Merger an outline of specific things to take into consideration.............
a. Direct – two corporations combine to form single entity
i. Survivor gets assets, liabilities, rights, and obligations of constituent corporations
ii. Approval Requirementsà?check statute AND certificate of incorporation
1. Board and Shareholders approval of both parties except in short-form
a. Board = unanimous b. Shareholders
i. Delaware – majority of shares but not majority of quorum at shareholder meeting
ii. California – majority shares of each class
iii. MBCA – majority quorum [at meeting]If any asset of P that is distributed in kind to H and W is subsequently sold, no opinion is expressed about whether P or H and W will be deemed to have made the sale (see Commissioner v. Court Holding Company, 324 U.S. 331 (1945), and Rev. Proc. 85-22, 1985 - 12 I.R.B. 13, 15, section 3.0121)."
No opinion is expressed about the tax treatment of the proposed transaction under other provisions of the Code or regulations or about the tax treatment of any conditions existing at the time of or effects resulting from, the proposed transaction that are not specifically covered by the above rulings.
Specifically, no opinion is expressed about the tax treatment of any distributions to H and W other than in the partial liquidation of P as described above.
No rulings were requested and no opinion is expressed about the limitations and modifications that may result from the application of the personal holding company provisions of the Code. Therefore, all of the above rulings are effective only to the extent that they are not modified by the provisions of the Code relating to personal holding companies including section 541 to 547 and 316(b). See, Weiss et al. v. United States, 75 - 2 U.S.T.C. para. 538 (N.D.Ohio 1975).
Temporary or final regulations pertaining to one or more issues addressed in this ruling have not yet been adopted. Therefore this ruling will be modified or revoked by adoption of temporary or final regulations, to the extent the regulations are inconsistent with any conclusions in this ruling. See section 17.04 of Rev. Proc. 85-1, 1985 - 1 I.R.B. 21, 31. However, when the criteria of section 17.05 of Rev. Proc. 85-1 are satisfied, a ruling is not revoked or modified retroactively, except in rare or unusual circumstances.
This ruling letter is directed only to the taxpayer who requested it. Section 6110(j)(3) of the Code provides that it may not be used or cited as precedent."
(a) The liquidation of S will not be preceded or followed by the reincorporation, transfer or sale to a recipient corporation of all or part of the business or assets of S where more than a nominal amount of the stock (that is, more than 20 percent in value) of S and the recipient corporation are owned by the same shareholders. For purposes of this representation, ownership will be determined by application of the constructive ownership rules of section 318 of the Internal Revenue Code, as modified by section 304(c)(3). (12) Except as provided in the recapture provisions of the Code and similar rules of law, including but not limited to sections 47, 291(a)(1), 311(b), 311(c), 311(d), 341f, 453B, 541, 617(d), 904(f)(3), 995, 1245, 1248(f), 1250, 1252, 1253, and 1254 of the Code, the assignment of income doctrine, the clear reflection of income doctrine of section 446(b) and 482, and the tax benefit rule (see, Hillsboro National Bank v. Commissioner, 460 U.S. 370 (1983) and Rev. Rul. 74-396, 1974 - 2 C.B. 106), no gain or loss will be recognized to P on the distribution of its property in partial liquidation to the holders of "qualified stock" as provided in ruling (15) (section 311(d)(2)). The information submitted for consideration is summarized below.
P, a domestic corporation, functions as a holding company which owns all of the outstanding stock of S, a domestic corporation, which is engaged in the L, M and Q businesses. S also provides management services for P's seven other subsidiaries. P owns all of the outstanding stock of these seven other domestic corporations, each of which engages in the R business. P has outstanding Value 1 shares of common stock, Value 3 of which are held by H and W, and Value 2 shares of preferred stock, Value 4 of which are held by H and W. P was formed in 1981 when H, W, their son A, and A's children, B and C, contributed to P their shares of stock in S and the seven other corporations now owned by P in a transaction which has been represented to have been a non-taxable one (viz. one governed by section 351). H, W, A, B, and C own, and have owned since its incorporation in 1981, all of the outstanding stock of P.
