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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
United States Lime & Minerals, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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[LOGO]
UNITED STATES LIME & MINERALS, INC.
13800 Montfort Drive, Suite 330
Dallas, Texas 75240
March 23, 2001
Dear Shareholders:
You are cordially invited to attend the 2001 Annual Meeting of
Shareholders at 10:00 a.m. on Friday, April 27, 2001, at the Crowne Plaza
Suites, 7800 Alpha Road, Dallas, Texas, 75240. Please refer to the back of this
letter for directions. The Meeting will be preceded by an informal reception
starting at 9:30 a.m., at which you will have an opportunity to meet the
Directors and Officers of the Company.
Enclosed with this letter is a Notice of the Annual Meeting, Proxy
Statement, and Proxy Card. I urge you to complete, sign, date, and mail the
enclosed Proxy Card at your earliest convenience. Regardless of the size of your
holdings, it is important that your shares be represented. If you attend the
Meeting, you may withdraw your Proxy and vote in person. You may also withdraw
your Proxy by submitting to the Company, prior to the Annual Meeting, a written
notice of revocation.
I look forward to meeting and speaking with you at the Annual Meeting
on April 27, 2001.
Sincerely,
/s/ TIMOTHY W. BYRNE
Timothy W. Byrne
President and Chief Executive Officer
Enclosures
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UNITED STATES LIME & MINERALS, INC.
Directions to the 2001 Annual Meeting of Shareholders
Friday, April 27, 2001, at 10:00 a.m.:
CROWNE PLAZA SUITES
7800 ALPHA ROAD
DALLAS, TEXAS 75240
DIRECTIONS FROM DALLAS-FT. WORTH AIRPORT:
o Take the North exit from the airport
o East on I-635 (Lyndon B Johnson Freeway)
o Exit at Coit Road, turning North (left) onto Coit
o Turn left at first intersection onto Alpha Road
o Hotel entrance is on the left before junction with Blossomheath Road
DIRECTIONS FROM DOWNTOWN DALLAS:
o North on North Central Expressway (U.S. 75)
o Exit at Coit Road (exit passes over U.S. 75 and joins Coit)
o Continue North on Coit until you cross over the Lyndon B Johnson
Freeway (I-635)
o Turn left at first intersection onto Alpha Road
o Hotel entrance is on the left before junction with Blossomheath Road
[MAP]
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UNITED STATES LIME & MINERALS, INC.
13800 Montfort Drive
Suite 330
Dallas, Texas 75240
NOTICE OF 2001 ANNUAL MEETING OF SHAREHOLDERS
To Be Held On April 27, 2001
To the Shareholders of
United States Lime & Minerals, Inc.:
Notice is hereby given that the 2001 Annual Meeting of Shareholders of
United States Lime & Minerals, Inc., a Texas corporation (the "Company"), will
be held on Friday, the 27th day of April, 2001, at 10:00 a.m., local time at the
Crowne Plaza Suites, 7800 Alpha Road, Dallas, Texas 75240 (the "Annual
Meeting"), for the following purposes:
1. To elect six directors to serve until the next annual meeting of
shareholders and until their respective successors have been duly
elected and qualified;
2. To consider and vote upon a proposal to approve the United States
Lime & Minerals, Inc. 2001 Long-Term Incentive Plan; and
3. To transact such other business as may properly be brought before
the Annual Meeting or any adjournment thereof.
Information regarding the matters to be acted upon at the Annual
Meeting is contained in the Proxy Statement accompanying this Notice.
The Board of Directors has fixed the close of business on March 16,
2001 as the record date for the determination of shareholders entitled to notice
of and to vote at the Annual Meeting or any adjournment thereof. Only
shareholders of record at the close of business on the record date are entitled
to notice of and to vote at the Annual Meeting or any adjournment thereof. A
complete list of such shareholders will be available for inspection during usual
business hours for ten days prior to the Annual Meeting at the office of the
Company in Dallas, Texas.
All shareholders are cordially invited to attend the Annual Meeting.
SHAREHOLDERS ARE URGED, WHETHER OR NOT THEY PLAN TO ATTEND THE ANNUAL MEETING,
TO COMPLETE, SIGN, AND DATE THE ACCOMPANYING PROXY CARD AND TO RETURN IT
PROMPTLY IN THE POSTAGE-PAID RETURN ENVELOPE PROVIDED. A shareholder who has
returned a Proxy Card may revoke the Proxy Card by sending the Company a written
notice of revocation or by attending the Annual Meeting and voting in person.
By Order of the Board of Directors,
/s/ TIMOTHY W. BYRNE
Timothy W. Byrne
President and Chief Executive Officer
Dallas, Texas
March 23, 2001
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[LOGO]
UNITED STATES LIME & MINERALS, INC.
13800 MONTFORT DRIVE
SUITE 330
DALLAS, TEXAS 75240
PROXY STATEMENT
FOR
2001 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 27, 2001
INTRODUCTION
The accompanying form of proxy (the "Proxy Card"), mailed together with
this proxy statement (the "Proxy Statement"), is solicited by and on behalf of
the Board of Directors of United States Lime & Minerals, Inc., a Texas
corporation (the "Company"), for use at the 2001 Annual Meeting of Shareholders
of the Company (the "Annual Meeting") to be held at the time and place and for
the purposes set forth in the accompanying Notice. The approximate date on which
this Proxy Statement and Proxy Card were first sent to shareholders of the
Company is March 23, 2001.
Shares of the Company's common stock, par value $0.10 per share (the
"Common Stock"), represented by valid Proxy Cards, duly signed, dated, and
returned to the Company and not revoked, will be voted at the Annual Meeting in
accordance with the directions given. In the absence of directions to the
contrary, such shares will be voted:
FOR the election of the six nominees named in the Proxy Card to the
Board of Directors of the Company; and
FOR the approval of the United States Lime & Minerals, Inc. 2001
Long-Term Incentive Plan.
If any other matter is properly brought before the Annual Meeting for
action at the Meeting, which is not currently anticipated, the persons
designated to serve as proxies will vote on such matters in accordance with
their best judgment.
Any shareholder of the Company returning a Proxy Card has a right to
revoke the proxy at any time before it is exercised by attending the Annual
Meeting and voting in person or by giving written notice of such revocation to
the Company addressed to Timothy W. Byrne, President and Chief Executive
Officer, United States Lime & Minerals, Inc., 13800 Montfort Drive, Suite 330,
Dallas, Texas 75240; however, no such revocation shall be effective unless such
notice of revocation has been received by the Company at or prior to the Annual
Meeting.
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VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS
Only holders of record of Common Stock at the close of business on
March 16, 2001, the record date for the Annual Meeting, are entitled to notice
of and to vote at the Annual Meeting or any adjournment thereof. The presence of
the holders of a majority of the outstanding shares of Common Stock is necessary
to constitute a quorum. On the record date for the Annual Meeting, there were
issued and outstanding 5,799,845 shares of Common Stock. At the Annual Meeting,
each shareholder of record on March 16, 2001 will be entitled to one vote for
each share of Common Stock registered in such shareholder's name on the record
date.
The following table sets forth, as of March 16, 2001, information with
respect to shareholders known to the Company to be the beneficial owners of more
than five percent of the issued and outstanding shares of Common Stock:
Name and Address Number of Shares Percent
of Beneficial Owner Beneficially Owned of Class
- ------------------- ------------------ --------
Inberdon Enterprises Ltd. 3,417,790(2) 58.93%(2)
1020-789 West Pender Street
Vancouver, British Columbia
Canada V6C 1H2(1)
Legg Mason, Inc. 359,261(2) 9.02%(2)
100 Light Street
Baltimore, MD 21203
- ----------
(1) Inberdon Enterprises Ltd. ("Inberdon") is principally engaged in the
acquisition and holding of securities of aggregate producing companies
located in North America. All of the outstanding shares of Inberdon are
held, indirectly through a number of private companies, by Mr. George M.
Doumet.
(2) In the case of Inberdon, based on the Company's records as of March 16,
2001. In the case of Legg Mason, Inc., based on a Schedule 13G received by
the Company on February 20, 2001 reporting shared voting and dispositive
power as of December 31, 2000. Assuming that Legg Mason, Inc. continued to
own 359,261 shares on March 16, 2001, such shares would represent 6.19% of
the class as of such date.
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SHAREHOLDINGS OF COMPANY DIRECTORS AND EXECUTIVE OFFICERS
The table below sets forth the number of shares of Common Stock
beneficially owned, as of March 16, 2001, by all directors and named executive
officers of the Company individually and all directors and executive officers as
a group:
Number of Shares Percent
Name Beneficially Owned of Class(1)
- ---- ------------------ -----------
John J. Brown -- --
Timothy W. Byrne 22,881(2)(5) (6)
Richard W. Cardin 2,000 (6)
Antoine M. Doumet --(3) --
Wallace G. Irmscher 9,000 (6)
Edward A. Odishaw 12,400 (6)
Johnney G. Bowers 22,496(2)(4) (6)
Billy R. Hughes 61,332(2)(4) 1.06%
Richard D. Murray 33,500(2)(4) (6)
All Directors
and Executive Officers
as a Group (11 persons) 182,255(2)(4)(5) 3.14%
- ---------
(1) All shares are directly held with sole voting and dispositive power unless
otherwise indicated.
(2) Includes 6,811, 496, 3,880, 500 and 646 shares allocated to Messrs. Byrne,
Bowers, Hughes, Murray, and Ohms, respectively, under the Company's
Employee Stock Ownership Plan ("ESOP"), which was merged with the Company's
401(k) profit-sharing plan effective July 31, 1999.
(3) The named individual is the brother of Mr. George M. Doumet, who indirectly
owns all the outstanding shares of Inberdon.
(4) Includes the following shares subject to stock options exercisable within
the next 60 days granted under the 1992 Stock Option Plan (the "1992
Plan"): Mr. Bowers, 22,000; Mr. Hughes, 52,000; Mr. Murray, 33,000; and Mr.
Ohms, 18,000.
(5) Does not include 30,000 shares subject to stock options granted under the
1992 Plan to Mr. Byrne in 2001.
(6) Less than 1%.
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PROPOSAL 1: ELECTION OF DIRECTORS
Six directors, constituting the entire Board of Directors, are to be
elected at the Annual Meeting to serve until the next annual meeting of
shareholders and until their respective successors have been duly elected and
qualified. All of the nominees are currently directors of the Company.
Directors are elected by a plurality of the votes cast by the holders
of shares entitled to vote in the election of directors at the Annual Meeting.
