(3) | Reflects the aggregate grant date fair value of restricted stock and performance share awards are outstanding at any time. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Option Awards | | Stock Awards | | | | | | | | | | | | | | | | | | | | | | | | Equity | | | | | | | | | | | | | | | | | | | | | | | | Incentive | | | | | | | | | | | | | | | | | | | | | | | | Plan | | | | | | | | | | | | | | | | | | | | | | | | Awards: | | | | | | | | | | | | | | | | | | | | Equity | | | Market or | | | | | | | | | | | | | | | | | | | | Incentive | | | Payout | | | | | | | | | | | | | | | | | | | | Plan Awards: | | | Value | | | | | | | | | | | | | | | | | | | | Number | | | of | | | | | | | | | | | | | | | | | | | | of | | | Unearned | | | | | | | | | | | | | | | | | Market | | | Unearned | | | Shares, | | | | | | | | | | | | | | | Value of | | | Shares, | | | Units or | | | | Number of | | Number of | | | | | | Number of | | | Shares or | | | Units or | | | Other | | | | Securities | | Securities | | | | | | Shares or | | | Units of | | | Other Rights | | | Rights | | | | Unexercised | | Unexercised | | Option | | | | Stock That | | Stock That | | That Have | | That Have | | | Options | | Options | | Exercise | | Option | | Have Not | | | Have Not | | | Not | | | Not | | | | (#) | | (#) | | Price | | Expiration | | Vested | | | Vested (1) | | | Vested | | | Vested (1) | | Name | | Exercisable | | Unexercisable | | ($) | | Date | | (#) | | | ($) | | | (#) | | | ($) | | Jack A. Hockema | | 8,037 |
| (2) | | — | | $80.01 | | 4/3/2017 | | 8,282 |
| (3) | | | $ | 581,728 |
| | | 32,979 |
| (6) | | | $ | 2,316,445 |
| | | | | | | | | | | | | 10,243 |
| (4) | | | $ | 719,468 |
| | | 34,349 |
| (7) | | | $ | 2,412,674 |
| | | | | | | | | | | | | 7,449 |
| (5) | | | $ | 523,218 |
| | | 26,898 |
| (8) | | | $ | 1,889,316 |
| | | | | | | | | | | | | | | | | | | | | | | | | | Daniel J. Rinkenberger | | 803 |
| (2) | | — | | $80.01 | | 4/3/2017 | | 5,490 |
| (3) | | | $ | 385,618 |
| | | 6,557 |
| (6) | | | $ | 460,564 |
| | | | | | | | | | | | | 6,850 |
| (4) | | | $ | 481,144 |
| | | 8,181 |
| (7) | | | $ | 574,633 |
| | | | | | | | | | | | | 5,363 |
| (5) | | | $ | 376,697 |
| | | 6,406 |
| (8) | | | $ | 449,957 |
| | | | | | | | | | | | | | | | | | | | | | | | | | John M. Donnan | | 2,083 |
| (2) | | — | | $80.01 | | 4/3/2017 | | 4,289 |
| (3) | | | $ | 301,259 |
| | | 5,122 |
| (6) | | | $ | 460,564 |
| | | | | | | | | | | | | 763 |
| (9) | | | $ | 53,593 |
| | | 911 |
| (10) | | | $ | 574,633 |
| | | | | | | | | | | | | 5,956 |
| (4) | | | $ | 418,349 |
| | | 7,114 |
| (7) | | | $ | 449,957 |
| | | | | | | | | | | | | 4,663 |
| (5) | | | $ | 327,529 |
| | | 5,569 |
| (8) | | | $ | 460,564 |
| | | | | | | | | | | | | | | | | | | | | | | | | | Peter Bunin | | 1,961 |
| (2) | | — | | $80.01 | | 4/3/2017 | | 5,147 |
| (3) | | | $ | 361,525 |
| | | 6,147 |
| (6) | | | $ | 431,765 |
| | | | | | | | | | | | | 5,956 |
| (4) | | | $ | 418,349 |
| | | 7,114 |
| (7) | | | $ | 499,687 |
| | | | | | | | | | | | | 4,663 |
| (5) | | | $ | 327,529 |
| | | 5,569 |
| (8) | | | $ | 391,167 |
| | | | | | | | | | | | | | | | | | | | | | | | | | Keith A. Harvey | | 1,202 |
| (2) | | — | | $80.01 | | 4/3/2017 | | 3,774 |
| (3) | | | $ | 265,086 |
| | | 4,508 |
| (6) | | | $ | 431,765 |
| | | | | | | | | | | | | 5,658 |
| (4) | | | $ | 397,418 |
| | | 6,758 |
| (7) | | | $ | 499,687 |
| | | | | | | | | | | | | 4,436 |
| (5) | | | $ | 311,585 |
| | | 5,299 |
| (8) | | | $ | 391,167 |
| |
____________
| | (1) | Reflects the aggregate market value determined based on a per share price of $70.24, the closing price per share of our common stock as reported on the Nasdaq Stock Market on December 31, 2013. to our named executive officers determined in accordance with ASC Topic 718, without regard to potential forfeiture. The aggregate grant date fair value of the performance share awards reflected in this table has been determined assuming the probable outcome of the performance condition on the date of the grant and without adjustment for actual performance during the period and using |
| | (2) | Reflects option rights granted to the named executive officer effective April 3, 2007. The option rights became exercisable as to one-third of the total number of shares of common stock for which they are exercisable on each of April 3, 2008, April 3, 2009 and April 3, 2010. The option rights expire on April 3, 2017, unless terminated earlier in accordance with their terms. |
| | (3) | For named executive officers other than Mr. Hockema, reflects the number of shares of restricted stock received by the named executive officer pursuant to awards granted effective March 5, 2011; for Mr. Hockema, reflects the number of shares of restricted stock received by him effective March 5, 2011 less the number of shares withheld to satisfy the withholding tax obligations resulting from the recognition of income when he reached age 65 on October 30, 2011. The restrictions on all such shares lapsed on March 5, 2014. |
| | (4) | For named executive officers other than Mr. Hockema, reflects the number of shares of restricted stock received by the named executive officer pursuant to awards granted effective March 5, 2012; for Mr. Hockema, reflects the number of shares of restricted stock received by him effective March 5, 2012 less the number of shares withheld to satisfy the withholding tax obligations resulting from the recognition of income at the time of grant because Mr. Hockema had previously reached age 65 on October 30, 2011. The restrictions on all such shares will lapse on March 5, 2015 or earlier if the named executive officer's employment terminates as a result of death or disability, the named executive officer's employment is terminated by us without cause, the named executive officer's employment is voluntarily terminated by him for good reason or in the event of a change of control, each such event being referred to below as an accelerated vesting event. If, prior to March 5, 2015, the named executive officer's employment terminates as a result of his retirement at or |
42
a Monte Carlo simulation of future stock prices of our company and our peer companies on the S&P 600 SmallCap Materials Index. | | (4) | Reflects the number of shares of restricted stock received by the named executive officer pursuant to awards granted effective March 5, 2015. The restrictions on 100% of the shares of restricted stock granted will lapse on March 5, 2018 or earlier if the named executive officer's employment terminates as a result of death or disability, the named executive officer's employment is terminated by us without cause, the named executive officer's employment is voluntarily terminated by him for good reason or in the event of a change in control. If the employment of an named executive officer terminates before March 5, 2018 as a result of his retirement at or after age 65, the shares of restricted stock granted to him will remain outstanding and the restrictions on a prorated portion of such shares, determined based on the actual days of his employment during the restriction period, will lapse on March 5, 2018. The named executive officer will receive all dividends and other distributions paid with respect to the shares of restricted stock he holds, but if any of such dividends or distributions are paid in shares of our capital stock, such shares will be subject to the same restrictions on transferability as are the shares of restricted stock with respect to which they were paid. |
Employment-Related Agreements and Certain Employee Benefit Plans
Employment Agreement with Jack A. Hockema
On July 6, 2006, we entered into an employment agreement with Jack A. Hockema, pursuant to which Mr. Hockema continued his duties as our President and Chief Executive Officer. On November 9, 2010, we entered into an amended and restated employment agreement with Mr. Hockema to extend the term of the existing employment agreement from July 5, 2012 through July 6, 2015, eliminate the automatic renewal provision, eliminate our obligation to make excise tax gross-up payments to Mr. Hockema, and modify his long-term incentive compensation to increase the portion of such compensation in the form of performance shares, as more fully described below. The agreement was amended and restated on March 5, 2014, primarily to extend the term of the existing employment agreement through December 31, 2016 and modify the calculation of any prorated payment of Mr. Hockema's annual short-term incentive compensation upon the termination of his employment prior to the last day of the applicable fiscal year so that such calculation is based on actual, rather than target, performance, and was amended on March 31, 2014 to permit his 2014 long-term incentive award to provide for prorated payment based on the actual number of days of his employment during the applicable restricted or performance period, rather than full payment, in the event of his retirement prior to the end of the applicable restricted or performance period. On December 31, 2015, the agreement was again amended and restated to extend the term of the existing employment agreement through December 31, 2018.
The terms of Mr. Hockema's amended and restated employment agreement provide for an initial base salary of $882,000, subject to annual increases, if any, agreed by us and Mr. Hockema and for an annual short-term incentive target equal to 68.5% of his base salary. The short-term incentive may be paid in cash, shares of the company's common stock, or a combination of cash and shares of the company's common stock, but is subject to both our meeting the applicable underlying performance thresholds and an annual cap of three times the target. If Mr. Hockema's employment terminates other than on a date which is the last day of a fiscal year, then his annual short-term incentive award with respect to the fiscal year in which his employment terminates will be determined based on the company's actual performance under the company's short-term incentive plan in which Mr. Hockema participates and prorated for the actual number of days of employment during such fiscal year, and such amount will be paid to Mr. Hockema or his estate unless his employment was terminated by us for cause. The amended and restated employment agreement provides that Mr. Hockema is entitled to receive annual equity awards (such as restricted stock, stock options or performance shares) with a target economic value of 227% of his base salary, with the portion of his annual equity awards in the form of restricted stock equaling 36% of the target economic value, and his annual equity awards in the form of performance shares equaling 64% of the target economic value.
Under Mr. Hockema's amended and restated employment agreement, following any termination of his employment, we must pay or provide to Mr. Hockema or his estate:
base salary earned through the date of such termination;
except in the case of a termination by us for cause, earned but unpaid incentive awards;
accrued but unpaid vacation;
benefits under our employment benefit plans to the extent vested and not forfeited on the date of such termination; and
benefit continuation and conversion rights to the extent provided under our employment benefit plans.
In addition, if Mr. Hockema's employment is terminated as a result of his death or disability, at the end of the term of his employment agreement or upon his retirement during the term, all of his outstanding equity awards will vest in accordance with their terms, subject to the provisions described above, and all of his vested but unexercised grants will remain exercisable through the second anniversary of such termination. If Mr. Hockema's employment is terminated by us for cause, all of his unvested equity grants will be forfeited and all of his vested but unexercised equity grants will be forfeited on the date that is 90 days following such termination. If Mr. Hockema's employment is terminated by us without cause or is voluntarily terminated by him with good reason, in addition to the payment of his accrued benefits as described above, (1) we will make a lump-sum payment to Mr. Hockema in an amount equal to 3.37 times his base salary, (2) his medical, dental, vision, life insurance and disability benefits, which we refer to as welfare benefits, will continue for two years commencing on the date of such termination, and (3) all of his outstanding equity awards will vest in accordance with their terms, subject to the provisions described above, and all of his vested but unexercised grants will remain exercisable through the second anniversary of such termination.
If there is a change in control of our company, all of Mr. Hockema's equity awards outstanding as of the date of such change in control will vest in accordance with their terms. If Mr. Hockema's employment is terminated by us without cause or is voluntarily terminated by him with good reason within two years following a change in control, in addition to the payments of his accrued benefits as described above, (1) we will make a lump-sum payment to Mr. Hockema in an amount equal to 5.05 times his base salary, (2) his welfare benefits will continue for three years commencing on the date of such termination, and (3) all previously unvested equity grants will become exercisable and vested but unexercised grants will remain exercisable through the second anniversary of such termination. If any payments to Mr. Hockema would be subject to a federal excise tax by reason of being considered contingent on a change in control, then such payments will be reduced to the minimum extent necessary so that no portion of such payments, as so reduced, is subject to such tax, except that such a reduction will be made only if and to the extent such reduction would result in an increase in the aggregate payment on an after-tax basis. Mr. Hockema will be subject to noncompetition, nonsolicitation and confidentiality restrictions following his termination of employment.
For quantitative disclosure regarding estimated payments and other benefits that would have been received by Mr. Hockema or his estate if his employment had terminated on December 31, 2015, the last day of 2015, under various circumstances, see "- Potential Payments and Benefits upon Termination of Employment" below.
Salaried Severance Plan
Mr. Hockema's employment agreement discussed above describes the benefits available to Mr. Hockema upon the severance of his employment with the company. Messrs. Harvey, Rinkenberger, Donnan, and Barneson are subject to our severance plan for salaried employees, which we refer to as our Salaried Severance Plan. Our Salaried Severance Plan provides for payment of a termination allowance and continuation of welfare benefits upon an involuntary separation of employment that is intended to be permanent and that is due to our convenience. The termination allowance and continuation of welfare benefits are not available under our Salaried Severance Plan if:
the employee received severance compensation or welfare benefit continuation pursuant to a Change in Control Agreement (described below) or any other agreement;
the employee's employment is terminated other than by us without cause; or
the employee declined to sign, or subsequently revokes, a designated form of release.
The termination allowance payable to covered employees under our Salaried Severance Plan consists of a lump-sum cash payment equal to the employee's weekly base salary multiplied by a number of weeks (not to exceed 26), which we refer to as the continuation period, determined based on the employee's number of years of full employment. Under our Salaried Severance Plan, welfare benefits are continued following the termination of employment for the shorter of the continuation period and the period commencing on the termination of employment and ending on the date that the employee is no longer eligible for coverage under the Consolidated Omnibus Budget Reconciliation Act, or COBRA. As of December 31, 2015, the continuation periods for Messrs. Harvey, Rinkenberger, Donnan, and Barneson were 26, 20, 20, and 26 weeks, respectively.
For quantitative disclosure regarding estimated payments and other benefits that would have been received by each of Messrs. Hockema, Harvey Rinkenberger, Donnan, and Barneson or his estate if his employment had terminated on
December 31, 2015 under various circumstances, see "- Potential Payments and Benefits upon Termination of Employment" below.
Change in Control Agreements
In 2002, in connection with the commencement of our chapter 11 bankruptcy and the implementation of our court-approved Chapter 11 Key Employee Retention Plan, we also entered into Change in Control Agreements with certain key executives, including Messrs. Hockema, Harvey, Rinkenberger, Donnan, and Barneson, in order to provide them with appropriate protection in the event of a termination of employment in connection with a change in control or, except as otherwise provided, a significant restructuring. Mr. Hockema's employment agreement discussed above supersedes his Change in Control Agreement. The Change in Control Agreements terminate on the second anniversary of a change in control.
The Change in Control Agreements provide for severance payments and continuation of welfare benefits upon termination of employment in certain circumstances. The participants are eligible for severance benefits if their employment is terminated by us without cause or by the participant with good reason during a period that commences 90 days prior to the change in control and ends on the second anniversary of the change in control. Participants (including Messrs. Harvey, Rinkenberger, Donnan, and Barneson) also are eligible for severance benefits if their employment is terminated by us due to a significant restructuring event when there has been no change in control. These benefits are not available if:
the participant's employment is terminated other than by us without cause or by the participant for good reason; or
the participant declines to sign, or subsequently revokes, a designated form of release.
In consideration for the severance payment and continuation of benefits, a participant will be subject to noncompetition, nonsolicitation and confidentiality restrictions following his or her termination of employment with us.
Upon a qualifying termination of employment, each of Messrs. Harvey, Rinkenberger, Donnan, and Barneson is entitled to receive the following:
three times (for Mr. Barneson) or two times (for Messrs Harvey, Rinkenberger, and Donnan) the sum of his base pay and most recent short-term incentive target;
a prorated portion of his short-term incentive target for the year of termination; and
a prorated portion of his long-term incentive target in effect for the year of his termination, provided that such target was achieved.
In addition, welfare benefits and perquisites are continued for a period of three years (for Mr. Barneson) or two years (for Messrs. Harvey, Rinkenberger, and Donnan) after termination of employment with us.
In general, if any payments would be subject to federal excise tax or any similar state or local tax by reason of being considered contingent on a change in control, the participant will be entitled to receive an additional amount (a "gross-up payment") such that, after satisfaction of all tax obligations imposed on such payments, the participant retains an amount equal to the federal excise tax or similar state or local tax imposed on such payments. However, if no such federal excise tax or similar state or local tax would apply if the aggregate payments were reduced by 5%, then the aggregate payments to the participant will be reduced by the amount necessary to avoid application of such federal excise tax or similar state or local tax.
For quantitative disclosure regarding estimated payments and other benefits that would have been received by each of Messrs. Hockema, Harvey, Rinkenberger, Donnan, and Barneson or his estate if his employment had terminated on December 31, 2015, the last day of 2015, under various circumstances, see "- Potential Payments and Benefits Upon Termination of Employment" below.
2006 Plan
The 2006 Plan is an omnibus plan that facilitates the issuance of incentive awards as part of our comprehensive compensation structure and is administered by a committee of non-employee directors of our board of directors, currently, the compensation committee.
Officers and other key employees (and persons who have agreed to commence serving in any of those capacities within 90 days) who are selected by the compensation committee, as well as our non-employee directors, are eligible to participate in the 2006 Plan. Any director emeritus and any person who provides services to us or any of our subsidiaries that are equivalent to those typically provided by employees and who are selected by the compensation committee are also eligible to participate in the 2006 Plan.
Subject to certain adjustments that may be required from time to time to prevent dilution or enlargement of the rights of participants under the 2006 Plan, a maximum of 2,722,222 shares of common stock may be issued under the 2006 Plan. As of the date of this Proxy Statement, 603,810 shares of common stock are available for additional awards under the 2006 Plan.
The 2006 Plan expires on July 6, 2016. If the 2016 Plan is not approved by our stockholders, we will not be able to grant equity awards as part of our incentive compensation programs in the coming years. For more detailed discussion of the 2016 Plan, see "Proposals Requiring Your Vote - Proposal 3 - Approval of Kaiser Aluminum Corporation 2016 Equity and Performance Incentive Plan" above.
Savings Plan
We sponsor a tax-qualified profit sharing and 401(k) plan, our Savings Plan, in which eligible salaried employees may participate. Pursuant to the Savings Plan, employees may elect to reduce their current annual compensation up to the lesser of 75% or the statutorily prescribed limit of $18,000 in calendar year 2016 (plus up to an additional $6,000 in the form of "catch-up" contributions for participants near retirement age), and have the amount of any reduction contributed to the Savings Plan. Our Savings Plan is intended to qualify under sections 401(a) and 401(k) of the Code, so that contributions by us or our employees to the Savings Plan and income earned on contributions are not taxable to employees until withdrawn from the Savings Plan and so that contributions will be deductible by us when made. We match 100% of the amount an employee contributes to the Savings Plan, subject to a 4% maximum based on the employee's compensation as defined in the Savings Plan.
Employees are immediately vested 100% in our matching contributions to our Savings Plan. We also make annual fixed-rate contributions on behalf of our employees in the following amounts:
for our employees who were employed with us on or before January 1, 2004, we contribute in a range from 2% to 10% of the total of the employee's base salary and short-term incentive award, based upon the sum of the employee's age and years of continuous service as of January 1, 2004; and
for our employees who were first employed with us after January 1, 2004, we contribute 2% of the total of the employee's base salary and short-term incentive award.
As discussed more fully below, the fixed-rate contributions were implemented following the termination of our qualified, defined benefit retirement plan and resulting loss of benefit accruals under that plan.
An employee is required to be employed on the last day of the year in order to receive the fixed-rate contribution. Employees are vested 100% in our fixed-rate contributions to the Savings Plan after three years of service. The total amount of elective, matching and fixed-rate contributions in any year cannot exceed the lesser of 100% of the total of an employee's base salary and short-term incentive award or $52,000 in 2015, respectively (adjusted annually). We may amend or terminate these matching and fixed-rate contributions at any time by an appropriate amendment to our Savings Plan. Upon termination of employment, employees are eligible to receive a distribution of their vested plan balances under our Savings Plan. The independent trustee of the Savings Plan invests the assets of the Savings Plan as directed by participants.
Restoration Plan
We sponsor a nonqualified, deferred compensation plan, our Restoration Plan, in which members of our senior management and highly compensated employees may participate. Eligibility to participate in our Restoration Plan is determined by the compensation committee. The purpose of our Restoration Plan is to restore the benefit of matching and fixed-rate contributions that we would have otherwise paid to participants under our Savings Plan but for the limitations on benefit accruals and payments imposed by the Code. We maintain an account on behalf of each participant in the Restoration Plan, and contributions to a participant's Restoration Plan account to restore benefits under the Savings Plan are made generally in the manner described below:
if our matching contributions to a participant under the Savings Plan are limited in any year, we will make an annual contribution to that participant's account under the Restoration Plan equal to the difference between:
the matching contributions that we could have made to that participant's account under the Savings Plan if the Code did not impose any limitations; and
the maximum contribution we could in fact make to that participant's account under the Savings Plan in light of the limitations imposed by the Code; and
annual fixed-rate contributions to the participant's account under the Restoration Plan are made in an amount equal to between 2% and 10% of the participant's excess compensation, as defined in Section 401(a)(17) of the Code.
Participants are immediately vested 100% in our matching contributions to the Restoration Plan and are vested 100% in our fixed-rate contributions to our Restoration Plan after three years of service or upon retirement, death, disability or a change of control. Participants do not make contributions to their respective Restoration Plan accounts. A participant is entitled to distributions six months following his or her termination of service, except that any participant who is terminated for cause will forfeit the entire amount of matching and fixed-rate contributions made by us to that participant's account under the Restoration Plan.
We may amend or terminate these matching and fixed-rate contributions at any time by an appropriate amendment to our Restoration Plan. The value of each participant's account under our Restoration Plan changes based upon the performance of the funds designated by the participant from a menu of various money market and investment funds.
Outstanding Equity Awards at December 31, 2015
The table below sets forth the information regarding equity awards held by our named executive officers as of December 31, 2015 and illustrates the impact of the intended design of our compensation program, which generally insures three years of restricted stock and performance share awards are outstanding at any time. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Option Awards | | Stock Awards | | | | | | | | | | | | | | | | | | | | | | | | Equity | | | | | | | | | | | | | | | | | | | | | | | | Incentive | | | | | | | | | | | | | | | | | | | | | | | | Plan | | | | | | | | | | | | | | | | | | | | | | | | Awards: | | | | | | | | | | | | | | | | | | | | Equity | | | Market or | | | | | | | | | | | | | | | | | | | | Incentive | | | Payout | | | | | | | | | | | | | | | | | | | | Plan Awards: | | | Value | | | | | | | | | | | | | | | | | | | | Number | | | of | | | | | | | | | | | | | | | | | | | | of | | | Unearned | | | | Number of | | | | | | | | | | | | Market | | | Unearned | | | Shares, | | | | Securities | | Number of | | | | | | Number of | | | Value of | | | Shares, | | | Units or | | | | Underlying | | Securities | | | | | | Shares or | | | Shares or | | | Units or | | | Other | | | | Unexercised | | Underlying | | | | | | Units of | | | Units of | | | Other Rights | | | Rights | | | | Options | | Unexercised | | Option | | | | Stock That | | Stock That | | That Have | | That Have | | | Exercisable | | Options | | Exercise | | Option | | Have Not | | | Have Not | | | Not | | | Not | | | | (#) | | Unexercisable | | Price | | Expiration | | Vested | | | Vested (2) | | | Vested | | | Vested (2) | | Name | | (1) | | (#) | | ($) | | Date | | (#) | | | ($) | | | (#) | | | ($) | | Jack A. Hockema | | 8,037 |
| | | — | | $80.01 | | 4/3/2017 | | 7,449 |
| (3) | | | $ | 623,183 |
| | | 26,898 |
| (6) | | | $ | 2,250,287 |
| | | | | | | | | | | | | 11,493 |
| (4) | | | $ | 961,504 |
| | | 24,401 |
| (7) | | | $ | 2,041,388 |
| | | | | | | | | | | | | 11,046 |
| (5) | | | $ | 924,108 |
| | | 23,459 |
| (8) | | | $ | 1,962,580 |
| | | | | | | | | | | | | | | | | | | | | | | | | | Keith A. Harvey | | 1,202 |
| | | — | | $80.01 | | 4/3/2017 | | 4,436 |
| (3) | | | $ | 371,116 |
| | | 5,299 |
| (6) | | | $ | 443,314 |
| | | | | | | | | | | | | 4,231 |
| (4) | | | $ | 353,965 |
| | | 5,052 |
| (7) | | | $ | 422,650 |
| | | | | | | | | | | | | 25,000 |
| (9) | | | $ | 2,091,500 |
| | | 6,594 |
| (8) | | | $ | 551,654 |
| | | | | | | | | | | | | 5,520 |
| (5) | | | $ | 461,803 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Daniel J. Rinkenberger | | 803 |
| | | — | | $80.01 | | 4/3/2017 | | 5,363 |
| (3) | | | $ | 448,669 |
| | | 6,406 |
| (6) | | | $ | 535,926 |
| | | | | | | | | | | | | 5,011 |
| (4) | | | $ | 419,220 |
| | | 5,985 |
| (7) | | | $ | 500,705 |
| | | | | | | | | | | | | 4,817 |
| (5) | | | $ | 402,990 |
| | | 5,754 |
| (8) | | | $ | 481,380 |
| | | | | | | | | | | | | | | | | | | | | | | | | | John M. Donnan | | 2,083 |
| | | — | | $80.01 | | 4/3/2017 | | 4,663 |
| (3) | | | $ | 390,107 |
| | | 5,569 |
| (6) | | | $ | 465,903 |
| | | | | | | | | | | | | 4,358 |
| (4) | | | $ | 364,590 |
| | | 5,205 |
| (7) | | | $ | 435,450 |
| | | | | | | | | | | | | 4,189 |
| (5) | | | $ | 350,452 |
| | | 5,004 |
| (8) | | | $ | 418,635 |
| | | | | | | | | | | | | | | | | | | | | | | | | | John Barneson | | 2,334 |
| | | — | | $80.01 | | 4/3/2017 | | 3,823 |
| (3) | | | $ | 319,832 |
| | | 4,567 |
| (6) | | | $ | 382,075 |
| | | | | | | | | | | | | 3,573 |
| (4) | | | $ | 298,917 |
| | | 4,268 |
| (7) | | | $ | 357,061 |
| | | | | | | | | | | | | 3,435 |
| (5) | | | $ | 287,372 |
| | | 4,103 |
| (8) | | | $ | 343,257 |
| |
____________ | | (1) | Reflects option rights granted to the named executive officer effective April 3, 2007. The option rights became exercisable as to one-third of the total number of shares of common stock for which they are exercisable on each of April 3, 2008, April 3, 2009 and April 3, 2010. The option rights expire on April 3, 2017, unless terminated earlier in accordance with their terms. |
| | (2) | Reflects the aggregate market value determined based on a per share price of $83.66, the closing price per share of our common stock as reported on the Nasdaq Stock Market on December 31, 2015. |
| | (3) | For named executive officers other than Mr. Hockema, reflects the number of shares of restricted stock received by the named executive officer pursuant to awards granted effective March 5, 2013; for Mr. Hockema, reflects the number of shares of restricted stock received by him effective March 5, 2013 less the number of shares withheld to satisfy the withholding tax obligations resulting from the recognition of income at the time of grant because Mr. Hockema had previously reached age 65 on October 30, 2011. The restrictions on all such shares lapsed on March 5, 2016. |
| | (4) | Reflects the number of shares of restricted stock received by the named executive officer pursuant to awards granted effective March 5, 2014. The restrictions on all such shares will lapse on March 5, 2017 or earlier if the named executive officer’s employment terminates as a result of death or disability, the named executive officer’s employment is terminated by us without cause, the named executive officer’s employment is voluntarily terminated by him for good reason or in the event of a change in control. If, prior to March 5, 2017, the employment of a named executive officer, other than Mr. Hockema, terminates as a result of his retirement at or after age 65, the shares of restricted stock granted to him will remain outstanding and the restrictions on 100% of such sharesshare will lapse on March 5, 2015. | | (5) | For named executive officers other than Mr. Hockema, reflects the number of shares of restricted stock received by the named executive officer pursuant to awards granted effective March 5, 2013; for Mr. Hockema, reflects the number of shares of restricted stock received by him effective March 5, 2013 less the number of shares withheld to satisfy the withholding tax obligations resulting from the recognition of income at the time of grant because Mr. Hockema had previously reached age 65 on October 30, 2011. The restrictions on all such shares will lapse on March 5, 2016 or earlier upon an accelerated vesting event. If, prior to March 5, 2016, the named executive officer's employment terminates as a result of his retirement at or after age 65, the shares of restricted stock granted to him will remain outstanding and the restrictions on 100% of such shares will lapse on March 5, 2016.2017. If, prior to March 5, 2017, Mr. Hockema's employment terminates as a result of his retirement, the shares of restricted stock granted to him will remain outstanding and the restriction on a prorated portion of such shares, determined based on the actual days of Mr. Hockema's employment during the restriction period, will lapse on March 5, 2017. |
| | (6) | Reflects the target number of performance shares received by the named executive officer pursuant to awards granted effective March 5, 2011. Such target number is approximately one-half of the performance shares received by the named executive officer pursuant to awards granted effective March 5, 2011. The number of performance shares earned based on the level of performance achieved during the three-year performance period vested on March 5, 2014. The compensation committee certified the performance level achieved during the three-year performance period in March 2014 and, based on the certified performance level, 46% of the target number of performance shares received by the named executive officers were earned. |
| | (7) | Reflects the target number of performance shares received by the named executive officer pursuant to awards granted effective March 5, 2012. Such target number is approximately one-half of the performance shares received by the named executive officer pursuant to awards granted effective March 5, 2012. The number of performance shares, if any, that vest based on the level of performance achieved during the three-year performance period will vest on the earlier to occur of March 15, 2015 and the date on which the compensation committee certifies the performance level achieved during the three-year performance period. If, prior to December 31, 2014, an accelerated vesting event occurs with respect to the named executive officer, the target number of performance shares will vest. If an accelerated vesting event occurs with respect to a named executive officer, on or after December 31, 2014 and prior to the vesting date, the performance shares will remain outstanding and the number of performance shares, if any, that will vest on the vesting date will be determined based on the performance level achieved during the applicable three-year performance period, except that the performance shares will be forfeited if the executive officer's employment is terminated by us for cause or is voluntarily terminated by him without good reason prior to age 65. If, prior to the vesting date, the employment of the named executive officer terminates as a result of his retirement at or after age 65, the performance shares granted to him will remain outstanding and the number of performance shares, if any, that will vest on the vesting date will be determined based on the performance level achieved during the applicable three-year performance period. Each performance share that becomes vested entitles the participant to receive one share of our common stock. |
| | (8) | Reflects the target number of performance shares received by the named executive officer pursuant to awards granted effective March 5, 2013. Such target number is approximately one-half of the performance shares received by the named executive officer pursuant to awards granted effective March 5, 2013. The number of performance shares, if any, that vest based on the level of performance achieved during the three-year performance period will vest on the later to occur of March 15, 2016 and the date on which the compensation committee certifies the performance level achieved during the three-year performance period. If, prior to December 31, 2015, an accelerated vesting event occurs with respect to the named executive officer, the target number of performance shares will vest. If an accelerated vesting event occurs with respect to a named executive officer, on or after December 31, 2015 and prior to the vesting date, the performance shares will remain outstanding and the number of performance shares, if any, that will vest on the vesting date will be determined based on the performance level achieved during the applicable three-year performance period, except that the performance shares will be forfeited if the executive officer's employment is terminated by us for cause or is voluntarily terminated by him without good reason prior to age 65. If, prior to the vesting date, the employment of the named executive officer terminates as a result of his retirement at or after age 65, the performance shares granted to him will remain outstanding and the number of performance shares, if any, that will vest on the vesting date will be determined based on the performance level achieved during the applicable three-year performance period. Each performance share that becomes vested entitles the participant to receive one share of our common stock. |
| | (9) | Reflects the number of shares of restricted stock received by Mr. Donnan pursuant to awards granted effective July 1, 2011, in connection with his assumption of increased responsibilities and relocation. The restrictions on all such shares lapsed on March 5, 2014. |
| | (10) | Reflects the target number of performance shares received by Mr. Donnan pursuant to awards granted effective July 1, 2011 in connection with his assumption of increased responsibilities and relocation. Such performance shares vested on the same terms as the performance shares described in Note 6 above. |
43
Option Exercises and Stock Vested in 2013
The table below sets forth information regarding | | (5) | Reflects the vesting during 2013number of shares of restricted stock received by the named executive officer pursuant to awards granted effective March 5, 2015. See Note 4 to the table set forth under "Executive Compensation - Grants of Plan-Based Awards" above for more information on the restricted stock granted to the named executive officers effective March 5, 2015. |
| | (6) | Reflects the target number of performance shares received by the named executive officer pursuant to awards granted effective March 5, 2013. Such target number is approximately one-half of the performance shares received by the named executive officer pursuant to awards granted effective March 5, 2013. The number of performance shares earned based on the level of performance achieved during the three-year performance period vested on March 5, 2016. The compensation committee certified the performance level achieved during the three-year performance period on March 5, 2015 and, based on the certified performance level, 64% of the target performance shares received by the named executive officers were earned. |
| | (7) | Reflects the target number of performance shares received by the named executive officer pursuant to awards granted effective March 5, 2014. Such target number is approximately one-half of the performance shares received by the named executive officer pursuant to awards granted effective March 5, 2014. The number of performance shares, if any, that vest based on the level of performance achieved during the three-year performance period will vest on the later to occur of March 15, 2017 and the date on which the compensation committee certifies the performance level achieved during the three-year performance period. If, prior to December 31, 2016, the named executive officer’s employment terminates as a result of death or disability, the target number of performance shares will vest. If, prior to the vesting date, the named executive officer’s employment is terminated by us without cause or is voluntarily terminated by him for good reason, the performance shares granted to him will remain outstanding and the number of performance shares, if any, that will vest upon the vesting date will be determined based on the performance level achieved during the three-year performance period. If, prior to December 31, 2016, a change in control occurs, the performance shares granted to him will vest immediately and the number of performance shares, if any, that will vest will be determined based on the performance level achieved during the performance period through the change in control date. If, prior to the vesting date, the employment of a named executive officer, other than Mr. Hockema, terminates as a result of his retirement at or after age 65, the performance shares granted to him will remain outstanding and the number of performance shares, if any, that will vest on the vesting date will be determined based on the performance level achieved during the applicable three-year performance period. If, prior to the vesting date, Mr. Hockema's employment terminates as a result of his retirement, the performance shares granted to him will remain outstanding and the number of performance shares, if any, that will vest on the vesting date will be determined based on the performance level achieved during the applicable three-year performance period and prorated based on the actual days of Mr. Hockema's employment during the performance period. Each performance share that becomes vested entitles the participant to receive one share of our common stock. |
| | (8) | Reflects the target number of performance shares received by the named executive officer pursuant to awards granted effective March 5, 2015. Such target number is approximately one-half of the performance shares received by the named executive officer pursuant to awards granted effective March 5, 2015. See Note 2 to the table set forth under "- Grants of Plan-Based Awards in 2015" above for more information on the performance shares granted to the named executive officers in 2010. | | | | | | | | | | Stock Awards | Name | | Number of Shares Acquired on Vesting (#) | | Value Realized on Vesting ($)(1) | Jack A. Hockema | | 19,113 |
| | | $1,168,187 | Daniel J. Rinkenberger | | 10,003 |
| | | $611,384 | John M. Donnan | | 7,830 |
| | | $478,569 | Peter Bunin | | 9,249 |
| | | $565,299 | Keith A. Harvey | | 6,452 |
| | | $394,347 |
____________
| effective March 5, 2015. | (1) | Reflects the aggregate market value of (i) restricted shares that vested on March 5, 2013, determined based on a per share price of $61.12,
|
Option Exercises and Stock Vested in 2015
The table below sets forth information regarding the vesting during 2015 of restricted stock and performance shares granted to our named executive officers in 2012. | | | | | | | | | | | | | | Stock Awards | Name | | Number of Shares Acquired on Vesting (#) | | Value Realized on Vesting ($)(1) | Jack A. Hockema | | 27,417 |
| | | | $ | 2,067,516 |
| | Keith A. Harvey | | 9,037 |
| | | | $ | 681,480 |
| | Daniel J. Rinkenberger | | 10,940 |
| | | | $ | 824,986 |
| | John M. Donnan | | 9,513 |
| | | | $ | 704,819 |
| | John Barneson | | 7,800 |
| | | | $ | 588,198 |
| |
____________ | | (1) | Reflects the aggregate market value of (i) restricted shares that vested on March 5, 2015, determined based on a per share price of $75.41, the closing price per share of our common stock as reported on the Nasdaq Stock Market on the vesting date of such shares of restricted stock, and (ii) shares of common stock that were received upon the vesting on March 5, 2013 of 17% of the total number of performance shares (34% of the target number of performance shares) granted to our named executive officers in 2010 based on actual results over the three-year performance period, determined based on a per share price of $61.12, the closing price per share of our common stock as reported on the Nasdaq Stock Market on the vesting date of such performance shares. |
Pension Benefits as of December 31, 2013
The table below sets forth information regarding the present value as of December 31, 2013 of the accumulated benefits of our named executive officers under our old defined benefit pension plan, our Old Pension Plan. As discussed further below, our Old Pension Plan was terminatedcommon stock as reported on December 17, 2003, at which time the number of years of credited service for participants was frozen.
| | | | | | | | Name | | Plan Name | | Number of Years Credited Service (#) | | Present Value of Accumulated Benefit (1) ($) | Jack A. Hockema | | Kaiser Aluminum Salaried Employees Retirement Plan | | 11.92 | | $389,339 | Daniel J. Rinkenberger | | Kaiser Aluminum Salaried Employees Retirement Plan | | 12.67 | | $409,554 | John M. Donnan | | Kaiser Aluminum Salaried Employees Retirement Plan | | 10.25 | | $328,218 | Peter Bunin | | Kaiser Aluminum Salaried Employees Retirement Plan | | 7.25 | | $230,277 | Keith A. Harvey | | Kaiser Aluminum Salaried Employees Retirement Plan | | 17.83 | | $401,160 |
Nasdaq Stock Market on the vesting |
date of such shares of restricted stock, and (ii) shares of common stock that were received upon the vesting on March 5, 2015 of 25% of the total number of performance shares (50% of the target number of performance shares) granted to our named executive officers in 2012 based on actual results over the three-year performance period, determined based on a per share price of $75.41, the closing price per share of our common stock as reported on the Nasdaq Stock Market on the vesting date of such performance shares.
Pension Benefits as of December 31, 2015
The table below sets forth information regarding the present value as of December 31, 2015 of the accumulated benefits of our named executive officers under our Old Pension Plan. As discussed further below, our Old Pension Plan was terminated on December 17, 2003, at which time the number of years of credited service for participants was frozen. | | | | | | | | Name | | Plan Name | | Number of Years Credited Service (#) | | Present Value of Accumulated Benefit (1) ($) | Jack A. Hockema | | Kaiser Aluminum Salaried Employees Retirement Plan | | 11.92 | | $380,105 | Keith A. Harvey | | Kaiser Aluminum Salaried Employees Retirement Plan | | 17.83 | | $434,649 | Daniel J. Rinkenberger | | Kaiser Aluminum Salaried Employees Retirement Plan | | 12.67 | | $433,779 | John M. Donnan | | Kaiser Aluminum Salaried Employees Retirement Plan | | 10.25 | | $344,294 | John Barneson | | Kaiser Aluminum Salaried Employees Retirement Plan | | 28.83 | | $638,374 |
____________ | | (1) | Determined (a) assuming mortality according to the RP-2000WC mortality table projected 23 years with Scale AA and (b) applying a discount rate of 3.40% per annum. |
The Old Pension Plan previously maintained by us was a qualified, defined-benefit retirement plan for our salaried employees who met certain eligibility requirements. Effective December 17, 2003, the PBGC terminated and effectively assumed responsibility for making benefit payments in respect of the Old Pension Plan. As a result of the termination, all benefit accruals under the Old Pension Plan were terminated and benefits available to certain executive officers, including Mr. Hockema, were significantly reduced due to the RP-2014 White Collar Healthy Annuitant mortality table, adjusted for 2006 and then projected with Scale MP-2015 and (b) applying a discount rate of 3.90% per annum.
|
The Old Pension Plan previously maintained by us was a qualified, defined-benefit retirement plan for our salaried employees who met certain eligibility requirements. Effective December 17, 2003, the PBGC terminated and effectively assumed responsibility for making benefit payments in respect of the Old Pension Plan. As a result of the termination, all benefit accruals under the Old Pension Plan were terminated and benefits available to certain executive officers, including Mr. Hockema, were significantly reduced due to the limitation on benefits payable by the PBGC. Benefits payable to participants will be reduced to a maximum of $34,742 annually for retirement at age 62, a lower amount for retirement prior to age 62, and a higher amount for retirements after age 62, up to $43,977 annually for retirement at age 65, and participants will not accrue additional benefits. In addition, the PBGC will not make lump-sum payments to participants.
Nonqualified Deferred Compensation for 2015
The table below sets forth, for each of our named executive officers, information regarding his participation in our Restoration Plan during 2015. For additional information about our Restoration Plan, see "- Restoration Plan." | | | | | | | | | | | | | | | | | | | | Name | | Registrant Contributions in Last FY (1) | | Aggregate Earnings in Last FY (2)(3) | | Aggregate Balance at Last FYE | Jack A. Hockema | | | $ | 159,326 |
| | | | $ | 38,661 |
| | | | $ | 3,693,420 |
| | Keith A. Harvey | | | $ | 57,272 |
| | | | $ | — |
| | | | $ | 498,684 |
| | Daniel J. Rinkenberger | | | $ | 49,978 |
| | | | $ | — |
| | | | $ | 398,667 |
| | John M. Donnan | | | $ | 45,394 |
| | | | $ | — |
| | | | $ | 493,556 |
| | John Barneson | | | $ | 41,333 |
| | | | $ | 10,000 |
| | | | $ | 2,174,191 |
| |
____________ | | (1) | In each case, 100% of such amount is included in the PBGC. Benefits payable to participants will be reduced to a maximum of $57,477 annuallyamounts for retirement at age 65, a lower amount for retirement prior to age 65, and a higher amount for retirements after age 65, up to $174,731 annually for retirement at age 75, and participants will not accrue additional benefits. In addition,2015 reflected in the PBGC will not make lump-sum payments to participants.
Nonqualified Deferred Compensation for 2013
The table below sets forth, for each of our named executive officers, information regarding his participation in our Restoration Plan during 2013. For additional information about our Restoration Plan, see "Executive Compensation - Restoration Plan."
| | | | | | | | | | | | | | | | | | | | Name | | Registrant Contributions in Last FY (1) | | Aggregate Earnings in Last FY (2)(3) | | Aggregate Balance at Last FYE | | | | (a) | | | | (b) | | | | (c) | | Jack A. Hockema | | | $ | 188,314 |
| | | | — | | | | $ | 3,205,708 |
| | Daniel J. Rinkenberger | | | $ | 60,787 |
| | | | $ | 25,817 |
| | | | $ | 275,461 |
| | John M. Donnan | | | $ | 55,665 |
| | | | $ | 49,883 |
| | | | $ | 373,271 |
| | Peter Bunin | | | $ | 55,665 |
| | | | $ | 93,748 |
| | | | $ | 451,920 |
| | Keith A. Harvey | | | $ | 63,876 |
| | | | $ | 46,280 |
| | | | $ | 359,458 |
| |
____________
| | (1) | In each case, 100% of such amount is included in the amounts for 2013 reflected in the “All Other Compensation” column of the Summary Compensation Table above.
|
| | (2) | Amounts included in this column reflect the change in market value of the investments made under the Restoration Plan and do not include amounts reflected in column (a). For 2013, the market value of Mr. Hockema's investments was reduced by $29,904. |
| | (3) | Amounts included in this column do not include above-market or preferential earnings (of which there were none) and, accordingly, such amount is not included in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings”"All Other Compensation" column of the Summary Compensation Table above. |
Potential Payments | | (2) | Amounts included in this column reflect the change in market value of the investments made under the Restoration Plan and Benefits Upon Terminationdo not include amounts reflected in column (a). |
| | (3) | Amounts included in this column do not include above-market or preferential earnings (of which there were none) and, accordingly, such amount is not included in the "Change in Pension Value and Nonqualified Deferred Compensation Earnings" column of Employment
The tables below set forth for each named executive officer quantitative disclosure regarding estimated payments and other benefits that would have been received by the named executive officer or his estate if his employment had terminated on December 31, 2013, the last day of 2013,Summary Compensation Table above.
|
Potential Payments and Benefits Upon Termination of Employment
The tables below set forth for each named executive officer quantitative disclosure regarding estimated payments and other benefits that would have been received by the named executive officer or his estate if his employment had terminated on December 31, 2015, the last business day of 2015, under the following circumstances:
voluntary termination by the named executive officer prior to age 65, except for Mr. Hockema, who turned age 65 during 2011;
termination by us for cause;
termination by us without cause or by the named executive officer with good reason;
termination by us without cause or by the named executive officer with good reason following a change in control;
termination at retirement at or after age 65;
termination as a result of disability; or
termination as a result of death.
Information regarding estimated payments and other benefits upon termination of employment of Messrs. Harvey, Rinkenberger, Donnan, and Barneson at retirement is provided for illustrative purposes notwithstanding the fact that none of such named executive officers had reached age 65 as of December 31, 2015.
JACK A. HOCKEMA
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Circumstances of Termination (1) | Payments and Benefits | | Termination by us for Cause | | Termination by us without Cause or by the Named Executive Officer with Good Reason | | Termination by us without Cause or by the Named Executive Officer with Good Reason Following a Change in Control | |
Retirement At or After Age 65 | | Disability | | Death | Payment of earned but unpaid: | | | | | | | | | | | | | | | | | | | Base salary (2) | | — |
| | — |
| | | — |
| | | — |
| | | — |
| | | — |
| | | Short-term incentive (3) | | — |
| | $ | 732,048 |
| | | $ | 732,048 |
| | | $ | 732,048 |
| | | $ | 732,048 |
| | | $ | 732,048 |
| | | Vacation (4) | | $ | 84,808 |
| | $ | 84,808 |
| | | $ | 84,808 |
| | | $ | 84,808 |
| | | $ | 84,808 |
| | | $ | 84,808 |
| | Other Benefits: | | | | | | | | | | | | | | | | | | | Lump sum payment | | — |
| | $ | 2,972,340 |
| (5) | | $ | 4,454,100 |
| (6) | | — |
| | | — |
| | | — |
| | | Healthcare benefits (7) | | — |
| | $ | 52,756 |
| | | $ | 83,153 |
| | | — |
| | | — |
| | | — |
| | | Disability benefits | | — |
| | $ | — |
| (8) | | $ | — |
| (8) | | — |
| | | $ | — |
| (9) | | — |
| | | Life insurance | | — |
| | $ | 939 |
| (10) | | $ | 1,449 |
| (10) | | — |
| | | — |
| | | $ | 50,000 |
| (11) | | Perquisites and other personal benefits | | — |
| | — |
| | | — |
| | | — |
| | | — |
| | | — |
| | | Tax gross-up (12) | | — |
| | — |
| | | $ | (3,286,787 | ) | | | — |
| | | — |
| | | — |
| | Acceleration of Equity Awards: | | | | | | | | | | | | | | | | | | | Market value of stock vesting on | | | | | | | | | | | | | | | | | | | termination | | — |
| | $ | 8,049,633 |
| (13) | | $ | 12,150,349 |
| (14) | | $ | 4,971,091 |
| (15) | | $ | 8,049,633 |
| (16) | | $ | 8,049,633 |
| (16) | | Spread for options vesting on | | | | | | | | | | | | | | | | | | | termination (17) | | — |
| | — |
| | | — |
| | | — |
| | | — |
| | | — |
| | Distribution of Restoration Plan Balance: | | | | | | | | | | | | | | | | | | | Amount of Distribution (18) | | — |
| | $ | 3,693,420 |
| | | $ | 3,693,420 |
| | | $ | 3,693,420 |
| | | $ | 3,693,420 |
| | | $ | 3,693,420 |
| | Total | | $ | 84,808 |
| | $ | 15,585,944 |
| | | $ | 17,912,540 |
| | | $ | 9,481,367 |
| | | $ | 12,559,909 |
| | | $ | 12,609,909 |
| |
____________
| | (1) | Mr. Hockema reached age 65 on October 30, 2011. Accordingly, any voluntary termination by Mr. Hockema would be treated as retirement at or after age 65. See "Retirement At or After Age 65" column of this table. |
| | (2) | Assumes that there is no earned but unpaid base salary at the time of termination. |
| | (3) | Under our 2015 STI Plan, Mr. Hockema's target award for 2015 was $604,000, but his award could have ranged from a threshold of $302,000 to a maximum of $1,812,000, or could have been zero if the threshold performance was not achieved. Mr. Hockema's award under our 2015 STI Plan was determined in March 2016 to be $732,048. Pursuant to Mr. Hockema's employment agreement, we must pay Mr. Hockema or his estate any earned but unpaid short-term incentive unless his employment is terminated by us for cause. Under Mr. Hockema's employment agreement, if his employment had been terminated during 2015 but prior to December 31, 2015, Mr. Hockema's award for 2015 under our 2015 STI Plan would have been determined based on actual performance and prorated for the actual number of days of Mr. Hockema's employment in 2015, provided that Mr. Hockema would have received no award for 2015 under our 2015 STI Plan if his employment had been terminated by us for cause. Under Mr. Hockema's employment agreement, if his employment had been terminated on December 31, 2015, the last day of our 2015 fiscal year, Mr. Hockema would have been entitled to full payment of his award under the 2015 STI Plan unless his employment had been terminated by us for cause. |
| | (4) | Assumes that Mr. Hockema used all of his 2015 vacation and that he had five weeks of accrued vacation for 2016. |
| | (5) | Under Mr. Hockema's employment agreement, if Mr. Hockema's employment is terminated by us without cause or is voluntarily terminated by him for good reason, we must make a lump-sum payment to Mr. Hockema in an amount equal to 3.37 times his base salary for the fiscal year in which such termination occurs. |
| | (6) | Under Mr. Hockema's employment agreement, if Mr. Hockema's employment is terminated by us without cause or is voluntarily terminated by him for good reason within two years following a change in control, we must make a lump-sum payment to Mr. Hockema in an amount equal to 5.05 times his base salary for the fiscal year in which such termination occurs. |
| | (7) | Under Mr. Hockema's employment agreement, if Mr. Hockema's employment is terminated by us without cause or is voluntarily terminated by him for good reason, we must continue his medical and dental benefits for two years, or, if such termination occurs within two years following a change in control, three years, commencing on the date of such termination. The table reflects the present value of such medical and dental benefits at December 31, 2015 determined (a) assuming family coverage in a consumer-driven health plan and a premium dental plan throughout the applicable benefit |
continuation period, (b) based on current COBRA coverage rates for 2016 and assuming a 10% increase in the cost of medical and dental coverage for 2017 as compared to 2016 and a 10% increase in the cost of medical and dental coverage for 2018 as compared to 2017. | | (8) | Under Mr. Hockema's employment agreement, if Mr. Hockema's employment is terminated by us without cause or is voluntarily terminated by him for good reason, we must continue his disability benefits for two years, or, if such termination occurs within two years following a change in control, three years, commencing on the date of such termination. This table reflects the present value of such disability benefits at December 31, 2015 determined (a) based on our current costs of providing such benefits and assuming such costs do not increase during the applicable benefit continuation period, (b) assuming we pay such costs throughout the applicable benefit continuation period in the same manner as we currently pay such costs, (c) assuming mortality according to the RP-2014 Mortality Table for Disabled Retirees, adjusted to 2006, and projected therefrom with MP-2015 Generational Mortality Improvement Projection, and (d) applying a discount rate of 3.90% per annum. |
| | (9) | Reflects the actuarial present value of Mr. Hockema's disability benefits at December 31, 2015 determined (a) assuming full disability at December 31, 2015, (b) assuming mortality according to the RP-2014 Mortality Table for Disabled Retirees, adjusted to 2006, and projected therefrom with MP-2015 Generational Mortality Improvement Projection, and (c) applying a discount rate of 3.90% per annum. Such disability benefits would be paid by a third-party insurer and not by us. |
| | (10) | Under Mr. Hockema's employment agreement, if Mr. Hockema's employment is terminated by us without cause or is voluntarily terminated by him for good reason, we must continue his life insurance benefits for two years, or, if such termination occurs within two years following a change in control, three years, commencing on the date of such termination. The table reflects the present value of such life insurance benefits at December 31, 2015 determined (a) assuming coverage throughout the applicable benefit continuation period at Mr. Hockema's current election of coverage, (b) based on our current costs of providing such benefits and assuming such costs do not increase during the applicable benefit continuation period, (c) assuming we pay such costs throughout the applicable benefit continuation period in the same manner as we currently pay such costs, (d) assuming mortality according to the RP-2015 White Collar Healthy Annuitant Mortality Table with MP-2015 Generational Mortality Improvement Projection, and (e) applying a discount rate of 3.90% per annum. |
| | (11) | Reflects the life insurance benefit payable assuming Mr. Hockema's death had occurred on December 31, 2015 other than while traveling on company-related business. Such life insurance benefit would have been paid by a third-party insurer and not by us. We maintain a travel and accidental death policy for certain employees, including Mr. Hockema, that would provide a $1,000,000 death benefit payable to Mr. Hockema's estate if his death occurs during company-related travel. Such death benefit would be paid by a third-party insurer and not by us. |
| | (12) | We do not have an obligation to make excise payments to Mr. Hockema. Mr. Hockema's employment agreement instead provides that, if any payments to Mr. Hockema would be subject to a federal excise tax by reason of being considered contingent on a change in control, then such payments will be reduced to the minimum extent necessary so that no portion of such payments, as so reduced, is subject to such tax, except that such a reduction will be made only if and to the extent such reduction would result in an increase in the aggregate payment on an after-tax basis. It is estimated that, if Mr. Hockema's employment had been terminated on December 31, 2015 by us without cause or by the named executive officer with good reason;
termination by us without cause or by the named executive officer withhim for good reason following a change in control;
termination at retirement atcontrol on such date, $3,286,787 owing to Mr. Hockema would have been subject to a federal excise tax by reason of being considered contingent on a change in control and, accordingly, such payments would have been reduced.
|
| | (13) | If, on December 31, 2015, Mr. Hockema's employment had been terminated by us without cause or after age 65;
termination as a resulthis employment had been voluntarily terminated by him for good reason, then (a) the restrictions on all shares of disability; or
termination as a resultrestricted stock that were held by Mr. Hockema would have lapsed, (b) the performance shares granted to him effective March 5, 2013 would have remained outstanding, with the number of death.
Information regarding estimated payments and other benefits upon terminationshares of employment of Messrs. Rinkenberger, Donnan, Bunin and Harvey at retirement is provided for illustrative purposes notwithstanding the fact that nonecommon stock, if any, to be received by Mr. Hockema in respect of such named executive officers had reached age 65performance shares to be determined based on the performance level achieved during the applicable three-year performance period, and (c) the performance shares granted to him effective March 5, 2014 and March 5, 2015 would have remained outstanding, with the number of shares of common stock, if any, to be received by Mr. Hockema in respect to such performance shares to be determined based on the performance level achieved during the applicable three-year performance period; in such instances, this table reflects the aggregate market value, determined based on a per share price of $83.66, the closing price per share of our common stock as of reported on the Nasdaq Global Select Market on December 31, 2013.
