consultant since January
2009. From January 2008 through January 2009, Mr. Fishman served as
Managing Director of Southwest Insurance Partners, Inc., an investment company
with operating subsidiaries in the property & casualty and life, accident
& health insurance sectors. From November 2006 through May 2007,
Mr. Fishman served as the Chief Executive Officer and President of United
America Indemnity Ltd., a provider of specialty property and casualty insurance
and reinsurance. From October 2005 through December 2006, Mr. Fishman
served as the Chief Executive Officer and President of ARAG NA, the U.S.
subsidiary of the ARAG Group, a leading provider of legal
insurance. From July 2004 through September 2004, Mr. Fishman was the
President of the insurance operations for Quanta Holdings Co., a provider of
specialty insurance and reinsurance. From January 1994 through June 2004, Mr.
Fishman was employed by Zurich Financial Services, where he served as Executive
Vice President and Chief Underwriting Officer starting January
2001. Prior to that time, Mr. Fishman also served as Chief Executive
Officer of Zurich’s Diversified Products Division (1999 through 2001) and
Executive Vice President of the Zurich Specialty Division (1994 through
1999). Prior to that time, among other positions, Mr. Fishman
held positions at Lexington Insurance Company and Progressive
Corporation. Mr. Fishman was self-employed as an insurance industry
consultant from May 2007 through January 2008 and from September 2004 through
October 2005. The principal business address of Mr. Fishman is 2316
Clover Lane, Northfield, Illinois. Mr. Fishman does not directly own,
and has not purchased or sold during the past two years, any securities of
SUA.
Mark E. Pape (Age 58) has
served as a partner at Tatum LLC, an executive services firm, since August
2008. From November 2005 through December 2007, Mr. Pape served as
Executive Vice President and Chief Financial Officer at Affirmative Insurance
Holdings, Inc., a property and casualty insurance company specializing in
non-standard automobile insurance. Mr. Pape also served on
Affirmative’s board of directors and its audit committee from July 2004 through
November 2005. Mr. Pape served as Chief Financial Officer of
HomeVestors of America, Inc., a franchisor of home acquisition services, from
September 2005 through November 2005. He served as President and
Chief Executive Officer of R.E. Technologies, Inc., a provider of software tools
to the apartment industry, from April 2002 through May 2005. He
served as Senior Vice President and Chief Financial Officer of LoanCity.com, a
start up e-commerce mortgage bank, from May 1999 through June
2001. Prior to that time, among other positions, Mr. Pape has served
as Vice President, Strategic Planning for Torchmark Corporation, a life and
health insurance holding company, Executive Vice President and Chief Financial
Officer of American Income Holding, Inc., a life insurance holding company, and
as an investment banker. Mr. Pape was self-employed as an insurance
industry consultant from December 2007 through August 2008 and from May 2005
through September 2005. The principal business address of Mr. Pape is
12050 Meadow Lake, Copper Canyon, Texas 76226. Mr. Pape does not
directly own, and has not purchased or sold during the past two years, any
securities of SUA.
-14-
C.
Gregory Peters (Age 42) has
served as Senior Vice President of Southwest Insurance Partners, Inc., an
investment company with operating subsidiaries in the property & casualty
and life, accident & health insurance sectors, since March
2009. From July 2008 through March 2009, he served as the President
and Chief Executive Officer of Remote Knowledge, Inc., a provider of
satellite-based high speed broadband equipment and services to the maritime
industry. From June 2007 through July 2008, Mr. Peters served as the
President of Muragai, LLC, a private investment company specializing in
acquisitions in the insurance industry. From November 1999 through
June 2007, Mr. Peters was Senior Vice President, Equity Research at Raymond
James and Associates, where Mr. Peters launched the firm’s sell-side research
practice for the insurance industry and was the lead analyst for property and
casualty companies. Prior to Raymond James, Mr. Peters covered the
insurance industry as a research analyst for ABN Amro and Kemper Securities. The
principal business address of Mr. Peters is 7941 Katy Freeway, #529, Houston,
Texas 77024. Mr. Peters does not directly own, and has not purchased
or sold during the past two years, any securities of
SUA.
Each of
the Nominees, as a member of a “group” for the purposes of Rule 13d-5(b)(1) of
the Securities Exchange Act of 1934, as amended, may be deemed to be a
beneficial owner of the 1,429,615 Shares beneficially owned by the Hallmark
Parties. Each of the Nominees disclaims beneficial ownership of such
Shares. For information regarding purchases and sales during the past
two years by the Hallmark Parties of securities of SUA that may be deemed to be
beneficially owned by the Nominees, see Schedule I.
The
Nominees will not receive any compensation from Hallmark for their services as
directors of SUA.
