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EXHIBIT 10.1
EFFECTIVE DATE: 9/9/97
SURREY, INC.
1997
LONG-TERM INCENTIVE PLAN
The purpose of the SURREY, INC. 1997 LONG-TERM INCENTIVE PLAN (the "Plan")
is to promote the growth and profitability of SURREY, INC. (the "Company") and
its affiliates by providing its executives and employees with an incentive to
achieve long-term corporate objectives, to attract and retain executives and
employees of outstanding competence, and to provide its executives and
employees with an equity interest in the Company.
1. STOCK SUBJECT TO PLAN.
a. AGGREGATE LIMIT. An aggregate of 350,000 shares (the "Shares") of the
Common Stock, no par value, of the Company ("Company Stock") may be subject to
awards granted under the Plan. Such Shares may be authorized but unissued
Company Stock or authorized and issued Company Stock that has been acquired by
the Company. Except to the extent otherwise provided in paragraph 6.b., Shares
that are forfeited, and Shares that are subject to an award which expires or is
canceled, shall be available for reissuance under the Plan.
b. INDIVIDUAL LIMIT. Not more than 100,000 Shares may be subject to awards
granted to any employee during any calendar year. If an award granted to an
employee is canceled, the canceled award will continue to be counted against
the maximum number of shares for which awards may be granted to that employee.
If, after grant, the exercise price of a stock option is reduced, the reduction
shall be treated as a cancellation of the option and the grant of a new option
for purposes of this paragraph.
2. ADMINISTRATION.
a. COMMITTEE. The Plan shall be administered by a committee (the
"Committee") consisting of the entire Board of Directors of the Company (the
"Board"), or of not less than two members of the Board each of whom is a
"nonemployee director" within the meaning of Rule 16b-3(a)(3) under the
Securities Exchange Act of 1934 (the "Exchange Act"). To the extent feasible,
at any time when the Company is registered under Section 12 of the Exchange
Act, each member of the Committee shall be an "outside director" within the
meaning of Section 162(m)(4)(C)(i) of the Internal Revenue Code of 1986 (the
"Code") and regulations thereunder.
b. POWERS AND DUTIES. The Committee shall have sole discretion and
authority to:
i. adopt rules and regulations governing the administration of the Plan;
ii. select eligible employees to whom awards will be granted;
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iii. determine the type, price, amount, size, and terms of awards;
iv. determine when awards will be granted;
v. determine whether restrictions will be placed on Shares purchased
pursuant to an option or issued pursuant to an award;
and make all other determinations necessary or advisable for the administration
of the Plan. The Committee's determinations need not be uniform, and may be
made by it selectively among persons who are eligible to receive awards,
whether or not such persons are similarly situated. All interpretations,
decisions, or determinations made by the Committee shall be final and
conclusive.
3. ELIGIBILITY. Any employee of the Company or its Affiliates shall be
eligible to receive awards under the Plan; however, no awards shall be made to
a director of the Company who is not an employee of the Company or an
Affiliate. An "Affiliate" is any corporation that is a "parent corporation" or
a "subsidiary corporation" with respect to the Company, as determined under
Sections 424(e) and (f) of the Code.
4. AWARDS. The Committee may make awards in the form of stock options, stock
appreciation rights, restricted stock, performance awards, or any combination
thereof.
5. STOCK OPTIONS. A stock option shall entitle the optionee, upon exercise,
to purchase Shares at a specified price during a specified period. Stock
options may be "Incentive Stock Options" within the meaning of Section 422 of
the Code, options which do not qualify as Incentive Stock Options
("Nonqualified Options"), or a combination of Incentive Stock Options and
Nonqualified Options. Stock options shall be subject to the following
requirements:
a. TYPE OF OPTION. Each option shall be identified as an Incentive
Stock Option or a Nonqualified Option. If a combination of Incentive Stock
Options and Nonqualified Options are granted in a single award, the
agreement evidencing the award shall specify the extent to which the
options are Incentive Stock Options and the extent to which they are
Nonqualified Options.
b. TERM. No option shall be exercisable more than ten years after the
date it is granted.
c. PAYMENT. The purchase price of Shares subject to an option shall
be payable in full when the option is exercised. Payment may be made in
cash, in shares of Common Stock having a fair market value on the date of
exercise which is equal to the option price, by directing the Company to
withhold from the Shares that would otherwise be issued upon exercise a
number of Shares having a fair market value on the date of exercise which
is equal to the exercise price, or by any combination of the foregoing,
subject to such terms and conditions as the Committee deems necessary or
appropriate. The Committee, in its discretion, may also cooperate with an
optionee who participates in a cashless exercise program of a broker or
other agent under which all or
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part of the Shares received upon exercise of an option are sold through the
broker or other agent or under which the broker or other agent makes a loan
to such optionee.