JACK A. HOCKEMA
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Circumstances of Termination (1) | Payments and Benefits | | Termination by us for Cause | | Termination by us without Cause or by the Named Executive Officer with Good Reason | | Termination by us without Cause or by the Named Executive Officer with Good Reason Following a Change in Control | |
Retirement At or After Age 65 | | Disability | | Death | Payment of earned but unpaid: | | | | | | | | | | | | | | | | | | Base salary (2) | | — |
| | — |
| | | — |
| | | — |
| | — |
| | | — |
| | | Short-term incentive (3) | | — |
| | $ | 799,304 |
| | | $ | 799,304 |
| | | $ | 799,304 |
| | $ | 799,304 |
| | | $ | 799,304 |
| | | Vacation (4) | | $ | 82,308 |
| | $ | 82,308 |
| | | $ | 82,308 |
| | | $ | 82,308 |
| | $ | 82,308 |
| | | $ | 82,308 |
| | Other Benefits: | | | | | | | | | | | | | | | | | | Lump sum payment | | — |
| | $ | 2,884,000 |
| (5) | | $ | 4,326,000 |
| (6) | | — |
| | — |
| | | — |
| | | Healthcare benefits | | — |
| | $ | 27,660 |
| (7) | | $ | 43,598 |
| (7) | | — |
| | — |
| | | — |
| | | Disability benefits | | — |
| | $ | 13,105 |
| (8) | | $ | 17,652 |
| (8) | | — |
| | $ | 254,788 |
| (9) | | — |
| | | Life insurance | | — |
| | $ | 1,041 |
| (10) | | $ | 1,600 |
| (10) | | — |
| | — |
| | | $ | 50,000 |
| (11) | | Perquisites and other personal benefits | | — |
| | — |
| | | — |
| | | — |
| | — |
| | | — |
| | | Tax gross-up (12) | | — |
| | — |
| | | — |
| | | — |
| | — |
| | | — |
| | Acceleration of Equity Awards: | | | | | | | | | | | | | | | | | | Market value of stock vesting on | | | | | | | | | | | | | | | | | | termination (13) | | — |
| | $ | 6,706,796 |
| | | $ | 6,706,796 |
| | | $ | 6,706,796 |
| | $ | 6,706,796 |
| | | $ | 6,706,796 |
| | | Spread for options vesting on | | | | | | | | | | | | | | | | | | termination (14) | | — |
| | — |
| | | — |
| | | — |
| | — |
| | | — |
| | Distribution of Restoration Plan Balance: | | | | | | | | | | | | | | | | | | Amount of Distribution (15) | | — |
| | $ | 3,205,708 |
| | | $ | 3,205,708 |
| | | $ | 3,205,708 |
| | $ | 3,205,708 |
| | | $ | 3,205,708 |
| | Total | | $ | 82,308 |
| | $ | 13,719,922 |
| | | $ | 15,182,966 |
| | | $ | 10,794,116 |
| | $ | 11,048,904 |
| | | $ | 10,844,116 |
| |
____________
| | (1) | Mr. Hockema reached age 65 on October 30, 2011. Accordingly, any voluntary termination by Mr. Hockema would be treated as retirement at or after age 65. See “Retirement At or After Age 65” column of this table. |
| | (2) | Assumes that there is no earned but unpaid base salary at the time of termination. |
| | (3) | Under our 2013 STI Plan, Mr. Hockema's target award for 2013 was $586,000, but his award could have ranged from a threshold of $293,000 to a maximum of $1,758,000, or could have been zero if the threshold performance was not achieved. Mr. Hockema's award under our 2013 STI Plan was determined in March 2014 to be $799,304. Pursuant to Mr. Hockema's employment agreement, we must pay Mr. Hockema or his estate any earned but unpaid short-term incentive unless his employment is terminated by us for cause. Under Mr. Hockema's employment agreement, as in effect at December 31, 2013, if his employment had been terminated during 2013 but prior to December 31, 2013, Mr. Hockema's target award for 2013 under our 2013 STI Plan would have been prorated for the actual number of days of Mr. Hockema's employment in 2013 and Mr. Hockema would have been entitled to payment of such amount, without any increase or reduction that would normally be considered with his award, unless his employment had been terminated by us for cause; on March 5, 2014, Mr. Hockema’s employment agreement was amended and restated to, among other things, modify the calculation of any such pro-rated payment of his annual short-term incentive to be based on actual rather than target, performance. Under Mr. Hockema's employment agreement, if his employment had been terminated on December 31, 2013, the last day of our 2013 fiscal year, Mr. Hockema would have been entitled to full payment of his award under the 2013 STI Plan unless his employment had been terminated by us for cause or had been voluntarily terminated by him.
|
| | (4) | Assumes that Mr. Hockema used all of his 2013 vacation and that he has five weeks of accrued vacation for 2014.
|
| | (5) | Under Mr. Hockema's employment agreement, as in effect at December 31, 2013, if Mr. Hockema's employment is terminated by us without cause or is voluntarily terminated by him for good reason, we must make a lump-sum payment to Mr. Hockema in an amount equal to two times the sum of his base salary and target annual bonus opportunity for the fiscal year in which such termination occurs; on March 5, 2014, Mr. Hockema’s employment agreement was amended and restated to, among other things, modify the calculation of any such lump-sum payment to be equal to 3.37 times his base salary. |
| | (6) | Under Mr. Hockema's employment agreement, if Mr. Hockema's employment is terminated by us without cause or is voluntarily terminated by him for good reason within two years following a change in control, we must make a lump-sum payment to Mr. Hockema in an amount equal to three times the sum of his base salary and target annual bonus opportunity for the fiscal year in which such termination occurs; on March 5, 2014, Mr. Hockema’s employment |
agreement was amended and restated to, among other things, modify the calculation2015, of any such lump-sum payment to bea number of shares equal to 5.05 times his base salary.
| | (7) | Under Mr. Hockema's employment agreement, if Mr. Hockema's employment is terminated by us without cause or is voluntarily terminated by him for good reason, we must continue his medical and dental benefits for two years, or, if such termination occurs within two years following a change in control, three years, commencing on the datethe sum of (i) 29,988, the number of such termination. The table reflects the present value of such medical and dental benefits at December 31, 2013 determined (a) assuming family coverage in a consumer-driven health plan and a premium dental plan throughout the applicable benefit continuation period, (b) based on current COBRA coverage rates for 2014 and assuming a 10% increase in the cost of medical and dental coverage for 2015 as compared to 2014 and a 10% increase in the cost of medical and dental coverage for 2016 as compared to 2015.
|
| | (8) | Under Mr. Hockema's employment agreement, if Mr. Hockema's employment is terminated by us without cause or is voluntarily terminated by him for good reason, we must continue his disability benefits for two years, or, if such termination occurs within two years following a change in control, three years, commencing on the date of such termination. This table reflects the present value of such disability benefits at December 31, 2013 determined (a) based on our current costs of providing such benefits and assuming such costs do not increase during the applicable benefit continuation period, (b) assuming we pay such costs throughout the applicable benefit continuation period in the same manner as we currently pay such costs, (c) assuming mortality according to the RP-2000 Combined Health mortality table published by the Society of Actuaries, and (d) applying a discount rate of 3.40% per annum.
|
| | (9) | Reflects the actuarial present value of Mr. Hockema's disability benefits at December 31, 2013 determined (a) assuming full disability at December 31, 2013, (b) assuming mortality according to the RP-2000 Disabled Retiree mortality table published by the Society of Actuaries, and (c) applying a discount rate of 3.40% per annum. Such disability benefits would be paid by a third-party insurer and not by us.
|
| | (10) | Under Mr. Hockema's employment agreement, if Mr. Hockema's employment is terminated by us without cause or is voluntarily terminated by him for good reason, we must continue his life insurance benefits for two years, or, if such termination occurs within two years following a change in control, three years, commencing on the date of such termination. The table reflects the present value of such life insurance benefits at December 31, 2013 determined (a) assuming coverage throughout the applicable benefit continuation period at Mr. Hockema's current election of coverage, (b) based on our current costs of providing such benefits and assuming such costs do not increase during the applicable benefit continuation period, (c) assuming we pay such costs throughout the applicable benefit continuation period in the same manner as we currently pay such costs, (d) assuming mortality according to the RP-2000 Combined Health mortality table published by the Society of Actuaries, and (e) applying a discount rate of 3.40% per annum.
|
| | (11) | Reflects the life insurance benefit payable assuming Mr. Hockema's death had occurred on December 31, 2013 other than while traveling on company-related business. Such life insurance benefit would have been paid by a third-party insurer and not by us. We maintain a travel and accidental death policy for certain employees, including Mr. Hockema, that would provide a $1,000,000 death benefit payable to Mr. Hockema's estate if his death occurs during company-related travel. Such death benefit would be paid by a third-party insurer and not by us.
|
| | (12) | We do not have an obligation to make excise payments to Mr. Hockema. Mr. Hockema's employment agreement instead provides that, if any payments to Mr. Hockema would be subject to a federal excise tax by reason of being considered contingent on a change in control, then such payments will be reduced to the minimum extent necessary so that no portion of such payments, as so reduced, is subject to such tax, except that such a reduction will be made only if and to the extent such reduction would result in an increase in the aggregate payment on an after-tax basis. It is estimated that, if Mr. Hockema's employment had been terminated on December 31, 2013 by us without cause or by him for good reason following a change in control on such date, no payments owing to Mr. Hockema would have been subject to a federal excise tax by reason of being considered contingent on a change in control and, accordingly, no such payments would have been reduced.
|
| | (13) | If, on December 31, 2013, Mr. Hockema's employment had been terminated as a result of his death or disability, his employment had been terminated by us without cause or his employment had been voluntarily terminated by him for good reason, or if there had been a change in control, then (a) the restrictions on all shares of restricted stock held by Mr. Hockema would have lapsed, (b) the performance shares granted to him effective March 5, 2011 would have remained outstanding, with the number of shares of common stock, if any, to be received by Mr. Hockema in respect of such performance shares to be determined based on the performance level achieved during the applicable three-year performance period, and (c) the target number of performance shares granted to him effective March 5, 2012 and March 5, 2013 would have vested; in such circumstances, the table reflects the aggregate market value, determined based on a per share price of $70.24, the closing price per share of our common stock as reported on the Nasdaq Global Select Market on December 31, 2013, of a number of shares equal to the sum of (i) all shares of restricted stock held by Mr.
|
Hockema on December 31, 2015, (ii) 15,170,17,215, the actual number of shares of common stock received by Mr. Hockema in respect of the performance shares granted to him effective March 5, 20112013 based on the performance level achieved during the applicable three-year performance period as determined by our compensation committee in early 2014,2016, and (iii) 24,401 and 23,459, the target number of shares of common stock that could be received by Mr. Hockema in respect of |
the performance shares granted to him effective March 5, 2014 and March 5, 2015, respectively. Pursuant to the terms of the performance shares granted to Mr. Hockema effective March 5, 2014 and March 5, 2015, if the company declares cash dividends on our common stock and the record and payment dates for such dividends occur on or after the date of grant but before common shares are issued or delivered in respect of such performance shares, then, upon the issuance or delivery of such common shares in respect of such performance shares, Mr. Hockema will be entitled to also receive a payment equal to the cash dividends that he would have received if the number of common shares so issued or delivered to him had been issued and outstanding and held of record by him from the date of grant through such issuance or delivery; this table reflects (a) in respect of the performance shares granted to Mr. Hockema effective March 5, 2014, an amount equal to the cash dividends he would have received if 24,401 common shares had been issued and outstanding and held of record by him from March 5, 2014 through the issuance and delivery of common shares in respect of such performance shares and (b) in respect of the performance shares granted to Mr. Hockema effective March 5, 2015, an amount equal to the cash dividends he would have received if 23,459 common shares had been issued and outstanding and held of record by him from March 5, 2015 through the issuance and delivery of common shares in respect of such performance shares, assuming in each case that the company does not declare any further cash dividends after December 31, 2015. | | (14) | If, on December 31, 2015, there had been a change in control and Mr. Hockema's employment had been terminated by us without cause or his employment had been voluntarily terminated by him for good reason, then (a) the restrictions on all shares of restricted stock that were held by Mr. Hockema would have lapsed, (b) the performance shares granted to him effective March 5, 20122013 would have remained outstanding, with the number of shares of common stock, if any, to be received by Mr. Hockema in respect of such performance shares to be determined based on the performance level achieved during the applicable three-year performance period, and (c) the performance shares granted to Mr. Hockema effective March 5, 2014 and March 5, 2015 would have immediately vested, with the number of common stock, if any, to be received by Mr. Hockema in respect to such performance shares to be determined based on the performance level achieved during the applicable performance period through the date of such change in control; in such instances, this table reflects the aggregate market value, determined based on a per share price of $83.66, the closing price per share of our common stock as reported on the Nasdaq Global Select Market on December 31, 2015, of a number of shares equal to the sum of (i) 29,988, the number of shares of restricted stock held by Mr. Hockema on December 31, 2015, (ii) 17,215, the actual number of shares of common stock received by Mr. Hockema in respect of the performance shares granted to him effective March 5, 2013. based on the performance level achieved during the applicable three-year performance period as determined by our compensation committee in early 2016, and (iii) 48,803 and 46,918, the number of shares of common stock that would have been received by Mr. Hockema in respect of the performance shares granted to him effective March 5, 2014 and March 5, 2015, respectively, based on the performance level achieved during the applicable performance period through the date of the change in control. Pursuant to the terms of the performance shares granted to Mr. Hockema effective March 5, 2014 and March 5, 2015, if the company declares cash dividends on our common stock and the record and payment dates for such dividends occur on or after the date of grant but before common shares are issued or delivered in respect of such performance shares, then, upon the issuance or delivery of such common shares in respect of such performance shares, Mr. Hockema will be entitled to also receive a payment equal to the cash dividends that he would have received if the number of common shares so issued or delivered to him had been issued and outstanding and held of record by him from the date of grant through such issuance or delivery; this table reflects (a) in respect of the performance shares granted to Mr. Hockema effective March 5, 2014, an amount equal to the cash dividends he would have received if 48,803 common shares had been issued and outstanding and held of record by him from March 5, 2014 through December 31, 2015 and (b) in respect of the performance shares granted to Mr. Hockema effective March 5, 2015, an amount equal to the cash dividends he would have received if 46,918 common shares had been issued and outstanding and held of record by him from March 5, 2015 through December 31, 2015. |
| | (15) | If Mr. Hockema had retired on December 31, 2013,2015, then allthe shares of restricted stock and performance shares that were held by Mr. Hockema on December 31, 20132015 would have remained outstanding, with the restrictions on such shares of restricted stock to lapse in each case on the third anniversary of the date of grant and with the number of shares of common stock, if any, to be received by Mr. Hockema in respect of such performance shares to be determined based on the performance level achieved during the applicable three-year performance periods;periods, except that the shares of restricted stock granted to Mr. Hockema effective March 5, 2014 and March 5, 2015 and shares of common stock to be received in respect of performance shares granted to Mr. Hockema effective March 5, 2014 and March 5, 2015 would be prorated based on actual days of Mr. Hockema's employment during the applicable restriction or performance period; in such instances, this table reflects the aggregate market value, determined based on a per share price of $70.24,$83.66, the closing price per share of our common stock as reported on the Nasdaq Global Select Market on December 31, 2013,2015, of a number of shares equal to the sum of (a) all(i) 7,449, the number of shares of restricted stock held by Mr. Hockema (b) 15,170,that were granted to him effective March 5, 2013, (ii) 6,983 and 3,033, the number of shares of restricted stock held by Mr. Hockema that were granted to him effective March 5, 2014 and March 5, 2015, respectively, prorated based on actual days of Mr. Hockema's employment during the applicable restriction period, (iii) 17,215, the actual number of shares of common stock received by Mr. Hockema in respect of the performance shares granted to him effective March 5, 20112013 based on the performance level achieved during the applicable three-year performance period as determined by our compensation committee in early 2014, and (c) |
level achieved during the applicable three-year performance period as determined by our compensation committee in early 2016, and (iv) 16,252 and 7,812, the target number of shares of common stock that could be received by Mr. Hockema in respect of the performance shares granted to him effective March 5, 2014 and March 5, 2015, prorated based on actual days of Mr. Hockema's employment during the applicable performance period. Pursuant to the terms of the performance shares granted to Mr. Hockema effective March 5, 2014 and March 5, 2015, if the company declares cash dividends on our common stock and the record and payment dates for such dividends occur on or after the date of grant but before common shares are issued or delivered in respect of such performance shares, then, upon the issuance or delivery of such common shares in respect of such performance shares, Mr. Hockema will be entitled to also receive a payment equal to the cash dividends that he would have received if the number of common shares so issued or delivered to him had been issued and outstanding and held of record by him from the date of grant through such issuance or delivery; this table reflects (a) in respect of the performance shares granted to Mr. Hockema effective March 5, 2014, an amount equal to the cash dividends he would have received if 16,252 common shares had been issued and outstanding and held of record by him from March 5, 2014 through the issuance and delivery of common shares in respect of such performance shares and (b) in respect of the performance shares granted to Mr. Hockema effective March 5, 2015, an amount equal to the cash dividends he would have received if 7,812 common shares had been issued and outstanding and held of record by him from March 5, 2015 through the issuance and delivery of common shares in respect of such performance shares, assuming in each case that company does not declare any further cash dividends after December 31, 2015. | | (16) | If, on December 31, 2015, Mr. Hockema's employment had been terminated as a result of his death or disability, then (a) the restrictions on all shares of commonrestricted stock that could be received by Mr. Hockema in respect of the performance shares granted to him effective March 5, 2012 and March 5, 2013. | | (14) | Reflects the spread, if any, of (a) the aggregate market value of the shares of common stock purchasable upon exercise of the option rights which would have vested early due to Mr. Hockema's termination, determined based on a per share price of $70.24, the closing price per share of common stock as reported on the Nasdaq Global Select Market on December 31, 2013, over (b) the aggregate exercise price required to purchase such shares upon exercise of such option rights. All option rightswere held by Mr. Hockema on December 31, 2013 had previously vested. Accordingly, no spread is reported in this table. In any event, the $80.01 per share exercise price of such option rights exceeded the $70.24 closing price per share of our common stock as reported on the Nasdaq Stock Market on December 31, 2013.
|
| | (15) | Under our Restoration Plan, Mr. Hockema is entitled to a distribution of his account balance six months following his termination, except that he will forfeit the entire amount of matching and fixed rate contributions made by us to his account if his employment is terminated for cause. In addition, under our Savings Plan, upon termination of employment, Mr. Hockema is eligible to receive a distribution of his vested balance under the plan; however, such balance is not reflected in this table. |
DANIEL J. RINKENBERGER
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Circumstances of Termination | Payments and Benefits | |
Voluntary Termination by Named Executive Officer Prior to Age 65 | | Termination by us for Cause | | Termination by us without Cause or by the Named Executive Officer with Good Reason (1) | | Termination by us without Cause or by the Named Executive Officer with Good Reason Following a Change in Control (2) | |
Retirement At or After Age 65 (3) | | Disability | | Death | Payment of earned but unpaid: | | | | | | | | | | | | | | | | | | | | Base salary (4) | | — |
| | — |
| | — |
| | | — |
| | | — |
| | — |
| | | — |
| | | Short-term incentive (5) | | — |
| | — |
| | $ | 465,465 |
| | | $ | 465,465 |
| | | $ | 465,465 |
| | $ | 465,465 |
| | | $ | 465,465 |
| | | Vacation (6) | | $ | 39,615 |
| | $ | 39,615 |
| | $ | 39,615 |
| | | $ | 39,615 |
| | | $ | 39,615 |
| | $ | 39,615 |
| | | $ | 39,615 |
| | Other Benefits: | | | | | | | | | | | | | | | | | | | | Lump sum payment | | — |
| | — |
| | $ | 158,462 |
| | | $ | 1,370,000 |
| | | — |
| | — |
| | | — |
| | | Healthcare benefits (7) | | — |
| | — |
| | $ | 5,066 |
| | | $ | 27,660 |
| | | — |
| | — |
| | | — |
| | | Disability benefits | | — |
| | — |
| | $ | 4,973 |
| (8) | | $ | 31,468 |
| (8) | | — |
| | $ | 1,302,999 |
| (9) | | — |
| | | Life insurance | | — |
| | — |
| | $ | 65 |
| (10) | | $ | 443 |
| (10) | | — |
| | — |
| | | $ | 100,000 |
| (11) | | Perquisites and other personal benefits | | — |
| | — |
| | — |
| | | $ | 20,576 |
| (12) | | — |
| | — |
| | | — |
| | | Tax gross-up (13) | | — |
| | — |
| | — |
| | | $ | (49,111 | ) | | | — |
| | — |
| | | — |
| | Acceleration of Equity Awards: | | | | | | | | | | | | | | | | | | | | Market value of stock vesting on | | | | | | | | | | | | | | | | | | | | termination (14) | | — |
| | — |
| | $ | 2,470,973 |
| | | $ | 2,470,973 |
| | | $ | 2,470,973 |
| | $ | 2,470,973 |
| | | $ | 2,470,973 |
| | | Spread for options vesting on | | | | | | | | | | | | | | | | | | | | termination (15) | | — |
| | — |
| | — |
| | | — |
| | | — |
| | — |
| | | — |
| | Distribution of Restoration Plan Balance: | | | | | | | | | | | | | | | | | | | | Amount of Distribution (16) | | $ | 275,461 |
| | — |
| | $ | 275,461 |
| | | $ | 275,461 |
| | | $ | 275,461 |
| | $ | 275,461 |
| | | $ | 275,461 |
| | Total | | $ | 315,076 |
| | $ | 39,615 |
| | $ | 3,420,080 |
| | | $ | 4,652,550 |
| | | $ | 3,251,514 |
| | $ | 4,554,513 |
| | | $ | 3,351,514 |
| |
____________
| | (1) | Under our Salaried Severance Plan, if Mr. Rinkenberger's employment is terminated by us without cause, Mr. Rinkenberger is entitled to (a) a lump-sum payment equal to his weekly base salary multiplied by 20 weeks, which we referred to as the continuation period, determined based on his number of years of full employment as of December 31, 2013, and (b) continuation of his medical and dental, disability, and life insurance benefits following the termination of employment for a period not to exceed the shorter of his continuation period and the period commencing on the termination of employment and ending on the date he is no longer eligible for coverage under COBRA.
|
| | (2) | Under Mr. Rinkenberger's Change in Control Agreement, if Mr. Rinkenberger's employment is terminated by us without cause or is voluntarily terminated by him for good reason within the period beginning 90 days prior to a change in control and ending two years following a change in control, Mr. Rinkenberger is entitled to (a) a lump-sum payment equal to two times the sum of his base salary and most recent short-term incentive target, (b) continuation of his medical and dental, disability, and life insurance benefits for two years commencing on the date of such termination, and (c) continuation of his perquisites for two years commencing on the date of such termination. |
| | (3) | Notwithstanding the fact that Mr. Rinkenberger had not reached age 65 as of December 31, 2013, this column is provided for illustrative purposes.
|
| | (4) | Assumes that there is no earned but unpaid base salary at the time of termination. |
| | (5) | Under our 2013 STI Plan, Mr. Rinkenberger's target award for 2013 was $273,000, but his award could have ranged from a threshold of $136,500 to a maximum of $819,000, or could have been zero if the threshold performance was not achieved. Mr. Rinkenberger's award under our 2013 STI Plan was determined in March 2014 to be $465,465. If Mr. Rinkenberger's employment had terminated on December 31, 2013, Mr. Rinkenberger would have been entitled to full payment of his award under the 2013 STI Plan unless his employment had been terminated by us for cause or voluntarily terminated by him other than for good reason. Under the 2013 STI Plan, Mr. Rinkenberger would have been entitled to a pro rata award under the 2013 STI Plan if his employment had been terminated during 2013 but prior to December 31, 2013 and his employment had been terminated as a result of death, disability, normal retirement or full early retirement (position elimination), had been terminated by us without cause or had been voluntarily terminated by him for good reason. Under Mr. Rinkenberger's Change in Control Agreement, if his employment had been terminated by us without cause or by him for good reason within the period commencing 90 days prior to a change in control and ending two years following a change in control and such termination had occurred during 2013 other than on December 31, 2013, Mr.
|
Rinkenberger's target award for 2013 under our 2013 STI Plan would have been prorated for the actual number of days of Mr. Rinkenberger's employment in 2013 and Mr. Rinkenberger would have been entitled to payment of such amount.
| | (6) | Assumes that Mr. Rinkenberger used all of his 2013 vacation and that he has five weeks of accrued vacation for 2014.
|
| | (7) | This table reflects the present value of Mr. Rinkenberger's medical and dental benefits at December 31, 2013 determined (a) assuming family coverage in a consumer-driven health plan and a premium dental plan throughout his applicable benefit continuation period and (b) based on current COBRA coverage rates for 2014 and assuming a 10% increase in the cost of medical and dental coverage for 2015 as compared to 2014.
|
| | (8) | This table reflects the present value of Mr. Rinkenberger's disability benefits at December 31, 2013 determined (a) assuming coverage throughout the applicable benefit continuation period, (b) based on our current costs of providing such benefits and assuming such costs do not increase during the applicable benefit continuation period, (c) assuming we pay such costs throughout the applicable benefit continuation period in the same manner as we currently pay such costs, (d) assuming mortality according to the RP-2000 Combined Health mortality table published by the Society of Actuaries, and (e) applying a discount rate of 3.40% per annum.
|
| | (9) | Reflects the actuarial present value of Mr. Rinkenberger's disability benefits at December 31, 2013 determined (a) assuming full disability at December 31, 2013, (b) assuming mortality according to the RP-2000 Disabled Retiree mortality table published by the Society of Actuaries, and (c) applying a discount rate of 3.40% per annum. Such disability benefits would be paid by a third-party insurer and not by us.
|
| | (10) | This table reflects the present value of Mr. Rinkenberger's life insurance benefits at December 31, 2013 determined (a) assuming coverage throughout the applicable benefit continuation period at his current election of coverage, (b) based on our current costs of providing such benefits and assuming such costs do not increase during the applicable benefit continuation period, (c) assuming we pay such costs throughout the applicable benefit continuation period in the same manner as we currently pay such costs, (d) assuming mortality according to the RP-2000 Combined Health mortality table published by the Society of Actuaries, and (e) applying a discount rate of 3.40% per annum.
|
| | (11) | Reflects the life insurance benefit payable assuming Mr. Rinkenberger's death had occurred on December 31, 2013 other than while traveling on company-related business. Such life insurance benefit would have been paid by a third-party insurer and not by us. We maintain a travel and accidental death policy for certain employees, including Mr. Rinkenberger, that would provide an additional $1,000,000 death benefit payable to Mr. Rinkenberger's estate if his death occurs during company-related travel. Such death benefit would be paid by a third-party insurer and not by us.
|
| | (12) | This table reflects the estimated cost to us of continuing Mr. Rinkenberger's perquisites for such two-year period as follows: vehicle allowance, $20,576. Such amount has been estimated by multiplying the cost of Mr. Rinkenberger's vehicle allowance for 2013 by two.
|
| | (13) | Under Mr. Rinkenberger's Change in Control Agreement, in general, if any payments to Mr. Rinkenberger would be subject to federal excise tax or any similar state or local tax by reason of being considered contingent on a change in control, we must pay to Mr. Rinkenberger an additional amount such that, after satisfaction of all tax obligations imposed on such payments, Mr. Rinkenberger retains an amount equal to the federal excise tax or similar state or local tax imposed on such payments. However, if no such federal excise tax or similar state or local tax would apply if the aggregate payments were reduced by 5%, then the aggregate payments to Mr. Rinkenberger will be reduced by the amount necessary to avoid application of such federal excise tax or similar state or local tax. This table reflects an estimate of any such additional amount that we would have been obligated to pay Mr. Rinkenberger, or any such reduction to the aggregate payments to Mr. Rinkenberger that would have occurred, if his employment had been terminated on December 31, 2013 by us without cause or by him for good reason following a change in control on such date.
|
| | (14) | If, on December 31, 2013, Mr. Rinkenberger's employment had been terminated as a result of his death or disability, his employment had been terminated by us without cause or his employment had been voluntarily terminated by him for good reason, or if there had been a change in control, then (a) the restrictions on all shares of restricted stock that were held by Mr. Rinkenberger on December 31, 2013 would have lapsed, (b) the performance shares granted to him effective March 5, 2011 would have remained outstanding, with the number of shares of common stock, if any, to be received by Mr. Rinkenberger in respect of such performance shares to be determined based on the performance level achieved during the applicable three-year performance period, and (c) the target number of performance shares granted to him effective March 5, 2012 and March 5, 2013 would have vested; in such circumstances, the table reflects the aggregate market value, determined based on a per share price of $70.24, the closing price per share of our common stock as reported on the Nasdaq Global Select Market on December 31, 2013, of a number of shares equal to (i) all shares of restricted stock held by Mr. Rinkenberger on December 31, 2013, (ii) 3,016, the actual number of shares of common stock received by Mr. Rinkenberger in respect of the performance shares granted to him effective March 5, 2011 based on the performance level achieved during the applicable three-year performance period as determined by our compensation committee in
|
early 2014, and (iii) the target number of shares of common stock that could be received by Mr. Rinkenberger in respect of the performance shares granted to him effective March 5, 2012 and March 5, 2013. If Mr. Rinkenberger had qualified for retirement on December 31, 2013 and he had retired on such date, then (a) the shares of restricted stock granted to Mr. Rinkenberger effective March 5, 2011, March 5, 2012 and March 5, 2013 would have remained outstanding and the restrictions on such shares would lapse on March 5, 2014, March 5, 2015 and March 5, 2016, respectively, and (b) the performance shares granted to Mr. Rinkenberger effective March 5, 2011, March 5, 2012 and March 5, 2013 would have remained outstanding with the number of shares of common stock, if any, to be received by Mr. Rinkenberger in respect to such performance shares to be determined based on the performance level achieved during the applicable three-year performance periods; in such circumstances, this table reflects the aggregate market value, determined based on a per share price of $70.24, the closing price per share of our common stock as reported on the Nasdaq Global Select Market on December 31, 2013, of a number of shares equal to the sum of (i)all shares of restricted stock granted to Mr. Rinkenberger effective March 5, 2011, March 5, 2012 and March 5, 2013, (ii) 3,016, the actual number of shares of common stock received by Mr. Rinkenberger in respect of the performance shares granted to him effective March 5, 2011 based on the performance level achieved during the applicable three-year performance period as determined by our compensation committee in early 2014, and (iii) the target number of shares of common stock that could be received by Mr. Rinkenberger in respect of the performance shares granted to him effective March 5, 2012 and March 5, 2013.
| | (15) | Reflects the spread, if any, of (a) the aggregate market value of the shares of common stock purchasable upon exercise of the option rights which would have vested early due to Mr. Rinkenberger's termination, determined based on a per share price of $70.24, the closing price per share of our common stock as reported on the Nasdaq Global Select Market on December 31, 2013, over (b) the aggregate exercise price required to purchase such shares upon exercise of such option rights. All option rights that were held by Mr. Rinkenberger on December 31, 2013 had previously vested. Accordingly, no spread is reflected in this table. In any event, the $80.01 per share exercise price of such option rights exceeded the $70.24 closing price per share of our common stock as reported on the Nasdaq Stock Market on December 31, 2013.
|
| | (16) | Under our Restoration Plan, Mr. Rinkenberger is entitled to a distribution of his account balance six months following his termination, except that he will forfeit the entire amount of matching and fixed rate contributions made by us to his account if he is terminated for cause. In addition, under our Savings Plan, upon termination of employment, Mr. Rinkenberger is eligible to receive a distribution of his vested balance under the plan; however, such balance is not reflected in this table. |
JOHN M. DONNAN
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Circumstances of Termination | Payments and Benefits | |
Voluntary Termination by Named Executive Officer Prior to Age 65 | | Termination by us for Cause | | Termination by us without Cause or by the Named Executive Officer with Good Reason (1) | | Termination by us without Cause or by the Named Executive Officer with Good Reason Following a Change in Control (2) | |
Retirement At or After Age 65 (3) | | Disability | | Death | Payment of earned but unpaid: | | | | | | | | | | | | | | | | | | | | Base salary (4) | | — |
| | — |
| | — |
| | | — |
| | | — |
| | — |
| | | — |
| | | Short-term incentive (5) | | — |
| | — |
| | $ | 439,038 |
| | | $ | 439,038 |
| | | $ | 439,038 |
| | $ | 439,038 |
| | | $ | 439,038 |
| | | Vacation (6) | | $ | 37,144 |
| | $ | 37,144 |
| | $ | 37,144 |
| | | $ | 37,144 |
| | | $ | 37,144 |
| | $ | 37,144 |
| | | $ | 37,144 |
| | Other Benefits: | | | | | | | | | | | | | | | | | | | | Lump sum payment | | — |
| | — |
| | $ | 118,862 |
| | | $ | 1,287,600 |
| | | — |
| | — |
| | | — |
| | | Healthcare benefits (7) | | — |
| | — |
| | $ | 5,066 |
| | | $ | 46,100 |
| | | — |
| | — |
| | | — |
| | | Disability benefits | | — |
| | — |
| | $ | 4,649 |
| (8) | | $ | 30,062 |
| (8) | | — |
| | $ | 1,508,496 |
| (9) | | — |
| | | Life insurance | | — |
| | — |
| | $ | 418 |
| (10) | | $ | 2,749 |
| (10) | | — |
| | — |
| | | $ | 800,000 |
| (11) | | Perquisites and other personal benefits | | — |
| | — |
| | — |
| | | $ | 44,872 |
| (12) | | — |
| | — |
| | | — |
| | | Tax gross-up (13) | | — |
| | — |
| | — |
| | | — |
| | | — |
| | — |
| | | — |
| | Acceleration of Equity Awards: | | | | | | | | | | | | | | | | | | | | Market value of stock vesting on | | | | | | | | | | | | | | | | | | | | termination (14) | | — |
| | — |
| | $ | 2,150,398 |
| | | $ | 2,150,398 |
| | | $ | 2,150,398 |
| | $ | 2,150,398 |
| | | $ | 2,150,398 |
| | | Spread for options vesting on | | | | | | | | | | | | | | | | | | | | termination (15) | | — |
| | — |
| | — |
| | | — |
| | | — |
| | — |
| | | — |
| | Distribution of Restoration Plan Balance: | | | | | | | | | | | | | | | | | | | | Amount of Distribution (16) | | $ | 373,271 |
| | — |
| | $ | 373,271 |
| | | $ | 373,271 |
| | | $ | 373,271 |
| | $ | 373,271 |
| | | $ | 373,271 |
| | Total | | $ | 410,415 |
| | $ | 37,144 |
| | $ | 3,128,846 |
| | | $ | 4,411,234 |
| | | $ | 2,999,851 |
| | $ | 4,508,347 |
| | | $ | 3,799,851 |
| |
____________
| | (1) | Under our Salaried Severance Plan, if Mr. Donnan's employment is terminated by us without cause, Mr. Donnan is entitled to (a) a lump-sum payment equal to his weekly base salary multiplied by 20 weeks, which we refer to as the continuation period, determined based on his number of years of full employment as of December 31, 2013, and (b) continuation of his medical and dental, disability, and life insurance benefits following the termination of employment for a period not to exceed the shorter of his continuation period and the period commencing on the termination of employment and ending on the date he is no longer eligible for coverage under COBRA.
|
| | (2) | Under Mr. Donnan's Change in Control Agreement, if Mr. Donnan's employment is terminated by us without cause or is voluntarily terminated by him for good reason within the period beginning 90 days prior to a change in control and ending two years following a change in control, Mr. Donnan is entitled to (a) a lump-sum payment equal to two times the sum of his base salary and most recent short-term incentive target, (b) continuation of his medical and dental, disability, and life insurance benefits for two years commencing on the date of such termination, and (c) continuation of his perquisites for two years commencing on the date of such termination. |
| | (3) | Notwithstanding the fact that Mr. Donnan had not reached age 65 as of December 31, 2013, this column is provided for illustrative purposes.
|
| | (4) | Assumes that there is no earned but unpaid base salary at the time of termination. |
| | (5) | Under our 2013 STI Plan, Mr. Donnan's target award for 2013 was $257,500, but his award could have ranged from a threshold of $128,750 to a maximum of $772,500, or could have been zero if the threshold performance was not achieved. Mr. Donnan's award under our 2013 STI Plan was determined in March 2014 to be $439,038. If Mr. Donnan's employment had terminated on December 31, 2013, Mr. Donnan would have been entitled to full payment of his award under the 2013 STI Plan unless his employment had been terminated by us for cause or voluntarily terminated by him other than for good reason. Under the 2013 STI Plan, Mr. Donnan would have been entitled to a pro rata award under the 2013 STI Plan if his employment had been terminated during 2013 but prior to December 31, 2013 and his employment had been terminated as a result of death, disability, normal retirement or full early retirement (position elimination), had been terminated by us without cause or had been voluntarily terminated by him for good reason. Under Mr. Donnan's Change in Control Agreement, if his employment had been terminated by us without cause or by him for good reason within the period commencing 90 days prior to a change in control and ending two years following a change in control and such termination had occurred during 2013 other than on December 31, 2013, Mr. Donnan's target award for 2013
|
under our 2013 STI Plan would have been prorated for the actual number of days of Mr. Donnan's employment in 2013 and Mr. Donnan would have been entitled to payment of such amount.
| | (6) | Assumes that Mr. Donnan used all of his 2013 vacation and that he has five weeks of accrued vacation for 2014.
|
| | (7) | This table reflects the present value of Mr. Donnan's medical and dental benefits at December 31, 2013 determined (a) assuming family coverage in a consumer-driven health plan and a premium dental plan throughout Mr. Donnan's applicable benefit continuation period and (b) based on current COBRA coverage rates for 2014 and assuming a 10% increase in the cost of medical and dental coverage for 2015 as compared to 2014.
|
| | (8) | This table reflects the present value of Mr. Donnan's disability benefits at December 31, 2013 determined (a) assuming coverage through out the applicable benefit continuation period, (b) based on our current costs of providing such benefits and assuming such costs do not increase during the applicable benefit continuation period, (c) assuming we pay such costs throughout the applicable benefit continuation period in the same manner as we currently pay such costs, (d) assuming mortality according to the RP-2000 Combined Health mortality table published by the Society of Actuaries, and (d) applying a discount rate of 3.40% per annum.
|
| | (9) | Reflects the actuarial present value of Mr. Donnan's disability benefits at December 31, 2013 determined (a) assuming full disability at December 31, 2013, (b) assuming mortality according to the RP-2000 Disabled Retiree mortality table published by the Society of Actuaries, and (c) applying a discount rate of 3.40% per annum. Such disability benefits would be paid by a third-party insurer and not by us.
|
| | (10) | This table reflects the present value of Mr. Donnan's life insurance benefits at December 31, 2013 determined (a) assuming coverage throughout the applicable benefit continuation period at his current election of the maximum available coverage, (b) based on our current costs of providing such benefits and assuming such costs do not increase during the applicable benefit continuation period, (c) assuming we pay such costs throughout the applicable benefit continuation period in the same manner as we currently pay such costs, (d) assuming mortality according to the RP-2000 Combined Health mortality table published by the Society of Actuaries, and (e) applying a discount rate of 3.40% per annum.
|
| | (11) | Reflects the life insurance benefit payable assuming Mr. Donnan's death had occurred on December 31, 2013 other than while traveling on company-related business. Such life insurance benefit would have been paid by a third-party insurer and not by us. We maintain a travel and accidental death policy for certain employees, including Mr. Donnan, that would provide an additional $1,000,000 death benefit payable to Mr. Donnan's estate if his death occurs during company-related travel. Such death benefit would be paid by a third-party insurer and not by us.
|
| | (12) | This table reflects the estimated cost to us of continuing Mr. Donnan's perquisites for such two-year period as follows: club membership dues, $18,008; and vehicle allowance, $25,368. Such amount has been estimated by multiplying the cost of Mr. Donnan's perquisites for 2013 by two.
|
| | (13) | Under Mr. Donnan's Change in Control Agreement, in general, if any payments to Mr. Donnan would be subject to federal excise tax or any similar state or local tax by reason of being considered contingent on a change in control, we must pay to Mr. Donnan an additional amount such that, after satisfaction of all tax obligations imposed on such payments, Mr. Donnan retains an amount equal to the federal excise tax or similar state or local tax imposed on such payments. However, if no such federal excise tax or similar state or local tax would apply if the aggregate payments were reduced by 5%, then the aggregate payments to Mr. Donnan will be reduced by the amount necessary to avoid application of such federal excise tax or similar state or local tax. This table reflects an estimate of any such additional amount that we would have been obligated to pay Mr. Donnan, or any such reduction to the aggregate payments to Mr. Donnan that would have occurred, if his employment had been terminated on December 31, 2013 by us without cause or by him for good reason following a change in control on such date.
|
| | (14) | If, on December 31, 2013, Mr. Donnan's employment had been terminated as a result of his death or disability, his employment had been terminated by us without cause or his employment had been voluntarily terminated by him for good reason, or if there had been a change in control, then (a) the restrictions on all shares of restricted stock held by Mr. Donnan would have lapsed, (b) the performance shares granted to him effective March 5, 2011 would have remained outstanding, with the number of shares of common stock, if any, to be received by Mr. Donnan in respect of such performance shares to be determined based on the performance level achieved during the applicable three-year performance period, and (c) the target number of performance shares granted to him effective March 5, 2012 and March 5, 2013 would have vested; in such circumstances, this table reflects the aggregate market value, determined based on a per share price of $70.24, the closing price per share of our common stock as reported on the Nasdaq Global Select Market on December 31, 2013, of a number of shares equal to (i) all shares of restricted stock held by Mr. Donnan,(ii) 2,356, the actual number of shares of common stock received by Mr. Donnan in respect of the performance shares granted to him effective March 5, 2011 based on the performance level achieved during the applicable three-year performance period as determined by our compensation committee in early 2014, and (iii) the target number of shares of
|
common stock that could be received by Mr. Donnan in respect of the performance shares granted to him effective March 5, 2012 and March 5, 2013. If Mr. Donnan had qualified for retirement on December 31, 2013 and he had retired on such date, then (a) the shares of restricted stock granted to Mr. Donnan effective March 5, 2011, March 5, 2012, and March 5, 2013 would have remained outstanding and the restrictions on such shares would lapse on March 5, 2014, March 5, 2015 and March 5, 2016, respectively, and (b)the performance shares granted to Mr. Donnan effective March 5, 2011, March 5, 2012, and March 5, 2013 would have remained outstanding, with the number of shares of common stock, if any, to be received by Mr. DonnanHockema in respect of such performance shares to be determined based on the performance level achieved during the applicable three-year performance periods;period, and (c) the target number of performance shares granted to him effective March 5, 2014 and March 5, 2015 would have vested; in such circumstances, the table reflects the aggregate market value, determined based on a per share price of $70.24,$83.66, the closing price per share of our common stock as reported on the Nasdaq Global Select Market on December 31, 2013,2015, of a number of shares equal to the sum of (i) all29,988, the number of shares of restricted stock granted toheld by Mr. Donnan effective March 5, 2011, March 5, 2012 and March 5, 2013,Hockema on December 31, 2015, (ii) 2,356,17,215, the actual number of shares of common stock received by Mr. DonnanHockema in respect of the performance shares granted to him effective March 5, 20112013 based on the performance level achieved during the applicable three-year performance period as determined by our compensation committee in early 2014,2016, and (iii) 24,401 and 23,459, the target number of shares of common stock that couldwould be received by Mr. DonnanHockema in respect of the performance shares granted to him effective March 5, 20122014 and March 5, 2013.
| | (15) | Reflects the spread, if any, of (a) the aggregate market value of the shares of common stock purchasable upon exercise of the option rights which would have vested early due to Mr. Donnan's termination, determined based on a per share price of $70.24, the closing price per share of our common stock as reported on the Nasdaq Global Select Market on December 31, 2013, over (b) the aggregate exercise price required to purchase such shares upon exercise of such option rights. All option rights that were held by Mr. Donnan on December 31, 2013 had previously vested. Accordingly, no spread is reflected in this table. In any event, the $80.01 per share exercise price of such option rights exceeded the $70.24 closing price per share of our common stock as reported on the Nasdaq Stock Market on December 31, 2013.
|
| | (16) | Under our Restoration Plan, Mr. Donnan is entitled to a distribution of his account balance six months following his termination, except2015, respectively. Pursuant to the terms of the performance shares granted to Mr. Hockema effective March 5, 2014 and March 5, 2015, if the company declares cash dividends on our common stock and the record and payment dates for such dividends occur on or after the date of grant but before common shares are issued or delivered in respect of such performance shares, then, upon the issuance or delivery of such common shares in respect of such performance shares, Mr. Hockema will be entitled to also receive a payment equal to the cash dividends that he will forfeit the entire amount of matching and fixed rate contributions made by us to his account if he is terminated for cause. In addition, under our Savings Plan, upon termination of employment, Mr. Donnan is eligible to receive a distribution of his vested balance under the plan; however, such balance is not reflected in this table. |
PETER BUNIN
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Circumstances of Termination | Payments and Benefits | |
Voluntary Termination by Named Executive Officer Prior to Age 65 | | Termination by us for Cause | | Termination by us without Cause or by the Named Executive Officer with Good Reason (1) | | Termination by us without Cause or by the Named Executive Officer with Good Reason Following a Change in Control (2) | |
Retirement At or After Age 65 (3) | | Disability | | Death | Payment of earned but unpaid: | | | | | | | | | | | | | | | | | | | | Base salary (4) | | — |
| | — |
| | — |
| | | — |
| | | — |
| | — |
| | | — |
| | | Short-term incentive (5) | | — |
| | — |
| | $ | 395,134 |
| | | $ | 395,134 |
| | | $ | 395,134 |
| | $ | 395,134 |
| | | $ | 395,134 |
| | | Vacation (6) | | $ | 29,715 |
| | $ | 29,715 |
| | $ | 29,715 |
| | | $ | 29,715 |
| | | $ | 29,715 |
| | $ | 29,715 |
| | | $ | 29,715 |
| | Other Benefits: | | | | | | | | | | | | | | | | | | | | Lump sum payment | | — |
| | — |
| | $ | 118,862 |
| | | $ | 1,287,600 |
| | | — |
| | — |
| | | — |
| | | Healthcare benefits (7) | | — |
| | — |
| | $ | 4,053 |
| | | $ | 36,880 |
| | | — |
| | — |
| | | — |
| | | Disability benefits | | — |
| | — |
| | $ | 4,740 |
| (8) | | $ | 28,908 |
| (8) | | — |
| | $ | 961,034 |
| (9) | | — |
| | | Life insurance | | — |
| | — |
| | $ | 47 |
| (10) | | $ | 315 |
| (10) | | — |
| | — |
| | | $ | 50,000 |
| (11) | | Perquisites and other personal benefits | | — |
| | — |
| | — |
| | | $ | 23,942 |
| (12) | | — |
| | — |
| | | — |
| | | Tax gross-up (13) | | — |
| | — |
| | — |
| | | — |
| | | — |
| | — |
| | | — |
| | Acceleration of Equity Awards: | | | | | | | | | | | | | | | | | | | | Market value of stock vesting on | | | | | | | | | | | | | | | | | | | | termination (14) | | — |
| | — |
| | $ | 2,185,869 |
| | | $ | 2,185,869 |
| | | $ | 2,185,869 |
| | $ | 2,185,869 |
| | | $ | 2,185,869 |
| | | Spread for options vesting on | | | | | | | | | | | | | | | | | | | | termination (15) | | — |
| | — |
| | — |
| | | — |
| | | — |
| | — |
| | | — |
| | Distribution of Restoration Plan Balance: | | | | | | | | | | | | | | | | | | | | Amount of Distribution (16) | | $ | 451,920 |
| | — |
| | $ | 451,920 |
| | | $ | 451,920 |
| | | $ | 451,920 |
| | $ | 451,920 |
| | | $ | 451,920 |
| | Total | | $ | 481,635 |
| | $ | 29,715 |
| | $ | 3,190,340 |
| | | $ | 4,440,283 |
| | | $ | 3,062,638 |
| | $ | 4,023,672 |
| | | $ | 3,112,638 |
| |
____________
| | (1) | Under our Salaried Severance Plan, if Mr. Bunin's employment is terminated by us without cause, Mr. Bunin is entitled to (a) a lump-sum payment equal to his weekly base salary multiplied by 12 weeks, which we refer to as the continuation period, determined based on his number of years of full employment as of December 31, 2013, and (b) continuation of his medical and dental, disability and life insurance benefits following the termination of employment for a period not to exceed the shorter of his continuation period and the period commencing on the termination of employment and ending on the date he is no longer eligible for coverage under COBRA.
|
| | (2) | Under Mr. Bunin's Change in Control Agreement, if Mr. Bunin's employment is terminated by us without cause or is voluntarily terminated by him for good reason within the period beginning 90 days prior to a change in control and ending two years following a change in control, Mr. Bunin is entitled to (a) a lump-sum payment equal to two times the sum of his base salary and most recent short-term incentive target, (b) continuation of his medical and dental, disability, and life insurance benefits for two years commencing on the date of such termination, and (c) continuation of his perquisites for two years commencing on the date of such termination. |
| | (3) | Notwithstanding the fact that Mr. Bunin had not reached age 65 as of December 31, 2013, this column is provided for illustrative purposes.
|
| | (4) | Assumes that there is no earned but unpaid base salary at the time of termination. |
| | (5) | Under our 2013 STI Plan, Mr. Bunin's target award for 2013 was $257,500, but his award could have ranged from a threshold of $128,750 to a maximum of $772,500, or could have been zero if the threshold performance was not achieved. Mr. Bunin's award under our 2013 STI Plan was determined in March 2014 to be $395,134. If Mr. Bunin's employment had terminated on December 31, 2013, Mr. Bunin would have been entitled to full payment of his award under the 2013 STI Plan unless his employment had been terminated by us for cause or voluntarily terminated by him other than for good reason. Under the 2013 STI Plan, Mr. Bunin would have been entitled to a pro rata award under the 2013 STI Plan if his employment had been terminated during 2013 but prior to December 31, 2013 and his employment had been terminated as a result of death, disability, normal retirement or full early retirement (position elimination), had been terminated by us without cause or had been voluntarily terminated by him for good reason. Under Mr. Bunin's Change in Control Agreement, if his employment had been terminated by us without cause or by him for good reason within the period commencing 90 days prior to a change in control and ending two years following a change in control and such termination had occurred during 2013 other than on December 31, 2013, Mr. Bunin's target award for 2013 under our
|
2013 STI Plan would have been prorated forreceived if the actual number of dayscommon shares so issued or delivered to him had been issued and outstanding and held of Mr. Bunin's employment in 2013 and Mr. Bunin would have been entitled to paymentrecord by him from the date of grant through such amount.
| | (6) | Assumes that Mr. Bunin used all of his 2013 vacation and that he has four weeks of accrued vacation for 2014.
|
| | (7) | Thisissuance or delivery; this table reflects the present value of Mr. Bunin's medical and dental benefits at December 31, 2013 determined (a) assuming family coverage in a consumer-driven health plan and a premium dental plan through out Mr. Bunin's applicable benefit continuation period and (b) based on current COBRA coverage rates for 2014 and assuming a 10% increase in the cost of medical and dental coverage for 2015 as compared to 2014.
|
| | (8) | This table reflects the present value of Mr. Bunin's disability benefits at December 31, 2013 determined (a) assuming coverage through out the applicable benefit continuation period, (b) based on our current costs of providing such benefits and assuming such costs do not increase during the applicable benefit continuation period, (c) assuming we pay such costs throughout the applicable benefit continuation period in the same manner as we currently pay such costs, (d) assuming mortality according to the RP-2000 Combined Health mortality table published by the Society of Actuaries, and (d) applying a discount rate of 3.40% per annum.
|
| | (9) | Reflects the actuarial present value of Mr. Bunin's disability benefits at December 31, 2013 determined (a) assuming full disability at December 31, 2013, (b) assuming mortality according to the RP-2000 Disabled Retiree mortality table published by the Society of Actuaries, and (c) applying a discount rate of 3.40% per annum. Such disability benefits would be paid by a third-party insurer and not by us.
|
| | (10) | This table reflects the present value of Mr. Bunin's life insurance benefits at December 31, 2013 determined (a) assuming coverage through out the applicable benefit continuation period at his current election of coverage, (b) based on our current costs of providing such benefits and assuming such costs do not increase during the applicable benefit continuation period, (c) assuming we pay such costs throughout the applicable benefit continuation period in the same manner as we currently pay such costs, (d) assuming mortality according to the RP-2000 Combined Health mortality table published by the Society of Actuaries, and (e) applying a discount rate of 3.40% per annum.
|
| | (11) | Reflects the life insurance benefit payable assuming Mr. Bunin's death had occurred on December 31, 2013 other than while traveling on company-related business. Such life insurance benefit would have been paid by a third-party insurer and not by us. We maintain a travel and accidental death policy for certain employees, including Mr. Bunin, that would provide an additional $1,000,000 death benefit payable to Mr. Bunin's estate if his death occurs during company-related travel. Such death benefit would be paid by a third-party insurer and not by us.
|
| | (12) | This table reflects the estimated cost to us of continuing Mr. Bunin's perquisites for such two-year period as follows: vehicle allowance, $23,942. Such amount has been estimated by multiplying the cost of Mr. Bunin's vehicle allowance for 2013 by two.
|
| | (13) | Under Mr. Bunin's Change in Control Agreement, in general, if any payments to Mr. Bunin would be subject to federal excise tax or any similar state or local tax by reason of being considered contingent on a change in control, we must pay to Mr. Bunin an additional amount such that, after satisfaction of all tax obligations imposed on such payments, Mr. Bunin retains an amount equal to the federal excise tax or similar state or local tax imposed on such payments. However, if no such federal excise tax or similar state or local tax would apply if the aggregate payments were reduced by 5%, then the aggregate payments to Mr. Bunin will be reduced by the amount necessary to avoid application of such federal excise tax or similar state or local tax. This table reflects an estimate of any such additional amount that we would have been obligated to pay Mr. Bunin, or any such reduction to the aggregate payments to Mr. Bunin that would have occurred, if his employment had been terminated on December 31, 2013 by us without cause or by him for good reason following a change in control on such date.
|
| | (14) | If, on December 31, 2013, Mr. Bunin's employment had been terminated as a result of his death or disability, his employment had been terminated by us without cause or his employment had been voluntarily terminated by him for good reason, or if there had been a change in control, then (a) the restrictions on all shares of restricted stock held by Mr. Bunin would have lapsed, (b) the performance shares granted to him effective March 5, 2011 would have remained outstanding, with the number of shares of common stock, if any, to be received by Mr. Bunin in respect of such performance shares to be determined based on the performance level achieved during the applicable three-year performance period, and (c) the target number of performance shares granted to him effective March 5, 2012 and March 5, 2013 would have vested; in such circumstances, this table reflects the aggregate market value, determined based on a per share price of $70.24, the closing price per share of our common stock as reported on the Nasdaq Global Select Market on December 31, 2013, of a number of shares equal to (i) all shares of restricted stock held by Mr. Bunin, (ii) 2,827, the actual number of shares of common stock received by Mr. Bunin in respect of the performance shares granted to him effective March 5, 2011 based on the performance level achieved during the applicable three-year performance period as determined by our compensation committee in early 2014, and (iii) the target number of shares of
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common stock that could be received by Mr. Bunin in respect of the performance shares granted to himMr. Hockema effective March 5, 20122014, an amount equal to the cash dividends he would have received if 24,401 common shares had been issued and March 5, 2013. If Mr. Bunin had qualified for retirement on December 31, 2013outstanding and he had retired on such date, then (a) the sharesheld of restricted stock granted to Mr. Bunin effective March 5, 2011, March 5, 2012 andrecord by him from March 5, 2014 would have remained outstanding and the restrictions on such shares would lapse on March 5, 2014, March 5,through December 31, 2015 and March 5, 2016, respectively, and (b) in respect of the performance shares granted to Mr. BuninHockema effective March 5, 2011,2015, an amount equal to the cash dividends he would have received if 23,459 common shares had been issued and outstanding and held of record by him from March 5, 2012 and March 5, 2013 would have remained outstanding with2015 through December 31, 2015.
|
| | (17) | Reflects the numberspread, if any, of (a) the aggregate market value of the shares of common stock if any,purchasable upon exercise of the option rights which would have vested early due to be received by Mr. Bunin in respect of such performance shares to be determined based on the performance level achieved during the applicable three-year performance periods; in such circumstances, the table reflects the aggregate market value,Hockema's termination, determined based on a per share price of $70.24,$83.66, the closing price per share of our common stock as reported on the Nasdaq Global Select Market on December 31, 2013,2015, over (b) the aggregate exercise price required to purchase such shares upon exercise of a number of shares equal to the sum of (i) all shares of restricted stock granted to Mr. Bunin effective March 5, 2011, March 5, 2012 and March 5, 2013, (ii) 2,827, the actual number of shares of common stock receivedsuch option rights. All option rights held by Mr. Bunin in respect of the performance shares granted to him effective March 5, 2011 basedHockema on the performance level achieved during the applicable three-year performance period as determined by our compensation committee in early 2014, and (iii) the target number of shares of common stock that could be received by Mr. Bunin in respect of the performance shares granted to him effective March 5, 2012 and March 5, 2013. | | (15) | Reflects the spread, if any, of (a) the aggregate market value of the shares of common stock purchasable upon exercise of the option rights which would have vested early due to Mr. Bunin's termination, determined based on a per share price of $70.24, the closing price per share of our common stock asDecember 31, 2015 had previously vested. Accordingly, no spread is reported on the Nasdaq Global Select Market on December 31, 2013, over (b) the aggregate exercise price required to purchase such shares upon exercise of such option rights. All option rights that were held by Mr. Bunin on December 31, 2013 had previously vested. Accordingly, no spread is reflected in this table. In any event, the $80.01 per share exercise price of such option rights exceeded the $70.24 closing price per share of our common stock as reported on the Nasdaq Stock Market on December 31, 2013.
|
| | (16) | Under our Restoration Plan, Mr. Bunin is entitled to a distribution of his account balance six months following his termination, except that he will forfeit the entire amount of matching and fixed rate contributions made by us to his account if he is terminated for cause. In addition, under our Savings Plan, upon termination of employment, Mr. Bunin is eligible to receive a distribution of his vested balance under the plan; however, such balance is not reflected in this table. |
KEITH A. HARVEY
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Circumstances of Termination | Payments and Benefits | |
Voluntary Termination by Named Executive Officer Prior to Age 65 | | Termination by us for Cause | | Termination by us without Cause or by the Named Executive Officer with Good Reason (1) | | Termination by us without Cause or by the Named Executive Officer with Good Reason Following a Change in Control (2) | |
Retirement At or After Age 65 (3) | | Disability | | Death | Payment of earned but unpaid: | | | | | | | | | | | | | | | | | | | | Base salary (4) | | — |
| | — |
| | — |
| | | — |
| | | — |
| | — |
| | | — |
| | | Short-term incentive (5) | | — |
| | — |
| | $ | 426,250 |
| | | $ | 426,250 |
| | | $ | 426,250 |
| | $ | 426,250 |
| | | $ | 426,250 |
| | | Vacation (6) | | $ | 36,538 |
| | $ | 36,538 |
| | $ | 36,538 |
| | | $ | 36,538 |
| | | $ | 36,538 |
| | $ | 36,538 |
| | | $ | 36,538 |
| | Other Benefits: | | | | | | | | | | | | | | | | | | | | Lump sum payment | | — |
| | — |
| | $ | 190,000 |
| | | $ | 1,260,000 |
| | | — |
| | — |
| | | — |
| | | Healthcare benefits | | — |
| | — |
| | $ | 6,586 |
| (7) | | $ | 27,660 |
| (7) | | — |
| | — |
| | | — |
| | | Disability benefits | | — |
| | — |
| | $ | 4,856 |
| (8) | | $ | 31,057 |
| (8) | | — |
| | $ | 1,407,824 |
| (9) | | — |
| | | Life insurance | | — |
| | — |
| | $ | 454 |
| (10) | | $ | 3,070 |
| (10) | | — |
| | — |
| | | $ | 800,000 |
| (11) | | Perquisites and other personal benefits | | — |
| | — |
| | — |
| | | $ | 44,958 |
| (12) | | — |
| | — |
| | | — |
| | | Tax gross-up (13) | | — |
| | — |
| | — |
| | | $ | (45,111 | ) | | | — |
| | — |
| | | — |
| | Acceleration of Equity Awards: | | | | | | | | | | | | | | | | | | | | Market value of stock vesting on | | | | | | | | | | | | | | | | | | | | termination (14) | | — |
| | — |
| | $ | 1,951,829 |
| | | $ | 1,951,829 |
| | | $ | 1,951,829 |
| | $ | 1,951,829 |
| | | $ | 1,951,829 |
| | | Spread for options vesting on | | | | | | | | | | | | | | | | | | | | termination (15) | | — |
| | — |
| | — |
| | | — |
| | | — |
| | — |
| | | — |
| | Distribution of Restoration Plan Balance: | | | | | | | | | | | | | | | | | | | | Amount of Distribution (16) | | $ | 359,458 |
| | — |
| | $ | 359,458 |
| | | $ | 359,458 |
| | | $ | 359,458 |
| | $ | 359,458 |
| | | $ | 359,458 |
| | Total | | $ | 395,996 |
| | $ | 36,538 |
| | $ | 2,975,971 |
| | | $ | 4,095,709 |
| | | $ | 2,774,075 |
| | $ | 4,181,899 |
| | | $ | 3,574,075 |
| |
____________
| | (1) | Under our Salaried Severance Plan, if Mr. Harvey's employment is terminated by us without cause, Mr. Harvey is entitled to (a) a lump-sum payment equal to his weekly base salary multiplied by 26 weeks (the maximum under the Salaried Severance Plan), which we refer to as the continuation period, determined based on his number of years of full employment as of December 31, 2013, and (b) continuation of his medical and dental, disability and life insurance benefits following the termination of employment for a period not to exceed the shorter of his continuation period and the period commencing on the termination of employment and ending on the date he is no longer eligible for coverage under COBRA.
| | (18) | Under our Restoration Plan, Mr. Hockema is entitled to a distribution of his account balance six months following his termination, except that he will forfeit the entire amount of matching and fixed rate contributions made by us to his account if his employment is terminated for cause. In addition, under our Savings Plan, upon termination of employment, Mr. Hockema is eligible to receive a distribution of his vested balance under the plan; however, such balance is not reflected in this table. |
KEITH A. HARVEY
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Circumstances of Termination | Payments and Benefits | |
Voluntary Termination by Named Executive Officer Prior to Age 65 | | Termination by us for Cause | | Termination by us without Cause or by the Named Executive Officer with Good Reason (1) | | Termination by us without Cause or by the Named Executive Officer with Good Reason Following a Change in Control (2) | |
Retirement At or After Age 65 (3) | | Disability | | Death | Payment of earned but unpaid: | | | | | | | | | | | | | | | | | | | | | Base salary (4) | | — |
| | — |
| | — |
| | | — |
| | | — |
| | | — |
| | | — |
| | | Short-term incentive (5) | | — |
| | — |
| | $ | 412,080 |
| | | $ | 412,080 |
| | | $ | 412,080 |
| | | $ | 412,080 |
| | | $ | 412,080 |
| | | Vacation (6) | | $ | 43,269 |
| | $ | 43,269 |
| | $ | 43,269 |
| | | $ | 43,269 |
| | | $ | 43,269 |
| | | $ | 43,269 |
| | | $ | 43,269 |
| | Other Benefits: | | | | | | | | | | | | | | | | | | | | | Lump sum payment | | — |
| | — |
| | $ | 225,000 |
| | | $ | 1,580,000 |
| | | — |
| | | — |
| | | — |
| | | Healthcare benefits (7) | | — |
| | — |
| | $ | 12,561 |
| | | $ | 52,776 |
| | | — |
| | | — |
| | | — |
| | | Disability benefits | | — |
| | — |
| | $ | 4,942 |
| (8) | | $ | 30,889 |
| (8) | | — |
| | | $ | 1,184,218 |
| (9) | | — |
| | | Life insurance | | — |
| | — |
| | $ | 952 |
| (10) | | $ | 6,178 |
| (10) | | — |
| | | — |
| | | $ | 800,000 |
| (11) | | Perquisites and other personal benefits | | — |
| | — |
| | — |
| | | $ | 26,492 |
| (12) | | — |
| | | — |
| | | — |
| | | Tax gross-up (13) | | — |
| | — |
| | — |
| | | $ | 2,644,820 |
| | | — |
| | | — |
| | | — |
| | Acceleration of Equity Awards: | | | | | | | | | | | | | | | | | | | | | Market value of stock vesting on | | | | | | | | | | | | | | | | | | | | | termination | | — |
| | — |
| | $ | 4,558,130 |
| (14) | | $ | 5,554,356 |
| (15) | | $ | 982,536 |
| (16) | | $ | 4,558,130 |
| (17) | | $ | 4,558,130 |
| (17) | | Spread for options vesting on | | | | | | | | | | | | | | | | | | | | | termination (18) | | — |
| | — |
| | — |
| | | — |
| | | — |
| | | — |
| | | — |
| | Distribution of Restoration Plan Balance: | | | | | | | | | | | | | | | | | | | | | Amount of Distribution (19) | | $ | 498,684 |
| | — |
| | $ | 498,684 |
| | | $ | 498,684 |
| | | $ | 498,684 |
| | | $ | 498,684 |
| | | $ | 498,684 |
| | Total | | $ | 541,953 |
| | $ | 43,269 |
| | $ | 5,755,618 |
| | | $ | 10,849,544 |
| | | $ | 1,936,569 |
| | | $ | 6,696,381 |
| | | $ | 6,312,163 |
| |
____________
| | (1) | Under our Salaried Severance Plan, if Mr. Harvey's employment is terminated by us without cause, Mr. Harvey is entitled to (a) a lump-sum payment equal to his weekly base salary multiplied by 26 weeks, which we referred to as the continuation period, determined based on his number of years of full employment as of December 31, 2015, and (b) continuation of his medical and dental, disability, and life insurance benefits following the termination of employment for a period not to exceed the shorter of his continuation period and the period commencing on the termination of employment and ending on the date he is no longer eligible for coverage under COBRA. |
| | (2) | Under Mr. Harvey's Change in Control Agreement, if Mr. Harvey's employment is terminated by us without cause or is voluntarily terminated by him for good reason within the period beginning 90 days prior to a change in control and ending two years following a change in control, Mr. Harvey is entitled to (a) a lump-sum payment equal to two times the sum of his base salary and most recent short-term incentive target, (b) continuation of his medical and dental, disability, and life insurance benefits for two years commencing on the date of such termination, and (c) continuation of his perquisites for two years commencing on the date of such termination. |
| | (3) | Notwithstanding the fact that Mr. Harvey had not reached age 65 as of December 31, 2013, | | (3) | Notwithstanding the fact that Mr. Harvey had not reached age 65 as of December 31, 2015, this column is provided for illustrative purposes. |
| | (4) | Assumes that there is no earned but unpaid base salary at the time of termination. |
| | (5) | Under our 2013 | | (5) | Under our 2015 STI Plan, Mr. Harvey's target award for 2013 was $250,000, but his award could have ranged from a threshold of $125,000 to a maximum of $750,000, or could have been zero if the threshold performance was not achieved. Mr. Harvey's award under our 2013 STI Plan was determined in March 2014 to be $426,250. If Mr. Harvey's employment had terminated on December 31, 2013, Mr. Harvey would have been entitled to full payment of his award under the 2013 STI Plan unless his employment had been terminated by us for cause or voluntarily terminated by him other than for good reason. Under the 2013 STI Plan, Mr. Harvey would have been entitled to a pro rata award under the 2013 STI Plan if his employment had been terminated during 2013 but prior to December 31, 2013 and his employment had been terminated as a result of death, disability, normal retirement or full early retirement (position elimination), had been terminated by us without cause or had been voluntarily terminated by him for good reason. Under Mr. Harvey's Change in Control Agreement, if his employment had been terminated by us without cause or by him for good reason within the period commencing 90 days prior to a change in control and ending two years following a change in control and such termination |
had occurred during 2013 other than on December 31, 2013, Mr. Harvey's target award for 20132015 was $340,000, but his award could have ranged from a threshold of $170,000 to a maximum of $1,020,000, or could have been zero if the threshold performance was not achieved. Mr. Harvey's award under our 20132015 STI Plan was determined in March 2016 to be $412,080. If Mr. Harvey's employment had terminated on December 31, 2015, Mr. Harvey would have been entitled to full payment of his award under the 2015 STI Plan unless his employment had been terminated by us for cause or voluntarily terminated by him. Under the 2015 STI Plan, Mr. Harvey would have been entitled to a prorated award under the 2015 STI Plan if his employment had been terminated during 2015 but prior to December 31, 2015 and his employment had been terminated as a result of death, disability or retirement at or after age 65. Under Mr. Harvey's Change in Control Agreement, if his employment had been terminated by us without cause or by him for good reason within the period commencing 90 days prior to a change in control and ending two years following a change in control and such termination had occurred during 2015 other than on December 31, 2015, Mr. Harvey's target award for 2015 under our 2015 STI Plan would have been prorated for the actual number of days of Mr. Harvey's employment in 20132015 and Mr. Harvey would have been entitled to payment of such amount.
