SM&A - Additional Proxy Soliciting Materials - Non-Management (definitive) (DFAN14A)
09 May 2008 - 6:54AM
Edgar (US Regulatory)
UNITED
STATES
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SECURITIES AND EXCHANGE COMMISSION
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Washington, D.C. 20549
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SCHEDULE 14A
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Proxy
Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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Filed by the Registrant
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Filed by a Party other than the
Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for
Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to
§240.14a-12
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SM&A
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(Name
of Registrant as Specified In Its Charter)
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Steven
S. Myers
Albert S. Nagy
Kenneth W. Colbaugh
Redge E. Bendheim
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(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
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Payment of Filing Fee (Check the
appropriate box):
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No fee required.
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Fee computed on table below per
Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to
which transaction applies:
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Aggregate number of securities to
which transaction applies:
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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):
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(4)
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Proposed maximum aggregate value of
transaction:
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(5)
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Total fee paid:
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Fee paid previously with preliminary
materials.
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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.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration
Statement No.:
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Filing Party:
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Date Filed:
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On May 8,
2008 Steven S. Myers issued the following press release:
FOR IMMEDIATE RELEASE
Collusion by SM&A and City National Bank to
Manipulate SM&A Board Proxy Contest, Asserted by Companys Largest
Shareholder and Founder
Sudden Change of SM&A Credit Agreement with City National Bank Is
an Attempt to Manipulate Shareholders and Consistent with Present Boards
Failure of Sound Corporate Governance
Newport
Beach, CA, May 8, 2008
Steven S. Myers, the largest shareholder, founder and former CEO of
SM&A (Nasdaq: WINS) asserted today that SM&A and City National Bank
have colluded to include in SM&As credit facility an illegitimate default
provision designed solely to skew the upcoming election and intimidate
SM&As shareholders into voting for the incumbent board.
SM&A
announced on May 6 that it had entered into a new credit agreement with
City National. While this agreement was
the sixth agreement in a series of revolving credit agreements with the bank,
it inexplicably included a new default provision which will be triggered if a
mere minority of the board changes in a contested election. According to a letter delivered today by Mr. Myerss
attorneys to the Chairman and CEO of City National Corporation, a copy of which
is reprinted below, this novel clause serves absolutely no legitimate business
purpose. As the Board is fully aware, as
of the end of each of the last five years, there were no outstanding borrowings
under the revolving credit facility with City National.
Mr. Myers
stated, I am not surprised that the incumbent Board of Directors, now
desperate about the proxy contest, would so blatantly breach its fiduciary
duties and resort to such conduct. Unfortunately, this Boards common practice
is to turn a blind eye to sound corporate governancethe effect of which has
been the debilitating destruction of shareholder value.
I
am shocked, however, that City National Bank would participate in SM&As
conduct. In view of its role, I am
calling on the Board to immediately join in my demand that City National Bank
permanently waive the new default provision and issue appropriate press
releases informing SM&A shareholders of this waiver and expressing regret
for its previous actions.
It
is the shareholders at SM&A who have the ultimate ability to determine the
future of their investment in this company.
We urge you to vote FOR our director nominees Ken Colbaugh, Al Nagy,
Redge Bendheim and myself by voting the GOLD proxy card.
The
full text of the letter to City National Corporation is as follows:
[K&E letterhead]
May 8, 2008
VIA EMAIL, FEDERAL EXPRESS
OVERNIGHT AND REGULAR U.S. MAIL
Russell
Goldsmith
Chairman and
Chief Executive Officer
City National
Corporation
City National
Center
400 North
Roxbury Drive
Beverly Hills,
CA 90210
Re:
May 1, 2008 Credit Agreement between SM&A
and City National Bank
Dear Mr. Goldsmith,
This Firm represents Steven S. Myers, the
largest shareholder of SM&A and its founder, retired chairman and chief
executive officer. As you may know, Mr. Myers
has launched a proxy contest against SM&A in which he has nominated himself
and three other independent nominees to the SM&A Board of Directors. The election will take place at SM&As
Annual Meeting of Shareholders scheduled for May 23, 2008 (the Annual Meeting). I am writing because we have reason to
believe that City National Bank may have conspired with SM&A in an unlawful
scheme designed to intimidate SM&As shareholders and skew the upcoming
election.
As I will outline in this letter, it is
apparent that SM&A and City National Bank have colluded and conspired to
include in their contract an illegitimate default provision designed solely to
intimidate SM&As shareholders into voting for the incumbent board. The fact that Cathy L. McCarthy, who is the
President and CEO of SM&A and a member of the incumbent Board, also happens
to be a member of the Orange County Advisory Board of City National Bank, only
confirms the fact that City National Bank and SM&A are actively conspiring
to skew the upcoming election for the SM&A Board of Directors. Such a blatant act to mislead SM&A
shareholders in light of an ongoing proxy contest impinges upon the shareholder
franchise and interferes with the effectiveness of a shareholder vote. The involvement by City National Bank in such
a scheme calls into question the banks integrity and ethics.
