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EXHIBIT 10.3
ALLEGHENY TELEDYNE INCORPORATED
1996 NON-EMPLOYEE DIRECTOR STOCK COMPENSATION PLAN
As Amended and Restated Effective December 12, 1996
ARTICLE I. GENERAL
1.01 Purpose. It is the purpose of the Plan to promote the interests
of the Company and its stockholders by attracting, retaining and providing an
incentive to Non-Employee Directors through the acquisition of a proprietary
interest in the Company and an increased personal interest in its performance.
This purpose will be served by providing an opportunity for Non-Employee
Directors to elect to receive Stock Options and/or Common Stock in lieu of
Director's Fees, the automatic payment of a portion of the Director's Retainer
Fee Payment in the form of Common Stock to those Non-Employee Directors not
electing to receive such portion in the form of Stock Options and/or Common
Stock and granting each Non-Employee Director annually an option covering 1,000
shares of Common Stock.
1.02 Adoption and Term. The Plan has been approved by the Board and,
subject to approval by the stockholders of Allegheny Ludlum Corporation and
Teledyne, Inc., respectively, shall become effective as of the Effective Date
(as hereinafter defined). The Plan shall terminate without further action upon
the earlier of (a) the tenth anniversary of the Effective Date, and (b) the
first date upon which no shares of Common Stock remain available for issuance
under the Plan.
1.03 Definitions. As used herein the following terms have the
following meanings:
(a) "Annual Options" means the Stock Options issuable under Section
4.04(a) of the Plan.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
References to a section of the Code shall include that section
and any comparable section or sections of any future legislation
that amends, supplements or supersedes said section.
(d) "Common Stock" means the common stock, par value $0.10 per share,
of the Company.
(e) "Company" means Allegheny Teledyne Incorporated, a Delaware
corporation, and any successor thereto.
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(f) "Compensation Year" means each calendar year or portion thereof
during which the Plan is in effect.
(g) "Director" means a member of the Board.
(h) "Director's Fees" means the Director's Retainer Fee Payments and
the Director's Meeting Fee Payments.
(i) "Director's Meeting Fee Payment" means the dollar value of the
fees which the Non-Employee Director would be entitled to receive
for attending meetings of the Board or any committee of the Board
or for serving as the chair of the Board or any committee of the
Board.
(j) "Director's Retainer Fee Payment" means the dollar value of that
portion of the annual retainer fee payable by the Company to a
Non-Employee Director as of a particular Quarterly Payment Date,
as established by the Board and in effect from time to time.
(k) "Effective Date" means the date on which the "Effective Time"
occurs. The term "Effective Time" shall have the meaning set
forth in the Amended and Restated Agreement and Plan of Merger
and Combination, dated as of April 1, 1996, by and among the
Company, Allegheny Ludlum Corporation, ALS Merger Corporation,
Teledyne, Inc. and TDY Merger, Inc.
(1) "Employee" means any employee of the Company or an affiliate.
(m) "Fair Market Value" means, as of any given date, the average of
the high and low trading prices of the Common Stock on such date
as reported on the New York Stock Exchange, or, if the Common
Stock is not then traded on the New York Stock Exchange, on such
other national securities exchange on which the Common Stock is
admitted to trade, or, if none, on the National Association of
Securities Dealers Automated Quotation System if the Common Stock
is admitted for quotation thereon; provided, however, if there
were no sales reported as of such date, Fair Market Value shall
be computed as of the last date preceding such date on which a
sale was reported; provided, further, that if any such exchange
or quotation system is closed on any day on which Fair Market
Value is to be determined, Fair Market Value shall be determined
as of the first date immediately preceding such date on which
such exchange or quotation system was open for trading.
(n) "Meeting Fee Options" means the Stock Options issuable under
Section 4.04(c) of the Plan.
(o) "Non-Employee Director" means a Director who is not an Employee.
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(p) "Non-Employee Director Notice" means a written notice delivered
in accordance with Section 4.02.