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| | (6) | Assumes that Mr. Harvey used all of his 2013 vacation and that he has five weeks of accrued vacation for 2014.
| | (6) | Assumes that Mr. Harvey used all of his 2015 vacation and that he had five weeks of accrued vacation for 2016. |
| | (7) | This table reflects the present value of Mr. Harvey's medical and dental benefits at December 31, 2013 determined (a) assuming family coverage in a consumer-driven health plan and a premium dental plan throughout the applicable benefit continuation period and (b) based on current COBRA coverage rates for 2014 and assuming a 10% increase in the cost of medical and dental coverage for 2015 as compared to 2014.
| | (7) | This table reflects the present value of Mr. Harvey's medical and dental benefits at December 31, 2015 determined (a) assuming family coverage in a consumer-driven health plan and a premium dental plan throughout his applicable benefit continuation period and (b) based on current COBRA coverage rates for 2016 and assuming a 10% increase in the cost of medical and dental coverage for 2017 as compared to 2016. |
| | (8) | This table reflects the present value of Mr. Harvey's disability benefits at December 31, 2013 determined (a) assuming coverage throughout the applicable benefit continuation period, (b) based on our current costs of providing such benefits and assuming such costs do not increase during the applicable benefit continuation period, (c) assuming we pay such costs throughout the applicable benefit continuation period in the same manner as we currently pay such costs, (d) assuming mortality according to the RP-2000 Combined Health mortality table published by the Society of Actuaries, and (d) applying a discount rate of 3.40% | | (8) | This table reflects the present value of Mr. Harvey's disability benefits at December 31, 2015 determined (a) assuming coverage throughout the applicable benefit continuation period, (b) based on our current costs of providing such benefits and assuming such costs do not increase during the applicable benefit continuation period, (c) assuming we pay such costs throughout the applicable benefit continuation period in the same manner as we currently pay such costs, (d) assuming mortality according to the RP-2014 Mortality Table for Disabled Retirees, adjusted to 2006, and projected therefrom with MP-2015 Generational Mortality Improvement Projection, and (e) applying a discount rate of 3.90% per annum. |
| | (9) | Reflects the actuarial present value of Mr. Harvey's disability benefits at December 31, 2013 determined (a) assuming full disability at December 31, 2013, (b) assuming mortality according to the RP-2000 Disabled Retiree mortality table published by the Society of Actuaries, and (c) applying a discount rate of 3.40% | | (9) | Reflects the actuarial present value of Mr. Harvey's disability benefits at December 31, 2015 determined (a) assuming full disability at December 31, 2015, (b) assuming mortality according to the RP-2014 Mortality Table for Disabled Retirees, adjusted to 2006, and projected therefrom with MP-2015 Generational Mortality Improvement Projection, and (c) applying a discount rate of 3.90% per annum. Such disability benefits would be paid by a third-party insurer and not by us. |
| | (10) | This table reflects the present value of Mr. Harvey's life insurance benefits at December 31, 2013 determined (a) assuming coverage through out the applicable benefit continuation period at his current election of the maximum available coverage, (b) based on our current costs of providing such benefits and assuming such costs do not increase during the applicable benefit continuation period, (c) assuming we pay such costs throughout the applicable benefit continuation period in the same manner as we currently pay such costs, (d) assuming mortality according to the RP-2000 Combined Health mortality table published by the Society of Actuaries, and (e) applying a discount rate of 3.40% | | (10) | This table reflects the present value of Mr. Harvey's life insurance benefits at December 31, 2015 determined (a) assuming coverage throughout the applicable benefit continuation period at his current election of coverage, (b) based on our current costs of providing such benefits and assuming such costs do not increase during the applicable benefit continuation period, (c) assuming we pay such costs throughout the applicable benefit continuation period in the same manner as we currently pay such costs, (d) assuming mortality according to the RP-2015 White Collar Healthy Annuitant Mortality Table with MP-2015 Generational Mortality Improvement Projection, and (e) applying a discount rate of 3.90% per annum. |
| | (11) | Reflects the life insurance benefit payable assuming Mr. Harvey's death had occurred on December 31, 2013 | | (11) | Reflects the life insurance benefit payable assuming Mr. Harvey's death had occurred on December 31, 2015 other than while traveling on company-related business. Such life insurance benefit would have been paid by a third-party insurer and not by us. We maintain a travel and accidental death policy for certain employees, including Mr. Harvey, that would provide an additional $1,000,000 death benefit payable to Mr. Harvey's estate if his death occurs during company-related travel. Such death benefit would be paid by a third-party insurer and not by us. |
| | (12) | This table reflects the estimated cost to us of continuing Mr. Harvey's perquisites for such two-year period as follows: club membership dues, $22,812; and vehicle allowance, $22,146. Such amount has been estimated by multiplying the cost of Mr. Harvey's perquisites for 2013 | | (12) | This table reflects the estimated cost to us of continuing Mr. Harvey's perquisites for such two-year period. Such amount has been estimated by multiplying the cost of Mr. Harvey's vehicle allowance and club membership dues for 2015 by two. |
| | (13) | Under Mr. Harvey's Change in Control Agreement, in general, if any payments to Mr. Harvey would be subject to federal excise tax or any similar state or local tax by reason of being considered contingent on a change in control, we must pay to Mr. Harvey an additional amount such that, after satisfaction of all tax obligations imposed on such payments, Mr. Harvey retains an amount equal to the federal excise tax or similar state or local tax imposed on such payments. However, if no such federal excise tax or similar state or local tax would apply if the aggregate payments were reduced by 5%, then the aggregate payments to Mr. Harvey will be reduced by the amount necessary to avoid application of such federal excise tax or similar state or local tax. This table reflects an estimate of any such additional amount that we would have been obligated to pay Mr. Harvey, or any such reduction to the aggregate payments to Mr. Harvey that would have occurred, if his employment had been terminated on December 31, 2013 | | (13) | Under Mr. Harvey's Change in Control Agreement, in general, if any payments to Mr. Harvey would be subject to federal excise tax or any similar state or local tax by reason of being considered contingent on a change in control, we must pay to Mr. Harvey an additional amount such that, after satisfaction of all tax obligations imposed on such payments, Mr. Harvey retains an amount equal to the federal excise tax or similar state or local tax imposed on such payments. However, if no such federal excise tax or similar state or local tax would apply if the aggregate payments were reduced by 5%, then the aggregate payments to Mr. Harvey will be reduced by the amount necessary to avoid application of such federal excise tax or similar state or local tax. This table reflects an estimate of any such additional amount that we would have been obligated to pay Mr. Harvey, or any such reduction to the aggregate payments to Mr. Harvey that would have occurred, if his employment had been terminated on December 31, 2015 by us without cause or by him for good reason following a change in control on such date. |
| | (14) |
| | (14) | If, on December 31, 2013,If, on December 31, 2015, Mr. Harvey's employment had been terminated as a result of his death or disability, his employment had been terminated by us without cause or his employment had been voluntarily terminated by him for good reason, or if there had been a change in control, then (a) the restrictions on all shares of restricted stock that were held by Mr. Harvey would have lapsed, (b) the performance shares granted to him effective March 5, 2011 would have remained outstanding, with the number of shares of common stock, if any, to be received by Mr. Harvey in respect of such performance shares to be determined based on the performance level achieved during the applicable three-year performance period, and (c) the target number of performance shares granted to him effective March 5, 2012 and March 5, 2013 would have vested; in such circumstances, this table reflects the aggregate market value, determined based on a per
|
share price of $70.24, the closing price per share of our common stock as reported on the Nasdaq Global Select Market on December 31, 2013, of a number of shares equal to (i) all shares of restricted stock held by Mr. Harvey, (ii) 2,073, the actual number of shares of common stock received by Mr. Harvey in respect of the performance shares granted to him effective March 5, 2011 based on the performance level achieved during the applicable three-year performance period as determined by our compensation committee in early 2014, and (iii) the target number of shares of common stock that could be received by Mr. Harvey in respect of the performance shares granted to him effective March 5, 2012 and March 5, 2013. If Mr. Harvey had qualified for retirement on December 31, 2013 and he had retired on such date, then (a) the shares of restricted stock granted to Mr. Harvey effective March 5, 2011, March 5, 2012 and March 5, 2013 would have remained outstanding and the restrictions on such shares would lapse on March 5, 2014, March 5, 2015 and March 5, 2016, respectively, and (b)the performance shares granted to Mr. Harvey effective March 5, 2011, March 5, 2012 and March 5, 2013 would have remained outstanding, with the number of shares of common stock, if any, to be received by Mr. Harvey in respect of such performance shares to be determined based on the performance level achieved during the applicable three-year performance periods;period, and (c) the performance shares granted to him effective March 5, 2014 and March 5, 2015 would have remained outstanding, with the number of shares of common stock, if any, to be received by Mr. Harvey in respect of such performance shares to be determined based on the performance level achieved during the applicable three-year performance period; in such circumstances, the table reflects the aggregate market value, determined based on a per share price of $70.24,$83.66, the closing price per share of our common stock as reported on the Nasdaq Global Select Market on December 31, 2013,2015, of a number of shares equal to (i) 39,187, the sum of (i) all sharesnumber of restricted stock granted tothat were held by Mr. Harvey effective March 5, 2011, March 5, 2012 and March 5, 2013,on December 31, 2015, (ii) 2,073,3,391, the actual number of shares of common stock received by Mr. Harvey in respect of the performance shares granted to him effective March 5, 20112013 based on the performance level achieved during the applicable three-year performance period as determined by our compensation committee in early 2014,2016, and (iii) 5,052
|
and 6,594, the target number of shares of common stock that could be received by Mr. Harvey in respect of the performance shares granted to him effective March 5, 2014 and March 5, 2015, respectively. Pursuant to the terms of the performance shares granted to Mr. Harvey effective March 5, 2014 and March 5, 2015, if the company declares cash dividends on our common stock and the record and payment dates for such dividends occur on or after the date of grant but before common shares are issued or delivered in respect of such performance shares, then, upon the issuance or delivery of such common shares in respect of such performance shares, Mr. Harvey will be entitled to also receive a payment equal to the cash dividends that he would have received if the number of common shares so issued or delivered to him had been issued and outstanding and held of record by him from the date of grant through such issuance or delivery; this table reflects (a) in respect of the performance shares granted to Mr. Harvey effective March 5, 2014, an amount equal to the cash dividends he would have received if 5,052 common shares had been issued and outstanding and held of record by him from March 5, 2014 through the issuance and delivery of common shares in respect of such performance shares and (b) in respect of the performance shares granted to Mr. Harvey effective March 5, 2015, an amount equal to the cash dividends he would have received if 6,594 common shares had been issued and outstanding and held of record by him from March 5, 2015 through the issuance and delivery of common shares in respect of such performance shares, assuming in each case that the company does not declare any further cash dividends after December 31, 2015. | | (15) | If, on December 31, 2015, there had been a change in control and Mr. Harvey's employment had been terminated by us without cause or his employment had been voluntarily terminated by him for good reason, then (a) the restrictions on all shares of restricted stock that were held by Mr. Harvey would have lapsed, (b) the performance shares granted to him effective March 5, 2013 would have remained outstanding, with the number of shares of common stock, if any, to be received by Mr. Harvey in respect of such performance shares to be determined based on the performance level achieved during the applicable three-year performance period, and (c) the performance shares granted to Mr. Harvey effective March 5, 2014 and March 5, 2015 would have immediately vested, with the number of shares of common stock, if any, to be received by Mr. Harvey in respect of such performance shares to be determined based on the performance level achieved during the applicable performance period through the date of such change in control; in such instances, this table reflects the aggregate market value, determined based on a per share price of $83.66, the closing price per share of our common stock as reported on the Nasdaq Global Select Market on December 31, 2015, of a number of shares equal to the sum of (i) 39,187, the number of shares of restricted stock that were held by Mr. Harvey on December 31, 2015, (ii) 3,391, the actual number of shares of common stock received by Mr. Harvey in respect of the performance shares granted to him effective March 5, 2013 based on the performance level achieved during the applicable three-year performance period as determined by our compensation committee in early 2016, and (iii) 10,105 and 13,189, the number of shares of common stock that would have been received by Mr. Harvey in respect of the performance shares granted to him effective March 5, 2014 and March 5, 2015 based on the performance level achieved during the applicable performance period through the date of the change in control. Pursuant to the terms of the performance shares granted to Mr. Harvey effective March 5, 2014 and March 5, 2015, if the company declares cash dividends on our common stock and the record and payment dates for such dividends occur on or after the date of grant but before common shares are issued or delivered in respect of such performance shares, then, upon the issuance or delivery of such common shares in respect of such performance shares, Mr. Harvey will be entitled to also receive a payment equal to the cash dividends that he would have received if the number of common shares so issued or delivered to him had been issued and outstanding and held of record by him from the date of grant through such issuance or delivery; this table reflects (a) in respect of the performance shares granted to Mr. Harvey effective March 5, 2014, an amount equal to the cash dividends he would have received if 10,105 common shares had been issued and outstanding and held of record by him from March 5, 2014 through December 31, 2015 and (b) in respect of the performance shares granted to Mr. Harvey effective March 5, 2015, an amount equal to the cash dividends he would have received if 13,189 common shares had been issued and outstanding and held of record by him from March 5, 2015 through December 31, 2015. |
| | (16) | If Mr. Harvey had qualified for retirement on December 31, 2015 and he had retired on such date, then the shares of restricted stock and performance shares that were held by Mr. Harvey would have remained outstanding, with the restrictions on such shares of restricted stock to lapse in each case on the third anniversary of the date of grant and with the number of shares of common stock, if any, to be received by Mr. Harvey in respect of such performance shares to be determined based on the performance level achieved during the applicable three-year performance periods, except that the restriction on the shares of restricted stock granted to Mr. Harvey on June 4, 2014 would lapse on the fifth anniversary of the date of grant and the shares of restricted stock granted to Mr. Harvey effective March 5, 2015 and shares of common stock to be received in respect of performance shares granted to Mr. Harvey effective March 5, 2015 would be prorated based on actual days of Mr. Harvey's employment during the applicable restriction or performance period; in such circumstances, this table reflects the aggregate market value, determined based on a per share price of $83.66, the closing price per share of our common stock as reported on the Nasdaq Global Select Market on December 31, 2015, of a number of shares equal to the sum of (i) 33,667, the total number of shares of restricted stock that were granted to Mr. Harvey in 2013 and 2014, (ii) 1,515, the number of shares of restricted stock held by Mr. Harvey that were granted to him effective March 5, 2015, prorated based on actual days of Mr. Harvey's employment during the applicable restriction |
period, (iii) 3,391, the actual number of shares of common stock received by Mr. Harvey in respect of the performance shares granted to him effective March 5, 2013 based on the performance level achieved during the applicable three-year performance period as determined by our compensation committee in early 2016, (iv) 5,052, the target number of shares of common stock that could be received by Mr. Harvey in respect of the performance shares granted to him effective March 5, 2014, and (v) 2,195, the target number of shares of common stock that could be received by Mr. Harvey in respect of the performance shares granted to him effective March 5, 2015, prorated based on actual days of Mr. Harvey's employment during the applicable performance period. Pursuant to the terms of the performance shares granted to Mr. Harvey effective March 5, 2014 and March 5, 2015, if the company declares cash dividends on our common stock and the record and payment dates for such dividends occur on or after the date of grant but before common shares are issued or delivered in respect of such performance shares, then, upon the issuance or delivery of such common shares in respect of such performance shares, Mr. Harvey will be entitled to also receive a payment equal to the cash dividends that he would have received if the number of common shares so issued or delivered to him had been issued and outstanding and held of record by him from the date of grant through such issuance or delivery; this table reflects (a) in respect of the performance shares granted to Mr. Harvey effective March 5, 2014, an amount equal to the cash dividends he would have received if 5,052 common shares had been issued and outstanding and held of record by him from March 5, 2014 through the issuance and delivery of common shares in respect of such performance shares and (b) in respect of the performance shares granted to Mr. Harvey effective March 5, 2015, an amount equal to the cash dividends he would have received if 2,195 common shares had been issued and outstanding and held of record by him from March 5, 2015 through the issuance and delivery of common shares in respect of such performance shares, assuming in each case that company does not declare any further cash dividends after December 31, 2015. | | (17) | If, on December 31, 2015, Mr. Harvey's employment had been terminated as a result of his death or disability, then (a) the restrictions on all shares of restricted stock that were held by Mr. Harvey would have lapsed, (b) the performance shares granted to him effective March 5, 2013 would have remained outstanding, with the number of shares of common stock, if any, to be received by Mr. Harvey in respect of such performance shares to be determined based on the performance level achieved during the applicable three-year performance period, and (c) the target number of performance shares granted to him effective March 5, 2014 and March 5, 2015 would have vested; in such circumstances, the table reflects the aggregate market value, determined based on a per share price of $83.66, the closing price per share of our common stock as reported on the Nasdaq Global Select Market on December 31, 2015, of a number of shares equal to (i) 39,187, the number of shares of restricted stock that were held by Mr. Harvey on December 31, 2015, (ii) 3,391, the actual number of shares of common stock received by Mr. Harvey in respect of the performance shares granted to him effective March 5, 2013 based on the performance level achieved during the applicable three-year performance period as determined by our compensation committee in early 2016, and (iii) 5,052 and 6,594, the target number of shares of common stock that would be received by Mr. Harvey in respect of the performance shares granted to him effective March 5, 20122014 and March 5, 2013.
| 2015, respectively. Pursuant to the terms of the performance shares granted to Mr. Harvey effective March 5, 2014 and March 5, 2015, if the company declares cash dividends on our common stock and the record and payment dates for such dividends occur on or after the date of grant but before common shares are issued or delivered in respect of such performance shares, then, upon the issuance or delivery of such common shares in respect of such performance shares, Mr. Harvey will be entitled to also receive a payment equal to the cash dividends that he would have received if the number of common shares so issued or delivered to him had been issued and outstanding and held of record by him from the date of grant through such issuance or delivery; this table reflects (a) in respect of the performance shares granted to Mr. Harvey effective March 5, 2014, an amount equal to the cash dividends he would have received if 5,052 common shares had been issued and outstanding and held of record by him from March 5, 2014 through December 31, 2015 and (b) in respect of the performance shares granted to Mr. Harvey effective March 5, 2015, an amount equal to the cash dividends he would have received if 6,594 common shares had been issued and outstanding and held of record by him from March 5, 2015 through December 31, 2015. | (15) | Reflects the spread, if any, of (a) the aggregate market value of the shares of common stock purchasable upon exercise of the option rights which would have vested early due to Mr. Harvey's termination, determined based on a per share price of $70.24, the closing price per share of our common stock as reported on the Nasdaq Global Select Market on December 31, 2013, over (b) the aggregate exercise price required to purchase such shares upon exercise of such option rights. All option rights that were held by Mr. Harvey on December 31, 2013
|
| | (18) | Reflects the spread, if any, of (a) the aggregate market value of the shares of common stock purchasable upon exercise of the option rights which would have vested early due to Mr. Harvey's termination, determined based on a per share price of $83.66, the closing price per share of our common stock as reported on the Nasdaq Global Select Market on December 31, 2015, over (b) the aggregate exercise price required to purchase such shares upon exercise of such option rights. All option rights that were held by Mr. Harvey on December 31, 2015 had previously vested. Accordingly, no spread is reflected in this table. In any event, the $80.01 per share exercise price of such option rights exceeded the $70.24 closing price per share of our common stock as reported on the Nasdaq Stock Market on December 31, 2013. |
| | (16) | Under our Restoration Plan, Mr. Harvey is entitled to a distribution of his account balance six months following his termination, except that he will forfeit the entire amount of matching and fixed rate contributions made by us to his account if he is terminated for cause. In addition, under our Savings Plan, upon termination of employment, Mr. Harvey is eligible to receive a distribution of his vested balance under the plan; however, such balance is not reflected in this table. |
| | (19) | Under our Restoration Plan, Mr. Harvey is entitled to a distribution of his account balance six months following his termination, except that he will forfeit the entire amount of matching and fixed rate contributions made by us to his account if he is terminated for cause. In addition, under our Savings Plan, upon termination of employment, Mr. Harvey is eligible to receive a distribution of his vested balance under the plan; however, such balance is not reflected in this table. |
Daniel J. Rinkenberger
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Circumstances of Termination | Payments and Benefits | |
Voluntary Termination by Named Executive Officer Prior to Age 65 | | Termination by us for Cause | | Termination by us without Cause or by the Named Executive Officer with Good Reason (1) | | Termination by us without Cause or by the Named Executive Officer with Good Reason Following a Change in Control (2) | |
Retirement At or After Age 65 (3) | | Disability | | Death | Payment of earned but unpaid: | | | | | | | | | | | | | | | | | | | | | Base salary (4) | | — |
| | — |
| | — |
| | | — |
| | | — |
| | | — |
| | | — |
| | | Short-term incentive (5) | | — |
| | — |
| | $ | 350,995 |
| | | $ | 350,995 |
| | | $ | 350,995 |
| | | $ | 350,995 |
| | | $ | 350,995 |
| | | Vacation (6) | | $ | 42,029 |
| | $ | 42,029 |
| | $ | 42,029 |
| | | $ | 42,029 |
| | | $ | 42,029 |
| | | $ | 42,029 |
| | | $ | 42,029 |
| | Other Benefits: | | | | | | | | | | | | | | | | | | | | | Lump sum payment | | — |
| | — |
| | $ | 168,115 |
| | | $ | 1,453,400 |
| | | — |
| | | — |
| | | — |
| | | Healthcare benefits (7) | | — |
| | — |
| | $ | 11,595 |
| | | $ | 52,756 |
| | | — |
| | | — |
| | | — |
| | | Disability benefits | | — |
| | — |
| | — |
| (8) | | — |
| (8) | | — |
| | | — |
| (9) | | — |
| | | Life insurance | | — |
| | — |
| | $ | 64 |
| (10) | | $ | 411 |
| (10) | | — |
| | | — |
| | | $ | 50,000 |
| (11) | | Perquisites and other personal benefits | | — |
| | — |
| | — |
| | | $ | 20,576 |
| (12) | | — |
| | | — |
| | | — |
| | | Tax gross-up (13) | | — |
| | — |
| | — |
| | | 1,729,868 |
| | | — |
| | | — |
| | | — |
| | Acceleration of Equity Awards: | | | | | | | | | | | | | | | | | | | | | Market value of stock vesting on | | | | | | | | | | | | | | | | | | | | | termination | | — |
| | — |
| | $ | 2,619,595 |
| (14) | | $ | 3,625,474 |
| (15) | | $ | 1,082,353 |
| (16) | | $ | 2,619,595 |
| (17) | | $ | 2,619,595 |
| (17) | | Spread for options vesting on | | | | | | | | | | | | | | | | | | | | | termination (18) | | — |
| | — |
| | — |
| | | — |
| | | — |
| | | — |
| | | — |
| | Distribution of Restoration Plan Balance: | | | | | | | | | | | | | | | | | | | | | Amount of Distribution (19) | | $ | 398,667 |
| | — |
| | $ | 398,667 |
| | | $ | 398,667 |
| | | $ | 398,667 |
| | | $ | 398,667 |
| | | $ | 398,667 |
| | Total | | $ | 440,696 |
| | $ | 42,029 |
| | $ | 3,591,060 |
| | | $ | 7,674,176 |
| | | $ | 1,874,044 |
| | | $ | 3,411,286 |
| | | $ | 3,461,286 |
| |
____________
60 | | (1) | Under our Salaried Severance Plan, if Mr. Rinkenberger's employment is terminated by us without cause, Mr. Rinkenberger is entitled to (a) a lump-sum payment equal to his weekly base salary multiplied by 20 weeks, which we refer to as the continuation period, determined based on his number of years of full employment as of December 31, 2015, and (b) continuation of his medical and dental, disability and life insurance benefits following the termination of employment for a period not to exceed the shorter of his continuation period and the period commencing on the termination of employment and ending on the date he is no longer eligible for coverage under COBRA. |
| | (2) | Under Mr. Rinkenberger's Change in Control Agreement, if Mr. Rinkenberger's employment is terminated by us without cause or is voluntarily terminated by him for good reason within the period beginning 90 days prior to a change in control and ending two years following a change in control, Mr. Rinkenberger is entitled to (a) a lump-sum payment equal to two times the sum of his base salary and most recent short-term incentive target, (b) continuation of his medical and dental, disability, and life insurance benefits for two years commencing on the date of such termination, and (c) continuation of his perquisites for two years commencing on the date of such termination. |
| | (3) | Notwithstanding the fact that Mr. Rinkenberger had not reached age 65 as of December 31, 2015, this column is provided for illustrative purposes. |
| | (4) | Assumes that there is no earned but unpaid base salary at the time of termination. |
| | (5) | Under our 2015 STI Plan, Mr. Rinkenberger's target award for 2015 was $289,600, but his award could have ranged from a threshold of $144,800 to a maximum of $868,800, or could have been zero if the threshold performance was not achieved. Mr. Rinkenberger's award under our 2015 STI Plan was determined in March 2016 to be $350,995. If Mr. Rinkenberger's employment had terminated on December 31, 2015, Mr. Rinkenberger would have been entitled to full payment of his award under the 2015 STI Plan unless his employment had been terminated by us for cause or voluntarily terminated by him. Under the 2015 STI Plan, Mr. Rinkenberger would have been entitled to a prorated award under the 2015 STI Plan if his employment had been terminated during 2015 but prior to December 31, 2015 and his employment had been terminated as a result of death, disability or retirement at or after age 65. Under Mr. Rinkenberger's Change in Control Agreement, if his employment had been terminated by us without cause or by him for good reason within the period commencing 90 days prior to a change in control and ending two years following a change in control and such termination had occurred during 2015 other than on December 31, 2015, Mr. Rinkenberger's target award for 2015 under our 2015 STI Plan would have been prorated for the actual number of days of Mr. Rinkenberger's employment in 2015 and Mr. Rinkenberger would have been entitled to payment of such amount. |
| | (6) | Assumes that Mr. Rinkenberger used all of his 2015 vacation and that he had five weeks of accrued vacation for 2016. |
| | (7) | This table reflects the present value of Mr. Rinkenberger's medical and dental benefits at December 31, 2015 determined (a) assuming family coverage in a consumer-driven health plan and a premium dental plan throughout Mr. Rinkenberger's applicable benefit continuation period and (b) based on current COBRA coverage rates for 2016 and assuming a 10% increase in the cost of medical and dental coverage for 2017 as compared to 2016. |
| | (8) | This table reflects the present value of Mr. Rinkenberger's disability benefits at December 31, 2015 determined (a) assuming coverage throughout the applicable benefit continuation period, (b) based on our current costs of providing such benefits and assuming such costs do not increase during the applicable benefit continuation period, (c) assuming we pay such costs throughout the applicable benefit continuation period in the same manner as we currently pay such costs, (d) assuming mortality according to the RP-2015 Mortality Table for Disabled Retirees, adjusted to 2006, and projected therefrom with MP-2015 Generational Mortality Improvement Projection, and (e) applying a discount rate of 3.90% per annum. |
| | (9) | Reflects the actuarial present value of Mr. Rinkenberger's disability benefits at December 31, 2015 determined (a) assuming full disability at December 31, 2015, (b) assuming mortality according to the RP-2015 Mortality Table for Disabled Retirees, adjusted to 2006, and projected therefrom with MP-2015 Generational Mortality Improvement Projection, and (c) applying a discount rate of 3.90% per annum. Such disability benefits would be paid by a third-party insurer and not by us. |
| | (10) | This table reflects the present value of Mr. Rinkenberger's life insurance benefits at December 31, 2015 determined (a) assuming coverage throughout the applicable benefit continuation period at his current election of the maximum available coverage, (b) based on our current costs of providing such benefits and assuming such costs do not increase during the applicable benefit continuation period, (c) assuming we pay such costs throughout the applicable benefit continuation period in the same manner as we currently pay such costs, (d) assuming mortality according to the RP-2015 White Collar Healthy Annuitant Mortality Table with MP-2015 Generational Mortality Improvement Projection, and (e) applying a discount rate of 3.90% per annum. |
| | (11) | Reflects the life insurance benefit payable assuming Mr. Rinkenberger's death had occurred on December 31, 2015 other than while traveling on company-related business. Such life insurance benefit would have been paid by a third-party insurer and not by us. We maintain a travel and accidental death policy for certain employees, including Mr. Rinkenberger, that would provide an additional $1,000,000 death benefit payable to Mr. Rinkenberger's estate if his death occurs during company-related travel. Such death benefit would be paid by a third-party insurer and not by us. |
| | (12) | This table reflects the estimated cost to us of continuing Mr. Rinkenberger's perquisites for the required two-year period. Such amount has been estimated by multiplying the cost of Mr. Rinkenberger's vehicle allowance for 2015 by two. |
| | (13) | Under Mr. Rinkenberger's Change in Control Agreement, in general, if any payments to Mr. Rinkenberger would be subject to federal excise tax or any similar state or local tax by reason of being considered contingent on a change in control, we must pay to Mr. Rinkenberger an additional amount such that, after satisfaction of all tax obligations imposed on such payments, Mr. Rinkenberger retains an amount equal to the federal excise tax or similar state or local tax imposed on such payments. However, if no such federal excise tax or similar state or local tax would apply if the aggregate payments were reduced by 5%, then the aggregate payments to Mr. Rinkenberger will be reduced by the amount necessary to avoid application of such federal excise tax or similar state or local tax. This table reflects an estimate of any such additional amount that we would have been obligated to pay Mr. Rinkenberger, or any such reduction to the aggregate payments to Mr. Rinkenberger that would have occurred, if his employment had been terminated on December 31, 2015 by us without cause or by him for good reason following a change in control on such date. |
| | (14) | If, on December 31, 2015, Mr. Rinkenberger's employment had been terminated by us without cause or his employment had been voluntarily terminated by him for good reason, then (a) the restrictions on all shares of restricted stock held by Mr. Rinkenberger would have lapsed, (b) the performance shares granted to him effective March 5, 2013 would have remained outstanding, with the number of shares of common stock, if any, to be received by Mr. Rinkenberger in respect of such performance shares to be determined based on the performance level achieved during the applicable three-year performance period, and (c) the performance shares granted to him effective March 5, 2014 and March 5, 2015 would have remained outstanding, with the number of shares of common stock, if any, to be received by Mr. Rinkenberger in respect to such performance shares to be determined based on the performance level achieved during the applicable three-year performance period; in such circumstances, this table reflects the aggregate market value, determined based on a per share price of $83.66, the closing price per share of our common stock as reported on the Nasdaq Global Select Market on December 31, 2015, of a number of shares equal to (i) 15,191, the number of shares of restricted stock that were held by Mr. Rinkenberger on December 31, 2015,(ii) 4,099, the actual number of shares of common stock received by Mr. Rinkenberger in respect of the performance shares granted to him effective March 5, 2013 based on the performance level achieved during the applicable three-year performance period as determined by our compensation committee in |
early 2016, and (iii) 5,985 and 5,754, the target number of shares of common stock that could be received by Mr. Rinkenberger in respect of the performance shares granted to him effective March 5, 2014 and March 5, 2015, respectively. Pursuant to the terms of the performance shares granted to Mr. Rinkenberger effective March 5, 2014 and March 5, 2015, if the company declares cash dividends on our common stock and the record and payment dates for such dividends occur on or after the date of grant but before common shares are issued or delivered in respect of such performance shares, then, upon the issuance or delivery of such common shares in respect of such performance shares, Mr. Rinkenberger will be entitled to also receive a payment equal to the cash dividends that he would have received if the number of common shares so issued or delivered to him had been issued and outstanding and held of record by him from the date of grant through such issuance or delivery; this table reflects (a) in respect of the performance shares granted to Mr. Rinkenberger effective March 5, 2014, an amount equal to the cash dividends he would have received if 5,985 common shares had been issued and outstanding and held of record by him from March 5, 2014 through the issuance and delivery of common shares in respect of such performance shares and (b) in respect of the performance shares granted to Mr. Rinkenberger effective March 5, 2015, an amount equal to the cash dividends he would have received if 5,754 common shares had been issued and outstanding and held of record by him from March 5, 2015 through the issuance and delivery of common shares in respect of such performance shares, assuming in each case that the company does not declare any further cash dividends after December 31, 2015. | | (15) | If, on December 31, 2015, there had been a change in control and Mr. Rinkenberger's employment had been terminated by us without cause or his employment had been voluntarily terminated by him for good reason, then (a) the restrictions on all shares of restricted stock that were held by Mr. Rinkenberger would have lapsed, (b) the performance shares granted to him effective March 5, 2013 would have remained outstanding, with the number of shares of common stock, if any, to be received by Mr. Rinkenberger in respect of such performance shares to be determined based on the performance level achieved during the applicable three-year performance period, and (c) the performance shares granted to Mr. Rinkenberger effective March 5, 2014 and March 5, 2015 would have immediately vested, with the number of shares of common stock, if any, to be received by Mr. Rinkenberger in respect of such performance shares to be determined based on the performance level achieved during the applicable performance period through the date of such change in control; in such instances, this table reflects the aggregate market value, determined based on a per share price of $83.66, the closing price per share of our common stock as reported on the Nasdaq Global Select Market on December 31, 2015, of a number of shares equal to the sum of (i) 15,191, the number of shares of restricted stock that were held by Mr. Rinkenberger on December 31, 2015, (ii) 4,099, the actual number of shares of common stock received by Mr. Rinkenberger in respect of the performance shares granted to him effective March 5, 2013 based on the performance level achieved during the applicable three-year performance period as determined by our compensation committee in early 2016, and (iii) 11,970 and 11,509, the number of shares of common stock that would have been received by Mr. Rinkenberger in respect of the performance shares granted to him effective March 5, 2014 and March 5, 2015, respectively, based on the performance level achieved during the performance period through the date of the change in control. Pursuant to the terms of the performance shares granted to Mr. Rinkenberger effective March 5, 2014 and March 5, 2015, if the company declares cash dividends on our common stock and the record and payment dates for such dividends occur on or after the date of grant but before common shares are issued or delivered in respect of such performance shares, then, upon the issuance or delivery of such common shares in respect of such performance shares, Mr. Rinkenberger will be entitled to also receive a payment equal to the cash dividends that he would have received if the number of common shares so issued or delivered to him had been issued and outstanding and held of record by him from the date of grant through such issuance or delivery; this table reflects (a) in respect of the performance shares granted to Mr. Rinkenberger effective March 5, 2014, an amount equal to the cash dividends he would have received if 11,970 common shares had been issued and outstanding and held of record by him from March 5, 2014 through December 31, 2015 and (b) in respect of the performance shares granted to Mr. Rinkenberger effective March 5, 2015, an amount equal to the cash dividends he would have received if 11,509 common shares had been issued and outstanding and held of record by him from March 5, 2015 through December 31, 2015.
DIRECTOR COMPENSATION
|
| | (16) | If Mr. Rinkenberger had qualified for retirement on December 31, 2015 and he had retired on such date, then the shares of restricted stock and performance shares that were held by Mr. Rinkenberger would have remained outstanding, with the restrictions on such shares of restricted stock to lapse in each case on the third anniversary of the date of grant and with the number of shares of common stock, if any, to be received by Mr. Rinkenberger in respect of such performance shares to be determined based on the performance level achieved during the applicable three-year performance periods, except that the shares of restricted stock granted to Mr. Rinkenberger effective March 5, 2015 and shares of common stock to be received in respect of performance shares granted to Mr. Rinkenberger effective March 5, 2015 would be prorated based on actual days of Mr. Rinkenberger's employment during the applicable restriction or performance period; in such circumstances, the table reflects the aggregate market value, determined based on a per share price of $83.66, the closing price per share of our common stock as reported on the Nasdaq Global Select Market on December 31, 2015, of a number of shares equal to the sum of (i) 10,374, the number of shares of restricted stock granted to Mr. Rinkenberger effective March 5, 2013 and March 5, 2014, (ii) 1,322, the number of shares of restricted stock granted to Mr. Rinkenberger |
effective March 5, 2015, prorated based on actual days of Mr. Rinkenberger's employment during the applicable restriction period, (iii) 4,099, the actual number of shares of common stock received by Mr. Rinkenberger in respect of the performance shares granted to him effective March 5, 2013 based on the performance level achieved during the applicable three-year performance period as determined by our compensation committee in early 2016, (iv) 5,985, the target number of shares of common stock that could be received by Mr. Rinkenberger in respect of the performance shares granted to him effective March 5, 2014, and (v) 1,916, the target number of shares of common stock that could be received by Mr. Rinkenberger in respect of the performance shares granted to him effective March 5, 2015, prorated based on actual days of Mr. Rinkenberger's employment during the applicable performance period. Pursuant to the terms of the performance shares granted to Mr. Rinkenberger effective March 5, 2014 and March 5, 2015, if the company declares cash dividends on our common stock and the record and payment dates for such dividends occur on or after the date of grant but before common shares are issued or delivered in respect of such performance shares, then, upon the issuance or delivery of such common shares in respect of such performance shares, Mr. Rinkenberger will be entitled to also receive a payment equal to the cash dividends that he would have received if the number of common shares so issued or delivered to him had been issued and outstanding and held of record by him from the date of grant through such issuance or delivery; this table reflects (a) in respect of the performance shares granted to Mr. Rinkenberger effective March 5, 2014, an amount equal to the cash dividends he would have received if 5,985 common shares had been issued and outstanding and held of record by him from March 5, 2014 through the issuance and delivery of common shares in respect of such performance shares and (b) in respect of the performance shares granted to Mr. Rinkenberger effective March 5, 2015, an amount equal to the cash dividends he would have received if 1,916 common shares had been issued and outstanding and held of record by him from March 5, 2015 through the issuance and delivery of common shares in respect of such performance shares, assuming in each case that company does not declare any further cash dividends after December 31, 2015. | | (17) | If, on December 31, 2015, Mr. Rinkenberger's employment had been terminated as a result of his death or disability, then (a) the restrictions on all shares of restricted stock that were held by Mr. Rinkenberger would have lapsed, (b) the performance shares granted to him effective March 5, 2013 would have remained outstanding, with the number of shares of common stock, if any, to be received by Mr. Rinkenberger in respect of such performance shares to be determined based on the performance level achieved during the applicable three-year performance period, and (c) the target number of performance shares granted to him effective March 5, 2014 and March 5, 2015 would have vested; in such circumstances, this table reflects the aggregate market value, determined based on a per share price of $83.66, the closing price per share of our common stock as reported on the Nasdaq Global Select Market on December 31, 2015, of a number of shares equal to (i) 15,191, the number of shares of restricted stock that were held by Mr. Rinkenberger on December 31, 2015,(ii) 4,099, the actual number of shares of common stock received by Mr. Rinkenberger in respect of the performance shares granted to him effective March 5, 2013 based on the performance level achieved during the applicable three-year performance period as determined by our compensation committee in early 2016, and (iii) 5,985 and 5,754, the target number of shares of common stock that would be received by Mr. Rinkenberger in respect of the performance shares granted to him effective March 5, 2014 and March 5, 2015, respectively. Pursuant to the terms of the performance shares granted to Mr. Rinkenberger effective March 5, 2014 and March 5, 2015, if the company declares cash dividends on our common stock and the record and payment dates for such dividends occur on or after the date of grant but before common shares are issued or delivered in respect of such performance shares, then, upon the issuance or delivery of such common shares in respect of such performance shares, Mr. Rinkenberger will be entitled to also receive a payment equal to the cash dividends that he would have received if the number of common shares so issued or delivered to him had been issued and outstanding and held of record by him from the date of grant through such issuance or delivery; this table reflects (a) in respect of the performance shares granted to Mr. Rinkenberger effective March 5, 2014, an amount equal to the cash dividends he would have received if 5,985 common shares had been issued and outstanding and held of record by him from March 5, 2014 through December 31, 2015 and (b) in respect of the performance shares granted to Mr. Rinkenberger effective March 5, 2015, an amount equal to the cash dividends he would have received if 5,754 common shares had been issued and outstanding and held of record by him from March 5, 2015 through December 31, 2015. |
| | (18) | Reflects the spread, if any, of (a) the aggregate market value of the shares of common stock purchasable upon exercise of the option rights which would have vested early due to Mr. Rinkenberger's termination, determined based on a per share price of $83.66, the closing price per share of our common stock as reported on the Nasdaq Global Select Market on December 31, 2015, over (b) the aggregate exercise price required to purchase such shares upon exercise of such option rights. All option rights that were held by Mr. Rinkenberger on December 31, 2015 had previously vested. Accordingly, no spread is reflected in this table. |
| | (19) | Under our Restoration Plan, Mr. Rinkenberger is entitled to a distribution of his account balance six months following his termination, except that he will forfeit the entire amount of matching and fixed rate contributions made by us to his account if he is terminated for cause. In addition, under our Savings Plan, upon termination of employment, Mr. |
Rinkenberger is eligible to receive a distribution of his vested balance under the plan; however, such balance is not reflected in this table.
JOHN M. DONNAN
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Circumstances of Termination | Payments and Benefits | |
Voluntary Termination by Named Executive Officer Prior to Age 65 | | Termination by us for Cause | | Termination by us without Cause or by the Named Executive Officer with Good Reason (1) | | Termination by us without Cause or by the Named Executive Officer with Good Reason Following a Change in Control (2) | |
Retirement At or After Age 65 (3) | | Disability | | Death | Payment of earned but unpaid: | | | | | | | | | | | | | | | | | | | | | Base salary (4) | | — |
| | — |
| | — |
| | | — |
| | | — |
| | | — |
| | | — |
| | | Short-term incentive (5) | | — |
| | — |
| | $ | 331,118 |
| | | $ | 331,118 |
| | | $ | 331,118 |
| | | $ | 331,118 |
| | | $ | 331,118 |
| | | Vacation (6) | | $ | 39,404 |
| | $ | 39,404 |
| | $ | 39,404 |
| | | $ | 39,404 |
| | | $ | 39,404 |
| | | $ | 39,404 |
| | | $ | 39,404 |
| | Other Benefits: | | | | | | | | | | | | | | | | | | | | | Lump sum payment | | — |
| | — |
| | $ | 157,615 |
| | | $ | 1,366,000 |
| | | — |
| | | — |
| | | — |
| | | Healthcare benefits (7) | | — |
| | — |
| | $ | 9,662 |
| | | $ | 52,756 |
| | | — |
| | | — |
| | | — |
| | | Disability benefits | | — |
| | — |
| | $ | 4,908 |
| (8) | | $ | 31,025 |
| (8) | | — |
| | | $ | 1,289,265 |
| (9) | | — |
| | | Life insurance | | — |
| | — |
| | $ | 890 |
| (10) | | $ | 5,781 |
| (10) | | — |
| | | — |
| | | $ | 800,000 |
| (11) | | Perquisites and other personal benefits | | — |
| | — |
| | — |
| | | $ | 38,664 |
| (12) | | — |
| | | — |
| | | — |
| | | Tax gross-up (13) | | — |
| | — |
| | — |
| | | $ | (165,760 | ) | | | — |
| | | — |
| | | — |
| | Acceleration of Equity Awards: | | | | | | | | | | | | | | | | | | | | | Market value of stock vesting on | | | | | | | | | | | | | | | | | | | | | termination | | — |
| | — |
| | $ | 2,278,017 |
| (14) | | $ | 3,152,805 |
| (15) | | $ | 941,138 |
| (16) | | $ | 2,278,017 |
| (17) | | $ | 2,278,017 |
| (17) | | Spread for options vesting on | | | | | | | | | | | | | | | | | | | | | termination (18) | | — |
| | — |
| | — |
| | | — |
| | | — |
| | | — |
| | | — |
| | Distribution of Restoration Plan Balance: | | | | | | | | | | | | | | | | | | | | | Amount of Distribution (19) | | $ | 493,556 |
| | — |
| | $ | 493,556 |
| | | $ | 493,556 |
| | | $ | 493,556 |
| | | $ | 493,556 |
| | | $ | 493,556 |
| | Total | | $ | 532,960 |
| | $ | 39,404 |
| | $ | 3,315,170 |
| | | $ | 5,345,349 |
| | | $ | 1,805,216 |
| | | $ | 4,431,360 |
| | | $ | 3,942,095 |
| |
____________
The | | (1) | Under our Salaried Severance Plan, if Mr. Donnan's employment is terminated by us without cause, Mr. Donnan is entitled to (a) a lump-sum payment equal to his weekly base salary multiplied by 20 weeks (the maximum under the Salaried Severance Plan), which we refer to as the continuation period, determined based on his number of years of full employment as of December 31, 2015, and (b) continuation of his medical and dental, disability and life insurance benefits following the termination of employment for a period not to exceed the shorter of his continuation period and the period commencing on the termination of employment and ending on the date he is no longer eligible for coverage under COBRA. |
| | (2) | Under Mr. Donnan's Change in Control Agreement, if Mr. Donnan's employment is terminated by us without cause or is voluntarily terminated by him for good reason within the period beginning 90 days prior to a change in control and ending two years following a change in control, Mr. Donnan is entitled to (a) a lump-sum payment equal to two times the sum of his base salary and most recent short-term incentive target, (b) continuation of his medical and dental, disability, and life insurance benefits for two years commencing on the date of such termination, and (c) continuation of his perquisites for two years commencing on the date of such termination. |
| | (3) | Notwithstanding the fact that Mr. Donnan had not reached age 65 as of December 31, 2015, this column is provided for illustrative purposes. |
| | (4) | Assumes that there is no earned but unpaid base salary at the time of termination. |
| | (5) | Under our 2015 STI Plan, Mr. Donnan's target award for 2015 was $273,200, but his award could have ranged from a threshold of $136,600 to a maximum of $819,600, or could have been zero if the threshold performance was not achieved. Mr. Donnan's award under our 2015 STI Plan was determined in March 2016 to be $331,118. If Mr. Donnan's employment had terminated on December 31, 2015, Mr. Donnan would have been entitled to full payment of his award under the 2015 STI Plan unless his employment had been terminated by us for cause or voluntarily terminated by him. Under the 2015 STI Plan, Mr. Donnan would have been entitled to a prorated award under the 2015 STI Plan if his employment had been terminated during 2015 but prior to December 31, 2015 and his employment had been terminated as a result of death, disability or retirement at or after age 65. Under Mr. Donnan's Change in Control Agreement, if his employment had been terminated by us without cause or by him for good reason within the period commencing 90 days prior to a change in control and ending two years following a change in control and such termination had occurred during 2015 other than on December 31, 2015, Mr. Donnan's target award for 2015 under our 2015 STI Plan would have |
been prorated for the actual number of days of Mr. Donnan's employment in 2015 and Mr. Donnan would have been entitled to payment of such amount. | | (6) | Assumes that Mr. Donnan used all of his 2015 vacation and that he had five weeks of accrued vacation for 2016. |
| | (7) | This table below sets forthreflects the present value of Mr. Donnan's medical and dental benefits at December 31, 2015 determined (a) assuming family coverage in a consumer-driven health plan and a premium dental plan throughout Mr. Donnan's applicable benefit continuation period and (b) based on current COBRA coverage rates for 2016 and assuming a 10% increase in the cost of medical and dental coverage for 2017 as compared to 2016. |
| | (8) | This table reflects the present value of Mr. Donnan's disability benefits at December 31, 2015 determined (a) assuming coverage throughout the applicable benefit continuation period, (b) based on our current costs of providing such benefits and assuming such costs do not increase during the applicable benefit continuation period, (c) assuming we pay such costs throughout the applicable benefit continuation period in the same manner as we currently pay such costs, (d) assuming mortality according to the RP-2014 Mortality Table for Disabled Retirees, adjusted to 2006, and projected therefrom with MP-2015 Generational Mortality Improvement Projection, and (e) applying a discount rate of 3.90% per annum. |
| | (9) | Reflects the actuarial present value of Mr. Donnan's disability benefits at December 31, 2015 determined (a) assuming full disability at December 31, 2015, (b) assuming mortality according to the RP-2014 Mortality Table for Disabled Retirees, adjusted to 2006, and projected therefrom with MP-2015 Generational Mortality Improvement Projection, and (e) applying a discount rate of 3.90% per annum. Such disability benefits would be paid by a third-party insurer and not by us. |
| | (10) | This table reflects the present value of Mr. Donnan's life insurance benefits at December 31, 2015 determined (a) assuming coverage throughout the applicable benefit continuation period at his current election of coverage, (b) based on our current costs of providing such benefits and assuming such costs do not increase during the applicable benefit continuation period, (c) assuming we pay such costs throughout the applicable benefit continuation period in the same manner as we currently pay such costs, (d) assuming mortality according to the RP-2015 White Collar Healthy Annuitant Mortality Table with MP-2015 Generational Mortality Improvement Projection, and (e) applying a discount rate of 3.90% per annum. |
| | (11) | Reflects the life insurance benefit payable assuming Mr. Donnan's death had occurred on December 31, 2015 other than while traveling on company-related business. Such life insurance benefit would have been paid by a third-party insurer and not by us. We maintain a travel and accidental death policy for certain information concerning compensationemployees, including Mr. Donnan, that would provide an additional $1,000,000 death benefit payable to Mr. Donnan's estate if his death occurs during company-related travel. Such death benefit would be paid by a third-party insurer and not by us. |
| | (12) | This table reflects the estimated cost to us of continuing Mr. Donnan's perquisites for the required two-year period. Such amount has been estimated by multiplying the cost of Mr. Donnan's vehicle allowance and club membership dues for 2015 by two. |
| | (13) | Under Mr. Donnan's Change in Control Agreement, in general, if any payments to Mr. Donnan would be subject to federal excise tax or any similar state or local tax by reason of being considered contingent on a change in control, we must pay to Mr. Donnan an additional amount such that, after satisfaction of all tax obligations imposed on such payments, Mr. Donnan retains an amount equal to the federal excise tax or similar state or local tax imposed on such payments. However, if no such federal excise tax or similar state or local tax would apply if the aggregate payments were reduced by 5%, then the aggregate payments to Mr. Donnan will be reduced by the amount necessary to avoid application of such federal excise tax or similar state or local tax. This table reflects an estimate of any such additional amount that we would have been obligated to pay Mr. Donnan, or any such reduction to the aggregate payments to Mr. Donnan that would have occurred, if his employment had been terminated on December 31, 2015 by us without cause or by him for good reason following a change in control on such date. |
| | (14) | If, on December 31, 2015, Mr. Donnan's employment had been terminated by us without cause or his employment had been voluntarily terminated by him for good reason, then (a) the restrictions on all shares of restricted stock that were held by Mr. Donnan would have lapsed, (b) the performance shares granted to him effective March 5, 2013 would have remained outstanding, with the number of shares of common stock, if any, to be received by Mr. Donnan in respect of such performance shares to be determined based on the performance level achieved during the applicable three-year performance period, and (c) the performance shares granted to him effective March 5, 2014 and March 5, 2015 would have remained outstanding, with the number of shares of common stock, if any, to be received by Mr. Donnan in respect to such performance shares to be determined based on the performance level achieved during the three-year performance period; in such circumstances, this table reflects the aggregate market value, determined based on a per share price of $83.66, the closing price per share of our non-employee directors who servedcommon stock as reported on the Nasdaq Global Select Market on |
December 31, 2015, of a number of shares equal to (i) 13,210, the number of shares of restricted stock that were held by Mr. Donnan on December 31, 2015, (ii) 3,564, the actual number of shares of common stock received by Mr. Donnan in respect of the performance shares granted to him effective March 5, 2013 based on the performance level achieved during the applicable three-year performance period as determined by our compensation committee in early 2016, and (iii) 5,205 and 5,004, the target number of shares of common stock that could be received by Mr. Donnan in respect of the performance shares granted to him effective March 5, 2014 and March 5, 2015, respectively. Pursuant to the terms of the performance shares granted to Mr. Donnan effective March 5, 2014 and March 5, 2015, if the company declares cash dividends on our common stock and the record and payment dates for such dividends occur on or after the date of grant but before common shares are issued or delivered in respect of such performance shares, then, upon the issuance or delivery of such common shares in respect of such performance shares, Mr. Donnan will be entitled to also receive a payment equal to the cash dividends that he would have received if the number of common shares so issued or delivered to him had been issued and outstanding and held of record by him from the date of grant through such issuance or delivery; this table reflects (a) in respect of the performance shares granted to Mr. Donnan effective March 5, 2014, an amount equal to the cash dividends he would have received if 5,205 common shares had been issued and outstanding and held of record by him from March 5, 2014 through the issuance and delivery of common shares in respect of such performance shares and (b) in respect of the performance shares granted to Mr. Donnan effective March 5, 2015, an amount equal to the cash dividends he would have received if 5,004 common shares had been issued and outstanding and held of record by him from March 5, 2015 through the issuance and delivery of common shares in respect of such performance shares, assuming in each case that the company does not declare any further cash dividends after December 31, 2015. | | (15) | If, on December 31, 2015, there had been a change in control and Mr. Donnan's employment had been terminated by us without cause or his employment had been voluntarily terminated by him for good reason, then (a) the restrictions on all shares of restricted stock that were held by Mr. Donnan would have lapsed, (b) the performance shares granted to him effective March 5, 2013 would have remained outstanding, with the number of shares of common stock, if any, to be received by Mr. Donnan in respect of such performance shares to be determined based on the performance level achieved during the applicable three-year performance period, and (c) the performance shares granted to Mr. Donnan effective March 5, 2014 and March 5, 2015 would have immediately vested, with the number of common stock, if any, to be received by Mr. Donnan in respect of such performance shares to be determined based on the performance level achieved during the applicable performance period through the date of such change in control; in such instances, this table reflects the aggregate market value, determined based on a per share price of $83.66, the closing price per share of our common stock as reported on the Nasdaq Global Select Market on December 31, 2015, of a number of shares equal to the sum of (i) 13,210, the number of shares of restricted stock held by Mr. Donnan on December 31, 2015,(ii) 3,564, the actual number of shares of common stock received by Mr. Donnan in respect of the performance shares granted to him effective March 5, 2013 based on the performance level achieved during the applicable three-year performance period as determined by our compensation committee in early 2016, and (iii) 10,410and 10,009, the number of shares of common stock that would have been received by Mr. Donnan in respect of the performance shares granted to him effective March 4, 2014 and March 5, 2015, respectively, based on the performance level achieved during the applicable performance period through the date of the change in control. Pursuant to the terms of the performance shares granted to Mr. Donnan effective March 5, 2014 and March 5, 2015, if the company declares cash dividends on our common stock and the record and payment dates for such dividends occur on or after the date of grant but before common shares are issued or delivered in respect of such performance shares, then, upon the issuance or delivery of such common shares in respect of such performance shares, Mr. Donnan will be entitled to also receive a payment equal to the cash dividends that he would have received if the number of common shares so issued or delivered to him had been issued and outstanding and held of record by him from the date of grant through such issuance or delivery; this table reflects (a) in respect of the performance shares granted to Mr. Donnan effective March 5, 2014, an amount equal to the cash dividends he would have received if 10,410 common shares had been issued and outstanding and held of record by him from March 5, 2014 through December 31, 2015 and (b) in respect of the performance shares granted to Mr. Donnan effective March 5, 2015, an amount equal to the cash dividends he would have received if 10,009 common shares had been issued and outstanding and held of record by him from March 5, 2015 through December 31, 2015. |
| | (16) | If Mr. Donnan had qualified for retirement on December 31, 2015 and he had retired on such date, then the shares of restricted stock and performance shares that were held by Mr. Donnan would have remained outstanding, with the restrictions on such shares of restricted stock to lapse in each case on the third anniversary of the date of grant and with the number of shares of common stock, if any, to be received by Mr. Donnan in respect of such performance shares to be determined based on the performance level achieved during the applicable three-year performance periods, except that the shares of restricted stock granted to Mr. Donnan effective March 5, 2015 and shares of common stock to be received in respect of performance shares granted to Mr. Donnan effective March 5, 2015 would be prorated based on actual days of Mr. Donnan's employment during the applicable restriction or performance period; in such circumstances, the table reflects the aggregate market value, determined based on a per share price of $83.66, the closing price per share of our common stock as reported on the Nasdaq Global Select Market on December 31, 2015, of a number of shares equal to the |
sum of (i) 9,021, the total number of shares of restricted stock granted to Mr. Donnan effective March 5, 2013 and March 5, 2014, (ii) 1,150, the number of shares of restricted stock granted to Mr. Donnan effective March 5, 2015, prorated based on actual days of Mr. Donnan's employment during the applicable restriction period, (iii) 3,564, the actual number of shares of common stock received by Mr. Donnan in respect of the performance shares granted to him effective March 5, 2013 based on the performance level achieved during the applicable three-year performance period as determined by our compensation committee in early 2016, (iv) 5,205, the target number of shares of common stock that could be received by Mr. Donnan in respect of the performance shares granted to him effective March 5, 2014, and (v) 1,666, the target number of shares of common stock that could be received by Mr. Donnan in respect of the performance shares granted to him effective March 5, 2015, prorated based on actual days of Mr. Donnan's employment during the applicable performance period. Pursuant to the terms of the performance shares granted to Mr. Donnan effective March 5, 2014 and March 5, 2015, if the company declares cash dividends on our common stock and the record and payment dates for such dividends occur on or after the date of grant but before common shares are issued or delivered in respect of such performance shares, then, upon the issuance or delivery of such common shares in respect of such performance shares, Mr. Donnan will be entitled to also receive a payment equal to the cash dividends that he would have received if the number of common shares so issued or delivered to him had been issued and outstanding and held of record by him from the date of grant through such issuance or delivery; this table reflects (a) in respect of the performance shares granted to Mr. Donnan effective March 5, 2014, an amount equal to the cash dividends he would have received if 5,205 common shares had been issued and outstanding and held of record by him from March 5, 2014 through the issuance and delivery of common shares in respect of such performance shares and (b) in respect of the performance shares granted to Mr. Donnan effective March 5, 2015, an amount equal to the cash dividends he would have received if 1,666 common shares had been issued and outstanding and held of record by him from March 5, 2015 through the issuance and delivery of common shares in respect of such performance shares, assuming in each case that company does not declare any further cash dividends after December 31, 2015. | | (17) | If, on December 31, 2015, Mr. Donnan's employment had been terminated as a result of his death or disability, then (a) the restrictions on all shares of restricted stock that were held by Mr. Donnan would have lapsed, (b) the performance shares granted to him effective March 5, 2013. would have remained outstanding, with the number of shares of common stock, if any, to be received by Mr. Donnan in respect of such performance shares to be determined based on the performance level achieved during the applicable three-year performance period, and (c) the target number of performance shares granted to him effective March 5, 2014 and March 5, 2015 would have vested; in such circumstances, this table reflects the aggregate market value, determined based on a per share price of $83.66, the closing price per share of our common stock as reported on the Nasdaq Global Select Market on December 31, 2015, of a number of shares equal to (i) 13,210, the number of shares of restricted stock that were held by Mr. Donnan on December 31, 2015, (ii) 3,564, the actual number of shares of common stock received by Mr. Donnan in respect of the performance shares granted to him effective March 5, 2013 based on the performance level achieved during the applicable three-year performance period as determined by our compensation committee in early 2016, and (iii) 5,205 and 5,004, the target number of shares of common stock that would have been received by Mr. Donnan in respect of the performance shares granted to him effective March 5, 2014 and March 5, 2015, respectively. Pursuant to the terms of the performance shares granted to Mr. Donnan effective March 5, 2014 and March 5, 2015, if the company declares cash dividends on our common stock and the record and payment dates for such dividends occur on or after the date of grant but before common shares are issued or delivered in respect of such performance shares, then, upon the issuance or delivery of such common shares in respect of such performance shares, Mr. Donnan will be entitled to also receive a payment equal to the cash dividends that he would have received if the number of common shares so issued or delivered to him had been issued and outstanding and held of record by him from the date of grant through such issuance or delivery; this table reflects (a) in respect of the performance shares granted to Mr. Donnan effective March 5, 2014, an amount equal to the cash dividends he would have received if 5,205 common shares had been issued and outstanding and held of record by him from March 5, 2014 through December 31, 2015 and (b) in respect of the performance shares granted to Mr. Donnan effective March 5, 2015, an amount equal to the cash dividends he would have received if 5,004 common shares had been issued and outstanding and held of record by him from March 5, 2015 through December 31, 2015. |
| | (18) | Reflects the spread, if any, of (a) the aggregate market value of the shares of common stock purchasable upon exercise of the option rights which would have vested early due to Mr. Donnan's termination, determined based on a per share price of $83.66, the closing price per share of our common stock as reported on the Nasdaq Global Select Market on December 31, 2015, over (b) the aggregate exercise price required to purchase such shares upon exercise of such option rights. All option rights that were held by Mr. Donnan on December 31, 2015 had previously vested. Accordingly, no spread is reflected in this table. |
| | (19) | Under our Restoration Plan, Mr. Donnan is entitled to a distribution of his account balance six months following his termination, except that he will forfeit the entire amount of matching and fixed rate contributions made by us to his account if he is terminated for cause. In addition, under our Savings Plan, upon termination of employment, Mr. Donnan |
is eligible to receive a distribution of his vested balance under the plan; however, such balance is not reflected in this table.
