Minerco Inc (MINE)

[StockScout1]

Here you go. Show me what you posted on Rule 16b-3 on here.
Cut and Paste, if you like.
New SEC Advice on Rule 16b-3
Provides Broad Relief for Treatment of Securities in a Merger
https://www.skadden.com/sites/default/files/publications/620library.pdf

SEC Division of Corporation Finance
https://www.sec.gov/interps/telephone/cftelinterps_sec16.pdf
Manual of Publicly Available Telephone Interpretations
R. SECTION 16 RULES AND FORMS 3, 4 AND 5
ALL 16b-3 Rules
16. Rule 16b-3
By its terms, Rule 16b-3 exempts from Section 16(b) certain transactions by officers and directors
occurring in connection with participation in an employee benefit plan. The rule, however, does
not exempt similar transactions by persons who are subject to Section 16 solely because they are
more than 10% beneficial owners.
17. **** Rule 16b-3(a) ****
Rule 16b-3 exempts issuer equity securities transactions between the issuer (including an
employee benefit plan sponsored by the issuer) and an officer or director. Rule 16b-3 will not
exempt a transaction between the issuer and (1) an officer's charitable remainder trust, or (2) an
investment advisor of which a director is a principal.
18. **** Rule 16b-3(b)(1); Rule 16b-3(f) ****
If, pursuant to the terms of a plan, a transaction to re-balance holdings among accounts other
than the issuer equity securities account results in a transfer of assets into or out of an issuer
equity securities account, the transaction will be a Discretionary Transaction, subject to Rule
16b-3(f).
R. Section 16 Rules and Forms 3, 4 and 5 — CF Telephone Interpretations 3
19. **** Rule 16b-3(b)(1); Rule 16b-3(f) ****
A rollover of funds into the issuer equity securities fund from a plan maintained by the insider's
former employer will not be a Discretionary Transaction subject to Rule 16b-3(f) because it does
not involve a reallocation of funds already invested in a plan of the issuer.
An automatic rollover of a phantom stock account upon the issuer's abolition of the plan in which
it is maintained into a restricted stock account in another plan of the issuer would not be a
Discretionary Transaction.

However, other rollovers or transfers between different plans sponsored by the same issuer may
be Discretionary Transactions, and need to be analyzed on a case-by-case basis as to the character
of the funds involved and whether the transaction is volitional to the insider.
20. **** Rule 16b-3(b)(1); Rule 16b-3(f) ****
Where there are two issuer equity securities funds (one containing 100% issuer equity securities
and the other 50% issuer equity securities), a transfer from the 100% fund to the 50% fund would
be a transfer out of an issuer equity securities fund for purposes of measuring the six-month
period before the next Discretionary Transaction. Conversely, a transfer from the 50% fund to the
100% fund would be a transfer into an issuer equity securities fund for the same purpose.
But a transfer out of either fund into a non-issuer equity securities fund would be a transfer out,
and a transfer into either fund from a non-issuer equity securities fund from a non-issuer equity
securities fund would be a transfer into an issuer equity securities fund.
21. **** Rule 16b-3(b)(1); Rule 16b-3(f); Form 5; Rule 16a-3(f)(1) ****

A Discretionary Transaction in a phantom stock account that is exempt pursuant to Rule 16b-3(f)
is reportable on Table II of Form 5 (or earlier on Table II of Form 4, at the insider's discretion), on
a single line using Code "I."
22. **** Rule 16b-3(b)(2); Rule 16b-3(c) ****
A stand-alone top hat plan that qualifies for an exemption under Section 201(2) of ERISA would
not be an Excess Benefit Plan eligible for exemption under Rule 16b-3(c) because such plan would
not be operated in conjunction with a Qualified Plan, as defined in Rule 16b-3(b)(4).
23. **** Rule 16b-3(b)(3) ****
The Non-Employee Director standards of this rule are independent of the "outside director"
standards of Internal Revenue Code Section 162(m). Accordingly, satisfaction of the NonEmployee
Director standards cannot be presumed based on satisfaction of the "outside director"
standards.
