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