Date: September 14, Interested Persons. Davis Polk & Wardwell. Implementation of E-Proxy

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1 Date: September 14, 2007 To: From: Re: Interested Persons Davis Polk & Wardwell Implementation of E-Proxy The SEC has adopted amendments to its proxy rules that will require issuers to offer Internet delivery of proxy materials to their stockholders beginning on January 1, 2008, in the case of large accelerated filers other than registered investment companies, and January 1, 2009, for all other filers. This memorandum outlines the practical considerations for issuers in implementing E-proxy. Issuers. Under the universal E-Proxy rules, issuers will be required to post their proxy materials 1 on an Internet website and send a Notice of Internet Availability of Proxy Materials ( Notice ) to their stockholders. Issuers have the choice of (1) continuing to provide all stockholders with a full set of paper copies of the proxy materials and simply including the Notice in the full set mailing or incorporating the Notice information into its proxy statement and proxy card ( Full Set Delivery Option ) or (2) ceasing to mail paper copies of the proxy materials and instead implementing all elements of the notice and access model ( Notice Only Option ) described below. In addition, an issuer may combine the two options, using the Notice Only Option for some stockholders and the Full Set Delivery Option for others. Under the Notice Only option, the issuer must mail a Notice at least 40 days prior to the scheduled stockholder meeting or corporate action informing stockholders of the Internet availability of the proxy materials. The 40 calendar day time frame does not apply to the Full Set Delivery Option. The Notice must, among other things, include the date, time and location of the meeting, voting instructions for the proposed meeting, a list of matters to be acted on (including the issuer s recommendations, but no supporting statements), and information on how stockholders may obtain paper or copies. 2 1 Proxy materials include: (i) notices of stockholder meetings; (ii) Schedule 14A proxy statements and consent solicitation statements; (iii) forms of proxy (i.e., proxy cards); (iv) Schedule 14C information statements; (v) annual reports to security holders; (vi) additional soliciting materials; and (vii) any amendments to such materials that are required to be furnished to stockholders. 2 Stockholders requesting paper mailings or copies need only make one request in order to receive future paper mailings and they may revoke this request at any time. The issuer must keep a record, for future solicitations, of the stockholders who have made such a standing request to receive paper copies

2 Such initial Notice may not be accompanied by a proxy card. A sample notice is provided as Exhibit A. 3 The issuer is permitted to household the Notices (i.e., mail only one copy to stockholders residing at the same address), but it must provide separate identification or control numbers to allow each householded account to execute separate proxies. After sending the Notice, the issuer is not required to send any other materials to stockholders, other than paper copies of the proxy materials to those who request them. It may elect, however, to (i) mail a proxy card along with a replacement or reminder notice no sooner than 10 days after mailing the Notice or (ii) mail a proxy card accompanied by paper proxy materials at any time. Intermediaries. In the case of shares held in record name by intermediaries, such as brokerage firms, the intermediary must also participate in the distribution of proxy materials to stockholders. The intermediary is required to prepare and send its own Notice to beneficial owners at least 40 days before the meeting date, based on information that the issuer provides to the intermediary. 4 In addition to the information included in the issuer s Notice, the intermediary s Notice must also include the telephone number, address and Internet website of the intermediary or its agent, as well as instructions on how to access the request for voting instructions on the intermediary s or agent s website. Internet Posting of Proxy Materials. Both the Notice Only Option and the Full Set Delivery Option require that the issuer post its proxy materials online. In addition, the Notice Only Option requires that the website provide a means to cast a vote either online or else by alternate means, like printing the proxy form or providing a voting system telephone number. Both delivery methods require that the website the issuer uses to electronically furnish its proxy materials to stockholders must be a publicly accessible Internet website other than the SEC s EDGAR website. The site must lead stockholders of proxy materials. The issuer may nevertheless continue to request that a stockholder accept electronic delivery or the notice and access model. 3 Issuers may combine the Notice with a state law notice unless state law prohibits such combination. Note that the SEC has emphasized that the new rules are not intended to affect any applicable state law requirement concerning the delivery of any document related to a stockholder meeting or proxy solicitation. We suggest that you consult with local counsel regarding state law considerations related to the implementation of E-Proxy. 4 Broadridge Financial Solutions, Inc. (formerly ADP) has indicated that it will ask issuers to provide the information needed to complete the Notice five business days in advance of the 40-day deadline in order to meet that deadline. Intermediaries may vary in their timing needs (the SEC leaves this coordination to the issuer and the intermediaries) so we suggest you contact intermediaries to coordinate your timing with theirs. 2

