Document:

exv10w2

 

Exhibit 10.2

USG CORPORATION

STOCK COMPENSATION PROGRAM

FOR NON-EMPLOYEE DIRECTORS

(As Amended and Restated Effective as of January 1, 2005)

 

 

Contents
 

	 	 	 	 	 	 	 
	Article 1.

	 	Establishment, Purpose, and Duration
	 	 	1	 
	 
	 	 	 	 	 	 
	Article 2.

	 	Definitions
	 	 	1	 
	 
	 	 	 	 	 	 
	Article 3.

	 	Administration
	 	 	2	 
	 
	 	 	 	 	 	 
	Article 4.

	 	Participation
	 	 	2	 
	 
	 	 	 	 	 	 
	Article 5.

	 	Annual Equity Grants
	 	 	3	 
	 
	 	 	 	 	 	 
	Article 6.

	 	Retainer Share Payments
	 	 	3	 
	 
	 	 	 	 	 	 
	Article 7.

	 	Annual Deferral Opportunity
	 	 	4	 
	 
	 	 	 	 	 	 
	Article 8.

	 	Deferred Stock Units
	 	 	6	 
	 
	 	 	 	 	 	 
	Article 9.

	 	Annual Grant in Cash or Equity
	 	 	7	 
	 
	 	 	 	 	 	 
	Article 10.

	 	Amendment, Modification, and Termination
	 	 	8	 
	 
	 	 	 	 	 	 
	Article 11.

	 	Miscellaneous
	 	 	8	 
	 
	 	 	 	 	 	 
	Appendix A.

	 	Beneficiary Designation	 	 	 	 

 

 

USG CORPORATION

STOCK COMPENSATION PROGRAM

FOR NON-EMPLOYEE DIRECTORS

(As Amended and Restated as of January 1, 2005)

Article 1. Establishment, Purpose, and Duration

     1.1 Establishment of the Plan. USG Corporation, a Delaware corporation (the “Corporation”),
hereby amends and restates in its entirety the non-employee director incentive stock compensation
plan known as the “USG Corporation Stock Compensation Program for Non-Employee Directors” (herein,
as so amended and restated, called the “Plan”), as set forth in this document. The Plan provides
for the annual grant of cash or shares of the common stock of the Corporation (“Shares”) to
non-employee directors and for the acquisition of Deferred Stock Units (as herein defined) by
non-employee directors, subject to the terms and provisions set forth herein.

     The effective date of this amendment and restatement of the Plan is January 1, 2005. The Plan
was originally effective as of July 1, 1997 (the “Effective Date”).

     The Plan is intended as a replacement for certain compensation arrangements for non-employee
directors in effect prior to the Effective Date and the Corporation’s Directors’ Deferred Fee Plan
(collectively, the “Prior Programs”). The Prior Programs will continue to apply in the future only
with respect to applicable compensation earned by non-employee directors for periods of service
prior to July 1, 1997.

     1.2. Purpose of the Plan. The purpose of the Plan is to promote the achievement of long-term
objectives of the Corporation by linking the personal interests of non-employee directors to those
of the Corporation’s stockholders and to attract and retain non-employee directors of outstanding
competence.

     1.3 Duration of the Plan. The Plan commenced as of the Effective Date and shall remain in
effect until terminated or amended by the Board of Directors pursuant to Article 10.

Article 2. Definitions

     In addition to the terms defined in the Plan, these terms shall have the meanings set forth
below:

	 	(a)	 	“Code” means the Internal Revenue Code of 1986, as amended.
	 
	 	(b)	 	“Deferred Stock Unit” or “Unit” means an award acquired by a Participant as a
measure of participation under the Plan, and having a value which changes in direct
relation to changes in the value of the Shares during the applicable period. A
Participant’s Deferred Stock Units shall be further

 

 

	 	 	 	divided into the “Grandfathered
Units” and the “Non-Grandfathered Units” in accordance with the terms of Section 7.5 of
the Plan.
	 
	 	(c)	 	“Fair Market Value” shall equal the mean of the high and low sales prices of a
Share on The New York Stock Exchange on the relevant date, or, if there were no sales
on such date, on the last trading date preceding the relevant date.
	 
