EXHIBIT 10.4
HOMESTAKE MINING COMPANY
1998 OUTSIDE DIRECTORS' STOCK COMPENSATION PLAN
The Plan was adopted by the Board on September 24, 1998, and
will be submitted for approval by Homestake's stockholders at the next meeting
of stockholders held after Board Approval. Contingent upon stockholder approval,
the Plan is generally effective as of January 1, 1999, except as specified below
in Article 8, relating to initial grants of Share Rights. Capitalized terms used
herein shall have the meanings provided in Article 12.
ARTICLE 1. SHARE OWNERSHIP POLICY; PLAN PURPOSE.
It is hereby declared to be the policy of Homestake that
Outside Directors are expected to own Shares equal in value to three times the
amount of the Annual Retainer. Outside Directors are expected to achieve that
level of ownership within five years from the later of (i) the effective date of
the Plan or (ii) the date of election as a Director.
The purpose of the Plan is to facilitate compliance with this
share ownership policy and to promote the interests of Homestake by attracting
and retaining qualified individuals who are neither employees nor officers of
Homestake or a subsidiary to serve as directors of Homestake. The Plan is
intended to further align the interests of outside directors with the interests
of stockholders of Homestake, thereby promoting longterm growth and performance
of Homestake. The Plan is intended to supersede Article 7 of the Homestake
Mining Company Stock Option and Share Rights Plan 1996 and, on the date the Plan
becomes effective, no further grants shall be made to Eligible Directors under
that plan.
ARTICLE 2. ADMINISTRATION.
The Plan shall be administered by the Board. The Board shall
administer the Plan in accordance with the Plan and shall have all powers and
discretion necessary or appropriate to administer the Plan, including but not
limited to, the power to (a) interpret the Plan and (b) make all other decisions
relating to the operation of the Plan. The Board may adopt such rules or
guidelines as it deems appropriate to implement the Plan. The Board's
determinations under the Plan shall be final and binding on all persons. No
member of the Board shall be liable for any action or decision made in good
faith in connection with the exercise of the Board's duties under the Plan.
ARTICLE 3. SHARES AVAILABLE FOR GRANTS.
3.1 Basic Limitation. Shares issued pursuant to the Plan shall be authorized
but unissued Shares or treasury Shares. The aggregate number of Shares that may
be issued under the Plan shall not exceed 250,000. The limitations of this
Section 3.1 shall be subject to adjustment pursuant to Section 3.3.
3.2 Available Shares. If Restricted Shares or Share Rights are forfeited or
terminate for any other reason before being exercised, then such Restricted
Shares and Shares subject to such Share Rights shall again become available for
Awards under the Plan. If cash is paid in lieu of the issuance of Shares, the
number of Shares with respect to which such payment is made shall not again be
available under the Plan.
3.3 Adjustments. In the event of a reorganization, recapitalization, stock
split, stock dividend, combination of Shares, merger, consolidation, rights
offering, or any other change in the corporate structure or Shares of Homestake,
the Board shall make such adjustment, if any, as it may deem appropriate in the
number and kind of Shares authorized by the Plan, and in the number and value of
Shares covered by Awards.
ARTICLE 4. PARTICIPATION IN THE PLAN.
Only Eligible Directors are eligible to participate in the
Plan.
ARTICLE 5. AGREEMENTS.
All Awards shall be evidenced by an Agreement signed by the
Eligible Directors and Homestake. Each Award shall be subject to the terms and
conditions of the Plan and to such other terms and conditions as may be
established by the Board.
ARTICLE 6. ANNUAL RETAINER.
6.1 Portion of Annual Retainer Payable in Shares. With respect to each Annual
Service Period, each Eligible Director shall receive, in lieu of cash,
unrestricted Shares having a Fair Market Value equal to 50% of his or her Annual
Retainer. The number of Shares to be issued pursuant to Section 6.1 on each date
that a part of the Annual Retainer is payable shall be determined by dividing
50% of the Annual Retainer that would otherwise have been paid in cash on each
payment date (but for this Section 6.1) by the Fair Market Value of a Share on
that date. The Shares shall be issued as soon as is reasonably possible after
the dates on which the cash portion of the Annual Retainer is to be paid.