On
January 12, 2009, the Hallmark Parties (other than Mr. Schwarz) and the Nominees
(collectively, the “Group”) entered into a Joint Filing and Solicitation
Agreement in which, among other things, (i) the parties agreed to the joint
filing on behalf of each of them of statements on Schedule 13D with respect to
the securities of SUA, (ii) the parties agreed to solicit proxies to elect the
Nominees or any other person designated by the Group as directors of SUA and to
take all other action necessary or advisable to achieve the foregoing (the
“Solicitation”), and (iii) Hallmark agreed to bear all expenses incurred in
connection with the Group’s activities, including approved expenses incurred by
any of the parties in connection with the Solicitation, subject to certain
limitations. On March 30, 2009, the Joint Filing and Solicitation
Agreement was amended to add Mr. Schwarz as a party thereto. Pursuant
to letter agreements, Hallmark agreed to indemnify each of the Nominees against
any and all claims of any nature arising from the Solicitation and any related
transactions.
-15-
Other
than as stated herein, there are no arrangements or understandings between
Hallmark and any of the Nominees or any other person or persons pursuant to
which the nomination described herein is to be made, other than the consent by
each of the Nominees to be named in this Proxy Statement and to serve as a
director of SUA if elected as such at the Annual Meeting. None of the
Nominees is a party adverse to SUA or any of its subsidiaries or has a material
interest adverse to SUA or any of its subsidiaries in any material pending legal
proceedings.
YOU
ARE URGED TO VOTE FOR THE ELECTION OF THE NOMINEES ON THE ENCLOSED GOLD PROXY
CARD.
-16-
PROPOSAL
NO. 2
SUA
PROPOSAL TO RATIFY APPOINTMENT OF INDEPENDENT
REGISTERED
PUBLIC ACCOUNTING FIRM
As
discussed in further detail in SUA’s proxy statement, the Company’s Audit
Committee has selected PricewaterhouseCoopers LLP as the independent registered
public accounting firm for the Company for the fiscal year ending December 31,
2009.
WE
DO NOT OBJECT TO THE RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS
LLP AS SUA’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR
ENDING DECEMBER 31, 2009.
-17-
VOTING
AND PROXY PROCEDURES
Only
stockholders of record on the Record Date will be entitled to notice of and to
vote at the Annual Meeting. Each Share is entitled to one
vote. Stockholders who sell Shares before the Record Date (or acquire
them without voting rights after the Record Date) may not vote such
Shares. Stockholders of record on the Record Date will retain their
voting rights in connection with the Annual Meeting even if they sell such
Shares after the Record Date. Based on publicly available
information, we believe that the only outstanding classes of securities of SUA
entitled to vote at the Annual Meeting are the Shares.
Shares
represented by properly executed GOLD proxy cards will be voted
at the Annual Meeting as marked and, in the absence of specific instructions,
will be voted FOR the election of the Nominees, FOR the election of the
candidates who have been nominated by the Company other than _______, ______ and
_______, FOR the ratification of the appointment of PricewaterhouseCoopers LLP
to serve as the Company’s independent registered public accounting firm for the
fiscal year ending December 31, 2009 and in the discretion of the persons named
as proxies on all other matters as may properly come before the Annual
Meeting.
According
to SUA’s proxy statement for the Annual Meeting, the Board intends to nominate
seven candidates for election as directors at the Annual
Meeting. This Proxy Statement is soliciting proxies to elect not only
our Nominees, but also the candidates who have been nominated by the Company
other than _______, ______ and _______. This gives stockholders who
wish to vote for our Nominees and such other persons the ability to do
so. Under applicable proxy rules we are required either to solicit
proxies only for our Nominees, which could result in limiting the ability of
stockholders to fully exercise their voting rights with respect to SUA’s
nominees, or to solicit for our Nominees and for fewer than all of the Company’s
nominees, which enables a stockholder who desires to vote for our Nominees to
also vote for those of the Company’s nominees for whom we are soliciting
proxies. The names, backgrounds and qualifications of the Company’s
nominees, and other information about them, can be found in the Company’s proxy
statement. There is no assurance that any of the Company’s nominees
will serve as directors if our Nominees are elected. To the extent
SUA’s nominees choose not to serve as directors if our Nominees are elected,
there will be vacancies on the Board, which may be filled by a vote of a
majority of the members of the Board. We do not know whether any
vacancies created will be filled by the remaining members of the
Board.
QUORUM
The
presence in person or by proxy of holders of a majority of the aggregate voting
power of the stock issued and outstanding and entitled to vote at the Annual
Meeting will constitute a quorum. In accordance with Delaware law,
abstentions are counted for purposes of determining the presence or absence of a
quorum for the transaction of business.
VOTES
REQUIRED FOR APPROVAL
Election of
Directors. Directors are elected by a plurality of the votes
cast at the Annual Meeting and the seven nominees who receive the most votes at
the Annual Meeting will be elected. Abstentions will have no effect
on the outcome of the election.