	 	(d)	 	“Grant Date” means the scheduled date of an annual equity grant made pursuant
to Section 5.1 of the Plan or of an annual grant made pursuant to Section 9.1 of the
Plan.
	 
	 	(e)	 	“Service Year” means a fiscal year commencing July 1 and ending on the
following June 30.
	 
	 	(f)	 	“Termination of Service” means a separation from service as defined under
Section 409A of the Code.

Article 3. Administration

     3.1 Governance Committee. The Plan shall be administered by the Governance Committee
(formerly called the Committee on Directors) (the “Committee”) of the Board of Directors of the
Corporation, subject to the restrictions set forth in the plan.

     3.2 Administration by the Committee. The Committee shall have the full power, discretion, and
authority to interpret and administer the Plan in a manner which is consistent with the Plan’s
provisions. In no event, however, shall the Committee have the power to determine Plan
eligibility, or to determine the number, the value, the vesting period, or the timing of awards to
be made under the Plan (all such determinations being automatic pursuant to the provisions of the
Plan).

     3.3 Decisions Binding. All determinations and decisions made by the Committee pursuant to the
Plan, and all related orders or resolutions of the Committee shall be final, conclusive, and
binding on all persons, including the Corporation, its shareholders, employees, directors,
Participants, and their estates and beneficiaries.

 

 

Article 4. Participation

     4.1 Participation. Except as otherwise expressly provided below, persons eligible to
participate in the Plan are limited to non-employee directors who are serving on the Board on the
date of each scheduled award under the Plan (“Participants”).

Article 5. Annual Equity Grants

     5.1 Annual Equity Grants. Commencing July 1, 1998, each Participant shall receive an annual
equity grant of five hundred (500) Shares on July 1 each

     year, or a proportionate share of such grant based on full months of service as a non-employee
director since the prior July 1. In lieu of issuing fractional Shares, the Corporation shall round
up to the nearest full Share.

     5.2 Timing of Payout. Certificates for Shares awarded pursuant to this Article 5 shall be
issued as soon as administratively practicable following July 1 each year.

     5.3 Deferral Election. In lieu of receiving his or her annual equity grant in Shares, any
Participant may elect to receive all or a portion of any such grant in the form of Deferred Stock
Units. Any such election shall be made pursuant to Article 7.

     5.4 Biennial Review. The Committee shall conduct a biennial review of the appropriateness of
the annual equity awards granted pursuant to this Article 5. In the event the Committee determines
that an adjustment in the amount of equity awards pursuant to this Article 5 is appropriate, the
Committee shall make a recommendation to the Board for an appropriate amendment.

     5.5 Termination of Annual Equity Grants after July 1, 2005. Notwithstanding the foregoing,
the annual equity grants provided for in this Article 5 shall not be granted after the final grant
made to Participants on the July 1, 2005 Grant Date and no further biennial review shall be
conducted pursuant to Section 5.4.

Article 6. Retainer Share Payments

     6.1 Portion of Retainers Paid in Shares. During the term of this Plan, each Participant shall
receive twenty-five percent (25%) of his or her annual retainer for board service in the form of
Shares, payable as the third quarter installment of such annual retainer.

     6.2 Number of Shares Paid. The number of Shares to be issued pursuant to Section 6.1 will be
determined on September 25th of each year (or the next trading date if such date is not a date on
which shares are traded on The New York Stock Exchange), and shall equal twenty-five percent (25%)
of the then current annual retainer for board service, divided by the Fair Market Value of a Share
on such date. In lieu of issuing fractional Shares, the Corporation shall round up to the nearest
full

 

 

share.

     6.3 Timing of Payout. Certificates for Shares payable pursuant to this Article 6 shall be
issued as soon as administratively practicable following the conclusion of the third calendar
quarter.

     6.4 Temporary Suspension. The payment of 25% of the Participant’s annual retainers for Board
service was suspended by action of the USG Board of Directors in May, 2001. This feature of the
plan will continue to be suspended until the Corporation emerges from Chapter 11 proceedings which
it filed in June, 2001 and the Board of Directors thereafter approves the recontinuation of this
feature, subject to any then required approval by stockholders of the Corporation.