JOHN BARNESON
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Circumstances of Termination | Payments and Benefits | |
Voluntary Termination by Named Executive Officer Prior to Age 65 | | Termination by us for Cause | | Termination by us without Cause or by the Named Executive Officer with Good Reason (1) | | Termination by us without Cause or by the Named Executive Officer with Good Reason Following a Change in Control (2) | |
Retirement At or After Age 65 (3) | | Disability | | Death | Payment of earned but unpaid: | | | | | | | | | | | | | | | | | | | | | Base salary (4) | | — |
| | — |
| | — |
| | | — |
| | | — |
| | | — |
| | | — |
| | | Short-term incentive (5) | | — |
| | — |
| | $ | 198,647 |
| | | $ | 198,647 |
| | | $ | 198,647 |
| | | $ | 198,647 |
| | | $ | 198,647 |
| | | Vacation (6) | | $ | 34,673 |
| | $ | 34,673 |
| | $ | 34,673 |
| | | $ | 34,673 |
| | | $ | 34,673 |
| | | $ | 34,673 |
| | | $ | 34,673 |
| | Other Benefits: | | | | | | | | | | | | | | | | | | | | | Lump sum payment | | — |
| | — |
| | $ | 180,300 |
| | | $ | 1,573,500 |
| | | — |
| | | — |
| | | — |
| | | Healthcare benefits | | — |
| | — |
| | $ | 12,561 |
| (7) | | $ | 83,153 |
| (7) | | — |
| | | — |
| | | — |
| | | Disability benefits | | — |
| | — |
| | — |
| (8) | | — |
| (8) | | — |
| | | — |
| (9) | | — |
| | | Life insurance | | — |
| | — |
| | $ | 162 |
| (10) | | $ | 998 |
| (10) | | — |
| | | — |
| | | $ | 50,000 |
| (11) | | Perquisites and other personal benefits | | — |
| | — |
| | — |
| | | $ | 31,377 |
| (12) | | — |
| | | — |
| | | — |
| | | Tax gross-up (13) | | — |
| | — |
| | — |
| | | $ | 1,559,367 |
| | | — |
| | | — |
| | | — |
| | Acceleration of Equity Awards: | | | | | | | | | | | | | | | | | | | | | Market value of stock vesting on | | | | | | | | | | | | | | | | | | | | | termination | | — |
| | — |
| | $ | 1,867,801 |
| (14) | | $ | 2,585,026 |
| (15) | | $ | 771,628 |
| (16) | | $ | 1,867,801 |
| (17) | | $ | 1,867,801 |
| (17) | | Spread for options vesting on | | | | | | | | | | | | | | | | | | | | | termination (18) | | — |
| | — |
| | — |
| | | — |
| | | — |
| | | — |
| | | — |
| | Distribution of Restoration Plan Balance: | | | | | | | | | | | | | | | | | | | | | Amount of Distribution (19) | | $ | 2,174,191 |
| | — |
| | $ | 2,174,191 |
| | | $ | 2,174,191 |
| | | $ | 2,174,191 |
| | | $ | 2,174,191 |
| | | $ | 2,174,191 |
| | Total | | $ | 2,208,864 |
| | $ | 34,673 |
| | $ | 4,468,335 |
| | | $ | 8,240,932 |
| | | $ | 3,179,139 |
| | | $ | 4,275,312 |
| | | $ | 4,325,312 |
| |
____________
| | (1) | Under our Salaried Severance Plan, if Mr. Barneson's employment is terminated by us without cause, Mr. Barneson is entitled to (a) a lump-sum payment equal to his weekly base salary multiplied by 26 weeks (the maximum under the Salaried Severance Plan), which we refer to as the continuation period, determined based on his number of years of full employment as of December 31, 2015, and (b) continuation of his medical and dental, disability and life insurance benefits following the termination of employment for a period not to exceed the shorter of his continuation period and the period commencing on the termination of employment and ending on the date he is no longer eligible for coverage under COBRA. |
| | (2) | Under Mr. Barneson's Change in Control Agreement, if Mr. Barneson's employment is terminated by us without cause or is voluntarily terminated by him for good reason within the period beginning 90 days prior to a change in control and ending two years following a change in control, Mr. Barneson is entitled to (a) a lump-sum payment equal to three times the sum of his base salary and most recent short-term incentive target, (b) continuation of his medical and dental, disability and life insurance benefits for three years commencing on the date of such termination, and (c) continuation of his perquisites for two years commencing on the date of such termination. |
| | (3) | Notwithstanding the fact that Mr. Barneson had not reached age 65 as of December 31, 2015, this column is provided for illustrative purposes. |
| | (4) | Assumes that there is no earned but unpaid base salary at the time of termination. |
| | (5) | Under our 2015 STI Plan, Mr. Barneson's target award for 2015 was $163,900, but his award could have ranged from a threshold of $81,950 to a maximum of $491,700, or could have been zero if the threshold performance was not achieved. Mr. Barneson's award under our 2015 STI Plan was determined in March 2016 to be $198,647. If Mr. Barneson's employment had terminated on December 31, 2015, Mr. Barneson would have been entitled to full payment of his award under the 2015 STI Plan unless his employment had been terminated by us for cause or voluntarily terminated by him. Under the 2015 STI Plan, Mr. Barneson would have been entitled to a prorated award under the 2015 STI Plan if his employment had been terminated during 2015 but prior to December 31, 2015 and his employment had been terminated as a result of death, disability or retirement at or after age 65. Under Mr. Barneson's Change in Control Agreement, if his employment had been terminated by us without cause or by him for good reason within the period commencing 90 days prior to a change in control and ending two years following a change in control and such termination had occurred during 2015 other than on December 31, 2015, Mr. Barneson's target award for 2015 under our 2015 STI Plan would have been prorated for the actual number of days of Mr. Barneson's employment in 2015 and Mr. Barneson would have been entitled to payment of such amount. |
| | (6) | Assumes that Mr. Barneson used all of his 2015 vacation and that he had five weeks of accrued vacation for 2016. |
| | (7) | This table reflects the present value of Mr. Barneson's medical and dental benefits at December 31, 2015 determined (a) assuming family coverage in a consumer-driven health plan and a premium dental plan throughout the applicable benefit continuation period and (b) based on current COBRA coverage rates for 2016 and assuming a 10% increase in the cost of medical and dental coverage for 2017 as compared to 2016. |
| | (8) | This table reflects the present value of Mr. Barneson's disability benefits at December 31, 2015 determined (a) assuming coverage throughout the applicable benefit continuation period, (b) based on our current costs of providing such benefits and assuming such costs do not increase during the applicable benefit continuation period, (c) assuming we pay such costs throughout the applicable benefit continuation period in the same manner as we currently pay such costs, (d) assuming mortality according to the RP-2014 Mortality Table for Disabled Retirees, adjusted to 2006, and projected therefrom with MP-2015 Generational Mortality Improvement Projection, and (e) applying a discount rate of 3.690% per annum. |
| | (9) | Reflects the actuarial present value of Mr. Barneson's disability benefits at December 31, 2015 determined (a) assuming full disability at December 31, 2015, (b) assuming mortality according to the RP-2014 Mortality Table for Disabled Retirees, adjusted to 2006, and projected therefrom with MP-2015 Generational Mortality Improvement Projection, and (c) applying a discount rate of 3.690% per annum. Such disability benefits would be paid by a third-party insurer and not by us. |
| | (10) | This table reflects the present value of Mr. Barneson's life insurance benefits at December 31, 2015 determined (a) assuming coverage throughout the applicable benefit continuation period at his current election of the maximum available coverage, (b) based on our current costs of providing such benefits and assuming such costs do not increase during the applicable benefit continuation period, (c) assuming we pay such costs throughout the applicable benefit continuation period in the same manner as we currently pay such costs, (d) assuming mortality according to the RP-2015 White Collar Healthy Annuitant Mortality Table with MP-2015 Generational Mortality Improvement Projection, and (e) applying a discount rate of 3.90% per annum. |
| | (11) | Reflects the life insurance benefit payable assuming Mr. Barneson's death had occurred on December 31, 2015 other than while traveling on company-related business. Such life insurance benefit would have been paid by a third-party insurer and not by us. We maintain a travel and accidental death policy for certain employees, including Mr. Barneson, that would provide an additional $1,000,000 death benefit payable to Mr. Barneson's estate if his death occurs during company-related travel. Such death benefit would be paid by a third-party insurer and not by us. |
| | (12) | This table reflects the estimated cost to us of continuing Mr. Barneson's perquisites for the required thee-year period. Such amount has been estimated by multiplying the cost of Mr. Barneson's vehicle allowance for 2015 by three. |
| | (13) | Under Mr. Barneson's Change in Control Agreement, in general, if any payments to Mr. Barneson would be subject to federal excise tax or any similar state or local tax by reason of being considered contingent on a change in control, we must pay to Mr. Barneson an additional amount such that, after satisfaction of all tax obligations imposed on such payments, Mr. Barneson retains an amount equal to the federal excise tax or similar state or local tax imposed on such payments. However, if no such federal excise tax or similar state or local tax would apply if the aggregate payments were reduced by 5%, then the aggregate payments to Mr. Barneson will be reduced by the amount necessary to avoid application of such federal excise tax or similar state or local tax. This table reflects an estimate of any such additional amount that we would have been obligated to pay Mr. Barneson, or any such reduction to the aggregate payments to Mr. Barneson that would have occurred, if his employment had been terminated on December 31, 2015 by us without cause or by him for good reason following a change in control on such date. |
| | (14) | If, on December 31, 2015, Mr. Barneson's employment had been terminated by us without cause or his employment had been voluntarily terminated by him for good reason, then (a) the restrictions on all shares of restricted stock that were held by Mr. Barneson would have lapsed, (b) the performance shares granted to him effective March 5, 2013 would have remained outstanding, with the number of shares of common stock, if any, to be received by Mr. Barneson in respect of such performance shares to be determined based on the performance level achieved during the applicable three-year performance period, and (c) the performance shares granted to him effective March 5, 2014 and March 5, 2015 would have remained outstanding, with the number of shares of common stock, if any, to be received by Mr. Barneson in respect to such performance shares to be determined based on the performance level achieved during the three-year performance period; in such circumstances, this table reflects the aggregate market value, determined based on a per share price of $83.66, the closing price per share of our common stock as reported on the Nasdaq Global Select Market on December 31, 2015, of a number of shares equal to (i) 10,831, the number of shares of restricted stock that were held by Mr. Barneson on December 31, 2015, (ii) 2,922, the actual number of shares of common stock received by Mr. Barneson in respect of the performance shares granted to him effective March 5, 2013 based on the performance level achieved during the applicable three-year performance period as determined by our compensation committee in early 2016, and (iii) 4,268 and 4,103, the target number of shares of common stock that could be received by Mr. Barneson in respect of the performance |
shares granted to him effective March 5, 2014 and March 5, 2015, respectively. Pursuant to the terms of the performance shares granted to Mr. Barneson effective March 5, 2014 and March 5, 2015, if the company declares cash dividends on our common stock and the record and payment dates for such dividends occur on or after the date of grant but before common shares are issued or delivered in respect of such performance shares, then, upon the issuance or delivery of such common shares in respect of such performance shares, Mr. Barneson will be entitled to also receive a payment equal to the cash dividends that he would have received if the number of common shares so issued or delivered to him had been issued and outstanding and held of record by him from the date of grant through such issuance or delivery; this table reflects (a) in respect of the performance shares granted to Mr. Barneson effective March 5, 2014, an amount equal to the cash dividends he would have received if 4,268 common shares had been issued and outstanding and held of record by him from March 5, 2014 through the issuance and delivery of common shares in respect of such performance shares and (b) in respect of the performance shares granted to Mr. Barneson effective March 5, 2015, an amount equal to the cash dividends he would have received if 4,103 common shares had been issued and outstanding and held of record by him from March 5, 2015 through the issuance and delivery of common shares in respect of such performance shares, assuming in each case that the company does not declare any further cash dividends after December 31, 2015. | | (15) | Director CompensationIf, on December 31, 2015, there had been a change in control and Mr. Barneson's employment had been terminated by us without cause or his employment had been voluntarily terminated by him for good reason, then (a) the restrictions on all shares of restricted stock that were held by Mr. Barneson would have lapsed, (b) the performance shares granted to him effective March 5, 2013 would have remained outstanding, with the number of shares of common stock, if any, to be received by Mr. Barneson in respect of such performance shares to be determined based on the performance level achieved during the applicable three-year performance period, and (c) the performance shares granted to Mr. Barneson effective March 5, 2014 and March 5, 2015 would have immediately vested, with the number of shares of common stock, if any, to be received by Mr. Barneson in respect of such performance shares to be determined based on the performance level achieved during the applicable performance period through the date of such change in control; in such instances, this table reflects the aggregate market value, determined based on a per share price of $83.66, the closing price per share of our common stock as reported on the Nasdaq Global Select Market on December 31, 2015, of a number of shares equal to the sum of (i) 10,831, the number of shares of restricted stock that were held by Mr. Barneson on December 31, 2015,(ii) 2,922, the actual number of shares of common stock received by Mr. Barneson in respect of the performance shares granted to him effective March 5, 2013 based on the performance level achieved during the applicable three-year performance period as determined by our compensation committee in early 2016, and (iii) 8,5362013 and 8,206, the number of shares of common stock that would have been received by Mr. Barneson in respect of the performance shares granted to him effective March 5, 2014 and March 5, 2015, respectively, based on the performance level achieved during the applicable performance period through the date of the change in control. Pursuant to the terms of the performance shares granted to Mr. Barneson effective March 5, 2014 and March 5, 2015, if the company declares cash dividends on our common stock and the record and payment dates for such dividends occur on or after the date of grant but before common shares are issued or delivered in respect of such performance shares, then, upon the issuance or delivery of such common shares in respect of such performance shares, Mr. Barneson will be entitled to also receive a payment equal to the cash dividends that he would have received if the number of common shares so issued or delivered to him had been issued and outstanding and held of record by him from the date of grant through such issuance or delivery; this table reflects (a) in respect of the performance shares granted to Mr. Barneson effective March 5, 2014, an amount equal to the cash dividends he would have received if 8,536 common shares had been issued and outstanding and held of record by him from March 5, 2014 through December 31, 2015 and (b) in respect of the performance shares granted to Mr. Barneson effective March 5, 2015, an amount equal to the cash dividends he would have received if 8,206 common shares had been issued and outstanding and held of record by him from March 5, 2015 through December 31, 2015.
|
| | (16) | If Mr. Barneson had qualified for retirement on December 31, 2015 and he had retired on such date, then the shares of restricted stock and performance shares that were held by Mr. Barneson would have remained outstanding, with the restrictions on such shares of restricted stock to lapse in each case on the third anniversary of the date of grant and with the number of shares of common stock, if any, to be received by Mr. Barneson in respect of such performance shares to be determined based on the performance level achieved during the applicable three-year performance periods, except that the shares of restricted stock granted to Mr. Barneson effective March 5, 2015 and shares of common stock to be received in respect of performance shares granted to Mr. Barneson effective March 5, 2015 would be prorated based on actual days of Mr. Barneson's employment during the applicable restriction or performance period; in such circumstances, the table reflects the aggregate market value, determined based on a per share price of $83.66, the closing price per share of our common stock as reported on the Nasdaq Global Select Market on December 31, 2015, of a number of shares equal to the sum of (i) 7,396, the total number of shares of restricted stock granted to Mr. Barneson effective March 5, 2013 and March 5, 2014, (ii) 943, the number of shares of restricted stock granted to Mr. Barneson effective March 5, 2015, prorated based on actual days of Mr. Barneson's employment during the applicable restriction period, (iii) 2,922, the actual number of shares of common stock received by Mr. Barneson in respect of the performance shares granted to him effective March 5, 2013 based on the performance level achieved during the applicable three-year performance period as determined by our |
compensation committee in early 2016, (iv) 4,268, the target number of shares of common stock that could be received by Mr. Barneson in respect of the performance shares granted to him effective March 5, 2014, and (v) 1,366, the target number of shares of common stock that could be received by Mr. Barneson in respect of the performance shares granted to him effective March 5, 2015, prorated based on actual days of Mr. Barneson's employment during the applicable performance period. Pursuant to the terms of the performance shares granted to Mr. Barneson effective March 5, 2014 and March 5, 2015, if the company declares cash dividends on our common stock and the record and payment dates for such dividends occur on or after the date of grant but before common shares are issued or delivered in respect of such performance shares, then, upon the issuance or delivery of such common shares in respect of such performance shares, Mr. Barneson will be entitled to also receive a payment equal to the cash dividends that he would have received if the number of common shares so issued or delivered to him had been issued and outstanding and held of record by him from the date of grant through such issuance or delivery; this table reflects (a) in respect of the performance shares granted to Mr. Barneson effective March 5, 2014, an amount equal to the cash dividends he would have received if 4,268 common shares had been issued and outstanding and held of record by him from March 5, 2014 through the issuance and delivery of common shares in respect of such performance shares and (b) in respect of the performance shares granted to Mr. Barneson effective March 5, 2015, an amount equal to the cash dividends he would have received if 1,366 common shares had been issued and outstanding and held of record by him from March 5, 2015 through the issuance and delivery of common shares in respect of such performance shares, assuming in each case that company does not declare any further cash dividends after December 31, 2015. | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Fees Earned or Paid in Cash (1) | | Stock Awards (2) | | All Other Compensation (3) | | Total | Carolyn Bartholomew | | | $ | 70,500 |
| | | | $ | 95,000 |
| | | | $ | 1,830 |
| | | | $ | 167,330 |
| | David Foster | | | $ | 68,500 |
| | | | $ | 95,000 |
| | | | $ | 1,830 |
| | | | $ | 165,330 |
| | Teresa A. Hopp | | | $ | 83,500 |
| | | | $ | 95,000 |
| | | | $ | 1,830 |
| | | | $ | 180,330 |
| | Lauralee E. Martin | | | $ | 75,250 |
| | | | $ | 95,000 |
| | | | $ | 1,830 |
| | | | $ | 172,080 |
| | William F. Murdy | | | $ | 70,250 |
| | | | $ | 95,000 |
| | | | $ | 1,830 |
| | | | $ | 167,080 |
| | Alfred E. Osborne, Jr., Ph.D. | | | $ | 81,500 |
| | | | $ | 95,000 |
| | | | $ | 1,830 |
| | | | $ | 178,330 |
| | Jack Quinn | | | $ | 66,000 |
| | | | $ | 95,000 |
| | | | $ | 1,830 |
| | | | $ | 162,830 |
| | Thomas M. Van Leeuwen | | | $ | 79,000 |
| | | | $ | 95,000 |
| | | | $ | 1,830 |
| | | | $ | 175,830 |
| | Brett E. Wilcox | | | $ | 74,000 |
| | | | $ | 95,000 |
| | | | $ | 1,830 |
| | | | $ | 170,830 |
| |
| | (17) | If, on December 31, 2015, Mr. Barneson's employment had been terminated as a result of his death or disability, then (a) the restrictions on all shares of restricted stock that were held by Mr. Barneson would have lapsed, (b) the performance shares granted to him effective March 5, 2013 would have remained outstanding, with the number of shares of common stock, if any, to be received by Mr. Barneson in respect of such performance shares to be determined based on the performance level achieved during the applicable three-year performance period, and (c) the target number of performance shares granted to him effective March 5, 2014 and March 5, 2015 would have vested; in such circumstances, this table reflects the aggregate market value, determined based on a per share price of $83.66, the closing price per share of our common stock as reported on the Nasdaq Global Select Market on December 31, 2015, of a number of shares equal to (i) 10,831, the number of shares of restricted stock that were held by Mr. Barneson on December 31, 2015, (ii) 2,922, the actual number of shares of common stock received by Mr. Barneson in respect of the performance shares granted to him effective March 5, 2013 based on the performance level achieved during the applicable three-year performance period as determined by our compensation committee in early 2016, and (iii) 4,268 and 4,103, the target number of shares of common stock that would have been received by Mr. Barneson in respect of the performance shares granted to him effective March 5, 2014 and March 5, 2015, respectively. Pursuant to the terms of the performance shares granted to Mr. Barneson effective March 5, 2014 and March 5, 2015, if the company declares cash dividends on our common stock and the record and payment dates for such dividends occur on or after the date of grant but before common shares are issued or delivered in respect of such performance shares, then, upon the issuance or delivery of such common shares in respect of such performance shares, Mr. Barneson will be entitled to also receive a payment equal to the cash dividends that he would have received if the number of common shares so issued or delivered to him had been issued and outstanding and held of record by him from the date of grant through such issuance or delivery; this table reflects (a) in respect of the performance shares granted to Mr. Barneson effective March 5, 2014, an amount equal to the cash dividends he would have received if 4,268 common shares had been issued and outstanding and held of record by him from March 5, 2014 through December 31, 2015 and (b) in respect of the performance shares granted to Mr. Barneson effective March 5, 2015, an amount equal to the cash dividends he would have received if 4,103 common shares had been issued and outstanding and held of record by him from March 5, 2015 through December 31, 2015. |
| | (18) | Reflects the spread, if any, of (a) the aggregate market value of the shares of common stock purchasable upon exercise of the option rights which would have vested early due to Mr. Barneson's termination, determined based on a per share price of $83.66, the closing price per share of our common stock as reported on the Nasdaq Global Select Market on December 31, 2015, over (b) the aggregate exercise price required to purchase such shares upon exercise of such option rights. All option rights that were held by Mr. Barneson on December 31, 2015 had previously vested. Accordingly, no spread is reflected in this table. |
| | (19) | Under our Restoration Plan, Mr. Barneson is entitled to a distribution of his account balance six months following his termination, except that he will forfeit the entire amount of matching and fixed rate contributions made by us to his account if he is terminated for cause. In addition, under our Savings Plan, upon termination of employment, Mr. Barneson is eligible to receive a distribution of his vested balance under the plan; however, such balance is not reflected in this table. |
DIRECTOR COMPENSATION
The table below sets forth certain information concerning compensation of our non-employee directors who served in 2015.
Director Compensation for 2015 | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Fees Earned or Paid in Cash (1) | | Stock Awards (2) | | All Other Compensation (3) | | Total | Carolyn Bartholomew | | | $ | 67,500 |
| | | | $ | 95,000 |
| | | | $ | 2,034 |
| | | | $ | 164,534 |
| | David Foster | | | $ | 60,750 |
| | | | $ | 95,000 |
| | | | $ | 2,034 |
| | | | $ | 157,784 |
| | L. Patrick Hassey | | | $ | 57,750 |
| | | | $ | 95,000 |
| | | | $ | 1,645 |
| | | | $ | 154,395 |
| | Teresa A. Hopp | | | $ | 82,000 |
| | | | $ | 95,000 |
| | | | $ | 2,034 |
| | | | $ | 179,034 |
| | Lauralee E. Martin | | | $ | 75,250 |
| | | | $ | 95,000 |
| | | | $ | 2,034 |
| | | | $ | 172,284 |
| | William F. Murdy (4) | | | $ | 15,000 |
| | | | — |
| | | | $ | 1,107 |
| | | | $ | 16,107 |
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| Alfred E. Osborne, Jr., Ph.D. | | | $ | 81,500 |
| | | | $ | 95,000 |
| | | | $ | 2,034 |
| | | | $ | 178,534 |
| | Jack Quinn | | | $ | 66,000 |
| | | | $ | 95,000 |
| | | | $ | 2,034 |
| | | | $ | 163,034 |
| | Thomas M. Van Leeuwen | | | $ | 81,750 |
| | | | $ | 95,000 |
| | | | $ | 2,034 |
| | | | $ | 178,784 |
| | Brett E. Wilcox | | | $ | 80,250 |
| | | | $ | 95,000 |
| | | | $ | 2,034 |
| | | | $ | 177,284 |
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____________ | | (1) | Reflects (a) annual retainer of $45,000, (b) any additional annual retainer for serving as Lead Independent Director or chair of a committee of the board of directors, and (c) fees for attendance of board or board committee meetings. Each non-employee director had the right to elect to receive shares of our common stock in lieu of any or all of his or her annual cash retainer, including retainers for serving as a committee chair or Lead Independent Director. In 2013: Ms. Martin elected to receive 700 shares of common stock in lieu of $44,989 of her annual retainer; Mr. Murdy elected to receive 583 shares of common stock in lieu of $37,469 of his annual retainer; Dr. Osborne elected to receive 933 shares of common stock in lieu of $59,964 of his annual retainer; and Mr. Wilcox elected to receive 700 shares of common stock in lieu of $44,989 of his annual retainer. In each case, the number of shares received was determined based on a per share price of $64.27, the average of the closing prices per share of our common stock as reported by the Nasdaq Stock Market for the 20 trading days prior to the award date of the annual retainers. |
| | (2) | Reflects the aggregate grant date fair value of restricted stock awards to non-employee directors determined in accordance with ASC Topic 718, without regard to potential forfeiture. On June 4, 2013, in accordance with our director compensation policy described below, each non-employee director received a grant of restricted stock having a value of $95,000; the average of the closing prices per share of our common stock as reported by the Nasdaq Stock Market for the 20 trading days prior to the award date was $64.27, resulting in the issuance of 1,478 shares of restricted stock to each non-employee director. For additional information regarding the assumptions made in the valuation of restricted stock awards with respect to our 2013 fiscal year, see Note 9 of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013. As of December 31, 2013, each non-employee director held 1,478 shares of restricted stock. The restrictions on 100% of the shares of restricted stock granted to non-employee directors will lapse on June 4, 2014 or earlier if the director's services to our company terminate as a result of death or disability, or in the event of a change in control. The non-employee director will receive all dividends and other distributions paid with respect to the shares of restricted stock he or she holds, but if any of such dividends or distributions are paid in shares of our capital stock, such shares will be subject to the same restrictions on transferability as are the shares of restricted stock with respect to which they were paid.
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| | (3) | Reflects dividends received on restricted stock. In 2013, each of the directors received $1,830 in dividends paid on restricted stock.
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Director Compensation Arrangements
We periodically review director compensation in relation to other comparable companies and in light of other factors that the compensation committee deems appropriate and discuss director compensation with the full board of directors. In June 2013, the compensation committee approved an increase to the annual restricted stock award from $75,000 to $95,000.
Pursuant to the director compensation policy, each non-employee director receives the following compensation:
an annual retainer of $45,000 per year;
an annual grant of restricted stock having a value equal to $95,000;
a fee of $1,500 per day for each meeting of the board of directors attended in person and $750 per day for each such meeting attended by phone; and
a fee of $1,500 per day for each in-person committee meeting of the board of directors attended ($2,000 per day for each such audit committee meeting) and $750 per day for each telephonic committee meeting of the board of directors meeting attended ($1,000 per day for each such audit committee meeting).
In addition, pursuant to our director compensation policy, our Lead Independent Director receives an additional annual retainer of $10,000, the chair of the audit committee receives an additional annual retainer of $15,000, the chair of the compensation committee receives an additional annual retainer of $5,000 and the chair of the nominating and corporate governance committee receives an additional annual retainer of $5,000, with all such amounts payable at the same time as the annual retainer. Each non-employee director may elect to receive shares of common stock in lieu of any or all of his or her annual cash retainer, including any additional annual retainerretainers for service as the Lead Independent Director or the chair of a committee of the board of directors. Our stock ownership guidelines require our non-employee directors to own company stock equal in value to six times their annual base retainer.
The payment of annual retainers, including any additional annual retainer for serviceserving as Lead Independent Director or the chair of a committee of the board of directors, and the annual grant of restricted stock is made each year on the date on which we hold our annual meeting of stockholders, unless the board of directors determines such payment and grant should occur on another date. The number ofchair. In 2015: Mr. Hassey elected to receive 548 shares of common stock to be received in the grant of restricted stock, as well as the number of shares of common stock to be received by any non-employee director electing to receive common stock in lieu of any or all$44,925 of his orannual retainer; Ms. Martin elected to receive 548 shares of common stock in lieu of $44,925 of her paymentannual retainer; Dr. Osborne elected to receive 731 shares of common stock in lieu of $59,927 of his annual retainer, including any additionalretainer; and Mr. Wilcox elected to receive 609 shares of common stock in lieu of $49,926 of his annual retainer, will beretainer. In each case, the number of shares received was determined based on a per share price of $81.98, the average of the closing prices per share of our common stock as reported on the Nasdaq Global Select Market for the 20 trading days prior to the award date of the annual retainers.
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| | (2) | Reflects the aggregate grant date fair value of restricted stock awards to non-employee directors determined in accordance with ASC Topic 718, without regard to potential forfeiture. On June 2, 2015, in accordance with our director compensation policy described below, each non-employee director received a grant of restricted stock having a value of $95,000; the average of the closing prices per share of our common stock as reported on the Nasdaq Global Select Market for the 20 trading days prior to the award date was $81.98, resulting in the issuance of 1,158 shares of restricted stock to each non-employee director. For additional information regarding the assumptions made in the valuation of restricted stock awards with respect to our 2015 fiscal year, see Note 8 of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015. As of December 31, 2015, each non-employee director held 1,158 shares of restricted stock. The restrictions on 100% of the shares of restricted stock granted to non-employee directors will lapse on June 2, 2016 or earlier if the director's services to our company terminate as a result of death or disability, or in the event of a change in control. The non-employee director will receive all dividends and other distributions paid with respect to the shares of restricted stock he or she holds, but if any of such dividends or distributions are paid in shares of our capital stock, such shares will be subject to the same restrictions on transferability as are the shares of restricted stock with respect to which they were paid. |
| | (3) | Reflects dividends received on restricted stock. |
| | (4) | Mr. Murdy served as a director from July 2006 until his retirement in June 2015. |
Director Compensation Arrangements
We periodically review director compensation in relation to other comparable companies and in light of other factors that the compensation committee deems appropriate and discuss director compensation with the full board of directors. Pursuant to our director compensation policy, each of our non-employee directors receives the following compensation:
an annual retainer of $45,000 per year;
an annual grant of restricted stock having a value equal to $95,000;
a fee of $1,500 per day for each meeting of our board of directors attended in person and $750 per day for each such meeting attended by phone; and
a fee of $1,500 per day for each in-person committee meeting of the board of directors attended ($2,000 per day for each such audit committee meeting) and $750 per day for each telephonic committee meeting of our board of directors meeting attended ($1,000 per day for each such audit committee meeting).
In addition, pursuant to our director compensation policy, our Lead Independent Director receives an additional annual retainer of $10,000, the chair of the audit committee receives an additional annual retainer of $15,000, the chair of the compensation committee receives an additional annual retainer of $5,000, the chair of the nominating and corporate governance committee receives an additional annual retainer of $5,000 and the chair of the talent development committee receives an additional annual retainer of $5,000, with all such amounts payable at the same time as the annual retainer. Each non-employee director may elect to receive shares of common stock in lieu of any or all of his or her annual retainer, including any additional annual retainer for service as the Lead Independent Director or the chair of a committee of the board of directors. Our stock ownership guidelines require our non-employee directors to own company stock equal in value to six times their annual base retainer.
The payment of annual retainers, including any additional annual retainer for service as Lead Independent Director or the chair of a committee of our board of directors, and the annual grant of restricted stock is made each year on the date on which we hold our annual meeting of stockholders, unless our board of directors determines such payment and grant should occur on another date. The number of shares of common stock to be received in the grant of restricted stock, as well as the number of shares of common stock to be received by any non-employee director electing to receive our common stock in lieu of any or all of his or her payment of annual retainer, including any additional annual retainer, is based on the average of the closing prices per share of our common stock for the 20 trading days prior to the date such grant and payments are made.
We reimburse all of our directors for reasonable and customary travel and other disbursements relating to meetings of our board of directors and committees thereof, and non-employee directors are provided accident insurance with respect to company-related business travel.
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of December 31, 2015 with respect to shares of our common stock that may be issued under our equity compensation plans. | | | | | | | | | | | Plan Category | | Number of Shares of Common Stock to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | | Number of Shares of Common Stock Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Shares of Common Stock Reflected in Column (a)) | | | (a) | | (b) | | (c) | Equity compensation plans approved by stockholders (1) | | 477,148 | (2) | | $80.01 | (3) | | 709,362 | (4) | Equity compensation plans not approved by stockholders | | N/A | | | N/A | | | N/A | | Total | | 477,148 | (2) | | $80.01 | (3) | | 709,362 | (4) |
____________
We reimburse all | | (1) | Our 2006 Plan initially became effective on July 6, 2006. Thereafter, our board of directors amended and restated the 2006 Plan effective as of February 6, 2008, again effective as of June 2, 2009 and again effective as of March 1, 2010; these amendments were not material and did not affect the number of shares available for reasonableissuance under the 2006 Plan. Subsequently, the 2006 Plan was amended and customary travel and other disbursements relating to meetings of therestated by our board of directors and committees thereof,approved by our stockholders effective as of June 8, 2010; in this instance, the amendments increased the number of shares available for issuance under the 2006 Plan. Following June 8, 2010, our board of directors amended and non-employee directorsrestated the 2006 Plan effective as of February 8, 2012 and again effective as of April 10, 2013; these amendments were not material and did not affect the number of shares available for issuance under the 2006 Plan. The 2006 Plan is our only equity compensation plan. A copy of the 2006 Plan is attached as Exhibit 10.7 to our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on April 24, 2013. |
| | (2) | Reflects options to purchase 16,645 shares of common stock, restricted stock units covering 5,521 shares of our common stock and performance shares covering 454,982 shares of our common stock, in each case outstanding as of December 31, 2015, and does not include 156,553 shares of restricted stock that remained subject to forfeiture as of December 31, 2015 because such shares are provided accident insurancealready outstanding. |
| | (3) | Reflects the exercise price per share of our common stock purchasable upon exercise of options outstanding as of December 31, 2015. The exercise price is the same for all such options. No exercise price is payable in connection with respectthe issuance of shares covered by the restricted stock units or performance shares outstanding as of December 31, 2015. |
| | (4) | Subject to company-related business travel.certain adjustments that may be required from time to time to prevent dilution or enlargement of the rights of participants, a maximum of 2,722,222 shares of our common stock may be issued under the 2006 Plan, taking into account all shares issued under the 2006 Plan. As of December 31, 2015, 1,535,712 shares of our common stock had been issued thereunder. Of such 1,535,712 shares, 156,553 were shares of restricted stock that remained subject to forfeiture as of such date. In the event of forfeiture, such shares again become available for issuance. |
PRINCIPAL STOCKHOLDERS AND MANAGEMENT OWNERSHIP
The following table presents information regarding the number of shares of the company's common stock beneficially owned as of March 31, 2016 by:
each named executive officer;
each of our current directors;
all our current directors and executive officers as a group; and
each person or entity known to us to beneficially own 5% or more of our common stock as determined in accordance with Rule 13d-3 under the Exchange Act.
Unless otherwise indicated by footnote, the beneficial owner exercises sole voting and investment power over the shares noted below. The percentage of beneficial ownership for our directors and executive officers, both individually and as a group, is calculated based on 17,986,521 shares of our common stock outstanding as of March 31, 2016. | | | | | | | | | | Name of Beneficial Owner | | Amount and Nature of Beneficial Ownership | | Percent of Class | Directors and Named Executive Officers | | | | | | | Jack A. Hockema | | 138,286 |
| (1)(2)(3) | | * |
| | Keith A. Harvey | | 51,734 |
| (1)(2) | | * |
| | Daniel J. Rinkenberger | | 71,700 |
| (1)(2) | | * |
| | John M. Donnan | | 25,767 |
| (1)(2) | | * |
| | John Barneson | | 60,978 |
| (1)(2) | | * |
| | Carolyn Bartholomew | | 12,953 |
| (2) | | * |
| | David Foster | | 9,527 |
| (2) | | * |
| | L. Patrick Hassey | | 3,025 |
| (2) | | * |
| | Teresa A. Hopp | | 13,380 |
| (2) | | * |
| | Lauralee E. Martin | | 12,640 |
| (2) | | * |
| | Alfred E. Osborne, Jr., PhD | | 17,825 |
| (2)(4) | | * |
| | Jack Quinn | | 9,918 |
| (2) | | * |
| | Thomas M. Van Leeuwen | | 9,311 |
| (2) | | * |
| | Brett E. Wilcox | | 10,944 |
| (2) | | * |
| | All current directors and executive officers as a group (19 persons) | | 497,905 |
| (1)(2)(3)(4) | | 2.8 | % | | 5% Stockholders | | | | | | | BlackRock, Inc. | | 1,685,118 |
| (5) | | 9.4 | % | | Vanguard Group, Inc. | | 1,490,771 |
| (6) | | 8.3 | % | | Dimensional Fund Advisors LP | | 1,352,094 |
| (7) | | 7.5 | % | |
_____________ *Less than one percent.
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of December 31, 2013 with respect to | | (1) | Includes shares of our common stock that may be issued under equity compensation plans. | | | | | | | | | | | Plan Category | | Number of Shares of Common Stock to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | | Number of Shares of Common Stock Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Shares of Common Stock Reflected in Column (a)) | | | (a) | | (b) | | (c) | Equity compensation plans approved by stockholders (1) | | 588,817 | (2) | | $80.01 | (3) | | 840,693 | (4) | Equity compensation plans not approved by stockholders | | N/A | | | N/A | | | N/A | | Total | | 588,817 | (2) | | $80.01 | (3) | | 840,693 | (4) |
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| | (1) | Our Equity Incentive Plan initially became effective on July 6, 2006. Thereafter, the Equity Incentive Plan was amended and restated by our board of directors effective as of February 6, 2008, again effective as of June 2, 2009 and again effective as of March 1, 2010; the amendments in connection therewith were not material and did not affect the number of shares available for issuance under the Equity Incentive Plan. Subsequently, the Equity Incentive Plan was amended and restated by our board of directors and approved by our stockholders effective June 8, 2010; in this instance, the amendments increased the number of shares available for issuance under the Equity Incentive Plan by 500,000 shares. The Equity Incentive Plan was again amended and restated by our board of directors effective February 8, 2012 and again effective as of April 10, 2013; the amendments in connection therewith were not material and did not affect the number of shares available for issuance under the Equity Incentive Plan. The Equity Incentive Plan is our only equity compensation plan. A copy of the Equity Incentive Plan is attached as Exhibit 10.7 to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2013. |
| | (2) | Reflects options to purchase 20,791 shares of common stock, restricted stock units covering 5,472 shares of common stock and performance shares covering 562,554 shares of common stock, in each case outstanding as of December 31, 2013, and does not include 178,558 unvested restricted shares outstanding on December 31, 2013.
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| | (3) | Reflects the exercise price per share of common stock purchasable upon exercise of options outstanding as of December 31, 2013. The exercise price is the same for all such options. No exercise price is payable in connection with the issuance of shares covered by the restricted stock units or performance shares outstanding as of December 31, 2013.
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| | (4) | Subject to certain adjustments that may be required from time to time to prevent dilution or enlargement of the rights of participants, a maximum of 2,722,222 shares of common stock may be issued under the Equity Incentive Plan, taking into account all shares issued under the Equity Incentive Plan. As of December 31, 2013, 1,292,712 shares of common stock had been issued thereunder. Of such 1,292,712 shares, 178,558 were shares of restricted stock that remained subject to forfeiture as of such date. In the event of forfeiture, such shares again become available for issuance.
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PRINCIPAL STOCKHOLDERS AND MANAGEMENT OWNERSHIP
The following table presents information regarding the number of shares of the company's common stock beneficially owned as of April 11, 2014 by:
each named executive officer;
eachMarch 31, 2016 were issuable upon exercise of our current directors;
all our current directors and executive officersoptions within 60 days after March 31, 2016, as a group; and
each person or entity known to us to beneficially own 5% or more of our common stock as determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934.
Unless otherwise indicated by footnote, the beneficial owner exercises sole voting and investment power over the shares noted below. The percentage of beneficial ownership for our directors and executive officers, both individually and as a group, is calculated based on 18,030,586 shares of our common stock outstanding as of April 11, 2014.
| | | | | | | | | | Name of Beneficial Owner | | Amount and Nature of Beneficial Ownership | | Percent of Class | Directors and Named Executive Officers | | | | | | | Jack A. Hockema | | 160,214 |
| (1)(2)(3) | | * |
| | Daniel J. Rinkenberger | | 61,673 |
| (1)(2) | | * |
| | John M. Donnan | | 35,012 |
| (1)(2) | | * |
| | Peter Bunin | | 44,305 |
| (1)(2) | | * |
| | Keith A. Harvey | | 23,687 |
| (1)(2) | | * |
| | Carolyn Bartholomew | | 10,411 |
| (2) | | * |
| | David Foster | | 6,985 |
| (2) | | * |
| | Teresa A. Hopp | | 10,838 |
| (2) | | * |
| | Lauralee E. Martin | | 8,895 |
| (2) | | * |
| | William F. Murdy | | 17,036 |
| (2) | | * |
| | Alfred E. Osborne, Jr., PhD | | 13,678 |
| (2)(4) | | * |
| | Jack Quinn | | 9,070 |
| (2) | | * |
| | Thomas M. Van Leeuwen | | 6,769 |
| (2) | | * |
| | Brett E. Wilcox | | 19,138 |
| (2) | | * |
| | All current directors and executive officers as a group (19 persons) | | 524,755 |
| (1)(2)(3)(4) | | 2.9 | % | | 5% Stockholders | | | | | | | BlackRock, Inc, | | 1,750,876 |
| (5) | | 9.7 | % | | Dimensional Fund Advsisors LP | | 1,622,431 |
| (6) | | 9.0 | % | | Vanguard Group, Inc. | | 1,135,969 |
| (7) | | 6.3 | % | |
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*Less than one percent.
| | (1) | Includes shares of our common stock that as of April 11, 2014 were issuable upon exercise of options within 60 days after April 11, 2014, as follows: Hockema (8,037 shares); Rinkenberger (803 shares); Donnan (2,083 shares); Bunin (1,961 shares); Harvey (1,202) and all current directors and executive officers as a group (17,063 shares).
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| | (2) | Includes shares of restricted stock that remained subject to forfeiture as of April 11, 2014, as follows: Hockema (23,190 shares); Rinkenberger (17,224 shares); Donnan (14,977 shares); Bunin (14,977 shares); Harvey (14,325 shares)Bartholomew (1,478 shares); Foster (1,478 shares); Hopp (1,478 shares); Martin (1,478 shares); Murdy (1,478 shares);
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Osborne (1,478 shares); Quinn (1,478Harvey (1,202 shares); Van Leeuwen (1,478Rinkenberger (803 shares); Wilcox (1,478Donnan (2,083 shares); Barneson (2,334 shares); and all current directors and executive officers as a group (124,941(15,102 shares).
| | (3) | Includes 111,420 shares of our common stock held by the Hockema Family Trust. |
| | (2) | Includes shares of restricted stock and restricted stock units that remained subject to forfeiture as of March 31, 2016, as follows: Hockema (33,369 shares); Harvey (39,858 shares); Rinkenberger (14,551 shares); Donnan (12,654 shares); Barneson (9,033 shares); Bartholomew (1,158 shares); Foster (1,158 shares); Hassey (1,158 share); Hopp (1,158 shares); |
Martin (1,158 shares); Osborne (1,158 shares); Quinn (1,158 shares); Van Leeuwen (1,158 shares); Wilcox (1,158 shares); and all current directors and executive officers as a group (139,031 shares). | | (3) | Includes 79,381 shares of our common stock held by the Hockema Family Trust. |
(4) | Includes 3,500 shares of our common stock held by a Keough plan of which Dr. Osborne is the beneficiary, 200 shares of our common stock held by Dr. Osborne's son and 500 shares held by the Rahnasto/Osborne Revocable Trust U/A DTD 11/07/1999 of which Dr. Osborne is a co-beneficiary and a co-trustee. |
(4) | Includes 3,500 shares of our common stock held by a Keough plan of which Dr. Osborne is the beneficiary, 200 shares of our common stock held by Dr. Osborne's son and 500 shares held by the Rahnasto/Osborne Revocable Trust U/A DTD 11/07/1999 of which Dr. Osborne is a co-beneficiary and a co-trustee. |
(5) | Shares beneficially owned by BlackRock, Inc. are as reported on Amendment No. 3 to Schedule 13G filed by BlackRock, Inc. on February 10, 2014. BlackRock, Inc. has sole voting power with respect to 1,684,762 shares and sole dispositive power with respect to 1,750,876 shares. The principal address of BlackRock, Inc. is 40 East 52nd Street, New York, New York 10022. |
(5) | Shares beneficially owned by BlackRock, Inc. are as reported on Amendment No. 6 to Schedule 13G filed by BlackRock, Inc. on January 26, 2016. BlackRock, Inc. has sole voting power with respect to 1,664,807 shares and sole dispositive power with respect to 1,685,118 shares. The principal address of BlackRock, Inc. is 55 East 52nd Street, New York, New York 10055. |
(6) | Shares beneficially owned by Dimensional Fund Advisors LP are as reported on Amendment No. 3 to Schedule 13G filed by the Dimensional Fund Advisors LP on February 10, 2014. Dimensional Fund Advisors LP has sole voting power with respect to 1,600,541 shares and sole dispositive power with respect to 1,622,431 shares. The principal address of Dimensional Fund Advisors, LP is Palisades West, Building One, 6300 Bee Caves Road, Austin, Texas, 78746. |
| | (7) | Shares beneficially owned by Vanguard Group, Inc. are as reported on Amendment No. 1 to Schedule 13G filed by Vanguard Group, Inc. on February 11, 2014. Vanguard Group, Inc. has sole voting power with respect to 29,384 shares and sole dispositive power with respect to 1,107,785 shares. Vanguard Group, Inc. has shared dispositive power with respect to 28,184 | (6) | Shares beneficially owned by Vanguard Group, Inc. are as reported on Amendment No. 3 to Schedule 13G filed by Vanguard Group, Inc. on February 10, 2016. Vanguard Group, Inc. has sole voting power with respect to 29,709 shares and shared voting power with respect to 1,300 shares. Vanguard Group, Inc. has sole dispositive power with respect to 1,463,486 shares and shared dispositive power with respect to 27,285 shares. The principal address of Vanguard Group, Inc. is 100 Vanguard Boulevard, Malvern, Pennsylvania 19355. |
| | (7) | Shares beneficially owned by Dimensional Fund Advisors LP are as reported on Amendment No. 5 to Schedule 13G filed by the Dimensional Fund Advisors LP on February 9, 2016. Dimensional Fund Advisors LP has sole voting power with respect to 1,317,610 shares and sole dispositive power with respect to 1,352,094 shares. The principal address of Dimensional Fund Advisors, LP is Building One, 6300 Bee Caves Road, Austin, Texas, 78746. |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Our corporate governance guidelines require that our board of directors conduct an appropriate review of all related-party transactions. The charter for the audit committee of our board of directors requires that any related-party transaction required to be disclosed under Item 404 of Regulation S-K must be approved by the audit committee. Neither our board of directors nor the audit committee has adopted specific policies or procedures for review or approval of related-party transactions.
AUDIT COMMITTEE REPORT
The audit committee charter requires the audit committee to undertake a variety of activities designed to assist our board of directors in fulfilling its oversight role regarding our independent registered public accounting firm's independence, our financial reporting process, our internal control over financial reporting and our compliance with applicable laws, rules and regulations. These requirements are briefly summarized under "Corporate Governance - Board Committees - Audit Committee" above. The audit committee charter also makes it clear that the independent registered public accounting firm is ultimately accountable to our board of directors and the audit committee, not our management.
Our internal accountants prepare our consolidated financial statements and our independent registered public accounting firm is responsible for auditing those financial statements. The audit committee oversees the financial reporting processes implemented by our management but does not conduct any auditing or accounting reviews. The members of the audit committee are not company employees. Instead, the audit committee relies, without independent verification, on our management's representation that the financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America and on the report of our independent registered public accounting firm on our financial statements. The audit committee's oversight does not provide it with an independent basis for determining whether our management has maintained appropriate accounting and financial reporting principles or policies or appropriate internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. Furthermore, the audit committee's discussions with our management and its accountants do not ensure that the financial statements are presented in accordance with accounting principles generally accepted in the United States of America or that the audit of our financial statements has been carried out in accordance with auditing standards of the Public Company Accounting Oversight Board or that our independent registered public accounting firm is in fact "independent."
We have engaged Deloitte & Touche LLP as our independent registered public accounting firm to audit and report to our stockholders on our financial statements for 2016 and the effectiveness of our internal control over financial reporting as of December 31, 2016. The audit committee reviews annually the independence and performance of Deloitte & Touche LLP in connection with the audit committee's determination of whether to retain Deloitte & Touche LLP or engage another firm as our independent registered public accounting firm. In the course of these reviews, the audit committee considers, among other things:
•the historical and recent performance of Deloitte & Touche LLP on our company's integrated audit;
•an analysis of known risks and significant proceedings involving Deloitte & Touche LLP, if any;
external data relating to the audit quality and performance, including recent Public Company Accounting Oversight Board reports on Deloitte & Touche LLP and its member firms;
•the appropriateness of Deloitte & Touche LLP's fee;
Deloitte & Touche LLP's tenure as our independent registered public accounting firm and its familiarity with our operations and businesses, accounting policies and practices and internal control over financial reporting;
•Deloitte & Touche LLP's capability and expertise in relation to the breadth and complexity of our operations; and
•Deloitte & Touche LLP's independence.
Based on its review the audit committee believes that Deloitte & Touche LLP is independent and that it is in the best interest of our company and our stockholders to retain Deloitte & Touche LLP to serve as our independent registered public accounting firm for 2016.
In accordance with rules of the Securities and Exchange Commission and Deloitte & Touche LLP's policies, audit partners are subject to rotation requirements to limit the number of consecutive years an individual partner may provide service to our company. For lead audit and engagement quality control review partners, the maximum number of consecutive years of service in that capacity is five years. The process for approval of the lead audit partner for our company pursuant to this rotation policy involves a meeting between the chair of the audit committee and the candidate for the role, as well as discussion by the full committee and with management.
The audit committee has discussed with management and Deloitte & Touche LLP significant accounting policies applied by us in our financial statements as well as alternative treatments and significant judgments and estimates, including (1) revenue
recognition, (2) estimates in respect of defined benefit plans, including (a) prior to the first quarter of 2015, the defined benefit postretirement medical plan maintained by a VEBA trust that provides benefits for certain eligible retirees represented by unions and their spouses and eligible dependents (which we refer to as the Union VEBA Trust), and (b) the defined benefit postretirement medical plan maintained by another VEBA trust that provides benefits for certain other eligible retirees and their surviving spouses and eligible dependents, (3) inventory valuation, (4) our income taxes, (5) tax contingencies, (6) estimates in regard to environmental commitments and contingencies, (7) the valuation of our legal commitments and contingencies, (8) acquisitions, goodwill and intangible assets, (9) estimates in respect to the valuation of derivatives, (10) estimates in respect to conditional asset retirement obligations, (11) long-lived assets, and (12) estimates in respect to long-term incentive plans. For a more detailed discussion of these accounting items, see Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2015. During the year ended December 31, 2015, there were no disagreements with Deloitte & Touche LLP on any matter of accounting principle or practice, financial statement disclosure or auditing scope or procedure, which, if not resolved to the satisfaction of Deloitte & Touche LLP, would have caused them to make a reference to the subject matter of the disagreement in connection with its reports.
The audit committee has read and discussed the company's audited financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2015 with our management. The audit committee has also discussed with our independent registered public accounting firm the matters required to be discussed pursuant to applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant's communications with the audit committee.
The audit committee has also received and read the written disclosures and the letter from Deloitte & Touche LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant's communications with the audit committee concerning independence, and has discussed with Deloitte & Touche LLP its independence.
The audit committee discussed with our internal accountants and Deloitte & Touche LLP the overall scope and plans for their respective audits. The audit committee meets with management, our internal accountants and our independent accountants periodically in separate private sessions to discuss any matter that the audit committee, our management, our internal accountants, the independent accountants or such other persons believe should be discussed privately.
Based on the review and discussions referred to above, the audit committee recommended to our board of directors that our audited financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the Securities and Exchange Commission.
The audit committee considered whether, and concluded that, the provision by Deloitte & Touche LLP of the services for which we paid the amounts set forth under "Independent Public Accountants - Tax Fees" and "Independent Public Accountants - All Other Fees" below is compatible with maintaining the independence of Deloitte & Touche LLP.
This report is submitted by the members of the audit committee of the board of directors:
Audit Committee Teresa A. Hopp (Chair) Carolyn Bartholomew Lauralee E. Martin Alfred E. Osborne, Jr., Ph.D. Thomas M. Van Leeuwen Brett E. Wilcox
This Audit Committee Report does not constitute soliciting material and shall not be deemed filed or incorporated by reference into any other filing made by us under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate this Audit Committee Report by reference therein.
