American Home Shield 2015 Annual Report Download - page 42

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Our amended and restated certificate of incorporation and amended and restated by laws include a number of provisions that
may discourage, delay or prevent a change in our management or control over us that stockholders may consider favorable. For
example, our amended and restated certificate of incorporation and amended and restated by laws collectively:
authorize the issuance of “blank check” preferred stock that could be issued by our board of directors to thwart a
takeover attempt;
provide for a classified board of directors, which divides our board of directors into three classes, with members of each
class serving staggered three-year terms, which prevents stockholders from electing an entirely new board of directors at
an annual meeting;
limit the ability of stockholders to remove directors;
provide that vacancies on our board of directors, including vacancies resulting from an enlargement of our board of
directors, may be filled only by a majority vote of directors then in office;
prohibit stockholders from calling special meetings of stockholders;
prohibit stockholder action by written consent, thereby requiring all actions to be taken at a meeting of the stockholders;
establish advance notice requirements for nominations of candidates for election as directors or to bring other business
before an annual meeting of our stockholders; and
require the approval of holders of at least 662/3% of the outstanding shares of our common stock to amend our amended
and restated by-laws and certain provisions of our amended and restated certificate of incorporation.
These provisions may prevent our stockholders from receiving the benefit from any premium to the market price of our
common stock offered by a bidder in a takeover context. Even in the absence of a takeover attempt, the existence of these provisions
may adversely affect the prevailing market price of our common stock if the provisions are viewed as discouraging takeover attempts
in the future.
Our amended and restated certificate of incorporation and amended and restated by laws may also make it difficult for
stockholders to replace or remove our management. These provisions may facilitate management entrenchment that may delay, deter,
render more difficult or prevent a change in our control, which may not be in the best interests of our stockholders.
We do not intend to pay dividends on our common stock and, consequently, your ability to achieve a return on your investment will
depend on appreciation in the price of our common stock.
We do not intend to declare and pay dividends on our common stock for the foreseeable future. We currently intend to use
our future earnings, if any, to repay debt, to repurchase shares of our common stock, to fund our growth, to develop our business, for
working capital needs and general corporate purposes. Therefore, you are not likely to receive any dividends on your common stock
for the foreseeable future and the success of an investment in shares of our common stock will depend upon any future appreciation in
their value. There is no guarantee that shares of our common stock will appreciate in value or even maintain the price at which our
stockholders have purchased their shares. In addition, ServiceMaster’s operations are conducted almost entirely through our
subsidiaries. As such, to the extent that we determine in the future to pay dividends on our common stock, none of our subsidiaries
will be obligated to make funds available to ServiceMaster for the payment of dividends. Further, the agreements governing our Credit
Facilities significantly restrict the ability of our subsidiaries to pay dividends or otherwise transfer assets to us. In addition, the
payment of ordinary and extraordinary dividends by our subsidiaries that are regulated as insurance, home service, or similar
companies is subject to applicable state law limitations, and Delaware law may impose additional requirements that may restrict our
ability to pay dividends to holders of our common stock.
Our amended and restated certificate of incorporation designates the Court of Chancery of the State of Delaware as the exclusive
forum for certain litigation that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a
favorable judicial forum for disputes with us.
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the sole
and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a
fiduciary duty owed to us or our stockholders by any of our directors, officers, employees or agents, (iii) any action asserting a claim
against us arising under the General Corporation Law of the State of Delaware or (iv) any action asserting a claim against us that is
governed by the internal affairs doctrine. By becoming a stockholder in our company, you will be deemed to have notice of and have
consented to the provisions of our amended and restated certificate of incorporation related to choice of forum. The choice of forum
provision in our amended and restated certificate of incorporation may limit our stockholders’ ability to obtain a favorable judicial
forum for disputes with us.
40 2015 Annual Report