The Company's Restated Articles of Incorporation prohibit cumulative voting for
the election of directors. All duly submitted and unrevoked Proxy Cards will be
voted FOR the nominees selected by the Board of Directors except where
authorization so to vote is withheld. Votes withheld and broker non-votes are
not counted in the election of directors.
The Board of Directors recommends that all shareholders vote "FOR" the
election of all such nominees. If any nominee should become unavailable for
election for any presently unforeseen reason, the persons designated to serve as
proxies will have full discretion to vote for another person nominated by the
Board.
NOMINEES FOR DIRECTOR
The six nominees for director are named below. Each has consented to
serve as a director if elected. Set forth below is pertinent information with
respect to each nominee:
JOHN J. BROWN
Mr. Brown, age 68, has served as a director of the Company since July
1993. Mr. Brown is a director and President of Pacific Opportunity
Company Ltd., a financial consulting and merchant banking firm located
in Vancouver, Canada. He is a director of several public and private
firms. From 1990 to 1993, he served as a director and chief financial
officer of an "LTL" transportation firm in Western Canada. From 1984 to
1990, Mr. Brown was an investment advisor with a Canadian brokerage
firm. Mr. Brown is a Chartered Accountant and was a senior partner with
the public auditing firm of Deloitte & Touche, Chartered Accountants,
in Vancouver, Canada.
TIMOTHY W. BYRNE
Mr. Byrne, age 43, rejoined the Company on December 8, 2000 as its
President and Chief Executive Officer, positions he previously held
during 1997 and 1998. Mr. Byrne has served the Company as a director
since 1991, and served as Chief Financial Officer and Senior Vice
President or Vice President of Finance and Administration from 1990 to
1998. Prior to rejoining the Company in 2000, Mr. Byrne was President
of Rainmaker Interactive, Inc., an Internet services and communications
company focused on strategy, marketing and technology. Prior to
initially joining the Company in 1990, Mr. Byrne was a partner at a
consulting and accounting firm in Washington D.C.
RICHARD W. CARDIN
Mr. Cardin, age 65, has served as a director of the Company since
August 1998. He is a consultant and retired partner of Arthur Andersen
LLP since 1995, having spent 37 years with that firm. He was Office
Managing partner with Arthur Andersen LLP in Nashville, Tennessee from
1980 until 1994. He is a member of the Board of Directors of Atmos
Energy Corporation.
ANTOINE M. DOUMET
Mr. Doumet, age 41, has served as a director of the Company since July
1993 in the capacity of Vice Chairman. He is a private businessman and
investor. From 1989 to 1995, he served as a director of MELEC, a French
electrical engineering and contracting company. From 1988 to
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1992, Mr. Doumet served as vice president and a director of Lebanon
Chemicals Company. Mr.Doumet is the brother of Mr. George M. Doumet,
who indirectly owns all of the outstanding shares of Inberdon.
WALLACE G. IRMSCHER
Mr. Irmscher, age 78, has served as a director of the Company since
July 1993. He was a senior executive with 44 years of diversified
experience in the construction and construction materials industry.
Since 1995, he has served as a director of N-Viro International
Corporation, a company involved in the recycling of industrial waste.
He also serves as an advisory board member of U.S. Concrete, Inc., a
producer of construction materials. From 1993 to 1995, Mr. Irmscher was
a director and officer of Newfoundland Resources & Mining Company
Limited. Mr. Irmscher has performed consulting services for various
companies in the cement, construction, and environmental industries.
EDWARD A. ODISHAW
Mr. Odishaw, age 65, has served as a director and Chairman of the Board
of the Company since July 1993. Mr. Odishaw is Chairman of Austpro
Energy Corporation, a public Canadian corporation. Between 1964 and
1999, he practiced law in Saskatchewan and British Columbia, Canada,
with emphasis on commercial law, corporate mergers, acquisitions, and
finance. Between 1992 and 1999, Mr. Odishaw was a Barrister and
Solicitor with the law firm of Boughton Peterson Yang Anderson, located
in Vancouver, Canada. From 1972 to 1992, Mr. Odishaw was a Barrister
and Solicitor with the law firm of Swinton & Company, Vancouver,
Canada. Mr. Odishaw holds directorships in numerous companies in
Canada. Mr. Odishaw is a member in good standing of the Law Society of
British Columbia and the Canadian Bar Association and is a
non-practicing member of the Law Society of Saskatchewan.
EXECUTIVE OFFICERS
WHO ARE NOT ALSO DIRECTORS
JOHNNEY G. BOWERS
Mr. Bowers, age 54, joined the Company in June 1997 and has served as
Vice President - Manufacturing since that date. He has over 25 years of
engineering and operating experience. From May 1991 until he joined the
Company, Mr. Bowers served as director of engineering with Chemical
Lime Company. Prior to May 1991, Mr. Bowers held various senior process
engineering and project manager positions in the mining and processing
industry.
BILLY R. HUGHES
Mr. Hughes, age 62, joined the Company in June 1973 and has served as
Senior Vice President - Sales & Marketing since December 1998. He has
more than 25 years of experience in the lime and limestone industry.
Mr. Hughes began his employment with the Company as a salesperson for
the Arkansas Lime plant. In 1978, he was promoted to sales manager for
Arkansas Lime. In 1983, Mr. Hughes was appointed Vice President - Sales
and Marketing for both Arkansas Lime and Texas Lime. Mr. Hughes is
active in the National Lime Association, having served on its board of
directors and executive committee for several years.
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RICHARD D. MURRAY
Mr. Murray, age 60, joined the Company in May 1995 and has served as
Vice President - Engineering since that date. In March 2001, he was
appointed Vice President and Plant Manager for Texas Lime Company. He
has 34 years of experience in various management and engineering
positions. Prior to joining the Company, he was Vice President -
Operations for Lone Star Industries, Inc., a leading cement
manufacturer.
LARRY T. OHMS
Mr. Ohms, age 40, joined the Company in July 1994 as Corporate
Controller. In December 1998, he was named Corporate Controller and
Treasurer and, in April 1999, he was appointed Company Secretary. In
February 2000, he was appointed Vice President - Finance and retains
the positions of Corporate Controller and Secretary. From 1990 until
July 1994, Mr. Ohms served as Vice President - Finance for My Alarm,
Inc., a manufacturer and distributor of two-way voice home security
systems. Prior to 1990, Mr. Ohms held positions as plant controller for
publicly traded companies, including Flowers Baking Company and
Weyerhauser Company.
CORPORATE GOVERNANCE
The Company has adopted a policy for Corporate Governance which is
broadly in line with the standards of the Nasdaq Stock Market, and commensurate
with its size and stage of development.
The Board consists of six directors, five of whom are independent
within the meaning of the Nasdaq rules. The sixth is the Company's President and
Chief Executive Officer. The Board meets at least four times each year, and more
frequently as required, and is responsible for supervising the management of the
business and affairs of the Company, including the development of major policy
and strategy. The Board has a standing Executive Committee, Audit Committee, and
Compensation Committee, but does not have a standing nominating committee.
During the fiscal year ended December 31, 2000, the Board of Directors
held six meetings, the Executive Committee held two meetings, the Audit
Committee held three meetings, and the Compensation Committee held two meetings.
During the fiscal year ended December 31, 2000, each director attended all
meetings held by the Board of Directors and the committees of the Board on which
he served.
Governance responsibilities are undertaken by the Board as a whole,
with certain specific responsibilities delegated to the three Committees as
described below:
o The Executive Committee is composed of Messrs. Odishaw (Chairman),
Doumet, and Byrne. Within the policy and strategic direction provided
by the Board, the Executive Committee may exercise all of the powers
of the Board, except those required by law to be exercised by the full
Board, and is required to report to the Board on all matters
considered and actions taken since the last meeting of the full Board.
o The Audit Committee is composed of three independent directors,
Messrs. Brown (Chairman), Cardin, and Irmscher, two of whom are
accounting professionals. A copy of the Audit Committee's charter,
which was adopted by the Board, is attached as Exhibit A to this Proxy
Statement. The Report of the Audit Committee is set forth below.
o The Compensation Committee is composed of two outside directors,
Messrs. Odishaw (Chairman) and Doumet. The Compensation Committee is
responsible for the evaluation, approval and administration of salary,
incentive compensation, bonuses, benefit plans and other forms of
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compensation for the Company's officers and directors. The
Compensation Committee will be responsible for administering the
United States Lime & Minerals, Inc. 2001 Long-Term Incentive Plan if
the shareholders of the Company approve the Plan. The Report of the
Compensation Committee follows the Report of the Audit Committee.
Notwithstanding anything to the contrary, the following reports of the
Audit Committee and the Compensation Committee and the Performance Graph set
forth below shall not be deemed to be incorporated by reference by any general
statement incorporating by reference the Proxy Statement into any filing under
the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the
extent that the Company specifically incorporates this information by reference.
This information shall not otherwise be deemed to be filed under such Acts.
REPORT OF THE AUDIT COMMITTEE
As members of the Audit Committee, we assist the Board in fulfilling its
responsibility to oversee the Company's financial reporting process. Management
has the primary responsibility for the financial statements and the reporting
process, including the systems of internal controls. In fulfilling our oversight
responsibilities, we reviewed the audited financial statements in the Annual
Report with management.
We discussed with the independent auditors, who are responsible for expressing
an opinion on the conformity of those audited financial statements with
generally accepted accounting principles, the financial statements, the audit,
and the matters required to be reviewed by Statement on Auditing Standards No.
61 (Communication with Audit Committees). In addition, we discussed with the
independent auditors the auditors' independence from management and the Company,
including the matters in the written disclosures required by the Independence
Standards Board.
We also discussed with the Company's independent auditors the overall scope and
plans for their audit. We met with the independent auditors, with and without
management present, to discuss the results of their audit.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors, and the Board has approved,
that the audited financial statements of the Company be included in the Annual
Report on Form 10-K for the year ended December 31, 2000 for filing with the
Securities and Exchange Commission. The Committee and the Board have also
approved the selection of the Company's independent auditors.
AUDIT COMMITTEE
John B. Brown, Chairman
Richard W. Cardin
Wallace G. Irmscher
REPORT OF THE COMPENSATION COMMITTEE
As members of the Compensation Committee of the Board of Directors (the
"Committee"), we have the responsibility for administering the executive
compensation program of the Company. The Compensation Committee reviews and
makes recommendations to the full Board of Directors regarding the base salaries
and annual incentive compensation for executive officers, and administers the
Company's 1992 Stock Option Plan (the "1992 Plan"), and will administer the
Company's 2001 Long-Term Incentive Plan (the "2001 Plan"), if it is approved by
the shareholders at the Annual Meeting. The Committee is composed of
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Messrs. Odishaw (Chairman) and Doumet. Mr. Byrne was a member of the Committee
until February 22, 2001.
