<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
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
[ ] Confidential, For Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
MPW INDUSTRIAL SERVICES GROUP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the 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:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:(1)
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identifying the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
- ---------------
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2
[LOGO]
9711 LANCASTER ROAD, S.E.
HEBRON, OHIO 43025
------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 11, 1998
------------------
To the Shareholders of
MPW Industrial Services Group, Inc.:
The Annual Meeting of Shareholders of MPW Industrial Services Group, Inc.
(the "Company") will be held at The Athletic Club of Columbus, 136 East Broad
Street, Columbus, Ohio 43215 on Wednesday, November 11, 1998, at 10:00 a.m.
local time for the following purposes:
1. To elect seven Directors to serve for the ensuing year;
2. To consider and act upon a proposal to amend the Company's 1997 Stock
Option Plan to increase the aggregate number of shares of Common Stock
that may be sold upon exercise of stock options granted under the Plan
from 700,000 to 1,200,000; and
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Only shareholders of record at the close of business on September 18, 1998,
will be entitled to vote at the meeting and any adjournment thereof. A list of
such shareholders will be available at the time and place of the meeting and,
during the ten days prior to the meeting, at the Company's principal office.
By Order of the Board of Directors
ROBERT J. GILKER
Vice President, Law and Administration
and Secretary
Hebron, Ohio
September 30, 1998
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. IF YOU DO NOT EXPECT TO
ATTEND, PLEASE FILL IN, DATE, SIGN AND RETURN THE ENCLOSED FORM OF PROXY IN THE
ENCLOSED PREPAID ENVELOPE AS PROMPTLY AS POSSIBLE.
<PAGE> 3
MPW INDUSTRIAL SERVICES GROUP, INC.
9711 LANCASTER ROAD, S.E.
HEBRON, OHIO 43025
------------------
PROXY STATEMENT FOR THE 1998 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 11, 1998
------------------
MPW Industrial Services Group, Inc. ("MPW" or the "Company") is mailing
this Proxy Statement to the shareholders of the Company in connection with the
solicitation of proxies by the Company's Board of Directors. These proxies will
be used at the Annual Meeting of Shareholders to be held at 10:00 a.m. on
Wednesday, November 11, 1998, at The Athletic Club of Columbus, 136 East Broad
Street, Columbus, Ohio 43215 and at any adjournment thereof (the "Annual
Meeting").
If a shareholder properly executes and returns the enclosed form of proxy,
it will be voted according to his or her instructions. If no instructions are
given, it will be voted (i) for the election as Directors of the seven nominees
named below, (ii) for the proposal to amend the Company's 1997 Stock Option Plan
to increase the aggregate number of shares of Common Stock that may be sold upon
exercise of stock options granted under the Plan from 700,000 to 1,200,000, and
(iii) in the discretion of the proxies with respect to any other matter that may
come before the meeting. Any shareholder may revoke a previously granted proxy
by giving notice of revocation to the Company in writing or in open meeting
before the proxy is exercised. Attendance at the Annual Meeting will not, in
itself, constitute revocation of a previously granted proxy.
The Company will pay the expenses of soliciting proxies, including the
charges and expenses of brokers, nominees, fiduciaries and custodians incurred
in sending proxy materials to principals and obtaining their instructions. In
addition to the use of the mail, proxies may be solicited in person or by
telephone or telegraph. Directors, officers and regular employees of the Company
may solicit proxies without additional compensation.
This Proxy Statement, Notice of Annual Meeting of Shareholders and the
accompanying form of proxy are first being mailed to shareholders on or about
September 30, 1998.
VOTING
The Board of Directors has fixed the close of business on September 18,
1998, as the record date (the "Record Date") for determining shareholders
entitled to notice of and to vote at the Annual Meeting. On the Record Date,
there were outstanding 10,700,201 shares of the Company's Common Stock, without
par value ("Common Stock"), all of one class and all of which are entitled to be
voted at the Annual Meeting. Holders of issued and outstanding shares of Common
Stock are entitled to one vote for each share held by them.
At the Annual Meeting, the results of shareholder voting will be tabulated
by the inspector of elections appointed for the Annual Meeting. Under Ohio law
and the Company's Code of Regulations, properly executed proxies either marked
"abstain" or held in "street name" by brokers that are not voted on one or more
particular proposals (if otherwise voted on at least one proposal) will be
counted for purposes of determining whether a quorum has been achieved at the
Annual Meeting but will not be treated as either a vote for or a vote against
any of the proposals to which such abstention or broker non-vote applies.
<PAGE> 4
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Company's Common Stock is the only outstanding class of voting
securities. The following table sets forth information regarding the beneficial
ownership of the Company's Common Stock as of September 18, 1998 by (a) each
person who owns beneficially more than 5% of Common Stock of the Company to the
extent known to management, (b) each Director and executive officer of the
Company set forth below, and (c) all directors and executive officers, as a
group. Unless otherwise indicated, the named persons exercise sole voting and
investment power over the shares that are shown as beneficially owned by them.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP OF CLASS
---------------- ----------------- --------
<S> <C> <C>
Monte R. Black (1)........................................ 6,200,000 57.9%
Susan K. Black............................................ 620,000 5.8%
Monte R. Black and Susan K. Black 1994 Irrevocable
Trust................................................... 503,784 4.7%
Ira O. Kane (2)........................................... 518,000 4.6%
Daniel P. Buettin (3)..................................... 92,500 *
Brad A. Martyn (4)........................................ 24,050 *
Pete A. Klisares.......................................... 1,000 *
Gerald Nilsson-Weiskott................................... 1,500 *
Robert E. Oyster.......................................... 5,000 *
Timothy A. Walsh.......................................... 1,500 *
Scott N. Whitlock......................................... 4,000 *
All Directors and executive officers as a group (10
persons) (5)............................................ 6,847,550 60.4%
</TABLE>
- ---------------
* less than 1%
(1) Includes (i) 620,000 shares held by Mr. Black's wife, Susan K. Black, and
(ii) an aggregate of 503,784 shares held in trust for Mr. Black's children.
Mr. Black disclaims beneficial ownership of the foregoing shares.
(2) Includes 518,000 shares subject to options to purchase Common Stock
exercisable until August 1, 2006.
(3) Includes 92,500 shares subject to options to purchase Common Stock
exercisable until August 1, 2006.
(4) Includes 24,050 shares subject to options to purchase Common Stock
exercisable until August 1, 2006.
(5) Includes (i) 620,000 shares held by Mr. Black's wife, Susan K. Black, (ii)
an aggregate of 503,784 shares held in trust for Mr. Black's children, and
(iii) 634,550 shares subject to options to purchase Common Stock exercisable
until August 1, 2006. Mr. Black disclaims beneficial ownership of the shares
referred to in (i) and (ii).
-2-
<PAGE> 5
PROPOSAL 1: ELECTION OF DIRECTORS
INFORMATION CONCERNING THE NOMINEES
Seven Directors will be elected at the Annual Meeting. Each Director
elected at the Annual Meeting will hold office until the next annual meeting of
shareholders and until his successor is duly elected and qualified, or until his
earlier death, resignation or removal from office. The Company's management
intends that the shares represented by the enclosed proxy will be voted, unless
the shareholder executing the proxy otherwise instructs, for the election to the
Board of Directors of each of the seven nominees named below.
