Exhibit 4.2
COMPASS MINERALS INTERNATIONAL, INC.
DIRECTORS’ DEFERRED COMPENSATION PLAN
Effective as of October 1, 2004
The Compass Minerals International, Inc. Directors’ Deferred Compensation Plan (as it may be amended from time to time, the “Plan”) has been adopted by Compass Minerals International, Inc., a corporation organized under the laws of the state of Delaware (the “Company”), effective as of October 1, 2004, for the benefit of its eligible non-employee directors.
Section 1.1 “Account” shall mean the bookkeeping account created by the Company pursuant to Article III of this Plan in accordance with an election by a Director to receive deferred cash compensation under Article II hereof.
Section 1.2 “Affiliate” shall mean with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries Controls, is Controlled by, or is under common Control with, such Person and/or one or more Affiliates thereof. The term “Control” includes, without limitation, the possession, directly or indirectly, of the power to direct the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. The term “Affiliate” shall not include at any time any portfolio companies of Apollo Management V, L.P. or its Affiliates.
Section 1.3 “Board” shall mean the Board of Directors of the Company.
Section 1.4 “Change in Control” shall mean a change in ownership or control of the Company effected through a transaction or series of transactions (other than an offering of Common Stock to the general public through a registration statement filed with the Securities and Exchange Commission) whereby any “person” or related “group” of “persons” (as such terms are used in Sections 13(d) and 14(d)(2) of the Exchange Act) (other than the Company, any of its subsidiaries, an employee benefit plan maintained by the Company or any of its subsidiaries, a Principal Stockholder or a “person” that, prior to such transaction, directly or indirectly controls, is controlled by, or is under common control with, the Company or a Principal Stockholder) directly or indirectly acquires beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of securities of the Company possessing more than 25% of the total combined voting power of the Company’s securities outstanding immediately after such acquisition.
Section 1.5 “Common Stock” shall mean the common stock of the Company, par value $0.01 per share.
Section 1.6 “Company” shall have the meaning set forth in the recitals hereto.
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Section 1.7 “Deferred Stock Unit” shall mean the right of a Director to receive one share of Common Stock upon a distribution of his Account in accordance with Article IV.
Section 1.8 “Deferred Fees” shall have the meaning set forth in Section 3.1.
Section 1.9 “Director” shall mean a member of the Board who is not an employee of the Company or any of its subsidiaries.
Section 1.10 “Exchange Act” means the Securities Exchange Act of 1934, as amended.
Section 1.11 “Fair Market Value” of a share of Common Stock as of any date shall be the average of the high and low trading prices for a share of Common Stock as reported on the New York Stock Exchange (or on any national securities exchange on which the Stock is then listed) for the immediately preceding date or, if no such prices are reported for that date, the average of the high and low trading prices on the next preceding date for which such prices were reported.
Section 1.12 “Fees” shall mean amounts payable to a Director for serving as a member of the Board, including without limitation any (a) annual or other periodic retainer payments; (b) fees payable for meeting attendance; (c) fees payable for committee membership; and (d) fees payable for Board or committee chairmanship.
Section 1.13 “Fund” shall have the meaning set forth in Section 3.4.
Section 1.14 “Plan” shall have the meaning set forth in the recitals hereto.
Section 1.15 “Principal Stockholders” shall mean Apollo Investment Fund V, L.P., Apollo Overseas Partners V, L.P., or any investment fund managed by Apollo Management V, L.P. or any of its Affiliates, and any of their successors and assigns.
Section 1.16 “Year” shall mean calendar year.
Section 2.1 A Director may elect, on or before December 31 of any Year, to defer payment of all or a specified part of all Fees earned during the Year following such election and in any succeeding Years (until the Director ceases to be a Director); provided, however, that with respect to Year 2004 a Director may elect, within thirty days after the effective date of this Plan, to defer all or a specified part of all Fees payable on or after the effective date of this Plan. Any person who shall become a Director during any Year, and who was not a Director of the Company on the preceding December 31, may elect, no later than seven days after the Director’s term begins, to defer payment of all or a specified part of such Fees payable during the remainder of such Year and for any succeeding Years. Any Fees deferred pursuant to this Paragraph shall be paid to the Director at the time(s) and in the manner specified in Article IV hereof, as designated by the Director.
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Section 2.2 The election to participate in the Plan and manner of payment shall be designated by submitting a deferral election form in substantially the form attached hereto as Exhibit A to the Chief Financial Officer of the Company.
Section 2.3 The election shall continue from Year to Year unless the Director terminates it by written request delivered to the Secretary of the Company prior to the commencement of the Year for which the termination is first effective.
Section 3.1 The Company shall maintain separate bookkeeping accounts for the Fees deferred by each Director (the “Deferred Fees”).
Section 3.2 As of the date that any Deferred Fees would otherwise have been payable to a Director, the Company shall credit such Director’s Account with that number of Deferred Stock Units equal to the ratio of (a) the aggregate value of such Deferred Fees, to (b) the Fair Market Value per share of Common Stock as of such date.