INDEPENDENT PUBLIC ACCOUNTANTS
The following table presents fees for professional audit services rendered by Deloitte & Touche LLP for the audit of our annual financial statements for each of 2014 and 2015, and fees billed for other services rendered by Deloitte & Touche LLP. | | | | | | | | | | | | | | | | | 2014 | | | | 2015 | | Audit Fees(1) | | | $ | 1,599,750 |
| | | | $ | 1,531,290 |
| | Audit-Related Fees (2) | | | $ | 40,325 |
| | | | $ | 29,040 |
| | Tax Fees (3) | | | $ | 8,028 |
| | | | $ | 42,403 |
| | All Other Fees (4) | | | $ | 8,600 |
| | | | $ | 66,600 |
| |
____________ | | (1) | Audit fees consist principally of fees for the audit committee of our board of directors requires that any related-party transaction required to be disclosed under Item 404 of SEC Regulation S-K must be approved by the audit committee. Neither the board of directors nor the audit committee has adopted specific policies or procedures for review or approval of related-party transactions.
AUDIT COMMITTEE REPORT
The audit committee charter requires the audit committee to undertake a variety of activities designed to assist our board of directors in fulfilling its oversight role regarding our independent registered public accounting firm's independence, ourannual financial reporting process, our internal control over financial reporting and our compliance with applicable laws, rules and regulations. These requirements are briefly summarized under “Corporate Governance - Board Committees - Audit Committee” above. The audit committee charter also makes it clear that the independent registered public accounting firm is ultimately accountable to the board of directors and the audit committee, not management.
Our internal accountants prepare our consolidated financial statements and our independent registered public accounting firm is responsible for auditing those financial statements. The audit committee oversees the financial reporting processes implemented by management but does not conduct any auditing or accounting reviews. The members of the audit committee are not company employees. Instead, the audit committee relies, without independent verification, on management's representation that the financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America and on the report of our independent registered public accounting firm on our financial statements. The audit committee's oversight does not provide it with an independent basis for determining whether management has maintained appropriate accounting and financial reporting principles or policies or appropriate internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. Furthermore, the audit committee's discussions with management and its accountants do not ensure that the financial statements are presented in accordance with accounting principles generally accepted in the United States of America or that the audit of the financial statements has been carried out in accordance with auditing standards of the Public Company Accounting Oversight Board or that our independent registered public accounting firm is in fact “independent.”
We have engaged Deloitte & Touche LLP as our independent registered public accounting firm to audit and report to our stockholders on our financial statements for 2014 and the effectiveness of our internal control over financial reporting as of December 31, 2014. The audit committee reviews annually the independence and performance of Deloitte & Touche LLP in connection with the audit committee's determination of whether to retain Deloitte & Touche LLP or engage another firm as our independent registered public accounting firm. In the course of these reviews, the audit committee considers, among other things:
•the historical and recent performance of Deloitte & Touche LLP on our company's integrated audit;
•an analysis of known risks and significant proceedings involving Deloitte & Touche LLP, if any;
external data relating to the audit quality and performance, including recent Public Company Accounting Oversight Board reports on Deloitte & Touche LLP and its member firms;
•the appropriateness of Deloitte & Touche LLP's fee;
Deloitte & Touche LLP's tenure as our independent registered public accounting firm and its familiarity with our operations and businesses, accounting policies and practices and internal control over financial reporting;
•Deloitte & Touche LLP's capability and expertise in relation to the breadth and complexity of our operations; and
•Deloitte & Touche LLP's independence.
Based on the evaluations the audit committee believes that Deloitte & Touche LLP is independent and that it is in the best interest of our company and our stockholders to retain Deloitte & Touche LLP to serve as our independent registered public accounting firm for 2014.
In accordance with SEC rules and Deloitte & Touche LLP's policies, audit partners are subject to rotation requirements to limit the number of consecutive years an individual partner may provide service to our company. For lead audit and engagement quality control review partners, the maximum number of consecutive years of service in that capacity is five years. The process for approval of the lead audit partner for our company pursuant to this rotation policy involves a meeting between the chair of the audit committee and the candidate for the role, as well as discussion by the full committee and with management.
The audit committee has discussed with management and Deloitte & Touche LLP significant accounting policies applied by us in our financial statements as well as alternative treatments and significant judgments and estimates, including (1) the valuation of our legal commitments and contingencies, (2) estimates in respect of defined benefit plans, including the two defined benefit postretirement medical plans maintained by a VEBA trust that provides benefits for certain eligible retirees represented by unions and their spouses and eligible dependents (which we refer to as the Union VEBA Trust), and another VEBA trust that provides benefits for certain other eligible retirees and their surviving spouses and eligible dependents, (3) estimates in regard to environmental commitments and contingencies, (4) estimates in respect to conditional asset retirement obligations, (5) long-lived assets, (6) our income taxes, (7) tax contingencies, (8) inventory valuation, (9) the valuation of our convertible notes and call options, and (10) acquisitions, goodwill and intangible assets. For a more detailed discussion of these accounting items, see Item 7. “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2013. During the year ended December 31, 2013, there were no disagreements with Deloitte & Touche LLP on any matter of accounting principle or practice, financial statement disclosure or auditing scope or procedure, which, if not resolved to the satisfaction of Deloitte & Touche LLP, would have caused them to make a reference to the subject matter of the disagreement in connection with its reports.
The audit committee has read and discussed the company's audited financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2013 with our management. The audit committee has also discussed with our independent registered public accounting firm the matters required to be discussed pursuant to applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant's communications with the audit committee.
The audit committee has also received and read the written disclosures and the letter from Deloitte & Touche LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant's communications with the audit committee concerning independence, and has discussed with Deloitte & Touche LLP its independence.
The audit committee discussed with our internal accountants and Deloitte & Touche LLP the overall scope and plans for their respective audits. The audit committee meets with management, our internal accountants and our independent accountants periodically in separate private sessions to discuss any matter that the committee, management, our internal accountants, the independent accountants or such other persons believe should be discussed privately.
Based on the review and discussions referred to above, the audit committee recommended to the board of directors that the audited financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2013, as filedthose years and review of our financial statements included in our Quarterly Reports on Form 10-Q for those years, and for audit services provided in connection with compliance with the SEC.
The audit committee considered whether,requirements of the Sarbanes-Oxley Act.
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| | (2) | Audit-related fees consist principally of fees for statutory audits. |
| | (3) | Tax fees for 2014 consist principally of fees for tax advisory services and concluded that, the provision bypreparation of tax returns for certain of our subsidiaries. Tax fees for 2015 consist principally of fees for tax advisory services related to compliance and payroll and income taxes related to equity grants to French employees and the preparation of tax returns for certain of our subsidiaries. |
| | (4) | All other fees for 2014 consist of the subscription fee to the Deloitte & Touche LLP Research Tool Library, fees relating to the review of agreed-upon procedures relating to certain environmental matters and fees relating to the review of comments from the Securities and Exchange Commission and our response to such comments. All other fees for 2015 consist of the services for which we paid the amounts set forth under “Tax Fees” and “All Other Fees” below is compatible with maintaining the independence of Deloitte & Touche LLP.
This report is submitted by the members of the audit committee of the board of directors:
Audit Committee
Teresa A. Hopp (Chair)
Carolyn Bartholomew
David Foster
Lauralee E. Martin
Alfred E. Osborne, Jr., Ph.D.
Thomas M. Van Leeuwen
Brett E. Wilcox
This Audit Committee Report does not constitute soliciting material and shall not be deemed filed or incorporated by reference into any other filing made by us under the Securities Act of 1933 or the Securities Exchange Act of 1934, exceptsubscription fee to the extent that we specifically incorporate this Audit Committee Report by reference therein.
INDEPENDENT PUBLIC ACCOUNTANTS
The following table presents fees for professional audit services rendered by Deloitte & Touche LLP Research Tool Library, fees relating to the review of agreed-upon procedures relating to certain environmental matters and fees relating to the reviews and discussions in regard to the termination of defined benefit plan accounting for the audit of our annual financial statements for each of 2012 and 2013, and fees billed for other services rendered by Deloitte & Touche LLP.Union VEBA Trust.
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The audit committee charter requires that the audit committee pre-approve all audit and non-audit engagements, fees, terms and services in a manner consistent with Sarbanes-Oxley Act and all rules and applicable listing standards promulgated by the Securities and Exchange Commission and the Nasdaq Stock Market. The audit committee may delegate the authority to grant any pre-approvals of non-audit engagements to one or more members of the audit committee, provided that such member (or members) reports any pre-approvals to the audit committee at its next scheduled meeting. The audit committee has delegated pre-approval authority to its chair. All of the audit-related fees, tax fees and other fees for 2015 were pre-approved by the audit committee.
Representatives of Deloitte & Touche LLP are expected to be present at the Annual Meeting and will have the opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our officers and directors and persons who own more than 10% of a registered class of our equity securities to file initial reports of ownership and reports of changes in ownership with the Securities and Exchange Commission. Such persons are required by regulation of the Securities and Exchange Commission to furnish us with copies of all Section 16(a) forms they file. Based solely on our review of the copies of such forms or written representations from certain reporting persons received by us with respect to 2015, we believe that our officers and directors and persons who own more than 10% of a registered class of our equity securities have complied with all applicable filing requirements.
OTHER MATTERS
We do not know of any other matters to be presented or acted upon at the Annual Meeting. If any other matter is presented at the Annual Meeting on which a vote may properly be taken, the shares represented by proxies will be voted in accordance with the judgment of the proxy holders.
FORM 10-K
Copies of our Annual Report on Form 10-K for the fiscal year endedDecember 31, 2015 (excluding exhibits) filed with the Securities and Exchange Commission are available,without charge, upon written request to Kaiser Aluminum Corporation, 27422Portola Parkway, Suite 200, Foothill Ranch, California 92610-2831, Attention:Investor Relations Department. Exhibits to the Annual Report on Form 10-K will be furnished upon payment of a fee of $0.25 per page to cover our expenses in furnishing the exhibits.
STOCKHOLDER PROPOSALS
To be considered for inclusion in our proxy statement for our 2017 annual meeting of stockholders, proposals of stockholders must be in writing and received by us no later than December [ ], 2016. To be presented at the 2017 annual meeting of stockholders without inclusion in our proxy statement for such meeting, proposals of stockholders must be in writing and received by us no later than February [ ], 2017 and no earlier than January [ ], 2017, in accordance with procedures set forth in our bylaws. Such proposals should be mailed to Kaiser Aluminum Corporation, 27422 Portola Parkway, Suite 200, Foothill Ranch, California 92610-2831 and directed to the corporate secretary.
| | | | | | | | | | | | | | | | | 2012 | | | | 2013 | | Audit Fees(1) | | | $ | 1,562,121 |
| | | | $ | 1,392,201 |
| | Audit-Related Fees (2) | | | $ | 44,024 |
| | | | $ | 52,886 |
| | Tax Fees (3) | | | $ | 8,240 |
| | | | $ | 16,223 |
| | All Other Fees (4) | | | $ | 216,700 |
| | | | $ | 7,200 |
| |
____________
| | (1) | Audit fees consist principally of fees for the audit of our annual financial statements included in our Annual Report on Form 10-K for those years and review of our financial statements included in our Quarterly Reports on Form 10-Q for those years, and for audit services provided in connection with compliance with the requirements of the Sarbanes-Oxley Act of 2002. | | | | By Order of the Board of Directors | | | | John M. Donnan | | Executive Vice President - Legal, | | Compliance and Human Resources |
Foothill Ranch, California April [ ], 2016
Appendix A
Kaiser Aluminum Corporation 2016 EQUITY AND INCENTIVE COMPENSATION PLAN 1.Purpose. The purpose of the 2016 Equity and Incentive Compensation Planis to attract and retain directors, officers and other key employees and service providersof the Company and its Subsidiaries and to provide to such persons incentives and rewards for performance.
2.Definitions. As used in this Plan:
(a)“Appreciation Right” means a right granted pursuant to Section 5 of this Plan, and will include Tandem Appreciation Rights and Free-Standing Appreciation Rights.
(b)“Base Price” means the price to be used as the basis for determining the Spread upon the exercise of a Free-Standing Appreciation Right or a Tandem Appreciation Right.
(c)“Board” means the Board of Directors of the Company.
(d)“Cash Incentive Award” means a cash award granted pursuant to Section 8 of this Plan.
(e)“Change in Control” has the meaning set forth in Section 12 of this Plan.
(f)“Code” means the Internal Revenue Code of 1986, as amended from time to time.
(g)“Committee” means the Compensation Committeeof the Board (or its successor(s)), or any other committee of the Board designated by the Board to administer the Plan pursuant to Section 10 of this Plan consisting solely of no fewer than two non-employee Directors (within the meaning of Rule 16b-3 promulgated under the Exchange Act) and, to the extent of any delegation by the Committee to a subcommittee pursuant to Section 10 of this Plan, such subcommittee.
(h)“Common Shares” means the shares of common stock, par value $0.01 per share, of the Company or any security into which such common stock may be changed by reason of any transaction or event of the type referred to in Section 11 of this Plan.
(i)“Company” means Kaiser Aluminum Corporation, a Delaware corporation, and its successors.
(j)“Covered Employee” means a Participant who is, or is determined by the Committee likely to become, a “covered employee” within the meaning of Section 162(m) of the Code (or any successor provision).
(k)“Date of Grant” means the date specified by the Committee on which a grant of Option Rights, Appreciation Rights, Performance Shares, Performance Units, Cash Incentive Awards, or other awards contemplated by Section 9 of this Plan, or a grant or sale of Restricted Stock, Restricted Stock Units, or other awards contemplated by Section 9 of this Plan, will become effective (which date will not be earlier than the date on which the Committee takes action with respect thereto).
(l)“Director” means a member of the Board.
(m)“Effective Date” means the date this Plan is approved by the Shareholders of the Company.
(n)“Evidence of Award” means an agreement, certificate, resolution or other type or form of writing or other evidence approved by the Committee that sets forth the terms and conditions of the awards granted under the Plan. An Evidence of Award may be in an electronic medium, may be limited to notation on the books and records of the Company and, unless otherwise determined by the Committee, need not be signed by a representative of the Company or a Participant.
(o)“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, as such law, rules and regulations may be amended from time to time.
(p)“Free-Standing Appreciation Right” means an Appreciation Right granted pursuant to Section 5 of this Plan that is not granted in tandem with an Option Right.
(q)“Incentive Stock Option” means an Option Right that is intended to qualify as an “incentive stock option” under Section 422 of the Code or any successor provision.
(r)“Management Objectives” means the measurable performance objective or objectives established pursuant to this Plan for Participants who have received grants of Performance Shares, Performance Units or Cash Incentive Awards or, when so determined by the Committee, Option Rights, Appreciation Rights, Restricted Stock, Restricted Stock Units, dividend equivalents or other awards pursuant to this Plan. Management Objectives may be described in terms of Company-wide objectives or objectives that are related to the performance of the individual Participant or of one or more of the Subsidiaries, divisions, departments, regions, functions or other organizational units within the Company or its Subsidiaries. The Management Objectives may be made relative to the performance of other companies or subsidiaries, divisions, departments, regions, functions or other organizational units within such other companies, and may be made relative to an index or one or more of the performance objectives themselves. The Committee may grant awards subject to Management Objectives that are either Qualified Performance-Based Awards or are not Qualified Performance-Based Awards. The Management Objectives applicable to any Qualified Performance-Based Award to a Covered Employee will be based on one or more, or a combination, of the following metrics (including relative or growth achievement regarding such metrics):
| | (2) | Audit-related fees consist principally of fees for statutory audits. |
| | (3) | Tax fees consist principally of fees for tax advisory services. |
| | (4) | All other fees for 2012 consist of the subscription fee to the Deloitte & Touche LLP Research Tool Library and fees relating to our senior notes offering in May 2012. All other fees for 2013 consist of the subscription fee to the Deloitte & Touche LLP Research Tool Library and fees relating to the review of agreed-upon procedures relating to certain environmental matters. | (i) | Profits (e.g., operating income, EBIT, EBT, net income (before or after taxes), earnings per share, residual or economic earnings, economic profit - these profitability metrics could be measured before certain specified special items and/or subject to GAAP definition); |
| | (ii) | The audit committee charter requires thatCash Flow (e.g., EBITDA, free cash flow, free cash flow with or without specific capital expenditure target or range, including or excluding divestments and/or acquisitions, total cash flow, cash flow in excess of cost of capital or residual cash flow or cash flow return on investment);
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| | (iii) | Returns (e.g., profits or cash flow returns on: assets, invested capital, net capital employed, revenue, sales and equity); |
| | (iv) | Working Capital (e.g., working capital divided by sales, days’ sales outstanding, days’ sales inventory, and days’ sales in payables); |
| | (v) | Profit Margins (e.g., profits divided by revenues, gross margins and material margins divided by revenues, and material margin divided by sales pounds); |
| | (vi) | Liquidity Measures (e.g., debt-to-capital, debt-to-EBITDA, total debt ratio); |
| | (vii) | Revenues, Sales, Operating, Cost, and Stock Price Metrics (e.g., revenues, sales, revenue or sales growth, revenue or sales growth outside the audit committee pre-approve all auditUnited States, gross margin, gross margin growth, material margin, material margin growth, operating margin, operating margin growth, sales and non-audit engagements, fees, termsadministrative costs divided by sales or profits, operating or manufacturing costs, operating or manufacturing costs relative to prior periods or business plan, stock price appreciation and services in a manner consistent with Sarbanes-Oxley Acttotal return to shareholders; |
| | (viii) | Safety Performance (e.g., total case incident rate); |
| | (ix) | Quality Performance (e.g., no fault claim rate); |
| | (x) | Delivery Performance (e.g., on-time delivery rate); and |
| | (xi) | Strategic Initiative Key Deliverable Metrics consisting of 2002 and all rules and applicable listing standards promulgated by the SEC and the Nasdaq Stock Market. The audit committee may delegate the authority to grant any pre-approvals of non-audit engagements to one or more members of the audit committee, provided that such member (or members) reports any pre-approvalsfollowing: product development, strategic partnering, research and development, vitality index, market penetration, geographic business expansion goals, customer satisfaction, employee satisfaction, management of employment practices and employee benefits, supervision of litigation and information technology, and goals relating to the audit committee at its next scheduled meeting. The audit committee has delegated pre-approval authority to its chair. Allacquisitions or divestitures of the audit-related fees, tax feessubsidiaries, affiliates and other fees for joint ventures.2013 were pre-approved by the audit committee. |
In the case of a Qualified Performance-Based Award, each Management Objective will be objectively determinable to the extent required under Section 162(m) of the Code, and, unless otherwise determined by the Committee and to the extent consistent with Code Section 162(m), will exclude the effects of certain designated items identified at the time of grant. If the Committee determines that a change in the business, operations, corporate structure or capital structure of the Company, or the manner in which it conducts its business, or other events or circumstances render the Management Objectives unsuitable, the Committee may in its discretion modify such Management Objectives or the related minimum acceptable level of achievement, in whole or in part, as the Committee deems appropriate and equitable, except in the case of a Qualified Performance-Based Award (other than in connection with a Change in Control) where such action would result in the loss of the otherwise available exemption of the award under Section 162(m) of the Code. In such case, the Committee will not make any modification of the Management Objectives or minimum acceptable level of achievement with respect to such Covered Employee. (s)“Market Value per Share” means, as of any particular date, the closing price of a Common Share as reported for that date on the NASDAQ Stock Market or, if the Common Shares are not then listed on the NASDAQ Stock Market, on any other national securities exchange on which the Common Shares are listed, or if there are no sales on such date, on the next preceding trading day during which a sale occurred. If there is no regular public trading market for the Common Shares, then the Market Value per Share shall be the fair market value as determined in good faith by the Committee. The Committee is authorized to adopt another fair market value pricing method provided such method is stated in the Evidence of Award and is in compliance with the fair market value pricing rules set forth in Section 409A of the Code.
(t)“Optionee” means the optionee named in an Evidence of Award evidencing an outstanding Option Right.
(u)“Option Price” means the purchase price payable on exercise of an Option Right.
(v)“Option Right” means the right to purchase Common Shares upon exercise of an option granted pursuant to Section 4 of this Plan.
(w)“Participant” means a person who is selected by the Committee to receive benefits under this Plan and who is at the time (i) an officer or other key employee of the Company or any Subsidiary, including a person who has agreed to commence serving in such capacity within 90 days of the Date of Grant, (ii) a person who provides services to the Company or any Subsidiary that are equivalent to those typically provided by an employee (provided that such person satisfies the Form S-8 definition of an “employee”), or (iii) a non-employee Director. The term “Participant” shall also include any director emeritus.
(x)“Performance Period” means, in respect of a Cash Incentive Award, Performance Share or Performance Unit, a period of time established pursuant to Section 8 of this Plan within which the Management Objectives relating to such Cash Incentive Award, Performance Share or Performance Unit are to be achieved.
(y)“Performance Share” means a bookkeeping entry that records the equivalent of one Common Share awarded pursuant to Section 8 of this Plan.
(z)“Performance Unit” means a bookkeeping entry awarded pursuant to Section 8 of this Plan that records a unit equivalent to $1.00 or such other value as is determined by the Committee.
(aa)“Plan” means this Kaiser Aluminum Corporation 2016 Equity and Incentive Compensation Plan.
(bb) “Predecessor Plan” means the Company’s Amended and Restated 2006 Equity and Performance Incentive Plan.
(cc) “Qualified Performance-Based Award” means any Cash Incentive Awardor award of Performance Shares, Performance Units, Restricted Stock, Restricted Stock Units or other awards contemplated under Section 9 of this Plan, or portion of such award, to a Covered Employee that is intended to satisfy the requirements for “qualified performance-based compensation” under Section 162(m) of the Code.
(dd) “Restricted Stock” means Common Shares granted or sold pursuant to Section 6 of this Plan as to which neither the substantial risk of forfeiture nor the prohibition on transfers has expired.
(ee) “Restricted Stock Units” means an award made pursuant to Section 7 of this Plan of the right to receive Common Shares, cash or a combination thereof at the end of a specified period.
(ff) “Restriction Period” means the period of time during which Restricted Stock Units are subject to restrictions, as provided in Section 7 of this Plan.
(gg) “Shareholder” means an individual or entity that owns one or more Common Shares.
(hh) “Spread” means the excess of the Market Value per Share on the date when an Option Right or Appreciation Right is exercised over the Option Price or Base Price provided for in the related Option Right or Appreciation Right, respectively.
(ii) “Subsidiary” means a corporation, company or other entity (i) more than 50 percent of whose outstanding shares or securities (representing the right to vote for the election of directors or other managing authority) are, or (ii) which does not have outstanding shares or securities (as may be the case in a partnership, joint venture, limited liability company, or unincorporated association), but more than 50 percent of whose ownership interest representing the right generally to make decisions for such other entity is, now or hereafter, owned or controlled, directly or indirectly, by the Company; provided, however, that for purposes of determining whether any person may be a Participant for purposes of any grant of Incentive Stock Options, “Subsidiary” means any corporation in which at the time the Company owns or controls, directly or indirectly, more than 50 percent of the total combined Voting Power represented by all classes of stock issued by such corporation.
(jj) “Tandem Appreciation Right” means an Appreciation Right granted pursuant to Section 5 of this Plan that is granted in tandem with an Option Right.
(kk) “Voting Power” means at any time, the combined voting power of the then-outstanding securities entitled to vote generally in the election of Directors in the case of the Company, or members of the board of directors or similar body in the case of another entity.
3.Shares Available Under the Plan.
(a)Maximum Shares Available Under Plan.
| | (i) | RepresentativesSubject to adjustment as provided in Section 11 of Deloitte & Touche LLPthis Plan and the share counting rules set forth in Section 3(b) of this Plan, the number of Common Shares available under the Plan for awards of (A) Option Rights or Appreciation Rights, (B) Restricted Stock, (C) Restricted Stock Units, (D) Performance Shares or Performance Units, (E) awards contemplated by Section 9 of this Plan, or (F) dividend equivalents paid with respect to awards made under the Plan will not exceed in the aggregate 1,045,000 shares minus, as of the Effective Date, one Common Share for every one Common Share subject to an award granted under the Predecessor Plan between December 31, 2015 and the Effective Date. Such shares may be shares of original issuance or treasury shares or a combination of the foregoing.
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| | (ii) | The aggregate number of Common Shares available for issuance or transfer under Section 3(a)(i) of this Plan will be reduced by one Common Share for every one Common Share subject to an award granted under this Plan. |
(b)Share Counting Rules.
| | (i) | If any award granted under this Plan is cancelled or forfeited, expires or is settled for cash (in whole or in part), the Common Shares subject to such award will, to the extent of such cancellation, forfeiture, expiration, or cash settlement, again be available under Section 3(a)(i) above. |
| | (ii) | If, after December 31, 2015, any Common Shares subject to an award granted under the Predecessor Plan are expectedforfeited, or an award granted under the Predecessor Plan is cancelled |
or forfeited, expires or is settled for cash (in whole or in part), the Common Shares subject to such award will, to the extent of such cancellation, forfeiture, expiration, or cash settlement, be available for awards under this Plan.
| | (iii) | Notwithstanding anything to the contrary contained herein: (A) Common Shares withheld by the Company, tendered or otherwise used in payment of the Option Price of an Option Right will not be presentadded back to the aggregate number of Common Shares available under Section 3(a)(i) above; (B) Common Shares withheld by the Company or otherwise used to satisfy a tax withholding obligation will not be added (or added back, as applicable) to the aggregate number of Common Shares available under Section 3(a)(i) above; (C) Common Shares subject to an Appreciation Rightthat are not actually issued in connection with its Common Shares settlement on exercise thereof will not be added back to the aggregate number of Common Shares available under Section 3(a)(i) above; and (D) Common Shares reacquired by the Company on the open market or otherwise using cash proceeds from the exercise of Option Rights will not be added back to the aggregate number of Common Shares available under Section 3(a)(i) above. |
(c)Limit on Incentive Stock Options. Notwithstanding anything in this Section 3 or elsewhere in this Plan to the contrary, and subject to adjustment as provided in Section 11 of this Plan, the aggregate number of Common Shares actually issued or transferred by the Company upon the exercise of Incentive Stock Options will not exceed 1,045,000 Common Shares.
(d)Individual Participant Limits. Notwithstanding anything in this Section 3 or elsewhere in this Plan to the contrary, and subject to adjustment as provided in Section 11 of this Plan:
| | (i) | No Participant will be granted Option Rights and/or Appreciation Rights, in the aggregate, for more than 250,000 Common Shares during any calendar year. |
| | (ii) | No Participant will be granted Qualified Performance-Based Awards of Restricted Stock, Restricted Stock Units, Performance Shares and/or other awards under Section 9 of this Plan, in the aggregate, for more than 250,000 Common Shares during any calendar year. |
| | (iii) | In no event will any Participant in any calendar year receive Qualified Performance-Based Awards of Performance Units and/or other awards payable in cash under Section 9 of this Plan having an aggregate maximum value as of their respective Dates of Grant in excess of $5,000,000. |
| | (iv) | In no event will any Participant in any calendar year receive Qualified Performance-Based Awards that are Cash Incentive Awards having an aggregate maximum value in excess of $5,000,000. |
| | (v) | No non-employee Director will be granted, in any period of one calendar year, awards under the Plan having an aggregate maximum value in excess of $500,000. |
(e)Notwithstanding anything in this Plan to the contrary, up to 5% of the maximum number of Common Shares available for awards under this Plan as provided for in Section 3(a) of this Plan, as may be adjusted under Section 11 of this Plan, may be used for awards granted under Section 4 through Section 9 of this Plan that do not at the Date of Grant comply with the applicable one-year minimum vesting or performance period requirements set forth in such sections of this Plan.
4.Option Rights. The Committee may, from time to time and upon such terms and conditions as it may determine, authorize the granting to Participants of Option Rights. Each such grant may utilize any or all of the authorizations, and will be subject to all of the requirements, contained in the following provisions:
(a)Each grant will specify the number of Common Shares to which it pertains subject to the limitations set forth in Section 3 of this Plan.
(b)Each grant will specify an Option Price per share, which (except with respect to awards under Section 22 of this Plan) may not be less than the Market Value per Share on the Date of Grant.
(c)Each grant will specify whether the Option Price will be payable (i) in cash or by check acceptable to the Company or by wire transfer of immediately available funds, (ii) by the actual or constructive transfer to the Company of Common Shares owned by the Optionee (or other consideration authorized pursuant to Section 4(d) of this Plan) having a value at the time of exercise equal to the total Option Price, (iii) subject to any conditions or limitations established by the Committee, the Company’s withholding of Common Shares otherwise issuable upon exercise of an Option Right pursuant to a “net exercise” arrangement (it being understood that, solely for purposes of determining the number of treasury shares held by the Company, the Common Shares so withheld will not be treated as issued and acquired by the Company upon such exercise), (iv) by a combination of such methods of payment, or (v) by such other methods as may be approved by the Committee.
(d)To the extent permitted by law, any grant may provide for deferred payment of the Option Price from the proceeds of sale through a bank or broker on a date satisfactory to the Company of some or all of the shares to which such exercise relates.
(e)Successive grants may be made to the same Participant whether or not any Option Rights previously granted to such Participant remain unexercised.
(f)Each grant will specify the period or periods of continuous service by the Optionee with the Company or any Subsidiary that is necessary before the Option Rights or installments thereof will become exercisable; provided, that, except as otherwise described in this subsection, no grant of Option Rights may become exercisable sooner than after one year. A grant of Option Rights may provide for the earlier exercise of such Option Rights, including in the event of the retirement, death or disability of a Participant.
(g)Any grant of Option Rights may specify Management Objectives that must be achieved as a condition to the exercise of such rights.
(h)Option Rights granted under this Plan may be (i) options, including, without limitation, Incentive Stock Options, that are intended to qualify under particular provisions of the Code, (ii) options that are not intended so to qualify, or (iii) combinations of the foregoing. Incentive Stock Options may only be granted to Participants who meet the definition of “employees” under Section 3401(c) of the Code.
(i)The exercise of an Option Right will result in the cancellation on a share-for-share basis of any Tandem Appreciation Right authorized under Section 5 of this Plan.
(j)No Option Right will be exercisable more than 10 years from the Date of Grant; provided, that, in the case of Incentive Stock Options granted to 10% Shareholders, no such Option Right shall be exercisable more than 5 years from the Date of Grant.
(k)Option Rights granted under this Plan may not provide for any dividends or dividend equivalents thereon.
(l)Each grant of Option Rights will be evidenced by an Evidence of Award. Each Evidence of Award will be subject to this Plan and will contain such terms and provisions, consistent with this Plan, as the Committee may approve.
5.Appreciation Rights.
(a)The Committee may, from time to time and upon such terms and conditions as it may determine, authorize the granting (i) to any Optionee, of Tandem Appreciation Rights in respect of Option Rights granted hereunder, and (ii) to any Participant, of Free-Standing Appreciation Rights. A Tandem Appreciation Right will be a right of the Optionee, exercisable by surrender of the related Option Right, to receive from the Company an amount determined by the Committee, which will be expressed as a percentage of the Spread (not exceeding 100 percent) at the time of exercise. Tandem Appreciation Rights may be granted at any time prior to the exercise or termination of the related Option Rights; provided, however, that a Tandem Appreciation Right awarded in relation to an Incentive Stock Option must be granted concurrently with such Incentive Stock Option. A Free-Standing Appreciation Right will be a right of the Participant to receive from the Company an amount determined by the Committee, which will be expressed as a percentage of the Spread (not exceeding 100 percent) at the time of exercise.
(b)Each grant of Appreciation Rights may utilize any or all of the authorizations, and will be subject to all of the requirements, contained in the following provisions:
| | (i) | Each grant may specify that the amount payable on exercise of an Appreciation Right will be paid by the Company in cash, Common Shares or any combination thereof. |
| | (ii) | Any grant may specify that the amount payable on exercise of an Appreciation Right may not exceed a maximum specified by the Committee at the Annual MeetingDate of Grant. |
| | (iii) | Any grant may specify waiting periods before exercise and permissible exercise dates or periods. |
| | (iv) | Each grant may specify the period or periods of continuous service by the Participant with the Company or any Subsidiary that is necessary before the Appreciation Rights or installments thereof will havebecome exercisable; provided, that, except as otherwise described in this subsection, no grant of Appreciation Rights may become exercisable sooner than after one year. A grant of Appreciation Rights may provide for the opportunity to makeearlier exercise of such Appreciation Rights, including in the event of the retirement, death or disability of a statement if they desire to do so andParticipant. |
| | (v) | Any grant of Appreciation Rights may specify Management Objectives that must be achieved as a condition of the exercise of such Appreciation Rights. |
| | (vi) | Each grant of Appreciation Rights will be available to respond to appropriate questions.evidenced by an Evidence of Award, which Evidence of Award will describe such Appreciation Rights, identify the related Option Rights (if applicable), and contain such other terms and provisions, consistent with this Plan, as the Committee may approve. |
(c)Any grant of Tandem Appreciation Rights will provide that such Tandem Appreciation Rights may be exercised only at a time when the related Option Right is also exercisable and at a time when the Spread is positive, and by surrender of the related Option Right for cancellation. Successive grants of Tandem Appreciation Rights may be made to the same Participant regardless of whether any Tandem Appreciation Rights previously granted to the Participant remain unexercised.
(d)Appreciation Rights granted under this Plan may not provide for any dividends or dividend equivalents thereon.
(e)Regarding Free-Standing Appreciation Rights only:
| | (i) | Each grant will specify in respect of each Free-Standing Appreciation Right a Base Price, which (except with respect to awards under Section 22 of this Plan) may not be less than the Market Value per Share on the Date of Grant; |
| | (ii) | Successive grants may be made to the same Participant regardless of whether any Free-Standing Appreciation Rights previously granted to the Participant remain unexercised; and |
| | (iii) | No Free-Standing Appreciation Right granted under this Plan may be exercised more than 10 years from the Date of Grant. |
6.Restricted Stock. The Committee may, from time to time and upon such terms and conditions as it may determine, authorize the grant or sale of Restricted Stock to Participants. Each such grant or sale may utilize any or all of the authorizations, and will be subject to all of the requirements, contained in the following provisions:
(a)Each such grant or sale will constitute an immediate transfer of the ownership of Common Shares to the Participant in consideration of the performance of services, entitling such Participant to voting, dividend and other ownership rights, but subject to the substantial risk of forfeiture and restrictions on transfer hereinafter referred to.
(b)Each such grant or sale may be made without additional consideration or in consideration of a payment by such Participant that is less than the Market Value per Share at the Date of Grant.
(c)Each such grant or sale will provide that the Restricted Stock covered by such grant or sale will be subject to a “substantial risk of forfeiture” within the meaning of Section 83 of the Code for a period to be determined by the Committee at the Date of Grant or until achievement of Management Objectives referred to in subparagraph (e) below. If the elimination of restrictions is based only on the passage of time rather than the achievement of Management Objectives, the period of time will be no shorter than one year.
(d)Each such grant or sale will provide that during or after the period for which such substantial risk of forfeiture is to continue, the transferability of the Restricted Stock will be prohibited or restricted in the manner and to the extent prescribed by the Committee at the Date of Grant (which restrictions may include, without limitation, rights of repurchase or first refusal in the Company or provisions subjecting the Restricted Stock to a continuing substantial risk of forfeiture in the hands of any transferee).
(e)Any grant of Restricted Stock may specify Management Objectives that, if achieved, will result in termination or early termination of the restrictions applicable to such Restricted Stock; provided, however, that notwithstanding subparagraph (c) above, for Restricted Stock that vests upon the achievement of Management Objectives, the performance period must be at least one year.
(f)Notwithstanding anything to the contrary contained in this Plan (including minimum vesting requirements), any grant or sale of Restricted Stock may provide for the earlier termination of restrictions on such Restricted Stock, including in the event of the retirement, death or disability of a Participant; provided, however, that no award of Restricted Stock intended to be a Qualified Performance-Based Award will provide for such early termination of restrictions except as otherwise provided in an Evidence of Award to the extent so providing would not result in the loss of an otherwise available exemption of the award under Section 162(m) of the Code.
(g)Any such grant or sale of Restricted Stock may require that any or all dividends or other distributions paid thereon during the period of such restrictions be automatically deferred and reinvested in additional Restricted Stock, which may be subject to the same restrictions as the underlying award; provided, however, that dividends or other distributions on Restricted Stock with restrictions that lapse as a result of the achievement of Management Objectives will be deferred until and paid contingent upon the achievement of the applicable Management Objectives.
(h)Each grant or sale of Restricted Stock will be evidenced by an Evidence of Award and will contain such terms and provisions, consistent with this Plan, as the Committee may approve. Unless otherwise directed by the Committee, (i) all certificates representing Restricted Stock will be held in custody by the Company until all restrictions thereon will have lapsed, together with a stock power or powers executed by the Participant in whose name such certificates are registered, endorsed in blank and covering such shares or (ii) all Restricted Stock will be held at the Company’s transfer agent in book entry form with appropriate restrictions relating to the transfer of such Restricted Stock.
7.Restricted Stock Units. The Committee may, from time to time and upon such terms and conditions as it may determine, authorize the granting or sale of Restricted Stock Units to Participants. Each such grant or sale may utilize any or all of the authorizations, and will be subject to all of the requirements, contained in the following provisions:
(a)Each such grant or sale will constitute the agreement by the Company to deliver Common Shares or cash, or a combination thereof, to the Participant in the future in consideration of the performance of services, but subject to the fulfillment of such conditions (which may include the achievement of Management Objectives) during the Restriction Period as the Committee may specify.
(b)If a grant of Restricted Stock Units specifies that the Restriction Period will terminate upon the achievement of Management Objectives or that the Restricted Stock Units will be earned based on the achievement of Management Objectives, then, notwithstanding anything to the contrary contained in subparagraph (d) below, the performance period must be at least one year.
(c)Each such grant or sale may be made without additional consideration or in consideration of a payment by such Participant that is less than the Market Value per Share at the Date of Grant.
(d)If the Restriction Period lapses only by the passage of time rather than the achievement of Management Objectives as provided in subparagraph (b) above, each such grant or sale will be subject to a Restriction Period of not less than one year.
(e)Notwithstanding anything to the contrary contained in this Plan (including minimum vesting requirements), any grant or sale of Restricted Stock Units may provide for the earlier lapse or other modification of the Restriction Period, including in the event of the retirement, death or disability of a Participant; provided, however, that no award of Restricted Stock Units intended to be a Qualified Performance-Based Award will provide for such early lapse or modification of the Restriction Period except as otherwise provided in an Evidence of Award to the extent so providing would not result in the loss of an otherwise available exemption of the award under Section 162(m) of the Code.
(f)During the Restriction Period, the Participant will have no right to transfer any rights under his or her award and will have no rights of ownership in the Common Shares deliverable upon payment of the Restricted Stock Units and will have no right to vote them, but the Committee may, at or after the Date of Grant, authorize the payment of dividend equivalents on such Restricted Stock Units on either a current or deferred or contingent basis, either in cash or in additional Common Shares; provided, however, that dividend equivalents or other distributions on Common Shares underlying Restricted Stock Units with restrictions that lapse as a result of the achievement of Management Objectives will be deferred until and paid contingent upon the achievement of the applicable Management Objectives.
(g)Each grant or sale of Restricted Stock Units will specify the time and manner of payment of the Restricted Stock Units that have been earned. Each grant or sale will specify that the amount payable with respect thereto will be paid by the Company in Common Shares or cash, or a combination thereof.
(h)Each grant or sale of Restricted Stock Units will be evidenced by an Evidence of Award and will contain such terms and provisions, consistent with this Plan, as the Committee may approve.
8.Cash Incentive Awards, Performance Shares and Performance Units. The Committee may, from time to time and upon such terms and conditions as it may determine, authorize the granting of Cash Incentive Awards, Performance Shares and Performance Units. Each such grant may utilize any or all of the authorizations, and will be subject to all of the requirements, contained in the following provisions:
(a)Each grant will specify the number or amount of Performance Shares or Performance Units, or amount payable with respect to Cash Incentive Awards, to which it pertains, which number or amount may be subject to adjustment to reflect changes in compensation or other factors; provided, however, that no such adjustment will be made in the case of a Qualified Performance-Based Award except as otherwise provided in an Evidence of Award to the extent so providing would not result in the loss of an otherwise available exemption of the award under Section 162(m) of the Code.
(b)The Performance Period with respect to each Cash Incentive Award, Performance Share or Performance Unit will be such period of time (not less than one year) as will be determined by the Committee at the time of grant, which may be subject to earlier lapse or other modification, including in the event of the retirement, death or disability of a Participant; provided, however, that no such adjustment will be made in the case of a Qualified Performance-Based Award except as otherwise provided in an Evidence of Award to the extent so providing would not result in the loss of an otherwise available exemption of the award under Section 162(m) of the Code. In such event, the Evidence of Award will specify the time and terms of delivery.
(c)Each grant of Cash Incentive Awards, Performance Shares or Performance Units will specify Management Objectives which, if achieved, will result in payment or early payment of the award, and each grant may specify in respect of such specified Management Objectives a minimum acceptable level or levels of achievement and may set forth a formula for determining the number of Performance Shares or Performance Units, or amount payable with respect to Cash Incentive Awards, that will be earned if performance is at or above the minimum or threshold level or levels, or is at or above the target level or levels, but falls short of maximum achievement of the specified Management Objectives.
(d)Each grant will specify the time and manner of payment of Cash Incentive Awards, Performance Shares or Performance Units that have been earned. Any grant may specify that the amount payable with respect thereto may be paid by the Company in cash, in Common Shares, in Restricted Stock or Restricted Stock Units or in any combination thereof.
(e)Any grant of Cash Incentive Awards, Performance Shares or Performance Units may specify that the amount payable or the number of Common Shares, shares of Restricted Stock or Restricted Stock Units with respect thereto may not exceed a maximum specified by the Committee at the Date of Grant.
(f)The Committee may, at the Date of Grant of Performance Shares, provide for the payment of dividend equivalents to the holder thereof either in cash or in additional Common Shares, subject in all cases to deferral and
payment on a contingent basis based on the Participant’s earning of the Performance Shares with respect to which such dividend equivalents are paid.
(g)Each grant of Cash Incentive Awards, Performance Shares or Performance Units will be evidenced by an Evidence of Award and will contain such other terms and provisions, consistent with this Plan, as the Committee may approve.
9.Other Awards.
(a)Subject to applicable law and the applicable limits set forth in Section 3 of this Plan, the Committee may grant to any Participant Common Shares or such other awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Common Shares or factors that may influence the value of such shares, including, without limitation, convertible or exchangeable debt securities, other rights convertible or exchangeable into Common Shares, purchase rights for Common Shares, awards with value and payment contingent upon performance of the Company or specified Subsidiaries, affiliates or other business units thereof or any other factors designated by the Committee, and awards valued by reference to the book value of the Common Shares or the value of securities of, or the performance of specified Subsidiaries or affiliates or other business units of the Company. The Committee will determine the terms and conditions of such awards. Common Shares delivered pursuant to an award in the nature of a purchase right granted under this Section 9 will be purchased for such consideration, paid for at such time, by such methods, and in such forms, including, without limitation, Common Shares, other awards, notes or other property, as the Committee determines.
(b)Cash awards, as an element of or supplement to any other award granted under this Plan, may also be granted pursuant to this Section 9.
(c)The Committee may grant Common Shares as a bonus, or may grant other awards in lieu of obligations of the Company or a Subsidiary to pay cash or deliver other property under this Plan or under other plans or compensatory arrangements (including Common Shares granted to a Director upon such Director’s election to receive Common Shares in lieu of cash or other consideration), subject to such terms as will be determined by the Committee in a manner that complies with Section 409A of the Code.
(d)If the earning or vesting of, or elimination of restrictions applicable to, an award granted under this Section 9 is based only on the passage of time rather than the achievement of Management Objectives, the period of time shall be no shorter than one year. If the earning or vesting of, or elimination of restrictions applicable to, awards granted under this Section 9 is based on the achievement of Management Objectives, the performance period must be at least one year. Subject to Section 3(e) of this Plan, but notwithstanding any other provision of this Plan to the contrary, the Committee may grant Common Shares under this Section 9 to a Director upon such Director’s election to receive Common Shares in lieu of cash or other consideration that are not subject to the one-year minimum vesting or performance period requirements described in the preceding two sentences.
(e)Notwithstanding anything to the contrary contained in this Plan (including minimum vesting requirements), any grant of an award under this Section 9 may provide for the earning or vesting of, or earlier elimination of restrictions applicable to, such award, including in the event of the retirement, death or disability of a Participant; provided, however, that no such adjustment will be made in the case of a Qualified Performance-Based Award except as otherwise provided in an Evidence of Award to the extent so providing would not result in the loss of an otherwise available exemption of the award under Section 162(m) of the Code. In such event, the Evidence of Award will specify the time and terms of delivery.
10.Administration of this Plan.
(a)This Plan will be administered by the Committee. The Committee may from time to time delegate all or any part of its authority under this Plan to a subcommittee thereof. To the extent of any such delegation, references in this Plan to the Committee will be deemed to be references to such subcommittee.
(b)The interpretation and construction by the Committee of any provision of this Plan or of any Evidence of Award (or related documents) and any determination by the Committee pursuant to any provision of this Plan or of any such agreement, notification or document will be final and conclusive. No member of the Committee shall be liable for any such action or determination made in good faith. In addition, the Committee is authorized to take any action it determines in its sole discretion to be appropriate subject only to the express limitations contained in this Plan, and no authorization in any Plan Section or other provision of this Plan is intended or may be deemed to constitute a limitation on the authority of the Committee.
(c)To the extent permitted by law, the Committee may delegate to one or more of its members or to one or more officers of the Company, or to one or more agents or advisors, such administrative duties or powers as it may deem advisable, and the Committee, the subcommittee, or any person to whom duties or powers have been delegated as aforesaid, may employ one or more persons to render advice with respect to any responsibility the Committee, the subcommittee or such person may have under the Plan. The Committee may, by resolution, authorize one or more officers of the Company to do one or both of the following on the same basis as the Committee: (i) designate employees to be recipients of awards under this Plan; and (ii) determine the size of any such awards; provided, however, that (A) the Committee will not delegate such responsibilities to any such officer for awards granted to an employee who is an officer, Director, or more than 10% Beneficial Owner (as defined in Section 12 below) of any class of the Company’s equity securities that is registered pursuant to Section 12 of the Exchange Act, as determined by the Committee in accordance with Section 16 of the Exchange Act, or any Covered Employee; (B) the resolution providing for such authorization sets forth the total number of Common Shares such officer(s) may grant; and (C) the officer(s) will report periodically to the Committee regarding the nature and scope of the awards granted pursuant to the authority delegated.
11.Adjustments. The Committee shall make or provide for such adjustments in the numbers of Common Shares covered by outstanding Option Rights, Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares and Performance Units granted hereunder and, if applicable, in the number of Common Shares covered by other awards granted pursuant to Section 9 hereof, in the Option Price and Base Price provided in outstanding Option Rights and Appreciation Rights, respectively, in the kind of shares covered thereby, in Cash Incentive Awards, and in other award terms, as the Committee, in its sole discretion, exercised in good faith, shall determine is equitably required to prevent dilution or enlargement of the rights of Participants or Optionees that otherwise would result from (a) any stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of the Company, (b) any merger, consolidation, spin-off, split-off, spin-out, split-up, reorganization, partial or complete liquidation or other distribution of assets, issuance of rights or warrants to purchase securities, or (c) any other corporate transaction or event having an effect similar to any of the foregoing. Moreover, in the event of any such transaction or event or in the event of a Change in Control, the Committee shall provide in substitution for any or all outstanding awards under this Plan such alternative consideration (including cash), if any, as it, in good faith, shall determine to be equitable in the circumstances and shallrequire in connection therewith the surrender of all awards so replaced in a manner that complies with Section 409A of the Code. In addition, for each Option Right or Appreciation Right with an Option Price or Base Price, respectively, greater than the consideration offered in connection with any such transaction or event or Change in Control, the Committee may in its discretion elect to cancel such Option Right or Appreciation Right without any payment to the person holding such Option Right or Appreciation Right. The Committee shall also make or provide for such adjustments in the numbers of shares specified in Section 3 of this Plan as the Committee in its sole discretion, exercised in good faith, shall determine is appropriate to reflect any transaction or event described in this Section 11; provided, however, that any such adjustment to the number specified in Section 3(c) will be made only if and to the extent that such adjustment would not cause any Option Right intended to qualify as an Incentive Stock Option to fail to so qualify.
12.Change in Control.
(a) Except as otherwise provided for in an Evidence of Award, upon a Change in Control, all then outstanding awards granted under this Plan shall vest or be earned upon the Change in Control if either (i) within a specified period, the Participant’s service is involuntarily terminated for reasons other than for cause or the Participant terminates his or her employment or service for good reason or (ii) such awards are not assumed or converted into replacement awards in a manner described in the Evidence of Award. Unless otherwise provided in an Evidence of Award, awards granted under this Plan that vest or are earned subject to the achievement of Management Objectives that become vested in accordance with this Section 12 will vest or be earned based on the actual achievement of the applicable Management Objectives as if the applicable performance period ended on the trading day immediately preceding the date of the Change in Control, pro-rated for the number of days that have lapsed during the period of time beginning on the first day of the performance period and continuing through the date of the Change in Control.
(b)For purposes of this Plan, except as may be otherwise prescribed by the Committee in an Evidence of Award made under this Plan, a “Change in Control” will be deemed to have occurred upon the occurrence (after the Effective Date) of any of the following events:
(i)The acquisition by any Person (as defined in this Section 12(b) below) of Beneficial Ownership (as defined in this Section 12(b) below) of 35% or more of the combined voting power of the then-outstanding Voting Stock (as defined in this Section 12(b) below) of the Company; provided, however, that:
A.for purposes of this Section 12(b), the following acquisitions shall not constitute a Change in Control: (1) any acquisition of Voting Stock of the Company directly from the Company that is approved by a majority of the Incumbent Directors (as defined in this Section 12(b) below); (2) any acquisition of Voting Stock of the Company by the Company or any Subsidiary; (3) any acquisition of Voting Stock of the Company by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary; and (4) any acquisition of Voting Stock of the Company by any Person pursuant to a Business Combination (as defined this Section 12(b) below) that complies with clauses (A), (B) and (C) of Section 12(b)(iii) below;
B.if any Person acquires Beneficial Ownership of 35%or more of combined voting power of the then-outstanding Voting Stock of the Company as a result of a transaction described in clause (1) of Section 12(b)(i)(A) and such Person thereafter becomes the Beneficial Owner of any additional shares of Voting Stock of the Company representing 1% or more of the then-outstanding Voting Stock of the Company, other than in an acquisition directly from the Company in a transaction that is approved by a majority of the Incumbent Directors or other than as a result of a stock dividend, stock split or similar transaction effected by the Company in which all holders of Voting Stock are treated equally, such subsequent acquisition shall be deemed to constitute a Change in Control;
C.a Change in Control will not be deemed to have occurred if a Person acquires Beneficial Ownership of 35% or more of the Voting Stock of the Company as a result of a reduction in the number of shares of Voting Stock of the Company outstanding unless and until such Person thereafter becomes the Beneficial Owner of any additional shares of Voting Stock of the Company representing 1% or more of the then-outstanding Voting Stock of the Company, other than in an acquisition directly from the Company in a transaction that is approved by a majority of the Incumbent Directors or other than as a result of a stock dividend, stock split or similar transaction effected by the Company in which all holders of Voting Stock are treated equally; and
D.if at least a majority of the Incumbent Directors determine in good faith that a Person has acquired Beneficial Ownership of 35% or more of the Voting Stock of the Company inadvertently, and such Person divests as promptly as practicable a sufficient number of shares so that such Person Beneficially Owns less than 35% of the Voting Stock of the Company, then no Change in Control shall have occurred as a result of such Person’s acquisition;
| | (ii) | a majority of the Directors are not Incumbent Directors; |
(iii)the consummation of a Business Combination (as defined in this Section 12(b) below), unless, in each case, immediately following such Business Combination, (A) all or substantially all of the individuals and entities who were the Beneficial Owners of Voting Stock of the Company immediately prior to such Business Combination Beneficially Own, directly or indirectly, more than 60% of the combined voting power of the then outstanding shares of Voting Stock of the entity resulting from such Business Combination (including without limitation an entity which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries), (B) no Person (other than the Company, such entity resulting from such Business Combination, any employee benefit plan (or related trust) sponsored or maintained by the Company, any Subsidiary or such entity resulting from such Business Combination or any Person that immediately prior to such Business Combination owns, directly or indirectly, 35% or more of the Voting Stock of the Company so long as such Person does not at such time own, directly or indirectly, more than 1% of the securities of the other corporation or other entity involved in such Business Combination to be converted into or exchanged for shares of Voting Stock of the entity resulting from such Business Combination pursuant to such Business Combination) Beneficially Owns, directly or indirectly, 35% or more of the combined Voting Power of the then outstanding shares of Voting Stock of the entity resulting from such Business Combination, and (C) at least a majority of the members of the board of directors of the entity resulting from such Business Combination were Incumbent Directors at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination; or
(iv)approval by the Shareholders of the Company of a complete liquidation or dissolution of the Company, except pursuant to a Business Combination that complies with clauses (A), (B) and (C) of Section 12(b)(iii).
For purposes of this Section 12(b), (1) “Beneficial Owner,” “Beneficial Ownership,” “Beneficially Own” and “Beneficially Owns” shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act; (2) “Business Combination” means a reorganization, merger or consolidation, or sale or other disposition of all or substantially all of the assets of the Company or the acquisition of assets of another corporation or entity, or other transaction; (3) “Incumbent Directors” means the individuals who, as of the Effective Date, are Directors and any individual becoming a Director subsequent to the Effective Date whose election, nomination for election by the Shareholders, or appointment was approved by a vote of at least two-thirds of the then Incumbent Directors (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director without
objection to such nomination); provided, however, that an individual shall not be an Incumbent Director if such individual’s election or appointment to the Board occurs as a result of an actual or threatened election contest (as described in Rule 14a-12(c) of the Exchange Act) with respect to the election or removal of Directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; (4) “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) of the Exchange Act; and (5) “Voting Stock” means securities entitled to vote generally in the election of Directors (or similar governing bodies).
13.Detrimental Activity and Recapture Provisions. Any Evidence of Award may provide for the cancellation or forfeiture of an award or the forfeiture and repayment to the Company of any gain related to an award, or other provisions intended to have a similar effect, upon such terms and conditions as may be determined by the Committee from time to time, if a Participant, either (a) during employment or other service with the Company or a Subsidiary, or (b) within a specified period after termination of such employment or service, shall engage in any detrimental activity. In addition, notwithstanding anything in this Plan to the contrary, any Evidence of Award may also provide for the cancellation or forfeiture of an award or the forfeiture and repayment to the Company of any gain related to an award, or other provisions intended to have a similar effect, upon such terms and conditions as may be required by the Committee or under Section 10D of the Exchange Act and any applicable rules or regulations promulgated by the Securities and Exchange Commission or any national securities exchange or national securities association on which the Common Shares may be traded.
14.Non U.S. Participants. In order to facilitate the making of any grant or combination of grants under this Plan, the Committee may provide for such special terms for awards to Participants who are foreign nationals or who are employed by the Company or any Subsidiary outside of the United States of America or who provide services to the Company or any Subsidiary under an agreement with a foreign nation or agency, as the Committee may consider necessary or appropriate to accommodate differences in local law, tax policy or custom. Moreover, the Committee may approve such supplements to or amendments, restatements or alternative versions of this Plan (including, without limitation, sub-plans) as it may consider necessary or appropriate for such purposes, without thereby affecting the terms of this Plan as in effect for any other purpose, and the secretary or other appropriate officer of the Company may certify any such document as having been approved and adopted in the same manner as this Plan. No such special terms, supplements, amendments or restatements, however, will include any provisions that are inconsistent with the terms of this Plan as then in effect unless this Plan could have been amended to eliminate such inconsistency without further approval by the Shareholders. Any such special terms, supplements, sub plans, or alternative versions of this Plan approved by the Committee may be attached as exhibits to this Plan.
15.Transferability.
(a)Except as otherwise determined by the Committee, no Option Right, Appreciation Right, Restricted Stock, Restricted Stock Unit, Performance Share, Performance Unit, Cash Incentive Award, award contemplated by Section 9 of this Plan or dividend equivalents paid with respect to awards made under this Plan will be transferable by the Participant except (i) if it is made by the Participant for no consideration to Immediate Family Members or to a bona fide trust, partnership or other entity controlled by and for the benefit of one or more Immediate Family Members (“Immediate Family Members” mean the Participant’s spouse, children, stepchildren, parents, stepparents, siblings (including half brothers and sisters), in-laws, and other individuals who have a relationship to the Participant arising because of legal adoption; however, no transfer may be made to the extent that transferability would cause Form S-8 or any successor form thereto not to be able to register Common Shares related to an award) or (ii) by will or the laws of descent and distribution. In no event will any such award granted under the Plan be transferred for value. Except as otherwise determined by the Committee, Option Rights and Appreciation Rights will be exercisable during the Participant’s lifetime only by him or her or, in the event of the Participant’s legal incapacity to do so, by his or her guardian or legal representative acting on behalf of the Participant in a fiduciary capacity under state law or court supervision.
(b)The Committee may specify at the Date of Grant that part or all of the Common Shares that are (i) to be issued or transferred by the Company upon the exercise of Option Rights or Appreciation Rights, upon the termination of the Restriction Period applicable to Restricted Stock Units or upon payment under any grant of Performance Shares or Performance Units or (ii) no longer subject to the substantial risk of forfeiture and restrictions on transfer referred to in Section 6 of this Plan, will be subject to further restrictions on transfer.
16.Withholding Taxes. To the extent that the Company is required to withhold federal, state, local or foreign taxes in connection with any payment made or benefit realized by a Participant or other person under this Plan, and the amounts available to the Company for such withholding are insufficient, it will be a condition to the receipt of such payment or the realization of such benefit that the Participant or such other person make arrangements satisfactory to the Company for payment of the balance of such taxes required to be withheld, which arrangements (in the discretion of the Committee) may
include relinquishment of a portion of such benefit. If a Participant’s benefit is to be received in the form of Common Shares, and such Participant fails to make arrangements for the payment of tax, then, unless otherwise determined by the Committee, the Company will withhold Common Shares having a value equal to the amount required to be withheld. Notwithstanding the foregoing, when a Participant is required to pay the Company an amount required to be withheld under applicable income and employment tax laws, the Participant may elect, unless otherwise determined by the Committee, to satisfy the obligation, in whole or in part, by having withheld, from the shares required to be delivered to the Participant, Common Shares having a value equal to the amount required to be withheld or by delivering to the Company other Common Shares held by such Participant. The shares used for tax withholding will be valued at an amount equal to the market value of such Common Shares on the date the benefit is to be included in Participant’s income. In no event will the market value of the Common Shares to be withheld and delivered pursuant to this Section to satisfy applicable withholding taxes in connection with the benefit exceed the minimum amount of taxes required to be withheld; provided, that, in the discretion of the Committee, Common Shares with a market value in excess of the minimum amount of taxes required to be withheld (but not in excess of the maximum statutory withholding rate) may be withheld as long as such withholding will not result in an award otherwise classified as an equity award under Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC Topic 718”) to be classified as a liability award under ASC Topic 718. Participants will also make such arrangements as the Company may require for the payment of any withholding tax obligation that may arise in connection with the disposition of Common Shares acquired upon the exercise of Option Rights.
17.Compliance with Section 409A of the Code.