The Company has no reason to believe that any of such nominees will be
unable, if elected, to serve as a Director. However, if such an event should
occur, the Company's management intends that the shares represented by the
enclosed proxy will be voted for the remainder of the nominees, and for such
substitute nominee or nominees as may be selected by the Company's current Board
of Directors.
All of the nominees for Director named below are currently serving as
Directors of the Company for terms expiring at the Annual Meeting. Messrs.
Klisares and Nilsson-Weiskott became Directors of the Company in February 1998.
Messrs. Whitlock, Oyster and Walsh became Directors in November 1995, February
1995 and September 1994, respectively. Mr. Kane took his position as a Director
of the Company in March 1994 and Mr. Black has served as the Chairman of the
Board of Directors since founding the Company in 1972.
The following table sets forth information regarding those persons
currently serving as directors of the Company. Certain biographical information
regarding each of the Company's current directors is described below the table.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Monte R. Black 48 Chairman of the Board of Directors and Chief Executive
Officer
Ira O. Kane 51 President and Chief Operating Officer; Director
Pete A. Klisares 62 Director
Gerald Nilsson-Weiskott 49 Director
Robert E. Oyster 52 Director
Timothy A. Walsh 36 Director
Scott N. Whitlock 55 Director
</TABLE>
Monte R. Black originally founded the Company in 1972 and has served as
Chief Executive Officer and Chairman of the Board of Directors since that time.
Ira O. Kane has served as President, Chief Operating Officer and Director
of the Company since March 1994. Prior to joining the Company, Mr. Kane served
as chairman of the board of directors, senior executive vice president and
director of NSC Corporation, an asbestos abatement company, and president and
chief operating officer of NSC Industrial Services Corp., an industrial services
company, from June 1993 until February 1994. Prior to joining NSC Corporation,
Mr. Kane served as director and executive vice president of OHM Corporation, an
environmental services company, from January 1984 until June 1993. Prior to
joining OHM Corporation, Mr. Kane was a partner with Crabbe, Brown, Jones, Potts
& Schmidt, a law firm.
Pete A. Klisares has served as a Director of the Company since February
1998. Mr. Klisares has served as president, chief operating officer and a
director of Karrington Health, Inc., a provider of assisted living facilities,
since December 1997. Prior to this time, Mr. Klisares served in the following
capacities with Worthington Industries, Inc., a manufacturer of processed steel
and custom and cast products: (i) assistant to the chairman of the board of
directors from August 1997 to December 1997 and from December 1991 to July 1993,
and (ii) executive vice president from August 1993 to July 1997. Before joining
Worthington Industries, Mr. Klisares served as executive director of JMAC, Inc.
an investment vehicle, from May 1991 to December 1991 and as Manufacturing Vice
President and General Manager of AT&T, a telecommunications firm, for more than
five years prior to May 1991. Mr. Klisares also serves as a director of
Worthington Industries, Dominion Homes, Inc., a residential construction firm,
and Huntington National Bank, N.A., a national banking association.
-3-
<PAGE> 6
Gerald Nilsson-Weiskott has served as a Director of the Company since
February 1998. Dr. Nilsson-Weiskott founded and has served as senior partner of
Organizational Horizons Incorporated, a comprehensive human resource consulting
firm, since 1983. Dr. Nilsson-Weiskott also served as director of marketing and
development of Healthy Lifestyle Consultants, a behavioral health company, from
1979 until March 1997. Prior to this time, Dr. Nilsson-Weiskott served as the
director of training of The Ohio State University Consultation and Counseling
Services.
Robert E. Oyster has served as a Director of the Company since February
1995. Mr. Oyster has served as president of Univenture, Inc., a packaging
materials manufacturer, since July 1998. Prior to this time, Mr. Oyster served
in the following capacities with Sun Television and Appliances, Inc., a consumer
electronics retailer: (i) chairman of the board of directors and chief executive
officer from June 1995 until June 1996; (ii) president and chief operating
officer from November 1989 until February 1996; and (iii) chief financial
officer and treasurer from June 1979 until June 1996. Prior to this time, Mr.
Oyster was employed by KPMG Peat Marwick, a public accounting firm.
Timothy A. Walsh has served as a Director of the Company since September
1994. Mr. Walsh has served as executive vice president, finance and treasurer
for Farm Family Holdings, Inc., a property and casualty insurance company, since
October 1996. Prior to this time, Mr. Walsh served in the following capacities
with Farm Family Insurance Company, a subsidiary of Farm Family Holdings, Inc.:
(i) senior vice president, finance from March 1996 to November 1996; and (ii)
director of corporate development from August 1995 to March 1996. Prior to this
time, Mr. Walsh served as Vice President, Finance, Chief Financial Officer and
Secretary of the MPW Industrial Services, Inc. from April 1994 until August 1995
and as corporate controller for NSC Corporation, an asbestos abatement company,
from June 1992 until April 1994. Before joining NSC Corporation, Mr. Walsh was
employed by KPMG Peat Marwick, a public accounting firm.
Scott N. Whitlock has served as a Director of the Company since November
1995. Mr. Whitlock has been of counsel with Vorys, Sater, Seymour and Pease, a
law firm, since August 1995. Prior to this time, Mr. Whitlock served in the
following capacities with Honda of America Mfg., Inc., an automobile
manufacturer: (i) executive vice president from January 1990 to April 1995; and
(ii) senior vice president and plant manager from January 1985 to January 1990.
Before joining Honda of America, Mr. Whitlock was a partner with Vorys, Sater,
Seymour and Pease.
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETINGS HELD
During the Company's fiscal year ended June 30, 1998 ("fiscal 1998"), the
Board of Directors of the Company held a total of nine meetings.
The Compensation Committee of the Board of Directors met once during fiscal
1998. Messrs. Klisares, Nilsson-Weiskott and Walsh are presently members of the
Compensation Committee, the primary function of which is to review and approve
salaries and other benefits for executive officers of the Company, to make
recommendations to the Board of Directors with respect to the adoption of
employee benefit programs and to administer the Company's stock option plans and
approve awards of stock options made under the Company's 1997 Stock Option Plan.
The Company has an Audit Committee, the primary function of which is to
oversee the accounting and auditing affairs of the Company. Messrs. Oyster,
Walsh and Whitlock serve as members of the Audit Committee which did not meet
during fiscal 1998.
The Company has no standing nominating committee or committee performing
similar functions.
-4-
<PAGE> 7
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The compensation discussion that follows has been prepared based on the
actual plan and non-plan compensation awarded to, earned by or paid to the
Company's named executive officers during the periods presented. The Company's
compensation arrangements with its directors and employment contracts and
several arrangements with its named executive officers are also described below.
CASH COMPENSATION TABLE
The following table sets forth the compensation paid or payable by the
Company during the fiscal years ended June 30, 1998 and 1997, to those
individuals serving as the registrant's chief executive officer at any time
during fiscal 1998 and certain other executive officers of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
------------------- ---------------------
SALARY BONUS SECURITIES UNDERLYING
NAME AND PRINCIPAL POSITION YEAR ($) ($) OPTIONS(#) (1)
--------------------------- ---- -------- -------- ---------------------
<S> <C> <C> <C> <C>
Monte R. Black 1998 453,097 232,600 --
Chairman of the Board of Directors 1997 453,131 100,000 --
and Chief Executive Officer
Ira O. Kane 1998 279,167 181,000 --
President and Chief Operating Officer 1997 200,000 175,000 518,000
Daniel P. Buettin 1998 150,083 90,000 --
Vice President, Chief Financial Officer, 1997 110,000 55,000 148,000
and Assistant Secretary
Brad A. Martyn 1998 109,896 42,000 --
Corporate Controller, Treasurer, and 1997 89,375 32,750 74,000
Assistant Secretary
</TABLE>
- ---------------
(1) Pursuant to contractual commitments made by the Company at the time the
named executive officers commenced their employment, the vesting provisions
and exercise price of certain stock options are effective as of the date of
the commencement of such named executive officer's employment, which
preceded the date of grant of such stock options.