COMPENSATION POLICIES. The principal executive compensation policy of the
Company, which is endorsed by the Committee, is to provide a compensation
program that will attract, motivate, and retain persons of high quality and will
support a long-standing internal culture of loyalty and dedication to the
interests of the Company and its shareholders. In administering the executive
compensation program, the Committee is mindful of the following principles and
guidelines which are supported by the full Board:
Base salaries for executive officers should be competitive. A sufficient portion
of annual compensation should be at risk in order to align the interests of
executives with those of the shareholders of the Company. This variable part of
annual compensation should reflect both individual and corporate performance. As
a person's level of responsibility increases, a greater portion of total
compensation should be at risk, and the mix of total compensation should be
weighted more heavily in favor of stock-based compensation. Stock options
provide executives long-term incentive and help align the interests of
executives and shareholders in the enhancement of shareholder value.
As discussed elsewhere in this Proxy Statement, the Company has entered into
employment agreements with Messrs. Bowers, Hughes and Byrne. These agreements
provide for an annual base salary, bonuses, the use of a Company car,
reimbursement of business expenses, participation in the 401(k) profit-sharing
plan, severance arrangements and other benefits. The Committee has determined
that such agreements are appropriate means to achieve the Company's overall
compensation policies.
2000 COMPENSATION. The Company's executive compensation packages have three
separate elements consisting of base salary, annual incentive compensation, and
long-term incentive compensation. The compensation packages of Mr. Byrne and the
other executive officers are designed to be competitive within the industry and
to provide incentives for both short- and long-term performance in line with the
financial interests of the shareholders.
BASE SALARIES. The Committee determined levels of the executive officers' base
salaries so as to be competitive with amounts paid to executives performing
similar functions in comparable size non-durable manufacturing companies. The
amount of each executive's annual increase in base salary, if any, will be based
on a number of largely subjective factors, including the personal performance of
such executive officer, the performance of the Company, cost-of-living
increases, and such other factors as the Committee deems appropriate, including
the individual's overall mix between fixed and variable compensation and between
cash and stock-based compensation. Executive officer raises in 2000 averaged
2.5%. Mr. Wilson's base salary did not increase in 2000.
ANNUAL INCENTIVE COMPENSATION. Each of the Company's executive officers is
eligible to receive annual cash bonus awards based on determinations made by the
Committee. The Company has not adopted a formal annual bonus plan. Rather, the
determination to pay a cash bonus, if any, is based on the Committee's
subjective judgment with respect to the past performance of the individual, or
on the individual's attainment of objective performance goals set by the
Committee. In either such case, the bonus may be based on the specific
accomplishments of the individual, or on the overall success of the Company.
Bonuses of $4,000, $5,000, and $3,000 were awarded in respect of performance in
1999, and paid in 2000, to Messrs. Bowers, Hughes, and Murray, respectively. Mr.
Wilson did not receive a bonus in 2000.
LONG-TERM INCENTIVE COMPENSATION. The Committee also administers the 1992 Plan
to provide long-term incentives to its key employees, including executive
officers. Grants are based on each individual's position within the Company,
level of responsibility, past performance, and expectation of future
performance. At the Annual Meeting of Shareholders held on April 30, 1999, the
shareholders approved an
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increase in the number of shares of Common Stock for which options may be
granted under the 1992 Plan of 100,000. At the same time, an annual limit of
70,000 shares per person on options granted under the 1992 Plan was also
imposed. At the end of 2000, Messrs. Wilson, Bowers, Hughes, Murray, and Ohms
held options to purchase 20,000, 22,000, 52,000, 33,000, and 18,000 shares,
respectively. No options were granted in 2000.
The Committee has recommended, and the full Board has approved, adoption of the
2001 Plan, subject to shareholder approval. The reasons for adopting the 2001
Plan and or summary of its material terms are set forth in this Proxy Statement
under "Proposal 2: Approval of the United States Lime & Minerals, Inc. Long-Term
Incentive Plan."
Internal Revenue Code of 1986 ("Code") Section 162(m) generally limits the
corporate income tax deduction for compensation paid to certain named executive
officers to $1 million per year, except for certain qualified and
performance-based compensation. The Committee had not seen any need to adopt a
policy with regard to qualifying bonus awards for tax deductibility under Code
Section 162(m), since Company cash compensation is well below the level at which
this tax limitation would apply, and most of the Company's stock options granted
previously were not subject to the limitation. Options that were granted in 1999
and thereafter under the 1992 Plan, as amended and restated in 1999, and that
will be granted under the 2001 Plan if it is approved by shareholders, are
intended to constitute performance-based compensation not subject to the Code
Section 162(m) limitation.
COMPENSATION COMMITTEE
Edward A. Odishaw, Chairman
Antoine M. Doumet
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and non-cash compensation for
each of the last three fiscal years earned by the current President and Chief
Executive Officer, the former President and Chief Executive Officer and three
other executive officers of the Company who earned salaries and bonuses in 2000
that exceeded $100,000:
LONG-TERM
ANNUAL COMPENSATION COMPENSATION ALL OTHER COMPENSATION
---------------------------- ------------ ----------------------
SECURITIES
NAME AND UNDERLYING
PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS (#) 401(k) ESOP
------------------- ---- -------- ------- ------------ ------ ------
(1) (2)(3)(4) (5) (6)
Timothy W. Byrne(7) 2000 $ 15,538 - -- -- --
President and Chief 1999 $ 43,533 $25,000 -- $1,496 --
Executive Officer 1998 $202,680 $25,000 15,000 $4,054 $2,226
Johnney G. Bowers 2000 $141,965 $ 4,000 -- $2,907 --
Vice President - 1999 $138,500 $ 4,000 10,000 $2,880 $2,393
Manufacturing 1998 $139,920 $ 8,000 12,000 $2,798 $1,363
Billy R. Hughes 2000 $153,750 $ 5,000 -- $3,122 --
Senior Vice President - 1999 $150,000 $ 8,000 10,000 $3,120 $3,018
Sales and Marketing 1998 $149,942 $10,000 12,000 $2,999 $2,095
Richard Murray 2000 $107,625 $ 3,000 -- $2,196 --
Vice President - 1999 $105,000 $ 5,000 10,000 $2,182 $1,754
Engineering 1998 $ 96,918 $ 5,000 3,000 $1,938 $ 972
Herbert G. A. Wilson(8) 2000 $220,000 -- -- $3,400 --
Former President & 1999 $220,000 -- 20,000 $1,496 --
Chief Executive Officer 1998 -- -- -- -- --
- ---------
(1) Bonuses, based on the Company's performance, were earned in the previous
year and paid in the year shown.
(2) Options granted pursuant to the 1992 Plan.
(3) Mr. Byrne was granted options for 30,000 shares on February 22, 2001 at
$5.50 per share.
(4) Options granted in 1999 have an exercise price of $8.00, and options
granted in 1998 have an exercise price of $7.00. No options were granted in
2000.
(5) Company contribution to defined contribution plan.
(6) ESOP share allocation, valued at year-end market price of the Common Stock.
(7) Mr. Byrne was elected President and Chief Executive Officer on December 8,
2000.
(8) Mr. Wilson resigned as President and Chief Executive Officer effective
December 8, 2000. Pursuant to the terms of his employment agreement, Mr.
Wilson continued as an employee of the Company through March 8, 2001.
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AGGREGATED OPTION EXERCISES IN LAST YEAR AND YEAR-END OPTION VALUES
The following table sets forth information with respect to stock
options exercised by the named executive officers during 2000 and the number and
value of unexercised options held by such executive officers at year end:
Shares Value Number of Securities Value of Unexercised
Acquired on Realized Underlying Unexercised Options In-the-Money Options
Name Exercise (#) ($) at Year-End (#) at Year-End ($)
- ------------------- ------------ -------- ------------------------------- --------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
Timothy W. Byrne -- -- -- (1) -- --
Johnney G. Bowers -- -- 22,000 -- -- --
Billy R. Hughes -- -- 52,000 -- 2,500 --
Richard D. Murray -- -- 33,000 -- -- --
Herbert G.A. Wilson -- -- 20,000 -- -- --
- ---------
(1) Does not include options for 30,000 shares granted to Mr. Byrne under the
1992 Plan on February 22, 2001.
EXECUTIVE EMPLOYMENT AND TERMINATION AGREEMENTS
The Company has employment agreements with Messrs. Bowers, Hughes and
Byrne. Such employment agreements are designed to ensure that the Company will
be able to attract, motivate, and retain highly qualified talent, which is
critical to both the short- and long-term success of the Company.
The employment agreements provide for a base salary to be reviewed
annually. Mr. Byrne and the Company entered into an employment agreement as of
December 8, 2000, which provides him with an annual base salary of $240,000. In
addition to the base salary, the agreements for Messrs. Bowers and Hughes
provide for a bonus to be determined by the Compensation Committee of the Board
of Directors. Mr. Byrne's agreement provides that he may receive annual bonuses
based on the Company's annual performance. The amount of Mr. Byrne's annual
bonuses will be determined by the percentage increase in the company's earnings
before income, taxes, depreciation and amortization ("EBITDA"). In the event of
a change of control of the Company, and Mr. Byrne's termination, Mr. Byrne may
be entitled to bonuses, the amount of which will depend on the reason for and
date of his termination in relation to the change in control. The employment
agreements also provide for use of a Company car, reimbursement of business
expenses, and participation in the Company's 401(k) profit-sharing plan.
Participation in the Company's ESOP ceased on July 31, 1999 when the ESOP was
merged with the 401(k) profit-sharing plan. In the case of Mr. Bowers, severance
payment would be six months' compensation. Mr. Hughes does not have a severance
arrangement, but is generally entitled to one-year's notice before termination.
Mr. Byrne is entitled to severance payments if he is terminated without cause.
Mr. Hughes' and Mr. Byrne's agreements contain certain post-termination
covenants not to compete. Mr. Bower's and Mr. Hughes' agreements have no
expiration dates. Mr. Byrne's agreement expires on December 31, 2003, and is
thereafter renewable for successive one-year periods, unless the agreement is
terminated earlier by him or the Company.
Pursuant to Mr. Byrne's employment agreement, the Company agreed to use
its best efforts to cause Mr. Byrne to remain on the Board and to be appointed a
member of the Executive Committee of the Board. The Company also agreed to use
its best efforts to cause the Compensation Committee of the Board (of which Mr.
