Exhibit 10.4
TITANIUM METALS CORPORATION
AMENDED AND RESTATED
1996 NON-EMPLOYEE DIRECTOR COMPENSATION PLAN
As Amended and Restated Effective May 20, 2003
1. Purpose. The purpose of the Amended and Restated 1996 Non-Employee
Director Compensation Plan is to promote the interests of the Company by
providing an inducement to obtain and retain the services of qualified persons
who are neither employees nor officers of the Company to serve as members of the
Company's Board of Directors.
2. Definitions.
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Cause" shall mean any misappropriation of the assets of the
Company or any of its Subsidiaries resulting in material loss to such
entity.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(d) "Company" shall mean Titanium Metals Corporation, a Delaware
corporation.
(e) "Director" shall mean any person serving as a member of the Board.
(f) "Disability" shall mean the condition of a Grantee who is unable
to engage in any substantial gainful activities by reason of any medically
determinable physical or mental impairment which can be expected to result
in death or which has lasted or can be expected to last for a continuous
period of not less than twelve (12) months.
(g) "Eligible Directors" shall mean those Directors eligible to
participate in the Plan pursuant to Section 4.
(h) "Fair Market Value" shall mean the last reported sale price of
Stock on the New York Stock Exchange (or other exchange upon which the
Stock is traded as of the date of determination).
(i) "Grantee" shall mean an Eligible Director who has been granted an
Option.
(j) "Ineligible Directors" shall mean those Directors who are not
Eligible Directors.
"Meeting Fees" shall mean the daily rate of $1,000 to be paid to each
Eligible Director for such Eligible Director's attendance at a regular or
special meeting of the Board or Board committee (in person or by
telephone), or for performing other services at the request of the Board or
Board committee (other than related to Board or Board committee meetings).
Provided, that, the meeting fee is intended to be paid on a daily rate
basis and not on a per meeting basis and covers any preparation time
required for such meetings.
(k) "Option" shall mean an option to purchase shares of Stock, granted
pursuant to the Plan and subject to the terms and conditions described in
the Plan. Options shall not be incentive stock options within the meaning
of Code Section 422A.
(l) "Optionee" shall mean a person who holds an Option.
(m) "Parent" shall mean a corporation of the type defined in Code
Section 424(e).
(n) "Plan" shall mean this Amended and Restated 1996 Non-Employee
Director Compensation Plan, as it may be amended from time to time pursuant
to Section 9.
(o) "Retainer" shall mean an annual retainer paid in quarterly
installments to Eligible Directors which shall be comprised of $20,000 in
cash, plus a variable number of shares of Stock to be determined in
accordance with the following schedule:
-------------------------------- --------------------------------
RANGE OF CLOSING PRICE PER NUMBER OF SHARES IN ANNUAL
SHARE ON THE DATE OF GRANT RETAINER STOCK GRANT
-------------------------------- --------------------------------
Over $20 500 shares
-------------------------------- --------------------------------
$10 to $20 1,000 shares
-------------------------------- --------------------------------
$5 to $9.99 1,500 shares
-------------------------------- --------------------------------
Under $5 2,000 shares
-------------------------------- --------------------------------
For service on Board committees, Eligible Directors shall be paid an
annual cash retainer of $2,000 for each Board committee on which the
Eligible Director serves, payable in quarterly installments on the same
dates as the cash portion of the annual Retainer for Board service is paid.
(p) "Stock" shall mean the Company's $.01 par value common stock.
(q) "Subsidiary" shall mean a corporation of the type defined in Code
Section 424(f).