FISCAL 1998 AGGREGATED OPTION EXERCISES FY-END OPTION VALUES
The following table sets forth information concerning the exercise of stock
options by each of the Company's named executive officers during fiscal 1998 and
fiscal year end value of unexercised options.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES VALUE OPTIONS AT FISCAL YEAR-END(#) OPTIONS AT FISCAL YEAR-END($)
ACQUIRED ON REALIZED ------------------------------ ------------------------------
NAME EXERCISE(#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ------------ -------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Ira O. Kane.......... -- -- 518,000 -- 5,883,185 --
Daniel P. Buettin.... -- -- 55,500 92,500 598,290 989,935
Brad A. Martyn....... -- -- 24,050 49,950 254,764 524,642
</TABLE>
- ---------------
(1) Value is based on the June 30, 1998 closing price of $13.50 per share of the
Company's common stock on the Nasdaq National Market.
-5-
<PAGE> 8
DIRECTORS' COMPENSATION
Directors who are employees of the Company do not receive compensation for
serving as Directors. Non-Employee Directors are paid a quarterly fee of $1,500
as well as additional fees of $1,000 for each meeting of the Board of Directors
or of a committee of the Board of Directors attended by such Director. All
Directors of the Company also are reimbursed for reasonable travel expenses to
and from meetings of the Board of Directors and committees.
EMPLOYMENT AND SEVERANCE AGREEMENTS WITH CERTAIN EXECUTIVES
Ira O. Kane entered into an employment agreement with the Company with a
term extending through June 30, 1999. Mr. Kane's employment agreement provides
for a minimum annual base salary of $300,000 and incentive compensation. In
general, Mr. Kane's employment agreement provides that if he is terminated for
any reason other than cause, he will receive a lump sum severance payment equal
to the greater of (i) the remaining base salary that would have been distributed
to him by the Company under the remaining term of his employment agreement or
(ii) one year's base salary, and the incentive compensation earned by Mr. Kane
for the most recent fiscal year. In the event that Mr. Kane is terminated
without cause following the term of his employment agreement, he will receive a
severance payment of one year's base salary and the incentive compensation
earned for the prior year. In addition, Mr. Kane's employment agreement provides
for the continuation of certain employee benefits for the longer of the
remaining term of the agreement or one year following his termination.
Mr. Kane has agreed pursuant to his employment agreement not to compete
with MPW for the longer of the term of his employment agreement or one year
following the payment of the foregoing severance benefit.
The Company has also entered into separate severance agreements (the
"Severance Agreements"), which are designed to ensure the continuity of
management in the event of a change in control, with Mr. Black, Mr. Kane, Mr.
Buettin and Mr. Martyn. The Severance Agreements provide that following a change
in control such executives will be entitled to severance compensation upon
termination of employment during the period commencing with the occurrence of
the change in control and continuing until the earliest of (i) the third
anniversary of the occurrence of the change in control, (ii) death or (iii)
attainment of age 65 and the occurrence of one or more certain additional
events.
Under the Severance Agreements, severance compensation will be a lump sum
payment in an amount equal to three times the sum of (i) base pay at the highest
rate in effect for the three calendar years immediately preceding the year in
which the change in control occurs, plus (ii) incentive pay in an amount equal
to not less than the highest aggregate annual bonus, incentive or other payments
of cash compensation made or to be made in regard to services rendered in any
fiscal year during the three fiscal years immediately preceding the year in
which the change in control occurs, less the sum of (iii) any and all payments
received from the Company, a successor or their affiliates following a change in
control, plus (iv) any future payments to be made in accordance with any
employment agreements or other contracts between the Company and such other
entities. For three years following termination, the Company will arrange to
provide the executives with welfare benefits substantially similar to those they
were receiving or were entitled to receive immediately prior to the termination
date, with such three-year period qualifying as service with the Company for the
purpose of determining service credits and benefits under the Company's various
retirement benefit plans.
The Company has agreed to pay any and all legal fees incurred by these
executives in connection with the interpretation, enforcement or defense of
their rights under the Severance Agreements. The terms of the Severance
Agreements run until the later of (i) the close of business on June 30, 2002 or
(ii) the expiration of the three-year period of severance benefit coverage.
Beginning in fiscal 2003, the Severance Agreements will automatically be renewed
for successive one year terms unless the Company or the executive gives notice
of intent to terminate before such renewal.
In the event of a termination of employment following a change in control,
at the option of Mr. Kane, the terms of his employment agreement may govern such
termination in lieu of the terms of his Severance Agreement.
-6-
<PAGE> 9
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Messrs. Klisares, Nilsson-Weiskott
and Walsh. Prior to November, 1997, the Company never had a Compensation
Committee or other committee of the Board of Directors performing similar
functions and decisions concerning compensation of executive officers of the
Company were made by the Company's Chief Executive Officer. Mr. Walsh served as
Vice President, Finance, Chief Financial Officer and Secretary of MPW Industrial
Services, Inc., a subsidiary of the Company from April 1994 until August 1995.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION*
The Compensation Committee of the Board of Directors of the Company (the
"Committee") is comprised of three outside Directors, none of whom is or was
formerly an officer of the Company, although Mr. Walsh served as Vice President,
Finance, Chief Financial Officer and Secretary of MPW Industrial Services, Inc.,
a subsidiary of the Company from April 1994 until August 1995. During fiscal
1998, none of the Company's executive officers served on the board of any entity
of which a Committee member was an executive officer or on the compensation
committee of any entity of which any Director of the Company was an executive
officer.
Role of Compensation Committee
Prior to November 1997, the Company had no compensation committee, and
decisions concerning compensation of executive officers of the Company were made
by the Company's Chief Executive Officer. Following the Offering, the Committee
undertook the oversight responsibility for the Company's executive compensation
program.
In general, the Company's compensation program for executive officers
consists of three primary elements: a base salary, a discretionary bonus and
periodic grants of stock options. The Committee believes that it is important to
pay competitive salaries but also to make a high proportion of the executive
officers' total compensation at risk in order to cause the executive officers to
focus on both the short-term and the long-term interests of the Company's
shareholders. Therefore, the bonus (which permits individual performance to be
recognized on an annual basis, and which is based, in part, on an evaluation of
the contribution made by the executive officer to the Company's performance) and
stock option grants (which directly tie the executive officer's long-term
remuneration to stock price appreciation realized by the Company's shareholders)
are important components of the overall compensation package.
Base Salary
Base salary is reviewed annually and may be adjusted on individual
performance and industry analysis and comparisons. To date, the Committee has
not utilized compensation consultants, but it may do so in future years to
assist the Committee with respect to industry analysis and comparisons. With
respect to fiscal 1998, no specific weight was assigned to any of the factors
mentioned above in determining 1998 base salaries for the Chief Executive
Officer and the other executive officers.
