SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
(Amendment No. )
Filed by the registrant [X] Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
SPEIZMAN INDUSTRIES, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transactions applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: (Set forth the amount of which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing party:
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(4) Date filed:
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SPEIZMAN INDUSTRIES, INC.
701 Griffith Road
Charlotte, North Carolina 28217
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 16, 2000
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To the Stockholders of Speizman Industries, Inc.:
Notice is hereby given that the Annual Meeting of Stockholders (the
"Annual Meeting") of Speizman Industries, Inc. (the "Company") will be held on
Thursday, November 16, 2000, at 11:00 a.m., at the principal executive offices
of the Company located at 701 Griffith Road, Charlotte, North Carolina, for the
following purposes:
1. To elect a Board of Directors of five directors to serve until the
Company's 2001 Annual Meeting of Stockholders and until their
successors are elected and qualified;
2. To approve and adopt the Company's 2000 Equity Compensation Plan,
which provides for the issuance of up to 155,000 shares of the
Company's common stock pursuant to awards thereunder;
3. To approve and adopt an amendment to the Company's Stock Option Plan
for Non-Employee Directors to increase the number of shares of the
Company's common stock available for issuance pursuant to option grants
thereunder from 15,000 to 35,000;
4. To ratify the selection of BDO Seidman, LLP as the Company's
independent certified public accountants for the fiscal year ending
June 30, 2001; and
5. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this notice. Only stockholders of record at the close of
business on October 9, 2000 will be entitled to notice of and to vote at the
Annual Meeting or any adjournment thereof.
Regardless of whether you expect to attend the Annual Meeting, you are
requested to complete, date and sign the enclosed proxy and return it promptly
in the envelope provided. No postage is required for mailing in the United
States. Your prompt response will assure that a quorum is present at the Annual
Meeting and save the Company the expense of further solicitation of proxies.
You may revoke your proxy at any time prior to the Annual Meeting. If you
attend the Annual Meeting and vote by ballot, your proxy will be revoked
automatically and only your vote at the Annual Meeting will be counted.
By order of the Board of Directors,
JOHN C. ANGELELLA
Secretary
Charlotte, North Carolina
October 19, 2000
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It is important that you return the accompanying proxy. If you do not
return the accompanying proxy to us, or otherwise communicate with us, for a
five-year period, North Carolina law requires us to treat all shares of Common
Stock held in your name as abandoned property which must be turned over to the
State Treasurer's office. It is also important that we have your correct
address. The address to which these proxy materials were mailed is the address
that we have on file for you. If you would like to make a correction to this
address, please contact Ms. Gail Gormly, 701 Griffith Road, Charlotte, North
Carolina 28217, (704) 559-5777.
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SPEIZMAN INDUSTRIES, INC.
701 Griffith Road
Charlotte, North Carolina 28217
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PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 16, 2000
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PROXY SOLICITATION AND GENERAL INFORMATION
This Proxy Statement is furnished to the stockholders of Speizman
Industries, Inc., a Delaware corporation (the "Company"), as of October 9, 2000
in connection with the solicitation of proxies by the Board of Directors of the
Company (the "Board of Directors" or the "Board") for use at the Company's
Annual Meeting of Stockholders to be held on Thursday, November 16, 2000, at
11:00 a.m., at the principal executive offices of the Company located at 701
Griffith Road, Charlotte, North Carolina, and at any adjournment thereof (the
"Annual Meeting"). The Company expects to mail this Proxy Statement and the
enclosed proxy card to the Company's stockholders on or about October 19, 2000.
Only stockholders of record at the close of business on October 9, 2000
(the "Record Date") will be entitled to notice of and to vote at the Annual
Meeting. As of the close of business on the Record Date, 3,252,428 shares of
the Company's Common Stock, par value $.10 per share ("Common Stock"), were
issued and outstanding. Each share of Common Stock outstanding on the Record
Date will be entitled to one vote on all matters to be presented for action at
the Annual Meeting. Stockholders may not cumulate votes in the election of
directors.
The presence of a majority of such shares is required, in person or by
proxy, to constitute a quorum for the transaction of business at the Annual
Meeting. Votes withheld from any nominee for election as director, abstentions
and broker "non-votes" are counted as present or represented for purposes of
determining the presence or absence of a quorum for the Annual Meeting. A
broker "non-vote" occurs when a nominee holding shares for a beneficial owner
votes on one proposal, but does not vote on another proposal because, in
respect of such other proposal, the nominee does not have discretionary voting
power and has not received instructions from the beneficial owner. The election
of directors by the stockholders shall be determined by a plurality of the
votes cast by stockholders entitled to vote, and votes withheld will not be
counted toward the achievement of a plurality. On all other matters being
submitted to stockholders, an affirmative vote of a majority of the shares
present or represented and voting on each such matter is required for approval.
The vote on each matter submitted to stockholders is tabulated separately.
Abstentions are included in the number of shares present or represented and
voting on each matter. Broker "non-votes" are not considered voted for the
particular matter and have the practical effect of reducing the number of
affirmative votes required to achieve a majority for such matter by reducing
the total number of shares from which the majority is calculated.
The enclosed proxy card is for use at the Annual Meeting if a stockholder
does not attend the Annual Meeting in person or wishes to have his shares of
Common Stock voted by proxy even if he attends the Annual Meeting. If the
enclosed proxy card is properly executed and returned in time to be voted at
the Annual Meeting, the shares of Common Stock represented thereby will be
voted in accordance with the directions given therein. In the absence of
directions to the contrary, the shares of Common Stock so represented will be
voted (1) FOR the election of the nominees named as directors named in this
Proxy Statement; (2) FOR the approval and adoption of the Speizman Industries,
Inc. 2000 Equity Compensation Plan; (3) FOR the approval and adoption of an
amendment of the Speizman Industries, Inc. Stock Option Plan for Non-Employee
Directors and (4) FOR the ratification of BDO Seidman, LLP as the Company's
independent certified public accountants for the fiscal year ending June 30,
2001. Any stockholder giving a proxy may revoke it at any time before it is
exercised by filing with the Secretary of the Company a written revocation or
an executed proxy having a later date, or by attending the Annual Meeting and
electing to vote in person.
The Company will bear the entire cost of the solicitation of proxies,
including the reimbursement of brokers, banks and other record holders of
shares of Common Stock for their expenses in forwarding proxy materials to the
beneficial owners of such shares. Following the original solicitation of
proxies by mail, proxies may be solicited by officers and employees of the
Company by telephone, facsimile, telegraph or in person. Such officers and
employees will not be additionally compensated for soliciting proxies.
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With respect to the election of a Board of Directors, any stockholder that
has submitted a proxy has a right to withhold authority to vote for any
individual nominee or group of nominees to the Board of Directors by writing
the name of such individual or group in the space provided on the proxy. The
Company does not know of any other business to be brought before the Annual
Meeting, but it is intended that as to any such other business the proxies will
be voted in accordance with the judgment of the person or persons acting
thereunder.
A copy of the Company's 2000 Annual Report to Stockholders is being
furnished herewith to each stockholder of record as of the close of business on
the Record Date. Copies of the Company's Annual Report on Form 10-K for the
year ended July 1, 2000 will be provided free of charge upon written request
to:
Speizman Industries, Inc.
P.O. Box 242108
Charlotte, North Carolina 28224
Attn: Chief Financial Officer
The Company's fiscal year ends on the Saturday closest to June 30 and is
named for the year in which it ends. Fiscal 1996 through 1998 and fiscal 2000
each contained 52 weeks and ended on June 29, 1996, June 28, 1997, June 27,
1999 and July 1, 2000, respectively. Fiscal 1999 contained 53 weeks and ended
on July 3, 1999. Fiscal 2001 will contain 52 weeks and will end on June 30,
2001.
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PROPOSAL 1:
ELECTION OF DIRECTORS
General
The Board of Directors has nominated the five persons named below for
election as directors at the Annual Meeting to serve until the next annual
meeting of stockholders and until their successors are elected and qualified.
The Company's bylaws provide that the Board of Directors shall consist of one
or more directors and that the Board of Directors has the power to determine
the number of directors (when not determined by the stockholders) and to fill
vacancies on the Board of Directors. The number of directors is presently fixed
at five. Each nominee named below, other than Mr. Brady, is presently serving
as a director of the Company and each nominee has consented to have his name
appear as a nominee in this Proxy Statement and to serve as a director of the
Company if elected. Should any nominee become unable to serve as a director,
shares of Common Stock represented at the Annual Meeting by valid proxies may
be voted for the election of such substitute nominee(s) as may be designated by
the Board of Directors. The Board of Directors has no reason to believe that
any nominee will be unable to serve as a director.
The following information is provided concerning the five nominees for
election as directors of the Company:
Robert S. Speizman Mr. Speizman, 60, has served as President of the
Company since November 1976. From 1969 to October
1976, Mr. Speizman served as Executive Vice
President of the Company. Mr. Speizman has been a
director of the Company since 1967 and Chairman of
the Board of Directors since July 1987.
William Gorelick Mr. Gorelick, 65, has served as a director of the
Company since March 1993. From May 1956 to June
1991, Mr. Gorelick was employed by Capitol Finance
Group, Inc., a consumer finance company, and its
subsidiary companies, and served these companies
in various capacities including as a director,
Treasurer, Secretary, Vice President and
President. Since April 1991, Mr. Gorelick has
served as President and/or a director of CPP
Holdings, Inc. and its subsidiary company, Capitol
Premium Plan, Inc., an insurance premium finance
company in which he has a substantial interest.
Since November 1991, Mr. Gorelick has held a
substantial interest in, and has served as
President, Treasurer, director and/or partner of,
Title Insurance Services Corporation, Atlantic
Title Insurance Company and Atlantic Assurance
Company. These companies underwrite title
insurance policies and sell appraisal and abstract
services to consumer lenders. In addition, Mr.
Gorelick is a partner in several real estate
partnerships.
Scott C. Lea Mr. Lea, 68, has served as a director of the
Company since May 1993. Mr. Lea also serves as a
director of Lance, Inc. and served as Chairman of
its Board of Directors from April 1996 to April
1999. Mr. Lea has been a private investor since
January 1992. From January 1972 to December 1991,
Mr. Lea was employed by Rexham Industries
(formerly Rexham Corp.), a manufacturer of
packaging, technical coatings and laminates. While
at Rexham, Mr. Lea served in various capacities,
including as President, Chief Executive Officer
and a director from September 1974 to April
1989, and as Chairman of the Board of Directors
from April 1989 to December 1991.
Josef Sklut Mr. Sklut, 71, has served as a director of the
Company since 1977. Since his retirement from the
Company in November 1998, Mr. Sklut has provided
consulting services to the Company on a part-time
basis relating to financial and management
matters. Prior to his retirement, Mr. Sklut served
as Vice President-Finance of the Company from
1978, as Secretary of the Company from 1977 and as
Treasurer of the Company from 1969.
Jon P. Brady Mr. Brady, 58, has been employed by Brady
Distributing Company, a wholesale distribution
company in Charlotte, North Carolina, since 1963.
He has served as Chief Executive Officer,
President and Chairman of the Board of Directors
of Brady Distributing Company since 1978. From
1984 to 1994, Mr. Brady also served as a director
of First Charlotte Bank and Trust Company, and
currently is a member of the Centura Bank
Charlotte Board of Advisors.
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Board Committees and Meetings
In fiscal 2000, the Board of Directors held four meetings and took action
by unanimous written consent 12 times. The Board of Directors presently has an
Audit Committee, a Compensation Committee and a Stock Option Committee, but has
no standing nominating committee. The Audit Committee is responsible for
recommending independent auditors, reviewing with the independent auditors the
scope and results of the audit engagement, establishing and monitoring the
Company's financial policies and control procedures, reviewing and monitoring
the provision of non-audit services by the Company's independent auditors and
reviewing all conflict of interest situations. The Compensation Committee is
responsible for determining the salaries, bonuses and all other compensation,
other than pursuant to the Company's equity-based plans, of the executive
officers of the Company. The Stock Option Committee is responsible for
administering the Company's equity-based plans. The Stock Option Committee, the
Audit Committee and the Compensation Committee are each presently comprised of
Mr. Gorelick and Mr. Lea, as well as Steven P. Berkowitz, a current director of
the Company who is not standing for re-election at the Annual Meeting. Mr. Lea
is the Chairman of the Audit Committee and Mr. Berkowitz is currently the
Chairman of the Compensation Committee and Stock Option Committee. Following
the Annual Meeting, Mr. Berkowitz will no longer serve as a member of any
committee of the Board of Directors. In fiscal 2000, the Audit Committee, the
Stock Option Committee and the Compensation Committee each held three meetings.
In fiscal 2000, all of the directors attended all of the meetings of the Board
of Directors and the above committees on which they served, except for Mr.
Berkowitz who was unable to attend one meeting of the Board of Directors.
Compensation of Directors
Each director who is not an officer or employee of the Company is paid
$1,000 for each meeting of the Board of Directors that he attends and is
reimbursed for out-of-pocket expenses incurred in connection with attending the
meeting.
Under the Company's Stock Option Plan for Non-Employee Directors, on
December 1, 1999, Mr. Berkowitz, Mr. Gorelick, Mr. Lea and Mr. Sklut were each
granted a non-qualified option to purchase 750 shares of Common Stock having an
exercise price of $4.875 per share. These options become exercisable in
cumulative increments of 50% and 100% beginning on the first and second
anniversaries, respectively, of the dates of grant, if the non-employee
director remains a non-employee director on such dates. Options granted under
this plan expire 10 years from the date of grant and within limited periods of
time, as specified therein, following such time as a director ceases to be a
non-employee director within the meaning of such plan.
Subsequent to his retirement as Vice President-Finance of the Company in
November 1998, Mr. Sklut has provided consulting services to the Company on a
part-time basis with regard to financial and management matters. Under his
arrangement with the Company, Mr. Sklut provides the Company consulting
services of up to eight hours per week, as requested by the Company, for which
he is paid $150 per hour. Under this arrangement, the Company paid Mr. Sklut
$59,775 in fiscal 2000.
The Company has a deferred compensation agreement with Mr. Sklut, which
was activated upon his retirement from the Company in November 1998 and which
is more fully described in the section "Certain Relationships and Related
Transactions."
Compensation Committee Interlocks and Insider Participation
None of the members of the Company's Compensation Committee is an officer
or employee of the Company. No interlocking relationship exists between any
member of the Board of Directors or Compensation Committee and any member of
the board of directors or compensation committee of any other company, nor has
any interlocking relationship existed in the past.
The Board of Directors recommends a vote FOR the election of the nominees
named above.
PROPOSAL 2:
ADOPTION AND APPROVAL OF SPEIZMAN INDUSTRIES, INC.
2000 EQUITY COMPENSATION PLAN
General
On October 13, 2000, the Board adopted, subject to stockholder approval,
the Speizman Industries, Inc. 2000 Equity Compensation Plan (the "2000 Plan").
The 2000 Plan, if approved by the stockholders, will be effective on the date
of stockholder approval.
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The following is a summary of the 2000 Plan, which is incorporated by
reference into this summary description. This summary is qualified entirely by
reference to the 2000 Plan, a copy of which is attached to this Proxy Statement
as Exhibit A. Any capitalized terms used in this summary description that are
not defined herein have the meanings assigned to them in the 2000 Plan.
Purpose
The ability to offer Common Stock through equity-based compensation
awards, historically stock options, has been and will continue to be a
necessary and beneficial method by which the Company has increased the
proprietary interests of key employees in the Company, thereby increasing their
personal interest in the Company's success. As of October 11, 2000, 33,400
shares of Common Stock remained available for option grants under the Company's
Nonqualified Stock Option Plan, its only equity-based plan available for this
purpose. The Board of Directors adopted the 2000 Plan, subject to stockholder
approval, because it believes that the availability of additional shares of
Common Stock and a variety of equity awards, in addition to stock options, will
assist the Company in attracting new executives and motivating existing key
employees. The Board of Directors further believes that it is in the best
interests of the Company and its stockholders to approve the 2000 Plan because
it believes that further alignment of the interests of the Company's key
employees with those of its stockholders through the grant of stock options and
other equity awards is a primary means of maximizing long-term stockholder
value.
Description of the 2000 Plan
In General
The 2000 Plan is not generally subject to the provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). The 2000 Plan is
not a qualified retirement plan under Section 401 of the Internal Revenue Code
of 1986, as amended (the "Code").
The 2000 Plan provides for the grant of several different types of
equity-based compensation awards under one plan. Awards under the 2000 Plan may
be made to participants in the form of incentive stock options, nonqualified
stock options, stock appreciation rights, restricted stock, performance shares,
and other forms of equity-based compensation as may be provided and are
permissible under the 2000 Plan.
Administration
The 2000 Plan will be administered by the Compensation Committee of the
Board (the "Committee"). The Committee has the exclusive right to interpret,
construe and administer the 2000 Plan and to select the persons eligible to
receive awards. The Committee will determine the number of stock options, stock
appreciation rights, stock awards or performance shares subject to an award and
the form, terms, conditions and duration of each award. All acts,
determinations and decisions of the Committee will be conclusive, final and
binding upon all parties.
The fair market value of the Common Stock for any day in question will be
the closing sale price reported for the Common Stock for such date on the
exchange on which the Common Stock is traded, if the Common Stock is traded on
an exchange, provided at least 100 shares of Common Stock were sold on such
date. If there was not a sale of at least 100 shares of Common Stock that day,
then the fair market value will be the closing sale price reported for the
Common Stock on such exchange on the last day on which there was a sale of at
least 100 shares of Common Stock. If the Common Stock is admitted for quotation
on the National Association of Securities Dealers Automated Quotation System or
other comparable quotation system, the fair market value of the Common Stock
for any day in question will be the last sale price reported for the Common
Stock for such date on such system, provided at least 100 shares of Common
Stock were sold on such date. If there was not a sale of at least 100 shares of
Common Stock that day, then the fair market value shall be the average of the
high bid and low asked prices reported for the Common Stock on such system on
such date (or, if no shares were sold on such date, the last sale price
reported for the Common Stock on such system on the last date on which at least
100 shares of Common Stock were sold). The Committee is also authorized to
establish an alternate method of determining fair market value of the Common
Stock.