3. Administration. The Plan shall be administered by the Ineligible
Directors. The amount and nature of the awards to be granted under the Plan,
including grants of Options, shall be automatic as described in Section 7. The
Ineligible Directors, subject to the provisions of the Plan, have the power to
construe the Plan, to determine all questions thereunder and to adopt and amend
such rules and regulations for the administration of the Plan as they may deem
desirable. Any interpretation, determination, or other action made or taken by
the Ineligible Directors shall be final, binding, and conclusive. A majority of
the total number of Ineligible Directors shall constitute a quorum for purposes
of any action by the Ineligible Directors, and the vote of a majority of the
Ineligible Directors present at a meeting of the Ineligible Directors at which a
quorum is present shall be the act of the Ineligible Directors. Any action
reduced to writing and signed by all of the Ineligible Directors shall be as
fully effective as if it had been taken by a vote at a meeting of the Ineligible
Directors duly called and held. None of the Ineligible Directors shall be
personally liable for any action, determination or interpretation made in good
faith with respect to the Plan or the Options.
4. Eligibility. All Directors of the Company shall be eligible to
participate in the Plan unless they are employees of the Company or any
Subsidiary or Parent of the Company.
5. Shares Subject to the Plan
(a) Class. The shares which are to be made the subject of awards
granted under the Plan shall be the Company's authorized but unissued
Stock. In connection with the issuance of Stock under the Plan, the Company
may repurchase Stock in the open market or otherwise.
(b) Aggregate Amount. The total number of shares of Stock authorized
under the Plan shall not exceed 26,250 (subject to adjustment under Section
10(c)). If any outstanding Option under the Plan expires or is terminated
for any reason, then the Stock allocable to the unexercised portion of such
Option shall not be charged against the limitation of this Section 5(b) and
may again become the subject of an Option granted under the Plan.
6. Retainer/Meeting Compensation.
(a) Cash Portion of Retainer. The cash portion of the Board and
committee Retainers shall be paid to each Eligible Director quarterly in
advance on or around the first business day of each calendar quarter
following the election or re-election of such Eligible Director by the
stockholders at the annual meeting (or by the Board, in the case of a
filled vacancy), and no payment of partial quarterly fees will be made or
required for partial calendar quarters served by a new director and/or
committee member before the next regular quarterly payment and no director
and/or committee member who ceases to serve shall be required to reimburse
the Company for the remainder of the calendar quarter following such
termination of service.
(b) Stock Portion of Retainer. Certificates representing the stock
portion of the Retainer shall be delivered to each Eligible Director as
soon as practicable following the election or re-election of such Eligible
Director by the stockholders at the annual meeting. Such certificates shall
be registered in the name of the Eligible Director, and all Stock so issued
shall be fully paid and nonassessable. The Company shall pay any issuance
or transfer taxes with respect to the issuance of Stock.
(c) Meeting Fees/Daily Rate. Meeting Fees and the daily services rate
shall be paid in cash on or as soon as practicable after any regular or
special meeting attended, or performance of any other services for the
Board or a committee of the Board, by an Eligible Director.
7. Terms, Conditions and Form of Options. Each Option granted under the
Plan shall be evidenced by a written agreement substantially in the form
attached hereto or in such other form as the Ineligible Directors shall from
time to time approve, which agreements shall be executed by a duly authorized
officer of the Company and shall comply with and be subject to the following
terms and conditions:
(a) Option Grant Dates. Commencing in 1999, Options were granted
automatically to each Eligible Director elected at the annual meeting of
stockholders of the Company as of the date of such meeting. For any
Eligible Director who was elected or appointed after the annual meeting of
the stockholders of the Company in a given year, the Options were granted
to such Eligible Director as of the date of his or her election or
appointment. Commencing in 2003, no further Options shall be granted under
this Plan; however, all previously granted Options shall remain issued,
outstanding and exercisable in accordance with their respective terms.
(b) Option Formula. Each Eligible Director received an Option to
purchase a specified number of shares of Stock on the grant date of the
Option without further action by the Board or the Ineligible Directors.
(c) Period of Options. Options granted under the Plan vest and become
exercisable on the first anniversary of grant date of the Option; and
Options shall terminate and cease to be exercisable on the tenth
anniversary of the grant date of the Option (subject to prior termination
as provided in Sections 7(g) and (h) below).
(d) Option Price. The exercise price of each Option was the Fair
Market Value of a share of Stock on the date the Option was granted.