In connection with the Company's initial public offering (the "Offering"),
which was consummated on December 5, 1997, the Company's Board of Directors
restructured the Company's compensation arrangements with its executive
officers, generally to increase the amount of base salary to levels that the
board deemed to be more competitive with similarly situated companies. In
addition, the Board of Directors approved an employment agreement with the
President and Chief Operating Officer described under "Executive Compensation
and Other Information -- Employment and Severance Agreements with Certain
Executives."
- ---------------
* Notwithstanding anything to the contrary set forth in the Company's previous
or future filings under the Securities Act of 1933 or the Securities Exchange
Act of 1934 that might incorporate future filings, including this proxy
statement, in whole or in part, the information set forth under "-- Board
Compensation Committee Report on Executive Compensation" and "-- Performance
Graph" shall not be incorporated by reference into any such filings.
-7-
<PAGE> 10
Bonus Plan
Bonuses are awarded at the discretion of the Committee and are targeted at
a percentage of the annual base salary of each executive officer. The targeted
bonus is the bonus the Company expects to award, based on the Company's
achievement of certain performance objectives, which, in the case of fiscal
1998, was the achievement of certain earnings per share targets. The granted
bonus may be more or less than the targeted percentage, based on the Company's
performance in relation to the stated goals and the subjective determination by
the Compensation Committee of the executive's performance. For fiscal 1998, each
of the Company's executive officers received his full targeted bonus and the
President and Chief Operating Officer received an additional amount to align his
fiscal 1998 bonus with the bonus paid to him for the 1997 fiscal year and to
reflect the committee's evaluation of his performance and contribution to the
Company's operating results for the 1997 fiscal year.
Stock Options
The purpose of the Company's 1997 Stock Option Plan is to attract and
retain key personnel and directors of the Company and to enhance their interest
in the Company's continued success. The maximum number of the Company's Common
Shares with respect to which awards may be granted under the 1997 Stock Option
Plan is 700,000. The Board is proposing that the Company shareholders approve
the amendment and restatement of the 1997 Stock Option Plan which would increase
the number of shares of Common Stock available thereunder to 1,200,000.
During fiscal 1998, the Company did not grant stock options to any of its
executive officers.
Mr. Monte R. Black's annual base salary for fiscal 1998 was established
prior to the Offering. In determining his fiscal 1998 bonus, the Committee
followed the same policies which it follows with respect to other executive
officers, which are described above. The Company's fiscal 1998 financial results
as well as other non-financial subjective considerations were considered, but as
with other executive officers, no particular weight was given to any factor. Mr.
Black was not granted any stock options during fiscal 1998.
Section 162(m) Compliance
Section 162(m) of the Internal Revenue Code, as in effect from time to time
(the "Code") places certain restrictions on the amount of compensation in excess
of $1,000,000 which may be deducted for each executive officer. The Company
intends to satisfy the requirements of Section 162(m) should the need arise.
Submitted by the Compensation
Committee
of the Company
TIMOTHY A. WALSH, Chairman
PETE A. KLISARES
GERALD NILSSON-WEISKOTT
-8-
<PAGE> 11
PERFORMANCE GRAPH*
Set forth below is a line graph comparing the yearly percentage change in the
cumulative total shareholder return on the Common Stock against the cumulative
total return of the S&P Composite-500 Stock Index and a peer group of companies
selected by the Company consisting of companies engaged in whole or in part in
the industrial cleaning and maintenance industry. These companies are: ABM
Industries, Inc., C.H. Heist Corporation, Harsco Corporation, Philip Services
Corp., Safety-Kleen Corp., The ServiceMaster Company and Valley Systems, Inc.
(the "Peer Group").
<TABLE>
<CAPTION>
MPW
INDUSTRIAL
Measurement Period SERVICES PEER
(Fiscal Year Covered) GROUP, INC. GROUP S & P 500
<S> <C> <C> <C>
12/2/97 100.00 100.00 100.00
12/97 100.00 110.14 101.72
1/98 91.67 96.32 102.84
2/98 108.33 100.59 110.26
3/98 120.83 103.47 115.91
4/98 133.33 99.82 117.07
5/98 152.78 102.61 115.06
6/98 150.00 113.21 119.73
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On August 9, 1996, MPW sold a certain real estate and a commercial building
located in Chesterfield, Michigan, which currently serves as one of MPW's
industrial container cleaning facilities, to the Black Family Limited
Partnership, an Ohio limited partnership in which Monte R. Black serves as the
sole general partner, for an aggregate consideration of $2.2 million. As part of
the same transaction, the partnership and MPW entered into a long-term lease
arrangement with respect to the facility for a term of ten years at an annual
payment amount of approximately $421,000, payable monthly. In connection with
the Offering, the Company entered into an amended lease agreement through June
30, 2004, which provides for an annual rental of $288,000, payable monthly,
which the Company believes is no less favorable than it would obtain in a third
party arm's-length transaction.
As part of an industrial revenue bond financing in 1986, Monte R. and Susan
K. Black constructed an approximately 67,000 square foot building in Hebron,
Ohio, which the Company leased for a ten-year term. Annual rent payments on the
building and equipment during this ten-year term were $726,000, payable monthly.
In connection with the Offering, the Company entered into an amended lease
agreement through June 30, 2004,
- ---------------
* Notwithstanding anything to the contrary set forth in the Company's previous
or future filings under the Securities Act of 1933 or the Securities Exchange
Act of 1934 that might incorporate future filings, including this proxy
statement, in whole or in part, the information set forth under "-- Board
Compensation Committee Report on Executive Compensation" and "-- Performance
Graph" shall not be incorporated by reference into any such filings.
-9-
<PAGE> 12
which provides for an annual rental of $600,000, payable monthly, which the
Company believes is no less favorable than it would obtain in a third party
arm's-length transaction.
In 1989 the Company entered into a five-year agreement to rent certain real
estate and a commercial building located in Newark, Ohio from Monte R. and Susan
K. Black. In 1993 the Company extended the lease for an additional five-year
term. Annual lease payments were $46,920, payable monthly. Effective July 1,
1997, the Company entered into a lease agreement through June 30, 2004, which
provides for an annual rental of $66,000, payable monthly, which the Company
believes is no less favorable than it would obtain in a third party arm's-length
transaction.
The Company provides, from time to time, certain operational,
administrative and financial services to Pro-Kleen Industrial Services, Inc.
("Pro-Kleen"), a portable sanitation services company wholly-owned by Monte R.
Black. During fiscal 1998, such services totaled $223,000.
In February 1998, the Company sold its corporate aircraft at a fair market
value of $3.6 million to an entity controlled by Monte R. Black. The purchase
price was paid by redeeming a portion of the indebtedness created by the
termination, prior to the Offering, of the S Corporation status of MPW
Industrial Services, Inc. ("Industrial") and distribution of accumulated
undistributed earnings to the former shareholders of Industrial. At the same
time, the Company entered into a five-year agreement to rent the aircraft from
such entity for an annual lease payment of $360,000, payable monthly, plus
applicable state and local sales taxes. This lease terminates on January 31,
2003 unless extended by the parties or unless terminated earlier by either party
on no less than 120 days' prior written notice.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Directors and Executive Officers to file reports of ownership and changes of
ownership with the Securities and Exchange Commission and the Nasdaq National
Market. The Company assists its Directors and Executive Officers in completing
and filing those reports. The Company believes that during the last completed
fiscal year all filing requirements applicable to its Directors and Executive
Officers were complied with except that the Initial Statement of Beneficial
Ownership of Securities of each of Messrs. Black, Kane, Buettin, Martyn, Oyster,
Walsh and Whitlock were not filed on the day that the Company's registration
statement on Form S-1 was declared effective by the Securities and Exchange
Commission, the day on which each such person became a reporting person.