-18-
Ratification of Appointment of
PricewaterhouseCoopers LLP. The affirmative vote of the
majority of the Shares present in person or by proxy at the Annual Meeting and
entitled to vote on the matter is required to ratify the appointment of
PricewaterhouseCoopers LLP as the Company’s registered public accounting firm
for the fiscal year ending December 31, 2009. Abstentions will have the same
effect as a vote against the approval of this proposal.
DISCRETIONARY
VOTING
Shares
held in “street name” and held of record by banks, brokers or nominees may not
be voted by such banks, brokers or nominees unless the beneficial owners of such
Shares provide them with instructions on how to vote.
REVOCATION
OF PROXIES
Stockholders
of SUA may revoke their proxies at any time prior to exercise by attending the
Annual Meeting and voting in person (although attendance at the Annual Meeting
will not in and of itself constitute revocation of a proxy) or by delivering a
written notice of revocation. The delivery of a subsequently dated
proxy which is properly completed will constitute a revocation of any earlier
proxy. The revocation may be delivered either to Hallmark in care of
MacKenzie Partners, Inc. at the address set forth on the back cover of this
Proxy Statement or to SUA at Specialty Underwriters’ Alliance, Inc., 222 South
Riverside Plaza, Suite 1600, Chicago, Illinois 60606, or any other address
provided by SUA. Although a revocation is effective if delivered to
SUA, Hallmark requests that either the original or photostatic copies of all
revocations be mailed to Hallmark in care of MacKenzie Partners, Inc. at the
address set forth on the back cover of this Proxy Statement so that Hallmark
will be aware of all revocations and can more accurately determine if and when
proxies have been received from the holders of record on the Record Date of a
majority of the outstanding Shares. Additionally, MacKenzie Partners,
Inc. may use this information to contact stockholders who have revoked their
proxies in order to solicit later dated proxies for the election of the
Nominees.
IF
YOU WISH TO VOTE FOR THE ELECTION OF THE NOMINEES TO THE BOARD OR FOR THE
RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP, PLEASE SIGN, DATE
AND RETURN PROMPTLY THE ENCLOSED GOLD PROXY CARD IN THE POSTAGE-PAID ENVELOPE
PROVIDED.
SOLICITATION
OF PROXIES
The
solicitation of proxies pursuant to this Proxy Statement is being made by
Hallmark. Proxies may be solicited by mail, facsimile, telephone,
telegraph, Internet, in person and by advertisements.
Hallmark
has entered into an agreement with MacKenzie Partners, Inc. for solicitation and
advisory services in connection with this solicitation, for which MacKenzie
Partners, Inc. will receive a fee not to exceed $___,000, 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. MacKenzie Partners, Inc. will solicit
proxies from individuals, brokers, banks, bank nominees and other institutional
holders. Hallmark has requested banks, brokerage houses and other
custodians, nominees and fiduciaries to forward all solicitation materials to
the beneficial owners of the Shares they hold of record. Hallmark
will reimburse these record holders for their reasonable out-of-pocket expenses
in so doing. It is anticipated that MacKenzie Partners, Inc. will
employ approximately 30 persons to solicit SUA’s stockholders for the Annual
Meeting.
-19-
The
entire expense of soliciting proxies is being borne by Hallmark pursuant to the
terms of the Joint Filing and Solicitation Agreement (as defined
above). Costs of this solicitation of proxies are currently estimated
to be approximately $___,000. Hallmark estimates that through the
date hereof, its expenses in connection with this solicitation are approximately
$___,000. Hallmark intends to seek reimbursement from SUA of all
expenses it incurs in connection with the solicitation of proxies for the
election of the Nominees to the Board at the Annual Meeting. Hallmark
does not intend to submit the question of such reimbursement to a vote of
security holders of the Company.
OTHER
PARTICIPANT INFORMATION
Other
than the Nominees, the participants in this solicitation are Hallmark, AHIC, a
Texas corporation, HSIC, an Oklahoma corporation, and Mark E.
Schwarz. AHIC and HSIC are wholly-owned subsidiaries of
Hallmark. Hallmark is a diversified property/casualty insurance
company that operates out of three insurance company subsidiaries, including
AHIC and HSIC. Mark E. Schwarz is the Executive Chairman of
Hallmark. The principal occupation of Mark E. Schwarz is serving as a
Principal of Newcastle Capital Management, L.P., a private investment management
firm. The principal place of business for each of Hallmark, AHIC and
HSIC is 777 Main Street, Suite 1000, Fort Worth, Texas 76102. The
principal place of business for Mark E. Schwarz is c/o Newcastle Capital
Management, L.P., 200 Crescent Court, Suite 1400, Dallas, Texas
75201.
