Portfolio 44-4th: Securities Law Aspects of Employee Benefit Plans

I. Overview
A. Topics Covered
B. Caveat
C. Preliminary Considerations

II. Registration Requirements
A. Focus
B. Organization
C. 1934 Act
1. General Rule
2. Employee Benefit Plans
D. 1933 Act
1. Applicability of 1933 Act
a. Classes of Securities
b. Statutory Definition of “Security”
c. Participation Interests
(1). Involuntary, Noncontributory Plan
(2). Involuntary, Contributory Plan
(3). Voluntary, Noncontributory Plan
(4). Voluntary, Contributory Plan
(a). Exemption from Registration
(b). Court Decisions
(c). Employee Contributions
(i). Section 401(k) Contributions
(ii). Wage Concessions
(iii). Rollover Contributions
(iv). Recontributions
(v). Loan Repayments
(d). Right to Demand Stock
d. Existence of a “Sale”
(1). Statutory Definition
(2). Regulatory Definition of “Sale”
(a). Employer Contributions
(b). Conversion of Plan
(3). Investment Elections
2. Exemptions
a. Participation Interests
(1). Statutory Provisions
(2). Restatement
(3). Interpretive Issues
(a). Maintained by a Bank
(b). Multiple Employer Plans
(c). Employee Contributions
b. Employer Stock
(1). General Statutory Exemptions
(a). Purchases on Behalf of Plan
(i). Open Market Purchases
(ii). Purchases from Employer
(iii). Purchases from Affiliates
(b). Participant-Directed Purchases
(2). Regulatory Safe Harbors
(a). Rule 147
(b). Regulation D
(i). General Rules
(ii). Rule 504
(iii). Rule 505
(iv). Rule 506
(v). Rule 701
3. Registration
E. Sales of Stock by Plan
1. Definitions
a. Affiliate
(1). General Rule
(2). Application to Plan
b. Registered Stock
c. Restricted Stock
2. Plan Is Not an Affiliate
a. Sales on Behalf of the Plan
(1). Registered Stock
(2). Restricted Stock
(a). General Rules
(b). Bonus Stock Exemption
b. Sales Made at the Direction of the Participant
F. Distributions
G. Resales by Participants
1. Restricted Stock
a. Non-Affiliate
(1). General Rule
(2). Special Rule
b. Affiliate
2. Registered Stock
a. Non-Affiliates
b. Affiliates
(1). Rule 144
(2). Private Sales
(3). Registration

III. Form S-8 Rules
. Introductory Material
A. Registrants
1. Employer
2. Plan
3. Qualifying Plans
4. Inappropriate Purpose
5. Qualifying Participants
a. Employing Entity
b. Categories of Individuals
c. Limitations
6. Registration of Interests
7. Audit Requirement
B. Component Parts
1. Prospectus
a. Documents Constituting Prospectus
(1). General Rule
(2). Multiple Documents
(3). Legend
(4). Use of SPD
(5). Timing of Delivery
(a). Initial Delivery
(i). ERISA
(ii). Securities Law
(b). Updating
b. Required Information
c. Retention of Documents
d. Impact of Delinquent Employer Form 10-K Filings
2. Registration Statement
a. Facing Page
b. Incorporation by Reference
c. Description of Securities
d. Interests of Named Experts and Counsel
e. Indemnity
f. Exemption
g. Exhibits
h. Undertakings
(1). Rule 415 Offering
(2). Subsequent Documents
(3). Indemnification
i. Signatures
(1). Employer
(2). Plan
C. Availability of Documents
1. Mandatory Disclosure
a. Annual Report
b. Shareholder Communications
2. Documents Available Upon Request
a. General Rule
b. ERISA Plans
c. Nonqualified Deferred Compensation Plans
3. Filing Not Required
4. Effective Date
5. Registration Fees
a. Employer Stock
(1). General Rule
(2). Resales
(3). Additional Securities
(a). General Rule
(b). Reoffer Prospectus
b. Participation Interests
D. Reoffer Prospectus
1. Form S-3 Unavailable
2. Availability of Form S-3
3. Types of Securities
a. Control Securities
(1). Definition
(2). Consequences
(a). Inclusion in Reoffer Prospectus
(b). Filing
b. Restricted Securities
(1). Definition
(2). Consequences
(a). Inclusion in Prospectus
(b). Filing
4. Selling Shareholders
a. Control Securities
b. Restricted Securities