Beginning in 2003, SM&A executed a series
of revolving credit agreements with City National Bank. The agreements provided for a credit facility
in the principal amount of $10 million, renewable on April 30 of each
year. For the years 2003, 2004, 2005,
2006 and 2007, the terms of each of these credit agreements, including the
Events of Default, were essentially the same.
Critically, none of the Events of Default specified in the 2003, 2004,
2005, 2006 or 2007 credit agreements had anything to do with the composition of
SM&As Board of Directors.
Consistent with SM&As and City National
Banks practice over the last five years, the 2007 revolving credit agreement
expired on May 1, 2008 and the parties renewed it on the same day. In this instance, however, SM&A and City
National Bank made one significant change to
the terms of
the credit agreement. Specifically, the May 1,
2008 Credit Agreement, which, as all involved were aware, was executed in the
midst of the proxy contest concerning the election of the SM&A Board of
Directors, contains the following provision that makes a change in SM&As
Board composition an Event of Default under the Credit Agreement:
8.1.10:
[An Event of Default occurs if]
[t]he individuals who, as of the date of the agreement, constitute the
[SM&As] Board of Directors (the Incumbent Board) cease for any reason to
constitute at least 75% of the Board of Directors;
provided,
however, that any individual who becomes a director subsequent to the date of
this agreement whose election, or nomination for election by the [SM&As]
shareholders, was approved by a vote of at least a majority of the directors
then compromising the Incumbent Board shall be considered as though such
individual were a member of the
Incumbent Board. (emphasis added)
I have
enclosed a copy of the May 1, 2008 Credit Agreement for your
convenience. Needless to say, this is
the first time any agreement between SM&A and City National Bank contained
a provision that even mentioned composition of SM&As Board of Directors,
let alone made a change in Board composition an Event of Default.
There is absolutely no legitimate business
purpose for the new Event of Default that was grafted onto SM&As most
recent credit facility. To the contrary,
the timing and content of Section 8.1.10 of the credit facility make clear
that this novel provision was inserted for the sole purpose of attempting to
intimidate SM&As shareholders into voting for the incumbent Board. We are not surprised that the incumbent Board
of Directors would so blatantly breach its fiduciary duties and resort to such
unlawful conduct. (Indeed, that is
precisely why Mr. Myers launched his proxy contest in the first
instance.) We are shocked, however, that
City National Bank would aid and abet SM&As unlawful conduct.
Section 8.1.10
is unlike any Event of Default we have ever seen or heard of in a credit
facility. We are aware of certain credit
facilities in which an event of default is triggered if a
majority
of the
directors are no longer continuing directors.
But here, SM&A and City National Bank took the remarkable step of
lowering the threshold for continuing directors to 25%, such that the election
of a
minority
slate to the Board in a contested election would constitute an event of
default. This was no coincidence. In the upcoming election for the SM&A
Board of Directors, Mr. Myers and his nominees seek four of the nine
SM&A Board seats less than a majority, but more than 25%.
To ensure that the SM&A shareholders
learned of Section 8.1.10, on May 6, 2008 less than three weeks
before the shareholder vote SM&A filed a current report on Form 8-K
with the Securities and Exchange Commission that highlighted this newly-crafted
default provision. While the new Credit
Agreement is approximately 20 pages long, the 8-K goes out of its way to
focus on the default provision: One
event of default is [sic] three or more of the incumbent Board of Directors
cease to be members of the Board of Directors.
We demand that City National Bank take
immediate action to remedy its unlawful conduct. In particular, City National Bank must
permanently waive the default provision in the May 1, 2008 Credit Agreement
concerning a 25% change in board composition.
Mr. Myers is calling the Board of Directors of SM&A to join him
in his effort to have this provision waived permanently. In addition, City National Bank must issue
appropriate press releases informing SM&A shareholders of this waiver and
expressing regret for its previous actions.
If City National Bank fails to take these actions by the close of
business on Monday, May 12, 2008, it will expose itself to substantial
legal liability, including the prospects of class-action lawsuits that will
seek punitive damages.
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Sincerely,
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/s/
Eric F. Leon
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Eric
F. Leon
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cc:
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General
Counsel
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City
National Bank
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Steven S.
Myers
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Stephen
Fraidin
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Joel A.
Blanchet
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Kirkland &
Ellis LLP
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Every Vote Counts Vote the GOLD PROXY CARD
TODAY!