Article 7. Annual Deferral Opportunity

     7.1 Termination of Prior Programs; Deferral of Retainers and Meeting Fees. The Prior Programs
are hereby terminated. In lieu thereof, any Participant may elect during the term of this Plan to
receive all or a portion of the cash component of his or her annual retainer or meeting fees for
board service in the form of Deferred Stock Units. Subject to Section 7.2 of the Plan, any
Participant may also elect to receive (i) all or a portion of his or her annual equity grant made
pursuant to Section 5.1 and (ii) all of his or her annual grant made pursuant to Section 9.1 of the
Plan in the form of Deferred Stock Units. Elections to receive Deferred Stock Units shall be
irrevocable and shall be subject to the provisions of this Article 7 and Article 8 and Article 9.
Notwithstanding the foregoing, no annual retainer and meeting fees may be deferred in the form of
Deferred Stock Units or otherwise after May 1, 2001.

     7.2 Annual Deferral Election.

     (a) A Participant may make an annual election to defer (i) all or a portion of his or her
annual equity grant under Section 5.1 of the Plan and (ii) all of his or her annual grant under
Section 9.1 of the Plan in the form of Deferred Stock Units, provided that deferral elections with
respect to annual equity grants under Section 5.1 of the Plan may only be made in ten percent (10%)
increments, and provided further that no deferral elections may be made with respect to the annual
grants made pursuant to Section 9.1 of the Plan with a Grant Date of July 1, 2006.

     (b) Such deferral elections shall be made by December 31 of the calendar year next preceding
the first day of the Service Year for which such grants would otherwise be earned, provided that a
non-employee director who first commences service on the Board during the course of a Service Year,
rather than on the first day of such Service Year, shall make such deferral election no later than
thirty (30) days following the date the non-employee director first commences service, and such
deferral election shall be effective only with regard to the portion of the grant earned during
such Service Year following the filing of the deferral election.

 

 

     (c) Subject to Section 8.3 of the Plan, a Participant’s deferral election shall also contain
the election (if any) regarding the form of payment of the Participant’s Account attributable to
the amounts deferred.

     7.3 Number of Deferred Stock Units. The number of Deferred Stock Units to be granted in
connection with an election pursuant to Section 7.2 shall equal: (w) in the case of annual equity
grants, the number of Shares being deferred; (x) in the case of an annual retainer, the dollar
value of the portion of the annual retainer being deferred divided by the Fair Market Value of a
Share on the last day of the applicable quarter; (y) in the case of meeting fees, the dollar value
of the portion of the meeting fees being deferred divided by the Fair Market Value of a Share on
the applicable meeting date; and (z) in the case of annual grants, the amount of the annual grant
divided by the Fair Market Value of a Share on the last trading date preceding the Grant Date.

     7.4 Vesting of Deferred Stock Units. Subject to the terms of this Plan, all Deferred Stock
Units acquired under this Article 7 shall vest upon the acquisition of such Deferred Stock Units,
which date, with respect to Deferred Stock Units attributable to the deferral of annual equity
grants made pursuant to Section 5.1 of the Plan and annual grants made pursuant to Section 9.1 of
Plan, means the applicable Grant Date.

     7.5 Application of the American Jobs Creation Act of 2004 (“AJCA”).

     (a) The following awards of Deferred Stock Units (and all earnings thereon) (the
“Grandfathered Units”) are “grandfathered” under Section 409A of the Code (as enacted by the AJCA)
and, as such, shall continue to be governed by the law applicable to nonqualified deferred
compensation prior to the enactment of Section 409A of the Code: (i) Deferred Stock Units
attributable to the deferral of annual retainer and meeting fees prior to May 1, 2001; and (ii)
Deferred Stock Units attributable to the deferral of annual equity grants made pursuant to Section
5.1 of the Plan with a Grant Date on or before July 1, 2004.