IV. Section 16
. Introductory Material
A. Affected Persons
1. General Rule
a. 10% Shareholders
b. Directors
c. Officers
(1). General Rule
(2). Consistency
(3). Rulings
2. Beneficial Ownership
a. 10% Shareholder Test
(1). Applicable Standard
(a). Current Powers
(b). Future Powers
(2). Employee Benefit Plans
(a). Applicable Standards
(i). Allocated Shares
(ii). Unallocated Shares
(b). Protected Parties
b. All Other Purposes
(1). Pecuniary Interest
(a). Defined Benefit Plans
(b). Defined Contribution Retirement Plans
(2). Indirect Pecuniary Interest
3. Changes in Status
a. Prior Acts
(1). Officers and Directors
(2). 10% Shareholders
b. Subsequent Acts
(1). Officers and Directors
(2). 10% Shareholders
4. Trusts, Trustees and Beneficiaries
a. Trusts
(1). Beneficial Ownership
(2). Officer or Director as Trustee
b. Trustees, Beneficiaries and Settlors
c. Deemed Trustees
B. Filings Required
1. Other Filings
2. Initial Filing
3. Changes in Ownership
a. General Rules
b. Specific Rules
c. Special Timing Rules
(1). Rule 10b5-1 Programs
(2). Discretionary Transactions
(3). Overriding Limitation
4. Annual Statements
a. General Rule
b. Timing
c. Content
d. Availability of Data
e. Exceptions
5. Special Rules
a. Filing
(1). General Rule
(2). Electronic Filing
(3). Retroactive Loss of Exemption
(4). Website Posting
b. Disclosure of Noncompliance
(1). Disclosure Required
(2). Depth of Inquiry Required
c. Trust Holdings and Transactions
(1). Trust
(2). Trustees
(3). Participants
6. Derivative Securities
a. Definition
(1). General Rule
(2). Exceptions
(3). Related Terms
(a). Call Equivalent Position
(b). Put Equivalent Position
(c). Definitions
b. Aggregation
c. Reporting Requirements
(1). Call Equivalent Position
(2). Put Equivalent Position
(3). Vesting
d. Profit Recovery Standards
(1). Deemed Purchases
(2). Deemed Sales
(3). Treatment of Certain Transactions
(a). Exempt Transactions
(b). Non-Exempt Transactions
(c). Stock for Stock Mergers
(4). Cancellation
C. Rule 16b-3
1. Overview
2. Tax-Conditioned Plans
a. Plans to Which Exemption Applies
b. Transactions to Which Exemption Applies
3. Grant or Award Transactions
a. Alternative Exemptions
b. Definition of Nonemployee Director
c. Scope of Approval
4. Dispositions to the Employer
5. Discretionary Transactions
a. Applicability
b. Required Conditions
c. Sole Exemption
6. Sales into Open Market

