Preliminary Proxy Statements, “Say on Pay” Vote Required in 2009 Proxy Season for TARP Recipients

March 6, 2009

Non-binding, shareholder vote on executive compensation required in proxy statements for 2009 Annual Meeting of Shareholders; Preliminary Proxy Statement Required.

On February 26, 2009, the Securities and Exchange Commission issued updated guidance (the "Updated Guidance") regarding "say on pay" provisions in the American Recovery and Reinvestment Act of 2009 (the "Act"). Section 111(e) of the Emergency Economic Stabilization Act (the "EESA"), as amended by Section 7001 of the Act, requires any company that has obligations outstanding in connection with its receipt of financial assistance under the Troubled Asset Relief Program ("TARP") to include a separate, non-binding shareholder vote to approve executive compensation in the proxy solicitation concerning the annual meeting at which directors will be elected. This "say on pay" requirement:

"Say on Pay" Vote

For so long as a company has outstanding obligations arising out of the receipt of TARP funds, the Act and the Updated Guidance call for a separate shareholder vote to approve the compensation of executives in any proxy solicitation concerning an annual meeting at which directors will be elected or a special meeting in lieu of such annual meeting. Such resolution should be worded to approve the company's executive compensation as disclosed pursuant to the SEC's compensation disclosure rules (including compensation discussion and analysis, compensation tables, and related materials). Although this resolution will be subject to a vote by the company's shareholders, the vote is non-binding and will not give rise to any additional fiduciary duty on the part of the company's directors.

Preliminary Proxy Statement

The SEC is taking the position that a company including a "say on pay" resolution in its proxy statement should file a preliminary proxy statement with the SEC at least ten days before the definitive proxy statement is released to shareholders. The Updated Guidance indicates that this ten-day waiting period may be accelerated in the event "special circumstances" exist.

Additional Certification by CEO and CFO

The Act also requires the CEO and the CFO of any company obligated to comply with the "say on pay" requirement to provide a written certification of such compliance. The Updated Guidance, however, indicates that this additional certification requirement will not be effective until the Secretary of the Treasury issues regulations regarding executive compensation and corporate governance standards, which are expected to be enacted within a year. Therefore, this additional certification is not a requirement, as yet.

If you have any questions regarding these "say on pay" requirements, please do not hesitate to contact Alan MacDonald, Neil Ganulin, James Giesel, Steven Ellcessor, William Strench, or Kevin Cooney.

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