Speizman Industries, Inc. 2000 Equity Compensation Plan
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Summary
Speizman Industries, Inc. has established the 2000 Equity Compensation Plan, which allows the company to grant up to 155,000 shares of common stock to eligible employees. The plan provides for various stock-based awards, including stock options, restricted stock, and stock appreciation rights. Employees who receive these awards may be subject to vesting schedules and other conditions. The plan outlines how awards are granted, exercised, and taxed, as well as the rights and obligations of both the company and participants. The plan is administered by Speizman and may be amended or terminated by the company.
EX-10.23 5 dex1023.txt SPEIZMAN IND. EQUITY COMP. PLAN Exhibit 10.23 ___________________ SPEIZMAN INDUSTRIES, INC. 2000 EQUITY COMPENSATION PLAN 155,000 SHARES OF COMMON STOCK ___________________ ___________________ This document constitutes part of a prospectus covering securities that have been registered under the Securities Act of 1933. __________________ The date of this prospectus is September ____, 2001. TABLE OF CONTENTS
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ii BACKGROUND INFORMATION What is a stock-based award? Stock-based awards are awards made by Speizman Industries, Inc. ("Speizman") that are either made up of or based upon the performance of Speizman common stock. Such awards include, but are not limited to, Speizman stock (including restricted stock), options on Speizman stock, stock appreciation rights and performance shares. Restricted stock awards are shares of stock that are subject to certain restrictions, such as an obligation to return the stock to Speizman if you terminate employment within a specified period. The economic value of a restricted stock award is the value of the stock at the time the restrictions lapse less the amount, if any, that you paid for the stock. A stock option gives you the opportunity to buy a specified number of shares of Speizman common stock (known as "exercising" the option) from Speizman at a fixed price per share (known as the "exercise price") during a specific time period (known as the "exercise period") - no matter what the market price of the stock is when you exercise the option. The economic value of a stock option is the appreciation, or increase, if any, in the value of the stock over the exercise price. You have the chance to benefit from this increased value when you exercise your option. A stock option will take the form of either an incentive stock option or a nonqualified stock option. Under a stock appreciation right ("SAR"), you become entitled to a payment of an amount equal to the increase in value of Speizman stock over a specified period of time. This payment may be made in either cash or shares of stock. The economic value of an SAR is the appreciation, or increase, if any, in the value of the stock over the specified period. Performance share awards are generally earned based upon the achievement of specified performance objectives over certain periods. Generally these awards may be settled in cash or in shares of stock. The economic value of such an award is the value of the shares of stock at the time of settlement. 1 How often will stock-based award Stock-based awards will be made from time to grants be made? time at the sole discretion of the Compensation Committee of the Board of Directors of Speizman (the "Compensation Committee"). Nothing in this document should be interpreted as giving any person the right to receive a stock-based award. Your receipt of one stock-based award does not guarantee that you will receive additional stock-based awards in the future. ELIGIBILITY Who is eligible to receive a Employees of Speizman or its related stock-based award? companies, members of the Board of Directors of Speizman (the "Board of Directors") and consultants and independent contractors who provide services to Speizman or its related companies, as determined by the Compensation Committee in its discretion, are eligible to receive stock-based awards under the Speizman Industries, Inc. 2000 Equity Compensation Plan (the "Plan"). How will know if I have been If Speizman grants you a stock-based award granted a stock-based award under the Plan, Speizman will give you a under the Plan? written agreement evidencing the award (an "Award Agreement"). The Award Agreement will set out important details about the award, including the grant date and any vesting schedule. For stock awards (including restricted stock), the Award Agreement will also set out any purchase price for the stock. For stock options and SARs, the Award Agreement will also set out the term of the award. For stock options, the Award Agreement will also set out the exercise price. What happens if I lose my Award An Award Agreement is not a stock certificate Agreement? or a negotiable security - it is simply an agreement evidencing a stock-based award under the Plan. A copy of the Award Agreement for your stock-based award will be retained in Speizman records. For stock options and SARs, you will not need to produce your Award Agreement to exercise your option or SAR. However, you should retain a copy of your Award Agreement for your own records. 