24. **** Rule 16b-3(b)(3) ****
The relevant date for determining Non-Employee Director status is the date on which approval is
obtained, including in circumstances where an award is not deemed to occur until a later date
upon the satisfaction of conditions (other than the passage of time and continued employment)
that are not tied to the market price of an equity security of the issuer. Cf. Bioject Medical
Technologies Inc. (Nov. 24, 1993).
R. Section 16 Rules and Forms 3, 4 and 5 — CF Telephone Interpretations 4
25. **** Rule 16b-3(b)(3)(i); Item 404(b)(1) of Regulation S-K ****
The issuer's director is chief executive officer of a company that in the ordinary course of business
borrows money from the issuer, which is a bank. The issuer discloses this indebtedness and the
interest to be paid thereon pursuant to S-K Item 404(c)(4), consistent with Instruction 3 to Item
404(c). Counsel inquired whether interest payments on the loan also required disclosure under
Item 404(b)(1) of Regulation S-K as payments for property or services. Rule 16b-3(b)(3)(i)(D)
provides that a business relationship for which disclosure would be required under Item 404(b)
would disqualify the director from service as a "Non-Employee Director." The staff took the view
that Item 404(b) disclosure would not be required because Instruction 1 to Item 404 states that
no information need be given in response to any paragraph of Item 404 as to any transaction
reported in response to any other paragraph of Item 404. Accordingly, the director would not be
precluded from service as a "Non-Employee Director," as defined in Rule 16b-3(b)(3)(i).
26. **** Rule 16b-3(b)(3)(i)(A) ****
This rule disqualifies for service as a Non-Employee Director any director who currently is an
officer of or otherwise currently employed by the issuer, its parent or subsidiary. For this
purpose, "subsidiary" would be defined pursuant to the broad standards of Rule 12b-2, i.e., as an
affiliate controlled directly or indirectly through one or more intermediaries.
27. **** Rule 16b-3(b)(3)(i)(B) ****
A director will not be disqualified for service as a Non-Employee Director by virtue of receiving
compensation from the issuer for services rendered "in any capacity other than as a director"
where the director receives a higher director's fee in consideration for service as chairman of the
board.
28. **** Rule 16b-3(b)(3)(i)(B) ****
Paragraph (B) provides that a Non-Employee Director may not receive compensation from the
issuer, its parent or subsidiary, for services in any capacity other than as a director, except for an
amount that does not exceed the dollar amount for which disclosure is required under Item
404(a) of Regulation S-K. The "services" in question refer to current services or services recently
provided. Accordingly, a director's receipt from the issuer of a pension that is paid as a result of
the director's prior service as an employee of the issuer would not trigger disqualification under
paragraph (B), without regard to amount. In contrast, a director's receipt of a severance payment,
in excess of the referenced amount, would trigger disqualification because it relates to recent
service.
29. **** Rule 16b-3(b)(3)(i)(D) ****
This rule provides that a director may not serve as a Non-Employee Director if the director is
engaged in a business relationship for which disclosure would be required pursuant to Item
404(b) of Regulation S-K. Where a director is a lawyer or investment banker to the issuer, such
relationship in all cases will preclude the director's service as Non-Employee Director because the
relationship is disclosable under Item 404(b) without regard to the percentage of revenues
involved.
R. Section 16 Rules and Forms 3, 4 and 5 — CF Telephone Interpretations 5
30. **** Rule 16b-3(b)(3)(i)(D); Item 404(b)(2) of Regulation S-K ****
The president-director of a publicly-held corporation is also the sole owner of a small private
company. The publicly-held corporation rented an airplane from the small company for $2,000,
an amount which represented a large portion of that company's revenues. Although disclosure of
the rental transaction would not be required under Item 404(a) of Regulation S-K, because it is
below the $60,000 exclusion, it would be required under item 404(b)(2) of Regulation S-K if the
$2,000 represented more than 5% of the small company's consolidated gross revenues. As long
as the transaction remains in effect and disclosable under Item 404(b)(2), the director will be
precluded from service as a Non-Employee Director pursuant to Rule 16b-3(b)(3)(i)(D).