     (b) The following awards of Deferred Stock Units (and all earnings thereon) (the
“Non-Grandfathered Units”) are subject to the provisions of Section 409A of the Code (as enacted by
the AJCA): (i) Deferred Stock Units attributable to the deferral of the annual equity grant made
pursuant to Section 5.1 of the Plan with a Grant Date of July 1, 2005; and (ii) Deferred Stock
Units attributable to the deferral of annual grants made pursuant to Section 9.1 of the Plan with a
Grant Date on or after July 1, 2007 (the “New Units”).

     (c) To the extent applicable, it is intended that this Plan comply with the provisions of
Section 409A of the Code. The Plan shall be administered in a manner consistent with this intent,
and any provision that would cause the Plan to fail to satisfy Section 409A of the Code shall have
no force and effect until amended to comply with Section 409A of the Code (which amendment may be
retroactive to the extent permitted under Section 409A of the Code and may be made by the
Corporation without the consent of the Participants).

 

 

Article 8. Deferred Stock Units

     8.1 Value of Deferred Stock Units. Each Deferred Stock Unit shall have a value that is equal
to the Fair Market Value of a Share on the relevant valuation date, it being understood that
subsequent to the date of an award or acquisition of a Deferred Stock Unit, its value shall change
in direct relationship to changes in the Fair Market Value of a Share.

     8.2 Dividend Equivalents. Dividend equivalents shall be earned on Deferred Stock Units
provided under this Plan and shall be converted into an equivalent amount of Deferred Stock Units
based upon the value of a Deferred Stock Unit on the payment date of the related dividend. The
converted Deferred Stock Units will be fully vested upon conversion.

     8.3 Amount and Normal Form of Payout; Installment Payment Elections.

     (a) The amount payable to a Participant shall be the aggregate value of the Participant’s
vested Deferred Stock Units, if any, on the date of the Participant’s Termination of Service on the
Board, normally payable in cash in a lump sum within thirty (30) days following such Termination of
Service.

     (b) Notwithstanding the foregoing, in lieu of such a lump sum payment a Participant may elect,
in a writing filed with the Corporate Secretary of the Corporation, to receive payment of such
amount in two installments. The first installment, equal to fifty percent (50%) of such amount,
shall be made within thirty (30) days following the Participant’s Termination of Service on the
Board. The second installment, including interest credited at the prime interest rate of JP
Morgan Chase Bank in effect on the date of such Termination of Service, shall be made one year
after the date of the first installment. A Participant shall make such an installment payment
election as follows: (i) elections with respect to Grandfathered Units must be made no later than
twelve (12) months prior to the Participant’s Termination of Service on the Board; and (ii)
elections with respect to Non-Grandfathered Units (including those Non-Grandfathered Units
attributable to the deferral of the annual equity grants made pursuant to Section 5.1 of the Plan
with a Grant Date of July 1, 2005) must be made on or before December 31, 2005, provided that a
non-employee director who first commences service on the Board after December 31, 20005 must make
such an installment payment election (if any) at the same time the director makes his or her first
election to defer under Section 7.2(b) of the Plan. Once elected, there will be no changes allowed
to installment payment elections for Non-Grandfathered Units.

     8.4 Deferred Stock Unit Account. A Deferred Stock Unit Account (the “Account”) shall be
established and maintained by the Corporation for each Participant receiving Deferred Stock Units
under the Plan. As the value of each Deferred Stock Unit changes pursuant to Section 8.1, the
Account established on behalf of each Participant shall be adjusted accordingly. Each Account
shall be the record of the

 

 

Deferred Stock Units granted to the Participant under Articles 7 and 9
of the Plan, shall be maintained solely for accounting purposes, and shall not require a
segregation of any Corporation assets. A Participant’s Account shall be further divided into the
following sub-accounts: (i) a sub-account which shall be the record of the Grandfathered Units
granted to a Participant and (ii) a sub-account which shall be the record of the Non-Grandfathered
Units granted to a Participant.

     8.5 Annual Reports. Participants with Deferred Stock Units shall receive annual reports
providing detailed information about their Accounts and changes in their Accounts during the
preceding year.