PROPOSAL 2: TO AMEND THE COMPANY'S 1997 STOCK OPTION PLAN
PROPOSED AMENDMENTS
The Board of Directors has approved, subject to the further approval of the
shareholders of the Company, an amendment of the Company's 1997 Stock Option
Plan (the "1997 Plan") to increase the aggregate number of shares of Common
Stock that may be sold upon exercise of stock options granted under the 1997
Plan from 700,000 to 1,200,000.
The Company recognizes the importance of attracting and retaining
outstanding individuals as officers and employees, and of stimulating the active
interest of these persons in the development and financial success of the
Company. The Board of Directors believes that the 1997 Plan is a significant
factor in furtherance of these objectives and intends, through the 1997 Plan, to
furnish incentives to officers and employees to increase the Company's profits
by providing such persons with opportunities to acquire shares of the Common
Stock of the Company on advantageous terms. In light of the competitive industry
in which the Company participates, the Board of Directors believes the 1997 Plan
is a particularly important factor in the Company's overall compensation program
and in attracting and retaining officers and key employees. However, as of
September 18, 1998, following the grant of 335,000 stock options to certain
executive officers and other key employees of the Company, and absent approval
of this Proposal, there were only 15,500 shares remaining available for issuance
upon exercise of stock options granted under the 1997 Plan. The Board of
Directors believes that in order to continue the effectiveness of the 1997 Plan
in achieving the objectives discussed above, it would be desirable to
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<PAGE> 13
increase to 1,200,000 the number of shares that may be issued upon the exercise
of stock options granted under the 1997 Plan. The following description of the
1997 Plan is qualified in its entirety by reference to the 1997 Plan, as
amended, attached hereto as Appendix 1.
Officers and key employees of the Company and its subsidiaries are eligible
to receive stock options under the 1997 Plan. The purpose of the 1997 Plan is to
attract and retain outstanding individuals as officers and employees of the
Company and its subsidiaries, and to furnish incentives to such persons to
increase the Company's profits by providing them opportunities to acquire shares
of Common Stock of the Company on advantageous terms. The 1997 Plan is
administered by the Compensation Committee of the Board of Directors, consisting
of Messrs. Klisares, Nilsson-Weiskott and Walsh, which determines the terms and
conditions of stock options issued under the 1997 Plan, amounts of benefits
granted, and the officers and key employees who shall receive them. Options
granted under the 1997 Plan may be (i) options that are intended to qualify
under particular provisions of the Code; (ii) options that are not intended to
so qualify; or (iii) combinations of the foregoing.
The 1997 Plan, as amended, authorizes the granting of options to purchase
up to an aggregate of 1,200,000 shares of the Company's Common Stock. Option
agreements evidencing the grant of options are required to specify an option
price that is not less than the fair market value of shares of Common Stock of
the Company on the date of grant in the case of incentive options or not less
than 85% of the fair market value of Shares of Common Stock of the Company on
the date of grant in the case of non-qualified options. Option agreements must
also specify the methods of payment of the option price, which may be (i) in
cash or check; (ii) by delivery of Common Stock of the Company already owned by
the optionee having a fair value at the time of exercise equal to the total
option price; or (iii) a combination of such methods of payment. Each stock
option granted under the 1997 Plan, other than those granted to nonemployee
directors as described below, vests as determined by the Committee. No stock
option granted may be exercised more than ten years from the date of grant and
the 1997 Plan does not impose a limit on the number of shares that may be
optioned to a particular employee or officer. However, the Code requires that
the aggregate fair market value (determined at the time the options are granted)
of stock with respect to which "incentive stock options" are exercisable for the
first time by any one employee during any calendar year not exceed a total of
$100,000. Outstanding options are subject to adjustment in specified events,
such as stock dividends, stock splits, recapitalizations and mergers, and the
number of shares authorized by the 1997 Plan is subject to adjustment in those
events.
The 1997 Plan may be amended by the Board of Directors of the Company
without shareholder approval; however, no such amendment may (i) increase the
maximum of shares of Common Stock available under the 1997 Plan; (ii) change the
eligible participants under the 1997 Plan; or (iii) cause Rule 16b-3 of the
Commission (or any successor rule to the same effect) to cease to be applicable
to the 1997 Plan.
Under the 1997 Plan, each director who is not an associate of the Company
or of a subsidiary will receive, on the first business day after the first
annual meeting of shareholders, a grant of a non-qualified stock option to
purchase 2,000 shares of Common Stock and, on the first business day after each
subsequent annual meeting of shareholders, a grant of a non-qualified stock
option to purchase 1,000 shares of Common Stock, in each case at an exercise
price equal to the fair market value of the Common Stock on the date of grant. A
director option will vest in full one year following the date of grant and will
be exercisable until the earlier of (i) the tenth anniversary of the date of
grant and (ii) three months (one year in the case of a director who becomes
disabled or dies) after the date the director ceases to be a director. The
exercise price of the director options may be satisfied in cash or, in the
discretion of the Committee, by exchanging Common Stock owned by the director,
or by a combination of cash and Common Stock.
Based on the closing price of the Company's Common Stock on the Nasdaq
National Market on September 18, 1998, the market value of the shares of Common
Stock underlying the additional 500,000 options being authorized hereby would be
$4,250,000.
FEDERAL INCOME TAX CONSEQUENCES
Stock options issued under the 1997 Plan may be either Non-Qualified Stock
Options or Incentive Stock Options with the following Federal tax consequences.
-11-
<PAGE> 14
Non-Qualified Stock Options. A stock option not qualified under the Code (a
"Non-Qualified Stock Option") generally will not result in any taxable income to
the optionee at the time it is granted. In general, the holder of a
Non-Qualified Stock Option will realize ordinary income, at the time of exercise
of the option, in an amount measured by the excess of the fair market value of
the optioned shares (at the time of exercise) over the option price. However,
the Section 16(b) Deferral described below will apply in the case of optionees
who are officers of the Company.
If the option price of a Non-Qualified Stock Option is paid for by the
delivery of shares of Common Stock previously owned by the optionee, no gain or
loss will be recognized to the extent that the shares received are equal in fair
market value to the shares surrendered.
Section 83 of the Code deals generally with property (including stock)
received by an employee as compensation, and provides for deferral of taxation
so long as the employee's rights in the property are subject to a substantial
risk of forfeiture and are not transferable. Section 83 will apply so long as
the sale of stock received could subject the employee to suit under Section
16(b) of the Securities Exchange Act of 1934, as amended, but not longer than
six months ("Section 16(b) Deferral").
The Section 16(b) Deferral can be avoided if the officer makes an election
within thirty days after the transfer of stock to him or her to have it taxed to
him or her as ordinary income at its fair market value on the date of transfer
less the amount, if any, paid by him or her.