31. **** Rule 16b-3(b)(5) ****
For purposes of determining whether a plan is a Stock Purchase Plan, as defined by this rule,
satisfaction of the coverage and participation requirements of Internal Revenue Code Section 410
will be measured by reference to employees eligible to participate, rather than employees actually
participating.
32. **** Rule 16b-3(b)(5); Rule 16b-3(c) ****
An Internal Revenue Code Section 423 plan permits a lump sum purchase at the end of the
purchase period as an alternative to payroll deductions. However, a participant must enroll at the
beginning of a purchase period and elect at that time whether to use payroll deductions or the
lump sum payment. Such a plan would be a Stock Purchase Plan, as defined by Rule 16b-3(b)(5)
and purchases under either form of payment would be exempt under Rule 16b-3(c).
33. **** Rule 16b-3(c) ****
A routine disposition of shares to fund an administrative fee assessment under a Tax-Conditioned
Plan would be exempt without further condition.
34. **** Rule 16b-3(c) ****
A sale into the open market from a Stock Purchase Plan will not be exempt pursuant to Rule 16b-
3(c), and will not be a Discretionary Transaction (as defined in Rule 16b-3(b)(1)) eligible for
exemption pursuant to Rule 16b-3(f). Such transactions will not be eligible for exemption from
Section 16(b) pursuant to Rule 16b-3.
35. **** Rule 16b-3(c) ****
A plan may be bifurcated so that it is eligible in part for exemption under Rule 16b-3(c) only if it
works entirely as a Tax-Conditioned Plan with respect to a segregable class of participants and
entirely as a non-Tax-Conditioned Plan as to a different class of participants.
36. **** Rule 16b-3(c); Rule 16b-3(b)(2) ****
A stand-alone top hat plan that qualifies for an exemption under Section 201(2) of ERISA would
not be an Excess Benefit Plan eligible for exemption under Rule 16b-3(c) because such plan would
not be operated in conjunction with a Qualified Plan, as defined in Rule 16b-3(b)(4).
R. Section 16 Rules and Forms 3, 4 and 5 — CF Telephone Interpretations 6
37. **** Rule 16b-3(c); Rule 16b-3(b)(5) ****
An Internal Revenue Code Section 423 plan permits a lump sum purchase at the end of the
purchase period as an alternative to payroll deductions. However, a participant must enroll at the
beginning of a purchase period and elect at that time whether to use payroll deductions or the
lump sum payment. Such a plan would be a Stock Purchase Plan, as defined by Rule 16b-3(b)(5)
and purchases under either form of payment would be exempt under Rule 16b-3(c).
38. **** Rule 16b-3(c); Rule 16b-3(d) ****
A cash-only security issued before 8/15/96 in reliance on the former Rule 16a-1(c)(3) exclusion
from the definition of "derivative security" will be amended so that subsequent transactions
pursuant to the security will not be consistent with the conditions of former Rule 16a-1(c)(3).
Such an amendment would effect a cancellation of the old security, and the grant of a new security
that will need to comply with Rule 16b-3(c) or Rule 16b-3(d) to be exempt.
39. **** Rule 16b-3(d), Note 3 ****
An amendment to a material term of a security acquired pursuant to the full board, NonEmployee
Director or shareholder approval conditions of Rule 16b-3(d) would require further
approval pursuant to any one of those approval conditions in order for the specific approval
conditions of Note 3 to be satisfied. This is required because allowing a material term to be
changed without subsequent approval would vitiate the specific approval requirement of the rule.
Such further approval is required whether or not the amendment would result in the cancellation
and regrant of the security. For example, an amendment to accelerate vesting (which pursuant to
Foster Pepper & Shefelman (12/20/91) does not effect a cancellation and regrant) would require
further approval.
40. **** Rule 16b-3(d), Note 3 ****
Initial approval of a plan will satisfy the specificity requirement where the specific terms and
conditions of each acquisition are fixed in advance, such as a formula plan. Plans that satisfy the
staff interpretations of 1991 Rule 16b-3(c)(2)(ii) will be considered formula plans for this purpose.