(q) "Plan" means this Allegheny Teledyne Incorporated 1996
Non-Employee Director Stock Compensation Plan, as it may
hereafter be amended from time to time.
(r) "Quarterly Payment Date" means each of the quarterly dates on
which the Director's Fee Payment is paid by the Company.
(s) "Retainer Fee Options" means the Stock Options issuable under
Section 4.04(b) of the Plan.
(t) "Stock Options" means options to purchase shares of Common Stock
of the Company issuable hereunder.
1.04 Shares Subject to the Plan. The shares to be offered under the
Plan shall consist of the Company's authorized but unissued Common Stock or
treasury shares and, subject to adjustment as provided in Section 5.01 hereof,
the aggregate amount of such stock which may be issued or subject to Stock
Options issued hereunder shall not exceed 700,000. If any Stock Option granted
under the Plan shall expire or terminate for any reason, without having been
exercised or vested in full, as the case may be, the unpurchased shares subject
thereto shall again be available for issuance under the Plan. Stock Options
granted under the Plan will not be qualified as "incentive stock options" under
Section 422 of the Code.
ARTICLE II. ADMINISTRATION
2.01 The Board. The Plan shall be administered by the Board. Subject
to the provisions of the Plan, the Board shall interpret the Plan, promulgate,
amend, and rescind rules and regulations relating to the Plan and make all
other determinations necessary or advisable for its administration.
Interpretation and construction of any provision of the Plan by the Board shall
be final and conclusive. Notwithstanding the foregoing, the Board shall have or
exercise no discretion with respect to the selection of persons eligible to
participate hereunder, the determination of the number of shares of Common
Stock or number of Stock Options issuable to any person or any other aspect of
Plan administration with respect to which such discretion is not permitted in
order for grants of shares of Common Stock and Stock Options to be exempt under
Rule 16b-3 under the Securities Exchange Act of 1934, as amended.
ARTICLE III. PARTICIPATION
3.01 Participants. Each Non-Employee Director shall participate in the
Plan on the terms and conditions hereinafter set forth.
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ARTICLE IV. PAYMENT OF DIRECTOR'S FEES
4.01 General. The Director's Retainer Fee Payment shall be paid to
each Non-Employee Director, as of each Quarterly Payment Date, as set forth in
the Plan and subject to such other payment policies and procedures as the Board
may establish from time to time. Director's Meeting Fee payments shall be paid
reasonably promptly following the date of the meeting to which such payments
relate. If for the applicable Compensation Year such Non-Employee Director has
not made an election to receive Stock Options or Common Stock in lieu of at
least one-fourth (1/4) of the Director's Retainer Fee Payment pursuant to
Section 4.02, three-fourths (3/4) of the Director's Retainer Fee Payment shall
be paid in cash and one-fourth (1/4) of the Director's Retainer Fee Payment
shall be paid in the form of Common Stock.
4.02 Non-Employee Director Notice. A Non-Employee Director may file
with the Secretary of the Company or other designee of the Board of Directors,
at any time prior to the first day of December in the calendar year prior to
any Compensation Year, and at such other times as the Board may approve, a
Non-Employee Director Notice making an election to receive (i) a specified
portion (but not below 25%) of his or her Director's Retainer Fee Payment in
the form of Stock Options and/or Common Stock, and/or (ii) a specified portion
of his or her Director's Meeting Fee payment in the form of Stock Options
and/or Common Stock. Notwithstanding the foregoing, elections with respect to
the 1996 and 1997 Compensation Years and elections by newly elected or
appointed Non-Employee Directors may be made during the Compensation Years to
which such elections relate. Once filed, a Non-Employee Director Notice is
irrevocable with respect to the initial Compensation Year to which it relates
and will be effective and irrevocable for all subsequent Compensation Years
until another Non-Employee Director Notice is filed by such director in
accordance with the procedure described in the first sentence of this Section
4.02.