Article 9. Annual Grant in Cash or Equity

     9.1 Annual Grant in Cash or Equity. For the remaining time during which the Corporation is a
Debtor in Chapter 11 proceedings, each non-employee director of the Corporation shall receive an
annual grant equal to $30,000 or a proportionate share of such grant based on full months of
service as a non-employee director since the prior July 1, normally payable in cash in a lump sum.
The regular Grant Date each year shall be July 1, commencing July 1, 2006. Notwithstanding the
foregoing, in lieu of such a lump sum cash payment a Participant may elect, in a writing filed with
the Corporate Secretary of the Corporation, to receive payment in an equivalent amount in Shares
valued at the Fair Market Value of a Share on the last trading date preceding the Grant Date.

     9.2 Timing of Payout. Payments in cash or certificates for Shares elected pursuant to this
Article shall be distributed as soon as administratively practicable following the applicable Grant
Date.

     9.3 Deferral Election. In lieu of receiving a distribution in cash or Shares, any Participant
may elect to receive all of such grant in the form of New Units. Any such election shall be made
pursuant to Article 7.

     9.4 Pro Rata Payment. To amplify Section 9.1, any non-employee director who incurs a
Termination of Service before a Grant Date shall nevertheless be entitled to receive a
proportionate payment based on the number of full months of service since the preceding July 1, in
a lump sum within 30 days of such Termination of Service, in whatever form the terminated
non-employee director elects, cash or Shares, provided that proportionate payment shall be made in
the form of two cash installment payments (determined in the manner described in Section 8.3(b) of
the Plan) if the non-employee director made a deferral election with respect to the annual grant
under Article 7 of the Plan, and, in connection with such election, elected to receive installment
payments under Section 8.3(b) of the Plan. 

Article 10. Amendment, Modification, and Termination

     10.1 Amendment, Modification, and Termination. The Board may

 

 

terminate, amend, or modify the
Plan at any time and from time to time.

     10.2 Awards Previously Granted. Unless required by law, and subject to Section 7.5(c) of the
Plan, no termination, amendment, or modification of the Plan shall in any material manner adversely
affect any award previously provided under the Plan, without the written consent of the Participant
holding such award.

Article 11. Miscellaneous

     11.1 Severability. In the event any provision of the Plan shall be held illegal or invalid
for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and
the Plan shall be construed and enforced as if the illegal or invalid provision had not been
included.

     11.2 Benefit Transfers. The interests of any Participant or beneficiary entitled to payments
hereunder shall not be subject to attachment or garnishment or other legal process by any creditor
of any such Participant or beneficiary nor shall any such Participant or beneficiary have any right
to alienate, anticipate, commute, pledge, encumber, or assign any of the benefits or rights which
he or she may expect to receive, contingently or otherwise under this Plan except as may be required
by the tax withholding provisions of the Code or of a state’s income tax act. Notwithstanding the
foregoing, amounts payable with respect to a Participant hereunder may be paid as follows:

	 	(a)	 	Payments with respect to a disabled or incapacitated person may be paid to such
person’s legal representative for such person’s benefit, to a custodian under the
Uniform Gifts or Transfers to Minors Act of any state, or to a relative or friend of
such person for such person’s benefit; and
	 
	 	(b)	 	Transfers by the Participant to a grantor trust established pursuant to
Sections 674, 675, 676 and 677 of the Code for the benefit of the participant or a
person or persons who are members of his or her immediate family (or for the benefit of
their descendants) shall be recognized and given effect, provided that any such
transfer has not been disclaimed prior to the payment, and the trustee of such trust
certifies to the Committee that such transfer occurred without any payment of
consideration for such transfer.

     11.3 Beneficiary Designation. Each Participant under the Plan may, from time to time, name
any beneficiary or beneficiaries (who may be named contingently or successively) to whom any
benefit under the Plan is to be paid in the event of his or her death. Each designation will
revoke all prior designations by the same Participant, shall be in a form as provided in Appendix A
hereto, and will be effective only when filed by the Participant in writing with the Corporate
Secretary of the Corporation, acting on behalf of the Board, during his or her lifetime. In the
absence of any such designation, benefits remaining unpaid at the Participant’s
death shall be paid
to the Participant’s

 

 

estate.

     11.4 No Right of Nomination. Nothing in this Plan shall be deemed to create any obligation on
the part of the Board to nominate any director for reelection by the Corporation’s shareholders.