6.2 Election to Receive Additional Shares. Not later than ten Business Days
prior to the first day of an Annual Service Period or, if later, the date on
which an individual first becomes an Eligible Director, an Eligible Director
may, by filing a written Annual Election with Homestake, direct Homestake to pay
to such Eligible Director, in the form of unrestricted Shares, some or all of
the cash portion of the Annual Retainer payable to such Eligible Director for
the related Annual Service Period. Any Annual Election shall be effective for
the entire Annual Service Period to which the Annual Election relates. The
number of Shares to be issued pursuant to an Annual Election shall be determined
by dividing the amount of the Annual Retainer that would otherwise have been
paid in cash on each payment date (but for this Section 6.2) by the Fair Market
Value of a Share on that date. Such Shares shall be issued as soon as is
reasonably possible after the dates on which that portion of the Annual Retainer
would have been paid in
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cash. If the Annual Retainer is increased during the Annual Service Period,
Eligible Directors shall receive such increase in cash and not Shares,
regardless of whether an Annual Election has been made.
6.3 Bonus Restricted Shares. Each Eligible Director who has made an Annual
Election pursuant to Section 6.2, shall also receive one Restricted Share for
each four Shares issued pursuant to Section 6.2. The Restricted Shares shall be
subject to the provisions of Article 7.
6.4 Election to Defer. Not later than ten Business Days prior to the first day
of an Annual Service Period or, if later, the date on which an individual first
becomes an Eligible Director, an Eligible Director may elect to defer, in
accordance with the Homestake Deferred Compensation Plan, receipt of Shares to
be issued pursuant to Sections 6.1 and 6.2 during the Annual Service Period to
which the election relates. To the extent that any Eligible Director elects to
defer the receipt of Shares, such number of deferred stock units shall be
credited to the Eligible Director's Deferred Compensation Plan account, and such
Deferred Compensation Plan account shall be credited with all dividends and
distributions payable with respect to the number of Shares equal to that number
of deferred stock units.
ARTICLE 7. TERMS OF RESTRICTED SHARES.
7.1 Restrictions. The Restricted Shares may not be sold, assigned, transferred,
pledged or otherwise encumbered, except as otherwise specifically provided,
prior to the lapse of the restrictions.
7.2 Issuance of Shares. Homestake shall cause each certificate representing
Restricted Shares awarded hereunder to be deposited by Homestake with a
custodian (which may be Homestake) to be designated by Homestake. In such event,
Homestake shall cause such custodian to issue to the Eligible Director a receipt
evidencing any stock certificates and accrued dividends thereon held or to be
held by the custodian for the benefit of such Eligible Director. Upon lapse of
the restrictions, Homestake shall cause the certificates and accrued dividends
paid in respect of such Shares to be issued and paid to the Eligible Director.
7.3 Forfeiture. Restricted Shares shall be forfeited and shall be returned to
Homestake and all rights of the Eligible Director to the Restricted Shares shall
terminate without any payment of consideration by Homestake if the Eligible
Director ceases to be a Director prior to the lapse of the restrictions.
7.4 Lapse of Restrictions. The restrictions shall lapse in accordance with this
section.
(a) Restrictions shall lapse with respect to the first 50% of
the Restricted Shares comprising an Award of Restricted Shares to an
Eligible Director on the first anniversary of the Grant Date.
(b) Restrictions shall lapse with respect to an additional 25%
of such Restricted Shares on the second anniversary of the Grant Date.
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(c) Restrictions shall lapse with respect to the final 25% of
such Restricted Shares on the third anniversary of the Grant Date.