(a)To the extent applicable, it is intended that this Plan and any grants made hereunder comply with the provisions of Section 409A of the Code, so that the income inclusion provisions of Section 409A(a)(1) of the Code do not apply to the Participants. This Plan and any grants made hereunder will be administered in a manner consistent with this intent. Any reference in this Plan to Section 409A of the Code will also include any regulations or any other formal guidance promulgated with respect to such Section by the U.S. Department of the Treasury or the Internal Revenue Service.
(b)Neither a Participant nor any of a Participant’s creditors or beneficiaries will have the right to subject any deferred compensation (within the meaning of Section 409A of the Code) payable under this Plan and grants hereunder to any anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment. Except as permitted under Section 409A of the Code, any deferred compensation (within the meaning of Section 409A of the Code) payable to a Participant or for a Participant’s benefit under this Plan and grants hereunder may not be reduced by, or offset against, any amount owing by a Participant to the Company or any of its Subsidiaries.
(c)If, at the time of a Participant’s separation from service (within the meaning of Section 409A of the Code), (i) the Participant will be a specified employee (within the meaning of Section 409A of the Code and using the identification methodology selected by the Company from time to time) and (ii) the Company makes a good faith determination that an amount payable hereunder constitutes deferred compensation (within the meaning of Section 409A of the Code) the payment of which is required to be delayed pursuant to the six-month delay rule set forth in Section 409A of the Code in order to avoid taxes or penalties under Section 409A of the Code, then the Company will not pay such amount on the otherwise scheduled payment date but will instead pay it, without interest, on the fifth business day of the seventh month after such separation from service.
(d)Notwithstanding any provision of this Plan and grants hereunder to the contrary, in light of the uncertainty with respect to the proper application of Section 409A of the Code, the Company reserves the right to make amendments to this Plan and grants hereunder as the Company deems necessary or desirable to avoid the imposition of taxes or penalties under Section 409A of the Code. In any case, a Participant will be solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on a Participant or for a Participant’s account in connection with this Plan and grants hereunder (including any taxes and penalties under Section 409A of the Code), and neither the Company nor any of its affiliates will have any obligation to indemnify or otherwise hold a Participant harmless from any or all of such taxes or penalties.
18.Amendments.
(a)The Board may at any time and from time to time amend this Plan in whole or in part; provided, however, that if an amendment to this Plan (i) would materially increase the benefits accruing to Participants under this Plan, (ii) would materially increase the number of securities which may be issued under this Plan, (iii) would materially modify the requirements for participation in this Plan,or (iv) must otherwise be approved by the Shareholders in order to comply with applicable law or the rules of the NASDAQ Stock Market or, if the Common Shares are not traded on the NASDAQ Stock
Market, the principal national securities exchange upon which the Common Shares are traded or quoted, then, such amendment will be subject to Shareholder approval and will not be effective unless and until such approval has been obtained.
(b)Except in connection with a corporate transaction or event described in Section 11 of this Plan, the terms of outstanding awards may not be amended to reduce the Option Price of outstanding Option Rights or the Base Price of outstanding Appreciation Rights, or cancel outstanding Option Rights or Appreciation Rights in exchange for cash, other awards or Option Rights or Appreciation Rights with an Option Price or Base Price, as applicable, that is less than the Option Price of the original Option Rights or Base Price of the original Appreciation Rights, as applicable, without Shareholder approval. This Section 18(b) is intended to prohibit the repricing of “underwater” Option Rights and Appreciation Rights and will not be construed to prohibit the adjustments provided for in Section 11 of this Plan. Notwithstanding any provision of this Plan to the contrary, this Section 18(b) may not be amended without approval by the Shareholders.
(c)If permitted by Section 409A of the Code and Section 162(m) of the Code, but subject to the paragraph that follows, notwithstanding the Plan’s minimum vesting requirements, and including in the case of termination of employment by reason of death, disability or retirement, or in the case of unforeseeable emergency or other special circumstances, to the extent a Participant holds an Option Right or Appreciation Right not immediately exercisable in full, or any Restricted Stock as to which the substantial risk of forfeiture or the prohibition or restriction on transfer has not lapsed, or any Restricted Stock Units as to which the Restriction Period has not been completed, or any Cash Incentive Awards, Performance Shares or Performance Units which have not been fully earned, or any other awards made pursuant to Section 9 subject to any vesting schedule or transfer restriction, or who holds Common Shares subject to any transfer restriction imposed pursuant to Section 15(b) of this Plan, the Committee may, in its sole discretion, accelerate the time at which such Option Right, Appreciation Right or other award may be exercised or the time at which such substantial risk of forfeiture or prohibition or restriction on transfer will lapse or the time when such Restriction Period will end or the time at which such Cash Incentive Awards, Performance Shares or Performance Units will be deemed to have been fully earned or the time when such transfer restriction will terminate or may waive any other limitation or requirement under any such award, except in the case of a Qualified Performance-Based Award where such action would result in the loss of the otherwise available exemption of the award under Section 162(m) of the Code.
(d)Subject to Section 18(b) hereof, the Committee may amend the terms of any award theretofore granted under this Plan prospectively or retroactively, except in the case of a Qualified Performance-Based Award except as otherwise provided in an Evidence of Award to the extent so providing would not result in the loss of an otherwise available exemption of the award under Section 162(m) of the Code. In such case, the Committee will not make any modification of the Management Objectives or the level or levels of achievement with respect to such Qualified Performance-Based Award. Subject to Section 11 above, no such amendment will impair the rights of any Participant without his or her consent. The Board may, in its discretion, terminate this Plan at any time. Termination of this Plan will not affect the rights of Participants or their successors under any awards outstanding hereunder and not exercised in full on the date of termination.
19.Governing Law. This Plan and all grants and awards and actions taken hereunder will be governed by and construed in accordance with the internal substantive laws of the State of Delaware.
20.Effective Date/Termination. This Plan will be effective as of the Effective Date. No grants will be made on or after the Effective Date under the Predecessor Plan, except that outstanding awards granted under the Predecessor Plan will continue unaffected following the Effective Date. No grant will be made under this Plan after the tenth anniversary of the Effective Date,but all grants made on or prior to such date will continue in effect thereafter subject to the terms thereof and of this Plan.
21.Miscellaneous Provisions.
(a)The Company will not be required to issue any fractional Common Shares pursuant to this Plan. The Committee may provide for the elimination of fractions or for the settlement of fractions in cash.
(b)This Plan will not confer upon any Participant any right with respect to continuance of employment or other service with the Company or any Subsidiary, nor will it interfere in any way with any right the Company or any Subsidiary would otherwise have to terminate such Participant’s employment or other service at any time.
(c)Except with respect to Section 21(e), to the extent that any provision of this Plan would prevent any Option Right that was intended to qualify as an Incentive Stock Option from qualifying as such, that provision will be null and void with respect to such Option Right. Such provision, however, will remain in effect for other Option Rights and there will be no further effect on any provision of this Plan.
(d)No award under this Plan may be exercised by the holder thereof if such exercise, and the receipt of cash or stock thereunder, would be, in the opinion of counsel selected by the Company, contrary to law or the regulations of any duly constituted authority having jurisdiction over this Plan.
(e)Absence on leave approved by a duly constituted officer of the Company or any of its Subsidiaries will not be considered interruption or termination of service of any employee for any purposes of this Plan or awards granted hereunder.
(f)No Participant will have any rights as a shareholder with respect to any shares subject to awards granted to him or her under this Plan prior to the date as of which he or she is actually recorded as the holder of such shares upon the stock records of the Company.
(g)The Committee may condition the grant of any award or combination of awards authorized under this Plan on the surrender or deferral by the Participant of his or her right to receive a cash bonus or other compensation otherwise payable by the Company or a Subsidiary to the Participant.
(h)Except with respect to Option Rights and Appreciation Rights, the Committee may permit Participants to elect to defer the issuance of Common Shares under the Plan pursuant to such rules, procedures or programs as it may establish for purposes of this Plan and which are intended to comply with the requirements of Section 409A of the Code. The Committee also may provide that deferred issuances and settlements include the payment or crediting of dividend equivalents or interest on the deferral amounts.
(i)If any provision of this Plan is or becomes invalid, illegal or unenforceable in any jurisdiction, or would disqualify this Plan or any award under any law deemed applicable by the Committee, such provision will be construed or deemed amended or limited in scope to conform to applicable laws or, in the discretion of the Committee, it will be stricken and the remainder of this Plan will remain in full force and effect.
22.Stock-Based Awards in Substitution for Option Rightsor Awards Granted by Other Company. Notwithstanding anything in this Plan to the contrary:
(a)Awards may be granted under this Plan in substitution for or in conversion of, or in connection with an assumption of, stock options, stock appreciation rights, restricted stock, restricted stock units or other stock or stock-based awards held by awardees of an entity engaging in a corporate acquisition or merger transaction with the Company or any Subsidiary. Any conversion, substitution or assumption will be effective as of the close of the merger or acquisition, and, to the extent applicable, will be conducted in a manner that complies with Section 409A of the Code. The awards so granted may reflect the original terms of the awards being assumed or substituted or converted for and need not comply with other specific terms of this Plan, and may account for Common Shares substituted for the securities covered by the original awards and the number of shares subject to the original awards, as well as any exercise or purchase prices applicable to the original awards, adjusted to account for differences in stock prices in connection with the transaction.
(b)In the event that a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary merges has shares available under a pre-existing plan previously approved by stockholders and not adopted in contemplation of such acquisition or merger, the shares available for grant pursuant to the terms of such plan (as adjusted, to the extent appropriate, to reflect such acquisition or merger) may be used for awards made after such acquisition or merger under the Plan; provided, however, that awards using such available shares may not be made after the date awards or grants could have been made under the terms of the pre-existing plan absent the acquisition or merger, and may only be made to individuals who were not employees or directors of the Company or any Subsidiary prior to such acquisition or merger.
(c)Any Common Shares that are issued or transferred by, or that are subject to any awards that are granted by, or become obligations of, the Company under Sections 22(a) or 22(b) above will not reduce the Common Shares available for issuance or transfer under the Plan or otherwise count against the limits contained in Section 3 of the Plan. In addition, no Common Shares that are issued or transferred by, or that are subject to any awards that are granted by, or become obligations of, the Company under Sections 22(a) or 22(b) above will be added to the aggregate limit contained in Section 3(a)(i) of the Plan.
EXHIBIT A RULES OF THE KAISER ALUMINUM CORPORATION 2016 EQUITY AND INCENTIVE COMPENSION PLAN FOR THE GRANT OF RESTRICTED STOCK UNITS TO EMPLOYEES IN FRANCE Dated _________, 2016
The Board of Directors (the “Board”) of Kaiser Aluminum Corporation (the “Company”) has established the Kaiser Aluminum Corporation 2016 Equity and Incentive Compension Plan (the “U.S. Plan”), for the benefit of certain employees of the Company, its parent and subsidiary companies, including its French subsidiaries for which it holds directly or indirectly at least 10% of the share capital (the “French Entities”). Section 14 of the U.S. Plan specifically authorizes the committee of Directors who administers the U.S. Plan (the “Administrator”) to adopt, amend, suspend, and revoke rules applicable to stock awards granted under the U.S. Plan (including those in France) as it deems necessary or advisable to administer the U.S. Plan for the purposes of satisfying applicable non-U.S. laws. The Administrator has determined that it is necessary and advisable to establish a sub-plan for the purpose of permitting restricted stock units to qualify for favorable tax and social security treatment in France. The Administrator, therefore, intends to establish a sub-plan of the U.S. Plan for the purpose of granting restricted stock units which qualify for the favorable tax and social security treatment in France applicable to shares granted for no consideration under Sections L. 225-197-1 to L. 225-197-6 of the French Commercial Code, as amended, to qualifying employees who are resident in France for French tax purposes and/or subject to the French social security regime (the “French Participants”). The terms of the U.S. Plan, as set out in this Exhibit A, shall, subject to the limitations in the following rules, constitute the Rules of the Kaiser Aluminum Corporation 2016 Equity and Incentive Compension Plan for the Grant of Restricted Stock Units to employees in France (the “French Restricted Stock Unit Plan”). Under the French Restricted Stock Unit Plan, the qualifying employees will be granted only restricted stock units as defined in Section 3 hereunder. The provisions of Sections 4, 5, 6, 8 and 9 of the U.S. Plan permitting the grant of options, incentive stock options, stock appreciation rights, restricted stock, cash incentive awards, performance shares and other awards are not applicable to grants made under this French Restricted Stock Unit Plan. The grant of restricted stock units is authorized under the Section 7 of the U.S. Plan. Capitalized terms not otherwise defined herein used in the French Restricted Stock Unit Plan shall have the same meanings as set forth in the U.S. Plan. The terms set out below will have the following meanings: | | (a) | Restricted Stock Units. |
The term “Restricted Stock Units” shall mean a promise by the Company to a future issuance at the Vesting Date provided the individual remains employed as of the Vesting Date, of one Common Share for each unit granted to the French Participant, and subject to specific terms and conditions. Notwithstanding any provisions of the U.S. Plan, Restricted Stock Units granted under the French Restricted Stock Unit Plan will not give rise to dividend equivalent payments prior to the Vesting Date nor shall a French Participant be entitled to receive on vesting an amount in cash in lieu of Common Shares.
The term “Grant Date” shall be the date on which the Administrator both (1) designates the French Participants and (2) specifies the terms and conditions of the Restricted Stock Units, including the number of Common Shares to be issued at a future date, the conditions for the vesting of the Restricted Stock Units, and the conditions of the transferability of the Common Shares once issued.
The term “Vesting Date” shall mean the date on which the Restricted Stock Units become vested, as specified by the Administrator. In principle, the Common Shares underlying the Restricted Stock Units are issued upon vesting. To qualify for the French favorable tax and social security regime, such Vesting Date shall not occur prior to the first anniversary of the Grant
Date, as required under Section L. 225-197-1 of the French Commercial Code, as amended, or in the French Tax Code or in the French Social Security Code, as amended.
The term “Closed Period” means: (i) Ten stock exchange trading days preceding and following the disclosure to the public of the consolidated financial statements or the annual statements of the Company; or
(ii) Any period during which the corporate management of the Company possess confidential information which could, if disclosed to the public, significantly impact the quotation price of the Common Shares, until the end of ten trading days following the date upon which the price information is made public. If the French Commercial Code is amended after adoption of this French Restricted Stock Units Plan to modify the definition and/or applicability of the Closed Periods to French-qualified Restricted Stock Units, such amendments shall become applicable to any French-qualified Restricted Stock Units granted under this French Restricted Stock Units Plan, to the extent required by French law.
The term “Disability” means disability as determined in categories 2 and 3 under Section L. 341-4 of the French Social Security Code as amended. (a)Filing requirements
The French Participants and their employer shall comply with the filing requirements provided for by French tax law. | | 3. | Entitlement to Participate. |
(a)Subject to Sections 3 (b), (c) and (d) below, any French Participant who, on the Grant Date of the Restricted Stock Units and to the extent required under French law, is either employed under the terms and conditions of an employment contract with the Company or a French Entity (“contrat de travail”) or who is a corporate officer of the Company (or of the French entity if the Company is listed on a regulated market), shall be eligible to receive Restricted Stock Units under the French Restricted Stock Unit Plan, provided that he or she also satisfies the eligibility conditions of Section 2(w) of the U.S. Plan.
Stock Units may not be issued to corporate officers of the French Entities, other than the managing directors (e.g., Président du Conseil d’Administration, Directeur Général, Directeur Général Délégué, Membre du Directoire, Gérant de Sociétés par actions), unless the corporate officer is an employee of a French Entity as defined by French law and is otherwise eligible to receive awards under Section 2(w) of the U.S. Plan.
(b)Notwithstanding any provisions in the U.S. Plan to the contrary, Restricted Stock Units may not be issued under the French Restricted Stock Unit Plan to employees or corporate officers owning more than ten percent (10%) of the Company’s share capital.
(c)Notwithstanding any provisions in the U.S. Plan to the contrary, a grant of Restricted Stock Units may not result in a Company’s employee or officer holding more than ten percent (10%) of the Company’s Common Shares.
(d)Notwithstanding any provisions in the U.S. Plan to the contrary, the number of Common Shares granted pursuant to Restricted Stock Units may not exceed 10% of the Company’s share capital at any time.
(e)Notwithstanding any provisions in the U.S. Plan to the contrary, Restricted Stock Units may not be granted to corporate officers under the French Restricted Stock Unit Plan, unless employee share plans or profit sharing plans are implemented to the benefit of all employees of the French branch of the Company, if any, and at least 90% of the employees of the French Entities, in the conditions described under Section L. 225-197-6 of the French Commercial Code.
| | 4. | SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCEConditions of the Restricted Stock Units.
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| | (a) | Grant of Restricted Stock Units. |
To the extent the French requirement is applicable to the Company, the Restricted Stock Units may be granted for 38 months following the approval of the U.S. Plan by the shareholders of the Company (or any other period stated in the U.S. Plan pursuant to the U.S. law). To the extent the provision does not apply to the Company, the U.S. Plan provision shall apply. | | (b) | Vesting of Restricted Stock Units. |
Restricted Stock Units will not vest prior to the relevant anniversary of the Grant Date specified by the Administrator and in any case will not vest prior to the first anniversary of the Grant Date as defined under Section 2 above. However, notwithstanding the above, in the event of the death or Disability of a French Participant, all of his or her outstanding Restricted Stock Units shall vest and Common Shares shall be issued as set forth in Sections 7 and/or 8 of this French Restricted Stock Unit Plan. | | (c) | Holding of Common Shares. |
The French Participants must hold the Common Shares issued pursuant to the Restricted Stock Units until the relevant anniversary of the Vesting Date specified by the Administrator, if any, and in any case until the second anniversary of the Grant Date, or such other period as is required to comply with the minimum mandatory holding period applicable to shares underlying French-qualified restricted stock units under Section L. 225-197-1 of the French Commercial Code, as amended or under the French Tax Code or French Social Security Code as amended. This holding period will continue to apply even after the French Participant is no longer an employee or corporate officer of a French Entity. In addition, notwithstanding any provisions in the U.S. Plan to the contrary, Common Shares delivered upon the Vesting Date shall not be sold during certain Closed Periods as provided for by Section L. 225-197-1 of the French Commercial Code, so long as those Closed Periods are applicable to shares underlying French-qualified restricted stock units. | | (d) | French Participant’s Account. |
The Common Shares issued to a French Participant shall be recorded in an account in the name of the French Participant with the Company or a broker or in such other manner as the Company may otherwise determine to ensure compliance with applicable restrictions provided by law.
French Participants shall not be granted any cash dividends with respect to a Restricted Stock Unit, applicable to the period commencing on the Grant Date and terminating on the Vesting Date. | | 5. | Non-transferability of Restricted Stock Units. |
Notwithstanding any provision in the U.S. Plan to the contrary, the Restricted Stock Unit is not transferable, except by will or by the laws of descent and distribution, and the granting of Common Shares may be claimed during the life of the French Participant by the French Participant. | | 6. | Adjustments and Change of Control. |
In the event of adjustment or a Change of Control, adjustment to the terms and conditions of the Restricted Stock Units or underlying Common Shares may be made in accordance with the U.S. Plan. To the extent that such adjustments would violate applicable French rules, it may result in the disqualification of the Restricted Stock Units for purposes of the French favorable tax and social security regime. In this case, the Administrator may decide at its discretion to lift the restriction on sale of the underlying Common Shares.
Notwithstanding the provisions set forth in Section 5 above, in the event of the death of a French Participant, the Restricted Stock Units held by the French Participants at the time of death are transferable to the French Participant’s heirs. The Company shall issue the underlying Common Shares to the French Participant’s heirs, at their request, if such request occurs
within six months following the death of the French Participant, as provided for in the Restricted Stock Unit Agreement. If the French Participant’s heirs do not request the issuance of the Common Shares underlying the Restricted Stock Units within six months following the French Participant’s death, the Restricted Stock Units will be forfeited. The French Participant’s heirs may freely sell the Common Shares notwithstanding the restriction on the sale of Common Shares set forth in Section 4(c) above to the extent and as long as applicable under French law.
In the event of the Disability of a French Participant, the Company shall issue the underlying Common Shares to the French Participant at his/her request as provided for in the Restricted Stock Unit Agreement. The French Participant may freely sell the Common Shares notwithstanding the restriction on the sale of Common Shares set forth in Section 4(c) above. | | 9. | Disqualification of French-qualified Restricted Stock Units. |
If the Restricted Stock Units are otherwise modified or adjusted in a manner in keeping with the terms of the U.S. Plan or as mandated as a matter of law and the modification or adjustment is contrary to the terms and conditions of this French Restricted Stock Unit Plan, the Restricted Stock Units may no longer qualify as French-qualified Restricted Stock Units. If the Restricted Stock Units no longer qualify as French-qualified Restricted Stock Units, the Administrator may, provided it is authorized to do so under the U.S. Plan, determine to lift, shorten or terminate certain restrictions applicable to the vesting of the Restricted Stock Units or the sale of the Common Shares which may have been imposed under this French Restricted Stock Unit Plan or in the Restricted Stock Unit Agreement delivered to the French Participant.
It is intended that Restricted Stock Units granted under the French Restricted Stock Unit Plan shall qualify for the favorable tax and social security treatment applicable to Restricted Stock Units granted under Sections L. 225-197-1 to L. 225-197-6 of the French Commercial Code as amended, or under the French Tax Code and the French Social Security Code as amended. The terms of the French Restricted Stock Unit Plan shall be interpreted accordingly and in accordance with the relevant provisions set forth by French tax and social security laws, as well as the French tax and social security administrations and the relevant guidelines released by the French tax and social insurance authorities and subject to the fulfillment of legal, tax and reporting obligations. In the event of any conflict between the provisions of the French Restricted Stock Unit Plan and the U.S. Plan, the provisions of the French Restricted Stock Unit Plan shall control for any grants made to the French Participants under this French Restricted Stock Unit Plan. Should the Restricted Stock Units not benefit from the French tax and social security favorable regime due to the French Participants’ failure to comply with the provisions of this French Restricted Stock Unit Plan, the French Participant shall be liable for the payment of resulting taxes and social security charges.
The adoption of this French Restricted Stock Unit Plan shall not confer upon the French Participants or any employees of a French Entity, any employment rights and shall not be construed as part of any employment contracts that a French Entity has with its employees.
Subject to the terms of the U.S. Plan, the board reserves the right to amend or terminate this French Stock Unit Plan at any time. Such amendments would only apply to future grants and would not be retroactive.
The French Restricted Stock Unit Plan is adopted and effective as of ______________, 2016.
Appendix B
Certificate of Amendment to Amended and Restated Certificate of Incorporation of Kaiser Aluminum Corporation
The undersigned, John M. Donnan, certifies that he is the Executive Vice President-Legal, Compliance and Human Resources of Kaiser Aluminum Corporation, a corporation organized and existing under the laws of the State of Delaware (the “Company”), and does hereby further certify as follows: 1. The name of the Company is Kaiser Aluminum Corporation. 2. The Company was originally incorporated under the name “KaiserTech Limited.” The Certificate of Incorporation of the Company was originally filed with the Secretary of State of the State of Delaware (the “Delaware Secretary of State”) on February 20, 1987; was restated by the Restated Certificate of Incorporation filed with the Delaware Secretary of State on February 9, 1988; was restated by the Restated Certificate of Incorporation filed with the Delaware Secretary of State on December 16, 1988; was restated by the Restated Certificate of Incorporation filed with the Delaware Secretary of State on September 28, 1989; was amended by the Amendment of the Restated Certificate of Incorporation filed with the Delaware Secretary of State on November 20, 1990; was restated by the Restated Certificate of Incorporation filed with the Delaware Secretary of State on February 22, 1991; was amended by the Certificate of Amendment of the Restated Certificate of Incorporation filed with the Delaware Secretary of State on January 11, 2000; was restated by the Restated Certificate of Incorporation filed with the Delaware Secretary of State on February 22, 2000; was restated by the Amended and Restated Certificate of Incorporation filed with the Delaware Secretary of State on July 6, 2006; was amended by the Certificate of Amendment to the Amended and Restated Certificate of Incorporation filed with the Delaware Secretary of State on July 7, 2008; and was amended by the Certificate of Amendment to the Amended and Restated Certificate of Incorporation filed with the Delaware Secretary of State of June 2, 2015. 3. This Certificate of Amendment to the Amended and Restated Certificate of Incorporation has been duly adopted in accordance with Section 242 of the General Corporation Law of the State of Delaware (the “DGCL”), with the stockholders of the Company having adopted the amendment reflected therein at the Company’s Annual Meeting of Stockholders held on May 26, 2016. 4. Section 4 of Article IV of the Amended and Restated Certificate of Incorporation of the Company is hereby amended by deleting such section in its entirety and by replacing such deleted section with the following: Section 4. Transfer Restrictions.
(a)5% Ownership Limit.
(1)Any attempted Transfer of Company Securities prior to the Restriction Release Date, or any attempted Transfer of Company Securities pursuant to an agreement entered into prior to the Restriction Release Date, will be prohibited and void abinitio if, as a result of such Transfer, either (A) any Person would become a 5% Shareholder or (B) the Percentage Stock Ownership in the Company of any 5% Shareholder would be increased.
(2)(A) Paragraph (a)(1) of this Section 4 of Article IV will not apply to a 5% Transaction if the Board approves the Transfer in accordance with Paragraph (a)(2)(B) or Paragraph (a)(2)(C) of this Section 4 of Article IV.
(B) The restrictions set forth in this Section 4 of Article IV are for the purposes of reducing the risk that any “ownership change” (as defined in the Code) with respect to the Company may limit the Company’s ability to utilize its Tax Benefits. The restrictions set forth in paragraph (a)(1) of this Section 4 of Article IV will not apply to a proposed Transfer that is a 5% Transaction if the transferor or the transferee obtains the approval of the Board in the manner described below. In connection therewith, and to provide for effective operation of these provisions, any Person who desires to effect a Transfer that may be a 5% Transaction (a “Requesting Person”) may, prior to the date of such Transfer for which the Requesting Person seeks approval (the “Proposed Transfer”), request in writing (a “Request”) that the Board review the Proposed Transfer and approve or not approve the Proposed Transfer in accordance with this paragraph (a)(2)(B) of Section 4 of Article IV. Any Request must be delivered by registered mail, return receipt requested, to the Secretary of the Company at
the Company’s principal executive office. Such Request will be deemed to have been made when actually received by the Company. Any Request must include: (i) the name, address and telephone number of the Requesting Person; (ii) the number and percentage of Company Securities then Beneficially Owned by the Requesting Person; and (iii) a reasonably detailed description of the Proposed Transfer by which the Requesting Person would propose to effect a 5% Transaction and the proposed tax treatment thereof. The Board will, in good faith, endeavor to respond to any Request within 30 calendar days of receiving such Request; provided that the failure of the Board to make a determination within such period will be deemed to constitute the denial by the Board of the Request. The Requesting Person must respond promptly to reasonable and appropriate requests for additional information from the Company or the Board and its advisors to assist the Board in making its determination. As a condition to granting any approval under this paragraph (a)(2)(B) of Section 4 of Article IV, the Board may, in its discretion, require (at the expense of the Requesting Person) a report from advisors selected by the Board to the effect that the Proposed Transfer will not result in the application of any limitations on the use by the Company of the Tax Benefits taking into account any and all other Transfers that have been consummated prior to receipt of the Request, any and all other Proposed Transfers that have been approved by the Board prior to receipt of the Request and such other actual or proposed transactions involving Stock as the Board may require; provided that the Board may approve the Proposed Transfer notwithstanding the effect thereof on the Tax Benefits if it determines that the approval is in the best interests of the Company. The Board may impose any conditions that it deems reasonable and appropriate in connection with approval of a Proposed Transfer, including without limitation restrictions on the ability of the transferee to transfer Company Securities acquired by it in the Transfer to which such approval relates. Any Request may be submitted on a confidential basis and, except to the extent required by applicable law, the Company will maintain the confidentiality of such Request and the determination of the Board with respect thereto, unless the information contained in the Request or the determination of the Board with respect thereto otherwise becomes publicly available.
(C) The Board may determine that the restrictions set forth in paragraph (a)(1) of this Section 4 of Article IV will not apply to a Transfer that is a 5% Transaction, whether or not a Request has been made pursuant to paragraph (a)(2)(B) of this Section 4 of Article IV. In connection with such approval of a Transfer, the Board may impose any conditions that it deems reasonable and appropriate, including without limitation restrictions on the ability of the transferee to transfer Company Securities acquired by it in the Transfer to which such approval relates. Any determination of the Board pursuant to this paragraph (a)(2)(C) of Section 4 of Article IV may be made prospectively or retroactively.
(3)Paragraph (a)(1) of this Section 4 of Article IV will not apply to Transfers to a Public Group (including a new Public Group).
(4)Each certificate representing Company Securities issued prior to the Restriction Release Date will contain a legend that refers to the restrictions set forth in this Section 4 of Article IV as follows:
“THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION (AS AMENDED, RESTATED OR AMENDED AND RESTATED AND IN EFFECT FROM TIME TO TIME, THE “CERTIFICATE OF INCORPORATION”) OF KAISER ALUMINUM CORPORATION (THE “CORPORATION”) CONTAINS RESTRICTIONS PROHIBITING TRANSFERS (AS DEFINED IN THE CERTIFICATE OF INCORPORATION) OF COMMON STOCK OF THE CORPORATION (INCLUDING THE CREATION OR GRANT OF CERTAIN OPTIONS, RIGHTS AND WARRANTS) WITHOUT THE PRIOR AUTHORIZATION OF THE BOARD OF DIRECTORS OF THE CORPORATION (THE “BOARD OF DIRECTORS”) IF SUCH TRANSFER AFFECTS THE PERCENTAGE OF STOCK OF THE CORPORATION (WITHIN THE MEANING OF SECTION 382 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”) AND THE TREASURY REGULATIONS PROMULGATED THEREUNDER) THAT IS TREATED AS OWNED BY A “5‑PERCENT SHAREHOLDER” UNDER THE CODE AND SUCH REGULATIONS. IF THE TRANSFER IS PROHIBITED BY SUCH RESTRICTIONS, THEN THE TRANSFER WILL BE VOID AB INITIO AND THE PURPORTED TRANSFEREE OF THE STOCK WILL BE REQUIRED TO TRANSFER EXCESS SECURITIES (AS DEFINED IN THE CERTIFICATE OF INCORPORATION) TO THE CORPORATION’S AGENT. IN THE EVENT OF A TRANSFER THAT DOES NOT INVOLVE AN ACTUAL DIRECT TRANSFER OF SECURITIES OF THE CORPORATION WITHIN THE MEANING OF DELAWARE LAW (“SECURITIES”) BUT OTHERWISE CONSTITUTES A TRANSFER PROHIBITED BY SUCH RESTRICTIONS, THE PURPORTED TRANSFEREE (OR THE RECORD OWNER) OF THE SECURITIES WILL BE REQUIRED TO TRANSFER SUFFICIENT SECURITIES PURSUANT TO THE TERMS PROVIDED FOR IN THE
CERTIFICATE OF INCORPORATION SO AS TO EFFECTIVELY REVERSE THE INDIRECT, CONSTRUCTIVE OR OTHER TRANSFER PROHIBITED BY SUCH RESTRICTIONS. THE CORPORATION WILL FURNISH WITHOUT CHARGE TO THE HOLDER OF RECORD OF THIS CERTIFICATE A COPY OF THE CERTIFICATE OF INCORPORATION CONTAINING THE ABOVE-REFERENCED TRANSFER RESTRICTIONS, UPON WRITTEN REQUEST TO THE CORPORATION AT ITS PRINCIPAL PLACE OF BUSINESS.” The Board may also require that any certificates representing Company Securities issued prior to the Restriction Release Date that are subject to conditions imposed by the Board in connection with its approval under paragraph (a)(2) of this Section 4 of Article IV also bear a conspicuous legend referencing the applicable restrictions. (5) As a condition to the registration of the Transfer of any Stock, any Person who is a beneficial, legal or record holder of Stock, and any proposed transferee or any Person controlling, controlled by or under common control with the proposed transferee, will provide such information as the Company may request from time to time in order to determine compliance with this Section 4 of Article IV or the status of the Tax Benefits. The Company may make such arrangements with, or issue such instructions to, its stock transfer agent as may be determined by the Secretary of the Company to be necessary or advisable to implement this Section 4 of Article IV.
(b)Treatment of Excess Securities.
(1)No employee or agent of the Company will record any Prohibited Transfer, and the Purported Transferee in any Prohibited Transfer will not be recognized as a stockholder of the Company for any purpose whatsoever in respect of the Excess Securities. The Purported Transferee of such Excess Securities will not be entitled with respect to such Excess Securities to any rights of stockholders of the Company, including without limitation the rights to vote such Excess Securities and to receive dividends or distributions, whether liquidating or otherwise, in respect thereof, if any. After Excess Securities have been acquired in a Transfer that is not a Prohibited Transfer in accordance with the provisions of this Section 4(b) of Article IV, such Company Securities will cease to be Excess Securities. Any Transfer of Excess Securities not in accordance with the provisions of this Section 4(b) of Article IV will also be a Prohibited Transfer.
(2)If the Board determines that a Transfer of Company Securities constitutes a Prohibited Transfer, then, upon written demand by the Company, the Purported Transferee will transfer or cause to be transferred any certificate or other evidence of ownership of the Excess Securities within the Purported Transferee’s possession or control, together with any Prohibited Distributions, to an Agent. The Agent will thereupon sell as promptly as practicable to a buyer or buyers, which may include the Company, the Excess Securities transferred to it in one or more arm’s-length transactions; provided, however, that (A) the Agent will effect such sales only if and when it can do so in transactions that do not constitute Prohibited Transfers and (B) the Agent will effect such sales in an orderly fashion and will not be required to effect any such sale within any specific time frame if, in the Agent’s business judgment, such sale would disrupt the market for the Company Securities or otherwise would adversely affect the value of the Company Securities. If the Purported Transferee has resold the Excess Securities before receiving the Company’s demand to surrender the Excess Securities to the Agent, the Purported Transferee will be deemed to have sold the Excess Securities for the Agent and will be required to transfer to the Agent any Prohibited Distributions and proceeds of such sale, except to the extent that the Company grants written permission to the Purported Transferee to retain a portion of such sales proceeds not exceeding the amount that the Purported Transferee would have received from the Agent pursuant to paragraph (b)(3) of this Section 4 of Article IV if the Agent rather than the Purported Transferee had resold the Excess Securities.
(3)The Agent will apply any proceeds of a sale by it of such Excess Securities, any dividends or distributions received by it from the Company with respect to such Excess Securities, any amounts received by it from the Purported Transferee in respect of Prohibited Distributions on such Excess Securities and, if the Purported Transferee had previously resold such Excess Securities, any amounts received by it from the Purported Transferee in respect of such previous sale, as follows:
(A)first, to pay costs and expenses incurred by the Agent in connection with the Agent’s duties specified herein;
(B)second, to pay to the Purported Transferee up to the amount paid by the Purported Transferee for the Excess Securities or, in the event the Prohibited Transfer was, in whole or in part, a gift, inheritance or similar Transfer, the Fair Market Value of the Excess Securities on the date of the Prohibited Transfer thereof, as shall be determined at the discretion of the Board; and
(C)third, to pay any remaining amounts to the Purported Transferor or, if the Purported Transferor that was party to the Prohibited Transfer cannot readily be identified, to one or more organizations qualifying under Section 501(c)(3) selected by the Board.
The recourse of any Purported Transferee in respect of any Prohibited Transfer will be limited to the amount payable to the Purported Transferee pursuant to clause (B) of the preceding sentence. In no event shall the proceeds of any sale of Excess Securities pursuant to this Section 4 of Article IV inure to the benefit of the Company. (4) If the Purported Transferee fails to surrender the Excess Securities, Prohibited Distributions or the proceeds of a sale of Excess Securities to the Agent within 30 days from the date on which the Company makes a demand pursuant to paragraph (b)(2) of this Section 4 of Article IV, then the Company will promptly take all actions that it believes are necessary or advisable to enforce the provisions hereof, including without limitation the institution of legal proceedings to compel such surrender.
(5) The Company will make the demand described in paragraph (b)(2) of this Section 4 of Article IV within 30 days of the date on which the Board determines that the attempted Transfer would result in Excess Securities; provided, however, that if the Company makes such demand at a later date, the provisions of this Section 4 of Article IV will apply nonetheless.
(6) In the event of any Transfer that does not involve an actual direct Transfer of securities of the Company within the meaning of Delaware law (“Securities” and individually, a “Security”) but otherwise constitutes a Prohibited Transfer, the application of paragraphs (b)(2) and (b)(3) of this Section 4 of Article IV will be modified as described in this paragraph (b)(6). In such case, the 5% Shareholder acquiring Securities in such Transfer will not be required to dispose of any interest that is not a Security, but such 5% Shareholder and/or any Person whose ownership of Securities is attributed to such 5% Shareholder will be required to dispose of sufficient Securities (which Securities will be disposed of in the inverse order in which they were acquired) to cause such 5% Shareholder, following such disposition, to have effectively reversed the Prohibited Transfer. The Securities to be disposed of will be considered Excess Securities and will be disposed of through the Agent as provided in paragraphs (b)(2) and (b)(3) of this Section 4 of Article IV, except that the maximum aggregate amount payable either to such 5% Shareholder or to such other Person that was the direct holder of such Excess Securities, in connection with such sale will be the Fair Market Value of such Excess Securities on the date of the purported Transfer. Such disposition will be deemed to occur simultaneously with the purported Transfer giving rise to the application of this provision. All expenses incurred by the Agent in disposing of such Excess Stock will be paid out of any amounts due such 5% Shareholder or such other Person. The purpose of this paragraph (b)(6) is to extend the restrictions of this Section 4 of Article IV to situations in which there is a 5% Transaction without an actual direct Transfer of Securities, and this paragraph (b)(6), along with the other provisions of this Section 4 of Article IV, will be interpreted to produce the same results, with differences as the context requires, as an actual direct Transfer of Company Securities.
(7) Nothing in this Section 4(b) of Article IV will (a) be deemed inconsistent with any attempted Transfer of Company Securities being void abinitio as provided in paragraph (a)(1) of this Section 4 of Article IV or (b) preclude the Company in its discretion from immediately bringing legal proceedings to give effect to the provisions of this Section 4 of Article IV without a prior demand or taking additional actions as it deems advisable to give effect to the provisions of this Section 4 of Article IV.
(c)Board Determinations and Authority.
(1)The Board will have the sole power to make determinations regarding compliance with this Section 4 of Article IV and any matters related thereto, including without limitation (A) the identification of 5% Shareholders, (B) whether a Transfer is a 5% Transaction or a Prohibited Transfer, (C) the Percentage Stock Ownership of any 5% Shareholder, (D) whether an instrument constitutes a Company Security, (E) the amount (or Fair Market Value) due to a Purported Transferee or a Purported Transferor pursuant to paragraph (b)(3), and (F) any other matters which the Board determines to be relevant. The good faith determination of the Board on such matters will be conclusive and binding for all the purposes of this Section 4 of Article IV. All determinations, approvals or other actions by the Board pursuant to this Section 4 of Article IV will require the affirmative vote of a majority of the total number of directors that the Company would have if there were no vacancies.
(2)The Board may, to the extent permitted by law, from time to time establish, modify, amend or rescind bylaws, regulations and procedures of the Company not inconsistent with the provisions of this Section 4 of Article IV
for purposes of determining whether any Transfer of Company Securities would jeopardize the Company’s ability to preserve and use the Tax Benefits and for the orderly application, administration and implementation of this Section 4 of Article IV.
(3)Nothing contained in this Section 4 of Article IV will limit the authority of the Board to take such other actions permitted by law as it deems necessary or advisable to preserve the Tax Benefits. Without limiting the generality of the foregoing, in the event of a change in law, the Board may, by adopting a written resolution, (A) accelerate the Release Restriction Date, (B) modify the Persons covered by this Section 4 of Article IV, (C) modify the definition of any term used in this Section 4 of Article IV, or (D) otherwise modify the terms of this Section 4 of Article IV, in each case, in order to prevent an “ownership change” for purposes of Section 382; provided, however, that the Board will not cause there to be such an acceleration or modification unless it determines that the continuation of the restrictions set forth in this Section 4 of Article IV is no longer necessary for the preservation of the Tax Benefits or that such modification is necessary or advisable to preserve the Tax Benefits, as applicable. Stockholders will be notified of any such acceleration or modification through a filing with the Securities and Exchange Commission or such other method of notice as the Secretary of the Company deems appropriate.
(4)In the case of an ambiguity in the application of any of the provisions of this Section 4 of Article IV, including any defined term used herein, the Board will have the power to determine the application of such provisions with respect to any situation based on its reasonable belief, understanding or knowledge of the circumstances. In the event that Section 4 of Article IV requires an action by the Board but fails to provide specific guidance with respect to such action, the Board will have the power to determine the action to be taken so long as such action is not contrary to the provisions of this Section 4 of Article IV. All such determinations made by the Board in good faith will be conclusive and binding for all purposes of this Section 4 of Article IV.
(5)The Board may delegate all or any portion of its duties and powers under this Section 4 of Article IV to a committee of the Board as it deems necessary or advisable and, to the fullest extent permitted by law, may exercise the authority granted by this Section 4 of Article IV through duly authorized officers or agents of the Company. Nothing in this Section 4 of Article IV will be construed to limit or restrict the Board in the exercise of its fiduciary duties under applicable law.
(d)Reliance. To the fullest extent permitted by law, the Company and the directors will be fully protected in relying in good faith upon the information, opinions, reports or statements of the chief executive officer, the chief financial officer, the chief accounting officer, or the corporate controller of the Company or of the Company’s legal counsel, independent auditors, transfer agent, investment bankers or other employees and agents of the Company in making the determinations contemplated by this Section 4 of Article IV, and the members of the Board will not be responsible for any good faith errors made in connection therewith. For purposes of determining the existence and identity of, and the amount of any Company Securities owned by, any stockholder, the Company is entitled to rely on the existence and absence of filings of Schedule 13D or 13G under the Securities Exchange Act of 1934, as amended (or similar filings), as of any date, subject to its actual knowledge of the ownership of Company Securities.
(e)Benefits. Nothing in this Section 4 of Article IV will be construed to give to any Person other than the Company or the Agent any legal or equitable right, remedy or claim under this Section 4 of Article IV. This Section 4 of Article IV will be for the sole and exclusive benefit of the Company and the Agent.
(f)Definitions. As used in this Section 4 of Article IV, the following capitalized terms have the following meanings when used herein in with initial capital letters:
(1)“5% Shareholder” means a Person having a Percentage Stock Ownership of 4.99% or more; provided, however, that the Agent will not constitute a 5% Shareholder.
(2)“5% Transaction” means any Transfer or attempted Transfer of Company Securities described in clause (A) of paragraph (a)(1) of this Section 4 of Article IV.
(3)“Agent” means an agent designated by the Board.
(4)“Code” means the Internal Revenue Code of 1986, as amended.
(5)“Company Securities” means (a) shares of Common Stock, (b) shares of Preferred Stock (other than preferred stock described in Section 1504(a)(4) of the Code or any successor provision), (c) warrants, rights or options (including without limitation options within the meaning of Treasury Regulation § 1.382-4(d)(9) or any successor provision) to purchase stock of the Company, and (d) any other Stock.
(6)“Excess Securities” means, with respect to any Prohibited Transfer, the Company Securities that are the subject of such Prohibited Transfer.
(7)“Fair Market Value “ means, with respect to any Excess Securities, the closing price of such Excess Securities on the applicable date. The “closing price” for such purposes will be the last sale price, regular way, or, in case no such price as reported, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on a national securities exchange or, if the Excess Securities are not listed or admitted to trading on any national securities exchange, the last quoted bid price in the over-the-counter market as reported by OTC Market Group, Inc. or a similar organization or, if the Excess Securities are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Excess Securities selected by the Board. If the Excess Securities are not publicly held or not so listed or traded, or are not the subject of available bid and asked quotes, “Fair Market Value” will mean the fair value of such Excess Share as determined in good faith by the Board.
(8)“Percentage Stock Ownership” means percentage Stock Ownership interest as determined in accordance with Treasury Regulation §1.382-2T(g), (h), (j) and (k) or any successor provisions.
(9)“Person” means any individual, firm, corporation, partnership, limited liability company, limited partnership, trust or other “entity” (including any group that is deemed to constitute a single “entity”) within the meaning of Section 1.382-3(a)(1) of the Treasury Regulations, and includes any successor (by merger or otherwise) of such entity.
(10)“Prohibited Distributions” means, with respect to any Prohibited Transfer, any dividends or distributions that were received by the Purported Transferee from the Company with respect to the Excess Securities.
(11)“Prohibited Transfer” means any purported Transfer of Company Securities to the extent that such Transfer is prohibited and/or void under this Section 4 of Article IV.
(12)“Proposed Transfer” has the meaning set forth in paragraph (a)(2)(B) of this Section 4 of Article IV.
(13)“Public Group” has the meaning set forth in Treasury Regulation § 1.382-2T(f)(13).
(14)“Purported Transferee” means, with respect to any Prohibited Transfer, the intended transferee in such Prohibited Transfer.
(15)“Purported Transferor” means, with respect to any Prohibited Transfer, the Person who attempted to Transfer Company Securities in such Prohibited Transfer.
(16)“Request” has the meaning set forth in paragraph (a)(2)(B) of this Section 4 of Article IV.
(17)“Requesting Person” has the meaning set forth in paragraph (a)(2)(B) of this Section 4 of Article IV.
(18)“Restriction Release Date” means the earliest of (a) May 26, 2019, the third anniversary of the Company’s 2016 annual meeting of stockholders, or such earlier date as the Board may determine in accordance with paragraph (c)(3) of this Section 4 of Article IV, (b) the effective date of the repeal of Section 382 if the Board determines that the provision in this Section 4 of Article IV are no longer necessary for the preservation of Tax Benefits, and (c) the first day of a taxable year of the Company to which the Board determines that no Tax Benefits may be carried forward.
(19)“Section 382” means Section 382 of the Code or any successor provision.
(20)“Section 501(c)(3)” means Section 501(c)(3) of the Code or any successor provision.
(21)“Securities” and “Security” each has the meaning set forth in paragraph (b)(6) of this Section 4 of Article IV.
(22)“Stock” means any interest that would be treated as “stock” of the Company pursuant to Treasury Regulation § 1.382-2T(f)(18).
(23)“Stock Ownership” means any direct or indirect ownership of Stock, including any ownership by virtue of application of constructive ownership rules, with such direct, indirect and constructive ownership determined under the provisions of Section 382.
(24)“Tax Benefits” means the net operating loss carryovers, capital loss carryovers, general business credit carryovers, alternative minimum tax credit carryovers and foreign tax credit carryovers, as well as any loss or deduction attributable to a “net unrealized built-in loss” within the meaning of Section 382, of the Company or any direct or indirect subsidiary thereof.
(25)“Transfer” means any direct, indirect or constructive sale, transfer, assignment, conveyance, pledge or other disposition or other action taken by a Person, other than the Company, that alters the Percentage Stock Ownership of any Person, including without limitation the creation or grant of an option (including an option within the meaning of Treasury Regulation § l.382-2T(h)(4)(v)), but not including (A) the creation or grant of an option by the Company or (B) the issuance of Stock by the Company.
(26)“Treasury Regulations” means final, temporary and proposed income tax regulations promulgated under the Code, including any amendments thereto.
Appendix C
TAX ASSET PROTECTION RIGHTS AGREEMENT DATED AS OF APRIL 7, 2016 BY AND BETWEEN KAISER ALUMINUM CORPORATION AND COMPUTERSHARE INC. AS RIGHTS AGENT
| | | | | Page | 1. Certain Definitions | 1 |
| 2. Appointment of Rights Agent | 6 |
| 3. Issue of Right Certificates | 6 |
| 4. Form of Right Certificates | 8 |
| 5. Countersignature and Resignation | 8 |
| 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates | 9 |
| 7. Exercise of Rights; Purchase Price; Expiration Date of Rights | 9 |
| 8. Cancellation of Destruction of Right Certificates | 11 |
| 9. Company Covenants Concerning Securities and Rights | 11 |
| 10. Record Date | 13 |
| 11. Adjustment of Purchase Price, Number and Kind of Securities or Number of Rights | 13 |
| 12. Certificate of Adjusted Purchase Price or Number of Securities | 20 |
| 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power | 20 |
| 14. Fractional Rights and Fractional Securities | 23 |
| 15. Rights of Action | 25 |
| 16. Agreement of Rights Holders | 25 |
| 17. Right Certificate Holder Not Deemed a Stockholder | 26 |
| 18. Concerning the Rights Agent | 26 |
| 19. Merger or Consolidation or Change of Rights Agent | 27 |
| 20. Duties of Rights Agent | 27 |
| 21. Change of Rights Agent | 29 |
| 22. Issuance of New Right Certificates | 30 |
| 23. Redemption | 31 |
| 24. Exchange | 31 |
| 25. Notice of Certain Events | 33 |
| 26. Notices | 33 |
| 27. Supplements and Amendments | 34 |
| 28. Successors; Certain Covenants | 35 |
| 29. Benefits of This Agreement | 35 |
| 30. Governing Law | 35 |
|
| | | | 31. Severability | 35 |
| 32. Descriptive Headings, Etc | 36 |
| 33. Determinations and Actions by the Board | 36 |
| 34. Process to Seek Exemption | 36 |
| 35. Suspension of Exercisability or Exchangeability | 38 |
| 36. Effective Time | 38 |
| 37. Counterparts | 38 |
| 38. Force Majeure | 38 |
| Exhibit A | A-1 |
| Exhibit B | B-1 |
| Exhibit C | C-1 |
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TAX ASSET PROTECTION RIGHTS AGREEMENT This Tax Asset Protection Rights Agreement, dated as of April 7, 2016 (this “Agreement”), is made and entered into by and between Kaiser Aluminum Corporation,a Delaware corporation (the “Company”), and Computershare Inc., a Delaware corporation, as Rights Agent (the “Rights Agent”). RECITALS WHEREAS, (i) the Company has generated Tax Benefits (as hereinafter defined) for United States federal income tax purposes; (ii) the Company desires to avoid an “ownership change” with the meaning of Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), and related Treasury Regulations (as hereinafter defined) in order to preserve the ability to fully utilize such Tax Benefits; and (iii) in furtherance of such objective, the Company desires to enter into this Agreement; and WHEREAS, on April 7, 2016 the Board of Directors of the Company authorized and declared a dividend distribution of one right (a “Right”) in respect of each of the Company’s Common Shares (as hereinafter defined) outstanding as of the Close of Business (as hereinafter defined) on April 22, 2016 (the “Record Date”), each Right initially representing the right to purchase one one-hundredth of a Preferred Share (as hereinafter defined), on the terms and subject to the conditions herein set forth, and further authorized and directed the issuance of one Right (subject to adjustment as provided herein) with respect to each Common Share issued or delivered by the Company (whether originally issued or delivered from the Company’s treasury) after the Record Date but prior to the earlier of the Distribution Date (as hereinafter defined) and the Expiration Date (as hereinafter defined) or as provided in Section 22. NOW, THEREFORE, in consideration of the mutual agreements herein set forth, the parties hereto hereby agree as follows: 1. Certain Definitions. For purposes of this Agreement, the following terms have the meanings indicated:
(a) “Acquiring Person” means any Person (other than the Company, any Related Person or any Exempt Person) who or which, together with all Affiliates and Associates of such Person, is or becomes the Beneficial Owner of 4.99%or more of the then-outstanding Common Shares; provided, however, that (i) any Person who would otherwise constitute an Acquiring Person as of 4:00 p.m., New York City time, on the date of this Agreement (the “Effective Time”) will not be deemed to be an Acquiring Person for any purpose of this Agreement unless and until such time as (A) such Person or any Affiliate or Associate of such Person thereafter becomes the Beneficial Owner of any additional Common Shares, other than (1) pursuant to any agreement or regular-way purchase order for Common Shares that is in effect on or prior to the Effective Time and consummated in accordance with its terms after the Effective Time or (2) as a result of a stock dividend, rights dividend, stock split or similar transaction effected by the Company in which all holders of Common Shares are treated equally, or (B) any other Person who is the Beneficial Owner of Common Shares becomes an Affiliate or Associate of such
Person, provided that the exclusion in this clause (i) shall cease to apply with respect to any Person at such time as such Person, together with all Affiliates and Associates of such Person, ceases to Beneficially Own 4.99%or more of the then-outstanding Common Shares, (ii) a Person will not be deemed to have become an Acquiring Person solely as a result of a reduction in the number of Common Shares outstanding unless and until such time as (A) such Person or any Affiliate or Associate of such Person thereafter becomes the Beneficial Owner of any additional Common Shares, other than as a result of a stock dividend, stock split or similar transaction effected by the Company in which all holders of Common Shares are treated equally, or (B) any other Person who is the Beneficial Owner of Common Shares thereafter becomes an Affiliate or Associate of such Person, and in either such case, such Person, together with all Affiliates and Associates of such Person, shall thereafter be the Beneficial Owner of 4.99% or more of the outstanding Common Shares and (iii) a Person will not be deemed to have become an Acquiring Person solely as a result of an Exempt Transaction unless and until such time as (A) such Person or any Affiliate or Associate of such Person thereafter becomes the Beneficial Owner of any additional Common Shares, other than as a result of a stock dividend, rights dividend, stock split or similar transaction effected by the Company in which all holders of Common Shares are treated equally, or (B) any other Person who is the Beneficial Owner of Common Shares thereafter becomes an Affiliate or Associate of such Person, and in either such case, such Person, together with all Affiliates and Associates of such Person, shall thereafter be the Beneficial Owner of 4.99% or more of the outstanding Common Shares. Notwithstanding the foregoing, if (1) the Board of Directors of the Company determines in good faith that a Person who would otherwise be an “Acquiring Person” as defined pursuant to the foregoing provisions of this Section 1(a), has become such inadvertently and (2) such Person has divested, divests as promptly as practicable or agrees in writing with the Company to divest, a sufficient number of Common Shares so that such Person is not or would no longer be an “Acquiring Person” as defined pursuant to the foregoing provisions of this Section 1(a), then such Person shall not be deemed to be an “Acquiring Person” for any purposes of this Agreement.
(b) “Affiliate” and “Associate” mean, with respect to any Person, any other Person (other than a Related Person or an Exempt Person) whose Common Shares would be deemed constructively owned by such first Person, owned by a single “entity” as defined in Section 1.382-3(a)(1) of the Treasury Regulations, or otherwise aggregated with Common Shares owned by such first Person pursuant to the provisions of the Code or the Treasury Regulations, provided, however, that a Person will not be deemed to be the Affiliate or Associate of another Person solely because either or both Persons are or were directors of the Company.
(c) “Agreement” has the meaning set forth in the Preamble to this Agreement.
(d) A Person will be deemed the “Beneficial Owner” of, and to “Beneficially Own,” any securities which such Person directly owns or would be deemed to constructively own, or which otherwise would be aggregated with securities owned by such Person, pursuant to Section 382 of the Code, or any successor or replacement provision, and the Treasury Regulations promulgated thereunder.
(e) “Business Day” means any day other than a Saturday, Sunday or a day on which banking institutions in the State of New York or New Jersey are authorized or obligated by law or executive order to close.
(f) “Close of Business” on any given date means 5:00 p.m., New York City time, on such date; provided, however, that if such date is not a Business Day, it means 5:00 p.m., New York City time, on the next succeeding Business Day.
(g) “Code” has the meaning set forth in the Recitals to this Agreement.
(h) “Common Shares” when used with reference to the Company means the shares of Common Stock, par value$0.01 per share, of the Company; provided, however, that if the Company is the continuing or surviving corporation in a transaction described in Section 13(a)(ii), “Common Shares” when used with reference to the Company means shares of the capital stock or units of the equity interests with the greatest aggregate voting power of the Company. “Common Shares” when used with reference to any corporation or other legal entity other than the Company, including an Issuer, means shares of the capital stock or units of the equity interests with the greatest aggregate voting power of such corporation or other legal entity.
(i) “Company” has the meaning set forth in the Preamble to this Agreement.
(j) “current market price” has the meaning set forth in Section 11(d)(i).
(k) “Distribution Date” means the earlier of: (i) the Close of Business on the tenth calendar day following theShare Acquisition Date (or, if the tenth calendar day following the Share Acquisition Date occurs before the Record Date, the Close of Business on the Record Date), or (ii) the Close of Business on the tenth Business Day (or, unless the Distribution Date shall have previously occurred, such later date as may be specified by the Board of Directors of the Company) after the commencement of a tender or exchange offer by any Person (other than the Company, any Related Person or any Exempt Person), if upon the consummation thereof such Person would be the Beneficial Owner of 4.99%or more of the then-outstanding Common Shares.
(l) “equivalent common shares” has the meaning set forth in Section 11(a)(iii).
(m) “equivalent preferred shares” has the meaning set forth in Section 11(a)(iii).
(n) “Effective Time” has the meaning set forth in Section 1(a).
(o) “Exchange Act” means the Securities Exchange Act of 1934, as amended.
(p) “Exchange Ratio” has the meaning set forth in Section 24(a).
(q) “Exemption Request” has the meaning set forth in Section 34(a).
(r) “Exempt Person” means a Person whose Beneficial Ownership (together with all Affiliates and Associates of such Person) of 4.99% or more of the then-outstanding Common Shares (but less than 15% of the then-outstanding Common Shares) will not, as determined by the Board of Directors of the Company in its sole discretion, jeopardize or endanger the availability to the Company of any income tax benefit, provided, however, that such a Person will cease to be an Exempt Person if the Board of Directors of the Company makes a contrary
determination in its sole discretion with respect to the effect of such Person’s Beneficial Ownership (together with all Affiliates and Associates of such Person), regardless of the reason for such contrary determination.
(s) “Exempt Transaction” means any transaction that the Board of Directors of the Company determines, in its sole discretion, is exempt for purposes of this Agreement.
(t) “Exercise Value” has the meaning set forth in Section 11(a)(iii).
(u) “Expiration Date” means the earliest of (i) the Close of Business on April 7, 2019, which is the third anniversary of the date on which the Board of Directors authorized and declared a dividend distribution of the Rights, or such earlier date as of which the Board of Directors of the Company determines that this Agreement is no longer necessary for the preservation of Tax Benefits, (ii) the time at which the Rights are redeemed as provided in Section 23, (iii) the time at which all exercisable Rights are exchanged as provided in Section 24, (iv) the Close of Business on the effective date of the repeal of Section 382 of the Code or any successor or replacement provision if the Board of Directors of the Company determines that this Agreement is no longer necessary for the preservation of Tax Benefits, (v) the Close of Business on the first day of a taxable year of the Company to which the Board of Directors of the Company determines that no Tax Benefits may be carried forward, and (vi) the Close of Business on the first Business Day following the certification of the voting results of the Company’s 2016 annual meeting of stockholders, if Stockholder Approval has not been obtained prior to such date.
(v) “Flip-in Event” means the event described in Section 11(a)(ii).
(w) “Flip-over Event” means any event described in clauses (i), (ii) or (iii) of Section 13(a).
(x) “Issuer” has the meaning set forth in Section 13(b).
(y) “Person” means any individual, firm, corporation, partnership, limited liability company, limited partnership, trust or other entity, including any group thereof making a “coordinated acquisition” of shares or otherwise treated as an “entity” within the meaning of Section 1.382-3(a)(1) of the Treasury Regulations, and includes any successor (by merger or otherwise) of such entity, but will not include a Public Group (as such term is defined in Section 1.382.2T(f)(13) of the Treasury Regulations).
(z) “Preferred Shares” means shares of Series A Junior Participating Preferred Stock, par value $0.01 per share, of the Company having substantially the rights and preferences set forth in the form of Certificate of Designation of Series A Junior Participating Preferred Stock attached as Exhibit A.