     11.5 Shares Available. The Shares delivered under the Plan may be either treasury shares,
originally issued Shares, or Shares that have been reacquired by the Corporation, including shares
purchased in the open market.

     11.6 Stock Splits/Stock Dividends. In the event of any change in the outstanding Shares of
the Company by reason of a stock dividend, recapitalization, merger, consolidation, split-up,
combination, exchange of Shares, or the like, the aggregate number of and class of Shares and
Deferred Stock Units awarded hereunder may be appropriately adjusted by the Committee, whose
determination
shall be conclusive.

     11.7 Successors. All obligations of the Corporation under the Plan with respect to awards
granted hereunder shall be binding on any successor to the Corporation, whether the existence of
such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise,
of all or substantially all of the business and/or assets of the Corporation.

 

 

     11.8 Requirements of Law. The granting of awards under the Plan shall be subject to all
applicable laws, rules, and regulations, and to such approvals by any governmental agencies or
national securities exchanges as may be required.

     11.9 Governing Law. The Plan, and all agreements hereunder, shall be construed in accordance
with and governed by the laws of the State of Delaware.

Chicago, Illinois

November 9, 2005exv10w3

 

Exhibit 10.3

USG Corporation

Audit Committee Pre-Approval Policy

The Audit Committee has adopted the following guidelines regarding the engagement of an independent
registered public accounting firm to perform audit and non-audit services for USG Corporation (the
“Corporation”).

STATEMENT OF PRINCIPLES

In accordance with Sections 201(a) and 202 of the Sarbanes-Oxley Act of 2002, the Audit Committee
pre-approves all audit and non-audit services performed by the independent auditors. The Audit
Committee will periodically review and authorize policies and procedures, including pre-approval
policies and procedures, for the Corporation to follow in engaging the independent auditors to
provide services to the Corporation.

When the Corporation seeks to engage the independent auditors to provide services not pre-approved
in the annual authorization, specific pre-approval of such services must be made by the Audit
Committee, or its Chair. Any pre-approval by the Chair must be presented to the Audit Committee at
its next regularly scheduled meeting. The independent auditors are not authorized to provide any
services that are prohibited by United States Securities and Exchange Commission (the “SEC”)
regulation, or any other applicable law or regulation. Additionally, the independent auditors are
not allowed to provide any service to the Corporation under a contingent fee arrangement.

AUDIT SERVICES

At its March meeting, the Audit Committee will review and approve the independent auditors’ plan
for the year outlining the scope of audit services (including statutory audit engagements as
required under local country laws) to be performed for the year, the proposed fees and the related
engagement letter. During the remainder of the year, the Audit Committee will approve, if
necessary, any changes in terms, conditions and fees resulting from changes in audit scope, the
Corporation’s structure or other matters.

Audit services include the annual audits of the Corporation’s internal controls and consolidated
financial statements and quarterly reviews of the Corporation’s consolidated financial statements,
all in accordance with generally accepted auditing standards. Audit services also include statutory
audits of the Corporation’s subsidiaries as required by local country laws.

Audit services also may include services related to the issuance of comfort letters, consents, the
review of registration statements filed with the SEC, and the review of, or consultation related
to, non-ordinary transactions that may arise during the year. These other audit services may be
approved from-time-to-time by the Audit Committee in the same manner as the pre-approval of
non-audit services described below.

 

 

NON-AUDIT SERVICES

The Audit Committee supports the Corporation’s efforts to transition to service providers other
than the Corporation’s independent auditors except where that is not reasonably advisable. In
cases where management believes that the Corporation’s independent auditors should be used for
non-audit services, management will submit to the Audit Committee for approval annually at its
November meeting, a detailed list of particular non-audit services that it recommends the Audit
Committee engage the independent auditors to provide during the following calendar year, as well as
detailed backup documentation to the extent necessary to inform the Audit Committee of each of the
specific services proposed to be provided. Management and the independent auditors will each
confirm to the Audit Committee that each non-audit service on the list is permissible under
applicable legal requirements, including the SEC’s rules regarding auditor independence. In
addition to the list of planned non-audit services, a related budget for expenditures for each
non-audit service for the following calendar year will be provided. The budget for non-audit
services will reflect the Corporation’s policy that fees for non-audit work related to tax planning
and other services generally should not exceed the fees for audit, audit-related and tax compliance
services.