d. INCENTIVE STOCK OPTIONS. An Incentive Stock Option shall be subject to
the following additional requirements:
i. The purchase price of Shares subject to the option
shall not be less than the fair market value of the Shares at the
time the option is granted, as determined in good faith by the
Committee.
ii. The fair market value (determined at the time the
option is granted) of all Shares with respect to which Incentive
Stock Options first become exercisable during any calendar year,
under this Plan or any other plan of the Company or an Affiliate,
shall not exceed $100,000.
iii. If the optionee owns 10% or more of the total
combined voting power of all classes of stock of the Company or
an Affiliate at the time the option is granted, the purchase
price of Shares subject to the option shall not be less than 110%
of their fair market value on the date the option is granted, and
the option may not be exercised more than five years after the
date it is granted. The rules of Section 424(d) of the Code
shall apply in determining the stock ownership of any optionee.
iv. The option shall not be transferable except to the
extent permitted by the agreement evidencing the option. An
option agreement may only permit an Incentive Stock Option to be
transferred by will or the laws of descent and distribution, and
an Incentive Stock Option may not be exercised during the
optionee's lifetime by anyone other than the optionee.
Subject to the foregoing, options may be made exercisable in one or more
installments, upon the happening of certain events, or upon such other terms
and conditions as the Committee shall determine.
6. STOCK APPRECIATION RIGHTS. A stock appreciation right shall entitle the
holder, upon exercise, to receive a payment equal to the amount by which the
fair market value of one Share on the date the right is exercised exceeds the
"base amount" established by the Committee on the date the right is granted.
Stock appreciation rights shall be subject to the following requirements:
a. TYPE OF RIGHT. Stock appreciation rights may be granted in tandem
with an option or as "freestanding" rights.
b. TANDEM RIGHTS. Stock appreciation rights granted in tandem with an
option shall become nonexercisable upon exercise of the option, and an
option granted in tandem with stock appreciation rights shall become
nonexercisable upon the exercise of the rights. Shares subject to an
option which becomes nonexercisable by virtue of
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the exercise of a tandem right shall not be available for subsequent awards
under the Plan.
c. TERM. No stock appreciation right shall be exercisable more than
ten years after the date it is granted.
d. PAYMENT. The amount payable upon the exercise of a stock
appreciation right may be paid in cash, in shares of Company Stock having a
fair market value which is not more than the amount payable on the date of
exercise, or in a combination of cash and such shares, as the Committee shall
determine.
e. RIGHTS NOT TRANSFERABLE. A stock appreciation right shall not be
transferable except to the extent permitted by the agreement evidencing the
right. A stock appreciation right agreement may only permit the right to be
transferred by will or the laws of descent and distribution, and a stock
appreciation right may not be exercised during the holder's lifetime by
anyone other than the holder.
f. RIGHTS IN TANDEM WITH ISOS. Stock appreciation rights granted in
tandem with an Incentive Stock Option shall be subject to the following
additional requirements:
i. The base amount of the rights shall not be less than the
purchase price of the Shares subject to the option.
ii. The rights may be exercised only when the fair market
value of the Shares subject to the rights exceeds the purchase price
of the Shares subject to the option.
iii. The rights may be exercised only when, and to the extent,
the option may be exercised.
iv. The rights may be transferred only when the option may be
transferred.
v. The amount payable upon exercise of the rights shall not
exceed the difference between the fair market value of the Shares
subject to the right and the purchase price of the Shares subject to
the option.
Subject to the foregoing, stock appreciation rights may be made exercisable in
one or more installments, upon the happening of certain events, or upon such
other terms and conditions as the Committee shall determine.
7. RESTRICTED STOCK. Restricted stock awards shall entitle the
holder to receive Shares subject to forfeiture if specified conditions are not
satisfied at the end of a restricted period. Restricted stock awards shall be
subject to the following requirements:
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a. RESTRICTED PERIOD. The Committee shall establish a restricted
period during which the holder will not be permitted to sell, transfer, pledge,
encumber, or assign the Shares subject to the award. Within these limits, the
Committee may provide for the lapse of restrictions in installments, upon the
occurrence of certain events, or upon such other terms and conditions as the
Committee deems appropriate. Any attempt by a holder to dispose of restricted
Shares in a manner contrary to the applicable restrictions shall be void, and
of no force or effect.