(aa) “Purchase Price” means initially $400.00per one one-hundredth of a Preferred Share, subject to adjustment from time to time as provided in this Agreement.
(bb) “Record Date” has the meaning set forth in the Recitals to this Agreement.
(cc) “Redemption Price” means $0.001 per Right, subject to adjustment by resolution of the Board of Directors of the Company to reflect any stock split, stock dividend or similar transaction occurring after the Record Date.
(dd) “Related Person” means (i) any Subsidiary of the Company or (ii) any employee benefit or stock ownership plan of the Company or of any Subsidiary of the Company or any entity holding Common Shares for or pursuant to the terms of any such plan.
(ee) “Requesting Person” has the meaning set forth in Section 34(a).
(ff) “Right” has the meaning set forth in the Recitals to this Agreement.
(gg) “Right Certificates” means certificates evidencing the Rights, in substantially the form attached as Exhibit B.
(hh) “Rights Agent” means Computershare Inc., a Delaware corporation, unless and until a successor Rights Agent has become such pursuant to the terms of this Agreement, and thereafter, “Rights Agent” means such successor Rights Agent.
(ii) “Securities Act” means the Securities Act of 1933, as amended.
(jj) “Share Acquisition Date” means the first date of public announcement by the Company (by press release, filing made with the Securities and Exchange Commission or otherwise) that an Acquiring Person has become such.
(kk) “Stockholder Approval” means the approval of this Agreement by the affirmative vote of the holders of a majority of the voting power of the outstanding Common Shares of the Company entitled to vote (excluding the vote of any Acquiring Person) that are present in person or represented by proxy and actually voted on the proposal to approve this Agreement, at a duly called meeting of stockholders of the Company (or any adjournment or postponement thereof) at which a quorum is present.
(ll) “Subsidiary” when used with reference to any Person means any corporation or other legal entity of which a majority of the voting power of the voting equity securities or equity interests is owned, directly or indirectly, by such Person; provided, however, that for purposes of Section 13(b), “Subsidiary” when used with reference to any Person means any corporation or other legal entity of which at least 20% of the voting power of the voting equity securities or equity interests is owned, directly or indirectly, by such Person.
(mm) “Summary of Rights” has the meaning set forth in Section 3(a).
(nn) “Tax Benefits” means the net operating loss carryovers, capital loss carryovers, general business credit carryovers, alternative minimum tax credit carryovers and foreign tax credit carryovers, as well as any “net unrealized built-in loss” within the meaning of Section 382 of the Code or any successor or replacement provision, of the Company or any direct or indirect subsidiary thereof.
(oo) “Trading Day” means any day on which the principal national securities exchange or quotation system on which the Common Shares are listed or admitted to trading is open for the transaction of business or, if the Common Shares are not listed or admitted to trading on any national securities exchange or quotation system, a Business Day.
(pp) “Treasury Regulations” means final, temporary and proposed income tax regulations promulgated under the Code, including any amendments thereto.
(qq) “Triggering Event” means any Flip-in Event or Flip‑over Event.
(rr) “Trust” has the meaning set forth in Section 24(a).
(ss) “Trust Agreement” has the meaning set forth in Section 24(a).
2. Appointment of Rights Agent. The Company hereby appoints the Rights Agent to act as agent for the Company in accordance with the express terms and conditions of this Agreement (and no implied terms and conditions), and the Rights Agent hereby accepts such appointment. The Company may from time to time appoint co-rights agents as it may deem necessary or desirable upon ten days’ prior written notice to the Rights Agent. In the event the Company appoints one or more co-rights agents, the respective duties of the Rights Agent and any co-rights agents shall be as the Company shall determine and the Company shall provide written notice thereof to the Rights Agent. The Rights Agent shall have no duty to supervise, and shall in no event be liable for, the acts or omissions of any such co-rights agent. To the extent that any co-rights agent takes any action pursuant to this Agreement, such co-rights agent will be entitled to all of the rights and protections of, and subject to all of the applicable duties and obligations imposed upon, the Rights Agent pursuant to the terms of this Agreement.
3. Issue of Right Certificates. (a) Until the Distribution Date, (i) the Rights will be evidenced by the certificates representing Common Shares registered in the names of the record holders thereof, which certificates representing Common Shares will also be deemed to be Right Certificates (or, in the case of uncertificated Common Shares registered in book entry form, by notation in accounts reflecting the ownership of such Common Shares), (ii) the Rights will be transferable only in connection with the transfer of the underlying Common Shares, and (iii) the transfer of any Common Shares in respect of which Rights have been issued will also constitute the transfer of the Rights associated with such Common Shares. On the Record Date, or as soon as practicable thereafter, the Company will send a copy of a Summary of Rights to Purchase Preferred Stock in substantially the form attached as Exhibit C (the “Summary of Rights”), by first-class mail, postage-prepaid, to each record holder of Common Shares as of the Close of Business on the Record Date (other than any Acquiring Person or any Associate or Affiliate of any Acquiring Person), at the address of such holder shown on the records of the Company. With respect to certificates for Common Shares outstanding as of the Record Date, until the Distribution Date, the Rights will be evidenced by such certificates registered in the names of the holders thereof together with the Summary of Rights.
(b) Rights will be issued by the Company in respect of all Common Shares (other than Common Shares issued upon the exercise or exchange of any Right) issued or delivered by the Company (whether originally issued or delivered from the Company’s treasury) after the
Record Date but prior to the earlier of the Distribution Date and the Expiration Date. Certificates evidencing such Common Shares will have stamped on, impressed on, printed on, written on, or otherwise affixed to them the following legend or such similar legend as the Company may deem appropriate and as is not inconsistent with the provisions of this Agreement, or as may be required to comply with any applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange or quotation system on which the Common Shares may from time to time be listed or quoted, or to conform to usage:
This Certificate also evidences and entitles the holder hereof to certain Rights as set forth in a Rights Agreement between Kaiser Aluminum Corporationand Computershare, Inc. (or any successor Rights Agent), dated as of April 7, 2016 (as it may be amended or supplemented from time to time, the “Rights Agreement”), the terms of which are hereby incorporated herein by reference and a copy of which is on file at the principal executive offices of Kaiser Aluminum Corporation. The Rights are not exercisable prior to the occurrence of certain events specified in the Rights Agreement. Under certain circumstances, as set forth in the Rights Agreement, such Rights may be redeemed, may be exchanged, may expire, may be amended, or may be evidenced by separate certificates and no longer be evidenced by this Certificate. Kaiser Aluminum Corporationwill mail to the holder of this Certificate a copy of the Rights Agreement, as in effect on the date of mailing, without charge promptly after receipt of a written request therefor. Under certain circumstances as set forth in the Rights Agreement, Rights that are or were Beneficially Owned by an Acquiring Person or any Affiliate or Associate of an Acquiring Person (as such terms are defined in the Rights Agreement) may become null and void. (c) Any Right Certificate issued pursuant to this Section 3 that represents Rights Beneficially Owned by an Acquiring Person or any Associate or Affiliate thereof and any Right Certificate issued at any time upon the transfer of any Rights to an Acquiring Person or any Associate or Affiliate thereof or to any nominee of such Acquiring Person, Associate or Affiliate and any Right Certificate issued pursuant to Section 6 or 11 hereof upon transfer, exchange, replacement or adjustment of any other Right Certificate referred to in this sentence, shall be subject to and contain the following legend or such similar legend as the Company may deem appropriate and as is not inconsistent with the provisions of this Agreement, or as may be required to comply with any applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange on which the Rights may from time to time be listed, or to conform to usage:
The Rights represented by this Right Certificate are or were Beneficially Owned by a Person who was an Acquiring Person or an Affiliate or an Associate of an Acquiring Person (as such terms are defined in the Rights Agreement). This Right Certificate and the Rights represented hereby may become null and void in the circumstances specified in Section 11(a)(ii) or Section 13 of the Rights Agreement. (d) As promptly as practicable after the Distribution Date, the Company will prepare and execute, the Rights Agent will countersign and the Company will send or cause to be sent
(and the Rights Agent will, if requested in writing by the Company and provided with all necessary and relevant information and documentation, send), by first-class, insured, postage prepaid mail, to each record holder of Common Shares as of the Close of Business on the Distribution Date, at the address of such holder shown on the records of the Company, a Right Certificate evidencing one Right for each Common Share so held, subject to adjustment as provided herein. As of and after the Distribution Date, the Rights will be evidenced solely by such Right Certificates.
(e) In the event that the Company purchases or otherwise acquires any Common Shares after the Record Date but prior to the Distribution Date, any Rights associated with such Common Shares will be deemed canceled and retired so that the Company will not be entitled to exercise any Rights associated with the Common Shares so purchased or acquired.
4. Form of Right Certificates. The Right Certificates (and the form of election to purchase and the form of assignment to be printed on the reverse thereof) will be substantially in the form attached as Exhibit B with such changes and marks of identification or designation, and such legends, summaries or endorsements printed thereon, as the Company may deem appropriate (but which do not affect the rights, duties, liabilities, protections or responsibilities of the Rights Agent) and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange or quotation system on which the Rights may from time to time be listed or quoted, or to conform to usage. Subject to the provisions of Section 22, the Right Certificates, whenever issued, on their face will entitle the holders thereof to purchase such number of one one-hundredths of a Preferred Share as are set forth therein at the Purchase Price set forth therein, but the Purchase Price, the number and kind of securities issuable upon exercise of each Right and the number of Rights outstanding will be subject to adjustment as provided herein.
5. Countersignature and Registration. (a) The Right Certificates will be executed on behalf of the Company by its Chief Executive Officer, its President or any Vice President, either manually or by facsimile signature, and will have affixed thereto the Company’s seal or a facsimile thereof which will be attested by the Secretary or an Assistant Secretary of the Company, either manually or by facsimile signature. The Right Certificates will be countersigned by the Rights Agent, either manually or by facsimile signature, and will not be valid for any purpose unless so countersigned. In case any officer of the Company who signed any of the Right Certificates ceases to be such an officer of the Company before countersignature by the Rights Agent and issuance and delivery by the Company, such Right Certificates, nevertheless, may be countersigned by the Rights Agent, and issued and delivered by the Company with the same force and effect as though the person who signed such Right Certificates had not ceased to be such an officer of the Company; and any Right Certificate may be signed on behalf of the Company by any person who, at the actual date of the execution of such Right Certificate, is a proper officer of the Company to sign such Right Certificate, although at the date of the execution of this Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or cause to be kept, at the office of the Rights Agent designated for such purpose and at such other offices as may be required to comply with any applicable law or with any rule or regulation made pursuant thereto
or with any rule or regulation of any stock exchange or any quotation system on which the Rights may from time to time be listed or quoted, books for registration and transfer of the Right Certificates issued hereunder. Such books will show the names and addresses of the respective holders of the Right Certificates, the number of Rights evidenced on its face by each of the Right Certificates and the date of each of the Right Certificates.
6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. (a) Subject to the provisions of Sections 7(d) and 14, at any time after the Close of Business on the Distribution Date and prior to the Expiration Date, any Right Certificate or Right Certificates representing exercisable Rights may be transferred, split up, combined or exchanged for another Right Certificate or Right Certificates, entitling the registered holder to purchase a like number of one one-hundredths of a Preferred Share (or other securities, as the case may be) as the Right Certificate or Right Certificates surrendered then entitled such holder (or former holder in the case of a transfer) to purchase. Any registered holder desiring to transfer, split up, combine or exchange any such Right Certificate or Right Certificates must make such request in a writing delivered to the Rights Agent and must surrender the Right Certificate or Right Certificates to be transferred, split up, combined or exchanged at the office of the Rights Agent designated for such purpose. Thereupon or as promptly as practicable thereafter, subject to the provisions of Sections 7(d) and 14, the Company will prepare, execute and deliver to the Rights Agent, and the Rights Agent will countersign and deliver, a Right Certificate or Right Certificates, as the case may be, as so requested. The Company or the Rights Agent may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer, split up, combination or exchange of Right Certificates. If and to the extent that the Company does require payment of any such tax or charge, the Company will provide the Rights Agent prompt written notice thereof and the Rights Agent will not deliver any Right Certificate unless and until the Rights Agent is satisfied that all such payments have been made, and the Rights Agent will forward any such sum collected by it to the Company or to such Person as the Company specifies by written notice. The Rights Agent will not have any duty or obligation to take any action pursuant to any Section of this Agreement that requires the payment of taxes or charges or related to the issuance or delivery of Rights Certificates unless and until it is satisfied that all such taxes or charges have been paid.
(b) Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to them of the loss, theft, destruction or mutilation of a Right Certificate and, in case of loss, theft or destruction, of indemnity or security satisfactory to them, and, if requested by the Company, reimbursement to the Company and the Rights Agent of all reasonable expenses incidental thereto, and upon surrender to the Rights Agent and cancellation of the Right Certificate if mutilated, the Company will prepare, execute and deliver a new Right Certificate of like tenor to the Rights Agent and the Rights Agent will countersign and deliver such new Right Certificate to the registered holder in lieu of the Right Certificate so lost, stolen, destroyed or mutilated.
7. Exercise of Rights; Purchase Price; Expiration Date of Rights. (a) The registered holder of any Right Certificate may exercise the Rights evidenced thereby (except as otherwise provided herein) in whole or in part at any time after the Distribution Date and prior to the
Expiration Date, upon surrender of the Right Certificate, with the form of election to purchase on the reverse side thereof duly executed, to the Rights Agent at the office of the Rights Agent designated for such purpose, together with payment in cash, in lawful money of the United States of America by certified check or bank draft payable to the order of the Company, equal to the sum of (i) the exercise price for the total number of securities as to which such surrendered Rights are exercised and (ii) an amount equal to any applicable transfer tax required to be paid by the holder of such Right Certificate in accordance with the provisions of Section 9(d). Except for those provisions herein that expressly survive the termination of this Agreement, this Agreement shall terminate upon the earlier of (x) the Expiration Date and (y) such time as all outstanding Rights have been exercised in full pursuant to terms of this Agreement.
(b) Upon receipt of a Right Certificate representing exercisable Rights with the form of election to purchase duly executed, accompanied by payment as described above, the Rights Agent will promptly (i) requisition from any transfer agent of the Preferred Shares (or make available, if the Rights Agent is the transfer agent) certificates representing the number of one one-hundredths of a Preferred Share to be purchased or, in the case of uncertificated shares or other securities, requisition from any transfer agent therefor a notice setting forth such number of shares or other securities to be purchased for which registration will be made on the stock transfer books of the Company (and the Company hereby irrevocably authorizes and directs its transfer agent to comply with all such requests), or, if the Company elects to deposit Preferred Shares issuable upon exercise of the Rights hereunder with a depositary agent, requisition from the depositary agent depositary receipts representing such number of one one-hundredths of a Preferred Share as are to be purchased (and the Company hereby irrevocably authorizes and directs such depositary agent to comply with all such requests), (ii) after receipt of such certificates (or notices or depositary receipts, as the case may be), cause the same to be delivered to or upon the order of the registered holder of such Right Certificate, registered in such name or names as may be designated by such holder, (iii) when necessary to comply with this Agreement, requisition from the Company or any transfer agent therefor (or make available, if the Rights Agent is the transfer agent) certificates representing the number of equivalent common shares (or, in the case of uncertificated shares, a notice of the number of equivalent common shares for which registration will be made on the stock transfer books of the Company) to be issued in lieu of the issuance of Common Shares in accordance with the provisions of Section 11(a)(iii), (iv) when necessary to comply with this Agreement, after receipt of such certificates or notices, cause the same to be delivered to or upon the order of the registered holder of such Right Certificate, registered in such name or names as may be designated by such holder, (v) when necessary to comply with this Agreement, requisition from the Company the amount of cash to be paid in lieu of the issuance of fractional shares in accordance with the provisions of Section 14 or in lieu of the issuance of Common Shares in accordance with the provisions of Section 11(a)(iii), (vi) when necessary to comply with this Agreement, after receipt, deliver such cash to or upon the order of the registered holder of such Right Certificate, and (vii) when necessary to comply with this Agreement, deliver any due bill or other instrument provided to the Rights Agent by the Company for delivery to the registered holder of such Right Certificate as provided by Section 11(l).
(c) In case the registered holder of any Right Certificate exercises less than all the Rights evidenced thereby, the Company will prepare, execute and deliver a new Right Certificate
evidencing the Rights remaining unexercised and the Rights Agent will countersign and deliver such new Right Certificate to the registered holder of such Right Certificate or to his, hers or its duly authorized assigns, subject to the provisions of Section 14.
(d) Notwithstanding anything in this Agreement to the contrary, neither the Rights Agent nor the Company will be obligated to undertake any action with respect to any purported transfer, split up, combination or exchange of any Right Certificate pursuant to Section 6 or exercise of a Right Certificate as set forth in this Section 7 unless the registered holder of such Right Certificate has (i) completed and signed the certificate following the form of assignment or the form of election to purchase, as applicable, set forth on the reverse side of the Right Certificate surrendered for such transfer, split up, combination, exchange or exercise and (ii) provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company or the Rights Agent may reasonably request.
8. Cancellation and Destruction of Right Certificates. All Right Certificates surrendered for the purpose of exercise, transfer, split up, combination or exchange will, if surrendered to the Company or to any of its stock transfer agents, be delivered to the Rights Agent for cancellation or in canceled form, or, if surrendered to the Rights Agent, will be canceled by it, and no Right Certificates will be issued in lieu thereof except as expressly permitted by the provisions of this Agreement. The Company will deliver to the Rights Agent for cancellation and retirement, and the Rights Agent will so cancel and retire, any other Right Certificate purchased or acquired by the Company otherwise than upon the exercise thereof. The Rights Agent will deliver all canceled Right Certificates to the Company, or will, at the written request of the Company, destroy such canceled Right Certificates, and in such case will deliver a certificate of destruction thereof to the Company.
9. Company Covenants Concerning Securities and Rights. The Company covenants and agrees that:
(a)It will cause to be reserved and kept available out of its authorized and unissued Preferred Shares or any Preferred Shares held in its treasury, a number of Preferred Shares that will be sufficient to permit the exercise pursuant to Section 7 of all outstanding Rights.
(b)So long as the Preferred Shares (and, following the occurrence of a Triggering Event, Common Shares and/or other securities) issuable upon the exercise of the Rights may be listed on a national securities exchange or quoted on a quotation system, it will endeavor to cause, from and after such time as the Rights become exercisable, all securities reserved for issuance upon the exercise of Rights to be listed on such exchange or quoted on such system, upon official notice of issuance upon such exercise.
(c)It will take all such action as may be necessary to ensure that all Preferred Shares (and, following the occurrence of a Triggering Event, Common Shares and/or other securities) delivered (or evidenced by registration on the stock transfer books of the Company) upon exercise of Rights, at the time of delivery of the certificates for (or registration of) such securities, will be (subject to payment of the Purchase Price) duly authorized, validly issued, fully paid and nonassessable securities.
(d)It will pay when due and payable any and all transfer taxes and charges that may be payable in respect of the issuance or delivery of the Right Certificates and of any certificates representing securities issued upon the exercise of Rights (or, if such securities are uncertificated, the registration of such securities on the stock transfer books of the Company); provided, however, that the Company will not be required to pay any transfer tax or charge which may be payable in respect of any transfer or delivery of Right Certificates to a person other than, or the issuance or delivery of certificates or depositary receipts representing (or the registration of) securities issued upon the exercise of Rights in a name other than that of, the registered holder of the Right Certificate evidencing Rights surrendered for exercise, or to issue or deliver any certificates, depositary receipts or notices representing securities issued upon the exercise of any Rights until any such tax or charge has been paid (any such tax or charge being payable by the holder of such Right Certificate at the time of surrender) or until it has been established to the Company’s and the Rights Agent’s reasonable satisfaction that no such tax is due.
(e)It will use its best efforts (i) to file on an appropriate form, as soon as practicable following the later of the Share Acquisition Date and the Distribution Date, a registration statement under the Securities Act with respect to the securities issuable upon exercise of the Rights, (ii) to cause such registration statement to become effective as soon as practicable after such filing, and (iii) to cause such registration statement to remain effective (with a prospectus at all times meeting the requirements of the Securities Act) until the earlier of (A) the date as of which the Rights are no longer exercisable for such securities and (B) the Expiration Date. The Company will also take such action as may be appropriate under, or to ensure compliance with, the applicable state securities or “blue sky” laws in connection with the exercisability of the Rights. The Company may temporarily suspend, for a period of time after the date set forth in clause (i) of the first sentence of this Section 9(e), the exercisability of the Rights in order to prepare and file such registration statement and to permit it to become effective. Upon any such suspension, the Company will issue a public announcement stating that the exercisability of the Rights has been temporarily suspended, as well as a public announcement at such time as the suspension is no longer in effect. The Company shall notify the Rights Agent in writing whenever it makes such public announcements. In addition, if the Company determines that a registration statement should be filed under the Securities Act or any state securities laws following the Distribution Date, the Company may temporarily suspend the exercisability of the Rights in each relevant jurisdiction until such time as a registration statement has been declared effective and, upon any such suspension, the Company will issue a public announcement stating that the exercisability of the Rights has been temporarily suspended, as well as a public announcement at such time as the suspension is no longer in effect and the Company shall notify the Rights Agent in writing whenever it makes such public announcements. Notwithstanding anything in this Agreement to the contrary, the Rights will not be exercisable in any jurisdiction if the requisite registration or qualification in such jurisdiction has not been effected or the exercise of the Rights is not permitted under applicable law.
(f)In the event that the Company is obligated to issue other securities of the Company and/or pay cash pursuant to Section 11, 13, 14 or 24, it will make all arrangements necessary so that such other securities and/or cash are available for distribution by the Rights Agent, if and when appropriate.
10. Record Date. Each Person in whose name any certificate representing Preferred Shares (or Common Shares and/or other securities, as the case may be) is issued (or in which such securities are registered upon the stock transfer books of the Company) upon the exercise of Rights will for all purposes be deemed to have become the holder of record of the Preferred Shares (or Common Shares and/or other securities, as the case may be) represented thereby on, and such certificate (or registration) will be dated, the date upon which the Right Certificate evidencing such Rights was duly surrendered and payment of the Purchase Price and all applicable transfer taxes was made; provided, however, that if the date of such surrender and payment is a date upon which the transfer books of the Company for the Preferred Shares (or Common Shares and/or other securities, as the case may be) are closed, such Person will be deemed to have become the record holder of such securities on, and such certificate (or registration) will be dated, the next succeeding Business Day on which the transfer books of the Company for the Preferred Shares (or Common Shares and/or other securities, as the case may be) are open. Prior to the exercise of the Rights evidenced thereby, the holder of a Right Certificate will not be entitled to any rights of a holder of any security for which the Rights are or may become exercisable, including, without limitation, the right to vote, to receive dividends or other distributions, or to exercise any preemptive rights, and will not be entitled to receive any notice of any proceedings of the Company, except as provided herein.
11. Adjustment of Purchase Price, Number and Kind of Securities or Number of Rights. The Purchase Price, the number and kind of securities issuable upon exercise of each Right and the number of Rights outstanding are subject to adjustment from time to time as provided in this Section 11.
(a)(i)In the event that the Company at any time after the Record Date (A) declares a dividend on the Preferred Shares payable in Preferred Shares, (B) subdivides the outstanding Preferred Shares, (C) combines the outstanding Preferred Shares into a smaller number of Preferred Shares, or (D) issues any shares of its capital stock in a reclassification of the Preferred Shares (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing or surviving corporation), except as otherwise provided in this Section 11(a), the Purchase Price in effect at the time of the record date for such dividend or of the effective date of such subdivision, combination or reclassification and/or the number and/or kind of shares of capital stock issuable on such date upon exercise of a Right, will be proportionately adjusted so that the holder of any Right exercised after such time is entitled to receive upon payment of the Purchase Price then in effect the aggregate number and kind of shares of capital stock which, if such Right had been exercised immediately prior to such date and at a time when the transfer books of the Company for the Preferred Shares were open, the holder of such Right would have owned upon such exercise (and, in the case of a reclassification, would have retained after giving effect to such reclassification) and would have been entitled to receive by virtue of such dividend, subdivision, combination or reclassification; provided, however, that in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares of capital stock issuable upon exercise of one Right. If an event occurs which would require an adjustment under both this Section 11(a)(i) and Section 11(a)(ii) or Section 13, the
adjustment provided for in this Section 11(a)(i) will be in addition to, and will be made prior to, any adjustment required pursuant to Section 11(a)(ii) or Section 13.
(ii) Subject to the provisions of Section 24, if any Person becomes an Acquiring Person, then from and after the later of the Distribution Date and the Share Acquisition Date, proper provision will be made so that each holder of a Right, except as provided below, will thereafter have the right to receive, upon exercise thereof in accordance with the terms of this Agreement at an exercise price per Right equal to the product of the then-current Purchase Price multiplied by the number of one one-hundredths of a Preferred Share for which a Right was exercisable immediately prior to the date of the occurrence of such Flip-in Event (or, if any other Flip-in Event shall have previously occurred, the product of the then-current Purchase Price multiplied by the number of one one-hundredths of a Preferred Share for which a Right was exercisable immediately prior to the date of the first occurrence of a Flip-in Event), in lieu of Preferred Shares, such number of Common Shares as equals the result obtained by (x) multiplying the then‑current Purchase Price by the number of one one-hundredths of a Preferred Share for which a Right was exercisable immediately prior to the date of the occurrence of such Flip-in Event (or, if any other Flip-in Event shall have previously occurred, multiplying the then-current Purchase Price by the number of one one-hundredths of a Preferred Share for which a Right was exercisable immediately prior to the date of the first occurrence of a Flip-in Event), and dividing that product by (y) 50% of the current per share market price of the Common Shares (determined pursuant to Section 11(d)) on the date of the occurrence of such Flip-in Event. Notwithstanding anything in this Agreement to the contrary, from and after the first occurrence of a Flip-in Event, any Rights that are Beneficially Owned by (A) any Acquiring Person (or any Affiliate or Associate of any Acquiring Person), (B) a transferee of any Acquiring Person (or any such Affiliate or Associate) who becomes a transferee after the occurrence of a Flip-in Event, or (C) a transferee of any Acquiring Person (or any such Affiliate or Associate) who became a transferee prior to or concurrently with the occurrence of a Flip-in Event pursuant to either (1) a transfer from an Acquiring Person to holders of its equity securities or to any Person with whom it has any continuing agreement, arrangement or understanding regarding the transferred Rights or (2) a transfer which the Board of Directors of the Company has determined is part of a plan, arrangement or understanding which has the purpose or effect of avoiding the provisions of this Section 11(a)(ii), and subsequent transferees of any of such Persons, will be null and void without any further action and any holder of such Rights will thereafter have no rights whatsoever with respect to such Rights under any provision of this Agreement. The Company will use all reasonable efforts to ensure that the provisions of this Section 11(a)(ii) are complied with, but will have no liability to any holder of Right Certificates or any other Person as a result of its failure to make any determinations with respect to an Acquiring Person or its Affiliates, Associates or transferees hereunder. Upon the occurrence of a Flip-in Event, no Right Certificate that represents Rights that are or have become null and void pursuant to the provisions of this Section 11(a)(ii) will thereafter be issued pursuant to Section 3 or Section 6, and any Right Certificate delivered to the Rights Agent that represents Rights that are or have become null and void pursuant to the provisions of this Section 11(a)(ii) will be canceled. Upon the occurrence of a Flip-over Event, any Rights
that shall not have been previously exercised pursuant to this Section 11(a)(ii) shall thereafter be exercisable only pursuant to Section 13 and not pursuant to this Section 11(a)(ii).
(iii) Upon the occurrence of a Flip‑in Event, if there are not sufficient Common Shares authorized but unissued or issued but not outstanding to permit the issuance of all the Common Shares issuable in accordance with Section 11(a)(ii) upon the exercise of a Right, the Board of Directors of the Company will use its best efforts promptly to authorize and, subject to the provisions of Section 9(e), make available for issuance additional Common Shares or other equity securities of the Company having equivalent voting rights and an equivalent value (as determined in good faith by the Board of Directors of the Company) to the Common Shares (for purposes of this Section 11(a)(iii), “equivalent common shares”). In the event that equivalent common shares are so authorized, upon the exercise of a Right in accordance with the provisions of Section 7, the registered holder will be entitled to receive (A) Common Shares, to the extent any are available, and (B) a number of equivalent common shares, which the Board of Directors of the Company has determined in good faith to have a value equivalent to the excess of (x) the aggregate current per share market value on the date of the occurrence of the most recent Flip-in Event of all the Common Shares issuable in accordance with Section 11(a)(ii) upon the exercise of a Right (the “Exercise Value”) over (y) the aggregate current per share market value on the date of the occurrence of the most recent Flip-in Event of any Common Shares available for issuance upon the exercise of such Right; provided, however, that if at any time after 90 calendar days after the latest of the Share Acquisition Date, the Distribution Date and the date of the occurrence of the most recent Flip-in Event, there are not sufficient Common Shares and/or equivalent common shares available for issuance upon the exercise of a Right, then the Company will be obligated to deliver, upon the surrender of such Right and without requiring payment of the Purchase Price, Common Shares (to the extent available), equivalent common shares (to the extent available) and then cash (to the extent permitted by applicable law and any agreements or instruments to which the Company is a party in effect immediately prior to the Share Acquisition Date), which securities and cash have an aggregate value equal to the excess of (1) the Exercise Value over (2) the product of the then-current Purchase Price multiplied by the number of one one-hundredths of a Preferred Share for which a Right was exercisable immediately prior to the date of the occurrence of the most recent Flip-in Event (or, if any other Flip-in Event shall have previously occurred, the product of the then-current Purchase Price multiplied by the number of one one-hundredths of a Preferred Share for which a Right would have been exercisable immediately prior to the date of the occurrence of such Flip-in Event if no other Flip-in Event had previously occurred). To the extent that any legal or contractual restrictions prevent the Company from paying the full amount of cash payable in accordance with the foregoing sentence, the Company will pay to holders of the Rights as to which such payments are being made all amounts which are not then restricted on a pro rata basis and will continue to make payments on a pro rata basis as promptly as funds become available until the full amount due to each such Rights holder has been paid.
(b) In the event that the Company fixes a record date for the issuance of rights, options or warrants to all holders of Preferred Shares entitling them (for a period expiring within 45 calendar days after such record date) to subscribe for or purchase Preferred Shares (or securities having equivalent rights, privileges and preferences as the Preferred Shares (for purposes of this Section 11(b), “equivalent preferred shares”)) or securities convertible into Preferred Shares or equivalent preferred shares at a price per Preferred Share or equivalent preferred share (or having a conversion price per share, if a security convertible into Preferred Shares or equivalent preferred shares) less than the current per share market price of the Preferred Shares (determined pursuant to Section 11(d)) on such record date, the Purchase Price to be in effect after such record date will be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which is the number of Preferred Shares outstanding on such record date plus the number of Preferred Shares which the aggregate offering price of the total number of Preferred Shares and/or equivalent preferred shares so to be offered (and/or the aggregate initial conversion price of the convertible securities so to be offered) would purchase at such current per share market price and the denominator of which is the number of Preferred Shares outstanding on such record date plus the number of additional Preferred Shares and/or equivalent preferred shares to be offered for subscription or purchase (or into which the convertible securities so to be offered are initially convertible); provided, however, that in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares of capital stock issuable upon exercise of one Right. In case such subscription price may be paid in a consideration part or all of which is in a form other than cash, the value of such consideration will be as determined in good faith by the Board of Directors of the Company, which determination will be described in a written statement filed with the Rights Agent. Preferred Shares owned by or held for the account of the Company will not be deemed outstanding for the purpose of any such computation. Such adjustment will be made successively whenever such a record date is fixed, and in the event that such rights, options or warrants are not so issued, the Purchase Price will be adjusted to be the Purchase Price which would then be in effect if such record date had not been fixed.
(c) In the event that the Company fixes a record date for the making of a distribution to all holders of Preferred Shares (including any such distribution made in connection with a consolidation or merger in which the Company is the continuing or surviving corporation) of evidences of indebtedness, cash (other than a regular periodic cash dividend), assets, stock (other than a dividend payable in Preferred Shares) or subscription rights, options or warrants (excluding those referred to in Section 11(b)), the Purchase Price to be in effect after such record date will be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which is the current per share market price of the Preferred Shares (as determined pursuant to Section 11(d)) on such record date or, if earlier, the date on which Preferred Shares begin to trade on an ex-dividend or when issued basis for such distribution, less the fair market value (as determined in good faith by the Board of Directors of the Company, which determination will be described in a written statement filed with the Rights Agent) of the portion of the evidences of indebtedness, cash, assets or stock so to be distributed or of such subscription rights, options or warrants applicable to one Preferred Share, and the denominator of which is such current per share market price of the Preferred Shares; provided, however, that in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares of capital stock issuable upon exercise of one
Right. Such adjustments will be made successively whenever such a record date is fixed; and in the event that such distribution is not so made, the Purchase Price will again be adjusted to be the Purchase Price which would then be in effect if such record date had not been fixed. (d) (i)For the purpose of any computation hereunder, the “current per share market price” of Common Shares on any date will be deemed to be the average of the daily closing prices per share of such Common Shares for the 30 consecutive Trading Days immediately prior to but not including such date; provided, however, that in the event that the current per share market price of the Common Shares is determined during a period following the announcement by the issuer of such Common Shares of (A) a dividend or distribution on such Common Shares payable in such Common Shares or securities convertible into such Common Shares (other than the Rights) or (B) any subdivision, combination or reclassification of such Common Shares, and prior to the expiration of 30 Trading Days after but not including the ex‑dividend date for such dividend or distribution, or the record date for such subdivision, combination or reclassification, then, and in each such case, the current per share market price will be appropriately adjusted to take into account ex‑dividend trading or to reflect the current per share market price per Common Share equivalent. The closing price for each day will be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated quotation system with respect to securities listed or admitted to trading on The NASDAQ Stock Market LLC or, if the Common Shares are not listed or admitted to trading on The NASDAQ Stock Market LLC, as reported in the principal consolidated quotation system with respect to securities listed on the principal national securities exchange on which the Common Shares are listed or admitted to trading or, if the Common Shares are not listed or admitted to trading on any national securities exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by such market then in use, or, if on any such date the Common Shares are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Common Shares selected by the Board of Directors of the Company. If the Common Shares are not publicly held or not so listed or traded, or are not the subject of available bid and asked quotes, “current per share market price” will mean the fair value per share as determined in good faith by the Board of Directors of the Company, which determination will be described in a written statement filed with the Rights Agent.
(ii) For the purpose of any computation hereunder, the “current per share market price” of the Preferred Shares will be determined in the same manner as set forth above for Common Shares in Section 11(d)(i), other than the last sentence thereof. If the current per share market price of the Preferred Shares cannot be determined in the manner provided above, the “current per share market price” of the Preferred Shares will be conclusively deemed to be an amount equal to the current per share market price of the Common Shares multiplied by one hundred (as such number may be appropriately adjusted to reflect events such as stock splits, stock dividends, recapitalizations or similar transactions relating to the Common Shares occurring after the date of this Agreement). If neither the Common Shares nor the Preferred Shares are publicly held or so listed or traded, or the subject of available bid and asked quotes, “current per share market price” of the Preferred Shares will mean the fair value per share as determined in good faith by
the Board of Directors of the Company, which determination will be described in a written statement filed with the Rights Agent. For all purposes of this Agreement, the current per share market price of one one-hundredth of a Preferred Share will be equal to the current per share market price of one Preferred Share divided by one hundred.
(e) Except as set forth below, no adjustment in the Purchase Price will be required unless such adjustment would require an increase or decrease of at least 1% in such price; provided, however, that any adjustments which by reason of this Section 11(e) are not required to be made will be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 11 will be made to the nearest cent or to the nearest one one-millionth of a Preferred Share or one ten-thousandth of a Common Share or other security, as the case may be. Notwithstanding the first sentence of this Section 11(e), any adjustment required by this Section 11 will be made no later than the earlier of (i) three years from the date of the transaction which requires such adjustment and (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a), the holder of any Right thereafter exercised becomes entitled to receive any securities of the Company other than Preferred Shares, thereafter the number and/or kind of such other securities so receivable upon exercise of any Right (and/or the Purchase Price in respect thereof) will be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Preferred Shares (and the Purchase Price in respect thereof) contained in this Section 11, and the provisions of Sections 7, 9, 10, 13 and 14 with respect to the Preferred Shares (and the Purchase Price in respect thereof) will apply on like terms to any such other securities (and the Purchase Price in respect thereof).
(g) All Rights originally issued by the Company subsequent to any adjustment made to the Purchase Price hereunder will evidence the right to purchase, at the adjusted Purchase Price, the number of one one-hundredths of a Preferred Share issuable from time to time hereunder upon exercise of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company has exercised its election as provided in Section 11(i), upon each adjustment of the Purchase Price pursuant to Section 11(b) or Section 11(c), each Right outstanding immediately prior to the making of such adjustment will thereafter evidence the right to purchase, at the adjusted Purchase Price, that number of one one-hundredths of a Preferred Share (calculated to the nearest one one-millionth of a Preferred Share) obtained by (i) multiplying (x) the number of one one-hundredths of a Preferred Share issuable upon exercise of a Right immediately prior to such adjustment of the Purchase Price by (y) the Purchase Price in effect immediately prior to such adjustment of the Purchase Price and (ii) dividing the product so obtained by the Purchase Price in effect immediately after such adjustment of the Purchase Price.
(i) The Company may elect, on or after the date of any adjustment of the Purchase Price, to adjust the number of Rights in substitution for any adjustment in the number of one one-hundredths of a Preferred Share issuable upon the exercise of a Right. Each of the Rights outstanding after such adjustment of the number of Rights will be exercisable for the number of one one-hundredths of a Preferred Share for which a Right was exercisable immediately prior to such adjustment. Each Right held of record prior to such adjustment of the number of Rights
will become that number of Rights (calculated to the nearest one ten-thousandth) obtained by dividing the Purchase Price in effect immediately prior to adjustment of the Purchase Price by the Purchase Price in effect immediately after adjustment of the Purchase Price. The Company will make a public announcement (with prompt written notice thereof to the Rights Agent) of its election to adjust the number of Rights, indicating the record date for the adjustment, and, if known at the time, the amount of the adjustment to be made. Such record date may be the date on which the Purchase Price is adjusted or any day thereafter, but, if the Right Certificates have been issued, will be at least 10 calendar days later than the date of the public announcement. If Right Certificates have been issued, upon each adjustment of the number of Rights pursuant to this Section 11(i), the Company will, as promptly as practicable, cause to be distributed to holders of record of Right Certificates on such record date Right Certificates evidencing, subject to the provisions of Section 14, the additional Rights to which such holders are entitled as a result of such adjustment, or, at the option of the Company, will cause to be distributed to such holders of record in substitution and replacement for the Right Certificates held by such holders prior to the date of adjustment, and upon surrender thereof if required by the Company, new Right Certificates evidencing all the Rights to which such holders are entitled after such adjustment. Right Certificates so to be distributed will be issued, executed, and countersigned in the manner provided for herein (and may bear, at the option of the Company, the adjusted Purchase Price) and will be registered in the names of the holders of record of Right Certificates on the record date specified in the public announcement.
(j) Without respect to any adjustment or change in the Purchase Price and/or the number and/or kind of securities issuable upon the exercise of the Rights, the Right Certificates theretofore and thereafter issued may continue to express the Purchase Price and the number and kind of securities which were expressed in the initial Right Certificate issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the Purchase Price below one one-hundredth of the then par value, if any, of the Preferred Shares or below the then par value, if any, of any other securities of the Company issuable upon exercise of the Rights, the Company will take any corporate action which may, based on the advice of its counsel, be necessary in order that the Company may validly and legally issue fully paid and nonassessable Preferred Shares or such other securities, as the case may be, at such adjusted Purchase Price.
(l) In any case in which this Section 11 otherwise requires that an adjustment in the Purchase Price be made effective as of a record date for a specified event, the Company may elect to defer (with prompt written notice to the Rights Agent) until the occurrence of such event the issuance to the holder of any Right exercised after such record date the number of Preferred Shares or other securities of the Company, if any, issuable upon such exercise over and above the number of Preferred Shares or other securities of the Company, if any, issuable upon such exercise on the basis of the Purchase Price in effect prior to such adjustment; provided, however, that the Company delivers to such holder a due bill or other appropriate instrument evidencing such holder’s right to receive such additional Preferred Shares or other securities upon the occurrence of the event requiring such adjustment.
(m) Notwithstanding anything in this Agreement to the contrary, the Company will be entitled to make such reductions in the Purchase Price, in addition to those adjustments expressly
required by this Section 11, as and to the extent that in its good faith judgment the Board of Directors of the Company determines to be advisable in order that any (i) consolidation or subdivision of the Preferred Shares, (ii) issuance wholly for cash of Preferred Shares at less than the current per share market price therefor, (iii) issuance wholly for cash of Preferred Shares or securities which by their terms are convertible into or exchangeable for Preferred Shares, (iv) stock dividends, or (v) issuance of rights, options or warrants referred to in this Section 11, hereafter made by the Company to holders of its Preferred Shares is not taxable to such stockholders. (n) Notwithstanding anything in this Agreement to the contrary, in the event that the Company at any time after the Record Date, but prior to the Distribution Date (i) pays a dividend on the outstanding Common Shares payable in Common Shares, (ii) subdivides the outstanding Common Shares, (iii) combines the outstanding Common Shares into a smaller number of shares, or (iv) issues any shares of its capital stock in a reclassification of the outstanding Common Shares (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing or surviving corporation), the number of Rights associated with each Common Share then outstanding, or issued or delivered thereafter but prior to the Distribution Date, will be proportionately adjusted so that the number of Rights thereafter associated with each Common Share following any such event equals the result obtained by multiplying the number of Rights associated with each Common Share immediately prior to such event by a fraction the numerator of which is the total number of Common Shares outstanding immediately prior to the occurrence of the event and the denominator of which is the total number of Common Shares outstanding immediately following the occurrence of such event. The adjustments provided for in this Section 11(n) will be made successively whenever such a dividend is paid or such a subdivision, combination or reclassification is effected.
12. Certificate of Adjusted Purchase Price or Number of Securities. Whenever an adjustment is made as provided in Section 11 or Section 13, the Company will promptly (a) prepare a certificate setting forth such adjustment and a brief statement of the facts accounting for such adjustment, (b) file with the Rights Agent and with each transfer agent for the Preferred Shares and the Common Shares a copy of such certificate, and (c) if such adjustment is made after the Distribution Date, mail a brief summary of such adjustment to each holder of a Right Certificate in accordance with Section 26. The Rights Agent shall be fully protected in relying on any such certificate and on any adjustment or statement therein contained and shall have no duty or liability with respect to, and shall not be deemed to have knowledge of, any adjustment or any such event unless and until it shall have received such a certificate.
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power. (a) In the event that:
(i) at any time after a Person has become an Acquiring Person, the Company consolidates with, or merges with or into, any other Person and the Company is not the continuing or surviving corporation of such consolidation or merger; or
(ii) at any time after a Person has become an Acquiring Person, any Person consolidates with the Company, or merges with or into the Company, and the Company is the continuing or surviving corporation of such merger or consolidation and, in
connection with such merger or consolidation, all or part of the Common Shares is changed into or exchanged for stock or other securities of any other Person or cash or any other property; or
(iii) at any time after a Person has become an Acquiring Person, the Company, directly or indirectly, sells or otherwise transfers (or one or more of its Subsidiaries sells or otherwise transfers), in one or more transactions, assets or earning power (including without limitation securities creating any obligation on the part of the Company and/or any of its Subsidiaries) representing in the aggregate more than 50% of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to any Person or Persons other than the Company or one or more of its wholly owned Subsidiaries;
then, and in each such case, proper provision will be made so that from and after the latest of the Distribution Date, the Share Acquisition Date, and the date of the occurrence of such Flip-over Event: (A) each holder of a Right thereafter has the right to receive, upon the exercise thereof in accordance with the terms of this Agreement at an exercise price per Right equal to the product of the then-current Purchase Price multiplied by the number of one one-hundredths of a Preferred Share for which a Right was exercisable immediately prior to the Share Acquisition Date, such number of duly authorized, validly issued, fully paid, nonassessable and freely tradeable Common Shares of the Issuer, free and clear of any liens, encumbrances and other adverse claims and not subject to any rights of call or first refusal, as equals the result obtained by (x) multiplying the then-current Purchase Price by the number of one one-hundredths of a Preferred Share for which a Right is exercisable immediately prior to the Share Acquisition Date and dividing that product by (y) 50% of the current per share market price of the Common Shares of the Issuer (determined pursuant to Section 11(d)), on the date of the occurrence of such Flip-over Event; (B) the Issuer will thereafter be liable for, and will assume, by virtue of the occurrence of such Flip-over Event, all the obligations and duties of the Company pursuant to this Agreement; (C) the term “Company” will thereafter be deemed to refer to the Issuer; and (D) the Issuer will take such steps (including without limitation the reservation of a sufficient number of its Common Shares to permit the exercise of all outstanding Rights) in connection with such consummation as may be necessary to assure that the provisions hereof are thereafter applicable, as nearly as reasonably may be possible, in relation to its Common Shares thereafter deliverable upon the exercise of the Rights. (b) For purposes of this Section 13, “Issuer” means (i) in the case of any Flip-over Event described in Sections 13(a)(i) or (ii) above, the Person that is the continuing, surviving, resulting or acquiring Person (including the Company as the continuing or surviving corporation of a transaction described in Section 13(a)(ii) above), and (ii) in the case of any Flip‑over Event described in Section 13(a)(iii) above, the Person that is the party receiving the greatest portion of the assets or earning power (including without limitation securities creating any obligation on the part of the Company and/or any of its Subsidiaries) transferred pursuant to such transaction or transactions; provided, however, that, in any such case: (A) if (1) no class of equity security of such Person is, at the time of such merger, consolidation or transaction and has been continuously over the preceding 12‑month period, registered pursuant to Section 12 of the Exchange Act, and (2) such Person is a Subsidiary, directly or indirectly, of another Person, a class of equity security of which is and has been so registered, the term “Issuer” means such
other Person; and (B) in case such Person is a Subsidiary, directly or indirectly, of more than one Person, a class of equity security of two or more of which are and have been so registered, the term “Issuer” means whichever of such Persons is the issuer of the equity security having the greatest aggregate market value. Notwithstanding the foregoing, if the Issuer in any of the Flip-over Events listed above is not a corporation or other legal entity having outstanding equity securities, then, and in each such case, (x) if the Issuer is directly or indirectly wholly owned by a corporation or other legal entity having outstanding equity securities, then all references to Common Shares of the Issuer will be deemed to be references to the Common Shares of the corporation or other legal entity having outstanding equity securities which ultimately controls the Issuer, and (y) if there is no such corporation or other legal entity having outstanding equity securities, (I) proper provision will be made so that the Issuer creates or otherwise makes available for purposes of the exercise of the Rights in accordance with the terms of this Agreement, a kind or kinds of security or securities having a fair market value at least equal to the economic value of the Common Shares which each holder of a Right would have been entitled to receive if the Issuer had been a corporation or other legal entity having outstanding equity securities; and (II) all other provisions of this Agreement will apply to the issuer of such securities as if such securities were Common Shares.
(c) The Company will not consummate any Flip‑over Event if, (i) at the time of or immediately after such Flip-over Event, there are or would be any rights, warrants, instruments or securities outstanding or any agreements or arrangements in effect which would eliminate or substantially diminish the benefits intended to be afforded by the Rights, (ii) prior to, simultaneously with or immediately after such Flip-over Event, the stockholders of the Person who constitutes, or would constitute, the Issuer for purposes of Section 13(a) shall have received a distribution of Rights previously owned by such Person or any of its Affiliates or Associates, or (iii) the form or nature of the organization of the Issuer would preclude or limit the exercisability of the Rights. In addition, the Company will not consummate any Flip‑over Event unless the Issuer has a sufficient number of authorized Common Shares (or other securities as contemplated in Section 13(b) above) which have not been issued or reserved for issuance to permit the exercise in full of the Rights in accordance with this Section 13 and unless prior to such consummation the Company and the Issuer have executed and delivered to the Rights Agent a supplemental agreement providing for the terms set forth in subsections (a) and (b) of this Section 13 and further providing that as promptly as practicable after the consummation of any Flip‑over Event, the Issuer will:
(A) prepare and file a registration statement under the Securities Act with respect to the Rights and the securities issuable upon exercise of the Rights on an appropriate form, and use its best efforts to cause such registration statement to (1) become effective as soon as practicable after such filing and (2) remain effective (with a prospectus at all times meeting the requirements of the Securities Act) until the Expiration Date;
(B) take all such action as may be appropriate under, or to ensure compliance with, the applicable state securities or “blue sky” laws in connection with the exercisability of the Rights; and
(C) deliver to holders of the Rights historical financial statements for the Issuer and each of its affiliates which comply in all respects with the requirements for registration on Form 10 under the Exchange Act.
(d) The provisions of this Section 13 will similarly apply to successive mergers or consolidations or sales or other transfers. In the event that a Flip‑over Event occurs at any time after the occurrence of a Flip-in Event, except for Rights that have become null and void pursuant to Section 11(a)(ii), Rights that shall not have been previously exercised will cease to be exercisable in the manner provided in Section 11(a)(ii) and will thereafter be exercisable in the manner provided in Section 13(a).
14. Fractional Rights and Fractional Securities. (a) The Company will not be required to issue fractions of Rights or to distribute Right Certificates which evidence fractional Rights. In lieu of such fractional Rights, the Company will pay as promptly as practicable to the registered holders of the Right Certificates with regard to which such fractional Rights otherwise would be issuable, an amount in cash equal to the same fraction of the current market value of one Right. For the purposes of this Section 14(a), the current market value of one Right is the closing price of the Rights for the Trading Day immediately prior to the date on which such fractional Rights otherwise would have been issuable. The closing price for any day is the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal quotation system with respect to securities listed or admitted to trading on The NASDAQ Stock Market LLC or, if the Rights are not listed or admitted to trading on The NASDAQ Stock Market LLC, as reported in the principal quotation system with respect to securities listed on the principal national securities exchange on which the Rights are listed or admitted to trading or, if the Rights are not listed or admitted to trading on any national securities exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by such market then in use, or, if on any such date the Rights are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Rights selected by the Board of Directors of the Company. If the Rights are not publicly held or are not so listed or traded, or are not the subject of available bid and asked quotes, the current market value of one Right will mean the fair value thereof as determined in good faith by the Board of Directors of the Company, which determination will be described in a written statement filed with the Rights Agent.
(b) The Company will not be required to issue fractions of Preferred Shares (other than fractions which are integral multiples of one one-hundredth of a Preferred Share) upon exercise of the Rights or to distribute certificates which evidence fractional Preferred Shares or to register fractional Preferred Shares on the stock transfer books of the Company (other than fractions which are integral multiples of one one-hundredth of a Preferred Share). Fractions of Preferred Shares in integral multiples of one one-hundredth of a Preferred Share may, at the election of the Company, be evidenced by depositary receipts pursuant to an appropriate agreement between the Company and a depositary selected by it, provided that such agreement provides that the holders of such depositary receipts have all the rights, privileges and preferences to which they are entitled as Beneficial Owners of the Preferred Shares represented by such depositary receipts. In lieu of fractional Preferred Shares that are not integral multiples
of one one-hundredth of a Preferred Share, the Company may pay to any Person to whom or which such fractional Preferred Shares would otherwise be issuable an amount in cash equal to the same fraction of the current market value of one Preferred Share. For purposes of this Section 14(b), the current market value of one Preferred Share is the closing price of the Preferred Shares (as determined in the same manner as set forth for Common Shares in the second sentence of Section 11(d)(i)) for the Trading Day immediately prior to the date of such exercise; provided, however, that if the closing price of the Preferred Shares cannot be so determined, the closing price of the Preferred Shares for such Trading Day will be conclusively deemed to be an amount equal to the closing price of the Common Shares (determined pursuant to the second sentence of Section 11(d)(i)) for such Trading Day multiplied by one hundred (as such number may be appropriately adjusted to reflect events such as stock splits, stock dividends, recapitalizations or similar transactions relating to the Common Shares occurring after the date of this Agreement); providedfurther, however, that if neither the Common Shares nor the Preferred Shares are publicly held or listed or admitted to trading on any national securities exchange, or the subject of available bid and asked quotes, the current market value of one Preferred Share will mean the fair value thereof as determined in good faith by the Board of Directors of the Company, which determination will be described in a written statement filed with the Rights Agent.
(c) Following the occurrence of a Triggering Event, the Company will not be required to issue fractions of Common Shares or other securities issuable upon exercise or exchange of the Rights or to distribute certificates which evidence any such fractional securities or to register any such fractional securities on the stock transfer books of the Company. In lieu of issuing any such fractional securities, the Company may pay to any Person to whom or which such fractional securities would otherwise be issuable an amount in cash equal to the same fraction of the current market value of one such security. For purposes of this Section 14(c), the current market value of one Common Share or other security issuable upon the exercise or exchange of Rights is the closing price thereof (as determined in the same manner as set forth for Common Shares in the second sentence of Section 11(d)(i)) for the Trading Day immediately prior to the date of such exercise or exchange; provided, however, that if neither the Common Shares nor any such other securities are publicly held or listed or admitted to trading on any national securities exchange, or the subject of available bid and asked quotes, the current market value of one Common Share or such other security will mean the fair value thereof as determined in good faith by the Board of Directors of the Company, which determination will mean the fair value thereof as will be described in a written statement filed with the Rights Agent.
(d) Whenever a payment of cash in lieu of fractional Rights, fractional Preferred Shares or fractional Common Shares is to be made by the Rights Agent under this Agreement, the Company shall (i) promptly prepare and deliver to the Rights Agent a certificate setting forth in reasonable detail the facts related to such payments and the prices and formulas utilized in calculating such payments, and (ii) provide sufficient monies to the Rights Agent in the form of fully collected funds to make such payments. The Rights Agent shall be fully protected in relying upon such a certificate and shall have no duty with respect to, and shall not be deemed to have knowledge of, any payment of cash in lieu of fractional Rights, fractional Preferred Shares or fractional Common Shares under this Agreement unless and until the Rights Agent shall have received such a certificate and sufficient monies.
15. Rights of Action. All rights of action in respect of this Agreement, excepting the rights of action given to the Rights Agent hereunder, are vested in the respective registered holders of the Right Certificates (and, prior to the Distribution Date, the registered holders of the Common Shares); and any registered holder of any Right Certificate (or, prior to the Distribution Date, of the Common Shares), without the consent of the Rights Agent or of the holder of any other Right Certificate (or, prior to the Distribution Date, of the holder of any Common Shares), may in his own behalf and for his own benefit enforce, and may institute and maintain any suit, action or proceeding against the Company to enforce, or otherwise act in respect of, his right to exercise the Rights evidenced by such Right Certificate in the manner provided in such Right Certificate and in this Agreement. Without limiting the foregoing or any remedies available to the holders of Rights, it is specifically acknowledged that the holders of Rights would not have an adequate remedy at law for any breach of this Agreement and will be entitled to specific performance of the obligations under this Agreement, and injunctive relief against actual or threatened violations of the obligations of any Person subject to this Agreement.
16. Agreement of Rights Holders. Every holder of a Right by accepting the same consents and agrees with the Company and the Rights Agent and with every other holder of a Right that:
(g)Prior to the Distribution Date, the Rights are transferable only in connection with the transfer of the Common Shares;
(h)After the Distribution Date, the Right Certificates are transferable only on the registry books of the Rights Agent if surrendered at the office of the Rights Agent designated for such purpose, duly endorsed or accompanied by a proper instrument of transfer, and with the appropriate forms and certificates fully completed and executed;
(i)The Company and the Rights Agent may deem and treat the person in whose name the Right Certificate (or, prior to the Distribution Date, the associated Common Share) is registered as the absolute owner thereof and of the Rights evidenced thereby (notwithstanding any notations of ownership or writing on the Right Certificate or the associated Common Share certificate, if any, made by anyone other than the Company or the Rights Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent will be affected by any notice to the contrary;
(j)Such holder expressly waives any right to receive any fractional Rights and any fractional securities upon exercise or exchange of a Right, except as otherwise provided in Section 14.
(k)Notwithstanding anything in this Agreement to the contrary, neither the Company nor the Rights Agent will have any liability to any holder of a Right or other Person as a result of its inability to perform any of its obligations under this Agreement by reason of any preliminary or permanent injunction or other order, decree or ruling issued by a court of competent jurisdiction or by a governmental, regulatory or administrative agency or commission, or any statute, rule, regulation or executive order promulgated or enacted by any governmental authority, prohibiting or otherwise restraining performance of such obligation; provided,
however, that the Company will use its best efforts to have any such order, decree or ruling lifted or otherwise overturned as soon as possible.
17. Right Certificate Holder Not Deemed a Stockholder. No holder, as such, of any Right Certificate will be entitled to vote, receive dividends, or be deemed for any purpose the holder of Preferred Shares or any other securities of the Company which may at any time be issuable upon the exercise of the Rights represented thereby, nor will anything contained herein or in any Right Certificate be construed to confer upon the holder of any Right Certificate, as such, any of the rights of a stockholder of the Company or any right to vote for the election of Directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting stockholders (except as provided in Section 25), or to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by such Right Certificate shall have been exercised in accordance with the provisions of this Agreement or exchanged pursuant to the provisions of Section 24.
18. Concerning the Rights Agent. (a) The Company will pay to the Rights Agent reasonable compensation for all services rendered by it hereunder and, from time to time, on demand of the Rights Agent, its reasonable expenses and counsel fees and other disbursements incurred in the preparation, negotiation, delivery, amendment, administration and execution of this Agreement and the exercise and performance of its duties hereunder. The Company will also indemnify the Rights Agent and its affiliates, director, employees. representatives and advisors for, and hold them harmless against, any loss, liability, suit, action, proceeding, damage, judgment, fine, penalty, claim, demand, settlement, cost or expense (including without limitation the reasonable fees and expenses of legal counsel), incurred without gross negligence, bad faith, or willful misconduct on the part of the Rights Agent (which gross negligence, bad faith or willful misconduct must be determined by a final, non-appealable judgment of a court of competent jurisdiction), for action taken, suffered or omitted to be taken by the Rights Agent in connection with the acceptance and administration of this Agreement, including the costs and expenses of defending against any claim of liability arising therefrom, directly or indirectly. The provisions provided for under this Section 18 and Section 20 below shall survive the exercise or expiration of the Rights, the termination of this Agreement and the resignation, replacement or removal of the Rights Agent. The costs and expenses incurred in enforcing this right of indemnification shall be paid by the Company.
(b) The Rights Agent will be protected and will incur no liability for or in respect of any action taken, suffered, or omitted to be taken by it in connection with its administration of this Agreement in reliance upon any Right Certificate or certificate or other notice evidencing Preferred Shares or Common Shares or other securities of the Company, instrument of assignment or transfer, power of attorney, endorsement, affidavit, letter, notice, direction, consent, certificate, statement or other paper or document believed by it to be genuine and to be signed, executed, and, where necessary, verified or acknowledged, by the proper Person or Persons. The Rights Agent shall not be deemed to have knowledge of any event of which it was supposed to receive notice thereof hereunder, and the Rights Agent shall be fully protected and shall incur no liability for failing to take any action in connection therewith, unless and until it has received such notice in writing.