(d) In the event that an Eligible Director ceases to be a
Director prior to the lapse of restrictions as described above within
one year following a Change of Control, or by reason of death,
disability, or retirement at mandatory retirement age for Directors,
the restrictions on all Restricted Shares (and accrued dividends
thereon) awarded to such Eligible Director shall lapse on the date the
Eligible Director ceases to be an Director.
(e) The Board shall have the authority to accelerate the time
at which the restrictions will lapse or to remove any of such
restrictions whenever it decides, in its sole discretion, that, by
reason of changes in applicable law or other material changes in
circumstances arising after the date of the Award, such action is in
the best interests of Homestake and equitable to the Eligible Director.
7.5 Voting Rights. Prior to lapse of the restrictions on Restricted Shares,
Eligible Directors shall not have any right to vote with respect to those
Restricted Shares, unless otherwise provided in the Agreement.
7.6 Dividends. Prior to lapse of the restrictions, dividends and other
distributions shall be credited to Restricted Shares, but not paid to Eligible
Directors, unless otherwise provided in the Agreement. After lapse of the
restrictions, Eligible Directors shall be entitled to receive all dividends and
other distributions accrued since the Grant Date with respect to such Restricted
Shares, unless otherwise provided in the Agreement.
ARTICLE 8. INITIAL GRANTS OF SHARE RIGHTS;
ANNUAL GRANTS OF SHARE RIGHTS
8.1 Initial Grant of Share Rights. Effective January 1, 1997, upon first being
elected to the Board, each Eligible Director shall be granted Share Rights
providing for the issuance of 2,000 Shares. For purposes of Section 8.4, the
date of election to the Board shall be the Grant Date for Eligible Directors
elected between January 1, 1997 and the effective date of the Plan.
8.2 Annual Grant of Share Rights. Effective January 1, 1999, on the first day
of each Annual Service Period, each Eligible Director shall be granted Share
Rights providing for the issuance of 1,000 Shares attributable to services
performed during the preceding Annual Service Period. Annual Grants to Eligible
Directors who were not Eligible Directors for the entire preceding Annual
Service Period shall be prorated and rounded to the nearest whole Share based on
the number of days actually served as an Eligible Director during such Annual
Service Period.
8.3 Forfeiture. Share Rights shall be canceled if the Eligible Director ceases
to be a Director before the lapse of the restrictions.
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8.4 Lapse of Restrictions. The restrictions imposed on Share Rights shall lapse
upon the earlier of: (i) the third anniversary of the Grant Date, (ii) the date
the Eligible Director ceases to be a Director within one year following a Change
of Control, or (iii) the date the Eligible Director ceases to be a Director by
reason of death, disability, or retirement at mandatory retirement age for
Directors.
8.5 Payment of Share Rights. If the restrictions imposed on an Eligible
Director Share Right lapse, the Shares to which such Share Right relates shall
be issued to the Eligible Director as soon as reasonably possible after the date
the Eligible Director ceases to be a Director.
ARTICLE 9. PLAN TERM; AMENDMENT; TERMINATION.
9.1 Plan Term. The Plan shall be effective upon approval at the next meeting of
stockholders held after Board Approval. Unless terminated sooner in accordance
with Section 9.2, no Award may be granted after the earlier of (i) December 31,
2008, or (ii) the date on which all Shares (or Share Rights in respect thereof)
available for issuance under the Plan have been issued or canceled pursuant to
the exercise or surrender of Awards under the Plan.
9.2 Amendment or Termination. Except as hereafter provided, the Board may, at
any time and for any reason, amend or terminate the Plan. The foregoing
notwithstanding, any amendment of the Plan shall be subject to the approval of
Homestake's stockholders to the extent required by applicable laws, regulations
or rules, or to the extent any such amendment shall (i) increase the maximum
number of Shares issuable under the Plan (except in accordance with Section
3.3), (ii) increase the benefits accruing to Eligible Directors, or (iii) modify
the eligibility requirements for Awards. No Awards shall be granted under the
Plan after the termination of the Plan. The termination of the Plan, or any
amendment thereof, shall not affect any Award previously granted under the Plan.