Proxy Material from Steven S. Myers has
already been distributed to all shareholders including a GOLD PROXY CARD. Mr. Myers urges all shareholders to vote
only the GOLD PROXY CARD. If you have
any questions, or need assistance with voting, please contact:
Georgeson Inc.
Toll Free (800) 561-3837
SM&A, based in Newport Beach, Calif., provides competition
management and program support
services to major industrial customers in the Aerospace &
Defense, Information Technology, Telecommunications, and other
industries.
Media Contact:
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Robert Siegfried
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Kekst and Company
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212-521-4800
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THIS PRESS RELEASE IS FOR GENERAL INFORMATIONAL PURPOSES ONLY. IT DOES NOT PERTAIN TO THE SPECIFIC
INVESTMENT OBJECTIVE, FINANCIAL SITUATION, SUITABILITY, OR THE PARTICULAR NEEDS
OF ANY SPECIFIC PERSON WHO MAY RECEIVE THIS PRESS RELEASE, AND SHOULD NOT
BE TAKEN AS ADVICE ON THE MERITS OF ANY INVESTMENT DECISION. THE VIEWS EXPRESSED HEREIN REPRESENT THE
OPINIONS OF STEVEN S. MYERS, AND ARE BASED ON PUBLICLY AVAILABLE INFORMATION
WITH RESPECT TO SM&A (THE ISSUER).
EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED HEREIN, THE MATTERS
ADDRESSED IN THIS PRESS RELEASE ARE FORWARD-LOOKING STATEMENTS THAT INVOLVE
CERTAIN RISKS AND UNCERTAINTIES. YOU
SHOULD BE AWARE THAT ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
CONTAINED IN THE FORWARD-LOOKING STATEMENTS.
MR. MYERS ASSUMES NO OBLIGATION TO UPDATE THE FORWARD-LOOKING
INFORMATION.
MR. MYERS RESERVES THE RIGHT TO CHANGE ANY OF HIS OPINIONS EXPRESSED
HEREIN AT ANY TIME AS HE DEEMS APPROPRIATE.
MR. MYERS DISCLAIMS ANY OBLIGATION TO UPDATE THE INFORMATION CONTAINED
HEREIN.
MR. MYERS HAS NOT SOUGHT OR OBTAINED CONSENT FROM ANY THIRD PARTY TO
USE ANY STATEMENT OR INFORMATION INDICATED IN THIS PRESS RELEASE OR THE
PRESENTATION REFERRED TO HEREIN AS HAVING BEEN OBTAINED OR DERIVED FROM
STATEMENTS MADE OR PUBLISHED BY THIRD PARTIES.
ANY SUCH STATEMENT OR INFORMATION SHOULD NOT BE VIEWED AS INDICATING THE
SUPPORT OF SUCH THIRD PARTY FOR THE VIEWS EXPRESSED HEREIN. NO WARRANTY IS MADE THAT DATA OR INFORMATION,
WHETHER DERIVED OR OBTAINED FROM FILINGS MADE WITH THE SEC OR FROM ANY THIRD
PARTY, IS ACCURATE.
EACH OF MR. MYERS, KENNETH W. COLBAUGH, ALBERT S. NAGY AND REDGE E.
BENDHEIM (COLLECTIVELY, THE PARTICIPANTS) IS DEEMED A PARTICIPANT IN THE
SOLICITATION OF PROXIES DESCRIBED IN THIS PRESS RELEASE. INFORMATION REGARDING THE PARTICIPANTS AND
THEIR DIRECT OR INDIRECT INTERESTS, BY SECURITY OWNERSHIP OR OTHERWISE, IS
AVAILABLE IN THE DEFINITIVE PROXY STATEMENT ON SCHEDULE 14A FILED
BY MR. MYERS WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 18,
2008.
ALL STOCKHOLDERS OF THE ISSUER ARE ADVISED TO READ THE DEFINITIVE PROXY
STATEMENT AND OTHER DOCUMENTS RELATED TO THE SOLICITATION OF PROXIES BY MR.
MYERS FOR USE AT THE 2008 ANNUAL MEETING OF STOCKHOLDERS OF THE ISSUER BECAUSE
THEY DO AND WILL CONTAIN IMPORTANT INFORMATION.
THE DEFINITIVE PROXY STATEMENT AND FORM OF PROXY HAVE BEEN MAILED
TO STOCKHOLDERS OF THE ISSUER. STOCKHOLDERS
OF THE ISSUER MAY OBTAIN COPIES OF THE DEFINITIVE PROXY STATEMENT AND
OTHER RELEVANT DOCUMENTS AT NO CHARGE ON THE SECS WEB SITE AT
HTTP://WWW.SEC.GOV. IN ADDITION, MR.
MYERS WILL PROVIDE COPIES OF THE DEFINITIVE PROXY STATEMENT WITHOUT CHARGE UPON
REQUEST.
# # #
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