Page 20 - RosboroAR2020

20 — ROSBORO ANNUAL REPORT 2020
NOTE 8
RETIREMENT & PROFIT
SHARING PLANS
The Company is a participant in a multiemployer de ned contribution plan. The Company’s collective bargaining agreement requires employer contributions to the plan at a rate between $.85 to $1.40 per hour worked, increasing incrementally per year through the duration of the agreement. Company contributions were approximately $436,000 and $434,000 for the years ended December 31, 2020 and 2019, respectively.
The Company also maintains a separate 401(k) and pro t-sharing plan that covers all eligible full-time salaried employees. The plan requires employer matching contributions equal to 100% of the employee’s elective deferrals up to a maximum of 6% of their salary. Company matching contributions were approximately $538,000 and $533,000 for the years ended December
31, 2020 and 2019, respectively. The plan also allows
for employer discretionary contributions. The Company accrued discretionary contributions of $385,000 and $206,000 for the years ended December 31, 2020 and 2019, respectively, which have been included with accounts payable and accrued expenses.
NOTE 9 COMMITMENTS &
CONTINGENCIES
Log Supply Agreement - The Company has a log supply agreement with Franklin-Clarkson LogCo, Inc. to purchase logs through the end of 2021. The Company is committed to purchase 18,000 MBF of logs, plus 30% or minus 20%, at a price to be negotiated and mutually
agreed upon quarterly that prices logs based on grade, sort, length and diameter. The agreement can be extended for one-year extension terms with notice by either party at least 6-months prior to the termination date of the initial or extended term subject to a 30-day period for the counterparty to decline the extension.
Litigation - The Company is involved in various
legal and environmental proceedings encountered in
the normal course of business. While any litigation or environmental matter has an element of uncertainty, the Company believes that the resolution of any of these matters or all of them combined will not have a materially adverse effect on its nancial condition or operations.
NOTE 10
STOCKHOLDERS’ EQUITY
The Company is authorized to issue 100,000 shares of common stock with a par value of $0.01 per share. The common stock is divided into two classes: voting common stock and non-voting common stock. A maximum of 80,000 shares of voting common stock and a maximum of 20,000 shares of non-voting common stock may be issued. The Company is also authorized to issue 10,000 shares of preferred stock with a par value of $0.01 per share. The Board of Directors has designated a series of preferred stock to be known as “Series A Preferred Stock”, which consists of a maximum of 7,500 shares. The common and preferred stock balances reported on the consolidated balance sheets include related additional paid-in capital amounts.
The Company has 5,100 voting common shares issued and outstanding at December 31, 2020 and 2019. The Company also has 21 non-voting common shares issued and outstanding at December 31, 2020 and 2019. The Company may be required to purchase shares of the Corporation in the event of certain voluntary and/
or involuntary acts. The Company would be obligated to purchase shares at a fair value mutually agreed to per terms of the amended and restated stockholders agreement.
The Company has 2,486 Series A Preferred Stock shares issued and outstanding at December 31, 2020 (5,049 at December 31, 2019). Series A Preferred Stock shares shall accrue cumulatively at the rate of 10% per annum, compounding quarterly. Such dividends shall accrue and accumulate whether or not they have been declared and whether or not there are pro ts, surplus or other funds of the Company legally available for the payment of dividends. Such dividends shall be payable when and as declared by the Board out of any assets or funds legally available therefore and upon the occurrence
of a liquidation event or an extraordinary transaction. During the year ending December 31, 2020, 2,563 Series A Preferred Stock shares were redeemed for $25,629,000 and preferred stock dividends totaling $24,371,000 were declared and paid. Accrued and undeclared dividends totaled approximately $211,000 and $17,878,000 at December 31, 2020 and 2019, respectively.
The amended and restated stockholders agreement included a provision to allow new stockholders to purchase shares from the existing stockholders in the same percentage of voting common stock and Series A Preferred Stock that the existing stockholders have. All new stockholders are entitled to the same rights and privileges of the existing stockholders in addition to speci c redemption rules in the case of a termination of employment.
NOTE 11 STOCK-BASED
COMPENSATION
In connection with the amended and restated stockholders agreement, the Company adopted the Rosboro Holdings, Inc. 2017 Equity Incentive Plan (2017 Incentive Plan). The 2017 Incentive Plan provides for grants of stock options, stock appreciation rights, stock awards, restricted stock, stock units and other stock or cash-based awards. These awards are at the discretion of the board of directors (Plan Administrator) and they vest and expire in accordance with terms established at the time of grant.