Pursuant to a plan of complete liquidation, S will be merged with P in accordance with state law. P will be the surviving corporation and will acquire all the assets and assume all the liabilities of S. The separate corporate existence of S will cease. P will then distribute all of the assets of the L business to H and W in exchange for a portion of their P stock and P will cease to engage in the L business. H and W will continue to operate the L business after the distribution. P will, after the distribution, conduct active trade or business through the continued operation of the N and Q businesses and will continue to provide management services to its subsidiaries.
Financial information has been received which indicates that the L, M and Q businesses have had gross receipts and operating expenses representative of the active conduct of a trade or business for each of the past five years immediately preceding the proposed transaction.
In connection with the liquidation of S into P, the following representations have been made:
(a) The liquidation of S will not be preceded or followed by the reincorporation, transfer or sale to a recipient corporation of all or part of the business or assets of S where more than a nominal amount of the stock (that is, more than 20 percent in value) of S and the recipient corporation are owned by the same shareholders. For purposes of this representation, ownership will be determined by application of the constructive ownership rules of section 318 of the Internal Revenue Code, as modified by section 304(c)(3).
(b) No assets of S will have been distributed in kind or sold to P within three years before the adoption of the plan of liquidation of S.
(c) After the first liquidating distribution, S will cease to be a going concern and its activities will be limited to winding up its affairs, paying its debts, and distributing its remaining assets to P.
(d) S will retain no assets following its final liquidating distribution.
(e) The fair market value of the assets of S will exceed the sum of its liabilities (including any amounts owed to P) assumed by P plus the liabilities to which the assets transferred are subject both on the date of the adoption of the plan of liquidation of S and at the time of the first liquidating distribution is made.
(f) As of August 31, 1984, P was indebted to S in the approximate amount of $Y. The entire amount will be cancelled pursuant to the plan of complete liquidation of S. No indebtedness between P and S was issued or acquired at a discount and, except as described above, none will be cancelled, forgiven, or discounted in connection with the proposed transaction.
(g) On the date of the adoption of the plan of complete liquidation of S and at all times until the final liquidating distribution of S, P will own at least 80 percent of the stock of S.
(h) S will not have acquired assets in any non-taxable transaction during the three year period preceding the adoption of the plan of complete liquidation.
(i) No shares of stock of S will have been redeemed during the three years preceeding the adoption of the plan of complete liquidation.
(j) There is no plan or intention to liquidate P completely, and P will continue to operate the N and Q businesses directly and the R business through its subsidiaries after the proposed transaction.
(k) All the liquidating distributions will be made within one taxable year.
(l) S will distribute no assets representing earned but unreported income.
(m) Both P and S employ the accrual method of accounting for federal income tax purposes.
(n) S has not adopted formal or informal plans of liquidation other than the current transaction.
(o) No shares of capital stock of S have been redeemed within three years of the adoption of the plan of liquidation of S or since the acquisition of S stock by P.
(p) The stock of S was acquired by P in March of 1981 pursuant to a transfer by H and W of their S stock to P in exchange for P voting preferred and voting common stock, in a transaction described in section 351(a) of the Internal Revenue Code.
(q) Each of the taxpayers will pay those expenses of the proposed transaction which are attributable to it.
(r) Neither P nor S has or expects to incur an operating loss or a deficit in accumulated earnings and profits.
The following representations have been made with respect to the distribution of the L business in partial liquidation of P:
(a) The assets of the L business to be distributed by P have been actively used for the past five years in the operation of the business to be distributed or are improvements of assets actively used or will be replacements of assets actively used for such period.
(b) The partial liquidation of P will not be preceded or followed by the reincorporation in or transfer or sale to, a recipient corporation of any of the business or assets of P, where persons holding more than 20 percent in value of the stock of P also hold more than 20 percent in value of the stock in such recipient corporation. For purposes of this representation, ownership will be determined by application of the constructive ownership rules of section 318 of the Internal Revenue Code, as modified by section 304(c)(3).