2 VESTING OF STOCK-BASED AWARDS What does it mean when my award Your right to keep a stock award or your becomes "vested"? right to exercise a stock option or SAR generally will be earned ("vest") over a period of time. Generally, this period of time is a period of continued employment (or other service) with Speizman or its related companies. Generally, your stock-based award will vest in installments over this period of time, conditioned on your continued employment (or other service) with Speizman or its related companies. However, different rules may apply to specific awards. The vesting schedule for your award is specified in the Award Agreement for the award. What happens to my stock-based Nothing. So long as you continuously remain award if employment status an employee of Speizman or its related changes (for example, I become companies, your stock-based award will not be a part-time employee impacted by any such change in the nature of your employment. EXERCISE OF CERTAIN STOCK-BASED AWARDS What does it mean to "exercise" "Exercising" your vested option means that my vested option or SAR? you have decided to purchase all or a portion of the shares available under the vested option at the exercise price. "Exercising" your vested SAR means that you have decided to receive payment of the difference between the value of the stock at exercise and the value of the stock at grant. In both cases, you must notify Speizman of your decision. What is an "exercise period"? With respect to option and SAR awards, once such award is vested, generally you may exercise the option or SAR during a specified period of time. For an option, this means you will be able to purchase the Speizman common stock from Speizman at the exercise price established in your Award Agreement, regardless of the market price of the shares at the time of exercise. The exercise period for your option or SAR is set out in the Award Agreement for your option or SAR. 3 Does termination of its related companies, in most cases you will have a my employment with short period of time following termination in which Speizman Yes. If, to exercise the vested portion of your option or for any reason, you SAR. In general, you will incur a termination of cease to be employed employment with Speizman if you discontinue all by Speizman or forms of a service relationship with Speizman and affect my ability to its related companies. However, the determination of exercise my option whether a termination of employment has occurred or SAR? will be made by the Compensation Committee in its discretion. Any unvested portion of your option or SAR will expire automatically on your employment termination date. In no event may you exercise your option or SAR beyond the term stated in your Award Agreement. The specific rules applicable to your option or SAR will be set out in your Award Agreement. STOCK PURCHASES, INCLUDING EXERCISE OF STOCK OPTIONS How do I purchase Some awards will not require you to expend money to Speizman stock obtain your award. However, certain awards, under my particularly stock options, will require you to pay stock-based award? for your stock. The amount you pay at exercise of a stock option is the "exercise price." What is the exercise The exercise price for a stock option is the price price? per share that you must pay if you decide to exercise your option. The exercise price for your stock option is set at the time of grant and is specified in your Award Agreement. The per share exercise price for an incentive stock option generally can not be less than the fair market value of a share of Speizman's common stock on the option grant date. (See "Paying Taxes" for an explanation of "fair market value"). However, the per share exercise price for an incentive stock option granted to a holder of 10% or more of Speizman's common stock can not be less than 110% of the fair market value of Speizman's stock on the option grant date. What happens if I When the market price is lower than the exercise exercise my option price, it would market price is lower than the when the market price exercise price? cost you more to exercise your is lower than the option than to purchase the shares on the open exercise price? market. As a result, presumably you would not choose to exercise your option in such circumstance. 4 When may I exercise my vested option or SAR? You may exercise your vested option or SAR once you have entered the exercise period specified in your Award Agreement. (See "Exercise of Certain Stock-Based Awards" for details). If you terminate employment with Speizman at any time during the exercise period, your opportunity to exercise the option or SAR may expire earlier. What procedures do I need to follow to Once the exercise period in exercise vested option or SAR? your Award Agreement begins, you will need to take the following steps to exercise your vested option or SAR: . Sign an election/agreement form, which states your agreement to be bound by the terms of your Award Agreement and the Plan, and deliver the signed form to Speizman. Once you deliver an executed election/agreement form, ------------------ you have made an irrevocable election - this means you may not change your mind about exercising your option or SAR. . Provide any proof requested regarding your right to exercise your option or SAR (this generally applies to beneficiaries in the event of your disability or death). . For an option, pay the total exercise price for the shares of stock in cash or by good check, or, if allowed under your Award Agreement, arrange for authorization of a third party, such as a stockbroker, to sell a portion of the shares acquired upon exercise of the option and remit to Speizman a sufficient portion of the sale proceeds to pay the full option price. . Arrange with Speizman for payment of any required withholding taxes (See "Paying Taxes" for details). . Provide other documents that Speizman considers necessary. STOCK RESTRICTIONS What can I do with the shares of stock You may keep the shares of I obtain pursuant to my stock-based award? stock or sell them at any time, unless your shares are subject to a specific restriction or you are considered an "affiliate" of Speizman. (For additional information about "affiliates" of Speizman, see "Plan Administration and General Plan Provisions"). 