As of the
date hereof, AHIC directly owned 1,308,615 Shares, representing approximately
9.1% of the Company’s issued and outstanding Shares, HSIC directly owned 100,000
Shares, representing approximately 0.7% of the Company’s issued and outstanding
Shares, and Hallmark directly owned 21,000 Shares, representing approximately
0.1% of the Company’s issued and outstanding Shares. Mark E. Schwarz
does not currently own any securities of the Company.
As the
parent of AHIC and HSIC, Hallmark may be deemed to beneficially own the
1,308,615 Shares owned by AHIC and the 100,000 Shares owned by HSIC,
representing (together with Shares owned directly by Hallmark) an aggregate of
1,429,615 Shares or approximately 9.9% of the issued and outstanding
Shares. As the Executive Chairman of Hallmark with voting and
dispositive power over Hallmark’s, AHIC’s and HSIC’s portfolio of securities,
Mark E. Schwarz may be deemed to beneficially own the 1,429,615 Shares or
approximately 9.9% of the issued and outstanding Shares owned in the aggregate
by Hallmark, AHIC and HSIC. Mark E. Schwarz disclaims beneficial
ownership of Shares that he does not directly own.
Currently,
none of the Nominees directly owns any Shares. As a member of a
“group” for the purposes of Rule 13d-5(b)(1) of the Securities Exchange Act of
1934, as amended, each of the Nominees may be deemed to be a beneficial owner of
the 1,429,615 Shares owned in the aggregate by the Hallmark
Parties. Each of the Nominees disclaims beneficial ownership of
Shares that he does not directly own. For information regarding
purchases and sales of securities of SUA during the past two years by the
Hallmark Parties, see Schedule I.
-20-
Except as
set forth in this Proxy Statement (including the Schedules hereto), (i) during
the past 10 years, none of the Hallmark Parties or the Nominees have been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors); (ii) none of the Hallmark Parties or the Nominees directly or
indirectly beneficially own any securities of SUA; (iii) none of the Hallmark
Parties or the Nominees own any securities of SUA which are owned of record but
not beneficially; (iv) none of the Hallmark Parties or the Nominees have
purchased or sold any securities of SUA during the past two years; (v) no part
of the purchase price or market value of the securities of SUA owned by the
Hallmark Parties or the Nominees is represented by funds borrowed or otherwise
obtained for the purpose of acquiring or holding such securities; (vi) none of
the Hallmark Parties or the Nominees are, or within the past year were, parties
to any contract, arrangements or understandings with any person with respect to
any securities of SUA, 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 of the Hallmark Parties or the Nominees owns
beneficially, directly or indirectly, any securities of SUA; (viii) none of the
Hallmark Parties or the Nominees own beneficially, directly or indirectly, any
securities of any parent or subsidiary of SUA; (ix) none of the Hallmark Parties
or the Nominees or any of their associates was a party to any transaction, or
series of similar transactions, since the beginning of SUA’s last fiscal year,
or are parties to any currently proposed transaction, or series of similar
transactions, to which SUA or any of its subsidiaries was or is to be a party,
in which the amount involved exceeds $120,000; (x) none of the Hallmark Parties
or the Nominees or any of their associates have any arrangement or understanding
with any person with respect to any future employment by SUA or its affiliates,
or with respect to any future transactions to which SUA or any of its affiliates
will or may be a party; and (xi) no person, including any of the Hallmark
Parties or the Nominees, who is a party to an arrangement or understanding
pursuant to 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 at the Annual Meeting. There are no material proceedings
to which any of the Hallmark Parties or the Nominees or any of their associates
are a party adverse to SUA or any of its subsidiaries or have a material
interest adverse to SUA or any of its subsidiaries. With respect to
each of the Nominees, none of the events enumerated in Item 401(f)(1)-(6) of
Regulation S-K of the Securities Exchange Act of 1934, as amended, occurred
during the past five years.
OTHER
MATTERS AND ADDITIONAL INFORMATION
Other
Matters
Other
than those discussed above, Hallmark is unaware of any other matters to be
considered at the Annual Meeting. However, should other matters,
which Hallmark is not aware of a reasonable time before this solicitation, be
brought before the Annual Meeting, the persons named as proxies on the enclosed
GOLD proxy card will
vote on such matters in their discretion.
-21-
Stockholder
Proposals
According
to SUA’s public filings, proposals of stockholders to be considered for
inclusion in the Company’s proxy statement for the Company’s 2010 Annual Meeting
of Stockholders, in accordance with Rule 14a-8 of the Securities Exchange Act of
1934, as amended, must be received by the Company on or prior to December 2,
2009. Proposals should be sent to SUA’s Corporate Secretary,
Specialty Underwriters’ Alliance, Inc., 222 South Riverside Plaza, Suite 1600,
Chicago, Illinois 60606.