(c) There is no plan or intention to completely liquidate P.
(d) There is no plan or intention for P to re-enter the L business or to enter any new line of business other than through normal internal growth.
(e) No part of the assets of the L business will be received by H or W as a debtor, creditor, employee, or in any capacity other than that of a shareholder of P.
(f) There is no plan or intention on the part of H or W to reinvest in P any proceeds of the distribution in partial liquidation.
(g) The distribution pursuant to the plan of partial liquidation of P will consist of the assets associated with the L business.
(h) All distributions pursuant to the plan of partial liquidation of P will be made within the taxable year in which the plan of partial liquidation is adopted or in the succeeding tax year.
(i) There are no declared but unpaid dividends on any P stock, and none will be declared before the distributions.
(j) The fair market value of the assets to be distributed to H and W, less the amount of liabilities to which assets will be subject will equal the fair market value of the P stock surrendered in exchange therefor.
(k) P does not maintain a reserve for bad debts.
(l) The fair market value and the basis of the assets to be distributed will, in each instance, exceed the liabilities to be assumed, or to which the distributed assets are subject.
(m) There has been no unusual or abnormal increases in working capital, extraordinary sales, purchases, replacements, or renovations of fixed or operating assets, or shifts, transfers, or loans of assets (including working capital) from one business activity to another, or termination or contraction of a business, and no substantial changes in assets of P and its Subsidiaries during the past five years other than those occuring in the normal course of business and other than the contribution by H, W, A, B, and C of their stock of the subsidiaries to P in exchange for P stock in the organization of P in 1981.
(n) The assets to be distributed are not from any of the following sources: (i) a reserve for expansion no longer needed; (ii) a mere decline in loss of business; (iii) a mere decrease in need for working capital; (iv) proceeds from the sale of a business which is nominal in relation to the entire business of P or S; or (v) a business operated at a loss which acquired assets from another business of S or P.
(o) There is no other outstanding capital of P, including bonds, debentures, notes, warrants, options, or other securities, which should be considered a stock interest, nor is there any outstanding indebtedness indebtedness that was not incurred in the ordinary course of business.
Based solely on the information submitted and on the representations set forth above, subject to any limitations and modifications that may result from the application of the personal holding company provisions of the Code, it is held as follows:
(1) For federal income tax purposes, the merger of S with and into P pursuant to applicable state law will be treated as distributions by S in complete liquidation within the meaning of section 332 of the Code (section 1.332 - 2(d) of the Income Tax Regulations).
(2) Provided that the requirements of section 332(b) of the Code are met, no gain or loss will be recognized by P upon the receipt of the property of S distributed in complete liquidation (section 332(a); Rev. Rul. 74-54, 1974 - 1 C.B. 76).
(3) The basis of the property of S to be received by P will be the same as the basis of such property in the hands of S immediately prior to the liquidation (section 334(b)(1)).
(4) The holding period of the property of S in the hands of P will include the holding period of that property in the hands of S immediately before the liquidation (section 1223(2)).
(5) No gain or loss will be recognized by S on the distribution of its property to P in complete liquidation (section 336).
(6) As provided in section 381(c)(2) of the Code and section 1.381(c)(2) - 1 of the regulations, P will succeed to and take into account the earnings and profits or deficit in earnings and profits of S as of the date of the transfer. Any deficits in earnings and profits of S will be used only to offset the earnings and profits accumulated after the date or dates of the transfer.
(7) The liquidating distribution will not subject S to any investment credit recapture pursuant to section 47(b).
(8) The distribution by P of the assets of its L business in redemption and cancellation of the stock of H and W pursuant to a plan of partial liquidation will qualify under section 302(e)(2) of the Internal Revenue Code.