b. RIGHTS DURING RESTRICTED PERIOD. Except to the extent otherwise
provided herein or under the terms of a restricted stock agreement, the holder
of restricted Shares shall have all of the rights of a stockholder in the
Company with respect to the restricted Shares, including the right to vote the
Shares and to receive dividends and other distributions. However, all stock
dividends, stock rights, and stock issued upon split-ups or reclassifications
of Shares shall be subject to the same restrictions as the Shares with respect
to which they are issued, and may be held in custody as provided below until
the restrictions have lapsed.
c. FORFEITURES. Except to the extent otherwise provided in a
restricted stock agreement, restricted Shares shall be forfeited to the
Company, and all rights of the holder with respect to such Shares shall
terminate, if the holder shall cease to be an employee of the Company and its
Affiliates or if any condition established by the Committee for the release of
any restriction shall not have occurred prior to the end of the restricted
period.
d. CUSTODY. The Committee may provide that certificates evidencing
restricted Shares shall be held in custody by a bank or other institution, or
by the Company or an Affiliate, until the restrictions have lapsed. The
Committee may also require the holder of restricted Shares to deliver a stock
power to the Company, endorsed in blank, relating to the restricted Shares.
e. CERTIFICATES. A recipient of restricted Shares shall be issued a
certificate or certificates evidencing such Shares. Such certificates shall be
registered in the name of the recipient, and shall bear a legend which shall be
in substantially the following form:
" The transferability of this certificate and the shares represented
hereby are subject to the terms and conditions forfeiture) of the
SURREY, INC. 1997 LONG-TERM INCENTIVE PLAN and a Restricted Stock
Agreement entered into between the registered owner and Surrey, Inc.
Copies of such Plan and Agreement are on file in the offices of
Surrey, Inc., 13110 Trails End Road, Leander, Texas 78641."
8. PERFORMANCE AWARDS. Performance awards shall entitle the recipient
to receive future payments of cash or distributions of Shares upon the
achievement of long-term performance goals. Performance awards shall be subject
to the following requirements:
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a. PERFORMANCE PERIOD. The Committee shall establish a
performance period of not more than five years.
b. AMOUNT OF AWARDS. The Committee shall establish a value
for each performance award, which may be expressed in terms of
specified dollar amounts or a specified number of Shares. Such value
may be fixed or variable in accordance with criteria specified by the
Committee at the time of the award.
c. PERFORMANCE OBJECTIVES. The Committee shall establish
performance objectives to be achieved during the performance period,
determining the extent to which an employee will be entitled to
distributions with respect to the award.
d. PERFORMANCE MEASURES. Performance objectives may relate to
corporate, subsidiary, unit, or individual performance, or any
combination thereof, and may be established in terms of growth in
gross or net earnings, earnings per share, ratio of earnings to equity
or assets, Share value, or such other measures as the Committee shall
determine. Multiple objectives may be used which have the same or
different weighting, and the objectives may relate to absolute
performance or to relative performance measured against other
companies, subsidiaries, units, or individuals.
e. ADJUSTMENTS. Prior to the end of a performance period, the
Committee may adjust previously established performance objectives
to reflect major unforeseen events such as changes in applicable laws,
regulations, or accounting practices; mergers, acquisitions, or
divestitures; or other unusual or non-recurring events.
f. DISTRIBUTIONS WITH RESPECT TO AWARDS. Following the end
of a performance period, the Committee shall determine the extent to
which the performance objectives for such period have been achieved
and the amounts, if any, that are payable with respect to performance
awards for that period. Such amounts may be paid in cash or in Shares
(based on their fair market value at the time of the payment), or in
any combination of cash and Shares, as the Committee shall determine.
Payments may be made in a lump sum or in installments, and shall be
subject to such vesting, deferral, or other terms and conditions as
the Committee may determine.
g. NONTRANSFERABILITY. A performance award shall not be
assignable or transferable except to the extent permitted by the
agreement evidencing the award. A performance award agreement may
only permit an award to be transferred by will or the laws of descent
and distribution, and during the recipient's lifetime, a performance
award may only be paid to the recipient.
9. AGREEMENTS. Each award shall be evidenced by an agreement
setting forth the terms and conditions upon which it is granted. Multiple
awards may be evidenced by a single agreement. Subject to the limitations set
forth in the Plan, the Committee may, with the consent of the person to whom an
award has been granted, amend an agreement to modify the terms or conditions of
any award.
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10. ADJUSTMENTS. If there is a change in the outstanding Shares of Company
Stock by reason of a stock dividend or split, recapitalization,
reclassification, combination, or exchange of Shares, or by reason of a similar
corporate change, the Committee may adjust the number of Shares subject to an
award, the option price or value of an award, the maximum number of Shares
subject to this Plan, or the maximum number of Shares subject to an award, as
may be appropriate to reflect the nature of the change. Any such adjustments
shall be conclusive and binding for all purposes of this Plan.