For
stockholder proposals, including nominations, that are not intended to be
included in the Company’s proxy statement under Rule 14a-8 for the Company’s
2010 Annual Meeting of Stockholders, stockholders must provide the information
required by the Bylaws and give timely notice to the Secretary in accordance
with the Bylaws, which require that the notice be received by the Company not
later than the close of business on February 4, 2010, and not earlier than the
close of business on January 5, 2010.
The
information set forth above regarding the procedures for submitting stockholder
nominations and other business proposals for consideration at SUA’s 2010 Annual
Meeting of Stockholders is based on information contained in the Company’s
public filings. The incorporation of this information in this Proxy
Statement should not be construed as an admission by us that such procedures are
legal, valid or binding.
Incorporation
by Reference
Hallmark has omitted from this Proxy
Statement certain disclosure required by applicable law that is expected to be
included in the Company’s proxy statement relating to the Annual
Meeting. This disclosure is expected to include, among other things,
current biographical information on SUA’s current directors, information
concerning executive compensation, and other important
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 SUA.
The
information concerning SUA contained in this Proxy Statement and the Schedules
attached hereto has been taken from, or is based upon, publicly available
information.
Hallmark
Financial Services, Inc.
April
___, 2009
-22-
SCHEDULE
I
|
Class
of
Security
|
Quantity
Purchased
|
Price
Per
Share
($)
|
Date
of
Purchase
|
Hallmark
Financial Services, Inc.
|
Common
Stock
|
15,000
|
5.35
|
6/30/08
|
|
|
Common
Stock
|
6,000
|
5.40
|
6/30/08
|
American
Hallmark Insurance Company of Texas
|
Common
Stock
|
6,300
|
5.04
|
2/28/08
|
|
|
Common
Stock
|
10,000
|
5.04
|
2/29/08
|
|
|
Common
Stock
|
7,011
|
4.79
|
6/03/08
|
|
|
Common
Stock
|
2,500
|
4.80
|
6/04/08
|
|
|
Common
Stock
|
100
|
4.80
|
6/05/08
|
|
|
Common
Stock
|
150,100
|
4.85
|
6/06/08
|
|
|
Common
Stock
|
304,900
|
4.85
|
6/09/08
|
|
|
Common
Stock
|
200,000
|
4.85
|
6/10/08
|
|
|
Common
Stock
|
291,400
|
4.92
|
6/12/08
|
|
|
Common
Stock
|
100
|
4.90
|
6/16/08
|
|
|
Common
Stock
|
10,724
|
4.90
|
6/18/08
|
|
|
Common
Stock
|
6,500
|
4.99
|
6/19/08
|
|
|
Common
Stock
|
318,980
|
5.04
|
6/20/08
|
Hallmark
Specialty Insurance Company
|
Common
Stock
|
70,000
|
4.85
|
6/11/08
|
|
|
Common
Stock
|
30,000
|
5.04
|
6/20/08
|
I-1
The
following table is reprinted from SUA’s Definitive Proxy Statement on Schedule
14A filed with the Securities and Exchange Commission on April 1,
2009.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS
AND MANAGEMENT
The
following table provides information as of March 25, 2009, with respect to
ownership of Common Stock by (i) each beneficial owner of five percent or more
of the Company’s Common Stock known to the Company, (ii) each of the Company’s
most highly compensated executive officers in fiscal 2008, (iii) each director
of the Company and (iv) all directors and executive officers as a
group. Except as otherwise noted, each person named below has sole
investment and voting power with respect to the securities
shown. Also, unless otherwise indicated, the business address for
each person below is 222 South Riverside Plaza, Suite 1600, Chicago, Illinois
60606.
|
Name
and Address
|
Number
of Shares
Beneficially
Owned
|
Percent
of
Stock
Outstanding
|
||||||
|
Heartland
Advisors, Inc.
|
1,926,300 | (1) | 13.34 | % | ||||
|
Hallmark
Financial Services, Inc.