(9) The maximum amount of property that will be considered to be distributed in partial liquidation will consist of the assets used in the terminated L business distributed by P to H and W, less all liabilities attributed to that business (including any taxes and expenses incurred in connection with that distribution), plus that amount of working capital reasonably attributable to the terminated activities. A determination as to that portion of the working capital that may be included in a distribution cannot be made until the tax returns for the years involved are filed and examined by an Internal Revenue Agent (see Rev. Rul. 60-232, 1960 - 2 C.B. 115; Rev. Rul. 71-250, 1971 - 1 C.B. 112; Rev. Rul. 76-279, 1976 - 2 C.B. 99; Rev. Rul. 76-289, 1976 - 2 C.B. 100).
(10) The distribution made by P pursuant to the plan of partial liquidation, to the extent indicated in ruling (9) above, will be treated as a distribution in partial liquidation under section 302(b)(4) of the Code and will be treated as in full payment in exchange for the P stock redeemed as provided in section 302(a) of the Code.
(11) To the extent that property distributed by P is in excess of amounts specified in ruling (9) above, such excess, if any, may be treated as distributions of property under sections 301 and 316 of the Code.
(12) Except as provided in the recapture provisions of the Code and similar rules of law, including but not limited to sections 47, 291(a)(1), 311(b), 311(c), 311(d), 341f, 453B, 541, 617(d), 904(f)(3), 995, 1245, 1248(f), 1250, 1252, 1253, and 1254 of the Code, the assignment of income doctrine, the clear reflection of income doctrine of section 446(b) and 482, and the tax benefit rule (see, Hillsboro National Bank v. Commissioner, 460 U.S. 370 (1983) and Rev. Rul. 74-396, 1974 - 2 C.B. 106), no gain or loss will be recognized to P on the distribution of its property in partial liquidation to the holders of "qualified stock" as provided in ruling (15) (section 311(d)(2)).
(13) Gain or loss will be recognize by H and W to the extent of the difference between the amount distributed in partial liquidation and the adjusted basis of the shares of P stock surrendered in exchange therefor. Provided that (a) the P stock constitutes a capital asset in the hands of H and W, and (b) section 341(a) (relating to collapsible corporations) is not applicable, the gain or loss, if any, will be considered capital gain or loss subject to the provisions and limitations of Subchapter P of Chapter 1 of the Code.
(14) Regardless of the number of shares of P stock surrendered for redemption, the number that will be considered redeemed to determine gain or loss for purposes of the partial liquidation will be the number determined in accordance with the principles set forth in Rev. Rul. 77-245, 1977 - 2 C.B. 105. To the extent that the fair market value of the distribution in partial liquidation received by H or W exceeds the fair market value of the P stock surrendered in exchange therefor, the additional shares considered redeemed pursuant to Rev. Rul. 77-245 will be determined in accordance with the principles set forth in Rev. Rul. 68-348, 1968 - 2 C.B. 141 and Rev. Rul. 85-48, 1985 - 16 I.R.B. 5.
(15) The shares of P stock surrendered by H and W in the partial liquidation will be treated as "qualified stock" under section 311(e)(1) of the Code.
If any asset of P that is distributed in kind to H and W is subsequently sold, no opinion is expressed about whether P or H and W will be deemed to have made the sale (see Commissioner v. Court Holding Company, 324 U.S. 331 (1945), and Rev. Proc. 85-22, 1985 - 12 I.R.B. 13, 15, section 3.0121).
No opinion is expressed about the tax treatment of the proposed transaction under other provisions of the Code or regulations or about the tax treatment of any conditions existing at the time of or effects resulting from, the proposed transaction that are not specifically covered by the above rulings.
Specifically, no opinion is expressed about the tax treatment of any distributions to H and W other than in the partial liquidation of P as described above.
No rulings were requested and no opinion is expressed about the limitations and modifications that may result from the application of the personal holding company provisions of the Code. Therefore, all of the above rulings are effective only to the extent that they are not modified by the provisions of the Code relating to personal holding companies including section 541 to 547 and 316(b). See, Weiss et al. v. United States, 75 - 2 U.S.T.C. para. 538 (N.D.Ohio 1975).
