Titanium Metals Corporation
AMENDED AND RESTATED
Executive Stock Ownership Loan Plan
(as of february 28, 2001)
I. PURPOSE
The purpose of the Titanium Metals Corporation Executive Stock Ownership Loan
Plan is to provide a means by which certain employees of the Company may acquire
a meaningful stake in the Company by purchasing securities of the Company with
funds loaned by the Company, so as to align the interests of the executives with
those of the shareholders of the Company.
II. EFFECTIVE DATE OF PLAN
The effective date of the Plan shall be February 19, 1998.
III. DEFINITIONS
(a) "Base Salary" shall mean a Participant's annual base salary in effect
on the date of a Loan.
(b) "BUCS" shall mean, collectively, the convertible preferred securities
designated the 6 5/8% Convertible Preferred Securities, Beneficial
Unsecured Convertible Securities issued by the Trust, as the same now
exist or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
(c) "Committee" shall mean the Management Development and Compensation
Committee of the Company's Board of Directors.
(d) "Company" shall mean Titanium Metals Corporation.
(e) "Lender" shall mean the Company or any wholly owned subsidiary of the
Company formed for such purpose (including, without limitation, TIMET
Colorado Corporation).
(f) "Loan" shall mean a loan from a Lender to a Participant, subject to the
requirements of this Plan.
(g) "Loan Documents" shall mean the promissory note, the loan and pledge
agreement, and such other documentation relating to a Loan as the
Company may deem appropriate.
(h) "Participant" shall mean an employee of the Company who is eligible
for a Loan, as determined under Section IV.
(i) "Plan" shall mean this Titanium Metals Corporation Executive Stock
Ownership Loan Plan, as it may be amended from time to time.
(j) "TIMET Stock" shall mean any securities of Titanium Metals Corporation,
including common stock, preferred stock, or BUCS.
(k) "Trust" shall mean the TIMET Capital Trust I, a Delaware business
trust, and its successors and assigns.
IV. ELIGIBILITY
The Committee will determine from time to time which employees of the Company
are eligible to be Participants.
V. ADMINISTRATION
The Committee will have the authority to administer the Plan. Except as may
otherwise be determined by the Committee, Loans extended under the Plan shall be
made in accordance with the following terms and conditions:
(a) No more than two Loans may be granted to any Participant in any
calendar year.
(b) The amount of any one Loan to any Participant may not exceed 50% of
such Participant's Base Salary, and the aggregate amount of all Loans
to any Participant may not exceed 200% of such Participant's Base
Salary (in effect on the date of the most recent Loan).
(c) Loan proceeds may be used solely to purchase TIMET Stock (including
payment of any related brokerage fees) and to pay withholding tax
obligations incurred by any Participant upon the lapsing of
restrictions on restricted TIMET Stock granted to such Participant by
the Company.
(d) Each Loan shall be evidenced by Loan Documents, in such form as may be
established from time to time by the Committee, entered into by a
Participant and Lender.
(e) The principal amount of a Loan will be repaid as provided for in the
Loan Documents; provided, that, repayment of principal shall commence
on the sixth (6th) anniversary of the Loan date and the Loan shall
mature in full on the tenth (10th) anniversary of the Loan date. The
Committee shall have the authority to extend the time for repayment or
modify the other terms for the payment of principal, as it may
determine to be appropriate in the case of any Participant whose
employment with the Company is terminated by the Company or by reason
of a participant's death or disability.
(f) Each Loan shall bear interest, payable as provided for in the Loan
Documents. The interest rate will initially be determined on the date
each Loan is made, which rate shall apply during the calendar year in
which the Loan is made and which will be equal to TIMET's
then-effective borrowing rate on the date the Loan is made plus
.0625%. Thereafter, as provided for in the Loan Documents, the Company
shall determine, as of January 2 of each subsequent year, the rate
that shall be effective for all outstanding Loans for that entire
year, which will be equal to TIMET's then-effective borrowing rate on
January 2 plus .0625%. In the event of a default on any Loan, the
interest rate applicable to such Loan shall be adjusted as described
in the Loan Documents. The Committee shall have the authority to
extend the time for repayment or modify the other terms for the
payment of interest, as it may determine in its discretion to be
appropriate, in the case of any Participant whose employment with the
Company is terminated by the Company or by reason of the participant's
death or disability.