However, such a plan need not provide that the plan be amended no more frequently than once in
any six-month period, as specifically required by this former Rule, so long as the plan is not
subject to frequent amendment in practice.
41. **** Rule 16b-3(d); Rule 16b-3(c) ****
A cash-only security issued before 8/15/96 in reliance on the former Rule 16a-1(c)(3) exclusion
from the definition of "derivative security" will be amended so that subsequent transactions
pursuant to the security will not be consistent with the conditions of former Rule 16a-1(c)(3).
Such an amendment would effect a cancellation of the old security, and the grant of a new security
that will need to comply with Rule 16b-3(c) or Rule 16b-3(d) to be exempt.
42. **** Rule 16b-3(d); Rule 16b-3(e); Rule 16b-3(f), Note 3 ****
A deferred compensation plan allows deferrals to either a phantom stock account or a cash
account (which is credited with interest at the market rate). No transfers between the phantom
stock account and the cash account are permitted, except that if a participant elects a payout in
installments, the participant may make a one-time election (effective simultaneously with
R. Section 16 Rules and Forms 3, 4 and 5 — CF Telephone Interpretations 7
commencement of payouts) to transfer all or part of the phantom stock account balance to the
cash account.
Because of this transfer feature, pursuant to ABA (12/20/96) Q. 4(c), the plan is treated as a
multi-fund deferral plan, rather than as a single-fund deferral plan. Generally, a transfer
pursuant to this feature would be a Discretionary Transaction, eligible for exemption under Rule
16b-3(f). However, where such a transaction is not a Discretionary Transaction (for example,
where it is in connection with the participant's death, disability or retirement, as provided by Rule
16b-3(b)(1)), it is eligible for exemption under Rule 16b-3(e). In that case, if the participant
irrevocably elects to make such a transfer at the time he or she elects to defer funds, the approval
requirement of Rule 16b-3(e) and Note 3 may be satisfied by approval of the plan. Cf. ABA
(12/20/96) Q. 4(b). However, if the election is made at a later point, approval of the individual
transaction is necessary.
43. **** Rule 16b-3(d) (Transition) ****
Prior to mandatory effectiveness of current Rule 16b-3, in reliance on 1991 Rule 16b-3(c)(2)(i)
("Disinterested Administration"), grants of performance units that are not deemed to occur until
the performance conditions are met (consistent with Certilman (4/20/92)) were authorized. At
such time, the compensation committee authorizing the grants did not comply with the
compositional requirements of current Rule 16b-3(d)(1) ("composed solely of two or more NonEmployee
Directors").
At the time the grants occur (upon satisfaction of the performance conditions subsequent to
mandatory effectiveness of current Rule 16b-3), the grants will be deemed to occur on an exempt
basis, provided that all applicable conditions of 1991 Rule 16b-3 (including the 1991 Rule 16b-
3(c)(1) six-month holding period) are satisfied.
44. **** Rule 16b-3(d) ****
Under a plan that is otherwise a formula plan, participants have the right following a change in
control (as objectively defined in the plan) to elect to receive benefits in the form of cash or stock.
However, the decision as to whether payment is made in cash or stock is made by the issuer's
compensation committee. Although issuer discretion is limited to the form of payment (rather
than the amount), this issuer discretion must be exercised by the full board, the committee of
Non-Employee Directors, or shareholders. Alternatively, any securities received by insiders must
be held for six months.
45. **** Rule 16b-3(d); Rule 16b-3(e), Note 3 ****
Approval of a grant which by its terms provides for automatic reloads would satisfy specificity of
approval requirements under Rule 16b-3(d) for the reload grants, unless the automatic reload
feature permitted the reload grants to be withheld by the issuer on a discretionary basis. The
same result applies under Rule 16b-3(e) where the automatic feature is a tax- or exercisewithholding
right.