ARTICLE 10. REGULATORY APPROVAL,
REGISTRATION, AND INVESTMENT PURPOSE.
10.1 Regulatory Approval. The implementation of the Plan, the issuance of
Restricted Shares and the granting of any Share Rights shall be subject to
Homestake's procurement of all approvals and permits required by regulatory
authorities having jurisdiction over the Plan, and the Shares issued pursuant to
it.
10.2 Registration. The Plan, the Shares subject thereto, and the Share Rights
granted thereunder may, in the discretion of the Board, be registered under the
Securities Act and under the securities laws of any state, province or country.
Unless the Share Rights or the Shares shall have been registered under the
Securities Act, each grant of Share Rights and each grant of Shares shall be for
investment and not with a view to resale or distribution of such Shares contrary
to any applicable securities laws. As a condition to the issuance of any Shares
which are not registered under such Act, the Eligible Director and his or her
legal representative, executor, administrator, heir or legatee, as the case may
be, receiving such Shares shall deliver to
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Homestake a writing, in form and substance satisfactory to Homestake and its
counsel, implementing such agreement.
ARTICLE 11. MISCELLANEOUS.
11.1 No Right to Continue as a Director. Neither the Plan nor any Award granted
under the Plan shall be deemed to give any individual a right to remain a
Director of Homestake, an Affiliate or any other person. Homestake reserves the
right to terminate the service of any Director in accordance with Homestake's
Certificate of Incorporation, its Bylaws or applicable law.
11.2 Shareholders' Rights. Except as otherwise provided in an Agreement, an
Eligible Director shall have no dividend rights, voting rights or other rights
as a shareholder with respect to any Shares covered by an Award prior to the
issuance of a stock certificate for such Shares and delivery thereof to such
Director.
11.3 Rule 16b3. Homestake intends that, with respect to persons subject to
Section 16 of the Exchange Act, this Plan and the issuance of Restricted Shares,
Share Rights and Shares issued on account of Share Rights will qualify under
Rule 16b3 promulgated thereunder. So long as Homestake has any class of equity
securities registered under the Exchange Act, to the extent required to avoid
application of Section 16(b) of the Exchange Act to an acquisition of Shares,
any equity security, as defined in the Exchange Act or the rules and regulations
thereunder, granted pursuant to the Plan, must be held for six months from the
Grant Date, and in the case of any derivative security (as defined in the rules
and regulations promulgated under Section 16) offered pursuant to the Plan, at
least six months must elapse from the date of acquisition of the derivative
security to the date of disposition of the derivative security (other than upon
exercise or conversion) or its underlying equity security, except in the event
of the death or disability of the holder thereof. If any provision of the Plan
or an Agreement requires modification to comply with the requirements of Section
16 and the rules thereunder, the Board may waive, amend or modify the Plan or
the Agreement accordingly. To the extent that any provision of this Plan or
action by the Board fails to comply with the Section 16 rules, it shall be null
and void to the extent permitted by law and deemed advisable by the Board.
11.4 Transferability. Restricted Shares and rights to dividends thereon (prior
to lapse of restrictions thereon) and Share Rights granted under the Plan shall
not be transferable other than by will or the laws of descent or distribution;
provided, however, to the extent permitted by Rule 16b3 or any successor rule,
an Agreement with respect to Restricted Shares and Share Rights may permit
transfers, (i) in connection with an Eligible Director's estate plan, to (a) an
Eligible Director's family members, (b) a trust for the benefit of the Eligible
Director or the Eligible Director's family members, or (c) other members of the
Eligible Director's household, or (ii) pursuant to a qualified domestic
relations order as defined by the Internal Revenue Code of 1986, as amended, or
Title I of the Employee Retirement Income Security Act, or the rules thereunder.
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11.5 Governing Law. The Plan and all Agreements shall be construed in
accordance with and governed by the laws of the State of Delaware.