(g) Each Loan must be secured by all of the TIMET Stock purchased with the
Loan proceeds in the case of Loans the proceeds of which have been used
to purchase TIMET Stock, and by all of the TIMET Stock for which
restrictions have lapsed under a restricted stock grant and for which
the Loan proceeds have been used to pay withholding tax obligations
incurred by the borrower upon such lapsing. The Company will hold
possession of any certificates representing such collateral securities
until the Loan is paid in full.
(h) Each Loan must be repaid in full within ninety (90) days after a
Participant's termination of employment with Company, unless a sale of
the TIMET Stock securing such Loan at such time would result in a
short-swing profit liability under applicable securities laws, in which
case repayment will be required on the earliest date on which such sale
could occur without resulting in such liability.
(i) Notwithstanding any other provision in this Plan, subject to any
limitations set forth in the Loan Documents a Participant may elect to
sell all or any portion of the TIMET Stock purchased with the proceeds
of a Loan; provided, however, that the Participant is eligible to sell
such TIMET Stock under applicable securities laws and provided,
further, that the Participant is not then in default under any Loan.
The Company shall be entitled to receive all of the proceeds of any
such voluntary sale (after reduction for any commissions incurred in
such sale), which proceeds will be applied in the following manner:
(1) first, to pay any federal or state income taxes owing by the
Participant as a result of such sale;
(2) second, to pay any outstanding interest owed on any Loan,
including interest amounts then due and interest accrued with
respect to the Loan being repaid;
(3) third, to pay any outstanding principal on any Loans (in the
order of maturity, starting with the oldest Loan) in
proportion to the TIMET Stock securing a given loan that is
sold (i.e., if the Participant elects to sell 50% of his or
her TIMET Stock securing a Loan, then the Participant would be
required to pay 50% of the principal of such Loan); provided
that if the sale proceeds are not sufficient to pay this
principal amount, the Participant may not sell the TIMET Stock
unless the Participant agrees to pay to the Company the
remaining principal amount required under this subsection at
the time of the sale of the TIMET Stock; and
(4) fourth, any remaining proceeds will be paid to the Participant.
(j) The Loan Documents will provide that each Loan is full recourse to the
Participant individually, except in the case of the termination of the
Participant's employment by the Company or in the event of a sale by
the Company of all of the TIMET Stock securing a Loan upon an event of
default, in which case the Loan shall be recourse to the Participant
individually only as to 70% of the net Loan balance (net of any of the
items listed in subsections (V)(i) above), and after the application of
the proceeds from the sale of all TIMET Stock securing such Loan.
VI. MISCELLANEOUS
(a) This Plan is not a contract of employment. No term of this Plan shall
be construed to confer on any Participant the right to continue in the
employ of the Company for any period of time or to restrict the right
of the Company to terminate or change the terms of any Participant's
employment with the Company at any time, including, without limitation,
any Participant's position or rate of compensation. No Participant
shall have any right to future participation in this Plan.
(b) No right or interest of any Participant in this Plan shall be
assignable or transferable or be subject to any lien, directly, by
operation of law, or otherwise, including by execution, levy,
garnishment, attachment, pledge, or bankruptcy.
(c) This instrument, along with the Loan Documents, contains the entire
understanding between the Company and the Participants relating to the
Plan and supersedes any prior description of the Plan or agreement
pertaining to the Plan (except for any previously-executed Loan
Documents) between such parties, whether written or oral.
(d) This Plan shall be construed in accordance with, and shall be
governed by the laws of the State of Colorado.
(e) To the extent that any one or more of the provisions of this Plan shall
be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions shall not in
any way be affected or impaired.
(f) The section headings are for convenience only and shall not be used
in interpreting or construing the Plan.
(g) This Plan may be amended by action taken by the Committee or by the
full Board of Directors of the Company.