Temporary or final regulations pertaining to one or more issues addressed in this ruling have not yet been adopted. Therefore this ruling will be modified or revoked by adoption of temporary or final regulations, to the extent the regulations are inconsistent with any conclusions in this ruling. See section 17.04 of Rev. Proc. 85-1, 1985 - 1 I.R.B. 21, 31. However, when the criteria of section 17.05 of Rev. Proc. 85-1 are satisfied, a ruling is not revoked or modified retroactively, except in rare or unusual circumstances.
This ruling letter is directed only to the taxpayer who requested it. Section 6110(j)(3) of the Code provides that it may not be used or cited as precedent."
The Board of Directors (the “Board”) of Multicorp International Inc. (the “Company”) has established
the following guidelines for the Board’s conduct and operation. These guidelines are designed to give
directors and management a flexible framework for effectively pursuing the Company’s objectives for the
benefit of shareholders. That is why these guidelines should be interpreted in the context of all applicable
laws, the Company’s charter documents, and other policies.
A. BOARD COMPOSITION AND SELECTION
Size of the Board
The Board will establish the number of directors in accordance with the certificate of incorporation
and bylaws of the Company. The Boards nominating and corporate governance
will periodically review the appropriate Board size, which may vary to accommodate the availability of
suitable candidates and the Company’s needs.
Independence of Directors
There will at all times be a majority of independent directors on the Board. An “independent director” is a
person who meets the definition of independent director under rules of the stock exchange on which the
Company’s securities are listed and does not have any other relationship with the Company that, in the
opinion of the Board, would interfere with the exercise of independent judgment in carrying out director
responsibilities.
Periodically as required by the rules of the Securities and Exchange Commission or listing
standards of the exchange that lists the Company’s capital stock (the “Exchange”) and based on
information provided by Board members and advice of counsel, the Board or the Nominating Committee
will affirmatively determine director independence. Directors may be asked from time to time to leave a
Board meeting when the Board is considering a transaction in which the director (or another organization
in which the director is a director or officer) has a financial or other interest.
Management Directors
The Board anticipates that the Chief Executive Officer will serve on the Board. The Board also anticipates
that other members of management, who can assist the Board in fulfilling its responsibilities based on
their experience and role at the Company, may also serve on the Board.
Board Leadership
The Board may select a chairperson of the Board in the manner and on the criteria that the Board deems
appropriate. In the event that the Company does not have an independent chairperson of the Board, the
independent directors will designate a lead independent director. The name of the chairperson or lead
independent director will be listed in the Company’s proxy statement.
The independent chairperson or
lead independent director will be responsible for coordinating the activities of the independent directors.
In addition to the duties of all Board members, the specific responsibilities of the independent
chairperson or lead independent director are to:(i) work with the Chief Executive Officer to develop and
approve an appropriate Board meeting schedule;(ii) work with the Chief Executive Officer to develop and
approve Board meeting agendas;(iii) provide the Chief Executive Officer feedback on the quality,
quantity, and timeliness of the information provided to the Board;(iv) develop the agenda and moderate
executive sessions of the independent members of the Board;(v) preside over Board meetings when the
Chief Executive Officer is not present or when Board or Chief Executive Officer performance or
compensation is discussed;(vi) act as principal liaison between the independent members of the Board
and Chief Executive Officer;(vii) convene meetings of the independent directors as appropriate;(viii) be
available for consultation and direct communication with shareholders as deemed appropriate; and (ix)
perform other duties as the Board may determine from time to time.
Selection of Directors
The Board will be responsible for nominating members for election to the Board by the Company’s
shareholders. The Board is also responsible for filling any vacancies on the Board unless the vacancy is
filled by the shareholders. The Nominating Committee is responsible for identifying, reviewing,
evaluating,
and recommending candidates to serve as directors of the Company, in accordance with its charter and
these guidelines.