Securities to be Offered
The Board has designated an aggregate of 155,000 shares of Common Stock
for issuance pursuant to awards granted under the 2000 Plan. Such shares of
Common Stock shall be made available from shares authorized and unissued or
currently held or subsequently reacquired by the Company as treasury shares,
including shares purchased in the open market
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or in private transactions. The last sale price of the Common Stock of the
Company on October 11, 2000, as reported on The Nasdaq Stock Market, was $2.19
per share.
To the extent any shares of Common Stock awarded or subject to purchase
under the 2000 Plan are not delivered or purchased, or are reacquired by the
Company, such shares will not be charged against the aggregate number of shares
available for awards under the 2000 Plan and may again be awarded under the
plan. This would occur, for example, upon a forfeiture of restricted stock or
termination, expiration, or cancellation of a Stock Option, stock appreciation
right, or performance share under the 2000 Plan, or any other termination of an
award without payment being made in the form of Common Stock.
Proportionate and equitable adjustments will be made by the Committee upon
the occurrence of certain events that result in changes in the outstanding
shares of Common Stock or that result in exchanges of shares of Common Stock
for a different number or class of Common Stock or other securities of the
Company or another corporation. These events include without limitation a
reorganization or recapitalization of the Company or reclassification of its
shares, stock split, stock dividend, or consolidation of shares of Common
Stock, merger, consolidation, or separation, including spin-off, or sale of
assets of the Company, or any distribution to stockholders other than a cash
dividend that results in the outstanding shares of Common Stock (or any
securities exchanged therefore or received in their place) being exchanged for
a different number or class of shares of Common Stock or other securities.
Under such circumstances, adjustments may be made by the Committee in the
limitation on the aggregate number of shares of Common Stock that may be
awarded under the 2000 Plan, the number and class of shares that may be subject
to an award, the purchase price for shares of Common Stock under outstanding
Stock Options, and the number of shares to be transferred in settlement of
outstanding stock appreciation rights, and the terms, conditions, or
restrictions of any award or award agreement, including the price payable for
the acquisition of Common Stock.
The Committee is also authorized to make adjustments in performance-based
criteria or in the terms and conditions of other awards under the 2000 Plan in
recognition of unusual or nonrecurring events affecting the Company or its
financial statements or changes in applicable laws, regulations, or accounting
principles. The Committee may also correct any defects or omissions or
reconcile any inconsistencies in the 2000 Plan or any agreement evidencing an
award under the 2000 Plan in the manner and to the extent it shall deem
desirable to carry it into effect. Moreover, the Committee may, in its
discretion, make such adjustments in the terms of awards under the 2000 Plan as
it deems appropriate if the Company assumes any outstanding employee benefit
plans or awards or the right or obligation to make future awards in connection
with the acquisition of any other entity.
Eligible Participants
The class of persons eligible to receive awards under the 2000 Plan are
employees of the Company and other natural persons, including non-employee
members of the Board and consultants and advisors who provide bona fide
services to the Company not in connection with the offer or sale of securities
in a capital-raising transaction. The Committee shall select from this class of
eligible individuals the individuals who shall receive awards under the 2000
Plan. As of September 8, 2000, the Company had approximately 206 employees and
four non-employee directors.
Types of Awards
Each award granted will be evidenced by a written agreement setting forth
the terms and conditions of the award. Each such agreement will also be subject
to and incorporate the applicable terms and conditions of the Equity 2000 Plan
and any other terms and conditions, not inconsistent with the 2000 Plan,
required by the Committee. The various forms of awards that may be made to
participants under the 2000 Plan are described below.
Incentive Stock Options
The Committee may grant incentive stock options ("ISOs") that may be
entitled to favorable tax treatment under Section 422 of the Code. See " -- Tax
Effects of Equity Compensation Plan Participation" below. ISOs may be granted
to eligible employees under the 2000 Plan at such time or times as determined
by the Committee until ten years following the date the Board adopted the 2000
Plan, subject to certain conditions described below. The exercise price of an
ISO under the 2000 Plan may not be less than 100% of the fair market value of
the Common Stock at the date of grant of the ISO (110% for 10% owners of the
Company).
An ISO and any related stock appreciation right, if any, granted under the
2000 Plan must be exercised in whole or in part from time to time within 10
years from the date of grant of the ISO (5 years for 10% owners of the
Company), or such shorter period specified by the Committee corresponding in
the award agreement. Upon a termination of employment of the
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optionee with the Company, as determined by the Committee in its discretion,
the ISO, and any related stock appreciation right, will lapse and cease to be
exercisable upon, or within such period following, the termination of
employment, as determined by the Committee and provided in the award agreement.
In no event, however, can the period of time during which an ISO or related
stock appreciation right remains exercisable following a termination of
employment exceed three months, unless employment is terminated because of
death or disability of the optionee. Following death or disability, the period
of time during which an ISO or related stock appreciation right may be
exercised cannot exceed one year after the date of death or disability. In no
event can the period of time following a termination of employment during which
an ISO or related stock appreciation right may be exercised extend beyond the
original exercise period of the ISO or related stock appreciation right.
The amount of ISOs that are first exercisable by any one participant in
any year that may receive favorable tax treatment as ISOs is limited. To the
extent that the aggregate fair market value of the shares of Common Stock with
respect to which ISOs are first exercisable during any calendar year by an
eligible participant exceeds $100,000, such options shall be treated as NQSOs.
Similar treatment applies in the event the exercise of an ISO is accelerated by
reason of change of control. See "Effects of Change in Control" below. The
aggregate fair market value of the Common Stock for these purposes is
determined as of the date the ISO is granted.
Subject to the limitation on the maximum number of shares of Common Stock
that may be issuable pursuant to the 2000 Plan, as discussed under "Securities
to be Offered" above, the maximum number of shares of Common Stock may be
subject to ISO awards under the 2000 Plan. An ISO granted under the 2000 Plan
will also be subject to such other terms and conditions which the Committee
deems necessary to impose in order to qualify the ISO under Section 422 of the
Code, as well as any other terms and conditions not inconsistent with the ISO
provisions of the 2000 Plan as determined by the Committee.
Nonqualified Stock Options
The Committee may also grant nonqualified stock options ("NQSOs") to
eligible participants to purchase shares of Common Stock at such time or times
as determined by the Committee. These stock options will not be eligible for
the favorable tax treatment available to ISOs under Section 422 of the Code.
The exercise price of an NQSO under the 2000 Plan will be as established
by the Committee in the agreement evidencing the award. Such exercise price may
be more than, equal to or less than 100% of the fair market value at the time
of grant. Thus, discounted stock options (options with exercise prices less
than the fair market value of the Common Stock at the date of the awards) may
be granted as NQSOs under the 2000 Plan.
An NQSO under the 2000 Plan, and its related stock appreciation right, if
any, will be exercisable in full or in part from time to time as specified by
the Committee or in the corresponding award agreement. Upon termination of
employment of the optionee, the NQSO and any related stock appreciation right
will lapse and cease to be exercisable upon, or within such period following,
such termination of employment, as determined by the Committee and specified in
the award agreement.
An NQSO may also be subject to such other terms and conditions, not
inconsistent with the 2000 Plan, as determined by the Committee and specified
in the award agreement for the NQSO.
Stock Appreciation Rights
The Committee is empowered under the 2000 Plan to grant a stock
appreciation right ("SAR") to an eligible participant in connection with an ISO
or an NQSO. SARs may also be granted independent of any related stock option.
A SAR is a right granted under the 2000 Plan that provides for an amount
payable in shares of Common Stock and/or cash, as determined by the Committee,
equal to the excess of the fair market value of a share of Common Stock on the
date the SAR is exercised over the exercise price of the SAR or the exercise
price of a related stock option to purchase a share of Common Stock. Thus, a
SAR granted in conjunction with a stock option will entitle the participant,
within the period specified for the exercise of the stock option, to surrender
the unexercised stock option, or a portion thereof, and receive in lieu thereof
a payment in cash or shares of Common Stock having an aggregate value equal to
the amount by which the fair market value of each share of Common Stock exceeds
the exercise price per share of Common Stock under the stock option, times the
number of shares of Common Stock under the stock option, or portion thereof,
that is surrendered.
Any SAR granted under the 2000 Plan in conjunction with a stock option
will be subject to the same terms and conditions as the related stock option,
including limits on transferability, and will be exercisable only to the extent
the stock option is exercisable. If the related stock option terminates or
lapses, the SAR will also terminate or lapse. Upon exercise
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of a SAR, the number of shares subject to exercise under any related stock
option will be reduced automatically by the number of shares of Common Stock
represented by the related stock option (or portion thereof) that is
surrendered. The grant of SARs related to ISOs under the 2000 Plan must be
concurrent with the grant of the related ISOs. For NQSOs, the grant of a
related SAR may either be made concurrently with the grant of the NQSO or may
be made in connection with NQSOs previously granted that are unexercised and
have not terminated or lapsed.
Incidents of Stock Options and Stock Appreciation Rights
Each stock option (ISO or NQSO) and SAR granted under the 2000 Plan will
be subject to such terms and conditions, not inconsistent with the 2000 Plan,
as may be determined by the Committee. Such provisions, for example, may
require the continued employment of a participant as consideration for the
grant or exercise of a stock option or SAR.
A stock option or SAR under the 2000 Plan will not be transferable by the
participant other than by will or the laws of descent and distribution or
pursuant to a qualified domestic relations order, as defined by the Code and
ERISA, and will be exercisable during the lifetime of the participant only by
the participant or his or her guardian or legal representative. In addition,
the Committee may, in its discretion, permit the transfer of a NQSO or SAR by a
participant to the extent determined by the Committee to be consistent with
applicable laws and Company policy.
The purchase price for shares of Common Stock under a stock option or SAR
shall be paid at the time of exercise (or in the case of a cashless exercise
described below, as soon as practicable after such exercise) in cash or by
tendering shares of Common Stock held by the participant for the requisite
period necessary to avoid a charge to the Company's earnings for financial
reporting purposes, as determined by the Committee in its discretion, with a
fair market value equal to the exercise price or by authorizing a third party
to sell a portion of the shares acquired upon exercise and remit to the Company
a sufficient portion of the sale proceeds to pay the exercise price and any tax
withholding resulting from such exercise.
The maximum number of shares for which options (ISOs and NQSOs) and SARS
may be granted to any individual during any calendar year is 100,000 shares
(150,000 for the calendar year in which an individual first becomes an
employee), subject to anti-dilution and similar provisions.
Restricted Stock
Restricted stock awards may be made to participants under the 2000 Plan as
an incentive for the performance of future services that will contribute
materially to the successful operation of the Company. The Company may award
restricted stock either alone, in addition to, or in tandem with other awards
granted under the 2000 Plan and/or cash payments made outside of the 2000 Plan.
A restricted stock award under the 2000 Plan will be an award of Common
Stock issued with such restrictions as the Committee, in its sole discretion,
may impose. These restrictions may include, without limitation, a restriction
on the right to sell, transfer, pledge or assign the Common Stock, to vote such
Common Stock and/or to receive cash dividends with respect to the Common Stock.
The restrictions may lapse separately or in combination and at such time or
times as the Committee may determine appropriate.
In addition to determining the applicable restrictions on restricted
stock, the Committee may also in its discretion determine the purchase price,
if any, to be paid for such restricted stock, the length of the time during
which the restrictions will apply, and whether dividends and other
distributions on the restricted stock will be paid currently to the participant
or paid to the Company for the account of the participant.
A participant receiving an award of restricted stock under the 2000 Plan
must accept the award within 60 days, or such shorter period as the Committee
may specify, after the date of the award, by executing an award agreement and
paying the purchase price, if any, for the restricted stock. Upon termination
of employment of a participant with the Company prior to the lapse of
restrictions, all shares of restricted stock then held by the participant will
be forfeited, unless otherwise provided in the award agreement or determined by
the Committee.
Except as otherwise provided in the 2000 Plan, no shares of restricted
stock received by a participant may be sold, exchanged, transferred, pledged,
or otherwise disposed of during the restriction period. The Committee in its
discretion may waive applicable restrictions in cases of special circumstances.
In its discretion, the Committee may also waive any remaining restrictions on
restricted stock upon hardship or other special circumstances of a participant
whose employment with the Company is involuntarily terminated.
Unless otherwise provided, a participant receiving an award of restricted
stock will have all the rights of a holder of the Common Stock with respect to
such restricted stock, including the right to vote the shares to the extent, if
any, such
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shares possess voting rights and the right to receive any dividends thereon.
The Committee may require, however, that any dividends be deferred
automatically and reinvested in additional restricted stock or may require that
dividends and other distributions on restricted stock be paid to the Company
for the account of the participant. If all of the restrictions applicable to
restricted stock expire without a forfeiture of the restricted stock,
unrestricted certificates for such shares will be delivered to the participant.
To better ensure that award payments actually reflect performance of the
Company and the service of the participant, the Committee in its discretion may
provide for a tandem performance-based or other award designed to guarantee a
minimum value, payable in cash or Common Stock, to the recipient of a
restricted stock award, subject to such performance, future service, deferral
and other terms and conditions as may be specified by the Committee.
Stock Awards
The Company may grant an award of Common Stock under the 2000 Plan in
payment of compensation that has been earned or as compensation to be earned,
including without limitation, compensation awarded concurrently with or prior
to the grant of the stock award. In determining the value of the stock award,
the shares of Common Stock subject to such award will be valued at not less
than 100% of the fair market value of such shares of Common Stock on the award
date, regardless of whether such shares of Common Stock are then issued or
transferred to the participant and whether or not such shares of Common Stock
are subject to restrictions that affect their value.
Shares of Common Stock subject to a stock award may be issued to the
participant at the time the award is granted, or at any time subsequent
thereto, or in installments from time to time, as determined by the Committee.
To the extent the shares of Common Stock subject to a stock award are not
issued to the participant at the time the award is granted, dividend
equivalents may be issued to the participant as determined by the Committee. In
the Committee's discretion, any issuance payable in shares of Common Stock
under a Common Stock award may be paid in cash on the date delivery of shares
would otherwise have been made.
A Common Stock award will be subject to such terms and conditions,
including without limitation, restrictions on the sale or other disposition of
the Common Stock award or the shares of Common Stock issued pursuant thereto,
as determined by the Committee. Upon issuance of shares to a participant
pursuant to a Common Stock award, the participant will become a holder of the
Common Stock fully entitled to receive dividends, to vote to the extent, if
any, such shares possess voting rights and to exercise all of the rights of a
shareholder, except to the extent otherwise provided in the stock award.
Performance Shares
Awards of performance shares may be made to participants under the 2000
Plan as an incentive for the performance of future services that will
contribute materially to the successful operation of the Company. Awards of
performance shares may be made either alone, in addition to, or in tandem with
other awards granted under the 2000 Plan and/or cash payments made outside of
the 2000 Plan.
The Committee in its sole discretion may determine the participants to
whom awards of performance shares will be made, the performance period, and/or
the performance objectives applicable to such awards, the form of settlement of
a performance share, and any other terms and conditions of such awards.
Performance periods may overlap, and participants may participate
simultaneously with respect to performance shares for which different
performance periods are prescribed.
The performance objectives may vary from participant to participant and
between awards and will be based upon such performance criteria or combination
of factors as the Committee may deem appropriate. For example, such performance
criteria may include minimum earnings per share or return on equity. The
Committee is empowered to revise such performance objectives during the
applicable performance period if significant events occur that the Committee
expects to have a substantial effect on the applicable performance objectives
during such period. The Committee may also provide for the proration of
performance shares if a participant terminates service with the Company during
a performance period because of special circumstances in which the Committee,
in its discretion, finds that a waiver is appropriate. If a participant
terminates service with the Company during a performance period for any other
reason, then such participant will not be entitled to any payment with respect
to that performance period, unless otherwise determined by the Committee.
The Committee is also authorized to approve requests by participants to
defer payment of performance shares on terms and conditions approved by the
Committee and set forth in an award agreement entered into in advance of the
time of receipt or constructive receipt of payment by the participant.
No more than 100,000 performance shares may be earned by any individual in
any calendar year.
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Other Stock-Based Awards
The 2000 Plan also authorizes the grant of other awards that are valued in
whole or in part by reference to, or otherwise based on, Common Stock. These
other stock-based awards will include without limitation convertible preferred
stock, convertible debentures, exchangeable securities, phantom stock and
stock-award options valued by reference to book value or performance. Other
stock-based awards may be granted either alone or in addition to or in tandem
with other awards granted under the 2000 Plan and/or cash awards made outside
of the 2000 Plan.
The Committee in its sole discretion is empowered to determine the
participants eligible to receive other stock-based awards, the time or times at
which such awards may be made, the number of shares of Common Stock subject to
such awards and all other terms and conditions of such awards. The provisions
of other stock-based awards need not be the same with respect to each
recipient.
Shares of Common Stock subject to other stock-based awards may not be
sold, assigned, transferred, pledged, or otherwise encumbered prior to the date
on which the shares are issued or, if later, the date on which any applicable
restriction, performance, or deferral period lapses. Interest or dividend
equivalents may be payable with respect to other stock-based awards in the
discretion of the Committee. The Committee may also determine whether any other
stock-based award will be subject to vesting or forfeiture provisions and the
effects of termination of employment upon such awards.
No more than 100,000 shares of Common Stock may be earned by any
individual in any calendar year.
Amendment and Termination
The 2000 Plan will continue in effect until terminated by the Company as
provided in the 2000 Plan. Notwithstanding the perpetual nature of the 2000
Plan, ISOs may only be granted under the 2000 Plan until ten years after the
date it was adopted by the Board.