V. Executive Compensation Disclosure Rules
A. Applicability
B. Covered Compensation
1. Definition of Plan
2. Third Party Transactions
3. Entity for Whom the Services Are Performed
4. Possible Duplication
5. Nondiscriminatory Plans
C. Named Executive Officers
1. Categories of Individuals
2. Definition of Executive Officer
3. Ranking
4. Exclusions
a. Minimum Compensation
b. Overseas Compensation
5. Changes in Status
D. Special Rules for Certain Classes of Employers
1. Smaller Reporting Companies
a. Required Disclosures
b. Exempted Disclosures
2. Foreign Private Issuers
3. Registered Investment Companies
E. Required Information
F. Partial Disclosures
1. Permitted Omissions
2. Election of Directors
G. Compensation Discussion and Analysis
H. Summary Compensation Table
1. General Instructions
a. Relevant Period
b. Prior Periods
c. Form of Compensation
d. Deferred Compensation
e. Indeterminate Compensation
2. Specific Instructions
a. Column (a)
b. Column (b)
c. Column (c)
d. Column (d)
e. Column (e)
f. Column (f)
g. Column (g)
h. Column (h)
i. Column (i)
(1). Perquisites
(a). Major Items
(b). Valuation
(2). Tax Gross-Ups
(3). Stock Discounts
(4). Dividends
j. Column (j)
3. Prior Law
I. Grants of Plan-Based Awards
1. General Instructions
a. Separate Disclosure
b. Consideration Paid
c. Tandem Grants
d. Incentive Plan Awards
e. Repriced or Materially Modified Grants
2. Specific Instructions
a. Column (a)
b. Column (b)
c. Columns (c) through (e)
d. Columns (f) through (h)
e. Column (i)
f. Column (j)
g. Column (k)
h. Column (l)
J. Narrative Description of Additional Material Factors
K. Outstanding Equity Awards at Fiscal Year-End
1. General Instructions
a. Multiple Awards
(1). Bifurcation of Single Grant
(2). Aggregation of Multiple Awards
(3). Definitions
b. Valuation
c. Satisfaction of Performance Condition
d. Explanations
2. Specific Instructions
a. Column (a)
b. Column (b)
c. Column (c)
d. Column (d)
e. Column (e)
f. Column (f)
g. Column (g)
h. Column (h)
i. Column (i)
j. Column (j)
L. Option Exercises and Stock Vested
1. Column (a)
2. Column (b)
3. Column (c)
4. Column (d)
5. Column (e)
M. Pension Benefits Table
1. General Instructions
a. Covered Plans
b. Benefit Allocation
c. Material Factors
2. Specific Instructions
a. Column (a)
b. Column (b)
c. Column (c)
d. Column (d)
e. Column (e)
N. Nonqualified Deferred Compensation
1. General Instructions
a. Covered Plans
b. Reconciliation with Summary Compensation Table
c. Material Factors
2. Specific Instructions
a. Column (a)
b. Column (b)
c. Column (c)
d. Column (d)
e. Column (e)
f. Column (f)
O. Employment Contracts and Termination of Employment and Change in Control Arrangements
P. Director Compensation Table
1. General Instructions
2. Specific Instructions
a. Column (a)
b. Column (b)
c. Column (c)
d. Column (d)
e. Column (e)
f. Column (f)
g. Column (g)
h. Column (h)
Q. New Plan Benefits
1. Narrative Explanation
a. General Rules
b. Amendments
(1). Nature of Amendments
(2). Completion of Item
2. Tabular Explanation
a. Covered Individuals
b. Level of Benefits
(1). Benefits Are Determinable
(2). Benefits Are Not Determinable
c. Pension or Retirement Plans
(1). Past Service Benefits
(2). Current Costs
d. Stock Plans
(1). Plan Information
(2). Participant Information
R. Performance Graph
1. Employer's Performance
2. Broad-Based Index
3. “Peer” Index
4. General Rules for “Peer” Indices
5. Transactions and Special Situations

VI. Stock Plan Disclosure
A. Introduction
B. Tabular Format
C. Equity Compensation Plans
D. Exclusions from Disclosure
E. Manner of Disclosure
1. Aggregation Based on Whether Shareholder-Approved
2. Evergreen Clauses
3. Restricted Stock and Restricted Stock Units
4. Performance Share Awards and Phantom Shares
5. Stock Appreciation Rights
6. Plans, Amendments and Grants Subject to Shareholder Approval
7. Narrative Description
8. Additional Disclosure for Awards Other Than Standard Options
9. Different Classes of Stock
10. Filing Requirement
11. Employee Stock Purchase Plans
12. Assumed Plans

VII. Prohibitions and Other Requirements for Directors and Officers
A. Prohibition on Insider Trading During Pension Blackout Periods
1. Pension “Blackout Period” Defined
2. Issuers and Persons Subject to Trading Prohibition
3. Transactions Subject to Trading Prohibitions
4. Transactions Not Subject to Trading Prohibitions
5. Notice of Blackout Period
6. Remedies
B. Executive Compensation and Corporate Governance Reform
1. Impact of Sarbanes-Oxley Act
2. Related Person Transactions
3. Corporate Governance
a. In General
b. Compensation Committee and its Charter
c. Compensation Committee Processes and Procedures
d. Compensation Committee Interlocks and Insider Participation
(1). Identification of Members
(2). Absence of Committee
(3). Interlocks
(4). Exempted Entities
e. Compensation Committee Report

VIII. Form 8-K Rules

IX. Other Securities Issues
A. 10b5-1 Programs
B. Option Repricing as a Tender Offer
1. Reasons for Option Repricing
2. Tender Offers
3. Rule 13e-4
4. 2001 SEC Exemptive Order
5. No-Action Letter Relief from Prompt Payment Requirement in Connection with Code §409A
C. Tender Offer Best Price Rule
D. Relationship Between Securities Laws and ERISA Standards