Section 3.3 As of the date the Company pays any dividend (whether in cash or in kind) on shares of Common Stock, each Director’s Deferred Compensation Account shall be credited with that number of Deferred Stock Units equal to the ratio of (a) the aggregate value of the dividend that would have been payable on the Deferred Stock Units held by the Director immediately prior to such payment date had the shares of Common Stock represented by such Deferred Stock Units been outstanding as of such payment date to (b) the Fair Market Value per share of Common Stock as of such date.
Section 3.4 Deferred Fees and any deemed earnings with respect thereto shall be held in the general assets of the Company and no separate fund or trust shall be created or moneys set aside on account of the Account. To the extent that any person acquires a right to receive distributions from the Company under the Plan, such right shall be no greater than the right of any unsecured general creditor of the Company. Notwithstanding the foregoing, the Board, in its discretion, may elect to establish a fund (the “Fund”) containing assets equal to the amounts credited to Directors’ Accounts, and may elect in its discretion to designate a trustee to hold the Fund in trust; provided, however, that such Fund shall remain a general asset of the Company subject to the rights of creditors of the Company in the event of the Company’s bankruptcy or insolvency as defined in any such trust.
Section 4.1 Subject to Section 4.4, amounts contained in a Director’s Account shall be distributed as the Director’s election (made pursuant to Section 2.2) shall provide. Notwithstanding the foregoing, all distributions from the Plan shall be made in the form of whole shares of Common Stock with fractional shares paid in cash.
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Section 4.2 Each Director shall have the right to designate a beneficiary who is to succeed to his or her right to receive payments hereunder in the event of death. Any designated beneficiary shall receive payments in the same manner as the Director if he or she had lived. In case of a failure of designation or the death of a designated beneficiary without a designated successor, the balance of the amounts contained in the Director’s Account shall be paid, in accordance with Section 4.1, to the Director’s or former Director’s estate in full on the first day of the Year following the Year in which he or she dies. No designation of beneficiary or change in beneficiary shall be valid unless it is in writing signed by the Director and filed with the Secretary of the Company.
Section 4.3 Notwithstanding the other provisions of the Plan to the contrary, a Director may request an early withdrawal from his Account at any time by filing a written request with the Board or its designee. The Board may approve or disapprove such request in its discretion. If any such withdrawal is approved by the Board, distribution shall be made to the Director within 30 days following the date of approval. Any amount withdrawn under this Section 4.3 shall be charged with a 10% early withdrawal penalty which shall be withheld from the amount withdrawn and shall be forfeited. The Company shall have no further obligation to the Director or any of his beneficiaries with respect to amounts forfeited pursuant to this Section 4.3.
Section 4.4 Notwithstanding the other provisions of the Plan to the contrary, if a Change in Control occurs prior to the complete distribution of a Director’s Account, then any portion of such Account that has not theretofore been distributed shall be distributed to the Director (or, as applicable, his beneficiary) immediately prior to the Change in Control.
Section 5.1 The Plan shall be administered by the Board. The Board may delegate certain administrative authority to a committee or subcommittee of the Board or to one or more employees of the Company, but shall retain the ultimate responsibility for the interpretation of, and amendments to, the Plan. Members of the Board shall not be liable for any of their actions or determinations made in good faith with respect to the administration of the Plan. Except to the extent superseded by the laws of the United States, the laws of the State of Delaware, without regard to its conflict of laws principles, shall govern in all matters relating to the Plan. All expenses related to plan administration shall be paid by the Company. All decisions made by the Board with respect to issues hereunder shall be final and binding on all parties.
Section 5.2 In the event of any stock dividend, stock split, combination or exchange of shares, merger, consolidation, spin-off, recapitalization or any other corporate event affecting the Common Stock or the share price of the Common Stock, the Board may, in its sole discretion, make such equitable adjustments, if any, with respect to the Directors’ Accounts (including, without limitation, adjusting the number of Deferred Stock Units credited thereto and/or the kind of securities represented thereby), as the Board may deem necessary or
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appropriate to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under this Plan and to reflect such changes.
Section 5.3 Except to the extent required by law, the right of any Director or any beneficiary to any benefit or to any payment hereunder shall not be subject in any manner to attachment or other legal process for the debts of such Director or beneficiary, and any such benefit or payment shall not be subject to alienation, sale, transfer, assignment or encumbrance.
Section 5.4 The Plan may be amended, suspended or terminated in whole or in part from time to time by the Board except that no amendment, suspension, or termination shall apply to the payment to any Director or beneficiary of a deceased Director of any amounts previously credited to a Director’s Account.
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I hereby certify that the Plan was adopted by the Board of Directors of Compass Minerals International, Inc. on August 12, 2004, effective as of October 1, 2004.
Executed on September 13, 2004.
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| Rodney Underdown | |
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