5 What happens if I decide to keep my shares of Stock will be issued in your stock? name as soon as reasonably possible after you become eligible to receive your stock. For restricted stock, your shares may be retained by Speizman until the restrictions no longer apply, or they may be issued to you with a legend describing the restrictions. For a stock option, issuance of stock will not occur until you exercise your option and purchase the stock. PAYING TAXES This section discusses federal income tax treatment connected with stock-based awards, based on current federal tax laws applicable to U.S. citizens or residents of the United States. If federal tax laws change in the future, the following may change and no longer apply. State and local tax provisions vary and are not covered in this summary. In any event, you should consult your tax advisor about your particular transactions, especially if you may be covered by other tax rules. When am I taxed on a stock award? Generally, you are not taxed on your stock award until you receive the financial benefits of your award (such as upon receipt of Speizman stock) and such benefits are not subject to a substantial risk of forfeiture. For outright stock awards, you are generally taxed at the time you receive your stock. If you receive restricted stock, you are generally taxed at the time the restrictions lapse. For example, Speizman may grant you shares of stock subject to the condition that if you leave employment with Speizman within a specified time you must return without payment (forfeit) the stock to Speizman. In such case, you generally will not be taxed until you are no longer obligated to return the stock to Speizman. The value of Speizman stock on the day the restriction lapses will be taxed to you as ordinary income and will be subject to payroll tax and tax withholding. With restricted stock, you are allowed to elect to be taxed on the value of the stock at the time you receive your restricted stock award rather than at the time the forfeiture restriction lapses. An advantage of such an election is that by being taxed on the value of the stock as ordinary income at the time of grant, any future 6 appreciation is taxed as capital gain. A disadvantage is that if the value of the stock declines after such an election, there are limitations on your ability to take a tax deduction for the capital loss. You should consult a tax advisor in deciding whether to make such an election with respect to a restricted stock award. When am I taxed on my option or SAR? The tax treatment for an option award depends on whether it is a nonqualified stock option or an incentive stock option. SARs are taxed similar to nonqualified stock options. For either type of option or for an SAR, you are not taxed on your option or SAR when it is granted. For a nonqualified stock option or SAR that is settled in stock, you will realize taxable income when you exercise your option or SAR. The amount of income will be equal to the difference between the fair market value of the stock on the exercise date less (for a stock option) your exercise price for the stock. The amount of tax you pay, plus your exercise price, will become your tax "basis" in the stock. When you sell the stock, you will have capital gain or loss in an amount equal to the difference between what you receive for the stock and your tax basis. For example, assume the exercise price on your nonqualified stock option is $2.00 per share. Also assume that the fair market value of Speizman's common stock on the date you exercise your option is $3.00 per share. Assume you exercise the option to purchase 100 shares of Speizman common stock. Your income at the time of exercise would be determined as follows: $3.00 - $2.00 = $1.00 per share This amount multiplied by the 100 shares purchased would be: $1.00 x 100 = $100.00 of ordinary income This $100.00 plus your $200.00 exercise price would be your tax basis in those shares. For an SAR that is settled in cash, the amount of the payment will be taxed to you as ordinary income. 7 For an incentive stock option, generally you will not realize taxable income when you exercise your option and purchase the stock. However, the difference between the fair market value of the stock on the exercise date and your exercise price will be a preference item for alternative minimum tax purposes. You should consult a tax advisor about the potential treatment of your options under the alternative minimum tax. Your exercise price for the stock will become your basis in the stock. When you sell the stock, you will have capital gain or loss in an amount equal to the difference between what you receive for the stock and your tax basis, provided that you have held the stock for a certain period of time before you sell it. This period is two years from the date the option was granted to you and one year from the date you exercise the option. If you do not satisfy this holding period, your income on the date of sale will be ordinary income rather than capital gain. How will Speizman report taxable income? Generally, Speizman will report amounts that are taxed as ordinary income pursuant to a stock-based award. For outright stock awards, the value of Speizman stock as of the date of the award, less any purchase price you paid, will be reported as ordinary income to you. For restricted stock, the value of Speizman stock on the date restrictions lapse, less any purchase price you paid, will be reported as ordinary income to you. However, if you elect to be taxed upon grant, the value of Speizman stock on the date of grant, less any purchase price you paid, will be reported as ordinary income to you. For nonqualified stock options and SARs, the difference between the value of Speizman stock on of the date of exercise, less the exercise price (for stock options), will be reported as ordinary income to you. Speizman will report this ordinary income to you on Form W-2 if you are an employee or on Form 1099 if you are another type of service provider. In addition, Speizman must satisfy tax withholding obligations in connection with this income if you are a current or former employee. 