11. MERGER, CONSOLIDATION, ETC. Subject to the provisions of the agreement
evidencing an award, if the Company becomes a party to a corporate merger,
consolidation, major acquisition of property for stock, spinoff,
reorganization, or liquidation, the Board may make any arrangement it deems
advisable with respect to outstanding awards, in the number of Shares subject
to this Plan, and in the number of Shares subject to awards to any employee.
Such an arrangement may include, but shall not be limited to, the substitution
of new awards for awards then outstanding, the assumption of any award, and the
termination of any award. Any such arrangements shall be conclusive and
binding for all purposes of this Plan.
12. INDEMNIFICATION. Each member of the Committee and the Board shall be
indemnified by the Company against any loss, cost, liability, or expense that
may be imposed upon or reasonably incurred by him as a result of any claim,
action, suit, or proceeding in which he may be involved by reason of any action
taken or omitted under this Plan; provided, such person gives the Company an
opportunity, at its own expense, to handle and defend the same before he
undertakes to handle and defend it on his own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification
to which any person may be entitled under the Company's articles of
incorporation or bylaws, as a matter of law, or otherwise.
13. RIGHTS AS STOCKHOLDER. Except to the extent otherwise specifically
provided herein, the recipient of an award shall have no rights as a
stockholder with respect to Shares sold or issued pursuant to the Plan until
certificates for such Shares have been issued to such person.
14. GENERAL RESTRICTIONS. Each award granted pursuant to the Plan shall be
subject to the requirement that if, in the opinion of the Committee:
a. the listing, registration, or qualification of any Shares related
thereto upon any securities exchange or under any state or federal law;
b. the consent or approval of any regulatory body; or
c. an agreement by the recipient with respect to the disposition of any
such Shares;
is necessary or desirable as a condition of the issuance or sale of such
Shares, such award shall not be consummated unless and until such listing,
registration, qualification, consent, approval, or agreement is effected or
obtained in form satisfactory to the Committee.
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15. EMPLOYMENT RIGHTS. Nothing in this Plan, or in any agreement entered
into under the Plan, shall confer upon any employee the right to continue in
the employ of the Company or its Affiliates, or affect the right of the Company
or any Affiliate to terminate an employee's employment at any time, with or
without cause.
16. WITHHOLDING. If the Company proposes or is required to issue Shares
pursuant to the Plan, it may require the recipient to remit to it, or withhold
from such award or from the recipient's other compensation, an amount
sufficient to satisfy any tax withholding requirements prior to the delivery of
certificates for the Shares.
17. AMENDMENTS. The Board may at any time, and from time to time, amend the
Plan in any respect, except that no amendment:
a. increasing the number of Shares available for issuance or
sale pursuant to the Plan (other than as permitted by paragraphs 10
and 11); or
b. changing the classification of employees eligible to
participate in the Plan or the definition of an Affiliate;
shall be made without stockholder approval.
18. CONTINGENT AWARDS. Any award granted under the Plan prior to the date
on which the Plan is approved by the Company's stockholders shall be contingent
upon such approval. If stockholder approval is not received within 12 months
after the date on which this Plan is adopted by the Board, such award shall be
void and of no force or effect.
19. STOCKHOLDER APPROVAL. The approval of the Plan or any amendment by the
Company's stockholders must comply with all applicable provisions of the
Company's charter, bylaws, and applicable state law prescribing the method and
degree of stockholder approval required for granting awards of the type
provided under the Plan. Absent any such prescribed method and degree of
stockholder approval, the Plan or such amendment must be approved by a simple
majority vote of stockholders voting, either in person or by proxy, at a duly
held stockholders' meeting
20. DURATION. No awards shall be granted under the Plan after the earlier
of: (a) the date the Plan is terminated by the Board; or (b) the tenth
anniversary of the date the Plan was first approved by the Board.
21. COMPLIANCE WITH SECTION 16(B). In the case of employees who are subject
to Section 16 of the Exchange Act, the Company intends that the Plan and any
award granted under the Plan satisfy the applicable requirements of Rule 16b-3.
If a provision of the Plan or any award would otherwise conflict with such
intent, that provision, to the extent possible, shall be interpreted so as to
avoid the conflict. To the extent of any remaining irreconcilable conflict
with such intent, the provision shall be deemed void as applied to employees
who are subject to Section 16 of the Exchange Act.
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