Byrne is no longer a member) to award Mr. Byrne stock options for a total of
80,000
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shares; including 30,000 granted on February 22, 2001 at a per share price of
$5.50, which options will fully vest on December 31, 2001, and 50,000 to be
granted on or about June 30, 2001 at a per share price equal to the per share
market price of the Company's Common Stock on the date of the grant, which
options will fully vest on the first anniversary of the date of the grant.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company, other than the Chairman
of the Board of Directors, are paid an annual retainer of $11,000 plus $600 per
day on Company business. The Chairman of the Board is paid an annual retainer of
$40,000 plus $800 per day on Company business.
PROPOSAL 2: APPROVAL OF THE UNITED STATES LIME & MINERALS INC.
2001 LONG-TERM INCENTIVE PLAN
The Compensation Committee has recommended, and the Board of Directors
has approved, adoption of the United States Lime & Minerals Inc. 2001 Long-Term
Incentive Plan (the "2001 Plan") subject to shareholder approval. The 2001 Plan
is intended to replace the 1992 Stock Option Plan (the "1992 Plan").
Adoption of the 2001 Plan will enable the Company to continue to use
stock options as a means to attract, retain and motivate the Company's
directors, officers and employees. In addition to stock options, the 2001 Plan
provides for the grant of stock appreciation rights, restricted stock, deferred
stock, and other stock-based awards to officers and employees. The 2001 Plan
also, for the first time, makes directors and consultants eligible for grants of
stock options and other awards.
The Board's adoption of the 2001 Plan is conditional upon shareholder
approval. If the shareholders approve the 2001 Plan, no further grants will be
made under the 1992 Plan, but the terms of the 1992 Plan will continue to govern
options that remain outstanding under the 1992 Plan. As of March 16, 2001, a
total of 224,000 shares of Common Stock were subject to options outstanding
under the 1992 Plan. As of such date, only 1,000 shares remained for grants
under the 1992 Plan. On March 16, 2001, the closing price of the Common Stock on
the Nasdaq National Market was $5.06.
SUMMARY DESCRIPTION OF THE 2001 PLAN
The 2001 Plan is set forth as Exhibit B to the Proxy Statement, and the
description of the 2001 Plan contained herein is qualified in its entirety by
reference to the 2001 Plan.
The purpose of the 2001 Plan is to provide a means to attract, retain,
motivate and reward selected directors, officers, employees and consultants of
the Company and its subsidiaries by increasing their ownership interests in the
Company. Awards under the 2001 Plan that may be granted by the Compensation
Committee of the Board may include: (i) options to purchase shares of Common
Stock, including incentive stock options ("ISOs"), non-qualified stock options
or both; (ii) stock appreciation rights ("SARs"), whether in conjunction with
the grant of stock options or independent of such grant, or stock appreciation
rights that are only exercisable in the event of a change in control of the
Company or upon other events; (iii) restricted stock, consisting of shares that
are subject to forfeiture based on the failure to satisfy employment-related
restrictions; (iv) deferred stock, representing the right to receive shares of
stock in the future; (v) bonus stock and awards in lieu of cash compensation;
(vi) dividend equivalents, consisting of a right to receive cash, other awards,
or other property equal in value to dividends paid with respect to a specified
number of shares of Common Stock, or other periodic payments; or (vii) other
awards not otherwise provided for, the value of which is based in whole or in
part upon the value of
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the Common Stock. Awards granted under the 2001 Plan will generally not be
assignable or transferable except by the laws of descent and distribution or as
permitted by the Compensation Committee.
The flexible terms of the 2001 Plan are intended to, among other
things, permit the Compensation Committee to impose performance conditions with
respect to any award, thereby requiring forfeiture of all or part of any award
if performance objectives are not met, or linking the time of exercisability or
settlement of an award to the achievement of performance conditions. For awards
intended to qualify as "performance-based compensation" within the meaning of
Section 162(m) of the Internal Revenue Code (the "Code"), such performance
objectives shall be based solely on (i) annual return on capital, (ii) annual
earnings or earnings per share, (iii) annual cash flow measures, (iv) changes in
annual revenues, (v) stock price and/or (v) strategic business criteria,
consisting of one or more objectives based on meeting specified revenue, market
penetration, geographic business expansion goals, cost targets, and goals
relating to acquisitions or divestitures.
The Compensation Committee, which will administer the 2001 Plan, will
have the authority, among other things, to: (i) select the directors, officers
and other employees and consultants entitled to receive awards under the 2001
Plan; (ii) determine the form of awards, or combinations thereof, and whether
such awards are to operate on a tandem basis or in conjunction with other
awards; (iii) determine the number of shares of Common Stock or units or rights
covered by an award; and (iv) determine the terms and conditions of any awards
granted under the 2001 Plan, including any restrictions or limitations on
transfer, any vesting schedules or the acceleration thereof and any forfeiture
provision or the waiver thereof. The exercise price at which shares of Common
Stock may be purchased pursuant to the grant of stock options under the 2001
Plan is to be determined by the Compensation Committee at the time of grant in
its discretion, which discretion includes the ability to set an exercise price
that is below the fair market value of the shares of Common Stock covered by
such grant at the time of grant.
The number of shares of Common Stock that may be subject to outstanding
awards granted under the 2001 Plan (determined immediately after the grant of
any award) may not exceed 475,000. In addition, no individual may receive awards
in any one calendar year relating to more than 100,000 shares of Common Stock.
The 2001 Plan provides that upon a "Change of Control" of the Company,
as defined in the 2001 Plan, all performance conditions related to any
performance-based awards granted under the Plan shall lapse immediately prior to
the Change of Control unless such lapse would impair such a transaction from
qualifying for certain accounting treatment, or the Compensation Committee
determines in its discretion that such lapse should not occur, provided that
such determination does not violate such accounting treatment.
The 2001 Plan may be amended, altered, suspended, discontinued, or
terminated by the Board without shareholder approval unless such approval is
required by law or regulation or under the rules of any stock exchange or
automated quotation system on which the Common Stock is then listed or quoted.
Thus, shareholder approval will not necessarily be required for amendments to
the 2001 Plan which might increase the cost of the Plan or broaden eligibility.
Shareholder approval will not be deemed to be required under laws or regulations
that condition favorable tax treatment on such approval, although the Board may,
in its discretion, seek shareholder approval in any circumstances in which it
deems such approval advisable.
No awards will be granted under the 2001 Plan unless the shareholders
approve the Plan. Mr. Byrne's employment agreement, dated December 8, 2000,
provides, subject to Compensation Committee approval, for the grant to him of
50,000 options on June 30, 2001 at an exercise price equal to the fair market
value of a share of Common Stock on that date. Other than the grant to Mr.
Byrne, it is not
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possible to determine who may be granted an award under the 2001 Plan, or the
terms of any such award that may be granted.
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief description of the federal income tax
consequences generally arising with respect to awards that may be granted under
the 2001 Plan. This discussion is intended for the information of shareholders
considering how to vote at the Annual Meeting and not as tax guidance to
individuals who participate in the 2001 Plan.
The grant of an option or SAR (including a stock-based award in the
nature of a purchase right) will create no tax consequences for the participant
or the Company. A participant will not have taxable income upon exercising an
ISO (except that the alternative minimum tax may apply), and the Company will
receive no deduction at that time. Upon exercising an option other than an ISO
(including a stock-based award in the nature of a purchase right), the
participant must generally recognize ordinary income equal to the difference
between the exercise price and the fair market value of the freely transferable
and nonforfeitable stock received. In each case, the Company will generally be
entitled to a deduction equal to the amount recognized as ordinary income by the
participant.
A participant's disposition of shares of Common Stock acquired upon the
exercise of an option, SAR or other stock-based award in the nature of a
purchase right generally will result in capital gain or loss measured by the
difference between the sale price and the participant's tax basis in such shares
(or the exercise price of the option in the case of shares acquired by exercise
of an ISO and held for the applicable ISO holding periods). Generally, there
will be no tax consequences to the Company in connection with a disposition of
shares of Common Stock acquired upon exercise of an option or other award,
except that the Company will generally be entitled to a deduction (and the
participant will recognize ordinary taxable income) if shares acquired upon
exercise of an ISO are disposed of before the applicable ISO holding periods
have been satisfied.
With respect to awards granted under the 2001 Plan that may be settled
either in cash or in stock or other property that is either not restricted as to
transferability or not subject to a substantial risk of forfeiture, the
participant must generally recognize ordinary income equal to the cash or the
fair market value of stock or other property received. The Company will
generally be entitled to a deduction for the same amount. With respect to awards
involving stock or other property that is restricted as to transferability and
subject to a substantial risk of forfeiture, the participant must generally
recognize ordinary income equal to the fair market value of the shares or other
property received at the first time the shares or other property becomes
transferable or not subject to a substantial risk of forfeiture, whichever
occurs earlier. The Company will generally be entitled to a deduction in an
amount equal to the ordinary income recognized by the participant. A participant
may elect to be taxed at the time of receipt of shares or other property rather
than upon lapse of restrictions on transferability or substantial risk of
forfeiture, but if the participant subsequently forfeits such shares or other
property he would not be entitled to any tax deduction, including a capital
loss, for the value of the shares or property on which he previously paid tax.
Such election must be made and filed with the Internal Revenue Service within
thirty days after the receipt of the shares or other property.
Section 162(m) of the Code generally disallows a public company's
annual tax deduction for compensation to the chief executive officer and the
four other most highly compensated executive officers in excess of $1 million.
Compensation that qualifies as "performance-based compensation" is excluded from
the $1 million deductibility cap, and therefore remains fully deductible by the
company that pays it. Assuming the 2001 Plan is approved at the Annual Meeting,
the Company believes that options granted with an exercise price at least equal
to 100% of the fair market value of the underlying Common Stock at
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the date of grant, and other awards the settlement of which is conditioned upon
achievement of performance goals (based on performance criteria described
above), will qualify as such "performance-based compensation," although other
awards under the 2001 Plan may not so qualify.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of the holders of a majority of shares of Common
Stock present in person or represented by proxies at the Annual Meeting and
entitled to vote is required to approve the 2001 Plan. All duly submitted and
unrevoked Proxy Cards will be voted "FOR" the approval of the 2001 Plan, except
where the Proxy Card is marked "Against" or "Abstain." Abstentions will have the
same effect as a vote against the 2001 Plan, and broker non-votes will have no
effect on the matter.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board unanimously recommends that shareholders vote "FOR" the
approval of the United States Lime & Minerals, Inc. 2001 Long-Term Incentive
Plan.