Upon the recommendation of the Committee, or otherwise, the Board may
amend the 2000 Plan. To the extent required by Section 422 of the Code and/or
the rules of the exchange upon which the Common Stock is traded or other
applicable law, no amendment to the 2000 Plan may be made without approval by
the Company's stockholders that would make certain changes, including altering
the group of persons eligible to participate in the 2000 Plan, increasing the
maximum number of shares of Common Stock available for awards under the 2000
Plan (except as otherwise provided in the 2000 Plan), extending the period
during which ISOs may be granted under the 2000 Plan, limiting or restricting
the powers of the Committee in administering the 2000 Plan, changing the
definition of participants eligible for ISOs or increasing the limit or value
of shares of Common Stock for which eligible participants may be granted ISOs
under the 2000 Plan, materially increasing the benefits accruing to
participants under the 2000 Plan, or changing the amendment provisions of the
2000 Plan.
Notwithstanding the foregoing, no amendment to or discontinuation of the
2000 Plan or any provision thereof may adversely affect any award previously
granted to a participant under the 2000 Plan without the written consent of
such participant. The Committee is empowered to determine whether an amendment
or discontinuation adversely affects any existing award. Notwithstanding the
foregoing, the Committee retains the power to (a) cancel any award if the
participant is terminated for cause as determined by the Committee, (b) provide
for the forfeiture of shares of Common Stock or other gain under an award as
determined by the Committee for competing against the Company and (c) convert
any outstanding ISO to an NQSO.
New Plan Benefits
No determination has been made with respect to any awards that may be made
under the 2000 Plan in the future. Future awards will be determined in
accordance with the terms of the 2000 Plan. Consequently, it is not possible to
determine the benefits or amounts that will be received by or allocated to any
executive officers or employees of the Company or other persons pursuant to the
2000 Plan in the future. Historically, however, the Company has granted
nonqualified stock options under its Nonqualified Stock Option Plan principally
to Robert, Bryan and Mark Speizman, all of whom are executive officers of the
Company.
Resale Restrictions
Participants under the 2000 Plan may be restricted under certain
circumstances in their ability to resell shares of Common Stock purchased or
awarded under the 2000 Plan. Resale restrictions may be imposed by virtue of
the provisions of the 2000 Plan and the applicable award agreement and/or by
application of the federal and state securities laws.
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Tax Effects of 2000 Plan
The following discussion of the federal income tax consequences of awards
granted under the 2000 Plan is intended only as a summary of the present
federal income tax treatment of stock options (ISOs and NQSOs), SARs and other
Common Stock awards under the 2000 Plan. The federal income tax laws pertaining
to the 2000 Plan are highly technical and such laws are subject to change at
any time. Some variations on the federal income tax effects of 2000 Plan
participation described below may occur with respect to participation by
persons subject to Section 16(b) of the Exchange Act.
Incentive Stock Options
Although the Company has obtained neither a letter ruling from the
Internal Revenue Service nor an opinion of counsel stating that the ISO
provisions of the 2000 Plan constitute an incentive stock option plan under the
Code, it is expected that the options granted under the ISO provisions of the
2000 Plan will qualify as ISOs for federal income tax purposes.
In general, no taxable income will be realized by an optionee, and no
federal income tax deduction will be allowed to the Company, upon the grant or
exercise of an ISO. The federal income tax consequences of a disposition of
Common Stock received pursuant to the exercise of an ISO will depend upon
whether the optionee has held the shares for the requisite holding period. If
the optionee disposes of such shares after the later to occur of (1) two years
from the date of the grant of the ISO or (2) one year after the date of the
transfer of the shares to him (the "Holding Period"), then the optionee will be
taxed according to the rules of sales and exchanges generally. The amount
subject to tax will be the difference between the amount realized and the
optionee's cost basis in the shares of Common Stock, which difference will be a
capital gain if the shares are held as a capital asset. In such event, the
Company will not be entitled to a tax deduction by reason of the disposition.
For purposes of this discussion, "disposition" means a lifetime transfer of
legal title, such as by sale, exchange, or gift, but does not include a
transfer that is triggered by death, such as one by bequest or inheritance or
one made by a decedent to his estate.
The Holding Period will not apply to an ISO that is exercised after the
optionee's death by his estate or by a person who acquired the right to
exercise it by bequest or inheritance or otherwise by reason of the optionee's
death. The Holding Period will apply if the optionee dies after he exercises
his ISO. In that case, his estate, or any other person holding the shares
acquired pursuant to the ISO, must either hold the shares for the applicable
Holding Period or suffer the tax consequences discussed below for a
"disqualifying disposition."
A "disqualifying disposition" takes place if the optionee makes a
disposition of the shares of Common Stock acquired through the exercise of an
ISO before satisfying the Holding Period. If a "disqualifying disposition"
occurs, the optionee must include as ordinary income the gain realized on that
disposition to the extent of the lesser of (1) the fair market value of the
Common Stock on the date of exercise of the ISO minus the option price or (2)
the amount realized on the disposition minus the option price. Upon the
occurrence of a "disqualifying disposition," the Company will be entitled to
deduct, as compensation paid, the amount so included as ordinary income by the
optionee.
As described above, an optionee who exercises an option may be allowed to
pay for his shares with cash or with shares of Common Stock, including shares
acquired in a prior ISO exercise. Generally, such payment would not give rise
to recognition by the optionee of a gain or loss. If, however, an optionee
exercises an option and pays for the shares upon exercise with shares that the
optionee acquired in a prior ISO exercise but has not held for the requisite
Holding Period, the optionee will be taxed on the disposition of the shares
acquired in the prior ISO exercise as if a "disqualifying disposition" of those
shares had occurred. In addition, if an optionee exercises an ISO by way of
"cashless exercise" as described above, the disposition of shares to pay the
exercise price will constitute a "disqualifying disposition" of those shares.
In order for an ISO granted under the 2000 Plan to be governed by the
general rules pertaining to ISOs, the optionee must be an employee of the
Company for the entire time from the date the ISO is granted until three months
before its exercise (twelve months for an optionee who is disabled). These
employment requirements do not apply if the optionee dies before exercising an
ISO, but in such circumstances the employment requirement must have been met by
the employee at his death.
The federal alternative minimum tax consequences of the exercise of an ISO
under the 2000 Plan may differ from the federal income tax consequences of such
exercise. The alternative minimum tax consequences of the disposition of shares
acquired upon the exercise of an ISO may also differ from the regular income
tax consequences of such disposition. The difference between the option price
and the fair market value of the shares upon exercise will be a preference item
subject to the federal alternative minimum tax. For purposes of the individual
alternative minimum tax, the income tax rules governing the transfer of
property in connection with the performance of services apply, not the regular
income tax rules applicable only to ISOs. For example, if an optionee acquires
shares pursuant to the exercise of an ISO under the 2000 Plan and
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disposes of the shares in the same taxable year, tax treatment under the
regular income tax and the alternative minimum tax will be the same. If,
however, the shares are disposed of in a disqualifying disposition in a later
taxable year, the difference between the option price and the fair market value
of the shares will be included in alternative minimum taxable income in the
year of exercise and in regular taxable income, but not in alternative taxable
income, in the year of the disposition. Similarly, if an optionee acquires
shares pursuant to the exercise of an ISO under the 2000 Plan and disposes of
the shares after the Holding Period is satisfied, the difference between the
option price and the fair market value of the Common Stock at the time of
exercise will be included in alternative minimum taxable income, but not in
regular taxable income, in the year of exercise, and for alternative minimum
tax purposes the cost basis of the shares will be the sum of the option price
and the amount of income included in alternative minimum taxable income in the
year of exercise.
Nonqualified Stock Options
Holders of NQSOs will not be entitled to the special tax treatment
afforded to ISOs. Under the Code, an optionee granted an NQSO generally will
realize no taxable income upon receipt of the NQSO, but instead will realize
ordinary taxable income equal to the excess of the fair market value of the
Common Stock acquired at the time of the exercise of the NQSO over the option
price paid, unless at the time of exercise the Common Stock remains subject to
a "substantial risk of forfeiture" as defined in Section 83 of the Code.
Whether an optionee who exercises an NQSO under the 2000 Plan will acquire the
Common Stock subject to such risk will depend upon the terms of the NQSO award
as determined by the Committee. For a complete discussion of the income tax
treatment when a participant acquires Common Stock subject to a "substantial
risk of forfeiture," see "Restricted Stock" below. The Company is required for
federal income tax purposes to withhold tax on the amount of income realized by
the optionee in the transaction. The Company will be entitled to a deduction
for federal income tax purposes in the year the optionee must report the income
in an amount equal to the ordinary income realized by the optionee as a result
of exercise of his NQSO.
An optionee's tax basis in shares acquired upon the exercise of an NQSO
will be the fair market value of such shares used to determine the amount of
ordinary taxable income reported by the optionee with respect to the exercise
of the NQSO. Upon any sale of such shares of Common Stock, the optionee's gain
or loss will therefore equal the difference between the sale price and such tax
basis. Any such gain or loss will be capital gain or loss. In general, when an
NQSO is exercised by the exchange of previously acquired Common Stock, the
optionee will receive a tax-free exchange and basis carryover for old shares
for an equivalent number of new shares. The basis for any additional shares
will equal the sum of the amount included in gross income by reason of the
exercise of the NQSO, plus any amount of cash paid by the optionee upon the
exercise of the NQSO.
SARs
The grant of an SAR to a participant under the 2000 Plan will not require
recognition of taxable income. Upon the exercise of an SAR, however, payments
received by the participant will be included in that participant's income as
compensation in that year. If payment is made in cash, that amount of cash must
be recognized as income. If the SAR is paid in Common Stock, income will be
recognized in the amount of the Common Stock's fair market value. The Company
will be entitled to a deduction for compensation in an amount equal to the
income realized by the participant, to be recognized in its taxable year in
which the participant's taxable year of income inclusion ends. Upon the sale of
any Common Stock acquired by the exercise of SARs, the participant will realize
gain or loss equal to the difference between the amount realized on the sale
and the participant's basis in such Common Stock.
Restricted Stock
A recipient of restricted stock, or any other stock award under the 2000
Plan that is subject to a "substantial risk of forfeiture," generally will be
subject to federal income tax at ordinary income rates on the excess of the
fair market value of the restricted stock or other stock award, at such time
that the Common Stock is no longer subject to forfeiture and restrictions on
transfer for purposes of Section 83 of the Code ("restrictions"), over the
purchase price, if any, of such restricted stock or other stock award. However,
a recipient who so elects under Code Section 83(b) within 30 days of the date
of transfer of the Common Stock will have ordinary taxable income on the date
of transfer of the shares equal to the excess of the fair market value of such
shares on the transfer date, determined without regard to the restrictions,
over the purchase price, if any, of such restricted stock or other stock award.
No additional ordinary taxable income will then be recognized when the
restrictions expire, although any gain on the disposition of the Common Stock
will be subject to tax as discussed below. If the shares subject to such
election are forfeited, the recipient will only be entitled to a deduction,
refund, or loss for tax purposes equal to the purchase price, if any, of the
forfeited shares, regardless of whether the recipient made an election Section
83(b) of the Code.
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Upon the sale of any Common Stock following the expiration of the
forfeiture period for restricted stock or other stock award or upon the sale of
Common Stock for which a timely election under Section 83(b) of the Code was
made, the participant will realize capital gain or loss equal to the difference
between the amount realized on the sale and the participant's basis in such
Common Stock. The holding period to determine whether the participant has
long-term or short-term capital gain will generally begin when the restrictions
expire, and the tax basis for such shares will generally be based on the fair
market value of such shares on such date. However, if the participant timely
elects to be taxed as of the date of transfer of the shares, the holding period
will commence on such date, and the tax basis will be equal to the fair market
value of the shares on such date, determined without regard to the
restrictions.
The Company will be entitled to a deduction for federal income tax
purposes in the year the participant is taxable in an amount equal to the
ordinary income realized by the participant as a result of the restricted stock
or other stock award. The Equity Compensation Plan requires any participant
exercising an award to give the Committee prompt written notice of any election
made by the participant under Section 83(b) of the Code.
Stock Awards
Unrestricted awards of Common Stock will be taxable to the participant and
deductible by the Company at the time of the award in an amount equal to the
fair market value of the shares at that time. If the shares are subject to
forfeitability and nontransferability restrictions, the participant may either
elect immediate taxability in an amount equal to the fair market value of the
shares at the time of the award, less any payment therefor, or delay the
recognition of taxable income in an amount equal to the fair market value of
the shares, less the purchase price, if any, when the restrictions lapse. See
"Restricted Stock" above. Upon a sale of shares received as a stock award, the
participant will realize capital gain or loss in an amount equal to the
difference between the amount realized and the participant's tax basis, which
is generally the amount of ordinary income previously recognized plus any cash
payment. The Company will be entitled to a deduction for federal income tax
purposes in the year the participant is taxable in an amount equal to the
ordinary income realized by the participant as a result of the stock award.
Performance Shares
A participant granted an award of performance shares will not realize
income at the time of grant but generally will realize ordinary income when the
award is settled, either at the conclusion of the performance period or at the
end of the deferral period elected by a participant. The amount of ordinary
income realized will be equal to the sum of the cash received, if any, plus the
then fair market value of the shares of Common Stock of the Company received.
The Company will be entitled to a deduction for federal income tax purposes in
the year the participant is taxable in an amount equal to the ordinary income
realized by the participant as a result of the performance share award.
Compliance with Section 162(m) of the Internal Revenue Code
Section 162(m) of the Code prohibits a deduction by an employer for
certain compensation in excess of $1 million per year paid by a publicly traded
corporation to its chief executive officer or any of the four most highly
compensated executive officers other than the chief executive officer.
Compensation realized with respect to Stock Options and SARs, as described
above under "Certain Federal Income Tax Consequences", will be excluded from
this deduction limit if it satisfies certain requirements, including a
requirement that the 2000 Plan be approved by the Company's stockholders. In
addition, performance shares and other stock-based awards may be structured by
the Committee to be excluded from this deduction limit as performance-based
compensation in accordance with special terms of the 2000 Plan.
Payments Upon Change in Control
The Committee has the authority under 2000 Plan to provide for the
acceleration of payment of awards and related shares of Common Stock in the
event of a change in control of the Company. Such acceleration of payment may
cause part or all of the consideration involved to be treated as a "parachute
payment" under the Code, which may subject the recipient thereof to a 20%
excise tax and which may not be deductible by the Company for federal income
tax purposes.
The Board recommends a vote FOR the proposal to approve the adoption of
the 2000 Plan.
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PROPOSAL 3:
APPROVAL OF INCREASE IN SHARES AUTHORIZED FOR
ISSUANCE UNDER SPEIZMAN INDUSTRIES, INC.
STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
General
Subject to the approval of stockholders, on October 13, 2000, the Board
amended the Company's Stock Option Plan for Non-Employee Directors (the
"Directors Plan") to increase the number of shares of Common Stock subject to
such plan by 20,000 shares, thus increasing the authorized shares of Common
Stock available for issuance under the Directors Plan from 15,000 to 35,000
shares. The Company has utilized stock incentives as a principal part of its
director compensation program, and the Board believes stock options play an
important role in attracting and retaining the services of non-employee
directors and in encouraging such directors to have a greater personal
financial investment in the Company and to more closely align their interests
with stockholders.
Originally 15,000 shares of Common Stock were issuable pursuant to the
Directors Plan. Following the automatic stock option grants thereunder in
December 1999, no shares of Common Stock remained available for future grants.
Therefore, the Board believes that the amendment to the Directors Plan is
necessary to assure that an adequate number of shares of Common Stock will be
available for future grants in order to continue to attract and retain services
of outside non-employee directors and encourage them to have a personal
financial interest in the Company.
Description of Directors Plan
The following is a summary of the Directors Plan, which is incorporated by
reference into this summary description. This summary is qualified entirely by
reference to the Directors Plan. Any capitalized terms used in this summary
description that are not defined herein have the meanings assigned to them in
the Directors Plan.
On December 1st of each year, each Non-Employee Director then in office
will automatically be granted an option to purchase 1,000 shares of Common
Stock (an "Annual Award"). Under the Directors Plan, a director is a
Non-Employee Director if he is not a full-time or part-time employee of the
Company or its parent or subsidiary corporations. The per share exercise price
of such options will be the fair market value of the Common Stock, as defined
in the Directors Plan, on the date of grant. Presently there are four nominees
who will be Non-Employee Directors, Mr. Sklut, Mr. Gorelick, Mr. Lea and Mr.
Brady.
Notwithstanding the foregoing, any Non-Employee Director may elect (1) to
decline an Annual Award or (2) to revoke a previous election to decline an
Annual Award, in either event, at any time prior to the date such Annual Award
would otherwise be made. A Non-Employee Director who elects to decline an
Annual Award will receive no compensation in lieu thereof. In the event that
the number of shares available for grants under the Plan is insufficient to
grant the number of options determined as provided above to each Non-Employee
Director, options for the remaining number of shares of Common Stock available
for grant under the Plan will be granted in equal amounts to each Non-Employee
Director.
Options granted pursuant to Annual Awards under the Directors Plan become
exercisable in cumulative increments of 50% and 100% beginning on the first and
second anniversaries, respectively, of the date of grant, if, on such dates,
the Non-Employee Director remains a Non-Employee Director. In the event a
Non-Employee Director ceases to be a Non-Employee Director, any of his then
outstanding options that have not become exercisable will terminate
immediately. In addition, in the event of a merger or consolidation or other
capital reorganization as described in such plan, or the sale by the Company of
all or substantially all its assets, any outstanding option that was granted
more than six months prior to the date of the Company's adoption of a plan or
definitive agreement in respect of such merger, consolidation, reorganization
or asset sale, as the case may be, but has not yet become exercisable, shall
become exercisable in full as of such date. Upon the effectiveness of such
merger, consolidation, reorganization or asset sale, as the case may be, any
then outstanding options shall terminate.