(e) Exercise of Options. Vested and exercisable Options may be
exercised (in full or in part) only by written notice of exercise delivered
to the Company at its principal executive office accompanied either (i) by
cash payment of the aggregate exercise price for all shares of Stock being
acquired upon exercise of the Option ("Exercise for Cash"), or (ii) written
direction to deliver the shares of Stock being acquired upon exercise of
the Option to a registered broker dealer with instruction to sell such
shares for the account of Optionee, and to remit to the Company out of such
sale proceeds a cash payment equal to the aggregate exercise price for all
shares of Stock being acquired upon exercise of the Option ("Cashless
Exercise"). Such Option shall be deemed to have been exercised, with
respect to an Exercise for Cash on the date both the notice and the cash
payment have been received by the Company (with the proceeds per share
being calculated as the difference between the Fair Market Value of the
stock on the date of exercise and the exercise price of the Option). Such
Option shall be deemed to have been exercised with respect to a Cashless
Exercise on the sale date shown on the Grantee's brokerage confirmation or
other confirmation of trade (with the proceeds per share being calculated
as the difference between the sale price of the stock shown on the
brokerage confirmation or other confirmation of trade and the exercise
price of the Option).
(f) Transferability. No Option granted under the Plan shall be
transferable other than by will or by the laws of descent and distribution;
provided, however, that the Ineligible Directors may determine to grant
Options that are transferable, without payment of consideration, to
immediate family members of the Grantee or to trusts or partnerships for
such family members, and may amend outstanding Options to provide for such
transferability. No interest of any Optionee in any Option shall be subject
to attachment, execution, garnishment, sequestration, the laws of
bankruptcy or any other legal or equitable process. Except as otherwise
determined by the Ineligible Directors, during the lifetime of the Grantee,
Options shall be exercisable only by the Grantee or the Grantee's guardian
or legal representative.
(g) Death or Disability of Grantee. If a Grantee dies or terminates
performance of services as a Director because of Disability, any unvested
and unexercisable Option granted to such Grantee shall immediately and
fully vest. Such Option, together with any other vested and unexercisable
Options granted to such Grantee, may be exercised, at any time, or from
time to time, prior to the earlier of (i) the termination of such Option in
accordance with Section 7(c), or (ii) one year after the date of Grantee's
death or termination of services as a Director, at which date all
then-outstanding and unexercised Options granted to such Grantee shall
terminate. In the case of death, an Option may be exercised by the person
or persons to whom the Optionee's rights under the Option pass by will or
applicable law, or if no such person has such rights, by the Optionee's
executors or administrators; provided that such person(s) consent in
writing to abide by and be subject to the terms of the Plan and the Option
and such writing is delivered to the Company.
(h) Termination of Services as Director.
(i) If a Grantee's performance of services for the Company and
its Subsidiaries shall terminate for any reason other than death or
Disability or termination of services as a Director for Cause, any
unvested and unexercisable Option granted to such Grantee shall
immediately and fully vest. Such Option, together with any other
vested and exercisable Options granted to such Grantee, may be
exercised, at any time, or from time to time, prior to the earlier of
(i) the termination of such Option in accordance with Section 7(c) or
(ii) three months after the date of such Grantee's termination of
services as a Director, at which date all then-outstanding and
unexercised Options granted to such Grantee shall terminate.
(ii) If a Grantee's performance of services as a Director is
terminated for Cause, any unvested and unexercisable Option granted to
such Grantee shall terminate as of the date of such termination of
services. All Options previously granted to such Grantee which are, as
of the date of such termination of services, vested and exercisable,
may be exercised at any time, or from time to time, prior to the
earlier of (i) the termination of such Option in accordance with
Section 7(c) or (ii) one month after the date of such Grantee's
termination of services as a Director, at which date all
then-outstanding and unexercised Options granted to such Grantee shall
terminate. For this purpose of the Plan and any Option agreement, such
Grantee's service shall be deemed to have terminated on the earlier of
(A) the date when the Grantee's service in fact terminated or (B) the
date when such Grantee received written notice that his service is to
terminate for Cause.