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PERFORMANCE GRAPH
The graph below compares the cumulative five-year total shareholders'
return on the Company's Common Stock with the cumulative total return on the
Nasdaq Market Index and a peer group consisting of Florida Rock Industries,
Lafarge Corporation, Martin Marietta Materials, Inc., Oglebay Norton Company,
and Puerto Rican Cement Company, Inc. The graph assumes that the value of the
investment in the Company's Common Stock and each index was $100 on December 31,
1995, and that all dividends have been reinvested.
COMPARISON OF CUMULATIVE 5-YEAR TOTAL SHAREHOLDERS' RETURN
AMONG UNITED STATES LIME & MINERALS, INC.,
NASDAQ MARKET INDEX AND PEER GROUP INDEX
[GRAPH]
ASSUMES $100 INVESTED ON DECEMBER 31, 1995
ASSUMES DIVIDENDS REINVESTED
FISCAL YEAR ENDING DECEMBER 31, 2000
12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00
-------- -------- -------- -------- -------- --------
U.S. LIME & MINERALS, INC. $100 $101.02 $ 86.27 $ 85.93 $ 84.07 $ 60.98
PEER GROUP INDEX $100 $111.72 $172.52 $247.13 $181.61 $178.08
NASDAQ MARKET INDEX $100 $124.27 $152.00 $214.39 $378.12 $237.66
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INDEPENDENT AUDITORS
The Board of Directors has reappointed Ernst & Young LLP as
independent auditors to audit the financial statements of the Company for the
current fiscal year.
A summary of the fees received by Ernst & Young LLP from the Company
during the year ended December 31, 2000 are as follows:
Audit fees: $75,500
Information systems design and implementation $ 0
Other fees:
Audit Related: $20,058
Tax consulting and compliance services: $21,000
Total fees: $41,058
The Audit Committee has considered the compatibility of nonaudit
services with the auditors' independence.
Audit fees include fees for the audit of the December 31, 2000
financial statements and related quarterly reviews performed during the year.
Audit-related fees include typical assurance services that are excluded from the
restrictive definition of audit fees.
Representatives of the firm of Ernst & Young LLP are expected to be
present at the Annual Meeting and will have an opportunity to make a statement
if they so desire and will be available to respond to appropriate questions.
OTHER MATTERS
The Board does not intend to present any other matters at the Annual
Meeting and knows of no other matters that will be presented. However, if any
other matters properly come before the Annual Meeting, the persons designated as
proxies on the enclosed Proxy Card intend to vote thereon in accordance with
their best judgment.
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SHAREHOLDER PROPOSALS
Shareholder proposals submitted to the Company under Securities and
Exchange Commission ("SEC") Rule 14a-8 under the Securities Exchange Act of 1934
for inclusion in the Company's Proxy Statement for its 2002 annual meeting of
Shareholders must be received by the Company at its office in Dallas, Texas,
addressed to Timothy W. Byrne, President and Chief Executive Officer of the
Company, not later than November 23, 2001. Such Rule 14a-8 shareholder proposals
must comply with SEC rules.
The Company must receive notice of other matters, including non-Rule
14a-8 proposals, that shareholders may wish to raise at the 2002 annual meeting
of Shareholders by February 8, 2002. If the Company does not receive timely
notice of such other matters, the persons designated as proxies for such meeting
will retain general discretionary authority to vote on such matters under SEC
rules. Such notices should be addressed to Timothy W. Byrne, President and Chief
Executive Officer of the Company.
The costs of solicitation of proxies for the Annual Meeting will be
borne by the Company. Solicitation may be made by mail, personal interview,
telephone, and/or telegraph by officers and regular employees of the Company who
will receive no additional compensation therefore. The Company may specifically
engage a firm to aid in the solicitation of Proxies, for which services the
Company would anticipate paying a standard reasonable fee plus out-of-pocket
expenses. The Company will bear the reasonable expenses incurred by banks,
brokerage firms, and other custodians, nominees, and fiduciaries in forwarding
proxy materials to beneficial owners.
UNITED STATES LIME & MINERALS, INC.
/s/ TIMOTHY W. BYRNE
TIMOTHY W. BYRNE
Dallas, Texas President and Chief Executive Officer
March 23, 2001
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EXHIBIT A
UNITED STATES LIME & MINERALS, INC.
AUDIT COMMITTEE CHARTER
Organization
The Audit Committee (the "Committee") of the Board of Directors (the
"Board") shall be composed of three independent directors, all of whom are
financially literate. At least one member shall have accounting or related
financial management expertise.
Role of the Committee
To assist the Board in fulfilling its responsibility for overseeing the
corporate accounting and reporting practices of the Company.
Responsibilities
The Committee is responsible for obtaining the approval of the full
Board to this charter and to regularly review and recommend changes as it sees
fit. Specifically, the Committee will:
o Recommend to the Board the independent auditors to be selected
to audit the financial statements of the Company and its
subsidiaries. However, the Board is ultimately responsible for
the engagement and evaluation of the independent auditors.
o Receive disclosures from the independent auditors regarding
their independence as required by ISB Standard No. 1 and
review such disclosures on behalf of the Board.
o Review the quarterly financial statements with management and
the independent auditors prior to the issuance of a press
release of quarterly results or filing of the Form 10-Q. The
Chair of the Committee may represent the entire Committee for
this purpose.
o Review the annual financial statements to be filed on Annual
Report Form 10-K with management and the independent auditors
and report the results of the annual audit to the Board. The
Committee will confirm that the independent auditors are
satisfied with the disclosure and content of the financial
statements and the cooperation received from management during
the course of the audit.
o Review with management and the independent auditors any
significant financial reporting issues and practices,
including any changes in, or adoptions of, accounting
principles and disclosure practices and the adequacy and
effectiveness of the accounting and financial controls of the
Company
o Investigate any matter brought to the attention of the
Committee within the scope of its duties, with the power to
retain outside counsel if judged appropriate.
A-1
24
o Submit minutes of all Committee meetings to the Board and
discuss issues raised with the Board.
Disclosure to Shareholders
The Audit Committee Charter will be reproduced in the Company's annual
proxy statement to shareholders together with a report from the Committee and
any required disclosure once every three years or otherwise as required.
Effective: April 27, 2000
A-2
25
EXHIBIT B
UNITED STATES LIME & MINERALS, INC.
2001 LONG-TERM INCENTIVE PLAN
1. Purpose. The purpose of this 2001 Long-Term Incentive Plan (the
"Plan") of United States Lime & Minerals, Inc., a Texas corporation (the
"Company"), is to advance the interests of the Company and its stockholders by
providing a means to attract, retain, motivate and reward directors, officers,
employees and consultants of and service providers to the Company and its
subsidiaries and to enable such persons to acquire or increase a proprietary
interest in the Company, thereby promoting a closer identity of interests
between such persons and the Company's stockholders.
2. Definitions. The definitions of awards under the Plan, including
Options, SARs (including Limited SARs), Restricted Stock, Deferred Stock, Stock
granted as a bonus or in lieu of other awards, Dividend Equivalents and Other
Stock-Based Awards are set forth in Section 6 of the Plan. Such awards, together
with any other right or interest granted to a Participant under the Plan, are
termed "Awards." For purposes of the Plan, the following additional terms shall
be defined as set forth below:
(a) "Award Agreement" means any written agreement, contract, notice or
other instrument or document evidencing an Award.
(b) "Beneficiary" shall mean the person, persons, trust or trusts which
have been designated by a Participant in his or her most recent written
beneficiary designation filed with the Committee to receive the benefits
specified under the Plan upon such Participant's death or, if there is no
designated Beneficiary or surviving designated Beneficiary, then the person,
persons, trust or trusts entitled by will or the laws of descent and
distribution to receive such benefits.
(c) "Board" means the Board of Directors of the Company.
(d) A "Change in Control" shall be deemed to have occurred on:
(i) the date of the acquisition by any "person" (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act), excluding
the Company or any of its subsidiaries or affiliates or any employee
benefit plan sponsored by any of the foregoing, of beneficial ownership
(within the meaning of Rule 13d-3 under the Exchange Act) of 30% or
more of either (x) the then outstanding shares of stock of the Company,
or (y) the then-outstanding voting securities entitled to vote
generally in the election of directors;
(ii) the date the individuals who constitute the Board as of
the effective date of the Plan (the "Incumbent Board") cease for any
reason to constitute at least a majority of the members of the Board,
provided that any individual becoming a director subsequent to the
effective date of this Agreement whose election, or nomination for
election by the Company's stockholders, was approved by a vote of at
least a majority of the directors then comprising the Incumbent Board
(other than any individual whose nomination for election to Board
membership was not endorsed by the Company's management prior to, or at
the time of, such individual's initial nomination for election) shall
be, for purposes of the Plan, considered as though such person were a
member of the Incumbent Board; or
B-1
26
(iii) the consummation of a merger, consolidation,
recapitalization, reorganization, sale or disposition of all or a
substantial portion of the Company's assets, a reverse stock split of
outstanding voting securities, or the issuance of shares of stock of
the Company in connection with the acquisition of the stock or assets
of another entity, provided, however, that a Change in Control shall
not occur under this clause (iii) if consummation of the transaction
would result in at least 70% of the total voting power represented by
the voting securities of the Company (or, if not the Company, the
entity that succeeds to all or substantially all of the Company's
business) outstanding immediately after such transaction being
beneficially owned (within the meaning of Rule 13d-3 promulgated
pursuant to the Exchange Act) by at least 75% of the holders of
outstanding voting securities of the Company immediately prior to the
transaction, with the voting power of each such continuing holder
relative to other such continuing holders not substantially altered in
the transaction.
(e) "Code" means the Internal Revenue Code of 1986, as amended from
time to time. References to any provision of the Code shall be deemed to include
regulations thereunder and successor provisions and regulations thereto.
(f) "Committee" means the committee appointed by the Board to
administer the Plan or, if no committee is appointed, the Board.
(g) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time. References to any provision of the Exchange Act shall
be deemed to include rules thereunder and successor provisions and rules
thereto.
(h) "ISO" means any Option intended to be and designated as an
incentive stock option within the meaning of Section 422 of the Code.
(i) "Participant" means a person who, at a time when eligible under
Section 5 hereof, has been granted an Award.
(j) "Rule 16b-3" means Rule 16b-3, as from time to time in effect and
applicable to the Plan and Participants, promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act.
(k) "Stock" means the Common Stock, par value $0.10, of the Company and
such other securities as may be substituted for Stock or such other securities
pursuant to Section 4.