An option granted pursuant to an Annual Award will not be exercisable
unless: (a) the option has become exercisable as provided above; (b) the person
exercising the option has been, at all times during the period beginning with
the date of grant of the option and ending on the date of such exercise, a
Non-Employee Director, except that (i) in the event a Non-Employee Director
ceases to be a Non-Employee Director for any reason, he may exercise any of his
options that are exercisable on the date he ceases to be a Non-Employee
Director at any time within one year after such date, subject to earlier
termination of any such option, following which period any unexercised option
will terminate, or (ii) if an optionee shall die holding an option that is
exercisable on the date of his death, his executors, administrators, heirs or
distributees, as the case may be, may exercise such option at any time within
six months after the date of such death, even if such six-month period
14
<PAGE>
extends beyond the one-year period described above, but subject to any other
earlier termination of such option, following which period any unexercised
option will terminate; (c) payment in full is made for the shares of Common
Stock being acquired thereunder at the time of exercise in United States
dollars by cash or check; and (d) payment in full is made for any tax
withholding obligation.
Each option granted under the Non-Employee Directors' Plan shall terminate
on the tenth anniversary of the date of grant, subject to earlier termination
as provided above.
The following table sets forth certain information concerning options that
will be granted automatically under the Directors Plan in fiscal 2001, assuming
that the amendment described herein is approved by the stockholders of the
Company at the Annual Meeting and further assuming that the nominees for
election as directors at the Annual Meeting are so elected and serve as
directors of the Company on December 1, 2000. Based on such assumptions, Mr.
Sklut, Mr. Gorelick, Mr. Lea and Mr. Brady, who would be the only Non-Employee
Directors, would each receive, on December 1, 2000, an option to purchase 1,000
shares of Common Stock under the Directors Plan. No executive officers or other
employees of the Company will receive any options under the Directors Plan.
NEW PLAN BENEFITS
Speizman Industries, Inc.
Stock Option Plan for Non-Employee Directors
Name and Position Dollar Value ($)(1) Number of Options
----------------------------- --------------------- ------------------
Non-Employee Director Group 4,000
---------
(1) The dollar value of such options is not presently determinable. The
exercise price of such options will be the fair market value of the Common
Stock, as defined in the Directors Plan, on December 1, 2000, the date of
grant of such options.
In addition, Mr. Berkowitz, Mr. Sklut, Mr. Gorelick and Mr. Lea, the only
Non-Employee Directors as of December 1, 1999, each received an option to
purchase 750 shares of Common Stock on such date, having an exercise price of
$4.875 per share (the last sale price as reported by The Nasdaq Stock Market on
such date). As of October 11, 2000, the exercise price of these options
exceeded the fair market value of the Common Stock subject to such options of
$2.19 per share (the last sale price of the Common Stock as reported by The
Nasdaq Stock Market on such date). No executive officers or other employees of
the Company received any options under the Directors Plan in fiscal 2000.
Tax Effects of Directors Plan
All options granted under the Directors Plan are nonqualified options not
entitled to special tax treatment under Section 422 of the Code. The following
discussion of the federal income tax consequences of the Directors Plan is
intended only as a summary of the federal income tax treatment of nonqualified
stock options under the Directors Plan as of the date hereof. The federal
income tax laws pertaining to the Directors Plan are highly technical, and such
laws are subject to change at any time. Some variations on the federal income
tax effects of Directors Plan participation described below may occur with
respect to participation by persons subject to Section 16(b) of the Exchange
Act. The Directors Plan is not subject to the provisions of the Employee
Retirement Income Security Act of 1974, as amended.
Under the Code, generally an optionee granted an nonqualified stock option
realizes no taxable income upon grant of the option, but is deemed to have
realized ordinary taxable income equal to the excess of the fair market value
of the Common Stock acquired at the time of the exercise of the option over the
option price paid. The income realized by the option holder will be subject to
income and other employee withholding taxes.
An optionee's tax basis for determination of gain or loss upon the
subsequent disposition of the shares acquired upon the exercise of a
nonqualified stock option will be the amount paid for such shares plus any
ordinary income recognized as a result of the exercise of such option. Upon
disposition of any shares acquired pursuant to the exercise of a nonqualified
stock option, the difference between the sale price and the option holder's
basis in the shares will be treated as a capital gain or loss.
In general, there will be no federal income tax deduction allowed to the
Company upon the grant or termination of a nonqualified stock option or a sale
or disposition of the shares acquired upon the exercise of a nonqualified stock
option. However, upon the exercise of a nonqualified stock option, the Company
will be entitled to a deduction for federal income
15
<PAGE>
tax purposes equal to the amount of ordinary income that an option holder
realizes as a result of the exercise, provided that the deduction is not
otherwise disallowed under the Code.
The foregoing is only a summary of certain effects of federal income
taxation upon the option holder and the Company with respect to the grant and
exercise of options under the Directors Plan, does not purport to be complete
and does not discuss the tax consequences of the option holder's death or the
income tax law of any local, state or foreign jurisdiction in which any option
holder may reside.
The Board recommends a vote FOR the proposal to approve the amendment to
the Directors Plan.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Common Stock as of the Record Date (or such
different date as is indicated below) by (i) each director of the Company and
each nominee for election as a director, (ii) each person that is known by the
Company to beneficially own more than 5% of the outstanding shares of Common
Stock, (iii) each executive officer named in the Summary Compensation Table and
(iv) all directors and executive officers of the Company as a group. The
stockholders named below have sole voting and investment power with respect to
the shares of Common Stock beneficially owned by them, except as expressly
disclosed to the contrary.
<TABLE>
<CAPTION>
Beneficial Ownership(1)
-----------------------------------------
Shares Beneficially Percent of
Name Owned Shares Outstanding
---------------------------------------------------------------- --------------------- -------------------
<S> <C> <C>
Robert S. Speizman
701 Griffith Road, Charlotte, NC 28217 .................... 832,260(2) 24.1%
C. Alexander Davis .......................................... 15,000(3) *
Bryan D. Speizman ........................................... 147,300(4) 4.4
Mark A. Speizman ............................................ 161,614(5) 4.8
Steven P. Berkowitz ......................................... 52,575(6) 1.6
William Gorelick ............................................ 29,375(7) *
Scott C. Lea ................................................ 9,375(8) *
Josef Sklut ................................................. 20,975(9) *
Jon P. Brady ................................................ -- --
Dimensional Fund Advisors, Inc.
1299 Ocean Avenue, 11th Floor, Santa Monica, CA 90401 ..... 198,600(10) 6.1
Heartland Advisors, Inc.
790 N. Milwaukee St., Milwaukee, WI 53202 ................. 300,000(11) 9.2
All executive officers and directors as a group (10 persons). 1,268,474 34.4
</TABLE>
---------
*Less than 1%
(1) This table is based upon information supplied by officers, directors and
principal stockholders of the Company and by Schedules 13G filed with the
Securities and Exchange Commission (the "SEC"). Unless otherwise indicated
in the footnotes to this table, each of the stockholders named in this
table has sole voting and investment power with respect to the shares
indicated as beneficially owned. Applicable percentages are based on
3,252,428 shares of Common Stock outstanding, adjusted as required by
rules promulgated by the SEC.
(2) Includes an aggregate 194,163 shares of Common Stock subject to presently
exercisable options.
(3) Includes 5,000 shares of Common Stock subject to presently exercisable
options. Mr. Davis resigned from the Company in July 2000.
(4) Includes an aggregate of 104,750 shares of Common Stock subject to options
that are presently exercisable or become exercisable in December 2000.
(5) Includes an aggregate of 103,750 shares of Common Stock subject to options
that are presently exercisable or become exercisable in December 2000.
(6) Includes 2,000 shares of Common Stock held by the estate of Mr. Berkowitz's
spouse and 500 shares of Common Stock held by Mr. Berkowitz as custodian
for one of his children, as to all of which he disclaims beneficial
ownership, and an aggregate of 4,375 shares of Common Stock subject to
options that are presently exercisable or become exercisable in December
2000.
16
<PAGE>
(7) Includes an aggregate of 4,375 shares of Common Stock subject to options
that are presently exercisable or become exercisable in December 2000.
(8) Represents shares of Common Stock owned by a revocable trust of which Mr.
Lea and certain of his family members are beneficiaries and an aggregate
of 4,375 shares of Common Stock subject to options that are presently
exercisable or become exercisable in December 2000.
(9) Includes 600 shares of Common Stock owned of record by Mr. Sklut's spouse,
as to which he disclaims beneficial ownership, and an aggregate 10,375
shares of Common Stock subject to options that are presently exercisable
or become exercisable in December 2000.
(10) Dimensional Fund Advisors Inc. ("Dimensional"), an investment advisor
registered under Section 203 of the Investment Advisors Act of 1940,
furnishes investment advice to four investment companies registered under
the Investment Company Act of 1940, and serves as investment manager to
certain other commingled group trusts and separate accounts. These
investment companies, trusts and accounts are the "Funds." In its role as
investment adviser or manager, Dimensional possesses voting and/or
investment power over the securities of the Issuer described in this
schedule that are owned by the Funds. All securities reported are owned by
the Funds. Dimensional disclaims beneficial ownership of such securities.
(11) These shares of Common Stock are held in investment advisory accounts of
Heartland Advisors, Inc. As a result, various persons have the right to
receive or the power to direct the receipt of dividends from, or the
proceeds from the sale of, the securities. The interests of one such
account, Heartland Value Fund, a series of Heartland Group, Inc., a
registered investment company, relates to more than 5% of the Common
Stock.
17
<PAGE>
EXECUTIVE COMPENSATION AND RELATED INFORMATION
Summary Compensation Table
The following table sets forth all compensation for fiscal 1998, 1999 and
2000 earned by the Company's President and other executive officers whose
salary and bonus exceeded $100,000 in fiscal 2000 (collectively, the "Named
Executive Officers"). In accordance with the rules of the SEC, the compensation
set forth in the table below does not include medical, group life or other
benefits which are available to all of the Company's salaried employees, and
perquisites and other benefits, securities or property which do not exceed the
lesser of $50,000 or 10% of the person's salary and bonus shown in the table.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
-------------
Annual
Compensation
----------------------------
Securities
Fiscal Underlying All Other
Name and Principal Position Year Salary Bonus Options Compensation(1)
------------------------------------------------ -------- ----------- ---------------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
Robert S. Speizman,
President ................................... 2000 $396,900 $ -- -- $42,733
1999 396,900 -- -- 42,614
1998 367,500 358,428(2) 20,000 39,628
C. Alexander Davis,
President, Wink Davis Equipment Co., Inc.(3). 2000 232,933 -- -- 3,801
1999 237,500 -- -- 5,962
1998 217,708 -- 5,000 5,317
Bryan D. Speizman,
Senior Vice President, Non-Hosiery .......... 2000 160,000 5,789(4) 15,000 2,789
1999 160,000 204,452(4) -- 2,430
1998 110,000 480,217(5) 25,000 5,277
Mark A. Speizman,
Senior Vice President, Hosiery .............. 2000 160,000 -- 15,000 3,200
1999 160,000 84,594(4) -- 1,813
1998 89,538 296,081(5) 25,000 5,587
</TABLE>
---------
(1) Represents for Robert Speizman, the Company's contribution of $4,824,
$5,008 and $5,000 in fiscal 1998, 1999 and 2000, respectively, to the
account of Mr. Speizman under the Company's 401(k) Profit Sharing Plan and
the full amount of premiums paid by the Company for the benefit of Mr.
Speizman of $34,804, $37,606 and $37,733 in fiscal 1998, 1999 and 2000,
respectively, on split dollar life insurance policies. Represents for Mr.
Davis, premiums paid by the Company of $1,212 in each of fiscal 1998 and
1999 on term life insurance for the benefit of Mr. Davis and the Company's
contribution of $4,105 in fiscal 1998, $4,750 in fiscal 1999 and $3,801 in
fiscal 2000 to the account of Mr. Davis under the Company's 401(k) Profit
Sharing Plan. Represents for Bryan Speizman and Mark Speizman,
contributions by the Company to their accounts under the Company's 401(k)
Profit Sharing Plan.
(2) Represents amounts paid under the Company's Executive Bonus Plan.
(3) Mr. Davis' employment by the Company commenced in August 1997 and he
resigned from the Company in July 2000.
(4) Represents sales commissions relating to machines ordered in fiscal 1998,
but delivered and paid for in fiscal 1999 or fiscal 2000, for which the
resulting sales commission was earned and paid in fiscal 1999 or fiscal
2000.
(5) Represents sales commissions earned and paid in fiscal 1998.
18
<PAGE>
Stock Options
The table below contains information concerning the grant of options to
purchase shares of Common Stock to each of the Named Executive Officers during
fiscal 2000. The percentage of total options granted to employees set forth
below is based on an aggregate of 46,500 shares subject to options granted to
the Company's employees in fiscal 2000.
The potential realizable value is calculated based on the term of the
option at the time of grant. Stock price appreciation of 5% and 10% is assumed
pursuant to rules promulgated by the SEC and does not represent the Company's
prediction of the price performance of its Common Stock. The potential
realizable values at 5% and 10% appreciation are calculated by assuming that
the market value on the date of grant appreciates at the indicated rate for the
entire term of the option and that the option is exercised at the exercise
price and sold on the last day of its term at the appreciated price.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
---------------------------------------------------
Potential Realizable
Percent of Value at
Total Assumed Annual Rates
Number of Options of Stock
Securities Granted To Appreciation for
Underlying Employees Exercise or Option Term(1)
Options in Base Price Expiration ---------------------
Granted(#) Fiscal Year ($/Sh) Date 5%($) 10%($)
------------ ------------- ------------ ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Robert S. Speizman ...... -- -- $ -- -- $ -- $ --
C. Alexander Davis ...... -- -- -- -- -- --
Bryan D. Speizman ....... 15,000 32.3% 5.03 9/14/09 122,900 195,698
Mark A. Speizman ........ 15,000 32.3% 5.03 9/14/09 122,900 195,698
</TABLE>
Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values
The table below sets forth information for each of the Named Executive
Officers with respect to the value of options outstanding as of July 1, 2000.
Option Exercises in Last Fiscal Year and
Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised
Unexercised Options In The-Money Options
at Fiscal Year-End at Fiscal Year-End(1)
--------------------------------- --------------------------
Shares Acquired Value
Name on Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
----------------------- ----------------- -------------- --------------------------------- --------------------------
<S> <C> <C> <C> <C>
Robert S. Speizman . 22,222 $9,444 194,163/0 $7,315/0
C. Alexander Davis . -- -- 5,000/0 0/0
Bryan D. Speizman .. -- -- 97,250/15,000 6,888/0
Mark A. Speizman ... -- -- 96,250/15,000 6,888/0
</TABLE>
---------
(1) The value of in-the-money options at fiscal year-end assumes a fair market
value for the Common Stock of $3.19, the last sale price of the Common
Stock as reported on the Nasdaq National Market on June 30, 2000.
Employment Agreements, Termination of Employment Arrangements and Change in
Control Arrangements
In connection with the acquisition of Wink Davis Equipment Co., Inc.
("Wink Davis") in August 1997, Wink Davis entered into a five-year employment
agreement with Alexander Davis. Pursuant to this employment agreement, Mr.
Davis was employed as President of Wink Davis and received a minimum base
annual salary of $237,500. In addition, pursuant to this employment agreement,
among other things, Wink Davis agreed to pay, during the term of such
agreement, one-half of the premiums on life insurance on the life of Mr. Davis,
and one-half of the premiums on disability insurance for Mr. Davis, both
providing for payments in an amount equal to the aggregate salary that would be
payable to Mr. Davis pursuant to such employment agreement during the remaining
term thereof. Under this employment agreement, if the employment of Mr. Davis
was terminated other than for cause, as defined in such employment agreement,
or upon his death or disability, Wink Davis was obligated to pay Mr. Davis his
aggregate base annual salary for the remainder of the term thereof subject to
offset for cash compensation from other employment. In connection with the
resignation of Mr. Davis from the Company in July 2000, the Company agreed to
pay Mr. Davis $75,000 from August 2000 to August 2001 and $50,000 from August
2001 to August 2002.
19
<PAGE>
In April 2000, the Company entered into an employment offer letter with
John C. Angelella, its Chief Financial Officer. Pursuant to his employment
offer letter, Mr. Angelella's annual compensation was initially set at a base
salary of $175,000 with the right to an annual cash bonus equal to 1% of the
Company's consolidated income before taxes and before executive officer
bonuses, but after non-executive employee bonuses, provided that such income
for the year exceeds 8.33% of the Company's stockholder's equity. In addition,
the Company granted Mr. Angelella an option to purchase 16,500 shares of Common
Stock having an exercise price of $3.56 per share which becomes exercisable in
three equal annual increments beginning on the first anniversary of Mr.
Angelella's employment by the Company. In the event Mr. Angelella's employment
is terminated without cause or in the event of a change in control of the
Company that results in the elimination of his position, he will receive
severance compensation equal to eight months' salary.
The Company has a deferred compensation agreement with Mr. Sklut, which
was activated upon his retirement from the Company in November 1998 and which
is more fully described in the section "Certain Relationships and Related
Transactions."
Other than the agreements described above, the Company currently has no
employment agreement with any executive officer and has no plan or arrangement
with any executive officer which is activated upon his resignation, termination
or retirement upon a change in control in the Company.
Pursuant to the Company's Nonqualified Stock Option Plan, the Stock Option
Committee of the Board of Directors (which administers such plan) may, in its
discretion, and in accordance with the terms of such plan, in the event of a
change in control as defined therein, accelerate the exercisability of, and
authorize cash settlement payments in respect of, outstanding options under
such plan.
Nonqualified Stock Option Plan
The Company adopted its Nonqualified Stock Option Plan (the "Plan") in
September 1995. Under the Plan, 450,000 shares of Common Stock were reserved
for issuance upon the exercise of options granted under the Plan. The Common
Stock subject to an option under the Plan is made available from authorized and
unissued shares of Common Stock. As of the Record Date, the Company had options
outstanding under the Plan to purchase an aggregate of 416,600 shares of Common
Stock.
The Plan provides for the grant of nonqualified stock options and is
administered by the Stock Option Committee. The Stock Option Committee has the
exclusive right to interpret, construe and administer the Plan and to select
the persons eligible to receive options. Subject to the foregoing, any employee
of the Company, as well as any other person, including directors, may
participate in the Plan if the Stock Option Committee determines such
participation is in the best interest of the Company, subject to any
limitations as may be provided by applicable law or the Stock Option Committee.