(i) No Rights as Shareholder. No Optionee shall have any rights as a
shareholder with respect to any Stock subject to an Option prior to the
date of issuance to such Optionee of a certificate or certificates for such
shares.
8. Compliance With Other Laws and Regulations. The Plan, the grant and
exercise of Options under the Plan, and the obligation of the Company to
transfer shares under such Options shall be subject to all applicable federal
and state laws, rules and regulations, including those related to disclosure of
financial and other information to Optionees, and to any approvals by any
government or regulatory agency as may be required. The Company shall not be
required to issue or deliver any certificates for shares of Stock prior to (a)
the listing of such shares on any stock exchange on which the Stock may then be
listed, where such listing is required under the rules or regulations of such
exchange, and (b) the compliance with applicable federal and state securities
laws and regulations relating to the issuance and delivery of such certificates;
provided, however, that the Company shall make all reasonable efforts to so list
such shares and to comply with such laws and regulations.
9. Amendment and Discontinuance. The Board may from time to time amend,
suspend or discontinue the Plan; provided, however, that, the Plan shall not be
amended without the consent of the shareholders of the Company to the extent
such consent is required under Rule 16b-3, Section 162(m) of the Code or any
stock exchange or market quotation system on which the Stock is then listed or
quoted. Except where approval of the Board is required by applicable law, the
power of the Board to amend, suspend or discontinue the Plan shall be exercised
by the Ineligible Directors.
10. General Provisions.
(a) Assignability. The rights and benefits under the Plan shall not be
assignable or transferable by an Eligible Director other than by will or by
the laws of descent and distribution, and, except for the Death Benefit
described in Section 10(d) below. Except as otherwise determined by the
Ineligible Directors, during the lifetime of the Grantee, Options granted
under the Plan shall be exercisable only by the Grantee.
(b) Termination of Plan. No Options may be granted under the Plan
after May 18, 2006 (or if such date is not a business day, on the next
succeeding business day). The Plan shall automatically terminate on the
date all Options granted under the Plan have been exercised or have
terminated or expired.
(c) Adjustments in Event of Change in Stock. In the event of any
change in the Stock by reason of any stock dividend, recapitalization,
reorganization, merger, consolidation, split-up, combination, or exchange
of shares, or of any similar change affecting the Stock, the number and
class of shares subject to outstanding Options, the exercise price per
share, and any other terms of the Plan or the Options which in the
Ineligible Directors' sole discretion require adjustment shall be
appropriately adjusted consistent with such change in such manner as the
Ineligible Directors may deem appropriate.
(d) Death Benefit. In the event that any Eligible Director's services
should terminate because of death, the Company shall pay in cash to such
Eligible Director's designated beneficiary or beneficiaries (or the
Eligible Director's estate if no beneficiary is designated) an amount equal
to the cash portion of the annual Board and any committee Retainers,
whether or not the Eligible Director has received any of such Retainer in
such year.
(e) No Right to Continue as a Director. Neither the Plan, nor the
granting of an Option nor any other action taken pursuant to the Plan,
shall constitute or be evidence of any agreement or understanding, express
or implied, that the Company will retain a Director for any period of time,
or at any particular rate of compensation.
(f) ERISA. The Plan is not an employee benefit plan which is subject
to the provisions of the Employee Retirement Income Security Act of 1974,
and the provisions of Section 401(a) of the Code are not applicable to the
Plan.
(g) Non-Statutory Options. All Options granted under the Plan shall be
non-statutory options not entitled to special tax treatment under Section
422A of the Code.
(h) Effective Date of the Plan. The Plan originally took effect on May
8, 1996 (ten days following last adoption by the stockholders of the
Company on May 8, 1996). The Plan was originally adopted by the Board on
March 29, 1996, was subsequently amended by the Board on April 15, 1996,
and was amended and restated by the Board on February 14, 1997, February
19, 1998, May 19, 1998, February 23, 1999, February 28, 2001, June 8, 2001,
May 7, 2002 and May 20, 2003. The Plan was originally adopted by the
stockholders of the Company on March 29, 1996, and again on May 8, 1996
following the amendment of the Plan by the Board.