46. **** Rule 16b-3(d)(3) ****
The six-month holding period will remain satisfied if during the six months the insider transfers
the securities to a family trust, provided that the insider retains a pecuniary interest in the
securities so transferred. In contrast, an outright transfer to a family member during the six
months (either by gift or for consideration) will result in failure to satisfy the six-month holding
period.
R. Section 16 Rules and Forms 3, 4 and 5 — CF Telephone Interpretations 8
47. **** Rule 16b-3(d)(3); Rule 16b-3(e) ****
A company grants options in reliance on the six-month holding period of Rule 16b-3(d)(3).
Shortly thereafter, the company authorizes tax-withholding rights with respect to the same
options pursuant to Non-Employee Director approval under Rule 16b-3(e). This bifurcated
procedure should work, provided that the withholding rights are not exercised before conclusion
of the six-month holding period for the related option grant.
48. **** Rule 16b-3(e), Note 3 ****
Board approval of a buy-back plan providing for the issuer to buy back option shares at any time
at fair market value would not satisfy the approval requirement of Rule 16b-3(e) because the
resultant open-ended buy-back transactions would not have been approved with sufficient
specificity.
49. **** Rule 16b-3(e), Note 3; Rule 16b-3(d) ****
Approval of a grant which by its terms provides for automatic reloads would satisfy specificity of
approval requirements under Rule 16b-3(d) for the reload grants, unless the automatic reload
feature permitted the reload grants to be withheld by the issuer on a discretionary basis. The
same result applies under Rule 16b-3(e) where the automatic feature is a tax- or exercisewithholding
right.
50. **** Rule 16b-3(e) ****
Because cashless exercises through a broker do not involve a transaction with the issuer or the
issuer's plan, the dispositions that takes place pursuant to these transactions are not eligible for
exemption pursuant to Rule 16b-3(e).
51. **** Rule 16b-3(e); Rule 16b-3(d)(3) ****
A company grants options in reliance on the six-month holding period of Rule 16b-3(d)(3).
Shortly thereafter, the company authorizes tax-withholding rights with respect to the same
options pursuant to Non-Employee Director approval under Rule 16b-3(e). This bifurcated
procedure should work, provided that the withholding rights are not exercised before conclusion
of the six-month holding period for the related option grant.
52. **** Rule 16b-3(e); Rule 16b-3(f), Note 3; Rule 16b-3(d) ****
A deferred compensation plan allows deferrals to either a phantom stock account or a cash
account (which is credited with interest at the market rate). No transfers between the phantom
stock account and the cash account are permitted, except that if a participant elects a payout in
installments, the participant may make a one-time election (effective simultaneously with
commencement of payouts) to transfer all or part of the phantom stock account balance to the
cash account.
Because of this transfer feature, pursuant to ABA (12/20/96) Q. 4(c), the plan is treated as a
multi-fund deferral plan, rather than as a single-fund deferral plan. Generally, a transfer
pursuant to this feature would be a Discretionary Transaction, eligible for exemption under Rule
16b-3(f). However, where such a transaction is not a Discretionary Transaction (for example,
where it is in connection with the participant's death, disability or retirement, as provided by Rule
16b-3(b)(1)), it is eligible for exemption under Rule 16b-3(e). In that case, if the participant
R. Section 16 Rules and Forms 3, 4 and 5 — CF Telephone Interpretations 9
irrevocably elects to make such a transfer at the time he or she elects to defer funds, the approval
requirement of Rule 16b-3(e) and Note 3 may be satisfied by approval of the plan. Cf. ABA
(12/20/96) Q. 4(b). However, if the election is made at a later point, approval of the individual
transaction is necessary.
53. **** Rule 16b-3(f) ****
Consistent with ABA (12/20/96) Q. 4(b), an insider elects to defer salary into a phantom stock
account, and at the same time makes an election to receive the ultimate cash payout at a fixed
date more than six months following the election. The payout election will not be subject to the
conditions applicable to Discretionary Transactions under Rule 16b-3(f).
