Presented by:

Thomas Montrone, President & CEO, R&T and Eagle Rock

Mary Rose Cascaes, EVP & COO, R&T

Bernard Lopez, Eagle Rock Proxy Advisors LLC

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Changes in Dormancy Rules Implications to Issuers Outline of SEC Regulations 17Ad17

Requirements Processing Changes to Meet the SEC Rule Eagle Rock Pre-Escheatment Services Questions and Answers

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Always on the Books, but interpreted Differently

6 States and Puerto Rico Amended Dormancy

States: California, Illinois, Delaware, Idaho, New York, Connecticut

More States are likely to follow

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Written communication is defined as Contact:No Contact = Account is Dormant

Typical Contact: Letters, checks, proxies

Non-Dividend Payers, DRPs, Unexchanged Shareholders at risk

Street Proxy Distribution Risks

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Underlying Shares escheated & sold, fixing value of stock in most states

Shareholders Unaware that Their Stock has been SOLD◦ Years may pass before shareholder learns of

escheatment◦ Appreciated Value – State Sale Price = LOSS

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Due Diligence Mailings Before Escheatment SEC Lost Shareholder Searches and “Extra”

Search for High Dollar Accounts “No Contact” Mailings Ensure external Proxy Voted files sent to R&T Issues Review “No Contact” and Escheatment

files to screen for customers and employees Pre-Escheatment Program

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•SEC 17Ad-17•1997 – Originally enacted by Congress to address situations where TA’s have lost contact with shareholders•2 searches within 24 months of identifying a bad address for anyone whose 1st class mailing was returned twice from USPS•Excludes decedents and ‘non-natural persons’ (corporations, trusts, etc.)

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Dodd-FrankEffective January 23, 2014Brokers must also search for ‘lost’ accountsPaying Agents must notify recipients with outstanding checks (‘Unresponsive Payees’)State escheatment statutes supersede

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No accounts excluded except those with bad addresses‘Regularly Scheduled Check’Within 7 months after issuanceMust be a separate notice but can include multiple payments

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Checks issued after 1/23/14 First pass will include all outstanding checks Separate mailing

◦ Cash your check or request replacement Notice will provide 3 contact options:

◦ Call toll-free #◦ Login to IRIS◦ Unique website link

Database updated with mail date

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Abandoned property has become most states’ top 3 revenue source

Shortening dormancy periods to 3 years from 5 or 7 (AZ tried to make it 2 years)

Increasing audits and hiring 3rd parties (30 year look back)

Assessing interest & penalties

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Additional mailings

Voluntary Disclosure Agreements (VDAs)

Deep Research Programs. Shareholders who have already been marked as lost after SEC 17Ad-17 requirements

Pre-Escheatment Programs

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Used to help locate unexchanged shareholders and assist them in completing a transaction after a corporate action

Asset Recovery, Post Merger Cleanup (PMC), Shareholder Asset Recovery Program (SHARP)

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Program may begin 6 to 9 months after a transaction has been completed

Deep research tools are used to locate the shareholder or heirs (e.g. LexisNexis, Social Media)

Easy to understand documents are put together and mailed out with transaction information and the need to take action

Documents disclose R&T as the exchange agent and provide the toll-free number

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Unexchanged holders are hand-held through the process and assisted in getting proper documentation

Shareholders are given the option to sell or exchange into shares of the new company

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Provides updated shareholder information Greatly reduce the amount of abandoned property

that is escheated to the states Avoid increased scrutiny and costly audits Reduce a company’s exposure to liability, interest

and penalties Program is run free to the company. Shareholders

are charged a processing fee

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Avoid shareholder lawsuits over escheated assets Company is promoting good corporate

governance by making every effort to find and locate “lost” shareholders

Shareholders can have lost certificates replaced for the purpose of exchange

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For more information please contact:

Tom Montrone tmontrone@rtco.com 908-497-2333Mary Rose Cascaes mrcascaes@rtco.com 908-497-2334Bernard Lopez blopez@eaglerockproxy.com 908-497-2344

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