3. Administration.
(a) Authority of the Committee. Except as otherwise provided below, the
Plan shall be administered by the Committee. The Committee shall have full and
final authority to take the following actions, in each case subject to and
consistent with the provisions of the Plan:
(i) to select persons to whom Awards may be granted;
(ii) to determine the type or types of Awards to be granted to
each such person;
(iii) to determine the number of Awards to be granted, the
number of shares of Stock to which an Award will relate, the terms and
conditions of any Award granted under the Plan (including, but not
limited to, any exercise price, grant price or purchase price, any
restriction or condition, any schedule for lapse of restrictions or
conditions relating to transferability or forfeiture, exercisability or
settlement of an Award, and waivers or accelerations thereof,
performance conditions relating to an Award (including performance
conditions relating to
B-2
27
Awards not intended to be governed by Section 7(f)) and waivers and
modifications thereof), based in each case on such considerations as
the Committee shall determine), and all other matters to be determined
in connection with an Award;
(iv) to determine whether, to what extent and under what
circumstances an Award may be settled, or the exercise price of an
Award may be paid, in cash, Stock, other Awards, or other property, or
an Award may be canceled, forfeited, or surrendered;
(v) to determine whether, to what extent and under what
circumstances, cash, Stock, other Awards or other property payable with
respect to an Award will be deferred automatically, at the election of
the Committee or at the election of the Participant;
(vi) to determine the restrictions, if any, to which Stock
received upon exercise or settlement of an Award shall be subject
(including lock-ups and other transfer restrictions), and whether to
condition the delivery of such Stock upon the execution by the
Participant of any agreement providing for such restrictions;
(vii) to prescribe the form of each Award Agreement, which
need not be identical for each Participant;
(viii) to adopt, amend, suspend, waive and rescind such rules
and regulations and appoint such agents as the Committee may deem
necessary or advisable to administer the Plan;
(ix) to correct any defect or supply any omission or reconcile
any inconsistency in the Plan and to construe and interpret the Plan
and any Award, rules and regulations, Award Agreement or other
instrument hereunder; and
(x) to make all other decisions and determinations as may be
required under the terms of the Plan or as the Committee may deem
necessary or advisable for the administration of the Plan.
Other provisions of the Plan notwithstanding, the Board shall perform the
functions of the Committee for purposes of granting awards to directors who
serve on the Committee, and the Board may perform any function of the Committee
under the Plan for any other purpose, including without limitation for the
purpose of ensuring that transactions under the Plan by Participants who are
then subject to Section 16 of the Exchange Act in respect of the Company are
exempt under Rule 16b-3. In any case in which the Board is performing a function
of the Committee under the Plan, each reference to the Committee herein shall be
deemed to refer to the Board, except where the context otherwise requires.
(b) Manner of Exercise of Committee Authority. Any action of the
Committee with respect to the Plan shall be final, conclusive and binding on all
persons, including the Company, subsidiaries of the Company, Participants, any
person claiming any rights under the Plan from or through any Participant and
stockholders, except to the extent the Committee may subsequently modify, or
take further action not consistent with, its prior action. If not specified in
the Plan, the time at which the Committee must or may make any determination
shall be determined by the Committee, and any such determination may thereafter
be modified by the Committee (subject to Section 8(e)). The express grant of any
specific power to the Committee, and the taking of any action by the Committee,
shall not be construed as limiting any power or authority of the Committee.
Except as provided under Section 7(f), the Committee may delegate to officers or
managers of the Company or any subsidiary of the Company the authority, subject
to such terms as the Committee shall determine, to perform such functions as the
Committee may determine, to the extent permitted under applicable law.
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(c) Limitation of Liability. Each member of the Committee shall be
entitled to, in good faith, rely or act upon any report or other information
furnished to him by any officer or other employee of the Company or any
subsidiary, the Company's independent certified public accountants or any
executive compensation consultant, legal counsel or other professional retained
by the Company to assist in the administration of the Plan. No member of the
Committee, or any officer or employee of the Company acting on behalf of the
Committee, shall be personally liable for any action, determination or
interpretation taken or made in good faith with respect to the Plan, and all
members of the Committee and any officer or employee of the Company acting on
its behalf shall, to the extent permitted by law, be fully indemnified and
protected by the Company with respect to any such action, determination or
interpretation.
4. Stock Subject to Plan.
(a) Amount of Stock Reserved. Subject to adjustment as provided in
Section 4(c), the total number of shares of Stock that may be issued pursuant to
Awards shall not exceed Four-Hundred, Seventy-Five Thousand (475,000) shares of
Stock. If an Award valued by reference to Stock may only be settled in cash, the
number of shares to which such Award relates shall be deemed to be Stock subject
to such Award for purposes of this Section 4(a). Any shares of Stock delivered
pursuant to an Award may consist, in whole or in part, of authorized and
unissued shares, treasury shares or shares acquired in the market for a
Participant's account.
(b) Annual Per-Participant Limitations. During any calendar year, no
Participant may be granted Awards that may be settled by delivery of more than
One-Hundred Thousand (100,000) shares of Stock, subject to adjustment as
provided in Section 4(c). In addition, with respect to Awards that may be
settled in cash (in whole or in part), no Participant may be paid during any
calendar year cash amounts relating to such Awards that exceed the greater of
the fair market value of the number of shares of Stock set forth in the
preceding sentence at the date of grant or the date of settlement of Award. This
provision sets forth two separate limitations, so that Awards that may be
settled solely by delivery of Stock will not operate to reduce the amount of
cash-only Awards, and vice versa; nevertheless, Awards that may be settled in
Stock or cash must not exceed either limitation.
(c) Adjustments. In the event that the Committee shall determine that
any recapitalization, forward or reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase or exchange of Stock or other
securities, Stock dividend or other special, large and non-recurring dividend or
distribution (whether in the form of cash, securities or other property),
liquidation, dissolution, or other similar corporate transaction or event,
affects the Stock such that an adjustment is appropriate in order to prevent
dilution or enlargement of the rights of Participants under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust any or all of
(i) the number and kind of shares of Stock reserved and available for Awards
under Section 4(a), including shares reserved for ISOs, (ii) the number and kind
of shares of Stock specified in the Annual Per-Participant Limitations under
Section 4(b), (iii) the number and kind of shares of outstanding Restricted
Stock or other outstanding Award in connection with which shares have been
issued, (iv) the number and kind of shares that may be issued in respect of
other outstanding Awards and (v) the exercise price, grant price or purchase
price relating to any Award (or, if deemed appropriate, the Committee may make
provision for a cash payment with respect to any outstanding Award). In
addition, the Committee is authorized to make adjustments in the terms and
conditions of, and the criteria included in, Awards (including, without
limitation, cancellation of unexercised or outstanding Awards, or substitution
of Awards using stock of a successor or other entity) in recognition of unusual
or nonrecurring events (including, without limitation, events described in the
preceding sentence and events constituting a Change in Control) affecting the
Company or any subsidiary or the financial statements of the Company or any
subsidiary, or in response to changes in applicable laws, regulations, or
accounting principles.
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5. Eligibility. Directors, officers and employees of the Company and
its subsidiaries, and persons who provide consulting or other services to the
Company deemed by the Committee to be of substantial value to the Company, are
eligible to be granted Awards. In addition, persons who have been offered
employment by the Company or its subsidiaries, and persons employed by an entity
that the Committee reasonably expects to become a subsidiary of the Company, are
eligible to be granted Awards.
6. Specific Terms of Awards.
(a) General. Awards may be granted on the terms and conditions set
forth in this Section 6. In addition, the Committee may impose on any Award or
the exercise thereof such additional terms and conditions, not inconsistent with
the provisions of the Plan, as the Committee shall determine, including terms
requiring forfeiture of Awards in the event of termination of employment,
directorship or service of the Participant. Except as expressly provided by the
Committee (including for purposes of complying with the requirements of Texas
law relating to lawful consideration for the issuance of shares), no
consideration other than services will be required as consideration for the
grant (but not the exercise) of any Award.
(b) Options. The Committee is authorized to grant options to purchase
Stock (including "reload" options automatically granted to offset specified
exercises of Options) on the following terms and conditions ("Options"):
(i) Exercise Price. The exercise price per share of Stock
purchasable under an Option shall be determined by the Committee.
(ii) Time and Method of Exercise. The Committee shall
determine the time or times at which an Option may be exercised in
whole or in part, the methods by which such exercise price may be paid
or deemed to be paid, the form of such payment, including, without
limitation, cash, Stock, other Awards or awards granted under other
Company plans or other property (including notes or other contractual
obligations of Participants to make payment on a deferred basis, such
as through "cashless exercise" arrangements, to the extent permitted by
applicable law), and the methods by which Stock will be delivered or
deemed to be delivered to Participants.
(iii) Termination of Employment, Directorship or Service. The
Committee shall determine the period, if any, during which Options
shall be exercisable following a Participant's termination of an
employment, directorship or service relationship with the Company and
its subsidiaries. For this purpose, any sale of a subsidiary of the
Company pursuant to which it ceases to be a subsidiary of the Company
shall be deemed to be a termination of employment, directorship or
service by any Participant whose only relationship was with such
subsidiary. Unless otherwise determined by the Committee, (i) during
any period that an Option is exercisable following termination of
employment, directorship or service, it shall be exercisable only to
the extent it was exercisable upon such termination and (ii) if such
termination is for cause, as determined in the discretion of the
Committee, all Options held by the Participant shall immediately
terminate.
(iv) Sale of the Company. All Options outstanding under the
Plan shall terminate upon the consummation of any transaction whereby
the Company (or any successor to the Company or substantially all of
its business) becomes or is merged with and into another corporation,
or a wholly-owned subsidiary of another corporation, unless such other
corporation shall continue or assume the Plan as it relates to Options
then outstanding (in which case such other corporation shall be treated
as the Company for all purposes hereunder, and, pursuant to Section
4(c), the Committee of such other
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30
corporation shall make appropriate adjustment in the number and kind of
shares of Stock subject thereto and the exercise price per share
thereof to reflect consummation of such transaction). If the Plan is
not to be so assumed, the Company shall notify the Participant of
consummation of such transaction at least ten days in advance thereof.
(v) ISOs. The Committee shall have the authority to grant ISOs
under the Plan. If Stock acquired by exercise of an ISO is sold or
otherwise disposed of within two years after the date of grant of the
ISO or within one year after the transfer of such Stock to the
Participant, the holder of the Stock immediately prior to the
disposition shall promptly notify the Company in writing of the date
and terms of the disposition and shall provide such other information
regarding the disposition as the Company may reasonably require in
order to secure any deduction then available against the Company's or
any other corporation's taxable income. The Company may impose such
procedures as it determines may be necessary or desirable to ensure
that such notification is made. Each Option granted as an ISO shall be
designated as such in the Award Agreement relating to such Option.