Our Board is divided into three classes. As a result, approximately one third of the Board will stand
for election for a three-year term by the share of the Company each year at the Company’s annual
meeting of shareholders. Each year, at the Company’s annual meeting of shareholders, the Board will
recommend a slate of directors for election by the shareholders. In accordance with the Bylaws, the
Board will also be responsible for filling vacancies or newly-created directorships on the Board that may
occur between annual meetings of shareholders. The Nominating Committee is responsible for identifying
and screening candidates for Board membership.
The Company’s Secretary will be notified of all persons proposed to serve as potential candidates
for nomination to the Board. For nominations of potential candidates made other than by the Board, the
shareholder or other person making such nomination must comply with the Company’s Bylaws, including
without limitation, submission of the information or other materials required with respect to proposed
nominees. Each potential candidate must provide a list of references and agree (i) to be interviewed by
members of the Nominating Committee or other directors in the discretion of the Nominating Committee,
and (ii) to a background check or other review of the qualifications of a proposed nominee by the
Company.
Prior to nomination of any potential candidate by the Board, each member of the Board will have an
opportunity to meet with the candidate. Upon request, any candidate nominated will agree in writing to
comply with these Corporate Governance Guidelines and all other policies and procedures of the
Company applicable to the Board.
Board Membership Criteria
The Nominating Committee works with the Board to determine periodically, as appropriate, the
desired Board qualifications, expertise and characteristics, including such factors as business experience,
diversity factors (including race, ethnicity, gender, age and sexual orientation, among others),
professional background, education, skill, and other individual qualities and attributes that contribute to
the total mix of viewpoints and experience represented on the Board.
The Nominating Committee and the Board evaluate each director in the context of the composition
of the Board overall, with the objective of having a Board that can best perpetuate the success of the
business and represent shareholder interests through the exercise of sound judgment using its diversity
of background and experience. Each director should be an individual of high character and integrity. In
determining whether to recommend a director for reelection, the Nominating Committee also considers
the director’s past attendance at meetings, participation in and contributions to the activities of the Board
and the Company.
Each director must ensure that other existing and anticipated future commitments do not materially
interfere with the director’s service as a director. Any employee director must submit his or her offer of
resignation from the Board in writing to the Nominating Committee upon termination of employment with
the Company. Upon change of his or her principal employer, any non-employee director must submit his
or her offer of resignation from the Board in writing to the Nominating Committee.
The Nominating
Committee will determine whether to accept or reject such resignation and will make a recommendation
to the Board as to whether to accept or reject the offer of resignation, or whether other action should be
taken. Candidates for director nomination are evaluated in the context of the current composition of the
Board, its operating requirements, and the long-term interests of our shareholders. In conducting this
assessment, the Nominating Committee Board considers character, integrity, judgment, diversity factors
(including race, ethnicity, gender, age and sexual orientation, among others), skills and areas of
expertise, and other factors that they deem appropriate to maintain a balance of knowledge, experience,
and capability. A third-party search firm will be engaged and requested to furnish a list of possible
candidates. They will be also be instructed to include women and candidates from underrepresented
communities who meet the applicable business and search criteria.
Term Limits
Term limits may result in the loss of long-serving directors who over time have developed unique
and valuable insights into the Company’s business and therefore can provide a significant contribution to
the Board. Because each director is periodically subject to election by the Company’s shareholders, the
Board does not believe, it is in the best interests of the Company to establish term limits at this time.
Limits on Other Board Memberships
Directors should advise the Nominating Committee of any invitations to join the board of directors
of any other public company prior to accepting the directorship. No director should serve on more than
four additional public company boards without the approval of the Board. The Nominating Committee will
review the continued service of the director who has changed his/her role, position, areas of
responsibility he or she held. In addition, service on other boards and/or committees should be consistent
with the Company’s conflict of interest policies.