The Stock Option Committee determines the number of shares of Common Stock
subject to an option granted under the Plan and the form, terms, conditions and
duration of each option. The Stock Option Committee is given broad discretion
under the Plan to make adjustments to options outstanding under the Plan upon
any extraordinary event affecting the Company or its financial condition or
performance, including, for example, a recapitalization or merger transaction
or a change in control or potential change in control of the Company.
The Plan limits to 100,000 the number of shares of Common Stock that are
subject to options that can be granted under the Plan to executive officers of
the Company during a 12-month period.
Bonus Plans
Under the Company's Executive Bonus Plan, originally adopted in 1991,
Robert Speizman, the Company's President, is entitled to receive an annual cash
bonus equal to 10% of the Company's annual consolidated income before taxes,
and before any bonus to which Mr. Speizman is entitled under this plan,
provided that if such annual income of the Company does not exceed 8.33% for
fiscal 2001, and 10.33% for fiscal 2002, of the Company's stockholder's equity
as of the end of the immediately preceding fiscal year, no bonus is paid
thereunder.
In addition, the Company has a bonus plan for Bryan Speizman, Mark
Speizman and John Angelella, the Company's recently hired Chief Financial
Officer. Under this plan, Bryan and Mark Speizman are each entitled to receive
an annual cash bonus equal to 6%, and Mr. Angelella is entitled to receive an
annual cash bonus equal to 1%, of the Company's consolidated income before
taxes and executive officer bonuses, provided that if such annual income of the
Company does not exceed 8.33% for fiscal 2001, and 10.33% for fiscal 2002, of
the Company's stockholder's equity as of the beginning of the fiscal year, no
bonuses will be paid under such plan.
20
<PAGE>
No bonuses were paid under either plan for fiscal 2000.
Report of the Compensation Committee and Stock Option Committee on Executive
Compensation
The Company's compensation program for its executive officers is
administered by the Compensation Committee and the Stock Option Committee of
the Company's Board of Directors. The present members of each of these
committees are Mr. Berkowitz, Mr. Gorelick and Mr. Lea. Mr. Berkowitz is the
Chairman of the Compensation Committee and the Stock Option Committee. None of
these committee members has ever been an officer or employee of the Company.
Mr. Berkowitz is not standing for re-election as a director at the Annual
Meeting.
Compensation Policy
The present compensation policies of the Compensation Committee and the
Stock Option Committee regarding executive officer compensation are designed
principally to (i) motivate the Company's executive officers to improve the
measure of the Company's financial performance selected by the Compensation
Committee, as well as stockholder return on the Common Stock, and (ii)
establish a relationship between executive officer compensation on the one hand
and such Company performance and stockholder return on the other hand. These
two committees, in implementing these policies, provide the Company's executive
officers, in addition to base salaries, short-term and long-term incentive
opportunities, consisting of annual cash bonuses based on the selected measure
of the Company's financial performance and options granted under the Company's
equity-based plans, respectively. The Compensation Committee believes that the
Company's Executive Bonus Plan in which Robert Speizman participates and the
bonus plan in which Bryan and Mark Speizman and John Angelella participate
motivate these executive officers to improve such financial performance and the
Stock Option Committee believes that awards under the Company's equity-based
plans motivate the executive officers to improve the stockholder return on the
Common Stock.
Tax Considerations
The Committee has considered the potential impact of Section 162(m) of the
Code. In 1993, the United States Congress adopted Section 162(m) of the Code,
which provision places limits on the Company's ability to deduct certain
compensation in excess of $1.0 million for any taxable year paid to its
executive officers ("Section 162(m)"). The amounts includible in an executive
officer's compensation upon the exercise of nonqualified stock options is
subject to this limitation. Since the targeted cash compensation of each of the
Named Executive Officers is below the $1.0 million threshold and the Board of
Directors believes that options granted under the Plan satisfy an exception to
the limitation, the Committee believes that Section 162(m) will not reduce the
tax deduction available to the Company for fiscal 2001. The Committee believes
in retaining flexibility to recognize an executive officer's contribution
beyond the deductibility limits if this serves the best interests of the
Company and its stockholders. In fiscal 2000, all of the compensation paid to
the executive officers qualified for deduction pursuant to Section 162(m) of
the Code.
Base Salaries
The Compensation Committee increased, for fiscal 2001, the base annual
salaries of Robert Speizman, Bryan Speizman and Mark Speizman. For fiscal 2000,
none of these executive officers received a salary increase or a cash bonus
under the Company's bonus plans for them. Robert Speizman's salary was
increased from $396,900 to $415,000 and Bryan and Mark Speizman's salaries each
was increased from $160,000 to $200,000.
Annual Incentive Opportunities -- Bonus Plans
The Compensation Committee believes that the compensation of the Company's
executive officers should be significantly influenced by the Company's
financial performance and that the Company's consolidated income before taxes
and before executive officer bonuses is an appropriate measure of such
financial performance for purposes of executive officer incentive compensation
determinations because it most nearly reflects the results of the diverse
responsibilities and efforts of the Company's executive officers. The
Compensation Committee further believes that providing significant
opportunities for incentive compensation based on increases in such income
focuses management's attention on this measure of the Company's financial
performance. The Compensation Committee believes that the executive officer
bonus plans reflect the Company's disappointing year as no bonuses were earned
under either plan.
21
<PAGE>
Long-Term Incentive Opportunities -- Stock Option Plans
To encourage a long-term focus by executive officers, the Company has
historically provided incentives through its Nonqualified Stock Option Plan
which is administered by the Stock Option Committee of the Board of Directors.
The exercise price of the options granted to executive officers to date has
been the fair market value of the Common Stock on the date of grant. As a
result, the value of the options granted depends on stock price appreciation.
The Board of Directors believes that use of such equity-based incentives
reinforces the identification of management with the long-term interests of the
Company's stockholders and motivates management to improve the Company's
performance. In fiscal 2000, the Stock Option Committee granted options to
purchase 15,000 shares of Common Stock each to Bryan Speizman and Mark Speizman
since neither officer received a cash bonus. John Angelella, the Company's
Chief Financial Officer, also received an option to purchase 16,500 shares of
Common Stock in connection with his employment by the Company.
President
The Compensation Committee increased the annual base salary of Mr.
Speizman, President, for fiscal 2001 for the reasons set forth above.
<TABLE>
<CAPTION>
Compensation Committee Stock Option Committee
--------------------------------- ------------------------------
<S> <C>
STEVEN P. BERKOWITZ, CHAIRMAN STEVEN P. BERKOWITZ, CHAIRMAN
WILLIAM GORELICK WILLIAM GORELICK
SCOTT C. LEA SCOTT C. LEA
</TABLE>
Comparative Performance Graph
The graph set forth below compares the cumulative total stockholder return
on the Common Stock for the Company's last five fiscal years with the
cumulative total return of companies listed on the CRSP Total Returns Index for
Nasdaq Stock Market (U.S. and Foreign Companies) ("Nasdaq Market Index") and of
the companies named below, including the Company, with the Standard Industrial
Classification code 508, Wholesale Trade-Machinery, Equipment and Supplies that
were included in the CRSP Total Returns Index for NASDAQ Stocks (U.S. and
Foreign Companies) at any time during the five-year measurement period (the
"Peer Group Index"). The comparison assumes the investment of $100 in the
Common Stock, in the Nasdaq Market Index and in the Peer Group Index on June
30, 1995 and the reinvestment of all dividends (the Company paid no dividends
during the periods shown). The stockholder return of each of the companies in
the Peer Group Index has been weighed according to market capitalization at the
beginning of each measurement period.
22
<PAGE>
Comparison Of Five-Year Cumulative Total Return
Among Speizman Industries, Inc.,
Nasdaq Market Index and Peer Group Index
June 30, 1995 to June 30, 2000
[performance chart appears here]
<TABLE>
<CAPTION>
Index Description 6/30/95 6/28/96 6/27/97 6/26/98 7/2/99 6/30/00
------------------- ------- ------- ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Speizman Industries, Inc. $100 $ 87.8 $104.9 $100.0 $ 70.7 $ 62.2
Nasdaq Market Index 100 127.6 154.6 199.6 292.8 425.5
Peer Group Index 100 106.1 116.6 128.9 105.0 100.8
</TABLE>
NOTE: Since the Company's fiscal year-end is not a trading day, the
preceding trading day was used for purposes of calculating the performance
graph.
The Peer Group Index consists of the following companies: American
Aircarriers Support Incorporated, AVTEAM, Inc., Bio-logic Systems Corp., CTC
Communications Group, CTC Communications Group Inc., China Resources
Development, Inc., Computer Telephone Corp., Conseco Industries, Ltd.,
Consolidated Stainless, Inc., DXP Enterprises, Inc., Dataflex Corp., Ezcony
Interamerica, Inc., Hi-Rise Recycling Systems, Hirsch International Corp., IIC
Industries, Inc., Industrial Holdings Inc., Innovative Valve Tech., Inc.,
Jayark Corporation, Kellstrom Industries, Inc., Lawson Products, Inc., Micro
Bio-Medics, Inc., Micros-to-Mainframes, Inc., Nyer Medical Group, Inc.,
Officeland, Inc., PerfectData Corporation, Quality Systems, Inc., Robec, Inc.,
Speizman Industries, Inc., Strategic Distribution Inc., Tech Data Corporation,
TransNet Corporation, White Cap Industries, Inc. and Willis Lease Finance
Corporation. With regard to the Peer Group Index, the capital stock of the
Company's direct competitors is not publicly traded. As a result, there is no
publicly available information concerning the total stockholder return for such
competitors and they are not included in the Peer Group Index.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933 or the Securities Exchange
Act of 1934 that might incorporate future filings made by the Company under
those statutes, the preceding Report of the Compensation Committee and Stock
Option Committee on Executive Compensation and the Comparative Performance
Graph will not be incorporated by reference into any of those prior filings,
nor will such report or graph be incorporated by reference into any future
filings made by the Company under those statutes.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company leases its headquarters, located in Charlotte, North Carolina,
consisting of 13.2 acres of land, office space of approximately 40,000 square
feet and warehouse space of approximately 182,000 square feet, from Speizman
Limited Liability Company ("SLLC"), a North Carolina limited liability company.
SLLC is owned by Robert Speizman and his spouse and children, including Bryan
and Mark Speizman. The Company began leasing the office space and approximately
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82,000 square feet of warehouse space in October 1997 and began leasing the
remaining 100,000 square feet of warehouse space in December 1999. The Company
refurbished the facility to suit its needs, at its own expense, and has spent a
total of approximately $2,045,000 for leasehold improvements to the facility to
date. The Company moved its headquarters to this facility in April 1999.
Pursuant to the terms of the original lease for the office space and
approximately 82,000 square feet of warehouse space, which began in October
1997 and extended to September 2012, the Company paid SLLC monthly rent of
$55,000. Under this original lease, SLLC was responsible for structural
maintenance of the facility, taxes and insurance and the Company was
responsible for normal operating expenses of the facility.
The Company began to occupy the remaining 100,000 square feet of office
space in December 1999, at which time it began paying SLLC additional monthly
rent of approximately $33,000 under a lease entered into in June 1999. In
December 1999, the Company and SLLC entered into a new lease for the entire
facility, including the 100,000 additional square feet of warehouse space,
which extended to September 2012. Under this lease, the Company agreed to pay
SLLC total monthly rent of approximately $88,000. The Company also agreed to be
responsible for the normal operating expenses and insurance on the facility and
SLLC agreed to be responsible for structural maintenance and taxes. In June
2000, the Company and SLLC amended this lease to extend the term thereof to May
2015 and to provide that the Company would be responsible for the costs of
insurance, taxes and all maintenance, including structural maintenance, on the
facility. During fiscal 2000, the Company paid SLLC aggregate rent of $860,000
on this facility. In connection with the construction of this facility, in
December 1999, the Company loaned $102,000 to SLLC. The principal amount of
this loan bore interest at Bank of America's prime rate. The principal amount
was repaid in full in April 2000 and accrued interest was paid in October 2000.
The Company leased its former headquarters in Charlotte, North Carolina
from a partnership owned by Robert Speizman and Lawrence Speizman, Robert
Speizman's brother, under a lease that terminated in December 1998. Following
the termination of this lease, the Company continued to occupy the entire
facility until it moved to its current headquarters in April 1999. From April
1999 to February 2000, the Company continued to occupy a portion of its former
headquarters, consisting principally of warehouse space, based upon a letter
agreement dated April 1999. The Company ceased paying rent on this facility in
February 2000. During fiscal 2000, the Company paid aggregate rent of $50,400
on this facility.
The Company leases sales offices and its primary operating facility for
its laundry equipment and services operations, located in Atlanta, Georgia,
Wooddale, Illinois and Chester, Virginia, under three agreements from a
partnership in which Alexander Davis has a 50% interest. Aggregate monthly
rental under the lease agreements is $18,000 and these leases each extend to
July 2001. Pursuant to the terms of these leases, the Company paid aggregate
rent of $205,000 during fiscal 2000 on these facilities.
In April 2000, the Company entered into a five-year lease for Charlotte,
North Carolina office facilities for its laundry equipment and services
operations with Speizman Limited Liability Company II ("SLLC II"), a limited
liability company owned by Robert Speizman, his wife and their children,
including Bryan and Mark Speizman. Under the terms of this lease agreement, the
Company has agreed to pay monthly rent of approximately $6,500. During fiscal
2000, the Company made aggregate rental payments of $19,000 to SLLC II on this
facility.
The Company and Mr. Sklut are parties to a deferred compensation agreement
under which the Company agreed to pay Mr. Sklut or his designated beneficiary
180 monthly payments of $8,648 commencing upon his retirement from the Company
after he reached the age of 70. The Company originally entered into this
agreement with Mr. Sklut in 1972. These payments commenced in December 1998
following Mr. Sklut's retirement from the Company after he reached the age of
70. The Company is a party to a trust agreement under which the Company agreed
to maintain, and pay all premiums on, a life insurance policy and an annuity
contract on Mr. Sklut. The trust owned and was the beneficiary under both the
life insurance policy and annuity contract, and the trustee agreed to use the
cash surrender value or proceeds, as the case may be, to make the required
payments under the deferred compensation agreement. The trustee has converted
the policy and the contract to cash and cash equivalents. In the event the
available funds are not adequate to make such required payments, the deficiency
will be paid by the Company to Mr. Sklut, and in the event such funds exceed
the required payments, such excess will be paid by the trustee to the Company.
Management believes that the available funds are adequate to make the required
payments to Mr. Sklut under the deferred compensation agreement. The Company
paid aggregate premiums of $45,131 on the life insurance policy and annuity
contract in fiscal 1998. In fiscal 1999, the Company paid premiums of $10,313
on the life insurance policy and made a payment of $197,656 on the annuity
contract to provide additional funding for future payments to Mr. Sklut. The
Company made no such payments in fiscal 2000. The Company does not currently
anticipate that it will be required to pay any additional material payments to
fund future payments to Mr. Sklut. Under the trust agreement, the trustee paid
Mr. Sklut, who retired as the Company's Vice President-Finance in November
1998, a total of $103,776 for fiscal 2000.
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The Company and Robert S. Speizman are parties to a redemption agreement
dated May 31, 1974, as amended, that provides for the Company's redemption of
the Common Stock owned by Mr. Speizman at his death. The agreement gives to Mr.
Speizman's legal representatives the option, for a two-year period following
his death, to require the Company to purchase such Common Stock at 95% of its
"fair market value," as defined in the agreement, provided that the aggregate
purchase price paid for Mr. Speizman's Common Stock may not exceed the excess
of the proceeds of certain life insurance policies obtained by the Company
remaining after repayment of any loans obtained by the Company under such
insurance policies. The agreement provides that the Company will maintain life
insurance on Mr. Speizman's life in the aggregate amount of $1.15 million to
fund its obligations thereunder. The Company is the beneficiary of this policy.
The Company paid aggregate premiums of approximately $10,039 in fiscal 2000 on
these life insurance policies.
Two of Mr. Speizman's children, Barry I. Speizman and Amy S. Mullen and
Mr. Speizman's son-in-law, P. Donald Mullen, are all employed by the Company
and, during fiscal 2000, received aggregate cash compensation from the Company
of $183,836. From time to time during fiscal 2000, the Company paid certain
personal expenses on behalf of Robert Speizman, Bryan Speizman, Mark Speizman
and Barry Speizman. Interest accrued on amounts owed to the Company under these
arrangements at 7% per annum. During fiscal 2000, the largest aggregate amount
of such indebtedness outstanding, including accrued interest, was $118,800 owed
by Robert Speizman as of May 2000, $13,570 owed by Bryan Speizman as of May
2000, $20,900 owed by Mark Speizman as of May 2000 and $5,300 owed by Barry
Speizman as of April 2000. As of July 1, 2000, all amounts owing had been paid
in full.
The Company is a party to an agreement with Mr. Davis and his children
related to the Company's acquisition of Wink Davis pursuant to which the
Company has agreed to pay such persons certain additional earn out
consideration equal to a specified annual percentage of the pre-tax earnings of
Wink Davis in excess of a specified minimum and not to exceed an aggregate of
$1.5 million over a five-year period which commenced August 1, 1997. To date,
no amounts have been earned under this agreement.
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires that the
Company's directors, executive officers and persons who own more than 10% of
the outstanding shares of the Company's Common Stock file with the SEC certain
reports relating to their ownership of Common Stock and changes in such
ownership. To the Company's knowledge, based solely on a review of the copies
of such reports furnished to the Company and written representations that no
other reports were required, during fiscal 2000, all such Section 16(a) filing
requirements were complied with.
DATE FOR RECEIPT OF PROPOSALS
In order for stockholder proposals to be included in the proxy materials
for the Company's annual meeting of stockholders for the year ending June 30,
2001, any such proposal must be received by the Company at its executive
offices not later than June 21, 2001 and meet all other applicable requirements
for inclusion therein.
