TITANIUM METALS CORPORATION
AMENDED AND RESTATED
1996 NON-EMPLOYEE DIRECTOR COMPENSATION PLAN
EFFECTIVE FEBRUARY 19, 1998
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 NASDAQ National Market (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.
(k) "Meeting Fees" shall mean all fees paid for attendance at each
regular or special meeting of the Board or Board committee
attended by an Eligible Director. Such fees initially shall be
$1000 per day for one or more meetings of the Board and/or
committees of the board attended in person, and $350 per day for
one or more telephonic meetings of the Board and/or committees of
the Board. Such initial fees shall each be subject to change by
the Ineligible Directors.
(l) "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.
(m) "Optionee" shall mean a person who holds an Option.
(n) "Parent" shall mean a corporation defined in Code Section 424(e).
(o) "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.
(p) "Retainer" shall mean a retainer paid annually to Eligible
Directors which shall initially equal $8000 in cash plus 400
shares of Stock. The cash and Stock comprising such initial
retainer shall be subject in each case to change by the
Ineligible Directors.
(q) "Stock" shall mean the Company's $.01 par value common stock.
(r) "Subsidiary" shall mean a corporation of the type defined in Code
Section 425(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 62,500 (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) Retainer. Commencing in 1999, the cash amount of the
Retainer shall be paid, and certificates for the Stock portion of
the Retainer shall be delivered, to Eligible Directors on or as
soon as practicable following the annual meeting of the
stockholders of the Company, in each such case to the Eligible
directors elected at such 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.
(b) Meeting Fees. Meeting Fees shall be paid in cash on or as
soon as practicable after any regular or special meeting attended
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 shall be
granted automatically to each Eligible Director elected at the
annual meeting of stockholders of the Company as of the date of
such meeting.
(b) Option Formula. Each Eligible Director shall receive an
Option to purchase 1,500 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 shall 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 shall be the
Fair Market Value of a share of Stock on the date the Option is
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, 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.
Such Option shall be deemed to have been exercised on the date
both such required items have been received by the Company.
(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 Option s 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 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) 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.
(e) 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.
(f) 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.
(g) 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 and February 19, 1998. 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.
(h) 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 of the following actions taken pursuant to
previous versions of the Plan: (i) Retainers for 1996 were paid on
June 10, 1996, the closing of the Company's initial public
offering of Stock registered on Form S-1 under the federal
securities laws, and Retainers for 1997 were paid on January 2,
1997, the first business day of the Company's fiscal year, (ii)
Options for 1996 were granted on June 4, 1996, the date of the
pricing of the Company's initial public offering, subject to the
closing of such offering, and Options for 1997 and 1998 were
granted on January 24, 1997 and January 27, 1998, respectively,
which was three business days after the issuance by the Company of
the press release that summarized the Company's financial
performance for 1996 and 1997, respectively, (iii) each Option
granted in 1996 and 1997 was for 625 shares of Stock, (iv) each
Option granted in 1996 and 1997 will terminate on the fifth
anniversary of the grant date of the Option (subject to prior
termination as provided in Section 7(g) and 7(h)), and (v) each
Option granted in 1996 is exercisable at $23 per share of Stock,
which was the offering price in the Company's initial public
offering.
(i) 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.
(j) 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.