The Audit Committee will evaluate the non-audit services recommended by management and assess
whether the provision of such services is consistent with appropriate principles of auditor
independence and such other factors that the Audit Committee considers relevant, including the
principles that (1) the auditor cannot function in the role of management, (2) the auditor cannot
audit his or her own work and (3) the auditor cannot serve in an advocacy role for the Corporation.
Based on such evaluation, the Audit Committee will determine whether to approve each non-audit
service and the budget for each approved service.

Management is responsible for monitoring the non-audit services provided and the level of related
fees against the pre-approval authorization, and will report each actual service provided and a
comparison of actual versus pre-approved fees for such service to the Audit Committee on a periodic
basis and no less frequently than annually. The independent auditor also will monitor its actual
services and fees against the pre-approval authorization and advise management if it is reasonably
likely that the level of pre-approved fees for any particular service may need to be exceeded or if
it believes that a requested service is not consistent with the pre-approval authorization of the
Audit Committee. Any reasonably likely budget overrun, as well as any unresolved question
regarding whether a requested service has been pre-approved, shall be reported to the Audit
Committee, or its Chair, as promptly as is appropriate under the circumstances, and in any event,
no later than the next regularly scheduled Audit Committee meeting.

To ensure prompt handling of unexpected matters, the Audit Committee delegates to the Chair the
authority to amend or modify the list of approved non-audit services and related fees. The Chair
will report to the Audit Committee at its next meeting any approval so given.

Non-audit services include the following:

2

 

Audit-Related Services — These include assurance and related services that are reasonably
related to the performance of the audit or review of the Corporation’s financial statements and
that are traditionally performed by the independent auditors. Audit-related services may include,
among other things, assistance related to the internal control reporting requirements prescribed
under Section 404 of the Sarbanes-Oxley Act of 2002, due diligence related to acquisitions, joint
ventures and dispositions, attest services that are not required by statute, and
consultations concerning financial accounting and reporting matters not related to the current-year
audit.

Tax Services — Tax services may include, but are not limited to, services such as
international tax compliance services, property tax services, expatriate tax services, domestic and
international tax planning and tax advice related to acquisitions, joint ventures and dispositions.
The Audit Committee will normally not permit the retention of the independent auditors in
connection with a transaction initially recommended by the independent auditors, the sole business
purpose of which may be tax avoidance and the tax treatment of which may not be supported in the
Internal Revenue Code and related regulations.

Other Services — The Audit Committee also may grant pre-approval to other permissible
non-audit services in situations that it considers appropriate.

PROHIBITED NON-AUDIT SERVICES

Non-audit service categories that are prohibited, including those listed under Section 201 of the
Sarbanes-Oxley Act of 2002 and Rule 2-01(c)(4) of Regulation S-X and further defined in the
regulations, are identified below:

	1.	 	Bookkeeping or Other Services Related to the Corporation’s Accounting Records or Financial
Statements
	 
	2.	 	Financial Information Systems Design and Implementation
	 
	3.	 	Appraisal or Valuation Services, Fairness Opinion or Contribution-in-Kind Reports
	 
	4.	 	Actuarial Services
	 
	5.	 	Internal Audit Outsourcing Services
	 
	6.	 	Managerial Functions
	 
	7.	 	Human Resources
	 
	8.	 	Broker-Dealer, Investment Advisor or Investment Banking Services
	 
	9.	 	Legal Services
	 
	10.	 	Expert Services
	 
	11.	 	Services related to marketing, planning or opining in favor of the tax treatment of a
confidential or “aggressive” transaction, including listed transactions

3

 

	12.	 	Tax services to certain members of management who serve in financial reporting oversight
roles at the audit client or to the immediate family members of such individuals

The foregoing list is subject to the SEC’s rules and relevant interpretive guidance concerning the
precise definitions of these services and the potential applicability of exceptions to certain of
the prohibitions.

4

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00093-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00093-of-00352.parquet"}]]