8 When you file your tax return, you will need to determine your actual tax liability based on your personal tax situation. What does "fair market value" mean? "Fair market value" is generally the closing sale price per share of Speizman's common stock reported on the NASDAQ SmallCap Market (NASDAQ) on the date in ------ question. If Speizman common stock is not traded on the NASDAQ on the date in question, the fair market value is determined on the next preceding date for which Company common stock was traded on the NASDAQ. What are Speizman's withholding When you have amounts that are obligations in connection with a to be taxed as ordinary stock-based award? income, such as upon exercise of a nonqualified option, required amounts on your resulting income will be withheld for federal, state, local and other applicable income taxes, and any applicable Social Security, state disability insurance or other employment tax, as determined by Speizman. All of these amounts will be reported to the appropriate government agencies and on your W-2 form for the year in which you must recognize ordinary income. Withholding applies only if you are a current or former employee of Speizman or its related companies. What are my payment choices for tax withholding? Generally, Speizman will satisfy its withholding obligations through the cash compensation it otherwise pays you as an employee. However, depending on the amount of the withholding obligation and other circumstances, it may be necessary to satisfy the withholding obligation in another manner. In this case, Speizman will work with you to arrive at an acceptable solution. Satisfaction of the withholding obligation is a condition to your ability to exercise your option. What is my option worth when I exercise it? That depends on the fair market value of the stock on the date you exercise your option. Here are two examples. One assumes that you decide to exercise your option on a day when the fair market value of Speizman's common stock is $2.00 per share and an exercise price of $1.00; the other assumes a fair market value of $5.00 per share and an exercise price of $2.00. Both examples assume a tax withholding rate of 41.65%, and do not reflect any transaction fees that may be incurred. 9
What are the tax consequences if I When you sell your shares of stock, you sell my purchased shares? usually will have a capital gain or loss, depending on the difference between the sale price and your tax basis in the shares. The capital gain or loss is considered "long term" or "short term," depending on how long it's been since you acquired the shares, and is taxed accordingly. What if I have terminated It does not matter whether you have employment when I exercise my terminated employment when you exercise option or SAR? your option or SAR - the tax consequences are the same as just described. What are the federal tax Speizman is entitled to a federal tax consequences to Speizman of a deduction equal to the amount that you and stock-based award? other eligible employees realize as income, as reported on your W-2 form. Speizman receives no such deduction upon the exercise of incentive stock options, unless the option holder has not met the holding period at the time of sale. 10 STOCKHOLDER RIGHTS When do I receive stockholder rights For stock awards (including awards of on my stock-based award shares? restricted stock), you will generally have the same rights as other stockholders, such as voting rights or the right to receive dividends. With respect to other stock-based awards, you generally do not have any rights as a stockholder until you actually own Speizman stock pursuant to the awards. For example, while you hold an option, you do not have any rights as a stockholder, but once you exercise your option and shares are issued in your name, you will have rights just as Speizman's other stockholders do, as long as you continue to own the shares. When do I receive dividends on my You will not receive dividends until you option shares? exercise your option and purchase the stock. Once you exercise your option, you will receive dividends, if any, but only if you continue to own the shares and own them on the date dividends are declared. Dividends are reported as income on Form 1099. What happens if there is a change in If there is an adjustment in the Speizman's stock, such as a stock outstanding shares of common stock, a split? corresponding adjustment will be made to your stock-based award. For stock options and SARs, a corresponding adjustment will be made to the exercise price and/or number of shares available under any stock option and SAR grant in order to preserve the option's or SAR's economic value. For example, if there is a two-for-one stock split, the number of shares available under an option would double and the exercise price would be cut in half. Is my stock-based award assignable You may generally assign, transfer or or transferable? sell any unrestricted stock you receive pursuant to an award. Shares of restricted stock can be assigned or transferred only to the extent allowed under your Award Agreement. Stock options and SARs generally cannot be assigned and are generally transferable only (1) if you die, and then only pursuant to your will or the laws of decent and distribution, or (2) pursuant to a qualified domestic relations order as defined by the Internal Revenue Code or the Employee Retirement Income Security Act of 1974, as amended. 