11.6 Payment of Taxes. Homestake shall have the right to require, prior to the
issuance or delivery of any Shares or dividends thereon, payment by an Eligible
Director of any taxes required by law with respect to the issuance or delivery
of such Shares or dividends. With respect to tax withholding required upon the
grant of Shares, upon the lapse of restrictions on Restricted Shares, or upon
any other taxable event arising out of or as a result of any grant or Award made
hereunder, Eligible Directors may elect to satisfy the withholding requirement,
in whole or in part, by tendering previously owned Shares or by having Homestake
withhold Shares having a Fair Market Value on the date the tax is to be
determined equal to the minimum statutory total tax which could be imposed on
the transaction. All elections shall be irrevocable, made in writing, and signed
by the Eligible Director.
11.7 Costs. Homestake shall bear all expenses incurred in administering the
Plan, including expenses related to the award and issuance of Shares, Restricted
Shares and Share Rights.
11.8 Fractional Shares. In all instances, cash shall be paid in lieu of
fractional Shares in an amount equal to the Fair Market Value of the fractional
Shares on the date the fractional Shares would otherwise be payable.
ARTICLE 12. DEFINITIONS.
12.1 General Definitions. The following words and phrases, when used in the
Plan, unless otherwise specifically defined or unless the context clearly
otherwise requires, shall have the following meanings:
"Agreement" means the written agreement setting forth the
terms and provisions applicable to each Award granted under the Plan.
"Annual Election" means an irrevocable election made in accor-
dance with Section 6.2.
"Annual Retainer" means the annual retainer to be paid by
Homestake to an Eligible Director with respect to an Annual Service Period, at
the rates determined by the Board in advance of such period.
"Annual Service Period" means an annual period determined by
the Board, which annual period shall be January 1 through December 31 or such
other annual period as may be designated from time to time by the Board of
Directors.
"Award" means any award of Shares, Restricted Shares or Share
Rights under the Plan.
"Board" means Homestake's Board of Directors, as constituted
from time to time.
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"Change in Control" means the occurrence of any of the
following events:
(a) Homestake is a party to a merger or combination under the
terms of which less than 75% of the shares in the resulting or
continuing publicly held company are owned by the shareholders of
Homestake immediately preceding such event; or
(b) At least 75% in fair market value of Homestake's assets
are sold; or
(c) At least 25% in voting power in election of Directors of
Homestake's capital stock is acquired by any one person or group as
that term is used in Rule 13d5 under the Exchange Act.
"Code" means the Internal Revenue Code of 1986, as amended.
"Director" means a member of the Board.
"Eligible Director" means a Director who is not an
employee of Homestake or any of its subsidiaries or affiliates. Directors
emeritus shall not be eligible to participate.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" means the fair market value of Shares,
determined by the Board, in its sole discretion.
"Grant Date" means, with respect to an Award, the date that
the Award is deemed granted under the Plan. Within a reasonable time thereafter,
Homestake will execute and deliver an Agreement to the Eligible Director.
"Homestake" means Homestake Mining Company, a Delaware corp-
oration.
"Plan" means this Homestake Mining Company 1998 Outside
Directors' Stock Compensation Plan, as it may be amended from time to time.
"Restricted Share" means a Share which is subject to the res-
trictions set forth in Section 7.
"Securities Act" means the Securities Act of 1933, as amended.
"Share" means one share of the common stock of Homestake.
"Share Right" means the right to acquire a Share for no consi-
deration.
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12.2 Other Definitions. In addition to the above definitions, certain words and
phrases used in the Plan and any Agreement may be defined in other portions of
the Plan or in an Agreement.
IN WITNESS WHEREOF, HOMESTAKE MINING COMPANY has executed this
Plan as of December 1, 1998.
HOMESTAKE MINING COMPANY
By: Wayne Kirk
Wayne Kirk
Vice President, General Counsel and Secretary