4.03 Conversion to Shares.
(a) Director's Retainer Fee Payment. Each Non-Employee Director who
pursuant to Section 4.01 or 4.02 is to receive Common Stock as part of his or
her Director's Retainer Fee Payment with respect to a Compensation Year and who
is elected or reelected or is a continuing Non-Employee Director as of the date
of commencement of such Compensation Year and as of the applicable Quarterly
Payment Date, shall receive as of each Quarterly Payment Date during such
Compensation Year a number of shares of Common Stock equal to the quotient
obtained by dividing (i) the amount of the Director's Retainer Fee Payment to
be paid in the form of Common Stock by (ii) the Fair Market Value of the Common
Stock per share on such Quarterly Payment Date. Cash shall be paid in lieu of
any fractional shares.
(b) Director's Meeting Fee Payment. Each Non-Employee Director who has
duly filed a Non-Employee Director Notice in accordance with Section 4.02 with
respect to a Compensation Year and elected to receive all or any portion of the
Director's Meeting Fee Payment in the form of Common Stock shall receive on the
first business day in January of the next following Compensation Year a number
of shares of Common Stock equal to the quotient obtained by dividing (i) the
amount of the Director's Meeting Fee Payment for the Compensation
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Year to be paid in the form of Common Stock by (ii) the Fair Market Value of
the Common Stock per share on the day immediately preceding the date of
issuance of such Common Stock. Cash shall be paid in lieu of any fractional
shares.
4.04 Stock Options.
(a) Annual Option Grants. Conditioned on the occurrence of the
Effective Time, an Annual Option covering 1,000 shares of Common Stock is
hereby granted to each Non-Employee Director as of (and with the date of grant
for all purposes of the Plan being), the first trading day for Common Stock
following the Effective Date. Thereafter, an Annual Option covering l,000
shares of Common Stock will be granted to each Non-Employee Director
automatically at the conclusion of each Company annual meeting. If, after the
date of adoption of this Plan, a director first becomes a Non-Employee Director
on a date other than an annual meeting date, an Annual Option covering 1,000
shares of Common Stock will be granted to such director on his or her first
date of Board service. The purchase price of the Common Stock covered by each
Annual Option will be the Fair Market Value of a share of Common Stock as of
the date of grant of the Annual Option.
(b) Retainer Fees Options. Retainer Fees Options for a Compensation
Year will be granted on January 2 of such Compensation Year (or if such January
2 is not a business day, on the next succeeding business day) for service
during such Compensation Year. The number of shares of Common Stock to be
subject to a Retainer Fees Option shall be equal to the nearest number of whole
shares determined by multiplying the Fair Market Value of a share of Company
Common Stock on the date of grant by 0.3333 and dividing the result into the
portion of the Director's Retainer Fee Payment elected to be received as Stock
Options by the Non-Employee Director for the Compensation Year. The purchase
price of each share covered by each Retainer Fee Option shall be equal to the
Fair Market Value of a share of Common Stock on the date of grant of the
Retainer Fee Option multiplied by 0.6666.
(c) Meeting Fee Options. Meeting Fee Options for a Compensation Year
will be granted on January 2 of the next following Compensation Year (or if
such January 2 is not a business day, on the next succeeding business day)
after the conclusion of the Compensation Year. The number of shares of Common
Stock to be subject to a Meeting Fee Option shall be equal to the nearest
number of whole shares determined by multiplying the Fair Market Value of a
share of Company Common Stock on the date of grant by 0.3333 and dividing the
result into the portion of the Director's Meeting Fee Payment elected to be
received as Stock Options by the Non-Employee Director. The purchase price of
each share covered by each Meeting Fee Option shall be equal to the Fair Market
Value of a share of Common Stock on the date of grant of the Meeting Fee Option
multiplied by 0.6666.