11 Does receiving a stock-based award No. Your receipt of a stock-based award from Speizman affect the terms of grant will not affect your employment my employment? status. In addition, the grant of a stock-based award is not a contract, nor does it guarantee future employment with Speizman or its related companies. PLAN ADMINISTRATION AND GENERAL PLAN PROVISIONS Under what plan was my stock-based Your stock-based award was granted under award granted? the Speizman Industries, Inc. 2000 Equity Compensation Plan. Speizman may not grant incentive stock options under the Plan after November 16, 2010. Who administers the equity The plan is administered by the Stock compensation plan? Option Committee. The Stock Option Committee has broad authority to administer and interpret the plan, including the authority to determine who is eligible to receive a grant under the plan and what terms and conditions exist in each Award Agreement; to make any rules regarding exercise of options and SARs; and to make all other determinations necessary to administer the plan. What is the total number of shares of 155,000 shares of Speizman's common Speizman's common stock reserved for stock have been reserved for issuance grants under the Plan. pursuant to awards granted under the plan? Are the shares registered? The shares issuable pursuant to the plan are registered on a Form S-8 with the U.S. Securities and Exchange Commission ("SEC"), so, unless other restrictions on sale or transfer apply, they can be sold or transferred immediately according to the Securities Act of 1933. However, in any event, persons who at the time are "affiliates" of Speizman (as defined under SEC regulations) can resell the shares only according to Securities Act Rule 144 (but need not comply with the holding period provision of Rule 144) or another exemption from registration. The Chief Financial Officer will notify you if you are considered an affiliate of the company. Generally, "affiliates" are officers, directors or large shareholders. If you own an option and are an affiliate, you must notify the Chief Financial Officer of Speizman before you exercise your option. 12 Can the plan be amended or Yes. The Board of Directors has the sole terminated? right to amend and/or terminate the Plan. However, certain types of amendments may be made only with shareholder approval. Generally, no amendment or discontinuance of the Plan may adversely affect any stock-based award previously granted unless the holder of the award consents in writing. One example of an exception to this rule, however, is that in certain circumstances the Compensation Committee may treat an incentive stock option as a nonqualified stock option without the option holder's consent. How can I receive information on Speizman may periodically issue reports on the status of my stock-based award the status of your stock-based award. You or obtain a copy of the plan? also can obtain information and reports about the status of your stock-based award and the plan administrators by contacting your Chief Financial Officer at ###-###-####, or by writing to: Speizman Industries, Inc. Attention: Chief Financial Officer 701 Griffith Road Charlotte, North Carolina 28217 Copies of the Plan are available upon request from Speizman's Chief Financial Officer. How can I get more information about The Company's common stock is traded on Speizman's common stock? the NASDAQ SmallCap Market under the ticker symbol SPZN. You may be able to find daily stock information in the NASDAQ listings in the newspapers. You can get additional information about Speizman's common stock from most brokers. Is the Plan subject to ERISA? The grant of a stock-based award is not subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). In addition, the Plan is not intended to be a qualified pension, profit-sharing or stock bonus plan under Section 401(a) of the Internal Revenue Code. 13 OTHER INFORMATION ABOUT SPEIZMAN What else should I know? Speizman has filed a Registration Statement on Form S-8 under the Securities Act of 1933, as amended (the "Securities Act"), with the Securities and Exchange Commission regarding the shares of Speizman's common stock issuable under the Plan. This prospectus does not contain all the information included in the Registration Statement and its exhibits, nor does it fully describe all aspects of the Plan and related agreements. Consequently, the Plan and related agreements should be read together in their entirety. Any person receiving a copy of this prospectus may obtain, without charge, a copy of any of the documents listed below, which are incorporated by reference into this prospectus. . Speizman's Annual Report on Form 10-K filed on September 29, 2000, which contains audited financial statements for Speizman's latest fiscal year for which such statements have been filed; . All other reports filed by Speizman pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") since the end of the fiscal year covered by the document referred to above; and . The description of Speizman's common stock set forth in Speizman's registration statement filed under Section 12 of the Exchange Act, together with any amendment or report filed by Speizman to update such description. All reports and other documents subsequently filed with the SEC by the company pursuant to Sections 13(a) and (c), 14 and 15(d) of the Exchange Act before the filing of a post-effective amendment to the Registration Statement, which indicates that all securities offered thereunder have been sold, or which de-registers all such securities remaining unsold, are incorporated by reference and are part hereof from the date such reports and documents are filed. Any person receiving a copy of this prospectus may also obtain, without charge, a copy of any of the following documents: 14 . Any document prepared by Speizman to update the information included in this prospectus or incorporated herein by reference; . Any document constituting a part of this prospectus; . Speizman's latest annual report to stockholders containing the information required by Rule 14a-3(b) under the Exchange Act for its latest fiscal year; . All reports, proxy statements and other communications distributed by Speizman to its stockholders generally; and . All other documents required to be delivered by Speizman pursuant to Rule 428(b) under the Securities Act. Copies of all documents referenced above may be obtained by contacting the Chief Financial Officer, Speizman Industries, Inc., 701 Griffith Road, Charlotte, North Carolina 28217, telephone: (704) 559-5777. 15