OTHER BUSINESS
The Board of Directors is not aware of any other matter to come before the
Annual Meeting. However, if any such matter does come before the Annual Meeting
which requires a vote of the stockholders, it is the intention of the persons
named in the enclosed proxy to vote the shares of Common Stock represented
thereby in accordance with the recommendations of the Company's management and
their judgment on such matter.
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ANNUAL REPORT ON FORM 10-K
A copy of the Company's Annual Report on Form 10-K for the year ended July
1, 2000 will be provided free of charge to stockholders upon written request
directed to: Speizman Industries, Inc., P.O. Box 242108, Charlotte, North
Carolina 28224, Attention: John C. Angelella, Secretary.
By order of the Board of Directors,
JOHN C. ANGELELLA
Secretary
Charlotte, North Carolina
October 19, 2000
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EXHIBIT A
SPEIZMAN INDUSTRIES, INC.
2000 EQUITY COMPENSATION PLAN
ARTICLE I -- GENERAL PROVISIONS
1.1 The Plan is designed for the benefit of the Company to secure and retain
the services of Eligible Participants. The Board believes the Plan will promote
and increase personal interests in the welfare of the Company by, and provide
incentive to, those who are primarily responsible not only for its regular
operations but also for shaping and carrying out the long-range plans of the
Company and ordering its continued growth and financial success.
1.2 Awards under the Plan may be made to Participants in the form of (i)
Incentive Stock Options; (ii) Nonqualified Stock Options; (iii) Stock
Appreciation Rights; (iv) Restricted Stock, (v) Stock Awards; (vi) Performance
Shares and/or (vii) Other Stock-Based Awards.
1.3 The Plan shall be effective on the date the Plan is approved at a meeting
of the stockholders of the Company by the affirmative vote of the holders of
the majority of the Stock outstanding (the "Effective Date"). Notwithstanding
any other provision of this Plan, any Award granted to a Participant prior to
such approval of the shareholders of the Company shall be conditioned upon and
subject to such approval.
ARTICLE II -- DEFINITIONS
Except where the context otherwise indicates, the following definitions
apply:
2.1 "Act" means the Securities Exchange Act of 1934, as now in effect or as
hereafter amended. All citations to sections of the Act or rules thereunder are
to such sections or rules as they may from time to time be amended or
renumbered.
2.2 "Agreement" means the written agreement evidencing an Award granted to
the Participant under the Plan.
2.3 "Award" means an award granted to a Participant under the Plan of a Stock
Option, Stock Appreciation Right, Restricted Stock, Stock Award, Performance
Share, Other Stock-Based Award or of any combination thereof.
2.4 "Board" means the Board of Directors of the Company.
2.5 "Code" means the Internal Revenue Code of 1986, as now in effect or as
hereafter amended. All citations to sections of the Code are to such sections
as they may from time to time be amended or renumbered.
2.6 "Committee" means the Compensation Committee of the Board or such other
committee consisting of two or more members as may be appointed by the Board to
administer this Plan pursuant to Article III.
2.7 "Company" means Speizman Industries, Inc., a Delaware corporation, and
its successors and assigns.
2.8 "Disability" means, with respect to any Incentive Stock Option,
disability as determined under Code section 22(e)(3), and with respect to any
other Award, (i) with respect to a Participant who is eligible to participate
in the Employer's program of long-term disability insurance, if any, a
condition with respect to which the Participant is entitled to commence
benefits under such program, and (ii) with respect to any Participant
(including a Participant who is eligible to participate in the Employer's
program of long-term disability insurance, if any), a disability as determined
under procedures established by the Committee or in any Award.
2.9 "Eligible Participant" means an employee of the Employer (including an
officer) as well as any other natural person, including a non-employee member
of the Board and a consultant or advisor who provides bona fide services to the
Employer not in connection with the offer or sale of securities in a
capital-raising transaction, subject to limitations as may be provided by the
Code, the Act or the Committee, as shall be determined by the Committee.
2.10 "Employer" means the Company and any entity during any period that it is
a "parent corporation" or a "subsidiary corporation" with respect to the
Company within the meaning of Code section 424(d). With respect to all purposes
of the Plan, including but not limited to, the establishment, amendment,
termination, operation and administration of the Plan, the Company shall be
authorized to act on behalf of all other entities included within the
definition of "Employer."
2.11 "Fair Market Value" means the fair market value of a share of Stock, as
determined in good faith by the Committee; provided, however, that
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(a) if the Stock is listed on a national securities exchange, Fair Market
Value on a date shall be the closing sale price reported for the Stock on
such exchange on such date if at least 100 shares of Stock were sold on
such date or, if fewer than 100 shares of stock were sold on such date,
then Fair Market Value on such date shall be the closing sale price
reported for the Stock on such exchange on the last prior date on which at
least 100 shares were sold, all as reported in The Wall Street Journal or
such other source as the Committee deems reliable; and
(b) if the Stock is not listed on a national securities exchange but is
admitted to quotation on the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") or other comparable quotation system,
Fair Market Value on a date shall be the last sale price reported for the
Stock on such system on such date if at least 100 shares of Stock were sold
on such date or, if fewer than 100 shares of Stock were sold on such date,
then Fair Market Value on such date shall be the average of the high bid
and low asked prices reported for the Stock on such system on such date or,
if no shares of Stock were sold on such date, then Fair Market Value on
such date shall be the last sale price reported for the Stock on such
system on the last date on which at least 100 shares of Stock were sold,
all as reported in The Wall Street Journal or such other source as the
Committee deems reliable; and
(c) If the Stock is not traded on a national securities exchange or
reported by a national quotation system, if any broker-dealer makes a
market for the Stock, then the Fair Market Value of the Stock on a date
shall be the average of the highest and lowest quoted selling prices of the
Stock in such market on such date if at least 100 shares of Stock were sold
on such date or, if fewer than 100 shares of Stock were sold on such date,
then Fair Market Value on such date shall be the average of the high bid
and low asked prices for the Stock in such market on such date or, if no
prices are quoted on such date, then Fair Market Value on such date shall
be the average of the highest and lowest quoted selling prices of the Stock
in such market on the last date on which at least 100 shares of Stock were
sold.
The Committee shall determine Fair Market Value in connection with an
Incentive Stock Option in accordance with Code section 422 and the rules
and regulations thereunder.
2.12 "Incentive Stock Option" means a Stock Option granted to an Eligible
Participant under Article IV of the Plan.
2.13 "Named Executive Officer" means a Participant who, as of the date of
vesting and/or payout of an Award, is one of the group of "covered employees"
as defined in the regulations promulgated or other guidance under Code section
162(m).
2.14 "Nonqualified Stock Option" means a Stock Option granted to an Eligible
Participant under Article V of the Plan.
2.15 "Option Grant Date" means, as to any Stock Option, the latest of:
(a) the date on which the Committee takes action to grant the Stock
Option to the Participant;
(b) the date the Participant receiving the Stock Option becomes an
employee of the Employer, to the extent employment status is a condition of
the grant or a requirement of the Code or the Act; or
(c) such other date (later than the dates described in (a) and (b)
above) as the Committee may designate.
2.16 "Participant" means an Eligible Participant to whom an Award has been
granted.
2.17 "Performance Share" means an Award under Article X of the Plan of a unit
valued by reference to a designated number of shares of Stock, which value may
be paid to the Participant by delivery of such property as the Committee shall
determine, including without limitation, cash or Stock, or any combination
thereof, upon achievement of such performance objectives during the relevant
performance period as the Committee shall establish at the time of such Award
or thereafter.
2.18 "Plan" means the Speizman Industries, Inc. 2000 Equity Compensation
Plan, as amended from time to time.
2.19 "Public Offering" means any underwritten public offering by the Company
or its stockholders of its equity securities pursuant to an effective
registration statement filed under the Securities Act of 1933.
2.20 "Restricted Stock" means an Award of Stock under Article VIII of the
Plan, which Stock is issued with such restriction(s) as the Committee, in its
sole discretion, may impose, including without limitation, any restriction on
the right to sell, transfer, pledge or assign such Stock, to vote such Stock,
and/or to receive any cash dividends with respect to such Stock, which
restrictions may lapse separately or in combination at such time or times, in
installments or otherwise, as the Committee may deem appropriate.
2.21 "Restriction Period" means the period commencing on the date an Award of
Restricted Stock is granted and ending on such date as the Committee shall
determine.
2.22 "Retirement" means retirement from active employment with the Employer,
as determined by the Committee.
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2.23 "Stock" means the common stock of the Company, as it may be adjusted
pursuant to the provisions of Plan section 3.10.
2.24 "Stock Appreciation Right" means an Award granted under Article VI which
provides for an amount payable in Stock and/or cash, as determined by the
Committee, equal to the excess of the Fair Market Value of a share of Stock on
the day the Stock Appreciation Right is exercised over the specified purchase
price.
2.25 "Stock Award" means as Award of Stock granted in payment of compensation
pursuant to Article IX of the Plan.
2.26 "Stock Option" means an Incentive Stock Option or a Nonqualified Stock
Option. A Stock Option shall be designated as either an Incentive Stock Option
or a Nonqualified Stock Option, and in the absence of such designation, shall
be treated as a Nonqualified Stock Option.
2.27 "Termination of Employment" means, with respect to a Participant, the
discontinuance of the Participant's service relationship with the Employer,
including but not limited to service as an employee of the Employer, as a
non-employee member of the board of directors of any entity constituting the
Employer, or as a consultant or advisor to the Employer who otherwise
constitutes an Eligible Participant. Except to the extent provided otherwise in
an Agreement or determined otherwise by the Committee, a Termination of
Employment shall not be deemed to have occurred if the capacity in which the
Participant provides service to the Employer changes (for example, a change
from consultant status to Employee status) or if the Participant transfers
among the various entities constituting the Employer, so long as there is no
interruption in the provision of service by the Participant to the Employer.
The determination of whether a Participant has incurred a Termination of
Employment shall be made by the Committee in its discretion. A Participant
shall not be deemed to have incurred a Termination of Employment if the
Participant is on military leave, sick leave, or other bona fide leave of
absence approved by the Employer of 90 days or fewer (or any longer period
during which the Participant is guaranteed reemployment by statute or
contract.) In the event a Participant's leave of absence exceeds this period,
he will be deemed to have incurred a Termination of Employment on the day
following the expiration date of such period. Notwithstanding the foregoing,
the determination of whether a Termination of Employment has occurred with
respect to an Incentive Stock Option shall be made consistent with Code section
422.
ARTICLE III -- ADMINISTRATION
3.1 This Plan shall be administered by the Committee. The Committee, in its
discretion, may delegate to one or more of its members such of its powers as it
deems appropriate. The Committee also may limit the power of any member to the
extent necessary to comply with rule 16b-3 under the Act, Code section 162(m)
or any other law or for any other purpose. Members of the Committee shall be
appointed originally, and as vacancies occur, by the Board, to serve at the
pleasure of the Board. The Board may serve as the Committee if by the terms of
the Plan all Board members are otherwise eligible to serve on the Committee. To
the extent that a Committee has not otherwise been appointed, references to the
"Committee" herein shall mean the Board.
3.2 The Committee shall meet at such times and places as it determines. A
majority of its members shall constitute a quorum, and the decision of a
majority of those present at any meeting at which a quorum is present shall
constitute the decision of the Committee. A memorandum signed by all of its
members shall constitute the decision of the Committee without necessity, in
such event, for holding an actual meeting.
3.3 The Committee shall have the exclusive right to interpret, construe and
administer the Plan, to select the persons who are eligible to receive an
Award, and to act in all matters pertaining to the granting of an Award and the
contents of the Agreement evidencing the Award, including without limitation,
the determination of the number of Stock Options, Stock Appreciation Rights,
Stock Awards or Performance Shares subject to an Award and the form, terms,
conditions and duration of each Award, and any amendment thereof consistent
with the provisions of the Plan. All acts, determinations and decisions of the
Committee made or taken pursuant to grants of authority under the Plan or with
respect to any questions arising in connection with the administration and
interpretation of the Plan, including the severability of any and all of the
provisions thereof, shall be conclusive, final and binding upon all
Participants, Eligible Participants and their estates and beneficiaries.
3.4 The Committee may adopt such rules, regulations and procedures of general
application for the administration of this Plan, as it deems appropriate.
3.5 Subject to adjustment as provided in Plan section 3.10, the aggregate
number of shares of Stock which are available for issuance pursuant to Awards
under the Plan is One Hundred Fifty-Five Thousand (155,000). Such shares of
Stock
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shall be made available from shares currently authorized but unissued or
currently held or subsequently acquired by the Company as treasury shares,
including shares purchased in the open market or in private transactions.
(a) If, for any reason, any shares of Stock awarded or subject to
purchase under the Plan are not delivered or purchased, or are reacquired
by the Company, for reasons including, but not limited to, a forfeiture of
Restricted Stock or termination, expiration or cancellation of a Stock
Option, Stock Appreciation Right, Stock Award or Performance Shares, such
shares of Stock shall not be charged against the aggregate number of shares
of Stock available for issuance pursuant to Awards under the Plan and shall
again be available for issuance pursuant to Award under the Plan. If the
exercise price and/or withholding obligation under a Stock Option is
satisfied by tendering shares of Stock to the Company (either by actual
delivery or attestation), only the number of shares of Stock issued net of
the shares of Stock so tendered shall be deemed delivered for purposes of
determining the maximum number of shares of Stock available for issuance
under the Plan.
(b) For all purposes under the Plan, each Performance Share awarded shall
be counted as one share of Stock subject to an Award.
(c) To the extent a Stock Appreciation Right granted in connection with a
Stock Option is exercised without payment being made in the form of Stock,
whether or not Restricted Stock, the shares of Stock which otherwise would
have been issued upon the exercise of such related Stock Option shall not
be charged against the aggregate number of shares of Stock subject to
Awards under the Plan, and may again be available for Award under the Plan.
3.6 Each Award granted under the Plan shall be evidenced by a written
Agreement. Each Agreement shall be subject to and incorporate, by reference or
otherwise, the applicable terms and conditions of the Plan, and any other terms
and conditions, not inconsistent with the Plan, as may be imposed by the
Committee. A copy of such document shall be provided to the Participant, and
the Committee may, but need not, require that the Participant sign a copy of
the Agreement.
3.7 The Company shall not be required to issue or deliver any certificates
for shares of Stock prior to:
(a) the listing of such shares on any stock exchange on which the Stock
may then be listed or the admission of such shares to quotation on NASDAQ
or other comparable quotation system; and
(b) the completion of any registration or qualification of such shares of
Stock under any federal or state law, or any ruling or regulation of any
government body which the Company shall, in its discretion, determine to be
necessary or advisable.
3.8 All certificates for shares of Stock delivered under the Plan shall also
be subject to such stop-transfer orders and other restrictions as the Committee
may deem advisable under the rules, regulations, and other requirements of the
Securities and Exchange Commission, any stock exchange upon which the Stock is
then listed and any applicable federal or state laws, and the Committee may
cause a legend or legends to be placed on any such certificates to make
appropriate reference to such restrictions. In making such determination, the
Committee may rely upon an opinion of counsel for the Company.
3.9 Subject to the restrictions on Restricted Stock, as provided in Article
VIII of the Plan and in the Restricted Stock Agreement, each Participant who
receives an Award of Restricted Stock shall have all of the rights of a
shareholder with respect to such shares of Stock, including the right to vote
the shares to the extent, if any, such shares possess voting rights and receive
dividends and other distributions. Except as provided otherwise in the Plan or
in an Agreement, no Participant awarded a Stock Option, Stock Appreciation
Right, Stock Award, Performance Share or Other Stock-Based Award shall have any
right as a shareholder with respect to any shares of Stock covered by such
Award prior to the date of issuance to him or her of a certificate or
certificates for such shares of Stock.
3.10 If any reorganization, recapitalization, reclassification, stock split,
stock dividend, or consolidation of shares of Stock, merger or consolidation or
separation, including a spin-off, of the Company or sale or other disposition
by the Company of all or a portion of its assets, any other change in the
Company's corporate structure, or any distribution to shareholders other than a
cash dividend results in the outstanding shares of Stock, or any securities
exchanged therefore or received in their place, being exchanged for a different
number or class of shares of Stock or other securities of the Company, or for
shares of Stock or other securities of any other corporation; or new, different
or additional shares or other securities of the Company or of any other
corporation being received by the holders of outstanding shares of Stock, then
equitable adjustments shall be made by the Committee in:
(a) the limitation on the aggregate number of shares of Stock that may be
awarded as set forth in Plan section 3.5;
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(b) the number and class of Stock that may be subject to an Award, and
which have not been issued or transferred under an outstanding Award;
(c) the purchase price to be paid per share of Stock under outstanding
Stock Options and the number of shares of Stock to be transferred in
settlement of outstanding Stock Appreciation Rights; and
(d) the terms, conditions or restrictions of any Award and Agreement,
including the price payable for the acquisition of Stock; provided,
however, that all adjustments made as the result of the foregoing in
respect of each Incentive Stock Option shall be made so that such Stock
Option shall continue to be an incentive stock option within the meaning of
Code section 422.
3.11 In addition to such other rights of indemnification as they may have as
directors or as members of the Committee, the members of the Committee shall be
indemnified by the Company against reasonable expenses, including attorney's
fees, actually and necessarily incurred in connection with the defense of any
action, suit or proceeding, or in connection with any appeal therein, to which
they or any of them may be a party by reason of any action taken or failure to
act under or in connection with the Plan or any Award granted thereunder, and
against all amounts paid by them in settlement thereof, provided such
settlement is approved by independent legal counsel selected by the Company, or
paid by them in satisfaction of a judgment or settlement in any such action,
suit or proceeding, except as to matters as to which the Committee member has
been negligent or engaged in misconduct in the performance of his duties;
provided, that within 60 days after institution of any such action, suit or
proceeding, a Committee member shall in writing offer the Company the
opportunity, at its own expense, to handle and defend the same.