|
1,429,615 | (2) | 9.90 | % | ||||
|
Aegis
Financial Corporation
|
1,421,838 | (3) | 9.85 | % | ||||
|
North
Run Capital, LP
|
1,327,300 | (4) | 9.19 | % | ||||
|
The
Philip Stephenson Revocable Living Trust
|
954,167 | (5) | 6.61 | % | ||||
|
Wellington
Management Company, LLP
|
772,102 | (6) | 5.35 | % | ||||
|
Renaissance
Technologies, LLC
|
770,400 | (7) | 5.34 | % | ||||
|
Whitebox
Advisors, LLC
|
759,996 | (8) | 5.26 | % | ||||
|
Peter
E. Jokiel
|
247,542 | (9) | 1.70 | % | ||||
|
Courtney
C. Smith
|
226,481 | (10) | 1.55 | % | ||||
|
Gary
J. Ferguson
|
89,640 | (11) | * | |||||
|
Barry
G. Cordeiro
|
77,710 | (12) | * | |||||
|
Scott
W. Goodreau
|
42,100 | (13) | * | |||||
|
Robert
E. Dean
|
28,500 | (14) | * | |||||
|
Robert
H. Whitehead
|
28,000 | (15) | * | |||||
|
Russell
E. Zimmermann
|
27,500 | (16) | * | |||||
|
Raymond
C. Groth
|
27,000 | (17) | * | |||||
|
Paul
A. Philp
|
27,000 | (18) | * | |||||
|
All
executive officers and directors as a group
|
884,013 | (19) | 5.86 | % | ||||
____________
|
(1)
|
This
information is based upon a Schedule 13G/A filing with the SEC dated
February 11, 2009 made by Heartland Advisors, Inc., setting forth
information as of December 31, 2008 and includes shares which may be
deemed to be beneficially held by William J. Nasgovitz. The
address for Heartland Advisors, Inc. is 789 North Water Street, Milwaukee,
WI, 53202. Of the aggregate amount beneficially owned, the
reporting persons have shared voting power as to 1,848,800 shares and
shared dispositive power as to all shares
reported.
|
II-1
|
(2)
|
This
information is based upon a Schedule 13D/A filing with the SEC dated
January 16, 2009 made by Hallmark Financial Services, Inc., setting forth
information as of December 31, 2008 and includes shares which may be
deemed to be beneficially held by American Hallmark Insurance Company of
Texas, Hallmark Specialty Insurance Company, C. Gregory Peters, Mark E.
Pape and Robert M. Fishman. The address for Hallmark Financial
Services, Inc. is 777 Main Street, Suite 1000, Fort Worth, TX
76102.
|
|
(3)
|
This
information is based upon a Schedule 13G filing with the SEC dated
February 12, 2009 made by Aegis Financial Corporation, setting forth
information as of December 31, 2008 and includes shares which may be
deemed to be beneficially held by Scott L. Barbee. The address
for Aegis Financial Corporation is 1100 North Glebe Road, Suite 1040,
Arlington, VA, 22201.
|
|
(4)
|
This
information is based upon a Schedule 13G/A filing with the SEC dated
February 17, 2009 made by North Run Capital, LP setting forth information
as of December 31, 2008 and represents shares held by North Run Master
Fund, LP (“NRM Fund”), for which North Run Capital, LP is the investment
manager. North Run Advisors, LLC is the general partner of
North Run Capital, LP and of North Run GP, LP which is the special general
partner of NRM Fund. Todd B. Hammer and Thomas B. Ellis are the
sole members of North Run Advisors, LLC. Mr. Hammer, Mr. Ellis,
North Run Capital, LP, North Run GP, LP and North Run Advisors, LLC have
shared voting and dispositive power with respect to the shares and, as
sole members of North Run Advisors, LLC, Messrs Hammer and Ellis may
direct the vote and disposition of such shares. The address of
North Run Capital, LP is One International Place, Suite 2401, Boston, MA
02110.
|
|
(5)
|
This
information is based upon a Schedule 13D/A filing with the SEC dated
November 28, 2008 made by The Philip Stephenson Revocable Living Trust,
and includes shares which may be deemed to be held by George Philip
Stephenson. The address of The Philip Stephenson Revocable
Living Trust is 99 Canal Center Plaza, Suite 420, Alexandria, VA
22314.
|
|
(6)
|
This
information is based upon a Schedule 13G filing with the SEC dated
February 17, 2009 made by Wellington Management Company, LLP, setting
forth information as of December 31, 2008. The address for
Wellington Management Company, LLP is 75 State Street, Boston MA
02109.
|
|
(7)
|
This
information is based upon a Schedule 13G filing with the SEC dated
February 13, 2009 made by Renaissance Technologies, LLC, setting forth
information as of December 31, 2008 and includes shares that may be deemed
to be beneficially held James H. Simons. The address for
Renaissance Technologies, LLC is 800 Third Avenue, New York, New York
10022.
|
II-2
|
(8)
|
This
information is based upon a Schedule 13G filing with the SEC dated
February 17, 2009 made by Whitebox Advisors, LLC, setting forth
information as of December 31, 2008 and include shares that may be deemed
to be beneficially held by Whitebox Combined Advisors, LLC, Whitebox
Combined Partners, L.P., Whitebox Combined Fund, L.P., Whitebox Combined
Fund, Ltd., Whitebox Intermarket Advisors, LLC, Whitebox Intermarket
Partners, L.P., Whitebox Intermarket Fund, L.P., and Whitebox Intermarket
Fund, Ltd. The address for Whitebox Advisors, LLC is 3033 Excelsior
Boulevard, Suite 300 Minneapolis, MN
55416.