Directors Who Have a Change in Job Responsibility or Other Circumstances
When a director, including any director who is currently an officer or employee of the Company, becomes
aware of circumstances that may adversely reflect upon a director, any other director, or the Company,
the director should notify the Nominating Committee of such circumstances. The Nominating Committee
will consider the circumstances, and may, in certain cases, request the director to cease the conflicting
activity, or in more severe cases, request that the director submit his or her resignation from the Board if,
for example, continuing service on the Board by the individual is not consistent with the criteria deemed
necessary by the Board.
A director who retires or materially changes his or her present job (other than a
promotion), should notify the Board and the Nominating Committee. While the Board does not believe
any director who retires or materially changes his or her present job should necessarily leave the Board.
There should be an opportunity for the Nominating Committee to review their continuing qualifications.
B. ROLE OF THE BOARD OF DIRECTORS
Shareholders select directors to provide oversight and strategic guidance to senior management. A
director’s responsibility is to fulfill his or her fiduciary duties of care, loyalty, and to exercise his or her
business judgment in the best interests of the Company and its shareholders. Board service requires
significant time and attention. More specifically, the Board has responsibilities to review, approve, and
monitor fundamental financial and business strategies, assess our major risks, and consider ways to
address those risks, select and oversee management, and establish and oversee processes to maintain
our integrity.
To fulfill their duties, directors must prepare for meetings and discussions with
management, participate in Board meetings, review relevant materials, and serve on committees. The
Company expects directors to maintain an attitude of constructive involvement and oversight, ask
relevant and incisive questions, and demand honest and accurate answers. Directors must act with
integrity and demonstrate a commitment to the Company, our values, business, and long-term
shareholder value.
C. DIRECTOR ORIENTATION AND EDUCATION
The Nominating Committee may implement an orientation process for directors that include
background material on our policies and procedures, meetings with senior management, and visits to our
facilities. We may also offer continuing education programs to assist the directors in maintaining the level
of expertise necessary to perform their duties.
D. DIRECTOR COMPENSATION
The Compensation Committee of the Board will review and recommend to the Board, the type and
amount of director compensation for Board and committee service for non-management directors in
accordance with applicable legal and regulatory guidelines. Compensation for non-management directors
and committee members should be designed to be aligned with the long-term interests of the
shareholders and consistent with market practices of similarly situated companies. In determining
compensation, the effect of such compensation arrangements on a director’s independence and
objectivity will be considered. Company employees will not receive additional compensation for their
service on the Board.
E. BOARD MEETINGS
Attendance and Preparation
The Board will meet on a periodic basis, in person or by teleconference, as such times and places
as the Board determines. In addition, special meetings may be called from time to time. Directors are
expected to attend each meeting to invest the time and effort necessary to understand the Company’s
business and financial strategies and challenges. The basic duties of the directors include being prepared
for and attending Board meetings and actively participating in Board discussions. Directors are also
expected to make themselves available outside of Board meetings for advice and consultation. A director
who is unable to attend a Board or committee meeting should notify the chairperson of the Board or lead
independent director or committee chairperson, as applicable, and the Chief Executive Officer in advance
of the meeting.
Agenda
The Chief Executive Officer and chairperson or lead independent director will create a schedule of
topics to be discussed during the year and an agenda for each Board meeting. Each Board member is
encouraged to suggest topics for the agenda at any time, and each Board member is free to raise
subjects that are not on the agenda.
Advance Receipt of Meeting Materials
Information regarding the topics to be considered at a meeting is essential to the Board’s
understanding of the business and the preparation of the directors for a productive meeting. To the
extent feasible, the meeting agenda and any written materials relating to each Board meeting will be
distributed to the directors sufficiently in advance of each meeting to allow for review of the agenda and
materials. Directors are expected to have reviewed and be prepared to discuss all materials distributed in
advance of any meeting.
Annual Meeting of Shareholders Attendance
Each director is strongly encouraged to attend the Company’s annual meetings of shareholders.
Attendance of Non-Directors
The Board encourages invitations to management and outside advisors or consultants from time
to time to participate in Board and/or committee meetings to (i) make presentations and provide insight
into items being discussed by the Board that involve the invitee and (ii) bring managers with high
potential into contact with the Board. Attendance of any non-directors at Board meetings is at the
discretion of the Board.