Incentive Stock Options. An incentive stock option (i.e., a stock option
that is qualified under the Code (an "Incentive Stock Option")) will not result
in any taxable income to the optionee when it is granted or timely exercised. To
be timely exercised, an Incentive Stock Option must be exercised within three
months after the optionee ceases to be an employee (within one year if the
optionee is disabled) unless the optionee has died. If the optioned stock is
held more than two years from the date of grant of the option and more than one
year after the transfer of the stock to the optionee, the optionee will be taxed
on any gain on the sale of such stock at long-term capital gains rates.
If Common Stock acquired on the exercise of an Incentive Stock Option is
sold, exchanged or otherwise disposed of before the end of the required holding
periods, the optionee will in the usual case realize ordinary income at the time
of disposition equal to the excess of the fair market value of the stock at the
time of exercise over the option price.
Under Section 1036 of the Code, if shares of Common Stock previously owned
by the optionee are transferred in payment of the option price under an
Incentive Stock Option, generally no gain or loss will be recognized on the
surrender of such shares to the extent the fair market value of the shares
received equals the fair market value of the shares surrendered. The shares
received in such equal exchange will have the same tax basis and holding period
as the shares surrendered; any additional shares received will have a zero basis
and the holding period will commence on the transfer date. The spread at the
time of exercise will not be subject to tax if the holding period and other
requirements for an Incentive Stock Option are satisfied. However, if any shares
transferred in payment of the option price under an Incentive Stock Option were
previously acquired by the optionee on the exercise of an Incentive Stock Option
and were held for less than the necessary holding period, Section 1036 would not
be available. As a result, the optionee would realize income on the surrender of
such shares in payment of the option price.
General Matters. To the extent that an employee recognizes ordinary income
in the circumstances described above, the Company would be entitled to a
corresponding deduction, provided, among other things, that such income meets
the test of reasonableness and is an ordinary and necessary business expense.
Withholding of Federal taxes at applicable rates will be required in
connection with ordinary income realized by an optionee upon exercise of
Non-Qualified Stock Options and disqualifying dispositions of stock acquired
upon exercise of an Incentive Stock Option.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR PROPOSAL 2.
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<PAGE> 15
SHAREHOLDER PROPOSALS FOR THE 1999 ANNUAL MEETING
Shareholder proposals for the 1999 annual meeting of shareholders (the
"1999 Annual Meeting") must be received by the Secretary of the Company by June
2, 1999, to be included in the Company's proxy statement, notice of annual
meeting and proxy related to the 1999 Annual Meeting.
OTHER MATTERS
The Board of Directors knows of no other matters to be presented for action
at the forthcoming Annual Meeting. However, the proxy confers upon the persons
named therein discretionary authority to act upon any other matter that may
properly come before the meeting.
THE COMPANY WILL FURNISH A COPY OF ITS ANNUAL REPORT ON FORM 10-K FOR THE
YEAR ENDED JUNE 30, 1998, INCLUDING FINANCIAL STATEMENTS AND SCHEDULES THERETO,
BUT EXCLUDING OTHER EXHIBITS, WITHOUT CHARGE, TO ANY PERSON UPON WRITTEN REQUEST
ADDRESSED TO ROBERT J. GILKER, VICE PRESIDENT, LAW AND ADMINISTRATION AND
SECRETARY, MPW INDUSTRIAL SERVICES GROUP, INC., 9711 LANCASTER ROAD, S.E.,
HEBRON, OHIO 43025.
ROBERT J. GILKER
Vice President, Law and Administration
and Secretary
September 30, 1998
Hebron, Ohio
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<PAGE> 16
APPENDIX 1
MPW INDUSTRIAL SERVICES GROUP, INC.
AMENDED AND RESTATED 1997 STOCK OPTION PLAN
1. PURPOSE. The purpose of this Plan is to attract and retain directors,
officers and key employees and consultants for MPW Industrial Services Group,
Inc., an Ohio corporation (the "Corporation"), and its Subsidiaries and to
provide such persons with incentives and rewards for superior performance.
2. DEFINITIONS. As used in this Plan,
"BOARD" means the Board of Directors of the Corporation.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
"COMMITTEE" means the committee described in Section 11(a) of this Plan;
provided, however, that until the Corporation shall have a class of equity
securities registered pursuant to Section 12 of the Exchange Act of 1934, as
amended, the "Committee" shall mean the Board, as defined herein.
"COMMON SHARES" means (i) shares of the common stock of the Corporation, no
par value, and (ii) any security into which Common Shares may be converted by
reason of any transaction or event of the type referred to in Section 6 of this
Plan.
"DATE OF GRANT" means the date specified by the Committee on which a grant
of Option Rights shall become effective, which shall not be earlier than the
date on which the Committee takes action with respect thereto.
"INCENTIVE STOCK OPTIONS" means Option Rights that are intended to qualify
as "incentive stock options" under Section 422 of the Code or any successor
provision.
"LESS-THAN-80-PERCENT SUBSIDIARY" means a Subsidiary with respect to which
the Corporation directly or indirectly owns or controls less than 80 percent of
the total combined voting or other decision-making power.
"MARKET VALUE PER SHARE" means, at any date, (i) the closing sales price
for the Common Shares on that date, if available, or, if there are no sales on
that date or if a closing sales price is not available, (ii) the average of the
"bid" and "asked" prices of the Common Shares on that date, in each case as
reported by the National Association of Securities Dealers Automated Quotation
System or any national securities exchange on which the Common Shares are then
traded, or, if (i) or (ii) are not available, the fair market value of the
Common Shares as determined by the Committee from time to time.
"NONEMPLOYEE DIRECTOR" means a member of the Board, who is not also an
employee of the Company or any of its subsidiaries on the date an Option Right
is granted to him or her pursuant to Section 4(b) of this Plan.
"OPTIONEE" means the person so designated in an agreement evidencing an
outstanding Option Right.
"OPTION PRICE" means the purchase price payable upon the exercise of an
Option Right.
"OPTION RIGHT" means the right to purchase Common Shares upon exercise of
an option granted pursuant to Section 4 of this Plan.
"PARTICIPANT" means a person who is selected by the Committee to receive
benefits under this Plan and who is at that time an officer, including without
limitation an officer who may also be a member of the Board, any other key
employee of, or a consultant to, the Corporation or any Subsidiary, or who has
agreed to commence serving in any such capacity or a Nonemployee Director
receiving an Option Right pursuant to Section 4(b) hereof.
"RELOAD OPTION RIGHTS" means additional Option Rights granted automatically
to an Optionee upon the exercise of Option Rights pursuant to Section 4(a)(iii)
of this Plan.
"RULE 16b-3" means Rule 16b-3 of the Securities and Exchange Commission (or
any successor rule to the same effect), as in effect from time to time.
<PAGE> 17
APPENDIX 1
"SUBSIDIARY" means a corporation, partnership, joint venture,
unincorporated association or other entity in which the Corporation has a direct
or indirect ownership or other equity interest; provided, however, for purposes
of determining whether any person may be a Participant for purposes of any grant
of Incentive Stock Options, "Subsidiary" means any corporation in which the
Corporation owns or controls directly or indirectly more than 50 percent of the
total combined voting power represented by all classes of stock issued by such
corporation at the time of such grant.
3. SHARES AVAILABLE UNDER THE PLAN.
(a) Subject to adjustment as provided in Section 6 of this Plan, the number
of Common Shares issued or transferred upon the exercise of Option Rights shall
not in the aggregate exceed 1,200,000 Common Shares, which may be Common Shares
of original issuance or Common Shares held in treasury or a combination thereof.