(i) Effect of Amendment and Restatement of the Plan. This amended and
restated version of the Plan shall amend and supersede in its entirety
previous versions of the Plan, provided, however, that such amendment and
restatement is not intended to affect the validity of any actions taken
under previous versions of the Plan, as summarized on Exhibit A hereto.
(j) Governing Law. The Plan and all determinations made and actions
taken pursuant hereto shall be governed by the laws of the State of
Colorado and construed accordingly.
(k) Variation of Pronouns. All pronouns and any variations thereof
contained herein shall be deemed to refer to masculine, feminine, neuter,
singular or plural, as the identity of the person or persons may require.
EXHIBIT A
HISTORY OF PLAN ACTIONS/AMENDMENTS
- ------------------------------------------------------------------------------------------------------------------------
RETAINER MEETING FEES OPTIONS
(In Person/By Telephone)
Committee Meeting
Amount of Non-Chair Number @ Price/ Term/
Cash/ # of Shares/ Board Committee Committee Date Issued
DATE ACTION Date Paid Date Paid Meeting Chair only Member
- ------------------------------------------------------------------------------------------------------------------------
3-29-96 Plan Adopted $8,000/ $8,000 in $1,000/ 625 @ IPO price then at
authorizing 62,500 IPO shares $350 FMV/ 5 years/ IPO Closing
shares closing (rounded to then 3rd business day
then 1st next 100)/IPO after earnings release
business closing then
day of 1st business
year day of year
- ------------------------------------------------------------------------------------------------------------------------
4-15-96 Plan Amended 400 shares/
IPO closing
then 1st
business day of
year
- ------------------------------------------------------------------------------------------------------------------------
2-14-97 Plan Amended $8,000/ 400 shares/ 1,500 @ FMV/10 years/
Annual Annual Meeting 3rd business day after
Meeting earnings release
- ------------------------------------------------------------------------------------------------------------------------
2-19-98 Plan Amended 1,500 @ FMV/10 years/
Annual Meeting
- ------------------------------------------------------------------------------------------------------------------------
5-19-98 Plan Amended $15,000/ 500 shares/ $2,000/ $1,000/
Annual Annual Meeting $700 $350
Meeting
- ------------------------------------------------------------------------------------------------------------------------
2-23-99 Plan Amended 5,000 @ FMV/10 years/
Annual Meeting
- ------------------------------------------------------------------------------------------------------------------------
2-28-01 Plan Amended to 1,000 shares/
Authorize 200,000 Annual Meeting
Additional shares
- ------------------------------------------------------------------------------------------------------------------------
6-8-01 Plan Amended to
provide awards to
Directors elected or
appointed after
annual meeting of
stockholders
- ------------------------------------------------------------------------------------------------------------------------
5-7-02 Plan Amended to
clarify date of
option exercise and
calculation of
option exercise
proceeds.
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
RETAINER MEETING FEES/ DEATH
DAILY RATE BENEFIT
- ------------------------------------------------------------------------------------------------------------------------------------
Cash Retainer: Stock Retainer: For meetings attended
Amount of Cash/ Price of Stock/# of Shares/ Committee in person orby phone;
DATE ACTION Date Paid Date Paid Retainer or rate for
performing services
at the request
of the Board
- ------------------------------------------------------------------------------------------------------------------------------------
5-20-03 Plan amended to $20,000, payable Over $20 = 500 shares $2,000, payable $1,000 Equal to Annual
increase cash quarterly $10 to $20 = 1,000 shares quarterly Cash Board and
retainer to $20,000, $5 to $9.99 = 1,500 shares Committee(s)
modify formula for Under $5 = 2,000 shares Retainer
retainer Stock
grant, add annual Granted on date of
Committee retainer, Annual Meeting
modify meeting
fee/daily rate
formula, and delete
annual option award
- ------------------------------------------------------------------------------------------------------------------------------------