|
|
(9)
|
Peter
E. Jokiel is Executive Vice President, Chief Financial Officer and
Director. The number of shares beneficially owned includes
136,000 shares issuable upon exercise of options that are currently
exercisable and 8,400 shares of restricted stock which vest within 60 days
of March 20, 2009.
|
|
(10)
|
Courtney
C. Smith is President, Chief Executive Officer and Chairman of the Board
of Directors. The number of shares beneficially owned includes
190,000 shares issuable upon exercise of options that are currently
exercisable and 12,000 shares of restricted stock which vest within 60
days of March 20, 2009.
|
|
(11)
|
Gary
J. Ferguson is a Senior Vice President and Chief Claims
Officer. The number of shares beneficially owned includes
64,000 shares issuable upon exercise of options that are currently
exercisable and 4,800 shares of restricted stock which vest within 60 days
of March 20, 2009.
|
|
(12)
|
Barry
G. Cordeiro a Senior Vice President and Chief Information
Officer. The number of shares beneficially owned includes
30,000 shares issuable upon exercise of options that are currently
exercisable and 4,800 shares of restricted stock which vest within 60 days
of March 20, 2009.
|
|
(13)
|
Scott
W. Goodreau is a Senior Vice President, General Counsel, Administration
& Corporate Relations and Secretary. The number of shares
beneficially owned includes 30,000 shares issuable upon exercise of
options that are currently exercisable and 4,800 shares of restricted
stock which vest within 60 days of March 20,
2009.
|
|
(14)
|
Robert
E. Dean is a Director. The number of shares beneficially owned
includes 8,500 shares held in living trust as to which Mr. Dean has shared
voting and dispositive power with his wife. Also includes
20,000 shares issuable upon exercise of options that are currently
exercisable.
|
|
(15)
|
Robert
H. Whitehead is a Director. The number of shares beneficially
owned includes 20,000 shares issuable upon exercise of options that are
currently exercisable.
|
|
(16)
|
Russell
E. Zimmermann is a Director. The number of shares beneficially
owned includes 20,000 shares issuable upon exercise of options that are
currently exercisable.
|
|
(17)
|
Raymond
C. Groth is a Director. The number of shares beneficially owned
includes 20,000 shares issuable upon exercise of options that are
currently exercisable.
|
II-3
|
(18)
|
Paul
A. Philp is a Director. The number of shares beneficially owned
includes 20,000 shares issuable upon exercise of options that are
currently exercisable.
|
|
(19)
|
The
total shares beneficially owned by all executive officers and directors as
a group (13 people) includes 594,400 shares issuable upon exercise of
options that are currently exercisable and 44,340 shares of restricted
stock which vest within 60 days of March 20, 2009. The only
executive officers of the Company included in this total but not otherwise
shown on this table are Daniel A. Cacchione, Senior Vice President and
Chief Underwriting Officer; Scott K. Charbonneau, Vice President and Chief
Actuary; and Daniel J. Rohan, Vice President and
Controller. Mr. Cacchione beneficially owned 13,000 shares,
which includes 10,000 shares issuable upon exercise of options that are
currently exercisable and 2,500 shares of restricted stock which vest
within 60 days of March 20, 2009. Mr. Charbonneau beneficially
owned 29,940 shares, which includes 20,000 shares issuable upon exercise
of options that are currently exercisable and 3,840 shares of restricted
stock which vest within 60 days of March 20, 2009. Mr. Rohan
beneficially owned 19,600 shares, which includes 14,400 shares issuable
upon exercise of options that are currently exercisable and 3,200 shares
of restricted stock which vest within 60 days of March 20,
2009.
|
II-4
IMPORTANT
Tell your
Board what you think! Your vote is important. No matter
how many Shares you own, please give Hallmark your proxy FOR the election of
Hallmark’s Nominees by taking three steps:
|
|
·
|
SIGNING
the enclosed GOLD
proxy card,
|
|
|
·
|
DATING
the enclosed GOLD
proxy card, and
|
|
|
·
|
MAILING
the enclosed GOLD
proxy card TODAY in the envelope provided (no postage is required if
mailed in the United States).
|
If any of
your Shares are held in the name of a brokerage firm, bank, bank nominee or
other institution, only it can vote such Shares and only upon receipt of your
specific instructions. Depending upon your broker or custodian, you
may be able to vote either by toll-free telephone or by the
Internet. Please refer to the enclosed voting form for instructions
on how to vote electronically. You may also vote by signing, dating
and returning the enclosed GOLD voting form.
If you
have any questions or require any additional information concerning this Proxy
Statement, please contact MacKenzie Partners, Inc. at the address set forth
below.
105
Madison Avenue
New York,
New York 10016
(212)
929-5500 (Call Collect)
proxy@mackenziepartners.com
or
CALL
TOLL FREE (800) 322-2885
PRELIMINARY
COPY - SUBJECT TO COMPLETION, DATED APRIL 2, 2009
GOLD
PROXY CARD
SPECIALTY
UNDERWRITERS’ ALLIANCE, INC.