19. Merger or Consolidation or Change of Name of Rights Agent. (a) Any Person into which the Rights Agent or any successor Rights Agent may be merged or with which it may be consolidated, or any Person resulting from any merger or consolidation to which the Rights Agent or any successor Rights Agent is a party, or any Person succeeding to the stockholder services business of the Rights Agent or any successor Rights Agent, will be the successor to the Rights Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided that such Person would be eligible for appointment as a successor Rights Agent under the provisions of Section 21. If at the time such successor Rights Agent succeeds to the agency created by this Agreement any of the Right Certificates shall have been countersigned but not delivered, any such successor Rights Agent may adopt the countersignature of the predecessor Rights Agent and deliver such Right Certificates so countersigned; and if at that time any of the Right Certificates shall not have been countersigned, any successor Rights Agent may countersign such Right Certificates either in the name of the predecessor Rights Agent or in the name of the successor Rights Agent; and in all such cases such Right Certificates will have the full force provided in the Right Certificates and in this Agreement.
(b) If at any time the name of the Rights Agent changes and at such time any of the Right Certificates have been countersigned but not delivered, the Rights Agent may adopt the countersignature under its prior name and deliver Right Certificates so countersigned; and if at that time any of the Right Certificates have not been countersigned, the Rights Agent may countersign such Right Certificates either in its prior name or in its changed name; and in all such cases such Right Certificates will have the full force provided in the Right Certificates and in this Agreement.
20. Duties of Rights Agent. The Rights Agent undertakes the duties and obligations expressly imposed by this Agreement upon the following terms and conditions, by all of which the Company and the holders of Right Certificates, by their acceptance thereof, will be bound:
(l)The Rights Agent may consult with legal counsel (who may be legal counsel for the Rights Agent or the Company or an employee of the Rights Agent), and the advice of such counsel will be full and complete authorization and protection to the Rights Agent and the Rights Agent shall incur no liability for or in respect of any action taken or omitted to be taken by it in accordance with such advice.
(m)Whenever in the performance of its duties under this Agreement the Rights Agent deems it necessary or desirable that any fact or matter be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by any one of the Chairman of the Board, the President, any Vice President, the Secretary or the Treasurer of the Company and delivered to the Rights Agent, and such certificate will be full authorization to the Rights Agent for any action taken, suffered or omitted to be taken by it under the provisions of this Agreement in reliance upon such certificate.
(n)The Rights Agent shall be liable hereunder to the Company and any other Person only for its own gross negligence, bad
faith or willful misconduct (which gross negligence, bad faith or willful misconduct must be determined by a final, non-appealable judgment of a court of competent jurisdiction). Any liability of the Rights Agent under this Agreement will be limited to the amount of annual fees paid by the Company to the Rights Agent. Anything to the contrary notwithstanding, in no event will the Rights Agent be liable for special, punitive, indirect, incidental or consequential loss or damages of any kind whatsoever (including, without limitation, lost profits), even if the Rights Agent has been advised of the likelihood of such loss or damages. and regardless of the form of the action; and the Company agrees to indemnify the Rights Agent and its affiliates, director, employees. representatives and advisors and to hold them harmless to the fullest extent permitted by law against any loss, liability or expense incurred as a result of claims for special, punitive, incidental, indirect or consequential loss or damages of any kind whatsoever.
(o)The Rights Agent will not be liable for or by reason of any of the statements of fact or recitals contained in this Agreement or in the Right Certificates (except its countersignature thereof) or be required to verify the same, but all such statements and recitals are and will be deemed to have been made by the Company only.
(p)The Rights Agent will not be under any responsibility or have any liability in respect of the validity of this Agreement or the execution and delivery hereof (except the due execution and delivery hereof by the Rights Agent) or in respect of the validity or execution of any Right Certificate (except its countersignature thereof); nor will it be responsible for any breach by the Company of any covenant contained in this Agreement or in any Right Certificate; nor will it be responsible for any adjustment required under the provisions of Sections 11 or 13 (including any adjustment which results in Rights becoming null and void) or responsible for the manner, method or amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment (except with respect to the exercise of Rights evidenced by Right Certificates after actual notice of any such adjustment); nor will it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any shares of stock or other securities to be issued pursuant to this Agreement or any Right Certificate or as to whether any shares of stock or other securities will, when issued, be duly authorized, validly issued, fully paid and nonassessable.
(q)The Company will perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further and other acts, instruments and assurances as may reasonably be required by the Rights Agent for the carrying out or performing by the Rights Agent of the provisions of this Agreement.
(r)The Rights Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder from any one of the Chairman of the Board, the President, any Vice President, the Secretary or the Treasurer of the Company, and to apply to such officers for advice or instructions in connection with its duties, and it will not be liable for any action taken or suffered to be taken by it in accordance with instructions of any such officer. The Rights Agent will be fully authorized and protected in relying upon instructions received by any such officer. The Rights Agent will not be held to have notice of any change of authority of any person until receipt of written notice thereof from the Company.
(s)The Rights Agent and any stockholder, director, officer or employee of the Rights Agent may buy, sell or deal in any of the Rights or other securities of the Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to the Company or otherwise act as fully and freely as though it were not Rights Agent under this Agreement. Nothing herein will preclude the Rights Agent (or its shareholder, affiliate, director, officer or employee) from acting in any other capacity for the Company or for any other Person.
(t)The Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys or agents, and the Rights Agent will not be answerable or accountable for any act, default, neglect or misconduct of any such attorneys or agents or for any loss to the Company resulting from any such act, default, neglect or misconduct in the absence of gross negligence, bad faith or willful misconduct in the selection and continued employment thereof (which gross negligence, bad faith or willful misconduct must be determined by a final, non-appealable judgment of a court of competent jurisdiction). The Rights Agent will not be under any duty or responsibility to ensure compliance with any applicable federal or state securities laws in connection with the issuance, transfer or exchange of Right Certificates.
(u)If, with respect to any Right Certificate surrendered to the Rights Agent for exercise, transfer, split up, combination or exchange, either (i) the certificate attached to the form of assignment or form of election to purchase, as the case may be, has either not been completed or indicates an affirmative response to clause 1 or 2 thereof, or (ii) any other actual or suspected irregularity exists, the Rights Agent will not take any further action with respect to such requested exercise, transfer, split up, combination or exchange without first consulting with the Company, and will thereafter take further action with respect thereto only in accordance with the Company’s written instructions.
(v)No provision of this Agreement shall require the Rights Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of its rights if it believes that repayment of such funds or adequate indemnification against such risk or liability is not reasonably assured to it.
(w)In the event the Rights Agent reasonably believes any ambiguity or uncertainty exists hereunder or in any notice, instruction, direction, request or other communication, paper or document received by the Rights Agent hereunder, the Rights Agent shall, as soon as practicable, inform the Company or such Person seeking clarification and may, in its sole discretion, refrain from taking any action, and will be fully protected and will not be liable in any way to the Company or other Person or entity for refraining from taking such action, unless the Rights Agent receives written instructions signed by the Company which eliminates such ambiguity or uncertainty to the reasonable satisfaction of the Rights Agent.
21. Change of Rights Agent. The Rights Agent or any successor Rights Agent may resign and be discharged from its duties under this Agreement upon 30 calendar days’ notice in writing mailed to the Company in accordance with Section 26 hereof and, in the event that the Rights Agent or one of its affiliates is not also the transfer agent for the Company, to each transfer agent of the Preferred Shares or the Common Shares by first-class mail, postage prepaid,
or nationally recognized overnight delivery. In the event the transfer agency relationship in effect between the Company and the Rights Agent terminates, the Rights Agent will be deemed to have resigned automatically and be discharged from its duties under this Agreement as of the effective date of such termination, and the Company shall be responsible for sending any required notice. The Company may remove the Rights Agent or any successor Rights Agent upon 30 calendar days’ notice in writing, mailed to the Rights Agent or successor Rights Agent, as the case may be, and to each transfer agent of the Preferred Shares and the Common Shares by registered or certified mail, and to the holders of the Right Certificates by first-class mail. If the Rights Agent resigns or is removed or otherwise becomes incapable of acting, the Company will appoint a successor to the Rights Agent. If the Company fails to make such appointment within a period of 30 calendar days after giving notice of such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of a Right Certificate (who will, with such notice, submit his Right Certificate for inspection by the Company), then the registered holder of any Right Certificate may apply to any court of competent jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent, whether appointed by the Company or by such a court, will be a corporation or other legal entity organized and doing business under the laws of the United States or of the State of New York (or of any other state of the United States), in good standing, which is authorized under such laws to exercise stockholder services powers and is subject to supervision or examination by federal or state authority and which has, along with its affiliates, at the time of its appointment as Rights Agent a combined capital and surplus of at least $50 million. After appointment, the successor Rights Agent will be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent without further act or deed; but the predecessor Rights Agent will deliver and transfer to the successor Rights Agent any property at the time held by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose. Not later than the effective date of any such appointment, the Company will file notice thereof in writing with the predecessor Rights Agent and each transfer agent of the Preferred Shares or the Common Shares, and mail a notice thereof in writing to the registered holders of the Right Certificates. Failure to give any notice provided for in this Section 21, however, or any defect therein, will not affect the legality or validity of the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the case may be.
22. Issuance of New Right Certificates. Notwithstanding any of the provisions of this Agreement or of the Rights to the contrary, the Company may, at its option, issue new Right Certificates evidencing Rights in such form as may be approved by the Board of Directors of the Company to reflect any adjustment or change in the Purchase Price per share and the number or kind of securities issuable upon exercise of the Rights made in accordance with the provisions of this Agreement. In addition, in connection with the issuance or sale by the Company of Common Shares following the Distribution Date and prior to the Expiration Date, the Company (a) will, with respect to Common Shares so issued or sold pursuant to the exercise, exchange or conversion of securities (other than Rights) issued prior to the Distribution Date which are exercisable or exchangeable for, or convertible into Common Shares, and (b) may, in any other case, if deemed necessary, appropriate or desirable by the Board of Directors of the Company, issue Right Certificates representing an equivalent number of Rights as would have been issued in respect of such Common Shares if they had been issued or sold prior to the Distribution Date,
as appropriately adjusted as provided herein as if they had been so issued or sold; provided, however, that (i) no such Right Certificate will be issued if, and to the extent that, in its good faith judgment the Board of Directors of the Company determines that the issuance of such Right Certificate could have a material adverse tax consequence to the Company or to the Person to whom or which such Right Certificate otherwise would be issued and (ii) no such Right Certificate will be issued if, and to the extent that, appropriate adjustment otherwise has been made in lieu of the issuance thereof.
23. Redemption. (a) Prior to the Expiration Date, the Board of Directors of the Company may, at its option, redeem all but not less than all of the then‑outstanding Rights at the Redemption Price at any time prior to the Close of Business on the later of (i) the Distribution Date and (ii) the Share Acquisition Date. Any such redemption will be effective immediately upon the action of the Board of Directors of the Company ordering the same, unless such action of the Board of Directors of the Company expressly provides that such redemption will be effective at a subsequent time or upon the occurrence or nonoccurrence of one or more specified events (in which case such redemption will be effective in accordance with the provisions of such action of the Board of Directors of the Company).
(b) Immediately upon the effectiveness of the redemption of the Rights as provided in Section 23(a), and without any further action and without any notice, the right to exercise the Rights will terminate and the only right thereafter of the holders of Rights will be to receive the Redemption Price, without interest thereon. Promptly after the effectiveness of the redemption of the Rights as provided in Section 23(a), the Company will publicly announce such redemption and, within 10 calendar days thereafter, will give notice of such redemption to the holders of the then‑outstanding Rights by mailing such notice to all such holders at their last addresses as they appear upon the registry books of the Company; provided, however, that the failure to give, or any defect in, any such notice will not affect the validity of the redemption of the Rights. Any notice that is mailed in the manner herein provided will be deemed given, whether or not the holder receives the notice. The notice of redemption mailed to the holders of Rights will state the method by which the payment of the Redemption Price will be made. The Company may, at its option, pay the Redemption Price in cash, Common Shares (based upon the current per share market price of the Common Shares (determined pursuant to Section 11(d)) at the time of redemption), or any other form of consideration deemed appropriate by the Board of Directors of the Company (based upon the fair market value of such other consideration, determined by the Board of Directors of the Company in good faith) or any combination thereof. The Company may, at its option, combine the payment of the Redemption Price with any other payment being made concurrently to holders of Common Shares and, to the extent that any such other payment is discretionary, may reduce the amount thereof on account of the concurrent payment of the Redemption Price. If legal or contractual restrictions prevent the Company from paying the Redemption Price (in the form of consideration deemed appropriate by the Board of Directors of the Company) at the time of redemption, the Company will pay the Redemption Price, without interest, promptly after such time as the Company ceases to be so prevented from paying the Redemption Price.
24. Exchange. (a) The Board of Directors of the Company may, at its option, at any time after the later of the (i) the Distribution Date and (ii) the Share Acquisition Date, exchange
all or part of the then-outstanding and exercisable Rights (which will not include Rights that have become null and void pursuant to the provisions of Section 11(a)(ii)) for Common Shares at an exchange ratio of one Common Share per Right, appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the Record Date (such exchange ratio being hereinafter referred to as the “Exchange Ratio”). Any such exchange will be effective immediately upon the action of the Board of Directors of the Company ordering the same, unless such action of the Board of Directors of the Company expressly provides that such exchange will be effective at a subsequent time or upon the occurrence or nonoccurrence of one or more specified events (in which case such exchange will be effective in accordance with the provisions of such action of the Board of Directors of the Company). Prior to effecting an exchange pursuant to this Section 24, the Board of Directors of the Company may direct the Company to enter into a Trust Agreement in such form and with such terms as the Board of Directors of the Company shall then approve (the “Trust Agreement”). If the Board of Directors of the Company so directs, the Company shall enter into the Trust Agreement and shall issue to the trust created by such agreement (the “Trust”) all of the Common Shares issuable pursuant to the exchange, and all Persons entitled to receive Common Shares pursuant to the exchange shall be entitled to receive such Common Shares (and any dividends or distributions made thereon after the date on which such shares are deposited in the Trust) only from the Trust and solely upon compliance with the relevant terms and provisions of the Trust Agreement. Notwithstanding the foregoing, the Board of Directors of the Company will not be empowered to effect such exchange at any time after any Person (other than the Company or any Related Person), who or which, together with all Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or more of the then‑outstanding Common Shares.
(b) Immediately upon the effectiveness of the exchange of any Rights as provided in Section 24(a), and without any further action and without any notice, the right to exercise such Rights will terminate and the only right with respect to such Rights thereafter of the holder of such Rights will be to receive that number of Common Shares equal to the number of such Rights held by such holder multiplied by the Exchange Ratio. Promptly after the effectiveness of the exchange of any Rights as provided in Section 24(a), the Company will publicly announce such exchange (with prompt written notice thereof also provided to the Rights Agent) and, within 10 calendar days thereafter, will give notice of such exchange to all of the holders of such Rights at their last addresses as they appear upon the registry books of the Rights Agent; provided, however, that the failure to give, or any defect in, such notice will not affect the validity of such exchange. Any notice that is mailed in the manner herein provided will be deemed given, whether or not the holder receives the notice. Each such notice of exchange will state the method by which the exchange of the Common Shares for Rights will be effected and, in the event of any partial exchange, the number of Rights which will be exchanged. Any partial exchange will be effected pro rata based on the number of Rights (other than Rights which have become null and void pursuant to the provisions of Section 11(a)(ii)) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its option, may substitute for any Common Share exchangeable for a Right (i) equivalent common shares (as such term is used in Section 11(a)(iii)), (ii) cash, (iii) debt securities of the Company, (iv) other assets, or (v) any combination of the foregoing, in any event having an aggregate value, as
determined in good faith by the Board of Directors of the Company (which determination will be described in a written statement filed with the Rights Agent), equal to the current market value of one Common Share (determined pursuant to Section 11(d)) on the Trading Day immediately preceding the date of the effectiveness of the exchange pursuant to this Section 24.
25. Notice of Certain Events. (a) If, after the Distribution Date, the Company proposes (i) to pay any dividend payable in stock of any class to the holders of Preferred Shares or to make any other distribution to the holders of Preferred Shares (other than a regular periodic cash dividend), (ii) to offer to the holders of Preferred Shares rights, options or warrants to subscribe for or to purchase any additional Preferred Shares or shares of stock of any class or any other securities, rights or options, (iii) to effect any reclassification of its Preferred Shares (other than a reclassification involving only the subdivision of outstanding Preferred Shares), (iv) to effect any consolidation or merger into or with, or to effect any sale or other transfer (or to permit one or more of its Subsidiaries to effect any sale or other transfer), in one or more transactions, of assets or earning power (including, without limitation, securities creating any obligation on the part of the Company and/or any of its Subsidiaries) representing more than 50% of the assets and earning power of the Company and its Subsidiaries, taken as a whole, to any other Person or Persons other than the Company or one or more of its wholly owned Subsidiaries, (v) to effect the liquidation, dissolution or winding up of the Company, or (vi) to declare or pay any dividend on the Common Shares payable in Common Shares or to effect a subdivision, combination or reclassification of the Common Shares then, in each such case, the Company will give to each holder of a Right Certificate, to the extent feasible and in accordance with Section 26, a notice of such proposed action, which specifies the record date for the purposes of such stock dividend, distribution or offering of rights, options or warrants, or the date on which such reclassification, consolidation, merger, sale, transfer, liquidation, dissolution or winding up is to take place and the date of participation therein by the holders of the Common Shares and/or Preferred Shares, if any such date is to be fixed, and such notice will be so given, in the case of any action covered by clause (i) or (ii) above, at least 10 calendar days prior to the record date for determining holders of the Preferred Shares for purposes of such action, and, in the case of any such other action, at least 10 calendar days prior to the date of the taking of such proposed action or the date of participation therein by the holders of the Common Shares and/or Preferred Shares, whichever is the earlier.
(b) In case any Triggering Event occurs, then, in any such case, the Company will as soon as practicable thereafter give to the Rights Agent and each holder of a Right Certificate, in accordance with Section 26, a notice in writing of the occurrence of such event, which specifies the event and the consequences of the event to holders of Rights.
(c) Notwithstanding anything in this Agreement to the contrary, prior to the Distribution Date, a filing by the Company with the Securities and Exchange Commission shall constitute sufficient notice to the holders of any Rights or of any Common Shares for purposes of this Agreement.
26. Notices. (a) Notices or demands authorized by this Agreement to be given or made by the Rights Agent or by the holder of any Right Certificate to or on the Company will be sufficiently given or made if sent in writing by first-class mail, postage prepaid, or overnight
delivery service, addressed (until another address is filed in writing with the Rights Agent) as follows:
Kaiser Aluminum Corporation 27422 Portola Parkway, Suite 200 Foothill Ranch, California 92610-2831 Attention: General Counsel (b) Subject to the provisions of Section 21 hereof, any notice or demand authorized by this Agreement to be given or made by the Company or by the holder of any Right Certificate to or on the Rights Agent will be sufficiently given or made if sent in writing by first-class mail, postage prepaid, or overnight delivery service, addressed (until another address is filed in writing with the Company) as follows:
Computershare Inc. 250 Royall Street Canton, MA 02021 Attention: Client Services
(c) Notices or demands authorized by this Agreement to be given or made by the Company or the Rights Agent to the holder of any Right Certificate (or, if prior the Distribution Date, to the holder of any Common Shares) will be sufficiently given or made if sent in writing by first‑class mail, postage prepaid, addressed to such holder at the address of such holder as shown on the registry books of the Company.
27. Supplements and Amendments. Prior to the time at which the Rights cease to be redeemable pursuant to Section 23, and subject to the penultimate sentence of this Section 27, the Company may in its sole and absolute discretion, and the Rights Agent will if the Company so directs, supplement or amend any provision of this Agreement in any respect without the approval of any holders of Rights or Common Shares. From and after the time at which the Rights cease to be redeemable pursuant to Section 23, and subject to the penultimate sentence of this Section 27, the Company may, and the Rights Agent will if the Company so directs, supplement or amend this Agreement without the approval of any holders of Rights or Common Shares in order (i) to cure any ambiguity, (ii) to correct or supplement any provision contained herein which may be defective or inconsistent with any other provisions herein, (iii) to shorten or lengthen any time period hereunder, or (iv) to supplement or amend the provisions hereunder in any manner which the Company may deem desirable; provided, however, that no such supplement or amendment shall adversely affect the interests of the holders of Rights as such (other than an Acquiring Person or an Affiliate or Associate of an Acquiring Person), and no such supplement or amendment shall cause the Rights again to become redeemable or cause this Agreement again to become supplementable or amendable otherwise than in accordance with the provisions of this sentence. Without limiting the generality or effect of the foregoing, this Agreement may be supplemented or amended to provide for such voting powers for the Rights and such procedures for the exercise thereof, if any, as the Board of Directors of the Company may determine to be appropriate. Upon the delivery of a certificate from an officer of the Company which states that the proposed supplement or amendment is in compliance with the terms of this Section 27, the Rights Agent will execute such supplement or amendment;
provided, however, that such supplement or amendment does not adversely affect the rights, duties, obligations or immunities of the Rights Agent under this Agreement. Notwithstanding anything in this Agreement to the contrary, no supplement or amendment may be made which decreases the stated Redemption Price to an amount less than $0.001 per Right. Notwithstanding anything in this Agreement to the contrary, the limitations on the ability of the Board of Directors of the Company to amend this Agreement set forth in this Section 27 shall not affect the power or ability of the Board of Directors of the Company to take any other action that is consistent with its fiduciary duties under Delaware law, including without limitation accelerating or extending the Expiration Date or making any other amendment to this Agreement that is permitted by this Section 27 or adopting a new stockholder rights plan with such terms as the Board of Directors of the Company determines in its sole discretion to be appropriate; provided, however the Rights Agent may, but will not be obligated to, enter into any new stockholder rights agreement that adversely affects the Rights Agent’s own rights, duties, obligations or immunities or that is not substantially similar in form to this Agreement.
28. Successors; Certain Covenants. All the covenants and provisions of this Agreement by or for the benefit of the Company or the Rights Agent will be binding on and inure to the benefit of their respective successors and assigns hereunder.
29. Benefits of This Agreement. Nothing in this Agreement will be construed to give to any Person other than the Company, the Rights Agent, and the registered holders of the Right Certificates (and, prior to the Distribution Date, the Common Shares) any legal or equitable right, remedy or claim under this Agreement. This Agreement will be for the sole and exclusive benefit of the Company, the Rights Agent, and the registered holders of the Right Certificates (or prior to the Distribution Date, the Common Shares). The Company and, by accepting Rights hereunder, each holder of Rights: (a) irrevocably submit to the exclusive jurisdiction of the Court of Chancery of the State of Delaware, or, if such court shall lack subject matter jurisdiction, the United States District Court for the District of Delaware, over any suit, action or proceeding arising out of or relating to this Agreement; (b) acknowledge that the forum designated by this Section 29 has a reasonable relation to this Agreement and to such Persons’ relationship with one another; (c) waive, to the fullest extent permitted by applicable law, any objection which they now or hereafter have to personal jurisdiction or to the laying of venue of any such suit, action or proceeding brought in any court referred to in this Section 29; (d) undertake not to commence any action subject to this Agreement in any forum other than the forum described in this Section 29; and (e) agree that, to the fullest extent permitted by applicable law, a final and non-appealable judgment in any such suit, action or proceeding brought in any such court shall be conclusive and binding upon such Persons.
30. Governing Law. This Agreement, each Right and each Right Certificate issued hereunder will be deemed to be a contract made under the internal substantive laws of the State of Delaware and for all purposes will be governed by and construed in accordance with the internal substantive laws of such State applicable to contracts to be made and performed entirely within such State.
31. Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, null and void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of
this Agreement will remain in full force and effect and will in no way be affected, impaired or invalidated; provided, however, that nothing contained in this Section 31 will affect the ability of the Company under the provisions of Section 27 to supplement or amend this Agreement to replace such invalid, null and void or unenforceable term, provision, covenant or restriction with a legal, valid and enforceable term, provision, covenant or restriction; provided further, however, that if such severed provision affects the rights, immunities, duties or obligations of the Rights Agent, then the Rights Agent will be entitled to resign immediately upon written notice to the Company.
32. Descriptive Headings, Etc. Descriptive headings of the several Sections of this Agreement are inserted for convenience only and will not control or affect the meaning or construction of any of the provisions hereof. Unless otherwise expressly provided, references herein to Articles, Sections and Exhibits are to Articles, Sections and Exhibits of or to this Agreement.
33. Determinations and Actions by the Board. (a) For all purposes of this Agreement, any calculation of the number of Common Shares outstanding at any particular time, including for purposes of determining the particular percentage of such outstanding Common Shares of which any Person is the Beneficial Owner, will be made in accordance with the provisions of Section 382 of the Code, or any successor or replacement provision, and the Treasury Regulations promulgated thereunder. The Board of Directors of the Company will have the exclusive power and authority to administer this Agreement and to exercise or refrain from exercising all rights and powers specifically granted to the Board of Directors of the Company or to the Company, or as may be necessary or advisable in the administration of this Agreement, including without limitation the right and power (i) to interpret the provisions of this Agreement (including without limitation Section 27, this Section 33 and other provisions hereof relating to its powers or authority hereunder) and (ii) to make all determinations deemed necessary or advisable for the administration of this Agreement (including without limitation any determination contemplated by Section 1(a) or any determination as to whether particular Rights shall have become null and void). All such actions, calculations, interpretations and determinations (including, for purposes of clause (y) below, any omission with respect to any of the foregoing) which are done or made by the Board of Directors of the Company in good faith will (x) be final, conclusive and binding on the Company, the Rights Agent, the holders of the Rights and all other parties and (y) not subject the Board of Directors of the Company to any liability to any Person, including without limitation the Rights Agent and the holders of the Rights. The Rights Agent is entitled always to assume the Company's Board of Directors acted in good faith and shall be fully protected and incur no liability in reliance thereon.
(b) If at any time the Board of Directors of the Company determines that a Person has become an Acquiring Person, the Company will give written notice of such determination, indicating the identity of such Person, to the Rights Agent promptly thereafter. Until such a notice is received by the Rights Agent, the Rights Agent may presume conclusively for all purposes that no Person has become an Acquiring Person.
34. Process to Seek Exemption. (a) Any Person who desires to effect any transaction that might, if consummated, result in such Person becoming the Beneficial Owner of 4.99% or more of the then-outstanding Common Shares (or, in the case of any Person who would
otherwise constitute an Acquiring Person as of the Effective Time but will not be deemed to be an Acquiring Person for any purpose of this Agreement unless and until such time as provided in Section 1(a), any additional Common Shares) (a “Requesting Person”) may, prior to the date of the transaction for which the Requesting Person is seeking a determination, request in writing that the Board of Directors of the Company make a determination under this Plan so that such Person would be deemed to be an “Exempt Person” for purposes of this Plan or such transaction would be deemed to be an “Exempt Transaction” for purposes of this Plan (an “Exemption Request”). Any Exemption Request must be delivered by registered mail, return receipt requested, to the Secretary of the Company at the Company’s principal executive office. Such Exemption Request will be deemed to have been made when actually received by the Company. Any Exemption Request must include: (i) the name, address and telephone number of the Requesting Person; (ii) the number and percentage of Common Shares then Beneficially Owned by the Requesting Person; (iii) a reasonably detailed description of the transaction or transactions by which the Requesting Person would propose to acquire Beneficial Ownership of Common Shares, the maximum number and percentage of Common Shares that the Requesting Person proposes to acquire and the proposed tax treatment thereof; and (iv) a commitment by the Requesting Person that such Requesting Person will not acquire Beneficial Ownership of 4.99% or more of the then-outstanding Common Shares or, if such Requesting Person Beneficially Owns 4.99% or more of the then-outstanding Common Shares, any additional Common Shares prior to such time as the Board has responded to, or is deemed to have responded to, the Exemption Request pursuant to this Section 34. The Board of Directors of the Company will, in good faith, endeavor to respond to any Exemption Request within 30 calendar days of receiving such Exemption Request; provided that the failure of the Board of Directors of the Company to make a determination within such period will be deemed to constitute the denial by the Board of Directors of the Company of the Exemption Request. The Requesting Person must respond promptly to reasonable and appropriate requests for additional information from the Company or the Board of Directors of the Company and its advisors to assist the Board of Directors of the Company in making its determination. As a condition to making any determination requested pursuant to this Section 34(a), the Board of Directors of the Company may, in its discretion, require (at the expense of the Requesting Person) a report from advisors selected by the Board of Directors of the Company to the effect that the proposed transaction or transactions will not result in the application of any limitations on the use by the Company of the Tax Benefits taking into account any and all other transactions that have been consummated prior to receipt of the Exemption Request, any and all other proposed transactions that have been approved by the Board of Directors of the Company prior to receipt of the Exemption Request and any such other actual or proposed transactions involving Common Shares as the Board may require; provided that the Board of Directors of the Company may make the determination requested in the Exemption Request notwithstanding the effect of the proposed transaction or transactions on the Tax Benefits if it determines that such determination is in the best interests of the Company. The Board of Directors of the Company may impose any conditions that it deems reasonable and appropriate in connection with a determination pursuant to this Section 34(a), including without limitation restrictions on the ability of the Requesting Person to transfer Common Shares acquired by it in the transaction or transactions to which such determination relates. Any Exemption Request may be submitted on a confidential basis and, except to the extent required by applicable law, the Company will maintain the confidentiality of such Exemption Request and the determination of the Board of Directors of the Company with respect thereto, unless the
information contained in the Exemption Request or the determination of the Board of Directors of the Company with respect thereto otherwise becomes publicly available.
(b) The Board of Directors of the Company may make a determination under this Plan so that a Person would be deemed to be an “Exempt Person” for purposes of this Plan or a transaction would be deemed to be an “Exempt Transaction” for purposes of this Plan, whether or not an Exemption Request has been made pursuant to Section 34(a). In connection with such determination, the Board of Directors of the Company may impose any conditions that it deems reasonable and appropriate, including without limitation restrictions on the ability of the transferee to transfer Common Shares acquired by it in the transaction or transactions to which such determination relates. Any determination of the Board of Directors of the Company pursuant to this Section 34(b) may be made prospectively or retroactively.
35. Suspension of Exercisability or Exchangeability. To the extent that the Board of Directors of the Company determines in good faith that some action will or may need be taken pursuant to, or in order to properly give effect to, Section 7, 11, 13, 21 or 24 or to comply with federal or state securities laws or rules and regulations of any national securities exchange on which the Common Shares are listed or admitted to trading, the Company may suspend the exercisability or exchangeability of the Rights for a reasonable period sufficient to allow it to take such action or comply with such laws or rules and regulations. In the event of any such suspension, the Company will issue as promptly as practicable a public announcement stating that the exercisability or exchangeability of the Rights has been temporarily suspended. The Company shall notify the Rights Agent in writing whenever it makes such a public announcement temporarily suspending the exercisability or exchangeability of the Rights, and whenever such suspension has been lifted. Notice thereof pursuant to Section 26 will not be required. Upon such suspension, any rights of action vested in a holder of Rights will be similarly suspended. Failure to give a notice pursuant to the provisions of this Plan will not affect the validity of any action taken hereunder.
36. Effective Time. Notwithstanding anything in this Agreement to the contrary, this Agreement will not be effective until the Effective Time.
37. Counterparts. This Agreement may be executed in any number of counterparts and each of such counterparts will for all purposes be deemed to be an original, and all such counterparts will together constitute but one and the same instrument. A signature to this Agreement transmitted electronically will have the same authority, effect and enforceability as an original signature.
38. Force Majeure. Notwithstanding anything to the contrary contained herein, the Rights Agent shall not be liable for any delays or failures in performance resulting from acts beyond its reasonable control including, without limitation, acts of God, terrorist acts, shortage of supply, breakdowns or malfunctions, interruptions or malfunction of computer facilities, or loss of data due to power failures or mechanical difficulties with information storage or retrieval systems, labor difficulties, war, or civil unrest
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date and year first above written. | | | |
Section 16(a) of the Securities Exchange Act of 1934 requires our officers and directors and persons who own more than 10% of a registered class of our equity securities to file initial reports of ownership and reports of changes in ownership with the SEC. Such persons are required by regulation of the SEC to furnish us with copies of all Section 16(a) forms they file. Based solely on our review of the copies of such forms or written representations from certain reporting persons received by us with respect to 2013, we believe that our officers and directors and persons who own more than 10% of a registered class of our equity securities have complied with all applicable filing requirements, except for the following: for each of Messrs. Barneson and Harvey, a Form 4 in connection with one transaction was filed late.
OTHER MATTERS
We do not know of any other matters to be presented or acted upon at the Annual Meeting. If any other matter is presented at the Annual Meeting on which a vote may properly be taken, the shares represented by proxies will be voted in accordance with the judgment of the proxy holders.
FORM 10-K
Copies of our Annual Report on Form 10-K for the fiscal year endedDecember 31, 2013 (excluding exhibits) filed with the SEC are available,without charge, upon written request to Kaiser Aluminum Corporation, 27422Portola Parkway, Suite 200, Foothill Ranch, California 92610-2831, Attention:Investor Relations Department. Exhibits to the Annual Report on Form 10-K will be furnished upon payment of a fee of $0.25 per page to cover our expenses in furnishing the exhibits.
STOCKHOLDER PROPOSALS
To be considered for inclusion in our proxy statement for our 2015 annual meeting of stockholders, proposals of stockholders must be in writing and received by us no later than January 6, 2015. To be presented at the 2015 annual meeting of stockholders without inclusion in our proxy statement for such meeting, proposals of stockholders must be in writing and received by us no later than March 7, 2015 and no earlier than February 5, 2015, in accordance with procedures set forth in our bylaws. Such proposals should be mailed to Kaiser Aluminum Corporation, 27422 Portola Parkway, Suite 200, Foothill Ranch, California 92610-2831 and directed to the corporate secretary.
| | | | By Order of the Board of Directors | | | | John M. Donnan | | Executive Vice President - Legal, | | Compliance and Human Resources |
Foothill Ranch, California
April 25, 2014KAISER ALUMINUM CORPORATION
By:/s/ John M. Donnan
Name: John M. Donnan Title: Executive Vice President - Legal, Compliance and Human Resources | | | | COMPUTERSHARE INC.
By:/s/ Dennis V. Moccia Name: Dennis V. Moccia Title: Manager, Contract Administration |
EXHIBIT A CERTIFICATE OF DESIGNATION of SERIES A JUNIOR PARTICIPATING PREFERRED STOCK of KAISER ALUMINUM CORPORATION (Pursuant to Section 151 of the General Corporation Law of the State of Delaware) Kaiser Aluminum Corporation, a corporation organized and existing under the General Corporation Law of the State of Delaware (the “Company”), DOES HEREBY CERTIFY: That, pursuant to authority vested in the Board of Directors of the Company by its Amended and Restated Certificate of Incorporation, and pursuant to the provisions of Section 151 of the General Corporation Law, the Board of Directors of the Company has adopted the following resolution providing for the issuance of a series of Preferred Stock: RESOLVED, that pursuant to the authority expressly granted to and vested in the Board of Directors of the Company (the “Board of Directors” or the “Board”) by the Amended and Restated Certificate of Incorporation of the Company, a series of Preferred Stock, par value $0.01 per share (the “Preferred Stock”), of the Company be, and it hereby is, created, and that the designation and amount thereof and the powers, designations, preferences and relative, participating, optional and other special rights of the shares of such series, and the qualifications, limitations or restrictions thereof are as follows: I. Designation and Amount The shares of such series will be designated as Series A Junior Participating Preferred Stock (the “Series A Preferred”) and the number of shares constituting the Series A Preferred is 900,000. Such number of shares may be increased or decreased by resolution of the Board; provided, however, that no decrease will reduce the number of shares of Series A Preferred to a number less than the number of shares then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the Company convertible into Series A Preferred. II. Dividends and Distributions
(a) Subject to the rights of the holders of any shares of any series of Preferred Stock ranking prior to the Series A Preferred with respect to dividends, the holders of shares of Series A Preferred, in preference to the holders of Common Stock, par value $0.01 per share (the “Common Stock”), of the Company, and of any other junior stock, will be entitled to receive, when, as and if declared by the Board out of funds legally available for the purpose, dividends payable in cash (except as otherwise provided below) on such dates as are from time to time
established for the payment of dividends on the Common Stock (each such date being referred to herein as a “Dividend Payment Date”), commencing on the first Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Preferred (the “First Dividend Payment Date”), in an amount per share (rounded to the nearest cent) equal to the greater of (i) $1.00 or (ii) subject to the provision for adjustment hereinafter set forth, one hundred times the aggregate per share amount of all cash dividends, and one hundred times the aggregate per share amount (payable in kind) of all non‑cash dividends, other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock since the immediately preceding Dividend Payment Date or, with respect to the First Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Preferred. In the event that the Company at any time (i) declares a dividend on the outstanding shares of Common Stock payable in shares of Common Stock, (ii) subdivides the outstanding shares of Common Stock, (iii) combines the outstanding shares of Common Stock into a smaller number of shares, or (iv) issues any shares of its capital stock in a reclassification of the outstanding shares of Common Stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing or surviving corporation), then, in each such case and regardless of whether any shares of Series A Preferred are then issued or outstanding, the amount to which holders of shares of Series A Preferred would otherwise be entitled immediately prior to such event under clause (ii) of the preceding sentence will be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.
(b) The Company will declare a dividend on the Series A Preferred as provided in the immediately preceding paragraph immediately after it declares a dividend on the Common Stock (other than a dividend payable in shares of Common Stock). Each such dividend on the Series A Preferred will be payable immediately prior to the time at which the related dividend on the Common Stock is payable.
(c) Dividends will accrue on outstanding shares of Series A Preferred from the Dividend Payment Date next preceding the date of issue of such shares, unless (i) the date of issue of such shares is prior to the record date for the First Dividend Payment Date, in which case dividends on such shares will accrue from the date of the first issuance of a share of Series A Preferred or (ii) the date of issue is a Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A Preferred entitled to receive a dividend and before such Dividend Payment Date, in either of which events such dividends will accrue from such Dividend Payment Date. Accrued but unpaid dividends will cumulate from the applicable Dividend Payment Date but will not bear interest. Dividends paid on the shares of Series A Preferred in an amount less than the total amount of such dividends at the time accrued and payable on such shares will be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board may fix a record date for the determination of holders of shares of Series A Preferred entitled to receive payment of a dividend or distribution declared thereon, which record date will be not more than 60 calendar days prior to the date fixed for the payment thereof.
III. Voting Rights
The holders of shares of Series A Preferred will have the following voting rights: (a) Subject to the provision for adjustment hereinafter set forth, each share of Series A Preferred will entitle the holder thereof to one hundred votes on all matters submitted to a vote of the stockholders of the Company. In the event the Company at any time (i) declares a dividend on the outstanding shares of Common Stock payable in shares of Common Stock, (ii) subdivides the outstanding shares of Common Stock, (iii) combines the outstanding shares of Common Stock into a smaller number of shares, or (iv) issues any shares of its capital stock in a reclassification of the outstanding shares of Common Stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing or surviving corporation), then, in each such case and regardless of whether any shares of Series A Preferred are then issued or outstanding, the number of votes per share to which holders of shares of Series A Preferred would otherwise be entitled immediately prior to such event will be adjusted by multiplying such number by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.
(b) Except as otherwise provided herein, in any other Preferred Stock Designation creating a series of Preferred Stock or any similar stock, or by law, the holders of shares of Series A Preferred and the holders of shares of Common Stock and any other capital stock of the Company having general voting rights will vote together as one class on all matters submitted to a vote of stockholders of the Company.
(c) Except as set forth in the Amended and Restated Certificate of Incorporation or herein, or as otherwise provided by law, holders of shares of Series A Preferred will have no voting rights.
IV. Certain Restrictions
(a) Whenever dividends or other dividends or distributions payable on the Series A Preferred are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Preferred outstanding have been paid in full, the Company will not:
(i)Declare or pay dividends, or make any other distributions, on any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the shares of Series A Preferred;
(ii)Declare or pay dividends, or make any other distributions, on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the shares of Series A Preferred, except dividends paid ratably on the shares of Series A Preferred and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled;
(iii)Redeem, purchase or otherwise acquire for consideration shares of any stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the shares of Series A Preferred; provided, however, that the Company may at any time redeem, purchase or otherwise acquire shares of any such junior stock in exchange for shares of any stock of the Company ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the shares of Series A Preferred; or
(iv)Redeem, purchase or otherwise acquire for consideration any shares of Series A Preferred, or any shares of stock ranking on a parity with the shares of Series A Preferred, except in accordance with a purchase offer made in writing or by publication (as determined by the Board) to all holders of such shares upon such terms as the Board, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, may determine in good faith will result in fair and equitable treatment among the respective series or classes.
(b) The Company will not permit any majority-owned subsidiary of the Company to purchase or otherwise acquire for consideration any shares of stock of the Company unless the Company could, under paragraph (a) of this Article IV, purchase or otherwise acquire such shares at such time and in such manner.
V. Reacquired Shares
Any shares of Series A Preferred purchased or otherwise acquired by the Company in any manner whatsoever will be retired and canceled promptly after the acquisition thereof. All such shares will upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock subject to the conditions and restrictions on issuance set forth herein, in the Amended and Restated Certificate of Incorporation of the Company, or in any other Preferred Stock Designation creating a series of Preferred Stock or any similar stock or as otherwise required by law. VI. Liquidation, Dissolution or Winding Up
Upon any liquidation, dissolution or winding up of the Company, no distribution will be made (a) to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the shares of Series A Preferred unless, prior thereto, the holders of shares of Series A Preferred have received $100 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment; provided, however, that the holders of shares of Series A Preferred will be entitled to receive an aggregate amount per share, subject to the provision for adjustment hereinafter set forth, equal to one hundred times the aggregate amount to be distributed per share to holders of shares of Common Stock or (b) to the holders of shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the shares of Series A Preferred, except distributions made ratably on the shares of Series A Preferred and all such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up. In the event the Company at any time (i) declares a dividend on the outstanding shares of Common Stock payable in shares of Common Stock, (ii) subdivides the outstanding shares of Common Stock, (iii) combines
the outstanding shares of Common Stock into a smaller number of shares, or (iv) issues any shares of its capital stock in a reclassification of the outstanding shares of Common Stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing or surviving corporation), then, in each such case and regardless of whether any shares of Series A Preferred are then issued or outstanding, the aggregate amount to which each holder of shares of Series A Preferred would otherwise be entitled immediately prior to such event under the proviso in clause (a) of the preceding sentence will be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. VII. Consolidation, Merger, Etc.
In the event that the Company enters into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then, in each such case, each share of Series A Preferred will at the same time be similarly exchanged for or changed into an amount per share, subject to the provision for adjustment hereinafter set forth, equal to one hundred times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Company at any time (a) declares a dividend on the outstanding shares of Common Stock payable in shares of Common Stock, (b) subdivides the outstanding shares of Common Stock, (c) combines the outstanding shares of Common Stock in a smaller number of shares, or (d) issues any shares of its capital stock in a reclassification of the outstanding shares of Common Stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing or surviving corporation), then, in each such case and regardless of whether any shares of Series A Preferred are then issued or outstanding, the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series A Preferred will be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. VIII. Redemption
The shares of Series A Preferred are not redeemable. IX. Rank
The Series A Preferred rank, with respect to the payment of dividends and the distribution of assets, junior to all other series of the Company’s Preferred Stock. X. Amendment
Notwithstanding anything contained in the Amended and Restated Certificate of Incorporation of the Company to the contrary and in addition to any other vote required by applicable law, the Amended and Restated Certificate of Incorporation of the Company may not
be amended in any manner that would materially alter or change the powers, preferences or special rights of the Series A Preferred so as to affect them adversely without the affirmative vote of the holders of at least 67% of the outstanding shares of Series A Preferred, voting together as a single series. IN WITNESS WHEREOF, I have signed this Certificate of Designation on behalf of Kaiser Aluminum Corporation this 7th day of April 2016. | | | | KAISER ALUMINUM CORPORATION
By:
Name: 67Title:
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EXHIBIT B FORM OF RIGHT CERTIFICATE Certificate No. R-______________________ Rights NOT EXERCISABLE AFTER April 7, 2019 OR EARLIER IF REDEEMED, EXCHANGED OR AMENDED. THE RIGHTS ARE SUBJECT TO REDEMPTION, EXCHANGE AND AMENDMENT AT THE OPTION OF THE COMPANY, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES SPECIFIED IN THE RIGHTS AGREEMENT, RIGHTS THAT ARE OR WERE BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR AN ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR A TRANSFEREE THEREOF MAY BECOME NULL AND VOID. Right Certificate KAISER ALUMINUM CORPORATION This certifies that _______________, or registered assigns, is the registered owner of the number of Rights set forth above, each of which entitles the owner thereof, subject to the terms, provisions, and conditions of the Tax Asset Protection Rights Agreement, dated as of April 7, 2016 (the “Rights Agreement”), between Kaiser Aluminum Corporation, a Delaware corporation (the “Company”), and Computershare Inc., a Delaware corporation(the “Rights Agent”), to purchase from the Company at any time after the Distribution Date (as such term is defined in the Rights Agreement) and prior to the Expiration Date (as such term is defined in the Rights Agreement) at the offices of the Rights Agent designated for such purpose, one one-hundredth of a fully paid nonassessable share of Series A Junior Participating Preferred Stock, par value $0.01 per share (the “Preferred Shares”), of the Company, at a purchase price of $400.00 per one one-hundredth of a Preferred Share (the “Purchase Price”), upon presentation and surrender of this Right Certificate with the Form of Election to Purchase and related Certificate duly executed. If this Right Certificate is exercised in part, the holder will be entitled to receive upon surrender hereof another Right Certificate or Right Certificates for the number of whole Rights not exercised. The number of Rights evidenced by this Right Certificate (and the number of one one-hundredths of a Preferred Share which may be purchased upon exercise thereof) set forth above, and the Purchase Price set forth above, are the number and Purchase Price as of the date of the Rights Agreement, based on the Preferred Shares as constituted at such date. As provided in the Rights Agreement, the Purchase Price and/or the number and/or kind of securities issuable upon the exercise of the Rights evidenced by this Right Certificate are subject to adjustment upon the occurrence of certain events. This Right Certificate is subject to all of the terms, provisions and conditions of the Rights Agreement, which terms, provisions and conditions are hereby incorporated herein by reference and made a part hereof and to which Rights Agreement reference is hereby made for a
full description of the rights, limitations of rights, obligations, duties and immunities of the Rights Agent, the Company and the holders of the Right Certificates, which limitations of rights include the temporary suspension of the exercisability of the Rights under the circumstances specified in the Rights Agreement. Copies of the Rights Agreement are on file at the above-mentioned office of the Rights Agent and can be obtained from the Company without charge upon written request therefor. Terms used herein with initial capital letters and not defined herein are used herein with the meanings ascribed thereto in the Rights Agreement. Pursuant to the Rights Agreement, from and after the occurrence of a Flip‑in Event, any Rights that are Beneficially Owned by (i) any Acquiring Person (or any Affiliate or Associate of any Acquiring Person), (ii) a transferee of any Acquiring Person (or any such Affiliate or Associate) who becomes a transferee after the occurrence of a Flip‑in Event, or (iii) a transferee of any Acquiring Person (or any such Affiliate or Associate) who became a transferee prior to or concurrently with the Flip‑in Event pursuant to either (a) a transfer from an Acquiring Person to holders of its equity securities or to any Person with whom it has any continuing agreement, arrangement or understanding regarding the transferred Rights or (b) a transfer which the Board of Directors of the Company has determined is part of a plan, arrangement or understanding which has the purpose or effect of avoiding certain provisions of the Rights Agreement, and subsequent transferees of any of such Persons, will be null and void without any further action and any holder of such Rights will thereafter have no rights whatsoever with respect to such Rights under any provision of the Rights Agreement. From and after the occurrence of a Flip‑in Event, no Right Certificate will be issued that represents Rights that are or have become null and void pursuant to the provisions of the Rights Agreement, and any Right Certificate delivered to the Rights Agent that represents Rights that are or have become null and void pursuant to the provisions of the Rights Agreement will be canceled. This Right Certificate, with or without other Right Certificates, may be transferred, split up, combined or exchanged for another Right Certificate or Right Certificates entitling the holder to purchase a like number of one one-hundredths of a Preferred Share (or other securities, as the case may be) as the Right Certificate or Right Certificates surrendered entitled such holder (or former holder in the case of a transfer) to purchase, upon presentation and surrender hereof at the office of the Rights Agent designated for such purpose, with the Form of Assignment (if appropriate) and the related Certificate duly executed. Subject to the provisions of the Rights Agreement, the Rights evidenced by this Certificate may be redeemed by the Company at its option at a redemption price of $0.001 per Right or may be exchanged in whole or in part. The Rights Agreement may be supplemented and amended by the Company, as provided therein. The Company is not required to issue fractions of Preferred Shares (other than fractions which are integral multiples of one one-hundredth of a Preferred Share, which may, at the option of the Company, be evidenced by depositary receipts) or other securities issuable upon the exercise of any Right or Rights evidenced hereby. In lieu of issuing such fractional Preferred Shares or other securities, the Company may make a cash payment, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, will be entitled to vote or receive dividends or be deemed for any purpose the holder of the Preferred Shares or of any other securities of the Company which may at any time be issuable upon the exercise of the Right or Rights represented hereby, nor will anything contained herein or in the Rights Agreement be construed to confer upon the holder hereof, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting stockholders (except as provided in the Rights Agreement), or to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by this Right Certificate have been exercised in accordance with the provisions of the Rights Agreement. This Right Certificate will not be valid or obligatory for any purpose until it has been countersigned by the Rights Agent. WITNESS the facsimile signature of the officers of the Company and its corporate seal. Dated as of ________, ____. | | | ATTEST: | KAISER ALUMINUM CORPORATION
| | By:Name: Title: |
| | Countersigned:
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Form of Reverse Side of Right Certificate FORM OF ASSIGNMENT (To be executed by the registered holder if such holder desires to transfer the Right Certificate) FOR VALUE RECEIVED, _______________ hereby sells, assigns and transfers unto ______________________________________________________________________________ (Please print name and address of transferee) ______________________________________________________________________________ this Right Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint _______________ Attorney, to transfer the within Right Certificate on the books of the within-named Company, with full power of substitution. Dated: __________, ____ | | | | Signature | Signature Guaranteed: _____________________________
Signatures must be guaranteed by an eligible guarantor institution (a bank, stockbroker, savings and loan association or credit union with membership in an approved signature guarantee medallion program) at a guarantee level satisfactory to the Rights Agent. A notary public is not sufficient. |
CERTIFICATE The undersigned hereby certifies by checking the appropriate boxes that: (1)the Rights evidenced by this Right Certificate [ ] are [ ] are not being sold, assigned, transferred, split up, combined or exchanged by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Person (as such terms are defined in the Rights Agreement); (2)after due inquiry and to the best knowledge of the undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Right Certificate from any Person who is, was or became an Acquiring Person or an Affiliate or Associate of an Acquiring Person. Dated: __________, ____
FORM OF ELECTION TO PURCHASE (To be executed if holder desires to exercise the Right Certificate) To Kaiser Aluminum Corporation: The undersigned hereby irrevocably elects to exercise __________ Rights represented by this Right Certificate to purchase the one one-hundredths of a Preferred Share or other securities issuable upon the exercise of such Rights and requests that certificates for such securities be issued in the name of and delivered to: Please insert social security or other identifying number: _________________________________________________________________________
(Please print name and address) ______________________________________________________________________________________________________ If such number of Rights is not all the Rights evidenced by this Right Certificate, a new Right Certificate for the balance remaining of such Rights will be registered in the name of and delivered to: Please insert social security or other identifying number: _____________________________________________________________
(Please print name and address) Dated: __________, ____ | | | | Signature | Signature Guaranteed: _____________________________
Signatures must be guaranteed by an eligible guarantor institution (a bank, stockbroker, savings and loan association or credit union with membership in an approved signature guarantee medallion program) at a guarantee level satisfactory to the Rights Agent. A notary public is not sufficient. |
CERTIFICATE The undersigned hereby certifies by checking the appropriate boxes that: (1)the Rights evidenced by this Right Certificate [ ] are [ ] are not being exercised by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Person (as such terms are defined pursuant to the Rights Agreement); (2)after due inquiry and to the best knowledge of the undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Right Certificate from any Person who is, was, or became an Acquiring Person or an Affiliate or Associate of an Acquiring Person. Dated: __________, ____
NOTICE
Signatures on the foregoing Form of Assignment and Form of Election to Purchase and in the related Certificates must correspond to the name as written upon the face of this Right Certificate in every particular, without alteration or enlargement or any change whatsoever. Signatures must be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved medallion signature program) pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended.
EXHIBIT C SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK On April 7, 2016, the Board of Directors of Kaiser Aluminum Corporation adopted a rights plan and declared a dividend of one preferred share purchase right for each outstanding share of Kaiser Aluminum Corporation’s common stock, par value $0.01 per share. The dividend is payable on April 22, 2016 to our stockholders of record on that date. The terms of the rights and the rights plan are set forth in a Tax Asset Protection Rights Agreement, dated as of April 7, 2016, by and between Kaiser Aluminum Corporation and Computershare Inc., as rights agent. Our Board adopted the rights plan in an effort to protect stockholder value by attempting to protect against a possible limitation on our ability to use our net operating loss carryforwards and other tax attributes to reduce potential future federal income tax obligations. Under the Internal Revenue Code and rules promulgated by the Internal Revenue Service, we may “carry forward” tax losses and credits in certain circumstances to offset any current and future earnings and thus reduce our federal income tax liability, subject to certain requirements and restrictions. To the extent that our tax attributes do not otherwise become limited, we believe that we will be able to carry forward a significant amount of losses and credits, and therefore these tax attributes could be a substantial asset to us. However, if we experience an “ownership change,” as defined in Section 382 of the Internal Revenue Code, our ability to use these tax attributes will be substantially limited, and the timing of the usage of the tax attributes could be substantially delayed, which could significantly impair the value of that asset. In general terms, the rights plan imposes a significant penalty upon any person or group that acquiresbeneficial ownership of 4.99% or more of our outstanding common stock without the prior approval of our Board. A person or group that acquires a percentage of our common stock in excess of that threshold is called an “acquiring person.” Any rights held by an acquiring person are null and void and may not be exercised. The term “beneficial ownership” is defined in the rights plan and generally means direct or constructive ownership as determined under Section 382 of the Internal Revenue Code. This summary of rights provides a general description of the rights plan. Because it is only a summary, this description should be read together with the entire rights plan, which we incorporate in this summary by reference. We have filed the rights plan with the Securities and Exchange Commission as an exhibit to our registration statement on Form 8-A. Upon written request, we will provide a copy of the rights plan free of charge to any stockholder. The Rights. Our Board of Directors authorized the issuance of one right per each outstanding share of our common stockon April 22, 2016. If the rights become exercisable, each right would allow its holder to purchase from us one one-hundredth of a share of our Series A Junior Participating Preferred Stock for a purchase price of $400.00. Each fractional share of preferred stock would give the stockholder approximately the same dividend, voting and liquidation rights as does one share of ourcommon stock. Prior to exercise, however, a right does not give its holder any dividend, voting or liquidation rights.
Exercisability. The rights will not be exercisable until the earlier of: 10 days after a public announcement by Kaiser Aluminum Corporation that a person or group has become an acquiring person; and
10 business days (or a later date determined by our Board) after a person or group begins a tender or exchange offer that, if completed, would result in that person or group becoming an acquiring person.
We refer to the date that the rights become exercisable as the “distribution date.” Until the distribution date, ourcommon stock certificates will also evidence the rights and will contain a notation to that effect. Any transfer of shares ofcommon stockprior to the distribution date will constitute a transfer of the associated rights. After the distribution date, the rights will separate from the common stock and be evidenced by right certificates, which we will mail to all holders of rights that have not become null and void. After the distribution date, if a person or group already is or becomes an acquiring person, all holders of rights, except the acquiring person, may exercise their rights upon payment of the purchase price to purchase shares of our common stock (or other securities or assets as determined by the Board) with a market value of two times the purchase price. We refer to this as a “flip-in event.” After the distribution date, if a flip-in event has already occurred and Kaiser Aluminum Corporation is acquired in a merger or similar transaction, all holders of rights except the acquiring person may exercise their rights upon payment of the purchase price, to purchase shares of the acquiring or other appropriate entity with a market value of two times the purchase price of the rights. We refer to this as a “flip-over event.” Rights may be exercised to purchase our preferred shares only after the distribution date occurs and prior to the occurrence of a flip-in event as described above. A distribution date resulting from the commencement of a tender offer or exchange offer as described in the second bullet point above could precede the occurrence of a flip-in event, in which case the rights could be exercised to purchase our preferred shares. A distribution date resulting from any occurrence described in the first bullet point above would necessarily follow the occurrence of a flip-in event, in which case the rights could be exercised to purchase shares of common stock (or other securities or assets) as described above. Exempted Persons and Exempted Transactions. Our Board of Directors recognizes that there may be instances when an acquisition of our common stock that would cause a stockholder to become an acquiring person may not jeopardize the availability of any tax attributes to Kaiser Aluminum Corporation. Accordingly, the rights plan grants discretion to the Board to designate a person as an “Exempt Person” or to designate a transaction involving our common stock as an “Exempt Transaction.” An “Exempt Person” cannot become an acquiring person under the rights plan. Our Board can revoke an “Exempt Person” designation if it subsequently makes a contrary determination regarding whether a person jeopardizes the availability of tax attributes to Kaiser Aluminum Corporation.
Expiration. The rights will expire on the earliest of (i) April 7, 2019, which is the third anniversary of date on which our Board adopted the rights plan and declared a dividend of the rights, or such earlier date as of which our Board determines that the rights plan is no longer necessary for the preservation of our tax assets, (ii) the time at which the rights are redeemed, (iii) the time at which the rights are exchanged, (iv) the effective time of the repeal of Section 382 of the Code or any successor statute if the Board determines that the rights plan is no longer necessary for the preservation of our tax assets, (v) the first day of a taxable year of the Company to which the Board determines that no NOLs or other tax assets may be carried forward, and (v) the day following the certification of the voting results of Kaiser Aluminum Corporation’s 2016annual meeting of stockholders, if stockholder approval of the rights plan has not been obtained prior to that date. Redemption. Our Board may redeem all (but not less than all) of the rights for a redemption price of $0.001 per right at any time before the later of the distribution date and thedate of the first public announcement or disclosure by Kaiser Aluminum Corporation that a person or group has become an acquiring person. Once the rights are redeemed, the right to exercise rights will terminate, and the only right of the holders of rights will be to receive the redemption price. The redemption price will be adjusted if we declare a stock split or issue a stock dividend on ourcommon stock. Exchange. After the later of the distribution date and thedate of the first public announcement by Kaiser Aluminum Corporation that a person or group has become an acquiring person, but before an acquiring person owns 50% or more of our outstanding common stock, our Board may exchange each right (other than rights that have become null and void) for one share of common stock or an equivalent security. Anti-Dilution Provisions. Our Board may adjust the purchase price of the preferred shares, the number of preferred shares issuable and the number of outstanding rights to prevent dilution that may occur as a result of certain events, including, among others, a stock dividend, a stock split or a reclassification of the preferred shares or our common stock. No adjustments to the purchase price of less than one percent will be made. Amendments. Before the time rights cease to be redeemable, our Board may amend or supplement the rights plan without the consent of the holders of the rights, except that no amendment may decrease the redemption price below $0.001 per right. At any time thereafter, our Board may amend or supplement the rights plan to cure an ambiguity, to alter time period provisions, to correct inconsistent provisions or to make any additional changes to the rights plan, but only to the extent that those changes do not impair or adversely affect any rights holder and do not result in the rights again becoming redeemable. The limitations on our Board’s ability to amend the rights plan does not affect our Board’s power or ability to take any other action that is consistent with its fiduciary duties, including without limitation accelerating or extending the expiration date of the rights, making any amendment to the rights plan that is permitted by the rights plan or adopting a new rights plan with such terms as our Board determines in its sole discretion to be appropriate. * * *
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