If any award terminates, expires or is canceled with respect to any Common
Shares, new awards may thereafter be granted covering such Common Shares.
(b) Upon the full or partial payment of any Option Price by the transfer to
the Corporation of Common Shares or upon satisfaction of tax withholding
provisions in connection with any such exercise or any other payment made or
benefit realized under this Plan by the transfer or relinquishment of Common
Shares, there shall be deemed to have been issued or transferred under this plan
only the net number of Common Shares actually issued or transferred by the
Corporation.
4. OPTION RIGHTS.
(a) The Committee may from time to time authorize grants to Participants of
options to purchase Common Shares upon such terms and conditions as the
Committee may determine in accordance with the following provisions:
(i) Each grant shall specify the number of Common Shares to which it
pertains.
(ii) Each grant shall specify an Option Price per Common Share, which
in the case of Incentive Options, shall be equal to or greater than the
Market Value per Share on the Date of Grant and, in the case of other
options, shall not be less than eighty-five percent (85%) of the Market
Value per Share on the Date of Grant.
(iii) Each grant shall specify the form of consideration to be paid in
satisfaction of the Option Price and the manner of payment of such
consideration, which may include (A) cash in the form of currency or check
or other cash equivalent acceptable to the Corporation, (B) nonforfeitable,
unrestricted Common Shares, which are already owned by the Optionee and
have a value at the time of exercise that is equal to the Option Price, (C)
any other legal consideration, including, without limitation, promissory
notes, that the Committee may deem appropriate, including without
limitation any form of consideration authorized under Section 4(a)(iv)
below, on such basis as the Committee may determine in accordance with this
Plan and (D) any combination of the foregoing.
(iv) Any grant may provide for deferred payment of the Option Price
from the proceeds of sale through a bank or broker on the date of exercise
of some or all of the Common Shares to which the exercise relates.
(v) Any grant may provide for the automatic grant to the Optionee of
Reload Option Rights upon the exercise of Option Rights, including Reload
Option Rights, for Common Shares or any other noncash consideration
authorized under Sections 4(a)(iii) above.
(vi) Successive grants may be made to the same Participant regardless
of whether any Option Rights previously granted to such Participant remain
unexercised.
(vii) Each grant shall specify the period or periods of continuous
employment of the Optionee by the Corporation or any Subsidiary that are
necessary before the Option Rights or installments thereof shall become
exercisable, and any grant may provide for the earlier exercisability of
such rights in the event of
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<PAGE> 18
APPENDIX 1
retirement, death or disability of the Participant or a change in control
of the Corporation or other similar transaction or event.
(viii) Option Rights granted under this Plan may be (A) options that
are intended to qualify under particular provisions of the Code, including
without limitation Incentive Stock Options, (B) options that are not
intended to so qualify or (C) combinations of the foregoing.
(ix) No Option Right granted under this Plan may be exercised more
than 10 years from the Date of Grant.
(x) Each grant shall be evidenced by an agreement, which shall be
executed on behalf of the Corporation by any officer thereof and delivered
to and accepted by the Optionee and shall contain such terms and provisions
as the Committee may determine consistent with this Plan.
(b) (i) Notwithstanding the above, each director who is a Nonemployee
Director is hereby granted, effective the close of business on the first
business day after (1) the date of the first annual meeting of shareholders
occurring after the date of this Plan at which he or she is elected a Director,
an option to purchase 2,000 Common Shares, and (2) the date of each subsequent
annual meeting of shareholders at which he or she is elected a Director, an
option to purchase 1,000 Common Shares.
(ii) All options granted pursuant to this Section 2(b)(i) hereof shall
be non-statutory options not intended to qualify under Section 422 of the
Code and shall be evidenced by an agreement, which shall be executed on
behalf of the Corporation by any officer thereof and delivered to and
accepted by such Nonemployee Director, and which agreement shall be in the
form attached hereto as Exhibit A.
(iii) The Option Price per Common Share shall be equal to 100% of the
Market Value per Share as of the date such option is granted, shall be
exercisable in full one year following the date of grant and shall expire
ten years from the date of grant, unless terminated earlier in accordance
with the stock option agreement.
5. TRANSFERABILITY.
(a) No Option Right or other derivative security (as that term is used in
Rule 16b-3) awarded under this Plan shall be transferable by a Participant other
than by will or the laws of descent and distribution or, other than with respect
to an Incentive Stock Option, a qualified domestic relations order, as defined
in the Code. Option Rights shall be exercisable during a Participant's lifetime
only by the Participant or, in the event of the Participant's legal incapacity,
by his guardian or legal representative acting in a fiduciary capacity on behalf
of the Participant under state law and court supervision. Notwithstanding the
foregoing, the Committee, in its sole discretion, may provide for
transferability of particular awards under this Plan so long as such provisions
will not disqualify the exemption for other awards under Rule 16b-3.
(b) Any award made under this Plan may provide that all or any part of the
Common Shares that are to be issued or transferred by the Corporation upon the
exercise of Option Rights shall be subject to further restrictions upon
transfer.
6. ADJUSTMENTS. The Committee may make or provide for such adjustments in
the (a) number of Common Shares covered by outstanding Option Rights, (b) prices
per share applicable to such Option Rights, and (c) kind of shares (including
shares of another issuer) covered thereby, as the Committee in its sole
discretion may in good faith determine to be equitably required in order to
prevent dilution or enlargement of the rights of Participants that otherwise
would result from (x) any stock dividend, stock split, combination of shares,
recapitalization or other change in the capital structure of the Corporation,
(y) any merger, consolidation, spin-off, spin-out, split-off, split-up,
reorganization, partial or complete liquidation or other distribution of assets,
issuance of rights or warrants to purchase securities or (z) any other corporate
transaction or event having an effect similar to any of the foregoing. In the
event of any such transaction or event, the Committee may provide in
substitution for any or all outstanding awards under this Plan such alternative
consideration as it may in good faith determine to be equitable under the
circumstances and may require in connection therewith the surrender of
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<PAGE> 19
APPENDIX 1
all awards so replaced. Moreover, the Committee may on or after the Date of
Grant provide in the agreement evidencing any award under this Plan that the
holder of the award may elect to receive an equivalent award in respect of
securities of the surviving entity of any merger, consolidation or other
transaction or event having a similar effect, or the Committee may provide that
the holder will automatically be entitled to receive such an equivalent award.
In any case, such substitution of securities shall not require the consent of
any person who is granted awards pursuant to this Plan.
7. FRACTIONAL SHARES. The Corporation shall not be required to issue any
fractional Common Shares pursuant to this Plan. The Committee may provide for
the elimination of fractions or for the settlement thereof in cash.
8. WITHHOLDING TAXES. To the extent that the Corporation is required to
withhold federal, state, local or foreign taxes in connection with any payment
made or benefit realized by a Participant or other person under this Plan, and
the amounts available to the Corporation for such withholding are insufficient,
it shall be a condition to the receipt of such payment or the realization of
such benefit that the Participant or such other person make arrangements
satisfactory to the Corporation for payment of the balance of such taxes
required to be withheld. At the discretion of the Committee, such arrangements
may include relinquishment of a portion of such benefit. The Corporation and any
Participant or such other person may also make similar arrangements with respect
to the payment of any taxes with respect to which withholding is not required.