3.12 The Committee may require each person purchasing shares of Stock
pursuant to a Stock Option or other Award under the Plan to represent to and
agree with the Company in writing that he is acquiring the shares of Stock
without a view to distribution thereof. The certificates for such shares of
Stock may include any legend which the Committee deems appropriate to reflect
any restrictions on transfer.
3.13 The Committee shall be authorized to make adjustments in performance
based criteria or in the terms and conditions of other Awards in recognition of
unusual or nonrecurring events affecting the Company or its financial
statements or changes in applicable laws, regulations or accounting principles.
The Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Agreement in the manner and to the extent it
shall deem desirable to carry it into effect. In the event the Company shall
assume outstanding employee benefit awards or the right or obligation to make
future such awards in connection with the acquisition of another corporation or
business entity, the Committee may, in its discretion, make such adjustments in
the terms of Awards under the Plan as it shall deem appropriate.
3.14 All outstanding Awards to any Participant may be canceled if:
(a) the Participant, without the consent of the Committee, during his or
her service relationship with the Employer or after termination of such
relationship, becomes associated with, employed by, renders services to, or
owns any interest in, other than any insubstantial interest, as determined
by the Committee, any business that is in competition with the Employer or
with any business in which the Employer has a substantial interest as
determined by the Committee; or
(b) is terminated for cause as determined by the Committee.
3.15 Notwithstanding any other provision of the Plan, the Company shall have
no liability to deliver any shares of Stock under the Plan or make any other
distribution of the benefits under the Plan unless such delivery or
distribution would comply with all applicable laws (including, without
limitation, the requirements of the Securities Act of 1933), and the applicable
requirements of any securities exchange or similar entity.
3.16 In connection with any Public Offering, a Participant shall not sell,
make any short sale of, loan, hypothecate, pledge, grant any option for the
purchase of, or otherwise dispose or transfer for value or otherwise agree to
engage in any of the foregoing transactions with respect to, any Stock acquired
under the Plan without the prior written consent of the Company or its
underwriters. Such restriction (the "Market Stand-Off") shall be in effect for
such period of time from and after the effective date of the final prospectus
for the Public Offering as may be requested by the Company or such
underwriters. In no event, however, shall such period exceed the period for
which securities owned by the Chief Executive Officer of the Company are
subject to the same restrictions. Any new, substituted or additional securities
that are by reason of any recapitalization or reorganization distributed with
respect to Stock acquired under the Plan shall be immediately subject to the
Market Stand-Off, to the same extent the Stock acquired under the Plan is at
such time covered by such provisions.
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In order to enforce the Market Stand-Off, the Company may impose stop-transfer
restrictions with respect to the Stock acquired under the Plan until the end of
the applicable stand-off period.
3.17 At all times when the Committee determines that compliance with Code
section 162(m) is required or desirable, all Awards granted under this Plan to
Named Executive Officers shall comply with the requirements of Code section
162(m). In addition, in the event that changes are made to Code section 162(m)
to permit greater flexibility with respect to any Awards under the Plan, the
Committee may, subject to the requirements of Article XII, make any adjustments
it deems appropriate.
ARTICLE IV -- INCENTIVE STOCK OPTIONS
4.1 Each provision of this Article IV and of each Incentive Stock Option
granted under the Plan shall be construed in accordance with the provisions of
Code section 422, and any provision hereof that cannot be so construed shall be
disregarded.
4.2 Incentive Stock Options shall be granted only to Eligible Participants
who are in the active employment of the Employer, and to individuals to whom
grants are conditioned upon active employment, each of whom may be granted one
or more such Incentive Stock Options for a reason related to his employment at
such time or times determined by the Committee following the Effective Date
through the date which is ten (10) years following the Effective Date, subject
to the following conditions:
(a) The Incentive Stock Option exercise price per share of Stock shall be
set in the Agreement, but shall not be less than 100% of the Fair Market
Value of the Stock on the Option Grant Date. If the Eligible Participant
owns more than 10% of the outstanding Stock (as determined pursuant to Code
section 424(d)) on the Option Grant Date, the Incentive Stock Option
exercise price per share shall not be less than 110% of the Fair Market
Value of the Stock on the Option Grant Date; provided, however, that if an
Incentive Stock Option is granted to such an Eligible Participant at an
exercise price per share that is less than 110% of Fair Market Value of the
stock on the Option Grant Date, such Option shall be deemed a Nonqualified
Stock Option.
(b) The Incentive Stock Option and its related Stock Appreciation Right,
if any, may be exercised in whole or in part from time to time within ten
(10) years from the Option Grant Date (five (5) years if the Eligible
Participant owns more than 10% of the Stock on the Option Grant Date), or
such shorter period as may be specified by the Committee in the Award;
provided, that in any event, the Incentive Stock Option and any related
Stock Appreciation Right shall lapse and cease to be exercisable upon a
Termination of Employment or within such period following a Termination of
Employment as shall have been specified in the Incentive Stock Option
Agreement or related Stock Appreciation Right agreement, which period shall
in no event exceed three months unless:
(i) employment shall have terminated as a result of death or
Disability, in which event such period shall not exceed one year after
the date of death or Disability; or
(ii) death shall have occurred following a Termination of Employment
and while the Incentive Stock Option or Stock Appreciation Right was
still exercisable, in which event such period shall not exceed one year
after the date of death;
provided, further, that such period following a Termination of Employment
shall in no event extend the original exercise period of the Incentive
Stock Option and/or Stock Appreciation Right.
(c) To the extent the aggregate Fair Market Value, determined as of the
Option Grant Date, of the shares of Stock with respect to which incentive
stock options (determined without regard to this subsection) are first
exercisable during any calendar year (under this Plan or any other plan of
the Company and its parent and subsidiary corporations (within the meaning
of Code sections 424(e) and 424(f), respectively)), by Participant exceeds
$100,000, such Incentive Stock Options granted under the Plan shall be
treated as Nonqualified Stock Options granted under Article V.
(d) The Committee may adopt any other terms and conditions which it
determines should be imposed for the Incentive Stock Option to qualify
under Code section 422, as well as any other terms and conditions not
inconsistent with this Article IV as determined by the Committee.
(e) The maximum number of shares of Stock that may be issued pursuant to
Incentive Stock Option Awards shall be the total number of shares specified
in section 3.5.
4.3 To the extent an Incentive Stock Option fails to meet the requirements of
Code section 422, it shall be deemed a Nonqualified Stock Option.
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4.4 If the Incentive Stock Option Agreement so provides, the Committee may
require that all or part of the shares of Stock to be issued upon the exercise
of an Incentive Stock Option shall take the form of Restricted Stock, which
shall be valued on the date of exercise, as determined by the Committee, on the
basis of the Fair Market Value of such Restricted Stock determined without
regard to the deferral limitations and/or forfeiture restrictions involved.
ARTICLE V -- NONQUALIFIED STOCK OPTIONS
5.1 Nonqualified Stock Options may be granted to Eligible Participants to
purchase shares of Stock at such time or times determined by the Committee,
subject to the terms and conditions set forth in this Article V.
5.2 The Nonqualified Stock Option exercise price per share of Stock shall be
established in the Agreement and may be more than, equal to or less than 100%
of the Fair Market Value at the time of the grant, but may not be less than par
value of the Stock.
5.3 A Nonqualified Stock Option and its related Stock Appreciation Right, if
any, may be exercised in full or in part from time to time within such period
as may be specified by the Committee in the Agreement; provided, that, in any
event, the Nonqualified Stock Option and related Stock Appreciation Right shall
lapse and cease to be exercisable upon a Termination of Employment or within
such period following a Termination of Employment as shall have been specified
in the Nonqualified Stock Option Agreement or related Stock Appreciation Right
Agreement, provided, that such period following a Termination of Employment
shall in no event extend the original exercise period of the Nonqualified Stock
Option or Stock Appreciation Right.
5.4 The Nonqualified Stock Option Agreement may include any other terms and
conditions not inconsistent with this Article V or Article VII, as determined
by the Committee.
ARTICLE VI -- STOCK APPRECIATION RIGHTS
6.1 A Stock Appreciation Right may be granted to an Eligible Participant in
connection with a Stock Option granted under Article IV or Article V of this
Plan or may be granted independent of any Stock Option.
6.2 A Stock Appreciation Right shall entitle the holder, within the specified
period, to exercise the Stock Appreciation Right and receive in exchange
therefore a payment having an aggregate value equal to the amount by which the
Fair Market Value of a share of Stock exceeds the exercise price, times the
number of shares of Stock with respect to which the Stock Appreciation Right is
exercised. A Stock Appreciation Right granted in connection with a Stock Option
shall entitle the holder of the related Stock Option, within the period
specified for the exercise of the Stock Option, to surrender the unexercised
Stock Option, or a portion thereof, and to receive in exchange therefore a
payment having an aggregate value equal to the amount by which the Fair Market
Value of a share of Stock exceeds the Stock Option price per share of Stock,
times the number of shares of Stock under the Stock Option, or portion thereof,
which is surrendered.
6.3 Each Stock Appreciation Right granted hereunder in connection with a
Stock Option shall be subject to the same terms and conditions as the related
Stock Option, including limitations on transferability, and shall be
exercisable only to the extent such Stock Option is exercisable and shall
terminate or lapse and cease to be exercisable when the related Stock Option
terminates or lapses. The grant of Stock Appreciation Rights related to
Incentive Stock Options must be concurrent with the grant of the Incentive
Stock Options. With respect to Nonqualified Stock Options, the grant either may
be concurrent with the grant of the Nonqualified Stock Options, or in
connection with Nonqualified Stock Options previously granted under Article V,
which are unexercised and have not terminated or lapsed.
6.4 The Committee shall have sole discretion to determine in each case
whether the payment with respect to the exercise of a Stock Appreciation Right
will be in the form of all cash, all Stock, or any combination thereof. If
payment is to be made in Stock, the number of shares of Stock shall be
determined based on the Fair Market Value of the Stock on the date of exercise.
If the Committee elects to make full payment in Stock, no fractional shares of
Stock shall be issued and cash payments shall be made in lieu of fractional
shares.
6.5 The Committee shall have sole discretion as to the timing of any payment
made in cash or Stock, or a combination thereof, upon exercise of Stock
Appreciation Rights. Payment may be made in a lump sum, in annual installments
or may be otherwise deferred; and the Committee shall have sole discretion to
determine whether any deferred payments may bear amounts equivalent to interest
or cash dividends.
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6.6 Upon exercise of a Stock Appreciation Right, the number of shares of
Stock subject to exercise under any related Stock Option shall automatically be
reduced by the number of shares of Stock represented by the Stock Option or
portion thereof which is surrendered.
6.7 Notwithstanding any other provision of the Plan, the exercise of a Stock
Appreciation Right is required to satisfy any applicable requirements under
Rule 16b-3 of the Act.
ARTICLE VII -- INCIDENTS OF STOCK OPTIONS
AND STOCK APPRECIATION RIGHTS
7.1 Each Stock Option and Stock Appreciation Right shall be granted subject
to such terms and conditions, if any, not inconsistent with this Plan, as shall
be determined by the Committee, including any provisions as to continued
employment or other service as consideration for the grant or exercise of such
Stock Option or Stock Appreciation Right and any provisions which may be
advisable to comply with applicable laws, regulations or rulings of any
governmental authority.
7.2 The maximum number of shares of Stock that may be subject to Stock
Options and Stock Appreciation Rights granted to any one individual during any
calendar year shall be 100,000 shares; provided, however, that this maximum
shall be 150,000 shares for the calendar year in which an individual first
becomes an employee of the Employer.
7.3 Except as provided below, each Stock Option and Stock Appreciation Right
shall not be transferable by the Participant other than by will or by the laws
of descent and distribution or, to the extent otherwise allowed by applicable
law, pursuant to a qualified domestic relations order as defined by the Code
and the Employee Retirement Income Security Act of 1974, as amended, or the
rules thereunder, and shall be exercisable during the lifetime of the
Participant only by him or in the event of his death or Disability, by his
guardian or legal representative; provided, however, that a Nonqualified Stock
Option or Stock Appreciation Right may be transferred and exercised by the
transferee to the extent determined by the Committee to be consistent with
securities and other applicable laws, rules and regulations and with Company
policy.
7.4 Shares of Stock purchased upon exercise of a Stock Option or Stock
Appreciation Right shall be paid for at the time of exercise (or, in case of an
exercise pursuant to a cashless exercise mechanism described below, as soon as
practicable after such exercise) in cash or by tendering (either by actual
delivery or by attestation) shares of Stock held by the Participant for the
requisite period necessary to avoid a charge to the Company's earnings for
financial reporting purposes, as determined by the Committee in its discretion,
having an aggregate Fair Market Value equal to the amount of cash that would
otherwise be required to pay the full option price or by authorizing a third
party to sell a portion of the shares acquired upon exercise of the Stock
Option or Stock Appreciation Right and remit to the Employer a sufficient
portion of the sales proceeds to pay the full option price any tax withholding
resulting from such exercise or by any combination of these methods, subject to
any limitations set forth in the corresponding Agreement.
7.5 Unless expressly provided otherwise in an Agreement or by the Committee,
no dividends shall be paid on shares of Stock subject to unexercised Stock
Options or Stock Appreciation Rights. However, the Committee may provide in an
Agreement or otherwise that a Participant has the right to receive dividend
payments or dividend equivalent payments with respect to Stock subject to a
Stock Option or Stock Appreciation Right (both before and after the Stock
subject to the Award is earned, vested, or acquired), which payments may be
either made currently or credited to an account for the Participant, and may be
settled in cash or Stock, as determined by the Committee. Any such settlements,
and any such crediting of dividends or dividend equivalents or reinvestment in
shares of Stock, may be subject to such conditions, restrictions, and
contingencies as the Committee shall establish, including the reinvestment of
such credited amounts in Stock equivalents. Any such Stock issued, whether
delivered or contingently credited, shall be charged against the limitations
set forth in Plan section 3.5.
7.6 The Committee may permit the voluntary surrender of all or a portion of
any Stock Option or Stock Appreciation Right granted under the Plan to be
conditioned upon the granting to the Participant of a new Stock Option or Stock
Appreciation Right for the same or a different number of shares of Stock as the
Stock Option or Stock Appreciation Right surrendered, or may require such
surrender as a condition precedent to a grant of a new Stock Option or Stock
Appreciation Right to such Participant. Subject to the provisions of the Plan,
such new Stock Option or Stock Appreciation Right shall be exercisable at such
price, during such period and on such other terms and conditions as are
specified by the Committee at the time the new Stock Option or Stock
Appreciation Right is granted. Upon surrender, the Stock Options or Stock
Appreciation Rights surrendered shall be canceled and the shares of Stock
previously subject to them shall be available for the grant of other Awards
under this Plan.
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ARTICLE VIII -- RESTRICTED STOCK
8.1 Restricted Stock Awards may be made to Participants as an incentive for
the performance of future services that will contribute materially to the
successful operation of the Employer. Awards of Restricted Stock may be made
either alone or in addition to or in tandem with other Awards granted under the
Plan.
8.2 With respect to Awards of Restricted Stock, the Committee shall:
(a) determine the purchase price, if any, to be paid for such Restricted
Stock, which may be more than, equal to, or less than par value and may be
zero, subject to such minimum consideration as may be required by
applicable law;
(b) determine the length of the Restriction Period;
(c) determine any restrictions applicable to the Restricted Stock such
as service or performance;
(d) determine if the restrictions shall lapse as to all shares of
Restricted Stock at the end of the Restriction Period or as to a portion of
the shares of Restricted Stock in installments during the Restriction
Period; and
(e) determine if dividends and other distributions on the Restricted
Stock are to be paid currently to the Participant or paid to the Company
for the account of the Participant.
8.3 Notwithstanding Section 3.6 of the Plan, a Restricted Stock Award must be
accepted within a period of 60 days, or such other period as the Committee may
specify, by executing a Restricted Stock Agreement and paying whatever price,
if any, is required. The prospective recipient of a Restricted Stock Award
shall not have any rights with respect to such Award, unless and until such
recipient has executed a Restricted Stock Agreement and has delivered a fully
executed copy thereof to the Committee, and has otherwise complied with the
applicable terms and conditions of such Award.
8.4 Except when the Committee determines otherwise, or as otherwise provided
in the Restricted Stock Agreement, if a Participant terminates employment or
other service relationship with the Employer for any reason before the
expiration of the Restriction Period, all shares of Restricted Stock still
subject to restriction shall be forfeited by the Participant and shall be
reacquired by the Company.
8.5 Except as otherwise provided in this Article VIII, no shares of
Restricted Stock received by a Participant shall be sold, exchanged,
transferred, pledged, hypothecated or otherwise disposed of during the
Restriction Period.
8.6 To the extent not otherwise provided in a Restricted Stock Agreement, in
cases of death, Disability or Retirement or in cases of special circumstances,
the Committee may in its discretion elect to waive any or all remaining
restrictions with respect to such Participant's Restricted Stock.
8.7 In the event of hardship or other special circumstances of a Participant
whose employment or other service relationship with the Employer is
involuntarily terminated, the Committee may in its discretion elect to waive in
whole or in part any or all remaining restrictions with respect to any or all
of the Participant's Restricted Stock, based on such factors and criteria as
the Committee may deem appropriate.
8.8 Upon an Award of Restricted Stock to a Participant, one or more stock
certificates representing the shares of Restricted Stock shall be registered in
the Participant's name. Such certificates may either:
(a) be held in custody by the Company until the Restriction Period
expires or until restrictions thereon otherwise lapse, and the Participant
shall deliver to the Company one or more stock powers endorsed in blank
relating to the Restricted Stock; and/or
(b) be issued to the Participant and registered in the name of the
Participant, and shall bear an appropriate restrictive legend and shall be
subject to appropriate stop-transfer orders.