(c) Stock Appreciation Rights. The Committee is authorized to grant
stock appreciation rights on the following terms and conditions ("SARs"):
(i) Right to Payment. An SAR shall confer on the Participant
to whom it is granted a right to receive, upon exercise thereof, the
excess of (A) the fair market value of one share of Stock on the date
of exercise (or, if the Committee shall so determine in the case of any
such right other than one related to an ISO, the fair market value of
one share at any time during a specified period before or after the
date of exercise), over (B) the grant price of the SAR as determined by
the Committee as of the date of grant of the SAR, which, except as
provided in Section 7(a), shall be not less than the fair market value
of one share of Stock on the date of grant.
(ii) Other Terms. The Committee shall determine the time or
times at which an SAR may be exercised in whole or in part, the method
of exercise, method of settlement, form of consideration payable in
settlement, method by which Stock will be delivered or deemed to be
delivered to Participants, whether or not an SAR shall be in tandem
with any other Award, and any other terms and conditions of any SAR.
Limited SARs that may only be exercised upon the occurrence of a Change
in Control may be granted on such terms, not inconsistent with this
Section 6(c), as the Committee may determine. Limited SARs may be
either freestanding or in tandem with other Awards.
(d) Restricted Stock. The Committee is authorized to grant Stock that
is subject to restrictions based on continued employment on the following terms
and conditions ("Restricted Stock"):
(i) Grant and Restrictions. Restricted Stock shall be subject
to such restrictions on transferability and other restrictions, if any,
as the Committee may impose, which restrictions may lapse separately or
in combination at such times, under such circumstances, in such
installments, or otherwise, as the Committee may determine. Except to
the extent restricted under the terms of the Plan and any Award
Agreement relating to the Restricted Stock, a Participant granted
Restricted Stock shall have all of the rights of a shareholder
including, without limitation, the right to vote Restricted Stock or
the right to receive dividends thereon.
(ii) Forfeiture. Except as otherwise determined by the
Committee, upon termination of employment, directorship or service (as
determined under criteria established by the Committee) during the
applicable restriction period, Restricted Stock that is at that time
subject to restrictions shall be forfeited and reacquired by the
Company; provided, however, that the Committee may provide, by rule or
regulation or in any Award Agreement, or may determine in any
individual case, that
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31
restrictions or forfeiture conditions relating to Restricted Stock will
be waived in whole or in part in the event of termination resulting
from specified causes.
(iii) Certificates for Stock. Restricted Stock granted under
the Plan may be evidenced in such manner as the Committee shall
determine. If certificates representing Restricted Stock are registered
in the name of the Participant, such certificates may bear an
appropriate legend referring to the terms, conditions, and restrictions
applicable to such Restricted Stock, or the Company may retain physical
possession of the certificate, and in either case the Participant may
be required to deliver a stock power to the Company, endorsed in blank,
relating to the Restricted Stock.
(iv) Dividends. Dividends paid on Restricted Stock shall be
paid at the dividend payment date either in cash or in shares of
unrestricted Stock having a fair market value equal to the amount of
such dividends, or the payment of such dividends shall be deferred
and/or the amount or value thereof automatically reinvested in
additional Restricted Stock, other Awards, or other investment
vehicles, as the Committee shall determine or permit the Participant to
elect. Stock distributed in connection with a Stock split or Stock
dividend, and other property distributed as a dividend, shall be
subject to restrictions and a risk of forfeiture to the same extent as
the Restricted Stock in respect of which such Stock or other property
has been distributed, unless otherwise determined by the Committee.
(e) Deferred Stock. The Committee is authorized to grant units
representing the right to receive Stock at a future date subject to the
following terms and conditions ("Deferred Stock"):
(i) Award and Restrictions. Delivery of Stock will occur upon
expiration of the deferral period specified for an Award of Deferred
Stock by the Committee (or, if permitted by the Committee, as elected
by the Participant). In addition, Deferred Stock shall be subject to
such restrictions as the Committee may impose, if any, which
restrictions may lapse at the expiration of the deferral period or at
earlier specified times, separately or in combination, in installments
or otherwise, as the Committee may determine.
(ii) Forfeiture. Except as otherwise determined by the
Committee, upon termination of employment, directorship or service (as
determined under criteria established by the Committee) during the
applicable deferral period or portion thereof to which forfeiture
conditions apply (as provided in the Award Agreement evidencing the
Deferred Stock), all Deferred Stock that is at that time subject to
such forfeiture conditions shall be forfeited; provided, however, that
the Committee may provide, by rule or regulation or in any Award
Agreement, or may determine in any individual case, that restrictions
or forfeiture conditions relating to Deferred Stock will be waived in
whole or in part in the event of termination resulting from specified
causes.
(f) Bonus Stock and Awards in Lieu of Cash Obligations. The Committee
is authorized to grant Stock as a bonus, or to grant Stock or other Awards in
lieu of Company obligations to pay cash under other plans or compensatory
arrangements.
(g) Dividend Equivalents. The Committee is authorized to grant Awards
entitling the Participant to receive cash, Stock, other Awards or other property
equal in value to dividends paid with respect to a specified number of shares of
Stock ("Dividend Equivalents"). Dividend Equivalents may be awarded on a
free-standing basis or in connection with another Award. The Committee may
provide that Dividend Equivalents shall be paid or distributed when accrued or
shall be deemed to have been reinvested in additional Stock, Awards, or awards
under other Company plans, or other property, and subject to such restrictions
on transferability and risks of forfeiture, as the Committee may specify.
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32
(h) Other Stock-Based Awards. The Committee is authorized, subject to
limitations under applicable law, to grant such other Awards that may be
denominated or payable in, valued in whole or in part by reference to, or
otherwise based on, or related to, Stock and factors that may influence the
value of Stock, as deemed by the Committee to be consistent with the purposes of
the Plan, including, without limitation, convertible or exchangeable debt
securities, other rights convertible or exchangeable into Stock, purchase rights
for Stock, Awards with value and payment contingent upon performance of the
Company or any other factors designated by the Committee and Awards valued by
reference to the book value of Stock or the value of securities of or the
performance of specified subsidiaries ("Other Stock Based Awards"). The
Committee shall determine the terms and conditions of such Awards. Stock issued
pursuant to an Award in the nature of a purchase right granted under this
Section 6(h) shall be purchased for such consideration, paid for at such times,
by such methods, and in such forms, including, without limitation, cash, Stock,
other Awards or awards under any other Company plan, or other property, as the
Committee shall determine. Cash awards, as an element of or supplement to any
other Award, may be granted pursuant to this Section 6(h).
7. Certain Provisions Applicable to Awards.
(a) Stand-Alone, Additional, Tandem, and Substitute Awards. Awards may,
in the discretion of the Committee, be granted either alone or in addition to,
in tandem with or in substitution for any other Award or any award granted under
any other plan of the Company, any subsidiary or any business entity to be
acquired by the Company or a subsidiary, or any other right of a Participant to
receive payment from the Company or any subsidiary. Awards granted in addition
to or in tandem with other Awards or awards may be granted either as of the same
time as or a different time from the grant of such other Awards or awards.
(b) Term of Awards. The term of each Award shall be for such period as
may be determined by the Committee; provided, however, that in no event shall
the term of any ISO or an SAR granted in tandem therewith exceed a period of ten
years from the date of its grant (or such shorter period as may be applicable
under Section 422 of the Code).
(c) Form of Payment Under Awards. Subject to the terms of the Plan and
any applicable Award Agreement, payments to be made by the Company or a
subsidiary upon the grant, exercise or settlement of an Award may be made in
such forms as the Committee shall determine, including, without limitation,
cash, Stock, other Awards or awards under any other Company plan, or other
property, and may be made in a single payment or transfer, in installments or on
a deferred basis. Such payments may include, without limitation, provisions for
the payment or crediting of reasonable interest on installment or deferred
payments or the grant or crediting of Dividend Equivalents in respect of
installment or deferred payments denominated in Stock.
(d) Rule 16b-3 Compliance. With respect to a Participant who is then
subject to Section 16(b) of the Exchange Act in respect of the Company, the
Committee shall implement transactions under the Plan and administer the Plan in
a manner that shall ensure that each transaction by such a Participant is exempt
from Section 16(b) liability pursuant to Rule 16b-3, except that such a
Participant may be permitted to engage in a non-exempt transaction under the
Plan if written notice has been given to the Participant regarding the
non-exempt nature of such transaction. The Committee may authorize the Company
to repurchase, cancel, or otherwise reverse or invalidate any Award or shares of
Stock resulting from any Award in order to prevent a Participant who is subject
to Section 16(b) from incurring liability under such Section.
(e) Loan Provisions. With the consent of the Committee, and subject at
all times to, and only to the extent, if any, permitted under and in accordance
with, laws and regulations and other binding obligations or provisions
applicable to the Company, the Company may make, guarantee or arrange for a loan
or loans to a Participant with respect to the exercise of any Option or other
payment in connection
B-8
33
with any Award, including the payment by a Participant of any or all federal,
state or local income or other taxes due in connection with any Award. Subject
to such limitations, the Committee shall have full authority to decide whether
to make a loan or loans hereunder and to determine the amount, terms and
provisions of any such loan or loans, including the interest rate to be charged
in respect of any such loan or loans, whether the loan or loans are to be with
or without recourse against the borrower, the terms on which the loan is to be
repaid and conditions, if any, under which the loan or loans may be forgiven.
(f) Performance-Based Awards. The Committee may, in its discretion,
designate any Award the exercisability or settlement of which is subject to the
achievement of performance conditions as a performance-based Award subject to
this Section 7(f), in order to qualify such Award as "qualified
performance-based compensation" within the meaning of Code Section 162(m) and
regulations thereunder. The performance objectives for an Award subject to this
Section 7(f) shall consist of one or more business criteria and a targeted level
or levels of performance with respect to such criteria, as specified by the
Committee but subject to this Section 7(f). Performance objectives shall be
objective and shall otherwise meet the requirements of Section 162(m)(4)(C) of
the Code. Business criteria used by the Committee in establishing performance
objectives for Awards subject to this Section 7(f) shall be selected from among
the following:
(i) Annual return on capital;
(ii) Annual earnings or earnings per share;
(iii) Annual cash flow;
(iv) Increase in stock price or book value or book value per
share;
(v) Changes in annual revenues; and/or
(vi) Strategic business criteria, consisting of one or more
objectives based on meeting specified revenue, market penetration,
geographic business expansion goals, cost targets, and goals relating
to acquisitions or divestitures.