2009
ANNUAL MEETING OF STOCKHOLDERS
THIS
PROXY IS SOLICITED ON BEHALF OF HALLMARK FINANCIAL SERVICES, INC.
THE
BOARD OF DIRECTORS OF SPECIALTY UNDERWRITERS’ ALLIANCE, INC.
IS
NOT SOLICITING THIS PROXY
P R O X Y
The
undersigned appoints Mark E. Schwarz and Mark J. Morrison, and each of them,
attorneys and agents with full power of substitution to vote all shares of
Common Stock of Specialty Underwriters’ Alliance, Inc. (the “Company”) which the
undersigned would be entitled to vote if personally present at the 2009 Annual
Meeting of Stockholders of the Company scheduled to be held in the Lake County
Room located at 222 South Riverside Plaza, 19th Floor, Chicago, IL 60606 on
Tuesday, May 5, 2009 at 9:00 a.m., local time, and including at any adjournments
or postponements thereof and at any meeting called in lieu thereof (the “Annual
Meeting”).
The
undersigned hereby revokes any other proxy or proxies heretofore given to vote
or act with respect to the shares of Common Stock of the Company held by the
undersigned, and hereby ratifies and confirms all action the herein named
attorneys and proxies, their substitutes, or any of them may lawfully take by
virtue hereof. If properly executed, this Proxy will be voted as
directed on the reverse and in the discretion of the herein named attorneys and
proxies or their substitutes with respect to any other matters as may properly
come before the Annual Meeting that are unknown to Hallmark Financial Services,
Inc. (“Hallmark”) a reasonable time before this solicitation.
IF
NO DIRECTION IS INDICATED WITH RESPECT TO THE PROPOSALS ON THE REVERSE, THIS
PROXY WILL BE VOTED “FOR” SUCH PROPOSALS.
This
Proxy will be valid until the sooner of one year from the date indicated on the
reverse side and the completion of the Annual Meeting.
Important
Notice Regarding the Availability of Proxy Materials for the Annual
Meeting
Our
Proxy Statement and this GOLD proxy card are available at
www._______.com
IMPORTANT:
PLEASE SIGN, DATE AND MAIL THIS PROXY CARD PROMPTLY!
CONTINUED
AND TO BE SIGNED ON REVERSE SIDE
GOLD
PROXY CARD
HALLMARK
RECOMMENDS A VOTE “FOR” EACH OF ITS NOMINEES LISTED BELOW IN PROPOSAL NO.
1.
[X]
Please mark vote as in this example
|
1.
|
HALLMARK’S
PROPOSAL TO ELECT DIRECTORS:
|
|
FOR
ALL NOMINEES
|
WITHHOLD
AUTHORITY TO VOTE FOR ALL NOMINEES
|
FOR
ALL NOMINEES EXCEPT
|
|
|
Nominees:
Robert M. Fishman
C. Gregory Peters Mark E. Pape |
[ ]
|
[ ]
|
[ ]
|
Hallmark
intends to use this proxy to vote (i) “FOR” Messrs. Fishman, Pape and Peters and
(ii) “FOR” the candidates who have been nominated by the Company to serve as
directors other than __________, __________ and __________ for whom Hallmark is
NOT seeking authority to vote for and WILL NOT exercise any such
authority. The names, backgrounds and qualifications of the
candidates who have been nominated by the Company, and other information about
them, can be found in the Company’s proxy statement.
There
is no assurance that any of the candidates who have been nominated by the
Company will serve as directors if Hallmark’s nominees are elected.
NOTE:
If you do not wish for your shares to be voted “FOR” a particular Hallmark
nominee, mark the “FOR ALL NOMINEES EXCEPT” box and write the name(s) of the
nominee(s) you do not support on the line below. Your shares will be
voted for the remaining Hallmark nominee(s). You may also withhold
authority to vote for one or more additional candidates who have been nominated
by the Company by writing the name of the nominee(s) below.
_______________________________________________________________
|
2.
|
THE
COMPANY’S PROPOSAL TO RATIFY APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS
INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31,
2009:
|
|
FOR
|
AGAINST
|
ABSTAIN
|
|
|
[ ]
|
[ ]
|
[ ]
|
|
DATE:
|
||
|
(Signature)
|
||
|
(Signature,
if held jointly)
|
||
|
(Title
of Authority)
|
||
WHEN
SHARES ARE HELD JOINTLY, JOINT OWNERS SHOULD EACH SIGN. EXECUTORS,
ADMINISTRATORS, TRUSTEES, ETC., SHOULD INDICATE THE CAPACITY IN WHICH
SIGNING. PLEASE SIGN EXACTLY AS NAME APPEARS ON THIS
PROXY.