8.9 Except as provided in this Article VIII, a Participant receiving a
Restricted Stock Award shall have, with respect to such Restricted Stock Award,
all of the rights of a shareholder of the Company, including the right to vote
the shares to the extent, if any, such shares possess voting rights and the
right to receive any dividends; provided, however, the Committee may require
that any dividends on such shares of Restricted Stock shall be automatically
deferred and reinvested in additional Restricted Stock subject to the same
restrictions as the underlying Award, or may require that dividends and other
distributions on Restricted Stock shall be paid to the Company for the account
of the Participant. The Committee shall determine whether interest shall be
paid on such amounts, the rate of any such interest, and the other terms
applicable to such amounts.
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8.10 If and when the Restriction Period expires without a prior forfeiture of
the Restricted Stock subject to such Restriction Period, unrestricted
certificates for such shares shall be delivered to the Participant; provided,
however, that the Committee may cause such legend or legends to be placed on
any such certificates as it may deem advisable under the rules, regulations and
other requirements of the Securities and Exchange Commission and any applicable
federal or state law.
8.11 In order to better ensure that Award payments actually reflect the
performance of the Company and the service of the Participant, the Committee
may provide, in its sole discretion, for a tandem performance-based or other
Award designed to guarantee a minimum value, payable in cash or Stock to the
recipient of a Restricted Stock Award, subject to such performance, future
service, deferral and other terms and conditions as may be specified by the
Committee.
ARTICLE IX -- STOCK AWARDS
9.1 A Stock Award shall be granted only in payment of compensation that has
been earned or as compensation to be earned, including without limitation,
compensation awarded concurrently with or prior to the grant of the Stock
Award.
9.2 For the purposes of this Plan, in determining the value of a Stock Award,
all shares of Stock subject to such Stock Award shall be valued at not less
than 100% of the Fair Market Value of such shares of Stock on the date such
Stock Award is granted, regardless of whether or when such shares of Stock are
issued or transferred to the Participant and whether or not such shares of
Stock are subject to restrictions which affect their value.
9.3 Shares of Stock subject to a Stock Award may be issued or transferred to
the Participant at the time the Stock Award is granted, or at any time
subsequent thereto, or in installments from time to time, as the Committee
shall determine. If any such issuance or transfer shall not be made to the
Participant at the time the Stock Award is granted, the Committee may provide
for payment to such Participant, either in cash or shares of Stock, from time
to time or at the time or times such shares of Stock shall be issued or
transferred to such Participant, of amounts not exceeding the dividends which
would have been payable to such Participant in respect of such shares of Stock,
as adjusted under Section 3.10, if such shares of Stock had been issued or
transferred to such Participant at the time such Stock Award was granted.
9.4 A Stock Award shall be subject to such terms and conditions, including
without limitation, restrictions on the sale or other disposition of the Stock
Award or of the shares of Stock issued or transferred pursuant to such Stock
Award, as the Committee shall determine; provided, however, that upon the
issuance or transfer of shares pursuant to a Stock Award, the Participant, with
respect to such shares of Stock, shall be and become a shareholder of the
Company fully entitled to receive dividends, to vote to the extent, if any,
such shares possess voting rights and to exercise all other rights of a
shareholder except to the extent otherwise provided in the Stock Award. Each
Stock Award shall be evidenced by a written Agreement in such form as the
Committee shall determine.
ARTICLE X -- PERFORMANCE SHARES
10.1 Awards of Performance Shares may be made to certain Participants as an
incentive for the performance of future services that will contribute
materially to the successful operation of the Company. Awards of Performance
Shares may be made either alone, in addition to or in tandem with other Awards
granted under the Plan and/or cash payments made outside of the Plan.
10.2 With respect to Awards of Performance Shares, which may be issued for no
consideration or such minimum consideration as is required by applicable law,
the Committee shall:
(a) determine and designate from time to time those Participants to whom
Awards of Performance Shares are to be granted;
(b) determine the number of Performance Shares to be granted to a
Participant;
(c) determine the performance period and/or performance objectives
pursuant to which Performance Shares may be earned;
(d) determine the form of settlement of a Performance Share; and
(e) generally determine the terms and conditions of each such Award.
At any date, each Performance Share shall have a value equal to the Fair Market
Value, determined as set forth in Section 2.11.
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10.3 The Committee may designate whether any Performance Share is intended to
be "performance-based compensation" within the meaning of Code section 162(m).
Notwithstanding anything herein to the contrary, any such Award shall be
conditioned on achievement of one or more performance measures selected by the
Committee from among the following: earnings, earnings per share, revenues,
revenue growth, gross margin, market value added, economic value added, EBIT,
EBITDA, return on equity, return on investment, return on assets, return on net
assets, return on capital employed, total shareholder return, profit, economic
profit, capitalized economic profit, after-tax profit/income, pre-tax
profit/income, cash flow, cash flow return, sales, sales volume, inventory
turnover ratio, stock price, cost, and/or unit cost. The grant of such Awards
and the establishment of the performance measures shall be made during the
specified performance period, which shall meet the requirements of Code section
162(m). No more than 100,000 Performance Shares may be earned by any
Participant in any calendar year.
10.4 Performance periods may overlap, and Participants may participate
simultaneously with respect to Performance Shares for which different
performance periods are prescribed.
10.5 The Committee shall determine the performance objectives of Awards of
Performance Shares. Performance objectives may vary from Participant to
Participant and between Awards and, except as provided in Section 10.3 above,
shall be based upon such performance criteria or combination of factors as the
Committee may deem appropriate, including for example, but not limited to,
minimum earnings per share or return on equity. If during the course of a
performance period there shall occur significant events which the Committee
expects to have a substantial effect on the applicable performance objectives
during such period, the Committee may revise such performance objectives.
10.6 If a Participant terminates service with the Employer during a
performance period because of death, Disability, Retirement or under other
circumstances in which the Committee in its discretion finds that a waiver
would be appropriate, that Participant, as determined by the Committee, may be
entitled to a payment of Performance Shares at the end of the performance
period based upon the extent to which the performance objectives were satisfied
at the end of such period and pro rated for the portion of the performance
period during which the Participant was in service with the Employer; provided,
however, the Committee may provide for an earlier payment in settlement of such
Performance Shares in such amount and under such terms and conditions as the
Committee deems appropriate or desirable. If a Participant terminates service
with the Employer during a performance period for any other reason, then such
Participant shall not be entitled to any payment with respect to that
performance period unless the Committee shall otherwise determine.
10.7 Each Award of a Performance Share shall be paid in whole shares of
Stock, or cash, or a combination of Stock and cash as the Committee shall
determine, with payment to be made as soon as practicable after the end of the
relevant performance period.
10.8 The Committee shall have the authority to approve requests by
Participants to defer payment of Performance Shares on terms and conditions
approved by the Committee and set forth in a written Agreement between the
Participant and the Company entered into in advance of the time of receipt or
constructive receipt of payment by the Participant.
ARTICLE XI -- OTHER STOCK-BASED AWARDS
11.1 Other awards that are valued in whole or in part by reference to, or are
otherwise based on, Stock ("Other Stock-Based Awards"), including without
limitation, convertible preferred stock, convertible debentures, exchangeable
securities, phantom stock and Stock awards or options valued by reference to
book value or performance, may be granted either alone or in addition to or in
tandem with other Awards granted under the Plan and/or cash awards made outside
of the Plan. Subject to the provisions of the Plan, the Committee shall have
authority to determine the Eligible Participants to whom and the time or times
at which Other Stock-Based Awards shall be made, the number of shares of Stock
subject to such Awards, and all other conditions of the Awards. The Committee
also may provide for the grant of shares of Stock upon the completion of a
specified performance period. The provisions of Other Stock-Based Awards need
not be the same with respect to each recipient.
11.2 Other Stock-Based Awards made pursuant to this Article XI shall be
subject to the following terms and conditions:
(a) Subject to the provisions of this Plan and the applicable Agreement,
shares of Stock subject to Other Stock- Based Awards may not be sold,
assigned, transferred, pledged or otherwise encumbered prior to the date on
which the shares are issued, or, if later, the date on which any applicable
restriction, performance or deferral period lapses.
(b) Subject to the provisions of this Plan and the applicable Agreement
and unless otherwise determined by the Committee at the time of the Award,
the recipient of an Other Stock-Based Award shall be entitled to receive,
currently
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or on a deferred basis, interest or dividends or interest or dividend
equivalents with respect to the number of shares covered by the Award, as
determined at the time of the Award by the Committee, in its sole
discretion, and the Committee may provide that such amounts, if any, shall
be deemed to have been reinvested in additional Stock or otherwise
reinvested.
(c) Any Other Stock-Based Award and any Stock covered by any such Award
shall vest or be forfeited to the extent so provided in the applicable
Agreement, as determined by the Committee, in its sole discretion.
(d) Upon the Participant's Retirement, Disability or death, or in cases
of special circumstances, the Committee may, in its sole discretion, waive
in whole or in part any or all of the remaining limitations imposed
hereunder, if any, with respect to any or all of an Other Stock-Based
Award.
(e) Each Other Stock-Based Award shall be evidenced by, and subject to
the terms of, an Agreement.
(f) Stock, including securities convertible into Stock, issued on a bonus
basis under this Article XI may be issued for no cash consideration.
11.3 The Committee may designate whether any Other Stock-Based Award is
intended to be "performance-based compensation" within the meaning of Code
section 162(m). Notwithstanding anything herein to the contrary, any such Award
shall be conditioned on achievement of one or more performance measures
selected by the Committee from among the following: earnings, earnings per
share, revenues, revenue growth, gross margin, market value added, economic
value added, EBIT, EBITDA, return on equity, return on investment, return on
assets, return on net assets, return on capital employed, total shareholder
return, profit, economic profit, capitalized economic profit, after-tax
profit/income, pre-tax profit/income, cash flow, cash flow return, sales, sales
volume, inventory turnover ratio, stock price, cost, and/or unit cost. The
grant of such Awards and the establishment of the performance measures shall be
made during the specified performance period, which shall meet the requirements
of Code section 162(m). No more than 100,000 shares of Stock may be earned by
any Participant in any calendar year.
11.4 Other Stock-Based Awards may include a phantom stock Award, which is
subject to the following terms and conditions:
(a) The Committee shall select the Eligible Participants who may receive
phantom stock Awards. The Eligible Participant shall be awarded a phantom
stock unit, which shall be the equivalent to a share of Stock.
(b) Under an Award of phantom stock, payment shall be made on the dates
or dates as specified by the Committee or as stated in the applicable
Agreement and phantom stock Awards may be settled in cash, Stock, or some
combination thereof.
(c) The Committee shall determine such other terms and conditions of each
Award as it deems necessary in its sole discretion.
ARTICLE XII -- AMENDMENT AND TERMINATION
12.1 The Board at any time and from time to time, may amend or terminate the
Plan. To the extent required by Code section 422 and/or the rules of the
exchange upon which the Stock is traded or other applicable law, no amendment,
without approval by the Company's shareholders, shall:
(a) alter the group of persons eligible to participate in the Plan;
(b) except as provided in Plan section 3.10, increase the maximum number
of shares of Stock which are available for issuance pursuant to Awards
granted under the Plan;
(c) extend the period during which Incentive Stock Options may be granted
beyond the date which is ten (10) years following the Effective Date.
(d) limit or restrict the powers of the Committee with respect to the
administration of this Plan;
(e) change the definition of an Eligible Participant for the purpose of
Incentive Stock Options or increase the limit or the value of shares of
Stock for which an Eligible Participant may be granted an Incentive Stock
Option;
(f) materially increase the benefits accruing to Participants under this
Plan; or
(g) change any of the provisions of this Article XII.
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<PAGE>
12.2 No amendment to or discontinuance of this Plan or any provision thereof
by the Board or the shareholders of the Company shall, without the written
consent of the Participant, adversely affect, as shall be determined by the
Committee, any Award previously granted to such Participant under this Plan;
provided, however, the Committee retains the right and power to treat any
outstanding Incentive Stock Option as a Nonqualified Stock Option in accordance
with Plan section 4.3.
12.3 Notwithstanding anything herein to the contrary, if the right to receive
or benefit from any Award, either alone or together with payments that a
Participant has the right to receive from the Company, would constitute a
"parachute payment" under Code section 280G, all such payments may be reduced,
in the discretion of the Committee, to the largest amount that will avoid an
excise tax to the Participant under Code section 280G.
ARTICLE XIII -- MISCELLANEOUS PROVISIONS
13.1 Nothing in the Plan or any Award granted under the Plan shall confer
upon any Participant any right to continue in the service of the Employer, or
to serve as a director thereof, or interfere in any way with the right of the
Employer to terminate his or her employment or other service relationship at
any time. Unless agreed by the Board, no Award granted under the Plan shall be
deemed salary or compensation for the purpose of computing benefits under any
employee benefit plan or other arrangement of the Employer for the benefit of
its employees. No Participant shall have any claim to an Award until it is
actually granted under the Plan. To the extent that any person acquires a right
to receive payments from the Company under the Plan, such right shall, except
as otherwise provided by the Committee, be no greater than the right of an
unsecured general creditor of the Company.
13.2 The Committee may make such provisions and take such steps as it may
deem necessary or appropriate for the withholding of any taxes which the
Employer is required by any law or regulation of any governmental authority,
whether federal, state or local, domestic or foreign, to withhold in connection
with any Award or the exercise thereof, including, but not limited to,
withholding the payment of all or any portion of such Award or another Award
under this Plan until the Participant reimburses the Employer for the amount
the Employer is required to withhold with respect to such taxes, or canceling
any portion of such Award or another Award under this Plan in an amount
sufficient to reimburse itself for the amount it is required to so withhold, or
selling any property contingently credited by the Company for the purpose of
paying such Award or another Award under this Plan in order to withhold or
reimburse itself for the amount it is required to so withhold. The amount to be
withheld shall not exceed the statutory minimum federal and state income and
employment tax liability arising from the exercise transaction. Any such method
of satisfying the withholding obligation must satisfy any applicable
requirements of rule 16b-3 under the Act.
13.3 The Plan and the grant of Awards shall be subject to all applicable
federal and state laws, rules, and regulations and to such approvals by any
United States government or regulatory agency as may be required. Any provision
herein relating to compliance with rule 16b-3 under the Act shall not be
applicable with respect to participation in the Plan by Participants who are
not subject to Act section 16(b).
13.4 The terms of the Plan shall be binding upon the Company, and its
successors and assigns.
13.5 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 by the Company, nothing contained herein shall give any such
Participant any rights that are greater than those of a general creditor of the
Company. In its sole discretion, the Committee may authorize the creation of
trusts or other arrangements to meet the obligations created under the Plan to
deliver shares of Stock or payments in lieu of or with respect to Awards under
the Plan; provided, however, that, unless the Committee otherwise determines
with the consent of the affected Participant, the existence of such trusts or
other arrangements is consistent with the "unfunded" status of the Plan.
13.6 Each Participant agrees to give the Committee prompt written notice of
any election made by such Participant under Code section 83(b) or any similar
provision thereof.
13.7 If any provision of this Plan or an Agreement is or becomes or is deemed
invalid, illegal or unenforceable in any jurisdiction, or would disqualify the
Plan or any Agreement under any law deemed applicable by the Committee, such
provision shall be construed or deemed amended to conform to applicable laws or
if it cannot be construed or deemed amended without, in the determination of
the Committee, materially altering the intent of the Plan or the Agreement, it
shall be stricken and the remainder of the Plan or the Agreement shall remain
in full force and effect.
13.8 Where the context admits, words in any gender shall include the other
gender, words in the singular shall include the plural and words in the plural
shall include the singular.
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<PAGE>
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APPENDIX
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SPEIZMAN INDUSTRIES, INC.
Proxy for Annual Meeting of Stockholders to be Held on November 16, 2000
This Proxy is Solicited on Behalf of the Board of Directors.
The undersigned revokes all previous proxies, acknowledges receipt of the
Notice of the Annual Meeting of Stockholders to be held on November 16, 2000
and the Proxy Statement and appoints Robert S. Speizman and John C. Angelella,
and each of them, the Proxy of the undersigned, with full power of
substitution, to vote all shares of Common Stock of Speizman Industries, Inc.
(the "Company") which the undersigned is entitled to vote, either on his or her
own behalf or on behalf of any entity or entities, at the Annual Meeting of
Stockholders of the Company to be held on November 16, 2000 at 11:00 a.m. at
the principal executive offices of the Company located at 701 Griffith Road,
Charlotte, North Carolina, and at any adjournment or postponement thereof, with
the same force and effect as the undersigned might or could do if personally
present thereat. The shares represented by this Proxy shall be voted as
follows:
1. ELECTION OF DIRECTORS:
[ ] FOR All Nominees [ ] WITHHOLD Authority [ ] WITHHOLD Authority To Vote
Listed below To Vote For All For Those Nominees Written
Nominees in the Space Provided Below;
and FOR All Other Nominees
Nominees: Robert S. Speizman, William Gorelick, Scott C. Lea, Josef Sklut and
Jon P. Brady.
INSTRUCTION -- To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below:
--------------------------------------------------------------------------------
2. Approval and adoption of the Speizman Industries, Inc. 2000 Equity
Compensation Plan, which provides for the issuance of up to 155,000 shares
of Common Stock of the Company. FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Approval and adoption of an amendment to the Speizman Industries, Inc.
Stock Option Plan for Non-Employee Directors increasing the maximum number of
shares of Common Stock of the Company available for issuance thereunder from
15,000 to 35,000. FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. Ratification of the appointment of BDO Seidman, LLP as the Company's
independent certified public accountants for the fiscal year ending June 30,
2001. FOR [ ] AGAINST [ ] ABSTAIN [ ]
<PAGE>
5. The Proxies are authorized to vote the shares of Common Stock of the
Company represented by this Proxy in accordance with their judgment on such
other business as may properly come before the meeting.
This Proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this Proxy, if
signed and returned, will be voted FOR the election of the nominees named in
Item 1 and FOR Items 2, 3 and 4.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officers. If a
partnership, please sign in partnership name by authorized person.
DATED:_________________________, 2000
____________________________________
Signature
____________________________________
Signature if held jointly
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS
PROXY PROMPTLY IN THE ENCLOSED ENVELOPE