54. **** Rule 16b-3(f) ****
If an election to effect a Discretionary Transaction is revocable until a specified date, such
specified date should be used as the date of the election for purposes of measuring the six-month
period before election of the next "opposite way" Discretionary Transaction eligible for exemption
under Rule 16b-3(f).
55. **** Rule 16b-3(f) (Transition) ****
For purposes of exempting the first Discretionary Transaction after conversion to 1996 Rule 16b-
3, the six-month period of Rule 16b-3(f) should be measured from the date of the election
effecting the last transaction under former Rule 16b-3 that would satisfy the 1996 Rule 16b-
3(b)(1) definition of Discretionary Transaction.
56. **** Rule 16b-3(f); Rule 16b-3(b)(1) ****
If, pursuant to the terms of a plan, a transaction to re-balance holdings among accounts other
than the issuer equity securities account results in a transfer of assets into or out of an issuer
equity securities account, the transaction will be a Discretionary Transaction, subject to Rule
16b-3(f).
57. **** Rule 16b-3(f); Rule 16b-3(b)(1) ****
A rollover of funds into the issuer equity securities fund from a plan maintained by the insider's
former employer will not be a Discretionary Transaction subject to Rule 16b-3(f) because it does
not involve a reallocation of funds already invested in a plan of the issuer.
An automatic rollover of a phantom stock account upon the issuer's abolition of the plan in which
it is maintained into a restricted stock account in another plan of the issuer would not be a
Discretionary Transaction.

However, other rollovers or transfers between different plans sponsored by the same issuer may
be Discretionary Transactions, and need to be analyzed on a case-by-case basis as to the character
of the funds involved and whether the transaction is volitional to the insider.
58. **** Rule 16b-3(f); Rule 16b-3(b)(1) ****
Where there are two issuer equity securities funds (one containing 100% issuer equity securities
and the other 50% issuer equity securities), a transfer from the 100% fund to the 50% fund would
R. Section 16 Rules and Forms 3, 4 and 5 — CF Telephone Interpretations 10
be a transfer out of an issuer equity securities fund for purposes of measuring the six-month
period before the next Discretionary Transaction. Conversely, a transfer from the 50% fund to the
100% fund would be a transfer into an issuer equity securities fund for the same purpose.
But a transfer out of either fund into a non-issuer equity securities fund would be a transfer out,
and a transfer into either fund from a non-issuer equity securities fund from a non-issuer equity
securities fund would be a transfer into an issuer equity securities fund.
59. **** Rule 16b-3(f), Note 3; Rule 16b-3(d); Rule 16b-3(e) ****
A deferred compensation plan allows deferrals to either a phantom stock account or a cash
account (which is credited with interest at the market rate). No transfers between the phantom
stock account and the cash account are permitted, except that if a participant elects a payout in
installments, the participant may make a one-time election (effective simultaneously with
commencement of payouts) to transfer all or part of the phantom stock account balance to the
cash account.
Because of this transfer feature, pursuant to ABA (12/20/96) Q. 4(c), the plan is treated as a
multi-fund deferral plan, rather than as a single-fund deferral plan. Generally, a transfer
pursuant to this feature would be a Discretionary Transaction, eligible for exemption under Rule
16b-3(f). However, where such a transaction is not a Discretionary Transaction (for example,
where it is in connection with the participant's death, disability or retirement, as provided by Rule
16b-3(b)(1)), it is eligible for exemption under Rule 16b-3(e). In that case, if the participant
irrevocably elects to make such a transfer at the time he or she elects to defer funds, the approval
requirement of Rule 16b-3(e) and Note 3 may be satisfied by approval of the plan. Cf. ABA
(12/20/96) Q. 4(b). However, if the election is made at a later point, approval of the individual
transaction is necessary.
60. **** Rule 16b-3(f); Form 5; Rule 16a-3(f)(1); Rule 16b-3(b)(1) ****

A Discretionary Transaction in a phantom stock account that is exempt pursuant to Rule 16b-3(f)
is reportable on Table II of Form 5 (or earlier on Table II of Form 4, at the insider's discretion), on
a single line using Code "I."