(d) Duration and exercise of Stock Options. Subject to Section 4.04(g)
below, Annual Options and Retainer Fee Options become exercisable on the first
anniversary of the date on which they were granted and Meeting Fee Options
become exercisable immediately upon grant. Stock Options shall terminate upon
the expiration of ten years from the date of grant. No
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Stock Option may be exercised for a fraction of a share and no partial exercise
of any Stock Option may be for less than one hundred (100) shares.
(e) Purchase Price. The purchase price for the shares shall be paid in
full at the time of exercise (i) in cash or by check payable to the order of
the Company, (ii) by delivery of shares of Common Stock of the Company owned by
the Stock Option holder, or (iii) by delivering a properly executed exercise
notice together with irrevocable instructions to a broker to deliver promptly
to the Company the amount of sale or loan proceeds to pay the Stock Option
price (in which case the exercise will be effective upon receipt of such
proceeds by the Company). Shares of Common Stock used to satisfy the exercise
price of a Stock Option shall be valued at their Fair Market Value on the date
of exercise.
(f) Transferability. Stock Options granted hereunder shall not be
transferable, other than by will or the laws of descent and distribution and
shall be exercisable during a Stock Option holder's lifetime only by the Stock
Option holder or by his or her guardian or legal representative, except to the
extent (i) transfer is permitted by Rule 16b-3 promulgated under the Exchange
Act, and (ii) approved by the Committee. Subject to the foregoing, Stock
Options shall not be assigned, pledged or otherwise encumbered by the holder
thereof, either voluntarily or by operation of law.
(g) Termination of Directorship. All rights of a director in a Stock
Option, to the extent that the Stock Option has not been exercised, shall
terminate three months after the date of the termination of his or her services
as a director for any reason other than (i) the death of the director, (ii)
cessation of services as a director because the individual, although nominated
by the Board, is not elected by the stockholders to the Board, or (iii)
retirement because of total and permanent disability as defined in Section
22(e)(3) of the Code (collectively, "Termination Events"). If a director ceases
to be a director of the Company because of a Termination Event, (i) the nearest
whole number of unexercisable Stock Options shall immediately become
exercisable which equals the number of full months actually served by the
director as a Non-Employee Director during the Compensation Year at issue
divided by 12, multiplied by the number of unexercisable Stock Options on the
date of the Termination Event. The remaining unexercisable portion of all such
Stock Options shall terminate. All then exercisable Stock Options shall expire
twelve months after the date of a Termination Event.
ARTICLE V. MISCELLANEOUS
5.01 Adjustments Upon Changes in Common Stock. The number and kind of
shares available for issuance under the Plan, and the number and kind of shares
subject to, and the exercise price of, outstanding Stock Options, shall be
appropriately adjusted to prevent dilution or enlargement of rights by reason
of any stock dividend, stock split, combination or exchange of shares,
recapitalization, merger, consolidation or other change in capitalization with
a similar substantive effect upon the Plan or the shares issuable under the
Plan.
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5.02 Amendment and Termination. The Board shall have complete power
and authority to amend the Plan at any time; provided, however, that the Board
shall not, without the affirmative approval of the shareholders of the Company,
increase the number of shares of Common Stock available for issuance hereunder
or make any other amendment which requires shareholder approval under Rule
16b-3 promulgated under the Securities Exchange Act of 1934, as amended, unless
the Board determines that such compliance is no longer desired, or under any
applicable law. The Board shall have the right and the power to terminate the
Plan at any time. No amendment or termination of the Plan may, without the
consent of the Non-Employee Director, adversely affect the right of such
Non-Employee Director with respect to any Stock Options then outstanding.
5.03 Requirements of Law. The issuance of Common Stock under the Plan
shall be subject to all applicable laws, rules and regulations and to such
approval by governmental agencies as may be required.
5.04 No Guarantee of Membership. Nothing in the Plan shall confer upon
a Non-Employee Director any right to continue to serve as a Director.
5.05 Construction. Words of any gender used in the Plan shall be
construed to include any other gender, unless the context requires otherwise.
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