Executive Sessions
The non-employee directors will meet in executive sessions without management directors or
management present on a periodic basis but no less than once a year. “Non-employee directors” are
all directors who are not Company employees, including both independent directors and such directors
who are not independent directors by virtue of a material relationship, former status or family
membership, or for any other reason. In addition, if the non-employee directors include directors who are
not independent directors, the independent directors will also meet on a periodic basis but no less than
once a year in an independent director executive session.
Committee Reports
At each regular Board meeting, if requested by the Board, each committee will present a brief
summary of the principal subjects discussed, any conclusions reached, along with final actions of the
committee. The chairperson of the appropriate committee, if present, will make such report. Minutes of
committee meetings will be maintained in the minute books of the Company and will be available to any
director.
F. BOARD COMMITTEES
TBD
G. BOARD ACCESS TO MANAGEMENT; USE OF OUTSIDE ADVISORS
The Board and each committee of the Board will have the power to hire, at the expense of the Company,
independent legal, financial, or other advisors that they may deem necessary or advisable in performing
their responsibilities, without consulting or obtaining the advanced approval of any officer.
H. ANNUAL SELF-EVALUATION
The Nominating Committee will oversee an annual self-evaluation by the Board and each committee
of the Board. The Nominating Committee will be responsible for establishing the evaluation criteria and
implementing the process for this evaluation, as well as considering other corporate governance
principles that may, from time to time, merit consideration by the Board.
The Nominating Committee will utilize the results of the Board evaluation process in assessing and
determining the characteristics and critical skills required of prospective candidates for election to the
Board and for current directors seeking re-election in an effort to further the interests of the Company
and its shareholders in a manner consistent with the Company’s mission and core values.
I. LEADERSHIP DEVELOPMENT
TBD
J. SHAREHOLDER-DIRECTOR COMMUNICATIONS
The Board believes that shareholders should have an opportunity to send communications to non-
management members of the Board. Any such communication should be made in accordance with the
Company’s Policies and Procedures for Shareholder Communications to Independent Directors.
K. BOARD RESPONSIBILITIES
A director should discharge his or her duties, including duties as a member of any committee of
the Board on which he or she serves, in good faith and in a manner the director reasonably believes to
be in the best interests of the Company and its shareholders. Board members will comply with the laws
and requirements of the Exchange and other applicable regulatory agencies and with all policies and
guidelines of the Company, including without limitation, the Company’s Code of Business Conduct and
Ethics.
Each director is expected to disclose promptly to the Board and respond promptly and accurately
to periodic questionnaires or other inquiries from the Company regarding any existing or proposed
relationships with the Company, including compensation and stock ownership, which could affect the
independence of the director. Each director is also expected to promptly inform the Board of any material
change in such information, to the extent not already known by the Board. Directors have an obligation
to protect and keep confidential all of our non-public information unless the Company has authorized
public disclosure or unless otherwise required by applicable law.
Confidential information includes all non-
public information entrusted to or obtained by a director by reason of his or her position on the Board.
This includes information regarding our strategy, business, finances, and operations, and will include
minutes, reports, and materials of the Board and committees, and other documents identified as
confidential by the Company.
The obligations described above continue even after service on the Board
has ended. Directors may not use such confidential information for personal benefit or to benefit other
persons or entities other than the Company. Unless authorized by the Company or applicable law,
directors will refrain from disclosing confidential information to anyone outside the Company. These
obligations continue even after service on the Board has ended. Any questions or concerns about
potential disclosures should be directed to the Company’s General Counsel, who then may communicate
with the Chief Executive Officer or the Nominating Committee regarding the potential disclosures.
L. REVIEW OF GOVERNANCE GUIDELINES
The Board and the Nominating Committee will periodically review and assess the adequacy of these
guidelines and recommend any proposed changes to the Board for approval.
AI