9. PARTICIPATION BY EMPLOYEES OF A LESS-THAN-80-PERCENT SUBSIDIARY. As a
condition to the effectiveness of any grant or award to be made hereunder to a
Participant who is an employee of a Less-Than-80-Percent Subsidiary, regardless
whether such Participant is also employed by the Corporation or another
Subsidiary, the Committee may require the Less-Than-80-Percent Subsidiary to
agree to transfer to the Participant (as, if and when provided for under this
Plan and any applicable agreement entered into between the Participant and the
Less-Than-80-Percent Subsidiary pursuant to this Plan) the Common Shares that
would otherwise be delivered by the Corporation upon receipt by the
Less-Than-80-Percent Subsidiary of any consideration then otherwise payable by
the Participant to the Corporation. Any such award may be evidenced by an
agreement between the Participant and the Less-Than-80-Percent Subsidiary, in
lieu of the Corporation, on terms consistent with this Plan and approved by the
Committee and the Less-Than-80-Percent Subsidiary. All Common Shares so
delivered by or to a Less-Than-80-Percent Subsidiary will be treated as if they
had been delivered by or to the Corporation for purposes of Section 3 of this
Plan, and all references to the Corporation in this Plan shall be deemed to
refer to the Less-Than-80-Percent Subsidiary except with respect to the
definitions of the Board and the Committee and in other cases where the context
otherwise requires.
10. CERTAIN TERMINATIONS OF EMPLOYMENT, HARDSHIP AND APPROVED LEAVES OF
ABSENCE. Notwithstanding any other provision of this Plan to the contrary, in
the event of termination of employment by reason of death, disability, normal
retirement, early retirement with the consent of the Corporation, termination of
employment to enter public service with the consent of the Corporation or leave
of absence approved by the Corporation, or in the event of hardship or other
special circumstances, of a Participant who holds an Option Right that is not
immediately and fully exercisable, the Committee may in its sole discretion take
any action that it deems to be equitable under the circumstances or in the best
interests of the Corporation, including without limitation waiving or modifying
any limitation or requirement with respect to any award under this Plan.
11. ADMINISTRATION OF THE PLAN.
(a) This Plan shall be administered by the Compensation Committee of the
Board appointed from time to time by the Board of Directors of the Corporation.
The Committee shall be composed of not less than two members of the Board, each
of whom shall be a "disinterested person" within the meaning of Rule 16b-3 and
an "outside director" within the meaning of Section 162(m) of the Code. A
majority of the Committee shall constitute a quorum, and the acts of the members
of the Committee who are present at any meeting thereof at which a quorum is
present, or acts unanimously approved by the members of the Committee in
writing, shall be the acts of the Committee.
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<PAGE> 20
APPENDIX 1
(b) The interpretation and construction by the Committee of any provision
of this Plan or of any agreement, notification or document evidencing the grant
of Option Rights, and any determination by the Committee pursuant to any
provision of this Plan or any such agreement, notification or document, shall be
final and conclusive. No member of the Committee shall be liable for any such
action taken or determination made in good faith.
12. AMENDMENTS AND OTHER MATTERS.
(a) This Plan may be amended from time to time by the Committee, but except
as expressly authorized by this Plan no such amendment shall increase the
maximum number of shares specified in Section 3(a) of this Plan (except that
adjustments authorized by Section 6 of this Plan shall not be limited by this
provision), or cause Rule 16b-3 to become inapplicable to this Plan, without the
further approval of the shareholders of the Corporation, unless permitted by
Rule 16b-3. Without limiting the generality of the foregoing, the Committee may
amend this Plan to eliminate provisions which are no longer necessary as a
result of changes in tax or securities laws or regulations, or in the
interpretation thereof.
(b) With the concurrence of the affected Optionee, the Committee may cancel
any agreement evidencing Option Rights or any other award granted under this
Plan. In the event of such cancellation, the Committee may authorize the
granting of new Option Rights or other awards hereunder, which may or may not
cover the same number of Common Shares that had been the subject of the prior
award, at such Option Price and subject to such other terms, conditions and
discretions as would have been applicable under this Plan had the canceled
Option Rights or other awards been granted.
(c) The Committee may, in its sole discretion, accelerate the time at which
any Option Right may be exercised. The Committee also may permit Participants to
elect to defer the issuance of Common Shares pursuant to such rules, procedures
or programs as it may establish for purposes of this Plan. The Committee also
may provide that deferred settlements include the payment or crediting of
interest on the deferral amounts, or the payment or crediting of dividend
equivalents where the deferral amounts are denominated in Common Shares.
(d) This Plan shall not confer upon any Participant any right with respect
to continuance of employment or other service with the Corporation or any
Subsidiary and shall not interfere in any way with any right that the
Corporation or any Subsidiary would otherwise have to terminate any
Participant's employment or other service at any time.
(e) To the extent that any provision of this Plan would prevent any Option
Right that was intended to qualify under particular provisions of the Code from
so qualifying, such provision of this Plan shall be null and void with respect
to such Option Right; provided, however, that such provision shall remain in
effect with respect to other Option Rights, and there shall be no further effect
on any provision of this Plan.
-5-
<PAGE> 21
MPW INDUSTRIAL SERVICES GROUP, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS, NOVEMBER 11, 1998
The undersigned hereby appoints each of Daniel P. Buettin, Robert J.
Gilker, Ira O. Kane and Brad A. Martyn as proxies with full power of
substitution, and hereby authorizes each of them to present and vote,
as designated on the reverse side of this card, all the shares of
Common Stock, without par value, held of record on September 18, 1998
by the undersigned in MPW INDUSTRIAL SERVICES GROUP, INC., at the
Annual Meeting of Shareholders to be held on November 11, 1998 and at
any adjournments thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. When
properly executed, it will be voted in the manner directed on the
reverse side of this card by the undersigned shareholder, if no
direction is made, this proxy will be voted for Item #1 and Item #2.
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY CARD PROMPTLY, USING THE
ENCLOSED PREPAID ENVELOPE.
Date: , 1998
------------------------------
------------------------------
Shareholder Signature
PLEASE SIGN YOUR NAME EXACTLY
AS IT APPEARS AT LEFT. IN
SIGNING AS ATTORNEY, EXECUTOR,
TRUSTEE OR GUARDIAN, PLEASE
GIVE YOUR FULL TITLE AS SUCH,
AND IF SIGNING FOR A
CORPORATION, PLEASE GIVE YOUR
TITLE. WHEN SHARES ARE IN THE
NAME OF MORE THAN ONE PERSON,
EACH SHOULD SIGN.
P
R
O
X
Y
MPW INDUSTRIAL SERVICES GROUP, INC.
PROXY
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS #1 AND #2.
1. Election of Directors:
<TABLE>
<S> <C>
[ ]FOR all of the nominees, except vote withheld from those whose names are entered on the line
below:
NOMINEES: Monte R. Black, Ira O. Kane, Pete A. Kilsares, Gerald Nilsson-Weiskott, Robert E.
Oyster, Timothy A. Walsh and Scott N. Whitlock
-------------------------------------------------------------------------------------------------
[ ]WITHHOLD authority to vote for all of the above nominees
</TABLE>
2. Approve amendment of the Company's 1997 Stock Option Plan to
increase the aggregate number of shares of Common Stock that may be
sold upon exercise of stock options granted under the Plan from
700,000 to 1,200,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the meeting or any
adjournment thereof.
BE SURE TO DATE AND SIGN THE REVERSE SIDE OF THIS CARD
Proxy Card