3 directly to the proxy materials without further browsing on the part of the stockholder. 5 Note that, due to privacy concerns, the E-Proxy rules prohibit the issuer from using the website on which the proxy materials are posted in a manner that infringes on the anonymity of a stockholder accessing that website. For example, the website may not track the identity of persons accessing that website to view the proxy statement, and it cannot require the installation of any cookies or other software that might collect information about the accessing person. The issuer is also restricted in how it can use addresses received by stockholders who request copies of the proxy materials. Practical Considerations for an Issuer. The Notice Only Option is likely to result in significant cost savings for the issuer, particularly in the long run. However, the first year or two of implementation of the Notice Only Option may involve higher costs than future years due to uncertainties such as the rate at which stockholders will elect to receive paper materials and the potential loss of cost savings associated with bulk mailing and printing. 6 By contrast, the Full Set Delivery Option is far less of a departure from the current proxy process and requires only minimal changes for companies planning for Most significantly, issuers implementing the Full Set Delivery Option are not required to mail their proxy materials 40 calendar days in advance of a meeting date and need not provide shareholders with any additional means for voting other than a proxy card or request for voting instructions. * * * * * * * If you have any questions regarding this Newsflash, please call your regular Davis Polk contact Davis Polk & Wardwell 5 The SEC requires that the materials be presented in a format, or formats, convenient for both printing and viewing online and must be in a readily searchable format, such as HTML. While many issuers currently use pdf format (which would appear to satisfy the SEC readily searchable format requirement), some commentators have suggested that issuers should create a more user-friendly experience (and, in doing so, cause fewer stockholders to request paper materials) by using valid HTML, which is the format currently used by GE and IBM. Such a format would require that an issuer generate its proxy materials with web posting in mind, rather than relying on later conversion of the documents. Apart from formatting considerations, the issuer will also need to consider its server capacity for handling an expected increase in the amount of traffic that E-Proxy will generate. 6 Estimates of the percentage of stockholders of public issuers who would request paper copies range from 19% (by the SEC based on comments it received) to 2-4% (based on a survey conducted by Broadridge as well as data from the Canadian equivalent of E-Proxy). An analysis by Computershare found that issuers using the notice only model with 5 to 30% of stockholders requesting paper can save 30 to 70% of their costs, respectively. 3

4 IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON [INSERT MEETING DATE] 7 Exhibit A Date Name Address City State Dear Stockholder: This communication presents only an overview of the more complete proxy materials that are available to you on the Internet. We encourage you to access and review all of the important information contained in the proxy materials before voting. The [proxy statement][information statement][and annual report to security holders][is/are] available at [insert Website address]. If you want to receive a paper or copy of these documents, you must request one. There is no charge to you for requesting a copy. Please make your request for a copy as instructed below on or before [insert date] to facilitate timely delivery. The 2008 annual stockholder meeting will be held on [insert date] at [insert time] at [insert location of the meeting]. The following are the matters under consideration at the meeting and the corresponding recommendations of [the Issuer]. [insert clear and impartial identification of each separate matter intended to be acted on at the meeting and the issuer s recommendations regarding those matters, but no supporting statements.] You may access the following materials at [insert the Website address]: [insert list of proxy materials provided on Website]. You may access your proxy card by [insert instructions on how to access the proxy card]. [You will need to enter the following [control/identification number(s)]: [insert control/identification number(s)] to access your proxy card.] [Insert a statement advising stockholders that they are not required to provide any personal information, other than the identification or control number provided in the notice (if such a number is used), to execute a proxy.] If you would like a paper copy of the proxy materials mailed to you, you may request one by calling [insert toll-free telephone number] or by sending an to [insert address] or by making your request online at [insert Website address]. You will have the opportunity to make your request for paper copies apply to all meetings (which you may later revoke at any time) or only for the [2008 annual stockholders meeting]. To obtain directions to attend the meeting and vote in person, [insert information on how to obtain directions to be able to attend the meeting and vote in person]. Sincerely, [Issuer] 7 This is intended as a sample only and should be revisited with reference to the applicable rules prior to the preparation of any distribution to stockholders. For example, appropriate changes must be made to the notice if the issuer is providing an information statement pursuant to Regulation 14C or seeking to effect a corporate action by written consent.

5 Exhibit B General Timetable Prior to proxy season 45 days prior to meeting date (approximately) Ensure that Website is prepared for the posting of proxy materials; Coordinate with intermediaries regarding timetable for exchange of information; and Begin drafting Notice. Issuer to provide intermediaries with all information necessary for intermediary to prepare and send its Notice to beneficial owners at least 40 days prior to meeting date. 40 days prior to meeting date Last day for the issuer and intermediaries to send Notice. 8 Ten days after Notice is mailed Annual meeting date One year after meeting date First day for issuer to send replacement or reminder Notice accompanied by proxy card. 9 At conclusion of the meeting, the issuer may remove the proxy materials from Website. Issuer is no longer required to mail paper copies in response to requests. 8 The date on which the Notice is sent is the date on which the proxy materials must be posted on the Internet Website and on which the Notice and proxy materials must be filed with the SEC. Note that, once stockholders receive their Notice, they may request paper copies from the issuer (for shares held directly) or from intermediaries (for shares held indirectly). Once the issuer receives the request from the stockholder directly or via the intermediary, it must send out the paper materials by first class mail or other reasonable prompt method of delivery within three business days. 9 The date on which the issuer sends any replacement or reminder notice and any proxy card (collectively, Additional Soliciting Materials ) is the date on which such Additional Soliciting Materials must be posted on the Internet Website and filed with the SEC.