The levels of performance required with respect to such business criteria may be
expressed in absolute or relative levels. Performance objectives may differ for
Awards to different Participants. The Committee shall specify the weighting to
be given to each performance objective for purposes of determining the final
amount payable with respect to any such Award. The Committee may, in its
discretion, reduce the amount of a payout otherwise to be made in connection
with an Award subject to this Section 7(f), but may not exercise discretion to
increase such amount, and the Committee may consider other performance criteria
in exercising such discretion. All determinations by the Committee as to the
achievement of performance objectives shall be in writing. The Committee may not
delegate any responsibility with respect to an Award subject to this Section
7(f).
(g) Acceleration upon a Change of Control. Notwithstanding anything
contained herein to the contrary, all conditions and/or restrictions relating to
the continued performance of services and/or the achievement of performance
objectives with respect to the exercisability or full enjoyment of an Award
shall lapse immediately prior to a Change in Control; provided, however, that
such lapse shall not occur if (i) it is intended that the transaction
constituting such Change in Control be accounted for as a pooling of interests
under Accounting Principles Board Opinion No. 16 (or any successor thereto), and
operation of this Section 7(g) would otherwise violate Paragraph 47(c) thereof,
or (ii) the Committee, in its discretion, determines that such lapse shall not
occur; provided, further, that the Committee shall not have the discretion
granted in clause (ii) if it is intended that the transaction constituting such
Change in
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Control be accounted for as a pooling of interests under Accounting Principles
Board Option No. 16 (or any successor thereto), and such discretion would
otherwise violate Paragraph 47(c) thereof.
8. General Provisions.
(a) Compliance With Laws and Obligations. The Company shall not be
obligated to issue or deliver Stock in connection with any Award or take any
other action under the Plan in a transaction subject to the requirements of any
applicable securities law, any requirement under any listing agreement between
the Company and any national securities exchange or automated interdealer
quotation system or any other law, regulation or contractual obligation of the
Company until the Company is satisfied that such laws, regulations, and other
obligations of the Company have been complied with in full. Certificates
representing shares of Stock issued under the Plan will be subject to such
stop-transfer orders and other restrictions as may be applicable under such
laws, regulations and other obligations of the Company, including any
requirement that a legend or legends be placed thereon.
(b) Limitations on Transferability. Awards and other rights under the
Plan will not be transferable by a Participant except by will or the laws of
descent and distribution or to a Beneficiary in the event of the Participant's
death, shall not be pledged, mortgaged, hypothecated or otherwise encumbered or
otherwise subject to the claims of creditors, and, in the case of ISOs and SARs
in tandem therewith, shall be exercisable during the lifetime of a Participant
only by such Participant or his guardian or legal representative; provided,
however, that such Awards and other rights (other than ISOs and SARs in tandem
therewith) may be transferred to one or more transferees during the lifetime of
the Participant to the extent and on such terms as then may be permitted by the
Committee.
(c) No Right to Continued Employment, Directorship or Service. Neither
the Plan nor any action taken hereunder shall be construed as giving any
employee, director or other person the right to be retained in the employ or
service of the Company or any of its subsidiaries, nor shall it interfere in any
way with the right of the Company or any of its subsidiaries to terminate any
employee's employment or other person's service at any time or with the right of
the Board or stockholders to remove any director.
(d) Taxes. The Company and any subsidiary is authorized to withhold
from any Award granted or to be settled, or from any delivery of Stock in
connection with an Award, any other payment relating to an Award or any payroll
or other payment to a Participant, amounts of withholding and other taxes due or
potentially payable in connection with any transaction involving an Award, and
to take such other action as the Committee may deem advisable to enable the
Company and Participants to satisfy obligations for the payment of withholding
taxes and other tax obligations relating to any Award. This authority shall
include authority to withhold or receive Stock or other property and to make
cash payments in respect thereof in satisfaction of a Participant's tax
obligations.
(e) Changes to the Plan and Awards. The Board may amend, alter,
suspend, discontinue or terminate the Plan or the Committee's authority to grant
Awards without the consent of shareholders or Participants, except that any such
action shall be subject to the approval of the Company's shareholders at or
before the next annual meeting of shareholders for which the record date is
after such Board action if such shareholder approval is required by any federal
or state law or regulation or the rules of any stock exchange or automated
interdealer quotation system on which the Stock may then be listed or quoted,
and the Board may otherwise, in its discretion, determine to submit other such
changes to the Plan to shareholders for approval; provided, however, that,
without the consent of an affected Participant, no such action may materially
impair the rights of such Participant under any Award theretofore granted to him
(as such rights are set forth in the Plan and the Award Agreement). The
Committee may waive any conditions or rights under, or amend, alter, suspend,
discontinue, or terminate, any Award theretofore granted and any Award Agreement
relating thereto; provided, however, that, without the consent of an affected
Participant, no such action may materially impair the rights of such Participant
under such
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Award (as such rights are set forth in the Plan and the Award Agreement).
Notwithstanding the foregoing, the Board or the Committee may take any action
(including actions affecting or terminating outstanding Awards): (i) permitted
by Sections 4(c) and 6, (ii) to avoid limitations related to the availability of
a tax deduction in respect of Awards (e.g., pursuant to Code Sections 162(m) and
280G), or (iii) to the extent necessary for a business combination in which the
Company is a party to be accounted for under the pooling-of-interests method of
accounting under Accounting Principles Board Opinion No. 16 (or any successor
thereto).
(f) No Rights to Awards; No Shareholder Rights. No person shall have
any claim to be granted any Award under the Plan, and there is no obligation for
uniformity of treatment of Participants. No Award shall confer on any
Participant any of the rights of a shareholder of the Company unless and until
Stock is duly issued or transferred and delivered to the Participant in
accordance with the terms of the Award or, in the case of an Option, the Option
is duly exercised.
(g) Unfunded Status of Awards; Creation of Trusts. The Plan is intended
to constitute an "unfunded" plan for incentive and deferred compensation. With
respect to any payments not yet made to a Participant pursuant to an Award,
nothing contained in the Plan or any Award Agreement shall give any Participant
any rights that are greater than those of a general creditor of the Company;
provided, however, that the Committee may authorize the creation of trusts or
make other arrangements to meet the Company's obligations under the Plan to
deliver cash, Stock, other Awards or awards under any other Company plan, or
other property pursuant to any Award, which trusts or other arrangements shall
be consistent with the "unfunded" status of the Plan unless the Committee
otherwise determines with the consent of each affected Participant.
(h) Nonexclusivity of the Plan. Neither the adoption of the Plan by the
Board nor any submission of the Plan or amendments thereto to the shareholders
of the Company for approval shall be construed as creating any limitations on
the power of the Board to adopt such other compensatory arrangements as it may
deem necessary or desirable, including, without limitation, the granting of
stock options otherwise than under the Plan, and such arrangements may be either
applicable generally or only in specific cases.
(i) No Fractional Shares. No fractional shares of Stock shall be issued
or delivered pursuant to the Plan or any Award. The Committee shall determine
whether cash, other Awards or awards under any other Company plan, or other
property shall be issued or paid in lieu of such fractional shares or whether
such fractional shares or any rights thereto shall be forfeited or otherwise
eliminated.
(j) Compliance with Code Section 162(m). It is the intent of the
Company that employee Options, SARs and other Awards designated as Awards
subject to Section 7(f) shall constitute "qualified performance-based
compensation" within the meaning of Code Section 162(m). Accordingly, if any
provision of the Plan or any Award Agreement relating to such an Award does not
comply or is inconsistent with the requirements of Code Section 162(m), such
provision shall be construed or deemed amended to the extent necessary to
conform to such requirements, and no provision shall be deemed to confer upon
the Committee or any other person discretion to increase the amount of
compensation otherwise payable in connection with any such Award upon attainment
of the performance objectives.
(k) Governing Law. The validity, construction and effect of the Plan,
any rules and regulations relating to the Plan and any Award Agreement shall be
determined in accordance with the laws of the State of Texas, without giving
effect to principles of conflicts of laws, and applicable federal law.
(l) Effective Date; Plan Termination. The Plan shall become effective
as of the date of its adoption by the Board, and shall continue in effect until
terminated by the Board.
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PROXY
UNITED STATES LIME & MINERALS, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Edward A. Odjshaw and Timothy W. Byrne,
and either of them, proxies, with power of substitution in each, and hereby
authorizes them to represent and to vote, as designated below, all shares of
Common Stock of UNITED STATES LIME & MINERALS, INC. standing in the name of the
undersigned on March 16, 2001, at the Annual Meeting of Shareholders to be held
on April 27, 2001, at the Crowne Plaza Suites, 7800 Alpha Road, Dallas, Texas
75240, and at any adjournment thereof, and especially to vote on the items of
business specified below, as more fully described in the Notice of the Meeting
dated March 23, 2001, and the Proxy Statement accompanying the same, the receipt
of which is hereby acknowledged.
YOU ARE ENCOURAGED TO RECORD YOUR VOTE ON THE FOLLOWING ITEMS OF BUSINESS
TO BE BROUGHT BEFORE THE ANNUAL MEETING, BUT YOU NOT NEED MARK ANY OVAL IF YOU
WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. The
proxies cannot vote your shares unless you sign, date, and return this Proxy
Card. Remember, you can revoke this Proxy Card and vote in person by attending
the Annual Meeting, or by submitting to the Company prior to the Annual Meeting,
a written notice of revocation.
(Continued and to be signed on reverse side.)
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES FOR DIRECTOR, AND
APPROVAL OF 2001 LONG-TERM INCENTIVE PLAN.
1. ELECTION OF DIRECTORS-- FOR WITHHOLD FOR ALL In their discretion, the proxies are authorized to
NOMINEES: 01- J.J. Brown, 02- T.W. Byrne, ALL ALL EXCEPT vote upon such other business as may properly be
03- R.W. Cardin, 04- A.M. Doumet, [ ] [ ] [ ] brought before the Annual Meeting or any adjournment
05- W.G. Irmacher, 06- E.A. Odjshaw thereof.
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(Except nominee(s) written above.)
2. APPROVAL OF THE UNITED STATES LIME & FOR AGAINST ABSTAIN The undersigned acknowledges receipt of the Notice of
MINERALS, INC. 2001 LONG-TERM INCENTIVE PLAN. [ ] [ ] [ ] Annual Meeting of Shareholders and of the Proxy
Statement.
Date: , 2001
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Signature(s)
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Please sign exactly as name appears. Joint owners
should each sign personally. Where applicable,
indicate your official position or representative
capacity.
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YOUR VOTE IS IMPORTANT!
PLEASE MARK, SIGN, AND DATE THIS PROXY CARD AND RETURN IT PROMPTLY
IN THE ACCOMPANYING ENVELOPE.